Company Posts Strong Sequential Sales Gains and Books Highest Revenue in a Year
Now Ramping Up Production from New Alloy Furnaces Recently Installed Across Both Operating Divisions
New Sales Contract Announced This Week With Raytheon Space and Airborne Systems Underscores Growing Demand for Company’s Beryllium-Aluminum Alloy Products
FRANKLIN, IN – May 30, 2017 – IBC Advanced Alloys Corp. (“IBC” or the “Company”) (TSX-V: IB; OTCQB: IAALF) announces its fiscal third quarter 2017 results.
The Company reported higher sales as compared to the quarter ended December 31, 2016, and booked the highest revenue in the past four quarters. It completed the installation of new production furnaces in both operating divisions, a key component of its year-long capital improvements program, and is now ramping up production to clear existing order backlogs and produce for new orders it is receiving. The Company also narrowed its per-share losses in the quarter on both a sequential and year-on-year basis.
“We are trending in the right direction in both our copper alloys and beryllium alloys divisions,” said Major General Duncan Heinz (USMC, Ret.), President, CEO, and Director of IBC. “In the third quarter, we generated the highest revenue and booked the lowest loss of any quarter of the past year. We also achieved cash-flow positive status for the month of March, although I expect that we may see continuing fluctuations in the coming months as we account for the downtime required for the installation of our new furnaces. However, now that those installs are behind us, I see us solidly on the path to achieving our goal of cash-flow positive operations in this calendar year.
The General added: “The very hard work by the IBC team to reduce costs, increase efficiencies, and implement the capital improvements over the last year is starting to show up in the numbers. We are focused and expect to continue trending upward in the next few quarters, bolstered by a strong order book and increased capacity to meet new demand.”
The Company’s fiscal third quarter 2017 financial statements and management’s discussion and analysis are available for review at www.sedar.com. Below are some highlights of the results.
Fiscal Third Quarter 2017 Highlights
(All financial amounts in US$)
- Revenue for the quarter was $4.69 million, a 31% increase sequentially over revenue of $3.57 million for the quarter ended on December 31, 2016. Revenue declined 9.7% from the comparable prior-year period, primarily because the comparative quarter had unusually high sales to Lockheed Martin. In addition, the Company has elected to eliminate subcontracted machining from its Lockheed Martin contract, given that the operating risk and costs associated with subcontracting machining did not justify the incremental revenue.
- The Company narrowed its losses in the quarter to $707,000, or ($0.02) per basic and diluted share in the fiscal third quarter, compared to a $838,000 loss in the quarter ended Dec. 31, 2016, or ($0.03) per basic and diluted share. In the comparable prior-year period, the Company lost $296,000, also representing ($0.03) per basic and diluted share.
- Both IBC operating divisions (Copper Alloys and Engineered Materials) enjoyed a stronger quarter with increased product demand. The loss for the quarter masks a swing to positive monthly operating income in March 2017 after several months of losses, although the Company noted that it expects to see continuing fluctuations in the coming months as it accounts for the downtime required for the installation of new furnaces in both operating divisions.
- Copper Alloys sales increased 33% in the quarter to $3.48 million, compared to sales of $2.6 million in the quarter ended December 31, 2016. Sales to metal service center customers improved, as did sales to original equipment manufacturers. These increases were offset by reduced sales to a multinational manufacturing customer in Asia, which resulted from a temporary disruption in the supply chain for these products. Gross profit declined $133,000 sequentially based on a product mix that included a significant proportion of cast products, which normally sell for a lower price per pound than forged products.
- Copper Alloys sales increased 20% to $3.48 million, as compared to $2.9 million in the comparable prior-year period. All industry sectors showed increased sales for the division, with the exception of sales to a multinational manufacturing customer in Asia, as described above. Gross profit was essentially unchanged from the year-ago period.
- Engineered Materials sales rose 28% in the quarter to $1.2 million, compared to sales of $948,000 in the quarter ended December 31, 2016. Increases in sales volume of commercial products contributed to the increase.
- Engineered Materials sales declined $635,000 compared to the quarter ended March 31, 2016, in part because the Company no longer included subcontracted machining as part of the contract (noted above). However, the decline was offset by volume increases of $903,000 in sales of specialty beryllium-aluminum castings. Sales declined $919,000 for the fiscal year-to-date compared to prior year, primarily due to the risk mitigation efforts described above.
- As of March 31, 2017, the Company reported working capital of $2.95 million, including cash and equivalents of $238,000, as compared to working capital of $4.3 million at June 30, 2016.
Other Highlights of the Quarter
- The Company was awarded a new contract from Lockheed Martin for the azimuth gimbal housing units for the Electro-Optical Targeting System (EOTS) system used in the F-35 Joint Strike Fighter, which IBC has manufactured for Lockheed since 2015 using IBC’s high performance Beralcast® beryllium-aluminum precision cast alloy. The new contract represented a 16% increase over the number of EOTS components that IBC manufactured for Lockheed Martin in the previous contract. See details of that announcement here.
- The Company won a bid to produce and provide forged and machine copper alloy products to a Fortune 100 electronics manufacturer. See details here.
- The Company appointed Mark A. Smith as Chairman of the Board of Directors. See details here.
The Company made several announcements in May 2017, including the following:
- The Company was awarded a production contract from Raytheon Space and Airborne Systems to produce a beryllium-aluminum cast component for use in Raytheon’s Advanced Targeting Forward Looking Infrared (ATFLIR) system, currently in use on U.S. Navy F/A-18 fighter jets. See details here.
- The Company successfully completed the installation and commissioning of a new solution annealing furnace and quench tank at its Copper Alloy division’s Franklin, IN facility. This equipment’s operational start marked the completion of the major component of the Copper Alloys division’s capital improvement program, which was launched in June 2016. Details can be seen here.
- The Company successfully completed the installation and commissioning of a new vacuum induction melting furnace at its Engineered Materials division’s Wilmington, MA manufacturing facility. This unit’s operational start marked the completion of the major component of the Engineered Materials division’s capital improvement program, which also was launched in June 2016. Details can be seen here.
“Demand for our beryllium-aluminum cast products continues to grow in both the defense and commercial sectors, as evidenced by our new contract with Raytheon, announced earlier this week, the double-digit increase in parts from Lockheed Martin in the February 2017 LRIP 11 contract, and the strong increase in orders we are receiving from the semiconductor equipment manufacturing industry,” said General Heinz. “We also are seeing an uptick in orders to our Copper Alloys division, and I believe that the enhanced production capabilities provided by our new solution annealing furnace and quench tank have positioned the Copper Alloys division to increase sales into several industry segments, including oil and gas.”
For more information on IBC and its innovative alloy products, go here.
To see previous IBC news releases, go here.
On Behalf of the Board of Directors:
Duncan Heinz, President, CEO and Director
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About IBC Advanced Alloys Corp.
IBC is a leading beryllium and copper advanced alloys company serving a variety of industries such as defense, aerospace, automotive, telecommunications, precision manufacturing, and others. IBC’s Copper Division manufactures and distributes a variety of copper alloys as castings and forgings, including beryllium copper, chrome copper, and aluminum bronze. IBC’s Engineered Materials Division makes the Beralcast® family of alloys, which can be precision cast and are used in an increasing number of defense, aerospace, and other systems, including the F-35 Joint Strike Fighter. IBC’s has production facilities in Indiana, Massachusetts, Pennsylvania, and Missouri. The Company’s common shares are traded on the TSX Venture Exchange under the symbol “IB” and the OTCQB under the symbol “IAALF”.
Jim Sims, Director of Investor and Public Relations
+1 (303) 503-6203
@IBCAdvanced $IB $IAALF #Beryllium #Beralcast
This news release was prepared by management of IBC, which takes full responsibility for its contents. The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy of this news release. Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
This disclosure contains certain forward-looking statements about the Company’s order book, increased capacity and objective to achieve cash flow positive operations in this calendar year. There can be no assurance that the order book will remain strong, that the Company will be able to maintain its increased capacity or that cash flow positive operations will be achieved in this calendar year. These forward-looking statements involve substantial known and unknown risks and uncertainties, certain of which are beyond the Company’s control including: the impact of general economic conditions in the areas in which the Company or its customers operate, including the semiconductor manufacturing and oil and gas industries, changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, limited availability of raw materials, fluctuations in commodity prices, foreign exchange or interest rates, stock market volatility and obtaining required approvals of regulatory authorities. In addition there are risks and uncertainties associated with manufacturing activities.
All statements included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements are based on assumptions made by the Company based on its experience, perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. As a result, the Company’s future results, performance or achievements could differ materially from those expressed in these forward-looking statements . We cannot guarantee that any forward-looking statement will materialize and we caution you against relying on any of these forward-looking statements IBC makes no commitment to revise or update any forward-looking statements in order to reflect events or circumstances after the date any such statement is made, except as required by applicable law. Additional information identifying risks and uncertainties is contained in IBC’s filings at www.sedar.com.