For the Quarter Ended December 31, 2020
Highlights of the Quarter
(unless otherwise noted, all financial amounts in this news release are expressed in U.S. dollars)
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- Double-Digit Sales Increase for Engineered Materials (“EM”) Division: IBC’s EM division saw its sales rise by 12.8% and 13.1%, respectively, in the three- and six-month periods ended December 31, 2020, as compared to the prior-year periods. Increased sales were driven largely by higher demand for semiconductor chips used in 5G network buildouts and upgrades.
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- EM Division Defense Business Expanding Significantly: In the quarter, the EM Division was awarded new purchase orders totaling approximately $9.7 million from Lockheed Martin to produce two aerospace-qualified beryllium-aluminum (“BeAl”) components for the F-35 Lightning II aircraft over 26 months. The contract expanded IBC’s work for the F-35 platform to include a second BeAl part for the aircraft, which was previously made by a competitor.
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- Gross Margin Improves: Consolidated gross margin improved to 17.0% and 15.0%, respectively, in the three- and six-month periods ended Dec. 31. 2020, from 15.2% and 12.8% in the comparable prior-year periods.
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- Adjusted EBITDA[1] Growth in the Quarter and YTD Periods: Consolidated adjusted earnings before interest, taxes, depreciation, and amortization (“Adjusted EBITDA”) grew to $273,000 in the quarter, which compared to a negative Adjusted EBITDA of $52,000 for the prior-year period. Fiscal year-to-date (“YTD”) Adjusted EBITDA of $152,000 compared favorably to $81,000 in the comparable prior-year period. Adjusted EBITDA for the EM Division rose by 29.9% and 86.2%, respectively, in the quarter and fiscal YTD periods over the comparable prior-year periods.
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- Net Income / Loss for the Period: The EM Division posted sharply higher comprehensive income of $173,000 in the quarter, a 253% increase over comprehensive income of $49,000 in the prior-year quarter. On a consolidated basis, IBC recorded a comprehensive loss of $1.26 million in the six-month period ended December 31, 2020, or ($0.02) per share, which compared to a loss of $1.32 million, or ($0.03) per share, in the prior-year period. The loss was driven largely by lower sales and softened demand in copper alloy markets primarily due to the COVID-19 pandemic.
FRANKLIN, Ind. (February 18, 2021) – IBC Advanced Alloys Corp. (“IBC” or the “Company”) (TSX-V: IB; OTCQB: IAALF) announces its financial results for the quarter ended December 31, 2020.
Consolidated sales for the EM and Copper Alloy divisions were $4.9 million in the quarter ended Dec. 31, 2020, which compared to $5.4 million in the prior-year period. EM Division sales in the quarter of $2.1 million were higher by 12.8% over sales of $1.8 million in the prior-year quarter. This was driven primarily by increased demand for BeAl products by semiconductor equipment manufacturers. Copper Alloys sales in the quarter of $2.9 million compared to sales of $3.5 million in the quarter ended Dec. 31. 2019. The decline was primarily due to COVID-19-related economic slowness.
Consolidated gross margin improved to 17.0% from 15.2%, and to 15.0% from 12.8%, respectively, in the three- and six-month periods ended Dec. 31, 2020 as compared to the comparable prior-year periods.
Consolidated Adjusted EBITDA for the quarter was a $273,000, which reversed a negative Adjusted EBITDA of $52,000 for the prior-year period. Consolidated Adjusted EBITDA of $152,000 in the six-month period ended December 31, 2020 compared favorably to $81,000 in the comparable prior year period.
“I was very pleased to see the especially strong performance of the Engineered Materials Division in fiscal second quarter of 2021 and on a year-to-date basis,” said IBC CEO and Board Chairman Mark A. Smith. “Demand was particularly strong for our custom beryllium-aluminum products used in to manufacture semiconductor chips, and that industry continues to signal growth. Our beryllium-aluminum defense business is also experiencing strong demand, and we see those trends continuing.”
“We also are continuing to progress in our planned consolidation and modernization of our Copper Alloys production facilities,” Mr. Smith added. “When complete, we see that increasing our production capabilities while considerably reducing our unit cost of production.”
| SELECTED RESULTS: Consolidated Operations ($000s) | ||||
| Quarter Ended 12-31-2020 |
Quarter Ended 12-30-2019 |
Six Months Ended 12-31-2020 |
Six Months Ended 12-31-2019 |
|
| Sales | 4,929 | 5,358 | 9,356 | 10,274 |
| Operating Income (Loss)[1] | (214) | (447) | (719) | (771) |
| Comprehensive Income (Loss) | (304) | (770) | (1,259) | (1,320) |
| Adjusted EBITDA | 273 | (52) | 152 | 81 |
ENGINEERED MATERIALS DIVISION RESULTS
IBC’s EM division sales in the quarter were $2.1 million, a 12.8% increase from $1.8 million in the comparable prior-year period. This was driven largely by increased demand semiconductor chips used in the transition to 5G networks and in the increasingly rapid growth of the Internet of Things (“IoT”).
Gross margin for the EM Division climbed in the quarter to 26.0%, as compared to 24.0% in the prior-year period. In the six months ended Dec. 31, 2020, gross margin improved to 24.5% from 14.5% in the prior-year period.
Adjusted EBITDA in the quarter for the EM division increased to $395,000, from $304,000 in the prior-year period. In the six months ended Dec. 31, 2020, Adjusted EBITDA rose to $553,000 from $297,000 in the prior-year period.
The EM Division generated sharply higher comprehensive income of $173,000 in the quarter, a 253% increase over comprehensive income of $49,000 in the comparable prior-year period.
Also in the quarter, the EM Division was awarded new purchase orders totaling approximately $9.7 million from Lockheed Martin to produce two aerospace-qualified BeAl components for the F-35 Lightning II aircraft over 26 months. The contract expanded IBC’s work for the F-35 platform to include a second part for the F-35, which was previously made by a competitor.
| SELECTED RESULTS: Engineered Materials ($000s) | ||||
| Quarter Ended 12-31-2020 |
Quarter Ended 12-31-2019 |
Six Months Ended 12-31-2020 |
Six Months Ended 12-31-2019 |
|
| Sales | 2,056 | 1,822 | 3,292 | 2,910 |
| Operating Income (Loss) | 198 | 34 | 144 | (187) |
| Comprehensive Income (Loss) | 173 | 49 | 90 | (209) |
| Adjusted EBITDA | 395 | 304 | 553 | 297 |
COPPER ALLOYS DIVISION RESULTS
Copper Alloys sales of $2.9 and $6.1 million, respectively, in the three- and six-month periods ended December 31, 2020 compared to sales of $3.5 million and $7.4 million, respectively, in the comparable prior-year periods. Gross margin of 10.6% in the quarter remained unchanged from the prior-year period, and was 9.8% in the six-month period ended December 31, 2020, a decrease from 12.1% in the prior-year period. The decline was due to fixed costs being spread over a lower volume of sales.
Adjusted EBITDA for the quarter was ($54,000), an improvement of ($120,000) in the quarter ended Dec. 31. 2020. YTD Adjusted EBITDA of ($43,000) compared to $185,000 in the comparable prior-year period.
IBC’s Copper Alloys division posted a comprehensive loss of $506,000 in the six-month period ended December 31, 2020, compared to a comprehensive loss of $304,000 in the prior-year period. This was largely due to decreased demand for the division’s products as a result of the COVID-19 pandemic.
| SELECTED RESULTS: Copper Alloys ($000s) | ||||
| Quarter Ended 12-31-2020 |
Quarter Ended 12-31-2019 |
Six Months Ended 12-31-2020 |
Six Months Ended 12-31-2019 |
|
| Sales | 2,873 | 3,536 | 6,064 | 7,364 |
| Operating Income (Loss) | (202) | (273) | (330) | (124) |
| Comprehensive Income (Loss) | (280) | (366) | (506) | (304) |
| Adjusted EBITDA | (54) | (120) | (43) | 185 |
NON-IFRS MEASURES
To supplement its consolidated financial statements, which are prepared and presented in accordance with IFRS, IBC uses “operating income (loss)” and “Adjusted EBITDA”, which are non-IFRS financial measures. IBC believes that operating income (loss) helps identify underlying trends in the business that could otherwise be distorted by the effect of certain income or expenses that the Company includes in loss for the period, and provides useful information about core operating results, enhances the overall understanding of past performance and future prospects, and allows for greater visibility with respect to key metrics used by management in financial and operational decision-making. The Company believes that Adjusted EBITDA is a useful indicator for cash flow generated by the business that is independent of IBC’s capital structure.
Operating income (loss) and Adjusted EBITDA should not be considered in isolation or construed as an alternative to loss for the period or any other measure of performance or as an indicator of our operating performance. Operating income (loss) and Adjusted EBITDA presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to IBC’s data.
Operating Income (Loss)
Operating income (loss) represents loss for the period, excluding foreign exchange loss, interest expense, interest income, other income (expense) and income taxes that the Company does not believe are reflective of its core operating performance during the periods presented. A reconciliation of the first quarter loss to operating loss follows:
| Three months ended December 31 | 2020 | 2019 |
| ($000s) | ($000s) | |
| Loss for the period | (304) | (770) |
| Foreign exchange (gain) loss | (86) | 57 |
| Interest expense | 172 | 271 |
| Gain/Loss on disposal of assets | – | – |
| Other income | (19) | (6) |
| Income tax expense (recovery) | 23 | 1 |
| Operating loss | (214) | (447) |
| Six months ended December 31 | 2020 | 2019 |
| ($000s) | ($000s) | |
| Loss for the period | (1,259) | (1,320) |
| Foreign exchange (gain) loss | (24) | 1 |
| Interest expense | 571 | 554 |
| Gain/Loss on disposal of assets | (3) | – |
| Other income | (24) | (13) |
| Income tax expense (recovery) | 20 | 7 |
| Operating loss | (719) | (771) |
Adjusted EBITDA
Adjusted EBITDA represents our income (loss) for the period before interest, income taxes, depreciation, amortization and share-based compensation. A reconciliation of the first quarter loss to Adjusted EBITDA follows:
| Three months ended December 31, 2020 | 2020 | 2019 |
| ($000s) | ($000s) | |
| Loss for the period | (304) | (770) |
| Income tax expense (recovery) | 23 | 1 |
| Interest expense | 172 | 271 |
| Depreciation, amortization, & impairment | 313 | 410 |
| Stock-based compensation expense (non-cash) | 69 | 36 |
| Adjusted EBITDA | 273 | (52) |
| Six months ended December 31, 2020 | 2020 | 2019 |
| ($000s) | ($000s) | |
| Loss for the period | (1,259) | (1,320) |
| Income tax expense (recovery) | 20 | 7 |
| Interest expense | 571 | 554 |
| Depreciation, amortization, & impairment | 653 | 766 |
| Stock-based compensation expense (non-cash) | 167 | 74 |
| Adjusted EBITDA | 152 | 81 |
For more information on IBC and its innovative alloy products, go here.
On Behalf of the Board of Directors:
“Mark A. Smith”
Mark A. Smith, CEO & Chairman of the Board
# # #
CONTACTS:
Mark A. Smith, Chairman of the Board
Jim Sims, Investor and Public Relations
IBC Advanced Alloys Corp.
+1 (303) 503-6203
Email: [email protected]
Website: www.ibcadvancedalloys.com
@IBCAdvanced $IB $IAALF
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 Alloys 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, and Pennsylvania. The Company’s common shares are traded on the TSX Venture Exchange under the symbol “IB” and the OTCQB under the symbol “IAALF”.
CAUTIONARY STATEMENTS
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 forward-looking statements. Forward-looking statements normally contain words like ‘believe’, ‘expect’, ‘anticipate’, ‘plan’, ‘intend’, ‘continue’, ‘estimate’, ‘may’, ‘will’, ‘should’, ‘ongoing’ and similar expressions, and within this news release include any statements (express or implied) respecting improving sales volumes and gross margins while lowering our operating costs and increasing efficiencies across the enterprise. Although IBC believes that the expectations reflected in these forward-looking statements are reasonable, forward-looking statements, by their very nature, are subject to inherent risks and uncertainties and are based on assumptions, both general and specific, which give rise to the possibility that actual results or events could differ materially from our expectations expressed in or implied by such forward-looking statement. The forward-looking statements made by the Company in this press release are 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, we cannot guarantee that any forward-looking statements 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, including its Annual Information Form for the fiscal year ended June 30, 2019, available at www.sedar.com.
[1] We report non-IFRS measures such as “Adjusted EBITDA.” Please see information on this and other non-IFRS measures in the “Non-IFRS Measures” section of this news release and in IBC’s MD&A for the quarter, posted on sedar.com.
[2] IBC reports non-IFRS measures such as “Operating Income.” Please see information on this and other non-IFRS measures in the “Non-IFRS Measures” section of this news release and in IBC’s MD&A, available on Sedar.com.
