Highlights of the Quarter
(unless otherwise noted, all financial amounts in this news release are expressed in U.S. dollars)
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- Company Swings to Profitability in the Quarter: The Company reported income of $139,000 in the quarter, reversing a loss posted in the preceding quarter, and as compared to income of $171,000 in the prior-year period. The Copper Alloys division posted income of $205,000 in the quarter, a 109% jump over the prior-year period, and the Engineered Materials (“EM”) division’s income in the quarter of $490,000 was 84.9% higher than the prior-year period.
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- Global Semiconductor Demand Boosts Beryllium Alloys Sales by Double Digits: IBC’s Engineered Materials (“EM”) division sales of precision beryllium-aluminum products rose 14.8% year over year (“YoY”), fueled largely by sharply higher demand from semiconductor chips used in the ongoing build-out of 5G networks and in vehicles, data centers, appliances, and other components of the Internet of Things (“IOT”). In the nine months ended March 31, 2021, the division posted sharply higher income of $579,000, a 916% increase over income of $57,000 in the prior-year period.
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- Post-COVID Recovery Continues, With Large Sequential Gains in Revenue and Earnings: In the quarter, IBC swung to profitability as compared to the quarter ended Dec. 31, 2020, with consolidated revenue increasing 110% and Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (“Adjusted EBITDA”)[1] rising by 151%, both as compared to the preceding quarter.
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- Gross Margin Strengthens: Consolidated gross margin improved to 30.5% in the quarter, as compared to 17.0% in the preceding quarter and 19.9% in the period-year period, with fixed costs being spread over higher sales volumes. Gross margin in the Copper Alloys division rose to 20.5%, as compared to 10.6% and 14.1% in the preceding and prior-year periods, respectively. EM gross margin expanded to 45.6% in the quarter, as compared to 26% and 32.1% in the preceding and prior-year periods, respectively.
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- Company Launches Expansion of Copper Alloy Division’s Indiana Facility: Construction has begun at IBC’s Copper Alloys facility in Franklin, Indiana facility to significantly expand and modernize the plant, which is expected to consolidate existing operations, increase production capacity, support higher sales, and achieve substantial costs savings.
FRANKLIN, Ind. (May 17, 2021) – IBC Advanced Alloys Corp. (“IBC” or the “Company”) (TSX-V: IB; OTCQB: IAALF) announces its financial results for the quarter ended March 31, 2021.
Consolidated sales of $5.4 million and $14.8 million in the three- and nine-month periods ended March 31, 2021, compared to $5.8 million and $16.1 million, respectively, in the corresponding prior-year periods. IBC’s consolidated sales posted a 53% gain over sales in the quarter ended Dec. 31, 2020.
| SELECTED RESULTS: Consolidated Operations ($000s)[2] | ||||
| Quarter Ended 3-31-2021 |
Quarter Ended 3-31-2020 |
Nine Months Ended 3-31-2021 |
Nine Months Ended 3-31-2020 |
|
| Revenue | 5,412 | 5,818 | 14,767 | 16,092 |
| Operating Income (Loss) | 477 | $134 | (241) | (637) |
| Income (loss) for the period | 139 | 171 | (1,119) | (1,149) |
| Adjusted EBITDA | 685 | 825 | 838 | 906 |
IBC posted income of $139,000 in the quarter ended March 31, 2021, which compared to a loss of $304,000 in the preceding quarter and income of $171,000 in the prior-year period. In the nine-month period ended March 31, 2021, the Company registered a loss of $1,119,000 or ($0.02) per share, which compared to a loss of $1,149,000, or ($0.03), in the prior-year period. The year-to-date loss was driven by lower sales and softened demand in copper alloy markets, primarily due to the COVID-19 pandemic.
However, the EM division posted a sharply higher income of $580,000 in the nine months ended March 31, 2021, a 918% increase over income in the corresponding prior-year period.
Consolidated gross margin improved to 30.5% in the quarter, as compared to 17.0% in the preceding quarter and 19.9% in the period-year period. Gross margin in the Copper Alloys division rose to 20.5%, as compared to 10.6% and 14.1% in the preceding and prior-year periods, respectively. EM gross margin expanded to 45.6% in the quarter, as compared to 26% and 32.1% in the preceding and prior-year periods, respectively.
Consolidated Adjusted EBITDA for the quarter was $685,000, which compared to Adjusted EBITDA of $825,000 in the prior-year period. Consolidated Adjusted EBITDA of $838,000 in the nine-month period ended March 31, 2021, compared to $906,000 in the comparable prior-year period.
“Demand continues to rise across both of our operating divisions, and it is clear that the post-COVID global economic recovery is driving strong growth across IBC’s product offering, particularly for specialty beryllium alloy products used to manufacture semiconductors,” said IBC CEO and Board Chairman Mark A. Smith. “For example, year-to-date income in Engineered Materials division is up 916% over the prior-year period, which is largely due to sharply higher market demand for our precision-cast beryllium alloy products because of the global 5G network buildout and demand for semiconductor chips across virtually all modern technology platforms.”
“I am also pleased that construction has begun in the effort to modernize and expand our Copper Alloys facility in Franklin, Indiana, and that work is progressing well,” Mr. Smith added. “When completed, we expect this expansion and facility consolidation to grow our production capacity, help to fuel higher sales, and help us achieve substantial costs savings.”
ENGINEERED MATERIALS DIVISION RESULTS
IBC’s EM division sales in the quarter were $2.2 million, a 14.8% increase from $1.9 million in the comparable prior-year period. This was driven largely by increased demand for semiconductor chips used in the transition to 5G networks and in the increasingly rapid IOT growth.
EM gross margin expanded to 45.6% in the quarter, as compared to 26% and 32.1% in the preceding and prior-year periods, respectively.
| SELECTED RESULTS: Engineered Materials ($000s) | ||||
| Quarter Ended 3-31-2021 |
Quarter Ended 3-31-2020 |
Nine Months Ended 3-31-2021 |
Nine Months Ended 3-31-2020 |
|
| Revenue | 2,151 | 1,873 | 5,443 | 4,783 |
| Operating Income (Loss) | 605 | 273 | 750 | 84 |
| Income (loss) for the period | 490 | 265 | 579 | 57 |
| Adjusted EBITDA | 835 | 501 | 1,386 | 796 |
Adjusted EBITDA in the quarter for the EM division increased sharply to $835,000, from $501,000 in the prior-year period and as compared to $395,000 in the quarter ended Dec. 31, 2020. In the nine months ended March 31, 2021, Adjusted EBITDA rose to $1.4 million from $796,000 in the prior-year period, a 74.1% increase.
The EM Division generated sharply higher income of $490,000 in the quarter, an 85% increase over income of $265,000 in the comparable prior-year period, and a 183% increase over income of $173,000 in the quarter ended Dec. 31, 2020.
COPPER ALLOYS DIVISION RESULTS
Copper Alloys sales of $3.3 and $9.3 million, respectively, in the three- and nine-month periods ended March 31, 2021, compared to sales of $3.9 million and $11.3 million, respectively, in the comparable prior-year periods, and as compared to sales of $2.9 million in the quarter ended Dec. 31, 2020.
| SELECTED RESULTS: Copper Alloys ($000s)2 | ||||
| Quarter Ended 3-31-2021 |
Quarter Ended 3-31-2020 |
Nine Months Ended 3-31-2021 |
Nine Months Ended 3-31-2020 |
|
| Revenue | 3,261 | 3,945 | 9,324 | 11,309 |
| Operating Income (Loss) | 231 | 173 | (100) | (50) |
| Income (loss) for the period | 205 | 98 | (299) | (206) |
| Adjusted EBITDA | 150 | 322 | 108 | 506 |
Gross margin in the Copper Alloys division rose to 20.5%, as compared to 10.6% and 14.1% in the preceding and prior-year periods, respectively.
Adjusted EBITDA for the quarter was $150,000, which compared to $322,000 in the prior-year period. This reversed a negative Adjusted EBITDA of $280,000 in the quarter ended Dec. 31, 2020.
The division posted income of $205,000 in the quarter, a 110% increase over income of $98,000 in the corresponding prior-year period, and it reversed a loss of $280,000 in the quarter ended Dec. 31, 2020. In the nine-month ended March 31, 2022, the division posted a loss of $299,000, which compared favorably to a loss of $206,000 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.
LIVE INVESTOR WEBCAST
Mark A. Smith, IBC Board CEO and Chairman, will host a conference call and live webcast at 10:30 a.m. Eastern on Friday, May 21, 2021, to discuss the Company’s quarterly results and future growth strategies. To register for the webinar, please go here: https://attendee.gotowebinar.com/register/5186085601455984399. A recording of the webcast will be made available on the IBC website following the event. Those wishing to participate via the webcast’s listen-only audio line can call +1 (415) 655-0052 and use the passcode 454-871-265.
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 March 31 | 2021 | 2020 |
| ($000s) | ($000s) | |
| Income (loss) for the period | 139 | 171 |
| Foreign exchange (gain) loss | – | 288 |
| Interest expense | 353 | 251 |
| Gain (loss) on disposal of assets | – | 5 |
| Interest income | – | – |
| Other income (loss) | (15) | (5) |
| Income tax expense (recovery) | – | – |
| Operating income (loss) | 477 | 134 |
| Nine months ended March 31 | 2020 | 2019 |
| ($000s) | ($000s) | |
| Income (loss) for the period | (1,119) | (1,149) |
| Foreign exchange gain (loss) | (24) | (288) |
| Interest income (expense) | 924 | 805 |
| Gain (loss) on disposal of assets | (3) | 5 |
| Interest income | – | – |
| Other income (loss) | (39) | (17) |
| Income tax expense (recovery) | 20 | 7 |
| Operating income (loss) | (241) | (637) |
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 March 31 | 2021 | 2020 |
| ($000s) | ($000s) | |
| Income (loss) for the period | 139 | 171 |
| Income tax expense (recovery) | – | – |
| Interest expense | 353 | 251 |
| Depreciation, amortization, & impairment | 136 | 370 |
| Stock-based compensation expense (non-cash) | 57 | 33 |
| Adjusted EBITDA | 685 | 825 |
| Nine months ended March 31 | 2021 | 2020 |
| ($000s) | ($000s) | |
| Income (Loss) for the period | (1,119) | (1,149) |
| Income tax expense (recovery) | 20 | 7 |
| Interest expense | 924 | 805 |
| Depreciation, amortization, & impairment | 789 | 1,136 |
| Stock-based compensation expense (non-cash) | 224 | 107 |
| Adjusted EBITDA | 838 | 906 |
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
[1] BC reports 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, available on Sedar.com
[2] IBC reports non-IFRS measures such as “Adjusted EBITDA” and “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
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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, 2020, available at www.sedar.com.
