IBC Advanced Alloys Reports Fiscal Q2 2018 Financial Results
Sales, Gross Profit, and Gross Margins Strengthen in the Quarter, Driven by Stronger Order Bookings and Improved Productivity Enabled by Capital Equipment Upgrades
Company Narrows Its Fiscal 1H 2018 Loss for the Period by 59% Year-on-Year, and Reiterates its Goal of Achieving Profitability in the First Calendar Quarter of 2018
- IBC posted a 32% increase in year-on-year sales for the quarter, with Engineered Materials division sales up 41% and Copper Alloys division sales 29% higher. Over the first six months of its fiscal year 2018, IBC’s consolidated sales rose 32% to US$9 million over comparable year-ago period sales of US$6.8 million, with Copper Alloy sales rising 18% and Engineered Materials sales jumping 80%.
- The Company cut its loss for the period by 52% to US$402,000 (US$0.01 per share) on total revenue of US$4.7 million, as compared to a loss in the year-ago period of US$838,000 (US$0.03/share) on revenue of US$3.6 million, and a sequential quarterly loss of US$602,000 (US$0.02/share) on revenue of US$4.3 million. The Company cut its fiscal 1H 2018 operating loss by 59% to $US1 million, compared a comparable year-ago period loss of US$2.45 million.
- The Company’s consolidated gross margin rose 38% in the quarter to 11%, as compared to an 8% gross margin in the comparable year-ago period. The Company’s Fiscal 1H 2018 gross margin turned to a positive 10% from a negative 3% gross margin in the comparable year-ago period.
- Order bookings increased 8.7% in the quarter for Copper Alloys, and product shipments in the quarter from Engineered Materials to its two largest customers improved by 96% and 130%, respectively, compared to the year-ago quarter.
- Selling, General and Administrative (“SGA”) expenses in the quarter were cut 25% from the year-ago quarter and have been reduced by 21% over the first six months of Fiscal Year 2018 compared to the comparable year-ago period.
- The Company reiterates its goal of achieving profitability in the quarter ending March 31, 2018.
FRANKLIN, IN – (February 28, 2018) – IBC Advanced Alloys Corp. (“IBC” or the “Company”) (TSX-V: IB; OTCQB: IAALF) announces its financial results for the quarter ended December 31, 2017, which is the Company’s second fiscal quarter of 2018.
Consolidated sales revenue increased 32% in the quarter to US$4.7 million, as compared to US$3.6 million in the quarter ended December 31, 2017, with the Engineered Materials division reporting 41% higher sales and Copper Alloys division registering a 29% increase in sales. Over the first six months of its Fiscal Year 2018, IBC’s consolidated sales rose 32% to US$9 million over comparable year-ago period sales of US$6.8 million, with Copper Alloy sales rising 18% and Engineered Materials sales jumping 80%.
Copper Alloys reported a year-on-year 8.7% increase in order bookings for the quarter. Shipments in the quarter by the Engineered Materials division of Beralcast®, IBC’s proprietary beryllium-aluminum alloy product, to its two largest customers rose sharply by 96% and 130%, respectively, compared to the year-ago quarter. These advances were driven by significantly improved efficiencies and operational throughput made possible by the capital improvements completed in calendar 2017 at IBC’s Wilmington, MA facility.
The Company saw its gross profit jump by 81% in the quarter to US$509,000, compared to US$281,000 in the year-ago period. Consolidated gross margin rose 38% in the quarter to 11%, as compared to an 8% gross margin in the comparable year-ago period. IBC’s gross margin for the first half of fiscal 2018 increased to 10%, reversing a negative gross margin of 3% in the comparable year-ago period.
Meanwhile, the Company reported cutting its Selling, General, and Administrative (“SG&A”) expenses in the quarter by 25% as compared to the year-ago quarter. SG&A expenses have been cut by 21% in fiscal 1H 2018 over the comparable year-ago period.
Loss for the Period Narrowed; Company Reiterates Goal of Profitability in Fiscal Q3 2018
The Company continued to narrow its per-share loss in the quarter on both a sequential and year-on-year basis. In the quarter, IBC cut its loss before other items by 52% to US$402,000 (US$0.01 per share) on total revenue of US$4.7 million, as compared to a loss in the year-ago period of US$838,000 (US$0.03/share) on revenue of US$3.6 million, and a sequential quarterly loss of US$602,000 (US$0.02/share) on revenue of US$4.3 million. The Company cut its fiscal 1H 2018 loss before other items by 59% to $US1 million, compared a comparable year-ago period loss of US$2.45 million.
“In the first six months of our current fiscal year, sales are up 32%, order bookings are strengthening, productivity and product shipments are up sharply in the EMC division, and SG&A expenses have been cut 21% compared to the year-ago period,” said Major General Duncan Heinz (USMC, Ret.), President, CEO and Director of IBC. “Challenges remain to be overcome, and I want to see sales continue to strengthen, order booking conversions improve, and more production efficiency improvements to increase margins. We are making progress every month advancing on our goal of profitability in fiscal Q3 of 2018.”
“The Copper Alloys division swung to an operational profit in the second fiscal quarter of 2018, which I was very pleased to see, and the team did an excellent job in addressing the challenges we faced in the Copper Division this past fall,” the General said. “The Engineered Materials division is significantly ramping up its operational tempo and getting more product out the door, largely as a result of the team’s hard work and the new capital equipment that we installed in calendar 2017.”
“We also are continuing to advance our aluminum-scandium alloy commercial development effort, which we are conducting under a joint development agreement with NioCorp Developments, Ltd.,” the General added. “Work to refine the special alloy materials that we have identified for target markets is continuing, and I am very excited about the prospects for the commercial alloys that we are developing. The size and potential demand in our target markets for such materials is very robust.”
The Company’s fiscal Q2 2018 financial statements and management’s discussion and analysis are available for review at www.sedar.com. Below are some highlights of the results.
Fiscal Q2 2018 Highlights
(All financial amounts in US$)
On a consolidated basis, the Company posted these results in the December 2017 quarter as compared to the year-ago period:
- Sales revenue increased by 32.4%, to $4.7 million from $3.6 million;
- Gross profit increased 81% to $509,000 from $281,000;
- Loss for the period was reduced by 62.4% to a loss of $301,000 from a loss of $800,000; and
- Gross margin increased 38%, moving to 11% from 8%.
As compared to the quarter ended September 30, 2017, IBC posted these results on a consolidated basis:
- Sales revenue increased 10% to $4.7 million from $4.3 million;
- Gross profit increased by 29% to $509,000 from $396,000;
- Loss for the period was reduced by 43.7% to loss of $301,000 from a loss of $535,000; and
- Gross margin increased 22%, improving to 11% from 9%.
Copper Alloys Segment Results
The Copper Alloys division completed the major components of its capital improvement program in the fiscal fourth quarter of 2017, and the Company stated at the time that it expects this to improve both its sales revenue and margins. In the quarter ended December 31, 2017, and as compared to the year-ago period, the Copper Alloys division posted the following results:
- Sales revenue increased by 29%, to $3.4 million from $2.6 million;
- Gross profit increased 23% to $451,000 from $368,000;
- Profit/loss for the period improved to income of $10,000 from a loss of $38,000;
- December 2017 quarterly order bookings increased 8.7% to $2.95 million from $2.7 million; and
- Gross margin decreased to 13% from 14%.
As compared to the quarter ended September 30, 2017:
- Sales revenue increased 19.1% to $3.4 million from $2.8 million;
- Gross profit increased 104% to $451,000 from $221,000;
- Profit/loss for the period improved to income of $10,000 from a loss of $269,000;
- December 2017 quarterly order bookings increased 3.54% to $2.95 million from $2.9 million; and
- Gross margin increased by 63%, rising to 13% from 8%.
In addition, the Copper Alloys division received bid proposals and orders in the quarter from both existing customers and new customers as a result of installing the solution annealing furnace and quench tank at the division’s Franklin, Indiana facility.
Looking forward, the Company expects sales revenue to increase further in the Copper Alloys division as it begins shipping all awarded forged and machined copper alloy products to a Fortune 100 electronics manufacturer. IBC has been shipping two qualified parts to this customer and has produced samples of the remaining four parts that have been ordered, which are currently undergoing First Article Inspection. Expected revenues of up to $2 million for production of sales of these six parts are based on customer forecasts and historical ordering patterns, although the customer may change these targets at its discretion.
Engineered Materials (EMC) Segment Results
In the December 2017 quarter, and as compared to the year-ago period, the Engineered Materials division reported the following:
- Sales revenue increased by 41%, to $1.3 million from $948,000;
- Gross profit swung to a positive $58,000 from a loss of $87,000;
- Loss for the period was reduced by 48% to a loss of $153,000 from a loss of $296,000; and
- Gross margin shifted to a positive 4% from a negative 9%.
As compared to the quarter ended September 30, 2017:
- Sales revenue decreased 8% to $1.3 million from $1.45 million;
- Gross profit decreased to $58,000 from $175,000;
- Loss for the period increased 125% to a loss of $153,000 from a loss of $68,000; and
- Gross margin decreased to 4% from 12%.
Operationally in the quarter, the division continued to fulfill orders related to the Company’s ongoing Lockheed Martin business as well as orders for additional customers.
For Lockheed Martin, IBC has completed Low Rate of Initial Production (“LRIP”) Lots 9 and 10 and has begun making deliveries on the third contract, LRIP Lot 11. LRIP Lot 11 represents a 16% increase in volume compared to LRIP Lots 9 and 10.
Additionally, sales of commercial products within the semiconductor manufacturing sector have experienced strong growth compared to the prior year. IBC’s order intake rate is continuing to follow this growth trend.
For more information on IBC and its innovative alloy products, go here.
On Behalf of the Board of Directors:
David “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 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, 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”.
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 that 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 therefore the Company’s future results, performance or achievements could differ materially from those expressed in these forward-looking statements. 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. Such forward-looking statements include but are not limited to statements regarding the timing of achieving profitability; increased sales; improvements to order booking conversions, production efficiency and margins; the refinement of special alloy materials; and the size and potential demand in target markets.