IBC Advanced Alloys Reports Q2 2020 Financial Results

Highlights of the Quarter Ended Dec. 31, 2019
(unless otherwise noted, all financial amounts in this news release are expressed in U.S. dollars)

  • Sales Sharply Higher:  Consolidated sales of $5.4 million were 38% higher than prior-year period sales of $3.9 million, and fiscal year-to-date (“YTD”) consolidated sales of $10.3 million were 20% higher than prior-year sales of $8.6 million.
     
  • Gross Margins Strengthen: Comprehensive gross margin more than doubled to 15.6% in the quarter ended December 31, 2019, compared to 6.8% in the prior-year period, and rose to 13.3% year to date, as compared to 9.0% in the comparable period of fiscal 2019.
     
  • Positive YTD Adjusted EBITDA: Adjusted earnings before interest, taxes, depreciation, and amortization (“Adjusted EBITDA)[1] for the six-month period ended December 31, 2019 was $67,000, as compared to ($723,000) in the prior-year period.  In the quarter, Adjusted EBITDA was ($53,000).  However, except for a one-time charge of $140,000 in the quarter (see further details below), the Company’s fiscal Q2 2020 Adjusted EBITDA would have swung to a positive $87,000.
     
  • Comprehensive Loss Narrows: IBC recorded a comprehensive loss of $770,000 in the quarter, or ($0.02) per share, which compared favorably to a loss of $1.1 million, or ($0.03) per share, in the prior-year period.  The Company recorded a YTD loss of $1.3 million, which compared favorably to a loss of $1.9 million in the prior-year period.
     
  • Beryllium-Aluminum Division Achieves Profitability on Stronger Sales: The Engineered Materials division (“EMC”), which produces advanced beryllium-aluminum (“BeAl” alloy products for commercial and defense markets, achieved profitability in the quarter on sales of $1.8 million, a 55% increase over the prior-year period.  Sales of $2.9 million YTD were 20.8% higher than the prior-year period.
     
  • Copper Alloy Sales Higher: Sales in the Copper Alloy division also were higher Q/Q and Y/Y.  In the quarter, sales of $2.7 million were 31% higher than in the prior-year period, and YTD sales of $7.4 million were 20% higher than in the prior-year period.

 

FRANKLIN, IN (February 27, 2020) – IBC Advanced Alloys Corp. (IBC” or the “Company”) (TSX-V: IB; OTCQB: IAALF) announces its financial results for its fiscal second quarter of 2020. 

 

Consolidated Results Highlights

The Company generated consolidated sales revenue of $5.4 million, a 38% increase over sales of $3.9 million in the prior-year period.  In the six-month period ended December 31, 2019, consolidated sales of $10.3 million were 20% higher than sales of $8.6 million in the prior-year period.

 

SELECTED RESULTS:  Consolidated

 

Quarter Ended
12-31-2018

Quarter Ended
12-31-2019

Sales

$3,904,142

$5,385,769

Adjusted EBITDA

$(607,532)

$(54,204)

Net Income (Loss)

$(1,087,693)

$(769,743)

 

IBC narrowed its comprehensive loss in the quarter to $770,000, or ($0.02) per share, as compared to a loss of $1.1 million, or ($0.03) per share, in the prior-year period.  Year to date, the Company posted a loss of $1.3 million, which compares to a loss of $1.9 million in the six months ended December 31, 2018.

On an Adjusted EBITDA basis, IBC booked ($53,000) for the quarter, which compared favorably to Adjusted EBITDA of ($606,000) for the prior-year period.  Year-to-date, IBC recorded Adjusted EBITDA of $67,000, as compared to ($723,000) in the prior-year period.  In Q2 of 2020, the Company booked a one-time charge of $140,000 to reimburse a customer for out-of-spec material that was supplied to IBC by another company.  Except for that one-time charge in SGA, Copper Alloy’s Adjusted EBITDA would have been $20,000 for the quarter instead of ($120,000).

Comprehensive gross margin strengthened in the quarter and year-to-date, improving to 15.6% in the quarter ended December 31, 2019, from 6.8% in the prior-year period, and rising to 13.3% year to date, as compared to 9.0% in the comparable period of fiscal 2019.

EMC Division Highlights

The EMC division swung to profitability in the quarter on sales of $1.8 million, which represented a 55% increase over sales in the prior-year period of $1.2 million.  Year-to-date, EMC sales were $2.9 million, a 20.8% increase over sales of $2.4 million in the prior-year period.  Increased sales in these periods were due largely to higher demand for BeAl products by semiconductor equipment manufacturers.  

 

SELECTED RESULTS:  Engineered Materials Division

 

Quarter Ended
12-31-2018

Quarter Ended
12-31-2019

Sales

$1,176,401

$1,821,650

Adjusted EBITDA

$(52,167)

$301,229

Net Income (Loss)

$(154,053)

$49,272

 

In addition:

  • EMC posted net income of $49,000 in the quarter, reversing a loss in the prior-year period of $154,000. Net loss in the six-month period ended December 31, 2019, was $209,000, as compared to a loss of $455,000 in the prior-year period.
     
  • Adjusted EBITDA for EMC was $301,000 in the quarter, which compared favorably to Adjusted EBITDA of ($52,000) in the prior-year period. Year to date, Adjusted EBITDA for EMC was $289,000, as compared to Adjusted EBITDA of ($221,000) in the prior-year period.
     
  • EMC’s gross margin in the quarter expanded by 63.8%, going from 14.8% in the quarter ended December 31, 2018, to 24.1% in the quarter ended December 31, 2019.
     
  • Demand for BeAl products used in defense applications remained steady in calendar year 2019 but is expected to strengthen as rates of production for defense programs such as the F-35 Lightning II aircraft begin to accelerate beyond low rates of initial production. For example, according to Lockheed-Martin, the annual rate of production of the F-35 aircraft is expected to nearly double by 2022 from 2018 production levels.  IBC is continuing to pursue additional contracts for high-performance BeAl products in other defense-sector platforms.
     
  • EMC continues to recycle BeAl scrap material into useful feedstock for both aerospace and commercial BeAl casting products, which helps to reduce our cost of goods sold and capture higher margins.

 

Copper Alloys Division Highlights

In the Copper Alloys division, sales in the quarter of $3.6 million were 31% higher than sales of $2.7 million in fiscal Q2 of 2019.  Division sales in the six-month period ended December 31, 2019 increased 20% to $7.4 million, from $6.2 million in the prior year-to-date period.

 

SELECTED RESULTS:  Copper Alloys Division

 

Quarter Ended
12-31-2018

Quarter Ended
12-31-2019

Sales

$2,727,741

$3,564,119

Adjusted EBITDA

$(362,975)

$(119,293)

Net Income (Loss)

$(547,706)

$(365,527)

 

  • Adjusted EBITDA for Copper Alloys division was ($119,000) in the quarter, which compares to Adjusted EBITDA of ($363,000) in the prior-year period. In the six-month period ended December 31, 2019, Adjusted EBITDA flipped to a positive $181,000, compared to Adjusted EBITDA of ($171,000) in the prior year-to-date period.  In the quarter, the Company booked a one-time charge of $140,000 to reimburse a customer for out-of-spec material that was supplied to IBC by another company.  Except for that one-time charge in SGA, Copper Alloy’s Adjusted EBITDA would have been $20,000 for the quarter instead of ($120,000).
     
  • Gross margin for Copper Alloys jumped 242% in the quarter, going from 3.3% in the quarter ended December 31, 2018, to 11.3% in the quarter ended December 31, 2019.
     
  • Copper Alloys posted a net loss of $366,000 in the quarter, which compared to a loss of $548,000 in the prior-year period. The division posted a loss of $304,000 in the six-month period ended December 31, 2019, which compared to a loss of $574,000 in the prior year-to-date period.

“The Board of Directors and I are pleased with the strong upward trajectory in sales across both our Copper Alloy and EMC divisions, and we were particularly pleased to see EMC swing to profitability in the quarter,” said Mark A. Smith, IBC Board Chairman.  “The growth in gross margins in both divisions bodes well for future revenue growth.  We look forward to driving these trends forward, expanding sales further, and realizing our goal of profitability for the Company.”

 

FISCAL Q2 2020 SEGMENT AND CONSOLIDATED OPERATIONS RESULTS

Following is a summary of the Company’s results of operations to Adjusted EBITDA for the second fiscal quarter of 2020, on a consolidated and segment-by-segment basis:

 

NON-IFRS MEASURES

To supplement its consolidated financial statements, which are prepared and presented in accordance with IFRS, IBC uses “Adjusted EBITDA,” a non-IFRS financial measure.  We believe Adjusted EBITDA is a useful indicator for cash flow generated by our business that is independent of our capital structure.   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.  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 our data.

Adjusted EBITDA

Adjusted EBITDA represents our income (loss) for the period before interest, income taxes, depreciation, amortization and share-based compensation. A reconciliation of our second quarter loss to Adjusted EBITDA follows:

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, Chairman of the Board

 

[1]     IBC 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 the Company’s MD&A for the quarter.

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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: jim.sims@ibcadvancedalloys.com
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 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”.

 

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 a 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 anticipated sales trends in fiscal 2020, expected demand for the Company’s products and expectations as to additional quantities to be sold under the Lockheed Martin contract. Although IBC believes that the expectations reflected in these forward-looking statement 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 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, including its Annual Information Form for the fiscal year ended June 30, 2019, available at www.sedar.com.

 

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