Company to Close its Beryllium-Aluminum Alloy Plant This Summer Due to Insufficient Long-Term Market Demand
FRANKLIN, Ind. (April 25, 2024) – IBC Advanced Alloys Corp. (“IBC” or the “Company”) (TSX-V: IB; OTCQB: IAALF) announces that it will focus on its profitable Copper Alloys division in Franklin, Ind., and cease production this summer at its Massachusetts beryllium-aluminum alloy plant because of insufficient long-term demand for cast beryllium-aluminum alloy products. IBC anticipates that the move will expand free cash flow, strengthen gross margins, and position the Company on a better path to sustained profitability. IBC’s Copper Alloys division has operated profitably since the quarter ended September 30, 2020, for a total of 14 quarters.
The Copper Alloys division operates a vertically integrated copper alloy production facility in Indiana, which takes raw material through foundry, forge, and rough and final machining. Since navigating the market disruptions of the COVID pandemic, consolidating three copper alloy plants into one facility in 2022, and completing construction of its modernized and expanded production facility in Franklin, Ind. in 2022, the division has significantly grown revenue, generated more robust Free Cash Flow[1], improved its gross profit margins, and operated profitably.
While the Copper Alloys division has operated profitably, there is no guarantee that IBC Advanced Alloys will achieve profitability on a consolidated basis.
The Company’s decision to close its Engineered Materials division (“EMC“) was driven primarily by insufficient long-term demand for cast beryllium-aluminum alloy products and the resulting continuing losses. EMC’s net losses, which included a loss of $7.4 million in the 12 months ended June 30, 2023, and a loss of $5.2 million in the trailing 12 months ended December 31, 2023, depleted available working capital for the Copper Alloys division at a time when demand for copper alloy products was growing.
“The IBC team worked very hard over a dozen years to expand markets for its innovative beryllium-aluminum cast alloy products,” said Mark A. Smith, Chairman and CEO of IBC, “but sufficient steady, long-term market demand simply did not materialize at a level that allowed for consistently profitable operations. By focusing on growing our Copper Alloys business at our integrated and highly efficient foundry in Indiana, we see significant opportunity to expand the business to a whole new level and seek consistent profitability.”
Prior to halting operations in Massachusetts, IBC intends to complete its existing production contracts for beryllium-aluminum alloy products, including components it manufactures for the F-35 aircraft and other defense systems. Alternative production of these alloy parts for the F-35 and other defense systems is expected to be available after IBC closes its Massachusetts facility, which employs 24 workers. The Company expects to incur a charge to operations in respect of the plant closure and is negotiating with suppliers and its landlord to minimize such costs.
IBC Investor Webcast Scheduled for Monday, April 29, 2023
IBC will host an investor update webcast on Monday, April 29, 2024, starting at 12 noon Eastern. The webcast can be accessed here at the starting time: https://us06web.zoom.us/j/82364608744?pwd=h1bZISCRaMuGKbsE9YohiaJ0Ake4Ba.1 The meeting ID for the webcast is 823 6460 8744 and the passcode to use is 039018. Investors can find local numbers to use to listen in to the webcast via a phone line here: https://us06web.zoom.us/u/kc4j36JmKe
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, Director of Investor and Public Relations
+1 (303) 503-6203
Email: [email protected]
Website: www.ibcadvancedalloys.com
@IBCAdvanced $IB.TO $IAALF #copper
ABOUT IBC ADVANCED ALLOYS CORP.
IBC is a leading advanced copper alloys manufacturer serving a variety of industries such as defense, aerospace, automotive, telecommunications, precision manufacturing, and others. At its vertically integrated production facility in Franklin, Indiana, IBC manufactures and distributes a variety of copper alloys as castings and forgings, including beryllium copper, chrome copper, and aluminum bronze. 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 REGARDING FORWARD LOOKING STATEMENTS
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.
Certain information contained in this news release may be forward-looking information or forward-looking statements as defined under applicable securities laws. Forward-looking information and forward-looking statements are often, but not always identified by the use of words such as “expect”, “anticipate”, “believe”, “foresee”, “could”, “estimate”, “goal”, “intend”, “plan”, “seek”, “will”, “may” and “should” and similar expressions or words suggesting future outcomes. This news release includes forward-looking information and statements pertaining to, among other things, the Company’s expectation to cease production this summer at its Massachusetts beryllium-aluminum alloy plant, the Company’s expectation that focusing on the Copper Alloy division will expand free cash flow, strengthen gross margins, and position the Company on a better path to sustained profitability, the Company’s expectation that it will incur a charge to operations in respect of the plant closure, and the Company’s intention to complete its existing production contracts. 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, risks associated with manufacturing activities, 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. As a result of these risks and uncertainties, 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.
Please see “Risks Factors” in our Annual Information Form available under the Company’s profile at www.sedar.com, for information on the risks and uncertainties associated with our business. Readers should not place undue reliance on forward-looking information and statements, which speak only as of the date made. The forward-looking information and statements contained in this release represent our expectations as of the date of this release. We disclaim any intention or obligation or undertaking to update or revise any forward-looking information or statements whether as a result of new information, future events or otherwise, except as required under applicable securities laws.
[1] IBC reports non-IFRS measures such as “Adjusted EBITDA,” “Operating Income,” and “Free Cash Flow.” 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. “Free cash flow” is generally defined as net income adjusted for non-cash expenses, changes in working capital, and capital expenditures.
