Q4 2023 Exco Technologies Ltd Earnings Call
Speaker 1: Today, and welcome to the Exco Technologies Limited Fourth Quarter 2023 Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again.
And welcome to the ESCO Technologies Ltd fourth quarter 2023 results conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question you will need to press star one one on your <unk>.
The phone you will then hear an automated message advising your hand is raised.
Your question. Please press Star one again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, Darren Clark President and Chief Executive Officer. Please go ahead.
Speaker 1: Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Darren Kirk, President and Chief Executive Officer. Please go ahead.
Speaker 2: Thank you, Abigail. Good morning, all participants. Welcome to Exco Technologies, fiscal 2023, fourth quarter in year-end conference call. I will leave it off with an operations overview. Matthew Pazno, our CFO , will then review the financial aspects of the quarter before we open the call for questions.
Thank you Abigail and good morning, all participants welcome to Exco Technology's fiscal 2023 fourth quarter and year end conference call I will lead off with an operations overview Matthew pause no. Our CFO will then review the financial aspects of the quarter before we open the call for questions before.
Speaker 2: Before I begin, I'd like to point out the cautionary notes in yesterday's news release and on page two of the presentation that we have posted to our website. They are applicable to this discussion today.
Before I begin I'd like to point out the cautionary notes in yesterday's news release and on page two of the presentation that we have posted to our website. They are applicable to this discussion today.
Speaker 2: In fiscal 2023, Exco clearly demonstrated our aggressive growth strategy is on the right track. Despite difficult market conditions, we recorded a 26% increase in sales to a record 619 million. Groo are evaida by 41% to almost 75 million and delivered 68 cents of earnings per share, a 39% improvement over last.
In fiscal 2023, Exco clearly demonstrated our aggressive growth strategy is on the right track despite difficult market conditions, we recorded a 26% increase in sales to a record $619 million grew our EBITDA by 41% to almost $75 million and delivered 60.
Eight of earnings per share of 39% improvement over last year.
Speaker 2: As well, our momentum remains strong. We established positive trends throughout the year with our quarterly revenues in Ibadat showing sequential improvement ending the year on a high note.
As well our momentum remains strong we established positive trends throughout the year with our quarterly revenues and EBITDA showing sequential improvement and every year on a high note.
Speaker 2: We not only achieved substantial financial growth, but also pushed operational excellence throughout our business.
We not only achieved substantial financial growth, but also pushed operational excellence throughout our business.
Speaker 2: From our fast-growing 3D printing operations to cast-dual energy efficient systems that help die-cast and extrusion customers reduce emissions globally to neoconb leadership in the industrial reuse of plastics and post-process recycling, it is truly inspiring to see the numerous examples of innovation in both products and processes happening across X-Go.
From our fast growing three D printing operations to cast tools energy efficient systems that help dicast that extrusion customers reduced emissions globally to neocon leadership in the industrial reuse of plastics and post process recycling. It is truly inspiring to see the numerous examples of innovation.
In both products and processes happening across exco.
Speaker 2: Similarly, the opportunities we see to further are reached through both recent acquisition and greenfield investments is thoroughly exciting.
Similarly, the opportunities we see to further our reach through both region recent acquisition and Greenfield investments is thoroughly excited.
Speaker 2: Looking forward, despite macro headwinds, vehicle production volumes are expected to grow in 2024. As dealer inventories continue to be replenished and tent up consumer demand is satisfied. Also, we are clearly...
Looking forward despite macro head wins vehicle production volumes are expected to grow.
In 2024 as dealer inventories continue to be replenished and pent up consumer demand is satisfied.
Also we are clearly gaining market share.
Speaker 2: And we enter the new fiscal year with a record backlog levels in our large, in our long-leaf time products, such as large moles.
And we entered the new fiscal year with a record backlog levels in our large and our lead long lead time products such as large malls.
Speaker 2: Moreover, startup losses and operational destruction associated with our current capital investment activity should reduce, while the benefits of our ongoing efficiency initiatives will continue to take hold. While there will no doubt be new challenges, we remain very optimistic that our earnings will again be substantially stronger in the year ahead.
Moreover, startup losses, and operational disruption associated with our current capital investment activity should reduce while the benefits of our ongoing efficiency initiatives will continue to take hold.
There will no doubt be new challenges, we remain very optimistic that our earnings will again be substantially stronger in the year ahead.
Speaker 2: As I've noted many times in the past, the key focus for X-GO is to directly support the electric vehicle revolution and the worldwide movement toward reducing emissions.
As Ed noted many times in the past a key focus for exco is to directly support the electric vehicle Revolution, and the worldwide movement toward reducing emissions. Consequently at the world continues to push forward with sustainability initiatives the future for our products has never been brighter.
Speaker 2: Consequently, as the world continues to push forward with the sustainability initiatives, the future for our products has never been brighter.
Speaker 2: An increase in the use of aluminum across many industries is the principal driver of this tailwind, particularly in the automotive industry, our primary end mark.
An increase in the use of alumina across many industries is the principal driver of this tailwind, particularly in the automotive industry, our primary end market.
Speaker 2: As the automotive industry adapts to ever tightening fuel efficiency standards, lightweight metals are increasingly displacing structural steel vehicle components to make internal combustion engine vehicles more environmentally friendly.
As the automotive industry adapt to ever tightening fuel efficiency standards lightweight metals are increasingly displacing structural steel vehicle components to make internal combustion engine vehicles more environmentally friendly.
Speaker 2: Moreover, electric vehicles make extensive use of aluminum components to reduce weight and therefore maximize battery range.
Moreover, electric vehicles make extensive use of aluminum components to reduce weight and therefore maximize battery range are casting and extrusion segment is especially well positioned to benefit from this transition.
Speaker 2: as we are the leading provider of tools that shape lightweight metals and we do not manufacture tooling for stamped steel components.
As we are the leading provider of tool that sheep lightweight metals, and we do not manufacture tooling for stamped steel components.
Speaker 2: Over the next several years, significant growth is expected in the application of both extruded and di-caf aluminum components.
Over the next several years significant growth is expected in the application of both extruded die cast aluminum components.
Speaker 2: More recently, diecast, aluminum components and associated tooling have been increasing in both size and complexity.
More recently die cast aluminum components and associated tooling have been increasing in both size and complexity.
Speaker 2: OEMs and their tier suppliers are increasingly using so-called gigapress die-casting machines that are much larger than those used previously.
Oems and their tier suppliers are increasingly using so called Giga press die casting machines that are much larger than those used previously.
Speaker 2: This enables the casting of entire vehicle subframes from aluminum rather than assembling numerous stamped metal components, creating significant manufacturing efficiency.
This enables the casting of entire vehicle sub frames from aluminum rather than assembling numerous stamped metal components, creating significant manufacturing efficiencies.
Speaker 2: The tooling required to facilitate this process is also much larger and more complex, which plays directly into our strengths. We anticipated this trend several years ago and have made considerable investments in our people, equipment and processes to be the leading supplier in this market cycle.
The tooling required to facilitate this process is also much larger and more complex, which plays directly into our strengths. We anticipated. This trend several years ago and have made considerable investments in our people equipment and processes to be the leading supplier in this market segment.
Speaker 2: Our automotive solutions group, which manufactures products for both the interior and storage areas of passenger vehicles, also stands to benefit from sustainability trends.
Our automotive solutions group, which manufacturers products for both the interior and storage areas of passenger vehicles also stands to benefit from sustainability trends.
Speaker 2: X goes automotive solutions segment typically makes products that are later in weight than competing products and electric vehicles generally have more cabin and storage space for which our products are well suited.
<unk> automotive solutions segment typically makes products that are lighter in weight than competing products and electric vehicles generally have more Kevin and <unk>.
Storage space for which our products are well suited.
Speaker 2: Helping this growth, OEMs are increasingly looking to the sale of higher-margined accessory products as a means to enhance their own profitability. And X-Go is an industry leader for many of these products.
Helping this growth Oems are increasingly looking to the sale of higher margin accessory products as a means to enhance their own profitability and exco is an industry leader for many of these products too.
Speaker 2: To these points, we grew our content for vehicle by 14% in fiscal 2023, which was well above our historical range of 5% to 10% per annum.
To these points, we grew our content per vehicle by 14% in fiscal 2023, which was well above our historical range of 5% to 10% per annum.
Speaker 2: It is important to note that while both our business segments are very well positioned for the automotive industry's eventual transition to electric vehicles, Texco is relatively agnostic to power train architect.
It is important to note that while both our business segments are very well positioned for the automotive industry's eventual transition to electric vehicles.
Mexico is relatively agnostic to powertrain architecture.
Speaker 2: Should the ED revolution proceed more slowly or even shift toward hybrid vehicles, we remain confident in the trend towards aluminum and that the man for our products will continue to grow strongly in the years ahead.
Should the EV Revolution proceed more slowly or even shift toward hybrid vehicles, we remain confident in the trend towards aluminum and that demand for our products will continue to grow strongly in the years ahead.
Speaker 2: With regard to our various capital asset investment in growth strategies, we again made great progress in fiscal 23.
With regard to our various capital asset investment and growth strategies, we again made great progress in fiscal 'twenty three.
Speaker 2: I want to emphasize the size of both negative impacts these investments have had on a recent financial result.
I want to emphasize the sizeable negative impact these investments have had on our recent financial results. We have incurred significant front end cash costs from the startup of new plants navigated through.
Speaker 2: We have incurred significant front-end cash costs from the start-up of new plants, navigated through operational disruption as we have installed new equipment and are incurring much higher levels of depreciation associated with our conservative accounting met.
Operational disruption as we installed new equipment and are incurring much higher levels of depreciation associated with our conservative accounting methods.
Speaker 2: Nonetheless, in fiscal 2023, we saw clear signs that the aggregate of these investments has not only begun to add to our EBITDA, but is accretive to our margins as well.
Nonetheless in fiscal 2023, we saw clear signs that the aggregate of these investments has not only.
<unk> begun to add to our EBITDA, but it is accretive to our margins as well.
Speaker 2: I will direct you to the slides we've posted to our website or to our quarterly material for more information about the specifics of these investments. I would point out, however, that Castools' new facility in Mexico is now operational with commercial operations beginning on October 1st. This plant will provide much needed capacity for Castools and better position us competitively within the geographies of Latin America and the Southern US.
I will direct you to the slides, we posted to our website or to our quarterly material for more information about the specifics of these investments I would point out however, it cast tools new facility in Mexico is now operational with commercial operations beginning on October one.
This plant will provide much needed capacity for cast tool and better position us competitively within the geographies of Latin America, and the Southern U S.
Speaker 2: In fiscal 2024, we will continue to generate efficiencies from the substantial capital that we have recently deployed. As well, we plan to spend approximately $49 million in capital in the year ahead to further improve our efficiency, provide additional capacity, and reduce our environmental cost.
In fiscal 2024, we will continue to generate efficiencies from the substantial capital that we have recently deployed.
As well, we plan to spend approximately $49 million in capital in the year ahead to further improve our efficiency provide additional capacity and reduce our environmental footprint with.
Speaker 2: With the benefit of these investments, the launch of new programs, general market growth, and also market share gains consistent with our history, we expect to achieve substantial growth.
With the benefit of these investments the launch of new programs General market growth and also market share gains consistent with our history, we expect to achieve substantial growth. This.
Speaker 2: This quarter we confirmed our fiscal 2026 targets of 750 million in revenue and 120 million of EBITDA. We did, however, revise our fiscal 2026 EPS target to roughly $1.50 as a result of higher than expected capital spending for future growth initiatives, as well as the potential that interest rates remain higher for longer.
This quarter, we confirmed our fiscal 2026 targets of $750 million in revenue and $120 million of EBITDA. We did however, revise our fiscal 2026 EPS target to roughly $1 50, as a result of higher than expected capital spending for future growth initiatives.
As well as the potential that interest rates remained higher for longer.
Speaker 2: Turning to market conditions, there was an overall improvement against this quarter with automotive industry volumes increasing in production flow stabilized.
Turning to market conditions, there was an overall improvement again this quarter with automotive industry volumes, increasing and production flow stabilizing.
Speaker 2: This positively impacted our own efficiency, particularly in our automotive solution segment, which demonstrated impressive sales growth in margin improvement.
This positively impacted our own efficiency, particularly in our automotive solutions segment, which demonstrated impressive sales growth and margin improvement.
Speaker 2: UAW strike action, which commenced in mid-September, had only a very modest impact on our results in Q4. While this impact continued through October before the strikes were resolved, I would describe the impact on our Q1 results as muted.
UAW strike action, which commenced in mid September had only a very modest impact on our results in Q4, while this impact continued through October before the strikes were resolved I would describe the impact on our Q1 results is muted.
Speaker 2: Consumer demand for new vehicles is holding up well despite the financial squeeze from inflationary pressures in rising interest.
Consumer demand for new vehicles is holding up well, despite the financial squeezed from inflationary pressures and rising interest rates.
Speaker 2: We have seen early science that OEMs are responding to the changing environment by increasing incentives and in some cases reducing vehicle prices. This bodes well for automotive suppliers as these actions will help support sales volumes should economic conditions deteriorate further.
We have seen early signs that Oems are responding to the changing environment by increasing incentives and in some cases, reducing vehicle prices. This bodes well for automotive suppliers. As these actions will help support sales volumes should economic conditions deteriorate further.
Speaker 2: Independent industry experts forecast a low single digit increase in overall automotive production volumes North America in Europe through 2024 As with the case Again, this quarter and year we would expect our automotive solution segment to generate higher sales growth and
Independent industry experts forecast, a low single digit increase in overall automotive production volumes for North America and Europe through 2024 as was the case again this quarter and year, we would expect our automotive solutions segment to generate higher sales growth in this.
Speaker 2: As we continue to benefit from the launch of previously awarded programs.
As we continue to benefit from the launch of previously awarded programs.
Speaker 2: Looking at further quoting activity is very robust across the segment which will support our growth over the longer term.
Looking at further quoting activity is very robust across the segment, which will support our growth over the longer term.
Speaker 2: With respect to our own input costs, we continue to see signs of slowing inflation. Labor rates, however, remain a challenge, particularly in Mexico, while foreign exchange rate movements have been an added hit.
With respect to our own input costs, we continue to see signs of slowing inflation labor rates. However remain a challenge, particularly in Mexico, while foreign exchange rate movements have been an added headwind.
Speaker 2: Within our casting extrusion segment, we saw a very strong demand for new die cast molds while Rebuild Work is also continuing to pick up.
Within our casting extrusion segment, we saw very strong demand for new Dicast malls, while rebuild work is also continuing to pick up.
Speaker 2: This is true for powertrain and structural programs. Gigasized dies and of course are additive manufacturing operations.
This is true for powertrain and structural programs Giga sized dies and of course, our additive manufacturing operations.
Speaker 2: Demand for consumable, extrusion tooling get remained soft during the corner as extruders have responded to weaker global macro conditions. However, extrusion demand in a number of end markets such as automotive remained strong.
Demand for consumable extrusion tooling remained soft during the quarter as Extruders have responded to weaker global macro conditions. However, extrusion demand in a number of end markets such as automotive remains strong.
Speaker 2: Cast tools capital to equipment sales within the extrusion and markets remain robust as does the man for its consumable die cast tooling in systems. Cast tools products greatly enhance the productivity and efficiency of the customers and they are clearly gaining significant market share globally.
Capital is capital equipment sales within the extrusion end markets remained robust as does demand for its consumable dicast tooling and systems capitals products greatly enhance the productivity and efficiency of their customers and they are clearly gaining significant market share globally.
Speaker 2: Margins in our cast and extrusion segment improve this quarter as we have been expecting to see. Margin improvement came from numerous areas, but primarily reflect our cost optimization efforts, strategic price increases, and the net benefit of the substantial investments we have been making over the past couple of years. We remain confident that there is much more upside to our margins as our recent green field investment season and our recent capacity additions are utilized.
Margins in our casting and extrusion segment improved this quarter as we have been expecting to see margin improvement came from numerous areas, but primarily reflect our cost optimization efforts strategic price increases and the net benefit of the substantial investments we've been making over the past couple of years, we remain confident that.
There is much more upside to our margins as our recent greenfield investment season, and our recent capacity additions are utilized with that I want to thank all of my exco teammates for a great quarter and year I will now pass the call over to Matthew to discuss the financial highlights.
Speaker 2: With that, I want to thank all of my ex-go team mates for a great quarter and year. I will now pass the call over to Matthew to discuss the financial hype.
Speaker 3: Thank you, Darren. Good morning, ladies and gentlemen. Consolidated sales for the fourth quarter and in September 30th of their 160.2 million, an increase of almost $20 million or 14% from the prior year. Fourth quarter sales at our Audemontal Solution segment increased $22 million or 33% and the casting and extrusion group decreased $1.8 million or 2%. Foreign exchange rate movements increased sales by $4.8 million in the quarter.
Thank you Darren and good morning, ladies and gentlemen, consolidated sales for the fourth quarter ended September 30 was $160 2 million, an increase of almost $20 million or 14% from the prior year fourth quarter sales at our automotive solutions segment increased $22 million or 33% and the casting and extrusion group decreased.
$1 $8 million or 2% foreign exchange rate movements increased sales by $4 8 million in the quarter.
Speaker 3: Annual sales totaled $619 million compared to $490 million last year, an increase of 129 million or 26%.
Annual sales totaled $619 million compared to $490 million last year, an increase of $129 million or 26%.
Speaker 3: And that effect of foreign exchange rate changes increased sale $28 million for the year. Bull year sales at Automotive Solutions segment were $327 million in increase of $73 million or 29 percent. And sales in the Casting and Extrusion Group were $292 million in increase of $56 million or 24 percent.
The net effect of foreign exchange rate changes increased sales $28 million for the year.
Full year sales of automotive solutions segment were $327 million, an increase of $73 million or 29% and sales of the casting and extrusion group for $292 million, an increase of $56 million or 24%.
Speaker 3: The increase reflects 12 months' sales from Haylats, a strong demand from our diecast products, large mold and cast tool, and higher sales in the auto-wound solution segment as auto-wound production volumes continue to increase and program launches generate higher content for vehicle for the company.
The increase reflects 12 months sales from halite strong demand from our die cast products large mold and cast tool and higher sales in the automotive solutions segment as automotive production volumes continue to increase and program launches generated higher content per vehicle for the company.
Speaker 3: Consolidated net income in the fourth quarter was $9 million, $9.2 million or earnings for share of 24 cents compared to 5.6 million or earnings for share of 14 cents in the same quarter last year. An EPS increase was 71%. The effective income tax rate was 25% in the current quarter compared to 26% in the same quarter last year.
Consolidated net income in the fourth quarter was 9 million $9 $2 million or earnings per share of 24 cents compared to $5 6 million or earnings per share of 14 in the same quarter last year and EPS increased to 71% effective income tax rate was 25% in the current quarter compared to 26% and same.
Order last year.
Speaker 3: The Automotive Solutions 7 and Experience of 33% increase in sales are an increase of $21.6 million to $87.6 million from $66 million in the fourth quarter of 2022. Excluding the impact of foreign exchange rate, segment sales increased 19.2 million or 30%. Sales increased at all four of the segments operations. The sales increase was primarily driven by new program launches and to a lesser extent higher vehicle production volume.
The automotive solutions segment experienced a 33% increase in sales or an increase of $21 6 million to $87 6 million from $66 million in the fourth quarter of 2022 <unk>.
Excluding the impact of foreign exchange rate segment sales increased $19 2 million or 30%.
Sales increased in all four of the segments operations.
Sales increase was primarily driven by new program launches and to a lesser extent higher vehicle production volumes.
Speaker 3: North American vehicle production was at 9% compared to a year ago, and European vehicle production was up.
North American vehicle production was up 9% compared to a year ago and European vehicle production was up 6%.
Speaker 3: There's virtually no impact on the UAW strike which started mid-September and was resolved in late October .
There's virtually no impact of the UAW strike, which started in mid September and was resolved in late October.
Speaker 3: Fourth quarter pre-tax earnings in the on-one solution segment total $10 million, which is an increase of 3.5 million or 54% over the same quarter last year.
Fourth quarter pre tax earnings and the automotive solutions segment totaled $10 million, which is an increase of $3 5 million or 54% over the same quarter last year, although production volumes continue to experience some challenges with semiconductor and supply chain constraints. The impact of those factors have reduced considerably. This has allowed all four businesses to benefit.
Speaker 3: Although production volumes continue to experience some challenges with semiconductor and supply change in strains, the impact of those factors has reduced considerably. This has allowed all four businesses to benefit from improved efficiencies and absorption of fixed costs to offset the higher raw material and labor costs experience in recent years.
<unk> from improved efficiencies and absorption of fixed costs to offset the higher raw material and labor costs experienced in recent years. In addition, the stabilized production volumes means improvements at scheduling managing labor downtime fewer expedited shipping and overtime costs experienced by the segment.
Speaker 3: In addition, the stabilized production volumes means improvements to scheduling and managing labor downtime, fewer expedited shipping and overtime costs experienced by the segment.
Speaker 3: The casting and extrusion segment recorded tail of $72.6 million in the fourth quarter compared to $74.4 million last year. A decrease of 1.8 million or 2%.
The casting and extrusion segment recorded sales of $72 $6 million in the fourth quarter compared to $74 4 million last year, a decrease of $1 $8 million or 2%.
Speaker 3: Demand for extrusion tooling was lower in the fourth quarter at the impact of higher interest rates and potential for lower session reduced orders mainly in the building and construction markets. Demand for extrusion tooling and automotive and sustainable energy markets remains strong and growing, but the building and construction market is the largest driver of extrusion tooling.
Demand for extrusion tooling was lower in the fourth quarter as impacted as the impact of higher interest rates and potential for global recession reduced orders, mainly in the building and construction markets demand for extrusion trailing in automotive and sustainable energy markets remained strong and growing but the building and construction market is the largest driver of extrusion tooling and.
Speaker 3: In the die cast market, which primarily serves the automotive industry, demand and order for new molds, associated consumable tooling like shot sleeves, rods, rings, and tips, and rebuild work continue to pick up as industry vehicle production recovers and new electric vehicles and more efficient internal combustion engine transmission platforms are launched.
The die cast market, which primarily serves the automotive industry demand in order for new malls associated consumable tooling like shocks leaves rod rings and tips and rebuild work continued to pick up as industry vehicle production recovers and new electric vehicles and more efficient internal combustion engine transmission platforms are launched.
Speaker 3: In addition, demand for ex-go's industry leading additive 3D printed tooling has continued to gain significant traction as customers focus on greater efficiency with the size and complexity of die-cast tooling continuing to improve.
In addition demand for Exco is industry, leading additive three D. Printed tooling has continued to gain significant traction as customers focus on greater efficiency with the size and complexity of die cast tooling continuing to increase.
Speaker 3: Sales in the quarter were also aided by price increases, which were implemented to protect margins from the higher input costs. Also impacting revenue during the quarter was considerable period over period variance to the recognition of revenues from some of the large new molds, new molds, new build molds, which have high price points relative to other products.
Sales in the quarter were also aided by price increases which were implemented to protect margins from the higher input costs also impacting revenue during the quarter was considerable period over period variance. So the recognition of revenue from some of the large new mall, new malls, newbuild malls, which have higher price points relative to other products in this segment.
Speaker 3: Fourth quarter pre-tax earnings in the casting and extrusion segment total 5.3 million, an increase of $2.8 million or 108% over the same quarter last year.
Fourth quarter pre tax earnings and the cashing in extrusion segment totaled $5 3 million, an increase of $2 $8 million or 108% over the same quarter last year.
Speaker 3: The pre-tax profit improvement is due to improved efficiency in the extergent dye business, including improvements in Halex and the elimination of fiscal 2022 one-time costs associated with the outsourcing due to the extergent heat treatment implementation.
The pre tax profit improvement is due to improved efficiency in extrusion die business, including improvements in helix and the elimination of fiscal 2022 onetime costs associated with the outsourcing due to the extrusion keep treatment implementation as.
Speaker 3: As well, there was improved absorption and efficiencies that cast tools heat treatment operation as the heat treatment operation ramps up, stabilizing raw material and labor costs, and lower cast tool Morocco's startup costs.
As well there was improved absorption and efficiencies of Castro's heat treatment operation at the heat treat operation ramps up stabilizing raw material and labor costs and lower capital Morocco startup costs.
Speaker 3: Program pricing and mix has also improved in the large mold group. A demand has picked up in recent quarters while efficiency initiatives continue to take hold.
Graham pricing and mix has also improved in the large mol group as demand has picked up in recent quarters, while efficiency initiatives continue to take hold.
Speaker 3: Offsetting these reduced costs was half a million dollars increase in depreciation costs associated with increased capital expenditures And start a loss to the cast tools new operation in Mexico
Offsetting these reduced costs was half a million dollars increase in depreciation costs associated with increased capital expenditures and startup losses capsules, new operation in Mexico.
Speaker 3: Management remains focused on reducing its overall cost structure and improving manufacturing efficiencies. And expects such activities together with the sales efforts should lead to improve segment profitability over time.
Management remains focused on reducing its overall cost structure and improving manufacturing efficiencies and expect such activities together with the sales efforts should lead to improved segment profitability over time.
Speaker 3: Offering cash flow before changes in working capital was $23.5 million in the quarter compared to $17.5 million in the prior year quarter. Higher fourth quarter net income depreciation deferred taxes and interest expense contributed to the increased operating cash flow in the quarter.
Operating cash flow before changes in working capital was $23 $5 million in the quarter compared to $17 5 million in the prior year quarter.
Fourth quarter net income depreciation deferred taxes and interest expense contributed to the increased operating cash flow in the quarter cash.
Speaker 3: Cash used for working capital was 5.9 million in fiscal 2023 compared to 21.5 million cash used last year. Current quarter cash used for working capital was driven by higher accounts receivable associated with higher quarter sales and increased inventory reflecting the strength of our backlog and ramping up a new facility.
Cash used for working capital was $5 9 million in fiscal 2023 compared to $21 5 million cash used last year current quarter cash used for working capital was driven by higher accounts receivable associated with higher fourth quarter sales and increased inventory, reflecting the strength of our backlog and ramping up of new facilities.
Speaker 3: Investment and fixed assets of 9.6 million compared to 16.4 million in the prior year quarter. Included in the current year quarter was 5.2 million in growth cap.
And fixed assets of $9 6 million compared to $16 4 million in the prior year quarter included in the current year quarter was $5 2 million of growth capital the.
Speaker 3: The difference relates to timing. The difference from prior year relates to timing of equipment purchases and the completion of major projects.
The difference relates to timing the difference from prior year relates to timing of equipment purchases and the completion of major projects.
Speaker 3: Exgo into the quarter with 94.2 million in that debt. The company has 43 million dollars in available liquidity under its banking facilities at your end.
Exco ended the quarter with $94 2 million in net debt. The company has $43 million in available liquidity under its banking facilities at year end.
Speaker 3: With respect to physical 2024 investments in fixed assets.
With respect to fiscal 2020 for investments in fixed assets.
Speaker 3: We are planning for approximately $49 million in capital expenditures with 25 million in growth cat-backs and 24 million in maintenance caps.
We are planning for approximately $49 million in capital expenditures with $25 million in growth Capex and $24 million in maintenance Capex included in the total spending of approximately $7 million in carryforward projects from longer term projects that were approved in prior years.
Speaker 3: Included in the toll spending are approximately 7 million odds in carried forward projects from longer-term projects that were approved in prior years.
Speaker 3: Exco's financial position remains strong. As such, the company's balance sheet availability and the existing credit facility allows flexibility to support strategic growth initiatives. This combined with cash from operations creates a foundation for management to pursue high value growth capital expenditures, dividends, and other opportunities that may arise.
<unk> financial position remains strong as such the company's balance sheet availability under the existing credit facility allows us flexibility to support strategic growth initiatives. This combined with cash.
Cash from operations creates a foundation for management to pursue high value growth capital expenditures dividends and other opportunities that may arise.
Speaker 3: That concludes my comment. We can now transition Abigail to the Q&A portion of the call.
That concludes my comments, we can now transitioned abigail to the Q&A portion of the call.
Speaker 1: Thank you. At this time, we'll conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. One moment will be compiled again.
Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
Now I'll be compile the Q&A roster.
Speaker 1: As a reminder to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced.
As a reminder.
To ask a question you will need to press star one on your telephone and wait for your name to be announced.
Got it.
Speaker 1: I'm showing no questions at this time. I would like to turn the call back to Darren Kirk for closing room.
And im showing.
No questions at this time I would like to turn the call back to Darren Clarke for closing remarks.
Speaker 2: Thanks Abigail. Actually, we did receive a few questions that were just submitted online, so I'll read them off and address them. Question one, with respect to the revision of EPS in 2026, you are indicating that the appreciation will be higher than previously expected. What do you foresee for CAPEX over the next few years?
Thanks, Abigail actually we did receive a few questions that were just submitted online so I'll read them off and address them.
So question one with respect to the revision of EPS in 2026, you were indicating that depreciation will be higher than previously expected.
What do you foresee for Capex over the next few years, while up take care of that one so as we I just mentioned in my notes.
Speaker 3: Well, I'll take care of that one. So as we, I just mentioned in my notes, we're expecting CapEx in fiscal 2024 to be approximately $49 million.
We're expecting capex in fiscal 2024 to be approximately $49 million and that includes $7 million of carryover from last year or prior years. The lead time on some of this capital is quite long and it's actually getting a little longer so the timing of that $49 million. Some of it may carryover into next year.
Speaker 3: That includes 7 million of carryover from last year or prior years. The lead time on some of this capital is quite long and it's actually getting a little longer. So the timing of that $49 million, some of it may carry over into next year. However, we are looking at a lot of new opportunities and we do not shy away from building and adding capital that's going to support us.
However, we are looking at a lot of new.
Opportunities and are we do not shy away from building and adding capital that's going to support us. So I expect our capex to remain elevated.
Speaker 3: So I expect our cap-fex to remain elevated over the next couple of years. Again, 49 this year. I don't have an estimate exactly for next year, but I'd say in excess of 40 million and probably pretty steady at that level for the next year.
Over the next couple of years again 49. This year I don't have an estimate exactly for next year, but I would say in excess of $40 million and probably pretty steady at that level for the next year or two.
Speaker 2: Next question I have is, I EBITDA margin in the casting and extrusion segments on a nice improvement this quarter. What were the key drivers of this improvement and how do you reach your 20% margin target? Yeah, thanks for the question.
Okay.
Our next question I have is EBITDA margin in the casting and extrusion segment saw a nice improvement this quarter what were the key drivers of this improvement and how do you reach your 20% margin target.
Yes, thanks for the question.
Speaker 2: I guess, you know, the biggest driver of the margin improvement was
I guess the biggest driver of the margin improvement was.
Speaker 2: A lot of these investments that we've been making over the last couple of years, as we've indicated,
A lot of these investments that we've been making over the last couple of years as we've indicated.
Speaker 2: throughout the investment period. There's a lot of operational disruption to install the new equipment. We've got startup losses for new plants. We had to outsource some of our heat treat to operations while we install new energy efficient heat treat operations within our own facilities. And I guess we've turned the corner with respect to the aggregate impact of these investments such that we're now starting to see the margin lift.
Throughout the investment period, there is a lot of operational disruption to install the new equipment, we've got start up losses for new.
Plant, we had to outsource some of our heat treat to operations, while we installed new energy efficient heat treat operations within our own facilities and I guess, we've turned the corner with respect to the aggregate impact of these investments such that we're now starting to see the margin lift.
Speaker 2: from them. And on top of that, we've had continued drive for efficiency throughout the segment. And all three
From them and on top of that we've had a continued drive for efficiency throughout the segment and all three.
Speaker 2: Casted to a large mold and extrusion did see improvement in their margins. This quarter.
Cash to a large molds and extrusion did see improvements in their margins this quarter.
Speaker 2: So, and say the last thing with respect to the recent improvement we've seen is we've worked through a lot of the older, much...
Yes.
So I'd say the last thing.
With respect to the recent improvement we've seen is we've.
We've worked through a lot of the.
Older.
Speaker 2: lower price programs and our large mold segment. And the market conditions in that business are improving rapidly, such that demand is increasing, particularly for the capabilities that we now have with these giga type dies. And so that is starting to have an impact as well. And continuation of all of these things plus the seasoning of our Greenfield plant.
Much.
Lower priced programs that are large mold.
Segment.
The market conditions in that business are.
Improving rapidly.
Such that demand is increasing particularly for the capabilities that we now have with these gigabyte at dice and so that is starting to have an impact as well.
Continuation of all of these things plus the seasoning of our Greenfield plants.
Speaker 2: that are still incurring cash drag on our results will enable us to reach our 20% margin by 20%.
We are still incurring cash drag.
Drag.
On our results will enable us to reach our 20% <unk>.
<unk> by 2026.
Speaker 2: So the last question I have is I was a little surprised that you were guiding the UAW strike won't have a material impact on your results. What explains?
And so the last question I have is I was a little surprised that you are guiding <unk>.
W strike won't have a material impact on your results what explains this.
Speaker 2: I would say that the biggest impact you would expect is in the auto solutions group. And it's not to say that the impact is zero, but our operations are very diverse with significant non-domestic OEM exposure. And it's really that diversity that plus the impact of the programs that we were on.
I would say that the biggest impact you would expect is in the auto solutions group and it's not to say that the impact is zero.
Our operations are very diverse with significant non domestic.
OEM exposure and.
It's really that that diversity.
Plus the impact of the programs that we were on.
Speaker 2: that has given us kind of a muted impact. Again, not to say it's zero, but it shouldn't be material within context of the overall.
That.
Has given us kind of a muted impact.
Again, not to say, it's zero, but.
It shouldn't be material within context of the overall results.
Speaker 2: So that's all the questions I have. And I want to thank everyone for participating. And we'll look forward to talking to you again next.
So thats.
All the questions they have and.
I want to thank everyone for participating and we'll look forward to talking to you again next quarter.
Speaker 1: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
Thank you for your participation in today's conference. This does conclude the program you may now disconnect.
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Yes.
Okay.
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Okay.