Exco Q1 2026 Exco Technologies Ltd Earnings Call | AllMind AI Earnings | AllMind AI
Q1 2026 Exco Technologies Ltd Earnings Call
Operator: Good day, and thank you for standing by. Welcome to Exco Technologies Limited Q1 2026 Results. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question-and-answer session. To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. I would now like to hand the conference over to your speaker today, President and CEO, Mr. Darren Kirk.
Good day, and thank you for standing by. Welcome to Exco Technologies Limited Q1 2026 Results. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question-and-answer session. To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. I would now like to hand the conference over to your speaker today, President and CEO, Mr. Darren Kirk.
Speaker #1: today's conference is being recorded. Please be advised that After the speakers' presentation, there will be a question-and-answer session. To ask a question, please press star one-one on your telephone, and wait for your name to be announced.
Speaker #1: withdraw your question, please press star To one-one again. I would now like to hand the conference over to your speaker today, President and CEO, Mr. Darren Kirk.
Speaker #2: Thank you, Josh, and good morning to everyone joining us. Welcome to Exco Technologies' fiscal 2026 first quarter conference call. I'll begin today with an overview of our operations and strategic progress.
Darren Kirk: Thank you, Josh, and good morning to everyone joining us. Welcome to Exco Technologies Fiscal 2026 Q1 Conference Call. I'll begin today with an overview of our operations and strategic progress. I will then hand it over to Matthew Posno, our CFO, to review the financial details for the quarter. Afterwards, I'll return to discuss our outlook before opening the call for questions. Before we proceed, I'd like to remind everyone that our discussion today contains forward-looking information. I ask that you refer to the cautionary notes included in yesterday's news release, and in our continuous disclosure filings, which apply to today's discussion. We are pleased to report a solid start to fiscal 2026.
Darren Kirk: Thank you, Josh, and good morning to everyone joining us. Welcome to Exco Technologies Fiscal 2026 Q1 Conference Call. I'll begin today with an overview of our operations and strategic progress. I will then hand it over to Matthew Posno, our CFO, to review the financial details for the quarter. Afterwards, I'll return to discuss our outlook before opening the call for questions. Before we proceed, I'd like to remind everyone that our discussion today contains forward-looking information. I ask that you refer to the cautionary notes included in yesterday's news release, and in our continuous disclosure filings, which apply to today's discussion. We are pleased to report a solid start to fiscal 2026.
Speaker #2: I will then hand it over to Matthew Posno, our CFO, to review the financial details for the quarter. Afterwards, I'll return to discuss our outlook before opening the call for questions.
Speaker #2: Before we proceed, I'd like to remind everyone that our discussion today contains forward-looking information. I ask that you refer to the cautionary notes included in yesterday's news release and in our continuous disclosure filings, which apply to today's discussion.
Speaker #2: We are pleased to report a solid start to fiscal 2026. In a global environment still characterized by economic fluidity and shifting trade policies, Exco delivered consolidated sales of almost $150 million for the first quarter, an increase of 4% over the prior year.
Darren Kirk: In a global environment still characterized by economic fluidity and shifting trade policies, Exco delivered consolidated sales of almost CAD 150 million for Q1, an increase of 4% over the prior year. More importantly, we translated this top-line stability into bottom-line growth, with net income rising to CAD 4.8 million and earnings per share reaching CAD 0.13, up from CAD 0.11 a year ago. This performance underscores the resilience we have built into our business model, capitalizing on relatively stable vehicle production volumes while navigating tariff-related uncertainties. Our diversification strategy and our relentless focus on operational efficiency are bearing fruit. We are seeing incremental benefits of our intense capital investment cycle over the past few years as our newer facilities ramp up and our cost structures optimize.
In a global environment still characterized by economic fluidity and shifting trade policies, Exco delivered consolidated sales of almost CAD 150 million for Q1, an increase of 4% over the prior year. More importantly, we translated this top-line stability into bottom-line growth, with net income rising to CAD 4.8 million and earnings per share reaching CAD 0.13, up from CAD 0.11 a year ago. This performance underscores the resilience we have built into our business model, capitalizing on relatively stable vehicle production volumes while navigating tariff-related uncertainties. Our diversification strategy and our relentless focus on operational efficiency are bearing fruit. We are seeing incremental benefits of our intense capital investment cycle over the past few years as our newer facilities ramp up and our cost structures optimize.
Speaker #2: More importantly, we translated this top-line stability income rising to 4.8 into bottom-line growth with net million and earnings per share reaching 13 cents, up from 11 cents a year ago.
Speaker #2: This performance underscores the resilience we have built into our business model. Capitalizing on relatively stable vehicle production volumes, while navigating tariff-related uncertainties, our diversification strategy, and our relentless focus on operational efficiency, are bearing benefits of our intense capital fruit.
Speaker #2: investment cycle over the past few We are seeing incremental years, as our newer facilities ramp up and our cost structures optimize. Let's look at our segment, starting with automotive solutions, where we saw a very encouraging turnaround this quarter.
Darren Kirk: Let's look at our segments, starting with Automotive Solutions, where we saw a very encouraging turnaround this quarter. The segment posted a robust sales growth, increasing 10% over the same quarter last year. To add some color to this performance, we are seeing a return to normal in the inventory channels. If you recall, in the prior year quarter, we faced a significant headwind from customers destocking their accessory inventories. That pressure has abated, and we are now seeing a cleaner run rate that better reflects actual end market demand. This growth was further bolstered by relatively stable automotive production volumes in both North America and Europe, alongside a favorable vehicle mix. We have substantial content on larger SUVs and crossover platforms, and as these continue to sell well, we benefit. But the real story here is on the profitability side.
Let's look at our segments, starting with Automotive Solutions, where we saw a very encouraging turnaround this quarter. The segment posted a robust sales growth, increasing 10% over the same quarter last year. To add some color to this performance, we are seeing a return to normal in the inventory channels. If you recall, in the prior year quarter, we faced a significant headwind from customers destocking their accessory inventories. That pressure has abated, and we are now seeing a cleaner run rate that better reflects actual end market demand. This growth was further bolstered by relatively stable automotive production volumes in both North America and Europe, alongside a favorable vehicle mix. We have substantial content on larger SUVs and crossover platforms, and as these continue to sell well, we benefit. But the real story here is on the profitability side.
Speaker #2: The segment posted a robust sales growth, increasing 10% over the same quarter last year. To add some color to this performance, we are seeing a return to normal in the inventory channels.
Speaker #2: If you recall, in the prior year quarter, we faced a significant headwind from customers destocking their accessory inventories. That pressure has abated, and we are now seeing a cleaner run rate that better reflects actual end-market demand.
Speaker #2: further bolstered by relatively stable automotive This growth was production volumes in both North America and Europe, alongside a favorable vehicle mix. We have substantial content on larger SUVs and crossover platforms, and as these continue to sell well, we benefit.
Speaker #2: the real story here is on the But profitability side. Pre-tax profit 6.5 million. This surged 37% to wasn't just about higher sales, giving us better overhead absorption, though that certainly helped.
Darren Kirk: Pre-tax profit surged 37% to CAD 6.5 million. This wasn't just about higher sales giving us better overhead absorption, though that certainly helped. It was about execution in the face of persistent inflation. As many of you know, labor costs in Mexico have been a structural challenge for the entire industry due to sharp government-mandated minimum wage increases. I am incredibly proud of how our management team have handled this. They didn't just absorb the cost, they offset it. Their aggressive productivity improvements and the development of new automation. We managed to keep our overall labor costs effectively flat compared to the prior year, despite those wage hikes. This is a significant operational win. We are also being much more disciplined on pricing. We do not chase volume for volume's sake.
Pre-tax profit surged 37% to CAD 6.5 million. This wasn't just about higher sales giving us better overhead absorption, though that certainly helped. It was about execution in the face of persistent inflation. As many of you know, labor costs in Mexico have been a structural challenge for the entire industry due to sharp government-mandated minimum wage increases. I am incredibly proud of how our management team have handled this. They didn't just absorb the cost, they offset it. Their aggressive productivity improvements and the development of new automation. We managed to keep our overall labor costs effectively flat compared to the prior year, despite those wage hikes. This is a significant operational win. We are also being much more disciplined on pricing. We do not chase volume for volume's sake.
Speaker #2: It was about execution in the face of persistent inflation. As many of you know, labor costs in Mexico have been a structural challenge for the entire industry due to sharp government-mandated minimum wage increases.
Speaker #2: I am incredibly proud of how our management team has handled this. They didn't just absorb the cost; they offset it. Their aggressive productivity improvements and the development of new automation, we managed to keep our overall labor costs effectively flat compared to the prior year, despite those wage hikes.
Speaker #2: This is a significant operational win. We are also being much more disciplined on pricing. We do not chase volume for volume's sake. On new program launches, we are ensuring that our pricing reflects the reality of today's higher economic and input costs.
Darren Kirk: On new program launches, we are ensuring that our pricing reflects the reality of today's higher economic and input costs. This pricing discipline, combined with our stabilized cost structure, gives us confidence that we can sustain and improve these margins, even if the broader global economy softens. Turning to the Casting and Extrusion segment. Sales for the quarter were CAD 70.2 million, down slightly by 2% compared to last year. It is important to flesh out the drivers here, as the top-line numbers mask some significant shifts in the market. Sales were negatively impacted by a sharp slowdown in die-cast molds, which was largely a reaction to the political landscape in the United States. When President Trump returned to office, many OEMs paused or even canceled then-current programs to assess the new regulatory and emissions landscape.
On new program launches, we are ensuring that our pricing reflects the reality of today's higher economic and input costs. This pricing discipline, combined with our stabilized cost structure, gives us confidence that we can sustain and improve these margins, even if the broader global economy softens. Turning to the Casting and Extrusion segment. Sales for the quarter were CAD 70.2 million, down slightly by 2% compared to last year. It is important to flesh out the drivers here, as the top-line numbers mask some significant shifts in the market. Sales were negatively impacted by a sharp slowdown in die-cast molds, which was largely a reaction to the political landscape in the United States. When President Trump returned to office, many OEMs paused or even canceled then-current programs to assess the new regulatory and emissions landscape.
Speaker #2: This pricing discipline combined with our stabilized cost structure gives us confidence that we can sustain and improve these margins even if the broader global economy softens.
Speaker #2: Turning to the casting and extrusion segment, sales for the quarter were 70.2 million, down slightly by 2% compared to last year. It is important to flesh out the drivers here, as the top-line numbers mask some significant shifts in the market.
Speaker #2: by a sharp slowdown in die-cast molds, which was Sales were negatively impacted largely a reaction to the political landscape in the United States. When President Trump returned to office, many OEMs paused or even canceled then-current programs to assess the new regulatory and emissions landscape.
Darren Kirk: Consequently, they pivoted aggressively away from pure EV platforms, which hurt our immediate pipeline of EV, EV programs, and have since refocused their efforts on hybrids and internal combustion engine vehicles. The good news is that the dust is settling. Tooling demand for these hybrid and ICE platforms has picked up substantially in the past quarter, and our quoting activity is currently very strong. Given that lead times in this business are approximately six months, we expect die-cast tooling revenues will begin to tick up late in Q2, and then continue to improve for the remainder of the year. And while the EV timeline has shifted, electrification is continuing to move ahead, albeit at a slower pace. We remain confident that demand for giga and mega casting applications associated with EVs will rise in the future from a number of customers.
Consequently, they pivoted aggressively away from pure EV platforms, which hurt our immediate pipeline of EV, EV programs, and have since refocused their efforts on hybrids and internal combustion engine vehicles. The good news is that the dust is settling. Tooling demand for these hybrid and ICE platforms has picked up substantially in the past quarter, and our quoting activity is currently very strong. Given that lead times in this business are approximately six months, we expect die-cast tooling revenues will begin to tick up late in Q2, and then continue to improve for the remainder of the year. And while the EV timeline has shifted, electrification is continuing to move ahead, albeit at a slower pace. We remain confident that demand for giga and mega casting applications associated with EVs will rise in the future from a number of customers.
Speaker #2: pivoted aggressively away from pure EV platforms, which hurt our Consequently, they immediate pipeline of EV programs, and have since refocused their efforts on hybrids and internal combustion engine vehicles.
Speaker #2: The good news is that the dust is settling. Tooling demand for these hybrid and ICE platforms has picked up substantially in the past quarter, and our quoting activity is currently very strong.
Speaker #2: Given that lead times in this business are approximately six months, we expect die-cast tooling revenues will begin to tick up late in Q2 and then continue to improve through the remainder of the year.
Speaker #2: And while the EV timeline has shifted, electrification is continuing to move ahead, albeit at a slower pace. We remain confident that demand for Giga and Megacasting applications associated with EVs will rise in the future from a number of customers.
Speaker #2: And beyond automotive powertrain and structural applications, we are seeing a pickup in die-cast demand in other sectors. We are seeing activity in marine, heavy trucks, energy, and even telecom, which provides additional growth drivers and helps diversify our revenue base.
Darren Kirk: And beyond automotive powertrain and structural applications, we are seeing a pickup in die-cast demand in other sectors. We are seeing activity in marine, heavy trucks, energy, and even telecom, which provides additional growth drivers and helps diversify our revenue base. Finally, the onshoring of tooling remains a significant tailwind for us. As supply chains regionalize, we are extremely well positioned to capture that volume as well. On the extrusion side, the business continued to perform well. I'd like to add some color to the dynamics of this market, as it has proven to be incredibly resilient. There are many shock absorbers built into this industry. Because the ultimate applications for aluminum extrusions are so diverse, ranging from building and construction to automotive to consumer goods, weakness in one area is often offset by strength in another.
And beyond automotive powertrain and structural applications, we are seeing a pickup in die-cast demand in other sectors. We are seeing activity in marine, heavy trucks, energy, and even telecom, which provides additional growth drivers and helps diversify our revenue base. Finally, the onshoring of tooling remains a significant tailwind for us. As supply chains regionalize, we are extremely well positioned to capture that volume as well. On the extrusion side, the business continued to perform well. I'd like to add some color to the dynamics of this market, as it has proven to be incredibly resilient. There are many shock absorbers built into this industry. Because the ultimate applications for aluminum extrusions are so diverse, ranging from building and construction to automotive to consumer goods, weakness in one area is often offset by strength in another.
Speaker #2: Finally, the onshoring of tooling remains a significant tailwind for us. As supply chains regionalize, we are extremely well-positioned to capture that volume as well.
Speaker #2: On the extrusion side, the business continued to perform well. I'd like to add some color to the dynamics of this market, as it has proven to be incredibly resilient.
Speaker #2: There are many shock absorbers built into this industry. Because the ultimate applications for aluminum extrusions are so diverse, ranging from building and construction to automotive to consumer goods, weakness in one area is often offset by strength in another.
Speaker #2: But beyond that, there is a counter-cyclical dynamic that plays to our benefit. When general extrusion activity slows, extruders tend to accept shorter production runs and more complex jobs to keep their presses utilized.
Darren Kirk: But beyond that, there is a countercyclical dynamic that plays to our benefit. When general extrusion activity slows, extruders tend to accept shorter production runs and more complex jobs to keep their presses utilized. These complex, short-run jobs are actually more tooling intensive, which drives incremental demand for our dies. Furthermore, in slower market conditions, we often see demand for our capital equipment items increase. Extruders use these quieter periods to focus on maintenance of their operations and upgrade to efficiency, which benefits our cast tool business. Finally, we are seeing a powerful new demand vector emerging, the rise of artificial intelligence in data centers. These facilities generate immense heat and require massive amounts of aluminum extrusion for cooling solutions, such as complex heat sinks and structural racking.
But beyond that, there is a countercyclical dynamic that plays to our benefit. When general extrusion activity slows, extruders tend to accept shorter production runs and more complex jobs to keep their presses utilized. These complex, short-run jobs are actually more tooling intensive, which drives incremental demand for our dies. Furthermore, in slower market conditions, we often see demand for our capital equipment items increase. Extruders use these quieter periods to focus on maintenance of their operations and upgrade to efficiency, which benefits our cast tool business. Finally, we are seeing a powerful new demand vector emerging, the rise of artificial intelligence in data centers. These facilities generate immense heat and require massive amounts of aluminum extrusion for cooling solutions, such as complex heat sinks and structural racking.
Speaker #2: These complex short-run jobs are actually more tooling-intensive, which drives incremental demand for our dies. Furthermore, in slower market conditions, we often see demand for our capital equipment items increase.
Speaker #2: Extruders use these quieter periods to focus on maintenance of their operations and upgrade to efficiency, which benefits our cast tool business. Finally, we are seeing a powerful new demand vector emerging: the rise of artificial intelligence and data centers.
Speaker #2: These facilities generate immense heat and require massive amounts of aluminum extrusion for cooling solutions, such as complex heat sinks and structural racking. As the buildout of these digital infrastructure accelerates, it is driving demand for high-precision aluminum extrusions and, by extension, our advanced tooling.
Darren Kirk: As the build-out of this digital infrastructure accelerates, it is driving demand for high-precision aluminum extrusions, and by extension, our advanced tooling. Before I discuss capital allocation, I want to highlight something that underpins all of these results, the incredible culture of innovation we have fostered at Exco. Innovation is not just a department here; it is woven into our DNA, from product development to process automation. I am incredibly proud of my teammates across the company for driving these advancements. We are seeing this clearly in our leadership with additively produced tooling, but also in less visible, yet equally critical areas. For example, we are now utilizing machine learning and AI to automate complex programming tasks, reducing human error and speeding up our workflows. There are numerous examples like this across the company, where our teams are challenging the status quo.
As the build-out of this digital infrastructure accelerates, it is driving demand for high-precision aluminum extrusions, and by extension, our advanced tooling. Before I discuss capital allocation, I want to highlight something that underpins all of these results, the incredible culture of innovation we have fostered at Exco. Innovation is not just a department here; it is woven into our DNA, from product development to process automation. I am incredibly proud of my teammates across the company for driving these advancements. We are seeing this clearly in our leadership with additively produced tooling, but also in less visible, yet equally critical areas. For example, we are now utilizing machine learning and AI to automate complex programming tasks, reducing human error and speeding up our workflows. There are numerous examples like this across the company, where our teams are challenging the status quo.
Speaker #2: Before I discuss capital allocation, I want to highlight something that underpins all of these results. The incredible culture of innovation we have fostered at Exco.
Speaker #2: Innovation is not just the department here. It is woven into our DNA from product development to process automation. I am incredibly proud of my teammates across the company for driving these advancements.
Speaker #2: We are seeing this clearly in our leadership with adequately produced tooling, but also in less visible yet equally critical areas. For example, we are now utilizing machine learning and AI to automate complex programming tasks, reducing human error and speeding up our workflows.
Speaker #2: There are numerous examples like this across the company, where our teams are challenging the status quo. Whether it is deploying increased automation in our automotive solutions group or utilizing 3D-printed printing to solve complex tooling challenges, for our die-cast customers, this culture of innovation is what allows us to stay ahead of the curve and deliver value even in challenging markets.
Darren Kirk: Whether it is deploying increased automation in our Automotive Solutions group, or utilizing 3D printing to solve complex cooling challenges for our die-cast customers, this culture of innovation is what allows us to stay ahead of the curve and deliver value even in challenging markets. With our major growth capital initiatives now largely complete, we are pivoting our capital allocation strategy. You will see capital spending trend below historical averages as we prioritize harvesting the returns from these investments. I will now turn the call over to Matthew to discuss the financial highlights in more detail.
Whether it is deploying increased automation in our Automotive Solutions group, or utilizing 3D printing to solve complex cooling challenges for our die-cast customers, this culture of innovation is what allows us to stay ahead of the curve and deliver value even in challenging markets. With our major growth capital initiatives now largely complete, we are pivoting our capital allocation strategy. You will see capital spending trend below historical averages as we prioritize harvesting the returns from these investments. I will now turn the call over to Matthew to discuss the financial highlights in more detail.
Speaker #2: With our major growth capital initiatives now largely complete, we are pivoting our capital allocation strategy, and you will see capital spending trend below historical averages as we prioritize harvesting the returns from these investments.
Speaker #2: I will now turn the call over to Matthew to discuss the financial highlights in more detail. Thank you, Darren. Good morning, ladies and gentlemen.
Matthew Posno: Thank you, Darren. Good morning, ladies and gentlemen. Consolidated sales for Q1 ended 31 December 2025 were CAD 149.5 million, compared to CAD 143.6 million in the same quarter last year, an increase of CAD 6 million or 4%. Foreign exchange movements increased sales by approximately CAD 1 million, primarily due to the strengthening of the euro versus the Canadian dollar. Consolidated net income for the quarter was CAD 4.8 million, or CAD 0.13 per share, compared with CAD 4.2 million, or CAD 0.11 per share in the prior year quarter. The effective income tax rate for this quarter was 31.8%, compared to 35.8% last year, reflecting geographic mix, foreign tax rate differentials, and losses that cannot be tax affected for accounting purposes.
Matthew Posno: Thank you, Darren. Good morning, ladies and gentlemen. Consolidated sales for Q1 ended 31 December 2025 were CAD 149.5 million, compared to CAD 143.6 million in the same quarter last year, an increase of CAD 6 million or 4%. Foreign exchange movements increased sales by approximately CAD 1 million, primarily due to the strengthening of the euro versus the Canadian dollar. Consolidated net income for the quarter was CAD 4.8 million, or CAD 0.13 per share, compared with CAD 4.2 million, or CAD 0.11 per share in the prior year quarter. The effective income tax rate for this quarter was 31.8%, compared to 35.8% last year, reflecting geographic mix, foreign tax rate differentials, and losses that cannot be tax affected for accounting purposes.
Speaker #2: Consolidated Sales for the first quarter ended December 31, 2025, where $149.5 million compared to $143.6 million in the same quarter last year. An increase of $6 million or 4%.
Speaker #2: Foreign exchange movements increased sales by approximately $1 million, primarily due to the strengthening of the euro versus the Canadian dollar. Consolidated net income for the quarter was $4.8 million, or 13 cents per share, compared with $4.2 million, or 11 cents per share.
Speaker #2: In the prior year quarter, the effective income tax rate for the quarter was 31.8%, compared to 35.8% last year, reflecting geographic mix, foreign tax rate differentials, and losses that cannot be tax affected for accounting purposes.
Speaker #2: Quarterly Consolidated EBITDA was $17.4 million, representing 12% of sales, compared to $16.7 million or 12% in the prior year period. First quarter sales in the automotive solutions segment were $79.3 million, up 7.2 million or 10% from the prior year quarter.
Matthew Posno: Quarterly consolidated EBITDA was CAD 17.4 million, representing 12% of sales, compared to CAD 16.7 million, or 12%, in the prior year period. Q1 sales in the Automotive Solutions segment were CAD 79.3 million, up CAD 7.2 million, or 10% from the prior year quarter. The increase reflected relatively stable automotive production volumes in North America and Europe, new product launches, a favorable vehicle mix, and the impact of inventory destocking in the accessory channel during the prior year quarter. Sales should continue to benefit from recent and upcoming program launches, which will further increase content per vehicle, and quoting activity remains encouraging. Pre-tax profit for the Automotive Solutions segment was CAD 6.5 million dollars, an increase of CAD 1.8 million, or 37%, from the prior year quarter.
Quarterly consolidated EBITDA was CAD 17.4 million, representing 12% of sales, compared to CAD 16.7 million, or 12%, in the prior year period. Q1 sales in the Automotive Solutions segment were CAD 79.3 million, up CAD 7.2 million, or 10% from the prior year quarter. The increase reflected relatively stable automotive production volumes in North America and Europe, new product launches, a favorable vehicle mix, and the impact of inventory destocking in the accessory channel during the prior year quarter. Sales should continue to benefit from recent and upcoming program launches, which will further increase content per vehicle, and quoting activity remains encouraging. Pre-tax profit for the Automotive Solutions segment was CAD 6.5 million dollars, an increase of CAD 1.8 million, or 37%, from the prior year quarter.
Speaker #2: The increase reflected relatively stable automotive production volumes in launches, a favorable vehicle mix, and the North America and Europe. New product impact of inventory destocking and the accessory channel during the prior year quarter.
Speaker #2: Sales should continue to benefit from recent and upcoming program launches, which will further increase content per vehicle and quoting activity remains encouraging. Pretax profit for the automotive solutions segment was $6.5 million, an increase of 1.8 million or 37% from the prior year quarter.
Matthew Posno: The improvement was driven by higher volumes and favorable mix, supporting improved overhead absorption. Labor costs in Mexico remain an industry-wide challenge due to mandated wage increases. However, management continues to emphasize productivity initiatives and pricing discipline, particularly on new programs, to mitigate cost inflation. Q1 sales in the Casting and Extrusion segment were CAD 70.2 million, down CAD 1.3 million, or 2%, versus the prior year quarter. Favorable foreign exchange movements contributed approximately CAD 700,000 to sales. Extrusion tooling sales performed well year-over-year, supported by a diversified range of end markets, including building and construction, transportation, sustainable energy, and electrical components. Die-cast tooling sales declined as OEMs deferred new tooling, new program launches amid softer EV demand, regulatory uncertainty, and tariff-related considerations, with a shift toward hybrid and smaller internal combustion engine platforms.
The improvement was driven by higher volumes and favorable mix, supporting improved overhead absorption. Labor costs in Mexico remain an industry-wide challenge due to mandated wage increases. However, management continues to emphasize productivity initiatives and pricing discipline, particularly on new programs, to mitigate cost inflation. Q1 sales in the Casting and Extrusion segment were CAD 70.2 million, down CAD 1.3 million, or 2%, versus the prior year quarter. Favorable foreign exchange movements contributed approximately CAD 700,000 to sales. Extrusion tooling sales performed well year-over-year, supported by a diversified range of end markets, including building and construction, transportation, sustainable energy, and electrical components. Die-cast tooling sales declined as OEMs deferred new tooling, new program launches amid softer EV demand, regulatory uncertainty, and tariff-related considerations, with a shift toward hybrid and smaller internal combustion engine platforms.
Speaker #2: The improvement was driven by higher volumes and favorable mix, supporting improved overhead absorption. Labor costs from Exco remain an industry-wide challenge due to mandated wage increases.
Speaker #2: However, management continues to emphasize productivity initiatives and pricing discipline, particularly on new programs, to mitigate cost inflation. First quarter sales in the Casting and Extrusion segment were $70.2 million, down $1.3 million, or 2%, versus the prior year quarter.
Speaker #2: Favorable foreign exchange movements contribute approximately $700,000 to sales. Extrusion tooling sales performed well year over year, supported by a diversified range of end transportation, sustainable energy, and electrical markets, including building and construction, components.
Speaker #2: Die-cast tooling sales declined as OEMs deferred new tooling new program launches amid softer EV demand, regulatory uncertainty, and tariff-related considerations. With a shift toward hybrid and smaller internal combustion engine platforms, quoting activity and orders for die-cast tooling improved during the quarter, and demand for Exco's additive or 3D-printed tooling remained strong.
Matthew Posno: Quoting activity and orders for Die-cast tooling improved during the quarter, and demand for Exco's additive or 3D printed tooling remains strong, particularly for larger, more complex applications, such as Giga Press molds. The segment reported pre-tax profit of $3.5 million, down $200,000, or 6%, from last year. The decline reflected lower volumes, unfavorable mix, higher direct labor and overhead costs, and increased depreciation. Performance at newer operations, including Castool greenfield facilities and Extrusion Germany, weighed on results, as these remained a focus area for improvements as operations scale. Management continues to emphasize pricing initiatives, operational efficiency, process standardization, and automation to support improved profitability over time. Corporate expenses for the quarter were $1.9 million, compared to $400,000 in the prior year quarter.
Quoting activity and orders for Die-cast tooling improved during the quarter, and demand for Exco's additive or 3D printed tooling remains strong, particularly for larger, more complex applications, such as Giga Press molds. The segment reported pre-tax profit of $3.5 million, down $200,000, or 6%, from last year. The decline reflected lower volumes, unfavorable mix, higher direct labor and overhead costs, and increased depreciation. Performance at newer operations, including Castool greenfield facilities and Extrusion Germany, weighed on results, as these remained a focus area for improvements as operations scale. Management continues to emphasize pricing initiatives, operational efficiency, process standardization, and automation to support improved profitability over time. Corporate expenses for the quarter were $1.9 million, compared to $400,000 in the prior year quarter.
Speaker #2: Particularly for larger, more complex applications such as gigapress molds. The segment reported pretax profit of $3.5 million, down $200,000 or 6% from last year.
Speaker #2: Decline reflected lower volumes, unfavorable mix, higher direct labor and overhead costs, and increased depreciation. Performance at newer operations, including cast tool greenfield facilities and extrusion Germany, weighed on results.
Speaker #2: As these remained a focus area for improvements as operations scale. Management continues to emphasize pricing initiatives, operational efficiency, process standardization, and automation to support improved profitability over time.
Speaker #2: Corporate expenses for the quarter were $1.9 million, compared to $400,000 in the prior year quarter. The increase was driven primarily by foreign exchange losses related to the strengthening Canadian dollar on balance sheet accounts.
Matthew Posno: The increase was driven primarily by foreign exchange losses related to the strengthening Canadian dollar on balance sheet accounts. Cash provided by operating activities was CAD 10.2 million, compared to CAD 10.4 million in the prior year quarter. Free cash flow for the quarter was CAD 4.8 million, up from CAD 3.8 million last year. Cash used in investing activities totaled CAD 4.5 million, compared to CAD 7.7 million in the prior year quarter. Growth capital expenditures were CAD 200,000, while maintenance CapEx totaled CAD 4.3 million. Following several years of elevated growth-related investments, management intends to moderate capital spending and focus on optimizing the performance of existing assets. Fiscal 2026 capital spending is forecasted CAD 28 million compared to CAD 36 million in fiscal 2025.
The increase was driven primarily by foreign exchange losses related to the strengthening Canadian dollar on balance sheet accounts. Cash provided by operating activities was CAD 10.2 million, compared to CAD 10.4 million in the prior year quarter. Free cash flow for the quarter was CAD 4.8 million, up from CAD 3.8 million last year. Cash used in investing activities totaled CAD 4.5 million, compared to CAD 7.7 million in the prior year quarter. Growth capital expenditures were CAD 200,000, while maintenance CapEx totaled CAD 4.3 million. Following several years of elevated growth-related investments, management intends to moderate capital spending and focus on optimizing the performance of existing assets. Fiscal 2026 capital spending is forecasted CAD 28 million compared to CAD 36 million in fiscal 2025.
Speaker #2: Cash provided by operating activities was $10.2 million, compared to $10.4 million in the prior year quarter. Free cash flow for the quarter million last year.
Speaker #2: Cash used in investing activities totaled $4.5 million, compared to $7.7 million in the prior year quarter. Growth capital expenditures were $200,000, while maintenance CapEx totaled $4.3 million.
Speaker #2: Following several years of elevated growth-related investments, management intends to moderate capital spending and focus on optimizing the performance of existing assets. Fiscal 2026 capital spending is forecast at $28 million, compared to $36 million in fiscal 2025.
Speaker #2: Exco ended the quarter with net debt of $67.1 million, unchanged from September 30, 2025. The company had cash with $24.6 million and $59.8 million of available liquidity under its $151 million committed credit facility, maturing March 2027.
Matthew Posno: Exco ended the quarter with net debt of CAD 67.1 million, unchanged from 30 September 2025. The company had cash of CAD 24.6 million and CAD 59.8 million of available liquidity under its CAD 151 million dollar committed credit facility, maturing March 2027. Exco remained in compliance with all financial covenants at quarter end. Our financial position remains strong and continues to provide flexibility to support strategic investments, dividends, and other opportunities as they arrive, arise, sorry. That concludes my comments. We can now transition back to Darren for his closing remarks.
Exco ended the quarter with net debt of CAD 67.1 million, unchanged from 30 September 2025. The company had cash of CAD 24.6 million and CAD 59.8 million of available liquidity under its CAD 151 million dollar committed credit facility, maturing March 2027. Exco remained in compliance with all financial covenants at quarter end. Our financial position remains strong and continues to provide flexibility to support strategic investments, dividends, and other opportunities as they arrive, arise, sorry. That concludes my comments. We can now transition back to Darren for his closing remarks.
Speaker #2: Exco remained in compliance with all financial covenants at quarter end. Our financial position remained strong and continues to provide flexibility to support strategic investments, dividends, and other opportunities as they arise.
Speaker #2: Sorry. That concludes my comments. We can now transition back to Darren for his closing
Speaker #2: remarks. Looking ahead, the
Darren Kirk: Looking ahead, the macro environment remains complex, with uncertainty surrounding global trade policy, particularly regarding tariffs. However, I want to be very clear: Our long-term confidence is unshaken. First, nearly all of Exco's products sold within North America comply with USMCA rules of origin. We expect these compliant products to remain exempt from tariffs in the long term. Second, the broader push towards reshoring industrial manufacturing in North America is a powerful tailwind for us. As tariffs make offshore tooling less competitive, we expect to see increased demand for domestic and nearshore sourcing. We maintain a substantial manufacturing footprint in the US and in USMCA partners, countries like Mexico and Canada. The combination of policy-driven reshoring, the aging vehicle fleet, and our strong product positioning reinforces our positive outlook. We have the capacity, the technology, and the footprint to capture market share as these conditions stabilize.
Darren Kirk: Looking ahead, the macro environment remains complex, with uncertainty surrounding global trade policy, particularly regarding tariffs. However, I want to be very clear: Our long-term confidence is unshaken. First, nearly all of Exco's products sold within North America comply with USMCA rules of origin. We expect these compliant products to remain exempt from tariffs in the long term. Second, the broader push towards reshoring industrial manufacturing in North America is a powerful tailwind for us. As tariffs make offshore tooling less competitive, we expect to see increased demand for domestic and nearshore sourcing. We maintain a substantial manufacturing footprint in the US and in USMCA partners, countries like Mexico and Canada. The combination of policy-driven reshoring, the aging vehicle fleet, and our strong product positioning reinforces our positive outlook. We have the capacity, the technology, and the footprint to capture market share as these conditions stabilize.
Speaker #3: The macro environment remains complex, with uncertainty surrounding global trade policy, particularly regarding tariffs. However, I want to be very clear: our long-term confidence is unshaken.
Speaker #3: First, nearly all of Exco's products sold within North America comply with USMCA rules of origin. We expect these compliant products to remain exempt from tariffs in the long term.
Speaker #3: Second, the broader push towards reshoring industrial manufacturing in North America is a powerful tailwind for us. As tariffs make offshore tooling less competitive, we expect to see increased demand for sourcing.
Speaker #3: We maintain a substantial domestic and nearshore manufacturing footprint in the US and in USMCA partners countries like Mexico and Canada. The combination of policy-driven reshoring, the aging vehicle fleet, and our strong product positioning reinforces our positive outlook.
Speaker #3: We have the capacity, the technology, and the footprint to capture market share as these conditions stabilize. I would like to thank our shareholders for their continued support and our global team for their dedication and hard work in navigating this dynamic environment.
Darren Kirk: I would like to thank our shareholders for their continued support and our global team for their dedication and hard work in navigating this dynamic environment. Operator, we are now ready to take questions.
I would like to thank our shareholders for their continued support and our global team for their dedication and hard work in navigating this dynamic environment. Operator, we are now ready to take questions.
Speaker #3: Operator, we are now ready to take
Speaker #3: questions. Thank you.
Matthew Posno: Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. One moment for questions.
Operator: Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. One moment for questions.
Speaker #1: As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.
Speaker #1: One moment for questions. And our first question comes from Nick Corcoran with Acumen Capital Partners. You may proceed.
Operator: Our first question comes from Nick Corcoran with Acumen Capital Partners. He may proceed.
Our first question comes from Nick Corcoran with Acumen Capital Partners. He may proceed.
Nick Corcoran: Hi, guys. Just a couple questions for me. First, you mentioned that extrusion is used in AI data centers. Can you comment on what percentage of your business this is and what potential growth rate might be going forward?
Nick Corcoran: Hi, guys. Just a couple questions for me. First, you mentioned that extrusion is used in AI data centers. Can you comment on what percentage of your business this is and what potential growth rate might be going forward?
Speaker #4: Hi, guys. Just a couple of questions from me. First, you mentioned that extrusion is used in AI data centers. Can you comment on what percentage of your business this is, and what the potential growth rate might be going forward?
Darren Kirk: Yeah. Morning, Nick. So, it's AI data centers is obviously an emerging end market for aluminum extrusions. It's in the low single digits currently, but you know, it's growing well into the double digits. So, it remains a tailwind for the foreseeable future, but albeit the current demand usage is a relatively low amount.
Darren Kirk: Yeah. Morning, Nick. So, it's AI data centers is obviously an emerging end market for aluminum extrusions. It's in the low single digits currently, but you know, it's growing well into the double digits. So, it remains a tailwind for the foreseeable future, but albeit the current demand usage is a relatively low amount.
Speaker #5: Good morning, Nick. So it's AI data centers, is obviously an emerging end market for aluminum extrusions. It's in the low single digits. Currently, but it's growing well into the double digits.
Speaker #5: So it remains a tailwind for the foreseeable future. But, albeit, the current demand usage is a relatively low amount.
Nick Corcoran: That's fair. And then, maybe switching gears, I know in the past you've talked about organic growth and potential for acquisitions. I'm wondering what your M&A pipeline looks like right now.
Nick Corcoran: That's fair. And then, maybe switching gears, I know in the past you've talked about organic growth and potential for acquisitions. I'm wondering what your M&A pipeline looks like right now.
Speaker #1: That's fair. And then maybe switching gears, I know in the past you've talked about organic growth and potential for acquisitions. I'm wondering what your M&A pipeline looks like right now.
Speaker #5: So the M&A pipeline is not very robust, to be honest. We continue to look for tuck-in opportunities, but as we've kind of indicated, the real focus is harvesting the investments that we have made through the prior CapEx cycle.
Darren Kirk: So, the M&A pipeline is, it's not very robust, to be honest. We continue to look for tuck-in opportunities, but, as we've kind of indicated, the real focus is harvesting the investments that we have made through the prior CapEx cycle. But we do certainly remain interested in looking out for acquisition activities. Our balance sheet remains very strong, and we have liquidity capacity to pursue that.
Darren Kirk: So, the M&A pipeline is, it's not very robust, to be honest. We continue to look for tuck-in opportunities, but, as we've kind of indicated, the real focus is harvesting the investments that we have made through the prior CapEx cycle. But we do certainly remain interested in looking out for acquisition activities. Our balance sheet remains very strong, and we have liquidity capacity to pursue that.
Speaker #5: So but we do certainly remain interested in looking out for acquisition activities or balance sheet remains very strong. And we have liquidity capacity to pursue that.
Nick Corcoran: Great. That's all for me. Thanks for taking my questions.
Nick Corcoran: Great. That's all for me. Thanks for taking my questions.
Speaker #1: Great. That's all great. Thanks for taking my questions.
Speaker #1: Great. That's all great. Thanks for taking my questions.
Darren Kirk: All right, Nick. Thanks, Nick.
Darren Kirk: All right, Nick. Thanks, Nick.
Speaker #5: Thanks. Thanks,
Speaker #6: Nick. Thank you.
Operator: Thank you. I would now like to turn the call back over to Mr. Darren Kirk for any closing remarks.
Operator: Thank you. I would now like to turn the call back over to Mr. Darren Kirk for any closing remarks.
Speaker #1: I would now like to turn the call back over to Mr. Darren Kirk for any closing
Speaker #1: remarks. Okay.
Darren Kirk: Okay. Well, thanks, everyone, for joining us today. We look forward to speaking again, when we release our Q2 results.
Darren Kirk: Okay. Well, thanks, everyone, for joining us today. We look forward to speaking again, when we release our Q2 results.
Speaker #6: Well, thanks, everyone, for joining us today. We look forward to speaking again when we release our Q2
Speaker #6: results.
Speaker #1: Thank
Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.
Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.
