Investor Presentation. February 2019

Transcription

1 Investor Presentation February 2019

2 Cautionary Statement Information in this presentation relating to projected growth and financial performance of the Company s business units, contribution of our greenfield business units, margin performance and operating efficiencies are forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements made during this presentation referring to growth and financial performance of the Company s business units, margin, operating improvement, capital expenditures and acquisitions because these plans, intentions or expectations are based on, among other things, assumptions about the number of automobiles produced in North America and Europe, the number of extrusion dies required in North America and South America, the rate of economic growth in North America and Europe and emerging markets, investment by OEMs in drivetrain and structural part architecture and other initiatives intended to reduce fuel consumption and/or the weight of automobiles, raw material prices, general economic conditions, capital expenditures and currency fluctuations. These forward-looking statements include known and unknown risks, uncertainties, assumptions and other factors which may cause actual results or achievements to be materially different from those expressed or implied. For a more extensive discussion of Exco s risks and uncertainties see the Risks and Uncertainties section in the latest Annual Report, Annual Information Form ( AIF ) and other reports and securities filings made by the Company. This information is available at and While Exco believes that the expectations expressed by such forward-looking statements are reasonable, we cannot assure that they will be correct. In evaluating forward-looking information and statements, readers should carefully consider the various factors which could cause actual results or events to differ materially from those indicated in the forward-looking information and statements. Readers are cautioned that the foregoing list of important factors is not exhaustive. Furthermore, the Company will update its disclosure upon publication of each fiscal quarter s financial results and otherwise disclaims any obligations to update publicly or otherwise revise any such factors or any of the forward-looking information or statements contained herein to reflect subsequent information, events or developments, changes in risk factors or otherwise. EXCO TECHNOLOGIES LIMITED 2

3 Company Overview Business Highlights Global provider of aluminum-focused tooling and interior trim components & solutions to the industrial and automotive markets Two principal business segments: Casting & Extrusion and Automotive Solutions Emission reduction requirements, vehicle lightweighting trends, share gains, new products, greenfield investments & acquisitions are key growth drivers Leading market positions in niche industries; over 60 year history Global footprint; concentrated in low cost jurisdictions Decentralized divisions run as profit centers TSX listed (XTC); control block owns 24% of shares United States Canada Mexico Europe Other Financial Highlights LTM Q1 F2019 pro-forma revenue of C$479 million and EBITDA of C$79 million (16% margin) 1 Latest 5-Yr Revenue & EBITDA CAGR of 44% & 12% Dividend has increased by well over 300% since F2010 Consistently strong free cash flow directed to share repurchases and bolstering balance sheet Essentially net-debt neutral & strong liquidity F2018 Sales by Customer Location 30% 9% 4% 4% 52% 1 Pro-Forma to eliminate the results of ALC Bulgaria, which filed a liquidation petition in Jan 2019 EXCO TECHNOLOGIES LIMITED 3

4 Principal Business Segments TTM Q1 F19 Pro-Forma Revenue and EBITDA 1 C$479 million in Pro-Forma Revenue C$79 million in Pro-Forma EBITDA 57% Automotive Solutions (C$273M) Neocon AFX Polydesign Polytech 43% Casting & Extrusion (C$206) Extrusion Technology Casting Technology Castool Group C$32M Casting & Extrusion (16% Margin) C$53M Automotive Solutions (19% Margin) (C$7 million) Corporate Expense Pro-Forma to eliminate the results of ALC Bulgaria, which filed a liquidation petition in Jan 2019 ALC Bulgaria recorded C$104 million of revenue and (C$1 million) of EBITDA TTM Q1 F19 EXCO TECHNOLOGIES LIMITED 4

5 Global Presence 15 Manufacturing Locations in 7 Countries and 5,350 Employees Chesterfield, MI Troy, MI Port Huron, MI Toledo, OH Uxbridge, ON Newmarket, ON Markham, ON Dartmouth, NS Matamoros, MX (2) Wylie, TX Tangier, Morocco Queretaro, MX (2)* Medellin, Colombia Sorocaba, Brazil Chonburi, Thailand Casting & Extrusion Technologies Extrusion Technology Casting Technology Castool Group *Extrusion facility under construction Automotive Solutions EXCO TECHNOLOGIES LIMITED 5

6 Automotive Solutions Segment EXCO TECHNOLOGIES LIMITED 6

7 Automotive Solutions Segment A leading innovator for interior trim and convenience solutions to the global auto market Competitive Strengths Largest supplier of flexible restraint and storage systems for autos in N.A. with majority share Content on popular models; sizeable SUV/CUV exposure Four businesses provide an expanding array of product offerings aimed at enhancing vehicle appeal Low-cost producer with facilities in Mexico, Morocco and Canada Strategically located in Free Trade Zones near US, and Western European markets Recent Supplier Awards from Honda, Toyota, General Motors, Subaru, and Faurecia Favorable Market Conditions Production volumes have softened modestly but are expected to continue near record levels Source: IHS Automotive Light Vehicle Production (millions of units) P NAFTA Europe EXCO TECHNOLOGIES LIMITED 7

8 Automotive Solutions Segment Four businesses provide an expanding array of product offerings Business Manufacturing Location(s) Facility Size Polytech Mexico 130,000 sq ft Polydesign Morocco 215,000 sq ft Neocon Canada 77,000 sq ft Mexico 91,000 sq ft Key Products/ Programs Netting-based storage systems for trunks, seat backs and door panels, etc. Netting-based restraint systems for passenger/ cargo separation Plastic injected moulded consoles, gearshift boots and componentry Similar products as Polytech Cutting and sewing of leather for instrument panels, door panels, consoles, steering wheels, sun visor assembly and wrapping Evaluating potential expansion to roughly 330,000 sq ft Thermoformed products Cargo organizer systems Flooring and protective systems including bumper covers Tier 2 supplier of interior trim components to diversified N.A customers Die cut leather sets for seating and most other interior trim applications Leather wrapped, machine and hand sewn automotive interior parts include steering wheels, shift knobs & boots, brake handles, armrests EXCO TECHNOLOGIES LIMITED 8

9 Casting & Extrusion Segment EXCO TECHNOLOGIES LIMITED 9

10 Casting Technology Aluminum-focused tooling for automotive powertrain and structural components Competitive Strengths Largest independent manufacturer of die-cast moulds in North America; estimated 20% share Three locations: Ontario, Ohio and Mexico with combined facilities totalling 200,000 square feet Industry leading design and engineering Capable of producing moulds up to 75 tons 3,500 ton die-casting machine and foundry to test products. Furnaces deliver standard aluminum alloy, structural aluminum alloy & magnesium Benefits from implementation of 5-axis machining to be steadily harnessed through F2019 Additive printing capability enhances mould design F2019 Finalist for Automotive Industry PACE Awards EXCO TECHNOLOGIES LIMITED 10

11 Extrusion Technology Largest designer and manufacturer of dies for aluminum extrusions in the Americas Competitive Strengths Estimated market share of 30% in North America Flagship locations in Ontario and Michigan Recent expansions into Brazil, Colombia and Texas New Mexico greenfield operational early C2019 Customer consolidation and competitor shake-out benefiting well-capitalized players such as Exco Upgraded machinery and commonality of design and manufacturing process across plants 8% 6% 4% 2% 0% N.A. Extruded Products Yr/ Yr Growth Rates YTD Nov Extruded Products by End Market 1 2% Transportation/ Auto 10% 10% 10% 31% Building & Construction Consumer Durables Electrical 37% Machinery & Equipment 1 The Aluminum Association, Exco Other EXCO TECHNOLOGIES LIMITED 11

12 Castool Group Equipment, accessories and tooling for aluminum die-cast machines and extrusion presses Competitive Strengths Proprietary consumable tooling components and systems designed to dramatically increase efficiency through improved uptime and yields Production facilities in Ontario and Thailand Currently expanding Ontario facility and evaluating potential new facility with proximity to Europe Dummy Blocks Plunger Tips Extrusion Container Die-Cast Shot Sleeves Die Ovens EXCO TECHNOLOGIES LIMITED 12

13 Casting & Extrusion Segment Focus on vehicle light-weighting provides significant ongoing growth opportunity Ever more stringent fuel efficiency and emission reduction standards are driving the development of increasingly advanced engines and transmissions by OEM and tier 1 suppliers Better fuel economy and lower emissions are also driving transition from steel to aluminum alloys in the production of non-powertrain structural components Light Vehicle Miles Per Gallon, Normalized to CAFE Dashed line represents future requirements US mpg US mpg* Net Pounds Per Vehicle of Aluminum Extruded Products Source: NHTSA and EPA *MY MY2025 mpg targets in process of being revised Source: Ducker worldwide EXCO TECHNOLOGIES LIMITED 13

14 Financial Results EXCO TECHNOLOGIES LIMITED 14

15 Annual Revenue by Segment Strong top-line growth over time driven by both business segments C$ Millions Automotive Solutions Casting and Extrusion F2013 F2014 F2015 F2016 F2017 F2018 Fiscal year ended September 30 ALC acquired March 2014; AFX acquired April 2016 EXCO TECHNOLOGIES LIMITED 15

16 Annual EBITDA by Segment EBITDA improvement along with sales growth over time C$ Millions Corporate Expense Automotive Solutions Casting and Extrusion Fiscal year ended September F2013 F2014 F2015 F2016 F2017 F2018 EXCO TECHNOLOGIES LIMITED 16

17 Net Income and Adjusted Net Income Net income up sharply over time C$ Millions Other Income/ Expense Reported Net Income F2013 F2014 F2015 F2016 F2017 F2018 Diluted Reported EPS $0.58 $0.73 $0.96 $1.11 $1.00 $1.00 Diluted Adjusted EPS $0.58 $0.73 $0.96 $1.03 $1.03 $1.00 EXCO TECHNOLOGIES LIMITED 17

18 Quarterly Revenue by Segment Revenue in both segments continue to recover from slowdown in H2 F2017 C$ Millions ALC Bulgaria Automotive Solutions (Ex ALC) Casting and Extrusion Q1 F18 Q2 F18 Q3 F18 Q4 F18 Q1 F19 Fiscal year ended September 30 EXCO TECHNOLOGIES LIMITED 18

19 Quarterly EBITDA by Segment EBITDA will benefit from the elimination of ALC drag going forward C$ Millions Corporate ALC Bulgaria Automotive Solutions (Ex ALC) Casting and Extrusion Q1 F18 Q2 F18 Q3 F18 Q4 F18 Q1 F19 EBITDA ex ALC (C$ Millions) Fiscal year ended September 30 EXCO TECHNOLOGIES LIMITED 19

20 Net Income and Adjusted Net Income ALC losses/ charges have masked otherwise stronger results C$ Millions Other Expense Net Income from ALC Net Income (Ex ALC) Q1 F18 Q2 F18 Q3 F18 Q4 F18 Q1 F19 Diluted Reported EPS $0.21 $0.25 $0.27 $0.27 $0.09 Diluted Adjusted EPS $0.21 $0.25 $0.27 $0.27 $0.24 Diluted Adjusted EPS ex ALC $0.24 $0.30 $0.27 $0.22 $0.29 EXCO TECHNOLOGIES LIMITED 20

21 Dividend Sustained dividend growth in-line with earnings improvement over time CAD Cents/ Share * * Dividend increased by 6% to an annualized rate of 36 cents per share January 2019 F2011 F2012 F2013 F2014 F2015 F2016 F2017 F2018 F % 23% 30% 27% 24% 26% 30% 34% % of Adjusted EPS EXCO TECHNOLOGIES LIMITED 21

22 C$ Millions Cash Flow Generation Strong EBITDA to free cash flow conversion despite sizeable working capital swing F (100%) 11 (14%) 16 (21%) 20 (26%) 28 (36%) EBITDA Interest/ Taxes/Other Opex Working Capital Capex (Net of Disposals) Free Cash Flow Fiscal year ended September 30 EXCO TECHNOLOGIES LIMITED 22

23 Capital Expenditures Elevated planned capex in F2019 a reflection of strong organic growth expectations C$ Millions F2013 F2014 F2015 F2016 F2017 F2018 F2019E Automotive Solutions C&E Maintenance/ Growth C&E Greenfield EXCO TECHNOLOGIES LIMITED 23

24 C$ Millions Pro-Forma Financial Leverage & Liquidity Net Debt/ LTM Q1F19 EBITDA of 0.1x Exco C$8M Pro-Forma Net Debt 9 Bank Indebtedness/ Other 4 Term Notes Revolver Borrowings 8 Cash 13 LTM Q1F19 Pro-Forma EBITDA of C$79M C$50M committed revolver matures February 2021; $42M available Balance sheet cash of $13M Consistent free cash flow generation Near term free cash flow will be directed towards debt repayment, increasing cash reserves and share repurchase activity EBITDA and Net Debt exclude ALC s operating results and balance sheet amounts ALC LTM Q1F19 EBITDA was (C$1M). As at Dec 31/18, ALC had cash of C$2.1M and Debt of C$6.3M EXCO TECHNOLOGIES LIMITED 24

25 Annual Foreign Exchange Sensitivity Estimated Impact of a $0.01 FX Change on F2019 Annual Consolidated Sales and Net Profit Approximate Revenue Exposure by Currency 1.40 USD/CAD Δ$0.01 EUR/CAD ~C$3.0M Sales ~C$0.6M ~C$0.7M Net Profit ~C$0.1M 28% 65% /30/2016 9/30/2017 9/30/ /30/2016 9/30/2017 9/30/2018 USD EUR CAD Other Average exchange rate for F17 and F18 EXCO TECHNOLOGIES LIMITED 25

26 Questions EXCO TECHNOLOGIES LIMITED 26

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