Exco Technologies Limited - Second Quarter ended March 31, 2009 and Quarterly Dividend Declared



    TORONTO, April 29 /CNW/ - Exco Technologies Limited (TSX-XTC) today
announced results for its second quarter ended March 31, 2009. In addition,
the Company announced a $0.0175 dividend per share which will be paid on June
30, 2009 to shareholders of record on June 15, 2009. The dividend is an
"eligible dividend" in accordance with the Income Tax Act of Canada.

    
    -------------------------------------------------------------------------
                                  6 Months ended          3 Months ended
                                     March 31                March 31
    -------------------------------------------------------------------------
                                     ($000s, except per share amounts)
                             ------------------------------------------------
                                    2009        2008        2009        2008
                                    ----        ----        ----        ----
    -------------------------------------------------------------------------
    Sales                         77,677     103,872      33,233      55,898
    Net income (loss) from
     continuing operations       (17,032)      4,208     (14,607)      2,844
    Net loss from discontinued
     operations                        -         (49)          -           -
    Net income (loss)            (17,032)      4,159     (14,607)      2,844
    Basic and diluted earnings
     (loss) per share from
     continuing operations        ($0.42)      $0.10      ($0.36)      $0.07
    Basic and diluted earnings
     (loss) per share             ($0.42)      $0.10      ($0.36)      $0.07
    Common shares outstanding 40,674,000  41,020,000  40,674,000  41,020,000
    -------------------------------------------------------------------------
    

    Consolidated sales from continuing operations for the quarter ended March
31, 2009 were $33.2 million - a decrease of $22.7 million or 40.6% over last
year. Year-to-date sales were $77.7 million - a decrease of $26.2 million or
25.2% compared to last year. This reflects a quarter of exceptional
contraction in global automotive production, commercial construction and
overall industrial output. The Automotive Solutions segment and the large
mould businesses were severely impacted by this collapse in automobile
production. Production of the Honda CRV and Civic in Europe was completely
shut down in January for 6 months impacting Polydesign's sales of seat covers
in the quarter by approximately $8 million in sales. It is anticipated that in
June deliveries of seat covers on these programs will resume. All automobile
manufacturers reduced production by extending Christmas shutdowns until well
into January and in some cases February and thereafter resumed production at
drastically reduced levels for the balance of the quarter. Deliveries to port
of entry programs were also impacted as Asian OEMs reduced vehicle exports to
North America. Extrusion die and Castool sales have been steadier since they
sell primarily to industrial markets and have benefited from the insolvency of
smaller competitors.
    Net loss from continuing operations for the second quarter was $14.6
million or $0.36 per share compared to net income of $2.8 million or $0.07 per
share last year. Year-to-date, Exco reported a net loss from continuing
operations of $17.0 million or $0.42 per share compared to net income of $4.2
million or $0.10 per share in the prior year. During the quarter Exco recorded
a goodwill impairment charge of $10.1 million associated with its Polytech
business unit compared to no goodwill impairment charge during the same
quarter last year. Consolidated pre tax loss from continuing operations,
before the impact of this goodwill charge, was $6.2 million compared to a pre
tax profit of $3.8 million last year. After this impairment charge no goodwill
remains on the balance sheet of the Company. During the quarter Exco also
determined that the carrying value of certain assets held for sale and
property, plant and equipment was impaired and a charge of $1.4 million was
taken against the Techmire building and $590 thousand was taken against
equipment held at Neocon USA. All of these charges are non cash in nature and
do not affect cash flow. Net income in the quarter was also impacted by
severance charges of $1.3 million pre tax incurred to reduce staff
company-wide by almost 20%. Bad debt write offs in the amount of $1.4 million
pre tax mostly related to the bankruptcy of a significant extrusion die
customer also increased our losses in the quarter. Excluding all the above
items, year-to-date pre tax profit from continuing operations was $64 thousand
or a loss of $0.04 per share compared to a pre tax profit of $6.7 million last
year or $0.12 per share.
    Gross margin for the second quarter was 18.0% compared to 21.3% in the
prior year. Year-to-date, gross margin was 18.9% compared to 21.5% last year.
Gross margin in the second quarter improved in the Casting and Extrusion
segment on better product mix and lower raw material costs. In the Automotive
Solutions segment staffing cuts and other overhead reduction initiatives have
enabled the segment to retain positive margin despite dramatically lower sales
in the quarter.
    Operating cash flow from continuing operations in the current quarter
decreased to $3.4 million from $6.9 million in the prior year primarily due to
lower income and build-up in raw material for large moulds due to be shipped
throughout the balance of the fiscal year and into fiscal 2010. Year-to-date,
operating cash flow increased to $9.4 million compared to $7.4 million last
year largely because of the decrease in non-cash working capital required at
these lower sales levels. The Company's net cash position at quarter end
totalled $4.0 million compared to $3.5 million at the beginning of the fiscal
year. The Company's cash position is also expected to benefit from the sale of
the Company's Techmire facility later this summer. Given the Company's strong
balance sheet with no net debt and its ability to generate positive operating
cash flow in the quarter even at these drastically low production levels,
management believes the Company is well positioned to weather this uncertainty
and thrive thereafter.
    The Company's cash position may also be impacted by the possible
insolvency of Chrysler which, in 2008, was the Company's second largest
customer at 9% of annual sales. This exposure primarily relates to the sale of
large moulds and outstanding accounts receivable range from $1 million to $4
million at any given time depending on the timing of tool acceptance or
delivery of moulds. The Company employs several strategies to minimize its
exposure in this regard including: 1) billing before delivery is made 2)
limiting total exposure to Chrysler by insisting, where possible, on payment
for outstanding invoices before additional tools are delivered and 3)
utilizing of the Export Development Corporation account receivable insurance
program when prudent.
    The Company believes that even in the event of a Chrysler bankruptcy or
an association with Fiat the Phoenix V6 engine program is inherently valuable
since it meets stringent future North American fuel efficiency standards. As
such the Company believes tooling for this program will continue to be
necessary to Chrysler in restructuring environment or desirable to other OEMs
in a liquidation scenario. The Company's exposure to General Motors is much
less with outstanding receivables typically less than $500 thousand for
components but occasionally reaching $750 thousand if tooling is delivered.
    Falling raw material prices and the weakening Canadian dollar are
benefiting the Company by supporting gross margin and operating cash flow.
However, substantial improvement in the Company's financial performance will
require an increase in sales. Management expects this will not take place for
several more quarters and will concentrate its efforts on continued right
sizing of the Company's capacity and fixed costs in order to achieve
profitability at these lower sales levels and to improve profitability once
volumes begin to return to more traditional levels. Despite this difficult
business environment Exco's Automotive Solutions segment has secured new
programs representing approximately $25 million in annualized sales launching
throughout the balance of 2009 and 2010, subject to volume and currency
fluctuations. The large mould group has received further orders for six speed
transmission moulds from the Detroit 3 for delivery during the same time frame
if they successfully conclude their restructurings.
    (For further information please refer to the Company's Second Quarter
Interim Financial Statements in the Investor Relations section posted at
www.excocorp.com after April 29, 2009. Alternatively, please refer to
www.sedar.com after April 29, 2009.)

    Exco Technologies Limited is a global supplier of innovative technologies
servicing the die-cast, extrusion and automotive industries. Through our 10
strategic locations, we employ 1,500 people and service a diverse and broad
customer base.

    Management will hold a conference call to discuss the second quarter
results on Thursday April 30, 2009 at 11:00 am (EST). The local dial in number
for the call is (416) 644-3421 or toll free 1-800-731-5774. To access the live
audio webcast, please log on to www.excocorp.com or www.q1234.com a few
minutes before the event. Real Player is required for access. For those unable
to participate on April 30, 2009, an archived version will be available on the
Exco website.

    This news release contains forward-looking information and
forward-looking statements within the meaning of applicable securities laws.
We use words such as "anticipate", "plan", "may", "will", "should", "expect",
"believe", "estimate" and similar expressions to identify forward-looking
information and statements. Such forward-looking information and statements
are based on assumptions and analyses made by us in light of our experience
and our perception of historical trends, current conditions and expected
future developments, as well as other factors we believe to be relevant and
appropriate in the circumstances. Readers are cautioned not to place undue
reliance on forward-looking information and statements, as there can be no
assurance that the assumptions, plans, intentions or expectations upon which
such statements are based will occur. Forward-looking information and
statements are subject to known and unknown risks, uncertainties, assumptions
and other factors which may cause actual results, performance or achievements
to be materially different from any future results, performance or
achievements expressed, implied or anticipated by such information and
statements. These risks, uncertainties and assumptions are described in the
Company's Management's Discussion and Analysis included in our 2008 Annual
Report, in our 2008 Annual Information Form and, from time to time, in other
reports and filings made by the Company with securities regulatory
authorities.
    While the Company believes that the expectations expressed by such
forward-looking information and statements are reasonable, there can be no
assurance that such expectations and assumptions will prove to 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 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.

    %SEDAR: 00003420E




For further information:

For further information: Paul Riganelli, Vice-President, Finance and
Chief Financial Officer, Telephone: (905) 477-3065, Website:
http://www.excocorp.com


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