Exco Technologies Limited: First Quarter ended December 31, 2006 and Quarterly Dividend Declared



    TORONTO, Jan. 31 /CNW/ - Exco Technologies Limited (TSX-XTC) today
announced results for its first quarter ended December 31, 2006. In addition,
the Company announced that a quarterly cash dividend of $0.015 per share will
be paid March 30, 2007 to shareholders of record on March 16, 2007.

    
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                                                       3 Months ended
                                                        December 31
                                            ($000s, except per share amounts)

                                                            2006         2005
                                                            ----         ----
    Sales                                                $48,751      $50,189
    Net income before taxes                               $1,837       $2,959
    Net income                                            $1,108       $1,996
    Basic and Diluted earnings per share                   $0.03        $0.05
    Common shares outstanding                         41,445,000   41,593,000

    -------------------------------------------------------------------------
    

    Consolidated sales for the quarter ended December 31, 2006 were down 3%
from last year at $48.8 million. The Casting and Extrusion segment reported
first quarter sales of $30.1 million - a decrease of about $1 million from
last year. Sales at the extrusion die businesses and Castool were up
approximately 8% over last year. These two business units sell predominantly
into industrial markets and have been consistently growing over the last year.
Both these businesses also benefited from consolidation among their customer
base. These global customers rely on established and reliable suppliers such
as Exco to meet their increased demand. Large mould sales and Techmire
shipments were down over last year. Large mould tooling orders were slow as
their customers focused on design issues and conserving cash. Techmire also
continued to experience weak demand for its traditional zinc products and
technical issues delayed shipment of wheel weight machines to the second
quarter.
    The Automotive Solutions segment reported slightly weaker sales compared
to last year of $18.6 million in the quarter. Combined North American sales by
Neocon and Polytech have declined over last year as domestic North American
carmakers have reduced production. Production volumes of SUVs and light trucks
have not returned to traditional levels during the quarter and are only likely
to do so after the full launch of next generation SUVs, light trucks and CUVs
is complete. Polydesign sales to the European market, however, continued its
growth trend with a 30% increase in quarterly sales over last year.
    Net income for the period is $1.1 million or $0.03 per share compared to
$2.0 million or $0.05 per share last year. Net income for the first quarter is
traditionally lower than other quarters. The erosion in earnings was primarily
in the Automotive Solutions segment. In this segment quarterly profit of  
$1.5 million was $1.1 million less than last year. Earnings were lower at most
business units owing to lower production. Several operations also incurred
start up costs associated with the launch of new business and at Neocon USA
the cancellation of a DCX program for which capacity had been added. In this
segment we expect earnings to improve with the launch of new business and
refreshed programs. This allows us to better recover raw material increases
which occurred over the last several years.
    Income in the Casting and Extrusion segment was down slightly from last
year by $77 thousand to $453 thousand. These weak earnings primarily reflect
lower shipments of large moulds and continuing losses at Techmire of     
$0.02 cents per share. Earnings were also impacted by moving costs and
production inefficiencies associated with relocating from the old Castool
facility in Scarborough, Ontario to the new premises in Uxbridge.
    Management is pleased with the working capital improvement in the last
quarter. Last year it increased by $5.2 million compared to a reduction of
$4.4 million this year. This generated cash from operations of $8.2 million
for the quarter.
    Exco increased its dividend in the quarter by 20% from $0.0125 to $0.015.
Exco also paid for Castool's new Uxbridge production facility in the quarter.
Despite these payments and reduction of accounts payable, Exco's net bank debt
fell to $3.4 million in December from $6.8 million in September. Exco's net
bank debt to equity ratio of 0.02:1 is now at its lowest level since Exco
incurred debt to finance its acquisitions in 1999.
    Since December the Canadian dollar has shown signs of weakening from
recent historic highs. This is a positive trend for Exco. Automobile
production at the domestic carmakers is expected to remain weak throughout the
next quarter as overcapacity and losses are expected to persist. This will
continue to put pressure on Exco's sales and capacity utilization and require
Exco to continue its focus on costs at all levels. Sales to industrial markets
by our extrusion tooling businesses and Castool should continue to experience
solid growth. Industrial products revenues currently represent about 40% of
annual consolidated sales and are expected to continue growing. Our major
industrial customers are increasingly consolidating their global supply base -
a trend that continues to favour Exco.
    Exco expects to continue building on its strong base of business with the
foreign domestics in the Automotive Solutions segment. There is much activity
in this market sector and we expect to launch several key programs for Toyota
later in the year. However, significant improvement in domestic OEM volumes
will likely not take place this fiscal year. Our large mould businesses will
benefit from relatively high fuel prices which are expected to continue
driving OEMs to improve the efficiency of their power train systems.
Nonetheless we expect design issues and serious cash flow issues faced by
domestic OEMs and their Tier 1 die casters to complicate the timely release of
new engine and transmission moulds.
    Techmire is not expected to return to profitability during 2007. The
price of zinc is expected to stay high and both dampen demand for zinc
die-cast machines and increase demand for magnesium die-cast machines and
moulds. Techmire, in the near term, is expected to prove out its magnesium
die-cast capabilities with the delivery of mould and/or machines for both thin
wall high finish magnesium parts and structural automotive magnesium
components.
    The recovery from recent raw material shocks is expected to slowly, yet
steadily, continue. Tool grade steel is now more readily available allowing
for lower inventory levels and improving margins. The cost of resin and other
synthetic raw material is also moderating and is expected to lead to better
margins in the Automotive Solution segment as well.

    (for further information please refer to the Company's First Quarter
Interim Financial Statements in the Investor Relations section posted at
www.excocorp.com. Alternatively, please refer to www.sedar.com after January
31, 2007.)

    Exco Technologies Limited is a global supplier of innovative technologies
servicing the die-cast, extrusion and automotive industries. Through our 13
strategic locations, we employ 2,200 people and service a diverse and broad
customer base.

    The Annual Meeting of Shareholders of Exco Technologies Limited will be
held at 4:30 pm (EST) and will be simultaneously webcast. Management will
discuss year-end and first quarter results. 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
January 31, 2007, 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 include, among other
things: industry cyclicality; global economic conditions, causing decreases in
automobile production volumes and demand for capital goods; changing demand
for specific models or products; price reduction pressures; pressure to absorb
certain fixed costs; dependence on major customers and changes in such
customers' financial capabilities; technological changes; compliance with
various laws; obtaining necessary permits and consents; fluctuations in
currency exchange and interest rates; employee work stoppages; dependence on
key employees; the competitive nature of the automotive and capital goods
industries, including competition with suppliers operating in low cost
countries; product supply and demand; the conduct of business in foreign
countries; and other risks, uncertainties and assumptions as described in the
Company's Management's Discussion and Analysis included in our 2006 Annual
Report, in our 2006 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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