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ABC Technologies Holdings Inc. Reports Fiscal Q1 2023 Results

ABC Technologies Holdings Inc. Reports Fiscal Q1 2023 Results

ABC Technologies Holdings Inc. (TSX: ABCT) (“ABC Technologies”, “ABC”, or the “Company”), a leading manufacturer and supplier of custom, highly engineered, technical plastics and lightweighting innovations to the North American light vehicle industry, today announced results for the three months ended September 30, 2022 (“Q1 Fiscal 2023”) and has declared a quarterly cash dividend of C$0.0375 per share. All amounts are shown in United States Dollars (“$”), unless otherwise noted.

Please click HERE for ABC’s Q1 Fiscal 2023 Management’s Discussion and Analysis (“MD&A”) or refer to the Company’s Interim Condensed Consolidated Financial Statements and MD&A for the three months ended September 30, 2022 available on the Company’s profile at www.SEDAR.com and on the Company website.

Q1 Fiscal 2023 Highlights

  • Q1 Fiscal 2023 Revenue increased by 95.1% to $318.9 million from $163.4 million for the three months ended September 30, 2021 (“Q1 Fiscal 2022”).
  • Q1 Fiscal 2023 Net Loss of $23.4 million, compared to a Net Loss of $28.2 million in Q1 Fiscal 2022.
  • Q1 Fiscal 2023 Adjusted EBITDA1,2 of $23.9 million, compared with $(11.3) million in Q1 Fiscal 2022, with the increase primarily driven by a higher sales and gross profit in the quarter from both existing operations as well as acquisitions.
  • Q1 Fiscal 2023 Adjusted Free Cash Flow3 of $2.4 million, up from $(59.5) million in Q1 Fiscal 2022.
  • Dividend of C$0.0375 per share declared.
  • Subsequent to the end of the quarter, on October 25, 2022, the Board of Directors approved a plan to shut down Company's Poland plant. For the Company, Poland is a small operation that was not able to overcome the dramatic increased costs for utilities, freight, material and labor experienced in that market. The Company is proactively working with its customers to relocate their production which is expected to take until Q4 Fiscal 2023 to complete. The plant is expected to be shut down when that activity is completed. A write-down relating to the tooling inventories of $2.0 million was recorded during the three months ended September 30, 2022 and an impairment charge relating to property, plant and equipment of $8.2 million was recorded during the year-end June 30, 2022. No additional significant impairment charges are expected at this time, although charges for severance and other estimated closure costs will be recorded in Q2 Fiscal 2023.
______________________________________
1 The Company prepares its consolidated financial statements in accordance with International Financial Reporting Standards (“IFRS”). However, the Company considers certain non-IFRS financial measures including “Adjusted EBITDA”, and “Adjusted Free Cash Flow” as useful additional information in measuring the financial performance and condition of the Company. These measures, which the Company believes are widely used by investors, securities analysts and other interested parties in evaluating the Company’s performance, do not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similarly titled measures presented by other publicly traded companies, nor should they be construed as an alternative to financial measures determined in accordance with IFRS. For a reconciliation of non-IFRS measures to measures determined in accordance with IFRS, please see heading “Non-IFRS Measures and Key Indicators” below.
2 Adjusted EBITDA is a non-IFRS measure. For a reconciliation of non-IFRS measures to measures determined in accordance with IFRS, please see heading “Non-IFRS Measures and Key Indicators” below.
3 Adjusted Free Cash Flow is a non-IFRS measure. For a reconciliation of non-IFRS measures to measures determined in accordance with IFRS, please see heading “Non-IFRS Measures and Key Indicators” below.

ABC Technologies’ President and Chief Executive Officer, Terry Campbell, commented: “We saw meaningful year-over-year improvement in our financial performance this quarter, driven by strong top-line growth supported by acquisition contribution, along with management efforts to improve operating performance and reduce costs. Looking ahead, our team continues to navigate lingering economic headwinds while building a more resilient business. ABC’s leadership is focused on operationalizing our new business model that will help improve efficiency at our plants while reducing complexity both within the organization and for our customers. We are committed to optimizing our cost structure, successfully completing our customer cost recovery negotiations, and converting top-line growth to sustained bottom-line performance. There is a lot of work ahead of us, but our team continues to be excited about tackling these challenges head on.”

Q1 Fiscal 2023 Results of Operations

Sales were $318.9 million in Q1 Fiscal 2023 compared with $163.4 million in Q1 Fiscal 2022, an increase of $155.4 million or 95.1%. Of this increase, $56.9 million is attributable to the dlhBOWLES and Karl Etzel acquisitions completed in the third quarter of the fiscal year 2022 (“Q3 Fiscal 2022”), accounting for 36.6% of the increase. According to IHS Markit reports, industry production in North America increased by 24.2% in Q1 Fiscal 2023 compared to Q1 Fiscal 2022. The Company enjoyed better than industry growth as a result of improved sales to a number of significant customers due to its product mix relative to the industry.

Cost of sales was $288.3 million in Q1 Fiscal 2023 compared with $162.6 million in Q1 Fiscal 2022, an increase of $125.7 million or 77.3%, of which $45.2 million or 36.0% is attributable to the dlhBOWLES and Karl Etzel acquisitions completed in Q3 Fiscal 2022. As a percentage of sales, cost of sales was 90.4% in Q1 Fiscal 2023compared with 99.5% in Q1 Fiscal 2022. Gross margin in Q1 Fiscal 2023 was higher than the comparable prior year’s quarter resulting from improved efficiencies due to a decrease in semiconductor shortages allowing for increased production volumes. Gross margin continued to be lower than normal as a result of higher labor and freight costs, and increased raw material costs, primarily resin, glass, rubber, paint and steel which the Company attributes to inflationary trends seen throughout both the industry and general economy.

Selling, general and administrative expenses were $45.9 million in Q1 Fiscal 2023 compared with $28.1 million in Q1 Fiscal 2022, an increase of $17.8 million or 63.3%. As a percentage of sales, selling, general and administrative expenses were 14.4% in Q1 Fiscal 2023 compared with 17.2% in Q1 Fiscal 2022.

Significant differences quarter over quarter include:

  • higher business transformation related costs in Q1 Fiscal 2023 of $12.1 million;
  • higher wages, benefits and professional fees in Q1 Fiscal 2023 of $2.6 million;
  • higher depreciation and amortization expense in Q1 Fiscal 2023 of $2.6 million; and
  • higher foreign exchange loss in Q1 Fiscal 2023 of $1.4 million partially offset by, lower share-based compensation expense of $1.7 million.

Net loss was $23.4 million in Q1 Fiscal 2023 compared with $28.2 million in Q1 Fiscal 2022, a decrease of $4.8 million or 16.8%. Primary contributors to the change between periods are a $29.8 million increase in gross profit in Q1 Fiscal 2023 due to the significant increase in sales and the efficiencies resulting from the increase, largely offset by a $17.8 million increase in SG&A expenses as previously noted, increased interest expense of $2.5 million and lower income tax recoveries of $6.6 million.

Adjusted EBITDA was $23.9 million in Q1 Fiscal 2023 compared with $(11.3) million in Q1 Fiscal 2022, an increase of $35.2 million or 311.4% primarily due to higher sales and gross profit in Q1 Fiscal 2023 compared with Q1 Fiscal 2022.

Adjusted Free Cash Flow was $2.4 million in Q1 Fiscal 2023, or $61.9 million higher compared with Q1 Fiscal 2022 primarily due to higher net cash flows from operating activities of $73.0 million which was partly offset by the higher purchases of property plant and equipment of $8.8 million.

Market Dynamics

The Company's financial results during the last half of the fiscal year of the Company ended June 30, 2021 (“Fiscal 2021”) and fiscal year of the Company ended June 30, 2022 (“Fiscal 2022”) were significantly impacted by disruptions and shortages in the supply of critical components and materials globally, particularly semiconductors, which were indirect outcomes of the COVID-19 pandemic. When the COVID-19 pandemic caused a significant drop in vehicle sales in spring 2020, OEMs cut their orders of all parts and materials, including the semiconductors needed for functions ranging from touchscreen displays to collision-avoidance systems. In the fall of 2020, when demand for passenger vehicles rebounded, OEMs were not able to secure adequate supply of semiconductors as chip manufacturers were already committed to supplying other customers in consumer electronics. The global semiconductor shortage resulted in temporary shut-downs or slowdowns of the production lines at the majority of our OEM customers beginning in February and March 2021, which impacted the production levels in our plants that supply those customers. In Fiscal 2022, primarily in the first and the second fiscal quarters, COVID-19 had a more direct effect on operations. Outbreaks in major semiconductor manufacturing countries, such as Malaysia, resulted in the temporary shutdown of the manufacturing sector in those countries. As a result, the lost production exacerbated the shortage of semiconductors, leading to increased shutdowns by nearly all OEMs. These shutdowns, frequently with very short notice, resulted in inefficiencies at the Company’s production facilities. In the third and the fourth fiscal quarters of Fiscal 2022 and Q1 Fiscal 2023, supply chain disruptions to OEM customers abated to some extent, but not completely. Supply chain disruptions and economic conditions, which also include the conflict between Russia and Ukraine have introduced higher levels of inflation for costs including, but not limited to, labor, freight, utilities, resin, glass, rubber, paint and steel.

We believe these conditions are temporary for many of our costs and will abate over time when supply conditions are successfully resolved. Presently we expect costs to remain elevated from now until the end of calendar year 2023. However, it is notable that increased costs in several areas, including, but not limited to labor, benefits, freight and utilities costs are likely not temporary and will remain part of the cost of the business. The Company is in discussions with its largest customers to adjust its prices for the effects of inflation that were not present when the programs were awarded to the Company. The Company is also refining its quoting practices to more proactively address input and conversion costs in its pricing to customers.

As a result of the global semiconductor shortages and production disruptions, inventories for new vehicles had reached historic lows, but have been bouncing back toward more normal levels. The high consumer demand for vehicles, lower than normal inventory supply and inflationary price increases has pushed prices for both new and used vehicles to record levels. Several OEMs are recording strong earnings as the average price of new models has increased. Due to the scarcity of new vehicles, used vehicle prices experienced new highs, at times exceeding the price of new vehicles, as customers turned to alternatives when new models were not available for purchase. Recently, used prices have diminished somewhat, but continue to be elevated relative to previous years.

Dividend

The Board of Directors today has declared a Q1 Fiscal 2023 quarterly cash dividend of C$0.0375 per share, payable on or about December 30, 2022 to shareholders of record on November 30, 2022.

Conference Call Information

ABC will host a conference call today, November 11, 2022 at 8:30am ET to discuss the results. Participants may listen to the call via audio streaming at www.abctechnologies.com/investors.

The dial-in number to participate in the call is:
Toll Free: 1-855-327-6837
Toll/International: 1-631-891-4304

A telephonic replay will be available approximately two hours after the call. The replay will be available until 11:59pm ET on Friday, November 25th, 2022.

Replay Information:
Toll Free: 1-844-512-2921
Toll/International: 1-412-317-6671
Replay Pin Number: 10020435

A webcast replay will be available approximately one hour after the conclusion of the call at www.abctechnologies.com/investors under the Events & Presentations section.

Non-IFRS Measures and Key Indicators

This Press Release uses certain non-IFRS financial measures and ratios. Management uses these non-IFRS financial measures for purposes of comparison to prior periods, to prepare annual operating budgets, and for the development of future projections and earnings growth prospects. This information is also used by management to measure the profitability of ongoing operations and in analyzing our financial condition, business performance and trends. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similarly titled measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management’s perspective. Accordingly, they should not be considered in isolation, nor as a substitute, for analysis of our financial information reported under IFRS. We use non-IFRS financial measures including Net Debt, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted Free Cash Flow to provide supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when using IFRS financial measures. We believe that the presentation of these financial measures enhances an investor’s understanding of our financial performance as these measures are widely used by investors, securities analysts and other interested parties.

“Net Debt” means (i) long-term debt less cash plus (ii) proportionate long-term debt held at joint ventures less proportionate cash held at joint ventures.

“EBITDA” means net earnings (loss) before interest expense, income tax expense (recovery), depreciation of property, plant and equipment, depreciation of right-of-use assets, and amortization of intangible assets.

“Adjusted EBITDA” means EBITDA plus: loss on disposal and write-down of assets, unrealized loss (gain) on derivative financial instruments, transactional, recruitment, and other bonuses, EBITDA from Poland operations which is being shut down, business transformation and related costs (which may include severance and restructuring expenses) and write-down of inventories less: our share of income of joint ventures plus the Company’s proportionate share of the EBITDA generated by our joint ventures, and share-based compensation expense. We also present Adjusted EBITDA excluding the impact of IFRS 16 by charging the lease payments applicable to those periods to expense as was the case prior to IFRS 16 – Leases (“IFRS 16”).

“Adjusted EBITDA Margin” means Adjusted EBITDA divided by sales adjusted to include the proportional share of joint venture sales attributable to ABC.

“Adjusted Free Cash Flow” means Net Cash Flows from Operating Activities less: purchases of property, plant and equipment, additions to intangible assets, lease payments, net impact of hedge monetization, plus: proceeds from disposal of property, plant, and equipment, cash dividends received from joint ventures, and one-time advisory, bonus and other costs.

Additional information about the Company, including the Company’s Management Discussion and Analysis of Operating Results and Financial Position for the three months ended September 30, 2022 and the Company’s Interim Condensed Consolidated Financial Statements for the three months ended September 30, 2022 can be found at www.sedar.com.

Fiscal Q1 2023 Financial Results

(Expressed in thousands of United States dollars, unless otherwise specified)

ABC Technologies Holdings Inc.

Interim Condensed Consolidated Statement of Financial Position

     

 

September 30, 2022

 

 

June 30, 2022

 

Assets

(unaudited)

 

 

 

 

Current assets

 

 

 

 

 

Cash

$

46,807

 

 

$

25,400

 

Trade and other receivables

 

107,758

 

 

 

122,192

 

Inventories

 

156,697

 

 

 

152,461

 

Prepaid expenses and other

 

32,299

 

 

 

42,094

 

Total current assets

 

343,561

 

 

 

342,147

 

 

 

 

 

 

 

Property, plant and equipment

 

419,786

 

 

 

425,645

 

Right-of-use assets

 

160,530

 

 

 

165,679

 

Intangible assets

 

154,849

 

 

 

156,844

 

Deferred income taxes

 

9,207

 

 

 

9,445

 

Investment in joint ventures

 

45,205

 

 

 

45,556

 

Derivative financial assets

 

508

 

 

 

3,996

 

Goodwill

 

112,330

 

 

 

112,369

 

Other long-term assets

 

15,621

 

 

 

16,392

 

Total non-current assets

 

918,036

 

 

 

935,926

 

Total assets

$

1,261,597

 

 

$

1,278,073

 

 

 

 

 

 

 

Liabilities and equity

 

 

 

 

 

Current liabilities

 

 

 

 

 

Trade payables

$

157,577

 

 

$

147,981

 

Accrued liabilities and other payables

 

121,320

 

 

 

98,280

 

Provisions

 

19,744

 

 

 

24,132

 

Current portion of lease liabilities

 

12,779

 

 

 

13,087

 

Purchase option

 

5,883

 

 

 

6,206

 

Total current liabilities

 

317,303

 

 

 

289,686

 

 

 

 

 

 

 

Long-term debt

 

375,000

 

 

 

400,000

 

Lease liabilities

 

171,177

 

 

 

175,940

 

Deferred income taxes

 

17,486

 

 

 

33,097

 

Derivative financial liabilities

 

6,118

 

 

 

1,453

 

Other long-term liabilities

 

37,577

 

 

 

2,137

 

Total non-current liabilities

 

607,358

 

 

 

612,627

 

Total liabilities

 

924,661

 

 

 

902,313

 

 

 

 

 

 

 

Equity

 

 

 

 

 

Capital stock

 

292,304

 

 

 

291,960

 

Other reserves

 

1,736

 

 

 

3,094

 

Retained earnings

 

50,868

 

 

 

77,453

 

Foreign currency translation reserve and other

 

(12,326

)

 

 

(7,524

)

Cash flow hedge reserve, including cost of hedging

 

4,354

 

 

 

10,777

 

Total equity

 

336,936

 

 

 

375,760

 

Total liabilities and equity

$

1,261,597

 

 

$

1,278,073

 

ABC Technologies Holdings Inc.

Interim Condensed Consolidated Statement of Comprehensive Income (Loss)

 

 

 

For the three months ended
September 30,

 

 

 

2022

 

 

 

2021

 

(unaudited)

 

 

 

 

Sales

 

$

318,864

 

 

$

163,415

 

Cost of sales

 

 

288,254

 

 

 

162,563

 

Gross profit

 

 

30,610

 

 

 

852

 

 

 

 

 

 

Selling, general and administrative

 

 

45,923

 

 

 

28,128

 

Loss (gain) on disposal and write-down of assets

 

 

687

 

 

 

(24

)

Loss (gain) on derivative financial instruments

 

 

(549

)

 

 

461

 

Share of loss of joint ventures

 

 

40

 

 

 

1,574

 

Operating loss

 

 

(15,491

)

 

 

(29,287

)

 

 

 

 

 

Interest expense, net

 

 

9,859

 

 

 

7,366

 

Loss before income tax

 

 

(25,350

)

 

 

(36,653

)

 

 

 

 

 

Income tax expense (recovery)

 

 

 

 

Current

 

 

11,027

 

 

 

1,103

 

Deferred

 

 

(12,928

)

 

 

(9,570

)

Total income tax recovery

 

 

(1,901

)

 

 

(8,467

)

 

 

 

 

 

Net loss

 

$

(23,449

)

 

$

(28,186

)

 

 

 

 

 

Other comprehensive income (loss)

 

 

 

 

Items that may be recycled subsequently to net earnings (loss):

 

 

 

 

Foreign currency translation of foreign operations and other

 

 

(4,802

)

 

 

(593

)

Cash flow hedges, net of taxes

 

 

(5,268

)

 

 

(4,474

)

Cash flow hedges recycled to net earnings, net of taxes

 

 

(82

)

 

 

447

 

Other comprehensive loss

 

$

(10,152

)

 

$

(4,620

)

 

 

 

 

 

Total comprehensive loss for the period

 

$

(33,601

)

 

$

(32,806

)

 

 

 

 

 

Earnings (loss) per share - basic and diluted

 

$

(0.20

)

 

$

(0.54

)

ABC Technologies Holdings Inc.

Interim Condensed Consolidated Statement of Cash Flows

 

 

 

For the three months ended
September 30,

(unaudited)

 

 

2022

 

 

 

2021

 

Cash flows from (used in) operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(23,449

)

 

$

(28,186

)

Adjustments for:

 

 

 

 

Depreciation of property, plant and equipment

 

 

17,271

 

 

 

11,967

 

Depreciation of right-of-use assets

 

 

4,226

 

 

 

3,626

 

Amortization of intangible assets

 

 

7,744

 

 

 

5,186

 

Loss (gain) on disposal and write-down of assets

 

 

687

 

 

 

(24

)

Unrealized loss (gain) on derivative financial instruments

 

 

(549

)

 

 

417

 

Interest expense

 

 

9,859

 

 

 

7,366

 

Share of loss of joint ventures

 

 

40

 

 

 

1,574

 

Income tax recovery

 

 

(1,901

)

 

 

(8,467

)

Share-based compensation expense (reversal)

 

 

(1,026

)

 

 

713

 

Write-down of inventories

 

 

2,030

 

 

 

 

Changes in:

 

 

 

 

Trade and other receivables and prepaid expenses and other

 

 

18,544

 

 

 

18,199

 

Inventories

 

 

(5,915

)

 

 

(18,909

)

Trade payables, accrued liabilities and other payables, and provisions

 

 

14,173

 

 

 

(26,680

)

Cash generated from (used in) operating activities

 

 

41,734

 

 

 

(33,218

)

 

 

 

 

 

Interest received

 

 

120

 

 

 

129

 

Income taxes paid

 

 

(1,020

)

 

 

(275

)

Interest paid on leases, net of interest received

 

 

(3,459

)

 

 

(3,387

)

Interest paid on long-term debt and other

 

 

(5,997

)

 

 

(4,896

)

Net cash flows from (used in) operating activities

 

 

31,378

 

 

 

(41,647

)

 

 

 

 

 

Cash flows used in investing activities

 

 

 

 

Purchases of property, plant and equipment

 

 

(19,859

)

 

 

(11,015

)

Additions to intangible assets

 

 

(5,761

)

 

 

(5,375

)

Net cash flows used in investing activities

 

 

(25,620

)

 

 

(16,390

)

 

 

 

 

 

Cash flows from (used in) financing activities

 

 

 

 

Net drawings (payments) on revolving credit facilities

 

 

(25,000

)

 

 

56,837

 

Principal payments of lease liabilities, net of sublease receipts

 

 

(3,186

)

 

 

(2,597

)

Financing costs

 

 

 

 

 

(580

)

Proceeds from other financing arrangement

 

 

44,469

 

 

 

 

Net cash flows from financing activities

 

 

16,283

 

 

 

53,660

 

 

 

 

 

 

Net increase (decrease) in cash

 

 

22,041

 

 

 

(4,377

)

Net foreign exchange difference

 

 

(634

)

 

 

(173

)

Cash, beginning of period

 

 

25,400

 

 

 

14,912

 

Cash, end of period

 

$

46,807

 

 

$

10,362

 

Reconciliation of Net loss to Adjusted EBITDA

 

 

For the three months ended
September 30,

 

 

 

2022

 

 

 

2021

 

Reconciliation of Net loss to Adjusted EBITDA

 

 

 

 

Net loss

 

$

(23,449

)

 

$

(28,186

)

Adjustments:

 

 

 

 

Income tax recovery

 

 

(1,901

)

 

 

(8,467

)

Interest expense

 

 

9,859

 

 

 

7,366

 

Depreciation of property, plant and equipment

 

 

17,271

 

 

 

11,967

 

Depreciation of right-of-use assets

 

 

4,226

 

 

 

3,626

 

Amortization of intangible assets

 

 

7,744

 

 

 

5,186

 

EBITDA

 

$

13,750

 

 

$

(8,508

)

 

 

 

 

 

Loss (gain) on disposal and write-down of assets

 

 

687

 

 

 

(24

)

Unrealized loss (gain) on derivative financial instruments

 

 

(549

)

 

 

417

 

Transactional, recruitment and other bonuses

 

 

 

 

 

11

 

EBITDA from Poland operations1

 

 

1,389

 

 

 

 

Business transformation related costs2

 

 

13,228

 

 

 

1,164

 

Share of loss of joint ventures

 

 

40

 

 

 

1,574

 

EBITDA from joint ventures3

 

 

1,016

 

 

 

(678

)

Write-down of inventories4

 

 

2,030

 

 

 

 

Share-based compensation expense

 

 

(1,026

)

 

 

713

 

Lease payments, net of sublease receipts

 

 

(6,645

)

 

 

(5,984

)

Adjusted EBITDA

 

$

23,920

 

 

$

(11,315

)

  1. Represents net impact on EBITDA from Poland operations that are planned to be shut down in Q4 Fiscal 2023. Refer to the subsequent event section for more details.
  2. Includes $7.4 million of costs incurred in connection with the restructuring activities, which mainly relates to the severance and asset relocation expenses. Refer to the recent development section for more details. In addition, $2.6 million of costs were incurred in connection with the ongoing work to evaluate potential acquisition targets.
  3. Represents 50% of joint ventures' EBITDA, which corresponds to the Company's proportionate share of ownership in the joint ventures.
  4. A write-down relating to Poland tooling inventories of $2.0 was recorded in Q1 Fiscal 2023.

Reconciliation of net cash flows from (used in) operating activities to Adjusted Free Cash Flow

 

 

For the three months ended
September 30,

 

 

 

2022

 

 

 

2021

 

Reconciliation of net cash flows from (used in) operating activities to Adjusted Free Cash Flow

 

 

 

 

 

 

 

 

 

Net cash flows from (used in) operating activities

 

$

31,378

 

 

$

(41,647

)

Purchases of property, plant and equipment

 

 

(19,859

)

 

 

(11,015

)

Additions to intangible assets1

 

 

(5,761

)

 

 

(5,375

)

Principal payments of lease liabilities

 

 

(3,186

)

 

 

(2,597

)

One-time advisory, bonus and other costs

 

 

3,143

 

 

 

1,124

 

Net impact of hedge monetization

 

 

(3,311

)

 

 

 

Adjusted Free Cash Flow

 

$

2,404

 

 

$

(59,510

)

  1. Represents capitalized development costs under IAS 38 Intangible Assets.

Forward-Looking Statements

Some of the information contained in this Press Release may constitute forward-looking information or contain statements expressing such forward-looking information ("forward-looking statements" and collectively with the forward-looking information expressed thereby, "forward-looking information"). We use words such as "may", "would", "could", "should", "will", "unlikely", "expect", "anticipate", "believe", "intend", "planning", "forecast", "outlook", "projection", "estimate", "target" and similar expressions suggesting future outcomes or events to identify forward-looking information.

Forward-looking information contained herein is based on management’s reasonable assumptions and beliefs in light of the information currently available to us and is presented as of the date of this Press Release. Such forward-looking information is intended to provide information about management's current expectations and plans, and may not be appropriate for other purposes. While we believe we have a reasonable basis for presenting such forward-looking information, any forward-looking statements expressing it are not a guarantee of future performance or outcomes. Whether actual results and developments conform to our expectations and predictions is subject to a number of factors, risks, assumptions and uncertainties, many of which are beyond our control, and the effects of which can be difficult to predict, including, but not limited to:

  • the light vehicle industry, including expectations regarding industry trends, growth opportunities, market demand, industry forecasts, overall market growth rates and our growth rates and strategies in light vehicle industry and in light vehicles, both in North America and globally;
  • other risks related to automotive industry such as: economic cyclicality regional production volume declines, intense competition; potential restrictions on free trade; trade disputes/tariffs;
  • our research and development, innovation, product categories, ongoing development, and our future platforms and programs;
  • our OEM customers, including future relationships with our OEM customers and new OEM customers;
  • the continuing global semi-conductor shortage;
  • the impact and duration of the conflict in Ukraine and the related economic sanctions on, and retaliatory measures taken by, Russia, including disruption in supply, or raising prices, of energy for the member states of the EU and globally;
  • other risks related to customer and suppliers, including: OEM consolidation and cooperation; shifts in market shares among vehicles or vehicle segments; shifts in demand for products offered by our OEM customers; dependence on outsourcing; quarterly sales fluctuations; potential loss of any material purchase orders; a deterioration in the financial condition of our supply base, including as a result of the increased financial pressure related to continuing effects of COVID-19 and other global pandemics and outbreaks of contagious diseases, including as a result of COVID-19 pandemic-caused OEM and supplier bankruptcies; effects of ongoing global conflicts on supply chain, raw material costs and costs of logistics;
  • our assessments of, and outlook for Fiscal 2023, including expected sales, Adjusted EBITDA, and Adjusted Free Cash Flow for Fiscal 2023;
  • our business plans and strategies, including our expected sales growth, ability to benefit from our business model and capitalize on our acquisitions;
  • our competitive position in our industry;
  • expansion of our presence in the European market through the acquisitions completed by the Company in the Fiscal Year 2022;
  • prices of raw materials, commodities and other supplies necessary for the Company to conduct its business, including any changes to prices and availability of supply components related to the continuing effects of COVID-19, Russia’s invasion of Ukraine; and related international economic sanctions; related disruption of supply of, and increase in prices of energy for the member states of the EU and globally, and other actual or potential ongoing geopolitical conflicts;
  • labor disruptions or labor shortages in our facilities, or those of our customers and suppliers, related to the continuing effects of the COVID-19 pandemic and effects of other global pandemics and outbreaks of contagious diseases; COVID-19 pandemic-related shutdowns; supply disruptions including disruptions caused by the COVID-19 pandemic and its continuing effects and applicable costs related to supply disruption mitigation initiatives, including related to the continuing effects COVID-19; attraction/retention of skilled labor including as a result of the continuing effects of COVID-19 pandemic and other global pandemics and outbreaks of contagious diseases;
  • effects of ongoing global conflicts and economic sanctions associated with them on logistics and cost of raw materials and components and supply chains;
  • increasing inflation and/or rising interest rates;
  • climate change risks;
  • risks associated with private or public investment in technology companies;
  • changes in governmental regulations or laws including any changes to trade;
  • risks of conducting business in foreign countries, including China, Japan, Mexico, member states of the EU, Brazil and other markets;
  • cybersecurity threats;
  • our dividend policy; and
  • the potential volatility of the Company’s share price.

Forward-looking information in this document includes, but are not limited to, statements relating to: the Company’s plan to shut down its Poland plant, including any future impairment charges, severance costs and other estimated closing costs; any of the Company’s actions made in response to or in connection with the COVID-19 pandemic and other global pandemics and outbreaks of contagious diseases, including with respect to employee health and safety, potential adjustments to our production plans to align with our customers' production plans, governmental orders and legal requirements; the ability to attract and retain the workforce required to maintain or grow the Company's operations in the context of the effects of the COVID-19 pandemic and other global pandemics and outbreaks of contagious diseases on the workforce in certain markets in which the Company operates; the timing of program launches, the growth of the Company and pursuit of, and belief in, its strategies and development and implementation of new product and business; continued investments in its business and technologies, the ability to finance future capital expenditures, and ability to fund anticipated working capital needs, debt obligations and other commitments; the Company’s ability to implement its efficiency, optimization and cost saving and recovery strategies; the Company’s ability to implement its efficiency, optimization and cost saving and recovery strategies; the Company’s views on its liquidity and operating cash flow and ability to deal with present or future economic conditions; the potential for fluctuation of operating results; global economic forces, including macroeconomic pressures; and the payment of any dividends as well as other forward-looking statements.

In evaluating forward-looking statements or forward-looking information, we caution readers not to place undue reliance on any forward-looking statement or forward-looking information expressed herein, and readers should specifically consider the various factors that could cause actual events or results to differ materially from those indicated by such forward-looking statements, including the risk factors listed above as well as these and other risks and uncertainties as may be described in greater detail in the Company’s public filings made with the Canadian Securities Administrators and publicly available on the Company’s profile at www.sedar.com, or other factors that may fall outside any list of risks and uncertainties. We do not undertake to update any forward-looking information whether as a result of new information, future events or otherwise, or to update the reasons why actual results could differ from those reflected in the forward-looking statements except as required under applicable securities laws in Canada.

About ABC Technologies

ABC Technologies is a leading manufacturer and supplier of custom, highly engineered, technical plastics and lightweighting innovations to the North American light vehicle industry, serving more than 25 OEM customers globally through a strategically located footprint. ABC Technologies’ integrated service offering includes manufacturing, design, engineering, material compounding, machine tooling and equipment building that are supported by a by a team of skilled professionals (including professional practicing engineers and additional employees with technical diplomas or at least 15 years technical working experience serving in other technical engineering roles), which we believe ultimately contributes to our differentiated product innovation. Our vertically integrated capabilities include our tool-building and material compounding businesses, which we believe allows us to stay on the leading edge of technical plastics and lightweighting product innovation. In addition, our manufacturing footprint provides us with 250-mile coverage for the majority of our OEM customers’ North American light vehicle manufacturing facilities, which we also believe provides us with logistical and competitive advantages. The Company offers three product groups: Interior Systems, Exterior Systems and HVAC, Fluids & Other.

Investor Contact:
Nathan Barton
Investor Relations
investors@abctech.com

View source version on businesswire.com: https://www.businesswire.com/news/home/20221111005108/en/

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