ABC Technologies Holdings Inc. Reports Q3 Fiscal 2022 Results

TORONTO--()--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 light vehicle industry, today announced results for the three and nine months ended March 31, 2022 (“Q3 Fiscal 2022” and “YTD Fiscal 2022”, respectively) 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 Third Quarter Fiscal Year 2022 MD&A or refer to the Company’s Interim Condensed Consolidated Financial Statements for the three and nine months ended March 31, 2022 and the Company’s MD&A for same period on the Company’s profile at www.SEDAR.com.

Q3 Fiscal 2022 Highlights

  • Q3 Fiscal 2022 revenue of $285.8 million was up $67.8 million, or 31.1% year over year, supported by slowly normalizing industry production as well as acquisition revenue.
  • Q3 Fiscal 2022 net loss of $6.3 million compared to net loss of $20.7 million in Q3 Fiscal 2021.
  • Q3 Fiscal 2022 Adjusted EBITDA1 of $30.3 million was up $4.8 million, or 18.9% year over year, helped by strong profitability flow through on incremental revenue and EBITDA contributions from acquisitions during the quarter.
  • Q3 Fiscal 2022 Adjusted Free Cash Flow1 of $7.7 million was down $2.2 million against Q3 Fiscal 2021 due to higher capital expenditure.
  • Dividend of C$0.0375 per share declared.
  • During the quarter, the Company completed two acquisitions; the first significantly bolsters ABC’s reach in Fluidics through the addition of dlhBowles, Inc. (“dlhBowles”) and the second expands interior capabilities through the addition of German-based Karl Etzel GmbH (“Etzel”). Total consideration paid for the dlhBowles and Etzel acquisitions were $258.1 million and $68.4 million, respectively.
  • To fund the acquisitions, during the quarter, the Company completed a private placement and rights offering raising aggregate gross proceeds of $289.4 million.
  • Subsequent to the period-end, the Company entered into an agreement for the sale and lease back of its real estate properties in Mühlacker, Germany obtained through the recent acquisition of Etzel. Net proceeds from the transaction after commissions and fees are expected to be EUR 51.8 million. The Company entered into a foreign currency contract to hedge the net proceeds from the transaction and expects to receive approximately $58.2 million.

YTD Fiscal 2022 Highlights

  • YTD Fiscal 2022 revenue declined to $652.6 million from $737.7 million in the prior year period due to the ongoing production interruptions at OEM customer facilities brought on by several macroeconomic challenges, including global semiconductor and other commodity shortages brought on by the COVID-19 pandemic and aftermath.
  • YTD Fiscal 2022 net loss of $50.9 million compared to a net profit of $0.1 million in YTD Fiscal 2021.
  • YTD Fiscal 2022 Adjusted EBITDA1 of $30.4 million, compared to Adjusted EBITDA of $106.5 million in the prior year period primarily on account of the above-mentioned revenue declines as well as continued elevated raw material costs, including resin, glass, rubber, paint, and steel, and higher freight and labor costs.
  • YTD Fiscal 2022 Adjusted Free Cash Flow1 of negative $46.8 million, compared to Adjusted Free Cash Flow of positive $96.4 million in the prior year period largely as a result of the above-mentioned negative operating results.
  • The Credit Facility was increased to $550.0 million from $450.0 million and the maturity was extended to February 2027 for all facilities except Revolving Facility B of $50.0 million, which is available until February 2023.
  • Closed the sale by ABC Group Canada LP, an affiliate of funds managed by Cerberus Capital Management, L.P, of its remaining minority stake in the Company to funds affiliated with Oaktree Capital Management, L.P. for C$9.00 per share (the “Oaktree Transaction”).
____________________________
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”, “Adjusted EBITDA Margin”, 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 used in this news release, including “Adjusted EBITDA”, “Adjusted EBITDA Margin”, and “Adjusted Free Cash Flow” to measures determined in accordance with IFRS that are their closest analogues, please see heading “Non-IFRS Measures and Key Indicators” below.

ABC Technologies’ President and Chief Executive Officer, Todd Sheppelman, commented: “ABC saw continued improvement in financial results in the quarter due to a combination of steady, though still depressed, production volumes at our OEM customers, and inclusion of our two recently closed acquisitions. Even with customer production improving slightly against Fiscal Q2, we continue to face increased raw material and labor costs, as well as lower OEM volumes due to semiconductor chip shortages, that negatively impacted results in the quarter. Despite these macro issues, our recent acquisitions have performed quite well, and we believe they will continue to improve ABC’s overall profitability margin. We are already seeing early signs of success in cross-sell to customers and synergy realizations that will build in the coming quarters. We expect that in Fiscal Q4 2022 and into Fiscal 2023 we’ll continue to see financial results improve as OEM volumes return, as well as seeing full year flow through of results from our recent acquisitions.”

Q3 Fiscal 2022 Results of Operations

Sales were $285.8 million in Q3 Fiscal 2022 compared with $217.9 million in Q3 Fiscal 2021, an increase of $67.8 million or 31.1%. Of this increase, $18.9 million is attributable to acquisitions accounting for 8.7% of the increase. According to IHS Markit reports, industry production in North America decreased by 1.8% in Q3 Fiscal 2022 compared to Q3 Fiscal 2021, but the Company enjoyed improved sales to a number of significant customers due to its product mix relative to the industry.

Cost of sales was $247.4 million in Q3 Fiscal 2022 compared with $187.0 million in Q3 Fiscal 2021, an increase of $60.4 million or 32.3%, a portion of which is attributable to acquisitions. As a percentage of sales, cost of sales was 86.6% in Q3 Fiscal 2022 compared with 85.8% in Q3 Fiscal 2021. Gross margin in Q3 Fiscal 2022 was lower than the comparable prior year quarter resulting from higher raw material costs, primarily resin, glass, rubber, paint, and steel, and other input costs such as labor and freight.

Selling, general and administrative expenses were $29.3 million in Q3 Fiscal 2022 compared with $38.2 million in Q3 Fiscal 2021, a decrease of $8.9 million or 23.3%. As a percentage of sales, selling, general and administrative expenses were 10.2% in Q3 Fiscal 2022 compared with 17.5% in Q3 Fiscal 2021. Q3 Fiscal 2021 included $7.7 million of initial public offering (“IPO”) costs and $6.5 million of transactional, recruitment and other bonus costs related to the IPO, neither of which were present in the current quarter. This $14.2 million reduction was partially offset by higher wages of $2.8 million, higher depreciation expense of $1.6 million, acquisition related costs of $1.3 million and directors’ and officers’ insurance of $0.8 million. A swing in foreign currency from a loss to a gain resulted in $1.8 million of reduced SG&A expenses.

Net loss was $6.3 million in Q3 Fiscal 2022 compared with net loss of $20.7 million in Q3 Fiscal 2021, an improvement of $14.4 million or 69.5%. Primary contributors to the change between periods are a $7.4 million increase in gross profit in Q3 Fiscal 2022 due to higher sales, $8.9 million due to lower selling general and administration costs, and a reduction in interest expense of $12.1 million, offset by a $13.6 million swing to income tax expense from recovery.

Adjusted EBITDA was $30.3 million in Q3 Fiscal 2022 compared with $25.5 million in Q3 Fiscal 2021, an increase of $4.8 million or 18.9%, primarily as a result of higher operating income due to the reasons described above.

Adjusted Free Cash Flow was $2.2 million lower for Q3 Fiscal 2022 compared with Q3 Fiscal 2021, primarily due to higher net cash flows from operating activities of $7.2 million offset by higher purchases of property plant and equipment of $4.6 million and lower one-time advisory, bonus and other costs of $4.2 million. As a result of cost pressures, the Company’s joint ventures did not issue dividends in fiscal Q3 2022.

YTD Fiscal 2022 Results of Operations

Sales were $652.6 million for YTD Fiscal 2022 compared with $737.7 million for YTD Fiscal 2021, a decrease of $85.0 million or 11.5%. Excluding $18.9 million in sales attributable to acquisitions in the period, sales were 14.1% lower than the comparable prior year period. According to IHS Markit reports, industry production in North America decreased by 1.8% in Q3 Fiscal 2022 compared to Q3 Fiscal 2021. Comparatively, North America production decreased 14.7% in Q2 Fiscal 2022 compared to Q2 Fiscal 2021, and 25.2% in Q1 Fiscal 2022 compared to Q1 Fiscal 2021. Lost production due to OEM plant closures due to semiconductor shortages resulted in a significant decrease in revenue compared to the comparable prior year period where production had approached near normal production levels after the initial COVID-19 lockdowns that had occurred in the period from March to May 2020.

Cost of sales was $597.8 million for YTD Fiscal 2022 compared with $610.7 million for YTD Fiscal 2021, a decrease of $12.8 million or 2.1%. As a percentage of sales, cost of sales was 91.6% for YTD Fiscal 2022 compared with 82.8% for YTD Fiscal 2021. Gross margin in YTD Fiscal 2022 is lower as a result of higher labor and freight costs, increased raw material costs, primarily resin, glass, rubber, paint, and steel, and from inefficiencies due to frequent plant closures by OEMs. YTD Fiscal 2021 enjoyed the benefit of $7.7 million in Canada Emergency Wage Subsidy ("CEWS") payments which reduced wages in the period, which was also partially offset by the increased costs around managing COVID-19 effects in the same period, versus YTD Fiscal 2022 where the Company was ineligible to receive CEWS.

Selling, general and administrative expenses were $86.8 million for YTD Fiscal 2022 compared with $95.8 million for YTD Fiscal 2021. As a percentage of sales, selling, general and administrative expenses were 13.3% for YTD Fiscal 2022 compared with 13.0% for YTD Fiscal 2021. Wages and salaries in YTD Fiscal 2022 were $3.9 million lower than in YTD Fiscal 2021 as a result of adjustments to compensation due to lower sales. In addition, during YTD Fiscal 2022, the Company incurred expenses associated with being a public company for the full YTD period, whereas the Company was public only during Q3 Fiscal 2021. Some of these costs include higher insurance (increase of $1.9 million) and higher share-based compensation ($1.4 million). YTD Fiscal 2022 also includes $5.3 million of acquisition related costs compared to $nil in the previous YTD period. Comparatively, YTD Fiscal 2021 included IPO related costs amounting to $7.7 million, $4.4 million of higher transactional, recruitment and other bonus costs and $1.6 million higher business transformation related costs than in the current YTD period.

Net loss was $50.9 million for YTD Fiscal 2022 compared with net income of $0.1 million for YTD Fiscal 2021, a decrease of $51.0 million. Primary negative contributors to the change between periods is a $72.2 million reduction in gross margin and a $6.9 million reduction in income from joint ventures, offset by a favorable $8.9 million reduction in selling, general and administration expenses, $16.4 million of lower interest expense and $4.3 million of lower tax expense.

Adjusted EBITDA was $30.4 million for YTD Fiscal 2022 compared with $106.5 million for YTD Fiscal 2021, a decrease of $76.1 million or 71.4%, primarily as a result of $71.8 million reduction in operating income due to the reasons described above.

Adjusted Free Cash Flow was $143.2 million lower for YTD Fiscal 2022 compared with YTD Fiscal 2021 primarily due to lower net cash flows from operating activities of $118.7 million, higher purchases of property plant and equipment of $6.1 million and the net impact of hedge monetization amounting to $8.4 million. Fiscal 2021 results were positively impacted by working capital normalization following the first wave of COVID-19.

Fiscal 2022 Guidance

Continued volatility in the market over the past several quarters, driven primarily by semiconductor chip shortages, has begun to abate. If this trend continues towards a more sustained and stable production environment, we expect ABC will be able to resume earnings guidance.

Management remains confident in the go-forward performance potential of ABC and maintains the view that with improvements in the current supply chain issues, ABC will be able to return to the superior absolute and relative margins it enjoyed prior to the COVID-19 pandemic.

Dividend

The Board of Directors today has declared a Q3 Fiscal 2022 quarterly cash dividend of C$0.0375 per share, payable on or about June 30, 2022 to shareholders of record on May 31, 2022.

Conference Call Information

ABC will host a conference call today, May 13, 2022 at 9:30am 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, May 27, 2022.

Replay Information:
Toll Free: 1-844-512-2921
Toll/International: 1-412-317-6671
Replay Pin Number: 10018878

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 news 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, acquisitions related cost, initial public offering related costs, business transformation and related costs (which may include severance and restructuring expenses), 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”). The purpose of this is to allow direct comparability of these periods to Adjusted EBITDA performance in prior periods, which have been calculated under the previous accounting standards.

"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 Statements for the three and nine months ended March 31, 2022 can be found at www.sedar.com.

Fiscal Q3 2022 Financial Results

ABC Technologies Holdings Inc. (previously ABC Group Holdings Parent Inc.)

Consolidated Statement of Financial Position

(Expressed in thousands of United States dollars)

 

 

 

March 31, 2022

 

June 30, 2021

Assets

 

(unaudited)

 

 

Current assets

 

 

 

 

Cash

 

$

32,528

 

 

$

14,912

Trade and other receivables

 

 

135,363

 

 

 

76,653

Inventories

 

 

155,435

 

 

 

82,170

Prepaid expenses and other

 

 

39,175

 

 

 

34,472

Assets held for sale

 

 

34,321

 

 

 

Total current assets

 

 

396,822

 

 

 

208,207

 

 

 

 

 

Property, plant and equipment

 

 

362,423

 

 

 

334,775

Right-of-use assets

 

 

172,002

 

 

 

153,628

Intangible assets

 

 

101,738

 

 

 

73,346

Deferred income taxes

 

 

7,849

 

 

 

5,237

Investment in joint ventures

 

 

46,544

 

 

 

47,412

Derivative financial assets

 

 

5,659

 

 

 

10,053

Goodwill

 

 

185,976

 

 

 

18,944

Other long-term assets

 

 

18,823

 

 

 

4,027

Total non-current assets

 

 

901,014

 

 

 

647,422

Total assets

 

$

1,297,836

 

 

$

855,629

 

 

 

 

 

Liabilities and equity

 

 

 

 

Current liabilities

 

 

 

 

Trade payables

 

$

154,856

 

 

$

118,723

Accrued liabilities and other payables

 

 

86,079

 

 

 

71,339

Provisions

 

 

23,447

 

 

 

16,063

Current portion of lease liabilities

 

 

13,226

 

 

 

10,351

Purchase option

 

 

7,967

 

 

 

Total current liabilities

 

 

285,575

 

 

 

216,476

 

 

 

 

 

Long-term debt

 

 

400,000

 

 

 

280,000

Lease liabilities

 

 

181,462

 

 

 

156,400

Deferred income taxes

 

 

27,179

 

 

 

32,673

Derivative financial liabilities

 

 

 

 

 

2,483

Other long-term liabilities

 

 

2,024

 

 

 

2,393

Total non-current liabilities

 

 

610,665

 

 

 

473,949

Total liabilities

 

 

896,240

 

 

 

690,425

 

 

 

 

 

Equity

 

 

 

 

Capital stock

 

 

291,960

 

 

 

2,991

Other reserves

 

 

2,991

 

 

 

972

Retained earnings

 

 

94,487

 

 

 

151,936

Foreign currency translation reserve and other

 

 

(1,370

)

 

 

276

Cash flow hedge reserve, including cost of hedging

 

 

13,528

 

 

 

9,029

Total equity

 

 

401,596

 

 

 

165,204

Total liabilities and equity

 

$

1,297,836

 

 

$

855,629

ABC Technologies Holdings Inc. (previously ABC Group Holdings Parent Inc.)

Consolidated Statement of Comprehensive Income (Loss)

(Expressed in thousands of United States dollars)

 

 

 

For the three months
ended March 31,

 

For the nine months
ended March 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

(Unaudited)

 

 

 

 

 

 

 

 

Sales

 

$

285,775

 

 

$

217,926

 

 

$

652,629

 

 

$

737,656

 

Cost of sales

 

 

247,390

 

 

 

186,983

 

 

 

597,839

 

 

 

610,650

 

Gross profit

 

 

38,385

 

 

 

30,943

 

 

 

54,790

 

 

 

127,006

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

29,252

 

 

 

38,156

 

 

 

86,820

 

 

 

95,755

 

Loss on disposal and write-down of assets

 

 

632

 

 

 

15

 

 

 

737

 

 

 

479

 

Gain on derivative financial instruments

 

 

(1,055

)

 

 

(128

)

 

 

(742

)

 

 

(2,130

)

Share of loss (income) of joint ventures

 

 

(57

)

 

 

(801

)

 

 

349

 

 

 

(6,517

)

Operating income (loss)

 

 

9,613

 

 

 

(6,299

)

 

 

(32,374

)

 

 

39,419

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

7,842

 

 

 

19,896

 

 

 

23,064

 

 

 

39,505

 

Income (loss) before income tax

 

 

1,771

 

 

 

(26,195

)

 

 

(55,438

)

 

 

(86

)

 

 

 

 

 

 

 

 

 

Income tax expense (recovery)

 

 

 

 

 

 

 

 

Current

 

 

4,900

 

 

 

1,142

 

 

 

6,755

 

 

 

3,844

 

Deferred

 

 

3,192

 

 

 

(6,642

)

 

 

(11,260

)

 

 

(4,017

)

Total income tax expense (recovery)

 

 

8,092

 

 

 

(5,500

)

 

 

(4,505

)

 

 

(173

)

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(6,321

)

 

$

(20,695

)

 

$

(50,933

)

 

$

87

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Foreign currency translation of foreign operations and other

 

 

(561

)

 

 

(1,755

)

 

 

(1,646

)

 

 

1,627

 

Cash flow hedges, net of taxes

 

 

6,748

 

 

 

1,535

 

 

 

4,951

 

 

 

22,881

 

Cash flow hedges recycled to net earnings, net of taxes

 

 

426

 

 

 

639

 

 

 

1,382

 

 

 

2,416

 

Other comprehensive income

 

$

6,613

 

 

$

419

 

 

$

4,687

 

 

$

26,924

 

 

 

 

 

 

 

 

 

 

Total comprehensive income (loss) for the period

 

$

292

 

 

$

(20,276

)

 

$

(46,246

)

 

$

27,011

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share - basic and diluted

 

$

(0.07

)

 

$

(0.39

)

 

$

(0.80

)

 

$

0.00

 

ABC Technologies Holdings Inc. (previously ABC Group Holdings Parent Inc.)

Consolidated Statement of Cash Flows

(Expressed in thousands of United States dollars)

 

 

 

For the three months
ended March 31,

 

For the nine months
ended March 31,

(Unaudited)

 

 

2022

 

 

2021

 

 

2022

 

 

2021

Cash flows from (used in) operating activities

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(6,321

)

 

$

(20,695

)

 

$

(50,933

)

 

$

87

 

Adjustments for:

 

 

 

 

 

 

 

 

Depreciation of property, plant and equipment

 

 

13,028

 

 

 

11,512

 

 

 

36,986

 

 

 

34,263

 

Depreciation of right-of-use assets

 

 

3,991

 

 

 

3,507

 

 

 

11,307

 

 

 

10,397

 

Amortization of intangible assets

 

 

6,154

 

 

 

4,575

 

 

 

16,797

 

 

 

13,766

 

Loss on disposal and write-down of assets

 

 

632

 

 

 

15

 

 

 

737

 

 

 

479

 

Unrealized loss (gain) on derivative financial instruments

 

 

(1,058

)

 

 

522

 

 

 

(841

)

 

 

(160

)

Interest expense

 

 

7,842

 

 

 

19,896

 

 

 

23,064

 

 

 

39,505

 

Share of loss (income) of joint ventures

 

 

(57

)

 

 

(801

)

 

 

349

 

 

 

(6,517

)

Income tax expense (recovery)

 

 

8,092

 

 

 

(5,500

)

 

 

(4,505

)

 

 

(173

)

Share-based compensation expense

 

 

826

 

 

 

881

 

 

 

2,307

 

 

 

881

 

IPO related costs

 

 

 

 

 

7,736

 

 

 

 

 

 

7,736

 

Changes in:

 

 

 

 

 

 

 

 

Trade and other receivables and prepaid expenses and other

 

 

(41,282

)

 

 

(2,137

)

 

 

(20,857

)

 

 

(10,092

)

Inventories

 

 

(6,254

)

 

 

(8,043

)

 

 

(19,173

)

 

 

(4,504

)

Trade payables, accrued liabilities and other payables, and provisions

 

 

44,177

 

 

 

11,810

 

 

 

36,541

 

 

 

62,420

 

Cash generated from operating activities

 

 

29,770

 

 

 

23,278

 

 

 

31,779

 

 

 

148,088

 

Interest received

 

 

140

 

 

 

67

 

 

 

353

 

 

 

191

 

Income taxes recovered (paid)

 

 

429

 

 

 

177

 

 

 

(548

)

 

 

3,407

 

Interest paid on leases

 

 

(3,479

)

 

 

(3,584

)

 

 

(10,291

)

 

 

(10,737

)

Interest paid on long-term debt and other

 

 

(4,354

)

 

 

(4,615

)

 

 

(13,616

)

 

 

(14,603

)

Net cash flows from operating activities

 

 

22,506

 

 

 

15,323

 

 

 

7,677

 

 

 

126,346

 

Cash flows from (used in) investing activities

 

 

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(11,748

)

 

 

(7,148

)

 

 

(31,253

)

 

 

(25,201

)

Acquisition of subsidiaries, net of cash acquired

 

 

(314,597

)

 

 

 

 

 

(314,597

)

 

 

 

Dividends received from joint ventures

 

 

 

 

 

1,500

 

 

 

553

 

 

 

5,991

 

Proceeds from disposals of property, plant and equipment

 

 

 

 

 

 

 

 

 

 

 

171

 

Additions to intangible assets

 

 

(4,147

)

 

 

(4,687

)

 

 

(14,470

)

 

 

(11,809

)

Net cash flows used in investing activities

 

 

(330,492

)

 

 

(10,335

)

 

 

(359,767

)

 

 

(30,848

)

Cash flows from (used in) financing activities

 

 

 

 

 

 

 

 

Net drawings on revolving credit facilities

 

 

55,000

 

 

 

285,000

 

 

 

120,000

 

 

 

200,000

 

Repayment of long-term debt

 

 

 

 

 

(293,000

)

 

 

 

 

 

(305,000

)

Principal payments of lease liabilities

 

 

(2,978

)

 

 

(2,267

)

 

 

(8,176

)

 

 

(6,311

)

Financing costs

 

 

(2,026

)

 

 

(1,088

)

 

 

(2,650

)

 

 

(1,736

)

IPO related costs

 

 

 

 

 

(7,736

)

 

 

 

 

 

(7,736

)

Dividends paid to shareholders

 

 

(3,420

)

 

 

 

 

 

(6,516

)

 

 

 

Proceeds from issuance of shares, net of issuance cost

 

 

288,853

 

 

 

 

 

 

288,853

 

 

 

 

Repayment of acquired loan

 

 

(21,376

)

 

 

 

 

 

(21,376

)

 

 

 

Net cash flows from (used in) financing activities

 

 

314,053

 

 

 

(19,091

)

 

 

370,135

 

 

 

(120,783

)

Net increase (decrease) in cash

 

 

6,067

 

 

 

(14,103

)

 

 

18,045

 

 

 

(25,285

)

Net foreign exchange difference

 

 

(85

)

 

 

(439

)

 

 

(429

)

 

 

74

 

Cash, beginning of period

 

 

26,546

 

 

 

63,389

 

 

 

14,912

 

 

 

74,058

 

Cash, end of period

 

 

32,528

 

 

 

48,847

 

 

 

32,528

 

 

 

48,847

 

Reconciliation of net income (loss) to Adjusted EBITDA

(Expressed in thousands of United States dollars)

 

 

For the three months ended
March 31,

 

For the nine months
ended March 31,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

Reconciliation of net income (loss) to Adjusted EBITDA

 

 

 

 

 

 

 

Net income (loss)

$

(6,321

)

 

$

(20,695

)

 

$

(50,933

)

 

$

87

 

Adjustments:

 

 

 

 

 

 

 

Income tax expense (recovery)

 

8,092

 

 

 

(5,500

)

 

 

(4,505

)

 

 

(173

)

Interest expense

 

7,842

 

 

 

19,896

 

 

 

23,064

 

 

 

39,505

 

Depreciation of property, plant and equipment

 

13,028

 

 

 

11,512

 

 

 

36,986

 

 

 

34,263

 

Depreciation of right-of-use assets

 

3,991

 

 

 

3,507

 

 

 

11,307

 

 

 

10,397

 

Amortization of intangible assets

 

6,154

 

 

 

4,575

 

 

 

16,797

 

 

 

13,766

 

EBITDA

$

32,786

 

 

$

13,295

 

 

$

32,716

 

 

$

97,845

 

Loss on disposal and write-down of assets

 

632

 

 

 

15

 

 

 

737

 

 

 

479

 

Unrealized loss (gain) on derivative financial instruments

 

(1,058

)

 

 

522

 

 

 

(841

)

 

 

(160

)

Acquisitions related cost

 

1,287

 

 

 

 

 

 

5,319

 

 

 

 

Transactional, recruitment and other bonuses1

 

 

 

 

6,502

 

 

 

2,374

 

 

 

6,745

 

Business transformation related costs2

 

1,152

 

 

 

1,055

 

 

 

4,004

 

 

 

5,600

 

Share of loss (income) of joint ventures

 

(57

)

 

 

(801

)

 

 

349

 

 

 

(6,517

)

EBITDA from joint ventures3

 

1,141

 

 

 

2,096

 

 

 

1,935

 

 

 

10,931

 

Initial public offering ("IPO") related costs

 

 

 

 

7,736

 

 

 

 

 

 

7,736

 

Share-based compensation expense

 

826

 

 

 

881

 

 

 

2,307

 

 

 

881

 

Lease payments

 

(6,457

)

 

 

(5,851

)

 

 

(18,467

)

 

 

(17,048

)

Adjusted EBITDA

$

30,252

 

 

$

25,450

 

 

$

30,433

 

 

$

106,492

 

  1. These costs include $2.4 million that was paid by the Company out of the Value Creation Plan ("VCP") in Q2 Fiscal 2022 and YTD Fiscal 2022 in connection with the Oaktree Transaction.
  2. These costs include services provided by Cerberus Operations and Advisory LLC and some of ABC's directors in the amount of $nil for Q3 Fiscal 2022 (Q3 Fiscal 2021: $0.4 million), and $0.0 million for YTD Fiscal 2022 (YTD Fiscal 2021: $0.9 million).
  3. Represents 50% of joint ventures' EBITDA, which corresponds to the Company's proportionate share of ownership in the joint ventures.

Reconciliation of net cash flows from operating activities to Adjusted Free Cash Flow

(Expressed in thousands of United States dollars)

 

 

For the three months
ended March 31,

 

For the nine months
ended March 31,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

Reconciliation of net cash flows from operating activities to Adjusted Free Cash Flow

 

 

 

Net cash flows from operating activities

$

22,506

 

 

$

15,323

 

 

$

7,677

 

 

$

126,346

 

Purchases of property, plant and equipment

 

(11,748

)

 

 

(7,148

)

 

 

(31,253

)

 

 

(25,201

)

Proceeds from disposals of property, plant and equipment

 

 

 

 

 

 

 

 

 

 

171

 

Additions to intangible assets1

 

(4,147

)

 

 

(4,687

)

 

 

(14,470

)

 

 

(11,809

)

Principal payments of lease liabilities

 

(2,978

)

 

 

(2,267

)

 

 

(8,176

)

 

 

(6,311

)

Dividends received from joint ventures

 

 

 

 

1,500

 

 

 

553

 

 

 

5,991

 

One-time advisory, bonus and other costs2

 

2,950

 

 

 

7,179

 

 

 

7,248

 

 

 

7,179

 

Net impact of hedge monetization

 

1,125

 

 

 

 

 

 

(8,412

)

 

 

 

Adjusted Free Cash Flow

$

7,708

 

 

$

9,900

 

 

$

(46,833

)

 

$

96,366

 

  1. Represents capitalized development costs under IAS 38 Intangible Assets.
  2. Includes $2.3 million paid from the VCP in connection with the Oaktree Transaction, and $2.7 million paid in connection with the acquisitions, which mainly consisted of professional fees.

Forward Looking Statements

Some of the information contained in this news 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 hereof. 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 the light vehicle industry and in light vehicles, both in North America and globally;
  • other risks related to the 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 global semi-conductor shortage;
  • 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 COVID-19 pandemic increased financial pressure, and including as a result of COVID-19 pandemic-caused OEM and supplier bankruptcies;
  • our assessments of, and outlook for Fiscal 2022 to Fiscal 2026, including expected sales, Adjusted EBITDA, and Adjusted Free Cash Flow for Fiscal 2022;
  • our business plans and strategies;
  • our competitive position in our industry;
  • prices and availability 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 effects of COVID-19 pandemic and to ongoing geopolitical conflicts and related international economic sanctions;
  • labor disruptions or labor shortages in our facilities, or those of our customers and suppliers, as a result of the COVID-19 pandemic; COVID-19 pandemic-related shutdowns; supply disruptions including disruptions caused by the COVID-19 pandemic and ongoing geopolitical conflicts and applicable costs related to supply disruption mitigation initiatives, including as a result of the COVID-19 and ongoing geopolitical conflicts; attraction/retention of skilled labor including as a result of the COVID-19 pandemic;
  • 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 European Union, Brazil and other markets, including risks related to the effects of ongoing and future geopolitical conflicts on the economies of these foreign countries and international economic sanctions;
  • cybersecurity threats;
  • our dividend policy and changes thereto;
  • our ability to provide earnings guidance in the future;
  • policies of our creditors concerting any existing or potential credit arrangements between them and the Company; and
  • the potential volatility of the Company’s share price.

Forward-looking information in this document includes, but is not limited to, statements relating to: any of the Company’s actions made in response to or in connection with the COVID-19 pandemic, 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, including the ability to meet customers' demands in the event of rapid ramping-up of production volumes following cessation of the COVID-19 pandemic-related slowdowns; 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 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 of the Company to complete future business acquisitions; the ability to successfully hedge risks related to currency exchange rates; the ability to finance future capital expenditures, and ability to fund anticipated working capital needs, debt obligations and other commitments; 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; 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 which 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 original equipment manufacturer 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 an experienced engineering team of approximately 600 skilled professionals and 6,150 employees worldwide. Figures represent ABC prior to the acquisitions of dlhBOWLES and Etzel. The Company offers six product groups: HVAC Systems, Interior Systems, Exterior Systems, Fluid Management, Air Induction Systems, and Flexible & Other.

Contacts

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

Contacts

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