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IBC Advanced Alloys Corp. (OTCQB:IAALF) Q3 2019 Earnings Conference Call May 30, 2019 12:00 PM ET
IBC Advanced Alloys Corp.（[OTCQB：IAALF]）2019年第3季度收益电话会议2019年5月30日中午12:00
Jim Sims - Director, IR & Public Relations
Mark Smith - Chairman of the Board
Jim Sims - IR＆Public Relations总监
马克史密斯 - 董事会主席
Good day and welcome to this IBC Advanced Alloys Webcast and Conference Call. I am Jim Sims, Director of Investor and Public Relations with IBC.
Before we begin the conference call, just a few reminders. Slides from today's presentation and the audio of this call are being broadcast live over the web. A recording of the broadcast will be made and a replay will be made available on the IBC website following the broadcast that's located at www.ibcadvancedalloys.com.
After our formal presentation, you'll be able to ask questions to the company using the questions pane on your computer screen or your handheld device, simply typing your question and click send. Those who are listening on our listen-only phone line can pose questions to me by emailing those at firstname.lastname@example.org. We may not have time to get back to all of your questions but we will try to get back to everyone after our call.
On the call today, we will be making forward-looking statements and investors are cautioned not to place undue reliance on such forward-looking information and statements. Additional information identifying risks and uncertainties is contained in IBC's filings for the quarter ended March 31, 2019, and in our annual information form for the fiscal year ended June 30, 2018, both available at sedar.com.
Joining us today and hosting the call is Mark Smith, Chairman of the Board of IBC. Mark, let's get stared.
Thanks, Jim and welcome everyone. Let's go to the key points of today's update brief.
Consolidated sales of $5.2 million in the quarter ended March 31, 2019 were higher over sales of $5.1 million in the year ago period that jumped by 33.3% as compared to the quarter ended December 31, 2018. We have been pleased to see significantly higher demand for copper alloy products across our product lines since January of this year which has reversed the industry-wide downturn in the copper sector than we saw in the last quarter of calendar year 2018. We're also beginning to see tangible results with the capital improvements that we made in the copper division as those expanded capabilities are now generating new sales orders for products that we could not previously manufacture.
Our beryllium aluminum alloy business took an important step recently when it advanced from first article qualification to initial commercial production that beryllium aluminum parts for the satellite manufacturing industry. This rapidly growing sector has a significant need for components that must operate in the extreme environment of space, and the beryllium alloy parts that we make are uniquely manufactured to meet those very demanding specifications. Finally, the company has closed or assumes will close on capital investment raises in calendar year 2019 for gross proceeds of approximately CAD1.295 million. It is being gratifying to say the least, to see both existing and new investors increase their commitment to IBC's long-term growth prospects through these raises.
We are continuing to see positive sales growth although I look forward to seeing these results significantly strengthen in the quarters ahead. Consolidated sales of $5.2 million in the third fiscal quarter of 2019 were slightly higher from prior year period sales of $5.1 million, and were slightly lower year-to-date by 2.7% over the first nine months of fiscal year 2018. However, as noted earlier, sales grew by 33.3% as compared to the quarter ended December 31, 2018. In the copper alloys division, Q3 2019, revenue of $3.6 million was lower by 2.7% over the prior year period and year-to-date sales of $9.8 million compared to $10 million in the comparable period of 2018. However, fiscal Q3 2019 sales jumped 32.6% sequentially over sales in the preceding quarter due to increased demand for copper alloys across our business.
Revenue in the quarter of $1.6 million for the Engineered Materials division, which specializes in manufacturing beryllium aluminum castings was higher by 10.5% over the comparable period of 2018 due to increased sales in the defense sector. Year-to-date sales of $4 million was 5.6% lower than the prior year period due to softening of the commercial or non-defense markets the company serves. On a sequential basis, fiscal Q3 sales advanced by 34.7% over sales in the quarter ended December 31, 2018 due to increased sales in the defense sector.
In our copper alloys division, we have installed and now operate a new computer numerical control or CNC vertical lathe. This machine is improving our efficiency on existing work by allowing us to make more aggressive cuts on rough forging. It also provides the additional speed and control required for higher tolerance finishes at a significantly reduced time. It is sized to accept work beyond the turning radius of any of our existing CNCs that has extended both, our capacity and our capability to produce products for both, commercial and defense markets. And as we are seeing new orders come in, I'm particularly excited to see how this continues to pickup in the coming quarters. I had the privilege of actually seeing this machine operate in person recently and I would have to say I was thoroughly impressed.
Thank you, Mark. And for those participating in the webcast, you can simply type in your question into the webcast tool on your screen and click send. For those participating in listen-only lines, you can pose your questions to me via email at email@example.com. While we wait for questions to come in, a couple of our shareholders, a number of them have sent in questions in advance of the email, Mark; so let's start with a couple of those questions. Here is number one; it appears that the downturn you experienced at the end of calendar 2018 has now passed. At least in copper alloys, do you see the upturn in copper demand from this past quarter continuing forward?
谢谢，马克。 对于那些参与网络直播的人，您只需在屏幕上的网络直播工具中输入您的问题，然后点击发送即可。 对于那些参与只听专线的人，您可以通过电子邮件jim.firstname.lastname@example.org向我提出您的问题。 当我们等待问题进入时，我们的几个股东，其中一些人已经在电子邮件之前提出了问题，马克
It's a great question and certainly, one the Board has asked our management operations team; and every time we get the opportunity and I'm happy to report that the consensus by the entire company, including the Board is, that we are past that point and we are going to see these sales continue to grow particularly in the copper alloys division which can make these sales happen much faster. The new capital projects that we put into place have really expanded our capabilities and that allows us to pursue multiple additional sales opportunities, many of which have been successful already; we expect to see that continue strongly into the future.
And here is a follow-on question from this investor, Mark. When do you expect to become cash flow positive again?
Well, this is a very difficult question for the company to respond to. We think that the trend in upward sales growth is an extremely positive factor for the company right now. We think that the fund raising that the company did to address some accounts payable issues and really kind of get turned around again was extremely important as well. But it is not an exact science to figure this out, and what we plan to do is continue to do what I call the basic blocking and tackling that we need to do to make this business successful. We need to make sure that we're investing in the business on a more frequent basis than what we have historically done. We need to get the right machining tools into this business that allow us to grow the sales and increase our profitability potential.
So, the board is committed to these items, we've demonstrated that in the last year or so now, the machines are on-site, they are operating, our sales growth opportunities are unbelievable compared to what they were even nine months ago; so we're excited. I know that's not a precise answer as to when we will become cash flow positive, but I can say that everything is trending very well in that direction.
Mark, here is a question from another investor. Gross margins in the business have declined in recent quarters, particularly in the beryllium aluminum business. How do you plan to increase margins going forward? Our sales price is too low or are volumes not sufficient to cover your fixed cost or is it something else?
马克，这是另一位投资者提出的问题。 最近几个季度业务毛利率有所下降，尤其是铍铝业务。 您打算如何提高利润率？ 我们的销售价格太低或者数量不足以支付您的固定成本，还是其他什么？
The business is a fascinating business. I invested in it because I'm very fascinated with the potential for this business in particular. Gross margins are -- have been a problem as of late, those gross margins have been driven not only in the EMC Group but the copper alloys group as well, largely by what the competition has been requiring us to do to stay in business. And as these cycles in business happen, there are a lot of people that stay in business longer than they should and continue to drive prices down in an atmosphere like this. And what I'm seeing and feel pretty good about it at this point in time is that, a lot of those competitors are now off to the side, they have lost their business, we have been able to keep our business where it is through the fantastic support of our shareholders and we are now in a position to make sure that we only put proposals out for new business that create profitability. So, as we continue to advance and get higher and higher sales volumes, this profitability and gross margin issue will by definition be taken care of.
这项业务是一项令人着迷的业务。我投入了它，因为我非常着迷这项业务的潜力。毛利率 - 最近一直是一个问题，这些毛利率不仅来自EMC集团，而且也来自铜合金集团，主要是竞争对手要求我们继续经营业务。随着这些业务周期的发生，有很多人在业务上的时间比他们应该的更长，并继续在这样的氛围中降低价格。而且我现在所看到的并且感觉相当不错的是，很多竞争对手现在偏离了一边，他们已经失去了生意，我们已经能够将我们的业务保持在最佳状态。我们股东的大力支持，我们现在能够确保我们只为创造盈利的新业务提出建议。因此，随着我们继续推进并获得越来越高的销售量，这个盈利能力和毛利率问题将根据定义得到解决。
And Mark, there is a follow on from that investor. Are you saying that you're now able to take business from others in the copper industry?
There is no doubt that we can do that, particularly with the two new pieces of equipment that we have installed recently. The copper division employees are so happy and excited about their potential in this business now that we're getting several requests at the Board level for additional capital investments to make this business stronger, longer lasting and sustainable, and that's where I wanted the go.
Here is another question from another investor. The company had forecasted profitability at one point for this year but backed off that. Do you anticipate profitability in 2020?
这是另一位投资者的另一个问题。 该公司已预测今年的盈利能力，但有所回落。 您预计2020年的盈利能力吗？
Yes, we've put our business plans together and we're obviously putting our 2020 fiscal year business together as we speak. I'll talk about this maybe from a little bit, more of a personal level as opposed to a company level. I'm the largest shareholder, I'm the Chairman of the Board, of this company. And I'm demanding that we reach profitability in 2020, fiscal year 2020 in this company. The team is committed to making that happen and as we get these business plans put together I think we'll have more details on that but I can tell you that this is something that not only myself but the rest of the board is very certain about. As we go forward, this company has that potential, it needs to now really grow to the level that it deserves to be at -- and that includes being profitable. I am demanding it.
是的，我们已将我们的业务计划放在一起，我们显然正在将2020财年业务整合在一起。 我可以从一点点谈论这个，更多的是个人层面而不是公司层面。 我是该公司的第一大股东，我是董事会主席。 而且我要求我们在2020年到2020财年实现盈利。 团队致力于实现这一目标，当我们将这些商业计划放在一起时，我想我们会有更多细节，但我可以告诉你，这不仅仅是我自己，而是董事会其他成员非常肯定的事情。。 在我们前进的过程中，这家公司具有这种潜力，它现在需要真正发展到它应有的水平 - 这包括盈利。 我要求它。
Mark, here is a question from several folks on Whatsapp. What is the status of the companies search for a new CEO?
Across search is ongoing, and are looking at it from multiple facets but the effort is ongoing and the board is committed to making that happen. We need to have the right leadership, day-to-day leadership in this company. I'm more than happy to fill those shoes for a short period of time. But we do need to get a permanent CEO and the board is in that process. So again, I apologize for the lack of certainty on that but the effort is ongoing.
搜索正在进行中，并且正在从多个方面对其进行研究，但努力正在进行中，董事会致力于实现这一目标。 我们需要在这家公司中拥有正确的领导，日常领导。 我很乐意在很短的时间内填满这些鞋子。 但我们确实需要获得一名常任CEO，而董事会正处于这个过程中。 所以，我再次为此缺乏确定性而道歉，但努力仍在继续。
Thanks, Mark. That exhausts our questions today. For those of you who weren't able to feature question in; but soon enough before you entered our visit, please send that question or those questions to be at email@example.com and will get back to you. That concludes our webcast and conference today. Thank you all for joining us. We look forward to talking to you soon. Take care, everyone.
谢谢，马克。 这就是我们今天的问题。 对于那些无法提问的人
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