Q2 headline: Consolidated gross sales fell to CAD 157.6M and internet revenue to CAD 5.8M, with CAD 6.9M of the gross sales decline from international‑alternate headwinds and CAD 2.4M of after‑tax restructuring expenses; administration says bettering order exercise helps a stronger second half.
Automotive Options: Excluding FX the phase grew about 5% on new program wins and blend, however margins had been squeezed by product combine, greater labor and materials prices, so administration is pursuing pricing, lean manufacturing and automation to revive profitability.
Casting & Extrusion and diversification: Giant‑mould gross sales had been weak as OEM program delays labored by way of, however backlog was “rebuilt meaningfully” and administration expects significant H2 income enchancment whereas pushing development in additive manufacturing, nuclear part machining and AI‑infrastructure extrusions.
Exco Applied sciences (TSE:XTC) reported fiscal 2026 second-quarter outcomes that administration mentioned had been formed by “non permanent softness in massive mould volumes, restructuring actions, and international alternate headwinds,” whereas pointing to bettering order exercise and a stronger second-half outlook.
Quarterly outcomes affected by FX and restructuring
CFO and VP of Finance Matthew Posno mentioned consolidated gross sales for the quarter ended March 31, 2026, had been CAD 157.6 million, down from CAD 166.1 million a yr earlier. He attributed CAD 6.9 million of the decline to international alternate, including that excluding FX, gross sales had been down about 1%.
Internet revenue was CAD 5.8 million, or CAD 0.15 per share, in contrast with CAD 6.4 million, or CAD 0.17 per share, within the prior-year interval. Posno mentioned outcomes included CAD 2.4 million (CAD 0.06 per share) of after-tax restructuring expenses. EBITDA was CAD 18.0 million, or 11.4% of gross sales, versus CAD 19.7 million, or 11.8%, final yr.
Posno additionally famous the efficient tax price decreased to 26.4% from 33.7% a yr earlier, reflecting geographic earnings combine and international tax price differentials.
President and CEO Darren Kirk mentioned Exco’s Automotive Options phase delivered “one other stable quarter” regardless of a modestly softer year-over-year manufacturing backdrop, with North American gentle car manufacturing down about 2% and Europe down 1%. He pointed to U.S. SAAR of 16.3 million models in March, below-prepandemic seller inventories, an growing older fleet, and elevated OEM incentives as supportive elements.
Posno reported Automotive Options gross sales of CAD 82.4 million, down 1% yr over yr, with international alternate decreasing gross sales by about CAD 4.5 million. Excluding FX, phase gross sales elevated roughly 5%, which Posno attributed to secure manufacturing ranges, contributions from new program launches, and favorable car combine.
Pre-tax revenue within the phase was CAD 7.0 million, down CAD 0.9 million from the prior yr. Posno mentioned the decline mirrored product combine, greater labor prices, and international alternate impacts. Kirk added that greater oil costs tied to Center East geopolitical tensions had been starting to maneuver by way of the availability chain within the type of greater polymer, thread, yarn, and resin prices, whereas “buyer value down requests have returned after a comparatively quiet interval.”
Administration mentioned it’s pursuing pricing actions the place possible—notably on new program awards—together with lean manufacturing and automation to offset inflation and labor value will increase. Kirk mentioned quoting exercise stays wholesome and that Exco sees alternatives to develop content material per car by way of new and progressive merchandise.
Casting & Extrusion: massive mould softness offset by rebuilding backlog
In Casting & Extrusion, the quarter mirrored what Kirk described as “two distinct dynamics.” Giant mould gross sales had been materially decrease yr over yr as Exco labored by way of a softer order e book. Kirk reiterated prior commentary that OEMs had deferred tooling and program launches by way of a lot of final yr as a consequence of softer EV demand, evolving regulatory frameworks, and tariff-related uncertainty.
Nonetheless, Kirk mentioned order exercise was “exceptionally robust” throughout the quarter, with backlog “rebuilt meaningfully” and quoting exercise excessive. With typical lead instances of 4 to 6 months, he mentioned the corporate expects “significant sequential and year-over-year income enchancment within the second half of 2026.” Posno equally mentioned strengthened order exercise and ramping applications are anticipated to help improved efficiency within the second half.
Posno reported Casting & Extrusion phase gross sales of CAD 75.1 million, down CAD 8.1 million, or 10%, yr over yr. He mentioned extrusion tooling demand remained stable, supported by various finish markets together with development, transportation, renewable power, and AI-related infrastructure, whereas die-cast tooling revenues declined as a consequence of prior program delays.
Phase pre-tax revenue was CAD 3.4 million, down CAD 1.0 million from final yr. Posno mentioned outcomes had been impacted by CAD 0.8 million of incremental restructuring prices, together with decrease volumes, product combine, and better labor and overhead. He famous the restructuring prices included a CAD 1.0 million accrual associated to the closure of Exco’s massive mould facility in Mexico, which administration mentioned ought to help improved profitability going ahead.
Kirk mentioned the Mexico closure mirrored restricted development alternatives within the home market and Exco’s goal to consolidate manufacturing. He said that as of March 31, workers had been notified, closing buyer orders fulfilled, and tools relocation underway, and that the closure shouldn’t be anticipated to materially cut back future income alternatives.
Additive manufacturing, nuclear diversification, and extrusion end-market tailwinds
Kirk highlighted continued momentum in Exco’s additive manufacturing enterprise, saying year-to-date gross sales are operating forward of expectations as adoption broadens throughout the die-cast tooling business. He cited buyer curiosity tied to manufacturing effectivity and more and more complicated tooling necessities, together with purposes for very massive castings and quicker cycle instances, and mentioned Exco holds “a transparent management place” in additive options.
He additionally mentioned diversification into the nuclear power finish market, describing efforts to leverage precision machining tools used for very massive molds to pursue machining of nuclear elements for the home Canadian power market. Kirk mentioned quoting exercise is encouraging and that orders are starting to circulate, calling it “a promising space of diversification.”
On extrusion, Kirk mentioned demand remained stable within the Americas and Europe, and famous that Exco’s Michigan facility benefited from the completion of warmth remedy vacuum tools set up and different capability enhancements. He emphasised the phase’s end-market variety, citing demand from constructing and development, transportation, renewable power, electrical purposes, and AI infrastructure.
Kirk mentioned the build-out of AI information facilities is driving demand for high-precision aluminum extrusions utilized in warmth sinks and superior cooling options, and mentioned the demand “is simply accelerating.” In Q&A, administration added that AI-infrastructure-related extrusions seem like “accelerating towards 10%,” or “definitely higher single digits,” of complete extrusions, although Kirk mentioned it’s troublesome to quantify short-term modifications exactly.
In Europe, Kirk mentioned efficiency “continues to bifurcate,” with Italy having a powerful quarter on value management and overhead absorption, whereas Germany stays a spotlight as a consequence of elevated power prices and weaker automotive demand. He mentioned management is working to enhance manufacturing predictability and lead-time consistency.
Money circulate, capital spending, and outlook elements
Posno mentioned money supplied by working actions was CAD 11.1 million, up from CAD 8.7 million a yr in the past, and free money circulate rose to CAD 5.9 million from CAD 2.8 million. Financing outflows included CAD 4.0 million in dividends and CAD 2.5 million in share repurchases below Exco’s regular course issuer bid. Investing actions used CAD 5.8 million, together with CAD 1.7 million in development capex and CAD 4.1 million in upkeep capex.
After a number of years of elevated growth-related investments, Posno mentioned capital spending has moderated, with fiscal 2026 capex anticipated to be roughly CAD 25 million, targeted on upkeep, productiveness, and choose development initiatives. Exco ended the quarter with CAD 22.5 million in money and about CAD 60 million obtainable below its credit score facility, and Posno mentioned the corporate stays in compliance with monetary covenants.
Trying forward, Kirk mentioned the macro surroundings stays unsure, together with world commerce coverage and the continued USMCA evaluation forward of a required resolution by July 1. He mentioned practically all of Exco’s merchandise offered inside North America adjust to USMCA guidelines of origin and that the corporate maintains a considerable U.S. manufacturing footprint for extrusion dies and huge mould merchandise. Kirk added that if elevated tariffs on imports from non-compliant jurisdictions persist, Exco’s positioning relative to sure world friends “ought to enhance.”
In response to an analyst query about value pass-through and contract constructions, administration mentioned Automotive Options applications usually run 4 to 5 years and are sometimes mounted worth with restricted pass-through capability, whereas accessory-type applications can provide higher alternatives for pricing changes. For big mould, administration mentioned inflation threat is mitigated as a result of metal—the important thing enter—is usually acquired on the time the contract is signed.
On M&A, Kirk mentioned Exco continues to search for “choose and tuck-in acquisitions,” however “nothing on the entrance burner” and “nothing to speak about at this level,” with present concentrate on natural development and executing on bettering volumes, nuclear alternatives, and efficiency in newer amenities.
About Exco Applied sciences (TSE:XTC)
Exco Applied sciences Ltd is a designer, developer, and producer of dies, moulds, elements and assemblies, and consumable tools for the die-cast, extrusion, and automotive industries. The corporate stories in two enterprise segments specifically, Casting and Extrusion phase and Automotive Options phase. It generates most income from the Automotive Options phase. The Automotive Options phase produces automotive inside elements and assemblies primarily for seating, cargo storage, and restraint on the market to automotive producers and Tier 1 suppliers.
