Exco Technologies (TSE:XTC) reported a higher year-over-year profit on modest revenue growth in its fiscal 2026 first quarter, as gains in its Automotive Solutions segment more than offset softer die-cast tooling demand within Casting and Extrusion.
On the company’s earnings call, President and CEO Darren Kirk described the quarter as a “solid start” amid “economic fluidity and shifting trade policies,” emphasizing Exco’s diversification strategy and focus on operational efficiency. CFO Matthew Posno said consolidated sales for the quarter ended December 31, 2025 were CAD 149.5 million, up 4% from CAD 143.6 million a year earlier, including about CAD 1 million of benefit from foreign exchange movements tied primarily to a stronger euro versus the Canadian dollar.
Quarterly profitability and cash flow
Posno said the company’s effective tax rate was 31.8%, down from 35.8% last year, reflecting geographic mix, foreign tax rate differentials, and losses that cannot be tax affected for accounting purposes.
Cash provided by operating activities was CAD 10.2 million, compared with CAD 10.4 million in the prior-year quarter. Free cash flow increased to CAD 4.8 million from CAD 3.8 million, while cash used in investing activities declined to CAD 4.5 million from CAD 7.7 million. Exco reported growth capital expenditures of CAD 200,000 and maintenance capex of CAD 4.3 million for the quarter.
Automotive Solutions: sales rise and profit jumps
Automotive Solutions delivered a notable improvement. Segment sales were CAD 79.3 million, up 10% year over year, driven by relatively stable vehicle production volumes in North America and Europe, new product launches, favorable vehicle mix, and the impact of prior-year inventory destocking in the accessory channel. Kirk said the destocking pressure seen a year ago has abated, resulting in a “cleaner run rate” that better reflects end-market demand.
Segment pre-tax profit increased 37% to CAD 6.5 million. Management attributed the improvement to higher volumes, favorable mix, and better overhead absorption. Kirk also pointed to operational execution in Mexico, where government-mandated minimum wage increases have pressured the broader industry. He said Exco offset those increases through “aggressive productivity improvements and the development of new automation,” keeping overall labor costs effectively flat versus the prior year.
Posno added that pricing discipline—particularly on new programs—remains a key lever to mitigate cost inflation. He said sales should continue to benefit from recent and upcoming launches that increase content per vehicle, and that quoting activity remains encouraging.
Casting and Extrusion: die-cast tooling softness offsets extrusion strength
Casting and Extrusion segment sales were CAD 70.2 million, down 2% year over year. Posno said favorable foreign exchange contributed approximately CAD 700,000 to sales.
Within the segment, extrusion tooling sales held up well, supported by end markets including building and construction, transportation, sustainable energy, and electrical components. Kirk described the extrusion tooling market as resilient, citing diverse applications and countercyclical dynamics where slower general activity can push extruders toward shorter runs and more complex jobs, which can be tooling-intensive. He also said extruders may use quieter periods for maintenance and efficiency upgrades, supporting demand for Exco’s capital equipment offerings.
By contrast, die-cast tooling sales declined as OEMs deferred new tooling and program launches amid softer EV demand, regulatory uncertainty, and tariff-related considerations. Kirk said the slowdown in die-cast molds was “largely a reaction to the political landscape in the United States,” describing OEMs pausing or canceling programs to reassess the regulatory and emissions environment and pivoting away from pure EV platforms toward hybrids and internal combustion engine vehicles.
Management said conditions are improving. Kirk noted that tooling demand for hybrid and ICE platforms picked up substantially in the past quarter and that quoting activity is currently strong. With lead times of about six months, he said die-cast tooling revenue is expected to “begin to tick up late in Q2” and improve through the remainder of the year. Posno similarly said quoting activity and orders for die-cast tooling improved during the quarter, and that demand for Exco’s additive (3D printed) tooling remained strong, particularly for larger, more complex applications such as giga press molds.
The segment reported pre-tax profit of CAD 3.5 million, down 6%, reflecting lower volumes, unfavorable mix, higher direct labor and overhead costs, and increased depreciation. Posno said performance at newer operations—including Castool greenfield facilities and Extrusion Germany—also weighed on results, with improvements expected as operations scale. Management highlighted continued emphasis on pricing initiatives, operational efficiency, process standardization, and automation.
Capital spending moderates; tariffs and reshoring in focus
Following several years of elevated growth-related capital investment, management said it intends to moderate spending and focus on optimizing existing assets. Posno said fiscal 2026 capital spending is forecast at CAD 28 million, down from CAD 36 million in fiscal 2025.
Exco ended the quarter with net debt of CAD 67.1 million, unchanged from September 30, 2025. The company had CAD 24.6 million in cash and CAD 59.8 million of available liquidity under its CAD 151 million committed credit facility, which matures in March 2027. Posno said Exco remained in compliance with all financial covenants.
In prepared remarks, Kirk said global trade policy uncertainty—particularly tariffs—continues to be a key macro consideration. He said nearly all of Exco’s products sold within North America comply with USMCA rules of origin and are expected to remain exempt from tariffs “in the long term.” He also pointed to reshoring of industrial manufacturing in North America as a tailwind, arguing that tariffs could make offshore tooling less competitive and increase demand for domestic and nearshore sourcing given Exco’s footprint in the U.S., Mexico, and Canada.
During Q&A, Kirk said aluminum extrusion demand tied to AI data centers is currently in the “low single digits” as a percentage of business, but is growing “well into the double digits,” calling it a tailwind for the foreseeable future. He also said the company’s M&A pipeline is “not very robust” at the moment, with management focused on harvesting returns from the prior capex cycle, while maintaining interest in tuck-in opportunities given balance sheet capacity.
About Exco Technologies (TSE:XTC)
Exco Technologies Ltd is a designer, developer, and manufacturer of dies, moulds, components and assemblies, and consumable equipment for the die-cast, extrusion, and automotive industries. The company reports in two business segments namely, Casting and Extrusion segment and Automotive Solutions segment. It generates maximum revenue from the Automotive Solutions segment. The Automotive Solutions segment produces automotive interior components and assemblies primarily for seating, cargo storage, and restraint for sale to automotive manufacturers and Tier 1 suppliers.
