Mission Critical Materials TSX-V: IB OTCQB: IAALF. Corporate Update July 2016

Transcription

1 Mission Critical Materials TSX-V: IB OTCQB: IAALF Corporate Update July 2016

2 LEGAL DISCLAIMER TSX-V: IB OTCQB: IAALF Statements and information herein that are not historical facts are forward-looking information. Words such as plans, intends, outlook, expects, anticipates, estimates, believes, likely, should, could, continue, will, may and similar expressions often identify forward-looking information and statements. Forward-looking statements and information may include, without limitation, statements regarding the operations, business, financial condition, liquidity, expected financial results, performance, obligations, market conditions, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies, market share growth, gross profit, outlook of IBC Advanced Alloys Corp. ( IBC ) and its business units selling, and general, selling and administrative expenses. Forward-looking information and statements contained herein are based on, among other things, IBC management s current assumptions, expectations, estimates, objectives, plans and intentions regarding projected revenues and expenses, the economic, industry and regulatory environments in which IBC operates or which could affect its activities, IBC s ability to attract and retain customers as well as IBC s operating costs and raw materials supply. By their nature, forward-looking information and statements, and the factors upon which they are based, are subject to risks and uncertainties which may be beyond IBC s ability to control or predict. Actual results or events could differ materially from those expressed or implied by forward-looking information and statements. Factors that could cause actual results or events to differ from current expectations include, among others: business cycle risk, including general economic and/or political conditions in the countries in which IBC operates; risk of commodity price changes including precious and base metals; risk of changes in foreign exchange rates, including the C$/US$ exchange rate; risk of the termination of distribution or original equipment manufacturer agreements; risk of equipment product acceptance and availability of supply; risk of increased competition; credit risk related to financial instruments; risk of additional costs associated with warranties and maintenance contracts; interest rate risk on financing arrangements; risk of availability of financing; risk of environmental regulation. Additional information on these factors and other risks and uncertainties that could cause actual results or events to differ from current expectations can be found in the IBC s annual MD&A for 2015, as updated in IBC s MD&A for the nine months ended March 31, Other factors, risks and uncertainties not presently known to IBC or that IBC currently believes are not material could also cause actual results or events to differ materially from those expressed or implied by forward-looking information and statements. All of these risks and factors should be taken into account in evaluating any forward-looking statements. Forward-looking information and statements contained herein about prospective results of operations, financial position or cash flows are presented for the purpose of assisting IBC s shareholders in understanding managements current view regarding those future outcomes and may not be appropriate for other purposes. Readers are cautioned not to place undue reliance on the forward-looking information and statements contained herein, which are given as of the date of this document, and not to use such information and statements for anything other than their intended purpose. IBC disclaims any obligation or intention to update or revise any forward-looking information or statement, whether the result of new information, future events or otherwise, except as required by applicable law. 2

3 KEY POINTS Sales Pipeline Activity Accelerating Sales inquiries, quotes, and orders are on the rise following news of the Company s restructuring and launch of capacity expansion. Production Capacity Expansion Now Underway Major equipment upgrades designed to boost production capacity and increase order fulfillment and sales are now in process. Expertise in Making Difficult-to-Manufacture Alloys IBC s ability to manufacture high-performance products with dissimilar and difficult-to alloy materials is a key market differentiator. Critical Technology Edge IBC s Beryllium-Aluminum near-net-shape casting technology is a faster and more cost-effective production approach than traditional methods. Potential Expansion Into New Alloy Products IBC is now positioned to harness in-house expertise to develop new alloys for use in a wide range of markets. 3

4 TSX-V: IB OTCQB: IAALF IBC: AT A GLANCE 4

5 IBC ADVANCED ALLOYS: AT A GLANCE Who We Are We are a leading supplier of high-performance beryllium-aluminum cast components and specialty copper and other alloys for global markets. Inception 2007 Markets We Serve Defense Aerospace Automotive Oil & Gas Electronics Resistance Welding Metal Casting Manufacturing Specialized Materials Plastic Injection Molding Employees 72 Locations Franklin, IN Royersford, PA New Madrid, MO Wilmington, MA 5

6 IBC ADVANCED ALLOYS: CAPITAL STRUCTURE Total Shares Outstanding 29,935,162 53,699,565 (fully diluted) Market Cap C$21.9M (as of ) 1 Year Price Range (as of ) TSX-V:IB -- C$ OTCQB: IAALD -- $ Average Daily Volume (TSX-V, 3 mo) Shareholder Structure 36,759 9% Insiders 91% Others 6

7 IBC BUSINESS DIVISIONS TSX-V: IB OTCQB: IAALF Engineered Materials Division Beryllium-Aluminum Advanced Castings Copper Alloys Division Copper Alloy Castings and Forgings Manufactures beryllium-aluminum (Be/Al) investment castings in near-net shapes Primary products including Beralcast (castable Be/Al) and ABX (castable Al/Be alloy for commercial applications and export) Customer base includes commercial and well-known aerospace companies Market dominated by single competitor 1 investment casting plant 19 employees Acquired 2010 Forges plates, rings, rods, and discs Cast billets and master alloys Alloys: beryllium copper, aluminum bronze, cupra nickel, chrome copper, oxygen-free, high conductivity copper Customer base covers most industrial sectors 2 semi-continuous casting foundries 1 open-die forging, ring-rolling, heat treatment, and machining plant 53 employees Established

8 HIGHLIGHTS: FISCAL 3 RD QUARTER FINANCIAL RESULTS Total revenues up 43% sequentially and up 6% over the comparable period in Quarterly loss ($296K) down 49% from the comparative period in 2015 and down 83% from the preceding quarter. Engineered Materials division posted record quarterly sales of $1.85M. Copper Alloys division saw sales rise sequentially, after a very weak Q2, and higher demand is seen for copper-based semi-finished and finished products. Cost-cutting measures reduced SG&A expenses in the quarter by 23% YOY. 8

9 SELECT CUSTOMERS TSX-V: IB OTCQB: IAALF BAE Systems European Space Agency General Dynamics Electric Boat Honda of America Manufacturing Honeywell Electronic Materials Kaman Kingsbury, Inc. Lockheed Martin Magna Newport News Shipbuilding Raytheon Schlumberger Thyssen Krupp UTC Aerospace Systems 9

10 TSX-V: IB OTCQB: IAALF RESULTS OF RECENT CORPORATE RESTRUCTURING 10

11 A RESTRUCTURED AND REVITALIZED IBC New, Highly Experienced U.S. Leadership New CEO is Major General David Heinz (USMC, ret.), the former Pentagon lead for the F-35 Joint Strike Fighter program. Two highly regarded business leaders have joined the Board, and industry veterans will continue as Presidents of the Company s two divisions. Production Capacity Expansion Underway IBC s recent capital raise is now fueling a major equipment upgrade and capacity expansion, which are deigned to shorten lead times for order fulfillment and fuel higher sales. Expanded Investor Base Restructuring has attracted new investors. Investor demand has helped drive a share price rise of >100% in two months. 4 Operational Streamlining and Overhead Cost Reduction Being Implemented 11

12 MY LEADERSHIP PHILOSOPHY TSX-V: IB OTCQB: IAALF Jim Collins Apostle Good to Great Level 5 Leadership First Who, Then What Confront the Brutal Facts (But NEVER loose Faith in Potential for Greatness) The Hedgehog Concept (build on the intersection of Passion, Best in the World and Economic Engine) The Flywheel A Culture of Discipline Technology as an Accelerator 12

13 NEW MANAGEMENT TEAM TSX-V: IB OTCQB: IAALF Major General David R. Heinz (Ret) President and CEO Former PEO for the Pentagon s F-35 JSF Program. Former VP/GM of Maritime System for irobot (autonomous underwater robots). Former portfolio manager for Middlebury Asset Advisors, Inc. BA, U.S. Naval Academy; MS, Florida Institute of Technology; MA Naval Warfare College. 3,000 flight hours in 22 T/M/S aircraft including the F- 18, A-6E, F-16, and several test aircraft. Chris Huskamp President, Engineered Materials Division Extensive experience in advanced materials development and implementation. Former Associate Technical Fellow at The Boeing Company. Principal of Huskamp Motorsports Engineering, which provides materials consulting services to Formula One, IndyCar and NASCAR teams. Former Engineering and Technology Manager for G&S Foundry. BS Metallurgical Engineering from the University of Missouri Rolla. Mark Wolma President, Copper Alloys Division 30+ years in manufacturing, sales and service of electrical, mechanical and hydraulic apparatus. Previously VP of Operations for Scherer Industrial Group, Inc. Director of the Copper and Brass Service Association and formerly active in the Electrical Apparatus Service Association. Attended Indiana University-Purdue University Indianapolis. David Anderson Incoming Chief Financial Officer Certified Management Accountant with over 20 years of progressive experience with public and private manufacturing companies, including M&A experience. Has served with EM Division since 2007 in various accounting, human resources, and information technology roles. BA in Accounting from University of Indianapolis. Anthony Dutton VP, Corporate Relations & Special Projects Extensive experience in corporate finance, business development and strategic management. Principal at Delu Corp., a strategic and financial advisory company. Director of several Canadian public and private companies. BA in Economics from the University of British Columbia, a M.Arch from Dalhousie University, MBA from the Cranfield School of Management in the UK. Jim Sims Director of Investor and Public Relations 25+ years in marketing, media relations, public affairs, and investor relations. Current CEO of Policy Communications, Inc. and VP of External Affairs for NioCorp Developments Ltd. Former White House aide, U.S. Senate Chief of Staff, CEO of the Western Business Roundtable, and Chairman of the Rare Earth Technology Alliance. BA, Georgetown University. 13

14 RECENT BOARD ADDITIONS TSX-V: IB OTCQB: IAALF Mark A. Smith, P.E., Esq. A 36-year veteran of operating, developing, and financing mining and strategic materials projects in the Americas and abroad, Mr. Smith is Executive Chair and CEO of NioCorp Developments, Ltd. (TSX:NB). Formerly, he served as President, CEO, and Director of Molycorp, Inc., where he was instrumental in taking the company public. Prior to that, Mr. Smith was the President and CEO of Chevron Mining Inc. from 2005 through He was also Vice President for Unocal Corporation, where he managed the real estate, remediation, mining, and carbon divisions for over 22 years. From 2000 to 2007, Mr. Smith served as a Director and Shareholder Representative of Companhia Brasileira de Metalurgia e Mineração (CBMM). Mr. Smith also currently serves as President, CEO and Director of Largo Resources (TSXv: LGO). Geoffrey Hampson A seasoned entrepreneur with 34 years of experience in advanced materials, technology, and mining. Mr. Hampson has founded and financed numerous successful private and public companies since Currently, he serves in the following capacity: CEO of Para Resources, Inc. (TSX-V: PBR); Chairman of Infracon Energy Services, Inc.; CEO and Board Chair of Fibrox Technology LP; CEO of Hampson Equities Ltd.; Chairman of the Board of LV Senior Housing LLC; Director and CFO of Environmental Resource Materials, LLC (a West Coast marine-based supplier of construction aggregates); and several others. 14

15 STOCK PERFORMANCE: 90 DAYS , , , , , , , ,000 50,

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18 TSX-V: IB OTCQB: IAALF OUR COMPETITIVE ADVANTAGES 18

19 OUR COMPETITIVE ADVANTAGES IP and Proprietary Know-How We own the intellectual property and we have the know-how for precision casting of Beryllium-Aluminum alloy, allowing us to produce complex, high-performance parts faster and less expensively than traditional methods. Precision Cast Beryllium-Aluminum Alloy Now Qualified We have successfully completed the multi-year qualification process for our precision cast Beryllium-Aluminum products with a major defense contractor (Lockheed Martin). Multiple Upstream Raw Material Suppliers We maintain multiple upstream sources for our raw materials, which helps to de-risk our supply chains. World-Class Workforce We have a world-class, highly skilled workforce that excels in highperformance alloy production, manufacture, and distribution. 19

20 TSX-V: IB OTCQB: IAALF THE IBC GO-FORWARD PLAN 20

21 ENGINEERED MATERIALS DIVISION Major Growth Drivers Beryllium-Aluminum alloy material and casting process now fully qualified by Lockheed Martin for use in the F-35 Lightning II Electro-Optical Targeting System (EOTS) system. First LRIP (LRIP 7 & 8) EOTS contract Sept 2014 First articles delivery (LRIP 7 & 8) July 2015 Second contract (LRIP 9&10) Aug 2015 Sniper hard tooling contract Sept 2015 Secured 4-year contract (worth US$4.8M over contract life) to serve as exclusive supplier of Beralcast cast components to a leading global manufacturer of semiconductor/electronics assembly equipment. Three other aerospace companies are now in the early contracting phase for Beryllium-Aluminum precision cast parts. Capital improvements designed to increase processing rates and reduce costs. Development of breakthrough alloys that enable advanced designs. 21

22 COPPER ALLOYS DIVISION Major Growth Drivers Greater gross margin capture through in-house production of semifinished and finished products. Demand growth for alloy billet from international customer base. Inventory expansion is intended to increase sales capture of unfilled orders going forward. Upgrade of heat treatment equipment to promote tight process controls of specialty alloys to capture increased demand. Higher copper prices up from 6-year low of January 2016 which provides increased incremental revenue. 22

23 EXPANSION INTO INNOVATIVE NEW ALLOY PRODUCTS Scandium-Bearing High-Performance Alloys Scandium promises major advancements in multiple clean-tech and transportation markets, including Solid Oxide Fuel Cells, vehicles, and commercial aviation. When alloyed with Aluminum, scandium lightens and strengthens many systems, reducing fuel use and relative emissions. Scandium supply has been the limiting factor. Current global consumption is only tpa. External estimate is that latent demand in aerospace + solid oxide fuel cells sectors is several hundred tpa. 1 $1-1.5 million of scandium oxide in a single airliner offers $10-15 million of present value in fuel savings. 2 IBC s in-house expertise and joint applications development initiative with prospective U.S. scandium producer NioCorp will help us catalyze new applications and possibly launch into this alloy business. 1 Source: Proprietary estimate prepared by ONG Commodities LLC 2 Source: ONG Commodities LLC. Based on a B737NG flying hours per year, and a long-term jet fuel price of $2-3/gallon. Savings potential is greater in long haul aircraft with higher overall utilization. 23

24 SUMMARY TSX-V: IB OTCQB: IAALF Materials Revolution Is Driving Higher Demand for IBC Products Manufacturers and governments want stronger, lighter, more effective, and more fuel efficient systems, particularly in defense platforms. IBC is well positioned to deliver these values with our proprietary castings and alloys. Production Capacity Expansion Sets Stage For Future Growth Equipment upgrades now being made are designed to improve production rates and yields, decrease outsourcing, increase sales of existing lines, and start the important work to bring new materials online for the next phase in our growth. Powerful Competitive Advantages Our precision casting capability with Beryllium-Aluminum alloys, and our ability to manufacture high-performance products with dissimilar and difficult-to alloy materials, are a key market differentiators. Potential Expansion Into New Alloy Products IBC is now positioned to harness in-house expertise to develop new alloys for use in a wide range of markets. 24

25 TSX-V: IB OTCQB: IAALF THANK YOU. QUESTIONS? For More Information: Jim Sims, IBC Investor Relations C: