Exco Technologies has 21 facilities in nine countries – and the smarts to diversify away from autos

Take a quick tour of one of Exco’s main plants in Newmarket, Ont., north of Toronto, and CEO Darren Kirk impresses you just not just with his financial knowledge but that of operations, too.

Kirk, 54, spent roughly 15 years as a manufacturing analyst with investors’ services giant Moody’s before joining Exco as executive vice-president in 2015. He then succeeded decades-long CEO Brian Robbins in 2019. The son of Exco founder H.H. Robbins—who started the company in his garage in 1952—shifted up to executive chairman. Kirk also happens to be Brian Robbins’s son-in-law.

The company has 20 manufacturing locations in nine countries and 4,500 employees, and when Kirk arrived, its Newmarket plant pretty much specialized in making tools for the auto industry and aluminum extrusion markets. But lately Exco has been expanding into nuclear and defence.

The tour includes aluminum moulds bigger than a person, machines that 3D-print smaller components for automakers, an explanation of how Exco uses AI to monitor tool life and part quality and more. “Beginning in about 2019, we undertook a substantial capital investment in our casting and extrusion segment, including new plants for its Castool division in Morocco and Mexico, adding significant equipment at our large mould facility in Newmarket to participate in the giga-mould market, the insourcing of heat-treatment capabilities and the acquisition of Halex, Europe’s second-largest extrusion-die manufacturer.”

Exco is sometimes lumped in with Canadian auto parts giants Magna, Linamar and Martinrea. But those companies actually produce parts. “We’re mainly a tooling provider and have a niche automotive accessory business,” Kirk explains.

Investors may have caught Exco at an inflection point. The share price peaked at over $15 in 2015, then sank to near $5 early in the Covid-19 pandemic. “We’re through several years of high capex spend, and now we’re squeezing out the returns,” he says.

There are the benefits of patient family ownership, as well. Brian Robbins owns about 26% of Exco; director Ed Kernaghan has almost the same amount. They won’t sell their stakes tomorrow. And there’s a dividend yield of greater than 5% that Kirk says is “well covered by our cash flow.”

In the long term, many trends look promising. Automakers will continue to use more aluminum, and governments will continue to invest in nuclear and defence, Kirk says. As for Donald Trump, Kirk adds, he can post whatever he wants on social media.