TORONTO, April 26, 2023 (GLOBE NEWSWIRE) — Shawcor Ltd. (“Shawcor” or the “Company”) (TSX: SCL) announced today that it will be expanding its Composite Systems segment production capabilities in the US, with commitments for two new operating facilities. Capital expenditures for these operating facilities are expected to represent, in the aggregate, approximately $60 million across 2023 and 2024. The 2023 portion of these organic growth investments form a part of the Company’s previously communicated capital expenditure guidance of $160-$180 million for the current year. These facilities will expand the Company’s capability to deliver premium spoolable composite pipe and market-leading underground fuel and water storage tanks, more specifically:
- An additional production facility for its Flexpipe® business, located in Texas. The Flexpipe business manufactures premium flexible fiberglass reinforced composite pipe used for oil and gas gathering and water disposal lines, carbon dioxide injection lines and other applications requiring corrosion resistance and high-pressure capabilities, and;
An additional production facility for its Xerxes® business, located in South Carolina. The Xerxes business manufactures market-leading fiberglass reinforced plastic underground storage tanks, primarily used within the retail fuel, storm water and wastewater markets.
- “These substantial organic investments are an important part of our overall strategy to elevate returns for the entire organization,” said Martin Perez, President of Shawcor’s Composite Systems segment. “The strategic placement of these new facilities positions our Flexpipe business closer to our US customer base and expands Xerxes’ ability to serve the eastern-US market with underground storage tanks. The added scale will serve to unlock additional revenue generating capacity, and the efficiencies of these new plants should, over time, enhance the margin profile of the segment.”
Both facilities will be populated in a phased manner, are expected to be operational by the end of 2024 and to approach normalized levels of production in 2026. The Company believes that, in combination, these facilities, with initial equipment installations, have the potential to enable over $100M of incremental annual revenue generating capacity as they approach efficient utilization levels.
Shawcor Ltd. is a growth-oriented, global material sciences company serving the Infrastructure, Energy, and Transportation markets. The Company operates through a network of fixed and mobile manufacturing and service facilities. Its three business segments, Composite Systems, Automotive & Industrial and Pipeline & Pipe Services enable responsible renewal and enhancement of critical infrastructure while lowering risk and environmental impact.
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Forward Looking Information
This news release contains forward-looking information within the meaning of applicable securities laws. Words such as “may”, “will”, “should”, “anticipate”, “plan”, “expect”, “believe”, “predict”, “estimate” or similar terminology are used to identify forward-looking information. Such statements, other than statements of historical fact, are predictive in nature or depend on future events or conditions. Specifically, this document includes forward-looking information in respect of, among other things: the Company’s expected investments during 2023 and 2024 to expand capacity within the Composite Systems segment and other segments of the Company’s business; the anticipated results and timing of the Company’s capital expenditures investments and the expected impact on the Company’s revenue generating capacity, operational efficiencies, margin profile enhancement, and financial results; and statements regarding timing for completion of the new facilities, and timing of achievement of anticipated production levels. This forward-looking information is based on assumptions, estimates and analysis made in the light of the Company’s experience and its perception of trends, current conditions and expected developments, as well as other factors that are believed by the Company to be reasonable and relevant in the circumstances. In particular, forward-looking statements regarding the Company’s expectations in respect of anticipated incremental annual revenue generating capacity resulting from its capital expenditure investments presented above are based on many assumptions including, but not limited to, the following material assumptions: expected demand for the Company’s products in the Composite Systems segment, including the ability to grow such demand over the timeline expected to complete such facilities and achieve desired operational levels; the Company being able to complete the construction and commissioning of these facilities on their expected timeline and budget, as applicable, and its ability to achieve and maintain necessary production and efficiency levels once operational; expectations regarding the Company’s ability to attract new customers and develop and maintain relationships with existing customers; the continued availability of funding required to meet our anticipated operating and capital expenditure requirements over such time; continued competitive intensity in the segments in which the Company operates consistent with levels experienced in 2022 and to date in 2023; no significant legal or regulatory developments, other shifts in economic conditions, or macro changes in the competitive environment affecting our business activities; key interest rates remaining relatively stable throughout 2023 to 2026; global oil and gas prices stabilizing at current levels; expectations regarding the Company’s ability to continue to manage its supply chain and any future disruptions; the costs of raw materials and labour, including as a result of labour shortages and capacity constraints; the easing of supply chain shortages and the continued supply of and stable pricing or the ability to pass on higher prices to its customers for commodities used by the Company; and the availability of personnel resources sufficient for the Company to operate its business segments. Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from those predicted, expressed or implied by the forward-looking information. The forward-looking information is provided as of the date of this news release and the Company does not assume any obligation to update or revise the forward-looking information to reflect new events or circumstances, except as required by law.
Source: Shawcor Ltd.