IBC Advanced Alloys Corp.

Okay. Thanks Jim.

And welcome to everyone. First of all, let me wish everyone the best in terms of your health right now, given the COVID-19 situation and want to assure everyone that the IBC family is safe and sound as we speak which we're very happy to report.

But let's go to the key points of today's update briefing. IBC recorded a comprehensive income of $171,000 in the quarter, which compared to a loss of $639,000 in the prior year period.

Profitability was driven by higher revenue and stronger gross margins. And the way I like to phrase that in a more simple way is performance, performance, performance.

Sales in our Copper Alloys division improved by 10% in the quarter and by 16% in the year-to-date period as compared to the corresponding periods of 2019. Sales in our Engineered Materials division rose by 18% in the quarter and were higher by 20% in the year-to-date period as compared to the comparable prior year periods.

Obviously sales were up 12% in the quarter and by 17% year-to-date over the comparable prior year periods. Comprehensive gross margin strengthened in the quarter to 20.4% from 11.9% in the prior year period and rose 15.9% on a year-to-day basis from 10.1% in the nine months ended March 31, 2019.

Consolidated adjusted earnings before interest, taxes, depreciation and amortization or adjusted EBITDA was $825,000 for the quarter which compared to adjusted EBITDA of negative $167,000 for the prior year periods. Year-to-date, adjusted EBITDA was 891,000 as compared to a negative 891,000 into comparable prior year period.

All in all, it was a much improved quarter for IBC and the Board of Directors and I look forward to seeing more of these kinds of results and trends going forward. Here you can see the quarter-on-quarter trends in IBC sales.

Our Engineered Materials division posted sales of $1.9 million in the most recent quarter. That was an 18% increase of sales of $1.6 million in the prior year period.

The Copper Alloys division generated sales in the quarter of $4 million which was 10% higher than in the prior year period. On a consolidated basis, obviously sales for the quarter were $5.9 million which was a 12.5% increase over sales at $5.2 million in the comparable quarter of 2019 Here you see four metrics charted over the prior four quarters.

Sales are shown in the green line and chartered against the right axis of this chart. Net income is shown in the purple line, operating income in the blue line and adjusted EBITDA in the orange line, all three of which are plotted against the left axis.

Each of these metrics were in positive territory at the quarter ended March 31, 2020 which was very good to see. I believe that over the long term with a continued focus on improved performance, we should continue to see these trends headed in this direction.

Although COVID-19 has forced many businesses to close or significantly scale back, IBC has been able to continue manufacturing our strategic alloy products because of our essential role as part of the United States defense industrial base. All four our U.S.

facilities remain in operation and are serving customers in both the defense and commercial sectors. Demand for our products has slowed somewhat as a result of the COVID-19 pandemic and we may not feel the full effects of any continuing decreased market demand until future quarters, but we think our blend of defense and commercial customers will definitely help to temper any COVID-19 impacts.

In our Copper Alloys division. Our computer numerical control or CNC vertical lays is improving our efficiency on existing work by allowing us to make more aggressive cuts on rough forgings.

It also provides the additional speed and control required for higher tolerance finishes at a significantly reduced time. It is size to accept work beyond the turning radius of any of our existing CNCs.

That has extended both our capacity and capability to produce products for both commercial and defense markets. Our new CNC bridge mill improves our efficiency on existing work with additional capability to mill, drill and tap specialized products for customers such as the copper alloy ring shown here on the bottom right.

In particular, these enhanced production capabilities have allowed us to produce more value added products for industries like oil and gas and defense. In our EMC business where we make investment cast beryllium-alloy parts for Lockheed's F-35 aircraft and other applications we expect business to grow as Lockheed continues to ramp-up production of the plane.

Lockheed reports that F-35s are now operating in nine nations and that more than 520 planes have been delivered so far? Our current volume of products for Lockheed is still considered low rate of additional production, but that will change as Lockheed and United States Defense Department move the program to full rate production likely in the next year or so Are there are beryllium-aluminum alloy business also is producing high performance parts for the satellite manufacturing industry.

This rapidly growing sector has a significant need for components that must operate in the extreme environment of space as a beryllium alloy parts that we make are uniquely manufactured to meet those very demanding specifications. In our Copper Alloys business, our capital equipment investments, specifically the upgrades in machine tools have already resulted in new business opportunities.

As a result of these upgrades, we are able to work on expanding sales into existing electronics markets with both current and prospective customers. New customers have already been signed up because of these expanded production capabilities.

While much of our sales to the defense sector are currently coming from the beryllium-aluminum business, we are also developing strategic relationships with new prime vendors in the defense sector for Copper Alloy products. Was that not happy to take any questions?

Thank you, Mark. For those participating on the webcast, you can type in your questions into the webcast tool shown on your screen and click send.

We'll see that on our end. For those participating in the listen only phone line, you can pose your questions to us via email.

Send those to me at [email protected] or please feel free to text me at 303-503-6203. Mark, our first question comes from Greg who asks, have you seen any impact to your defense sector business because of the pandemic?

Actually we have not seen an impact at all on the defense side, which I'm happy to report. We do think that, to the extent that we are going to have impacts mostly come from the commercial side and that's when we're pretty glad that we've got this nice balance of defense work and regular commercial work.

Okay. We have a question from Ludo.

There's a big swing in the category called other income forensic expense between 2019 and 2020 of this quarter of about $270,000. Can you elaborate on that difference?

And what expectations are there in the future?

Yes. The largest portion of that impact, and there are several components to it, but the largest impact comes from the interest debt – interest bearing debt instruments that we have within the company.

And you will continue to see that type of number, however, our strategy is going to be very, very simple going forward and that is we're going to continue to focus on performance, performance, performance and we're going to continue to work to improve our gross margins, improve the volume of business that we're doing. And there at the right point in time, we'll be able to fix that balance sheet and get rid of that debt so that that piece of the financials becomes a much more attractive piece of the financials.

All right. Here's a question from Steve who asks, it appears that your Engineered Materials division has really turned the corner.

How do you see the future of beryllium-aluminum alloys – how do you see the future of the beryllium-aluminum alloys business?

I agree with your assessment that our Engineered Materials division in fact has turned the corner and it does appear to be quite sustainable at this point in time. And because of the very good performance that EMC has had with a customer like Lockheed Martin, we've made a very good day for ourself at this point.

And we've got people coming in to see us and ask us about our capabilities to make these beryllium alloy – beryllium-aluminum alloy part. We think that the business is set for additional growth and we're pretty excited about it all in all, between the F-35, multiple other Lockheed Martin programs that that would become available to us because of our performance in the F-35 sector, as well as the satellite industry.

I'd have to say that we're at about EMC at this point in time.

Okay. Here's a question from John.

What percentage of copper division revenues are from oil and gas sector? And how do you expect this revenue level to hold up in the low price environment currently prevailing?

We estimate that about 10% of our copper business is a result of the oil and gas business. Obviously, that business is changing very dramatically as we sit here.

And so we're monitoring that carefully. But the good news is that we have a very diverse range of businesses that we serve out of the copper business in particular.

And so any one segment of business that has troubles, the good news is we've got multiple other segments that we're still serving. So I think diversity is the key there and we'll continue to focus on marketing to that program.

Mark, here's another question. Can you elaborate on scandium-aluminum products?

Well, first of all, I'm very excited about scandium-aluminum products and for multiple reasons, not just IBC, but other companies that are very interested in called NioCorp. And the work and the effort between the two companies is continuing.

We remain very excited about what these two – these two metals can do when you alloy them together. I think that the potential is just off the radar charts in terms of its uses and its benefits to society.

And that's what really drives us and we'll continue this joint development program between the two companies. NioCorp is a few years away from producing that scandium yet.

So we've got plenty of time to continue to experiment with these different alloys. But it is really excited when you think about what scandium does to aluminum and how it makes it lighter, stronger, more corrosion-resistant and weldable.

And those are all attributes that the airline industry, in particular, are very excited about. So yes, I'm pretty excited about that program still and we’ll continue to work that jointly between the two companies.

Okay. Here's a question about our defense business.

Mr. Smith, do you – is IBC trying to increase its sales of beryllium-aluminum into other systems beyond the F-35?

Absolutely. And it's really the performance that IBC and EMC division in particular has demonstrated to Lockheed Martin as part of that F-35 program, that good reliability, good performance, that's the type of performance that is now opening up doors to other Lockheed Martin programs and other defense programs.

And it all boils down to, and I can't say this enough when I do these calls or when I talk to the IBC team, it's all about performance, performance, performance. People come after you when you're performing well and if you're reliable.

And here's a question for Harry who asks, what sectors are you most interested in, in terms of future growth privacy?

Well, on the EMC side, I think clearly the defense sector and the satellite sectors are the ones that attract us the most and we're spending the largest percentage of our time pursuing. Those seem to have just natural abilities because of what beryllium-aluminum do together and what those machines have to do for their performance.

So it's a natural fit and we see that the Department of Defense sees it, Lockheed Martin sees it and other defense contractors see it. So we are spending a large amount of our marketing time for EMC in those categories.

On the copper side, a little bit different. But we're looking at ways to use those new machines that we put some capital into and increase the capability of the company.

We've got customers like Honeywell that really see what our copper division can do for performance and meeting specs that they require for their end use customers. So we're continuing to build on that part of the business.

And I think this is – the copper business is a very interesting one and one that has a lot of flexibility to it. And I think we're just now realizing that we can spread our wings a little bit, create additional diversity in that division and seek new business opportunities that maybe we didn't think were possible before.

But because of the outstanding people we have in that division, Mark Wolma and his whole team, it opens up doors that we might not have thought existed before, but they're willing to try that as long as we can serve the customer well. I hope that helps a little bit.

That's a good answer. I've got one more so far.

It's actually not a question, it's – I just wanted you people to know I liked your video.

Well, thank you. Jim and his team do a great job of putting those together.

Okay. That is the – that's the end of the questions that we've been – that have been posed, but as usually as the case, other folks will have questions.

So please send me your questions to [email protected], or feel free to text me at 303-503-6203 and I'll be happy to get back with those questions. A replay and the slides will be available on the IBC website sometime later today.

Thank you all for joining us. Have a good, happy and safe day today.

We'll talk to you next time. Bye.