From Sub-Division to Stand Alone: Quebec’s Exo-s Puts the Parts Together

From Sub-Division to Stand Alone: Quebec’s Exo-s Puts the Parts Together

For Sherbrooke, Quebec’s Exo-s, it’s all about the parts. Start with their name, for example.

EXpertise, Objective driven, partnership, innovative Solutions. Four parts that together define the company. Their business is also parts… for the most part. Seventy-five per cent of their revenue comes from designing and manufacturing plastic-based parts for many of the world’s leading automotive giants. Engine covers, venting systems and coolant reservoirs are some examples of what they create; all customized and molded to fit the complex schematics of their client’s vehicles.

The remaining 25 per cent of their business comes from producing various industrial and consumer goods, from snow mobile skis to Rubbermaid bins and tires for toy cars.

With so many moving parts, it’s imperative that Exo-s meet the specific needs of their clients. Their products are like puzzle pieces – precision is needed so they can fit seamlessly with the rest to make a functional whole. This is especially true with their auto clients. To improve coordination on this front, they’ve placed engineers in their client’s facilities to ensure they are always present and receptive to their needs. This type of service keeps a smaller company like Exo-s competitive in a sector crowded by giants.

Their history, as well, can be divided into parts. The first manifestation of Exo-s was born into the Bombardier family in 1968 as a plastics division. In 1982, Quebec’s Camoplast Solideal acquired Bombardier’s plastics division, along with the rubber and fashion divisions, beginning phase two of Exo-s’s history.

Thirty years later Camoplast’s rubber division had grown so large that less focus was being placed on the plastics division, hindering their growth. So in 2012, Exo-s, as is it known today, was created through a management buyout. Growth came quickly after that.

“This year, we expect to hit close to $100 million in revenue, which is equivalent to a 15 per cent annual compounded growth rate from our first year as a stand-alone company,” says Daniel Denault, Chief Financial Officer of Exo-s.

Exo-s grows in Mexico

“In addition to growing our revenue, we are also growing geographically. In February we acquired the assets of a plastics company in Mexico, named Hudson Gardens, which is our first step outside of Canada and the U.S. in terms of operations. We anticipate that in a few years Mexico may surpass the U.S. in the number of cars they produce, so as a parts supplier, we need to be where our customers are.”

Export Development Canada (EDC) provided Exo-s with a $4 million loan for this acquisition. Part (there it is again) of the financing was used to purchase Hudson Gardens’ assets, which included a large production plant; the second part of the financing will be used this year to purchase new equipment for the plant.

As an offshoot to the financing, EDC was also able to help Exo-s find business opportunities in Mexico by introducing them to auto companies in the area and promoting their products.

“We’ve heard from an overwhelming number of Canadian companies how difficult it is to enter the supply chains of those large global players, where the opportunities are greatest,” said Carl Burlock, Senior Vice-President, Financing and Investment, EDC.

“EDC’s financing allows Exo-s to get closer to their customers and capitalize on more opportunities. Our representatives on the ground in Mexico also help by serving as that all-important local connection that all businesses need when entering a new market. If we can help them win contracts in Mexico, that growth will always translate back to the Canadian parent, and that’s what we’re all about.”

At the time of Exo-s’s acquisition, the Hudson Garden’s plant was bringing in about $6 M in revenue, mostly from the sale of Rubbermaid bins. In four years’ time, with the new equipment installed for auto parts manufacturing and the expected contracts in the area, Denault estimates that revenue will quadruple.

“We see Mexico as a significant part of our growth,” says Denault. “Looking forward, we’d like to take advantage of opportunities all over the world and replicate what we’ve done in Mexico. Right now we’re looking at Europe, South America, and Asia as the next regions we’d like to expand into.”

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