Canadian Biomass Magazine

Coronavirus impacts Xebec’s operations in China, Italy

March 17, 2020
By Xebec Adsorption Inc.

One of Xebec Shanghai’s deliveries (a hydrogen purification unit) since the factory restarted in late February 2020. Photo courtesy Xebec.

Xebec Adsorption Inc., a global provider of clean energy solutions, is pleased to provide an update on the novel coronavirus (COVID-19) impact on Xebec’s global operations. Xebec currently has operations and manufacturing capacity in three countries, which include: China, Italy, and Canada.

Xebec’s manufacturing operations in Shanghai, China (Xebec Shanghai) were previously affected by COVID-19 and were shut down for three additional weeks after the normal two-week Chinese New Year holiday. The facility has since restarted and is now fully operational. Over this period, the rest of the operations were working remotely to continue progress on designs of various customer contracts. As a result, Xebec Shanghai may experience a moderate impact on Q1/20 revenues and earnings but does not expect a material impact on full-year 2020.

Our operations in Lombardy, Italy were recently impacted by the mandated lockdown of the country. Although Xebec does not have full manufacturing capabilities in Italy, projects are mostly outsourced into the supply chain. We are now starting to see delays from suppliers based in Northern Italy because of the transportation shutdown.

There are two ongoing projects in Italy that are under construction, one located in Sicily and the other in Genova. Work on both projects is now halted and will restart after April 3rd at the earliest. Similar to Xebec Shanghai, Xebec’s operations in Italy may experience moderate impacts on Q1 and Q2 2020 revenues and earnings, but we do not expect a significant impact on full year numbers.

Lastly, Xebec’s Canadian operations in Québec currently remain unaffected and we are operating close to capacity. Our schedule for North American deliveries remains the same and no impact has so far been experienced due to the coronavirus. We are working on a multitude of shipments for the North American market as evidenced by recent contract announcements.

Xebec is well-positioned to work through these disruptions with its strong balance sheet that includes more than $20 million of cash on hand and approximately $18 million in outstanding warrants, exercisable at $1.05 and $1.85 over the next four months. In addition, our quote log continues to increase and now exceeds $937.0 million (as of March 13, 2020) and our order backlog stands at $95.1 million (as of January 28, 2020).

The company continues to follow the current developments and will provide further communications should the effect on operations change materially.

“COVID-19’s spread has left both a human and economic toll in its wake. Xebec’s first priority is to ensure the health and safety of its employees, customers, and partners. We continue to watch the situation closely as we execute our rapid scale up.

We have been dealing with the novel coronavirus since its first outbreak in China 12 weeks ago. This has led Xebec to prepare for a similar situation in North America and we are in the fortunate situation to have all necessary protocols in place to continue operating in this challenging environment. Over the last 10 weeks, we have increased our inventory and work in progress levels to withstand certain supply chain disruptions and continue our Blainville operations to the best possible extent. The steps we have taken to protect our stakeholders include travel restrictions, a significant reduction of in-person meetings as we have started to utilize remote working solutions such as telephone and video conferencing and instant messaging applications. We have also provided a number of our employees with laptops to allow working from home.

Last week Xebec has implemented a COVID-19 Protocol for all its North American employees and suppliers, which includes actions for a clean and disinfected work environment, travel and self-quarantine guidelines and remote working instructions. I believe we have taken reasonable steps to protect not only our employees, suppliers and customers but also safeguard to the best possible extent our ability to deliver financial results that will protect the expectations of our shareholders,” said Kurt Sorschak, president and CEO, Xebec Adsorption Inc.

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