Avcorp announces 2011 Second Quarter Results

VANCOUVER, Aug. 10, 2011 /PRNewswire/ - Avcorp (AVP on the Toronto Stock Exchange) today announced its financial results for the quarter ended June 30, 2011.

During the quarter ended June 30, 2011, the Company recorded a loss from operations of $752,000 on $20,492,000 revenue, as compared to a $2,191,000 loss from operations on $18,710,000 revenue for the same quarter preceding year; and a net loss for the current quarter of $1,148,000 as compared to a net loss of $2,213,000 for the quarter ended June 30, 2010.

The Company has realized revenue growth during the second quarter 2011 relative to the same quarter in 2010 for most major structures deliveries; while customer demand for non-original equipment manufacturers' products and services has increased slightly.

Earnings before interest, taxes, depreciation and amortization (EBITDA) were positive $258,000 for the current quarter compared to a negative EBITDA of $957,000 for the quarter ended June 30, 2010.

Cash flows from operating activities during the current quarter utilized $785,000 of cash resulting from working capital growth in support of increased revenues, as well as operating losses; as compared to providing $1,189,000 of cash during the quarter ended June 30, 2010.  The Company has a working capital surplus of $10,897,000 as at June 30, 2011 (December 31, 2010: $1,493,000 surplus) and an accumulated deficit of $76,156,000 at June 30, 2011 (December 31, 2010: $73,564,000).

About Avcorp

Avcorp designs and builds major airframe structures for some of the world's leading aircraft companies, including Boeing, Bombardier, and Cessna.  With more than 50 years of experience, over 500 skilled employees and 354,000 square feet of facilities, Avcorp offers integrated composite and metallic aircraft structures to aircraft manufacturers, a distinct advantage in the pursuit of contracts for new aircraft designs, which require lower-cost, light-weight, strong, reliable structures.  Avcorp is a Canadian public company traded on the Toronto Stock Exchange (TSX:AVP).

(signed)
MARK VAN ROOIJ
PRESIDENT and CHIEF EXECUTIVE OFFICER

Forward-Looking Statements

This management discussion and analysis should be read in conjunction with the Company's audited financial statements.  Certain statements in this report and other oral and written statements made by the Company from time to time are forward-looking statements, including those that discuss strategies, goals, outlook or other non-historical matters; or projected revenues, income, returns or other financial measures.  These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contained in the statements, including the following:  (a) the ability of the Company to renegotiate its debt agreements under which it is in default; (b) the extent to which the Company is able to achieve savings from its restructuring plans; (c) uncertainty in estimating the amount and timing of restructuring charges and related costs; (d) changes in worldwide economic and political conditions that impact interest and foreign exchange rates; (e) the occurrence of work stoppages and strikes at key facilities of the Company or the Company's customers or suppliers; (f) government funding and program approvals affecting products being developed or sold under government programs; (g) cost and delivery performance under various program and development contracts; (h) the adequacy of cost estimates for various customer care programs including servicing warranties; (i) the ability to control costs and successful implementation of various cost reduction programs; (j) the timing of certifications of new aircraft products; (k) the occurrence of further downturns in customer markets to which the Company products are sold or supplied or where the Company offers financing; (l) changes in aircraft delivery schedules or cancellation of orders; (m) the Company's ability to offset, through cost reductions, raw material price increases and pricing pressure brought by original equipment manufacturer customers; (n) the availability and cost of insurance; (o) the Company's ability to maintain portfolio credit quality; (p) the Company's access to debt financing at competitive rates; and (q) uncertainty in estimating contingent liabilities and establishing reserves tailored to address such contingencies.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(unaudited, expressed in thousands of Canadian dollars)

  June 30, 2011     December 31, 2010
         
ASSETS        
Current assets        
Accounts receivable $   13,586     $   8,869
Inventories 17,218     14,886
Prepayments 1,404     1,922
Other assets 27     28
  32,235     25,705
Non-current assets        
Development costs 5,853     5,181
Property, plant and equipment 13,434     14,794
Total assets 51,522     45,680
         
LIABILITIES AND EQUITY        
Current liabilities        
Bank indebtedness 8,697     8,158
Accounts payable and accrued liabilities 10,650     10,634
Current portion of long-term debt 1,991     5,420
  21,338     24,212
Non-current liabilities        
Deferred gain 334     358
Lease inducement 715     764
Deferred tooling revenues 14,835     6,804
Long-term debt 6,516     3,275
Warranty provisions 186     167
  43,924     35,580
Equity        
Attributable to shareholders of the Company:        
Capital stock 72,927     72,927
Equity component of convertible loan 453     453
Preferred shares 7,622     7,622
Contributed surplus 2,752     2,662
Deficit (76,156)     (73,564)
  7,598     10,100
Total liabilities and equity 51,522     45,680
         

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(unaudited, expressed in thousands of Canadian dollars, except number of shares and per share amounts)

  Three months ended Six months ended
FOR THE PERIOD ENDED JUNE 30 2011 2010 2011 2010
         
Revenues $   20,492 $   18,710 $   41,408 $   36,086
Cost of sales 18,208 17,654 36,840 34,057
Gross profit 2,284 1,056 4,568 2,029
Administrative and general expenses 2,873 2,985 5,508 5,717
Office equipment depreciation 166 263 335 535
Other (gains) and losses - net (3) (1) (6) (1)
Operating Loss (752) (2,191) (1,269) (4,222)
Foreign exchange (gain) loss (69) (285) 135 (327)
Finance costs 465 307 813 564
Loss before income tax (1,148) (2,213) (2,217) (4,459)
Income taxes recovery (expense) - - - -
Future income tax recovery (expense) - - - -
Loss and comprehensive loss for the period (1,148) (2,213) (2,217) (4,459)
Earnings (loss) per share:        
Basic and diluted loss per common share (0.01) (0.01) (0.01) (0.02)
Basic weighted average number of shares outstanding (000's) 195,505 195,505 195,505 189,712
Diluted weighted average number of shares outstanding (000's) 199,490 195,505 201,115 190,404
         

CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, expressed in thousands of Canadian dollars)

  Three months ended Six months ended
FOR THE PERIOD ENDED JUNE 30 2011 2010 2011 2010
         
Cash flows from operating activities        
Profit (loss) before tax $   (1,148) $   (2,213) $   (2,217) $   (4,459)
   Adjustment for items not affecting cash:        
     Accretion on convertible loan 21 - 42 -
     Accrued interest and government royalties 137 157 283 266
     Amortization and depreciation 840 887 1,686 1,754
     Deferred tooling revenue amortization (204) (201) (426) (399)
     Development cost amortization 102 62 190 100
     Provision for loss-making contracts (200) 174 (291) 279
     Provision for obsolete inventory (3) (412) (50) (427)
     Stock based compensation 45 - 90 -
     Warranty provisions (2) 458 (12) 875
     Other items (35) 46 (96) (47)
  (447) (1,042) (801) (2,058)
Changes in non-cash working capital        
   Accounts receivable 1,281 871 (1,740) (35)
   Inventories (987) 1,266 (1,991) 2,367
   Prepayments 251 (426) 518 (460)
Accounts payable and accrued liabilities (913) 690 (367) 1,992
   Other items 30 (170) 30 (170)
Net cash from operating activities (785) 1,189 (4,351) 1,636
         
Cash flows from investing activities        
Purchase of equipment (133) (329) (327) (518)
Payments relating to development costs and tooling (529) (288) (862) (526)
Net cash from investing activities (662) (617) (1,189) (1,044)
         
Cash flows from financing activities        
(Decrease) increase in bank indebtedness 571 (2,810) 539 (3,804)
Proceeds from customer funding of program non-recurring expenditures 1,109 712 5,480 1,081
Proceeds from current and long-term debt - 1,771 - 1,771
Repayment of current and long-term debt (233) (245) (479) (613)
Issue of common shares - - - 977
Share issue expense - - - (4)
Net cash from financing activities 1,447 (572) 5,540 (592)
Net increase (decrease) in cash and cash equivalents - - - -
Cash and cash equivalents - Beginning of period - - - -
Cash and cash equivalents - End of period - - - -
         

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(unaudited, expressed in thousands of Canadian dollars, except number of shares)


  Share capital Equity
component 
convertible
loan
Preferred
shares
Contributed
surplus
Deficit Total
equity
  Shares Amount
Balance January 1, 2010 177,732,112 $71,954 $    - $7,622 $2,647 $(66,162) $16,061
Issue of common shares 17,773,211 973 - - - - 973
Loss for the period - - - - - (4,459) (4,459)
Dividends on preferred shares - - - - - (375) (375)
Balance June 30, 2010 195,505,323 72,927 - 7,622 2,647 (70,996) 12,200
Balance December 31, 2010 195,505,323 72,927 453 7,622 2,662 (73,564) 10,100
Stock based compensation expense - - - - 90 - 90
Loss for the period - - - - - (2,217) (2,217)
Dividends on preferred shares - - - - - (375) (375)
Balance June 30, 2011 195,505,323 72,927 453 7,622 2,752 (76,156) 7,598

 

SOURCE Avcorp Industries Inc.



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