VANCOUVER, Nov. 10, 2011 /PRNewswire/ - Avcorp (TSX: AVP) today announced its financial results for the quarter ended September 30, 2011.
During the quarter ended September 30, 2011, the Company recorded net income of $39,000 on $20,383,000 revenue, as compared to a net loss of $185,000 on $21,808,000 revenue for the same quarter preceding year.
Earnings before interest, taxes, depreciation and amortization (EBITDA) was positive $1,455,000 for the quarter ended September 30, 2011 compared to an EBITDA of positive $1,129,000 for the quarter ended September 30, 2010.
Cash flows from operating activities, before consideration of changes in non-cash working capital provided $843,000 of cash for the quarter ended September 30, 2011 compared to providing $203,000 of cash for the same quarter last year. The primary factor underlying the increase in cash provided by operating activities during 2011 was positive production gross margins.
Non-cash operating assets and liabilities utilized $1,723,000 of cash during the current quarter primarily as a result of the growth in accounts receivable and inventory related to new business; compared to utilizing $2,536,000 of cash during the same quarter in 2010 which occurred as a result of increased accounts receivable stemming from resurgent customer demand.
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, prepared in accordance with IFRS, expressed in thousands of Canadian dollars)
September 30, 2011 | December 31, 2010 | |
ASSETS | ||
Current assets | ||
Accounts receivable | $ 15,109 | $ 8,869 |
Inventories | 18,706 | 14,886 |
Prepayments | 1,404 | 1,922 |
Other assets | 31 | 28 |
35,250 | 25,705 | |
Non-current assets | ||
Development costs | 5,861 | 5,181 |
Property, plant and equipment | 12,955 | 14,794 |
Total assets | 54,066 | 45,680 |
LIABILITIES AND EQUITY | ||
Current liabilities | ||
Bank indebtedness | 643 | 8,158 |
Accounts payable and accrued liabilities | 11,660 | 10,634 |
Current portion of long-term debt | 1,634 | 5,420 |
13,937 | 24,212 | |
Non-current liabilities | ||
Deferred gain | 323 | 358 |
Lease inducement | 691 | 764 |
Deferred tooling revenues | 18,585 | 6,804 |
Long-term debt | 12,555 | 3,275 |
Warranty provisions | 136 | 167 |
46,227 | 35,580 | |
Equity | ||
Attributable to shareholders of the Company: | ||
Capital stock | 73,251 | 72,927 |
Equity component of convertible loan | 453 | 453 |
Preferred shares | 7,622 | 7,622 |
Contributed surplus | 2,821 | 2,662 |
Deficit | (76,308) | (73,564) |
7,839 | 10,100 | |
Total liabilities and equity | 54,066 | 45,680 |
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(unaudited, prepared in accordance with IFRS, expressed in thousands of Canadian dollars, except number of shares and per share amounts)
Three months ended | Nine months ended | |||
FOR THE PERIOD ENDED SEPTEMBER 30 | 2011 | 2010 | 2011 | 2010 |
Revenues | $ 20,383 | $ 21,808 | $ 61,791 | $ 57,894 |
Cost of sales | 17,686 | 18,873 | 54,526 | 52,930 |
Gross profit | 2,697 | 2,935 | 7,265 | 4,964 |
Administrative and general expenses | 2,729 | 2,413 | 8,237 | 8,130 |
Office equipment depreciation | 160 | 257 | 495 | 792 |
Other (gains) and losses - net | (6) | (2) | (12) | (3) |
Operating Income (loss) | (186) | 267 | (1,455) | (3,955) |
Foreign exchange (gain) loss | (706) | 104 | (571) | (223) |
Finance costs | 481 | 348 | 1,294 | 912 |
Income (loss) before income tax | 39 | (185) | (2,178) | (4,644) |
Income taxes recovery (expense) | - | - | - | - |
Future income tax recovery (expense) | - | - | - | - |
Income (loss) and total comprehensive income (loss) for the period | 39 | (185) | (2,178) | (4,644) |
Earnings (loss) per share: | ||||
Basic and diluted earnings loss per common share | 0.00 | (0.00) | (0.01) | (0.02) |
Basic weighted average number of shares outstanding (000's) | 198,750 | 195,505 | 196,599 | 191,664 |
Diluted weighted average number of shares outstanding (000's) | 198,750 | 195,505 | 200,305 | 192,379 |
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, prepared in accordance with IFRS, expressed in thousands of Canadian dollars)
Three months ended | Nine months ended | |||||
FOR THE PERIOD ENDED SEPTEMBER 30 | 2011 | 2010 | 2011 | 2010 | ||
Cash flows from operating activities | ||||||
Profit (loss) before tax | $ 39 | $ (185) | $ (2,178) | $ (4,644) | ||
Adjustment for items not affecting cash: | ||||||
Accretion on convertible loan | 21 | - | 63 | - | ||
Accrued interest and government royalties | 352 | 166 | 635 | 432 | ||
Amortization and depreciation | 844 | 899 | 2,530 | 2,653 | ||
Deferred tooling revenue amortization | (214) | (229) | (640) | (628) | ||
Development cost amortization | 91 | 67 | 281 | 167 | ||
Provision for loss-making contracts | (300) | (476) | (591) | (197) | ||
Provision for obsolete inventory | (123) | 41 | (173) | (386) | ||
Stock based compensation | 25 | - | 115 | - | ||
Warranty provisions | (6) | 7 | (18) | 882 | ||
Other items | 114 | (87) | 18 | (134) | ||
843 | 203 | 42 | (1,855) | |||
Changes in non-cash working capital | ||||||
Accounts receivable | (1,396) | (2,957) | (3,136) | (2,992) | ||
Inventories | (1,065) | 555 | (3,056) | 2,922 | ||
Prepayments | - | (877) | 518 | (1,337) | ||
Accounts payable and accrued liabilities | 815 | 790 | 448 | 2,782 | ||
Other items | (77) | (47) | (47) | (217) | ||
Net cash from operating activities |
(880) | (2,333) | (5,231) | (697) | ||
Cash flows from investing activities |
||||||
Purchase of equipment | (364) | (290) | (691) | (808) | ||
Payments relating to development costs and tooling | (99) | (876) | (961) | (1,402) | ||
Net cash from investing activities |
(463) | (1,166) | (1,652) | (2,210) | ||
Cash flows from financing activities | ||||||
(Decrease) increase in bank indebtedness | (8,054) | 2,103 | (7,515) | (1,701) | ||
Proceeds from customer funding of program non-recurring expenditures | 3,837 | 1,658 | 9,317 | 2,739 | ||
Proceeds from current and long-term debt | 6,000 | - | 6,000 | 1,771 | ||
Repayment of current and long-term debt | (440) | (262) | (919) | (875) | ||
Issue of common shares | - | - | - | 977 | ||
Share issue expense | - | - | - | (4) | ||
Net cash from financing activities |
1,343 | 3,499 | 6,883 | 2,907 | ||
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, prepared in accordance with IFRS, 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 | - | - | - | - | - | (4,644) | (4,644) | |||||||
Dividends on preferred shares | - | - | - | - | - | (566) | (566) | |||||||
Balance September 30, 2010 | 195,505,323 | 72,927 | - | 7,622 | 2,647 | (71,372) | 11,824 | |||||||
Balance December 31, 2010 | 195,505,323 | 72,927 | 453 | 7,622 | 2,662 | (73,564) | 10,100 | |||||||
Issue of common shares | 6,488,790 | 324 | - | - | - | - | 324 | |||||||
Stock based compensation expense | - | - | - | - | 115 | - | 115 | |||||||
Fair value of warrants expense | - | - | - | - | 44 | - | 44 | |||||||
Loss for the period | - | - | - | - | - | (2,178) | (2,178) | |||||||
Dividends on preferred shares | - | - | - | - | - | (566) | (566) | |||||||
Balance September 30, 2011 | 201,994,113 | 73,251 | 453 | 7,622 | 2,821 | (76,308) | 7,839 |
SOURCE Avcorp Industries Inc.
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