Avcorp announces 2012 First Quarter Results

Common Stock Listed
Trading Symbol: AVP

VANCOUVER, May 14, 2012 /PRNewswire/ - Avcorp Industries Inc. (TSX: AVP) (the "Company" or "Avcorp") today announced its financial results for the quarter ended March 31, 2012.

During the quarter ended March 31, 2012, the Company recorded income from operations of $860,000 on $25,006,000 revenue, as compared to a $517,000 operating loss on $20,916,000 revenue for the same quarter in the preceding year; and net income for the current quarter of $151,000 as compared to a net loss of $1,258,000 for the quarter ended March 31, 2011.

A combination of continued sales growth, improvements in both operating efficiencies and production quality levels, as well as continued stringent cost controls have netted a $1,409,000 profitability improvement for the first quarter 2012 relative to the same quarter in 2011.

Earnings before interest, taxes, depreciation and amortization (EBITDA) was positive $1,951,000 for the quarter ended March 31, 2012 compared to a positive EBITDA of $213,000 for the quarter ended March 31, 2011.  The Company's improved gross margins have contributed significantly to the $1,738,000 improvement in EBITDA.

Cash flows from operating activities during the quarter ended March 31, 2012 utilized $267,000 of cash as compared to utilizing $3,391,000 of cash during the quarter ended March 31, 2011.  The Company has a working capital surplus of $16,494,000 as at March 31, 2012 (December 31, 2011: $14,663,000 surplus).

About Avcorp

Avcorp designs and builds major airframe structures for some of the world's leading aircraft companies, including BAE, Boeing, Bombardier and Cessna. With more than 50 years of experience, 500 skilled employees and 354,000 square feet of facilities in Delta BC and Burlington ON, 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. Its Burlington location also offers composite repairs for commercial aircraft.  Avcorp is a Canadian public company, traded on the Toronto Stock Exchange (TSX:AVP).


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.


(unaudited, prepared in accordance with IFRS, expressed in thousands of Canadian dollars)

  March 31, 2012 December 31, 2011
Current assets    
Cash $   6,014 $   3,778
Accounts receivable 11,113 12,160
Inventories 19,550 19,418
Prepayments and other assets 1,470 1,396
  38,147 36,752
Non-current assets    
Prepaid rent 146 146
Development costs 5,440 5,540
Property, plant and equipment 11,966 12,523
Total assets 55,699 54,961
Current liabilities    
Accounts payable and accrued liabilities 10,264 10,694
Current portion of long-term debt 1,310 1,505
Preferred shares 10,079 9,890
  21,653 22,089
Non-current liabilities    
Deferred gain 299 311
Lease inducement 641 666
Deferred program revenues 19,548 18,671
Long-term debt 12,081 12,027
Warranty provisions 85 85
  54,307 53,849
Capital stock 73,360 73,251
Equity component of convertible loan 453 453
Contributed surplus 3,444 3,424
Deficit (75,865) (76,016)
  1,392 1,112
Total liabilities and equity 55,699 54,961


(unaudited, prepared in accordance with IFRS, expressed in thousands of Canadian dollars, except number of shares and per share amounts)

Revenues $  25,006   $  20,916
Cost of sales 20,725   18,632
Gross profit 4,281   2,284
Administrative and general expenses 3,309   2,635
Office equipment depreciation 114   169
Other (gains) and losses - net (2)   (3)
Operating Income (loss) 860   (517)
Foreign exchange (gain) loss 112   204
Finance costs 597   537
Income (loss) before income tax 151   (1,258)
Income tax expense -   -
Loss and total comprehensive loss for the period 151   (1,258)
Earnings (loss) per share:      
Basic earnings (loss) per common share 0.00   (0.01)
Diluted earnings (loss) per common share 0.00   (0.01)
Basic weighted average number of shares outstanding (000's) 203,862   195,505
Diluted weighted average number of shares outstanding (000's) 204,984   228,231


(unaudited, prepared in accordance with IFRS, expressed in thousands of Canadian dollars)

Cash flows from operating activities      
Profit (loss) before tax $   151   $  (1,258)
   Adjustment for items not affecting cash:      
       Accretion on convertible loan 22   21
       Accrued interest and government royalties 342   321
       Amortization and depreciation 767   846
       Deferred tooling revenue amortization and reclassification to revenue (3,256)   (222)
       Development cost amortization 436   88
       Fair value of warrants amortization 44   -
       Preferred share dividends accrued 189   189
       Provision for loss-making contracts 55   (91)
       Provision for obsolete inventory (13)   (47)
       Stock based compensation 20   45
       Other items (44)   (61)
  (1,287)   (169)
Changes in non-cash working capital      
   Accounts receivable 1,704   (3,021)
   Inventories (174)   (1,004)
   Prepayments and other assets (74)   267
  Accounts payable and accrued liabilities (436)   546
   Warranty provision -   (10)
Net cash from operating activities (267)   (3,391)

Cash flows from investing activities

Purchase of equipment (167)   (194)
Payments relating to development costs and tooling (336)   (333)
Net cash from investing activities (503)   (527)
Cash flows from financing activities      
(Decrease) increase in bank indebtedness -   (32)
Payment of interest (253)   (205)
Proceeds from customer funding of program introduction 3,476   4,371
Repayment of current and long-term debt (217)   (216)
Net cash from financing activities 3,006   3,918
Net increase (decrease) in cash 2,236   -
Cash - Beginning of period 3,778   -
Cash - End of period 6,014   -


(unaudited, prepared in accordance with IFRS, expressed in thousands of Canadian dollars, except number of shares)

  Share capital Equity
Deficit Total
  Shares Amount
Balance December 31, 2010 195,505,323 $ 72,927 $   453 $  2,662 $ (73,561) $  2,481
Stock based compensation expense - - - 45 - 45
Loss for the quarter - - - - (1,258) (1,258)
Balance March 31, 2011 195,505,323 72,927 453 2,707 (74,819) 1,268
Balance December 31, 2011 201,994,113 73,251 453 3,424 (76,016) 1,112
Issue of common shares 2,323,521 109 - - - 109
Stock-based compensation expense - - - 20 - 20
Income for the period - - - - 151 151
Balance March 31, 2012 204,317,634 73,360 453 3,444 (75,865) 1,392




SOURCE Avcorp Industries Inc.

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