2014

Avcorp announces 2012 Second Quarter Results

Common Stock Listed
Toronto
Trading Symbol: AVP

VANCOUVER, Aug. 8, 2012 /PRNewswire/ - Avcorp Industries Inc. (TSX: AVP) (the "Company" or "Avcorp") today announced its financial results for the quarter ended June 30, 2012.

During the quarter ended June 30, 2012, the Company recorded income from operations of $411,000 on $25,192,000 revenue, as compared to a $752,000 operating loss on $20,492,000 revenue for the same quarter in the preceding year; and net income for the current quarter of $13,000 as compared to a net loss of $1,337,000 for the quarter ended June 30, 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 $1,350,000 profitability improvement for the second quarter 2012 relative to the same quarter in 2011.

Earnings before interest, taxes, depreciation and amortization (EBITDA) was positive $1,656,000 for the quarter ended June 30, 2012 compared to a positive EBITDA of $259,000 for the quarter ended June 30, 2011.  A $1,397,000 improvement largely contributed to by gross margin growth.

Cash flows from operating activities during the quarter ended June 30, 2012 utilized $1,421,000 of cash as compared to utilizing $149,000 of cash during the quarter ended June 30, 2011 primarily as a result of deferred revenue amortization for which customer cash receipts had been received in prior periods; while working capital changes remained neutral.  The Company has a working capital surplus of $16,149,000 as at June 30, 2012 which has increased from the December 31, 2011 $14,663,000 surplus, as a result of growth in cash and a reduction in accounts payable.  The Company's accumulated deficit as at June 30, 2012 was $75,852,000 (December 31, 2011: $76,016,000).

About Avcorp
Avcorp designs and builds major airframe structures for some of the world's leading aircraft companies, including BAE Systems, Boeing, Bombardier, and Cessna.  With more than 50 years of experience, over 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.  Our Burlington location also offers composite repairs for commercial aircraft.  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)

  June 30, 2012 December 31, 2011
ASSETS    
Current assets    
Cash $   6,382 $   3,778
Accounts receivable 9,962 12,160
Inventories 18,275 19,418
Prepayments and other assets 1,467 1,396
  36,086 36,752
     
Non-current assets    
Prepaid rent 146 146
Development costs 5,118 5,540
Property, plant and equipment 11,311 12,523
Total assets 52,661 54,961
     
LIABILITIES AND EQUITY    
Current liabilities    
Accounts payable and accrued liabilities 8,239 10,694
Current portion of long-term debt 1,430 1,505
Preferred shares 10,268 9,890
  19,937 22,089
Non-current liabilities    
Deferred gain 287 311
Lease inducement 616 666
Deferred program revenues 18,448 18,671
Long-term debt 11,800 12,027
Warranty provisions 85 85
  51,173 53,849
Equity    
Capital stock 73,419 73,251
Equity component of convertible loan 453 453
Contributed surplus 3,468 3,424
Deficit (75,852) (76,016)
  1,488 1,112
Total liabilities and equity 52,661 54,961

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 Six months ended
FOR THE PERIOD ENDED JUNE 30 2012 2011 2012 2011
         
Revenues $  25,192 $ 20,492 $  50,198 $ 41,408
         
Cost of sales 20,490 18,208 41,215 36,840
         
Gross profit 4,702 2,284 8,983 4,568
Administrative and general expenses 4,166 2,873 7,475 5,508
Office equipment depreciation 127 166 241 335
Other (gains) and losses - net (2) (3) (4) (6)
         
Operating Income (loss) 411 (752) 1,271 (1,269)
Foreign exchange (gain) loss (191) (69) (79) 135
Finance costs 589 654 1,186 1,191
         
Income (loss) before income tax 13 (1,337) 164 (2,595)
         
Income tax expense - - - -
         
Income (loss) and total comprehensive income (loss) for the period 13 (1,337) 164 (2,595)
         
Earnings (loss) per share:        
Basic earnings (loss) per common share 0.00 (0.01) 0.00 (0.01)
Diluted earnings (loss) per common share 0.00 (0.01) 0.00 (0.01)
         
Basic weighted average number of shares outstanding (000's) 204,369 195,505 204,113 195,505
         
Diluted weighted average number of shares outstanding (000's) 204,369 201,734 204,611 203,727

CONSOLIDATED STATEMENTS OF CASH FLOWS

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

  Three months ended Six months ended
FOR THE PERIOD ENDED JUNE 30 2012 2011 2012 2011
         
Cash flows from operating activities        
Profit (loss) before tax $   13 $ (1,337) $   164 $ (2,595)
  Adjustment for items not affecting cash:        
  Accretion on convertible loan 22 21 44 42
  Accrued interest and government royalties 335 445 677 766
  Amortization and depreciation 789 840 1,556 1,686
  Deferred tooling revenue amortization and reclassification to revenue (3,162) (204) (6,418) (426)
  Development cost amortization and reclassification to cost of sales 445 102 1,036 190
  Fair value of warrants amortization 44 - 88 -
  Preferred share dividends accrued 189 189 378 378
  Provision for loss-making contracts (136) (200) (81) (291)
  Provision for obsolete inventory 30 (3) 17 (50)
  Stock based compensation 24 45 44 90
  Other items (14) (47) (58) (108)
  (1,421) (149) (2,553) (318)
         
Changes in non-cash working capital        
  Accounts receivable 600 1,281 2,304 (1,740)
  Inventories 1,381 (987) 1,207 (1,991)
  Prepayments and other assets (1) 251 (75) 518
  Accounts payable and accrued liabilities (2,028) (913) (2,464) (367)
  Other Items - 40 - 30
Net cash from operating activities (1,469) (477) (1,581) (3,868)
         
         
Cash flows from investing activities        
Purchase of equipment (134) (133) (301) (327)
Payments relating to development costs and tooling (123) (529) (614) (862)
Net cash from investing activities (257) (662) (915) (1,189)
         
Cash flows from financing activities        
(Decrease) increase in bank indebtedness - 571 - 539
Payment of interest (243) (334) (496) (539)
Proceeds from customer funding of program introduction 2,613 1,109 6,089 5,480
Repayment of current and long-term debt (276) (207) (493) (423)
Net cash from financing activities 2,094 1,139 5,100 5,057
Net increase (decrease) in cash 368 - 2,604 -
Cash - Beginning of period 6,014 - 3,778 -
Cash - End of period 6,382 - 6,382 -

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

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

  Share capital        
 
Shares
Amount Equity
component
convertible
loan
Contributed
surplus
Deficit Total
equity
             
Balance December 31, 2010 195,505,323 $ 72,927 $   453 $  2,662 $ (73,561) $  2,481
             
Stock based compensation expense - - - 90 - 90
             
Loss for the period - - - - (2,595) (2,595)
             
Balance June 30, 2011 195,505,323 72,927 453 2,752 (76,156) (24)
             
Balance December 31, 2011 201,994,113 73,251 453 3,424 (76,016) 1,112
             
Issue of common shares 3,439,238 168 - - - 168
             
Stock-based compensation expense - - - 44 - 44
             
Income for the period - - - - 164 164
             
Balance June 30, 2012 205,433,351 73,419 453 3,468 (75,852) 1,488

 

 

 

 

SOURCE Avcorp Industries Inc.



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