Avcorp announces 2011 First Quarter Results
VANCOUVER, June 14, 2011 /PRNewswire/ - Avcorp (TSX: AVP) today announced its financial results for the quarter ended March 31, 2011.
During the quarter ended March 31, 2011, the Company recorded a loss from operations of $517,000 on $20,916,000 revenue, as compared to a $2,031,000 loss from operations on $17,376,000 revenue for the same quarter preceding year; and a net loss for the current quarter of $1,069,000 as compared to a net loss of $2,246,000 for the quarter ended March 31, 2010.
The Company has realized revenue growth during the first quarter 2011 relative to the same quarter in 2010, from the restart in deliveries as well as increase in deliveries of several programs; while customer demand for non-original equipment manufacturer's products and services has increased slightly.
Cash flows from operating activities during the current quarter utilized $3,566,000 of cash primarily resulting from working capital growth in support of increased revenues, as compared to providing $447,000 of cash during the quarter ended March 31, 2010. The Company has a working capital surplus of $5,096,000 as at March 31, 2011 (December 31, 2010: $1,493,000 surplus).
Subsequent to the end of the current quarter the Company and its bank entered into an agreement amending its existing banking arrangement as announced in our press release of May 26, 2011.
In conjunction with the banking requirements, the Company completed a secured subordinated convertible loan from Panta with a principal amount of $6,000,000 which will be used to pay down its operating line of credit, and is convertible into 85,714,286 common shares as announced in our press release of May 26, 2011.
The Company is currently not in compliance with the covenants of its EDC debenture and is working on the refinancing of the Export Development Canada convertible debenture which matured on March 31, 2011. At the same time the Company is working to refinance its preferred shares which are redeemable on July 1, 2011. The Company expects to complete these refinancings during the second quarter 2011 although no assurance for a successful completion can be given.
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, 565 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)
| March 31, 2011 | December 31, 2010 | January 1, 2010 | ||||||||||
| ASSETS | ||||||||||||
| Current assets | ||||||||||||
| Accounts receivable | $ 12,349 | $ 8,869 | $ 6,689 | |||||||||
| Inventories | 16,028 | 14,886 | 15,497 | |||||||||
| Prepayments | 1,655 | 1,922 | 1,092 | |||||||||
| Other assets | 27 | 28 | 24 | |||||||||
| 30,059 | 25,705 | 23,302 | ||||||||||
| Non-current assets | ||||||||||||
| Development costs | 5,426 | 5,181 | 3,923 | |||||||||
| Property, plant and equipment | 14,142 | 14,794 | 17,346 | |||||||||
| Warranty claim receivable | - | - | 1,637 | |||||||||
| Total assets | 49,627 | 45,680 | 46,208 | |||||||||
| LIABILITIES AND EQUITY | ||||||||||||
| Current liabilities | ||||||||||||
| Bank indebtedness | 8,126 | 8,158 | 8,422 | |||||||||
| Accounts payable and accrued liabilities | 11,380 | 10,634 | 7,752 | |||||||||
| Current portion of long-term debt | 5,457 | 5,420 | 6,131 | |||||||||
| 24,963 | 24,212 | 22,305 | ||||||||||
| Non-current liabilities | ||||||||||||
| Deferred gain | 346 | 358 | 405 | |||||||||
| Lease inducement | 740 | 764 | 863 | |||||||||
| Deferred tooling revenues | 11,412 | 6,804 | 3,116 | |||||||||
| Long-term debt | 3,129 | 3,275 | 1,811 | |||||||||
| Warranty provisions | 147 | 167 | 1,647 | |||||||||
| 40,737 | 35,580 | 30,147 | ||||||||||
| Equity | ||||||||||||
| Attributable to shareholders of the Company: | ||||||||||||
| Capital stock | 72,927 | 72,927 | 71,954 | |||||||||
| Equity component of convertible loan | 453 | 453 | - | |||||||||
| Preferred shares | 7,622 | 7,622 | 7,622 | |||||||||
| Contributed surplus | 2,707 | 2,662 | 2,647 | |||||||||
| Deficit | (74,819) | (73,564) | (66,162) | |||||||||
| 8,890 | 10,100 | 16,061 | ||||||||||
| Total liabilities and equity | 49,627 | 45,680 | 46,208 |
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(unaudited, expressed in thousands of Canadian dollars, except number of shares and per share amounts)
| FOR THE QUARTER ENDED MARCH 31 | 2011 | 2010 | ||||||||||||
| Revenues | $ 20,916 | $ 17,376 | ||||||||||||
| Cost of sales | 18,632 | 16,403 | ||||||||||||
| Gross profit | 2,284 | 973 | ||||||||||||
| Administrative and general expenses | 2,635 | 2,732 | ||||||||||||
| Office equipment depreciation | 169 | 272 | ||||||||||||
| Other (gains) and losses - net | (3) | - | ||||||||||||
| Loss profit | (517) | (2,031) | ||||||||||||
| Foreign exchange (gain) loss | 204 | (42) | ||||||||||||
| Finance costs | 348 | 257 | ||||||||||||
| Loss before income tax | (1,069) | (2,246) | ||||||||||||
| Income taxes recovery (expense) | - | - | ||||||||||||
| Future income tax recovery (expense) | - | - | ||||||||||||
| Loss and comprehensive loss for the quarter | (1,069) | (2,246) | ||||||||||||
| Earnings (loss) per share: | ||||||||||||||
| Basic and diluted loss per common share | (0.01) | (0.01) | ||||||||||||
| Basic weighted average number of shares outstanding (000's) | 195,505 | 183,854 | ||||||||||||
| Diluted weighted average number of shares outstanding (000's) | 202,568 | 183,854 |
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, expressed in thousands of Canadian dollars)
| FOR THE QUARTER ENDED MARCH 31 | 2011 | 2010 | |||||||||
| Cash flows from operating activities | |||||||||||
| Profit (loss) before tax | $ (1,069) | $ (2,246) | |||||||||
| Adjustment for items not affecting cash: | |||||||||||
| Accretion on convertible loan | 21 | - | |||||||||
| Accrued interest and government royalties | 146 | 109 | |||||||||
| Amortization and depreciation | 846 | 867 | |||||||||
| Deferred tooling revenue amortization | (222) | (198) | |||||||||
| Development cost amortization | 88 | 38 | |||||||||
| Provision for loss-making contracts | (91) | 105 | |||||||||
| Provision for obsolete inventory | (47) | (15) | |||||||||
| Stock based compensation | 45 | - | |||||||||
| Warranty provisions | (10) | 417 | |||||||||
| Other items | (61) | (93) | |||||||||
| (354) | (1,016) | ||||||||||
| Changes in non-cash working capital | |||||||||||
| Accounts receivable | (3,021) | (906) | |||||||||
| Inventories | (1,004) | 1,101 | |||||||||
| Prepayments | 267 | (34) | |||||||||
| Accounts payable and accrued liabilities | 546 | 1,302 | |||||||||
| Net cash from operating activities | (3,566) | 447 | |||||||||
| Cash flows from investing activities | |||||||||||
| Purchase of equipment | (194) | (189) | |||||||||
| Payments relating to development costs and tooling | (333) | (238) | |||||||||
| Net cash from investing activities | (527) | (427) | |||||||||
| Cash flows from financing activities | |||||||||||
| (Decrease) increase in bank indebtedness | (32) | (994) | |||||||||
| Proceeds from customer funding of program non-recurring expenditures | 4,371 | 369 | |||||||||
| Repayment of current and long-term debt | (246) | (368) | |||||||||
| Issue of common shares | - | 977 | |||||||||
| Share issue expense | - | (4) | |||||||||
| Net cash from financing activities | 4,093 | (20) | |||||||||
| 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 | ||||||||||||||||
| Shares | Amount | Equity component convertible loan |
Preferred shares |
Contributed surplus |
Deficit | Total equity |
||||||||||
| Balance January 1, 2010 | 177,732,112 | $71,954 | $ - | $7,622 | $2,647 | $(66,162) | $16,061 | |||||||||
| Issue of shares | 17,773,211 | 973 | - | - | - | - | 973 | |||||||||
| Loss for the quarter | - | - | - | - | - | (2,246) | (2,246) | |||||||||
| Dividends on preferred shares | - | - | - | - | - | (186) | (186) | |||||||||
| Balance March 31, 2010 | 195,505,323 | 72,927 | - | 7,622 | 2,647 | (68,594) | 14,602 | |||||||||
| Balance December 31, 2010 | 195,505,323 | 72,927 | 453 | 7,622 | 2,662 | (73,564) | 10,100 | |||||||||
| Stock based compensation expense | - | - | - | - | 45 | - | 45 | |||||||||
| Loss for the quarter | - | - | - | - | - | (1,069) | (1,069) | |||||||||
| Dividends on preferred shares | - | - | - | - | - | (186) | (186) | |||||||||
| Balance March 31, 2011 | 195,505,323 | 72,927 | 453 | 7,622 | 2,707 | (74,819) | 8,890 | |||||||||
SOURCE Avcorp Industries Inc.
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