May 15, 2015
VANCOUVER: Avcorp Industries Inc. (TSX: AVP) (the “Company” or “Avcorp”) today announced its financial results for the quarter ended March 31, 2015.
Revenue for the quarter ended March 31, 2015 was $15,661,000 as compared to $17,551,000 for the quarter ended March 31, 2014. Revenues have decreased during the current quarter relative to the same quarter in the previous year as the timing of customer demand for certain business jet aircraft structures, and one defence program structure, manufactured by the Company which have shifted to later quarters in 2015, in part offset by strong current year aircraft component repairs revenue. The Company’s production has met and continues to exceed customer quality and delivery requirements.
Comtek Advanced Structures Ltd. (“Comtek”) has commenced the production introduction process of composite floor panels in supply to Bombardier Aerospace’s Global 5000/6000 and Global 7000/8000 programs. Full rate production for these programs will further establish the wholly owned subsidiary as a leading manufacturer of composite floor panels. Comtek has also developed long term relationships with aircraft operators ensuring that its growth in composite aircraft structure repair revenues provides a strong operating cash flow from this market segment.
The Company continues to actively pursue production contracts on aerospace programs throughout North America, Asia, and Europe both in the commercial and defence aerospace sectors. The Company is expending significant resources with a focused business development strategy to grow revenues via a targeted customer approach, and where beneficial, aligned with the Government of Canada Defence Procurement Strategy leveraging Industrial and Technological Benefits (“ITBs”).
During the quarter ended March 31, 2015, the Company recorded a loss from operations of $2,672,000 on $15,661,000 revenue, as compared to a $1,397,000 operating loss on $17,551,000 revenue for the same quarter in the previous year; and a net loss for the current quarter of $2,761,000 as compared to net loss of $1,242,000 for the quarter ended March 31, 2014.
In addition to $1,292,000 expensed for unutilized plant capacity, the current quarter loss includes $224,000 in provisions for slow-moving inventory and loss making contracts, as well as $222,000 in non-cash employee incentive costs. The 2015 loss also included a $66,000 foreign exchange loss which resulted from holding foreign currency denominated cash, accounts receivable and accounts payable.
Cash flows from operating activities during the quarter ended March 31, 2015 utilized $1,947,000 of cash as compared to utilizing $835,000 of cash during the quarter ended March 31, 2014. The primary use of cash from operations during the current quarter is due to operating losses reflecting temporary reduced customer demand. As at March 31, 2015, the Company had $881,000 cash on hand (December 31, 2014: $3,159,000) and utilized $3,118,000 of its operating line of credit (December 31, 2014: $Nil). The Company has a working capital surplus of $4,200,000 as at March 31, 2015 which has decreased from the December 31, 2014 $7,205,000 surplus, as a result of cash utilized in operating activities. The Company’s accumulated deficit as at March 31, 2015 is $68,434,000 (December 31, 2014: $65,673,000).
Further to the news release of May 7, 2015, The Company is pleased to announce that it has entered into a Letter of Intent effective May 12, 2015 (“LOI”) for the acquisition of certain assets and undertaking of a manufacturer of parts for major aerospace industry customers. Material terms contemplate the consideration for the assets and undertaking remain subject to negotiation and adjustment in relation to assumed contracts and certain performance criteria being achieved. A definitive agreement and closing of any acquisitions remains subject to material conditions including, inter alia, satisfactory due diligence and certain customer, supplier, and other third party consents and approvals. As a result of the material conditions outstanding, there can be no assurance that the proposed transaction will complete or that a definitive agreement will be entered into. Based on the foregoing, the Company will not be identifying the proposed target until such time as a definitive agreement has been reached and all conditions have been satisfied.
Avcorp designs and builds major airframe structures for some of the world’s leading aircraft companies, including BAE Systems, Boeing and Bombardier. With more than 50 years of experience, over 380 skilled employees and 340,000 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).
Sandi DiPrimo, Investor Relations Contact | 604-587-4938