August 13, 2015
VANCOUVER: Avcorp Industries Inc. (TSX: AVP) (the “Company”, “Avcorp” or the “Avcorp Group”) today
announced its second quarter financial results for the quarter ended June 30, 2015.
During the quarter ended June 30, 2015 Avcorp Group revenues totaled $20,369,000 as compared to
$21,134,000 revenue for the same quarter in the previous year. 2015 year-to date revenues for the
Avcorp Group have increased for production and deliveries of commercial aerospace products, while
government budgetary curtailed defense spending has caused deliveries of defense aerospace products
to be lesser in 2015 than for the same two quarter period in 2014. Year-to-date 2015 revenues amount to
$36,030,000 as compared to $38,685,000 for the same period in 2014.
Increased production by Comtek of composite floor panels for delivery to Bombardier Aerospace’s
regional and business jets floors product lines, strong sales into the composite floor panel aftermarket, as
well as continued higher than historical composite and metal aircraft structure repairs on a “loyalty”
program with key accounts, has significantly contributed to increasing Comtek’s second quarter revenues
by 13% over the same quarter in 2014.
On July 20, 2015, the Company entered into a definitive agreement (the “Agreement”) to acquire the US-based
composite aerostructures division of Hitco Carbon Composites Inc. (“Hitco”) a subsidiary of
Frankfurt-listed SGL Carbon SE (“SGL”).
The aerostructures division of Hitco is a large carbon composites aerostructures manufacturer which
produces and supplies composite aerostructures assemblies to aerospace markets. Its products comprise
complex mold line structures such as beams, wing skins, tailcones, pressurized bulkheads and control
surfaces. Hitco’s products are sold within the commercial and military aerospace industry.
The acquisition of Hitco’s aerostructures composite division offers a unique opportunity to transform the
Avcorp Group’s existing metal fabrication and integrated assembly business by broadening the product
range and strengthening its composite capabilities. Advanced composite fabrication capabilities, provided
by this acquisition, will enhance Avcorp Group’s ability to participate in large aerospace assembly
programs which combine mixed material components.
Closing is subject to customary conditions, including finalization of other ancillary agreements, third party
and regulatory approvals, and is anticipated to occur in Q3 2015.
During the quarter ended June 30, 2015, the Avcorp Group recorded a loss from operations of $1,125,000
on $20,369,000 revenue, as compared to a $472,000 operating loss on $21,134,000 revenue for the same
quarter in the previous year; and a net loss for the current quarter of $1,135,000 as compared to net loss
of $589,000 for the quarter ended June 30, 2014.
During the current quarter Avcorp incurred expenses totaling $491,000 in support of its current merger
and acquisition initiatives. Specifically, the Company incurred costs in execution of the due diligence
process related to constructing the legal framework, examining operations and conducting financial, as
well as valuation assessments. Although one time in nature, these costs are expected to continue
through to close of the acquisition transaction.
There remain within operations significant levels of unutilized plant capacity within the Company’s British
Columbia facility. The Company has expensed $1,204,000 of overhead costs during the current quarter
(June 30, 2014: $1,268,000) in respect of unutilized plant capacity. The amount of overhead costs
expensed, as a result of unutilized capacity, will fluctuate from quarter to quarter as production in support
of deliveries varies.
Cash flows from operating activities during the quarter ended June 30, 2015 utilized $2,580,000 of cash as
compared to generating $103,000 of cash during the quarter ended June 30, 2014. The primary use of
cash from operations during the current quarter is due to recognition of revenue related to current
quarter product deliveries for which the cash was received in a previous quarter. The Company has a
working capital surplus of $3,189,000 as at June 30, 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 June 30, 2015 is $69,569,000 (December 31, 2014: $65,673,000).
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 388 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