April 12, 2016
VANCOUVER: Avcorp Industries Inc. (TSX: AVP) (the “Company”, “Avcorp” or the “Avcorp Group”) today
announced its annual financial results for the year ended December 31, 2015.
During the year ended December 31, 2015 Avcorp Group revenues totaled $79,925,000 as compared to
$67,104,000 revenue for the previous year; a strong 19% annual revenue increase for 2015 as compared
to 2014. Both commercial and defence programs, for all customers, have experienced increased demand
during the current year. Furthermore, new program introductions and acquisition based revenues have
added to current year revenues as the Group ramps up to full rates of production on existing programs in
Effective December 18, 2015, Avcorp completed the acquisition of the US-based composite
Aerostructures division of Hitco, a subsidiary of Frankfurt-listed SGL. The Acquisition was completed
pursuant to the terms of an asset purchase agreement that was entered into on July 20, 2015, and
subsequent amendments to December 18, 2015. Pursuant to the Agreement Avcorp’s subsidiary, Avcorp
Composite Fabrication Inc., purchased the assets of the division of Hitco which produces composite
structural parts for commercial and military aerostructures.
The Acquisition, which was first announced in July 2015, will approximately double Avcorp’s revenue
while strengthening its balance sheet and adding approximately $274 million to the Company’s order
backlog. Avcorp’s business acquisition contributed $1,856,000 to the 2015 revenues arising during the
period post the December 18, 2015 acquisition date.
The Delta facility revenues have increased by 17% during the current year relative the previous year:
primarily as a result of the successful start-up of a rotary wing aircraft defence program whose full rate
production occurred during the second half of 2015. Current year commercial jet and business jet aircraft
structure and retro-fit program deliveries increased as well in 2015 over 2014, reflecting increased
customer production rate demand and spare components sales.
The Burlington facility commenced production of composite floor panels in supply to Bombardier
Aerospace’s Global 5000/6000 and Global 7000/8000 programs during the current year, with increased
rates of production expected for 2016. Full rate production for these programs will further establish the
wholly owned subsidiary as a leading manufacturer of composite floor panels. Composite floor panel
revenues arising from aftermarket or spare component sales have risen by 91% in 2015 over 2014; while
composite floor panel revenues derived from sales to original equipment manufacturers (“OEM”) have
increased by 20%. Comtek has also developed long term relationships with aircraft operators ensuring
that its growth in composite and metal aircraft structure repair revenues will continue to provide a strong
operating cash flow from this market segment. In summary, Avcorp’s Burlington operations increased
revenue in 2015 relative to 2014 by $3,685,000 (28%).
During the year ended December 31, 2015, the Avcorp Group recorded a loss from operations of
$12,114,000 on $79,925,000 revenue, as compared to an $8,038,000 operating loss on $67,104,000
revenue for the previous year. During the current year Avcorp incurred expenses totaling $5,865,000 in
support of its current merger and acquisition initiatives. Although recent customer contract awards will
commence to increase facility utilization, there remain within operations significant levels of unutilized
plant capacity within the Company’s Delta, British Columbia facility. The Company has expensed
$4,906,000 of overhead costs during the current year (December 31, 2014: $5,047,000) in respect of
unutilized plant capacity.
Net income for the current year amounted to $3,208,000 as compared to a net loss of $7,950,000 for the
year ended December 31, 2014. A $15,973,000 gain was recorded in 2015, arising from the December 18,
2015 acquisition of the composite Aerostructures division of Hitco.
Cash flows from operating activities during the year ended December 31, 2015 utilized $20,004,000 of
cash as compared to utilizing $3,139,000 of cash during the year ended December 31, 2014. Cash flows
from operating activities were most significantly impacted as a result of the December 18, 2015
acquisition of Hitco’s Aerostructures division, as well as working capital growth in support of increased
production and revenues.
Total current assets less total current liabilities were in a surplus position of $55,045,000 at December 31,
2015 and $7,205,000 at December 31, 2014.
On December 31, 2015, the ratio of the Company's current assets to current liabilities was 2.02:1
(December 31, 2014: 1.43:1), with the debt to equity ratio at 0.09:1 (December 31, 2014: 0.07:1).