Aeroquest International Limited
TSX : AQL

Aeroquest International Limited

February 10, 2010 16:44 ET

Aeroquest International Limited (TSX:AQL) Announces Financial Results for the Three Months Ended December 31, 2009

- Revenue of $8.2 million up $2.6 million from Q4 (including acquisitions)

- EBITDA of negative $1.4 million compared to negative $1.3 million in Q4.

- Contract backlog at $11.4 million, an increase of $0.5 million from year-end.

MISSISSAUGA, ONTARIO--(Marketwire - Feb. 10, 2010) -

Attention business/financial editors and reporters:

Aeroquest International Limited (TSX:AQL) today reported financial results for its first quarter of fiscal 2009, the three months ended December 31, 2008. The quarterly results reflect both modest growth in the airborne geophysical survey business as well as the first quarter of revenue from the Optimal Geomatics business acquisition, which closed on September 30, 2009.

"We are cautiously optimistic that we have seen the worst of the economic slowdown and its impact on exploration activity" said Roy Graydon, President and CEO of Aeroquest; "at the same time, we believe that the pace of recovery in this segment will remain modest." 

Consolidated revenue for the three months ended December 31 2009 was $8.2 million, a decrease of $3.1 million or 28 percent over the first quarter last year. Revenue from airborne geophysical surveys comprised $5.7 million, a decline of $5.0 from Q1 of last year but up $0.8 million from Q4 of 2009. Revenue from aerial geomatics (the former Optimal Geomatics business) was $2.2 million. Contract R&D revenue (the Geophex business) contributed $0.4 million. 

Profit margins in the airborne geophysical survey businesses still lag behind historical level at 16 percent compared with 26 percent in the first quarter last year Both the helicopter and fixed wing margins suffered primarily due to lower margins on government survey work in Australia combined with logistical issues with surveys in Latin America and South East Asia. Management expects that these margins will improve in the second quarter. Aerial Geomatics profit margins were 15% of revenue, again below management's expectations. The Company embarked on a cost rationalization program at the former Optimal businesses in the first quarter and this process is continuing into the second quarter. Management expects margins to improve in this business segment over the next six months. Overall profit margin was 17% compared with 26% last year and 21% in the fourth quarter. EBITDA1 in the quarter was negative $1.4 million, a decline of $1.3 million over the negative $0.1 million reported in the comparable quarter last year and a decline of $0.1 million from the fourth quarter of last year.

1 EBITDA stands for earnings before interest, taxes, depreciation and amortization. It is a financial metric used to analyze operating results. The Company defines EBITDA as revenue less cost of sales, cash operating costs (general and administrative expenses as well as foreign currency gains/losses) and stock-based compensation expense. It is not a standard measure under Generally Accepted Accounting Principles and as such EBITDA as calculated may not be comparable to similarly titled amounts reported by other companies.

Net loss in the quarter was $2.3 million or $0.06 per share compared to net loss of $1.5 million, or $0.04 per share in the first quarter last year.

Cash flow from operating activities was negative $1.4 million, or $0.03 per share for the period, as compared to positive $1.1 million, or $0.03 per share in the first quarter last year. Capital expenditures totaled $0.2 million for the quarter, a decline of $1.8 million from the comparable quarter last year. This decline is due to the acquisition last year of a new airborne gravity meter. Management expects capital expenditures to be modest for the balance of fiscal 2010.

Outlook – Q2 - 2010

Given the ongoing market uncertainty and its impact on worldwide exploration in the mining and petroleum industries, the Company has found that it is difficult to provide revenue guidance with a reasonable degree of certainty. However, contract backlog showed an increase of $0.5 million from year-end and sits at $11.4 million at quarter end. Backlog is composed of $3.6 million in airborne geophysical survey backlog ($2.0 million in helicopter and $1.6 million in fixed wing) $7.4 million in aerial geomatics backlog, and $0.4 million in contract R&D backlog.

The Company believes that the worst of the negative impact on its target markets is ending and exploration spending is set for a gradual improvement in 2010.

Analyst Conference Call

Aeroquest International Limited will hold a Q1 2010 conference call at 11:00 a.m. ET on Thursday, February 11, 2010. The conference call will review Aeroquest's results for the quarter ended December 31, 2009. The scheduled speakers for the Company on the conference call are: Roy Graydon, President and Chief Executive Officer, and Robert Motz, Chief Financial Officer.

Interested parties can access the conference call by dialing from North America 1-866-696-5910. The international or local dial-in number is 416-340-2217. You must enter pass code 6870836. Please dial in approximately five minutes prior to the start time.

A replay service will be available from two hours following the conference call until midnight on February 25, 2010. To access this recording, dial 1-800-408-3053 or 1-416-695-5800 and enter pass code 7616327.

About Aeroquest International

Aeroquest International is a global information and technology services company and a leader in the development and operation of airborne geophysics and geomatics survey platforms for the mineral and petroleum exploration, and environmental and infrastructure industries. Through its subsidiary companies Aeroquest Surveys, UTS/Aeroquest, Geophex and Optimal Geomatics, Aeroquest International fields a fleet of 30 helicopter and fixed wing survey systems and is active around the world. More information about Aeroquest International can be found at www.aeroquest.ca.

For Investors

This news release may include statements about expected future events and/or financial results that are forward-looking in nature and subject to risks and uncertainties. The Company cautions that actual performance will be affected by a number of factors, many of which are beyond its control. Future events and results may vary substantially from what the Company currently foresees. Discussion of the various factors that may affect future results is contained in the Company's recent filings, available on SEDAR.

AEROQUEST INTERNATIONAL LIMITED

Consolidated Balance Sheets

As at Dec. 31, 09   Sep. 30, 09  
Assets        
  Current        
    Cash and cash equivalents $ 4,671,287   $ 6,145,782  
    Accounts receivable 6,784,704   5,870,328  
    Income taxes recoverable 2,816,792   2,196,916  
    Unbilled contracts in progress 614,142   723,008  
    Inventory 607,701   342,012  
    Prepaid expenses and deposits 1,699,733   1,564,357  
Total current assets 17,194,359   16,842,403  
  Long term        
    Long term investments 137,338   99,521  
    Capital assets 11,409,303   12,426,652  
    Intangible assets 15,354,291   16,275,187  
    Goodwill 11,365,694   11,408,513  
    Future income taxes 701,273   687,907  
Total long term assets 38,967,899   40,897,780  
Total Assets 56,162,258   57,740,183  
         
Liabilities and Shareholders' Equity        
  Current        
    Accounts payable and accrued liabilities $ 5,021,063   $ 4,783,426  
    Deferred revenue 1,938,975   910,429  
    Capital lease obligations 489,977   543,874  
Total current liabilities 7,450,015   6,237,729  
  Long term        
    Capital lease obligations 135,856   223,815  
    Future income taxes 4,726,623   5,113,055  
Total liabilities 12,312,494   11,574,599  
         
  Shareholders' equity        
    Share capital 48,465,023   48,084,479  
    Contributed surplus 2,216,990   2,479,824  
    Accumulated other comprehensive income (loss) 1,323,298   1,490,428  
    Retained earnings/(deficit) (8,155,547 ) (5,889,147 )
Total shareholders' equity 43,849,764   46,165,584  
Total Liabilities and Shareholders' Equity 56,162,258   $ 57,740,183  

AEROQUEST INTERNATIONAL LIMITED

Consolidated Statements of Operations

    For the three months ending Dec. 31, 09   Dec. 31, 08  
         
Sales $ 8,174,536   $ 11,297,694  
  Cost of sales 6,779,344   8,369,934  
Gross profit 1,395,192   2,927,760  
         
Expenses and other items        
  General and administrative 2,668,099   4,350,563  
  Foreign exchange (gain)/loss 81,087   (1,205,586 )
  Stock based compensation expense 84,809   104,392  
  Amortization of intangible assets 874,568   885,050  
  Depreciation of capital assets 880,148   801,563  
Total operating expenses 4,588,711   4,935,982  
         
Operating profit/(loss) (3,193,519 ) (2,008,222 )
  Other costs (income) (118,326 ) -  
  Interest Income -   (70,770 )
  Interest Expense 15,223   14,585  
Income/(loss) before income taxes (3,090,416 ) (1,952,037 )
Income taxes        
  Current (438,291 ) (147,067 )
  Future (recovery) (385,725 ) (291,400 )
  Total income tax (824,016 ) (438,467 )
Net income/(loss) for the period $ (2,266,400 ) $  (1,513,570 )
         
Earnings/(loss) per share        
  Basic $ (0.06 ) $  (0.04 )
  Diluted $ (0.07 ) $  (0.04 )

AEROQUEST INTERNATIONAL LIMITED

Consolidated Statements of Retained Earnings/(Deficit)

For the three months ending Dec. 31, 09   Dec. 31, 08  
Retained earnings (deficit), beginning of period $ (5,889,147 ) $  4,681,071  
Excess of purchase price over cost on redemption of shares -   52,087  
  Net income/(loss) (2,266,400 ) (1,513,570 )
Retained earnings, end of period (8,115,547 ) $ 3,219,588  
         

Consolidated Statements of Comprehensive Income

For the three months ending Dec. 31, 09   Dec. 31, 08  
         
Net Income/(loss) for the period $ (2,266,400 ) $  (1,513,570 )
Revaluation of long term investments to fair market value (Net of tax $26,773, 2008 - $1,360) (52,177 ) (2,640 )
Unrealized gain(loss) on translation of self-sustaining foreign operations (114,953 ) 592,864  
Total Other Comprehensive Income (loss) (168,130 ) 590,224  
Total Comprehensive Income (loss) $( 2,434,530 ) $  (923,346 )
         
Accumulated Other Comprehensive Income (loss):        
Revaluation of long term investments to fair market value $ (28,081 ) $  6,280  
Unrealized gain(loss) on translation of self-sustaining foreign operations 1,351,379   (1,210,814 )
Total Accumulated Other Comprehensive Income (loss) $ 1,323,298   $  (1,204,534 )
         

AEROQUEST INTERNATIONAL LIMITED

Consolidated Statements of Cash Flow

For the three months ending Dec. 31, 09   Dec. 31, 08  
Cash provided by (used in)        
Operating activities        
  Net income/(loss) for the period $ (2,266,400 ) $  (1,513,570 )
  Operating items not requiring cash        
  Amortization of intangible assets 874,568   885,050  
  Depreciation of capital assets 880,148   801,563  
  Future income taxes (385,725 ) (291,400 )
  Stock based compensation 84,809   104,392  
Operating cash flow before changes in non-cash working capital (812,600 ) (13,965 )
  Changes in non cash working capital (601,468 ) 1,110,747  
Total cash flow from operating activities (1,414,068 ) 1,096,782  
Investing activities        
  Capital asset purchases (163,423 ) (2,039,702 )
  Proceeds from disposal of capital assets 330,400   (86,000 )
  Long-term investments acquired (90,000 ) -  
Total cash flow from investing activities 76,977   (2,125,702 )
Financing activities        
  Capital lease payments (141,856 ) (85,130 )
  Aeroquest shares redeemed -   (56,814 )
  Proceeds: issuance of common shares 4,450   -  
Total cash flow from financing activities (137,406 ) (141,944 )
         
Net change in cash and cash equivalents for the period $ (1,474,497 ) $  (1,170,864 )
Cash and cash equivalents, beginning of period 6,145,784   15,373,132  
Cash and cash equivalents, end of period $ 4,671,287   $ 14,202,268  

Contact Information

  • Aeroquest International Limited
    Roy Graydon
    President & Chief Executive Officer
    905-672-9129
    rgraydon@aeroquest.ca