SOURCE: First Aviation Services Inc.

First Aviation Services Inc.

October 23, 2009 18:57 ET

FAVS Announces Improvement in First Quarter Results

WESTPORT, CT--(Marketwire - October 23, 2009) - First Aviation Services Inc. (PINKSHEETS: FAVS) today announced improved financial results for the three months ended April 30, 2009 on 10.5% lower revenue. There was a net loss of ($182,000) in the current year quarter versus a net loss of ($292,000) incurred in the prior year quarter. SG&A and corporate expenses were 16.3% and 12.8% lower, respectively, in the current year three month period versus the comparable prior year period as cost savings initiatives produced a positive impact on operational expense. Interest expense of $192,000 was approximately 37% lower in the current three month period compared to the prior year.

Mr. Aaron Hollander, Chairman and CEO of First Aviation, said: "The team continues to make progress in improving efficiencies and customer service while reducing costs. The markets we compete in have suffered significant erosion due to the economic downturn. Corporate flight hours are down 30% to 40% and charter operators have reported even worse results. OEM's are slashing production and airlines face further reductions in capacity. Notwithstanding the difficult economy, we have controlled costs and improved customer service levels. We are increasing our competitiveness and are focusing on strategic partnerships that will increase market share and improve profitability."

The company reported that the delay in reporting the first quarter financials was the result of a restatement in the prior periods' financial statements as more fully described in the annual report for the year ended January 31, 2009. Financial statements for the period ended January 31, 2009 are available on the company's website.

First Aviation and its principal operating subsidiary Aerospace Products International, Inc. ("API"), headquartered in Memphis, Tennessee, is a leading provider of services to the aviation industry worldwide. With locations in the U.S., Canada, Asia Pacific, and China plus partners throughout the world, services to the aviation industry include the sale of aircraft parts and components, the provision of supply chain management services, and overhaul and repair services.

More information about First Aviation can be found on the Company's and API's websites, which are located at http://www.favs.com and http://www.apiworldwide.com.

Forward-Looking Statements

Certain statements discussed in this release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical facts, but rather reflect our current expectations concerning future events and results. Such forward-looking statements, including those concerning our expectations, involve known and unknown risks, uncertainties and other factors, some of which are beyond the Company's control, that may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks, uncertainties and other important factors include, among others: our ability to obtain parts and components from principal suppliers on a timely basis; depressed domestic and international market and economic conditions; especially those currently facing the aviation industry as a whole, including terrorism and terrorism related impacts, the impact of changes in fuel and other freight related costs, major adverse weather related effects such as hurricanes impacting our customer base, relationships with customers, the ability of our customers to meet their financial obligations to us, our ability to obtain and service supply chain management contracts, changes in regulations or accounting standards, the ability to consummate suitable acquisitions and expand, the loss of the use of facilities and distribution hub in Southaven, Mississippi, significant failure of our computer systems, telephone systems or networks, and other items that are beyond our control and may cause actual results to differ from management's expectations. The Company undertakes no obligation to update any forward-looking statements or cautionary factors except as required by law.

                      First Aviation Services Inc.
            Consolidated Condensed Statements of Operations
           (in thousands, except share and per share amounts)



                                                     Three months ended
                                                          April 30,
                                                     2009         2008
                                                  -----------  -----------
                                                  (unaudited)  (unaudited)

Net sales                                         $    26,431  $    29,499
Cost of sales                                          22,317       24,593
                                                  -----------  -----------

Gross profit                                            4,114        4,906
Selling, general and administrative expenses            3,784        4,519
Corporate expenses                                        320          367
                                                  -----------  -----------

Income from operations                                     10           20
Net interest income (expense)                            (192)        (307)
Foreign currency transaction gain (loss)                    -           (1)
                                                  -----------  -----------

Loss before income taxes                                 (182)        (288)
Provision for income taxes                                  -           (4)
                                                  -----------  -----------

Net loss                                          $      (182) $      (292)
                                                  ===========  ===========

(EBIDTA) Earnings before interest, taxes,
 depreciation and amortization                    $       297  $       445
                                                  ===========  ===========

Basic net loss per share, and net loss per share
 - assuming dilution:

Basic net loss per share                          $     (0.02) $     (0.04)
                                                  ===========  ===========

Net loss per share - assuming dilution            $     (0.02) $     (0.04)
                                                  ===========  ===========

Weighted average shares outstanding - basic         7,534,569    7,423,220
                                                  ===========  ===========

Weighted average shares outstanding - assuming
 dilution                                           7,534,569    7,423,220
                                                  ===========  ===========







                       First Aviation Services Inc.
                  Consolidated Condensed Balance Sheets
            (in thousands, except share and per share amounts)


                                                   April 30,   January 31,
                                                     2009         2009
                                                  -----------  -----------
                                                  (unaudited)   (Audited)
Assets
Current assets:
      Cash and cash equivalents                   $     1,349  $     1,304
      Trade receivables, net of allowance for
       doubtful accounts of $926 and $1,013,
       respectively                                    12,976       14,492
      Inventory, net of allowance for obsolete
       and slow moving inventory of $4,354 and
       $4,425, respectively                            28,480       29,471
      Prepaid expenses and other                        1,246        1,362
                                                  -----------  -----------

Total current assets                                   44,051       46,629

Plant and equipment, net                                2,958        3,253
                                                  -----------  -----------
Total Assets                                      $    47,009  $    49,882
                                                  ===========  ===========
Liabilities and stockholders' equity
Current liabilities:
      Accounts payable                            $    11,195  $    11,651
      Accrued compensation and related expenses           251          290
      Other accrued liabilities                         1,400        1,280
      Revolving line of credit                         18,419       20,630
      Notes payable                                       537          537
                                                  -----------  -----------
Total current liabilities                              31,802       34,388
      Related Party - JEM III LLC                       2,000        2,000
                                                  -----------  -----------
Total liabilities                                      33,802       36,388
Stockholders' equity:
      Common stock, $0.01 par value, 10,000,000
       shares authorized, 9,135,699 shares issued          91           91
      Additional paid-in capital                       38,318       38,288
      Accumulated deficit                             (16,972)     (16,761)
      Accumulated other comprehensive income              153          229
                                                  -----------  -----------
                                                       21,590       21,847
      Less:  Treasury stock, at cost, 1,601,130
       and 1,601,130 shares, respectively              (8,383)      (8,353)
                                                  -----------  -----------
Total stockholders' equity                             13,207       13,494
                                                  -----------  -----------
Total liabilities and stockholders' equity        $    47,009  $    49,882
                                                  ===========  ===========







                       First Aviation Services Inc.
       Consolidated Condensed Statements of Cash Flows (Unaudited)
                              (in thousands)



                                                    Three months ended
                                                         April 30,
                                                    2009          2008
                                                ------------  ------------
                                                (unaudited)   (as restated)
Cash flows from operating activities
Net loss                                        $       (182) $       (292)
Adjustments to reconcile net loss to net
 cash used in operating activities - non-cash
 expense (income):
      Depreciation and amortization                      287           425
      Equity based compensation                            -             6
(Increase) decrease in working capital assets:
      Trade receivables                                1,516         1,217
      Inventory                                          991           191
      Prepaid expenses and other                         116          (452)
(Increase) decrease in working capital
 liabilities:
      Accounts payable                                  (470)       (1,475)
      Accrued compensation and related
       expenses, and other accrued liabilities            81           525
                                                ------------  ------------
Net cash used in operating activities                  2,339           145

Cash flows from investing activities
Purchases of plant and equipment                          (8)         (188)
                                                ------------  ------------
Net cash used in investing activities                     (8)         (188)

Cash flows from financing activities
Borrowings (repayments), net on revolving line
 of credit                                            (2,211)        1,097
Repayments on notes payable                                -           (86)
                                                ------------  ------------
Net cash provided by (used in) financing
 activities                                           (2,211)        1,011
                                                ------------  ------------
Effect of exchange rate changes on cash and
 cash equivalents                                        (75)          (44)

Net decrease in cash and cash equivalents                 45           924
Cash and cash equivalents at beginning of
 period                                                1,304           750
                                                ------------  ------------
Cash and cash equivalents at end of period      $      1,349  $      1,674
                                                ============  ============

Contact Information

  • Contact:
    James Howell
    Chief Financial Officer
    Aerospace Products International, Inc.
    (203) 291-3300