SOURCE: First Aviation Services Inc.

First Aviation Services Inc.

October 23, 2009 20:00 ET

FAVS Announces Second Quarter Results

WESTPORT, CT--(Marketwire - October 23, 2009) - First Aviation Services Inc. (PINKSHEETS: FAVS) today announced a net loss of ($100,000) for the three months ended July 31, 2009 versus net income of $15,000 in the three month period ended July 31, 2008. Earnings before interest, taxes, depreciation and amortization (EBITDA) was a positive $476,000 compared to $754,000 in the three months ended July 31, 2008. For the six months ended July 31, 2009, the net loss of ($283,000) was comparable with the net loss of ($278,000) in the prior year period on 12.0% lower revenue.

SG&A expense was reduced by 16.2% in both the current year quarter and six months periods versus the prior year three and six month periods ended July 31, 2008. Corporate charges were 5.1% and 8.8% lower, respectively, in the current year three and six month periods versus the prior year. Interest expense was approximately 29% lower in the current six month period compared to the prior year.

Mr. Aaron Hollander, Chairman and CEO of First Aviation, said: "The company has responded aggressively to the economic impact of the recession, but the full benefit of the initiatives over the past months and strategic partnerships the company has forged have yet to be fully realized. The exclusive logistics services agreement the company announced in July with Cirrus Aircraft represents a major milestone in the expansion of our long-term Supply Chain Management Programs with leading aerospace OEMs worldwide. We continue to stay focused on cost containment, customer service enhancement and the expansion of our supply chain management business."

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
                                                         July 31,
                                                    2009          2008
                                                ------------  ------------
                                                (unaudited)   (unaudited)


Net sales                                       $     25,884  $     29,923
Cost of sales                                         21,496        24,575
                                                ------------  ------------

Gross profit                                           4,388         5,348
Selling, general and administrative expenses           3,861         4,607
Corporate expenses                                       373           393
                                                ------------  ------------

Income (loss) from operations                            154           348
Net interest income (expense)                           (255)         (329)
Foreign currency transaction gain                          1             -
                                                ------------  ------------

Earnings (loss) before income taxes                     (100)           19
Provision for income taxes                                 -            (4)
                                                ------------  ------------

Net earnings (loss)                             $       (100) $         15
                                                ============  ============

(EBIDTA) Earnings before taxes depreciation and
 amortization                                   $        476  $        754
                                                ============  ============

Basic net earnings (loss) per share, and net
 earnings (loss) per share - assuming dilution:

Basic net earnings (loss) per share             $      (0.01) $       0.00
                                                ============  ============

Net earnings (loss) per share - assuming
 dilution                                       $      (0.01) $       0.00
                                                ============  ============

Weighted average shares outstanding - basic        7,554,191     7,457,546
                                                ============  ============

Weighted average shares outstanding - assuming
 dilution                                          7,554,191     7,457,546
                                                ============  ============




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


                                                      Six months ended
                                                          July 31,
                                                      2009         2008
                                                  -----------  -----------
                                                  (unaudited)  (unaudited)


Net sales                                         $    52,315  $    59,422
Cost of sales                                          43,814       49,168
                                                  -----------  -----------

Gross profit                                            8,501       10,254
Selling, general and administrative expenses            7,646        9,126
Corporate expenses                                        693          760
                                                  -----------  -----------

Income (loss) from operations                             162          368
Net interest income (expense)                            (453)        (638)
Foreign currency transaction gain                           8            -
                                                  -----------  -----------

Loss before income taxes                                 (283)        (270)
Provision for income taxes                                  -           (8)
                                                  -----------  -----------

Net loss                                          $      (283) $      (278)
                                                  ===========  ===========

(EBIDTA) Earnings before taxes depreciation and
 amortization                                     $       771  $     1,186
                                                  ===========  ===========

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

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

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

Weighted average shares outstanding - basic         7,544,541    7,433,370
                                                  ===========  ===========

Weighted average shares outstanding - assuming
 dilution                                           7,544,541    7,433,370
                                                  ===========  ===========



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

                                                  July 31,     January 31,
                                                   2009          2009
                                                ------------  ------------
                                                (unaudited)     (audited)
Assets
Current assets:
      Cash and cash equivalents                 $      1,827  $      1,304
      Trade receivables, net of allowance for
       doubtful accounts of $951 and
       $1013, respectively                            13,214        14,492
      Inventory, net of allowance for obsolete
       and slow moving inventory of
       $4,096 and $4,425, respectively                33,360        29,471
      Prepaid expenses and other                       1,369         1,362
                                                ------------  ------------
Total current assets                                  49,770        46,629
Plant and equipment, net                               2,677         3,253
                                                ------------  ------------
Total Assets                                    $     52,447  $     49,882
                                                ============  ============
Liabilities and stockholders' equity
Current liabilities:
      Accounts payable                          $     14,188  $     11,651
      Accrued compensation and related expenses          160           290
      Other accrued liabilities                        1,305         1,280
      Revolving line of credit                        21,025        20,630
      Notes payable                                      464           537
                                                ------------  ------------
Total current liabilities                             37,142        34,388
      Related Party - JEM III LLC                      2,000         2,000
      Notes payable, less current portion                  -             -
                                                ------------  ------------
Total liabilities                                     39,142        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                      38,029        38,288
      Accumulated deficit                            (17,112)      (16,761)
      Accumulated other comprehensive income             348           229
                                                ------------  ------------
                                                      21,356        21,847
      Less:  Treasury stock, at cost, 1,544,460
       and 1,601,130 shares, respectively             (8,051)       (8,353)
                                                ------------  ------------
Total stockholders' equity                            13,305        13,494
                                                ------------  ------------
Total liabilities and stockholders' equity      $     52,447  $     49,882
                                                ============  ============




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

                                                     Six months ended
                                                          July 31,
                                                      2009         2008
                                                  -----------  -----------
                                                  (unaudited)  (unaudited)
Cash flows from operating activities
Net loss                                          $      (283) $      (278)
Adjustments to reconcile net loss to net
 cash used in operating activities - non-cash
 expense (income):
      Depreciation and amortization                       610          833
      Equity based compensation                            43           28
(Increase) decrease in working capital assets:
      Trade receivables                                 1,278        2,334
      Inventory                                        (3,889)      (3,220)
      Prepaid expenses and other                           (7)         188
Increase (decrease) in working capital
 liabilities:
      Accounts payable                                  2,469         (241)
      Accrued compensation and related expenses,
       and other accrued liabilities                     (105)        (618)
                                                  -----------  -----------
Net cash used in operating activities                     116         (974)

Cash flows from investing activities
Purchases of plant and equipment                          (34)        (440)
                                                  -----------  -----------
Net cash used in investing activities                     (34)        (440)

Cash flows from financing activities
Borrowings (repayments), net on revolving line of
 credit                                                   395        1,598
Repayments on notes payable                               (73)        (176)
                                                  -----------  -----------
Net cash provided by (used in) financing
 activities                                               322        1,422
                                                  -----------  -----------
Effect of exchange rate changes on cash and cash
 equivalents                                              119         (125)

Net decrease in cash and cash equivalents                 523         (117)
Cash and cash equivalents at beginning of period        1,304          750
                                                  -----------  -----------
Cash and cash equivalents at end of period        $     1,827  $       633
                                                  ===========  ===========

Contact Information

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