SOURCE: First Aviation Services Inc.

First Aviation Services Inc.

November 19, 2009 14:22 ET

Third Quarter Results Announced by First Aviation

WESTPORT, CT--(Marketwire - November 19, 2009) - First Aviation Services Inc. (PINKSHEETS: FAVS) today announced net income of $419,000 for the three months ended October 31, 2009 or $.06 per share versus a net loss of ($80,000) in the three month period ended October 31, 2008. Earnings before interest, taxes, depreciation and amortization (EBITDA) was a positive $1,062,000 compared to $655,000 in the three months ended October 31, 2008. Revenue for the quarter ended October 31, 2009 was 2.2% lower than the prior year same period.

SG&A expense was reduced by 8.0% and 13.6% in the current year quarter and nine months periods respectively versus the prior year three and nine month periods ended October 31, 2008. Corporate charges were 1.8% higher in the current year three month period versus the prior year and 5.3% lower for the nine month period compared to the same period in the prior year. Interest expense was approximately 18% lower in the current nine month period compared to the prior year.

On November 9, 2009, First Aviation Services Inc. announced that it has entered into definitive agreement with Kelly Aerospace, Inc. to acquire the business of Kelly Aerospace Turbine Rotables, Inc. through a newly formed subsidiary named Aerospace Turbine Rotables, Inc. (AeTR). FAvS has separately entered into definitive agreement to acquire the propeller overhaul repair business of Limco-Piedmont Inc. through a newly formed subsidiary Piedmont Propulsion Systems, LLC (PPS). These transactions will also result in Limco-Piedmont acquiring approximately 37% of FAvS' common stock in the form of newly issued non-voting shares, plus preferred stock and Limco-Piedmont guaranteeing certain debt required to finance the purchase of AeTR. Limco-Piedmont is a subsidiary of TAT Technologies Ltd. (NASDAQ: TATTF).

Mr. Aaron Hollander, Chairman and CEO of First Aviation, said: "We are very pleased with the results in the quarter despite an extremely challenging environment. The company has responded aggressively to the economic impact of the recession as we continue to stay focused on cost containment, customer service enhancement and the expansion of our supply chain management business. We look forward to Aerospace Turbine Rotables, Inc. and Piedmont Propulsion Systems, LLC joining the First Aviation family and expanding the capabilities we provide our customers. We expect the transactions to close in the coming weeks."

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.

Please see our important forward-looking statement at www.favs.com/forward

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

                                                     Three months ended
                                                         October 31,
                                                      2009         2008
                                                  -----------  -----------
                                                  (unaudited)  (unaudited)


Net sales                                         $    28,924  $    29,581
Cost of sales                                          23,790       24,094
                                                  -----------  -----------

Gross profit                                            5,134        5,487
Selling, general and administrative expenses            3,987        4,810
Corporate expenses                                        391          384
                                                  -----------  -----------

Income (loss) from operations                             756          293
Net interest income (expense)                            (365)        (361)
Foreign currency transaction gain                          28           (5)
                                                  -----------  -----------

Earnings (loss) before income taxes                       419          (73)
Provision for income taxes                                  -           (7)
                                                  -----------  -----------

Net earnings (loss)                               $       419  $       (80)
                                                  ===========  ===========

(EBIDTA) Earnings before taxes depreciation and
 amortization                                     $     1,062  $       655
                                                  ===========  ===========

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

Basic net earnings (loss) per share               $      0.06  $     (0.01)
                                                  ===========  ===========

Net earnings (loss) per share - assuming dilution $      0.06  $     (0.01)
                                                  ===========  ===========

Weighted average shares outstanding - basic         7,477,000    7,422,000
                                                  ===========  ===========

Weighted average shares outstanding - assuming
 dilution                                           7,477,000    7,422,000
                                                  ===========  ===========




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

                                                      Nine months ended
                                                         October 31,
                                                      2009         2008
                                                  -----------  -----------
                                                  (unaudited)  (unaudited)


Net sales                                         $    81,240  $    88,152
Cost of sales                                          67,604       71,535
                                                  -----------  -----------

Gross profit                                           13,636       16,617
Selling, general and administrative expenses           11,633       14,811
Corporate expenses                                      1,083        1,144
                                                  -----------  -----------

Income (loss) from operations                             920          662
Net interest income (expense)                            (818)      (1,001)
Foreign currency transaction gain                          36           (3)
                                                  -----------  -----------

Loss before income taxes                                  138         (342)
Provision for income taxes                                  -          (15)
                                                  -----------  -----------

Net loss                                          $       138  $      (357)
                                                  ===========  ===========

(EBIDTA) Earnings before taxes depreciation and
 amortization                                     $     1,835  $     1,857
                                                  ===========  ===========

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

Basic net earnings (loss) per share               $      0.02  $     (0.05)
                                                  ===========  ===========

Net earnings (loss) per share - assuming dilution $      0.02  $     (0.05)
                                                  ===========  ===========

Weighted average shares outstanding - basic         7,477,000    7,422,000
                                                  ===========  ===========

Weighted average shares outstanding - assuming
 dilution                                           7,477,000    7,422,000
                                                  ===========  ===========




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

                                                 Oct 31, 2009  Jan 31, 2009
                                                  -----------  -----------
                                                  (unaudited)   (audited)
Assets
Current assets:
      Cash and cash equivalents                   $     1,025  $     1,304

Trade receivables, net                                 17,039       14,492

Inventory, net                                         32,459       29,471

      Prepaid expenses and other                        2,259        1,362
                                                  -----------  -----------

Total current assets                                   52,782       46,629

Plant and equipment, net                                2,385        3,253
                                                  -----------  -----------

Total Assets                                      $    55,167  $    49,882
                                                  ===========  ===========
Liabilities and stockholders' equity
Current liabilities:
      Accounts payable                            $    15,073  $    11,651
      Accrued compensation and related expenses           268          290
      Other accrued liabilities                         1,435        1,034
      Revolving line of credit                         21,201       20,630
      Notes payable                                     1,032          537
                                                  -----------  -----------
Total current liabilities                              39,009       34,142

      Related Party - JEM III LLC                       2,338        2,246
      Notes payable, less current portion                  37            -
                                                  -----------  -----------
Total liabilities                                      41,384       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                       37,815       38,288
      Accumulated deficit                             (16,660)     (16,761)
      Accumulated other comprehensive income              342          229
                                                  -----------  -----------
                                                       21,588       21,847
      Less:  Treasury stock, at cost, 1,501,708
       and 1,601,130 shares, respectively              (7,805)      (8,353)
                                                  -----------  -----------
Total stockholders' equity                             13,783       13,494
                                                  -----------  -----------
Total liabilities and stockholders' equity        $    55,167  $    49,882
                                                  ===========  ===========




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

                                                      Nine months ended
                                                         October 31,
                                                      2009         2008
                                                  -----------  -----------
                                                  (unaudited)  (unaudited)
Cash flows from operating activities
Net income (loss)                                 $       138  $      (357)
Adjustments to reconcile net loss to net
 cash used in operating activities - non-cash
 expense (income):
      Depreciation and amortization                       915        1,195
      Equity based compensation                            74           28
(Increase) decrease in working capital assets:
      Trade receivables                                (2,547)       2,210
      Inventory                                        (2,988)         (83)
      Prepaid expenses and other                         (897)        (672)
Increase (decrease) in working capital
 liabilities:
      Accounts payable                                  3,422       (2,713)
      Accrued compensation and related expenses,
       and other accrued liabilities                      379         (645)
                                                  -----------  -----------
Net cash used in operating activities                  (1,504)      (1,037)

Cash flows from investing activities
Purchases of plant and equipment                          (47)        (621)
                                                  -----------  -----------
Net cash used in investing activities                     (47)        (621)

Cash flows from financing activities
Borrowings (repayments), net on revolving line of
 credit                                                   571        3,614
Repayments on notes payable & other short term
 debt                                                     587         (411)
                                                  -----------  -----------
Net cash provided by (used in) financing
 activities                                             1,158        3,203
                                                  -----------  -----------
Effect of exchange rate changes on cash and cash
 equivalents                                              114         (443)

Net decrease in cash and cash equivalents                (279)       1,102

Cash and cash equivalents at beginning of period        1,304          750
                                                  -----------  -----------
Cash and cash equivalents at end of period        $     1,025  $     1,852
                                                  ===========  ===========

Contact Information

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