Avcorp Industries Inc.
TSX : AVP

Avcorp Industries Inc.

November 06, 2006 20:20 ET

Avcorp Announces 2006 Third Quarter Results

263% increase in net income over previous quarter Continued strong revenue for the first nine months Three consecutive quarters of profitability

DELTA, BRITISH COLUMBIA--(CCNMatthews - Nov. 6, 2006) - Avcorp Industries Inc. (TSX:AVP) today announces results for the quarter ended September 30, 2006.

Revenue for the quarter ended September 30, 2006 was $25,199,000, up from $21,345,000 for the comparable quarter last year. Revenue for the first nine months is up 36% over the comparable period last year. This increase in revenue is primarily from full rate production on various customer programs.

Gross profit (revenue less cost of sales) increased to 15% of revenue for the quarter ended September 30, 2006 from 2% for the quarter ended September 30, 2005. EBITDA (earnings (loss) before interest, income taxes, depreciation and amortization) was $1,935,000 for the quarter ended September 30, 2006 compared to a loss of $2,000,000 for the quarter ended September 30, 2005. Earnings from operations was $1,097,000 for the quarter ended September 30, 2006 an increase of 31% from the previous quarter, which compares to loss from operations of $2,776,000 for the same quarter last year.

Income for the quarter ended September 30, 2006 was $698,000, or $0.03 per share, compared to a loss of $3,583,000 for the quarter ended September 30, 2005. The net income of $698,000 for the quarter marked a 263% increase over the previous quarter's net income.

About Avcorp

Avcorp Industries Inc. designs and builds major airframe structures for some of the world's most respected aircraft companies, including Boeing, Bombardier and Cessna. With 50 years of experience, more than 600 skilled employees and a 300,000 square foot facility near Vancouver, Canada, the company's depth and breadth of capabilities are unique in the aerospace industry for a company of its size. Avcorp is a Canadian public company traded on the Toronto Stock Exchange. More information is available at www.avcorp.com.

MICHAEL SCHOLZ, CHAIRMAN

PAUL KALIL, PRESIDENT

Forward-Looking Statements

This release should be read in conjunction with the Company's unaudited financial statements contained in the Company's Annual Report and with the quarterly financial statements and accompanying notes filed with Sedar (www.sedar.com).

Certain statements in this release and other oral and written statements made by the Company from time to time are forward-looking statements, including those that discuss strategies, goals, outlook or other non-historical matters; or projected revenues, income, returns or other financial measures. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contained in the statements, including the following: (a) the extent to which the Company is able to achieve savings from its restructuring plans; (b) uncertainty in estimating the amount and timing of restructuring charges and related costs; (c) changes in worldwide economic and political conditions that impact interest and foreign exchange rates; (d) the occurrence of work stoppages and strikes at key facilities of the Company or the Company's customers or suppliers; (e) government funding and program approvals affecting products being developed or sold under government programs; (f) cost and delivery performance under various program and development contracts; (g) the adequacy of cost estimates for various customer care programs including servicing warranties; (h) the ability to control costs and successful implementation of various cost reduction programs; (i) the timing of certifications of new aircraft products; (j) the occurrence of further downturns in customer markets to which the Company products are sold or supplied or where the Company offers financing; (k) changes in aircraft delivery schedules or cancellation of orders; (l) the Company's ability to offset, through cost reductions, raw material price increases and pricing pressure brought by original equipment manufacturer customers; (m) the availability and cost of insurance; (n) the Company's ability to maintain portfolio credit quality; (o) the Company's access to debt financing at competitive rates; and (p) uncertainty in estimating contingent liabilities and establishing reserves tailored to address such contingencies.



Balance Sheets
as at September 30, 2006 and December 31, 2005
(unaudited, in thousands of Canadian dollars)

September 30 December 31
2006 2005
$ $
------------ ------------
ASSETS
Current assets
Accounts receivable 9,249 8,482
Inventories 16,940 13,465
Prepayments 1,134 1,429
------------ ------------

27,323 23,376
Development costs 1,257 615
Property, plant and equipment 15,016 16,557
Investment 759 759
Other assets 1,500 1,500
------------ ------------

45,855 42,807
------------ ------------
------------ ------------
LIABILITIES
Current liabilities
Bank indebtedness 7,420 7,846
Accounts payable and accrued
liabilities 11,265 12,272
Demand loans - 2,642
Debenture - 5,110
Current portion of long-term debt 617 1,386
------------ ------------

19,302 29,256
Deferred gain 560 596
Deferred lease inducement 1,184 1,258
Deferred credit 3,575 4,220
Long-term debt 5,387 7,338
------------ ------------

30,008 42,668
------------ ------------
SHAREHOLDERS' EQUITY
Capital stock 52,718 49,626
Preferred Shares 11,454 -
Contributed Surplus 2,365 2,042
Deficit (50,690) (51,529)
------------ ------------

15,847 139
------------ ------------

45,855 42,807
------------ ------------
------------ ------------


Statements of Operations
for the three and nine months ended September 30, 2006 and
September 30, 2005
(unaudited, in thousands of Canadian dollars, except per share amounts)

three months ended nine months ended
September 30 September 30
2006 2005 2006 2005
$ $ $ $
------------------ ------------------

Revenues 25,199 21,345 77,906 57,205
------------------ ------------------

Cost of sales and expenses
Cost of sales 21,467 21,798 67,128 57,821
Administrative and general
expenses 1,896 1,956 5,698 5,305
Depreciation 778 692 2,377 1,666
Foreign exchange (gain) (39) (325) (40) (289)
------------------ ------------------

24,102 24,121 75,163 64,503
------------------ ------------------

Earnings (loss) from
operations 1,097 (2,776) 2,743 (7,298)

Interest expense and
financing charges (399) (807) (1,658) (2,023)
------------------ ------------------

Earnings (loss) before
income taxes 698 (3,583) 1,085 (9,321)

Income taxes - - - -
------------------ ------------------

Income (loss) for the
period 698 (3,583) 1,085 (9,321)
------------------ ------------------
------------------ ------------------

Earnings (loss) per common
share
Basic 0.03 (0.19) 0.05 (0.53)
------------------ ------------------
------------------ ------------------
Diluted 0.03 (0.19) 0.04 (0.53)
------------------ ------------------
------------------ ------------------

Weighted average number of
shares outstanding (000's)
Basic 24,972 18,668 24,026 17,551
------------------ ------------------
------------------ ------------------
Diluted 25,417 18,668 24,537 17,551
------------------ ------------------
------------------ ------------------


Statements of Deficit
for the three and nine months ended September 30, 2006 and
September 30, 2005
(unaudited, in thousands of Canadian dollars)

three months ended nine months ended
September 30 September 30
2006 2005 2006 2005
$ $ $ $
------------------ ------------------

Deficit - Beginning of
period (51,142) (42,887) (51,529) (37,149)

Income (loss) for the
period 698 (3,583) 1,085 (9,321)
Preferred share dividends (246) - (246) -
------------------ ------------------

Deficit - End of period (50,690) (46,470) (50,690) (46,470)
------------------ ------------------
------------------ ------------------

Statements of Cash Flows
for the three and nine months ended September 30, 2006 and
September 30, 2005
(unaudited, in thousands of Canadian dollars)

three months ended nine months ended
September 30 September 30
2006 2005 2006 2005
$ $ $ $
------------------ ------------------
Cash flows from operating
activities
Income (loss) for the period 698 (3,583) 1,085 (9,321)
Items not affecting cash (357) 613 1,520 1,551
------------------ ------------------
341 (2,970) 2,605 (7,770)


Change in non-cash items
related to operating
activities (2,294) (1,084) (4,954) (4,484)
------------------ ------------------

(1,953) (4,054) (2,349) (12,254)
------------------ ------------------

Cash flows from investing
activities
Development costs (165) (81) (882) (122)
Purchase of property, plant
and equipment (514) (440) (857) (1,786)
Proceeds from sale of
property, plant and
equipment - - 21 -
------------------ ------------------
(679) (521) (1,718) (1,908)
Cash flows from financing
activities
Increase (decrease) in bank
indebtedness (949) 4,809 (426) 5,331
Proceeds from sale of
tooling - - - 4,092
Proceeds from current and
long-term debt - 3,130 490 11,073
Repayment of current and
long-term debt (3,350) (3,364) (5,645) (8,691)
Issue of common shares 88 - 2,821 2,409
Issue of preferred shares 7,635 - 7,635 -
Preferred share dividends (246) - (246) -
Share issue expense (546) - (562) (52)
------------------ ------------------

2,632 4,575 4,067 14,162

Net change in cash and cash
equivalents - - - -

Cash and cash equivalents -
Beginning of period - - - -
------------------ ------------------

Cash and cash equivalents -
End of period - - - -
------------------ ------------------
------------------ ------------------

Interest paid 349 556 1,127 1,359
------------------ ------------------
------------------ ------------------


Contact Information

  • Avcorp Industries Inc.
    Sheryl Brecknell
    Investor Relations
    (604) 587-4921
    Website: www.avcorp.com