SOURCE: First Aviation Services Inc.

First Aviation Services Inc.

November 17, 2010 08:00 ET

Third Quarter Sales Increase of 24% Reported by First Aviation

WESTPORT, CT--(Marketwire - November 17, 2010) - First Aviation Services Inc. (PINKSHEETS: FAVS) announced that revenue for the quarter ended September 30, 2010 increased 24.2% to $33.6 million vs. $27.0 million in the prior year period. For the nine month period ended September 30 sales at $96.8 million were 22.2% higher than the similar prior year period. Operating subsidiary Aerospace Products International, Inc. on a stand alone basis increased sales 4.3% for the comparable period.

For the quarter there was a small net loss of $369,000 due to several factors including margin pressure on distribution. However, for the nine months ended September 30, 2010 Company net income continues to perform favorably against the prior year realizing net income of $704,000 versus a loss of $225,000 in the prior year period.

Gross margin for the quarter and for the nine months ended September 30 was 18.4% and 20.5% respectively, which compares favorably to the prior year 17.8% and 17.0% respectively.

At September 30, trade receivables were up $2.5 million compared to the balance at December 31, 2009. This is largely due to receivables related to certain programs that by nature have an extended collection cycle. The Company continues to show positive movement in its inventory reduction initiatives.

Aaron P. Hollander, Chairman and C.E.O., stated, "We are pleased with the sales growth in the quarter. We are focusing on increasing margins in the distribution business, growing our maintenance, repair and overhaul capabilities and expanding our supply chain programs. During the quarter we began the implementation of our participation in the Army C-12 program which became operational in the fourth quarter. This program along with the recently closed new financing facility with Wells Fargo Capital Finance should positively impact profitability."


                       First Aviation Services Inc.

              Consolidated Condensed Statements of Operations

            (in thousands, except share and per share amounts)

                                                                  12 Mos
                   Three Mos Ended          Nine Mos Ended         Ended
                       Sept 30,                Sept 30,           Dec 31,
                ----------------------  ----------------------
                   2010        2009        2010        2009        2009
                ----------  ----------  ----------  ----------  ----------
                (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)

Net sales       $   33,584  $   27,039  $   96,769  $   79,190  $  108,933
Cost of sales      (27,395)    (22,218)    (76,965)    (65,721)    (90,004)
                ----------  ----------  ----------  ----------  ----------

Gross profit         6,189       4,821      19,804      13,469      18,929

Selling,
 general and
 administrative
 expenses           (5,607)     (3,906)    (16,173)    (11,798)    (15,513)
Corporate
 expenses             (356)       (368)     (1,118)     (1,145)     (2,258)
Acquisition
 expenses                -           -         (11)          -        (683)
                ----------  ----------  ----------  ----------  ----------
                    (5,963)     (4,274)    (17,302)    (12,943)    (18,454)

Income from
 operations            226         547       2,502         526         475

Interest income
 (expense) and
 other, net           (543)       (365)     (1,605)       (751)     (1,189)
                ----------  ----------  ----------  ----------  ----------

Income (loss)
 before income
 taxes                (317)        182         897        (225)       (714)
Income tax
 provision             (52)          -        (193)          -           -
                ----------  ----------  ----------  ----------  ----------

Net income
 (loss)               (369)        182         704        (225)       (714)

Dividends on
 preferred
 stock                 (55)          -        (176)          -           -
                ----------  ----------  ----------  ----------  ----------

Income
 available
 (loss
 attributable)
 to common
 stockholders   $     (424) $      182  $      528  $     (225) $     (714)
                ==========  ==========  ==========  ==========  ==========


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

Basic net
 income (loss)
 per share      $    (0.03) $     0.02  $     0.03  $    (0.03) $    (0.09)
                ----------  ----------  ----------  ----------  ----------

Net income
 (loss) per
 share -
 assuming
 dilution       $    (0.03) $     0.02  $     0.03  $    (0.03) $    (0.09)
                ----------  ----------  ----------  ----------  ----------

Weighted
 average shares
 outstanding -
 basic          15,693,193   7,595,083  15,657,578   7,551,772   8,250,906
                ==========  ==========  ==========  ==========  ==========

Weighted
 average shares
 outstanding -
 assuming
 dilution       15,693,193   7,597,939  15,678,682   7,551,772   8,250,906
                ==========  ==========  ==========  ==========  ==========


Please see our forward looking statements at www.firstaviation.com/forward





                       First Aviation Services Inc.

                  Consolidated Condensed Balance Sheets

                   (in thousands, except share amounts)


                                       Sept 30,     Dec 31,      Sept 30,
                                         2010        2009*         2009
                                     -----------  -----------  -----------
                                     (Unaudited)               (Unaudited)
Assets
Current assets:
  Cash and cash equivalents          $     1,126  $     1,033  $     1,371
  Trade receivables, net                  20,387       17,878       13,793
  Inventories, net                        36,981       37,604       31,841
  Prepaid expenses and other               3,440        3,292        1,369
                                     -----------  -----------  -----------
Total current assets                      61,934       59,807       48,374

Plant and equipment, net                   2,626        2,663        2,485
Goodwill                                  11,488       11,488            -
                                     -----------  -----------  -----------

Total assets                         $    76,048  $    73,958  $    50,859
                                     ===========  ===========  ===========


Liabilities and stockholders' equity
Current liabilities:
  Accounts payable                   $    18,936  $    17,091  $    12,856
  Accrued compensation and related
   expenses                                  479          407          217
  Other accrued liabilities                1,983        3,378        1,188
  Revolving line of credit                22,479       21,326       19,658
  Term loan payable                        6,600        7,000            -
  Notes payable                              295          432        1,359
                                     -----------  -----------  -----------
Total current liabilities                 50,772       49,634       35,278

Subordinated debt:
  Related party - JEM III LLC                  -            -        2,000
Long-term liabilities                        805          649           67
                                     -----------  -----------  -----------
Total liabilities                         51,577       50,283       37,345

Stockholders' equity
  Class A Common stock, $0.01 par
   value, 10,000,000 shares
   authorized (increased to
   20,000,000 shares authorized
   in December 2009), 11,320,628,
   11,320,628 and 9,135,699
   shares issued, respectively,
   9,926,822, 9,838,234 and
   7,633,991 shares outstanding,
   respectively                               91           91           91
  Class B Common stock, $0.01 par
   value, 6,000,000 shares
   authorized 5,766,667, 5,766,667,
   and -0- shares issued,
   respectively, 5,766,667,
   5,766,667 and -0- shares
   outstanding, respectively                  58           58            -
  Preferred stock, $0.01 par value,
   $100 redemption value, 30,000
   shares authorized, 15,264,
   13,500 and -0- shares  issued,
   respectively, 15,264, 13,500
   and -0- shares outstanding,
   respectively                            1,526        1,350            -
  Additional paid-in capital              46,329       46,754       37,814
  Deficit                                (16,749)     (17,296)     (16,898)
  Accumulated other comprehensive
   income                                    368          390          312
                                     -----------  -----------  -----------
                                          31,623       31,347       21,319
  Less:  treasury stock, at cost,
   1,393,806, 1,482,394 and
   1,589,460 shares, respectively         (7,152)      (7,672)      (7,805)
                                     -----------  -----------  -----------
Total stockholders' equity                24,471       23,675       13,514
                                     -----------  -----------  -----------

Total liabilities and stockholders'
 equity                              $    76,048  $    73,958  $    50,859
                                     ===========  ===========  ===========


* Derived from Audited Consolidated Financial Statements

Please see our forward looking statements at www.firstaviation.com/forward







                       First Aviation Services Inc.

                  Consolidated Statements of Cash Flows

                              (in thousands)

                                                                  12 Mos
                      Three Months Ended     Nine Months Ended     Ended
                           Sept 30,              Sept 30,         Dec 31,
                     --------------------  --------------------
                       2010       2009       2010       2009       2009
                     ---------  ---------  ---------  ---------  ---------
                    (Unaudited)(Unaudited)(Unaudited)(Unaudited)(Unaudited)

Cash flows from
 operating
 activities
Net income (loss)    $    (369) $     182  $     704  $    (225) $    (714)
Adjustments to
 reconcile net
 income (loss) to
 net cash
 provided by (used
 in) operating
 activities
  Depreciation and
   amortization            269        316        701        908      1,038
  Provision for bad
   debts                    67          -        184         55          -
  Equity based
   compensation              5         74        101        213        245
  Change in
   working capital
   assets/liabilities:
    Trade receivables     (556)       749     (3,021)      (701)    (3,676)
    Inventories          1,488     (2,257)       623     (2,512)    (4,561)
    Prepaid expenses
     and other             (22)         8        180       (155)    (1,199)
    Accounts payable     1,900     (2,135)     1,845      2,010      5,647
    Accrued
     compensation
     and related
     expenses, and
     other accrued
     liabilities          (845)      (278)    (1,323)      (471)     1,202
                     ---------  ---------  ---------  ---------  ---------

Net cash provided by
 (used in) operating
 activities              1,937     (3,341)        (6)      (878)    (2,018)

Cash flows from
 investing
 activities
Purchases of plant
 and equipment and
 other assets             (467)         -       (664)      (103)      (137)
                     ---------  ---------  ---------  ---------  ---------
Net cash used in
 investing
 activities               (467)         -       (664)      (103)      (137)

Cash flows from
 financing
 activities
Borrowings
 (repayments) on
 revolving line of
 credit, net              (678)     1,981        753       (361)     1,307
Repayments on notes
 payable and other        (164)       609         19        490       (191)
                     ---------  ---------  ---------  ---------  ---------
Net cash (used in)
 provided by
 financing
 activities               (842)     2,590        772        129      1,116

Effect of exchange
 rate changes on
 cash and cash
 equivalents                 -        414         (9)        87        (64)
                     ---------  ---------  ---------  ---------  ---------

Net change in cash
 and cash
 equivalents               628       (337)        93       (765)    (1,103)
Cash and cash
 equivalents at the
 beginning of the
 period                    498      1,708      1,033      2,136      2,136
                     ---------  ---------  ---------  ---------  ---------
Cash and cash
 equivalents at the
 end of the period   $   1,126  $   1,371  $   1,126  $   1,371  $   1,033
                     =========  =========  =========  =========  =========



Please see our forward looking statements at www.firstaviation.com/forward




First Aviation Services Inc., ("FAvS") located in Westport, Connecticut, through its principal operating subsidiaries Aerospace Products International, Inc., ("API"), based in Memphis, TN, Aerospace Turbine Rotables, Inc. ("AeTR") in Wichita, KS and Piedmont Propulsion Systems, LLC ("PPS") in Winston-Salem, NC 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, FAvS is a leading provider of aviation products, supply chain management services, repair and overhaul and technology solutions in the industry.

More information about FAvS and its subsidiaries may be found on the company's website, www.firstaviation.com. Please see our forward-looking statements at www.firstaviation.com/forward.

Note: The results of operations for the prior year to date do not include the operating results of Aerospace Turbine Rotables and Piedmont Propulsion Systems LLC. Both entities were acquired in December 2009.

Contact Information

  • Contact:

    James G. Howell II
    Chief Financial Officer
    First Aviation Services Inc.
    (901) 259-4502

    First Aviation Services Inc.
    15 Riverside Avenue
    Westport, CT 06880
    www.firstaviation.com