Chronicle Journal: Finance

Avcorp announces 2014 Third Quarter Financial Results

VANCOUVER, Nov. 13, 2014 /PRNewswire/ - Avcorp Industries Inc. (TSX: AVP) (the "Company" or "Avcorp") today announced its financial results for the quarter ended September 30, 2014.

Revenue for the quarter ended September 30, 2014 was $14,675,000 as compared to $19,767,000 for the quarter ended September 30, 2013. Current quarter revenues have decreased relative to same quarter in the previous year primarily as a result of a decrease in quantities delivered for two defence programs and one commercial business jet program, in part offset by strong current quarter aircraft component repairs revenue.

During the quarter ended September 30, 2014, the Company recorded a loss from operations of $2,321,000 on $14,675,000 revenue, as compared to $211,000 operating loss on $19,767,000 revenue for the same quarter in the preceding year; and a net loss for the current quarter of $2,229,000 as compared to net loss of $1,139,000 for the quarter ended September 30, 2013. 

Cash flows from operating activities during the quarter ended September 30, 2014 utilized $1,152,000 of cash as compared to providing $25,595,000 of cash during the quarter ended September 30, 2013.  The primary use of cash from operations during the current quarter is due to operating losses reflecting temporary reduced customer demand. During the nine months ended September 30, 2014 the Company utilized $3,276,000 cash from operating activities as compared to providing $21,403,000 cash for the same period in 2013.  The primary causes of operating cash movement during the nine month period ended September 30, 2014 and 2013 were the same circumstances as existed during the three month periods noted above, however, collection of an Other Receivable during the third quarter 2013 provided cash during 2013.  As at September 30, 2014 the Company had $1,180,000 cash on hand (December 31, 2013: $7,012,000). 

The Company has a working capital surplus of $8,797,000 as at September 30, 2014 as compared to a $14,213,000 surplus on December 31, 2013.  The Company's accumulated deficit as at September 30, 2014 is $61,783,000 (December 31, 2013: $57,723,000).

About Avcorp

Avcorp designs and builds major airframe structures for some of the world's leading aircraft companies, including BAE Systems, Boeing and Bombardier.  With more than 50 years of experience, over 380 skilled employees and 340,000 square feet of facilities in Delta BC and Burlington ON, Avcorp offers integrated composite and metallic aircraft structures to aircraft manufacturers, a distinct advantage in the pursuit of contracts for new aircraft designs, which require lower-cost, light weight, strong, reliable structures.  Our Burlington location also offers composite repairs for commercial aircraft.  Avcorp is a Canadian public company traded on the Toronto Stock Exchange (TSX:AVP).

(signed)

PETER GEORGE
CHIEF EXECUTIVE OFFICER, AVCORP GROUP

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.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(unaudited, prepared in accordance with IFRS, expressed in thousands of Canadian dollars)



September 30, 2014

December 31, 2013

ASSETS



Current assets



Cash

$  1,180

$   7,012

Accounts receivable

8,879

8,845

Inventories

12,461

14,940

Prepayments and other assets

945

1,306


23,465

32,103

Non-current assets



Prepaid rent

146

146

Development costs

3,019

1,240

Property, plant and equipment

8,392

8,704

Total assets

35,022

42,193




LIABILITIES AND EQUITY



Current liabilities



Accounts payable and accrued liabilities

9,303

7,645

Current portion of long-term debt

281

199

Preferred shares

-

36

Deferred program revenues

5,084

10,010


14,668

17,890

Non-current liabilities



Deferred gain

180

216

Lease inducement

395

469

Long-term debt

152

67


15,395

18,642

Equity



Capital stock

77,910

77,681

Contributed surplus

3,500

3,593

Deficit

(61,783)

(57,723)


19,627

23,551

Total liabilities and equity

35,022

42,193

 

 

CONSOLIDATED STATEMENTS OF (LOSS) INCOME AND COMPREHENSIVE (LOSS) INCOME
(unaudited, prepared in accordance with IFRS, expressed in thousands of Canadian dollars, except number of shares and per share amounts)



Three months ended

Nine months ended

FOR THE PERIOD ENDED SEPTEMBER 30

2014

2013

2014

2013






Revenues

$  14,675

$  19,767

$  53,360

$  60,205






Cost of sales

14,274

16,493

48,898

51,463






Gross profit

401

3,274

4,462

8,742






Administrative and general expenses

2,579

2,816

8,220

8,292

Office equipment depreciation

143

144

432

432

Other operating (income) loss

-

525

-

(604)






Operating (Loss) Income

(2,321)

(211)

(4,190)

622






Finance costs – net

16

284

36

840

Foreign exchange (gain) loss

(108)

644

(173)

(783)

Write-down and loss on disposal of equipment

-

-

7

-






(Loss) Income before income tax

(2,229)

(1,139)

(4,060)

565






Income tax expense

-

-

-

-






(Loss) Income and total comprehensive (loss) income for the period

(2,229)

(1,139)

(4,060)

565






(Loss) Earnings per share:





Basic (loss) earnings per common share

(0.01)

(0.00)

(0.01)

0.00

Diluted (loss) earnings per common share

(0.01)

(0.00)

(0.01)

0.00






Basic weighted average number of shares outstanding (000's)

283,083

280,390

282,732

268,344






Diluted weighted average number of shares outstanding (000's)

283,083

280,390

282,732

269,877

 

 

CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, prepared in accordance with IFRS, expressed in thousands of Canadian dollars)


Three months ended

Nine months ended

FOR THE PERIOD ENDED SEPTEMBER 30

2014

2013

2014

2013






Cash flows from (used in) operating activities





(Loss) Income before income tax

$  (2,229)

$  (1,139)

$  (4,060)

$   565


Adjustment for items not affecting cash:







Accrued interest and government royalties

10

94

26

275



Depreciation

417

494

1,192

1,561



Development cost amortization

1

875

137

1,855



Loss on settlement

-

525

-

525



Preferred share dividends accrued

-

186

-

563



Provision for loss-making contracts

129

-

98

-



Provision for obsolete inventory

(9)

(156)

40

(259)



Write-down and loss on disposal of equipment

-

-

7

-



Other items

(4)

7

(81)

(15)


(1,685)

886

(2,641)

5,070







Changes in non-cash working capital







Accounts receivable

954

(251)

1,960

597



Inventories

(97)

(197)

2,341

(86)



Prepayments and other assets

137

180

338

675



Other receivables

-

29,380

-

26,832



Accounts payable and accrued liabilities

(463)

(1,003)

1,645

(313)



Deferred program revenues

2

(3,400)

(6,919)

(11,372)

Net cash from (used in) operating activities

(1,152)

25,595

(3,276)

21,403






Cash flows from (used in) investing activities





Proceeds from sale of equipment

21

-

589

-

Purchase of equipment

(127)

(218)

(917)

(646)

Payments relating to development costs and tooling

(511)

(25)

(1,916)

(335)






Net cash from (used in) investing activities

(617)

(243)

(2,244)

(981)






Cash flows from (used in) financing activities





Increase (Decrease) in bank indebtedness

-

(6,496)

-

(2,122)

Payment of interest

(11)

(95)

(28)

(277)

Proceeds from issuance of common shares

-

-

142

1,249

Redemption of preferred shares and accrued dividends

-

-

(36)

-

Repayment of current and long-term debt

(67)

(170)

(390)

(466)

Net cash from (used in) financing activities

(78)

(6,761)

(312)

(1,616)

Net increase (decrease) in cash

(1,847)

18,591

(5,832)

18,806

Cash - Beginning of period

3,027

2,812

7,012

2,597

Cash - End of period

1,180

21,403

1,180

21,403

 

 

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(unaudited, prepared in accordance with IFRS, expressed in thousands of Canadian dollars, except number of shares)


Share capital






Shares

Amount

Contributed
surplus

Deficit

Total
equity








Balance December 31, 2012

254,898,072

$ 76,423

$  3,539

$ (55,375)

$  24,587







Issue of common shares

25,493,080

1,258

-

-

1,258







Stock based compensation expense

-

-

45

-

45







Income for the period

-

-

-

565

565







Balance September 30, 2013

280,391,152

77,681

3,584

(54,810)

26,455







Balance December 31, 2013

280,391,152

77,681

3,593

(57,723)

23,551







Issue of common shares

2,691,500

142

-

-

142







Stock-based compensation expense

-

-

(6)

-

(6)







Transfer to share capital on exercise of
stock options

-

87

(87)

-

-







Loss for the period

-

-

-

(4,060)

(4,060)







Balance September 30, 2014

283,082,652

77,910

3,500

(61,783)

19,627

 

SOURCE Avcorp Industries Inc.

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