Avcorp announces 2012 Second Quarter Results

Common Stock Listed
Toronto
Trading Symbol: AVP

VANCOUVER, Aug. 8, 2012 /CNW/ - Avcorp Industries Inc. (TSX: AVP) (the "Company" or "Avcorp") today announced its financial results for the quarter ended June 30, 2012.

During the quarter ended June 30, 2012, the Company recorded income from operations of $411,000 on $25,192,000 revenue, as compared to a $752,000 operating loss on $20,492,000 revenue for the same quarter in the preceding year; and net income for the current quarter of $13,000 as compared to a net loss of $1,337,000 for the quarter ended June 30, 2011.

A combination of continued sales growth, improvements in both operating efficiencies and production quality levels, as well as continued stringent cost controls have netted a $1,350,000 profitability improvement for the second quarter 2012 relative to the same quarter in 2011.

Earnings before interest, taxes, depreciation and amortization (EBITDA) was positive $1,656,000 for the quarter ended June 30, 2012 compared to a positive EBITDA of $259,000 for the quarter ended June 30, 2011.  A $1,397,000 improvement largely contributed to by gross margin growth.

Cash flows from operating activities during the quarter ended June 30, 2012 utilized $1,421,000 of cash as compared to utilizing $149,000 of cash during the quarter ended June 30, 2011 primarily as a result of deferred revenue amortization for which customer cash receipts had been received in prior periods; while working capital changes remained neutral.  The Company has a working capital surplus of $16,149,000 as at June 30, 2012 which has increased from the December 31, 2011 $14,663,000 surplus, as a result of growth in cash and a reduction in accounts payable.  The Company's accumulated deficit as at June 30, 2012 was $75,852,000 (December 31, 2011: $76,016,000).

About Avcorp
Avcorp designs and builds major airframe structures for some of the world's leading aircraft companies, including BAE Systems, Boeing, Bombardier, and Cessna.  With more than 50 years of experience, over 500 skilled employees and 354,000 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)
MARK VAN ROOIJ
PRESIDENT and CHIEF EXECUTIVE OFFICER

Forward-Looking Statements

This management discussion and analysis should be read in conjunction with the Company's audited financial statements.  Certain statements in this report 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 ability of the Company to renegotiate its debt agreements under which it is in default; (b) the extent to which the Company is able to achieve savings from its restructuring plans; (c) uncertainty in estimating the amount and timing of restructuring charges and related costs; (d) changes in worldwide economic and political conditions that impact interest and foreign exchange rates; (e) the occurrence of work stoppages and strikes at key facilities of the Company or the Company's customers or suppliers; (f) government funding and program approvals affecting products being developed or sold under government programs; (g) cost and delivery performance under various program and development contracts; (h) the adequacy of cost estimates for various customer care programs including servicing warranties; (i) the ability to control costs and successful implementation of various cost reduction programs; (j) the timing of certifications of new aircraft products; (k) the occurrence of further downturns in customer markets to which the Company products are sold or supplied or where the Company offers financing; (l) changes in aircraft delivery schedules or cancellation of orders; (m) the Company's ability to offset, through cost reductions, raw material price increases and pricing pressure brought by original equipment manufacturer customers; (n) the availability and cost of insurance; (o) the Company's ability to maintain portfolio credit quality; (p) the Company's access to debt financing at competitive rates; and (q) uncertainty in estimating contingent liabilities and establishing reserves tailored to address such contingencies.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(unaudited, prepared in accordance with IFRS, expressed in thousands of Canadian dollars)

	June 30, 2012	December 31, 2011
ASSETS
Current assets
Cash	$   6,382	$   3,778
Accounts receivable	9,962	12,160
Inventories	18,275	19,418
Prepayments and other assets	1,467	1,396
	36,086	36,752
Non-current assets
Prepaid rent	146	146
Development costs	5,118	5,540
Property, plant and equipment	11,311	12,523
Total assets	52,661	54,961
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued liabilities	8,239	10,694
Current portion of long-term debt	1,430	1,505
Preferred shares	10,268	9,890
	19,937	22,089
Non-current liabilities
Deferred gain	287	311
Lease inducement	616	666
Deferred program revenues	18,448	18,671
Long-term debt	11,800	12,027
Warranty provisions	85	85
	51,173	53,849
Equity
Capital stock	73,419	73,251
Equity component of convertible loan	453	453
Contributed surplus	3,468	3,424
Deficit	(75,852)	(76,016)
	1,488	1,112
Total liabilities and equity	52,661	54,961

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(unaudited, prepared in accordance with IFRS, expressed in thousands of Canadian dollars, except number of shares and per share amounts)

	Three months ended		Six months ended
FOR THE PERIOD ENDED JUNE 30	2012	2011	2012	2011
Revenues	$  25,192	$ 20,492	$  50,198	$ 41,408
Cost of sales	20,490	18,208	41,215	36,840
Gross profit	4,702	2,284	8,983	4,568
Administrative and general expenses	4,166	2,873	7,475	5,508
Office equipment depreciation	127	166	241	335
Other (gains) and losses - net	(2)	(3)	(4)	(6)
Operating Income (loss)	411	(752)	1,271	(1,269)
Foreign exchange (gain) loss	(191)	(69)	(79)	135
Finance costs	589	654	1,186	1,191
Income (loss) before income tax	13	(1,337)	164	(2,595)
Income tax expense	-	-	-	-
Income (loss) and total comprehensive income (loss) for the period	13	(1,337)	164	(2,595)
Earnings (loss) per share:
Basic earnings (loss) per common share	0.00	(0.01)	0.00	(0.01)
Diluted earnings (loss) per common share	0.00	(0.01)	0.00	(0.01)
Basic weighted average number of shares outstanding (000's)	204,369	195,505	204,113	195,505
Diluted weighted average number of shares outstanding (000's)	204,369	201,734	204,611	203,727

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, prepared in accordance with IFRS, expressed in thousands of Canadian dollars)

		Three months ended		Six months ended
FOR THE PERIOD ENDED JUNE 30		2012	2011	2012	2011
Cash flows from operating activities
Profit (loss) before tax		$   13	$ (1,337)	$   164	$ (2,595)
	Adjustment for items not affecting cash:
	Accretion on convertible loan	22	21	44	42
	Accrued interest and government royalties	335	445	677	766
	Amortization and depreciation	789	840	1,556	1,686
	Deferred tooling revenue amortization and reclassification to revenue	(3,162)	(204)	(6,418)	(426)
	Development cost amortization and reclassification to cost of sales	445	102	1,036	190
	Fair value of warrants amortization	44	-	88	-
	Preferred share dividends accrued	189	189	378	378
	Provision for loss-making contracts	(136)	(200)	(81)	(291)
	Provision for obsolete inventory	30	(3)	17	(50)
	Stock based compensation	24	45	44	90
	Other items	(14)	(47)	(58)	(108)
		(1,421)	(149)	(2,553)	(318)
Changes in non-cash working capital
	Accounts receivable	600	1,281	2,304	(1,740)
	Inventories	1,381	(987)	1,207	(1,991)
	Prepayments and other assets	(1)	251	(75)	518
	Accounts payable and accrued liabilities	(2,028)	(913)	(2,464)	(367)
	Other Items	-	40	-	30
Net cash from operating activities		(1,469)	(477)	(1,581)	(3,868)
Cash flows from investing activities
Purchase of equipment		(134)	(133)	(301)	(327)
Payments relating to development costs and tooling		(123)	(529)	(614)	(862)
Net cash from investing activities		(257)	(662)	(915)	(1,189)
Cash flows from financing activities
(Decrease) increase in bank indebtedness		-	571	-	539
Payment of interest		(243)	(334)	(496)	(539)
Proceeds from customer funding of program introduction		2,613	1,109	6,089	5,480
Repayment of current and long-term debt		(276)	(207)	(493)	(423)
Net cash from financing activities		2,094	1,139	5,100	5,057
Net increase (decrease) in cash		368	-	2,604	-
Cash - Beginning of period		6,014	-	3,778	-
Cash - End of period		6,382	-	6,382	-

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		Equity component convertible loan		Contributed surplus		Deficit		Total equity
Balance December 31, 2010		195,505,323		$ 72,927		$   453		$  2,662		$ (73,561)		$  2,481
Stock based compensation expense		-		-		-		90		-		90
Loss for the period		-		-		-		-		(2,595)		(2,595)
Balance June 30, 2011		195,505,323		72,927		453		2,752		(76,156)		(24)
Balance December 31, 2011		201,994,113		73,251		453		3,424		(76,016)		1,112
Issue of common shares		3,439,238		168		-		-		-		168
Stock-based compensation expense		-		-		-		44		-		44
Income for the period		-		-		-		-		164		164
Balance June 30, 2012		205,433,351		73,419		453		3,468		(75,852)		1,488

 

 

 

 

SOURCE: Avcorp Industries Inc.

Contact: Sandi DiPrimo, Investor Relations Contact 604-587-4938

about Avcorp Industries Inc. please visit our website. www.avcorp.com