Avcorp announces 2013 Second Quarter Financial Results

VANCOUVER, Aug. 6, 2013 /CNW/ - Avcorp Industries Inc. (TSX: AVP) (the "Company" or "Avcorp") today announced its financial results for the quarter ended June 30, 2013.

During the quarter ended June 30, 2013, the Company recorded income from operations of $393,000 on $20,492,000 revenue, as compared to $411,000 operating income on $25,192,000 revenue for the same quarter in the preceding year; and net income for the current quarter of $1,596,000 as compared to net income of $13,000 for the quarter ended June 30, 2012.

Current quarter revenues have decreased from the same quarter in the preceding year primarily as a result of the wind-down of Cessna Aircraft Company programs.

Earnings before interest, taxes, depreciation and amortization (EBITDA) was positive $3,066,000 for the quarter ended June 30, 2013 compared to a positive EBITDA of $1,656,000 for the quarter ended June 30, 2012.  The increase in EBITDA was primarily as a result of current quarter court-awarded interest and foreign exchange gain.

Cash flows from operating activities during the quarter ended June 30, 2013 utilized $4,347,000 of cash as compared to utilizing $1,469,000 of cash during the quarter ended June 30, 2012.  The increase in operating cash utilization over the same quarter in the prior year is primarily attributable to recognition of revenues which were funded in a previous period and increase in other receivables, offset by collection of trade accounts receivable and a number of non-cash expenses.  The Company has a working capital surplus of $31,492,000 as at June 30, 2013 which has decreased from the December 31, 2012 $34,819,000 surplus, as a result of an increase in bank indebtedness and accounts payable.  The Company's accumulated deficit as at June 30, 2013 is $53,671,000 (December 31, 2012: $55,375,000).

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 400 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).

MARK VAN ROOIJ
PRESIDENT and CHIEF EXECUTIVE OFFICER

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)

		June 30, 2013		December 31, 2012
ASSETS
Current assets
Cash		$    2,812		$    2,597
Accounts receivable		7,977		7,944
Inventories		16,564		16,572
Prepayments and other assets		1,139		1,634
Other receivable		29,939		27,391
		58,431		56,138
Non-current assets
Prepaid rent		146		146
Development costs		2,048		2,718
Property, plant and equipment, net		8,994		9,633
Total assets		69,619		68,635
LIABILITIES AND EQUITY
Current liabilities
Bank indebtedness		6,496		2,122
Accounts payable and accrued liabilities		8,558		7,859
Current portion of long-term debt		862		692
Preferred shares		11,023		10,646
		26,939		21,319
Non-current liabilities
Deferred gain		239		263
Lease inducement		518		567
Deferred program revenues		10,424		17,514
Long-term debt		3,835		4,300
Warranty provisions		85		85
		42,040		44,048
Equity
Capital stock		77,672		76,423
Contributed surplus		3,578		3,539
Deficit		(53,671)		(55,375)
		27,579		24,587
Total liabilities and equity		69,619		68,635

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		2013		2012		2013		2012
Revenues		$  20,492		$  25,192		$  40,438		$  50,198
Cost of sales		18,101		20,490		34,970		41,215
Gross profit		2,391		4,702		5,468		8,983
Administrative and general expenses		2,975		4,164		5,476		7,475
Office equipment depreciation		152		127		288		241
Other operating income		(1,129)		-		(1,129)		(4)
Operating Income		393		411		833		1,271
Foreign exchange gain		(1,494)		(191)		(1,427)		(79)
Finance costs		291		589		556		1,186
Income before income tax		1,596		13		1,704		164
Income tax expense		-		-		-		-
Income and total comprehensive income for the period		1,596		13		1,704		164
Earnings per share:
Basic earnings per common share		0.01		0.00		0.01		0.00
Diluted earnings per common share		0.01		0.00		0.01		0.00
Basic weighted average number of shares outstanding (000's)		269,464		204,420		262,221		204,123
Diluted weighted average number of shares outstanding (000's)		271,070		204,420		263,520		204,579

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				2013		2012		2013		2012
Cash flows from (used in) operating activities
Income before tax				$   1,596		$      13		$   1,704		$      164
	Adjustment for items not affecting cash:
		Accrued interest and government royalties		102		335		181		677
		Depreciation		535		789		1,067		1,556
		Deferred tooling revenue amortization and reclassification to revenue		(5,080)		(3,162)		(9,543)		(6,418)
		Development cost amortization and write-off		644		445		980		1,036
		Preferred share dividends accrued		188		188		377		377
		Provision for obsolete inventory		-		30		(103)		17
		Other items		(15)		(59)		(22)		38
				(2,030)		(1,421)		(5,359)		(2,553)
Changes in non-cash working capital
	Accounts receivable			333		600		848		2,304
	Inventories			77		1,381		111		1,207
	Prepayments and other assets			145		(1)		495		(75)
	Other receivable			(2,548)		-		(2,548)		-
	Accounts payable and accrued liabilities			(324)		(2,028)		690		(2,464)
Net cash from (used in) operating activities				(4,347)		(1,469)		(5,763)		(1,581)
Cash flows from (used in) investing activities
Purchase of equipment				(191)		(134)		(428)		(301)
Payments relating to development costs and tooling				(196)		(123)		(310)		(614)
Net cash from (used in) investing activities				(387)		(257)		(738)		(915)
Cash flows from (used in) financing activities
Increase in bank indebtedness				2,207		-		4,374		-
Payment of interest				(102)		(243)		(182)		(496)
Repayment of current and long-term debt				(279)		(276)		(296)		(493)
Proceeds from customer funding of program introduction				1,571		2,613		1,571		6,089
Proceeds from issuance of common shares				1,249		-		1,249		-
Net cash from financing activities				4,646		2,094		6,716		5,100
Net increase (decrease) in cash				(88)		368		215		2,604
Cash - Beginning of period				2,900		6,014		2,597		3,778
Cash - End of period				2,812		6,382		2,812		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					Equity component convertible loan		Contributed surplus		Deficit		Total equity
		Shares		Amount
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
Balance December 31, 2012		254,898,072		76,423		-		3,539		(55,375)		24,587
Issue of common shares		25,489,807		1,249		-		-		-		1,249
Stock-based compensation expense		-		-		-		39		-		39
Income for the period		-		-		-		-		1,704		1,704
Balance June 30, 2013		280,387,879		77,672		-		3,578		(53,671)		27,579

 

SOURCE: Avcorp Industries Inc.

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