Northstar Aerospace Inc. restores profitability, increases revenue and margin

LISTED: TSX

SYMBOL: NAS

CHICAGO, IL, March 31 /CNW/ - (All amounts within this news release are stated in U.S. dollars unless otherwise stated.) Northstar Aerospace, Inc. (the "Company") today reported revenue from continuing operations for the three months ended December 31, 2009 of $53.7 million compared to $51.6 million in the same period in 2008. Revenue from continuing operations for the twelve months ended December 31, 2009 was $193.9 million compared to $171.7 million in 2008.

Defense revenue was $39.5 million and $144.7 million for the three and twelve months ended December 31, 2009, respectively. For the three months period, revenue from the defense sector is consistent with the $39.9 million reported for 2008. For the twelve month period, an increase in activity on the CH-47 Chinook and F-22 Raptor programs in 2009 contributed to the $18.8 million increase in revenue over the $125.9 million reported for 2008.

Commercial revenue in the three and twelve months ended December 31, 2009 was $14.2 million and $49.2 million, respectively, compared to $11.7 million and $45.8 million in the comparable periods of 2008. The $2.5 million increase in the three month period is due to increased activity on the Rolls-Royce programs. The $3.4 million increase in the twelve month period compared to 2008 is primarily due to increased activity on the General Electric Aviation Risk and Revenue Sharing program involving the CF34-3 engine that powers Bombardier regional and business aircrafts and an increase in Rolls-Royce activity partially offset by decreases in other small programs.

Margin increased to 23.3% in the three months ended December 31, 2009, from 1.4% in 2008. For the twelve months ended December 31, 2009, margin increased to 21.3% from 14.0% for the same period in 2008. The margin was impacted in 2008 by $6.5 million of inventory provisions, without which the margin would have been 17.8%. The remaining increase in margin is a result of realizing cost efficiencies from increased volume and productivity improvements.

Defense margin was 24.4% and 22.9% in the three and twelve months ended December 31, 2009, respectively, compared to 9.1% and 18.5% in the same period of 2008. Commercial margin increased to 20.3% and 16.6% in the three months and twelve months ended December 31, 2009, respectively, compared to a loss of 24.6% and a gain of 1.6% in the comparable periods of 2008.

Selling, general and administrative ("SG&A") expenses were $4.1 million (7.6% of revenue) and $19.0 million (9.8% of revenue) for the three and twelve months ended December 31, 2009, respectively. For the same periods in 2008, SG&A expenses were $4.9 million (9.5% of revenue) and $17.4 million (10.2% of revenue), respectively. The year-on-year decrease in total dollars for the three month period was due to certain restructuring costs in 2008 that did not occur in 2009. The year-on-year increase for the twelve month period resulted from the addition of depth to the management team to accommodate the increase in revenue.

Income from continuing operations for the three months ended December 31, 2009 was $3.9 million or $0.13 per share, compared to a loss of $10.6 million or $0.35 per share in the same period in 2008. The income from continuing operations for the twelve months ended December 31, 2009 was $4.6 million or $0.15 per share, compared to a loss of $10.1 million or $0.34 per share in the same period in 2008.

Net income including the impact of discontinued operations for the three months ended December 31, 2009 was $3.7 million or $0.12 per share, compared to a loss of $10.4 million or $0.35 per share in the same period in 2008. The net income for the twelve months ended December 31, 2009 was $3.5 million or $0.12 per share, compared to a loss of $9.4 million or $0.32 per share in the same period in 2008.

As noted in prior periods, the Company does not recognize the income tax benefit for losses generated in Canada. Additionally, the Company's income tax expense from Canadian operations is offset by the realization of the benefits from its net operating loss carryforward. The expense related to Canada would have been $0.3 million for the three months ended December 31, 2009. The benefit would have been $0.3 million for the twelve months ended December 31, 2009.

The Company's backlog was $426 million at December 31, 2009 compared to $479 million at December 31, 2008.

Glenn Hess, President and Chief Executive Officer, stated:

    
    "Turnaround strategies to reduce long-term debt, focus on our core
    business and invest in people and technology have contributed to
    restoring the company to profitability. Significant increases in revenue,
    margin and income from continuing operations are strong indicators that
    our continuous improvement efforts are yielding positive results. We will
    continue to pursue further growth and operational improvement in 2010."
    

A more detailed discussion of the Company's financial results for the three months ended March 31, 2009 is contained in Management's Discussion and Analysis, including comments on the comparability of results between the current and prior year and is available on www.sedar.com and on the Company's website at www.nsaero.com.

Northstar Aerospace, Inc. (www.nsaero.com) is North America's leading independent manufacturer of flight critical gears and transmissions. Northstar Aerospace is a public company (TSX:NAS) with operating subsidiaries in the United States and Canada. Its principal products include helicopter gears and transmissions, accessory gearbox assemblies, rotorcraft drive systems and other machined and fabricated parts. It also provides maintenance, repair and overhaul of helicopter engines and transmissions. The Company's executive offices are located in Chicago, Illinois. Its plants are located in Chicago, Illinois; Phoenix, Arizona; Anderson, Indiana; and Milton and Windsor, Ontario.

Forward Looking Statements

This press release contains forward-looking statements that are subject to risks and uncertainty. All statements, other than statements of historical facts included in this press release, including, without limitation, those regarding the Company's financial position, business strategy, projected costs, including estimated environmental remediation costs, and plans, projected revenues, objectives of management for future operations, and certain other items may be or include forward-looking statements. Forward-looking information contained herein is based upon a number of assumptions regarding the Canadian, U.S. and global economic environment, and local and foreign government policies and actions. Actual future results of the Company may differ materially depending on a variety of factors, including production rates, timing of product deliveries, Canadian, U.S. and foreign government activities, volatility of the market for the Company's products and services, worldwide political stability, factors that result in significant and prolonged disruption to commercial air travel worldwide, U.S. military activity, domestic and international economic conditions, and other political and economic risks, including currency risks, and uncertainties. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the Company's expectations ("Cautionary Statements"), are included in the Company's Consolidated Financial Statements for the Years Ended December 31, 2009 and 2008 - Management's Discussion and Analysis - Risks and Uncertainties, and in the Company's Annual Information Form filed on March 31, 2010, under the heading of Risks and Uncertainties. All information contained in this press release and subsequent written and oral forward-looking statements attributable to the Company or persons acting on behalf of the Company are expressly qualified in their entirety by the Cautionary Statements. The Company disclaims any intentions or obligation to update or revise any forward looking statements or comments as a result of any new information, future event or otherwise, unless such disclosure is required by law.

    
    NORTHSTAR AEROSPACE INC.
    FINANCIAL HIGHLIGHTS (UNAUDITED)
    For the three months ended December 31, 2009
    prepared in accordance with Canadian GAAP
    (thousands of U.S. dollars except per share amounts)

    Summary of Quarterly Information

             Q4 2009 Q3 2009 Q2 2009 Q1 2009 Q4 2008 Q3 2008 Q2 2008 Q1 2008
    -------------------------------------------------------------------------

    Revenues $53,717 $48,098 $46,871 $45,233 $51,626 $40,025 $43,204 $36,888

    Unusual
     items*    273       -   4,135  (5,990)  1,632       -       -       -

    Net income
     (loss)    3,662    (411) (5,187)  5,437 (10,427)    304     629      80

    Income
     (loss)
     per share:
     basic &
     diluted   $0.12   (0.01)  (0.17)   0.18   (0.35)   0.01    0.02    0.00

    * includes sale of investments gains (losses), litigation settlement
        costs, environmental remediation provisions, impairments on long-
        lived assets and goodwill, restructuring charges for severance and
        termination and plant shut down costs.

    Summary Balance Sheet Information

                                        December 31, 2009  December 31, 2008

    Working capital, continuing operations   $37,408            $20,664

    Total assets                            $153,743           $168,208

    Total debt                               $52,394            $70,376

    Shareholders' equity                     $27,736            $23,250
    

The Consolidated Financial Statements for the twelve months ended December 31, 2009 and related MD&A are available on our website at: www.nsaero.com and on SEDAR.

%SEDAR: 00002555E

For further information: Greg Schindler, Chief Financial Officer, [phone]