Published:
FAVS Announces Improved Second Quarter Results
First Aviation Services Inc. (PINKSHEETS: FAVS) today announced net earnings of $15,000 for the three months ended
July 31, 2008 versus a net loss of ($815,000) in the three months ended
July 31, 2007. Earnings before interest, taxes, depreciation and
amortization (EBITDA) in the current year quarter was $754,000 compared to
$153,000 in the quarter ended July 31, 2007 while EBITDA for the six months
ended July 31, 2008 was $1,186,000 versus ($798,000) for the prior year.
For the six months ended July 31, 2008, earnings from operations improved
to $368,000 versus a negative ($1,723,000) after adjusting for the effect
of the one-time repurchase of $2.0 million of previously classified slow
moving and obsolete inventory by a major aircraft original equipment
manufacturer in the prior year six month period.
Gross Margin pre-freight, as a percentage of sales, continued its
improvement to 19.7% in the current year quarter versus 17.6% in the prior
year period and 19.1% versus 16.8% (ex the repurchase) in the prior year
six month period. SG&A and corporate expenses were reduced by 2.3% and
39.5%, respectively, in the current year quarter and 5.7% versus 34.3% in
the six months ended July 31, 2008 and 2007, respectively. Interest
expense was approximately 32% lower in the current six month period
compared to the prior year period, and net freight expense was 1.5% of
revenue in the six months ended July 31, 2008 versus 2.0% in the 2007
period.
r. Aaron Hollander, Chairman and CEO of First Aviation, said: "The
operational and financial initiatives we have instituted have resulted in
the improved financial performance exhibited in the just completed second
quarter. The positive results were achieved despite a difficult economic
environment and record high fuel costs. We continue to stay focused on
cost containment, customer service enhancement and the expansion of our
supply chain management business."
The results of operations for the six months ended July 31, 2007 have been
restated from the results reported in the prior year period. The effect of
the restatement is more fully described in a note to the consolidated
statements of operations.
First Aviation and its principal operating subsidiary Aerospace Products
International, Inc. ("API"), based in Memphis, Tennessee, 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, services to the aviation industry include the sale of aircraft parts
and components, the provision of supply chain management services, and
overhaul and repair services.
ore information about First Aviation can be found on the Company's and
API's websites, which are located at http://www.favs.com and
http://www.apiworldwide.com.
Forward-Looking Statements
Certain statements discussed in this release constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform
Act of 1995. Forward-looking statements are not statements of historical
facts, but rather reflect our current expectations concerning future events
and results. Such forward-looking statements, including those concerning
our expectations, involve known and unknown risks, uncertainties and other
factors, some of which are beyond the Company's control, that may cause our
actual results, performance or achievements, or industry results, to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such risks,
uncertainties and other important factors include, among others: our
ability to obtain parts and components from principal suppliers on a timely
basis; depressed domestic and international market and economic conditions;
especially those currently facing the aviation industry as a whole,
including terrorism and terrorism related impacts, the impact of changes in
fuel and other freight related costs, major adverse weather related effects
such as hurricanes impacting our customer base, relationships with
customers, the ability of our customers to meet their financial obligations
to us, our ability to obtain and service supply chain management contracts,
changes in regulations or accounting standards, the ability to consummate
suitable acquisitions and expand, the loss of the use of facilities and
distribution hub in Southaven, Mississippi, significant failure of our
computer systems, telephone systems or networks, and other items that are
beyond our control and may cause actual results to differ from management's
expectations. The Company undertakes no obligation to update any
forward-looking statements or cautionary factors except as required by law.
First Aviation Services Inc.
Consolidated Condensed Statements of Operations
(in thousands, except share and per share amounts)
Three months ended
July 31,
2008 2007
----------- ------------
(as
(unaudited) restated)(1)
Net sales $ 29,923 $ 32,167
Cost of sales 24,575 27,259
----------- ------------
Gross profit 5,348 4,908
Selling, general and administrative expenses 4,607 4,716
Corporate expenses 393 648
----------- ------------
Income from operations 348 (456)
Net interest income (expense) (329) (514)
Foreign currency transaction gain (loss) - 192
----------- ------------
Loss before income taxes 19 (778)
Provision for income taxes (4) (37)
----------- ------------
Net loss $ 15 $ (815)
=========== ============
(EBIDTA) Earnings before taxes depreciation and
amortization $ 754 $ 153
=========== ============
Basic net loss per share, and net loss
per share - assuming dilution:
Basic net loss per share $ 0.00 $ (0.11)
=========== ============
Net loss per share - assuming dilution $ 0.00 $ (0.11)
=========== ============
Weighted average shares outstanding - basic 7,457,546 7,373,613
=========== ============
Weighted average shares outstanding - assuming
dilution 7,457,546 7,373,613
=========== ============
(1) The results of operations for the quarter ended July 31, 2007 have been
restated from the results in the prior year period in the amount of
$101,000 in SG&A costs and $20,000 in non-cash cost of goods sold
related to the prior year quarter.
First Aviation Services Inc.
Consolidated Condensed Statements of Operations
(in thousands, except share and per share amounts)
Six months ended
July 31,
2008 2007 2007
----------- ------------- ------------
(as restated) (as restated)
(unaudited) (1) (1)
(Ex Raytheon)
(2)
Net sales $ 59,422 $ 62,830 $ 64,844
Cost of sales 49,168 53,715 54,496
----------- ------------- ------------
Gross profit 10,254 9,115 10,348
Selling, general and
administrative expenses 9,126 9,681 9,681
Corporate expenses 760 1,157 1,157
----------- ------------- ------------
Income from operations 368 (1,723) (490)
Net interest income (expense) (638) (946) (946)
Foreign currency transaction gain
(loss) - 396 396
----------- ------------- ------------
Loss before income taxes (270) (2,273) (1,040)
Provision for income taxes (8) (57) (57)
----------- ------------- ------------
Net loss $ (278) $ (2,330) $ (1,097)
=========== ============= ============
(EBIDTA) Earnings before taxes
depreciation and amortization $ 1,186 $ (798) $ 743
=========== ============= ============
Basic net loss per share, and net
loss per share - assuming
dilution:
Basic net loss per share $ (0.04) $ (0.32) $ (0.15)
=========== ============= ============
Net loss per share - assuming
dilution $ (0.04) $ (0.32) $ (0.15)
=========== ============= ============
Weighted average shares
outstanding - basic 7,433,370 7,373,642 7,373,642
=========== ============= ============
Weighted average shares
outstanding - assuming dilution 7,433,370 7,373,642 7,373,642
=========== ============= ============
(1) The results of operations for the six months ended July 31, 2007 have
been restated from the results reported in the prior year period in
the amount of $523,000 in non-cash income resulting from the
correction of the foreign exchange revaluation calculation on the
Canadian dollar denominated balance sheet, ($392,000) in non-cash cost
of goods sold (COGS) expense related to the correction of intercompany
service billings, ($155,000) in COGS costs for a reduction in customer
service billings, $101,000 in additional SG&A expenses and $144,000
in income for China operations start-up costs previously reported
in the quarter ended April 30, 2007 and incurred in the prior
fiscal year ended January 31, 2007.
(2) Excluding the effect of the $2.0 million Raytheon repurchase and
resulting $1.2 million gain recognized in the six months ended
July 31, 2007.
First Aviation Services Inc.
Consolidated Condensed Balance Sheets
(in thousands, except share and per share amounts)
July 31, January 31,
2008 2008
----------- ----------
(unaudited) (Audited)
Assets
Current assets:
Cash and cash equivalents $ 633 $ 750
Trade receivables, net of allowance for
doubtful accounts of $918 and $1,847,
respectively 14,762 17,096
Inventory, net of allowance for obsolete and
slow moving inventory of $4,601 and $5,426,
respectively 33,971 30,751
Prepaid expenses and other 1,227 1,415
----------- ----------
Total current assets 50,593 50,012
Plant and equipment, net 3,671 4,064
----------- ----------
Total Assets $ 54,264 $ 54,076
=========== ==========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 10,243 $ 10,654
Accrued compensation and related expenses 247 762
Other accrued liabilities 1,377 1,480
Revolving line of credit 21,972 20,374
Notes payable 612 598
----------- ----------
Total current liabilities 34,451 33,868
Related Party - JEM III LLC 2,000 2,000
Notes payable, less current portion 255 445
----------- ----------
Total liabilities 36,706 36,313
Stockholders' equity:
Common stock, $0.01 par value, 10,000,000
shares authorized, 9,135,699 shares issued 91 91
Additional paid-in capital 38,879 38,782
Accumulated deficit (13,038) (12,931)
Accumulated other comprehensive income 710 835
----------- ----------
26,642 26,777
Less: Treasury stock, at cost, 1,671,036 and
1,713,774 shares, respectively (9,084) (9,014)
----------- ----------
Total stockholders' equity 17,558 17,763
----------- ----------
Total liabilities and stockholders' equity $ 54,264 $ 54,076
=========== ==========
First Aviation Services Inc.
Consolidated Condensed Statements of Cash Flows (Unaudited)
(in thousands)
Six months ended
July 31,
2008 2007
----------- -----------
(as
(unaudited) restated)
Cash flows from operating activities
Net loss $ (278) $ (1,097)
Adjustments to reconcile net loss to net cash
used in operating activities - non-cash
expense (income):
Depreciation and amortization 833 837
Equity based compensation 28 47
(Increase) decrease in working capital assets:
Trade receivables 2,334 (300)
Inventory (3,220) (1,293)
Prepaid expenses and other 188 115
Increase (decrease) in working capital
liabilities:
Accounts payable (241) (3,471)
Accrued compensation and related expenses,
and other accrued liabilities (618) (685)
----------- -----------
Net cash used in operating activities (974) (5,847)
Cash flows from investing activities
Purchases of plant and equipment (440) (400)
----------- -----------
Net cash used in investing activities (440) (400)
Cash flows from financing activities
Borrowings (repayments), net on revolving line of
credit 1,598 2,816
Borrowings on related party note - 3,000
Repayments on notes payable (176) (70)
----------- -----------
Net cash provided by (used in) financing
activities 1,422 5,746
----------- -----------
Effect of exchange rate changes on cash and cash
equivalents (125) 173
Net decrease in cash and cash equivalents (117) (328)
Cash and cash equivalents at beginning of period 750 1,745
----------- -----------
Cash and cash equivalents at end of period $ 633 $ 1,417
=========== ===========
Copyright © 2008, MarketWire
Copyright © 2008, NewsBlaze,
Daily NewsTags: ,Aerospace and Defense:Aircraft, AerospaceandDefense:ElectronicsandCommunications, TransportationandLogistics:AirFreight, ,INTHPINK,INTHPINK,CT,WESTPORT, CT
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