Avcorp Reports Record Sales and Earnings
VANCOUVER, British Columbia - Avcorp Industries (TSE:AVP.)(VSE:AVP.) Avcorp Industries Inc. (AVP on the Montreal and Toronto Stock Exchanges) reported record sales and earnings for the year ended September 30, 1998 as follows:
Sales for the year ended September 30,1998 were $66,903,000, an increase of 48 percent over the same period last year. Fourth quarter sales of $18,324,000 were an increase of 47 percent over the same period last year and a 4 percent increase over the previous quarter. These increases continue to be the result of the ramp up of existing contracts from both the regional jet and commercial jet segments of the aerospace industry.
The Company's operating earnings for the year increased 83 percent to $2,810,000 compared to $1,537,000 last year. The Company's net earnings for the year were $2,810,000 compared to $2,127,000 for the same period last year, an increase of 32 percent. Last year's net earnings included a recovery from discontinued operations of $590,000.
Earnings before interest, taxes and depreciation ("EBITDA") for the year improved by 76 percent to $5,553,000 from $3,164,000 last year and EBITDA from continuing operations improved by 116 percent. This demonstrates the strong operating results and the high level of investment being made in the Company.
Fourth quarter net earnings were slightly lower than last year. Costs associated with the move and additional environmental remediation costs at the old Richmond, B.C. facility reduced net earnings in the fourth quarter by approximately $500,000. No further expenses are anticipated on either the move or the environmental remediation at the Richmond, B.C. site.
Fiscal 1998 was a year of record sales and net earnings growth during a period of dramatic change for the Company. Other significant achievements during the year included:
- moving the Company's largest Division from its leased buildings in Richmond, British Columbia to its new purpose-built owned 300,000 sq. ft. facility in Delta, British Columbia,
- investing $25 million in new plant and equipment, - adding over 175 new employees to support the high level of growth,
- investing $9 million in the design and development of the Canadair Regional Jet 700 Series ("RJ700") tail components, which will go into commercial production in fiscal year 2000. This represents the Company's single largest contract with estimated revenues in excess of $170 million, and,
- acquiring and canceling 829,401, or approximately 6 percent, of the Company's shares at an average cost of $3.53, which, management believes, will benefit both the Company and shareholders.
Mr. Peter Jeffrey, President and Chief Executive Officer stated , "We are very pleased with our fiscal 1998 results and the progress we have made towards becoming a major global aerospace manufacturer. When you consider that a major portion of our productive effort went into the design and development of the RJ700 which produced no revenue this fiscal year, it demonstrates that our capacity is much greater than our current sales levels. As much as we have accomplished in the last year, we feel we are only just beginning to see our true potential as we look forward to the challenges ahead."
During the year, the Company raised over $27 million of long-term debt to finance the growth of the Company and this is reflected in higher interest costs in 1998 compared to 1997. Approximately $7.5 million of the long term debt is in the form of interest bearing convertible debentures which can be converted into equity under certain conditions at prices ranging from $4.00 to $4.65.
The outlook for the Company remains strong as the sales order backlog is over $300 million and continued sales and earnings growth is expected in fiscal 1999. Fiscal year 2000 will see further growth with the introduction of the RJ700 which should contribute $16 million to revenues on an annual basis.
Avcorp Industries Inc. is a Canadian aerospace industry manufacturer. The Company is a single-source supplier for design, fabrication and assembly of metal, composite and plastic components and is made up of four divisions: Aerostructures, Composites, Metal Products and Engineering.