2021 First Quarter Highlights
- First quarter 2021 revenue was
$23,933,000 compared to$40,205,000 in 2020. 2021 revenue decreased by$16,272,000 , in comparison to 2020. Revenue was affected by lower customer requirements due to the Coronavirus ("COVID-19"). - First quarter 2021 net income was
$17,390,000 compared to net loss of$10,414,000 in 2020. The net income in the first quarter of 2021 was supported by the accommodation agreement. - On
March 12, 2021 , the Company entered into a multiparty amended and restated Accommodation Agreement with a customer andPanta Canada B.V. Panta Canada B.V. has agreed to provide a USD$10,000,000 non-revolving standby loan facility and a USD$3,000,000 equipment loan for an aggregate availability of USD$13,000,000 .- The elimination of an unamortized cash advance, mutual release and forgiveness of certain historic and future guarantee fees payable to the customer, and a legal claim. The customer advance of
$5,800,000 (USD$4,643,000 ), guarantee fee of$8,595,000 (USD$6,880,000 ), and a legal claim provision of$6,996,000 (USD$5,600,000 ) were released and included in the first quarter 2021 Net income. - First quarter 2021 cash flows from operating activities were
$1,603,000 compared to an outflow of$5,338,000 in 2020. The first quarter of 2021 cash flows from operating activities were supported by the receipt ofCanada Emergency Wage Subsidies of$3,127,000 . - On
February 25, 2021 , the Company amended theAvcorp Composite Fabrication Inc.'s Gardena facility lease agreement effectiveJanuary 1, 2021 to vacate certain buildings, reduce shared operating expenses, and set new lease terms. - On
March 15, 2021 , the Company received a$2,532,000 (USD$2,000,000 ) second wave Small Business Administration Paycheck Protection Program Loan. The Company has recognized an estimated forgiveness of$1,224,000 (USD$967,000 ) in the current quarter as the company has satisfied the requirements of loan forgiveness.
Highlights Subsequent to Quarter-End
- The Company received
Canada Emergency Wage Subsidies of$733,000 andCanada Emergency Rent Subsidies of$277,000 inApril 2021 .
Review of 2021 First Quarter Results
For the quarter ended
During the quarter ended
As at
About Avcorp
CHIEF EXECUTIVE OFFICER
AVCORP GROUP
Forward-Looking Statements
This release should be read in conjunction with the Company's audited 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) changes in worldwide economic and political conditions that impact interest and foreign exchange rates; (b) the occurrence of work stoppages and strikes at key facilities of the Corporation or the Corporation's customers or suppliers; (c) government funding and program approvals affecting products being developed or sold under government programs; (d) cost and delivery performance under various program and development contracts; (e) the adequacy of cost estimates for various customer care programs including servicing warranties; (f) the ability to control costs and successful implementation of various cost reduction programs; (g) the timing of certifications of new aircraft products; (h) the occurrence of downturns in customer markets to which the Corporation products are sold or supplied or where the Corporation offers financing; (i) changes in aircraft delivery schedules or cancellation of orders; (j) the Corporation's ability to offset, through cost reductions, raw material price increases and pricing pressure brought by original equipment manufacturer customers; (k) the availability and cost of insurance; (l) the Corporation's ability to maintain portfolio credit quality; (m) the Corporation's access to debt financing at competitive rates; (n) uncertainty in estimating contingent liabilities and establishing reserves tailored to address such contingencies; and (o) integration of newly acquired operations and associated expenses may adversely affect profitability.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | ||
(unaudited, expressed in thousands of Canadian dollars) | ||
ASSETS | ||
Current assets | ||
Cash | ||
Accounts receivable | 14,120 | 14,436 |
Government grant receivable | 1,253 | 2,688 |
Contract assets | 33,398 | 34,325 |
Inventories | 12,259 | 9,657 |
Prepayments and other assets | 2,090 | 2,108 |
71,425 | 70,258 | |
Non-current assets | ||
Prepayments and other assets | 2,843 | 2,877 |
Development costs | 10,209 | 9,045 |
Property, plant, and equipment | 31,745 | 38,703 |
Intangibles | 624 | 655 |
Total assets | 116,846 | 121,538 |
LIABILITIES AND DEFICIENCY | ||
Current liabilities | ||
Bank indebtedness | 75,041 | 76,708 |
Accounts payable and accrued liabilities | 21,873 | 27,932 |
Current portion of term debt | 17,263 | 16,868 |
Contract liability | 13,076 | 11,502 |
Onerous contract provision | 400 | 282 |
Deferred government grant | 341 | 657 |
Customer advance | - | 5,911 |
Guarantee fee | - | 8,178 |
127,994 | 148,038 | |
Non-current liabilities | ||
Term debt | 15,364 | 19,168 |
Contract liability | 3,302 | 3,189 |
Onerous contract provision | - | 283 |
146,660 | 170,678 | |
(Deficiency) Equity | ||
Capital stock | 86,219 | 86,219 |
Contributed surplus | 6,857 | 5,478 |
Accumulated other comprehensive income | 8,639 | 8,082 |
Accumulated deficit | (131,529) | (148,919) |
(29,814) | (49,140) | |
Total liabilities and deficiency | 116,846 | 121,538 |
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) | ||
(unaudited, expressed in thousands of Canadian dollars, except number of shares and per share amounts) | ||
FOR THE QUARTER ENDED | 2021 | 2020 |
Revenues | ||
Cost of sales | 24,334 | 40,303 |
Gross loss | (401) | (98) |
Administrative and general expenses | 5,434 | 4,407 |
Office equipment depreciation | 187 | 195 |
Accommodation agreement settlement | (21,391) | - |
Other income | (2,905) | - |
Operating income (loss) | 18,274 | (4,700) |
Finance costs – net | 1,256 | 2,769 |
Foreign exchange (gain) loss | (431) | 2,858 |
Net loss on sale of equipment | 59 | 87 |
Income (loss) before income tax | 17,390 | (10,414) |
Income tax expense | - | - |
Income (loss) for the period | 17,390 | (10,414) |
Other comprehensive gain (loss) | 557 | (3,984) |
Total comprehensive income (loss) for the period | 17,947 | (14,398) |
Income (loss) per share: | ||
Basic income (loss) per common share | 0.05 | (0.03) |
Diluted income (loss) per common share |
0.05 | (0.03) |
Basic weighted average number of shares outstanding (000's) | 368,118 | 368,118 |
Diluted weighted average number of shares outstanding (000's) | 370,337 | 368,118 |
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
(unaudited, expressed in thousands of Canadian dollars) | ||
FOR THE QUARTER ENDED | 2021 | 2020 |
Cash flows from (used in) operating activities | ||
Net income (loss) for the year | ||
Adjustment for items not affecting cash: | ||
Net interest expense | 1,256 | 2,634 |
Depreciation | 1,838 | 2,068 |
Development cost amortization | 165 | 311 |
Intangible assets amortization | 23 | 300 |
Provision for onerous contracts | (165) | (124) |
Provision for doubtful accounts | - | (127) |
Provision for obsolete inventory | (90) | (252) |
Accommodation agreement settlement | (21,391) | - |
Stock based compensation | 1,379 | 9 |
Lease modification loss | 350 | - |
Loss on disposal of equipment | 59 | 87 |
Government grant income | (2,135) | - |
Unrealized foreign exchange | (388) | 2,968 |
Cash flows used in operating activities before | (1,709) | (2,540) |
Changes in non-cash working capital | ||
Accounts receivable | 4,290 | (6,512) |
Contract assets | 875 | 1,376 |
Inventories | (2,561) | 541 |
Prepayments and other assets | 1,624 | 117 |
Accounts payable and accrued liabilities | 1,003 | 1,524 |
Contract liability | (1,919) | 156 |
Net cash from (used in) operating activities | 1,603 | (5,338) |
Cash flows (used in) from investing activities | ||
Proceeds from sale of equipment | 654 | - |
Purchase of equipment | (228) | (221) |
Payments relating to development costs and tooling | (1,329) | (1,450) |
Net cash used in investing activities | (903) | (1,671) |
Cash flows from (used in) financing activities | ||
Proceeds from bank indebtedness | - | 653 |
Repayment of bank indebtedness | (591) | - |
Payment of interest | (628) | (1,147) |
Proceeds from term debt | 2,532 | 6,924 |
Repayment of term debt | (739) | (612) |
Net cash from financing activities | 574 | 5,818 |
Net increase (decrease) in cash | 1,274 | (1,191) |
Net foreign exchange difference | (13) | 74 |
Cash - Beginning of the period | 7,044 | 4,316 |
Cash - End of the period | 8,305 | 3,199 |
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIENCY | ||||||
(unaudited, expressed in thousands of Canadian dollars, except number of shares) | ||||||
Capital Stock | ||||||
Number of | Amount | Contributed | Accumulated | Accumulated | Total | |
Balance at | 368,118,620 | 86,219 | 5,446 | (142,194) | 7,054 | (43,475) |
Stock-based compensation expense | - | - | 9 | - | - | 9 |
Unrealized currency loss on translation for the period | - | - | - | - | (3,984) | (3,984) |
Net loss for the period | - | - | - | (10,414) | - | (10,414) |
Balance at | 368,118,620 | 86,219 | 5,455 | (152,608) | 3,070 | (57,864) |
Balance at | 368,118,620 | 86,219 | 5,478 | (148,919) | 8,082 | (49,140) |
Stock-based compensation expense | - | - | 1,379 | - | - | 1,379 |
Unrealized currency gain on translation for the period | - | - | - | - | 557 | 557 |
Net income for the period | - | - | - | 17,390 | - | 17,390 |
Balance at | 368,118,620 | 86,219 | 6,857 | (131,529) | 8,639 | (29,814) |
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