Avcorp increases revenues in first quarter
Avcorp Industries Inc AVP
Shares issued 13,873,623 Feb 17 close $3.15
Thu 18 Feb 99 News Release
Mr. Peter Jeffrey reports
Avcorp Industries Inc. had a 22 per cent increase in revenues as compared
with the comparable quarter last year. However, higher production rates and
investment in employee training to accommodate rapid revenue growth
contributed to margin reductions. As a result the company experienced a
first quarter loss of $184,000 (one cent per share) as compared with
earnings of $629,000 (four cents per share) for the comparable period last
year. In addition, increased infrastructure costs associated with the new
Delta facility and continued environmental costs at the old Richmond, B.C.
facility made a negative impact on earnings in the quarter.
The continued dramatic growth experienced has resulted in over 200 new
employees being added to the company in the last year. The company expenses
training costs for new employees as they develop their skills and become
productive which tends to impact earnings in the short-term.
The company is nearing completion of the design and development of
components for the Canadair 70 seat regional jet (RJ700). Revenues on this
program are expected to commence later this year. The company has invested
over $13.5-million on this contract to date, which represents the company's
largest contract. As at December 1998, firm orders for the Canadair
Regional Jet Series 100, 200 and 700, all of which Avcorp is a major
supplier, stood at a record 541 aircraft from 24 airlines. The success of
the Canadair regional jet programs has resulted in requests to increase
production rates at an accelerated pace. As a result, the higher levels of
training and overtime have reduced margins and productivity. The company
will continue to add assembly technicians as needed in the second and third
quarters. The company is committed to meeting customer needs and will work
diligently to reduce costs without sacrificing quality or delivery of
product.
STATEMENT OF EARNINGS
Three months ended Dec. 31
1998 1997
Sales $ 18,716 $ 15,318
Cost of sales
and expenses 18,503 14,674
Interest expense 397 15
--------- ---------
Net earnings $ (184) $ 629
========= =========
Net earnings
per share (1 cent) 4 cents
The company's sales backlog remains strong at over $325-million at Dec. 31,
1998. As the company increases production rates on the Canadair programs,
revenues and earnings will increase. |
