VANCOUVER, BC, Nov. 13, 2020 /CNW/ – Avcorp Industries Inc. (TSX: AVP) (the “Company”, “Avcorp” or the “Avcorp Group”) today announced its financial results for the quarter ended September 30, 2020. All amounts are in Canadian currency unless otherwise stated.
2020 Third Quarter Highlights
Key financial results include:
- Third quarter 2020 revenue was $33,769,000 compared to $37,437,000 in 2019. 2020 revenue decreased by $3,668,000 because of lower deliveries caused by lower customer requirements due to the novel Coronavirus (“COVID-19”) and 737 MAX grounding.
- Third quarter 2020 defense program related revenue was $20,848,000 compared to $13,737,000 in 2019, a strong growth of $7,111,000.
- Third quarter 2020 net loss was $1,263,000 compared to net loss of $7,511,000 in 2019. Net loss improved in comparison to 2019 due to higher gross profit, savings in administrative and general expenses and the receipts of government support.
- Third quarter 2020 foreign exchange gain was $712,000 (September 30, 2019: $171,000 loss). The Canadian dollar strengthened against the US dollar resulting in a gain predominately from the translation of the Company’s US dollar denominated Bank indebtedness and Term debt.
- Third quarter 2020 cash flows from operating activities before changes in non-cash working capital was $2,021,000 (September 30, 2019: cash outflow of $3,509,000). Third quarter 2020 cash flows from operating activities increased by $4,104,000 relative to 2019, after the cash receipts from Canada Emergency Wage Subsidies and other government grants of $1,426,000 have been removed.
- Third quarter 2020, the Company repaid $4,744,000 of bank indebtedness (September 30, 2019: Nil) and paid trade payables down to $11,829,000 (December 31, 2019: $23,201,000).
- BAE Systems awarded the Company a contract for the assembly of the F-35 Carrier Variant Outboard Wing. The total awards are approximately $87 million extending Avcorp’s current long-term contract with BAE systems into 2022.
- In July 2020, the Company received an additional Canada Emergency Wage Subsidy of $1,231,000.
Highlights Subsequent to Quarter-End
- On October 30, 2020, the Company entered into an amendment to its existing operating credit facility with a Canadian Chartered Bank whereby the maximum availability under the Loan agreement cannot exceed USD $68,000,000 less USD $1,000,000 until December 31, 2020 and thereafter less USD $2,300,000 providing additional liquidity.
- In October and November 2020, the Company received an additional Canada Emergency Wage Subsidy of $1,077,000.
Review of 2020 Third Quarter Results
For the quarter ended September 30, 2020, the Avcorp Group recorded losses from operations totaling $326,000 from $33,769,000 revenue, as compared to losses from operations totaling $5,164,000 from $37,437,000 revenue from the same quarter in the previous year. The third quarter 2020 operating loss decreased in comparison to 2019 by $3,721,000 after the removal of the onerous contracts provision of $Nil (September 30, 2019: $408,000 income), and government grants of $1,525,000 in 2020. The decrease in operating loss is due to continued operational improvement, cost reduction initiatives and the change in program revenue mix.
During the quarter ended September 30, 2020, cash flows from operating activities, excluding the impact of changes in non–cash working capital and $1,426,000 of Canada Emergency Wage and other government subsidies, provided $595,000 of cash as compared to utilization of $3,509,000 during the quarter ended September 30, 2019.
As at September 30, 2020, the Company had $6,606,000 cash on hand (December 31, 2019: $4,316,000) and had utilized $82,808,000 of its operating line of credit (December 31, 2019: $84,661,000). The Company has a working capital deficit of $92,484,000 as at September 30, 2020, compared with $71,561,000 deficit as at December 31, 2019. Working capital surplus/deficit is defined as the difference between current assets and current liabilities. The Company’s accounts receivable, contract assets, and inventories net of accounts payable, amount to a $20,546,000 surplus as at September 30, 2020 (December 31, 2019: $18,542,000 surplus). The Company’s accumulated deficit as at September 30, 2020 is $155,465,000 (December 31, 2019: $142,194,000).