VANCOUVER, BC, March 25, 2022 /CNW/ – Avcorp Industries Inc. (TSX: AVP) (the “Company”, “Avcorp” or the “Avcorp Group”) today announced its financial results for the year ended December 31, 2021. All amounts are in Canadian currency unless otherwise stated.
2021 Highlights
- 2021 revenue was $99,476,000 compared to $150,962,000 in 2020. 2021 revenue decreased by $51,486,000, in comparison to 2020. The decrease in revenue in 2021 was due to COVID-19 impact on customer requirements and the recognition of variable consideration on the contract termination of convenience in 2020. In addition, the Gardena facility’s revenue decreased as it has fulfilled the remaining customer requirements on a contract and Boeing suspended deliveries of its 787 aircraft during 2021 which impacted Subaru’s delivery requirement from the Gardena facility.
- 2021 net loss was $531,000 compared to net loss of $6,725,000 in 2020. The net loss improved by $6,194,000 in comparison to 2020, mainly supported by the Accommodation Agreement settlement of $21,391,000 and the decrease in net financing charge of $4,514,000; offset by the impairment of assets in the Gardena facility, higher administrative and general expenses, a decrease in government grants, and the recognition of variable consideration on the termination of convenience in 2020.
- On March 12, 2021, the Company entered into a multiparty amended and restated Accommodation Agreement with a customer and Panta 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.
- On February 25, 2021, the Company amended the Avcorp Composite Fabrication Inc.’s Gardena facility lease agreement effective January 1, 2021 to vacate certain buildings, reduce shared operating expenses, and reduced the lease term.
- On March 15, 2021, the Company received a $2,508,000 (USD $2,000,000) second wave Small Business Administration Paycheck Protection Program Loan and has recognized the amount as other income in the year ended December 31, 2021 as the company determined it has satisfied the requirements of loan forgiveness.
- On June 8, 2021, the Company received approval for forgiveness on the first wave Small Business Administration Paycheck Protection Program Loan full loan amount of USD $4,123,000. An amount of $4,601,000 (USD $3,430,000) was recognized as other income in the year ended December 31, 2020, the Company recognized the remaining portion of loan forgiveness and related interest of $924,000 (USD $737,000) as other income in the year ended December 31, 2021.
- On June 22, 2021, the Company amended its loan agreement with a Canadian Chartered Bank to extend the maturity date of the existing loan agreement to June 30, 2023, which is supported by a major and material customer of the Company by way of a guarantee and recorded a modification gain of $1,155,000 (USD $932,000).
- On June 28, 2021, the Company received an award letter from BLR Aerospace to produce Wingtips with estimated first delivery by the second quarter of 2022.
- In August 2021, the Company signed a contract extension with Boeing to provide the Wheel Well Fairing assemblies for the Boeing 737 MAX aircraft.
2022 Outlook
- The Company is positioned to perform well in 2022 and into the longer term. Longer term performance, based on current expectations of contracts and contract renewals, show a growth plan with positive operational performance and significant improvement in net cash from operating activities that will enable the Company to repay any outstanding bank indebtedness by fiscal year 2026. The Company continues to work toward securing new defence and commercial program production contracts to augment and diversify its backlog and renewing existing customer production contracts. Current contracts extend as far as 2027 and beyond. As the demand for the commercial air traffic improves and original equipment manufacturer (“OEM”) production rates increase for both commercial and defense programs, the Company is expecting a 20% annual growth in revenue in the coming couple of years. We have strong order backlog as at December 31, 2021 of $457 million.
- The Company forecasts its working capital requirements during the growth path will be met by the current operating line of credit, working capital surplus, and availability on a shareholder loan.
Review of 2021 Financial Results
For the year ended December 31, 2021, the Avcorp Group recorded income from operations of $2,686,000 (December 31, 2020: $2,371,000). Operating income in 2021 increased slightly over 2020 mainly due to the inclusion of the Accommodation Agreement settlement of $21,391,000, offset by lower gross profit of $8,303,000 and impairment loss of $7,815,000 driven from the Gardena facility, lower other income of $3,462,000 and higher administrative and general expenses of $1,560,000.
During the year ended December 31, 2021, the Company had a net loss of $531,000 (December 31, 2020: net loss of $6,725,000), had positive operating cash flows of $4,903,000 (December 31, 2020: positive $9,125,000) shareholders’ deficiency of $48,107,000 as of December 31, 2021 (December 31, 2020: $49,140,000 deficiency) and an accumulated deficit of $149,450,000 (December 31, 2020: $148,919,000).
The Company ended the year with bank operating line utilization of $75,335,000 (USD $59,421,000) offset by $4,060,000 cash compared to utilization of $76,439,000 (USD $60,037,000) with $7,044,000 cash on hand as at December 31, 2020. The bank indebtedness balance of the modification gain and related adjustments as a result of executing the amending agreement in 2021 was $923,000 as at December 31, 2021, (December 31, 2020: loss $269,000 from 2019 amendment). Based on net collateral provided to its bank, the Company is able to draw up to an additional $7,879,000 (USD $6,215,000) on its operating line of credit as at December 31, 2021 (December 31, 2020: $1,762,000 (USD$1,384,000)). As at the date of this report the Company is able to draw up to an additional $3,092,000 (USD$2,439,000) on its operating line of credit.
About Avcorp
The Avcorp Group designs and builds major airframe structures for some of the world’s leading aircraft companies, including BAE Systems, Boeing, Bombardier, Lockheed Martin and Subaru Corporation. The Avcorp Group has more than 65 years of experience, over 450 skilled employees and 560,000 square feet of facilities. Avcorp Structures & Integration located in Delta British Columbia, Canada is dedicated to metallic and composite aerostructures assembly and integration; Avcorp Engineered Composites located in Burlington Ontario, Canada is dedicated to design and manufacture of composite aerostructures, and Avcorp Composite Fabrication located in Gardena California, USA has advanced composite aerostructures fabrication capabilities for composite aerostructures. The Avcorp Group offers integrated composite and metallic aircraft structures to aircraft manufacturers, a distinct advantage in the pursuit of contracts for new aircraft designs, which require lower-cost, light–weight, strong, reliable structures. Comtek Advanced Structures Ltd., at our Burlington, Ontario, Canada location also provides aircraft operators with aircraft structural component repair services for commercial aircraft.
Avcorp Composite Fabrication Inc. is wholly owned by Avcorp US Holdings Inc. Both companies are incorporated in the State of Delaware, USA, and are wholly owned subsidiaries of Avcorp Industries Inc.
Comtek Advanced Structures Ltd., incorporated in the Province of Ontario, Canada, is a wholly owned subsidiary of Avcorp Industries Inc.
Avcorp Industries Inc. is a federally incorporated reporting company in Canada and traded on the Toronto Stock Exchange (TSX:AVP).