Northstar Aerospace Inc. Reports Third Quarter Results

LISTED:    TSX
SYMBOL:  NAS                                  Common Shares

CHICAGO, Nov. 14, 2011 /CNW/ - (All amounts within this news release are stated in U.S. dollars unless otherwise stated.) Northstar Aerospace, Inc. (the "Company") today reported revenue for the three months ended September 30, 2011 of $45.9 million compared to $49.4 million in the same period of 2010.  As discussed in the Notes to Company's Consolidated Interim Financial Statements, the Company implemented International Financial Reporting Standards as of January 1, 2011.  The 2010 amounts in this release and the financial statements have been restated to comply with those standards.

Defense revenue was $36.1 million for the three months ended September 30, 2011, a $1.0 million increase compared to the same period of 2010. The increase was primarily the result of increased Apache Block III and AgustaWestland Lynx rotor heads shipments offset by lower CH-47 volume. Commercial revenue in the three months ended September 30, 2011 was $9.8 million compared to $14.3 million in the same period of 2010. The year-over-year decrease was primarily due to a reduction in sales to Rolls-Royce and Honeywell.

Gross margin increased to 17.9% in the three months ended September 30, 2011 from 16.0% in the same period in 2010.  Defense margin (excluding depreciation) was 16.2% in the three months ended September 30, 2011 consistent with the 16.0% in the same period of 2010. Commercial margin (excluding depreciation) increased to 23.9% in the three months ended September 30, 2011 compared to 16.0% in 2010, primarily due to increased sales of higher margin spares.

Selling, general and administrative ("SG&A") expenses were $5.1 million (11.1% of revenue) for the three months ended September 30, 2011.  For the same period in 2010, SG&A expenses were $4.7 million (8.9% of revenue), which were lower due to a one-time adjustment to compensation expense.

Net income from continuing operations for the three months ended September 30, 2011 was $10 thousand or nil per share compared to a loss of $0.5 million or $0.02 per share in the three months ended September 30, 2010. The increase in net income was due primarily to improved year-over year margins and foreign currency gains.

Net income including discontinued operations for the three months ended September 30, 2011 was $10 thousand or nil per share compared to a loss of $0.8 million or $0.03 per share in the three months ended September 30, 2010. The three months ended September 30, 2010 included a $308 loss related to the sale of the discontinued operations.

The Company's backlog was $294 million at September 30, 2011 compared to $404 million at September 30, 2010.  The decrease in the backlog reflects shipments along with an adjustment due to the change in accounting for the backlog in accordance with IFRS, including a reduction to the backlog for commercial orders that have been extended beyond the Company's contractual agreements.

In the Notes to the Consolidated Financial Statements and Management's Discussion and Analysis for the period ended September 30, 2011, the Company has included disclosure about its ability to continue as a going concern.   The Company is in compliance with all financial covenants as of September 30, 2011.  However, there is concern that the Company may violate its bank covenants as of December 31, 2011.  The Company is currently in discussions with its lenders to address the terms of the credit agreement and with its customers to address the terms of contracts in the Company's backlog.  For further information, see the Notes to the Consolidated Financial Statements and Management's Discussion and Analysis for the period ended September 30, 2011.

Glenn Hess, President and Chief Executive Officer, stated:

"During the quarter, the first production Apache Block III was completed and was subsequently delivered on schedule to the U.S. Army in October.  Apache Block III production is important because it somewhat offsets the impact of reduced activity on the Apache Block II and F-22 programs and anticipated softening in CH-47 demand.  We are working with our customers to develop mutually beneficial business terms to address the financial impact of the stretch out of deliveries and related higher costs."

A more detailed discussion of the Company's financial results for the three months ended September 30, 2011 is contained in Management's Discussion and Analysis, including comments on the comparability of results between the current and prior year and is available on www.sedar.com and on the Company's website at www.nsaero.com.

Northstar Aerospace, Inc. (www.nsaero.com) is North America's leading independent manufacturer of flight critical gears and transmissions.  Northstar Aerospace is a public company (TSX:NAS) with operating subsidiaries in the United States and Canada.  Its principal products include helicopter gears and transmissions, accessory gearbox assemblies, rotorcraft drive systems and other machined and fabricated parts.  It also provides maintenance, repair and overhaul of helicopter engines and transmissions.  The Company's executive offices are located in Chicago, Illinois.  Its plants are located in Chicago, Illinois; Phoenix, Arizona; and Milton and Windsor, Ontario.

Forward Looking Statements
This press release contains forward-looking statements that are subject to risks and uncertainty. All statements, other than statements of historical facts included in this press release, including, without limitation, those regarding the Company's financial position, business strategy, projected costs, including estimated environmental remediation costs, and plans, projected revenues, objectives of management for future operations, and certain other items may be or include forward-looking statements. Forward-looking information contained herein is based upon a number of assumptions regarding the Canadian, U.S. and global economic environment, and local and foreign government policies and actions. Actual future results of the Company may differ materially depending on a variety of factors, including production rates, timing of product deliveries, Canadian, U.S. and foreign government activities, volatility of the market for the Company's products and services, worldwide political stability, factors that result in significant and prolonged disruption to commercial air travel worldwide, U.S. military activity, domestic and international economic conditions, and other political and economic risks, including currency risks, and uncertainties.  Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to have been correct.  Important factors that could cause actual results to differ materially from the Company's expectations ("Cautionary Statements"), are included in the Company's Consolidated Financial Statements for the Years Ended December 31, 2010 and 2009 - Management's Discussion and Analysis - Risks and Uncertainties, and in the Company's Annual Information Form filed on March 25, 2011, under the heading of Risks and Uncertainties.  All information contained in this press release and subsequent written and oral forward-looking statements attributable to the Company or persons acting on behalf of the Company are expressly qualified in their entirety by the Cautionary Statements.  The Company disclaims any intentions or obligation to update or revise any forward looking statements or comments as a result of any new information, future event or otherwise, unless such disclosure is required by law.

NORTHSTAR AEROSPACE INC.
FINANCIAL HIGHLIGHTS (UNAUDITED)
For the three months ended September 30, 2011
Prepared in accordance with International Financial Reporting Standards for Q1 2010 through Q3 2011 and Canadian GAAP for Q4 2009
(thousands of U.S. dollars except per share amounts)

Summary of Quarterly Information

    Q3 2011   Q2 2011   Q1 2011   Q4 2010   Q3 2010   Q2 2010     Q1 2010   Q4 2009
           
   
   
   
   

   
   
Revenues    $ 45,920   $ 46,229   $ 51,033   $ 57,400   $ 49,407   $ 47,593     $ 49,752   $ 53,717
                                                   
Unusual items*     -     -     -     34     -     400 **     (1,943)     273
                                                   
Net income (loss)     10     790     178     3,173     (791)     1,520       (2,130)     3,662
                                                   
Income (loss) per share:                                                  
basic & diluted    $ -   $ 0.02   $ 0.01   $ 0.11   $ (0.03)   $ 0.05     $ (0.07)   $ 0.12

*Includes sale of investments gains (losses), litigation settlement costs, environmental remediation provisions, impairments on non-financial assets and goodw ill, restructuring charges for severance and termination and plant shut dow n costs.

**Adjustment to the environmental provision arising from transition to IFRS.

Summary Balance Sheet Information

  September 30, 2011 December 31, 2010
Working capital $30,066 $32,512
     
Total assets $180,676 $190,746
     
Total debt $57,587 $54,585
     
Shareholders' equity $24,790 $24,671

The Consolidated Financial Statements for the three months ended September 30, 2011 and related MD&A are available on our website at:  www.nsaero.com and on SEDAR.

 

 

 

 

 

SOURCE Northstar Aerospace

For further information:

Greg Schindler, Chief Financial Officer
(708)728-2099

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Northstar Aerospace

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