SYMBOL: NAS Common Shares
CHICAGO, IL, March 10 /CNW/ - (All amounts within this news release are
stated in U.S. dollars) Northstar Aerospace, Inc. (the "Company") today
reported revenue for the three months ended December 31, 2007 of $42.2 million
compared to $34.1 million in 2006, an increase of $8.1 million. Full-year 2007
revenue was $163.7 million compared to $144.1 million in 2006, marking the
fifth consecutive year of revenue growth.
Revenue in the fourth quarter was driven by a $7.6 million increase in
defense sector business at the Company's U.S. operations, including
year-on-year growth in the CH-47 Chinook and F/A-22 Raptor programs. For the
year, 2007 defense sector revenue increased $12.2 million over 2006.
Commercial revenue increased $0.5 million in the three months ended December
31, 2007 compared to 2006 primarily from increased volume with Honeywell.
Commercial sector revenue increased $7.4 million in 2007 compared to 2006.
The Company's management has been focused on improvements at the Canadian
operations. Performance at the company's Canadian plants has been impacted by
the continued strengthening of the Canadian dollar and product mix changes as
legacy defense sector programs wind down. The Company reduced the workforce at
its Canadian facilities during the quarter as part of a restructuring plan to
improve the cost structure. A charge of $1.4 million was recorded as an
unusual item in 2007, primarily for employee severance costs. In addition, the
Company recorded net adjustments of approximately $3.8 million to reduce
year-end inventory value.
Overall margins as a percentage of revenue were 16.2% in the three months
ended December 31, 2007 compared to 20.3% in the same period 2006. Defense
sector margins increased from 20.1% to 23.8%. Commercial sector margins
decreased from 20.6% to a loss of 1.3% as the $3.8 million provision related
to inventories was recorded as a reduction to the 2007 commercial sector
margins. Overall margins as a percentage of revenue for the twelve months of
2007 were 21.0% compared to 21.6% in 2006. Defense sector margins increased
from 22.3% to 24.4% and commercial margins declined from 20.4% to 15.0%.
Earnings before interest, taxes, depreciation, amortization, gains
(losses) on foreign exchange and forward contracts, and unusual items
("EBITDA") were $4.0 million for the three months ended December 31, 2007
compared to $4.2 million in 2006. For the year, EBITDA was $21.1 million in
2007 compared to $19.0 million in 2006.
In addition to restructuring charges at Canadian operations, the Company
recorded unusual items of $5.0 million and $8.1 million for 2007 and 2006,
respectively, related to the environmental concern at one of the Company's
Canadian subsidiaries. The environmental provision is based on management's
estimates as well as information provided by the Company's environmental
experts. These estimates are subject to change due to the inherent difficulty
of determining the underlying assumptions. The provisions recorded in 2007 and
2006 reflect changes in those assumptions. The provision in 2007 was deemed
necessary as a result of changes in the estimated costs in future years.
Management anticipates cash needs in the next twelve months have not changed
based on the additional provision.
The net loss for the three months ended December 31, 2007 was
$7.8 million or $0.26 per share compared to a net loss of $12.8 million or
$0.43 per share for the same period in 2006. For the year, net loss was
$7.4 million in 2007 compared to a net loss of $10.8 million in 2006.
The Company's backlog increased to $372 million at December 31, 2007 from
$222 million at December 31, 2006, driven by approximately $300 million in
orders received during 2007.
Donald Jackson, Executive Chairman, stated:
"Management's concentration on improvement at U.S. operations in recent
years to capitalize on anticipated growth opportunities resulted in
strong revenue growth at those facilities in 2007 compared to 2006.
Margins as a percentage of defense revenue demonstrate that the benefits
of various operational improvements and capital investment are being
However, overall results reported during the fourth quarter and the full
year are disappointing as a result of continuing challenges at Canadian
operations including the stronger Canadian dollar and product mix changes
as legacy programs wind down.
The charge related to the environmental remediation is based on an update
of estimates for which better information is currently available. The
remediation effort is on track and going well. The additional provision
is not a reflection on any change in the remediation plan or its
anticipated success. Northstar remains committed to its social
responsibility to the community, while maintaining its fiduciary
responsibility to its shareholders and employees.
U.S. operations are a platform for profitable growth. The improvements
needed at Canadian operations will continue to be a management priority
during the coming year."
A more detailed discussion of the Company's financial results for the
three and twelve months ended December 31, 2007 is contained in Management's
Discussion and Analysis, including comments on the comparability of results
between the current and prior year.
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; Stroud, Oklahoma; Anderson, Indiana; and Milton
and Windsor, Ontario.
Forward Looking Statements
This press release includes "forward-looking statements" that are subject
to risk and uncertainty. All statements other than statements of historical
facts included in this report, including, without limitation, those regarding
the Company's financial position, business strategy, projected costs and
plans, projected revenues, objectives of management for future operations, and
certain other items discussed above may be or include forward-looking
statements. There is uncertainty over the impact of terrorist activity on the
North American economy and the Company's revenues and earnings for 2007 and
beyond. There is also uncertainty as a result of the downturn in the
commercial aerospace market, the impact of lower world wide commercial
passenger air travel, air freight traffic, fluctuation in foreign currency
markets and the impact of the level of future U.S. military expenditures.
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, worldwide
political stability, domestic and international economic conditions, and other
political and economic 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 Annual Report for the Years Ended December 31, 2006
and 2005 - Management's Discussion and Analysis - Risks and Uncertainties, and
in the Company's Annual Information Form filed on March 31, 2007, under the
heading of Risks and Uncertainties. All information contained in this report
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.
The Company defines adjusted net income, comparable basis as income from
operations before income taxes and unusual items. The Company defines EBITDA
as earnings from continuing operations before interest, income taxes, foreign
exchange, depreciation and amortization, unusual items, and other
non-recurring items. EBITDA and adjusted net income are used by management to
evaluate the Company's performance as compared to other companies in the
industry that have different financing and capital structures and/or tax
Furthermore, the Company has included information concerning EBITDA and
adjusted net income (loss) before taxes because it believes these measures are
used by certain investors as measures of continuing financial performance.
These measures are not measures of financial performance under Canadian
generally accepted accounting principles (GAAP). As well, these measures have
no standardized meaning prescribed under GAAP and are unlikely to be
comparable to similarly titled measures used by other companies. These
measures should not be construed as an alternative to cash flow from
operations or earnings from operations as determined in accordance with GAAP
as measures of liquidity or earnings.
The Company's provision for environmental liabilities and restructuring
and severance costs are included as an adjusting item to arrive at EBITDA and
adjusted net income (loss) before taxes as these matters are not recurring by
nature. The environmental provision is related to a specific concern at the
Company's Canadian facilities. Estimates related to the provision are based on
a number of assumptions which are inherently difficult to determine and no
assurances can be given that environmental test results, changes in laws or
enforcement policies or other factors could not result in costs that differ
from the estimates contained therein. As a result of the complexity of this
matter, there have been changes in various estimates that resulted in multiple
year impacts. The provision for restructuring and severance costs is related
to certain plans that require implementation over a period of time. The need
for these plans is in response to the increasing costs at the Company's
Canadian operations, principally driven by the strengthening of the Canadian
dollar. Management does not consider these matters to be recurring in nature
or part of the on-going business of the Company.
For a detailed reconciliation of EBITDA to income from continuing
operations, please see Management's Discussion and Analysis available on the
Company's website and on SEDAR.
NORTHSTAR AEROSPACE INC.
For the three months and twelve months ended December 31, 2007
prepared in accordance with Canadian GAAP
(millions of U.S. dollars except per share amounts)
Summary of Quarterly Information
Q4 2007 Q3 2007 Q2 2007 Q1 2007 Q4 2006 Q3 2006 Q2 2006 Q1 2006
Revenues $ 42.2 $ 41.7 $ 40.9 $ 38.9 $ 34.1 $ 36.9 $ 36.8 $ 36.3
loss 6.4 - - - 8.1 - 0.6 -
operations (7.8) 0.3 (0.1) 0.2 (12.8) 0.7 0.1 0.3
(loss) (7.8) 0.3 (0.1) 0.2 (12.8) 0.7 0.9 0.5
diluted (0.26) 0.01 - 0.01 (0.43) 0.02 - 0.01
diluted (0.26) 0.01 - 0.01 (0.43) 0.02 0.03 0.02
Summary Balance Sheet Information
31, 2007 31, 2006
Working capital $49.5 $48.1
Total assets $185.0 $152.9
Total debt $75.5 $66.1
Shareholders' equity $43.2 $35.6
The unaudited Consolidated Financial Statements for the Three and Twelve
Months ended December 31, 2007 and related MD&A are available on our website
at: www.nsaero.com and on SEDAR.
For further information:
For further information: Craig Yuen, Chief Financial Officer, (708)