ExelTech announces first quarter results



    Revenue increases 24% over previous year

    MONTREAL, Aug. 28 /CNW Telbec/ - ExelTech Aerospace Inc. ("ExelTech" or
the "Company") (TSX Venture: XLT), a leading aircraft maintenance, repair and
overhaul ("MRO") provider with operations in Montreal and Quebec City, today
announced its financial results for the first fiscal quarter ended June 30,
2007. All amounts are in Canadian dollars unless otherwise indicated.
    Revenues for the quarter ended June 30, 2007 totalled $13.7 million
compared to $11.1 million for the quarter ended June 30, 2006, an increase of
24%. This increase was principally driven by continued growth in the Company's
Bombardier CRJ regional jet maintenance and increased demand from ATR 42 and
Dash 8 regional turboprop operators.
    The Company completed 39 maintenance checks in the quarter ended June 30,
2007 compared to 26 checks completed during the comparable quarter of the
previous year. Of these, 15 were contracted by leasing companies and airlines
returning aircraft to lessors, compared to just three in the comparative
quarter of the prior year.
    This higher volume of business from leasing companies and airlines
returning aircraft to lessors led to an increase in the sale of aircraft parts
and outside services from 29% of total revenues in the first quarter of the
prior year to 39% in the current quarter while the traditionally higher margin
labour revenues decreased from 71% of overall revenues in the first quarter
fiscal 2007 compared to 61% in the last quarter.
    The cost of sales, including direct and indirect labour costs plus
subcontract services and the cost of parts installed on aircraft, for the
quarter ended June 30, 2007, totalled $10.8 million, representing 79% of
revenues, compared to $7.8 million for the quarter ended June 30, 2006,
representing 71% of revenues. The decrease in Gross Margin from 29% to 21% is
the result of three factors:

    - The mix of services provided to heavy maintenance customers changed
relative to the comparable period a year earlier, with an increase in the
relative proportion of revenue earned from the sale of lower-margin aircraft
parts, and a decrease in the relative proportion of revenue earned from the
sale of higher-margin labour services. This change in the mix of services was
the result of an increase in business contracted by two of our customers for
the return of aircraft to lessors. These projects are typically longer in
duration than other checks because they are complicated by contractual
relationships with more than one party; more aircraft parts are replaced and
overhauled; and there are regulatory and certification issues. The longer
duration of these projects also results in reduced labour productivity.

    - During the quarter, the Company continued to ramp up support for a
major operator of Dash 8 aircraft under a new long term relationship. ExelTech
and the customer are investing in strong logistics support in order to
optimize aircraft re-deliveries and drive higher productivity.

    - A 1.9% increase in the value of the Canadian dollar relative to the
US dollar compared to the same quarter of the prior year, which represented a
decrease in Gross Margin of approximately $0.2 million.

    These factors were only partially offset by continued increases in the
Company's productivity.
    The Company recorded earnings before tax of $0.1 million in the first
quarter, compared with $0.6 million in the first quarter of Fiscal 2007. The
difference, quarter over quarter, was attributable mainly to the decreased
operating margins discussed above.
    Net working capital increased to $18.5 million at June 30, 2007 compared
to $5.6 million at March 31, 2007, due to the bought deal public offering
closed in May 2007. Cash, net of bank loans, was $11.8 million at the end of
the first quarter.
    "The decrease in our Gross Margin percentage in the first quarter was in
part the direct result of support for a long-standing airline customer
returning aircraft to lessors as a result of a merger with another entity, and
the ramp up of service for a new long term client," stated Derek Nice,
ExelTech's President and CEO. "The unusually high proportion of revenues
generated from aircraft returns to lessors in this first quarter mask the
improvements in productivity our team continue to achieve."
    In the second quarter of the current year, ExelTech made two
announcements of significant interest:

    On July 31, 2007, the Company announced it had signed a five-year
contract to provide CRJ regional jet maintenance services for Air Wisconsin,
valued at Cdn$28 million, with the work scheduled to begin in November 2007.

    On August 27, 2007, ExelTech announced that is has launched the
development of a new $21 million heavy maintenance hangar facility at
Montreal's Pierre Elliot Trudeau International Airport. The new facility, to
be completed in the spring of 2008, will result in a 30% increase in capacity
compared to the two smaller, older hangars the Company currently operates in
Montreal.

    About ExelTech Aerospace

    The third largest commercial airframe MRO vendor in Canada, ExelTech
Aerospace is listed on the TSX Venture Exchange and trades under the symbol
XLT. The company holds Transport Canada, US Federal Aviation Administration
(FAA) and European Aviation Safety Agency (EASA) approvals to repair a wide
range of aircraft, structures, components and electrical and electronic
systems. Aircraft models serviced by ExelTech Aerospace include Bombardier
CRJ, Embraer ERJ and Fokker F.100 regional jets; ATR-42 and 72; Bombardier
Dash-8 and Saab 340 regional turboprops; and Boeing 737, 757 and MD-80
narrow-body airliners.
    With 230,000 square feet of hangar, shop and office space in three
facilities at Montreal and Quebec City, and with marketing offices in the US
and Europe, ExelTech Aerospace provides maintenance repair and overhaul
services to airlines in Canada, the US and 19 other countries around the
world.
    To find out more about ExelTech Aerospace Inc. (TSX Venture: XLT), visit
our website at www.exeltech-aerospace.com.

    The TSX Venture Exchange Inc. has not reviewed and does not accept
    responsibility for the adequacy of this release.

    
    SELECTED FINANCIAL INFORMATION OF EXELTECH AEROSPACE INC.

    Consolidated statements of operations and
    comprehensive income
    Three-month period ended June 30                      2007          2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Revenue                                       $ 13,702,948  $ 11,063,330
    Cost of sales                                   10,752,082     7,808,265
    -------------------------------------------------------------------------
                                                     2,950,866     3,255,065
    Operating expenses                               2,294,932     2,087,015
    -------------------------------------------------------------------------
    Earnings before the following                      655,934     1,168,050
    Amortization                                       303,998       304,606
    Financial expenses                                 281,512       311,544
    -------------------------------------------------------------------------
    Earnings before income taxes                        70,424       551,900
    -------------------------------------------------------------------------
    Income taxes                                        51,633       379,718
    -------------------------------------------------------------------------
    Net earnings and comprehensive income               18,791       172,182
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net earnings per share basic and diluted      $       0.00  $       0.00


    Consolidated balance sheet
                                                         As at         As at
                                                       June 30,     March 31,
                                                          2007          2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                             $             $
    ASSETS
    Current assets                                  31,040,788    18,436,119
    Capital assets                                   5,994,229     6,280,457
    Intangible assets                                  411,086       449,836
    Future income taxes                              3,990,426     3,778,298
    Goodwill                                        13,241,506    13,241,506
    -------------------------------------------------------------------------
                                                    54,678,035    42,186,216
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    LIABILITIES
    Current liabilities                             12,495,296    12,872,881
    Long-term debt and liability component of
     convertible debentures                          7,615,065     8,876,019
    Other                                              525,562       444,944
    SHAREHOLDERS' EQUITY                            34,042,112    19,992,372
    -------------------------------------------------------------------------
                                                    54,678,035    42,186,216
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    
    %SEDAR: 00020968EF




For further information:

For further information: Roland Blais, Chief Financial Officer, (514)
631-8999 ext. 2400, rblais@exeltech-aerospace.com; Elisabeth Preston, Vice
President of Corporate Affairs and General Counsel, (613) 614-4884,
epreston@exeltech-aerospace.com

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EXELTECH AEROSPACE INC.

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