Northstar Aerospace Inc. reports continued revenue growth and record backlog in second quarter 2007



    
    LISTED: TSX
    SYMBOL: NAS                 Common Shares
    

    CHICAGO, IL, Aug. 9 /CNW/ - (All amounts within this news release are
stated in U.S. dollars) Northstar Aerospace Inc. (the "Company") today
reported record revenue totaling $40.9 million for the three months ended
June 30, 2007 compared to $36.8 million in 2006, a increase of $4.1 million.
Revenue year-to-date is $79.8 million compared to $73.0 million in 2006
reflecting a growth trend since 2005.
    Revenue for the quarter was driven by a $3.3 million increase in the
defense sector, including year-on-year growth in the CH-47 Chinook and F/A-22
Raptor programs. Commercial revenue increased $0.8 million in the three months
ended June 30, 2007 compared to 2006 as growth with Rolls Royce offset a
decline in revenue on the General Electric Aviation CF-34-3 engine program.
The Company recorded a $0.6 million reduction to revenue, and $0.5 million
reduction to margin and earnings in June 2007 as a result of the strengthening
Canadian dollar. This adjustment reflects the impact of the stronger Canadian
dollar on the Company's long-term contracts accounted for under the
percentage-of-completion accounting method. Year-to date defense sector
revenue compared to 2006 increased $1.9 million and commercial sector revenue
increased $4.9 million.
    Margins as a percentage of revenue were 21.6% in the three months ended
June 30, 2007 compared to 22.4% in the same period 2006. Defense sector
margins increased from 23.7% to 25.1%. Commercial sector margins decreased
from 20.2% to 15.4%. Commercial sector margins for the quarter were 17.5%
prior to the adjustment for exchange rates. Margins as a percentage of revenue
fluctuate from quarter-to-quarter primarily due to the mix of program revenue.
Margins as a percentage of revenue for the first six months of 2007 were
21.9%, consistent with 2006.
    Selling, general and administrative expenses were $4.1 million in the
three months ended June 30, 2007 compared to $3.9 million in the corresponding
2006 period. Earnings before interest, taxes, depreciation, amortization,
foreign exchange and unusual items ("EBITDA") were $5.4 million for the three
months ended June 30, 2007 compared to $5.2 million in 2006.
    The net loss for the three months ended June 30, 2007 was $0.1 million or
$0.00 per share compared to net income of $0.9 million or $0.03 per share for
the same period in 2006. The 2006 net income included $0.8 million or $0.03
per share related to discontinued operations. The net loss in the quarter
includes an income tax provision of $0.7 million, which represents the
effective tax rate applied to the U.S. operations. Consistent with 2006
year-end and first quarter 2007 disclosures the Company does not record an
income tax benefit for its losses from the Canadian operations.
    Backlog increased to $367 million at June 30, 2007 from $319 million at
March 31, 2007 and $222 million at December 31, 2006. The increase was driven
by order intake on the CH-47 of $39 million and the F/A-22 of $23 million in
the quarter and $133 million and $24 million, respectively, year-to-date.

    Mark Emery, President and Chief Executive Officer stated:

    
        "Foreign exchange pressures impacted the quarter and we continue to
        review our Canadian plants to deliver near term improvement in their
        cost competitiveness.

        Defense sector growth delivered the second consecutive record sales
        quarter for the company and it is encouraging to see the initial
        translation of the backlog into sales and margin. This is being
        driven by improving plant utilization and the benefits of our Lean
        Manufacturing. The growth of the backlog underlines the Company's
        exciting prospects."
    

    A more detailed discussion of the Company's financial results for the
three months ended June 30, 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 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.

    Non-GAAP Measures

    The Company defines adjusted income before taxes, comparable basis, as
income from operations before income taxes, unusual items, and non-recurring
items. The Company defines EBITDA as earnings from operations before interest,
income taxes, foreign exchange, depreciation and amortization, unusual items,
and other non-recurring items. The Company has included information concerning
EBITDA because it believes this measure is used by certain investors as a
measure of continuing financial performance. EBITDA is not a measure of
financial performance under GAAP. As well, this measure has no standardized
meaning prescribed under GAAP and is unlikely to be comparable to similarly
titled measures used by other companies. EBITDA 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.
    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.
    FINANCIAL HIGHLIGHTS
    For the three months and six months ended June 30, 2007
    prepared in accordance with Canadian GAAP
    UNAUDITED
    (millions of U.S. dollars except per share amounts)
    ---------------------------------------------------

    Summary of Quarterly Information

                 Q2      Q1      Q4      Q3      Q2      Q1      Q4      Q3
                2007    2007    2006    2006    2006    2006    2005    2005

    Revenues $  40.9 $  38.9 $  34.1 $  36.9 $  36.8 $  36.3 $  30.9 $  37.7

    Unusual
     loss
     (gain)        -       -     8.1       -     0.6       -     5.5    (0.6)

    Net
     income
     (loss)
     continuing
     operations (0.1)    0.2   (12.8)    0.7     0.1     0.3    (4.9)    0.4

    Net income
     (loss)     (0.1)    0.2   (12.8)    0.7     0.9     0.5    (4.7)    0.5

    Income
     (loss)
     per share,
     continuing
     operations:

    basic      (0.00)   0.01   (0.43)   0.02    0.00    0.01   (0.17)   0.01
    diluted    (0.00)   0.01   (0.43)   0.02    0.00    0.01   (0.17)   0.01

    Income
     (loss)
     per share:

    basic      (0.00)   0.01   (0.43)   0.02    0.03    0.02   (0.16)   0.02
    diluted    (0.00)   0.01   (0.43)   0.02    0.03    0.02   (0.16)   0.02




    Summary Balance Sheet Information

                                                       June 30,  December 31,
                                                          2007          2006

    Working capital                                  $    55.8     $    48.1

    Total assets                                     $   186.6     $   152.9

    Total debt                                       $    79.0     $    66.1

    Shareholders' equity                             $    52.9     $    35.6
    

    The unaudited Consolidated Financial Statements for the Three and Six
Months ended June 30, 2007 and related MD&A are available on our website at: 
www.nsaero.com and on SEDAR.

    %SEDAR: 00002555E




For further information:

For further information: Craig Yuen, Chief Financial Officer, (708)
728-2000

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