Northstar Aerospace Inc. reports third quarter results and organizational changes


    CHICAGO, Nov. 8 /CNW/ - (All amounts within this news release are stated
in U.S. dollars) Northstar Aerospace Inc. (the "Company") today reported
record revenue for the third consecutive quarter of 2007. Revenue totaled
$41.7 million for the three months ended September 30, 2007 compared to
$36.9 million in 2006, an increase of $4.8 million. Revenue year-to-date is
$121.5 million compared to $109.9 million in 2006.
    Revenue was driven by a $2.7 million increase in the defense sector,
including year-on-year growth in the CH-47 Chinook and F-22 Raptor programs.
Commercial revenue increased $2.1 million in the three months ended
September 30, 2007 compared to 2006 as a result of volume increases with
Rolls-Royce and the General Electric Aviation CF-34-3 revenue sharing program.
Year-to-date defense sector revenue increased $4.6 million year-on-year.
Commercial sector revenue increased $7.0 million.
    Margins as a percentage of revenue were 24.4% in the three months ended
September 30, 2007 compared to 22.2% in the same period 2006. Defense sector
margins increased from 22.9% to 25.2%. Commercial sector margins increased
from 21.0% to 23.0%. Margins as a percentage of revenue for the first
nine months of 2007 were 22.7% up from 22.0% in 2006.
    In September 2007, the Company recorded a $0.3 million reduction to
revenue, and $0.2 million reduction to margins and earnings as a result of the
strengthening Canadian dollar. Year-to-date, the Company has reduced revenue
by $0.9 million and margin by $0.7 million to reflect the impact of the
stronger Canadian dollar on long-term contracts accounted for under the
percentage-of-completion accounting method.
    Earnings before interest, taxes, depreciation, amortization, gains
(losses) on foreign exchange and forward contracts, and unusual items
("EBITDA") were $6.7 million for the three months ended September 30, 2007
compared to $5.1 million in 2006.
    The net income for the three months ended September 30, 2007 was
$0.3 million or $0.01 per share compared to $0.7 million or $0.02 per share
for the same period in 2006. The net income in the quarter includes an income
tax provision of $0.8 million, which represents the effective tax rate applied
to the U.S. operations. The Company does not record an income tax benefit for
its losses from the Canadian operations, consistent with 2006 year-end and
first quarter 2007 disclosures.
    The backlog increased to $380 million at September 30, 2007 from
$367 million at June 30, 2007 and $222 million at December 31, 2006.
    Northstar Aerospace, Inc. today announced that Mark Emery, President and
Chief Executive Officer, will resign effective December 31, 2007. Donald
Jackson will continue in his role as Executive Chairman and serve as Interim
Chief Executive Officer. Mr. Emery will be joining The Jordan Company L.P., a
private equity firm, as President, U.S. Operations Management, beginning in
January next year.
    Northstar also announced today that Michael J. Tkach has joined the Board
of Directors as non-executive Director. Mr. Tkach recently retired as Vice
President and General Manager, Boeing Rotorcraft Systems, a division of the
Precision Engagement and Mobility Systems business unit with facilities in
Philadelphia, Pennsylvania and Mesa, Arizona. He was responsible for all
rotorcraft systems programs and supporting functional activities at these
locations. Rotorcraft programs included the AH-64D Apache Longbow, the
CH-47F/MH-47G Chinook, Aerospace Support and Advanced Rotorcraft Systems, a
division of Boeing Phantom Works. Mr. Tkach was also responsible for the Bell
Boeing V-22 Osprey tiltrotor aircraft and the Boeing Strategic Manufacturing
Center for Electrical Products and Interorganizational Work Authorizations at
    Mr. Tkach spent 11 years in the U.S. Navy as a carrier and test pilot. He
has a bachelor's degree in Mechanical Engineering from the U.S. Naval Academy
and a master's degree in Systems Engineering from the University of Southern

    Don Jackson, Executive Chairman, stated:

    "The Board is grateful to Mark in his many contributions to Northstar.
    While we are sorry to see him leave the business, we do so with best
    personal wishes for his continuing success. We are confident in the
    knowledge, leadership and continuity provided by experienced leaders in
    place across the company.

    The addition of Michael Tkach to the company's Board provides broad
    international aerospace experience and intimate knowledge of key
    rotorcraft programs.

    Over the past three years, the Company has invested heavily in
    operational improvements and new capital equipment to meet the growth in
    demand. The third quarter was notable in demonstrating significant
    earnings growth and an initial paydown of debt. It was also the third
    consecutive quarter of record sales as Northstar Aerospace.

    In the face of foreign exchange pressures, management continues to review
    our Canadian plants to deliver near term improvement in their cost
    competitiveness. Management's emphasis continues to be the translation of
    the backlog into profitable growth.

    The future of the business has never looked brighter. We have achieved
    record backlog, new and deeper customer relationships with leading OEMs
    across the global aerospace industry and improving productivity in our
    manufacturing operations. We are confident the performance of the
    business will continue to improve and develop, guided by an experienced
    and knowledgeable management team."

    A more detailed discussion of the Company's financial results for the
three and nine months ended September 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. ( 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.

    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.

    For the three months and nine months ended September 30, 2007
    prepared in accordance with Canadian GAAP


    (millions of U.S. dollars except per share amounts)

    Summary of Quarterly Information

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

    Revenues          $41.7  $40.9  $38.9  $34.1  $36.9  $36.8  $36.3  $30.9

    Unusual loss          -      -      -    8.1      -    0.6      -    5.5

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

    Net income (loss)   0.3   (0.1)   0.2  (12.8)   0.7    0.9    0.5   (4.7)

    Income (loss)
     per share,
    basic              0.01      -   0.01  (0.43)  0.02      -   0.01  (0.17)
    diluted            0.01      -   0.01  (0.43)  0.02      -   0.01  (0.17)

    Income (loss)
     per share:
    basic              0.01      -   0.01  (0.43)  0.02   0.03   0.02  (0.16)
    diluted            0.01      -   0.01  (0.43)  0.02   0.03   0.02  (0.16)

    Summary Balance Sheet Information

                                                  September 30,  December 31,
                                                      2007           2006

    Working capital                                    $57.3           $48.1

    Total assets                                      $188.3          $152.9

    Total debt                                         $79.1           $66.1

    Shareholders' equity                               $54.1           $35.6


    The unaudited Consolidated Financial Statements for the Three and
Nine Months ended September 30, 2007 and related MD&A are available on our
website at: and on SEDAR.

    %SEDAR: 00002555E

For further information:

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

Organization Profile

Northstar Aerospace

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