ExelTech Aerospace Inc. (TSX Venture: XLT), a leading aircraft maintenance, repair and overhaul provider with operations in Montreal and Quebec City, today announced its financial results for the first fiscal quarter ended June 30, 2008. All amounts are in Canadian dollars unless otherwise indicated.
Revenues for the quarter ended June 30, 2008 totalled $15.3 million compared to $13.7 million for the quarter ended June 30, 2007, an increase of 11%. This increase was driven by continued growth in ATR, Dash-8 and Saab regional turboprop heavy maintenance and in Montreal and Québec line maintenance services, which increased 28% and 83% respectively over the same period in the prior year, offset by reduced demand for regional jet maintenance, which declined 15%, primarily as a result of delays in leasing company contracts and changes in US regional airline flight schedules. The increase in regional turboprop heavy maintenance revenue reflects recognition of the revenue from a substantial aircraft refurbishment project, for which much of the work was accomplished in prior periods, and increased revenue from the Saab 340 maintenance line, which operated at full capacity throughout the quarter.
Despite this increase in revenue, Net Income declined to a loss of $1.3 million, compared to a profit of $18,791 in the same period in the prior year. This reflects in part lower margins caused by the change in value of the US dollar, the general market conditions in the MRO industry; and one-time training costs to meet the requirements of regulatory agencies; further training to expand our capabilities to meet increased demand for Embraer ERJ145, ATR 42/72 and Saab 340 heavy maintenance.
"We are disappointed to announce this loss", stated Derek Nice, ExelTech's Chairman and Chief Executive Officer. "Seasonally, our first quarter is always one of our weakest, but we are nonetheless not happy with these results. We are making strong advances in our plan to return to profitability."
Highlights of the quarter ended June 30, 2008 include:
- The company's ERJ145 heavy maintenance line operated at full capacity throughout the quarter, making the ERJ145 ExelTech's most successful product launch ever. Nonetheless, this was not enough to offset declines in the Bombardier CRJ maintenance business caused by delays in leasing company contracts and flight schedule adjustments by US regional airlines that have reduced their flying in response to the US airline industry slowdown. As a result, even though regional jet maintenance revenues were 11% higher than in the previous quarter, they declined 15% over the prior year period.
- Line maintenance revenue increased 70% over the previous quarter and 83% over the quarter ended June 30, 2007.
- ExelTech made substantial progress in implementing its business re-engineering plan, driving higher efficiencies in all aspects of its operations. During the quarter, the company appointed Mr. Sylvain Duval as new President and Chief Operating Officer, with the mandate to concentrate on internal operating efficiencies. Organizational changes, investments in tooling and equipment, new training and other initiatives are all making a contribution toward driving down the company's costs while increasing service levels for all customers.
On August 21, 2008 the company officially opened its new Montreal heavy maintenance facility, which is a major milestone in its plans for industry-leading profitability. -- www.cnxmarketlink.com
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