14-May-2010 Source: Northstar Aerospace
CHICAGO, ILLINOIS, MAY 13, 2010 â€“ (All amounts within this news release are stated in U.S. dollars unless otherwise stated.) Northstar Aerospace, Inc. (the “Company”) today reported revenue from continuing operations for the three months ended March 31, 2010 of $52.6 million compared to $45.2 million in the same period of 2009.
Defense revenue was $45.3 million for the three months ended March 31, 2010, an $11.7 million increase over the same period of 2009. The increase was the result of higher activity across all major programs compared to 2009.
Commercial revenue in the three months ended March 31, 2010 was $10.3 million compared to $14.7 million in the same period of 2009. The year-on-year decrease is primarily due to timing of revenue as the majority of CF34-3 consigned spare inventory was sold to Aviall in the first quarter of 2009 as it entered into a distributor agreement with General Electric Aviation.
Margin increased to 21.9% in the three months ended March 31, 2010, from 21.0% in the same period in 2009. The increase is a result of productivity improvements and cost efficiencies from increased volume.
Defense margin was 22.7% in the three months ended March 31, 2010 compared to 21.2% in the same period of 2009. Commercial margin declined to 19.0% in the three months ended March 31, 2010 compared to 20.8% in 2009, primarily due to the above mentioned sale of the consigned spares inventory in 2009.
Selling, general and administrative (â€œSG&Aâ€) expenses were $4.9 million (9.3% of revenue) for the three months ended March 31, 2010. For the same period in 2009, SG&A expenses were $5.1 million (11.3% of revenue). The year-on-year decrease was due to lower employee-related costs during the quarter.
The results for the three month period ended March 31, 2010 include a provision totaling $1.9 million for unusual items. With the Apache Block III Program moving into production, the company is moving forward with plans to align its manufacturing footprint to best utilize company resources. The Company plans on closing its Anderson, Indiana facility in mid-2011 and make certain investments to restructure its Canadian operations. As a result, the Company recorded a $1.4 million expense in the March 2010 for the estimated costs of executing this plan. The majority of this expense will be paid in 2011.
In April 2010, the Company reached a $0.5 million settlement on an outstanding claim related to its Phoenix, Arizona facility. The settlement provides the Company release from the claim with no acknowledgement of the Companyâ€™s liability and no ability by any party to reassert a claim against the Company related to an environmental concern that initiated at a neighboring facility. The $0.5 million will be paid in three installments over the balance of 2010.
Loss from continuing operations for the three months ended March 31, 2010 was $0.5 million or $0.02 per share, compared to income of $5.2 million or $0.17 per share in the same period in 2009. In 2010, restructuring costs and the environmental claim settlement contributed a loss of approximately $1.3 million net of taxes. In 2009, the sale of consigned inventory contributed approximately $2.5 million and the gain, on sale of the investment in Vector Aerospace contributed $5.3 million. Net income including the impact of discontinued operations for the three months ended March 31, 2009 was $5.4 million or $0.18 per share.
The Company does not recognize the income tax benefit for losses generated in Canada. Additionally, the Companyâ€™s income tax expense from Canadian operations is offset by the realization of the benefits from its net operating loss carryforward. The expense related to Canada would have been $0.5 million for the three months ended March 31, 2010.
The Companyâ€™s backlog was $391 million at March 31, 2010 compared to $440 million at March 31, 2009. The decrease in the backlog from 2009 is due primarily to increased shipping activity and a delay in anticipated customer orders. The Company previously announced a $53 million order received in May 2010 related to the Apache program.
Glenn Hess, President and Chief Executive Officer, stated:
â€œRevenues and margins have increased again this quarter as our investments in people, processes and equipment continue to yield improving results. These investments plus our recently announced contract for initiating production of Apache Block III Face Gear transmission components positions us for continued growth.â€
A more detailed discussion of the Companyâ€™s financial results for the three months ended March 31, 2010 is contained in Managementâ€™s Discussion and Analysis, including comments on the comparability of results between the current and prior year and is available on www.sedar.com and on the Companyâ€™s website at www.nsaero.com.
Northstar Aerospace, Inc. (www.nsaero.com) is North Americaâ€™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 Companyâ€™s executive offices are located in Chicago, Illinois. Its plants are located in Chicago, Illinois; Phoenix, Arizona; Anderson, Indiana; and Milton and Windsor, Ontario.