Pemco Aviation Group Reports Significantly Improved Third Quarter And Nine Month Results
November 03 2003 - 8:30AM
PR Newswire (US)
Pemco Aviation Group Reports Significantly Improved Third Quarter
And Nine Month Results BIRMINGHAM, Ala., Nov. 3
/PRNewswire-FirstCall/ -- Pemco Aviation Group, Inc. , a leading
provider of aircraft maintenance and modification services, today
announced higher revenues, EBITDA, operating income and net income
for the third quarter and nine months ended September 30, 2003.
"Pemco's earning performance improved significantly in the third
quarter as a result of higher revenues, higher margins and improved
operating efficiencies," stated Ronald Aramini, President and Chief
Executive Officer of Pemco Aviation Group. "Our excellent results
were attributable to the strength of our Government Services
Segment that increased deliveries of aircraft under contract while
expanding its market with several new contracts." Total revenues
for the third quarter of 2003 increased 24.0% to $43.9 million
compared with $35.4 million in the third quarter of 2002. Income
from operations rose 293.3% to $5.9 million compared with $1.5
million in the third quarter of the prior year. Net income for the
third quarter of 2003 was $3.8 million compared with $0.7 million
in the third quarter of 2002. Net income per diluted share
increased to $0.88 in the third quarter of 2003 compared with $0.17
per diluted share in the third quarter of 2002. Government Services
Segment sales rose 76.3% to $34.1 million and represented 77.7% of
total sales compared with 54.7% of sales in the third quarter of
2002. "We delivered eight aircraft under the KC-135 contract during
the third quarter compared with six aircraft in the third quarter
of last year," continued Mr. Aramini. "Pemco's excellent
performance on government maintenance contracts was instrumental in
our signing new contracts for C-130 aircraft maintenance. During
the third quarter, we signed contracts for 20 C-130 aircraft from
the Air Force valued at approximately $3.5 million over the next
year and a Navy contract valued at approximately $2.0 million
expected to be completed during the fourth quarter. We subsequently
signed an HC-130 aircraft maintenance contract with the Coast Guard
that is valued at up to $36 million over the five-year life of the
contract. We have already taken delivery of aircraft under these
contracts and expect they will have a positive effect on our fourth
quarter results as we begin delivery of the aircraft. Revenue from
these contracts was not material to our third quarter results."
Commercial Services Segment revenues were $8.6 million compared
with $13.1 million in the third quarter of last year. "Commercial
Services Segment sales were affected by the continuation of the
soft economy and the timing of aircraft deliveries during the
quarter," noted Mr. Aramini. "We have a significant backlog of
work-in-process in our Commercial Services Segment that we expect
to deliver in the fourth quarter." "We have seen an increase in
demand for services from commercial customers in recent months,
particularly from the commercial airline industry. We began adding
personnel in the Commercial Services Segment late in the third
quarter in response to expanded work with a U.S. carrier. We also
received certification from the United Kingdom Civil Aviation
Authority (UK-CAA) for Boeing 737-200/300 aircraft cargo
conversions. This certification complements similar certifications
we already have from the FAA and the CAAC of the People's Republic
of China and holds the promise of extending our customer base for
these conversions worldwide." Summary of unaudited comparative
results for the third quarter ended September 30: (In Millions)
2003 2002 % Change Revenue $43.9 $35.4 24.0% Gross Profit 12.5 6.3
98.4% Operating Income 5.9 1.5 293.3% Income Before Taxes 6.2 1.2
416.7% Net Income 3.8 0.7 442.9% EBITDA* 7.4 2.2 236.4% Gross
profit represented 28.5% of 2003 third quarter sales compared with
17.8% in the same quarter of last year. The increase in gross
profit was due to increased sales and improved product mix. The
2003 third quarter income before taxes also included a $1.2 million
insurance recovery related to a plant fire in our Dothan, Alabama
facility that occurred January 2002. The recovery is reported in
other income ($0.5 million) and cost of sales ($0.7 million).
Selling, general and administrative (SG&A) expenses rose 37.5%
to $6.6 million compared with $4.8 million in the third quarter of
2002. The SG&A increase relates to greater sales in the
Government Services Segment. "We continue to pursue new
opportunities in all of our operating segments," noted Mr. Aramini.
"We believe our quality, on-time delivery and cost management on
existing contracts will be a positive factor in expanding our
government contract opportunities. We are also working on the
expansion of our cargo conversion program in our Commercial
Services Segment to include the Boeing 757 aircraft. Over the past
two years, we have focused on growing our production capabilities
and efficiencies throughout our plants and believe we are in an
excellent position to leverage our manufacturing facilities as we
add new contracts," concluded Mr. Aramini. Nine Month Results
Revenues for the first nine months of 2003 increased to $128.3
million compared with $113.4 million in the same period of 2002.
Income from operations for the 2003 period rose to $13.0 million
compared with $8.5 million in the first nine months of 2002. Net
income was $7.9 million, or $1.82 per diluted share, in the first
nine months of 2003 compared with $5.7 million, or $1.28 per
diluted share in the first nine months of 2002. The results for
2003 included approximately $1.4 million from contract adjustments,
and 2002 included approximately $1.4 million from litigation
settlements. In addition, the nine months ended 2003 included a
$1.2 million insurance recovery related to the Dothan plant fire
that occurred in January 2002, which is included in other income
($0.5) and cost of sales ($0.7). *Use of Non-GAAP Financial
Measures EBITDA is defined as earnings before interest, taxes,
depreciation and amortization. Pemco presents EBITDA because its
management uses the measure to evaluate the company's performance
and to allocate resources. In addition, Pemco believes EBITDA is a
measure of performance used by some commercial banks, investment
banks, investors, analysts and others to make informed investment
decisions. EBITDA is an indicator of cash generated to service debt
and fund capital expenditures. EBITDA is not a measure of financial
performance under generally accepted accounting principles and
should not be considered as a substitute for or superior to other
measures of financial performance reported in accordance with GAAP.
EBITDA as presented herein may not be comparable to similarly
titled measures reported by other companies. See the reconciliation
of net income to EBITDA at the end of this release. About Pemco
Pemco Aviation Group, Inc., with executive offices in Birmingham,
Alabama, and facilities in Alabama, Florida and California,
performs maintenance and modification of aircraft for the U. S.
Government and for foreign and domestic commercial customers. The
company also provides aircraft parts and support and engineering
services, in addition to developing and manufacturing aircraft
cargo systems, rocket vehicles and control systems, and precision
components. For more information:
http://www.pemcoaviationgroup.com/ Certain statements in this
release that are not historical fact may constitute forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements involve known
and unknown risks, uncertainties and other factors which may cause
actual results to differ materially from historical results or from
any results expressed or implied by such forward-looking
statements, including but not limited to: change in economic
conditions, Pemco's ability to obtain additional contracts and
perform under existing contracts, the outcome of pending and future
litigation, potential environmental and other liabilities, and
other risks detailed from time to time in Pemco's SEC reports,
including its Annual Report on Form 10-K/A filed with the
Securities and Exchange Commission for the fiscal year ended
December 31, 2002. Pemco cautions readers not to place undue
reliance on any forward-looking statements, which speak only as of
the date on which they are made. Pemco does not undertake any
obligation to update or revise any forward-looking statements and
is not responsible for changes made to this release by wire
services or Internet services. PEMCO AVIATION GROUP, INC. (In
thousands except per share information) Third Quarter Ended
September 30, 2003 2002 Sales: Government Services Segment $ 34,144
$ 19,364 Commercial Services Segment 8,644 13,058 Manufacturing and
Components Segment 1,867 3,015 Inter-segment Revenue (709) (37)
Total Sales 43,946 35,400 Cost of Sales 31,493 29,097 Gross Profit
12,453 6,303 Selling, General and Administrative Expenses 6,563
4,810 Income from Operations 5,890 1,493 Other expense (income):
Proceeds From Insurance Claim (527) -- Interest expense 224 326
Income Before Income Taxes 6,193 1,167 Provision For Income Taxes
2,353 443 Net Income $ 3,840 $ 724 Weighted Average Common Shares
Outstanding: Basic 4,043 3,778 Diluted 4,368 4,205 Net Income Per
Common Share: Basic $ 0.95 $ 0.19 Diluted $ 0.88 $ 0.17 EBITDA
Reconciliation* Net Income $ 3,840 $ 724 Interest 224 326 Taxes
2,353 443 Depreciation and Amortization 999 756 EBITDA $ 7,416 $
2,249 *See note on Use of Non-GAAP Financial Measures. PEMCO
AVIATION GROUP, INC. (In thousands except per share information)
Nine Months Ended September 30, 2003 2002 Sales: Government
Services Segment $ 90,511 $ 67,054 Commercial Services Segment
33,795 36,720 Manufacturing and Components Segment 6,032 9,707
Inter-segment Revenue (2,042) (114) Total Sales 128,296 113,367
Cost of Sales 96,150 89,476 Gross Profit 32,146 23,891 Selling,
General and Administrative Expenses 19,189 15,383 Income from
Operations 12,957 8,508 Other expense (income): Proceeds From
Insurance Claim (527) -- Interest expense 673 861 Litigation, net
-- (1,480) Income Before Income Taxes 12,811 9,127 Provision For
Income Taxes 4,868 3,468 Net Income $ 7,943 $ 5,659 Weighted
Average Common Shares Outstanding: Basic 4,041 3,976 Diluted 4,376
4,422 Net Income Per Common Share: Basic $ 1.97 $ 1.42 Diluted $
1.82 $ 1.28 EBITDA Reconciliation* Net Income $ 7,943 $ 5,659
Interest 673 861 Taxes 4,868 3,468 Depreciation and Amortization
2,912 2,467 EBITDA $ 16,396 $ 12,455 *See note on Use of Non-GAAP
Financial Measures. DATASOURCE: Pemco Aviation Group, Inc. CONTACT:
John R. Lee, Senior Vice President and Chief Financial Officer of
Pemco Aviation Group, Inc., +1-205-510-4051 Web site:
http://www.pemcoaviationgroup.com/
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