Pemco Aviation Group Reports Improved Revenue for First Quarter
BIRMINGHAM, Ala., May 13 /PRNewswire-FirstCall/ -- Pemco Aviation Group, Inc. , a leading provider of aircraft maintenance and modification services, today
announced 2004 first quarter net income of $1.0 million ($0.23 per diluted
share) compared with $0.7 million ($0.16 per diluted share) in 2003, a 49.5%
increase. Net sales were $43.2 million, a 21.2% increase over the first quarter
of 2003 sales of $35.7 million.
Government Services segment revenue increased $7.5 million primarily as a
result of an increase in sales under the KC-135 Programmed Depot Maintenance
("PDM") contract of approximately $6.4 million and sales related to a new C-
130 contract of approximately $0.8 million. During the first quarter of 2004,
the Government Services segment delivered seven PDM aircraft compared to five
PDM deliveries during the same period of 2003.
"Pemco's improved results were due to higher sales and margins on aircraft
delivered under government and commercial contracts," stated Ron Aramini,
President and Chief Executive Officer of Pemco Aviation Group. "Sales in our
Government Services segment continued to accelerate as a result of existing
contracts with the Air Force, Coast Guard and Navy for C-130 and KC-135
aircraft." The increase in Commercial Services segment revenue of $0.4 million was
attributable to an increase in commercial Maintenance, Repair, and Overhaul
("MRO") services to its largest customer of approximately $3.8 million,
partially offset by a decrease in other MRO services of approximately $3.4
million. A significant portion of the other MRO services performed during the
first quarter of 2003 related to heavy maintenance on aircraft undergoing cargo
conversions. There were no comparable sales during the first quarter of 2004. "We anticipate the cargo conversion business to improve in 2004 due to the
Hainan contract and our recent alliance with Malaysian Airlines for cargo
conversions in southeast Asia," noted Mr. Aramini. "We expect increased demand
for maintenance and modification services from airlines that are outsourcing
more of this work than in the past." Gross profit increased to $8.9 million during the first quarter of 2004 from
$6.5 million in the first quarter of 2003 as a result of the increase in
revenue completed with improved productivity. Overall, the gross profit
percentage of the company increased during this same period to 20.7% in 2004
from 18.2% in 2003. Gross profit at the Government Services segment remained
relatively constant at approximately 30%. Gross profit at the Commercial
Services segment improved to approximately 3.1% during the first quarter of
2004 from approximately 0.0% during the same period of 2003.
SG&A increased to $7.0 million in the first quarter of 2004 from $5.2 million
during the first quarter of 2003 as a result of several factors. The company
recorded accounting and legal charges of approximately $0.9 million during the
first quarter of 2004 related to the 2003 financial statement audit and
restatement of the company's financial statements filed in connection with the
first three quarters of 2003. In addition, certain SG&A costs allocable to the
Government Services segment are included in work in process inventory as they
are incurred under the company's accounting practice. As a result of a general
increase in SG&A expense over the last two fiscal years and the increase in
sales at the Government Services segment quarter over quarter, a greater amount
of SG&A expense was relieved from work in process during the first quarter of
2004 compared to the first quarter of 2003. The general increase in SG&A
expense included continued investment in the company's Industrial Engineering
productivity programs, expansion of marketing and business development
capabilities across each segment, and expansion of the internal audit function.
"I remain optimistic that Pemco's earnings for 2004 will be significantly
higher than the record earnings we realized in 2003," stated Michael
Tennenbaum, Chairman of Pemco Aviation Group. "First quarter earnings were
adversely affected by several factors that should not continue throughout 2004. These include charges related to the restatement of quarterly results for 2003
and learning curves associated with work being performed on new aircraft types
at the Government Services segment. In addition, the company expects earnings
to benefit from cargo conversion sales, of which there were none in the first
quarter. We stand by our projections for 2004 earnings made in the press
release dated April 19, 2004," added Mr. Tennenbaum.
First Quarter Results Summary of unaudited comparative results for the first quarter ended March 31:
(in millions except per share amounts) 2004 2003 % Change
-------- -------- --------
Revenue $43.2 $35.7 21.2%
Gross profit 8.9 6.5 37.4%
Operating income 1.9 1.3 43.1%
Income before taxes 1.7 1.1 51.0%
Net income 1.0 0.7 49.5%
Net income per diluted share 0.23 0.16 43.8%
EBITDA* 2.9 2.1 40.9% *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.
Annual Shareholder Meeting Pemco's annual shareholder meeting will be held at 9:00 am CDT on Tuesday, May
18, 2004, at its corporate headquarters located at 1943 50th Street North,
Birmingham, Alabama. All shareholders are cordially invited to attend.
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/ .
This press release contains forward-looking statements made in reliance on the
safe harbor provisions of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements may be identified by their use of words, such as "believe,"
"expect," "intend" and other words and terms of similar meaning, in connection
with any discussion of the company's prospects, financial statements, business,
financial condition, revenues, results of operations or liquidity. Factors that
could affect the company's forward-looking statements include, among other
things: negative reactions from the company's stockholders, creditors or
customers to the results of the company's previously announced investigation
and restatement; the impact and result of any litigation (including private
litigation), any action by The Nasdaq Stock Market, any investigation by the
Securities and Exchange Commission (SEC) or any investigation by any other
governmental agency related to the company; the company's ability to manage its
operations during and after the financial statement restatement process; the
company's ability to successfully implement internal controls and procedures
that remediate the material weakness resulting in the restatement, and ensure
timely, effective and accurate financial reporting; changes in economic
conditions; the company'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 the company's SEC reports, including its Annual Report on Form
10-K for the fiscal year ended December 31, 2003. The company cautions readers
not to place undue reliance on any forward-looking statements, which speak only
as of the date on which they are made. The company 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) First Quarter Ended
March 31,
2004 2003
-------- --------
Sales:
Government Services Segment $29,581 $22,089
Commercial Services Segment 12,159 11,696
Manufacturing and Components Segment 1,776 2,158
Inter-segment Revenue (269) (274)
-------- --------
Total Sales 43,247 35,669 Cost of Sales 34,312 29,164
-------- --------
Gross Profit 8,935 6,505 Selling, General and Administrative Expenses 7,025 5,170
-------- -------- Income from Operations 1,910 1,335 Other expense (income):
Interest expense 225 219
-------- -------- Income Before Income Taxes 1,685 1,116
Provision For Income Taxes 649 423
-------- --------
Net Income $1,036 $693
======== ========
Net Income Per Common Share:
Basic $0.26 $0.17
======== ========
Diluted $0.23 $0.16
======== ======== Weighted Average Shares Outstanding
Basic 4,045 4,036
======== ========
Diluted 4,544 4,384
======== ======== EBITDA Reconciliation* Net Income $1,036 $693
Interest 225 219
Taxes 649 423
Depreciation and Amortization 1,039 758
-------- --------
EBITDA $2,949 $2,093
======== ======== *See note on Use of Non-GAAP Financial Measures. DATASOURCE: Pemco Aviation Group, Inc.
CONTACT: John R. Lee, Senior Vice President, Chief Financial Officer of Pemco Aviation Group, Inc., +1-205-510-4051 Web site: http://www.pemcoaviationgroup.com/
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