Pemco Aviation Grp. (MM) (NASDAQ:PAGI)
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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/