Aviall Reports Third Quarter Results.Business Editors & High Tech Writers DALLAS--(BUSINESS WIRE)--Oct. 30, 2001 Aviall, Inc. (NYSE NYSE See: New York Stock Exchange : AVL (Automatic Vehicle Location) See mobile positioning. ) today reported financial results for the third quarter of 2001. The Company's net earnings in the quarter were $2.4 million, or $0.12 per share (diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. ), which included $244,000, or $0.01 per share, of earnings from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. . This compares to net earnings of $2.7 million, or $0.15 per share (diluted), in the comparable 2000 period. Despite the negative effect of the shutdown shut·down n. A cessation of operations or activity, as at a factory. shutdown Noun the closing of a factory, shop, or other business Verb shut down of domestic flying activity resulting from the September September: see month. 11 terrorist attacks, Aviall's third quarter 2001 net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight increased 3% year over year to $127.8 million versus last year's level of $124.6 million. By business unit, Aviall Services' sales growth was 3% for the quarter, while ILS ILS In currencies, this is the abbreviation for the Israeli Shekel. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. sales declined 3%. Gross profit of $29.7 million for the third quarter 2001 was up $2.2 million or 8% from third quarter 2000 gross profit of $27.5 million. The gross profit percentage increased by 115 basis points to 23.2% reflecting a product mix change. Selling and administrative expenses increased $1.1 million driven by a combination of previously planned technology investment at both ILS and Aviall Services, and preliminary headquarters move-related expenses. In addition, Aviall booked $0.9 million of unusual items due to increased bad debt expense, largely due to airline bankruptcies in the quarter. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. margin was 5.9% for the third quarter of 2001, up 75 basis points on a year over year basis. Review and Outlook "This was a period of extremes," said Paul Paul, 1901–64, king of the Hellenes (1947–64), brother and successor of George II. He married (1938) Princess Frederika of Brunswick. During Paul's reign Greece followed a pro-Western policy, and the Cyprus question was temporarily resolved. E. Fulchino, Aviall's chairman, president and chief executive officer. "The aftermath of the September 11th terrorist attacks hit the aviation industry particularly hard, and the shock waves are obviously still being felt. But in spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite the disruptions that have ensued, I am very proud of the ways our Aviall employee team has jumped to help the industry begin its recovery from these tragic events. This has ranged from direct involvement of employees in Ground Zero rescue efforts; activation activation /ac·ti·va·tion/ (ak?ti-va´shun) 1. the act or process of rendering active. 2. the transformation of a proenzyme into an active enzyme by the action of a kinase or another enzyme. 3. of military-requested protocols; increase in emergency shipments to law enforcement aircraft; an across-the-board step-up step-up A scheduled increase in the exercise or conversion price at which a warrant, an option, or a convertible security may be used to acquire shares of common stock. of Aviall customer communications; utilization of Aviall product forecasting Product forecasting is the science of predicting the degree of success a new product will enjoy in the marketplace. To do this, the forecasting model must take into account such things as product awareness, distribution, price, fulfilling unmeet needs and competitive alternatives. technologies to rapidly respond to OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and demand reforecasts; and substantial acceleration of onsite customer assistance. While the aviation community attempts to rebuild toward more normal traffic conditions, the days ahead will continue to present a challenge for the industry. Fortunately, Aviall's core marketplace strengths -- our global scope and coverage, product depth, and market diversity -- are helping to offset the sales weaknesses we are seeing in some competitive markets." Fulchino added, "We have also benefited from the additions of new product lines added -- helping us to offset some of the effects of the slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. and diversify diversify To acquire a variety of assets that do not tend to change in value at the same time. To diversify a securities portfolio is to purchase different types of securities in different companies in unrelated industries. our revenue sources. We will continue to pursue additional new product lines, although the recent financial market conditions are a key factor in the Company's plan to expand its capital structure to accommodate these additional accretive new business and strategic acquisition opportunities." Fulchino continued, "The impact of the shutdown of North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. flying activity during September took an obvious toll on our third quarter results. Although still operating at lower levels than prior to the terrorist attacks, there are, however, indications that U.S. airline traffic is slowly rebuilding. Even more positively, while U.S. general aviation flying activity was actually restricted longer than airline activity, Aviall Services' general aviation sales were surprisingly good. In fact, even with all the disruptions, Aviall Services' general aviation sales were higher year over year for the month of September. Our government/military sales have also increased as expected." In closing, Fulchino went on to say, "We are hopeful that the evidence of increasing business aviation, military and related helicopter activity will continue. Similarly, we are cautiously optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that the commercial airline sector will continue its recovery. As a result of these factors and its capabilities, Aviall is positioned to overcome the near-term near-term adj. Of, for, or involving a short period of time in the near future. sales sluggishness and move ahead." Aviall will host a conference call on Tuesday Tuesday: see week. , October October: see month. 30, 2001, at 11 a.m. ET. The conference call can be accessed by calling (800) 937-6980 (toll-free) or (706) 679-5454 (toll) and referencing Aviall. A replay will be available until 7 p.m. ET on Friday, November 2, 2001, at (800) 642-1687 (toll-free) or (706) 645-9291 (toll), Conference ID No. 2101129. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. The statements contained in this release that are not historical facts are forward-looking statements (as such term is defined in the Private Securities Litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. Act of 1995). Actual results may differ materially from those expected in the forward-looking statements. These forward-looking statements involve risks and uncertainties, including competitive factors and pricing and supply pressures, shifts in market demand, general economic conditions and other factors including, among others, those that affect flight activity in commercial, business and general aviation, the business activities of the Company's customers and suppliers and developments in information and communications technology Noun 1. communications technology - the activity of designing and constructing and maintaining communication systems engineering, technology - the practical application of science to commerce or industry . About Aviall, Inc. Aviall, Inc. (NYSE: AVL) is a leading solutions provider of aftermarket Aftermarket See: Secondary market. aftermarket See secondary market. supply-chain management services for the aviation and marine industries. As the world's largest independent provider of new aviation parts and related aftermarket services, the Aviall Services business unit markets and distributes products for approximately 175 manufacturers and distributes approximately 90,000 line items from customer service centers located in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , Europe and Asia-Pacific. Aviall Services also supports a full line of aviation batteries, hoses, wheels and brake services. The Inventory Locator LOCATOR, civil law. He who leases or lets a thing to hire to another. His duties are, 1st. To deliver to the hirer the thing hired, that he may use it. 2d. To guaranty to the hirer the free enjoyment of it. 3d. Service (ILS) business unit, headquartered in Memphis, Tennessee For the ancient Egyptian capital, see . Memphis is a city in the southwest corner of Tennessee, and the county seat of Shelby County. Memphis rises above the Mississippi River on the 4th Chickasaw Bluff just below the mouth of the Wolf River. , provides information and facilitates commerce via its global electronic marketplace to enable subscribers to buy and sell commercial aviation and marine parts, equipment and services. Additional information on Aviall is available via the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at www.aviall.com.
AVIALL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except share data)
Three months ended Nine months ended
September 30, September 30,
-----------------------------------------
2001 2000 2001 2000
---- ---- ---- ----
Net sales $127,816 124,553 392,104 361,118
Cost of sales 98,106 97,027 302,116 278,310
-----------------------------------------
Gross profit 29,710 27,526 89,988 82,808
Selling and administrative
expenses 22,174 21,109 66,962 63,679
-----------------------------------------
Operating income 7,536 6,417 23,026 19,129
Unusual items (a) 926 - 926 -
Interest expense 2,647 2,096 7,508 6,403
-----------------------------------------
Earnings from continuing
operations before income taxes 3,963 4,321 14,592 12,726
Provision for income taxes (b) 1,857 1,596 6,215 5,294
-----------------------------------------
Earnings from continuing
operations 2,106 2,725 8,377 7,432
Discontinued operations:
Gain on disposal (net of
income tax expense of
$131 in 2001 and $77 in
2000)(c) 244 - 244 143
-----------------------------------------
Earnings from discontinued
operations 244 - 244 143
-----------------------------------------
Net earnings $ 2,350 2,725 8,621 7,575
-----------------------------------------
Basic net earnings per share:
Earnings from continuing
operations $ 0.11 0.15 0.45 0.41
Earnings from discontinued
operations 0.01 - 0.01 0.01
-----------------------------------------
Net earnings $ 0.12 0.15 0.46 0.42
-----------------------------------------
Weighted average common
shares 18,495,281 18,332,209 18,480,302 18,306,935
Diluted net earnings per share:
Earnings from continuing
operations $ 0.11 0.15 0.45 0.41
Earnings from discontinued
operations 0.01 - 0.01 0.01
-----------------------------------------
Net earnings $ 0.12 0.15 0.46 0.42
-----------------------------------------
Weighted average common and
potentially dilutive common
shares 18,757,428 18,337,171 18,655,098 18,337,143
(a) The $0.9 million unusual expense in the 3rd quarter of 2001 is due
to an increase in the allowance for doubtful accounts resulting
from airline bankruptcies and other potential bad debts related to
the September 11, 2001 terrorist attacks.
(b) Due to the Company's large U.S. federal tax loss carryforwards,
cash tax payments are substantially lower than the provision
recorded. Cash tax payments were $0.3 million and $1.7 million for
the three months and nine months ended September 30, 2001,
respectively.
(c) The $0.2 million gain from discontinued operations in the third
quarter of 2001 resulted from revised environmental liability
estimates.
AVIALL, INC.
SELECTED BALANCE SHEET ACCOUNTS
(Dollars in thousands)
September 30, December 31,
2001 2000
------------- ------------
Cash $ 2,542 4,865
Receivables $ 83,139 83,395
Inventories $ 170,181 134,156
Deferred tax asset $ 66,687 72,299
Accounts payable $ 60,628 66,657
Debt $ 133,183 90,422
Shareholders' equity $ 200,169 191,674
SEGMENT INFORMATION
(Dollars in thousands)
Three months ended Nine months ended
September 30, September 30,
------------------ -----------------
Revenues 2001 2000 2001 2000
----------------------------------------------------------------------
Aviall Services $ 121,194 117,697 372,191 339,769
ILS 6,622 6,856 19,913 21,349
-----------------------------------------
Total revenue $ 127,816 124,553 392,104 361,118
-----------------------------------------
Profit
----------------------------------------------------------------------
Aviall Services $ 6,171 4,843 20,403 14,460
ILS 2,562 3,092 7,794 9,930
-----------------------------------------
Reportable segment profit 8,733 7,935 28,197 24,390
Corporate (2,123) (1,518) (6,097) (5,261)
Interest expense (2,647) (2,096) (7,508) (6,403)
-----------------------------------------
Earnings before income taxes $ 3,963 4,321 14,592 12,726
-----------------------------------------
DEPRECIATION AND AMORTIZATION
(Dollars in thousands)
Three months ended Nine months ended
September 30, September 30,
------------------ -----------------
2001 2000 2001 2000
Depreciation $ 1,285 1,053 3,546 3,091
Amortization 1,534 1,098 4,073 3,289
Debt issue cost 275 178 694 452
------------------------------------------
$ 3,094 2,329 8,313 6,832
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