Aviall Second Quarter Net Earnings Jump 118 Percent On Revenue Increase of 44 Percent.Business Editors Aviall, Inc. (NYSE NYSE See: New York Stock Exchange :AVL (Automatic Vehicle Location) See mobile positioning. ) today reported financial results for the second quarter of 2002: Highlights : -- Net earnings were $7.8 million in Q2 2002, up 118% from $3.6 million in Q2 2001. -- Revenues grew 44% year-over-year not including what would have been approximately $36 million of T56 sales that were actually made by Rolls-Royce to the U.S. military as part of the T56 transition program and for which Aviall received full margin. Including these direct T56 sales on a pro forma basis, Aviall's revenues would have been $229 million or an increase of 71% from Q2 2001. -- Total Company SG&A as a percentage of sales continued to decline, falling 3.3 percentage points year-over-year to 13.2% not including Rolls-Royce's direct T56 sales and falling 5.4 percentage points year-over-year to 11.1% including these direct T56 sales on a pro forma basis. -- Aviall Services signed a new contract with Honeywell for fuel controls employed on the PT6, PW100 and JT15D turbine engines, expanding significantly the fuel control products it offers. -- ILS continued to set new records for inventory listings, number of accesses, and number of subscribers on ILSmart.com, with overall usage increasing 11% year-over-year. Second Quarter Results Aviall, Inc. net earnings in the quarter were $7.8 million, or $0.26 per share (basic and 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. under GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ), versus net earnings of $3.6 million, or $0.19 per share (basic and diluted under GAAP), in the comparable 2001 period. Applying the "if-converted" methodology, second quarter 2002 non-GAAP pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma diluted EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. would have been $0.27 per share. The "if-converted" methodology assumes that all the Series D preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. were converted and all the outstanding warrants were exercised as of April 1, 2002. This calculation also excludes the preferred stock quarterly dividend and uses 28.5 million shares for ease of comparison to subsequent quarters. Second quarter 2002 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 rose $58.8 million to $193.1 million or 44% above last year's level of $134.3 million. The reported second quarter revenues however, do not include approximately $36 million of T56 sales made directly by Rolls-Royce Rolls-Royce is a British brand, it may refer to:
Aviall Services continued to experience sharp sales growth in the second quarter, up 46% year-over-year, driven primarily by Rolls-Royce T56 sales. In addition, our general aviation sales and market share have continued to grow, complemented by the phase-in phase-in n. A gradual introduction: a phase-in of new personal policies. of new product line sales from Honeywell In 1927, the Minneapolis Honeywell Regulator Company was formed as a merger of Alfred Butz' temperature control company (1885) and Mark Honeywell's water heater company (1906). In 1957, Honeywell, along with Ratheon, introduced one of the first computers in the U.S., the Datamatic 1000. although these impacts have been offset by continued weaker airline-related sales. At 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. , second quarter sales of $6.8 million were up $0.2 million year-over-year, marking the second successive quarter of revenue gains for the global electronic marketplace. ILS continued to set new records for inventory listings, the number of accesses, and the number of subscribers on ILSmart.com, with overall usage increasing 11% year-over-year. Aviall's gross profit of $43.6 million for the second quarter of 2002 was up $12.8 million, or 41%, from the second quarter 2001 level of $30.8 million. As expected, the gross profit percentage fell slightly to 22.6% reflecting a stronger base of lower-margin Rolls-Royce T56 sales. On a pro forma basis including the approximately $36 million of T56 sales made by Rolls-Royce, Aviall's second quarter gross profit percentage would have been 19.0%. Compared to the second quarter of 2001, selling and administrative expenses increased $3.4 million to $25.5 million. This increase represents 6% of the second quarter year-over-year net sales increase and just 4% of the pro forma second quarter net sales increase when including the approximately $36 million of direct T56 sales. As a result, the SG&A expenses as a percentage of sales fell 3.3 percentage points to 13.2% in the second quarter of 2002 and would have fallen 5.4 percentage points to 11.1% if the direct Rolls-Royce T56 sales were included in the Company's revenues. Continuing the improvement trend, 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 increased to 9.4% in the second quarter of 2002 from the adjusted (to cease goodwill amortization under SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 142) 6.8% in the second quarter of 2001. On a pro forma basis, if the direct T56 sales were included in the Company's revenues, operating income margin would have been 7.9% in the second quarter of 2002. Review and Outlook "The Company continued to build on its strong start in the first quarter with an even better performance in the second quarter," 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 successful addition of the T56 product line has obviously been a strong wind in our sails. Other new product line additions in 2001 and thus far in 2002 have further enhanced Aviall's core marketplace strengths -- our global coverage, product depth, and market diversity. Specifically, the stronger-than-expected T56 product line sales and the year-over-year improvement in our general aviation business have more than offset the weaknesses we are seeing in the commercial aviation marketplace. In addition, ILS improved its year-over-year revenue performance and again set new records for accesses, transactions, quote requests, and inventory listings." Fulchino continued, "The addition of new product lines has clearly contributed to our success -- as we take advantage of the scalability How much a system can be expanded. See scalable. scalability - How well a solution to some problem will work when the size of the problem increases. For example, a central server of some kind with ten clients may perform adequately but with a thousand clients it of our business model and increase the proportion of our military/government business to approximately 45% of pro forma sales for Aviall Services. We will continue to pursue new opportunities as a priority. The latest Honeywell agreement announced earlier this week covers the widely utilized PT6, PW100 and JT15D turbine turbine, rotary engine that uses a continuous stream of fluid (gas or liquid) to turn a shaft that can drive machinery. A water, or hydraulic, turbine is used to drive electric generators in hydroelectric power stations. engine fuel controls. Although this agreement is non-exclusive and not as large as the other Honeywell agreements, it continues to show that Aviall remains the avenue of choice to the aftermarket Aftermarket See: Secondary market. aftermarket See secondary market. for OEMs." Fulchino closed by saying, "Aviall's performance for the first half of 2002 has validated val·i·date tr.v. val·i·dat·ed, val·i·dat·ing, val·i·dates 1. To declare or make legally valid. 2. To mark with an indication of official sanction. 3. our optimism about taking on big challenges with major OEMs and rendering See render. (graphics, text) rendering - The conversion of a high-level object-based description into a graphical image for display. For example, ray-tracing takes a mathematical model of a three-dimensional object or scene and converts it into a bitmap image. quality services to our 17,000 general aviation customers. Our ability to leverage our scale, reach, and technology has created unique marketplace advantages and supply-chain values for our customers. We remain committed to moving this company forward by further leveraging all of our capabilities." Aviall will host a conference call on Thursday Thursday: see week. , July July: see month. 18, 2002, at 11 a.m. ET. The conference call can be accessed by calling (888) 664-9861 (toll-free) or (402) 228-4588 (toll) and referencing Aviall. A replay will be available until 7 p.m. ET on Thursday, July 25, 2002, at (800) 873-9810 (toll-free) or (402) 220-5314 (toll). 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 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 200 manufacturers and offers approximately 250,000 catalog catalog, descriptive list, on cards or in a book, of the contents of a library. Assurbanipal's library at Nineveh was cataloged on shelves of slate. The first known subject catalog was compiled by Callimachus at the Alexandrian Library in the 3d cent. B.C. 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 Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). and
Asia-Pacific The term Asia-Pacific generally applies to littoral East Asia, Southeast Asia and Australasia near the Pacific Ocean, plus the states in the ocean itself (Oceania). . 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 Six months ended
June 30, June 30,
2002 2001 2002 2001
---- ---- ---- ----
Net sales $ 193,109 134,266 360,712 264,288
Cost of sales 149,542 103,462 278,949 204,010
-------------------------------------------
Gross profit 43,567 30,804 81,763 60,278
Operating and other expenses:
Selling and administrative
expenses 25,485 22,113 50,671 44,788
Interest expense 5,653 2,565 11,243 4,861
-------------------------------------------
Earnings before income
taxes 12,429 6,126 19,849 10,629
Provision for income
taxes (a) 4,649 2,557 7,543 4,358
-------------------------------------------
Net earnings 7,780 3,569 12,306 6,271
Less deemed dividend from
beneficial conversion
feature (b) - - (20,533) -
Less preferred stock
dividends (b) (1,038) - (2,053) -
-------------------------------------------
Net earnings (loss)
applicable to common
Shares $ 6,742 3,569 (10,280) 6,271
-------------------------------------------
Basic net earnings (loss)
per share (c) $ 0.26 0.19 (0.56) 0.34
Weighted average
common shares 18,382,482 18,483,726 18,382,757 18,472,688
---------------------------------------------
Diluted net earnings
(loss) per share (d) $ 0.26 0.19 (0.56) 0.34
Weighted average common
and potentially dilutive
common shares 28,657,865 18,713,855 26,057,973 18,603,808
---------------------------------------------
(a) Due to the Company's large U.S. federal tax loss carryforwards,
cash tax payments are substantially lower than the provision
recorded. Cash tax (refunds) payments were $(0.2) million and $0.2
million for the three and six months ended June 30, 2002,
respectively.
(b) Preferred stock dividends include a $20.5 million one-time noncash
"deemed dividend" and a $1 million paid-in-kind quarterly dividend
on the convertible preferred stock. The "deemed dividend" reflects
the difference between the $5.80 per share conversion price of the
Series D Redeemable Preferred Stock negotiated in December 2001
and the closing price of our common stock on the New York Stock
Exchange on March 15, 2002, the date of stockholder approval of
the issuance of the Series D Redeemable Preferred Stock.
(c) Basic earnings per share for the three months ended June 30, 2002
are calculated under the "two-class" method, given the
participating nature of the Series D Redeemable Preferred Stock
(d) Diluted earnings per share were antidilutive in 2002. Therefore,
diluted earnings per share is presented equal to basic earnings
per share.
AVIALL, INC.
SELECTED BALANCE SHEET ACCOUNTS
(Dollars in thousands)
June 30, December 31,
2002 2001
-------------- ---------------
Cash $ 12,378 2,526
Receivables $ 107,308 75,134
Inventories $ 265,519 241,635
Deferred tax asset $ 64,267 71,211
Accounts payable $ 96,680 51,090
Debt $ 186,496 200,854
Convertible redeemable
preferred stock $ 42,209 40,161
Shareholders' equity $ 216,497 194,842
SEGMENT INFORMATION
(Dollars in thousands)
Three months ended Six months ended
June 30, June 30,
Net Sales 2002 2001 2002 2001
---- ---- ---- ----
Aviall Services $ 186,346 127,678 347,372 250,997
ILS 6,763 6,588 13,340 13,291
---------------------------------------------
Total net sales $ 193,109 134,266 360,712 264,288
---------------------------------------------
Profit
Aviall Services $ 17,996 7,635 31,803 14,232
ILS 2,433 2,691 4,641 5,232
---------------------------------------------
Reportable segment
profit 20,429 10,326 36,444 19,464
Corporate (2,347) (1,635) (5,352) (3,974)
Interest expense (5,653) (2,565) (11,243) (4,861)
---------------------------------------------
Earnings before income
taxes $ 12,429 6,126 19,849 10,629
---------------------------------------------
DEPRECIATION AND AMORTIZATION
(Dollars in thousands)
Three months ended Six months ended
June 30, June 30,
2002 2001 2002 2001
---- ---- ---- ----
Depreciation $ 1,800 1,161 3,989 2,261
Amortization 1,327 1,350(a) 2,590 2,539(a)
Debt issue cost 1,144 240 1,793 419
-------------------------------------------------
$ 4,271 2,751 8,372 5,219
-------------------------------------------------
(a) Amortization expense for the three months and six months ended June 30, 2001 includes $479 thousand and $958 thousand, respectively, of goodwill amortization which was discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: effective January January: see month. 1, 2002 upon adoption of Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets," or SFAS 142. |
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