Aviation Sales Company Reports Record Second Quarter 1999 Results.MIAMI--(BUSINESS WIRE)--Aug. 2, 1999-- Aviation Sales Company (NYSE NYSE See: New York Stock Exchange :AVS (Audio Video Coding Standard) A video compression technique developed by Chinese companies and supported by the Chinese government. Expected to provide better compression than MPEG-2, AVS was created to avoid paying royalties to the MPEG licensors, which are outside ) today announced record revenues and net income for the quarter ended June June: see month. 30, 1999. Operating revenues operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. for the second quarter of 1999 rose 64.3% to $179.2 million, from $109.1 million for the same period in 1998. Net income for the second quarter of 1999 rose 69.6% to $9.5 million ($0.71 per 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. share), compared to 1998 second quarter net income of $5.6 million ($0.44 per diluted share). Increases in operating revenues for the second quarter of 1999 reflect continued strong internal growth and the contribution of the acquisitions completed by the Company during 1998. Gross profit increased 52.4% to $44.2 million for the second quarter of 1999, compared with $29.0 million for the same period last year. Increases in gross profit in the second quarter of 1999 reflect the turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. in the heavy airframe maintenance operations acquired by the Company in July July: see month. 1998 through the acquisition of Whitehall Whitehall, cities, United States Whitehall. 1 City (1990 pop. 20,572), Franklin co., central Ohio, a suburb of Columbus; inc. 1948. Manufactures include water coolers and packaged meats. , a transaction accounted for as a pooling of interest Noun 1. pooling of interest - an accounting method used in the merging of companies; the balance sheets are added together item by item; this method is tax-free . Additionally, gross profit was favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impacted by the inclusion of Triad International Maintenance Corporation's ("TIMCO TIMCO Triad International Maintenance Company (Oscoda, Michigan) ") operations which were acquired in a transaction accounted for as a purchase in 1998. On September September: see month. 22, 1998, the Company acquired TIMCO, further increasing the percentage of the Company's business associated with its Maintenance, Repair and Overhaul Maintenance, Repair and Overhaul or MRO is a multi-billion dollar industry which works on international authorization rules to deliver a safe airline operation and to assure reliability and availability of customer fleets. (MRO MRO In currencies, this is the abbreviation for the Mauritanian Ouguiya. 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. ) operations. During the 1998 fourth quarter, TIMCO's heavy aircraft maintenance operations were consolidated with Whitehall's heavy aircraft maintenance operations under the TIMCO banner. The gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. for the 1999 second quarter was 24.7%, compared to 26.6% for the 1998 second quarter. The decrease in gross margin percentage for the second quarter of 1999 compared to 1998 reflects the increase in the percentage of the Company's business derived from its MRO operations, which generally experience lower gross profit margins than the Company's redistribution re·dis·tri·bu·tion n. 1. The act or process of redistributing. 2. An economic theory or policy that advocates reducing inequalities in the distribution of wealth. operations. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. for the second quarter of 1999 were $20.9 million, compared to $15.6 million for the comparable 1998 period. Operating expenses as a percentage of operating revenues decreased dramatically in the quarter from 14.3% a year ago to 11.7%, due in large part to the economies of scale achieved through substantial increases in operating revenues. Resulting income from operations for 1999 increased 73.9% to $23.3 million, equating e·quate v. e·quat·ed, e·quat·ing, e·quates v.tr. 1. To make equal or equivalent. 2. To reduce to a standard or an average; equalize. 3. to 13.0% of revenues, from $13.4 million, or 12.3% of revenues, for the comparable 1998 period. Dale S. Baker, Chairman and Chief Executive Officer, commented, "Our strategy of providing Total Inventory Management ("TIM TIM Timothy TIM Technical Interchange Meeting TIM Transient Intermodulation Distortion TIM Time Is Money TIM The Invisible Man (movie) TIM Telecom Italia Mobile (Italian cellular provider) ") and Total Aircraft Maintenance ("TAM") programs, combined with selective and strategic acquisitions, continues to drive our performance. We are extremely pleased with our second quarter results. We were able to report an internal growth rate of 17.3%, excluding the contribution of TIMCO in our second quarter revenues, which demonstrates strong customer interest in our services. Demand in the marketplace continues to rise as airlines increasingly outsource their maintenance and repair needs in an effort to control their costs." Mr. Baker continued, "We recently agreed to enter into a three year exclusive business partnership with Kitty Hawk Kitty Hawk or Kittyhawk, part of an offshore sandbar on Cape Hatteras, NE N.C., E of Albemarle Sound. Nearby is Kill Devil Hill, where the Wright brothers experimented successfully (1900–1903) with gliders and airplanes. , Inc. (Nasdaq:KTTY) to provide heavy airframe and JT8D engine maintenance services for Kitty Hawk's fleet of Boeing (language) BOEING - An early system on the IBM 1130. [Listed in CACM 2(5):16, May 1959]. 727 aircraft. This transaction is of particular significance because it allows Aviation Sales to deliver to Kitty Hawk a comprehensive nose-to-tail maintenance solution. This is just a single example of how we are meeting customer demand for our TIM and TAM services." For the six months ended June 30, 1999, operating revenues rose 69.1% to $357.2 million, from $211.3 million for the six months ended June 30, 1998. 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. for the first six months of 1999 increased 86.1% to $44.3 million, from $23.8 million for the first six months of 1998. Income for the six months ended June 30, 1999 was $17.4 million, almost double the $9.9 million earned in income before an extraordinary item for the same period in 1998. The Company recorded an extraordinary charge (net of income taxes) of $0.6 million or $0.5 per diluted share in 1998, which was related to the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of deferred financing costs associated with the debt repaid with proceeds from the $165 million senior subordinated notes offering completed in February February: see month. 1998. Gross profit increased 57.3% to $85.4 million for the six months ended June 30, 1999, compared with $54.3 million for the same period last year. For the reasons set forth above, gross profit margin for the first six months of 1999 decreased to 23.9% from 25.7% for the six months ended June 30, 1998. Operating expenses for the six months ended June 30, 1999 were $41.1 million or 11.5% of operating revenues compared with $30.5 million or 14.4% for the same period last year. Results for the first six months of 1999 were impacted by significantly higher interest expense, which resulted from increased borrowings incurred during 1998 to fund acquisitions and growth. Aviation Sales Company is a leading independent provider of fully integrated aviation inventory and maintenance services, including aircraft heavy maintenance, component repair and overhaul, leasing, the distribution of aircraft spare parts Spare parts, also referred to as Service Parts is a term used to indicate extra parts available and in proximity to the mechanical item, such as a automobile, boat, engine, for which they might be used. Spare parts are also called “spares. and the manufacture of new components for major commercial airlines, original equipment manufacturers and maintenance and repair facilities throughout the world. Except for historical information contained herein, this release contains certain 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. that are made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Company's actual results in future periods to differ materially from forecasted results. A number of factors, including those identified below, could adversely affect the Company's ability to obtain these results: the Company's ability to acquire adequate inventory and to obtain favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. pricing for such inventory, competitive pricing for the Company's products and services, increased competition in the aircraft spare parts redistribution and MRO markets, the ability to consummate To carry into completion; to fulfill; to accomplish. A Common-Law Marriage is consummated when the parties live in a manner intended to bring about public recognition of their relationship as Husband and Wife. suitable acquisitions, the continuing ability to effectively integrate acquisitions, economic factors which affect the airline industry, and changes in government regulations. Certain of these risks are described in the Company's 10-K filings with the Securities and Exchange Commission (SEC). Copies of the Company's 10-K and 10-Q are available from the SEC or may be obtained upon request from the Company. The Company does not undertake any obligation to update the information contained herein, which speaks only as of this date. -0-
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Financial Data (Unaudited)
Condensed Statements of Income
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Aviation Sales Company and Subsidiaries
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Three Months Six Months
Ended June 30, Ended June 30,
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Millions, except earnings
per share 1999(1) 1998(1) 1999(1) 1998(1)
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Operating Revenues $179.2 $109.1 $357.2 $211.3
Cost of Sales 135.0 80.1 271.8 157.0
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Gross Profit 44.2 29.0 85.4 54.3
Gross Margin 24.7% 26.6% 23.9% 25.7%
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Operating Expenses 20.9 15.6 41.1 30.5
11.7% 14.3% 11.5% 14.4%
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Income from Operations 3.3 13.4 44.3 23.8
13.0% 12.3% 12.4% 11.3%
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Interest Expense and Other 8.4 4.8 17.1 8.7
------- ------- ------- -------
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Income before income tax,
equity income of affiliate
and extraordinary item 14.9 8.6 27.2 15.1
Income tax expense 5.8 3.4 10.6 5.9
------- ------- ------- -------
-
Income before equity income
of affiliate and
extraordinary item 9.1 5.2 16.6 9.2
Equity income of affiliate,
net of tax 0.4 0.4 0.8 0.7
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-
Income before extraordinary
item 9.5 5.6 17.4 9.9
Extraordinary item,
net of tax - - - 0.6
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Net income $ 9.5 $ 5.6 $ 17.4 $ 9.3
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Diluted Earnings Per Share:
Income Before
Extraordinary Item $ 0.71 $ 0.44 $ 1.32 $ 0.79
Extraordinary Item, Net of
Taxes - - - 0.05
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Net Income $ 0.71 $ 0.44 $ 1.32 $ 0.74
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Average Common Shares and
Common Share Equivalents
Outstanding -
Diluted 13.3 12.7 13.3 12.7
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Common Stock Prices,
per share
High 46 1/8 41 47 5/16 44 1/4
Low 35 15/16 34 15/16 35 15/16 33 1/4
Period Close 39 1/2 39 5/8 39 1/2 39 5/8
(1) The three and six month period ended June 30, 1998 have been
restated to reflect the results of operations of Whitehall
Corporation, which was acquired in July 1998 in a transaction
accounted for using the pooling of interests method of
accounting. Included in the three and six month periods ended
June 30, 1999 and 1998 are the post acquisition results of TIMCO
and Caribe Aviation, Inc. which were acquired in September 1998
and March 1998, respectively, in transactions accounted for using
the purchase method of accounting.
Financial Data
Condensed Balance Sheet
Aviation Sales Company and Subsidiaries
June 30, Dec. 31,
Millions 1999 1998
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(Unaudited)
Assets
Current Assets
Cash and Cash Equivalents $ 10.9 $ 10.5
Accounts Receivable, net 154.8 116.0
Inventories 354.7 277.1
Other Current Assets 31.4 22.3
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Total Current Assets 551.8 425.9
Equipment on Lease, net 11.1 28.4
Property and Equipment, net 78.3 69.7
Goodwill, net 55.3 56.9
Other Assets 24.5 18.4
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Total Assets $721.0 $599.3
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Liabilities & Stockholders' Equity
Current Liabilities
Accounts Payable & Accrued Expenses $ 97.6 $ 77.2
Current Maturities - Debt 191.5 178.9
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Total Current Liabilities 289.1 256.1
Other Liabilities 5.7 1.7
Notes Payable - Long Term 5.3 23.1
Bonds Payable, net 164.2 164.1
Stockholders' Equity 256.7 154.3
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Total Liabilities & Stockholders' Equity $721.0 $599.3
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