MISSISSAUGA, ONTARIO today reported financial results for the
three month period ended March 31, 2008.
On October 23, 2007 the Company announced its intention to
change the financial year end to September 30th. As a result of
this change in financial year end, comparative periods do not line
up precisely. The comparative period used in this report is for the
three month period ending April 30, 2007.
"This was a very full quarter for our Company," said Roy
Graydon, President & CEO of Aeroquest; "In addition to posting
strong operating results in our core Mining Services business, we
made substantial progress in developing traction in Petroleum
Services, bringing several large contracts to the signature stage,
and continue to be optimistic about the opportunities in
Environmental Services. We completed a very important common equity
financing in the quarter, raising $18.5 million; which allowed us
to de-lever our balance sheet, increase our capital expenditure
plans and enhance our liquidity to take advantage of future
opportunities."
Consolidated revenue for the three months ended March 31, 2008
was $13.3 million, an increase of $7.4 million or 124% over the
most comparable period last year and up $2.2 million or 20% over
consolidated revenue for the first quarter of 2008. Revenue from
helicopter operations contributed $7.4 million in the quarter,
while revenue from fixed wing operations totaled $5.6 million in
the quarter.
Gross profit in the period was $6.1 million, or 46% of revenue,
driven by a normalization of costs in our helicopter operations and
an exceptionally productive quarter in our fixed wing operations.
Gross profit margins have recovered to historical levels,
increasing 3% in the current quarter over the comparable period
last year and increasing 30% over the first quarter of 2008.
EBITDA in the quarter was $3.4 million, or 26% of revenue, an
increase of $2.4 million or 225% over the comparable period last
year. The EBITDA improvement was the result of higher revenue, a
healthy gross margin offset by an increase in cash operating costs
driven by the increased size and scope of the business.
Net income in the quarter was $0.8 million, an increase of $0.5
million or 154% over the comparable period last year. Earnings per
share for the quarter are $0.03 compared to $0.02 per share for the
comparable period last year.
Operating cash flow before changes in working capital was $2.8
million, or $0.09 per share for the period, as compared to $0.8
million, or $0.05 per share in the most comparable period last
year, and reflects the underlying health of the Company's
operations.
Capital expenditures totaled $1.7 million for the quarter,
representing 13% of revenue, which was in line with the Company's
expectations.
Contract backlog showed a modest decrease over the last quarter
and sits at $18 million at period end. Backlog is composed of $6
million in helicopter backlog and $12 million in fixed wing
backlog.
About Aeroquest International
Aeroquest International is a global information and technology
services company and a leader in the development and operation of
innovative and proprietary geophysical surveying platforms for the
mineral and petroleum exploration, and environmental services
industries. Directly, and through its sister companies UTS
Geophysics and Geophex, Aeroquest fields a fleet of approximately
two dozen helicopter and fixed wing systems and is active around
the world. More information about Aeroquest can be found at
www.aeroquest.ca. More information on UTS Geophysics can be found
at www.uts.com.au. More information on Geophex can be found at
www.geophex.com.
For Investors
This news release may include statements about expected future
events and/or financial results that are forward-looking in nature
and subject to risks and uncertainties. The Company cautions that
actual performance will be affected by a number of factors, many of
which are beyond its control. Future events and results may vary
substantially from what the Company currently foresees. Discussion
of the various factors that may affect future results is contained
in the Company's recent filings, available on SEDAR.
Aeroquest International Limited
Unaudited Consolidated Financial Statements
For the three and six months ended March 31, 2008
In accordance with National Instrument 51-102 released by the
Canadian Securities Administrators, the Company discloses that its
auditors have not reviewed these unaudited financial statements for
the period ended March 31, 2008.
Aeroquest International Limited
Consolidated Balance Sheets
Unaudited - Prepared by Management
----------------------------------------------------------------------------
As at Mar. 31, 08 Sep. 30, 07
Assets (Unaudited) (Audited)
Current
Cash and cash equivalents $ 16,225,372 $ 5,398,777
Accounts receivable 9,425,932 8,014,717
Unbilled contracts in progress 1,190,195 2,312,098
Inventory 119,074 -
Prepaid expenses and deposits 554,868 462,109
---------------------------
Total current assets 27,515,441 16,187,701
Long term
Long term investments (Note 1) 65,001 90,001
Capital assets (Note 2) 9,697,968 7,618,873
Intangible assets (Note 3) 22,760,971 20,431,860
Goodwill (Note 4) 11,863,976 9,199,108
Future income taxes 149,578 143,747
---------------------------
Total long term assets 44,537,494 37,483,589
---------------------------
Total Assets $ 72,052,935 $ 53,671,290
---------------------------
---------------------------
Liabilities and Shareholders' Equity
Current
Accounts payable and accrued liabilities $ 5,644,547 $ 5,325,928
Income taxes payable 1,036,917 2,238,543
Deferred revenue 3,554,044 3,838,463
Promissory notes (Note 5) - 536,449
Capital lease obligations (Note 6) 293,343 292,466
---------------------------
Total current liabilities 10,528,851 12,231,849
Long term
Promissory notes (Note 5) - 2,597,339
Capital lease obligations (Note 6) 562,305 720,230
Future income taxes 7,287,187 6,566,056
---------------------------
Total liabilities 18,378,343 22,115,474
---------------------------
Shareholders' equity
Share capital (Note 8) 48,354,284 27,403,594
Contributed surplus (Note 8) 1,800,821 1,320,461
Accumulated other comprehensive income 238,493 72,794
Retained earnings 3,280,994 2,758,967
---------------------------
Total shareholders' equity 53,674,592 31,555,816
----------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $ 72,052,935 $ 53,671,290
----------------------------------------------------------------------------
----------------------------------------------------------------------------
The accompanying summary of significant accounting policies and notes are an
integral part of these financial statements.
Aeroquest International Limited
Consolidated Statement of Operations and Comprehensive Income
Unaudited - Prepared by Management
----------------------------------------------------------------------------
Three months Three months Six months Six months
ended ended ended ended
For the period Mar. 31, 08 Apr. 30, 07 Mar. 31, 08 Apr. 30, 07
Sales $ 13,294,277 $ 5,936,703 $ 24,490,818 $ 10,034,587
Cost of sales 7,221,337 3,305,062 14,500,556 5,818,147
-------------------------------------------------------
Gross profit 6,072,940 2,631,641 9,990,262 4,216,440
-------------------------------------------------------
Expenses and other
items
General and
administrative 2,330,573 1,209,228 4,211,136 2,043,370
Development expense 98,453 117,589 209,620 216,172
Foreign exchange
(gain)/loss 24,313 154,272 (32,151) 124,883
Stock based
compensation expense 173,208 91,476 555,963 91,476
Amortization of
intangible assets 1,178,301 - 2,070,888 -
Depreciation of
capital assets 654,838 277,444 1,166,471 547,079
-------------------------------------------------------
Total operating
expenses 4,459,686 1,850,009 8,181,927 3,022,980
Operating profit 1,613,254 781,632 1,808,335 1,193,460
Other costs (income)
(Note 12) (23,115) (188,254) (11,526) (219,501)
Contract
cancellations costs - 202,500 - 270,000
-------------------------------------------------------
Income before income
taxes 1,636,369 767,386 1,819,861 1,142,961
Income taxes
(Note 10)
Current 1,161,718 408,147 1,598,918 573,293
Future (340,930) 38,433 (715,300) 38,433
-------------------------------------------------------
Total income tax 820,788 446,580 883,618 611,726
-------------------------------------------------------
Net income for the
period $ 815,581 $ 320,806 $ 936,243 $ 531,235
-------------------------------------------------------
Revaluation of long
term investments
to fair market value (23,000) - (25,000) -
Unrealized gain
(loss) on
translation of
self-sustaining
foreign operations 206,265 - 190,699 -
----------------------------------------------------------------------------
Total comprehensive
income, for the
period $ 998,846 $ 320,806 $ 1,101,942 $ 531,235
----------------------------------------------------------------------------
The accompanying summary of significant accounting policies and notes are an
integral part of these financial statements.
Aeroquest International Limited
Consolidated Statements of Retained Earnings
Unaudited - Prepared by Management
----------------------------------------------------------------------------
Three months Three months Six months Six months
ended ended ended ended
For the period Mar. 31, 08 Apr. 30, 07 Mar. 31, 08 Apr. 30, 07
Retained earnings,
beginning of
period, as previously
reported $ 2,674,783 $ 625,455 $ 2,758,967 $ 260,054
Cumulative effect of
change in
accounting policy
(Note 9) - 54,995 - 209,967
----------------------------------------------------
Retained earnings,
beginning of
period, as restated $ 2,674,783 $ 680,450 $ 2,758,967 $ 470,021
----------------------------------------------------
Excess of purchase
price over
cost on redemption
of shares (209,370) (225,666) (414,216) (225,666)
Net income 815,581 320,806 936,243 531,235
----------------------------------------------------
Retained earnings, end
of period $ 3,280,994 $ 775,590 $ 3,280,994 $ 775,590
----------------------------------------------------
Earnings per share
(Note 11)
Basic $ 0.03 $ 0.02 $ 0.03 $ 0.03
Fully diluted $ 0.02 $ 0.02 $ 0.03 $ 0.03
----------------------------------------------------------------------------
The accompanying summary of significant accounting policies and notes are an
integral part of these financial statements.
Aeroquest International Limited
Consolidated Statements of Cash Flow
Unaudited - Prepared by Management
----------------------------------------------------------------------------
Three months Three months Six months Six months
ended ended ended ended
For the period Mar. 31, 08 Apr. 30, 07 Mar. 31, 08 Apr. 30, 07
Cash provided by
(used in)
Operating activities
Net income for the
period $ 815,581 $ 320,806 $ 936,243 $ 531,235
Operating items not
requiring cash
Amortization of
intangible assets 1,178,301 - 2,070,888 -
Depreciation of
capital assets 654,838 277,444 1,166,471 547,079
Translation of self
sustaining foreign
operations 206,265 - 190,699 -
Future income taxes (340,930) 38,433 (715,300) 38,433
Interest accretion on
promissory notes 142,868 - 221,213 -
Stock based
compensation 173,208 91,476 555,963 91,476
Write down of long
term investment - 110,000 - 110,000
Loss (Gain) on
disposal of capital
assets (45,739) 7,377 (49,476) 7,377
----------------------------------------------------
Operating cash flow
before changes in
non-cash working
capital 2,784,392 845,536 4,376,701 1,325,600
Accounts receivable (3,626,098) (265,503) (1,391,557) (432,147)
Prepaid expenses 139,132 (398,440) (92,758) (546,077)
Unbilled contracts in
progress 954,319 129,874 1,121,903 (24,742)
Inventory 142,134 - 142,134 -
Accts. Payable and
accrued liabilities (2,059,911) 347,710 281,990 724,263
Income taxes (1,151,404) 416,185 (1,201,626) 581,330
Deferred revenue 583,611 867,717 (284,419) 1,012,908
----------------------------------------------------
Total cash flow from
operating activities (2,233,825) 1,943,079 2,952,368 2,641,135
----------------------------------------------------
----------------------------------------------------
Investing activities
Capital asset
purchases (1,708,993) (951,720) (2,940,662) (1,208,685)
Loan receivable - 41,850 - 44,250
Cash cost of
acquisition (Note 4b) (95,170) - (2,116,616) -
----------------------------------------------------
Total cash flow from
investing activities (1,804,163) (909,870) (5,057,278) (1,164,435)
----------------------------------------------------
----------------------------------------------------
Financing activities
Promissory note
payments (5,337,600) - (5,337,600) -
Capital lease
payments (70,604) - (229,059) -
Aeroquest shares
redeemed (440,031) (327,132) (815,368) (327,477)
Proceeds: issuance of
common shares 18,677,574 138,750 19,313,532 138,750
----------------------------------------------------
Total cash flow from
financing activities 12,829,339 (188,382) 12,931,505 (188,727)
----------------------------------------------------
----------------------------------------------------
Net change in cash
and cash equivalents
for the period $ 8,791,351 $ 844,827 $ 10,826,595 $ 1,287,973
Cash and cash
equivalents,
beginning
of period 7,434,021 3,861,208 5,398,777 3,418,062
----------------------------------------------------------------------------
Cash and cash
equivalents, end of
period $ 16,225,372 $ 4,706,035 $ 16,225,372 $ 4,706,035
----------------------------------------------------------------------------
----------------------------------------------------------------------------
The accompanying summary of significant accounting policies and notes are an
integral part of these financial statements.
Aeroquest International Limited
Consolidated Statements of Shareholders' Equity
Unaudited - Prepared by Management
For the six months ending March 31, 2008
----------------------------------------------------------------------------
Accumu-
lated
Other Total
Share Contributed Retained Comp. Shareholders'
Capital Surplus Earnings Income Equity
Balance Sep.
30, '07 $ 27,403,594 $ 1,320,461 $ 2,758,967 $72,794 $ 31,555,816
Aeroquest
shares
purchased
for
cancellation (385,288) (15,864) (414,216) (815,368)
Issuance of
common
shares for
cash, net
of expenses 18,532,367 18,532,367
Issuance of
common
shares on
acquisition 1,962,708 1,962,708
Share
issuances
pursuant to
restricted
stock unit
vesting 22,500 (22,500) -
Share
issuances
pursuant to
stock
options
exercised 149,195 (37,239) 111,956
Warrants
exercised 669,208 669,208
Net income
for the
period 936,243 936,243
Stock based
compensation
expense 555,963 555,963
Unrealized
gain on
translation
of self
sustaining
foreign
operations 190,699 190,699
Revaluation
of long
term
investments
to fair
market
value (25,000) (25,000)
----------------------------------------------------------------------------
Balance Mar.
31 08 $ 48,354,284 $ 1,800,821 $ 3,280,994 $ 238,493 $ 53,674,592
----------------------------------------------------------------------------
----------------------------------------------------------------------------
The accompanying summary of significant accounting policies and notes are an
integral part of these financial statements.
The TSX Venture Exchange does not accept responsibility for the
adequacy or accuracy of this release.
Contacts: Aeroquest International Limited Roy Graydon President
& Chief Executive Officer (905) 672-4010 Email:
rgraydon@aeroquest.ca Website: www.aeroquest.ca
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