Global Aircraft Solutions Announces Second Quarter 2008 Financial Results
Global Aircraft Solutions, Inc. (OTCBB: GACF), an integrated aviation company engaged in aircraft trading, aircraft parts sales, and scheduled maintenance, repair and overhaul (MRO) services for commercial airlines, charter airlines and aviation leasing companies, today announced its financial results for the second quarter ended June 30, 2008.
2008 Q2 Significant Events
— Revenue increased 8.7% to $7.48 million compared to $6.88 million in Q1 2008 — The Company reported a net loss of $4.26 million, driven by $3.0 million of aircraft inventory write downs and a $1.8 million increase in receivable reserves
Net sales for the three months ended June 30, 2008 decreased approximately $3.69 million, or 33%, to $7.48 million from $11.17 million for the three months ended June 30, 2007. Cost of sales for the three months ended June 30, 2008 increased approximately $315,000, or 3.4%, to $9.62 million from $9.30 million for the three months ended June 30, 2007. Gross loss for the three months ended June 30, 2008 totaled $2.1 million compared to a $1.86 million gross profit for the second quarter of 2007.
The Company reported an operating loss of $6,366,148 and a net loss of $4,255,309 for the second quarter of 2008 compared to $337,285 operating profit and $140,530 net income for the second quarter 2007. The Q2 loss encompassed aircraft write downs in inventory of $3 million, increased accounts receivables reserves of $1.8 million, a charge against a previous aircraft sale of $923,000, and various non-repeatable one-time expenses of approximately $200,000. These events, related to activities in other periods, totaled $5.9 million during Q2 of 2008. The roughly $3.0 million inventory write-down taken in the second quarter pertains almost exclusively to aircraft inventory originally booked as part of the JetGlobal settlement agreement dated April 20, 2007. This inventory write down was occasioned by changed circumstances in specific sales transactions pursued by the Company and by changes in the market at large as airlines moved to aggressively divest themselves of older less fuel efficient aircraft in response to increased fuel prices. Virtually all of the approximately $1.8 million in bad debt expense arose due to the Company’s decision to write down its BCI (approximately $800,000) and Avolar (approximately $315,000) receivables, and as a result of a delivery condition deficiency claim (approximately $656,000) made by GALP regarding a 737-300 sold to GALP by Global. The Company is pursuing legal remedies in an attempt to reverse the BCI and Avolar bad debt expenses. Interest expense for the quarter was $380,360, virtually unchanged from the $378,889 incurred in the same quarter last year.
On the balance sheet, the Company reported total current assets of $24.9 million and total assets of $26.0 million. Total current liabilities were $16.1 million and total liabilities of $16.2 million, representing a current ratio of 1.6 to 1. Diluted share count for the quarter ending June 30, 2008 was 40.37 million, versus 35.89 million one year ago. Stockholders’ equity was $9.74 million or $.24/share fully diluted.
Gordon Hamilton, CEO of Global Aircraft Solutions, Inc. stated, “Clearly, our second quarter financial results were overshadowed by the inventory and receivable write-downs taken during this period. Accounting adjustments of this type are always painful and generally unpopular. Nonetheless, it is the responsibility of Management to provide a dispassionate and conservative valuation of the Company’s assets in an ever-changing market environment. It is worth noting that, without these write-downs, both our core operating entities, World Jet and Hamilton Aerospace, would have shown quarter to quarter growth in both revenue and pre-tax income. Our top priority at this time is to return our aircraft-trading business segment to profitability. The recent changes to our board, management, and corporate governance are the most visible of the numerous steps we are taking to improve our aircraft-trading operations.”
Conference Call
The conference call will take place on Friday, August 15, 2008 at 1:00 p.m. EST. Anyone interested in participating should call 1-800-762-8795 if calling within the United States, or 1-480-629-9041 if calling internationally. Please dial in approximately 5-10 minutes prior to 1:00 p.m. to ensure timely participation on the call. There will be a playback available until August 22, 2008. To listen to the playback, please call 1-800-406-7325 if calling within the United States, or 1-303-590-3030 if calling internationally. Please use pass code 3911692 for the replay.
This call is being webcast by ViaVid Broadcasting and can be accessed at Global’s Web site http://www.globalaircraftsolutions.com. The webcast may also be accessed at ViaVid’s Web sites at http://www.viavid.net. The webcast can be accessed through September 15, 2008.
About Global Aircraft Solutions
Global Aircraft Solutions provides parts support and maintenance, repair and overhaul (MRO) services for large passenger jet aircraft to scheduled and charter airlines and aviation leasing companies. Hamilton Aerospace and World Jet, both divisions of Global Aircraft Solutions, operate from adjacent facilities comprising about 35 acres located at Tucson International Airport. These facilities include hangars, workshops, warehouses, offices and other buildings. Notable customers include G.A. Telesis, AfriJet, Zero G, Swift Air, Pamir Airways, Wind Rose Aviation, Jetran International, the Mexican Presidential Fleet, SEDENA, Canadian North Airlines, CanJet Airlines, Iraqi Airways, Ryan International Airlines, and Alant Soyuz.
Global’s website is located at www.globalaircraftsolutions.com.
Except for the historical information presented, this press release contains “forward-looking statements” made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 or regulations thereunder including, but not limited to expected and estimated revenue and earnings. Forward-looking statements are made based upon management’s expectations and belief concerning future developments and their potential effect upon the Company. There can be no assurance that future developments will be in accordance with management’s expectations or that the effect of future developments on the Company will be those anticipated by management.
The words “believes,”"expects,”"intends,”"plans,”"anticipates,”"hopes,”"likely,”"will,” and similar expressions identify such forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company or its subsidiaries or industry results, to differ materially from future results, performance or achievements expressed or implied by such forward-looking statements. These risks include the economic health of the airline industry, demand for Global Aircraft Solutions’ services, and competitive pricing pressures.
In addition, other risks are detailed in Global’s Form 10-KSB for the year ended December 31, 2007 and Global’s Form 10-Q for the quarter ended March 31, 2008. These statements speak only as of above dates, and Global disclaims any intent or obligation to update them.
GLOBAL AIRCRAFT SOLUTIONS, INC. Condensed Consolidated Balance Sheets June 30, 2008 and December 31, 2007 (unaudited) ASSETS June 30, December 31, 2008 2007 ———— ———— CURRENT ASSETS Cash and cash equivalents $ 646,091 $ 1,221,598 Accounts receivable, net 5,337,724 7,412,120 Due from equity investee partner 347,000 472,000 Inventory, net 12,903,662 16,429,501 Costs and estimated earnings on contracts in excess of billings on contracts in progress, net 231,625 Restricted funds 446,007 196,181 Deferred income taxes 3,895,966 1,682,948 Other current assets 1,075,081 752,784 ———— ———— TOTAL CURRENT ASSETS 24,883,156 28,167,132 Property, plant and equipment, net 881,167 1,024,837 Investments in and advances to affiliates 20,000 20,000 Goodwill 38,992 38,992 Deferred taxes 76,718 76,718 Other assets 39,951 366,469 ———— ———— TOTAL ASSETS $ 25,939,984 $ 29,694,148 ============ ============ The accompanying notes, which are not included in this press release, are an integral part of these condensed consolidated financial statements. GLOBAL AIRCRAFT SOLUTIONS, INC. Condensed Consolidated Balance Sheets June 30, 2008 and December 31, 2007 (unaudited) LIABILITIES AND STOCKHOLDERS’ EQUITY June 30, December 31, 2008 2007 ———— ———— CURRENT LIABILITIES Notes payable $ 9,135,091 $ 10,268,091 Accounts payable – trade 2,323,772 3,051,776 Customer deposits 3,294,674 419,076 Billings in excess of costs and estimated earnings on contracts in progress, net — 822,782 Accrued liabilities 647,727 484,109 Income taxes payable 596,874 673,453 Current maturities – capital lease obligations 65,080 62,038 ———— ———— TOTAL CURRENT LIABILITIES 16,063,218 15,781,325 LONG-TERM LIABILITIES Capitalized lease obligations 138,044 170,990 ———— ———— TOTAL LONG-TERM LIABILITIES 138,044 170,990 ———— ———— TOTAL LIABILITIES 16,201,262 15,952,315 ============ ============ Commitments and contingencies STOCKHOLDERS’ EQUITY Preferred stock, $.001 par value, 5,000,000 shares authorized no shares issued or outstanding 2008 and 2007 — — Common stock, $.001 par value, 100,000,000 shares authorized and 41,081,301 and 40,181,301 shares issued and outstanding 2008 and 2007 41,081 40,181 Additional paid-in capital 14,107,524 13,755,973 Contributed capital 620,289 620,289 Subscriptions receivable 154,035 Accumulated deficit (4,876,137) (674,610) ———— ———— TOTAL STOCKHOLDERS’ EQUITY 9,738,722 13,741,833 ============ ============ TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 25,939,984 $ 29,694,148 ============ ============ The accompanying notes, which are not included in this press release, are an integral part of these condensed consolidated financial statements. GLOBAL AIRCRAFT SOLUTIONS, INC. Condensed Consolidated Statements of Operations For the Three and Six Months ended June 30, 2008 and June 30, 2007 (unaudited) Three Months Three Months Six Months Six Months ended June Ended June ended June ended June 30, 30, 30, 30, 2008 2007 2008 2007 Sales Sales, maintenance, repair and overhaul $ 5,118,194 $ 2,742,659 $ 8,689,349 $ 8,276,990 Sales, aircraft trading 1,556,167 7,850,000 3,549,917 7,900,000 Sales, parts 744,552 594,800 1,851,014 1,225,468 Sales, other 64,050 (13,569) 271,668 432 ———— ———— ———— ———— Total sales 7,482,963 11,173,890 14,361,948 17,402,890 Cost of sales Cost of sales, maintenance, repair and overhaul (3,959,445) (2,207,074) (6,266,010) (5,958,354) Cost of sales, aircraft trading (2,185,599) (6,846,000) (3,405,730) (6,846,234) Cost of sales, parts (383,225) (193,084) (952,870) (567,093) Cost of sales, other (57,630) (198,398) (435) Inventory write-down (3,037,350) (61,741) (3,075,288) (61,741) ———— ———— Total cost of sales (9,623,249) (9,307,899) (13,898,296) (13,433,857) ———— ———— ———— ———— Gross profit (2,140,286) 1,865,991 463,652 3,969,033 Selling, general and administrative expense (4,225,862) (1,528,706) (6,356,833) (3,128,191) ———— ———— ———— ———— Income from operations (6,366,148) 337,285 (5,893,181) 840,842 Other income (expense): Interest income 3,074 177,848 7,566 184,291 Interest expense (380,360) (378,889) (776,174) (510,489) Miscellaneous income 46,304 52,746 48,478 74,745 Legal settlement 200,000 – - – 200,000 (100,000) Loss on asset disposal (157) – - – (1,234) – - – Equity in income of unconsolidated affiliate 214,800 Gain on sale of interest in unconsolidated affiliate – - – 27,210 – - – 27,210 ———— ———— ———— ———— Net income, before taxes (6,497,287) 216,200 (6,414,545) 731,399 Provision for income taxes 2,241,978 (75,670) 2,213,018 (256,004) ———— ———— ———— ———— Net income $ (4,255,309) $ 140,530 $ (4,201,527) $ 475,395 ============ ============ ============ ============ Net income per share: Basic $ (0.11) $ 0.00 $ (0.10) $ 0.01 ============ ============ ============ ============ Diluted $ (0.11) $ 0.00 $ (0.10) $ 0.01 ============ ============ ============ ============ Weighted average number of common shares outstanding: Basic 40,369,213 34,779,327 40,275,527 39,719,669 ============ ============ ============ ============ Diluted 40,369,213 35,894,478 40,275,527 40,783,188 ============ ============ ============ ============ The accompanying notes, which are not included in this press release, are an integral part of these condensed consolidated financial statements.
Contact: Global Aircraft Solutions, Inc. Gordon Hamilton, (520) 547-8631 Email Contact Or Alliance Advisors, LLC Alan Sheinwald, 914-669-0222 Email Contact
SOURCE: Global Aircraft Solutions, Inc.