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Magellan Aerospace Corporation Announces Financial Results

Magellan Aerospace Corporation ("Magellan" or the "Corporation") released its financial results for the first quarter of 2020. All amounts are expressed in Canadian dollars unless otherwise indicated. The results are summarized as follows:

 

 

Three month period ended
March 31

Expressed in thousands of Canadian dollars, except per share amounts

 

2020

 

2019

 

Change

Revenues

 

238,813

 

269,884

 

(11.5%)

Gross Profit

 

36,772

 

42,821

 

(14.1%)

Net Income

 

20,074

 

20,409

 

(1.6%)

Net Income per Share

 

0.34

 

0.35

 

(2.9%)

EBITDA

 

41,543

 

40,493

 

2.6%

EBITDA per Share

 

0.71

 

0.70

 

1.4%

This news release contains certain forward-looking statements that reflect the current views and/or expectations of the Corporation with respect to its performance, business and future events. Such statements are subject to a number of risks, uncertainties and assumptions, which may cause actual results to be materially different from those expressed or implied. The Corporation assumes no future obligation to update these forward-looking statements except as required by law.

This news release presents certain non-IFRS financial measures to assist readers in understanding the Corporation's performance. Non-IFRS financial measures are measures that either exclude or include amounts that are not excluded or included in the most directly comparable measures calculated and presented in accordance with Generally Accepted Accounting Principles ("GAAP"). Throughout this news release, reference is made to EBITDA (defined as net income before interest, income taxes, depreciation and amortization), which the Corporation considers to be an indicative measure of operating performance and a metric to evaluate profitability. EBITDA is not a generally accepted earnings measure and should not be considered as an alternative to net income (loss) or cash flows as determined in accordance with IFRS. As there is no standardized method of calculating this measure, the Corporation’s EBITDA may not be directly comparable with similarly titled measures used by other companies.

1. Overview
A summary of Magellan’s business and significant updates

Magellan is a diversified supplier of components to the aerospace industry. Through its wholly owned subsidiaries, Magellan designs, engineers, and manufactures aeroengine and aerostructure components for aerospace markets, advanced products for defence and space markets, and complementary specialty products. The Corporation also supports the aftermarket through supply of spare parts as well as performing repair and overhaul services.

Magellan operates substantially all of its activities in one reportable segment, Aerospace, which is viewed as one segment by the chief operating decision-makers for the purpose of resource allocations, assessing performance and strategic planning. The Aerospace segment includes the design, development, manufacture, repair and overhaul, and sale of systems and components for defence and civil aviation.

Business Update
Magellan announced on April 16, 2020 that it would provide Black Brant sounding rocket motors to The German Aerospace Center (Deutsches Zentrum für Luft- und Raumfahrt e.V. or "DLR") that is estimated to generate revenue of up to $9.4 million over the term of the agreement. Under the terms of this agreement, the DLR will purchase Black Brant rocket motors over a three-year period and may exercise options to purchase certain additional hardware items from Magellan’s facility in Winnipeg, Manitoba.

For additional information, please refer to the "Management’s Discussion and Analysis" section of the Corporation’s 2019 Annual Report available on www.sedar.com.

2. Results of Operations
A discussion of Magellan’s operating results for the first quarter ended March 31, 2020

The Corporation reported revenue in the first quarter of 2020 of $238.9 million, a $31.0 million decrease from the first quarter of 2019 revenue of $269.9 million. Gross profit and net income for the first quarter of 2020 were $36.8 million and $20.1 million, respectively, in comparison to gross profit of $42.8 million and net income of $20.4 million for the first quarter of 2019.

Consolidated Revenue

 

Three month period

 

ended March 31

Expressed in thousands of dollars

 

2020

 

2019

 

Change

Canada

 

94,243

 

90,701

 

3.9%

United States

 

64,718

 

84,819

 

(23.7%)

Europe

 

79,852

 

94,364

 

(15.4%)

Total revenues

 

238,813

 

269,884

 

(11.5%)

Revenues in Canada increased 3.9% in the first quarter of 2020 compared to the corresponding period in 2019, primarily due to increased volumes particularly in the casting business.

Revenues in the United States decreased by 23.7% in the first quarter of 2020 when compared to the first quarter of 2019 largely due to volume decreases for single aisle aircraft, specifically the Boeing 737 MAX, offset in part by favourable foreign exchange impact due to the strengthening of the United States dollar against the Canadian dollar.

European revenues in the first quarter of 2020 decreased 15.4% when compared to the corresponding period in 2019 primarily driven by decreased production rates for single aisle and wide-body aircraft and lower repair and overhaul revenues. On a constant currency basis, revenues in the first quarter of 2020 in Europe decreased 16.4% compared to the same period in 2019.

Gross Profit

 

Three month period

 

ended March 31

Expressed in thousands of dollars

 

2020

 

2019

 

Change

Gross profit

 

36,772

 

42,821

 

(14.1%)

Percentage of revenues

 

15.4%

 

15.9%

 

 

Gross profit of $36.8 million for the first quarter of 2020 was $6.0 million lower than the $42.8 million gross profit for the first quarter of 2019, and gross profit as a percentage of revenues was 15.4% for the first quarter of 2020 decreased from 15.9% recorded in the same period in 2019. The gross profit in the current quarter was primarily impacted by volume decreases and unfavourable product mix.

Administrative and General Expenses

 

Three month period

 

ended March 31

Expressed in thousands of dollars

 

2020

 

2019

 

Change

Administrative and general expenses

 

15,676

 

15,300

 

2.5%

Percentage of revenues

 

6.6%

 

5.7%

 

 

Administrative and general expenses as a percentage of revenues of 6.6% for the first quarter of 2020 were higher than the same period of 2019. Administrative and general expenses increased $0.4 million or 2.5% to $15.7 million in the first quarter of 2020 compared to $15.3 million in the corresponding quarter of 2019 mainly due to higher maintenance and amortization costs related to the new ERP system and the additional costs related to new businesses acquired in 2019.

Other

 

Three month period

 

ended March 31

Expressed in thousands of dollars

 

2020

 

 

2019

 

Foreign exchange (gain) loss

 

(5,785

)

 

453

 

Loss (gain) on disposal of property, plant and equipment

 

19

 

 

(85

)

Other

 

(172

)

 

190

 

Total other (income) expenses

 

(5,938

)

 

558

 

Other income for the first quarter of 2020 included a $5.8 million foreign exchange gain compared to a $0.5 million loss in the first quarter of the prior year. The movements in balances denominated in the foreign currencies and the fluctuations of the foreign exchange rates impact the net foreign exchange gain or loss recorded in a quarter.

Interest Expense

 

Three month period

 

ended March 31

Expressed in thousands of dollars

 

2020

 

2019

 

Interest on bank indebtedness and long-term debt

 

66

 

(40

)

Accretion charge for borrowings, lease liabilities and long-term debt

 

814

 

545

 

Discount on sale of accounts receivable

 

320

 

563

 

Total interest expense

 

1,200

 

1,068

 

Total interest expense of $1.2 million in the first quarter of 2020 was slightly higher than the first quarter of 2019 mainly due to higher accretion charge on lease liabilities offset in part by the lower discount on sale of accounts receivables.

Provision for Income Taxes

 

Three month period

 

ended March 31

Expressed in thousands of dollars

 

2020

 

2019

Expense of current income taxes

 

2,047

 

2,805

Expense of deferred income taxes

 

3,713

 

2,681

Total expense of income taxes

 

5,760

 

5,486

Effective tax rate

 

22.3%

 

21.2%

Income tax expense for the three months ended March 31, 2020 was $5.8 million, representing an effective income tax rate of 22.3% compared to 21.2% for the same period of 2019. The change in effective tax rate and current and deferred income tax expenses year over year was primarily due to the change in mix of income across the different jurisdictions in which the Corporation operates.

3. Selected Quarterly Financial Information
A summary view of Magellan’s quarterly financial performance

 

 

2020

 

 

 

 

 

 

 

2019

 

 

 

 

 

2018

Expressed in millions of dollars,

except per share amounts

 

Mar 31

 

Dec 31

 

Sep 30

 

Jun 30

 

Mar 31

 

Dec 31

 

Sep 30

 

Jun 30

Revenues

 

238.8

 

246.7

 

235.6

 

264.1

 

269.9

 

254.4

 

226.5

 

241.2

Income before taxes

 

25.8

 

11.7

 

19.6

 

27.8

 

25.9

 

38.5

 

23.4

 

29.8

Net Income

 

20.1

 

9.4

 

15.8

 

21.7

 

20.4

 

29.5

 

18.6

 

23.5

Net Income per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

0.34

 

0.16

 

0.27

 

0.37

 

0.35

 

0.51

 

0.32

 

0.40

EBITDA1

 

41.5

 

27.9

 

34.1

 

42.7

 

40.5

 

50.7

 

35.5

 

41.8

1 EBITDA is not an IFRS financial measure. Please see the "Reconciliation of Net Income to EBITDA" section for more information.

Revenues and net income reported in the quarterly financial information were impacted by the movements in the Canadian dollar relative to the United States dollar and British pound, when the Corporation translates its foreign operations to Canadian dollars. Further, the movements in the United States dollar relative to the British pound impact the Corporation’s United States dollar exposures in its European operations. During the periods reported, the average quarterly exchange rate of the United States dollar relative to the Canadian dollar fluctuated between a high of 1.3442 in the first quarter of 2020 and a low of 1.2912 in the second quarter of 2018. The average quarterly exchange rate of the British pound relative to the Canadian dollar moved from a high of 1.7567 in the second quarter of 2018 to a low of 1.6280 in the third quarter of 2019. The average quarterly exchange rate of the British pound relative to the United States dollar reached its high of 1.3605 in the second quarter of 2018 and hit a low of 1.2327 in the third quarter of 2019.

Revenue for the first quarter of 2020 of $238.8 million was lower than that in the first quarter of 2019. The average quarterly exchange rate of the United States dollar relative to the Canadian dollar in the first quarter of 2020 was 1.3442 versus 1.3292 in the same period of 2019. The average quarterly exchange rate of the British pound relative to the Canadian dollar moved from 1.7315 in the first quarter of 2019 to 1.7185 during the current quarter. The average quarterly exchange rate of the British pound relative to the United States dollar decreased from 1.3027 in the first quarter of 2019 to 1.2805 in the current quarter. Had the foreign exchange rates remained at levels experienced in the first quarter of 2019, reported revenues in the first quarter of 2020 would have been lower by $1.9 million.

As discussed above, net income reported in the quarterly information was also impacted by the foreign exchange movements. In the fourth quarter of 2018, the Corporation recorded a net gain of $9.7 million related to prior acquisitions. The fourth quarter of 2019 was impacted by volume decrease in Europe, production inefficiencies in certain of our operating divisions and an accrual recorded in relation to the wind-down of the A380 program.

4. Reconciliation of Net Income to EBITDA
A description and reconciliation of certain non-IFRS measures used by management

In addition to the primary measures of earnings and earnings per share (basic and diluted) in accordance with IFRS, the Corporation includes EBITDA (earnings before interest expense, income taxes and depreciation and amortization) in this quarterly statement. The Corporation has provided this measure because it believes this information is used by certain investors to assess financial performance and that EBITDA is a useful supplemental measure as it provides an indication of the results generated by the Corporation’s principal business activities prior to consideration of how these activities are financed and how the results are taxed in the various jurisdictions. Each of the components of this measure are calculated in accordance with IFRS, but EBITDA is not a recognized measure under IFRS, and the Corporation’s method of calculation may not be comparable with that of other companies. Accordingly, EBITDA should not be used as an alternative to net income as determined in accordance with IFRS or as an alternative to cash provided by or used in operations.

 

Three month period

 

ended March 31

Expressed in thousands of dollars

 

2020

 

2019

Net income

 

20,074

 

20,409

Interest

 

1,200

 

1,068

Taxes

 

5,760

 

5,486

Depreciation and amortization

 

14,509

 

13,530

EBITDA

 

41,543

 

40,493

EBITDA in the first quarter of 2020 increased $1.1 million or 2.6% to $41.5 million in comparison to $40.5 million in the same quarter of 2019 mainly as a result of higher depreciation and amortization expense, taxes and interest, offset by slightly lower net income.

5. Liquidity and Capital Resources
A discussion of Magellan’s cash flow, liquidity, credit facilities and other disclosures

The Corporation’s liquidity needs can be met through a variety of sources including cash on hand, cash provided by operations, short-term borrowings from its credit facility and accounts receivable securitization program, and long-term debt and equity capacity. Principal uses of cash are for operational requirements, capital expenditures and dividend payments. Based on current funds available and expected cash flow from operating activities, management believes that the Corporation has sufficient funds available to meet its liquidity requirements at any point in time. However, if cash from operating activities is lower than expected or capital projects exceed current estimates, or if the Corporation incurs major unanticipated expenses, it may be required to seek additional capital in the form of debt or equity or a combination of both.

Cash Flow from Operations

 

Three month period

 

ended March 31

Expressed in thousands of dollars

 

2020

 

 

2019

 

Increase in trade receivables

 

(29,933

)

 

(22,706

)

Increase in contract assets

 

(6,713

)

 

(11,736

)

Increase in inventories

 

(13,549

)

 

(2,062

)

Increase in prepaid expenses and other

 

(4,421

)

 

(2,826

)

(Decrease) increase in accounts payable, accrued liabilities and provisions

 

(2,834

)

 

12,374

 

Changes to non-cash working capital balances

 

(57,450

)

 

(26,956

)

Cash (used in) provided by operating activities

 

(18,992

)

 

8,056

 

For the three months ended March 31, 2020, the Corporation used $19.0 million from operating activities, compared to $8.1 million generated in the first quarter of 2019. The quarter over quarter change in non-cash working capital balances was attributable to unfavourable changes in accounts payable, accrued liabilities and provisions due to timing of purchases and payments, increases in trade receivables which resulted from timing of production and billing, and higher inventories related to the timing of material purchases and schedule changes. This was offset partially by favourable changes in contract assets from the timing of production and billing related to products transferred over time.

Investing Activities

 

Three month period

 

ended March 31

Expressed in thousands of dollars

 

2020

 

 

2019

 

Business combination, net of cash acquired

 

-

 

 

(2,661

)

Purchase of property, plant and equipment

 

(4,210

)

 

(9,507

)

Proceeds of disposal of property plant and equipment

 

-

 

 

235

 

Increase in intangible and other assets

 

(1,728

)

 

(6,066

)

Change in restricted cash

 

(1,246

)

 

-

 

Cash used in investing activities

 

(7,184

)

 

(17,999

)

Investing activities used $7.2 million cash for the first quarter of 2020 compared to $18.0 million cash used in the same quarter of the prior year, a reduction of $10.8 million primarily due to lower level of investment in property, plant and equipment and intangibles.

Financing Activities

 

Three month period

 

ended March 31

Expressed in thousands of dollars

 

2020

 

 

2019

 

Decrease in debt due within one year

 

(2,997

)

 

(6,884

)

Decrease in long-term debt

 

(592

)

 

(647

)

Lease liability payments

 

(1,758

)

 

(901

)

Decrease in long-term liabilities and provisions

 

(255

)

 

(35

)

Increase in borrowings, net

 

29

 

 

-

 

Common share dividend

 

(6,112

)

 

(5,821

)

Cash used in financing activities

 

(11,685

)

 

(14,288

)

The Corporation has a Bank Credit Facility Agreement with a syndicate of lenders, of which there were no drawings under as of March 31, 2020. The Bank Credit Facility Agreement provides for a multi-currency global operating credit facility to be available to Magellan in a maximum aggregate amount of $75 million. The Bank Credit Facility Agreement also includes a $75 million uncommitted accordion provision, which provides Magellan with the option to increase the size of the operating credit facility to $150 million. Under the terms of the Bank Credit Facility Agreement, the operating credit facility expires on September 13, 2021. Any extensions of the operating credit facility are subject to mutual consent of the lenders and the Corporation.

The Corporation used $11.7 million in the first quarter of 2020 mainly for the payment of common share dividends and lease liabilities, and the repayment of debt due within one year and long-term debt.

As at March 31, 2020, the Corporation had contractual commitments to purchase $6.8 million of capital assets.

Dividends
During the first quarter of 2020, the Corporation declared and paid quarterly cash dividends of $0.105 per common shares representing an aggregating dividend payment of $6.1 million.

Subsequent to March 31, 2020, the Corporation announced that its Board of Directors had declared a quarterly cash dividend on its common shares of $0.105 per common share. The dividend will be payable on June 30, 2020 to shareholders of record at the close of business on June 16, 2020.

Outstanding Share Information
The authorized capital of the Corporation consists of an unlimited number of preference shares, issuable in series, and an unlimited number of common shares. As at May 5, 2020, 58,209,001 common shares were outstanding and no preference shares were outstanding.

6. Financial Instruments
A summary of Magellan’s financial instruments

Derivative Contracts
The Corporation operates internationally, which gives rise to a risk that its income, cash flows and shareholders’ equity may be adversely impacted by fluctuations in foreign exchange rates. Currency risk arises because the amount of the local currency receivable or payable for transactions denominated in foreign currencies may vary due to changes in exchange rates and because the non-Canadian dollar denominated financial statements of the Corporation’s subsidiaries may vary on consolidation into the reporting currency of Canadian dollars. The Corporation from time to time may use derivative financial instruments to help manage foreign exchange risk with the objective of reducing transaction exposures and the resulting volatility of the Corporation’s earnings. The Corporation does not trade in derivatives for speculative purposes. Under these contracts the Corporation is obligated to purchase specified amounts at predetermined dates and exchange rates. These contracts are matched with anticipated cash flows in United States dollars. The counterparties to the foreign currency contracts are all major financial institutions with high credit ratings. As at March 31, 2020, there were no foreign exchange contracts outstanding.

Off Balance Sheet Arrangements
The Corporation does not have any off-balance sheet arrangements that have or reasonably are likely to have a material effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. As a result, the Corporation is not exposed materially to any financing, liquidity, market or credit risk that could arise if it had engaged in these arrangements.

7. Related Party Transactions
A summary of Magellan’s transactions with related parties

For the three month period ended March 31, 2020, the Corporation had no material transactions with related parties as defined in IAS 24, Related Party Disclosures.

8. Risk Factors
A summary of risks and uncertainties facing Magellan

The Corporation manages a number of risks in each of its businesses in order to achieve an acceptable level of risk without hindering the ability to maximize returns. Management has procedures to help identify and manage significant operational and financial risks.

In March 2020 the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, which include travel bans, self-imposed quarantine periods and social distancing, have caused material disruption to businesses globally resulting in an economic slowdown.

As an emerging risk, the duration and full financial effect of the COVID-19 pandemic is unknown at this time, as is the efficacy of the government and central bank interventions, the Corporation’s business continuity plan and other mitigating measures. Any estimate of the length and severity of these developments is therefore subject to significant uncertainty, and accordingly estimates of the extent to which the COVID-19 pandemic may materially and adversely affect the Corporation’s operations, financial results and condition in future periods are also subject to significant uncertainty. Therefore, uncertainty about judgments, estimates and assumptions made by management during the preparation of the Corporation’s consolidated financial statements related to potential impacts of the COVID-19 outbreak on revenue, expenses, assets, liabilities, and note disclosures could result in a material adjustment to the carrying value of the asset or liability affected.

The Corporation’s customers and supply chain in the commercial aerospace sector were negatively affected in the first quarter. The Corporation will continue to closely monitor the COVID-19 situation and should the duration, spread or intensity of the pandemic further develop in 2020, the supply chain and customer demand will likely be further affected. These factors may further impact the Corporation’s operating plan, its liquidity and cash flows.

For more information in relation to the risks inherent in Magellan’s business, reference is made to the information under "Risk Factors" in the Corporation’s Management’s Discussion and Analysis for the year ended December 31, 2019 and to the information under "Risks Inherent in Magellan’s Business" in the Corporation’s Annual Information Form for the year ended December 31, 2019, which have been filed with SEDAR at www.sedar.com.

9. Outlook
The outlook for Magellan’s business in 2020

Air travel has not experienced such a significant decline in its passenger volumes as it has witnessed year to date in 2020 since 9/11. It is reported that 66% of the global commercial aircraft fleet, approximately 19,350 aircraft, have been grounded by airlines while the world attempts to slow the spread of the COVID-19 outbreak. Various original equipment manufacturers (OEM’s) and supply chain companies temporarily suspended manufacturing operations due to the pandemic, some of whom have since restarted or are about to restart manufacturing with reduced workforces.

The greatest impact of COVID-19 on the aerospace market is expected to be on commercial aircraft programs. Airlines have already begun deferring new aircraft orders and announcing fleet reductions through early retirements of older aircraft. There have also been some new order cancelations. Responding to the rapidly changing market conditions, certain OEM’s have issued lower interim aircraft and engine build rates with additional guidance from these and other OEM’s anticipated in the second quarter of 2020.

Although defence markets are not expected to be significantly impacted due to the pandemic, there are growing concerns over potential supply chain and logistics disruptions. Notwithstanding these concerns, programs that were previously constrained by supply chain capacity issues may be able to utilize excess capacity made available by commercial program declines.

There remains to be limited market visibility during this very dynamic period. Any estimate of the length and severity of market impact is subject to significant uncertainty. The Corporation will continue to closely monitor the COVID-19 situation and reassess its operating plan as program updates become available.

Due to the ongoing COVID-19 pandemic and the impact it is having on the commercial aerospace market and associated lower aircraft demand and production rates, Magellan is reviewing all its operations and implementing cost reduction initiatives and production efficiencies, to ensure that our plants remain competitive.

Magellan’s businesses currently continue manufacturing operations as permitted by local and state government authorities. The Corporation is in contact with the public health authorities, governments and other agencies where we have operations, and with authorities around the world, to ensure Magellan is aligned with current guidance regarding COVID-19. The Corporation remains committed to preventing the spread of the virus, providing a safe environment for our workforce, and in the process, protecting the continuity of our business.

Additional Information
Additional information relating to Magellan Aerospace Corporation, including the Corporation’s annual information form, can be found on the SEDAR web site at www.sedar.com.

Forward Looking Statements
This news release contains certain forward-looking statements that reflect the current views and/or expectations of the Corporation with respect to its performance, business and future events. Such statements are subject to a number of uncertainties and assumptions, which may cause actual results to be materially different from those expressed or implied. These forward looking statements can be identified by the words such as "anticipate", "continue", "estimate", "forecast", "expect", "may", "project", "could", "plan", "intend", "should", "believe" and similar words suggesting future events or future performance. In particular there are forward looking statements contained under the heading "Overview" which outlines certain expectations for future operations. These statements assume the continuation of the current regulatory and legal environment; the continuation of trends for passenger airliner and defence production and are subject to the risks contained herein and outlined in our annual information form. The Corporation assumes no future obligation to update these forward-looking statements except as required by law.

MAGELLAN AEROSPACE CORPORATION

 

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

 

 

 

(unaudited)

 

Three month period
ended March 31

 

(expressed in thousands of Canadian dollars, except per share amounts)

 

2020

 

 

2019

 

 

 

 

 

 

 

Revenues

 

238,813

 

 

269,884

 

Cost of revenues

 

202,041

 

 

227,063

 

Gross profit

 

36,772

 

 

42,821

 

 

 

 

 

 

 

Administrative and general expenses

 

15,676

 

 

15,300

 

Other

 

(5,938

)

 

558

 

Income before interest and income taxes

 

27,034

 

 

26,963

 

 

 

 

 

 

 

Interest

 

1,200

 

 

1,068

 

Income before income taxes

 

25,834

 

 

25,895

 

 

 

 

 

 

 

Income taxes

 

 

 

 

 

Current

 

2,047

 

 

2,805

 

Deferred

 

3,713

 

 

2,681

 

 

 

5,760

 

 

5,486

 

Net income

 

20,074

 

 

20,409

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

Other comprehensive income (loss) that may be reclassified to profit and loss in subsequent periods:

 

 

 

 

 

Foreign currency translation

 

34,178

 

 

(6,710

)

Items not to be reclassified to profit and loss in subsequent periods:

 

 

 

 

 

Actuarial (loss) income on defined benefit pension plans, net of taxes

 

(4,759

)

 

239

 

Total comprehensive income, net of taxes

 

49,493

 

 

13,938

 

Net income per share

 

 

 

 

 

Basic and diluted

0.34

 

 

0.35

 

MAGELLAN AEROSPACE CORPORATION

 

 

 

 

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

 

 

 

 

 

(unaudited)

 

March 31

 

December 31

(expressed in thousands of Canadian dollars)

 

2020

 

2019

 

 

 

 

 

Current assets

 

 

 

 

Cash

 

32,430

 

69,637

Restricted cash

 

1,315

 

Trade and other receivables

 

214,148

 

177,801

Contract assets

 

87,936

 

77,967

Inventories

 

217,606

 

196,823

Prepaid expenses and other

 

26,489

 

21,127

 

 

579,924

 

543,355

Non-current assets

 

 

 

 

Property, plant and equipment

 

451,866

 

439,102

Right-of-use assets

 

45,688

 

44,692

Investment properties

 

2,230

 

2,180

Intangible assets

 

67,191

 

65,373

Goodwill

 

35,839

 

34,137

Other assets

 

9,409

 

8,770

Deferred tax assets

 

1,929

 

3,556

 

 

614,152

 

597,810

Total assets

 

1,194,076

 

1,141,165

 

 

 

 

 

Current liabilities

 

 

 

 

Accounts payable and accrued liabilities and provisions

 

153,991

 

151,907

Debt due within one year

 

46,755

 

48,144

 

 

200,746

 

200,051

Non-current liabilities

 

 

 

 

Long-term debt

 

6,335

 

6,876

Lease liabilities

 

40,459

 

39,794

Borrowings subject to specific conditions

 

24,304

 

24,098

Other long-term liabilities and provisions

 

26,590

 

20,289

Deferred tax liabilities

 

36,385

 

34,181

 

 

134,073

 

125,238

 

 

 

 

 

Equity

 

 

 

 

Share capital

 

254,440

 

254,440

Contributed surplus

 

2,044

 

2,044

Other paid in capital

 

13,565

 

13,565

Retained earnings

 

526,114

 

516,911

Accumulated other comprehensive income

 

59,717

 

25,539

Equity attributable to equity holders of the Corporation

 

855,880

 

812,499

Non-controlling interest

 

3,377

 

3,377

Total equity

 

859,257

 

815,876

Total liabilities and equity

 

1,194,076

 

1,141,165

MAGELLAN AEROSPACE CORPORATION

       

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

    
   

(unaudited)

 

Three month period
ended March 31

 

(expressed in thousands of Canadian dollars)

 

2020

 

 

2019

 

 

 

 

   

 

 

Cash flow from operating activities

 

 

   

 

 

Net income

 

20,074

 

 

20,409

 

Amortization/depreciation of intangible assets, right-of-use assets and property, plant and equipment

 

14,509

 

 

13,530

 

Loss (Gain) on disposal of property, plant and equipment

 

19

 

 

(85

)

Gain on disposal of joint venture investment

 

   

(881

)

Increase (decrease) in defined benefit plans

 

116

 

 

(154

)

Accretion of financial liabilities

 

814

 

 

545

 

Deferred taxes

 

3,062

 

 

1,818

 

Income on investments in joint ventures

 

(136

)

 

(170

)

Changes to non-cash working capital

 

(57,450

)

 

(26,956

)

Net cash (used in) provided by operating activities

 

(18,992

)

 

8,056

 

 

 

 

   

 

 

Cash flow from investing activities

 

 

   

 

 

Business combination, net of cash acquired

 

   

(2,661

)

Purchase of property, plant and equipment

 

(4,210

)

 

(9,507

)

Proceeds from disposal of property, plant and equipment

 

   

235

 

Increase in intangible and other assets

 

(1,728

)

 

(6,066

)

Change in restricted cash

 

(1,246

)

 

 

Net cash used in investing activities

 

(7,184

)

 

(17,999

)

 

 

 

   

 

 

Cash flow from financing activities

 

 

   

 

 

Decrease in debt due within one year

 

(2,997

)

 

(6,884

)

Decrease in long-term debt

 

(592

)

 

(647

)

Lease liability payments

 

(1,758

)

 

(901

)

Decrease in long-term liabilities and provisions

 

(255

)

 

(35

)

Increase in borrowings, net

 

29

 

 

 

Common share dividend

 

(6,112

)

 

(5,821

)

Net cash used in financing activities

 

(11,685

)

 

(14,288

)

 

 

 

   

 

 

Decrease in cash during the period

 

(37,861

)

 

(24,231

)

Cash at beginning of the period

 

69,637

 

 

63,316

 

Effect of exchange rate differences

 

654

 

 

(622

)

Cash at end of the period

 

32,430

 

 

38,463

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20200505006127/en/

Contacts

Phillip C. Underwood
President & Chief Executive Officer
(905) 677-1889
phil.underwood@magellan.aero

Elena M. Milantoni
Chief Financial Officer
(905) 677-1889
elena.milantoni@magellan.aero