Backlog Continues To Grow As Well. Boisture Says 2011 Is
"Encouraging"
Hawker Beechcraft Acquisition Company delivered 66 aircraft in
the first quarter of 2011 versus 50 in the first quarter of 2010.
In addition, the Company ended the first quarter of 2011 with a
$122 million higher backlog than 2010 year-end backlog. “We
are coming off of a solid 2010 and our momentum into 2011 is
encouraging,” said Bill Boisture, HBC Chairman and CEO.
“While the first quarter is historically a quieter one for
the industry, we believe the uptick in our aircraft shipments and
increased backlog is evidence of the ongoing demand for our
products.”
Bill Boisture
The Company reported net sales for the three months ended March
31, 2011, of $558.4 million, a modest decrease of $9.8 million
compared to the same period of 2010. Additional information is
provided in the Business Segment Summary section below. During the
three months ended March 31, 2011, the Company recorded an
operating loss of $37.9 million, an increased loss of $12.8 million
compared to $25.1 million during the same period of 2010.
Additional information is provided in the Business Segment Summary
section below. On March 31, 2011, the Company’s cash and cash
equivalents balance was $310.7 million as compared to $422.8
million on Dec. 31, 2010. The decrease was partially due to
negative operating cash flow from changes in advance payment
balances, cash payments made under performance incentive plans, and
increases in inventory. In addition, during the first quarter of
2011, the Company made a debt principal prepayment of approximately
$45 million as a result of excess cash flow generated in 2010 as
required by the Company’s credit agreement. The
Company’s backlog as of March 31, 2011, was $122 million
higher than at year-end 2010. Backlog was $1.5 billion on March 31,
2011, as compared to $1.4 billion on Dec. 31, 2010, with new orders
of $714 million exceeding cancellations of $33 million.
Approximately 45 percent of the backlog on March 31, 2011,
represented orders that are not expected to be delivered in the
next 12 months.
Aircraft deliveries in the Business and General Aviation
(B&GA) segment were up versus the first quarter of 2010 with 45
deliveries in the first quarter 2011 versus 34 deliveries in the
same period of 2010. The B&GA segment reported sales of $286.2
million in the first quarter 2011, which was a decrease of $48.9
million versus the first quarter 2010 sales of $335.1 million. The
revenue decrease was attributed to the delivery of a higher
percentage of lower priced aircraft in the first quarter 2011
versus the same period of 2010. In addition, revenues from the sale
of used aircraft received as trade-ins were lower by $20.7 million,
which was due to the Company’s continued low inventory of
pre-owned aircraft.
“We continue to experience significant losses in our
B&GA segment,” Boisture said. “This was driven in
large part by loss making aircraft charges, higher sales and
marketing expenses related to our international expansion, expenses
associated with our cost reduction initiatives, and continuing
weakness in the general aviation market. Due to strong sales in the
fourth quarter of 2010, we started the year with fewer jets in
inventory, which in turn led to four fewer jet deliveries compared
to the first quarter of last year. However, we delivered 15 more
Beechcraft aircraft versus last year – including several
special mission aircraft – which speaks to the market
recognizing the inherent attributes of Beechcraft products’
efficiency and utility, especially in a down market.”
Deliveries in the Trainer/Attack Aircraft segment were up versus
the first quarter 2010 with 21 deliveries in the first quarter 2011
versus 16 deliveries in the same period of 2010. The Trainer/Attack
Aircraft segment reported sales of $176.6 million in the first
quarter 2011, which was an increase of $34.2 million versus the
first quarter 2010 sales of $142.4 million. The increase in revenue
was primarily due to increased volume on international trainer
contracts. "Our Trainer/Attack segment remains solid for the
Company,” Boisture said. “We are working hard to keep
this strong position with our Government Business team aggressively
pursuing opportunities around the globe. We had a good showing of
our T-6C in Australia earlier this year, where we’ve teamed
with Raytheon Australia and BAE Systems Australia to meet
requirements for Australia’s pilot training system. “We
look for this segment to be further diversified in the near future
with the addition of our AT-6 Light Attack aircraft, which
continues to exhibit superior performance in a variety of operating
and weapons assessments. The U.S. Air Force (USAF) is expected to
competitively award a Light Air Support contract within the next
several months. We continue to believe the AT-6 will integrate
nicely into existing fielded operational platforms and be well
suited for the missions of the 21st Century USAF.”
In an effort to be more in line with global growth markets, the
Company continues to right-size its business footprint and broaden
its supply base, including the recent opening of its newest
facility in Chihuahua, Mexico. In the area of product development,
testing of the new Hawker 200 is meeting or exceeding all of its
performance targets. Further, the Company received $10 million in
January, as a result of its agreement with the State of Kansas, to
develop new products and enhance existing aircraft. Finally,
approximately 250 employees are benefitting from the
Company’s tuition reimbursement program that is also being
funded by the State as a result of this agreement.
“There are many positive things going on at HBC beyond our
increased shipments and backlog this quarter,” Boisture said.
“We continue to transform our business and are making great
strides in becoming a smaller, more agile Company. Our people are
benefiting from new education and training programs and we are
aggressively hiring in key areas of the business like Engineering
and Marketing. While 2011 will continue to present challenges as we
work our way through what remains to be a soft market, we are
confident that we are making sound business decisions and have a
unique, diversified product mix.”