Montreal-based aircraft MRO firm aims to reduce exposure to value of Canadian dollar
Montreal, QC -- ExelTech Aerospace Inc., an aircraft maintenance, repair and overhaul (MRO) provider with operation...
Montreal, QC — ExelTech Aerospace Inc., an aircraft maintenance, repair and overhaul (MRO) provider with operations in Montreal and Quebec City, increased sales by 31% to a record $10.1 million in its third quarter ended December 31, 2005, compared with sales of $7.7 million for the comparable period one year earlier.
The increase was driven by new contracts with customers in the U.S., Russia and Africa. This revenue growth has been achieved despite the increasing strength of the Canadian dollar relative to the U.S. dollar. The strengthening of the Canadian dollar relative to the same quarter last year had a negative impact of $0.4 million on revenues during this year’s third quarter.
For the nine month period ended December 31, 2005, revenues increased by 26% to $26.9 million, up from $21.4 million in the nine-month period ending December 31, 2004. The strengthening of the Canadian dollar relative to the American dollar had a negative impact of $1.5 million on revenues during this fiscal year’s first nine months compared to the same period last year.
ExelTech Aerospace recorded a net loss of $0.5 million in the third quarter, compared with net earnings of $0.1 million in the same period one year earlier. The loss in the quarter was attributable mainly to (i) the increase in the value of the Canadian dollar, which impacted on gross margins; and (ii) higher fixed costs associated with the new infrastructure necessary to support continued growth, including increased sales and marketing activities.
“As expected, revenues in the third quarter have increased coming out of our low season in the summer,” stated Derek Nice, president and CEO. “Although our quarterly results were impacted by unfavourable currency fluctuations, we were able to deliver record revenues, reflecting strong business from new and existing customers.”
During the quarter ended December 31, 2005, the company’s U.S. dollar-denominated revenues increased to more than 87% of overall revenues, compared to 48% in the comparable period in 2004, further increasing the company’s exposure to foreign exchange fluctuations.
In the North American market, maintenance, repair and overhaul suppliers such as ExelTech Aerospace generally price their services in U.S. dollars, with little flexibility to bill in other currencies. As a result, they use other techniques to mitigate the effects of currency fluctuations.
ExelTech Aerospace expects to reduce its future exposure to increases in the value of the Canadian dollar through continued productivity improvements, expense rationalization, growth in non U.S. dollar-denominated revenues, and implementation of a hedging program, where and when appropriate.
With 230,000 sq ft of hangar, shop and office space in three facilities at Montreal and Quebec City, and with marketing offices in the U.S. and Europe, ExelTech Aerospace provides maintenance repair and overhaul services to airlines in Canada, the U.S. and 19 other countries around the world.
In 2005, ExelTech Aerospace was recognized as one of Canada’s 50 Best Managed Companies in a national recognition program sponsored by Deloitte & Touche LLP, CIBC Commercial Banking, National Post, and Queen’s School of Business.
To find out more about ExelTech Aerospace Inc., visit www.exeltech-aerospace.com.