FLYHT Reports Third Quarter 2017 Financial Results
Calgary, Alberta – November 2, 2017 – FLYHT Aerospace Solutions Ltd. (TSX-V: FLY) (OTCQX: FLYLD) (the “Company” or “FLYHT”), the leading provider of real-time data streaming technology that enhances the efficiency and safety of aircraft, today reported financial results for the third quarter ended September 30, 2017.
“Shortfalls in Parts and Voice & Data Services (V&DS) lowered revenue in the third quarter,” stated Thomas R. Schmutz, Chief Executive Officer of FLYHT. “Also, as we cautioned in our October 3, 2017 quarterly sales update, unforeseen delays in obtaining STC approvals deferred the recognition of some AFIRS hardware revenue, thus limiting growth in this product category.” Schmutz added, “Despite this quarter’s revenue decline, FLYHT’s revenue is trending above last year on a year-to-date basis, we continue to generate cash from operating activities and finished the quarter with a strong cash position, and we continue to build upon our $27M backlog of AFIRS hardware and V&DS revenue as we win more business around the world.”
Third Quarter 2017 highlights
- Revenue totaled $3,322,342, a decline of 18.1% compared to third quarter 2016, due mainly to a decline in Parts and V&DS sales and delays encountered in test flights required to obtain STC approvals. Revenue for the nine months ended September 30 was $10,439,454, an increase of 2.3% from the same period in 2016.
- Net loss of $624,425 compared to Net Income of $303,888 in the third quarter of 2016. For the nine-month period, a Net loss of $1,235,187 compared to a net loss of $1,590,157 before non-recurring other income of $3,223,166, for a decreased loss of $354,970 or compared to Net Income of $1,633,009 in the corresponding 2016 period, which includes the non-recurring item.
- Gross Profit was 55.4% of revenue compared to 66.8% for the third quarter of 2016. The decrease in gross margin was due to differences in the mix of revenue sources in 2017 versus the prior year period. On a nine-month basis, Gross Profit was 64.1% and 65.8%, respectively.
- Recurring revenue (voice and data services) of $998,337, decreased by 11.0% compared to the third quarter of 2016. During the same period, parts revenue decreased 44.7% to $863,221.
- Distribution Expenses were $1,166,972, a 5.2% increase over third quarter 2016. On a nine-month basis Distribution Expenses rose 8.6% to $3,780,776. The increases in both periods were due mainly to higher costs associated with sales activities.
- Administration Expenses increased 10.6% to $684,651. This increase was primarily due to the payment of new software licenses and the timing of executive travel in the quarter. For the nine-month period, they rose 1.9% to $2,413,106.
- Research and Development expenses decreased 8.3% to $458,327. For the nine-month period they were $1,419,405, a 24.3% decrease compared to the corresponding 2016 period. The decrease was principally due to a 2016 settlement of a warranty claim that did not recur in the current year, the WINN grants received in 2017, and partially offset by a lower SR&ED credit and higher labour costs.
- Customer deposits more than doubled to $1,106,012 at the end of the quarter, compared to $508,224 at the end of third quarter 2016. Payments received during the quarter totaled $1,580,270 net of the value of deposits transitioned to unearned revenue upon the shipment of hardware and equipment, which was $1,383,576, compared to $242,260 and $544,270 in the prior year’s period, respectively.
- Unearned revenue decreased $167,838 to $579,673 from $747,511 at the end of third quarter 2016. The opening balance as at January 1, 2017 was $318,106 lower than as at January 1, 2016, but the net change in AFIRS units recognized as revenue in 2017 was $150,268 lower than units shipped compared to 2016.
- Revenue recognized on AFIRS units in the period was $1,392,193, 2.9% higher than the $1,353,021 in the prior year’s quarter. Revenue was recognized on 22 installation kits in the third quarter, compared to 25 in third quarter of 2016. Year-to-date, revenue was recognized on 54 installation kits, compared to 61 in the same period in 2016.
- Cash and Cash Equivalents totaled $2,573,442, compared to $709,958 at the end of 2016. The increase in cash was the result of the release of restricted cash of $250,000, cash generated from operations in the year of $672,625, as well as a net cash inflow from financing and investing activities of $1,036,912, and partially offset by adjustments resulting from foreign exchange fluctuations of $96,053.
Detailed information can be found in FLYHT’s 2017 Third Quarter Report containing the CEO’s Letter to Shareholders, Management Discussion and Analysis, and Financial Statements. The report has been posted to the Company’s website and can be accessed at http://cn.flyht.com/financial-reports/. The MD&A and Financial Statements have been filed with SEDAR and can be accessed at www.sedar.com.
FLYHT has scheduled a live conference call to discuss its second quarter results on Friday, November 3, 2017 at 7 am MDT (9 am EDT, 6 am PDT).
To access the conference call by phone within Canada and the U.S.A. the toll-free number is 1-800-319-4610. Outside Canada and the U.S.A., dial 1-604-638-5340. (Callers should dial in five to 10 minutes prior to the scheduled start time).
Management will accept questions by telephone and e-mail. Individuals wishing to ask a question during the call, can do so by pressing *1. Questions can be emailed to firstname.lastname@example.org.
An archive of the conference call will be posted on the Presentations and Webcasts section of FLYHT’s website as soon as it is available from the conference call provider. http://cn.flyht.com/presentation-and-webcast/
About FLYHT Aerospace Solutions Ltd.
FLYHT’s mission is to improve aviation safety, efficiency and profitability (located in Calgary, Canada; publicly traded as: FLY:TSX.V; FLYLF:OTCQX). Airlines, leasing companies, fractional owners and original equipment manufacturers have installed the Automated Flight Information Reporting System (AFIRSTM) on their aircraft to capture, process and stream aircraft data with real-time alerts. AFIRS sends this information through satellite networks to the UpTimeTM cloud-based data center, which provides aircraft operators with direct insight into the operational status and health of their aircraft and enables them to take corrective action to maintain the highest standard of operational control.
FLYHT Aerospace Solutions Ltd.
Interim Chief Financial Officer
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