Magellan Aerospace Corporation (“Magellan” or the “Corporation”) released its financial results for the first quarter of 2015 and recorded its highest quarterly revenues and net income in its history. All amounts are expressed in Canadian dollars unless otherwise indicated. The results are summarized as follows:
1. Overview
A summary of Magellan’s business and significant updates
Magellan is a diversified supplier of components to the aerospace industry and in certain circumstances for power generation projects. 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 and supplies in certain circumstances parts and equipment for power generation projects.
The Corporation’s strategy has been to focus on several core competencies within the aerospace industry. These include precision machining of a wide variety of aerospace material, composites, complex high technology magnesium and aluminum alloy castings, repair and overhaul technologies and design of structures. The Corporation is now seeking to leverage these core competencies by achieving growth in applications where these abilities are critical in meeting customer needs.
Business Update
In the first quarter of 2015, the Corporation announced that a significant agreement had been reached with Pratt & Whitney Canada (“P&WC”), a United Technologies Company for the supply of complex magnesium and aluminum castings. This strategic contract is expected to generate CDN $250 million in revenue for the Corporation through 2023. The long term agreement with P&WC reinforces the benefits of Magellan’s commitment to developing and implementing the latest in a variety of high technology initiatives at the Corporation’s castings facilities.
On March 4, 2015 Magellan, in partnership with The University of Manitoba, unveiled their new Advanced Satellite Integration Facility (or ASIF) at the Corporation’s Winnipeg facility. The ASIF is an International Organization for Standardization (“ISO”) class 8 clean room facility which can accommodate the assembly of up to three satellites at the same time in full support of current and future Canadian Government satellite programs.
On April 6, 2015 Magellan announced their intent to open a new advanced, precision machining facility in Mielec, Poland. The establishment of this machining facility is complimentary to the Corporation’s existing surface treatment facility in the same area in Poland. The expansion of the Corporation’s capabilities in Poland in conjunction with investments made in India strengthens the Corporation’s competitive advantage and provides direct support to its customers’ growing demand for globalization. It is expected that the Mielec facility will reach full operation capability in the second half of 2015.
For additional information, please refer to the “Management’s Discussion and Analysis” section of the Corporation’s 2014 Annual Report available on www.sedar.com.
2. Results of Operations
A discussion of Magellan’s operating results for first quarter ended March 31, 2015
The Corporation operates substantially all of its activities in one reportable segment, Aerospace, which include the design, development, manufacture, repair and overhaul and sale of systems and components for defence and civil aviation. The Corporation continues to provide services to the Power Generation segment, however the Corporation has removed the disclosure of this segment as the activity in relation to these services were not material in the current quarter and, at present, they are not expected to be material in future periods.
The Corporation reported higher revenue in the first quarter of 2015 when compared to the first quarter of 2014. Gross profit and net income for the first quarter of 2015 were $39.2 million and $19.2 million, respectively, an increase from the first quarter of 2014 gross profit of $29.5 million and from the first quarter of 2014 net income of $12.1 million.
– Read the full financial results on the Magellan website (PDF).
