Revenues Up 52.9% Year Over Year
Reaffirms FY2008 Aircraft Delivery Schedule
CLEARWATER, Fla., Nov. 14, 2007 (PRIME NEWSWIRE) -- Avantair, Inc. (OTCBB:AAIR) (OTCBB:AAIRU) (OTCBB:AAIRW), the only publicly traded stand-alone fractional operator and the sole provider of fractional shares in the Avanti P.180 aircraft, today announced its first quarter financial results ended September 30, 2007.
First Quarter 2008 Highlights
* Total revenues $25.7 million, up 52.9% year over year;
* Quarter-end fractional shares 552 versus 382.5 at the end of the
first quarter of fiscal 2007;
* Revenue from maintenance and management fees up 61.6% year over
year;
* Net loss increased to $4.8 million from $3.8 million year over
year; and
* Reaffirms previously disclosed fiscal 2008 aircraft delivery
schedule.
First Quarter 2008 Financial Results
Total revenues for the first quarter of fiscal 2008 were $25.7 million compared to $16.8 million for the first quarter of fiscal 2007, an increase of 52.9%.
Revenues from fractional aircraft shares sold were $9.8 million versus $7.5 million in the year-ago quarter, an increase of 30.8%. This reflects an increase of 15.0% in new aircraft shares sold to 34.5 during the first quarter of fiscal 2008 from 30 in the same period last year and an increase in the price of an aircraft share to $415,000 per share versus $405,000 a year ago. Under GAAP accounting rules, sales and the associated costs of fractional aircraft shares are amortized over 60 months.
Revenues from maintenance and management fees were $13.0 million for the first quarter of fiscal 2008, an increase of 61.6% from $8.0 million in the first quarter of fiscal 2007, primarily reflecting the increase in aircraft shares to 552 at September 30, 2007 compared to 382.5 at September 30, 2006 and an increase in monthly management fees, which were $9,400 during the first quarter of fiscal 2008 compared to $8,400 in the year-ago period.
Charter card revenue, which was formerly included in Other revenue, was $1.4 million for the first quarter of fiscal 2008, up 257.9% from $0.4 in the first quarter of fiscal 2007. This reflects an increase in hours flown by customers using our card program. Demonstration and other revenues, which consist of charges for demonstration flights, fees for remarketing of used aircraft shares, and rent and fuel sales from our FBO operations, were $1.5 million for the quarter compared to $0.9 million in the year-ago period, an increase of 70.9%.
"Demand for shares on our aircraft continued strong in the first quarter, building on our base of fractional shares, which drives the growth of our monthly maintenance and management fees," commented Mr. Steven Santo, CEO of Avantair. "As we anticipated, the prior upsurge in new owners and card holders put some strains on our system and drove up the cost of flight operations. This contributed to a higher net loss versus last year. We believe that throughout the year, owners and card holders will either fly fewer hours, which reduces costs, or will buy additional shares or cards to meet their future needs. In addition, we recently purchased two core aircraft to help lower our repositioning costs. We anticipate that our cost of flight operations as a percentage of revenue will decrease as the fiscal year progresses."
Cost of flight operations for the first quarter of fiscal 2008 were $15.8 million, or 61.5% of revenue, compared to $9.9 million, or 58.2% of revenue, for the first quarter of fiscal 2007. As the company previously disclosed, flight operations in the first quarter of fiscal 2008 included additional expenses for chartering and repositioning aircraft to satisfy demand for hours flown by new share owners and card holders.
SG&A expenses for the first quarter of 2008 were $5.5 million, or 21.7% of revenue, compared to $5.1 million, or 30.3% of revenue, in the first quarter of fiscal 2007. Depreciation and amortization was approximately $761,000 versus approximately $188,000 in the prior-year period.
Loss from operations for the first quarter of fiscal 2008 was $4.5 million versus $3.0 million in the year-ago quarter. Loss from operations for the first quarter of fiscal 2008 includes approximately $115,355 of non-cash charges related to compensation expense for equity issued to management.
Net loss for the first quarter of fiscal 2008 was $4.8 million compared to a net loss of $3.8 million for the first quarter of fiscal 2007.
Mr. Santo continued, "We expect the demand we experienced in the first quarter for hours on our fleet to translate into demand for shares in the airplanes we are planning to have delivered during the remainder of fiscal 2008 and beyond. We believe we are on track to take delivery of a total of 15 planes in fiscal year 2008 to meet our year-end target of 51 fractional aircraft in the fleet. Although we had some extra expenses this quarter, given the strong revenue growth, we believe there is inherent leverage in our model. Therefore, we continue to forecast that we will be break-even on a quarterly basis some time during fiscal 2008."
Cash earnings, a non-GAAP financial measure, for the first quarter of 2008 was a loss of $1.8 million versus a loss of $3.9 million in the first quarter last year.
Cash earnings (as contractually defined in the 10Q filed with the SEC today) is defined as the income/loss from operations before deductions for interest, depreciation and amortization. The income/loss used in this calculation is based on recognizing revenues on share sales in the period that the sale takes place and revenues from charter cards in the period that the card is sold. A schedule showing adjustments to GAAP items to calculate cash earnings is attached to this press release. This schedule was not prepared in accordance with generally accepted accounting principles and is for presentation purposes only. We believe this information provides useful data for purposes of financial analysis. Avantair uses this non-GAAP measure internally to assess its in period financial operating performance and to plan for future periods. However, these non-GAAP measures are neither stated in accordance with, nor are they a substitute for GAAP measures.
Conference Call
Avantair will host a conference call to discuss financial results for its first quarter of fiscal 2008 and provide an update on business developments at 5:00 p.m. Eastern Time today. Investors may participate in the conference call by dialing 866-250-3615 (303-262-2140 for international callers). When prompted, ask for the "Avantair Inc. First Quarter 2008 Earnings Conference Call." A telephonic replay of the conference call may be accessed approximately two hours after the call through November 21, 2007, by dialing 800-405-2236 (303-590-3000 for international callers). The replay access code is 11101821#. The conference call will be simultaneously webcast and can be accessed by visiting the Investor section of our website at www.avantair.com. The webcast replay will be archived for twelve months.
About Avantair
Headquartered in Clearwater, FL, Avantair Inc. is the sole North American provider of fractional aircraft shares in the Piaggio Avanti P.180 aircraft. Avantair is the fifth largest company in the North American fractional aircraft industry and the only stand-alone fractional operator. The company currently manages a fleet of 39 planes with another 46 Piaggio Avanti IIs on order. It also has announced an order of 20 Embraer Phenom 100s. Avantair, with operations in 5 states and approximately 300 employees, offers private travel solutions for individuals and companies at a fraction of the cost of whole aircraft ownership. For more information about Avantair, please visit: www.avantair.com.
Forwarding Looking Statements
This press release includes forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. Forward-looking statements are statements that are not historical facts. Such forward-looking statements, based upon the current beliefs and expectations of Avantair's management, are subject to risks and uncertainties, which could cause actual results to differ from the forward-looking statements.
AVANTAIR, INC. AND SUBSIDIARY
(Formerly Ardent Acquisition Corporation)
Consolidated Balance Sheets
ASSETS
------
September 30, June 30,
2007 2007
------------ ------------
(unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 3,195,079 $ 12,577,468
Accounts receivable, net of allowance
for doubtful accounts of $436,933 at
September 30, 2007 and $460,377 at
June 30, 2007 4,952,997 5,087,491
Inventory 550,501 579,517
Current portion of aircraft costs
related to fractional sales 37,060,561 31,895,085
Current portion of notes receivable 1,046,221 1,015,163
Prepaid expenses and other current
assets 520,567 378,394
------------ ------------
Total current assets 47,325,926 51,533,118
------------ ------------
AIRCRAFT COSTS RELATED TO FRACTIONAL
SHARE SALES- net of current portion 78,491,914 74,870,704
------------ ------------
PROPERTY AND EQUIPMENT, at cost, net of
accumulated depreciation and
amortization of $6,415,745 at
September 30, 2007 and $5,654,306 at
June 30, 2007 15,670,623 15,380,698
------------ ------------
OTHER ASSETS
Cash - restricted 2,565,205 2,942,983
Deposits 11,968,761 9,904,054
Deferred maintenance agreement 2,495,137 2,691,539
Notes receivable- net of current portion 1,082,905 1,327,552
Goodwill 1,141,159 1,141,159
Other assets 749,813 698,453
------------ ------------
Total other assets 20,002,980 18,705,740
------------ ------------
Total assets $161,491,443 $160,490,260
============ ============
AVANTAIR, INC. AND SUBSIDIARY
(Formerly Ardent Acquisition Corporation)
Consolidated Balance Sheets
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
September 30, June 30,
2007 2007
------------- -------------
(unaudited)
CURRENT LIABILITIES
Accounts payable $ 8,791,178 $ 5,765,189
Accrued liabilities 2,214,394 3,141,061
Customer deposits 936,750 612,500
Current portion of deferred revenue
related to fractional aircraft share
sales 40,752,424 38,058,547
Current portion of notes payable 4,830,719 4,412,288
Unearned management fee and charter
card revenues 7,666,760 7,950,636
------------- -------------
Total current liabilities 65,192,225 59,940,221
------------- -------------
Notes payable, net of current portion 17,480,297 18,560,570
Deferred revenue related to fractional
aircraft share sales, net of current
portion 93,866,165 92,186,334
Other liabilities 1,847,269 1,762,159
------------- -------------
Total long-term liabilities 113,193,731 112,509,063
------------- -------------
Total liabilities 178,385,956 172,449,284
------------- -------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT
Preferred stock, $.0001 par value,
Authorized 1,000,000 shares; none
issued -- --
Common stock, Class A, $.0001 par
value, 75,000,000 shares authorized,
15,220,817 shares issued and
outstanding 1,522 1,522
Common stock, Class B, non-voting,
$10 par value, 1,250 shares
authorized, none issued -- --
Additional paid-in capital 45,982,066 46,124,857
Accumulated deficit (60,991,225) (56,198,527)
Treasury stock, at cost (1,886,876) (1,886,876)
------------- -------------
Total stockholders' deficit (16,894,513) (11,959,024)
------------- -------------
Total liabilities and stockholders'
deficit $ 161,491,443 $ 160,490,260
============= =============
AVANTAIR, INC. AND SUBSIDIARY
(Formerly Ardent Acquisition Corporation)
Consolidated Statements of Operations
(Unaudited)
Three Months Ended
--------------------------
September 30, September 30,
2007 2006
------------ ------------
Revenues
Fractional aircraft sold $ 9,803,793 $ 7,492,808
Maintenance and management fees 12,974,596 8,029,078
Charter card revenue 1,401,082 391,520
Demonstration fees and other revenues 1,475,028 863,311
------------ ------------
Total revenue 25,654,499 16,776,717
------------ ------------
Operating Expenses
Cost of fractional aircraft shares sold 8,047,427 4,363,266
Cost of flight operations 15,788,935 9,852,506
Write-off of aircraft deposit -- 300,000
General and administrative expenses
(including share-based compensation
expense of $115,355 in 2007 and $0 in
2006) 4,533,056 4,261,952
Depreciation and amortization 761,439 188,109
Selling expenses 1,023,856 824,357
------------ ------------
Total operating expenses 30,154,713 19,790,190
------------ ------------
Loss from operations before interest,
depreciation and amortization expense (4,500,214) (3,013,473)
------------ ------------
Other income (expenses)
Interest income 192,722 79,248
Interest expense (485,206) (844,132)
------------ ------------
Total other expenses (292,484) (764,884)
------------ ------------
Net loss $ (4,792,698) $ (3,778,357)
============ ============
Loss per common share:
Basic and Diluted $ (0.32) $ (1.15)
============ ============
Weighted-average common shares
outstanding:
Basic and diluted 15,220,817 3,288,590
============ ============
AVANTAIR, INC. AND SUBSIDIARY
Reconciliation of Cash Earnings (as defined) to GAAP
Operating Income
For Three Months Ended September 30, 2007 and 2006
(Unaudited)
GAAP GAAP
Three Months Cash Three Months Cash
Ended Earnings Ended Earnings
September 30, (as defined) September 30, (as defined)
2007 2007 2006 2006
----------- ----------- ----------- -----------
Revenues
Fractional
aircraft
shares
sold $ 9,803,793(a) $14,177,500 $ 7,492,808(a)(d) $11,940,000
Maintenance
and
management
fees 12,974,596 12,974,596 8,029,078 8,029,078
Charter
card
revenue 1,401,082(b) 2,888,302 391,520(b) 870,000
Demonstration
fees and
other
revenue 1,475,028 1,475,028 863,311 863,311
----------- ----------- ----------- -----------
25,654,499 31,515,426 16,776,717 21,702,389
----------- ----------- ----------- -----------
Operating
expenses
Cost of
fractional
aircraft
shares
sold 8,047,427(a) 12,141,861 4,363,266(a)(d) 10,316,254
Cost of
flight
opera-
tions 15,788,935 15,788,935 9,852,506 9,852,506
Depreciation
and
amortization 761,439 761,439 188,109 188,109
Write-off of
aircraft
deposit -- -- 300,000 300,000
General and
administra-
tive
expenses 4,533,056(c) 4,417,701 4,261,952 4,261,952
Selling
expenses 1,023,856 1,023,856 824,357 824,357
----------- ----------- ----------- -----------
Total
operating
expenses 30,154,713 34,133,792 19,790,190 25,743,178
Loss from
opera-
tions $(4,500,214) $(2,618,366)$(3,013,473) $(4,040,789)
=========== ===========
Add
depreciation
and
amortization 761,439 188,109
----------- -----------
EBITDA $(1,856,927) $(3,852,680)
=========== ===========
(a) Share sales and the related cost of share sales are recorded
in the period of sale.
(b) Charter card revenue is recorded in the period the card is sold.
The cost associated with providing the future service is not
included.
(c) Stock compensation expense is eliminated.
(d) Adjusted for non-recurring item.