Avcorp announces 2020 Third Quarter Financial Results

As at September 30, 2020, the Company had $6,606,000 cash on hand (December 31, 2019: $4,316,000) and had utilized $82,808,000 of its operating line of credit (December 31, 2019: $84,661,000).  The Company has a working capital deficit of $92,484,000 as at September 30, 2020, compared with $71,561,000 deficit as at December 31, 2019.  Working capital surplus/deficit is defined as the difference between current assets and current liabilities.  The Company's accounts receivable, contract assets, and inventories net of accounts payable, amount to a $20,546,000 surplus as at September 30, 2020 (December 31, 2019: $18,542,000 surplus).  The Company's accumulated deficit as at September 30, 2020 is $155,465,000 (December 31, 2019: $142,194,000).

About Avcorp

The Avcorp Group designs and builds major airframe structures for some of the world's leading aircraft companies, including BAE Systems, Boeing, Bombardier, Lockheed Martin and Subaru Corporation.  The Avcorp Group has more than 60 years of experience, over 550 skilled employees and 636,000 square feet of facilities.  Avcorp Structures & Integration located in Delta British Columbia, Canada is dedicated to metallic and composite aerostructures assembly and integration; Avcorp Engineered Composites located in Burlington Ontario, Canada is dedicated to design and manufacture of composite aerostructures, and Avcorp Composite Fabrication located in Gardena California, USA has advanced composite aerostructures fabrication capabilities for composite aerostructures.  The Avcorp Group offers integrated composite and metallic aircraft structures to aircraft manufacturers, a distinct advantage in the pursuit of contracts for new aircraft designs, which require lower-cost, light–weight, strong, reliable structures. Comtek Advanced Structures Ltd., at our Burlington, Ontario, Canada location also provides aircraft operators with aircraft structural component repair services for commercial aircraft.

Avcorp Composite Fabrication Inc. is wholly owned by Avcorp US Holdings Inc. Both companies are incorporated in the State of Delaware, USA, and are wholly owned subsidiaries of Avcorp Industries Inc.

Comtek Advanced Structures Ltd., incorporated in the Province of Ontario, Canada, is a wholly owned subsidiary of Avcorp Industries Inc.

Avcorp Industries Inc. is a federally incorporated reporting company in Canada and traded on the Toronto Stock Exchange (TSX:AVP).

AMANDEEP KALER
CHIEF EXECUTIVE OFFICER
AVCORP GROUP

Forward-Looking Statements

This release should be read in conjunction with the Company's audited financial statements contained in the Company's Annual Report, and with the quarterly financial statements and accompanying notes filed with Sedar (www.sedar.com).

Certain statements in this release and other oral and written statements made by the Company from time to time are forward-looking statements, including those that discuss strategies, goals, outlook or other non–historical matters; or projected revenues, income, returns or other financial measures.  These forward–looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contained in the statements, including the following:  (a) changes in worldwide economic and political conditions that impact interest and foreign exchange rates; (b) the occurrence of work stoppages and strikes at key facilities of the Corporation or the Corporation's customers or suppliers; (c) government funding and program approvals affecting products being developed or sold under government programs; (d) cost and delivery performance under various program and development contracts; (e) the adequacy of cost estimates for various customer care programs including servicing warranties; (f) the ability to control costs and successful implementation of various cost reduction programs; (g) the timing of certifications of new aircraft products; (h) the occurrence of downturns in customer markets to which the Corporation products are sold or supplied or where the Corporation offers financing; (i) changes in aircraft delivery schedules or cancellation of orders; (j) the Corporation's ability to offset, through cost reductions, raw material price increases and pricing pressure brought by original equipment manufacturer customers; (k) the availability and cost of insurance; (l) the Corporation's ability to maintain portfolio credit quality; (m) the Corporation's access to debt financing at competitive rates; (n) uncertainty in estimating contingent liabilities and establishing reserves tailored to address such contingencies; and (o) integration of newly acquired operations and associated expenses may adversely affect profitability.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(unaudited, expressed in thousands of Canadian dollars)

	September 30, 2020	December 31, 2019
ASSETS
Current assets
Cash	$6,606	$4,316
Accounts receivable	17,032	17,625
Contract assets	19,714	26,162
Inventories	11,569	12,933
Prepayments and other assets	2,992	2,136
	57,913	63,172
Non-current assets
Prepayments and other assets	3,012	2,738
Development costs	16,074	14,075
Property, plant and equipment	42,718	46,328
Intangibles	984	1,827
Total assets	120,701	128,140
LIABILITIES AND EQUITY
Current liabilities
Bank indebtedness	83,213	85,470
Accounts payable and accrued liabilities	27,769	38,178
Current portion of term debt	16,515	2,768
Contract liability	8,246	2,036
Guarantee fee	7,778	-
Customer advance	6,193	6,030
Deferred government grant	392	-
Onerous contract provision	291	251
	150,397	134,733
Non-current liabilities
Term debt	24,801	26,848
Contract liability	3,020	4,757
Deferred government grant	229	-
Onerous contract provision	91	-
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