Lower Sales, Higher Losses... But Net Income Rises On Repurchased Debt Securities

And the hits just keep on coming. Hawker Beechcraft reported Thursday lower net sales and an increased operating loss for the three months ending March 29, 2009, compared to the same period in 2008, as a result of fewer commercial aircraft deliveries and charges associated with work force reductions and used aircraft valuations.

HBC's net income was higher during the first quarter of 2009 compared to the first quarter of 2008... as a result of gains realized on a previously-disclosed repurchase of the company's debt securities.

Net sales for the three months ending March 29, 2009, were $537.6 million, a decrease of $38.9 million compared to the same period in 2008. Business and general aviation aircraft deliveries were impacted by the deterioration in the overall economy and totaled 57 for the quarter, compared to 72 for the first quarter of 2008.

Hawker Beech delivered 15 business jet, 29 turboprop and 13 piston aircraft during the three months ending March 29, 2009.

Operating loss for the three months ending March 29, 2009, was $41.2 million, compared to a loss of $1.5 million for the same period in 2008, and was impacted by the reduced business and general aircraft deliveries, as well as a $13.6 million charge to reflect the estimated severance costs related to the work force reductions announced during the quarter. During the first quarter of 2009, the Company also recorded a $25.3 million charge to reduce the carrying value of used aircraft inventory to reflect current market values. The first quarter of 2008 was impacted by an $18.4 million charge related to early production Hawker 4000 units.  

Despite the increased operating loss, HBC recorded net Q1 2009 after-tax income of $66.9 million, compared to a net after-tax loss of $31.3 million for the same period in 2008. During the first quarter of 2009, the Company recorded a $177.0 net gain on the repurchase, at a significant discount, of $222.0 million of its debt securities.   

As of March 29, 2009, the company had $72.3 million in cash and cash equivalents and its revolving credit facility was undrawn. "The Company believes that its cash on hand, anticipated cash from operations and available liquidity under its revolving credit facility will be sufficient to meet its cash requirements for the next 12 months," Hawker Beechcraft noted.

FMI: www.hawkerbeechcraft.com