- Streamlined operational structure and rightsizing of operations
designed to restore profitability
- Financial position strengthened
- Lockheed Martin places initial orders for Electronic Counter Measures
(ECM) products
- Financial model to reflect higher gross margin and lower overhead
OTTAWA, Feb. 21 /CNW Telbec/ - Allen-Vanguard Corporation (the "Company"
or "Allen-Vanguard") (TSX:VRS) of Ottawa, Canada today provided highlights of
its progress towards profitability and the outlook for the balance of fiscal
2006.
"Our first priority is restoring profitability after the past difficult
year," said David Luxton, interim CEO and Chairman. "We put the pieces
together to make Allen-Vanguard the "go-to" company to combat "all hazards",
meaning the company that can deal with a threat that could be explosive, bio-
chemical or radiological. But the focus on integration was at the expense of
our operational and financial performance. Now we have taken the steps to
streamline and rightsize our operations."
Some of the steps included in the restructuring process include
reorganizing management and accountability around product lines. In addition
the Company is taking a new approach to the U.S. market with an augmented
U.S.-resident sales team in order to turn around performance in this key
market.
Rightsizing measures are also key to restoring profitability, and these
include the already announced outsourcing of manufacturing of the Vanguard(TM)
Mk2 robot in Ottawa. Also, overheads in Ottawa, including finance,
administration, insurance and professional fees have been substantially
reduced.
Allen-Vanguard said that with the progress on restructuring and
streamlining it is now closely monitoring the performance of its base
businesses of Explosive Ordnance Disposal (EOD) equipment and CBRN (Chemical-
Biological-Radiological-Nuclear) protection and decontamination equipment. "We
are evaluating the profitability of our EOD and CBRN products and should be
able to quickly draw conclusions as to where the most value might be created
for our shareholders for these product lines. This is part of the announced
strategic review currently underway," said Luxton.
The Company noted that its balance sheet was strengthened and its quality
was improved from June 30, 2005 to the end of the first quarter of fiscal
2006, ended December 31, 2005:
- net debt was reduced to $8.9 million from $18.2 million;
- the ratio of net debt:net debt plus equity was reduced to 20% from 29%;
- working capital increased to $15.8 million from $6.9 million;
The Company said that The Bank of Scotland has been a very supportive
lender through the transition period and balance sheet restructuring. Allen-
Vanguard met all bank covenants at December 31, 2005. The next covenant test
is at March 31, 2006, based on the ratio of profit before interest,
amortization of intangibles and income taxes to interest of at least 2:1 for
the preceding six months. "We are keeping the Bank of Scotland continuously
informed as to our progress, and they understand our business extremely well."
said David Luxton. "Meanwhile, our cash position has strengthened with the
royalty agreement with Lockheed Martin and the pickup in ECM orders."
The Company also reported that it has received initial orders from
Lockheed Martin for introductory quantities of its ECM components under the
agreement announced on January 18, 2006. These currently total only a few
hundred thousand dollars, but the Company stated it was pleased to see
Lockheed Martin moving quickly with seed orders into U.S. ECM programs with
such large potential. The Company also reported that it has also begun co-
development work with Lockheed Martin on next-generation ECM equipment.
Looking ahead the Company noted that ECM sales have the potential to
represent more than half of total revenues in fiscal 2006 due to the rapid
growth in this product line and a decline in sales of its traditional
products. Overall, it foresees increasing order flow, lower overheads and
higher margins due to the percentage of ECM product in its sales mix. The net
effect is expected to be a significant improvement in profitability over the
balance of the year - even if revenue for fiscal 2006 does not exceed last
year's level.
"We still have much work to do to," said David Luxton, "but I believe
we've taken the first important steps towards restoring profitability. We look
forward to continuing to report on our progress, including at the Company's
Annual General Meeting of shareholders which has been scheduled for April
27th, 2006."
The Company will be holding a conference call for investors and analysts
at 9am, Tuesday, February 21s. This will be followed by a question and answer
period.
Date: Tuesday, February 21, 2006
Time: 9:00 a.m. EST
Dial-in numbers: (416) 644-3414
1-800-814-4860
Web access: http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID(equal
sign)1367300
or Access from allen-vanguard.com
For those unable to listen to the call live, a replay will be available
for a two week period beginning at 11:00 a.m. on February 21, 2006. The replay
phone number is 1-877-289-8525 and the access code is 21176197(pound key).
About Allen-Vanguard
Allen-Vanguard Corporation and its subsidiaries worldwide operate under
the brand "Allen-Vanguard". The Company develops and markets technologies,
tools and training for defeating and minimizing the effects of hazardous
devices and materials, whether Chemical, Biological, Radiological, Nuclear or
Explosive (CBRNE). The Company's equipment is in service with leading security
and military forces in more than 120 countries. This includes a complete range
of remote intervention robots for hazardous applications, vehicle barrier
systems, suspect package containers and Electronic Counter-Measures (ECM)
equipment. The Company is a world leader in the development, manufacturer and
sale of specialty security equipment for Explosive Ordnance Disposal (EOD),
and is the sole, worldwide licensee and/or developer of patented technologies
such as the Universal Containment System and CASCAD Foam for blast mitigation,
decontamination of bio-chemical warfare agents, and personal protective gear.
Head office operations are located in Ottawa, Ontario, Canada, with
manufacturing operations in Ottawa and Stoney Creek, Ontario; Tewkesbury,
U.K.; and Cork, Ireland, and sales offices in Canada, the U.S., the U.K. and
Asia. The Company's shares are listed on The Toronto Stock Exchange (TSX:
VRS). The web site is www.allen-vanguard.com.
This press release may contain forward-looking statements relating to,
among other things, the Company's expectations concerning future product
demand and growth opportunities and customer acceptance of Company's products.
These forward-looking statements are neither promises nor guarantees, but
involve risks and uncertainties that may cause actual results to differ
materially from those in the forward-looking statements. The Company disclaims
any obligation to publicly update or revise any such statements. The Toronto
Stock Exchange has neither approved nor disapproved the contents of this press
release.
To find out more about Allen-Vanguard (TSX: VRS), visit our website at
www.allen-vanguard.com.
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