Tuesday, 6 November 2012

FLYHT – “We’re Starting To Achieve What We Talked About” – CEO Tempany

FLYHT Aerospace Solutions Ltd.
TSX Venture: FLY
Shares Issued: 139,386,166
Fully Diluted: 178,135,626


In a management conference call to discuss third quarter results, FLYHT CFO, Tom French labelled the quarter “important”, as the company moved into commercialization of the new AFIRS 228 technology.

Although Q3 is typically a slower period, sales for the quarter were up 7.6% to $1.55 million compared to $1.44 million the same quarter last year.

A critical point for investors are expenses and quarterly burn vs. revenue and cash on hand, which stood at $1.4 million at the end of September. Mr. French acknowledged that while FLYHT is still several quarters away from being cash flow positive on an overall basis, the company is expecting accelerated sales and shipments starting in 2013. This position was based on customer feedback.

He addressed the question on many shareholders’ minds regarding the possible need for the company to raise money in the near future. Mr. French revealed that FLYHT is currently in the process of investigating five possibilities in order to raise funds, most of which would address concerns about avoiding share dilution but that is not an absolute guarantee . Management wants the matter resolved before the end of the year.

Possible scenarios he mentioned included a forward sales agreement, licensing, or strategic investments.

During the Q&A, a shareholder asked President & CEO Bill Tempany for further comment on the cash short-fall issue. Mr. Tempany expressed that FLYHT is “looking for a short-term solution to a short-term problem”. The emphasis was on “short-term”.

In responding to a question about NetJets Europe, Mr. Tempany said that subject to the current timetable, A FLYHT team was slated to install the first ten of thirty, 228 units around the end of this month.

Regarding L-3 Communications, it has a team in Calgary around the middle of November to begin its education on the new 228 technology.

Director of Advanced Applications, Kent Jacobs, highlighted several of FLYHT’s achievements over the past quarter including key certifications received from China and Europe and continued growth of the company’s Supplemental Type Certificate list, as well as increased activity in Western Africa.

Howard Group note: When we announced our IR re-engagement with FLYHT in early September, it was our expectation that HG would release its “Perspectives” on FLYHT later that month. We made a decision to delay our commentary as the resolution of the balance sheet issue and the need for short-term funding will have a bearing on FLYHT’s tactics and how the market views the company.

While management is clearly confident with the company’s direction, overhanging the market is one question, will FLYHT need to raise equity? Should this issue be answered in a non-dilutive manner, expectation is that this would be viewed as extremely positive. As such, the timing of The Howard Group’s commentary, “Sleeping With Elephants” will be dictated by events.

-      Grant Howard

To view FLYHT’s Q3 reports, please click here....