* Down 10 percent on the TSX
* Company reported results after market close on Friday
* Extends maturity date of credit agreement
By John McCrank
TORONTO, March 29 (Reuters) - Shares of Magellan Aerospace (MAL.TO) were down 10 percent on Monday as ongoing weakness in the aviation market pressured revenues and concerns remained over credit, even as the company posted earnings that topped expectations.
Magellan’s stock was down 21 Canadian cents at C$1.88 on the Toronto Stock Exchange on Monday morning.
The Mississauga, Ontario-based maker of aircraft components reported quarterly earnings late Friday of C$2 million, or 5 Canadian cents a diluted share, down from C$7.4 million, or 39 Canadian cents a share, a year earlier.
That topped the average analyst forecast for earnings of 3 Canadian cents a diluted share, according to Thomson Reuters I/B/E/S. Revenue sagged 7.9 percent to C$165.8 million, mainly due to softness in the business jet sector and a stronger Canadian dollar.
“On a revenue side, at least relative to what I was expecting, it was a little low,” said Cameron Doerksen, an analyst at Versant Partners in Montreal, who has a “neutral” rating on the stock.
Another concern to shareholders was the company’s ability to renew and extend its debt facility, which “remains an ongoing risk to shareholders,” Dundee Capital Markets analyst, Richard Stoneman, said in a note to clients.
Stoneman has a “buy, high risk” rating on the stock.
“Given the improvement in operating results, net income of C$40 million over the past two years and a recovery in the commercial aerospace markets; more permanent and less expensive credit should be available 12 months from now,” he said.
A year ago, when Magellan last reported its fourth quarter results, it said that it was in danger of becoming insolvent if it could not refinance its credit facility, as debt markets were tight and the aerospace industry was in serious decline.
It was successful in the refinancing and said on Friday it had amended its operating credit agreement with lenders, completing new financing and extending the maturity.
The facility is fully guaranteed until May 21, 2011, by Chairman Murray Edwards, who has kept the company afloat.
Looking forward, Magellan said a modest recovery may occur in the global aerospace industry in 2010. It warned, however, that sales in 2010 could be affected by temporary cash management measures by its customers and suppliers, as well as by potential exchange rate fluctuations.
Magellan designs, engineers, and manufactures aircraft parts and engines for civil and military markets. It operates in Canada, the United States, the United Kingdom and India.
$1=$1.02 Canadian Reporting by John McCrank; editing by Rob Wilson