Canadian Helicopters Group Inc. (TSX: CHL.A CHL.B) ("the Company"), an international provider of helicopter transportation and related support services, today announced its financial and operating results for the fourth quarter and fiscal year ended December 30, 2011. These results reflect the acquisition of Helicopters (N.Z.) Limited, ("HNZ") on July 7, 2011. The results also reflect Canadian Helicopters' conversion to a corporation on December 31, 2010 and the adoption, on January 1, 2011, of International Financial Reporting Standards ("IFRS"). Results for the prior year period have been restated, for comparability.
|Financial Highlights||Quarters ended||Fiscal years ended|
|(in thousands of dollars, except per share data)||Dec. 30, 2011||Dec. 31, 2010||Dec. 30, 2011||Dec. 31, 2010|
|Adjusted net income (2)||10,185||5,114||50,547||26,365|
|Per share - basic and diluted ($)||0.78||0.39||3.84||2.02|
|Net income (loss) (3)||10,185||(28,805)||50,547||(52,416)|
|Per share - basic and diluted ($) (3)||0.78||n.a.||3.84||n.a.|
|Cash flows related to operating activities (4)||15,759||4,314||70,498||26,194|
|Weighted-average shares/units outstanding (all classes)||13,068,700||13,068,700||13,068,700||13,068,700|
|(1)||Earnings before interest, income taxes, depreciation and amortization, gain or loss on disposal of property, plant and equipment and share of net loss of an associate, distributions to Unitholders and holders of Exchangeable Class B LP Units and change in fair value of Units and Exchangeable Class B LP Units.|
|(2)||Excluding certain significant impacts, in 2010, from classifying the Fund Units and Exchangeable Class B LP Units as financial liabilities before the Fund's conversion into an incorporated entity.|
|(3)||Prior to December 31, 2010, Units and Exchangeable Class B LP Units were classified as financial liabilities before their conversion into shares of the Company. Therefore, the comparability of the net income (loss) and the concept of earnings per Unit did not apply before the Fund's conversion into an incorporated entity on December 31, 2010. Please refer to the adjusted net income per unit as above.|
|(4)||Before net changes in non-cash working capital balances.|
2011 YEAR-END RESULTS
The Company generated revenue of $264.3 million, up 54.8% from $170.7 million in 2010. This $93.6 millionimprovement includes revenue of $26.8 million from HNZ and also reflects an increase of $66.8 million, or approximately 39.1%, from existing operations. Revenue flying hours increased 32.4% to 75,014 hours, including 3,918 hours flown at HNZ. In addition to the HNZ contribution, Visual Flight Rules (VFR) revenue from existing operations increased $64.7 million primarily due to revenues from medium and heavy aircraft contracted in Afghanistanand increased activity in the mining industry in eastern Canada. Excluding HNZ, Instrument Flight Rules (IFR) revenue decreased $5.3 million due to reduced emergency medical services. Ancillary revenue grew $7.4 million reflecting a full year contribution from a repair and maintenance business acquired in 2010 as well as to higher revenue from the DND Contracted Flying Training and Support contract (CFTS)
EBITDA for 2011 more than doubled, reaching $85.2 million, up from $42.1 million a year earlier. This increase is mainly attributable to higher operating activity, a more favourable mix resulting from increased activity in Afghanistanwhere revenues reflect the significantly higher level of effort required to accomplish the work, as well as a $7.8 millionEBITDA contribution from HNZ.
2011 net income amounted to $50.5 million, or $3.84 per share, up sharply from $26.4 million of adjusted net income, or $2.02 per share in 2010. Adjusted net income excludes certain significant impacts from classifying the Fund Units and Exchangeable Class B LP Units as financial liabilities before the Fund's conversion into an incorporated entity onDecember 31, 2010. These significant impacts, mostly of a non-cash nature, reduced net income by $78.8 million in 2010.
Reflecting higher net income, cash flows related to operating activities before net changes in non-cash working capital balances reached $70.5 million in 2011, up from $26.2 million a year earlier.
"The international character of Canadian Helicopters continued to develop significantly in 2011 with the acquisition of HNZ and further success in Afghanistan. On the North American market, our national presence, strong brand recognition and operating flexibility allowed us to be at the forefront of an accelerating recovery in the mining sector. These factors, together with a control of expenses relative to revenue, contributed to record profitability. Cash flow generation remained very strong, enabling the Company to conclude the year with a sound financial position," saidDon Wall, President and Chief Executive Officer of Canadian Helicopters.
For the fourth quarter ended December 30, 2011, revenue reached $68.7 million, up from $43.0 million in the corresponding period in 2010. This increase of $25.7 million, or 59.8%, reflects a $15.4 million contribution from HNZ and a revenue increase of $10.3 million from existing operations. Canadian Helicopters flew 15,875 hours, including 2,316 hours at HNZ, up 44.4% from a year earlier. Excluding HNZ, VFR revenue increased $10.4 million due to contracted aircraft in Afghanistan and higher Canadian activity in the mining industry, while IFR revenue decreased$2.0 million as a result of reduced EMS activity. Ancillary revenue grew $1.9 million reflecting increased maintenance revenues and higher revenue from the CFTS contract. The fourth quarter is seasonally slower in the North American market due to reduced daylight hours and weather conditions, but HNZ's location in the southern hemisphere results is a seasonal offset to the North American operations.
EBITDA amounted to $18.8 million, up significantly from $8.4 million a year earlier, as a result of higher operating activity in North America and in Afghanistan, as well as a $5.6 million EBITDA contribution from HNZ. 2011 net income reached $10.2 million, or $0.78 per share, versus an adjusted net income of $5.1 million, or $0.39 per share, last year. Finally, cash flows related to operating activities before net changes in non-cash working capital balances totalled $15.8 million, compared with $4.3 million in 2010.
STRONG FINANCIAL POSITION
As at December 30, 2011, Canadian Helicopters' financial position remains strong with a debt of $32.3 million, net of cash and cash equivalents and bank indebtedness, drawn under its authorized revolving operating credit facility of$125 million. During the fourth quarter, the Company used its seasonal cash flow resulting in part from the collection of receivables to reduce the outstanding balance on its credit facility by $32.0 million. As a result, the long-term debt-to-equity ratio was 0.19 at the end of 2011.
"We are confident in regard to the immediate and long term prospects for Canadian Helicopters. On the international side, we anticipate steady growth from our operations in the southern hemisphere, and our higher contribution revenues will remain significant in Afghanistan. On the North American domestic side, indications of increased mining activity suggest that the momentum in Canada will again produce improved results. Meanwhile, a marketing drive is ongoing to increase our business in new markets, particularly in Asia, and we believe this effort will begin yielding results in coming quarters. With a strong financial position, Canadian Helicopters also remains poised for further expansion through acquisition, both in Canada and abroad," concluded Mr. Wall.
LONG TERM INCENTIVE PLAN SHARE PURCHASE
Under the terms of the Canadian Helicopters long term incentive plan ("LTIP"), Canadian Helicopters has an obligation to purchase shares for the account of eligible employees. In satisfaction of the purchase obligation, on March 27, 2012, Canadian Helicopters, Computershare Trust Company of Canada ("Computershare") and Fonds de solidaritÃ© des travailleurs du QuÃ©bec (F.T.Q.) ("FSTQ") entered into a share purchase agreement whereby Computershare, as trustee and custodian under the LTIP, will, subject to certain conditions, purchase a minimum of 120,000 and a maximum of 190,000 common shares from FSTQ at a purchase price based on the volume weighted average price of the common shares on the TSX for the ten trading days immediately following March 28, 2012. The closing of the sale is expected to occur in April 2012. Immediately following the closing of the sale, FSTQ's interest in the common shares of Canadian Helicopters will be reduced from approximately 20.87% to between approximately 19.93% and 19.37%.
Canadian Helicopters will hold a conference call to discuss these results on March 28, 2012 at 11:00 AM (ET). Interested parties can join the call by dialing 647-427-7450 (Toronto) or 1-888-231-8191 (toll free). If you are unable to call at this time, you may access a tape recording of the meeting by calling 416-849-0833 (local) or 1-855-859-2056 (toll free) followed by access code 59689382. This tape recording will be available until April 4, 2012.
ABOUT CANADIAN HELICOPTERS GROUP INC.
Canadian Helicopters Group is an international provider of helicopter transportation and related support services with primary operations in Canada, Australia, New Zealand and regions of Southeast Asia. The group also delivers contracted on demand support in Afghanistan and Antarctica. Charter operations are provided under two brands: Helicopters New Zealand (HNZ) in the Asia Pacific and Antarctica regions and Canadian Helicopters Limited (CHL) inCanada and Afghanistan. In addition to charter services, the Company provides flight training and third party repair and maintenance services. With headquarters near Montreal, Canada, the Company operates approximately 160 helicopters and employs approximately 800 personnel.
This press release contains forward-looking statements relating to the future performance of the Company and in particular with respect to the continuing business relationship in Afghanistan and expected revenues from USTRANSCOM. Forward-looking statements, specifically those concerning future performance, are subject to certain risks and uncertainties, and actual results may differ materially. Consequently, readers should not place any undue reliance on such forward-looking statements. In addition, these forward-looking statements relate to the date on which they were made. The Company disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise unless being required by applicable laws.
DEFINITION OF NON-IFRS MEASURES: EBITDA, ADJUSTED NET INCOME AND ADJUSTED EPS
References to "EBITDA" are to earnings (loss) before net financing charges (income), income taxes, depreciation and amortization, gain or loss on disposal of property, plant and equipment, share of net income (loss) of an associate, distributions to Unitholders and holders of Exchangeable Class B LP Units and change in fair value of Units and Exchangeable Class B LP Units as disclosed in the Summary of Selected Consolidated Financial Information. Since EBITDA is a metric used by many investors to compare issuers on the basis of the ability to generate cash from operations, management believes that in addition to net earnings or loss, EBITDA is a useful supplementary measure.
Adjusted net income and adjusted Earnings per share information ("Adjusted EPS") are provided by management to improve the comparability information between 2011 and 2010. Adjusted EPS is calculated by dividing the net income as disclosed in the statement of comprehensive income, adjusted to add back any distributions to Unitholders and holders of Exchangeable Class B LP Units and to exclude the effect of any change in fair value of Units and Exchangeable Class B LP Units during the 2010 comparative periods, by the weighted average number of Units and Exchangeable Class B LP Units in issue during these periods, regardless whether these units were classified as equity or financial liabilities.
EBITDA, Adjusted net income and Adjusted EPS are not earnings measures recognized under IFRS and do not have standardized meanings prescribed by IFRS. Therefore, EBITDA, Adjusted net income and Adjusted EPS may not be comparable with similar measures presented by other entities. Investors are cautioned that EBITDA, Adjusted net income and Adjusted EPS should not be construed as an alternative to net earnings (loss) determined in accordance with IFRS as indicators of the Company's performance, or to cash flows from operating, investing and financing activities as measures of liquidity and cash flows.
Note to readers: Complete consolidated unaudited interim financial statements and Management's Discussion & Analysis of Operating Results and Financial Position are available on Canadian Helicopters' website atwww.canadianhelicopters.com and on SEDAR at www.sedar.com.
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