CHC reports Q4 and FY2015 Results

CHC reports Q4 and FY2015 Results

30-Jun-2015 Source: CHC

CHC Group (NYSE:HELI), the parent company of CHC Helicopter, reported revenue of $374 million and a net loss of $119 million for its fiscal 2015 fourth quarter, which ended April 30, 2015. Full-year consolidated revenue was $1.7 billion, a decline of 3 percent year-over-year, driven by the impact of currency translation as the U.S. dollar strengthened. On a constant currency basis, full year revenue increased 1 percent.

The Company had a fourth quarter adjusted net loss of $32 million, which excluded the effect of special items. The special items included, but were not limited to, a $77 million restructuring charge related to employee severance costs and lease and other contractual costs on certain older technology leased helicopters. Fourth quarter Adjusted EBITDAR (earnings before interest, taxes, depreciation, amortization and helicopter lease and other costs) excluding special items was $110 million, a decline of 17 percent. For the full year, the Company recorded an adjusted net loss of $123 million. Full year Adjusted EBITDAR excluding special items was $461 million, a decrease of 2 percent. On a constant currency basis, Adjusted EBITDAR excluding special items for the full year was relatively flat.

INDUSTRY ENVIRONMENT

Oil and gas customers continue to focus on reducing their capital and operating expenses amid significantly lower crude oil prices, which affects demand for both offshore flying services and helicopter maintenance, repair and overhaul (MRO) services. Oil prices remain at historically low levels, which primarily impacts exploration business which is approximately 20 percent of CHC’s flying revenue.

Karl Fessenden, CHC president and chief executive officer:

“We continue to benefit from having a very significant portion of our flying revenue weighted toward oil and gas production, which is more stable than exploration, and we remain confident that the long-term demand for transportation to deep water and ultra-deep water locations remains strong. We are focused on reducing CHC’s costs, strengthening our balance sheet, and partnering with our customers to provide solutions that result in lower customer costs – while maintaining an absolute commitment to industry-leading safety, availability and reliability. These efforts will create a more efficient, market responsive and competitive CHC that is well positioned for balanced growth in the future.”

Joan Hooper, CHC chief financial officer:

“We continue to focus on our financial priorities – strengthening our balance sheet, becoming free cash flow positive and positioning for long-term balanced growth. Our new asset-backed loan facility increases our liquidity and provides us with greater financial flexibility. In addition, the bond tender completed in the fourth quarter resulted in a debt reduction of almost $21 million at a discount, bringing the total bonds retired in the fiscal year to $320 million.”

BUSINESS SEGMENTS

Helicopter Services (flying)

Fourth quarter revenue of $341 million was down 16 percent, primarily driven by the negative impact of currency translation. On a constant currency basis, the decline was 6 percent, driven by lower flying activity and lower reimbursable revenue. Full year revenue was $1.6 billion, down 4 percent, but was essentially flat on a constant currency basis. The segment’s fourth quarter Adjusted EBITDAR of $124 million declined 11 percent, a lower decline than revenue primarily reflecting a lower foreign exchange impact. For the full 2015 fiscal year, the segment’s Adjusted EBITDAR of $516 million was relatively flat.

Heli-One (MRO)

Heli-One’s third-party revenue for the fourth quarter was $33 million, a decline of 32 percent compared to the prior year quarter due to lower third-party flying hours and the timing of maintenance work completions. However, for the full 2015 fiscal year, Heli-One’s external revenue was up $3 million to $150 million, an increase of 2 percent. Fourth quarter Adjusted EBITDAR declined $6 million due to lower internal work compared to the prior year quarter. For the full 2015 fiscal year, Heli-One’s Adjusted EBITDAR was $23 million.

DEBT, LIQUIDITY AND LEVERAGE

During the fourth quarter, CHC strengthened its balance sheet by deploying a portion of the proceeds from the CD&R transaction to repurchase $21 million in 9.375 percent senior unsecured notes at a discount. For the full 2015 fiscal year, CHC retired long-term debt of $320 million resulting in approximately $30 million annualized interest expense savings. The company ended the year with an adjusted leverage ratio of 5.0x, compared to 5.3x last year.

The Company ended the 2015 fiscal year with $500 million in liquidity as defined under “Non-GAAP Measures” below. In addition, after the 2015 fiscal year-end, the Company put in place a new asset-backed loan facility that will increase liquidity by an additional $145 million.

PREFERRED SHARE DIVIDEND

In the fourth quarter, GAAP and adjusted earnings per share (EPS) include $13 million or 16 cents of preferred dividends paid in-kind to CD&R. For the full year, GAAP and adjusted EPS included preferred share dividends of $24 million.

ABOUT CHC

CHC Helicopter is a leader in enabling customers to go further, do more and come home safely, including oil and gas companies, government search-and-rescue agencies and organizations requiring helicopter maintenance, repair and overhaul services through the Heli-One segment. The company has a fleet of more than 230 aircraft and operates in more than 20 countries around the world.

Additional Information

The preferred shares offered to the purchaser in the private placement have not been and will not be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

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