CHC Group (NYSE:HELI) reported fiscal 2016 first quarter (ended July 31, 2015) consolidated revenue of $376 million, a decline of 18 percent year-over-year driven by unfavorable currency translation effects and challenging operating conditions in the global oil sector. On a constant currency basis, revenue decreased 9 percent.
The Company reported a net loss of $47 million, or $0.62 per ordinary share, for the fiscal 2016 first quarter. Excluding special items, Adjusted EBITDAR (earnings before interest, taxes, depreciation, amortization and helicopter lease and other costs) increased 2 percent to $114 million, reflecting the Company’s successful execution of cost control initiatives. On a constant currency basis, Adjusted EBITDAR excluding special items was up modestly year-over-year. Adjusted EBITDAR margin, excluding special items, was 33 percent, an increase of 620 basis points year-over-year, resulting from cost control initiatives as well as the impact of foreign exchange.
The Company had a fiscal 2016 first quarter adjusted net loss of $34 million. Quarterly adjustments included, but were not limited to, a $19 million restructuring charge related to lease and other contractual costs on certain leased helicopters as well as employee severance costs.
Karl Fessenden, CHC President and Chief Executive Officer:
“In the fiscal 2016 first quarter, we significantly lowered our costs and improved our capital efficiency, reflecting both the resiliency and flexibility of our business model. Excluding foreign exchange, we reduced operating expenses at the Adjusted EBITDAR level by approximately $50 million on a year-over-year basis, which more than offset the decline in revenue and resulted in modest growth in Adjusted EBITDAR. We remain confident in our ability to manage through the current operating environment given the mission-critical services that we provide, coupled with the fact that the majority of our revenue is derived from oil and gas production platforms operating at low marginal costs. We continue to believe there are significant opportunities for attractive growth as production and exploration activities continue to move further offshore to meet the forecasted long-term demand for oil.”
Lee Eckert, CHC Chief Financial Officer:
“While we are encouraged by the positive impact from our significant initial cost reduction program, we believe there is more runway to further improve our cost base, capital efficiency, productivity and commercial excellence.”
Helicopter Services (flying)
Fiscal 2016 first quarter revenue of $341 million declined 20 percent, with the negative impact of currency translation being a significant contributor to the reduction. On a constant currency basis, the decline was 9 percent, driven by lower flying activity and lower reimbursable revenue. Adjusted EBITDAR for the segment was $121 million, a decline of 4 percent largely due to the impact of foreign exchange. The segment’s Adjusted EBITDAR margin of 39 percent increased approximately 590 basis points compared to the prior year quarter, reflecting the positive impact of foreign exchange and cost saving initiatives.
Heli-One’s third-party revenue for the fiscal 2016 first quarter was $35 million, a decline of 4 percent compared to the prior year quarter due to the impact of foreign exchange. On a constant currency basis, revenue increased 8 percent year-over-year. Adjusted EBITDAR was $7 million, an increase of 40 percent and Adjusted EBITDAR margin of 12 percent increased 300 basis points compared to the prior year quarter.
LEVERAGE, LIQUIDITY AND COMMITMENTS
The Company ended the fiscal 2016 first quarter with an adjusted leverage ratio of 5.0x, which was unchanged from the prior quarter.
The Company ended the quarter with $559 million in liquidity as defined under “Non-GAAP Measures” below. This includes $145 million in undrawn capacity under the asset-based revolving credit facility. Operating cash flow was $25 million, an improvement of $56 million over the same period in the prior year.
During fiscal 2016 to date, the Company repurchased $41 million in bonds at significant discounts to face value, driving annualized interest savings of approximately $4 million.
In addition, the Company reduced its aircraft purchase commitments by $169 million. Additional flexible orders of $249 million allow the Company to monitor the market recovery before confirming dates and the type of aircraft for deliveries, further strengthening the Company’s financial flexibility.
On Wednesday, September 9, 2015, the Company will hold its quarterly results call at 8 a.m. (Eastern Time). The call will also be audio webcast at www.chc.ca/presentations.
Presentation material accompanying the release will be posted to the Company’s website before the call begins. Analysts only are invited to dial into and register for the call at 877-407-0778 (toll free) or 201-689-8565 (International), using Conference ID 13617734.
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 approximately 20 countries around the world.
Full press release with financial statements here
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