Erickson Air-Crane Incorporated, a leading operator and the manufacturer of the powerful heavy-lift helicopter, the Erickson S-64 Aircrane, today announced financial results for the third quarter ended September 30, 2012.
Revenues for the three months ended September 30, 2012 increased by 29% versus the third quarter of 2011, rising to $76.3 million. This increase was the result of broad-based strength as each of the Company’s business segments made gains versus prior year levels. Net income attributable to Erickson Air-Crane Incorporated in the third quarter increased by 53% versus the year-ago quarter, rising to $17.6 million, or $1.80 per diluted share.
Udo Rieder, President and Chief Executive Officer of Erickson Air-Crane, said, “We are very pleased that every one of our Aerial Service lines of business and our Manufacturing and MRO segment grew versus the prior year. The demands of a heavy firefighting season, combined with improvement in a number of end markets and our new contracts helped push us to very strong levels of both revenue and profitability.”
The Company noted that its third quarter operating income increased by 59% to $30.5 million and that adjusted EBITDA increased by 50% to $33.0 million. A gross margin increase of 450 basis points and a reduction in operating expenses as a percentage of sales of 290 basis points were the main drivers of the increased profitability.
These improvements, combined with a $0.8 million reduction in interest expense following the repayment of debt with the proceeds of the Company’s initial public offering and reductions in interest rates on subordinated debt, drove net income attributable to Erickson Air-Crane Incorporated to $17.6 million, an increase of 53% versus prior year. Earnings per diluted share for the third quarter, normally the Company’s most profitable quarter on an annual basis, were $1.80.
Mr. Rieder continued, “In addition to the financially and operationally strong quarter, we are pleased to have made strategic advances as we position the Company for additional growth and diversification. Yesterday we announced a non-binding Letter of Intent to acquire a Brazilian helicopter business, a deal which, if completed, would greatly expand our operating footprint in one of the world’s fastest growing economies and position us firmly as a leading provider of aerial services to the oil and gas industry.”
The Company noted that on November 6, 2012 it issued a separate press release announcing the signing of the non-binding Letter of Intent to acquire an air logistics operation from HRT Participacoes em Petroleo S.A.
The Company also noted that, during the fourth quarter, it completed a deal with San Diego Gas and Electric (“SGD&E”) to repurchase an Aircrane and related spare parts inventory and to provide firefighting service to SDG&E under a new contract. This transaction is estimated to favorably impact EPS by $0.35 per share in the fourth quarter and is included in guidance. The Company expects to utilize this aircraft to facilitate planned organic growth.
During the three months ended September 30, 2012, total Aerial Services revenues increased by 31% to $69.6 million versus the prior year’s third quarter level of $53.0 million. Total Revenue Flight Hours during the quarter increased by 41% to 5,843 hours versus the year-ago level of 4,146 hours. The Company noted that while increased firefighting hours were the primary driver for the improved revenues, it saw increases in each type of business versus the prior year and, importantly, had more than doubled its construction flight hours as a result of its contract with Repsol, an oil and gas customer based in Peru.
Mr. Rieder commented, “Our crews are to be congratulated on their tireless work in helping mitigate the loss of life, property and resources during an extraordinarily heavy fire season. We are proud that they embrace the seriousness of their mission and we are fortunate to have their dedication as an important part of our corporate culture at Erickson.”
During the three months ended September 30, 2012, total Manufacturing and MRO revenues increased by 8% to $6.6 million versus the year-ago level. This growth was mainly due to increased cost-per-hour support for the Company’s customer in Italy, where the fire season was also particularly heavy.
In order to reflect the stronger than expected third quarter financial performance and with improved visibility on its fourth quarter operations, the Company revised its guidance for the fiscal year ending December 31, 2012. Consistent with last quarter, the Company is providing full year Earnings Per Share estimates on a pro forma basis, as though the recapitalization and IPO had taken place on January 1, 2012.
The Company now expects revenues for the year to range between $177.0 million and $181.0 million. This compares favorably to its prior guidance of $159.0 million to $165.0 million. With respect to adjusted EBITDA, the Company now expects to report between $42.0 million and $44.0 million versus its previously communicated range of $31.5 million to $33.5 million. Lastly, the Company now expects to report full year pro forma earnings per share between $1.34 and $1.55 (GAAP earnings per share between $1.86 and $2.15) versus its prior expectation for a range of pro forma earnings per share between $0.76 and $0.86 per share (GAAP earnings per share between $1.05 and $1.20). Included within these numbers is the expected benefit of a relief of liability associated with the termination of cost-per-hour contract obligations to SDG&E as a result of the helicopter repurchase. This impact is estimated to be $5.7 million revenue and EBITDA, or $0.35 fourth quarter earnings per share assuming a 40% tax rate.
Mr. Rieder concluded, “We’re very pleased to have reported one of the strongest quarters in the history of our Company. We are even more excited to have made excellent progress positioning our business for sustainable growth.”
The Company will host a conference call at 4:30 p.m. Eastern Time today, Wednesday, November 7 2012, to discuss the financial results for the third quarter ended September 30, 2012.
To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: +1-888-401-4668. International callers should dial +1-719-325-2458. The conference call ID number is 5403949.
If you are unable to participate in the call at this time, a replay will be available starting today, on Wednesday, November 7, 2012 at 7:30 p.m. Eastern Time, and will remain available through Wednesday, November 21, 2012. To access the replay, dial +1-877-870-5176. International callers should dial +1-858-384-5517. The conference ID number for the replay is 5403949.
This conference call will also be broadcast live over the Internet and can be accessed by all interested parties by clicking on http://investors.ericksonaircrane.com/. Please access the link at least fifteen minutes prior to the start of the call to register, download, and install any necessary audio software. For those unable to participate during the live broadcast, a replay will be available shortly after the call by accessing the same link.
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