31-Jul-2013 Source: Erickson Air-Crane
Erickson Air-Crane Incorporated (NASDAQ:EAC) (“Erickson,” the “Company,” “we,” “us” and “our”), a leading global provider of aviation services to a diverse mix of commercial and government customers and the vertically integrated manufacturer and operator of the powerful, heavy-lift helicopter, the Erickson S-64 Aircrane, today announced strong second quarter 2013 financial results.
Second Quarter and Recent Highlights
Second Quarter Results
Revenue for the quarter ended June 30, 2013 increased by 81% compared with the prior year second quarter, to $69 million. While all segments of the business performed strongly, revenue growth was primarily due to the acquisition of Evergreen Helicopters, Inc. (“Evergreen Helicopters”) during the second quarter of 2013. Erickson’s business, excluding Evergreen’s operations, was also up for the quarter as compared to the prior year, primarily driven by infrastructure construction and timber harvesting, partially offset by a decrease in firefighting revenues, following an exceptionally busy firefighting season in Q2 2012.
Udo Rieder, Chief Executive Officer of Erickson, commented, “We are very pleased with the strong financial results of the second quarter. We made tremendous operational and strategic progress in the quarter, across every aspect of our business. We are demonstrating our ability to deliver results to our customers, partners, and shareholders. We executed well across all dimensions: financially, operationally and strategically.
Financially, we performed strongly while integrating the Evergreen Helicopters acquisition and working toward attaining a variety of identified synergies across the business. Operationally, we executed very well, maintained a strong safety record, increased fleet utilization, increased maintenance levels for the Evergreen Helicopters fleet and are making substantial progress on the integration of the two businesses. Strategically, in addition to dramatically expanding our business with the Evergreen Helicopters acquisition, we are also pleased to have recently announced our transaction to add the Air Amazonia business to our growing global business.”
As part of the integration of the Evergreen Helicopters business, the Company has realigned its reporting structure into two new segments: government and commercial. The Government segment includes defense and security, firefighting, and transport and other government related activities. The Commercial segment includes timber harvesting, infrastructure construction (including oil and gas) and MRO/Manufacturing.
Revenues from the Government segment during the second quarter of 2013 increased 140%, to $43.9 million as compared to $18.3 million in the prior year second quarter. This growth was primarily due to the inclusion of a partial quarter’s revenues from the Evergreen Helicopters acquisition. Revenues from the Commercial segment in the second quarter of 2013 increased 26% to $24.7 million as compared to the prior year second quarter total of $19.6 million. Commercial segment growth was broad-based, with gains in infrastructure construction, including strong results from the Company’s oil and gas business in South America and its timber harvesting.
The Company’s second quarter 2013 operating income grew 59% to $4.9 million as compared to $3.1 million in the prior year second quarter. This includes $4.0 million of acquisition and integration expenses that decreased operating income.
Other expenses in the second quarter of 2013 were $7.7 million as compared to $1.2 million in the prior year second quarter. Net interest expense increased to $6.5 million as compared to $1.7 million in the prior year second quarter. This increase was primarily driven by the Company’s recent debt financing, including its $400.0 million of 8.25% Second Priority Senior Secured Notes due 2020 (the “Notes”). Pursuant to the terms of the Notes, the funds in escrow will be released to redeem $45.0 million of the $400 million of Senior Notes within three business days after July 31, 2013.
The Company reported net loss in the second quarter of 2013 of $2.0 million as compared to net income of $1.1 million in the prior year second quarter. Net income and earnings per share, adjusted to exclude acquisition and integration costs, were $0.4 million and $0.04, respectively, for the second quarter, as presented in the table below.
Adjusted EBITDA, which excludes the effect of the acquisition and integration costs as presented in the table below, increased 73% to $17.2 million in the second quarter of 2013 as compared to $10.0 million in the prior year period.
Adjusted EBITDAR, which excludes the effect of the acquisition and integration costs as presented in the table below, was $20.5 million in the second quarter of 2013.
As of June 30, 2013 the Company had $34.9 million drawn on its revolving credit facility (excluding letters of credit) and $5.8 million in cash on its balance sheet. The Company’s borrowing capacity under its revolving line of credit was $85.5 million.
Udo Rieder, President and Chief Executive Officer of Erickson, commented, “As a result of the Evergreen Helicopters transaction, we are broadly diversified across aircraft type, customers, geography and range of mission capabilities. We are now well positioned to target a wide range of growth opportunities around the world and across many industries and end markets. We are very pleased with our results thus far this year and expect to see our performance accelerate as we move through the second half of 2013.”
The full year guidance provided below is operational and adjusted to exclude any acquisition or integration related expenses (including the $6.2 million incurred in the first two quarters and an estimated $11.0 million for the full year). The guidance also does not include any effect from the anticipated acquisition of Air Amazonia from HRT.
On a pro forma basis, which assumes the acquisition of Evergreen Helicopters and associated financing had occurred on January 1, 2013, the Company maintains its guidance and expects full year revenues in the range of $385 to $395 million, Adjusted EBITDA in the range of $108 to $116 million, and earnings per share of $1.36 to $1.58 based on assumed fully diluted shares oustanding of 13.8 million. The 13.8 million shares assumes the conversion of approximately 4.0 million outstanding shares of preferred stock into the same number of shares of common stock on January 1, 2013.
On an as reported basis, projected full year fiscal 2013 revenues are in the range of $325 to $335 million which is in line with the Company’s previous guidance and an increase in projected Adjusted EBITDA for the full year in the range of $97 to $105 million. The earnings per share are projected to be in the range of $1.54 to $1.75 based on the assumed shares outstanding of 13.8 million.
Mr. Rieder concluded, “Our entire organization is energized to demonstrate that we have a unique ability to develop our business, position our company for growth, and deliver exceptional value to the full range of our constituencies, including our customers, partners, and our shareholders. We now have the infrastructure, capabilities, and resources to take advantage of our position as a global and broadly diversified company to address a wide range of growth opportunities and emerge as one of the world’s leading aviation services providers.”
The Company recently announced the signing of agreements to acquire Air Amazonia. The Company expects annual revenues related to this acquisition to be approximately $30.0 million and Adjusted EBITDA margins comparable to the base business. The transaction is subject to customary closing conditions and if completed, will be funded using the Company’s revolving line of credit. Pursuant to the terms of the Notes, the funds in escrow will be released to redeem $45.0 million of the $400 million of the Notes within three business days after July 31, 2013.
The Company will hold a conference call to discuss its earnings results for the second quarter ended June 30, 2013 on July 29, 2013 at 4:30 p.m. Eastern Time with prepared remarks by Udo Rieder, the Company’s President and Chief Executive Officer, and Chuck Ryan, the Company’s Chief Financial Officer, to be followed by a question and answer session for the investment community. A live webcast of the call can be accessed at investors.ericksonaircrane.com. To access the call, dial toll-free 1-888-329-8893 or 1-719-325-2315 (international). The pass code is 9669665.
To listen to a telephonic replay of the conference call, dial toll-free 1-877-870-5176 or 1-858-384-5517 (international) and enter pass code 9669665. The replay will be available beginning at 7:30 p.m. ET on Monday, July 29, 2013, and will last through 11:59 p.m. ET August 12, 2013.
About Erickson Air-Crane Incorporated
Erickson Air-Crane Incorporated is a leading global provider of aviation services to a diverse mix of commercial and government customers. The Company currently operates a diverse fleet of 85 rotary-wing and fixed wing aircraft, including a fleet of 20 heavy-lift S-64 Aircranes. This fleet supports a wide and worldwide variety of government and commercial customers, across a broad range of aerial services, including critical supply and logistics for deployed military forces, humanitarian relief, firefighting, timber harvesting, infrastructure construction, and crewing. The Company also maintains a vertical manufacturing capability for the S-64 Aircrane, related components, and other aftermarket support and maintenance, repair, and overhaul services for the Aircrane and other aircraft. Founded in 1971, Erickson Air-Crane is headquartered in Portland, Oregon and maintains facilities and operations in North America, South America, the Middle East, Africa and Asia-Pacific. For more information, please visit http://www.ericksonaircrane.com.