CHC reports FY2014Q3 results, provides guidance for full year

CHC reports FY2014Q3 results, provides guidance for full year

13-Mar-2014 Source: CHC

CHC Group Ltd. (NYSE:HELI), the parent company of CHC Helicopter, today reported its financial performance for the fiscal-2014 third quarter, which ended Jan. 31.

Revenue for the quarter was $454 million, up 3 percent. (Unless otherwise noted, all comparisons are year-over-year.) The company had a quarterly net loss of $60 million, compared to a net loss of $59 million in the same quarter last year. Through the first three quarters of the fiscal year, CHC reported revenue of $1.31 billion, up less than 1 percent, and a net loss of $149 million, compared to a net loss of $85 million a year ago.

CHC’s third-quarter adjusted EBITDAR (earnings before interest, taxes, depreciation, amortization and aircraft rental costs, excluding special items) was $119 million, down 1 percent. CHC had a quarterly adjusted net loss of $25 million, compared with a loss of $46 million in the year-ago quarter.

William Amelio, CHC president and chief executive officer:

“Long-term trends for oil-and-gas investments in deep and ultra-deep discovery and production – where the need for our services is greatest – remain robust. We are pursuing our financial priorities by focusing on disciplined capital allocation, reduced leverage and positive free cash flow – with safety leadership in the air and on the ground.”

Joan Hooper, CHC chief financial officer:

“The changes we are making to CHC are further enhancing safety, service and efficiency. We are applying the same resolve to financial discipline as we do to operating standards. Our financial priorities – profitable growth, expanding adjusted EBITDAR margins and strengthening the balance sheet – are guiding all of our decisions and actions.”

FINANCIAL PRIORITIES

Growth:

  • A 1-percent increase in overall revenue from flying services was attributable to growth in CHC’s business in the Western North Sea region. Third-party sales by Heli-One – which provides helicopter maintenance, repair and overhaul services (MRO) – were up 25 percent.

Adjusted EBITDAR:

  • CHC’s consolidated Q3 adjusted EBITDAR margin, excluding special items, was 29 percent.
  • EBITDAR for Helicopter Services, CHC’s oil-and-gas and search-and-rescue flying business, declined 3 percent to $118 million, driven in part by costs associated with returning Airbus EC225 aircraft to service, as well as expenses to initiate new operations in Nigeria, a key growth area for CHC.
  • Heli-One’s EBITDAR declined 11 percent to $16 million, mostly as a result of the timing of helicopter maintenance projects, increased maintenance expenses for EC225 aircraft as they returned to service, and costs to improve the efficiency of the company’s supply chain.

Balance Sheet:

  • Proceeds from CHC Group’s initial public offering of its ordinary shares were $322 million (net of underwriting fees). This is composed of $294 million from the base offering in January, and $28 million from the underwriters’ February exercise of an over-allotment option to purchase additional ordinary shares.
  • Those net proceeds, along with existing cash, were used in January to pay down all of CHC Helicopter’s outstanding revolver balance of $225 million, and in February to redeem $130 million of senior secured notes. Liquidity at the end of the quarter was $775 million.

BUSINESS HIGHLIGHTS

Helicopter Services (flying):

  • Third-quarter contract wins from oil-and-gas customers illustrated the leading global reach of CHC’s flying operations. The agreements were for services in places as wide-ranging as Azerbaijan, Australia, Brazil, Kenya, Malaysia, Mozambique and Norway.
  • CHC’s retention rate of existing contracts continues to exceed 90 percent.
  • The company’s return to strategically important Nigeria took a significant step forward in February when Atlantic Aviation, CHC’s joint-venture partner, initiated regular commercial flights for Shell.

Heli-One (MRO):

  • New contracts recorded during the quarter included agreements with Lufttransport (Norway) to upgrade and modify Airbus (formerly Eurocopter) AS332L1 aircraft for all-weather search-and-rescue services, and with Erickson Helicopters (United States) to maintain specific Airbus and Sikorsky aircraft.
  • In February, the U.K. Ministry of Defence’s Military Aviation Authority certified Heli-One to provide maintenance support services for the agency’s Makila 1A1 engines.

Full-Year Fiscal-2014 Guidance

The company anticipates revenue to be flat to slightly up from fiscal 2013, and adjusted EBITDAR to be flat to slightly down, reflecting the negative effect of the suspension and subsequent return to service of EC225 aircraft. Interest expense is expected to be $150 to $160 million, tax expense to be $25 to $35 million, and adjusted share count to be 78 million shares. Capital expenditures are anticipated to be $140 to $190 million, and depreciation and amortization to be $135 to $145 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 operates about 240 aircraft in approximately 30 countries around the world.

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