26-Feb-2015 Source: Erickson
Erickson Incorporated (NASDAQ:EAC) (“Erickson,” the “Company,” “we,” “us” and “our”), a leading global provider of aviation services, today announced fourth quarter and full year 2014 financial results and guidance for fiscal 2015.
Udo Rieder, Chief Executive Officer of Erickson, commented, “The recently completed business reorganization provides for an increased focus on our end markets and additional investment in business development. The reorganization enables us to better leverage our competitive strengths and enhance our leadership position. This completes the integration of the transformative acquisitions we made over the past 18 months. We expect to capture opportunities and improve our financial results. We remain sharply focused on driving value for our customers, partners and shareholders.”
Fourth Quarter and Recent Highlights
1) Fourth quarter revenues declined to $73.2 million as compared to $92.5 million in the prior year period, primarily driven by the previously anticipated reduction in the defense and security market.
2) Operating expenses reduced by $4.9 million as compared to the prior year period, driven by cost-saving and integration synergy initiatives undertaken earlier in 2014.
3) Fourth quarter operating income was $4.1 million as compared to $9.2 million in the prior year period.
4) Fourth quarter Adjusted EBITDA was $14.2 million as compared to $19.0 million in the fourth quarter of last year; Adjusted EBITDA margin held relatively stable at 19.4% compared to 20.6% in the prior year period.
5) The Company generated $5.2 million of operating cash flow and $1.1 million of free cash flow(1) during the fourth quarter.
6) As of January 1, 2015, the Company reorganized into four business units aligned by end market: Government Aviation Services, Commercial Aviation Services, Oil & Gas Aviation Services and Manufacturing/MRO. This reorganization enables operational streamlining, enhanced competitiveness and accountability throughout the organization.
7) In January 2015, the Company entered into a new, two-year agreement with PetroRio (formerly HRT), the Company’s first near-shore platform support contract.
8) In February 2015, the Company entered into an exclusive MRO relationship with Bell Helicopter, a division of Textron, Inc. (NYSE:TXT), to provide parts and maintenance support of approximately 50 aircraft in the globally deployed fleet of Bell 214 ST and 214 B helicopters.
Full Year Highlights
1) Full year revenue increased 8.9% to $346.6 million, driven primarily by acquisitions. Pro forma revenues for 2013 were $395.2 million.
2) Full year Adjusted EBITDA decreased 7.8% to $83.8 million, a margin of 24.2%, as compared to $90.9 million, a margin of 28.6%, in 2013. Pro forma Adjusted EBITDA for 2013 was $106.3 million, a margin of 26.8%.
Fourth Quarter Results
Consolidated revenues for the quarter ended December 31, 2014 were $73.2 million as compared to $92.5 million in the prior year. This reflects a decrease in the Company’s Government segment to $52.4 million as compared to $67.2 million in the prior year’s period. This performance was, as expected, primarily driven by lower defense activity.
Revenues from the Company’s Commercial segment were $20.8 million as compared to $25.3 million in the prior year’s fourth quarter; higher MRO revenues and aircraft sales were offset by the conclusion of the initial PetroRio (formerly HRT/Rosneft) contract, as well as lower spot construction and the Company’s strategic exit from Malaysia compared to the prior year.
Fourth quarter 2014 operating income decreased to $4.1 million as compared to the prior year level of $9.2 million; adjusted operating income, which excludes acquisition and integration expenses, and restructuring costs, was $4.5 million, as compared to $10.8 million in the prior year’s period.
Net loss in the fourth quarter of 2014 was $2.5 million, or $0.18 per diluted share, compared to net loss of $1.7 million, or $0.12 per diluted share, in the prior year period; adjusted net loss was $2.2 million, or $0.16 per diluted share, as compared to adjusted net income of $1.3 million, or $0.10 per diluted share in the prior year.
Fourth quarter Adjusted EBITDA was $14.2 million as compared to $19.0 million in the prior year period. Adjusted EBITDAR was $19.1 million in the fourth quarter of 2014 as compared to $24.4 million in the prior year’s fourth quarter.
As of December 31, 2014, the Company had $5.1 million in cash on its balance sheet and $89.3 million drawn on its revolving credit facility. Long-term debt, including the current portion, as of December 31, 2014 was $371.9 million.
Full Year Results
Consolidated full year revenue increased by 8.9% to $346.6 million on increased revenue contribution from acquisitions. Pro forma revenues were $395.2 million in 2013. Government segment revenues for the year were $248.0 million and Commercial segment revenues for the year were $98.6 million.
Net loss attributable to common shareholders for 2014 was $10.3 million, or $0.75 per diluted share, compared to net income of $9.7 million, or $0.82 per diluted share, in the prior year. Adjusted full year net income in 2014 was $4.4 million, or $0.32 per diluted share as compared to $18.0 million or $1.52 per diluted share in 2013.
Full year Adjusted EBITDA decreased 7.8% to $83.8 million as compared to $90.9 million in 2013. Adjusted EBITDA margin for the year was 24.2% as compared to 28.6% in the prior year. Pro forma Adjusted EBITDA was $106.3 million, a margin of 26.8%, in 2013.
The full year guidance provided below is operational and adjusted to exclude any acquisition, reorganization or other nonoperational expenses.
For the full year ending December 31, 2015, the Company expects the following: a soft defense environment and growth in new oil and gas customers, significant growth in MRO/Manufacturing, and a steady year-over-year performance in other commercial markets. Also incorporated into the Company’s guidance are estimates of cost savings from prior initiatives and the recently announced reorganization. Based upon these and other assumptions, the Company anticipates full year 2015 revenues in the range of $330 million to $350 million, Adjusted EBITDA in the range $80 million to $90 million and Adjusted EBITDAR in the range of $100 million to $110 million. The Company also noted that it expects to generate positive free cash flow(1) on a full year basis in 2015.
(1) We define free cash flow as operating cash flow adjusted for net purchases of aircraft, property, plant and equipment.
About Erickson Incorporated
Erickson is a leading global provider of aviation services specializing in oil and gas, government services, legacy aircraft MRO and manufacturing, and commercial services such as firefighting, HVAC, power line, specialty, construction, and timber harvesting. Erickson operates a fleet of approximately 80 rotary-wing (light, medium, and heavy) and fixed-wing aircraft, including 20 heavy-lift S-64 Aircranes. Founded in 1971, Erickson is headquartered in Portland, Oregon, USA, and maintains operations in North America, South America, Europe, the Middle East, Africa, Asia Pacific, and Australia. For more information, please visit www.ericksonaviation.com.