Erickson Air-Crane Incorporated Announces Record Full-Year and Fourth Quarter Results
Mar 11th 2013 7:18AM
Updated Mar 11th 2013 8:35AM
Erickson Air-Crane Incorporated Announces Record Full-Year and Fourth Quarter Results
PORTLAND, Ore.--(BUSINESS WIRE)-- Erickson Air-Crane Incorporated (NAS: EAC) ("Erickson Air-Crane", "Erickson", the "Company", "we", "us" and "our"), a leading operator and the manufacturer of the powerful Erickson S-64 Aircrane heavy-lift helicopter, today announced financial results for the fourth quarter and full year ended December 31, 2012.
Full-Year 2012 highlights include:
- Revenue increased 18.4% to $180.8 million
- Flight hours increased 18.9% to 12,075 hours
- Operating Income doubled to $33.4 million
- Adjusted EBITDA increased 77.4% to $44.5 million
Fourth Quarter 2012 highlights include:
- Revenue increased 27.2% to $39.1 million
- Flight hours increased 14.6% to 1,766 hours
- Operating Income increased $5.1 million to $1.5 million
- Adjusted EBITDA increased $6.2 million to $4.5 million
Revenues for the year ended December 31, 2012 increased by 18.4% compared with the full year of 2011, rising to $180.8 million. The Company experienced strong growth in both of its business segments as compared with the prior year, driven by new firefighting contracts, an active fire season and the Company's expansion of infrastructure construction, especially in support of the oil-and-gas market in South America. Full-year net income attributable to Erickson Air-Crane was $15.2 million, or pro forma earnings per share ("EPS") of $1.56, at the top end of prior guidance. This compares with prior year net income of $15.9 million, which included a net $11.2 million benefit from the reversal of accrued interest and taxes related to an audit by the IRS that was settled in our favor. The Company's pro forma EPS assumes that the recapitalization and IPO had taken place on January 1, 2012 and that 9.7 million fully diluted shares used in the calculation were outstanding the entire year.
Udo Rieder, President and Chief Executive Officer of Erickson Air-Crane, commented, "This was an outstanding year for Erickson. Erickson's leadership position in the heavy-lift market continues to strengthen and we are confident in our ability to build our business in related sectors."
The Company's full-year operating income increased by 101.4%, rising to $33.4 million as compared with the prior year's $16.6 million. Full-year Adjusted EBITDA (a non-GAAP measured described below) increased by 77.4% to $44.5 million as compared with prior year, driven by a gross margin improvement of 420 basis points and by a reduction in operating expenses as a percentage of sales of 340 basis points.
Fourth Quarter Results
Revenues for the three months ended December 31, 2012 increased by 27.2% compared with the fourth quarter of 2011, rising to $39.1 million. As in recent quarters, organic growth was broad-based in the fourth quarter of 2012, with revenue increases in both of the Company's business segments as compared with the prior year. The net loss attributable to Erickson Air-Crane Incorporated in the fourth quarter was $0.9 million, or a $0.10 loss per basic and diluted share. Included in the fourth quarter 2012 were $0.2 million or $0.02 per share on an after-tax basis of expenses associated with the Air Amazonia acquisition. Additionally, the company recorded a charge of $0.05 per share related to its previously disclosed dispute with the Greek tax authorities. These items were more than offset by the completion in the quarter of the Company's previously announced deal with San Diego Gas and Electric ("SGD&E") to purchase an Aircrane and related spare parts inventory. As expected, the acceleration of deferred revenues associated with early contract termination as a result of the SDG&E transaction favorably impacted EPS by $0.39 per share in the fourth quarter.
Rieder continued, "We continue to see an excellent response to the value provided by our unique heavy-lift S-64 platform in the increasingly diverse, global end-markets we serve. Firefighting activity remained strong in the fourth quarter, particularly with the US Forest Service, and our new firefighting contract in San Diego helped drive a strong revenue performance versus prior year. Additionally, we continued to see strong performance from our fast-growing aerial services business in support of the South American oil-and-gas industry, for which we deployed a second Aircrane at the end of the fourth quarter."
Adjusted EBITDA increased to $4.5 million in the fourth quarter as compared with the prior year negative amount of $1.7 million. Profitability in the fourth quarter was driven by a gross margin improvement of $3.4 million, reflecting the benefit of the inclusion of SDG&E revenues and partially offset by heavier spending on aircraft maintenance as a result of increased firefighting flight hours. In addition, SG&A decreased by $1.7 million, reflecting the absence of restructuring charges and bad debt expense in 2012, which totaled $1.1 million and $2.5 million in the fourth quarter of 2011, respectively. This SG&A improvement was partially offset by a charge of $0.8 million for potential interest and penalties associated with our dispute with the Greek tax authorities, and as expected an increase in variable and share-based compensation.
The Company announced on March 7, 2013 that it had received firm commitments for a credit agreement led by Wells Fargo Bank that accommodates the liquidity needs of the business and the financing of the Air Amazonia deal. This credit facility would total up to $165.0 million, consisting of a $115.0 million term loan facility and a revolving credit facility of up to $50.0 million.
On March 7, 2013 the Company also announced the execution of a binding term sheet and significant progress toward completion of its previously announced purchase of the Air Amazonia aerial services business from HRT Participacoes em Petroleo, S.A. ("HRT"). The Company expects to close the transaction in the second quarter of 2013.
Rieder said, "Following the purchase of the Air Amazonia fleet and operations from HRT, we will be poised to greatly accelerate our presence in the booming on-shore oil and gas sector in South America, an important source of strategic growth. Importantly, we believe we can efficiently service HRT's needs while freeing up nearly half of the acquired fleet of 14 aircraft for other customers, in Brazil and other markets. This highly accretive transaction will accelerate our transformation from a leader in the heavy-lift category to a diversified, global air services business. It is significant that this acquisition provides us an entry into the passenger transport and medium-lift markets, where we see significant demand from a wide range of our existing and prospective customers. Following the closing of the Air Amazonia transaction, we will be positioned to greatly diversify our operations and expand the range and scope of our growth opportunities, as well as enhance our ability to create significant value for our shareholders."
Rieder concluded, "Erickson Air-Crane is poised to drive top-line growth in 2013 and beyond. With the Air Amazonia transaction, we will be able to attack an expanded range of market opportunities by geography and end-markets utilizing a wide variety of helicopter platforms. We also anticipate reduced seasonality and improved profitability. We regard this transaction as a natural extension of our strategy and an excellent use of capital. At the same time, we will take additional decisive steps to grow our business and drive value to our shareholders."
The Company noted that it will hold a conference call to discuss its earnings results for the fiscal year and fourth quarter ended December 31, 2012 on Monday, March 11, 2013 at 8:30 am ET 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 1-888-505-4375 or 1-719-325-2429 (international). The pass code is 7685194.
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 7685194. The replay will be available beginning at 11:30 a.m. ET on Monday, March 11, 2013 and will last through 11:59 p.m. ET March 25, 2013.
-- FINANCIAL TABLES FOLLOW -
|ERICKSON AIR-CRANE INCORPORATED AND SUBSIDIARIES|
|CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)|
|(in thousands, except share and per share data)|
|Three Months||Three Months|
|Ended||Ended||Year Ended||Year Ended|
|December 31,||December 31,||December 31,||December 31,|
|Manufacturing / MRO||7,727||3,313||19,419||14,132|
|Total net revenues||39,077||30,715||180,824||152,769|
|Cost of revenues:|
|Manufacturing / MRO||2,598||5,336||9,782||13,730|
|Total cost of revenues||28,560||23,627||119,405||107,296|
|General and administrative||5,827||3,489||17,232||13,023|
|Research and development||1,258||1,604||4,683||4,827|
|Selling and marketing||1,894||4,471||6,071||9,940|
|Total operating expenses||8,979||10,648||27,986||28,874|
|Operating income (loss)||1,538||(3,560||)||33,433||16,599|
|Other income (expense):|
|Interest income (expense) related to tax contingencies||-||3,015||-||2,745|
|Amortization of debt issuance costs||(322||)||(322||)||(1,174||)||(875||)|
|Gain (loss) on disposal of equipment||(5||)||21||(5||)||26|
|Unrealized foreign exchange gain (loss)||(350||)||358||(322||)||1,819|
|Realized foreign exchange gain (loss)||581||(553||)||788||(956||)|
|Other income (expense), net||(802||)||476||119||1,126|
|Total other income (expense)||(2,351||)||401||(7,584||)||(5,265||)|
Income (loss) before noncontrolling interest and income taxes
Income tax expense (benefit)
|Net income (loss)||(858||)||8,363||15,636||16,260|
|Less: Net (income) loss related to noncontrolling interest||(91||)||213||(406||)||(390||)|
|Net income (loss) attributable to Erickson Air-Crane Incorporated||(949||)||8,576||15,230||15,870|
|Dividends on redeemable preferred stock||-||2,422||2,795||9,151|
|Net income (loss) attributable to common stockholders||$||(949||)||$||6,154||$||12,435||$||6,719|
|Other comprehensive income (loss):|
|Net income (loss)||$||(858||)||$||8,363||$||15,636||$||16,260|
Foreign currency translation adjustment
Comprehensive income (loss)
Comprehensive income (loss) attributable to noncontrolling interest
Comprehensive income (loss) attributable to Erickson Air-Crane Incorporated
|Net income (loss) per share attributable to common stockholders|
|Weighted average shares outstanding|