VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 12/11/12 -- Revenue and earnings were up in CHC Helicopter's fiscal second-quarter 2013, as the company continues to transform itself into the most capable and efficient global helicopter-services operator.
CHC's revenue for the quarter, which ended Oct. 31, increased 6 percent from the same period a year ago, to $447 million. It was the seventh straight quarter of higher revenue and earnings since the company started its ambitious transformation. Net earnings were $7 million, compared with a net loss of $6 million in the FY12 second quarter.
Earnings before interest, taxes, depreciation, amortization and aircraft rental costs (EBITDAR), were $126 million, up 17 percent from the year-ago quarter. EBITDAR is CHC's primary measure of operational profitability.
Second Quarter Year-to-Date
(U.S.$ in Change Change
millions) FY13 FY12 (ii) FY12 FY11 (ii)
------------------------------------------------------------
Revenue $ 447 $ 423 6% $ 863 $ 833 4%
EBITDAR(i) $ 126 $ 107 17% $ 227 $ 208 9%
EBITDA(i) $ 77 $ 65 19% $ 130 $ 124 4%
(i) Non-GAAP financial measure. See reconciliation to applicable GAAP
measure below.
(ii) All growth rates in this release are year-over-year unless otherwise
noted.
The continued improvement spanned both CHC's flying and Heli-One business segments. Flying revenue rose 5 percent and EBITDAR grew 13 percent. For Heli-One, which provides maintenance, repair and overhaul (MRO) services, third-party customers sales were 11 percent higher and EBITDAR increased 48 percent.
William Amelio, CHC's president and chief executive officer, said the second quarter showed how the company is transforming its tools, systems and processes. Those changes are contributing to improving operating performance.
"Our people are also making sure we deliver on our purpose: to provide unmatched helicopter services that enable customers to go further, do more and come home safely," said Mr. Amelio. "The second quarter provided two vivid illustrations - one involving superb in-flight management of a crippled aircraft, the other an extraordinary evacuation of more than 270 customers from a North Sea oil-production platform that was in distress.
"Our objective isn't simply for CHC to be the largest and most profitable helicopter-services company. We're determined to be the best at all that we do for our customers."
BUSINESS HIGHLIGHTS
Helicopter Services (flying):
-- Flying results were driven by revenue and EBITDAR gains in the Americas
(mainly Brazil), Western North Sea (United Kingdom) and Africa Euro-
Asia. Sales were also up in Asia-Pacific.
-- Significant wins in the period included new contracts with Marathon in
the U.K., Eni in Australia and Petronas in Mozambique.
-- During the quarter, Atlantic Aviation - a partnership between Jagal
Group and CHC - received its long-awaited Air Operating Certificate in
Nigeria. Atlantic Aviation has twin-engine Sikorsky S76C+ medium-lift
helicopters to begin its support of Nigeria's fast-growing oil-and-gas
industry.
Heli-One (MRO):
-- Among notable contracts secured in the second quarter, AAR, a global
aerospace and defense supplier, selected Heli-One to complete 20 engine
overhauls.
-- During the quarter the company delivered the first of three customized
Super Puma aircraft commissioned by the Los Angeles County Sheriff's
Department.
-- Heli-One further broadened its range of services by adding four-year
inspections of AW139s to capabilities at the Stavanger, Norway,
operation.
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 division. The company is headquartered in Vancouver and operates more than 240 aircraft in about 30 countries around the world.
Segment Performance (Unaudited)
(U.S.$ in thousands)
----------------------------------------------------------------------------
Segment Third Party
Revenue
For the three months ended For the six months ended
October 31, October 31,
----------------------------------------------------
2012 2011 2012 2011
----------------------------------------------------------------------------
Helicopter Services $ 402,617 $ 383,279 $ 792,521 $ 756,573
MRO 42,488 38,409 67,034 73,297
Corporate and Other 1,681 1,312 3,300 2,779
----------------------------------------------------
Consolidated totals $ 446,786 $ 423,000 $ 862,855 $ 832,649
----------------------------------------------------
----------------------------------------------------
EBITDAR and EBITDA
Summary
For the three months
ended For the six months ended
October 31, October 31,
----------------------------------------------------
2012 2011 2012 2011
----------------------------------------------------
Helicopter Services $ 120,931 $ 107,000 $ 223,554 $ 202,688
MRO 28,082 18,935 41,746 39,949
Corporate and Other (22,916) (18,473) (38,304) (35,106)
----------------------------------------------------
Consolidated EBITDAR(i) 126,097 107,462 226,996 207,531
Less: aircraft lease and
associated costs (48,797) (42,604) (97,227) (83,100)
----------------------------------------------------
Consolidated EBITDA(i) $ 77,300 $ 64,858 $ 129,769 $ 124,431
----------------------------------------------------
----------------------------------------------------
(i) See reconciliations to GAAP measures below.
----------------------------------------------------------------------------
Consolidated Statement of Earnings (Unaudited)
(U.S.$ in thousands)
----------------------------------------------------------------------------
For the three months For the six months
ended ended
----------------------------------------------------
October 31, October 31, October 31, October 31,
2012 2011 2012 2011
----------------------------------------------------------------------------
Revenue $ 446,786 $ 423,000 $ 862,855 $ 832,649
Operating Expenses
Direct costs (351,397) (343,346) (697,484) (679,987)
Earnings from equity
accounted investees 825 625 1,837 1,221
General and
administrative costs (18,914) (15,421) (37,439) (29,452)
Amortization (27,635) (25,429) (55,945) (52,532)
Restructuring costs (1,797) (7,080) (3,727) (11,884)
Recovery (impairment) of
receivables and funded
residual value
guarantees 143 63 (572) 47
Impairment of intangible
assets (6,339) (1,717) (5,818) (1,825)
Impairment of assets
held for sale (3,650) (4,251) (9,297) (11,632)
Impairment of assets
held for use - - (660) -
Gain (loss) on disposal
of assets (3,026) (316) (4,617) 3,741
----------------------------------------------------------------------------
(411,790) (396,872) (813,722) (782,303)
Operating income 34,996 26,128 49,133 50,346
Interest on long-term
debt (30,075) (29,516) (59,958) (60,186)
Foreign exchange gain 10,562 2,446 3,161 2,639
Other financing charges (3,449) (6,491) (11,603) (6,235)
----------------------------------------------------------------------------
Income (loss) from
continuing operations
before tax 12,034 (7,433) (19,267) (13,436)
Income tax recovery
(expense) (5,022) 8,638 (6,303) 12,485
----------------------------------------------------------------------------
Income (loss) from
continuing operations 7,012 1,205 (25,570) (951)
Earnings (loss) from
discontinued
operations, net of tax 467 (7,526) 812 (8,312)
----------------------------------------------------------------------------
Net earnings (loss) $ 7,479 $ (6,321) $ (24,758) $ (9,263)
----------------------------------------------------------------------------
Net earnings (loss)
attributable to:
Controlling interest $ 6,999 $ (11,420) $ (26,106) $ (19,793)
Non-controlling interest 480 5,099 1,348 10,530
----------------------------------------------------------------------------
Net earnings (loss) $ 7,479 $ (6,321) $ (24,758) $ (9,263)
----------------------------------------------------------------------------
Consolidated Statement of Cash Flows
(Expressed in thousands of United States dollars)
----------------------------------------------------------------------------
For the three months ended For the six months ended
----------------------------------------------------
October 31, October 31, October 31, October 31,
2012 2011 2012 2011
----------------------------------------------------------------------------
Cash provided by (used
in):
Operating activities:
Net earnings (loss) $ 7,479 $ (6,321) $ (24,758) $ (9,263)
Less: earnings (loss)
from discontinued
operations, net of tax 467 (7,526) 812 (8,312)
----------------------------------------------------------------------------
Earnings (loss) from
continuing operations 7,012 1,205 (25,570) (951)
Adjustments to reconcile
net earnings (loss) to
cash flows provided by
(used in) operating
activities:
Amortization 27,635 25,429 55,945 52,532
Loss (gain) on disposal
of assets 3,026 316 4,617 (3,741)
Asset impairments 9,846 5,905 16,347 13,410
Non-cash leasing and
financing costs (140) (492) (304) (1,306)
Earnings from equity
accounted investees (825) (625) (1,837) (1,221)
Deferred income taxes (512) (6,356) (6,252) (13,953)
Pension contributions,
net of pension expense (5,690) (7,898) (17,436) (15,560)
Increase to deferred
lease financing costs (216) (2,774) (1,489) (7,488)
Foreign exchange gain
(loss) (19,893) 5,404 2,382 2,068
Other 2,816 (868) 5,319 (1,640)
Increase (decrease) in
cash resulting from
changes in operating
assets and liabilities (900) 34,657 (55,480) (32,226)
----------------------------------------------------------------------------
Cash provided by (used
in) operating
activities 22,159 53,903 (23,758) (10,076)
----------------------------------------------------------------------------
Financing activities:
Sold interest in
accounts receivable,
net of collections 674 530 8,917 40,082
Proceeds from issuance
of capital stock - 60,000 - 60,000
Proceeds from the
issuance of senior
secured notes 202,000 - 202,000 -
Long-term debt proceeds 165,076 125,000 390,229 405,000
Long-term debt
repayments (319,871) (116,826) (471,824) (390,539)
Increase in deferred
financing costs
related to the
revolver and notes (3,793) - (3,793) -
----------------------------------------------------------------------------
Cash provided by
financing activities 44,086 68,704 125,529 114,543
----------------------------------------------------------------------------
Investing activities:
Property and equipment
additions (95,600) (121,964) (142,267) (164,751)
Proceeds from disposal
of property and
equipment 46,188 43,117 93,413 91,120
Aircraft deposits, net
of lease inception
refunds (10,845) (34,429) (40,926) (36,115)
Restricted cash 38 2,320 5,384 753
Distribution from
equity investments - - - 936
----------------------------------------------------------------------------
Cash used in investing
activities (60,219) (110,956) (84,396) (108,057)
----------------------------------------------------------------------------
Cash provided by (used
in) continuing
operations 6,026 11,651 17,375 (3,590)
Cash flows provided by
(used in) discontinued
operations:
Cash flows provided by
(used in) operating
activities 467 (1,019) 812 (1,488)
Cash flows provided by
(used in) financing
activities (467) 1,019 (812) 1,488
----------------------------------------------------------------------------
Cash provided by (used
in) discontinued
operations - - - -
Effect of exchange rate
changes on cash and
cash equivalents 5,677 (6,605) (4,144) (10,804)
----------------------------------------------------------------------------
Increase (decrease) in
cash and cash
equivalents during the
period 11,703 5,046 13,231 (14,394)
Cash and cash
equivalents, beginning
of period 57,075 49,481 55,547 68,921
----------------------------------------------------------------------------
Cash and cash
equivalents, end of
period $ 68,778 $ 54,527 $ 68,778 $ 54,527
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Consolidated Balance Sheets (Unaudited)
(U.S.$ in thousands)
----------------------------------------------------------------------------
October 31, 2012 April 30, 2012
----------------------------------------------------------------------------
Assets
Current Assets:
Cash and cash equivalents $ 68,778 $ 55,547
Receivables, net of allowance for
doubtful accounts 304,701 266,115
Income taxes receivable 25,078 20,747
Deferred income tax assets 9,361 8,542
Inventories 95,740 90,013
Prepaid expenses 20,069 21,183
Other assets 38,039 33,195
----------------------------------------------------------------------------
561,766 495,342
Property and equipment, net 1,041,490 1,026,860
Investments 25,466 24,226
Intangible assets 205,493 217,890
Goodwill 432,059 433,811
Restricted cash 20,353 25,994
Other assets 410,986 363,103
Deferred income tax assets 49,020 48,943
Assets held for sale 63,295 79,813
----------------------------------------------------------------------------
$ 2,809,928 $ 2,715,982
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Liabilities and Shareholder's Equity
Current Liabilities:
Payables and accruals $ 356,519 $ 363,064
Deferred revenue 20,775 23,737
Income taxes payable 40,169 43,581
Deferred income tax liabilities 13,073 11,729
Current facility secured by accounts
receivable 55,317 45,566
Other liabilities 20,155 23,648
Current portion of long-term debt 14,039 17,701
----------------------------------------------------------------------------
520,047 529,026
Long-term debt 1,401,504 1,269,379
Deferred revenue 50,221 43,517
Other liabilities 189,820 191,521
Deferred income tax liabilities 18,943 20,072
----------------------------------------------------------------------------
Total liabilities 2,180,535 2,053,515
Redeemable non-controlling interests 4,489 1,675
Capital stock: Par value 1 Euro;
Authorized and issued:
1,228,377,770 and 1,228,377,770,
respectively 1,607,101 1,607,101
Contributed surplus 55,541 55,318
Deficit (966,137) (940,031)
Accumulated other comprehensive loss (71,601) (61,596)
----------------------------------------------------------------------------
$ 2,809,928 $ 2,715,982
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Non-GAAP Financial Measures:
This earnings release includes non-GAAP financial measures, segment earnings before interest, taxes, depreciation, amortization and aircraft lease rent and associated costs ("segment EBITDAR (adjusted)") referred to above as EBITDAR and earnings before interest, taxes, depreciation and amortization ("EBITDA") that are not required by, or presented in accordance with GAAP. These non-GAAP measures are not performance measures under U.S. generally accepted accounting principles and should not be considered as alternatives to net earnings (loss) or any other performance or liquidity measures derived in accordance with GAAP. In addition, these measures may not be comparable to similarly titled measures of other companies. CHC has provided a reconciliation of these non-GAAP measures to the most directly comparable GAAP measure. CHC has chosen to include segment EBITDAR (adjusted) as we consider this to be a significant indicator of our financial performance and use this measure to assist us in allocating available capital resources. We have also included EBITDA as this measure is useful to our debt holders as it is a proxy of Adjusted EBITDA, a non-GAAP measure. Adjusted EBITDA provides useful information to investors as it is a measure to calculate certain financial covenants related to our revolving credit facility and certain covenants in the indenture. CHC has provided a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measure below and has presented a detailed discussion of its reasons for including non-GAAP financial measures and the limitations associated with those measures as part of the "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in the Quarterly Report on Form 10-Q. CHC encourages investors to review the reconciliation and the non-GAAP discussion in conjunction with our presentation of these non-GAAP financial measures.
Reconciliation of Non-GAAP Financial Measures
(U.S.$ in thousands)
----------------------------------------------------------------------------
For the three months ended For the six months ended
October 31, October 31,
----------------------------------------------------
2012 2011 2012 2011
----------------------------------------------------
Helicopter Services $ 120,931 $ 107,000 $ 223,554 $ 202,688
MRO 28,082 18,935 41,746 39,949
Corporate and Other (22,916) (18,473) (38,304) (35,106)
----------------------------------------------------
Consolidated EBITDAR 126,097 107,462 226,996 207,531
Less: aircraft lease and
associated costs (48,797) (42,604) (97,227) (83,100)
----------------------------------------------------
Consolidated EBITDA 77,300 64,858 129,769 124,431
Amortization (27,635) (25,429) (55,945) (52,532)
Restructuring costs (1,797) (7,080) (3,727) (11,884)
Recovery (impairment)
of receivables and
funded residual value
guarantees 143 63 (572) 47
Impairment of
intangible assets (6,339) (1,717) (5,818) (1,825)
Impairment of assets
held for sale (3,650) (4,251) (9,297) (11,632)
Impairment of assets
held for use - - (660) -
Gain (loss) on disposal
of assets (3,026) (316) (4,617) 3,741
----------------------------------------------------------------------------
Operating income 34,996 26,128 49,133 50,346
Interest on long-term
debt (30,075) (29,516) (59,958) (60,186)
Foreign exchange gain 10,562 2,446 3,161 2,639
Other financing charges (3,449) (6,491) (11,603) (6,235)
----------------------------------------------------------------------------
Income (loss) from
continuing operations
before tax 12,034 (7,433) (19,267) (13,436)
Income tax recovery
(expense) (5,022) 8,638 (6,303) 12,485
----------------------------------------------------------------------------
Income (loss) from
continuing operations 7,012 1,205 (25,570) (951)
Earnings (loss) from
discontinued
operations, net of tax 467 (7,526) 812 (8,312)
----------------------------------------------------------------------------
Net earnings (loss) $ 7,479 $ (6,321) $ (24,758) $ (9,263)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cautionary Note on Forward-Looking Statements:
This press release contains forward-looking statements and information within the meaning of certain securities laws, including the "safe harbor" provision of the United States Private Securities Litigation Reform Act of 1995 and any applicable Canadian securities legislation. All statements, other than statements of historical fact included in this presentation, regarding our strategy, future operations, projections, conclusions, forecasts and other statements are "forward-looking statements". While these forward-looking statements represent our best current judgment, the actual results could differ materially from the conclusions, forecasts or projections contained in the forward-looking information. Certain material factors or assumptions were applied in drawing a conclusion or making a forecast or projection in the forward-looking information contained herein. Such factors include, but are not limited to, the following: exchange rate fluctuations, industry exposure, inflation, inability to enter into new contracts or the loss of existing contracts, inability to maintain government issued licenses, inability to obtain necessary aircraft or insurance, competition, political, economic and regulatory uncertainty, loss of key personnel, work stoppages due to labor disputes, accidents, mechanical failures, regulatory actions and future material acquisitions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated. The Company disclaims any intentions or obligations to update or revise any forward-looking information, whether as a result of new information, future events or otherwise. Please refer to our annual report on Form 10-K, our quarterly reports on Form 10-Q, and other filings, in particular any discussion of risk factors or forward-looking statements, which are filed with the SEC and available at the SEC's website (www.sec.gov), for a full discussion of the risks and other factors that may impact any estimates or forward-looking statements made herein.
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