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CHC Helicopter Reports Operating Results for Fiscal-2014 Second Quarter

VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 12/11/13 -- CHC Helicopter's revenue and earnings were both down year-over-year, partly as a result of limited availability of EC225 aircraft, along with costs to return those helicopters to flying operations.

The company reported revenue for the quarter of $443 million, down 1 percent from the same period in fiscal 2013. A net loss of $49 million compared with net earnings of $7 million in the year-ago quarter.

EBITDAR(i) (earnings before interest, taxes, depreciation, amortization and aircraft rental costs) was $109 million, down 13 percent.


                              Second Quarter            Year-to-Date
                                          Change                    Change
(U.S.$, in millions)        FY13    FY14   (iii)      FY13     FY14  (iii)
                         ---------------------------------------------------
Revenue                  $   447 $   443      (1%) $   863  $   858     (1%)
Net Earnings (Loss)            7     (49)      -       (25)     (84)     -
EBITDAR(i)                   126     109     (13%)     227      221     (3%)
Adjusted Net Earnings
 (Loss)(ii)                    8     (27)      -        (4)     (55)     -
 (i)   Adjusted EBITDAR is referred to in this document as EBITDAR.See a
       description of non-GAAP calculations and reconciliation to comparable
       GAAP measures below.
 (ii)  See a description of non-GAAP calculations and reconciliation to
       comparable GAAP measures below.
 (iii) All growth rates in this release are year-over-year unless otherwise
       noted.

Revenue was lower because of reduced availability of EC225 aircraft in the period, and costs were higher as a result of expenses incurred in returning those helicopters to service. That process was largely completed by the end of the quarter.

"We have now resumed commercial operations with our EC225 aircraft," said William Amelio, CHC's president and chief executive officer.

"I'm proud of the leadership CHC brought to that work, and the ability of our people to minimize disruption to customer operations while those aircraft were suspended from flight during the past year."

BUSINESS HIGHLIGHTS

Helicopter Services (flying):


--  Second-quarter revenue from oil-and-gas, search-and-rescue and emergency
    medical flying services was $408 million, up 1 percent. Sales from
    Helicopter Services would have been higher and overall CHC revenue up
    had all of our EC225 aircraft been available. Flying EBITDAR was $113
    million, down 3 percent.
--  Flying revenue was higher in Australia, Ireland, Malaysia, Norway and
    the Philippines, among other locations. A sales decline in Brazil was
    attributable to customers electing to resume EC225 flights more slowly
    than elsewhere.
--  Recent developments illustrate strong demand for CHC's flying services
    in its more mature regions - and enhancements to the business in newer
    areas:
    --  The company completed a two-year extension, through fiscal 2017, of
        an agreement with Statoil - CHC's largest customer - to provide
        services from bases in Bergen and Floro in Norway. The contract
        requires a dedicated fleet of 10 heavy aircraft.
    --  CHC's joint venture partner in Nigeria, Atlantic Aviation, has
        informed CHC that it has gained approval from the government of
        Nigeria to import AW139 aircraft, which the company expects to
        eventually use to compete for flying contracts in that country.
    --  Also, CHC has been granted an air-operator certificate for AW139 and
        S76C+ helicopters in Tanzania, where it has been flying based on
        permits held by customers. Having its own certifications enhances
        the company's flexibility and long-term opportunities in Tanzania.
--  During the quarter, CHC entered into an agreement with Sikorsky to
    purchase nine additional S-92 helicopters, with options for up to 15
    more of the aircraft. The S-92s will be used for offshore oil-and-gas
    flights and perhaps search-and-rescue operations. Deliveries of the
    first five aircraft are scheduled for 2015, with four more in 2016.
    Options for others span fiscal 2014 through 2017.
--  CHC has secured additional, nonspecified aircraft capacity through a
    recent agreement to purchase $100 million worth of aircraft from
    Eurocopter by Dec. 31, 2016.

Heli-One (MRO):


--  Sales of maintenance, repair and overhaul (MRO) services to third-party
    customers were $35 million, down 17 percent. EBITDAR was $16 million, a
    decline of 45 percent.
--  Similar to in Q1, Heli-One's EBITDAR was negatively affected by costs
    incurred to prepare EC225s to return to service, as well as costs
    necessary to maximize availability of other CHC aircraft.

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 is headquartered in Vancouver and operates about 240 aircraft in about 30 countries around the world.

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 press release, 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: competition in the markets we serve, long-term support contracts, failure to maintain standards of acceptable safety performance, political, economical, and regulatory uncertainty, problems with our non-wholly owned entities, including potential conflicts with the other owners of such entities, exposure to credit risks, inability to fund our working capital requirement, risks inherent in the operation of helicopters, unanticipated costs or cost increases associated with our business operations, exchange rate fluctuations, trade industry exposure, inflation, inability to maintain government issued licenses, inability to obtain necessary aircraft or insurance, loss of key personnel, work stoppages due to labor disputes, 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 our other filings, in particular any discussion of risk factors or forward-looking statements, which are filed with the SEC and available free of charge 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.


Segment Performance
(Expressed in thousands of United States dollars)
(Unaudited)
----------------------------------------------------------------------------

Segment Third-party Revenue
                            Three months ended         Six months ended
                         ---------------------------------------------------
                         October 31,  October 31,  October 31,  October 31,
                             2012        2013         2012         2013
----------------------------------------------------------------------------

 Revenue                 $   363,274  $   367,908  $   712,756  $   713,338
 Reimbursable revenue         41,024       40,155       83,065       82,027
                         ---------------------------------------------------
Helicopter Services          404,298      408,063      795,821      795,365
Heli-One                      42,488       35,309       67,034       62,938
                         ---------------------------------------------------
 Consolidated totals     $   446,786  $   443,372  $   862,855  $   858,303
                         ---------------------------------------------------
                         ---------------------------------------------------


EBITDAR Summary
                             Three months ended         Six months ended
                         ---------------------------------------------------
                            October
                             31,      October 31,  October 31,  October 31,
                             2012        2013         2012         2013
                         ---------------------------------------------------

Helicopter Services      $   116,929  $   112,938  $   222,689  $   241,567
Heli-One                      29,101       15,964       42,914       17,587
Corporate                    (18,914)     (19,092)     (37,439)     (37,153)
Eliminations                  (1,019)        (631)      (1,168)      (1,388)
                         ---------------------------------------------------
Adjusted EBITDAR(i)      $   126,097  $   109,179  $   226,996  $   220,613
                         ---------------------------------------------------
                         ---------------------------------------------------

(i) See a description of non-GAAP calculations and reconciliation to
 comparable GAAP measures below.
Consolidated Statements of Operations
(Expressed in thousands of United States dollars)
(Unaudited)
----------------------------------------------------------------------------

                           Three months ended          Six months ended
                       -------------------------- --------------------------
                        October 31,  October 31,   October 31,  October 31,
                               2012         2013          2012         2013
------------------------------------------------- --------------------------

 Operating Revenue      $   405,762  $   403,217   $   779,790  $   776,276
 Reimbursable Revenue        41,024       40,155        83,065       82,027
                       -------------------------- --------------------------
Revenue                     446,786      443,372       862,855      858,303

Operating Expenses
 Direct costs              (351,397)    (371,794)     (697,484)    (714,900)
 Earnings from equity
  accounted investees           825        1,527         1,837        3,918
 General and
  administration costs      (18,914)     (19,092)      (37,439)     (37,153)
 Depreciation               (27,635)     (38,694)      (55,945)     (70,751)
 Restructuring costs         (1,797)           -        (3,727)           -
 Asset impairments           (9,846)     (14,575)      (16,347)     (21,899)
 Loss on disposal of
  assets                     (3,026)      (3,299)       (4,617)      (4,421)
                       -------------------------- --------------------------
                           (411,790)    (445,927)     (813,722)    (845,206)
                       -------------------------- --------------------------

Operating income (loss)      34,996       (2,555)       49,133       13,097

Interest on long-term
 debt                       (30,075)     (39,143)      (59,958)     (77,720)
Foreign exchange gain
 (loss)                      10,562          190         3,161      (12,958)
Other financing income
 (charges)                   (3,449)      (1,707)      (11,603)       4,117
------------------------------------------------- --------------------------

Income (loss) from
 continuing operations
 before tax                  12,034      (43,215)      (19,267)     (73,464)

Income tax expense           (5,022)      (5,491)       (6,303)     (10,799)
------------------------------------------------- --------------------------

Income (loss) from
 continuing operations        7,012      (48,706)      (25,570)     (84,263)

Earnings from
 discontinued
 operations, net of tax         467            -           812            -
------------------------------------------------- --------------------------
Net earnings (loss)     $     7,479  $   (48,706)  $   (24,758) $   (84,263)
------------------------------------------------- --------------------------

Net earnings (loss)
 attributable to:

Controlling interest    $     6,999  $   (48,415)  $   (26,106) $   (86,620)
Non-controlling
 interest                       480         (291)        1,348        2,357
------------------------------------------------- --------------------------
Net earnings (loss)     $     7,479  $   (48,706)  $   (24,758) $   (84,263)
------------------------------------------------- --------------------------
Consolidated Balance Sheets
(Expressed in thousands of United States dollars)
(Unaudited)
----------------------------------------------------------------------------
                                           April 30, 2013  October 31, 2013
----------------------------------------------------------------------------

Assets
Current Assets:
 Cash and cash equivalents               $        123,714  $         84,102
 Receivables, net of allowance for
  doubtful accounts                               317,249           293,564
 Income taxes receivable                           25,871            24,787
 Deferred income tax assets                            49                54
 Inventories                                      105,794           119,906
 Prepaid expenses                                  22,219            30,212
 Other assets                                      56,083            58,536
----------------------------------------------------------------------------
                                                  650,979           611,161

Property and equipment, net                     1,075,254         1,010,106
Investments                                        26,896            29,451
Intangible assets                                 197,810           186,588
Goodwill                                          430,462           429,865
Restricted cash                                    29,639            33,188
Other assets                                      438,777           543,758
Deferred income tax assets                         10,752             9,562
Assets held for sale                               32,047            38,519
----------------------------------------------------------------------------
                                         $      2,892,616  $      2,892,198
----------------------------------------------------------------------------

Liabilities and Shareholder's Equity
Current Liabilities:
 Payables and accruals                   $        419,179  $        345,429
 Deferred revenue                                  27,652            34,721
 Income taxes payable                              47,987            42,115
 Deferred income tax liabilities                      618               916
 Current facility secured by accounts
  receivable                                       53,512            43,400
 Other liabilities                                 22,791            21,155
 Current portion of long-term debt
  obligations                                       2,138            18,609
----------------------------------------------------------------------------
                                                  573,877           506,345
Long-term debt obligations                      1,475,087         1,646,670
Deferred revenue                                   55,990            72,659
Other liabilities                                 246,455           253,344
Deferred income tax liabilities                    10,627            10,183
----------------------------------------------------------------------------
Total liabilities                               2,362,036         2,489,201

Redeemable non-controlling interests               (8,262)           (7,177)
Capital stock: Par value 1 Euro;
 Authorized and issued:
  1,228,377,771 and 1,228,377,772,
   respectively                                 1,607,101         1,607,101
Contributed surplus                                80,686           140,915
Deficit                                        (1,059,110)       (1,230,878)
Accumulated other comprehensive loss              (89,835)         (106,964)
----------------------------------------------------------------------------
Total Shareholder's Equity                        538,842           410,174

----------------------------------------------------------------------------
                                         $      2,892,616  $      2,892,198
----------------------------------------------------------------------------


Consolidated Statements of Cash Flows
(Expressed in thousands of United States dollars)
(Unaudited)
----------------------------------------------------------------------------
                                                  Six months ended
                                        ------------------------------------
                                              October 31,       October 31,
                                                     2012              2013
                                        ------------------------------------

Cash provided by (used in):
Operating activities:
 Net loss                                $        (24,758) $        (84,263)
Earnings from discontinued operations,
 net of tax                                           812                 -
----------------------------------------------------------------------------
  Loss from continuing operations                 (25,570)          (84,263)
Adjustments to reconcile net loss to
 cash flows provided by (used in)
 operating activities:
  Depreciation                                     55,945            70,751
  Loss on disposal of assets                        4,617             4,421
  Asset impairments                                16,347            21,899
  Earnings from equity accounted
   investees                                       (1,837)           (3,918)
  Deferred income taxes                            (6,252)              978
  Non-cash stock-based compensation
   expense                                            223               229
  Amortization of unfavorable contract
   credits                                         (2,826)                -
  Amortization of lease related fixed
   interest rate obligations                       (1,443)             (965)
  Amortization of long-term debt and
   lease deferred financing costs                   4,719             5,241
  Non-cash accrued interest income on
   funded residual value guarantees                (3,580)           (3,363)
  Mark to market loss (gain) on
   derivative instruments                           2,964           (10,340)
  Non-cash defined benefit pension
   expense                                          3,431               216
  Defined benefit contributions and
   benefits paid                                  (20,867)          (26,334)
  Increase to deferred lease financing
   costs                                           (1,489)           (2,893)
  Unrealized gain on foreign currency
   exchange translation                              (582)            9,295
  Other                                             7,922             3,055
 Decrease in cash resulting from changes
  in operating assets and liabilities             (55,480)           (7,823)
----------------------------------------------------------------------------
Cash used in operating activities                 (23,758)          (23,814)
----------------------------------------------------------------------------

Financing activities:
  Sold interest in accounts receivable,
   net of collections                               8,917           (10,349)
  Proceeds from the issuance of capital
   stock                                                -            60,000
  Proceeds from issuance of senior
   secured notes                                  202,000                 -
  Proceeds from issuance of senior
   unsecured notes                                      -           300,000
  Long-term debt proceeds                         390,229           450,000
  Long-term debt repayments                      (471,824)         (561,378)
  Increase in revolver and notes
   deferred financing costs                        (3,793)           (5,987)
  Dividend distribution to parent                       -           (85,148)
----------------------------------------------------------------------------
Cash provided by financing activities             125,529           147,138
----------------------------------------------------------------------------

Investing activities:
  Property and equipment additions               (142,267)         (227,562)
  Proceeds from disposal of property and
   equipment                                       93,413           169,209
  Aircraft deposits net of lease
   inception refunds                              (40,926)          (92,676)
  Restricted cash                                   5,384            (1,592)
  Distribution from equity investments                  -             1,677
----------------------------------------------------------------------------
Cash used in investing activities                 (84,396)         (150,944)

----------------------------------------------------------------------------
Cash provided by (used in) continuing
 operations                                        17,375           (27,620)

Cash flows provided by (used in)
 discontinued operations:
  Cash flows provided by operating
   activities                                         812                 -
  Cash flows used in financing
   activities                                        (812)                -
----------------------------------------------------------------------------
Cash provided by (used in) discontinued
 operations                                             -                 -

Effect of exchange rate changes on cash
 and cash equivalents                              (4,144)          (11,992)
----------------------------------------------------------------------------
Change in cash and cash equivalents
 during the period                                 13,231           (39,612)
Cash and cash equivalents, beginning of
 period                                            55,547           123,714

----------------------------------------------------------------------------
Cash and cash equivalents, end of period $         68,778  $         84,102
----------------------------------------------------------------------------

Non-GAAP Financial Measures:

This press release includes non-GAAP financial measures, including adjusted net earnings (loss), earnings before interest, taxes, depreciation, amortization and aircraft lease rent and associated costs ("Adjusted EBITDAR") referred to above as EBITDAR that are not required by, or presented in accordance with U.S. generally accepted accounting principles ("GAAP"). These non-GAAP measures are not performance measures under GAAP 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 below. CHC has chosen to include adjusted net earnings (loss) as we consider this to be a useful measure of our results before asset impairments, gain or loss on the disposal of assets and foreign exchange gains or losses. We have chosen to include Adjusted EDITDAR 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. 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 our Quarterly Reports on Form 10-Q and Annual Report on Form 10-K. CHC encourages investors to review the reconciliation and the non-GAAP discussion in conjunction with our presentation of these non-GAAP financial measures.


EBITDAR - Non-GAAP Reconciliation
(Expressed in thousands of United States dollars)
(Unaudited)
----------------------------------------------------------------------------

                           Three months ended          Six months ended
                       -----------------------------------------------------
                        October 31,  October 31,   October 31,  October 31,
                               2012         2013          2012         2013
                       -----------------------------------------------------

 Helicopter Services    $   116,929  $   112,938   $   222,689  $   241,567
 Heli-One                    29,101       15,964        42,914       17,587
 Corporate                  (18,914)     (19,092)      (37,439)     (37,153)
 Eliminations                (1,019)        (631)       (1,168)      (1,388)
                       -----------------------------------------------------
Adjusted EBITDAR            126,097      109,179       226,996      220,613
 Aircraft lease and
  associated costs          (48,797)     (55,166)      (97,227)    (110,445)
 Depreciation               (27,635)     (38,694)      (55,945)     (70,751)
 Restructuring costs         (1,797)           -        (3,727)           -
 Asset impairments           (9,846)     (14,575)      (16,347)     (21,899)
 Loss on disposal of
  assets                     (3,026)      (3,299)       (4,617)      (4,421)
----------------------------------------------------------------------------
Operating income (loss)      34,996       (2,555)       49,133       13,097

Interest on long-term
 debt                       (30,075)     (39,143)      (59,958)     (77,720)
Foreign exchange gain
 (loss)                      10,562          190         3,161      (12,958)
Other financing income
 (charges)                   (3,449)      (1,707)      (11,603)       4,117
----------------------------------------------------------------------------
Income (loss) from
 continuing operations
 before tax                  12,034      (43,215)      (19,267)     (73,464)
Income tax expense           (5,022)      (5,491)       (6,303)     (10,799)
----------------------------------------------------------------------------
Income (loss) from
 continuing operations        7,012      (48,706)      (25,570)     (84,263)
Earnings from
 discontinued
 operations, net of tax         467            -           812            -
----------------------------------------------------------------------------
Net earnings (loss)     $     7,479  $   (48,706)  $   (24,758) $   (84,263)
----------------------------------------------------------------------------

Adjusted net earnings (loss) - Non-GAAP Reconciliation
(Expressed in thousands of United States dollars)
(Unaudited)
                            Three months ended          Six months ended
                        -------------------------- -------------------------
                         October 31,  October 31,   October 31,  October 31,
                            2012         2013          2012         2013
                        -------------------------- -------------------------

Adjusted earnings (loss) $     7,599  $   (26,598)  $    (3,991) $  (55,325)
 Asset impairments            (9,846)     (14,575)      (16,347)    (21,899)
 Loss on disposal of
  assets                      (3,026)      (3,299)       (4,617)     (4,421)
 Foreign exchange gain
  (loss)                      10,562          190         3,161     (12,958)
 Unrealised gain (loss)
  on derivatives               2,190       (4,424)       (2,964)      10,340
                        -------------------------- -------------------------
Net earnings (loss)      $     7,479  $   (48,706)  $   (24,758) $  (84,263)
                        -------------------------- -------------------------
                        -------------------------- -------------------------

Contacts:
CHC Helicopter
Investor Relations
(604) 247-7052
investor@chc.ca

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