Canadian Helicopters reports strong second quarter
Aug. 12, 2011, Montreal - Canadian Helicopters Group Inc.on Thursday announced its financial and operating results for the second quarter ended June 30, 2011.
By Carey Fredericks
These results reflect Canadian Helicopters' conversion to a corporation on December 31, 2010 and the adoption, on January 1, 2011, of International Financial Reporting Standards ("IFRS"). Results for the prior year period have been restated, for comparability.
Financial Highlights Quarters ended June 30, Six months ended June 30,
(in thousands of dollars, except per share data) 2011 2010 2011 2010
Revenue 63,286 44,439 110,203 72,932
EBITDA (1) 23,351 12,259 32,278 13,037
Adjusted net income (2) 15,109 7,291 19,891 7,096
Per share/unit – basic and diluted ($) 1.15 0.56 1.52 0.54
Net income (loss) (3) 15,109 1,194 19,891 (19,124)
Per share/unit – basic and diluted ($) (3) 1.15 n.a. 1.52 n.a.
Cash flows related to operating activities (4) 21,300 8,353 29,054 8,680
Weighted-average shares/units outstanding (all classes) 13,068,700 13,068,700 13,068,700 13,068,700
(1) Earnings before interest, income taxes, depreciation and amortization, gain or loss on disposal of property, plant and equipment and share of net loss of an associate, distributions to Unitholders and holders of Exchangeable Class B LP Units and change in fair value of Units and Exchangeable Class B LP Units
(2) Excluding certain significant impacts, in 2010, from classifying the Fund Units and Exchangeable Class B LP Units as financial liabilities before the Fund's conversion into an incorporated entity.
(3) Prior to December 31, 2010, Units and Exchangeable Class B LP Units were classified as financial liabilities before their conversion into shares of the Company. Therefore, the comparability of the net income (loss) and the concept of earnings per Unit did not apply before the Fund's conversion into an incorporated entity on December 31, 2010. Please refer to the adjusted net income per unit as above.
(4) Before net changes in non-cash working capital balances
The Company generated revenue of $63.3 million, representing an increase of $18.9 million, or 42.6%, over revenue of $44.4 million in the second quarter of 2010. Visual Flight Rules (VFR) revenue increased $17.8 million primarily due to revenues from medium and additional heavy aircraft contracted inAfghanistan and, to a lesser extent, to higher activity in the domestic mining market. Instrument Flight Rules (IFR) revenue decreased $1.4 million mainly resulting from reduced emergency medical services revenue. Ancillary revenue grew $2.5 million essentially due to the consolidation of maintenance revenues from Heli-Welders and Nampa Valley Helicopters for the full period, versus less than a month last year, and to higher revenue from the DND Contracted Flying Training and Support Contract. Revenue-flying hours increased 27.1% to 19,776 hours.
EBITDA for the second quarter of 2011 reached $23.4 million, up from $12.3 million a year earlier. This increase mainly reflects higher operating activity and a more favourable mix resulting from increased activity in Afghanistan where revenues reflect the significantly higher level of effort required to accomplish the work.
As a result, second quarter adjusted net income amounted to $15.1 million, or $1.15 per share, versus $7.3 million, or $0.56 per unit in 2010. Adjusted net income excludes certain significant impacts from classifying the Fund Units and Exchangeable Class B LP Units as financial liabilities before the Fund's conversion into an incorporated entity on December 31, 2010. These significant impacts, mostly of a non-cash nature, reduced net income by $6.1 million in the second quarter of 2010.
Reflecting higher net income, cash flows related to operating activities before net changes in non-cash working capital balances reached $21.3 million in the second quarter of 2011, up from $8.4 million in the corresponding period a year earlier.
"We are pleased with the strong performance of Canadian Helicopters in the second quarter. Our contracted aircraft flew the expected number of hours inAfghanistan in support of the U.S. military, while recovering demand in the domestic mining sector benefited our Canadian VFR operations. Moreover, our recent acquisitions in the repair and maintenance sector continued to perform as expected. As a result of these increased activities, our fixed costs have been more efficiently absorbed which, combined with the nature of our contracted work in Afghanistan, allowed for a significant enhancement in operating profitability," said Don Wall, President and Chief Executive Officer of Canadian Helicopters
For the six-month period ended June 30, 2011, revenue reached $110.2 million, up 51.2% from $72.9 million in the corresponding period in 2010. VFR revenue increased $34.4 million mainly due to contracted aircraft in Afghanistan, IFR revenue declined $1.7 million as a result of reduced EMS activity, while ancillary revenue grew $4.6 million reflecting the consolidation of maintenance revenues from Heli-Welders and Nampa Valley Helicopters and higher revenue from the CFTS contract. Canadian Helicopters flew 30,028 hours in the first six months of 2011, up 24.5% from the year prior.
EBITDA amounted to $32.3 million, up significantly from $13.0 million a year earlier. Adjusted net income reached $19.9 million, or $1.52 per share, versus$7.1 million, or $0.54 per share, last year. Finally, cash flows related to operating activities before net changes in non-cash working capital balances totalled$29.1 million, compared with $8.7 million in 2010.
Subsequent to the end of the second quarter, on July 7, 2011, Canadian Helicopters completed its previously announced acquisition of Helicopters (N.Z.) Limited, ("HNZ"). Headquartered in Nelson, New Zealand, HNZ has 11 bases to support operations across New Zealand, Australia, Laos and Cambodia as well as a corporate office in Perth to support its Australian operations. As it is located in the southern hemisphere, HNZ's business will be counter seasonal to the Company's domestic operations in Canada.
The transaction purchase price of NZ$154 million (approximately C$123 million) was funded with a combination of cash on hand and a $93 million drawdown on a new revolving credit facility of $125 million. This new facility matures in December 2013.
"The international scope of our operations has been significantly widened by the addition of HNZ to the Canadian Helicopters group of companies. In addition to contracted services delivered in Afghanistan and Antarctica, our fixed transportation and third party maintenance facilities now span Canada, Australia,New Zealand and regions of southeast Asia. This international character of CHL is integral to our efforts to steadily build shareholder value. In the quarters ahead, we expect our contracts in Afghanistan to continue to generate strong revenues, while domestic demand recovers as a result of momentum in the natural resources sector. With our financial position remaining solid, we will go on pursuing suitable acquisition opportunities to enhance our core services and extend our reach," concluded Mr. Wall.