HNZ Group reports 2012 third quarter results
- Revenue of $70.0 million, versus $85.4 million last year, reflecting the known expiry of two contracts
- EBITDA margin of 39.7%, stable in comparison with 39.8% last year
- Net income of $16.1 million or $1.23 per share
- Solid financial position with long-term debt-to-equity ratio of 0.23
MONTREAL, Nov. 13, 2012 /CNW Telbec/ - HNZ Group Inc. (TSX: HNZ.A, HNZ.B) ("the Company"), an international provider of helicopter transportation and related support services, today announced its financial and operating results for the third quarter ended September 30, 2012.
||Quarters ended Sept. 30,||Nine months ended Sept. 30,|
|(in thousands of dollars, except per share data)||2012||2011||2012||2011|
|Per share - basic and diluted ($)||1.23||1.56||2.79||3.07|
|Cash flows related to operating activities (2)||22,280||25,836||51,921||55,024|
|Weighted-average shares outstanding (all classes)||13,068,700||13,068,700||13,068,700||13,068,700|
|(1)||Net income before net financing charges, income taxes, depreciation and amortization and gain or loss on disposal of property, plant and equipment|
|(2)||Before net changes in non-cash working capital balances|
THIRD QUARTER RESULTS
The Company generated revenue of $70.0 million, compared with revenue of $85.4 million in the third quarter of 2011. Year-over-year revenue contribution from Southern Hemisphere Operations was stable, while revenue from Northern Hemisphere Operations was negatively impacted by the expiry of emergency medical services (EMS) activities in Ontario in March 2012 and the conclusion of one contract in Afghanistan in November 2011. For the quarter, the Company flew 22,824 hours compared to 29,047 hours in 2011.
Visual Flight Rules (VFR) revenue decreased by $8.3 million primarily due to the termination of one contract in Afghanistan. Instrument Flight Rules (IFR) revenue declined by $6.1 million due to the expiry of EMS activities in Ontario mentioned above. Ancillary revenue decreased $1.0 million primarily due to a reduction of ground handling activity in Cambodia and a slight reduction in Heli-Welders third party maintenance revenue.
EBITDA for the third quarter of 2012 reached $27.8 million, versus $34.0 million a year earlier. While the EBITDA decline in monetary terms is attributable to lower revenues, the EBITDA margin remained relatively stable due to lower selling, general and administrative expenses primarily related to HNZ Global acquisition costs incurred in the third quarter of 2011. As a result, net income amounted to $16.1 million, or $1.23 per share, compared with $20.5 million, or $1.56 per share in 2011. Reflecting the variation in net income, cash flows related to operating activities before net change in non-cash working capital balances were $22.3 million in the third quarter of 2012, versus $25.8 million in the corresponding period a year earlier.
"HNZ generated satisfactory financial results in the third quarter. As anticipated, revenue from Northern Hemisphere Operations further reflected the termination of two contracts, offsetting activity levels that remained consistent with expectations for contracts in Afghanistan and higher repair and maintenance revenue. Southern Hemisphere Operations performed as anticipated in what has traditionally been a seasonally slower quarter," said Don Wall, President and Chief Executive Officer of the Company.
As at September 30, 2012, the Company's financial position remains strong with debt, net of cash and cash equivalents and bank indebtedness of $47.5 million, drawn under its authorized revolving operating credit facility of $125.0 million, in part to finance deposits of $8.8 million paid as a result of the acquisition of two AW139 and three AW109. As a result, the long-term debt-to-equity ratio was 0.23 as at September 30, 2012, down from 0.24 three months earlier.
For the nine-month period ended September 30, 2012, revenue reached $195.3 million compared with $195.6 million in the corresponding period of 2011. Reflecting the above-mentioned contract expiry, the Northern Hemisphere Operations generated revenue of $155.1 million compared with $184.3 million last year. The Southern Hemisphere Operations generated revenue of $40.2 million over a nine-month period in 2012, compared to $11.3 million in 2011 following the acquisition of HNZ acquisition on July 7, 2011. VFR revenue decreased by $3.4 million due to the reduction in revenue from Afghanistan, partially offset by a $10.4 million increase in the Southern Hemisphere. IFR revenue decreased $2.7 million as a result of the end of EMS activities in Ontario in March 2012, partially offset by additional revenue of $14.1 million in the Southern Hemisphere. Ancillary revenue increased by $5.8 million primarily due to a $4.4 million increase in other revenue earned from contract crew supply, ground handling and leased aircraft from the Southern Hemisphere and an increase in repair and maintenance activities at Heli-Welders and Nampa. The Company flew a total of 52,428 hours during the nine-month period compared to 59,076 hours in the same period in 2011.
EBITDA amounted to $63.5 million, down from $66.3 million a year earlier. Net income stood at $36.8 million, or $2.79 per share, compared with $40.4 million, or $3.07 per share, last year. Finally, cash flows related to operating activities before net changes in non-cash working capital balances totaled $51.9 million, versus $55.0 million, in 2011.
On November 1, 2012, the Company announced that the United States Transportation Command ("USTRANSCOM") has exercised its renewal option, subject to funding, to extend until October 31, 2013 the contract for work in Afghanistan previously announced on October 1, 2010 involving the movement of supplies and passengers to military forward operating locations. This contract involves the provision by the Company of two fully crewed and supported Sikorsky S-61 heavy category helicopters and four Bell 212 medium category helicopters. There are two additional one-year renewal option periods and a final 8-month renewal option period to June 30, 2016 remaining on the contract, each exercisable at the discretion of USTRANSCOM.
"As evidenced by the renewal of the USTRANSCOM contract, HNZ's solid reputation with respect to its ability to perform complex tasks safely and with distinction continues to set the Company apart. While our ongoing business remains solid in both hemispheres, the expiry of the Ontario EMS contract will continue to negatively affect year-over-year comparisons in operating results for the next six months. As our financial position remains solid, we continue to actively search for growth opportunities, both through acquisitions and organic fleet expansion that will complement existing activities and further enhance our international reach. Our efforts will mainly be directed towards initiatives that optimize asset utilization and build shareholder value," concluded Mr. Wall.
The Company will hold a conference call to discuss these results on November 13, 2012 at 3:00 PM (ET). Interested parties can join the call by dialing 647-427-7450 (Toronto) or 1-888-231-8191 (toll free). If you are unable to call at this time, you may access a tape recording of the meeting by calling 416-849-0833 (Toronto), 514-807-9274 (Montreal), or 1-855-859-2056 (toll free) followed by access code 49848633. This tape recording will be available until November 21, 2012.
ABOUT HNZ GROUP INC.
The Company is an international provider of helicopter transportation and related support services with fixed primary operations in Canada, New Zealand, Australia and regions of Southeast Asia. The group also delivers contracted on demand support in Afghanistan and Antarctica. With bases around the world, the Company provides helicopter transportation services to a broad range of sectors, including infrastructure maintenance, utilities, oil and gas, mining, forestry, construction, government survey and infrastructure, tourism, marine pilot transfer, emergency medical services ["EMS"] and provides military support in Afghanistan. Charter operations are provided under two brands: HNZ Global in the Asia Pacific and Antarctica regions and Canadian Helicopters Limited in Canada and Afghanistan. In addition to charter services, the Company provides third party repair and maintenance services in Canada and in the United States and operates two flight schools in Canada. With headquarters near Montreal, Canada, the Company operates approximately 140 helicopters and employs approximately 800 personnel.
This press release contains forward-looking statements relating to the future performance of the Company. Forward-looking statements, specifically those concerning future performance, are subject to certain risks and uncertainties, and actual results may differ materially. Consequently, readers should not place any undue reliance on such forward-looking statements. In addition, these forward-looking statements relate to the date on which they were made. The Company disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise unless being required by applicable laws.
DEFINITION OF NON-IFRS MEASURES: EBITDA
References to "EBITDA" are to earnings before net financing charges, income taxes, depreciation and amortization and gain or loss on disposal of property, plant and equipment. Since EBITDA is a metric used by many investors to compare issuers on the basis of the ability to generate cash from operations, management believes that in addition to net earnings or loss, EBITDA is a useful supplementary measure.
EBITDA is not a measure recognized under IFRS and does not have standardized meanings prescribed by IFRS. Therefore, EBITDA may not be comparable with similar measures presented by other entities. Investors are cautioned that EBITDA should not be construed as an alternative to net earnings determined in accordance with IFRS as indicators of the Company's performance, or to cash flows from operating, investing and financing activities as measures of liquidity and cash flows.
Note to readers: Complete consolidated unaudited interim financial statements and Management's Discussion & Analysis of Operating Results and Financial Position are available on the Company's website at www.hnz.com and on SEDAR at www.sedar.com.
SOURCE: HNZ Group Inc.For further information:
HNZ Group Inc.
President and Chief Executive Officer