HNZ Group Reports 2013 Year-end Results
- Revenue of $255.1 million, versus $256.0 million last year
- EBITDA of $76.7 million or 30.1% compared to $77.5 million or 30.3% a year ago
- Net income of $19.9 million or $1.52 per share due to a Q3 non-cash goodwill impairment charge of $23.5 million or net income before goodwill impairment charge totaling $43.4 million or $3.32 per share
- Long-term debt repayment of $24.0 million in Q4, resulting in long-term debt-to-equity ratio of 0.09 versus 0.16 in 2012
- Solid financial position enabling HNZ to remain proactive in the search for beneficial opportunities
MONTREAL, March 19, 2014 /CNW Telbec/ - HNZ Group Inc. (TSX: HNZ.A, HNZ.B) (the "Corporation"), an international provider of helicopter transportation and related support services, today announced its financial and operating results for the fourth quarter and fiscal year ended December 31, 2013.
|Financial Highlights (in thousands of dollars, except per unit data)||Quarters ended||Fiscal years ended|
|Dec. 31,||Dec. 30,||Dec. 31,||Dec. 30,|
|(in thousands of dollars, except per share data)||2013||2012||2013||2012|
|Goodwill impairment charge||-||-||23,500||-|
|Net income (2)||6,491||6,665||19,858||43,127|
|Per share - basic and diluted ($)||0.50||0.51||1.52||3.30|
|Cash flows related to operating activities (3)||11,237||11,409||63,032||63,439|
|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
(2) Attributable to the shareholders of the Corporation
(3) Before net changes in non-cash working capital balances and deferred revenues
FOURTH QUARTER RESULTS
The Corporation generated revenue of $62.0 million, compared with revenue of $60.7 million in the fourth quarter of 2012. The increase in revenue was due to an increase in Instrument Flight Rules (IFR) partially offset by a decrease in Visual Flight Rules (VFR) and Ancillary revenues. While the Corporation flew 12,522 hours compared to 12,818 hours in the fourth quarter of 2012, the positive mix of hours flown generated an increase in revenue.
IFR revenue increased by $7.7 million mainly due to an increase in activity in the mining sector in Australia related to the Rio Tinto contract, the oil and gas sector in New Zealand and the start-up of the previously-announced Shell offshore support contract in the Philippines. VFR revenue decreased by $4.5 million primarily due to the loss of the forest fire suppression contracts in Australia, reduced activities in Afghanistan and decreased activities in Antarctica partially offset by increased oil and gas activities in western Canada. Ancillary revenue decreased by $1.9 million due to the decrease in repair and maintenance revenues from the Nampa and Heli-Welders businesses and decreased activities in aircraft leases and ground handling in the Southern Hemisphere.
EBITDA for the fourth quarter of 2013 totaled $12.7 million, compared to $14.0 million a year earlier. During the quarter, the Corporation recorded a foreign exchange net loss of $0.7 million compared to a net gain of $0.6 million last year.
Net income attributable to the shareholders of the Corporation totaled $6.5 million, or $0.50 per share in the fourth quarter of 2013, compared to $6.7 million, or $0.51 per share for the same period in 2012. Cash flows related to operating activities before net change in non-cash working capital balances and deferred revenues were $11.2 million in the fourth quarter of 2013, versus $11.4 million in the corresponding period a year earlier.
"Our operations in the final quarter of 2013 generated all expected revenues and concluded a strong year for HNZ globally," said Don Wall, President and CEO of HNZ Group Inc. "Even though our support work in Afghanistan is winding down as planned, we are seeing a promising uptick in oil and gas activities in the Southern Hemisphere and in western Canada. We are pleased with the overall 2013 performance of the Corporation, as we set the stage for growth in the Philippines with the start-up of our offshore activities for Shell. In North America, the opening of our new facilities in Terrace, British Columbia, is well timed with the increased demand for pipeline support work in western Canada."
As at December 31, 2013, the Corporation's financial position remains strong with working capital of $46.5 million and debt net of cash and cash equivalents, of $18.8 million, with $23 million drawn under the Corporation's revolving operating credit facility of $125 million that matures on January 31, 2017.The Corporation also has an option to increase the credit facility to $175 million subject to certain conditions. As at December 31, 2013, the long-term debt-to-equity ratio was 0.09, compared to 0.16 a year ago.
2013 YEAR-END RESULTS
For the twelve-month period ended December 31, 2013, revenue reached $255.1 million, compared with revenue of $256.0 million in the corresponding period of 2012. This variation is explained by a decrease in VFR revenue of $9.1 million and a decrease in ancillary revenue of $1.7 million partially offset by an increase in IFR revenue of $9.9 million. The contracts in Afghanistan, in aggregate, are still experiencing a level of revenue not significantly different from those previously announced despite the decreased flying hours experienced this year compared to prior years due to the impact of annual rate escalation.
The Corporation flew 58,698 hours over the twelve-month period ended December 31, 2013, compared to 65,246 hours in the same period in 2012.
EBITDA amounted to $76.7 million, versus $77.5 million a year earlier. During the year, the Corporation recorded a foreign exchange net loss of $1.1 million compared to a net gain of $0.4 million last year.
"While we are very pleased with the financial results for the year, we are also extremely grateful to be able to recognize another year of accident free operations across our global network, in some very difficult operating environments" said Mr. Wall.
During the third quarter of 2013, the Corporation recorded a non-cash goodwill impairment charge of $23.5 million with respect to its Canadian Helicopters operations in Canada, including Afghanistan (and not HNZ Global helicopter transportation services in the Southern Hemisphere or its repair and maintenance services provided under the Heli-Welders or Nampa Valley Helicopters brands) primarily as a result of the reduced future cash flows expected from declining USTRANSCOM revenues in Afghanistan.
Net income attributable to the shareholders of the Corporation stood at $19.9 million, or $1.52 per share, compared with $43.1 million, or $3.30 per share, last year. Without the impact of the goodwill impairment, the Corporation would have reported net income for the twelve-month period of $43.4 million or $3.32 per share. Finally, cash flows related to operating activities before net change in non-cash working capital balances and deferred revenues totaled $63.0 million, versus $63.4 million, in 2012.
The Corporation commenced providing service to Shell Global Solutions International B.V. ("Shell") in September of 2013. In July 2013, Shell requested and the Corporation agreed to contract for an additional AW139 aircraft as back-up for the term of the contract as well as some additional crewing for the primary operational aircraft. As a result of these changes, revenues under the contract during the initial four year term are expected to be approximately US$57 million, instead of the US$40 million initially estimated.
CHANGE IN FISCAL YEAR-END
The Corporation has received confirmation from the Canada Revenue Agency that it has changed its fiscal year-end from December 30 to December 31, effective for fiscal 2013. The reason for this change was to align the Corporation's year-end with that of its subsidiary companies and to facilitate financial reporting and the preparation of corporate tax returns.
"In the quarters ahead, as previously announced, we anticipate that our activities in Afghanistan will significantly decrease," said Mr. Wall, "Despite the adverse effect this will have on HNZ's revenues and EBITDA, we expect our ongoing activities in North America and the Southern Hemisphere to continue to be strong. Moreover, the operational expertise and outstanding safety record we demonstrated in Afghanistan during the last six years will serve us well as we continue to build our brand worldwide. As we transition our resources, we will be studying entry opportunities in a variety of different geographic areas. The Corporation's solid financial position also enables us to remain proactive in the search for beneficial acquisitions."
The Corporation will hold a conference call to discuss these results on Wednesday March 20, 2014 at 11:00 AM (ET). Interested parties can join the call by dialing 514-807-9895 (Montreal) or 1-888-231-8191 (toll free). If you are unable to call at this time, you may access a tape recording of the conference call by dialing 416-849-0833 (Toronto), 514-807-9274 (Montreal), or 1-855-859-2056 (toll free) followed by access code: 9453693. This tape recording will be available until March 27, 2014.
ABOUT HNZ GROUP INC.
The Corporation is an international provider of helicopter transportation and related support services with operations in Canada, Australia, New Zealand, Afghanistan, Antarctica and Southeast Asia. The Corporation operates in excess of 130 helicopters in support of a range of multinational companies and government agencies, including onshore and offshore oil and gas, mineral exploration, military support, hydro and utilities, forest management, construction, air ambulance and search and rescue. In addition to charter services, the Corporation provides flight training and third-party repair and maintenance services. The Corporation is headquartered near Montreal, Canada and employs approximately 800 personnel from 35 locations around the world. The Corporation operates from fixed-base locations as well as from temporary locations, commonly referred to as "pool locations", and provides helicopters in a wide variety of climatic conditions and terrain across Canada, Australia, New Zealand Afghanistan, Antarctica and Southeast Asia.
Certain statements in this press release may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Corporation, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Examples of such statements include, but are not limited to, statements regarding the HNZ Global acquisition, the integration of HNZ Global and the realization of expected synergies, the financial position, results of operations, objectives, dividend policy, participation in bidding processes, continuing business relationship with actual or potential key clients (in particular USTRANSCOM in Afghanistan, Rio Tinto and Shell), expected revenues from contracts with key clients, seasonal levels of activity, maintenance of contractual relationships, impact of any economic uncertainty, expected competition, use of available funds, maintenance of strategic relationships with aboriginal groups and regulations (in particular environmental and transportation regulations) and legislation (including tax legislation) applicable to the Corporation.
Although the forward-looking statements contained in this press release are based upon what management of the Corporation believes are reasonable assumptions, the Corporation cannot assure investors that actual results will be consistent with these forward-looking statements. The assumptions on which the forward-looking statements are based include, but are not limited to, general economic trends, industry trends, current contractual and business relationships, capital markets and current competitive, governmental, regulatory and legal environment.
These statements are not based on historical facts but instead reflect current expectations of management regarding future events and operating performance and speak only as of the date of this press release. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to, the factors discussed in this press release or referred to under "Risk Factors". These forward-looking statements are made as of the date of this press release, and the Corporation assumes no obligation to update or revise them to reflect new events or circumstances, unless required by applicable laws.
DEFINITION OF NON-IFRS MEASURES: EBITDA
References to "EBITDA" are to net income before net financing charges, income taxes, depreciation and amortization, gain or loss on disposal of property, plant and equipment and change in fair value of the obligation to purchase the shares of non-controlling interests. 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 income or loss, EBITDA is a useful supplementary measure.
EBITDA is not an earnings measure recognized under IFRS and does not have a standardized meaning 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 income determined in accordance with IFRS as an indicator of the Corporation's performance, or to cash flows from operating, investing and financing activities as measures of liquidity and cash flows.
Note to readers: Complete consolidated financial statements and Management's Discussion & Analysis of Operating Results and Financial Position are available on the Corporation'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