HNZ Group reports 2014 first quarter results
- Revenue of $56.0 million, versus $54.2 million last year
- EBITDAR of $12.5 million or 22.3% compared to $13.4 million or 24.8% a year ago
- EBITDA of $9.6 million or 17.2% compared to $12.8 million or 23.6% a year ago
- Net income of $3.6 million or $0.27 per share, versus $6.5 million or $0.50 per share last year
- Long-term debt repayment of $5.0 million in Q1, resulting in long-term debt-to-equity ratio of 0.07 versus 0.21 a year ago
- Solid financial position enabling HNZ to remain proactive in the search for organic expansion and beneficial acquisitions
MONTREAL, May 13, 2014 /CNW Telbec/ - HNZ Group Inc. (TSX: HNZ.A, HNZ.B) (the "Corporation"), an international provider of helicopter transportation and related support services, today announced its financial and operating results for the first quarter ended March 31, 2014.
|Financial Highlights||Quarters ended March 31,|
|(in thousands of dollars, except per share data)||2014||2013|
|Net income (3)||3,593||6,514|
|Per share - basic and diluted ($)||0.27||0.50|
|Cash flows related to operating activities (4)||9,661||11,355|
|Weighted-average shares outstanding (all classes)||13,068,700||13,068,700|
|(1)||Net income before net financing charges, income taxes, depreciation and amortization, gain or loss on disposal of property, plant and equipment, and aircraft operating leases expense but including payments made to lessors to cover variable costs for leased aircraft such as maintenance and crew costs|
|(2)||Net income before net financing charges, income taxes, depreciation and amortization and gain or loss on disposal of property, plant and equipment|
|(3)||Attributable to the shareholders of the Corporation|
|(4)||Before net changes in non-cash working capital balances and deferred revenues|
FIRST QUARTER RESULTS
The Corporation generated revenue of $56.0 million in the first quarter of 2014, compared with revenue of $54.2 million a year ago. The increase in revenue was due to an increase in Instrument Flight Rules (IFR) and Ancillary revenues, partially offset by a decrease in Visual Flight Rules (VFR) revenues. The Corporation flew 9,787 hours compared to 9,272 hours in the first quarter of 2013, an increase of 5.6%.
IFR revenue increased by $11.2 million mainly due to an increase in activity in the oil and gas sector in New Zealand and the start of the previously-announced Shell offshore support contract in the Philippines in September 2013. VFR revenue decreased by $11.7 million primarily due to the loss of the forest fire suppression contract in Australia, reduced activities in Afghanistan and decreased activities in environmental work in Antarctica partially offset by increased oil and gas activities in Western Canada. Ancillary revenue increased by $2.3 million due to higher revenues in repair and maintenance revenues from the Nampa and Heli-Welders businesses and increased activities in aircraft leases partially offset by lower ground handling activity in the Southern Hemisphere.
Operating expenses increased by $4.3 million in the first quarter compared to last year, mainly due to selling, general and administrative expenses, which increased by $3.5 million to $16.4 million. This increase is mainly explained by the increase in support and base costs in the Southern Hemisphere operations in connection with the increased activities in New Zealand and the contract in the Philippines.
EBITDAR and EBITDA for the first quarter of 2014 were $12.5 and $9.6 million, compared to $13.4 and $12.8 million a year earlier. Changes in operating margins reflect the decrease of activity in Afghanistan and the increasing use of helicopter operating leases in the offshore oil and gas sector. Furthermore, during the quarter, the Corporation recorded a foreign exchange net loss of $0.4 million compared to a net gain of $0.3 million last year.
Net income attributable to the shareholders of the Corporation totaled $3.6 million, or $0.27 per share in the first quarter of 2014, compared to $6.5 million, or $0.50 per share for the same period in 2013. Cash flows related to operating activities before net change in non-cash working capital balances and deferred revenues were $9.7 million in the first quarter of 2014, versus $11.4 million in the corresponding period a year earlier, mainly due to lower net income.
Net free cash flows totaled $8.2 million in the first quarter, compared to $8.5 million for the same period a year ago. For the twelve-month period ended March 31, 2014, net free cash flows stood at $54.1 million, compared with $54.3 million for the year ended December 31, 2013.
"We are pleased with HNZ's results in the first quarter. Our operations generated an increase in year-over-year revenues despite a reduction of our activity in Afghanistan," said Don Wall, President and Chief Executive Officer of HNZ Group Inc. "HNZ benefited from higher levels of activity in the oil and gas sector in both the Southern and Northern Hemispheres, as well as improved ancillary revenue from our Nampa and Heli-Welders repair and maintenance subsidiaries. Importantly, the Corporation's strong performance also resulted from the ongoing implementation of our Shell offshore support contract in the Philippines which started in September of last year."
As at March 31, 2014, the Corporation's financial position remains strong with working capital of $52.8 million and debt net of cash and cash equivalents and bank indebtedness, of $6.2 million, with $18 million drawn under the Corporation 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. For the first quarter, the long-term debt-to-equity ratio was 0.07, compared to 0.21 last year.
"Although revenues from our work in Afghanistan will continue to decrease throughout the year, we consider the prospects for HNZ from its traditional sources of business to be strong. Our recent successes in the offshore oil and gas sector have positioned the Corporation to capture additional opportunities in the Asia Pacific market, and we see considerable potential in oil and gas pipeline activity in Western Canada. HNZ is also well positioned to benefit from a recovery in mining and exploration activity. HNZ's solid financial position will enable us to be proactive in the search for organic expansion and beneficial acquisitions," concluded Mr. Wall.
CHANGES IN MD&A DISCLOSURE
During the first quarter of 2014, the Corporation added "Net free cash flows" and "EBITDAR" measures in its MD&A.
Net free cash flows
Management believes this supplementary disclosure provides useful additional information to the cash flows of the Corporation including the amount available for distribution to the shareholders, repayment of debt and other investing activities.
This information is used by other public company operators. It will be a relevant comparison with companies that do present this information, as the Corporation is planning to do more offshore work, requiring more capital intensive aircraft, and expand its lease fleet accordingly. This measure is a helpful analytical tool in that it presents a pre-capital measure of performance.
The Corporation will hold a conference call to discuss these results on Wednesday May 14, 2014 at 2:00 PM (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: 31914259. This tape recording will be available until May 21, 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, 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, goodwill impairment charge and change in fair value of the obligation to purchase the shares of non-controlling interests in subsidiaries as disclosed in the Summary of Selected Consolidated Financial Information.
- References to "EBITDAR" are to EBITDA before aircraft operating leases expense but including payments made to lessors to cover variable costs for leased aircraft such as maintenance and crew costs.
- References to Free Cash Flows are to cash flows from operating activities plus (minus) net change in non-cash working capital balances less maintenance capital expenditure as determined by management. Maintenance CAPEX is defined by management as any capital expenditure which is undertaken to maintain current output in terms of revenues and operating cash flows, as opposed to Growth CAPEX which is determined by management based on capital expenditures undertaken to increase the Corporation's capacity for potential growth.
Since EBITDAR, EBITDA and Net Free Cash Flows are metrics 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, EBITDAR, EBITDA and Net Free Cash Flows are useful supplementary measures. Management believes Net Free Cash Flows provides useful additional information to the cash flows of the Corporation including the amount available for distribution to the shareholders, repayment of debt and other investing activities.
EBITDAR, EBITDA and Net Free Cash Flows are not earnings or cash flows measures recognized under IFRS and do not have a standardized meaning prescribed by IFRS. Therefore, EBITDAR, EBITDA and Net Free Cash Flows may not be comparable with similar measures presented by other entities. Investors are cautioned that EBITDAR, EBITDA and Net Free Cash Flows should not be construed as alternatives to net income determined in accordance with IFRS as indicators 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