HNZ Group reports 2016 first quarter results

  • Revenue of $46.2 million, versus $36.5 million last year
  • Adjusted EBITDAR of $9.9 million or 21.4% compared to $1.5 million or 4.0% a year ago
  • Adjusted EBITDA of $5.5 million or 11.9% compared to a $0.1 million loss a year ago
  • Net income of $1.6 million or $0.12 per share versus a net loss of $3.0 million or $0.23 per share last year
  • Solid financial position with a $5.6 million net cash position and $125 million credit facility

MONTREAL, May 11, 2016 /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, 2016.

Financial Highlights

Quarters ended March 31,


(in thousands of dollars, except per share data)




2016


2015


Revenue




46,205


36,535


Adjusted EBITDAR (1)




9,884


1,465


Adjusted EBITDA (2)




5,502


(116)


Net income (loss) (3)




1,612


(3,043)



Per share - basic and diluted ($)




0.12


(0.23)


Adjusted cash flows related to operating activities (4)




4,313


1,762


Weighted-average shares outstanding (all classes)




13,028,003


13,068,700


(1)

Adjusted EBITDA (as defined below) before aircraft operating leases expense but including payments made to lessors to cover variable costs for leased aircraft such as maintenance and crew costs (see reconciliation in the Non-IFRS financial measures section)

(2)

Net income (loss) before net financing charges, income taxes, depreciation and amortization, adjusted for gain or loss on disposal of property, plant and equipment, non-cash impairment charge (if any), change in fair value of the obligation to purchase the shares of non-controlling interests in subsidiaries as disclosed in the reconciliation of the EBITDA and EBITDAR (see reconciliation in the Non-IFRS financial measures section)

(3)

Attributable to the shareholders of the Corporation

(4)

Before net changes in non-cash working capital balances and deferred revenues (see reconciliation in the Non-IFRS financial measures section)


FIRST QUARTER RESULTS
Revenue increased by $9.7 million to $46.2 million in the first quarter of 2016, compared to $36.5 million a year ago, as a result of increased revenue from all three business segments. The Corporation flew 6,569 hours compared to 7,025 hours in the first quarter of 2015, a decrease of 6.5%.

Offshore revenue increased by $6.4 million from the first quarter of 2015, mainly due to the Shell Canada offshore support contract in Halifax, the addition of the Norsk subsidiary in Norway and increased business in Southeast Asia, partially offset by a reduction in offshore activity in New Zealand. Ancillary revenue increased by $2.1 million primarily due to increased activity at Nampa Valley and HNZ Topflight. Finally, onshore revenues increased by $1.2 million as a result of the new North Warning System contract (NWS), partially offset by reductions in utility flying in Canada and Antarctica.  

Operating expenses, before aircraft operating leases expenses, increased by $1.1 million to $36.3 million in the first quarter compared to last year. The increase in operating expenses is primarily explained by the incremental Shell Halifax contract, NWS and Norsk, partially offset by reductions in support costs and VFR expenses due to lower activity levels.

Adjusted EBITDAR and adjusted EBITDA for the first quarter of 2016 were $9.9 million and $5.5 million respectively or 21.4% and 11.9% of revenues, compared to $1.5 million (4.0% of revenues) and a loss of $0.1 million a year earlier.

Net income attributable to the shareholders of the Corporation totaled $1.6 million or $0.12 per share, compared to a net loss of $3.0 million, or $0.23 per share for the same period in 2015. Adjusted cash flows related to operating activities before net change in non-cash working capital balances and deferred revenues were $4.3 million in the first quarter of 2016 versus $1.8 million in the corresponding period a year earlier.

Adjusted net free cash flows for the three months ended March 31, 2016 totaled $2.7 million, compared to ($0.2) million for the same period a year ago. For the twelve-month period ended March 31, 2016, adjusted net free cash flows stood at $13.1 million, compared with $20.1 million for the year ended December 31, 2015.

"Our first quarter results reflect the benefit of the Shell offshore support contract in Nova Scotia, the U.S. Department of Defense North Warning System contract and the execution of ongoing cost control measures," said Don Wall, President and Chief Executive Officer of HNZ Group. "While the quarter was positive, the overall context in the oil and gas and other resource sectors remains difficult with little sign of short-term improvement. We continue to maintain a solid financial position with cash and cash equivalents net of debt of $5.6 million."

As at March 31, 2016, the Corporation's financial position is strong with working capital of $48.0 million, and cash and cash equivalents, net of bank indebtedness of $11.5 million, combined with an operating credit facility drawdown of $5.9 million.

FIRST QUARTER HIGHLIGHTS
Expanding Northern Canadian Operations Through Investment in Acasta HeliFlight Inc.
On March 8, 2016, the Corporation announced that it has enhanced its presence in Northern Canada through the creation of Acasta HeliFlight Inc. ("Acasta"). Acasta is based in Yellowknife, NWT and will provide specialized Northern Canadian VFR helicopter transportation services across all sectors of the regional economy. Acasta will be primarily under the leadership of President Adam Bembridge, a local aviation executive with experience in the North and a recognized pioneer in the area of building mutually beneficial alliances with Northern Aboriginal organizations.

OUTLOOK
"On a near to mid term basis, we expect slight improvement to the macroeconomic environment, but with continued headwinds putting pressure on volumes and pricing. However, we will continue to maintain a solid balance sheet, which will allow us to remain opportunistic in the marketplace. We remain focused on growth opportunities in the offshore market over a longer term period and continued efforts to align operating expenses with the current economic environment," concluded Mr. Wall.

CONFERENCE CALL
The Corporation will hold a conference call to discuss these results on Thursday May 12, 2016 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: 98857269. This tape recording will be available until May 19, 2016.

ABOUT HNZ GROUP INC.
HNZ Group is an international provider of helicopter transportation and related support services with operations in Canada, New Zealand, Australia, Norway, Southeast Asia and Antarctica. The Corporation operates in excess of 115 helicopters to support offshore and onshore charter activities. Offshore operations worldwide are provided through HNZ Global and partner Norsk Helikopterservice while onshore charter operations are managed by Canadian Helicopters in Canada, Asia-Pacific and Antarctica, and by Acasta in Northern Canada. Clients consist of multinational companies and government agencies including offshore and onshore oil and gas, mineral exploration, military support, hydro and utilities, forest management, construction, air ambulance and search and rescue. In addition to charter services, it provides ancillary services which include third-party repair and maintenance services and flight training, including the internationally recognized HNZ Topflight advanced training centre in Penticton, British Columbia. HNZ Group is a publicly traded company on the Toronto Stock Exchange (TSX: HNZ.A, HNZ.B) and is headquartered near Montreal, Canada employing approximately 600 personnel from 35 locations around the world.

FORWARD-LOOKING STATEMENTS
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.  When used in this press release, such statements use such words as "may", "will", "intend", "should", "expect", "believe", "plan", "anticipated", "estimate", "predict", "potential" or the negative of these terms and other similar terminology.  Examples of such statements include, but are not limited to, statements regarding the financial position, results of operations, objectives, dividend policy, participation in bidding processes, continuing business relationships with actual or potential key clients (in particular 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), legislation (including tax legislation) applicable to the Corporation. Consequently, readers should not place any undue reliance on such forward-looking statements.

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.

NON-IFRS FINANCIAL MEASURES
This press release contains certain non-IFRS financial measures as defined under applicable securities legislation, including adjusted EBITDAR, adjusted EBITDA, Adjusted cash flows related to operating activities and Adjusted net free cash flows. The Corporation believes that such non-IFRS financial measures improve the period-to-period comparability of the Corporation's results by providing more insight into the performance of ongoing core business operations. As required by applicable securities legislation, the Corporation has provided reconciliations of those measures to the most directly comparable IFRS measures. Investors and other readers are encouraged to review the related IFRS financial measures and the reconciliation of non-IFRS measures to their most directly comparable IFRS measures set forth below and should consider non-IFRS measures only as a supplement to, not as a substitute for or as measure to, measures of financial performance prepared in accordance with IFRS.

  • References to "Adjusted EBITDA" are to net income (loss) before net financing charges, income taxes, depreciation and amortization, adjusted for gain or loss on disposal of property, plant and equipment, trade name impairment charge (if any), goodwill impairment charge (if any) 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. Adjustments to standard EBITDA are made by management to normalize for non-recurring events.
  • References to "Adjusted EBITDAR" are to Adjusted 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 (as disclosed in the Summary of "Selected Consolidated Financial Information").
  • References to "Adjusted operating income" are to revenues less direct operating expenses. Direct operating expenses include crew and maintenance costs, cost of goods sold (if applicable), direct base costs, aircraft leases and other operating expenses.
  • References to "Adjusted Net Free Cash Flows" are to cash flows from operating activities plus (minus) net change in non-cash working capital balances and deferred revenues less "Maintenance CAPEX". "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 defined as capital expenditures undertaken to increase the Corporation's capacity for potential growth as defined by management.
  • References to net income (loss) before non-cash impairment charge are to net income (loss) plus the trade name impairment charge and goodwill impairment charge.
  • References to earnings before non-cash impairment charge per share basic and diluted are to earnings per share plus the trade name impairment charge and goodwill impairment charge per share basic and diluted.

Since Adjusted EBITDAR, Adjusted EBITDA, Adjusted cash flows related to operating activities and Adjusted Net Free Cash Flows are useful to many investors to compare issuers on the basis of the ability to generate cash from operations on a recurring basis, management believes that in addition to net income, Adjusted EBITDAR, Adjusted EBITDA, Adjusted cash flows related to operating activities and Adjusted net free cash flows are useful supplementary measures. Management believes that Adjusted net free cash flows provides useful additional information to investors concerning the operations and cash flows of the Corporation including the amount available for distribution to the shareholders, repayment of debt and other investing activities.

Adjusted EBITDAR, Adjusted EBITDA, Adjusted Net Free Cash Flows, Adjusted operating income, net income (loss) before non-cash impairment charge and earnings before non-cash impairment charge per share basic and diluted are not earnings or cash flows measures recognized under IFRS and do not have a standardized meaning prescribed by IFRS. Therefore, Adjusted EBITDAR, Adjusted EBITDA, Adjusted Net Free Cash Flows, adjusted operating income, net income (loss) before non-cash impairment charge and earnings before non-cash impairment charge per share basic and diluted may not be comparable with similar measures presented by other entities. Investors are cautioned that Adjusted EBITDAR, Adjusted EBITDA, Adjusted Net Free Cash Flows, Adjusted operating income, net income (loss) before non-cash impairment charge and earnings before non-cash impairment charge per share basic and diluted should not be construed as alternatives to net income or earnings per share determined in accordance with IFRS as indicators of the Corporation's performance, or to cash flows related to operating, investing and financing activities as measures of liquidity and cash flows.


Adjusted EBITDAR and Adjusted EBITDA Reconciliation to income before income taxes

 


Three-month periods ended

March 31

($000's except for shares and per share amounts)

2016

2015


Revenue

46,205

36,535


Operating expenses before aircraft operating leases expenses

36,924

35,230


Foreign exchange gain

(603)

(160)


Adjusted EBITDAR1

9,884

1,465


Aircraft operating leases expenses

4,382

1,581


Adjusted EBITDA1

5,502

(116)


- Amortization

4,518

4,455


- Net gain on disposal of property, plant and equipment

(424)

(61)


- Net financing charges

103

84


Income (loss) before income taxes

1,305

(4,594)


Net income (loss) attributable to:




Shareholders of the Corporation

1,612

(3,043)


Non-controlling interests

(925)

58


Net income (loss)

687

(2,985)


Earnings (loss) per share basic and diluted

0.1238

(0.2328)


Dividends declared per share

0.2756


Total assets

299,538

323,377


[1] 

See "Definition of Non-IFRS Measures". Adjusted EBITDAR and Adjusted EBITDA are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS. Adjusted EBITDAR and Adjusted EBITDA may not be comparable to similar measures presented by other issuers.

 

Adjusted cash flows from operating activities and Adjusted net free cash flow Reconciliation to cash flows from operating activities

 


Three months ended

Twelve months
ended

Year

ended

(in $000's)

March 31,
2016

March 31,

2015

March 31,
2016

December 31,
2015

Cash flows related to operating activities

(1,383)

(4,750)

16,778

22,585

Add (deduct):

Net change in non-cash working capital
 balances and deferred revenues

5,696

6,512

2,755

3,386


4,313

1,762

19,533

25,971

Less:

Maintenance CAPEX1

1,576

1,915

6,385

5,868

Adjusted Net Free Cash Flows2

2,737

(153)

13,148

20,103

[1]   

See "Definition of Non-IFRS Measures" for a description of management's definition of Maintenance CAPEX and Growth CAPEX.

[2]   

See "Definition of Non-IFRS Measures" Adjusted net free cash flows is not a recognized measure under IFRS and does not have a standardized meaning prescribed by IFRS. Adjusted net free cash flows may not be comparable to similar measures presented by other issuers.

 

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., Matthew Wright, Vice-President and Chief Financial Officer, Tel: 780-429-6903


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