MONTREAL, Aug. 12 /CNW Telbec/ - Canadian Helicopters Income Fund (TSX: CHL.UN) ("the Fund"), the largest helicopter transportation services company operating in Canada, today announced its financial and operating results for the second quarter ended June 30, 2010.
The Fund generated revenue of $44.4 million, an increase of $3.0 million, or 7.2%, over revenue of $41.4 million in the second quarter of 2009. Visual Flight Rules (VFR) revenue increased $6.4 million primarily due to revenues from aircraft contracted in Afghanistan, including the additional heavy aircraft contracted as part of supplemental work awarded in March 2010, as well as a slight increase in domestic operations due to greater mining and fire suppression activities. Instrument Flight Rules (IFR) revenue decreased by $4.1 million primarily resulting from the loss of the United States Transportation Command North Warning System operation and maintenance contract. Ancillary revenue, including the CFTS contract, grew $0.7 million primarily due to increased DND flying training support and the consolidation of maintenance revenues from Heli-Welders and the newly-acquired Nampa Valley Helicopters. Revenue-flying hours increased 0.8% to 15,560 hours.
EBITDA was $13.2 million compared with $10.3 million a year earlier. The improvement reflects a more favourable revenue mix and lower maintenance costs. Crew costs increased slightly due to the need to hire additional crew for the increased activities in Afghanistan. As a result, net earnings before non-controlling interest reached $9.8 million, or $0.75 per unit, up 21.0% over net earnings of $8.1 million, or $0.62 per unit, in the second quarter of 2009.
Driven by higher net income, cash flows related to operating activities before net changes in non-cash working capital balances rose 24.6% to $11.2 million, compared with $9.0 million a year earlier. Distributable cash amounted to $11.1 million, or $0.85 per unit, compared with $12.3 million, or $0.94 per unit, last year.
Financial Highlights Quarters ended Six months ended
(in thousands of dollars, June 30, June 30,
except per unit data) 2010 2009 2010 2009
Revenue 44,439 41,389 72,932 67,869
EBITDA (1) 13,175 10,291 11,747 7,802
Net earnings (loss)
interest 9,848 8,142 9,261 7,637
Per unit - basic and
diluted ($) 0.75 0.62 0.71 0.58
Distributable cash 11,130 12,265 11,980 10,196
Per unit - basic and
diluted ($) 0.85 0.94 0.92 0.78
Class B) 13,068,700 13,098,700 13,068,700 13,098,700
(1) Earnings before interest, income taxes, depreciation and
amortization, gain or loss on disposal of property, plant and
equipment, share of net loss of a company subject to significant
influence and non-controlling interest
"Second-quarter results further reflect the success of contracted work in Afghanistan, including the rapid ramp-up of additional work awarded earlier this year," said Don Wall, President and Chief Executive Officer of Canadian Helicopters. "In the domestic marketplace, the resource market remains weak, although we are seeing signs of improvement in the mining sector. Furthermore, we were able to respond to increased demand for fire suppression support during the quarter. The integration of the newly-acquired Nampa Valley Helicopters is progressing as anticipated and we are looking forward to the continued growth of our ancillary activities."
The Fund ended the quarter in a strong financial position with cash and cash equivalents of $19.2 million and unused debt facilities. As at June 30, 2010, the Fund had $15.0 million and $40.0 million available under its operating and term credit facilities, respectively, while combined cash and credit facilities amounted to $74.2 million.
For the first half of 2010, revenue reached $72.9 million, up 7.4% from $67.9 million in the corresponding period in 2009. VFR revenue increased $11.4 million primarily due to contracted work in Afghanistan. IFR revenue declined by 26.6% as a result of the loss of the North Warning System operation and maintenance contract, and ancillary revenue increased $1.5 million primarily due to increased DND flying training support and the consolidation of Heli-Welders and Nampa Valley Helicopters maintenance revenues. Revenue-flying hours decreased 3.0% to 24,113 hours.
EBITDA amounted to $11.7 million, up from $7.8 million a year earlier, while net earnings before non-controlling interest rose to $9.3 million, or $0.71 per unit, from $7.6 million, or $0.58 per unit, last year. Cash flows related to operating activities before net changes in non-cash working capital balances totaled $12.1 million, compared with $7.7 million a year ago. Finally, distributable cash was $12.0 million, or $0.92 per unit, up 17.5% from $10.2 million, or $0.78 per unit, last year.
"The loss of the North Warning System operation and maintenance contract coupled with any weakness in the domestic VFR sector will impact our results in the third quarter, historically our strongest quarter. Afghanistan operations will continue to contribute strongly in the second half of 2010. Importantly, Canadian Helicopters is looking forward to the potential exercise of Option Year 2 of our initial contract as well as the one-year renewal option of the additional work awarded earlier this year. Both option periods are set to begin on December 1, 2010. We are optimistic those options will be exercised and will continue to contribute strongly to operating results. Our successful initiatives to leverage our asset base and competencies into new operations, combined with the strength of our balance sheet, provide Canadian Helicopters the means to aggressively pursue any profitable expansion opportunity that arises," concluded Mr. Wall.
Canadian Helicopters will hold a conference call to discuss these results on August 13, 2010 at 11:00 AM (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 (local) or 1-800-642-1687 (toll free) followed by access code 92153269 followed by #. This tape recording will be available until August 20, 2010.
ABOUT CANADIAN HELICOPTERS INCOME FUND
Through Canadian Helicopters Limited, Canadian Helicopters Income Fund is the largest helicopter transportation services company operating in Canada and one of the largest in the world based on the size of its fleet. With over 35 base locations across Canada, Canadian Helicopters provides helicopter services to a broad range of sectors, including emergency medical services, infrastructure maintenance, utilities, oil and gas, mining, forestry and construction. In addition to helicopter transportation services, Canadian Helicopters operates two flight schools, provides third party repair and maintenance services in Canada and provides military support in Afghanistan. With over 60 years of experience, Canadian Helicopters is an industry leader in establishing safety standards and operating procedures.
This press release contains forward-looking statements relating to the future performance of the Fund. 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 Fund 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-GAAP MEASURES: EBITDA, STANDARDIZED DISTRIBUTABLE CASH AND DISTRIBUTABLE CASH
References to "EBITDA" are to earnings (loss) before interest, income taxes, depreciation and amortization, gain or loss on disposal of property, plant and equipment and non-controlling interest, as disclosed in the Summary of Selected Consolidated Financial Information. 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.
Standardized Distributable Cash is a non-GAAP measure recommended by the Canadian Institute of Chartered Accountants ("CICA") in order to provide a consistent and comparable measurement of distributable cash across entities. Standardized Distributable Cash represents cash flows from operating activities, less adjustments for net maintenance capital expenditures as reported in accordance with GAAP.
Management views Distributable Cash as an operating performance measure, as it is a measure generally used by Canadian income funds as an indicator of financial performance. Distributable Cash is defined as Standardized Distributable Cash plus the net change in non-cash working capital balances and less the consideration paid by the Fund for the purchase of Units under the employee Unit purchase plan. Distributable Cash is important as it summarizes the funds available for distribution to Unitholders.
EBITDA, Standardized Distributable Cash and Distributable Cash are not earnings measures recognized under GAAP and do not have standardized meanings prescribed by GAAP. Therefore, EBITDA, Standardized Distributable Cash and Distributable Cash may not be comparable with similar measures presented by other entities. Investors are cautioned that EBITDA, Standardized Distributable Cash and Distributable Cash should not be construed as an alternative to net earnings (loss) determined in accordance with GAAP as indicators of the Fund'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 Canadian Helicopters' website at www.canadianhelicopters.com and on SEDAR at www.sedar.com.
SOURCE HNZ Group Inc.
For further information: For further information: Don Wall, President and Chief Executive Officer, Canadian Helicopters Income Fund, Tel: 780-429-6919, Tel: 450-452-3007