HNZ Group reports 2015 first quarter results

• Revenue of $36.5 million, versus $56.0 million last year
• Adjusted EBITDAR of $1.5 million or 4.1% compared to $12.5 million or 22.3% a year ago
• Adjusted EBITDA of ($0.1) million or (0.3%) compared to $9.6 million or 17.1% a year ago
• Net loss of $3.0 million or ($0.23) per share, versus net income of $3.6 million or $0.27 per share last year
• Solid financial position with $4.5 million net cash position and $125 million credit facility, allowing HNZ to pursue organic growth or opportunistic acquisitions

MONTREAL, May 14, 2015 /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, 2015.

Financial Highlights							Quarters ended March 31,
(in thousands of dollars, except per share data)								2015		2014
Revenue								36,535		55,951
Adjusted EBITDAR (1)								1,465		12,481
Adjusted EBITDA (2)								(116)		9,617
Net income (loss) (3)								(3,043)		3,593
	Per share - basic and diluted ($)							(0.23)		0.27
Adjusted cash flows related to operating activities (4)								1,762		9,661
Weighted-average shares outstanding (all classes)								13,068,700		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, goodwill 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)

CHANGE IN BUSINESS SEGMENTATION
During the first quarter, the Corporation changed the reporting of its financial results to designate the following business segments: offshore operations; onshore operations; ancillary services. This new segmentation reflects Management's view of the business and also HNZ's growth strategy going forward, with an emphasis on growing offshore helicopter transportation services. See section CHANGES IN BUSINESS SEGMENTATION AND MD&A DISCLOSURE.

FIRST QUARTER RESULTS
The Corporation generated revenue of $36.5 million in the first quarter of 2015, compared with revenue of $56.0 million a year ago. This decrease is mostly due to the completion of the USTRANSCOM contracts in Afghanistan as planned in October 2014 and a decrease in onshore operations in Canada. The Corporation flew 7,025 hours compared to 9,787 hours in the first quarter of 2014, a decrease of 28.2%.

Offshore revenue decreased $2.3 million from the first quarter of 2014, due to the completion of the New Zealand Anadarko exploration support contract at the end of March 31, 2014, partially offset by an increase in oil and gas activities related to the Shell offshore support contract in the Philippines. Onshore revenues decreased $16.1 million following the termination of the contract in Afghanistan and due to reduced activities in Canada. Ancillary revenue decreased by $1.1 million mainly due to the decrease in aircraft leasing revenues, partially offset by increased flight training revenues.

Operating expenses before aircraft operating leases expense decreased by $7.9 million in the first quarter compared to last year. The decrease is partially explained by the decrease in revenues but to a lesser extent given the higher margins achieved on the USTRANSCOM contracts in Afghanistan.

Adjusted EBITDAR and adjusted EBITDA for the first quarter of 2015 were $1.5 million and ($0.1) million respectively or 4.1% and (0.3%), compared to $12.5 million and $9.6 million or 22.3% and 17.1% a year earlier.

The Corporation incurred a net loss attributable to the shareholders of the Corporation of $3.0 million, or ($0.23) per share in the first quarter of 2015, compared to a net income of $3.6 million, or $0.27 per share for the same period in 2014. Adjusted cash flows related to operating activities before net change in non-cash working capital balances and deferred revenues were $1.8 million in the first quarter of 2015, versus $9.7 million in the corresponding period a year earlier, mainly due to reduced activities and revenues compared to the previous year.

Adjusted net free cash flows for the three months ended March 31, 2015 totaled ($0.2) million, compared to $8.2 million for the same period a year ago. For the twelve-month period ended March 31, 2015, adjusted net free cash flows stood at $20.1 million, compared with $28.5 million for the year ended December 31, 2014.

"This first quarter reflects the impact of Canadian onshore seasonality in our financial results with Q1 and Q4 being generally softer quarters," said Don Wall, President and Chief Executive Officer of HNZ Group. "Because of challenging market conditions in our Canadian onshore operations, we are taking action to control costs and improve efficiencies without affecting the safety or the quality of the service we provide. These measures include keeping tight controls on personnel, fleet and support costs. To reflect Management's perspective on the business and our growth strategy, we have also changed the segmentation of our business to better reflect the results of our offshore operations, which we believe will be the primary growth driver for HNZ in the future."

As at March 31, 2015, the Corporation's financial position is strong with working capital of $46.1 million, and cash and cash equivalents of $4.5 million, combined with a revolving operating credit facility of $125 million that matures on January 31, 2017.

OUTLOOK
"HNZ's strategy going forward is to grow its offshore operations. Our recent win with Shell Canada in eastern Canada is a testament to our capabilities and expertise in this sector and should enable us to grow our market share as we continue to bid for more business. As I mentioned last quarter, current market conditions seem to be favourable for increased tenders for offshore production support work as customers revisit markets to seek more favourable pricing on ongoing production support work. Similar to the Canadian onshore industry overall, HNZ will continue to face significant headwinds as market conditions in the mining and oil and gas sectors are still very difficult. We remain committed to reducing our cost structure, improving operational efficiencies, protecting our balance sheet while meeting our ongoing obligations including the payment of dividends. Despite this challenging market, we are optimistic about our growth opportunities and benefit from a solid financial position while having a positive cash position to pursue organic growth or opportunistic acquisitions."

CHANGES IN BUSINESS SEGMENTATION AND MD&A DISCLOSURE
During the first quarter, the Corporation changed the reporting of its financial results to the following business segments: offshore operations; onshore operations; ancillary services. This new segmentation reflects Management's view of the business and also HNZ's growth strategy going forward, with an emphasis on growing offshore helicopter transportation services.

Offshore operations revenue is generated from helicopter transportation services. It is comprised of work mainly related to personnel and cargo transport using medium and heavy category aircraft for oil and gas and in limited cases, mining companies. The offshore operations also include medevac and search and rescue activities, and the provision of crew to an international oil and gas company in Australia. Offshore revenue typically relies on fixed monthly standing charges plus an hourly flying rate.

Onshore operations revenue is also generated from helicopter transportation services. Onshore operations are diverse and typically use light and medium category aircraft to provide services for a short period or season for oil and gas, mining and utility companies and governmental entities. Our onshore operations also include the provision of Emergency Medical Services for the government of Nova Scotia, our contracts with the United States Transportation Command for the North Warning System and in previous years in Afghanistan. Onshore revenue is currently earned primarily from our activities in Canada and Antarctica and has inherent seasonality and variability in demand.

Ancillary services revenue is mostly generated from the Corporation's repair and maintenance services in Canada and in the United States, from flight training in Canada and from other minor sources including aircraft leases.

CONFERENCE CALL
The Corporation will hold a conference call to discuss these results on Friday May 15, 2015 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: 35687242. This tape recording will be available until May 23, 2015.

ABOUT HNZ GROUP INC.
HNZ Group is an international provider of helicopter transportation and related support services with operations in Canada, New Zealand, Australia, Southeast Asia and Antarctica. The Corporation operates in excess of 120 helicopters to support offshore and onshore charter activities. Offshore operations worldwide are provided through HNZ Global while onshore charter operations are provided through Canadian Helicopters in Canada and HNZ Global in Asia-Pacific and Antarctica. 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 third-party repair and maintenance services and flight training. HNZ Group is a publically traded company on the Toronto Stock Exchange (TSX: HNZ.A, HNZ.B) and is headquartered near Montreal, Canada employing approximately 700 personnel from 34 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. 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 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.

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, goodwill impairment charge (if any) and change in fair value of the obligation to purchase the shares of non-controlling interests in subsidiaries. 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.
• References to "Adjusted cash flows related to operating activities" are to cash flows related to operating activities before net changes in non-cash working capital balances and deferred revenues.
• References to "Adjusted net free cash flows" are to cash flows from operating activities before net change in non-cash working capital balances and deferred revenues less "Maintenance CAPEX" 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 defined as capital expenditures undertaken to increase the Corporation's capacity for potential growth as determined by management.

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 cash flows related to operating activities and Adjusted 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, Adjusted EBITDAR, Adjusted EBITDA, Adjusted cash flows related to operating activities and Adjusted net free cash flows may not be comparable with similar measures presented by other entities. Investors are cautioned that Adjusted EBITDAR, Adjusted EBITDA, Adjusted cash flows related to operating activities and Adjusted 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 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)	2015	2014
Revenue	36,535	55,951
Operating expenses before aircraft operating leases expenses	35,230	43,082
Foreign exchange loss (gain)	(160)	388
Adjusted EBITDAR	1,465	12,481
Aircraft operating leases expenses ^1	1,581	2,864
Adjusted EBITDA	(116)	9,617
- Amortization	4,455	3,983
- Net loss (loss) on disposal of property, plant and equipment	(61)	82
- Net financing charges	84	196
Income (loss) before income taxes	(4,594)	5,356
Net income (loss) attributable to:
Shareholders of the Corporation	(3,043)	3,593
Non-controlling interests	58	149
Net income (loss)	(2,985)	3,742

Adjusted cash flows related to operating activities and Adjusted net free cash flow Reconciliation to cash flows related to operating activities
	Three months ended		Twelve months ended	Year ended
(in $000's)	March 31,   2015	March 31, 2014	March 31, 2015	December 31,   2014
Cash flows related to operating activities	(4,750)	10,501	22,585	37,836
Add (deduct): Net change in non-cash working capital balances and deferred revenues	6,512	(840)	3,386	(3,966)
Adjusted cash flows related to operating activities	1,762	9,661	25,971	33,870
Less: Maintenance CAPEX	1,915	1,413	5,868	5,366
Adjusted net free cash flows	(153)	8,248	20,103	28,504

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.

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1 The aircraft operating lease expenses exclude the payments made to lessors to cover variable costs for leased aircraft such as maintenance and crew costs.

SOURCE HNZ Group Inc.

HNZ Group Inc., Don Wall, President and Chief Executive Officer, Tel: [phone], Tel: [phone]