ERICKSON INC. - FORM 8-K - EX-99.1 - PRESS RELEASE - March 3, 2016

Attached files

file filename
8-K - FORM 8-K - ERICKSON INC.eac2015annualrelease8-k.htm


Exhibit 99.1
Erickson Reports Fourth Quarter and Full Year 2015 Financial Results

•
Full-year revenue of $298 million and Adjusted EBITDA of $59 million, approximating revised guidance
•
Achieved $10 million of cost savings in 2015 compared to 2014
•
Free cash flow of $(5) million for 2015, a $38 million improvement compared to 2014

March 3rd, 2016 9:00 AM Eastern Time

PORTLAND, Ore.--(GLOBE NEWSWIRE)--Erickson Inc. (NASDAQ: EAC) (“Erickson,” the “Company,” “we,” “us” and “our”), a leading global provider of aviation services, today announced fourth quarter and full year 2015 financial results.

“2015 was a challenging year for Erickson as several of our end markets were contracting and under duress. This resulted in disappointing revenue and income results. We finished 2015 approximately in line with our revised guidance on revenue and Adjusted EBITDA. We have largely completed our transformation plan and delivered cost savings and cash flow improvements. We continue to pivot the business to longer-term contracts to reduce the impact of seasonality, and improve the stability of our cash flows. Our ongoing attention to fleet rationalization is in direct correlation to addressing market needs and improving asset utilization,” said Jeff Roberts, President and CEO.
Fourth Quarter 2015 Highlights
•
MRO revenue growth of 57%, excluding aircraft sales
•
Contract extension with Repsol Peru in South America for the exclusive use of one Aircrane
•
Contract extension with NATO and Hellenic Fire Dept. for the exclusive use of three Aircranes for two years
Full Year 2015 Highlights
•
92% MRO revenue growth compared to 2014, excluding aircraft sales
•
Achieved $10 million of cost savings in 2015 compared to 2014
•
Free cash flow of $(5) million for 2015, a $38 million improvement compared to 2014
Recent Highlights
•
New contract award to provide various fixed wing aerial transport services for the Department of Defense in Africa
•
Annual heli-logging contract extensions with Helifor and Western Forest Products for the exclusive use of an Aircrane for each contract
•
New contract award to refurbish two, super heavy lift MH-53E Sea Dragons for the United States Navy
•
New contract win with Sterlite Grid to place high voltage powerlines in the Pir Panjel mountain range in India



Fourth Quarter Results
Erickson recorded net revenue of $60.9 million for the fourth quarter of 2015, compared to net revenue of $73.2 million for the fourth quarter of 2014. Fourth quarter 2015 loss from operations was $15.5 million, a decrease of $19.6 million compared to income from operations of $4.1 million for the same period in 2014. Fourth quarter 2015 income from operations included asset impairments of $8.1 million. Fourth quarter 2015 Adjusted EBITDA was $8.5 million compared to $14.2 million for the same period in 2014.

Full Year Results
Net revenue for the year ended December 31, 2015, was $297.5 million compared to net revenue of $346.6 million for the full year 2014. Full year 2015 loss from operations was $54.8 million compared to income from operations of $22.3 million for the same period in 2014. Full year 2015 income from operations included goodwill and asset impairments of $65.1 million. Full year 2015 Adjusted EBITDA was $58.7 million compared to $83.8 million for the same period in 2014.

Closing Comments
Jeff Roberts concluded, “We are beginning to see improvement in the pipeline and backlog, and are cautiously optimistic for the second half of 2016. However, we expect that challenging market conditions will persist for the first half of 2016. While we have seen improvements in our cost base and cash flow, there is still additional work to be done. We believe that our efforts to reconstitute our aerial assets and build on our existing strength in MRO capabilities will best prepare us to respond to market demand.”

Use of Non-GAAP Financial Measures
In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), this press release contains certain non-GAAP financial measures, including EBITDA, Adjusted EBITDA, Adjusted EBITDAR, and free cash flows. While non-GAAP financial measures are not superior to or a substitute for the comparable GAAP measures, Erickson believes certain non-GAAP information is useful to investors for historical comparison purposes and because it provides additional information on the performance of the Company’s business. Erickson management also uses these non-GAAP financial measures to assess the Company’s financial and operating performance and to compare that performance against results from prior periods and the performance of Erickson’s competitors. Erickson management also uses this information in its financial and operating decision-making.

Conference Call
Jeff Roberts, the Company’s President and Chief Executive Officer, and Eric Struik, the Company’s Chief Financial Officer, will host a conference call at 11:00 a.m. ET on Thursday, March 3, 2016 to discuss the results, followed by a question and answer session for the investment community. To access the call, dial toll-free 1-888-503-8169 or 1-719-325-2244 (international).
To listen to a telephonic replay of the conference call, dial toll-free 1-877-870-5176 or 1-858-384-5517 (international) and enter pass code 4311704. The replay will be available beginning at 8:00 p.m. ET on March 3, 2016 and will last through 11:59 p.m. ET on March 17, 2016.
####


2


About Erickson
Erickson is a leading global provider of aviation services specializing in government services, manufacturing and MRO, and commercial services such as firefighting, energy construction, timber harvesting, HVAC & specialty, and oil and gas. As of December 31, 2015, Erickson’s fleet consisted of 74 rotary-wing (light, medium, and heavy) and fixed-wing aircraft, including 20 heavy-lift S-64 Aircranes. Founded in 1971, Erickson is headquartered in Portland, Oregon, USA, and maintains operations in North America, South America, Europe, the Middle East, Africa, Asia Pacific, and Australia. For more information, please visit our Web site at http://www.ericksoninc.com

Cautionary Note Regarding Forward-Looking Statements
Except for historical information, all of the statements, expectations and assumptions contained in this news release, including statements, expectations and assumptions about Company growth and prospects for its business units, are forward-looking statements that involve a number of risks and uncertainties. Although Erickson attempts to be accurate in making these forward-looking statements, it is possible that future circumstances might differ from the assumptions on which such statements are based. In addition, other important factors which could cause actual results to differ materially include the following: reliance on economic conditions and trends in the aerial services and MRO sectors; success in sales growth; loss or non-renewal of large contracts; reductions or delays in customer orders; competition; reliance on a small number of large customers; the impact of government spending, including reduced Department of Defense spending in Afghanistan; our substantial indebtedness; our failure to obtain any required financing on favorable terms; compliance with debt obligations and covenants; risks associated with and dependence on collaborative relationships; weather and seasonal fluctuations that impact aerial services activities; our ability to keep pace with changes in technology; significant changes in demand for the fleet of aircraft we offer; hazards associated with our aerial operations, which may be uninsured; our safety record; risks associated with international operations, including doing business in developing countries and politically or economically volatile areas; the impact of product liability and product warranties; the impact of environmental and other regulations, including the FAA and similar international regulatory bodies; our ability to accurately forecast financial guidance; the ability to attract and retain qualified personnel; fluctuations in the price of fuel; the impact of changes in the value of foreign currencies; other risk factors set forth from time to time in the SEC filings for Erickson, copies of which are available free of charge upon request from the Erickson investor relations department. Erickson assumes no obligation to update forward-looking statements to reflect actual results, changes in assumptions, or changes in other factors affecting forward-looking information, except to the extent required by law.


Source: Erickson Incorporated


3


ERICKSON INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)

 
As of December 31,
 
2015
 
2014
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
2,129

 
$
5,097

Restricted cash
373

 
567

Accounts receivable, net
40,520

 
44,350

Prepaid expenses and other current assets
5,233

 
9,457

Total current assets
48,255

 
59,471

Aircraft, net
186,132

 
225,395

Aircraft support parts, net
139,609

 
137,593

Assets held for sale
12,348

 
—

Property, plant and equipment, net
25,553

 
23,461

Other assets
10,261

 
12,006

Other intangible assets, net
15,787

 
20,053

Goodwill, net
163,708

 
215,241

Total assets
$
601,653

 
$
693,220

LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
13,660

 
$
19,844

Current portion of long-term debt
8,205

 
2,438

Accrued and other current liabilities
17,828

 
19,349

Total current liabilities
39,693

 
41,631

Credit facility
96,165

 
87,062

Long-term debt, less current portion
364,782

 
360,359

Other liabilities
11,720

 
23,155

Total liabilities
512,360

 
512,207

Equity:
 
 
 
Erickson Incorporated shareholders’ equity:
 
 
 
Common stock; $0.0001 par value; 110,000,000 shares authorized; 13,895,421 and 13,823,818 issued and outstanding at December 31, 2015 and 2014, respectively
1

 
1

Additional paid-in capital
181,259

 
181,018

Retained earnings
(84,901
)
 
1,812

Accumulated other comprehensive loss, net of tax
(7,789
)
 
(2,544
)
Total Erickson Incorporated shareholders’ equity
88,570

 
180,287

Noncontrolling interests’ equity
723

 
726

Total equity
89,293

 
181,013

Total liabilities and equity
$
601,653

 
$
693,220



4


ERICKSON INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)

 
Three Months Ended
December 31,
 
Years Ended
December 31,
 
2015
 
2014
 
2015
 
2014
Revenues, net:
 
 
 
 
 
 
 
Commercial Aviation Services
$
31,888

 
$
33,019

 
$
160,885

 
$
177,261

Global Defense and Security
21,013

 
34,591

 
105,158

 
154,057

Manufacturing and MRO
8,005

 
5,592

 
31,477

 
15,291

Total revenues
60,906

 
73,202

 
297,520

 
346,609

Cost of revenues:
 
 
 
 
 
 
 
Commercial Aviation Services
28,383

 
33,726

 
129,018

 
129,978

Global Defense and Security
20,625

 
23,701

 
97,035

 
124,574

Manufacturing and MRO
6,773

 
3,287

 
24,192

 
11,163

Total cost of revenues
55,781

 
60,714

 
250,245

 
265,715

Gross profit (loss):


 


 


 


Commercial Aviation Services
3,505

 
(707
)
 
31,867

 
47,283

Global Defense and Security
388

 
10,890

 
8,123

 
29,483

Manufacturing and MRO
1,232

 
2,305

 
7,285

 
4,128

Total gross profit
5,125

 
12,488

 
47,275

 
80,894

Operating expenses:
 
 
 
 
 
 
 
General and administrative
10,809

 
6,206

 
28,891

 
26,606

Research and development
789

 
943

 
2,675

 
3,782

Selling and marketing
906

 
1,283

 
5,449

 
6,904

Impairment of goodwill
—

 
—

 
49,823

 
21,272

Impairment of other assets
8,093

 
—

 
15,236

 
—

Total operating expenses
20,597

 
8,432

 
102,074

 
58,564

Operating income (loss)
(15,472
)
 
4,056

 
(54,799
)
 
22,330

Interest expense, net
(9,194
)
 
(8,934
)
 
(37,073
)
 
(35,800
)
Other income (expense), net
3,449

 
1,000

 
517

 
(1,193
)
Net loss before income taxes and noncontrolling interests
(21,217
)
 
(3,878
)
 
(91,355
)
 
(14,663
)
Income tax benefit
(4,556
)
 
(1,393
)
 
(4,723
)
 
(4,432
)
Net loss
(16,661
)
 
(2,485
)
 
(86,632
)
 
(10,231
)
Less: Net (income) loss related to noncontrolling interests
(35
)
 
34

 
(81
)
 
(61
)
Net loss attributable to Erickson Incorporated
$
(16,696
)
 
$
(2,451
)
 
$
(86,713
)
 
$
(10,292
)
Loss per share—Basic and Diluted
$
(1.21
)
 
$
(0.18
)
 
$
(6.27
)
 
$
(0.75
)
Weighted average shares outstanding—Basic and Diluted
13,843,902

 
13,810,587

 
13,833,552

 
13,800,494



5


ERICKSON INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
Three Months Ended
December 31,
 
Years Ended
December 31,

2015
 
2014
 
2015
 
2014
Cash flows from operating activities:
 
 
 
 
 
 
 
Net loss
$
(16,661
)
 
$
(2,485
)
 
$
(86,632
)
 
$
(10,231
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
 
 
 
 
 
 
 
Depreciation and amortization
11,430

 
7,805

 
42,314

 
34,903

Impairment of goodwill
—

 
—

 
49,823

 
21,272

Impairment of other assets
8,093

 
—

 
15,236

 
—

Deferred income taxes
(46
)
 
483

 
(2,943
)
 
(7,790
)
Amortization of debt issuance costs
723

 
606

 
2,660

 
2,433

Non-cash interest expense
243

 
98

 
886

 
324

Stock-based compensation
83

 
245

 
294

 
861

Other non-cash (income) expense, net
4,129

 
(1,974
)
 
3,855

 
(2,535
)
Changes in operating assets and liabilities:
 
 
 
 
 
 
 
Accounts receivable
14,610

 
21,244

 
3,003

 
19,719

Prepaid expenses and other current assets
343

 
848

 
4,003

 
(5,110
)
Aircraft support parts, net
11,222

 
(3,602
)
 
3,384

 
(17,240
)
Aircraft held for sale
400

 
—

 
2,400

 
—

Other assets
(2,536
)
 
1,370

 
(278
)
 
5,602

Accounts payable
(6,569
)
 
(2,695
)
 
(5,707
)
 
(8,856
)
Accrued and other current liabilities
(11,730
)
 
(17,183
)
 
1,151

 
(20,023
)
Other liabilities
(14,805
)
 
463

 
(12,281
)
 
655

Net cash provided by (used in) operating activities
(1,071
)
 
5,223

 
21,168

 
13,984

Cash flows from investing activities:
 
 
 
 
 
 
 
Purchases of aircraft and property, plant and equipment
(5,497
)
 
(4,100
)
 
(26,126
)
 
(56,807
)
Proceeds from sale-leaseback of aircraft
—

 
—

 
5,078

 
24,660

Restricted cash
(31
)
 
(119
)
 
104

 
2,222

Increase in other assets
—

 
(126
)
 
—

 
(126
)
Dividends paid to non-controlling interest
—

 
4

 
—

 
(69
)
Net cash used in investing activities
(5,528
)
 
(4,341
)
 
(20,944
)
 
(30,120
)
Cash flows from financing activities:
 
 
 
 
 
 
 
Proceeds from shareholders, net
—

 
—

 
—

 
414

Credit facility payments
(39,787
)
 
(57,847
)
 
(180,231
)
 
(206,686
)
Credit facility borrowings
50,400

 
60,946

 
188,890

 
227,939

Long-term debt payments, including capital lease payments
(2,906
)
 
—

 
(6,895
)
 
—

Other long-term (payments) borrowings
(36
)
 
(35
)
 
(156
)
 
409

Debt issuance costs
(77
)
 
(32
)
 
(224
)
 
(371
)
Shares withheld for payment of taxes
(10
)
 
(45
)
 
(53
)
 
(211
)
Net cash provided by financing activities
7,584

 
2,987

 
1,331

 
21,494

Effect of foreign currency exchange rates on cash and cash equivalents
(554
)
 
(1,331
)
 
(4,523
)
 
(2,142
)
Net change in cash and cash equivalents
431

 
2,538

 
(2,968
)
 
3,216

Cash and cash equivalents at beginning of period
1,698

 
2,559

 
5,097

 
1,881

Cash and cash equivalents at end of period
$
2,129

 
$
5,097

 
$
2,129

 
$
5,097



6


ERICKSON INCORPORATED AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES
(In thousands, except share and per share data)
(Unaudited)

The following tables reconcile the non-GAAP financial measures appearing in this press release to the most directly comparable GAAP measures:
 
Three Months Ended
December 31,
 
Years Ended
December 31,
 
2015
 
2014
 
2015
 
2014
EBITDA, Adjusted EBITDA and Adjusted EBITDAR Reconciliation:
Net loss attributable to Erickson Incorporated
$
(16,696
)
 
$
(2,451
)
 
$
(86,713
)
 
$
(10,292
)
Interest expense, net
9,194

 
8,934

 
37,073

 
35,800

Tax benefit
(4,556
)
 
(1,393
)
 
(4,723
)
 
(4,432
)
Depreciation and amortization
11,430

 
7,805

 
42,314

 
34,903

Amortization of debt issuance costs
723

 
606

 
2,660

 
2,433

EBITDA
95

 
13,501

 
(9,389
)
 
58,412

Impairment of goodwill
—

 
—

 
49,823

 
21,272

Impairment of other assets
8,093

 
—

 
15,236

 
—

Restructuring costs
96

 
401

 
2,545

 
1,482

Unrealized foreign currency exchange losses
172

 
113

 
467

 
387

Stock-based compensation
83

 
245

 
294

 
861

Gain on early extinguishment of debt
(653
)
 
—

 
(806
)
 
—

Acquisition and integration related expenses
134

 
30

 
195

 
1,687

Other non-cash items, net
460

 
(95
)
 
338

 
(348
)
Adjusted EBITDA
8,480

 
14,195

 
58,703

 
83,753

Aircraft lease expenses
3,899

 
4,924

 
16,997

 
20,198

Adjusted EBITDAR
$
12,379

 
$
19,119

 
$
75,700

 
$
103,951

 
 
 
 
 
 
 
 
Free Cash Flow:
 
 
 
 
 
 
 
Net cash provided by (used in) operating activities
$
(1,071
)
 
$
5,223

 
$
21,168

 
$
13,984

Add: Purchases of aircraft and property, plant and equipment
(5,497
)
 
(4,100
)
 
(26,126
)
 
(56,807
)
Free cash flow
$
(6,568
)
 
$
1,123

 
$
(4,958
)
 
$
(42,823
)

7

Stock widget

Investing forum

ERICKSON INC. Reports

Also read