Attached files
| file | filename |
|---|---|
| 8-K - 8-K VOLUNTARY FILING FOR BANKRUPTCY AND ERROR IN FINANCIAL STATEMENTS - ERICKSON INC. | a8k-voluntaryfilingforbank.htm |
| EX-99.4 - EXHIBIT 99.4 PRESS RELEASE - ERICKSON INC. | item994_pressreleasexnov8x.htm |
| EX-99.2 - EXHIBIT 99.2 OPERATRING AND MONTHLY CASH FLOW FORECAST - ERICKSON INC. | a992operatingandmonthlyc.htm |
| EX-99.1 - EXHIBIT 99.1 CASH FLOW FORECAST - ERICKSON INC. | a991cashflowforecast.htm |
| EX-10.1 - EXHIBIT 10.1 DIP TERM SHEET - ERICKSON INC. | item101_diptermsheet.htm |
CONFIDENTIAL
INVESTOR PRESENTATION
NOVEMBER 2016
CONFIDENTIAL
DISCLAIMER
3
This presentation contains information about our management’s view of our future expectations, plans and prospects that
constitute forward-looking statements. Actual results may differ materially from historical results or those indicated by these
forward-looking statements due to risks and uncertainties including, but not limited to, our substantial indebtedness and
significant debt service obligations, which could adversely affect our financial condition and impair our ability to grow and operate
our business; that we may be unable to access public or private debt markets to fund our operations and contractual
commitments at competitive rates, on commercially reasonable terms, or in sufficient amounts, if at all; that foreign, domestic,
federal, state and local government spending and mission priorities may change in a manner that materially and adversely
affects our future revenues and limits our growth prospects; that a number of risks inherent in international operations could have
a material adverse effect on our international operations and, consequently, on our results of operations; that emerging market
countries have less developed economies that are more vulnerable to economic and political problems and may experience
economic instability; that our operations in certain dangerous and war-affected areas may result in hazards to our fleet and
personnel; that our international sales and operations are subject to applicable laws relating to trade, export controls and foreign
corrupt practices, the violation of which could adversely affect our operations; that our business in countries with a history of
corruption and transactions with foreign governments increases the compliance risks associated with our international activities;
that claims against us by governmental agencies or other parties related to environmental matters could adversely affect us; that
our business is subject to laws limiting ownership or control of aircraft companies, which may increase our costs and adversely
affect us; and other risks and uncertainties more fully described under the heading “Risk Factors” in our most recently filed
Annual Report on Form 10-K as well as the other reports we file with the SEC from time to time. All of the information provided in
this presentation is as of today’s date and we undertake no duty to update this information, except as required by law.
This presentation contains financial measures not prepared in accordance with U.S. generally accepted accounting principles
(“GAAP”), including EBITDA and Adjusted EBITDA. These measures are in addition to, and not a substitute for or superior to,
measures of financial performance prepared in accordance with GAAP.
CONFIDENTIAL
BUSINESS OVERVIEW
CONFIDENTIAL
STRATEGIC PRIORITIES
5
• Become the global leader of utility aircraft services
– To consistently and continually deliver best-in-class metrics in the following areas:
– Safety
– Financial and operational efficiency metrics
– Customer satisfaction
– Employee engagement
• Create a balanced portfolio
‒ Civil versus Defense & Security
‒ Global enterprise
‒ Offer both products and services
‒ Increase in annualized long-term contracts
CONFIDENTIAL
CORE COMPETENCIES
6
1
2
4
5
3
Focus on medium, heavy and super heavy lift
Best-in-class globally at precision placement
Most differentiated operating in remote and austere environments
Self-sustainability via vertical integration
Ability to aggregate all capabilities to create differentiated solutions
CONFIDENTIAL
CIVIL AVIATION
CONFIDENTIAL
CIVIL AVIATION
8
Civil 2016 Revenue Mix (% of total)
Market Opportunities / Considerations
16%
17%
3%
64%
Captured
Addressable
Opportunities
Mature Markets
$400M
Total Addressable Market of Over $1 Billion
Emerging Markets
$700M
* Emerging Markets includes China, India, South America and Africa
• Leading position in the majority of our end markets
• Market is generally stable with moderate growth opportunities in select end markets
• Able to leverage competitive advantages, safety and past performance to defend and enhance our share in the civil
market
• Capital intensive nature of services, asset base, intellectual property and demonstrated capabilities serve as
barriers to entry
Firefighting
21%
Timber
Harvesting
11%
Infrastructure
Construction
8%
Oil & Gas
8%
CONFIDENTIAL FIREFIGHTING OVERVIEW
CIVIL AVIATION
9
Wildland and Urban Interface Aerial Firefighting and Disaster Response
– State, Federal, Government Agencies – (8-11 S64 AC)
• Tank system drop pattern and reliability as well as dual
snorkel and tanked salt water fill as a differentiator
• Tanked S64 Commercial category aircraft for WUI
(Wildland Urban Interface)
• Water cannon, grapples, tongs, and rescue basket as a multi-
purpose tool for urban emergency response
• Leverage our unmatched OEM support and reliability in the
high stress fire environment
• Market is stable, to slightly increasing due to long-term drought,
increasing fire budgets and more housing in WUI areas
• Core Competencies
• Precision Placement
• Remote Austere Operations
• Self Sustainment
• Medium & Heavy Lift
Segment Highlights
Market Size $400M
Market Share 12%
Historical Pipeline Conversion Rate
For 2016
50%
Pipeline Growth
As of 6/30/16 from 1/1/2016 to present
+20%
CONFIDENTIAL TIMBER HARVESTING OVERVIEW
CIVIL AVIATION
10
Timber Harvesting in remote, environmentally sensitive areas
(3-4 S64 E models)
• Utilize support structure, expertise, reliability to control and
grow market
• Market is stable to slightly increasing
• Heavy helicopter is the best way to remove high value large
logs in restricted areas
• Erickson is the market leader in this segment
• Core Competencies
• Precision Placement
• Remote Austere Operations
• Self Sustainment
Segment Highlights
Market Size $80M
Market Share 45%
Historical Pipeline Conversion Rate
For 2016
35%
Pipeline Growth
As of 6/30/16 from 1/1/2016 to present
+40%
CONFIDENTIAL INFRASTRUCTURE CONSTRUCTION OVERVIEW
CIVIL AVIATION
11
Powerline, Infrastructure, Spot Construction high
precision lift segment (3-4 S64F)
• High precision backseat heavy load placement,
speed of construction, reliability are market
differentiators
• Erickson is market leader in this segment
• Market is increasing steadily with good future
growth
• Segment growth 20% Y-O-Y
• Core Competencies
• Precision Placement
• Remote Austere Operations
• Self Sustainment
• Medium & Heavy Lift
Segment Highlights
Market Size $500M
Market Share 5%
Historical Pipeline Conversion Rate
For 2016
35%
Pipeline Growth
As of 6/30/16 from 1/1/2016 to present
+30%
CONFIDENTIAL OIL & GAS OVERVIEW
CIVIL AVIATION
12
O&G Core business moving portable drill rigs and
personnel in remote, roadless environments and near
shore transport (1-3 S64 and 214ST)
• Safety record, reliability, OEM support and price
are differentiators
• Erickson has consistently won against competition
(HTS, Columbia)
• Market is declining due to worldwide slowdown in
frontier exploration because of low oil prices
• Market will contract through 2017
• Lease expirations will spur some resumption
of drill programs in late 2017-2018
• Core Competencies
• Precision Placement
• Remote Austere Operations
• Self Sustainment
• Medium & Heavy Lift
Segment Highlights
Market Size $50M
Market Share 24%
Historical Pipeline Conversion Rate
For 2016
35%
Pipeline Growth
As of 6/30/16 from 1/1/2016 to present
Flat
CONFIDENTIAL PIPELINE GROWTH
$246M $567M
35%
2016 Pipeline (12/1/15)
Current
CIVIL AVIATION
Historical (2015-
2016) Pwin of 35%
• Overall pipeline continues to show significant growth
13
CONFIDENTIAL ROTOR FLEET PLAN AND CAPITAL REQUIREMENTS
CIVIL AVIATION
14
0
2
2
1
3
0
0
0 2
Bell 212
3 total
Bell 412
5 total
AS350
3 total
Contracted
Available
Unserviceable
Opportunities
On-Going Maintenance
~10-12% of Revenue
For Contracted and Available Aircraft
Potential Growth
Capital Investment
$2-4M
2
1
0
Alaskan O&G Alaska
Alaska
Alaska FF
CONFIDENTIAL ROTOR FLEET PLAN AND CAPITAL REQUIREMENTS
CIVIL AVIATION
15
17
0
3
0
S-64 Fleet
20 total
Contracted
Available
Unserviceable
Opportunities
12 various contracts
On-Going Maintenance
10-12% of Revenue
Potential Growth
Capital Investment
$0M
CONFIDENTIAL OUTLOOK
CIVIL AVIATION
16
• Pipeline has expanded from $200M to over $550M but needs to be over $800M
• Growth in 2017 will come from:
• Construction & Powerline (20-30% YoY)
• Logging (25-30% YoY) (contracts already secured)
• Oil & Gas will be flat
• Fire will be flat or up to 20-30% depending on various opportunities
CONFIDENTIAL
GLOBAL DEFENSE & SECURITY
CONFIDENTIAL
SERVED MARKETS: GDS
18
Market Opportunities / Considerations
• Market contraction is abating with a return to more traditional opportunities
• Diversified between expeditionary aviation, aerial replenishment and sustainment and support aviation
• One of three providers globally with both fixed and rotor wing, CARB and Part 135 certifications create significant
barriers to entry
• Diverse fleet and vertically integrated MRO capabilities provide customers a compelling service offering
• Focused on developing bid as Prime capability and regain SBA status
Government 2016 Revenue Mix (% of total)Total Addressable Market of $3 Billion
3%
36%
0%
60%
Captured
Addressable
Opportunities
Government Services
$1.8B
Government Airlift
$1.2B
GDS
Expeditionary
Aviation
16%
GDS Aerial
Replenishment
25%
CONFIDENTIAL
• Pivot into Africa has opened Expeditionary Aviation
opportunities supporting special operating and
conventional forces globally
• Combination of rotary and fixed wing is a critical
differentiator to mission success, with past
performance a strong factor
• Focus on proxy wars countering ISIS in
developing countries
• Growing opportunity in the non-conventional or
“black” space
• Durability – Growing Market Supporting DoD, UN and
Foreign Militaries
• US Government raised priority for
counterterrorism efforts
• Top opportunities
• Being war fighter centric and continuing to
leverage relationships with combatant commands
• Core Competencies
• Remote Austere Locations
• Self Performance of Maintenance
• Integrated Services
EXPEDITIONARY AVIATION OVERVIEW
GLOBAL DEFENSE & SECURITY
19
Segment Highlights
Market Size ~$800M+
Market Share 5%
Historical Pipeline Conversion Rate
For 2016
75%
Pipeline Growth
As of 6/30/16 from 1/1/2016 to present
500%
CONFIDENTIAL
• Aerial replenishment focuses on aerial rotor and light lift fixed
wing markets supporting forward deployed operations at land
and at sea
• Erickson is the market leader providing aerial lift replenishment
at sea for the US Navy. Performs ship to ship resupply in remote
oceans worldwide
• $25M-$30M annual market
• Moved share from 25% to 75% in 2016
• Expanding opportunity of resupply of forward deployed
firebases in Afghanistan
• Established position in medium lift rotary support
• Durability: Very Solid – Long-Term Government Contracts
• War on terrorism is forecasted to continue with a
renewed commitment to Afghanistan
• Market is very stable with on going requirements for 4
detachments of vertical replenishment
• Core competencies leveraged
• Austere Operations
• Integrated Services
• Self Sustainment
AERIAL REPLENISHMENT OVERVIEW
GLOBAL DEFENSE & SECURITY
20
Segment Highlights
Market Size (Annual) $400M
Market Share 11%
Historical Pipeline Conversion Rate
For 2016
80%
Pipeline Growth
As of 6/30/16 from 1/1/2016 to present
200%
CONFIDENTIAL SUSTAINMENT SERVICES OVERVIEW
GLOBAL DEFENSE & SECURITY
21
• New sizeable market opportunity leveraging flight,
maintenance, training support and technology transfer
• Multi-billion dollar space is highly fragmented
• No single provider of end to end service and
support for legacy aircraft
• Superior opportunity to enter into a space
leveraging well developed and proven expertise
in maintaining and servicing airframes in remote
locations for 30+ years
• Durability: Solid – Long-Term Foreign Military and
Government Contracts
• Market continues to grow with US (Sikorsky,
Bell) and French (Airbus Helicopters) having
aging installed bases
• Core competencies leveraged
• Integrated Services
• Self Sustainment
• Remote Operations
Segment Highlights
Market Size (Annual) $1.8B
Market Share <1%
Historical Pipeline Conversion Rate
For 2016
New to
Market
Pipeline Growth
As of 6/30/16 from 1/1/2016 to present
0 to >$45M
CONFIDENTIAL ROTOR FLEET PLAN AND CAPITAL REQUIREMENTS
GLOBAL DEFENSE & SECURITY
22
2
7
3
6
7
0
2/2
0
0
4 0 5
Bell-214ST
12 total
Puma 330J/332L
13 total
Puma 332L1
4 total
Contracted
Available
Unserviceable
Opportunities
Africa Alion
Vert Rep
Vert Rep
Vert Rep
Afghanistan Fluor
Afghanistan Starlite
Afghanistan #1
Afghanistan #2
Afg Service Replacement
New Equipment
Africa #1
Africa #2
Africa #1
From Unserviceable
On-Going Maintenance
~10-12% of Revenue
For Contracted and Available Aircraft
Potential Growth
Capital Investment
$30-35M
Africa #1
NGO Work
Africa #1
NGO Work
Retire
CONFIDENTIAL FIXED WING FLEET PLAN AND CAPITAL REQUIREMENTS
GLOBAL DEFENSE & SECURITY
23
2
0
2
1
0
2
4
CASA 212
3 Total
Beech1900 D
4 Total
Contracted
Available
Unserviceable
Opportunities 1
On-Going Maintenance
~5-8% of Revenue
For Contracted and Available Aircraft
Potential Growth
Capital Investment
$5-10M
CONFIDENTIAL FINANCIAL OVERVIEW
GLOBAL DEFENSE & SECURITY
24
• 2015 to 2016: Strategy towards the war on terrorism began changed delaying
spending
• Pricing pressure as US Government continued transition from war time
spending to sustainment activities
• Transition induced a delay in previously forecasted programs
• Many programs were fully allocated but were not approved causing a
disconnect in program timing
• 2016 to 2017: Reinvigorated focus on counter terrorism on a world wide basis is
starting to materialize in global opportunities
• Strong investment in the front end created momentum and has provided
insight into market and ability to shape future requirements
• Pipeline has expanded from $200M to $800M+
CONFIDENTIAL
MRO
CONFIDENTIAL
SERVED MARKETS: MRO
26
Manufacturing & MRO 2016 Revenue Mix (% of total)
Market Opportunities / Considerations
Total Addressable Market of Multi-Billions
2%
47%
1%
50%
Captured
Addressable
Opportunities
Commercial Markets
>$500M
Military Markets
Multi Billion
• This business segment and market is our highest growth opportunity
• Stable due to exceptionally large installed base
• Currently no global legacy provider evident
• Unique and proven vertical integration capabilities in manufacturing, engineering, CRO and field support
• Must provide operational cost advantages and improved return to service times for aerial services
MRO:
Civil, 9%
MRO: GDS
3%
CONFIDENTIAL CIVILIAN MRO MARKET
MRO UPDATE
27
• The MRO organization supports the Aircrane fleet
as well as other aircraft types operated by Erickson
and other airlift providers
– New parts production, avionics components,
hard-to-locate parts, reverse engineering
– MRO services include repair and reassembly
of airframes, engines, components and
accessories
• Niche player in vast MRO market
• Established player in legacy aircraft S64 and B214
• Core competencies leveraged
• Aerospace grade integrated services
Segment Highlights
Market Size >$500M
Market Share Fractional
Historical Pipeline Conversion Rate
For 2016
33%
Pipeline Growth
As of 6/30/16 from 1/1/2016 to present
200%
CONFIDENTIAL GOVERNMENT AND DEFENSE MRO MARKET
MRO UPDATE
28
• GDS/MRO organization supports the refurbishment and rest
of legacy Government aircraft and components
– Defined processes to partner with the US
Government in aircraft processing and return to
service
– MRO services include full repair and reassembly of
airframes, engines, components, and accessories.
– Reverse engineering of long out of date parts and
components from aged drawings
• Established player in legacy aircraft (MH53/CH53)
• Core competencies leveraged
• Aerospace grade integrated services
Segment Highlights
Market Size for targeted legacy fleet $1-1.4B
Market Share Fractional
Historical Pipeline Conversion Rate
For 2016
30%+
Pipeline Growth
As of 6/30/16 from 1/1/2016 to present
$20-25M
CONFIDENTIAL
CONCLUSION
CONFIDENTIAL CHALLENGES FACED
SITUATIONAL UPDATE
30
• Company had previously been challenged by divergent priorities between key constituents (i.e. equity holders,
bondholders, leadership team and employee base)
Headwinds facing the business and management required a significant
re-calibration of operations
Challenges Faced
Cash
Management
Operational cash flow limitations
Working capital imbalances
Tight liquidity constrained operations and potential growth
Capital structure was onerous for the size of the business
Cost
Unprofitable subsidiaries and operations
Fleet composition and financing unsustainable
Cost structure too fixed in nature
Revenue
Lack of rigor and robustness around the front end
Lost SBA status which eliminated existing contracts and significant market opportunities
Oil & Gas market rapidly deteriorated and not fully addressable with asset base
Significant contraction and transition in GDS market
Operations
Duplication and redundancies due to lack of operational integration
Staffing and support levels disproportionate to the size of the business
Lack of clarity around accountability and goals
CONFIDENTIAL INITIATIVES UNDERTAKEN
SITUATIONAL UPDATE (CONT’D)
31
Initiatives Undertaken
Cash
Management
Cash management has improved consumption by $50 million
Cash conversion cycle management initiatives
Continued to monetize non-core assets
Heightened scrutiny around capital investing
Retained Imperial Capital to explore strategic alternatives surrounding our capital structure
Cost
Management headcount reduced by 30+%, new management team in place
Headcount reduction of over 16%, expected to reduce annual labor cost by ~$10 million
Total reduction in COGS and SG&A reduced by over $50M in 2016 as compared to 2015
Closed unprofitable subsidiaries and exited unprofitable contracts
Continue to increase variabilization in compensation, aircraft leases and operating expenses
Revenue
Established a new front end leadership team
Introduced enhanced sales metrics, governance and quotas
Seeing increased pipeline growth of greater than 20 %
Backlog has grown 15% since the first of the year
For the first time in 3 years, the backlog is growing
Operations
Consolidated facilities
Consolidated numerous redundant shared services
Fleet rationalization
Crew rotation extension schedules, localized operational capabilities
Continue to turn around or discontinue loss making operations
Engaged in discussions with lessors, targeting annual cash savings of over $5 million
CONFIDENTIAL PENDING INITIATIVES / NEXT STEPS
SITUATIONAL UPDATE (CONT’D)
32
Pending Initiatives / Next Steps
Cash
Management
Finalizing working capital initiatives
New capital structure plan with appropriate liquidity to support the business
Continue monetizing non-core assets
Introducing capital investment review process
Cost
Increased variabilization of cost
Continue to size direct labor to industry standard levels
Baseline compensation to industry standards
Variabilize compensation structure
Further consolidating facilities
Restructure leases
Revenue
Re-access SBA set aside contracts
Continue to refine and improve front end rigor and robustness (focus and accountability)
Open the aperture for adjacent opportunities
Convert to more annualized contracts with new and existing customers
Establish strategic partnerships and joint ventures
Develop capabilities to bid as Prime
Operations
Fleet rationalization to fewer types of aircraft as well as idle aircraft
Improve maintenance and supply chain efficiencies
Improve manufacturing efficiencies
Will create an enterprise that funds its operations from cash, a cost base that gives a
competitive advantage, best in class front end and meets and exceeds customer expectations
CONFIDENTIAL FLEET OVERVIEW
CONCLUSION
33
Picture Aircraft Picture Aircraft
Erickson S-64 (20)
(E & F models)
S76C+ (2)
Eurocopter AS332
Super Puma (2)
Eurocopter AS350 (3)
Bell 214ST (10) Bell 206 (5)
Eurocopter 300J
Puma (11)
Eurocopter BO-105 (1)
Bell 412 EP / SP (5) CASA 212 (3)
Bell 212 (3) Beechcraft 1900D (4)
Current Fleet (69 total) Illustrative Future Fleet
Picture Aircraft Description
Erickson S-64
(E & F models)
• Heavy-lift aircraft
• Twin-engine
• Civil version of the United States
Army's CH-54 Tarhe
Puma/Super Puma
• Medium-lift aircraft
• Four-bladed, twin-engine, utility
• 2 crew and up to 19 passengers
Bell 214ST
• Medium-lift aircraft
• 2 bladed, dual engine
• 1- 2 crew and up to 17 passengers
Bell 412 EP / SP
• Medium-lift aircraft
• 1- 2 pilots and up to 13 passengers
CASA 212
• Fixed wing
• Two turbo propeller engine aircraft,
for light transportation
• Cargo compartment can carry up to 18
passengers
Twin Otter / Dash-8
• Fixed wing
• Twin turboprop regional aircraft
• Up to 19 passengers (Twin Otter)
• Up to 39 passengers (Dash 8)
Long-term strategy to consolidate platforms
CONFIDENTIAL FLEET PLAN
CONCLUSION
34
• The Company currently owns 42 aircraft, with another 27 leased
• Company estimates leases are 40-50% out of market value
• In addition to renegotiating leases, the Company is actively looking to sell underutilized / idle aircraft
Current Pro-Forma
Aircraft Type
Total
Owned
Total
Leased
Total
Aircraft
Total
Aircraft
AS-350-B2/B3 2 1 3 2-3
BH-206/212/214/412 9 14 23 16-18
BO-105CBS5 1 0 1 0
Puma 330/332 6 7 13 10-12
S-64 E/F 19 1 20 20
S-76C+ 2 0 2 0
FW B-1900 2 2 4 0-1
FW CASA 212 1 2 3 2-3
Total 42 27 69 50-57