-
Revenue of $74.9 million, versus $70.0 million for the comparative
period of 2012
-
EBITDA of $30.1 million or 40.2% compared to $27.8 million or 39.7% for
the comparative period of 2012
-
Net loss of $5.8 million or $0.44 per share due to a non-cash goodwill
impairment charge of $23.5 million or net income before goodwill
impairment charge totaling $17.7 million or $1.36 per share
-
Strong financial position with working capital of $49.7 million and
long-term debt-to-equity ratio of 0.19
-
Start-up, in Q3, of the new offshore support contract with Shell Global
Solutions International B.V.
-
Adopts policy of rotating Board roles and appoints Mr. Larry Pollock as
incoming Chair, effective 2014
MONTREAL, Nov. 11, 2013 /CNW Telbec/ - HNZ Group Inc. (TSX: HNZ.A, HNZ.B) ("the Corporation"), an international
provider of helicopter transportation and related support services,
today announced its financial and operating results for the third
quarter ended September 30, 2013.
|
Financial Highlights
|
Quarters ended September 30,
|
Nine months ended September 30,
|
(in thousands of dollars, except per share data)
|
2013
|
2012
|
2013
|
2012
|
Revenue
|
74,906
|
69,977
|
193,062
|
195,334
|
EBITDA (1)
|
30,134
|
27,779
|
63,979
|
63,520
|
Goodwill impairment charge
|
23,500
|
-
|
23,500
|
-
|
Net income (loss) (2)
|
(5,783)
|
16,069
|
13,367
|
36,462
|
|
Per share - basic and diluted ($)
|
(0.44)
|
1.23
|
1.02
|
2.79
|
Cash flows related to operating activities (3)
|
23,671
|
21,565
|
51,795
|
52,029
|
Weighted-average shares outstanding (all classes)
|
13,068,700
|
13,068,700
|
13,068,700
|
13,068,700
|
(1) Income (loss) before net financing charges, income taxes,
depreciation and amortization, goodwill impairment and gain or loss on
disposal of property, plant and equipment
(2) Attributable to the shareholders of the Corporation
(3) Before net changes in non-cash working capital balances and
deferred revenues
THIRD QUARTER RESULTS
The Corporation generated revenue of $74.9 million, compared with
revenue of $70.0 million in the third quarter of 2012. The increase in
revenue was mainly due to an increase in Instrument Flight Rules (IFR),
as well as smaller increases in Visual Flight Rules (VFR) and Ancillary
revenues. While the Corporation flew 21,540 hours compared to 22,824
hours in the third quarter of 2012, the positive mix of hours flown
generated an increase in revenues.
IFR revenue increased by $4.0 million mainly due to an increase in
activity in the mining sector in Australia related to the Rio Tinto
contract and the start-up of the Shell offshore support contract in
Asia. VFR revenue increased by $0.6 million primarily due to an
increase in pipeline support revenues in Canada partially offset by
reduced Canadian domestic mining activity. Ancillary revenue increased
by $0.3 million due to an increase in the repair and maintenance
revenues from the Nampa and Heli-Welders businesses partially offset by
a reduction of third party aircraft lease revenue in the Southern
Hemisphere.
EBITDA for the third quarter of 2013 reached $30.1 million, compared to
$27.8 million a year earlier. During the quarter, the Corporation
recorded a foreign exchange net gain of $0.2 million compared to a net
loss of $0.9 million last year.
During the third quarter of 2013, the Corporation recorded a goodwill
impairment charge of $23.5 million with respect to its Canadian
Helicopters operations in Canada, including Afghanistan (and not HNZ
Global helicopter transportation services in the Southern Hemisphere or
its repair and maintenance services provided under the Heli-Welders or
Nampa Valley Helicopters brands) primarily as a result of the reduced
future cash flows expected from declining USTRANSCOM revenues in
Afghanistan. The goodwill impairment charge is a non-cash adjustment
and has no adverse impact on the company meeting its debt covenants.
Net income attributable to the shareholders of the corporation prior to
the recognition of the goodwill impairment charge was $17.7 million or
$1.36 per share compared to $16.1 million or $1.23 per share for 2012.
After recognizing goodwill impairment, the Corporation experienced a
net loss of $5.8 million or $0.44 per share. Cash flows related to
operating activities before net change in non-cash working capital
balances and deferred revenues were $23.7 million in the third quarter
of 2013, versus $21.6 million in the corresponding period a year
earlier.
"We are pleased with the strong third quarter performance of the
Corporation," said Don Wall, President and CEO of HNZ Group Inc.
"Revenues were stronger than expected and the important mandate we
started for Shell Global Solutions in Asia signifies excellent
opportunity for our brand in Asia. Our expanded 10-year contract with
Rio Tinto in Australia, which began in May, positively impacted HNZ's
third-quarter results, and, while modest in size, the increasing
contribution to revenues from HNZ's repair and maintenance subsidiaries
point to the success of our diversification efforts. The goodwill
impairment charge recorded in the third quarter of 2013 reflects the
winding down of our work with USTRANSCOM in Afghanistan and while it
does have an effect on net income, it does not reflect the strong
quarterly operating results nor the strong growth prospects."
As at September 30, 2013, the Corporation's financial position remains
strong with working capital of $49.7 million and debt and bank
indebtedness, net of cash and cash equivalents, of $49.3 million, with
$47 million drawn under the Corporation's revolving operating credit
facility of $125 million that matures on January 31, 2017.The
Corporation also has an option to increase the credit facility to $175
million subject to certain conditions. For the third quarter, the
long-term debt-to-equity ratio was 0.19, compared to 0.16 a year ago.
NINE-MONTH RESULTS
For the nine-month period ended September 30, 2013, revenue reached
$193.1 million, compared with revenue of $195.3 million in the
corresponding period of 2012. This variation is mainly explained by a
net decrease in VFR revenue of $4.7 million. This net decrease is
mainly due to a decrease in revenues from Canadian mining, the
Australian utility market and Afghanistan contracted revenues. The
contracts in Afghanistan, in aggregate, experienced a level of revenues
not significantly different from those previously announced despite the
decrease in flying hours experienced this year compared to prior years
due to the impact of annual rate escalation. The Corporation flew
46,177 hours over the nine-month period ended September 30, 2013,
compared to 52,428 hours in the same period in 2012.
EBITDA amounted to $64.0 million, versus $63.5 million a year earlier.
Net income attributable to the shareholders of the Corporation before
goodwill impairment charge stood at $36.9 million, or $2.82 per share,
compared with $36.8 million, or $2.79 per share, last year. After
recognition of the goodwill impairment, the Corporation reported net
income for the nine-month period of $13.4 million or $1.02 per share.
Finally, cash flows related to operating activities before net change
in non-cash working capital balances and deferred revenues totaled
$51.8 million, versus $52.0 million, in 2012.
MAJOR CONTRACT
The Corporation commenced providing service to Shell Global Solutions
International B.V. ("Shell") in September of 2013. In July 2013, Shell
requested and the Corporation agreed to contract for an additional
AW139 aircraft as back-up for the term of the contract as well as some
additional crewing for the primary operational aircraft. As a result of
these changes, revenues under the contract during the initial four year
term are expected to be approximately US$57 million, instead of the
US$40 million initially estimated.
BOARD OF DIRECTORS
The Board has decided to adopt a policy of periodically rotating the
roles of Board members. Consistent with that, effective January 1, 2014
Larry Pollock will replace Randy Findlay as Chairman. Both Mr. Pollock
and Mr. Findlay have been on the Board as independent directors since
its Initial Public Offering in 2005 and have sat on the Boards' Audit
committee. Both Mr. Pollock and Mr. Findlay will continue to sit on the
Board's Audit Committee.
Commenting on his appointment, Mr. Pollock said, "Randy Findlay has been
extremely helpful in leading the Board through its history as a public
company, initially as an income trust and then in late 2010 through its
conversion to a corporation, as well as in guiding the Board through a
significant growth period and we wish to thank him for that. I am very
pleased to assume an expanded role on the Board and view the company's
future as bright".
OUTLOOK
"Looking ahead," said Mr. Wall, "We expect HNZ's activities in
Afghanistan will go on producing strong revenues until the end of this
year. Then, in subsequent quarters, as we detailed recently in an
earlier press release, our mission in that country will increasingly
wind down and we expect the Corporation's revenue and earnings to be
significantly affected. Meanwhile, HNZ's core transportation services
in Canada and the Southern Hemisphere appear both strong and growing,
and we expect the coming quarters to continue delivering satisfactory
financial results.
"The balance of this year will also be positively affected by the
continuation of pipeline work in Canada, and we are well-positioned to
benefit from an upsurge in the Canadian mining and exploration sector.
Our new facility in Terrace, B.C., has recently been opened and will
continue to serve our long-term customer Rio Tinto Alcan, and will
support pipeline projects in Canada. Our balance sheet is strong,"
concluded Mr. Wall, "and we are continuing to follow opportunities for
expansion through acquisition and organic growth."
CONFERENCE CALL
The Corporation will hold a conference call to discuss these results on
Tuesday November 12, 2013 at 11:00 AM (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: 80229436. This tape recording will be available until
November 19, 2013.
ABOUT HNZ GROUP INC.
The Corporation is an international provider of helicopter
transportation and related support services with operations in Canada,
Australia, New Zealand, Afghanistan, Antarctica and Southeast Asia. The
Corporation operates in excess of 130 helicopters in support of a range
of multinational companies and government agencies, including onshore
and offshore oil and gas, mineral exploration, military support, hydro
and utilities, forest management, construction, air ambulance and
search and rescue. In addition to charter services, the Corporation
provides flight training and third-party repair and maintenance
services. The Corporation is headquartered near Montreal, Canada and
employs approximately 800 personnel from 36 locations around the world.
The Corporation operates from fixed-base locations as well as from
temporary locations, commonly referred to as "pool locations", and
provides helicopters in a wide variety of climatic conditions and
terrain across Canada, Australia, New Zealand Afghanistan, Antarctica
and Southeast Asia.
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 USTRANSCOM in Afghanistan, 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 and the future contractual relationship between HNZ Group
and USTRANSCOM and in particular with respect to expected revenues, the
availability of funding for the period covered by the renewal option,
the duration of such relationship and any goodwill impairment that
could result from changes to the relationship. Forward-looking
statements, specifically those concerning future performance and
expected revenues from contracts, are subject to certain risks and
uncertainties, such as customary U.S. government approval of
operational funding and the reduction of USTRANSCOM's activities in
Afghanistan, and actual results may differ materially. 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.
DEFINITION OF NON-IFRS MEASURES: EBITDA
References to "EBITDA" are to net income before net financing charges,
income taxes, depreciation and amortization, gain or loss on disposal
of property, plant and equipment and change in fair value of the
obligation to purchase the shares of non-controlling interests. 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 income or loss, EBITDA is a useful
supplementary measure.
EBITDA is not an earnings measure recognized under IFRS and does not
have a standardized meaning prescribed by IFRS. Therefore, EBITDA may
not be comparable with similar measures presented by other entities.
Investors are cautioned that EBITDA should not be construed as an
alternative to net income determined in accordance with IFRS as an
indicator of the Corporation's performance, or to cash flows from
operating, investing and financing activities as measures of liquidity
and cash flows.
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.