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Erickson Inc. – ‘8-K’ for 5/5/16 – EX-99.1

On:  Thursday, 5/5/16, at 8:55am ET   ·   For:  5/5/16   ·   Accession #:  1490165-16-85   ·   File #:  1-35482

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  As Of                Filer                Filing    For·On·As Docs:Size

 5/05/16  Erickson Inc.                     8-K:2,9     5/05/16    2:1.0M

Current Report   —   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Current Report                                      HTML     17K 
 2: EX-99.1     Press Release                                       HTML     90K

EX-99.1   —   Press Release

This exhibit is an HTML Document rendered as filed.  [ Alternative Formats ]

  Exhibit  
Exhibit 99.1


Erickson Reports First Quarter 2016 Financial Results

•
Revenue and EBITDA down while Cash Flow from Operations improves
◦
Revenue of $46.8 million, down $19.3 million compared to first quarter 2015
◦
Adjusted EBITDA loss of $3.1 million compared to first quarter 2015 Adjusted EBITDA of $2.2 million
◦
Improvement in operating cash flow of $6.6 million compared to first quarter 2015
•
Secured a credit facility amendment providing incremental liquidity and flexibility
•
Growing backlog as a result of multiple contract wins in India, Peru, Alaska and with the U.S. Navy

May 5th, 2016 7:00 AM Eastern Time

PORTLAND, Ore.--(GLOBE NEWSWIRE)--Erickson Incorporated (NASDAQ: EAC) (“Erickson,” the “Company,” “we,” “us” and “our”), a leading global provider of aviation services, today announced first quarter 2016 financial results.

“The first quarter was largely consistent with our expectations. Revenue for our services continues to be disappointing as we were unable to replace certain defense, and oil and gas contracts we had last year. Despite a $19 million decline in revenue, we were pleased to deliver a $7 million improvement in operating cash flow compared to the first quarter of 2015. We are also pleased that our pipeline continues to grow, and we are starting to see some improvement in our backlog. During the quarter we delivered some important contract wins including a Vertrep contract with the U.S. Navy, and a contract in India for the first time in our company’s history. While it is difficult to predict the timing of contract wins, our growing pipeline is encouraging, and we look forward to contract awards in the coming months”, said Jeff Roberts, President and CEO.

First Quarter 2016 Highlights
•
Awarded two 5-year Vertrep contracts with the U.S. Navy’s military sealift command to provide aerial re-supply for U.S. Navy detachments while at sea
•
Contract win with Sterlite Grid in India for precision lift installation of power line towers using an S-64E Aircrane
•
Two exclusive-use one-year contract wins each with four additional option years with the State of Alaska’s Department of Natural Resources for wildfire suppression. Erickson to provide two medium-lift helicopters
•
Sale of two B-212 helicopters for a total of $2.0million in furtherance of our fleet rationalization plan


1

Recent Highlights
•
Heavy lift contract win in Peru to provide one S-64F Aircrane with related support for year round use with an oil and gas operator in the Amazon region
•
Contract win with Rokstad Power to provide heavy-lift precision placement services to Brucejack Mine in Stewart, British Columbia, using an S-64F Aircrane. Contract duration of 4 months with possible extensions

First Quarter Results
Erickson recorded net revenue of $46.8 million for the first quarter of 2016, compared to net revenue of $66.2 million for the first quarter of 2015. First quarter 2016 loss from operations was $13.1 million, an improvement of $52.1 million compared with $65.2 million for the same period in 2015, which included goodwill and asset impairments of $57.0 million. First quarter 2016 Adjusted EBITDA was a loss of $3.1 million compared to Adjusted EBITDA of $2.2 million for the same period in 2015.

Commercial Aviation Services revenues decreased $6.3 million, to $19.9 million in the first quarter of 2016 from $26.3 million in the first quarter of 2015 primarily due to the overall decline in global oil and gas exploration combined with lower firefighting activity in Australia, which experienced a milder fire season. We did however see improvements in timber harvesting activity in Canada, as well as higher revenues generated from a European firefighting contract that was not in place during the first quarter of 2015. Infrastructure construction revenues were relatively flat on a year-over-year basis.

Global Defense and Security revenues decreased $13.8 million to $19.1 million for the first quarter of 2016 from $32.9 million in the first quarter of 2015 due to contracts ending and, to a lesser degree, a reduction in scope of U.S. Department of Defense activity.

Manufacturing and MRO revenues increased by $0.8 million to $7.8 million compared to $7.0 million for the first quarter of 2015. This increase was primarily driven by revenue derived from the refurbishment of two MH-53E Sea Dragons for the U.S. Navy.

Closing Comments
“The transformation program we have initiated and the subsequent work to turn around our business continues. The initiatives we put in place to manage cash and liquidity have served us well. Our business development and sales efforts remain concentrated on uncovering new opportunities that will develop into revenue, and we are maintaining our focus on exceeding customer expectations and upholding stringent safety standards. We are working hard to improve efficiencies from a cost standpoint, which includes the ongoing fleet rationalization process. These efforts will help lead our transition to a growing, profitable enterprise” concluded Jeff Roberts.

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

2

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, May 5, 2016 to discuss the results, followed by a question and answer session for the investment community. To access the call, dial toll-free 1-888-329-8877 or 1-719-457-2664 (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 4024627. The replay will be available beginning at 8:00 p.m. ET on May 5, 2016 and will last through 11:59 p.m. ET on May 19, 2016.
####

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 March 31, 2016, 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 and working capital deficit; 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; 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.

3



Source: Erickson Incorporated


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

March 31,
2016
 
December 31,
2015
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
3,291

 
$
2,129

Restricted cash
228

 
373

Accounts receivable, net
34,983

 
40,520

Prepaid expenses and other current assets
3,784

 
5,233

Total current assets
42,286

 
48,255

Aircraft, net
185,746

 
186,132

Aircraft parts, net
140,068

 
139,609

Aircraft held for sale
10,465

 
12,348

Property, plant and equipment, net
25,163

 
25,553

Other assets
9,320

 
10,261

Other intangible assets, net
15,250

 
15,787

Goodwill, net
164,111

 
163,708

Total assets
$
592,409

 
$
601,653

LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
13,742

 
$
13,660

Current portion of long-term debt
8,294

 
8,205

Accrued expenses and other current liabilities
25,720

 
17,828

Total current liabilities
47,756

 
39,693

Credit Facility
105,064

 
96,165

Long-term debt, less current portion
362,088

 
364,782

Other liabilities
13,327

 
11,720

Total liabilities
528,235

 
512,360

Equity:
 
 
 
Erickson Incorporated:
 
 
 
Common stock; $0.0001 par value; 110,000,000 shares authorized; 13,895,421 issued and outstanding as of March 31, 2016 and December 31, 2015
1

 
1

Additional paid-in capital
181,353

 
181,259

Accumulated deficit
(110,885
)
 
(84,901
)
Accumulated other comprehensive loss, net of tax
(7,012
)
 
(7,789
)
Total Erickson Incorporated shareholders’ equity
63,457

 
88,570

Noncontrolling interests’ equity
717

 
723

Total equity
64,174

 
89,293

Total liabilities and equity
$
592,409

 
$
601,653



5

ERICKSON INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
 
Three Months Ended March 31,
 
2016
 
2015
Revenues, net:
 
 
 
Commercial Aviation Services
$
19,946

 
$
26,253

Global Defense and Security
19,069

 
32,875

Manufacturing and MRO
7,814

 
7,034

Total revenues
46,829

 
66,162

Cost of revenues:
 
 
 
Commercial Aviation Services
24,304

 
30,940

Global Defense and Security
20,028

 
28,513

Manufacturing and MRO
6,571

 
5,335

Total cost of revenues
50,903

 
64,788

Gross profit (loss):
 
 
 
Commercial Aviation Services
(4,358
)
 
(4,687
)
Global Defense and Security
(959
)
 
4,362

Manufacturing and MRO
1,243

 
1,699

Total gross profit (loss)
(4,074
)
 
1,374

Operating expenses:
 
 
 
General and administrative
6,492

 
6,938

Research and development
631

 
878

Selling and marketing
1,882

 
1,755

Impairment of goodwill
—

 
49,823

Impairment of other assets
—

 
7,143

Total operating expenses
9,005

 
66,537

Operating loss
(13,079
)
 
(65,163
)
Interest expense, net
(9,247
)
 
(9,212
)
Other expense, net
(1,011
)
 
(1,325
)
Net loss before income tax expense (benefit)
(23,337
)
 
(75,700
)
Income tax expense (benefit)
2,670

 
(617
)
Net loss
(26,007
)
 
(75,083
)
Less: Net loss related to noncontrolling interests
23

 
113

Net loss attributable to Erickson Incorporated
$
(25,984
)
 
$
(74,970
)
Net loss per share attributable to Erickson Incorporated shareholders—Basic and Diluted
$
(1.87
)
 
$
(5.42
)
Weighted average shares outstanding—Basic and Diluted
13,895,421

 
13,823,818



6

ERICKSON INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
Three Months Ended March 31,
 
2016
 
2015
Cash flows from operating activities:
 
 
 
Net loss
$
(26,007
)
 
$
(75,083
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
Depreciation and amortization
9,585

 
8,818

Impairment of goodwill
—

 
49,823

Impairment of other assets
—

 
7,143

Deferred income taxes
2,166

 
(1,418
)
Amortization of debt issuance costs
602

 
624

Amortization of debt discount
149

 
177

Stock-based compensation
94

 
145

Other non-cash (income) expense, net
(10
)
 
6

Changes in operating assets and liabilities:
 
 
 
Accounts receivable
5,751

 
(8,059
)
Prepaid expenses and other current assets
1,463

 
39

Aircraft parts, net
(3,871
)
 
(1,320
)
Aircraft held for sale
2,012

 
—

Other assets
963

 
2,390

Accounts payable
41

 
(2,205
)
Accrued expenses and other current liabilities
7,387

 
12,323

Other liabilities
(466
)
 
(144
)
Net cash used in operating activities
(141
)
 
(6,741
)
Cash flows from investing activities:
 
 
 
Purchases of aircraft and property, plant and equipment
(4,774
)
 
(5,674
)
Restricted cash
155

 
(51
)
Net cash used in investing activities
(4,619
)
 
(5,725
)
Cash flows from financing activities:
 
 
 
Credit facility borrowings
31,071

 
48,797

Credit facility payments
(22,355
)
 
(34,211
)
Long-term debt payments, including capital lease payments
(3,169
)
 
(2,140
)
Other long-term payments
—

 
(48
)
Debt issuance costs
—

 
(70
)
Net cash provided by financing activities
5,547

 
12,328

Effect of foreign currency exchange rates on cash and cash equivalents
375

 
(2,085
)
Net increase (decrease) in cash and cash equivalents
1,162

 
(2,223
)
Cash and cash equivalents at beginning of period
2,129

 
5,097

Cash and cash equivalents at end of period
$
3,291

 
$
2,874



7

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 March 31,
 
2016
 
2015
EBITDA, Adjusted EBITDA and Adjusted EBITDAR Reconciliation:
Net loss attributable to Erickson Incorporated
$
(25,984
)
 
$
(74,970
)
Interest expense, net
9,247

 
9,212

Tax expense (benefit)
2,670

 
(617
)
Depreciation and amortization
9,585

 
8,818

Amortization of debt issuance costs
602

 
624

EBITDA
(3,880
)
 
(56,933
)
Unrealized foreign currency exchange losses
417

 
436

Insurance related to aircraft held for sale
114

 
—

Stock-based compensation
94

 
145

Restructuring costs
71

 
1,545

Acquisition and integration related expenses
51

 
—

Interest expense related to tax contingencies
35

 
—

Impairment of goodwill
—

 
49,823

Impairment of other assets
—

 
7,143

Other
(10
)
 
6

Adjusted EBITDA
(3,108
)
 
2,165

Aircraft lease expenses
3,904

 
4,517

Adjusted EBITDAR
$
796

 
$
6,682

 
 
 
 
Free Cash Flow:
 
 
 
Net cash used in operating activities
$
(141
)
 
$
(6,741
)
Add: Purchases of aircraft and property, plant and equipment
(4,774
)
 
(5,674
)
Free cash flow
$
(4,915
)
 
$
(12,415
)


8

Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘8-K’ Filing    Date    Other Filings
5/19/16
Filed on / For Period End:5/5/16
3/31/16
12/31/1510-K,  4
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