VANCOUVER, BRITISH COLUMBIA (TSX: FLY.A)(TSX: FLY.B)(NYSE: FLI)
today announced unaudited financial results for the three and nine
months ended January 31, 2008.
Financial Highlights
(in millions of Canadian dollars, except per share amounts)
Three Months Ended Nine Months Ended
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January 31, January 31, January 31, January 31,
2008 2007 2008 2007
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Revenue $ 321.9 $ 300.8 $ 959.9 $ 836.9
Operating income 22.9 26.0 86.1 86.6
Net earnings from
continuing operations 6.5 12.0 28.8 29.3
Net earnings from
discontinued operations - - 16.4 0.4
Extraordinary item - 0.8 - 0.8
Net earnings 6.5 12.8 45.2 30.5
Per share information
(diluted)
Weighted average number
of shares 46.4 46.1 46.4 46.1
Net earnings from
continuing operations $ 0.14 $ 0.26 $ 0.63 $ 0.64
Net earnings from
discontinued operations - - 0.35 0.01
Extraordinary item - 0.02 - 0.02
Net earnings 0.14 0.28 0.98 0.67
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The Company continued to realize revenue increases over the
prior year and continued its fleet renewal plan, which included the
addition of eight new aircraft during the third quarter. The
Company recorded a 14% increase in quarterly revenue (excluding
foreign exchange ("FX")) from the same period last year. The
Company added 21 new aircraft to its fleet during the nine months
ended January 31, 2008. During the third quarter, the Company began
transitioning its Vancouver repair and overhaul shops and the
Heli-One administration offices to its new Boundary Bay facility.
The facility is expected to be completed by the fourth quarter of
the current year. The Company believes that it is well positioned
for future growth in its maintenance, repair and overhaul business
with this new facility and the Company's growing ability to support
all new helicopter types, including the Eurocopter EC225, Sikorsky
S76 and S92 and AgustaWestland AW139.
During the third quarter, Global Operations' revenue and segment
EBITDAR increased $20.0 million (17%) and $2.3 million (6%),
respectively, from the same period last year (excluding FX). Flying
hours in Global Operations' also increased by 1,949 hours (9%) over
the same period last year. In the third quarter, European
Operations' revenue and segment EBITDAR increased $22.3 million
(16%) and $4.2 million (18%), respectively, from the same period
last year (excluding FX). Flying hours in European Operations also
increased by 866 hours (4%) over the same period last year. During
the third quarter, external revenue in Heli-One decreased slightly;
however, internal revenue and segment EBITDAR increased by $12.9
million (14%) and $17.6 million (27%), respectively, from the same
period last year (excluding FX).
Operating income decreased by $0.2 million or 1% (excluding FX)
in the third quarter, compared to the same period last year,
primarily due to an increase in lease costs and amortization
expense, partially offset by increases in segment EBITDAR
(excluding FX) in all operating segments.
Net earnings for the third quarter were $6.5 million ($0.14 per
share, diluted), a decrease of $6.3 million ($0.14 per share,
diluted) from the same period last year.
The following table presents the impact on net income and
diluted earnings per share of certain items that affect the
comparability of the Company's net earnings from the applicable
prior periods (all amounts are after-tax and in millions, except
per share amounts):
Three Months Ended Nine Months Ended
January 31, January 31,
------------------------------ -------------------------------
2008 2007 2008 2007
-------------- --------------- --------------- ---------------
Di- Di- Di- Di-
luted luted luted luted
earn- earn- earn- earn-
Net ings Net ings Net ings Net ings
earn- per earn- per earn- per earn- per
ings share ings share ings share ings share
impact impact impact impact impact impact impact impact
--------------------------------------------------------------
Operational
Issues:
Aircraft
introduction
costs(1) $ (2.4) $(0.05) $ (2.2) $(0.05) $ (7.0) $(0.15) $ (9.9) $(0.21)
Estimated
net impact
from the
anticipated
exit of
power-by-
the-hour
("PBH")
maintenance
programs 3.7 0.08 - - 0.5 0.01 - -
Major
component
exchange
costs - - - - (2.4) (0.05) - -
Aircraft
impairment
adjustment - - - - (2.5) (0.05) - -
Costs
associated
with exit
from certain
low margin
contracts - - - - (0.5) (0.01) - -
Impact of
aircraft
availability
and late
delivery
issues(2) (3.1) (0.07) (3.0) (0.07) (6.5) (0.14) (7.0) (0.15)
Net trade
receivables
provision
decrease - - 3.4 0.07 3.1 0.07 10.7 0.23
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(1.8) (0.04) (1.8) (0.05) (15.3) (0.32) (6.2) (0.13)
Financing,
Investing
and
Related
Issues:
Gain on
disposal
of Survival
-One
(discontinued
operations) - - - - 16.4 0.35 - -
Equity
losses in
associated
companies - - - - (0.9) (0.02) - -
Financing
charges
(FX and
other) 3.6 0.08 2.6 0.06 (3.2) (0.07) (5.3) (0.12)
--------------------------------------------------------------
3.6 0.08 2.6 0.06 12.3 0.26 (5.3) (0.12)
Other:
Contract
settlement
costs - - - - - - (1.2) (0.03)
Restructuring
recovery - - - - - - 1.4 0.03
Environmental
liabilities (0.7) (0.02) - - (0.7) (0.02) - -
Tax
adjustments
(FIT and
other) (2.0) (0.04) (2.2) (0.05) 2.2 0.05 (2.2) (0.05)
--------------------------------------------------------------
(2.7) (0.06) (2.2) (0.05) 1.5 0.03 (2.0) (0.05)
--------------------------------------------------------------
Total $ (0.9) $(0.02) $ (1.4) $(0.04) $ (1.5) $(0.03) $(13.5) $(0.30)
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(1) Includes estimated after-tax interest and lease costs of $0.9 million
($0.02 per share, diluted) and $2.4 million ($0.05 per share, diluted)
for the three and nine months ended January 31, 2008, respectively.
(Three and nine months ended January 31, 2007 $0.8 million ($0.02 per
share, diluted) and $3.8 million ($0.08 per share, diluted),
respectively).
(2) Includes customer service penalties, estimated revenue lost and
short-term aircraft lease costs due to late delivery and lack of
availability of aircraft to service contract and non-contract
customers.
Other significant variances include (all amounts are pre-tax,
unless otherwise noted):
- Interest expense increases of approximately $0.5 million ($0.4
million or $0.01 per share, diluted, after-tax) and $2.2 million
($1.7 million or $0.04 per share, diluted, after-tax) for the three
and nine months ended January 31, 2008, respectively, primarily as
a result of higher debt levels related to investment in growing
fleet and associated working capital; and
- Lease expense increases of approximately $3.9 million ($3.0
million or $0.06 per share, diluted, after-tax) and $15.0 million
($11.5 million or $0.25 per share, diluted, after-tax) for the
three and nine months ended January 31, 2008, respectively,
primarily due to an increase in the size of the Company's leased
fleet.
- Amortization expense increases of approximately $4.6 million
($3.5 million or $0.08 per share, diluted) and $12.0 million ($9.1
million or $0.20 per share, diluted) for the three and nine months
ended January 31, 2008, respectively, primarily due to a change in
the amortization rate for rotables, an increase in the value of
aircraft and other flying assets, partially offset by a decrease in
owned aircraft in the fleet.
Capital and liquidity:
- The Company used cash of $23.1 million in operations and
invested $70.0 million in property and equipment during the three
months ended January 31, 2008.
- The total number of aircraft in the fleet remained unchanged
during the third quarter. However, during the third quarter eight
new aircraft, including four Sikorsky S92, two AgustaWestland AW139
and two Eurocopter EC225 aircraft, were added to the fleet. These
additions were offset by the disposal or return to lessors of eight
older technology aircraft.
- The Company has 75 aircraft (36 heavy and 39 medium aircraft)
on order, 16 of which are expected to be delivered in the final
quarter of the current year, with the remaining 59 aircraft to be
delivered over the next four years. The Company also has the option
to purchase up to 34 additional heavy and medium aircraft over the
next seven years.
- The Company had unused capacity under its credit facilities of
$78.6 million and cash and cash equivalents of $15.6 million for a
total of $94.2 million at January 31, 2008.
- The Company has approximately US $210 million in total
credit-approved aircraft specific financing facilities currently
available.
Recent Developments
Sylvain Allard, President and Chief Executive Officer, said, "We
are deeply saddened by the news that our affiliate BHS - Brazilian
Helicopter Services Taxi Aereo S.A. ("BHS") had an accident
involving an AS332L2 aircraft in the Campos Basin off the coast of
Brazil on February 26, 2008. The lives of four people were lost
with one individual still missing. Our thoughts and sympathies are
with the families and friends of those who lost their lives. CHC
and BHS continue to assist and support all agencies investigating
the accident."
Subsequent to January 31, 2008, the Company announced that it
has entered into an agreement with an affiliate of a fund managed
by First Reserve Corporation to acquire all outstanding Class A
Subordinate Voting Shares ("Class A Shares") and Class B Multiple
Voting Shares ("Class B Shares") of the Company. Subject to the
terms of the agreement, the affiliate will acquire the Class A
Shares and Class B Shares for $32.68 per share for aggregate
consideration of approximately $1.5 billion. Following completion
of the potential transaction, the Company's Class A and Class B
Shares will be de-listed and will no longer be publicly traded.
The transaction will require the approval of two-thirds of the
votes cast by holders of the outstanding Class A Shares (1 vote per
share), Class B Shares (10 votes per share) and Ordinary Shares (1
vote for every 10 shares), voting together as a single class. In
addition, the transaction will require the approval of a majority
of the Class A Shares, Class B Shares and Ordinary Shares, each
voting as a separate class, and in each case excluding shares owned
or over which control or direction is exercised by an "interested
party", which term includes certain members of management of the
Company who may invest in an affiliate of the First Reserve Fund.
These votes will take place at a Special General Meeting of
Shareholders in Richmond, BC on April 29, 2008.
Completion of the transaction is subject to certain conditions,
including obtaining approvals or confirmations from certain
European aviation regulatory authorities as well as the Canadian
Transportation Agency regarding the granting or maintaining of
required licenses and permits following completion of the
transaction. The transaction will also be subject to a number of
other customary conditions, including obtaining approval under the
Investment Canada Act. The transaction is not subject to any
financing condition.
The agreement provides that in certain circumstances where the
purchaser fails to complete the transaction as required, the
purchaser would be required to pay CHC a "reverse break fee" of
$61.4 million. The agreement allows CHC to terminate the agreement
in certain circumstances, including to allow CHC to accept a
superior proposal, subject to fulfilling certain conditions,
including the payment to the purchaser of a break fee of $38.5
million. This break fee would also be payable by CHC in certain
other circumstances. The closing of the transaction will take place
after satisfaction or waiver of all conditions, including the
approvals and confirmations from aviation regulatory authorities
described above. While the timing associated with satisfying these
conditions is not certain, the Company currently expects the
transaction to close in the second calendar quarter of 2008,
subject to terms of the agreement. There can be no assurance that
these approvals will be obtained, the other conditions to the
transaction will be satisfied in accordance with their terms,
and/or the parties to the agreement will complete the transaction
under the specified terms. In such cases, the proposed transaction
could be modified, restructured or terminated, as applicable.
Failure to complete the proposed transaction could have a material
adverse impact on the Company's share price. The Company may incur
significant costs if the transaction is not completed. If the
transaction is completed, the Company may also incur fees and costs
prior to closing.
For a complete overview of results, including Management's
Discussion and Analysis, and Unaudited Interim Consolidated
Financial Statements and Notes thereto, please visit the CHC
website at http://www.chc.ca/investor_financialreports.php.
Investor Conference Call
The Company's third quarter conference call and webcast will
take place Thursday, March 13th, 2008 at 10:30 a.m. EDT. To listen
to the conference call, dial 416-641-6126 for local and overseas
calls, or toll-free 1-866-542-4236 for calls from within North
America. To hear a replay of the conference call, visit www.chc.ca
or dial 416-695-5800 or toll-free 1-800-408-3053 and enter passcode
"3254350#".
The financial results will be available at www.chc.ca. To listen
to the conference call webcast and view the Q3 Overview
presentation, please visit the "Investor Events" section of the CHC
website at www.chc.ca/investor_events.php or click on the following
link to listen to the audio portion only:
http://events.onlinebroadcasting.com/chchelicopter/031308/index.php.
CHC Helicopter Corporation is the world's largest provider of
helicopter services to the global offshore oil and gas industry
with aircraft operating in more than 30 countries.
If you wish to be added to CHC's news distribution list, please
visit http://www.chc.ca/investor_materialrequest.php.
This document may contain forward-looking information. While
these projections, conclusions, forecasts and other statements
represent our best current judgment, the actual results could
differ materially from the conclusion, forecast or projection
contained in the forward-looking information. Certain material
factors or assumptions were applied in drawing a conclusion or
making a forecast or projection in the forward-looking information
contained herein. Such factors include, but are not limited to, the
following: exchange rate fluctuations, inherent risk, trade credit
risk, industry exposure, inflation, contract loss, inability to
maintain government issued licences, inability to obtain necessary
aircraft or insurance, competition, political, economic and
regulatory uncertainty, loss of key personnel, pension risk, work
stoppages due to labour disputes, international uncertainty, and
future material acquisitions. These risk factors are further
detailed in the restated Annual Report on Form 20-F and other
filings of the Company with the United States Securities and
Exchange Commission and in the Company's Annual Information Form
filed with the Canadian securities regulatory authorities. Should
one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual outcomes may vary
materially from those indicated. CHC disclaims any intention or
obligation to update or revise any forward-looking information,
whether as a result of new information, future events or
otherwise.
Contacts: CHC Helicopter Corporation Rick Davis Senior Vice
President and Chief Financial Officer (604) 279-2471 or (778)
999-0314 CHC Helicopter Corporation Annette Cusworth Vice
President, Financial Services (604) 279-2484 or (778) 999-1476
Website: www.chc.ca
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