- HNZ Group to be acquired for $18.70 per share in cash (see press release dated October 31, 2017)
- Revenue of $72.0 million, versus $54.7 million last year
- Adjusted EBITDAR of $21.4 million or 29.7% compared to $12.8 million or 23.4% a year ago
- Adjusted EBITDA of $15.9 million or 22.1% compared to $9.8 million or 17.9% a year ago
- Net income from continuing operations of $6.3 million or $0.49 per share versus $2.3 million or $0.18 per share last year
- Net income for the period of $6.4 million or $0.50 per share versus $1.7 million or $0.13 per share last year
MONTREAL, Nov. 12, 2017 /CNW/ - HNZ Group Inc. (TSX: HNZ) (the "Corporation"), an international provider of helicopter transportation and related support services, today announced its financial and operating results for the third quarter ended September 30, 2017.
| Financial Highlights |
Quarters ended September 30, |
Nine months ended September 30, |
|||
| (in thousands of dollars, except per share data) |
2017 |
2016 |
2017 |
2016 |
|
| Revenue |
72,000 |
54,655 |
168,303 |
157,206 |
|
| Adjusted EBITDAR [1] |
21,405 |
12,824 |
30,644 |
37,789 |
|
| Adjusted EBITDA [2] |
15,908 |
9,799 |
21,240 |
28,438 |
|
| Net income from continuing operations [3] |
6,310 |
2,299 |
6,744 |
8,756 |
|
| Per share - basic and diluted ($) |
0.49 |
0.18 |
0.52 |
0.67 |
|
| Net income [3] |
6,424 |
1,692 |
4,096 |
6,427 |
|
| Per share - basic and diluted ($) |
0.50 |
0.13 |
0.32 |
0.49 |
|
| Cash flows related to operating activities |
7,628 |
10,540 |
399 |
16,073 |
|
| Weighted-average shares outstanding (all classes) |
12,960,365 |
13,020,845 |
12,979,377 |
13,023,231 |
|
| [1] |
Adjusted EBITDA (as defined below) before aircraft operating leases expense but including payments made to lessors to cover variable costs for leased aircraft such as maintenance and crew costs (see reconciliation in the Non-IFRS financial measures section) |
| [2] |
Net income before net financing charges, income taxes, depreciation and amortization, adjusted for gain or loss on disposal of property, plant and equipment, trade name impairment charge (if any), goodwill impairment charge (if any), change in fair value of the obligation to purchase the shares of non-controlling interests in subsidiaries (see reconciliation in the Non-IFRS financial measures section) |
| [3] |
Attributable to the Shareholders of the Corporation |
THIRD QUARTER RESULTS
Revenue was $72.0 million in the third quarter of 2017, an increase of $17.3 million compared to $54.7 million a year ago. This variation is mostly explained by an increase in offshore revenue and onshore revenue, partially offset by a decrease in ancillary revenue. The Corporation flew 18,127 hours compared to 14,178 hours in the third quarter of 2016, an increase of 27.9%.
Offshore revenue increased by $12.5 million from the third quarter of 2016 primarily due to the addition of the new INPEX crew transport offshore contract and the ExxonMobil and Encana contract. Onshore revenue increased by $7.1 million as a result of higher VFR activity in western Canada and in Acasta. Ancillary revenue decreased by $2.3 million mainly due to decreased activity at Nampa Valley, Heli-Welders and the Contracted Flying and Training Services ("CFTS") project.
Operating expenses, before aircraft operating leases expenses, amounted to $51.1 million for the third quarter, compared to $41.3 million last year, representing an increase of $9.8 million. The increase is mainly due to operating costs incurred in the period for the following recently awarded contracts: INPEX crew transport offshore contract, the INPEX-Shell Search and Rescue ("SAR") contract in Asia-Pacific and the ExxonMobil and Encana contract, partially offset by lower costs from the completion of the Shell Halifax contract.
Adjusted EBITDAR and adjusted EBITDA for the third quarter of 2017 were $21.4 million and $15.9 million respectively or 29.7% and 22.1% of revenues, compared to $12.8 million and $9.8 million a year earlier.
Net income from continuing operations attributable to the shareholders of the Corporation totaled $6.3 million or $0.49 per share, compared to $2.3 million, or $0.18 per share for the same period in 2016. Net income attributable to the shareholders of the Corporation totaled $6.4 million or $0.50 per share, compared to $1.7 million, or $0.13 per share in 2016. Cash flows related to operating activities were $7.6 million in the third quarter of 2017 versus $10.5 million in the corresponding period a year earlier. The decrease in cash flows is primarily related to operating costs incurred on the new contracts.
Adjusted net free cash flows for the nine months ended September 30, 2017 were $6.4 million, compared to $17.7 million for the same period a year ago. For the twelve-month period ended September 30, 2017, adjusted net free cash flows stood at $6.4 million, compared with $17.7 million for the year ended December 31, 2016.
"The third quarter results saw the benefits of increased fire suppression activities and the ramp-up of the PHI/HNZ operations, as well as the ExxonMobil/Encana contract, which was partially offset by delays in the ramp-up of the INPEX-Shell SAR contract and decreased activity at Nampa Valley, Heli-Welders and CFTS." said Don Wall, President and Chief Executive Officer of HNZ Group Inc.
As at September 30, 2017, the Corporation had working capital of $55.1 million, and cash and cash equivalents, net of short-term debt of $0.6 million.
NINE-MONTH RESULTS
For the nine-month period ended September 30, 2017, revenue totaled $168.3 million, an increase of $11.1 million compared to $157.2 million a year ago. The increase is mostly due to an increase in offshore revenue of $15.1 million and an increase in onshore revenue of $1.4 million, partially offset by a decrease in ancillary revenue of $5.4 million. The Corporation flew 35,218 hours compared to 32,251 hours in 2016.
Adjusted EBITDAR and adjusted EBITDA for the nine-month period amounted to $30.6 million and $21.2 million respectively, compared to $37.8 million and $28.4 million a year earlier.
Net income from continuing operations attributable to the shareholders of the Corporation totaled $6.7 million or $0.52 per share, compared to $8.8 million, or $0.67 per share for the same period in 2016. Net income attributable to the shareholders of the Corporation totaled $4.1 million or $0.32 per share, compared to $6.4 million, or $0.49 per share in 2016. Cash flows related to operating activities were $0.4 million for the nine-month period versus $16.1 million in the corresponding period a year earlier.
POST THIRD QUARTER HIGHLIGHT
HNZ Group to be acquired by President and CEO Don Wall and PHI, Inc.
On October 31, 2017, HNZ Group and PHI, Inc. ("PHI") announced that, together with Don Wall, the Corporation's President and CEO, have entered into an arrangement agreement (the "Arrangement Agreement") pursuant to which Don Wall, through a wholly-owned acquisition company (the "Canadian Purchaser" and together with PHI, the "Purchasers"), will acquire all of the issued and outstanding common and variable voting shares of the Corporation by way of a statutory plan of arrangement under Section 192 of the Canada Business Corporations Act (the "Arrangement") for CADs$18.70 per share in cash (the "Consideration"). As part of the Arrangement, PHI will acquire from the Canadian Purchaser the portion of the Corporation's offshore business conducted in New Zealand, Australia, the Philippines and Papua New Guinea (the "Offshore Operations").
The Consideration represents a premium of 43.3% to the October 30, 2017 closing price of the Corporation's common and variable voting shares on the Toronto Stock Exchange and a premium of 46.6% to the 20-day volume weighted average price of the Corporation's common and variable voting shares on the Toronto Stock Exchange from October 2, 2017 to October 30, 2017. The Arrangement values the Corporation at approximately CAD $242.4 million, based on the number of outstanding shares of the Corporation as of October 30, 2017.
The Corporation's board of directors (with Don Wall abstaining), after consultation with its financial and legal advisors, and following receipt of the unanimous recommendation by a Special Committee of the board of directors composed entirely of independent directors (the "Special Committee"), has unanimously approved the Arrangement and unanimously recommends that holders of the Corporation's common and variable voting shares vote in favour of the Arrangement. The Arrangement has also been approved unanimously by the board of directors of PHI.
CONFERENCE CALL
The Corporation will hold a conference call to discuss these results on Monday, November 13, 2017 at 11:00AM (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: 6386868. This tape recording will be available until November 20, 2017.
ABOUT HNZ GROUP INC.
HNZ Group Inc. is an international provider of helicopter transportation and related support services with operations in Canada, Australia, New Zealand, Antarctica, the United States and Southeast Asia. The Corporation operates in excess of 115 helicopters to support offshore and onshore charter activities under a number of different brands. Offshore operations are provided under the HNZ brand, while onshore charter operations are under the Canadian Helicopters brand in Canada, Acasta in Northern Canada and the HNZ brand in Asia-Pacific and Antarctica. Clients consist of multinational companies and government agencies including offshore and onshore oil and gas, mineral exploration, military support, hydro and utilities, forest management, construction, air ambulance and search and rescue. In addition to charter services, it provides ancillary services which include third-party repair and maintenance services and advanced flight training by the internationally recognized HNZ Topflight training center in Penticton, British Columbia. The Corporation is headquartered near Montreal, Canada and employs approximately 600 personnel from 36 locations around the world. Revenue from offshore and ancillary operations is mostly earned evenly throughout the year while onshore operations follow a seasonal pattern with the highest revenue occurring from May to October.
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. When used in this press release, such statements use such words as "may", "will", "intend", "should", "expect", "believe", "plan", "anticipated", "estimate", "predict", "potential" or the negative of these terms and other similar terminology. Examples of such statements include, but are not limited to, statements regarding the financial position, results of operations, objectives, dividend policy, participation in bidding processes, continuing business relationships with actual or potential key clients, expected revenues from contracts with key clients, seasonal levels of activity, maintenance of contractual relationships, any goodwill impairment that could result from changes to those 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) and legislation (including tax legislation) applicable to the Corporation. 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 the 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 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.
NON-IFRS FINANCIAL MEASURES
This press release contains certain non-IFRS financial measures as defined under applicable securities legislation, including Adjusted EBITDA, Adjusted EBITDAR, Adjusted operating income and Adjusted Net Free Cash Flows. The Corporation believes that such non-IFRS financial measures improve the period-to-period comparability of the Corporation's results by providing more insight into the performance of ongoing core business operations. As required by applicable securities legislation, the Corporation has provided reconciliations of those measures to the most directly comparable IFRS measures. Investors and other readers are encouraged to review the related IFRS financial measures and the reconciliation of non-IFRS measures to their most directly comparable IFRS measures set forth below and should consider non-IFRS measures only as a supplement to, not as a substitute for or as measure to, measures of financial performance prepared in accordance with IFRS.
- References to "Adjusted EBITDA" are to net income (loss) from continuing operations before net financing charges, income taxes, depreciation and amortization, adjusted for gain or loss on disposal of property, plant and equipment, trade name impairment charge (if any), goodwill impairment charge (if any) and change in fair value of the obligation to purchase the shares of non-controlling interests in subsidiaries as disclosed in the "Summary of Selected Consolidated Financial Information". Adjustments to standard EBITDA are made by management to normalize for non-recurring events.
- References to "Adjusted EBITDAR" are to Adjusted EBITDA before aircraft operating leases expense but including payments made to lessors to cover variable costs for leased aircraft such as maintenance and crew costs (as disclosed in the "Summary of Selected Consolidated Financial Information"). This measure is commonly used in the Corporation's industry as a means to measure operating results and to assess comparability with peers, as there are differences in the way corporations finance their aircraft and other assets.
- References to "Adjusted operating income" are to revenues less direct operating expenses from continuing operations. Direct operating expenses include crew and maintenance costs, cost of goods sold (if applicable), direct base costs, aircraft leases and other operating expenses. The Corporation uses this measure as a means to evaluate the segment performance for the purposes of making decisions.
- References to "Adjusted Net Free Cash Flows" are to cash flows from operating activities plus (minus) net change in non-cash working capital balances and deferred revenues less "Maintenance CAPEX" from continuing operations. "Maintenance CAPEX" is defined by management as any capital expenditure which is undertaken to maintain current output in terms of revenues and operating cash flows, as opposed to "Growth CAPEX" which is defined as capital expenditures undertaken to increase the Corporation's capacity for potential growth as defined by management. This measure is commonly used in the Corporation's industry and is used by the Corporation as an indicator of financial strength and performance of its business, indicating the amount of cash the Corporation is able to generate from operations after capital expenditures.
Since Adjusted EBITDA, Adjusted EBITDAR and Adjusted Net Free Cash Flows are useful to many investors to assess performance on the basis of the ability to generate cash from operations on a recurring basis, management believes that, in addition to net income (loss), Adjusted EBITDA, Adjusted operating income and Adjusted Net Free Cash Flows are useful supplementary measures which exclude non-recurring items or items that are not related to day-to-day operations. Management believes that Adjusted Net Free Cash Flows provides useful additional information to investors concerning the operations and cash flows of the Corporation including the amount available for distribution to the shareholders, repayment of debt and other investing activities.
Adjusted EBITDA, Adjusted EBITDAR, Adjusted operating income and Adjusted Net Free Cash Flows are not earnings or cash flows measures recognized under IFRS and do not have a standardized meaning prescribed by IFRS. Therefore, Adjusted EBITDA, Adjusted EBITDAR, Adjusted operating income and Adjusted Net Free Cash Flows may not be comparable with similar measures presented by other entities. Investors are cautioned that Adjusted EBITDA, Adjusted EBITDAR, Adjusted operating income and Adjusted Net Free Cash Flows should not be construed as alternatives to net income or earnings per share determined in accordance with IFRS as indicators of the Corporation's performance, or to cash flows related to operating, investing and financing activities as measures of liquidity and cash flows.
Adjusted EBITDAR and Adjusted EBITDA Reconciliation to income before income taxes
| Three-month period ended September 30 |
Nine-month period ended September 30 |
|||||
| ($000's except for shares and per share amounts) |
2017 |
2016 |
2017 |
2016 |
||
| Continuing operations |
||||||
| Revenue |
72,000 |
54,655 |
168,303 |
157,206 |
||
| Operating expenses before aircraft operating leases expenses |
51,134 |
41,339 |
140,557 |
118,701 |
||
| Foreign exchange (gain) loss |
(539) |
492 |
(2,898) |
716 |
||
| Adjusted EBITDAR(1) |
21,405 |
12,824 |
30,644 |
37,789 |
||
| Aircraft operating leases expenses |
5,497 |
3,025 |
9,404 |
9,351 |
||
| Adjusted EBITDA(1) |
15,908 |
9,799 |
21,240 |
28,438 |
||
| Amortization |
5,053 |
4,845 |
13,619 |
13,900 |
||
| Net loss (gain) on disposal of property, plant and equipment |
247 |
(12) |
(1,084) |
(446) |
||
| Net financing charges |
142 |
93 |
301 |
472 |
||
| Income before income taxes from continuing operations |
10,466 |
4,873 |
8,404 |
14,512 |
||
| Income taxes expense (recovery) |
||||||
| Current |
4,185 |
2,590 |
4,740 |
6,440 |
||
| Deferred |
(372) |
(232) |
(3,472) |
(1,141) |
||
| 3,813 |
2,358 |
1,268 |
5,299 |
|||
| Net income from continuing operations |
6,653 |
2,515 |
7,136 |
9,213 |
||
| Discontinued operations |
||||||
| Net income (loss) from discontinued operations |
75 |
(1,101) |
(5,566) |
(4,284) |
||
| Net income for the period |
6,728 |
1,414 |
1,570 |
4,929 |
||
| Net income attributable to: |
||||||
| Shareholders of the Corporation |
6,423 |
1,692 |
4,096 |
6,427 |
||
| Non-controlling interests from continuing operations |
344 |
215 |
392 |
457 |
||
| Non-controlling interests from discontinued operations |
(39) |
(493) |
(2,918) |
(1,955) |
||
| 6,728 |
1,414 |
1,570 |
4,929 |
|||
| Earnings per share basic and diluted from continuing operations |
0.4868 |
0.1766 |
0.5196 |
0.6723 |
||
| Total assets |
308,829 |
307,805 |
308,829 |
307,805 |
||
| [1] |
See "Definition of Non-IFRS Measures". Adjusted EBITDAR and Adjusted EBITDA are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS. Adjusted EBITDAR and Adjusted EBITDA may not be comparable to similar measures presented by other issuers. |
Adjusted net free cash flow Reconciliation to cash flows from operating activities
| Nine months ended |
Twelve months |
Year ended |
||
| (in $000's) |
September 30, |
September 30, 2016 |
September 30, 2017 |
December 31, |
| Cash flows related to operating activities |
399 |
16,073 |
3,994 |
19,668 |
| Add (deduct): Net change in non-cash working capital balances and deferred revenues |
12,959 |
6,174 |
13,556 |
6,771 |
| 13,358 |
22,247 |
17,550 |
26,439 |
|
| Less: Maintenance CAPEX(1) |
7,007 |
4,576 |
11,149 |
8,718 |
| Adjusted Net Free Cash Flows(2) |
6,351 |
17,671 |
6,401 |
17,721 |
| [1] |
See "Definition of Non-IFRS Measures" for a description of management's definition of Maintenance CAPEX and Growth CAPEX. |
| [2] |
See "Definition of Non-IFRS Measures". Adjusted net free cash flows is not a recognized measure under IFRS and does not have a standardized meaning prescribed by IFRS. Adjusted net free cash flows may not be comparable to similar measures presented by other issuers. |
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.
HNZ Group Inc.: Matthew Wright, Vice-President and Chief Financial Officer, Tel: 780-429-6903
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