CHC Helicopter Corporation
TSX : FLY.A
TSX : FLY.B
NYSE : FLI

CHC Helicopter Corporation

March 12, 2008 19:40 ET

CHC Announces Third Quarter Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 12, 2008) - CHC Helicopter Corporation (the "Company" or "CHC") (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
--------------------------------------------------------------
(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)
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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.

Contact Information

  • CHC Helicopter Corporation
    Rick Davis
    Senior Vice President and Chief Financial Officer
    (604) 279-2471 or (778) 999-0314
    or
    CHC Helicopter Corporation
    Annette Cusworth
    Vice President, Financial Services
    (604) 279-2484 or (778) 999-1476
    Website: www.chc.ca