Air Methods Reports Second Quarter 2016 Results
August 04 2016 - 4:01PM
Air Methods Corporation (Nasdaq:AIRM), the global leader in air
medical transportation, today reported financial results for the
quarter ended June 30, 2016.
Second Quarter 2016 Results:
- Revenue of $292.6 million, compared to $263.6 million for the
second quarter of 2015, an increase of 11.0%.
- Diluted earnings per share from continued operations of $0.70,
compared to $0.69 for the second quarter of 2015, an increase of
1.4%.
- EBITDA from continuing operations of $76.2 million, compared to
$71.2 million for the second quarter of 2015, an increase of
7.0%.
- The company repurchased 688,210 shares in the second quarter
and an additional 718,000 shares in the third quarter through
August 3, 2016.
Aaron Todd, CEO of Air Methods, stated, “While
we continued to grow the company with 11.0% top line growth in the
second quarter, lower than planned air medical transport and
tourism passenger volumes resulted in weaker earnings growth. The
accelerated training for Tri-State employees is mostly complete,
resulting in improved in-service rates and transports in July.
Tourism passenger volumes also have recovered in July, declining
only 1.6% over the prior year. With these issues now behind us, we
are still positioned to achieve our financial targets for the full
year.”
Second Quarter Performance by
Segment
For the second quarter, Air Medical Services
(AMS) revenue increased by 12.6% to $252.9 million compared to
$224.7 million in the prior-year quarter. The acquisition of
Tri-State Care Flight (TSCF) added $11.2 million in revenues.
Excluding TSCF, revenues grew 7.6%. Key operating statistics
include:
|
|
2Q16 |
|
|
2Q15 |
|
YOY Change (%) |
Transports |
|
18,662 |
|
|
16,105 |
|
|
15.9 |
% |
Transports + Weather Cancellations |
|
24,626 |
|
|
22,071 |
|
|
11.6 |
% |
Same-Base Transports (SBTs) |
|
15,464 |
|
|
15,397 |
|
|
0.4 |
% |
SBT
+ Weather Cancellations |
|
20,544 |
|
|
21,120 |
|
|
-2.7 |
% |
Net Revenue per Transport |
$ |
11,516 |
|
$ |
11,298 |
|
|
1.9 |
% |
Flight center and aircraft operations expenses
increased 11.1% to $144.2 million in the current quarter compared
to $129.8 million in the prior year quarter. TSCF added $8.6
million in flight center and aircraft operations expenses.
Excluding TSCF, these expenses increased 4.4% despite revenues
growing 7.6% for the corresponding AMS operations. Drivers of the
margin expansion include the Company’s investment in its fleet and
lower fuel prices. AMS segment net income increased 6.6% to $55.4
million compared to $51.9 million for the second quarter of
2015. On a stand-alone basis, TSCF lost $3.2 million (pre-tax)
in the quarter. This does not include the positive contribution
from transports retained at consolidated bases.
Tourism revenues decreased 6.4% to $32.2 million
in the current quarter compared to $34.4 million in the prior-year
quarter. Total passengers decreased 9.7% to 114,615 during
the current quarter compared to 126,953 in the prior-year quarter.
Total revenue per passenger increased 3.7% to $281 in the current
quarter compared to $271 in the prior-year quarter. Tourism
operating expenses decreased 4.1% to $22.1 million in the current
quarter compared to $23.1 million in the prior-year quarter. The
year-over-year decline was driven primarily by a reduction in
maintenance and fuel expense. Tourism segment net income was $2.0
million in the current quarter compared to net income of $3.9
million in the prior-year quarter.
United Rotorcraft’s external revenue increased
66.4% to $7.4 million in the current quarter compared to $4.4
million in the prior-year quarter. Its segment external earnings
improved from a loss of $0.4 million in the year-ago period to a
loss of $0.2 million in the current-year quarter.
Share Repurchase Program
During the second quarter and current
quarter-to-date through August 3, 2016, the Company repurchased 1.4
million shares for $50.6 million bringing the total number and
amount of shares repurchased since the program was initiated to 2.1
million and $77.5 million, respectively. The company presently has
$122.5 million remaining on its authorized program.
3Q16 Update
The Company also provided an update on
preliminary July 2016 air medical and tourism flight volume. Total
community-based transports increased 9.6% to 6,376 during July 2016
compared to 5,816 in July 2015. July 2016 same-base
transports decreased by 354 transports as compared with July 2015.
Weather cancellations during July 2016 for these same bases
decreased by 6 compared with the prior-year month.
Tourism passengers declined 1.6% to 49,203
during July 2016 compared to 50,015 in July 2015.
Basic and diluted earnings per share from
continuing operations for the six-month period ended June 30, 2016
were decreased by $0.02 for an adjustment to the value of equity
put options related to both of our redeemable non-controlling
interests in consolidated subsidiaries. While net income on the
consolidated statement of comprehensive income is not decreased for
the valuation adjustment, earnings per share are required to be
calculated after decreasing net income for the change in valuation.
Basic and diluted earnings per share in the quarters-ended June 30,
2016 and 2015 and six-month period ended June 30, 2015 were
not impacted by the adjustment.
Second Quarter 2016 Conference
Call
The Company will discuss these results in a
conference call scheduled today at 4:30 p.m. Eastern. Interested
parties can access the call by dialing (855) 601-0049 (domestic) or
(720) 398-0100 (international) or by accessing the web cast at
www.airmethods.com. A replay of the call will be available at (855)
859-2056 (domestic) or (404) 537-3406 (international), access
number 52621462, for 3 days following the call and the web cast can
be accessed at www.airmethods.com for 30 days. Concurrently, the
Company will post a financial supplement that contains final
operating statistics on its website, www.airmethods.com.
Air Methods Corporation (www.airmethods.com) is
the global leader in air medical transportation. The Air Medical
Services Division is the largest provider of air medical transport
services in the United States. The United Rotorcraft Division
specializes in the design and manufacture of aeromedical and
aerospace technology. The Tourism Division is comprised of Sundance
Helicopters, Inc. and Blue Hawaiian Helicopters, which provide
helicopter tours and charter flights in the Las Vegas/Grand Canyon
region and Hawaii, respectively. Air Methods’ fleet of owned,
leased or maintained aircraft features approximately 500
helicopters and fixed wing aircraft.
Forward Looking Statements:
Forward-looking statements in this news release are made pursuant
to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Statements in this press release that are
“forward-looking statements”, including statements we make with
regard to (i) expected financial results for 2016; and (ii)
preliminary results of community-based transports, same-base
transports and weather cancellations and tourism passengers for
July 2016, are based on current expectations and assumptions that
are subject to risks and uncertainties. Actual results could differ
materially from those currently anticipated due to a number of
factors, including but not limited to, the Company’s completion of
its third quarter closing and review procedures, the size,
structure and growth of the Company's air medical services, United
Rotorcraft Division and Tourism Division; the collection rates for
patient transports; collection of future price increases for
patient transports; shifts in payer mix resulting in a decrease of
the number of privately insured transports, the continuation and/or
renewal of air medical service contracts; weather conditions across
the U.S.; development and changes in laws and regulations,
including, without limitation, increased regulation of the health
care and aviation industry through legislative action and revised
rules and standards; and other matters set forth in the Company's
filings with the SEC. The Company is under no obligation (and
expressly disclaims any obligation) to update or alter its
forward-looking statements, whether as a result of new information,
future events or otherwise.
Please contact Christina Brodsly at (303)
256-4122 to be included on the Company’s e-mail distribution
list.
– FINANCIAL STATEMENTS ATTACHED –
AIR METHODS CORPORATION AND SUBSIDIARIES |
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
|
|
(Amounts in thousands) |
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2016 |
|
|
December 31, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash
equivalents |
$ |
6,619 |
|
|
5,808 |
|
|
Trade receivables,
net |
|
414,470 |
|
|
376,300 |
|
|
Other current
assets |
|
83,724 |
|
|
91,251 |
|
|
|
|
|
|
|
|
|
|
Total current
assets |
|
504,813 |
|
|
473,359 |
|
|
|
|
|
|
|
|
|
|
Net property and
equipment |
|
866,950 |
|
|
799,656 |
|
|
Other assets, net |
|
435,889 |
|
|
278,693 |
|
|
|
|
|
|
|
|
|
|
Total assets |
$ |
1,807,652 |
|
|
1,551,708 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
Notes payable related
to aircraft pending long-term financing |
$ |
- |
|
|
2,955 |
|
|
Current portion of
indebtedness |
|
70,187 |
|
|
58,304 |
|
|
Accounts payable,
accrued expenses and other |
|
95,453 |
|
|
87,211 |
|
|
|
|
|
|
|
|
|
|
Total current
liabilities |
|
165,640 |
|
|
148,470 |
|
|
|
|
|
|
|
|
|
|
Long-term
indebtedness |
|
865,397 |
|
|
635,615 |
|
|
Other non-current
liabilities |
|
190,348 |
|
|
185,198 |
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
1,221,385 |
|
|
969,283 |
|
|
|
|
|
|
|
|
|
|
Redeemable
non-controlling interests |
|
155 |
|
|
8,550 |
|
|
|
|
|
|
|
|
|
|
Total stockholders'
equity |
|
586,112 |
|
|
573,875 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity |
$ |
1,807,652 |
|
|
1,551,708 |
|
|
|
|
|
|
|
|
|
|
AIR METHODS CORPORATION AND SUBSIDIARIES |
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
|
(Amounts in thousands, except share and per share
amounts) |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016 |
|
|
|
|
2015 |
|
|
|
|
2016 |
|
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Patient transport
revenue, net |
$ |
|
215,310 |
|
|
|
|
182,260 |
|
|
|
|
413,142 |
|
|
|
|
344,076 |
|
|
Air medical services
contract revenue |
|
|
34,175 |
|
|
|
|
38,775 |
|
|
|
|
67,819 |
|
|
|
|
79,414 |
|
|
Tourism revenue |
|
|
32,234 |
|
|
|
|
34,444 |
|
|
|
|
59,461 |
|
|
|
|
62,665 |
|
|
Product operations |
|
|
7,406 |
|
|
|
|
4,450 |
|
|
|
|
14,363 |
|
|
|
|
8,587 |
|
|
Dispatch and billing
service revenue |
|
|
3,447 |
|
|
|
|
3,673 |
|
|
|
|
7,185 |
|
|
|
|
7,159 |
|
|
Total revenue |
|
|
292,572 |
|
|
|
|
263,602 |
|
|
|
|
561,970 |
|
|
|
|
501,901 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
177,341 |
|
|
|
|
160,090 |
|
|
|
|
343,765 |
|
|
|
|
316,833 |
|
|
General and
administrative |
|
|
39,992 |
|
|
|
|
33,622 |
|
|
|
|
79,384 |
|
|
|
|
69,347 |
|
|
Depreciation and
amortization |
|
|
23,499 |
|
|
|
|
21,154 |
|
|
|
|
46,065 |
|
|
|
|
41,198 |
|
|
|
|
|
240,832 |
|
|
|
|
214,866 |
|
|
|
|
469,214 |
|
|
|
|
427,378 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
51,740 |
|
|
|
|
48,736 |
|
|
|
|
92,756 |
|
|
|
|
74,523 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(7,908 |
) |
|
|
|
(5,163 |
) |
|
|
|
(15,708 |
) |
|
|
|
(10,148 |
) |
|
Other, net |
|
|
464 |
|
|
|
|
1,172 |
|
|
|
|
774 |
|
|
|
|
1,536 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing
operations before income taxes |
|
|
44,296 |
|
|
|
|
44,745 |
|
|
|
|
77,822 |
|
|
|
|
65,911 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
(17,315 |
) |
|
|
|
(17,339 |
) |
|
|
|
(30,417 |
) |
|
|
|
(25,629 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing
operations |
|
|
26,981 |
|
|
|
|
27,406 |
|
|
|
|
47,405 |
|
|
|
|
40,282 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on discontinued
operations, net of income taxes |
|
|
- |
|
|
|
|
(340 |
) |
|
|
|
- |
|
|
|
|
(349 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
26,981 |
|
|
|
|
27,066 |
|
|
|
|
47,405 |
|
|
|
|
39,933 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income attributable to
redeemable non-controlling interests |
|
|
(1 |
) |
|
|
|
243 |
|
|
|
|
(30 |
) |
|
|
|
482 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable
to Air Methods Corporation and subsidiaries |
$ |
|
26,982 |
|
|
|
|
26,823 |
|
|
|
|
47,435 |
|
|
|
|
39,451 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per common
share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
$ |
|
0.70 |
|
|
|
|
0.69 |
|
|
|
|
1.21 |
|
|
|
|
1.01 |
|
|
Discontinued operations |
|
|
- |
|
|
|
|
(0.01 |
) |
|
|
|
- |
|
|
|
|
(0.01 |
) |
|
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
$ |
|
0.70 |
|
|
|
|
0.69 |
|
|
|
|
1.20 |
|
|
|
|
1.01 |
|
|
Discontinued operations |
|
|
- |
|
|
|
|
(0.01 |
) |
|
|
|
- |
|
|
|
|
(0.01 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares outstanding - basic |
|
|
38,396,241 |
|
|
|
|
39,272,325 |
|
|
|
|
38,600,029 |
|
|
|
|
39,267,222 |
|
|
Weighted average common
shares outstanding - diluted |
|
|
38,461,238 |
|
|
|
|
39,405,889 |
|
|
|
|
38,664,976 |
|
|
|
|
39,400,193 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIR METHODS CORPORATION AND SUBSIDIARIES |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
(Amounts in thousands) |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
|
|
June 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016 |
|
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
Cash flows
from operating activities: |
|
|
|
|
|
|
|
Net
income |
$ |
|
47,405 |
|
|
|
|
39,933 |
|
|
|
Loss from
discontinued operations, net of income taxes |
|
|
- |
|
|
|
|
349 |
|
|
|
Adjustments
to reconcile net income to net cash provided by operating
activities: |
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
|
46,065 |
|
|
|
|
41,198 |
|
|
|
|
Deferred income tax
expense |
|
|
7,003 |
|
|
|
|
2,491 |
|
|
|
|
Stock-based
compensation |
|
|
3,140 |
|
|
|
|
3,604 |
|
|
|
|
Loss on disposition of
assets |
|
|
178 |
|
|
|
|
269 |
|
|
|
|
Unrealized loss (gain)
on derivative instrument |
|
|
(970 |
) |
|
|
|
256 |
|
|
|
|
Loss from equity method
investee |
|
|
264 |
|
|
|
|
353 |
|
|
|
|
Changes in assets and
liabilities, net of effects of acquisitions |
|
|
(10,746 |
) |
|
|
|
19,933 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
continuing operating activities |
|
|
92,339 |
|
|
|
|
108,386 |
|
|
|
|
Net cash used by
discontinued operating activities |
|
|
- |
|
|
|
|
(47 |
) |
|
|
|
Net cash provided by
operating activities |
|
|
92,339 |
|
|
|
|
108,339 |
|
|
|
|
|
|
|
|
|
|
|
Cash flows
from investing activities: |
|
|
|
|
|
|
|
Acquisition
of subsidiaries |
|
|
(225,519 |
) |
|
|
|
- |
|
|
|
Acquisition
of property and equipment |
|
|
(57,675 |
) |
|
|
|
(48,355 |
) |
|
|
Payments
for hospital contract conversions |
|
|
- |
|
|
|
|
(43,481 |
) |
|
|
Buy-out of
previously leased aircraft |
|
|
(10,529 |
) |
|
|
|
(7,569 |
) |
|
|
Proceeds
from disposition of equipment |
|
|
5,189 |
|
|
|
|
2,664 |
|
|
|
Decrease
(increase) in other assets |
|
|
(6,542 |
) |
|
|
|
(10,741 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used by
continuing investing activities |
|
|
(295,076 |
) |
|
|
|
(107,482 |
) |
|
|
|
Net cash provided
(used) by discontinued investing activities |
|
|
- |
|
|
|
|
25 |
|
|
|
|
Net cash used by
investing activities |
|
|
(295,076 |
) |
|
|
|
(107,457 |
) |
|
|
|
|
|
|
|
|
|
|
Cash flows
from financing activities: |
|
|
|
|
|
|
|
Proceeds
from issuance of common stock, net |
|
|
803 |
|
|
|
|
408 |
|
|
|
Purchases
of common stock |
|
|
(38,288 |
) |
|
|
|
- |
|
|
|
Net
borrowings (payments) under line of credit |
|
|
8,000.00 |
|
|
|
|
- |
|
|
|
Payments
for financing costs |
|
|
(68 |
) |
|
|
|
(54 |
) |
|
|
Proceeds
from long-term debt |
|
|
271,792 |
|
|
|
|
55,321 |
|
|
|
Payment of
long-term debt and capital lease obligations |
|
|
(38,691 |
) |
|
|
|
(40,861 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided
(used) by continuing financing activities |
|
|
203,548 |
|
|
|
|
14,814 |
|
|
|
|
Net cash provided
(used) by discontinued financing activities |
|
|
- |
|
|
|
|
- |
|
|
|
|
Net cash provided
(used) by financing activities |
|
|
203,548 |
|
|
|
|
14,814 |
|
|
|
|
|
|
|
|
|
|
|
Increase
(decrease) in cash and cash equivalents |
|
|
811 |
|
|
|
|
15,696 |
|
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents at beginning of period |
|
|
5,808 |
|
|
|
|
13,165 |
|
|
|
|
|
|
|
|
Cash and
cash equivalents at end of period |
$ |
|
6,619 |
|
|
|
28,861 |
|
|
|
|
|
|
|
|
|
|
|
|
|
AIR METHODS CORPORATION AND
SUBSIDIARIES |
RECONCILIATION OF NET INCOME TO EBITDA |
(Amounts in thousands) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
Net income attributable
to Air Methods Corporation and subsidiaries |
$ |
26,982 |
|
|
|
26,823 |
|
|
$ |
47,435 |
|
|
|
39,451 |
|
|
Loss on discontinued
operations, net of income taxes |
|
- |
|
|
|
(340 |
) |
|
|
- |
|
|
|
(349 |
) |
|
Net income from
continuing operations attributable to Air Methods Corporation and
subsidiaries |
|
26,982 |
|
|
|
27,163 |
|
|
|
47,435 |
|
|
|
39,800 |
|
|
|
|
|
|
|
|
|
|
|
Interest expense * |
|
7,908 |
|
|
|
5,118 |
|
|
|
15,708 |
|
|
|
10,063 |
|
|
Income tax expense
* |
|
17,315 |
|
|
|
17,339 |
|
|
|
30,417 |
|
|
|
25,629 |
|
|
Depreciation and
amortization * |
|
23,499 |
|
|
|
21,061 |
|
|
|
46,065 |
|
|
|
41,017 |
|
|
Loss on disposition of
assets, net * |
|
508 |
|
|
|
531 |
|
|
|
178 |
|
|
|
269 |
|
|
|
|
|
|
|
|
|
|
|
EBITDA from continuing
operations |
$ |
76,212 |
|
|
|
71,212 |
|
|
$ |
139,803 |
|
|
|
116,778 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Excludes amounts
attributable to redeemable non-controlling interests |
|
|
|
|
|
|
|
CONTACTS: Peter P. Csapo, Chief Financial Officer, (303) 792-7561.
Air Methods Corp. (NASDAQ:AIRM)
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