WAIR Wesco Aircraft Holdings Inc

Erickson Air-Crane Inc. (EAC) posted first quarter 2013 adjusted earnings of 1 cent per share, ahead of the Zacks Consensus Estimate of a loss of 13 cents.

Including expenses of 14 cents per share related to the Air Amazonia acquisition, the company reported a loss of 13 cents per share in the first quarter of 2013.

The company has started the year on a positive note led by its impressive Aircrane operations.

Operational Highlights

Erickson Air-Crane registered record high quarterly revenue of $36.9 million, up 33.8% year over year. The figure also surpassed the Zacks Consensus Estimate of $33.0 million. The top-line increase was driven by a serious fire season in Australia, solid growth in Erickson’s infrastructure construction operation, mainly in the oil and gas sector, and an active quarter for timber harvesting.

In the first quarter of 2013, revenues from Aerial Services were $35.2 million, up 40.3% year over year while the Manufacturing / MRO segment generated revenues of $1.7 million, down 31.2% year over year.

On the cost front, total operating expenses were $9.6 million, up a considerable 68.4% year over year. Cost of revenues also surged 17.4% to $27.7 million from $23.6 million in the first quarter of 2012.

Adjusted EBITDA was approximately $7.0 million versus $1.7 million in the year-ago quarter. Operating income (excluding $2.3 million of acquisition-related expenses) in the reported quarter was $1.9 million versus an operating loss of $1.7 million in the same period last year.

Financial Condition

Erickson ended the first quarter 2013 with cash and cash equivalents of approximately $1.3 million, compared with $1.5 million at the end of 2012.

Long-term debt climbed to $107.9 million at the end of the quarter from $26.7 million at 2012 end.

In the first quarter 2013, net cash used in operating activities was $6.3 million versus $2.3 million in the first quarter of 2012.

Guidance

Erickson expects its top line in the band of $325.0 million to $335.0 million for 2013. Adjusted EBITDA is expected to be between $93.0 million and $101.0 million.

However, considering the Evergreen Helicopters, Inc. acquisition, the company expects 2013 revenues in the range of $385.0 million to $395.0 million and adjusted EBITDA in the range of $108.0 million to $116.0 million.

Update on Acquisitions

In Mar 2013, Erickson entered into a stock purchase agreement with Evergreen International Aviation, Inc. (“EIA”) for the purchase of Evergreen Helicopters, Inc. (“EHI”) for $250 million. The company wrapped up this acquisition on May 2, 2013.

The acquisition of EHI provides Erickson with an incremental fleet of 64 aircrafts that comprise both helicopters and fixed-wing airplanes. This diverse fleet serves a wide range of customers which include significant passenger transport and airlift services for the US military.

In Nov 2012, the company had announced the acquisition of Air Amazonia from HRT Oil & Gas. The company expects to close the Air Amazonia transaction in the second quarter of 2013.

 With Air Amazonia and EHI, the combined business would operate a diverse fleet of 100 aircrafts. These acquisitions would bring in synergies and significant opportunities for incremental growth in the near as well as long term. Moreover, the combination of these businesses would diversify end markets, regions serviced, mission capabilities and aircraft types.

Last year, the company completed the purchase of the Sun Bird Aircraft and associated spare parts inventory and accessories from SDG&E, a subsidiary of Sempra Energy (SRE). The Sun Bird is an Erickson model S-64F Aircrane that was originally purchased by SDG&E from Erickson Air-Crane in 2009. This transaction will allow the company to take advantage of market opportunities in 2013 and beyond in the oil-and-gas and power line construction sectors of the business in South America and elsewhere.

Zacks Rank

The company presently retains a Zacks Rank #3 (Hold).

Stocks worthy of consideration in the aerospace and defense sector are Northrop Grumman Corporation (NOC) and Wesco Aircraft Holdings, Inc. (WAIR), both with a Zacks Rank #2 (Buy).

Erickson Air-Crane Inc. manufactures and operates Erickson S-64 Aircrane (S-64) heavy-lift helicopters. The company operates through two segments: Aerial Services and Aircraft Manufacturing and Maintenance, Repair, and Overhaul (Manufacturing/MRO).
 

 
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