Erickson Air-Crane Incurs Q1 Loss, Shares Down - Analyst Blog

Erickson Air-Crane Inc. EAC incurred first quarter 2014 adjusted loss of 52 cents per share as against a profit of 1 cent per share in the year-ago quarter. The quarterly figure lagged the break-even Zacks Consensus Estimate by a wide margin.

This evoked a negative market reaction with the shares losing 4.46% to close at $15.00 on May 9.

Total Revenue

Erickson Air-Crane registered quarterly revenues of $74.0 million, up 100.5% from the year-ago level of $36.9 million. The improved result was driven by strategic acquisitions, partially offset by lower revenues for infrastructure construction and firefighting.  

However, the quarterly figure failed to meet the Zacks Consensus Estimate of $75.0 million by 1.3%.

Segment Details

Government Segment: Sales in the reported quarter increased 218.0% to $55.9 million from $17.6 million in the first quarter 2013 due to contributions from acquisitions, offset by lower firefighting revenues in Australia.

Commercial Segment: Sales decreased 5.5% to $18.3 million from $19.3 million in the first quarter 2013 due to lower timber harvesting revenues primarily in Malaysia together with lower North American infrastructure construction primarily due to bad weather. Partial offsets were increases in South American infrastructure construction and higher revenues in MRO as compared to the prior-year period.

Highlights of the Release

On the cost front, total operating expenses were $11.1 million in the reported quarter, up 15.5% year over year. Cost of revenues also surged 138.2% to $65.9 million from $27.7 million in the first quarter of 2013.

Adjusted EBITDA was $5.8 million, down 17.2% from the year-ago quarter. Operating loss in the reported quarter was $2.8 million versus $0.3 million in the year ago quarter.

Erickson entered into new multi-year contracts with Hunt Oil Exploration and Production Company of Peru, L.L.C., Sucursal de Peru (“Hunt Oil”) during the first quarter. Through this contract the company expects to generate a strong revenue stream in South America. Thanks to this contract and other new multi-year contracts, the company reported a moderate backlog of $494.0 million at the end of the first three months of 2014.

Financial Condition

Erickson ended the first quarter 2014 with cash and cash equivalents of approximately $3.2 million, compared with $1.9 million at the end of Dec 31, 2013.

Long-term debt (excluding current portion) increased marginally to $16.2 million at the end of Mar 31, 2014 from $16.1 million at 2013 end.

2014 Guidance

Erickson reaffirmed its 2014 guidance supported by the solid first quarter 2014 backlog. It maintained its prior revenue guidance range of $385.0 million to $405.0 million and adjusted EBITDA guidance range of $100.0 million to $110.0 million. The guidance for earnings per share is also maintained in the range of 95 cents to $1.35 based on 13.8 million of expected shares outstanding.

Other Releases

Lockheed Martin Corp. LMT announced first quarter 2014 earnings of $2.87 per share, surpassing the Zacks Consensus Estimate of $2.52 by 13.9%.

Boeing Co. BA reported first quarter 2014 adjusted earnings of $1.76 per share, beating the Zacks Consensus Estimate of $1.54 by 14.3%.

Embraer SA's ERJ first-quarter 2014 earnings of 34 cents per American Depository Shares ADS spiked 78.9% from 19 cents per ADS in the prior-year quarter.

Zacks Rank

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