Erickson Air-Crane sees a jump in earnings

Company says it plans to acquire air logistics unit of HRT Participaes em Petroleo S.A.
Heavy-lift helicopter manufacturer and operator Erickson Air-Crane reported a 53 percent boost in third-quarter earnings.Jamie Lusch

A busy fire season led to increased profits for Erickson Air-Crane as the heavy-lift helicopter operator and manufacturer reported a 53 percent boost in third-quarter earnings to $17.6 million, or $1.80 per share.

Erickson, which manufactures, maintains and makes spare parts for its fleet of Sikorsky-64s at its Willow Springs Road complex in Central Point, reported a 29 percent revenue gain over the third quarter of 2011 to $76.3 million.

The company saw a 31 percent increase in its aerial service revenue to $69.6 million as revenue flight hours rose 41 percent to 5,843 hours.

"It was an extraordinarily active firefighting season," said Udo Rieder, Erickson's president and chief executive officer. "The strength of our revenue gains was broad-based and our market share increased because of new contracts with the U.S. Forest Service."

The company is on course to increase its global market share as well.

Erickson Air-Crane said Tuesday it plans to acquire the air logistics unit of HRT Participaes em Petroleo S.A., one of the largest independent oil and natural gas explorers and producers in Brazil.

"It plays well to our unique capabilities," Rieder said during a conference call with analysts on Wednesday.

He said the deal for 14 medium and light helicopters will significantly increase Erickson's capability in South American markets, adding revenue and making good use of the company's capital.

"It will reduce the impact of the seasonality of our business and expand our footprint in the gas and oil industry," Rieder said.

HRT owns seven Sikorsky-61 aircraft, which are smaller but have many similarities to Erickson's current fleet.

"We've always talked about adding medium-lift capability to our operation," Rieder said. "It's complementary to our business. The S-61s are little sisters to the air-cranes. Many of the parts are similar and some are identical — the cockpits are the same. This would give us quite a bit more capability at our Central Point facility. This will provide a platform to bring in S-64s and exchange equipment fairly quickly in Brazil and Peru."

He said the company is unsure of what it will do with the Bell 212s and Eurocopter AS-350s that are part of the deal.

"We have the option to move them anywhere we want near-term," he said. "We'll wait and see what the demand is, but we'll pretty much absorb all the aircraft there."

The deal, however, isn't expected to close until the second half of 2013, Rieder said, because of "fairly complex regulatory requirements and licensing matters."

A previous relationship with HRT ended a year ago while Erickson was gearing up for its initial public offering.

"Our performance with HRT was extraordinary," Rieder said. "What led to the deal is they liked what we did with air-cranes and how we operated. The only issue in the end was that they were originally going to buy a 64. They ended up making the decision not to buy as part of a grander decision to let them focus on oil and gas and let someone else focus on helicopter operations."

None of HRT's fixed-wing aircraft or Africa-based aircraft are part of the deal, he said. "Helicopters are the only source of moving people and equipment in and out of the Amazon."

South American contracts span the entire year, he said, unlike seasonal operations in the Mediterranean region and Australia. "There's fairly consistent flying, five, six or seven hours per day," Rieder said. "In some cases we had to double our crew, we were flying so much. It's very complementary to the rest of our business."

Construction revenue jumped 40 percent, timber harvest revenue grew 7 percent despite continued soft demand for wood from Malaysia, and pilot crew revenue improved 5 percent.

The company said its deal with San Diego Gas and Electric to repurchase a helicopter and related spare parts inventory and to provide firefighting service to the company under a new contract will improve per-share earnings by 35 cents in the fourth quarter.



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