Erickson reports third quarter profit
Aviation company Erickson persevered through a relatively mild fire season throughout the northern hemisphere and reduced Defense Department contract activity to increase its earnings in the third quarter.
The helicopter services and manufacturing firm builds and maintains heavy-lift Sikorsky air-cranes and tankers in the Rogue Valley.
Erickson said its net income grew 16.1 percent in the third quarter to $16.9 million, or $1.22 per share, compared with $14.5 million, or $1.05 per share, a year ago. Revenue fell 1.6 percent to $118.3 million from $120.2 million.
Erickson said growth in its firefighting and South American oil and gas business offset lower revenues from defense and security-related services.
Revenue from government contracts declined 8.1 percent to $85.4 million, compared with revenues of $92.9 million in the prior year period, as the U.S. military activity in Afghanistan wound down. Erickson also saw fewer flight hours in firefighting in Greece and the U.S., although it picked up more hours in Turkey.
Energy exploration activity pushed up commercial revenue 20.7 percent to $33.0 million, compared with $27.3 million a year ago.
Looking ahead to 2015, CEO Udo Rieder told analysts a number of factors bode well for Erickson.
"First, we have no reason to expect the same kind of weather-related pressure in our legacy air crane business that limited our performance in infrastructure construction and fire fighting in the early part of 2014," Rieder said. "What we saw in the first half of the year was definitely outside the historical norm. Second, we’ll see a good uptick in the contribution from long-term oil and gas contracts we signed and we expect to continue to grow that business. We expect this portion of our business to remain strong well beyond next year and for the non-seasonal revenue to make up a greater percentage of our total revenue mix as time goes on."
Erickson's flight time fighting fires declined to 2,079 hours in the third quarter from 2,198 in the similar quarter in 2013. For the first nine months of 2014, the company's firefighting hours declined to 2,914 from 3,249.
Asked if the U.S. government was changing its approach to fires or whether there were just fewer incidents, Rieder said both elements came into play.
"They are utilizing heavy lift capacity like ours on a more frequent basis these days than they have in the past," Rieder said. "So despite that overall reduction, that 10-year low that we talked about, we definitely got our share of flying hours. But then again having said that, compared to previous years, we are lower and it was definitely an aberration from what we typically see. We’re seeing I think greater utilization on the heavy lift resources and then at the same time the overall total number of hours is down."
Defense and security flight hours tumbled nearly 47 percent in the third quarter to 2,855 from 5,382. However, combined commercial timber harvesting and infrastructure construction hours increased modestly during the quarter to 2,122 from 2,082.