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Erickson Air-Crane Inc. (EAC - Snapshot Report) announced fourth quarter 2012 adjusted loss of 3 cents per share lagging the Zacks Consensus Estimate of earnings of 14 cents per share.

Including expenses of 2 cents per share related to the Air Amazonia acquisition and a charge of 5 cents per share related to the previously disclosed dispute with the Greek tax authorities, GAAP loss per share reported by the company was 10 cents.

In full-year 2012, earnings per share were $1.56 per share, missing the Zacks Consensus Estimate of $1.76 per share.

Operational Highlights

Erickson Air-Crane clocked quarterly revenues of $39.1 million, up 27.2% year over year. The figure also surpassed the Zacks Consensus Estimate of $38 million. The top-line increase was driven by higher segment revenue.

In 2012, the company generated revenues of $180.8 million, up 18.4% year over year. The increase in revenue was driven by new firefighting contracts, an active fire season and the company’s expansion of infrastructure construction, especially in support of the oil-and-gas market in South America. The figure was almost in line with the Zacks Consensus Estimate of $180 million.

In the fourth quarter of 2012, revenues from Aerial Services were $31.4 million, up 14.4% year over year while Manufacturing / MRO segment generated revenues of $7.73 million, up133.3% year over year.

In the quarter under review, total operating expenses were $9 million, down 15.7% year over year. Adjusted EBITDA was $4.5 million versus a negative figure of $1.7 million in the year-ago quarter.

Operating income in the reported quarter was $1.5 million versus an operating loss of $3.6 million. Other income (expense), net in the quarter under review was ($0.802) million versus $0.476 million in the year-ago quarter. Therefore, the company reported a net loss of $0.9 million versus a profit of $8.6 million a year ago.

Financial Condition

Erickson Air-Crane Inc. ended full year 2012 with cash and cash equivalents of approximately $1.47 million, compared with $0.268 million at the end of full year 2011. Long-term debt fell to $26.7 million at the end of full year 2012 from $124.0 million at the end of full year 2011.

In 2012, net cash provided by (used in) operating activities was $28.2 million versus ($20.7) million in 2011. Capital expenditure in 2012 was $22.7 million versus $11.4 million at the end of 2011.

Our Take

Erickson Air-Crane’s earnings failed to meet the Zacks Consensus Estimate. However, the top-line beat the Zacks Consensus Estimate driven by new firefighting contracts and organic growth.

In 2012, 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 - Analyst Report). 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.

Also, the company is expected to complete the acquisition of Air Amazonia’s aerial services business from HRT Participacoes em Petroleo, S.A. in the near term. These acquisitions, going forward, continue to strengthen Erickson’s leading position in the heavy-lift market.

However, expected cutbacks in the U.S. defense budgets and political uncertainty remain a matter of concern for Erickson Air-Crane. The company presently retains a Zacks Rank #3 (Hold).

Stocks worthy of consideration in the aerospace and defense sector are The Boeing Company (BA - Analyst Report), and Lockheed Martin Corporation (LMT - Analyst Report), all 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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