Evergreen Helicopters, Inc. (“EHI”), a wholly owned subsidiary of Erickson Air-Crane Inc. (EAC), has purchased five aircraft worth $10.1 million from a third party, which were earlier hired under lease. These aircraft comprise of two Bell 214STs, two Beechcraft 1900Ds and one Casa 212-CC.
Post-purchase there was no change to the company’s fleet size. It remained at 85 aircraft, which is a combination of 35 leased and 50 owned aircraft. Besides adding to the asset collateral base, the transaction would eliminate $3.0 million of annual lease expense and $12.2 million of total future lease obligations.
Recently, the company posted first quarter 2013 results with earnings and revenues above the Zacks Consensus Estimate. The top-line increase was driven by solid growth in Erickson’s infrastructure construction operation, mainly in the oil and gas sector.
As of Mar 31, 2013, Erickson had cash and cash equivalents of approximately $1.3 million. The company seems to be well utilizing its liquidity position. Recently, the company completed the acquisition of EHI from Evergreen International Aviation, Inc. The transaction payment comprises of $185 million cash, $17.5 million in unsecured promissory notes issued by Erickson Air-Crane and approximately four million convertible preferred shares of Erickson Air-Crane based on an agreed value of $11.85 per share worth $47.5 million. EHI operates a fleet of 65 aircraft of varying rotary-wing and fixed-wing types for a wide range of passenger transport and light, medium and heavy load-carrying missions. Moreover, EHI maintains a global presence with operations in North America, the Middle East, Africa, and Asia-Pacific.
Erickson is also set to acquire the Air Amazonia fleet and operations from HRT Oil & Gas. Besides adding to the product portfolio, these acquisitions will allow Erickson to emerge as a highly diversified, global company with opportunities to generate high-margin growth. The company presently retains a short-term Zacks Rank #1 (Strong Buy).
Other stocks that can also be taken into consideration are Northrop Grumman Corporation (NOC), Wesco Aircraft Holdings, Inc. (WAIR) and B/E Aerospace Inc. (BEAV), all with a Zacks Rank #2 (Buy).
B/E AEROSPACE (BEAV): Free Stock Analysis Report
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