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Air Methods Reports Year 2014 Results and 1Q2015 Update

DENVER, Feb. 26, 2015 (GLOBE NEWSWIRE) -- Air Methods Corporation (Nasdaq:AIRM), the global leader in air medical transportation, reported financial results for the quarter and year ended December 31, 2014.

For the year, revenue increased 14% to $1,004.8 million compared to $879.2 million in the prior year. Income from continuing operations after minority interests increased 57% to $98.8 million, or $2.56 per diluted share, in the current year from $62.9 million, or $1.55 per diluted share, in the prior year. For the fourth quarter, revenue increased 12% to $249.2 million as compared with $222.4 million during the prior-year period. Earnings from continuing operations after minority interests increased 72% to $23.4 million, or $0.59 per diluted share, compared to $13.7 million, or $0.29 per diluted share, in the prior-year period.

The Company made the decision during the fourth quarter of 2014 to discontinue all operations conducted by its subsidiary, American Jets, Inc. (AJI), a long-range fixed wing medical transportation provider acquired in July 2013. Ongoing operating losses were a key factor in the decision to discontinue all of AJI's operations in late December 2014. Accordingly, after-tax losses of $2.0 million, or $.05 per share, and $3.9 million, or $0.10 per share, for the quarter and year ended December 31, 2014, respectively, have been excluded from results from continuing operations. The loss from this discontinued operation was $0.01 per diluted share for the quarter and year ended December 31, 2013.

The fourth quarter of 2013 included $2.4 million in pre-tax charges associated with severance for certain terminated employees, reserves for pending legal matters, impairment/disposition losses on aircraft and certain intangible assets, and transaction costs associated with acquisition activities. The current-year quarter includes $1.1 million in pre-tax charges from these activities.

Basic and diluted earnings per share for the quarter and year ended December 31, 2013, were reduced by $0.05 for the impact of an equity put option related to our redeemable non-controlling interest in one of our consolidated subsidiaries. The equity put option allows the non-controlling interest party to sell its ownership interest in a joint venture to the Company at a future date for a minimum pre-established amount. While net income on the consolidated statements of comprehensive income was not reduced by the amount of this equity put option, earnings per share are required to be calculated after reducing net income by the amount of the equity put option. Basic and diluted earnings per share for the year ended December 31, 2014 were increased by $0.05 associated with an adjustment to the value of the same equity put option during the third quarter of 2014.

Financial results for the quarter and year ended December 31, 2014, include operations associated with the Company's acquisition of Helicopter Consultants of Maui, LLC (doing business as Blue Hawaiian Helicopters) and certain of its affiliates (collectively, Blue Hawaiian) on December 13, 2013. Revenue generated from Blue Hawaiian during the quarter and year ended December 31, 2014 was $13.8 million and $56.3 million, respectively, compared with $2.8 million from December 13 through December 31 of 2013.

Fourth Quarter Highlights

Net patient transport revenue increased 15% to $174.3 million from $151.9 million in the prior-year quarter. Net revenue per patient transport increased 6% to $12,238 from $11,531 in the prior-year quarter. Total patient transports from community-based locations increased 9% to 14,209 from 13,054. Patient transports from community-based locations open greater than one year (Same-Base Transports) increased 71 transports, as compared with the prior-year quarter. Weather cancellations for these same base locations increased by 272 transports compared with the prior-year quarter. Air medical services contract revenue decreased by 8% to $41.9 million from $45.8 million.

Maintenance expense (excluding tour operations) for the fourth quarter of 2014 compared to the prior-year period decreased by 10%, or $2.5 million, while flight volume, including volume associated with hospital contracts, decreased by 2%. Fuel costs (excluding tour operations) per flight hour decreased by 14% during the current year quarter.

Revenue and divisional net loss from tour operations were $26.3 million and $0.4 million, respectively, for the quarter ended December 31, 2014, compared with revenue and net income of $14.2 million and $1.3 million, respectively, for the prior year quarter. Decrease in divisional net income was attributed, in part, to more severe weather in certain markets.

Revenue from our United Rotorcraft Division, excluding revenue generated from internal projects, decreased to $3.4 million from $9.3 million in the prior-year quarter, a 63% decrease. Excluding internal projects, the division generated a net loss of $2.7 million in the current-year quarter compared to a net loss of $1.0 million in the prior-year quarter.

The Company also provided an update on preliminary January flight volume and net revenue per patient transport. Total community-based transports during January 2015 were mostly unchanged at 4,534 compared with 4,542 during January 2014. Same-Base Transports for January decreased 335 transports, or 8%, while weather cancellations for these same bases increased by 365 transports. Preliminary net revenue per patient transport during January 2015 increased 15% to $12,740 compared with $11,074 during January 2014. The Company also announced that community-based transports for February to date reflect a 13% increase, due in part to reduction in weather cancellations month to date.

Aaron Todd, Chief Executive Officer, stated, "We have achieved a key milestone in exceeding $1 billion in revenue in 2014. Healthy growth in air medical flight volume throughout 2014 and quarter to date in 2015 is very encouraging. We have also seen less seasonality in our net reimbursement results during the winter months thus far, as well. Fuel price decreases and continued outsourcing activity within our hospital-based operations should continue to be key earnings growth drivers in 2015. We are also pleased to have generated strong earnings accretion from our helicopter tourism diversification in 2014, despite more severe weather conditions in both key markets."

The Company will discuss these results in a conference call scheduled today at 4:30 p.m. Eastern. Interested parties can access the call by dialing (855) 601-0049 (domestic) or (720) 398-0100 (international) or by accessing the web cast at www.airmethods.com. A replay of the call will be available at (855) 859-2056 (domestic) or (404) 537-3406 (international), access number90055964, for 3 days following the call and the web cast can be accessed at www.airmethods.com for 30 days. Concurrently, a financial supplement that contains operating statistics normally provided during previous earnings calls has been posted on its website, www.airmethods.com.

Air Methods Corporation (www.airmethods.com) is the global leader in air medical transportation. The Air Medical Services Division is the largest provider of air medical transport services in the United States. The United Rotorcraft Division specializes in the design and manufacture of aeromedical and aerospace technology. The Tourism Division is comprised of Sundance Helicopters, Inc. and Blue Hawaiian Helicopters, which provide helicopter tours and charter flights in the Las Vegas/Grand Canyon region and Hawaii, respectively. Air Methods' fleet of owned, leased or maintained aircraft features approximately 450 helicopters and fixed wing aircraft.

Forward-Looking Statements: Forward-looking statements in this news release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements in this press release that are "forward-looking statements," including statements made with regard to the Company's preliminary January and February 2015 operational and financial results, including those related to (i) total community-based patient transports, (ii) same base transports, (iii) weather cancellations, and (iv) net revenue per patient transport, and the anticipated impact of fuel price decreases and outsourcing activity, are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors, including but not limited to, the size, structure and growth of the Company's air medical services, United Rotorcraft Division and Tourism Division; the collection rates for patient transports; the continuation and/or renewal of air medical service contracts; weather conditions across the U.S.; development and changes in laws and regulations, including, without limitation, the impact of the Patient Protection and Affordable Care Act; increased regulation of the health care and aviation industry through legislative action and revised rules and standards; and other matters set forth in the Company's filings with the SEC. The Company is under no obligation (and expressly disclaims any obligation) to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.

About Non-GAAP Financial Information: This press release discusses EBITDA, which is not calculated in conformity with U.S. Generally Accepted Accounting Principles (GAAP). The Company defines EBITDA as earnings before interest, income taxes, depreciation, amortization and gain or loss on disposition of assets. A table is provided in this press release to reconcile such non-GAAP financial measure to net income, which is the most directly comparable financial measure prepared in accordance with GAAP. Such table below includes all information reasonably available to the Company at the date of this press release and adjustments that the Company can reasonably predict. Events that could cause the reconciliation to change include, but are not limited to, acquisitions and divestitures of businesses and goodwill and other asset impairments.

To supplement the Company's consolidated financial statements presented on a GAAP basis, management believes that this non-GAAP measure provides useful information about the Company's core operating results and thus is appropriate to enhance the overall understanding of the Company's past financial performance and its prospects for the future. Management believes the additions and subtractions from net income used to calculate EBITDA reflect the measurements that its bank creditors and third party stock analysts use in evaluating the Company. These adjustments to the Company's GAAP results are made with the intent of providing both management and investors a more complete understanding of the Company's underlying operational results and trends and performance. Management uses this non-GAAP measure to evaluate the Company's financial results. The presentation of non-GAAP measures is not meant to be considered in isolation or as a substitute for or superior to financial results determined in accordance with GAAP.

Please contact Christina Brodsly at (303) 256-4122 to be included on the Company's e-mail distribution list.

– FINANCIAL STATEMENTS ATTACHED –

AIR METHODS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(unaudited)
December 31, 2014 December 31, 2013
ASSETS
Current assets:
Cash and cash equivalents $ 13,165 $ 9,862
Trade receivables, net 293,985 237,856
Other current assets 92,691 92,832
Total current assets 399,841 340,550
Net property and equipment 721,981 664,842
Other assets, net 239,483 247,149
Total assets $ 1,361,305 $ 1,252,541
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable related to aircraft pending long-term financing $ 11,442 $ 2,616
Current portion of indebtedness 69,781 68,531
Accounts payable, accrued expenses and other 99,044 91,171
Total current liabilities 180,267 162,318
Long-term indebtedness 563,373 608,287
Other non-current liabilities 138,775 105,864
Total liabilities 882,415 876,469
Redeemable non-controlling interests 6,981 8,113
Total stockholders' equity 471,909 367,959
Total liabilities and stockholders' equity $ 1,361,305 $ 1,252,541
AIR METHODS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in thousands, except share and per share amounts)
(unaudited)
Quarter Ended Year Ended
December 31, December 31,
2014 2013 2014 2013
Revenue:
Patient transport revenue, net $ 174,343 151,923 676,213 585,459
Air medical services contract revenue 41,915 45,769 176,744 204,512
Tourism revenue 26,327 14,206 116,036 56,591
Product operations 3,383 9,279 24,844 24,305
Dispatch and billing service revenue 3,182 1,197 10,936 8,294
Total revenue 249,150 222,374 1,004,773 879,161
Expenses:
Operating expenses 151,098 145,268 603,251 565,605
General and administrative 34,743 30,092 137,477 112,502
Depreciation and amortization 20,100 19,794 80,567 79,514
205,941 195,154 821,295 757,621
Operating income 43,209 27,220 183,478 121,540
Interest expense (5,311) (5,154) (21,750) (20,323)
Other, net 522 172 1,110 1,136
Income from continuing operations before income taxes 38,420 22,238 162,838 102,353
Income tax expense (14,792) (8,846) (63,460) (39,752)
Income from continuing operations 23,628 13,392 99,378 62,601
Loss on discontinued operations, net of income taxes (1,974) (388) (3,908) (532)
Net income 21,654 13,004 95,470 62,069
Income (loss) attributable to redeemable non-controlling interests 179 (270) 599 (270)
Net income attributable to Air Methods Corporation and subsidiaries $ 21,475 13,274 94,871 62,339
Income per common share: 23,449 13,662 98,779 62,871
Basic
Continuing operations $ 0.60 0.30 2.57 1.56
Discontinued operations (0.05) (0.01) (0.10) (0.01)
Diluted
Continuing operations $ 0.59 0.29 2.56 1.55
Discontinued operations (0.05) (0.01) (0.10) (0.01)
Weighted average common shares outstanding:
Basic 39,211,958 39,042,683 39,163,080 38,923,206
Diluted 39,367,533 39,273,193 39,348,291 39,210,392
AIR METHODS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(unaudited)
Year Ended
December 31,
2014 2013
Cash flows from operating activities:
Net income $ 95,470 62,069
Loss from discontinued operations, net of income taxes 3,908 532
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 80,567 79,514
Deferred income tax expense 45,051 26,935
Stock-based compensation 4,134 3,560
Tax benefit from exercise of stock options (1,951) (3,015)
Loss on disposition of assets 455 519
Unrealized loss on derivative instrument 70 143
Loss from equity method investee 624 212
Changes in assets and liabilities, net of effects of acquisitions (51,027) (20,077)
Net cash provided by continuing operating activities 177,301 150,392
Net cash used by discontinued operating activities (1,672) (742)
Net cash provided by operating activities 175,629 149,650
Cash flows from investing activities:
Acquisition of subsidiaries (3,182) (65,641)
Acquisition of property and equipment (119,753) (62,410)
Buy-out of previously leased aircraft (28,751) (57,458)
Proceeds from disposition of equipment 19,001 20,471
Decrease (increase) in other assets 1,316 (6,660)
Net cash used by continuing investing activities (131,369) (171,698)
Net cash provided (used) by discontinued investing activities 97 (3,394)
Net cash used by investing activities (131,272) (175,092)
Cash flows from financing activities:
Proceeds from issuance of common stock, net 1,422 1,749
Tax benefit from exercise of stock options 1,951 3,015
Net borrowings (payments) under line of credit (12,000) (55,000)
Payments for financing costs (126) (868)
Proceeds from long-term debt 89,911 194,628
Payment of long-term debt, notes payable, and capital lease obligations (122,310) (112,380)
Proceeds from non-controlling interests 98 342
Net cash provided (used) by continuing financing activities (41,054) 31,486
Net cash provided (used) by discontinued financing activities -- --
Net cash provided (used) by financing activities (41,054) 31,486
Increase (decrease) in cash and cash equivalents 3,303 6,044
Cash and cash equivalents at beginning of period 9,862 3,818
Cash and cash equivalents at end of period $ 13,165 9,862
AIR METHODS CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO EBITDA
(Amounts in thousands)
(unaudited)
Quarter Ended Year Ended
December 31, December 31,
2014 2013 2014 2013
Net income attributable to Air Methods Corporation and subsidiaries $ 21,475 13,274 94,871 62,339
Loss on discontinued operations, net of income taxes (1,974) (388) (3,908) (532)
Net income from continuing operations attributable to Air Methods Corporation and subsidiaries 23,449 13,662 98,779 62,871
Interest expense * 5,272 5,154 21,604 20,323
Income tax expense * 14,792 8,846 63,460 39,752
Depreciation and amortization * 20,013 19,768 80,225 79,488
Loss (gain) on disposition of assets, net * (572) 193 456 519
EBITDA from continuing operations $ 62,954 47,623 264,524 202,953
* Excludes amounts attributable to redeemable non-controlling interests

CONTACT: Trent J. Carman, Chief Financial Officer, (303) 792-7591

Source:Air Methods Corporation