Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)

Erickson Inc. (NASDAQ:EAC)

Q1 2014 Earnings Conference Call

May 8, 2014 16:30 ET

Executives

Zach Cotner - Investor Relations

Udo Rieder - President and Chief Executive Officer

Eric Struik - Chief Financial Officer

Analysts

Yair Reiner - Oppenheimer

JB Groh - D.A. Davidson

Ken Herbert - Canaccord Investment Bank

Ross Licero - Craig-Hallum Capital

Bob McAdoo - Imperial Capital

Operator

Good day, ladies and gentlemen. Thank you for standing by and welcome to the Erickson Incorporated First Quarter 2014 Earnings Conference Call. At this time, all participants have been placed in a listen-only mode and the lines will be opened for your questions following the presentation. Please note that this conference is being recorded.

I would now like to hand the conference over to Mr. Zach Cotner. Please go ahead, sir.

Zach Cotner

Thank you, operator, and good afternoon, everyone. Before we begin prepared remarks today, I would just like to remind you of the company’s Safe Harbor language. Information discussed during this conference call might be forward-looking in nature and is subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. To understand the factors that could cause these results to differ materially from those in the forward-looking statements, please refer to our latest Annual Report on Form 10-K and reports subsequently filed with the Securities and Exchange Commission.

In addition to financial results presented on a GAAP basis today, the company will also be discussing non-GAAP information that it believes to be useful in evaluating the company’s operating performance. Reconciliations of these non-GAAP financial measures to the closest GAAP equivalent can be found in the company’s earnings press release that was released this afternoon and was also filed with the SEC under Form 8-K. A replay of this call can be accessed by telephonically or through the webcast on the company’s website and the replay instructions were included in the company’s earnings press release this afternoon. Thank you for your attention to those items.

And this time, I’d now like to turn the call over to President and Chief Executive Officer of Erickson.

Udo Rieder

Okay, thank you, Zach and good afternoon and thank you all for joining us today. During the first quarter, we delivered exceptional operational performance to our customers. We captured significant new contracts and we built our backlog as well as our visibility into the remainder of the year. We are at this point well-positioned and we expect to see our results strengthen into the second half. We are increasingly confident in our view of the full year and we have reiterated our guidance for both revenues as well as profitability.

Our revenue growth in the first quarter was driven by our acquisitions, which also performed well. Our strategy to expand our fleet and create a comprehensive global services platform is being very well-received by our customers and we are capturing significant new business as a result. In the first quarter, we saw significant, but I want to emphasize temporary year-over-year decline in our Aircrane operations, which we will discuss in more detail. This was mostly due to timing of factors, which led us to maintain the current guidance for the full year.

As in past years, we do expect to see seasonality in our results this year. In addition to the seasonal fleet and firefighting as we move into the later quarters of the year, our results will reflect a shift to timing of weather delayed programs and the start of revenue streams from the new contracts in South America. Our Chief Financial Officer, Eric Struik will walk through the results in some detail, but I would like to go over the major line items in the quarter.

The first quarter, as you recall, is seasonally our smallest quarter, but a strong performance from both of our acquisitions enabled us to double last year’s revenues to $74 million. In our Air-Crane operations, we were up against an extraordinary compare to the first quarter of last year. The Australian fire season was not as strong and for both infrastructure construction and Canadian timber harvesting, poor weather delayed some revenue. As we execute the delayed work and as revenues under our new oil and gas contracts begin to flow, we expect to see sequential strengthening in our results as the year progresses.

The digital book revenue comparison in our Aircrane operations, which was in high margin programs, caused adjusted EBITDA to decline significantly compared to the $17 million pro forma last year. Although we did not reach last year’s surge level in Australian firefighting, we do expect to have good contract activity in infrastructure construction though it will be less concentrated in the first half of the year when compared to last year. And keep in mind, this work carries a very high contribution margin.

We gained a solid amount of visibility into the remainder of the year and we expect a strong second half. At this point, the intensity of the North American fire season is our largest source of variability. So, having said this, following our acquisitions, firefighting is now only expected to be roughly 25% of the total business this year as compared to 45% of the total two years ago and also about 30% of that – only 30% of that is dependent on flying hours. While there is always a risk of something unexpected, we either have high confidence or specific contract visibility into over 90% of our revenues for 2014. This greater diversification protects us from the variability in any single market and at the same time it gives us superior growth opportunities in every market.

So, I would like to highlight a few of the contracts wins that we have had over the past several months and they are characteristic of the new Erickson. On March 13, we announced the signing of a four year agreement with Hunt oil and gas to support their operations in Peru. So under this contract, we will supply one S-64 Aircrane and one Bell 214ST medium-lift helicopter that was previously operating in Afghanistan. This will include external load transport of drilling equipment and passenger and cargo transport. Also on April 7 we announced the singing of a five year agreement with PLUSPETROL to provide one S-64 Aircrane to support their operations in Peru. We also expect to release shortly the signing of other long-term contracts using mixed platform to further expand our presence in South America.

We are now essentially finished with our integration work and we anticipate that we even exceeded the $7 million in annual synergies we have identified previously and we have been able to maintain our target run rate for penalties now for five months. We believe there is also incremental opportunity and MRO that’s maintenance, repair and overhaul to pick up additional margin over time. To this end we signed MOUs with Airbus helicopters and with engine manufacturer, Snecma, to explore how we might cooperate to provide them and their customers with legacy MRO manufacturing support. We are making excellent progress in our composite main rotor blade program and we expect that to be flight testing at the end of this year. And we see significant cost reduction opportunities associated with the acquisition of the Pratt & Whitney type certificate that we also previously announced.

Taking costs out and maximizing contribution wherever possible is important especially as the competition for new DoD contractors is increasing. It’s fair to expect that both pricing and margin for these opportunities will see some pressure through the lower demand for flight hours in the Afghanistan region. We are of course not alone in a need to deploy those assets as effectively and as quickly as possible. Now that integration is complete we are very focused on making continuous improvement part of the corporate DNA and we will continue to share ideas, identify best practices and work to enhance and streamline our operations as well as maximize our growth. This includes moving our lowest performing assets to maximize their contribution in other venues.

I would also like to take a minute to welcome our newest member of our senior team Brian Clegg, who joined us this March. Brian comes to us right over 40 years of experience in the rotorcraft industry most recently as Head of Operations for CHC. We look forward to having the benefit of Brian’s experience and his expertise and we continue to optimize our fleet and diversify our operations around the world. Overall, I am just very pleased with the exceptional talent that we have been able to attract here at Erickson.

We are now focusing our energy on diversification by customer and end market. We are leveraging the expanded fleet and the certifications that we now have to penetrate new markets and win business that was unavailable prior to acquisitions. This includes increased work with existing customers as well as new ones. We have significantly enhanced our mix of services that we can offer to our customers and over the balance of the year and in future years we expect to drive growth and enable more diversified and balanced business.

So thanks for your attention today and now I will turn it over to Eric.

Eric Struik

Thank you, Udo and good afternoon to everyone. I would like to provide some further details on our first quarter financial performance. We reported net revenue of $74.2 million for the first quarter (indiscernible) 101% compared to the prior year’s first quarter driven entirely by contributions from the Evergreen and Air Amazonia acquisitions offset by lower revenue in our legacy Aircrane business.

Our government segment reported revenues of $55.9 million, an increase of 218% as compared to revenues of $17.6 million in the prior year period. This was comprised of defense and security revenue of $41.1 million versus zero last year driven by the Evergreen acquisition, firefighting revenue of $12.9 million compared to $14.6 million reflecting the tough comparison to record Australian firefighting revenues last year partially offset by the benefit of our new Turkish contract and transport and other government revenue of $2 million compared to $3.1 million last year reflecting the impact of the reduction incurring work to the Italian Forestry Service.

Our commercial segment reported revenues of $18.3 million in the quarter, down 5.5% as compared to $19.3 million last year. Timber harvesting revenue was $4.5 million compared to $6.2 million in the prior year driven by reduced demand for hardwood in Malaysia coupled with the decline in Canada largely due to weather. Infrastructure construction, including oil and gas, contributed revenue of $11 million compared to $11.5 million last year, primarily due to declines in North American spot construction caused by weather, also from the benefit of incremental revenue from the Air Amazonia acquisition. And manufacturing MRO delivered $2.7 million in revenue for the quarter compared to $1.6 million in the prior year.

First quarter SG&A expenses were $11.1 million. Excluding acquisition, integration and related expenses, adjusted SG&A was $10.3 million as compared to $7.4 million in the year ago period. The increase is primarily due to the increased cost associated with operating the larger fleet as well as incremental sales and marketing investment and legal fees associated with various projects, including the notes exchange.

Adjusted operating loss in the quarter was $2 million compared to adjusted operating income of $1.9 million in the prior year. The decline was primarily the result of lower contribution from the Aircrane fleet as well as startup costs related to the new contracts and increased pilot and field maintenance costs. Other increases in the quarter were $9.3 million compared to $1.8 million last year. This was primarily comprised of $8.8 million in interest on outstanding borrowings and amortized debt issuance cost.

Adjusted EBITDA for the quarter was $5.8 million compared to $7 million in last year’s first quarter. And adjusted EBITDAR, excluding aircraft lease expenses, was $10.7 million in the first quarter of 2014 compared to $7 million in last year’s first quarter. Adjusted EPS, excluding acquisition integration and other costs, were a loss of $0.52 for the first quarter compared to adjusted EPS of $0.01 in the prior year’s first quarter.

Now, I would like to provide some first quarter pro forma information. Our pro forma revenues in the prior year’s first quarter, which exclude Air Amazonia, were $81.7 million. The former Evergreen business reported $44.7 million in revenue last year as compared to $42.8 million in the current year first quarter. The $1.9 million decline is explained by lower activity in Afghanistan partially offset by the benefit of lower loss revenue or penalties.

Our Aircrane fleet generated record first quarter revenue of $36.9 million last year as compared to $25.9 million in the current year first quarter. The $11 million revenue decline was distributed across the business due to the lower Australian firefighting activity, construction and timber harvesting timing as well as the transition to new South American oil and gas business. W expect to pickup most of this work in the later months of the year. First quarter 2014 revenue of $25.9 million is more in line with revenue we had experienced in the first quarter of 2012.

Turning to pro forma adjusted EBITDA, pro forma adjusted EBITDA in last year’s first quarter was $17.2 million compared to adjusted EBITDA of $5.8 million this year. While we don’t break out the EBITDA by former businesses, I’d like to point out that due to the high fixed cost structure of the Aircrane fleet, the $11 million reduction in Aircrane revenues secured a very high contribution margin and drove the majority of the year-over-year decline in pro forma adjusted EBITDA. The revenue shortfall has largely been returned later in the year, where we have available Aircrane capacity. As the Aircrane revenue recovers, we expect a similar EBITDA conversion in our favor. Finally, the EHI acquisition, adjusted EBITDA contribution was down only modestly year-over-year.

Turning to our first quarter balance sheet, we had total debt of $454.8 million, including $83.6 million drawn on our revolver, $355 million in senior notes, and $16.2 million of subordinated debt at March 31, 2014. During the quarter, we were pleased to be able to upsize the revolving credit facility to $140 million providing incremental liquidity to the business. Our backlog at the end of the quarter stood at $494 million as we have added the recent long-term oil and gas contract wins.

And now, I would like to cover our 2014 financial guidance. For the full year, we are reiterating our prior guidance for sales and earnings. We continue to expect 2014 revenue to be between $385 million and $405 million in revenue, adjusted EBITDA to be in the range of $100 million to $110 million, adjusted EBITDAR to be between $120 million to $130 million and full year earnings per share in the range of $0.95 to $1.35. As Udo mentioned in his remarks we expect to see sequential strengthening in our results somewhat in the second quarter and most significantly through the second half of the year.

As a reminder pro forma revenues in the second quarter of last year were $84 million and adjusted EBITDA was $19 million. We expect similar results for Q2 of this year. This is driven by the timing of new contracts mostly in oil and gas offset by reductions in timber harvesting and defense and security revenues. We also expect significant profitability in our peak seasonal third quarter and a strong profitable fourth quarter. We have excellent visibility into our revenue forecast at this point and potential sources of variability to the forecast could be the intensity of the U.S. fire season, our ability to meet North American construction demand and potential changes in Department of Defense operational tempo.

This concludes our prepared remarks. Thank you all for participating. Operator, Udo and I are prepared to entertain questions at this point.

Question-and-Answer Session

Operator

Thank you, sir. (Operator Instructions) First, we will hear from Yair Reiner, Oppenheimer.

Yair Reiner - Oppenheimer

Great. Thank you. So first question on EHI it looks like the contribution from Afghanistan was down about $7 million quarter-on-quarter, I imagine that business is not really seasonal per se, can you give us a sense of the tempo of revenues at this stage and what you expect the full year contribution from Afghanistan could be?

Udo Rieder

So we are not prepared to talk about the full year outlook, but for the quarter pro forma revenues for Evergreen were down $2 million as I mentioned and essentially the gross revenue opportunity was down about $10 million and then we had offsetting good news on lower penalties lost revenue of $8 million, so the net impact ended up just being $2 million.

Yair Reiner - Oppenheimer

Got it. Okay. And then the gross margin in the quarter was a bit lower than what we have seen in the past, it sounds like part of that was operational deleveraging, was there anything else that impacted profitability?

Udo Rieder

I think that captures as you know the margin on the Aircrane is a little bit higher than the Evergreen business and given the conversion on the infrastructure construction which carries very high margins that essentially impacted the overall gross margin.

Yair Reiner - Oppenheimer

Got it. Okay. Just one more question and I will get back into queue. The free cash flow in the quarter seems to be negatively impacted by fairly high investment in PP&E and also in Aircrane support products, any update on how much you expect us to invest in CapEx over the course of the year and maybe free cash flow outlook for the year I know that three months ago it was still – the outlook was still somewhat influx?

Udo Rieder

We continue to project positive free cash flow for the year and for the quarter that free cash flow was a little bit more negative than we had anticipated, but this is our seasonally heaviest working capital consumption period. So it wasn’t out of the – out of our expectations.

Yair Reiner - Oppenheimer

Thank you.

Operator

Next, that is JB Groh, D.A. Davidson.

JB Groh - D.A. Davidson

Good afternoon guys.

Udo Rieder

Hi JB.

JB Groh - D.A. Davidson

You mentioned both of you guys mentioned weather in the timber harvesting and infrastructure construction businesses in Q1 is there anyway to A, quantify that and B, it sounds like you are maintaining the guidance, so I assuming you think you are going to get that back pretty rapidly, but is there anyway to sort of flush that out?

Udo Rieder

Yes, I will start and I will ask Eric to chime in as well. In March essentially we experienced in Canada late snow and just freezing temperatures. And so that affected our ability to number one get the timber cut and then number two to access the timber, that is down covered with snow is impossible to pullout. So, we had to wait for that to pass. And the overall number – and the second part of that is construction and that is our construction customers were unable to pour the concrete due to frozen conditions that are there. And so that is shifted into latter of Q2 and then the latter part of the year, which is where we have capacity currently to do that work. And then in terms of the total dollars that shifted out Eric’s total revenue dollars?

Eric Struik

I think you are seeing probably at $4 million to $5 million shift out. And then just on the timber harvesting JV, we lost about 20 days of available capacity in the first quarter that just due to the weather.

JB Groh - D.A. Davidson

That’s pretty significant, isn’t?

Udo Rieder

Yes, no, it is. And then you are thinking sort of general profitability of logging, that’s fairly consistent, but this infrastructure construction work is as we mentioned is very high contribution margin. And so that has – that passes through at a very high rate into EBITDA as well, which we want to make sure to explain, but the good news is as we shifted to different parts of the year, it comes back at a very high rate as well.

JB Groh - D.A. Davidson

Okay. And so you also mentioned, Udo, little bit of an update on the penalties, could you give us a little more detail on that?

Udo Rieder

Yes. It’s been going very well. And on previous calls, I mentioned that we are conservatively optimistic, let’s say and about sustaining it and didn’t want to claim victory until we were able to sustain it. Well, we sustained it now for five months. So we feel real good about that.

Eric Struik

And JB, I would add that the penalties incurred in the first quarter, were $0.5 million and we have been planning at a 250K per month run rate. So, they were about 250K below the anticipated full year run rate amount.

JB Groh - D.A. Davidson

Okay, great. Thanks.

Udo Rieder

Alright, thanks JB.

Operator

Next up from Canaccord Investment Bank is Ken Herbert.

Ken Herbert - Canaccord Investment Bank

Hi, good afternoon.

Udo Rieder

Hey, Ken.

Ken Herbert - Canaccord Investment Bank

I wondered if you could provide just a little more color in detail on the recent contract wins, Hunt and others down in Latin America and specifically what kind of ramp should we expect from those contracts? And is the margin profile on these contracts, how does that compare to existing contracts or other opportunities you have got?

Udo Rieder

Yes, I will start with that and start with Hunt is a great example of our strategy to be able to provide our customers with a one-stop shop. And these oil and gas customers in general, have to do a lot of work to maintain their supplier base in terms of things like audits, etcetera to ensure the safety and the reliability. So they like having fewer suppliers, fewer operators as long as they are safe and high reliability. And so we have been offering that and we are just really pleased with the success. So, Hunt was the very first one that we actually were able to demonstrate this combined fleet and in this case it was 64, the heavy lift Aircrane and as well as medium lift helicopter that as I mentioned have been previously flying in the Middle East. And so, in terms of the overall profitability of these contracts, it is not quite as high as DoD, but comparable to the other contracts that we have within the Aircrane fleet. And the other important point is every one of these contracts that we add on – that are annualized like this we were providing annualized support as opposed to seasonal helps to mitigate the seasonality that we have traditionally had in our business. So, it’s what drives the percent of firefighting down even more and we expect that to continue to decline, not because it’s shrinking, but because we have got a greater portion of these annualized contracts.

Then the other one is PLUSPETROL just started with, it’s one Aircrane. But there is an opening to add additional medium and light helicopters to that as well. And then we have several more that we are not at liberty to disclose the details on that that are in work and so bottom line is we are getting really good traction and really pleased about it.

Ken Herbert - Canaccord Investment Bank

That’s great. And then I guess it’s to the firefighting and the seasonality, but also the Afghanistan work, you did mention that you are seeing increased pricing pressure there and maybe things from a competitive standpoint stepping up an intensity, can you talk just a little bit more about that and maybe quantify what you are seeing in terms of the pricing pressure and how we should think about that I know you don’t want to talk about sort of maybe a full year run rate based on the first quarter, but from the pricing standpoint anymore detail will be helpful?

Udo Rieder

Yes. So, in terms of the kind of pressure that we are seeing, there is just more competition that’s out there, out of competitors that were previously in Afghanistan were up against at least in other DoD work not so much in commercial work because we have been in that work for a long time. The advantages that we have as we do typically command a higher pricing and that’s because of our extremely high reliability and relationships we have built with the customers and so that will help us continue to win contracts. But we are cognizant that with obviously more supply out there that we have to remain competitive and we are aware of it, but it is we are not prepared to quantify what that may be.

Ken Herbert - Canaccord Investment Bank

Okay, great. Thank you very much.

Udo Rieder

Alright. Thanks.

Operator

Mike Malouf from Craig-Hallum Capital is next.

Ross Licero - Craig-Hallum Capital

Yes. Hi. Thanks for answering my questions. This is Ross on for Mike.

Udo Rieder

Okay.

Ross Licero - Craig-Hallum Capital

Just wanted to get a little more color on the pipeline and could you tell me how much of that is factored into the guidance you gave and what are the ramp times that you expect for new business wins that maybe haven’t been announced yet?

Udo Rieder

Yes, so in terms of new business it’s not announced yet in the coming months. We have got I would say I’d expect that in almost all of our end markets. There is a lot of activity and so they will be announced maybe and that will be in the coming months. We are also working today on things that will happen next year as well to build that backlog going forward. And in terms of the overall backlog for this year as I have mentioned over 90% of our contract backlog is in the category of either contracted, awarded or just highly probable. And what I mean by that is some of it is renewals that we are confident that they will be renewed and we have no reason to believe that they won’t. And part of that is in things like flying hours, etcetera that we know there might be a little bit of variability, but as an example in firefighting, there maybe some variability in that. However, we know that every year always they are going to fly. So, it’s not a question that we are not there going to fly, so it’s just a question of that variability.

And given what’s happening now in the Western U.S. in terms of the drought in Southern Oregon and California. We have already got aircraft that has been deployed and they immediately began flying. And so the demand is definitely in there and now we are in the process of bringing all of our aircraft back to the U.S. to start on those fire contracts. Another thing that was publicly announced is the U.S. Forest Service announced that they were increasing their access to funds to the tune of $400 million because they are concerned about the fire season and so it’s that kind of information that gives us the confidence that we have got in the 90% plus kind of number.

Ross Licero - Craig-Hallum Capital

Okay, great. Thanks.

Udo Rieder

You bet.

Operator

(Operator Instructions) Next up is Steve Levenson, Stifel.

Steve Levenson - Stifel

Thanks. Good afternoon, Udo and Eric.

Udo Rieder

Hi, Steve.

Steve Levenson - Stifel

Can you tell us how many Aircranes were in the fleet right now? How many are under construction and if any more are planned?

Udo Rieder

Yes. So we have 20 in the fleet right now. One is getting heavy maintenance and that will be completed this year. And then we have – we are contemplating another Aircrane build, but we are also looking at the – as I mentioned here, the redeployment of some assets and more specifically of Aircranes that today are in the underperforming venues. And we want to take advantage of this new increased demand later this year and next year to redeploy those assets first, because obviously that’s a very inexpensive way for us to increase margin. And so we are pleased with the demand for Aircranes on one hand. On the other hand, there is some demand that is in excess to current capacity that we have. And so we will again first take advantage of the least and the most effective way to redeploy and then we will get into building. We started the process and it’s the build process. And it’s a – it will essentially go from end of this year into next year and it will be about one year before that’s completed.

Steve Levenson - Stifel

Okay, thank you. Of the other aircrafts that you have including the ones acquired with Evergreen, are there idle aircrafts and if I so I think I remember that you said there are some under lease and if they are under utilized you could return them. Are there plans along those plans right now?

Udo Rieder

Yes. We are working all fronts of our existing fleet. And we have got about 61 aircrafts that are on contract, 14 that are attractive, but not under contract. And we have got about 16 that were teeing up for return to service and then sale and then in some cases maybe heavy maintenance as well. And in terms of leases versus owned aircraft, all of our – the only leased aircraft that we have are the former Evergreen aircraft. And we are utilizing about – of the total lease cost about 75% of that – 75% of that four contracts, the support contracts that are active. About 25% still carry lease costs that are not on active contracts. And they are a priority obviously to reduce, to sell, or to renegotiate leases. What we are also doing is consolidating leases in order to be able to reduce the annual run rate of our lease costs. And all of that, it’s – it takes a little bit of time to do, but it’s going very well. We have got a new department in Eric’s organization of couple of guys that have strong industry ties and they are very familiar with this and so it’s going very well.

Steve Levenson - Stifel

Got it. Thank you very much.

Udo Rieder

You bet. Thanks for calling.

Operator

We will now hear from Bob McAdoo, Imperial Capital.

Bob McAdoo - Imperial Capital

Hi, guys. As I look at this the one table in your release as it has the hours and the dollars kind of split up by the types, I am trying to figure – I haven’t heard anything much about the Air Amazonia. I understand that’s (indiscernible) was very either not in the quarter or late in the quarter, but I don’t see or hear anything and I don’t know where to find or think about the whole Air Amazonia side of the thing. Where does that show up and how much was that in this quarter?

Eric Struik

Yes. Air Amazonia would show up in oil and gas and….

Bob McAdoo - Imperial Capital

I don’t see the line this is oil and gas, that’s my problem, I guess.

Eric Struik

It’s in infrastructure construction. So, it’s part of the infrastructure construction group.

Bob McAdoo - Imperial Capital

Okay.

Eric Struik

And the – I mean the number of hours I would have to get back to you Bob on that, I don’t have that off the top of my head.

Udo Rieder

I think the way maybe to think about it, you may recall when we announced that contract, it had guaranteed – included guaranteed revenues for the first year of approximately $29 million. And so I think – and that’s, it’s a fairly – it’s an annualized contract. So that’s fairly even split over the quarters.

Bob McAdoo - Imperial Capital

I guess, the fact that, that line is down versus last year, what was in there last year that it must have come down if we have added that in, somehow this doesn’t seem quite right?

Eric Struik

Yes. So the transition really to the new oil and gas contracts, so the contracts we have recently announced, we were flying on either HUDs or PLUSPETROL in the first quarter. Last year, we had a Pacific Stratus contract as well as a Repsol contract. And so…

Bob McAdoo - Imperial Capital

It’s just a year or at least….

Eric Struik

We continue to fly on Pacific Stratus, but the Repsol contract is in suspension and there maybe an opportunity later this year to pickup some hours there.

Udo Rieder

You may recall, Repsol gained a new partner in Peru. And so they wound down their partnership with Petrobras. And it was like in the third quarter of last year, but they also announced that they were ramping back up with a new Chinese partner. And that is in process right now. And then as Eric mentioned both Hunt Oil as well as PLUSPETROL were not – did not ramp up in the first quarter. We actually expected them to, but we had a few delays associated with getting the aircraft in and started. And both of those contracts have now started. And so – and I mean again we have got a few more that have yet to be announced.

Operator

And next up, we will hear from Yair Reiner, Oppenheimer.

Yair Reiner - Oppenheimer

Thank you. Just a quick follow-up, your interest rate, does it change at all with the enlarged revolver?

Eric Struik

Similar terms.

Yair Reiner - Oppenheimer

Got it. And what should we use as the number as interest rate for that revolver for the balance of the year?

Eric Struik

It’s about 5%.

Yair Reiner - Oppenheimer

Got it. Okay, thank you. That’s it.

Eric Struik

Okay.

Udo Rieder

Thank you again.

Operator

At this time, there are no further questions. I will turn the conference back to our speakers for any additional or closing remarks.

Udo Rieder

Okay. Well, thanks everybody for calling in and joining us today and for your continued interest in Ericson. I’d also like you to take just a minute and thank all of our hardworking employees at Ericson for their focus on safety and for their efforts to always exceed customer expectation. This gets us a lot of business and we are really proud of everything that they are doing. It’s an exciting business. And we have got a great team here, that’s very energized about the business. And I am – just personally I am very happy to be part of it and we look forward to calls in the future. Thanks everybody.

Operator

And ladies and gentlemen, that does conclude today’s program. We would like to thank you all for your participation.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Erickson's (EAC) CEO Udo Rieder on Q1 2014 Results - Earnings Call Transcript

Check out Seeking Alpha’s new Earnings Center »

This Transcript
All Transcripts