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$EAC Acquisitions Imply Doubled Share Value

|Includes: Erickson Air-Crane (EAC)

EAC Ericson Air Crane

June 3rd, 2013

EAC has secured financing to acquire two companies that will approximately double the current earnings. The financing is such that these acquisitions will have an immediately accretive effect on the company's value.

"At a purchase price multiple of less than 5.0x EHI's 2012 Adjusted EBITDA, the acquisition of EHI is expected to be immediately accretive to EAC's earnings per share." -press release

Comparing EAC to other air services companies:

Company EPS 1yr Share Price P/E 1yr
EAC (pre) $1.54 $24.75 10.31
EAC (post) >$3.00    
CKH $2.20 $77.86 15.27
BRS $4.43 $63.08 11.60
AIRM $1.96 $37.19 13.23
EPS & P/E are forward 1-year estimates

Assuming a conservative $3.00 EPS for 2013:
BRS multiple implies $3 x 11.6 = $34.80
CKH multiple implies $3 x 15.27 = $45.81

EAC shares outstanding: ~9.7 million (before acquisitions)
Float: 2.8 million shares (before acquisitions)
Dilution: 4 million shares
Shares Outstanding (after acquisitions): ~13.7 million

Key Findings:
EAC (2012) EPS was $1.54.

The acquisitions more than double the company's size.

EAC EBITDA (2012) was $44M, but would have been $108M with the acquisitions. Therefore, EPS would have been over $3.00 per share if the acquisitions already happened.

"We believe that there are significant opportunities for incremental growth and efficiency embedded within the global operational platform we are assembling." -CEO Udo Rieder

This means the acquisitions could lead to even higher EBIDTA due to efficiencies and synergy between the core business and the acquisitions.

Disclosures: I am long EAC. I have no business relationship with any company whose stock is mentioned in this article.

Disclosure: I am long EAC.