Evergreen Helicopters, a wholly owned subsidiary of Erickson Air-Crane Inc. (EAC), has extended its contract with Fluor Corp. The value of the contract is more than $100 million. Fluor Corporation is engaged in engineering, procuring, constructing, maintaining and is involved in project management services.
Per the contract, the company will provide multiple rotary wing aircraft for cargo as well as transport mission requirements. These aircrafts will be used by Afghanistan forces. This contract extension would continue to meet significant, urgent and ongoing needs of various aviation services work in Afghanistan.
We note that the company had acquired Evergreen Helicopters in May this year.
Recently, the company also extended its contract with U.S. Transportation Command to provide essential services to support overseas operations in Afghanistan. Taken together, both these contract extensions would bring in $125 million.
In Mar 2013, the company renewed its contracts with Helifor Canada (“Helifor”), an affiliate of Columbia Helicopters, and Western Forest Products Inc. (“Western”). Per this renewal, Erickson will continue to provide Helifor with logging services and transmission tower construction in western Canada for $8 million to $10 million. Erickson will continue to provide aerial support for year-round selective logging efforts to Western for $10 million to $13 million.
Erickson Air-Crane manufactures and operates Erickson S-64 Aircrane (S-64) heavy-lift helicopters. The series of contract renewals at Erickson Air-Crane speaks for the confidence of its customers in its services.
Currently, the company is progressing well with ways that are generating revenues. Contract renewals and acquisitions are driving this growth. Strategic acquisitions, going forward, would continue to strengthen Erickson’s leading position in the heavy-lift market.
The company has built a good position in the market by the dint of its efforts. Recently, after a successful negotiation with financial institutions Erickson Air-Crane enhanced its five-year revolving credit facility to $125 million. On May 2, the company entered into a $100 million, five-year revolving credit facility with a group of financial institutions. This credit facility will carry an interest rate of 325-450 basis points over the London Interbank Offered Rate. Erickson Air-Crane intends to use this credit facility for general corporate purposes.
The company presently retains a short-term Zacks Rank #1 (Strong Buy). Other stocks to consider are Wesco Aircraft Holdings, Inc. (WAIR), Alliant Techsystems Inc. (ATK) and Raytheon Co. (RTN), all with a Zacks Rank #2 (Buy).
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