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First there was Air Jordan:
Then there was Air Bud:
Now you may ask, is there a Method to all of this Air madness? Why of course there is.
On Friday I bought stock in Air Methods at 115.73. I will sell it in 4 to 6 weeks at 133.55. Here’s why I like AIRM:
It may not be flying as high as Air Jordan or Air Bud, but this stock is really moving. It’s up 85% in the last 52 weeks, yet its PE is only 19.6. Yup it’s another $$$MR. MARKET$$$ winner!
Air Methods Corporation, together with its subsidiaries, provides air medical emergency transport services and systems in the United States. It transports persons requiring intensive medical care from either the scene of accident or general care hospitals to highly skilled trauma centers or tertiary care centers. The company operates through three segments: Community-Based Services, Hospital-Based Services, and United Rotorcraft. The Community-Based Services segment provides air medical transportation services, including aircraft operation and maintenance, medical care, dispatch and communications, and medical billing and collection services. This segment operates 201 helicopters and 15 fixed wing aircraft in 29 states. The Hospital-Based Services segment offers air medical transportation services, and medically equipped helicopters and airplanes for hospitals. It operates 212 helicopters and 6 fixed wing aircraft in 34 states. The United Rotorcraft segment designs, manufactures, installs, and certifies modular medical interiors, multi-mission interiors, and other aerospace and medical transport products for domestic and international customers, as well as provides quality assurance and certification services. Air Methods Corporation was founded in 1982 and is headquartered in Englewood, Colorado.
Someone gets in an unfortunate accident. Time is of the essence. You have to get them to the hospital. You put the victim in a helicopter and an ER surgeon saves his life. How often have you read this story? Quite a bit, I’d be willing to wager. Many times it has a happy ending. The unsung hero in this saga is the helicopter pilot who safely transports the patient to the hospital. Oh yea, by the way, someone pays for that service. When someone’s life is on the line, do you want the USFL or the NFL? Do you want Budget Rent a Car or Hertz? Do you want Key Largo or do you want Montego Bay? AIRM is the largest provider of air medical transportation services in the estimated $2.5 Billion U.S. market, transporting approximately 115,000 patients in 2011 and operating in 43 states.
Just like it’s too late for another company to start a new version of Facebook. It’s too late for another company to start another Air Methods. They are the winner. The gorilla and their stock, and its owners, will continue to be rewarded for being king of the road. How do we know this?
The stock has delivered a remarkable average total return of 34% per year over the last ten years. The stock is currently trading at 16.6 times forward earnings estimates. The consensus five year growth rate, from our esteemed ANAL-ysts estimate, is 17%. The PEG ratio is right around 1, so it’s still a good value.
The company started with a single helicopter in Grand Junction, Colorado and grew through acquisitions, after going public in 1991. With each roll up they can grow accretive earnings while stepping up in overhead efficiency. Oh by the way, the trend in outsourcing has really helped AIRM. Hospitals no longer have in house transport. They pay for this service. AIRM is more than happy to bill them and arm and a leg. Almost seems fitting, doesn’t it? This is what is known as AIRM’s Hospital-Based Services (HBS) where the hospital owns the program, while AIRM provides the aviation services to the hospital as a vendor. These are long term fixed contracts and represents 27% of the company’s flight revenues.
Their most recent earnings were pornographically good…almost transformational. For the quarter, revenue increased 48% from $150.2 million to $222.5 million in the current-year quarter. For the six-month period, revenue increased 47% to $413.3 million, compared with $282.1 million in the prior-year six-month period. Financial results for the three and six months ended June 30, 2012 include operations associated with the Company's acquisition of OF Air Holdings and its subsidiaries (together, Omniflight) effective August 1, 2011.
For the quarter, net income increased 217% to $31.4 million, or $2.43 per diluted share, as compared with prior-year second quarter net income of $9.9 million, or $0.77 per diluted share. Net income for the six-month period increased 181% to $43.9 million, or $3.39 per diluted share, compared to $15.6 million, or $1.22 per diluted share, for the prior-year six-month period.
The Company also provided an update on preliminary July 2012 flight volume. Total community-based transports were 5,053 during July 2012, compared with 3,785 in July 2011, a 34% increase. The more efficient fleet and consolidated bases will certainly allow the company to operate more efficiently.
If you look at the TTM revenue of their Community Based Services Revenue (73% of their total revenue) as of June 30, 2012, you’re at $551 million vs 2012 revenues of $424 million. That’s very impressive growth.
The hidden fact that is most important is that their Net Revenue per Transport is rising significantly…up from $7,310 per transport in 2009 to $10,075 per transport in 2012. That’s something like 15% compounded annual increase during the last 3 years!! So if the price per trip is growing AND the volume of trips are growing, that’s a really good growth margin story, isn’t it?
As far as the excitement in the stock price goes, they’ve just completed their 2nd quarter with record revenues and earnings. Would you believe that the 3rd and 4th quarters are always their best quarters. Oh yea…it’s going to fun for shareholders around earnings season.
The regulatory environment is also positioned to help AIRM. For every 1% shift from uninsured to Medicaid, the EBITDA impact is almost $1 million to earnings. For every 1% shift from uninsured to Medicare, the EBITDA impact is almost $2.5 million to earnings. For every 1% shift from uninsured to insured, the EBITDA impact is almost $9 million to earnings!
The balance sheet is getting really healthy. Excess Cash Flow has grown from $83 million in 2009 to $175 million in TTM 6/30/12. With all of this extra cash, the company plans on paying off their aircraft leases, which will reduce their depreciation and interest expense. They will continue to pay down debt while continuing their M&A rampage. Their competitors are fragmented. They will absorb and conquer while continuing to pick up outsourcing business from hospitals.
AIRM also is positioned to pick up some FEMA revenue. Now I don’t wish a hurricane on anyone, but if there is one, AIRM will be there at the ready.
He’s not full of hot air, but the CEO is as bullish on AIRM as I am:
Aaron Todd, CEO, stated, "During our second quarter, growth in Same-Base Transports attributed to milder weather, increase in net revenue per community-based transport, decrease in maintenance expense per flight hour, and the accretive financial performance of our Omniflight acquisition have combined to create strong top-line and bottom-line results. The Company continues to enjoy solid organic growth as well. Excluding revenue generated from Omniflight operating bases, our revenue would have grown 22%. We remain very optimistic for continued strength in our operating results for the remainder of 2012, especially when considering that the second half of 2012 will benefit from a full six months of combined operations and the non-recurrence of transaction and severance costs associated with the Omniflight acquisition."
Up up and away!
I am HUGE!!
$$$MR. MARKET$$$
Then there was Air Bud:
Now you may ask, is there a Method to all of this Air madness? Why of course there is.
On Friday I bought stock in Air Methods at 115.73. I will sell it in 4 to 6 weeks at 133.55. Here’s why I like AIRM:
It may not be flying as high as Air Jordan or Air Bud, but this stock is really moving. It’s up 85% in the last 52 weeks, yet its PE is only 19.6. Yup it’s another $$$MR. MARKET$$$ winner!
Air Methods Corporation, together with its subsidiaries, provides air medical emergency transport services and systems in the United States. It transports persons requiring intensive medical care from either the scene of accident or general care hospitals to highly skilled trauma centers or tertiary care centers. The company operates through three segments: Community-Based Services, Hospital-Based Services, and United Rotorcraft. The Community-Based Services segment provides air medical transportation services, including aircraft operation and maintenance, medical care, dispatch and communications, and medical billing and collection services. This segment operates 201 helicopters and 15 fixed wing aircraft in 29 states. The Hospital-Based Services segment offers air medical transportation services, and medically equipped helicopters and airplanes for hospitals. It operates 212 helicopters and 6 fixed wing aircraft in 34 states. The United Rotorcraft segment designs, manufactures, installs, and certifies modular medical interiors, multi-mission interiors, and other aerospace and medical transport products for domestic and international customers, as well as provides quality assurance and certification services. Air Methods Corporation was founded in 1982 and is headquartered in Englewood, Colorado.
Someone gets in an unfortunate accident. Time is of the essence. You have to get them to the hospital. You put the victim in a helicopter and an ER surgeon saves his life. How often have you read this story? Quite a bit, I’d be willing to wager. Many times it has a happy ending. The unsung hero in this saga is the helicopter pilot who safely transports the patient to the hospital. Oh yea, by the way, someone pays for that service. When someone’s life is on the line, do you want the USFL or the NFL? Do you want Budget Rent a Car or Hertz? Do you want Key Largo or do you want Montego Bay? AIRM is the largest provider of air medical transportation services in the estimated $2.5 Billion U.S. market, transporting approximately 115,000 patients in 2011 and operating in 43 states.
Just like it’s too late for another company to start a new version of Facebook. It’s too late for another company to start another Air Methods. They are the winner. The gorilla and their stock, and its owners, will continue to be rewarded for being king of the road. How do we know this?
The stock has delivered a remarkable average total return of 34% per year over the last ten years. The stock is currently trading at 16.6 times forward earnings estimates. The consensus five year growth rate, from our esteemed ANAL-ysts estimate, is 17%. The PEG ratio is right around 1, so it’s still a good value.
The company started with a single helicopter in Grand Junction, Colorado and grew through acquisitions, after going public in 1991. With each roll up they can grow accretive earnings while stepping up in overhead efficiency. Oh by the way, the trend in outsourcing has really helped AIRM. Hospitals no longer have in house transport. They pay for this service. AIRM is more than happy to bill them and arm and a leg. Almost seems fitting, doesn’t it? This is what is known as AIRM’s Hospital-Based Services (HBS) where the hospital owns the program, while AIRM provides the aviation services to the hospital as a vendor. These are long term fixed contracts and represents 27% of the company’s flight revenues.
Their most recent earnings were pornographically good…almost transformational. For the quarter, revenue increased 48% from $150.2 million to $222.5 million in the current-year quarter. For the six-month period, revenue increased 47% to $413.3 million, compared with $282.1 million in the prior-year six-month period. Financial results for the three and six months ended June 30, 2012 include operations associated with the Company's acquisition of OF Air Holdings and its subsidiaries (together, Omniflight) effective August 1, 2011.
For the quarter, net income increased 217% to $31.4 million, or $2.43 per diluted share, as compared with prior-year second quarter net income of $9.9 million, or $0.77 per diluted share. Net income for the six-month period increased 181% to $43.9 million, or $3.39 per diluted share, compared to $15.6 million, or $1.22 per diluted share, for the prior-year six-month period.
The Company also provided an update on preliminary July 2012 flight volume. Total community-based transports were 5,053 during July 2012, compared with 3,785 in July 2011, a 34% increase. The more efficient fleet and consolidated bases will certainly allow the company to operate more efficiently.
If you look at the TTM revenue of their Community Based Services Revenue (73% of their total revenue) as of June 30, 2012, you’re at $551 million vs 2012 revenues of $424 million. That’s very impressive growth.
The hidden fact that is most important is that their Net Revenue per Transport is rising significantly…up from $7,310 per transport in 2009 to $10,075 per transport in 2012. That’s something like 15% compounded annual increase during the last 3 years!! So if the price per trip is growing AND the volume of trips are growing, that’s a really good growth margin story, isn’t it?
As far as the excitement in the stock price goes, they’ve just completed their 2nd quarter with record revenues and earnings. Would you believe that the 3rd and 4th quarters are always their best quarters. Oh yea…it’s going to fun for shareholders around earnings season.
The regulatory environment is also positioned to help AIRM. For every 1% shift from uninsured to Medicaid, the EBITDA impact is almost $1 million to earnings. For every 1% shift from uninsured to Medicare, the EBITDA impact is almost $2.5 million to earnings. For every 1% shift from uninsured to insured, the EBITDA impact is almost $9 million to earnings!
The balance sheet is getting really healthy. Excess Cash Flow has grown from $83 million in 2009 to $175 million in TTM 6/30/12. With all of this extra cash, the company plans on paying off their aircraft leases, which will reduce their depreciation and interest expense. They will continue to pay down debt while continuing their M&A rampage. Their competitors are fragmented. They will absorb and conquer while continuing to pick up outsourcing business from hospitals.
AIRM also is positioned to pick up some FEMA revenue. Now I don’t wish a hurricane on anyone, but if there is one, AIRM will be there at the ready.
He’s not full of hot air, but the CEO is as bullish on AIRM as I am:
Aaron Todd, CEO, stated, "During our second quarter, growth in Same-Base Transports attributed to milder weather, increase in net revenue per community-based transport, decrease in maintenance expense per flight hour, and the accretive financial performance of our Omniflight acquisition have combined to create strong top-line and bottom-line results. The Company continues to enjoy solid organic growth as well. Excluding revenue generated from Omniflight operating bases, our revenue would have grown 22%. We remain very optimistic for continued strength in our operating results for the remainder of 2012, especially when considering that the second half of 2012 will benefit from a full six months of combined operations and the non-recurrence of transaction and severance costs associated with the Omniflight acquisition."
Up up and away!
I am HUGE!!
$$$MR. MARKET$$$
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