PHI, Inc. Announces Results For The Third Quarter Ended September 30, 2016

PHI, Inc. (The Nasdaq Global Market: PHII (voting) PHIIK (non-voting)) today reported financial results for the quarter ended September 30, 2016.

Consolidated operating revenues for the quarter ended September 30, 2016 were $158.1 million, compared to $214.7 million for the quarter ended September 30, 2015, a decrease of $56.6 million. Oil and Gas segment operating revenues decreased $43.6 million for the quarter ended September 30, 2016, related primarily to decreased aircraft flight revenues for all model types resulting predominately from fewer aircraft on contract and decreased flight hours. Air Medical segment operating revenues decreased $11.0 million due principally to decreased traditional provider program revenues resulting from reduced overseas operations. Technical Services segment operating revenues decreased $2.0 million due primarily to a decrease in technical services provided to a third party customer.

Oil and Gas segment loss was $7.0 million for the quarter ended September 30, 2016, compared to segment profit of $10.3 million for the quarter ended September 30, 2015. The decrease in segment profit was due to decreased revenues, which were only partially offset by decreased expenses.

Air Medical segment profit was $14.9 million for the quarter ended September 30, 2016, compared to a segment profit of $17.7 million for the quarter ended September 30, 2015. The $2.8 million decrease in profit is attributable to the decreased operating revenues, partially offset by decreased expenses.

Technical Services segment profit was less than $0.1 million for the quarter ended September 30, 2016, compared to segment profit of $0.6 million for the quarter ended September 30, 2015. The $0.5 million decrease in profit is attributable to decreased revenues described above, partially offset by decreased expenses.

Consolidated operating revenues for the nine months ended September 30, 2016 were $489.2 million, compared to $617.5 million for the nine months ended September 30, 2015, a decrease of $128.3 million. Oil and Gas segment operating revenues decreased $105.3 million for the nine months ended September 30, 2016, related primarily to decreased aircraft flight revenues for all model types resulting predominately from fewer aircraft on contract and decreased flight hours for these aircraft. Air Medical segment operating revenues decreased $19.5 million due principally to decreased traditional provider program revenues resulting from reduced overseas operations. This decrease was partially offset by increased revenues attributable to our independent provider programs, driven principally by increased transports. Technical Services segment operating revenues decreased $3.5 million due to fewer services provided to a third party customer.

Oil and Gas segment loss was $17.8 million for the nine months ended September 30, 2016, compared to segment profit of $40.5 million for the nine months ended September 30, 2015. The decrease in segment profit was due to decreased revenues, which were only partially offset by decreased expenses.

Air Medical segment profit was $39.2 million for the nine months ended September 30, 2016, compared to a segment profit of $43.0 million for the nine months ended September 30, 2015. The decrease in profit is primarily attributable to decreased revenues, which were only partially offset by the decreased aircraft operating expenses.

Technical Services segment profit was $3.8 million for the nine months ended September 30, 2016, compared to $1.8 million for the nine months ended September 30, 2015. The $2.0 million increase in profit is primarily due to decreased expenses, partially offset by decreased revenues described above.

For additional information, please see (i) the attachments hereto and (ii) Form 10-Q for the quarter ended September 30, 2016 that we filed today with the U.S. Securities and Exchange Commission.

PHI provides helicopter transportation and related services to a broad range of customers including the oil and gas and air medical industries, and also provides third-party maintenance services to select customers. PHI Voting Common Stock and Non-Voting Common Stock are traded on The NASDAQ Global Market (symbols PHII and PHIIK).
       
PHI, INC. AND SUBSIDIARIES
Consolidated Statements of Operations

(Thousands of dollars and shares, except per share data)
(Unaudited)
 
Quarter Ended Nine Months Ended
September 30, September 30,
2016     2015 2016     2015
 
Operating revenues, net $ 158,093 $ 214,733 $ 489,245 $ 617,477
 
Expenses:
Direct expenses 144,938 182,064 449,909 520,099

Selling, general and administrative expenses
  13,381     11,575     36,832     34,859  
Total operating expenses 158,319 193,639 486,741 554,958
 
Loss (gain) on disposal of assets 85 (165 ) (3,854 ) (238 )

Equity in loss of unconsolidated affiliate
  198     75     274     249  
Operating (loss) income (509 ) 21,184 6,084 62,508
 
Interest expense 7,719 7,366 22,792 21,691
Other income, net   (462 )   (472 )   (1,571 )   (1,501 )
  7,257     6,894     21,221     20,190  
 
(Loss) earnings before income taxes (7,766 ) 14,290 (15,137 ) 42,318
Income tax (benefit) expense   (2,799 )   6,621     (5,515 )   17,832  
Net (loss) earnings $ (4,967 ) $ 7,669   $ (9,622 ) $ 24,486  
 

Weighted average shares outstanding:
Basic 15,683 15,587 15,655 15,558
Diluted 15,683 15,652 15,655 15,640
 
Net (loss) earnings per share:
Basic $ (0.32 ) $ 0.49 $ (0.61 ) $ 1.57
Diluted $ (0.32 ) $ 0.49 $ (0.61 ) $ 1.57
 

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Unaudited summarized financial information concerning our reportable operating segments for the quarters and nine months ended September 30, 2016 and 2015 is as follows:
 
Quarter Ended Nine Months Ended
September 30, September 30,
2016     2015 2016     2015
(Thousands of dollars) (Thousands of dollars)
Segment operating revenues
Oil and Gas $ 77,551 $ 121,190 $ 249,173 $ 354,425
Air Medical 74,482 85,516 220,089 239,543
Technical Services   6,060     8,027     19,983     23,509  
Total operating revenues, net   158,093     214,733     489,245     617,477  
 
Segment direct expenses
Oil and Gas 82,832 109,500 262,148 310,093
Air Medical 56,562 65,474 172,603 189,089
Technical Services   5,742     7,165     15,432     21,166  
Total direct expenses   145,136     182,139     450,183     520,348  
 
Segment selling, general and administrative expenses
Oil and Gas 1,705 1,397 4,838 3,831
Air Medical 3,056 2,302 8,293 7,458
Technical Services   266     230     763     552  
Total segment selling, general and administrative expenses   5,027     3,929     13,894     11,841  
Total segment expenses   150,163     186,068     464,077     532,189  
 
Net segment (loss) profit
Oil and Gas (6,986 ) 10,293 (17,813 ) 40,501
Air Medical 14,864 17,740 39,193 42,996
Technical Services   52     632     3,788     1,791  
Total   7,930     28,665     25,168     85,288  
 
Other, net 377 637 5,425 1,739
Unallocated selling, general and administrative costs (8,354 ) (7,646 ) (22,938 ) (23,018 )
Interest expense   (7,719 )   (7,366 )   (22,792 )   (21,691 )
(Loss) earnings before income taxes $ (7,766 ) $ 14,290   $ (15,137 ) $ 42,318  
 

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