PHI, Inc. Announces Results for the First Quarter Ended March 31, 2017

PHI, Inc. (The Nasdaq Select Global Market: PHII (voting) PHIIK (non-voting)) today reported financial results for the quarter ended March 31, 2017.

Consolidated operating revenues for the three months ended March 31, 2017 were $134.6 million, compared to $164.0 million for the three months ended March 31, 2016, a decrease of $29.4 million. Oil and Gas segment operating revenues decreased $16.7 million for the quarter ended March 31, 2017, related primarily to decreased aircraft flight revenues for all model types resulting predominately from fewer aircraft on contract and decreased flight hours. Operating revenues in our Air Medical segment decreased $14.7 million due principally to decreased revenues attributable to our traditional provider programs resulting from reduced overseas operations. Our Air Medical segment also experienced decreased revenues from our independent provider programs primarily resulting from decreased transports due principally to adverse weather conditions in our operating markets. Technical Services revenues increased $2.0 million due primarily to an increase of technical services provided to a third party customer whose service requirements vary from period to period. Consolidated net loss for the three months ended March 31, 2017 was $15.2 million compared to net loss of $8.9 million for the three months ended March 31, 2016.

Oil and Gas segment loss was $11.7 million for the quarter ended March 31, 2017, compared to a loss of $5.0 million for the quarter ended March 31, 2016. The $6.7 million increase in segment loss was due to the above-described decreased revenues, which were only partially offset by decreased expenses attributable to decreased flight hours and cost reduction measures.

Air Medical segment profit was $1.6 million for the quarter ended March 31, 2017, compared to a segment profit of $10.4 million for the quarter ended March 31, 2016. The $8.8 million decrease in profit is primarily attributable to the decreased revenues, partially offset by decreased expenses resulting from reduced overseas operations.

Technical Services segment’s profit was $2.3 million for the three months ended March 31, 2017, compared to segment profit of $1.7 million for the three months ended March 31, 2016. The $0.6 million increase in profit is attributable to an increase of services provided to a third party customer.

Unallocated selling, general and administrative costs were $8.1 million for the quarter ended March 31, 2017 compared to $7.3 million for the quarter ended March 31, 2016. The increase of $0.8 million includes $1.6 million of severance costs related to reductions in force at our Lafayette headquarters facility in March, 2017 and $0.6 million of legal and consulting fees related to a special project. Partially offsetting these increases were decreases in equity-based compensation of $0.8 million.

Relative to the Oil and Gas segment, we continued to take the actions necessary to preserve our organization, our assets, and our financial health. We are selectively expanding our international operations in the Middle East, West Africa, Trinidad, Canada and Australia. We plan to continue to identify opportunities and cost efficiencies in an effort to provide a business model which enables us to expand our geographic footprint and scale our cost footprint to the varying cyclical demands typical of the oil and gas industry.

For additional information, please see (i) the attachments hereto and (ii) Form 10-Q for the quarter ended March 31, 2017 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)

Quarter Ended
March 31,
20172016
Operating revenues, net $ 134,618 $ 164,016
Expenses:
Direct expenses 136,513 152,554

Selling, general and administrative expenses

13,044 11,673
Total operating expenses 149,557 164,227
Loss on disposal of assets -- 359

Equity in loss (income) of unconsolidated affiliate

1,003 --
Operating loss (15,942 ) (570 )
Interest expense 8,195 7,533
Other income – net (1,064 ) (615 )
7,131 6,918
Loss before income taxes (23,073 ) (7,488 )
Income tax (benefit) expense (7,825 ) 1,444
Net loss $ (15,248 ) $ (8,932 )

Weighted average shares outstanding:

Basic 15,689 15,600
Diluted 15,689 15,600
Net loss per share:
Basic $ (0.97 ) $ (0.57 )
Diluted $ (0.97 ) $ (0.57 )

A-1

Unaudited summarized financial information concerning our reportable operating segments for the quarters ended March 31, 2017 and 2016 is as follows:

Quarter Ended
March 31,
20172016
(Thousands of dollars)
Segment operating revenues
Oil and Gas $ 71,731 $ 88,437
Air Medical 55,338 70,060
Technical Services 7,549 5,519
Total operating revenues 134,618 164,016
Segment direct expenses (1)
Oil and Gas (2) 81,728 91,916
Air Medical 50,842 57,044
Technical Services 4,946 3,594
Total segment direct expenses 137,516 152,554
Segment selling, general and administrative expenses
Oil and Gas 1,720 1,528
Air Medical 2,881 2,595
Technical Services 338 224
Total selling, general and administrative expenses 4,939 4,347

Total direct and selling, general and administrative expenses

142,455 156,901
Net segment (loss) profit
Oil and Gas (11,717 ) (5,007 )
Air Medical 1,615 10,421
Technical Services 2,265 1,701
Total net segment (loss) profit (7,837 ) 7,115
Other, net (3) 1,064 256
Unallocated selling, general and administrative costs (1) (8,105 ) (7,326 )
Interest expense (8,195 ) (7,533 )
Loss before income taxes $ (23,073 ) $ (7,488 )

(1) Included in segment direct expenses and unallocated selling, general, and administrative costs are the depreciation and amortization expense amounts below:

Depreciation and
Amortization Expense

Quarter Ended
March 31,
20172016
(Thousands of dollars)
Segment Direct Expense:
Oil and Gas $ 9,862 $ 9,918
Air Medical 5,477 4,256
Technical Services 146 128
Total $ 15,485 $ 14,302
Unallocated SG&A $ 1,360 $ 2,671

(2) Includes Equity in loss of unconsolidated affiliate.

(3) Consists of gains on disposition of property and equipment and other income.

A-2

Contacts:

PHI, Inc.
Trudy McConnaughhay, 337-235-2452
Chief Financial Officer

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