PHI, Inc. (The Nasdaq Select Global Market: PHII (voting) PHIIK (non-voting)) today reported financial results for the quarter ended September 30, 2017.
Consolidated operating revenues for the three months ended September 30, 2017 were $150.2 million, compared to $158.1 million for the three months ended September 30, 2016, a decrease of $7.9 million. Oil and Gas segment operating revenues decreased $1.9 million for the three months ended September 30, 2017, related primarily to decreased aircraft flight revenues for medium and heavy aircraft models. These decreases resulted predominately from fewer aircraft on contract, decreased flight hours for our medium aircraft models and decreased rates for our heavy aircraft models. Air Medical segment operating revenues decreased $4.2 million due principally to decreased traditional provider program revenues resulting from the termination of our overseas operations in late 2016, offset by an increase in revenue from our independent provider operations related to improved cash collections and lower allowances for doubtful accounts. Technical Services segment operating revenues decreased $1.9 million due primarily to a decrease in technical services provided to a third party customer. Consolidated net loss for three months ended September 30, 2017 was $3.3 million compared to net loss of $5.0 million for the three months ended September 30, 2016.
Oil and Gas segment loss was $6.9 million for the three months ended September 30, 2017, compared to a loss of $7.0 million for the three months ended September 30, 2016. The $0.1 million decrease in segment loss was attributable to a $2.0 million decrease in expenses, partially offset by the $1.9 million decrease in revenues.
Air Medical segment profit was $16.0 million for the three months ended September 30, 2017, compared to a segment profit of $14.9 million for the three months ended September 30, 2016. The $1.1 million increase in profit is primarily attributable to increased revenues and profit from our independent provider programs, partially offset by decreased revenues and profits from our traditional provider programs.
Technical Services segment profit was less than $0.1 million for the three months ended September 30, 2017 and September 30, 2016.
Consolidated operating revenues for the nine months ended September 30, 2017 were $431.2 million, compared to $489.2 million for the nine months ended September 30, 2016, a decrease of $58.0 million. Oil and Gas segment operating revenues decreased $27.1 million for the nine months ended September 30, 2017, related primarily to decreased aircraft flight revenues for all model types resulting predominately from fewer aircraft on contract, decreased flight hours for our medium and heavy aircraft and decreased rates. Air Medical segment operating revenues decreased $27.2 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 and our U.S.-based traditional provider programs. Technical Services segment operating revenues decreased $3.7 million due to variations in the level of services provided to a third party customer under projects. Consolidated net loss for the nine months ended September 30, 2017 was $21.8 million compared to net loss of $9.6 million for the nine months ended September 30, 2016.
Oil and Gas segment loss was $19.3 million for the nine months ended September 30, 2017, compared to segment loss of $17.8 million for the nine months ended September 30, 2016. The decrease in segment profit was due to the decreased revenues detailed above, which were only partially offset by decreased operating expenses.
Air Medical segment profit was $31.2 million for the nine months ended September 30, 2017, compared to a segment profit of $39.2 million for the nine months ended September 30, 2016. The decrease in profit is primarily attributable to the decreased revenues described above, partially offset by the decreased aircraft operating expenses.
Technical Services segment profit was $2.7 million for the nine months ended September 30, 2017, compared to $3.8 million for the nine months ended September 30, 2016.
Unallocated selling, general and administrative costs were $23.9 million for the nine months ended September 30, 2017 compared to $22.9 million for the nine months ended September 30, 2016. The increase of $1.0 million includes $3.2 million of severance costs related to reductions in force during the first nine months of 2017 and $1.5 million of legal and consulting fees related to special projects. These items were partially offset by $1.3 million decrease in equity-based compensation and $1.5 million of savings related to a 2016 charges for aircraft lease returns that did not recur in 2017. Other items decreased $0.9 million, net.
For additional information, please see (i) the attachments hereto and (ii) Form 10-Q for the quarter ended September 30, 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) (unaudited) | ||||||||||||||||||||
| Quarter Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||||
| Operating revenues, net | $ | 150,167 | $ | 158,093 | $ | 431,209 | $ | 489,245 | ||||||||||||
| Expenses: | ||||||||||||||||||||
| Direct expenses | 136,786 | 144,938 | 400,250 | 449,909 | ||||||||||||||||
| Selling, general and administrative expenses | 11,401 | 13,381 | 38,691 | 36,832 | ||||||||||||||||
| Total operating expenses | 148,187 | 158,319 | 438,941 | 486,741 | ||||||||||||||||
| (Gain) loss on disposal of assets | (4 | ) | 85 | 3 | (3,854 | ) | ||||||||||||||
| Equity in (earnings) loss of unconsolidated affiliates, net | (438 | ) | 198 | 1,556 | 274 | |||||||||||||||
| Operating income (loss) | 2,422 | (509 | ) | (9,291 | ) | 6,084 | ||||||||||||||
| Interest expense | 8,027 | 7,719 | 24,305 | 22,792 | ||||||||||||||||
| Other income – net | (706 | ) | (462 | ) | (2,474 | ) | (1,571 | ) | ||||||||||||
| 7,321 | 7,257 | 21,831 | 21,221 | |||||||||||||||||
| (Loss) earnings before income taxes | (4,899 | ) | (7,766 | ) | (31,122 | ) | (15,137 | ) | ||||||||||||
| Income tax (benefit) expense | (1,622 | ) | (2,799 | ) | (9,324 | ) | (5,515 | ) | ||||||||||||
| Net (loss) earnings | $ | (3,277 | ) | $ | (4,967 | ) | $ | (21,798 | ) | $ | (9,622 | ) | ||||||||
| Weighted average shares outstanding: | ||||||||||||||||||||
| Basic | 15,799 | 15,683 | 15,758 | 15,655 | ||||||||||||||||
| Diluted | 15,799 | 15,683 | 15,758 | 15,655 | ||||||||||||||||
| Net (loss) earnings per share: | ||||||||||||||||||||
| Basic | $ | (0.21 | ) | $ | (0.32 | ) | $ | (1.38 | ) | $ | (0.61 | ) | ||||||||
| Diluted | $ | (0.21 | ) | $ | (0.32 | ) | $ | (1.38 | ) | $ | (0.61 | ) | ||||||||
A-1
Summarized financial information concerning our reportable operating segments for the quarters and nine months ended September 30, 2017 and 2016 is as follows:
| Quarter Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||||
| (Thousands of dollars) | (Thousands of dollars) | |||||||||||||||||||
| (unaudited) | ||||||||||||||||||||
| Segment operating revenues | ||||||||||||||||||||
| Oil and Gas | $ | 75,700 | $ | 77,551 | $ | 222,098 | $ | 249,173 | ||||||||||||
| Air Medical | 70,280 | 74,482 | 192,840 | 220,089 | ||||||||||||||||
| Technical Services | 4,187 | 6,060 | 16,271 | 19,983 | ||||||||||||||||
| Total operating revenues, net | 150,167 | 158,093 | 431,209 | 489,245 | ||||||||||||||||
| Segment direct expenses | ||||||||||||||||||||
| Oil and Gas (1) | 81,467 | 82,832 | 236,878 | 262,148 | ||||||||||||||||
| Air Medical | 51,120 | 56,562 | 152,363 | 172,603 | ||||||||||||||||
| Technical Services | 3,761 | 5,742 | 12,565 | 15,432 | ||||||||||||||||
| Total segment direct expenses | 136,348 | 145,136 | 401,806 | 450,183 | ||||||||||||||||
| Segment selling, general and administrative expenses | ||||||||||||||||||||
| Oil and Gas | 1,148 | 1,705 | 4,501 | 4,838 | ||||||||||||||||
| Air Medical | 3,136 | 3,056 | 9,280 | 8,293 | ||||||||||||||||
| Technical Services | 338 | 266 | 1,032 | 763 | ||||||||||||||||
| Total segment selling, general and administrative expenses | 4,622 | 5,027 | 14,813 | 13,894 | ||||||||||||||||
| Total segment expenses | 140,970 | 150,163 | 416,619 | 464,077 | ||||||||||||||||
| Net segment (loss) profit | ||||||||||||||||||||
| Oil and Gas | (6,915 | ) | (6,986 | ) | (19,281 | ) | (17,813 | ) | ||||||||||||
| Air Medical | 16,024 | 14,864 | 31,197 | 39,193 | ||||||||||||||||
| Technical Services | 88 | 52 | 2,674 | 3,788 | ||||||||||||||||
| Total net segment profit (2) | 9,197 | 7,930 | 14,590 | 25,168 | ||||||||||||||||
| Other, net (3) | 710 | 377 | 2,471 | 5,425 | ||||||||||||||||
| Unallocated selling, general and administrative costs (4) | (6,779 | ) | (8,354 | ) | (23,878 | ) | (22,938 | ) | ||||||||||||
| Interest expense | (8,027 | ) | (7,719 | ) | (24,305 | ) | (22,792 | ) | ||||||||||||
| (Loss) earnings before income taxes | $ | (4,899 | ) | $ | (7,766 | ) | $ | (31,122 | ) | $ | (15,137 | ) | ||||||||
(1) Includes Equity in (income) loss of unconsolidated affiliates, net.
(2) These financial measures have not been prepared in accordance with generally accepted accounting principles (“GAAP”) and have not been audited or reviewed by our independent registered public accounting firm. These financial measures are therefore considered non-GAAP financial measures. Management believes these non-GAAP financial measures provide meaningful supplemental information regarding our results of operations. A description of the adjustments to and reconciliations of these non-GAAP financial measures to the most comparable GAAP financial measures is as follows:
| Quarter Ended | Nine Months Ended | |||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||||
| Total net segment profit | $ | 9,197 | $ 7,930 | $ | 14,590 | $ | 25,168 | |||||||||||||
| Other, net | 710 | 377 | 2,471 | 5,425 | ||||||||||||||||
| Unallocated selling, general and administrative costs | (6,779 | ) | (8,354 | ) | (23,878 | ) | (22,938 | ) | ||||||||||||
| Interest expense | (8,027 | ) | (7,719 | ) | (24,305 | ) | (22,792 | ) | ||||||||||||
| (Loss) earnings before income taxes | $ | (4,899 | ) | $ (7,766 | ) | $ | (31,122 | ) | $ | (15,137 | ) | |||||||||
(3) Consists of net (gains) on disposition of property and equipment, and other income.
(4) Represents corporate overhead expenses not allocable to segments.
A-2
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Contacts:
Trudy McConnaughhay, 337-235-2452
Chief Financial
Officer
