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PHI, Inc. Announces Results for the Year Ended December 31, 2018

LAFAYETTE, La.--(BUSINESS WIRE)--

PHI, Inc. (Nasdaq: PHII (voting); PHIIK (non-voting)) today reported financial results for the year ended December 31, 2018.

PHI, Inc (the “Company”) today announced a net loss from continuing operations for the year ended December 31, 2018 of $141.5 million, or $8.95 per share, on revenue of $674.4 million. This compares to a net gain from continuing operations of $7.5 million, or $0.48 per share, for the year ended December 31, 2017, on revenue of $579.5 million.

The Company recorded a pre-tax expense of $109.0 million on asset impairments in the fourth quarter of 2018. These charges included a $61.6 million of goodwill impairment, $31.8 million of aircraft and related spare parts impairment and $15.6 million of intangibles impairment. Also included in the 2018 loss is $5.2 million of pre-tax costs associated with special projects. Excluding these one-time charges, the resulting adjusted net loss for the year ended December 31, 2018 was $40.3 million, or $(2.55) per share. Included in the net loss for the year ended December 31, 2017 is a one-time tax benefit of $49.2 million related to the impact of the 2017 Tax Cuts and Jobs Act. Excluding this tax benefit, the resulting adjusted net loss for the year ended December 31, 2017 was $41.7 million, or $(2.64) per share.

Oil and Gas segment operating revenues increased $81.8 million for the year ended December 31, 2018. The increase is attributable principally to revenue derived from our recently-acquired HNZ Offshore business and secondarily from an increase in revenues from our legacy international Oil and Gas operations, partially offset by a decrease in revenues from our Gulf of Mexico operations. Operating revenues in our Air Medical segment were essentially flat, decreasing just under $0.2 million. Technical Services operating revenues increased $13.2 million due to an increase in services provided to a third party customer.

Oil and Gas segment loss was $10.2 million for the year ended December 31, 2018, compared to a loss of $28.8 million for the prior year. The $18.2 million decrease in segment loss was due to the increased revenues detailed above, partially offset by increased expenses. Air Medical segment profit was $12.5 million for the year ended December 31, 2018, compared to segment profit of $35.8 million for the year ended December 31, 2017. The $23.3 million decrease in profit is due in part to increased expenses related to new bases that were not operating in the prior year and higher employee compensation costs for existing operations. Technical Services segment profit was $6.8 million for the year ended December 31, 2018, compared to $5.6 million for the year ended December 31, 2017. The $1.2 million increase in segment profit is primarily attributable to an increase in technical services provided to a third party customer.

For additional information, please see (i) the attachments hereto and (ii) the Annual Report on Form 10-K for the year ended December 31, 2018 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 Select Market (symbols PHII and PHIIK).

 
 
 
 
 

PHI, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Thousands of dollars and shares, except per share data)

 
        Year Ended
December 31,
2018
    Year Ended
December 31,
2017
    Year Ended
December 31,
2016
Operating revenues, net $ 674,423 $ 579,545 $ 634,098
Expenses:
Direct expenses 631,807 546,699 592,550
Selling, general and administrative expenses 66,685   53,817   44,418  
Total operating expenses 698,492 600,516 636,968
Loss (gain) on disposition of assets, net 753 298 (3,350 )
Impairments of assets 109,024 368 407
Equity in loss (profit) of unconsolidated affiliate (188 ) 385   (151 )
Operating income (133,658 ) (22,022 ) 224
Interest expense 33,981 32,183 30,644
Other income, net (179 ) (2,764 ) (3,271 )
33,802   29,419   27,373  
(Loss) earnings before income taxes (167,460 ) (51,441 ) (27,149 )
Income tax (benefit) expense (25,946 ) (58,973 ) (469 )
Net earnings (loss) $ (141,514 ) $ 7,532   $ (26,680 )
Earnings (loss) per share:
Basic $ (8.95 ) $ 0.48 $ (1.70 )
Diluted $ (8.95 ) $ 0.48 $ (1.70 )
Weighted average shares outstanding:
Basic 15,818 15,762 15,663
Diluted 15,818 15,762 15,663
 
 

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Summarized financial information concerning the Company’s reportable operating segments for the years ended December 31, 2018, 2017, and 2016:

 
  Year Ended December 31,
2018   2017   2016
(Thousands of dollars)
Segment operating revenues
Oil and Gas $ 380,238 $ 298,398 $ 324,129
Air Medical 257,132 257,273 281,868
Technical Services 37,053   23,874   28,101  
Total operating revenues 674,423   579,545   634,098  
Segment direct expenses
Oil and Gas (1) 371,930 321,272 344,640
Air Medical 230,840 208,987 227,877
Technical Services 28,849   16,825   19,882  
Total segment direct expenses 631,619 547,084 592,399
Segment selling, general and administrative expenses
Oil and Gas 18,485 5,899 6,739
Air Medical 13,833 12,442 10,968
Technical Services 1,418   1,405   1,101  
Total segment selling, general and administrative expenses 33,736   19,746   18,808  
Total segment expenses 665,355   566,830   611,207  
Net segment (loss) profit
Oil and Gas (10,177 ) (28,773 ) (27,250 )
Air Medical 12,459 35,844 43,023
Technical Services 6,786   5,644   7,118  
Total net segment profit (2) 9,068 12,715 22,891
Impairments of assets (109,024 ) (368 ) (407 )
Other, net (3) (574 ) 2,466 6,621
Unallocated selling, general and administrative expenses (32,949 ) (34,071 ) (25,610 )
Interest expense (33,981 ) (32,183 ) (30,644 )
(Loss) earnings before income taxes $ (167,460 ) $ (51,441 ) $ (27,149 )
 

(1) Includes equity in gain/loss of unconsolidated affiliate.

(2) Total net segment profit has not been prepared in accordance with generally accepted accounting principles (“GAAP”). Management believes this non-GAAP financial measure provides meaningful supplemental information regarding our results of operations. A description of the adjustments to and reconciliations of total net segment profit to the most comparable GAAP financial measure is as follows:

        Year Ended
December 31,
2018     2017     2016
 
Total net segment profit $ 9,068 $ 12,715 $ 22,891
 
Impairment of assets (109,024 ) (368 ) (407 )
Other, net (574 ) 2,466 6,621
Unallocated selling, general and administrative costs (32,949 ) (34,071 ) (25,610 )
Interest expense   (33,981 )   (32,183 )   (30,644 )
Earnings before income taxes $ (167,460 ) $ (51,441 ) $ (27,149 )
 

(3) Includes gains on disposition of property and equipment, asset impairments, and other income.

 
 

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Non-GAAP Financial Measures

The following table reconciles the Company’s adjusted net earnings (loss) and the reported net earnings (loss), which is the directly comparable financial results determined in accordance with Generally Accepted Accounting Principles (GAAP).

 
 

Reconciliation of Consolidated Adjusted Net Earnings (Loss)
(in thousands)
(unaudited)

 
   

Twelve months ended

December 31, 2018     December 31, 2017     December 31, 2016
Consolidated    

Per

Share

Consolidated    

Per

Share

Consolidated    

Per

Share

Reported net earnings (loss) (141,514 ) (8.95 ) 7,532 0.48 (26,680 ) (1.69 )
Asset impairment 109,024 6.89 0.4 0 0.4 0
Restructuring costs 5,176 0.33 0 0 0 0
Income taxes (12,948 ) (0.82 ) 0 0 0 0
US Tax Reform (1) 0   0   (49,219 ) (3.12 ) 0   0  
Adjusted net earnings (loss) (2) (40,262 ) (2.55 ) (41,687 ) (2.64 ) (26,680 ) (1.69 )
 

(1) Recorded in Income Taxes in the consolidated statement of operations

(2) These financial measures are provided to enhance investors’ overall understanding of the Company’s current financial performance.

 
 

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