PHI, Inc. Announces Results for the First Quarter Ended March 31, 2014

LAFAYETTE, La.--()--PHI, Inc. (The Nasdaq Global Market: PHII (voting) PHIIK (non-voting)) today reported financial results for the quarter ended March 31, 2014.

Consolidated operating revenues for the three months ended March 31, 2014 were $197.1 million, compared to $179.0 million for the three months ended March 31, 2013, an increase of $18.1 million. Oil and Gas segment revenues were $126.0 million for the three months ended March 31, 2014, compared to $112.8 million for the three months ended March 31, 2013, an increase of $13.2 million. The increase in this segment’s revenues is related primarily to increased heavy aircraft flight revenues resulting predominately from increased flight hours for these aircraft, as well as incremental rate increases implemented over the past year. Operating revenues in the Air Medical segment were $67.9 million for the three months ended March 31, 2014, compared to $63.4 million for the three months ended March 31, 2013, an increase of $4.5 million. The Air Medical revenue increase is due principally to increased revenues attributable to an expansion of our traditional provider operations, as well as increased revenues from our independent provider programs driven by an improvement in our payor mix and rate increases implemented over the past year.

During the quarter ended March 31, 2014, we issued $500 million of 5.25% Senior Notes due March 2019 in a private placement under the Securities Act of 1933, under more favorable terms and conditions than our previously outstanding 8.625% Senior Notes. A portion of the proceeds from these notes were used to retire $292.6 million of our $300 million previously outstanding 8.625% Senior Notes pursuant to a tender offer, at a total cost of $329.4 million including the tender premium and accrued interest. We subsequently redeemed the remaining $7.4 million of 8.625% Senior Notes on April 16, 2014, at a redemption price of 108.3% of the face amount plus accrued interest. As a result of our repurchase of the 8.625% Senior Notes, we recorded a non-recurring pretax charge of $29.2 million in the quarter ended March 31, 2014. Consequently, we experienced a net loss for the quarter ended March 31, 2014. Consolidated net loss for the three months ended March 31, 2014 was $5.3 million compared to net income of $8.8 million for the three months ended March 31, 2013. Losses before income taxes for the three months ended March 31, 2014 was $8.5 million compared to earnings before income tax of $14.7 million for the same period in 2013. Losses per diluted share was $0.34 for the current quarter compared to earnings per diluted share of $0.57 for the prior year quarter. The decrease in earnings before taxes for the quarter ended March 31, 2014 is attributable to the above-mentioned non-recurring pretax charge of $29.2 million related to the early retirement of our 8.625% Senior Notes, partially offset by increased profits in our Oil and Gas and Technical Services segments. Exclusive of the loss on debt extinguishment of $29.2 million, our net income for the three months would have been $12.9 million, which represents an increase of $4.3 million over the same period in 2013.

Oil and Gas segment profit was $27.6 million for the quarter ended March 31, 2014, compared to segment profit of $19.0 million for the quarter ended March 31, 2013. The increase in profit is primarily attributable to the increased revenue described above.

Air Medical segment profit was $6.4 million for the quarter ended March 31, 2014, compared to a segment profit of $7.6 million for the quarter ended March 31, 2013. The decrease in profit is primarily attributable to increased employee compensation expenses due to additional personnel in the segment and compensation rate increases. Aircraft operating expenses also increased due to additional aircraft added to the fleet. The severe weather experience throughout our U.S. operations had a substantial negative impact on our flight volumes in Air Medical. Although we did experience a decline in segment profits over the same period in 2013, we expect improved performance over the remainder of the year.

Technical Services revenues were $3.1 million for the three months ended March 31, 2014, compared to $2.8 million for the three months ended March 31, 2013. Technical Services segment profit was $1.2 million for the three months ended March 31, 2014, compared to $1.0 million for the three months ended March 31, 2013. Direct expenses increased $0.1 million compared to the prior year quarter.

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,
2014     2013
 
Operating revenues, net $ 197,071 $ 178,968
 
Expenses:
Direct expenses 158,653 148,203

Selling, general and administrative expenses

  9,328     8,266  
Total operating expenses 167,981 156,469
 
Loss on disposal of assets, net 1,073 25
Equity in loss of unconsolidated affiliate   41     487  
Operating income 27,976 21,987
 
Interest expense 7,364 7,409
Loss on debt extinguishment 29,216 --
Other income, net   (91 )   (152 )
  36,489     7,257  
 
(Loss) earnings before income taxes (8,513 ) 14,730
Income tax (benefit) expense   (3,192 )   5,892  
Net (loss) earnings $ (5,321 ) $ 8,838  
 

Weighted average shares outstanding:

Basic 15,480 15,474
Diluted 15,480 15,502
 
Net (loss) earnings per share:
Basic $ (0.34 ) $ 0.57
Diluted $ (0.34 ) $ 0.57
 
 

Summarized financial information concerning our reportable operating segments for the quarters ended March 31, 2014 and 2013 is as follows:

 
Quarter Ended
March 31,
2014   2013
(Thousands of dollars)
Segment operating revenues
Oil and Gas $ 125,975 $ 112,831
Air Medical 67,952 63,387
Technical Services   3,144     2,750  
Total operating revenues   197,071     178,968  
 
Segment direct expenses
Oil and Gas 97,374 92,873
Air Medical 59,379 53,996
Technical Services   1,941     1,821  
Total segment direct expenses 158,694 148,690
 
Segment selling, general and administrative expenses
Oil and Gas 1,034 913
Air Medical 2,153 1,840
Technical Services   2     --  
Total selling, general and administrative expenses   3,189     2,753  
Total direct and selling, general and administrative expenses   161,883     151,443  
 
Net segment profit
Oil and Gas 27,567 19,045
Air Medical 6,420 7,551
Technical Services   1,201     929  
Total net segment profit 35,188 27,525
 
Other, net (982 ) 127
Unallocated selling, general and administrative costs (6,139 ) (5,513 )
Interest expense (7,364 ) (7,409 )
Loss on debt extinguishment   (29,216 )   --  
(Loss) earnings before income taxes $ (8,513 ) $ 14,730  
 
     
PHI, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures

(Thousands of dollars)

 
Quarter Ended
March 31,
2014     2013
 
Net (loss) earnings, as reported $ (5,321 ) $ 8,838
 
Add back: loss on debt extinguishment, net of tax   18,260     --
 
Net earnings, as adjusted $ 12,939   $ 8,838

Contacts

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

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Contacts

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