LAFAYETTE, La.--(BUSINESS WIRE)--PHI, Inc. (The Nasdaq Select Global Market: PHII (voting) PHIIK (non-voting)) today reported financial results for the quarter ended June 30, 2017.
Consolidated operating revenues for the quarter ended June 30, 2017 were $146.4 million, compared to $167.1 million for the quarter ended June 30, 2016, a decrease of $20.7 million. Oil and Gas segment operating revenues decreased $8.5 million for the three months ended June 30, 2017, related primarily to decreased aircraft flight revenues for heavy and medium model types resulting predominately from fewer aircraft on contract and decreased flight hours, partially offset by increased revenues from our light model types. Air Medical segment operating revenues decreased $8.3 million due principally to decreased traditional provider program revenues resulting from the completion of our overseas operations in late 2016. Technical Services segment operating revenues decreased $3.9 million due primarily to a decrease in technical services provided to a third party customer. Consolidated net loss for the quarter ended June 30, 2017 was $3.3 million compared to net earnings of $4.3 million for the quarter ended June 30, 2016. The $4.3 million net earnings for the quarter ended June 30, 2016 included a $4.3 million gain on disposal of assets.
Oil and Gas segment loss was $0.6 million for the three months ended June 30, 2017, compared to a loss of $5.8 million for the three months ended June 30, 2016. The $5.2 million decrease in segment loss was primarily due to a non-recurring warranty credit.
Air Medical segment profit was $13.6 million for the three months ended June 30, 2017, compared to a segment profit of $13.9 million for the three months ended June 30, 2016. The $0.3 million decrease in profit is attributable to the decreased operating revenues described above, partially offset by decreased expenses.
Technical Services segment profit was $0.3 million for the three months ended June 30, 2017, compared to segment profit of $2.0 million for the three months ended June 30, 2016. The $1.7 million decrease in profit is attributable to a decrease of services provided to a third party customer whose service requirements typically vary from period to period.
Consolidated operating revenues for the six months ended June 30, 2017 were $281.0 million, compared to $331.1 million for the six months ended June 30, 2016, a decrease of $50.1 million. Oil and Gas segment operating revenues decreased $25.2 million for the six months ended June 30, 2017, 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 $23.0 million due principally to decreased traditional provider program revenues resulting from reduced overseas operations and reduced revenues from our independent provider programs. This decrease was partially offset by increased revenues attributable to our U.S.-based traditional provider programs. Technical Services segment operating revenues decreased $1.8 million due to variations in the level of services provided to a third party customer. Consolidated net loss for the six months ended June 30, 2017 was $18.5 million compared to net loss of $4.7 million for the six months ended June 30, 2016.
Oil and Gas segment loss was $12.4 million for the six months ended June 30, 2017, compared to segment loss of $10.8 million for the six months ended June 30, 2016. The decrease in segment profit was due to the decreased revenues detailed above, which were only partially offset by decreased warranty and other expenses.
Air Medical segment profit was $15.2 million for the six months ended June 30, 2017, compared to a segment profit of $24.3 million for the six months ended June 30, 2016. The decrease in profit is primarily attributable to the decreased revenues described above, partially offset by decreased aircraft operating expenses.
Technical Services segment profit was $2.6 million for the six months ended June 30, 2017, compared to $3.7 million for the six months ended June 30, 2016. The $1.1 million decrease in profit is primarily due to decreased revenues described above.
Unallocated selling, general and administrative costs were $17.1 million for the six months ended June 30, 2017 compared to $14.6 million for the six months ended June 30, 2016. The increase of $2.5 million includes $2.9 million of severance costs related to reductions in force during the six month period and $1.3 million of legal and consulting fees related to a special project. These items were partially offset by decreases in equity-based compensation and other items.
While our Oil and Gas segment continues to be challenged, we believe that we are seeing the positive financial impact of our cost efficiency initiatives on our operating results in this division. We strive to identify and implement revenue-producing and cost-saving measures in all our divisions. We also continue to pursue opportunities in all our business units, domestic and international, and are optimistic that our efforts will be productive in 2017.
For additional information, please see (i) the attachments hereto and (ii) Form 10-Q for the quarter ended June 30, 2017 that we filed today with the U.S. Securities and Exchange Commission.
Forward-Looking Statements
Except for historical and factual information, the matters set forth in this release are forward-looking statements as defined by the federal securities laws, and are subject to the “safe harbor” protections thereunder. These forward-looking statements are not guarantees of future results, and are based on our current expectations only, are inherently speculative, and are subject to a number of assumptions, risks and uncertainties, many of which are beyond our control. Actual events and results may differ materially from those anticipated, estimated, projected, or implied by us if one or more of these risks or uncertainties materialize, or if our underlying assumptions prove incorrect. Factors that could affect actual results include but are not limited to prevailing levels of oil and gas prices, prevailing levels of exploration and production activity, our ability to successfully implement or secure the benefits of the above-described initiatives and opportunities, and the other risks referenced in our filings with the U.S. Securities and Exchange Commission (the “SEC”). For all the reasons set forth above and in our SEC reports, you are cautioned not to place undue reliance upon any of our forward-looking statements included in this release, which speak only as of the date made. We undertake no obligation to publicly update or revise any of our forward-looking statements for any reason, whether as a result of new information, future events or developments, changed circumstances, or otherwise.
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 | ||||||||||||||||
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(Thousands of dollars and shares, except per share data) |
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(unaudited) |
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| Quarter Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Operating revenues, net | $ | 146,424 | $ | 167,136 | $ | 281,042 | $ | 331,152 | ||||||||
| Expenses: | ||||||||||||||||
| Direct expenses | 126,951 | 152,417 | 263,464 | 304,971 | ||||||||||||
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Selling, general and administrative expenses |
14,247 | 11,778 | 27,290 | 23,451 | ||||||||||||
| Total operating expenses | 141,198 | 164,195 | 290,754 | 328,422 | ||||||||||||
| Loss (gain) on disposal of assets | 7 | (4,298 | ) | 7 | (3,939 | ) | ||||||||||
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Equity in loss of unconsolidated affiliates, net |
991 | 76 | 1,994 | 76 | ||||||||||||
| Operating income | 4,228 | 7,163 | (11,713 | ) | 6,593 | |||||||||||
| Interest expense | 8,083 | 7,540 | 16,278 | 15,073 | ||||||||||||
| Other income, net | (705 | ) | (494 | ) | (1,768 | ) | (1,109 | ) | ||||||||
| 7,378 | 7,046 | 14,510 | 13,964 | |||||||||||||
| (Loss) earnings before income taxes | (3,150 | ) | 117 | (26,223 | ) | (7,371 | ) | |||||||||
| Income tax expense (benefit) | 123 | (4,160 | ) | (7,702 | ) | (2,716 | ) | |||||||||
| Net (loss) earnings | $ | (3,273 | ) | $ | 4,277 | $ | (18,521 | ) | $ | (4,655 | ) | |||||
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Weighted average shares outstanding: |
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| Basic | 15,716 | 15,677 | 15,716 | 15,650 | ||||||||||||
| Diluted | 15,716 | 15,718 | 15,716 | 15,650 | ||||||||||||
| Net (loss) earnings per share: | ||||||||||||||||
| Basic | $ | (0.21 | ) | $ | 0.27 | $ | (1.18 | ) | $ | (0.30 | ) | |||||
| Diluted | $ | (0.21 | ) | $ | 0.27 | $ | (1.18 | ) | $ | (0.30 | ) | |||||
A-1
| Summarized financial information concerning our reportable operating segments for the quarters and six months ended June 30, 2017 and 2016 is as follows: |
| Quarter Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| (Thousands of dollars) |
(Thousands of dollars) |
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| (unaudited) | ||||||||||||||||
| Segment operating revenues | ||||||||||||||||
| Oil and Gas | $ | 74,668 | $ | 83,185 | $ | 146,399 | $ | 171,622 | ||||||||
| Air Medical | 67,222 | 75,547 | 122,559 | 145,607 | ||||||||||||
| Technical Services | 4,534 | 8,404 | 12,084 | 13,923 | ||||||||||||
| Total operating revenues, net | 146,424 | 167,136 | 281,042 | 331,152 | ||||||||||||
| Segment direct expenses | ||||||||||||||||
| Oil and Gas (1) | 73,681 | 87,400 | 155,410 | 179,316 | ||||||||||||
| Air Medical | 50,402 | 58,997 | 101,243 | 116,041 | ||||||||||||
| Technical Services | 3,858 | 6,096 | 8,804 | 9,690 | ||||||||||||
| Total direct expenses | 127,941 | 152,493 | 265,457 | 305,047 | ||||||||||||
| Segment selling, general and administrative expenses | ||||||||||||||||
| Oil and Gas | 1,635 | 1,605 | 3,354 | 3,132 | ||||||||||||
| Air Medical | 3,263 | 2,642 | 6,144 | 5,237 | ||||||||||||
| Technical Services | 356 | 273 | 694 | 497 | ||||||||||||
| Total segment selling, general and administrative expenses | 5,254 | 4,520 | 10,192 | 8,866 | ||||||||||||
| Total segment expenses | 133,195 | 157,013 | 276,649 | 313,913 | ||||||||||||
| Net segment (loss) profit | ||||||||||||||||
| Oil and Gas | (648 | ) | (5,820 | ) | (12,365 | ) | (10,826 | ) | ||||||||
| Air Medical | 13,557 | 13,908 | 15,172 | 24,329 | ||||||||||||
| Technical Services | 320 | 2,035 | 2,586 | 3,736 | ||||||||||||
| Total net segment profit (2) | 13,229 | 10,123 | 5,393 | 17,239 | ||||||||||||
| Other, net (3) | 697 | 4,792 | 1,761 | 5,048 | ||||||||||||
| Unallocated selling, general and administrative costs (4) | (8,993 | ) | (7,258 | ) | (17,099 | ) | (14,585 | ) | ||||||||
| Interest expense | (8,083 | ) | (7,540 | ) | (16,278 | ) | (15,073 | ) | ||||||||
| (Loss) earnings before income taxes | $ | (3,150 | ) | $ | 117 | $ | (26,223 | ) | $ | (7,371 | ) | |||||
| (1) | Includes Equity in 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 |
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Six Months Ended |
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| June 30, |
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June 30, |
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| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Total net segment profit | $ | 13,229 | $ 10,123 | $ | 5,393 | $ | 17,239 | |||||||||
| Other, net | 697 | 4,792 | 1,761 | 5,048 | ||||||||||||
| Unallocated selling, general and administrative costs | (8,993 | ) | (7,258 | ) | (17,099 | ) | (14,585 | ) | ||||||||
| Interest expense | (8,083 | ) | (7,540 | ) | (16,278 | ) | (15,073 | ) | ||||||||
| (Loss) earnings before income taxes | $ | (3,150 | ) | $ 117 | $ | (26,223 | ) | $ | (7,371 | ) | ||||||
| (3) | Consists of gains on disposition of property and equipment, and other income. | |
| (4) | Represents corporate overhead expenses not allocable to segments. | |
A-2
