PHI, Inc. (OTC: PHIIQ (voting) PHIKQ (non-voting)) today reported financial results for the quarter ended March 31, 2019.
Consolidated operating revenues for the three months ended March 31, 2019 were $151.9 million, compared to $160.4 million for the three months ended March 31, 2018, a decrease of $8.5 million. Oil and Gas segment operating revenues decreased $10.7 million for the three months ended March 31, 2019. Revenues from our Gulf of Mexico operations decreased $5.1 million, primarily due to adverse weather conditions. Revenues from our international Oil and Gas operations decreased $5.6 million due to lower contracted aircraft flight hours. Air Medical segment operating revenues decreased $0.4 million due principally to adverse weather conditions. Technical Services segment operating revenues increased $2.6 million due primarily to an increase in technical services provided to a third party customer.
Oil and Gas segment loss was $9.8 million for the three months ended March 31, 2019, compared to a loss of $5.8 million for the three months ended March 31, 2018. The $4.0 million decrease in segment loss is primarily attributable to a $10.7 million decrease in revenues, partially offset by $6.7 million decrease in expenses.
Air Medical segment loss was $3.7 million for the three months ended March 31, 2019, compared to a segment loss of less than $0.1 million for the three months ended March 31, 2018. The $3.7 million decrease in profit is attributable to a decrease in profit from our independent provider model bases.
Technical Services segment profit was $1.7 million for the three months ended March 31, 2019, compared to $1.5 million for the three months ended March 31, 2018.
The Company recorded a pre-tax expense of $10.7 million of associated with the restructuring process. Excluding these one-time charges, the resulting adjusted net loss for the quarter ended March 31, 2019 was $25.0 million, or $(1.59) per share.
For additional information, please see (i) the attachments hereto and (ii) Form 10-Q for the quarter ended March 31, 2019 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 in the OTC Markets Pink Sheets (symbols PHIIQ and PHIKQ).
PHI, INC. AND SUBSIDIARIES (DEBTOR-IN-POSSESSION) Condensed Consolidated Statements of Operations (Thousands of dollars and shares, except per share data) (Unaudited) | ||||||||
Quarter Ended March 31, | ||||||||
2019 | 2018 | |||||||
Operating revenues, net | $ | 151,890 | $ | 160,370 | ||||
Expenses: | ||||||||
Direct expenses | 156,874 | 156,226 | ||||||
Selling, general and administrative expenses | 24,869 | 15,459 | ||||||
Total operating expenses | 181,743 | 171,685 | ||||||
Loss on disposal of assets | 51 | 879 | ||||||
Equity in (income) loss of unconsolidated affiliates, net | (1,361 | ) | 37 | |||||
Operating loss | (28,543 | ) | (12,231 | ) | ||||
Interest expense | 8,166 | 8,197 | ||||||
Reorganization items, net | 1,600 | — | ||||||
Other income – net | 40 | 1,045 | ||||||
9,806 | 9,242 | |||||||
Loss before income taxes | (38,349 | ) | (21,473 | ) | ||||
Income tax benefit | (3,108 | ) | (4,490 | ) | ||||
Net loss | $ | (35,241 | ) | $ | (16,983 | ) | ||
Weighted average shares outstanding: | ||||||||
Basic | 15,825 | 15,806 | ||||||
Diluted | 15,825 | 15,806 | ||||||
Net loss per share: | ||||||||
Basic | $ | (2.23 | ) | $ | (1.07 | ) | ||
Diluted | $ | (2.23 | ) | $ | (1.07 | ) | ||
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A-1 | ||||||||
Unaudited summarized financial information concerning our reportable operating segments for the quarters ended March 31, 2019 and 2018 is as follows: | ||||||||
Quarter Ended March 31, | ||||||||
2019 | 2018 | |||||||
(Thousands of dollars) | ||||||||
Segment operating revenues | ||||||||
Oil and Gas | $ | 84,946 | $ | 95,640 | ||||
Air Medical | 56,646 | 56,988 | ||||||
Technical Services | 10,298 | 7,742 | ||||||
Total operating revenues, net | 151,890 | 160,370 | ||||||
Segment direct expenses (1) (2) | ||||||||
Oil and Gas (1) | 89,968 | 96,507 | ||||||
Air Medical | 57,081 | 53,832 | ||||||
Technical Services | 8,464 | 5,887 | ||||||
Total direct expenses | 155,513 | 156,226 | ||||||
Segment selling, general and administrative expenses | ||||||||
Oil and Gas | 4,761 | 4,921 | ||||||
Air Medical | 3,292 | 3,167 | ||||||
Technical Services | 148 | 370 | ||||||
Total segment selling, general and administrative expenses | 8,201 | 8,458 | ||||||
Total segment direct and selling, general and administrative expenses | 163,714 | 164,684 | ||||||
Net segment (loss) profit | ||||||||
Oil and Gas | (9,783 | ) | (5,788 | ) | ||||
Air Medical | (3,727 | ) | (11 | ) | ||||
Technical Services | 1,686 | 1,485 | ||||||
Total net segment profit | (11,824 | ) | (4,314 | ) | ||||
Other, net (3) | (91 | ) | (1,961 | ) | ||||
Unallocated selling, general and administrative costs (1) (4) | (18,268 | ) | (7,001 | ) | ||||
Interest expense | (8,166 | ) | (8,197 | ) | ||||
(Loss) earnings before income taxes | $ | (38,349 | ) | $ | (21,473 | ) | ||
(1) | Included in direct expenses and unallocated selling, general, and administrative costs are the depreciation and amortization expense amounts below: | |||||||
Depreciation and | ||||||||
Quarter Ended March 31, | ||||||||
2019 | 2018 | |||||||
(Thousands of dollars) | ||||||||
Segment Direct Expense: | ||||||||
Oil and Gas | $ | 11,278 | $ | 11,783 | ||||
Air Medical | 5,286 | 5,624 | ||||||
Technical Services | 71 | 145 | ||||||
Total | $ | 16,635 | $ | 17,552 | ||||
Unallocated SG&A | $ | 1,809 | $ | 1,915 | ||||
(2) | Includes equity in (earnings) of unconsolidated affiliates, net. | |||||||
(3) | Consists of (gains) losses on disposition of property and equipment and other income. | |||||||
(4) | Represents corporate overhead expenses not allocable to segments. | |||||||
A-2 | ||||||||
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) | |||||||||||||
Three months ended, | |||||||||||||
March 31, 2019 | March 31, 2018 | ||||||||||||
Consolidated | Per Share | Consolidated | Per Share | ||||||||||
Reported net earnings (loss) | (35,241 | ) | (2.23 | ) | (16,983 | ) | (1.07 | ) | |||||
Restructuring costs | 10,666 | 0.67 | 0 | 0 | |||||||||
Income taxes | (444 | ) | (0.03 | ) | 0 | 0 | |||||||
Adjusted net earnings (loss) (1) | (25,019 | ) | (1.59 | ) | (16,983 | ) | (1.07 | ) | |||||
(1) | These financial measures are provided to enhance investors’ overall understanding of the Company’s current financial performance. | ||||||||||||
A-3 |
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Trudy McConnaughhay
Chief Financial Officer
(337) 235-2452