August 06, 2012 at 17:42 PM EDT
PHI, Inc. Announces Results for the Second Quarter Ended June 30, 2012

PHI, Inc. (The Nasdaq Global Market: PHII (voting) PHIIK (non-voting)) today reported financial results for the quarter ended June 30, 2012.

Oil and Gas segment revenues were $104.4 million for the three months ended June 30, 2012, compared to $90.2 million for the three months ended June 30, 2011, an increase of $14.2 million. Flight hours were 30,833 for the current quarter, compared to 29,997 for the same quarter in the prior year. The increase in revenues is primarily due to increased medium and heavy aircraft flight hours and revenues, due to an increase in deepwater drilling activity compared to the same period in 2011 when there was no significant deepwater drilling activity due to the Macondo incident.

Our Oil and Gas segment profit was $14.3 million for the quarter ended June 30, 2012, compared to $9.5 million for the quarter ended June 30, 2011. Operating margins (segment profit divided by operating revenues) were 14% for the three months ended June 30, 2012, compared to 11% for the three months ended June 30, 2011. The increase in segment profit of $4.8 million was primarily due to increased revenues of $14.2 million, partially offset by increased direct expenses of $9.5 million as further discussed in our Form 10Q for the quarter ended June 30, 2012.

Air Medical segment revenues were $54.4 million for the three months ended June 30, 2012, compared to $44.2 million for the three months ended June 30, 2011, an increase of $10.2 million. The increase was primarily due to increased revenue of $8.8 million in the independent provider programs related to improved payor mix, rate increases implemented in 2011 and 2012, and increased patient transports. Operating revenues related to hospital based contracts increased $1.3 million. Total patient transports were 4,922 for the three months ended June 30, 2012, compared to 4,525 for the three months ended June 30, 2011.

Our Air Medical segment profit was $9.8 million for the quarter ended June 30, 2012, compared to $4.6 million for the quarter ended June 30, 2011. Operating margins were 18% for the three months ended June 30, 2012, compared to 10% for the three months ended June 30, 2011. The improvement in Air Medical segment operating income is due to the increase in transports, increases in rates in 2011 and 2012, closure of unprofitable bases, and cost reductions.

Technical Services revenues were $1.7 million for the three months ended June 30, 2012, compared to $1.6 million for the three months ended June 30, 2011. Direct expenses in our Technical Services segment were $2.0 million for the three months ended June 30, 2012, compared to $1.9 million for the three months ended June 30, 2011. Our Technical Services segment’s operating loss was $0.3 million for the three months ended June 30, 2012 and for the three months ended June 30, 2011.

Combined operating revenues for the three months ended June 30, 2012 were $160.6 million, compared to $136.0 million for the three months ended June 30, 2011, an increase of $24.6 million.

Combined net income for the three months ended June 30, 2012 was $6.1 million, compared to net income of $0.7 million for the three months ended June 30, 2011. Earnings before income taxes for the three months ended June 30, 2012 was $10.1 million, compared to earnings before tax of $1.2 million for the same period in 2011. Earnings per diluted share were $0.39 for the current quarter, compared to earnings per diluted share of $0.05 for the prior year quarter. The increase in earnings before taxes for the quarter ended June 30, 2012 is primarily due to increased revenues and segment operating profit in the Oil and Gas and Air Medical segments as discussed above.

In April 2012, our subsidiary PHI Air Medical, L.L.C. entered into a three-year contract with the Saudi Red Crescent Authority (“SRCA”) to provide helicopter emergency medical services in the Kingdom of Saudi Arabia. The contract calls for us to place eight medium aircraft in service during 2012, along with support staff, and to operate and maintain the aircraft for the contract term. In connection with the contract, we have entered into an aircraft purchase agreement, pursuant to which we would purchase and then sell seven new aircraft to the company that will lease them to the SRCA, after we complete and configure the aircraft for use in emergency medical services. Funds for the purchase of the aircraft have been deposited into an escrow account by the company that will lease the aircraft to SRCA. The SRCA project is expected to commence flight operations in September 2012, with two aircraft in service at that time. For additional information, please see our Form 10Q for the quarter ended June 30, 2012.

PHI provides helicopter transportation and related services to a broad range of customers including the oil and gas industry, air medical industry 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

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Thousands of dollars and shares, except per share data)

(Unaudited)

Quarter EndedSix Months Ended
June 30,June 30,
2012201120122011
Operating revenues, net $ 160,554 $ 135,976 $ 298,605 $ 255,616
Gain on dispositions of assets, net 679 77 690 223
Other, principally interest income 57 93 363 636
161,290 136,146 299,658 256,475
Expenses:
Direct expenses 134,092 120,443 252,790 228,649

Selling, general and administrative expenses

9,668 7,736 18,508 17,279
Interest expense 7,440 6,761 14,640 13,793
151,200 134,940 285,938 259,721
Earnings (loss) before income taxes 10,090 1,206 13,720 (3,246 )
Income tax expense (benefit) 4,036 483 5,488 (1,298 )
Net earnings (loss) $ 6,054 $ 723 $ 8,232 $ (1,948 )
Weighted average shares
outstanding:
Basic 15,312 15,312 15,312 15,312
Diluted 15,550 15,474 15,486 15,312
Net earnings (loss) per share:
Basic $ 0.40 $ 0.05 $ 0.54 $ (0.13 )
Diluted $ 0.39 $ 0.05 $ 0.53 $ (0.13 )

Summarized financial information concerning our reportable operating segments for the quarters and six months ended June 30, 2012 and 2011 is as follows:

Quarter EndedSix Months Ended
June 30,June 30,
2012201120122011
(Thousands of dollars) (Thousands of dollars)
Segment operating revenues
Oil and Gas $ 104,421 $ 90,200 $ 197,373 $ 167,681
Air Medical 54,399 44,214 96,553 82,596
Technical Services 1,734 1,562 4,679 5,340
Total operating revenues 160,554 135,976 298,605 255,616
Segment direct expenses
Oil and Gas 89,252 79,779 169,266 149,377
Air Medical 42,847 38,793 80,003 75,420
Technical Services 1,989 1,871 3,521 3,852
Total direct expenses 134,088 120,443 252,790 228,649
Segment selling, general and administrative expenses
Oil and Gas 911 883 1,808 1,764
Air Medical 1,720 856 3,375 1,788
Technical Services -- 6 1 19
Total selling, general and administrative expenses 2,631 1,745 5,184 3,571
Total direct and selling, general and administrative expenses 136,719 122,188 257,974 232,221
Net segment profit (loss)
Oil and Gas 14,258 9,538 26,299 16,539
Air Medical 9,832 4,565 13,175 5,388
Technical Services (255 ) (315 ) 1,157 1,469
Total 23,835 13,788 40,631 23,396
Other, net 736 170 1,053 859
Unallocated selling, general and administrative costs (7,041 ) (5,991 ) (13,324 ) (13,708 )
Interest expense (7,440 ) (6,761 ) (14,640 ) (13,793 )
Earnings (loss) before income taxes $ 10,090 $ 1,206 $ 13,720 $ (3,246 )

The following tables present certain non-financial operational statistics for the quarters and six months ended June 30, 2012 and 2011:

Quarter EndedSix Months Ended
June 30,June 30,
2012201120122011
Flight hours:
Oil and Gas 30,833 29,997 56,547 54,250
Air Medical 9,347 8,737 17,148 16,360
Technical Services -- -- 550 562
Total 40,180 38,734 74,245 71,172
Air Medical Transports 4,922 4,525 8,968 8,560
June 30,
20122011
Aircraft operated at period end:
Oil and Gas 164 164
Air Medical 93 88
Technical Services 6 5
Total 263 257

Contacts:

PHI, Inc.
Michael J. McCann, Chief Financial Officer, 337-235-2452
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