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PHI, Inc. Announces Results for the First Quarter Ended March 31, 2015

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PHI, Inc. (The Nasdaq Global Market: PHII (voting) PHIIK (non-voting)) today reported financial results for the quarter ended March 31, 2015.

Consolidated operating revenues for the three months ended March 31, 2015 were $204.2 million, compared to $197.1 million for the three months ended March 31, 2014, an increase of $7.1 million. Oil and Gas segment operating revenues decreased $5.6 million for the quarter ended March 31, 2015, related primarily to decreased light and medium aircraft flight revenues resulting predominately from less aircraft on contract and decreased flight hours for our medium aircraft. Operating revenues in our Air Medical segment increased $4.4 million 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 rate increases over the past year and an improvement in our payor mix. Technical Services revenues were $11.4 million for the three months ended March 31, 2015, compared to $3.1 million for the three months ended March 31, 2014. The increase in revenue is due primarily to an expansion of technical services provided to a third party customer under a project that we expect to complete in the third quarter of 2015.

Oil and Gas segment profit was $18.9 million for the quarter ended March 31, 2015, compared to segment profit of $27.6 million for the quarter ended March 31, 2014. The decrease in segment profit was due to the decreased revenues described above and increased direct expenses attributable to increased employee compensation expense, aircraft warranty costs and aircraft depreciation, partially offset by decreased insurance expense and parts expense.

Air Medical segment profit was $9.7 million for the quarter ended March 31, 2015, compared to a segment profit of $6.4 million for the quarter ended March 31, 2014. The increase in profit is primarily attributable to the increased revenues described above, partially offset by increased operating expenses. The segment experienced increases in aircraft warranty costs and component repair costs, partially offset by decreases in insurance expense, fuel expense, and outside services.

Technical Services segment profit was $2.4 million for the three months ended March 31, 2015, compared to $1.2 million for the three months ended March 31, 2014. Segment direct expenses increased $7.0 million compared to the prior year quarter.

Consolidated net earnings for the three months ended March 31, 2015 was $10.4 million compared to a net loss of $5.3 million for the three months ended March 31, 2014. Earnings before income taxes for the three months ended March 31, 2015 was $17.0 million compared to a loss before income tax of $8.5 million for the same period in 2014. Earnings per diluted share were $0.66 for the current quarter compared to a loss per diluted share of $0.34 for the prior year quarter. The increase in earnings before taxes for the quarter ended March 31, 2015 is principally attributable to the pre-tax charge of $29.2 million ($18.3 million after-tax) related to the early retirement of our 8.625% Senior Notes in 2014, and increased profits in our Air Medical and Technical Services segments, partially offset by decreased profits in our Oil & Gas segment.

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)

(Unaudited)

Quarter Ended
March,
2015 2014
Operating revenues, net $ 204,197 $ 197,071
Expenses:
Direct expenses 169,207 158,653

Selling, general and administrative expenses

11,237 9,328
Total operating expenses 180,444 167,981
(Gain) loss on disposal of assets (7 ) 1,073

Equity in loss of unconsolidated affiliate

68 41
Operating income 23,692 27,976
Interest expense 7,170 7,364
Loss on debt extinguishment 29,216
Other income, net (462 ) (91 )
6,708 36,489
Earnings (loss) before income taxes 16,984 (8,513 )
Income tax expense (benefit) 6,621 (3,192 )
Net earnings (loss) $ 10,363 $ (5,321 )

Weighted average shares outstanding:

Basic 15,579 15,480
Diluted 15,662 15,480
Net earnings (loss) per share:
Basic $ 0.67 $ (0.34 )
Diluted $ 0.66 $ (0.34 )

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Unaudited summarized financial information concerning our reportable operating segments for the quarters ended March 31, 2015 and 2014 is as follows:

Quarter Ended
March 31,
2015 2014
(Thousands of dollars)
Segment operating revenues
Oil and Gas $ 120,396 $ 125,975
Air Medical 72,385 67,952
Technical Services 11,416 3,144
Total operating revenues 204,197 197,071
Segment direct expenses
Oil and Gas 100,331 97,374
Air Medical 60,039 59,379
Technical Services 8,905 1,941
Total segment direct expenses 169,275 158,694
Segment selling, general and administrative expenses
Oil and Gas 1,159 1,034
Air Medical 2,629 2,153
Technical Services 114 2
Total selling, general and administrative expenses 3,902 3,189
Total direct and selling, general and administrative expenses 173,177 161,883
Net segment profit
Oil and Gas 18,906 27,567
Air Medical 9,717 6,420
Technical Services 2,397 1,201
Total net segment profit 31,020 35,188
Other, net 469 (982 )
Unallocated selling, general and administrative costs (7,335 ) (6,139 )
Interest expense (7,170 ) (7,364 )
Loss on debt extinguishment (29,216 )
Earnings (loss) before income taxes $ 16,984 $ (8,513 )

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