Era Group Inc. Reports Third Quarter 2017 Results


HOUSTON, Nov. 09, 2017 (GLOBE NEWSWIRE) -- Era Group Inc. (NYSE:ERA) (the “Company”) today reported a net loss attributable to the Company of $81.4 million, or $3.91 per diluted share, for its third quarter ended September 30, 2017 (“current quarter”) on operating revenues of $61.4 million compared to net loss attributable to the Company of $2.8 million, or $0.13 per diluted share, for the quarter ended June 30, 2017 (“preceding quarter”) on operating revenues of $57.9 million.  As further described in the “H225 Update” section of this press release, the Company recorded non-cash impairment charges of approximately $117 million in the current quarter primarily related to its H225 helicopters, capital parts and related inventory.  Excluding the impact of non-cash impairment charges, net loss attributable to the Company would have been $6.2 million, or $0.30 per diluted share.

Earnings before interest, taxes, depreciation and amortization (“EBITDA”) was negative $110.5 million in the current quarter compared to positive $11.9 million in the preceding quarter.  EBITDA adjusted to exclude gains on asset dispositions and special items was positive $6.7 million in the current quarter compared to $7.5 million in the preceding quarter.  Losses on asset dispositions were $0.1 million in the current quarter compared to gains of $5.1 million in the preceding quarter.  Special items in the current quarter consisted of the $117.0 million non-cash impairment charges primarily related to the Company’s H225 helicopters.  Special items in the preceding quarter consisted of $0.6 million of severance-related expenses due to changes in senior management.

“We experienced an increase in oil and gas customer activity in the third quarter, as evidenced by the 15% sequential quarter improvement in operating revenues in our oil and gas service line,” said Chris Bradshaw, President and Chief Executive Officer of Era Group Inc. “Profitability in the third quarter was adversely impacted by $0.6 million of expenses to prepare helicopters for new customer contracts, $1.0 million of expenses due to the correction of immaterial accounting errors related to prior periods, $1.9 million of non-routine professional services fees, and a high volume of engine overhaul expense ($2.8 million higher than the trailing four quarter average). Despite this elevated level of expenses, Era continued to generate positive operating cash flow for the 22nd consecutive quarter.”

Sequential Quarter Results

Operating revenues in the current quarter were $3.5 million higher compared to the preceding quarter primarily due to higher utilization in our oil and gas operations.  These increases were partially offset by the absence of the benefit from lease return charges recognized in the preceding quarter.

Operating expenses were $2.7 million higher in the current quarter primarily due to increased repairs and maintenance costs related to the timing of repairs, as well as increased fuel and personnel expenses resulting from increased activity.

Administrative and general expenses were $1.0 million higher in the current quarter primarily due to an increase in professional services fees and the correction of immaterial accounting errors, partially offset by a decrease in compensation costs due to the recognition of severance expenses in the preceding quarter.

In the preceding quarter, we sold or otherwise disposed of a hangar in Alaska, two helicopters and related equipment resulting in gains of $5.1 million.  There were no significant asset dispositions in the current quarter.

Income tax benefit was $44.5 million higher primarily due to the impairment of our H225 helicopters in the current quarter.

Net income attributable to noncontrolling interest in subsidiary was $0.2 million in the current quarter compared to a net loss of $0.3 million in the preceding quarter.  The increase was due to an increase in income in Colombia resulting from a new short-term contract and higher utilization. 

Calendar Quarter Results

Operating revenues in the current quarter were $3.6 million lower compared to the quarter ended September 30, 2016 (“prior year quarter”) primarily due to lower utilization of light helicopters in our U.S. oil and gas operations, fewer search and rescue (“SAR”) subscribers and the end of air medical contracts.  These decreases were partially offset by increased utilization of heavy and medium helicopters in our U.S. oil and gas operations.

Operating expenses were $3.6 million higher in the current quarter primarily due to increased repairs and maintenance expenses in the current quarter due to the timing of repairs and the recognition of credits in the prior year quarter following the removal of our H225 helicopters from power-by-the-hour maintenance programs.  This increase was partially offset by decreases in personnel, fuel and other operating expenses.

Administrative and general expenses were $1.4 million higher in the current quarter primarily due to increased professional services fees and the correction of immaterial accounting errors, partially offset by lower compensation costs.

Depreciation expense was $0.4 million lower in the current quarter primarily due to certain assets becoming fully depreciated and asset dispositions subsequent to the prior year quarter, partially offset by new heavy helicopters placed in service in the current year.

Income tax benefit was $45.2 million in the current quarter compared to an income tax expense of $0.1 million in the prior year quarter.  The income tax benefit was primarily due to the impairment of our H225 helicopters in the current quarter.

Net loss attributable to the Company was $81.4 million in the current quarter compared to $0.6 million in the prior year quarter.  EBITDA was $125.8 million lower in the current quarter compared to the prior year quarter.  EBITDA adjusted to exclude gains on asset dispositions and special items was $8.9 million lower in the current quarter.  Losses on asset dispositions were $0.1 million in the current quarter compared to $0.2 million in the prior year quarter.  Special items in the current quarter consisted of the $117.0 million non-cash impairment charges primarily related to the Company’s H225 helicopters.

Capital Commitments

We had unfunded capital commitments of $118.6 million as of September 30, 2017, of which $7.4 million is payable during the remainder of 2017 with the balance payable through 2019.  We may terminate $114.3 million of our total commitments (inclusive of deposits paid on options not yet exercised) without further liability other than aggregate liquidated damages of $2.6 million.  The noncancellable portion of our commitments payable during the remainder of 2017 is $2.8 million. 

Included in these capital commitments are agreements to purchase five AW189 heavy helicopters, one S92 heavy helicopter and five AW169 light twin helicopters.  The AW189 and S92 helicopters are scheduled to be delivered in 2018 and 2019.  Delivery dates for the AW169 helicopters have yet to be determined.  In addition, we had outstanding options to purchase up to ten additional AW189 helicopters. If these options are exercised, the helicopters would be scheduled for delivery beginning in 2019 through 2020.

Liquidity

As of September 30, 2017, we had $26.9 million in cash balances and $124.6 million of remaining availability under the senior secured revolving credit facility (the “Facility”) for total liquidity of $151.5 million.  As of September 30, 2017, our senior secured leverage ratio, as defined in the Facility, was 1.3x compared to the current covenant requirement of not more than 3.50x, and our interest coverage ratio was 2.6x compared to the current covenant requirement of not less than 1.75x.  The non-cash impairment charges primarily related to our H225 helicopters, discussed elsewhere in this press release, do not impact these covenant calculations under the Facility.

H225 Update

Due to an accident in April 2016 involving an Airbus Helicopters H225 model helicopter (also known as an EC225LP) operated by another helicopter company, the majority of the offshore oil and gas fleet of H225 and AS332 L2 model helicopters remains on operational suspension.  In February and April 2017, the Accident Investigation Board Norway (“AIBN”) published additional preliminary reports that updated and expanded findings from the investigation into the accident.  The AIBN’s investigation remains ongoing.  In July 2017, the civil aviation authorities in each of Norway and the United Kingdom published directives that set forth the requirements with respect to the return to service of these helicopter models.  Prior to a return to service, an operator must comply with an EASA directive issued on June 23, 2017 that requires the replacement of, and prescribes reduced service limits and inspections with respect to, identified parts and the installation of, and prescribes maintenance protocols with respect to, a new EASA-approved full flow magnetic plug device to support the inspection of the main gearbox oil system particle detection.  In addition, an operator must develop a return to service plan for the applicable helicopter model that must be approved by the relevant regulatory authority.  Such a plan would need to include a detailed safety case, outlining specific maintenance processes, tooling and training requirements.

Since the accident, we believe that H225 helicopters have only returned to service in offshore oil and gas missions in a few countries in Asia.  During the current quarter, we noted certain events that led us to come to the belief that there will not be a broad-based return to service of the H225 and AS332 L2 helicopter models in the offshore oil and gas industry.  Therefore, during the current quarter, we determined that our H225 helicopters are no longer interchangeable with the remainder of our fleet and should be evaluated for impairment.  We performed an impairment analysis on the H225 helicopters, capital parts and related inventory and determined that the carrying value exceeded the fair value.  We recorded a non-cash impairment charge of approximately $117 million to record the assets at their respective fair values.

On November 21, 2016, we filed a lawsuit in the District Court of Dallas County, Texas against Airbus Helicopters, Inc. and Airbus Helicopters S.A.S. alleging breaches of various contracts between us, fraudulent inducement and unjust enrichment in connection with the sale by Airbus of H225 model helicopters to us.  We seek compensation for our monetary damages in an amount to be determined. We cannot predict the ultimate outcome of the litigation, and we may spend significant resources pursuing our legal remedies against Airbus.

Conference Call

Management will conduct a conference call starting at 10:00 a.m. ET (9:00 a.m. CT) on Friday, November 10, 2017, to review the results for the third quarter ended September 30, 2017. The conference call can be accessed as follows:

All callers will need to reference the access code 1119678.

Within the U.S.:  Operator Assisted Toll-Free Dial-In Number: (877) 548-7914

Outside the U.S.:  Operator Assisted International Dial-In Number: (719) 325-4904

Replay

A telephone replay will be available through November 24, 2017 by utilizing the above numbers and access code.  An audio replay will also be available on the Company’s website at www.erahelicopters.com shortly after the call and will be accessible through November 24, 2017. The accompanying investor presentation will be available on November 9, 2017 on Era’s website at www.erahelicopters.com 

For additional information concerning Era Group, contact Jennifer Whalen at (713) 369-4636 or visit Era Group’s website at www.erahelicopters.com.

About Era Group

Era Group is one of the largest helicopter operators in the world and the longest serving helicopter transport operator in the U.S.  In addition to servicing its U.S. customers, Era Group provides helicopters and related services to customers and third-party helicopter operators in other countries, including Argentina, Brazil, Colombia, the Dominican Republic, India and Suriname.  Era Group’s helicopters are primarily used to transport personnel to, from and between offshore oil and gas production platforms, drilling rigs and other installations. In addition, Era Group’s helicopters are used to perform emergency air medical, search and rescue, firefighting, utility, VIP transport and flightseeing services.  Era Group also provides a variety of operating lease solutions and technical fleet support to third party operators as well as offering unmanned aerial solutions.

Forward-Looking Statements Disclosure

Certain statements discussed in this release as well as in other reports, materials and oral statements that the Company releases from time to time to the public include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements concerning management's expectations, strategic objectives, business prospects, anticipated performance and financial condition and other similar matters involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of results to differ materially from any future results, performance or achievements discussed or implied by such forward-looking statements. Such risks, uncertainties and other important factors include, among others, the Company’s dependence on, and the cyclical and volatile nature of, offshore oil and gas exploration, development and production activity, and the impact of general economic conditions and fluctuations in worldwide prices of and demand for oil and natural gas on such activity levels; the Company’s reliance on a small number of customers and the reduction of its customer base resulting from bankruptcies or consolidation; risks that the Company’s customers reduce or cancel contracted services or tender processes; cost savings initiatives implemented by the Company’s customers; risks inherent in operating helicopters; the Company’s ability to maintain an acceptable safety record; the impact of increased United States (“U.S.”) and foreign government regulation and legislation, including potential government implemented moratoriums on drilling activities; the impact of a grounding of all or a portion of the Company’s fleet for extended periods of time or indefinitely on the Company’s business, including its operations and ability to service customers, results of operations or financial condition and/or the market value of the affected helicopter(s); the Company’s ability to successfully expand into other geographic and aviation service markets; risks associated with political instability, governmental action, war, acts of terrorism and changes in the economic condition in any foreign country where the Company does business, which may result in expropriation, nationalization, confiscation or deprivation of the Company’s assets or result in claims of a force majeure situation; the impact of declines in the global economy and financial markets; the impact of fluctuations in foreign currency exchange rates on the Company’s asset values and cost to purchase helicopters, spare parts and related services; risks related to investing in new lines of service without realizing the expected benefits; risks of engaging in competitive processes or expending significant resources for strategic opportunities, with no guaranty of recoupment; the Company’s reliance on a small number of helicopter manufacturers and suppliers; the Company’s ongoing need to replace aging helicopters; the Company’s reliance on the secondary helicopter market to dispose of older helicopters; the Company’s reliance on information technology; the impact of allocation of risk between the Company and its customers; the liability, legal fees and costs in connection with providing emergency response services; adverse weather conditions and seasonality; risks associated with the Company’s debt structure; the Company’s counterparty credit risk exposure; the impact of operational and financial difficulties of the Company’s joint ventures and partners and the risks associated with identifying and securing joint venture partners when needed; conflict with the other owners of the Company’s non-wholly owned subsidiaries and other equity investees; adverse results of legal proceedings, including the risks related to the Company’s ability to recover damages from the manufacturer of the H225 model helicopter; the incurrence of significant costs in connection with the Company’s pursuit of legal remedies, including those against the manufacturer of the H225 model helicopter; the Company’s ability to obtain insurance coverage and the adequacy and availability of such coverage; the Company’s ability to remediate the material weaknesses it has identified in its internal controls over financial reporting described in its Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2017 and in its Annual Report on Form 10-K for the year ended December 31, 2016; the possibility of labor problems; the attraction and retention of qualified personnel; restrictions on the amount of foreign ownership of the Company’s common stock; and various other matters and factors, many of which are beyond the Company’s control.  In addition, these statements constitute Era Group's cautionary statements under the Private Securities Litigation Reform Act of 1995. It is not possible to predict or identify all such factors. Consequently, the foregoing should not be considered a complete discussion of all potential risks or uncertainties. The words "estimate," "project," "intend," "believe," "plan" and similar expressions are intended to identify forward-looking statements. Forward-looking statements speak only as of the date of the document in which they are made. Era Group disclaims any obligation or undertaking to provide any updates or revisions to any forward-looking statement to reflect any change in Era Group's expectations or any change in events, conditions or circumstances on which the forward-looking statement is based. The forward-looking statements in this release should be evaluated together with the many uncertainties that affect the Company's businesses, particularly those mentioned under "Risk Factors" in Era Group's Annual Report on Form 10-K for the year ended December 31, 2016, in Era Group's subsequent Quarterly Reports on Form 10-Q and in Era Group's periodic reporting on Form 8-K (if any), which are incorporated by reference. 

ERA GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except share and per share amounts)
 
  Three Months Ended
 September 30,
 Nine Months Ended
 September 30,
  2017 2016 2017 2016
Operating revenues $61,385  $65,006  $173,790  $190,939 
Costs and expenses:        
Operating 43,987  40,371  123,079  132,074 
Administrative and general 10,928  9,504  31,211  26,871 
Depreciation and amortization 12,103  12,519  35,635  37,976 
Total costs and expenses 67,018  62,394  189,925  196,921 
Gains (losses) on asset dispositions, net (122) (246) 5,048  4,034 
Loss on impairment (117,018)   (117,018)  
Operating income (loss) (122,773) 2,366  (128,105) (1,948)
Other income (expense):        
Interest income 206  466  641  1,170 
Interest expense (4,097) (4,003) (11,620) (12,881)
Foreign currency gains (losses), net 12  (33) (96) 577 
Gain on debt extinguishment       518 
Other, net (33) 34  (29) 63 
Total other income (expense) (3,912) (3,536) (11,104) (10,553)
Loss before income taxes and equity earnings (126,685) (1,170) (139,209) (12,501)
Income tax expense (benefit) (45,237) 69  (48,066) (2,177)
Loss before equity earnings (81,448) (1,239) (91,143) (10,324)
Equity earnings, net of tax 233  437  1,069  1,062 
Net loss (81,215) (802) (90,074) (9,262)
Net loss (income) attributable to noncontrolling interest in subsidiary (233) 242  219
  6,822 
Net loss attributable to Era Group Inc. $(81,448) $(560) $(89,855) $(2,440)
         
Loss per common share, basic and diluted: $(3.91) $(0.03) $(4.34) $(0.12)
         
Weighted average common shares outstanding, basic and diluted: 20,844,376  20,384,348  20,715,686  20,322,167 
         
EBITDA $(110,458) $15,323  $(91,526) $38,248 
Adjusted EBITDA $6,560  $15,323  $26,107  $37,730 
Adjusted EBITDA excluding gains $6,682
  $15,569  $21,059  $33,696 


ERA GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except share and per share amounts)
 
  Three Months Ended
  Sep 30,
 2017
 Jun 30,
 2017
 Mar 31,
 2017
 Dec 31,
 2016
 Sep 30,
 2016
Operating revenues $61,385  $57,878  $54,527  $56,289  $65,006 
Costs and expenses:          
Operating 43,987  41,335  37,757  37,789  40,371 
Administrative and general 10,928  9,902  10,381  9,335  9,504 
Depreciation and amortization 12,103  11,978  11,554  11,339  12,519 
Total costs and expenses 67,018  63,215  59,692  58,463  62,394 
Gains (losses) on asset dispositions, net (122) 5,061  109  753  (246)
Loss on impairment (117,018)        
Operating income (loss) (122,773) (276) (5,056) (1,421) 2,366 
Other income (expense):          
Interest income 206  185  250  (429) 466 
Interest expense (4,097) (3,934) (3,589) (4,444) (4,003)
Foreign currency gains (losses), net 12  (136) 28  (570) (33)
Gain on debt extinguishment          
Other, net (33) (8) 12  6  34 
Total other income (expense) (3,912) (3,893) (3,299) (5,437) (3,536)
Loss before income taxes and equity earnings (126,685) (4,169) (8,355) (6,858) (1,170)
Income tax expense (benefit) (45,237) (726) (2,103) (1,180) 69 
Loss before equity earnings (81,448) (3,443) (6,252) (5,678) (1,239)
Equity earnings, net of tax 233  371  465  30  437 
Net loss (81,215) (3,072) (5,787) (5,648) (802)
Net loss (income) attributable to noncontrolling interest in subsidiary (233) 285  167  110  242 
Net loss attributable to Era Group Inc. $(81,448) $(2,787) $(5,620) $(5,538) $(560)
           
Loss per common share, basic and diluted: $(3.91) $(0.13) $(0.27) $(0.27) $(0.03)
           
Weighted average common shares outstanding, basic and diluted: 20,844,376  20,789,537  20,509,463  20,433,155  20,384,348 
           
EBITDA $(110,458) $11,929  $7,003  $9,384  $15,323 
Adjusted EBITDA $6,560
  $12,544  $7,003  $9,384  $15,323 
Adjusted EBITDA excluding gains $6,682
  $7,483  $6,894  $8,631  $15,569 


ERA GROUP INC.
OPERATING REVENUES BY LINE OF SERVICE
(unaudited, in thousands)
 
  Three Months Ended
  Sep 30,
 2017
 Jun 30,
 2017
 Mar 31,
 2017
 Dec 31,
 2016
 Sep 30,
 2016
Oil and gas:(1)          
U.S. $36,578  $32,081  $30,341  $31,709  $35,961 
International 16,764  14,284  17,167  14,881  17,306 
Total oil and gas 53,342  46,365  47,508  46,590  53,267 
Dry-leasing 2,558  6,606  3,279  3,719  2,664 
Emergency Response Services (2) 2,550  2,771  3,740  5,980  5,854 
Flightseeing 2,935  2,136      3,221 
  $61,385  $57,878  $54,527  $56,289  $65,006 
                     


FLIGHT HOURS BY LINE OF SERVICE(3)
(unaudited)
 
  Three Months Ended
  Sep 30,
 2017
 Jun 30,
 2017
 Mar 31,
 2017
 Dec 31,
 2016
 Sep 30,
 2016
Oil and gas:(1)          
U.S. 6,732  5,693  5,219  6,294  7,628 
International 2,754  2,205  2,636  2,477  3,005 
Total oil and gas 9,486  7,898  7,855  8,771  10,633 
Emergency Response Services (2) 90  131  481  885  1,084 
Flightseeing 906  673      970 
  10,482  8,702  8,336  9,656  12,687 
                

____________________

    (1) Primarily oil and gas services, but also includes revenues and flight hours from utility services, such as firefighting, and VIP transport.
    (2) Includes revenues and flight hours from SAR and air medical services.
    (3) Does not include hours flown by helicopters in our dry-leasing line of service.


ERA GROUP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
  Sep 30,
 2017
 Jun 30,
 2017
 Mar 31,
 2017
 Dec 31,
 2016
 Sep 30,
 2016
ASSETS (unaudited) (unaudited) (unaudited)   (unaudited)
Current assets:          
Cash and cash equivalents $26,896  $28,878  $26,339  $26,950  $32,144 
Receivables:          
Trade, net of allowance for doubtful accounts 38,608  32,824  34,840  32,470  34,300 
Tax receivables 2,811  3,000  3,166  3,461   
Other 2,486  3,172  2,396  2,716  6,490 
Inventories, net 21,985  24,296  25,232  25,417  26,615 
Prepaid expenses 2,439  2,518  2,535  1,579  1,799 
Escrow deposits     3,779  3,777  190 
Total current assets 95,225  94,688  98,287  96,370  101,538 
Property and equipment 983,798  1,164,048  1,154,835  1,154,028  1,175,131 
Accumulated depreciation (299,294) (353,830) (343,659) (332,219) (347,113)
Net property and equipment 684,504  810,218  811,176  821,809  828,018 
Equity investments and advances 29,894  29,852  29,727  29,266  29,595 
Intangible assets 1,126  1,129  1,133  1,137  1,141 
Other assets 5,021  5,593  6,096  6,591  11,177 
Total assets $815,770  $941,480  $946,419  $955,173  $971,469 
           
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY          
Current liabilities:          
Accounts payable and accrued expenses $15,326  $12,884  $9,032  $8,876  $9,132 
Accrued wages and benefits 8,350  8,708  6,881  8,507  9,077 
Accrued interest 3,325  527  3,365  529  3,363 
Accrued income taxes 38  291  689  666  550 
Accrued other taxes 2,098
  1,145  1,447  2,139  2,311 
Accrued contingencies 1,288  1,334  1,189  1,447  1,543 
Current portion of long-term debt 2,191  2,161  2,199  1,237  1,539 
Other current liabilities 2,406  2,590  2,846  2,222  2,470 
Total current liabilities 35,022  29,640  27,648  25,623  29,985 
Long-term debt 215,025  221,354  225,946  230,139  232,655 
Deferred income taxes 177,704  222,724  223,442  225,472  227,417 
Deferred gains and other liabilities 1,069  944  924  1,301  4,280 
Total liabilities 428,820  474,662  477,960  482,535  494,337 
           
Redeemable noncontrolling interest 4,002  3,769  4,054  4,221  4,331 
Equity:          
Era Group Inc. stockholders’ equity:          
Common stock 215  215  215  211  211 
Additional paid-in capital 442,948  441,595  440,164  438,489  437,291 
Retained earnings (57,331) 24,117  26,904  32,524  38,062 
Treasury shares, at cost (2,974) (2,968) (2,968) (2,899) (2,855)
Accumulated other comprehensive income, net of tax 90  90  90  92  92 
Total equity 382,948  463,049  464,405  468,417  472,801 
Total liabilities, redeemable noncontrolling interest and stockholders’ equity $815,770  $941,480  $946,419  $955,173  $971,469 
                     

Our management uses EBITDA and Adjusted EBITDA to assess the performance and operating results of our business. EBITDA is defined as Earnings before Interest (includes interest income and interest expense), Taxes, Depreciation and Amortization. Adjusted EBITDA is defined as EBITDA further adjusted for certain items noted in the reconciliation below that occur during the reported period. We include EBITDA and Adjusted EBITDA to provide investors with a supplemental measure of our operating performance. Neither EBITDA nor Adjusted EBITDA is a recognized term under generally accepted accounting principles in the U.S. (“GAAP”). Accordingly, they should not be used as an indicator of, or an alternative to, net income as a measure of operating performance. In addition, EBITDA and Adjusted EBITDA are not intended to be measures of free cash flow available for management’s discretionary use, as they do not consider certain cash requirements, such as debt service requirements. Because the definitions of EBITDA and Adjusted EBITDA (or similar measures) may vary among companies and industries, they may not be comparable to other similarly titled measures used by other companies.  Each of these non-GAAP measures has limitations and therefore should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP.

The following table provides a reconciliation of Net Income, the most directly comparable GAAP measure, to EBITDA and Adjusted EBITDA (in thousands).

  Three Months Ended Nine Months Ended
  Sep 30,
 2017
 Jun 30,
 2017
 Mar 31,
 2017
 Dec 31,
 2016
 Sep 30,
 2016
 Sep 30,
 2017
 Sep 30,
 2016
Net loss $(81,215) $(3,072) $(5,787) $(5,648) $(802) $(90,074) $(9,262)
Depreciation and amortization 12,103  11,978  11,554  11,339  12,519  35,635  37,976 
Interest income (206) (185) (250) 429  (466) (641) (1,170)
Interest expense 4,097  3,934  3,589  4,444  4,003  11,620  12,881 
Income tax expense (benefit) (45,237) (726) (2,103) (1,180) 69  (48,066) (2,177)
EBITDA $(110,458) $11,929  $7,003  $9,384  $15,323  $(91,526) $38,248 
Special items (1) 117,018  615        117,633  (518)
Adjusted EBITDA $6,560  $12,544  $7,003  $9,384  $15,323  $26,107  $37,730 
Losses (gains) on asset dispositions, net 122  (5,061) (109) (753) 246  (5,048) (4,034)
Adjusted EBITDA excluding gains $6,682
  $7,483  $6,894  $8,631  $15,569  $21,059  $33,696 
                             

____________________

    (1) Special items include the following:

  • In the three months ended September 30, 2017, non-cash impairment charges of $117.0 million primarily related to the impairment of the Company’s H225 model helicopters;
  • In the three months ended June 30, 2017, $0.6 million of severance-related expenses due to changes in senior management; and
  • In the nine months ended September 30, 2016, a gain of $0.5 million on the extinguishment of debt related to the repurchase of a portion of our 7.750% Senior Notes.

The Facility requires that the Company maintain certain financial ratios on a rolling four-quarter basis.  The interest coverage ratio is a trailing four-quarter quotient of (i) EBITDA (as defined in the Facility) less dividends and distributions divided by (ii) interest expense.  The interest coverage ratio is not a measure of operating performance or liquidity defined by GAAP and may not be comparable to similarly titled measures presented by other companies.  The senior secured leverage ratio is calculated by dividing (i) the sum of secured debt for borrowed money, capital lease obligations and guaranties of obligations of non-consolidated entities by (ii) EBITDA (as defined in the Facility).  The senior secured leverage ratio is not a measure of operating performance or liquidity defined by GAAP and may not be comparable to similarly titled measures presented by other companies.  EBITDA is calculated under the Facility differently than as presented elsewhere in this release.

ERA GROUP INC.
FLEET COUNTS (1)
(unaudited)
 
  Sep 30,
 2017
 Jun 30,
 2017
 Mar 31,
 2017
 Dec 31,
 2016
 Sep 30,
 2016
Heavy:          
S92 3  3  2  2  2 
H225 9  9  9  9  9 
AW189 4  4  2  2  2 
  16  16  13  13  13 
           
Medium:          
AW139 36  36  36  36  38 
S76 C+/C++ 5  5  5  6  6 
B212 6  6  7  7  7 
B412         1 
  47  47  48  49  52 
           
Light—twin engine:          
A109 7  7  7  7  7 
EC135 15  15  15  16  17 
EC145 3  3  4  5  5 
BK117 2  2  2  2  3 
BO105 3  3  3  3  3 
  30  30  31  33  35 
           
Light—single engine:          
A119 14  14  14  14  14 
AS350 26  26  27  27  27 
  40  40  41  41  41 
Total Helicopters 133  133  133  136  141 

____________________

    (1) Includes all owned, joint ventured, leased-in and managed helicopters and excludes helicopters fully paid for and delivered but not yet placed in service as of the applicable dates.