CST: 06/12/2016 15:50:28   

Era Group Inc. Reports Fourth Quarter and Full Year 2015 Results

284 Days ago

HOUSTON, TX--(Marketwired - Feb 25, 2016) - Era Group Inc. (NYSE: ERA)

During 2015, the Company:

  • generated positive free cash flows despite the deteriorating business environment;
  • consolidated its Brazilian joint venture, Aeróleo Taxi Aero S/A ("Aeróleo"), and purchased a 75% interest in Sicher Helicopters SAS ("Sicher"), a helicopter operator in Colombia;
  • sold its fixed base operations ("FBO") in Alaska for proceeds of $14.3 million, resulting in gains of $12.9 million;
  • upgraded its fleet by placing in service its first two S92 heavy helicopters and two AW189 heavy helicopters;
  • repurchased $50.2 million principal amount of its 7.750% senior unsecured notes (the "7.750% Senior Notes") for total cash of $47.9 million, inclusive of accrued interest; and
  • recorded an impairment charge of $1.9 million on the write-off of its goodwill balance and non-recurring tax charges of $3.8 million resulting from the consolidation of Aeróleo and $1.0 million related to the transfer of a helicopter to Sicher.

Era Group Inc. (NYSE: ERA) today reported a net loss for its fourth quarter ended December 31, 2015 ("current quarter") of $3.4 million, or $0.17 per diluted share, on operating revenues of $73.9 million compared to net income of $3.2 million, or $0.16 per diluted share, on operating revenues of $74.7 million for the quarter ended December 31, 2014 ("prior year quarter"). Excluding the special items discussed below and a $3.8 million write-off of a deferred tax asset resulting from the consolidation of Aeróleo, current quarter net income would have been $0.9 million, or $0.04 per diluted share. The Company also reported net income of $8.7 million, or $0.42 per diluted share, for the year ended December 31, 2015 ("current year") on operating revenues of $281.8 million compared to net income of $17.1 million, or $0.84 per diluted share, on operating revenues of $331.2 million for the year ended December 31, 2014 ("prior year").

Earnings before interest, taxes, depreciation and amortization ("EBITDA") was $16.8 million in the current quarter compared to $18.6 million in the prior year quarter. EBITDA adjusted to exclude gains on asset dispositions and special items was $16.3 million in the current quarter compared to $18.6 million in the prior year quarter. Gains on asset dispositions were $1.0 million in the current quarter. There were no significant gains in the prior year quarter. Special items in the current quarter consisted of a $1.4 million gain on debt extinguishment related to the repurchase of a portion of the 7.750% Senior Notes and a $1.9 million goodwill impairment charge. There were no special items in the prior year quarter.

EBITDA was $81.7 million in the current year compared to $85.9 million in the prior year. EBITDA adjusted to exclude gains on asset dispositions and special items was $63.0 million in the current year compared to $84.7 million in the prior year. The Company sold or otherwise disposed of helicopters and related equipment for gains of $6.0 million in the current year compared to gains of $6.1 million in the prior year. Special items in the current year consisted of a $1.6 million gain on debt extinguishment related to the repurchase of a portion of the 7.750% Senior Notes, a $12.9 million gain on the sale of the Company's FBO in Alaska and the goodwill impairment charge discussed above. Special items in the prior year consisted of $2.5 million in severance-related expenses for the Company's former Chief Executive Officer and a $2.5 million impairment charge related to a probable loss of a note receivable.

"I would like to thank everyone at Era for their diligence in achieving our target of zero air accidents in 2015, extending our clean sheet of zero air accidents in 2014," said Chris Bradshaw, President and Chief Executive Officer of Era Group. "Safety is our most important core value and remains the highest operational priority for our customers and Era."

"We believe the challenging industry conditions prevalent in 2015 are likely to persist for the next several quarters as oil and gas companies further reduce their spending levels and there continues to be an excess supply of heavy and medium helicopters in the market. Over the last 16 months, we have reduced headcount by more than 25%, reduced and deferred firm capital commitments, sold our FBO business and helicopter assets for significant gains over book value, lowered our fixed charges by repurchasing $50 million of our 7.750% Senior Notes at discounts to par and successfully implemented other cost control measures. We remain focused on maintaining the highest safety performance, maximizing the utilization of our fleet, realizing operational efficiencies and protecting our balance sheet."

"Era has a strong credit profile and ample liquidity to navigate through a prolonged market downturn. During the fourth quarter, we continued to generate positive operating cash flows and improved the funded debt-to-EBITDA and interest coverage ratios under our revolving credit facility to 2.6x and 8.4x, respectively."

Fourth Quarter Results

Operating revenues were $0.7 million lower in the current quarter compared to the prior year quarter primarily due to lower utilization and lower average rates in the U.S. Gulf of Mexico and Alaska, dry-leasing and air medical contracts that ended subsequent to the prior year quarter and the sale of the FBO in May 2015. These decreases were partially offset by increased revenues due to the consolidation of Aeróleo.

Operating expenses were $0.7 million lower in the current quarter primarily due to reductions in fuel, personnel and other operating costs in our U.S. business, partially offset by increases due to the consolidation of Aeróleo.

Administrative and general expenses were $1.4 million higher in the current quarter due to the consolidation of Aeróleo and increased bad debt reserves, which offset reduced shared service and compensation expenses in the U.S.

Income tax expense was $4.5 million higher in the current quarter primarily due to the write-off of a deferred tax asset upon the consolidation of Aeróleo.

Equity losses were $1.2 million in the current quarter primarily due to losses from the Company's Dart Holding Company Ltd. ("Dart") joint venture. 

Sequential Quarter Results

Net loss in the current quarter was $3.4 million compared to net income of $0.9 million in the third quarter ended September 30, 2015 ("preceding quarter"). EBITDA was $16.8 million in the current quarter compared to $17.1 million in the preceding quarter. EBITDA adjusted to exclude gains on asset dispositions and special items was $16.3 million in the current quarter compared to $15.3 million in the preceding quarter. Gains on asset dispositions were $1.8 million, and special items were less than $0.1 million in the preceding quarter. 

Operating revenues in the current quarter were $4.2 million higher compared to the preceding quarter due to the consolidation of Aeróleo, partially offset by the end of seasonal activities in Alaska and lower fleet utilization. 

Operating expenses were $2.1 million higher due to the consolidation of Aeróleo partially offset by reductions in personnel and repairs and maintenance costs. Administrative and general expenses were $0.2 million lower due to reductions in professional services and compensation expenses in the U.S, partially offset by increases due to the consolidation of Aeróleo and increased bad debt reserves.

Full Year Results

Operating revenues were $49.4 million lower in the current year primarily due to reduced utilization of medium helicopters operating in the U.S. Gulf of Mexico and Alaska, dry-leasing and air medical contracts that ended subsequent to the prior year and the sale of the FBO in May 2015. These decreases were partially offset by higher revenues from international oil and gas operations due to the consolidation of Aeróleo.

Operating expenses were $32.9 million lower in the current year primarily due to lower fuel, repairs and maintenance and personnel expenses.

Administrative and general expenses were $1.2 million lower in the current year primarily due to lower compensation costs and transition services, which were partially offset by higher professional fees and Aeróleo expenses.

Depreciation expense was $1.0 million higher in the current year primarily due to a base expansion project and new helicopters placed in service.

During the current year, the Company sold or otherwise disposed of helicopters and other equipment for total consideration of $36.5 million, including cash proceeds of $25.3 million, resulting in gains of $6.0 million, compared to proceeds from helicopter and equipment sales of $7.1 million and gains of $6.1 million in the prior year.

Interest expense was $1.3 million lower in the current year primarily due to increased capitalized interest and interest savings resulting from the repurchase of a portion of the 7.750% Senior Notes.

Derivative losses, net, were less than $0.1 million in the Current Year. Unrealized derivative losses of $0.9 million in the Prior Year were primarily due to the revaluation to market of forward currency contracts.

Income tax expense was $5.8 million higher in the current year primarily due to the write-off of a deferred tax asset related to the consolidation of Aeróleo and a nonrecurring charge related to the acquisition of Sicher.

Equity losses were $1.9 million in the current year compared to equity earnings of $2.7 million in the prior year. The reduction in equity earnings is primarily due to the sale of a 51% interest in Lake Palma S.A. in the prior year for a gain of $1.5 million, net of tax, and equity losses from Dart in the current year.

Fleet Update

During the current quarter, the Company's capital expenditures were $12.8 million, which consisted primarily of payments for new helicopter purchases. The Company placed two S92 heavy helicopters in service during the current quarter, one of which was delivered in the preceding quarter, and took delivery of and placed in service two AW189 heavy helicopters during the current quarter. The Company records helicopter acquisitions in property and equipment and places helicopters in service once completion work has been finalized and the helicopters are ready for use.

The Company continues to experience excess capacity in its medium and heavy helicopters and expects this excess capacity to persist for the next several quarters. Excess helicopters include the Company's helicopters other than those under customer contracts, undergoing maintenance or dedicated for charter activity. The Company is participating in several competitive bids to place excess medium and heavy helicopters on contract. In addition, the Company may sell certain helicopters on an opportunistic basis consistent with its stated strategy.

Capital Commitments

The Company's unfunded capital commitments as of December 31, 2015 consisted primarily of orders for helicopters and totaled $150.3 million, of which $38.9 million is payable during 2016 with the balance payable through 2018. The non-cancellable portion of helicopter commitments payable in 2016 is $13.4 million. The Company may terminate $123.6 million of its total commitments (inclusive of deposits paid on options not yet exercised) without further liability other than liquidated damages of $3.2 million in the aggregate. 

Included in these capital commitments are agreements to purchase seven AW189 heavy helicopters, two S92 heavy helicopters and five AW169 light twin helicopters. The AW189 and S92 helicopters are scheduled to be delivered in 2016 through 2018. Delivery dates for the AW169 helicopters have yet to be determined. In addition, the Company had outstanding options to purchase up to an additional ten AW189 helicopters and two S92 helicopters. If these options are exercised, the helicopters would be delivered beginning in 2017 through 2018. As of December 31, 2015, the Company had $1.5 million of deposits paid on these unexercised helicopter purchase options.

Capital Allocation and Liquidity

In the current quarter, the Company repurchased $25.3 million principal amount of its 7.750% Senior Notes at prices ranging from 79.00 to 95.00 for total cash of $23.5 million, inclusive of accrued interest, and recognized gains of $1.4 million. 

As of December 31, 2015, the Company had $14.4 million in cash balances and $207.1 million of remaining availability under its senior secured revolving credit facility (the "Facility") for total liquidity of $221.5 million. The Company's funded debt-to-EBITDA and interest coverage ratios, as defined in the Facility, improved during the quarter to 2.6x and 8.4x, respectively.

Conference Call

Management will conduct a conference call starting at 10:00 a.m. ET (9:00 a.m. CT) on Friday, February 26, 2016 to review the results for the fourth quarter and full year ended December 31, 2015. The conference call can be accessed as follows:

All callers will need to reference the access code 1755914

Within the U.S.: Operator Assisted Toll-Free Dial-In Number: (888) 576-4398

Outside the U.S.: Operator Assisted International Dial-In Number: (719) 325-2495

Replay

A telephone replay will be available through March 10, 2016 and may be accessed by calling (888) 203-1112 for domestic callers or (719) 457-0820 for international callers. An audio replay will also be available on the Company's website at www.eragroupinc.com shortly after the call and will be accessible through March 10, 2016.

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 also provides helicopters and related services to customers and third-party helicopter operators in other countries, including Brazil, Colombia, Dominican Republic, India, Norway, Spain, and the United Kingdom. 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.

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 consolidation; cost-saving initiatives implemented by the Company's customers; risks inherent in operating helicopters; the Company's ability to maintain an acceptable safety record; the Company's ability to successfully expand into other geographic and helicopter service markets; the impact of increased U.S. and foreign government regulation and legislation, including potential government implemented moratoriums on drilling activities; risks of engaging in competitive processes or expending significant resources with no guaranty of recoupment; risks of a grounding of all or a portion of the Company's fleet for extended periods of time or indefinitely; risks that the Company's customers reduce or cancel contracted services or tender processes; the Company's reliance on a small number of helicopter manufacturers and suppliers; 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 cost to purchase helicopters, spare parts and related services and on asset values; the Company's credit risk exposure; 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; risks associated with the Company's debt structure; operational and financial difficulties of the Company's joint ventures and partners; conflict with the other owners of the Company's non-wholly owned subsidiaries and other equity investees; adverse results of legal proceedings; adverse weather conditions and seasonality; the Company's ability to obtain insurance coverage and the adequacy and availability of such coverage; 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, 2015, in Era Group's subsequent Quarterly Reports on Form 10-Q and in Era Group's current reporting on Form 8-K (if any), which are incorporated by reference.

   
ERA GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
 
   
  Three Months Ended
December 31,
    Year Ended
December 31,
 
  2015     2014     2015     2014  
  (unaudited)              
Operating revenues $ 73,943     $ 74,689     $ 281,837     $ 331,222  
Costs and expenses:                              
  Operating   45,085       45,772       171,481       204,373  
  Administrative and general   11,052       9,647       42,812       43,987  
  Depreciation and amortization   12,151       11,854       47,337       46,312  
    Total costs and expenses   68,288       67,273       261,630       294,672  
Gains on asset dispositions, net   994       29       5,953       6,101  
Goodwill impairment   (1,866 )     -       (1,866 )     -  
Operating income   4,783       7,445       24,294       42,651  
Other income (expense):                              
  Interest income   391       122       1,191       540  
  Interest expense   (3,979 )     (3,556 )     (13,526 )     (14,778 )
  Derivative gains (losses), net   (4 )     800       (18 )     (944 )
  Foreign currency losses, net   (319 )     (1,856 )     (2,590 )     (2,377 )
  Gain on debt extinguishment   1,369       -       1,617       -  
  Gain on sale of FBO   -       -       12,946       -  
  Note receivable impairment   -       -       -       (2,457 )
  Other, net   54       (14 )     45       (4 )
    Total other income (expense)   (2,488 )     (4,504 )     (335 )     (20,020 )
Income before income tax expense and equity earnings (losses)   2,295       2,941       23,959       22,631  
Income tax expense, net   4,691       155       14,117       8,285  
Income (loss) before equity earnings (losses)   (2,396 )     2,786       9,842       14,346  
Equity earnings (losses), net of tax   (1,224 )     354       (1,943 )     2,675  
Net income (loss)   (3,620 )     3,140       7,899       17,021  
Net loss attributable to non-controlling interest in subsidiary   173       45       806       96  
Net income (loss) attributable to Era Group Inc. $ (3,447 )   $ 3,185     $ 8,705     $ 17,117  
                               
Basic earnings (loss) per common share $ (0.17 )   $ 0.16     $ 0.42     $ 0.84  
Diluted earnings (loss) per common share $ (0.17 )   $ 0.16     $ 0.42     $ 0.84  
                               
Weighted average common shares outstanding, basic   20,183,027       20,173,583       20,228,370       20,073,378  
Weighted average common shares outstanding, diluted   20,183,027       20,232,025       20,270,756       20,139,581  
                               
EBITDA $ 16,810     $ 18,583     $ 81,688     $ 85,856  
Adjusted EBITDA $ 17,307     $ 18,583     $ 68,991     $ 90,775  
Adjusted EBITDA excluding Gains $ 16,313     $ 18,554     $ 63,038     $ 84,674  
   
   
   
ERA GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except share and per share amounts)
 
   
  Three Months Ended  
  Dec 31,
2015
    Sep 30,
2015
    Jun 30,
2015
    Mar 31,
2015
    Dec 31,
2014
 
Operating revenues $ 73,943     $ 69,741     $ 70,738     $ 67,415     $ 74,689  
Costs and expenses:                                      
  Operating   45,085       43,007       39,784       43,605       45,772  
  Administrative and general   11,052       11,238       10,779       9,743       9,647  
  Depreciation and amortization   12,151       12,186       11,398       11,602       11,854  
    Total costs and expenses   68,288       66,431       61,961       64,950       67,273  
Gains (losses) on asset dispositions, net   994       1,813       (242 )     3,388       29  
Goodwill impairment   (1,866 )     -       -       -       -  
Operating income   4,783       5,123       8,535       5,853       7,445  
Other income (expense):                                      
  Interest income   391       232       317       251       122  
  Interest expense   (3,979 )     (3,121 )     (2,881 )     (3,545 )     (3,556 )
  Derivative gains (losses), net   (4 )     8       (10 )     (12 )     800  
  Foreign currency gains (losses), net   (319 )     146       543       (2,960 )     (1,856 )
  Gains (losses) on debt extinguishment   1,369       (16 )     -       264       -  
  Gain on sale of FBO   -       -       12,946       -       -  
  Other, net   54       -       (9 )     -       (14 )
    Total other income (expense)   (2,488 )     (2,751 )     10,906       (6,002 )     (4,504 )
Income (loss) before income tax expense and equity earnings (losses)   2,295       2,372       19,441       (149 )     2,941  
Income tax expense (benefit)   4,691       1,343       8,138       (55 )     155  
Income (loss) before equity earnings (losses)   (2,396 )     1,029       11,303       (94 )     2,786  
Equity earnings (losses), net of tax   (1,224 )     (376 )     (198 )     (145 )     354  
Net income (loss)   (3,620 )     653       11,105       (239 )     3,140  
Net loss attributable to non-controlling interest in subsidiary   173       208       228       197       45  
Net income (loss) attributable to Era Group Inc. $ (3,447 )   $ 861     $ 11,333     $ (42 )   $ 3,185  
                                       
Basic earnings (loss) per common share $ (0.17 )   $ 0.04     $ 0.55     $ -     $ 0.16  
Diluted earnings (loss) per common share $ (0.17 )   $ 0.04     $ 0.55     $ -     $ 0.16  
                                       
Weighted average common shares outstanding, basic   20,183,027       20,260,514       20,273,780       20,195,955       20,173,583  
Weighted average common shares outstanding, diluted   20,183,027       20,287,069       20,332,657       20,195,955       20,232,025  
                                       
EBITDA $ 16,810     $ 17,071     $ 33,205     $ 14,602     $ 18,583  
Adjusted EBITDA $ 17,307     $ 17,087     $ 20,259     $ 14,338     $ 18,583  
Adjusted EBITDA excluding Gains $ 16,313     $ 15,274     $ 20,501     $ 10,950     $ 18,554  
                                       
   
   
ERA GROUP INC.
OPERATING REVENUES BY LINE OF SERVICE
(unaudited, in thousands)
 
   
  Three Months Ended  
  Dec 31,
2015
  Sep 30,
2015
  Jun 30,
2015
    Mar 31,
2015
    Dec 31,
2014
 
Oil and gas:(1)                                  
  U.S. Gulf of Mexico $ 40,368   $ 42,132   $ 41,821     $ 41,913     $ 45,837  
  Alaska   3,309     5,429     6,009       3,801       6,496  
  International   18,865     60     47       -       183  
    Total oil and gas   62,542     47,621     47,877       45,714       52,516  
Dry-leasing   4,643     11,925     12,233       11,956       11,911  
Search and rescue   4,955     4,418     4,989       5,238       5,650  
Air medical services   1,803     1,854     1,914       2,367       2,301  
Flightseeing   -     3,923     3,118       -       -  
Fixed Base Operations   -     -     614       2,146       2,403  
Eliminations   -     -     (7 )     (6 )     (92 )
  $ 73,943   $ 69,741   $ 70,738     $ 67,415     $ 74,689  
 
 
FLIGHT HOURS BY LINE OF SERVICE (2)
(unaudited)
 
  Three Months Ended
  Dec 31,
2015
  Sep 30,
2015
  Jun 30,
2015
  Mar 31,
2015
  Dec 31,
2014
Oil and gas:(1)                  
  U.S. Gulf of Mexico 8,255   9,435   8,717   7,612   8,514
  Alaska 380   797   732   290   560
  International 3,055   22   14   -   -
    Total oil and gas 11,690   10,254   9,463   7,902   9,074
Search and rescue 275   265   260   300   355
Air medical services 748   949   826   825   831
Flightseeing -   1,502   1,118   -   -
  12,713   12,970   11,667   9,027   10,260
                   

____________________

(1) Primarily oil and gas services, but also includes revenues from activities such as firefighting and utility support.
(2) Does not include hours flown by helicopters in our dry-leasing line of service.
   
   
   
ERA GROUP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
   
  Dec 31,
2015
    Sep 30,
2015
    Jun 30,
2015
    Mar 31,
2015
    Dec 31,
2014
 
ASSETS       (unaudited)   (unaudited)   (unaudited)      
Current assets:                                      
  Cash and cash equivalents $ 14,370     $ 13,808     $ 17,002     $ 33,691     $ 40,867  
  Receivables:                                      
    Trade, net of allowance for doubtful accounts   48,639       39,498       39,866       38,949       33,390  
    Tax receivables   6,085       114       105       380       380  
    Other   3,305       2,399       2,005       2,187       1,682  
  Inventories, net   27,994       24,932       25,808       26,189       26,869  
  Prepaid expenses   1,963       3,055       3,847       4,081       2,661  
  Deferred income taxes   -       2,276       2,507       2,167       1,996  
  Other current assets   191       2,297       6,762       2,800       -  
    Total current assets   102,547       88,379       97,902       110,444       107,845  
Property and equipment   1,175,909       1,175,693       1,192,445       1,171,548       1,171,267  
    Accumulated depreciation   (316,693 )     (311,070 )     (314,484 )     (315,399 )     (308,141 )
    Net property and equipment   859,216       864,623       877,961       856,149       863,126  
Equity investments and advances   28,898       30,256       30,945       31,397       31,753  
Goodwill   -       1,589       1,823       352       352  
Intangible assets   1,158       1,411       1,410       -       -  
Other assets   15,272       12,522       14,547       15,156       14,098  
Total assets $ 1,007,091     $ 998,780     $ 1,024,588     $ 1,013,498     $ 1,017,174  
                                       
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS' EQUITY                                      
Current liabilities:                                      
  Accounts payable and accrued expenses $ 12,000     $ 12,037     $ 12,026     $ 13,904     $ 15,120  
  Accrued wages and benefits   9,012       7,861       7,293       6,822       7,521  
  Accrued interest   562       3,992       813       4,791       949  
  Accrued income taxes   -       7,415       7,613       37       267  
  Derivative instruments   -       71       192       275       1,109  
  Current portion of long-term debt   3,278       25,335       26,130       26,729       27,426  
  Accrued other taxes   2,520       1,259       968       1,326       955  
  Accrued contingencies   2,410       -       -       -       -  
  Other current liabilities   2,300       3,476       2,588       1,795       2,207  
    Total current liabilities   32,082       61,446       57,623       55,679       55,554  
Long-term debt   266,438       242,873       267,671       277,424       282,118  
Deferred income taxes   229,848       213,998       218,802       217,200       217,027  
Deferred gains and other liabilities   2,616       1,956       1,994       1,937       2,111  
    Total liabilities   530,984       520,273       546,090       552,240       556,810  
                                       
Redeemable noncontrolling interest   4,804       4,783       5,195       -       -  
Equity:                                      
  Era Group Inc. stockholders' equity:                                      
    Common stock   207       207       206       206       204  
    Additional paid-in capital   433,175       432,774       431,233       430,251       429,109  
    Retained earnings   40,502       43,949       43,088       31,755       31,797  
    Treasury shares, at cost   (2,673 )     (2,632 )     (563 )     (560 )     (551 )
    Accumulated other comprehensive income (loss), net of tax   92       92       (44 )     93       95  
  Total Era Group Inc. stockholders' equity   471,303       474,390       473,920       461,745       460,654  
  Non-controlling interest   -       (666 )     (617 )     (487 )     (290 )
    Total equity   471,303       473,724       473,303       461,258       460,364  
Total liabilities, redeemable noncontrolling interest and stockholders' equity $ 1,007,091     $ 998,780     $ 1,024,588     $ 1,013,498     $ 1,017,174  
                                       

The Company's 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 non-recurring items that occur during the reported period, as noted below. 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.

The following table provides a reconciliation of Net Income, the most directly comparable GAAP measure, to EBITDA, Adjusted EBITDA and Special items include the following:

           
  Three Months Ended     Year Ended  
  Dec 31,
2015
    Sep 30,
2015
    Jun 30,
2015
    Mar 31,
2015
    Dec 31,
2014
    Dec 31,
2015
    Dec 31,
2014
 
Net Income $ (3,620 )   $ 653     $ 11,105     $ (239 )   $ 3,140     $ 7,899     $ 17,021  
  Depreciation and amortization   12,151       12,186       11,398       11,602       11,854       47,337       46,312  
  Interest income   (391 )     (232 )     (317 )     (251 )     (122 )     (1,191 )     (540 )
  Interest expense   3,979       3,121       2,881       3,545       3,556       13,526       14,778  
  Income tax expense (benefit)   4,691       1,343       8,138       (55 )     155       14,117       8,285  
EBITDA $ 16,810     $ 17,071     $ 33,205     $ 14,602     $ 18,583     $ 81,688     $ 85,856  
  Special items (1)   497       16       (12,946 )     (264 )     -       (12,697 )     4,919  
Adjusted EBITDA $ 17,307     $ 17,087     $ 20,259     $ 14,338     $ 18,583     $ 68,991     $ 90,775  
  Gains on asset dispositions, net ("Gains")   (994 )     (1,813 )     242       (3,388 )     (29 )     (5,953 )     (6,101 )
Adjusted EBITDA excluding Gains $ 16,313     $ 15,274     $ 20,501     $ 10,950     $ 18,554     $ 63,038     $ 84,674  
                                                       

____________________

(1) Special items include the following:

  • In the three months ended December 31, 2015, a pre-tax gain of $1.4 million on the extinguishment of debt related to the repurchase of a portion of our 7.750% Senior Notes and a pre-tax charge of $1.9 million on the impairment of our goodwill;
  • In the three months ended September 30, 2015, a pre-tax loss of less than $0.1 million on the extinguishment of debt related to the repurchase of a portion of our 7.750% Senior Notes;
  • In the three months ended June 30, 2015, a pre-tax gain of $12.9 million on the sale of our FBO in Alaska;
  • In the three months ended March 31, 2015, a pre-tax gain of $0.3 million on the extinguishment of debt related to the repurchase of a portion of our 7.750% Senior Notes; and
  • In the year ended December 31, 2014, a pre-tax charge of $2.5 million for severance-related expenses for the Company's former CEO and a pre-tax impairment charge of $2.5 million related to a probable loss of a note receivable.

The Company's Credit Facility requires that it maintain certain financial ratios on a rolling 12-month basis. The interest coverage ratio is a trailing 12-month 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 funded debt to EBITDA ratio is calculated by dividing (i) the sum of total debt for borrowed money, capital lease obligations and guaranties of obligations of non-consolidated entities by (ii) EBITDA (as defined in the Facility). The funded debt to EBITDA 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.

 
ERA GROUP INC.
FLEET COUNTS
(1)
(unaudited)
                   
  Dec 31,
2015
  Sep 30,
2015
  Jun 30,
2015
  Mar 31,
2015
  Dec 31,
2014
Heavy:                  
  H225 9   9   9   9   9
  S92 2   -   -   -   -
  AW189 2   -   -   -   -
  13   9   9   9   9
                   
Medium:                  
  AW139 38   39   39   39   39
  S76 C+/C++ 6   6   6   6   6
  S76 A++ 2   2   2   2   2
  B212 8   8   8   8   9
  B412 1   2   3   3   6
  55   57   58   58   62
                   
Light-twin engine:                  
  A109 7   7   7   7   9
  EC135 17   17   19   19   20
  EC145 5   5   5   5   5
  BK117 3   3   3   3   3
  BO105 3   3   3   -   -
  35   35   37   34   37
                   
Light-single engine:                  
  A119 14   16   17   17   17
  AS350 29   31   31   35   35
  43   47   48   52   52
Total Helicopters 146   148   152   153   160
                   

____________________

(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.