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Era Group Inc. Reports Fourth Quarter and Full Year 2018 Results and Announces Sale of Dart Joint Venture

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HOUSTON, March 07, 2019 (GLOBE NEWSWIRE) -- Era Group Inc. (NYSE:ERA) today reported net loss attributable to the Company for its fourth quarter ended December 31, 2018 ("current quarter") of $5.8 million, or $0.27 per diluted share, on operating revenues of $52.0 million compared to net income of $31.3 million, or $1.44 per diluted share, on operating revenues of $54.6 million for the quarter ended September 30, 2018 ("preceding quarter").  The Company reported net income attributable to the Company of $13.9 million, or $0.64 per diluted share, for the year ended December 31, 2018 ("current year") on operating revenues of $221.7 million compared to net loss of $28.2 million, or $1.36 per diluted share, on operating revenues of $231.3 million for the year ended December 31, 2017 ("prior year").

Earnings before interest, taxes, depreciation and amortization ("EBITDA") was $4.6 million in the current quarter compared to $51.5 million in the preceding quarter.  EBITDA adjusted to exclude losses on asset dispositions and special items was $6.3 million in the current quarter compared to $9.8 million in the preceding quarter.  Losses on asset dispositions were $0.7 million in the current quarter compared to $0.1 million in the preceding quarter.  Special items in the current quarter consisted of a $1.0 million non-cash impairment charge related to the Company's last remaining H225 helicopter. Special items in the preceding quarter consisted of $42.0 million in litigation settlement proceeds and $0.2 million in non-routine professional service fees related to the settled litigation.

"We expect offshore helicopter market activity in 2019 to vary considerably by geographic region, with Mexico and the Guyana-Suriname basin representing two of the bright spots," said Chris Bradshaw, President and Chief Executive Officer of Era Group Inc. "The supply and demand balance has tightened meaningfully for certain helicopter types, and our dry-leasing activities have benefited from these improved market conditions.  From the beginning of October 2018 through February 2019, we placed five helicopters on new lease contracts with third party operators."

Sale of Dart Joint Venture

On March 7, 2019, the Company in conjunction with its 50% joint venture partner entered into an agreement to sell its Dart Holding Company Ltd. joint venture ("Dart").  The transaction is expected to close in the second quarter of 2019, subject to the satisfaction or waiver of customary closing conditions.  At closing, the Company expects to receive cash proceeds, including repayment of a related party note receivable, of approximately $40 million. The Company's tax basis in Dart was $23.6 million as of December 31, 2018.

"We are very pleased with the value received for our 50% equity interest in Dart, and we wish the Dart team well as they move forward with the new owners," said Bradshaw.  "We continue to believe that our strong balance sheet and cash flow profile present multiple opportunities to create value for Era shareholders during the expected market recovery."

Sequential Quarter Results

Operating revenues were $2.6 million lower in the current quarter compared to the preceding quarter primarily due to lower utilization of helicopters in oil and gas operations and the conclusion of a search and rescue contract.  These decreases were partially offset by higher dry-leasing revenues due to new lease contracts that commenced in the current quarter.

Operating expenses were $0.5 million higher compared to the preceding quarter primarily due to an increase in repairs and maintenance expenses.  This increase was partially offset by a decrease in personnel and other operating expenses.

Administrative and general expenses were $0.6 million higher compared to the preceding quarter.

The Company disposed of one H225 heavy helicopter via a sales-type lease and disposed of capital parts for a net loss of $0.7 million in the current quarter.

Income tax benefit was $1.6 million in the current quarter primarily due to pre-tax losses. Income tax expense was $7.9 million in the preceding quarter primarily due to the recognition of litigation settlement proceeds.

Calendar Quarter Results

Operating revenues in the current quarter were $5.5 million lower compared to the quarter ended December 31, 2017 ("prior year quarter") primarily due to lower utilization of light and medium helicopters in oil and gas operations, the weakening of the Brazilian real relative to the U.S. dollar, and the conclusion of a search and rescue contract.  These decreases were partially offset by higher utilization of heavy helicopters in oil and gas operations in the current quarter.

Operating expenses were $7.3 million lower compared to the prior year quarter primarily due to decreased repairs and maintenance and personnel expenses and the accounting for a Tax Special Regularization Program ("PERT") in Brazil in the prior year quarter.

Administrative and general expenses were $1.5 million lower in the current quarter primarily due to the absence of professional service fees related to litigation that has now been settled.

EBITDA was $4.6 million in the current quarter compared to $2.0 million in the prior year quarter.  EBITDA adjusted to exclude losses on asset dispositions and special items was $6.3 million in the current quarter compared to $6.9 million in the prior year quarter.  Losses on asset dispositions were $0.7 million in the current quarter compared to $0.5 million in the prior year quarter.  Special items in the current quarter consisted of a $1.0 million non-cash impairment charge related to the Company's last remaining H225 helicopter. Special items in the prior year quarter consisted of $2.2 million in non-routine professional services fees related to now settled litigation, $2.0 million in non-cash charges related to the Company's Brazil subsidiary entering the PERT program and $0.2 million of other non-cash charges.

Depreciation and amortization expense was $0.6 million lower in the current quarter primarily due to assets that became fully depreciated subsequent to the prior year quarter.

Interest income was $0.7 million higher in the current quarter primarily due to interest earned on sales-type leases of H225 helicopters.

Interest expense was $1.7 million lower in the current quarter primarily due to lower debt balances.

Income tax benefit was $1.6 million in the current quarter primarily due to pre-tax losses. Income tax benefit was $74.6 million in the prior year quarter primarily due to adjustments related to the Tax Cuts and Jobs Act of 2017.

Net loss attributable to the Company was $5.8 million in the current quarter compared to net income attributable to the Company of $61.7 million in the prior year quarter.

Full Year Results

Operating revenues were $9.6 million lower in the current year primarily due to lower utilization of light helicopters in oil and gas operations, the absence of flightseeing revenues following the sale of the Company's flightseeing assets in early 2018, the weakening of the Brazilian real relative to the U.S. dollar, lower dry-leasing revenues, and the end of certain emergency response services contracts.  These decreases were partially offset by higher utilization of heavy helicopters servicing U.S. oil and gas operations.

Operating expenses were $15.9 million lower in the current year primarily due to a reduction in headcount, lower repairs and maintenance expenses, the accounting for PERT in the prior year, and the absence of expenses related to flightseeing activities.

Administrative and general expenses were $3.0 million higher in the current year primarily due to an increase in professional services fees related to litigation that has now been settled, partially offset by decreases in compensation and other administrative and general costs.

EBITDA was $69.0 million in the current year compared to negative $89.5 million in the prior year.  EBITDA adjusted to exclude gains on asset dispositions and special items was $37.5 million in the current year compared to $31.2 million in the prior year.  Gains on asset dispositions were $1.6 million in the current year compared to $4.5 million in the prior year.  Special items in the current year consisted of $42.0 million in litigation settlement proceeds, $11.2 million in non-routine professional services fees related to the settled litigation, a $1.0 million non-cash impairment charge related to the Company's last remaining H225 helicopter, and a $0.2 million gain on the extinguishment of debt related to a previously settled tax dispute in Brazil. Special items in the prior year consisted of non-cash impairment charges of $117.0 million related to the impairment of the Company's H225 helicopters, $5.5 million in non-routine professional services fees related to now settled litigation, $2.0 million in non-cash charges related to the Company's Brazil subsidiary entering the PERT program, $0.6 million of severance-related expenses due to changes in senior management and $0.2 million of other non-cash charges.

Depreciation expense was $6.2 million lower in the current year primarily due to lower depreciation on the H225 helicopters following their impairment in the prior year, the subsequent sale of most of these helicopters during the current year, and certain assets becoming fully depreciated subsequent to the prior year.

Interest income was $1.3 million higher in the current year primarily due to interest earned on sales-type leases of H225 helicopters.

Interest expense was $1.6 million lower in the current year primarily due to accounting for PERT in the prior year and lower outstanding debt balances in the current year.

Foreign currency losses were $1.0 million in the current year primarily due to the weakening of the Brazilian real relative to the U.S. dollar.

Income tax expense was $2.9 million in the current year primarily due to the recognition of litigation settlement proceeds. Income tax benefit was $122.7 million in the prior year primarily due to the impact of changes in U.S. income tax legislation and the impairment of the Company's H225 helicopters.

Equity earnings were $0.8 million higher in the current year primarily due to higher earnings at Dart.

Net income attributable to the Company was $13.9 million in the current year compared to net loss of $28.2 million in the prior year.  The increase in net income in the current year was primarily due to the recognition of litigation settlement proceeds and a decrease in losses recognized on impairment.

Liquidity

As of December 31, 2018, the Company had $50.8 million in cash balances and $124.1 million of remaining availability under its $125 million senior secured revolving credit facility (the "Facility"), for total liquidity of $174.9 million.  As of December 31, 2018, the Company's senior secured leverage ratio, as defined in the Facility, was 0.3x, and the Company's interest coverage ratio, as defined in the Facility, was 2.9x.

Capital Commitments

The Company had unfunded capital commitments of $81.1 million as of December 31, 2018, consisting primarily of orders for new helicopters.  The Company may terminate all of its capital commitments without further liability other than aggregate liquidated damages of $2.1 million.

Included in these capital commitments are agreements to purchase three AW189 heavy helicopters and five AW169 light twin helicopters.  The AW189 helicopters are scheduled to be delivered in 2019 and 2020.  Delivery dates for the AW169 helicopters have not been determined.  In addition, the Company had outstanding options to purchase up to ten additional AW189 helicopters.  If these options are exercised, the helicopters would be scheduled for delivery in 2020 and 2021.

Conference Call

Management will conduct a conference call starting at 10:00 a.m. ET (9:00 a.m. CT) on March 8, 2019 to review the results for the fourth quarter and full year ended December 31, 2018. The conference call can be accessed as follows:

All callers will need to reference the access code 9375212

Within the U.S.: Operator Assisted Toll-Free Dial-In Number: (800) 458-4121

Outside the U.S.: Operator Assisted International Dial-In Number: (323) 794-2597

Replay

A telephone replay will be available through March 22, 2019 and may be accessed by calling (888) 203-1112 using the replay passcode 9375212. 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 March 22, 2019.  The accompanying investor presentation will be available on Friday, March 8, 2019, on Era's website at www.erahelicopters.com.

About Era Group

Era 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 provides helicopters and related services to customers and third-party helicopter operators in other countries, including Brazil, Colombia, India, Mexico, Spain and Suriname.  Era'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's helicopters are used to perform emergency response services, firefighting, utility, VIP transport and other services.  Era also provides a variety of operating lease solutions and technical fleet support to third party operators.

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 Company's 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 limited 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 or obtain comparable services through other forms of transportation; dependence on United States ("U.S.") government agency contracts that are subject to budget appropriations; cost savings initiatives implemented by the Company's customers; risks inherent in operating helicopters; the Company's ability to maintain an acceptable safety record and level of reliability; the impact of increased 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, trade policies 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 aviation 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 used helicopters and parts; the Company's reliance on information technology and potential harm from cyber-security incidents; 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; significant increases in fuel costs; 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; the risk that one or more closing conditions to the Dart transaction, may not be satisfied or waived on a timely basis; the Company may not realize the anticipated net proceeds upon the closing of the Dart transaction; 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, 2018, and in Era Group's current reporting on Form 8-K (if any).

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

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,
  2018   2017   2018   2017
  (unaudited)        
Operating revenues $ 52,016     $ 57,531     $ 221,676     $ 231,321  
Costs and expenses:              
Operating 37,018     44,367     151,523     167,446  
Administrative and general 9,412     10,881     45,126     42,092  
Depreciation and amortization 9,530     10,101     39,541     45,736  
Total costs and expenses 55,960     65,349     236,190     255,274  
Gains (losses) on asset dispositions, net (694 )   (541 )   1,575     4,507  
Litigation settlement proceeds         42,000      
Loss on impairment (991 )       (991 )   (117,018 )
Operating income (loss) (5,629 )   (8,359 )   28,070     (136,464 )
Other income (expense):              
Interest income 818     119     2,042     760  
Interest expense (3,485 )   (5,143 )   (15,131 )   (16,763 )
Foreign currency gains (losses), net 77     (130 )   (1,018 )   (226 )
Gain on debt extinguishment         175      
Other, net 33     17     54     (12 )
Total other income (expense) (2,557 )   (5,137 )   (13,878 )   (16,241 )
Income (loss) before income tax expense and equity earnings (8,186 )   (13,496 )   14,192     (152,705 )
Income tax expense (benefit), net (1,609 )   (74,599 )   2,940     (122,665 )
Income (loss) before equity earnings (6,577 )   61,103     11,252     (30,040 )
Equity earnings, net of tax 629     356     2,206     1,425  
Net income (loss) (5,948 )   61,459     13,458     (28,615 )
Net loss attributable to non-controlling interest in subsidiary 154     235     464     454  
Net income (loss) attributable to Era Group Inc. $ (5,794 )   $ 61,694     $ 13,922     $ (28,161 )
               
Basic earnings (loss) per common share $ (0.27 )   $ 2.89     $ 0.64     $ (1.36 )
Diluted earnings (loss) per common share $ (0.27 )   $ 2.89     $ 0.64     $ (1.36 )
               
Weighted average common shares outstanding, basic 21,251,638     20,893,600     21,167,550     20,760,530  
Weighted average common shares outstanding, diluted 21,251,638     20,905,020     21,180,490     20,760,530  
               
EBITDA $ 4,640     $ 1,985     $ 69,028     $ (89,541 )
Adjusted EBITDA $ 5,631     $ 6,343     $ 39,026     $ 35,749  
Adjusted EBITDA excluding Gains $ 6,325     $ 6,884     $ 37,451     $ 31,242  
                               


ERA GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except share and per share amounts)
  Three Months Ended
  Dec 31,
 2018
  Sep 30,
 2018
  Jun 30,
 2018
  Mar 31,
 2018
  Dec 31,
 2017
Operating revenues $ 52,016     $ 54,610     $ 57,728     $ 57,322     $ 57,531  
Costs and expenses:                  
Operating 37,018     36,513     40,332     37,660     44,367  
Administrative and general 9,412     8,837     14,806     12,071     10,881  
Depreciation and amortization 9,530     9,541     10,116     10,354     10,101  
Total costs and expenses 55,960     54,891     65,254     60,085     65,349  
Gains (losses) on asset dispositions, net (694 )   (148 )   (1,997 )   4,414     (541 )
Litigation settlement proceeds     42,000              
Loss on impairment (991 )                  
Operating income (loss) (5,629 )   41,571     (9,523 )   1,651     (8,359 )
Other income (expense):                  
Interest income 818     732     346     146     119  
Interest expense (3,485 )   (3,549 )   (3,521 )   (4,576 )   (5,143 )
Foreign currency gains (losses), net 77     (94 )   (1,075 )   74     (130 )
Gains on debt extinguishment             175      
Other, net 33     15     14     (8 )   17  
Total other income (expense) (2,557 )   (2,896 )   (4,236 )   (4,189 )   (5,137 )
Income (loss) before income tax expense and equity earnings (8,186 )   38,675     (13,759 )   (2,538 )   (13,496 )
Income tax expense (benefit) (1,609 )   7,861     (2,574 )   (738 )   (74,599 )
Income (loss) before equity earnings (6,577 )   30,814     (11,185 )   (1,800 )   61,103  
Equity earnings, net of tax 629     465     669     443     356  
Net income (loss) (5,948 )   31,279     (10,516 )   (1,357 )   61,459  
Net loss attributable to non-controlling interest in subsidiary 154     10     137     163     235  
Net income (loss) attributable to Era Group Inc. $ (5,794 )   $ 31,289     $ (10,379 )   $ (1,194 )   $ 61,694  
                   
Basic earnings (loss) per common share $ (0.27 )   $ 1.44     $ (0.49 )   $ (0.06 )   $ 2.89  
Diluted earnings (loss) per common share $ (0.27 )   $ 1.44     $ (0.49 )   $ (0.06 )   $ 2.89  
                   
Weighted average common shares outstanding, basic 21,251,638     21,215,576     21,199,280     21,003,777     20,893,600  
Weighted average common shares outstanding, diluted 21,251,638     21,239,189     21,199,280     21,003,777     20,905,020  
                   
EBITDA $ 4,640     $ 51,498     $ 201     $ 12,689     $ 1,985  
Adjusted EBITDA $ 5,631     $ 9,678     $ 7,347     $ 16,370     $ 6,343  
Adjusted EBITDA excluding Gains $ 6,325     $ 9,826     $ 9,344     $ 11,956     $ 6,884  
                                       


ERA GROUP INC.
OPERATING REVENUES BY LINE OF SERVICE
(unaudited, in thousands)
  Three Months Ended
  Dec 31,
 2018
  Sep 30,
 2018
  Jun 30,
 2018
  Mar 31,
 2018
  Dec 31,
 2017
Oil and gas: (1)                  
U.S. $ 33,876     $ 35,473     $ 37,771     $ 36,536     $ 35,063  
International 13,357     13,665     14,160     15,617     16,163  
Total oil and gas 47,233     49,138     51,931     52,153     51,226  
Dry-leasing (2) 2,938     2,716     3,256     2,572     3,680  
Emergency response (3) 1,845     2,756     2,541     2,597     2,625  
  $ 52,016     $ 54,610     $ 57,728     $ 57,322     $ 57,531  
                                       


FLIGHT HOURS BY LINE OF SERVICE (4)
(unaudited)
  Three Months Ended
  Dec 31,
 2018
  Sep 30,
 2018
  Jun 30,
 2018
  Mar 31,
 2018
  Dec 31,
 2017
Oil and gas: (1)                  
U.S. 5,235     6,132     6,991     5,705     5,967  
International 2,410     2,288     2,185     2,296     2,218  
Total oil and gas 7,645     8,420     9,176     8,001     8,185  
Emergency Response (3) 90     108     95     100     110  
  7,735     8,528     9,271     8,101     8,295  
                             

____________________

  1. Primarily oil and gas services, but also includes revenues and flight hours from utility services, such as firefighting, and VIP transport.
  2. Includes certain property rental income that was previously in emergency response services and oil and gas lines of service.
  3. Includes revenues and flight hours from search and rescue ("SAR") and air medical services.
  4. 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,
 2018
  Sep 30,
 2018
  Jun 30,
 2018
  Mar 31,
 2018
  Dec 31,
 2017
ASSETS     (unaudited)   (unaudited)   (unaudited)    
Current assets:                  
Cash and cash equivalents $ 50,753     $ 47,631     $ 15,057     $ 16,553     $ 13,583  
Receivables:                  
Trade, net of allowance for doubtful accounts 37,109     39,488     39,286     38,700     38,964  
Tax receivables 3,187     3,117     3,206     3,466     2,829  
Other 2,343     2,701     1,451     4,168     1,623  
Inventories, net 20,673     20,157     20,864     20,830     21,112  
Prepaid expenses 1,807     2,367     2,548     2,804     1,203  
Escrow deposits                 3,250  
Total current assets 115,872     115,461     82,412     86,521     82,564  
Property and equipment 917,161     927,477     923,249     949,064     972,942  
Accumulated depreciation (317,967 )   (314,736 )   (305,745 )   (297,341 )   (299,028 )
Net property and equipment 599,194     612,741     617,504     651,723     673,914  
Equity investments and advances 27,112     26,600     30,982     30,445     30,056  
Intangible assets 1,107     1,111     1,115     1,118     1,122  
Other assets 21,578     18,421     18,680     4,798     4,441  
Total assets $ 764,863     $ 774,334     $ 750,693     $ 774,605     $ 792,097  
                   
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS' EQUITY                  
Current liabilities:                  
Accounts payable and accrued expenses $ 13,161     $ 10,438     $ 17,246     $ 11,084     $ 16,421  
Accrued wages and benefits 9,267     8,605     7,516     6,530     8,264  
Accrued interest 569     3,404     545     3,485     606  
Accrued income taxes 973     2,993     40     46     28  
Current portion of long-term debt 2,058     2,158     2,257     2,296     2,736  
Accrued other taxes 1,268     2,396     1,965     1,856     1,810  
Accrued contingencies 630     1,014     946     892     859  
Other current liabilities 878     1,033     3,224     3,166     1,720  
Total current liabilities 28,804     32,041     33,739     29,355     32,444  
Long-term debt 160,217     160,476     172,787     188,470     202,174  
Deferred income taxes 108,357     108,138     103,303     105,865     106,598  
Other liabilities 747     1,753     1,350     1,596     1,434  
Total liabilities 298,125     302,408     311,179     325,286     342,650  
                   
Redeemable noncontrolling interest 3,302     3,456     3,466     3,603     3,766  
Equity:                  
Era Group Inc. stockholders' equity:                  
Common stock 219     219     219     219     215  
Additional paid-in capital 447,298     447,013     445,885     445,174     443,944  
Retained earnings 18,285     24,079     (7,210 )   3,169     4,363  
Treasury shares, at cost (2,476 )   (2,951 )   (2,951 )   (2,951 )   (2,951 )
Accumulated other comprehensive income (loss), net of tax 110     110     105     105     110  
Total equity 463,436     468,470     436,048     445,716     445,681  
Total liabilities, redeemable noncontrolling interest and stockholders' equity $ 764,863     $ 774,334     $ 750,693     $ 774,605     $ 792,097  
                                       

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 special 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 Adjusted EBITDA further adjusted to exclude gains on dispositions (in thousands).

  Three Months Ended   Year Ended
  Dec 31,
 2018
  Sep 30,
 2018
  Jun 30,
 2018
  Mar 31,
 2018
  Dec 31,
 2017
  Dec 31,
 2018
  Dec 31,
 2017
Net Income $ (5,948 )   $ 31,279     $ (10,516 )   $ (1,357 )   $ 61,459     $ 13,458     $ (28,615 )
Depreciation and amortization 9,530     9,541     10,116     10,354     10,101     39,541     45,736  
Interest income (818 )   (732 )   (346 )   (146 )   (119 )   (2,042 )   (760 )
Interest expense 3,485     3,549     3,521     4,576     5,143     15,131     16,763  
Income tax expense (benefit) (1,609 )   7,861     (2,574 )   (738 )   (74,599 )   2,940     (122,665 )
EBITDA $ 4,640     $ 51,498     $ 201     $ 12,689     $ 1,985     $ 69,028     $ (89,541 )
Special items (1) 991     (41,820 )   7,146     3,681     4,358     (30,002 )   125,290  
Adjusted EBITDA $ 5,631     $ 9,678     $ 7,347     $ 16,370     $ 6,343     $ 39,026     $ 35,749  
Gains on asset dispositions, net ("Gains") 694     148     1,997     (4,414 )   541     (1,575 )   (4,507 )
Adjusted EBITDA excluding Gains $ 6,325     $ 9,826     $ 9,344     $ 11,956     $ 6,884     $ 37,451     $ 31,242  
                                                       

____________________

  1. Special items include the following: 
  • In the three months ended December 31, 2018, a non-cash impairment charge of $1.0 million related to the impairment of the Company's last remaining H225 helicopter;
  • Non-routine litigation expenses related to the H225 helicopters of $0.2 million, $7.1 million, $3.9 million, and $2.2 million, in Q3 2018, Q2 2018, Q1 2018, and Q4 2017, respectively;
  • In the three months ended September 30, 2018, $42.0 million in litigation settlement proceeds;
  • In the three months ended March 31, 2018, a $0.2 million gain on the extinguishment of debt related to a previously settled tax dispute in Brazil;
  • In the three months ended December 31, 2017, $2.0 million in non-cash charges related to our Brazil subsidiary entering the PERT program and $0.2 million of other non-cash items; and
  • In the year ended December 31, 2017, non-cash impairment charges of $117.0 million primarily related to the impairment of the Company's H225 model helicopters, $5.5 million in non-routine professional services fees related to now settled litigation, $2.0 million in non-cash charges related to our Brazil subsidiary entering the PERT program, $0.6 million of severance-related expenses due to changes in senior management, and $0.2 million of other non-cash charges.

The Facility requires that the Company maintain certain financial ratios on a trailing 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 total 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)
  Dec 31,
 2018
  Sep 30,
 2018
  Jun 30,
 2018
  Mar 31,
 2018
  Dec 31,
 2017
Heavy:                  
S92 4     4     4     4     3  
H225 1     2     2     9     9  
AW189 4     4     4     4     4  
  9     10     10     17     16  
                   
Medium:                  
AW139 36     36     36     36     36  
S76 C+/C++ 5     5     5     5     5  
B212 5     5     5     6     6  
  46     46     46     47     47  
                   
Light—twin engine:                  
A109 7     7     7     7     7  
EC135 13     15     15     15     15  
EC145                 2  
BK117         2     2     2  
BO105 3     3     3     3     3  
  23     25     27     27     29  
                   
Light—single engine:                  
A119 13     13     13     13     14  
AS350 17     17     17     17     26  
  30     30     30     30     40  
Total Helicopters 108     111     113     121     132  
                             

____________________

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

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