Q3 2019 Earnings Call

Good shape and welcome to the erect group reports Q3 2019 results conference call today's conferences being recorded at this time I would like to turn the conference ever to Crystal Gordon S.P.P. and General Counsel. Please go ahead.

Thank you can't be in the morning, everyone welcome to Eric third quarter 2019 earnings call you here today with our president in C.E.O., Chris franchise, a senior Vice President and T.F.I., Jennifer Whalen, and our senior Vice Presidents Grant Newman direct easily and Paul White as well as our corporate controller Tricia Shredder.

In our finance director seen apart.

You May access our recent earnings press release and presentation slides on our website era helicopters dot com.

Let me remind everyone that during the course management may make forward looking statements that are subject to rest and uncertain keys that are described in more detail and fly three of the earnings presentation.

Announcer and the call over to our president and the <unk>.

Thank you Crystal.

And welcome to the call everyone.

That's always a little bit again are prepared remarks with a note on safety, which is arrows most important core value in our highest operational priority.

We are pleased to report that error achieved our dual goals zero air accidents, and zero recordable workplace incident year today 2019.

The company has not experience in the air accident in the last three years and we have now gone over 770 consecutive days without recordable workplace incident.

I want to think and can men all of the hardworking error team members for their focus and dedication to achieve this world class safety performance.

Turning to an update on our financial position. We have continued to strengthen error is already strong balance sheet and industry, leading financial flexibility.

As a quarter in areas total liquidity was approximately $232 million, including 108 million of cash on hand.

Or net that balance was just $55 million.

Which isn't 80% reduction from when the industry downturn began in late 2014.

You're in Q3, 2019, we generated approximately $17 million or free cash flow increasing arrows here today free cash flow total to 24 million.

With a strong balance sheet limited near term debt maturities.

Manageable fix charge obligations and a flexible orderbook.

Ever remains well position for positive free cash flow generation.

Well now turn it over Torsiello for a view of two or three financial results Jennifer.

Thank you Chris.

Even if it's a adjusted to exclude asset positions in special items was 9.5 million for the third quarter at 2019 compared to eight nine in the second quarter of 2019.

Privy to the same point 5 million increasing event that was a 3.4 million increasing revenues due to higher utilization of helicopters and our <unk>.

Operating expenses were higher by point 7 million due to increased personnel insurance and feel okay actually I sat by lower repairs and maintenance.

<unk> negatively impacted by foreign currency losses that point 7 million you shouldn't change I mean at the U.S. dollar relative to the first on the Internet.

Maybe not for the third quarter 2019, compared to the third quarter 2018 result, even digested too.

Additions to special items attire my point.

The increase in the event that resulted from higher revenues at 4.3 million, primarily due to higher utilization in oil and gas operation and new contract in our dryly paid an emergency response.

Operating expenses or 3 million higher primarily due to increase your parents maintenance and personnel.

Oh I personally losses were point 6 million higher decent restricting F.U.S. dollars relative to the front binary.

I only cashless provided by operate activities with 10 million in the current car further enhance neat enhancing the company's liquidity position and financially.

At this time I'll tend to fall back up to press for further.

Right.

Thank you Jennifer.

Two 320 19 represented Arabs highest quarterly revenue generation in the last two years.

And the highest quarterly adjusted either door results since you want of 2018.

These improve financial results were driven by increased activity levels and each of our service line.

Including a 9% sequential quarter increase in U.S. Gulf of Mexico revenues.

What's that let's open the line for questions Casey.

Thank you ladies and gentlemen at this time, we will open afford to questions. If you would like to ask a question. Please signal by pressing star one on your telephone keypad, if you're using a speaker phone. Please make sure that you're me function is turned off to allow your signal to reach our equipment and again that a star one to ask a question what passed for just a moment to allow everyone an opportunity.

To signal for questions.

[laughter].

Our first question comes from Bill <unk>, what's parent.

Thank you very much Christian mentioning the increased activity levels, but what seems to be a stalling of energy prices with the exception maybe natural gas do you see maybe pipeline of new contracts it might be up for bid or should we expected activity levels are going to remain relatively flat now.

But at elevated levels versus this time last year, that's the first question.

Good morning, Bill I think we felt for a while that the offshore oil and gas market recovery was underway, but that the recovery would be a gradual one and I think what we see an r. Q3 results is consistent with that we did see an increase in utilization and driving incremental improvements in revenues Angie but <unk>.

And based upon the information that's available to US today, we believe that are consistent level of customer activity is likely to exist, particularly in the U.S. Gulf of Mexico into four of this year in into 2020.

<unk> and Chris are there any new contracts that are coming up for bed.

In our market. There are always knew tinders that were evaluating some are shorter term in nature and they may last for a two or three months at a time, depending upon the number of wells at the exploration program is addressing so we do have Ah contracted in any given period, we do typically have.

Some short term contracts that are coming to an end and others that are beginning but I think what we're seeing is that the the <unk> those projects across the customer base is improving off the levels of the downturn, but that improvement is really a gradual one nothing dramatic in terms of increased customer activity.

Okay. So even though it's gradual where do you kind of <expletive> and some of your thoughts for maybe taking any new aircraft deliveries I know that in the past you've mentioned that you're going to address it when it comes up but we're at the level now where this involves some serious consideration or where exactly are we right now.

[laughter]. So we're pleased with the Optionality that we've negotiated with all our time corners that the <unk> I think that if we were had to make all the decisions tomorrow and a hypothetical scenario, we would probably not take new aircraft today based upon the information that's available that being said, we do have the option we've negotiated.

That to bring in additional that aircraft should market opportunities present themselves, but we're not there as it today.

Okay and then my final question just has to do with as as you indicated you flush with liquidity.

Any thoughts now on maybe debt repurchases and and maybe going ahead, and getting maybe even a little bit more defensive until maybe the market recover sin and where you can take advantage of what opportunities might be out there. So it is kind of a retrenchment question, a little bit but <unk>.

Is that actually on the docket.

It could question I think we believe that are strong balance sheet, including the cash balance and an actual blissfully, we have give us multiple opportunities to drive value creation for shareholders in the past we have purchased a good portion of the senior unsecured notes that or do what 2022 is that we bought back.

About 25% of the original issue amount to get the current balanced below $145 million. That's something we'll continue to evaluate we've also at times were purchased shares. So far this year, we for purchased about five per cent of our previously outstanding unrestricted shares will continue to evaluate sheer repurchases on an opportunistic.

This is we also believe that in the context of the potential for industry consolidation, a strong balance sheet cash balance in that financial flexibility could be an asset and helping to affect that consolidation. So really all of those opportunities remain on the table and I think we'll take a an opportunist approach in evaluating how we deploy that out.

Little going forward.

Okay. Thank you very much appreciate it.

Thank you.

And once again, if you would like to ask a question not a star one.

[laughter].

At this time I'm showing no further questions on the Kim.

Great. Thank you Casey and thank you everyone for joining will afford us beginning again next quarter Mr. Mr. Brachial.

Yes, I do have one more question here from H. chain Lee with international value advisor Sir.

Okay. Thanks, good morning.

Good morning, Thanks for taking my question.

Your discuss a little bit about the easy 135 disposals side during the quarter.

Sure we did sell three easy 130 fives during the quarter. This is consistent with our longstanding strategy of evaluating secondary market sales as part of the.

Portfolio options that we have so in general any aircraft that becomes available we will evaluate one of three options for the cash flows that weekend project operating it for our own in customer second what cash flows we might earn from leasing it out so another operator and third the cash that can be realized today from sales to the secondary market.

And generally speaking we will take the highest net present value alternative of those three options. In this case at least three easy 130 fives, we felt that the cash proceeds that came in from the purchase offer where the best return potential for those aircrafts. So we've sold them and we think that capital could be better redeployed elsewhere.

Who is the type of the buyer.

We actually sold these into a financial company that is placing them into the air medical industry.

Got it thank you.

Ladies and gentlemen at this time. This concludes today's question and answer session I will now turn it back to Mr., Brad Shah for closing remarks.

Great. Thanks again Casey. Thanks, Your time, everyone you save we'll talk again next quarter.

Ladies and gentlemen, this concludes today's teleconference and you may now disconnect.

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