Form 8-K ERA GROUP INC. For: Nov 04

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November 5, 2015 6:08 AM EST


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  November 4, 2015

Era Group Inc.
(Exact Name of Registrant as Specified in Its Charter)

Delaware
 
1-35701
 
72-1455213
(State or Other Jurisdiction
of Incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)

818 Town & Country Blvd., Suite 200 Houston, Texas
 
77024
(Address of Principal Executive Offices)
 
(Zip Code)

Registrant’s telephone number, including area code
 
(713) 369-4700

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act  (17 CFR 240.14d-2(b))
 
 
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))







Item 2.02 Results of Operations and Financial Condition
On November 4, 2015, Era Group Inc. (“Era Group”) issued a press release setting forth its third quarter 2015 earnings. A copy of the press release is attached hereto as Exhibit 99.1 and hereby incorporated by reference.
The information furnished pursuant to Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, and shall not be incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 7.01 Regulation FD Disclosure
On November 5, 2015, Era Group will make a presentation about its third quarter 2015 earnings as noted in the press release described in Item 2.02 above. A copy of the presentation slides are attached hereto as Exhibit 99.2. Additionally, Era Group has posted the presentation on its website at www.eragroupinc.com.
The information furnished pursuant to Item 7.01, including Exhibit 99.2, shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that Section, and shall not be incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits
99.1 Press Release of Era Group Inc., dated November 4, 2015.    
99.2 Presentation Slides





SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
Era Group Inc.
  
 
 
 
 
November 4, 2015
 
By:
 
/s/ Andrew L. Puhala
 
 
 
 
 
 
 
 
 
Name: Andrew L. Puhala
 
 
 
 
Title: Senior Vice President, Chief Financial Officer





Exhibit Index

 
 
Exhibit No.
Description
 
 
99.1
Press Release of Era Group Inc., dated November 4, 2015
99.2
Presentation Slides



Exhibit 99.1

PRESS RELEASE

ERA GROUP INC. REPORTS
THIRD QUARTER 2015 RESULTS

Houston, Texas
November 4, 2015
FOR IMMEDIATE RELEASE — Era Group Inc. (NYSE: ERA) today reported net income of $0.9 million, or $0.04 per diluted share, for its third quarter ended September 30, 2015 (“current quarter”) on operating revenues of $69.7 million compared to net income for the quarter ended September 30, 2014 (“prior year quarter”) of $4.3 million, or $0.21 per diluted share, on operating revenues of $90.5 million.
Earnings before interest, taxes, depreciation and amortization (“EBITDA”) was $17.1 million in the current quarter compared to $22.4 million in the prior year quarter. EBITDA adjusted to exclude gains on asset dispositions and special items was $15.3 million in the current quarter compared to $24.8 million in the prior year quarter. Gains on asset dispositions totaled $1.8 million in the current quarter compared to immaterial gains in the prior year quarter. Special items in the current quarter were immaterial. Special items in the prior year quarter consisted of a pre-tax charge of $2.5 million due to severance expenses related to our former Chief Executive Officer.
“The third quarter proved to be a very challenging one as conditions further deteriorated in our key geographical markets,” said Chris Bradshaw, President and Chief Executive Officer of Era Group Inc. “As the WTI crude oil price dropped from approximately $60 per barrel at the end of June to below $40 per barrel in mid-August, our customer base responded with renewed emphasis on cost reduction measures, which negatively impacted our operating revenues.”
“We believe the challenging industry conditions prevalent in 2015 are likely to continue for the next several quarters. We operate in a dynamic industry, and cost management is an ongoing process. We began adjusting our organization and cost structure with a management realignment and reduction in force in October and November 2014, and our focus on realizing cost savings has continued throughout 2015 and included all aspects of our business. Last month, we began an additional round of cost control measures, including further headcount reductions.”
“Era has a strong balance sheet and ample liquidity to withstand the pressures of a prolonged market downturn, and we will continue to protect our balance sheet to ensure the security of our business. Despite the unfavorable industry conditions, we have continued to generate strong, positive operating cash flows.”
Third Quarter Results
Operating revenues in the current quarter were $20.8 million lower than the prior year quarter primarily due to lower utilization of our helicopters and the sale of our fixed base operations (“FBO”) in Alaska.
Operating expenses were $11.3 million lower in the current quarter primarily due to decreased fuel, personnel and repairs and maintenance expenses.
Administrative and general expenses were $1.7 million lower primarily due to severance-related expenses for our former Chief Executive Officer recognized in the prior year quarter, partially offset by increased professional service fees in the current quarter.

1

Gains on asset dispositions were $1.8 million higher in the current quarter. In the current quarter, we sold four helicopters for gains of $0.5 million. In addition, we recognized gains of $0.6 million related to the early buy-out of two helicopter leases by a customer and $0.7 million related to other equipment sales. There were no significant asset sales in the prior year quarter.
Unrealized derivative losses of $1.7 million in the prior year quarter were primarily due to the revaluation to market of forward currency contracts. We did not have any forward currency contracts in the current quarter.
Income tax expense was $1.5 million lower in the current year quarter primarily due to lower pre-tax income, partially offset by a higher effective income tax rate.
Equity earnings were $1.7 million lower in the current quarter primarily due to losses of $0.3 million from our interest in Dart Holding Company Ltd. (“Dart”) as well as a $1.5 million after-tax gain on the sale of our 51% interest in Lake Palma S.A. (“Lake Palma”) in the prior year quarter.
Nine Months Results
The Company reported net income of $12.2 million, or $0.59 per diluted share, for the nine months ended September 30, 2015 (“current nine months”) on operating revenues of $207.9 million compared to net income for the nine months ended September 30, 2014 (“prior nine months”) of $13.9 million, or $0.68 per diluted share, on operating revenues of $256.5 million. In addition to the gains on asset dispositions and special items noted below, the current nine months also included $2.3 million of foreign currency losses primarily due to the strengthening of the U.S. dollar resulting in losses on our euro denominated cash balances and forward contracts.
EBITDA was $64.9 million in the current nine months compared to $67.3 million in the prior nine months. EBITDA adjusted to exclude gains on asset dispositions and special items was $46.7 million in the current nine months compared to $66.1 million in the prior nine months. Special items in the current nine months consisted of a $12.9 million pre-tax gain on the sale of our FBO business in Alaska and a $0.2 million gain on the repurchase of a portion of our 7.750% senior unsecured notes (the “7.750% Senior Notes”). Special items in the prior nine months consisted of a $2.5 million pre-tax impairment charge related to a note receivable and a pre-tax charge of $2.5 million due to severance-related expenses for our former Chief Executive Officer. Gains on asset dispositions were $5.0 million in the current nine months compared to $6.1 million in the prior nine months.
Operating revenues in the current nine months were $48.6 million lower than in the prior nine months primarily due to lower utilization of our medium helicopters and the sale of our FBO business in Alaska.
Operating expenses were $32.2 million lower primarily due to decreased repairs and maintenance expenses, fuel and personnel costs.
Administrative and general expenses were $2.6 million lower primarily due to severance expenses related to changes in senior management in the prior nine months and reduced headcount in the current nine months, partially offset by increased professional service fees.
Equity earnings were $3.0 million lower primarily due to the gain on sale of Lake Palma in the prior nine months, the corresponding loss of Lake Palma earnings, and incremental losses from Dart in the current nine months.
Sequential Quarter Results
Operating revenues in the current quarter were $1.0 million lower than in the quarter ended June 30, 2015 (“preceding quarter”) primarily due to fewer aircraft on contract in Alaska, lower search and rescue revenues and the sale of the FBO, partially offset by the seasonal increase of flightseeing activity in Alaska.

2

Operating expenses were $3.2 million higher compared to the preceding quarter primarily due to reduced vendor credits, the increase of seasonal activities, increased part sales to our Brazilian joint venture and start-up costs related to the introduction of new helicopter models and the launch of our new offshore business in Colombia.
Administrative and general expenses were $0.5 million higher primarily due to increased professional service fees and information technology costs, partially offset by decreased compensation and employee costs due to reduced headcount.
Gains on asset dispositions were $2.1 million higher compared to the preceding quarter.
EBITDA was $16.1 million lower compared to the preceding quarter. EBITDA adjusted to exclude gains or losses on asset dispositions and special items was $5.2 million lower.
Net income was $10.5 million lower compared to the preceding quarter. Excluding the $12.9 million pre-tax gain on the sale of the FBO and the one-time net deferred tax expense of $1.0 million in connection with the Sicher Helicopters SAS acquisition in Colombia, net income would have been $3.3 million lower.
Fleet Update
We took delivery of one S92 heavy helicopter in September 2015, which was placed in service in October.
At the end of October, our Brazilian joint venture, Aeróleo Taxi Aero S/A (“Aeróleo”), received notice from Petroleo Brazileiro S.A. (“Petrobras”) of Petrobras’ intention to renew the existing contracts for three H225 heavy helicopters with Aeróleo for an additional 60 days effective as of November 5, 2015. During this interim period, Aeróleo will continue efforts to secure a long-term extension of those heavy helicopter contracts with Petrobras.
We continue to experience excess capacity in our medium helicopters, and we expect excess capacity in our heavy helicopters to increase beginning in the fourth quarter of 2015.  Excess helicopters include our helicopters other than those under customer contracts, undergoing maintenance or dedicated for charter activity.  We are participating in several competitive bids to place some or all of the excess medium and heavy helicopters on contract.  If we are not successful in securing sufficient new projects, our financial results will be negatively impacted. In addition, we may sell certain helicopters on an opportunistic basis consistent with our stated strategy.
Capital Commitments
Subsequent to September 30, 2015, we signed a contract amendment which provides Era with additional flexibility with respect to certain orders and options for new helicopter deliveries, including a reduction in the aggregate amount of firm capital commitments and a deferral in the timing of delivery dates and deposit payments. We remain in dialogue with our long-term partners at the helicopter manufacturers and expect that those commercial conversations will result in additional contract modifications that will further reduce our near-term capital commitments by deferring additional helicopter delivery dates.
Our unfunded capital commitments as of October 30, 2015 consisted primarily of orders for helicopters and totaled $174.5 million, of which $37.4 million is payable during 2015 with the balance payable through 2018. We also had $1.6 million of deposits paid on options not yet exercised. We may terminate $127.0 million of our total commitments (inclusive of deposits paid on options not yet exercised) without further liability other than aggregate liquidated damages of $3.2 million.
Included in these capital commitments are agreements to purchase nine AW189 heavy helicopters, three S92 heavy helicopters and five AW169 light twin helicopters. The AW189 and S92 helicopters are scheduled to be delivered beginning in 2015 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 three S92 helicopters. If these options are exercised, the helicopters would be scheduled for delivery beginning in 2017 through 2018.

3

Capital Allocation and Liquidity
During the current quarter, we repurchased 131,984 shares of Era Group Inc. common stock for $2.1 million at an average price of $15.65 per share.
We repurchased $15.0 million of our 7.750% Senior Notes at prices ranging from 97.25 to 97.50 during the current quarter. In October 2015, we repurchased an additional $19.9 million of our 7.750% Senior Notes at prices ranging from 93.00 to 95.00, raising our total repurchases of the 7.750% Senior Notes to $44.8 million in 2015. At the current borrowing rate under our senior secured revolving credit facility, the aggregate 7.750% Senior Notes repurchases imply annualized interest expense savings of $2.4 million.
The repurchase of common stock and 7.750% Senior Notes during the current quarter was funded with existing cash balances, cash from operating activities and proceeds from asset dispositions. The repurchase of 7.750% Senior Notes in October was funded by borrowings under our senior secured revolving credit facility.
As of September 30, 2015, we had cash balances and like-kind-exchange escrow deposits totaling $15.8 million and remaining availability under our senior secured revolving credit facility of $227.2 million.
Conference Call
Management will conduct a conference call starting at 10:00 a.m. ET (9:00 a.m. CT) on Thursday, November 5, 2015, to review the results for the third quarter ended September 30, 2015. The conference call can be accessed as follows:
All callers will need to reference the access code 775416.
Within the U.S.: Operator Assisted Toll-Free Dial-In Number: (888) 801-6499
Outside the U.S.: Operator Assisted International Dial-In Number: (913) 981-5510
Replay
A telephone replay will be available through December 4, 2015 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 for approximately 90 days.
For additional information concerning Era Group, contact Andrew Puhala at (713) 369-4646 or visit Era Group’s website at www.eragroupinc.com.

4

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 third-party helicopter operators and customers in other countries, including Brazil, Colombia, 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.
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 reduction of our customer base resulting from consolidation; 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 United States (“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 its 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 used 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; adequacy of the Company’s insurance coverage; 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, 2014, 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.


5

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,
 
 
2015
 
2014
 
2015
 
2014
Operating revenues
 
$
69,741

 
$
90,510

 
$
207,894

 
$
256,533

Costs and expenses:
 
 
 
 
 
 
 
 
Operating
 
43,007

 
54,282

 
126,396

 
158,601

Administrative and general
 
11,238

 
12,941

 
31,760

 
34,340

Depreciation and amortization
 
12,186

 
11,746

 
35,186

 
34,458

Total costs and expenses
 
66,431

 
78,969

 
193,342

 
227,399

Gains on asset dispositions, net
 
1,813

 
42

 
4,959

 
6,072

Operating income
 
5,123

 
11,583

 
19,511

 
35,206

Other income (expense):
 
 
 
 
 
 
 
 
Interest income
 
232

 
130

 
800

 
418

Interest expense
 
(3,121
)
 
(3,629
)
 
(9,547
)
 
(11,222
)
Gain (loss) on debt extinguishment
 
(16
)
 
—

 
248

 
—

Derivative gains (losses), net
 
8

 
(1,703
)
 
(14
)
 
(1,744
)
Note receivable impairment
 
—

 
—

 
—

 
(2,457
)
Foreign currency gains (losses), net
 
146

 
(485
)
 
(2,271
)
 
(521
)
Gain on sale of FBO
 
—

 
—

 
12,946

 
—

Other, net
 
—

 
(3
)
 
(9
)
 
10

Total other income (expense)
 
(2,751
)
 
(5,690
)
 
2,153

 
(15,516
)
Income before income taxes and equity earnings
 
2,372

 
5,893

 
21,664

 
19,690

Income tax expense
 
1,343

 
2,868

 
9,426

 
8,130

Income before equity earnings
 
1,029

 
3,025

 
12,238

 
11,560

Equity earnings (losses), net of tax
 
(376
)
 
1,286

 
(719
)
 
2,321

Net income
 
653

 
4,311

 
11,519

 
13,881

Net loss (income) attributable to non-controlling interest in subsidiary
 
208

 
(45
)
 
633

 
51

Net income attributable to Era Group Inc.
 
$
861

 
$
4,266

 
$
12,152

 
$
13,932

 
 
 
 
 
 
 
 
 
Earnings per common share, basic
 
$
0.04

 
$
0.21

 
$
0.59

 
$
0.69

Earnings per common share, diluted
 
$
0.04

 
$
0.21

 
$
0.59

 
$
0.68

 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding, basic
 
20,260,514

 
20,098,239

 
20,243,653

 
20,039,609

Weighted average common shares outstanding, diluted
 
20,287,069

 
20,163,990

 
20,292,782

 
20,108,399

 
 
 
 
 
 
 
 
 
EBITDA
 
$
17,071

 
$
22,424

 
$
64,878

 
$
67,273

Adjusted EBITDA
 
$
17,087

 
$
24,886

 
$
51,684

 
$
72,192

Adjusted EBITDA excluding Gains
 
$
15,274

 
$
24,844

 
$
46,725

 
$
66,120




6

ERA GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except share and per share amounts)
 
 
Three Months Ended
 
 
Sep 30,
2015
 
Jun 30,
2015
 
Mar 31,
2015
 
Dec 31,
2014
 
Sep 30,
2014
Operating revenues
 
$
69,741

 
$
70,738

 
$
67,415

 
$
74,689

 
$
90,510

Costs and expenses:
 
 
 
 
 
 
 
 
 
 
Operating
 
43,007

 
39,784

 
43,605

 
45,772

 
54,282

Administrative and general
 
11,238

 
10,779

 
9,743

 
9,647

 
12,941

Depreciation and amortization
 
12,186

 
11,398

 
11,602

 
11,854

 
11,746

Total costs and expenses
 
66,431

 
61,961

 
64,950

 
67,273

 
78,969

Gains (losses) on asset dispositions, net
 
1,813

 
(242
)
 
3,388

 
29

 
42

Operating income
 
5,123

 
8,535

 
5,853

 
7,445

 
11,583

Other income (expense):
 
 
 
 
 
 
 
 
 
 
Interest income
 
232

 
317

 
251

 
122

 
130

Interest expense
 
(3,121
)
 
(2,881
)
 
(3,545
)
 
(3,556
)
 
(3,629
)
Gain (loss) on debt extinguishment
 
(16
)
 
—

 
264

 
—

 
—

Derivative gains (losses), net
 
8

 
(10
)
 
(12
)
 
800

 
(1,703
)
Foreign currency gains (losses), net
 
146

 
543

 
(2,960
)
 
(1,856
)
 
(485
)
Gain on sale of FBO
 
—

 
12,946

 
—

 
—

 
—

Other, net
 
—

 
(9
)
 
—

 
(14
)
 
(3
)
Total other income (expense)
 
(2,751
)
 
10,906

 
(6,002
)
 
(4,504
)
 
(5,690
)
Income (loss) before income taxes and equity earnings
 
2,372

 
19,441

 
(149
)
 
2,941

 
5,893

Income tax expense (benefit)
 
1,343

 
8,138

 
(55
)
 
155

 
2,868

Income before equity earnings (losses)
 
1,029

 
11,303

 
(94
)
 
2,786

 
3,025

Equity earnings (losses), net of tax
 
(376
)
 
(198
)
 
(145
)
 
354

 
1,286

Net income (loss)
 
653

 
11,105

 
(239
)
 
3,140

 
4,311

Net loss (income) attributable to non-controlling interest in subsidiary
 
208

 
228

 
197

 
45

 
(45
)
Net income (loss) attributable to Era Group Inc.
 
$
861

 
$
11,333

 
$
(42
)
 
$
3,185

 
$
4,266

 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) per common share, basic
 
$
0.04

 
$
0.55

 
$
—

 
$
0.16

 
$
0.21

Earnings (loss) per common share, diluted
 
$
0.04

 
$
0.55

 
$
—

 
$
0.16

 
$
0.21

 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding, basic
 
20,260,514

 
20,273,780

 
20,195,955

 
20,173,583

 
20,098,239

Weighted average common shares outstanding, diluted
 
20,287,069

 
20,332,657

 
20,195,955

 
20,232,025

 
20,163,990

 
 
 
 
 
 
 
 
 
 
 
EBITDA
 
$
17,071

 
$
33,205

 
$
14,602

 
$
18,583

 
$
22,424

Adjusted EBITDA
 
$
17,087

 
$
20,259

 
$
14,338

 
$
18,583

 
$
24,886

Adjusted EBITDA excluding Gains
 
$
15,274

 
$
20,501

 
$
10,950

 
$
18,554

 
$
24,844




7

ERA GROUP INC.
OPERATING REVENUES BY LINE OF SERVICE
(unaudited, in thousands)
 
 
Three Months Ended
 
 
Sep 30,
2015
 
Jun 30,
2015
 
Mar 31,
2015
 
Dec 31,
2014
 
Sep 30,
2014
Oil and gas:(1)
 
 
 
 
 
 
 
 
 
 
U.S. Gulf of Mexico
 
$
42,132

 
$
41,821

 
$
41,913

 
$
45,837

 
$
52,870

Alaska
 
5,429

 
6,009

 
3,801

 
6,496

 
7,984

International
 
60

 
47

 
—

 
183

 
1,514

Total oil and gas
 
47,621

 
47,877

 
45,714

 
52,516

 
62,368

Dry-leasing
 
11,925

 
12,233

 
11,956

 
11,911

 
12,392

Search and rescue
 
4,418

 
4,989

 
5,238

 
5,650

 
5,666

Air medical services
 
1,854

 
1,914

 
2,367

 
2,301

 
2,569

Flightseeing
 
3,923

 
3,118

 
—

 
—

 
4,043

Fixed base operations
 
—

 
614

 
2,146

 
2,403

 
3,562

Eliminations
 
—

 
(7
)
 
(6
)
 
(92
)
 
(90
)
 
 
$
69,741

 
$
70,738

 
$
67,415

 
$
74,689

 
$
90,510


FLIGHT HOURS BY LINE OF SERVICE(2) 
(unaudited)
 
 
Three Months Ended
 
 
Sep 30,
2015
 
Jun 30,
2015
 
Mar 31,
2015
 
Dec 31,
2014
 
Sep 30,
2014
Oil and gas:(1)
 
 
 
 
 
 
 
 
 
 
U.S. Gulf of Mexico
 
9,435

 
8,717

 
7,612

 
8,514

 
10,594

Alaska
 
797

 
732

 
290

 
560

 
939

International
 
22

 
14

 
—

 
—

 
—

Total oil and gas
 
10,254

 
9,463

 
7,902

 
9,074

 
11,533

Search and rescue
 
265

 
260

 
300

 
355

 
348

Air medical services
 
949

 
826

 
825

 
831

 
1,239

Flightseeing
 
1,502

 
1,118

 
—

 
—

 
1,505

 
 
12,970

 
11,667

 
9,027

 
10,260

 
14,625

____________________
(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.


8

ERA GROUP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
 
Sep 30,
2015
 
Jun 30,
2015
 
Mar 31,
2015
 
Dec 31,
2014
 
Sep 30,
2014
ASSETS
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
 
 
(unaudited)
Current assets:
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
13,808

 
$
17,002

 
$
33,691

 
$
40,867

 
$
40,357

Receivables:
 
 
 
 
 
 
 
 
 
 
Trade, net of allowance for doubtful accounts
 
39,498

 
39,866

 
38,949

 
33,390

 
48,307

Other
 
2,513

 
2,110

 
2,567

 
2,062

 
1,679

Inventories, net
 
24,932

 
25,808

 
26,189

 
26,869

 
27,039

Prepaid expenses and other
 
3,055

 
3,847

 
4,081

 
2,661

 
1,712

Deferred income taxes
 
2,276

 
2,507

 
2,167

 
1,996

 
2,065

Escrow deposits
 
2,297

 
6,762

 
2,800

 
—

 
—

Total current assets
 
88,379

 
97,902

 
110,444

 
107,845

 
121,159

Property and equipment
 
1,175,693

 
1,192,445

 
1,171,548

 
1,171,267

 
1,128,510

Accumulated depreciation
 
(311,070
)
 
(314,484
)
 
(315,399
)
 
(308,141
)
 
(296,294
)
Net property and equipment
 
864,623

 
877,961

 
856,149

 
863,126

 
832,216

Equity investments and advances
 
30,256

 
30,945

 
31,397

 
31,753

 
31,641

Goodwill
 
1,589

 
1,823

 
352

 
352

 
352

Intangible assets
 
1,411

 
1,410

 
—

 
—

 
—

Other assets
 
12,522

 
14,547

 
15,156

 
14,098

 
14,794

Total assets
 
$
998,780

 
$
1,024,588

 
$
1,013,498

 
$
1,017,174

 
$
1,000,162

 
 
 
 
 
 
 
 
 
 
 
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
 
Accounts payable and accrued expenses
 
$
12,037

 
$
12,026

 
$
13,904

 
$
15,120

 
$
21,819

Accrued wages and benefits
 
7,861

 
7,293

 
6,822

 
7,521

 
9,651

Accrued interest
 
3,992

 
813

 
4,791

 
949

 
4,805

Accrued income taxes
 
7,415

 
7,613

 
37

 
267

 
1,029

Derivative instruments
 
71

 
192

 
275

 
1,109

 
1,991

Current portion of long-term debt
 
25,335

 
26,130

 
26,729

 
27,426

 
2,787

Other current liabilities
 
4,735

 
3,556

 
3,121

 
3,162

 
4,154

Total current liabilities
 
61,446

 
57,623

 
55,679

 
55,554

 
46,236

Long-term debt
 
242,873

 
267,671

 
277,424

 
282,118

 
277,390

Deferred income taxes
 
213,998

 
218,802

 
217,200

 
217,027

 
216,985

Deferred gains and other liabilities
 
1,956

 
1,994

 
1,937

 
2,111

 
2,898

Total liabilities
 
520,273

 
546,090

 
552,240

 
556,810

 
543,509

 
 
 
 
 
 
 
 
 
 
 
Redeemable noncontrolling interest
 
4,783

 
5,195

 
—

 
—

 
—

Equity:
 
 
 
 
 
 
 
 
 
 
Era Group Inc. stockholders’ equity:
 
 
 
 
 
 
 
 
 
 
Common stock
 
207

 
206

 
206

 
204

 
204

Additional paid-in capital
 
432,774

 
431,233

 
430,251

 
429,109

 
428,530

Retained earnings
 
43,949

 
43,088

 
31,755

 
31,797

 
28,612

Treasury shares, at cost
 
(2,632
)
 
(563
)
 
(560
)
 
(551
)
 
(547
)
Accumulated other comprehensive income (loss), net of tax
 
92

 
(44
)
 
93

 
95

 
99

Total Era Group Inc. stockholders’ equity
 
474,390

 
473,920

 
461,745

 
460,654

 
456,898

Non-controlling interest
 
(666
)
 
(617
)
 
(487
)
 
(290
)
 
(245
)
Total equity
 
473,724

 
473,303

 
461,258

 
460,364

 
456,653

Total liabilities, redeemable noncontrolling interest and stockholders’ equity
 
$
998,780

 
$
1,024,588

 
$
1,013,498

 
$
1,017,174

 
$
1,000,162


9

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.
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,
2015
 
Jun 30,
2015
 
Mar 31,
2015
 
Dec 31,
2014
 
Sep 30,
2014
 
Sep 30,
2015
 
Sep 30,
2014
Net Income
 
$
653

 
$
11,105

 
$
(239
)
 
$
3,140

 
$
4,311

 
$
11,519

 
$
13,881

Depreciation and amortization
 
12,186

 
11,398

 
11,602

 
11,854

 
11,746

 
35,186

 
34,458

Interest income
 
(232
)
 
(317
)
 
(251
)
 
(122
)
 
(130
)
 
(800
)
 
(418
)
Interest expense
 
3,121

 
2,881

 
3,545

 
3,556

 
3,629

 
9,547

 
11,222

Income tax expense (benefit)
 
1,343

 
8,138

 
(55
)
 
155

 
2,868

 
9,426

 
8,130

EBITDA
 
$
17,071

 
$
33,205

 
$
14,602

 
$
18,583

 
$
22,424

 
$
64,878

 
$
67,273

Special items (1)
 
16

 
(12,946
)
 
(264
)
 
—

 
2,462

 
(13,194
)
 
4,919

Adjusted EBITDA
 
$
17,087

 
$
20,259

 
$
14,338

 
$
18,583

 
$
24,886

 
$
51,684

 
$
72,192

Losses (gains) on asset dispositions, net (“Gains”)
 
(1,813
)
 
242

 
(3,388
)
 
(29
)
 
(42
)
 
(4,959
)
 
(6,072
)
Adjusted EBITDA excluding Gains
 
$
15,274

 
$
20,501

 
$
10,950

 
$
18,554

 
$
24,844

 
$
46,725

 
$
66,120

____________________
(1)
Special items include the following:
•
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;
•
In the three and nine months ended September 30, 2014, a pre-tax charge of $2.5 million for severance-related expenses for the Company’s former CEO; and
•
In the nine months ended September 30, 2014, a pre-tax impairment charge of $2.5 million on a note receivable from a foreign company with whom we participated in bids for contracts.



10


ERA GROUP INC.
FLEET COUNTS (1) 
(unaudited)
 
 
Sep 30,
2015
 
Jun 30,
2015
 
Mar 31,
2015
 
Dec 31,
2014
 
Sep 30,
2014
Heavy:
 
 
 
 
 
 
 
 
 
 
H225
 
9

 
9

 
9

 
9

 
9

 
 
 
 
 
 
 
 
 
 
 
Medium:
 
 
 
 
 
 
 
 
 
 
AW139
 
39

 
39

 
39

 
39

 
39

B212
 
8

 
8

 
8

 
9

 
9

B412
 
2

 
3

 
3

 
6

 
6

S76 A++
 
2

 
2

 
2

 
2

 
2

S76 C+/C++
 
6

 
6

 
6

 
6

 
6

 
 
57

 
58

 
58

 
62

 
62

 
 
 
 
 
 
 
 
 
 
 
Light—twin engine:
 
 
 
 
 
 
 
 
 
 
A109
 
7

 
7

 
7

 
9

 
9

BK-117
 
3

 
3

 
3

 
3

 
3

BO-105
 
3

 
3

 
—

 
—

 
—

EC135
 
17

 
19

 
19

 
20

 
20

EC145
 
5

 
5

 
5

 
5

 
5

 
 
35

 
37

 
34

 
37

 
37

 
 
 
 
 
 
 
 
 
 
 
Light—single engine:
 
 
 
 
 
 
 
 
 
 
A119
 
16

 
17

 
17

 
17

 
17

AS350
 
31

 
31

 
35

 
35

 
35

 
 
47

 
48

 
52

 
52

 
52

Total Helicopters
 
148

 
152

 
153

 
160

 
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. We took delivery of one S92 heavy helicopter in September 2015, but it was not yet placed in service as of September 30, 2015 .

11
Q3 2015 Earnings Presentation 0November 5, 2015

 
I. Introduction Shefali Shah, SVP and General Counsel II. Operational Highlights Chris Bradshaw, President and CEO III. Financial Review Andy Puhala, SVP and CFO IV. Questions & Answers Q3 2015 Earnings Call Agenda 1

 
2 Cautionary Statement Regarding Forward Looking Statements This presentation contains “forward-looking statements.” Forward-looking statements give the Company’s current expectations or forecasts of future events. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “project,” or “continue,” or other similar words. These statements reflect management’s current views with respect to future events and are subject to risks and uncertainties, both known and unknown. The Company’s actual results may vary materially from those anticipated in forward-looking statements. The Company cautions investors not to place undue reliance on any 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 reduction of our customer base resulting from consolidation; 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 United States (“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 our 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 used 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; adequacy of the Company’s insurance coverage; 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. These factors are not exhaustive, and new factors may emerge or changes to the foregoing factors may occur that could impact the Company’s business. Except to the extent required by law, the Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 
3 This presentation includes EBITDA and Adjusted EBITDA as supplemental measures of the Company’s operating performance. EBITDA is defined as Earnings before Interest (includes interest income, interest expense and interest expense on advances from SEACOR), Taxes, Depreciation and Amortization. Adjusted EBITDA is defined as EBITDA further adjusted for SEACOR Management Fees and certain other special items that occurred during the reporting period. 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 a measure of free cash flow available for discretionary use, as they do not take into account certain cash requirements, such as debt service requirements. EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation, nor as a substitute for analysis of our results as reported under GAAP. 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. A reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDA further adjusted to exclude gains on asset dispositions is included in this presentation. Non-GAAP Financial Measures Reconciliation

 
4 Operational Highlights

 
14,625 12,970 11,667 12,970 0 5,000 10,000 15,000 20,000 Q3 2014 Q3 2015 Q2 2015 Q3 2015 $90,510 $69,741 $70,738 $69,741 – $25,000 $50,000 $75,000 $100,000 $125,000 Q3 2014 Q3 2015 Q2 2015 Q3 2015 $24,886 $17,087 $20,259 $17,087 – $10,000 $20,000 $30,000 $40,000 Q3 2014 Q3 2015 Q2 2015 Q3 2015 • Revenues of $69.7mm ̶ $20.8mm lower than Q3 2014 primarily due to lower utilization of our helicopters and the sale of our FBO business in Q2 2015 ̶ $1.0mm lower than Q2 2015 primarily due to fewer helicopters on contract in Alaska, lower SAR revenues and the FBO sale • Adjusted EBITDA of $17.1mm • Net income of $0.9 mm and EPS of $0.04 5 Q3 2015 Highlights Revenues ($000s) Adjusted EBITDA ($000s) Flight Hours 23% 11% 11% 31% 1% 16%

 
$52,870 $42,132 $41,821 $42,132 – $25,000 $50,000 $75,000 Q3 2014 Q3 2015 Q2 2015 Q3 2015 10,594 9,435 8,717 9,435 0 5,000 10,000 15,000 Q3 2014 Q3 2015 Q2 2015 Q3 2015 6 Oil & Gas – Gulf of Mexico Revenues ($000s) Flight Hours • Year-over-year revenues and flight hours down primarily due to lower utilization of medium and heavy helicopters • Sequential quarter revenues were flat. Flight hours increased primarily due to increased utilization of light helicopters • First S92 revenue flight on October 19 20% 11% 8%1%

 
939 797 732 797 0 500 1,000 1,500 Q3 2014 Q3 2015 Q2 2015 Q3 2015 $7,984 $5,429 $6,009 $5,429 – $2,000 $4,000 $6,000 $8,000 $10,000 Q3 2014 Q3 2015 Q2 2015 Q3 2015 7 Oil & Gas – Alaska Revenues ($000s) Flight Hours 15% 9% 32% • Year-over-year revenues and flight hours down primarily due to lower utilization • Sequential quarter revenues down due to fewer helicopters on contract ̶ Flight hours increased, consistent with seasonal pattern • Shell’s decision to exit Alaska represents a negative sign for near-term activity 10%

 
8 Oil & Gas – International • Year-over-year revenues decreased due to conclusion of a contract • The integration of Sicher Helicopters, our consolidated Colombian joint venture, continues, and we are preparing for the launch of offshore operations in 2016

 
$12,392 $11,925 $12,233 $11,925 – $5,000 $10,000 $15,000 $20,000 $25,000 Q3 2014 Q3 2015 Q2 2015 Q3 2015 9 Dry-Leasing Revenues ($000s) • Revenues decreased year-over-year due to contracts that ended subsequent to the prior year quarter, partially offset by increased cash collections from Aeróleo ̶ Aeróleo cash collections increased $1.5mm over prior year quarter, but decreased $0.6mm over Q2 2015 primarily due to weakening of the Brazilian real • In addition to Brazil, we dry lease helicopters to third party helicopter operators in India, the North Sea and Spain • Revenues from Aeróleo have been recognized on a cash receipts basis since 2012 • Following the closing of the Aeroleo partner transaction on October 1st, Aeroleo financial results will be consolidated within Era’s financial statements beginning with Q4 2015 ̶ Revenues will be reflected in our International Oil and Gas line of service 4% 3%

 
$5,666 $4,418 $4,989 $4,418 – $2,500 $5,000 $7,500 $10,000 Q3 2014 Q3 2015 Q2 2015 Q3 2015 348 265 260 265 0 250 500 750 1,000 Q3 2014 Q3 2015 Q2 2015 Q3 2015 10 Search and Rescue Revenues ($000s) Flight Hours • Decrease in revenues over the prior year quarter and sequential quarter primarily due to the end of a subscriber contract ̶ We are pleased to announce the addition of a major international oil and gas company as a new SAR subscriber in Q4 2015 • Operate AW139 SAR helicopters out of Galveston, TX and Fourchon, LA providing 24/7 emergency services covering the entire U.S. Gulf of Mexico 24% 22% 11% 2%

 
$2,569 $1,854 $1,914 $1,854 – $1,000 $2,000 $3,000 $4,000 $5,000 Q3 2014 Q3 2015 Q2 2015 Q3 2015 1,239 949 826 949 0 500 1,000 1,500 Q3 2014 Q3 2015 Q2 2015 Q3 2015 11 • Year-over-year decline in revenues and flight hours primarily due to the conclusion of a contract subsequent to the prior year quarter • Operate with a mix of helicopters owned by Era, leased-in by Era or owned by the hospitals served Air Medical Revenues ($000s) Flight Hours 23% 28% 3% 15%

 
$4,043 $3,923 $3,118 $3,923 – $2,500 $5,000 $7,500 $10,000 Q3 2014 Q3 2015 Q2 2015 Q3 2015 1,505 1,502 1,118 1,502 0 500 1,000 1,500 2,000 2,500 Q3 2014 Q3 2015 Q2 2015 Q3 2015 12 • Decrease in revenues over the prior year quarter due to reduced customer bookings • Increase in revenue and flight hours sequentially due to more operating days • Seasonal business which operates AS350s out of bases in Juneau and Denali, Alaska from mid-May to mid-September during tourist season each year ̶ Block space is allocated to cruise lines and seats are sold directly to customers Flightseeing Revenue ($000s) Flight Hours 34%26% 3% Unchanged

 
13 Financial Review

 
14 Quarter Period Over Period Comparison Three Months Ended September 30, 2015 2014 $ Change % Variance ($000s) Operating revenues 69,741$ 90,510$ (20,769)$ (23%) Operating expenses 43,007 54,282 (11,275) 21% G&A expenses 11,238 12,941 (1,703) 13% Depreciation 12,186 11,746 440 (4%) Gains on asset dispositions, net 1,813 42 1,771 N/A Operating income 5,123 11,583 (6,460) (56%) Interest income 232 130 102 78% Interest expense (3,121) (3,629) 508 14% Loss on debt extinguishment (16) - (16) N/A Derivative gains (losses), net 8 (1,703) 1,711 N/A Foreign currency gains (losses), net 146 (485) 631 N/A Other, net - (3) 3 N/A Income tax expense (1,343) (2,868) 1,525 53% Equity earnings (losses), net (376) 1,286 (1,662) N/A Net income 653$ 4,311$ (3,658)$ (85%) Net loss (income) attributable to NCI 208 (45) 253 N/A Net income attributable to Era Group Inc. 861$ 4,266$ (3,405)$ (80%) Adjusted EBITDA 17,087$ 24,886$ (7,799)$ (31%) % Margin 25% 27% Adjusted EBITDA Excluding Gains 15,274$ 24,844$ (9,570)$ (39%) % Margin 22% 27%

 
15 Sequential Quarter Comparison Three Months Ended 30-Sep 30-Jun $ Change % Variance ($000s) Operating revenues 69,741$ 70,738$ (997)$ (1%) Operating expenses 43,007 39,784 3,223 (8%) G&A expenses 11,238 10,779 459 (4%) Depreciation 12,186 11,398 788 (7%) Gains (losses) on asset dispositions, net 1,813 (242) 2,055 N/A Operating income 5,123 8,535 (3,412) (40%) Interest income 232 317 (85) (27%) Interest expense (3,121) (2,881) (240) (8%) Loss on debt extinguishment (16) - (16) N/A Derivative gains (losses), net 8 (10) 18 N/A Foreign currency gains, net 146 543 (397) (73%) Gain on sale of FBO - 12,946 (12,946) N/A Other, net - (9) 9 N/A Income tax expense (1,343) (8,138) 6,795 83% Equity losses, net (376) (198) (178) (90%) Net income 653$ 11,105$ (10,452)$ (94%) Net loss attributable to NCI 208 228 (20) (9%) Net income attributable to Era Group Inc. 861$ 11,333$ (10,472)$ (92%) Adjusted EBITDA 17,087$ 20,259$ (3,172)$ (16%) % Margin 25% 29% Adjusted EBITDA Excluding Gains 15,274$ 20,501$ (5,227)$ (25%) % Margin 22% 29%

 
16 Year-to-date Comparison Nine Months Ended September 30, 2015 2014 $ Change % Variance ($000s) Operating revenues 207,894$ 256,533$ (48,639)$ (19%) Operating expenses 126,396 158,601 (32,205) 20% G&A expenses 31,760 34,340 (2,580) 8% Depreciation 35,186 34,458 728 (2%) Gains on asset dispositions, net 4,959 6,072 (1,113) (18%) Operating income 19,511 35,206 (15,695) (45%) Interest income 800 418 382 91% Interest expense (9,547) (11,222) 1,675 15% Gain on debt extinguishment 248 - 248 N/A Derivative losses, net (14) (1,744) 1,730 99% Note receivable impairment - (2,457) 2,457 N/A Foreign currency losses, net (2,271) (521) (1,750) (336%) Gain on sale of FBO 12,946 - 12,946 N/A Other, net (9) 10 (19) N/A Income tax expense (9,426) (8,130) (1,296) (16%) Equity earnings (losses), net (719) 2,321 (3,040) N/A Net income 11,519$ 13,881$ (2,362)$ (17%) Net loss attributable to NCI in subsidiary 633 51 582 1141% Net income attributable to Era Group Inc. 12,152$ 13,932$ (1,780)$ (13%) Adjusted EBITDA 51,684$ 72,192$ (20,508)$ (28%) % Margin 25% 28% Adjusted EBITDA Excluding Gains 46,725$ 66,120$ (19,395)$ (29%) % Margin 22% 26%

 
17 Equity and Debt Repurchases Equity Repurchases • During the quarter, we repurchased 131,984 shares of our common stock for $2.1mm ̶ Average price per share of $15.65 ̶ Repurchase of common stock was funded with existing cash balances, cash from operating activities and proceeds from asset dispositions Debt Repurchases • During the quarter, we repurchased $15.0mm of our 7.75% Senior Notes at prices ranging from 97.25 to 97.50 • In October, we repurchased an additional $19.9mm of our 7.75% Senior Notes at prices ranging from 93.00 to 95.00 • Repurchase of our 7.75% Senior Notes was funded with existing cash balances, cash from operating activities, proceeds from asset dispositions and borrowings under our senior secured revolving credit facility • To date, we have repurchased $44.8mm of our $200mm 7.75% Senior Notes due in 2022 ̶ At the current borrowing rate under our senior secured revolving credit facility, the aggregate repurchases imply annual interest expense savings of $2.4mm

 
18 Leverage Metrics Total Liquidity (US$mm)(a) Healthy Leverage Metrics and Ample Liquidity Note: As reported GAAP basis (a) At period end $149 $164 $176 $136 $244 $244 $244 $214 $209 $219 $227 $25 $28 $32 $31 $25 $15 $40 $41 $34 $17 $14 $174 $193 $209 $167 $270 $259 $285 $255 $243 $236 $241 – $50 $100 $150 $200 $250 $300 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Availability on revolver Cash and equivalents 3.3x 2.8x 2.6x 3.0x 3.1x 3.1x 3.1x 3.4x 3.7x 3.8x 3.9x 6.4x 6.0x 5.5x 5.3x 5.3x 5.7x 5.9x 6.1x 5.7x 5.7x 5.4x 0.0x 1.0x 2.0x 3.0x 4.0x 5.0x 6.0x 7.0x Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Total debt / Adjusted EBITDA Adjusted EBITDA / interest expense

 
19 Appendix

 
20 Owned(a) Joint Ventured Leased-In Managed Total Average Age(b) Heavy: H225 9 – – – 9 5 Total Heavy 9 – – – 9 Medium: AW139 38 1 – – 39 6 B212 8 – – – 8 36 B412 2 – – – 2 34 S76 A/A++ 2 – – – 2 25 S76 C+/C++ 5 – – 1 6 9 Total Medium 55 1 – 1 57 Light – twin engine: A109 7 – – – 7 9 BK-117 – – 2 1 3 N/A BO-105 3 – – – 3 26 H135 14 – 2 1 17 8 H145 3 – – 2 5 6 Total Light – twin engine 27 – 4 4 35 Light – single engine: A119 16 – – – 16 9 AS350 31 – – – 31 20 Total Light – single engine 47 – – – 47 Total Helicopters 138 1 4 5 148 13 (a) Does not include an S92 heavy helicopter that was delivered in September 2015 but not yet placed in service (b) Average for owned fleet Fleet Overview

 
September 30, 2015 ($000s) Cash and cash equivalents $13,808  Credit facility $70,000  Promissory notes 25,335  Total secured debt $95,335  7.750% Senior Notes $175,100  Other 119  Total debt $270,554  Net debt $256,746  Shareholders' Equity $473,724  Total capitalization $744,278  Total Debt / Adjusted EBITDA 3.9x  Adjusted EBITDA / Interest Expense 5.4x  Net Debt / Net Capitalization (a) 35%  Total Debt / Total capitalization 36%  Available under credit facility $227,200  21 • In October, we repurchased an additional $19.9mm of our 7.75% Senior Notes, funded with borrowings under our senior secured revolving credit facility • Era continues to generate substantial free cash flow before growth capex • Flexibility to deploy capital for attractive opportunities • Existing capital commitments can be funded via combination of cash-on-hand, cash flow from operations and temporary borrowings under our revolving credit facility Capitalization and Financial Policy (a) Calculated as Total debt less cash and cash equivalents / Total capitalization less cash and cash equivalents

 
22 Historical Gains on Helicopter Sales (a) Indexed resale value of several helicopter types by vintage, inflation adjusted to 2011 dollars. Source: HeliValue$, Cowen and Co. (b) Index includes: Augusta Westland 109A Widebody (1988 model), Bell 212 (1979 model), Bell 412 (1984 model), Eurocopter BK 117A-4 (1988 model), Eurocopter AS 350B (1982 model), Sikorsky S-76A Mark II (1982 model) (c) Era depreciates its helicopters to 40% salvage value over 15 years • We have consistently sold helicopters at a premium to book value • Since 2004, Era has sold 103 aircraft for an aggregate gain of nearly $80 million • We spent $44 million, $57 million and $64 million in 2012, 2013 and 2014, respectively, to maintain our fleet ̶ Amounts fully expensed, as we do not capitalize maintenance expenditures Helicopter Value Retention 20 40 60 80 100 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Helicopter Age (Indexed Resale Value) Premium to Book Helicopter Resale Value(a)(b) Illustrative Book Value(c) Historical Gains on Helicopter Sales ($000s) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Total # of Aircraft Sold 2 8 15 11 8 5 2 14 6 15 3 14 103 Acquisition Cost $1,401 $13,599 $34,373 $20,842 $11,781 $24,670 $471 $20,848 $4,164 $74,296 $2,317 $27,358 236,120 Sale Proceeds 1,385 19,011 36,628 28,170 14,790 25,267 740 28,680 3,435 68,165 6,950 20,111 253,332 Book Value at Sale 936 10,958 27,231 19,362 9,776 24,853 254 12,640 1,268 50,247 931 15,735 174,193 Gain on Sale $449 $8,053 $9,397 $8,808 $5,014 $414 $486 $16,040 $2,167 $17,918 $6,019 $4,375 $79,139

 
23 Operating Revenues and Flight Hours by Line of Service Note: Flight hours do not include hours flown by helicopters in our dry-leasing line of service (a) Primarily oil and gas services, but also includes revenues and flight hours from activities such as firefighting and utility support Three Months Ended Revenue ($000s) 30-Sep-15 30-Jun-15 31-Mar-15 31-Dec-14 30-Sep-14 Oil and gas:(a) U.S. Gulf of Mexico $42,132 $41,821 $41,913 $45,837 $52,870 Alaska 5,429 6,009 3,801 6,496 7,984 International 60 47 – 183 1,514 Total oil and gas $47,621 $47,877 $45,714 $52,516 $62,368 Dry-Leasing 11,925 12,233 11,956 11,911 12,392 Search and rescue 4,418 4,989 5,238 5,650 5,666 Air medical services 1,854 1,914 2,367 2,301 2,569 Flightseeing 3,923 3,118 – – 4,043 FBO – 614 2,146 2,403 3,562 Eliminations – (7) (6) (92) (90) $69,741 $70,738 $67,415 $74,689 $90,510 Three Months Ended Flight Hours 30-Sep-15 30-Jun-15 31-Mar-15 31-Dec-14 30-Sep-14 Oil and gas:(a) U.S. Gulf of Mexico 9,435 8,717 7,612 8,514 10,594 Alaska 797 732 290 560 939 International 22 14 – – – Total oil and gas 10,254 9,463 7,902 9,074 11,533 Search and rescue 265 260 300 355 348 Air medical services 949 826 825 831 1,239 Flightseeing 1,502 1,118 – – 1,505 12,970 11,667 9,027 10,260 14,625

 
24 (a) See next page for Adjusted EBITDA reconciliation to Net Income (Loss) Financial Highlights Fiscal Year 9 Mos. Ended Sept 30, ($ millions) 2010 2011 2012 2013 2014 2014 2015 Revenue 235.4$ 258.1$ 272.9$ 299.0$ 331.2$ 256.5$ 207.9$ Operating Expenses 147.2 162.7 167.2 186.6 204.4 158.6 126.4 G&A 25.8 31.9 34.8 38.9 44.0 34.3 31.8 Depreciation 43.4 42.6 42.5 45.6 46.3 34.5 35.2 Gains on Asset Dispositions 0.8 15.2 3.6 18.3 6.1 6.1 5.0 Operating Income 19.8 36.1 32.0 46.2 42.7 35.2 19.5 Other Income (Expense): Interest Income 0.1 0.7 0.9 0.6 0.5 0.4 0.8 Interest Expense (0.1) (1.4) (10.6) (18.1) (14.8) (11.2) (9.5) Gain on Debt Extinguishment - - - - - - 0.2 Intercompany Interest (21.4) (23.4) - - - - - Derivative Gains (Losses) (0.1) (1.3) (0.5) (0.1) (0.9) (1.7) (0.0) Note Receivable Impairment - - - - (2.5) (2.5) - Foreign Currency Gains (Losses) (1.5) 0.5 0.7 0.7 (2.4) (0.5) (2.3) Gain on sale of FBO - - - - - - 12.9 SEACOR Corporate Charges (4.6) (8.8) (2.0) (0.2) - - - (27.6) (33.7) (11.5) (17.1) (20.0) (15.5) 2.2 Income before Taxes and Equity Earnings (7.8) 2.4 20.5 29.1 22.6 19.7 21.7 Income Taxes (4.3) 0.4 7.3 11.7 8.3 8.1 9.4 Income before Equity Earnings (3.5) 2.0 13.2 17.4 14.4 11.6 12.2 Equity Earnings (0.1) 0.1 (5.5) 0.9 2.7 2.3 (0.7) Net Income (3.6)$ 2.1$ 7.7$ 18.3$ 17.0$ 13.9$ 11.5$ Adjusted EBITDA(a) 61.8$ 82.2$ 78.8$ 95.3$ 90.8$ 72.2$ 51.7$ Adjusted EBITDA Excluding Gains(a) 61.0 67.0 75.2 77.0 84.7 66.1 46.7

 
• Adjusted EBITDA reflects special items: – Executive severance adjustments of $0.4 million, $4.2 million, and $0.7 million in FY 2010, 2011 and 2012, respectively, and $2.5 million in Q3 2014 – An adjustment for IPO related fees and expenses of $2.9 million in FY 2012 – Impairment of our investment in Aeróleo in the first quarter of 2012 ($5.9 million) – A one-time charge related to operating leases on certain air medical helicopters in Q3 2013 of $2.0 million – A pre-tax impairment charge of $2.5 million in Q2 2014 representing a reserve against a note receivable – A pre-tax gain on the extinguishment of debt of $0.3 million related to the repurchase of a portion of our 7.75% Senior Notes in Q1 2015 – A pre-tax gain of $12.9 million on the sale of our FBO in Alaska in Q2 2015 – A pre-tax loss on the extinguishment of debt <$0.1 million related to the repurchase of a portion of our 7.75% Senior Notes in Q3 2015 • Historically, SEACOR charged its corporate costs and overhead charges to all of its operating divisions − These charges have been excluded from Adjusted EBITDA to more accurately reflect Era’s historical results as if we had not been a SEACOR subsidiary 25 Reconciliation of Non-GAAP Financial Measures Historical EBITDA and Adjusted EBITDA Fiscal Year 9 Mos. Ended Sept 30, (USD$ in thousands) 2010 2011 2012 2013 2014 2014 2015 Net Income (Loss) (3,639) 2,108 7,747 18,304 17,021 13,881 11,519 Depreciation 43,351 42,612 42,502 45,561 46,312 34,458 35,186 Interest Income (109) (738) (910) (591) (540) (418) (800) Interest Expense 94 1,376 10,648 18,050 14,778 11,222 9,547 Interest Expense on Advances 21,437 23,410 - - - - - Income Tax Expense (Benefit) (4,301) 434 7,298 11,727 8,285 8,130 9,426 EBITDA 56,833 69,202 67,285 93,051 85,856 67,273 64,878 SEACOR Management Fees 4,550 8,799 2,000 168 - - - Special Items 379 4,171 9,552 2,045 4,919 4,919 (13,194) Adjusted EBITDA 61,762 82,172 78,837 95,264 90,775 72,192 51,684 Gains on Asset Dispositions, Net ("Gains") (764) (15,172) (3,612) (18,301) (6,101) (6,072) (4,959) Adjusted EBITDA Excluding Gains 60,998 67,000 75,225 76,963 84,674 66,120 46,725

 
26 Quarterly Reconciliation of Non-GAAP Financial Measures Quarterly Historical EBITDA and Adjusted EBITDA Three Months Ended (USD$ in thousands) 30-Sep-14 31-Dec-14 31-Mar-15 30-Jun-15 30-Sep-15 Net Income (Loss) 4,311 3,140 (239) 11,105 653 Depreciation 11,746 11,854 11,602 11,398 12,186 Interest Income (130) (122) (251) (317) (232) Interest Expense 3,629 3,556 3,545 2,881 3,121 Income Tax Expense (Benefit) 2,868 155 (55) 8,138 1,343 EBITDA 22,424 18,583 14,602 33,205 17,071 Special Items 2,462 - (264) (12,946) 16 Adjusted EBITDA 24,886 18,583 14,338 20,259 17,087 Gains on Asset Dispositions, Net ("Gains") (42) (29) (3,388) 242 (1,813) Adjusted EBITDA Excluding Gains 24,844 18,554 10,950 20,501 15,274

 

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