PHI, Inc. ("PHI") (the nasdaq global market:PHII (voting) PHIIK (non-voting)) today reported financial results for the year ended December 31, 2011.
Oil and Gas operating revenues increased $10.0 million, related primarily to increased heavy aircraft flight hours and revenues. This increase was offset in part by a decrease in revenues for light and medium aircraft. Although there was an increase in revenue in the Oil and Gas segment, flight hours and revenue for deepwater drilling support began to achieve the same level of activity as before the Macondo incident only in the fourth quarter of 2011. Flight hours were 111,546 for 2011, compared to 114,122 for the same period in 2010.
Net Oil and Gas segment profit was $41.6 million for the year ended December 31, 2011, compared to $50.7 million for the year ended December 31, 2010. Revenue in the first three quarters of 2011 was adversely affected by decreased deepwater drilling activity caused by the Macondo oil spill in 2010. Deepwater drilling permits began to be issued and affect our customers in approximately April 2011 and permitting activity has improved since that time. There was also an increase in direct expense of $20.2 million, as discussed in our Form 10-K.
Operating revenues in the Air Medical segment increased $11.2 million primarily due to increased revenues for hospital based contracts of $8.0 million due to increased flight hours for those contracts. There was also an increase in revenues of $3.2 million in the independent provider programs due to an improved payor mix and rate increases implemented in 2010 and 2011. Patient transports were 17,638 for 2011, compared to 18,480 for 2010, a decrease of 842 transports. Flight hours were 33,650 for 2011, compared to 33,222 for 2010.
Net segment profit for the Air Medical segment was $15.0 million for the year ended December 31, 2011, compared to $10.2 million for the year ended December 31, 2010. The increase in segment profit in the Air Medical segment was primarily due to increased revenues related to increased activity on hospital contracts and rate increases, offset in part by increased direct expenses of $6.1 million. Operating income for 2010 includes a credit of $3.1 million related to termination of a manufacturer's warranty program in 2010.
Technical Services revenues were $12.6 million for 2011, compared to $11.0 million for 2010. Direct expenses in our Technical Services segment were $8.0 million for 2011 compared to $8.2 million for 2010. Our Technical Services segment's operating income was $4.5 million for 2011, compared to operating income of $2.7 million for 2010.
Consolidated operating revenues for 2011 were $539.6 million, compared to $517.0 million for 2010, an increase of $22.6 million, or 4%. Oil and Gas operating revenues increased $10.0 million and operating revenues in the Air Medical segment increased $11.2 million, as discussed above. Flight hours for the year ended December 31, 2011 were 146,706 compared to 149,020 for the year ended December 31, 2010.
Consolidated net earnings for 2011 were $4.9 million, compared to net earnings of $7.1 million for 2010. Earnings before tax for 2011 were $8.1 million compared to earnings before tax of $14.6 million in 2010. Earnings per diluted share were $0.31 for 2011 compared to earnings per diluted share of $0.46 for 2010. The decrease in earnings is due primarily to the decrease in Oil and Gas segment profit of $10.0 million. As mentioned above, although there was an increase in revenue in the Oil and Gas segment, flight hours and revenue for deepwater drilling support began to achieve the same level of activity as before the Macondo incident only in the fourth quarter of 2011. There was also an increase in selling, general and administrative expense of $4.3 million further discussed in the Company's Form 10-K. Interest expense increased $8.6 million from $19.4 million in 2010 to $28.0 million in 2011, due to the issuance of the 8.625% Senior Notes. Earnings for 2010 included a credit of $4.3 million in direct expense related to termination of a manufacturer's warranty program on certain aircraft, and a $9.5 million pre-tax charge related to the early redemption of our 7.125% Senior Notes.
Certain statements in this release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words "forecast," "anticipate," "estimate," "project," "intend," "expect," "should," "believe," and similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the Company's actual results, performance (financial or operating) or achievements to differ materially from the results, performance (financial or operating) or achievements expressed or implied by such forward-looking statements. These factors include adverse weather, competition, the level of activity in the oil and gas industry (particularly in the Gulf of Mexico) and our ability to continue to grow patient transport volumes. These and other factors are more fully discussed in the Company's SEC filings under "Risk Factors."
PHI provides helicopter transportation and related services to a broad range of customers including the oil and gas industry, air medical industry and also provides third-party maintenance services to select customers. PHI Voting Common Stock and Non-Voting Common Stock are traded on The Nasdaq Global Market (symbols PHII and PHIIK).
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