FOURTH QUARTER RESULTS
Revenue increased by $2.1 million to $50.9 million in the fourth quarter of 2016, compared to $48.8 million a year ago, mainly as a result of increased revenue from the ancillary business segment. The Corporation flew 8,304 hours compared to 8,290 hours in the fourth quarter of 2015, representing an increase of 0.2%.

Ancillary revenue increased by $1.3 million mainly due to higher activity levels at the Contracted Flying and Training Services (CFTS) project and an increase at Nampa Valley and Heli-Welders. Onshore revenue increased by $0.8 million primarily due to the addition of Acasta HeliFlight Inc. (Acasta) and an increase from the North Warning System contract (NWS). Finally, offshore revenue remained flat with gains in Southeast Asia offset by lower activity levels at the Shell Canada offshore support contract in Halifax and decreases from the Shell Philippines contract.

Operating expenses, before aircraft operating leases expenses, increased by $4.3 million to $43.7 million in the fourth quarter compared to last year. The increase in operating expenses is primarily explained by increased activity at the CFTS project, increased costs at Norsk, the addition of Acasta and increased activity in Southeast Asia, partially offset by lower costs at HNZ Topflight and the Nova Scotia EMS contract.

The Corporation recorded a foreign exchange gain of $0.3 million in the fourth quarter, compared to a loss of $1.7 million in the comparable quarter last year. The $2.0 million variation is mostly explained by a loss recorded in 2015 on revaluation of net working capital accounts from foreign subsidiaries.

Adjusted EBITDAR and Adjusted EBITDA for the fourth quarter of 2016 were $7.5 million and $2.3 million respectively or 14.7% and 4.5% of revenues, compared to $7.7 million and $3.4 million a year earlier.

For the three-month period ended December 31, 2016, the Corporation recorded an income tax expense of $1.5 million (income tax expense of $1.7 million for the comparative period in 2015). Income tax expense excludes the recognition of the benefit for losses incurred in various subsidiaries for which a tax benefit was not recognized during the three-month period ended December 31, 2016.

Net loss attributable to the shareholders of the Corporation totaled $3.0 million or ($0.23) per share, compared to a net loss of $2.7 million, or ($0.20) per share in 2015. Cash flows related to operating activities were $1.5 million in the fourth quarter of 2016 versus $10.2 million in the corresponding period a year earlier.

“The fourth quarter reflected continued increases in Ancillary activity, combined with seasonality and ongoing pressure in the Canadian onshore due to lower resource activity. The addition of Acasta has broadened our exposure to a strong segment of the market, and we are seeing the benefits of the investment. While the offshore market remained flat, the recent contract awards are demonstrating our capability in the segment,” said Don Wall, President and Chief Executive Officer of HNZ Group Inc. “We were pleased to be able to achieve modest profitability for the year in a difficult market, and finish 2016 with a strong balance sheet and $15.0 million cash on hand.”

As at December 31, 2016, the Corporation’s financial position is strong with working capital of $58.1 million, and cash and cash equivalents of $15.0 million.

YEAR-END RESULTS
For the twelve-month period ended December 31, 2016, revenue totaled $212.3 million, compared with revenue of $188.7 million in the corresponding period of 2015. This increase is explained by higher offshore revenue of $13.8 million, an increase in ancillary revenue of $7.5 million and an increase in onshore revenue of $2.3 million. The Corporation flew 40,828 hours over the twelve-month period ended December 31, 2016, compared to 40,680 hours in 2015.

Adjusted EBITDAR and Adjusted EBITDA for the twelve-month period amounted to $45.2 million and $27.1 million respectively, compared to $32.6 million and $22.0 million a year earlier.

Net income attributable to the Shareholders of the Corporation totaled $3.4 million or $0.26 per share, compared to a net loss of $13.8 million, or ($1.05) per share in 2015. Cash flows related to operating activities were $12.9 million for the twelve-month period versus $13.4 million in the corresponding period a year earlier.

Adjusted Net Free Cash Flows for the twelve months ended December 31, 2016 totaled $10.6 million, compared to $10.3 million for the same period a year ago.

2016 AND POST-YEAR HIGHLIGHTS
Nova Scotia Offshore Operations Contract
On March 9, 2017, the Corporation announced that it had secured a new, multi-year contract to provide helicopter services to support ExxonMobil Canada and Encana Corporation’s activities offshore Nova Scotia, Canada.  The Corporation will supply two Sikorsky S-92 helicopters for a term of 3 years beginning late in the second quarter of 2017. Helicopter transportation is integral to supporting safe, day-to-day operations of the Sable Offshore Energy Project and the Deep Panuke Project, both of which are natural gas production facilities located approximately 200 kilometres from shore.

Extension of Nova Scotia Emergency Health Services Contract

On January 26, 2017, the Corporation announced the extension of the Emergency Health Services (“EHS”) LifeFlight air ambulance helicopter services contract with the Province of Nova Scotia. HNZ, operating under the Canadian Helicopters brand, will continue to support EHS through an amended agreement by supplying two Sikorsky S-76C+ helicopters, an upgrade from one currently employed Sikorsky S-76A model. The amended agreement is set to commence on August 1, 2017 with an expiration date of March 31, 2032. Revenues are expected to be approximately $105 million over the course of the contract and will be invoiced in Canadian dollars.

Investment in Australia to Support INPEX Offshore Contract
On December 1, 2016, the Corporation announced the creation of PHI HNZ Australia Pty Limited, a legal entity held 50% by PHI, Inc. (“PHI”) and 50% by the Corporation, to provide offshore helicopter transportation services for the INPEX-led Ichthys LNG Project. The entity will supply up to four Sikorsky S-92 heavy helicopters, alongside the Ichthys Project’s current aviation provider, in support of the safe and efficient installation, hook up, commissioning and production activities of this project’s offshore facilities in Australia. The leased aircraft from PHI will be based out of Broome, Western Australia. The contract will commence on or before April 1, 2017 with a base term of five years, plus two, two-year option periods.

PHI HNZ Australia Pty Limited is designed to provide a comprehensive aircraft solution to the Ichthys Project. Employing PHI aircraft and HNZ employees, the entity will execute all aspects of the contract through service agreements providing personnel, equipment and support for flight operations, maintenance and administration.

Normal Course Issuer Bid

On August 25, 2016, the Corporation announced the renewal of a normal course issuer bid (“NCIB”) to repurchase up to 390,625 common shares and/or variable voting shares representing approximately 3% of the issued and outstanding common shares and variable voting shares, with daily repurchases limited to 1,059 common shares and/or variable voting shares other than block purchase exceptions. The NCIB will be conducted over a period of twelve months ending on August 28, 2017. During the year ended December 31, 2016, the Corporation repurchased 38,091 shares for a consideration of $421,962 (27,467 shares for a consideration of $303,245 were repurchased during the year-ended December 31, 2015).

Renewal of Offshore Oil and Gas Helicopter Support Contract in New Zealand
On June 1, 2016, HNZ announced that HNZ New Zealand entered into an offshore oil and gas helicopter support contract with a consortium of customers which includes Shell Todd Oil Services Limited, AWE Taranaki Limited, OMV New Zealand Limited and Origin Energy Resources (Kupe) Limited, New Plymouth.

The contract commenced on April 1, 2016, as HNZ began crew change helicopter services from New Plymouth to various offshore petroleum platforms in New Zealand using two AgustaWestland AW139 helicopters. This contract replaced two previous contracts HNZ held with the same customer group which collectively utilized three AW139 helicopters. One of the New Zealand based AW139 aircraft was redeployed to other opportunities outside the country. The initial term of the contract is five years with five one-year option periods, exercisable by the customer.

Revenues under the contract during the initial five year term are expected to be approximately $60 million ($67 million NZD) including annual inflation adjustments over the period. The contract contains both US dollar and New Zealand dollar revenues, corresponding to the underlying costs of the operation.

Renewal of Offshore Oil and Gas Helicopter Support Contract with Shell Philippines Exploration
On June 1, 2016, HNZ was awarded a five year extension to its existing contract with Shell Philippines Exploration, BV (“SPEX”). The extension replaced the original five one-year option periods at the expiry of the existing contract, and will be in effect from August 2017 to August 2022. The contract for SPEX is for the supply of two AgustaWestland AW139 helicopters for the provision of services to the Malampaya Gas Platform.

Revenues for the extension period of five years are expected to be approximately $61 million ($47 million USD). Non-recurring costs of approximately $3 million USD were incurred in relation to transition of replacement aircraft into the contract during financial year 2016.

OUTLOOK
“Looking forward, we remain focused on expanding our presence in the offshore market which represented close to 45% of total revenue in 2016. In the past 12 months, HNZ’s long-term visibility was enhanced as multi-year contracts were secured. These include the new INPEX-led Ichthys LNG offshore project and, subsequent to year-end, the Nova Scotia Emergency Health contract extension and expansion until 2032, as well as a three year Nova Scotia offshore operations contract. We are well positioned to take advantage of strategic growth opportunities through acquisitions, joint ventures and diversification,” concluded Mr. Wall.

CONFERENCE CALL
The Corporation will hold a conference call to discuss these results on Friday, March 17, 2017 at 11:00AM (ET). Interested parties can join the call by dialing 514-807-9895 (Montreal) or 1-888-231-8191 (toll free). If you are unable to call at this time, you may access a tape recording of the conference call by dialing 416-849-0833 (Toronto), 514-807-9274 (Montreal), or 1-855-859-2056 (toll free) followed by access code: 74473973. This tape recording will be available until March 24, 2017.