PHI - PHI Inc

[chesko182]

Has anyone looked at this name? It's a helicopter transportation company, providing service to the Oil&Gas and Medical industry. Company has good asset coverage which seems to provide a lot of downside protection from both high cash balances (although they're ST investments) and owning the majority of their fleet. Oil division obviously going through some difficult times as Gulf of Mexico Rig Counts are very low (which is the area that they service) but they're Medical business is doing well. Company should have flexibility to both sell or retool part of their fleet to adjust to industry conditions. I'm also looking at their 2019 bonds currently yielding 8% at a 95 price. The company certainly looks better than their main competitors in O&G (Bristow) and Medical (Air Methods) given its diversification, asset profile, manageable debt, and owner operated company. I think the earnings instability may be creating an opportunity as long as one believes the company will turn out fine in this environment.

 

Good VIC writeup: https://valueinvestorsclub.com/idea/PHI_INC/139066

 

Thanks

[mjohn707]

I took a look and I couldn't figure out if it made sense.  It's got a weird balance sheet, owns a bunch of corporate bonds, but it has a big bond liability with a pretty high interest rate.  I couldn't get comfortable with how bad the offshore division might get and what the helicopters were worth ultimately

[JayGatsby]

The Air Medical segment seems to be doing a lot worse the last two quarters since the middle east contract rolled off. Looks like the margins there were fairly high so the loss of that contract had an outsized impact on margin. It's only been a short time though so that could just be a blip. I assume there's costs incurred winding down the contract (returning the equipment to the US at a minimum) so that may be weighing on results as well. It was a good VIC writeup, but if you kick out that leg of the stool it becomes a riskier bet on GoM and/or the value of the assets (primarily the fleet of heavy S-92s, as that's where a lot of the book value is).

 

They do have 4 S-92s going to Australia so that should help: http://www.newswire.ca/news-releases/hnz-group-announces-joint-venture-in-australia-to-support-new-inpex-offshore-oil-and-gas-contract-604109366.html . HNZ just announced another S-92 for search and rescue purposes, so possible that's leased from PHI as as well.

 

This leasing company is bullish on the market dynamics / asset values, although the article overall seems a bit excessively bullish: http://waypointleasing.com/wp-content/uploads/2017/03/Waypoint-Helicopter-Values.pdf