Thank you, Greg, and good morning, everyone. Welcome to Era’s fiscal year-end and fourth quarter 2018 earnings call.

I’m here today with our President and CEO, Chris Bradshaw; our SVP and CFO, Jennifer Whalen; our SVP of Strategy and Corporate Development, Grant Newman; our SVP of Commercial, Paul White; our SVP Operations and Fleet Management, Stuart Stavley; our Corporate Controller, Tricia Schroeder; and our Finance Director, Seema Parekh.

You may access our recent earnings press release and presentation slides on our website, erahelicopters.com. Let me remind everyone that during the call, management may make forward-looking statements that are subject to risks and uncertainties that are described in more detail on Slide 3 of our investor presentation.

I’ll now turn the call over to our President and CEO.

Chris?.

Thank you, Crystal, and welcome to the call, everyone. As always, I will begin our prepared remarks with a note on safety, which is Era’s most important core value and our highest operational priority. We are pleased to report that Era achieved our dual goals of zero air accidents and zero recordable workplace injuries in full year 2018.

As of today, we have experienced over 530 consecutive days without a recordable workplace injury. This safety performance is truly world-class, and I want to thank our entire team for their hard work and dedication in placing safety first every day.

We are also pleased to announce that, together with our 50% partner, Era has entered into an agreement to sell Dart joint venture. When the transaction closes, which should occur in Q2 2019, we expect to receive cash proceeds of approximately $40 million.

We are very pleased with the value received for our full 50% equity interest in Dart, and we wish the Dart team well as they forward with the new owners. Now, as you can probably tell, I’m battling a head cold and losing my voice, so we’re going to bring in a pinch-hitter, Seema Parekh, to finish the prepared remarks.

Seema?.

The proceeds from the Dart sale will further impact our financial strength and strategic flexibility. As of year-end, we had total liquidity of $175 million, including over $50 million of cash on hand. As noted, the expected proceeds from the sale of Dart will increase both of those numbers by approximately $40 million.

With a strong balance sheet, limited debt maturities prior to 2022, manageable fixed charge obligation and a flexible order book, Era possesses industry-leading financial facility. The company has continue to generate positive cash flow. In 2018, we generated positive net cash flows from operating and investing activities of $77 million.

Excluding the impact of the H225 litigation settlement proceeds and the nonroutine professional services fee associated with that litigation, the net cash flow from operating and investing activities would have been positive $46 million in 2018.

We believe that having strong balance sheet and cash flow generation presents multiple opportunities to create value for Era shareholders. For a review of our Q4 and full year 2018 financial results, I will now turn it over to our CFO, Jennifer..

Thank you, Seema. Turning to the financial highlights for the fourth quarter compared to the third quarter of 2018, revenues decreased by $2.6 million. The primary drivers for this decrease were lower utilization in helicopters in our U.S. oil and gas business and the conclusion of a search and rescue contract.

Operating expenses were $0.5 million higher – higher by $0.5 million due to increased repairs and maintenance expense. General and administrative expenses were $0.6 million higher in the current quarter.

During the fourth quarter, we disposed one H225 heavy helicopter via a sales-type lease and disposes in capital parts for a total loss of $0.7 million and took a noncash impairment charge of $1 million on the final remaining H225 helicopter in our fleet. Moving on to the full year 2018 compared to 2017 results, revenues were lower by $9.6 million.

The revenue decrease was primarily due to lower utilization of light helicopters in oil and gas operations, the absence of flightseeing revenues following the sale of the company’s flightseeing assets in early 2018, lower dry-leasing revenues, the weakening of the Brazilian real, relative to the U.S.

dollar and conclusion of a search and rescue contract. Operating expenses were $15.9 million lower, primarily due to a reduction in headcount, decreased repairs and maintenance expense, the accounting for a special tax program in Brazil in the prior year and the absence of expenses related to flightseeing activities.

General and administrative expenses were $3 million higher in the current year due to an increase in professional service fees related to litigation that has now been settled, partially offset by decreases in compensation and other general and administrative expenses. At this time, I’ll turn the call back with Seema for further remarks.

Seema?.

Thank you, Jennifer. In 2018, we observed that the offshore oil and gas market recovery had begun, but it would not be linear and the cadence for customer projects may cause some quarter-to-quarter variability during recovery. In addition, we noted that the pace and slope of the offshore oil and gas market recovery was varied by geographic region.

In 2019, we expect Mexico and the Guyana-Suriname basin will be two of the bright spots. While it may be more of a transitional year in the U.S. Gulf of Mexico and Brazil. Globally, the supply and demand balance has tighten meaningfully for certain helicopter types, such as the AW139.

Our dry-leasing business has benefited from these improved market conditions, and we put five helicopters on new lease contracts with third-party operators since the end of Q3. We believe this highlights the strength of our hybrid operator/lessor model.

We can move assets around to capitalize on demand opportunities in regions where we do not have an Air Operator Certificate and by doing so, maximize the utilization of our helicopter fleet.

Chris?.

Thank you, Seema. So proving my long-held hypothesis that I would sound smarter with a British accent. With that, let’s open the lines for questions.

Greg?.

[Operator Instructions] And our first question will come from Bill Mastoris with Baird..

Thank you. So my first question, Chris, relates to actually a slide that you put up, this is in September and this I think was during a couple of the presentations in it, talked about 55 outstanding contract tenders for floaters.

Any update on that? I mean, where are we in that process right now? And I think closely related to that particular question, can you comment on the amount of ad hoc work that we have now, maybe versus the same time last year? And I hope you feel better. I do have a follow-up after that but it will be with somebody else. Thank you..

Good morning, Bill and thanks for the question. So in regards to the outstanding tenders for floating drilling rigs, the slide that you referenced from our September slide deck, some of those tenders have been filled, which is good news because that means the rigs are going to work.

So that number of outstanding tenders has come down some, but it’s still a pretty robust backlog of tenders where people are looking to contract those floating drilling rigs globally. In regard to ad hoc work, that mostly relates to our U.S. Gulf of Mexico work.

I would say that we had a very good recovery in the first half of 2018 off of the lows of the downturn, which was encouraging. In the latter part of 2018, we did see some softer activity in the U.S.

Gulf of Mexico, as we transition now into 2019, I think that pace of activity we saw in the back half of 2018 is probably our best guess now for the outlook in 2019 in the U.S. Gulf of Mexico, which is why we referring to it 2019 as what could be somewhat of a transitional year in the U.S.

Gulf before we get into what’s expected to be a longer-term market recovery in 2020 and beyond..

Okay. And the second question I have is probably best posed to Jennifer.

And Jennifer, how much revenue and EBITDA were associated with the search and rescue contract that was just concluded? And is there any chance that, that – you could get that contract back at any point down the road?.

For – since our long-standing policy, we’re not going to – we don’t comment on the EBITDA on an individual contract basis for competitive reasons. We continue to explore avenues in the Gulf of Mexico for search and rescue opportunities in the future..

Okay. So let me switch channels to services slightly. And maybe, Chris, this comes back to you, any updated thoughts on your intentions as far as the delivery of aircraft commitments? And certainly, much has been talked about just in terms of specific aircraft types that are more attractive than others.

What are your thoughts currently right now, given the challenging conditions?.

Well, we’re pleased with the flexibility that we’ve negotiated with our long-term partners at the OEMs inside of our order book.

It really gives us the opportunity to bring in new aircraft if the market opportunities present themselves, and conversely, if the opportunities aren’t there, we have the ability to cancel those orders with de minimis impact. We had only forfeiture of previously paid cash deposits of approximately $2 million.

So we still have some time before we can make those decisions. I think that a large part of our order book is comprised of both orders and options for AW189 helicopters. That is a new type of helicopter, which has received a very welcome reception amongst the customer base. They like the value proposition of that aircraft.

It can do a lot of the missions that a traditional heavy helicopter can do, the operating capabilities are very good and that comes at approximately half the company cost of the traditional heavy helicopter and about one-third less of an operating cost relative to an S92.

So I think if we were to place new orders for aircraft, 189 could be one of those candidates but it’s, again, it’s only going to be if the market opportunities are there to support it..

And so if the market didn’t change between now and the tail end 2019 and certainly, I don’t want to imply anything, it sounds like that you’re just going to forgo that opportunity.

Would that be the correct conclusion?.

Well, obviously, a lot of the value of an option is in the time value of the option. So we’re not going to take away from that value by making a decision today, but I would say, in response to the question, in a hypothetical world, if all of the decision points had to be made tomorrow, then we will cancel those orders based upon what we know today.

But we don’t have to. We can see how the market plays out. We’re actively engaged with customers about what their demands might be, and they have a lot of flexibility and we’re going to try to capitalize on that flexibility..

Okay. Thank you very much and I hope you feel better..

And next, we have John Koller with Oppenheimer..

It’s Oppenheimer & Co., sorry.

My question’s also related to the capital commitments for the year ahead and you’ve pretty much answered my question but just as a thought, can you further push out the AW189 for the year to give yourself more leeway or is it pretty much set in stone?.

We have a very good relationship with Leonardo. They are long-term partners of ours, we’ve done a number of things together over the years in terms of introducing new models. We were a launch customer in the U.S. for the AW139. We are the launch customer in the Americas for the AW189. So we have a good relationship there.

And I don’t want to negotiate, obviously, the contract here on the call, but I think we have a constructive dialogue there and potentially some flexibility if it’s something that could make sense for both parties..

Okay and then just as a follow-up to that, with the sale of your interest in Dart, it does give you significant liquidity. I’m curious how you view the optionality of that.

Whether you would tend to hang on to that or if you see paying down debt relatively fast is the best option if you’re not going to put it into capital equipment?.

Thanks for the question on Dart. We’re very pleased with the value that we received for our 50% equity interest in Dart. We think that further strengthens the flexibility that we have with our strong balance sheet, our cash flow profile, we believe we have multiple opportunities to create value for shareholders.

That could be paying down senior notes, it could be the purchasing shares, it could be dividends. We’re also looking right now at potential consolidation opportunities. This is, we believe, a unique stage in offering helicopter industry and really a – essentially, a generational opportunity to create value by consolidating the market.

So we’re spending some time and effort looking into some of those strategic alternatives. That being said, if none of them come to fruition, as we noted before, there are other avenues by which we can create values for shareholders..

Moving on from Pressprich, we have Adam Ritzer..

Hi, good morning. Thanks for taking my call. Just had a couple of questions. Can you talk a little bit more about the five new helicopters you just put on lease? What type of helicopters? What are the terms? Where they are? Maybe a little more detail on that..

Hey, good morning, Adam. Yes, I can provide some detail, we’re not going to disclose rates or specific terms for competitive reasons, but to provide some additional color, four of the five were AW139s. Three of them are going to Mexico. This is, I think, a great example of the value in our hybrid operator/lessor model.

We don’t have an AOC in Mexico, you have to be an Mexican national to operate there. But we were able to capitalize on the growing demand that’s coming from the international oil companies towards spending money to explore and eventually produce Mexico by leafing in these AW139 helicopters through an existing logo operator.

We’re pleased with that partnership and we think there is additional growth potential in Mexico over the years, because it is going to be, we believe, a bright spot in the offshore oil and gas industry. The fourth 139 went to India. Our long-term partner in India.

Again, meeting offshore demand in that market without us needing to have an AOC there, further evidence of that – the benefits of that hybrid model. And the fifth machine was a single-engine aircraft, it’s going to operator here in the United States.

I think these are part of what we see as a broader trend for certain helicopter markets, where the supply-demand balance globally has tightened considerably. And we’re looking to capitalize on additional leasing opportunities as well..

But I said terms, I didn’t mean rates.

Could you give us the length of those contracts?.

I don’t want to comment on any of the specific contractual terms, but we think these are – those are good opportunities to place those machines..

Got it. And I know you guys, you mentioned the generational opportunities you see out there.

Clearly, PHI and Bristow are potentially on the brink of bankruptcy near term, can you talk about, not them specifically, but what opportunities, where you’re looking? What type of things do you think would be the best fit? I know you’ve had bankers in-house for, I don’t know, six months almost.

Maybe you can update us on what your thinking is there?.

Sure. And I appreciate the way you asked the question, Adam. We do see a lot of opportunities, given the current state of the industry. There are certain players out there who we think could be attractive partners and then maybe in a state where things could become actionable.

I think as we rank those M&A opportunities, the characteristics that will weigh out at the top of our list are situations where we have existing overlap in our operations, which affords us the ability to create value through cost savings and synergies.

We think that’s an opportunity that – in addition to the benefits of scale and diversification that come with M&A, value creation from synergy – synergies are really a way to create value that only exists within the construct of an M&A transaction. So those areas with the most overlap weigh out at the top of our list.

And then there are other opportunities that could make sense for us at the right value as well..

Okay. What about – I think in the past, you’ve mentioned geography diversification.

Does that still rank on your list? Or is the synergy opportunity a top priority right now?.

Well, at the right value, going to a new geography if it’s the right competitive dynamic in that geography and the value is right that still could be an interest to us.

But again, because of the synergies and the cost savings that can be realized, we do think that areas where we have the most amount of overlap today could rank out at the top of our list of interest. But again, at the right value, we’re not going rule anything out..

Got it. Okay, I appreciate it. That’s only I had. Thanks a lot..

Thank you..

And the next question will come from Christopher Hagedorn with Redwood Capital..

Hey guys. Chris, can you help, I’ll keep my questions short, I think most of my questions have already been asked.

But one thing that I just wanted to ask you about is I just look at your commentary from the last conference call before around some of the activity levels from the Gulf of Mexico and then this particular call, would I be sort of – would it be appropriate to imply that maybe the pickup in activity hasn’t been quite as strong as maybe that was the expectation in September or over the summer?.

Hey, good morning, Chris and thanks for the well wishes. You are right in that, the Gulf of Mexico activity was stronger in the first half of last year. Really, if you go back even further than that, beginning in mid-2017, we started to see a recovery in the U.S.

Gulf of Mexico from the levels of the downturn, and that really continued at a pretty meaningful pace through really the mid-2018. And then at the latter part of last year, we did see some softening. No one saying, no one customer in particular, really just more general softening across the board.

And so as we have begun 2019 and look forward to this year, I think that they are having great visibility on what’s going to happen, I think that’s probably our best guess in terms of what the state of activity level could be, a continuation of what we saw in the latter part of last year into 2019.

And then we’re more constructive as we get into 2020 and beyond for what we think will be a longer- term recovery in the offshore market..

Got it. Maybe just one follow-up on that.

Is that – as you look at the reason why that is, is that because just all processes have been sort of weaker towards second half? Or particularly in the fourth quarter, third, fourth quarter in 2018? And the OEMs are just much quicker these days to adjust their production schedules or are there other reasons that factor into there as well?.

Well, I think the dip that we saw in oil and – in oil pricing that probably didn’t help realistically but I don’t think that was necessarily the main driver either. I think the way that we see the market is that we believe the offshore oil and gas market recovery globally has begun, but it’s not going to be a linear one.

The cadence of customer projects, individual customer projects may cause some quarter-to-quarter variability during that recovery, and we do think there’s going to be variability, as we’ve noted, by region, where the pace and slope of that offshore recovery may vary when you look at some markets like Mexico or the Guyana-Suriname basin, which we expect to be stronger in 2019 versus ones like the U.S side of the Gulf of Mexico or Brazil, which we think is maybe a bit more of a transition year before improving next year..

And maybe the last one here. I mean, given the cause [ph] of large fairly holistic market, I mean, and you have two players, as mentioned, that have a bit of a financial difficulty at the moment.

Can you see them being rational? Do you see rational competition? Or you see those guys or some of your competitors there being very aggressive on price at the moment?.

It remains a competitive market in U.S. Gulf of Mexico. I don’t think that – I wouldn’t draw any specific conclusions from any one of those competitors today other than it remains a pretty competitive market here..

Get better and good luck for the next quarter..

Thanks, Chris..

And next we’ll move on to HJ Lee with International Value Advisers..

Good morning, Chris..

Good morning..

Just a quick question on Dart JV sale.

Could you disclose who the buyer was?.

Not by name, but it was a private equity firm..

Okay. All right. Thank you..

[Operator Instructions] Next from CreditSights, we have Roger King..

Just for background, could you give us a general feel for market share in U.S.

Gulf, maybe color that a bit with deepwater or shallow water?.

Thanks for the question. Not in specific percentages but I would note that….

Just in general..

Sure. Yes, in the deepwater Gulf of Mexico, we see ourselves as being one of the top two players in U.S. Gulf of Mexico. There are three large players in the deepwater in the Gulf of Mexico today and then some smaller players as well.

On the shallow side, I think it is important to understand our business profile, we don’t have much of any exposure today to shallow water E&P activities in the U.S. Gulf of Mexico.

We do have a number of light aircraft that are servicing shallow water missions but those are either one for BESI, which is the Bureau of Safety and Environmental Enforcement, a division of the U.S. government, where we have the exclusive contract for the Gulf of Mexico to fly their inspectors around to do their work.

Or two, for pipeline companies, which tends to be a different customer profile. So again, today, we have pretty limited, I would say, de minimis exposure to shallow water E&P activity in the Gulf of Mexico today. We’re mostly deepwater-oriented business profile for oil and gas crude transport in the Gulf..

Thank you..

And ladies and gentlemen, at this point, it looks like we have no further questions from the audience. I’d like to turn the floor back to Mr. Chris Bradshaw for any additional or closing remarks..

Thank you, Greg, and thanks, everyone, for precipitating on the call this quarter. We look forward to speaking to you again in Q1. Please stay safe..

Once again ladies and gentlemen, that concludes our call. Thank you again for joining. You may now disconnect..