Bristow Group Inc. (NYSE: BRS) today reported net income for the three months ended September 30, 2010 of $38.9 million, or $1.06 per diluted share, compared to $33.2 million, or $0.92 per diluted share, in the September 2009 quarter. The quarter benefited from sequential improvement in the underlying operations and a significant reduction in the effective tax rate, which was driven by a global restructuring of Bristow's operations as part of the continuing implementation of our global business strategy, in addition to a shift of expected earnings for the current fiscal year to lower tax jurisdictions.
Revenue for the three months ended September 30, 2010 totaled $312.6 million compared to $291.6 million in same period a year ago. Earnings before interest, taxes, depreciation and amortization ("EBITDA") totaled $74.6 million compared to $74.1 million in the September 2009 quarter. Results benefited from revenue increases in Australia, West Africa, North America and Europe compared to the same quarter a year ago, driven by the addition of new contracts and increases in both price and activity for certain customers. These increases were partially offset by a lower level of gain on disposal of assets year-over-year and higher compensation costs in Australia and Nigeria.
"We are pleased with our higher fiscal second quarter results as we were able to deliver sequential improvement in both revenue and earnings," said William E. Chiles, President, Chief Executive Officer of Bristow Group. "The underlying performance of our operations was strong and the operating margins improved sequentially in several of our business units including Europe, West Africa, North America and Other International. Our global restructuring has also benefited shareholders by aligning our corporate structure with how we do business, significantly lowering our effective tax rate. The expected amendment to our credit facility improves our liquidity position and increases capital structure flexibility while lowering the overall cost of debt. These efforts demonstrate the Bristow team's commitment to lower our cost of capital.
"As previously disclosed, we continue to expect revenue and earnings per share for the current fiscal year to be stronger than fiscal year 2010 as additional newer-technology aircraft go to work for our customers and we relentlessly focus on improving returns and lowering our after tax cost of capital. We continue to anticipate a much stronger second half compared to the first half of fiscal year 2011," Chiles added.
SECOND QUARTER FY2011 RESULTS
Revenue totaled $312.6 million compared to $291.6 million in same period a year ago.
Operating income remained flat at $53.6 million.
EBITDA totaled $74.6 compared to $74.1 million in the September 2009 quarter. EBITDA is a measure that has not been prepared in accordance with Accounting Principles Generally Accepted in the United States of America ("GAAP"). Please refer to disclosures contained at the end of this news release for additional information about EBITDA.
Net income totaled $38.9 million, or $1.06 per diluted share, compared to $33.2 million, or $0.92 per diluted share, in the September 2009 quarter.
Net income and earnings per share increased due to a significant reduction in our effective tax rate, which was 7.9% versus 25.0% in the September 2009 quarter. This reduction was driven by a global restructuring of our operations as part of the continuing implementation of our global business strategy, in addition to a shift of our expected earnings for the current fiscal year to lower tax jurisdictions. This benefit was partially offset by increased interest expense and lower foreign currency transaction and hedging gains.
Our Europe business unit added two new customers and saw an increase in activity over the prior year quarter, which along with higher equity earnings from our military training unconsolidated affiliate, FB Heliservices Limited, increased our operating margin in this market.
Our North America business unit continued to benefit during the quarter from contracts with BP in the U.S. Gulf of Mexico, where nine of our aircraft were supporting the well control and spill cleanup efforts at the end of September. While we can't predict how long this work will continue, for the past two quarters the new work more than offset lost business from customers stalled by the deep-water moratorium, which has now been lifted. Subsequent to September 30, 2010, this work has continued to wind down.
Our West Africa business unit also benefitted from new contracts and rate escalations on existing contracts in excess of lost work with certain existing customers. We have also benefitted from a continued effort to reduce aircraft maintenance delays in this market, which reduced the number of days our aircraft were grounded during the quarter. Despite the revenue improvement, our operating margin remained relatively flat versus the prior year quarter as we incurred severance costs for employees that had been supporting a major contract that finished in September. We are continuing to seek permanent work to replace the earnings associated with this contract.
Our Australia business unit saw a significant increase in revenue over the prior year quarter resulting from new contracts and a favorable impact of change in foreign currency exchange rates. However, as a result of an increase in annual leave and long service leave provisions in this market, compensation costs have increased contributing to a decrease in operating margin versus the same quarter last year.
Our Other International business unit's operating margin was lower primarily due to reduced earnings in Kazakhstan as we stopped operating in this market in a year ago and the Comparable Quarter included a $2.5 million reversal of a bad debt provision. Our results for our unconsolidated affiliate in Brazil totaled $1.8 million for the three months ended September 30, 2010, which were also reduced by foreign exchange losses. These foreign exchange losses partially mask the fact that the normal operations of our affiliate in this market, Lider Aviacao Holding S.A. ("Lider"), have shown significant improvement sequentially over the past several quarters from a revenue and EBITDA standpoint. Excluding the impact of foreign exchange losses, our equity earnings for Lider would have been approximately $3.8 million for the three months ended September 30, 2010. The improvement in Lider's normal operations translated into a sequential improvement in quarterly earnings from our investment, which led to higher operating margin for this business unit in the second fiscal quarter compared with the preceding quarter.
During the September 2010 quarter we experienced only modest gains on the sale of a few aircraft and these gains during the quarter were $3.0 million lower than those during the same quarter last year; however, we continue to see opportunities for sale of our aircraft in the aftermarket.
YEAR-TO-DATE RESULTS THROUGH SEPTEMBER 30, 2010
Revenue totaled $604.8 million compared to $582.1 million for the same period a year ago.
Operating income was $93.2 million compared to $98.3 million for the six months ended September 30, 2009.
EBITDA totaled $134.4 million compared to $135.8 million for the six months ended September 30, 2009.
Net income totaled $59.7 million, or $1.63 per diluted share, compared to $56.9 million, or $1.58 per diluted share, for the six months ended September 30, 2009.
Our year-to-date results through September 30, 2010 benefitted from revenue increases in Australia, West Africa and North America compared to the same period a year ago, which was driven by the addition of new contracts and increases in rates on existing contracts in excess of reduced activity for certain customers.
Despite increased revenue, operating income and EBITDA decreased due to a lower level of gain on disposal of assets and reduced earnings in Kazakhstan.
Net income and earnings per share benefitted from a significant reduction in our effective tax rate, which was 16.6% versus 26.4% for the six months ended September 30, 2009. This reduction was driven by a global restructuring of our operations as part of the continuing implementation of our global business strategy, in addition to a shift of our expected earnings for the current fiscal year to lower tax jurisdictions. This benefit was partially offset by increased interest expense.
CAPITAL AND LIQUIDITY
For the six months ended September 30, 2010, net cash generated by operating activities was $69.2 million and net cash used in investing activities was $44.5 million. At September 30, 2010, we had:
$1.4 billion in stockholders' investment and $720.6 million of indebtedness,
$108.5 million in cash and a $100 million undrawn revolving credit facility, and
$154.2 million in aircraft purchase commitments for 12 aircraft.
In addition, we are currently negotiating an amendment to our existing bank credit facility to extend the facility for five years and increase the amount financed to $375 million. The facility is expected to consist of a $200 million term loan and a $175 million revolver at an initial expected rate of Libor+250. We expect to use proceeds for general corporate purposes, including repayment of existing indebtedness. Completion of the amendment is subject to reaching agreement on the definitive documentation and satisfaction of customary closing conditions.
Management will conduct a conference call starting at 9:00 a.m. ET (8:00 a.m. CT) on Friday, November 5, 2010, to review financial results for the 2011 second quarter. This release and the most recent investor slide presentation are available in the investor relations area of our web page at www.bristowgroup.com. The conference call can be accessed as follows:
Visit Bristow Group's investor relations Web page at www.bristowgroup.com
Live: Click on the link for "Bristow Group Fiscal 2011 Second Quarter Earnings Conference Call"
Replay: A replay via webcast will be available approximately one hour after the call's completion and will be accessible for approximately 90 days
Via Telephone within the U.S.:
Live: Dial toll free 1-877-941-1465
Replay: A telephone replay will be available through November 19, 2010 and may be accessed by calling toll free 1-800-406-7325, passcode: 4375416#
Via Telephone outside the U.S.:
Live: Dial 480-629-9644
Replay: A telephone replay will be available through November 19, 2010 and may be accessed by calling 303-590-3030, passcode: 4375416#
ABOUT BRISTOW GROUP INC.
Bristow Group Inc. is the leading provider of helicopter services to the worldwide offshore energy industry based on the number of aircraft operated and one of two helicopter service providers to the offshore energy industry with global operations. The Company has major transportation operations in the North Sea, Nigeria and the U.S. Gulf of Mexico, and in most of the other major offshore oil and gas producing regions of the world, including Alaska, Australia, Brazil, Mexico, Russia and Trinidad.For more information, visit the Company's website at www.bristowgroup.com.
FORWARD-LOOKING STATEMENTS DISCLOSURE
Statements contained in this news release that state the Company's or management's intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements. These forward-looking statements include statements regarding the impact of activity levels, including the amendment to our credit facility and use of proceeds therefrom, business performance, fiscal 2011 results and other market and industry conditions. It is important to note that the Company's actual results could differ materially from those projected in such forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the Company's SEC filings, including but not limited to the Company's quarterly report on Form 10-Q for the quarter and six months ended September 30, 2010 and annual report on Form 10-K for the fiscal year ended March 31, 2010. Bristow Group Inc. disclaims any intention or obligation to revise any forward-looking statements, including financial estimates, whether as a result of new information, future events or otherwise.
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