8-Nov-2011 Source: Bristow Group
Bristow Group Inc. (NYSE: BRS) today reported net income for theÂ September 2011quarter ofÂ $2.7 million, orÂ $0.07Â per diluted share, compared to net income ofÂ $38.9 million, orÂ $1.06Â per diluted share, in the same period a year ago. Adjusted net income, excluding non-cash asset impairment charges ofÂ $27.3 millionÂ and asset disposition effects, for theÂ September 2011Â quarter wasÂ $23.3 million, orÂ $0.63Â per diluted share, compared toÂ $37.1 million, orÂ $1.01Â per diluted share, in theÂ September 2010Â quarter.
Operating revenue for theÂ September 2011Â quarter increased 4% toÂ $297.1 millionfromÂ $286.5 millionÂ in theÂ September 2010Â quarter. Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”), which excludes special items and asset disposition effects, wasÂ $62.1 millionÂ for theÂ September 2011Â quarter compared toÂ $72.7 millionÂ in the same period a year ago. Net cash provided by operating activities increased toÂ $64.1 millionÂ in theÂ September 2011Â quarter from$43.5 millionÂ in theÂ September 2010Â quarter and toÂ $117.0 millionÂ for the six months endedÂ September 30, 2011Â fromÂ $69.2 millionÂ in the prior fiscal year-to-date period.
TheÂ September 2011Â quarter’s financial performance was negatively affected by several factors, including:
In addition to these items, cost increases across most of our business units have outpaced revenue growth when compared to the prior year quarter. We continue to see significant growth opportunities across most of our major markets as tender activity is robust and as new work starts in the second half of fiscal year 2012 and in fiscal year 2013. However, costs we incurred in advance of this activity (either to start up new operations or to maintain resources that will be needed in future periods), have resulted in increased operating expense in excess of revenue growth in theSeptember 2011Â quarter.
Our management reviews our operating results when adjusted for certain items not considered to be part of our normal and recurring operations, which includes gains or losses on asset dispositions and any special items during the reporting period. During theÂ September 2011Â quarter, the write-down of inventory spare parts, and the impairment charge on the abandonment of assets at theÂ Creole, LouisianaÂ location have been identified as special items. After adjusting for these items and for losses on asset dispositions, our adjusted operating income, adjusted EBITDA, adjusted net income and adjusted earnings per share wereÂ $38.5 million,Â $62.1 million,Â $23.3 millionÂ andÂ $0.63, respectively, which all decreased from the prior year quarter as a result of reduced earnings from Lider and the cost increases noted above. No special items were identified for theÂ September 2010Â quarter.
“Growth across all of our regions is accelerating with new aircraft adding value for our clients in the latter half of this fiscal year and in fiscal year 2013,” saidÂ William E. Chiles, President and Chief Executive Officer of Bristow Group. “However, we are dissatisfied with the quarter’s results which were impacted by the need to incur additional costs ahead of this activity. This has resulted in increased operating expense in excess of revenue growth in the current quarter and deterioration in operating margin today to support future growth.”
Mr. Chiles reiterated, “Going forward, we are expecting stronger levels of activity in ourÂ Europe,Â AustraliaÂ and Other International Business Units; but the higher costs for future growth during the first half of this fiscal year have led to a revision of our earnings per share guidance range for the current fiscal year. Despite these costs, we continued to generate record operating cash flows during fiscal year 2012 which were considerably stronger than fiscal year 2011. We also expect sequential improvement in our financial results and continue to anticipate a stronger second half compared to the first half of fiscal year 2012, particularly in the fourth quarter.”
SECOND QUARTER FY2012 RESULTS
Our Europe Business Unit saw an increase in flying activity over the prior year quarter as a result of new contracts with existing clients, which resulted in increased operating income. However, operating margin decreased slightly despite the increase in operating revenue and operating income as a result of increased salaries and benefits, maintenance, insurance and fuel costs.
Our West Africa Business Unit saw increased flying activity over the prior year quarter as activity associated with three new contracts and activity under existing contracts offset the impact of the non-renewal of a major contract in the prior fiscal year. Despite the increase in operating revenue, operating income and margin forÂ West AfricaÂ decreased in theÂ September 2011Â quarter primarily as a result of an increase in operating expense and the non-renewal of the major contract in the prior fiscal year.
Our North America Business Unit saw some benefit in the current quarter from an increase in activity as drilling and completion permits are being issued at an increasing pace. We are also seeing the benefit from a reduction in cost structure. Operating revenue, operating income and operating margin improved sequentially over theÂ June 2011Â quarter. When excluding the impact of the impairment of theCreole, LouisianaÂ assets, operating margin improved from 3.6% in theÂ June 2011quarter to 11.0% in theÂ September 2011Â quarter. Based on current discussions with our major clients, especially concerning activity for large aircraft, we anticipate the level of activity in the Gulf to continue to improve during the second half of fiscal year 2012.
Our Australia Business Unit saw a decrease in revenue over the prior year quarter resulting from the loss of a major contract inÂ May 2011, which has not been offset by new work. We are expecting a turnaround in this market over the second half of fiscal year 2012, especially in the fourth quarter, as new work begins. This new work is expected to replace the work from the contract loss inÂ May 2011. The level of fixed cost we are carrying in anticipation of the increased activity, coupled with the decrease in revenue, has resulted in a substantial decrease in operating income and operating margin compared with the prior year period. We expect to see considerable improvement in operating income and operating margin in the second half of fiscal year 2012.
We continue to see substantial growth opportunity in our Other International Business Unit. However, in the current quarter we realized a loss from Lider due to foreign currency exchange rate changes. Additionally, our results were impacted by cessation of operations inÂ Libya. We are also incurring start up costs in new markets for operations that will begin later in fiscal year 2012. Depending on exchange rate movements inÂ BrazilÂ and the timing of the start ups, we expect to recover much of the lost income and margin over the second half of the fiscal year.
YEAR-TO-DATE FY2012 RESULTS
InÂ November 2011, our board of directors authorized us to spend up toÂ $100 millionÂ to repurchase shares of our common stock. The timing and method of any repurchases will depend on a variety of factors, including market conditions, is subject to our results of operations, financial condition, cash requirements and other factors, and may be suspended or discontinued at any time.
Bristow is revising the diluted earnings per share guidance provided inÂ May 2011Â for the full fiscal year 2012 ofÂ $3.55 to $3.90Â to a range ofÂ $3.05 to $3.30.
As a reminder, our GAAP earnings per share guidance does not include gains and losses on disposals of assets as well as special items because their timing and amounts are more variable and less predictable. This guidance is based on current foreign currency exchange rates. In providing this guidance, the Company has not included the impact of any changes in accounting standards and any impact from significant acquisitions or divestitures. Changes in events or other circumstances that the Company does not currently anticipate or predict could result in earnings per share for fiscal year 2012 that are significantly above or below this guidance. Factors that could cause such changes are described below under Forward-Looking Statements Disclosure.
“Despite the impact of higher than anticipated cost levels in the current quarter to advance revenue growth expected from several large awards, we continue to see success in implementing Bristow Value Added (BVA), with an almost doubling of operating cash flow in the first half of fiscal year 2012 from the prior year period,” saidÂ Jonathan E. Baliff, Senior Vice President and Chief Financial Officer of Bristow Group. “We expect to continue generating significant cash flow while maintaining prudent balance sheet management and financial strength which provides the underpinnings for the stock buyback authorization and a balanced return for our shareholders.”
Management will conduct a conference call starting atÂ 10:00 a.m. ETÂ (9:00 a.m. CT) onÂ Tuesday, November 8, to review financial results for the fiscal year 2012 second quarter endedÂ September 30, 2011. This release and the most recent investor slide presentation are available in the investor relations area of our web page atwww.bristowgroup.com. The conference call can be accessed as follows:
Via Telephone within the U.S.:
Via Telephone outside the U.S.:
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,Â NigeriaÂ and the U.S.Â Gulf of Mexico, and in most of the other major offshore oil and gas producing regions of the world, includingÂ Alaska,Â Australia,Â Brazil,Â RussiaÂ and Trinidad. For more information, visit the Company’s website atÂ www.bristowgroup.com.
Full financial numbers at http://phx.corporate-ir.net/phoenix.zhtml?c=91226&p=irol-newsArticle&ID=1627335&highlight=