8-Nov-2012 Source: Bristow Group
Bristow Group Inc. (NYSE: BRS) today reported net income for the September 2012 quarter of $29.7 million or $0.82 per diluted share compared to net income of $2.7 million or $0.07 per diluted share in the same period a year ago. Adjusted net income, which excludes asset disposition effects and special items, was $29.2 million or $0.80 per diluted share for the September 2012 quarter, an increase of $5.9 million or $0.17 per diluted share over the September 2011 quarter.
Operating revenue for the September 2012 quarter increased approximately 10% to $326.0 million from $297.1 million in the September 2011 quarter.
Adjusted earnings before interest, taxes, depreciation, amortization and rent (“Adjusted EBITDAR”), which excludes asset disposition effects and special items, was $84.9 million for the September 2012 quarter compared to $71.2 million in the same period a year ago. Net cash provided by operating activities totaled $79.5 million for the September 2012 quarter compared to $64.1 million in the September 2011 quarter. As of September 30, 2012, cash totaled $348.3 million and our total liquidity, which includes cash and borrowing available on our revolving credit facility, was $507.7 million.
Net income and diluted earnings per share increased significantly over the September 2011 quarter primarily as a result of the year-over-year increase in operating revenue, an $11.0 million increase in earnings from unconsolidated affiliates and the inclusion of$27.3 million in non-cash impairment charges in the September 2011 quarter.
The significant increase in earnings from unconsolidated affiliates relates to an improvement in earnings from our investment in Lider in Brazil primarily resulting from the impact of foreign currency exchange rate changes as the value of the Brazilian real has fluctuated significantly relative to the U.S. dollar and a $2.3 million correction of a calculation error related to foreign currency derivative transactions at Lider for the September 2012 quarter.
The year-over-year improvement in net income and diluted earnings per share was partially offset by the following:
After adjusting for asset disposition effects and special items in the September 2012 and 2011 quarters, we realized an improvement in the financial measures used by management to assess and measure our financial performance, including a 19.2% improvement in adjusted EBITDAR, an improvement in adjusted EBITDAR margin from 24.0% to 26.1%, a 25.2% improvement in adjusted net income and a 27.0% improvement in adjusted diluted earnings per share. This improvement was driven by strong revenue performance and the increase in earnings from unconsolidated affiliates in the September 2012 quarter, partially offset by the increases in general and administrative expense, allowance for doubtful accounts and rent expense discussed above.
The allowance for doubtful accounts recorded for accounts receivable due from ATP, while not adjusted for in these non-GAAP measures, resulted in a $0.05 decrease in diluted earnings per share in the September 2012 quarter.
“The strong performance we experienced in our fiscal 2013 first quarter continued in the second quarter of fiscal 2013,” said William E. Chiles, President and Chief Executive Officer of Bristow Group. “We continue to benefit from a turnaround in Australia and the U.S. Gulf of Mexico as well as strength in the U.K. and Norway. Our fiscal 2013 and future year results should benefit further from the investment in Cougar Helicopters completed in October, along with financing transactions also completed in October to reduce our cost of capital.”
Mr. Chiles continued, “We are working hard to mitigate the impact of the recent suspension of flight operations of sixteen large EC225 and AS332L2 aircraft across our fleet. Despite this situation, we are still expecting the solid revenue growth experienced over the recent quarters to continue throughout the remainder of fiscal 2013, and anticipate stronger adjusted EBITDAR margins. During times like these, Bristow’s financial strength and commitment to operational excellence – to provide unmatched safety, reliability and hassle-free service – is a key difference maker for our clients. Our global management team is dedicated to continuing the service excellence we provide to our clients and is working hard every day for all our stakeholders.”
SECOND QUARTER FY2013 BUSINESS UNIT RESULTS
There continues to be strong demand for our services both from new and existing clients in the Northern North Sea and in Norway. To meet this demand, we have added new large aircraft to our Europe Business Unit over the past year. These new aircraft, as well as an overall increase in flying activity, led to a 10% increase in operating revenue and a 21% increase in adjusted EBITDAR over the September 2011 quarter. Adjusted EBITDAR margin of 34.6% improved from the prior year quarter’s margin of 31.4%. We executed operating leases for five large aircraft in this market in late fiscal year 2012 (one of which was a new delivery in the September 2012 quarter), contributing to the increase in adjusted EBITDAR margin.
Activity levels continue to be strong in our West Africa Business Unit, leading to a 7% increase in operating revenue over the September 2011 quarter. However, as a result of previously reported increases in maintenance costs, adjusted EBITDAR and adjusted EBITDAR margin decreased by 20% and 25%, respectively, compared with the September 2011 quarter. Maintenance expense increased primarily due to aircraft undergoing scheduled major maintenance during the September 2012 quarter.
As was the case in the first quarter of fiscal year 2012, the addition of S-92 large aircraft to our North America Business Unit continued to drive operating improvement in the U.S. Gulf of Mexico in the second fiscal quarter, along with the issuance of more drilling and completion permits. Operating revenue increased 19% resulting from the addition of the new large aircraft despite no significant change in flight hours from the September 2011 quarter. However, operating results in the September 2012 quarter were impacted by an allowance recorded against amounts due from ATP totaling $2.6 million. Excluding this allowance, adjusted EBITDAR margin was 25.3% for the quarter, up from 20.6% in the September 2011 quarter and 23.2% in the June 2012 quarter.
As a result of a 24% increase in flight activity in Australia, driven by new contracts and increased ad hoc work, operating revenue increased by 26% in the second fiscal quarter versus the September 2011 period. The increase in operating revenue along with a significant reduction in costs more than doubled Australia’s adjusted EBITDAR to $10.8 million in the September 2012 quarter and nearly doubled adjusted EBITDAR margins to 28.0% in the second fiscal quarter from 14.4% in the September 2011 quarter.
Our Other International Business Unit was positively affected by increased earnings from Líder in Brazil, which increased from a loss of $6.6 million in the September 2011 quarter to a gain of $4.6 million in the September 2012 quarter.
YTD FY2013 RESULTS
RECENT AIRCRAFT INCIDENTS
On Monday, October 22, 2012, an incident occurred with an EC225 Super Puma helicopter operated by another helicopter company, which resulted in a controlled ditching on the North Sea, south of the Shetland Isles, U.K. Following the ditching, all 19 passengers and crew were recovered safely and without injuries.
Related to this incident, the Civil Aviation Authority (“CAA”) in the U.K. issued a safety directive on October 25, 2012, requiring operators to suspend operations of the affected aircraft. As a result, we will not be flying a total of sixteen large Eurocopter aircraft until further notice: eleven EC225 helicopters in the U.K., three EC225 helicopters in Australia, one EC225 helicopter in Norway and one AS332L2 helicopter in Nigeria. Our other aircraft, including search and rescue (“SAR”) aircraft, continue to operate globally.
In order to minimize or eliminate the impact on our clients, we have increased utilization of other in-region aircraft and have implemented contingency plans designed to mobilize additional available aircraft, including entering into an agreement on November 7, 2012 to order ten Sikorsky S-92 large aircraft and obtain options for 16 Sikorsky S-92 large aircraft. An incident involving another operator and an EC225 helicopter in May 2012 that resulted in a similar directive did not have a material financial impact on our company. However, we are unable to determine whether this incident on October 22 and the resulting actions taken by the CAA could have a material effect on our business, financial condition or results of operations at this time.
COUGAR INVESTMENT
In early October 2012, we completed the acquisition of 40 newly issued Class B shares (“Class B Shares”) in the capital of Cougar Helicopters Inc. (“Cougar”), the largest offshore energy and search and rescue (“SAR”) helicopter service provider in Canada, and certain aircraft and facilities used by Cougar in its operations, for $250 million, of which $23.8 million had been previously paid for an aircraft and certain other advances, resulting in a net cash outlay of $226.2 million. Cougar’s operations are primarily focused on serving the offshore oil and gas industry off Canada’s Atlantic coast and in the Arctic. The operating assets purchased include eight Sikorsky S-92 large helicopters, inventory and helicopter passenger, maintenance and SAR facilities located in St. John’s,Newfoundland and Labrador and Halifax, Nova Scotia. The purchased aircraft and facilities are leased to Cougar on a long-term basis. The Class B Shares represent 25% of the voting power and 40% of the economic interests in Cougar. Additionally, the terms of the purchase agreement include a potential earn-out of $40 million payable over three years based on Cougar achieving certain agreed performance targets.
FINANCING ACTIVITY
Subsequent to September 30, 2012, we raised $675 million through the offering of $450 million 6 ¼% senior notes due 2011 (“6 ¼% senior notes”) and proceeds from a $225 million 364-day term loan (“364-day term loan”). Net proceeds for the issuance of the 6 ¼% senior notes are being used to purchase and redeem 100% of our $350 million 7 ½% senior notes due 2017 and for general corporate purposes, and proceeds from the 364-day term loan were used to complete the Cougar investment.
DIVIDEND AND SHARE REPURCHASE AUTHORIZATION
On November 2, 2012, our Board of Directors declared a seventh consecutive quarterly dividend. This dividend of $0.20 per share will be paid on December 14, 2012 to shareholders of record on November 30, 2012. Based on shares outstanding at September 30, 2012, total dividend payments will be approximately $7.2 million. Also on November 2, 2012, our Board of Directors authorized the expenditure of up to $100 million to repurchase shares of our common stock up to 12 months from that date.
GUIDANCE
Bristow is reaffirming today the adjusted earnings per share guidance provided in May 2012 for the full fiscal year 2013 of $3.25 to $3.55.
“Our 2013 guidance reaffirmation is based on the results of our strong first half performance for the fiscal year and the contribution expected from our recent investment in Cougar, taking into account uncertainty around the recent suspension of operations of EC225 and AS332L2 aircraft,” said Jonathan E. Baliff, Senior Vice President and Chief Financial Officer of Bristow Group. “In addition to the stronger performance and earnings per share growth year over year, we continued to generate significant operating cash flow. This is a testament to the hard work and proven results of our global operations and commercial teams.”
As a reminder, our earnings per share guidance does not include unrealized 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, we have not included the impact of any changes in accounting standards nor any impact from significant acquisitions and divestitures. Changes in events or other circumstances that we cannot currently anticipate or predict could result in earnings per share for fiscal year 2013 that are significantly above or below this guidance, including the impact of the recent suspension of operations of certain aircraft and changes in the market and industry. Factors that could cause such changes are described below under Forward-Looking Statements Disclosure.
CONFERENCE CALL
Management will conduct a conference call starting at 10:00 a.m. ET (9:00 a.m. CT) on Thursday, November 8, 2012 to review financial results for the fiscal year 2013 second quarter ended September 30, 2012. 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:
Via Webcast:
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, 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, Canada, Russia and Trinidad. For more information, visit the Company’s website at www.bristowgroup.com.
