23-May-2013 Source: Bristow Group
Bristow Group Inc. (NYSE: BRS) today reported net income for the March 2013 quarter of $40.4 million, or $1.11 per diluted share, compared to net income of $14.2 million, or $0.39 per diluted share, in the same period a year ago. Adjusted net income, which excludes special items and asset disposition effects, was $36.7 million, or $1.01 per diluted share, for the March 2013 quarter, a decrease of $7.8 million, or $0.21 per diluted share, from the March 2012 quarter. Bristow Group Inc. also reported net income for the fiscal year ended March 31, 2013 (“fiscal year 2013”) of $130.1 million, or $3.57 per diluted share, more than double the net income of $63.5 million, or$1.73 per diluted share, reported in the prior fiscal year. Adjusted net income increased 20% to $137.8 million, or $3.78 per diluted share, for fiscal year 2013 from $114.6 million, or $3.12 per diluted share, in the prior fiscal year. Adjusted net income for the March 2013 quarter and fiscal year 2013 includes pre-tax allowances of $0.9 million ($0.02 per diluted share) and $4.9 million ($0.11 per diluted share), respectively, for doubtful accounts in connection with ATP’s bankruptcy.
Adjusted earnings before interest, taxes, depreciation, amortization and rent (“Adjusted EBITDAR”), which excludes special items and asset disposition effects, was $103.0 million for the March 2013 quarter compared to $99.5 million in the same period a year ago and increased 19% to $381.0 million for fiscal year 2013 from $319.5 million in fiscal year 2012. Net cash provided by operating activities totaled $64.0 million for the March 2013 quarter compared to $37.4 million in the March 2012 quarter, and increased 15% to $266.8 million for fiscal year 2013 from $231.3 million in fiscal year 2012.
“Fiscal year 2013 was an excellent financial year for Bristow with record revenue, cash flow and bottom line earnings,” said William E. Chiles, President and Chief Executive Officer of Bristow Group. “We benefitted from increased activity in most of our business units driven by increased demand from our clients for our services and improved contract terms. This increased activity is being fueled by our clients’ exploration success which continues to unlock new plays in deep water and harsh environment areas.”
“Unfortunately, there were three accidents involving single-engine aircraft in our commercial operations during the fiscal year. These accidents are disappointing in an organization that consistently strives for a target of zero accidents, injuries and harm to the environment. We reaffirm our goal to reach Target Zero.”
Bill Chiles continued, “The growing global demand for our services, the benefits from our Operational Excellence initiatives, our investments in Atlantic Canada and Brazil, and the recent U.K. Search and Rescue award are creating the fundamental catalysts for a higher level of sustainable growth.”
FOURTH QUARTER FY2013 RESULTS
The 10% increase in operating revenue primarily resulted from:
Partially offsetting these increases was a decrease in operating revenue in our Australia Business Unit of$2.8 million as a result of the end of short-term contracts.
Results for the March 2013 quarter also benefitted from an increase in earnings from unconsolidated affiliates, related primarily to an improvement in earnings from our investment in Lider in Brazil, which increased to $6.0 million in the March 2013 quarter from $1.0 million in the March 2012 quarter. The increase in earnings from Lider is primarily due to an increase in aircraft on contract as well as cost controls.
Additionally, we recognized a pre-tax gain on disposal of assets in the March 2013 quarter of $7.2 millioncompared to a pre-tax loss on disposal of assets in the March 2012 quarter of $28.6 million. In the March 2013 quarter, we recorded a gain on insurance proceeds of $2.8 million and wrote-up two large aircraft that had been held for sale by $5.2 million as they were returned to operational status. This compares to the March 2012 quarter in which we recorded non-cash impairment charges of $23.6 million to reduce the carrying value of 14 aircraft held for sale and a loss of $5.6 million on the sale of nine large aircraft.
The improvement in operating income was driven primarily by the above items and partially offset by the following items:
FOURTH QUARTER FY2013 BUSINESS UNIT RESULTS
Europe Business Unit
Strong demand for our services, both from new and existing clients in the Northern North Sea and inNorway, permitted us to add new large aircraft to our Europe Business Unit over the past fiscal year. These new aircraft, as well as an overall increase in pricing on many of our existing contracts, led to a 6.8% increase in operating revenue and a 13.3% increase in adjusted EBITDAR for the March 2013quarter compared to the March 2012 quarter despite the suspension of operations of twelve Eurocopter EC225 Super Puma aircraft operating in Europe. We increased our fleet by executing operating leases for fourteen new large aircraft in this market beginning in late fiscal year 2012 and fiscal year 2013, contributing to the increase in adjusted EBITDAR. The overall increase in activity and additional aircraft improved Europe’s adjusted EBITDAR and EBITDAR margin to $49.5 million and 38.3%, respectively, in the March 2013 quarter compared to $43.7 million and 36.1%, respectively, in the March 2012 quarter.
West Africa Business Unit
Activity levels continued to be strong in our West Africa Business Unit, leading to an 11.8% increase in operating revenue for the March 2013 quarter compared to the March 2012 quarter. However, primarily as a result of aircraft undergoing major maintenance checks, salary and maintenance costs increased leading to a slight decrease in adjusted EBITDAR from the March 2012 quarter and a decrease in adjusted EBITDAR margin to 31.8% in the March 2013 quarter from 36.6% in the March 2012 quarter.
North America Business Unit
Our entry into the Atlantic Canada market through our investment in Cougar Helicopters contributed to the significant improvement in revenue and adjusted EBITDAR margin in North America. Additionally, flight activity with medium and large aircraft in the U.S. Gulf of Mexico continued to drive financial improvement in our North America Business Unit in the March 2013 quarter. Operating revenue increased 33.0% in theMarch 2013 quarter primarily due to the additional activity with medium and large aircraft despite no significant change in overall flight hours from the March 2012 quarter. The Cougar investment combined with the increased demand for our services in the U.S. Gulf of Mexico increased North America’s adjusted EBITDAR and EBITDAR margin to $16.6 million and 29.5%, respectively, in the March 2013 quarter compared to $8.2 million and 19.4%, respectively, in the March 2012 quarter.
Australia Business Unit
Although flight activity in Australia increased 4.7%, operating revenue declined to $40.6 million in theMarch 2013 quarter from $43.3 million in the March 2012 quarter as a result of the expiration of short-term contracts that contributed to prior year performance. The decline in operating revenue also resulted in a decrease in adjusted EBITDAR and adjusted EBITDAR margin to $10.6 million and 26.0%, respectively, in the March 2013 quarter from $15.5 million and 35.6%, respectively, in the record March 2012 quarter.
Other International Business Unit
Our Other International Business Unit saw an increase in adjusted EBITDAR margin to 51.6% in the March 2013 quarter primarily as a result of an increase in earnings from unconsolidated affiliates related to our investment in Lider of $5.0 million over the March 2012 quarter, which was driven by the addition of new aircraft on contract as well as cost controls in fiscal year 2013.
FISCAL YEAR 2013 RESULTS
UPDATE ON EC225 OPERATIONS
Recently, Eurocopter, the manufacturer of the EC225 Super Puma aircraft, has indicated that they have determined the root causes of the gear shaft failure in the EC225, which are being reviewed by airworthiness authorities and independent third parties. The definitive solution to the problem will be a redesign of the gear shaft which could take more than a year to complete. However, interim solutions are under consideration, including minor aircraft modifications and new maintenance/operating procedures for mitigating shaft failure and enhancing early detection, which could result in Bristow’s return to revenue service for the EC225 aircraft in the third quarter of our fiscal year 2014.
The current situation will continue until the necessary modifications are made to the EC225 fleet, the airworthiness regulators remove the operating restrictions, and we are confident that the interim modifications will allow us to operate the aircraft safely. Until then, this situation could have a material adverse effect on our future business, financial condition and results of operations.
FINANCING ACTIVITIES
During the March 2013 quarter, we completed the sale and leaseback of eight large aircraft.
On April 29, 2013, we entered into an amendment to our revolving credit and term loan agreement, which (a) extends the maturity date of the revolving credit facility and the term loans from December 2016 toApril 2018 and (b) increases the commitments under the revolving credit facility from $200 million to $350 million. This extension and expansion of our overall liquidity is consistent with our prudent balance sheet management principles as we prepare for U.K. Search and Rescue and the projected overall growth in the oil and gas helicopter market. As of May 17, 2013, our liquidity stood at $560 million, made up of $211 million in cash and $349 million in undrawn revolver capacity.
DIVIDEND
On May 14, 2013, our Board of Directors approved a dividend of $0.25 per share, an increase of 25% from the previous quarter’s dividend of $0.20, reflecting management’s confidence in our cash generation ability and commitment to return value to our shareholders while we continue to grow globally.
This dividend will be paid on June 14, 2013 to shareholders of record on May 31, 2013. Based on shares outstanding as of March 31, 2013, total dividend payments to be made during the three months endingJune 30, 2013 will be approximately $9 million.
GUIDANCE
Bristow is issuing adjusted diluted earnings per share guidance for the full fiscal year 2014 that began onApril 1, 2013 of $4.20 to $4.50, reflecting our expectation for continued growth, and improving operational and capital efficiency.
“Our dedication to Operational Excellence in all areas has positioned us for continued success in fiscal year 2014,” said Jonathan E. Baliff, Senior Vice President and Chief Financial Officer of Bristow Group. “Fiscal year 2014 EPS guidance, which is in the upper range of the previously provided long term average adjusted earnings growth rate of 10-15% per year, is based on our commercial and operational teams’ proven ability to capitalize on overall market strength and excel in the face of a number of challenges. When combined with our prudent balance sheet management and demonstrated commitment to quarterly dividend growth (with a 33% increase in the quarterly dividend for fiscal year 2013 and a 25% increase in the quarterly dividend for the first quarter of fiscal year 2014), we believe Bristow can provide solid and balanced returns to our shareholders.”
As a reminder, our 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, we have 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 we do not currently anticipate or predict could result in earnings per share for fiscal year 2014 that are significantly above or below this guidance, including the impact of the suspension of EC225 Super Puma aircraft and changes in the market and industry. Factors that could cause such changes are described below under the 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, May 23, 2013 to review financial results for fiscal year 2013 and the fiscal year 2013 fourth quarter ended March 31, 2013. 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.
