Bristow Group reports results for year to 31 March 2014

Bristow Group reports results for year to 31 March 2014

23-May-2014 Source: Bristow Group

Bristow Group Inc. (NYSE: BRS) today reported net income for the March 2014quarter of $30.3 million, or $0.83 per diluted share, compared to net income of $40.4 million, or $1.11 per diluted share, in the same period a year ago.

Adjusted net income, which excludes special items and asset disposition effects, increased 33.7% to $49.1 million, or $1.35per diluted share, for the March 2014 quarter, compared to $36.7 million, or $1.01 per diluted share, in the March 2013 quarter.

Adjusted earnings before interest, taxes, depreciation, amortization and rent (“adjusted EBITDAR”), which also excludes special items and asset disposition effects, was $122.9 million for the March 2014 quarter compared to $103.0 million in the same period a year ago, an increase of 19.3%.

The increase in adjusted EBITDAR, adjusted net income and adjusted diluted earnings per share for the March 2014 quarter compared to the March 2013 quarter was primarily driven by increased operating revenue across most of Bristow’s business units, leading to LACE rate increases. Specifics include:

  • A $41.4 million increase in operating revenue in our Europe business unit primarily driven by Bristow Helicopters’ acquisition of Eastern Airways in February 2014 and Gap SAR (Search and Rescue) contract beginning in June and July 2013,
  • The benefit from $12.4 million in maintenance credits (primarily in our Europe and Australia business units) we were able to recover from our original equipment manufacturers for costs incurred earlier in the fiscal year,
  • Increased earnings from unconsolidated affiliates of $4.4 million primarily due to a tax indemnity payment of $2.5 millionand lower tax charges than accrued in the December 2013 quarter from a tax amnesty payment our unconsolidated affiliate in Brazil paid to the Brazilian government, and
  • A decrease in our effective tax rate.

We also saw additional GAAP expenses in the March 2014 quarter that are excluded from adjusted EPS including:

  • Impairment of inventories of $10.5 million related to aircraft model types we ceased ownership of, or plan to dispose of, over the next two years.  A majority of this impairment relates to a medium aircraft type being replaced by new technology models, and
  • An increase in insurance expense of $8.6 million due to a fire in a hangar in Nigeria.

“We had a successful fiscal year in terms of safety and operational performance, while delivering on our annual financial promises to investors in fiscal 2014, which is a testament to the passion and discipline of our team around the globe,” saidWilliam E. Chiles, President and Chief Executive Officer of Bristow Group.  “Bristow is a unique company in that we continue to invest in our business at record rates while delivering a balanced return to our shareholders demonstrated by doubling the quarterly dividend since 2011 and repurchasing record amounts of shares.”

“We expect our growth to continue as we deliver superior service to our clients with new contracts in new markets like East Africa and existing markets like Australia, Europe and the U.S. Gulf of Mexico, with continued strong performance from our affiliates in Brazil and Canada.”

FISCAL YEAR 2014 RESULTS

  • Operating revenue increased 12.8% to $1.5 billion compared to $1.3 billion a year ago.
  • GAAP net income increased 43.5% to $186.7 million, or $5.09 per diluted share, compared to $130.1 million, or $3.57 per diluted share, in fiscal year 2013.  Record adjusted net income increased 18.4% to $163.2 million, or $4.45 per diluted share, compared to $137.8 million, or $3.78 per diluted share, in fiscal year 2013.
  • GAAP operating income decreased 16.6% to $187.0 million compared to $224.1 million in fiscal year 2013, impacted by GAAP non-cash inventory impairment charges of $12.7 million in fiscal year 2014, lower equity earnings from unconsolidated affiliates of $12.4 million in fiscal year 2014 and lower gain (loss) on disposal of assets of $8.8 million in fiscal year 2014.
  • Record adjusted EBITDAR increased 13.8% year over year at $433.7 million compared to $381.0 million in fiscal year 2013.
  • Operating cash flow of $232.1 million for fiscal year 2014 compared to $266.8 million for fiscal year 2013.  The year over year decrease is primarily due to an increase in income taxes paid of $35.0 million primarily due to the sale of unconsolidated affiliates, the FB Entities, as well as approximately $10 million in cash payments related to the U.K. SAR contract award and annual compensation payments.
  • Cash on hand as of March 31, 2014 totaled $204.3 million compared to $215.6 million as of March 31, 2013.  Our total liquidity, including cash on hand and availability on our revolving credit facility, was $529.9 million as of March 31, 2014 compared to $415.0 million as of March 31, 2013, a 26.7% increase.

FOURTH QUARTER FY2014 RESULTS

  • Operating revenue increased 15.4% to $404.6 million compared to $350.7 million in the same period a year ago.
  • GAAP net income decreased 24.9% to $30.3 million, or $0.83 per diluted share, compared to $40.4 million, or $1.11 per diluted share, in the March 2013 quarter.
  • GAAP operating income decreased 24.4% to $47.4 million compared to $62.7 million in the March 2013 quarter.
  • GAAP results for the March 2014 quarter were affected by a number of special items as described further below that are excluded from our adjusted non-GAAP financial measures for the quarter.
  • Additionally, GAAP results were impacted by a gain on disposal of assets of assets of $0.1 million for the March 2014compared to $7.2 million in the March 2013 quarter.
  • Adjusted net income increased 33.7% to $49.1 million, or $1.35 per diluted share, compared to $36.7 million, or $1.01per diluted share, in the March 2013 quarter.
  • Adjusted EBITDAR increased 19.3% to $122.9 million compared to $103.0 million in the same period a year ago.

FOURTH QUARTER FY2014 BUSINESS UNIT RESULTS

Europe Business Unit

The net addition of seven large aircraft, along with an overall increase in activity with existing clients and new contracts primarily in the U.K. Northern North Sea and the addition of Eastern Airways beginning in February 2014, resulted in increased operating revenue of $41.4 million and were the primary contributors to revenue growth in our Europe Business Unit.  We also added four SAR aircraft beginning in June and July 2013. Adjusted EBITDAR increased 28.6% year-over-year; however, adjusted EBITDAR margin decreased to 37.3% in the March 2014 quarter compared to 38.3% in the March 2013 quarter primarily due to salary increases year over year.  Sequential quarterly adjusted EBITDAR margins increased from 35.3% in the December quarter primarily as a result our recovery of maintenance credits as discussed above.

On February 20, 2014, the U.K. Civil Aviation Authority (“CAA”) issued a report detailing the findings and recommendations from its review of helicopter transport operations serving offshore installations in the U.K.  The report, commonly referred to as CAP 1145, contains more than 60 safety actions and recommendations to improve the safety of offshore helicopter transport.  Ten of the recommendations are designed to improve the survivability of passengers and crew following a ditching or impact in water.

One safety directive, which is scheduled to go into effect on September 1, 2014, will restrict seating capacity on some aircraft in the North Sea until new breathing systems are available or side floats are installed.  Further requirements will be implemented over the next 12 months, including operational restrictions when sea states are above a certain prescribed level, or the flight prohibition of individuals whose size exceeds the dimensions of emergency egress windows.

We believe CAP 1145 will make our industry safer.  We are working cooperatively with the CAA, other helicopter operators, and our clients in the North Sea to evaluate and deploy technologies that meet these new safety standards.  We remain committed to ensuring that any impact to our operations is managed through our existing safety policies and programs and does not result in an elevated safety risk in the near term. The requirements could present North Sea operators, including us, with significant operational challenges.

West Africa Business Unit

Pricing improvements drove revenue increases in our West Africa Business Unit, leading to a 13.2% increase in operating revenue for the March 2014 quarter compared to the March 2013 quarter.  Adjusted EBITDAR increased by 18.2% compared to the March 2013 quarter and adjusted EBITDAR margin increased to 33.2% for the March 2014 quarter compared to 31.8% for the March 2013 quarter. Sequentially, EBITDAR margin was mostly unchanged compared with the 33.5% margin in theDecember 2013 quarter.

North America Business Unit

The decrease in small aircraft on contract in the U.S. Gulf of Mexico, partially offset by an increase in medium and large aircraft in this business unit, drove the reduction in our revenue in North America Business Unit.  However, North America’s adjusted EBITDAR and adjusted EBITDAR margin improved to $19.7 million and 35.4%, respectively, in the March 2014 quarter compared to $16.6 million and 29.5%, respectively, in the March 2013 quarter, driven primarily by a lower level of bad debt expense in the March 2014 quarter, an increase in earnings from unconsolidated affiliates, net of losses, related to our Cougar investment and an increase in the number of large and medium aircraft on contract in the U.S. Gulf of Mexico. Sequentially, adjusted EBITDAR margin improved to 35.4% in the March 2014 quarter compared to 33.1% in the December 2013 quarter primarily due to higher equity earnings from our investment in Cougar.

Australia Business Unit

Operating revenue for our Australia Business Unit stayed flat at $40.6 million in the March 2014 and March 2013 quarters.  Further, as a result of costs incurred in the March 2014 quarter in anticipation of client contracts that start in fiscal year 2015, adjusted EBITDAR and adjusted EBITDAR margin decreased to $9.7 million and 24.0%, respectively, from $10.6 million and 26.0%, respectively, in the March 2013 quarter. We continue to incur salaries and benefits, depreciation, insurance, training and lease costs in anticipation of the new contracts that started in late fiscal year 2014 or will start in fiscal year 2015. Sequentially, adjusted EBITDAR margin improved to 24.0% in the March 2014 quarter compared to 15.0% in the December 2013 due to the start of new contracts in late fiscal year 2014.

Other International Business Unit

Operating revenue for our Other International Business Unit increased due to the start of a new contract in Tanzania and introduction of a new aircraft type in Trinidad, partially offset by a decline in number of aircraft in Malaysia. Adjusted EBITDAR and adjusted EBITDAR margin for the March 2014 quarter increased to $20.2 million and 53.3%, respectively, compared to$18.0 million and 51.6%, respectively, in the March 2013 quarter, primarily due to increased activity, the start of the contract inTanzania and dividends received from our cost method investment in Egypt, partially offset by the decline in activity in Malaysiaand increased costs in Trinidad. Sequentially, adjusted EBITDAR margin improved to 53.3% in the March 2014 quarter compared to 33.2% in the December 2013 quarter primarily due to the start of the contract in Tanzania and dividends received from our cost method investment in Egypt in the March 2014 quarter.

DIVIDEND AND SHARE REPURCHASE

On May 16, 2014, our Board of Directors approved our thirteenth consecutive quarterly dividend and raised it by 28%.  The dividend of $0.32 per share will be paid on June 19, 2014 to shareholders of record on June 5, 2014 and is more than double the first quarterly dividend paid in June 2011.  Based on shares outstanding as of March 31, 2014, the total quarterly dividend payment will be approximately $11.4 million.  Additionally, during the March 2014 quarter, we spent $61.1 million to repurchase 828,565 shares of our common stock, a record for quarterly buybacks.  Subsequently, from April 1, 2014 through May 16, 2014, we spent an additional $9.4 million to repurchase another 125,983 shares of our common stock.

On February 5, 2014, our Board of Directors approved an increase of the remaining repurchase amount of our common stock to up to $100 million through November 5, 2014.  As of May 16, 2014, we had $46.5 million of remaining repurchase authority.

GUIDANCE

We are announcing our adjusted diluted earnings per share guidance range for fiscal year 2015 of $4.70 to $5.20.

“Our continued improvement in operating and commercial performance has delivered strong twelve month year-to-date financial results, as seen in the 18% growth in adjusted EPS for fiscal year 2014 compared to fiscal year 2013,” said Jonathan E. Baliff, Senior Vice President and Chief Financial Officer of Bristow Group. “We were able to deliver adjusted EPS of $4.45 per share in fiscal year 2014, which is above the midpoint of our revised adjusted EPS guidance range of $4.25 to $4.55 for fiscal year 2014 that we reaffirmed on our last third quarter earnings call.”

“The ability for Bristow to deliver on our annual financial guidance these past number of years and more than double our quarterly dividend in the face of industry challenges reinforces our confidence in the previously provided long term average adjusted earnings growth rate of 10-15% per year and the adjusted EPS guidance range for fiscal year 2015 of $4.70 to $5.20that we are providing today.”

As a reminder, our adjusted diluted earnings per share guidance excludes the effect of special items and asset dispositions because their timing and amounts are more variable and less predictable.  Further, 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 or significant acquisitions and divestitures.  Events or other circumstances that we do not currently anticipate or cannot predict, including any issues involved with the return to full revenue service of the EC225 aircraft and changes in the market and industry, could result in earnings per share for fiscal year 2015 that are significantly above or below this guidance.  Factors that could cause such changes are described below under the Forward-Looking Statements Disclosure and the Risk Factors in our annual report on Form 10-K for the fiscal year ended March 31, 2014.

Full release with financial statements HERE

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