Bristow reports Q4 and full year results to 31 March 2015

Bristow reports Q4 and full year results to 31 March 2015 20 May, 15, Source: Bristow

Bristow Group Inc. (NYSE: BRS) today reported net income for the March 2015 fiscal fourth quarter of $15.1 million, or $0.43per diluted share, compared to net income of $30.3 million, or $0.83 per diluted share, in the same period a year ago.

Adjusted net income, which excludes special items and asset disposition effects, decreased 35.3% to $31.8 million, or $0.91 per diluted share, for the March 2015quarter, compared to $49.1 million, or $1.35 per diluted share, in the March 2014quarter.

Operating revenue was $418.9 million for the March 2015 quarter compared to$404.6 million a year ago, an increase of 3.5%, driven by improvements in ourAustralia, North America and Europe Business Units. Adjusted earnings before interest, taxes, depreciation, amortization and rent (“adjusted EBITDAR”), which also excludes special items and asset disposition effects, was $126.3 million for the March 2015 quarter compared to $122.9 million in the same period a year ago, an increase of 2.8%. Results for the March 2015 quarter were significantly impacted by changes in foreign exchange rates of $12.9 million, primarily related to the Brazilian real, which decreased diluted earnings per share by $0.29, on an adjusted and unadjusted basis.

“Fiscal 2015 was a successful fiscal year in terms of operational performance, with the Bristow team remaining focused on what is vital: the safety and efficiency of our client’s personnel and business,” said Jonathan Baliff, President and Chief Executive Officer of Bristow Group.  “Despite the headwinds that emerged during the second half of our fiscal year, we delivered revenue growth, and through the disciplined efforts of our employees, we proactively implemented cost and capital reductions that created FY15’s strong Bristow Value Added (“BVA”), adjusted EBITDAR and operating cash flow.  Bristow’s performance in the face of this downturn demonstrates the uniqueness of our business model and balance sheet strength, but more importantly the resilience of the Bristow Team.”

“We will continue to invest in our future and position Bristow to capitalize on opportunities that emerge, while committing to a balanced return for our shareholders such as our dividend which has more than doubled since its initiation in 2011,” added Mr. Baliff.

FISCAL YEAR 2015 RESULTS

  • Operating revenue increased 13.9% to $1.7 billion compared to $1.5 billion a year ago. Large AirCraft Equivalent (“LACE”) increased from 158 to 166 while our LACE rate decreased slightly from $9.34 million to $9.21 million during fiscal year 2015.
  • GAAP net income decreased 54.9% to $84.3 million, or $2.37 per diluted share, from $186.7 million, or $5.09 per diluted share, for fiscal year 2014 impacted by a higher gain on sale of unconsolidated affiliates in fiscal year 2014 and a higher loss on disposal of assets, primarily due to non-cash impairment charges related to aircraft of $36.1 million, in fiscal year 2015.
  • Adjusted net income for fiscal year 2015 decreased 17.9% to $134.0 million, or$3.77 per diluted share, from $163.2 million, or $4.45 per diluted share, in the fiscal year ended March 31, 2014.
  • Results for fiscal year 2015 were significantly impacted by changes in foreign exchange rates of $39.4 million, primarily related to the Brazilian real, which decreased diluted earnings per share by $0.88 for the period, on an adjusted and unadjusted basis.
  • In addition to the unfavorable impact of changes in foreign exchange rates, results for fiscal year 2015 were significantly impacted by:
    • An increase in general and administrative expense of $54.3 million driven by higher compensation costs of $20.1 million primarily related to improved BVA year-over-year and stock price performance versus our peer group, and higher professional fees of $13.1 million related to ongoing Operations Transformation and other initiatives,
    • A loss on disposal of assets of $35.8 million (primarily due to non-cash impairment charges related to aircraft of $36.1 million) and GAAP non-cash inventory impairment charges of $7.2 million in fiscal year 2015, and
    • Additional depreciation expense related to fleet changes of $10.4 million.
  • We continued to see top line strength in our operations driving an improvement in adjusted EBITDAR of 9.3% to $473.8 million in the current fiscal year from $433.7 million in the prior fiscal year.
  • In terms of cash generation from our operations and management of our capital, net cash provided by operating activities was $253.2 million for fiscal year 2015 compared to $232.1 million for the prior fiscal year. Our total liquidity, which includes cash on hand and availability under our revolving credit facility, was$369.9 million as of March 31, 2015 compared to $529.9 million as of March 31, 2014. The decrease in liquidity year over year primarily related to significant cash expenditures primarily for growth totaling $601.8 million in fiscal year 2015.
  • Our net income and diluted earnings per share were also impacted by an increase in pre-tax rent expense of $59.0 million for fiscal year 2015 compared to the prior year. These increases in rent expense resulted from an increase in the number of leased aircraft compared to the prior fiscal year.

FOURTH QUARTER FISCAL YEAR 2015 RESULTS

  • Operating revenue increased 3.5% to $418.9 million compared to $404.6 million in the March 2014 quarter.
  • Operating income decreased 41.6% to $27.7 million compared to $47.4 million in the March 2014 quarter.
  • GAAP net income decreased 50.3% to $15.1 million, or $0.43 per diluted share, compared to $30.3 million, or $0.83 per diluted share, in the March 2014 quarter.
  • Results for the March 2015 quarter were significantly impacted by changes in foreign exchange rates of $12.9 million, primarily related to the Brazilian real, which decreased diluted earnings per share by $0.29 for the period, on an adjusted and unadjusted basis.
  • In addition to the unfavorable impact of changes in foreign exchange rates, GAAP results for the March 2015 quarter were significantly impacted by:
    • A loss on disposal of assets of $10.3 million (including non-cash impairment charges related to aircraft of $7.3 million), and
    • Additional depreciation expense related to fleet changes of $10.4 million.
  • Despite the impact of changes in foreign exchange rates, adjusted EBITDAR improved 2.8% to $126.3 million for the March 2015 quarter from $122.9 million for the March 2014 quarter primarily as a result of the following:
    • The startup of new contracts in our Australia Business Unit and the addition of Airnorth,
    • The proactive cost reduction efforts realized by our West Africa Business Unit, and
    • A favorable shift in the mix to larger aircraft under contract and improved utilization that benefited our North America Business Unit.
  • Our net income and diluted earnings per share were also impacted by an increase in pre-tax rent expense of $18.8 million for the March 2015 quarter compared to the prior year period. These increases in rent expense resulted from an increase in the number of leased aircraft compared to the prior fiscal year.

FOURTH QUARTER FISCAL YEAR 2015 BUSINESS UNIT RESULTS

Europe Business Unit

Operating revenue for the March 2015 quarter improved in our Europe Business Unit compared to the prior year quarter primarily due to reporting a full quarter of Eastern Airways results and increased activity in Norway. Adjusted EBITDAR margin decreased to 29.9% in the March 2015 quarter compared to 37.3% in the March 2014 quarter primarily due to the absence of $8.5 million in credits for maintenance expense from original equipment manufacturers that were recognized in the March 2014 quarter.  Also negatively impacting adjusted EBITDAR for the March 2015quarter was a $7.1 million unfavorable impact of changes in foreign exchange rates which was the primary driver of a sequential decline in the adjusted EBITDAR margin from 33.1% in the December 2014 quarter to 29.9% in the March 2015 quarter.

West Africa Business Unit

Operating revenue decreased by 10.0% in our West Africa Business Unit for theMarch 2015 quarter compared to the March 2014 quarter due to reduced activity. Adjusted EBITDAR increased by 29.3% compared to the March 2014 quarter and adjusted EBITDAR margin increased to 47.7% for the March 2015 quarter compared to 33.2% for the March 2014 quarter. Adjusted EBITDAR and adjusted EBITDAR margin benefited from cost reductions and efficiency gains realized in our operations. Also impacting adjusted EBITDAR and adjusted EBITDAR margin for the March 2015quarter was a $2.6 million favorable impact of changes in foreign exchange rates. Sequentially, adjusted EBITDAR margin increased from a 34.6% margin in theDecember 2014 quarter primarily due to the cost reduction efforts.

North America Business Unit

The North America Business Unit realized increases in operating revenue, adjusted EBITDAR and adjusted EBITDAR margin in the March 2015 quarter compared to the prior year quarter due to an increase in the number of large aircraft on contract and improved utilization. Adjusted EBITDAR and adjusted EBITDAR margin improved to$28.2 million and 48.3%, respectively, in the March 2015 quarter compared to $19.7 million and 35.4%, respectively, in the March 2014 quarter. Sequentially, adjusted EBITDAR margin improved from 40.0% in the December 2014 quarter.

Australia Business Unit

The Australia Business Unit realized increases in operating revenue, adjusted EBITDAR and adjusted EBITDAR margin compared to the prior year quarter primarily as a result of new client contracts and the acquisition of Airnorth in January 2015. Airnorth contributed $11.4 million of operating revenue and $2.1 million of adjusted EBTIDAR during the March 2015 quarter. Operating revenue increased to $62.9 million in the March 2015 quarter from $40.6 million in the March 2014 quarter. Adjusted EBITDAR and adjusted EBITDAR margin increased to $17.6 million and 27.9%, respectively, from $9.7 million and 24.0%, respectively, in the March 2014quarter. Sequentially, adjusted EBITDAR margin improved from 25.4% in theDecember 2014 quarter primarily due to the contribution of new contracts.

Other International Business Unit

Operating revenue for our Other International Business Unit compared to the prior year quarter decreased primarily due to the end of contracts in Malaysia, Brazil andTrinidad, partially offset by a change in aircraft mix in Trinidad. Adjusted EBITDAR and adjusted EBITDAR margin for the March 2015 quarter decreased to $7.5 millionand 23.6%, respectively, compared to $20.2 million and 53.3%, respectively, in theMarch 2014 quarter, primarily due to a $12.6 million unfavorable impact of changes in foreign currency rates on Líder, our unconsolidated affiliate in Brazil. Sequentially, adjusted EBITDAR margin increased from 20.7% in the December 2014 quarter.

CHANGES TO BUSINESS UNITS

Effective April 1, 2015, we reorganized our global operations from five business units to four regions as follows:  Africa, Americas, Asia Pacific and Europe Caspian. The goal of these changes is to streamline and standardize our business, simplify our operating model, reduce costs and support consistent and faster response to clients globally. We believe the new structure will allow us to respond to market opportunities faster and execute our growth strategy more efficiently.

The Africa region will comprise all our operations and affiliates on the African continent, including Nigeria, Tanzania and Egypt.

The Americas region will comprise all our operations and affiliates in North America and South America, including Brazil, Canada, Trinidad and the U.S. Gulf of Mexico.

The Asia Pacific region will comprise all our operations and affiliates in Australia and Southeast Asia, including Malaysia and Sakhalin.

The Europe Caspian region will comprise all our operations and affiliates in Europe and Central Asia, including Norway, the U.K. and Turkmenistan.

Our historical business unit operating results will be recast based on the new region structure beginning with the quarter ending June 30, 2015.

DIVIDEND

On May 15, 2015, our Board of Directors approved our seventeenth consecutive quarterly dividend. This dividend of $0.34 per share will be paid on June 18, 2015 to shareholders of record on June 5, 2015. Based on shares outstanding as of March 31, 2015, the total quarterly dividend payment will be approximately $11.8 million.

GUIDANCE

“Our fiscal year 2015 earnings performance was materially impacted by the strength of the U.S. dollar, which reduced our adjusted earnings per share by $0.88, the majority of which came from the weakness in the Brazilian real and is non-cash. A large portion of the negative impact occurred in the fourth fiscal quarter,” said John Briscoe, Senior Vice President and Chief Financial Officer of Bristow Group. “We generated very strong and improving operating cash flow and also created value for our shareholders by delivering $100 million of BVA during fiscal 2015. Impacts from the oil and gas downturn materialized in our fourth quarter; however good cost control resulted in a sequential improvement in adjusted EBITDAR margin for the quarter.”

Today, we are announcing our adjusted diluted earnings per share guidance range for fiscal year 2016 of $3.90 to $4.40.

“The fiscal 2016 energy industry environment is presenting more challenges and uncertainties for the oil and gas portion of our business and impacts our full year adjusted EPS guidance range. However, our business model, which is strongly tied to offshore production combined with the start-up of the U.K. SAR contract and our growing fixed-wing operations, supports our expectation of average adjusted earnings growth of 10%-15% per year over the medium and long term,” added Mr. Briscoe.

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 foreign exchange rates as of March 31, 2015 and assumes the rates will remain unchanged.  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 changes in the market and industry, could result in earnings per share for fiscal year 2016 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, 2015.

CONFERENCE CALL

Management will conduct a conference call starting at 10:00 a.m. EDT (9:00 a.m. CDT) on Thursday, May 21, 2015 to review financial results for the fiscal year 2015 and fourth quarter ended March 31, 2015.  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 Webcast:

  • Visit Bristow Group’s investor relations Web page at www.bristowgroup.com
  • Live: Click on the link for “Bristow Group Fiscal 2015 Fourth 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 1-877-404-9648
  • Replay: A telephone replay will be available through May 28, 2015 and may be accessed by calling toll free 1-877-660-6853, passcode: 13606746#

Via Telephone outside the U.S.:

  • Live: Dial 1-412-902-0030
  • Replay: A telephone replay will be available through May 28, 2015 and may be accessed by calling toll free 1-201-612-7415, passcode: 13606746#

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 Australia, Brazil, Canada, Russia and Trinidad.  For more information, visit the Company’s website at www.bristowgroup.com.

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