Bristow Reports on Q1 Fiscal Year 2023 Results

Bristow Reports on Q1 Fiscal Year 2023 Results

5-Aug-2022 Source: Bristow

 

  • Total revenues of $301.7 million in Q1 FY23 compared to $287.4 million in Q4 FY22
  • Net income of $4.0 million, or $0.14 per diluted stock, in Q1 FY23 compared to net loss of $4.3 million, or $(0.15) per diluted stock, in Q4 FY22
  • EBITDA adjusted to exclude special items and asset dispositions was $51.1 million in Q1 FY23 compared to $35.9 million in Q4 FY22
  • Adjusted Free Cash Flow was $26.0 million in Q1 FY23, with unrestricted cash balance of $255.0 million and total liquidity of $318.0 million
  • Awarded £1.6 billion second-generation search and rescue aviation contract by the Maritime and Coastguard Agency (“UK SAR 2G”)
  • Signed favorable, long-term maintenance support agreements for global AW139 helicopter fleet

Bristow Group Inc. (NYSE: VTOL) today reported net income attributable to the Company of $4.0 million, or $0.14 per diluted stock, for its fiscal first quarter ended June 30, 2022 (“Current Quarter”) on operating revenues of $294.1 million compared to net loss attributable to the Company of $4.3 million, or $(0.15) per diluted stock, in the quarter ended March 31, 2022 (“Preceding Quarter”) on operating revenues of $275.6 million.

Earnings before interest, taxes, depreciation and amortization (“EBITDA”) was $39.0 million in the Current Quarter compared to $26.0 million in the Preceding Quarter. EBITDA adjusted to exclude special items and gains or losses on asset dispositions was $51.1 million in the Current Quarter compared to $35.9 million in the Preceding Quarter. See Reconciliation of Non-GAAP Metrics for a reconciliation of net income (loss), the most directly comparable GAAP (as defined below) measure, to EBITDA and Adjusted EBITDA. The following table provides a bridge between EBITDA, Adjusted EBITDA and Adjusted EBITDA excluding gains or losses on asset dispositions (in thousands, unaudited).

Three Months Ended,

June 30,
2022

March 31,
2022

EBITDA

$     39,024

$     26,044

Special items:

Restructuring costs

$            —

$       2,113

Loss on impairment

5,187

PBH amortization

3,291

3,062

Merger and integration costs

368

824

Reorganization items, net

49

43

Nonrecurring professional services fees

1,091

3,796

$       9,986

$       9,838

Adjusted EBITDA

$     49,010

$     35,882

Loss on disposal of assets

2,101

41

Adjusted EBITDA excluding asset dispositions

$     51,111

$     35,923

 

“I want to thank the Bristow team members who have worked diligently over the last several months to successfully deliver on several of the Company’s strategic priorities, including securing the highly important UKSAR2G contract award, winning new government contracts to provide critical SAR services throughout the Netherlands and the Dutch Caribbean region, and completing the acquisition of British International Helicopters Limited, which expands our government services offering to the Falklands Islands and establishes an important new relationship with the British Armed Forces,” said Chris Bradshaw, President and CEO of Bristow Group. “We have continued to make investments to strengthen our business such as the new long-term, highly favorable maintenance support agreements for our global AW139 helicopter fleet, while at the same time returning capital to shareholders with $10 million of share repurchases executed over the last two months. I’m grateful to the Bristow team for their collective efforts to deliver these successful outcomes and, most importantly, to deliver another quarter of world-class safety performance and excellent customer service.”

Sequential Quarter Results

Operating revenues in the Current Quarter were $18.6 million higher compared to the Preceding Quarter. Operating revenues from oil and gas services were $5.8 million higher primarily due to higher utilization in the Africa and Europe regions and higher fuel revenues. These increases were partially offset by lower lease payment collections from Cougar Helicopters Inc. (“Cougar”), which are recognized on cash basis, and the weakening of the Norwegian krone and British pound sterling relative to the U.S. dollar. Operating revenues from government services were $3.9 million higher primarily due to higher activity, partially offset by the weakening of the British pound sterling relative to the U.S. dollar. Operating revenues from fixed wing services were $9.1 million higher primarily due to higher utilization related to the reopening of borders in Australia.

Operating expenses were $6.8 million higher in the Current Quarter primarily due to higher fuel expenses and maintenance costs, partially offset by lower personnel, insurance and leased-in equipment costs.

General and administrative expenses were $1.5 million lower in the Current Quarter primarily due to lower professional services fees and lower compensation expenses.

Merger and integration costs were $0.5 million lower in the Current Quarter primarily due to lower lease return costs related to the merger with Era Group Inc. (the “Merger”).

During the Preceding Quarter, restructuring costs were $2.1 million primarily due to severance costs in the Africa region.

During the Current Quarter, the Company recognized a $5.2 million loss on impairment related to power-by-the-hour (“PBH”) intangible assets write-off.

During the Current Quarter, the Company recognized a loss on disposal of assets of $2.1 million from the sale of five helicopters for cash proceeds of $7.6 million.

During the Current Quarter, the Company recognized earnings of $0.1 million from unconsolidated affiliates compared to losses of $0.3 million in the Preceding Quarter.

Other income, net of $16.8 million in the Current Quarter resulted from foreign exchange gains of $14.0 million, government grants to fixed wing services of $2.5 million and a favorable interest adjustment to the Company’s pension liability of $0.2 million. Other income, net of $13.0 million in the Preceding Quarter resulted from foreign exchange gains of $6.0 million, government grants to fixed wing services of $3.8 million, a gain on the sale of inventory of $1.9 million, insurance gains of $0.7 million and a favorable interest adjustment to the Company’s pension liability of $0.6 million.

Income tax expense was $8.2 million in the Current Quarter compared to $3.3 million in the Preceding Quarter.  The increase in income tax expense in the Current Quarter primarily related to changes in the blend of earnings, the tax impact of valuation allowances on the Company’s net operating losses and deductible business interest expense.

Liquidity and Capital Allocation

As of June 30, 2022, the Company had $255.0 million of unrestricted cash and $63.0 million of remaining availability under its amended asset-based revolving credit facility (the “ABL Facility”) for total liquidity of $318.0 million. Borrowings under the amended ABL Facility are subject to certain conditions and requirements.

In the Current Quarter, purchases of property and equipment were $9.0 million, and cash proceeds from dispositions of property and equipment were $7.6 million, resulting in net purchases of / (proceeds from) property and equipment (“Net Capex”) of $1.5 million. In the Preceding Quarter, purchases of property and equipment were $7.8 million, and there were no cash proceeds from dispositions of property and equipment. See Adjusted Free Cash Flow Reconciliation for a reconciliation of Net Capex and Adjusted Free Cash Flow.

In June and July 2022, the Company repurchased 425,938 shares of common stock for gross consideration of $10.0 million, which is an average repurchase price of $23.48 per stock. As of July 29, 2022, $15.0 million remained available under the authorized $75.0 million stock repurchase program.

In August 2022, the Board of Directors of Bristow (the “Board”) approved a new $40.0 million stock repurchase program, and terminated the prior program, under which $15.0 million remained available of the original $75.0 million authorized. Purchases of the Company’s common stock under the stock repurchase program may be made in the open market, including pursuant to a Rule 10b5-1 program, by block repurchases, in private transactions (including with related parties) or otherwise, from time to time, depending on market conditions. The stock repurchase program has no expiration date and may be suspended or discontinued at any time without notice, subject to any changes in applicable law or regulations thereunder.

Recent Highlights

On August 3, 2022, the Board approved a change in the fiscal year end of the Company from March 31st to December 31st. The Company expects to change the fiscal year on a prospective basis and will not adjust operating results for prior periods, and the Company will file a transition report on Form 10-K for the transition period ended December 31, 2022. The Company believes this change to align with the calendar year will provide numerous benefits, including improving comparability between periods and relative to its peers. Bristow intends to issue financial guidance for the 2023 calendar year when it announces next quarter’s earnings.

On August 2, 2022, Bristow completed the acquisition of British International Helicopter Services Limited (“BIH”) for  £10.4 million, further enhancing its leading global government services offering. Bristow will integrate BIH into its U.K. operations, where BIH will adopt the Bristow name and brand throughout its operations. BIH’s more than 110 employees currently deliver combined search and rescue and support helicopter services for the U.K. Ministry of Defence (MOD) with operations in the Falkland Islands and deliver Fleet Operational Sea Training (FOST) helicopter support for the Royal Navy in the U.K. BIH currently operates a fleet of two AW189 SAR-configured helicopters, three S61 helicopters, and one AS365 helicopter, performing various passenger and freight transport as well as hoist operations. With this acquisition, Bristow established an important new relationship with the British Armed Forces, and the Company is well-positioned to further expand its government services business throughout the U.K. and beyond.

On July 27, 2022, Bristow was pleased to release its first sustainability report, which emphasizes Bristow’s commitment to formally embedding sustainability into the Company’s vision and highlighting its role as a leader in sustainability within the vertical lift industry. Bristow’s global environmental sustainability highlights in 2021 include completing flights in the U.K. using sustainable aviation fuel (SAF), initiating a transition to electric ground support vehicles in Norway and the U.K., publishing the first-of-its-kind greenhouse gas emissions report in Brazil, and partnering with leading companies developing electric vertical take-off and landing (eVTOL) and electric short take-off and landing (eSTOL) aircraft. The Company’s social sustainability highlights for 2021 include donating more than $500,000 to community engagement programs through its global Bristow Uplift program as well as rescuing 593 people through its U.K. search and rescue program. Additionally, Bristow’s executive management team is 50% female, and the Company boasts a U.S. employee base in which one in four employees is a veteran. The complete sustainability report can be viewed at: https://www.bristowgroup.com/sustainability-report-2022.

As announced on July 21, 2022, Bristow has been awarded the £1.6 billion 10-year UKSAR2G contract by the Maritime and Coastguard Agency, an executive agency of the U.K. Department for Transport. Bristow will work in partnership with 2Excel Aviation, a leading specialist in fixed wing services, and Nova Systems, the consortium’s innovation partner, to deliver the contract for the MCA on behalf of Her Majesty’s Coastguard. The UKSAR2G contract combines the existing two separate aviation contracts for fixed wing aircraft and rotary aircraft and will include the use of unmanned aerial systems (UAS). As part of the new contract, Bristow will continue to operate from its current 10 bases and will launch two new seasonal bases in Fort William and Carlisle. The partners will operate: 18 helicopters, including nine existing Leonardo AW189s and three existing Sikorsky S-92s augmented by the introduction of six new Leonardo AW139 helicopters; six King Air fixed-wing airplanes; and one mobile deployable Schiebel CAMCOPTER S-100 UAS. The companies will transition from the current contracts starting from September 30, 2024 through to December 31, 2026, to ensure a continuation of critical search and rescue aviation services across the whole of the U.K.

As announced on June 30, 2022, Bristow has signed long-term, favorable maintenance support agreements with Leonardo Helicopters for airframes and Pratt & Whitney for engines on the Company’s global fleet of AW139 helicopters. The legacy Era AW139 fleet was previously covered by a limited PBH support agreement with Leonardo for the airframes, while the engines were maintained on a time and cost of materials basis. The legacy Bristow AW139 fleet was covered by multiple, disparate PBH support agreements with Leonardo for the airframes, and the engines were covered under a PBH agreement with Pratt & Whitney. The new agreements result in consistent, global maintenance support programs for Bristow’s AW139 helicopters, both the airframes and the engines. These agreements mitigate cost uncertainty in an inflationary environment and will result in maintenance expenses that are more directly correlated with flight hours. The Company expects the new agreements to deliver unlevered, cash-on-cash returns of approximately 20 percent over the life of the agreements. The aggregate buy-in cost is approximately $55 million, which will be paid in installments between July and December 2022. In addition to the AW139 agreements, Bristow has also signed long-term maintenance support agreements with Leonardo for the AW189 airframe and with Honeywell for the AW139 avionics suite. Bristow has also signed a long-term maintenance agreement with General Electric for support of AW189 and S-92 engines.

Conference Call

Management will conduct a conference call starting at 9:00 a.m. ET (8:00 a.m. CT) on Friday, August 5, 2022, to review the results for the fiscal first quarter ended June 30, 2022. The conference call can be accessed as follows:

All callers will need to reference the access code 162062.

Within the U.S.:  Operator Assisted Toll-Free Dial-In Number: (800) 207-0148

Outside the U.S.:  Operator Assisted International Dial-In Number: (856) 344-9282

Replay

A telephone replay will be available through August 19, 2022 by dialing 888-203-1112 and using the access code 6245002.  An audio replay will also be available on the Company’s website at www.bristowgroup.com shortly after the call and will be accessible through August 19, 2022. The accompanying investor presentation will be available on August 5, 2022 on Bristow’s website at www.bristowgroup.com.

For additional information concerning Bristow, contact Jennifer Whalen at InvestorRelations@bristowgroup.com, (713) 369-4636 or visit Bristow Group’s website at https://ir.bristowgroup.com/.

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