Bristow Group Inc. (NYSE: VTOL) reported net loss attributable to the Company of $1.5 million, or $0.05 per diluted share, for its quarter ended March 31, 2023 (the “Current Quarter”) on operating revenues of $292.9 million compared to net loss attributable to the Company of $7.0 million, or $0.25 per diluted share, for the quarter ended December 31, 2022 (the “Preceding Quarter”) on operating revenues of $304.3 million.

Earnings before interest, taxes, depreciation and amortization (“EBITDA”) was $21.1 million in the Current Quarter compared to $19.7 million in the Preceding Quarter. EBITDA adjusted to exclude special items, gains or losses on asset dispositions and foreign exchange losses was $28.9 million in the Current Quarter compared to $36.3 million  in the Preceding Quarter. The following table provides a reconciliation of net loss to EBITDA, Adjusted EBITDA and Adjusted EBITDA excluding gains or losses on asset dispositions and foreign exchange losses (in thousands, unaudited). See “Non-GAAP Financial Measures” for further information on the use of non-GAAP financial measures used herein.

 

 

 

“Consistent with our previously issued financial guidance and commentary, the first quarter was expected to represent the Company’s softest financial results due to typical seasonality as well as the transition of aircraft between the end of a contract at year-end 2022 and the commencement of newly awarded contracts over the course of 2023,” said Chris Bradshaw, President and CEO of Bristow Group. “Actual first quarter results were higher than management’s estimates, and we are pleased to affirm Bristow’s full year 2023 financial guidance. The fundamentals for Bristow’s business are improving significantly, and the EBITDA run rate at year-end is expected to be significantly higher than the first half of the year, setting up positively for stronger financial results in 2024.”

Sequential Quarter Results

Operating revenues in the Current Quarter were $11.4 million lower compared to the Preceding Quarter. Operating revenues from offshore energy services were $17.0 million lower primarily due to lower seasonal utilization, the end of a contract in Guyana and lower lease payments received from Cougar, partially offset by higher revenues in the Africa region due to increased rates. Operating revenues from government services were $5.3 million higher in the Current Quarter primarily due to the full quarter impact of the Netherlands and Dutch Caribbean contracts and higher revenues in U.K. SAR due to the strengthening of the British pound sterling (“GBP”) relative to the U.S. dollar (“USD”). Operating revenues from fixed wing services were $0.9 million higher in the Current Quarter primarily due to a benefit on expired tickets and a retrospective billing adjustment, partially offset by lower seasonal utilization. Operating revenues from other services were $0.6 million lower in the Current Quarter primarily due to lower dry-lease revenues.

Operating expenses were $8.0 million lower in the Current Quarter primarily due to lower repairs and maintenance costs, fuel expenses and leased-in equipment costs, partially offset by higher training, personnel and other operating costs.

General and administrative expenses were $5.0 million higher primarily due to nonrecurring professional services fees, severance costs and tax expenses of $3.2 million in the Current Quarter and the absence of one-time benefits recognized in the Preceding Quarter of $1.3 million related to insurance rebates and non-cash compensation adjustments. Adjusted for these unusual items, general and administrative expenses would have been $0.4 million higher in the Current Quarter.

During the Current Quarter, the Company sold or otherwise disposed of three helicopters and other assets, resulting in a net gain of $3.3 million. During the Preceding Quarter, the Company sold or otherwise disposed of four helicopters and other assets, resulting in a net loss of $1.7 million.

Other expense, net of $3.4 million in the Current Quarter primarily resulted from foreign exchange losses of $4.1 million, partially offset by a favorable interest adjustment to the Company’s pension liability. Other expense, net of $7.7 million in the Preceding Quarter primarily resulted from foreign exchange losses of $9.2 million, partially offset by a favorable interest adjustment to the Company’s pension liability.

Income tax benefit was $4.2 million higher in the Current Quarter primarily due to the earnings mix of the Company’s global operations.

2023 Outlook – Affirmed

Please read the paragraph entitled “Forward Looking Statements Disclosure” below for further discussion regarding the risks and uncertainties as well as other important information regarding Bristow’s guidance. The following guidance also contains the non-GAAP financial measure of Adjusted EBITDA. Please read the section entitled “Non-GAAP Financial Measures” for further information.

Select financial targets for the calendar year commencing January 1, 2023 and ending December 31, 2023 (“2023”) are as follows:

 

Outlook by Line of Service

Offshore Energy Services:

We believe the offshore energy market has entered a multi-year growth cycle. Given our sector’s late cycle exposure and the lag effect involving new projects, this should become evident in our financial results in 2023. The guidance above will be weighted to the second half of 2023. A tighter equipment market, constrained global labor force and inflationary cost pressures should drive meaningful rate increases.

Europe region:

Norway’s run rate contribution will be larger in the last quarter of 2023 compared to the first nine months, upon commencement of a previously announced four-year SAR contract, which is expected to start in September 2023. A crowded competitive landscape will continue to be a challenge in our U.K. offshore energy business. A stronger USD relative to the GBP and NOK would adversely impact financial results in this region.

Americas region:

An expected increase in customer activity and the commencement of previously awarded contracts are expected to drive increased utilization in the U.S. Gulf of Mexico and Brazil. Guyana revenues declined due to the end of a customer contract at year-end 2022.

Africa region:

Increased market activity and the return of a significant customer contract continue to drive better results in Nigeria.

Government Services:

The full year impact of operations in the Falkland Islands, the Netherlands and the Dutch Caribbean will benefit financial results in 2023, as well as the U.K. SAR rate increase which took effect in the beginning of 2023. A stronger USD relative to the GBP would adversely impact financial results.

Fixed wing and other services:

We believe the financial performance of this business will be stronger in 2023 compared to 2022. We are seeing continued growth from charter revenues, expected to continue through 2023. Pilot shortages in Australia will remain a challenge.

Liquidity and Capital Allocation

As of March 31, 2023, the Company had $198.4 million of unrestricted cash and $76.5 million of remaining availability under its amended asset-based revolving credit facility (the “ABL Facility”) for total liquidity of $274.9 million. Borrowings under the amended ABL Facility are subject to certain conditions and requirements.

In January 2023, the Company entered into two thirteen-year secured equipment financings with National Westminster Bank Plc (“NatWest”) for aggregate proceeds of $169.5 million. The net proceeds from the financings were used to refinance the indebtedness of the Lombard Debt and will be used to provide additional financing to support the Company’s obligations under its SAR contracts in the U.K. The credit facilities have thirteen-year terms with repayment due in quarterly installments which commenced on March 31, 2023. The credit facilities bear interest at a rate equal to the Sterling Overnight Index Average (“SONIA”) plus 2.75% per annum. Bristow’s obligations under the NatWest Debt are secured by ten SAR helicopters.

In the Current Quarter, purchases of property and equipment were $31.5 million, of which 3.0 million were maintenance capital expenditures, and cash proceeds from dispositions of property and equipment were $23.4 million. In the Preceding Quarter, purchases of property and equipment were $31.5 million, of which $1.9 million were maintenance capital expenditures, and cash proceeds from dispositions of property and equipment were $1.3 million. See Adjusted Free Cash Flow Reconciliation for a reconciliation of Adjusted Free Cash Flow.

Conference Call

Management will conduct a conference call starting at 10:00 a.m. ET (9:00 a.m. CT) on Thursday, May 4, 2023, to review the results for the first quarter ended March 31, 2023. The conference call can be accessed using the following link:

Link to Access Earnings Call: https://www.veracast.com/webcasts/bristow/webcasts/VTOL1Q23.cfm

Replay

A replay will be available through May 26, 2023 by using the link above. A replay will also be available on the Company’s website at www.bristowgroup.com shortly after the call and will be accessible through May 26, 2023. The accompanying investor presentation will be available on May 4, 2023, 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/.