Bristow Group Reports Second Quarter Fiscal Year 2018 Results – iCrowdNewswire
 
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Nov 9, 2017 7:10 AM ET

Bristow Group Reports Second Quarter Fiscal Year 2018 Results

Disclosure NewswireTM

iCrowdNewswire - Nov 9, 2017

HOUSTON — Bristow Group Inc. (NYSE: BRS) today reported the following results for the three and six months ended September 30, 2017. All amounts shown are dollar amounts in thousands unless otherwise noted:

 

  

Three Months Ended
September 30,

   

Six Months Ended
September 30,

  
  

2017

 

2016

 

% Change

 

2017

 

2016

 

% Change

Operating revenue

 

$

357,992

  

$

343,662

  

4.2%

  

$

697,721

  

$

699,846

  

(0.3)%

 

Net loss attributable to Bristow Group

 

(31,209)

  

(29,797)

  

(4.7)%

  

(86,484)

  

(70,569)

  

(22.6)%

 

Diluted loss per share

 

(0.88)

  

(0.85)

  

(3.5)%

  

(2.45)

  

(2.02)

  

(21.3)%

 

Adjusted EBITDA (1)

 

32,378

  

25,399

  

27.5%

  

47,581

  

44,479

  

7.0%

 

Adjusted net loss (1)

 

(11,607)

  

(12,314)

  

5.7%

  

(40,746)

  

(24,322)

  

(67.5)%

 

Adjusted diluted loss per share (1)

 

(0.33)

  

(0.35)

  

5.7%

  

(1.16)

  

(0.69)

  

(68.1)%

 

Operating cash flow

 

15,845

  

43,623

  

(63.7)%

  

(35,334)

  

28,795

  

(222.7)%

 

Capital expenditures

 

11,764

  

80,803

  

(85.4)%

  

24,317

  

101,866

  

(76.1)%

 

Rent expense

 

57,224

  

51,955

  

10.1%

  

115,899

  

103,238

  

12.3%

 

 

  

September 30,
2017

 

June 30,
2017

 

March 31,
2017

 

% Change
June 30, 2017 to
September 30,
2017

 

% Change
March 31, 2017 to
September 30,
2017

Cash

 

$

97,343

  

$

78,879

  

$

96,656

  

23.4%

  

0.7%

 

Undrawn borrowing capacity on Revolving Credit Facility

 

292,039

  

214,129

  

260,320

  

36.4%

  

12.2%

 

Total liquidity

 

$

389,382

  

$

293,008

  

$

356,976

  

32.9%

  

9.1%

 

 

_____________

(1)

A full reconciliation of non-GAAP financial measurements is included at the end of this news release.

“This second quarter’s financial performance demonstrates the success of the fiscal 2018 improvements with notable accomplishments including OEM cost recoveries and capex deferrals that provide a significant strengthening of our liquidity position, annual EBITDA guidance improvement and positive free cash flow in the quarter,” said Jonathan Baliff, President and Chief Executive Officer of Bristow Group. “Our better than expected EBITDA was a result of higher revenue from increased flying activity across all regions, while also benefiting from the operating leverage created by our lower cost hub structure.”

BUSINESS AND FINANCIAL HIGHLIGHTS

  • In light of the better than expected financial performance in the first half of fiscal 2018, we are raising our fiscal 2018 adjusted EBITDA guidance to $55 million – $85 million from $15 million – $50 million provided in August 2017but retain a cautious outlook for the remainder of fiscal 2018 due to the short-term nature and unpredictability of the work driving the improved performance in the September 2017 quarter.
  • We have an agreement with an original equipment manufacturer and a letter of understanding with another to recover approximately $130 million in fiscal 2018 related to ongoing aircraft issues and to defer approximately $190 million of aircraft capital expenditures into fiscal 2020 and beyond.
  • In early November 2017, we sold Bristow Academy as part of our aggressive portfolio management efforts to improve returns, liquidity and credit quality.
  • We had $389.4 million of total liquidity as of September 30, 2017, an increase of approximately $96 million in the September 2017 quarter primarily due to the funding of our $230 million credit agreement. We now expect ending fiscal 2018 liquidity to be in the range of $410 million to $450 million, an increase of $185 million over our August 2017 guidance as a result of the agreement and letter of understanding we have in place with original equipment manufacturers, and other portfolio management efforts.

“Bristow is delivering on our fiscal 2018 priorities of safety improvement, cost efficiencies, portfolio management and increased revenue, and I am incredibly proud of our team members who are delivering safety and efficiency for our clients every day,” said Jonathan Baliff. “While we flew safely, flew more, and flew more efficiently in the first half of the fiscal year, the remainder of fiscal 2018 will remain challenging due to continued oversupply of aircraft and less visibility into our clients’ demand for aviation services. Our lower cost structure is clearly showing progress, but we must continue to strive to meet the goals of Target Zero safety and our fiscal 2018 priorities as we more effectively compete and ensure our clients’ success in the fourth year of this historic oil and gas downturn.”

Operating revenue from external clients by line of service was as follows:

 

 

Three Months Ended
September 30,

  
 

2017

 

2016

 

% Change

      
 

(in thousands, except percentages)

Oil and gas services

$

243,754

  

$

238,233

  

2.3%

 

Fixed wing services

56,721

  

51,972

  

9.1%

 

U.K. SAR services

56,060

  

50,850

  

10.2%

 

Corporate and other

1,457

  

2,607

  

(44.1)%

 

Total operating revenue

$

357,992

  

$

343,662

  

4.2%

 

The year-over-year increase in revenue was primarily driven by an increase in operating revenue for our oil and gas services in our Europe Caspian, Asia Pacific and Americas regions due to an increase in activity as well as an increase in U.K. SAR services revenue due to additional bases coming online in fiscal years 2017 and 2018. Additionally, our fixed wing services in our Asia PacificAfrica and Europe Caspian regions have contributed to the increase in operating revenue. The activity level increase across our business was driven mostly by short term contracts, ad hoc and increased flying on existing contracts as we are beginning to see stability in certain markets, especially in the North Sea off of Norway and in the shelf in the U.S. Gulf of Mexico. However, these activity levels remain less predictable and may be offset by decreased activity on certain existing contracts over the second half of the fiscal year.

The year-over-year change in net loss and diluted loss per share was primarily driven by higher income tax, rent and interest expense and a higher loss on disposal of assets in the September 2017 quarter. These unfavorable changes were partially offset by higher revenue in the September 2017 quarter discussed above and impairment charges on inventory recorded in the September 2016 quarter that did not recur in the September 2017 quarter.

The GAAP net loss and diluted loss per share for the September 2017 quarter included the following special items:

  • A loss on disposal of assets of $8.5 million ($14.1 million net of tax) primarily related to $8.2 million for impairment charges on assets held for sale (including $6.5 million impairment related to the Bristow Academy disposal group),
  • Organizational restructuring costs of $2.7 million ($2.2 million net of tax) included in direct costs and general and administrative expense, which includes severance expense of $2.4 million related to separation programs across our global organization designed to increase efficiency and reduce costs and other restructuring costs of $0.3 million, and
  • Tax items of $3.2 million that include non-cash adjustments related to the ongoing impact of valuation of deferred tax assets of $2.5 million and a one-time non-cash tax effect from repositioning of certain aircraft from one tax jurisdiction to another related to recent financing transactions resulting in additional income tax expense of $0.7 million.

The September 2016 quarter was impacted by similar items as reflected in the table at the end of this release.

Excluding the effect of these special items, the year-over-year change in adjusted net loss, diluted loss per share and adjusted EBITDA was primarily driven by the increase in oil and gas, fixed wing and U.K. SAR revenue, and ongoing cost management efforts across our business.

LIQUIDITY AND FINANCIAL FLEXIBILITY

Don Miller, Senior Vice President and Chief Financial Officer, commented, “Our liquidity improved by approximately $96 million to $389.4 million at the end of the September quarter due to the funding of our $230 million credit agreement and the operating cash flow of $15.8 million generated during the quarter. We are raising our expected ending total liquidity as of March 31, 2018 by $185 million to between $410 million and $450 million, as we continue to work with our OEMs to recover costs and minimize our capital expenditures and as we take actions to reduce cost, manage working capital and leverage our existing assets.”

“The $130 million cost recovery and deferral of approximately $190 million in oil and gas aircraft capital expenditures into fiscal 2020 and beyond, combined with our focus on addressing our debt maturities, are all part of our commitment to improving liquidity as we navigate through this challenging but somewhat improving market environment.”

“We have made significant progress on our four fiscal 2018 priorities of safety improvement; efficiency improvement and cost reductions; optimization of our portfolio and our fleet including reducing or deferring capital expenditures; and revenue growth as we better serve our clients in our Europe and Americas Hubs.”

 

REGIONAL PERFORMANCE

 

Europe Caspian

 
  

Three Months Ended
September 30,

  
  

2017

 

2016

 

% Change

       
  

(in thousands, except percentages)

Operating revenue

 

$

196,595

  

$

186,098

  

5.6%

 

Operating income

 

$

9,891

  

$

5,741

  

72.3%

 

Operating margin

 

5.0%

  

3.1%

  

61.3%

 

Adjusted EBITDA

 

$

23,950

  

$

16,551

  

44.7%

 

Adjusted EBITDA margin

 

12.2%

  

8.9%

  

37.1%

 

Rent expense

 

$

36,851

  

$

33,604

  

9.7%

 

The increase in operating revenue from the September 2016 quarter to the September 2017 quarter was primarily driven by an increase in Norway primarily due to increases in activity and short-term contracts and an increase from the start-up of U.K. SAR bases since the September 2016 quarter. Partially offsetting these increases was a decrease in U.K. oil and gas revenue. Eastern Airways contributed $30.5 million and $29.8 million in operating revenue and $0.2 million and $0.3 million in adjusted EBITDA for the September 2017 quarter and September 2016 quarter, respectively.

Operating income, operating margin, adjusted EBITDA and adjusted EBITDA margin increased from the September 2016 quarter primarily due to the year-over-year increase in operating revenue, but also due to ongoing cost reduction initiatives and less of a negative impact from foreign currency exchange rate changes. These benefits were partially offset by increased rent expense year-over-year.

A substantial portion of our operations in the Europe Caspian region are contracted in the British pound sterling, which depreciated significantly against the U.S. dollar at the end of the September 2016 quarter as a result of Brexit. We recorded a foreign exchange gain of $1.9 million in the September 2017 quarter and a foreign exchange loss of $1.3 million in the September 2016 quarter from the revaluation of assets and liabilities on British pound sterling functional currency entities as of September 30, 2017 and 2016, respectively, which is recorded in other income (expense), net and included in adjusted EBITDA. Net of the translation and revaluation impacts, adjusted EBITDA was negatively impacted by $0.9 million and $4.7 million resulting from the change in exchange rates during the September 2017 quarter and September 2016 quarter, respectively. A further weakening or strengthening of the British pound sterling could result in additional foreign exchange volatility in future quarters.

 

Africa

 
  

Three Months Ended
September 30,

  
  

2017

 

2016

 

% Change

       
  

(in thousands, except percentages)

Operating revenue

 

$

48,627

  

$

50,344

  

(3.4)%

 

Operating income

 

$

7,835

  

$

7,942

  

(1.3)%

 

Operating margin

 

16.1%

  

15.8%

  

1.9%

 

Adjusted EBITDA

 

$

12,617

  

$

15,566

  

(18.9)%

 

Adjusted EBITDA margin

 

25.9%

  

30.9%

  

(16.2)%

 

Rent expense

 

$

2,176

  

$

2,066

  

5.3%

 

Operating revenue for Africa decreased in the September 2017 quarter due to an overall decrease in activity driven by the downturn of the oil and gas industry compared to the September 2016 quarter. Activity declined with certain clients and certain contracts ending, reducing revenue, which was only partially offset by an increase in activity with other clients increasing revenue. Additionally, fixed wing services in Africa generated $1.6 million and $0.7 million of operating revenue for the September 2017 quarter and September 2016 quarter, respectively.

Operating income, adjusted EBITDA and adjusted EBITDA margin decreased in the September 2017 quarter primarily due to the decrease in revenue discussed above, partially offset by a decline in direct costs (including a decrease in salaries and benefits). During the September 2017 and September 2016 quarters, we recorded $0.2 million and $4.1 million, respectively, in severance expense resulting from voluntary and involuntary separation programs as part of our organizational restructuring, which is excluded from adjusted EBITDA and adjusted EBITDA margin. The year-over-year devaluation of the Nigerian naira also benefited our results by $1.5 million compared to the September 2016 quarter as expenses denominated in naira translated into less U.S. dollars for reporting purposes.

 

Americas

 
  

Three Months Ended
September 30,

  
  

2017

 

2016

 

% Change

       
  

(in thousands, except percentages)

Operating revenue

 

$

60,756

  

$

56,800

  

7.0%

 

Earnings from unconsolidated affiliates

 

$

2,150

  

$

260

  

*

 

Operating income

 

$

7,483

  

$

2,643

  

183.1%

 

Operating margin

 

12.3%

  

4.7%

  

161.7%

 

Adjusted EBITDA

 

$

14,565

  

$

10,242

  

42.2%

 

Adjusted EBITDA margin

 

24.0%

  

18.0%

  

33.3%

 

Rent expense

 

$

5,191

  

$

5,058

  

2.6%

 

 

___________

 * percentage change too large to be meaningful or not applicable.

Operating revenue increased in the September 2017 quarter primarily due to an increase in activity in our U.S. Gulf of Mexico oil and gas operations, additional revenue from the search and rescue consortium in the U.S. Gulf of Mexico and additional revenue in Canada, partially offset by a decrease of operating revenue from Brazil due to no aircraft being leased to Líder in the September 2017 quarter.

Earnings from unconsolidated affiliates, net of losses, increased $1.9 million primarily due to an increase in earnings from our investment in Líder in Brazil related to a favorable change in exchange rates which increased our earnings from our investment in Líder by $0.3 million in the September 2017 quarter and decreased our earnings from our investment in Líder by $1.3 million in the September 2016 quarter.

The increases in operating income, operating margin, adjusted EBITDA and adjusted EBITDA margin were driven by the increase in revenue and earnings from unconsolidated affiliates discussed above.

 

Asia Pacific

 
  

Three Months Ended
September 30,

  
  

2017

 

2016

 

% Change

       
  

(in thousands, except percentages)

Operating revenue

 

$

53,990

  

$

50,820

  

6.2%

 

Operating loss

 

$

(5,903)

  

$

(9,575)

  

38.3%

 

Operating margin

 

(10.9)%

  

(18.8)%

  

42.0%

 

Adjusted EBITDA

 

$

1,425

  

$

(2,363)

  

160.3%

 

Adjusted EBITDA margin

 

2.6%

  

(4.6)%

  

156.5%

 

Rent expense

 

$

10,595

  

$

9,272

  

14.3%

 

Operating revenue increased in the September 2017 quarter primarily due to an increase from our fixed-wing operations. Airnorth contributed $24.6 million and $21.5 million in operating revenue and $5.6 million and $3.2 million in adjusted EBITDA for the September 2017 quarter and September 2016 quarter, respectively.

Operating income, operating margin, adjusted EBTIDA and adjusted EBITDA margin increased primarily due to the increase in revenue discussed above and decreased maintenance expense.

During the September 2017 and September 2016 quarters, we recorded $1.4 million and $1.8 million in severance expense related to organizational restructuring efforts, respectively. The severance expense is not included in adjusted EBITDA or adjusted EBITDA margin for the September 2017 quarter and September 2016 quarter.

 

Corporate and other

 
  

Three Months Ended
September 30,

  
  

2017

 

2016

 

% Change

       
  

(in thousands, except percentages)

Operating revenue

 

$

1,457

  

$

2,641

  

(44.8)%

 

Operating loss

 

$

(23,697)

  

$

(31,447)

  

24.6%

 

Adjusted EBITDA

 

$

(20,179)

  

$

(14,597)

  

(38.2)%

 

Rent expense

 

$

2,411

  

$

1,955

  

23.3%

 

Operating revenue decreased in the September 2017 quarter primarily due to a decrease in part sales and a decline in Bristow Academy revenue.

Operating loss was reduced from the September 2016 quarter as a result of reduced organizational restructuring cost and the inclusion of $7.6 million of inventory impairment charges in the September 2016 quarter. Adjusted EBITDA decreased primarily due to foreign currency transaction losses of $1.2 million recorded in the September 2017 quarter versus foreign currency transaction gains of $2.8 million in the September 2016 quarter.

During the September 2017 and September 2016 quarters, we recorded $1.1 million and $3.8 million related to organizational restructuring costs, respectively, which along with the $7.6 million of inventory impairment charges in the September 2016 quarter, are excluded from adjusted EBITDA.

GUIDANCE

Guidance for selected financial measures is included in the tables that follow.

BRISTOW ACADEMY SALE

On November 1, 2017, we sold our 100% interest in Bristow Academy, as we continue to execute on our priority to optimize our business portfolio to improve its competitive position during the market downturn. The sales price will be a minimum of $1.5 million to be received over a maximum of four years with potential additional consideration based on Bristow Academy’s financial performance.

The sale includes Bristow Academy’s entire operation, including training facilities, helicopters and related personnel, at Titusville, Florida, and Minden, Nevada. The sale does not impact recurrent training of Bristow flight crews for ongoing commercial operations. Initial type rating and recurrent pilot training for commercial operations will continue at Bristow’s flight-simulator training facilities located in Aberdeen, Scotland, and New Iberia, Louisiana, supplemented with the use of other globally located training centers.

The sale of this non-core business resulted in an impairment of assets of $6.5 million, included in loss on disposal of assets on our condensed consolidated statement of operations, for the three and six months ended September 30, 2017.

With the completion of this sale and similar dispositions of non-core assets in prior fiscal years, we have streamlined our business to focus on our core oil and gas, SAR and fixed wing businesses globally. No significant non-core assets outside of these key areas of concentration remain upon completion of this sale.

CONFERENCE CALL

Management will conduct a conference call starting at 10:00 a.m. ET (9:00 a.m. CT) on Thursday, November 9, 2017 to review financial results for the fiscal year 2018 second quarter ended September 30, 2017.  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:

  • Visit Bristow Group’s investor relations Web page at www.bristowgroup.com
  • Live: Click on the link for “Bristow Group Fiscal 2018 Second 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

Via Telephone outside the U.S.:

  • Live: Dial 1-412-902-0030

ABOUT BRISTOW GROUP INC.

Bristow Group Inc. is the leading global industrial aviation services provider offering helicopter transportation, search and rescue (SAR) and aircraft support services, including maintenance and training, to government and civil organizations worldwide. Bristow has major 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 AustraliaBrazilCanadaRussia and Trinidad. Bristow provides SAR services to the private sector worldwide and to the public sector for all of the U.K. on behalf of the Maritime and Coastguard Agency. For more information, visit bristowgroup.com.

FORWARD-LOOKING STATEMENTS DISCLOSURE

Statements contained in this news release that state the Company’s or management’s intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements. These forward-looking statements include statements regarding earnings guidance, expected contract revenue, capital deployment strategy, operational and capital performance, expected cost management activities, original equipment manufacturer recoveries, expected capital expenditure deferrals, shareholder return, liquidity, market and industry conditions. It is important to note that the Company’s actual results could differ materially from those projected in such forward-looking statements. Risks and uncertainties include without limitation:  fluctuations in the demand for our services; fluctuations in worldwide prices of and supply and demand for oil and natural gas; fluctuations in levels of oil and natural gas production, exploration and development activities; the impact of competition; actions by clients and suppliers; the risk of reductions in spending on industrial aviation services by governmental agencies; changes in tax and other laws and regulations; changes in foreign exchange rates and controls; risks associated with international operations; operating risks inherent in our business, including the possibility of declining safety performance; general economic conditions including the capital and credit markets; our ability to obtain financing; the risk of grounding of segments of our fleet for extended periods of time or indefinitely; our ability to re-deploy our aircraft to regions with greater demand; our ability to acquire additional aircraft and dispose of older aircraft through sales into the aftermarket; the possibility that we do not achieve the anticipated benefit of our fleet investment program; availability of employees; and political instability, war or acts of terrorism in any of the countries where we operate. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the Company’s SEC filings, including but not limited to the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2017 and annual report on Form 10-K for the fiscal year ended March 31, 2017. Bristow Group Inc. disclaims any intention or obligation to revise any forward-looking statements, including financial estimates, whether as a result of new information, future events or otherwise.

Linda McNeill 
Investor Relations 
(713) 267-7622

(financial tables follow)

 

BRISTOW GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts and percentages)

(Unaudited)

 
 

Three Months Ended
September 30,

 

Six Months Ended
September 30,

 

2017

 

2016

 

2017

 

2016

        
  

Gross revenue:

       

Operating revenue from non-affiliates

$

340,593

  

$

325,315

  

$

662,711

  

$

663,990

 

Operating revenue from affiliates

17,399

  

18,347

  

35,010

  

35,856

 

Reimbursable revenue from non-affiliates

15,684

  

13,805

  

28,064

  

27,019

 
 

373,676

  

357,467

  

725,785

  

726,865

 

Operating expense:

       

Direct cost

284,713

  

281,630

  

570,264

  

571,173

 

Reimbursable expense

15,414

  

13,276

  

27,640

  

25,890

 

Depreciation and amortization

31,381

  

28,592

  

62,437

  

63,286

 

General and administrative

48,622

  

51,274

  

95,329

  

103,869

 
 

380,130

  

374,772

  

755,670

  

764,218

 
        

Loss on impairment

  

(7,572)

  

(1,192)

  

(7,572)

 

Loss on disposal of assets

(8,526)

  

(2,186)

  

(7,827)

  

(12,203)

 

Earnings from unconsolidated affiliates, net of losses

2,063

  

181

  

1,398

  

4,011

 

Operating loss

(12,917)

  

(26,882)

  

(37,506)

  

(53,117)

 
        

Interest expense, net

(18,563)

  

(11,468)

  

(34,584)

  

(22,354)

 

Other income (expense), net

2,558

  

3,003

  

913

  

(3,186)

 

Loss before provision for income taxes

(28,922)

  

(35,347)

  

(71,177)

  

(78,657)

 

Benefit (provision) for income taxes

(2,474)

  

5,240

  

(15,965)

  

7,478

 

Net loss

(31,396)

  

(30,107)

  

(87,142)

  

(71,179)

 

Net loss attributable to noncontrolling interests

187

  

310

  

658

  

610

 

Net loss attributable to Bristow Group

$

(31,209)

  

$

(29,797)

  

$

(86,484)

  

$

(70,569)

 
        

Loss per common share:

       

Basic

$

(0.88)

  

$

(0.85)

  

$

(2.45)

  

$

(2.02)

 

Diluted

$

(0.88)

  

$

(0.85)

  

$

(2.45)

  

$

(2.02)

 
        

Non-GAAP measures:

       

Adjusted EBITDA

$

32,378

  

$

25,399

  

$

47,581

  

$

44,479

 

Adjusted EBITDA margin

9.0

%

 

7.4

%

 

6.8

%

 

6.4

%

Adjusted net loss

$

(11,607)

  

$

(12,314)

  

$

(40,746)

  

$

(24,322)

 

Adjusted diluted loss per share

$

(0.33)

  

$

(0.35)

  

$

(1.16)

  

$

(0.69)

 

 

BRISTOW GROUP INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 
  

September 30,
2017

 

March 31,
2017

ASSETS

   

Current assets:

    

Cash and cash equivalents

 

$

97,343

  

$

96,656

 

Accounts receivable from non-affiliates

 

225,940

  

198,129

 

Accounts receivable from affiliates

 

11,932

  

8,786

 

Inventories

 

131,616

  

124,911

 

Assets held for sale

 

34,934

  

38,246

 

Prepaid expenses and other current assets

 

44,089

  

41,143

 

Total current assets

 

545,854

  

507,871

 

Investment in unconsolidated affiliates

 

211,499

  

210,162

 

Property and equipment – at cost:

    

Land and buildings

 

243,355

  

231,448

 

Aircraft and equipment

 

2,617,835

  

2,622,701

 
  

2,861,190

  

2,854,149

 

Less – Accumulated depreciation and amortization

 

(664,450)

  

(599,785)

 
  

2,196,740

  

2,254,364

 

Goodwill

 

20,364

  

19,798

 

Other assets

 

114,066

  

121,652

 

Total assets

 

$

3,088,523

  

$

3,113,847

 
     

LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS’ INVESTMENT

Current liabilities:

    

Accounts payable

 

$

97,762

  

$

98,215

 

Accrued wages, benefits and related taxes

 

51,390

  

59,077

 

Income taxes payable

 

14,064

  

15,145

 

Other accrued taxes

 

9,610

  

9,611

 

Deferred revenue

 

21,889

  

19,911

 

Accrued maintenance and repairs

 

29,651

  

22,914

 

Accrued interest

 

12,456

  

12,909

 

Other accrued liabilities

 

55,837

  

46,679

 

Deferred taxes

 

  

830

 

Short-term borrowings and current maturities of long-term debt

 

113,519

  

131,063

 

Total current liabilities

 

406,178

  

416,354

 

Long-term debt, less current maturities

 

1,198,587

  

1,150,956

 

Accrued pension liabilities

 

57,928

  

61,647

 

Other liabilities and deferred credits

 

31,873

  

28,899

 

Deferred taxes

 

154,927

  

154,873

 

Redeemable noncontrolling interest

 

6,002

  

6,886

 
     

Stockholders’ investment:

    

Common stock

 

381

  

379

 

Additional paid-in capital

 

815,990

  

809,995

 

Retained earnings

 

902,957

  

991,906

 

Accumulated other comprehensive loss

 

(307,279)

  

(328,277)

 

Treasury shares

 

(184,796)

  

(184,796)

 

Total Bristow Group stockholders’ investment

 

1,227,253

  

1,289,207

 

Noncontrolling interests

 

5,775

  

5,025

 

Total stockholders’ investment

 

1,233,028

  

1,294,232

 

Total liabilities, redeemable noncontrolling interest and stockholders’ investment

 

$

3,088,523

  

$

3,113,847

 

 

BRISTOW GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 
  

Six Months Ended
September 30,

  

2017

 

2016

Cash flows from operating activities:

    

Net loss

 

$

(87,142)

  

$

(71,179)

 

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

    

Depreciation and amortization

 

62,437

  

63,286

 

Deferred income taxes

 

1,197

  

(20,060)

 

Write-off of deferred financing fees

 

621

  

 

Discount amortization on long-term debt

 

101

  

989

 

Loss on disposal of assets

 

7,827

  

12,203

 

Loss on impairment

 

1,192

  

7,572

 

Stock-based compensation

 

6,542

  

6,244

 

Equity in earnings from unconsolidated affiliates in excess of dividends received

 

(1,190)

  

(3,528)

 

Increase (decrease) in cash resulting from changes in:

    

Accounts receivable

 

(25,222)

  

24,395

 

Inventories

 

(1,848)

  

(797)

 

Prepaid expenses and other assets

 

7,320

  

(4,910)

 

Accounts payable

 

(4,581)

  

18,169

 

Accrued liabilities

 

(2,635)

  

1,939

 

Other liabilities and deferred credits

 

47

  

(5,528)

 

Net cash provided by (used in) operating activities

 

(35,334)

  

28,795

 

Cash flows from investing activities:

    

Capital expenditures

 

(24,317)

  

(101,866)

 

Proceeds from asset dispositions

 

42,244

  

11,819

 

Net cash provided by (used in) investing activities

 

17,927

  

(90,047)

 

Cash flows from financing activities:

    

Proceeds from borrowings

 

338,018

  

195,954

 

Debt issuance costs

 

(6,695)

  

(2,925)

 

Repayment of debt

 

(318,130)

  

(120,966)

 

Partial prepayment of put/call obligation

 

(23)

  

(25)

 

Payment of contingent consideration

 

  

(10,000)

 

Common stock dividends paid

 

(2,465)

  

(4,910)

 

Repurchases for tax withholdings on vesting of equity awards

 

(548)

  

(757)

 

Net cash provided by financing activities

 

10,157

  

56,371

 

Effect of exchange rate changes on cash and cash equivalents

 

7,937

  

1,239

 

Net increase (decrease) in cash and cash equivalents

 

687

  

(3,642)

 

Cash and cash equivalents at beginning of period

 

96,656

  

104,310

 

Cash and cash equivalents at end of period

 

$

97,343

  

$

100,668

 

 

BRISTOW GROUP INC. AND SUBSIDIARIES

SELECTED OPERATING DATA

(In thousands, except flight hours and percentages)

(Unaudited)

 
  

Three Months Ended
September 30,

 

Six Months Ended
September 30,

  

2017

 

2016

 

2017

 

2016

Flight hours (excluding Bristow Academy and unconsolidated affiliates):

        

Europe Caspian

 

23,706

  

22,638

  

45,853

  

44,782

 

Africa

 

7,621

  

7,652

  

15,144

  

15,724

 

Americas

 

8,164

  

5,957

  

15,856

  

12,167

 

Asia Pacific

 

6,958

  

6,357

  

13,319

  

13,068

 

Consolidated

 

46,449

  

42,604

  

90,172

  

85,741

 

Operating revenue:

        

Europe Caspian

 

$

196,595

  

$

186,098

  

$

381,073

  

$

375,226

 

Africa

 

48,627

  

50,344

  

98,608

  

103,468

 

Americas

 

60,756

  

56,800

  

118,539

  

115,554

 

Asia Pacific

 

53,990

  

50,820

  

103,117

  

106,052

 

Corporate and other

 

1,457

  

2,641

  

3,169

  

5,818

 

Intra-region eliminations

 

(3,433)

  

(3,041)

  

(6,785)

  

(6,272)

 

Consolidated

 

$

357,992

  

$

343,662

  

$

697,721

  

$

699,846

 

Consolidated operating loss:

        

Europe Caspian

 

$

9,891

  

$

5,741

  

$

14,298

  

$

18,771

 

Africa

 

7,835

  

7,942

  

17,883

  

9,513

 

Americas

 

7,483

  

2,643

  

6,227

  

3,564

 

Asia Pacific

 

(5,903)

  

(9,575)

  

(18,433)

  

(15,468)

 

Corporate and other

 

(23,697)

  

(31,447)

  

(49,654)

  

(57,294)

 

Loss on disposal of assets

 

(8,526)

  

(2,186)

  

(7,827)

  

(12,203)

 

Consolidated

 

$

(12,917)

  

$

(26,882)

  

$

(37,506)

  

$

(53,117)

 

Operating margin:

        

Europe Caspian

 

5.0

%

 

3.1

%

 

3.8

%

 

5.0

%

Africa

 

16.1

%

 

15.8

%

 

18.1

%

 

9.2

%

Americas

 

12.3

%

 

4.7

%

 

5.3

%

 

3.1

%

Asia Pacific

 

(10.9)

%

 

(18.8)

%

 

(17.9)

%

 

(14.6)

%

Consolidated

 

(3.6)

%

 

(7.8)

%

 

(5.4)

%

 

(7.6)

%

Adjusted EBITDA:

        

Europe Caspian

 

$

23,950

  

$

16,551

  

$

40,102

  

$

34,150

 

Africa

 

12,617

  

15,566

  

26,000

  

22,338

 

Americas

 

14,565

  

10,242

  

20,741

  

24,278

 

Asia Pacific

 

1,425

  

(2,363)

  

(4,295)

  

(5,486)

 

Corporate and other

 

(20,179)

  

(14,597)

  

(34,967)

  

(30,801)

 

Consolidated

 

$

32,378

  

$

25,399

  

$

47,581

  

$

44,479

 

Adjusted EBITDA margin:

        

Europe Caspian

 

12.2

%

 

8.9

%

 

10.5

%

 

9.1

%

Africa

 

25.9

%

 

30.9

%

 

26.4

%

 

21.6

%

Americas

 

24.0

%

 

18.0

%

 

17.5

%

 

21.0

%

Asia Pacific

 

2.6

%

 

(4.6)

%

 

(4.2)

%

 

(5.2)

%

Consolidated

 

9.0

%

 

7.4

%

 

6.8

%

 

6.4

%

             
             
  

Three Months Ended
September 30,

 

Six Months Ended
September 30,

  

2017

 

2016

 

2017

 

2016

Depreciation and amortization:

        

Europe Caspian

 

$

12,196

  

$

11,220

  

$

24,018

  

$

22,409

 

Africa

 

3,590

  

3,220

  

6,666

  

8,673

 

Americas

 

6,998

  

7,228

  

13,997

  

18,609

 

Asia Pacific

 

5,058

  

4,377

  

10,868

  

8,613

 

Corporate and other

 

3,539

  

2,547

  

6,888

  

4,982

 

Consolidated

 

$

31,381

  

$

28,592

  

$

62,437

  

$

63,286

 

Rent expense:

        

Europe Caspian

 

$

36,851

  

$

33,604

  

$

73,304

  

$

65,892

 

Africa

 

2,176

  

2,066

  

4,376

  

4,334

 

Americas

 

5,191

  

5,058

  

12,185

  

10,620

 

Asia Pacific

 

10,595

  

9,272

  

21,549

  

18,556

 

Corporate and other

 

2,411

  

1,955

  

4,485

  

3,836

 

Consolidated

 

$

57,224

  

$

51,955

  

$

115,899

  

$

103,238

 

 

BRISTOW GROUP INC. AND SUBSIDIARIES

AIRCRAFT COUNT

As of September 30, 2017

(Unaudited)

 
  

Percentage
of Current
Period
Operating
Revenue

 

Aircraft in Consolidated Fleet

    
  

Helicopters

 

Fixed
Wing

   

Unconsolidated
Affiliates (3)

  
  

Small

 

Medium

 

Large

 

Training

Total (1)(2)

 

Total

Europe Caspian

 

54

%

 

  

16

  

80

  

  

32

  

128

  

  

128

 

Africa

 

14

%

 

9

  

32

  

5

  

  

5

  

51

  

48

  

99

 

Americas

 

17

%

 

14

  

42

  

16

  

  

  

72

  

68

  

140

 

Asia Pacific

 

15

%

 

  

10

  

23

  

  

14

  

47

  

  

47

 

Corporate and other

 

%

 

  

  

  

45

  

1

  

46

  

  

46

 

Total

 

100

%

 

23

  

100

  

124

  

45

  

52

  

344

  

116

  

460

 

Aircraft not currently in fleet: (4)

                  

On order

   

  

  

27

  

  

  

27

     

Under option

   

  

  

4

  

  

  

4

     

 

_________

(1)

Eastern Airways operates a total of 32 fixed wing aircraft in the Europe Caspian region and provides technical support for three fixed wing aircraft in the Africa region. Additionally, Airnorth operates a total of 14 fixed wing aircraft, which are included in the Asia Pacific region.

(2)

Includes 15 aircraft held for sale and 120 leased aircraft as follows:

  

 

  

Held for Sale Aircraft in Consolidated Fleet

  

Helicopters

  
  

Small

 

Medium

 

Large

 

Training(7)

 

Fixed
Wing

 

Total

Europe Caspian

 

  

2

  

  

  

  

2

 

Africa

 

  

5

  

  

  

  

5

 

Americas

 

  

5

  

  

  

  

5

 

Asia Pacific

 

  

  

  

  

1

  

1

 

Corporate and other

 

  

  

  

2

  

  

2

 

Total

 

  

12

  

  

2

  

1

  

15

 
             
  

Leased Aircraft in Consolidated Fleet

  

Helicopters

    
  

Small

 

Medium

 

Large

 

Training

 

Fixed
Wing

 

Total

Europe Caspian

 

  

6

  

41

  

  

14

  

61

 

Africa

 

  

1

  

2

  

  

2

  

5

 

Americas

 

1

  

14

  

6

  

  

  

21

 

Asia Pacific

 

  

3

  

9

  

  

4

  

16

 

Corporate and other

 

  

  

  

17

  

  

17

 

Total

 

1

  

24

  

58

  

17

  

20

  

120

 

 

 

(3)

The average age of our fleet, excluding training aircraft, was approximately nine years as of September 30, 2017.

(4)

The 116 aircraft operated by our unconsolidated affiliates do not include those aircraft leased from us. Includes 44 helicopters (primarily medium) and 24 fixed wing aircraft owned and managed by Líder Táxi Aéreo S.A. (“Líder”), our unconsolidated affiliate in Brazil included in the Americas region, and 41 helicopters and seven fixed wing aircraft owned by Petroleum Air Services (“PAS”), our unconsolidated affiliate in Egypt included in the Africa region.

(5)

The aircraft presented for Corporate and other represent the aircraft operated by Bristow Academy as of September 30, 2017. On November 1, 2017, we sold Bristow Academy including all of their aircraft.

(6)

This table does not reflect aircraft which our unconsolidated affiliates may have on order or under option.

(7)

This table does not include the Bristow Academy aircraft as held for sale which are part of the Bristow Academy disposal group.

 

BRISTOW GROUP INC. AND SUBSIDIARIES

FY18 GUIDANCE

 

FY18 guidance as of September 30, 2017 (1)

 

Operating revenue 2

Adjusted EBITDA2,3

Rent2

Oil and gas

~$875M – $975M 4

~$0 – $20M 4

~$150M – $160M 4

U.K. SAR

~$215M – $230M

~$45M – $55M 4

~$45M – $50M

Eastern

~$105M – $115M

~$0 – $5M

~$10M – $12M

Airnorth

~$80M – $90M

~$5M – $10M

~$10M – $12M

Total

~$1.3B – $1.4B

~$55M – $85M 4

~$220M – $225M 4

    

G&A expense

~$170M – $190M

  

Depreciation expense

~$120M – $130M

  

Total aircraft rent 4, 5

~$195M – $200M

  

Total non-aircraft rent 5

~$25M – $30M

  

Interest expense 4

~$60M – $70M

  

Non-aircraft capex 4

~$40M annually

  

 

__________

(1)

FY18 guidance assumes FX rates as of September 30, 2017.

(2)

Operating revenue, EBITDA and rent for oil and gas includes corporate and other revenue and the impact of corporate overhead expenses.

(3)

EBITDA for U.K. SAR and fixed wing (Eastern/Airnorth) excludes corporate overhead allocations consistent with financial reporting. EBITDA is a non-GAAP measure of which the most comparable GAAP measure is net income (loss). We have not provided a reconciliation of this non-GAAP forward-looking information to GAAP. The most comparable GAAP measure to EBITDA is net income (loss) which is not calculated at this lower level of our business as we do not allocate certain costs, including corporate and other overhead costs, interest expense and income taxes within our accounting system. Providing this data would require unreasonable efforts in the form of allocations of other costs across the organization.

(4)

Updated from guidance provided in August 2017.

(5)

Total aircraft rent and total non-aircraft rent are inclusive of the respective components of rent expense for U.K. SAR, Eastern, Airnorth plus oil and gas.

 

BRISTOW GROUP INC. AND SUBSIDIARIES

GAAP RECONCILIATIONS

 

These financial measures have not been prepared in accordance with generally accepted accounting principles (“GAAP”) and have not been audited or reviewed by our independent auditor.  These financial measures are therefore considered non-GAAP financial measures.  A description of the adjustments to and reconciliations of these non-GAAP financial measures to the most comparable GAAP financial measures is as follows:

 
  

Three Months Ended
September 30,

 

Six Months Ended
September 30,

  

2017

 

2016

 

2017

 

2016

         
  

(In thousands, except
per share amounts)

Net loss

 

$

(31,396)

  

$

(30,107)

  

$

(87,142)

  

$

(71,179)

 

Loss on disposal of assets

 

8,526

  

2,186

  

7,827

  

12,203

 

Special items

 

2,676

  

18,265

  

13,542

  

24,824

 

Depreciation and amortization

 

31,381

  

28,592

  

62,437

  

63,286

 

Interest expense

 

18,717

  

11,703

  

34,952

  

22,823

 

Provision (benefit) for income taxes

 

2,474

  

(5,240)

  

15,965

  

(7,478)

 

Adjusted EBITDA

 

$

32,378

  

$

25,399

  

$

47,581

  

$

44,479

 
         

(Provision) benefit for income taxes

 

$

(2,474)

  

$

5,240

  

$

(15,965)

  

$

7,478

 

Tax expense (benefit) on loss on disposal of assets

 

5,618

  

(699)

  

10,191

  

(3,905)

 

Tax provision on special items

 

2,782

  

(3,554)

  

14,178

  

4,972

 

Adjusted benefit for income taxes

 

$

5,926

  

$

987

  

$

8,404

  

$

8,545

 
         

Effective tax rate (1)

 

(8.6)

%

 

14.8

%

 

(22.4)

%

 

9.5

%

Adjusted effective tax rate (1)

 

33.4

%

 

7.3

%

 

16.9

%

 

25.5

%

         

Net loss attributable to Bristow Group

 

$

(31,209)

  

$

(29,797)

  

$

(86,484)

  

$

(70,569)

 

Loss on disposal of assets

 

14,144

  

1,487

  

18,018

  

8,298

 

Special items

 

5,458

  

15,996

  

27,720

  

37,949

 

Adjusted net loss

 

$

(11,607)

  

$

(12,314)

  

$

(40,746)

  

$

(24,322)

 
         

Diluted loss per share

 

$

(0.88)

  

$

(0.85)

  

$

(2.45)

  

$

(2.02)

 

Loss on disposal of assets

 

0.40

  

0.04

  

0.51

  

0.24

 

Special items

 

0.15

  

0.46

  

0.79

  

1.08

 

Adjusted diluted loss per share

 

(0.33)

  

(0.35)

  

(1.16)

  

(0.69)

 

 

__________

(1)

Effective tax rate is calculated by dividing benefit (provision) for income tax by pretax net loss. Adjusted effective tax rate is calculated by dividing adjusted benefit (provision) for income tax by adjusted pretax net loss. Tax expense (benefit) on loss on disposal of asset and tax expense (benefit) on special items is calculated using the statutory rate of the entity recording the loss on disposal of asset or special item.

 

  

Three Months Ended
September 30, 2017

  

Adjusted
EBITDA

 

Adjusted
Net Loss

 

Adjusted
Diluted
Loss
Per
Share

       
  

(In thousands, except per share amounts)

Organizational restructuring costs (1)

 

$

(2,676)

  

$

(2,237)

  

(0.06)

 

Tax items (2)

 

  

(3,221)

  

(0.09)

 

Total special items

 

$

(2,676)

  

$

(5,458)

  

(0.15)

 
       
   
  

Three Months Ended
September 30, 2016

 

Adjusted
EBITDA

 

Adjusted
Net Loss

 

Adjusted
Diluted
Loss
Per
Share

       
  

(In thousands, except per share amounts)

Organizational restructuring costs (1)

 

$

(10,693)

  

$

(7,296)

  

(0.21)

 

Additional depreciation expense resulting from fleet changes (3)

 

  

(871)

  

(0.02)

 

Inventory impairment

 

(7,572)

  

(5,344)

  

(0.15)

 

Tax valuation allowances (2)

 

  

(2,485)

  

(0.07)

 

Total special items

 

$

(18,265)

  

$

(15,996)

  

(0.46)

 
   
   
  

Six Months Ended
September 30, 2017

  

Adjusted
EBITDA

 

Adjusted
Net Loss

 

Adjusted
Diluted
Loss
Per
Share

       
  

(In thousands, except per share amounts)

Organizational restructuring costs (1)

 

$

(12,350)

  

$

(8,838)

  

(0.25)

 

Tax items (2)

 

  

(18,107)

  

(0.51)

 

Inventory impairment

 

(1,192)

  

(775)

  

(0.02)

 

Total special items

 

$

(13,542)

  

$

(27,720)

  

(0.79)

 
       
   
  

Six Months Ended
September 30, 2016

  

Adjusted
EBITDA

 

Adjusted
Net Loss

 

Adjusted
Diluted
Loss
Per
Share

       
  

(In thousands, except per share amounts)

Organizational restructuring costs (1)

 

$

(17,252)

  

$

(11,588)

  

(0.33)

 

Additional depreciation expense resulting from fleet changes (3)

 

  

(5,361)

  

(0.15)

 

Inventory impairment

 

(7,572)

  

(5,344)

  

(0.15)

 

Tax valuation allowances (2)

 

  

(15,656)

  

(0.45)

 

Total special items

 

$

(24,824)

  

$

(37,949)

  

(1.08)

 

 

__________

(1)

Organizational restructuring costs include severance expense included in direct costs and general and administrative expense from our voluntary and involuntary separation programs.

(2)

Relates to a one-time non-cash tax effect from repositioning of certain aircraft from one tax jurisdiction to another related to recent financing transactions and non-cash adjustments related to the valuation of deferred tax assets for all periods presented.

(3)

Relates to additional depreciation expense due to fleet changes.

 

SOURCE Bristow Group Inc.

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Bristow Group Inc.

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