Bristow Group Reports Second Quarter Fiscal Year 2018 Results
HOUSTON, Nov. 8, 2017 /PRNewswire/ -- 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 Six Months Ended
September 30, 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, June 30, March 31, % Change % Change
2017 2017 2017 June 30, 2017 to March 31, 2017 to
September 30, September 30,
2017 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 2017 but 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 Pacific, Africa 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 Australia, Brazil, Canada, Russia 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 Six Months Ended
September 30, 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, March 31,
2017 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 Six Months Ended
September 30, 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 Six Months Ended
September 30, 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 Aircraft in Consolidated Fleet
of Current
Period
Operating
Revenue
-------
Helicopters Fixed Unconsolidated
Wing 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 Total
Wing
----
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 Total
Wing
----
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 Rent(2)
-------
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 Six Months Ended
September 30, 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 Adjusted Adjusted
EBITDA Net Loss 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 Adjusted Adjusted
EBITDA Net Loss 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 Adjusted Adjusted
EBITDA Net Loss 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 Adjusted Adjusted
EBITDA Net Loss 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.
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SOURCE Bristow Group Inc.
