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Bristow Group Reports Financial Results for its 2011 Second Fiscal Quarter and Six-Month Period Ended September 30, 2010

November 4, 2010

HOUSTON, Nov. 4, 2010 /PRNewswire-FirstCall/ — Bristow Group Inc. (NYSE: BRS) today reported net income for the three months ended September 30, 2010 of $38.9 million, or $1.06 per diluted share, compared to $33.2 million, or $0.92 per diluted share, in the September 2009 quarter. The quarter benefited from sequential improvement in the underlying operations and a significant reduction in the effective tax rate, which was driven by a global restructuring of Bristow’s operations as part of the continuing implementation of our global business strategy, in addition to a shift of expected earnings for the current fiscal year to lower tax jurisdictions.

Revenue for the three months ended September 30, 2010 totaled $312.6 million compared to $291.6 million in same period a year ago. Earnings before interest, taxes, depreciation and amortization (“EBITDA”) totaled $74.6 million compared to $74.1 million in the September 2009 quarter. Results benefited from revenue increases in Australia, West Africa, North America and Europe compared to the same quarter a year ago, driven by the addition of new contracts and increases in both price and activity for certain customers. These increases were partially offset by a lower level of gain on disposal of assets year-over-year and higher compensation costs in Australia and Nigeria.

“We are pleased with our higher fiscal second quarter results as we were able to deliver sequential improvement in both revenue and earnings,” said William E. Chiles, President, Chief Executive Officer of Bristow Group. “The underlying performance of our operations was strong and the operating margins improved sequentially in several of our business units including Europe, West Africa, North America and Other International. Our global restructuring has also benefited shareholders by aligning our corporate structure with how we do business, significantly lowering our effective tax rate. The expected amendment to our credit facility improves our liquidity position and increases capital structure flexibility while lowering the overall cost of debt. These efforts demonstrate the Bristow team’s commitment to lower our cost of capital.

“As previously disclosed, we continue to expect revenue and earnings per share for the current fiscal year to be stronger than fiscal year 2010 as additional newer-technology aircraft go to work for our customers and we relentlessly focus on improving returns and lowering our after tax cost of capital. We continue to anticipate a much stronger second half compared to the first half of fiscal year 2011,” Chiles added.

SECOND QUARTER FY2011 RESULTS

  • Revenue totaled $312.6 million compared to $291.6 million in same period a year ago.
  • Operating income remained flat at $53.6 million.
  • EBITDA totaled $74.6 compared to $74.1 million in the September 2009 quarter. EBITDA is a measure that has not been prepared in accordance with Accounting Principles Generally Accepted in the United States of America (“GAAP”). Please refer to disclosures contained at the end of this news release for additional information about EBITDA.
  • Net income totaled $38.9 million, or $1.06 per diluted share, compared to $33.2 million, or $0.92 per diluted share, in the September 2009 quarter.

Net income and earnings per share increased due to a significant reduction in our effective tax rate, which was 7.9% versus 25.0% in the September 2009 quarter. This reduction was driven by a global restructuring of our operations as part of the continuing implementation of our global business strategy, in addition to a shift of our expected earnings for the current fiscal year to lower tax jurisdictions. This benefit was partially offset by increased interest expense and lower foreign currency transaction and hedging gains.

Our Europe business unit added two new customers and saw an increase in activity over the prior year quarter, which along with higher equity earnings from our military training unconsolidated affiliate, FB Heliservices Limited, increased our operating margin in this market.

Our North America business unit continued to benefit during the quarter from contracts with BP in the U.S. Gulf of Mexico, where nine of our aircraft were supporting the well control and spill cleanup efforts at the end of September. While we can’t predict how long this work will continue, for the past two quarters the new work more than offset lost business from customers stalled by the deep-water moratorium, which has now been lifted. Subsequent to September 30, 2010, this work has continued to wind down.

Our West Africa business unit also benefitted from new contracts and rate escalations on existing contracts in excess of lost work with certain existing customers. We have also benefitted from a continued effort to reduce aircraft maintenance delays in this market, which reduced the number of days our aircraft were grounded during the quarter. Despite the revenue improvement, our operating margin remained relatively flat versus the prior year quarter as we incurred severance costs for employees that had been supporting a major contract that finished in September. We are continuing to seek permanent work to replace the earnings associated with this contract.

Our Australia business unit saw a significant increase in revenue over the prior year quarter resulting from new contracts and a favorable impact of change in foreign currency exchange rates. However, as a result of an increase in annual leave and long service leave provisions in this market, compensation costs have increased contributing to a decrease in operating margin versus the same quarter last year.

Our Other International business unit’s operating margin was lower primarily due to reduced earnings in Kazakhstan as we stopped operating in this market in a year ago and the Comparable Quarter included a $2.5 million reversal of a bad debt provision. Our results for our unconsolidated affiliate in Brazil totaled $1.8 million for the three months ended September 30, 2010, which were also reduced by foreign exchange losses. These foreign exchange losses partially mask the fact that the normal operations of our affiliate in this market, Lider Aviacao Holding S.A. (“Lider”), have shown significant improvement sequentially over the past several quarters from a revenue and EBITDA standpoint. Excluding the impact of foreign exchange losses, our equity earnings for Lider would have been approximately $3.8 million for the three months ended September 30, 2010. The improvement in Lider’s normal operations translated into a sequential improvement in quarterly earnings from our investment, which led to higher operating margin for this business unit in the second fiscal quarter compared with the preceding quarter.

During the September 2010 quarter we experienced only modest gains on the sale of a few aircraft and these gains during the quarter were $3.0 million lower than those during the same quarter last year; however, we continue to see opportunities for sale of our aircraft in the aftermarket.

YEAR-TO-DATE RESULTS THROUGH SEPTEMBER 30, 2010

  • Revenue totaled $604.8 million compared to $582.1 million for the same period a year ago.
  • Operating income was $93.2 million compared to $98.3 million for the six months ended September 30, 2009.
  • EBITDA totaled $134.4 million compared to $135.8 million for the six months ended September 30, 2009.
  • Net income totaled $59.7 million, or $1.63 per diluted share, compared to $56.9 million, or $1.58 per diluted share, for the six months ended September 30, 2009.

Our year-to-date results through September 30, 2010 benefitted from revenue increases in Australia, West Africa and North America compared to the same period a year ago, which was driven by the addition of new contracts and increases in rates on existing contracts in excess of reduced activity for certain customers.

Despite increased revenue, operating income and EBITDA decreased due to a lower level of gain on disposal of assets and reduced earnings in Kazakhstan.

Net income and earnings per share benefitted from a significant reduction in our effective tax rate, which was 16.6% versus 26.4% for the six months ended September 30, 2009. This reduction was driven by a global restructuring of our operations as part of the continuing implementation of our global business strategy, in addition to a shift of our expected earnings for the current fiscal year to lower tax jurisdictions. This benefit was partially offset by increased interest expense.

CAPITAL AND LIQUIDITY

For the six months ended September 30, 2010, net cash generated by operating activities was $69.2 million and net cash used in investing activities was $44.5 million. At September 30, 2010, we had:

  • $1.4 billion in stockholders’ investment and $720.6 million of indebtedness,
  • $108.5 million in cash and a $100 million undrawn revolving credit facility, and
  • $154.2 million in aircraft purchase commitments for 12 aircraft.

In addition, we are currently negotiating an amendment to our existing bank credit facility to extend the facility for five years and increase the amount financed to $375 million. The facility is expected to consist of a $200 million term loan and a $175 million revolver at an initial expected rate of Libor+250. We expect to use proceeds for general corporate purposes, including repayment of existing indebtedness. Completion of the amendment is subject to reaching agreement on the definitive documentation and satisfaction of customary closing conditions.

CONFERENCE CALL

Management will conduct a conference call starting at 9:00 a.m. ET (8:00 a.m. CT) on Friday, November 5, 2010, to review financial results for the 2011 second quarter. 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 2011 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 1-877-941-1465
  • Replay: A telephone replay will be available through November 19, 2010 and may be accessed by calling toll free 1-800-406-7325, passcode: 4375416#

Via Telephone outside the U.S.:

  • Live: Dial 480-629-9644
  • Replay: A telephone replay will be available through November 19, 2010 and may be accessed by calling 303-590-3030, passcode: 4375416#

ABOUT BRISTOW GROUP INC.

Bristow Group Inc. is the leading provider of helicopter services to the worldwide offshore energy industry based on the number of aircraft operated and one of two helicopter service providers to the offshore energy industry with global operations. The Company has major transportation operations in the North Sea, Nigeria and the U.S. Gulf of Mexico, and in most of the other major offshore oil and gas producing regions of the world, including Alaska, Australia, Brazil, Mexico, Russia and Trinidad. For more information, visit the Company’s website at www.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 the impact of activity levels, including the amendment to our credit facility and use of proceeds therefrom, business performance, fiscal 2011 results and other 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. 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 and six months ended September 30, 2010 and annual report on Form 10-K for the fiscal year ended March 31, 2010. 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 INCOME
                     (In thousands, except per share amounts)
                                   (Unaudited)
                         Three Months
                                 Ended          Six Months Ended
                            September 30,         September 30,
                            -------------         -------------
                             2010             2009       2010        2009
                             ----             ----       ----        ----

    Gross revenue:
      Operating revenue
       from non-
       affiliates        $270,053         $247,642   $524,647    $496,533
      Operating revenue
       from affiliates     16,484           17,460     33,899      32,062
      Reimbursable
       revenue from non-
       affiliates          25,933           24,746     45,996      50,599
      Reimbursable
       revenue from
       affiliates              89            1,767        255       2,873
                              ---            -----
                          312,559          291,615    604,797     582,067
                          -------          -------    -------     -------
    Operating expense:
      Direct cost         189,110          173,392    372,274     354,069
      Reimbursable
       expense             25,020           26,304     45,198      52,961
      Depreciation and
       amortization        20,968           18,470     40,299      36,656
      General and
       administrative      30,515           29,686     61,417      58,488
                          265,613          247,852    519,188     502,174
                          -------          -------    -------     -------

    Gain on disposal
     of assets              1,897            4,880      3,615      10,889
    Earnings from
     unconsolidated
     affiliates, net
     of losses              4,716            4,924      4,014       7,557
      Operating income     53,559           53,567     93,238      98,339

    Interest income           168              210        460         432
    Interest expense      (11,452)         (10,640)   (22,490)    (20,652)
    Other income
     (expense), net          (111)           1,809        404         328
                             ----            -----        ---         ---
      Income before
       provision for
       income taxes        42,164           44,946     71,612      78,447
    Provision for
     income taxes          (3,316)         (11,236)   (11,856)    (20,746)
                           ------          -------    -------     -------
      Net income           38,848           33,710     59,756      57,701
      Net income
       attributable to
       noncontrolling
       interests               32             (540)       (68)       (808)
      Net income
       attributable to
       Bristow Group       38,880           33,170     59,688      56,893
      Preferred stock
       dividends                -           (3,163)         -      (6,325)
                              ---           ------        ---      ------
      Net income
       available to
       common
       stockholders       $38,880          $30,007    $59,688     $50,568
                          =======          =======    =======     =======

    Earnings per
     common share:
      Basic                 $1.07            $0.98      $1.66       $1.70
                            =====            =====      =====       =====
      Diluted               $1.06            $0.92      $1.63       $1.58
                            =====            =====      =====       =====

                  BRISTOW GROUP INC. AND SUBSIDIARIES
                      CONSOLIDATED BALANCE SHEETS
                             (In thousands)
                                                   September
                                                       30,       March 31,
                                                           2010          2010
                                                           ----          ----
                                                  (Unaudited)

                                       ASSETS
    Current assets:
      Cash and cash equivalents                        $108,501       $77,793
      Accounts receivable from non-
       affiliates                                       231,351       203,312
      Accounts receivable from affiliates                19,812        16,955
      Inventories                                       193,017       186,863
      Prepaid expenses and other current
       assets                                            41,759        31,448
                                                         ------        ------
           Total current assets                         594,440       516,371
    Investment in unconsolidated
     affiliates                                         205,779       204,863
    Property and equipment - at cost:
      Land and buildings                                 95,998        86,826
      Aircraft and equipment                          2,093,105     2,036,962
                                                      ---------     ---------
                                                      2,189,103     2,123,788
      Less - Accumulated depreciation and
       amortization                                    (436,769)     (404,443)
                                                       --------      --------
                                                      1,752,334     1,719,345
    Goodwill                                             32,185        31,755
    Other assets                                         22,187        22,286
                                                         ------        ------
                                                     $2,606,925    $2,494,620
                                                     ==========    ==========

               LIABILITIES AND STOCKHOLDERS' INVESTMENT
    Current liabilities:
      Accounts payable                                  $61,545       $48,545
      Accrued wages, benefits and related
       taxes                                             36,049        35,835
      Income taxes payable                                  952         2,009
      Other accrued taxes                                 5,575         3,056
      Deferred revenues                                   6,904        19,321
      Accrued maintenance and repairs                    15,663        10,828
      Accrued interest                                    6,429         6,430
      Other accrued liabilities                          20,680        14,508
      Deferred taxes                                     10,714        10,217
      Short-term borrowings and current
       maturities of long-term debt                      23,798        15,366
                                                         ------        ------
           Total current liabilities                    188,309       166,115
    Long-term debt, less current
     maturities                                         696,779       701,195
    Accrued pension liabilities                         112,551       106,573
    Other liabilities and deferred
     credits                                             28,636        20,842
    Deferred taxes                                      148,021       143,324

    Stockholders' investment:
      Common stock                                          362           359
      Additional paid-in capital                        684,464       677,397
      Retained earnings                                 879,033       820,145
      Accumulated other comprehensive loss             (137,414)     (148,102)
                                                       --------      --------
                                                      1,426,445     1,349,799
      Noncontrolling interests                            6,184         6,772
                                                          -----         -----
                                                      1,432,629     1,356,571
                                                      ---------     ---------
                                                     $2,606,925    $2,494,620
                                                     ==========    ==========

                        BRISTOW GROUP INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (In thousands)
                                    (Unaudited)
                                                 Six Months Ended
                                                  September  30,
                                                  --------------
                                                    2010              2009
                                                    ----              ----

    Cash flows from operating activities:
      Net income                                 $59,756           $57,701
    Adjustments to reconcile net income to net
     cash provided by operating activities:
      Depreciation and amortization               40,299            36,656
      Deferred income taxes                        4,385            13,340
      Discount amortization on long-term debt      1,565             1,462
      Gain on disposal of assets                  (3,615)          (10,889)
      Gain on sale of joint ventures                (572)                -
      Stock-based compensation                     8,019             6,611
      Equity in earnings from unconsolidated
       affiliates less than (in excess of)
       dividends                                    (890)           (3,846)
      received
      Tax benefit related to stock-based
       compensation                                 (179)             (433)
    Increase (decrease) in cash resulting from
     changes in:
      Accounts receivable                        (24,940)           13,707
      Inventories                                 (3,000)          (13,243)
      Prepaid expenses and other assets          (14,363)          (10,391)
      Accounts payable                             9,774             2,528
      Accrued liabilities                         (2,917)          (10,303)
      Other liabilities and deferred credits      (4,138)           10,709
    Net cash provided by operating activities     69,184            93,609
    Cash flows from investing activities:
      Capital expenditures                       (63,943)         (136,145)
      Deposits on assets held for sale             1,000                 -
      Proceeds from sale of joint ventures         1,291                 -
      Proceeds from asset dispositions            17,178            71,238
      Acquisition, net of cash received                -          (178,961)
    Net cash used in investing activities        (44,474)         (243,868)
    Cash flows from financing activities:
      Proceeds from borrowings                    10,012                 -
      Repayment of debt                           (7,630)           (8,858)
      Distribution to noncontrolling interest
       owners                                       (637)                -
      Partial prepayment of put/call obligation      (28)              (37)
      Acquisition of noncontrolling interest        (800)                -
      Preferred stock dividends paid                   -            (6,325)
      Issuance of common stock                       111             1,089
      Tax benefit related to stock-based
       compensation                                  179               433
                                                     ---               ---
    Net cash provided by (used in) financing
     activities                                    1,207           (13,698)
    Effect of exchange rate changes on cash
     and cash equivalents                          4,791             6,193
                                                   -----             -----
    Net increase (decrease) in cash and cash
     equivalents                                  30,708          (157,764)
    Cash and cash equivalents at beginning of
     period                                       77,793           300,969
                                                  ------           -------
    Cash and cash equivalents at end of period  $108,501          $143,205
                                                ========          ========

                         BRISTOW GROUP INC. AND SUBSIDIARIES
                               SELECTED OPERATING DATA
                 (In thousands, except flight hours and percentages)
                                     (Unaudited)
                                            Three Months Ended
                                              September 30,
                                              -------------
                                             2010                      2009
                                             ----                      ----
    Gross revenue:
        Europe                           $117,595                  $113,913
        North America                      55,281                    48,737
        West Africa                        58,110                    51,452
        Australia                          37,364                    30,333
        Other International                36,295                    37,007
        Corporate and other                 8,421                    11,362
        Intrasegment eliminations            (507)                   (1,189)
        Corporate and other              $312,559                  $291,615
                                         ========                  ========

    Operating income (loss):
        Europe                            $21,612                   $19,063
        North America                       8,904                     4,716
        West Africa                        17,158                    15,064
        Australia                           6,094                     7,011
        Other International                11,102                    12,978
        Corporate and other               (13,208)                  (10,145)
        Gain on disposal of other
         assets                             1,897                     4,880
         Consolidated total               $53,559                   $53,567
                                          =======                   =======

    Operating margin:
       Europe                                18.4%                    16.7%
       North America                         16.1%                     9.7%
       West Africa                           29.5%                    29.3%
       Australia                             16.3%                    23.1%
       Other International                   30.6%                    35.1%
          Consolidated total                 17.1%                    18.4%

    Flight hours (excludes
     Bristow Academy and
       unconsolidated affiliates):
        Europe                             14,432                    14,242
        North America                      23,279                    21,215
        West Africa                         9,572                     8,470
        Australia                           3,318                     2,794
        Other International                12,577                    11,810
                                           ------                    ------
         Consolidated total                63,178                    58,531
                                           ======                    ======


                                        Six Months Ended
                                          September 30,
                                          -------------
                                        2010                     2009
                                        ----                     ----
    Gross revenue:
        Europe                      $219,286                 $228,978
        North America                 108,092                   98,593
        West Africa                   117,206                  106,269
        Australia                      72,655                   58,496
        Other International            69,114                   70,001
        Corporate and other           19,263                   23,178
        Intrasegment eliminations       (819)                  (3,448)
        Corporate and other         $604,797                 $582,067
                                    ========                 ========

    Operating income (loss):
        Europe                       $39,911                  $38,841
        North America                 14,212                    9,142
        West Africa                   32,794                   28,727
        Australia                     14,046                   12,667
        Other International           13,367                   20,190
        Corporate and other          (24,707)                 (22,117)
        Gain on disposal of other
         assets                        3,615                   10,889
         Consolidated total          $93,238                  $98,339
                                     =======                  =======

    Operating margin:
       Europe                           18.2%         17.0%
       North America                    13.1%          9.3%
       West Africa                      28.0%         27.0%
       Australia                        19.3%         21.7%
       Other International              19.3%         28.8%
          Consolidated total            15.4%         16.9%

    Flight hours (excludes
     Bristow Academy and
       unconsolidated
        affiliates):
        Europe                        27,399                   29,097
        North America                 44,683                   43,332
        West Africa                   19,332                   17,420
        Australia                      6,558                    5,674
        Other International           24,055                   22,935
                                      ------                   ------
         Consolidated total          122,027                  118,458
                                     =======                  =======

                      BRISTOW GROUP INC. AND SUBSIDIARIES
                                 AIRCRAFT COUNT
                            AS OF SEPTEMBER 30, 2010
                            Aircraft in Consolidated Fleet
                            ------------------------------
                           Helicopters
                           -----------

                                                           Fixed
                   Small Medium      Large      Training     Wing Total(1)
                   ----- ------      -----      --------   ------ --------
    Europe             -     14         37             -        -       51
    North America     72     27          6             -        -      105
    West Africa       12     33          5             -        3       53
    Australia          3     14         18             -        -       35
    Other
     International     5     42         12             -        -       59
    Corporate and
     other             -      -          -            76        -       76
                     ---    ---        ---           ---      ---      ---
    Total             92    130         78            76        3      379
                     ===    ===        ===           ===      ===      ===
    Aircraft not
     currently in
     fleet: (3)
      On order         -      5          7             -        -       12
      Under option     -     25         10             -        -       35


                          Unconsolidated      Total
                          Affiliates(2)      -----
                          -------------
    Europe                 63                114
    North America           -                105
    West Africa             -                 53
    Australia               -                 35
    Other
     International        136                195
    Corporate and
     other                  -                 76
                          ---                ---
    Total                 199                578
                          ===                ===
    Aircraft not
     currently in
     fleet: (3)
      On order
      Under option

    (1)  Includes 12 aircraft held for sale.
    (2)  The 199 aircraft operated or managed by our unconsolidated
    affiliates are in addition to those aircraft leased from us.
    (3)  This table does not reflect aircraft which our unconsolidated
    affiliates may have on order or under option.

                     BRISTOW GROUP INC. AND SUBSIDIARIES
                            GAAP RECONCILIATIONS

    EBITDA is a measure that has not been prepared in accordance with
    GAAP and has not been audited or reviewed by our independent
    auditors.  EBITDA is therefore considered a non-GAAP financial
    measure.  A description of adjustments and a reconciliation to net
    income, the most comparable GAAP financial measure to EBITDA, is as
    follows (in thousands):
                        Three Months
                            Ended                Six Months Ended
                       September 30,              September 30,
                       -------------              -------------
                        2010            2009            2010          2009
                        ----            ----            ----          ----

                                     (Unaudited)
    Net income       $38,848         $33,710         $59,756       $57,701
    Provision for
     income taxes      3,316          11,236          11,856        20,746
    Interest expense  11,452          10,640          22,490        20,652
    Depreciation and
     amortization     20,968          18,470          40,299        36,656
                      ------          ------          ------        ------
       EBITDA        $74,584         $74,056        $134,401      $135,755
                     -------         -------        --------      --------

SOURCE Bristow Group Inc.


Source: newswire



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