Bristow Group Reports Financial Results for Its 2011 Third Fiscal Quarter and Nine-Month Period Ended December 31, 2010
-- $1.13 DILUTED EPS ON NET INCOME OF $41.8 MILLION, UP $0.39, A 53% INCREASE OVER THE PRIOR YEAR QUARTER.
-- $46.6 MILLION IN OPERATING INCOME, A 17% INCREASE OVER THE PRIOR YEAR QUARTER DUE TO OPERATIONAL IMPROVEMENT IN OTHER INTERNATIONAL, EUROPE, WEST AFRICA AND NORTH AMERICA BUSINESS UNITS.
-- REVERSAL OF DEFERRED TAX LIABILITIES AS A RESULT OF THE COMPLETION OF GLOBAL RESTRUCTURING OF BRISTOW'S OPERATIONS AS PART OF THE CONTINUING IMPLEMENTATION OF OUR GLOBAL BUSINESS STRATEGY.
HOUSTON, Feb. 2, 2011 /PRNewswire/ -- Bristow Group Inc. (NYSE: BRS) today reported a 57% increase in net income for the three months ended December 31, 2010 to $41.8 million, or $1.13 per diluted share, compared to $26.7 million, or $0.74 per diluted share, in the December 2009 quarter. The quarter benefited from year-over-year improvement in the underlying operations and a significant reduction in our effective tax rate primarily resulting from the reversal of deferred tax liabilities recorded in prior fiscal years, which was driven by a global restructuring of Bristow's operations as part of the continuing implementation of our global business strategy.
Revenue for the three months ended December 31, 2010 totaled $317.9 million compared to $303.3 million in the same period a year ago. Earnings before interest, taxes, depreciation and amortization ("EBITDA") totaled $65.6 million compared to $64.4 million in the December 2009 quarter. Results benefited from revenue increases in the following business units: Other International (primarily Brazil, Suriname and Russia), Australia and Europe compared to the same quarter a year ago, primarily 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 (loss) on disposal of assets year-over-year.
Excluding the special items discussed below and the gain (loss) on disposal of assets, our operating income, EBITDA, net income and diluted earnings per share totaled $43.2 million, $64.4 million, $26.3 million and $0.71, respectively, for the three months ended December 31, 2010, and $39.0 million, $60.9 million, $23.8 million and $0.66, respectively, for the three months ended December 31, 2009.
"As we discussed last quarter, Bristow continued to see improvement in our operational results during our third fiscal quarter," said William E. Chiles, President and Chief Executive Officer of Bristow Group. "The underlying performance of our business continues to be strong with improving operating margins year-over-year in a majority of our business units. The amendment to our credit facility completed during the quarter almost doubles our liquidity position while lowering the overall cost of debt. When combined with the commercial and tax benefits realized as a part of the recent reorganization, our financial results are demonstrating the benefit of the Bristow global team's efforts to deliver on our promises.
"As we go into the final quarter of this fiscal year, 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 focus on improving returns and lowering our after tax cost of capital. We continue to anticipate a stronger second half compared to the first half of fiscal year 2011," Chiles added.
THIRD QUARTER FY2011 RESULTS
-- Revenue totaled $317.9 million compared to $303.3 million in same period a year ago. -- Operating income totaled $46.6 million compared to $39.7 million in the December 2009 quarter. -- EBITDA totaled $65.6 million compared to $64.4 million in the December 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 $41.8 million, or $1.13 per diluted share, compared to $26.7 million, or $0.74 per diluted share, in the December 2009 quarter.
Our results for the three months ended December 31, 2010 were significantly affected by the following items:
-- A reduction in maintenance expense (included in direct cost) associated with a credit resulting from the renegotiation of a "power-by-the-hour" contract for aircraft maintenance with a third party provider, which increased operating income and EBITDA by $3.5 million, net income by $2.9 million and diluted earnings per share by $0.08. -- The early retirement of the 6 1/8% Senior Notes, which resulted in a $2.3 million early redemption premium (included in other income (expense), net) and the non-cash write-off of $2.4 million of unamortized debt issuance costs (included in interest expense) and decreased EBITDA by $2.3 million, net income by $4.0 million and diluted earnings per share by $0.11. -- A reduction in tax expense primarily related to adjustments to deferred tax liabilities that were no longer required as a result of the restructuring during the three months ended December 31, 2010, which increased net income by $16.6 million and diluted earnings per share by $0.45.
Our results for the three months ended December 31, 2009 were significantly affected by the following items:
-- Compensation expense included in general and administrative expense incurred in connection with the departure of two of the Company's officers, which decreased operating income and EBITDA by $1.7 million, net income by $1.4 million and diluted earnings per share by $0.04. -- Hedging gains included in other income (expense), net resulting from the termination of forward contracts on euro-denominated aircraft purchase commitments which increased EBITDA by $2.8 million, net income by $2.3 million and diluted earnings per share by $0.06.
During the December 2010 quarter, we experienced a small loss on the sale of aircraft compared to gains during the December 2009 quarter of $2.4 million; however, we continue to see opportunities for sale of our aircraft in the aftermarket.
Our Europe business unit added three new customers, which along with higher equity earnings from our military training unconsolidated affiliate, FB Heliservices Limited, price escalations under existing contracts and renegotiated rates on contract renewals, 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 despite a decline in the number of aircraft supporting well control and spill cleanup efforts from five at the end of September to three at the end of December. This work mostly offset lost business from customers stalled by the deepwater moratorium, which has now been lifted. A decrease in costs in this market resulted in a slight increase in operating margin.
Our West Africa business was impacted by the loss of a major customer in this market. However, lower operating expense combined with the addition of new contracts, increased rates on existing contracts and fewer flight delay penalties resulted in improved operating margin. We are continuing to seek permanent work to replace the earnings associated with the lost work with the major customer.
Our Australia business unit was impacted by higher compensation costs and increased depreciation expense, which despite a favorable impact from exchange rate changes, resulted in decreased operating earnings and margin.
Our Other International business unit's operating margin improved substantially as a result of increased revenue in Brazil, the Baltic Sea, Suriname, Ghana and Russia. Additionally, our earnings from our affiliates in Brazil and Mexico improved over the prior year quarter.
YEAR-TO-DATE RESULTS THROUGH DECEMBER 31, 2010
-- Revenue totaled $922.7 million compared to $885.4 million for the same period a year ago. -- Operating income was $139.9 million compared to $138.1 million for the nine months ended December 31, 2009. -- EBITDA totaled $200.0 million compared to $200.2 million for the nine months ended December 31, 2009. -- Net income totaled $101.4 million, or $2.77 per diluted share, compared to $83.6 million, or $2.32 per diluted share, for the nine months ended December 31, 2009.
Our year-to-date results through December 31, 2010 benefitted from revenue increases in Australia, Europe, West Africa, North America and Other International 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.
Our results for the nine months ended December 31, 2010 were significantly affected by the following items:
-- A reduction in maintenance expense (included in direct cost) associated with a credit resulting from the renegotiation of a "power-by-the-hour" contract for aircraft maintenance with a third party provider, which increased operating income and EBITDA by $3.5 million, net income by $2.9 million and diluted earnings per share by $0.08. -- The early retirement of the 6 1/8% Senior Notes, which resulted in a $2.3 million early redemption premium (included in other income (expense) net) and the non-cash write-off of $2.4 million of unamortized debt issuance costs (included in interest expense) and decreased EBITDA by $2.3 million, net income by $3.9 million and diluted earnings per share by $0.11. -- A reduction in tax expense primarily related to adjustments to deferred tax liabilities that were no longer required as a result of the restructuring during the three months ended December 31, 2010, which increased net income by $17.3 million and diluted earnings per share by $0.47.
Our results for the nine months ended December 31, 2009 were significantly affected by the following items:
-- Compensation expense included in general and administrative expense incurred in connection with the departure of three of the Company's officers, which decreased operating income and EBITDA by $4.9 million, net income by $3.9 million and diluted earnings per share by $0.11. -- Hedging gains included in other income (expense), net resulting from the termination of forward contracts on euro-denominated aircraft purchase commitments which increased EBITDA by $3.9 million, net income by $3.0 million and diluted earnings per share by $0.08. -- An increase in tax expense resulting from tax contingency items and changes in our expected foreign tax credit utilization, which decreased net income by $5.2 million and diluted earnings per share by $0.14.
During the December 2010 quarter, we experienced lower gain on aircraft sales, which totaled $3.6 million compared to $13.3 million in the prior year period.
Excluding these items listed above and gain on disposal of assets in both periods, our operating income, EBITDA, net income and diluted earnings per share totaled $132.8 million, $195.2 million, $82.1 million and $2.24, respectively, for the nine months ended December 31, 2010, and $129.6 million, $187.8 million, $78.9 million and $2.19, respectively, for the nine months ended December 31, 2009.
CAPITAL AND LIQUIDITY
For the nine months ended December 31, 2010, net cash generated by operating activities was $115.4 million and net cash used in investing activities was $103.3 million. At December 31, 2010, we had:
-- $1.5 billion in stockholders' investment and $725.5 million of indebtedness, -- $232.9 million in total liquidity consisting of $100.9 million in cash and a $132 million undrawn under our revolving credit facility, and -- $105.3 million in aircraft purchase commitments for nine aircraft.
During the December 2010 quarter, we completed the amendment to our bank credit facility, extending the facility for five years and increasing the amount of the facility to $375 million. The facility consists of a $200 million term loan and a $175 million revolver. We used proceeds of the term loan and $43 million drawn on the revolver to primarily redeem our 6 1/8% Senior Notes early in December 2010.
CONFERENCE CALL
Management will conduct a conference call starting at 10:00 a.m. ET (9:00 a.m. CT) on Thursday, February 3, 2011, to review financial results for the fiscal 2011 third 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 Third 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 1-877-941-2333 -- Replay: A telephone replay will be available through February 17 and may be accessed by calling toll free 1-800-406-7325, passcode: 4401176#
Via Telephone outside the U.S.:
-- Live: Dial 480-629-9723 -- Replay: A telephone replay will be available through February 17 and may be accessed by calling 303-590-3030, passcode: 4401176#
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, 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 nine months ended December 31, 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 Three Months Ended Nine Months Ended December 31, December 31, 2010 2009 2010 2009 (Unaudited) (In thousands, except per share amounts) Gross revenue: Operating revenue from non-affiliates $ 264,064 $ 260,907 $ 788,711 $ 757,440 Operating revenue from affiliates 18,543 14,581 52,442 46,643 Reimbursable revenue from non-affiliates 34,918 27,615 80,914 78,214 Reimbursable revenue from affiliates 344 203 599 3,076 317,869 303,306 922,666 885,373 Operating expense: Direct cost 186,937 189,456 559,211 543,525 Reimbursable expense 34,548 28,219 79,746 81,180 Depreciation and amortization 21,338 20,663 61,637 57,319 General and administrative 33,715 30,758 95,132 89,246 276,538 269,096 795,726 771,270 Gain (loss) on disposal of assets (33) 2,448 3,582 13,337 Earnings from unconsolidated affiliates, net of losses 5,341 3,068 9,355 10,625 Operating income 46,639 39,726 139,877 138,065 Interest income 417 365 877 797 Interest expense (13,773) (10,979) (36,263) (31,631) Other income (expense), net (2,792) 3,695 (2,388) 4,023 Income before provision for income taxes 30,491 32,807 102,103 111,254 (Provision for) benefit from income taxes 11,823 (5,681) (33) (26,427) Net income 42,314 27,126 102,070 84,827 Net income attributable to noncontrolling interests (555) (448) (623) (1,256) Net income attributable to Bristow Group 41,759 26,678 101,447 83,571 Preferred stock dividends — — — (6,325) Net income available to common stockholders $ 41,759 $ 26,678 $ 101,447 $ 77,246 Earnings per common share: Basic $ 1.15 $ 0.74 $ 2.82 $ 2.43 Diluted $ 1.13 $ 0.74 $ 2.77 $ 2.32
BRISTOW GROUP INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, March 31, 2010 2010 (Unaudited) (In thousands) ASSETS Current assets: Cash and cash equivalents $ 100,863 $ 77,793 Accounts receivable from non-affiliates, net of allowance for doubtful accounts of $0.7 million and $0.2 million, respectively 233,730 203,312 Accounts receivable from affiliates, net of allowance for doubtful accounts of $5.6 million and $4.7 million, respectively 20,915 16,955 Inventories 195,537 186,863 Prepaid expenses and other current assets 38,292 31,448 Total current assets 589,337 516,371 Investment in unconsolidated affiliates 206,139 204,863 Property and equipment – at cost: Land and buildings 96,593 86,826 Aircraft and equipment 2,141,804 2,036,962 2,238,397 2,123,788 Less – Accumulated depreciation and amortization (450,897) (404,443) 1,787,500 1,719,345 Goodwill 31,636 31,755 Other assets 24,124 22,286 $ 2,638,736 $ 2,494,620 LIABILITIES AND STOCKHOLDERS' INVESTMENT Current liabilities: Accounts payable $ 47,068 $ 48,545 Accrued wages, benefits and related taxes 41,877 35,835 Income taxes payable — 2,009 Other accrued taxes 2,851 3,056 Deferred revenue 8,009 19,321 Accrued maintenance and repairs 15,035 10,828 Accrued interest 8,143 6,430 Other accrued liabilities 19,304 14,508 Deferred taxes 13,268 10,217 Short-term borrowings and current maturities of long-term debt 8,039 15,366 Total current liabilities 163,594 166,115 Long-term debt, less current maturities 717,469 701,195 Accrued pension liabilities 112,248 106,573 Other liabilities and deferred credits 32,107 20,842 Deferred taxes 137,189 143,324 Commitments and contingencies (Note 5) Stockholders' investment: Common stock, $.01 par value, authorized 90,000,000; outstanding: 36,289,089 as of December 31 and 35,954,040 as of March 31 (exclusive of 1,291,325 treasury shares) 363 359 Additional paid-in capital 686,952 677,397 Retained earnings 920,792 820,145 Accumulated other comprehensive loss (138,687) (148,102) 1,469,420 1,349,799 Noncontrolling interests 6,709 6,772 1,476,129 1,356,571 $ 2,638,736 $ 2,494,620
BRISTOW GROUP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended December 31, 2010 2009 (Unaudited) (In thousands) Cash flows from operating activities: Net income $ 102,070 $ 84,827 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 61,637 57,319 Deferred income taxes (3,648) 18,892 Discount amortization on long-term debt 2,360 2,213 Gain on disposal of assets (3,582) (13,337) Gain on sales of joint ventures (572) — Stock-based compensation 10,763 9,914 Equity in earnings from unconsolidated affiliates less than (in excess of) dividends received (1,447) (6,853) Tax benefit related to stock-based compensation (230) (409) Increase (decrease) in cash resulting from changes in: Accounts receivable (26,514) 794 Inventories (6,414) (11,382) Prepaid expenses and other assets (8,365) 14,555 Accounts payable (3,546) 4,638 Accrued liabilities (5,340) 3,216 Other liabilities and deferred credits (1,773) (1,370) Net cash provided by operating activities 115,399 163,017 Cash flows from investing activities: Capital expenditures (122,748) (250,272) Deposits on assets held for sale 1,000 — Proceeds from sales of joint ventures 1,291 — Proceeds from asset dispositions 17,175 74,973 Acquisition, net of cash received — (178,961) Net cash used in investing activities (103,282) (354,260) Cash flows from financing activities: Proceeds from borrowings 253,013 — Debt issuance costs (3,339) — Repayment of debt (246,553) (10,068) Distribution to noncontrolling interest owners (637) — Partial prepayment of put/call obligation (44) (52) Acquisition of noncontrolling interest (800) — Preferred stock dividends paid — (6,325) Issuance of common stock 754 1,336 Tax benefit related to stock-based compensation 230 409 Net cash provided by (used in) financing activities 2,624 (14,700) Effect of exchange rate changes on cash and cash equivalents 8,329 12,033 Net increase (decrease) in cash and cash equivalents 23,070 (193,910) Cash and cash equivalents at beginning of period 77,793 300,969 Cash and cash equivalents at end of period $ 100,863 $ 107,059
BRISTOW GROUP INC. AND SUBSIDIARIES SELECTED OPERATING DATA (In thousands, except flight hours and percentages) (Unaudited) Three Months Ended Nine Months Ended December 31, December 31, 2010 2009 2010 2009 Gross revenue: Europe $ 129,828 $ 119,290 $ 349,114 $ 348,268 North America 45,629 45,684 153,721 144,277 West Africa 53,725 58,736 170,931 165,005 Australia 41,440 38,188 114,095 96,684 Other International 41,865 33,345 110,979 103,346 Corporate and other 6,393 8,464 25,656 31,642 Intrasegment eliminations (1,011) (401) (1,830) (3,849) Consolidated total $ 317,869 $ 303,306 $ 922,666 $ 885,373
Operating income (loss): Europe $ 25,470 $ 19,239 $ 65,381 $ 58,080 North America 1,917 1,511 16,129 10,653 West Africa 15,995 14,913 48,789 43,640 Australia 7,139 9,358 21,185 22,025 Other International 11,595 5,181 24,962 25,371 Corporate and other (15,444) (12,924) (40,151) (35,041) Gain on disposal of other assets (33) 2,448 3,582 13,337 Consolidated total $ 46,639 $ 39,726 $ 139,877 $ 138,065
Operating margin: Europe 19.6 % 16.1 % 18.7 % 16.7 % North America 4.2 % 3.3 % 10.5 % 7.4 % West Africa 29.8 % 25.4 % 28.5 % 26.4 % Australia 17.2 % 24.5 % 18.6 % 22.8 % Other International 27.7 % 15.5 % 22.5 % 24.5 % Consolidated total 14.7 % 13.1 % 15.2 % 15.6 %
Flight hours (excludes Bristow Academy and unconsolidated affiliates): Europe 13,676 13,597 41,075 42,694 North America 20,079 17,712 64,762 61,044 West Africa 9,885 9,175 29,217 26,595 Australia 3,234 3,304 9,793 8,978 Other International 11,417 10,734 35,471 33,669 Consolidated total 58,291 54,522 180,318 172,980
BRISTOW GROUP INC. AND SUBSIDIARIES AIRCRAFT COUNT AS OF DECEMBER 31, 2010 Aircraft in Consolidated Fleet Helicopters Total Unconsolidated Small Medium Large Training FixedWing (1) Affiliates(2) Total Europe — 16 40 — — 56 63 119 North America 72 27 5 — — 104 — 104 West Africa 12 26 5 — 3 46 — 46 Australia 3 14 18 — — 35 — 35 Other International 5 43 12 — — 60 133 193 Corporate and other — — — 77 — 77 — 77 Total 92 126 80 77 3 378 196 574 Aircraft not currently in fleet:(3) On order — 3 6 — — 9 Under option — 25 9 — — 34
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(1) Includes 14 aircraft held for sale. The 196 aircraft operated or managed by our unconsolidated affiliates are (2) in addition to those aircraft leased from us. This table does not reflect aircraft which our unconsolidated affiliates (3) 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 Nine Months Ended December 31, December 31, 2010 2009 2010 2009 (Unaudited) Net income $ 42,314 $ 27,126 $ 102,070 $ 84,827 Provision for (benefit from) income taxes (11,823) 5,681 33 26,427 Interest expense 13,773 10,979 36,263 31,631 Depreciation and amortization 21,338 20,663 61,637 57,319 EBITDA $ 65,602 $ 64,449 $ 200,003 $ 200,204
A reconciliation of our operating income, EBITDA, net income and diluted earnings per share as reported to the calculations of each of these items excluding certain amounts described earlier in this earnings release is as follows:
Three Months Ended Nine Months Ended December 31, 2010 December 31, 2010 Diluted Diluted Earnings Earnings Per Per Operating Net Operating Net Income EBITDA Income Share Income EBITDA Income Share (Unaudited) (In thousands, except per share amounts) As reported $ 46,639 $ 65,602 $ 41,759 $ 1.13 $ 139,877 $ 200,003 $ 101,447 $ 2.77 Adjust for: Power-by- the-hour credit (3,500) (3,500) (2,894) $ (0.08) (3,500) (3,500) (2,904) $ (0.08) Retirement of 6 1/8% Senior Notes - 2,300 3,966 $ 0.11 - 2,300 3,900 $ 0.11 Tax items - - (16,573) $ (0.45) - - (17,338) $ (0.47) Loss (gain) on disposal of assets 33 33 27 $ - (3,582) (3,582) (2,972) $ (0.08) Adjusted $ 43,172 $ 64,435 $ 26,285 $ 0.71 $ 132,795 $ 195,221 $ 82,133 $ 2.24
Three Months Ended Nine Months Ended December 31, 2009 December 31, 2009 Diluted Diluted Earnings Earnings Per Per Operating Net Operating Net Income EBITDA Income Share Income EBITDA Income Share (Unaudited) (In thousands, except per share amounts) As reported $ 39,726 $ 64,449 $ 26,678 $ 0.74 $ 138,065 $ 200,204 $ 83,571 $ 2.32 Adjust for: Officer severance costs 1,744 1,744 1,442 $ 0.04 4,874 4,874 3,944 $ 0.11 Hedging gains - (2,804) (2,318) $ (0.06) - (3,936) (3,001) $ (0.08) Tax items - - - $ - - - 5,200 $ 0.14 Gain on disposal of assets (2,448) (2,448) (2,024) $ (0.06) (13,337) (13,337) (10,792) $ (0.30) Adjusted $ 39,022 $ 60,941 $ 23,778 $ 0.66 $ 129,602 $ 187,805 $ 78,922 $ 2.19
SOURCE Bristow Group Inc.
Released February 2, 2011