Bristow Group Reports Financial Results for its 2011 Second Fiscal Quarter and Six-Month Period Ended September 30, 2010
- $1.06 diluted EPS on net income of $38.9 million, up approximately 17% over the prior year quarter.
- $312.6 million in revenue, a 7% increase over the prior year quarter due to operational improvement in Australia, West Africa, Europe and North America.
- Completion of global restructuring of Bristow's operations as part of the continuing implementation of our global business strategy, significantly lowering our effective tax rate.
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
received (890) (3,846)
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 Six Months Ended
September 30, September 30,
2010 2009 2010 2009
Gross revenue:
Europe $ 117,595 $ 113,913 $ 219,286 $ 228,978
North America 55,281 48,737 108,092 98,593
West Africa 58,110 51,452 117,206 106,269
Australia 37,364 30,333 72,655 58,496
Other International 36,295 37,007 69,114 70,001
Corporate and other 8,421 11,362 19,263 23,178
Intrasegment eliminations (507) (1,189) (819) (3,448)
Corporate and other $ 312,559 $ 291,615 $ 604,797 $ 582,067
Operating income (loss):
Europe $ 21,612 $ 19,063 $ 39,911 $ 38,841
North America 8,904 4,716 14,212 9,142
West Africa 17,158 15,064 32,794 28,727
Australia 6,094 7,011 14,046 12,667
Other International 11,102 12,978 13,367 20,190
Corporate and other (13,208) (10,145) (24,707) (22,117)
Gain on disposal of other
assets 1,897 4,880 3,615 10,889
Consolidated total $ 53,559 $ 53,567 $ 93,238 $ 98,339
Operating margin:
Europe 18.4 % 16.7 % 18.2 % 17.0 %
North America 16.1 % 9.7 % 13.1 % 9.3 %
West Africa 29.5 % 29.3 % 28.0 % 27.0 %
Australia 16.3 % 23.1 % 19.3 % 21.7 %
Other International 30.6 % 35.1 % 19.3 % 28.8 %
Consolidated total 17.1 % 18.4 % 15.4 % 16.9 %
Flight hours (excludes
Bristow Academy and
unconsolidated
affiliates):
Europe 14,432 14,242 27,399 29,097
North America 23,279 21,215 44,683 43,332
West Africa 9,572 8,470 19,332 17,420
Australia 3,318 2,794 6,558 5,674
Other International 12,577 11,810 24,055 22,935
Consolidated total 63,178 58,531 122,027 118,458
BRISTOW GROUP INC. AND SUBSIDIARIES
AIRCRAFT COUNT
AS OF SEPTEMBER 30, 2010
Aircraft in Consolidated Fleet
Helicopters
Fixed Total Unconsolidated
Small Medium Large Training Wing (1) Affiliates(2) Total
Europe — 14 37 — — 51 63 114
North America 72 27 6 — — 105 — 105
West Africa 12 33 5 — 3 53 — 53
Australia 3 14 18 — — 35 — 35
Other
International 5 42 12 — — 59 136 195
Corporate and
other — — — 76 — 76 — 76
Total 92 130 78 76 3 379 199 578
Aircraft not
currently in
fleet: (3)
On order — 5 7 — — 12
Under option — 25 10 — — 35
(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.
Released November 4, 2010