Bristow Group Reports Fiscal 2009 Second Quarter Financial Results
HOUSTON, Nov. 6 /PRNewswire-FirstCall/ -- Bristow Group Inc. (NYSE: BRS) today reported financial results for the three months ended September 30, 2008, which is the Company's fiscal 2009 second quarter.
Highlights include:
For the September 2008 quarter:
-- Revenue increased 12% versus the September 2007 quarter to $291.7
million. Revenue gains occurred across all of our business units, but
most significantly in our U.S. Gulf of Mexico, Europe and Southeast
Asia business units. Revenue gains were driven in large part by the
addition of new aircraft and improved pricing.
-- Operating income decreased 19% to $40.4 million from $49.7 million in
the September 2007 quarter primarily as a result of the items discussed
below.
-- Income from continuing operations decreased 16% to $28.0 million from
$33.3 million in the September 2007 quarter primarily as a result of
the items discussed below, but also as a result of decreased earnings
from unconsolidated affiliates and an increase in net interest expense
which resulted from debt offerings in November 2007 and June 2008.
These items were partially offset by gains on disposal of assets and an
increase in other income (expense), net which primarily related to
foreign currency exchange gains driven by a strengthening U.S. dollar.
-- Diluted earnings per share decreased to $0.78 from $1.12 in the
September 2007 quarter primarily as a result of the decrease in income
from continuing operations and the June 2008 equity offering, which
reduced diluted earnings per share in the September 2008 quarter by
$0.13.
-- The largest factors affecting operating results for the September 2008
quarter were:
-- Hurricanes in the U.S. Gulf of Mexico during the September 2008
quarter, which resulted in a decrease in flight activity and an
increase in costs, reducing operating income by $2.1 million,
income from continuing operations by $1.5 million and diluted
earnings per share by $0.04.
-- Revenue recognized in the September 2008 quarter related to
contractual rate escalations and retroactive rate adjustments
applicable to services performed in prior quarters in Europe,
which increased operating income by $4.5 million, income from
continuing operations by $3.2 million and diluted earnings per
share by $0.09.
-- Decreases in operating results in Australia -- part of our
Southeast Asia business unit -- which reduced operating income by
$5.9 million, income from continuing operations by $4.2 million
and diluted earnings per share by $0.12. Operating results in
Australia were lower than expected as a result of delays in
planned contracts, increased compensation costs, unscheduled line
maintenance and re-positioning of aircraft.
-- As in the June 2008 quarter and as was anticipated for the
September 2008 quarter, Eastern Hemisphere Centralized Operations
experienced higher maintenance expense (primarily due to foreign
currency movements related to the portion of our third party
maintenance contracts denominated in euros and an increase in
heavy maintenance activities) which reduced operating income by
$2.7 million, income from continuing operations by $1.9 million
and diluted earnings per share by $0.05.
-- Earnings for the September 2007 quarter benefited from the reversal of
$1 million of accrued costs associated with the settlement of the U.S.
Securities and Exchange Commission ("SEC") investigation, items in
Nigeria, including $2.1 million of retroactive rate increases related
to services rendered in a prior quarter and the reversal of $5.4
million in sales tax contingency, and $2.4 million of contractual rate
escalations on services performed in prior quarters under contracts
with our customers in Europe, which collectively increased operating
income by $10.9 million, income from continuing operations by $7.3
million and diluted earnings per share by $0.24 in the September 2007
quarter.
For the six months ended September 30, 2008:
-- Revenue increased 17% versus the six months ended September 30, 2007 to
$575.8 million. Revenue gains occurred across all of our business
units, but most significantly in our U.S. Gulf of Mexico, Europe, West
Africa and Southeast Asia business units. Revenue gains were driven in
large part by the addition of new aircraft and improved pricing.
-- Operating income decreased 8% to $72.0 million from $78.5 million for
the six months ended September 30, 2007 primarily as a result of the
items discussed below.
-- Income from continuing operations decreased 8% to $50.7 million from
$55.2 million for the six months ended September 30, 2007 as a result
of decreased operating income and an increase in net interest expense
which resulted from debt offerings in June and November 2007 and June
2008. These items were partially offset by gains on disposal of assets
for the six months ended September 30, 2008 - compared to losses in the
same period a year ago -- along with an increase in other income
(expense), net, which primarily related to foreign currency exchange
gains driven by a strengthening U.S. dollar, and an increase in
earnings from unconsolidated affiliates.
-- Diluted earnings per share decreased to $1.50 from $1.87 for the six
months ended September 30, 2007 primarily as a result of the decrease
in income from continuing operations and the June 2008 equity offering,
which reduced diluted earnings per share for the six months ended
September 30, 2008 by $0.15.
-- The largest factors affecting operating results for the six months
ended September 30, 2008 were:
-- Hurricanes in the U.S. Gulf of Mexico during the September 2008
quarter, which resulted in a decrease in flight activity and an
increase in costs, reducing operating income by $2.1 million,
income from continuing operations by $1.5 million and diluted
earnings per share by $0.05.
-- Revenue recognized during the six months ended September 30, 2008
related to contractual rate escalations and retroactive rate
adjustments applicable to services performed in prior periods in
Europe of $2.9 million and Russia -- part of our Other
International business unit -- of $1.2 million, which increased
operating income by $4.1 million, income from continuing
operations by $2.9 million and diluted earnings per share by
$0.09.
-- Decreases in operating results in Australia, part of our Southeast
Asia business unit -- which reduced operating income by $8.5
million -- income from continuing operations by $6.1 million and
diluted earnings per share by $0.18. Operating results in
Australia were lower than expected as a result of delays in
planned contracts, increased compensation costs, unscheduled line
maintenance and re-positioning of aircraft.
-- Higher maintenance expense in Eastern Hemisphere Centralized
Operations (primarily due to foreign currency movements related to
the portion of our third party maintenance contracts denominated
in euros and an increase in heavy maintenance activities) which
reduced operating income by $9.6 million, income from continuing
operations by $6.9 million and diluted earnings per share by
$0.20.
-- The restructuring of our ownership interests in affiliates in
Mexico -- part of our Latin America business unit -- which
resulted in several changes effective April 1, 2008, which
increased operating income by $0.8 million, income from continuing
operations by $3.7 million and diluted earnings per share by
$0.11.
-- Financial results for the six months ended September 30, 2007 included
a reversal of accrued costs of $1 million associated with the
settlement of the SEC investigation, the reversal of $5.4 million in
sales tax contingency in Nigeria and $1.9 million of contractual rate
escalations on services performed in prior periods under contracts with
our customers in Europe, which collectively increased operating income
by $8.3 million, income from continuing operations by $5.5 million and
diluted earnings per share by $0.18.
Sale of Certain Single-Engine Aircraft
As previously announced, on October 30, 2008, we closed the sale of 53 single-engine aircraft and related assets operating in the U.S. Gulf of Mexico for approximately $65 million, 20% of which was received at closing, with the remainder to be paid to us from escrow as the titles to the aircraft are processed by the U.S. Federal Aviation Administration. The sale is expected to result in a pre-tax gain of approximately $40 million, or $0.72 per diluted share after tax, in the December 2008 quarter.
Acquisition of Additional Interest in Norsk Helikopter
Also as previously announced, on October 31, 2008, we acquired the remaining interest in Norsk Helikopter AS, our affiliate in Norway of which we previously owned 49%. Our partner in Norsk received approximately $5.1 in cash and all of Lufttransport AS, an air ambulance subsidiary of Norsk. We now own 100% of Norsk and will consolidate this entity effective October 31, 2008, including approximately $22 million in debt. Norsk, excluding Lufttransport, generated $133.9 million of revenue, $4.8 million of operating income and $3.1 million of net income for the year ended December 31, 2007. Our Europe operations for our fiscal year ended March 31, 2008 generated $13.5 million in revenue from leasing aircraft to Norsk, which will be eliminated in consolidation in future periods.
Capital and Liquidity
-- At September 30, 2008 we continued to have a strong balance sheet,
which allows us the financial flexibility to take advantage of growth
opportunities:
-- $1.2 billion in stockholders' investment and $730.9 million of
indebtedness
-- $399.1 million in cash and $100 million undrawn revolving credit
facility
-- Aircraft purchase commitments totaled $379.9 million for 42
aircraft, with options totaling $806.3 million for 47 aircraft
-- During the six months ended September 30, 2008, we generated strong
cash flows, including:
-- $55.5 million of cash from operating activities
-- $62.2 million of EBITDA
-- $336.6 million in net proceeds from the sale of convertible senior
notes and common stock
-- We used $278.5 million for capital expenditures -- primarily for
aircraft
CEO Remarks
"We are pleased with our continued growth, which was driven by the addition of new aircraft and improved pricing. Excluding the previously disclosed impact of the worse than usual hurricane season in the U.S. Gulf of Mexico and the increased Eastern Hemisphere maintenance costs, our consolidated operating results were in line with our expectations with better than expected results in Europe being offset by lower than expected results in Australia. Some of these items are not expected to recur (e.g. extent of hurricanes and portion of costs in Australia), and we have taken actions to address and mitigate the portion of the costs expected to continue," said William E. Chiles, President and Chief Executive Officer of Bristow Group Inc.
"Over the past three years we have raised approximately $1.1 billion of capital in a mix of debt and equity through public and private financings. We expect that our September 30, 2008 cash balance of $399 million will be sufficient to satisfy our remaining aircraft purchase commitments of $380 million, 61% of which are payable after March 31, 2009.
"The cash we expect to generate from future operations, along with the sales of aircraft and the $100 million borrowing capacity under our revolving credit facility, should provide us with additional uncommitted liquidity. We remain disciplined in our capital program. In addition, we are taking proactive measures to protect the Company's liquidity during this period of disruption in the financial markets, including seeking secure investments for our cash and monitoring the ability of our business counterparties to fulfill their obligations to us.
"We remain in close contact with our customers to understand their plans for future operating expenditures, which are the primary source of our revenue, as well as their capital expenditures, which fund a smaller portion of our income. At this time, we have not experienced a decline in customer demand for our services. Most of our pending business is production based and therefore less likely to be curtailed as a result of lower oil and gas prices. We expect the aircraft on order and the available uncommitted liquidity to allow us deliver on our growth plans."
CONFERENCE CALL
Management will conduct a conference call starting at 10:00 a.m. EST (9:00 a.m. CST) on Thursday, November 6, 2008, to review financial results for the fiscal 2009 second quarter ended September 30, 2008. The conference call can be accessed as follows:
Via Webcast:
-- Visit Bristow Group's investor relations Web page at
http://www.bristowgroup.com
-- Live: Click on the link for "Q2 2009 Bristow Group Inc. Earnings
Conference Call"
-- Replay: A replay via webcast will be available approximately one hour
after the call's completion
Via Telephone within the U.S.:
-- Live: Dial toll free (800) 218-0204
-- Replay: A telephone replay will be available through Thursday, November
20, by dialing toll free (800) 405-2236, passcode: 11121266#
Via Telephone outside the U.S.:
-- Live: Dial (303) 262-2163
-- Replay: A telephone replay will be available through Thursday, November
20, by dialing (303) 590-3000, passcode: 11121266#
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. Through its subsidiaries, affiliates and joint ventures, the Company has major transportation operations in most of the major offshore oil and gas producing regions of the world, including in the North Sea, the U.S. Gulf of Mexico, Nigeria and Australia. For more information, visit the Company's website at http://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 customer demand, future operations, future liquidity, ability to satisfy commitments, supply of helicopters and growth plans and opportunities. 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 ended September 30, 2008 and the annual report on Form 10-K for the fiscal year ended March 31, 2008. 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,
------------------- -------------------
2007 2008 2007 2008
Gross revenue: --------- --------- --------- ---------
Operating revenue from
non-affiliates $219,858 $248,526 $419,767 $489,660
Operating revenue from
affiliates 13,858 18,430 24,955 35,700
Reimbursable revenue from
non-affiliates 23,594 23,208 42,636 47,579
Reimbursable revenue from
affiliates 2,498 1,524 3,601 2,872
--------- --------- --------- ---------
259,808 291,688 490,959 575,811
--------- --------- --------- ---------
Operating expense:
Direct cost 152,624 188,393 305,712 375,366
Reimbursable expense 24,098 24,681 44,243 50,748
Depreciation and amortization 12,351 15,485 23,682 30,440
General and administrative 20,260 25,984 38,645 53,190
Loss (gain) on disposal of
assets 757 (3,302) 173 (5,967)
--------- --------- --------- ---------
210,090 251,241 412,455 503,777
--------- --------- --------- ---------
Operating income 49,718 40,447 78,504 72,034
Earnings from unconsolidated
affiliates, net of losses 4,118 1,971 7,508 9,694
Interest income 3,960 3,205 6,084 4,652
Interest expense (6,523) (8,404) (9,451) (16,897)
Other income (expense), net 360 2,070 786 3,762
--------- --------- --------- ---------
Income from continuing
operations before provision
for income taxes and minority
interest 51,633 39,289 83,431 73,245
Provision for income taxes (18,294) (10,310) (27,733) (20,914)
Minority interest (4) (952) (453) (1,655)
--------- --------- --------- ---------
Income from continuing
operations 33,335 28,027 55,245 50,676
Discontinued operations:
Income (loss) from
discontinued operations
before provision for income
taxes 962 (379) 2,119 (379)
(Provision) benefit for income
taxes on discontinued
operations (347) 133 (742) 133
--------- --------- --------- ---------
Income (loss) from
discontinued operations 615 (246) 1,377 (246)
--------- --------- --------- ---------
Net income 33,950 27,781 56,622 50,430
Preferred stock dividends (3,163) (3,163) (6,325) (6,325)
--------- --------- --------- ---------
Net income available to common
stockholders $30,787 $24,618 $50,297 $44,105
========= ========= ========= =========
Basic earnings per common share:
Earnings from continuing
operations 1.27 $0.85 $2.07 $1.65
Earnings (loss) from
discontinued operations 0.03 (0.01) 0.06 (0.01)
--------- --------- --------- ---------
Net earnings $1.30 $0.84 $2.13 $1.64
========= ========= ========= =========
Diluted earnings per common share:
Earnings from continuing
operations $1.10 $0.79 $1.83 $1.51
Earnings (loss) from
discontinued operations 0.02 (0.01) 0.04 (0.01)
--------- --------- --------- ---------
Net earnings $1.12 $0.78 $1.87 $1.50
========= ========= ========= =========
Weighted average number of common
shares outstanding:
Basic 23,731 29,085 23,635 26,941
Diluted 30,408 35,636 30,263 33,487
BRISTOW GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, September 30,
2008 2008
------------ ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $290,050 $399,055
Accounts receivable from non-affiliates 204,599 192,933
Accounts receivable from affiliates 11,316 25,462
Inventories 176,239 166,958
Prepaid expenses and other 24,177 20,654
Assets held for sale - U.S. Gulf of Mexico -- 21,369
------------ ------------
Total current assets 706,381 826,431
Investment in unconsolidated affiliates 52,467 33,951
Property and equipment -- at cost:
Land and buildings 60,056 57,341
Aircraft and equipment 1,428,996 1,649,743
------------ ------------
1,489,052 1,707,084
Less -- Accumulated depreciation and
amortization (316,514) (302,538)
------------ ------------
1,172,538 1,404,546
Goodwill 15,676 16,571
Other assets 30,293 25,605
------------ ------------
$1,977,355 $2,307,104
============ ============
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current liabilities:
Accounts payable $49,650 $45,090
Accrued wages, benefits and related taxes 35,523 32,290
Income taxes payable 5,862 229
Other accrued taxes 1,589 3,848
Deferred revenues 15,415 14,096
Accrued maintenance and repairs 13,250 13,579
Accrued interest 5,656 6,414
Other accrued liabilities 22,235 24,110
Deferred taxes 9,238 11,553
Short-term borrowings and current maturities
of long-term debt 6,541 5,378
------------ ------------
Total current liabilities 164,959 156,587
Long-term debt, less current maturities 599,677 725,534
Accrued pension liabilities 134,156 117,566
Other liabilities and deferred credits 14,805 15,760
Deferred taxes 91,747 98,802
Minority interest 4,570 11,064
Commitments and contingencies
Stockholders' investment:
5.50% mandatory convertible preferred stock 222,554 222,554
Common stock 239 291
Additional paid-in capital 186,390 416,025
Retained earnings 606,931 652,291
Accumulated other comprehensive loss (48,673) (109,370)
------------ ------------
967,441 1,181,791
------------ ------------
$1,977,355 $2,307,104
============ ============
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,
------------------ ------------------
2007 2008 2007 2008
-------- -------- -------- --------
Flight hours (excludes Bristow
Academy and unconsolidated
affiliates):
U.S. Gulf of Mexico 36,621 34,891 74,489 72,530
Arctic 3,002 3,695 5,405 6,132
Latin America 10,810 10,938 22,177 20,002
Europe 11,494 10,265 22,315 20,571
West Africa 9,887 9,647 18,785 19,245
Southeast Asia 3,644 4,841 6,988 9,723
Other International 2,177 1,823 4,724 3,876
-------- -------- -------- --------
Consolidated total 77,635 76,100 154,883 152,079
======== ======== ======== ========
Gross revenue:
U.S. Gulf of Mexico $55,948 $62,491 $111,376 $124,000
Arctic 5,290 6,840 9,647 11,083
Latin America 16,951 19,051 32,987 39,257
WH Centralized Operations 821 2,909 1,975 5,169
Europe 93,459 98,303 176,816 193,733
West Africa 45,799 47,010 79,082 90,310
Southeast Asia 23,858 33,381 46,350 70,261
Other International 12,046 14,215 23,501 27,236
EH Centralized Operations 5,331 8,128 12,136 16,965
Bristow Academy 3,228 5,572 6,247 11,723
Intrasegment eliminations (2,923) (6,208) (9,158) (13,954)
Corporate -- (4) -- 28
-------- -------- -------- --------
Consolidated total $259,808 $291,688 $490,959 $575,811
======== ======== ======== ========
Operating income (loss):
U.S. Gulf of Mexico $9,680 $8,263 $18,779 $16,252
Arctic 1,440 1,900 2,115 2,419
Latin America 4,251 4,553 7,585 11,028
WH Centralized Operations 70 904 1,362 228
Europe 21,895 21,969 36,470 39,445
West Africa 15,492 8,024 18,289 14,540
Southeast Asia 5,107 1,064 9,234 5,250
Other International 1,781 1,578 4,046 2,775
EH Centralized Operations (3,247) (4,467) (7,526) (12,388)
Bristow Academy (391) (159) (482) 387
Gain (loss) on disposal of assets (757) 3,302 (173) 5,967
Corporate (5,603) (6,484) (11,195) (13,869)
-------- -------- -------- --------
Consolidated total $49,718 $40,447 $78,504 $72,034
======== ======== ======== ========
Operating margin:
U.S. Gulf of Mexico 17.3% 13.2% 16.9% 13.1%
Arctic 27.2% 27.8% 21.9% 21.8%
Latin America 25.1% 23.9% 23.0% 28.1%
Europe 23.4% 22.3% 20.6% 20.4%
West Africa 33.8% 17.1% 23.1% 16.1%
Southeast Asia 21.4% 3.2% 19.9% 7.5%
Other International 14.8% 11.1% 17.2% 10.2%
Bristow Academy (12.1)% (2.9)% (7.7)% 3.3%
Consolidated total 19.1% 13.9% 16.0% 12.5%
SOURCE Bristow Group Inc.
Released November 6, 2008