Bristow Group Inc. Reports Fiscal 2007 Third Quarter Financial Results
HOUSTON--(BUSINESS WIRE)--
Bristow Group Inc. (NYSE: BRS) today reported financial results for its fiscal 2007 third quarter and nine months ended December 31, 2006.
Highlights included the following:
For the quarter ended December 31, 2006:
-- Total revenue of $223.8 million increased by 16.4 percent over
the third quarter a year ago due to increased revenues in most
of our business units driven by a favorable change in mix of
aircraft operating, improved pricing and the addition of new
aircraft;
-- Operating income of $21.0 million increased by 18.3 percent
primarily due to increases in revenues and gains on sales of
aircraft partially offset by higher maintenance and salary
expenses;
-- Net income of $10.5 million decreased 21.6 percent versus net
income for the third quarter a year ago and earnings per
diluted share of $0.31 decreased 45.6 percent compared to the
same three-month period, primarily due to the items related to
corporate activities discussed below under "Corporate Items
Affecting the Comparability of Results";
-- In contrast to the nine-month period, diluted earnings per
share for the quarter ended December 31, 2006 was reduced by
the effect of inclusion of preferred stock dividends, and the
weighted-average shares outstanding used to compute diluted
earnings per share did not include the assumed conversion of
preferred stock outstanding into common shares. The
computation was different in the third quarter because
inclusion of these shares and the adjustment for preferred
stock dividends would have had an anti-dilutive effect for the
period.
For the nine months ended December 31, 2006:
-- Total revenue of $669.1 million increased by 17.9 percent over
the same period a year ago due to increased flight hours,
improved pricing and the addition of new aircraft;
-- Operating income of $82.9 million increased by 51.1 percent
primarily due to increases in revenues and gains on sales of
aircraft partially offset by higher maintenance and salary
expenses;
-- Net income of $46.8 million rose 16.9 percent versus net
income for the nine months ended December 31, 2005 and
earnings per diluted share of $1.80 rose 5.9 percent compared
to the same period a year ago, primarily due to the items
related to corporate activities discussed below under
"Corporate Items Affecting the Comparability of Results";
-- Diluted earnings per share for the nine months ended December
31, 2006 was reduced by the effect of weighted-average shares
resulting from the assumed conversion of the preferred stock
at the conversion rate that results in the most dilution.
These shares were included in the calculation for the
nine-month period, as inclusion of those shares was dilutive
for the period.
Corporate Items Affecting Comparability of Results:
-- Net income and diluted earnings per share for the quarter and
nine-month period ended December 31, 2006 reflected the
following items related to corporate activities (see attached
table and accompanying notes for details and amounts by
period) that affect the comparability of our results:
-- Costs expected to be incurred in connection with the
resolution of the investigation by the U.S. Securities and
Exchange Commission ("SEC");
-- Legal fees incurred for the continuing Department of
Justice ("DOJ") investigation;
-- Acquisition costs previously deferred but expensed in the
quarter ended December 31, 2006 because the acquisition is
no longer probable;
-- Tax expense from the sale of the assets of Turbo Engines,
Inc. ("Turbo") on November 30, 2006, which increased the
effective tax rates;
-- Foreign currency transaction gains and losses. However,
the effects of these foreign currency transaction gains
and losses were offset to a large extent by corresponding
charges or benefits in the cumulative translation
adjustment in stockholders' investment with no overall
economic effect;
-- The dilutive effect of preferred stock dividends or shares
partially offset by interest income on unused offering
proceeds.
Capital and Liquidity:
-- The December 31, 2006 consolidated balance sheets reflect
$849.1 million in stockholders' investment and $259.9 million
of indebtedness or 23.4 percent leverage;
-- We had $219.7 million in cash and an undrawn $100 million
revolving credit facility;
-- We generated $67.9 million in cash from operations and spent
$209 million on aircraft during the nine months ended December
31, 2006;
-- Aircraft purchase commitments totaled $331.0 million with
options totaling $386.2 million as of December 31, 2006. In
early calendar year 2007, we added further commitments (for
which no previous option existed) of $63.6 million.
William E. Chiles, president and chief executive officer of Bristow Group Inc., said, "We are pleased with our operating results for the December quarter, although net income and earnings per share were negatively affected by various items which related primarily to corporate events and activities and non-operating expenses. Strong customer demand for our services continued during the quarter and is expected for the foreseeable future. Based on this robust demand and the limited supply of aircraft, we ordered additional large aircraft during and subsequent to the third quarter. We expect to realize the earnings power of our investments in these and other new aircraft when a significant number of our new aircraft are placed in service and contributing to our earnings in late fiscal 2008."
CONFERENCE CALL
Management will conduct a conference call starting at 10:00 a.m. EST (9:00 a.m. CST) on Tuesday, February 6, 2007, to review financial results for the three and nine months ended December 31, 2006. 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 "Q3 2007 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 U.S.:
-- Live: Dial toll free (800) 706-7749, passcode: 74135626
-- Replay: A telephone replay will be available through March 6,
2007, by dialing toll free (888) 286-8010, passcode: 44407139
Via Telephone outside the U.S.:
-- Live: Dial (617) 614-3474, passcode: 74135626
-- Replay: A telephone replay will be available through March 6,
2007 by dialing (617) 801-6888, passcode: 44407139
ABOUT BRISTOW GROUP INC.
Bristow Group Inc. is a leading provider of helicopter services to the worldwide energy industry. Through its subsidiaries, affiliates and joint ventures, the Company has major transportation operations in the U.S. Gulf of Mexico and the North Sea, and in most of the other major offshore oil and gas producing regions of the world, including Alaska, Australia, Brazil, Mexico, Nigeria, Russia and Trinidad. Additionally, the Company is a leading provider of production management services for oil and gas production facilities in the U.S. Gulf of Mexico. The Company's Common Stock trades on the New York Stock Exchange under the symbol BRS.
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 results, the addition of new aircraft to our fleet, future investments and earnings power of aircraft. 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 reports on Form 10-Q for each quarter during fiscal 2007 and the annual report on Form 10-K for the year ended March 31, 2006. 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.
BRISTOW GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
December 31, December 31,
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Gross revenue:
Operating revenue from non-
affiliates $191,301 $155,864 $564,426 $470,531
Operating revenue from
affiliates 10,701 13,715 34,411 37,994
Reimbursable revenue from
non-affiliates 20,668 21,751 66,884 56,091
Reimbursable revenue from
affiliates 1,172 937 3,392 2,993
--------- --------- --------- ---------
223,842 192,267 669,113 567,609
--------- --------- --------- ---------
Operating expenses:
Direct costs 151,193 126,120 438,534 375,182
Reimbursable expense 21,488 22,050 69,266 58,114
Depreciation and amortization 11,060 10,653 32,080 32,160
General and administrative 20,164 15,338 52,040 46,005
Loss (gain) on disposal of
assets (1,042) 374 (5,707) 1,276
--------- --------- --------- ---------
202,863 174,535 586,213 512,737
--------- --------- --------- ---------
Operating income 20,979 17,732 82,900 54,872
Earnings from unconsolidated
affiliates, net of losses 2,106 1,351 5,393 1,770
Interest income 3,841 898 6,200 2,879
Interest expense (2,539) (3,903) (8,646) (11,288)
Other income (expense), net (5,226) 2,296 (11,319) 4,308
--------- --------- --------- ---------
Income before provision for
income taxes and minority
interest 19,161 18,374 74,528 52,541
Provision for income taxes (8,453) (4,984) (26,724) (12,453)
Minority interest (257) 10 (1,049) (84)
--------- --------- --------- ---------
Net income 10,451 13,400 46,755 40,004
Preferred stock dividends (3,150) - (3,471) -
--------- --------- --------- ---------
Net income available to
common stockholders $ 7,301 $ 13,400 $ 43,284 $ 40,004
========= ========= ========= =========
Earnings per common share:
Basic $ 0.31 $ 0.57 $ 1.85 $ 1.71
========= ========= ========= =========
Diluted $ 0.31 $ 0.57 $ 1.80 $ 1.70
========= ========= ========= =========
Preferred dividends declared
per common share $ 0.13 $ - $ 0.13 $ -
========= ========= ========= =========
Weighted average common shares
outstanding:
Basic 23,506 23,343 23,428 23,335
========= ========= ========= =========
Diluted 23,641 23,598 25,967 23,601
========= ========= ========= =========
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,
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Flight hours (excludes
unconsolidated affiliates):
Helicopter Services:
North America 34,742 38,131 118,353 115,516
South and Central America 9,973 9,569 28,889 29,198
Europe 10,917 9,329 31,772 29,323
West Africa 9,733 8,867 27,795 25,836
Southeast Asia 3,059 3,117 9,328 8,844
Other International 2,641 1,728 7,119 5,020
--------- --------- --------- ---------
Consolidated total 71,065 70,741 223,256 213,737
========= ========= ========= =========
Three Months Ended Nine Months Ended
December 31, December 31,
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Gross revenue:
Helicopter Services:
North America $ 62,758 $ 56,869 $195,863 $170,571
South and Central America 13,488 11,427 40,130 31,811
Europe 73,256 59,998 216,767 181,903
West Africa 35,062 27,427 98,009 79,876
Southeast Asia 18,181 15,789 52,848 44,285
Other International 11,462 9,087 32,599 24,756
EH Centralized Operations 15,918 14,677 45,049 39,604
Intrasegment eliminations (19,116) (16,676) (54,321) (48,811)
--------- --------- --------- ---------
Total Helicopter Services 211,009 178,598 626,944 523,995
Production Management Services 15,130 16,253 50,599 50,163
Corporate - 8 (26) 40
Intersegment eliminations (2,297) (2,592) (8,404) (6,589)
--------- --------- --------- ---------
Consolidated total $223,842 $192,267 $669,113 $567,609
========= ========= ========= =========
Operating income:
Helicopter Services:
North America $ 9,078 $ 8,785 $ 29,341 $ 33,159
South and Central America 2,993 1,391 9,904 2,006
Europe 3,803 3,628 21,278 20,553
West Africa 3,153 1,806 6,381 5,911
Southeast Asia 1,956 1,701 5,056 2,786
Other International 905 2,192 5,340 4,376
EH Centralized Operations 5,565 3,302 15,472 2,601
--------- --------- --------- ---------
Total Helicopter Services 27,453 22,805 92,772 71,392
Production Management Services 739 1,117 3,546 3,675
Gain (loss) on disposal of
assets 1,042 (373) 5,707 (1,276)
Corporate (8,255) (5,817) (19,125) (18,919)
--------- --------- --------- ---------
Consolidated total $ 20,979 $ 17,732 $ 82,900 $ 54,872
========= ========= ========= =========
Operating margin:
Helicopter Services:
North America 14.5% 15.4% 15.0% 19.4%
South and Central America 22.2% 12.2% 24.7% 6.3%
Europe 5.2% 6.0% 9.8% 11.3%
West Africa 9.0% 6.6% 6.5% 7.4%
Southeast Asia 10.8% 10.8% 9.6% 6.3%
Other International 7.9% 24.1% 16.4% 17.7%
EH Centralized Operations 35.0% 22.5% 34.3% 6.6%
Total Helicopter Services 13.0% 12.8% 14.8% 13.6%
Production Management Services 4.9% 6.9% 7.0% 7.3%
Consolidated total 9.4% 9.2% 12.4% 9.7%
BRISTOW GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, March 31,
2006 2006
------------ -----------
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 219,699 $ 122,482
Accounts receivable from non-affiliates, net
of allowance for doubtful accounts of $3.1
million and $4.6 million, respectively 163,361 144,521
Accounts receivable from affiliates, net of
allowance for doubtful accounts of $4.1
million and $4.6 million, respectively 16,887 15,884
Inventories 161,067 147,860
Prepaid expenses and other 12,701 16,519
------------ -----------
Total current assets 573,715 447,266
Investments in unconsolidated affiliates 42,969 39,912
Property and equipment -- at cost:
Land and buildings 48,918 40,672
Aircraft and equipment 1,079,273 838,314
------------ -----------
1,128,191 878,986
Less: accumulated depreciation and
amortization (302,877) (263,072)
------------ -----------
825,314 615,914
Goodwill 20,478 26,837
Prepaid pension costs 45,125 37,207
Other assets 10,163 9,277
------------ -----------
$1,517,764 $1,176,413
============ ===========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current liabilities:
Accounts payable $ 36,466 $ 41,227
Accrued wages, benefits and related taxes 43,126 45,958
Income taxes payable 457 6,537
Other accrued taxes 8,647 6,471
Deferred revenues 14,127 9,994
Other accrued liabilities 37,149 31,083
Deferred taxes 10,892 5,025
Short-term borrowings and current maturities
of long-term debt 22,198 17,634
------------ -----------
Total current liabilities 173,062 163,929
Long-term debt, less current maturities 237,749 247,662
Accrued pension liabilities 153,609 136,521
Other liabilities and deferred credits 17,485 18,016
Deferred taxes 81,494 68,281
Minority interest 5,292 4,307
Commitments and contingencies
Stockholders' investment:
5.50% mandatory convertible preferred stock,
$.01 par value, authorized and outstanding
4,600,000 shares; entitled on liquidation
to $230 million; net of offering costs of
$7.4 million 222,554 -
Common Stock, $0.01 par value, authorized
35,000,000 shares; outstanding: 23,534,536
shares as of December 31 and 23,385,473
shares as of March 31 (exclusive of
1,281,050 treasury shares) 235 234
Additional paid-in capital 166,559 158,762
Retained earnings 491,335 447,524
Accumulated other comprehensive loss (31,610) (68,823)
------------ -----------
849,073 537,697
------------ -----------
$1,517,764 $1,176,413
============ ===========
BRISTOW GROUP INC. AND SUBSIDIARIES
CORPORATE ITEMS AFFECTING THE COMPARABILITY OF RESULTS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
--------------------------------------
December 31, 2006 December 31, 2005
------------------- ------------------
Diluted Diluted
Net Earnings Net Earnings
Income Per Share Income Per Share
Impact Impact Impact Impact
--------- --------- -------- ---------
Investigations:
SEC (1) $ (2,067) $ (0.09) $(1,790) $ (0.08)
DOJ (2) (462) (0.02) (712) (0.03)
Acquisitions and divestitures:
Impairment of investment in
Brazilian joint venture (3) - - (758) (0.03)
Expense of previously deferred
acquisition costs (4) (1,302) (0.06) - -
Turbo asset sale (5) (2,419) (0.10) - -
Foreign currency transaction
(gains) losses (6) (2,352) (0.10) 1,677 0.07
Preferred stock (7) 1,608 (0.07) - -
--------- --------- -------- ---------
Total $ (6,994) $ (0.44) $(1,583) $ (0.07)
========= ========= ======== =========
Nine Months Ended
--------------------------------------
December 31, 2006 December 31, 2005
------------------- ------------------
Diluted Diluted
Net Earnings Net Earnings
Income Per Share Income Per Share
Impact Impact Impact Impact
--------- --------- -------- ---------
Investigations:
SEC (1) $ (2,096) $ (0.08) $(7,789) $ (0.33)
DOJ (2) (1,041) (0.04) (1,064) (0.05)
Acquisitions and divestitures:
Impairment of investment in
Brazilian joint venture (3) - - (794) (0.03)
Expense of previously deferred
acquisition costs (4) (1,275) (0.05) - -
Turbo asset sale (5) (2,421) (0.09) - -
Foreign currency transaction
(gains) losses (6) (6,450) (0.25) 4,044 0.17
Preferred stock (7) 1,758 (0.16) - -
--------- --------- -------- ---------
Total $(11,525) $ (0.67) $(5,603) $ (0.24)
========= ========= ======== =========
(1) Represents costs incurred in conjunction with the SEC investigation regarding findings resulting from the internal review initiated by the Audit Committee of our board of directors in February 2005 to review certain payments made by two of our affiliated entities in a foreign country. The costs incurred for the three and nine months ended December 31, 2006 consist primarily of $3.0 million (pre-tax) recorded for costs and fees we currently expect to incur in connection with the resolution of the SEC investigation, a substantial portion of which relates to legal fees in connection with the investigation. There can be no assurance that the amounts currently recorded will be sufficient to resolve such matters or that such matters can ultimately be resolved until final action by the SEC.
(2) Represents legal and other professional fees incurred in connection with a document subpoena received from the Antitrust Division of the DOJ in June 2005, which related to a grand jury investigation of potential antitrust violations among providers of helicopter transportation services in the U.S. Gulf of Mexico focusing on activities during the period from January 1, 2000 to June 13, 2005.
(3) Represents an impairment charge recorded during the three months ended December 31, 2005 to reduce the recorded value of our 50% investment in Aeroleo Taxi Aereo S.A. ("Aeroleo"), our Brazilian affiliate, as we expected at that time that our investment would not be recoverable. On December 22, 2006, we entered into an agreement to terminate our ownership interest in Aeroleo. The closing of this transaction is pending approval from a regulatory agency in that country and is expected to result in a pre-tax gain of approximately $2.5 million.
(4) Represents expense recorded in December 2006 for acquisition costs previously deferred in connection with an acquisition we were evaluating as we determined that the acquisition is no longer probable.
(5) On November 30, 2006, we completed a sale of the assets of our aircraft engine overhaul business, Turbo, to Timken Alcor Aerospace Technologies, Inc. ("Timken") for approximately $14.6 million ($13.2 million of which was received in cash upon closing of the transaction), including estimated post-closing adjustments. The sale was effective November 30, 2006 and resulted in a pretax gain of $0.1 million. However, the transaction resulted in additional tax expense of $2.5 million related to non-deductible goodwill recorded at the time we acquired Turbo in 2001.
(6) Represents foreign currency transaction gains and losses resulting from changes in exchange rates during the applicable periods, primarily related to the British pound sterling. These gains and losses arose primarily from U.S. dollar-denominated transactions entered into by Bristow Aviation Holdings, Ltd., one of our consolidated subsidiaries (whose functional currency is the British pound sterling). The effects of these foreign currency transaction gains and losses were offset to a large extent by corresponding charges or benefits in the cumulative translation adjustment in stockholders' investment with no overall economic effect.
(7) Represents the effect of the preferred stock offering completed in September and October 2006. The net income effect results from interest income earned on cash proceeds generated from the offering. Diluted earnings per share for the three months ended December 31, 2006 was reduced by the effect of the inclusion of preferred stock dividends in the calculation for that period, partially offset by the impact of higher interest income. Weighted-average earnings per share for the three months ended December 31, 2006 excluded the assumed conversion of preferred stock outstanding into common shares as the result of the inclusion of these shares and the adjustment for preferred stock dividends would have been anti-dilutive for the period. Diluted earnings per share for the nine months ended December 31, 2006 was reduced by the effect of the inclusion of weighted average shares resulting from the assumed conversion of the preferred stock at the conversion rate that results in the most dilution, partially offset by the impact of higher interest income.
Source: Bristow Group Inc.
Released February 5, 2007