November 3, 2016 - 5:01 PM EDT
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Bristow Group Reports Second Quarter Fiscal Year 2017 Results

HOUSTON, Nov. 3, 2016 /PRNewswire/ -- Bristow Group Inc. (NYSE: BRS) today reported the following results for the quarter ended September 30, 2016. All amounts shown are dollar amounts in thousands unless otherwise noted:



Three Months Ended
September 30,


Six Months Ended
September 30,



2016


2015


% Change


2016


2015


% Change

Operating revenue


$

343,662


$

419,011


(18.0)%


$

699,846


$

859,122


(18.5)%

Net loss


(29,797)


(47,132)


36.8%


(70,569)


(50,389)


(40.0)%

Diluted loss per share


(0.85)


(1.21)


29.8%


(2.02)


(1.49)


(35.6)%

Adjusted EBITDAR (1)


77,354


92,764


(16.6)%


147,717


213,811


(30.9)%

Adjusted net income (loss) (1)


(12,314)


1,271


*


(24,322)


19,876


(222.4)%

Adjusted diluted earnings (loss) per share (1)


(0.35)


0.04


*


(0.69)


0.56


(223.2)%

Operating cash flow


43,436


42,323


2.6%


28,038


58,260


(51.9)%

Capital expenditures


80,803


79,212


2.0%


101,866


146,989


(30.7)%

 



September 30,
2016


June 30,
2016


% Change

Cash


$

100,668


$

122,711


(18.0)%

Undrawn borrowing capacity on Revolving Credit Facility


165,970


192,470


(13.8)%

Total liquidity


$

266,638


$

315,181


(15.4)%

_______________

(1)

A full reconciliation of non-GAAP financial measurements is included at the end of this news release

 * percentage change too large to be meaningful or not applicable

 

For the September 2016 quarter, we reported a GAAP net loss of $29.8 million or diluted loss per share of $0.85 compared to a GAAP net loss of $47.1 million or diluted loss per share of $1.21 for the September 2015 quarter. Additionally, we reported an adjusted net loss of $12.3 million or adjusted diluted loss per share of $0.35 for the September 2016 quarter compared to adjusted net income of $1.3 million or adjusted diluted earnings per share of $0.04 for the September 2015 quarter.

For the September 2016 year-to-date period, we reported a GAAP net loss of $70.6 million or diluted loss per share of $2.02 compared to a GAAP net loss of $50.4 million or diluted loss per share of $1.49 for the September 2015 year-to-date period. Additionally, we reported an adjusted net loss of $24.3 million or adjusted diluted loss per share of $0.69 for the September 2016 year-to-date period compared to adjusted net income of $19.9 million or adjusted diluted earnings per share of $0.56 for the September 2015 year-to-date period.

BUSINESS AND FINANCIAL UPDATE

  • The September 2016 quarter results are consistent with our view that our global oil and gas business is bottoming with financial results in line with internal expectations.
  • We had $267 million of liquidity as of September 30, 2016 after $80.8 million of capital expenditures and $43.4 million of operating cash flows during the September 2016 quarter.
  • U.K. SAR continues to generate stable cash flows; however the post-Brexit depreciation of British pound sterling reduced net income by $5.6 million, diluted earnings per share by $0.16 and adjusted EBITDAR by $7.4 million in the September 2016 quarter.

"While our results continue to be impacted by the challenges facing the oil and gas industry, we have been successful on a number of fronts, including generating positive cash flow, reducing and deferring capital expenditures and amending our bank group facilities in order to improve our business in fiscal 2017 and beyond," said Bristow Group President and Chief Executive Officer Jonathan Baliff. "We continue to be laser focused on safety, liquidity and improving cash generation through revenue and cost savings."

"Our second quarter financial performance was in line with our expectations with sequential quarterly improvement in adjusted EBITDAR. We are actively pursuing financing options and other initiatives to improve our liquidity position and maintain our leadership in this current market environment with further cost reductions and ongoing negotiations with our key business partners."

"On the commercial front, we continue to see lower global oil and gas business performance in line with our expectations. Although we are seeing an increased level of tender activity globally, fiscal 2017 will remain a challenging year from an earnings perspective. Our strategy beyond the fiscal 2017 action plan is designed to return us to profitability, with or without a market recovery, and includes further revenue diversification and operating efficiencies as we continue to prudently manage our balance sheet."

Operating revenue from external clients by line of service was as follows:


Three Months Ended
September 30,


Six Months Ended
September 30,


2016


2015


% Change


2016


2015


% Change














(in thousands, except percentages)

Oil and gas services

$

238,233


$

320,119


(25.6)%


$

490,609


$

668,227


(26.6)%

Fixed wing services

51,972


54,365


(4.4)%


103,300


109,826


(5.9)%

U.K. SAR services

50,850


39,030


30.3%


100,399


67,583


48.6%

Corporate and other

2,607


5,497


(52.6)%


5,538


13,486


(58.9)%

Total operating revenue

$

343,662


$

419,011


(18.0)%


$

699,846


$

859,122


(18.5)%

 

SECOND QUARTER FY2017 RESULTS

The oil and gas industry experienced a significant downturn during fiscal years 2015 and 2016 primarily due to a decline in crude oil prices which negatively impacted activity with our oil and gas clients. While this decline started in fiscal year 2015, activity and pricing declined further in fiscal year 2016 and has continued into fiscal year 2017, resulting in a significant decrease in gross revenue for our oil and gas services year-over-year. This decline in oil and gas revenue was partially offset by the benefit of our diversification efforts with the start-up of the U.K. SAR contract in April 2015 with seven bases coming online throughout fiscal year 2016.

We reported a net loss of $29.8 million and $47.1 million and diluted loss per share of $0.85 and $1.21 for the September 2016 and 2015 quarters, respectively. The year-over-year decrease in net loss and diluted loss per share is primarily driven by goodwill impairment charges recorded in the September 2015 quarter (included in loss on impairment), less of an unfavorable impact from changes in foreign currency exchange rates, lower losses from disposal of assets and lower depreciation and amortization expense, partially offset by the decline in oil and gas revenue discussed above.

The most significant foreign currency exchange rate impacts were from an $11.4 million loss in the September 2015 quarter compared to a $2.9 million gain in the September 2016 quarter from balance sheet revaluations presented as transaction gains (losses) in other income (expense), net, and an $18.6 million larger unfavorable impact in the September 2015 quarter on our earnings from unconsolidated affiliates as results related to Líder were negatively impacted by the devaluation of the Brazilian real in the September 2015 quarter. This favorable year-over-year change was partially offset by a $3.0 million unfavorable income statement translation impact from changes in foreign currency exchange rates compared to the September 2015 quarter driven by the impact of the depreciating British pound sterling resulting from Brexit on the translation of our results in our Europe Caspian region, partially offset by a favorable impact of the devalued naira in our Africa region. Compared to the pre-Brexit exchange rates, the depreciation of the pound sterling versus the U.S. dollar resulted in a $6.7 million pre-tax decrease in earnings during the September 2016 quarter. Similarly, compared to pre-naira devaluation exchange rates from late June 2016, the devaluation of the naira versus the U.S. dollar resulted in a $6.4 million pre-tax increase in earnings during the September 2016 quarter. During the September 2016 quarter, we benefited from the devaluation of the naira as a majority of our revenue in our Africa region is contracted at fixed U.S. dollar values while the expenses incurred in this region are more evenly split between U.S. dollars and naira, resulting in a significant net expense exposure to the naira that translates into higher U.S. dollar earnings for reporting purposes. This is contrary to our position in our Europe Caspian region, where a majority of our revenue is contracted in British pound sterling with our expense being more evenly split between U.S. dollars and pound sterling, resulting in a significant net revenue exposure to the pound sterling that translates into lower U.S. dollar earnings for reporting purposes. 

The GAAP net loss and diluted loss per share for the September 2016 quarter were significantly impacted by the following special items:

  • Organizational restructuring costs of $10.7 million ($7.3 million net of tax), which includes severance expense of $9.6 million related to separation programs across our global organization designed to increase efficiency and reduce costs and other restructuring costs of $1.1 million; $5.0 million of the restructuring costs are included in direct costs and $5.7 million are included in general and administrative expense,
  • Loss on disposal of assets of $2.2 million ($1.5 million net of tax), accelerated depreciation of $1.3 million ($0.9 million net of tax) and impairment of inventory of $7.6 million ($5.3 million net of tax), and
  • A non-cash adjustment related to the valuation of deferred tax assets of $2.5 million.

The September 2015 quarter was impacted by similar items as reflected in the table at the end of this release.

Excluding these items, adjusted net loss and adjusted diluted loss per share were $12.3 million and $0.35, respectively, for the September 2016 quarter. These adjusted results compare to adjusted net income and adjusted diluted earnings per share of $1.3 million and $0.04, respectively, for the September 2015 quarter.

LIQUIDITY AND FINANCIAL FLEXIBILITY

We expect that our liquidity as of September 30, 2016 of $266.6 million, cash flow from operations and proceeds from aircraft sales, as well as future financings will be sufficient to satisfy our capital commitments, including our oil and gas aircraft purchase commitments and remaining capital requirements in connection with our U.K. SAR contract.

"Despite the challenging operating environment, we generated $43 million in operating cash flow in the September quarter demonstrating our commitment to maintaining strong liquidity," said Don Miller, Senior Vice President and Chief Financial Officer. "With the financial flexibility provided by our current amended debt covenants and the deferral of oil and gas aircraft capital expenditures into fiscal 2019 and beyond, we continue to focus on addressing our debt maturities as part of our commitment to maintaining a prudent balance sheet."

REGIONAL PERFORMANCE

Europe Caspian



Three Months Ended
September 30,



2016


2015


% Change










(in thousands, except percentages)

Operating revenue


$

186,098


$

207,072


(10.1)%

Earnings from unconsolidated affiliates


$

65


$

153


(57.5)%

Operating income


$

5,741


$

15,060


(61.9)%

Operating margin


3.1%


7.3%


(57.5)%

Adjusted EBITDAR


$

50,155


$

67,373


(25.6)%

Adjusted EBITDAR margin


27.0%


32.5%


(16.9)%

 

The decrease in operating revenue for the September 2016 quarter was primarily driven by the impact of the downturn in the oil and gas industry, which has resulted in decreased activity levels with our oil and gas clients and impacted our revenue for Eastern Airways, the end of an oil and gas contract that began in late fiscal year 2015 and ended in late fiscal year 2016 that contributed $13.5 million in operating revenue in the September 2015 quarter and the impact of changes in foreign currency exchange rates. Partially offsetting these decreases was an increase in operating revenue driven by the start-up of U.K. SAR bases since the September 2015 quarter, which contributed $11.8 million in additional operating revenue for the September 2016 quarter. Eastern Airways contributed $29.8 million and $32.9 million in operating revenue and $3.1 million and $7.8 million in adjusted EBITDAR for the September 2016 and 2015 quarters, respectively.

A substantial portion of our operations in the Europe Caspian region are contracted in the British pound sterling, which depreciated significantly against the U.S. dollar since June 2016 as a result of Brexit. Translation of results at lower pound sterling exchange rates decreased operating revenue, operating income and adjusted EBITDAR by $25.3 million, $11.5 million and $7.0 million, respectively, for the September 2016 quarter compared to the September 2015 quarter. Additionally, we recorded foreign exchange losses of $1.3 million and $6.8 million primarily from the revaluation of assets and liabilities on pound sterling functional currency entities as of September 30, 2016 and 2015, respectively, which is recorded in other income (expense), net and included in adjusted EBITDAR. We expect a greater negative impact on operating revenue, operating income and adjusted EBITDAR from translation of operating results over the remainder of fiscal year 2017 if exchange rates remain at current rates or the British pound sterling weakens further.

Operating margin and adjusted EBITDAR margin for the September 2016 quarter decreased from the September 2015 quarter as a result of the impact from the downturn in the offshore energy market, which was only partially offset by the start-up of the U.K. SAR bases and cost reduction activities.

Africa



Three Months Ended
September 30,



2016


2015


% Change










(in thousands, except percentages)

Operating revenue


$

50,344


$

63,618


(20.9)%

Operating income


$

7,942


$

7,574


4.9%

Operating margin


15.8%


11.9%


32.8%

Adjusted EBITDAR


$

17,632


$

19,901


(11.4)%

Adjusted EBITDAR margin


35.0%


31.3%


11.8%

 

Operating revenue for Africa decreased for the September 2016 quarter due to an overall decrease in activity compared to the September 2015 quarter driven by the downturn in the oil and gas industry. A majority of our revenue in our Africa region is contracted at fixed U.S. dollar values, resulting in minimal exposure to the devalued naira upon translation into U.S. dollars for reporting purposes.

Operating income and operating margin increased in the September 2016 quarter primarily due to a decrease in depreciation and amortization expense and a decline in direct costs. These costs were impacted by the devaluation of the naira since the September 2015 quarter as our naira based expenses translate into less U.S. dollars. The impact of exchange rate changes resulted in a benefit of $8.0 million in reduced operating expenses driving the improvement in operating margin and adjusted EBITDAR margin. Operating income and adjusted EBITDAR benefited from changes in foreign currency exchange rates by $6.8 million and $6.5 million, respectively, year-over-year due to the combination of currencies we transact in for our Nigerian operations.

Americas



Three Months Ended
September 30,



2016


2015


% Change










(in thousands, except percentages)

Operating revenue


$

56,800


$

73,193


(22.4)%

Earnings from unconsolidated affiliates


$

260


$

(15,513)


101.7%

Operating income


$

2,643


$

(9,046)


129.2%

Operating margin


4.7%


(12.4)%


137.9%

Adjusted EBITDAR


$

15,300


$

7,295


109.7%

Adjusted EBITDAR margin


26.9%


10.0%


169.0%

 

Operating revenue decreased for the September 2016 quarter primarily due to a decline in activity in our U.S. Gulf of Mexico operations resulting from the oil and gas industry downturn, a decrease in Brazil due to fewer aircraft leased to Líder and a decrease in Suriname due to the end of a contract. These decreases were partially offset by an increase in Trinidad due to additional aircraft on contract and a new contract in Guyana.

Operating income, operating margin, adjusted EBITDAR and adjusted EBITDAR margin were negatively impacted by unfavorable exchange rate changes in both the September 2016 and 2015 quarters which reduced our results from our investment in Líder. Earnings from our investment in Líder were reduced by $1.3 million and $19.9 million for the September 2016 and 2015 quarters, respectively, due to the impact of unfavorable exchange rate changes. Excluding this impact, earnings from our investment in Líder would have been $2.2 million and $4.7 million, respectively, operating income for the Americas region would have been $3.9 million (6.9% operating margin) and $10.9 million (14.8% operating margin), respectively, and adjusted EBITDAR for the Americas region would have been $16.6 million (29.1% adjusted EBITDAR margin) and $27.2 million (37.1% adjusted EBITDAR margin), respectively, in the September 2016 and 2015 quarters. Further, this year-over-year decrease in the Americas region's operating income, operating margin, adjusted EBITDAR and adjusted EBITDAR margin primarily resulted from lower revenue driven by a decline in activity discussed above, partially offset by a decrease in direct costs, including a decrease in salaries and benefits and maintenance expense.

Asia Pacific



Three Months Ended
September 30,



2016


2015


% Change










(in thousands, except percentages)

Operating revenue


$

50,820


$

72,038


(29.5)%

Operating income


$

(9,575)


$

5,013


(291.0)%

Operating margin


(18.8)%


7.0%


(368.6)%

Adjusted EBITDAR


$

6,909


$

16,323


(57.7)%

Adjusted EBITDAR margin


13.6%


22.7%


(40.1)%

 

Operating revenue decreased for the September 2016 quarter compared to the September 2015 quarter primarily due to the ending of short-term contracts. A substantial portion of our operations in the Asia Pacific region are contracted in the Australian dollar, which has strengthened against the U.S. dollar since fiscal year 2016.  Foreign currency exchange rate changes resulted in an increase of our revenue for our Asia Pacific region of $1.9 million for the September 2016 quarter. Airnorth contributed $21.5 million and $21.6 million in operating revenue and $5.2 million and $4.9 million in adjusted EBITDAR for the September 2016 and 2015 quarters, respectively.

Operating income, operating margin, adjusted EBITDAR and adjusted EBITDAR margin decreased primarily due to lower activity partially offset by cost reduction activities, including a decrease in salaries and benefits, maintenance expense and travel and training expense.

Corporate and other



Three Months Ended
September 30,



2016


2015


% Change










(in thousands, except percentages)

Operating revenue


$

2,641


$

6,160


(57.1)%

Earnings from unconsolidated affiliates


$

(187)


$


*

Operating income


$

(31,447)


$

(34,427)


8.7%

Adjusted EBITDAR


$

(12,642)


$

(18,128)


30.3%

_____________

 * percentage change too large to be meaningful or not applicable

 

Operating revenue decreased in the September 2016 quarter primarily due to a decline in Bristow Academy revenue of $3.3 million.

Operating loss and adjusted EBITDAR improved from the September 2015 quarter primarily due to overall cost reduction activities that reduced professional fees and other costs including information technology, staff relocation and recruitment and travel expenses, partially offset by a decline in revenue discussed above and an increase in salaries and benefits. Salaries and benefits were impacted by the reversal of a bonus accrual in the September 2015 quarter, an increase in performance cash plan expense as a result of an increase in stock price performance and an increase in severance expense associated with the organizational restructuring efforts, mostly offset by a reduction in other salaries and benefits as a result of a reduced headcount from organizational restructuring efforts.

DIVIDEND

On November 1, 2016, our Board of Directors approved a dividend of $0.07 per share to be paid on December 15, 2016 to shareholders of record on December 1, 2016. Based on shares outstanding as of September 30, 2016, the total quarterly dividend payment will be approximately $2.5 million.

GUIDANCE

Fiscal year 2017 guidance for selected financial measures is provided in the financial tables that follow.

CONFERENCE CALL

Management will conduct a conference call starting at 10:00 a.m. ET (9:00 a.m. CT) on Friday, November 4, 2016 to review financial results for the fiscal year 2017 second quarter ended September 30, 2016.  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 2017 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 1-877-404-9648
  • Replay: A telephone replay will be available through November 18, 2016 and may be accessed by calling toll free 1-877-660-6853, passcode: 13646189#

Via Telephone outside the U.S.:

  • Live: Dial 1-412-902-0030
  • Replay: A telephone replay will be available through November 18, 2016 and may be accessed by calling 1-201-612-7415, passcode: 13646189#

ABOUT BRISTOW GROUP INC.

Bristow Group Inc. is the leading global industrial aviation services provider offering helicopter transportation, search and rescue (SAR) and aircraft support services, including maintenance and training, to government and civil organizations worldwide.  Bristow has major 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 Australia, Brazil, Canada, Russia and Trinidad.  Bristow provides SAR services to the private sector worldwide and to the public sector for all of the U.K. on behalf of the Maritime and Coastguard Agency.  For more information, visit 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 earnings guidance, expected contract revenue, capital deployment strategy, operational and capital performance, expected cost management activities, expected capital expenditure deferrals, shareholder return, liquidity, 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.  Risks and uncertainties include without limitation:  fluctuations in the demand for our services; fluctuations in worldwide prices of and supply and demand for oil and natural gas; fluctuations in levels of oil and natural gas production, exploration and development activities; the impact of competition; actions by clients and suppliers; the risk of reductions in spending on helicopter services by governmental agencies; changes in tax and other laws and regulations; changes in foreign exchange rates and controls; risks associated with international operations; operating risks inherent in our business, including the possibility of declining safety performance; general economic conditions including the capital and credit markets; our ability to obtain financing; the risk of grounding of segments of our fleet for extended periods of time or indefinitely; our ability to re-deploy our aircraft to regions with greater demand; our ability to acquire additional aircraft and dispose of older aircraft through sales into the aftermarket; the possibility that we do not achieve the anticipated benefit of our fleet investment program; availability of employees; and political instability, war or acts of terrorism in any of the countries where we operate.  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 June 30, 2016 and annual report on Form 10-K for the fiscal year ended March 31, 2016.  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

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts and percentages)

(Unaudited)



Three Months Ended
 September 30,


Six Months Ended
 September 30,


2016


2015


2016


2015

Gross revenue:








Operating revenue from non-affiliates

$

325,315


$

398,010


$

663,990


$

818,023

Operating revenue from affiliates

18,347


21,001


35,856


41,099

Reimbursable revenue from non-affiliates

13,805


27,900


27,019


54,785


357,467


446,911


726,865


913,907

Operating expense:








Direct cost

281,630


307,564


571,173


638,243

Reimbursable expense

13,276


26,695


25,890


52,862

Depreciation and amortization

28,592


37,387


63,286


74,533

General and administrative

51,274


53,457


103,869


114,789


374,772


425,103


764,218


880,427









Loss on impairment

(7,572)


(22,274)


(7,572)


(27,713)

Loss on disposal of assets

(2,186)


(14,007)


(12,203)


(21,702)

Earnings from unconsolidated affiliates, net of losses

181


(15,360)


4,011


(9,064)

Operating loss

(26,882)


(29,833)


(53,117)


(24,999)









Interest expense, net

(11,468)


(7,179)


(22,354)


(14,848)

Other income (expense), net

3,003


(11,424)


(3,186)


(7,585)

Loss before benefit for income taxes

(35,347)


(48,436)


(78,657)


(47,432)

Benefit for income taxes

5,240


2,756


7,478


123

Net loss

(30,107)


(45,680)


(71,179)


(47,309)

Net (income) loss attributable to noncontrolling interests

310


(1,452)


610


(3,080)

Net loss attributable to Bristow Group

(29,797)


(47,132)


(70,569)


(50,389)

Accretion of redeemable noncontrolling interest


4,803



(1,498)

Net loss attributable to common stockholders

$

(29,797)


$

(42,329)


$

(70,569)


$

(51,887)

















Loss per common share:








Basic

$

(0.85)


$

(1.21)


$

(2.02)


$

(1.49)

Diluted

$

(0.85)


$

(1.21)


$

(2.02)


$

(1.49)
















Non-GAAP measures:








Adjusted EBITDAR

$

77,354


$

92,764


$

147,717


$

213,811

Adjusted EBITDAR margin

22.5%


22.1%


21.1%


24.9%

Adjusted net income (loss)

$

(12,314)


$

1,271


$

(24,322)


$

19,876

Adjusted diluted earnings (loss) per share

$

(0.35)


$

0.04


$

(0.69)


$

0.56

 

BRISTOW GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)




September 30,
 2016


March 31,
 2016

ASSETS

Current assets:





Cash and cash equivalents


$

100,668


$

104,310

Accounts receivable from non-affiliates


199,005


243,425

Accounts receivable from affiliates


8,351


5,892

Inventories


126,973


142,503

Assets held for sale


40,338


43,783

Prepaid expenses and other current assets


50,510


53,183

Total current assets


525,845


593,096

Investment in unconsolidated affiliates


206,483


194,952

Property and equipment – at cost:





Land and buildings


237,282


253,098

Aircraft and equipment


2,614,585


2,570,577



2,851,867


2,823,675

Less – Accumulated depreciation and amortization


(560,955)


(540,423)



2,290,912


2,283,252

Goodwill


28,922


29,990

Other assets


145,934


161,655

Total assets


$

3,198,096


$

3,262,945

LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS' INVESTMENT

Current liabilities:





Accounts payable


$

110,650


$

96,966

Accrued wages, benefits and related taxes


60,852


59,431

Income taxes payable


18,617


27,400

Other accrued taxes


7,052


7,995

Deferred revenue


30,612


24,206

Accrued maintenance and repairs


20,198


22,196

Accrued interest


11,884


11,985

Other accrued liabilities


49,760


48,392

Deferred taxes


696


1,881

Short-term borrowings and current maturities of long-term debt


81,510


60,394

Contingent consideration


7,352


29,522

Total current liabilities


399,183


390,368

Long-term debt, less current maturities


1,140,036


1,071,578

Accrued pension liabilities


55,036


70,107

Other liabilities and deferred credits


25,137


33,273

Deferred taxes


149,328


172,254

Redeemable noncontrolling interest


13,175


15,473

Stockholders' investment:





Common stock


378


377

Additional paid-in capital


803,801


801,173

Retained earnings


1,096,794


1,172,273

Accumulated other comprehensive loss


(307,358)


(289,819)

Treasury shares


(184,796)


(184,796)

Total Bristow Group stockholders' investment


1,408,819


1,499,208

Noncontrolling interests


7,382


10,684

Total stockholders' investment


1,416,201


1,509,892

Total liabilities, redeemable non controlling interests and stockholders' investment


$

3,198,096


$

3,262,945

 

BRISTOW GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)




Six Months Ended
 September 30,



2016


2015

Cash flows from operating activities:





Net loss


$

(71,179)


$

(47,309)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:





Depreciation and amortization


63,286


74,533

Deferred income taxes


(20,060)


(22,545)

Discount amortization on long-term debt


989


946

Loss on disposal of assets


12,203


21,702

Loss on impairment


7,572


27,713

Stock-based compensation


6,244


10,380

Equity in earnings from unconsolidated affiliates less than (in excess of) dividends received


(3,528)


9,876

Tax benefit related to stock-based compensation



(203)

Increase (decrease) in cash resulting from changes in:





Accounts receivable


24,395


33,490

Inventories


(797)


(3,061)

Prepaid expenses and other assets


(4,910)


(21,667)

Accounts payable


18,169


25,395

Accrued liabilities


1,939


(41,488)

Other liabilities and deferred credits


(6,285)


(9,502)

Net cash provided by operating activities


28,038


58,260

Cash flows from investing activities:





Capital expenditures


(101,866)


(146,989)

Proceeds from asset dispositions


11,819


16,107

Net cash used in investing activities


(90,047)


(130,882)

Cash flows from financing activities:




Proceeds from borrowings


195,954


461,581

Debt issuance costs


(2,925)


Repayment of debt


(120,966)


(323,569)

Partial prepayment of put/call obligation


(25)


(28)

Acquisition of noncontrolling interest



(2,000)

Payment of contingent consideration


(10,000)


(8,000)

Common stock dividends paid


(4,910)


(23,746)

Tax benefit related to stock-based compensation



203

Net cash provided by financing activities


57,128


104,441

Effect of exchange rate changes on cash and cash equivalents


1,239


3,376

Net increase (decrease) in cash and cash equivalents


(3,642)


35,195

Cash and cash equivalents at beginning of period


104,310


104,146

Cash and cash equivalents at end of period


$

100,668


$

139,341

 

BRISTOW GROUP INC. AND SUBSIDIARIES

SELECTED OPERATING DATA

(In thousands, except flight hours and percentages)

(Unaudited)




Three Months Ended
 September 30,


Six Months Ended
 September 30,



2016


2015


2016


2015

Flight hours (excluding Bristow Academy and unconsolidated affiliates):









Europe Caspian


22,638


24,220


44,782


47,636

Africa


7,652


8,678


15,724


18,858

Americas


5,957


9,735


12,167


20,427

Asia Pacific


6,357


8,191


13,068


16,697

Consolidated


42,604


50,824


85,741


103,618

Operating revenue:









Europe Caspian


$

186,098


$

207,072


$

375,226


$

410,997

Africa


50,344


63,618


103,468


141,099

Americas


56,800


73,193


115,554


153,215

Asia Pacific


50,820


72,038


106,052


146,775

Corporate and other


2,641


6,160


5,818


14,933

Intra-region eliminations


(3,041)


(3,070)


(6,272)


(7,897)

Consolidated


$

343,662


$

419,011


$

699,846


$

859,122

Operating income (loss):









Europe Caspian


$

5,741


$

15,060


$

18,771


$

29,257

Africa


7,942


7,574


9,513


20,526

Americas


2,643


(9,046)


3,564


7,486

Asia Pacific


(9,575)


5,013


(15,468)


4,325

Corporate and other


(31,447)


(34,427)


(57,294)


(64,891)

Loss on disposal of assets


(2,186)


(14,007)


(12,203)


(21,702)

Consolidated


$

(26,882)


$

(29,833)


$

(53,117)


$

(24,999)

Operating margin:









Europe Caspian


3.1%


7.3%


5.0%


7.1%

Africa


15.8%


11.9%


9.2%


14.5%

Americas


4.7%


(12.4)%


3.1%


4.9%

Asia Pacific


(18.8)%


7.0%


(14.6)%


2.9%

Consolidated


(7.8)%


(7.1)%


(7.6)%


(2.9)%

Adjusted EBITDAR:









Europe Caspian


$

50,155


$

67,373


$

100,042


$

132,559

Africa


17,632


19,901


26,672


42,715

Americas


15,300


7,295


34,898


40,737

Asia Pacific


6,909


16,323


13,070


33,395

Corporate and other


(12,642)


(18,128)


(26,965)


(35,595)

Consolidated


$

77,354


$

92,764


$

147,717


$

213,811

Adjusted EBITDAR margin:









Europe Caspian


27.0%


32.5%


26.7%


32.3%

Africa


35.0%


31.3%


25.8%


30.3%

Americas


26.9%


10.0%


30.2%


26.6%

Asia Pacific


13.6%


22.7%


12.3%


22.8%

Consolidated


22.5%


22.1%


21.1%


24.9%

 

BRISTOW GROUP INC. AND SUBSIDIARIES

AIRCRAFT COUNT

As of September 30, 2016

(Unaudited)





Aircraft in Consolidated Fleet





Percentage

of Current Period

Operating

Revenue


Helicopters








Small


Medium


Large


Training


Fixed

Wing (1)




Unconsolidated

Affiliates (4)




Total (2)(3)



Total

Europe Caspian

54%



14


74



30


118



118

Africa

15%


14


30


5



4


53


45


98

Americas

17%


15


45


17




77


68


145

Asia Pacific

14%


2


9


23



14


48



48

Corporate and other

0%





49



49



49

Total

100%


31


98


119


49


48


345


113


458



















Aircraft not currently in fleet: (5)

















On order




5


30




35





Under option




2


4




6





_______________

(1) 

Includes 32 fixed wing aircraft operated by Eastern Airways which are included in the Europe Caspian and Africa regions and 14 fixed wing aircraft operated by Airnorth which are included in the Asia Pacific region.

(2) 

Includes 27 aircraft held for sale and 115 leased aircraft as follows:

 


Held for Sale Aircraft in Consolidated Fleet


Helicopters




Small


Medium


Large


Training


Fixed

Wing


Total

Europe Caspian


1





1

Africa

5


7





12

Americas

1


8





9

Asia Pacific





1


1

Corporate and other




4



4

Total

6


16



4


1


27





















Leased Aircraft in Consolidated Fleet


Helicopters





Small


Medium


Large


Training


Fixed

Wing


Total

Europe Caspian


5


39



12


56

Africa



2



2


4

Americas

1


14


5




20

Asia Pacific

2


2


9



4


17

Corporate and other




18



18

Total

3


21


55


18


18


115



(3)

The average age of our fleet, excluding fixed wing and training aircraft, was approximately nine years as of September 30, 2016.

(4)

The 113 aircraft operated by our unconsolidated affiliates do not include those aircraft leased from us. Includes 44 helicopters (primarily medium) and 24 fixed wing aircraft owned and managed by Líder, our unconsolidated affiliate in Brazil, which is included in our Americas region.

(5) 

This table does not reflect aircraft which our unconsolidated affiliates may have on order or under option.

 

BRISTOW GROUP INC. AND SUBSIDIARIES

FY17 GUIDANCE


FY17 guidance as of September 30, 2016 (1)

U.K. SAR

Revenue

~$195M - $225M


G&A expense

~$195M - $215M

EBITDAR (2)

~$85M - $105M


Depreciation expense

~$110M - $130M

Eastern

Revenue

~$120M - $135M


Rent expense

~$215M - $225M

EBITDAR (2)

~$15M - $20M


Interest expense

~$35M - $45M

Airnorth

Revenue

~$70M - $85M


Non-aircraft capital expenditures

~$50M annually

EBITDAR (2)

~$15M - $20M




_______________

(1) 

FY17 guidance assumes FX rates as of September 30, 2016.



(2) 

EBITDAR excludes corporate overhead allocations consistent with financial reporting. EBITDAR is a non-GAAP measure of which the most comparable GAAP measure is net income (loss). We have not provided a reconciliation of this non-GAAP forward-looking information to GAAP. The most comparable GAAP measure to EBITDAR is net income (loss) which is not calculated at this lower level of our business as we do not allocate certain costs, including corporate and other overhead costs, interest expense and income taxes within our accounting system. Providing this data would require unreasonable efforts in the form of allocations of other costs across the organization.

 

BRISTOW GROUP INC. AND SUBSIDIARIES
GAAP RECONCILIATIONS

These financial measures have not been prepared in accordance with generally accepted accounting principles ("GAAP") and have not been audited or reviewed by our independent registered public accounting firm.  These financial measures are therefore considered non-GAAP financial measures.  A description of the adjustments to and reconciliations of these non-GAAP financial measures to the most comparable GAAP financial measures is as follows:



Three months ended

Six months ended



September 30,


September 30,



2016


2015


2016


2015












(In thousands, except percentages and per share amounts)

Net loss


$

(30,107)


$

(45,680)


$

(71,179)


$

(47,309)

Loss on disposal of assets


2,186


14,007


12,203


21,702

Special items


18,265


27,974


24,824


41,404

Depreciation and amortization


28,592


37,387


63,286


74,533

Rent expense


51,955


54,436


103,238


108,318

Interest expense


11,703


7,396


22,823


15,286

Benefit for income taxes


(5,240)


(2,756)


(7,478)


(123)

Adjusted EBITDAR


$

77,354


$

92,764


$

147,717


$

213,811










Benefit for income taxes


$

5,240


2,756


$

7,478


$

123

Tax benefit on loss on disposal of asset


(699)


(3,221)


(3,905)


(4,991)

Tax expense (benefit) on special items


(3,554)


(893)


4,972


(7,100)

Adjusted benefit (provision) for income taxes


$

987


$

(1,358)


$

8,545


$

(11,968)










Effective tax rate (1)


14.8%


5.7%


9.5%


0.3%

Adjusted effective tax rate (1)


7.3%


33.3%


25.5%


34.3%










Net loss attributable to Bristow Group


$

(29,797)


$

(47,132)


$

(70,569)


$

(50,389)

Loss on disposal of assets


1,487


10,786


8,298


16,711

Special items


15,996


37,617


37,949


53,554

Adjusted net income (loss)


$

(12,314)


$

1,271


$

(24,322)


$

19,876










Diluted loss per share


$

(0.85)


$

(1.21)


$

(2.02)


$

(1.49)

Loss on disposal of assets


0.04


0.31


0.24


0.47

Special items


0.46


0.93


1.08


1.56

Adjusted diluted earnings (loss) per share


(0.35)


0.04


(0.69)


0.56

_______________

(1) 

Effective tax rate is calculated by dividing income tax expense by pretax net income.  Adjusted effective tax rate is calculated by dividing adjusted income tax expense by adjusted pretax net income. Tax expense (benefit) on loss on disposal of asset and tax expense (benefit) on special items is calculated using the statutory rate of the entity recording the loss on disposal of asset or special item.

 


Three Months Ended
 September 30, 2016



Adjusted

EBITDAR


Adjusted

Net Income


Adjusted

Diluted

Earnings

Per

Share









(In thousands, except per share amounts)

Organizational restructuring costs (1)


$

10,693


$

7,296


$

0.21

Additional depreciation expense resulting from fleet changes (2)



871


0.02

Impairment of inventories (3)


7,572


5,344


0.15

Tax valuation allowance (4)



2,485


0.07

Total special items


$

18,265


$

15,996


0.46




Three Months Ended
 September 30, 2015



Adjusted

EBITDAR


Adjusted

Net Income


Adjusted

Diluted

Earnings

Per

Share









(In thousands, except per share amounts)

Organizational restructuring costs (1)


$

5,700


$

4,167


$

0.12

Additional depreciation expense resulting from fleet changes (2)



7,885


0.22

Goodwill impairment (5)


22,274


25,565


0.73

Accretion of redeemable noncontrolling interests (6)




(0.14)

Total special items


$

27,974


$

37,617


0.93








 


Six Months Ended
 September 30, 2016



Adjusted

EBITDAR


Adjusted

Net Income


Adjusted

Diluted

Earnings

Per

Share









(In thousands, except per share amounts)

Organizational restructuring costs (1)


$

17,252


$

11,588


$

0.33

Additional depreciation expense resulting from fleet changes (2)



5,361


0.15

Impairment of inventories (3)


7,572


5,344


0.15

Tax valuation allowance (4)



15,656


0.45

Total special items


$

24,824


$

37,949


1.08











Six Months Ended
 September 30, 2015



Adjusted

EBITDAR


Adjusted

Net Income


Adjusted

Diluted

Earnings

Per

Share









(In thousands, except per share amounts)

Organizational restructuring costs (1)


$

13,691


$

10,904


$

0.31

Additional depreciation expense resulting from fleet changes (2)



13,321


0.38

Impairment of inventories (3)


5,439


3,764


0.11

Goodwill impairment (5)


22,274


25,565


0.72

Accretion of redeemable noncontrolling interests (6)




0.04

Total special items


$

41,404


$

53,554


1.56

_______________

(1)

Organizational restructuring costs primarily includes severance expense included in direct costs and general and administrative expense from our voluntary and involuntary separation programs.



(2)

Relates to additional depreciation expense due to fleet changes.



(3)

Relates to increase in inventory allowance as a result of our review of excess inventory on aircraft model types we ceased ownership of, classified all or a significant portion of as held for sale or made a decision to cease ownership within our fleet earlier than previously anticipated.



(4)

Relates to a tax valuation allowance of $2.5 million against net operating losses for the three months ended September 30, 2016 and a tax valuation allowance of $11.0 million against foreign tax credits and $4.7 million against net operating losses in certain foreign jurisdictions for the six months ended September 30, 2016.



(5)

Relates to an impairment of goodwill of our Bristow Norway reporting unit within our Europe Caspian region and Bristow Academy reporting unit within Corporate and other.



(6)

Relates to the accounting for changes in the redeemable value of put arrangements whereby the noncontrolling interest holders in Airnorth and Eastern Airways may require us to redeem the remaining shares in these companies.  This change does not impact net earnings (loss), but rather is accounted for as a reduction of earnings (loss) available to common shareholders in the calculation of diluted earnings (loss) per share.

 

 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/bristow-group-reports-second-quarter-fiscal-year-2017-results-300357263.html

SOURCE Bristow Group Inc.


Source: PR Newswire (November 3, 2016 - 5:01 PM EDT)

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