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Bristow Group Inc. Reports Fiscal 2007 Third Quarter Financial Results

HOUSTON--(BUSINESS WIRE)--Feb. 5, 2007--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.

CONTACT: Bristow Group Inc.
Joe Baj, 713-267-7605

SOURCE: Bristow Group Inc.