FLYING SMART.
FLYING RIGHT.

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News Release

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Bristow Group Reports Financial Results for its 2011 Second Fiscal Quarter and Six-Month Period Ended September 30, 2010

  • $1.06 diluted EPS on net income of $38.9 million, up approximately 17% over the prior year quarter.
  • $312.6 million in revenue, a 7% increase over the prior year quarter due to operational improvement in Australia, West Africa, Europe and North America.
  • Completion of global restructuring of Bristow's operations as part of the continuing implementation of our global business strategy, significantly lowering our effective tax rate.

HOUSTON, Nov. 4, 2010 /PRNewswire via COMTEX/ -- Bristow Group Inc. (NYSE: BRS) today reported net income for the three months ended September 30, 2010 of $38.9 million, or $1.06 per diluted share, compared to $33.2 million, or $0.92 per diluted share, in the September 2009 quarter. The quarter benefited from sequential improvement in the underlying operations and a significant reduction in the effective tax rate, which was driven by a global restructuring of Bristow's operations as part of the continuing implementation of our global business strategy, in addition to a shift of expected earnings for the current fiscal year to lower tax jurisdictions.

Revenue for the three months ended September 30, 2010 totaled $312.6 million compared to $291.6 million in same period a year ago. Earnings before interest, taxes, depreciation and amortization ("EBITDA") totaled $74.6 million compared to $74.1 million in the September 2009 quarter. Results benefited from revenue increases in Australia, West Africa, North America and Europe compared to the same quarter a year ago, driven by the addition of new contracts and increases in both price and activity for certain customers. These increases were partially offset by a lower level of gain on disposal of assets year-over-year and higher compensation costs in Australia and Nigeria.

"We are pleased with our higher fiscal second quarter results as we were able to deliver sequential improvement in both revenue and earnings," said William E. Chiles, President, Chief Executive Officer of Bristow Group. "The underlying performance of our operations was strong and the operating margins improved sequentially in several of our business units including Europe, West Africa, North America and Other International. Our global restructuring has also benefited shareholders by aligning our corporate structure with how we do business, significantly lowering our effective tax rate. The expected amendment to our credit facility improves our liquidity position and increases capital structure flexibility while lowering the overall cost of debt. These efforts demonstrate the Bristow team's commitment to lower our cost of capital.

"As previously disclosed, we continue to expect revenue and earnings per share for the current fiscal year to be stronger than fiscal year 2010 as additional newer-technology aircraft go to work for our customers and we relentlessly focus on improving returns and lowering our after tax cost of capital. We continue to anticipate a much stronger second half compared to the first half of fiscal year 2011," Chiles added.

SECOND QUARTER FY2011 RESULTS

  • Revenue totaled $312.6 million compared to $291.6 million in same period a year ago.
  • Operating income remained flat at $53.6 million.
  • EBITDA totaled $74.6 compared to $74.1 million in the September 2009 quarter. EBITDA is a measure that has not been prepared in accordance with Accounting Principles Generally Accepted in the United States of America ("GAAP"). Please refer to disclosures contained at the end of this news release for additional information about EBITDA.
  • Net income totaled $38.9 million, or $1.06 per diluted share, compared to $33.2 million, or $0.92 per diluted share, in the September 2009 quarter.

Net income and earnings per share increased due to a significant reduction in our effective tax rate, which was 7.9% versus 25.0% in the September 2009 quarter. This reduction was driven by a global restructuring of our operations as part of the continuing implementation of our global business strategy, in addition to a shift of our expected earnings for the current fiscal year to lower tax jurisdictions. This benefit was partially offset by increased interest expense and lower foreign currency transaction and hedging gains.

Our Europe business unit added two new customers and saw an increase in activity over the prior year quarter, which along with higher equity earnings from our military training unconsolidated affiliate, FB Heliservices Limited, increased our operating margin in this market.

Our North America business unit continued to benefit during the quarter from contracts with BP in the U.S. Gulf of Mexico, where nine of our aircraft were supporting the well control and spill cleanup efforts at the end of September. While we can't predict how long this work will continue, for the past two quarters the new work more than offset lost business from customers stalled by the deep-water moratorium, which has now been lifted. Subsequent to September 30, 2010, this work has continued to wind down.

Our West Africa business unit also benefitted from new contracts and rate escalations on existing contracts in excess of lost work with certain existing customers. We have also benefitted from a continued effort to reduce aircraft maintenance delays in this market, which reduced the number of days our aircraft were grounded during the quarter. Despite the revenue improvement, our operating margin remained relatively flat versus the prior year quarter as we incurred severance costs for employees that had been supporting a major contract that finished in September. We are continuing to seek permanent work to replace the earnings associated with this contract.

Our Australia business unit saw a significant increase in revenue over the prior year quarter resulting from new contracts and a favorable impact of change in foreign currency exchange rates. However, as a result of an increase in annual leave and long service leave provisions in this market, compensation costs have increased contributing to a decrease in operating margin versus the same quarter last year.

Our Other International business unit's operating margin was lower primarily due to reduced earnings in Kazakhstan as we stopped operating in this market in a year ago and the Comparable Quarter included a $2.5 million reversal of a bad debt provision. Our results for our unconsolidated affiliate in Brazil totaled $1.8 million for the three months ended September 30, 2010, which were also reduced by foreign exchange losses. These foreign exchange losses partially mask the fact that the normal operations of our affiliate in this market, Lider Aviacao Holding S.A. ("Lider"), have shown significant improvement sequentially over the past several quarters from a revenue and EBITDA standpoint. Excluding the impact of foreign exchange losses, our equity earnings for Lider would have been approximately $3.8 million for the three months ended September 30, 2010. The improvement in Lider's normal operations translated into a sequential improvement in quarterly earnings from our investment, which led to higher operating margin for this business unit in the second fiscal quarter compared with the preceding quarter.

During the September 2010 quarter we experienced only modest gains on the sale of a few aircraft and these gains during the quarter were $3.0 million lower than those during the same quarter last year; however, we continue to see opportunities for sale of our aircraft in the aftermarket.

YEAR-TO-DATE RESULTS THROUGH SEPTEMBER 30, 2010

  • Revenue totaled $604.8 million compared to $582.1 million for the same period a year ago.
  • Operating income was $93.2 million compared to $98.3 million for the six months ended September 30, 2009.
  • EBITDA totaled $134.4 million compared to $135.8 million for the six months ended September 30, 2009.
  • Net income totaled $59.7 million, or $1.63 per diluted share, compared to $56.9 million, or $1.58 per diluted share, for the six months ended September 30, 2009.

Our year-to-date results through September 30, 2010 benefitted from revenue increases in Australia, West Africa and North America compared to the same period a year ago, which was driven by the addition of new contracts and increases in rates on existing contracts in excess of reduced activity for certain customers.

Despite increased revenue, operating income and EBITDA decreased due to a lower level of gain on disposal of assets and reduced earnings in Kazakhstan.

Net income and earnings per share benefitted from a significant reduction in our effective tax rate, which was 16.6% versus 26.4% for the six months ended September 30, 2009. This reduction was driven by a global restructuring of our operations as part of the continuing implementation of our global business strategy, in addition to a shift of our expected earnings for the current fiscal year to lower tax jurisdictions. This benefit was partially offset by increased interest expense.

CAPITAL AND LIQUIDITY

For the six months ended September 30, 2010, net cash generated by operating activities was $69.2 million and net cash used in investing activities was $44.5 million. At September 30, 2010, we had:

  • $1.4 billion in stockholders' investment and $720.6 million of indebtedness,
  • $108.5 million in cash and a $100 million undrawn revolving credit facility, and
  • $154.2 million in aircraft purchase commitments for 12 aircraft.

In addition, we are currently negotiating an amendment to our existing bank credit facility to extend the facility for five years and increase the amount financed to $375 million. The facility is expected to consist of a $200 million term loan and a $175 million revolver at an initial expected rate of Libor+250. We expect to use proceeds for general corporate purposes, including repayment of existing indebtedness. Completion of the amendment is subject to reaching agreement on the definitive documentation and satisfaction of customary closing conditions.

CONFERENCE CALL

Management will conduct a conference call starting at 9:00 a.m. ET (8:00 a.m. CT) on Friday, November 5, 2010, to review financial results for the 2011 second quarter. This release and the most recent investor slide presentation are available in the investor relations area of our web page at http://www.bristowgroup.com/. 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 "Bristow Group Fiscal 2011 Second Quarter Earnings Conference Call"
  • Replay: A replay via webcast will be available approximately one hour after the call's completion and will be accessible for approximately 90 days

Via Telephone within the U.S.:

  • Live: Dial toll free 1-877-941-1465
  • Replay: A telephone replay will be available through November 19, 2010 and may be accessed by calling toll free 1-800-406-7325, passcode: 4375416#

Via Telephone outside the U.S.:

  • Live: Dial 480-629-9644
  • Replay: A telephone replay will be available through November 19, 2010 and may be accessed by calling 303-590-3030, passcode: 4375416#

ABOUT BRISTOW GROUP INC.

Bristow Group Inc. is the leading provider of helicopter services to the worldwide offshore energy industry based on the number of aircraft operated and one of two helicopter service providers to the offshore energy industry with global operations. The Company has major transportation operations in the North Sea, Nigeria and the U.S. Gulf of Mexico, and in most of the other major offshore oil and gas producing regions of the world, including Alaska, Australia, Brazil, Mexico, Russia and Trinidad.For more information, visit the Company's website at http://www.bristowgroup.com/.

FORWARD-LOOKING STATEMENTS DISCLOSURE

Statements contained in this news release that state the Company's or management's intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements. These forward-looking statements include statements regarding the impact of activity levels, including the amendment to our credit facility and use of proceeds therefrom, business performance, fiscal 2011 results and other market and industry conditions. It is important to note that the Company's actual results could differ materially from those projected in such forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the Company's SEC filings, including but not limited to the Company's quarterly report on Form 10-Q for the quarter and six months ended September 30, 2010 and annual report on Form 10-K for the fiscal year ended March 31, 2010. Bristow Group Inc. disclaims any intention or obligation to revise any forward-looking statements, including financial estimates, whether as a result of new information, future events or otherwise.

Linda McNeill

Investor Relations

(713) 267-7622

(financial tables follow)

BRISTOW GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)




Three Months Ended
September 30,



Six Months Ended
September 30,





2010



2009




2010



2009





Gross revenue:
















Operating revenue from non-affiliates


$

270,053


$

247,642



$

524,647


$

496,533



Operating revenue from affiliates



16,484



17,460




33,899



32,062



Reimbursable revenue from non-affiliates



25,933



24,746




45,996



50,599



Reimbursable revenue from affiliates



89



1,767




255



2,873






312,559



291,615




604,797



582,067


Operating expense:
















Direct cost



189,110



173,392




372,274



354,069



Reimbursable expense



25,020



26,304




45,198



52,961



Depreciation and amortization



20,968



18,470




40,299



36,656



General and administrative



30,515



29,686




61,417



58,488







265,613



247,852




519,188



502,174


















Gain on disposal of assets



1,897



4,880




3,615



10,889


Earnings from unconsolidated affiliates, net of losses



4,716



4,924




4,014



7,557



Operating income



53,559



53,567




93,238



98,339

















Interest income



168



210




460



432


Interest expense



(11,452)



(10,640)




(22,490)



(20,652)


Other income (expense), net



(111)



1,809




404



328



Income before provision for income taxes



42,164



44,946




71,612



78,447


Provision for income taxes



(3,316)



(11,236)




(11,856)



(20,746)



Net income



38,848



33,710




59,756



57,701



Net income attributable to noncontrolling interests



32



(540)




(68)



(808)



Net income attributable to Bristow Group



38,880



33,170




59,688



56,893



Preferred stock dividends



--



(3,163)




--



(6,325)



Net income available to common stockholders


$

38,880


$

30,007



$

59,688


$

50,568

















Earnings per common share:
















Basic


$

1.07


$

0.98



$

1.66


$

1.70



Diluted


$

1.06


$

0.92



$

1.63


$

1.58



BRISTOW GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)










September 30,
2010


March 31,
2010




(Unaudited)








ASSETS

Current assets:









Cash and cash equivalents


$

108,501


$

77,793



Accounts receivable from non-affiliates



231,351



203,312



Accounts receivable from affiliates



19,812



16,955



Inventories



193,017



186,863



Prepaid expenses and other current assets



41,759



31,448




Total current assets



594,440



516,371


Investment in unconsolidated affiliates



205,779



204,863


Property and equipment - at cost:









Land and buildings



95,998



86,826



Aircraft and equipment



2,093,105



2,036,962







2,189,103



2,123,788



Less - Accumulated depreciation and amortization



(436,769)



(404,443)







1,752,334



1,719,345


Goodwill



32,185



31,755


Other assets



22,187



22,286






$

2,606,925


$

2,494,620












LIABILITIES AND STOCKHOLDERS' INVESTMENT

Current liabilities:









Accounts payable


$

61,545


$

48,545



Accrued wages, benefits and related taxes



36,049



35,835



Income taxes payable



952



2,009



Other accrued taxes



5,575



3,056



Deferred revenues



6,904



19,321



Accrued maintenance and repairs



15,663



10,828



Accrued interest



6,429



6,430



Other accrued liabilities



20,680



14,508



Deferred taxes



10,714



10,217



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



23,798



15,366




Total current liabilities



188,309



166,115


Long-term debt, less current maturities



696,779



701,195


Accrued pension liabilities



112,551



106,573


Other liabilities and deferred credits



28,636



20,842


Deferred taxes



148,021



143,324










Stockholders' investment:









Common stock



362



359



Additional paid-in capital



684,464



677,397



Retained earnings



879,033



820,145



Accumulated other comprehensive loss



(137,414)



(148,102)






1,426,445



1,349,799



Noncontrolling interests



6,184



6,772







1,432,629



1,356,571






$

2,606,925


$

2,494,620



BRISTOW GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)




Six Months Ended
September 30,




2010


2009






Cash flows from operating activities:









Net income


$

59,756


$

57,701


Adjustments to reconcile net income to net cash provided by operating activities:









Depreciation and amortization



40,299



36,656



Deferred income taxes



4,385



13,340



Discount amortization on long-term debt



1,565



1,462



Gain on disposal of assets



(3,615)



(10,889)



Gain on sale of joint ventures



(572)



--



Stock-based compensation



8,019



6,611



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

received



(890)



(3,846)



Tax benefit related to stock-based compensation



(179)



(433)


Increase (decrease) in cash resulting from changes in:









Accounts receivable



(24,940)



13,707



Inventories



(3,000)



(13,243)



Prepaid expenses and other assets



(14,363)



(10,391)



Accounts payable



9,774



2,528



Accrued liabilities



(2,917)



(10,303)



Other liabilities and deferred credits



(4,138)



10,709


Net cash provided by operating activities



69,184



93,609


Cash flows from investing activities:









Capital expenditures



(63,943)



(136,145)



Deposits on assets held for sale



1,000



--



Proceeds from sale of joint ventures



1,291



--



Proceeds from asset dispositions



17,178



71,238



Acquisition, net of cash received



--



(178,961)


Net cash used in investing activities



(44,474)



(243,868)


Cash flows from financing activities:









Proceeds from borrowings



10,012



--



Repayment of debt



(7,630)



(8,858)



Distribution to noncontrolling interest owners



(637)



--



Partial prepayment of put/call obligation



(28)



(37)



Acquisition of noncontrolling interest



(800)



--



Preferred stock dividends paid



--



(6,325)



Issuance of common stock



111



1,089



Tax benefit related to stock-based compensation



179



433


Net cash provided by (used in) financing activities



1,207



(13,698)


Effect of exchange rate changes on cash and cash equivalents



4,791



6,193


Net increase (decrease) in cash and cash equivalents



30,708



(157,764)


Cash and cash equivalents at beginning of period



77,793



300,969


Cash and cash equivalents at end of period


$

108,501


$

143,205



BRISTOW GROUP INC. AND SUBSIDIARIES
SELECTED OPERATING DATA
(In thousands, except flight hours and percentages)
(Unaudited)



Three Months Ended
September 30,



Six Months Ended
September 30,



2010



2009



2010



2009


Gross revenue:
















Europe

$

117,595



$

113,913



$

219,286



$

228,978


North America


55,281




48,737




108,092




98,593


West Africa


58,110




51,452




117,206




106,269


Australia


37,364




30,333




72,655




58,496


Other International


36,295




37,007




69,114




70,001


Corporate and other


8,421




11,362




19,263




23,178


Intrasegment eliminations


(507)




(1,189)




(819)




(3,448)


Corporate and other

$

312,559



$

291,615



$

604,797



$

582,067




Operating income (loss):
















Europe

$

21,612



$

19,063



$

39,911



$

38,841


North America


8,904




4,716




14,212




9,142


West Africa


17,158




15,064




32,794




28,727


Australia


6,094




7,011




14,046




12,667


Other International


11,102




12,978




13,367




20,190


Corporate and other


(13,208)




(10,145)




(24,707)




(22,117)


Gain on disposal of other assets


1,897




4,880




3,615




10,889


Consolidated total

$

53,559



$

53,567



$

93,238



$

98,339




Operating margin:
















Europe


18.4

%


16.7

%


18.2

%


17.0

%

North America


16.1

%


9.7

%


13.1

%


9.3

%

West Africa


29.5

%


29.3

%


28.0

%


27.0

%

Australia


16.3

%


23.1

%


19.3

%


21.7

%

Other International


30.6

%


35.1

%


19.3

%


28.8

%

Consolidated total


17.1

%


18.4

%


15.4

%


16.9

%



Flight hours (excludes Bristow Academy and

unconsolidated affiliates):
















Europe


14,432




14,242




27,399




29,097


North America


23,279




21,215




44,683




43,332


West Africa


9,572




8,470




19,332




17,420


Australia


3,318




2,794




6,558




5,674


Other International


12,577




11,810




24,055




22,935


Consolidated total


63,178




58,531




122,027




118,458



BRISTOW GROUP INC. AND SUBSIDIARIES
AIRCRAFT COUNT
AS OF SEPTEMBER 30, 2010




Aircraft in Consolidated Fleet








Helicopters












Small


Medium


Large


Training


Fixed Wing


Total(1)


Unconsolidated
Affiliates(2)


Total

Europe


--


14


37


--


--


51


63



114

North America


72


27


6


--


--


105


--



105

West Africa


12


33


5


--


3


53


--



53

Australia


3


14


18


--


--


35


--



35

Other International


5


42


12


--


--


59


136



195

Corporate and other


--


--


--


76


--


76


--



76

Total


92


130


78


76


3


379


199



578

Aircraft not currently in fleet: (3)

















On order


--


5


7


--


--


12





Under option


--


25


10


--


--


35






(1) Includes 12 aircraft held for sale.

(2) The 199 aircraft operated or managed by our unconsolidated affiliates are in addition to those aircraft leased from us.

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


BRISTOW GROUP INC. AND SUBSIDIARIES
GAAP RECONCILIATIONS


EBITDA is a measure that has not been prepared in accordance with GAAP and has not been audited or reviewed by our independent auditors. EBITDA is therefore considered a non-GAAP financial measure. A description of adjustments and a reconciliation to net income, the most comparable GAAP financial measure to EBITDA, is as follows (in thousands):









Three Months Ended
September 30,



Six Months Ended
September 30,



2010



2009



2010



2009















(Unaudited)


Net income

$

38,848



$

33,710



$

59,756



$

57,701


Provision for income taxes


3,316




11,236




11,856




20,746


Interest expense


11,452




10,640




22,490




20,652


Depreciation and amortization


20,968




18,470




40,299




36,656


EBITDA

$

74,584



$

74,056



$

134,401



$

135,755



SOURCE: Bristow Group Inc.