Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________________________________
FORM 8-K
_________________________________________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 9, 2018
_________________________________________________
 
Bristow Group Inc.
(Exact name of registrant as specified in its charter)
_________________________________________________

Delaware
 (State or other jurisdiction
 of incorporation)
 
001-31617
 (Commission
File Number)
 
72-0679819
 (IRS Employer
 Identification No.)

2103 City West Blvd.,
 4th Floor
 Houston, Texas
 (Address of principal executive offices)
 
77042
 (Zip Code)  

Registrant’s telephone number, including area code: (713) 267-7600

Former Name or Former Address, if Changed Since Last Report: NONE
_________________________________________________

 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨





ITEM 2.02 Results of Operations and Financial Condition.
On November 9, 2018, Bristow Group Inc. (the “Company”) issued a press release that summarized its financial results for the three and six-month periods ended September 30, 2018 (the “Financial Results”). This press release was issued in anticipation of a conference call and Q&A session starting at 7:00 a.m. CT (8:00 a.m. ET) on Friday, November 9, 2018, to review the Financial Results. A copy of the press release is furnished with this report as Exhibit 99.1, and is incorporated herein by reference.
The press release includes certain “non-GAAP financial measures” under Regulation G of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including adjusted EBITDA, adjusted benefit (provision) for income taxes, adjusted net income (loss), adjusted diluted earnings (loss) per share and free cash flow (collectively, the “Non-GAAP measures”). Adjusted EBITDA is calculated by taking our net income (loss) and adjusting for interest expense, depreciation and amortization, benefit (provision) for income taxes, gain (loss) on disposal of assets and special items, if any. Additionally, our net income (loss) and diluted earnings (loss) per share in this release have been presented in certain instances excluding gain (loss) on disposal of assets and special items detailed in the press release; these items are presented as adjusted net income (loss) and adjusted diluted earnings (loss) per share. Management believes that the Non-GAAP measures provide relevant and useful information, which is widely used by analysts, investors and competitors in our industry as well as by our management in assessing both consolidated and regional performance. Adjusted EBITDA provides us with an understanding of one aspect of earnings before the impact of investing and financing transactions and income taxes. Adjusted EBITDA should not be considered a measure of discretionary cash available to us for investing in the growth of our business. Adjusted net income (loss) and adjusted diluted earnings (loss) per share present our consolidated results excluding asset dispositions and special items that do not reflect the ordinary earnings of our operations. Adjusted benefit (provision) for income taxes excludes the tax impact of these items. We believe that these measures are useful supplemental measures because net income (loss) and diluted earnings (loss) per share include asset disposition effects and special items and benefit (provision) for income taxes includes the tax impact of these items, and inclusion of these items does not reflect the ongoing operational earnings of our business. Free cash flow is calculated by taking net cash generated by (used in) operating activities subtracting out capital expenditures and adding back proceeds from asset dispositions. Management believes free cash flow provides meaningful supplemental information regarding liquidity. The Non-GAAP measures are not calculated or presented in accordance with GAAP and other companies in our industry may calculate these measures differently than we do. As a result, these financial measures have limitations as analytical and comparative tools and you should not consider these measures in isolation, or as a substitute for analysis of our results as reported under GAAP. In calculating these financial measures, we make certain adjustments that are based on assumptions and estimates that may prove to be inaccurate. In addition, in evaluating these financial measures, you should be aware that in the future we may incur expenses similar to those eliminated in this presentation. Our presentation of the Non-GAAP measures should not be construed as an inference that our future results will be unaffected by unusual or special items. Such non-GAAP measures should not be viewed as an alternative to our GAAP financial statements, but should be read as a supplement to, and in conjunction with, our GAAP financial statements.
ITEM 9.01. Financial Statements and Exhibits.
(d) Exhibits
 
 
 
 
Exhibit Number
  
Description of Exhibit
 
 
99.1

  
Limitation on Incorporation by Reference.
Information on Bristow’s website is not incorporated by reference in this Form 8-K. In accordance with General Instruction B.2 of Form 8-K, the information set forth in this Form 8-K and the attached exhibit shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any registration statement or other filing under the Securities Act of 1933, as amended, or the Exchange Act unless Bristow expressly states that such information is to be considered “filed” under the Exchange Act or incorporates it by specific reference in such a filing. The information set forth in Item 2.02 and the related exhibit furnished in Item 9.01 of this report shall not be deemed an admission as to the materiality of any information in this report on Form 8-K.





SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
 
 
BRISTOW GROUP INC.
 
 
 
 
 
Date: November 9, 2018
 
By:
 
/s/ Brian J. Allman
 
 
 
 
 
Brian J. Allman
 
 
 
 
 
Vice President, Chief Accounting Officer
 


Exhibit
        

Exhibit 99.1
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12540883&doc=3
News Release


FOR IMMEDIATE RELEASE

Bristow Group Reports Second Quarter Fiscal Year 2019 Results
Announces Agreement to Acquire Privately-Owned Columbia Helicopters for $560 Million - Expected to Significantly Improve Future Operational and Financial Performance
Revises Bristow Standalone Full Fiscal Year 2019 Adjusted EBITDA Guidance to $80 Million to $110 Million
Company schedules conference call for today at 7am CT (8am ET)

HOUSTON, November 9, 2018 – Bristow Group Inc. (NYSE: BRS) today reported the following results for the three and six months ended September 30, 2018. All amounts shown are dollar amounts in thousands unless otherwise noted:
 
 
Three Months Ended 
 September 30,
 

 
Six Months Ended 
 September 30,
 
 
 
 
2018
 
2017
 
% Change
 
2018
 
2017
 
% Change
Operating revenue
 
$
334,711

 
$
357,992

 
(6.5
)%
 
$
685,698

 
$
697,721

 
(1.7
)%
Net loss attributable to Bristow Group
 
(144,190
)
 
(31,209
)
 
(362.0
)%
 
(176,298
)
 
(86,484
)
 
(103.9
)%
Diluted loss per share
 
(4.03
)
 
(0.88
)
 
(358.0
)%
 
(4.94
)
 
(2.45
)
 
(101.6
)%
Adjusted EBITDA (1)
 
21,310

 
32,378

 
(34.2
)%
 
48,079

 
47,581

 
1.0
 %
Adjusted net loss (1)
 
(28,004
)
 
(11,607
)
 
(141.3
)%
 
(57,127
)
 
(40,746
)
 
(40.2
)%
Adjusted diluted loss per share (1)
 
(0.78
)
 
(0.33
)
 
(136.4
)%
 
(1.60
)
 
(1.16
)
 
(37.9
)%
Operating cash flow
 
17,217

 
15,845

 
8.7
 %
 
(26,902
)
 
(35,334
)
 
23.9
 %
Capital expenditures
 
8,407

 
11,764

 
(28.5
)%
 
17,302

 
24,317

 
(28.8
)%
Rent expense
 
49,591

 
57,224

 
(13.3
)%
 
99,672

 
115,899

 
(14.0
)%
 
 
September 30, 
 2018
 
June 30,
2018
 
March 31,  
 2018
 
% Change
June 30, 2018 to
September 30, 2018
 
% Change
March 31, 2018 to
September 30, 2018
Cash
 
$
307,791

 
$
316,550

 
$
380,223

 
(2.8
)%
 
(19.0
)%
Undrawn borrowing capacity on ABL Facility (2)
 
11,691

 
25,216

 

 
(53.6
)%
 
*

Total liquidity
 
$
319,482

 
$
341,766

 
$
380,223

 
(6.5
)%
 
(16.0
)%
______________ 
* percentage change too large to be meaningful or not applicable
(1) 
A full reconciliation of non-GAAP financial measures is included at the end of this news release
(2) 
Our $75 million Asset-Backed Revolving Credit Facility (ABL Facility) closed on April 17, 2018 and, therefore, availability under such facility is not included in liquidity as of March 31, 2018.
“Amidst the uneven nature of the recovery in our global oil and gas business, Bristow remained focused on serving its growing global customer base, winning new contracts and delivering excellent safety improvement from the first quarter,” said Jonathan Baliff, Chief Executive Officer of Bristow Group. “Despite significant progress in strengthening service to our offshore oil and gas customers, and a solid performance from our U.K. SAR business, our financial results were affected negatively by foreign exchange volatility, the timing of certain operating costs and continued challenges in our fixed wing operations - and we have lowered our Bristow standalone adjusted EBITDA guidance accordingly.
“Today, we are announcing the signing of an agreement to acquire Columbia Helicopters. With this $560 million transaction, Bristow is taking a significant step forward today in terms of growing our diversified industrial aviation business and strengthening our consolidated financial position.

1

        

“The combination will create the world’s most diverse and effective rotor-wing fleet for our clients, with a platform that is capable of serving almost any rotor-wing mission across the globe. The acquisition will diversify our revenue by geography and end-market, deepen our position with the U.S. government and enable us to pursue global government contract opportunities that would not be available to either standalone company. This transaction, upon close, will significantly expand annual long-term contracted revenue, EBITDA and operating cash flow, in addition to deleveraging our balance sheet, and is expected to be immediately accretive to earnings per share and operating cash flow in fiscal year 2019,” added Jonathan Baliff.
BUSINESS AND FINANCIAL HIGHLIGHTS
Bristow has signed a definitive agreement to acquire privately held Columbia Helicopters for $560 million, creating the world’s most diverse and effective rotor-wing mission across the globe.
Net loss was $144.2 million ($4.03 per diluted share) for the September 2018 quarter, mainly due to a loss on impairment of $117.2 million ($2.83 per diluted share) related to our H225 owned aircraft and inventory and Eastern Airways assets, compared to a net loss of $31.2 million ($0.88 per diluted share) for the September 2017 quarter.
Adjusted net loss was $28.0 million ($0.78 per diluted share) for the September 2018 quarter compared to an adjusted net loss of $11.6 million ($0.33 per diluted share) for the September 2017 quarter; the September 2018 quarter is adjusted for $116.2 million in net unfavorable special items, including impairments of our H225 owned aircraft and inventory and Eastern Airways assets, and the September 2017 quarter is adjusted for $19.6 million in net unfavorable special items.
Adjusted EBITDA of $21.3 million for the September 2018 quarter.
Operating cash flows of $17.2 million and free cash flows of $9.5 million for the September 2018 quarter compared to operating cash flows of $15.8 million and free cash flows of $4.4 million for the September 2017 quarter.
After principal and interest payments in the September 2018 quarter of $39.7 million, we had $319.5 million of total liquidity as of September 30, 2018.
We are lowering our Bristow standalone fiscal 2019 adjusted EBITDA guidance from $90 million - $140 million to $80 million - $110 million, reflecting foreign exchange volatility, the timing of certain operating costs and continued headwinds in our fixed wing operations.
Operating revenue from external customers by line of service was as follows:
        
 
Three Months Ended 
 September 30,
 
 
 
2018
 
2017
 
% Change
 
 
 
 
 
 
 
(in thousands, except percentages)
Oil and gas services
$
221,080

 
$
243,754

 
(9.3
)%
U.K. SAR services
56,928

 
56,060

 
1.5
 %
Fixed wing services
55,996

 
56,721

 
(1.3
)%
Corporate and other
707

 
1,457

 
(51.5
)%
Total operating revenue
$
334,711

 
$
357,992

 
(6.5
)%
The year-over-year decrease in operating revenue was primarily driven by decreased flight activity in the September 2018 quarter in our Africa region, Canada operations within our Americas region, and our Asia Pacific region, with the largest impact coming from our operations in Africa due to a contract that expired on March 31, 2018, which was partially offset by increased activity with other customers. Also, revenue from our fixed wing services in our Asia Pacific region declined, partially offset by an increase in operating revenue from our fixed wing services in our Africa and Europe Caspian regions. Additionally, revenue decreased by $5.3 million compared to the September 2017 quarter due to changes in foreign currency exchange rates, primarily in our Asia Pacific region related to the strengthening of the U.S. dollar versus the Australian dollar.

2

        

The GAAP net loss and diluted loss per share for the September 2018 quarter were significantly impacted by the following special items:
Loss on impairment of $117.2 million ($101.1 million net of tax), or $2.83 per share, including:
$87.5 million impairment of H225 aircraft and $8.9 million impairment of H225 inventory, and
$20.8 million impairment of Eastern Airways assets including $17.5 million for aircraft and equipment, $3.0 million for intangible assets and $0.3 million for inventory,
Organizational restructuring costs of $2.7 million ($2.4 million net of tax), or $0.07 per share, included in direct cost and general and administrative expense, which resulted from separation programs across our global organization designed to increase efficiency and reduce costs,
Transaction costs of $1.2 million ($1.0 million net of tax), or $0.03 per share, included in general and administrative expense, resulting from the announced agreement to acquire Columbia Helicopters, and
A non-cash tax expense of $10.3 million, or $0.29 per share, from the valuation allowance on deferred tax assets.
Additionally, we realized a loss on disposal of assets of $1.3 million ($1.4 million net of tax), or $0.04 per share, during the September 2018 quarter from the sale or disposal of aircraft and other equipment.
The year-over-year change in GAAP net loss and diluted loss per share were primarily driven by loss on impairment in the September 2018 quarter discussed above, lower revenue in the September 2018 quarter discussed above, higher interest expense, foreign currency losses in the September 2018 quarter versus foreign currency gains in the September 2017 quarter and lower earnings from unconsolidated affiliates, partially offset by lower general and administrative expenses, lower losses on disposal of assets, lower rent expense and a more favorable effective tax rate.
The September 2018 quarter results benefited from the impact of $3.4 million of OEM cost recoveries resulting in a $2.4 million reduction in rent expense and a $1.0 million reduction in direct costs. The OEM cost recoveries described above are included within adjusted net income, adjusted earnings per share and adjusted EBITDA in the September 2018 quarter.
The year-over-year change in adjusted EBITDA was primarily driven by the decline in oil and gas revenue discussed above, foreign currency losses in the September 2018 quarter versus foreign currency gains in the September 2017 quarter, lower earnings from unconsolidated affiliates and lower results from our fixed wing services in our Asia Pacific region primarily due to an increase in maintenance expense and decrease in operating revenue. These unfavorable changes were partially offset by a decrease in general and administrative expense primarily from lower salaries and benefits in the September 2018 quarter and lower rent expense discussed above. The year-over-year change in adjusted net loss and adjusted diluted loss per share was impacted by the same items that impacted adjusted EBITDA as well as higher interest expense.
The September 2017 quarter was also impacted by special items as reflected in the table at the end of this release.
LIQUIDITY AND FINANCIAL FLEXIBILITY
Don Miller, Senior Vice President and Chief Financial Officer, commented, “Bristow’s previous financings and capital management continue to provide us with the runway needed to take advantage of the beginning of a recovery cycle for offshore oil and gas and the ability to capitalize on market opportunities like the transaction to acquire Columbia Helicopters. Bristow’s operations delivered positive operating and free cash flow in the September 2018 quarter. However, given the challenges noted we believe it is prudent to adjust our adjusted EBITDA guidance range for fiscal 2019 from $90 million to $140 million to $80 million to $110 million. Assuming a closing date of December 31, 2018 and the inclusion of Columbia for our fiscal fourth quarter 2019, our combined Bristow and Columbia fiscal 2019 adjusted EBITDA guidance range is $100 million to $140 million.”

3

        

REGIONAL PERFORMANCE

Europe Caspian
 
 
Three Months Ended 
 September 30,
 
 
 
 
2018
 
2017
 
% Change
 
 
 
 
 
 
 
 
 
(in thousands, except percentages)
Operating revenue
 
$
195,449

 
$
196,595

 
(0.6
)%
Operating income (loss)
 
$
(11,414
)
 
$
9,854

 
(215.8
)%
Operating margin
 
(5.8
)%
 
5.0
%
 
(216.0
)%
Adjusted EBITDA
 
$
19,865

 
$
23,950

 
(17.1
)%
Adjusted EBITDA margin
 
10.2
 %
 
12.2
%
 
(16.4
)%
Rent expense
 
$
31,179

 
$
36,851

 
(15.4
)%
Operating revenue for Europe Caspian in the September 2018 quarter was flat compared to the September 2017 quarter with an unfavorable year-over-year impact from changes in foreign currency exchange rates and a decrease in Norway driven by less short-term activity, primarily offset by an increase in fixed wing revenue from Eastern Airways and an increase in U.K. SAR revenue. Eastern Airways contributed $31.4 million and $30.5 million in operating revenue for the September 2018 quarter and September 2017 quarter, respectively.
During the September 2018 quarter, we recorded $20.8 million for impairment of Eastern Airways assets including $17.5 million for aircraft and equipment, $3.0 million for intangible assets and $0.3 million for inventory. The impairments are excluded from adjusted EBITDA and adjusted EBITDA margin.
The decrease in operating income and operating margin from the September 2017 quarter was primarily due to the impairments for Eastern Airways assets discussed above. Adjusted EBITDA and adjusted EBITDA margin decreased primarily due to foreign exchange losses from revaluation of assets and liabilities included in other income (expense), net in the September 2018 quarter compared to gains recorded in the September 2017 quarter. Eastern Airways contributed a negative $0.7 million and positive $0.2 million in adjusted EBITDA for the September 2018 quarter and September 2017 quarter, respectively.
Africa
 
 
Three Months Ended 
 September 30,
 
 
 
 
2018
 
2017
 
% Change
 
 
 
 
 
 
 
 
 
(in thousands, except percentages)
Operating revenue
 
$
37,236

 
$
48,627

 
(23.4
)%
Operating income
 
$
1,465

 
$
7,835

 
(81.3
)%
Operating margin
 
3.9
%
 
16.1
%
 
(75.8
)%
Adjusted EBITDA
 
$
5,105

 
$
12,617

 
(59.5
)%
Adjusted EBITDA margin
 
13.7
%
 
25.9
%
 
(47.1
)%
Rent expense
 
$
2,146

 
$
2,176

 
(1.4
)%
Operating revenue for Africa decreased in the September 2018 quarter primarily due to a contract that expired on March 31, 2018, which was partially offset by an increase in activity from other oil and gas customers due to a stronger than expected recovery as utilization on existing assets has improved. Additionally, fixed wing services in Africa generated $2.8 million and $1.6 million of operating revenue for the September 2018 quarter and September 2017 quarter, respectively.
Operating income, operating margin, adjusted EBITDA and adjusted EBITDA margin decreased as a result of the decrease in operating revenue in the September 2018 quarter, which was partially offset by a decrease in direct costs and general and administrative expense.

4

        

Americas
 
 
Three Months Ended 
 September 30,
 
 
 
 
2018
 
2017
 
% Change
 
 
 
 
 
 
 
 
 
(in thousands, except percentages)
Operating revenue
 
$
57,958

 
$
60,756

 
(4.6
)%
Earnings from unconsolidated affiliates
 
$
16

 
$
2,150

 
(99.3
)%
Operating income
 
$
1,813

 
$
7,483

 
(75.8
)%
Operating margin
 
3.1
%
 
12.3
%
 
(74.8
)%
Adjusted EBITDA
 
$
8,961

 
$
14,565

 
(38.5
)%
Adjusted EBITDA margin
 
15.5
%
 
24.0
%
 
(35.4
)%
Rent expense
 
$
6,334

 
$
5,191

 
22.0
 %
Operating revenue decreased in the September 2018 quarter primarily due to a decrease in operating revenue in Canada resulting from reduced activity, partially offset by an increase in activity with our U.S. Gulf of Mexico oil and gas customers.
Earnings from unconsolidated affiliates, net of losses, decreased primarily due to a reduction in earnings from our investment in Líder in Brazil resulting from an unfavorable change in foreign currency exchange rates and decline in activity.
The decreases in operating income, operating margin, adjusted EBITDA and adjusted EBITDA margin were driven by the decreases in operating revenue and earnings from unconsolidated affiliates discussed above and increase in rent expense.
Asia Pacific
 
 
Three Months Ended 
 September 30,
 
 
 
 
2018
 
2017
 
% Change
 
 
 
 
 
 
 
 
 
(in thousands, except percentages)
Operating revenue
 
$
46,625

 
$
53,990

 
(13.6
)%
Operating loss
 
$
(6,988
)
 
$
(5,903
)
 
(18.4
)%
Operating margin
 
(15.0
)%
 
(10.9
)%
 
(37.6
)%
Adjusted EBITDA
 
$
(3,000
)
 
$
1,425

 
*

Adjusted EBITDA margin
 
(6.4
)%
 
2.6
 %
 
*

Rent expense
 
$
8,281

 
$
10,595

 
(21.8
)%
_____________ 
 * percentage change too large to be meaningful or not applicable
Operating revenue decreased in the September 2018 quarter primarily due to an end of short-term contracts in Australia and a decrease from our fixed wing operations at Airnorth. Airnorth contributed $21.8 million and $24.6 million in operating revenue for the September 2018 quarter and September 2017 quarter, respectively.
Operating loss increased and operating margin, adjusted EBITDA and adjusted EBITDA margin decreased in the September 2018 quarter primarily due to a decrease in operating revenue discussed above and an increase in maintenance expense at Airnorth, partially offset by a decrease in salaries and benefits due to headcount reductions, a reduction to rent expense related to the return of leased aircraft and OEM cost recoveries and a decrease in general and administrative expenses. Additionally, changes in foreign exchange rates negatively impacted adjusted EBITDA results by $2.3 million compared to the September 2017 quarter primarily due to foreign exchange rate losses of $1.1 million for the September 2018 quarter compared to foreign exchange rate gains of $0.8 million in the September 2017 quarter. Airnorth contributed a negative $1.9 million and positive $5.6 million in adjusted EBITDA for the September 2018 quarter and September 2017 quarter, respectively.

5

        

Corporate and other
 
 
Three Months Ended 
 September 30,
 
 
 
 
2018
 
2017
 
% Change
 
 
 
 
 
 
 
 
 
(in thousands, except percentages)
Operating revenue
 
$
708

 
$
1,457

 
(51.4
)%
Operating loss
 
$
(113,274
)
 
$
(23,689
)
 
(378.2
)%
Adjusted EBITDA
 
$
(9,621
)
 
$
(20,179
)
 
52.3
 %
Rent expense
 
$
1,651

 
$
2,411

 
(31.5
)%
Operating revenue decreased in the September 2018 quarter primarily due to the sale of Bristow Academy on November 1, 2017.
Operating loss for the September 2018 quarter includes impairments of $87.5 million for the impairment of H225 aircraft and $8.9 million for the impairment of H225 inventory. The impairments are excluded from adjusted EBITDA and adjusted EBITDA margin. Adjusted EBITDA improved primarily due to foreign currency transaction gains of $0.1 million in the September 2018 quarter compared to foreign currency transaction losses of $1.2 million in the September 2017 quarter, and a reduction in general and administrative expenses.
GUIDANCE
Guidance for selected financial measures is included in the tables that follow.
CONFERENCE CALL
Management will conduct a conference call starting at 7:00 a.m. CT (8:00 a.m. ET) today, Friday, November 9, 2018, to review both the announced transaction and the financial results for the fiscal year 2019 second quarter ended September 30, 2018. 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 2019 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
Via Telephone outside the U.S.:
Live: Dial 1-412-902-0030
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 to government and civil organizations worldwide. Bristow 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 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, the Columbia acquisition and the expected benefits thereof, capital deployment strategy, operational and capital performance, expected cost management

6

        

activities, expected capital expenditure deferrals, shareholder return, liquidity and 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; the risks that we may not complete the Columbia acquisition or achieve the expected benefits thereof; actions by customers and suppliers; the risk of reductions in spending on industrial aviation 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 annual report on Form 10-K for the fiscal year ended March 31, 2018 and quarterly report on Form 10-Q for the quarter ended June 30, 2018. 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.
(financial tables follow)

Investor Relations
Linda McNeill
Director, Investor Relations
+1 713.267.7622

Global Media Relations
Adam Morgan
Director, Global Communications
+1 281.253.9005


7

        

BRISTOW GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts and percentages)
(Unaudited)
 
Three Months Ended 
 September 30,
 
Six Months Ended 
 September 30,
 
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
 
 
Revenue:
 
 
 
 
 
 
 
Operating revenue from non-affiliates
$
321,580

 
$
340,593

 
$
660,046

 
$
662,711

Operating revenue from affiliates
13,131

 
17,399

 
25,652

 
35,010

Reimbursable revenue from non-affiliates
15,946

 
15,684

 
32,853

 
28,064

 
350,657

 
373,676

 
718,551

 
725,785

Operating expense:
 
 
 
 
 
 
 
Direct cost
277,217

 
284,742

 
557,268

 
570,322

Reimbursable expense
15,194

 
15,414

 
31,098

 
27,640

Depreciation and amortization
30,489

 
31,381

 
61,430

 
62,437

General and administrative
38,839

 
48,622

 
78,940

 
95,329

 
361,739

 
380,159

 
728,736

 
755,728

 
 
 
 
 
 
 
 
Loss on impairment
(117,220
)
 

 
(117,220
)
 
(1,192
)
Loss on disposal of assets
(1,293
)
 
(8,526
)
 
(2,971
)
 
(7,827
)
Earnings (losses) from unconsolidated affiliates, net
(96
)
 
2,063

 
(3,113
)
 
1,398

Operating loss
(129,691
)
 
(12,946
)
 
(133,489
)
 
(37,564
)
 
 
 
 
 
 
 
 
Interest expense, net
(26,433
)
 
(18,563
)
 
(53,577
)
 
(34,584
)
Other income (expense), net
(3,204
)
 
2,587

 
(7,154
)
 
971

Loss before provision for income taxes
(159,328
)
 
(28,922
)
 
(194,220
)
 
(71,177
)
Benefit (provision) for income taxes
15,655

 
(2,474
)
 
18,506

 
(15,965
)
Net loss
(143,673
)
 
(31,396
)
 
(175,714
)
 
(87,142
)
Net (income) loss attributable to noncontrolling interests
(517
)
 
187

 
(584
)
 
658

Net loss attributable to Bristow Group
$
(144,190
)
 
$
(31,209
)
 
$
(176,298
)
 
$
(86,484
)
 
 
 
 
 
 
 
 
Loss per common share:
 
 
 
 
 
 
 
Basic
$
(4.03
)
 
$
(0.88
)
 
$
(4.94
)
 
$
(2.45
)
Diluted
$
(4.03
)
 
$
(0.88
)
 
$
(4.94
)
 
$
(2.45
)
 
 
 
 
 
 
 
 
Non-GAAP measures:
 
 
 
 
 
 
 
Adjusted EBITDA
$
21,310

 
$
32,378

 
$
48,079

 
$
47,581

Adjusted EBITDA margin
6.4
%
 
9.0
%
 
7.0
%
 
6.8
%
Adjusted net loss
$
(28,004
)
 
$
(11,607
)
 
$
(57,127
)
 
$
(40,746
)
Adjusted diluted loss per share
$
(0.78
)
 
$
(0.33
)
 
$
(1.60
)
 
$
(1.16
)

8

        

BRISTOW GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 
 
September 30, 
 2018
 
March 31,  
 2018
ASSETS
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
307,791

 
$
380,223

Accounts receivable from non-affiliates
 
218,792

 
233,386

Accounts receivable from affiliates
 
13,029

 
13,594

Inventories
 
117,706

 
129,614

Assets held for sale
 
24,176

 
30,348

Prepaid expenses and other current assets
 
46,603

 
47,234

Total current assets
 
728,097

 
834,399

Investment in unconsolidated affiliates
 
110,637

 
126,170

Property and equipment – at cost:
 
 
 
 
Land and buildings
 
243,245

 
250,040

Aircraft and equipment
 
2,491,291

 
2,511,131

 
 
2,734,536

 
2,761,171

Less – Accumulated depreciation and amortization
 
(848,271
)
 
(693,151
)
 
 
1,886,265

 
2,068,020

Goodwill
 
18,778

 
19,907

Other assets
 
117,027

 
116,506

Total assets
 
$
2,860,804

 
$
3,165,002

 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
 
 
 
 
Accounts payable
 
$
103,510

 
$
101,270

Accrued wages, benefits and related taxes
 
47,011

 
62,385

Income taxes payable
 
6,809

 
8,453

Other accrued taxes
 
9,095

 
7,378

Deferred revenue
 
13,733

 
15,833

Accrued maintenance and repairs
 
28,372

 
28,555

Accrued interest
 
17,154

 
16,345

Other accrued liabilities
 
52,735

 
65,978

Short-term borrowings and current maturities of long-term debt
 
50,798

 
56,700

Total current liabilities
 
329,217

 
362,897

Long-term debt, less current maturities
 
1,398,911

 
1,429,834

Accrued pension liabilities
 
28,484

 
37,034

Other liabilities and deferred credits
 
31,639

 
36,952

Deferred taxes
 
97,372

 
115,192

 
 
 
 
 
Stockholders’ investment:
 
 
 
 
Common stock
 
385

 
382

Additional paid-in capital
 
858,809

 
852,565

Retained earnings
 
615,739

 
793,783

Accumulated other comprehensive loss
 
(322,015
)
 
(286,094
)
Treasury shares
 
(184,796
)
 
(184,796
)
Total Bristow Group stockholders’ investment
 
968,122

 
1,175,840

Noncontrolling interests
 
7,059

 
7,253

Total stockholders’ investment
 
975,181

 
1,183,093

Total liabilities and stockholders’ investment
 
$
2,860,804

 
$
3,165,002


9

        

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


 
 
Six Months Ended 
 September 30,
 
 
2018
 
2017
Cash flows from operating activities:
 
 
 
 
Net loss
 
$
(175,714
)
 
$
(87,142
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
 
Depreciation and amortization
 
61,430

 
62,437

Deferred income taxes
 
(27,651
)
 
1,197

Write-off of deferred financing fees
 

 
621

Discount amortization on long-term debt
 
3,101

 
101

Loss on disposal of assets
 
2,971

 
7,827

Loss on impairment
 
117,220

 
1,192

Deferral of lease payment
 
2,841

 

Stock-based compensation
 
3,714

 
6,542

Equity in earnings from unconsolidated affiliates less than (in excess of) dividends received
 
3,299

 
(1,190
)
Increase (decrease) in cash resulting from changes in:
 
 
 
 
Accounts receivable
 
6,792

 
(25,222
)
Inventories
 
(3,785
)
 
(1,848
)
Prepaid expenses and other assets
 
2,980

 
7,320

Accounts payable
 
7,651

 
(4,581
)
Accrued liabilities
 
(26,703
)
 
(2,635
)
Other liabilities and deferred credits
 
(5,048
)
 
47

Net cash used in operating activities
 
(26,902
)
 
(35,334
)
Cash flows from investing activities:
 
 
 
 
Capital expenditures
 
(17,302
)
 
(24,317
)
Proceeds from asset dispositions
 
8,462

 
42,244

Net cash provided by (used in) investing activities
 
(8,840
)
 
17,927

Cash flows from financing activities:
 
 
 
 
Proceeds from borrowings
 
387

 
338,018

Debt issuance costs
 
(2,554
)
 
(6,695
)
Repayment of debt
 
(29,970
)
 
(318,130
)
Partial prepayment of put/call obligation
 
(27
)
 
(23
)
Dividends paid to noncontrolling interest
 
(580
)
 

Common stock dividends paid
 

 
(2,465
)
Issuance of common stock
 
2,830

 

Repurchases for tax withholdings on vesting of equity awards
 
(1,504
)
 
(548
)
Net cash provided by (used in) financing activities
 
(31,418
)
 
10,157

Effect of exchange rate changes on cash and cash equivalents
 
(5,272
)
 
7,937

Net increase (decrease) in cash and cash equivalents
 
(72,432
)
 
687

Cash and cash equivalents at beginning of period
 
380,223

 
96,656

Cash and cash equivalents at end of period
 
$
307,791

 
$
97,343








10

        

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,
 
 
2018
 
2017
 
2018
 
2017
Flight hours (excluding Bristow Academy and unconsolidated affiliates):
 
 
 
 
 
 
 
 
Europe Caspian
 
22,609

 
23,706

 
45,977

 
45,853

Africa
 
4,002

 
7,621

 
7,672

 
15,144

Americas
 
9,735

 
8,164

 
19,002

 
15,856

Asia Pacific
 
5,656

 
6,958

 
12,554

 
13,319

Consolidated
 
42,002

 
46,449

 
85,205

 
90,172

Operating revenue:
 
 
 
 
 
 
 
 
Europe Caspian
 
$
195,449

 
$
196,595

 
$
406,435

 
$
381,073

Africa
 
37,236

 
48,627

 
72,151

 
98,608

Americas
 
57,958

 
60,756

 
111,768

 
118,539

Asia Pacific
 
46,625

 
53,990

 
101,029

 
103,117

Corporate and other
 
708

 
1,457

 
898

 
3,169

Intra-region eliminations
 
(3,265
)
 
(3,433
)
 
(6,583
)
 
(6,785
)
Consolidated
 
$
334,711

 
$
357,992

 
$
685,698

 
$
697,721

Consolidated operating loss:
 
 
 
 
 
 
 
 
Europe Caspian
 
$
(11,414
)
 
$
9,854

 
$
10,514

 
$
14,225

Africa
 
1,465

 
7,835

 
2,606

 
17,883

Americas
 
1,813

 
7,483

 
(5,774
)
 
6,227

Asia Pacific
 
(6,988
)
 
(5,903
)
 
(7,959
)
 
(18,433
)
Corporate and other
 
(113,274
)
 
(23,689
)
 
(129,905
)
 
(49,639
)
Loss on disposal of assets
 
(1,293
)
 
(8,526
)
 
(2,971
)
 
(7,827
)
Consolidated
 
$
(129,691
)
 
$
(12,946
)
 
$
(133,489
)
 
$
(37,564
)
Operating margin:
 
 
 
 
 
 
 
 
Europe Caspian
 
(5.8
)%
 
5.0
 %
 
2.6
 %
 
3.7
 %
Africa
 
3.9
 %
 
16.1
 %
 
3.6
 %
 
18.1
 %
Americas
 
3.1
 %
 
12.3
 %
 
(5.2
)%
 
5.3
 %
Asia Pacific
 
(15.0
)%
 
(10.9
)%
 
(7.9
)%
 
(17.9
)%
Consolidated
 
(38.7
)%
 
(3.6
)%
 
(19.5
)%
 
(5.4
)%
Adjusted EBITDA:
 
 
 
 
 
 
 
 
Europe Caspian
 
$
19,865

 
$
23,950

 
$
48,659

 
$
40,102

Africa
 
5,105

 
12,617

 
10,424

 
26,000

Americas
 
8,961

 
14,565

 
8,554

 
20,741

Asia Pacific
 
(3,000
)
 
1,425

 
(914
)
 
(4,295
)
Corporate and other
 
(9,621
)
 
(20,179
)
 
(18,644
)
 
(34,967
)
Consolidated
 
$
21,310

 
$
32,378

 
$
48,079

 
$
47,581

Adjusted EBITDA margin:
 
 
 
 
 
 
 
 
Europe Caspian
 
10.2
 %
 
12.2
 %
 
12.0
 %
 
10.5
 %
Africa
 
13.7
 %
 
25.9
 %
 
14.4
 %
 
26.4
 %
Americas
 
15.5
 %
 
24.0
 %
 
7.7
 %
 
17.5
 %
Asia Pacific
 
(6.4
)%
 
2.6
 %
 
(0.9
)%
 
(4.2
)%
Consolidated
 
6.4
 %
 
9.0
 %
 
7.0
 %
 
6.8
 %




11

        

BRISTOW GROUP INC. AND SUBSIDIARIES
AIRCRAFT COUNT
As of September 30, 2018
(Unaudited)
 
 
Percentage
of Current
Period
Operating
Revenue
 
Aircraft in Consolidated Fleet
 
 
 
 
 
 
Helicopters
 
Fixed
Wing (1)
 
 
 
Unconsolidated
Affiliates (4)
 
 
 
 
Small
 
Medium
 
Large
Total (2)(3)
 
Total
Europe Caspian
 
59
%
 

 
14

 
77

 
32

 
123

 

 
123

Africa
 
11
%
 
4

 
28

 
7

 
3

 
42

 
48

 
90

Americas
 
16
%
 
20

 
40

 
15

 

 
75

 
66

 
141

Asia Pacific
 
14
%
 

 
8

 
20

 
14

 
42

 

 
42

Total
 
100
%
 
24

 
90

 
119

 
49

 
282

 
114

 
396

Aircraft not currently in fleet: (5)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
On order
 
 
 

 

 
27

 

 
27

 
 
 
 
Under option
 
 
 

 

 
4

 

 
4

 
 
 
 
_____________ 
(1) 
Eastern Airways operates a total of 32 fixed wing aircraft in the Europe Caspian region and provides technical support for two fixed wing aircraft in the Africa region. Additionally, Airnorth operates a total of 14 fixed wing aircraft, which are included in the Asia Pacific region.
(2) 
Includes 10 aircraft held for sale and 92 leased aircraft as follows:
 
 
Held for Sale Aircraft in Consolidated Fleet
 
 
Helicopters
 
 
 
Small
 
Medium
 
Large
 
Fixed
Wing
 
Total
Europe Caspian
 

 
1

 

 

 
1

Africa
 
2

 
3

 

 

 
5

Americas
 

 
3

 

 

 
3

Asia Pacific
 

 

 

 
1

 
1

Total
 
2

 
7

 

 
1

 
10

 
 
 
 
 
 
 
 
 
 
 
 
 
Leased Aircraft in Consolidated Fleet
 
 
Helicopters
 
 
 
 
 
Small
 
Medium
 
Large
 
Fixed
Wing
 
Total
Europe Caspian
 

 
3

 
38

 
12

 
53

Africa
 

 
1

 
3

 

 
4

Americas
 
2

 
14

 
6

 

 
22

Asia Pacific
 

 
3

 
6

 
4

 
13

Total
 
2

 
21

 
53

 
16

 
92

(3) 
The average age of our fleet was approximately ten years as of September 30, 2018.
(4) 
The 114 aircraft operated by our unconsolidated affiliates do not include those aircraft leased from us. Includes 43 helicopters (primarily medium) and 22 fixed wing aircraft owned and managed by Líder Táxi Aéreo S.A. (“Líder”), our unconsolidated affiliate in Brazil included in the Americas region, and 41 helicopters and seven fixed wing aircraft owned by Petroleum Air Services (“PAS”), our unconsolidated affiliate in Egypt included in the Africa region, and one helicopter operated by Cougar Helicopters Inc., our unconsolidated affiliate in Canada.
(5) 
This table does not reflect aircraft which our unconsolidated affiliates may have on order or under option.



12

        


BRISTOW GROUP INC. AND SUBSIDIARIES
FY 2019 GUIDANCE

Bristow Standalone FY 2019 guidance as of September 30, 2018(1)
 
Operating revenue 2
Adjusted EBITDA2,3
Rent2
Oil and gas
~$825M - $925M
~$20M - $40M 4
~$115M - $125M
U.K. SAR
~$230M - $240M
~$65M - $75M 4
~$45M - $50M
Eastern
~$90M - $100M
~($5M) - $0M 4
~$10M - $12M
Airnorth
~$80M - $90M
~($5M) - $0M 4
~$8M - $10M
Total
~$1.25B - $1.35B
~$80M - $110M 4
~$185M - $195M
 
 
 
 
G&A expense
~$150M - $170M
 
 
Depreciation expense
~$115M - $125M
 
 
Total aircraft rent 5
~$160M - $165M
 
 
Total non-aircraft rent 5
~$25M - $30M
 
 
Interest expense
~$100M - $110M
 
 
Non-aircraft capex
~$30M annually
 
 
Aircraft Sale Proceeds
~$20M annually
 
 
_____________ 
(1) 
FY19 guidance assumes FX rates as of September 30, 2018.
(2) 
Operating revenue, adjusted EBITDA and rent for oil and gas includes corporate and other revenue and the impact of corporate overhead expenses.
(3) 
Adjusted EBITDA for U.K. SAR and fixed wing (Eastern/Airnorth) excludes corporate overhead allocations consistent with financial reporting. Adjusted EBITDA 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 adjusted EBITDA 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.
(4) 
Updated from guidance provided in August 2018.
(5) 
Total aircraft rent and total non-aircraft rent are inclusive of the respective components of rent expense for U.K. SAR, Eastern, Airnorth plus oil and gas.


13

        

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 auditor. 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 
 September 30,
 
Six Months Ended 
 September 30,
 
 
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
 
 
 
(In thousands, except percentages and per share amounts)
Net loss
 
$
(143,673
)
 
$
(31,396
)
 
$
(175,714
)
 
$
(87,142
)
Loss on disposal of assets
 
1,293

 
8,526

 
2,971

 
7,827

Special items
 
121,194

 
2,676

 
122,913

 
13,542

Depreciation and amortization
 
30,489

 
31,381

 
61,430

 
62,437

Interest expense
 
27,662

 
18,717

 
54,985

 
34,952

Provision (benefit) for income taxes
 
(15,655
)
 
2,474

 
(18,506
)
 
15,965

Adjusted EBITDA
 
$
21,310

 
$
32,378

 
$
48,079

 
$
47,581

 
 
 
 
 
 
 
 
 
Benefit (provision) for income taxes
 
$
15,655

 
$
(2,474
)
 
$
18,506

 
$
(15,965
)
Tax provision (benefit) on loss on disposal
   of assets
 
104

 
5,618

 
(300
)
 
10,191

Tax provision (benefit) on special items
 
(6,405
)
 
2,782

 
(6,413
)
 
14,178

Adjusted benefit for income taxes
 
$
9,354

 
$
5,926

 
$
11,793

 
$
8,404

 
 
 
 
 
 
 
 
 
Effective tax rate (1)
 
9.8
%
 
(8.6
)%
 
9.5
%
 
(22.4
)%
Adjusted effective tax rate (1)
 
25.4
%
 
33.4
 %
 
17.3
%
 
16.9
 %
 
 
 
 
 
 
 
 
 
Net loss attributable to Bristow Group
 
$
(144,190
)
 
$
(31,209
)
 
$
(176,298
)
 
$
(86,484
)
Loss on disposal of assets
 
1,397

 
14,144

 
2,671

 
18,018

Special items
 
114,789

 
5,458

 
116,500

 
27,720

Adjusted net loss
 
$
(28,004
)
 
$
(11,607
)
 
$
(57,127
)
 
$
(40,746
)


 
 
 
 
 
 
 
 
Diluted loss per share
 
$
(4.03
)
 
$
(0.88
)
 
$
(4.94
)
 
$
(2.45
)
Loss on disposal of assets
 
0.04

 
0.40

 
0.07

 
0.51

Special items
 
3.21

 
0.15

 
3.26

 
0.79

Adjusted diluted loss per share
 
(0.78
)
 
(0.33
)
 
(1.60
)
 
(1.16
)
_____________ 
(1) 
Effective tax rate is calculated by dividing benefit (provision) for income tax by pretax net loss. Adjusted effective tax rate is calculated by dividing adjusted benefit (provision) for income tax by adjusted pretax net loss. Tax provision (benefit) on loss on disposal of assets and tax provision (benefit) on special items is calculated using the statutory rate of the entity recording the loss on disposal of assets or special item.  
 
 
Three Months Ended 
 September 30,
 
Six Months Ended 
 September 30,
 
 
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
 
 
 
(In thousands)
Net cash generated by (used in) operating activities
 
$
17,217

 
$
15,845

 
$
(26,902
)
 
$
(35,334
)
Capital expenditures
 
(8,407
)
 
(11,764
)
 
(17,302
)
 
(24,317
)
Proceeds from asset dispositions
 
688

 
269

 
8,462

 
42,244

Free cash flow
 
$
9,498

 
$
4,350

 
$
(35,742
)
 
$
(17,407
)
 
 
 
 
 
 
 
 
 
Net cash provided by (used in) investing activities
 
$
(7,719
)
 
$
(11,495
)
 
$
(8,840
)
 
$
17,927

 
 
 
 
 
 
 
 
 
Net cash provided by (used in) financing activities
 
$
(16,565
)
 
$
11,330

 
$
(31,418
)
 
$
10,157


14

        


The following table presents reconciliation of adjusted EBITDA by segment and adjusted EBITDA margin and rent expense by region for the three months ended September 30, 2018:
 
 
Europe Caspian
 
Africa
 
Americas
 
Asia Pacific
 
Corporate and other
 
Loss on disposal of assets
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands, except percentages)
Operating income (loss)
 
$
(11,414
)
 
$
1,465

 
$
1,813

 
$
(6,988
)
 
$
(113,274
)
 
$
(1,293
)
 
$
(129,691
)
Depreciation and amortization expense
 
12,189

 
3,665

 
7,310

 
4,054

 
3,271

 
 
 
30,489

Interest income
 
18

 
2

 
1

 
34

 
1,174

 
 
 
1,229

Other income (expense), net
 
(1,836
)
 
(27
)
 
(332
)
 
(1,123
)
 
114

 
 
 
(3,204
)
Special items and loss on asset disposal
 
20,908

 

 
169

 
1,023

 
99,094

 
1,293

 
122,487

Adjusted EBITDA
 
$
19,865

 
$
5,105

 
$
8,961

 
$
(3,000
)
 
$
(9,621
)
 
$

 
$
21,310

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA margin
 
10.2
%
 
13.7
%
 
15.5
%
 
(6.4
)%
 
 
 
 
 
6.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rent expense
 
$
31,179

 
$
2,146

 
$
6,334

 
$
8,281

 
$
1,651

 
 
 
$
49,591

The following table presents reconciliation of adjusted EBITDA by segment and adjusted EBITDA margin and rent expense by region for the three months ended September 30, 2017:
 
 
Europe Caspian
 
Africa
 
Americas
 
Asia Pacific
 
Corporate and other
 
Loss on disposal of assets
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands, except percentages)
Operating income (loss)
 
$
9,854

 
$
7,835

 
$
7,483

 
$
(5,903
)
 
$
(23,689
)
 
$
(8,526
)
 
$
(12,946
)
Depreciation and amortization expense
 
12,196

 
3,590

 
6,998

 
5,058

 
3,539

 
 
 
31,381

Interest income
 
2

 
4

 
26

 
26

 
96

 
 
 
154

Other income (expense), net
 
1,921

 
1,031

 
(12
)
 
827

 
(1,180
)
 
 
 
2,587

Special items and loss on asset disposal
 
(23
)
 
157

 
70

 
1,417

 
1,055

 
8,526

 
11,202

Adjusted EBITDA
 
$
23,950

 
$
12,617

 
$
14,565

 
$
1,425

 
$
(20,179
)
 
$

 
$
32,378

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA margin
 
12.2
%
 
25.9
%
 
24.0
%
 
2.6
%
 
 
 
 
 
9.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rent expense
 
$
36,851

 
$
2,176

 
$
5,191

 
$
10,595

 
$
2,411

 
 
 
$
57,224

We determined that during the three months ended June 30, 2018, we had incorrectly allocated a foreign currency transaction gain and loss between two regions: Europe Caspian and Corporate and other with no impact to consolidated adjusted EBITDA or consolidated other income. This resulted in an overstatement of adjusted EBITDA and other income for Europe Caspian region of $6.9 million and an understatement of adjusted EBITDA and other income for Corporate and other of $6.9 million during the three months ended June 30, 2018. We have corrected the adjusted EBITDA and other income for these regions for three months ended June 30, 2018. There is no impact on the three or six months ended September 30, 2018.


15

        

The following table presents reconciliation of adjusted EBITDA by segment and adjusted EBITDA margin and rent expense by region for the six months ended September 30, 2018:
 
 
Europe Caspian
 
Africa