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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, Nov. 9, 2018 /PRNewswire/ -- 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.

"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.

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."

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.

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.

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 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

 

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)


 

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


 

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


 

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

%

 

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.

 

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.

 

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


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