Bristow Group Reports First Quarter Fiscal Year 2021 Results

Bristow Group Inc. reported net income attributable to the Company of $71.5 million, or $5.16 per diluted share, for its first quarter ended June 30, 2020 (“current quarter”) on operating revenues of $261.5 million compared to net income attributable to the Company of $291.7 million, or a loss of $1.26 per diluted share, for the quarter ended March 31, 2020 (“preceding quarter”) on operating revenues of $274.4 million.  The net income in the preceding quarter resulted in a net loss per diluted share due to the dilutive effect of preferred stock; the preferred stock was eliminated upon closing of the Merger.

After the closing of the business combination between Bristow Group Inc. and Era Group Inc. (the “Merger”) on June 11, 2020, the current quarter includes 19 days of operating results from legacy Era Group Inc. The preceding quarter and prior periods only include operating results of legacy Bristow Group Inc.

Earnings before interest, taxes, depreciation and amortization (“EBITDA”) was $97.0 million in the current quarter compared to $310.1 million in the preceding quarter.  EBITDA adjusted to exclude special items and gains or losses on asset dispositions was $46.0 million in the current quarter compared to $21.5 million in the preceding quarter. The following table provides a bridge between EBITDA, Adjusted EBITDA and Adjusted EBITDA excluding gains or losses on asset dispositions. See Reconciliation of Non-GAAP Metrics for a reconciliation of net income, the most directly comparable GAAP measure, to EBITDA and Adjusted EBITDA.

“I thank and commend the entire Bristow team for their focus and dedication to successfully close the merger during these unprecedented times, all while continuing to deliver safe, reliable and uninterrupted service to our valued customers,” said Chris Bradshaw, President and Chief Executive Officer of Bristow. “While the outlook for the offshore oil and gas industry appears challenging for the foreseeable future, the timing of the merger presents opportunities to create value by realizing cost synergies and operational efficiencies, supporting continued positive cash flow generation for the Company.”

Sequential Quarter Results

Operating revenues in the current quarter were $12.9 million lower compared to the preceding quarter. Operating revenues from fixed wing services were $7.8 million lower primarily due to lower utilization related to COVID-19. Operating revenues from oil and gas services were $4.5 million lower primarily due to lower utilization in our Africa region, partially offset by an increase in revenues in our Americas region due to the Merger and an increase in utilization in our Europe Caspian region due to the commencement of short-term contracts. Operating revenues from U.K. SAR services were $1.1 million lower in the current quarter primarily due to fewer flight hours.

Operating expenses were $21.5 million lower in the current quarter primarily due to lower personnel, fuel, maintenance and other operating expenses related to the decrease in activity discussed above, partially offset by an increase in lease and insurance costs.

General and administrative expenses were $7.2 million higher in the current quarter primarily due to professional services fees and severance costs related to the Merger in the current quarter, partially offset by professional services fees related to fresh-start accounting in the preceding quarter.

During the current quarter and preceding quarter, the Company recognized losses on the impairment of its investment in Líder Táxi Aéreo S.A. (“Líder”) of $18.7 million and $9.6 million, respectively.

During the current quarter, the Company sold one heavy helicopter resulting in gains of $5.5 million. There were no significant asset dispositions in the preceding quarter.

During the current quarter, the Company recognized losses of $2.0 million from its equity investments compared to gains of $5.8 million in the preceding quarter. The increased losses in the current quarter were primarily due to the Company’s investment in Lider and the absence of a dividend from a cost-based investment which was received in the preceding quarter.

Reorganization items incurred in the preceding quarter related to the Company’s voluntary filing for relief under Chapter 11 of the U.S. Bankruptcy Code (“Chapter 11 Cases”) and primarily consisted of professional fees and trustee fees.

During the current quarter and preceding quarter, the Company recognized benefits of $15.4 million and $317.5 million, respectively, related to a decrease in the fair value of preferred stock derivative. The preferred stock was eliminated upon closing of the Merger.

During the current quarter, the Company recognized a bargain purchase gain of $75.4 million related to the Merger.

Benefit for income taxes was $7.8 million lower in the current quarter. Benefit for income taxes in the preceding quarter included changes in estimates in certain tax attributes as a result of the Chapter 11 Cases.

Calendar Quarter Results

Operating revenues in the current quarter were $55.1 million lower compared to the quarter ended June 30, 2019 (“prior year quarter”).

Operating revenues from oil and gas services were $28.3 million lower.  Operating revenues in our Africa region were $12.8 million lower primarily due to lower utilization.  Operating revenues in our Asia Pacific region were $11.4 million lower primarily due to the absence of revenues from a business that was sold in the prior year quarter and lower utilization in the current quarter.  Operating revenues in our Europe Caspian region were $6.2 million lower primarily due to lower utilization and the weakening of the Norwegian krone and British pound sterling relative to the U.S. dollar.  These decreases were partially offset by a $2.1 million increase in operating revenues in our Americas region primarily due to the Merger.

Operating revenues from fixed wing services were $23.8 million lower in the current quarter primarily due to the absence of revenues from Eastern Airways, which was sold during the prior year quarter, and lower utilization in existing fixed wing services primarily related to the impact of COVID-19.

Operating revenues from U.K. SAR services were $3.5 million lower in the current quarter primarily due to fewer flight hours.

Operating expenses were $67.3 million lower in the current quarter. Lease costs were $20.5 million lower in the current quarter primarily due to aircraft lease rejections related to Chapter 11 during the prior year and the absence of $10.8 million in net lease return costs incurred in the prior year quarter. Personnel, fuel, maintenance and other operating expenses were lower primarily due to the decrease in activity discussed above and the absence of costs related to Eastern Airways.

In the prior year quarter, the Company incurred $13.5 million in professional services fees prior to the petition date related to the Chapter 11 Cases.

General and administrative expenses were $18.2 million higher in the current quarter primarily due to professional services fees and severance costs related to the Merger.

Depreciation and amortization expense decreased by $15.0 million in the current quarter primarily due to the revaluation of assets in connection with the Company’s adoption of fresh-start accounting.

The Company recognized a loss on the impairment of its investment in Lider of $18.7 million during the current quarter.

During the current quarter, the Company sold one heavy helicopter resulting in gains of $5.5 million. During the prior year quarter, the Company sold one medium helicopter, a fixed wing aircraft and other equipment resulting in losses of $3.8 million.

During the current quarter, the Company recognized losses of $2.0 million from its equity investments compared to gains of $2.3 million in the prior year quarter. The losses in the current quarter were primarily due to increased losses from the Company’s investment in Lider, which was fully impaired during the quarter.

Interest expense was $14.2 million lower in the current quarter primarily due to lower debt balances.

Reorganization items incurred in the prior year quarter related to the Chapter 11 Cases and consisted of the write-off of debt discount, lease termination costs, professional services fees and the write-off of deferred financing costs.

During the prior year quarter, the Company sold two subsidiaries, Eastern Airways and Aviashelf, resulting in losses of $46.9 million and $9.5 million, respectively.

During the current quarter, the Company recognized a benefit of $15.4 million related to a decrease in the fair value of preferred stock derivative.  The preferred stock was eliminated upon closing of the Merger.

During the current quarter, the Company recognized a bargain purchase gain of $75.4 million related to the Merger.

The Company’s effective tax rate was (4.8)% in the current quarter compared to 8.4% in the prior year quarter. The change in the Company’s effective tax rate primarily related to changes in the blend of earnings, releases of valuation allowances on the Company’s net operating losses and nondeductible professional fees related to the Merger.

Liquidity

As of June 30, 2020, the Company had $259.9 million of unrestricted cash and $38.8 million of remaining availability under its amended asset-backed revolving credit facility (the “ABL Facility”) for total liquidity of $298.7 million. Borrowings under the amended ABL Facility are subject to certain conditions and requirements.

Recent Developments

The Company initiated a partial dissolution process to exit its equity investment in Lider. As a result of this process, the Company will no longer be a shareholder of Líder as of August 30, 2020.  The amount payable to the Company for its equity interests will be governed by the partial dissolution process set forth under the Brazilian Constitution.

Conference Call

Management will conduct a conference call starting at 10:00 a.m. ET (9:00 a.m. CT) on Friday, August 7, 2020, to review the results for the first quarter ended June 30, 2020. The conference call can be accessed as follows:

All callers will need to reference the access code 1268149.

Within the U.S.:  Operator Assisted Toll-Free Dial-In Number: (800) 353-6461

Outside the U.S.:  Operator Assisted International Dial-In Number: (334) 323-0501

Replay

A telephone replay will be available through August 21, 2020 by dialing 888-203-1112 and utilizing the access code above.  An audio replay will also be available on the Company’s website at www.bristowgroup.com shortly after the call and will be accessible through August 21, 2020. The accompanying investor presentation will be available on August 7, 2020 on Bristow’s website at www.bristowgroup.com.

For additional information concerning Bristow, contact Grant Newman at (713) 369-4692 or visit Bristow Group’s website at https://ir.bristowgroup.com/.