Bristow Group Reports Financial Results For Its 2013 Fiscal Fourth Quarter And Year Ended March 31, 2013

HOUSTON, May 22, 2013 /PRNewswire/ — Bristow Group Inc. (NYSE: BRS) today reported net income for the March 2013 quarter of $40.4 million, or $1.11 per diluted share, compared to net income of $14.2 million, or $0.39 per diluted share, in the same period a year ago. Adjusted net income, which excludes special items and asset disposition effects, was $36.7 million, or $1.01 per diluted share, for the March 2013 quarter, a decrease of $7.8 million, or $0.21 per diluted share, from the March 2012 quarter. Bristow Group Inc. also reported net income for the fiscal year ended March 31, 2013 (“fiscal year 2013”) of $130.1 million, or $3.57 per diluted share, more than double the net income of $63.5 million, or $1.73 per diluted share, reported in the prior fiscal year. Adjusted net income increased 20% to $137.8 million, or $3.78 per diluted share, for fiscal year 2013 from $114.6 million, or $3.12 per diluted share, in the prior fiscal year. Adjusted net income for the March 2013 quarter and fiscal year 2013 includes pre-tax allowances of $0.9 million ($0.02 per diluted share) and $4.9 million ($0.11 per diluted share), respectively, for doubtful accounts in connection with ATP’s bankruptcy.

Adjusted earnings before interest, taxes, depreciation, amortization and rent (“Adjusted EBITDAR”), which excludes special items and asset disposition effects, was $103.0 million for the March 2013 quarter compared to $99.5 million in the same period a year ago and increased 19% to $381.0 million for fiscal year 2013 from $319.5 million in fiscal year 2012. Net cash provided by operating activities totaled $64.0 million for the March 2013 quarter compared to $37.4 million in the March 2012 quarter, and increased 15% to $266.8 million for fiscal year 2013 from $231.3 million in fiscal year 2012.

“Fiscal year 2013 was an excellent financial year for Bristow with record revenue, cash flow and bottom line earnings,” said William E. Chiles, President and Chief Executive Officer of Bristow Group. “We benefitted from increased activity in most of our business units driven by increased demand from our clients for our services and improved contract terms. This increased activity is being fueled by our clients’ exploration success which continues to unlock new plays in deep water and harsh environment areas.”

“Unfortunately, there were three accidents involving single-engine aircraft in our commercial operations during the fiscal year. These accidents are disappointing in an organization that consistently strives for a target of zero accidents, injuries and harm to the environment. We reaffirm our goal to reach Target Zero.”

Bill Chiles continued, “The growing global demand for our services, the benefits from our Operational Excellence initiatives, our investments in Atlantic Canada and Brazil, and the recent U.K. Search and Rescue award are creating the fundamental catalysts for a higher level of sustainable growth.”

FOURTH QUARTER FY2013 RESULTS

Operating revenue increased 10% to $350.7 million compared to $318.7 million in the same period a year ago.
Operating income increased 139% to $62.7 million compared to $26.2 million in the March 2012 quarter, significantly impacted by non-cash impairment charges of $27.6 million in the March 2012 quarter.
Net income increased by 184% to $40.4 million, or $1.11 per diluted share, compared to $14.2 million, or $0.39 per diluted share, in the March 2012 quarter. Adjusted net income decreased 18% to $36.7 million, or $1.01 per diluted share, compared to $44.6 million, or $1.22 per diluted share, in the March 2012 quarter.
Adjusted EBITDAR, which excludes special items and asset disposition effects, increased 4% to $103.0 million compared to $99.5 million in the same period a year ago.
Cash as of March 31, 2013 totaled $216 million, down 18% from $262 million as of March 31, 2012. However, our total liquidity, including cash on hand and availability on our revolving credit facility, was $415 million as of March 31, 2013, up from $402 million as of March 31, 2012.
The 10% increase in operating revenue primarily resulted from:

The addition of eight aircraft operating in Canada that contributed $14.3 million in operating revenue ($8.2 million in North America and $6.1 million in Corporate and other), and
Increases in operating revenue in Europe of $8.3 million, West Africa of $7.8 million and the U.S. Gulf of Mexico of $5.4 million, each primarily related to the addition of new contracts and improvements in pricing.
Partially offsetting these increases was a decrease in operating revenue in our Australia Business Unit of $2.8 million as a result of the end of short-term contracts.

Results for the March 2013 quarter also benefitted from an increase in earnings from unconsolidated affiliates, related primarily to an improvement in earnings from our investment in Lider in Brazil, which increased to $6.0 million in the March 2013 quarter from $1.0 million in the March 2012 quarter. The increase in earnings from Lider is primarily due to an increase in aircraft on contract as well as cost controls.

Additionally, we recognized a pre-tax gain on disposal of assets in the March 2013 quarter of $7.2 million compared to a pre-tax loss on disposal of assets in the March 2012 quarter of $28.6 million. In the March 2013 quarter, we recorded a gain on insurance proceeds of $2.8 million and wrote-up two large aircraft that had been held for sale by $5.2 million as they were returned to operational status. This compares to the March 2012 quarter in which we recorded non-cash impairment charges of $23.6 million to reduce the carrying value of 14 aircraft held for sale and a loss of $5.6 million on the sale of nine large aircraft.

The improvement in operating income was driven primarily by the above items and partially offset by the following items:

A $14.5 million increase in general and administrative expense, resulting primarily from an increase in incentive compensation as a result of our stock price out-performing our peers, and a one-time bonus to non-officer employees totaling $3.3 million,
An increase in direct costs relating to an increase in salaries and benefits of $8.5 million and maintenance expense of $9.4 million due to the increase in activity in certain markets and the addition of aircraft operating in Canada,
An increase in rent expense of $3.1 million resulting from a higher number of aircraft under operating leases, and
A $0.9 million allowance for doubtful accounts recorded for accounts receivable due from ATP, a client in the U.S. Gulf of Mexico, in connection with ATP’s bankruptcy.
FOURTH QUARTER FY2013 BUSINESS UNIT RESULTS

Europe Business Unit

Strong demand for our services, both from new and existing clients in the Northern North Sea and in Norway, permitted us to add new large aircraft to our Europe Business Unit over the past fiscal year. These new aircraft, as well as an overall increase in pricing on many of our existing contracts, led to a 6.8% increase in operating revenue and a 13.3% increase in adjusted EBITDAR for the March 2013 quarter compared to the March 2012 quarter despite the suspension of operations of twelve Eurocopter EC225 Super Puma aircraft operating in Europe. We increased our fleet by executing operating leases for fourteen new large aircraft in this market beginning in late fiscal year 2012 and fiscal year 2013, contributing to the increase in adjusted EBITDAR. The overall increase in activity and additional aircraft improved Europe’s adjusted EBITDAR and EBITDAR margin to $49.5 million and 38.3%, respectively, in the March 2013 quarter compared to $43.7 million and 36.1%, respectively, in the March 2012 quarter.

West Africa Business Unit

Activity levels continued to be strong in our West Africa Business Unit, leading to an 11.8% increase in operating revenue for the March 2013 quarter compared to the March 2012 quarter. However, primarily as a result of aircraft undergoing major maintenance checks, salary and maintenance costs increased leading to a slight decrease in adjusted EBITDAR from the March 2012 quarter and a decrease in adjusted EBITDAR margin to 31.8% in the March 2013 quarter from 36.6% in the March 2012 quarter.

North America Business Unit

Our entry into the Atlantic Canada market through our investment in Cougar Helicopters contributed to the significant improvement in revenue and adjusted EBITDAR margin in North America. Additionally, flight activity with medium and large aircraft in the U.S. Gulf of Mexico continued to drive financial improvement in our North America Business Unit in the March 2013 quarter. Operating revenue increased 33.0% in the March 2013 quarter primarily due to the additional activity with medium and large aircraft despite no significant change in overall flight hours from the March 2012 quarter. The Cougar investment combined with the increased demand for our services in the U.S. Gulf of Mexico increased North America’s adjusted EBITDAR and EBITDAR margin to $16.6 million and 29.5%, respectively, in the March 2013 quarter compared to $8.2 million and 19.4%, respectively, in the March 2012 quarter.

Australia Business Unit

Although flight activity in Australia increased 4.7%, operating revenue declined to $40.6 million in the March 2013 quarter from $43.3 million in the March 2012 quarter as a result of the expiration of short-term contracts that contributed to prior year performance. The decline in operating revenue also resulted in a decrease in adjusted EBITDAR and adjusted EBITDAR margin to $10.6 million and 26.0%, respectively, in the March 2013 quarter from $15.5 million and 35.6%, respectively, in the record March 2012 quarter.

Other International Business Unit

Our Other International Business Unit saw an increase in adjusted EBITDAR margin to 51.6% in the March 2013 quarter primarily as a result of an increase in earnings from unconsolidated affiliates related to our investment in Lider of $5.0 million over the March 2012 quarter, which was driven by the addition of new aircraft on contract as well as cost controls in fiscal year 2013.

FISCAL YEAR 2013 RESULTS

Operating revenue increased 12% to $1.3 billion compared to just under $1.2 billion a year ago.
Operating income increased 94% to $224.1 million compared to $115.8 million in fiscal year 2012, significantly impacted by non-cash impairment charges of $57.6 million in fiscal year 2012.
Net income increased 105% to $130.1 million, or $3.57 per diluted share, compared to $63.5 million, or $1.73 per diluted share, in fiscal year 2012. Adjusted net income increased to $137.8 million, or $3.78 per diluted share, compared to $114.6 million, or $3.12 per diluted share, in fiscal year 2012.
Adjusted EBITDAR, which excludes special items and asset disposition effects, was $381.0 million compared to $319.5 million in fiscal year 2012.
UPDATE ON EC225 OPERATIONS

Recently, Eurocopter, the manufacturer of the EC225 Super Puma aircraft, has indicated that they have determined the root causes of the gear shaft failure in the EC225, which are being reviewed by airworthiness authorities and independent third parties. The definitive solution to the problem will be a redesign of the gear shaft which could take more than a year to complete. However, interim solutions are under consideration, including minor aircraft modifications and new maintenance/operating procedures for mitigating shaft failure and enhancing early detection, which could result in Bristow’s return to revenue service for the EC225 aircraft in the third quarter of our fiscal year 2014.

The current situation will continue until the necessary modifications are made to the EC225 fleet, the airworthiness regulators remove the operating restrictions, and we are confident that the interim modifications will allow us to operate the aircraft safely. Until then, this situation could have a material adverse effect on our future business, financial condition and results of operations.

FINANCING ACTIVITIES

During the March 2013 quarter, we completed the sale and leaseback of eight large aircraft.

On April 29, 2013, we entered into an amendment to our revolving credit and term loan agreement, which (a) extends the maturity date of the revolving credit facility and the term loans from December 2016 to April 2018 and (b) increases the commitments under the revolving credit facility from $200 million to $350 million. This extension and expansion of our overall liquidity is consistent with our prudent balance sheet management principles as we prepare for U.K. Search and Rescue and the projected overall growth in the oil and gas helicopter market. As of May 17, 2013, our liquidity stood at $560 million, made up of $211 million in cash and $349 million in undrawn revolver capacity.

DIVIDEND

On May 14, 2013, our Board of Directors approved a dividend of $0.25 per share, an increase of 25% from the previous quarter’s dividend of $0.20, reflecting management’s confidence in our cash generation ability and commitment to return value to our shareholders while we continue to grow globally.

This dividend will be paid on June 14, 2013 to shareholders of record on May 31, 2013. Based on shares outstanding as of March 31, 2013, total dividend payments to be made during the three months ending June 30, 2013 will be approximately $9 million.

GUIDANCE

Bristow is issuing adjusted diluted earnings per share guidance for the full fiscal year 2014 that began on April 1, 2013 of $4.20 to $4.50, reflecting our expectation for continued growth, and improving operational and capital efficiency.

“Our dedication to Operational Excellence in all areas has positioned us for continued success in fiscal year 2014,” said Jonathan E. Baliff, Senior Vice President and Chief Financial Officer of Bristow Group. “Fiscal year 2014 EPS guidance, which is in the upper range of the previously provided long term average adjusted earnings growth rate of 10-15% per year, is based on our commercial and operational teams’ proven ability to capitalize on overall market strength and excel in the face of a number of challenges. When combined with our prudent balance sheet management and demonstrated commitment to quarterly dividend growth (with a 33% increase in the quarterly dividend for fiscal year 2013 and a 25% increase in the quarterly dividend for the first quarter of fiscal year 2014), we believe Bristow can provide solid and balanced returns to our shareholders.”

As a reminder, our earnings per share guidance does not include gains and losses on disposals of assets as well as special items because their timing and amounts are more variable and less predictable. This guidance is based on current foreign currency exchange rates. In providing this guidance, we have not included the impact of any changes in accounting standards and any impact from significant acquisitions or divestitures. Changes in events or other circumstances that we do not currently anticipate or predict could result in earnings per share for fiscal year 2014 that are significantly above or below this guidance, including the impact of the suspension of EC225 Super Puma aircraft and changes in the market and industry. Factors that could cause such changes are described below under the Forward-Looking Statements Disclosure.