FLYING SMART.
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News Release

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Bristow Group Reports First Quarter Fiscal Year 2018 Results
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HOUSTON, Aug. 3, 2017 /PRNewswire/ -- Bristow Group Inc. (NYSE: BRS) today reported the following results for the three months ended June 30, 2017. All amounts shown are dollar amounts in thousands unless otherwise noted:


Three Months Ended
June 30,




2017


2016


% Change

Operating revenue

$

339,729



$

356,184



(4.6)%


Net loss attributable to Bristow Group

(55,275)



(40,772)



(35.6)%


Diluted loss per share

(1.57)



(1.17)



(34.2)%


Adjusted EBITDA (1)

15,203



19,080



(20.3)%


Adjusted net loss (1)

(29,138)



(12,008)



(142.7)%


Adjusted diluted loss per share (1)

(0.83)



(0.34)



(144.1)%


Operating cash flow

(51,179)



(14,828)



(245.2)%


Capital expenditures

12,553



21,063



(40.4)%


Rent expense

58,675



51,283



14.4%









June 30,
2017


March 31,
2017


% Change

Cash

$

78,879



$

96,656



(18.4)%


Undrawn borrowing capacity on Revolving Credit Facility

214,129



260,320



(17.7)%


Total liquidity

$

293,008



$

356,976



(17.9)%




(1)  

A full reconciliation of non-GAAP financial measurements is included at the end of this news release.

For the June 2017 quarter, we reported a GAAP net loss of $55.3 million and diluted loss per share of $1.57 compared to a GAAP net loss of $40.8 million and diluted loss per share of $1.17 for the June 2016 quarter. Additionally, we reported an adjusted net loss of $29.1 million and adjusted diluted loss per share of $0.83 for the June 2017 quarter compared to adjusted net loss of $12.0 million and adjusted diluted loss per share of $0.34 for the June 2016 quarter.

BUSINESS AND FINANCIAL UPDATE

  • Our June 2017 quarter adjusted EBITDA was better than our internal expectations as a result of higher revenue primarily from increased activity levels in Europe and Africa, and reduced expenses from the actions taken during the quarter, which included the reversal of $8.0 million in previously accrued annual and long-term incentive bonuses and reduced corporate salary and professional fee expenses.
  • We had $293.0 million of total liquidity as of June 30, 2017 with negative operating cash flow during the quarter driven primarily by working capital changes from the timing of receivable collections, and interest and severance payments being only partially offset by $40 million in proceeds from the sale of a SAR S-92.
  • In July 2017, we entered into a $230 million Credit Agreement that is currently expected to fund on or before August 30, 2017.  We anticipate an improved fiscal year 2018 liquidity outlook reflecting the benefit of actions taken in fiscal year 2018, including cost reductions and the suspension of our $2.5 million quarterly dividend.
  • Our expectations for fiscal year 2018 full year operating results remain largely consistent with our May 2017 guidance with the bonus accrual benefit not expected to recur.

"While our first quarter financial performance continues to reflect the difficult environment in the offshore oil and gas industry, I am incredibly proud that our teams delivered safe operations and a more competitive and cost efficient service for our clients as a result of aggressive actions taken during the quarter," said Jonathan Baliff, President and Chief Executive Officer of Bristow Group.

"Even with the better-than-expected first quarter performance, we expect the full fiscal 2018 operating results to be largely consistent with our May 2017 guidance as the current downturn persists with low offshore oil and gas activity levels. However, since the beginning of this fiscal year, we have taken several actions designed to significantly strengthen our liquidity. We sold a SAR S-92 for approximately $40 million, announced an agreement for a secured financing of $230 million, and therefore anticipate an improved fiscal 2018 liquidity outlook."

"We remain committed to our four fiscal 2018 priorities for the New Bristow. One, safety improvement remains Bristow's top priority while; two, continuing to improve efficiency with G&A expenses expected to decrease to approximately 12% of revenues; three, further optimizing our portfolio and our fleet, recovering costs incurred as a result of the actions of original equipment manufacturers (OEMs) while reducing or deferring capital expenditures; and four, growing revenue as we better serve our clients in our Europe and Americas Hubs."

Operating revenue from external clients by line of service was as follows:


Three Months Ended June 30,




2017


2016


% Change








(in thousands, except percentages)

Oil and gas services

$

234,775



$

253,087



(7.2)%


Fixed wing services

50,677



50,617



0.1%


U.K. SAR services

52,587



49,549



6.1%


Corporate and other

1,690



2,931



(42.3)%


Total operating revenue

$

339,729



$

356,184



(4.6)%


The year-over-year decrease in revenue was driven by lower oil and gas activity levels and an unfavorable impact from changes in foreign currency exchange rates compared to the June 2016 quarter of $18.8 million, which related mostly to the depreciation in the British pound sterling. The decline in oil and gas services revenue was partially offset by the increase in U.K. SAR services revenue due to additional bases coming online in fiscal years 2017 and 2018.

The year-over-year change in net loss and diluted loss per share was primarily driven by the decline in oil and gas revenue discussed above, higher income tax, rent and interest expense, lower earnings from unconsolidated affiliates and an inventory impairment charge recorded in the June 2017 quarter. These unfavorable changes were partially offset by higher impairment of asset charges recorded in the June 2016 quarter, a decrease in general and administrative expense and direct costs primarily from lower salaries and benefits and lower depreciation and amortization expense due to accelerated depreciation recorded in the June 2017 quarter. The year-over-year impact of changes in foreign currency exchange rates on revenue was offset by a positive impact on operating expenses and lower transaction losses compared to the June 2016 quarter.

The GAAP net loss and diluted loss per share for the June 2017 quarter included the following special items:

  • Organizational restructuring costs of $9.7 million ($6.6 million net of tax) included in general and administrative expense, which includes severance expense of $8.7 million related to separation programs across our global organization designed to increase efficiency and reduce costs and other restructuring costs of $1.0 million,
  • Impairment of inventories of $1.2 million ($0.8 million net of tax) included in loss on impairment, and
  • Tax items of $14.9 million that include non-cash adjustments related to the ongoing impact of valuation of deferred tax assets of $13.9 million and a one-time non-cash tax effect from repositioning of certain aircraft from one tax jurisdiction to another related to recent financing transactions resulting in additional income tax expense of $1.0 million.

The June 2016 quarter was impacted by similar items as reflected in the table at the end of this release.

Excluding the effect of these special items, the year-over-year increase in adjusted net loss and diluted earnings per share and decrease in adjusted EBITDA was primarily driven by the decline in oil and gas revenue, higher adjusted income tax expense, higher rent expense and lower earnings from unconsolidated affiliates.

DIVIDEND, LIQUIDITY AND FINANCIAL FLEXIBILITY

In August 2017, the Board of Directors voted to suspend our quarterly dividend as part of our fiscal 2018 priorities. By suspending what had been a $0.07 per share quarterly dividend, we will preserve approximately $10 million of cash annually.

Our total liquidity decreased approximately $64 million to $293 million as of June 30, 2017 primarily due to cash used in operations of $51.2 million, including negative working capital changes of $32.1 million as well as principal debt repayments of $33.5 million, partially offset by proceeds from asset dispositions of $42.0 million. We expect ending total liquidity as of March 31, 2018 to be between $225 million and $265 million, which is higher than we forecasted in May 2017 as we continue to take actions to reduce cost, manage working capital and leverage our asset portfolio.

"The actions we have taken over the past two years were designed to strengthen our financial position and further extend our liquidity runway as we work through this generational downturn," said Don Miller, Senior Vice President and Chief Financial Officer.  "Our focused effort on continued cost reductions, including the return of expiring leased aircraft and working capital reductions, are expected to improve our liquidity as we navigate through this challenging market environment."


REGIONAL PERFORMANCE


Europe Caspian



Three Months Ended
June 30,




2017


2016


% Change








(in thousands, except percentages)

Operating revenue

$

184,478



$

189,128



(2.5)%


Earnings from unconsolidated affiliates

$

30



$

51



(41.2)%


Operating income

$

4,407



$

13,030



(66.2)%


Operating margin

2.4%



6.9%



(65.2)%


Adjusted EBITDA

$

16,152



$

17,599



(8.2)%


Adjusted EBITDA margin

8.8%



9.3%



(5.4)%


Rent expense

$

36,453



$

32,288



12.9%


The year-over-year decrease in operating revenue was primarily driven by the unfavorable impact of foreign currency exchange rates during the June 2017 quarter of $18.0 million, partially offset by an increase in operating revenue driven by the start-up of U.K. SAR bases since the June 2016 quarter and an additional contract in Norway. Eastern Airways contributed $27.9 million and $30.9 million in operating revenue and $0.1 million and $1.5 million in adjusted EBITDA for the June 2017 and June 2016 quarters, respectively.

Excluding the impact of foreign currency exchange rate changes, operating margin and adjusted EBITDA margin, would have been 3.0% and 9.6% in the June 2017 quarter compared to 5.5% and 11.5% in the June 2016 quarter, respectively. Operating margin and adjusted EBITDA margin, excluding the impact of foreign currency exchange rate changes, decreased from the June 2016 quarter as a result of the impact from the downturn in the offshore energy market, which was only partially offset by the start-up of the U.K. SAR bases and cost reduction activities.


Africa



Three Months Ended
June 30,




2017


2016


% Change








(in thousands, except percentages)

Operating revenue

$

49,981



$

53,124



(5.9)%


Operating income

$

10,048



$

1,571



539.6%


Operating margin

20.1%



3.0%



570.0%


Adjusted EBITDA

$

13,383



$

6,772



97.6%


Adjusted EBITDA margin

26.8%



12.7%



111.0%


Rent expense

$

2,200



$

2,268



(3.0)%


Operating revenue for Africa decreased for the June 2017 quarter due to an overall decrease in helicopter activity compared to the June 2016 quarter. We began providing fixed wing services in Africa which generated $1.8 million of operating revenue for the June 2017 quarter which partially offset the decline in helicopter activity.

Operating income, operating margin, adjusted EBITDA and adjusted EBITDA margin increased in the June 2017 quarter primarily due to a decline in direct costs driven by cost management efforts and the benefit of the devalued Nigerian naira, partially offset by the decrease in revenue discussed above. Operating income and operating margin also benefited from lower depreciation expense compared to the June 2016 quarter; we recorded $2.8 million of accelerated depreciation expense in the June 2016 quarter related to aircraft where management made the decision to exit model types earlier than originally anticipated.  The year-over-year devaluation of the Nigerian naira benefited our regional results by $2.0 million as expenses denominated in naira translated into fewer U.S. dollars for reporting purposes.


Americas



Three Months Ended
June 30,




2017


2016


% Change








(in thousands, except percentages)

Operating revenue

$

57,783



$

58,754



(1.7)%


Earnings from unconsolidated affiliates

$

(535)



$

3,863



(113.8)%


Operating income

$

(1,256)



$

921



(236.4)%


Operating margin

(2.2)%



1.6%



(237.5)%


Adjusted EBITDA

$

6,176



$

14,036



(56.0)%


Adjusted EBITDA margin

10.7%



23.9%



(55.2)%


Rent expense

$

6,994



$

5,562



25.7%


Operating revenue was slightly lower for the June 2017 quarter compared to the June 2016 quarter primarily due to the decline in medium and large aircraft activity in our U.S. Gulf of Mexico operations, a decrease in revenue in Trinidad and a decrease in revenue in Brazil; no aircraft were leased to Líder during the June 2017 quarter. These decreases were mostly offset by a new contract in Guyana and additional revenue from the search and rescue consortium in the U.S. Gulf of Mexico.

Earnings from unconsolidated affiliates decreased $4.4 million year-over-year primarily due to a decrease in earnings from our investment in Líder in Brazil. Operating income, operating margin, adjusted EBITDA and adjusted EBITDA margin were negatively impacted by this decrease in earnings from Líder, which included an unfavorable exchange rate impact of $1.1 million year-over-year.

Operating income, operating margin, adjusted EBITDA and adjusted EBITDA margin decreased primarily due to the decrease in earnings from unconsolidated affiliates and revenue and an increase in lease costs. Operating income and operating margin benefited from lower depreciation expense compared to the June 2016 quarter; we recorded $3.9 million of accelerated depreciation expense in the June 2016 quarter related to aircraft where management made the decision to exit model types earlier than originally anticipated.


Asia Pacific



Three Months Ended
June 30,




2017


2016


% Change








(in thousands, except percentages)

Operating revenue

$

49,127



$

55,232



(11.1)%


Operating loss

$

(12,530)



$

(5,893)



(112.6)%


Operating margin

(25.5)%



(10.7)%



(138.3)%


Adjusted EBITDA

$

(5,720)



$

(3,123)



(83.2)%


Adjusted EBITDA margin

(11.6)%



(5.7)%



(103.5)%


Rent expense

$

10,954



$

9,284



18.0%


Operating revenue decreased for the June 2017 quarter compared to the June 2016 quarter primarily due to the ending of short-term contracts, partially offset by an increase in revenue from our fixed-wing operations at Airnorth. Airnorth contributed $21.0 million and $19.7 million in operating revenue and $0.9 million and $3.5 million in adjusted EBITDA for the June 2017 and June 2016 quarters, respectively.

Operating income, operating margin, adjusted EBITDA and adjusted EBITDA margin decreased in the June 2017 quarter primarily due to decreased revenue and an increase in lease costs, which was only partially offset by a decrease in salaries and benefits. Additionally, operating income and operating margin in the June 2017 quarter were negatively impacted by an increase in depreciation and amortization expense.


Corporate and other



Three Months Ended
June 30,




2017


2016


% Change








(in thousands, except percentages)

Operating revenue

$

1,712



$

3,177



(46.1)%


Earnings from unconsolidated affiliates

$

(160)



$

(84)



(90.5)%


Operating loss

$

(25,957)



$

(25,847)



(0.4)%


Adjusted EBITDA

$

(14,788)



$

(16,204)



8.7%


Rent expense

$

2,074



$

1,881



10.3%


Operating revenue decreased for the June 2017 quarter primarily due to a decline in Bristow Academy revenue.

Adjusted EBITDA improved primarily due to overall cost reduction activities that decreased general and administrative expenses, partially offset by a decline in revenue discussed above. In addition to the items impacting adjusted EBITDA, operating loss for the June 2017 quarter was impacted by $1.2 million of inventory impairment charges.

GUIDANCE

Guidance for selected financial measures is included in the tables that follow.

CONFERENCE CALL

Management will conduct a conference call starting at 10:00 a.m. ET (9:00 a.m. CT) on Friday, August 4, 2017 to review financial results for the fiscal year 2018 first quarter ended June 30, 2017.  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 2018 First 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
  • Replay: A telephone replay will be available through August 18, 2017 and may be accessed by calling toll free 1-877-660-6853, passcode: 13665035#

Via Telephone outside the U.S.:

  • Live: Dial 1-412-902-0030
  • Replay: A telephone replay will be available through August 18, 2017 and may be accessed by calling 1-201-612-7415, passcode: 13665035#

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, including maintenance and training, to government and civil organizations worldwide. Bristow has major 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, capital deployment strategy, operational and capital performance, expected cost management activities, expected capital expenditure deferrals, shareholder return, liquidity, 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; actions by clients 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, 2017.  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.

News Release

Linda McNeill
Investor Relations
(713) 267-7622

(financial tables follow)


BRISTOW GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts and percentages)

(Unaudited)



Three Months Ended
June 30,


2017


2016





Gross revenue:




Operating revenue from non-affiliates

$

322,118



$

338,675


Operating revenue from affiliates

17,611



17,509


Reimbursable revenue from non-affiliates

12,380



13,214



352,109



369,398


Operating expense:




Direct cost

285,551



289,543


Reimbursable expense

12,226



12,614


Depreciation and amortization

31,056



34,694


General and administrative

46,707



52,595



375,540



389,446






Loss on impairment

(1,192)




Gain (loss) on disposal of assets

699



(10,017)


Earnings from unconsolidated affiliates, net of losses

(665)



3,830


Operating loss

(24,589)



(26,235)






Interest expense, net

(16,021)



(10,886)


Other income (expense), net

(1,645)



(6,189)


Loss before provision for income taxes

(42,255)



(43,310)


(Provision) benefit for income taxes

(13,491)



2,238


Net loss

(55,746)



(41,072)


Net loss attributable to noncontrolling interests

471



300


Net loss attributable to Bristow Group

$

(55,275)



$

(40,772)






Loss per common share:




Basic

$

(1.57)



$

(1.17)


Diluted

$

(1.57)



$

(1.17)






Non-GAAP measures:




Adjusted EBITDA

$

15,203



$

19,080


Adjusted EBITDA margin

4.5

%


5.4

%

Adjusted net loss

$

(29,138)



$

(12,008)


Adjusted diluted loss per share

$

(0.83)



$

(0.34)




BRISTOW GROUP INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)



June 30,
2017


March 31,
2017

ASSETS

Current assets:




Cash and cash equivalents

$

78,879



$

96,656


Accounts receivable from non-affiliates

218,413



198,129


Accounts receivable from affiliates

13,302



8,786


Inventories

130,479



124,911


Assets held for sale

34,585



38,246


Prepaid expenses and other current assets

43,145



41,143


Total current assets

518,803



507,871


Investment in unconsolidated affiliates

205,174



210,162


Property and equipment – at cost:




Land and buildings

235,270



231,448


Aircraft and equipment

2,605,978



2,622,701



2,841,248



2,854,149


Less – Accumulated depreciation and amortization

(630,223)



(599,785)



2,211,025



2,254,364


Goodwill

19,907



19,798


Other assets

115,921



121,652


Total assets

$

3,070,830



$

3,113,847






LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS' INVESTMENT

Current liabilities:




Accounts payable

$

96,498



$

98,215


Accrued wages, benefits and related taxes

53,288



59,077


Income taxes payable

15,802



15,145


Other accrued taxes

8,383



9,611


Deferred revenue

22,318



19,911


Accrued maintenance and repairs

25,628



22,914


Accrued interest

5,702



12,909


Other accrued liabilities

48,376



46,679


Deferred taxes



830


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

117,817



131,063


Total current liabilities

393,812



416,354


Long-term debt, less current maturities

1,174,749



1,150,956


Accrued pension liabilities

60,057



61,647


Other liabilities and deferred credits

25,634



28,899


Deferred taxes

159,439



154,873


Redeemable noncontrolling interest

6,349



6,886






Stockholders' investment:




Common stock

380



379


Additional paid-in capital

813,857



809,995


Retained earnings

934,166



991,906


Accumulated other comprehensive loss

(318,207)



(328,277)


Treasury shares

(184,796)



(184,796)


Total Bristow Group stockholders' investment

1,245,400



1,289,207


Noncontrolling interests

5,390



5,025


Total stockholders' investment

1,250,790



1,294,232


Total liabilities, redeemable noncontrolling interest and stockholders' investment

$

3,070,830



$

3,113,847




BRISTOW GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)



Three Months Ended
June 30,


2017


2016

Cash flows from operating activities:




Net loss

$

(55,746)



$

(41,072)


Adjustments to reconcile net loss to net cash used in operating activities:




Depreciation and amortization

31,056



34,694


Deferred income taxes

6,651



(7,216)


Discount amortization on long-term debt

23



27


Gain (loss) on disposal of assets

(699)



10,017


Loss on impairment

1,192




Stock-based compensation

4,136



4,200


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

665



(3,587)


Increase (decrease) in cash resulting from changes in:




Accounts receivable

(21,541)



(18,391)


Inventories

(3,551)



(2,000)


Prepaid expenses and other assets

5,106



(2,390)


Accounts payable

(3,288)



5,328


Accrued liabilities

(8,807)



10,904


Other liabilities and deferred credits

(6,376)



(5,342)


Net cash used in operating activities

(51,179)



(14,828)


Cash flows from investing activities:




Capital expenditures

(12,553)



(21,063)


Proceeds from asset dispositions

41,975



11,500


Net cash provided by (used in) investing activities

29,422



(9,563)


Cash flows from financing activities:




Proceeds from borrowings

69,018



74,408


Debt issuance costs

(493)



(2,925)


Repayment of debt

(66,947)



(18,035)


Partial prepayment of put/call obligation

(12)



(13)


Payment of contingent consideration



(10,000)


Common stock dividends paid

(2,465)



(2,453)


Repurchases for tax withholdings on vesting of equity awards

(274)



(570)


Net cash provided by (used in) financing activities

(1,173)



40,412


Effect of exchange rate changes on cash and cash equivalents

5,153



2,380


Net increase (decrease) in cash and cash equivalents

(17,777)



18,401


Cash and cash equivalents at beginning of period

96,656



104,310


Cash and cash equivalents at end of period

$

78,879



$

122,711




BRISTOW GROUP INC. AND SUBSIDIARIES

SELECTED OPERATING DATA

(In thousands, except flight hours and percentages)

(Unaudited)



Three Months Ended
June 30,


2017


2016

Flight hours (excluding Bristow Academy and unconsolidated affiliates):




Europe Caspian

22,147



22,144


Africa

7,523



8,072


Americas

7,692



6,210


Asia Pacific

6,361



6,711


Consolidated

43,723



43,137


Operating revenue:




Europe Caspian

$

184,478



$

189,128


Africa

49,981



53,124


Americas

57,783



58,754


Asia Pacific

49,127



55,232


Corporate and other

1,712



3,177


Intra-region eliminations

(3,352)



(3,231)


Consolidated

$

339,729



$

356,184


Operating income (loss):




Europe Caspian

$

4,407



$

13,030


Africa

10,048



1,571


Americas

(1,256)



921


Asia Pacific

(12,530)



(5,893)


Corporate and other

(25,957)



(25,847)


Gain (loss) on disposal of assets

699



(10,017)


Consolidated

$

(24,589)



$

(26,235)


Operating margin:




Europe Caspian

2.4

%


6.9

%

Africa

20.1

%


3.0

%

Americas

(2.2)

%


1.6

%

Asia Pacific

(25.5)

%


(10.7)

%

Consolidated

(7.2)

%


(7.4)

%

Adjusted EBITDA:




Europe Caspian

$

16,152



$

17,599


Africa

13,383



6,772


Americas

6,176



14,036


Asia Pacific

(5,720)



(3,123)


Corporate and other

(14,788)



(16,204)


Consolidated

$

15,203



$

19,080


Adjusted EBITDA margin:




Europe Caspian

8.8

%


9.3

%

Africa

26.8

%


12.7

%

Americas

10.7

%


23.9

%

Asia Pacific

(11.6)

%


(5.7)

%

Consolidated

4.5

%


5.4

%




Three Months Ended
June 30,


2017


2016

Depreciation and amortization:




Europe Caspian

$

11,822



$

11,189


Africa

3,076



5,453


Americas

6,999



11,381


Asia Pacific

5,810



4,236


Corporate and other

3,349



2,435


Consolidated

$

31,056



$

34,694


Rent expense:




Europe Caspian

$

36,453



$

32,288


Africa

2,200



2,268


Americas

6,994



5,562


Asia Pacific

10,954



9,284


Corporate and other

2,074



1,881


Consolidated

$

58,675



$

51,283




BRISTOW GROUP INC. AND SUBSIDIARIES

AIRCRAFT COUNT

As of June 30, 2017

(Unaudited)



Percentage

of Current

Quarter

Operating

Revenue


Aircraft in Consolidated Fleet






Helicopters


Fixed

Wing




Unconsolidated

Affiliates (3)




Small


Medium


Large


Training

Total (1)(2)


Total

Europe Caspian

54

%




16



78





31



125





125


Africa

15

%


9



31



5





5



50



46



96


Americas

17

%


14



41



17







72



67



139


Asia Pacific

14

%


2



10



23





14



49





49


Corporate and other

%








48





48





48


Total

100

%


25



98



123



48



50



344



113



457


Aircraft not currently in fleet: (4)


















On order





2



27







29






Under option







4







4








(1)    

Eastern Airways operates a total of 31 fixed wing aircraft in the Europe Caspian region and provides technical support for 3 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 14 aircraft held for sale and 121 leased aircraft as follows:




Held for Sale Aircraft in Consolidated Fleet


Helicopters




Small


Medium


Large


Training


Fixed

Wing


Total

Europe Caspian



2









2


Africa



4









4


Americas



5









5


Asia Pacific









1



1


Corporate and other







2





2


Total



11





2



1



14















Leased Aircraft in Consolidated Fleet


Helicopters






Small


Medium


Large


Training


Fixed

Wing


Total

Europe Caspian



6



39





13



58


Africa



1



2





2



5


Americas

1



14



7







22


Asia Pacific

2



3



9





4



18


Corporate and other







18





18


Total

3



24



57



18



19



121




(3)   

The average age of our fleet, excluding training aircraft, was approximately nine years as of June 30, 2017.

(4)    

The 113 aircraft operated by our unconsolidated affiliates do not include those aircraft leased from us. Includes 43 helicopters (primarily medium) and 24 fixed wing aircraft owned and managed by Líder Táxi Aéreo S.A. ("Líder"), our unconsolidated affiliate in Brazil included in the Americas region, and 39 helicopters and 7 fixed wing aircraft owned by Petroleum Air Services ("PAS"), our unconsolidated affiliate in Egypt included in the Africas region.

(5)     

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



BRISTOW GROUP INC. AND SUBSIDIARIES

FY18 GUIDANCE


FY18 guidance as of June 30, 2017 (1)


Operating revenue2

Adjusted EBITDA2,3

Rent2

Oil and gas

~$850M - $950M

~$(35M) - $(10M)

~$155M - $165M

U.K. SAR

~$215M - $230M

~$40M - $50M

~$45M - $50M

Eastern

~$105M - $115M

~$0 - $5M

~$10M - $12M

Airnorth

~$80M - $90M

~$5M - $10M

~$10M - $12M

Total

~$1.3B - $1.4B

~$15M - $50M

~$225M - $235M





G&A Expense4

~$170M - $190M



Depreciation Expense

~$120M - $130M



Total aircraft rent5

~$200M - $205M



Total non-aircraft rent5

~$25M - $30M



Interest expense

~$55M - $65M



Non-aircraft capex4

~$45M annually





(1)

FY18 guidance assumes FX rates as of June 30, 2017.



(2) 

Operating revenue, EBITDA and rent for oil and gas includes corporate and other revenue and the impact of corporate overhead expenses.



(3) 

 EBITDA for U.K. SAR and fixed wing (Eastern/Airnorth)  excludes corporate overhead allocations consistent with financial reporting. 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 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 as of March 31, 2017.



(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
June 30,


2017


2016






(In thousands, except

 per share amounts)

Net loss

$

(55,746)



$

(41,072)


(Gain) loss on disposal of assets

(699)



10,017


Special items

10,866



6,559


Depreciation and amortization

31,056



34,694


Interest expense

16,235



11,120


Provision (benefit) for income taxes

13,491



(2,238)


Adjusted EBITDA

$

15,203



$

19,080






(Provision) benefit for income taxes

$

(13,491)



$

2,238


Tax expense (benefit) on gain (loss) on disposal of asset

4,573



(3,206)


Tax provision on special items

11,397



8,526


Adjusted benefit for income taxes

$

2,479



$

7,558






Effective tax rate (1)

(31.9)

%


5.2

%

Adjusted effective tax rate (1)

7.7

%


38.0

%





Net loss attributable to Bristow Group

$

(55,275)



$

(40,772)


Loss on disposal of assets

3,874



6,811


Special items

22,263



21,953


Adjusted net loss

$

(29,138)



$

(12,008)






Diluted loss per share

$

(1.57)



$

(1.17)


Loss on disposal of assets

0.11



0.19


Special items

0.63



0.63


Adjusted diluted loss per share

(0.83)



(0.34)




(1)

Effective tax rate is calculated by dividing benefit (provision) for income tax by pretax net income (loss). Adjusted effective tax rate is calculated by dividing adjusted benefit (provision) for income tax by adjusted pretax net income (loss). Tax expense (benefit) on loss on disposal of asset and tax expense (benefit) on special items is calculated using the statutory rate of the entity recording the loss on disposal of asset or special item.




Three Months Ended
June 30, 2017


Adjusted

EBITDA


Adjusted

Net Loss


Adjusted

Diluted

Loss

Per

Share








(In thousands, except per share amounts)

Organizational restructuring costs (1)

$

(9,674)



$

(6,602)



(0.19)


Tax items (2)



(14,886)



(0.42)


Inventory impairment

(1,192)



(775)



(0.02)


Total special items

$

(10,866)



$

(22,263)



(0.63)





Three Months Ended
June 30, 2016


Adjusted
EBITDA


Adjusted

Net Loss


Adjusted

Diluted

Loss

Per

Share








(In thousands, except per share amounts)

Organizational restructuring costs (1)

$

(6,559)



$

(4,292)



(0.12)


Additional depreciation expense resulting from fleet changes (3)



(4,490)



(0.13)


Tax valuation allowances (2)



(13,171)



(0.38)


Total special items

$

(6,559)



$

(21,953)



(0.63)




(1) 

Organizational restructuring costs include severance expense included in direct costs and general and administrative expense from our voluntary and involuntary separation programs.

(2)

Relates to a one-time non-cash tax effect from repositioning of certain aircraft from one tax jurisdiction to another related to recent financing transactions for the June 2017 quarter and non-cash adjustments related to the valuation of deferred tax assets for all periods presented.

(3)

Relates to additional depreciation expense due to fleet changes.

 

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SOURCE Bristow Group Inc.