Bristow Group Reports Fiscal Fourth Quarter and Full Fiscal Year 2017 Results

Liquidity increased $76 million in the March quarter to $357 million

News provided by

Bristow Group Inc.

May 23, 2017, 16:45 ET

HOUSTON, May 23, 2017 /PRNewswire/ -- Bristow Group Inc. (NYSE: BRS) today reported the following results for the quarter and full fiscal year ended March 31, 2017. All amounts shown are dollar amounts in thousands unless otherwise noted:

Three Month Period

Full Year


FY2017

FY2016

% Change

FY2017

FY2016

% Change

Operating revenue

$

323,651

$

375,268

(13.8)

%

$

1,347,850

$

1,629,547

(17.3)

%

Net loss attributable to Bristow Group

(78,040)

(25,255)

(209.0)

%

(170,536)

(73,940)

(130.6)

%

Diluted loss per share

(2.22)

(0.72)

(208.3)

%

(4.87)

(2.12)

(129.7)

%

Adjusted EBITDA (1)

3,687

35,300

(89.6)

%

71,084

205,523

(65.4)

%

Adjusted net income (loss) (1)

(40,302)

4,716

(954.6)

%

(74,525)

51,308

(245.3)

%

Adjusted diluted earnings (loss) per share (1)

(1.15)

0.13

(984.6)

%

(2.13)

1.45

(246.9)

%

Operating cash flow

25,562

60,342

(57.6)

%

10,702

116,026

(90.8)

%

Capital expenditures

15,384

29,010

(47.0)

%

135,110

372,375

(63.7)

%

Rent expense

55,718

51,345

8.5

%

212,608

211,840

0.4

%


March 31,

December 31,

March 31,

% Change

% Change


2017

2016

2016

Quarter over quarter

Year over year

Cash

$

96,656

$

71,159

$

104,310

35.8

%

(7.3)

%

Undrawn borrowing capacity on Revolving Credit Facility

260,320

209,420

255,420

24.3

%

1.9

%

Total liquidity

$

356,976

$

280,579

$

359,730

27.2

%

(0.8)

%

______________

(1)

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

For the March 2017 quarter, we reported a GAAP net loss of $78.0 million, or diluted loss per share of $2.22, compared to GAAP net loss of $25.3 million, or diluted loss per share of $0.72, for the March 2016 quarter. Additionally, we reported an adjusted net loss of $40.3 million, or adjusted diluted loss per share of $1.15, for the March 2017 quarter compared to adjusted net income of $4.7 million, or adjusted diluted earnings per share of $0.13, for the March 2016 quarter.

BUSINESS AND FINANCIAL UPDATE

  • The March 2017 quarter results reflect the decrease of our oil and gas operations' margins due to the continued offshore oil and gas industry downturn with certain contract work ending during the quarter being partially offset by the one-time benefit of $11.1 million from a contract termination payment.
  • The March 2017 quarter and fiscal year 2017 results were also impacted by costs incurred resulting from the grounding of the Airbus H225 fleet, the impact of the depreciation of the British pound sterling and significant non-cash tax charges; the tax charges did not impact adjusted net loss and adjusted diluted loss per share.
  • We increased liquidity during the March 2017 quarter by $76.4 million and funded $290.1 million of previously announced financings of which $200 million was used to repay term loan debt, and further reduced capital expenditures and working capital needs; a previously announced executed commitment letter for up to $230 million is currently expected to close no later than June 30, 2017.
  • On March 31, 2017, we commenced search and rescue (SAR) operations at our tenth and final base and transitioned one of two Gap SAR bases to the U.K. SAR contract, with the final Gap SAR base expected to transition to the U.K. SAR contract in July 2017.
  • We expect fiscal year 2018 results to be impacted by the continued offshore oil and gas industry downturn. Industry conditions in the March 2017 quarter are expected to continue into fiscal year 2018; however, we anticipate sequential quarterly improvement beginning in the second half of the fiscal year as new contracts commence and we further eliminate costs and focus our efforts on recovering costs from OEMs, while focusing on liquidity.

"I am very proud of our team's results in improving safety and efficiency during this past year," said Jonathan Baliff, President and Chief Executive Officer of Bristow Group. "Our fourth quarter results reflect the ongoing difficult conditions in the offshore oil and gas industry with reduced demand for helicopter transportation that will continue into fiscal 2018."

"Just like we successfully did in fiscal 2017, we will reduce costs, further improve liquidity and recover costs incurred resulting from the actions of OEMs. In addition to improving our balance sheet, these efforts should make us more competitive as we focus on getting more aircraft on contract."

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

Three Month Period

Full Year

FY2017

FY2016

% Change

FY2017

FY2016

% Change













(in thousands, except percentages)

Oil and gas services

$

233,753

$

255,017

(8.3)

%

$

956,649

$

1,222,501

(21.7)

%

Fixed wing services

43,498

53,552

(18.8)

%

191,609

208,538

(8.1)

%

U.K. SAR services

43,963

62,118

(29.2)

%

189,555

177,230

7.0

%

Corporate and other

2,437

4,581

(46.8)

%

10,037

21,278

(52.8)

%

Total operating revenue

$

323,651

$

375,268

(13.8)

%

$

1,347,850

$

1,629,547

(17.3)

%

FOURTH QUARTER FY2017 RESULTS

During fiscal year 2017, the offshore oil and gas industry continued to experience a significant downturn primarily due to a decline in crude oil prices which negatively impacted activity with our oil and gas clients. This decline started in fiscal year 2015 and continued through fiscal year 2017, resulting in a significant decrease in gross revenue for our oil and gas services year-over-year. In addition to reduced activity, changes in foreign currency exchange rates also contributed to the decrease in gross revenue year-over-year.

Additionally, during March 2017, we came to an agreement with a client in our Asia Pacific Region for which we had incurred significant start-up costs on a project in Australia that was cancelled prior to contract commencement. In connection with the cancellation, we agreed to a termination fee with the client of $11.1 million, which is recorded in operating revenue in the March 2017 quarter. Additionally, we had previously deferred revenue and costs totaling $6.1 million each related to this contract, which is included in operating revenue and direct costs in the March 2017 quarter.

We reported a net loss of $78.0 million and diluted loss per share of $2.22 for the March 2017 quarter compared to net loss of $25.3 million and diluted loss per share of $0.72 for the March 2016 quarter. The year-over-year increase in net loss and diluted loss per share was primarily due to the decline in oil and gas revenue discussed above, higher interest expense resulting from additional borrowings and increased tax charges partially offset by less of a loss from disposal of assets and lower depreciation and amortization expense. Additionally, the March 2016 quarter included goodwill and intangible asset impairment charges of $27.4 million (included in loss on impairment).

The net loss for the March 2017 quarter was significantly impacted by the following items:

  • Organizational restructuring costs of $2.8 million ($2.1 million net of tax), which includes severance expense of $1.1 million and other restructuring costs of $1.7 million; $0.6 million of the restructuring costs are included in direct costs and $2.2 million are included in general and administrative expense,
  • Loss on disposal of assets of $1.4 million ($0.8 million net of tax) and accelerated depreciation of $1.1 million ($0.7 million net of tax),
  • Reversal of $5.9 million ($5.9 million net of tax) of contingent consideration related to the Airnorth acquisition, and
  • Tax items totaling $40.0 million that include 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 $22.5 million and non-cash adjustments related to the valuation of deferred tax assets of $17.5 million.

Excluding these items, adjusted net loss and adjusted diluted loss per share were $40.3 million and $1.15, respectively, for the March 2017 quarter compared to $4.7 million and $0.13, respectively, for the March 2016 quarter. Adjusted EBITDA, which excludes these items with the exception of accelerated depreciation and the tax items, also decreased year-over-year to $3.7 million in the March 2017 quarter from $35.3 million in the March 2016 quarter.

LIQUIDITY AND FINANCIAL FLEXIBILITY

The second loan from Lombard funded in January 2017 in the amount of $90.1 million. Additionally, the previously announced Macquarie term loan funded on March 7, 2017 in the amount of $200 million. The proceeds from the Macquarie financing were used to repay $154.1 million of our $200 million term loan and $45.9 million of our $350 million term loan.

Also, as previously announced, we executed a credit agreement commitment letter for an approximate six-year, $230 million secured equipment financing with PK Transportation Finance Ireland Limited, a part of GE Capital Aviation Services ("GECAS"). We expect this financing to close no later than June 30, 2017. The proceeds from the financing are expected to be used to repay amounts outstanding under our existing bank credit facilities.

Don Miller, Senior Vice President and Chief Financial Officer, commented, "Our liquidity improved by $76.4 million in the March 2017 quarter to $357.0 million as of March 31, 2017 resulting from the recently funded financings and operating cash flow of $25.6 million generated during the quarter. Our improved liquidity is essential as we navigate through this challenging market environment."

REGIONAL PERFORMANCE

Europe Caspian

Three Month Period

Full Year


FY2017

FY2016

% Change

FY2017

FY2016

% Change















(in thousands, except percentages)

Operating revenue

$

162,511

$

206,517

(21.3)

%

$

710,581

$

809,914

(12.3)

%

Earnings from unconsolidated affiliates

$

32

$

(35)

191.4

%

$

273

$

310

(11.9)

%

Operating income (loss)

$

(4,628)

(5,837)

20.7

%

$

13,840

50,406

(72.5)

%

Operating margin

(2.8)

%

(2.8)

%

—

%

1.9

%

6.2

%

(69.4)

%

Adjusted EBITDA

$

1,890

$

28,441

(93.4)

%

$

45,163

$

123,952

(63.6)

%

Adjusted EBITDA margin

1.2

%

13.8

%

(91.3)

%

6.4

%

15.3

%

(58.2)

%

Rent expense

$

34,065

$

33,267

2.4

%

$

134,072

$

136,377

(1.7)

%

Operating revenue, operating income and adjusted EBITDA decreased in the March 2017 quarter and fiscal year 2017 primarily due to the impact of the downturn in the oil and gas industry and the negative impact of changes in foreign currency exchange rates. Partially offsetting these decreases was an increase in operating revenue from increased activity in Norway. Eastern Airways contributed $24.5 million and $39.2 million in operating revenue and a negative $4.3 million and negative $0.7 million in adjusted EBITDA for the March 2017 and 2016 quarters, respectively, and $110.4 million and $133.5 million in operating revenue and a negative $4.5 million and positive $13.6 million in adjusted EBITDA for fiscal years 2017 and 2016, respectively.

A substantial portion of our revenue in the Europe Caspian region is contracted in British pound sterling, which depreciated significantly against the U.S. dollar in late June 2016 as a result of Brexit. Translation of results at lower British pound sterling exchange rates decreased operating revenue, operating income and adjusted EBITDA by $16.9 million, $6.0 million and $4.0 million, respectively, for the March 2017 quarter compared to the March 2016 quarter and $79.4 million, $26.7 million and $35.1 million, respectively, for fiscal year 2017 compared to fiscal year 2016.

The decrease in operating margin for fiscal year 2017 and the decrease in adjusted EBITDA margin for the March 2017 quarter and fiscal year 2017 compared to the prior year periods is primarily a result of the impact from the downturn in the offshore energy industry, which was only partially offset by the start-up of the U.K. SAR bases and cost reduction activities.

Africa

Three Month Period

Full Year


FY2017

FY2016

% Change

FY2017

FY2016

% Change















(in thousands, except percentages)

Operating revenue

$

47,049

$

46,660

0.8

%

$

200,104

$

249,545

(19.8)

%

Earnings from unconsolidated affiliates

$

2,025

$

2,025

—

%

$

2,068

$

2,068

—

%

Operating income (loss)

$

10,225

$

(5,201)

296.6

%

$

30,179

$

19,702

53.2

%

Operating margin

21.7

%

(11.1)

%

295.5

%

15.1

%

7.9

%

91.1

%

Adjusted EBITDA

$

12,203

$

5,519

121.1

%

$

51,553

$

60,371

(14.6)

%

Adjusted EBITDA margin

25.9

%

11.8

%

119.5

%

25.8

%

24.2

%

6.6

%

Rent expense

$

2,000

$

1,431

39.8

%

$

8,101

$

7,456

8.7

%

Operating revenue for Africa increased in the March 2017 quarter compared to the prior year period primarily due to the temporary operational suspension of our S-76 fleet in the March 2016 quarter. Operating revenue decreased in fiscal year 2017 primarily due to an overall decrease in activity. A majority of our revenue in our Africa region is contracted at fixed U.S. dollar rates, resulting in minimal exposure to the devalued Nigerian naira upon translation into U.S. dollars for reporting purposes. We began providing fixed wing services in Africa which generated $4.2 million of operating revenue for fiscal year 2017 which partially offset the decline in helicopter activity.

Operating income and operating margin increased in the March 2017 quarter and fiscal year 2017 primarily due to a decrease in depreciation and amortization expense and lower operating expenses. Operating expenses were $3.4 million and $17.7 million lower in the March 2017 quarter and fiscal year 2017, respectively, due to the devaluation of the Nigerian naira which resulted in naira-based expenses translating into fewer U.S. dollars. Operating income and adjusted EBITDA in the March 2017 quarter benefited $2.0 million and $0.5 million, respectively, and for fiscal year 2017 benefited $13.5 million and $13.7 million, respectively, from changes in foreign currency exchange rates due to the combination of currencies our Nigerian operations transact in.

Adjusted EBITDA declined in fiscal year 2017 as the impact of decreased revenue was only partially offset by cost reduction activities and the favorable exchange rate impact compared to fiscal year 2016. The increase of operating margin and adjusted EBITDA margin is primarily related to the reduction of operating expense due to the devaluation of the Nigerian naira and cost reduction activities, partially offset by the reduction in revenue due to the downturn of the oil and gas industry.

Americas

Three Month Period

Full Year


FY2017

FY2016

% Change

FY2017

FY2016

% Change















(in thousands, except percentages)

Operating revenue

$

51,966

$

65,016

(20.1)

%

$

220,544

$

290,299

(24.0)

%

Earnings from unconsolidated affiliates

$

613

$

(357)

271.7

%

$

5,207

$

(2,117)

346.0

%

Operating income (loss)

$

(1,566)

$

4,180

(137.5)

%

$

4,224

$

34,463

(87.7)

%

Operating margin

(3.0)

%

6.4

%

(146.9)

%

1.9

%

11.9

%

(84.0)

%

Adjusted EBITDA

$

5,635

$

11,529

(51.1)

%

$

39,952

$

71,958

(44.5)

%

Adjusted EBITDA margin

10.8

%

17.7

%

(39.0)

%

18.1

%

24.8

%

(27.0)

%

Rent expense

$

6,757

$

4,800

40.8

%

$

23,015

$

21,016

9.5

%

Operating revenue declined for the March 2017 quarter and fiscal year 2017 compared to the prior year periods primarily due to the decline in activity in our U.S. Gulf of Mexico operations.

Operating income, operating margin, adjusted EBITDA and adjusted EBITDA margin decreased in the March 2017 quarter and fiscal year 2017 compared to the prior year periods primarily due to the decline in activity, partially offset by a decrease in maintenance expense and salaries and benefits due to cost reduction initiatives. Our earnings from unconsolidated affiliates was impacted by foreign currency exchange rate changes, which reduced earnings from our investment in Líder by $0.6 million, $5.2 million, $3.2 million and $22.4 million for the March 2017 quarter, March 2016 quarter, fiscal year 2017 and fiscal year 2016, respectively.

Asia Pacific

Three Month Period

Full Year


FY2017

FY2016

% Change

FY2017

FY2016

% Change















(in thousands, except percentages)

Operating revenue

$

62,628

$

57,877

8.2

%

$

217,772

$

272,054

(20.0)

%

Operating income (loss)

$

3,610

$

(710)

608.5

%

$

(20,870)

$

4,073

(612.4)

%

Operating margin

5.8

%

(1.2)

%

583.3

%

(9.6)

%

1.5

%

(740.0)

%

Adjusted EBITDA

$

5,487

$

6,197

(11.5)

%

$

(5,026)

$

28,361

(117.7)

%

Adjusted EBITDA margin

8.8

%

10.7

%

(17.8)

%

(2.3)

%

10.4

%

(122.1)

%

Rent expense

$

10,956

$

9,223

18.8

%

$

39,759

$

37,053

7.3

%

Operating revenue increased in the March 2017 quarter compared to the March 2016 quarter primarily due to the early cancellation of a contract resulting in an additional $17.2 million of operating revenue earned in the March 2017 quarter, partially offset by a decline in oil and gas activity. Operating revenue declined for fiscal year 2017 compared to fiscal year 2016 primarily due to a decline in oil and gas activity, partially offset by an increase due to the additional operating revenue from the early contract cancellation in fiscal year 2017.

Airnorth contributed $17.2 million and $14.3 million in operating revenue and a negative $0.7 million and positive $2.4 million in adjusted EBITDA for the March 2017 and 2016 quarters, respectively, and $77.1 million and $75.4 million in operating revenue and $7.1 million and $12.4 million in adjusted EBITDA for fiscal years 2017 and 2016, respectively.

Adjusted EBITDA and adjusted EBITDA margin declined for the March 2017 quarter and fiscal year 2017 compared to the prior year periods primarily due to a decline in oil and gas revenue which was only partially offset by cost reduction efforts and the contract cancellation billing in March 2017.

Corporate and other

Three Month Period

Full Year


FY2017

FY2016

% Change

FY2017

FY2016

% Change















(in thousands, except percentages)

Operating revenue

$

2,452

$

4,945

(50.4)

%

$

10,369

$

23,487

(55.9)

%

Earnings from unconsolidated affiliates

$

(142)

$

—

*

$

(603)

$

—

*

Operating loss

$

(25,747)

$

(23,518)

(9.5)

%

$

(104,616)

$

(118,796)

11.9

%

Adjusted EBITDA

$

(21,528)

$

(16,386)

(31.4)

%

$

(60,558)

$

(79,119)

23.5

%

Rent expense

$

1,940

$

2,624

(26.1)

%

$

7,661

$

9,938

(22.9)

%

_______________

*

percentage change too large to be meaningful or not applicable

Operating revenue decreased in the March 2017 quarter and fiscal year 2017 compared to prior periods primarily due to a decline in Bristow Academy revenue.

While operating loss remained relatively flat, adjusted EBITDA decreased for the March 2017 quarter compared to the prior year period primarily due to a decline in the favorable impact from changes in foreign currency exchange rates of $3.4 million and the decrease in Bristow Academy revenue. Operating loss and adjusted EBITDA improved for fiscal year 2017 compared to the prior year primarily due to cost reduction initiatives including lower compensation expense and professional fees and a favorable impact from changes in foreign currency exchange rates on our Corporate results of $10.9 million compared to fiscal year 2016.

DIVIDEND

On May 18, 2017, our Board of Directors approved a dividend of $0.07 per share to be paid on June 22, 2017 to shareholders of record on June 7, 2017. Based on the number of shares outstanding as of March 31, 2017, the total quarterly dividend payment will be approximately $2.5 million.

OUTLOOK

We expect fiscal year 2018 results to be impacted by the continued offshore oil and gas industry downturn. Industry conditions in the March 2017 quarter are expected to continue into fiscal year 2018. However, fiscal year 2018 results are expected to be better than our annualized fourth quarter fiscal year 2017 results as we anticipate sequential quarterly improvement beginning in the second half of fiscal year 2018 as new contracts commence.

Our liquidity of $357 million as of March 31, 2017 is expected to decrease during fiscal year 2018, but we expect liquidity as of March 31, 2018 to still be in excess of $200 million as a result of the net impact of previously announced capex eliminations/deferrals and financings and debt repayments.

Additionally, our focus on continued cost elimination, recovering costs from OEMs, and lower net capex should further improve liquidity. Guidance for selected financial measures will be provided in the investor slide presentation during tomorrow's conference call.

CONFERENCE CALL

Management will conduct a conference call starting at 10:00 a.m. ET (9:00 a.m. CT) on Wednesday, May 24, 2017 to review financial results for the fiscal year 2017 fourth quarter ended March 31, 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 2017 Fourth 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 June 7, 2017 and may be accessed by calling toll free 1-877-660-6853, passcode: 13661548#

Via Telephone outside the U.S.:

  • Live: Dial 1-412-902-0030
  • Replay: A telephone replay will be available through June 7, 2017 and may be accessed by calling 1-201-612-7415, passcode: 13661548#

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 quarterly report on Form 10-Q for the quarter ended December 31, 2016 and annual report on Form 10-K for the fiscal year ended March 31, 2016.  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.

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 Month Period

Full Year

FY2017

FY2016

FY2017

FY2016








Gross revenue:






Operating revenue from non-affiliates

$

306,595

$

357,636

$

1,276,374

$

1,550,638

Operating revenue from affiliates

17,056

17,632

71,476

78,909

Reimbursable revenue from non-affiliates

12,543

6,451

52,652

85,966

336,194

381,719

1,400,502

1,715,513








Operating expense:






Direct cost

272,468

301,163

1,103,984

1,227,541

Reimbursable expense

12,217

5,582

50,313

81,824

Depreciation and amortization

25,694

29,959

118,748

136,812

General and administrative

46,089

50,343

195,367

224,645

356,468

387,047

1,468,412

1,670,822








Loss on impairment

—

(27,391)

(16,278)

(55,104)

Loss on disposal of assets

(1,422)

(6,837)

(14,499)

(30,693)

Earnings from unconsolidated affiliates, net of losses

2,168

1,633

6,945

261








Operating loss

(19,528)

(37,923)

(91,742)

(40,845)

Interest expense, net

(15,386)

(9,744)

(49,919)

(34,128)

Other income (expense), net

(1,123)

2,677

(2,641)

(4,258)

Loss before provision for income taxes

(36,037)

(44,990)

(144,302)

(79,231)

Benefit (provision) for income taxes

(43,626)

11,582

(32,588)

2,082

Net loss

(79,663)

(33,408)

(176,890)

(77,149)

Net loss attributable to noncontrolling interests

1,623

8,153

6,354

4,707

Net loss attributable to Bristow Group

(78,040)

(25,255)

(170,536)

(72,442)

Accretion of redeemable noncontrolling interests

—

—

—

(1,498)

Net loss attributable to common stockholders

$

(78,040)

$

(25,255)

$

(170,536)

$

(73,940)








Loss per common share:






Basic

$

(2.22)

$

(0.72)

$

(4.87)

$

(2.12)

Diluted

$

(2.22)

$

(0.72)

$

(4.87)

$

(2.12)
















Non-GAAP measures:






Adjusted EBITDA

$

3,687

$

35,300

$

71,084

$

205,523

Adjusted EBITDA margin

1.1

%

9.4

%

5.3

%

12.6

%

Adjusted net income (loss)

$

(40,302)

$

4,716

$

(74,525)

$

51,308

Adjusted diluted earnings (loss) per share

$

(1.15)

$

0.13

$

(2.13)

$

1.45

BRISTOW GROUP INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)



March 31,

2017

2016

ASSETS

Current assets:


Cash and cash equivalents

$

96,656

$

104,310

Accounts receivable from non-affiliates

198,129

243,425

Accounts receivable from affiliates

8,786

5,892

Inventories

124,911

142,503

Assets held for sale

38,246

43,783

Prepaid expenses and other current assets

41,143

53,183

   Total current assets

507,871

593,096

Investment in unconsolidated affiliates

210,162

194,952

Property and equipment – at cost:


Land and buildings

231,448

253,098

Aircraft and equipment

2,622,701

2,570,577

2,854,149

2,823,675

Less – Accumulated depreciation and amortization

(599,785)

(540,423)

2,254,364

2,283,252

Goodwill

19,798

29,990

Other assets

121,652

161,655

Total assets

$

3,113,847

$

3,262,945




LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS' INVESTMENT

Current liabilities:


Accounts payable

$

98,215

$

96,966

Accrued wages, benefits and related taxes

59,077

59,431

Income taxes payable

15,145

27,400

Other accrued taxes

9,611

7,995

Deferred revenue

19,911

24,206

Accrued maintenance and repairs

22,914

22,196

Accrued interest

12,909

11,985

Other accrued liabilities

46,679

48,392

Deferred taxes

830

1,881

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

131,063

60,394

Contingent consideration

—

29,522

   Total current liabilities

416,354

390,368

Long-term debt, less current maturities

1,150,956

1,071,578

Accrued pension liabilities

61,647

70,107

Other liabilities and deferred credits

28,899

33,273

Deferred taxes

154,873

172,254

Redeemable noncontrolling interest

6,886

15,473

Stockholders' investment:


Common stock

379

377

Additional paid-in capital

809,995

801,173

Retained earnings

991,906

1,172,273

Accumulated other comprehensive loss

(328,277)

(289,819)

Treasury shares, at cost

(184,796)

(184,796)

Total Bristow Group stockholders' investment

1,289,207

1,499,208

Noncontrolling interests

5,025

10,684

Total stockholders' investment

1,294,232

1,509,892

Total liabilities, redeemable noncontrolling interest and stockholders' investment

$

3,113,847

$

3,262,945

BRISTOW GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)



Full Year

FY2017

FY2016

Cash flows from operating activities:


Net loss

$

(176,890)

$

(77,149)

Adjustments to reconcile net loss to net cash provided by operating activities:


Depreciation and amortization

118,748

136,812

Deferred income taxes

15,720

(51,643)

Write-off of deferred financing fees

923

—

Discount amortization on long-term debt

1,606

1,000

Loss on disposal of assets

14,499

30,693

Loss on impairment

16,278

55,104

Stock-based compensation

12,352

21,181

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

(4,438)

2,619

Increase (decrease) in cash resulting from changes in:


Accounts receivable

23,759

46,608

Inventories

(1,958)

(3,380)

Prepaid expenses and other assets

1,267

493

Accounts payable

15,052

13,316

Accrued liabilities

(19,713)

(34,035)

Other liabilities and deferred credits

(6,503)

(25,593)

Net cash provided by operating activities

10,702

116,026

Cash flows from investing activities:


Capital expenditures

(135,110)

(372,375)

Proceeds from asset dispositions

18,471

60,035

Investment in unconsolidated affiliates

—

(4,410)

Deposit received on aircraft held for sale

290

—

Net cash used in investing activities

(116,349)

(316,750)

Cash flows from financing activities:


Proceeds from borrowings

708,267

928,802

Payment of contingent consideration

(10,000)

(9,453)

Debt issuance costs

(8,010)

(5,139)

Repayment of debt and debt redemption premiums

(570,328)

(677,003)

Partial prepayment of put/call obligation

(49)

(55)

Acquisition of noncontrolling interest

—

(7,309)

Dividends paid to noncontrolling interest

(2,533)

(153)

Common stock dividends paid

(9,831)

(38,076)

Net cash provided by financing activities

107,516

191,614

Effect of exchange rate changes on cash and cash equivalents

(9,523)

9,274

Net increase (decrease) in cash and cash equivalents

(7,654)

164

Cash and cash equivalents at beginning of period

104,310

104,146

Cash and cash equivalents at end of period

$

96,656

$

104,310

BRISTOW GROUP INC. AND SUBSIDIARIES

SELECTED OPERATING DATA

(In thousands, except flight hours and percentages)

(Unaudited)







Three Month Period

Full Year


FY2017

FY2016

FY2017

FY2016

Flight hours (excluding Bristow Academy and unconsolidated affiliates):







Europe Caspian

20,203

20,633

85,906

90,260

Africa

6,704

5,921

29,573

33,111

Americas

6,151

7,257

23,655

36,841

Asia Pacific

6,359

7,025

26,118

31,638

Consolidated

39,417

40,836

165,252

191,850









Operating revenue:







Europe Caspian

$

162,511

$

206,517

$

710,581

$

809,914

Africa

47,049

46,660

200,104

249,545

Americas

51,966

65,016

220,544

290,299

Asia Pacific

62,628

57,877

217,772

272,054

Corporate and other

2,452

4,945

10,369

23,487

Intra-region eliminations

(2,955)

(5,747)

(11,520)

(15,752)

Consolidated

$

323,651

$

375,268

$

1,347,850

$

1,629,547









Operating income (loss):







Europe Caspian

$

(4,628)

$

(5,837)

$

13,840

$

50,406

Africa

10,225

(5,201)

30,179

19,702

Americas

(1,566)

4,180

4,224

34,463

Asia Pacific

3,610

(710)

(20,870)

4,073

Corporate and other

(25,747)

(23,518)

(104,616)

(118,796)

Loss on disposal of assets

(1,422)

(6,837)

(14,499)

(30,693)

Consolidated

$

(19,528)

$

(37,923)

$

(91,742)

$

(40,845)









Operating margin:







Europe Caspian

(2.8)

%

(2.8)

%

1.9

%

6.2

%

Africa

21.7

%

(11.1)

%

15.1

%

7.9

%

Americas

(3.0)

%

6.4

%

1.9

%

11.9

%

Asia Pacific

5.8

%

(1.2)

%

(9.6)

%

1.5

%

Consolidated

(6.0)

%

(10.1)

%

(6.8)

%

(2.5)

%









Adjusted EBITDA:







Europe Caspian

$

1,890

$

28,441

$

45,163

$

123,952

Africa

12,203

5,519

51,553

60,371

Americas

5,635

11,529

39,952

71,958

Asia Pacific

5,487

6,197

(5,026)

28,361

Corporate and other

(21,528)

(16,386)

(60,558)

(79,119)

Consolidated

$

3,687

$

35,300

$

71,084

$

205,523









Adjusted EBITDA margin:







Europe Caspian

1.2

%

13.8

%

6.4

%

15.3

%

Africa

25.9

%

11.8

%

25.8

%

24.2

%

Americas

10.8

%

17.7

%

18.1

%

24.8

%

Asia Pacific

8.8

%

10.7

%

(2.3)

%

10.4

%

Consolidated

1.1

%

9.4

%

5.3

%

12.6

%












Three Month Period

Full Year


FY2017

FY2016

FY2017

FY2016

Depreciation and amortization:







Europe Caspian

$

5,917

$

11,620

$

39,511

$

41,509

Africa

3,984

5,063

16,664

29,337

Americas

7,058

7,848

32,727

36,371

Asia Pacific

5,505

3,081

19,091

20,526

Corporate and other

3,230

2,347

10,755

9,069

Consolidated

$

25,694

$

29,959

$

118,748

$

136,812









Rent expense:







Europe Caspian

$

34,065

$

33,267

$

134,072

$

136,377

Africa

2,000

1,431

8,101

7,456

Americas

6,757

4,800

23,015

21,016

Asia Pacific

10,956

9,223

39,759

37,053

Corporate and other

1,940

2,624

7,661

9,938

Consolidated

$

55,718

$

51,345

$

212,608

$

211,840

BRISTOW GROUP INC. AND SUBSIDIARIES

AIRCRAFT COUNT

As of March 31, 2017

(Unaudited)










Aircraft in Consolidated Fleet



Percentage

of FY2017

Operating

Revenue

Helicopters





Small

Medium

Large

Training

Fixed

Wing (1)

Total (2)(3)

Unconsolidated

Affiliates (4)




Total

Europe Caspian

53

%

—

16

78

—

31

125

—

125

Africa

15

%

14

28

5

—

5

52

46

98

Americas

16

%

14

41

18

—

—

73

65

138

Asia Pacific

16

%

3

10

24

—

14

51

—

51

Corporate and other

—

%

—

—

—

47

—

47

—

47

Total

100

%

31

95

125

47

50

348

111

459

Aircraft not currently in fleet: (5)















On order

—

5

27

—

—

32


Under option

—

—

4

—

—

4



_______________


(1)

Includes 31 fixed wing aircraft operated by Eastern Airways which are included in the Europe Caspian region, three fixed wing aircraft Eastern Airways provides technical support for in our Africa region and 14 fixed wing aircraft operated by Airnorth which are included in the Asia Pacific region.



(2)

Includes 20 aircraft held for sale and 122 leased aircraft as follows:


Held for Sale Aircraft in Consolidated Fleet


Helicopters





Small

Medium

Large

Training

Fixed

Wing

Total

Europe Caspian

—

2

—

—

—

2

Africa

5

4

—

—

—

9

Americas

—

5

—

—

—

5

Asia Pacific

—

—

—

—

1

1

Corporate and other

—

—

—

3

—

3

Total

5

11

—

3

1

20















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

8

—

—

23

Asia Pacific

3

3

9

—

4

19

Corporate and other

—

—

—

17

—

17

Total

4

24

58

17

19

122


(3)

The average age of our fleet, excluding training aircraft, was nine years as of March 31, 2017.


(4)

The 111 aircraft operated by our unconsolidated affiliates do not include those aircraft leased to us. Includes 43 helicopters (primarily medium) and 22 fixed wing aircraft owned and managed by Líder, our unconsolidated affiliate in Brazil, which is included in our Americas region, and 39 helicopters and seven fixed wing aircraft owned by Petroleum Air Services ("PAS"), our unconsolidated affiliate in Egypt, which is included in our 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
GAAP RECONCILIATIONS
(Unaudited)

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 Month Period

Full Year


FY2017

FY2016

FY2017

FY2016











(In thousands, except per share amounts and percentages)

Net loss

$

(79,663)

$

(33,408)

$

(176,890)

$

(77,149)

Loss on disposal of assets

1,422

6,837

14,499

30,693

Special items

(3,084)

33,311

31,277

82,063

Depreciation and amortization

25,694

29,959

118,748

136,812

Interest expense

15,692

10,183

50,862

35,186

Provision (benefit) for income taxes

43,626

(11,582)

32,588

(2,082)

Adjusted EBITDA

$

3,687

$

35,300

$

71,084

$

205,523









Benefit (provision) for income taxes

$

(43,626)

11,582

$

(32,588)

$

2,082

Tax benefit on loss on disposal of asset

(618)

(3,178)

(6,476)

(8,665)

Tax provision (benefit) on special items

38,923

(10,629)

49,342

(8,996)

Adjusted benefit (provision) for income taxes

$

(5,321)

$

(2,225)

$

10,278

$

(15,579)









Effective tax rate (1)

(121.1)

%

25.7

%

(22.6)

%

2.6

%

Adjusted effective tax rate (1)

(14.5)

%

(183.6)

%

11.7

%

25.1

%









Net loss attributable to Bristow Group

$

(78,040)

$

(25,255)

$

(170,536)

$

(72,442)

Loss on disposal of assets

804

3,659

8,023

22,028

Special items

36,934

26,312

87,988

101,722

Adjusted net income (loss)

$

(40,302)

$

4,716

$

(74,525)

$

51,308









Diluted loss per share

$

(2.22)

$

(0.72)

$

(4.87)

$

(2.12)

Loss on disposal of assets

0.02

0.10

0.23

0.62

Special items

1.05

0.74

2.51

2.92

Adjusted diluted earnings (loss) per share

(1.15)

0.13

(2.13)

1.45

_______________


(1)

Effective tax rate is calculated by dividing benefit (provision) for income taxes by pretax net income.  Adjusted effective tax rate is calculated by dividing adjusted benefit (provision) for income taxes by adjusted pretax net income. 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

 March 31, 2017


Adjusted

EBITDA

Adjusted

Net Income

Adjusted

Diluted

Earnings

Per Share

(In thousands, except per share amounts)

Organizational restructuring costs (1)

$

2,814

$

2,071

0.06

Additional depreciation expense resulting from fleet changes (2)

—

712

0.02

Reversal of Airnorth contingent consideration (3)

(5,898)

(5,898)

(0.17)

Tax items (4)

—

40,049

1.14


$

(3,084)

$

36,934

1.05



Three Months Ended

 March 31, 2016


Adjusted

EBITDA

Adjusted

Net Income

Adjusted

Diluted

Earnings

Per Share

(In thousands, except per share amounts)

Organizational restructuring costs (1)

$

5,920

$

2,336

$

0.07

Additional depreciation expense resulting from fleet changes (2)

—

3,167

0.09

Goodwill and intangible asset impairment (5)

27,391

15,705

0.44

Tax items (4)

—

5,104

0.14

Total special items

$

33,311

$

26,312

0.74








Fiscal Year Ended

 March 31, 2017


Adjusted

EBITDA

Adjusted

Net Income

Adjusted

Diluted

Earnings

Per Share

(In thousands, except per share amounts)

Organizational restructuring costs (1)

$

20,897

$

14,998

$

0.43

Additional depreciation expense resulting from fleet changes (2)

—

6,843

0.19

Goodwill impairment (5)

8,706

7,138

0.20

Impairment of inventories (6)

7,572

5,428

0.15

Reversal of Airnorth contingent consideration (3)

(5,898)

(5,898)

(0.17)

Tax items (4)

—

59,479

1.70

Total special items

$

31,277

$

87,988

2.51



Fiscal Year Ended

 March 31, 2016


Adjusted

EBITDA

Adjusted

Net Income

Adjusted

Diluted

Earnings

Per Share

(In thousands, except per share amounts)

Organizational restructuring costs (1)

$

26,959

$

19,094

$

0.54

Additional depreciation expense resulting from fleet changes (2)

—

20,577

0.58

Goodwill and intangible asset impairment (5)

49,665

37,979

1.08

Impairment of inventories (6)

5,439

4,004

0.11

Tax items (4)

—

20,068

0.57

Accretion of redeemable noncontrolling interests (7)

—

—

0.04

Total special items

$

82,063

$

101,722

2.92

_______________


(1)

Organizational restructuring costs include severance expense related to separation programs across our global organization designed to increase efficiency and cut costs as well other restructuring costs.


(2)

Relates to additional depreciation expense due to fleet changes impacting the depreciable lives of certain aircraft.


(3)

Relates to reversal of contingent consideration related to the Airnorth acquisition.


(4)

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 March 2017 quarter and fiscal year 2017 and non-cash adjustments related to the valuation of deferred tax assets for all periods presented.


(5)

Relates to impairments of goodwill of Eastern Airways within our Europe Caspian region in fiscal year 2017 and Bristow Norway and Eastern Airways within our Europe Caspian region, Bristow Academy within Corporate and other and our Africa region and impairment of intangibles of Eastern Airways within our Europe Caspian region in fiscal year 2016. Relates to impairments of goodwill and intangibles of Eastern Airways without our Europe Caspian region and goodwill impairment of our Africa region in the March 2016 quarter.


(6)

Relates to increase in inventory allowance as a result of our review of excess inventory on aircraft model types we plan to cease ownership of earlier than originally anticipated.


(7)

Relates to the accounting for changes in the redeemable value of put arrangements whereby the noncontrolling interest holders in Airnorth and Eastern Airways may require us to redeem the remaining shares in these companies.  This change does not impact net earnings (loss), but rather is accounted for as a reduction of earnings (loss) available to common shareholders in the calculation of diluted earnings (loss) per share.

SOURCE Bristow Group Inc.