Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Bristow Group Inc (VTOL, Financial) reported a 50% sequential quarter increase in adjusted EBITDA, highlighting strong financial performance.
- The company raised its financial guidance for full year 2024 and 2025, indicating confidence in continued growth.
- Operating revenues increased by $23.1 million due to higher utilization and increased rates in offshore energy and fixed wing services.
- The effective tax rate decreased significantly from 86% in the prior year to approximately 25%, contributing to improved financial results.
- Bristow Group Inc (VTOL) secured additional financing with the United Kingdom Export Bank for up to EUR100 million at attractive rates, supporting key contracts.
Negative Points
- General and administrative expenses increased by $1.6 million, primarily due to higher professional service fees.
- Penalties related to availability in the government services business, driven by supply chain challenges, negatively impacted results.
- The company experienced higher repairs and maintenance costs, partially offsetting the benefits of lower personnel and leasing equipment costs.
- The transition from cash-basis recognition to an accrual basis of accounting for lease payments from Cougar resulted in a one-time benefit, which may not recur.
- Despite strong performance, the company did not raise its guidance range even higher due to the presence of one-time items and ongoing supply chain issues.
Q & A Highlights
Q: Just looking at the sizable peak year for 2Q, why might have you not raised the guidance range even higher? Or maybe what are the major puts and takes?
A: Jennifer Whalen, CFO: Parts of our business are performing better than expected and should continue to perform well. We did have one-time items that resulted in an $8.6 million benefit for the quarter. We expect to end the year strongly, with our new midpoint of the range approximately 30% over where we ended 2023.
Q: Can you expand on where you see the increased visibility for 2025 guidance?
A: Jennifer Whalen, CFO: The 2025 guidance raise is being driven primarily by Africa. That region has really outperformed, and we expect that to continue into 2025.
Q: Can we get more color on the penalties in your government services business? How long should we expect those penalties to last?
A: Jennifer Whalen, CFO: The penalties are primarily driven by supply chain issues. We expect them to continue into the future and have factored a level of that expectation into our guidance.
Q: How should we think of the cadence of investments for aircraft in 3Q and 4Q, and into Q1?
A: Jennifer Whalen, CFO: We expect to continue taking delivery of helicopters related to SAR contracts mostly over the next two quarters. It drops off significantly in 2025, with only $18 million to $20 million left related to the big SAR contracts.
Q: Could you provide some context on offshore helicopter utilization rates?
A: Christopher Bradshaw, CEO: For relevant helicopter models, current effective utilization levels are at or near 100%. There are idle S-92 airframes awaiting delayed parts and repairs, which we expect to be absorbed at leading edge rates once the supply chain situation is rectified.
Q: Have you observed a shift towards greater utilization of large capacity transfer devices for offshore transportation?
A: Christopher Bradshaw, CEO: The personnel transportation market for offshore facilities is well segmented between helicopters and marine options by geography and distance from shore. We do not compete against marine vessels on a day-to-day basis.
Q: How significant a risk are current and potentially lower energy prices to Bristow's outlook?
A: Christopher Bradshaw, CEO: The thesis for a robust and long-duration offshore energy upcycle is intact. Most offshore basins have breakeven economic thresholds well below current commodity prices, so long-term price expectations would have to be substantially lower to impact the economics of the projects we service.
Q: Given the strong performance in Q2 and recent financing, is there any change in your thinking on capital allocation and shareholder returns?
A: Christopher Bradshaw, CEO: No material change. We aim to protect our strong balance sheet, invest in attractive organic opportunities, and return capital to shareholders via share buybacks and potential dividends, particularly in the latter half of 2025 and beyond.
Q: Could you update us on the timing of the overall fleet expansion?
A: Christopher Bradshaw, CEO: We expect the fleet to grow over the next couple of years. This includes deliveries of SAR-configured AW189s and AW139s, light twin H135 helicopters, and AW189 super medium aircraft. The timing for these deliveries will begin this year and continue into 2026.
Q: Could you talk more about the growth in America and Africa oil and gas flight hours on a year-over-year basis in the quarter?
A: Christopher Bradshaw, CEO: The trend is on theme with increased utilization and higher rates on new contracts. Africa has seen market activity pick up, with some customers returning to Bristow. In the Americas, new contracts in Brazil and short-term projects in Trinidad and the Caribbean have driven better utilization and higher rates.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
