Bristow Group Inc. — Form 10-Q Summary
Business Context and Reporting Period
Bristow provides helicopter, fixed-wing, search-and-rescue and other aviation services to energy companies and government customers globally. The filing covers the unaudited three months ended June 30, 2021, the first quarter of fiscal 2022. The fiscal year ends March 31. Comparisons primarily use the three months ended June 30, 2020, although management also discusses the preceding quarter ended March 31, 2021.
Because the June 2020 period was affected by the June 2020 Era merger and the financial statements use Old Bristow as the accounting predecessor, year-over-year comparisons are not fully comparable. The company reported one aviation-services segment across Europe, Africa, the Americas and Asia Pacific.
Key Financial Metrics
| Metric | Q1 FY2022 | Q1 FY2021 | Change |
|---|---|---|---|
| Total revenue | $300.6 million | $270.2 million | Up 11.3% |
| Operating revenue | $288.4 million | $261.5 million | Up 10.3% |
| Operating loss | $12.2 million | $13.9 million | Improved by $1.6 million |
| Operating margin | (4.2%) | (5.3%) | Improved 1.1 percentage points |
| Net income (loss) | $(14.2) million | $71.4 million | Declined $85.6 million |
| Net loss attributable to Bristow | $(14.2) million | $71.5 million | Declined $85.7 million |
| Diluted EPS | $(0.50) | $5.16 | Not comparable due to merger-related items |
| Operating cash flow | $36.4 million | $(6.9) million | Improved $43.3 million |
Revenue growth was led by government services, which increased to $70.4 million from $54.6 million, and fixed-wing services, which increased to $24.7 million from $11.6 million. Oil and gas revenue decreased modestly to $189.6 million from $191.9 million, reflecting lower activity in Africa and parts of Europe, partly offset by growth in the Americas.
Operating expenses increased 14.4% to $214.5 million. Repairs and maintenance, fuel, personnel and other operating costs increased, while leased-in equipment costs declined. Depreciation and amortization increased to $23.2 million from $16.4 million. Merger-related costs declined sharply to $1.7 million from $17.4 million, and restructuring costs declined to $0.9 million from $3.0 million.
Net loss included a $16.0 million impairment of the company’s investment in Petroleum Air Services, a $5.9 million impairment of helicopters held for sale, a $2.0 million loss on the sale of a Colombian subsidiary and $0.4 million of net reorganization expense. The prior-year quarter included a $75.4 million bargain-purchase gain and a $15.4 million gain from a preferred-stock derivative, which substantially benefited reported earnings.
Cash Flow, Debt and Liquidity
- Cash, cash equivalents and restricted cash totaled $248.7 million at June 30, 2021, including unrestricted cash of $244.7 million, compared with $231.1 million at March 31, 2021.
- Operating activities generated $36.4 million of cash, investing activities generated $6.8 million, and financing activities used $27.7 million. The net increase in cash was $17.6 million.
- Capital expenditures were $3.0 million, while proceeds from asset dispositions were $10.6 million.
- Total debt was $541.6 million, consisting primarily of $391.5 million of 6.875% senior secured notes due March 2028 and $144.8 million of Lombard debt. Debt declined from $543.5 million at March 31, 2021.
- The ABL facility had no outstanding borrowings, $54.1 million of remaining availability and $21.3 million of letters of credit outstanding. Management reported total liquidity of $298.8 million, including unrestricted cash and available ABL capacity.
- The company had $86.0 million of unfunded helicopter capital commitments and $21.1 million of other purchase obligations. These helicopter commitments may generally be terminated subject to approximately $2.1 million of liquidated damages.
Material Changes Versus Comparable Periods
- Compared with Q1 FY2021, total revenue increased $30.4 million, but reported net income fell from $71.4 million to a $14.2 million loss because the prior period benefited from merger-related accounting gains.
- Operating loss improved modestly year over year despite higher operating costs and impairments, primarily because merger-related and restructuring costs were substantially lower.
- Compared with the preceding quarter, total revenue increased 2.5% and operating loss improved from $27.8 million to $12.2 million. Lower personnel, maintenance, general and administrative, merger-related and restructuring costs offset higher fuel expense and depreciation.
- June 2021 included repurchases of 933,208 shares for $25.1 million. In July, the company repurchased an additional 547,596 shares for $14.9 million, leaving $25.0 million under the authorized $75.0 million program.
- The company sold its 75% interest in Hauser Investments Limited, which owns Sicher Helicopters in Colombia, recognizing a $2.0 million loss.
Outlook, Risks and Unusual Items
Management stated that it expects to generate positive operating cash flow and believes current liquidity is adequate for working capital, debt service and planned capital expenditures. No specific revenue, earnings or cash-flow guidance was provided in the filing.
Key risks include COVID-19-related economic effects, lower oil and natural-gas prices and offshore activity, customer concentration and contract terminations, aircraft utilization and resale values, impairment risk, foreign exchange exposure, government contract changes, political and regulatory conditions, safety and operational risks, covenant compliance, and the ability to realize merger synergies and integrate the combined company.
In July 2021, after the reporting period, the company settled a bankruptcy preference claim and expected to receive a $9.0 million cash payment in the second fiscal quarter. The filing also notes potential tax exposures in certain international jurisdictions where liabilities are not currently recorded because payment is not considered probable, although it is reasonably possible.
Other income included $3.7 million of insurance proceeds, $2.7 million of government grants for fixed-wing services and a $0.7 million favorable pension interest adjustment. These items may not recur at the same level.
Investor Verification Items
- Verify the comparability of year-over-year earnings given the Era merger, predecessor accounting and significant prior-period bargain-purchase and derivative gains.
- Assess whether the $16.0 million Petroleum Air Services impairment and $5.9 million aircraft impairment indicate broader asset valuation or utilization risks.
- Monitor oil and gas activity, contract renewals and termination rights, especially in Africa and Europe.
- Reconcile total liquidity to cash held outside the United States and confirm the availability and covenant conditions of the ABL facility.
- Review the timing and financing of the $86.0 million helicopter commitments, lease obligations and other purchase commitments.
- Track continuing share repurchases and their effect on cash, debt reduction and share count.
- Verify recognition and cash receipt of the expected $9.0 million Columbia Helicopters settlement in the subsequent quarter.