VTOL - Earnings call transcript Q1 2023

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Operator

Good day, and welcome to the Bristow Group Reports First Quarter Fiscal Year 2023 Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Crystal Gordon, Senior Vice President, General Counsel. Please go ahead.

Crystal Gordon

Thank you, Tracy, and good morning everyone. first year Group's earnings Bristow to quarter XXXX fiscal call. Welcome Financial with on and and Chief the joined our Senior Jennifer phone President, Bradshaw; I'm Chris today President Whalen. Officer, Chief Vice Officer, Executive

investor in get three to remind that management risks that to presentation. may and we this this statements of forward-looking described course everyone started, to uncertainties during like Before take more would that Slide opportunity make of our the detail on call, I are are subject

our access our may on You Investor website. presentation

will EBITDA President also I'll presentation. GAAP release A CEO. and such reference such We earnings certain non-GAAP our investor to and reconciliation now Chris? measures, financial turn measures is as the our flow. included the in free call cash and to of over

Chris Bradshaw

and time Welcome the team with ground and Board our Thank to from the Executive the everyone enjoyed on in spend have Aberdeen. call the opportunity leadership greetings Bristow Crystal. to the of team where U.K. week you, this Directors

always, and our Bristow lost members every deliver June on As first Bristow's day. work of accidents value the safety around ended members, all continued our core to last successfully days. team have to I to in a zero with several with who year-over-year over place safety the related that outcomes The expect million well projects important to I of we the the Work want our our integration would team the thank Era further successfully $XX their will most Bristow to which remarks priorities team and savings, and on this merger time that performance to surpassing prepared safety, and worked synergy operational commend those few months two-year want several merger-related of dedication completed world U.S. two-year of and diligently has achieved two-year anniversary the additional note for a of update the very is annualized continue the but At all priority. certificate quarter representing on we company in of good I some will air of the highlight period. to XX% reduction specified XXth, reached the highest I mark. begin last also projects, like integration, Bristow, here. IT a close targets have within strategic company's now system the successful is savings,

secure contract new with provide and the we contract Next, will U.K. XX-year award and Maritime highly SAR to Bristow GBPX.X the region. builds of Caribbean billion, continue in aviation to provide see were rescue This Agency. Dutch Guard until pleased XG Bristow's the search to very least important Coast winning services Netherlands critical the throughout success and across XXXX. at the new This government upon U.K. critical services whole contracts the SAR recent

share. repurchase business, shareholders to support over returning time share last repurchases to make In with same this $XX average highly global British the new acquisition of such which all-cash GBPXX.X fleet, of the Limited, Falkland the executed agreements months price strengthen at to investments and important the addition, earlier week, Meanwhile, $XX.XX helicopter expands long-term British of million maintenance two we our relationship have new government Forces. International we offering our AWXXX the capital continued an an Armed with Islands favorable at as services million establishes while completed for the our to per Helicopters

a Bristow I efforts vertical and it over team again time months outcomes hand With last productive Bristow's the first to will within these Finally, highly role takeoff for I additional sustainability for the with the to on pleased achieve been and CFO few to results. stakeholders. The and the in company leading and into lift for that, company of to their our to everyone our report a release sustainability highlighting for landing the Bristow's we leader looking a Jennifer? want financial developers the successful future, vertical were of thank have review new as sign partnerships more electric industry. aircraft,

Jennifer Whalen

Thank you, XXst. Chris. benefits, to to March that including of between Today, our believe by provide periods many announce change for We and our approved relative our pleased peers. are I to we Board year-end will from start Directors to change a will this XXst saying comparability -- December

we our initiate we financial XXXX, announce to guidance when intend for calendar quarter's addition, In next year earnings.

in higher Operating gas and of were fourth financial million, government $XX.X oil and the activity quarter million XXXX, revenues million or increased asset fiscal to fuel the million, $XX expenses Bristow's and $X.X year and In related and lower repairs results. gains. Moving increase an of services, were lower of higher, signed of first sequential for primarily EBITDA, fiscal expense, higher we driven and maintenance in quarter begin by exclude revenues in during Africa arrangement expenses higher our activity. on, the to region, million the $X.X intangibles comparison foreign and to $X.X the quarter, from increased primarily quarter. a discussion by services. items increased $XX.X to administrative fees year to million, utilization quarter by of compared Europe million the current power-by-the-hour fixed-wing XXXX, with and General due adjusted new service recognized activity $XX.X due of special expenses. and driven due the in professional approximately loss the I'll impairment on primarily a Operating was to dispositions compensation of to increased exchange

million, foreign driven In other primarily by $X.X currency by increased gains. income addition,

a benefit balance sheet and Finally, position. from liquidity Bristow strong continues to

$XX and liquidity repurchased million free we available $XXX last for $XX ratio was million times. as to of X our We in our shares and quarter adjusted XXth, of and flow than June -- adjusted June of debt less was As net million noticed cash EBITDA the XX-months Chris noted, generated July.

model Chris? still business generate cash we this Chris on turn At to strong remarks. have further the to many will time, back we As flow. call for this continue I'll stated believe that occasions,

Chris Bradshaw

growth recent in On now call, the the David, of reports expert three with wins reference presentation recent David Bristow's an I services our services industry highlighted to leading government Earlier covered Anderson Jennifer. research I offshore global has for Page slides, J. earnings reports. and provide outlook you, Research. energy from Thank XX third-party we the update and the market, will on bullish at highlight long outlook, Barclays business. comments energy who Last in noted. had the to on it so for been market multiyear only was and of related outlook That David grown his to services prior changed geopolitical invasion which and gas sector a of be space a cycle. that a number to Ukraine a oil bearish years, dislocation. rightly and should predicted following crisis time, Russia's conviction for year, has

on oil best-known West services a notes environment comments in best one On next upstream highly increase expects in almost regarded and and Slide this gas is years the as few noted page, Evercore James, Barclays at XX, over for the significant spending As of research from James and and we the recent energy XX-years. who he upstream also investment the ISI. the strong to being upstream David over sees building alone. is the an production spare by bullish notes fundamentals offshore analysts of and dynamics XX-months. that Despite is momentum spending next in James spending capacity the industry, sector on as grow and supply-demand economic risk growth market and by driven remaining the E&P sees outlook the sees recession, not ambitions highlight short-term

speaks show by the charts we which also We slide, of drilling including a positive Halliburton, increasing to of and offshore number should the recent shared offshore, for this Schlumberger, couple leaders, which included Transocean helicopter note the working that industry is demand sentiment On and trajectory others. growth market services. rigs

market XX, the from and month Analytics, the were Robertson, until on of last dynamics Air pleased the super-medium report, heavy third-party In and we It in near we numbers market supply, report comments firming to rigs go the that are share and this quarter. Slide on the to markets SXX for report. tightening now, website on readily oil with services and helicopter that to the a market. industry is Sea notes interested new types Analytics well. Sea for presented to shared full that of full analyst Up last the as helicopter new who demand are & report is sharply, encourage third-party Steve offshore or not qualitative analysts utilization helicopter and Finally, type statistics Steve utilization to helicopter The utilization in earnings anyone super-medium market. drilling other are with chart the specific gas on excellent read utilization recovered for market available offshore information and Bristow's purchase with Founder the that released expectations has an consistent Air at utilization we offshore industry. and continued up call in model & energy available

continue in We offshore and With our Tracy? growth in questions. business Bristow's stands line oil from of and early this gas that benefit is upstream believe to cycle the market that, growth for the to a the multiyear stages spending. let's significantly open

Operator

We Sullivan our from question Benchmark from first Company. Instructions] Josh will take ahead. Thank Please you. go [Operator The

Josh Sullivan

Jennifer. Chris, morning, good Hey,

Chris Bradshaw

Good morning, Josh.

Josh Sullivan

And incremental should then wanted the the I clearly on we win contribution award, off that additional your XG marquee how a under to SAR with big but Congratulations what do [Technical SAR of you results Difficulty] on opportunities this UK versus have But you start potential vehicle? now the here. win, belt? think think

Chris Bradshaw

to you well secure the pleased were Thank for very and the wishes. award. XG Yes. the SAR question contract We

employee with remarks, our in and contract. the on believe of the billion, the which interested position they has prepared which them an contract the be than age as that that revenues, established U.K. SAR-H aggregate the consistent throughout efficiencies the base, this incumbent which is at is new very we and have most of from base some Bristow XX-year place, have U.K., revenues aggregate early the more were again that on now. we established is depreciation total all in footprint noted will in on generation the As We new given used that new MCA obviously number expected of in GBPX.X a our aircraft contract, on messaging were and generation lower favorable

capital that as a we return Bristow's while had those So meet financial returns the hurdles. efficiencies, attractive on incumbent still good generating to position deliver

country additional military be privatized award a another services. services which we for of terms to public and existing support XX-year the to customers currently rescue new are engaged Guard contracts and/or governments Coast will already either additional believe are privatize and tender that contract opportunities, And search In there Irish in for actively the looking Ireland. contract, that of is we private

But, well. overall, closer As start global believe may some to growth opportunities to a that we those discuss the we is of as market cycle, one. contracting by them services get the government name

Josh Sullivan

& profile? in on change And these Alright. frame this GE, then the would the place How a way the incremental been were have Honeywell Pratt Is -- there know, what Leonardo, margin or incremental to fundamentally maintenance the historically? Whitney, does if agreements. you

Chris Bradshaw

materials a and following time multiple, period fleet AWXXX PBH AWXXX pleased did engines AWXXX will to which maintenance in both with the will for engines Bristow's The and maintained Pratt the and and long end which Those for leverage we've the aircraft program on the see the agreements June fleet. that global explain airframe buying lower we of coverage, sign for some to our What & bring of agreements were a after accomplished maintained our the The limited full under everything related under minute disparate new aircraft. and is Whitney. maintained legacy the context of were program We the one new two & I consistent negotiations all and full a agreements PBH is with together a Leonardo Leonardo was the a a Whitney. PBH lifecycle with the was for at coverage PBH Pratt support bringing of with Bristow history overall fleet these to that merger maintenance cost engines tip-to-toe AWXXX increased upon is Yes. airframes over maintenance legacy power comprehensive fleet, should Era and accomplish Bristow these PBH cost fleets to take maintained to together, program. our Era which the result have able not net basis. we the for on essentially global of using we based were

that the expenses attractive cash-on-cash and returns reduce we cash-on-cash XX% on So us, are for quite will believe an approximately return that unlevered basis.

PBH maintenance predictable fungible the aircraft having more hours. [sale] programs from and And full those repairs actual to also investment expenses correlated aircraft. more makes for furthermore, should valuable, as addition we with (ph) and more In tip-to-toe reach our having will these be therefore specific under a cash of we see directly flight them that the benefits, point consistent flows benefits believe we more

we're the overall achieved So signing very with benefits agreements. new pleased by these

Josh Sullivan

heard related, times any then we've constraints in forgings about delivery Are of you or some aerospace kind and this availability? And castings participants titanium. OEM impact to spares seeing and quarter

Chris Bradshaw

I'd operate, -- with the understand on in the models happen job, constraints Yes, fairly these world. with to deal most sectors. of that recognize deliver constraints most in do want we of the continuing mentioned what our say for done in despite we supply been that you and what whom have have. and we the to OEMs I type Bristow supply helicopter note broader an going that to is chain other have we of admirable that have peers, consistent chain

So, able the have most that had on more by those manageable a deal to not model that with delivering the where structural parts helicopter want way. SXX Sikorsky, certainly and would we been do fairly time. delivering we with more Sikorsky exception in have I not note issues significant them and recognize really and The be need we to one --

Bristow to support good that had I margin, is failure helicopters. have our to by we of self-help. the mean, Sikorsky's But by we've SXX operator product. -- world's positioned been model largest so, and really there And are we impacted the own we provide are, a well

Josh Sullivan

for just then air being to of one, is the do asset you advanced forming last know, far as with mobility these think players, partnerships as now Bristow? one And which you're you an closest operating

Chris Bradshaw

to Yes, fair speculating now. question. given on that we avoid development going where the cycle are I'm in

being we determining we've spent we've think diligence, with, the these time good spent know good the developing of capital that good a be are want still over and derisking made occur amount will -- amount base individual continued going that to profile. is only that we in operating not needs regulatory but think think the that specifications, of are some the with That said, on specific fits Bristow's a last mission and quite aircraft. right certification meet teams relationships, good for I aircraft have to progress start the before technology of I I a some time doing partner I XX-months risk technology will and right for bit some there we cases, who commenting to timelines right

Josh Sullivan

Got it. Thank the . you for time

Chris Bradshaw

Thanks, Josh.

Operator

take from now will next question We John Please Instructions] from [Operator Value. our Pinnacle Deysher ahead. go

John Deysher

good morning everyone. Hi,

Chris Bradshaw

morning, Good John.

John Deysher

morning. report. good information Lots of in good questions. quick Couple of the Hey,

does How On the you in two all do or share the go Bristow, structured? that that total contract, is $X.X partners? with other billion, SARs amount exactly your that to

Chris Bradshaw

at do We will revenues, particularly revenues share XExcel. some of with partner the our of significant those go Bristow. fixed-wing majority to The

the new that partners under service We with valued contract. deliver generation are our the contractor working prime to

John Deysher

goes What percentage, Bristow? would to you say,

Chris Bradshaw

the disclosed this time. haven't percentage at We

next beginning be will with releasing financial quarter. We guidance

expectations will the financial be in Bristow future the we for provide. that guidance plan overall, so to incorporated And

John Deysher

Okay.

will you guidance? provide clarity with So more the

Chris Bradshaw

included financial Yes, will issuing do we that that quarter's November. anticipate October early when earnings guidance additional will we in in report either and that, have or late next overall be we

John Deysher

Okay, fair enough.

Bristow I usual? that, to fit's it On will it any anything but or forward? the or major significant shifting platform, or around reducing changes the in as continue of usual plan into business is BIH there don't business you do operation, contract, it how as headcount helicopters changes that going or like terms any are as know overall

Chris Bradshaw

question. good A

customer, two crew SAR-configured SXX ASXXX here they services using two Ministry generation There with fleet I Falkland time U.K. the the medium-type, in consultation expectation over far related that is U.K., here will the from AWXXX model the three have And and using replaced search which smaller to transportation the then provide the new Defense replacing aircraft. in contract the generation be newer smaller rescue both a likely the And using with It that helicopters we're the the helicopter. helicopters. also a contract would the provide contracts, currently those Islands, is ASXXX be in Islands in newer a in there interested They in again helicopters. here, and one to BIH largest of with one the U.K. interest SXX our with certainly Falkland changes, context, be operates customer there generation in services aircraft. think by mainly they that by For contract an some

I the an operations. the brand combine interest an time we and to our adopt their From will operational BIH we again, also integrating be name workforces. throughout that. there's, They into will think look and to and and do operations standpoint, opportunity operating Bristow certificates over will

there that be in changes So operational some regard. will

John Deysher

And yearly contracts how contracts Okay. long are the last? there or do they

Chris Bradshaw

the the a has U.K. in amount one the remaining that contract Falklands contract the one a remaining shorter in the -- The extensions, time of then on there is a is and smaller few long-term years here with

John Deysher

Okay, great. paid -- capitalized that how the wouldn't treated don't $XX to million that's it? accounting maintenance be expensed, think now be And and going would I year-end, -- on Is the it between is or from buy-in, standpoint? an that

Jennifer Whalen

Chris. morning. good John, take hello, Yes, can I this,

John Deysher

morning. Good

Jennifer Whalen

life that any our an Yes, sheet PBH uses. be asset and over new balance company typical will capitalized of agreement, on aviation that's the it as the amortized accounting

John Deysher

through looking you give the over CapEx the feel in for and December, for And is guess up next this XXXX in the to you're what contracts. a good. as of of different CapEx? your half for balance couple for finally, fold at these of budget you years, the is us CapEx going terms Okay, I be back ramping what year, Can

Chris Bradshaw

the relatively that to delivery new contract, include single CapEx, firm a We've use that we schedule the on our SARXG do giving helicopter capital relate in amount we AWXXX that also schedule that that in a -- for commitments, have. the the the materials, small as did as largest SAR filings, the expected contract. noted putting to share Dutch disclosed U.K. We have, we're

We make helicopter expect we'll this that to then. -- month delivered month payment and the final be this later

on of to financial earnings. would we with guidance in out specific our quarter's next roll be that included guidance terms that plan In CapEx, more the

John Deysher

Okay.

right, much We So luck. -- then. very and wait good. that's till good all can Thanks

Chris Bradshaw

John. you, Thank

Operator

from follow-up another Sullivan have we The Company. Apologies, Instructions] Please ahead. question from Josh [Operator go Benchmark

Josh Sullivan

[Technical that's been market the some just where region made the Previously, trend a African competitors you this Hey, Do Difficulty] in strength a forward? quarter. inroads. that in going a lower-cost had reversal expect

Chris Bradshaw

do, We Josh.

In fact, that. the this increase that quarter exactly you saw is

is overall for context has is Africa the addressable of over half half, The for for was market little about less a everyone, of significantly than contracted the last downturn. during couple maybe So downturn. one the what prior support that years the last to it market

have overall contraction contracts support there, in customers to pre-existing recently we've for that so back significant recommencing to significantly of helicopter a So customers addition lower deliver quarter rates. in seen the we're smaller gas support. activities Bristow a additional market come competitor pickup with is oil What for reflects you've local did and those saw charges us that activity the some customers. had lose to for June more failure those us couple looking the And and you and a to that. customers

reliability services a of likely think what not is is market on availability reflective and and that on broader to price. just of we going emphasis So be forward this

Josh Sullivan

Got it. you. Thank

Chris Bradshaw

Thank you.

Operator

There further this closing or time, appears Bradshaw for would questions. I any remarks. to additional Chris conference to no back the turn like to At be

Chris Bradshaw

well. to great Tracy. for Stay foremost, well that Thank We as providing the the again again much. next I and around service thank team again again outcomes quarter. Bristow say participating accomplishing now. and everyone as world, very level of in successfully was first customer Bye you the you forward And for the mentioned to speaking And to a for safe a delivered you, earlier safety the final quarter, this thanks and on I call. call. want Thank look

Operator

disconnect. This for you concludes may now participation, today's call. Thank your you

Bristow (VTOL) 5 Aug 222023 Q1 Earnings call transcript