Q2 2021 Bristow Group Inc Earnings Call

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Good day and welcome to the Bristow Group reports fiscal quarter, two 2021 results conference call.

Today's conference is being recorded at this time I would like to turn the conference over to senior Vice President General Counsel Crystal Gordon. Please go ahead ma'am.

Thank you Connor and good morning, everyone.

Welcome to Bristow groups second quarter fiscal year 2021 earnings call.

I'm joined on the phone today, with our President and Chief Executive Officer, Chris Bradshaw, and senior Vice President Chief Financial Officer, Jennifer Whalen.

Let me remind everyone. During the call management may make forward looking statements that are subject to risks and uncertainties that are described in more detail on slide three of our investor presentation.

You may access our investor presentation on our website.

We will also reference certain non-GAAP financial measures, such as EBITDA and free cash flow a reconciliation of such measures to GAAP is included in the earnings release in the Investor side.

I'll now turn the call over to our President and CEO Chris.

Thank you Crystal and welcome to the call everyone.

As always I will begin our prepared remarks with a note on safety.

Which is bristows, most importantly core value and our highest operational priority.

Despite the numerous potential distractions.

We have achieved our target of zero air accidents, thus far enough why 21.

I want to thank all of our Bristow team members for their continued devotion to play safety first.

We remain committed to achieving the highest safety standards to ensure that all of our customers and employees return home safely every day.

Financial front Bristow generated a substantial amount of free cash flow in Q2.

Which further increased our robust cash balance to more than $300 million with total liquidity of almost 360 million at quarter end.

The company's financial strength facilitated the return of capital to shareholders as we repurchased approximately 1% of the previously outstanding shares at an average price of $21.93 per share in.

In the month of September.

I will now turn it over to our CFO for a more detailed review of financial results Jennifer.

Thank you Chris.

As a reminder, the close of the merger was on June 11th and due to the fact that Bristow was the accounting acquirer in the transaction the previous quarter. Only includes 19 days of operating results from legacy era group Inc. compared to a full quarter in the current quarter results prior.

Prior period only include operating results of legacy Bristow Group, Inc.

54 million for the current quarter versus 39 million. The primary driver for the increase in pro forma EBITDA is foreign currency games in the current quarter compared with losses in the prior year Carter.

Revenues decreased 68 million, primarily due to lower utilization in oil and gas and fixing services.

Operating expenses were 44 million lower due to decreased activity and lower lease cost due to aircraft least rejections in chapter 11 cases, and the absence of least return path.

<unk>, an administrative expenses were 3 million lower primarily due to lower salary expense.

Finally, we generated adjusted free cashflow, excluding Matt Capex, a $57 million for the corner. In addition, we generated fifth 41 million and proceeds from the sale of helicopters during the Carter.

At this time I'll turn the call back to Christopher further remarks crest.

Thank you Jennifer.

Looking forward, we expect challenging conditions in the offshore oil and gas industry to persist for the next year or so.

We also want to advise investors that the next fiscal quarter comes at a time when activity levels may decline and we are not yet benefiting from the full run rate impact of the merger synergies and other cost saving initiatives.

However, it has always been our strategy to maintain a business model that is viable and generates positive cash flow regardless of the commodity price environment.

We will continue to accomplish that objective by employing a dynamic approach to managing our cost structure continually looking for opportunities to realize efficiencies.

As part of this.

We will maximize the utilization of our owned aircraft fleet and returned leased aircraft at their schedule. These maturity days.

These lease returns will further support positive cash flow generation for the company.

The synergies identified as part of the Bristow era merger will further enhance the efficiency of our cost structure as.

As you May recall, we increase the amount of identified synergies to at least $45 million of annualized run right cost savings, which is 10 million higher than the original total.

As of October 30th synergy projects, representing over $20 million of annualized savings have already been completed.

We expect a full amount of the identified synergies to be realized by midyear 2022.

In conclusion, we will continue to execute a capital disciplined approach.

Focused on generating positive cash flow.

Protecting the balance sheet.

And Opportunistically returning capital to shareholders.

With that let's open the lines for questions Connor.

Thank you if.

If you would like to ask a question. Please signal by pressing star one on your telephone keypad.

If you were using a speakerphone. Please make sure that your mute function is turned off to allow your signal to reach our equipment.

Again, Please press star one to ask a question we.

We will pause momentarily to allow everyone an opportunity to signal for questions.

Sure.

And we will take our first question this will come from James West with Evercore ISI.

Hey, good morning goes.

Good morning, James.

So once that one congratulations on over those well executed quarter, especially given no the restructuring and everything else that's going on with the the merger. The first thing I had does it you know my my view on on the stock in on the business that the cash flow resiliency would would shine through.

Through as we got past kind of the merger and uhm would likely to resolve the multiple rereading uhm, but even cash flow. This quarter was was well ahead of my expectations. I was curious is there anything on.

On the free cash flow started this quarter that was an unusual or is this kind of what we should expect to see over the next several quarters notwithstanding of course, the seasonality that we'll see you know.

In the.

Calendar fourthquarter this year.

Well. Thank you for the question James We are pleased with the results this quarter the merger integrations going well I think the team is doing a great job continuing to integrate in progress towards the the value additive synergies that we've identified I'll, let Jennifer address the free cash flow question a lot of it has to do with a strong adjusted EBITDA performance for the call.

Better, but Jennifer again and you please expand upon that.

Okay.

James are yeah, well as Chris noted that we had a a strong.

EBITDA and that that translated into that strong cash flow as our non-cash amortization of that and the non-cash dot com.

That is upsetting the interest expense for that for the corner. So it it just really.

Means that much of that EBITDA is falling into free cash flow.

Okay. Okay got it and then on the the sheer buybacks, obviously opportunistic during the quarter. How do you guys think about <unk>.

The phone keypad now.

We will take our next question.

This will come from John Deysher with Pinnacle.

Hi, good morning, everyone.

Good morning, John.

Regards the buyback well first off congratulations on another good quarter in a tough environment.

Oh I was just too I missed the buyback announcement, what what is the total amount of the buyback.

So we announced that the board has approved a 75 million dollar share repurchase program and we used approximately 7.6 million of that in the month of September before the quarter close okay.

Okay can you share with us if you bought any shares in October and if so how many.

Yeah, we're gonna take continued to be active in evaluating opportunities to return capital to shareholders. Our plan is to provide the disclosure on it on a quarterly basis.

Yeah as you might imagine we get questions about this periodically throughout the quarter. So what we'd like to do is just announce it at the end of each quarter in terms of any activity that occurred during the period and so we'll have an update on our next call.

Okay fair enough.

Terms of the Big picture, obviously, the end markets are not so great right now.

But that may spell opportunity for you in terms of X.

Expanding your share at the bottom and I was just wondering strategically if you're seeing.

Any opportunities both in terms of lease fleets that might be available or.

Captive fleets of Oh, sure you'd be companies that might.

No longer be be viewed as core assets.

No specifics, but are you seeing anything at all and in those areas.

There are situations like the examples you mentioned John we also think that in terms of.

Other operating companies there may be some attractive opportunities for consolidation and in certain markets around the world going forward and we are active in evaluating those we do think that Bristow is as well positioned if not better positioned than than anyone in the industry to take advantage of those opportunities.

But we're also going to continue.

As we have throughout to take a very patient.

And disciplined approach there so any opportunity whether it be a another operator, a captive fleet or some of the examples that you mentioned, we'll have to meet our strategic priorities. It will have to be value added.

It will have to be consistent with protecting our balance sheet and putting the company in position, where we will continue to generate positive free cash flow in the future.

Sounds good it sounds like.

You are ready to move if something becomes available at the right price.

Yeah, we.

We're active and I can't predict whether something will meet our requirements because we will we will be patient what.

But we certainly are active out there.

Great. Thank.

Thank you and good luck.

Thank you.

And at this time there are no questions in queue I would like to turn the conference back to Chris fragile.

Thank you everyone for joining the call I know, it's a busy news week. This week I appreciate the questions James and John We look forward to updating this community again on our next quarter call and until then stay safe and stay well. Thank you.

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

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