Q3 2022 Bristow Group Inc Earnings Call
Please standby were about to begin.
Good day and welcome to the Bristow Group reports third quarter fiscal year 2022 results conference call Today's conference is being recorded.
At this time I'd like to turn the conference over to Crystal Gordon Senior Vice President and General Counsel. Please go ahead.
Thank you Cody and good morning, everyone welcome to Bristow groups third quarter fiscal year 2022 earnings.
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.
A reconciliation of such measures to GAAP is included in the earnings release, and our Investor presentation, I'll now turn the call over to our president and CEO right.
Thank you Crystal and welcome to the call everyone.
As always I will begin our prepared remarks with a note on safety, which is Bristow is most important core value and our.
Operational priority.
Over the last few years, we're still team members working on five continents.
Dealt with the challenges of managing through the global COVID-19 pandemic.
These men and women have adopted new personal protective equipment implemented additional operating procedures and followed enhanced health and safety protocols.
All while dealing with the pandemic effects and stresses in their own personal lives.
They have done this with a dedicated focus on getting everyone home safe and healthy every day.
And delivering reliable and efficient service to our valued customers.
I want to commend and thank all of our Bristow team members around the world.
For their continued dedication to our mission.
Bristow is target zero safety culture. Thank you.
The company has also made significant integration progress following the merger of era and Bristow in June 2020.
As of December 31, synergy projects, representing approximately $47 million of annualized savings have been completed.
Which means that we have already captured 94% of the target synergy projects identified with the merger.
As outlined in yesterday's press release.
It's disappointing financial results in Q3, FY 'twenty two were due to a number of factors.
Between foreign currency losses, and equity losses from our consolidated subsidiaries.
Sequential quarter EBITDA experienced a negative variance of approximately $5 million from below the line noncash items.
The timing of major repairs and aircraft lease return costs contributed another $5 million this negative sequential quarter variance.
In addition.
We incur extraordinary costs related to the temporary relocation of operations in the Gulf of Mexico.
Following damage caused by Hurricane, Idaho, which slammed into Louisiana coastline on August 29.
These hurricane related costs totaled over $3 million in Q3.
Thanks to a lot of hard work from our Bristow U S team, we've returned to full operations out of our Super base in Houma, Louisiana in mid January .
So while there will be some adverse effect our Q4 financial results. This impact was limited to the first couple of weeks of the new calendar year.
With that I will hand, it over to our CFO for a more detailed review of our Q3 financial results.
Thank you Chris today, I will begin with a sequential quarter comparison net financial result.
EBITDA adjusted to exclude special items and asset dispositions was $30 7 million for the third quarter fiscal year, 2022 compared to $44 5 million in the second quarter or a decrease of approximately $14 million.
As Chris noted our current quarter financial results were adversely affected by expenses related to Hurricane Ike.
We carry insurance policies that cover the costs related to the damage of any aircraft or facilities. In addition, we have business continuity coverage that offset a portion of the costs related to operating from alternate basis.
Over there were extraordinary costs related to the prolonged placement of operation following Hurricane Ida, which included hotel travel and other operating costs. These net cost totaled $3 4 million in Q3 compared to $1 3 million in Q2, resulting in an adverse variance of $2 1 million to the sequential.
Our EBIT.
Additionally, operating revenues decreased $5 1 million, primarily due to lower utilization in government services and decreased activity in fixed wing operation due to COVID-19 related travel restrictions and seasonality, partially offset by increased oil and gas revenue due to higher utilization in the.
Yes.
Operating expenses were $3 1 million higher due to higher fuel expenses maintenance and the previously referenced costs related to the relocation of certain bases due to damage from hurricane.
General and administrative expenses increased $2 million due to higher nonrecurring professional service fee.
Earnings were also negatively affected by losses from unconsolidated subsidiaries of <unk> 9 million in the third quarter compared to earnings of $1 million in the previous quarter.
In addition, we experienced losses on foreign currency of <unk> 8 million in the third quarter compared to gains of $2 2 million in the previous quarter or a $3 million negative effect on EBITDA.
Finally, Bristow continues to benefit from a strong balance sheet and liquidity position as of December 31st available liquidity was $326 million and our net debt to LTM adjusted EBITDA ratio was approximately two times.
In conclusion in the last 12 months, we have generated $162 million and adjusted free cash flow and as we have stated before we believe this business model will continue to have strong free cash flow.
At this time I'll turn the call back to Chris for further remarks, Chris.
Thank you Jennifer.
We continue to have a positive outlook on the future demand for our services with.
With crude oil and refined product inventories below historical averages.
Increasing demand trends as the pandemic effects recede.
And limited excess capacity in the market.
The fundamentals for the oil and gas industry are very favorable.
We continue to believe that a significant broad based increase in offshore oil and gas activity will begin in earnest this year.
Indeed, the recent strength in commodity prices and improving market conditions have enhanced our belief that we're on the precipice of a multiyear growth cycle.
Given the operating leverage inherent in our business Bristol's financial results will benefit greatly from the expected increase in offshore oil and gas spending.
Beyond oil and gas services, we believe compelling growth opportunities exist in government and military services offshore wind farm support and advanced Air mobility.
In particular, we were pleased to announce the successful award of the Dutch SAR contract to Bristow.
This 10 year contract with two one year extension options will commence in November 2022.
And involves providing dedicated SAR equipped AWP 189 helicopters operated by highly qualified Bristow crews from two basis in the Netherlands.
We are currently involved in other active tender processes for additional government SAR contracts in both Europe and the Americas.
And we believe Bristow is well positioned to grow our global leading search and rescue business.
We were also pleased to announce the recent completion of offshore revenue flights in the UK using sustainable aviation fuel.
As previously noted we're still intends to be an early and leading adopter of sustainable aviation fuels.
Combined with our adoption of electric powered ground support vehicles.
Early partnerships with manufacturers of electric vertical takeoff and landing and short takeoff and landing aircraft and other initiatives.
Bristow is committed to remaining a global leader in innovative and sustainable vertical flight solutions.
Let's open the line for questions operator.
Thank you if you'd like to ask a question. Please signal pressing star one on your telephone keypad. If you are using a speaker phone. Please make sure that your mute function is turned off to allow your signal to reach our equipment. Once again that is star one if you'd like to ask a question, we'll pause for just a moment to allow everyone an opportunity to signal.
And once again Thats star one if you'd like to ask a question.
And we'll take our first question from Doyle and Shah from <unk>. Please go ahead.
Hi, good morning, Thanks for taking my questions first.
It looks like you had a.
Several kind of nonrecurring or extraordinary extraordinary cost items in the quarter and I'm, just if we use kind of a $31 million.
Adjusted EBITDA number for the quarter.
I was wondering like these factors like FX.
Hurricane related costs et cetera.
What should we expect next quarter to two.
Come back so to speak what should we credit back.
Well, we can certainly comment on the items that impacted this quarter. So in the current quarter. There was a negative variance at least relative to the prior quarter of about $5 million just due to below the line noncash items in the form of foreign exchange currency translations.
Yes, and also as we noted this quarter was adversely impacted from extraordinary costs related to the dislocation following hurricane idle.
That in of itself was about $3 4 million in total costs that impacted the December quarter.
We also noted some some items related to the timing of repairs and some lease return costs for aircraft that were preparing to return to the lessors and those two items themselves were about $5 million of negative variance again relative to the prior quarter. So some of those items, we will see in the future for example.
Always going to have some variance in our timing of repairs and it'll be a little lumpy as we look at the portion of our fleet. That's maintained all the time and cost of repair basis, others have ended such as the hurricane related costs.
And there are others like the foreign currency exchange, which will vary from quarter to quarter, but again.
That in the unconsolidated subsidiary earnings are really noncash items.
Got you thanks.
No.
Could you also I think last quarter, you had touched upon fuel costs being.
Pressuring your margins a bit I'm, just wondering if that.
Seen a continuation of that.
And then my last question is related to working capital.
Source of cash this quarter.
Some guidance on how we should be thinking about the seasonality or what to expect next quarter. Thank you.
Sure I'll start with the working capital the cash flow, we did benefit from working capital.
Our cash flow this quarter.
Due to timing of payments from customers that came earlier.
Well as higher accrued interest for our notes, we have outstanding partially offset by some lower operate at a lower operating result, and a $9 million legal settlement that we had last quarter. So.
On working capital you know, it's based on timing of payments and we did have the bigger driver from the accounts receivable this quarter and we will make our interest payment next quarter or so.
It will fluctuate from time to time.
And the first question was on.
<unk>.
Past that Joel.
On.
Thank you our customer it is a it is.
Primarily a pass through and we do have an airline in Australia, it's a little bit different based on ticket prices, but generally our fuel is passed through to customers.
As a pass through instant or Theyre typically some lag we should expect I'm just again just trying to.
<unk> modeled the next quarter and get a better understanding of that thank you.
It's not really a <unk>.
A lag it's based on a formula that we use based on average fuel prices that month. So there can be some disconnect between the two but it typically catch itself up.
You could have a little bit in the last month of the quarter, but generally it is.
Thanks Carter.
Okay. Thank you very much.
Okay.
Thank you we'll take our next question from John <unk> with Pinnacle.
Good morning, everyone. Thanks for taking my question.
Just curious on the swing in the consolidated.
The subsidiary income where we're at.
What do you attribute that to.
It really the only thing that's going through there John is RV.
<unk> investment into there so that's our investment in Canada, but they had some fluctuation.
Sure.
Okay.
Income last quarter not this quarter.
Okay.
I think in the prior call you mentioned that the here at North.
Fleet was going to be reconfigured by the end of.
This year is that still on track.
To get completed by the end of this year for <unk>.
Yes. Good morning, John So that are north fleet transition, we expect to be complete by the end of our FY 'twenty three so it will be a little over a year from now.
Work to transition some smaller regional aircraft into some slightly larger Embraer E 190.
Which also will be a more favorable lease terms. So we think both have the capacity to carry more customers on the air aircraft, especially.
Especially as travel picks back up in Australia, following the pandemic as well as the economics on those leases will put the the iron ore business in Australia, and a much better place following that transition.
Okay. That's good to hear and just back to Cougar for a second Oh well.
The decline was it.
The decline in hours or.
What was the basis for less revenue coming in through coover with less profit.
So I'll just back up a little bit on Cougar. So just stretch for just to remind you that we.
We do have lead we lead to helicopters and facilities and the tutors, though we do have economics coming out of kilter.
It's on a cash basis today, because the results have not been great. So.
But in the last Ah.
In the last previous period, they had some more unusual settlements.
<unk> contributed to revenue that didn't continue into the next quarter.
Sorry, I'm not clear when you say settlements into revenue what does that refer to exactly say.
Had some.
Costs for the end of some contracts that happened that we noted in previous quarters, we had an impairment due to the endo contract and they they received a settlement or.
The ending that contract that they received in the previous quarter, which didn't recur in the current quarter, Alright, gotcha, Okay, Fine and Oh, Let me SG&A. It was up to me and you said for professional expenses could you give us some color as to what professional types of professional expenses, you're referring to.
This is primarily related to an ongoing legal matter.
Yeah.
Other than that it's not part of our normal run rate of what G&A will be going forward.
Do you expect that to continue.
Through the fourth quarter.
We may see some additional costs related to this legal matter.
And we've made.
You May say, okay is this legal matter disclosed in the 10-K or the 10-Q.
No. It's not John So this is this is a claim that we are pursuing against our vendor we think it's.
Important obviously to protect the Companys rights hard to say how this will.
Evolve over time as is often the case in disputes of this nature, but as Jennifer noted this is not part of our recurring SG&A.
Okay.
Was there anything in past quarters related to this dispute.
There was up $8 million in the preceding quarter.
Then the amounts a little over 2 million to $3 million that we disclosed in this quarter.
Alright, I would guess that if it continues into the fourth quarter, it's not resolved zero disclose the basis for the complaint and the 10-K.
Yeah again, it's an active dispute so I think it's a dynamic situation hard to predict exactly how it'll all within a particular quarter, but yes as it has any impact on our business. We will we will disclose that okay.
Okay fair enough, thanks, very much and good luck.
Thanks, John .
Thank you we'll take our next question from Sam Mitchell with Ryan capital.
Hi, Thank you for taking the questions. Just three from me first is there a specific leverage target do you have to hit before resuming share repurchases.
Can you comment on price realization in the quarter and the overall pricing environment going forward and then third given our very upbeat tone on the strength of the offshore market can.
Can you provide additional commentary on where you see.
Potential EBITDA relative to the $240 million target you laid out one announcing the Bristow air merger. Thank you.
Hey, Sam Good morning, and thank you for the question. So on the share repurchases I would say, we remain very comfortable with the current leverage of the company.
And there is there's nothing about our current leverage situation that would preclude us from repurchasing additional shares at this time.
Not an impact there we're comfortable with where we had.
On pricing I would say.
As has been our case for a while we don't discuss specifics around pricing, but what I would say is this has not been a material driver one way or the other for the business at this point in time, where we are right now in the cycle is that there is still some some idle capacity.
What will really drive the most significant improvement for the company from a revenue and cash flow standpoint, as an increase in utilization. So as additional aircrafts go back on contract that'll have the biggest impact on the company's financial results, but pricing itself has not been a large variance.
Any recent time, nor do we expect it to be necessarily.
In the immediate future.
As it relates to our outlook for offshore oil and gas activity. We do remain quite positive I think our outlook will be consistent with what youre hearing from other large.
Players in this space, which is that we are expecting significant increases in spending from the oil and gas companies on their offshore activity beginning this year and we expect that to be a multiyear growth cycle.
We've spoken in some recent calls about the.
The fact is the earliest green shoots we were seeing were in our Americas regions.
Thats really from Brazil to the Caribbean triangle that we support up to the U S Gulf of Mexico.
And indeed, you are now starting to see that flow through to our activity in revenues in the Americas Youll note that.
America's oil and gas revenues have been up consistently over the last three quarters, including a 9% sequential quarter increase.
We do have a positive outlook as noted with respect to the specific target that you mentioned.
At this time, we're not providing financial guidance, but what we have said and we'll reiterate here is that we do believe that the oil and gas helicopter market will return to the levels of activity that we saw.
Prior to early 2020, when the pandemic began so the run rate that you referenced again, it's still within where we think offshore activity will return to you as spending.
The increase again no no predicting an exact timing of.
What quarter or fiscal year within a quarter.
That'll happen, but we do think we will get back to and surpass the overall levels of activity that existed prior to this pandemic we've noted before that.
We think it's unlikely the overall industry will ever return to the pre 2014.
But certainly that 2019 early 2020 not.
Not only do we think we'll return to that overall level of activity, but also surpass it.
Okay perfect. Thank you guys.
Thank you and once again Thats star one if you'd like to ask a question, we'll hear next from Adam Ritzer with private investor.
Yeah.
Hi, good morning, Thanks for taking my call.
Can you give us a little more of like a global outlook I know you talked about the Americas, that's coming back strong can you give us a little more color on what's going on in Africa.
We're up maybe between Norway, and the UK and talk about that a little more specifically.
Yes, good morning, Adam in terms of some of those other regions again, not not quite the level of activity that we're seeing come back in the Americas at this time.
Africa and more specifically in Nigeria as you know has been one of the markets hardest hit.
The pandemic began in early 2020, the overall market has contracted significantly there.
I think it will be there will be an increase again in activity there is our expectation.
But not coming back online quite as fast as.
As the U S.
Europe overall activity has been more stable, particularly in Norway.
Norway activity was actually up a little bit sequentially in the December quarter relative to September .
In the UK that market has been impacted by the decline in activity and it also is I think you've personally will call Adam Theres, a fairly challenging competitive landscape in the U K given the number of competitors. There. So that's also impacted our business I would say again that.
We are positive on the global outlook, we do think there will be a water based increase in offshore oil and gas spending over time, we just think the Americas is moving more quickly and we're already starting to see the benefits in the Americas, whereas.
Spending in these other regions will probably take a little longer to come back online.
Got it and I mean going touching back on what you just mentioned the competition.
<unk> seen any positive effects with C H C.
Taking out that top end of Babcock in the past you guys have pointed out has been oh.
Almost unbilled getting contracts just to get the revenue can you talk about anything.
Anything going on there if it's improving at all.
Well, we continue to believe that the north sea.
Particularly the U K sector of the North Sea is a market that.
Really needed consolidation and should benefit from consolidation.
There is a regulatory review going on at that particular merger that you'd mentioned that that review is not yet completed its scheduled to be completed over the coming months, which will determine whether or not there'll be able us to actually integrate those businesses and run them together. So we will follow the developments there with interest.
But again, we think that.
That market in particular really needed consolidation and needed.
Structural change to get to a more sustainable place.
Right.
And when you talked about the solid business I know, there's a couple of large contracts in the EU, There's Ireland and obviously you guys are trying to renew the UK deal, but you also mentioned Americas are there new SAR contracts in the Americas that you can talk about at all.
Yes, we're actively participating in a tender for the Dutch Caribbean Coast Guard contract. So this is a government provided search and rescue support or the southern Caribbean region here in the Americas actually Bristow was determined to be the preliminary winner of that contract is going.
Through.
Or.
Our structured period, where people can lodge challenges so that the termination, but we were really well.
Happy and pleased to see that the government designated Bristow was the best.
The best provider for that future contract, we hope to secure the Ultimate award of that contract soon.
And secure the geographic expansion of our government provided search and rescue business into the Americas.
So will there ever be or maybe there is a solid business in Guyana, and Suriname with all of that activity that everybody reads about almost daily.
Is there anything there that could develop at some point in time.
So we do provide search and rescue services to our commercial customers are oil and gas customers throughout the Caribbean region, each of Trinidad Guyana, and Suriname, we provide SAR support so the oil and gas community drilling there.
Not at least at this time any government contract that's up for for outsourcing our bid, but we are active in the provision of search and rescue support through our commercial customers that okay. So do you do you guys just providing to your customers not.
At this time, Okay and then the last question I had is about the balance sheet. Obviously, you guys are generating a significant amount of cash from the business from working capital. It seems like you have way too much cash and you have a ton of liquidity.
It doesn't look like there's going to be anything less to do with consolidation right now or maybe there is behind the scenes, but how can you not more active on either paying down your debt. Besides the notes and or you haven't bought back stock in the last.
Five or six months.
Why do we need all this liquidity at this point in time.
And so we do think Bristow is fortunate to have a strong balance sheet, including a robust liquidity position. We think there are multiple opportunities to create value with.
That availability as we think about those alternatives.
Referenced a few of the ones that you mentioned first of all we have we have paid down a lot of debt since the merger closed.
And just in the last couple of quarters.
Paid off cleaned up.
That in Australia.
And in the UK that we had locally related to an airport that we own there.
So right now we have a much cleaner capital structure than was the case in newly after the merger we have the publicly traded senior notes and then we have the the.
The UK SAR related debt, which is at a very favorable rate. So we're pleased with the progress that's been made since the merger closed on really cleaning up the back of the debt side of the capital structure.
With respect to share repurchases.
Return of capital to shareholders has been a priority and we're going to continue to look at that as one of the principal alternative uses where the available cash we have repurchased approximately $50 million of stock since the share repurchase program was approved in late 2020, and again that will continue to be one of the primary considerations for.
Our available cash.
We do think that M&A and consolidation is a potential use of cash for us.
And indeed, we think some of the potential consolidation opportunities that are out there could be some of the best long term value creation opportunities available for the company and our stakeholders.
That was the case with the Arab Bristow merger, and we think there could be other consolidation that would be attractive as well. We also have some needs for cash that'll be related to growing our SAR business. For example, we will bring in a new delivery helicopters to support the award of the Dutch SAR contract in the Netherlands, We are following.
Other opportunities in government SAR contracts as we've already talked about.
On this call.
We're also mindful of our balance sheet strength as it relates to some of the big bids that we're pursuing for.
For example, some of these large government contract awards will look at the service provider to balance sheet and credit situation. So we're always going to take that into consideration.
So all of which is to say Adam we think we're in a favorable position now we do have available cash to put to work. We think there are multiple opportunities multiple alternatives to create value using that availability.
Okay, Great I really appreciate it and best of luck to you.
Thank you.
Thank you we'll take our next question from Patrick Fitzgerald with Baird.
Yeah.
Percent of your.
Like increase in flight hours that Youre expecting.
You know from oil and gas.
Would be.
I know, it's somewhat difficult to say production.
Versus you know incremental drilling activity.
Sure and good morning, Patrick if you look at our business today on the oil and gas side.
More than 80% of our revenues are coming from production support.
The exploration side is the minority.
However, that's likely where a lot of the growth will come from so.
To directly address your question there will be some increase in flight hours related to production support because.
There is some aspect of production activities for oil and gas customers that are elective they can choose when they want to do major projects. For example, whether it's an upgrade or a major repair on a production facility. They may differ that depending upon the commodity price environment or their capital plans.
That elective expansion or contraction of production support will drive some change in flight hours, but as we think about growth. It's really new projects, it's really more of the exploration side, whether its seismic or drilling or completion activities.
As more floating rigs are put to work to support those activities, we will need more helicopters to go.
We've got to work to support those customer demand flight hours will increase and again, even more so than flight hours, just getting more aircraft on contract as our customers need to support that kind of transportation for their increased activity will drive the increase in risk those revenues and cash flows.
Okay. So it's more of a.
Youre expecting increased.
Drilling.
That makes sense and then you're in you're expecting.
Increased volume or just kind of loosening of the purse strings at your customers.
Because I mean like production.
As a whole is not like up significantly in <unk>.
Uh huh.
I wouldn't expect.
So.
If you could provide some color on that that'd be helpful.
Sure so from the baseline where we're at today.
Most of the growth will be driven by new activity.
Operational related again, either seismic drilling or completion activities.
There will be some likely increase in the personnel onboard the number of.
People that will go to support additional projects on production.
Well, so I just I would note that as I mentioned that it's not purely static on the production side either there is flex in that spending but from the baseline where we're at today.
Especially getting additional helicopters back on contract.
New exploration activity, either seismic drilling or completion activity will be what drives that.
Okay, and then in terms of pricing power. What gives you guys confidence there I mean is it like a utilization level that you're bumping up against that.
Historically has provided upside with rates are.
Pursuant to our longstanding policy, we don't make specific comments on pricing for competitive reasons, but I would note that pricing has not really been a big driver in our business for a long time, it's been more about utilization of the fleet.
And thats been the case since really the.
2014, 2015 downturn so.
Will pricing increase over time.
We hope so but right now in the immediate near term, it's really about getting more more aircrafts on contracting increasingly utilization.
Okay. Thanks.
And then just could you just remind.
US where you stand with respect to that.
Right.
UK SAR two point at all.
You know what you have to do what we can expect to hear.
Yes happy to do that so late last year, we submitted our bid.
There, it's a fairly public process. There are two companies ourselves and one other left and the competition we will be entering later this month.
Negotiation space with the UK government.
They continue their work on which provider they want to award the two G contract too.
We think we're very well positioned there to secure the win obviously not taking anything for granted.
They stated that they will make a final determination and announce the winner of the two <unk> contract later this year, but by October of 2022.
Alright, thank you.
Thank you.
Thank you I will take a follow up from Ian Shah with them Okay.
Hi, Thanks.
With regard to your comments earlier about M&A opportunities.
Your leverage.
Currently on an LTM basis about two times, maybe on an annualized linked quarter basis as higher I'm, just wondering what kind of.
Leverage metrics are you abiding by when considering potential.
Potential M&A.
Thank you for the question.
And we are comfortable where we're at today or where we're at from a leverage perspective stay hover and <unk>.
Depending on the transaction, we would be willing to let that go up as long as we had that visibility.
Visibility into the cash flow.
Of the combined new business going forward.
Okay.
Would you be looking to potentially balance.
Such a potential transaction with the with both cash and equity or.
Or is it.
Primarily with cash.
Well.
The M&A situations.
It is a two way street so.
There may be some situations, where the buyers looking for particular form of consideration.
Obviously from our standpoint, we will have our own priorities as well so it really hard to answer on a blanket basis it'll it a pen.
Situation to situation I think we're in a in a favorable position as first though because we are.
And the industry. In addition to being the largest global player. We do have the strongest balance sheet. So the ability to use cash. We also have the best ability to access additional financing whether thats debt or equity. We are the only publicly traded helicopter operator left in the world. So I think we have more flexibility and more.
Our favorable.
We are in a more favorable position to affect consolidation than anyone else.
Got you.
One last question regarding wind farms, I think you've been talking about before.
Almost a year now and.
And I just wanted to see how you were measuring progress.
And that market and if you could discuss a little bit how you're positioned relative to.
Competition or substance.
Other substitute forms of transportation. Thank you.
Sure. Thank you for the question on that offshore wind here in the U S. As a market very nascent market really doesn't exist from a helicopter support contract today.
Here in the U S. We're actively participating right now.
Two active tender processes to support what will be new wind farm projects. So these would really be the first offshore helicopter support work in the U S for that industry. So we're optimistic.
There I hope to be in a position to win some of that work.
In a market really that again today doesn't exist, but we expect to grow and to grow meaningfully over the next several years.
Northwest Europe .
We have provided limited amount of offshore wind support we're currently supporting a an offshore wind project out of the UK right now.
With some helicopters.
In terms of a broader scale.
This space offshore wind in northwest Europe had not been.
Part of those business historically.
<unk> merger, we have looked at ways to penetrate that.
We've noted before that we will look at both buy and build options to grow.
Our offshore wind support business in the North sea pleased to be supporting those projects today.
And again, we're looking actively today at ways, we can further penetrate.
Offshore helicopter support for wind projects in Europe .
Got you. So is there any difference in the kind of specs.
That are required or better suited for offshore.
Wind farm support versus your fleet.
I just wanted to get a better understanding of that aspect of it.
Yes, it's a good question the answer is yes, and no. So there are really two stages that you would think about offshore helicopter support for wind projects in the initial stage in the construction phase of the wind farm Youre typically using larger aircraft, whether that's medium helicopters are larger to support crew change for the <unk>.
Crews that are conducting that construction work on the project. Those aircrafts are would really be the same models and really same mission profiles that we do today for our oil and gas customers for their crew transportation needs. Once the wind farm is up and running it transitions into in the operations and maintenance phase and then the <unk>.
Mission changes there the mission is more about wasting.
Maintenance personnel down to the top of the pistol to conduct the work that needs to be done whether scheduled or unscheduled maintenance on the turbine.
And the right aircraft for that mission profile is really a new generation light twin helicopters or whether that would be an H five manufactured by Airbus <unk> hundred 69 manufactured by Leonardo those are the two most common types used today in the mature markets like in northwest Europe , So that APA.
<unk> and maintenance phase, which will go on for the life of the wind farms that were talking about a few decades.
It does involve a different type of aircraft than what we have in our fleet today and so as we look to participate in some of those contracts, we would need to bring in some new aircrafts.
Got you.
Thank you very much that's very helpful.
Thank you.
Thank you and that does conclude today's question and answer session I would like to turn the conference back over to management for any additional or closing remarks.
I want to thank everyone for joining the call today and look forward to speaking again next quarter in the meantime, everyone stays safe and well take care.
Thank you and that does conclude today's conference. Thank you all for your participation and you may now disconnect.
Sure.
Yeah.
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Okay.
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Yeah.
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