Q1 2025 Bristow Group Inc Earnings Call
Speaker Change: Good day everyone, and welcome to Bristow Group Report's first quarter 2025 earnings call. Today's call is being recorded. After the speaker's remarks, there will be a question and answer session.
Speaker Change: If you'd like to ask a question during that time, simply press star followed by the number five on your telephone keypad. At this time, I'd like to turn over the call to Red Tilahun, Senior Manager of Investor Relations and Financial Report.
Rede Tilahun: Thank you, Luke. Good morning, everyone, and welcome to Bristow Group's first quarter of 2025 earnings call. I am joined on the call today with our President and Chief Executive Officer, Chris Bradshaw, and Senior Vice President and Chief Financial Officer, Jennifer Whalen.
Rede Tilahun: Before we begin, I'd like to take this opportunity to remind everyone that during the course of this call, management may make forward-looking statements that are subject to risks and uncertainties that are described in more detail on flight three of our investor presentation.
Rede Tilahun: You may access the Investor presentation on our website. We will also reference certain non-GAAP financial measures such as EBIDAC and free cash flow. A reconciliation of such measures to gap is included in the earnings release and the investor presentation.
Rede Tilahun: I'll now turn the call over for President and CEO , Chris.
Chris Bradshaw: Thank you, Red. I will begin with a note on safety, which is Bristow's number one core value and our highest operational priority.
Chris Bradshaw: The company achieved our target of zero air accidents in Q1, 2025.
Chris Bradshaw: In terms of workplace safety, we experienced fewer recordable injuries and fewer lost work days than the first quarter of 2024.
Chris Bradshaw: and we are currently on track to achieve the company's workplace AP charter for 2025.
Chris Bradshaw: I want to thank all the Bristow team members around the world for their continued focus on placing safety first every day.
Turning to financial performance and outlook for the company.
Chris Bradshaw: We are pleased to report very strong first quarter financial results and to affirm Bristow's financial guidance for both 2025 and 2026.
Chris Bradshaw: We recognize that macroeconomic risk and uncertainty have increased significantly in the beginning of the year.
Chris Bradshaw: and I want to briefly address the potential impact on Bristow's business.
Chris Bradshaw: Recently implemented U.S. tariffs on fuel and aluminum imports, including some aircraft parts, introduced incremental costs and additional complexities into the industry's already complex of bi-chain.
Chris Bradshaw: The new tariff regime has negative implications for repairs and maintenance costs on our US-based aircraft fleet and introduces additional uncertainty for a component delivery timeline.
Having said that,
Chris Bradshaw: In the scope of our overall financial guidance, we do not expect the direct impact of these costs to have a material impact on the company's financial performance.
Chris Bradshaw: The greater risk relates to concerns about slowing economic activity, which could result in decreased demand for crude oil and natural gas.
Chris Bradshaw: East demand concerns, combined with an increased supply of crude oil, as OPEC-plus has announced additional supply increases sooner than previously contemplated.
Chris Bradshaw: Have resulted in a significant reduction in the price of oil which has adverse implications for our customer spending plans.
Despite these adverse developments,
Chris Bradshaw: We continue to have a positive outlook for Bristow's offshore energy services business.
Chris Bradshaw: Deepwater Projects remain favorably positioned within oil and gas company portfolios
and the attractive full-cycle economic returns from these projects.
Chris Bradshaw: are likely to drive continued investment in offshore activity for the foreseeable future.
Chris Bradshaw: In summary, we are confident in affirming the company's financial guidance.
Chris Bradshaw: This belief is further supported by the stability of our government services business.
Chris Bradshaw: The heavy weighting of our offshore energy services business to production support activities.
Chris Bradshaw: and the breadth and diversity of the geographic markets we serve.
Speaker Change: I will now hand it over to our CFO for a more detailed discussion of Q1 financial results and our financial output, Jennifer.
Speaker Change: Thank you, Chris. Good morning, everyone. I will begin with a review of Bristow's sequential quarter financial results on my consolidated basis before covering the financial results of each of our segments in more detail.
Speaker Change: Revenue's decreased $3 million, primarily due to lower utilization resulting from seasonality in our other services segment.
Speaker Change: Namely, our Fixing Operations in Australia, partially offset by higher revenues from new contracts and government services.
Speaker Change: Revenue is from offshore energy services or OES to remain consistent with last quarter.
Speaker Change: Adjusted EBIT dial with 58 million this quarter, consistent with last quarter.
Speaker Change: While Q1 is generally our seasonly lowest revenues period, our costs for lower primarily driven by lower operating and administrative expenses offsetting the lower revenues.
Speaker Change: Focusing on our OES segment, revenues in Europe be increased 4.5 million due to lower utilization in the UK.
Speaker Change: Revenue is in Africa, increased 2.2 million due to additional aircraft capacity and higher utilization.
Speaker Change: and revenues in the Americas increase 1.9 million due to increased utilization of heavy helicopters in the U.S.
Speaker Change: The 3.1 million increase in adjusted operating income from OES was primarily due to lower repairs and maintenance expenses of 7.1 million.
Speaker Change: partially offset by 3.2 million of increased expenses due to higher training costs in the current order and the absence of a property tax benefit recognized in the receiving order.
Speaker Change: Moving on to government services, revenues were 3.4 million higher, primarily due to the Irish Coast Guard contract, which began its transition in late 2024, adjusted operating income for the segment with 3.9 million higher this quarter.
Speaker Change: Finally, revenues from other services were 6 million lower as a result of lower seasonal activity in Australia. Unfavorable foreign exchange rate impacts and lower dry leasing revenues.
Speaker Change: Adjusted operating income with $4.5 million lower this quarter due to these lower seasonal revenues which were partially offset by a decrease in operating expenses, also related to activity.
Thank you.
Speaker Change: Turning now to cashflow, working capital uses a $56.4 million this quarter, primarily resulted from an increase in the cash receivables due to the timing of customer payment.
Speaker Change: An increase in cost related to the start-up of new government services contracts, and increases an inventory to support new contracts and to mitigate risks related to supply chain challenges.
Speaker Change: As a result of these working capital changes, cash use and operating activities was 0.6 million
Speaker Change: Bristow continues to benefit from a strong balance sheet and liquidity position.
Speaker Change: As of March 31, our available liquidity was approximately 254 million and we have now funded 86% of the capital investments needed for our new government services contract.
Speaker Change: with the remaining capital investments expected to include in the coming month.
Speaker Change: As we continue to transition on our two new government services contract and begin to execute on our capital allocation target.
Speaker Change: We remain mission focused on maintaining a strong balance sheet and believe that our business model will continue to generate healthy cash loads.
Moving on for those financial outlook.
Speaker Change: Though additional uncertainty has been introduced to the global economy and to the oil and gas industry in recent months, for the reasons Chris noted.
Speaker Change: We are affirming our previously reported 2025 revenues guidance of 1.4 billion to 1.6 billion and adjusted EBITDA range of 230 to 260 million.
Supply Chain Dynamics, the Impact Aircraft Availability
Speaker Change: Customer activity levels influence by global energy demand and the exchange rates of foreign currencies relative to the US dollar, namely the British Crown Sterling and the Euro, are among the primary factors that could bias results to either end of our guidance range.
Hey!
Speaker Change: In our earliest segment, we expect market conditions to remain supportive in 2025 and to generate adjusted operating income of approximately $190.210 million on revenues of $950 million to $1 billion.
A significant improvement in profitability compared to 2024.
Speaker Change: In Europe , we expect activities of levels to remain mostly stable in 2025.
Speaker Change: So in general, the North Sea is a mature market with limited growth opportunities.
Thank you.
Speaker Change: We believe the Americas and African markets will continue to contribute positively to growth in our 2025 results.
Speaker Change: In our government services segment, 2025 remains a transition year as we encourage startup costs related to the new contracts while the cadence of revenues is tied to a schedule that commences as each base becomes fully operational.
Speaker Change: The strong margins and earning potential of this business will not become fully avidate until the operations and revenue for these contracts have fully ramped.
Speaker Change: We expect this segment to contribute meaningfully to our financial results and the stable long-term cash flow with high credit quality customers will provide valuable diversification and reliable capital returns to our investors, well into the middle of the next decade.
Chris Bradshaw: At this time, I'll turn the call back to Chris for the remarks. Chris?
Chris Bradshaw: Thank you. We continue to believe that Bristow is well-traditioned as the global leader in vertical flight solutions.
Chris Bradshaw: The company's current fleet includes 211 aircraft, low-curated across six continents in 18 different countries.
Chris Bradshaw: Bristow is the world's largest operator of each of the S-92 AW-189 and AW-139 helicopter models.
Chris Bradshaw: which remained the most in-demand models for both offshore cruise transportation and
Chris Bradshaw: In our offshore energy services business, we continue to have an optimistic outlook for a long duration of cycle.
Chris Bradshaw: The Fleet Status for Offshore Configures, Heavy and Supermedium Helicopters, remains at or near
Chris Bradshaw: With current manufacturing lead time that approximately 24 months, the ability to bring in new capacity is constrained.
Chris Bradshaw: In our government services business, we are focused on the ongoing launch of SAR services for the Irish Coast Guard and the transition of operations to the UK SAR2G contract to United Kingdom.
Chris Bradshaw: Those are large and complex projects with extended transition timelines running through the beginning of 2026 in Ireland and through the end of 2026 for UK SRTG.
Chris Bradshaw: While we are facing challenges along the way with unexpected regulatory and supply chain delays, our commitment to delivering successful outcomes for the government and communities we serve remains unwavering.
Chris Bradshaw: Bristow's vision is to lead the world in innovative and sustainable vertical flight solutions.
and we are committed to leading responsibly.
Chris Bradshaw: Ristow's fourth annual sustainability report will be published in the coming week, which reaffirms our steadfast dedication, responsible growth, and environmental protection for our employees, as well as the diverse communities we take great pride in serving.
Chris Bradshaw: Our overall goal remains consistent. We seek to minimize our environmental footprint while maintaining the resilience of our operations through an inclusive workforce and an act of outreach in the places where we work and call home.
Chris Bradshaw: In conclusion, while macroeconomic risk and uncertainty have increased significantly in recent months
Chris Bradshaw: The outlook for Bristow's business remains positive and we are confident in affirming the company's financial guidance for both 2025 and 2026.
Chris Bradshaw: This confidence is supported by the stability of our government services business.
The heavy weighting of our offshore energy services business.
and more stable production of floor activities.
Chris Bradshaw: and the breadth and diversity of the geographic markets we serve.
with that. Let's open the line for questions.
Speaker Change: At this time, I would like to remind everyone in order to ask a question, press star, then the number five on your telephone keypad. If you'd like to withdraw your question, press star and the number five once again.
Speaker Change: and will pause for a moment to compile the Q&A roster.
Speaker Change: OK, our first question will come from Josh Sullivan with the Benchmark Company.
Your line is that open? Please go ahead.
Take good morning!
Morning, Josh.
Speaker Change: You know, given the uncertainty in the broader market, you know, a lot of companies in the space of suspended guidance and you guys are reaffirming that in 26 as well, you know, is this a wait and see approach to tariffs or what gives you confidence to continue with the outlook here?
Speaker Change: Given the factors that you referenced, what's going on in the broader economy, we did take a hard look at our outlook.
Speaker Change: starting first with with the view on the macro and the Wiley gas industry particular focus on offshore activity and we're having customer conversations regularly with essentially daily to make sure that we understand our customers plan.
Speaker Change: and expectations for the aircraft that we have located around the world and all of these factors and the combination gave us the confidence to reaffirm our previously issue guidance for not just this year, but also next year in 2026 as you reference. And I would say
Speaker Change: Josh, that's further supported by a few factors. One, the stability that exists in the cash tools from our government services business and those long-term contracts.
Speaker Change: Bradth and diversity of the geographic markets that we serve. So again, that gave us in summary the confidence to reaffirm guidance for this year and there.
Hook
Speaker Change: And then you guys recently announced a long-term S-92 agreement with Sikorski. Can you just expand on the benefits of the new agreement and what entails?
Speaker Change: Yes, happy to do that. We were very pleased to reach this agreement with Sukorski for S92 support for Bristow's global fleet of S92 helicopters, both search and rescue as well as offshore energy.
Speaker Change: The primary benefits are that this provides us price stability and price stability for a large portion of our fleet well into the next decade, which provides, again, better stability and ability to manage the business that we have from that fleet globally.
David Smith, David Smith, David Smith, David Smith
Speaker Change: And just as far as the CAPEX and investment in the search and rescue Irish opportunity, how helicopter OEMs then with deliveries at this point? What's left in that 14% of the CAPEX related to the contract? Are you confident in that 86% at this point?
David Smith, David Smith, David Smith, David Smith
Speaker Change: Sure, yeah, I mean, the helicopter deliveries that have been, you know, some supply chain challenges for the OEMs as well as, you know, as we've experienced but we've had been receiving the helicopters, we have a couple left to receive and so we're fairly confident in that number based on the couple helicopters we have left to receive.
Speaker Change: and I said the remaining amount of CapEx probably is more related to the infrastructure and modifications, not necessarily the air front itself.
. . . . .
Speaker Change: Let me get just one last one in regard to the advanced air mobility, opportunity, Norway moving along with ECC health lights, any updates there?
Speaker Change: Happy to be part of an important new project there. Last year, Avonore and the Norwegian Civil Aviation Authority entered into a new collaboration agreement to establish Norway as...
Speaker Change: an international test arena for zero in low emissions aircraft. And in March of this year, the first formal agreement for demonstration flights was fine with U.S.-based aircraft manufactured automated technologies and us, the Pristow, as the operator.
The goal of this new capterina is to-
Speaker Change: demonstrated on a real-world basis and gained knowledge from operations and learning to prepare the ecosystem for the foundation of this future industry.
Thank you for your time. Thank you. Thank you.
Good, thank you for the time.
Thanks Josh
Speaker Change: The next question comes from the line of Steve Silver with Argus Research. Your line is not open. Please go ahead.
Steve Silver: Thanks operator, and thanks for taking my questions. My first question is given the majority of Bristow's businesses outside the U.S. hoping to provide a little color on maybe some of the specifics of the potential cost exposure in a higher-terror environment.
Speaker Change: Good morning, Steve, and thank you for the question. As you noted, the vast majority of our revenues about 85% are generated from activities outside the US.
Speaker Change: for the portion that is generated here in the US. We do have some exposure on the import of dumb aircraft parts.
Speaker Change: from foreign countries, namely Europe , into the US to support the ongoing repairs and maintenance of those US-based aircraft. But in the context of our overall financial results and our overall financial outlook, we do not expect this to have a material impact on our financial.
Speaker Change: Great, and one more if I may. It sounds like the use of cash in the quarter was more of a timing issue. I'm just curious as to whether you expect anywhere near the current level of working capital uses throughout the rest of the year.
Steve Silver: Thank you. Good morning. The short answer is no, but a little more detail you're right. It is really timing.
Speaker Change: They're particularly with our customers and really this was on the government services side, not...
Not related to the Lincoln account, just the timing
Speaker Change: on that. We do have some pre-operation costs for those contracts, the service of those contracts that will continue, but at more muted levels, and we will continue to invest in inventory where need be.
Speaker Change: to protect us on the supply chain side. But again, the short answer is no, we shouldn't see these same levels going forward.
David Smith, James West, Patrick Fitzgerald, David Smith, David Smith
Great. Thanks so much for that strip call.
Speaker Change: Thank you. The next question comes from the line of Laura Lee with Don't You Bake. Your line is not open, please go ahead.
Laura Lee: Hey, thank you for taking my question. And I think you mentioned some like supply chain challenges and the constraints. So have you seen any changes or improvements in the
Laura Lee: Yes, we have, fortunately, there have been some incremental improvements that
Laura Lee: Related specifically to the S-92 fleet, where Sikorski has addressed some of the delays related to certain components.
Laura Lee: We are still experiencing delays on other components, both for the S92 fleet as well as some of our other helicopter fleets.
Laura Lee: That's a challenge we've been dealing with for a few years now. It's not unique to us in this space. It's one that is really impacting the broader overall aviation industry, but we have seen some incremental improvements in recent months.
Speaker Change: Okay, gotcha. And also we talk about like the Evito Tessler in Norway later this year. So are you expecting to like stand at this goat?
We certainly are hoping that will be the case.
Speaker Change: Excited to be a part of that project, which is really one of the first of its kind in anywhere in the world. It's a well-structured project in our view and that you have.
Speaker Change: The government and the regulatory authorities there are doing really sponsoring this international test arena. You have a beta as the OEM.
Speaker Change: coming in with the aircraft to provide that level of support, and then an opportunity for us at Bristow to operate the aircraft, to demonstrate in a real world what they're able to do, prove out some of the assumptions that-
Speaker Change: had existed in the development of the aircraft and factor in some of the real-world things that happened around whether or another environmental condition.
Speaker Change: We expect that the results from these test flights will be positive and we think that is truly the case that we're likely to see an expansion of these sort of operations both in Norway and elsewhere in the world.
Anthony Garchman, I appreciate it.
Thank you
Speaker Change: Our final question today comes from Alex Westle with Arctic Securities. Your line is not open, please go ahead.
Alex Wessel: Hey guys, thanks for taking my question. I just wanted to go back to the offshore
Speaker Change: Energy Piece a little bit, and obviously oil prices.
Alex Wessel: I've continued to soften this year. Could you give sort of any indication?
Alex Wessel: of what price you're going to start seeing impact on the business and the outlook.
Good morning, Alex. And thank you for the question.
Alex Wessel: Today, we're not seeing any tangible impacts on offshore activity as we look at the
Alex Wessel: and the projects we're supporting for our customers and their plans for upcoming quarters.
Alex Wessel: So no impact as of now, but we're fortunate in that deep water projects are really well positioned within the portfolios of these oil and gas companies we believe that they offer.
Alex Wessel: Attractive full cycle economic returns relative to some of the other investment opportunities they have within their portfolio So we believe that the level investment will continue for the foreseeable future really at a at a Brent price
Alex Wessel: Adder above $60 a barrel. We don't anticipate any material impact on activity for our business.
Speaker Change: All right, great. So, it's fair to say there hasn't been any impact on the offshore activity so far.
Speaker Change: Correct. As of today, we haven't seen any tangible impacts on the level of offshore activity that we're supporting today or expected support in the coming quarter.
David Smith, David Smith, David Smith,
All right. Thank you. Appreciate it.
Thank you [inaudible]
Speaker Change: This concludes the question and answer session. I'll now turn the call back over to Christopher Bradshaw for closing remarks.
Christopher Bradshaw: Thank you Luke and thanks everyone for joining the call. We look forward to connecting again next quarter in the meantime stay safe and well.
Speaker Change: This concludes today's call. You may now disconnect at any time.