Bristow Group Reports Financial Results for Its 2011 Third Fiscal Quarter and Nine-Month Period Ended December 31, 2010

HOUSTON, Feb. 2, 2011 /PRNewswire/ -- Bristow Group Inc. (NYSE: BRS) today reported a 57% increase in net income for the three months ended December 31, 2010 to $41.8 million, or $1.13 per diluted share, compared to $26.7 million, or $0.74 per diluted share, in the December 2009 quarter.  The quarter benefited from year-over-year improvement in the underlying operations and a significant reduction in our effective tax rate primarily resulting from the reversal of deferred tax liabilities recorded in prior fiscal years, which was driven by a global restructuring of Bristow's operations as part of the continuing implementation of our global business strategy.

Revenue for the three months ended December 31, 2010 totaled $317.9 million compared to $303.3 million in the same period a year ago.  Earnings before interest, taxes, depreciation and amortization ("EBITDA") totaled $65.6 million compared to $64.4 million in the December 2009 quarter.  Results benefited from revenue increases in the following business units: Other International (primarily Brazil, Suriname and Russia), Australia and Europe compared to the same quarter a year ago, primarily driven by the addition of new contracts and increases in both price and activity for certain customers.  These increases were partially offset by a lower level of gain (loss) on disposal of assets year-over-year.

Excluding the special items discussed below and the gain (loss) on disposal of assets, our operating income, EBITDA, net income and diluted earnings per share totaled $43.2 million, $64.4 million, $26.3 million and $0.71, respectively, for the three months ended December 31, 2010, and $39.0 million, $60.9 million, $23.8 million and $0.66, respectively, for the three months ended December 31, 2009.  

"As we discussed last quarter, Bristow continued to see improvement in our operational results during our third fiscal quarter," said William E. Chiles, President and Chief Executive Officer of Bristow Group.  "The underlying performance of our business continues to be strong with improving operating margins year-over-year in a majority of our business units.  The amendment to our credit facility completed during the quarter almost doubles our liquidity position while lowering the overall cost of debt.  When combined with the commercial and tax benefits realized as a part of the recent reorganization, our financial results are demonstrating the benefit of the Bristow global team's efforts to deliver on our promises.  

"As we go into the final quarter of this fiscal year, we continue to expect revenue and earnings per share for the current fiscal year to be stronger than fiscal year 2010 as additional newer-technology aircraft go to work for our customers and we focus on improving returns and lowering our after tax cost of capital.  We continue to anticipate a stronger second half compared to the first half of fiscal year 2011," Chiles added.

THIRD QUARTER FY2011 RESULTS

• Revenue totaled $317.9 million compared to $303.3 million in same period a year ago.
• Operating income totaled $46.6 million compared to $39.7 million in the December 2009 quarter.
• EBITDA totaled $65.6 million compared to $64.4 million in the December 2009 quarter.  EBITDA is a measure that has not been prepared in accordance with Accounting Principles Generally Accepted in the United States of America ("GAAP").  Please refer to disclosures contained at the end of this news release for additional information about EBITDA.  
• Net income totaled $41.8 million, or $1.13 per diluted share, compared to $26.7 million, or $0.74 per diluted share, in the December 2009 quarter.  

Our results for the three months ended December 31, 2010 were significantly affected by the following items:

• A reduction in maintenance expense (included in direct cost) associated with a credit resulting from the renegotiation of a "power-by-the-hour" contract for aircraft maintenance with a third party provider, which increased operating income and EBITDA by $3.5 million, net income by $2.9 million and diluted earnings per share by $0.08.
• The early retirement of the 6 1/8% Senior Notes, which resulted in a $2.3 million early redemption premium (included in other income (expense), net) and the non-cash write-off of $2.4 million of unamortized debt issuance costs (included in interest expense) and decreased EBITDA by $2.3 million, net income by $4.0 million and diluted earnings per share by $0.11.
• A reduction in tax expense primarily related to adjustments to deferred tax liabilities that were no longer required as a result of the restructuring during the three months ended December 31, 2010, which increased net income by $16.6 million and diluted earnings per share by $0.45.

Our results for the three months ended December 31, 2009 were significantly affected by the following items:

• Compensation expense included in general and administrative expense incurred in connection with the departure of two of the Company's officers, which decreased operating income and EBITDA by $1.7 million, net income by $1.4 million and diluted earnings per share by $0.04.
• Hedging gains included in other income (expense), net resulting from the termination of forward contracts on euro-denominated aircraft purchase commitments which increased EBITDA by $2.8 million, net income by $2.3 million and diluted earnings per share by $0.06.

During the December 2010 quarter, we experienced a small loss on the sale of aircraft compared to gains during the December 2009 quarter of $2.4 million; however, we continue to see opportunities for sale of our aircraft in the aftermarket.  

Our Europe business unit added three new customers, which along with higher equity earnings from our military training unconsolidated affiliate, FB Heliservices Limited, price escalations under existing contracts and renegotiated rates on contract renewals, increased our operating margin in this market.

Our North America business unit continued to benefit during the quarter from contracts with BP in the U.S. Gulf of Mexico despite a decline in the number of aircraft supporting well control and spill cleanup efforts from five at the end of September to three at the end of December.  This work mostly offset lost business from customers stalled by the deepwater moratorium, which has now been lifted.  A decrease in costs in this market resulted in a slight increase in operating margin.

Our West Africa business was impacted by the loss of a major customer in this market.  However, lower operating expense combined with the addition of new contracts, increased rates on existing contracts and fewer flight delay penalties resulted in improved operating margin.  We are continuing to seek permanent work to replace the earnings associated with the lost work with the major customer.

Our Australia business unit was impacted by higher compensation costs and increased depreciation expense, which despite a favorable impact from exchange rate changes, resulted in decreased operating earnings and margin.

Our Other International business unit's operating margin improved substantially as a result of increased revenue in Brazil, the Baltic Sea, Suriname, Ghana and Russia.  Additionally, our earnings from our affiliates in Brazil and Mexico improved over the prior year quarter.  

YEAR-TO-DATE RESULTS THROUGH DECEMBER 31, 2010

• Revenue totaled $922.7 million compared to $885.4 million for the same period a year ago.
• Operating income was $139.9 million compared to $138.1 million for the nine months ended December 31, 2009.
• EBITDA totaled $200.0 million compared to $200.2 million for the nine months ended December 31, 2009.    
• Net income totaled $101.4 million, or $2.77 per diluted share, compared to $83.6 million, or $2.32 per diluted share, for the nine months ended December 31, 2009.  

Our year-to-date results through December 31, 2010 benefitted from revenue increases in Australia, Europe, West Africa, North America and Other International compared to the same period a year ago, which was driven by the addition of new contracts and increases in rates on existing contracts in excess of reduced activity for certain customers.  

Our results for the nine months ended December 31, 2010 were significantly affected by the following items:

• A reduction in maintenance expense (included in direct cost) associated with a credit resulting from the renegotiation of a "power-by-the-hour" contract for aircraft maintenance with a third party provider, which increased operating income and EBITDA by $3.5 million, net income by $2.9 million and diluted earnings per share by $0.08.
• The early retirement of the 6 1/8% Senior Notes, which resulted in a $2.3 million early redemption premium (included in other income (expense) net) and the non-cash write-off of $2.4 million of unamortized debt issuance costs (included in interest expense) and decreased EBITDA by $2.3 million, net income by $3.9 million and diluted earnings per share by $0.11.
• A reduction in tax expense primarily related to adjustments to deferred tax liabilities that were no longer required as a result of the restructuring during the three months ended December 31, 2010, which increased net income by $17.3 million and diluted earnings per share by $0.47.

Our results for the nine months ended December 31, 2009 were significantly affected by the following items:

• Compensation expense included in general and administrative expense incurred in connection with the departure of three of the Company's officers, which decreased operating income and EBITDA by $4.9 million, net income by $3.9 million and diluted earnings per share by $0.11.
• Hedging gains included in other income (expense), net resulting from the termination of forward contracts on euro-denominated aircraft purchase commitments which increased EBITDA by $3.9 million, net income by $3.0 million and diluted earnings per share by $0.08.
• An increase in tax expense resulting from tax contingency items and changes in our expected foreign tax credit utilization, which decreased net income by $5.2 million and diluted earnings per share by $0.14.

During the December 2010 quarter, we experienced lower gain on aircraft sales, which totaled $3.6 million compared to $13.3 million in the prior year period.  

Excluding these items listed above and gain on disposal of assets in both periods, our operating income, EBITDA, net income and diluted earnings per share totaled $132.8 million, $195.2 million, $82.1 million and $2.24, respectively, for the nine months ended December 31, 2010, and $129.6 million, $187.8 million, $78.9 million and $2.19, respectively, for the nine months ended December 31, 2009.  

CAPITAL AND LIQUIDITY

For the nine months ended December 31, 2010, net cash generated by operating activities was $115.4 million and net cash used in investing activities was $103.3 million.  At December 31, 2010, we had:

• $1.5 billion in stockholders' investment and $725.5 million of indebtedness,
• $232.9 million in total liquidity consisting of $100.9 million in cash and a $132 million undrawn under our revolving credit facility, and
• $105.3 million in aircraft purchase commitments for nine aircraft.

During the December 2010 quarter, we completed the amendment to our bank credit facility, extending the facility for five years and increasing the amount of the facility to $375 million.  The facility consists of a $200 million term loan and a $175 million revolver.  We used proceeds of the term loan and $43 million drawn on the revolver to primarily redeem our 6 1/8% Senior Notes early in December 2010.

CONFERENCE CALL

Management will conduct a conference call starting at 10:00 a.m. ET (9:00 a.m. CT) on Thursday, February 3, 2011, to review financial results for the fiscal 2011 third quarter.  This release and the most recent investor slide presentation are available in the investor relations area of our web page at www.bristowgroup.com.  The conference call can be accessed as follows:

Via Webcast:

• Visit Bristow Group's investor relations Web page at www.bristowgroup.com
• Live: Click on the link for "Bristow Group Fiscal 2011 Third Quarter Earnings Conference Call"
• Replay: A replay via webcast will be available approximately one hour after the call's completion and will be accessible for approximately 90 days

Via Telephone within the U.S.:

• Live: Dial toll free 1-877-941-2333    
• Replay: A telephone replay will be available through February 17 and may be accessed by calling toll free 1-800-406-7325, passcode: 4401176#

Via Telephone outside the U.S.:

• Live: Dial 480-629-9723
• Replay: A telephone replay will be available through February 17 and may be accessed by calling 303-590-3030, passcode: 4401176#

ABOUT BRISTOW GROUP INC.

Bristow Group Inc. is the leading provider of helicopter services to the worldwide offshore energy industry based on the number of aircraft operated and one of two helicopter service providers to the offshore energy industry with global operations.  The Company has major transportation operations in the North Sea, Nigeria and the U.S. Gulf of Mexico, and in most of the other major offshore oil and gas producing regions of the world, including Alaska, Australia, Brazil, Mexico, Russia and Trinidad.  For more information, visit the Company's website at www.bristowgroup.com.

FORWARD-LOOKING STATEMENTS DISCLOSURE

Statements contained in this news release that state the Company's or management's intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements.  These forward-looking statements include statements regarding the impact of activity levels including, business performance, fiscal 2011 results and other market and industry conditions.  It is important to note that the Company's actual results could differ materially from those projected in such forward-looking statements.  Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the Company's SEC filings, including but not limited to the Company's quarterly report on Form 10-Q for the quarter and nine months ended December 31, 2010 and annual report on Form 10-K for the fiscal year ended March 31, 2010.  Bristow Group Inc. disclaims any intention or obligation to revise any forward-looking statements, including financial estimates, whether as a result of new information, future events or otherwise.

(financial tables follow)

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EBITDA is a measure that has not been prepared in accordance with GAAP and has not been audited or reviewed by our independent auditors.  EBITDA is therefore considered a non-GAAP financial measure.  A description of adjustments and a reconciliation to net income, the most comparable GAAP financial measure to EBITDA, is as follows (in thousands):

A reconciliation of our operating income, EBITDA, net income and diluted earnings per share as reported to the calculations of each of these items excluding certain amounts described earlier in this earnings release is as follows:  

SOURCE Bristow Group Inc.