Bristow Group Inc. today reported a net loss attributable to the Company of $42.6 million, or $1.47 per diluted share, for its fiscal fourth quarter ended March 31, 2021 (current quarter) on operating revenues of $281.5 million compared to a net loss attributable to the Company of $57.1 million, or $1.97 per diluted share, for the quarter ended December 31, 2020 (preceding quarter) on operating revenues of $300.3 million.
The primary drivers of the net loss in the current quarter were the recognition of losses on the extinguishment of debt and merger-related costs.
Earnings before interest, taxes, depreciation and amortization (EBITDA) was $(32.2) million in the current quarter compared to $(12.7) million in the preceding quarter. EBITDA adjusted to exclude special items and gains or losses on asset dispositions was $30.5 million in the current quarter compared to $47.7 million in the preceding quarter.
The following table provides a bridge between EBITDA, Adjusted EBITDA and Adjusted EBITDA excluding gains or losses on asset dispositions. See Reconciliation of Non-GAAP Metrics for a reconciliation of net income, the most directly comparable GAAP measure, to EBITDA and Adjusted EBITDA.
“In addition to challenging market conditions related to the pandemic and depressed offshore oil and gas customer activity, the Company’s current quarter results also reflect the typical seasonality in our business, as the March quarter has historically been the period of lowest flight activity due to fewer daylight hours and more inclement weather days,” said Chris Bradshaw, President and Chief Executive Officer of Bristow.
“Despite the challenging conditions, Bristow generated a substantial amount of free cash flow in the quarter, further demonstrating the resiliency of our business model.”
Bristow reported a net loss attributable to the Company of $56.1 million, or earnings per diluted share of $2.32, for the fiscal year ended March 31, 2021 (“current year”) on operating revenues of $1.1 billion compared to a net loss attributable to the Company of $697.2 million on operating revenues of $1.2 billion for the fiscal year ended March 31, 2020 (“prior year”).
The net loss in the current year resulted in net earnings per diluted share due to the deemed contribution from the conversion of preferred stock included in the income available to shareholders calculation. After the closing of the business combination between Bristow Group Inc. and Era Group Inc. (the “Merger”) on June 11, 2020, the current year includes operating results from legacy Era Group Inc. from June 11, 2020, onwards.
The prior year and periods ending prior to the Merger date only include operating results of legacy Bristow Group Inc.
Furthermore, as a result of the adoption of fresh-start accounting, the Company’s consolidated financial statements subsequent to October 31, 2019 (“Successor”) may not be comparable to the consolidated financial statements prior to October 31, 2019 (“Predecessor”).
Sequential Quarter Results
Operating revenues were $18.8 million lower in the current quarter compared to the preceding quarter.
Operating revenues from oil and gas operations were $21.4 million lower than the preceding quarter. During the current quarter, the Company changed its revenue recognition method for leases to Cougar Helicopters Inc. (“Cougar”) to cash basis recognition, resulting in $9.1 million lower revenues in Canada. Furthermore, revenues decreased due to lower utilization in the Americas, Africa and the Asia Pacific regions.
Operating revenues from U.K. SAR services were $2.8 million higher in the current quarter primarily due to the strengthening of the British pound sterling (“GBP”) relative to the U.S. dollar. Operating revenues from fixed-wing services were $1.9 million higher in the current quarter primarily due to the strengthening of the Australian dollar (“AUD”) relative to the U.S. dollar and higher utilization. Operating revenues from other services were $2.0 million lower due to higher part sales in the preceding quarter.
Operating expenses were $8.7 million lower in the current quarter. Lower personnel costs, due to a decrease in headcount following a reduction in force (“RIF”) during the current quarter, combined with a lower cost of part sales, maintenance costs, training costs and lease costs, were partially offset by higher fuel and freight costs.
General and administrative expenses were $3.1 million higher in the current quarter primarily due to incentive compensation expenses.
Merger-related costs of $16.5 million during the current quarter primarily consisted of RIF costs related to the Merger.
Restructuring costs of $7.9 million during the current quarter were primarily related to separation programs in our Africa and Asia Pacific regions and corporate, which were not directly related to the Merger.
During the current quarter, the Company recognized a loss on impairment of $1.2 million related to helicopters held for sale. During the preceding quarter, the Company recognized a loss on impairment of $51.9 million related to its investment in Cougar and a loss on impairment of $1.4 million related to helicopters held for sale.
During the current quarter, the Company disposed of five S-76C++ helicopters via sales-type lease agreements and disposed of three fixed-wing aircraft for cash proceeds of $1.4 million, resulting in losses of $7.2 million.
During the preceding quarter, the Company sold five S-76C++ medium, two B412 medium, seven B407 single-engine helicopters, and one H225 simulator for cash proceeds of $14.4 million, resulting in gains of $2.0 million.
During the current quarter, in connection with the Refinancing, the Company repaid existing term loans and redeemed its 7.750% senior unsecured notes due December 15, 2022 (the “7.750% Senior Notes”) and recognized a loss on extinguishment of debt of $28.5 million related to the write-off of associated discount balances and early repayment fees.
During the current quarter, the Company recognized an expense of $0.4 million related to bankruptcy trustee fees. During the preceding quarter, the Company recognized a gain of $2.0 million related to the release of the rabbi trust which held investments related to the Company’s senior non-qualified deferred compensation plan for the Company’s former senior executives.
Other income, net of $7.0 million in the current quarter was primarily due to government grants in Australia of $3.8 million, insurance proceeds of $2.6 million and a favourable interest adjustment to the Company’s pension liability of $1.0 million, partially offset by net foreign exchange losses of $1.7 million.
Other income, net of $5.9 million in the preceding quarter was primarily due to government grants in Australia of $3.4 million, a favourable interest adjustment to the Company’s pension liability of $1.1 million and net foreign exchange gains of $0.9 million.
The income tax benefit was $19.1 million in the current quarter compared to the income tax expense of $13.4 million in the preceding quarter. The expense in the preceding quarter primarily related to the variability of earnings in different jurisdictions and the impact of valuation allowances.
Calendar Quarter Results
Operating revenues were $7.1 million higher in the current quarter compared to the three months ended March 31, 2020 (the “prior year quarter”).
Operating revenues from oil and gas operations were $5.3 million lower in the current quarter. Operating revenues in the Africa region were $16.1 million lower primarily due to the end of customer contracts.
Operating revenues in the Europe Caspian region were $11.0 million lower primarily due to fewer helicopters on contract, partially offset by the strengthening of the GBP and Norwegian krone (“NOK”) relative to the U.S. dollar. These decreases were partially offset by increased operating revenues of $21.9 million in the Americas region primarily due to the impact of the Merger.
Operating revenues from U.K. SAR services were $5.5 million higher in the current quarter primarily due to the strengthening of the GBP relative to the U.S. dollar.
Operating revenues from fixed-wing services were $2.7 million higher in the current quarter. Increased revenues in Australia of $5.0 million primarily due to strengthening of the AUD relative to the U.S. dollar and higher utilization were partially offset by decreased revenues of $2.3 million in other regions primarily due to lower utilization.
Operating revenues from other services were $4.2 million higher due to the benefit of the Merger and higher part sales.
Operating expenses were $6.5 million higher in the current quarter. Maintenance costs were $6.2 million higher primarily due to the impact of the Merger, partially offset by lower activity.
Personnel costs were $2.3 million higher primarily due to the impact of the Merger, partially offset by headcount reductions. Insurance costs were $1.6 million higher. These increases were partially offset by decreased other operating costs of $3.6 million primarily due to lower activity and lower lease expense.
General and administrative expenses were $1.1 million higher in the current quarter primarily due to increased professional services fees.
Merger-related costs of $16.5 million during the current quarter primarily consisted of RIF costs related to the Merger.
Restructuring costs of $7.9 million during the current quarter were primarily related to separation programs in our Africa and Asia Pacific regions and corporate, which were not directly related to the Merger.
During the current quarter, the Company recognized a loss on impairment of $1.2 million related to helicopters held for sale. During the prior-year quarter, the Company recognized a loss on impairment of $9.6 million related to its investment in Líder Táxi Aéreo S.A. (“Líder”) in Brazil.
During the current quarter, the Company disposed of five S-76C++ helicopters via sales-type lease agreements and disposed of three fixed-wing aircraft, resulting in losses of $7.2 million.
During the prior-year quarter, the Company disposed of four H225 heavy and one B412 medium helicopters for cash proceeds of $13.6 million, resulting in losses of $0.3 million.
During the current quarter, the Company recognized losses of $0.4 million from its equity investments compared to earnings of $5.8 million in the prior-year quarter. The prior-year quarter included earnings from Líder, which the Company has subsequently exited its equity investment, and from Cougar, which was impaired during the preceding quarter.
During the current quarter, in connection with the Refinancing, the Company repaid existing term loans and redeemed its 7.750% Senior Notes and recognized a loss on extinguishment of debt of $28.5 million related to the write-off of associated discount balances and early repayment fees.
During the current quarter, the Company recognized an expense of $0.4 million related to bankruptcy trustee fees. Reorganization items incurred in the prior-year quarter consisted of $6.5 million related to professional services fees for fresh start accounting and $0.7 million related to bankruptcy trustee fees.
During the prior-year quarter, the Company recognized a benefit of $317.5 million related to a decrease in the fair value of the preferred stock derivative.
Other income, net of $7.0 million in the current quarter was primarily due to government grants in Australia of $3.8 million, insurance proceeds of $2.6 million and a favourable interest adjustment to the Company’s pension liability of $1.0 million, partially offset by net foreign exchange losses of $1.7 million.
Another expense, net of $13.7 million in the prior-year quarter was primarily due to net foreign exchange losses of $14.8 million and a favourable interest adjustment to the Company’s pension liability of $1.2 million.
The income tax benefit was $19.1 million in the current quarter compared to $11.1 million in the prior-year quarter due to the variability of earnings in different jurisdictions and the impact of valuation allowances.
Liquidity and Capital Allocation
As of March 31, 2021, the Company had $228.0 million of unrestricted cash and $56.1 million of remaining availability under its amended asset-based revolving credit facility (the “ABL Facility”) for total liquidity of $284.1 million.
During the current quarter, the Company closed a private offering of $400 million aggregate principal amount of 6.875% senior secured notes due 2028 (the “6.875% Senior Notes”).
The Company used a portion of the net proceeds from the offering of the 6.875% Senior Notes, together with cash on hand, to repay its secured equipment term loan with Macquarie Bank Limited, term loans with PK AirFinance S.à r.l. and to redeem its 7.750% Senior Notes.
In the current quarter, cash proceeds from dispositions of property and equipment were $1.4 million and purchases of property and equipment were $3.6 million, resulting in net (proceeds from)/purchases of property and equipment (“Net Capex”) of $2.2 million.
In the preceding quarter, cash proceeds from dispositions of property and equipment were $14.4 million and purchases of property and equipment were $3.9 million, resulting in Net Capex of $(10.5) million. See Adjusted Free Cash Flow Reconciliation for a reconciliation of Net Capex and Adjusted Free Cash Flow.
