Second quarter FY18 earnings presentation Bristow Group Inc. November 9, 2017 Exhibit 99.1
Forward-looking statements Statements contained in this presentation regarding 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 earnings guidance and earnings growth, expected contract revenue, expected liquidity, capital deployment strategy, operational and capital performance, impact of new contracts, cost reduction initiatives, expected original equipment manufacturer cost recoveries, expected financings, capex deferral, shareholder return, 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. Risks and uncertainties include, without limitation: fluctuations in the demand for our services; fluctuations in worldwide prices of and supply and demand for oil and natural gas; fluctuations in levels of oil and natural gas production, exploration and development activities; the impact of competition; actions by clients and suppliers; the risk of reductions in spending on helicopter services by governmental agencies; changes in tax and other laws and regulations; changes in foreign exchange rates and controls; risks associated with international operations; operating risks inherent in our business, including the possibility of declining safety performance; general economic conditions including the capital and credit markets; our ability to obtain financing; the risk of grounding of segments of our fleet for extended periods of time or indefinitely; our ability to re-deploy our aircraft to regions with greater demand; our ability to acquire additional aircraft and dispose of older aircraft through sales into the aftermarket; the possibility that we do not achieve the anticipated benefit of our fleet investment and Operational Excellence programs; availability of employees with the necessary skills; and political instability, war or acts of terrorism in any of the countries in which we operate. 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 annual report on Form 10-K for the fiscal year ended March 31, 2017 and its quarterly report on Form 10-Q for the quarter ended September 30, 2017. 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.
Executive summary and safety review
Q2 FY18 operational safety review AAR prior to FY16 includes commercial helicopter operations for Bristow Group and consolidated affiliates. AAR beginning in FY16 includes all Category A and B accidents for consolidated Bristow operations, including Airnorth, Bristow Academy and Eastern Airways. AAR is per 100,000 flight hours TRIR beginning in FY15 includes consolidated commercial operations, corporate, Bristow Academy, Eastern Airways, and Airnorth employees. TRIR is per 200,000 man hours Continued solid safety performance with full Target Zero in multiple regions in Q2 FY18 STRIVE priority safety improvement through: Initiatives in global pilot and engineer standards and training Completion of our Organizational Safety Effectiveness Survey H225 safety case evaluation is ongoing with local regulators, Airbus, HeliOffshore member operators and clients Air Accident Rate (AAR1) Total Recordable Injury Rate (TRIR2)
We have made significant progress in achieving our FY18 STRIVE priorities ~$130M in cost recoveries expected to be received from OEMs in second half of FY18 Better bottom-line results reflect increased operating leverage from a much lower cost structure Continuing focus on managing risk exposure through enhanced safety analytics Completed Organizational Safety Effectiveness Survey as initial action to refresh our Target Zero safety culture ~$190 million of capex deferrals out of FY18 – FY20 into FY20 and beyond Bristow Academy sale in early November 2017; making difficult decisions concerning each business based on current and future returns Safety improvement Cost efficiencies Portfolio and fleet optimization Revenue growth Increased activity particularly in the U.S. Gulf of Mexico and Norway Improved revenue reflects ability to capture short-cycle opportunities through lower cost and faster hub response
Deferral of ~$190 million of aircraft capex into future periods ~$78 ~$62 1 Net of ~$51M of deferrals pushed out of FY20 1. FY20 aircraft capex includes the ~$62M deferred from FY18 Deferral out of FY18/FY19/FY20 and into future periods
Significantly improved liquidity outlook reflects actions taken thus far in FY18 Liquidity increased ~$96M to $389M during the quarter, primarily due to: Positive operating cash flow of ~$16M including favorable working capital changes of ~$5M Net financing activity of ~$92M We are increasing liquidity guidance by ~$185M for March 31, 2018 to $410M - $450M reflecting: Cost recoveries from OEMs of $130M and capex deferrals of ~$62M ~$16M of positive operating cash flow ~$5M decrease in non-aircraft capex Offset by ~$26M related to an ~$11M reduction in expected FY18 H225 lease deferrals and ~$15M for increased letters of credit and debt issuance costs Q3 – Q4 FY18 operating cash flow range of ~$(30M) to $(10M) is consistent with the guidance given on the following page and equates to full year FY18 operating cash flow guidance of ~$(65M) to $(45M), a increase of ~$10M from the prior guidance. Net capex includes aircraft capex commitments per Note 5 of the 10-Q of ~$3M, plus ~$18M of non-aircraft capex, offset by $10M (low) to $30M (high) of expected aircraft sales (on top of the ~$40M sale of the SAR S-92 completed in Q1). Net financing impact includes debt repayment of ~$29M and amortization of ~$41M per the 10-Q and excludes repayments to the revolver. Cost recoveries from OEMs of $130M plus lease deferrals of ~$4M related to H225s Expected liquidity range as of March 31, 2018 is subject to business, market, and foreign currency uncertainty.
Updated FY18 guidance FY18 guidance assumes FX rates as of September 30, 2017 Operating revenue, adjusted EBITDA and rent for oil and gas includes corporate and other revenue and the impact of corporate overhead expenses Adjusted EBITDA for U.K. SAR and fixed wing (Eastern/Airnorth) excludes corporate overhead allocations consistent with financial reporting. Adjusted EBITDA is a non-GAAP measure of which the most comparable GAAP measure is net income (loss). We have not provided a reconciliation of this non-GAAP forward-looking information to GAAP. The most comparable GAAP measure to adjusted EBITDA is net income (loss) which is not calculated at this lower level of our business as we do not allocate certain costs, including corporate and other overhead costs, interest expense and income taxes within our accounting system. Providing this data would require unreasonable efforts in the form of allocations of other costs across the organization Total aircraft rent and total non-aircraft rent are inclusive of respective component of rent expense for U.K. SAR, Eastern, Airnorth plus oil and gas We are further delivering on improvements to FY18’s financial outlook through G&A / opex efficiencies, capex elimination / deferrals, and other initiatives Items noted in blue have been updated from guidance that was provided in August 2017
We are delivering on our STRIVE priorities with a better than expected quarter and improved liquidity We are proud of the global teams for their commitment and results for our FY18 STRIVE priorities in the face of continued offshore market challenges: Safety improvement Cost efficiencies Portfolio and fleet optimization Revenue growth Increased guidance and improved liquidity runway reflect 1HFY18 operating leverage from cost reductions, hub structure benefits and continued support from our OEM partners Our outlook remains cautious as this offshore downturn continues in spite of benchmark commodity price range stabilizing in the past six months Our oil and gas clients remain guarded and are diverting capital to pay down debt (and sometimes buying back equity) rather than sanctioning significant offshore projects
Operational highlights
Q2 FY18 results Adjusted EBITDA1 $ in millions Operating revenue $ in millions Net loss Adjusted net loss 1) Adjusted EBITDA and adjusted net income (loss) excludes gains (losses) on asset dispositions and special items $ in millions $ in millions
Europe Caspian United Kingdom Norway Turkmenistan $ in millions $ in millions 1) Adjusted EBITDA and adjusted net income (loss) excludes gains (losses) on asset dispositions and special items Operating revenue Adjusted EBITDA1
Africa Nigeria Egypt $ in millions $ in millions 1) Adjusted EBITDA and adjusted net income (loss) excludes gains (losses) on asset dispositions and special items Operating revenue Adjusted EBITDA1
Americas United States Canada Brazil Trinidad $ in millions Guyana $ in millions 1) Adjusted EBITDA and adjusted net income (loss) excludes gains (losses) on asset dispositions and special items Operating revenue Adjusted EBITDA1
Líder Líder adjusted EBITDA1 1) Reconciliation of adjusted EBITDA and leverage provided in the appendix
Asia Pacific Russia Australia Malaysia $ in millions $ in millions 1) Adjusted EBITDA and adjusted net income (loss) excludes gains (losses) on asset dispositions and special items Operating revenue Adjusted EBITDA1
Appendix
Organizational chart as of September 30, 2017 Business Unit (% of current period operating revenue) Corporate Region ( # of helicopters / # of fixed wing ) Joint Venture (# of helicopters / # of fixed wing) * Includes corporate and other Bristow Europe Caspian 54% Africa 14% Americas 17% Asia Pacific 15% BRS Academy / Other 0%* U.K. – 67 / 32 Norway – 28 / 0 Nigeria – 46 / 5 U.S. GoM – 53 / 0 Canada – 8 / 0 Australia – 26 / 14 Brazil – 0 / 0 Egypt – 0 / 0 Russia – 7 / 0 Trinidad – 8 / 0 Florida – 41 / 1 Nevada – 4 / 0 Líder – 44 / 24 PAS – 41 / 7 Guyana – 3 / 0 Turkmenistan – 1 / 0
Next generation aircraft Mature aircraft Fleet as of September 30, 2017
Fleet as of September 30, 2017 (continued) Next generation aircraft Mature aircraft
1) The percentage of LACE leased is calculated by taking the total LACE for leased aircraft divided by the total LACE for all aircraft we operate, including both owned and leased aircraft. See 10-Q Note 5 “Commitments and Contingencies” for more information provided on operating leases 1 Leased aircraft detail as of September 30, 2017
See 10-Q Note 5 “Commitments and Contingencies” for more information provided on operating leases Consolidated fleet changes and aircraft sales *Includes write offs and lease returns
Operating revenue, LACE and LACE rate by region 4 $ in millions LACE rate is annualized $ in millions per LACE Excludes assets held for sale, Bristow Academy, Airnorth and Eastern Airways
Historical LACE count by region
Historical LACE rate by region $ in millions LACE rate calculated as YTD revenue annualized divided by period ending LACE count
Order and options book as of November 8, 2017 Orders that can be cancelled prior to delivery date
NOTE: The company derives market value from observable market data if available and may require utilization of estimates, applications of significant judgment and reliance upon valuation specialists’ and third party analysts’ reports. When using third party reports, the market value is as of the date of such report and is not updated to reflect factors that may impact the valuation since the date of such report, including fluctuations in foreign currency exchange rates, oil and gas prices, and the balance of supply and demand. There is no assurance that market value of an asset represents the amount that the Company could obtain from an unaffiliated third party in an arm’s length sale of the asset, the fleet, or the Company. The net asset FMV disclosed herein includes the pre-grounding value for 16 owned H225s totaling ~$340 million that has not been updated as third party appraisal sources are no longer publishing values for these aircraft as they are grounded. Excluding these aircraft, net asset FMV per share would decrease by $9.55 to $27.68. Net asset FMV and book value per share
Net asset FMV reconciliation The net asset FMV disclosed herein includes the pre-grounding value for 16 owned H225s totaling ~$340 million that has not been updated as third party appraisal sources are no longer publishing values for these aircraft as they are grounded. Excluding these aircraft, net asset FMV per share would decrease by $9.55 to $27.68. NBV of PPE without aircraft includes land and buildings, ground equipment, software, tooling, simulators, other misc. PPE
Adjusted EBITDA margin trend by region Adjusted EBITDA excludes special items and asset dispositions and margin is calculated by taking adjusted EBITDA divided by operating revenue
Historical U.K. SAR performance (1) GAP and U.K. SAR operating results are included within our Europe-Caspian region results. Adjusted EBITDA excludes corporate overhead allocations consistent with financial reporting. Adjusted EBITDA is a non-GAAP measure of which the most comparable GAAP measure is net income (loss). We have not provided a reconciliation of this non-GAAP information to GAAP. The most comparable GAAP measure to adjusted EBITDA is net income (loss) which is not calculated at this lower level of our business as we do not allocate certain costs, including corporate and other overhead costs, interest expense and income taxes within our accounting system. Providing this data would require unreasonable efforts in the form of allocations of other costs across the organization.
Historical U.K. SAR performance (2) GAP and U.K. SAR operating results are included within our Europe-Caspian region results. Adjusted EBITDA excludes corporate overhead allocations consistent with financial reporting. Adjusted EBITDA is a non-GAAP measure of which the most comparable GAAP measure is net income (loss). We have not provided a reconciliation of this non-GAAP information to GAAP. The most comparable GAAP measure to adjusted EBITDA is net income (loss) which is not calculated at this lower level of our business as we do not allocate certain costs, including corporate and other overhead costs, interest expense and income taxes within our accounting system. Providing this data would require unreasonable efforts in the form of allocations of other costs across the organization. Includes only Stornoway, the last GAP SAR base which transitioned to U.K. SAR in July 2017
Historical fixed wing performance (1) Fixed wing operating results are included within their respective regional results. Adjusted EBITDA excludes corporate overhead allocations consistent with financial reporting. Adjusted EBITDA is a non-GAAP measure of which the most comparable GAAP measure is net income (loss). We have not provided a reconciliation of this non-GAAP information to GAAP. The most comparable GAAP measure to Adjusted EBITDA is net income (loss) which is not calculated at this lower level of our business as we do not allocate certain costs, including corporate and other overhead costs, interest expense and income taxes within our accounting system. Providing this data would require unreasonable efforts in the form of allocations of other costs across the organization.
Historical fixed wing performance (2) Fixed wing operating results are included within their respective regional results. Adjusted EBITDA excludes corporate overhead allocations consistent with financial reporting. Adjusted EBITDA is a non-GAAP measure of which the most comparable GAAP measure is net income (loss). We have not provided a reconciliation of this non-GAAP information to GAAP. The most comparable GAAP measure to Adjusted EBITDA is net income (loss) which is not calculated at this lower level of our business as we do not allocate certain costs, including corporate and other overhead costs, interest expense and income taxes within our accounting system. Providing this data would require unreasonable efforts in the form of allocations of other costs across the organization.
Adjusted EBITDA reconciliation Adjusted EBITDA excludes special items and asset dispositions
Adjusted EBITDA regional reconciliation Adjusted EBITDA excludes special items and asset dispositions
Rent by region
GAAP reconciliation See information about special items in 10-Q or earnings release for Q1 FY18 These amounts are presented after applying the appropriate tax effect to each item and dividing by the weighted average shares outstanding during the related period to calculate the earnings per share impact
Líder adjusted EBITDA and leverage Adjusted EBITDA excludes special items and asset dispositions
Debt repayments and amortization as of September 30, 2017
Bank financial covenants Includes a $18.2 million standby letter of credit issued under Bristow Group Inc.’s Revolving Credit Facility as support for Airnorth letters of credit issued by an Australian bank
Adjusted EBITDA excludes gains and losses on dispositions of assets Debt does not include unamortized debt issuance cost Total leverage reconciliation
Bristow Group Inc. (NYSE: BRS) 2103 City West Blvd., 4th Floor Houston, Texas 77042 t 713.267.7600 f 713.267.7620 bristowgroup.com Contact us