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Bristow Group reports fiscal 2010 third quarter financial results
Bristow Group has reported financial results for its fiscal 2010 third quarter ended December 31, 2009.
For the December 2009 quarter:
-- Revenue was $303.3 million, an increase of 7% from the December 2008
quarter and 4% from the September 2009 quarter.
-- Operating income was $39.7 million, a decrease of 45% from the December
2008 quarter and 26% from the September 2009 quarter.
-- Net income was $27.1 million, a decrease of 43% from the December 2008
quarter and 20% from the September 2009 quarter.
-- Diluted earnings per share was $0.74, a decrease of $0.58 from the
December 2008 quarter and $0.18 from the September 2009 quarter.
-- The following items impacted the comparability of our results between the
December 2009 and December 2008 quarters:
December 2009 Quarter December 2008 Quarter
--------------------- ---------------------
Diluted Diluted
Earnings Earnings
Operating Net Per Operating Net Per
Income Income Share Income Income Share
--------- ------ -------- --------- ------ -------
(In thousands, except per share amounts)
GOM Asset
Sale(1) $ - $ - $ - $37,780 $24,417 $0.69
Departure of
two officers(2) (1,744) (1,448) (0.04) - - -
Aircraft
incident
charge(3) (1,978) (1,642) (0.05) - - -
Hedging
gains(4) - 2,328 0.06 - - -
Tax items(5) - (1,000) (0.03) - 4,001 0.11
--- ------- ------ --- ----- ----
Total $(3,722) $(1,762) $(0.06) $37,780 $28,418 $0.80
======== ======== ======= ======= ======= =====
----
(1) Represents the impact on the December 2008 quarter of the gain
generated from the sale of 53 aircraft, related inventory, spare
parts and offshore fuel equipment in the U.S. Gulf of Mexico (the
"GOM Asset Sale") on October 30, 2008 included in gain on GOM Asset
Sale on the consolidated statements of income.
(2) Represents compensation costs associated with the departure of two of
the Company's officers during the December 2009 quarter included in
general and administrative costs on the consolidated statements of
income.
(3) Represents a charge in the December 2009 quarter related to damage to
an aircraft operating in Nigeria as a result of a flight incident
included in direct cost on the consolidated statements of income.
(4) Represents the impact of pre-tax hedging gains of $2.8 million
realized during the December 2009 quarter due to termination of
forward contracts on euro-denominated aircraft purchase commitments
included in other income (expense), net on the consolidated
statements of income.
(5) Represents the unfavorable impact on our provision for income taxes in
the December 2009 quarter from tax contingency items and changes in
our expected foreign tax credit utilization and the favorable impact
on our provision for income taxes in the December 2008 quarter of a
benefit related to tax elections filed in the December 2008 quarter
as part of an internal reorganization and the resolution of uncertain
tax positions.
-- In addition to the items impacting comparability of results in the table
above, operating income, net income and diluted earnings per share were
also impacted by:
-- A $6.9 million increase in operating income in Australia primarily
resulting from an improvement in our cost structure in this market
since the December 2008 quarter, the addition of aircraft earning
higher rates and a favorable impact from changes in exchange rates
-- A $4.3 million increase in operating income in Eastern Hemisphere
("EH") Centralized Operations primarily resulting from an increase
in cost allocations to other business units and a shift since the
December 2008 quarter to allocate exchange rate exposures to other
operating business units, partially offset by a charge of $1.1
million to reduce the carrying value of obsolete inventory,
-- A $5.2 million increase in other income (expense), net, which
includes the hedging gains of $2.8 million discussed above,
-- A decrease in our effective tax rate to 17.3% in the December 2009
quarter from 25.0% in the December 2008 quarter primarily
resulting from the indefinite reinvestment outside the U.S. of
foreign earnings and our ability to realize foreign tax credits,
-- A $4.2 million decrease in operating income in the U.S. Gulf of
Mexico primarily resulting from decreased demand for aircraft in
this market driven by decreased drilling activity,
-- A $3.7 million decrease in operating income in our Other
International business unit that primarily resulted from the
grounding of our aircraft in Kazakhstan since mid-October 2009,
and
-- A $4.1 million increase in net interest expense that resulted from
lower cash amounts invested and reduced investment performance as
well as less capitalized interest.
-- A $4.1 million increase in net interest expense that resulted from lower
cash amounts invested and reduced investment performance as well as less
capitalized interest.
-- Additionally, our results for the December 2009 quarter were favorably
impacted by changes in exchange rates versus the December 2008 quarter,
which resulted in an increase in operating income of $5.2 million, net
income of $6.2 million and diluted earnings per share of $0.17. These
increases are primarily reflected in our results for Europe, West Africa
and Australia and in other income (expense), net.
-- The following items impacted the comparability of our results between the
December 2009 and September 2009 quarters:
December 2009 Quarter September 2009 Quarter
--------------------- ----------------------
Diluted Diluted
Earnings Earnings
Operating Net Per Operating Net Per
Income Income Share Income Income Share
--------- ------ -------- --------- ------ -------
(In thousands, except per share amounts)
Departure of two
officers(1) $(1,744) $(1,448) $(0.04) $ - $ - $ -
Aircraft
incident charge(2) (1,978) (1,642) (0.05) - - -
Hedging gains(3) - 2,328 0.06 - 849 0.02
Tax items(4) - (1,000) (0.03) - (2,075) (0.06)
Reversal of bad
debt(5) - - - 2,500 1,875 0.05
Mexico earnings
change(6) - - - 1,300 1,075 0.03
--- --- --- ----- ----- ----
Total $(3,722) $(1,762) $(0.06) $3,800 $1,724 $0.04
======== ======== ======= ======= ======= =====
----
(1) Represents compensation costs associated with the departure of two of
the Company's officers during the December 2009 quarter included in
general and administrative costs on the consolidated statements of
income.
(2) Represents a charge in the December 2009 quarter related to damage to
an aircraft operating in Nigeria as a result of a flight incident
included in direct cost on the consolidated statements of income.
(3) Represents the impact of pre-tax hedging gains of $2.8 million and
$1.1 million realized during the December 2009 and September 2009
quarters, respectively, due to termination of forward contracts on
euro-denominated aircraft purchase commitments included in other
income (expense), net on the consolidated statements of income.
(4) Represents the unfavorable impact on our provision for income taxes in
the December 2009 and September 2009 quarters from tax contingency
items and changes in our expected foreign tax credit utilization.
(5) Represents the reversal of a bad debt reserve in Kazakhstan in the
September 2009 quarter included in direct cost on the consolidated
statements of income.
(6) Represents out of period earnings from our unconsolidated affiliate in
Mexico realized in the September 2009 quarter included in earnings
(losses) from unconsolidated affiliates, net on our consolidated
statements of income.
-- In addition to the items impacting comparability of results in the table
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above, operating income, net income and diluted earnings per share were
also impacted by:
-- A decrease in our effective tax rate to 17.3% in the December 2009
quarter from 25.0% in the September 2009 quarter primarily
resulting from the indefinite reinvestment outside the U.S. of
foreign earnings and our ability to realize foreign tax credits,
and
-- A $4.9 million decrease in operating income in our Other
International business unit primarily resulting from the grounding
of our aircraft in Kazakhstan since mid-October 2009.
For the nine months ended December 31, 2009:
-- Revenue was $885.4 million, an increase of 3% from the nine months ended
December 31, 2008.
-- Operating income was $138.1 million, a decrease of 10% from the nine
months ended December 31, 2008.
-- Net income was $84.8 million, a decrease of 15% from the nine months
ended December 31, 2008.
-- Diluted earnings per share was $2.32, a decrease of $0.52 from the nine
months ended December 31, 2008.
-- The following items impacted the comparability of our results between the
nine months ended December 31, 2009 and 2008:
Nine Months Ended
----------------------------------------------------------
December 31, 2009 December 31, 2008
------------------------------ --------------------------
Diluted Diluted
Earnings Earnings
Operating Net Per Operating Net Per
Income Income Share Income Income Share
--------- ------ -------- --------- ------ -------
(In thousands, except per share amounts)
GOM Asset
Sale(1) $ - $ - $ - $37,780 $24,417 $0.71
Departure of
three
officers(2) (4,874) (3,720) (0.10) - - -
Hedging gains(3) - 3,004 0.08 - - -
Tax items(4) - (5,200) (0.14) - 4,700 0.14
--- ------ ----- --- ----- ----
Total $(4,874) $(5,916) $(0.16) $37,780 $29,117 $0.85
======== ======== ======= ======= ======= =====
----
(1) Represents the impact on the nine months ended December 31, 2008 of
the gain generated from the GOM Asset Sale on October 30, 2008
included in gain on GOM Asset Sale on the consolidated statements of
income.
(2) Represents compensation costs associated with the departure of three
of the Company's officers during the nine months ended December 31,
2009 included in general and administrative costs on the consolidated
statements of income.
(3) Represents the impact of pre-tax hedging gains of $3.9 million
realized during the nine months ended December 31, 2009 due to
termination of forward contracts on euro-denominated aircraft
purchase commitments included in other income (expense), net on the
consolidated statements of income.
(4) Represents the unfavorable impact on our provision for income taxes in
the nine months ended December 31, 2009 from tax contingency items
and changes in our expected foreign tax credit utilization and the
favorable impact on our provision for income taxes in the nine months
ended December 31, 2008 of a benefit related to tax elections filed
in the December 2008 quarter as part of an internal reorganization
and the resolution of uncertain tax positions.
-- In addition to the items impacting comparability of results in the table
above, operating income, net income and diluted earnings per share were
also impacted by:
-- A $16.1 million increase in operating income in West Africa
primarily resulting from a favorable impact from changes in
exchange rates and improved pricing,
-- A $19.0 million increase in operating income in Australia
primarily resulting from cost reductions in this market and the
addition of aircraft earning higher rates,
-- A $11.3 million increase in operating income in EH Centralized
Operations primarily resulting from an increase in cost
allocations to other business units and a shift in the current
fiscal year to allocate exchange rate exposures to other operating
business units,
-- A decrease in our effective tax rate to 23.8% in the nine months
ended December 31, 2009 from 26.8% the same period a year ago
primarily resulting from the indefinite reinvestment outside the
U.S. of foreign earnings and our ability to realize foreign tax
credits,
-- An $8.7 million decrease in operating income in the U.S. Gulf of
Mexico primarily resulting from decreased demand for aircraft in
this market driven by decreased drilling activity,
-- A $9.3 million decrease in operating income in Western Hemisphere
("WH") Centralized Operations primarily resulting from an under
recovery of maintenance costs from other Western Hemisphere
business units driven by lower flight hours,
-- A $6.5 million decrease in operating income in Europe primarily
resulting from an unfavorable impact of changes in exchange rates
versus the same period a year ago, partially offset by a full
period's contribution of operating income from our Bristow Norway
operations which were consolidated beginning October 31, 2008, and
-- A $10.6 million increase in net interest expense primarily
resulting from lower cash amounts invested and reduced investment
performance, increased interest expense from our issuance of $115
million of convertible senior notes in June 2008 and less
capitalized interest.
-- A $10.6 million increase in net interest expense primarily resulting from
lower cash amounts invested and reduced investment performance, increased
interest expense from our issuance of $115 million of convertible senior
notes in June 2008 and less capitalized interest.
Capital and Liquidity
-- At December 31, 2009, key balance sheet items, capital commitments and
liquidity sources were:
-- $1.4 billion in stockholders' investment and $717 million of
indebtedness,
-- $107 million in cash and a $100 million undrawn revolving credit
facility, and
-- $117 million in aircraft purchase commitments for 11 aircraft.
-- $117 million in aircraft purchase commitments for 11 aircraft.
-- Net cash generated by operating activities was $69 million and net cash
used in investing activities was $110 million in the December 2009
quarter.
CEO Remarks
"We realized solid operating results in Europe, West Africa and Australia during our third fiscal 2010 quarter," said William E. Chiles, President and Chief Executive Officer of Bristow Group.
"In Latin America, our investment in Lider in Brazil contributed to these positive results but was offset by poor performance from our joint venture in Mexico. In Europe, overall activity levels were strong. We're also seeing robust activity levels in Nigeria despite a challenging political environment. In Australia, our local team continues to make improvements in operations and cost structure and in our activity level.
"The U.S. Gulf of Mexico saw continued weakness, but we have not been impacted to as large a degree as other offshore service companies. Our efforts to maintain stable pricing and to upgrade our fleet to larger, more efficient and more profitable aircraft serving larger projects farther offshore in deeper water has us well positioned for opportunities that might arise.
"As previously announced, we changed our management organization structure to better focus on winning and doing work more effectively. Some aspects of the reorganization will take time to fully implement. We believe that this reorganization coupled with financial flexibility and adequate liquidity have positioned us well to weather the current uncertain market in order to benefit from a turnaround in industry conditions which we believe is likely over the next year or two," Chiles added.
Source: Bristow
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