Bristow Group: Buy On Strong Q2 Results And Raised Outlook

Core Viewpoint - Bristow Group reported strong second quarter results, exceeding consensus expectations in both revenue and adjusted EBITDA, driven by the offshore energy services segment [1][8] Financial Performance - Revenue for Q2 2023 was $319 million, up from $302 million in Q1 2023, with adjusted EBITDA reaching $39 million, compared to $29 million in Q1 2023 [1] - Adjusted EBITDA margin improved to 12.2% in Q2 2023 from 9.6% in Q1 2023, with cash flow from operations increasing to $18 million from $7 million [1] - Free cash flow was slightly negative at $9 million due to elevated capital expenditures related to new SAR contracts [2][3] Operational Highlights - The offshore energy services segment outperformed expectations, contributing significantly to the overall financial results, while the government business faced penalties [1][8] - One-time items totaling $8.6 million positively impacted Q2 results, including seasonal personnel cost benefits and adjustments for lease payments [2] Future Outlook - The company raised its outlook for 2024 and 2025, anticipating continued profitability increases from new SAR contracts in the UK and Ireland [2][4] - Bristow expects to generate meaningful free cash flow starting next year, which will support potential shareholder returns through buybacks and dividends [3][4] Valuation and Price Target - Adjusted EBITDA estimates for Bristow have been updated to $220 million for 2024, $250 million for 2025, and $310 million for 2026, with a corresponding price target of $45 based on a multiple of 6.5x EV/Adjusted EBITDA [5][6] - The company's net asset value per share is estimated at $44.06, aligning closely with the new price target [7]