Bristow(VTOL) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q3 2024 was $60.2 million, down from$71.3 million in the previous quarter [5] - Operating revenues increased by $3.9 million due to higher utilization and favorable foreign exchange impacts [5] - Operating cash flows were$66 million, a 96% increase compared to $34 million in the preceding quarter [9] - Adjusted EBITDA guidance for full year 2024 was raised to$220 million to $230 million [4][8] Business Line Data and Key Metrics Changes - Higher utilization and favorable foreign exchange impacts were noted in government services and Fixed Wing services, while lower utilization was observed in America's offshore energy services [5] - Operating expenses increased by$16.3 million, primarily due to higher operating personnel costs and repairs and maintenance [6][16] - The absence of a one-time benefit from the previous quarter related to lease revenues impacted the current quarter's results [5] Market Data and Key Metrics Changes - The Africa region showed increased utilization and performance, exceeding expectations [8] - Positive demand signals were noted in Suriname and Brazil, with expectations for growth in these areas [14] Company Strategy and Development Direction - The company is focused on growing and diversifying its government services business, which is expected to yield attractive long-term cash flow [11] - The offshore energy services sector is believed to be in a multi-year upcycle, supported by tight supply dynamics and limited new helicopter additions [11] - A disciplined capital allocation approach will prioritize protecting the balance sheet while facilitating organic investments and potential returns to shareholders [11][25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's growth accelerating over the next two years, with strong performance expected in the offshore energy services sector [11] - Supply chain challenges continue to impact operations, but overall business strengthening is evident [8] - The company remains positive about utilization and growth potential in the Americas, particularly in emerging markets [14] Other Important Information - The company finalized a new collective bargaining agreement with UK air crews, which included back pay and is expected to have long-term implications [20] - The company has a strong balance sheet with available liquidity of $260 million as of September 30 [9] Q&A Session Summary Question: Factors behind the decrease in utilization in the Americas - Management noted that the decrease was primarily due to a change in accounting for Cougar and the completion of a project in Suriname [13] Question: Outlook for utilization and growth in the Americas - Management remains positive, citing demand signals in Suriname and Brazil, with expectations for growth in these regions [14] Question: Breakdown of the increase in operating expenses - The increase was largely due to higher personnel costs, repairs, and maintenance related to new contracts [16] Question: Thoughts on maintaining the 2025 outlook - Management indicated that 2025 will see continued operationalization of contracts, with significant increases in adjusted EBITDA expected in 2026 [18] Question: Funding for new government contract CapEx - Funding will primarily come from existing facilities and is expected to increase leverage temporarily [24] Question: Update on capital allocation strategy - No material changes are expected, with a focus on protecting the balance sheet and returning capital to shareholders in the future [25]