Bristow Group Inc. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Safety: 32% decrease in lost workdays in 2024. Tragic air accident in Norway in Feb 2024 (1 fatality), investigation ongoing.
• Financial Performance: Strong Q4 results exceeded upwardly revised outlook. Consolidated revenues up $118M, adjusted EBITDA up 39% in 2024. Cash flow improved, adjusted free cash flow $161M in 2024. Available liquidity as of Dec 31 was ~$312M.
• Segment Realignment: Realigned to three segments (OES, Government Services, Other Services) with changes in revenue classification (e.g., fixed income revenues in Africa reclassified to OES).
• Capital Allocation Framework: Priorities include reducing gross debt to ~$500M by end 2026 (initiating payments in Q2 2025), pursuing growth opportunities (e.g., Australia SAR tender, Middle East SAR privatization), and returning capital to shareholders via quarterly dividends (commencing Q1 2026) and $125M share buyback program.

Segment Performance

• Offshore Energy Services (OES): In 2024, revenues were $113 million higher compared to 2023, driven by higher utilization and increased rates in Africa, Brazil, Americas, and Norway. Adjusted operating income was $84 million higher. Revenue contribution from OES is significant due to strong industry fundamentals and multiyear upcycle.
• Government Services: Revenues were $7.6 million lower in 2024 vs 2023 due to a change in rates from the Dutch Caribbean Coast Guard contract. Adjusted operating income was $10 million lower due to aircraft availability penalties, startup costs for IRIS SAR, and foreign exchange impact. However, long-term contracts (10+ years with extensions) provide stable cash flows and strong margins.
• Other Services: Revenues were $12.6 million higher in 2024 vs 2023 due to higher utilization and increased rates. Adjusted operating income was consistent with prior year as higher revenues were offset by higher operating costs in fixed wing services.

Guidance

• 2025 revenues guidance: $1.4B - $1.6B, adjusted EBITDA $230M - $260M.
• 2026 target guidance: $1.5B - $1.8B revenues, adjusted EBITDA $275M - $335M.
• OES expected to perform well in 2025 despite supply chain headwinds; utilization near 100% due to tight supply-demand. Government Services margins expected to return to 2023 levels by 2026, with 25% increase in adjusted operating income relative to 2022.

Risks

• Regulatory and supply chain challenges in government services projects (e.g., UK SAR supply chain issues).
• Uncertainty around aircraft certification and regulatory timelines for advanced air mobility technologies.
• Impact of tariffs and supply chain disruptions on new aircraft deliveries (e.g., components from Canada, Europe).

Question and Answer

• Q: Jason Vandeil on OES dynamics and net asset value (NAV).

A: Chris Bradshaw discussed OES supply-demand driven by tight fleet supply, Jennifer Whalen explained NAV ($57 per share NAV vs current stock price discount).

• Q: Josh Sullivan on Surinam pricing, capital allocation, growth outlets.

A: Chris Bradshaw noted stable pricing in OES, debt repayment to start in Q2 2025, and potential growth in Australia, Middle East, Europe.

• Q: Savi Syth on US government spending, advanced mobility.

A: Chris Bradshaw mentioned monitoring US government opportunities, advanced mobility potential in Middle East and Africa.

• Q: Nikolai Tomfield on Irish and UK contract ramp-up.

A: Chris Bradshaw stated cleaner earnings picture expected in 2026 and beyond for these contracts.

• Q: Colby Castle on M&A, US tariffs.

A: Chris Bradshaw discussed M&A track record and monitoring tariffs' impact on supply chain for new aircraft deliveries.