Bristow Group Q4 2024 Earnings Call Transcript

Skip to Participants
Operator

Good day, everyone, and welcome to Bristow Group Reports Fourth Quarter and Full Year twenty twenty four Earnings Call. Today's call is being recorded. After the prepared remarks, there will be a question and answer session. At this time, I would like to turn the call over to Rud Tilchin, Senior Manager of Investor Relations and Financial Reporting.

Red Tilahun
Red Tilahun
Senior Manager of Investor Relations and Financial Reporting at Bristow Group

Thank you, Angela. Good morning, everyone, and welcome to Bristow Group's fourth quarter and full year twenty twenty four earnings call. I am joined on the call today with our President and Chief Executive Officer, Chris Bradshaw and Senior Vice President and Chief Financial Officer, Jennifer Whalen. Before we begin, I'd like to take this opportunity to remind everyone that during the course of this call, management may make forward looking statements that are subject to risks and uncertainties that are described in more detail on Slide three of our investor presentation. You may access our investor presentation on our website.

Red Tilahun
Red Tilahun
Senior Manager of Investor Relations and Financial Reporting at Bristow Group

We will also reference certain non GAAP financial measures such as EBITDA and free cash flow. A reconciliation of such measures to GAAP is included in the earnings release and our investor presentation. I'll now turn the call over to our President and CEO.

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

Chris? Thank you, Red.

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

I want to thank all the Bristow team members around the world for their continued focus on safety, which is Bristow's number one core value and our highest operational priority. In terms of workplace safety, the company delivered a 32% decrease in lost workdays in 2024 compared to the prior year, which represents a significant HSE performance improvement. With respect to aviation safety, as a reminder, we experienced a tragic air accident during a search and rescue training exercise offshore Norway on 02/28/2024, with six crew members on board. While five crew members were rescued, we tragically experienced one fatality as a result of the accident, and we will carry this loss with us always. The investigation process is ongoing, and we will refer you to the preliminary reports published by the authorities in Norway.

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

We continue to fully cooperate in the investigation process. We do not have any other material updates at this time. While always a difficult transition to make, I will now turn our comments to the company's operational and financial performance. We are pleased to report very strong fourth quarter financial results, which exceeded the upwardly revised outlook range for Q4 and full year 2024. This outperformance was driven by strong growth in our offshore energy services business, where industry fundamentals remain positive and we continue to believe that we are in the midst of a multi year upcycle.

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

In our government services business, we are focused on the ongoing launch of SAR services for the Irish Coast Guard and the transition of operations to The UK SAR2G contract in The United Kingdom. Those are large and complex projects with extended transition timelines running through the second half of twenty twenty five in Ireland and through the end of twenty twenty six for UK SAR2G. While we are facing challenges along the way with unexpected regulatory and supply chain challenge delays, our commitment to delivering successful outcomes for the governments and communities we serve remains unwavering. I will now hand it over to our CFO for a more detailed discussion of financial results and guidance. Jennifer?

Jennifer Whalen
Jennifer Whalen
Senior VP & CFO at Bristow Group

Thank you, Chris. Today, I will begin with a review of Brista's sequential quarter financial results on a consolidated basis before moving on to an introduction of our newly realigned business segment and review of the full year 2024 results on a segment basis. Adjusted EBITDA in the fourth quarter of twenty twenty four was $57,800,000 compared to $60,200,000 in the third quarter. Revenues decreased $11,600,000 primarily due to lower aircraft availability and unfavorable foreign exchange rate impact across all segments, partially offset by the commencement of a new government services contract in Ireland. Operating expenses were $9,600,000 lower due to lower operating personnel costs as a result of the finalization of a labor agreement in The UK in The Third Quarter, lower fuel costs due to fewer flight hours and decreases in global fuel prices and lower repairs and maintenance costs primarily due to decreased power by the hour or PBH expenses.

Jennifer Whalen
Jennifer Whalen
Senior VP & CFO at Bristow Group

These decreases were partially offset by higher costs related to the commencement of the new government services contract. General and administrative expenses were $1,500,000 higher, primarily due to higher incentive compensation costs related to the company's full year financial results. Other expenses of $6,200,000 resulted from foreign exchange losses of $12,600,000 which as noted in previous earnings calls primarily comprises non cash foreign currency gains and losses that are excluded from our adjusted EBITDA calculation. These foreign exchange losses were partially offset by an insurance recovery of $4,500,000 and a favorable interest adjustment to our company's pension liability of $1,700,000 I will now move on to an explanation of our newly realigned business segment and a brief introduction to each operating segment. Due to the recent expansion of our government services business via the addition of new contracts in multiple jurisdictions, we reevaluated the various factors that make our existing service lines of service unique, such as end customer profile, management responsibility and contract dynamics.

Jennifer Whalen
Jennifer Whalen
Senior VP & CFO at Bristow Group

In the fourth quarter of twenty twenty four, we realigned our segments from a single reportable segment Aviation Services to three reportable segments. The first is Offshore Energy Services or OES, which provides aviation services to, from and between offshore energy installations globally. The second is government services, which provides search and rescue or SAR and support helicopter services to government agencies globally. And lastly, other services, which primarily comprise of fixed wing services, providing transportation through scheduled passenger flights and aircraft charter services, dry leasing of aircraft to third party operators and park sales. The realignment of our segment resulted in certain presentation changes that include a reclassification of our fixed wing revenues supporting our energy business in Africa to our OES segment, combining our fixed wing airline operations in Australia into the other services segment, and combining reimbursable and operating revenues as well as combining reimbursable and operating expenses.

Jennifer Whalen
Jennifer Whalen
Senior VP & CFO at Bristow Group

The financial years presented, including our forward looking guidance, have been recast to conform with the revised presentation for ease of comparison. I will now cover our full year 2024 financial results by segment. Frisco's revenues from OES were $113,000,000 higher in 2024 compared to 2023. This increase is attributed to higher utilization and increased rates in Africa, the commencement of new contracts in Brazil, higher utilization in other parts of The Americas and the commencement of a new contract in Norway. This increase in activity and revenues was partially offset by higher repairs and maintenance costs of $20,100,000 and operating personnel costs of $8,700,000 due to the increased activity.

Jennifer Whalen
Jennifer Whalen
Senior VP & CFO at Bristow Group

Adjusted operating income from OES was $84,000,000 higher in 2024. Revenues from government services were $7,600,000 lower than 2023, primarily due to a change in rates after transitioning to the long term contracts with the Dutch Caribbean Coast Guard or DCCG. Adjusted operating income was $10,000,000 lower in 2024, primarily due to aircraft availability penalties related to supply chain challenges in UK SAR, start up costs for IRIS SAR or IRCG and the transition to the long term DCCG contract. However, it is important to note that the duration of these contracts generally lasting ten or more years with additional one to three year extension options provides stable long term cash flows with high credit quality customers, strong margins and reliable capital returns once operations are fully ramped, which I will discuss in more detail when we cover the government services outlook momentarily. Moving on to other services.

Jennifer Whalen
Jennifer Whalen
Senior VP & CFO at Bristow Group

Revenues from this segment were $12,600,000 higher in 2024, primarily due to higher utilization and increased rates. Adjusted operating income was consistent with the prior year as higher revenues were offset by higher operating costs in fixed wing services of $12,700,000 As Chris noted, we are pleased with the stronger than expected fourth quarter, which exceeded our upwardly revised outlook range for Q4 and the full year 2024. Our consolidated financial performance in 2024 culminated in revenues increasing by $118,000,000 and adjusted EBITDA increasing by $66,300,000 which is a 39% increase compared to the prior year. Turning now to cash flows. The $145,000,000 increase in operating cash flows is attributed to the increase in operating income and an improvement in working capital in 2024.

Jennifer Whalen
Jennifer Whalen
Senior VP & CFO at Bristow Group

Additionally, our adjusted free cash flows were $161,000,000 in 2024 compared to $28,000,000 in 2023. Bristow continues to benefit from a strong balance sheet and liquidity position. As of December 31, our available liquidity was approximately $312,000,000 We have now funded 84% of the capital investments needed for our UK and IRCG contracts. The remaining capital investment is expected to largely conclude in the first half of the year. As we have noted in past earnings calls and continue to reiterate now, we believe that our business model will continue to generate strong cash flow.

Jennifer Whalen
Jennifer Whalen
Senior VP & CFO at Bristow Group

This is becoming more evident through our new capital allocation framework. Moving on to Bristow's outlook. At this time, we are confirming our previously reported 2025 revenues guidance of $1,400,000,000 to $1,600,000,000 and adjusted EBITDA range of $230,000,000 to $260,000,000 as well as our 2026 target guidance of 1,500,000,000 to $1,800,000,000 total revenues and adjusted EBITDA range of $275,000,000 to $335,000,000 20 20 4 was a year of increased utilization, rate and full year impact of contract commencement, with Nigeria and Brazil a standout market. And while market conditions in our OES segment are expected to remain constructive in 2025, we expect headwinds from our continued supply chain shortages persist during the year. Additionally, the cadence of our contract renewals is such that more of the contracts would commence in late twenty twenty five or 2026.

Jennifer Whalen
Jennifer Whalen
Senior VP & CFO at Bristow Group

So the more meaningful increases will be visible in 2026. However, given our current utilization levels coupled with unmet lift demand and long lead times for new builds, we expect to perform well, if not better in 2025 as reflected in our OES adjusted operating income range of $190,000,000 to $210,000,000 compared to the $173,000,000 in 2024. Regarding our outlook for our Government Services segment, adjusted operating income for the Government Services segment declined by approximately $14,000,000 from 2022 to 2024, primarily due to startup expenses of $4,000,000 in support of our new IRCG contract higher aircraft penalties in UK SAR of $6,000,000 due to significant supply chain challenges and $4,000,000 in adverse foreign exchange impact. As the transition progresses for both IRCG and UKSRTG contracts, we expect adjusted operating income margins to return to twenty twenty three levels at a minimum and for aggregate adjusted operating income generated by our government service segment to increase by approximately 25% in 2026 relative to 2022. We expect full year impacts in subsequent years will contribute meaningfully to our financial results and the strong margin, stable long term cash flows with high credit quality customers will provide reliable capital returns well into the middle of the next decade, as illustrated on Slide 14.

Jennifer Whalen
Jennifer Whalen
Senior VP & CFO at Bristow Group

We continue to believe the growth in our Government Services segment and diversification of Bristol's revenues will provide long term value to our customers investors as evidenced by the commencement of dividend payment in Q1 twenty twenty six. At this time, I'll turn the call back to Chris for further remarks. Chris?

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

Thank you. As summarized in our press release and Slide 19 of the earnings presentation, we are pleased to announce Bristow's new capital allocation framework with strategic priorities that include protect and maintain a strong balance sheet and liquidity position pursue high impact, high return growth opportunities and return capital to shareholders via opportunistic share buybacks and quarterly dividend payments. Understanding that offshore energy services, our largest business segment, is inherently volatile, we must sustain a robust balance sheet that can withstand all market cycles. As such, the company intends to pay down debt to a balance of approximately $500,000,000 of gross debt by the end of twenty twenty six. At the same time, we will continue to execute on compelling growth opportunities, such as the long term government SAR contracts as well as the attractive opportunities we have to introduce new AW189 helicopters to meet customer demand and boost profitability in our Offshore Energy Services segment.

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

Furthermore, Fristo is committed to return capital to shareholders via a new quarterly dividend program intended to commence in Q1 twenty twenty six with an initial dividend payment of $0.125 per share or $0.5 per share annualized as well as opportunistic share buybacks under the company's new $125,000,000 share repurchase program. We believe this disciplined and focused capital allocation approach provides multiple avenues to create additional value for Bristow's stakeholders. With that, let's open the line for questions. Angela?

Red Tilahun
Red Tilahun
Senior Manager of Investor Relations and Financial Reporting at Bristow Group

Angela?

Operator

Our first question comes from Jason Vandell with Evercore. Jason, please go ahead.

Jason Bandel
Equity Research Analyst at Evercore

Thanks. Good morning, Chris, Jennifer and Red.

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

Good morning.

Red Tilahun
Red Tilahun
Senior Manager of Investor Relations and Financial Reporting at Bristow Group

Good morning.

Jennifer Whalen
Jennifer Whalen
Senior VP & CFO at Bristow Group

Good morning.

Jason Bandel
Equity Research Analyst at Evercore

My first question, let's start with offshore energy services. The business seems to be doing quite well. The outlook sounds constructive. We're kind of used to hearing about white space headwinds and commodity macro headwinds and so forth. So can you guys, I guess, start by highlighting some of the dynamics that are going on in OES and expand a little bit on how you're keeping utilization levels still high currently?

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

Yes. Happy to do so, Jason, and thanks again for joining the call. So I think as we look at our sector, obviously, we are impacted by a lot of the same market drivers that impact other offshore services spaces like the drillers, for example. And we certainly do follow those indicators, especially the floating offshore rig count as that's mostly the water depth and market that we serve. Our equipment sector is really different from that.

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

We have our own supplydemand dynamics. And so what's keeping utilization levels so high and again today they really are at or near 100% effective utilization for the relevant heavy, super medium and medium helicopter models is the fact that we had about a decade's period where there were very few, if any, new deliveries coming into the market. Over that period of time, you had a number of helicopters that were sold into other end markets or were aged out or otherwise disposed out of the available fleet. So there's been a significant tightening of the supply. So as demand has picked up over the last several years, we've resulted in this very tight supplydemand dynamic that's informing those at or near 100% effective utilization levels.

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

And importantly, with a very finite number of OEMs who manufacture helicopters, the lead times today are really two plus years if you're looking for a new aircraft to be delivered. So that's part of what informs our visibility on the supplydemand dynamic for our space over the next couple of years.

Jason Bandel
Equity Research Analyst at Evercore

Great. And if you can dig in a little bit deeper, Chris, just on, I guess, the 2025 outlook here, just some of the key drivers to your growth to maintain that utilization kind of go around the globe here and kind of note one or two or three kind of pockets of strength that you're seeing?

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

Sure. Happy to do that. So for the purposes of this, I'll focus on the OES portion of our business. The markets where we are seeing more growth continue to be in West Africa. Nigeria has been a very strong positive contributor to our business.

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

We expect that to continue in 2025, '20 '20 '6 and really beyond. Also Brazil, Brazil is an area where we put more helicopters on contract, both with Petrobras as well as independent producers there. So Brazil is an area where that has driven growth so far. We expect that to continue particularly in the latter half twenty twenty five and into 2026. And then the Caribbean Triangle, namely thinking about right now for the purposes of these comments Suriname is an area where we're seeing additional projects come up, additional demand for our offshore helicopter services there.

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

So from a growth rate standpoint, those are the markets that I would highlight. But we also have strength in some of our more mature markets like the Gulf Of Mexico, for example. Not the same growth rate given the size, but there is incremental demand here in The U. S. We just started a new S92 contract for a customer here in The U.

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

S. At the beginning of this year. And we see incremental demand over the course of 2025 and 2026 as well.

Jason Bandel
Equity Research Analyst at Evercore

Great. That's helpful, Chris. And let me get one last question in here. In your appendix, you have a slide in the presentation on net asset value. Would love to kind of hear your thoughts on that and the importance of that slide and also hear your thoughts about why you think your stock continues to kind of trade out the discount to that NAV calculation you show on that slide?

Jason Bandel
Equity Research Analyst at Evercore

Thanks.

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

Yes. Thank you for the question, Jason. Once a year, we do have a third party firm that does an appraisal of all of the owned aircraft in Bristow's fleet. So this does not include any attributed value to the leased helicopters. This is really just focused on all the aircraft that we own in the fleet.

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

So this third party appraisal is done on an individual aircraft basis. We roll that up into their estimation of the fair market value of the overall owned aircraft fleet, which is a little over $1,500,000,000 To that, we add the net book value of other tangible assets subtract total debt as well as other liabilities such as deferred taxes. And this year, that resulted in an aggregate net asset value of about $1,700,000,000 which on a per share basis is roughly $57 per share of NAV, which is a significant premium to where the stock price is trading today. In terms of why there is such a discount to that NAV, I'll probably leave that for other market participants to speculate. Obviously, as a management team, we always think our stock price could be higher.

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

That's a given. But we are pleased to release this year's version of the NAV, which again we disclose once a year.

Jason Bandel
Equity Research Analyst at Evercore

Great. Thanks so much for the time. I'll turn it back.

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

All right.

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

Thank you.

Operator

Thank you. Our next question will come from Jason Vandell at Evercore.

Red Tilahun
Red Tilahun
Senior Manager of Investor Relations and Financial Reporting at Bristow Group

I think we just had Jason there.

Operator

I'm sorry. He was he moved up. Okay. I'm sorry about that. Our next question will come from Josh Sullivan at The Benchmark Company.

Josh Sullivan
Managing Director at The Benchmark Company LLC

Can you hear me?

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

Yes. Hi, Josh. Good morning. Good morning.

Josh Sullivan
Managing Director at The Benchmark Company LLC

Good morning. Sorry, just wanted to

Josh Sullivan
Managing Director at The Benchmark Company LLC

make sure. So you just mentioned Surname there as an opportunity for growth. Is pricing coming back in that market? At one point, there seemed to be a dislocation. Are customers changing their perspective there?

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

Good morning, Josh. Thanks again for the question. So we continue to see a really positive, strong, stable pricing across our offshore energy services business. I think that is informed by the tight utilization or the high utilization levels, the tight supply supply and demand dynamic. So when we're looking to bid on new projects or new contracts, that's the type of consistency and sustainability that we're seeing in the pricing in the market right now, and that includes Surname.

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

Really the growth in Surname, I would attribute more to incremental project demand as you have you've had some very successful discoveries, which is prompting the initiation beginning later this year of more development and exploration or sorry, development and production work, as well as it's promoting additional exploration work by other operators who are looking to potentially hit promising reserves like those that have been discovered there already.

Josh Sullivan
Managing Director at The Benchmark Company LLC

Okay, got it. And then I guess just looking at the 2024 results, you beat your own guidance. What was the outsized driver compared to maybe what you saw at the end of Q3?

Jennifer Whalen
Jennifer Whalen
Senior VP & CFO at Bristow Group

Thank you, Josh. Good morning. So we were pleased to deliver a better than expected results for the quarter. There were several items. Africa has continued to be a driver.

Jennifer Whalen
Jennifer Whalen
Senior VP & CFO at Bristow Group

Our OES business is a driver in Africa particularly, but also in Q4 you had both in The Brazil and The UK some attractive ad hoc opportunities as well to help drive that.

Josh Sullivan
Managing Director at The Benchmark Company LLC

Got it. And then I guess just excuse me, relatedly as we look at 2025, why keep the current guide then? What are the major puts and takes to 2025, I guess?

Jennifer Whalen
Jennifer Whalen
Senior VP & CFO at Bristow Group

Sure. We always knew that 2025 was going to be a transition year with both The UK Star two gs and the Irish Coast Guard contracts ramping up. Our OAS business continues to do well. However, as I noted in my prepared remarks, we do expect supply chain shortages to persist. In addition, many of our contract renewals commenced in late twenty twenty five or 2026, so the impact of those really get reflected in 2026 and beyond.

Jennifer Whalen
Jennifer Whalen
Senior VP & CFO at Bristow Group

And for those reasons, we affirmed the guidance as we had put it out previously.

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

Which I think just if I could add there, I think is a positive statement made made in light of what's going on elsewhere and in this climate for the offshore services space. Hopefully, it's sending a positive message that we can affirm our outlook for both 2025 and 2026 given the strength that we see for Cristo's business.

Josh Sullivan
Managing Director at The Benchmark Company LLC

Got it. And then I guess just one or actually a couple on the new capital allocation framework. Congratulations on that. But if we take the priorities as you mentioned just one by one, maybe first in the debt, how quickly should we expect you to start paying that down?

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

Thank you for the comments on that, Josh. We are pleased to roll that out and introduce and we'll start implementing that. On the debt, we are looking to pay down debt to gross debt balance of approximately $500,000,000 by the end of next year. And we expect to initiate those advance payments beginning in Q2 of this year. So just over the next couple of months, we should initiate those advance debt payments.

Josh Sullivan
Managing Director at The Benchmark Company LLC

And then on the second priority just on growth outlooks, with the Irish SAR and UK contracting, the helicopters associated with that coming to the end at some point, what are the other growth outlets that might require some capital over the next few years?

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

Nothing immediately identified, although we do think there will be some additional opportunities that may come to market. Those include Australia, where we expect that the existing SAR support services there for the government in Australia will come to Tinder over the next couple of years. There might be some opportunities in The Middle East where we're seeing some potential interest to launch search and rescue services to privatize those services for those communities as well as in Europe, probably more around training opportunities that could exist. There's obviously a high focus on military and security in Europe right now. And I think there's an interest in looking to the private sector to help support some of the training necessary to keep pace with that increased defense activity.

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

So those would be a few areas that we would highlight. But again, nothing identified at this time that would impact CapEx over the timeframe you referenced.

Josh Sullivan
Managing Director at The Benchmark Company LLC

Got it. And then I just go on the buybacks. When should we expect those to begin? And on the new dividend policy, what is the strategy there? Is there a ratio or metric that you're following?

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

Thanks for that question as well. On the buybacks, we are planning to take an opportunistic approach to deployment of capital to repurchase shares. So there's nothing programmatic about the timing or cadence for those. It will depend on the situation and prevailing market conditions. On the dividends, our intention is to initiate that quarterly dividend payment beginning in Q1 of twenty twenty six.

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

We're initiating that at $0.125 per share quarterly or $0.5 per share annualized initially. That's informed really by the size of the and the stability of the government services cash flows that the company is expected to generate. So the sizing really I would think about as being a function of our government services business. We do have a long term ambition on being able to grow that dividend payout over time. But again, that's the amount that we intend to initiate in Q1 of twenty twenty six.

Josh Sullivan
Managing Director at The Benchmark Company LLC

Got it. And then just one last one. On the advanced mobility market, you've got some of the eVTOL players talking about international markets being some of the first areas for operations. Obviously, you guys have some very good operating certificates globally. What's your perspective on the market right now and how it might develop over the next year or so?

Josh Sullivan
Managing Director at The Benchmark Company LLC

Yes.

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

We as you're aware, Josh, but just for the benefit of the broader audience, we have spent some time and resources over the last several years now really analyzing that space, advanced air mobility, studying and understanding the technology, understanding the variances between the different products that are being developed and may come to market, the teams that are behind them. We've been in a lot of discussions with those. We have announced some partnerships with some of those. We are interested in how the new technology can be deployed to meet demand from our existing customer base as well as a potential new set of customers. In terms of timing, really those aircraft are still in the certification stage.

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

It's uncertain exactly what those timelines will be. I think there's a lot of optimism that the first Western Advanced Air Mobility products will be certified later this year. Obviously, there's some uncertainty around that, particularly with what's going on with the regulatory authorities that are relevant here. But we'll be optimistic that those timelines will advance. We were pleased to publicly announce that Brista will be participating in really a first of its kind exercise later this year in a regulatory sandbox in Norway, where we will be operating one of those products, namely Beta's eCTOL or conventional takeoff and landing aircraft in Norway on a real world, real life basis, testing that technology in partnership with not just Beta, but also the government there.

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

So that's an exciting opportunity to demonstrate some real world data, help prove out some of the assumptions and use cases, and I think hopefully clarify a visible path to more commercial operations for these technologies moving forward.

Josh Sullivan
Managing Director at The Benchmark Company LLC

Great. Thank you for all the time.

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

Thanks, Josh.

Operator

Thank you. Our next question will come from Savi Syth with Raymond James.

Savanthi Syth
Savanthi Syth
MD - Airlines & Advance Air Mobility at Raymond James Financial

Hey, good morning, everyone. I just had actually a couple of follow-up questions. Just on the government services side, I recognize those are kind of longer term contracts and you've mentioned this a little bit in terms of Europe, but clearly there's a lot of noise around government spending in The U. S. And I was just kind of wondering if you're seeing anything that today that gives you kind of reason to be more optimistic or have concerns on The U.

Savanthi Syth
Savanthi Syth
MD - Airlines & Advance Air Mobility at Raymond James Financial

S. Side of things?

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

Obviously, there's thanks for the question. There's a lot to follow there. Heavy news flow in The U. S. Certainly.

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

I think our view right now is we expect continuation of the same with some optimism for potential incremental opportunities or growth over time, particularly if the government is focused on being more efficient and thinking about how they can adopt and work with more of a private sector model to capture some of those efficiencies, that could be an incremental opportunity. But we will continue to actively monitor the news flow and look to see where we could potentially glean some of those opportunities for Bristow.

Savanthi Syth
Savanthi Syth
MD - Airlines & Advance Air Mobility at Raymond James Financial

Appreciate that. And just a follow-up on that kind of advanced mobility side of the world. I realize it's still very early days across, but if you look at your operations globally, where do you think it will be kind of easier to initiate or where there might be some more demand to initiate some of these operations?

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

Yes. Our view is that it could be outside of some of the major countries and regulatory bodies. So maybe not The U. S. Or Europe, but maybe some of the first places where you can actually put these to work at scale would be in places like The Middle East, where you have a lot of interest, very heavy state sponsorship that can make things like that happen quickly or in Africa, where again there's perhaps fewer hurdles there, the launching operations of this nature.

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

So in things that we're looking to do either directly with the aircraft manufacturers or in partnership with other players in the space, those are some of the areas that could move more quickly than others in our view.

Savanthi Syth
Savanthi Syth
MD - Airlines & Advance Air Mobility at Raymond James Financial

Helpful. Appreciate it. Thank you.

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

Thank you.

Operator

Thank you. Our next question will come from Nikolay Tomfield with Fearnley Securities.

Nicolai Tørnfeldt
Nicolai Tørnfeldt
Equity Research Analyst at Bristow Group

Hi there. Good morning. So I believe most of my questions already has been covered, but just one final question from my side. With the Irish Coast Guard and The UK Star two gs contract being in sort of, call it, the transition phase, when do you sort of believe that we when do you anticipate that we will see the full ramp up and the full earnings potential with these contracts?

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

You'll start to see a cleaner picture in 2026. That won't be a perfectly clean one really. That will be 2027 beyond. But we've always known that both 2024 and 2025 this year were going to be transition years as we're launching those services. We do have a pretty extended period of time of startup costs given the scale and complexity of these operations.

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

So certainly a bit of a drag from some of the start up costs impacting both '24 and '25 profitability margins. But '26 again should be a cleaner picture of the earnings potential, particularly from Ireland and then '27 and beyond should be, we think, an even cleaner view on the earnings potential and profitability from that part of our business, which we expect to carry on well into the middle of the next decade.

Nicolai Tørnfeldt
Nicolai Tørnfeldt
Equity Research Analyst at Bristow Group

All right. That's clear. Thank you.

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

Thank you.

Operator

Thank you. Our final question will come from Colby Fassa.

Analyst

Hi. Thanks for having me on the call. Multiples in the offshore multiples have compressed our offshore energy levered equities in the last twelve months. When you think about opportunities for growth for your business, have you seen any more opportunities become available given the multiple compression in the energy space?

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

Good morning and thank you for the question. In our sector, since Bristow is really the only public company today, there are not directly some other public multiples to reference for the what could be potential M and A opportunities since they're private. Nevertheless, similar dynamics prevail, right? So I think that certainly understand the nature of the question. We'll continue to look at those opportunities and they're relatively finite in number in our space.

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

There's only really a few players out there. But for ones that meet our parameters and become actionable, we will spend the time to analyze them and see if there's a way to implement M and A that could be value added for shareholders. Certainly, we did that with the Era Bristol merger in 2020. We were able to also add via direct acquisition of business to our government services, which expanded us into the Fauquelin and UK MOD business. So we do have, I believe, a track record of being able to execute when the opportunities are there and we'll continue to monitor them and see if any of them become actionable over the near to medium term.

Analyst

Perfect. And as a quick follow-up, I know you've already touched on the U. S. Government a little bit, but tariffs are on again off again and there seems to be no concrete answer. But I wanted to ask how you're thinking about the potential impact to your company given you have some newbuild aircraft coming over the next few years and if you're planning for this impact at all?

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

Yes. That's an important Definitely something that we're actively monitoring. As an aviation operator, we do have a large and very international complex supply chain. So tariffs or really anything that introduces uncertainty to that supply chain would be a potential issue for our business. We do have a portion of our supply chain that comes through Canada engines and other components, and we have a heavy portion of our supply chain that's coming out of Europe.

Christopher Bradshaw
Christopher Bradshaw
President & CEO at Bristow Group

So this is definitely an important issue that we monitor. As it relates to the new deliveries that we're bringing in to the fleet, whether it's the H135 light twins that we're taking delivery of right now or the AW189 orders that we have in place, those are fixed and firm prices, so will not be impacted by tariffs.

Analyst

Thank you. That's all I have.

Operator

Thank you. Thank you. We have no raised hands at this time. I will now turn it back over for closing remarks.

Red Tilahun
Red Tilahun
Senior Manager of Investor Relations and Financial Reporting at Bristow Group

Thank you, Angela, and thanks, everyone, for joining the call. I appreciate the time and look forward to speaking again next quarter. Stay safe and well.

Operator

Thank you. The call has now concluded. Please feel free to disconnect.

Executives
    • Red Tilahun
      Red Tilahun
      Senior Manager of Investor Relations and Financial Reporting
    • Christopher Bradshaw
      Christopher Bradshaw
      President & CEO
    • Jennifer Whalen
      Jennifer Whalen
      Senior VP & CFO
    • Nicolai Tørnfeldt
      Nicolai Tørnfeldt
      Equity Research Analyst
Analysts
Earnings Conference Call
Bristow Group Q4 2024
00:00 / 00:00

Transcript Sections