HI Uplift: Bristow expects ‘accelerating growth over next two years’

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by Mike Stones

15 November 2024

Bristow Group president and CEO Chris Bradshaw was in upbeat mood when he co-hosted the company’s third quarter (Q3) earnings call last week. It wasn’t difficult to understand why. The CEO and Jennifer Whalen, senior vice president and chief financial officer (CFO) revealed Q3 EBITDA of $63.9m, up slightly from $63.7m in Q2. Plus, they raised the operator’s full-year 2024 adjusted EBITDA guidance range to $220 – $230m.

The earnings call, the day after the US presidential election, came a little over a year since Bradshaw told a similar online meeting that Bristow had passed “a positive inflection point”. That followed Q3 2023 net income of $4.3m compared with a net loss of $1.6m in Q2. (The good news continued in Q1 this year when Bristow reported a profit of $6.6m, reversing a loss of $7.9m in Q3 2023).

Behind the buoyant figures are what Bradshaw sees as strong prospects for sustained structural growth as the business takes on new government contracts and benefits from renewed oil and gas exploitation.

Long-term cash flow

“Bristow’s business is performing well today, and we expect the company’s growth to accelerate over the next two years,” Bradshaw told the meeting. “The investments we are making to grow and diversify our leading government services business will result in attractive long-term cash flow yields for the company well into the middle of the next decade.”

In offshore energy services, the industry fundamentals remain positive, he added. The industry continues to be “in the midst of a multi-year up cycle”.

But the upturn, coupled with a tight supply with limited new helicopter additions over the past eight years, had led to long lead times for new builds, according to the operator. “The current effective utilisation for the most relevant heavy and super medium helicopter models is at or near 100%,” said the CEO. “As indicated by the company’s guidance metrics, we expect to generate positive net cash flows in the latter half of 2025 and beyond.”

CFO Wheelan disclosed the operator had now funded 60% of the capital investments needed to service its UK SAR and Irish Coast Guard contracts. The remaining capital investment was predicted to conclude in the next two quarters. But as the business moves into 2026, there will be a more significant increase in adjusted EBITDA as those contracts are fully operationalised, she said.

Irish Coast Guard

Bristow added: “The growth and diversification of the company’s government services business is progressing, as we execute on the transition process for important, long-term contracts with the Irish Coast Guard and UKSAR2G [UK Second-Generation Search and Rescue Aviation service].”

Bristow’s offshore energy services business is benefiting from increased activity, supporting the view that the sector is in the middle of a multi-year growth cycle. Commenting on energy markets in the Americas, Bradshaw noted positive demand signals. Although a young basin, Suriname, on the southeast coast of South America, has “extremely promising exploration finds”. The region will be developing production alongside continued exploration – generating good demand for helicopters.

But it is Brazil that Bristow expects to grow as fast or faster than any other offshore basin worldwide. The company based its optimism on the number of drilling rigs that are coming into the market and the number of SPSOs (subsea production systems) that are expected to be installed in Brazil over the next few years. Also, there are positive demand signals in mature markets, such as Trinidad and the US Gulf of Mexico. “So, we remain very optimistic about the utilisation and outlook for our Americas business the rest of this year, ’25 and beyond,” said Bradshaw.

Supply chain challenges

However, both Whelan and the CEO mentioned that supply chain challenges remained in the industry. Responding to a question from an equity research analyst at The Benchmark Company, Bradshaw welcomed Lockheed’s recent extension on the Sikorsky S-92 gearbox lifecycle. The move will facilitate the return of some of the operator’s S-92s to service over the coming quarters.

But he added: “Unfortunately, there are other components for which we’re still seeing significant delays in both delivery and/or repairs, which is causing still a number of S-92 airframes to remain idle on the ground. So hopefully continued progress can be made on those components as well.”

Bristow began the earnings call by wryly thanking attendees for joining the meeting on what he quipped was “a slow news day”, following the presidential election the day before. And it was to this topic he returned in answer to one delegate’s closing question.

Asked whether Bristow expected more or less regulation to arise from the new administration, Bradshaw first congratulated all those elected to public office. He then told the audience: “I would remind everyone that while we are a US-based company with 15% of our revenues generated in the US, we do earn 85% of our revenues from other countries. So, we are a multinational company with multinational considerations that include foreign exchange rates and a complicated supply chain.”

Bradshaw also hoped for a favourable tariff or trade regime that might impact the supply chain. (The company had an idle S-92 in the US that’s been unserviceable for some time awaiting parts that will be returning to service at the start of next year, he said).

Finally, he noted: “From a global perspective, the business is performing well. We had a very positive outlook for Bristow’s business yesterday, and we have a very positive outlook for Bristow business today.”

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