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Operator: Good day, everyone, and welcome to Bristol Group Reports Third Quarter 2024 Earnings Call. [Operator Instructions]. I would like to turn the call over to Red Tilahun, Senior Manager of Investor Relations and Financial Reporting.

Red Tilahun : Thank you, Robbie. Good morning everyone, and welcome to Bristol Group’s Third Quarter of 2024 Earnings Call. I’m joined on the call today with our President and CEO, 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 the investor presentation on our website. 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 the investor presentation. I’ll now turn the call over to our President and CEO, Chris.

Chris Bradshaw : Thank you, Red and thanks everyone for joining the call on an otherwise slow news day. I want to thank all the Bristow team members around the world for their continued focus on safety, which resulted in very good performance in the third quarter. As always, safety remains Bristow’s number one core value and our highest operational priority. In conjunction with the Company’s strong Q3 financial results, we are pleased to raise Bristow’s adjusted EBITDA guidance for full year 2024 to $220 million to $230 million. Positive demand trends, coupled with a tight supply of offshore helicopters support good visibility for significant improvements in the company’s margins, free cash flow and capital returns. I will now hand it over to our CFO for a more detailed review of Q3 results. Jennifer?

Jennifer Whalen : Thank you, Chris. Today I will begin with the sequential quarter comparison of Bristow’s financial results. EBITDA adjusted to exclude special items, asset dispositions and foreign exchange with $60.2 million for the third quarter of 2024 compared to $71.3 million in the preceding quarter. Operating revenues increased $3.9 million, primarily due to higher utilization and favorable foreign exchange rate impacts in government services and Fixed Wing services, partially offset by lower utilization in America’s offshore energy services and the absence of a one-time benefit in the preceding quarter related to a change in accounting treatment for lease revenues received from tutor. Operating expenses were $16.3 million higher in the current quarter due to higher operating personnel costs, repairs and maintenance and other operating expenses.

The increase in operating personnel costs were related to the finalization of a labor agreement in the UK during the current quarter. The absence of seasonal personnel cost variations in Norway, a one-time benefit related to an adjustment for tax equalization in Suriname and an insurance reserve adjustments recognized in the preceding quarter, which were previously noted in our last earnings call. Excluding the impact of seasonal and non-recurring items, operating personnel cost would have otherwise been $3 million higher in the current quarter, and largely related to increased headcount and support of new contracts. General and administrative expenses were $2 million lower, primarily due to lower professional service fees. As noted in previous earnings calls.

The other income and expense line item is primarily comprised of non-cash, foreign currency gains and losses which we exclude from our adjusted EBITDA calculation. Though supply chain challenges continue to impact us. A review of our third quarter results and 2024 forecasts demonstrate signs of continuing strengthening of our business. As such we have raised our 2024 adjusted EBITDA guidance to $220 million to $230 million. The primary drivers that continue to support our positive outlook and increased guidance include increased utilization and race in Africa, this region has performed better than expected over the course of this year and is expected to maintain its strong performance through the rest of 2024 and into 2025. Higher ad-hoc activity in our Americas and UK OES business so this is expected to reduce in the remainder of the year and higher yields in our scheduled passenger transport, and a short term increase in charter activity in our Fixed Wing business.

Turning now to cash flows. Our operating cash flows were $66 million on positive working capital in the current quarter, compared to $34 million in the preceding quarter, illustrating a 96% increase. We have now funded 60% of the capital investments needed for our UK and Irish Coast Guard contracts. The remaining capital investment is expected to largely conclude in the next two quarters. Finally, Bristow continues to benefit from a strong balance sheet and liquidity position. As of September 30th, our available liquidity was $260 million and we believe that our business model will continue to generate strong cash flows. At this time, I’ll turn the back call back to Chris for further remarks. Chris.

Chris Bradshaw : Thank you. As Jennifer noted, Bristow’s business is performing well today, and we expect the company’s growth to accelerate over the next two years. 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, and we continue to believe that we are In the midst of a multi-year up cycle. This is coupled with a tight supply dynamic with limited new helicopter additions over the last eight years and long lead times for new builds. The current effective utilization for the most relevant heavy and super medium helicopter models is at or near 100%, as indicated by the company’s guidance metrics, we expect to generate positive net cash flows in the latter half of 2025 and beyond.

Bristow has a disciplined and focused capital allocation approach that will prioritize the protection of our strong balance sheet, allow for attractive organic investments like the ones driving our increased financial guidance and facilitate the return of capital to shareholders. With that, let’s open the line for questions. Robbie.

Operator: [Operator Instructions]. The first question is from Chris Lee from Evercore. Your line is now open.

Chris Lee: Thank you for taking my question. I guess my first question is, I was kind of curious to know if you could elaborate on the factors behind the recent decrease in utilization within the Americas region. Additionally, as you raise your 2024 just a bit of guidance, can you provide insights into your underlying assumptions for the Americas specifically, and discuss how you expect utilization to trend in the region through the remainder of the year and into 2025.

Jennifer Whalen: Good morning. Chris, glad you could join us, as I noted in my prepared remarks, there are really two primary drivers for the utilization in lower utilization in the Americas in Q3 really first is the change in accounting for Cougar. If you recall, last quarter, we changed from a cash basis of accounting to accrual basis accounting, which had a benefit in that quarter that didn’t recur. Now that should be fairly stable going forward and also, there was a project in Suriname that completed in over the last quarter that also contributed to the lower utilization.

Chris Bradshaw: In terms of Outlook, we remain positive on utilization and growth potential in our Americas business. The performance of that business for us this year has been consistent with our internal expectations. As we look throughout the region, there are positive demand signals, certainly in Suriname, which Jennifer mentioned, which is an area that’s a young basin, but it’s had extremely promising exploration finds and will be transitioning to a development and production mode here, along with additional exploration going forward. So good demand for helicopters expected in that region of the world. Also, Brazil is an area that we expect to grow as fast or faster than any other offshore basin in the world, with a number of drilling rigs that are coming into the market, as well as the number of SPSOs that are expected to be installed in Brazil over the next few years, and even in the more mature markets in the region, such as Trinidad and the U.S., Gulf of Mexico, we have positive demand signals from our customers, so we remain very optimistic about the utilization and outlook for our Americas business the rest of this year, ’25 and beyond.

Chris Lee: Really appreciate the color. I think my follow up question is, I know that you touched on the offering expenses, Jennifer, the increase of $16 million this quarter. It seems like there’s other key factors at play as well. So I was kind of wondering if you could break down the remaining components of this expense increase and kind of provide the guidance on how we should think about these costs as we move forward.

Jennifer Whalen: Sure. So outside of the personnel cost, which we talked about, which is about $13 million of the $16 million increase in operating expenses, the other two drivers are repairs and maintenance and our other expense. Repairs and maintenance will fluctuate with flight hours and the type of flight hour, not every flight hour is treated as created equal as it relates to which aircraft are flying. Also there is a part of the variation is timing of repairs for some of our aircraft that don’t fall under power by the hour agreement. So that could, that can vary from cycles from when we’re doing major repairs. On the other expense side, that really is related to new contracts. We have new contracts starting for our search and rescue business particularly so as we put on new contracts our that other costs will also increase.

Operator: The next question is from Josh Sullivan from The Benchmark Company.

Josh Sullivan: Congratulations on the quarter here, especially in the face of the slow news day. But just given the momentum and you know, the raised last quarter, this quarter on ’24 you know, as that plays out, what are the current thoughts on ’25 you know, anything to infer on maintaining the ’25 outlook here?

Jennifer Whalen: Sure. Thank you for the question. As a reminder we did increase the 2025 guidance last quarter and that really was to reflect some of the things that we were seeing in ’24, ’25 will be a year where we are operate, still operationalizing the Irish Coast Guard and the UK SAR 2G contracts, while continuing to perform on the offshore energy side of the business. And then that year, really is will then transition into 2026 where you see the more significant increase in adjusted EBITDA as those contracts are fully operationalized.

Josh Sullivan: And then, you know, something like $125 million to go on your new government contract CapEx. Here is that feasible to do in two quarters? You know, is there capacity to execute on that?

Jennifer Whalen: The short answer is yes, these aircraft deliveries are really it’s primarily aircraft deliveries, and it’s for these two contracts. I had mentioned, UK SAR 2G and Irish Coast Guard, which this contracts are beginning to start. So we will take delivery of those and get those ready and get fined.

Josh Sullivan: And then just one on the labor settlement in the UK. What did that entail? Any long term implications there?

Chris Bradshaw: We’ve been in extended negotiations with our air crews in the United Kingdom, going back some time and Q3 we were pleased to finalize and announce a new agreement, new collective bargaining agreement with that workforce, the pilots and tech crews in the UK. As part of finalizing that agreement, we did recognize some back pay, so some pay related to prior periods, including prior years, to catch up. So there was a back pay amount that is one time that’s why you see the larger impact and call out that we noted in Q3 results. But moving forward, we now have a multi-year agreement with that portion of our workforce, and pleased to have an agreement that we think works for both our employee base as well as the company.

Josh Sullivan: Got it and then Lockheed made some changes on the S92 gearbox lifecycle. How has that helped with capacity and any other increase in availability of parts in the supply chain in the future that you see coming?

Chris Bradshaw: Yes, the extension that you noted is helpful, and we’re pleased to see that development. It will allow, it will facilitate the return of some of our S92 to service over the coming quarters. So again, pleased about that. On the other side of the coin, 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 S92 airframes to remain idle on the ground. So hopefully continued progress can be made on those components as well.

Josh Sullivan: And then just one last one, just on, you know, as far as election implications, I mean, do you think or use do you believe that any you know, increased availability of — or reduced regulation is going to increase activity for any of your customers in the near short term?

Chris Bradshaw: First of all, I’d like to share my congratulatory sentiments with all those who were elected to public office yesterday. From a business standpoint, we will actively monitor any changes in policy or other tangible developments that might have an impact on our business. I would remind everyone that while we are a U.S. based company with 15% of our revenues generated in the U.S. We do earn 85% of our revenues from other countries. So we are a multinational company with multinational considerations that include foreign exchange rates, also a complicated supply chain. So we need changes in a tariff or trade regime that might impact the supply chain, or also developments that we will monitor specifically here to the U.S. and the Gulf of Mexico supply chain problems, which we spoke about in the prior question have been our biggest challenge related to your question about the MGB for the S92 we’re pleased to share the news that we do have an idle F92 that’s been unserviceable for some time here in the U.S. waiting parts that we are in the process of returning to service at the beginning of the year.

So that will be a positive benefit for the company in 2025 for our U.S. business. But again, 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.

Operator: [Operator Instructions]. The next question is from Steve Silver from Argus.

Steve Silver: Congratulations to the team on the increased guidance. With the new star contract, the investments being 60% funded at this point, and most of the balance expected to be funded over the next couple of quarters, I was hoping you could provide some color on how that funding is going to take shape, whether it’s expected to come from the company’s free cash flow or from additional debt, and what impact that might have on near term liquidity and leverage.

Jennifer Whalen: Sure. Thanks. Good to hear from you. So we announced very early this year that we had upsized our facility that we have for our UK SAR operations and really that was to help fund the UK SAR 2G part of the contract and then mid-year, we announced this new facility with for the Irish Coast Guard contract, that very favorable rate that we were able to achieve based on that contract. And again, that’s going to help fund the Irish Coast Guard contract. So that will be primarily how we fund the rest of that, how we have been funding these, this CapEx and how we will continue to fund it. So it will increase the leverage some over the next couple of quarters, and then we expect that to then level out to we won’t have the significant CapEx anymore, and the financings will be in place.

Steve Silver: Great. Thanks for that. And one more, I guess, on a related follow up, given the fact that this investment phase is almost behind you and these contracts are on their way to becoming fully implemented, is there any update in your thinking about the capital allocation strategy as you start to look a little further out down the road?

Chris Bradshaw: Thank you for the question, Steve, no material changes to our capital allocation strategy, although I think it is a good opportunity to re-emphasize how we do think about our capital allocation framework. So number one, we’re going to be in a position to generate positive net cash flows in the latter half 2025 and beyond, as you just referenced, and Jennifer commented on once we finished the funding of these large government projects. So we’re going to continue to prioritize the protection of our strong balance sheet. We do have, still a lot of exposure to the oil and gas markets, which can be volatile. We want to make sure that we have a balance sheet which is strong enough to withstand any and all market conditions.

Number two, we want to make sure that we have the flexibility to fund organic growth opportunities, like the ones that are driving the significant increases in the financial guidance that we’ve provided and then third, while doing all of that, we do believe that the company will be in a position to return capital to shareholders, and we’re evaluating whether that might include opportunistic share repurchases and/or a potential dividend strategy. We expect as we get into next year again and complete the funding of these big government contracts, which should largely be concluded in Q1 of 2025 that at that time we’ll be in a position to further crystallize that capital allocation approach.

Operator: There are no further questions in the queue. I will now turn the call back over to Christopher Bradshaw for closing remarks.

Chris Bradshaw: Thank you, Robbie, and thanks again everyone for joining the call, especially with everything else going on today, we appreciate your interest in Bristow. In the meantime, I hope everyone stays safe and well. Take care.

Operator: This concludes today’s call. You may now disconnect at any time you.