Bristow Group, Inc.

VTOL Details

Bristow Group, Inc. (NYSE: VTOL) is a global provider of vertical flight solutions. The company provides helicopter services to national and independent offshore energy companies by transporting personnel to and from the offshore oil and gas production platforms and drilling rigs. It also provides commercial search and rescue (SAR) services in various countries and public sector SAR services in the United Kingdom on behalf of the Maritime & Coastguard Agency (MCA). In addition, VTOL provides its aviation services across four regions, namely, Europe Caspian, Africa, Americas, and the Asia Pacific. As of June 10, 2021, VTOL’s market capitalization stood at USD 767.26 million.

Contract extension with Aker BP: On April 29, 2021, VTOL announced the three-year contract extension until August 2024 with Aker BP, a long-standing aviation partner of the company, to assist personnel transportation crew change services for its operations in Norway. The company will use Aker BP’s fleet of existing S-92 helicopters in Norway to deliver crew change flights out of Bristow's base in Sola, Norway. The current contract ends on August 31, 2021.

Fleet Overview (Source: Earnings Presentation, May 27, 2021)

FY21 Results: The company reported a decline in total revenues to USD 1,178.06 million in FY21 (ended March 31, 2021) compared to USD 1,242.98 million. Net loss reduced to USD 56.28 million in FY21 from USD 697.13 million in FY20. Capital expenditure totaled USD 14.80 million during the fiscal year primarily for helicopter spare parts, facility improvement, and various technological upgrades.

Key Risks: For FY20, the company generated 72% of the operating revenues from oil and gas operations. Any downturn or significant effect in the economic condition of the oil and gas industry could adversely impact the company’s ability to collect the receivables from its customers, subjecting to an increase in the overall credit risk. Moreover, the fall and winter months in the Northern hemisphere have fewer hours of daylight. During December through March, the U.S. Gulf of Mexico has more days of harsh weather conditions than the other months in the year, resulting in lower flight hours during those periods. A significant percentage of the company’s operating revenues from the oil and gas industry is dependent on actual flight hours. Therefore, prolonged periods of bleak weather can harm the company’s business operations and financial health.

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation

(Data Source: REFINITIV, Analysis by Kalkine Group)

• % Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

VTOL Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: VTOL’s share price has decreased by 12.84% in the past 1 week and is currently trading at a higher end of the 52-week range of USD 30.82 to USD 12.76. The stock is currently trading around its 200 DMA levels. We have valued the stock using the EV/EBITDA-based relative valuation methodology and arrived at a target price of USD 29.35. On the technical chart, the next support level is USD 23.71. Considering the expected recovery in offshore drilling, the company’s potential entry into the offshore wind service market, a reasonable balance sheet, current valuation, and associated risks, we recommend a “Speculative Buy” rating on the stock at the closing price of USD 25.52, down by 1.24% as of June 10, 2021.

* The reference data in this report has been partly sourced from REFINITIV.

* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached or if the price closes below the support level.