Bristow Group, Inc.

VTOL Details

Bristow Group, Inc. (NYSE: VTOL) is a leading global vertical flight solutions provider. By transporting personnel to and from offshore oil and gas production platforms and drilling rigs, the firm provides aviation services to large national and independent offshore energy corporations. In addition, on behalf of the Maritime & Coastguard Agency (MCA), it also offers commercial search and rescue (SAR) services in several nations and public sector SAR services in the UK. VTOL's flying services are offered in four regions: Europe, Africa, the Americas, and the Asia Pacific. As of August 23, 2021, VTOL's market capitalization stood at USD 743.22 million.

Contract Extension with Multiple Companies in Norway: VTOL signed four consecutive two-year contract renewals with Equinor, Shell, and Neptune on July 12, 2021, through April 2024, to sustain its air transportation crew change services for its activities on the Norwegian Continental Shelf (NCS). Further, VTOL also signed a three-year contract renewal through August 2024 with Aker BP, a long-time aviation partner of the firm, to assist with individual transportation and crew change services for its operations in Norway on April 29, 2021. The existing agreement will expire on August 31, 2021.

Q1FY22 Results: The company reported an 11.25% rise in total revenues to USD 300.60 million in Q1FY22 (ended June 30, 2021) compared to USD 270.19 million in Q1FY21. VTOL incurred net losses of USD 14.21 million in Q1FY22 vs. a net profit of USD 71.40 million reported in Q1FY21 due to an increase in operating expenses. As of June 30, 2020, the company's cash balance stood at USD 244.70 million, with a total debt of USD 541.61 million.

Key Risks: Oil and gas activities accounted for 72% of the company's operating revenue in FY21. Accordingly, any downturn or significant effect on the oil and gas industry's economic state might harm the company's ability to recover receivables from customers, resulting in a rise in total credit risk. Furthermore, in the Northern Hemisphere, the fall and winter months have fewer hours of daylight. From December through March, the Gulf of Mexico in the United States has more days of severe weather than the rest of the year, resulting in fewer flying hours. Actual flight hours account for a substantial portion of the company's operational revenues from the oil and gas industry. As a result, extended spells of bad weather can harm the company's operations and financial health.

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's FY1 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 increased by 43.36% in the past 12 months and is currently trading at a higher end of the 52-week range of USD 18.40 to USD 30.82. The stock is currently trading significantly above its 50 and 200 DMA levels, and its RSI Index is at 67.68. We have valued the stock using the EV/EBITDA-based relative valuation methodology and arrived at a target price of USD 27.67. Considering the significant rise in the stock price, we believe the current trading levels adequately reflect the decent business fundamentals and hence, we recommend a "Sell" rating on the stock at the closing price of USD 30.32, up 15.29% as of August 23, 2021.

*All forecasted figures and Industry Information have been taken from REFINITIV.

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