Bristow Group Inc. 2026 Q2 Earnings Call

Thank you, Emmy. Good morning, everyone, and welcome to Bristow Group's second quarter of 2026 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 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 will now turn the call over to our President and CEO.

Chris? Thank you, Red. I'll begin with a brief note on safety, which remains Bristow's number one core value and highest operational priority.

The company has delivered on our goal of zero air accidents year to date 2026. With regard to occupational safety, we are pleased that the number of lost workdays is down from this time last year, and we are on track to achieve our third consecutive year of fewer lost workdays. I would like to thank everyone on the Bristow team for their continued commitment to play safety first every day. We closed on the acquisition of Berry Aviation on July 13th, and we are excited to welcome the Berry team to Bristow. Headquartered in San Marcos, Texas, Berry Aviation operates a fleet of more than 20 aircraft, primarily providing military and defense aviation services across multiple countries.

Through its government services offering, Berry provides a broad range of services such as special missions, ISR operations, MRO services, training and mission support, and unmanned aerial systems design and development capabilities. Berry's other services consist of on-demand cargo logistics for blue-chip end customers and aftermarket supply chain aviation solutions. Berry has extensive experience supporting all branches of the U.S. military and a record of excellence in completing missions that demand precision, safety, and strict compliance. Bristow and Berry share a cultural emphasis on safety, reliability, and rapid response in complex environments. Through this transaction, customers will benefit from Bristow's scale, operational expertise, and global platform. We now have a presence on six continents across 20 different countries. Berry's specialized capabilities across a range of mission-critical operations and strong customer relationships are complementary to our existing government services operations, better positioning Bristow to compete for long-duration government programs.

The acquisition is expected to enhance the quality of Bristow's earnings through increased exposure to contracted government services and multi-mission aviation activities, supporting a more durable and balanced business profile. The acquisition is also expected to be immediately accretive to Bristow's earnings and free cash flow while bolstering the company's EBITDA margin profile. In a separate initiative, we announced that Bristow is pursuing the sale of our Norway Offshore Energy Services business as part of our longstanding portfolio optimization strategy. The exit is consistent with Bristow's ongoing strategy to deploy assets and resources in markets with attractive margin profiles and value-accretive returns on capital. Bristow remains focused on growing our global offshore energy services business in markets that meet our financial return parameters. We also expect to continue pursuing other opportunities in Norway, such as those in the advanced air mobility space.

We should note that the timing and structure of any sale transaction remains subject to market conditions and other considerations. I would further note that the planned exit of the Norway OES business and the addition of Berry Aviation would have been neutral to Bristow's 2025 EBITDA on a pro forma basis. Turning now to our financial outlook, Bristow's second quarter financial results keep us on track for what is expected to be a transformational year for the company. We are pleased to affirm our adjusted EBITDA guidance range for full year 2026 of $295 million-$325 million, which reflects year-over-year growth of approximately 25%.

The ability to confirm this outlook despite macro uncertainties and continued supply chain challenges that are adversely impacting our government search and rescue contract transitions is a testament to the complementary nature of Bristow's business segments and the benefits provided by the significant geographic and customer diversity in our business model. I'll have more comments on the strong tailwinds poised to benefit the company later in the call. For now, I will hand it over to our CFO for a detailed discussion of Q2 results and our financial outlook.

Jennifer? Thank you, Chris, and good morning, everyone Before we begin, I would like to echo Chris's comments on the acquisition of Berry Aviation.

We are pleased to have successfully closed the deal and welcome the Berry Aviation team to Bristow Group. As we begin consolidating Berry Aviation's financials, we plan to include their special missions, MRO, CRO, and UAS business as part of our Government Services segment, and their on-demand cargo and remaining services as part of our Other segment. Today, I will begin with a review of Bristow Group's sequential quarter financial results on a consolidated basis before covering the financial results and the 2026 guidance ranges for each of our segments. In Q2, Bristow Group's total revenues were $23.1 million higher compared to Q1, primarily due to higher utilization in our Other Services segment and higher fuel revenues and rates in our Offshore Energy Services or OES business.

Adjusted EBITDA was $20.5 million higher in Q2, largely attributable to the increased revenues across our segments and lower repairs and maintenance costs. We are affirming our 2026 guidance ranges of $1.6 billion-$1.7 billion for total revenues and $295 million-$325 million for Adjusted EBITDA. Turning now to our segment financial results. Revenues in our OES segment were $7.3 million higher in Q2, primarily due to higher rates and fuel revenues in Europe and across several key markets in the Americas, while revenues in Africa remained consistent with the preceding quarter. Adjusted operating income in OES was $16.4 million higher this quarter due to higher revenues coupled with lower operating expenses of $4.3 million and higher earnings from unconsolidated affiliates of $2.2 million. In Q2, repairs and maintenance costs were $7.8 million lower, primarily due to higher vendor credits.

Personnel costs were $6.3 million lower due to seasonal personnel cost variations in Norway, while increases in activity and global commodity prices contributed to higher fuel, rate, and other operating costs of $9.9 million. Depreciation and amortization expense was $4 million higher as a result of accelerated depreciation of assets related to a leased facility in the U.S. and capital spare parts associated with the S-76D medium helicopter model that is in the process of being phased out, as I mentioned last quarter. Given the continued performance of our OES business, we are tightening our 2026 revenues guidance and increasing the Adjusted operating income guidance range to $235 million-$245 million for this segment. Moving on to Government Services. Revenues were $4.4 million higher, largely attributable to the commencement of operations at two UKSAR2G seasonal bases and increased rates from annual rate escalations.

Irish Coast Guard revenues were $1.5 million higher due to the full quarter impact of the Waterford base that commenced operations last quarter, and revenues in the U.S. were $1 million higher due to higher utilization. Penalties related to aircraft availability, which has been adversely impacted by continued supply chain challenges, have remained elevated in the current quarter but were consistent with the preceding quarter. While fuel revenues were consistent with the preceding quarter, despite increases in global fuel prices due to contractual lags in rebuilding fuel costs under UKSAR2G. Adjusted operating income was $2.3 million lower, primarily due to higher operating expenses of $6.1 million offsetting the higher revenues.

The commencement of operations at certain UKSAR2G and Irish Coast Guard bases, including full quarter impacts of costs that were previously deferred, increased overtime costs to support the ongoing transition, and one-time salary adjustments related to a labor agreement in the U.K. resulted in personnel costs being $3.3 million higher this quarter. Additionally, increased training, travel between bases, and higher base and facilities costs related to transitions were $1.8 million higher this quarter. Lastly, fuel costs were $1.5 million higher due to higher global fuel prices. While fuel is typically a pass-through, there's a delay between when the company incurs the cost of fuel at prevailing market prices and is then able to recoup the fuel expense under a UKSAR2G. In summary, the lower margins in this segment are expected to be largely confined to calendar year 2026.