Recording in progress. Worldwide, a diversified revenue stream and a global geographical presence. The company's aviation services include personnel transport, SAR, medevac, fixed-wing transportation, unmanned systems, and ad hoc helicopter services. Bristow's production-oriented business and multiple long-term government contracts, in tandem with strengthening offshore fundamentals, provide resiliency, growth, and stable cash flow, which we think deserves a much higher multiple than where the stock currently trades. Here with me, as I mentioned, is Chris Bradshaw, who served as President and CEO of Bristow, formerly known as Era Group, since two thousand and fourteen, and as CFO of Era from two thousand and twelve to two thousand and fifteen. Prior to that, Chris was Managing Partner and CFO of US Capital Advisors and was an energy investment banker at UBS, Morgan Stanley, and PaineWebber. He currently serves on the board of directors of the National Ocean Industries Association and HeliOffshore. Chris graduated summa cum laude from Dartmouth College, and with a degree in economics and governance. Chris, thanks for joining me today. Oh, thanks for having us, James. Yeah. It's a good opportunity to be here and talk about Bristow and the market. Absolutely. So, you know, I think we both know the oilfield service industry, last upcycle didn't end so, so well. As we all remember, a lot of speculative new builds, in the industry, led to oversupply. There were a lot of new entrants in the financing markets for helicopters, and the companies were all highly leveraged. And then you had the shale boom, of course, shifting capital to shale versus offshore. And the OPEC plus price war that we had right in front of, COVID, which was not helpful to, to anybody, at all. So what's your view on the current upcycle, particularly the offshore upcycle? I think there's some debate right now, and I'm sure as you, you're in New York City for a conference, I'm sure there's a lot of kind of conversations going on about the oil markets and the debate, but it seems to me, or I believe, at least, the offshore market is a little bit isolated this time. So let me get your thoughts on that. I would agree with you about the offshore market. I think the outlook is very good. I think the visibility on the duration and the strength of this upcycle is very strong, certainly from the indications we have with our customer base, ongoing tendering activity, or further, outlook discussions, all very positive around offshore. So, as you noted, there's a debate about what's going on with macroeconomic, what will oil demand be? You know, I suppose we can have a very legitimate argument about a million barrels here or there in demand, but in terms of the mix of barrels, we think offshore is very favorably positioned because of how compelling the return propositions are within our customer's portfolio. So demand looks strong. I think a key difference from the last upcycle is really the supply side- Right. Which you referenced. Going into late 2014, there were a large number of build orders, a number of which were speculative, and that all occurred right before the downturn began, and it's one of the reasons that we've had a very painful last eight years or so. Right. But that's fundamentally different now. The supply picture for our sector is very tight. We are really at or near 100% utilization for all of the relevant helicopter models in our space. And to maybe further underscore that point, unlike some of the other equipment sectors within offshore and the energy patch, we're at a place right now where customers are actually being forced to share equipment that they would otherwise not share. Okay. Meaning, there are oil companies who would prefer to contract their own dedicated helicopter- Right. and be happy to pay the leading rates for that today, but they're not able to do that because the aircraft aren't there. So they're being forced into sharing relationships. Interesting ... with other customers. So I think that supply picture being constrained as it is, lead times being 2+ years for any new orders, give us a lot of confidence in this cycle. Interesting. And are you seeing, in the offshore markets, are you starting to see, and I know the helicopters doesn't matter what you're drilling for, oil versus gas, but are you starting to see more interest in major gas plays? We are. For example, Trinidad. Yeah. Very mature market. Bristow has been there for more than 60 years, but there's a new deepwater gas play opening up in Trinidad. Right. So the likes of BP and Shell are very interested in exploring that. That's gonna lead to, we believe, more helicopter demand for our services in Trinidad. So short answer to your question would be, yes, we are seeing some gas interest as well. Okay. That's one of our part of our thesis on this cycle, is that gas will start to go from that kind of historical 20-ish% of offshore activity to something much higher. So you guys introduced a three-year plan earlier this year. You increased guidance for this last quarter from 2024 and 2025 in the backdrop of driven offshore fundamentals. Can you describe maybe your thought process on the introduction of the three-year plan and, you know, how you thought about the visibility that you have on those three years, and how comfortable you are with that visibility? Sure. There are really two primary reasons that we have that kind of visibility. First, just to put a little context for those that might be listening, it wasn't that long ago that we didn't issue guidance at all. Yeah. And then we rolled it out for one year, and as you referenced, now we have guidance out through the end of 2026. And one of the reasons we're able to do that is because we do have this very stable, long-term government services business, characterized by ten-year contracts, ten-year-plus contracts. But then also on the offshore energy side, it's really the visibility that gives us the conviction to be able to look that far ahead. And a big piece of that is that supply-demand- Right Balance that we were just talking about. It's gonna take really quite a bit of time for the unmet demand right now to be reached. Right. It's one of the reasons that lead times are so long. That's really why. It's the visibility and the conviction around that cycle and the duration of the cycle in offshore that we're seeing. Right. Right. And then as you guys have branched more into search and rescue, government contracts, how are you thinking about the portfolio of businesses? Are there some that you want to grow further, some you want to shrink further? Some that are obviously more suitable than others, but how are you kind of envisioning, you know, call it a couple of years out, what you want the—what you would like the portfolio to look like for Bristow? Yeah. We like. First thing I'll say is we like the complementary nature of having that stable, long-term government business with the oil and gas exposure, which is inherently volatile, as you all know. Mm-hmm. Yep. Yep. Our strategy on the government side has been to grow and diversify that part of our business by adding new contracts. So a few years ago, we were just in the United Kingdom, really providing search and rescue services to the government. Since then, over the last couple of years, we've added the Netherlands, the Dutch Caribbean properties, some work on the Falkland Islands for the U.K. MOD, and most recently, the Irish Coast Guard contract, which will start later this year. So that's been our focus there, growth and diversification. On the offshore energy side, we believe that market's going to be around for a very long time. Sure. And so a couple of years ago, when, you know, you'll remember the conversations where oil demand was going to drop off a cliff tomorrow. Right. We really remained committed to the market, invested in our business. I would say, doubled down on our leadership position in the global offshore helicopter market. And so that's put us, I think, in a good position now, where what the customers are really valuing, even more than absolute rate right now, is the reliability piece. Right. and access, and knowing that their operations are going to proceed on their schedule. And so I think that's helped us. That focus on continued investment, and again, doubling down on our leadership position there, I think, has helped us. How are you thinking about offshore wind at this point? Clearly, the wind market, offshore wind market, has had its fits and starts, and the turbine guys have had trouble, and even the blade guys have had trouble, but we're pushing forward. We're going forward in the U.S., Europe, Asia. It seems like your hoisting capabilities, especially from your SAR contracts, gives you some expertise that other providers may not have. And so I think you'd be perfectly positioned to support that market. Now, maybe it takes a lot of play off, but how are you thinking about the wind potential? I would separate our view on what's going to happen with offshore wind developments globally. Sure. from what it means for our services. Yeah. On the former, absolutely agree with your thesis. I mean, it's clear that those projects are going to move forward at very substantial volumes and at pretty aggressive paces, depending upon where you are in the world. I think the big question mark for our services remains how cost-conscious that customer base is. Right. What we found is that they are more willing to go with, in many cases, boats, even though they're slower and maybe a lesser service and emit more carbon, because it's lower cost. Yeah. And then on the helicopter side, they're looking for the lowest cost option. Right. And so it's been mostly smaller, more mom-and-pop- Okay. Helicopter companies in Europe that have captured a lot of that demand. So optimistic on the overall market, would love to see that the customer base becomes willing to pay for the services that we provide, but right now, that's really a big question mark. Okay. So stay strategic on that. Okay. What are the regions right now where you're seeing the most growth potential, both on oil and gas and SAR, and kind of, you know, how should we think about a good proxy for demand? I know historically, we've looked at kind of platforms and rigs, but there's a lot of non-rig, non-platform work that's being done as well, too. And so, how should we be thinking about both demand and then, especially with the growth in kind of FPSOs and things like that that are coming out in Brazil, things like that. What are the bigger markets that you're focused on? Sure. On the offshore side, Brazil is probably the first one that comes to mind. Yeah. We're seeing that the growth rates there are as good, if not greater, than any other offshore region that we participate in, globally. Mm-hmm. The number of FPSOs that are coming in the market over the next few years, the amount of drilling activity and the rigs that will be needed to support that. Petrobras has really been issuing tenders almost as fast as they can- Yeah. -for helicopters. They're all public, so we see these. Yeah. Exactly. Yeah. So they're clearly looking to catch up on contracting for helicopter services- Mm-hmm. to meet their project schedules. So Brazil is at the top of the list. Africa is an area- Yeah That's been growing very, very fast for us over the last eighteen months, and we think the demand signals going forward continue to be really strong for Africa. The Caribbean Triangle, so I mentioned Trinidad earlier, that Trinidad, Suriname, Guyana, maybe- Mm-hmm. Area has been active. Even in the US Gulf of Mexico, which obviously is a bigger, more mature market, doesn't have nearly the growth rates of the places that I just talked about, but there's unmet demand right there, right now for helicopters. Mm-hmm. We see growth even in the U.S., too. Right. In terms of signals, you know, our offshore business is really 80% production-oriented- Yep. -with the balance being drilling and completion. So certainly, looking at overall, offshore-directed upstream spending is a key indicator. Beyond that, the number of platforms focusing both on FPSOs in terms of new units as well as drilling rigs are good leading indicators for our business. Okay. And then, how are you thinking about, at this point in the cycle, contracting strategy? Obviously, earlier in the cycle, you want to be kind of short the market, later in the cycle, you want to be long the market. We think we're, you know, in the offshore part of the cycle, that we're kind of in the middle. So how are you thinking about, contract portfolio? We would agree with your view, in terms of where we are in the market right now. We think we're in a good place in the sense that, within our offshore contract portfolio, as of today, we've reset about 30% of our contracts, so we still have a runway of about 70%. Most of that will be contracted and in place by the end of 2026, so we think we have a good window really to capture and capitalize on some of these contracting opportunities within that period of time. Okay. Okay, that's great. That's good to understand the legacy contracts and the go-forward contracts. One of the things about the contracts in the downturn, the offshore downturn, which was a good decade of a downturn, was that your customers downsized the amount of helicopters they had working for them and or on standby. And you mentioned earlier that you have customers that have to share now, which they don't always like to do that. But are they back up to kind of what they need, or is there still some unmet demand in the market that you're going to need to bring some new builds in to satiate that demand to where their logistics supply chain is back up to what it should be? Right. Well, today, there is unmet demand, so they, they're not where they want to be. How we get there over the next few years, I think really are two main sources to meet what's currently unmet demand. One is that we have an ongoing supply chain challenge with the Sikorsky S-92 heavy helicopter right now. Right. To put some numbers around that, of the roughly one hundred and ninety offshore configured S-92s in the world today, approximately thirty are on the ground awaiting delayed parts today. Wow. So a meaningful portion of the fleet. Okay. As that supply chain situation is resolved over the next, I'll say, 12 months, hopefully, that happens. Sure. Hopefully, they can meet that kind of schedule. Mm-hmm. We're confident that those aircraft are going to be readily absorbed back into the market- Right ... at the kind of leading-edge rates that we're seeing now. And then beyond that, I mentioned earlier, lead times for new equipment, which are going to be mostly the super medium models, so an AW189 from Leonardo or an H175 from Airbus, it's about a two-plus year lead time. So if you were to turn up later this week at Leonardo with EUR 21 million, you're not going to see an AW189 until 2027. But we think those will come into a market, again, as these S-92s either have been or are being absorbed back in, and those two sources are going to help meet what is currently unmet demand. Right. Okay. Maybe we can shift gears and talk about the SAR business, because I think it's fascinating, one, the amount of people that fall off boats in the North Sea and stuff all the time and have to be rescued. But two, really, just the outsourcing of search and rescue from governments to private operators like yourself. What other opportunities are you staring down right now? I mean, I think people, I think governments have all looked at U.K. as a big success. Certainly Ireland did, certainly the Dutch did. There's got to be others that are looking at that, and kind of what are you seeing play out in the market? I think you're right, that people have looked at the UK model, to put a term to it, as a success. We've had a couple of big wins, including Ireland, which you mentioned. We'll start that, transition project beginning later this year in October. It'll transition through July of next year. So big contract, takes some time to stage up all the bases. In terms of what's new, what's next, there's a large contract in Australia that we expect to come to market sometime over the next 12 months. The tendering process will begin. It'll probably be a multi-year tender, but within that timeframe, we should know more. Mm-hmm. And then we also have some indications of interest out of the Middle East for governments looking to provide that kind of service to their population as well, which today doesn't really exist. Right. So those are the two areas that I would point to for what could be next in government-sponsored search and rescue. Okay, interesting. And then how are you thinking about, or what kind of capital outlays do you need for these transitions, as you win these contracts and as you think about your overall capital structure and shareholder return structure, where does that fit in? I mean, I would assume the growth capital and high return is going to be the number one use of capital. But I guess, how are you guys thinking about that today? Sure. So we, fortunately, we did win the UK SAR 2G and the Irish Coast Guard contract, so we have about $300 million of capital investment required to bring those new aircraft in- Right ... and stand up those contracts. Of that $300 million number, about $150 million was spent through the first half of this year. Mm-hmm. We have 150 left on those two programs. About $125-$130 million will be spent second half of 2024, the balance the beginning of 2025, and then we'll be through that heavy investment cycle for those contracts, which are going to yield really attractive, high returning cash flows for the next decade plus, and then in terms of capital allocation, we're going to continue to protect our balance sheet because of the volatility. Sure ... in our core market that we've chatted about. Sure, sure. We want to have the flexibility to continue to invest in these projects like we have, that are going to yield unlevered cash on cash returns in the high teens. But we can do both of those things, protect the balance sheet and invest organically, and we're still going to have excess cash. Right. That allows us to have, as we get into 2025 and beyond, a shareholder return strategy that we see involving both dividends and share repurchases. Now, if we were just an energy services company of our capitalization size, I don't think we'd be talking about dividends. Right. But the government side of our business and the stability that offers really lends itself well to a dividend. We should think about that as the dividend, dividend co, if you will. Right. And then the other is kind of the opportunistic capital allocation and the opportunistic buybacks. Exactly. So as our offshore energy business generates, Right. excess or available cash, we'll look at opportunistic share purchases. Okay. That's right. Okay, that makes sense. What is the cadence that you have on helicopter deliveries now for these new contracts over the next, you know, 18 to 24 months? So on the government side, we have five new build AW189s- Yep. -coming in, six new build AW139s, which is more of a medium-sized helicopter coming in. So 11 total for those government projects. We've already started taking delivery of some this year. We'll take delivery, most of them by the end of this year, and complete that new delivery cycle in the beginning of 2025. Right. And then we'll be complete with that stage of investment to ramp up those contracts. Right. Right. So Bristow or Era via Bristow has been a big consolidator of the industry. You have a major Canadian player, which, you know, might present - you could try to consolidate, but I think this administration, I wouldn't try. But you're gonna get some pushback there, although, you know, I'm sure Tom or one of his team members is listening in, but would think about it, because they lack the Gulf of Mexico exposure that you have, as you know. But what do you see as incremental kind of acquisition opportunities? You mentioned the mom and pops that are picking around the edges at some of the smaller wind contracts, for example. But are there a lot of, or how do you see the regional players that you maybe could beef up operations or get into a new country? I guess, how do you think about M&A strategy from here? Sure. Well, I think as you, as you said, we don't really see anything transformational out there. Yep. We've done that transaction. But there are other opportunities that could come, and we'll continue to evaluate those. We'll be opportunistic. Certainly, as we look around the world, there are a couple of markets, Brazil comes to mind, the UK comes to mind, where there really is need for consolidation to rationalize the competitive landscape. Obviously, how that plays out over time depends on a lot of- Sure. -uh, factors. Sure. But those are the two regions I would mention where there could be some level of M&A, which would benefit the sector. Right. Right. Okay. And then maybe as you think about new markets or new helicopter types, eVTOL, electric helicopters, how are you guys positioning yourselves for what seems to be the inevitable electrification of some parts of aviation? Not, I'm gonna let you take the first electric plane to Europe or something, but. And then I'll let someone else take the second one, too. But, how are you guys thinking about, you know, short-term haul, maintenance, visibility, looking at pipelines? The kind of stuff that you've done historically with, you know, diesel, traditional, I guess, helicopters, moving into electrification. Right. Really, over the last few years, we have been spending quite a bit of time on this- Yep. And I would summarize our approach as really wanting to create optionality and make sure that we're in a position to act, should the technology prove itself out. So just a little bit of context there. Bristow has been around for more than 75 years now. Market leader over that period of time, an early adopter of different models, different types, new technologies. As we've been looking at this new electrification play, hybridization play, we really wanted to make sure that we spent the time to understand the technology, understand the players that are developing these new aircraft, understand how it may be potentially used to complement our business. It's not gonna substitute for search and rescue- Sure. -or taking 19 passengers 200 nautical miles offshore, but the technology, as it evolves, we think will have applications, so we might use some of the lighter products to help either our government customers- Mm-hmm. We're using unmanned systems right now in the U.K., for example, or to complement our oil and gas customers. We also think that particularly hybridization could become a part of the future. So for example, almost all the helicopters that we're operating today are multi-engine, twin-engine helicopters. On the lighter end of that, maybe the future could be a conventional powered engine and then a backup electric motor. Right. which has more than adequate capacity to get you on the ground should an event occur. Right. So that's the type of thing that we think could be part of the future. But again, right now, we've made a very really de minimis capital outlay, more of a time investment. I would almost think about it as R&D for the future of our fleet. How are you thinking about drone technology? Certain applications we think are gonna be important for us. For example, right now in the U.K., we're using four unmanned systems- Okay. To service the government. And a lot of U.S. citizens probably aren't aware, but post-Brexit, illegal immigration across the channel has become a big issue in the U.K. And so the government came to us looking for a solution, and what we're doing is we're using these unmanned systems to provide essentially 24/7 coverage to give situational awareness over the channel at all times. Okay. Okay, interesting. Maybe an update on your sustainability initiatives and the partnerships you have with, you know, THC and Volocopter? Sure. So I think that electric play- Which is part of what we just talked about, yeah. Is part of that. Yep. And beyond that, thinking about sustainability more broadly, we are using sustainable aviation fuels- Okay. SAF today. As you're well aware, that's very much a nascent supply chain. Yep. So we can't get it everywhere, and you can't get it in good volumes. Mm-hmm. But for example, in the U.K., every day we're flying with SAF- Okay ... for a portion of our fleet. So we'll continue to look at opportunities to incorporate that and adopt it into our operations as it becomes more readily available. Okay. Okay. Last question from me. Priorities for the remainder of this year and for next year? Remainder of this year and next year, certainly operational execution. So that big Ireland contract, the big UK SAR 2G, it's great that we've captured those, but now we have to go execute. So that operational focus and execution is a big part of it. And then the other big one I would note is, we are very excited about the opportunity that exists in our offshore energy business over the next couple of years. We talked earlier about the 70% of our contracts, which have yet to reset. Mm-hmm. So the ability to capture those opportunities over the next period of time that you referenced, I think, is an exciting one for Bristow and our shareholders as well. Great. Chris, thanks for joining me today. Great conversation. Good luck at the conferences you're attending this week. We think you have an unmatched unparalleled valuation proposition here, so I'm glad that we were able to put this together and get you in front of our clients and investors, and do it again soon. Sounds great, James. Thanks again for having us. Absolutely. Thanks, Chris. Take care.