Bristow Group, Inc. · NYSE:VTOL
Bristow — Corporate Update (October 2014)
18 slides from Bristow's corporate update, Oct 14, 2014
Slide 1: Returns Comparison
October 10, 2014 Returns Comparison Exhibit 99.1
Slide 2: Illustrative comparison of return metrics
Illustrative comparison of return metrics • Bristow believes a good capital deployment strategy includes a mix of leased assets and owned assets • The company uses the metric Bristow Value Added (BVA), which is a tailored version of the cash flow value added (CFVA) metric also similar to the economi
Slide 3: TSR requires a growth and return balance
TSR requires a growth and return balance Return alone only measures quality and not quantity • Don’t Be Too Preoccupied with Return on Capital Gregory V. Milano, Fortuna Advisors (May 19, 2010) • Study was based on the 1000 Largest Non- Financial US Companies as of 12/31/2009, excluding those not pu
Slide 4: BVA balances growth and return
BVA balances growth and return Two equivalent ways to calculate BVA BVA Gross Cash Flow Gross Operating Assets Required Return (10.5%) BVA Gross Operating Assets Gross Cash Flow Return Required Return (10.5%) Quality Quantity BVA captures quantity and quality which return measures do not
Slide 5: BVA is a superior valuation metric
BVA is a superior valuation metric • When used in valuation (current gross operating assets + NPV of future BVA), BVA predicts enterprise values quite well even when future BVA is assumed constant. • The approach helps solve the apparent disconnect between market valuation and traditional measures o
Slide 6: ROC misses important performance aspects
ROC misses important performance aspects BVA treatment: • • • • • Leases Remove rent to get EBITDAR and capitalize the present value of leases as a debt equivalent Depreciation : Remove depreciation to get EBITDAR and add back accumulated depreciation to capital Cash Remove from capital – reflects n
Slide 7: Gross cash flow return (GCFR) A BVA-like return measure
Gross cash flow return (GCFR) A BVA-like return measure BVA Gross Cash Flow Gross Operating Assets Required Return (10.5%) Gross Cash Flow Return Gross Operating Assets Gross Cash Flow The numerator and denominator in Gross Cash Flow Return are the very same Gross Cash Flow and Gross Operating Asset
Slide 8: Bridge ROC to GCFR: FY13
Bridge ROC to GCFR: FY13 Gross cash flow return numerator and denominator from BVA 7.2% 10.7% NOTE: For illustrative purposes only 1.5% 2.0% 0.4% 0.4% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% 13.0% ROC Leases D&A Líder Other GCFR FY13
Slide 9: Bridge ROC to GCFR: FY14
Bridge ROC to GCFR: FY14 Gross cash flow return numerator and denominator from BVA 7.2% 12.1% NOTE: For illustrative purposes only 2.3% 1.6% 1.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% 13.0% ROC Leases D&A Líder GCFR FY14
Slide 10: Treatment of leases in BVA and GCFR
Treatment of leases in BVA and GCFR • In BVA and GCFR, the present value of lease commitments is added to gross operating assets Equivalent to taking out a level payment loan to finance making a one time payment to purchase the rights to the asset over the lease term. The hypothetical loan value (i.
Slide 11: Illustration of PV approach to leases
Illustration of PV approach to leases Assume 10% discount for longer commitment Shorter commitment implies less capital Optionality: only renew if needed Stuck if not needed Overstates the commitment Understates the commitment Ultimately pay more in total if used all 15 years – that’s the cost of un
Slide 12: Treatment of depreciation in BVA and GCFR
Treatment of depreciation in BVA and GCFR Capital Charge Depreciation Required Return • Using gross assets treats old assets the same as new assets A net asset framework gives misleading signals as older businesses with depreciated assets look better than newer businesses with un-depreciated assets
Slide 13: Cash is removed
Cash is removed • Cash is removed from gross operating assets in BVA and gross cash flow return • In most valuations, cash is treated as a negative debt (i.e. subtract cash from debt to get net debt to subtract from enterprise value to get equity value). BVA treats cash the same way • Cash is expect
Slide 14: Treatment of Lider in BVA and GCFR
Treatment of Lider in BVA and GCFR • Earnings from unconsolidated entities removed from gross cash flow • Investment in unconsolidated entities removed from gross operating assets • Proportional consolidation of pro rata share of Lider BVA added in to improve accuracy over using equity accounting; t
Slide 15: Goodwill is excluded from BVA
Goodwill is excluded from BVA • We aimed for a framework that would simultaneously encourage investments and hold management accountable for delivering returns. Incentives focus on year to year changes in BVA to encourage a constant pursuit of growth and return that more than covers the required ret
Slide 16: me ia
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Slide 17: FY14 bridge to gross cash flow
FY14 bridge to gross cash flow $180 $420 NOTE: For illustrative purposes only $106 $95 $43 $100 $150 $200 $250 $300 $350 $400 $450 NOPAT Rent D&A Líder equity earnings Líder proportional Other GCF FY14 NOPAT to GCF
Slide 18: FY14 bridge to gross operating assets
FY14 bridge to gross operating assets $2,598 $3,455 NOTE: For illustrative purposes only $523 $412 $250 $193 $135 $2,000 $2,200 $2,400 $2,600 $2,800 $3,000 $3,200 $3,400 $3,600 $3,800 Invested Capital (LT + ST Debt + Equity) Accumulated depreciation NPV of leases Líder equity investment balance Líde