Bristow Group Inc. (NYSE: VTOL), a leading provider of helicopter services to the offshore energy industry, has reported a significant 50% increase in adjusted EBITDA for the second quarter of 2024. Following these strong financial results, the company has raised its full-year guidance for both 2024 and 2025. This optimistic outlook is largely attributed to increased rates and utilization in Africa, as well as improved performance in the UK and Fixed Wing businesses.
However, Bristow's Government Services business has faced challenges, including penalties related to supply chain issues. Despite these setbacks, the company is confident in its growth prospects and expects to generate substantial cash flow in the latter half of 2025 and beyond, buoyed by positive market trends in the offshore energy services sector.
Key Takeaways
- Bristow Group reported a 50% increase in adjusted EBITDA for Q2 2024.
- Full-year guidance for 2024 and 2025 has been raised, reflecting strong performance and market trends.
- Higher rates and utilization in Africa, along with improved UK and Fixed Wing business performance, contribute to the positive outlook.
- The Government Services business has incurred penalties due to supply chain issues.
- Bristow has completed over half of the capital expenditures for new search and rescue contracts and secured financing for the remainder.
- Significant cash flows are anticipated in late 2025, driven by a robust offshore energy services sector.
Company Outlook
- Bristow expects to continue taking delivery of helicopters for SAR contracts over the next two quarters.
- The delivery schedule for SAR contracts will decrease significantly post-2025.
- The company is launching a large Irish Coast Guard contract with completion expected by mid-2025.
- OES contracts for 2025 are mostly secured, with additional growth and rate increases expected in 2026.
Bearish Highlights
- The Government Services business has been negatively impacted by supply chain-related penalties.
- Some S-92 airframes remain idle due to supply chain issues.
Bullish Highlights
- Helicopter utilization rates for offshore facilities are at or near 100% for relevant models.
- The offshore energy upcycle is expected to remain strong, with breakeven thresholds well below current commodity prices.
- The company has successful equipment financing in place and sufficient cash flows to manage CapEx.
- Bristow's order book and delivery slots for helicopters like the AW189 are seen as valuable assets.
Misses
- The company has faced challenges in the Government Services business due to supply chain issues.
Q&A Highlights
- Bristow is confident in meeting helicopter delivery dates despite supply chain challenges.
- The fleet is expected to grow, with plans to purchase new helicopters for SAR and offshore energy services.
- CapEx for the next two years is estimated to be under $100 million annually for helicopters, with flexibility based on customer opportunities.
- High activity levels and rate increases are anticipated in Africa, with a focus on meeting demand in Nigeria.
- Industry lead times for new helicopter orders are lengthy, at 24 months or more for super-medium models.
Bristow Group Inc. has shown resilience in the face of industry challenges and is positioning itself for continued growth and profitability in the offshore energy services market. The company's strategic investments in its fleet and its ability to secure lucrative contracts, such as the Irish Coast Guard contract, underscore its commitment to expanding its operational capabilities. With a strong balance sheet and a focus on organic growth, Bristow Group is poised to capitalize on the positive trends in the offshore energy sector and deliver long-term value to its shareholders.
InvestingPro Insights
Bristow Group Inc. (NYSE: VTOL) has demonstrated financial resilience and optimism for the future, as evidenced by their impressive 50% increase in adjusted EBITDA and the subsequent raise in full-year guidance. This positive momentum is further substantiated by real-time data and expert analysis from InvestingPro.
InvestingPro Data indicates a robust Market Cap of $1.08 billion, signaling a strong market presence. The company's Revenue Growth over the last twelve months as of Q2 2024 stands at an impressive 16.25%, illustrating its capacity to expand its top-line figures. Furthermore, Bristow's Price Total Return over the last six months has seen a significant uptick of 37.65%, reflecting investor confidence and market performance.
In line with the article's bullish highlights, an InvestingPro Tip points out that analysts predict the company will be profitable this year, which aligns with the company's raised guidance and strong performance in various geographical markets. Another relevant InvestingPro Tip is that the company's liquid assets exceed its short-term obligations, providing a cushion for operational flexibility and potential growth investments.
For readers interested in deeper investment analysis, InvestingPro offers additional tips on Bristow Group Inc., which can be accessed through the dedicated InvestingPro page for VTOL at https://www.investing.com/pro/VTOL. With a total of 10 InvestingPro Tips available, investors can gain a comprehensive understanding of the company's financial health and market potential.
Full transcript - Bristow Group Inc (VTOL) Q2 2024:
Chris Lee - Evercore ISI: Steve Silver - Argus
Patrick Fitzgerald - Baird:
Josh Jayne - Daniel Energy Partners:
Operator: Good day, everyone, and welcome to Bristow Group Reports Second Quarter 2024 Investor Call. Today's call is being recorded. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] At this time, I would like to turn the call over to Red Tilahun, Senior Manager of Investor Relations and Financial Reporting.
Red Tilahun: Thank you, Robbie. Good morning, everyone, and welcome to Bristow Group's second quarter of 2024 earnings call. I'm 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 3 of our investor presentation. You may access our 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 our investor presentation. I'll now turn the call over to our President and CEO. Chris?
Chris Bradshaw: Thank you, Red. I want to begin by thanking all the Bristow team members around the world for their continued focus on safety, our number one core value, and highest operational priority, which resulted in very good safety performance in the second quarter. I also want to thank our global team for their contributions to Bristow's strong financial results in Q2, highlighted by the 50% sequential quarter increase in adjusted EBITDA. In conjunction with these results, we are pleased to raise the company's for full year 2024 and 2025. This builds on the outlook we shared last quarter, and is aligned with our conviction that we are in the early stages of a multi-year growth cycle. I will now hand it over to our CFO for a more detailed review of Q2 results and our increased guidance ranges. Jennifer?
Jennifer Whalen: Thank you, Chris. Today, I will begin with the sequential comparison of Bristow's financial results. EBITDA adjusted to exclude special items, asset dispositions, and foreign exchange was $71.3 million for the second quarter of 2024, compared to $47.5 million in the first quarter, or an increase of approximately $23.8 million. Operating revenues increased $23.1 million, primarily due to higher utilization and increased rates in offshore energy and Fixed Wing services, partially offset by government services. Operating expenses were $0.9 million lower in the current quarter. Lower personnel and leasing equipment costs were partially offset by higher repairs and maintenance and other operating expenses. General and administrative expenses were $1.6 million higher, primarily due to higher professional service fees. As noted in previous earnings calls, the other income and expense line item is primarily comprised of non-cash foreign currency gains and losses, which we've excluded from our adjusted EBITDA calculation. Our effective tax rate is approximately 25% for the current year, compared to 86% in the prior year. The decrease in stabilization of our effective tax rate is attributable to the positive changes in our global mix of earnings. Of note, there are a few quarter-specific items which benefited our financial results in Q2. These include a seasonal personnel cost benefit in Norway, the transition from cash-basis recognition to an accrual basis of accounting for lease payments from Cougar, an adjustment for tax equalization in Suriname, and the release of an insurance reserve. In aggregate, these items resulted in an $8.6 million benefit to Q2 results. The change in accounting methodology for lease revenues from Cougar, our joint venture in Canada, will have the benefit of more consistent and stable earnings per quarter going forward. As a result of the second quarter's earnings and the review of the forecast for the rest of the year, we have raised our 2024 adjusted EBITDA guidance to $210 million to $230 million. In addition, we have raised our 2025 estimates for adjusted EBITDA to $230 million to $260 million. The increase is being driven by several factors. First and most impactful are higher rates and utilization in Africa. This region has outperformed over the last quarter and is expected to continue to perform well throughout the rest of 2024 and into 2025. Our UK OES business benefited from higher ad hoc activity during the first half of 2024. However, that is expected to reduce in the second half of 2024. The Fixed Wing business saw higher yields in scheduled passenger transport, as well as a short-term increase in charter activity. Our America's OES business benefited from short-term projects with attractive rates. This is expected to reduce in the second half of the year. These positive drivers are partially offset by penalties related to availability in our Government Services business. These availability penalties are primarily due to supply chain challenges, namely delayed parts and repairs from the helicopter OEM. Due to the factors that I noted, we are pleased to be able to increase guidance for 2024 and 2025. Our targets for 2026 remain unchanged. Further details are available on Slides 7 and 8 of the presentation. Moving on to recent updates on capital expenditures for our new SAR contract. As we have noted in our last several earnings presentations, we have a capital investment of approximately $300 million related to the successful award of contracts with the UK and Irish Coast Guard. As of the end of July, we have completed $157 million, or just a little over half of the total investment required. In the second quarter, we completed an additional financing with the United Kingdom Export Bank for up to EUR100 million and very attractive rates. The financing will be used to support the Irish Coast Guard contract. With this new financing and the upsize of our UK SAR facility with NatWest earlier this year, we are well positioned to fund the capital that is needed for these two very important contracts. Finally, Bristow continues to benefit from a strong balance sheet and liquidity position. As of June 30, our available liquidity was $246 million. We generated adjusted free cash flow of $33 million in Q2. And as we have stated before, we believe that our business model will continue to generate strong cash flows. At this time, I'll turn the call back over to Chris for further remarks. Chris?
Chris Bradshaw: Thank you. As Jennifer noted, Bristow's business is performing well today, and we expect the company's growth to accelerate over the next two years. Our leading government services business is experiencing growth and diversification through the addition of key search and rescue contracts, and we are excited to launch operations for the Irish Coast Guard later this year. The investments we are making now will result in attractive, long-term cash flow yields for the company well into the middle of the next decade. In addition, the financial performance of our Fixed Wing business has improved over the last year, and we expect this improvement to continue. In Offshore Energy Services, where Bristow is the leading global helicopter operator, the industry fundamentals remain very positive, and we are experiencing an accelerating upcycle. Offshore basins offer very compelling return prospects with breakeven economic thresholds well under prevailing commodity price levels. As a result, offshore projects have seen renewed focus and investment from the upstream industry, and global offshore spending is expected to increase significantly over the next several years, as illustrated on Slide 11 of our earnings presentation. These positive market trends are occurring amidst the backdrop of a tight supply dynamic, with limited new helicopter additions over the last eight years, and long lead times for new builds. The current effective utilization for the most relevant heavy, super medium, and medium helicopter models is at or near 100%, which has contributed to higher rates. The combination of these factors has increased Bristow's visibility for material improvements in margins, free cash flow, and capital returns. As indicated by the company's guidance metrics, we expect to generate significant cash flows in the latter half of 2025 and beyond. Bristow has a disciplined and focused capital allocation approach that will prioritize protection of our strong balance sheet, allow for attractive organic investment, like the ones driving our increased financial guidance, and facilitate the return of capital to shareholders. With that, let's open the line for questions. Robbie?
Operator: [Operator Instructions] The first question is from Josh Sullivan from The Benchmark Company. Please go ahead.
Josh Sullivan: Hey, good morning. Congratulations on a great quarter here. Good morning, guys. Just looking at the sizable peak year for 2Q, why might have you not raised the guidance range even higher? Or maybe what are the major puts and takes? You did mention some of them there, but curious what the major ones are?
Jennifer Whalen: Sure, Josh. As I talked about in my prepared remarks, the parts of our business are performing better than expected and should continue to perform well. We did have the one-time items that resulted in the $8.6 million benefit for the quarter. And those were the seasonal personnel cost benefit in Norway, changing Cougar back to an accrual basis of accounting, tax equalization and Suriname, and a release of insurance reserves. We do expect to end the year strongly, and our new midpoint of the range is approximately 30% over where we ended 2023.
Josh Sullivan: Got it. And then I get those drivers for '24, but as far as taking up the '25 guidance as well, you mentioned some increased visibility here in the release. Can you just expand on where you see that visibility?
Jennifer Whalen: Sure. Thanks for the question. The 2025 guidance raise is being driven primarily by Africa. That region is really outperformed, and we expect that to continue into 2025.
Josh Sullivan: Okay. And then can we just maybe get a little more color on the penalties in your Government Services business, partially offsetting some of the success here. But how long should we expect those penalties to last? And then maybe how should we think about potential financial impact long-term?
Jennifer Whalen: Sure. So, the penalties that we're experiencing in our Government Services business are primarily being driven by these supply chain issues that we've been talking about for quite some time now. And we do expect them to continue into the future, and we have a level of that expectation that is factored into our guidance. So, if they end up being better than what we have in that, it would bias us to the higher end of our guidance range, or vice versa, if they're worse than what we expect, they would be on the lower end of that range.
Josh Sullivan: And then just as we look at the cadence of investments for aircraft here, how should we think of 3Q and 4Q, and then even into Q1, how dramatically does it fall off?
Jennifer Whalen: I mean, we have -- we expect to continue to take the delivery of the helicopters related to both of the SAR contracts, mostly over the next two quarters. It does drop off. I think, we have it in our earnings presentation where we get into 2025, and it drops off quite dramatically. I think there's only $18 million, $20 million left into 2025 related to the big SAR contracts that we have.
Josh Sullivan: Okay. And are you confident in those deliveries, just given the overall supply chain issues? I mean, are for the OEMs providing you with confidence those dates are going to be met?
Chris Bradshaw: Yeah, Josh. As of this time, we're expecting the aircraft and the deliveries to arrive on time.
Josh Sullivan: Got it. Okay. Thank you for the time.
Chris Bradshaw: Thank you.
Operator: The next question is from Chris Lee from Evercore ISI. Your line is now open.
Chris Lee: Hi, team. Thank you for taking my questions.
Chris Bradshaw: Good morning.
Chris Lee: I guess my first question is, could you provide some context on offshore helicopter utilization rates? And do you anticipate utilization to stay tight as the cycle continues and the pace of S-92 fleet attrition increases?
Chris Bradshaw: Yeah. Thank you for the question, Chris. If we think about the relevant helicopter models for our business, particularly for any new projects that we're bidding on, we're really talking about the super mediums, that being the AW189s, the H175s, the medium category leader being the AW139, and then the S-92 on the traditional heavy category. For each of those relevant helicopter models, current effective utilization levels are at or near 100%. Now there is a dynamic related to the S-92, where there are a number of idle airframes today, which probably could be working, but they are not serviceable as they're awaiting delayed parts and repairs from the OEM. As that supply chain situation is rectified over time, we do see those S-92s coming back into the market. And we see them being readily absorbed at the leading edge rates that we're seeing in the market today.
Chris Lee: Got you. And have you observed a shift towards greater utilization of large capacity transfer devices for offshore transportation? So such as like growing preference for crew transfers via boats over helicopters?
Chris Bradshaw: Really, the personnel transportation market for offshore facilities is pretty well segmented between helicopters, which obviously is what we do, and then the marine options. It's really well segmented by geography, and then in some cases by distance from shore. So we don't end up competing against marine vessels on a day-to-day basis. In one area where we do geographically have some overlaps, such as the U.S. Gulf of Mexico, the facilities that are being supported by marine vessel for crew transportation are really on the shelf in shallow water, and that's not a market that Bristow services today. In the Gulf of Mexico, our crew transportation services that we're providing via helicopter are really all deepwater. So again, on a day-to-day basis, we're not competing against the marine vessel option. Those markets tend to be fairly well segmented.
Chris Lee: Right. And I guess my last question is that recently energy prices have been trending lower. So how significant a risk are current and potentially lower energy prices to Bristow's outlook?
Chris Bradshaw: We believe the thesis for a robust and long-duration offshore energy upcycle is firmly intact. Really if we look at the offshore basins that we're servicing, most of the breakeven economic thresholds are at levels well below current prevailing commodity prices. So we believe, again, while Brent is at $77, $78 a barrel today, expectations for really long-term prices would have to be substantially below that before it would start to impact the attractive economics of most of the offshore projects we're servicing. So again, we believe the thesis for a long-duration, strong offshore upcycle is firmly intact.
Chris Lee: Got you. Perfect. Thank you so much.
Chris Bradshaw: Thank you.
Operator: The next question is from Steve Silver from Argus. Your line is now open.
Steve Silver: Thanks, operator. And good morning, and thanks for taking the questions. Congratulations on the quarter and -- outlook. My first question, given the fact that the 2026 targets were unchanged despite the raising of guidance for '24 and '25. Can you just remind us of the underlying assumptions behind the wide range in '26, given that the new SAR contracts coming online will be more fixed rate in nature and that the outlook for contract renewals and offshore energy remain positive?
Jennifer Whalen: Sure, Steve. As you know, last quarter, we put out these longer-term financial targets through 2026. And as you noted, there is quite a large range for 2026. This is due to the long-term nature that we put out there. So, if things continue this way, we -- it could bias us to the higher end of that range, but we deemed it to be reasonable to leave the targets as is for now.
Steve Silver: Great. Thanks. And given the strong performance in Q2, the recent financing now behind you, and now being more than halfway through the contract investments for the new SAR contract. Is there any change in your thinking in terms of potential timing on capital allocation and shareholder returns?
Chris Bradshaw: No material change, Steve. I think it affirms the framework that we have for thinking about capital allocation, namely that we want to ensure that we protect our strong balance sheet. We are, via our significant exposure to the Offshore Energy Services space, exposed to volatility from oil and gas cycles. So we want to make sure that we have a strong balance sheet that can withstand various cycles over time. We also want to make sure that we have the ability to continue to invest in attractive organic investments, like the ones that are driving our higher guidance ranges. And then we also believe we'll be in a position, particularly in the latter half of 2025 and beyond, to return capital to shareholders via share buybacks, whether that be programmatic or opportunistic, and potential dividends.
Steve Silver: Great. And one last one, if I may. Can you provide any update on the timing of the overall fleet expansion? You've mentioned the tight supply dynamics around the industry. It looks like the overall fleet was down four aircraft from last quarter, and the presentation cites nearly 40 aircraft, either under construction or on order. So is there any thinking in terms of the timing over the near term of returning to an expansion of the overall fleet?
Chris Bradshaw: Yeah. On a net basis, we expect the fleet will be growing over the next couple of years. I'll start first with our Government Services business. So we -- in total for Irish Coast Guard, we're taking delivery of 5 new build SAR configured AW189s. Those will be delivered this year and next. For UKSAR2G, we are taking delivery of a total of 6 SAR configured AW139 model helicopters, which we expect to take delivery of this year. We have also ordered 5 light twin H135 helicopters to support a key Offshore Energy Services customer. And those aircraft will begin delivery later this year and in the first quarter of 2025. And then on the sticking with the OES space, we also have an order book for AW189 super medium aircraft, which we believe is a very helpful competitive advantage to have access to those orders as they are finite and become pretty valuable delivery slots over the next couple of years. With long lead times, we think we're well positioned to actually have deliveries next year in 2026 for those super medium AW189s. So the timing of those, again, will begin next year and then have more that we expect to be delivered in 2026.
Steve Silver: Great. Thanks for the color and congratulations, again.
Chris Bradshaw: Thank you.
Operator: The next question is from Patrick Fitzgerald from Baird. Your line is now open.
Patrick Fitzgerald: Hi, thanks for taking the question. Could you talk a little bit more about the growth you saw in America and Africa oil and gas flight hours on a year-over-year basis in the quarter? Is that a big change in behavior, number of jobs, one-off issues, or the accounting change? Or could you just talk a little bit about that?
Chris Bradshaw: Yeah. Thank you, Patrick. Happy to address that. So, specific to Africa and the Americas, overall, I'd say that the trend is on theme with the activity ramp-up that we've been talking about, which is both increased utilization of aircraft as well as increased rates on new contracts that we've signed. So in Africa, really, market activity has picked up there. Customers are working more. We've also had some customers who had previously left Bristow for a lower-cost competitor in the country come back to Bristow, which has helped with the utilization levels of our fleet there. So Africa is certainly a market that, as Jennifer referenced, has improved significantly, and we expect that performance improvement to continue well into next year and beyond. And in the Americas, overall, we've increased utilization, particularly with some new contracts that started in Brazil, as well as some short-term projects that we've seen in places like Trinidad and the Caribbean. So utilization is better, and then, again, any opportunity that we've had within this window to sign new contracts, those rates have been higher, on average, roughly 25% higher than the legacy rates that they were replacing. So overall, again, it's both higher utilization and higher rates driving the better improvement in both Africa and the Americas.
Patrick Fitzgerald: Okay. And then, if you kind of reprice your contracts every, 20% percent every year, and you're repricing them 25% higher than the previous level, what are we -- year 2 or 3 into that process? So there would be an additional, like, 60% of contracts that would be repriced higher? How should we think about that?
Chris Bradshaw: So within our OES contract portfolio, as of now, we've reset about 30% of the contract mix. So we still have 70% to go in terms of the runway of what's left to be reset. I think you referenced a good rule of thumb just at a high level. However, of course, in any given year, there will be some variability there. In 2024, a lot of the improvements that we're seeing are the full year run rate impacts of new contracts that were signed last year. 2025 is seeing some growth, but it's not as active of a renewal and new contract year as 2026 is. 2026 is really a more active period for us where we expect to be starting new contracts. And that's one of the reasons when you look at our 2026 target levels that there's such a large improvement in the OES revenues and the overall company EBITDA ranges.
Patrick Fitzgerald: Okay. Yeah, that's helpful because I was actually going to ask about that. How much of your -- so how much of the 2025 guidance, I guess, is contracted versus, still kind of, I guess, in the spot market in terms of -- if things changed, you would see that fallback a bit?
Chris Bradshaw: Overall, looking at our EBITDA ranges for 2025, one of the bigger impacts is that we're launching our Irish Coast Guard contract beginning later this year. It's a large contract with a long transition period, so we'll begin the transition in October of this year. It won't be completed with the final base in Ireland until the middle of 2025. But a good component of the improvement in 2025 EBITDA is attributable to Ireland on the government services side. Within the OES side of our business, most of what we would have in our 2025 guidance range is contracted, although there is some component from spot or short-term work in there, as well.
Patrick Fitzgerald: Okay. And thank you for the detail on the -- the detailed guidance in general and the guidance for the SAR CapEx spend. So I guess just doing the math, you have, like, $125 million more of that CapEx for the rest of this year, and then $18 million next year. And then you have -- you said, I believe, a couple quarters ago or something, you expected to spend $250 million on oil and gas helicopters from 2025 to 2029. Just wondering about the cadence of that, as well, as we kind of think about, what your CapEx looks like in the out years and, free cash flow, et cetera.
Chris Bradshaw: Do you want to take that one, Jennifer? Or -- I can address it, too, and then Jennifer can compliment me. So as you noted, we expect to be largely complete with the government services capital investments for both UK SAR 2G and Irish Coast Guard by Q1 of next year. We have identified an opportunity, and we did note in an earlier question that we have some aircraft on order for our OES. That includes the 5 Light Twins helicopters. It also includes an order book for AW189 helicopters that we see being demanded by customers. The numbers we expect to be, significantly below the threshold that you referenced. And next year, it'll be -- it would be under $100 million, and then maybe a similar size in 2026. We do have some good flexibility within that order book from a timing standpoint if we need to move orders around to match up with customer opportunities.
Patrick Fitzgerald: All right. Last one. Just if you do -- the guidance reflects those new helicopters being in the fleet in '25 and '26?
Chris Bradshaw: It does. For a -- for certainly the Light Twins that I referenced, and then for a smaller number, probably a handful of AW189s by the end of 2026.
Patrick Fitzgerald: All right. Thanks very much.
Chris Bradshaw: Thank you.
Operator: The next question is from Josh Jayne from Daniel Energy Partners. Your line is now open.
Josh Jayne: Hi, good morning.
Chris Bradshaw: Good morning.
Josh Jayne: First question I want to ask is just on the financing side. You guys have obviously been successful with a couple of equipment financings year to date. A little bit different for you as they're backed by significant contracts, but could you just talk us through the financing market today, what you're seeing, your expectations going forward, and how you're thinking about that?
Jennifer Whalen: Sure. Thank you for the question. It's a bit of a unique situation for us with these search and rescue contracts that we have. So we've been able to go to these banks, and in the case of this newest financing to an export bank, which is a government-backed sort of organization, and be able to get financing where they look basically through our credit quality to the credit quality of the government that's backing us. These are 10-year long-term, at least 10-year contracts, cash-generative, and there's a lot of security there. So, we're able to get very attractive terms for the specific equipment financing related to both the UK SAR and the Irish SAR contract. So, that's the reason we went down this path for this financing. It really is -- the newest one is the best that we have out there today. As we move forward, we don't really, as of this time, see a need for any additional that to partake, to work on -- as we take these other deliveries, we have sufficient cash flows to manage that CapEx.
Josh Jayne: Okay. And then on the offshore energy services side, I mean, if we just do rough math based on your Q2 top line for where you were -- when we think about the offshore drilling market going forward, a lot of the offshore drilling calls over the last couple of weeks sort of highlighted, let's call it, the flattish activity over the next 12 months. When I look at your guidance, I'm going to ask the guidance on '25 question a little bit differently. When I see where you were in Q2, and even if we're in a flattish recount environment, it seems very reasonable, even without some material price increases, to be sort of at the $1 billion level of the top line in the offshore energy business. Would you confirm that? And then also maybe elaborate a little bit on your expectations for rig activity in '25 and '26 and beyond, especially in West Africa, where we would expect to see a decent amount of growth?
Jennifer Whalen: Yeah. I'll go back to a big portion of our offshore energy business is production related. So that does -- put some stability into that offshore energy. As Chris talked about in one of the other questions around rate increases and where those rates are going to go, there's a lot more in '26 than there is in '25. So, we have priced in, for 2025, a fairly stable number based on the fact that we're not going to have likely as many ratings, well, we will not have as many rate increases as we will on '25. And a lot of our growth today in Africa is in Nigeria, which is really related to customers we already have or customers that came back to us, not necessarily the growth and the rigs that are coming into that region.
Chris Bradshaw: Yeah, I would just add that, I think we have a similar view that you referenced, Josh, in terms of the activity levels in Africa. We expect that it's a market that will continue to see a pretty high level of activity from the upstream customers. And we're working to ensure that we'll have the capacity and the fleet availability to meet that need.
Josh Jayne: Okay. And then just for my final question, could you update us on lead times today for helicopters across the industry? So, if things start getting ordered today, when ultimately they could be delivered, I'm just trying to think about competition from a standpoint of how long the cycle could remain tight and just potential issues with lead times and things of that nature. If you could just update on that, so we could think about the supply-demand balance would be helpful. Thanks.
Chris Bradshaw: Sure. And thank you for the question, Josh. I think it is a good opportunity to update on the status of what potential new builds look like. So, if we look at the heavier side of the market today, the S92 production line has been closed for a couple of years now. What is really being manufactured today that could be available to meet the future needs of the industry and the growth that we've been talking about is primarily focused on the super-medium category. So, that would be both the AW189 and the H175, the first being a Leonardo product, the second being an Airbus product. Both of those production lines have relatively finite numbers they can produce a year. I'll quote as a broad reference around 20 aircraft per year for the AW189. And that production line needs to be shared between the military customers, which are significant in terms of their orders, as well as the civilian market. So, for folks like Bristow. Because of that relatively tight production capacity, lead times are long. I'd say 24 months or more. So, it will be a while if you were to turn up at the OEM today and want to order a super-medium like a 189 before you would actually have an opportunity to receive that. This is one of the reasons that we're pleased to have the order book that we do with Leonardo for those AW189s and the ability to actually deliver aircraft in 2025 and 2026 has become a scarce and valuable delivery slot. So, we think that positions us well.
Josh Jayne: Thanks, I’ll turn it back.
Chris Bradshaw: Thank you.
Operator: There are no further questions in the queue. I will now turn the call back over to Christopher Bradshaw for closing remarks.
Chris Bradshaw: Thank you, Robbie, and thank you everyone for joining the call. We look forward to speaking again next quarter. Stay safe.
Operator: This concludes today's call. You may now disconnect at any time.
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