Good day and welcome to the Era Group Resorts Fiscal Year and Quarter Four 2019 Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Crystal Gordon. Please go ahead, ma'am..

Jennifer Whalen; Stu Stavley; Paul White; Grant Newman; and Dave Stepanek. Let me remind everyone, during the 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 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 investor slides and also available on the investor page of our website.

Further Era intends to file with the SEC a registration statement on Form S-4 that will include a joint proxy consent solicitation statement of Era and Bristow and the prospectus of Era. Investors are urged to read this carefully, because it will contain important information about the proposed transaction.

You may obtain a copy when it becomes available at the SEC's website by calling Era or by going to our website.

Era, Bristow and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from Era and Bristow stockholders in respect of the proposed transaction under the rules of the SEC.

You may obtain information regarding the names, affiliations and interests of Era's directors and executive officers in Era's Annual Report on Form 10-K. I'll now turn the call over to our President and CEO.

Chris?.

Thank you, Crystal, and welcome to the call everyone. As always, I will begin our prepared remarks with a note on safety, which is Era's most important core value and our highest operational priority.

We are pleased to report that Era achieved our dual goals of zero air accidents and zero recordable workplace incidents in full year 2019 and year-to-date 2020. The company has not experienced an air accident in the last three years and we have now gone over 890 consecutive days without a recordable workplace incident.

I want to thank and commend the entire Era team for their hard work and dedication in placing safety first every day. I will now turn it over to our CFO for a review of Q4 and full year financial results.

Jennifer?.

Thank you, Chris. EBITDA adjusted to exclude special items of $13.7 million for the fourth quarter of 2019 compared to $10.5 million in the third quarter of 2019. This increase was primarily due to $3.1 million of gains on asset dispositions. There was an increase of $1.5 million in revenues due to higher utilization of helicopters in our U.S.

oil and gas operations and the full quarter impact of emergency response services contracts that commenced in the preceding quarter. General and administrative expenses were $2.2 million higher, due to increased compensation costs and higher professional service fees related to the expected merger with Bristow.

Moving on to the full year 2019, compared to the full year 2018 results, adjusted EBITDA was $1 million higher. Full year 2019 revenues were $4.4 million higher due to the commencement of new dry leasing and emergency response contracts. Operating expenses were $3 million higher, primarily due to increased repairs and maintenance and personnel costs.

General and administrative expenses were $6.8 million lower in the current year, primarily due to the absence of professional service fees related to litigation that was settled in the prior year. You can find a more detailed description of these special items in the reconciliation of non-GAAP measures section of our earnings release.

Finally, during 2019, we generated $35 million in adjusted free cash flow, allowing us to continue to strengthen the company's balance sheet and financial flexibility. As of year-end, Era's total liquidity was approximately $242 million, including $117 million in cash on hand.

Our net debt balance was just $45 million, which is more than an 80% reduction from when the industry downturn began in late 2014. With a strong balance sheet and flexible order book, Era remains positioned -- well positioned for positive free cash flow generation. At this time I'll turn the call back over to Chris for further remarks.

Chris?.

Thank you, Jennifer. I want to take a minute to address the current concerns regarding the coronavirus disease 2019 or COVID-19. We are working in concert with our customers to limit the spread of the virus and mitigate potential future impacts on our operations.

We have implemented enhanced screening procedures at our facilities and we've issued new policies and alerts to keep our employees and passengers well informed. At this time, we have not experienced any material impacts on our operations.

Through the first two months of 2020, we have witnessed similar levels of customer activity as those that we experienced in Q4 of last year. And we are not currently aware of any adverse impacts from COVID-19 on our customer spending plans.

Having said that, we are all operating in a period of limited visibility given the uncertainty regarding the duration and severity of the coronavirus outbreak. We will continue to work closely with our customers to monitor developments and take the necessary measures to protect our people and mitigate potential impact on our operations.

Turning to a more positive topic. We remain very excited about the announced merger with Bristow Group, which we believe will create substantial value for the stakeholders of both companies.

As previously announced, the merger is expected to close in the second half of this year, and we believe there is a very attractive future for the combined company. We anticipate filing a Form S-4 with the SEC in the next 30 days and that document will contain additional information on the transaction.

I want to remind everyone that Era and Bristow remain separate companies and competitors, until the time that the transaction closes. As such, we are not in a position to answer any Bristow specific questions in the interim, and we are unable to provide additional information on the transaction beyond what has already been publicly disclosed.

We are happy though to address Era specific questions as well as questions related to the information that has already been disclosed on the merger. With that, let's open the line for questions.

Britney?.

Yes, sir. Thank you. [Operator Instructions] Our first question comes from Adam Ritzer, Investor..

Hi. Good morning.

How you guys doing?.

Good morning, Adam..

So, I guess, I'm not exactly sure what you can and can't ask but let me maybe give you a simple one. I think when you guys had announced a transaction you said you'd be willing to buy back $10 million worth of shares.

Can you comment on if you've been able to do any of that? And/or what the plans are for that?.

Sure. We -- as we have done historically, we will take an opportunistic approach to the share repurchases. It won't be programmatic. So we're monitoring market developments. And if we see a compelling opportunity we'll act. And if and when there is share repurchase activity to disclose, we'll do that pursuant to the relevant disclosure requirements..

Okay. But let me ask you this you guys, which was pretty -- I think you haven't done this for a while. You put out your NAV calculation et cetera. Either way you want to look at it from a book perspective or an NAV the stock is trading well below 50% of that.

Why would you not want to be buying back volume liquidity more than $10 million worth so the pro forma share count after the transaction if it closes are even less than what you projected. That -- maybe you could explain that a little bit..

Sure. So with respect to the size of the program that's been approved as is customary in transaction agreements of this nature both sides have agreed to limit certain activities that they will pursue in the interim period between announcement and close, so that there's not a fundamental change in either company's business or financial profile.

So some of those considerations are what's governing the size of the approved program. You referenced our NAV disclosure, which as you know we provide once a year and we did that again this morning as part of the investor slide deck.

As has been the case for some time during the downturn, our stock price is trading at a discount to both NAV per share and net book value per share. I think that we have consistently demonstrated over a long period of time that we're able to sell assets at a premium to book value.

Over the last 10 or 12 years, we've sold well north of 100 helicopters at a premium to book value. So I think we have a demonstrated track record of being able to monetize assets at book value..

Okay. So the bottom line is you're restricted from buying back more than $10 million worth of stock because of the agreement.

Is that correct?.

That's accurate. Yes..

Okay. So that's the bottom line. Okay I got it. Let me ask you this. Are you allowed to speak more about your synergy projection? You had given synergy projections of $35 million.

Have you been able to do any more work on that? Is that something you're allowed to comment on?.

So as you referenced, we did announce synergies of at least $35 million. Most of those are going to come from reducing fixed costs, so we see them as being highly achievable. The largest contributor will be from the elimination of redundant corporate expenses.

Next in line in terms of size of potential savings relates to operational efficiencies that we believe we can realize giving -- given our overlapping presence in the U.S. Gulf of Mexico.

And then next in line would be some fleet savings that we anticipate from the optimization of our aircraft maintenance programs and optimizing fleet utilization between the new combined fleet. In terms of more work we will -- we have begun a pre-integration planning process.

We can't actually implement any changes prior to closing the transaction obviously, but we have begun a pre-integration planning process. And at this time we have no changes or updates to that at least $35 million number that we provided..

Okay.

With the pre-implementation, could you say if you're as confident, more confident anything directionally now that you've got in there a little bit and taken a look at things?.

On the synergies, we believe there are at least $35 million. As we get into the business more to the extent that there are more savings that we can realize there might be some upside there. But at this time, we remain focused and dedicated on delivering that at least $35 million number..

Got it. Then the last question. I guess you said your S-4 is going to be out within the next month or so. And I realize from your last slide presentation, the $165 million of EBITDA run rate you gave for Bristow was at the end of their fiscal year which is March of 2019.

Since it's pretty much a year later, are you going to be able to update Bristow's numbers in the S-4?.

So the numbers for Bristow really have not changed. That $165 million was a run rate number for them. So that's after bridging from what they did in their FY 2019 to the run rate. And we provided a summary of that EBITDA bridge on page 9 of that investor slide deck.

So, again, that $165 million number is a run rate adjusted EBITDA number for Bristow, and there are no changes or updates to that number at this time..

Okay.

So you're not going to update that when you put out the S-4 for anything that's happened since the end of their last fiscal year, right?.

Yes. I'm not aware of any changes or developments that would change that number in our disclosure in the S-4..

Got it. Got it. Okay. Great. That's it. I appreciate your time and I guess we look forward to when the S-4 comes out. Thanks a lot..

Thanks Adam. Take care..

Thank you. At this time, there are no further questions in the queue. I will turn the conference back over to Mr. Chris Bradshaw..

Thank you, Britney..

I do apologize. We did just have one party queue up. My apologies..

No problem. We'll take the question..

That comes from John Deysher with Pinnacle..

Good morning everyone. I was just curious on the capital commitments section going forward. You talked about the AW189s to be delivered 2020 and 2021.

Is there a go/no-go date that's approaching that we should be aware of? And I guess, if you had to make the decision today would you proceed with those commitments?.

So we're really pleased with the partnership that we have with Leonardo and the flexibility that we have in that order book. So we are already well beyond the original decision dates for those flexible orders. They've been extended a number of times. We're optimistic that we will be able to extend them if we desire and preserve that flexibility.

So we're in a protracted position now where we're not obligated to spend any unfamiliar capital commitments, but we have the flexibility to bring in those aircraft if the opportunities present themselves. To address your question, if we have to make all of these decisions today, we would cancel these flexible orders.

However, we know we have the ability to see how things play out. And again this order book gives us some flexibility to bring in those aircraft if there are compelling opportunities to do that. .

Okay. Great.

And of course I guess you're going to monitor or accommodate the fleet of Bristow in making those decisions going forward?.

That's right. That's exactly right. .

Okay. That was it. Thank you..

Thanks John..

Thank you. Again there are no further questions in the queue. I will now turn the conference back over to Mr. Chris Bradshaw. .

Thank you Britney and thank you everyone for joining the call. I look forward to speaking again next quarter. And as always stay safe. .

Thank you everyone. That concludes today's teleconference. You may now disconnect..