This is a helicopter operator / lessor with Bristow and Era Group ($ERA) completed their merger on June 11, 2020. Bristow was in bankruptcy while Era had managed the oil & gas downturn fairly well.
Financials & Valuation
Revenue stopped declining and was flat YoY. EBITDA was up plenty to $51m in Q2 (from ~$36m last Q and $40m last year). Cash flow and net debt are in a healthy spot. Leverage is 1.7x this Q.
There were a few big announcements in the quarter. First, they won the GBP1.6bn UK SAR contract; second, they completed a GBP10m acquisition; third, they are spending $55m on a repair and maintenance contract which they expect will generate good returns. These announcements all mean more capex. The $55m will be spend in 2022 and the UK SAR contract will require $160m over the next 4 years.
The stock is down to $27 and has performed poorly the past few years. Current market cap is ~$750m with a $1bn enterprise value. This trades at 6.2x trailing EBITDA despite a relatively clean balance sheet, stable performance, a good management team, and discretionary cash flow.
If the new contract(s) and acquisition don’t lead to increased EBITDA/cash flow then there will be little room for capital deployment over the next few years.
At 8x $165m EBITDA = $1.32bn EV. They’ll likely finish the year with $260m (or more) in net debt as they use up operating cash flow for the R&M contract. on 28m shares that would be a $38 target price.