Bristow Group Inc. (VTOL) Q3 2022 Earnings Report, Transcript and Summary

00:04 Good day, and welcome to the Bristow Group Reports Third Quarter Fiscal Year 2022 Results Conference Call. Today's conference is being recorded. 00:14 At this time, I'd like to turn the conference over to Crystal Gordon, Senior Vice President and General Counsel. Please go ahead.

00:21 Thank you, Cody and good morning, everyone. Welcome to Bristow Group's third quarter fiscal year 2022 earnings call. I'm joined on the phone today with our President and Chief Executive Officer, Chris Bradshaw; and Senior Vice President, Chief Financial Officer, Jennifer Whalen. 00:37 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 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. 01:04 I'll now turn the call over to our President and CEO, Chris.

01:08 Thank you, Crystal and welcome to the call everyone. As always, I will begin our prepared remarks with a note on safety, which is Bristow's most important core value and our highest operational priority. Over the last two years, Bristow team members working on five continents have dealt with the challenges of managing through the global COVID-19 pandemic. 01:30 These men and women have adopted new personal protective equipment, implemented additional operating procedures and followed enhanced health and safety protocols, all while dealing with the pandemic effects and stressors in their own personal lives. They have done this with a dedicated focus on getting everyone home safe and healthy every day and delivering reliable and efficient service to our valued customers. 01:54 I want to commend and thank all of our Bristow team members around the world for their continued dedication to our mission and Bristow's target zero safety culture. Thank you. The company has also made significant integration progress following the merger of Era and Bristow in June 2020. As of December 31, synergy projects representing approximately $47 million of annualized savings have been completed, which means that we have already captured 94% of the target synergy projects identified with the merger. 02:33 As outlined in yesterday's press release, Bristow's disappointing financial results in Q3 FY '22 were due to a number of factors. Between foreign currency losses and equity losses from unconsolidated subsidiaries, the sequential quarter EBITDA experienced a negative variance of approximately $5 million from below the line non-cash items. The timing of major repairs and aircraft lease return costs contributed another $5 million to this negative sequential quarter variance. 03:04 In addition, we incurred extraordinary costs related to the temporary relocation of operations in the Gulf of Mexico following damage caused by Hurricane Ida, which slammed into Louisiana coastline on August 29. These hurricane related costs totaled over $3 million in Q3. Thanks to a lot of hard work from our Bristow U.S. team, we returned to full operations out of our Super Base in Houma, Louisiana in mid-January. So, while there will be some adverse effect on Q4 financial results, this impact was limited to the first couple of weeks of the new calendar year. 03:43 With that, I will hand it over to our CFO for more detailed review of Q3 financial results. Jennifer?

03:50 Thank you, Chris. Today, I will begin with a sequential quarter comparison of Bristow's financial results. EBITDA adjusted to exclude special items and asset dispositions was $30.7 million for the third quarter of fiscal year 2022 compared to $44.5 million in the second quarter, or a decrease of approximately $14 million. As Chris noted, our current quarter financial results were adversely affected by expenses related to Hurricane Ida. 04:20 We carry insurance policies that cover the costs related to damage of any aircraft or facilities. In addition, we have business continuity coverage that offset a portion of the costs related to operating from alternate bases. However, there were extraordinary costs related to the prolonged displacement of operations following Hurricane Ida which included hotel, travel and other operating costs. 04:43 These net costs totaled $3.4 million in Q3 compared to $1.3 million in Q2, resulting in an adverse variance of $2.1 million to the sequential quarter EBITDA. Additionally, operating revenues decreased $5.1 million, primarily due to lower utilization in government services and decreased activity in fixed-wing operations due to COVID-related travel restrictions and seasonality, partially offset by increased oil and gas revenues due to higher utilization in the Americas. 05:16 Operating expenses were $3.1 million higher due to higher fuel expenses, maintenance costs and the previously referenced costs related to the relocation of certain bases due to damage from Hurricane Ida. General and administrative expenses increased $2 million due to higher non-recurring professional services fees. 05:37 Earnings were also negatively affected by losses from unconsolidated subsidiaries of $0.9 million in the third quarter compared to earnings of $1 million in the previous quarter. In addition, we experienced losses on foreign currency of $0.8 million in the third quarter compared to gains of $2.2 million in the previous quarter or $3 million negative effect on EBITDA. 06:01 Finally, Bristow continues to benefit from a strong balance sheet and liquidity position. As of December 31, available liquidity was $326 million and our net debt-to-LTM adjusted EBITDA ratio was approximately two times. In conclusion, in the last 12 months, we have generated $162 million in adjusted free cash flow and as we've stated before, we believe this business model will continue to have strong free cash flow. 06:28 At this time, I'll turn the call back to Chris for further remarks. Chris?

06:32 Thank you, Jennifer. We continue to have a positive outlook on the future demand for our services. With crude oil and refined product inventories below historical averages, increasing demand trends as the pandemic effects recede and limited excess capacity in the market, the fundamentals for the oil and gas industry are very favorable. We continue to believe that a significant broad based increase in offshore oil and gas activity will begin in earnest this year. 07:03 Indeed, the recent strength in commodity prices and improving market conditions have enhanced our belief, that we are on the precipice of a multiyear growth cycle. Given the operating leverage inherent in our business, Bristow's financial results will benefit greatly from the expected increase in offshore oil and gas spending. 07:24 Beyond oil and gas services, we believe compelling growth opportunities exist in government and military services, offshore wind farm support and advance air mobility. In particular, we were pleased to announce the successful award of a Dutch SAR contract to Bristow. This 10-year contract with two one-year extension options will commence in November 2022 and involve providing dedicated SAR-equipped AW189 helicopters operated by highly qualified Bristow crews from two bases in the Netherlands. 07:57 We are currently involved in other active tender processes for additional government SAR contracts in both Europe and the Americas and we believe Bristow is well positioned to grow our global leading search and rescue business. We were also pleased to announce the recent completion of offshore revenue flight in the UK using sustainable aviation fuel. 08:19 As previously noted, Bristow intends to be an early and leading adopter of sustainable aviation fuels. Combined with our adoption of electric powered ground support vehicles, early partnerships with manufacturers of electric vertical take-off and landing and short take-off and landing aircraft and other initiatives, Bristow is committed to remaining a global leader in innovative and sustainable vertical flight solutions. 08:44 With that, let's open the line for questions. Operator?

08:49 Thank you.[Operator Instructions] And we take our first question from Dohyun Cha from MacKay. Please go ahead.

09:23 Hi. Good morning. Thanks for taking my questions. First, it looks like you had a several kind of non-recurring or extraordinary cost items in the quarter and just, if we use kind of $31 million as the adjusted EBITDA number for the quarter. I just was wondering like these factors like FX, hurricane related costs, et cetera, what -- what should we expect next quarter to come back, so to speak, what should we credit back?

09:57 Well, we can certainly comment on the items that impacted this quarter. So in the current quarter, there was a negative variance at least relative to the prior quarter of about $5 million just due to below-the-line non-cash items in the form of foreign exchange currency translations. Yes. And also, as we noted this quarter was adversely impacted from extraordinary costs related to the dislocation following Hurricane Ida. That in of itself was about $3.4 million in total cost that impacted the December quarter. We also noted some items related to the timing of repairs and some lease return costs for aircraft that we were preparing to return to the lessors and those two items themselves were about $5 million and negative variance again relative to the prior quarter. 10:47 So some of those items, we will see in the future, for example, we're always going to have some variance in our timing of repairs. It will be a little lumpy as we look at the portion of our fleet that's maintained on a time and cost of repair basis. Others have ended, such as the hurricane related costs and there are others like the foreign currency exchange, which will vary from quarter-to-quarter, but again that and the unconsolidated subsidiary earnings are really non-cash items.

11:14 Got you. Thanks. Now, could you also, I think last quarter you had touched upon fuel costs being pressuring your margins a bit. I'm just wondering if that -- if you've seen a continuation of that and then my last question is related to working capital, thinking about the source of cash this quarter. Can you give some guidance on how we should be thinking about the seasonality or what to expect next quarter? Thank you.

11:44 Sure. I'll start with the working capital, the cash flow. We did benefit from working capital for our cash flow this quarter. This was really due to some timing of payments from customers that came earlier as well as higher accrued interest for our notes that we have outstanding, partially offset by some a lower operating results and $9 million legal settlement that we had last quarter. So, on working capital, it's based on timing of payments and we did have the bigger driver from the accounts receivable this quarter and we will make our interest payment next quarter. So it will fluctuate from time to time. The first question was on pricing. So, we pass on fuel costs on to our customer. It is primarily a pass-through and we do have an airline in Australia that's a little bit different based on ticket prices, but generally our fuel is passed through to our customers.

12:47 Is the pass through instant or is there typically some lag we should expect. I'm just, again, just trying to model the next quarter and can get a better understanding of that? Thank you.

13:00 It's not really a lag. It's based on a formula that we use, based on average fuel prices that month. So there can be some disconnect between the two, but it typically catches itself up. So, you could have a little bit in the last month of the quarter, but generally it's in that same quarter.

13:21 Okay. Thank you very much.

13:26 Thank you. We will take our next question from John Deysher with Pinnacle.

13:31 Good morning, everyone. Thanks for taking my question. I was just curious on the swing in the unconsolidated subsidiary income, where did -- what do you attribute that to?

13:47 It really, the only thing that's going through there, John, is our investment in Cougar. So that's our investment in Canada. So they had some fluctuation, they had some income last quarter and not this quarter.

14:04 Okay. And I think in the prior call, you mentioned that the Airnorth fleet was going to be reconfigured by the end of this year. Is that still on track to get completed by the end of this year for Airnorth?

14:22 Yeah. Good morning, John. So that Airnorth fleet transition, we expect to be complete by the end of our FY '23. So, it will be a little over a year from now as we work to transition some smaller regional aircraft into some slightly larger Embraer E190s, which will also will be on more favorable lease terms. So we think both the capacity to carry more customers on the aircraft, especially as travel picks back up in Australia following the pandemic, as well as the economics on those leases will put the Airnorth business in Australia in a much better place following that transition.

15:00 Okay. That's good to hear. And just back to Cougar for a second. Was the decline -- was the result of the decline in hours or what was the basis for less revenue coming in for cougar or less profit?

15:14 So, I'll just back up a little bit on Cougar. So just to remind you and we do have lease -- we've leased helicopters and facilities into Cougar. So we do have economics coming out of Cougar. It's on a cash basis today because their results have not been great. So, but in the last -- in the previous period they had some more unusual settlements that contributed to revenue that didn't continue into the next quarter.

15:47 Sorry, I'm not clear when you say settlements into revenue, what does that refer to exactly?

15:50 They had some costs for the end of some contracts that happens, that we noted in previous quarters we had an impairment due to the end of contract and they received a settlement for ending that contract that they received in the previous quarter, which didn't recur in this current quarter.

16:10 I got you. Okay. Fine. And on the SG&A, it was up by $2 million you said for professional expenses. Could you give us some color as to what professional -- types of professional expenses you're referring too?

16:23 This is primarily related to an ongoing legal matter. Other than that, it's not part of our normal run rate of what G&A will be going forward.

16:36 Do you expect that to continue through the fourth quarter?

16:40 We may see some additional costs related to this legal matter, we may.

16:51 You may see, okay. Is this legal matter disclosed in the 10-K or the 10-Q?

16:56 No. It's not, John. So, this is a claim that we're pursuing against the vendor. We think it's important obviously to protect the company's rights. Hard to say, how this will evolve over time, as is often the case in disputes of this nature, but as Jennifer noted, this is not part of our recurring SG&A.

17:16 Okay. Was there anything in past quarters related to this dispute?

17:23 It was up $0.8 million in the preceding quarter and then the amounts a little over $2 million -- $2.3 million that we disclosed in this quarter.

17:33 All right. I would guess that if it continues in the fourth quarter and it's not resolved, you will disclose the basis for the complaint in 10-K?

17:43 Yeah. Again it's an active dispute, so I think it's a dynamic situation, hard to predict exactly how it will evolve within a particular quarter. But yes, as it has any impact on our business, we will disclose that.

17:57 Okay. Fair enough. Thanks very much and good luck.

18:01 Thanks, John.

18:04 Thank you. We will take our next question from Sam Mitchell with Empyrean Capital.

18:11 Hi. Thank you for taking the questions. Just three from me. First, is there a specific leverage target do you have to hit before resuming share repurchases? Second, can you comment on price realization in the quarter and the overall pricing environment going forward? And then third, given a very upbeat tone on the strength of the offshore market, can you provide additional commentary on where you see potential EBITDA relative to the $240 million target you laid out when announcing the Bristow Era merger. Thank you.

18:52 Hi, Sam. Good morning and thank you for the question. So on the share repurchases, I would say, we remain very comfortable with the current leverage of the company and there is nothing about our current leverage situation that would preclude us from repurchasing additional shares at this time. So, not an impact there. We're comfortable with where we're at. On pricing, I would say, as has been our case while we don't discuss specifics around pricing, but what I would say is, this is not been a material driver one way or the other for the business at this point in time. Where we are right now in the cycle is that there is still some idle capacity. 19:29 What will really drive the most significant improvement for the company from revenue and cash flow standpoint is an increase in utilization. So, as additional aircraft go back on contract, that will have the biggest impact on the company's financial results, but pricing itself has not been a large variance in any recent time nor do we expect it to be necessarily in the immediate future. 19:51 As it relates to our outlook for offshore oil and gas activity, we do remain quite positive. I think our outlook would be consistent with what you're hearing from other large players in this space, which is that we are expecting significant increases in spending from the oil and gas companies on their offshore activity beginning this year and we expect that to be a multi-year growth cycle. We've spoken in some recent calls about the fact that the earliest green shoots we were seeing were in our Americas region, that's really from Brazil to the Caribbean Triangle that we support up to the U.S. Gulf of Mexico. 20:31 And indeed, you're now starting to see that flow through to our activity and revenues in the Americas, you'll note that Americas oil and gas revenues have been up consistently over the last three quarters, including a 9% sequential quarter increase. So, we do have a positive outlook as noted. 20:47 With respect to the specific target that you mentioned, at this time, we're not providing financial guidance, but what we have said and we'll reiterate here, is that we do believe that the oil and gas helicopter market will return to the levels of activity that we saw prior to early 2020 when the pandemic began. 21:10 So, the run rate that you referenced, again, it's still within where we think offshore activity will return to as spending starts to increase again. No predictions on exact timing of what quarter or fiscal year within a quarter that will happen, but we do think we will get back to and surpass the overall levels of activity that existed prior to this pandemic. We've noted before that we think it's unlikely the overall industry will ever return to the pre-2014 levels, but certainly the 2019, early 2020 not only did we think we'll return to that overall level of activity, but also surpass it.

21:53 Perfect. Thank you, guys.

21:58 Thank you. [Operator Instructions] We will hear next from Adam Ritzer, Private Investor.

22:04 Hi. Good morning. Thanks for taking my call. Can you give us a little more of, like a global outlook? I know you've talked about the Americas that's coming back strong. Can you give us a little more color on what's going on in Africa, in Europe, maybe between Norway and the UK and talk about that a little more specifically?

22:29 Yeah. Good morning, Adam. In terms of some of those other regions, again not quite the level of activity that we're seeing come back in the Americas at this time. Africa and more specifically in Nigeria, as you know has been one of the markets hardest hit since the pandemic began in early 2020. The overall market has contracted significantly there. I think there will be an increase again in activity there is our expectation, but not coming back online quite as fast as the U.S. In Europe, overall activity has been more stable, particularly in Norway. Norway activity was actually up a little bit sequentially in the December quarter relative to September. 23:17 In the UK, that market has been impacted by the decline in activity and it also, as I think you personally will recall, Adam, there a fairly challenging competitive landscape in the UK given the number of competitors there. So that's also impacted our business. I would say, again, that we are positive on the global outlook. We do think there will be a broader based increase in offshore oil and gas spending over time. We just think the Americas is moving more quickly and we're already starting to see the benefits in the Americas whereas spending in these other regions will probably take a little longer to come back online.

23:58 Got it. And I mean -- going, touching back on what you just mentioned, the competition, have you seen any positive effects with CHC taking out Babcock. I know Babcock in the past, you guys have pointed out has been almost underbidding contracts just to get the revenue. Can you talk about anything going on there if it's improving at all?

24:23 Well, we continue to believe that the North Sea is, and particularly the UK sector of the North Sea is a market that really needed consolidation and should benefit from consolidation. There is a regulatory review going on the particular merger that you mentioned, that review is not yet completed, it's scheduled to be completed over the coming months, which will determine whether or not that we will be able to actually integrate those businesses and run them together. So, we will follow developments there with interest. But again, we think that, that market in particular really needed consolidation and needed structural change to get to a more sustainable place.

25:07 Right. And when you talked about the SAR business, I know there is a couple of large contracts in the EU, there's Ireland and obviously you guys are trying to renew the UK deal, but you also mentioned the Americas, are there new SAR contracts in the Americas that you can talk about at all?

25:29 Yes. We are actively participating in a tender for the Dutch Caribbean Coastguard contract. So this is a government provided search and rescue support for the Southern Caribbean region here in the Americas. Actually Bristow was determined to be the preliminary winner of that contract. It is going through a structured period where people can launch challenges to that determination, but we were really happy and pleased to see that the government designated Bristow as the best -- the best provider for that future contract. We hope to secure the ultimate award of that contract soon and secure the geographic expansion of our government provided search and rescue business into the Americas.

26:13 Will there ever be or maybe there is SAR business in Guiana and Suriname. With all that activity that everybody reads about almost daily, is there anything there was that could develop at some point in time?

26:29 We do provide search and rescue services to our commercial customers, our oil and gas customers throughout the Caribbean region, each of Trinidad, Guiana and Suriname. We provide SAR support some to the oil and gas community drilling there. There is not at least at this time any government contract that's up for outsourcing our bid. But we are active in the provision of search and rescue support through our commercial customers there.

26:53 Okay. So do you guys just are providing to your customers, not government at this time, okay. And then the last question I had is about the balance sheet, obviously you guys are generating a significant amount of cash from the business, from working capital. It seems like you have way too much cash and you have a ton of liquidity. It doesn't look like there's going to be anything left to do in consolidation right now or maybe there is behind the scenes, but how can you not more active on either paying down your debt besides the notes and/or you haven't bought back stock in the last five months or six months. Why do we need all this liquidity at this point in time?

27:36 Yeah. So, we do think Bristow is fortunate to have a strong balance sheet, including a robust liquidity position. We think there are multiple opportunities to create value with that availability. As we think about those alternatives, I'll reference a few to ones that you mentioned. First of all, we have paid down a lot of debt since the merger closed. And just in the last couple of quarters, we paid off, cleaned up debt in Australia and in the UK that we had locally related to an airport that we own there. So, right now we have a much cleaner capital structure than with the case and nearly after the merger when we have the publicly traded senior notes and then we have the UK SAR related debt, which is at a very favorable rate. So, we're pleased with the progress that's been made since the merger closed on really cleaning up the back of the debt side of the capital structure. 28:29 With respect to share repurchases, the return of capital to shareholders has been a priority, and we're going to continue to look at that as one of the principal alternative uses for the available cash. We have repurchased approximately $50 million of stock since the share repurchase program was approved in late 2020. And again, that will continue to be one of the primary considerations for our available cash. We do think that M&A and consolidation is a potential use of cash for us and indeed we think some of the potential consolidation opportunities that are out there could be some of the best long-term value creation opportunities available for the company and our stakeholders. That was the case with the Era Bristow merger and we think there could be other consolidation that would be attractive as well. 29:19 We also have some needs for cash that will be related to growing our SAR business. For example, we will bring in a new delivery helicopter to support the award of the Dutch SAR contract in the Netherlands. We are following other opportunities in government SAR contracts as we've already talked about on this call. We are also are mindful of our balance sheet strength as it relates to some of the big bids that we're pursuing. For example, some of these large government contract awards will look at the service providers balance sheet and credit situation. So, we're always going to take that into consideration. So, all of which is to say, Adam, we think we're in a favorable position now. We do have available cash to put to work. We think there are multiple opportunities, multiple alternatives to create value using that availability.

30:06 Okay. Great. I really appreciate it and best of luck to you.

30:10 Thank you.

30:12 Thank you. We will take our next question from Patrick Fitzgerald with Baird.

30:18 Yeah. What percent of your like increase in flight hours that you're expecting from oil and gas would be? I know it's somewhat difficult to say production versus incremental drilling activity?

30:42 Sure. Good morning, Patrick. If you look at our business today on the oil and gas side, more than 80% of our revenues are coming from production support. The exploration side is the minority. However, that's likely where a lot of the growth will come from. So, to directly address your question, there will be some increase in flight hours related to production support because there is some aspect of production activities for oil and gas customers that are elective. They can choose when they want to do major projects, for example, whether it's an upgrade or a major repair on a production facility, they may defer that depending upon the commodity price environment or their capital plans. So that elective expansion or contraction of production support will drive some change in flight hours, but as we think about growth, it's really new projects. It's really more of the exploration side whether it's seismic or drilling or completion activities that as more floating rigs are put to work to support those activities, we will need more helicopters to go to work to support those customer demand, flight hours will increase and again even more so than flight hours, just getting more aircraft on contract as our customers need to support that kind of transportation for their increased activity will drive the increase in Bristow's revenues and cash flows.

32:05 Okay. So it's more of a -- you're expecting increase drilling to some extent and then you're expecting increased volume or just kind of loosening of the purse strings at your customers, because I mean like production as a whole is not like up significantly and I wouldn't expect, so if you could provide some color on that, that'd be helpful?

32:41 Sure. So, from the baseline where we're at today, it's -- most of the growth will be driven by new activity, exploration related again either seismic drilling or completion activities. There will be some likely increase in the personnel on board, the number of people that will go to support additional projects on production as well. So I just -- I note that to mention that it is not purely static on the production side either, there is flex in that spending. But from the baseline where we're at today, especially getting additional helicopters back on contract, new exploration activity either seismic drilling or completion activity will be what drives that.

33:26 Okay. And then in terms of pricing power. What gives you guys confidence there, I mean is it like a utilization level that you're bumping up against that historically has provided upside with rates or...

33:40 Well, pursuant to our longstanding policy, we don't make specific comments on pricing for competitive reasons, but I would note that pricing has not really been a big driver in our business for a long time, it's been more about utilization of the fleet and that's been the case since really the 2014, 2015 downturn. So, will pricing increase over time, we certainly hope so, but right now in the immediate near term, it's really about getting more aircraft on contracting, increasing the utilization.

34:13 Okay. Thanks. And then just -- could you just remind us where you stand with respect to the UK SAR 2.0, what you have to do, what we can expect to hear?

34:31 Yes, happy to do that. So late last year, we submitted our bid. There, it's a fairly public process. There are two companies, ourselves and one other left in the competition. We will be entering later this month the negotiation phase with the UK Government as they continue their work on which provider, they want to award the 2G contract to. We think we're very well positioned there to secure the win. Obviously not taking anything for granted. They've stated that they will make a final determination and announce the winner of the 2G contract later this year, but by October of 2022.

35:15 All right. Thank you.

35:17 Thank you.

35:19 Thank you. We will take a follow-up from Dohyun Cha with MacKay.

35:24 Hi. Thanks. With regards to your comments earlier about M&A opportunities, your leverage currently on an LTM basis is about 2 times, maybe on an annualized latest quarter basis it's higher. I'm just wondering what kind of leverage metrics are you abiding by when considering potential M&A?

35:47 Thank you for the question. And we are comfortable where we're at today, where we're at from a leverage perspective, say however in -- depending on the transaction, we would be willing to let that go up as long as we have good visibility into the cash flows of the combined new business going forward.

36:09 Okay. And would you be looking to potentially balance such a potential transaction with both cash and equity or is it primarily with cash?

36:26 Well, with M&A situations, it is a two-way street. So, there may be some situations with the buyers looking for particular form of consideration. Obviously, from our standpoint, we will have our own priorities as well. So it’s really hard to answer on a blanket basis, it will depend situation to situation. I think we're in a favorable position as Bristow, because we are today in the industry in addition to being the largest global player. We do have the strongest balance sheet. So the ability to use cash, we also have the best ability to access additional financing, whether that's debt or equity. We are the only publicly traded helicopter operator left in the world. So, I think we have more flexibility and a more favorable -- we are in a more favorable position to effect consolidation than anyone else.

37:17 Got you. One last question regarding wind farms. I think you've been talking about for almost a year now and I just wanted to see how you were measuring progress in that market and if you could discuss a little bit how you're positioned relative to competition or other substitute forms of transportation? Thank you.

37:44 Sure. Thank you for the question on that. Offshore wind here in the U.S. is a market -- very nascent market really doesn't exist from helicopter support contract today. Here in the U.S., we're actively participating right now in two active tender processes to support what will be new wind farm projects. So, these would really be the first offshore helicopter support work in the U.S. for that industry. So we're optimistic there, hope to be in a position to win some of that work in the market really that again today doesn't exist, but we expect to grow and to grow meaningfully over the next several years. 38:21 In Northwest Europe, we have provided limited amount of offshore wind support and we're currently supporting an offshore wind project out of the UK right now with some helicopters. In terms of a broader scale, this space offshore wind Northwest Europe had not been a part of Bristow's business historically. Post-merger, we have looked at ways to penetrate that. We've noted before that we will look at both buy and build options to grow our offshore wind support business in the North Sea. Pleased to be supporting those projects today and again we're looking actively today at ways we can further penetrate offshore helicopter support for wind projects in Europe.

39:09 Got you. So is there any difference in the kinds of specs that are required or better suited for offshore wind farm support versus your fleet. I just wanted to get a better understanding of that aspect of it?

39:25 Yeah. It’s a good question. The answer is yes and no. So, there really two stages that you would think about offshore helicopter support for wind projects. In the initial stage in the construction phase of the wind farm, you're typically using larger aircraft whether that medium helicopters or larger to support crew change for the crews that are conducting that construction work on the project. Those aircraft are -- would really be the same models and really same mission profiles that we do today for our oil and gas customers for their crude transportation needs. 39:59 Once the wind farm is up and running, it transitions into an operations and maintenance space and then the mission changes. There the mission is more about hoisting the maintenance personnel down to the top of the [indiscernible] to conduct the work that needs to be done whether scheduled and unscheduled maintenance on the turbines, and the right aircraft for that mission profile is really a new generation light twin helicopter, whether that be an H145 manufactured by Airbus or an AW169 manufactured by Leonardo, those are the two most common types used today in the mature markets like in Northwest Europe. 40:41 So that operations and maintenance phase, which will go on for the life of the wind farms, you're talking about a few decades, it does involve a different type of aircraft than what we have in our fleet today. And so as we look to participate in some of those contracts, we would need to bring in some new aircraft.

40:58 Got you. Thank you very much. That's very helpful.

41:02 Thank you.

41:04 Thank you. That does conclude today's question-and-answer session. I'd like to turn the conference back over to management for any additional or closing remarks.

41:12 I want to thank everyone for joining the call today. I look forward to speaking again next quarter. In the meantime, everyone stay safe and well. Take care.

41:20 Thank you. That does conclude today's conference. Thank you all for your participation and you may now disconnect.