Christopher Bradshaw: Yes. Thanks for the question, Josh. So factors that will bias results to one into the range or another are multifaceted. They include things like foreign exchange exposure in our big Government Services contracts. We do get paid in local currency, so that’s the pound on U.K. SAR. It will be the euro with Irish Coast Guard. So a stronger pound, stronger Euro are better for our results and would bias results more to the higher end of the range. We do have — I mean, I think it’s responsible to note some operational execution, especially on the new contracts, but that’s mostly weighted to the near term 2024 and 2025. Another factor would be supply chain challenges. We’ve talked about the various supply chain challenges that are impacting the industry today, namely weighted to the S-92.
So if there’s an improvement in those conditions and we’re able to return incremental S-92s into service and generate revenues and cash flow sooner than expected, again, that could bias us more to the higher end of the range. Of course, you have the overall macro questions, particularly on our Offshore Energy Services business, where the cycle is going to be. That’s more, I would think, weighted to later years, though. I think as of now, for the reasons we’ve discussed, we have a pretty high degree of visibility and conviction in what activity levels are going to look like over the next 2 to 3 years, which, again, we think are quite positive. So those are some of the various factors just directionally that would bias to the high end of the range or another.
We are guiding, and Jennifer summarized on the bar chart to certain midpoints. I would note, just as a point of reference, which is on that chart as well, in 2023, when we initially issued guidance for 2023, we did that with an adjusted EBITDA range of $150 million to $170 million, and we closed 2023 at $171 million of EBITDA. So again, especially as we look at outer years, we’re providing for some variability in the range and some of the factors that I mentioned could drive results to one of the range or the other.
Joshua Sullivan: Got it. And then just on that S-92 spare parts availability. What are you seeing as far as lead times? How have they kind of changed over the last quarter?
Christopher Bradshaw: Not much of a change to date. So we are still, as an overall industry, this is obviously not just impacting Bristow, it’s impacting everyone in the industry who operates those aircraft. We are seeing continued delays in parts and repairs. However, in working with Sikorsky, if they are optimistic, and we’re working with them to help get to a position by the end of this year, that is more normal course where hopefully, the parts are shipping when the parts are needed. So our outlook, I’d say, is a little bit better, but real-time conditions on the ground today remain challenged.
Joshua Sullivan: And then just one last one. You talked a little bit about capital allocation there, but any more additional color you can provide us on the buyback or timing?
Christopher Bradshaw: Well, we are making an investment this year in 2024, which we’ve discussed since when in U.K. SAR contract in 2022 and then subsequent to that, Ireland. So we do have a high investment period in 2024. But as you look at 2025 and beyond, if you look at the adjusted EBITDA numbers that we’ve provided, clearly that’s going to leave some excess cash available and capital allocation strategy will include looking at the return of capital to shareholders, whether that’s share repurchases, either programmatic or opportunistic or potentially thinking about dividends as we think about the stable cash flows that come off of our Government Services business. So 2025 and beyond, again we’ll be in a position to lean more heavily into that.
Joshua Sullivan: Great, thank you for the time.
Christopher Bradshaw: Thank you.
Operator: Our next question comes from Eddie Kim with Barclays.
Eddie Kim: Hi good morning. Great to see the 2025 outlook and the 2026 targets really speaks to the visibility you guys have in your business. My question is around the contract reset slide in your investor deck. It’s clear you have quite a few contracts coming up for renewal here. Does your guidance and your ’26 targets assume that you’ll successfully renew all of these at current market rates? And if so, what’s your confidence level in executing on that?
Christopher Bradshaw: Yes. To begin, I think it’s good to acknowledge that there is a risk whenever a contract is coming up for renewal or bid. And certainly, when you’re in a position as a market leader to raise rates, occasionally, you will have a customer who opts to go with a lower cost operator to save some money. We understand that risk. We accept that risk, particularly in a market like this one, where we know that demand is strong, supply is limited, and we’re going to have alternative uses for the assets. So we did see this in Guyana in 2022, when we were rebidding that, and the customer decided to go with a low-cost operator out of Brazil. We saw this again last year with a multiyear aircraft contract in the Southern North Sea in the U.K., where the customer opted again to go with the new market entrants at a lower cost than what we were quoting.
But in both those instances, we were able to quickly place those aircraft on new contracts with customers and opportunities that are willing to pay market rates that generate fair and attractive returns for Bristow. So I would say in today’s market, with strong demand, high supply picture, we’re very optimistic about the prospects ahead and view the opportunity to renew these expiring contracts and this market window is really a positive opportunity for Bristow.
Eddie Kim: Got it. And my follow-up is just on the time it will take to reset these legacy contracts. And apologies if I missed it, but the 70% of contracts that are yet to reset, do you think all of these resets in the next three years or so? And if so, is it like 1/3, 1/3, 1/3 each year? Just if you could speak to the time to reset and the cadence, that would be great.
Christopher Bradshaw: Yes, happy to address that. So if you look at the three-year window that you referenced, yes, over that full 3 years, the vast majority of our OES contracts will reset, but they’re not evenly distributed. So 2025 is a lighter year, a relatively light year for contract renewals in our OES business. 2026 is going to be a much more active one. But by the time we get through 2026, most of our big OES contracts will have renewed, and we’ll have an opportunity to reset those within that time period. So it’s really when you get to 2027 and beyond, you’ll see the full benefit of that run rate from the impacts of our 2026 vintage renewals.
