UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
________________________________________
FORM 10-Q
________________________________________
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
| For the quarterly period ended | ||||||||
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the transition period from to | ||||||||
Commission File Number | ||||||||||||||
| (Exact name of registrant as specified in its charter) | ||||||||||||||
| (State or Other Jurisdiction of Incorporation or Organization) | (IRS Employer Identification No.) | ||||||||||
| (Address of Principal Executive Offices) | (Zip Code) | ||||||||||
Registrant’s telephone number, including area code:
(713 ) 267-7600
None | ||||||||
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | Non-accelerated filer | Smaller reporting company | Emerging growth company | |||||||||||
| ☐ | ☑ | ☐ | ||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☑ No ☐
The total number of shares of common stock (in thousands), par value $0.01 per share, outstanding as of August 2, 2024 was 28,618 . The Registrant has no other class of common stock outstanding.
BRISTOW GROUP INC. AND SUBSIDIARIES
TABLE OF CONTENTS
| PART I. Financial Information | Page | |||||||||||||
| Item 1. | ||||||||||||||
Note 1 | ||||||||||||||
Note 2 | ||||||||||||||
Note 3 | ||||||||||||||
Note 4 | ||||||||||||||
Note 5 | ||||||||||||||
Note 6 | ||||||||||||||
Note 7 | ||||||||||||||
Note 8 | ||||||||||||||
Note 9 | ||||||||||||||
Note 10 | ||||||||||||||
Note 11 | ||||||||||||||
| Item 2. | ||||||||||||||
| Item 3. | ||||||||||||||
| Item 4. | ||||||||||||||
| PART II. Other Information | ||||||||||||||
| Item 1. | ||||||||||||||
| Item 1A. | ||||||||||||||
| Item 2. | ||||||||||||||
| Item 3. | ||||||||||||||
| Item 4. | ||||||||||||||
| Item 5. | ||||||||||||||
| Item 6. | ||||||||||||||
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
BRISTOW GROUP INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share amounts)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Operating revenues | $ | $ | $ | $ | |||||||||||||||||||
Reimbursable revenues | |||||||||||||||||||||||
| Total revenues | |||||||||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Reimbursable expenses | |||||||||||||||||||||||
| General and administrative expenses | |||||||||||||||||||||||
| Merger and integration costs | |||||||||||||||||||||||
| Depreciation and amortization expense | |||||||||||||||||||||||
| Total costs and expenses | |||||||||||||||||||||||
Gains (losses) on disposal of assets | ( | ( | ( | ||||||||||||||||||||
| Earnings from unconsolidated affiliates | |||||||||||||||||||||||
| Operating income | |||||||||||||||||||||||
| Interest income | |||||||||||||||||||||||
| Interest expense, net | ( | ( | ( | ( | |||||||||||||||||||
| Reorganization items, net | ( | ( | |||||||||||||||||||||
| Other, net | ( | ( | ( | ( | |||||||||||||||||||
| Total other income (expense), net | ( | ( | ( | ( | |||||||||||||||||||
| Income (loss) before income taxes | ( | ( | |||||||||||||||||||||
| Income tax benefit (expense) | ( | ( | |||||||||||||||||||||
Net income (loss) | ( | ( | |||||||||||||||||||||
| Net loss (income) attributable to noncontrolling interests | ( | ( | |||||||||||||||||||||
Net income (loss) attributable to Bristow Group Inc. | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Earnings (losses) per common share: | |||||||||||||||||||||||
| Basic | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Diluted | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Weighted average shares of common stock outstanding: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
1
BRISTOW GROUP INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited, in thousands)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Net income (loss) | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||
| Currency translation adjustments | ( | ( | |||||||||||||||||||||
| Pension liability adjustment | ( | ( | ( | ||||||||||||||||||||
| Unrealized losses on cash flow hedges, net | ( | ( | ( | ( | |||||||||||||||||||
| Total other comprehensive income (loss), net of tax | ( | ( | |||||||||||||||||||||
| Total comprehensive income | |||||||||||||||||||||||
| Net comprehensive loss (income) attributable to noncontrolling interests | ( | ( | |||||||||||||||||||||
| Total comprehensive income attributable to Bristow Group Inc. | $ | $ | $ | $ | |||||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
2
BRISTOW GROUP INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)
| June 30, 2024 | December 31, 2023 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash | |||||||||||
Accounts receivable, net of allowance of $ | |||||||||||
| Inventories | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
Property and equipment, net of accumulated depreciation of $ | |||||||||||
| Investment in unconsolidated affiliates | |||||||||||
| Right-of-use assets | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued wages, benefits and related taxes | |||||||||||
| Income taxes payable and other accrued taxes | |||||||||||
| Deferred revenues | |||||||||||
| Accrued maintenance and repairs | |||||||||||
| Current portion of operating lease liabilities | |||||||||||
| Accrued interest and other accrued liabilities | |||||||||||
| Current maturities of long-term debt | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt, less current maturities | |||||||||||
| Other liabilities and deferred credits | |||||||||||
| Deferred taxes | |||||||||||
| Long-term operating lease liabilities | |||||||||||
| Total liabilities | $ | $ | |||||||||
| Commitments and contingencies (Note 7) | |||||||||||
| Stockholders’ equity: | |||||||||||
Common stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Retained earnings | |||||||||||
Treasury stock, at cost; | ( | ( | |||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total Bristow Group Inc. stockholders’ equity | |||||||||||
| Noncontrolling interests | ( | ( | |||||||||
| Total stockholders’ equity | |||||||||||
| Total liabilities and stockholders’ equity | $ | $ | |||||||||
See accompanying notes to condensed consolidated financial statements.
3
BRISTOW GROUP INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Changes in Stockholders’ Equity
(Unaudited, in thousands)
| Total Bristow Group Inc. Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Common Stock (Shares) | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Loss | Noncontrolling Interests | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||
| December 31, 2023 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
| Share award amortization | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Share repurchases | — | ( | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
March 31, 2024 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
| Share award amortization | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Share repurchases | — | ( | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
June 30, 2024 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
| Total Bristow Group Inc. Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Common Stock (Shares) | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Loss | Noncontrolling Interests | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||
December 31, 2022 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
| Share award amortization | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Share repurchases | — | ( | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
March 31, 2023 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
| Share award amortization | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Share repurchases | — | ( | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
June 30, 2023 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
4
BRISTOW GROUP INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
| Six Months Ended June 30, | |||||||||||
| 2024 | 2023 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income (loss) | $ | $ | ( | ||||||||
| Adjustments to reconcile net income (loss) to net cash from operating activities: | |||||||||||
| Depreciation and amortization expense | |||||||||||
| Losses (gains) on disposal of assets | ( | ||||||||||
| Earnings from unconsolidated affiliates | ( | ( | |||||||||
| Deferred income taxes | ( | ( | |||||||||
| Stock-based compensation expense | |||||||||||
| Amortization of deferred financing fees | |||||||||||
| Amortization of deferred contract costs | |||||||||||
| Discount amortization on long-term debt | |||||||||||
| Increase (decrease) in cash resulting from changes in: | |||||||||||
| Accounts receivable | ( | ||||||||||
| Inventory, prepaid expenses and other assets | ( | ( | |||||||||
| Accounts payable, accrued expenses and other liabilities | |||||||||||
| Net cash provided by operating activities | |||||||||||
| Cash flows from investing activities: | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Proceeds from asset dispositions | |||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds from borrowings | |||||||||||
| Debt issuance costs | ( | ( | |||||||||
| Repayments of debt | ( | ( | |||||||||
| Purchase of treasury stock | ( | ( | |||||||||
| Net cash provided by financing activities | |||||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | |||||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | ( | ||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | |||||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | $ | |||||||||
| Cash paid during the period for: | |||||||||||
| Interest | $ | $ | |||||||||
| Income taxes, net | $ | $ | |||||||||
See accompanying notes to condensed consolidated financial statements.
5
BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 — BASIS OF PRESENTATION, CONSOLIDATION AND SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The condensed consolidated financial statements include the accounts of Bristow Group Inc. and its consolidated entities. Unless the context otherwise indicates, any references to the “Company”, “Bristow”, “we”, “us” and “our” refer to Bristow Group Inc. and its consolidated entities.
The condensed consolidated financial information for the three and six months ended June 30, 2024 and 2023, has been prepared by the Company in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information reporting on Quarterly Form 10-Q and Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted from that which would appear in the annual consolidated financial statements. The condensed consolidated financial statements on this Quarterly Report on Form 10-Q should be read in conjunction with the financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
Summary of Significant Accounting Policies and Other Accounting Considerations
Basis of Consolidation — The consolidated financial statements include the accounts of Bristow Group Inc., its wholly and majority-owned subsidiaries and entities that meet the criteria of variable interest entities of which the Company is the primary beneficiary. All significant inter-company accounts and transactions are eliminated in consolidation.
Reclassification — Certain amounts reported for prior periods in the consolidated financial statements have been reclassified to conform with the current period’s presentation.
Accounting Estimates — The preparation of these condensed consolidated financial statements and accompanying footnotes requires the Company to make estimates and assumptions; however, they include all adjustments of a normal recurring nature which, in the opinion of management, are necessary for a fair presentation of the condensed consolidated statements of operations and comprehensive income, the condensed consolidated balance sheet, the condensed consolidated statements of changes in stockholders’ equity and the condensed consolidated statements of cash flows. Operating results for the interim period presented are not necessarily indicative of the results that may be expected for the entire year.
Recent Accounting Standards — The Company considers the applicability and impact of all Accounting Standard Updates (“ASUs”) issued by the Financial Accounting Standards Board (“FASB”). ASUs not listed within this Quarterly Report on Form 10-Q were assessed and determined as either not applicable or not material to the Company’s consolidated financial position or results of operations.
6
BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
Note 2 — REVENUES
The Company’s customers are primarily major integrated, national and independent offshore energy companies and government agencies. The Company derives its revenues primarily from aviation services generated through two types of contracts: helicopter services contracts and fixed wing services contracts. Revenues are generally recognized when the Company satisfies its performance obligations by providing aviation services to its customers in exchange for consideration.
The following table sets forth the disaggregation of operating revenues by service line for the applicable periods (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Offshore energy services | $ | $ | $ | $ | |||||||||||||||||||
| Government services | |||||||||||||||||||||||
| Fixed wing services | |||||||||||||||||||||||
| Other services | |||||||||||||||||||||||
| Total operating revenues | $ | $ | $ | $ | |||||||||||||||||||
| Reimbursable revenues | |||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | |||||||||||||||||||
Note 3 — RELATED PARTY TRANSACTIONS
The Company owns a 25 % voting interest and a 40 % economic interest in Cougar Helicopters Inc. (“Cougar”), an aviation services provider in Canada. The remaining 75 % voting interest and 60 % economic interest in Cougar are owned by VIH Aviation Group Ltd. (“VIH”). Due to common ownership of Cougar, the Company considers VIH a related party.
The Company and VIH lease certain aircraft and facilities and from time to time purchase inventory from one another. During the three months ended June 30, 2024 and 2023, the Company made payments of $1.0 million and $1.6 million to its related parties, respectively, and also generated total revenues of $10.0 million and $9.2 million from its related parties, respectively. During the six months ended June 30, 2024 and 2023, the Company made payments of $2.1 million and $3.0 million to its related parties, respectively, and also generated total revenues of $17.2 million and $13.8 million from its related parties, respectively. During the six months ended June 30, 2023, the Company and VIH entered into resale agreements under which one S92 aircraft was sold in exchange for the purchase of another S92 aircraft in a non-monetary transaction. The exchange did not result in a gain or loss being recognized on the Company’s condensed consolidated statement of operations.
As of June 30, 2024 and December 31, 2023, accounts receivable from related parties included in accounts receivable on the condensed consolidated balance sheets were $3.6 million and $1.2 million, respectively.
7
BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
Note 4 — DEBT
Debt as of June 30, 2024 and December 31, 2023, consisted of the following (in thousands):
| June 30, 2024 | December 31, 2023 | ||||||||||
| $ | $ | ||||||||||
| UKSAR Debt | |||||||||||
| IRCG Debt | |||||||||||
| Total debt | |||||||||||
| Less short-term borrowings and current maturities of long-term debt | ( | ( | |||||||||
| Total long-term debt | $ | $ | |||||||||
As of June 30, 2024 and December 31, 2023, the Company had $5.1 million and $5.8 million, respectively, of unamortized deferred financing fees associated with the 6.875 % Senior Notes.
UKSAR Debt — In January 2023, the Company entered into two thirteen-year secured equipment financings for an aggregate amount of up to £145 million with National Westminster Bank Plc as arranger, agent and security trustee (“UKSAR Debt”, formerly known as “NatWest Debt”). The credit facilities bear interest at a rate equal to the Sterling Overnight Index Average (“SONIA”) plus 2.75 % per annum and mature in March 2036, with repayment due in quarterly installments.
In January 2024, the Company entered into a long-term equipment financing to upsize the UKSAR Debt by an aggregate amount of up to £55 million. The upsizing will be used to support the Company’s capital commitments related to the Second-Generation UK Search and Rescue (“UKSAR2G”) contract. The credit facility has a 15-month availability period and will fund during 2024, subject to delivery of the new search and rescue (“SAR”) configured helicopters. The credit facility bears interest at a rate equal to SONIA plus 2.75 % per annum. Bristow's obligations under the additional UKSAR Debt will be secured by four new Leonardo S.p.A AW139 SAR configured helicopters. As of June 30, 2024, the Company had drawn approximately $32.7 million (£26.1 million) under this facility.
During the six months ended June 30, 2024 and 2023, the Company made principal payments of $7.3 million and $6.5 million, respectively. As of June 30, 2024 and December 31, 2023, the Company had unamortized deferred financing fees, inclusive of amounts related to the upsizing, associated with the UKSAR Debt of $9.6 million and $8.4 million, respectively.
IRCG Debt — In June 2024, the Company entered into a long-term equipment financing for an aggregate amount of up to €100.0 million with National Westminster Bank Plc as the original lender and UK Export Finance guaranteeing 80 % of the facility (“IRCG Debt”, formerly known as “UKEF Debt”). The financing will be used, among other items, to support the Company’s acquisition of five new AW189 aircraft to fulfill contractual obligations with the Irish Department of Transport to provide SAR services to the Irish Coast Guard (“IRCG”). The credit facility has an availability period of up to two years followed by a five-year term. The IRCG Debt bears interest at a rate equal to the Euro Interbank Offered Rate (“EURIBOR”)
8
BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
plus 1.95 % per annum with repayments due in semi-annual installments following the end of the availability period. As of June 30, 2024, the Company had drawn approximately $24.3 million (€22.7 million) and had $2.0 million of unamortized deferred financing fees associated with the IRCG Debt. Furthermore, in July 2024, the second utilization date occurred, and the Company drew approximately $25.4 million (€23.3 million) under this facility.
ABL Facility — The Company’s asset-backed revolving credit facility (the “ABL Facility”) provides that amounts borrowed under the ABL Facility (i) are secured by certain accounts receivable owing to the borrower subsidiaries and the deposit accounts into which payments on such accounts receivable are deposited, and (ii) are fully and unconditionally guaranteed as to payment by the Company, as a parent guarantor, and each of Bristow Norway AS, Bristow Helicopters Limited (“BHL”), Bristow U.S. LLC and Era Helicopters, LLC. As of June 30, 2024, the ABL Facility provided for commitments in an aggregate amount of $85.0 million with the ability to increase the total commitments up to a maximum aggregate amount of $120.0 million, subject to the terms and conditions therein.
As of June 30, 2024, there were no outstanding borrowings under the ABL Facility nor had the Company made any draws during the six months ended June 30, 2024. Letters of credit issued under the ABL Facility in the aggregate face amount of $3.1 million were outstanding as of June 30, 2024.
Note 5 — FAIR VALUE DISCLOSURES
Authoritative guidance on fair value measurements provides a framework for measuring fair value and establishes a fair value hierarchy that prioritizes the inputs used to measure fair value, giving the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs). The fair values of the Company’s cash and cash equivalents, accounts receivable and accounts payable approximate their carrying values due to the short-term nature of these items.
The Company’s debt was measured at fair value using Level 2 inputs based on estimated current rates for similar types of arrangements using discounted cash flow analysis. Considerable judgment was required in developing certain of the estimates of fair value, and, accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a current market exchange.
The carrying and fair values of the Company’s debt were as follows (in thousands):
| Carrying Amount | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
| June 30, 2024 | |||||||||||||||||||||||
| LIABILITIES | |||||||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||
UKSAR Debt(2) | |||||||||||||||||||||||
IRCG Debt(3) | |||||||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||
| December 31, 2023 | |||||||||||||||||||||||
| LIABILITIES | |||||||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||
UKSAR Debt(2) | |||||||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||
(1)As of June 30, 2024 and December 31, 2023, the carrying values of unamortized deferred financing fees related to the 6.875 % Senior Notes were $5.1 million and $5.8 million, respectively.
(2)As of June 30, 2024 and December 31, 2023, the carrying values of unamortized deferred financing fees related to the UKSAR Debt were $9.6 million and $8.4 million, respectively.
(3)The IRCG Debt was entered into in June 2024. Given the close proximity of the reporting date and entry into the financing agreements, and the variable EURIBOR attached to the IRCG Debt, the Company believes the fair value of this debt is materially the same as the carrying amount as of June 30, 2024. As of June 30, 2024, the carrying values of unamortized deferred financing fees related to the IRCG Debt were $2.0 million.
9
BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
Note 6 — DERIVATIVE FINANCIAL INSTRUMENTS
From time to time, the Company may use derivatives to partially offset its business exposure to foreign currency risks on expected future cash flows. The Company enters into master netting arrangements to mitigate credit risk in derivative transactions by permitting net settlement of transactions with the same counterparty. The Company does not offset fair value amounts recognized for derivative instruments under master netting arrangements. The derivative agreements do not contain credit-risk-related contingent features. There are no amounts of related financial collateral received or pledged. The Company does not use any of its derivative instruments for speculative or trading purposes.
Cash Flow Hedges
The Company may use foreign exchange options or forward contracts to hedge a portion of its forecasted foreign currency denominated transactions. To receive hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedge, and the hedges must be highly effective in offsetting changes to future cash flows on hedged transactions.
These foreign exchange hedge contracts, carried at fair value, have maturities of up to approximately 12 months. As of June 30, 2024 and December 31, 2023, total notional amounts of outstanding cash flow hedges were $148.8 million and $254.7 million, respectively. As of June 30, 2024, the estimated net amount of losses expected to be reclassified from accumulated other comprehensive income into earnings within the next 12 months is $2.6 million. For the six months ended June 30, 2024, there were no net gains or losses recognized in earnings relating to hedges of forecasted transactions that did not occur.
The Company’s derivative assets and liabilities measured at fair value are classified as Level 2 within the fair value hierarchy. The fair value of the Company’s derivatives is based on valuation methods which project future cash flows and discount the future amounts to present value using market-based observable inputs, including interest rate curves and foreign currency rates. The fair value of derivative instruments on the Company’s Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023 were as follows, presented on a gross basis (in thousands):
| June 30, 2024 | December 31, 2023 | ||||||||||||||||||||||
| Fair Value Asset Derivatives | Fair Value Liability Derivatives | Fair Value Asset Derivatives | Fair Value Liability Derivatives | ||||||||||||||||||||
| Derivatives designated as hedging instruments: | |||||||||||||||||||||||
| Foreign exchange forward contracts | $ | $ | $ | $ | |||||||||||||||||||
Note 7 — COMMITMENTS AND CONTINGENCIES
Fleet — The Company’s unfunded capital commitments as of June 30, 2024 consisted primarily of agreements to purchase helicopters and totaled $315.8 million, payable beginning in 2024.
Included in these commitments are orders to purchase eleven AW189 heavy helicopters, four AW139 medium helicopters, five AW169 light twin helicopters and five H135 light twin helicopters. The AW189 helicopters are scheduled to be delivered between 2024 and 2026; the AW139 helicopters are scheduled to be delivered in 2024; and the H135 helicopters are scheduled to be delivered between 2024 and 2025. Delivery dates for the AW169 helicopters have yet to be determined. In addition, the Company has outstanding options to purchase up to ten additional AW189 helicopters and ten additional H135 helicopters. If these options are exercised, the AW189 helicopters would be scheduled for delivery between 2026 and 2028, and the H135 helicopters would be scheduled for delivery between 2027 and 2028. The Company may, from time to time, purchase aircraft for which it has no orders.
The Company may terminate $33.8 million of its unfunded capital commitments without further liability other than aggregate liquidated damages of approximately $1.1 million.
10
BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
General Litigation and Disputes
The Company operates in jurisdictions internationally where it is subject to risks that include government action to obtain additional tax revenues. In a number of these jurisdictions, political unrest, the lack of well-developed legal systems and legislation that is not clear enough in its wording to determine the ultimate application, can make it difficult to determine whether legislation may impact the Company’s earnings until such time as a clear court or other ruling exists. The Company operates in jurisdictions currently where amounts may be due to governmental bodies that the Company is not currently recording liabilities for as it is unclear how broad or narrow legislation may ultimately be interpreted. The Company believes that payment of amounts in these instances is not probable at this time, but is reasonably possible.
In the normal course of business, the Company is involved in various litigation matters including, among other things, claims by third parties for alleged property damages and personal injuries. Management has used estimates in determining the Company’s potential exposure to these matters and has recorded reserves in its condensed consolidated financial statements related thereto as appropriate. It is possible that a change in its estimates related to these exposures could occur, but the Company does not expect such changes in estimated costs or uninsured losses, if any, would have a material effect on its business, consolidated financial position or results of operations.
Note 8 — INCOME TAXES
During the three months ended June 30, 2024 and 2023, the Company recorded an income tax expense of $9.2 million, resulting in an effective tax rate of 24.7 %, and income tax benefit of $14.2 million, resulting in an effective tax rate of 89.7 %, respectively. During the six months ended June 30, 2024 and 2023, the Company recorded an income tax expense of $11.8 million, resulting in an effective tax rate of 25.2 %, and income tax benefit of $19.3 million, resulting in an effective tax rate of 85.9 %, respectively.
The effective tax rate during the six months ended June 30, 2024 is impacted by the Company’s global mix of earnings in the current year, adjustments to valuation allowances against future realization of losses and deductible business interest expense, partially offset by the recognition of certain deferred tax assets. The effective tax rate during the six months ended June 30, 2023 was impacted by a lower U.S. statutory rate compared to higher foreign tax rates as a result of non-U.S. earnings in certain jurisdictions, adjustments to valuation allowances against future realization of deductible business interest expense and the recognition of certain deferred tax assets.
11
BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
Note 9 — STOCKHOLDERS’ EQUITY
Accumulated Other Comprehensive Income (Loss)
The following table shows the changes in balances for accumulated other comprehensive income (loss), net of tax (in thousands):
| Currency Translation Adjustments | Pension Liability Adjustments | Unrealized gains (losses) on cash flow hedges | Total | ||||||||||||||||||||
| Balance as of December 31, 2023 | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
| Other comprehensive loss | ( | ( | ( | ||||||||||||||||||||
| Reclassified from accumulated other comprehensive loss | |||||||||||||||||||||||
| Income tax benefit | |||||||||||||||||||||||
| Net current period other comprehensive income (loss) | ( | ( | ( | ||||||||||||||||||||
| Foreign exchange rate impact | ( | ||||||||||||||||||||||
Balance as of March 31, 2024 | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Other comprehensive income (loss) | ( | ( | |||||||||||||||||||||
| Reclassified from accumulated other comprehensive loss | ( | ( | |||||||||||||||||||||
| Income tax benefit | |||||||||||||||||||||||
| Net current period other comprehensive income (loss) | ( | ( | ( | ||||||||||||||||||||
| Foreign exchange rate impact | ( | ||||||||||||||||||||||
Balance as of June 30, 2024 | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Note 10 — EARNINGS PER SHARE
Basic earnings per common share is computed by dividing income available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share excludes options to purchase common stock and restricted stock units and awards which were outstanding during the period but were anti-dilutive. The following table shows the computation of basic and diluted earnings per share (in thousands, except per share amounts):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Income (loss): | |||||||||||||||||||||||
| Net income (loss) attributable to Bristow Group Inc. | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Shares of common stock: | |||||||||||||||||||||||
| Weighted average shares of common stock outstanding – basic | |||||||||||||||||||||||
| Net effect of dilutive stock | |||||||||||||||||||||||
Weighted average shares of common stock outstanding – diluted(1) | |||||||||||||||||||||||
| Earnings (losses) per common share - basic | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Earnings (losses) per common share - diluted | $ | $ | ( | $ | $ | ( | |||||||||||||||||
12
BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
Note 11 — SEGMENT INFORMATION
The Company conducts business in one segment: aviation services. The aviation services global operations include four regions as follows: Europe, the Americas, Africa and Asia Pacific. The Europe region comprises all of the Company’s operations and affiliates in Europe, including the Dutch Caribbean, the Falkland Islands, the Netherlands, Norway and the United Kingdom (“UK”). The Americas region comprises all of the Company’s operations and affiliates in North America and South America, including Brazil, Canada, Suriname, Trinidad and the U.S. Gulf of Mexico. The Africa region comprises all of the Company’s operations and affiliates on the African continent, including Nigeria. The Asia Pacific region comprises all of the Company’s operations and affiliates in Australia.
The following tables show region information prepared on the same basis as the Company’s condensed consolidated financial statements (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Region revenues: | |||||||||||||||||||||||
| Europe | $ | $ | $ | $ | |||||||||||||||||||
| Americas | |||||||||||||||||||||||
| Africa | |||||||||||||||||||||||
| Asia Pacific | |||||||||||||||||||||||
| Total region revenues | $ | $ | $ | $ | |||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Consolidated operating income: | |||||||||||||||||||||||
| Europe | $ | $ | $ | $ | |||||||||||||||||||
| Americas | |||||||||||||||||||||||
| Africa | |||||||||||||||||||||||
| Asia Pacific | |||||||||||||||||||||||
| Other | ( | ( | ( | ( | |||||||||||||||||||
| Gains (losses) on disposal of assets | ( | ( | ( | ||||||||||||||||||||
| Total consolidated operating income | $ | $ | $ | $ | |||||||||||||||||||
13
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes, included elsewhere herein, as well as our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (the “SEC”) on March 6, 2024 (the “Annual Report on Form 10-K”). Unless the context otherwise indicates, in this MD&A, any references to the “Company”, “Bristow”, “we”, “us” and “our” refer to Bristow Group Inc. and its consolidated entities.
In the discussions that follow, the terms “Current Quarter” and “Preceding Quarter” refer to the three months ended June 30, 2024 and March 31, 2024, respectively, and “Current Period” and “Prior Year Period” refer to the six months ended June 30, 2024 and 2023, respectively.
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are statements about our future business, strategy, operations, capabilities and results; financial projections; plans and objectives of our management; expected actions by us and by third parties, including our customers, competitors, vendors and regulators, and other matters. Some of the forward-looking statements can be identified by the use of words such as “believes”, “belief”, “forecasts”, “expects”, “plans”, “anticipates”, “intends”, “projects”, “estimates”, “may”, “might”, “will”, “would”, “could”, “should” or other similar words; however, all statements in this Quarterly Report on Form 10-Q, other than statements of historical fact or historical financial results, are forward-looking statements.
Our forward-looking statements reflect our views and assumptions on the date we are filing this Quarterly Report on Form 10-Q regarding future events and operating performance. We believe that they are reasonable, but they involve significant known and unknown risks, uncertainties, assumptions and other factors, many of which may be beyond our control, that may cause actual results to differ materially from any future results, performance or achievements expressed or implied by the forward-looking statements. Such risks, uncertainties and factors that could cause or contribute to such differences, include, but are not limited to, those discussed in this Quarterly Report on Form 10-Q, and in particular, the risks discussed in Part II, Item 1A, “Risk Factors” of this report and those discussed in other documents we file with the SEC. Accordingly, you should not put undue reliance on any forward-looking statements.
You should consider the following key factors when evaluating these forward-looking statements:
•the impact of supply chain disruptions and inflation and our ability to recoup rising costs in the rates we charge to our customers;
•our reliance on a limited number of helicopter manufacturers and suppliers and the impact of a shortfall in availability of aircraft components and parts required for maintenance and repairs of our helicopters, including significant delays in the delivery of parts for our S92 fleet.
•our reliance on a limited number of customers and the reduction of our customer base as a result of consolidation and/or the energy transition;
•public health crises, such as pandemics (including COVID-19) and epidemics, and any related government policies and actions;
•our inability to execute our business strategy for diversification efforts related to government services and advanced air mobility;
•the potential for cyberattacks or security breaches that could disrupt operations, compromise confidential or sensitive information, damage reputation, expose to legal liability, or cause financial losses;
•the possibility that we may be unable to maintain compliance with covenants in our financing agreements;
•global and regional changes in the demand, supply, prices or other market conditions affecting oil and gas, including changes resulting from a public health crisis or from the imposition or lifting of crude oil production quotas or other actions that might be imposed by the Organization of Petroleum Exporting Countries (OPEC) and other producing countries;
14
•fluctuations in the demand for our services;
•the possibility of significant changes in foreign exchange rates and controls;
•potential effects of increased competition and the introduction of alternative modes of transportation and solutions;
•the possibility that portions of our fleet may be grounded for extended periods of time or indefinitely (including due to severe weather events);
•the possibility of political instability, civil unrest, war or acts of terrorism in any of the countries where we operate or elsewhere;
•the possibility that we may be unable to re-deploy our aircraft to regions with greater demand;
•the existence of operating risks inherent in our business, including the possibility of declining safety performance;
•the possibility of changes in tax, environmental and other laws and regulations and policies, including, without limitation, actions of the governments that impact oil and gas operations, favor renewable energy projects or address climate change;
•any failure to effectively manage, and receive anticipated returns from, acquisitions, divestitures, investments, joint ventures and other portfolio actions;
•the possibility that we may be unable to dispose of older aircraft through sales into the aftermarket;
•the possibility that we may impair our long-lived assets and other assets, including inventory, property and equipment and investments in unconsolidated affiliates;
•general economic conditions, including interest rates or uncertainty in the capital and credit markets;
•the possibility that reductions in spending on aviation services by governmental agencies where we are seeking contracts could adversely affect or lead to modifications of the procurement process or that such reductions in spending could adversely affect search and rescue (“SAR”) contract terms or otherwise delay service or the receipt of payments under such contracts; and
•the effectiveness of our environmental, social and governance initiatives.
The above description of risks and uncertainties is by no means all-inclusive, but is designed to highlight what we believe are important factors to consider. All forward-looking statements in this Quarterly Report on Form 10-Q are qualified by these cautionary statements and are only made as of the date of this Quarterly Report on Form 10-Q. The forward-looking statements in this Quarterly Report on Form 10-Q should be evaluated together with the many uncertainties that affect our businesses, particularly those discussed in greater detail in Part I, Item 1A, “Risk Factors” and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Annual Report on Form 10-K, Part II, Item 1A, “Risk Factors” of this Quarterly Report on Form 10-Q and Part II, Item 1A, “Risk Factors” of the Company’s subsequent Quarterly Reports on Form 10-Q.
We disclaim any obligation or undertaking, other than as required by law, to provide any updates or revisions to any forward-looking statement to reflect any change in our expectations or any change in events, conditions or circumstances on which the forward-looking statement is based, whether as a result of new information, future events or otherwise.
15
Overview
Bristow Group Inc. is the leading global provider of innovative and sustainable vertical flight solutions. We primarily provide aviation services to a broad base of offshore energy companies and government entities. Our aviation services include personnel transportation, SAR, medevac, fixed wing transportation, unmanned systems and ad-hoc helicopter services. Our energy customers charter our helicopters primarily to transport personnel to, from and between onshore bases and offshore production platforms, drilling rigs and other installations.
Our core business of providing aviation services to leading global energy companies and government entities provides us with geographic and customer diversity that helps mitigate risks associated with a single market or customer. We currently have customers in Australia, Brazil, Canada, Chile, the Dutch Caribbean, the Falkland Islands, India, Ireland, the Kingdom of Saudi Arabia, Mexico, the Netherlands, Nigeria, Norway, Spain, Suriname, Trinidad, the UK and the U.S.
Certain of our operations are subject to seasonal factors. For example, operations in the U.S. Gulf of Mexico are often at their highest levels from April to September, as daylight hours increase, and are at their lowest levels from December to February, as daylight hours decrease. Our North Sea operations also are subject to seasonality as drilling activity is lower during the winter months due to harsh weather and shorter days. See “Segment, Markets and Seasonality” in Part I, Item 1, “Business” of our Annual Report on Form 10-K for further discussion on seasonality.
Recent Developments
IRCG Debt Facility
In June 2024, the Company entered into a long-term equipment financing for an aggregate amount of up to €100.0 million with National Westminster Bank Plc as the original lender and UK Export Finance guaranteeing 80% of the facility (“IRCG Debt”, formerly known as “UKEF Debt”). The financing will be used primarily to support the Company’s acquisition of five new AW189 aircraft to service the Irish Coast Guard (“IRCG”) contract. As of July 31, 2024, the Company had drawn approximately €46.0 million under this facility.
Bristow Releases 2023 Sustainability Report
In May 2024, the Company released its 2023 Sustainability Report, which underscores its ongoing commitment to responsible growth and sustainable practices, as well as aligning with internationally recognized frameworks and standards to offer stakeholders a transparent view of the Company's efforts. The report highlights the Company’s updates to its materiality assessment, as the Company strives to ensure that its sustainability efforts remain aligned with stakeholder expectations as well as the most relevant areas of potential impact. In 2023, the Company achieved a 50% reduction in Lost Work Cases and a 39% decrease in Total Recordable Incident Rate as compared to the previous year, reaffirming its commitment to safety as its highest operational priority. The Company continues its role in the development and certification of aircraft powered by electric and hybrid propulsion technologies that will create efficiencies and reduce greenhouse gas emissions. Information on our website, including the Company’s 2023 Sustainability Report, is not incorporated by reference into this Quarterly Report on Form 10-Q.
16
Fleet Information
The chart below presents the number of aircraft in our fleet and their distribution among the regions in which we operate, the number of helicopters we had on order or under construction and the percentage of operating revenues each of our regions provided for the three months ended June 30, 2024:
| Percentage of Current Quarter Operating Revenues | Helicopters | Fixed Wing | UAS | ||||||||||||||||||||||||||||||||||||||||||||
| Heavy | Medium | Light Twin | Light Single | Total | |||||||||||||||||||||||||||||||||||||||||||
| Europe | 51 | % | 62 | 3 | — | 3 | — | 4 | 72 | ||||||||||||||||||||||||||||||||||||||
| Americas | 29 | % | 21 | 53 | 11 | 25 | — | — | 110 | ||||||||||||||||||||||||||||||||||||||
| Africa | 13 | % | 4 | 11 | 3 | — | 1 | — | 19 | ||||||||||||||||||||||||||||||||||||||
| Asia Pacific | 7 | % | — | 2 | — | — | 11 | — | 13 | ||||||||||||||||||||||||||||||||||||||
| Total | 100 | % | 87 | 69 | 14 | 28 | 12 | 4 | 214 | ||||||||||||||||||||||||||||||||||||||
| Aircraft not currently in fleet: | |||||||||||||||||||||||||||||||||||||||||||||||
Under construction(1) | 7 | 6 | 5 | — | — | — | 18 | ||||||||||||||||||||||||||||||||||||||||
On order(2) | 5 | — | 5 | — | — | — | 10 | ||||||||||||||||||||||||||||||||||||||||
Options(3) | 10 | — | 10 | — | — | — | 20 | ||||||||||||||||||||||||||||||||||||||||
(1)Under construction reflects new aircraft that the Company has either taken ownership of and are undergoing additional configuration before being put into service or are currently under construction by the Original Equipment Manufacturer (“OEM”) and pending delivery. Includes seven AW189 heavy helicopters (of which one was delivered and is undergoing additional configuration), six AW139 medium helicopters (of which two were delivered and are undergoing additional configuration) and five H135 light-twin helicopters.
(2)On order reflects aircraft that the Company has commitments to purchase but construction has not yet begun. Includes five AW189 heavy helicopters and five AW169 light-twin helicopters.
(3)Options include ten AW189 heavy helicopters and ten H135 light-twin helicopters.
17
As of June 30, 2024, the aircraft in our fleet were as follows:
| Number of Aircraft | |||||||||||||||||||||||||||||
| Type | Owned Aircraft | Leased Aircraft | Total Aircraft | Max Pass. Capacity | Avg Age (yrs)(1) | ||||||||||||||||||||||||
| Heavy Helicopters: | |||||||||||||||||||||||||||||
| S92 | 37 | 29 | 66 | 19 | 14 | ||||||||||||||||||||||||
| AW189 | 17 | 4 | 21 | 16 | 8 | ||||||||||||||||||||||||
| 54 | 33 | 87 | |||||||||||||||||||||||||||
| Medium Helicopters: | |||||||||||||||||||||||||||||
| AW139 | 49 | 4 | 53 | 12 | 13 | ||||||||||||||||||||||||
| S76 D/C++ | 15 | — | 15 | 12 | 13 | ||||||||||||||||||||||||
| AS365 | 1 | — | 1 | 12 | 35 | ||||||||||||||||||||||||
| 65 | 4 | 69 | |||||||||||||||||||||||||||
| Light—Twin Engine Helicopters: | |||||||||||||||||||||||||||||
| AW109 | 4 | — | 4 | 7 | 17 | ||||||||||||||||||||||||
| EC135 | 9 | 1 | 10 | 6 | 15 | ||||||||||||||||||||||||
| 13 | 1 | 14 | |||||||||||||||||||||||||||
| Light—Single Engine Helicopters: | |||||||||||||||||||||||||||||
| AS350 | 15 | — | 15 | 4 | 26 | ||||||||||||||||||||||||
| AW119 | 13 | — | 13 | 7 | 18 | ||||||||||||||||||||||||
| 28 | — | 28 | |||||||||||||||||||||||||||
| Total Helicopters | 160 | 38 | 198 | 14 | |||||||||||||||||||||||||
| Fixed Wing | 9 | 3 | 12 | ||||||||||||||||||||||||||
| Unmanned Aerial Systems (“UAS”) | 4 | — | 4 | ||||||||||||||||||||||||||
Total Fleet | 173 | 41 | 214 | ||||||||||||||||||||||||||
(1)Reflects the average age of helicopters that are owned by the Company.
18
Results of Operations
The following table presents our operating results and other statement of operations information for the Current Quarter and the Preceding Quarter (in thousands, except percentages):
| Three Months Ended | Favorable (Unfavorable) | ||||||||||||||||||||||
| June 30, 2024 | March 31, 2024 | ||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||
| Operating revenues | $ | 352,494 | $ | 329,356 | $ | 23,138 | 7.0 | % | |||||||||||||||
| Reimbursable revenues | 7,255 | 7,738 | (483) | (6.2) | % | ||||||||||||||||||
| Total revenues | 359,749 | 337,094 | 22,655 | 6.7 | % | ||||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Personnel | 77,913 | 84,198 | 6,285 | 7.5 | % | ||||||||||||||||||
| Repairs and maintenance | 69,143 | 65,723 | (3,420) | (5.2) | % | ||||||||||||||||||
| Insurance | 6,212 | 6,651 | 439 | 6.6 | % | ||||||||||||||||||
| Fuel | 22,876 | 21,634 | (1,242) | (5.7) | % | ||||||||||||||||||
| Leased-in equipment | 25,449 | 26,239 | 790 | 3.0 | % | ||||||||||||||||||
| Other | 44,828 | 42,919 | (1,909) | (4.4) | % | ||||||||||||||||||
| Total operating expenses | 246,421 | 247,364 | 943 | 0.4 | % | ||||||||||||||||||
| Reimbursable expenses | 7,212 | 7,691 | 479 | 6.2 | % | ||||||||||||||||||
| General and administrative expenses | 44,933 | 43,347 | (1,586) | (3.7) | % | ||||||||||||||||||
| Depreciation and amortization expense | 16,848 | 17,169 | 321 | 1.9 | % | ||||||||||||||||||
| Total costs and expenses | 315,414 | 315,571 | 157 | — | % | ||||||||||||||||||
| Losses on disposal of assets | (224) | (113) | (111) | (98.2) | % | ||||||||||||||||||
| Earnings from unconsolidated affiliates | 651 | 1,419 | (768) | (54.1) | % | ||||||||||||||||||
| Operating income | 44,762 | 22,829 | 21,933 | 96.1 | % | ||||||||||||||||||
| Interest income | 2,142 | 1,984 | 158 | 8.0 | % | ||||||||||||||||||
| Interest expense, net | (9,385) | (9,472) | 87 | 0.9 | % | ||||||||||||||||||
| Other, net | (83) | (6,201) | 6,118 | 98.7 | % | ||||||||||||||||||
| Total other income (expense), net | (7,326) | (13,689) | 6,363 | 46.5 | % | ||||||||||||||||||
| Income before income taxes | 37,436 | 9,140 | 28,296 | nm | |||||||||||||||||||
| Income tax expense | (9,245) | (2,508) | (6,737) | nm | |||||||||||||||||||
| Net income | 28,191 | 6,632 | 21,559 | nm | |||||||||||||||||||
| Net income attributable to noncontrolling interests | (34) | (27) | (7) | (25.9) | % | ||||||||||||||||||
| Net income attributable to Bristow Group Inc. | $ | 28,157 | $ | 6,605 | $ | 21,552 | nm | ||||||||||||||||
19
Revenues by Service Line. The table below sets forth the operating revenues earned by service line for the applicable periods (in thousands):
| Three Months Ended | Favorable (Unfavorable) | |||||||||||||||||||
| June 30, 2024 | March 31, 2024 | |||||||||||||||||||
| Offshore energy services: | ||||||||||||||||||||
| Europe | $ | 99,741 | $ | 99,530 | $ | 211 | 0.2 | % | ||||||||||||
| Americas | 97,752 | 88,515 | 9,237 | 10.4 | % | |||||||||||||||
| Africa | 40,998 | 32,653 | 8,345 | 25.6 | % | |||||||||||||||
| Total offshore energy services | $ | 238,491 | $ | 220,698 | $ | 17,793 | 8.1 | % | ||||||||||||
| Government services | 79,476 | 82,108 | (2,632) | (3.2) | % | |||||||||||||||
| Fixed wing services | 31,987 | 23,708 | 8,279 | 34.9 | % | |||||||||||||||
| Other services | 2,540 | 2,842 | (302) | (10.6) | % | |||||||||||||||
| $ | 352,494 | $ | 329,356 | $ | 23,138 | 7.0 | % | |||||||||||||
Current Quarter compared to Preceding Quarter
Operating revenues. Operating revenues were $23.1 million higher in the Current Quarter compared to the Preceding Quarter.
Operating revenues from offshore energy services were $17.8 million higher in the Current Quarter.
Operating revenues from offshore energy services in the Americas were $9.2 million higher in the Current Quarter primarily due to higher utilization and higher revenues of $2.9 million from Cougar Helicopters Inc. (“Cougar”), which transitioned from cash basis recognition to an accrual basis of accounting for lease payments in the Current Quarter.
Operating revenues from offshore energy services in Africa were $8.3 million higher in the Current Quarter primarily due to higher utilization and increased rates.
Operating revenues from offshore energy services in Europe were $0.2 million higher in the Current Quarter. Revenues in Norway were $2.0 million higher primarily due to higher utilization, partially offset by the weakening of the Norwegian krone (“NOK”) relative to the U.S. dollar. Revenues in the UK were $1.8 million lower primarily due to lower utilization and lower maintenance services revenues.
Operating revenues from government services were $2.6 million lower in the Current Quarter primarily due to a change in monthly standing charge (“MSC”) rates and penalties related to lower availability.
Operating revenues from fixed wing services were $8.3 million higher in the Current Quarter primarily due to higher utilization and increased rates.
Operating expenses. Operating expenses were $0.9 million lower than the Preceding Quarter. Operating personnel salaries were $6.3 million lower primarily due to seasonal personnel cost variations in Norway and an adjustment for tax equalization in Suriname. Leased-in equipment costs were $0.8 million lower primarily due to the termination of an aircraft lease in Norway. Insurance costs were $0.4 million lower in the Current Quarter. These decreases were partially offset by higher repairs and maintenance costs of $3.4 million related to higher power-by-the-hour (“PBH”) expenses from increased flight hours and higher inventory write-offs. Other operating costs were $1.9 million higher primarily due to a reclassification of subcontractor costs. Fuel costs were $1.2 million higher primarily due to increased flight hours.
General and administrative expenses. General and administrative expenses were $1.6 million higher than the Preceding Quarter primarily due to higher professional services fees, partially offset by lower personnel and insurance costs.
Earnings from unconsolidated affiliates. During the Current Quarter, the Company recognized earnings of $0.7 million from unconsolidated affiliates compared to earnings of $1.4 million in the Preceding Quarter.
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Other, net. Other expense, net of $0.1 million in the Current Quarter primarily resulted from foreign exchange losses of $0.7 million, partially offset by government grants to fixed wing services and a favorable interest adjustment to the Company’s pension liability. Other expense, net of $6.2 million in the Preceding Quarter resulted from foreign exchange losses of $6.5 million due to the significant devaluation of the Nigerian Naira (“NGN”).
| Three Months Ended | Favorable (Unfavorable) | ||||||||||||||||
| June 30, 2024 | March 31, 2024 | ||||||||||||||||
| Foreign exchange losses | $ | (749) | $ | (6,499) | $ | 5,750 | |||||||||||
| Pension related income | 257 | 220 | 37 | ||||||||||||||
| Other | 409 | 78 | 331 | ||||||||||||||
| Other, net | $ | (83) | $ | (6,201) | $ | 6,118 | |||||||||||
Income tax expense. Income tax expense was $9.2 million in the Current Quarter compared to $2.5 million in the Preceding Quarter primarily due to the earnings mix of the Company’s global operations and changes to deferred tax valuation allowances and deferred tax assets.
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Current Period compared to Prior Year Period
The following table presents our operating results and other statement of operations information for the Current Period and Prior Year Period (in thousands, except percentages):
| Six Months Ended June 30, | Favorable (Unfavorable) | ||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||
| Operating revenues | $ | 681,850 | $ | 604,453 | $ | 77,397 | 12.8 | % | |||||||||||||||
| Reimbursable revenues | 14,993 | 16,952 | (1,959) | (11.6) | % | ||||||||||||||||||
| Total revenues | 696,843 | 621,405 | 75,438 | 12.1 | % | ||||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Personnel | 162,111 | 156,346 | (5,765) | (3.7) | % | ||||||||||||||||||
| Repairs and maintenance | 134,866 | 123,500 | (11,366) | (9.2) | % | ||||||||||||||||||
| Insurance | 12,863 | 14,009 | 1,146 | 8.2 | % | ||||||||||||||||||
| Fuel | 44,510 | 43,511 | (999) | (2.3) | % | ||||||||||||||||||
| Leased-in equipment | 51,688 | 48,479 | (3,209) | (6.6) | % | ||||||||||||||||||
| Other | 87,747 | 81,538 | (6,209) | (7.6) | % | ||||||||||||||||||
| Total operating expenses | 493,785 | 467,383 | (26,402) | (5.6) | % | ||||||||||||||||||
| Reimbursable expenses | 14,903 | 16,671 | 1,768 | 10.6 | % | ||||||||||||||||||
| General and administrative expenses | 88,280 | 91,346 | 3,066 | 3.4 | % | ||||||||||||||||||
| Merger and integration costs | — | 1,116 | 1,116 | nm | |||||||||||||||||||
| Depreciation and amortization expense | 34,017 | 35,737 | 1,720 | 4.8 | % | ||||||||||||||||||
| Total costs and expenses | 630,985 | 612,253 | (18,732) | (3.1) | % | ||||||||||||||||||
| Gains (losses) on disposal of assets | (337) | 92 | (429) | nm | |||||||||||||||||||
| Earnings from unconsolidated affiliates | 2,070 | 2,316 | (246) | (10.6) | % | ||||||||||||||||||
| Operating income | 67,591 | 11,560 | 56,031 | nm | |||||||||||||||||||
| Interest income | 4,126 | 2,656 | 1,470 | 55.3 | % | ||||||||||||||||||
| Interest expense, net | (18,857) | (20,135) | 1,278 | 6.3 | % | ||||||||||||||||||
| Reorganization items, net | — | (83) | 83 | nm | |||||||||||||||||||
| Other, net | (6,284) | (16,463) | 10,179 | 61.8 | % | ||||||||||||||||||
| Total other income (expense), net | (21,015) | (34,025) | 13,010 | 38.2 | % | ||||||||||||||||||
| Income (loss) before income taxes | 46,576 | (22,465) | 69,041 | nm | |||||||||||||||||||
Income tax benefit (expense) | (11,753) | 19,303 | (31,056) | nm | |||||||||||||||||||
| Net income (loss) | 34,823 | (3,162) | 37,985 | nm | |||||||||||||||||||
| Net loss (income) attributable to noncontrolling interests | (61) | 3 | (64) | nm | |||||||||||||||||||
| Net income (loss) attributable to Bristow Group Inc. | $ | 34,762 | $ | (3,159) | $ | 37,921 | nm | ||||||||||||||||
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Revenues by Service Line. The table below sets forth the operating revenues earned by service line for the applicable periods (in thousands):
| Six Months Ended June 30, | Favorable (Unfavorable) | ||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| Offshore energy services: | |||||||||||||||||||||||
| Europe | $ | 199,271 | $ | 172,622 | $ | 26,649 | 15.4 | % | |||||||||||||||
| Americas | 186,267 | 151,866 | 34,401 | 22.7 | % | ||||||||||||||||||
| Africa | 73,651 | 52,335 | 21,316 | 40.7 | % | ||||||||||||||||||
| Total offshore energy services | 459,189 | 376,823 | 82,366 | 21.9 | % | ||||||||||||||||||
| Government services | 161,584 | 169,654 | (8,070) | (4.8) | % | ||||||||||||||||||
| Fixed wing services | 55,695 | 52,367 | 3,328 | 6.4 | % | ||||||||||||||||||
| Other services | 5,382 | 5,609 | (227) | (4.0) | % | ||||||||||||||||||
| $ | 681,850 | $ | 604,453 | $ | 77,397 | 12.8 | % | ||||||||||||||||
Current Period compared to Prior Year Period
Operating revenues. Operating revenues were $77.4 million higher in the Current Period compared to the Prior Year Period.
Operating revenues from offshore energy services were $82.4 million higher in the Current Period.
Operating revenues from offshore energy services in the Americas were $34.4 million higher in the Current Period primarily due to higher utilization and increased rates. Revenues in Canada were higher primarily due to increased lease payments from Cougar and the transition from cash basis recognition to an accrual basis of accounting for lease payments during the Current Period.
Operating revenues from offshore energy services in Europe were $26.6 million higher in the Current Period. Revenues in Norway were $24.5 million higher primarily due to the commencement of a new contract and higher utilization. Revenues in the UK were $2.2 million higher primarily due to increased rates, partially offset by lower utilization.
Operating revenues from offshore energy services in Africa were $21.3 million higher primarily due to higher utilization and increased rates.
Operating revenues from government services were $8.1 million lower in the Current Period primarily due to a change in rates after transitioning to the long-term contract with the Dutch Caribbean Coast Guard (“DCCG”) from the interim period.
Operating revenues from fixed wing services were $3.3 million higher in the Current Period primarily due to higher utilization, partially offset by the weakening of the Australian dollar (“AUD”) relative to the U.S. dollar.
Operating expenses. Operating expenses were $26.4 million higher in the Current Period. Repairs and maintenance costs were $11.4 million higher due to higher PBH expenses related to increased flight hours and the timing of repairs, partially offset by lower inventory write-offs. Other operating costs were $6.2 million higher in the Current Period primarily due to the commencement of new offshore energy services contracts. Personnel costs were $5.8 million higher primarily due to an increase in headcount in Norway and Africa. Leased-in equipment costs were $3.2 million higher due to additional leased-in helicopters in support of new contracts in Norway. Fuel costs were $1.0 million higher due to increased flight hours. These increases were partially offset by lower insurance costs of $1.1 million.
General and administrative expenses. General and administrative expenses were $3.1 million lower primarily due to lower insurance costs and professional services fees, partially offset by higher personnel costs.
Interest income. Interest income was $1.5 million higher than the Prior Year Period primarily due to higher interest rates and income from sales-type leases.
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Other, net. Other expense, net was $6.3 million in the Current Period compared to $16.5 million in the Prior Year Period primarily due to lower foreign exchange losses.
| Six Months Ended June 30, | Favorable (Unfavorable) | ||||||||||||||||
| 2024 | 2023 | ||||||||||||||||
Foreign exchange losses | $ | (7,248) | $ | (17,124) | $ | 9,876 | |||||||||||
Pension-related income | 477 | 516 | (39) | ||||||||||||||
| Other | 487 | 145 | 342 | ||||||||||||||
| Other, net | $ | (6,284) | $ | (16,463) | $ | 10,179 | |||||||||||
Income tax benefit (expense). Income tax expense was $11.8 million in the Current Period compared to an income tax benefit of $19.3 million in the Prior Year Period primarily due to the earnings mix of the Company’s global operations compared to a loss in 2023, changes to deferred tax valuation allowances and deferred tax assets.
Liquidity and Capital Resources
General
Our ongoing liquidity requirements arise primarily from working capital needs, meeting our capital commitments (including the purchase of aircraft and other equipment) and the payment of debt service obligations. In addition, we may use our liquidity to fund acquisitions, repurchase stock or debt securities or make other investments. Our primary sources of liquidity are cash balances and cash flows from operations and, from time to time, we may obtain additional liquidity through the issuance of equity or debt or other financing options or through asset sales.
Summary of Cash Flows
| Six Months Ended June 30, | |||||||||||
| 2024 | 2023 | ||||||||||
| (in thousands) | |||||||||||
| Cash flows provided by or (used in): | |||||||||||
| Operating activities | $ | 60,344 | $ | 24,825 | |||||||
| Investing activities | (110,507) | (16,992) | |||||||||
| Financing activities | 43,618 | 28,871 | |||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | 4,718 | 15,802 | |||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | $ | (1,827) | $ | 52,506 | |||||||
Operating Activities
Cash flows provided by operating activities were $35.5 million higher in the Current Period primarily due to an increase in operating income before depreciation and gains (losses) on asset dispositions. Working capital uses of $19.1 million in the Current Period were primarily due to an increase in accounts receivables related to the timing of payments from customers, increases in inventory to mitigate risks related to supply chain constraints and decreases in payables and accrued liabilities primarily due to the timing of payments to vendors. Working capital sources of $10.0 million in the Prior Year Period were primarily due to decreased receivables and prepaid balances and increased liabilities.
Investing Activities
During the Current Period, net cash used in investing activities was $110.5 million primarily consisting of:
•Capital expenditures of $114.9 million primarily related to payments for aircraft, purchases of equipment and leasehold improvements, and
•Proceeds of $4.4 million primarily from the sale of aircraft and other assets.
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During the Prior Year Period, net cash used in investing activities was $17.0 million primarily consisting of:
•Capital expenditures of $43.8 million primarily related to deposit payments for aircraft, purchases of equipment and leasehold improvements, and
•Proceeds of $26.8 million primarily from the sale of aircraft and other assets.
Financing Activities
During the Current Period, net cash provided by financing activities was $43.6 million primarily consisting of:
•Proceeds from borrowings of $57.0 million, partially offset by
•Net repayments of debt of $7.3 million,
•Stock repurchases of $3.9 million, and
•Payments on debt issuance costs of $2.2 million.
During the Prior Year Period, net cash provided by financing activities was $28.9 million primarily consisting of:
•Proceeds from borrowings of $169.5 million, partially offset by
•Net repayments of debt of $135.6 million primarily related to the principal of secured equipment term loans,
•Payments on debt issuance costs of $2.7 million, and
•Stock repurchases of $2.4 million.
Effect of Exchange Rate Changes
The effect of exchange rate changes on cash and cash equivalents denominated in currencies other than the reporting currency are reflected in a separate line on the condensed consolidated statement of cash flows. Through our foreign operations we are exposed to currency fluctuations, and changes in the value of the GBP and NOK relative to the U.S. dollar have the most significant impacts to the effect of exchange rate changes on our cash, cash equivalents and restricted cash.
Material Cash Requirements
The factors that materially affect our overall liquidity include cash from or used to fund operations, capital expenditure commitments, debt service, pension funding, adequacy of bank lines of credit and our ability to attract capital on satisfactory terms. We believe that our cash flows from operating activities will be adequate to meet our working capital requirements. To support our capital expenditure program and/or other liquidity requirements, we may use any combination of operating cash flows, unrestricted cash balances, borrowings under our ABL Facility, proceeds from sales of assets, issue debt or equity, or other financing options.
As of June 30, 2024, approximately 89% of our total cash balance was held outside the U.S. Most of our cash held outside the U.S. could be repatriated to the U.S., and any such repatriation could be subject to additional taxes. If cash held by non-U.S. operations is required for funding operations in the U.S., we may make a provision for additional taxes in connection with repatriating this cash, which is not expected to have a significant impact on our results of operations.
We have no near-term debt maturities, other than the current portion of long-term debt of $15.9 million, and believe that our cash flows from operations and other sources of liquidity will continue to be sufficient in fulfilling our capital requirements and other obligations. Our long-term liquidity is dependent upon our ability to generate operating profits sufficient to meet our requirements for working capital, debt service obligations, capital expenditures and a reasonable return on investment. As of June 30, 2024, we had $178.6 million of unrestricted cash and $67.8 million of remaining availability under our ABL Facility for total liquidity of $246.4 million.
In January 2024, we entered into a long-term equipment financing to upsize the UKSAR Debt by an aggregate amount of up to £55 million. As of June 30, 2024, we had drawn approximately £26.1 million under this facility.
In June 2024, we entered into a long-term equipment financing for an aggregate amount of up to €100.0 million with National Westminster Bank Plc as the original lender and UK Export Finance guaranteeing 80% of the facility (“IRCG Debt”, formerly known as “UKEF Debt”). The financing will be used, among other items, to support the Company’s acquisition of five new AW189 aircraft to service the IRCG contract. As of June 30, 2024, we had drawn approximately €22.7 million under this facility.
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As of June 30, 2024, our total principal debt balance, net of deferred financing fees, was $594.2 million, primarily comprised of the 6.875% Senior Notes due in March 2028 and the UKSAR Debt and IRCG Debt maturing in March 2036 and June 2031, respectively.
We plan to use a combination of cash on hand, operating cash flows, new debt financing and aircraft leasing to fund our projected future capital expenditures, which includes our aircraft purchase commitments, infrastructure and other growth expenditure plans, primarily in support of new long term contracts such as the UKSAR2G and IRCG, among other growth opportunities.
Contractual Obligations and Commercial Commitments
We have various contractual obligations that are recorded as liabilities on our consolidated balance sheets. Other items, such as certain purchase commitments and other executory contracts, are not recognized as liabilities on our consolidated balance sheets.
As of June 30, 2024, we had unfunded capital commitments of $315.8 million, consisting primarily of agreements to purchase eleven AW189 heavy helicopters, four AW139 medium helicopters, five AW169 light twin helicopters and five H135 light twin helicopters. The AW189 helicopters are scheduled to be delivered between 2024 and 2026; the AW139 helicopters are scheduled to be delivered in 2024; and the H135 helicopters are scheduled to be delivered between 2024 and 2025. Delivery dates for the AW169 helicopters have yet to be determined. In addition, the Company has outstanding options to purchase up to 10 additional AW189 helicopters and 10 additional H135 helicopters. If these options are exercised, the AW189 helicopters would be scheduled for delivery between 2026 and 2028, and the H135 helicopters would be scheduled for delivery between 2027 and 2028. The Company may, from time to time, purchase aircraft for which it has no orders.
As of June 30, 2024, $33.8 million of our unfunded capital commitments (inclusive of deposits paid on options not yet exercised) may be terminated without further liability other than aggregate liquidated damages of approximately $1.1 million. If we do not exercise our rights to cancel these capital commitments, we expect to finance the remaining acquisition costs for these helicopters through a combination of cash on hand, cash provided by operating activities, asset sales and financing options.
Lease Obligations
From time to time we may, under favorable market conditions and when necessary, enter into opportunistic aircraft lease agreements in support of our global operations.
We have non-cancelable operating leases in connection with the lease of certain equipment, including leases for aircraft, and land and facilities used in our operations. The related lease agreements, which range from non-cancelable to month-to-month terms, generally provide for fixed monthly rentals and can also include renewal options. As of June 30, 2024, aggregate undiscounted future payments under all non-cancelable operating leases that have initial or remaining terms in excess of one year were as follows (in thousands):
| Aircraft | Other | Total | |||||||||||||||
| 2024 | $ | 40,089 | $ | 5,769 | $ | 45,858 | |||||||||||
| 2025 | 76,135 | 9,890 | 86,025 | ||||||||||||||
| 2026 | 63,479 | 7,770 | 71,249 | ||||||||||||||
| 2027 | 41,687 | 5,085 | 46,772 | ||||||||||||||
| 2028 | 27,577 | 4,255 | 31,832 | ||||||||||||||
| Thereafter | 29,116 | 9,488 | 38,604 | ||||||||||||||
| $ | 278,083 | $ | 42,257 | $ | 320,340 | ||||||||||||
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Selected Financial Information on Guarantors of Securities
On February 25, 2021, Bristow Group Inc. (“the Parent”) issued its 6.875% Senior Notes due 2028. The 6.875% Senior Notes, issued under an indenture, are fully and unconditionally guaranteed as to payment by a number of subsidiaries of the Parent (collectively, the “Guarantors”). The Parent is a holding company with no significant assets other than the stock of its subsidiaries. In order to meet its financial needs and obligations, the Parent relies exclusively on income from dividends and other cash flow from such subsidiaries. The subsidiary guarantees provide that, in the event of a default on the 6.875% Senior Notes, the holders of the 6.875% Senior Notes may institute legal proceedings directly against the Guarantors to enforce the guarantees without first proceeding against the Parent.
None of the non-Guarantor subsidiaries of the Parent are under any direct obligation to pay or otherwise fund amounts due on the 6.875% Senior Notes or the guarantees, whether in the form of dividends, distributions, loans or other payments. If such subsidiaries are unable to transfer funds to the Parent or Guarantors and sufficient cash or liquidity is not otherwise available, the Parent or Guarantors may not be able to make principal and interest payments on their outstanding debt, including the 6.875% Senior Notes or the guarantees. The following selected financial information of the Guarantors presents a sufficient financial position of the Parent to continue to fulfill its obligations under the requirements of the 6.875% Senior Notes. This selected financial information should be read in conjunction with the accompanying consolidated financial statements and notes (in thousands).
| June 30, 2024 | December 31, 2023 | ||||||||||
| Current assets | $ | 1,648,857 | $ | 1,152,830 | |||||||
| Non-current assets | $ | 2,397,655 | $ | 2,090,176 | |||||||
| Current liabilities | $ | 1,769,109 | $ | 836,017 | |||||||
| Non-current liabilities | $ | 709,136 | $ | 556,479 | |||||||
| Six Months Ended June 30, 2024 | |||||
| Total revenues | $ | 386,004 | |||
| Operating loss | $ | 35,302 | |||
| Net loss | $ | 24,023 | |||
| Net loss attributable to Bristow Group Inc., | $ | 23,970 | |||
Critical Accounting Estimates
See Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Estimates” of the Annual Report on Form 10-K for a discussion of our critical accounting estimates. There have been no material changes to our critical accounting policies and estimates since the Annual Report on Form 10-K.
For discussion of recent accounting pronouncements and accounting changes, see Part I, Item 1, “Financial Statements”, Note 1 on this Quarterly Report on Form 10-Q.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
We are subject to certain market risks arising from the use of financial instruments in the ordinary course of business. This risk arises primarily as a result of potential changes in the fair market value of financial instruments that would result from adverse fluctuations in foreign currency exchange rates, credit risk, and interest rates.
For additional information about our exposure to market risk, refer to Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” of the Annual Report on Form 10-K. Our exposure to market risk has not changed materially since December 31, 2023.
See Note 6 in the Notes to the Condensed Consolidated Financial Statements on this Quarterly Report on Form 10-Q for information regarding derivative financial instruments.
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Item 4. Controls and Procedures.
With the participation of our Chief Executive Officer and Chief Financial Officer, management evaluated, with reasonable assurance, the effectiveness of the disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2024.
During the quarter ended June 30, 2024, there were no changes in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
In the normal course of our business, we are involved in various litigation matters including, among other things, claims by third parties for alleged property damages and personal injuries. Management has used estimates in determining our potential exposure to these matters and has recorded reserves in our financial statements related thereto as appropriate. It is possible that a change in our estimates related to these exposures could occur, but we do not expect any such changes in estimated costs would have a material effect on our consolidated financial position or results of operations.
Item 1A. Risk Factors
For a detailed discussion of our risk factors, see Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table presents information regarding our repurchases of shares of our common stock on a monthly basis during the three months ended June 30, 2024:
Total Number of Shares Purchased(1) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs | ||||||||||||||||||||
| April 1, 2024 - April 30, 2024 | 2,922 | $ | 26.23 | — | $ | 40,000,000 | |||||||||||||||||
| May 1, 2024 - May 31, 2024 | 27,824 | $ | 34.00 | — | $ | 40,000,000 | |||||||||||||||||
| June 1, 2024 - June 30, 2024 | 52,556 | $ | 35.91 | — | $ | 40,000,000 | |||||||||||||||||
(1)Reflects 83,302 shares purchased in connection with the surrender of stock by employees to satisfy certain tax withholding obligations. These repurchases are not a part of our publicly announced program and do not affect our Board-approved stock repurchase program.
(2)On August 4, 2022, the Company announced that its Board of Directors approved a $40.0 million stock repurchase program. Purchases of the Company’s common stock under the stock repurchase program may be made in the open market, including pursuant to a Rule 10b5-1 program, by block repurchases, in private transactions (including with related parties) or otherwise, from time to time, depending on market conditions. The stock repurchase program has no expiration date and may be suspended or discontinued at any time without notice, subject to any changes in applicable law or regulations thereunder.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
During the three months ended June 30, 2024, no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) of the Company adopted terminated
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Item 6. Exhibits
The following exhibits are filed as part of this Quarterly Report on Form 10-Q:
| Exhibit Number | Description of Exhibit | |||||||
| 3.1 | ||||||||
| 3.2 | ||||||||
| 3.3 | ||||||||
| 3.4 | ||||||||
| 10.1 | ||||||||
| 10.2† | ||||||||
| 31.1* | ||||||||
| 31.2* | ||||||||
| 32.1** | ||||||||
| 32.2** | ||||||||
| 101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
| 101.SCH | XBRL Taxonomy Extension Schema Document. | |||||||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | |||||||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | |||||||
| † | Compensatory Plan or Arrangement. | |||||||
| * | Filed herewith. | |||||||
| ** | Furnished herewith. | |||||||
29
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| BRISTOW GROUP INC. | ||||||||
| By: | /s/ Jennifer D. Whalen | |||||||
Jennifer D. Whalen Senior Vice President, Chief Financial Officer | ||||||||
| By: | /s/ Donna L. Anderson | |||||||
Donna L. Anderson Vice President, Chief Accounting Officer | ||||||||
DATE: August 6, 2024
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