Bristow(VTOL) - 2024 Q1 - Quarterly Report

PART I. Financial Information Item 1. Financial Statements (Unaudited) This section presents unaudited condensed consolidated financial statements, including statements of operations, balance sheets, cash flows, and detailed notes Condensed Consolidated Statements of Operations | Metric | 3 Months Ended March 31, 2024 (in thousands) | 3 Months Ended March 31, 2023 (in thousands) | Change (YoY) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | :------------ | | Total Revenues | $337,094 | $302,022 | +11.6% | | Total Costs and Expenses | $315,571 | $300,329 | +5.1% | | Operating Income | $22,829 | $5,986 | +281.4% | | Income (loss) before income taxes | $9,140 | $(6,619) | N/A (swing to profit) | | Net income (loss) attributable to Bristow Group Inc. | $6,605 | $(1,522) | N/A (swing to profit) | | Basic EPS | $0.23 | $(0.05) | N/A (swing to profit) | | Diluted EPS | $0.23 | $(0.05) | N/A (swing to profit) | Condensed Consolidated Statements of Comprehensive Income (Loss) | Metric | 3 Months Ended March 31, 2024 (in thousands) | 3 Months Ended March 31, 2023 (in thousands) | Change (YoY) | | :------------------------------------------------ | :------------------------------------------- | :------------------------------------------- | :------------ | | Net income (loss) | $6,632 | $(1,525) | N/A (swing to profit) | | Currency translation adjustments | $(8,583) | $11,745 | N/A (swing to loss) | | Total other comprehensive income (loss), net of tax | $(12,105) | $10,127 | N/A (swing to loss) | | Total comprehensive income (loss) attributable to Bristow Group Inc. | $(5,500) | $8,605 | N/A (swing to loss) | Condensed Consolidated Balance Sheets | Metric | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | Change (QoQ) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :------------ | | Total Current Assets | $524,444 | $563,583 | -6.9% | | Total Assets | $1,915,776 | $1,937,278 | -1.1% | | Total Current Liabilities | $303,415 | $309,789 | -2.1% | | Total Liabilities | $1,095,566 | $1,114,099 | -1.7% | | Total Stockholders' Equity | $820,210 | $823,179 | -0.4% | Condensed Consolidated Statements of Changes in Stockholders' Equity | Metric | December 31, 2023 (in thousands) | March 31, 2024 (in thousands) | Change (QoQ) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :------------ | | Total Bristow Group Inc. Stockholders' Equity | $823,179 | $820,210 | -0.4% | | Retained Earnings | $217,968 | $224,573 | +3.0% | | Accumulated Other Comprehensive Loss | $(54,643) | $(66,748) | -22.1% | Condensed Consolidated Statements of Cash Flows | Metric | 3 Months Ended March 31, 2024 (in thousands) | 3 Months Ended March 31, 2023 (in thousands) | Change (YoY) | | :------------------------------------------- | :------------------------------------------- | :------------------------------------------- | :------------ | | Net cash provided by operating activities | $26,679 | $6,615 | +303.3% | | Net cash used in investing activities | $(64,557) | $(8,104) | +696.6% (increased outflow) | | Net cash provided by (used in) financing activities | $(5,108) | $34,148 | N/A (swing to outflow) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $(40,744) | $36,860 | N/A (swing to decrease) | | Cash, cash equivalents and restricted cash at end of period | $142,918 | $200,543 | -28.7% | Notes to Condensed Consolidated Financial Statements Note 1 Basis Of Presentation, Consolidation And Significant Accounting Policies - The financial statements are prepared in accordance with U.S. GAAP and SEC rules for interim reporting[25] - The Company is evaluating the potential impact of ASU 2023-07 on Segment Reporting, effective for fiscal years beginning after December 15, 2023[30] Note 2 Revenues - The Company's customers are primarily major integrated, national and independent offshore energy companies and government agencies, with revenues derived from helicopter and fixed-wing aviation services[31] | Service Line | 3 Months Ended March 31, 2024 (in thousands) | 3 Months Ended March 31, 2023 (in thousands) | Change (YoY) | | :---------------------- | :------------------------------------------- | :------------------------------------------- | :------------ | | Offshore energy services | $220,698 | $181,629 | +21.5% | | Government services | $82,108 | $82,334 | -0.3% | | Fixed wing services | $23,708 | $25,919 | -8.5% | | Other services | $2,842 | $3,049 | -6.8% | | Total operating revenues | $329,356 | $292,931 | +12.4% | | Reimbursable revenues | $7,738 | $9,091 | -14.9% | | Total revenues | $337,094 | $302,022 | +11.6% | - Deferred revenue balance increased to $24.7 million as of March 31, 2024, from $20.3 million as of December 31, 2023[32] Note 3 Related Party Transactions - The Company owns a 25% voting interest and a 40% economic interest in Cougar Helicopters Inc. ('Cougar'), which is considered a related party[33] - Payments to related parties were $1.1 million for the three months ended March 31, 2024, compared to $1.5 million for the same period in 2023[34] - Revenues from related parties increased to $7.1 million for the three months ended March 31, 2024, from $4.6 million for the same period in 2023[34] Note 4 Debt | Debt Type | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | Change (QoQ) | | :------------------ | :-------------------------------- | :-------------------------------- | :------------ | | 6.875% Senior Notes | $394,539 | $394,184 | +0.1% | | NatWest Debt | $149,531 | $153,886 | -2.9% | | Total Debt | $544,070 | $548,070 | -0.7% | | Total Long-Term Debt | $530,943 | $534,823 | -0.7% | - In January 2024, the Company upsized the NatWest Debt by up to £55 million to support capital commitments related to the Second-Generation UK Search and Rescue ("UKSAR2G") contract[40] - Approximately £26 million was borrowed under the upsized NatWest Debt facility in April 2024[40] - The ABL Facility provides $85.0 million in commitments, with no outstanding borrowings as of March 31, 2024[42][43] Note 5 Fair Value Disclosures - The fair values of cash and cash equivalents, accounts receivable, and accounts payable approximate their carrying values due to their short-term nature[44] - The Company's debt was measured at fair value using Level 2 inputs based on estimated current rates for similar arrangements using discounted cash flow analysis[45] | Debt Type | Carrying Amount (March 31, 2024) | Fair Value (March 31, 2024) | Carrying Amount (December 31, 2023) | Fair Value (December 31, 2023) | | :------------------ | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | 6.875% Senior Notes | $394,539 | $391,417 | $394,184 | $383,068 | | NatWest Debt | $149,531 | $165,637 | $153,886 | $162,467 | | Total Debt | $544,070 | $557,054 | $548,070 | $545,535 | Note 6 Derivative Financial Instruments - The Company uses foreign exchange options or forward contracts to hedge a portion of its forecasted foreign currency denominated transactions[48] - Total notional amounts of outstanding cash flow hedges decreased to $199.2 million as of March 31, 2024, from $254.7 million as of December 31, 2023[49] - An estimated net gain of $2.5 million is expected to be reclassified from accumulated other comprehensive income into earnings within the next 12 months[49] Note 7 Commitments And Contingencies - Unfunded capital commitments totaled $349.3 million as of March 31, 2024, primarily for agreements to purchase helicopters[51] - Commitments include orders for 12 AW189, 4 AW139, 5 AW169, and 5 H135 helicopters, with deliveries scheduled between 2024 and 2026[52] - The Company has outstanding options to purchase up to ten additional AW189 helicopters and ten additional H135 helicopters[52] - $34.0 million of unfunded capital commitments can be terminated with aggregate liquidated damages of approximately $1.1 million[53] - The Company is involved in various litigation matters but does not expect such changes in estimated costs or uninsured losses to have a material effect on its business, consolidated financial position or results of operations[55] Note 8 Income Taxes | Metric | 3 Months Ended March 31, 2024 | 3 Months Ended March 31, 2023 | | :-------------------- | :---------------------------- | :---------------------------- | | Income Tax Expense (Benefit) | $2.5 million | $(5.1) million | | Effective Tax Rate | 27.4% | 77.0% | - The effective tax rate for the three months ended March 31, 2024, was impacted by the Company's global mix of earnings and adjustments to valuation allowances[58] Note 9 Stockholders' Equity | Metric | December 31, 2023 (in thousands) | March 31, 2024 (in thousands) | Change (QoQ) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :------------ | | Accumulated Other Comprehensive Loss | $(54,643) | $(66,748) | -22.1% | | Currency Translation Adjustments | $(21,601) | $(30,184) | -39.7% | | Unrealized (losses) on cash flow hedges | $1,899 | $(1,944) | N/A (swing to loss) | Note 10 Earnings Per Share | Metric | 3 Months Ended March 31, 2024 | 3 Months Ended March 31, 2023 | | :------------------------------------------- | :---------------------------- | :---------------------------- | | Net income (loss) attributable to Bristow Group Inc. | $6,605 | $(1,522) | | Basic EPS | $0.23 | $(0.05) | | Diluted EPS | $0.23 | $(0.05) | | Weighted average shares outstanding – basic | 28,332 | 27,983 | | Weighted average shares outstanding – diluted | 29,239 | 27,983 | Note 11 Segment Information - The Company conducts business in one segment: aviation services, across four regions: Europe, the Americas, Africa, and Asia Pacific[61] | Region | 3 Months Ended March 31, 2024 (in thousands) | 3 Months Ended March 31, 2023 (in thousands) | Change (YoY) | | :----------- | :------------------------------------------- | :------------------------------------------- | :------------ | | Europe | $186,441 | $173,008 | +7.8% | | Americas | $97,015 | $79,184 | +22.5% | | Africa | $34,252 | $28,708 | +19.3% | | Asia Pacific | $19,386 | $21,122 | -8.2% | | Total region revenues | $337,094 | $302,022 | +11.6% | | Region | 3 Months Ended March 31, 2024 (in thousands) | 3 Months Ended March 31, 2023 (in thousands) | Change (YoY) | | :----------- | :------------------------------------------- | :------------------------------------------- | :------------ | | Europe | $14,503 | $11,579 | +25.3% | | Americas | $19,674 | $9,298 | +111.6% | | Africa | $8,650 | $4,522 | +91.3% | | Asia Pacific | $(761) | $2,868 | N/A (swing to loss) | | Total consolidated operating income | $22,829 | $5,986 | +281.4% | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on financial performance, condition, and outlook, highlighting key drivers and changes Forward-Looking Statements - This report contains forward-looking statements regarding future business, strategy, operations, capabilities, and financial projections[67] - These statements involve significant known and unknown risks, uncertainties, assumptions, and other factors that may cause actual results to differ materially[68] - Key risk factors include supply chain disruptions, inflation, reliance on limited manufacturers and customers, cyberattacks, compliance with financing agreements, and fluctuations in oil and gas demand[69][72] Overview - Bristow Group Inc. is a leading global provider of innovative and sustainable vertical flight solutions, primarily serving offshore energy companies and government entities[73] - The Company's aviation services include personnel transportation, Search and Rescue (SAR), medevac, fixed-wing transportation, unmanned systems, and ad-hoc helicopter services[73] - In January 2024, the NatWest Debt facility was upsized by up to £55 million to support capital commitments related to the Second-Generation UK Search and Rescue ("UKSAR2G") contract[77] Fleet Information - As of March 31, 2024, the total fleet comprised 218 aircraft, including 201 helicopters, 13 fixed-wing aircraft, and 4 Unmanned Aerial Systems (UAS)[78][80] - The fleet includes 90 heavy, 69 medium, 14 light-twin, and 28 light-single engine helicopters[78][80] - The Company has 16 aircraft under construction, 12 on order, and options for 20 additional helicopters[78][79][81] Results of Operations - Management believes comparing the most recently completed quarter to the immediately preceding quarter provides more relevant information for business analysis[82] | Metric | 3 Months Ended March 31, 2024 (in thousands) | 3 Months Ended December 31, 2023 (in thousands) | Change (QoQ) | | :------------------------------------------- | :------------------------------------------- | :------------------------------------------- | :------------ | | Total Revenues | $337,094 | $337,934 | -0.2% | | Total Costs and Expenses | $315,571 | $319,328 | -1.2% | | Operating Income | $22,829 | $19,574 | +16.6% | | Income before income taxes | $9,140 | $13,495 | -32.3% | | Net income (loss) attributable to Bristow Group Inc. | $6,605 | $(7,938) | N/A (swing to profit) | - Operating revenues from offshore energy services increased by $0.7 million QoQ, driven by additional aircraft on contract in Africa and increased ad hoc activity and rates in Europe[86][87] - Total operating expenses decreased by $2.2 million QoQ, primarily due to a $3.8 million decrease in fuel costs from lower seasonal flight hours and decreased global fuel prices[90] - Other expense, net, was $6.2 million in the Current Quarter, primarily due to $6.5 million in foreign exchange losses from the significant devaluation of the Nigerian Naira (NGN)[93] Liquidity and Capital Resources - Primary sources of liquidity are cash balances and cash flows from operations; additional liquidity may be obtained through equity or debt issuance or asset sales[95] | Cash Flow Activity | 3 Months Ended March 31, 2024 (in thousands) | 3 Months Ended March 31, 2023 (in thousands) | Change (YoY) | | :------------------------------------------- | :------------------------------------------- | :------------------------------------------- | :------------ | | Operating activities | $26,679 | $6,615 | +303.3% | | Investing activities | $(64,557) | $(8,104) | +696.6% (increased outflow) | | Financing activities | $(5,108) | $34,148 | N/A (swing to outflow) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $(40,744) | $36,860 | N/A (swing to decrease) | - Net cash used in investing activities increased significantly to $64.6 million, primarily due to $64.6 million in capital expenditures for aircraft and equipment[98] - As of March 31, 2024, total liquidity was $222.5 million, comprising $140.6 million of unrestricted cash and $81.9 million of remaining availability under the ABL Facility[104] - Unfunded capital commitments totaled $349.3 million as of March 31, 2024, primarily for helicopter purchases, with aggregate undiscounted future payments under non-cancelable operating leases totaling $332.1 million[107][110] Critical Accounting Estimates - There have been no material changes to the Company's critical accounting policies and estimates since the Annual Report on Form 10-K[114] Item 3. Quantitative and Qualitative Disclosures About Market Risk The Company is exposed to market risks from financial instruments, primarily foreign currency, credit, and interest rates, with no material changes - The Company is subject to market risks from financial instruments, primarily due to potential changes in foreign currency exchange rates, credit risk, and interest rates[116] - The Company's exposure to market risk has not changed materially since December 31, 2023[117] Item 4. Controls and Procedures Management evaluated disclosure controls and procedures, concluding they were effective as of March 31, 2024, with no material changes to internal control - Disclosure controls and procedures were evaluated and deemed effective as of March 31, 2024[118] - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2024[119] PART II. Other Information Item 1. Legal Proceedings The Company is involved in various litigation matters, with management recording reserves and not expecting material effects on financial position or operations - The Company is involved in various litigation matters, including claims by third parties for alleged property damages and personal injuries[121] - Management has used estimates to determine potential exposure and recorded reserves, not expecting a material effect on consolidated financial position or results of operations[121] Item 1A. Risk Factors This section refers to the detailed discussion of risk factors in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 - For a detailed discussion of risk factors, refer to Part I, Item 1A, "Risk Factors" of the Company's Annual Report on Form 10-K for the year ended December 31, 2023[122] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Repurchases of Equity Securities The Company repurchased shares during the quarter, primarily for employee tax withholding, with the $40.0 million stock repurchase program remaining active - The Company repurchased 39,473 shares during the three months ended March 31, 2024, primarily in connection with the surrender of stock by employees to satisfy tax withholding obligations[123][124] - These repurchases are not part of the publicly announced $40.0 million stock repurchase program, which has no expiration date and may be suspended or discontinued at any time[123][124] | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Approximate Dollar Value Remaining Under Program | | :----------------------------------- | :------------------------------- | :--------------------------- | :----------------------------------------------- | | January 1, 2024 - January 31, 2024 | 367 | $28.18 | $40,000,000 | | February 1, 2024 - February 29, 2024 | 1,730 | $27.41 | $40,000,000 | | March 1, 2024 - March 31, 2024 | 37,376 | $25.63 | $40,000,000 | Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported during the period - No defaults upon senior securities were reported[125] Item 4. Mine Safety Disclosures This item is not applicable to the Company - Mine Safety Disclosures are not applicable to the Company[126] Item 5. Other Information No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended March 31, 2024 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended March 31, 2024[127] Item 6. Exhibits This section lists all exhibits filed as part of the Quarterly Report on Form 10-Q, including corporate documents, agreements, and certifications - The exhibits filed include Amended and Restated Certificate of Incorporation, Bylaws, Facility Agreements, and Rule 13a-14(a) Certifications by the Chief Executive Officer and Chief Financial Officer[128] Signatures The report was signed by Jennifer D. Whalen, SVP and CFO, and Donna Anderson, VP and CAO, on May 7, 2024 - The report was signed by Jennifer D. Whalen, Senior Vice President, Chief Financial Officer, and Donna Anderson, Vice President, Chief Accounting Officer, on May 7, 2024[132]