vtol-20240331

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	March 31, 2024


☐			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

001-35701

Bristow Group Inc.

(Exact name of registrant as specified in its charter)


Delaware		72-1455213
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)

3151 Briarpark Drive, Suite 700
Houston,	Texas	77042
(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
Common Stock, par value $0.01 per share	VTOL	NYSE

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

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 May 3, 2024 was 28,393. 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.

Financial Statements (Unaudited)

Condensed Consolidated Statements of Operations

Condensed Consolidated Statements of Comprehensive Income (Loss)

Condensed Consolidated Balance Sheets

Condensed Consolidated Statements of Changes in Stockholders’ Equity

Condensed Consolidated Statements of Cash Flows

Notes to Condensed Consolidated Financial Statements

Note 1

Basis Of Presentation, Consolidation And Significant Accounting Policies

Note 2

Revenues

Note 3

Related Party Transactions

Note 4

Debt

Note 5

Fair Value Disclosures

Note 6

Derivative Financial Instruments

Note 7

Commitments And Contingencies

Note 8

Income Taxes

Note 9

Stockholders’ Equity

Note 10

Earnings Per Share

Note 11

Segment Information

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

Overview

Fleet Information

Results of Operations

Liquidity and Capital Resources

Critical Accounting Estimates

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

PART II. Other Information

Item 1.

Legal Proceedings

Item 1A.

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Repurchases of Equity Securities

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosures

Item 5.

Other Information

Item 6.

Exhibits

Signatures

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 March 31,
	2024		2023
Revenues:
Operating revenues	$	329,356	$	292,931
Reimbursable revenues	7,738		9,091
Total revenues	337,094		302,022

Costs and expenses:
Operating expenses	247,364		226,724
Reimbursable expenses	7,691		8,991
General and administrative expenses	43,347		46,730
Merger and integration costs	—		439

Depreciation and amortization expense	17,169		17,445
Total costs and expenses	315,571		300,329


Gains (losses) on disposal of assets	(113)		3,256
Earnings from unconsolidated affiliates	1,419		1,037
Operating income	22,829		5,986

Interest income	1,984		1,129
Interest expense, net	(9,472)		(10,264)

Reorganization items, net	—		(44)


Other, net	(6,201)		(3,426)
Total other income (expense), net	(13,689)		(12,605)
Income (loss) before income taxes	9,140		(6,619)
Income tax benefit (expense)	(2,508)		5,094
Net income (loss)	6,632		(1,525)
Net loss (income) attributable to noncontrolling interests	(27)		3
Net income (loss) attributable to Bristow Group Inc.	$	6,605	$	(1,522)
Earnings (losses) per common share:
Basic	$	0.23	$	(0.05)
Diluted	$	0.23	$	(0.05)
Weighted average shares of common stock outstanding:
Basic	28,332		27,983
Diluted	29,239		27,983

See accompanying notes to condensed consolidated financial statements.

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited, in thousands)


	Three Months Ended March 31,
	2024		2023

Net income (loss)	$	6,632	$	(1,525)
Other comprehensive income (loss):
Currency translation adjustments	(8,583)		11,745
Pension liability adjustment	321		(1,111)
Unrealized losses on cash flow hedges, net	(3,843)		(507)
Total other comprehensive income (loss), net of tax	(12,105)		10,127
Total comprehensive income (loss)	(5,473)		8,602
Net comprehensive loss (income) attributable to noncontrolling interests	(27)		3
Total comprehensive income (loss) attributable to Bristow Group Inc.	$	(5,500)	$	8,605

See accompanying notes to condensed consolidated financial statements.

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited, in thousands)


	March 31, 2024		December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	140,630	$	180,265
Restricted cash	2,288		3,397
Accounts receivable, net of allowance of $201 and $77, respectively	234,914		234,620
Inventories	102,358		99,863

Prepaid expenses and other current assets	44,254		45,438
Total current assets	524,444		563,583
Property and equipment, net of accumulated depreciation of $242,863 and $232,107, respectively	951,806		927,766
Investment in unconsolidated affiliates	20,325		19,890
Right-of-use assets	280,306		287,939
Other assets	138,895		138,100
Total assets	$	1,915,776	$	1,937,278
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	86,960	$	87,885
Accrued wages, benefits and related taxes	48,157		52,685
Income taxes payable and other accrued taxes	9,614		8,176
Deferred revenues	24,717		20,334
Accrued maintenance and repairs	24,072		24,545
Current portion of operating lease liabilities	75,862		75,288
Accrued interest and other accrued liabilities	20,906		27,629
Current maturities of long-term debt	13,127		13,247
Total current liabilities	303,415		309,789
Long-term debt, less current maturities	530,943		534,823

Other liabilities and deferred credits	10,705		11,820
Deferred taxes	41,587		42,710
Long-term operating lease liabilities	208,916		214,957
Total liabilities	$	1,095,566	$	1,114,099
Commitments and contingencies (Note 7)
Stockholders’ equity:
Common stock, $0.01 par value, 110,000 authorized; 28,387 and 28,310 outstanding, respectively	312		311
Additional paid-in capital	729,292		725,773
Retained earnings	224,573		217,968
Treasury stock, at cost; 2,605 and 2,566 shares, respectively	(66,738)		(65,722)
Accumulated other comprehensive loss	(66,748)		(54,643)
Total Bristow Group Inc. stockholders’ equity	820,691		823,687
Noncontrolling interests	(481)		(508)
Total stockholders’ equity	820,210		823,179
Total liabilities and stockholders’ equity	$	1,915,776	$	1,937,278

See accompanying notes to condensed consolidated financial statements.

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	$	311	28,310	$	725,773	$	217,968	$	(65,722)	$	(54,643)	$	(508)	$	823,179
Share award amortization	1		117	3,519		—		—		—		—		3,520

Share repurchases	—		(40)	—		—		(1,016)		—		—		(1,016)

Net income	—		—	—		6,605		—		—		27		6,632
Other comprehensive loss	—		—	—		—		—		(12,105)		—		(12,105)
March 31, 2024	$	312	28,387	$	729,292	$	224,573	$	(66,738)	$	(66,748)	$	(481)	$	820,210


	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	$	306	28,009	$	709,319	$	224,748	$	(63,009)	$	(84,057)	$	(368)	$	786,939
Share award amortization	—		—	3,311		—		—		—		—		3,311
Share repurchases	—		(1)	—		—		(385)		—		—		(385)

Net loss	—		—	—		(1,522)		—		—		(3)		(1,525)
Other comprehensive income	—		—	—		—		—		10,127		—		10,127
March 31, 2023	$	306	28,008	$	712,630	$	223,226	$	(63,394)	$	(73,930)	$	(371)	$	798,467

See accompanying notes to condensed consolidated financial statements.

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)


	Three Months Ended March 31,
	2024		2023
Cash flows from operating activities:
Net income (loss)	$	6,632	$	(1,525)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation and amortization expense	20,893		21,248

Losses (gains) on disposal of assets	113		(3,256)
Earnings from unconsolidated affiliates	(1,419)		(1,037)




Deferred income taxes	(1,174)		(9,213)

Stock-based compensation expense	3,519		3,311

Amortization of deferred financing fees	718		635
Amortization of deferred contract costs	836		—
Discount amortization on long-term debt	—		473

Increase (decrease) in cash resulting from changes in:
Accounts receivable	(5,026)		7,071
Inventory, prepaid expenses and other assets	(13,093)		(4,718)
Accounts payable, accrued expenses and other liabilities	14,680		(6,374)
Net cash provided by operating activities	26,679		6,615
Cash flows from investing activities:
Capital expenditures	(64,562)		(31,537)
Proceeds from asset dispositions	5		23,433



Net cash used in investing activities	(64,557)		(8,104)
Cash flows from financing activities:
Proceeds from borrowings	—		169,508
Debt issuance costs	(810)		(2,714)
Repayments of debt	(3,282)		(132,261)

Purchase of treasury stock	(1,016)		(385)
Net cash provided by (used in) financing activities	(5,108)		34,148
Effect of exchange rate changes on cash, cash equivalents and restricted cash	2,242		4,201
Net increase (decrease) in cash, cash equivalents and restricted cash	(40,744)		36,860
Cash, cash equivalents and restricted cash at beginning of period	183,662		163,683
Cash, cash equivalents and restricted cash at end of period	$	142,918	$	200,543
Cash paid during the period for:
Interest	$	16,910	$	16,315
Income taxes, net	$	6,052	$	537

See accompanying notes to condensed consolidated financial statements.

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 months ended March 31, 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.

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.

In November 2023, the FASB issued ASU 2023-07 - Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 applies to all public entities that are required to report segment information in accordance with Topic 280. The purpose of this ASU is to improve financial reporting by requiring disclosure of incremental information on an annual and interim basis by disclosing significant segment expenses, transparency on measures of segment’s profit and loss in assessing performance and resource allocations and identify the chief operating decision maker. This standard will be effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company is evaluating the potential impact of the adoption of this ASU on its consolidated financial statements.

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 March 31,
	2024		2023
Offshore energy services	$	220,698	$	181,629
Government services	82,108		82,334
Fixed wing services	23,708		25,919
Other services	2,842		3,049
Total operating revenues	$	329,356	$	292,931
Reimbursable revenues	$	7,738	$	9,091
Total revenues	$	337,094	$	302,022

As of March 31, 2024, the Company had a deferred revenue balance of $24.7 million compared to the December 31, 2023 balance of $20.3 million. Deferred revenues are primarily generated by fixed wing services where customers pay for tickets in advance of receiving the Company’s services and advanced payments from helicopter services customers and from mobilization fees received from customers in connection with new contract commencements. During the three months ended March 31, 2024 and 2023, revenue recognized that had been previously deferred was $7.3 million and $6.4 million, respectively.

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 March 31, 2024 and 2023, the Company made payments of $1.1 million and $1.5 million to its related parties, respectively, and also generated total revenues of $7.1 million and $4.6 million from its related parties, respectively.

As of March 31, 2024 and December 31, 2023, accounts receivables from related parties included in accounts receivables on the condensed consolidated balance sheets were $1.1 million and $1.2 million, respectively.

BRISTOW GROUP INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Note 4 — DEBT

Debt as of March 31, 2024 and December 31, 2023, consisted of the following (in thousands):


	March 31, 2024		December 31, 2023
6.875% Senior Notes	$	394,539	$	394,184
NatWest Debt	149,531		153,886
Total debt	544,070		548,070
Less short-term borrowings and current maturities of long-term debt	(13,127)		(13,247)
Total long-term debt	$	530,943	$	534,823

6.875% Senior Notes — In February 2021, the Company issued $400.0 million aggregate principal amount of its 6.875% senior secured notes due March 2028 (the “6.875% Senior Notes”) and received net proceeds of $395.0 million. The 6.875% Senior Notes are fully and unconditionally guaranteed as to payment by a number of subsidiaries. Interest on the 6.875% Senior Notes is payable semi-annually in arrears on March 1st and September 1st of each year. The 6.875% Senior Notes may be redeemed at any time and from time to time, with sufficient notice and at the applicable redemption prices set forth in the indenture governing the 6.875% Senior Notes, inclusive of any accrued and unpaid interest leading up to the redemption date. The indenture governing the 6.875% Senior Notes contains covenants that restrict the Company’s ability to, among other things, incur additional indebtedness, pay dividends or make other distributions or repurchase or redeem the Company’s capital stock, prepay, redeem or repurchase certain debt, make loans and investments, sell assets, incur liens, enter into transactions with affiliates, enter into agreements restricting its subsidiaries’ ability to pay dividends, and consolidate, merge or sell all or substantially all of its assets. In addition, upon a specified change of control trigger event, the Company must make an offer to repurchase each noteholder’s notes at an offer price of 101% of the aggregate principal amount, plus accrued and unpaid interest.

As of March 31, 2024 and December 31, 2023, the Company had $5.5 million and $5.8 million, respectively, of unamortized deferred financing fees associated with the 6.875% Senior Notes.

NatWest 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 (“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 NatWest 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 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 NatWest Debt will be secured by four new Leonardo AW139 SAR configured helicopters. In April 2024, the Company borrowed approximately £26 million under this facility.

During the three months ended March 31, 2024 and 2023, the Company made principal payments of $3.3 million and $3.2 million, respectively. As of March 31, 2024 and December 31, 2023, the Company had unamortized deferred financing fees, inclusive of amounts related to the upsizing, associated with NatWest Debt of $9.6 million and $8.4 million, respectively.

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 March 31, 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.

BRISTOW GROUP INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

As of March 31, 2024, there were no outstanding borrowings under the ABL Facility nor had the Company made any draws during the three months ended March 31, 2024. Letters of credit issued under the ABL Facility in the aggregate face amount of $3.0 million were outstanding as of March 31, 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
March 31, 2024
LIABILITIES
6.875% Senior Notes(1)	$	394,539	$	—	$	391,417	$	—
NatWest Debt(2)	149,531		—		165,637		—
	$	544,070	$	—	$	557,054	$	—
December 31, 2023
LIABILITIES
6.875% Senior Notes(1)	$	394,184	$	—	$	383,068	$	—
NatWest Debt(2)	153,886		—		162,467		—


	$	548,070	$	—	$	545,535	$	—

____________________

(1)As of March 31, 2024 and December 31, 2023, the carrying values of unamortized deferred financing fees related to the 6.875% Senior Notes were $5.5 million and $5.8 million, respectively.

(2)As of March 31, 2024 and December 31, 2023, the carrying values of unamortized deferred financing fees related to the NatWest Debt were $9.6 million and $8.4 million, respectively.

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.

BRISTOW GROUP INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

These foreign exchange hedge contracts, carried at fair value, have maturities of up to 12 months. As of March 31, 2024 and December 31, 2023, total notional amounts of outstanding cash flow hedges were $199.2 million and $254.7 million, respectively. As of March 31, 2024, the estimated net amount of gains (losses) expected to be reclassified from accumulated other comprehensive income into earnings within the next 12 months is $2.5 million. For the three months ended March 31, 2024, there were no net gains or losses recognized in earnings relating to hedges of forecasted transactions that did not occur.

The fair value of derivative instruments on the Company’s Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023 were as follows, presented on a gross basis (in thousands):


	March 31, 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	$	107	$	2,622	$	2,557	$	1,200

Note 7 — COMMITMENTS AND CONTINGENCIES

Fleet — The Company’s unfunded capital commitments as of March 31, 2024 consisted primarily of agreements to purchase helicopters and totaled $349.3 million, payable beginning in 2024.

Included in these commitments are orders to purchase twelve 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 $34.0 million of its unfunded capital commitments without further liability other than aggregate liquidated damages of approximately $1.1 million.

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.

BRISTOW GROUP INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Note 8 — INCOME TAXES

During the three months ended March 31, 2024 and 2023, the Company recorded an income tax expense of $2.5 million, resulting in an effective tax rate of 27.4%, and income tax benefit of $5.1 million, resulting in an effective tax rate of 77.0%, respectively.

The effective tax rate during the three months ended March 31, 2024 is impacted by the Company’s global mix of earnings, 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 three months ended March 31, 2023 was higher than the U.S. statutory rate due to the tax impact of non-U.S. earnings in certain profitable jurisdictions, partially offset by the impact of utilizing net operating losses in certain jurisdictions and the tax impact of deductible interest expense.

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	$	(21,601)	$	(34,941)	$	1,899	$	(54,643)

Other comprehensive income (loss)	(8,267)		—		(4,496)		(12,763)
Reclassified from accumulated other comprehensive loss	—		5		625		630
Income tax benefit (expense)	—		—		28		28
Net current period other comprehensive income (loss)	(8,267)		5		(

SEC Form 10-Q filed by Bristow Group Inc.