Bristow Group Inc

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 repayment of debt obligations. In addition, we may use our liquidity to fund acquisitions, repay debt, 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

Operating Activities

Cash flows provided by operating activities were $32.0 million in the Current Year compared to $7.7 million used in the Prior Year. The increase in operating cash flows was primarily due to an increase in net income before non cash charges such as depreciation and amortization, equity earnings from unconsolidated affiliates, impairment, foreign currency gains and losses from revaluations and asset dispositions of $32.6 million.

Working capital uses of $59.1 million in the Current Year were primarily due to increases in accounts receivables and inventories. Working capital uses of $117.5 million in the Prior Year were primarily due to payments on the PBH buy-in agreements of $55.4 million, increased receivables due to the timing of collections in 2021 and prepaid expenses.

Investing Activities

During the Current Year, net cash used in investing activities was $47.3 million primarily consisting of:

•Capital expenditures of $81.5 million primarily related to payments for aircraft, purchases of equipment and leasehold improvements, partially offset by

•Proceeds of $34.2 million from the sale or disposal of aircraft and other assets.

During the Prior Year, net cash used in investing activities was $52.0 million primarily as follows:

•Capital expenditures of $57.4 million primarily related to payments for aircraft, purchases of equipment and leasehold improvements,

•Cash paid for an acquisition, net of cash received, of $12.6 million, partially offset by

•Proceeds of $18.0 million from the sale or disposal of aircraft and other assets.

Financing Activities

During the Current Year, net cash provided by financing activities was $22.0 million primarily consisting of:

•Proceeds from borrowing of $169.5 million, partially offset by

•Net repayments of debt of $142.0 million primarily related to Lombard debt principal,

•Payment on deferred financing costs of $2.7 million, and

•Stock repurchases of $2.7 million.

During the Prior Year, net cash used in financing activities was $24.6 million primarily as follows:

•Stock repurchases of $11.9 million,

•Net repayments of debt of $11.8 million related to the Lombard debt principal, and

•Payment on debt issuance costs $0.9 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.

Entry into a Long-Term Equipment Financing

In January 2023, we entered into two thirteen-year secured equipment financings with NatWest for aggregate proceeds of $169.5 million. The net proceeds from the financings were used to refinance the indebtedness of the Lombard Debt and will be used to provide additional financing to support our obligations under our SAR contracts in the UK. The credit facilities have approximately thirteen-year terms with repayment due in quarterly installments which commenced on March 31, 2023. The credit facilities bear interest at a rate equal to the SONIA plus 2.75% per annum. Bristow's obligations under the NatWest Debt are secured by ten SAR helicopters.

In January 2024, Bristow entered into a new twelve-year secured equipment financing for an aggregate principal amount of up to £55 million with a syndicate of banks led by NatWest. The credit facility has a 15-month availability period and is expected to fund during 2024, subject to delivery of the new SAR configured helicopters. Bristow contemporaneously entered into amendments and restatements of the credit facilities with respect to the other two existing tranches of the NatWest Debt (as defined in Note 6 to the consolidated financial statement) in order to, among other things, reflect that certain subsidiaries will be providing guarantees of the term loans under the NatWest Debt.

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, cash balances, borrowings under our ABL Facility, proceeds from sales of assets, issue debt or equity, or other financing options.

As of December 31, 2023, approximately 55% 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 $13.2 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, capital expenditures and a reasonable return on investment. As of December 31, 2023, we had $180.3 million of unrestricted cash and $70.9 million of remaining availability under our ABL Facility for total liquidity of $251.2 million.

Our total principal debt balance as of December 31, 2023 was $548.1 million primarily comprised of the 6.875% Senior Notes due in March 2028 and two tranches of the NatWest Debt maturing in March 2036.

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 December 31, 2023, we had unfunded capital commitments of $307.3 million, consisting primarily of agreements to purchase six AW189 heavy helicopters, six AW139 medium helicopters, five AW169 light twin helicopters and five H135 light twin helicopters. The AW139 helicopters are scheduled to be delivered in 2024, and the AW189 helicopters and 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 six additional AW189 helicopters and ten additional H135 helicopters. If these options are exercised, the AW189 helicopters would be scheduled for delivery between 2025 and 2026, 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 December 31, 2023, $35.6 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 December 31, 2023, aggregate future payments under all non-cancelable operating leases that have initial or remaining terms in excess of one year, were as follows (in thousands):

During the twelve months ended December 31, 2023, our long-term operating lease assets and liabilities increased by $47.0 million and $49.0 million, respectively, as reflected on the consolidated balance sheets, primarily due to 14 aircraft lease extensions, three new aircraft leases, an operating base and other assets in support of new contracts.

Pension Obligations

As of December 31, 2023, we had a net $3.3 million pension asset related to the BHL and Bristow International Aviation (Guernsey) Limited (“BIAGL”) pension plans as recorded on our consolidated balance sheets. The net asset represents the excess of the fair value of plan assets over the defined benefit pension plan of the present value of the liabilities that existed at that date. The minimum funding rules of the UK require the employer to agree to a funding plan with the plans’ trustee for securing that the pension plan has sufficient and appropriate assets to meet its technical provisions liabilities. The technical provisions are the measure of liabilities used for UK funding purposes and differs from that used to determine the balance sheet liabilities. When there is a shortfall in assets against these technical provisions, we are required to make scheduled contributions in amounts sufficient to bring the plan up to fully-funded status as quickly as can be reasonably afforded. The timing of the funding is dependent on actuarial valuations and resulting negotiations with the plan trustees. The employer contributions for the pension plan for the twelve months ended December 31, 2023, nine months ended December 31, 2022 and twelve months ended March 31, 2022 were $15.7 million, $11.1 million and $18.0 million, respectively.

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).