Executive Summary / Key Takeaways

• Bristow Group is positioned as a leading global provider of vertical flight solutions, strategically diversified across Offshore Energy Services (OES) and growing Government Services segments, supported by a critical fleet and technological focus.
• The company demonstrated strong recent financial performance, with Q1 2025 operating income increasing sequentially and full year 2024 adjusted EBITDA growing significantly by 39% year-over-year, driven by OES strength and initial contributions from new government contracts.
• Management has confidently affirmed its 2025 and 2026 financial guidance, signaling conviction in the multi-year OES upcycle and the increasing stability and earnings potential from the large, long-term government SAR contracts despite macroeconomic uncertainties and supply chain challenges.
• A new capital allocation framework prioritizes balance sheet strength, funding attractive organic growth opportunities (like new aircraft orders), and initiating shareholder returns, including planned debt reduction starting Q2 2025 and a quarterly dividend commencing Q1 2026.
• Key risks include ongoing supply chain disruptions impacting aircraft availability, sensitivity to global energy demand and prices, and the complex transitions of new government contracts, though geographic and segment diversification help mitigate some exposure.

Bristow Group: Charting a Course with Vertical Flight Solutions

Bristow Group Inc. stands as a prominent global provider of vertical flight solutions, operating a diverse fleet of helicopters and fixed-wing aircraft across six continents and 18 countries. The company's core business revolves around providing essential aviation services, primarily serving the offshore energy industry and government agencies. This strategic positioning leverages Bristow's extensive operational expertise and global infrastructure to meet critical transportation and safety needs in often challenging environments.

Historically, Bristow's journey has involved significant strategic evolution. A key transformative event was the merger with Era Group in 2020, which expanded its operational scale and geographic reach. Following this, the company has actively pursued diversification, notably expanding its Government Services segment through acquisitions and securing large, long-term contracts. This strategic pivot, culminating in the Q4 2024 realignment into three distinct reporting segments – Offshore Energy Services, Government Services, and Other Services – underscores Bristow's intent to balance the cyclical nature of offshore energy with the stable, long-duration cash flows offered by government contracts. This foundational strategy sets the stage for understanding the company's current performance and future trajectory.

Bristow's operational capabilities are underpinned by its substantial fleet, including being the world's largest operator of the S-92, AW189, and AW139 helicopter models. These aircraft are crucial for both offshore crew transport and demanding SAR missions. The company's management of this fleet involves a careful evaluation of global demand and the specific types of helicopters needed, recognizing that heavy and medium helicopters are essential for longer distances, heavier payloads, and operations in challenging weather.

Technological differentiation is a key component of Bristow's strategy, particularly in maintaining its competitive edge and pursuing its vision of leading in innovative and sustainable vertical flight solutions. While specific quantifiable performance metrics for its core helicopter technology compared to rivals are not detailed, the strategic importance of operating the most in-demand models (S-92, AW189, AW139) is clear. These aircraft are selected for their capabilities in demanding offshore and SAR environments.

Beyond its core fleet, Bristow is actively engaged in exploring new technologies, particularly within Advanced Air Mobility (AAM). The company has partnered with BETA Technologies to participate in an international test arena in Norway, collaborating with Avinor and the Norwegian Civil Aviation Authority. This initiative involves demonstration flights using BETA's ALIA aircraft, initially for cargo. The stated goal is to gain real-world operational knowledge and prepare the ecosystem for future AAM applications. While specific performance targets for the ALIA aircraft are not provided, the strategic intent is to demonstrate the technology's capabilities and identify potential use cases, including potentially in markets outside major regulatory bodies like the Middle East and Africa, where adoption might be faster. This R&D focus, while early stage, positions Bristow to potentially leverage emerging vertical flight technologies to meet future customer needs and enhance its service offerings, contributing to its long-term competitive positioning.

In the competitive landscape, Bristow operates against a backdrop of both direct and indirect rivals. Direct competitors like PHI Inc. (PHII), Seacor Marine Holdings (SMHI), and Tidewater Inc. (TDW) offer overlapping services, particularly in offshore energy support. Bristow positions itself as a global leader in offshore helicopter services, leveraging its extensive international network and regulatory licenses, which contribute to customer loyalty and revenue stability. While direct quantitative comparisons with all private competitors are challenging to ascertain, analysis suggests Bristow holds an estimated 25-30% aggregate market share in global offshore helicopter services, positioning it as a leader but trailing larger energy support firms like TDW in overall scale.

Compared to PHI, a key helicopter peer, Bristow's strength lies in its global diversification and government contracts, which offer greater revenue stability than PHI's more U.S.-centric model. Bristow's operational efficiency in utilization rates appears strong, contributing to revenue growth. However, PHI may hold an edge in cost efficiency in its streamlined U.S. operations. Against SMHI and TDW, which have broader marine operations, Bristow's focus on pure aviation expertise and its specialized helicopter fleet provide advantages in operational performance and niche aviation margins, although it may lag in overall scale and potentially cost synergies across integrated marine/aviation services. Indirect competitors, such as drone operators offering potentially lower-cost surveillance, pose a potential threat in niche segments, highlighting the importance of Bristow's focus on innovation and higher-value services like heavy-lift transport and SAR. Bristow's strategic response involves leveraging its global network and specialized fleet capabilities as competitive moats, while also exploring new technologies like AAM to address potential disruptions.

Performance Reflecting Strategic Momentum

Bristow's recent financial performance underscores the impact of its strategic focus and the improving market conditions in its core segments. In the first quarter of fiscal year 2025 (ended March 31, 2025), the company reported total revenues of $350.5 million, a slight decrease from $353.5 million in the preceding quarter, primarily attributed to lower seasonal utilization in the Other Services segment (specifically fixed wing operations in Australia) and unfavorable foreign exchange impacts, partially offset by increased revenues from new government contracts in Ireland.

Despite the slight sequential revenue dip, Q1 2025 saw operating income increase to $33.5 million from $31.8 million in the preceding quarter. This improvement was primarily driven by lower operating expenses, particularly in the Offshore Energy Services segment. OES operating income rose significantly to $37.4 million in Q1 2025 from $34.3 million sequentially, largely due to a $7.1 million decrease in repairs and maintenance expenses, influenced by lower power-by-the-hour costs, timing of repairs, and increased vendor credits. This highlights operational efficiencies offsetting revenue fluctuations.

The Government Services segment saw revenues increase sequentially to $85.9 million in Q1 2025 from $82.6 million, and operating income rise to $6.0 million from $2.3 million, primarily reflecting the ramp-up of the Irish Coast Guard contract which commenced transition in late 2024. This demonstrates the initial financial impact of these significant new contracts. The Other Services segment experienced sequential declines in both revenue ($24.8 million vs. $30.8 million) and operating income ($0.6 million vs. $3.6 million), mainly due to expected seasonal factors in Australia and lower dry-lease revenues.

Looking at the full year 2024 performance (ended December 31, 2024), Bristow delivered robust growth. Total revenues increased by $118 million compared to 2023, and adjusted EBITDA saw a significant 39% increase, rising by $66.3 million. This strong performance was largely attributed to the Offshore Energy Services segment, where revenues were $113 million higher year-over-year due to increased utilization and rates across regions like Africa, Brazil, and the Americas. While Government Services revenues were slightly lower year-over-year in 2024 due to rate changes on an existing contract and impacted by startup costs and supply chain-related availability penalties on new contracts, the segment's strategic importance for future stability was emphasized.

Liquidity remains a focus for Bristow. As of March 31, 2025, the company reported available liquidity of approximately $254 million, comprising $191.1 million in unrestricted cash and $63.2 million in availability under its ABL facility. While Q1 2025 saw a net decrease in cash due to working capital uses ($56.4 million primarily driven by increases in accounts receivable, other assets for contract startup costs, and inventory to mitigate supply chain risks), the full year 2024 demonstrated strong cash flow generation, with adjusted free cash flow reaching $161 million compared to $28 million in 2023. The company's total debt stood at $701.9 million as of March 31, 2025, primarily long-term obligations with no significant near-term maturities beyond the current portion of $19.2 million. The majority of capital investments for the new government contracts (86% funded as of Q1 2025) are expected to conclude in the coming months, positioning the company for improved free cash flow generation in the latter half of 2025 and beyond.

Outlook and Strategic Trajectory

Bristow's management has expressed strong confidence in the company's future, affirming previously reported financial guidance ranges for both 2025 and 2026 despite increased macroeconomic uncertainty and volatility in oil prices. The company expects 2025 revenues to range from $1.4 billion to $1.6 billion and adjusted EBITDA to be between $230 million and $260 million. For 2026, the outlook is even more positive, with projected total revenues of $1.5 billion to $1.8 billion and adjusted EBITDA between $275 million and $335 million.

This optimistic outlook is underpinned by the expected continued strength in the Offshore Energy Services segment, where market conditions are anticipated to remain supportive in 2025. Management projects OES adjusted operating income to be approximately $190 million to $210 million on revenues of $950 million to $1 billion in 2025, representing a significant improvement over 2024's profitability. Growth is expected to be driven primarily by the Americas and Africa markets, while Europe's North Sea is viewed as a more mature, stable region. The thesis for a long-duration OES upcycle remains intact, supported by attractive deepwater economics and the tight supply of relevant helicopter models, with manufacturing lead times of 24 months or more limiting new capacity.

The Government Services segment is central to the future growth narrative. While 2025 is acknowledged as a transition year involving startup costs and a phased revenue ramp-up as bases become fully operational for the Irish Coast Guard and UKSAR2G contracts, this segment is expected to contribute meaningfully to financial results and provide stable, high-credit-quality cash flows well into the next decade. Management anticipates adjusted operating income margins for this segment to return to at least 2023 levels as the transition progresses, with aggregate adjusted operating income projected to increase by approximately 25% in 2026 relative to 2022 levels. The full earnings potential is expected to become more evident in 2027 and beyond.

Supporting this outlook is Bristow's new capital allocation framework, announced in Q4 2024. The framework prioritizes maintaining a strong balance sheet, funding high-return organic growth opportunities, and returning capital to shareholders. The company intends to reduce gross debt to approximately $500 million by the end of 2026, with advanced payments expected to begin in Q2 2025. Furthermore, Bristow plans to initiate a quarterly dividend program in Q1 2026, starting at $0.125 per share ($0.50 annualized), sized based on the expected stable cash flows from the Government Services business, with a long-term ambition to grow the payout. An opportunistic $125 million share repurchase program was also approved. These initiatives signal management's confidence in the company's ability to generate significant cash flows following the conclusion of major SAR contract capital investments.

However, the path forward is not without challenges. Supply chain disruptions continue to impact aircraft availability, particularly for certain helicopter components, leading to availability penalties in the Government Services segment and higher costs in OES. While some incremental improvements have been noted, delays persist. Macroeconomic uncertainty, including potential slowing economic activity and volatility in oil and gas prices, remains a risk that could impact customer spending plans, although Bristow's focus on production support and geographic diversity provides some insulation. The large government contract transitions are complex and subject to unexpected regulatory and supply chain delays. Operating in various international jurisdictions also exposes the company to geopolitical risks, civil unrest, and potential uncertainties regarding tax legislation.

Conclusion

Bristow Group is strategically positioned with dual engines for growth: a robust Offshore Energy Services segment benefiting from a multi-year upcycle and a rapidly expanding Government Services business poised to deliver stable, long-term cash flows. The company's recent financial performance, marked by strong full year 2024 results and sequential operating income improvement in Q1 2025, reflects the positive momentum from these core areas. Despite facing macroeconomic crosscurrents and persistent supply chain challenges, management's affirmation of its 2025 and 2026 guidance underscores confidence in the underlying business fundamentals and the expected ramp-up of high-margin government contracts. Bristow's new capital allocation framework, targeting debt reduction and initiating shareholder returns, signals a commitment to enhancing shareholder value as significant capital investments conclude and free cash flow generation accelerates. While risks related to supply chain, energy market volatility, and complex contract transitions require careful monitoring, Bristow's diversified business model, critical fleet, and strategic focus on both traditional and emerging vertical flight solutions provide a compelling investment thesis centered on continued growth and improving financial returns.