Form 8-K Bristow Group Inc For: Feb 08

February 8, 2018 5:05 PM


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________________________________
FORM 8-K
_________________________________________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 8, 2018
_________________________________________________
 
Bristow Group Inc.
(Exact name of registrant as specified in its charter)
_________________________________________________

Delaware
 (State or other jurisdiction
 of incorporation)
 
001-31617
 (Commission
File Number)
 
72-0679819
 (IRS Employer
 Identification No.)

2103 City West Blvd.,
 4th Floor
 Houston, Texas
 (Address of principal executive offices)
 
77042
 (Zip Code)  

Registrant's telephone number, including area code: (713) 267-7600

Former Name or Former Address, if Changed Since Last Report: NONE
_________________________________________________

 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ¨





ITEM 2.02 Results of Operations and Financial Condition.
On February 8, 2018, Bristow Group Inc. (the “Company”) issued a press release that summarized its financial results for the three and nine-month periods ended December 31, 2017 (the “Financial Results”). This press release was issued in anticipation of a conference call and Q&A session starting at 10:00 a.m. ET (9:00 a.m. CT) on Friday, February 9, 2018, to review the Financial Results. A copy of the press release is furnished with this report as Exhibit 99.1, and is incorporated herein by reference.
The press release includes certain “non-GAAP financial measures” under Regulation G of the Securities Exchange Act of 1934 (the “Exchange Act”), including adjusted EBITDA, adjusted benefit (provision) for income taxes, adjusted net income (loss) and adjusted diluted earnings (loss) per share (collectively, the “Non-GAAP measures”). Adjusted EBITDA is calculated by taking our net income (loss) and adjusting for interest expense, depreciation and amortization, benefit (provision) for income taxes, gain (loss) on disposal of assets and special items, if any. Additionally, our net income (loss) and diluted earnings (loss) per share in this release have been presented in certain instances excluding gain (loss) on disposal of assets and special items detailed in the press release; these items are presented as adjusted net income (loss) and adjusted diluted earnings (loss) per share. Management believes that the Non-GAAP measures provide relevant and useful information, which is widely used by analysts, investors and competitors in our industry as well as by our management in assessing both consolidated and business unit performance. Adjusted EBITDA provides us with an understanding of one aspect of earnings before the impact of investing and financing transactions and income taxes. Adjusted EBITDA should not be considered a measure of discretionary cash available to us for investing in the growth of our business. Adjusted net income (loss) and adjusted diluted earnings (loss) per share present our consolidated results excluding asset dispositions and special items that do not reflect the ordinary earnings of our helicopter services operations. Adjusted benefit (provision) for income taxes excludes the tax impact of these items. We believe that these measures are useful supplemental measures because net income (loss) and diluted earnings (loss) per share include asset disposition effects and special items, and inclusion of these items does not reflect the predictive ongoing operational earnings of our business. The Non-GAAP measures are not calculated or presented in accordance with GAAP and other companies in our industry may calculate these measures differently than we do. As a result, these financial measures have limitations as analytical and comparative tools and you should not consider these items in isolation, or as a substitute for analysis of our results as reported under GAAP. In calculating these financial measures, we make certain adjustments that are based on assumptions and estimates that may prove to be inaccurate. In addition, in evaluating these financial measures, you should be aware that in the future we may incur expenses similar to those eliminated in this presentation. Our presentation of the Non-GAAP measures should not be construed as an inference that our future results will be unaffected by unusual or special items. Such non-GAAP measures should not be viewed as an alternative to our GAAP financial statements, but should be read as a supplement to, and in conjunction with, our GAAP financial statements.
ITEM 9.01. Financial Statements and Exhibits.
(d) Exhibits
 
 
 
 
Exhibit Number
  
Description of Exhibit
 
 
99.1

  
Limitation on Incorporation by Reference.
Information on Bristow’s website is not incorporated by reference in this Form 8-K. In accordance with General Instruction B.2 of Form 8-K, the information set forth in this Form 8-K and the attached exhibit shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any registration statement or other filing under the Securities Act of 1933 or the Exchange Act unless Bristow expressly states that such information is to be considered “filed” under the Exchange Act or incorporates it by specific reference in such a filing. The information set forth in Item 2.02 and the related exhibit furnished in Item 9.01 of this report shall not be deemed an admission as to the materiality of any information in this report on Form 8-K.





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 hereunto duly authorized.
 
 
 
 
 
 
 
 
 
BRISTOW GROUP INC.
 
 
 
 
 
Date: February 8, 2018
 
By:
 
/s/ Brian J. Allman
 
 
 
 
 
Brian J. Allman
 
 
 
 
 
Vice President, Chief Accounting Officer
 


        

Exhibit 99.1
bristowlogoa12.jpg
News Release

Linda McNeill
Investor Relations
(713) 267-7622
FOR IMMEDIATE RELEASE

Bristow Group Reports Third Quarter Fiscal Year 2018 Results

HOUSTON, February 8, 2018 – Bristow Group Inc. (NYSE: BRS) today reported the following results for the three and nine months ended December 31, 2017. All amounts shown are dollar amounts in thousands unless otherwise noted:
 
 
Three Months Ended 
 December 31,
 

 
Nine Months Ended 
 December 31,
 
 
 
 
2017
 
2016
 
% Change
 
2017
 
2016
 
% Change
Operating revenue
 
$
345,528

 
$
324,353

 
6.5
 %
 
$
1,043,249

 
$
1,024,199

 
1.9
 %
Net loss attributable to
   Bristow Group
 
(8,273
)
 
(21,927
)
 
62.3
 %
 
(94,757
)
 
(92,496
)
 
(2.4
)%
Diluted loss per share
 
(0.23
)
 
(0.62
)
 
62.9
 %
 
(2.69
)
 
(2.64
)
 
(1.9
)%
Adjusted EBITDA (1)
 
34,964

 
22,918

 
52.6
 %
 
82,545

 
67,397

 
22.5
 %
Adjusted net loss (1)
 
(18,450
)
 
(10,121
)
 
(82.3
)%
 
(59,198
)
 
(34,415
)
 
(72.0
)%
Adjusted diluted loss per share (1)
 
(0.52
)
 
(0.29
)
 
(79.3
)%
 
(1.68
)
 
(0.98
)
 
(71.4
)%
Operating cash flow
 
26,027

 
(42,893
)
 
*

 
(9,307
)
 
(14,098
)
 
34.0
 %
Capital expenditures
 
12,124

 
17,860

 
(32.1
)%
 
36,441

 
119,726

 
(69.6
)%
Rent expense
 
42,620

 
53,652

 
(20.6
)%
 
158,519

 
156,890

 
1.0
 %
 
 
December 31, 
 2017
 
September 30,
2017
 
March 31,  
 2017
 
% Change
September 30, 2017
to December 31, 2017
 
% Change
March 31, 2017
 to December 31, 2017
Cash
 
$
117,848

 
$
97,343

 
$
96,656

 
21.1
%
 
21.9
%
Undrawn borrowing capacity on Revolving Credit Facility
 
387,584

 
292,039

 
260,320

 
32.7
%
 
48.9
%
Total liquidity
 
$
505,432

 
$
389,382

 
$
356,976

 
29.8
%
 
41.6
%
______________ 
* percentage change too large to be meaningful or not applicable
(1) 
A full reconciliation of non-GAAP financial measurements is included at the end of this news release

“Our third quarter results continue to demonstrate the success of the new Bristow in the face of ongoing industry challenges,” said Jonathan Baliff, President and Chief Executive Officer of Bristow Group. “Our adjusted EBITDA was better than expected in the third quarter led by higher revenue from increased flying activity across several regions, while also benefiting from the operating leverage created by our lower cost hub structure. In addition, the third quarter benefited significantly from OEM cost recoveries, which, when coupled with capex deferrals, revenue improvement and cost control measures, delivered a significant increase in cash and liquidity.”
BUSINESS AND FINANCIAL HIGHLIGHTS
Our operating revenue showed continued improvement year-over-year as all U.K. SAR bases are fully online, fixed wing services were accretive, and oil and gas service activity benefited from short-term activity in the North Sea off Norway and in the U.S. Gulf of Mexico. In addition, during the December 2017 quarter, we recovered $125 million in OEM costs resulting in a $13.1 million reduction in rent expense (included in direct cost) and a corresponding increase in adjusted EBITDA.
We are raising our fiscal 2018 adjusted EBITDA guidance to $100 million - $115 million from $55 million - $85 million provided in November 2017, as a result of better than expected operational and financial performance including OEM cost recoveries.

1

        

We had $505.4 million of total liquidity as of December 31, 2017, an increase of $116 million or 30% in the December 2017 quarter; we are raising our liquidity guidance as of March 31, 2018 to a range of $450 million to $480 million, an increase of approximately $40 million over our November 2017 guidance, primarily due to the issuance of $143.8 million of 4½% Convertible Senior Notes due 2023, net of amounts used to pay down existing bank debt.
“I am incredibly proud of our team members who are delivering on our fiscal 2018 priorities of safety improvement, cost efficiencies, portfolio management and increased revenue,” said Jonathan Baliff. “While the third quarter results tangibly demonstrate efforts like the OEM cost recoveries, the remainder of fiscal 2018 will remain challenging due to continued oversupply of aircraft and limited visibility into our clients’ demand for aviation services. Our lower cost structure works for our clients, but we must continue to improve Target Zero safety as we successfully compete in a short cycle market that will likely continue into fiscal 2019.”
Operating revenue from external clients by line of service was as follows:
        
 
Three Months Ended 
 December 31,
 
 
 
2017
 
2016
 
% Change
 
 
 
 
 
 
 
(in thousands, except percentages)
Oil and gas services
$
236,655

 
$
232,287

 
1.9
 %
Fixed wing services
52,476

 
44,811

 
17.1
 %
U.K. SAR services
55,659

 
45,193

 
23.2
 %
Corporate and other
738

 
2,062

 
(64.2
)%
Total operating revenue
$
345,528

 
$
324,353

 
6.5
 %
The year-over-year increase in revenue was primarily driven by an increase in U.K. SAR services revenue due to additional bases coming online in fiscal years 2017 and 2018, an increase in our fixed wing services in our Europe Caspian, Asia Pacific and Africa regions and an increase in operating revenue for our oil and gas services primarily in our Americas and Europe Caspian regions due to an increase in activity. The activity level increase across our business was driven mostly by short term contracts, ad hoc and increased flying on existing contracts as we continue to see some stability in certain markets, especially in Norway and in the U.S. Gulf of Mexico.
The year-over-year change in net loss and diluted loss per share was primarily driven by one-time income tax benefits, higher revenue in the December 2017 quarter as discussed above, lower rent expense resulting from OEM cost recoveries in the December 2017 quarter and impairment charges on goodwill recorded in the December 2016 quarter that did not recur in the December 2017 quarter. These favorable changes were partially offset by higher interest expense and a higher loss on disposal of assets in the December 2017 quarter.
The GAAP net loss and diluted loss per share for the December 2017 quarter included the following special items:
Organizational restructuring costs of $2.8 million ($2.5 million net of tax), or $0.07 per share, included in direct cost and general and administrative expense, resulting from separation programs across our global organization designed to increase efficiency and reduce costs, and
A non-cash benefit from tax items of $15.1 million, or $0.42 per share, including a $75.6 million benefit related to the revaluation of net deferred tax liabilities to a lower tax rate resulting from the enactment of the Tax Cuts and Jobs Act (the “Act”) in December 2017 and ongoing impact of valuation of deferred tax assets and recent financings of $1.0 million, partially offset by the impact of deemed repatriation of foreign earnings under the Act of $61.5 million.
Additionally, we had a loss on disposal of assets of $4.6 million ($2.5 million net of tax), or $0.07 per share, during the December 2017 quarter primarily related to a loss of $3.0 million from the sale or disposal of aircraft and other equipment.
Excluding the effect of special items and the loss on disposal of assets, the year-over-year change in adjusted net loss and adjusted diluted loss per share is primarily driven by an adjusted income tax expense in the December 2017 quarter compared to an adjusted income tax benefit in the December 2016 quarter and an increase in interest expense, partially offset by the increase in U.K. SAR, fixed wing services and oil and gas services revenue and the

2

        

benefit from the OEM cost recoveries discussed above. The year-over-year change in adjusted EBITDA was primarily driven by the same increase in revenue and benefit from OEM cost recoveries.
The December 2016 quarter was also impacted by special items as reflected in the table at the end of this release.
LIQUIDITY AND FINANCIAL FLEXIBILITY
Don Miller, Senior Vice President and Chief Financial Officer, commented, “Our liquidity improved significantly by $116 million or 30% to $505.4 million at the end of the December 2017 quarter primarily due to the recovery of OEM costs and the issuance of $143.8 million of our convertible senior notes. In addition, we paid down $135.4 million of our bank term loans and ended the quarter with $400 million available under our revolver, before $12 million in letters of credit. We are raising our liquidity guidance as of March 31, 2018 to a range of $450 million to $480 million from $410 million to $450 million provided in November 2017 as we take actions to improve revenue, reduce cost, manage working capital and leverage our existing assets.”
REGIONAL PERFORMANCE

Europe Caspian
 
 
Three Months Ended 
 December 31,
 
 
 
 
2017
 
2016
 
% Change
 
 
 
 
 
 
 
 
 
(in thousands, except percentages)
Operating revenue
 
$
189,910

 
$
172,844

 
9.9
 %
Operating income
 
$
5,312

 
$
(303
)
 
*

Operating margin
 
2.8
%
 
(0.2
)%
 
*

Adjusted EBITDA
 
$
18,614

 
$
9,123

 
104.0
 %
Adjusted EBITDA margin
 
9.8
%
 
5.3
 %
 
84.9
 %
Rent expense
 
$
29,499

 
$
34,115

 
(13.5
)%
_____________ 

 * percentage change too large to be meaningful or not applicable
The increase in operating revenue from the December 2016 quarter to the December 2017 quarter was primarily driven by an increase from the start-up of U.K. SAR bases since the December 2016 quarter, an increase in Norway primarily due to increases in activity and short-term contracts and an increase in fixed wing revenue. Partially offsetting these increases was a decrease in U.K. oil and gas revenue. Eastern Airways contributed $29.5 million and $25.1 million in operating revenue for the December 2017 quarter and December 2016 quarter, respectively.
A substantial portion of our operations in the Europe Caspian region are contracted in the British pound sterling, which depreciated significantly against the U.S. dollar in the December 2016 quarter as a result of Brexit. As a result of the changes in the British pound sterling, adjusted EBITDA was favorably impacted from foreign exchange changes of $0.7 million during the December 2017 quarter compared to an unfavorable impact of $11.3 million during the December 2016 quarter.
During the December 2017 quarter, we recorded a benefit to rent expense within our Europe Caspian region results of $7.1 million related to the OEM cost recoveries. Additionally, during the December 2016 quarter, we recorded an impairment of $8.7 million for the remaining goodwill related to Eastern Airways, which contributed to the operating loss in the December 2016 quarter, but was adjusted for in our calculation of adjusted EBITDA.
Operating income, operating margin, adjusted EBITDA and adjusted EBITDA margin increased in the December 2017 quarter primarily due an increase in operating revenue as a result of increased activity, the benefit to rent expense in the December 2017 quarter related to the OEM cost recoveries and favorable impacts from changes in foreign currency exchange rates, with operating income and operating margin also improving due to the goodwill impairment in the December 2016 quarter. These benefits were partially offset by increased salaries and benefits and maintenance expense year-over-year due to the increase in activity. Eastern Airways contributed a negative $4.1 million and a negative $2.1 million in adjusted EBITDA for the December 2017 quarter and December 2016 quarter, respectively.

3

        

Africa
 
 
Three Months Ended 
 December 31,
 
 
 
 
2017
 
2016
 
% Change
 
 
 
 
 
 
 
 
 
(in thousands, except percentages)
Operating revenue
 
$
47,915

 
$
49,587

 
(3.4
)%
Operating income
 
$
10,470

 
$
10,441

 
0.3
 %
Operating margin
 
21.9
%
 
21.1
%
 
3.8
 %
Adjusted EBITDA
 
$
14,206

 
$
17,012

 
(16.5
)%
Adjusted EBITDA margin
 
29.6
%
 
34.3
%
 
(13.7
)%
Rent expense
 
$
2,048

 
$
1,767

 
15.9
 %
Operating revenue for Africa decreased in the December 2017 quarter due to an overall decrease in activity compared to the December 2016 quarter. Activity declined with certain clients and certain contracts ended, which was only partially offset by an increase in activity with other clients. Additionally, fixed wing services in Africa generated $2.0 million and $1.0 million of operating revenue for the December 2017 quarter and December 2016 quarter, respectively.
Operating income remained flat while adjusted EBITDA and adjusted EBITDA margin decreased in the December 2017 quarter primarily due to the impact of changes in foreign currency exchange rates, which negatively impacted adjusted EBITDA by $2.2 million compared to the December 2016 quarter.
Americas
 
 
Three Months Ended 
 December 31,
 
 
 
 
2017
 
2016
 
% Change
 
 
 
 
 
 
 
 
 
(in thousands, except percentages)
Operating revenue
 
$
60,345

 
$
53,024

 
13.8
%
Earnings from unconsolidated affiliates
 
$
2,097

 
$
831

 
152.3
%
Operating income
 
$
5,308

 
$
2,226

 
138.5
%
Operating margin
 
8.8
%
 
4.2
%
 
109.5
%
Adjusted EBITDA
 
$
12,689

 
$
10,039

 
26.4
%
Adjusted EBITDA margin
 
21.0
%
 
18.9
%
 
11.1
%
Rent expense
 
$
6,295

 
$
5,638

 
11.7
%
Operating revenue increased in the December 2017 quarter primarily due to an increase in activity from our U.S. Gulf of Mexico oil and gas operations and additional revenue from the search and rescue consortium in the U.S. Gulf of Mexico, partially offset by a decrease in operating revenue in Trinidad and Brazil due to lower activity.
Earnings from unconsolidated affiliates, net of losses, increased $1.3 million primarily due to an increase in earnings from our investment in Líder in Brazil due to reduced salaries and benefits and less of an unfavorable change in exchange rates which decreased our earnings from our investment in Líder by $0.8 million in the December 2017 quarter and decreased our earnings from our investment in Líder by $1.2 million in the December 2016 quarter.
The increases in operating income, operating margin, adjusted EBITDA and adjusted EBITDA margin were driven by the increase in revenue and earnings from unconsolidated affiliates discussed above, partially offset by an increase in rent expense.

4

        

Asia Pacific
 
 
Three Months Ended 
 December 31,
 
 
 
 
2017
 
2016
 
% Change
 
 
 
 
 
 
 
 
 
(in thousands, except percentages)
Operating revenue
 
$
50,248

 
$
49,092

 
2.4
 %
Operating loss
 
$
(941
)
 
$
(9,012
)
 
89.6
 %
Operating margin
 
(1.9
)%
 
(18.4
)%
 
89.7
 %
Adjusted EBITDA
 
$
4,797

 
$
(5,027
)
 
*

Adjusted EBITDA margin
 
9.5
 %
 
(10.2
)%
 
*

Rent expense
 
$
2,807

 
$
10,247

 
(72.6
)%
_____________ 
 * percentage change too large to be meaningful or not applicable
Operating revenue increased in the December 2017 quarter primarily due to an increase from our fixed wing operations as Airnorth contributed $21.0 million and $18.7 million in operating revenue for the December 2017 quarter and December 2016 quarter, respectively.
Operating loss, operating margin, adjusted EBITDA and adjusted EBITDA margin improved in the December 2017 quarter primarily due to a benefit to rent expense of $6.0 million recorded in the December 2017 quarter related to the OEM cost recoveries and the increase in operating revenue discussed above. Airnorth contributed $2.2 million and $1.1 million in adjusted EBITDA for the December 2017 quarter and December 2016 quarter, respectively.
Corporate and other
 
 
Three Months Ended 
 December 31,
 
 
 
 
2017
 
2016
 
% Change
 
 
 
 
 
 
 
 
 
(in thousands, except percentages)
Operating revenue
 
$
743

 
$
2,099

 
(64.6
)%
Operating loss
 
$
(19,055
)
 
$
(21,575
)
 
11.7
 %
Adjusted EBITDA
 
$
(15,342
)
 
$
(8,229
)
 
(86.4
)%
Rent expense
 
$
1,971

 
$
1,885

 
4.6
 %
Operating revenue decreased in the December 2017 quarter primarily due to a decrease in Bristow Academy revenue due to the sale of Bristow Academy on November 1, 2017.
Operating loss was lower for the December 2017 quarter primarily due to the sale of Bristow Academy, which incurred less of an operating loss in the December 2017 quarter compared to the December 2016 quarter. Adjusted EBITDA decreased primarily due to foreign currency transaction losses of $0.3 million recorded in the December 2017 quarter versus foreign currency transaction gains of $10.7 million in the December 2016 quarter.
GUIDANCE
Guidance for selected financial measures is included in the tables that follow.
CONFERENCE CALL
Management will conduct a conference call starting at 10:00 a.m. ET (9:00 a.m. CT) on Friday, February 9, 2018 to review financial results for the fiscal year 2018 third quarter ended December 31, 2017. This release and the most recent investor slide presentation are available in the investor relations area of our web page at www.bristowgroup.com. The conference call can be accessed as follows:
Via Webcast:
Visit Bristow Group’s investor relations Web page at www.bristowgroup.com
Live: Click on the link for “Bristow Group Fiscal 2018 Third Quarter Earnings Conference Call”

5

        

Replay: A replay via webcast will be available approximately one hour after the call’s completion and will be accessible for approximately 90 days.
Via Telephone within the U.S.:
Live: Dial toll free 1-877-404-9648
Via Telephone outside the U.S.:
Live: Dial 1-412-902-0030
ABOUT BRISTOW GROUP INC.
Bristow Group Inc. is the leading global industrial aviation services provider offering helicopter transportation, search and rescue (SAR) and aircraft support services to government and civil organizations worldwide. Bristow has major operations in the North Sea, Nigeria and the U.S. Gulf of Mexico, and in most of the other major offshore oil and gas producing regions of the world, including Australia, Brazil, Canada, Russia and Trinidad. Bristow provides SAR services to the private sector worldwide and to the public sector for all of the U.K. on behalf of the Maritime and Coastguard Agency. For more information, visit bristowgroup.com.
FORWARD-LOOKING STATEMENTS DISCLOSURE
Statements contained in this news release that state the Company’s or management’s intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements. These forward-looking statements include statements regarding earnings and liquidity guidance, expected contract revenue, capital deployment strategy, operational and capital performance, expected cost management activities, original equipment manufacturer recoveries, expected capital expenditure deferrals and, market and industry conditions. It is important to note that the Company’s actual results could differ materially from those projected in such forward-looking statements. Risks and uncertainties include without limitation: fluctuations in the demand for our services; fluctuations in worldwide prices of and supply and demand for oil and natural gas; fluctuations in levels of oil and natural gas production, exploration and development activities; the impact of competition; actions by clients and suppliers; the risk of reductions in spending on industrial aviation services by governmental agencies; changes in tax and other laws and regulations; changes in foreign exchange rates and controls; risks associated with international operations; operating risks inherent in our business, including the possibility of declining safety performance; general economic conditions including the capital and credit markets; our ability to obtain financing; the risk of grounding of segments of our fleet for extended periods of time or indefinitely; our ability to re-deploy our aircraft to regions with greater demand; our ability to acquire additional aircraft and dispose of older aircraft through sales into the aftermarket; the possibility that we do not achieve the anticipated benefit of our fleet investment program; availability of employees; and political instability, war or acts of terrorism in any of the countries where we operate. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the Company’s SEC filings, including but not limited to the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 2017 and annual report on Form 10-K for the fiscal year ended March 31, 2017. Bristow Group Inc. disclaims any intention or obligation to revise any forward-looking statements, including financial estimates, whether as a result of new information, future events or otherwise.
(financial tables follow)

6

        

BRISTOW GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts and percentages)
(Unaudited)



 
Three Months Ended 
 December 31,
 
Nine Months Ended 
 December 31,
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
 
 
Gross revenue:
 
 
 
 
 
 
 
Operating revenue from non-affiliates
$
328,944

 
$
305,789

 
$
991,655

 
$
969,779

Operating revenue from affiliates
16,584

 
18,564

 
51,594

 
54,420

Reimbursable revenue from non-affiliates
15,207

 
13,090

 
43,271

 
40,109

 
360,735

 
337,443

 
1,086,520

 
1,064,308

Operating expense:
 
 
 
 
 
 
 
Direct cost
271,864

 
260,343

 
842,128

 
831,516

Reimbursable expense
14,725

 
12,206

 
42,365

 
38,096

Depreciation and amortization
31,682

 
29,768

 
94,119

 
93,054

General and administrative
43,366

 
45,409

 
138,695

 
149,278

 
361,637

 
347,726

 
1,117,307

 
1,111,944

 
 
 
 
 
 
 
 
Loss on impairment

 
(8,706
)
 
(1,192
)
 
(16,278
)
Loss on disposal of assets
(4,591
)
 
(874
)
 
(12,418
)
 
(13,077
)
Earnings from unconsolidated affiliates, net of losses
1,996

 
766

 
3,394

 
4,777

Operating loss
(3,497
)
 
(19,097
)
 
(41,003
)
 
(72,214
)
 
 
 
 
 
 
 
 
Interest expense, net
(19,093
)
 
(12,179
)
 
(53,677
)
 
(34,533
)
Other income (expense), net
(766
)
 
1,668

 
147

 
(1,518
)
Loss before provision for income taxes
(23,356
)
 
(29,608
)
 
(94,533
)
 
(108,265
)
Benefit (provision) for income taxes
13,419

 
3,560

 
(2,546
)
 
11,038

Net loss
(9,937
)
 
(26,048
)
 
(97,079
)
 
(97,227
)
Net loss attributable to noncontrolling interests
1,664

 
4,121

 
2,322

 
4,731

Net loss attributable to Bristow Group
$
(8,273
)
 
$
(21,927
)
 
$
(94,757
)
 
$
(92,496
)
 
 
 
 
 
 
 
 
Loss per common share:
 
 
 
 
 
 
 
Basic
$
(0.23
)
 
$
(0.62
)
 
$
(2.69
)
 
$
(2.64
)
Diluted
$
(0.23
)
 
$
(0.62
)
 
$
(2.69
)
 
$
(2.64
)
 
 
 
 
 
 
 
 
Non-GAAP measures:
 
 
 
 
 
 
 
Adjusted EBITDA
$
34,964

 
$
22,918

 
$
82,545

 
$
67,397

Adjusted EBITDA margin
10.1
%
 
7.1
%
 
7.9
%
 
6.6
%
Adjusted net loss
$
(18,450
)
 
$
(10,121
)
 
$
(59,198
)
 
$
(34,415
)
Adjusted diluted loss per share
$
(0.52
)
 
$
(0.29
)
 
$
(1.68
)
 
$
(0.98
)

7

        

BRISTOW GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 
 
December 31, 
 2017
 
March 31,  
 2017
ASSETS
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
117,848

 
$
96,656

Accounts receivable from non-affiliates
 
202,141

 
198,129

Accounts receivable from affiliates
 
12,638

 
8,786

Inventories
 
133,993

 
124,911

Assets held for sale
 
31,038

 
38,246

Prepaid expenses and other current assets
 
43,668

 
41,143

Total current assets
 
541,326

 
507,871

Investment in unconsolidated affiliates
 
211,115

 
210,162

Property and equipment – at cost:
 
 
 
 
Land and buildings
 
241,792

 
231,448

Aircraft and equipment
 
2,511,322

 
2,622,701

 
 
2,753,114

 
2,854,149

Less – Accumulated depreciation and amortization
 
(673,930
)
 
(599,785
)
 
 
2,079,184

 
2,254,364

Goodwill
 
20,299

 
19,798

Other assets
 
115,233

 
121,652

Total assets
 
$
2,967,157

 
$
3,113,847

 
 
 
 
 
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
 
 
 
 
Accounts payable
 
$
87,428

 
$
98,215

Accrued wages, benefits and related taxes
 
55,652

 
59,077

Income taxes payable
 
5,320

 
15,145

Other accrued taxes
 
6,095

 
9,611

Deferred revenue
 
17,922

 
19,911

Accrued maintenance and repairs
 
28,468

 
22,914

Accrued interest
 
6,292

 
12,909

Other accrued liabilities
 
72,292

 
46,679

Deferred taxes
 

 
830

Short-term borrowings and current maturities of long-term debt
 
93,136

 
131,063

Total current liabilities
 
372,605

 
416,354

Long-term debt, less current maturities
 
1,102,765

 
1,150,956

Accrued pension liabilities
 
54,291

 
61,647

Other liabilities and deferred credits
 
37,768

 
28,899

Deferred taxes
 
141,904

 
154,873

Redeemable noncontrolling interest
 
3,859

 
6,886

 
 
 
 
 
Stockholders’ investment:
 
 
 
 
Common stock
 
381

 
379

Additional paid-in capital
 
844,825

 
809,995

Retained earnings
 
894,684

 
991,906

Accumulated other comprehensive loss
 
(307,353
)
 
(328,277
)
Treasury shares
 
(184,796
)
 
(184,796
)
Total Bristow Group stockholders’ investment
 
1,247,741

 
1,289,207

Noncontrolling interests
 
6,224

 
5,025

Total stockholders’ investment
 
1,253,965

 
1,294,232

Total liabilities, redeemable noncontrolling interest and stockholders’ investment
 
$
2,967,157

 
$
3,113,847


8

        

BRISTOW GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)


 
 
Nine Months Ended 
 December 31,
 
 
2017
 
2016
Cash flows from operating activities:
 
 
 
 
Net loss
 
$
(97,079
)
 
$
(97,227
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
 
Depreciation and amortization
 
94,119

 
93,054

Deferred income taxes
 
(14,665
)
 
(20,991
)
Write-off of deferred financing fees
 
1,138

 

Discount amortization on long-term debt
 
343

 
1,314

Loss on disposal of assets
 
12,418

 
13,077

Loss on impairment
 
1,192

 
16,278

Deferral of lease payment
 
2,423

 

Stock-based compensation
 
8,776

 
9,508

Equity in earnings from unconsolidated affiliates in excess of dividends received
 
(3,185
)
 
(4,294
)
Increase (decrease) in cash resulting from changes in:
 
 
 
 
Accounts receivable
 
(3,785
)
 
15,787

Inventories
 
(4,618
)
 
(2,912
)
Prepaid expenses and other assets
 
10,250

 
(4,359
)
Accounts payable
 
(14,540
)
 
(7,395
)
Accrued liabilities
 
(5,528
)
 
(19,891
)
Other liabilities and deferred credits
 
3,434

 
(6,047
)
Net cash used in operating activities
 
(9,307
)
 
(14,098
)
Cash flows from investing activities:
 
 
 
 
Capital expenditures
 
(36,441
)
 
(119,726
)
Proceeds from asset dispositions
 
48,547

 
14,344

Proceeds from OEM cost recoveries
 
94,463

 

Deposits received on aircraft held for sale
 

 
290

Net cash provided by (used in) investing activities
 
106,569

 
(105,092
)
Cash flows provided by (used in) financing activities:
 
 
 
 
Proceeds from borrowings
 
548,768

 
360,240

Debt issuance costs
 
(11,653
)
 
(3,883
)
Repayment of debt
 
(609,667
)
 
(243,677
)
Purchase of 4½% Convertible Senior Notes call option
 
(40,393
)
 

Proceeds from issuance of warrants
 
30,259

 

Partial prepayment of put/call obligation
 
(36
)
 
(38
)
Dividends paid to noncontrolling interest
 

 
(2,533
)
Payment of contingent consideration
 

 
(10,000
)
Common stock dividends paid
 
(2,465
)
 
(7,366
)
Repurchases for tax withholdings on vesting of equity awards
 
(591
)
 
(762
)
Net cash provided by (used in) financing activities
 
(85,778
)
 
91,981

Effect of exchange rate changes on cash and cash equivalents
 
9,708

 
(5,942
)
Net increase (decrease) in cash and cash equivalents
 
21,192

 
(33,151
)
Cash and cash equivalents at beginning of period
 
96,656

 
104,310

Cash and cash equivalents at end of period
 
$
117,848

 
$
71,159






9

        



BRISTOW GROUP INC. AND SUBSIDIARIES
SELECTED OPERATING DATA
(In thousands, except flight hours and percentages)
(Unaudited)
 
 
Three Months Ended 
 December 31,
 
Nine Months Ended 
 December 31,
 
 
2017
 
2016
 
2017
 
2016
Flight hours (excluding Bristow Academy and unconsolidated affiliates):
 
 
 
 
 
 
 
 
Europe Caspian
 
22,909

 
20,921

 
68,762

 
65,703

Africa
 
7,417

 
7,145

 
22,561

 
22,869

Americas
 
7,954

 
5,337

 
23,810

 
17,504

Asia Pacific
 
6,672

 
6,691

 
19,991

 
19,759

Consolidated
 
44,952

 
40,094

 
135,124

 
125,835

Operating revenue:
 
 
 
 
 
 
 
 
Europe Caspian
 
$
189,910

 
$
172,844

 
$
570,983

 
$
548,070

Africa
 
47,915

 
49,587

 
146,523

 
153,055

Americas
 
60,345

 
53,024

 
178,884

 
168,578

Asia Pacific
 
50,248

 
49,092

 
153,365

 
155,144

Corporate and other
 
743

 
2,099

 
3,912

 
7,917

Intra-region eliminations
 
(3,633
)
 
(2,293
)
 
(10,418
)
 
(8,565
)
Consolidated
 
$
345,528

 
$
324,353

 
$
1,043,249

 
$
1,024,199

Consolidated operating loss:
 
 
 
 
 
 
 
 
Europe Caspian
 
$
5,312

 
$
(303
)
 
$
19,610

 
$
18,468

Africa
 
10,470

 
10,441

 
28,353

 
19,954

Americas
 
5,308

 
2,226

 
11,535

 
5,790

Asia Pacific
 
(941
)
 
(9,012
)
 
(19,374
)
 
(24,480
)
Corporate and other
 
(19,055
)
 
(21,575
)
 
(68,709
)
 
(78,869
)
Loss on disposal of assets
 
(4,591
)
 
(874
)
 
(12,418
)
 
(13,077
)
Consolidated
 
$
(3,497
)
 
$
(19,097
)
 
$
(41,003
)
 
$
(72,214
)
Operating margin:
 
 
 
 
 
 
 
 
Europe Caspian
 
2.8
 %
 
(0.2
)%
 
3.4
 %
 
3.4
 %
Africa
 
21.9
 %
 
21.1
 %
 
19.4
 %
 
13.0
 %
Americas
 
8.8
 %
 
4.2
 %
 
6.4
 %
 
3.4
 %
Asia Pacific
 
(1.9
)%
 
(18.4
)%
 
(12.6
)%
 
(15.8
)%
Consolidated
 
(1.0
)%
 
(5.9
)%
 
(3.9
)%
 
(7.1
)%
Adjusted EBITDA:
 
 
 
 
 
 
 
 
Europe Caspian
 
$
18,614

 
$
9,123

 
$
58,716

 
$
43,273

Africa
 
14,206

 
17,012

 
40,206

 
39,350

Americas
 
12,689

 
10,039

 
33,430

 
34,317

Asia Pacific
 
4,797

 
(5,027
)
 
502

 
(10,513
)
Corporate and other
 
(15,342
)
 
(8,229
)
 
(50,309
)
 
(39,030
)
Consolidated
 
$
34,964

 
$
22,918

 
$
82,545

 
$
67,397

Adjusted EBITDA margin:
 
 
 
 
 
 
 
 
Europe Caspian
 
9.8
 %
 
5.3
 %
 
10.3
 %
 
7.9
 %
Africa
 
29.6
 %
 
34.3
 %
 
27.4
 %
 
25.7
 %
Americas
 
21.0
 %
 
18.9
 %
 
18.7
 %
 
20.4
 %
Asia Pacific
 
9.5
 %
 
(10.2
)%
 
0.3
 %
 
(6.8
)%
Consolidated
 
10.1
 %
 
7.1
 %
 
7.9
 %
 
6.6
 %

10

        

 
 
Three Months Ended 
 December 31,
 
Nine Months Ended 
 December 31,
 
 
2017
 
2016
 
2017
 
2016
Depreciation and amortization:
 
 
 
 
 
 
 
 
Europe Caspian
 
$
12,771

 
$
11,185

 
$
36,789

 
$
33,594

Africa
 
3,664

 
4,007

 
10,330

 
12,680

Americas
 
6,909

 
7,060

 
20,906

 
25,669

Asia Pacific
 
4,479

 
4,973

 
15,347

 
13,586

Corporate and other
 
3,859

 
2,543

 
10,747

 
7,525

Consolidated
 
$
31,682

 
$
29,768

 
$
94,119

 
$
93,054

Rent expense:
 
 
 
 
 
 
 
 
Europe Caspian
 
$
29,499

 
$
34,115

 
$
102,803

 
$
100,007

Africa
 
2,048

 
1,767

 
6,424

 
6,101

Americas
 
6,295

 
5,638

 
18,480

 
16,258

Asia Pacific
 
2,807

 
10,247

 
24,356

 
28,803

Corporate and other
 
1,971

 
1,885

 
6,456

 
5,721

Consolidated
 
$
42,620

 
$
53,652

 
$
158,519

 
$
156,890



11

        

BRISTOW GROUP INC. AND SUBSIDIARIES
AIRCRAFT COUNT
As of December 31, 2017
(Unaudited)
 
 
Percentage
of Current
Period
Operating
Revenue
 
Aircraft in Consolidated Fleet
 
 
 
 
 
 
Helicopters
 
Fixed
Wing (1)
 
 
 
Unconsolidated
Affiliates (4)
 
 
 
 
Small
 
Medium
 
Large
Total (2)(3)
 
Total
Europe Caspian
 
54
%
 

 
16

 
79

 
32

 
127

 

 
127

Africa
 
14
%
 
9

 
28

 
5

 
5

 
47

 
48

 
95

Americas
 
17
%
 
16

 
41

 
16

 

 
73

 
66

 
139

Asia Pacific
 
15
%
 

 
10

 
21

 
14

 
45

 

 
45

Total
 
100
%
 
25

 
95

 
121

 
51

 
292

 
114

 
406

Aircraft not currently in fleet: (5)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
On order
 
 
 

 

 
27

 

 
27

 
 
 
 
Under option
 
 
 

 

 
4

 

 
4

 
 
 
 
_____________ 
(1) 
Eastern Airways operates a total of 32 fixed wing aircraft in the Europe Caspian region and provides technical support for three fixed wing aircraft in the Africa region. Additionally, Airnorth operates a total of 14 fixed wing aircraft, which are included in the Asia Pacific region.
(2) 
Includes 9 aircraft held for sale and 102 leased aircraft as follows:
 
 
Held for Sale Aircraft in Consolidated Fleet
 
 
Helicopters
 
 
 
 
Small
 
Medium
 
Large
 
Fixed
Wing
 
Total
Europe Caspian
 

 
2

 

 

 
2

Africa
 

 
1

 

 
1

 
2

Americas
 

 
4

 

 

 
4

Asia Pacific
 

 

 

 
1

 
1

Total
 

 
7

 

 
2

 
9

 
 
 
 
 
 
 
 
 
 
 
 
 
Leased Aircraft in Consolidated Fleet
 
 
Helicopters
 
 
 
 
 
 
Small
 
Medium
 
Large
 
Fixed
Wing
 
Total
Europe Caspian
 

 
6

 
40

 
14

 
60

Africa
 

 
1

 
2

 
2

 
5

Americas
 
3

 
14

 
6

 

 
23

Asia Pacific
 

 
3

 
7

 
4

 
14

Total
 
3

 
24

 
55

 
20

 
102

(3) 
The average age of our fleet was approximately nine years as of December 31, 2017.
(4) 
The 114 aircraft operated by our unconsolidated affiliates do not include those aircraft leased from us. Includes 44 helicopters (primarily medium) and 22 fixed wing aircraft owned and managed by Líder Táxi Aéreo S.A. (“Líder”), our unconsolidated affiliate in Brazil included in the Americas region, and 41 helicopters and seven fixed wing aircraft owned by Petroleum Air Services (“PAS”), our unconsolidated affiliate in Egypt included in the Africa region.
(5) 
This table does not reflect aircraft which our unconsolidated affiliates may have on order or under option.



12

        


BRISTOW GROUP INC. AND SUBSIDIARIES
FY18 GUIDANCE

FY18 guidance as of December 31, 2017 (1)
 
Operating revenue 2
Adjusted EBITDA2,3
Rent2
Oil and gas
~$875M - $975M
~$40M - $50M 4
~$130M - $140M 4
U.K. SAR
~$215M - $230M
~$55M - $60M 4
~$45M - $50M
Eastern
~$105M - $115M
~$(5M) - $0M 4
~$10M - $12M
Airnorth
~$80M - $90M
~$5M - $10M
~$10M - $12M
Total
~$1.3B - $1.4B
~$100M - $115M 4
~$205M - $215M 4
 
 
 
 
G&A expense
~$170M - $190M
 
 
Depreciation expense
~$120M - $130M
 
 
Total aircraft rent 4, 5
~$180M - $185M
 
 
Total non-aircraft rent 5
~$25M - $30M
 
 
Interest expense 4
~$65M - $75M
 
 
Non-aircraft capex
~$40M annually
 
 
_____________ 
(1) 
FY18 guidance assumes FX rates as of December 31, 2017.
(2) 
Operating revenue, adjusted EBITDA and rent for oil and gas includes corporate and other revenue and the impact of corporate overhead expenses.
(3) 
Adjusted EBITDA for U.K. SAR and fixed wing (Eastern/Airnorth) excludes corporate overhead allocations consistent with financial reporting. Adjusted EBITDA is a non-GAAP measure of which the most comparable GAAP measure is net income (loss). We have not provided a reconciliation of this non-GAAP forward-looking information to GAAP. The most comparable GAAP measure to adjusted EBITDA is net income (loss) which is not calculated at this lower level of our business as we do not allocate certain costs, including corporate and other overhead costs, interest expense and income taxes within our accounting system. Providing this data would require unreasonable efforts in the form of allocations of other costs across the organization.
(4) 
Updated from guidance provided in November 2017.
(5) 
Total aircraft rent and total non-aircraft rent are inclusive of the respective components of rent expense for U.K. SAR, Eastern, Airnorth plus oil and gas.


13

        

BRISTOW GROUP INC. AND SUBSIDIARIES
GAAP RECONCILIATIONS

These financial measures have not been prepared in accordance with generally accepted accounting principles (“GAAP”) and have not been audited or reviewed by our independent auditor. These financial measures are therefore considered non-GAAP financial measures. A description of the adjustments to and reconciliations of these non-GAAP financial measures to the most comparable GAAP financial measures is as follows:
 
 
Three Months Ended 
 December 31,
 
Nine Months Ended 
 December 31,
 
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
 
 
 
(In thousands, except
 per share amounts)
Net loss
 
$
(9,937
)
 
$
(26,048
)
 
$
(97,079
)
 
$
(97,227
)
Loss on disposal of assets
 
4,591

 
874

 
12,418

 
13,077

Special items
 
2,810

 
9,537

 
16,352

 
34,361

Depreciation and amortization
 
31,682

 
29,768

 
94,119

 
93,054

Interest expense
 
19,237

 
12,347

 
54,189

 
35,170

(Benefit) provision for income taxes
 
(13,419
)
 
(3,560
)
 
2,546

 
(11,038
)
Adjusted EBITDA
 
$
34,964

 
$
22,918

 
$
82,545

 
$
67,397

 
 
 
 
 
 
 
 
 
Benefit (provision) for income taxes
 
$
13,419

 
$
3,560

 
$
(2,546
)
 
$
11,038

Tax provision (benefit) on loss on disposal
  of assets
 
(2,130
)
 
(1,953
)
 
8,061

 
(5,858
)
Tax provision (benefit) on special items
 
(15,448
)
 
5,227

 
(1,272
)
 
10,227

Adjusted (provision) benefit for income taxes
 
$
(4,159
)
 
$
6,834

 
$
4,243

 
$
15,407

 
 
 
 
 
 
 
 
 
Effective tax rate (1)
 
57.5
 %
 
12.0
%
 
(2.7
)%
 
10.2
%
Adjusted effective tax rate (1)
 
(26.1
)%
 
37.9
%
 
6.5
 %
 
29.9
%
 
 
 
 
 
 
 
 
 
Net loss attributable to Bristow Group

 
$
(8,273
)
 
$
(21,927
)
 
$
(94,757
)
 
$
(92,496
)
Loss (gain) on disposal of assets
 
2,461

 
(1,079
)
 
20,479

 
7,219

Special items
 
(12,638
)
 
12,885

 
15,080

 
50,862

Adjusted net loss
 
$
(18,450
)
 
$
(10,121
)
 
$
(59,198
)
 
$
(34,415
)


 
 
 
 
 
 
 
 
Diluted loss per share
 
$
(0.23
)
 
$
(0.62
)
 
$
(2.69
)
 
$
(2.64
)
Loss (gain) on disposal of assets
 
0.07

 
(0.03
)
 
0.58

 
0.21

Special items
 
(0.36
)
 
0.37

 
0.43

 
1.45

Adjusted diluted loss per share
 
(0.52
)
 
(0.29
)
 
(1.68
)
 
(0.98
)
_____________ 
(1) 
Effective tax rate is calculated by dividing benefit (provision) for income tax by pretax net loss. Adjusted effective tax rate is calculated by dividing adjusted benefit (provision) for income tax by adjusted pretax net loss. Tax provision (benefit) on loss on disposal of assets and tax provision (benefit) on special items is calculated using the statutory rate of the entity recording the loss on disposal of assets or special item.  

14

        

 
 
Three Months Ended 
 December 31, 2017
 
 
Adjusted
EBITDA
 
Adjusted
Net Loss
 
Adjusted
Diluted
Loss
Per
Share
 
 
 
 
 
 
 
 
 
(In thousands, except per share amounts)
Organizational restructuring costs (1)
 
$
(2,810
)
 
$
(2,501
)
 
(0.07
)
Tax items (2)
 

 
15,139

 
0.42

Total special items
 
$
(2,810
)
 
$
12,638

 
0.36

 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended 
 December 31, 2016
 
Adjusted
EBITDA
 
Adjusted
Net Loss
 
Adjusted
Diluted
Loss
Per
Share
 
 
 
 
 
 
 
 
 
(In thousands, except per share amounts)
Organizational restructuring costs (1)
 
$
(831
)
 
$
(583
)
 
(0.02
)
Additional depreciation expense resulting from fleet changes (3)
 

 
(761
)
 
(0.02
)
Goodwill impairment (4)
 
(8,706
)
 
(7,857
)
 
(0.22
)
Tax valuation allowances (2)
 

 
(3,684
)
 
(0.10
)
Total special items
 
$
(9,537
)
 
$
(12,885
)
 
(0.37
)
 
 
Nine Months Ended 
 December 31, 2017
 
 
Adjusted
EBITDA
 
Adjusted
Net Loss
 
Adjusted
Diluted
Loss
Per
Share
 
 
 
 
 
 
 
 
 
(In thousands, except per share amounts)
Organizational restructuring costs (1)
 
$
(15,160
)
 
$
(11,337
)
 
(0.32
)
Inventory impairment
 
(1,192
)
 
(775
)
 
(0.02
)
Tax items (2)
 

 
(2,968
)
 
(0.08
)
Total special items
 
$
(16,352
)
 
$
(15,080
)
 
(0.43
)
 
 
 
 
 
 
 
 
 
Nine Months Ended 
 December 31, 2016
 
 
Adjusted
EBITDA
 
Adjusted
Net Loss
 
Adjusted
Diluted
Loss
Per
Share
 
 
 
 
 
 
 
 
 
(In thousands, except per share amounts)
Organizational restructuring costs (1)
 
$
(18,083
)
 
$
(12,171
)
 
(0.35
)
Additional depreciation expense resulting from fleet changes (3)
 

 
(6,122
)
 
(0.17
)
Goodwill impairment (4)
 
(8,706
)
 
(7,857
)
 
(0.22
)
Inventory impairment
 
(7,572
)
 
(5,372
)
 
(0.15
)
Tax valuation allowances (2)
 

 
(19,340
)
 
(0.55
)
Total special items
 
$
(34,361
)
 
$
(50,862
)
 
(1.45
)
_____________ 
(1) 
Organizational restructuring costs include severance expense included in direct costs and general and administrative expense from our voluntary and involuntary separation programs.

15

        

(2) 
Relates to a one-time non-cash effect from tax items including a $75.6 million benefit related to the revaluation of net deferred tax liabilities to a lower tax rate resulting from the enactment of the Tax Cuts and Jobs Act in December 2017 and ongoing impact of valuation of deferred tax assets and recent financings of $1.0 million, partially offset by the impact of deemed repatriation of foreign earnings under the Act of $61.5 million for the three months ended December 31, 2017. Relates to a one-time non-cash effect from tax items including a $75.6 million benefit related to the revaluation of net deferred tax liabilities to a lower tax rate resulting from the enactment of the Tax Cuts and Jobs Act in December 2017, partially offset by the impact of deemed repatriation of foreign earnings under the Act of $61.5 million, the ongoing impact of valuation of deferred tax assets of $14.7 million and a one-time non-cash tax effect from repositioning of certain aircraft from one tax jurisdiction to another related to recent financing transactions resulting in additional income tax expense of $2.4 million for the nine months ended December 31, 2017. Relates to a tax valuation allowance of $3.7 million against net operating losses in certain foreign jurisdictions for the three months ended December 31, 2016 and a tax valuation allowance of $11.0 million against foreign tax credits and $8.3 million against net operating losses in certain foreign jurisdictions for the nine months ended December 31, 2016.
(3) 
Relates to additional depreciation expense due to fleet changes.
(4) 
Relates to impairment of goodwill of Eastern Airways in our Europe Caspian region.

16

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