Bridger Aerospace Group Q3 2023 Earnings Call Transcript

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November 13, 2023

There are 3 speakers on the call.

Operator

Good afternoon,

Speaker 1

and welcome to the Bridger Aerospace Third Quarter 2023 Conference Call. All participants will be in listen only mode. Please note, this event is being recorded. I would now like to turn the conference over to Eric Jarrod, CFO. Please go ahead.

Operator

Good afternoon, and thank you for joining us today. Joining me on the call this afternoon is Chief Executive Officer, Founder and Director, Tim Sheehy. Before we begin, please note that certain statements contained in this conference call that do not describe historical facts Our forward looking statements is defined in the Private Securities Litigation Reform Act of 1995. Since forward looking statements are based on various assumptions, risks and uncertainties, Actual results may differ materially from those expressed or implied by such statements. Factors that could cause results to differ materially from those

Speaker 2

Thank you. Thank you.

Operator

Thank you. Thank you. Thank you. Thank you. Thank you.

Operator

Thank you. Thank you. Good morning, everyone. Listeners should not place undue reliance on forward looking statements, which reflect management's views only as of today. We anticipate that subsequent events and developments will cause our assessments to change.

Operator

However, we undertake no obligation to revise or update any forward looking statement or to make any other forward looking statement. Throughout today's this afternoon's earnings release and our call and presentation today, We refer to non GAAP financial measures, adjusted EBITDA. The definition, calculation and reconciliation to the financial statements of adjusted EBITDA Can be found in Exhibit A of our earnings release, which is available on our website. We believe adjusted EBITDA is useful in evaluating our reported results as a supplement to and not a substitute for reported results under GAAP. With that, I'd like to turn the call over to Tim.

Speaker 2

Thank you, Eric. Good afternoon. Thank you for joining today's call to discuss our Q3 results and recent progress, including contract wins, fleet acquisition plans And the expansion of our aerial firefighting services to new mission critical areas and geographies. For our Q3 update, the earnings potential of our SCOOPR fleet was on full display in the Q3, as we experienced the highest level of utilization in the company's history. This drove our record results, including record quarterly revenue of over $50,000,000 Record adjusted EBITDA of nearly $39,000,000 It was also a record quarter in terms of our territories covered as we flew from East to West Coast Canada and all the way down to Louisiana.

Speaker 2

This is a testament to the rapid adoption of our initial attack platform enabled by the SuperScooper's superior initial attack capabilities And our industry leading surveillance technology. With 1 of the nation's largest aerial firefighting fleets and our long standing customer relationships with federal and state We continue to be a beneficiary of the trend for government outsourcing of aerial firefighting services. This quarter, we were awarded a 10 year air attack contract for up to 100 $66,000,000 from the U. S. Forest Service to provide various fixed wing missions for aerial supervision, incident awareness, fire detection and reconnaissance.

Speaker 2

This contract is separate from the previously disclosed contracts for the U. S. Department of Interior awarded in July 2023, which included 2 5 year exclusive Contracts worth up to $24,000,000 each and one call related contract worth up to $20,000,000 for high resolution surveillance and intelligence operations using a specialized Air Attack The award was based in part on the architecture of Bridger's proprietary data platform. As a small business with leading edge sensor and mapping capabilities We are well positioned to support our federal and state and international alliance in the growing battle against wildfires. Speaking of our Fire Intelligence assets, in September, we completed the acquisition of Ignis Technologies to expand our Wildland Fire Software offerings.

Speaker 2

We issued 3,000,000 stock at the close and there will be additional contingent earn out consideration of up to $9,000,000 also to be paid in restricted shares. Ignis delivers mission critical intelligence and technology solutions and maximizes the value of our investments in fire intelligence SaaS assets. Through collaborative development with federal, state and local fire organizations, Aignus is developing a pioneering mobile and web platform We also continue to pursue opportunities to further expand our fleet both in the U. S. And abroad.

Speaker 2

As we announced September, we successfully bid via public tender process to purchase 4 Canada CL-215T amphibious aircraft from the Spanish Ministry. We are working to complete the acquisition process and we'll have an update soon. While we remain on good terms with Bighorn Airways, we have mutually agreed to terminate the existing purchase sale agreement which was announced in July, we remain hopeful that there will be opportunities to reengage in the future. While the wildfire season will always remain unpredictable, We see continued demand for our services and look forward to supporting the needs of our customers. We're also receiving an unprecedented influx of requests from multiple foreign governments for wildfire suppression services.

Speaker 2

This is due both to the global demand for Super Scoopers fed by the limited supply of functional Super Scoopers and the heightened awareness of the effectiveness of these purpose built aircraft. Bridger is taking steps to strategically position its assets to serve these needs and to match multi continent weather exposure to diversify I'll now turn the call back over to Eric, who will update you about our financial performance in the Q3.

Operator

Thanks, Tim. Revenue for the Q3 of 2023 was $53,600,000 compared to 32 point $4,000,000 in the Q3 of 2022, up 65%. The increase was the result of record utilization of the company's growing scooper fleet despite a slower than average North American wildfire season. Cost of revenues was $15,200,000 in the Q3 of 2023 and was comprised of flight operation expenses of $9,700,000 and maintenance expenses of $5,500,000 This compares to cost of revenues of $12,600,000 in the Q3 of 2022, which included $7,100,000 of flight operations expenses and $5,500,000 of maintenance expenses. The increase primarily relates to higher depreciation, maintenance and other expenses Related to the 2 additional SuperScooper aircraft that were placed into service in September 2022 February 2023, respectively.

Operator

Selling, general and administrative expenses were $15,800,000 in the Q3 of 2023 compared to $18,100,000 in the Q3 last year. The decrease was primarily due to transaction related bonuses for employees and executives and higher operating costs recorded in the Q3 of 2022. These decreases were partially offset by higher non cash stock based compensation expense in the Q3 of 2023 compared to the Q3 of 2022. Interest expense for the Q3 of 2023 decreased to $6,000,000 down from $7,000,000 in the Q3 of 2022, primarily due to lower interest expense for the Series A preferred stock year over year. The decrease was partially offset by additional interest expense for the Gallatin for bond that closed in the Q3 of 2022.

Operator

The company also reported other income of $600,000 for the Q3 of 2023, Primarily comprised of interest income for the embedded derivative of our preferred equity of $400,000 For the Q3 of 2023, net income was $17,500,000 compared to a net loss of $5,700,000 in the Q3 of 2022, driven by strong fleet utilization in the Q3 this year. Adjusted EBITDA was $38,700,000 compared to $19,100,000 in the Q3 of 2. Adjusted EBITDA excludes income tax benefits, interest expense, depreciation and amortization, Stock based compensation, gains and losses on disposal of assets, offering costs related to financing and other transactions, Business Development and Integration Expenses as well as loss on extinguishment of debt and one time discretionary bonuses to employees and executives. Looking at our results for the 1st 9 months of 2023, revenue was $65,600,000 compared to $45,300,000 in the 9 months of 2022. Cost of revenues was $33,000,000 compared to $28,600,000 in the 1st 9 months last year.

Operator

SG and A expenses were $6,64,200,000 compared to $28,600,000 in the 1st 9 months of 2022, With the increase being driven primarily by non cash stock based compensation expense this year, interest expense for the 1st 9 months increased $17,200,000 from $13,000,000 in the 1st 9 months of 2022. Bridger also reported other income of 2 point $3,000,000 for the 1st 9 months of 'twenty 3 compared to $200,000 of other expenses for the 1st 9 months of 2022. Net loss was $46,200,000 in the 1st 9 months of 2023 compared to $25,100,000 in the 1st 9 months of 2022, With adjusted EBITDA at $29,000,000 for the 1st 9 months this year compared to $12,200,000 in the same period last year. Turning to our balance sheet. We ended the Q3 with cash, restricted cash and short term investments of $33,900,000 up from $25,700,000 at June 30, 2023, driven by seasonality and the strong third quarter performance.

Operator

While the company saw record results in the Q3 after the late start to the wildfire season, the last 2 weeks September brought cooler wet weather to the U. S. And Canada. With limited wildfire activity in the 1st part of our seasonally slower Q4, We now expect the shortest North American fire season in the past 10 years. As a result, we are reducing our previous annual 2023 revenue guidance of $84,000,000 to $96,000,000 to a range of $66,000,000 to $68,000,000 Given the company's largely fixed cost structure, Bridger typically generates negative EBITDA in the 4th quarter.

Operator

In response to the shorter 2023 wildfire season and reduced revenue, we've identified reductions to our cost structure, which will benefit the Q4 as well as the full year of 2024. Even with these cost reductions, the company expects to report negative EBITDA of $10,000,000 to $11,000,000 in the Q4 of 2023, which brings full year 2023 adjusted EBITDA to a range of $18,000,000 to $19,000,000 This compares to our prior estimate of $37,000,000 to $45,000,000 These current estimates assume wildfire conditions will remain unchanged for the remainder of the Q4 and additional aircraft will not be deployed. Looking at Bridger's standalone operations for the full year 2024, which excludes the impact of any acquisitions And accounts for the estimated $16,000,000 of annual reduction to the company's fixed cost structure, 2024 adjusted EBITDA Is anticipated to range from $35,000,000 to $51,000,000 a gain of at least 84% On revenue of $70,000,000 to $86,000,000 The low end of this guidance range is consistent with the unusually short 2023 fire season

Speaker 2

with

Operator

the high end being consistent with the longer, more normal fire season. With that, I'd like to turn the call back to Tim for final comments.

Speaker 2

Thank you, Eric, and thank you to everyone for joining us on today's call and for your support. While this year has been full of challenges thus far with a profitable business model, strong fundamentals, strict cost controls and a growing number of opportunities to expand our fleet. We are well positioned to see significant growth and drive shareholder returns while supporting Our federal, state and international clients in the growing battle against wildfires.

Operator

We look forward to updating you

Speaker 2

on our progress. We'll also be attending the Wolfe Research First Annual Small and Mid Cap Conference,

Speaker 1

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

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Earnings Conference Call
Bridger Aerospace Group Q3 2023
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