HSBC Q1 2023 Earnings Call Transcript

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May 12, 2023

There are 4 speakers on the call.

Operator

Afternoon, ladies and gentlemen, and welcome to the Bridger Aerospace First Quarter 2023 Conference Call. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. This call is being recorded on Friday, May 12, 2023. I would now like to turn the conference over to Eric Bharat, Chief Financial Officer.

Operator

Please go ahead.

Speaker 1

Good afternoon, and thank you for joining us today. Joining me on the call this afternoon are Chief Executive Officer, Founder and Director, Tim Sheehy and Chief Investment Officer and Director, Mikandru Rudacille. Before we begin, please note that certain statements contained in this conference call that do not describe historical facts are forward looking statements as defined in the Private 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 expressed Include, but are not limited to, those discussed in the company's filings with the Securities and Exchange Commission, including expectations regarding financial results for 2023. Management cannot control or predict many factors that ultimately impact future results.

Speaker 1

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. However, we undertake no obligation to revise or update any forward looking statement or to make any other forward looking statement. For those joining by webcast, you can follow along with today's presentation. For those listening by phone, you can access today's presentation on our Web site at www.bridgeraerospace.com under the Investor Relations tab.

Speaker 1

Throughout This afternoon's earnings release and our call and presentation today, we refer to adjusted EBITDA, which is a non GAAP financial measure. 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, everyone, and welcome. Abi, I'm happy to be joining you today to discuss our Q1 results, our progress since becoming a public company in late January as well as the market opportunity ahead. As a reminder, we have historically used our Q1 to finish winter maintenance on our fleet and to complete flight training and agency carding So that we are ready to mobilize when the U. S.

Speaker 2

Wildfire season typically begins in late April, early May. In fact, our first Air Attack plane was recently deployed in Mesa, Arizona in Our Air Attack fleet operates nationwide and provides near real time data, specialized radio technology and airborne command and control capabilities in order to coordinate ground firefighting efforts with the airborne task force. Additional aircraft will be deployed over the coming weeks months. Locating our aircraft in areas of high fire risk to respond rapidly to fires is critical to protect property and human life, particularly as Population expands further into wildfire prone areas commonly referred to as the Wildland Urban Interface or the WUI. As a result, we are seeing several states looking to secure aerial firefighting capabilities to respond to wildfires more rapidly and efficiently.

Speaker 2

The State of Montana recently passed a new bill earmarking $186,000,000 for wildfire prevention. The bill covers several initiatives, We believe Bridger is particularly well positioned for these types of initiatives With our full spectrum of aviation resources, including the largest private SuperScooper fleet in the world. We continue to believe the CL-four fifteen EAF Super Scooper and similar aircraft, which fight fires by scooping water from nearby lakes, rivers, reservoirs or oceans and dropping it directly on the fire, The safest, most efficient and most effective aerial firefighting platform in the world. As a result, they continue to be highly sought after during wildfire season. As we enter the 2023 wildfire season, we have all 6 Super Scoopers in operation, up from 4 for most of the 2022 fire season.

Speaker 2

We are well positioned to leverage the infrastructure we put in place last year. We also see opportunities to expand into new verticals and new markets to more fully support our state and federal customers. We hope to have some news about our progress in the months ahead. We remain on track to generate significant improvements to revenue, margins and EBITDA, which Chandra will review in more detail shortly. With that, I will turn the call over to Eric, who will talk about our financial performance in the Q1.

Speaker 1

Thanks, Tim. Revenue for the Q1 of 2023 was $365,000 Compared to $69,000 in the Q1 of 2022. Revenue is typically lower in the Q1 as the company schedules annual fleet maintenance activities In preparation for the U. S. Fire season, which historically occurs during the 2nd and third quarters of the fiscal year.

Speaker 1

Cost of revenues increased 11 percent to $7,200,000 in the Q1 of 2023 and was comprised of flight operations expenses of $3,700,000 And maintenance expenses of $3,500,000 This compares to cost of revenues of $6,500,000 in the Q1 of 2022, which included $3,700,000 of flight operations expenses and $2,900,000 of maintenance expenses. The increase primarily relates to higher personnel and other expenses related to the 2 additional scooper aircraft that were placed into service in September 2022 February 2023, respectively. Selling, general and administrative expenses were $33,200,000 in the Q1 2023 and included planned operating SG and A expenses of $6,000,000 $3,200,000 of professional service fees primarily associated with Going public and $24,000,000 of non cash stock based compensation expense for restricted stock units issued in conjunction With the business combination with Jack Creek Investment Corp, which closed in January 2023. Operating SG and A expenses of $6,000,000 that I previously mentioned increased $1,200,000 from $4,800,000 in the Q1 of 2022. This increase was in line with our expectations and was driven by both higher insurance and operating costs associated with the addition of the 2 latest scoopers.

Speaker 1

Interest expense for the Q1 of 2023 increased to $5,700,000 from $3,700,000 in the Q1 of 2022. The increase was driven by additional interest expense related to the Gallatin Municipal Bond, which closed in the Q3 of 2022. The company also reported other income of $1,100,000 in the Q1 of 2023, which was comprised of interest income for the embedded derivative of For the Q1 of 2023, net loss was $44,700,000 Compared to a net loss of $14,900,000 in the Q1 of 2022. The increase in the net loss was primarily driven by the increases in G and A that I mentioned previously. Adjusted EBITDA was negative $10,700,000 compared to negative $9,100,000,000 in the Quarter of 2022.

Speaker 1

Adjusted EBITDA excludes interest expense, depreciation and amortization, stock based compensation, Gains and losses on disposal of assets, legal fees related to financing transaction and business development integration expenses. As another reminder, the company historically generates negative EBITDA in the Q1 each year with positive adjusted EBITDA Generated primarily in the second and third quarters coinciding with the U. S. Wildfire season. Turning now to the balance sheet.

Speaker 1

We ended the Q1 with cash, restricted cash and marketable securities of $45,000,000 and our outstanding debt was $207,700,000 As of March 31, 2023. With that, I'll turn the call over to Mikanda Rudasil, our Chief Investment Officer, who will review our guidance for 2023.

Speaker 3

Thank you, Eric. The Q1 was in line with expectations. We are reaffirming the guidance we issued on March 20, 2023, We will release our 2022 results. Bridger's current fleet of over 20 aircraft, including 6 Super Scoopers It's projected to generate revenue of $84,000,000 to $96,000,000 in 2023, which with much of the cost to support the 2 latest scoopers, Scooper number 5 and scooper number 6 already embedded in our cost structure. We continue to expect adjusted EBITDA margins to improve from 8% in 2022 to over 40% in 2023.

Speaker 3

As a result, adjusted EBITDA is projected to range $37,000,000 to $45,000,000 in 2023. As Tim mentioned, we continue to anticipate expanding our fleet in the months to come As a result of M and A opportunities and expect to add to the adjusted EBITDA range from potential future fleet expansion, if any, to our guidance upon transaction closings. With that, operator, we're ready for questions.

Operator

Thank you. Ladies and gentlemen, we will now begin the question and answer session. You will hear a one tone prompt acknowledging your request. One moment please for your first question. There are no further questions at this time.

Operator

I will now hand it back over to team Chihi for closing remarks.

Speaker 2

Thank you for joining today's call. We have no further comments. We look forward to speaking to you next quarter.

Operator

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

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Earnings Conference Call
HSBC Q1 2023
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