CB Financial Services Q4 2023 Earnings Call Transcript

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March 19, 2024

There are 3 speakers on the call.

Operator

Good afternoon, everyone. Welcome to today's Bridger Aerospace 4th Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen only mode. Also, today's call is being recorded and I will be standing by if anyone should need any assistance.

Speaker 1

Now at this time,

Operator

I would like to turn the call over to the Chief Financial Officer, Mr. Eric Jarrett. Please go ahead, sir.

Speaker 2

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 are forward looking statements as 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 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 2024.

Speaker 2

Management cannot control or predict many factors that ultimately impact future results. 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 assessment to change. However, we undertake no obligation to revise or update any forward looking statement or to make any other forward looking statements. Throughout this afternoon's earnings release and our call today, we refer to the non GAAP financial measure of adjusted EBITDA.

Speaker 2

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 our substitute for our results reported under GAAP. With that, I'd like to turn the call over to Tim.

Speaker 1

Thank you, Eric. Good afternoon. Thank you for joining today. Bruder accomplished a great deal in the Q4 and in 2023 as a whole. We achieved record revenue of nearly $67,000,000 and record adjusted EBITDA of 18,700,000 dollars for the full year.

Speaker 1

This record performance was despite one of the slowest fire seasons in 25 years in the United States. While these fire seasons has its own seasonal and regional fluctuations and complexions, the overall trend of larger wildfires and longer fire seasons continues. This drives continued long term demand for our aerial surveillance, suppression, services and technology capabilities. In fact, 2023 saw record contract awards for Bridger including a 5 year $60,000,000 exclusive use fire surveillance and technology fire surveillance and technology contract in support of the Department of Interior and a 10 year air attack contract for up to $166,000,000 from the U. S.

Speaker 1

Forest Service awarded in the 3rd quarter. While we saw a slow start to the U. S. Fire season last year, we offset the impact by expanding our aerial firefighting operations internationally into Canada for the first time in our history where wildfires kicked off early and record acreage was burned. In fact, there are still over 100 wildfires that continue to burn underneath the snow today across Canada.

Speaker 1

These overwintering fires or zombie fires they are called, burn slowly below the surface during the cold months and have become more common in recent Having gone through the regulatory process in Canada last year, we are hopeful that Bridger could assist in Canada in the future as part of normal operations. Our deployment in Canada last year translated with the most territory covered in the history of the company and we continue to make strides to further expand our aerial firefighting services to areas and geographies. In late 2023, we entered into a joint venture partnership with Marathon Asset Management LP and Avenue Sustainable Solutions Fund to complete the purchase of 4 Spanish Coopers recently awarded from the government of Spain. This transaction was several years in the making and positions us to meaningfully expand our fleet over the coming years. As part of our expansion into Europe, we have established a new Spanish subsidiary, Aldo Sete Aero, to oversee the return to service work on the 4 Spanish Coopers, which has already begun.

Speaker 1

It is important to note that we are not including any impact of Spanish Coopers in our current 2024 guidance. We also acquired a hangar in Spain in the Q4 to support our growth in Europe. I also want to touch on our September acquisition of Ignis Technologies, which has been fully integrated with our investments in fire surveillance intelligence SaaS assets. Through development with federal, state and local fire organizations, this pioneering mobile and web platform elevates firefighters' situational awareness, creates a common operating picture across firefighting units and produces real time high value data to better manage wildfire risk. Recent software and surveillance contracts showcase this unique and differentiated offering in the marketplace.

Speaker 1

Turning to 2024, it's important to remember we have historically used our Q1 to finish winter maintenance of fleet and to complete flight training and carding so that we are ready to mobilize come spring. While fire season typically begins in late April or May, this year we saw our earliest seasonal deployment of scooper and surveillance aircraft in company history to Texas and Oklahoma where wildfires are being driven by air conditions in the central U. S. While this revenue will not be sufficient to offset spending in Q1 and seasonally negative adjusted EBITDA, it is helpful to set the company up for another record year of growth. And I'll turn it back to Eric to talk about our financial performance.

Speaker 2

Thanks, Tim. Looking at our results for 2023, revenue grew 44% to a record $66,700,000 compared to $46,400,000 in 2022. After the late start to the 2023 U. S. Wildfire season, fire activity increased in the Q3 driving record utilization of the company's growing Super Scooper fleet despite a shorter than average North American wildfire season.

Speaker 2

Cost of revenues was $41,300,000 and was comprised of flight operations expenses of $24,400,000 and maintenance expenses of $16,900,000 This compared to cost of revenues of $33,900,000 in 2022, which included $18,800,000 of flight operations expenses and $15,100,000 of maintenance expenses. The increase primarily relates to higher employee labor and depreciation expenses related to the 2 additional SuperScuba aircraft that were placed into service in September 2022 February 2023 respectively. Gross margin increased 38% in 2023, up from 27% in 2022, driven primarily by the record utilization of the company's SuperScooper fleet. Selling, general and administrative or SG and A expenses were $82,900,000 compared to $35,100,000 in 2022, with the increase primarily attributable to $45,700,000 of non cash stock based compensation related to RSUs granted to management and employees in 2023. The remaining increase was primarily attributable to an increase in business development, insurance, professional services and other expenses associated with operating as a publicly traded company in 2023, as well as impairment charges of $2,400,000 associated with our plan to phase out certain aging aircraft platforms in our aerial surveillance operation.

Speaker 2

The increase was partially offset by $10,100,000 of transaction related bonuses for employees recorded in the Q3 of 2022 connection with the business combination and preparation of becoming a public company. Interest expense for 2023 increased to $23,200,000 from $20,000,000 in 2022. Bridger also reported other income of $3,100,000 for 2023 compared to $500,000 of other expenses for 2022. Net loss was $77,400,000 in 2023 compared to $42,100,000 in 20.22. Adjusted EBITDA was $18,700,000 for 2023 compared to $3,700,000 in 2022.

Speaker 2

Adjusted EBITDA excludes income tax expense or benefit, depreciation and amortization, interest expense, stock based compensation, business development integration expenses, operating offering costs related to financing and other transactions, loss on disposal and non cash impairment charges, changes in fair value of earn out consideration, changes in fair value of warrants, loss on extinguishment of debt and one time discretionary bonuses to employees and executives. Turning to our results for the Q4 of 2023, revenue was $1,100,000 compared to $1,100,000 in the Q4 last year. Cost of revenues was $8,400,000 and was comprised of flight operation expenses of $4,700,000 and maintenance expenses of $3,700,000 This compares the cost of revenues of $5,300,000 in the Q4 last year, which included $2,100,000 of flight operations expenses and $3,200,000 of maintenance expenses. SG and A expenses were $18,600,000 in the Q4 of 2023 compared to $6,500,000 in the Q4 of 2022. The increase was primarily driven by the non cash stock based compensation related to RSUs as well as an increase in professional services and insurance and other expenses associated with operating the publicly traded companies.

Speaker 2

The increase is also partially due to the non cash impairment charges associated with our plan to phase out certain aging aircraft as I mentioned before. Interest expense for the Q4 of 2023 decreased to $6,000,000 down from $7,000,000 in the Q4 of 2022. For the Q4, we reported a net loss of $31,100,000 compared to a net loss of $17,000,000 in the Q4 of 2022. Adjusted EBITDA was negative $10,400,000 compared to negative $8,500,000 in the Q4 of 2022. We ended the year with cash, restricted cash and short term investments of $37,900,000 and outstanding long term debt just under $207,000,000 Looking at Bridger's standalone operations for the full year 2024, including our 6 Scoopers, adjusted EBITDA is anticipated to range from $35,000,000 to $51,000,000 on revenues of $70,000,000 to $86,000,000 This guidance, which is in line with our prior guidance issued in November 2023, includes the impact of recent reductions to the company's largely fixed cost structure and excludes any impact from the Spanish Super Scoopers acquired by the joint venture partnership between Marathon Asset Management LLP, Avenue Sustainable Solutions Fund and Bridger Aerospace, which are undergoing maintenance work in order to be returned to service.

Speaker 2

Also despite the early start to the wildfire season, given the company's largely fixed cost structure, Bridger is expected to generate negative adjusted EBITDA in the Q1 of 2024 with positive adjusted EBITDA anticipated in the second and third quarters. With that, I'd like to turn the call back to Tim for final comments.

Speaker 1

Thanks, Eric, and thank you to everyone for joining us on today's call and for your support. While our 1st year as a public company was without its challenges with a profitable business model, strong fundamentals and strict cost controls, we reported record results and are well positioned for 2020 4. We continue to pursue opportunities to expand our aerial firefighting services to new mission critical areas and geographies and are receiving an unprecedented influx of requests from multiple foreign governments for wildfire suppression and technology services. This is due both to the global demand for Super Scoopers and surveillance aircraft fed by the limited supply of functional Super Scoopers and the heightened awareness of the effectiveness of these purpose built aircraft. With these specialized aircraft, our high quality team and innovative use of technology and data, we are uniquely positioned to drive stakeholder returns while supporting our federal and state government clients in the growing battle against wildfires.

Speaker 1

We look forward to updating you on our progress when we report our Q1 results in May. If anyone has any follow-up questions, please reach out to our Investor Relations contact found on the IR section of our website. Thank you and have a great day.

Operator

Thank you, Mr. Sheehy. Ladies and gentlemen, that will conclude the Bridger Aerospace 4th quarter 2023 earnings conference call. We'd like to thank you all so much for joining us and wish you all a great remainder of your day. Goodbye.

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Earnings Conference Call
CB Financial Services Q4 2023
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