Q4 2023 Bridger Aerospace Group Holdings Inc Earnings Call
Any assistance now at this time I would like to turn the call over to the Chief Financial Officer, Mr. Eric Geri. Please go ahead Sir.
Operator: Today's call is being recorded, and I will be standing by if anyone should need any assistance. Now, at this time, I would like to turn the call over to the Chief Financial Officer, Mr. Eric Gerratt. Please go ahead.
Speaker Change: Good afternoon, and thank you for joining us today.
Speaker Change: Joining me on the call. This afternoon is chief Executive Officer, founder and director Tim Sheehy.
Eric L. Gerratt: 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.
Speaker Change: 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 1095.
Eric L. Gerratt: 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. Management cannot control or predict many factors that ultimately impact future results.
Speaker Change: 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.
Speaker Change: 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 Change: 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.
Eric L. Gerratt: 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 statement. Throughout this afternoon's earnings release and our call today, we refer to the non-GAAP financial measure of 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, our results reported under GAAP. With that, I'd like to turn the call over to you.
Speaker Change: Looking statements or to make any other forward looking statements.
Speaker Change: Throughout this afternoon's earnings release, and our call today, we refer to the non-GAAP financial measure.
Speaker Change: 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 our results reported under GAAP.
Speaker Change: With that I'd like to turn the call over to Tim.
Speaker Change: Yes.
Tim Sheehy: Thank you, Eric and good afternoon, and thank you for joining today.
Tim Sheehy: <unk> accomplished a great deal in the fourth quarter ended 2023 as a whole we achieved record revenue of nearly $67 million and record adjusted EBITDA of $18 7 million for the full year. This record performance was despite one of the slowest fire seasons in 25 years in the United States.
Timothy Sheehy: Thank you, Eric. Good afternoon.
Timothy Sheehy: Thank you for joining us today. Bridger accomplished a great deal in the fourth quarter and in 2023 as a whole. We achieved record revenue of nearly $67 million and record adjusted EBITDA of $18.7 million for the full year. This record performance was despite one of the slowest fire seasons in 25 years in the United States. While each fire season 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 aerial surveillance, suppression services, and technology capability.
Tim Sheehy: While these fire season has its own seasonal and regional fluctuations and complexion of the overall trend of larger wildfires and longer fire seasons continues. This drives continued long term demand for our aerospace <unk> suppression services and technology capabilities. In fact, 2023 saw record contract awards for Bridger, including a five year $60 million exclusive use fire.
Timothy Sheehy: In fact, 2023 saw record contract awards for Bridger, including a five-year, $60 million exclusive use fire surveillance and technology contract in support of the Department of Interior, and a 10-year air attack contract for up to $166 million from the U.S. Forest Service, awarded in the third quarter. Well, we saw a slow start to the US fire season last year. We offset the impact by expanding our aerial firefighting operations internationally into Canada for the 1st time in our history when wildfires kicked off early and covered record acreage.
Tim Sheehy: Our surveillance technology contract in support of the Department of interior and a 10 year aerotech contract for up to $166 million from the U S Forest service awarded in the third quarter.
Tim Sheehy: While we saw a slow start to the U S fire season last year, we offset the impact by expanding our Airbus firefighting operations internationally into Canada for the first time in our history, where wildfires kicked off early and record acreage was burnt in fact, there are still over 100 wildfires that continue to burn underneath the snow today across Canada. These overwintering fires or zombie Flyers, they're called.
Timothy Sheehy: In fact, there are still over 100 wildfires that continue to burn underneath the snow across Canada today. These overwintering fires, or zombie fires, as they are called, burn slowly below the surface during the cold months and have become more common in recent years.
Tim Sheehy: Burns slowly below the surface during the cold months and have become more common in recent years have gone through the regulatory process in Canada last year, we are hopeful that Bridget can assist in Canada in the future as part of normal operations or.
Timothy Sheehy: Having gone through the regulatory process in Canada last year, we are hopeful that Bridger can assist in Canada in the future as part of normal operations. Our deployment in Canada last year covered the most territory covered in the history of the company, and we continue to make strides to further expand our aerial firefighting services to new mission critical 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 four Spanish scoopers recently awarded by the government of Spain.
Our deployment in Canada last year translated into the most territory covered in the history of the company and we continue to make strides to further expand our arrow firefighting services to meet mission critical areas and geographies.
Tim Sheehy: In late 2023, we entered into a joint venture partnership with Marathon asset management LP and Avenue sustainable solutions for them to complete the purchase of four Spanish Scoopers recently awarded from the government of Spain.
Tim Sheehy: This transaction was done 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 said the arrow to oversee the return to service work on the four Spanish Scoopers, which has already begun is important to note that we are not including any impact of the Spanish scoopers in our current 2024 guys.
Timothy Sheehy: This transaction was several years in the making and positions us to meaningfully expand our fleet over the coming year. As part of our expansion into Europe, we have established a new Spanish subsidiary, Albacete Aero, to oversee the return-to-service work on the four Spanish scoopers, which has already begun. It is important to note that we are not including any impact of the Spanish scoopers in our current 2020 forecast.
Tim Sheehy: We also acquired a hangar in Spain in the fourth quarter to support our growth in Europe.
Timothy Sheehy: We also acquired a hangar in Spain in the fourth quarter 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, and SAS 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.
Tim Sheehy: I wanted to touch on our September acquisition of Ignace technologies, which has been fully integrated with our investments in fiber surveillance intelligence SaaS assets.
Tim Sheehy: Two development with federal state and local fiber organizations is 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 contract showcase that's unique and differentiated offering in the marketplace.
Timothy Sheehy: Recent software and surveillance contracts showcase this unique and differentiated offering in the marketplace. Turning to 2024, it's important to remember that we have historically used our first quarter to finish winter maintenance on our fleet and to complete flight training and cargo loading 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 and company history to Texas and Oklahoma, where wildfires are being driven by air conditions in the central.
Speaker Change: Turning to 2024 is important to remember we have historically used our first quarter to finish winter maintenance of our fleet and to complete flight training and coding so that we're ready to mobilize come spring wildfire season typically begins in late April or May. This year, we saw our earliest seasonal employment of Scooper and surveillance aircraft in company history to Texas and Oklahoma.
Speaker Change: Where wildfires are being driven by Eric 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.
Timothy Sheehy: 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 funding.
Speaker Change: Now I'll turn it back to Eric to talk about our financial performance.
Tim Sheehy: Thanks, Tim.
Eric: Looking at our results for 2023 revenue grew 44% to a record $66 7 million.
Eric L. Gerratt: Looking at our results for 2023, revenue grew 44% to a record $66.7 million, compared to $46.4 million in 2022. After the late start to the 2023 U.S. wildfire season, fire activity increased in the third quarter, driving record utilization of the company's growing Super Scooper fleet despite a shorter-than-average North American wildfire season. The cost of revenues was $41.3 million and was comprised of flight operations expenses of $24.4 million and maintenance expenses of $16.9 million.
Eric: Compared to $46 4 million in 2022.
Speaker Change: After the late start to the 2023 U S. Wildfire season fire activity increased in the third quarter driving record utilization of the Companys growing Super Scooper fleet, despite the shorter than average North American wildfires.
Speaker Change: Cost of revenues was $41 $3 million and was comprised of flight operations expenses of $24 4 million and maintenance expenses of $16 $9 million. This compared to cost of revenues of $33 $9 million in 2022, which included $18 $8 million of flight operations expenses.
Eric L. Gerratt: This compares to cost of revenues of $33.9 million in 2022, which included $18.8 million of flight operations expenses and $15.1 million of maintenance expenses. The increase primarily relates to higher employee labor and depreciation expenses related to the two additional Super Scooper aircraft that were placed into service in September 2022 and February 2023, respectively.
Speaker Change: And $15 1 million of maintenance expenses.
Speaker Change: The increase primarily relates to higher employee labor and depreciation expenses related to the two additional super Super aircraft that were placed into service in September 2022, and February 2023, respectively.
Speaker Change: Gross margin increased to 38% in 2023 up from 27% in 2022, driven primarily by the record utilization of the company's Super Super Fleet.
Eric L. Gerratt: Gross margin increased to 38% in 2023, up from 27% in 2022, driven primarily by the record utilization of the company's Super Scooper fleet. Selling general and administrative, or SG&A, expenses were $82.9 million compared to $35.1 million in 2022, with the increase primarily attributable to $45.7 million 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 $2.4 million associated with our plan to phase out certain aging aircraft platforms in our aerial surveillance operations. The increase was partially offset by $10.1 million of transaction-related bonuses for employees recorded in the third quarter of 2022 in connection with the business combination and preparation of becoming a public company.
Speaker Change: Selling general and administrative or SG&A expenses were $82 9 million compared to $35 1 million in 2022 with the increase primarily attributable to $45 7 million of noncash stock based compensation related to <unk> granted to management and employees in 2020.
Speaker Change: Three the.
Speaker Change: 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 $4 million associated with our plan to phase out certain aging aircraft platforms and our <unk>.
Aerial surveillance operation.
Speaker Change: The increase was partially offset by $10 $1 million of transaction related bonuses for employees recorded in the third quarter of 2022 in connection with the business combination and preparation of becoming a public company.
Speaker Change: Interest expense for 2023 increased to $23 2 million from $20 million in 2022 Bridger.
Eric L. Gerratt: Interest expense for 2023 increased to $23.2 million from $20 million in 2022. Bridger also reported other income of $3.1 million for 2023 compared to $0.5 million of other expenses for 2022. Net loss was $77.4 million in 2023 compared to $42.1 million in 2022. Adjusted EBITDA was $18.7 million for 2023 compared to $3.7 million in 2022. Adjusted EBITDA excludes income tax expense or benefit, depreciation and amortization, interest expense, Stock Based Compensation, Business Development and Integration Expenses, Offering Costs Related to Financing and Other Transactions, Loss on Disposal, and Non-Cash Impairment Charges, changes in fair value of burnout consideration, changes in fair value of warrants, loss on extinguishment of debt, and one-time discretionary bonuses to employees and executives.
Speaker Change: <unk> also reported other income of $3 $1 million for 2023 compared to <unk> 5 million of other expenses for 2022.
Speaker Change: Net loss was $77 $4 million in 2023 compared to $42 $1 million in 2022.
Speaker Change: Adjusted EBITDA was $18 7 million for 2023 compared to $3 7 million in 2022.
Speaker Change: Yes.
Speaker Change: Adjusted EBITDA excludes income tax expense or benefit depreciation and amortization interest expense stock based compensation business development and integration expenses operating offering costs related to financing and other transaction loss on disposal and noncash impairment charges.
Speaker Change: 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 fourth quarter of 2023 revenue was $1 1 million.
Eric L. Gerratt: Turning to our results for the fourth quarter of 2023, revenue was $1.1 million compared to $1.1 million in the fourth quarter of last year. Cost of revenue was $8.4 million and was comprised of flight operation expenses of $4.7 million and maintenance expenses of $3.7 million. This compares with a cost of revenues of $5.3 million in the fourth quarter last year, which included $2.1 million of flight operations expenses and $3.2 million of maintenance expenses.
Speaker Change: Compared to $1 1 million in the fourth quarter last year.
Speaker Change: Cost of revenues was $8 4 million.
Speaker Change: And was comprised of flight operation expenses of $4 $7 million and maintenance expenses of $3 $7 million. This.
Speaker Change: This compares to cost of revenues of $5 3 million in the fourth quarter last year.
Speaker Change: Which included $2 $1 million of flight operations expenses, and $3 2 million of maintenance expenses.
Speaker Change: SG&A expenses were $18 6 million in the fourth quarter of 2023 compared to $6 5 million in the fourth quarter of 2022.
Eric L. Gerratt: SG&A expenses were $18.6 million in the fourth quarter of 2023 compared to $6.5 million in the fourth quarter of 2022. The increase is primarily driven by non-cash stock-based compensation related to RSUs as well as an increase in professional services and insurance and other expenses associated with operating a publicly traded company.
Speaker Change: The increase was primarily driven by the noncash stock based compensation related to RF use as well as an increase in professional services and insurance and other expenses associated with operating as a publicly traded companies.
Speaker Change: The increase was also also partially due to the noncash impairment charges associated with our plan to phase out certain aging aircraft as I mentioned before.
Eric L. Gerratt: 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. However, interest expense for the fourth quarter of 2023 decreased to $6 million, down from $7 million in the fourth quarter of 2022. For the fourth quarter, we reported a net loss of $31.1 million compared to a net loss of $17 million in the fourth quarter of 2022. Adjusted EBITDA was negative $10.4 million compared to negative $8.5 million in the fourth quarter of 2022.
Speaker Change: Interest expense for the fourth quarter of 2023 decreased to $6 million down from $7 million in the fourth quarter of 2022.
For the fourth quarter, we reported a net loss of $31 1 million.
Compared to a net loss of $17 million in the fourth quarter of 2022, adjusted EBITDA was negative $10 4 million.
Speaker Change: To a negative $8 $5 million in the fourth quarter of 2022.
Speaker Change: We ended the year with cash restricted cash and short term investments of $37 9 million.
Eric L. Gerratt: We ended the year with cash, restricted cash, and short-term investments of $37.9 million and outstanding long-term debt of just under $207 million. Looking at Bridger's standalone operations for the full year 2024, including our six scoopers, adjusted EBITDA is anticipated to range from $35 million to $51 million on revenues of $70 million to $86 million. 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 Change: And now some outstanding long term debt of just under $207 million.
Speaker Change: Looking at Bridger Standalone operations for the full year 2024, including our sixth Scoopers.
Speaker Change: Adjusted EBITDA is anticipated to range from $35 million to $51 million on revenues of 70 million to $86 million.
Speaker Change: This guidance, which is in line with our prior guidance issued in November 2023 includes the impact of recent reductions to the companys largely fixed cost structure and excludes any impact from the Spanish Super Scoopers acquired by the joint venture partnership between Marathon asset management LLP avenues for sustainable solutions.
Speaker Change: Fund and Bridger aerospace, which are undergoing maintenance work in order to be returned to service.
Speaker Change: Also despite the early start to the wildfire season, given the companys largely fixed cost structure Bridger is expected to generate negative adjusted EBITDA in the first quarter of 2024 with positive adjusted EBITDA and anticipated in the second and third quarters.
Eric L. Gerratt: 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 first quarter 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 Change: With that I'd like to turn the call back to Tim for final comments.
Speaker Change: Okay.
Tim Sheehy: Thanks, Eric and thank you to everyone for joining us on today's call and for your support while our first year as a public company was not without its challenges with a profitable business model strong fundamentals and strict cost controls we reported record results and are well positioned for 2024, we continue to pursue opportunities to expand our aerostar funding services to new mission critical areas and geographies and are receiving an.
Timothy Sheehy: Thanks, Eric. And thank you to everyone for joining us on today's call and for your support.
Timothy Sheehy: While our first year as a public company was not without its challenges, with a profitable business model, strong fundamentals, and strict cost controls, we reported record results and are well positioned for 2025. We continue to pursue opportunities to expand our area of 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 superscoopers and surveillance aircraft fed by the limited supply of functional superscoopers and the heightened awareness of the effectiveness of these purpose-built aircraft.
Tim Sheehy: The influx of requests from multiple foreign governments for wildfire suppression and technology services.
Tim Sheehy: Do both of the global demand for Super Scoopers and surveillance aircraft fed by the limited supply of functional supers Coopers and the heightened awareness of the effectiveness of these purpose built aircrafts.
Tim Sheehy: With the specialized aircraft are 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 and the growing battle against wildfires. We look forward to updating you on our progress when we report our first quarter results in May if anyone has any follow up questions. Please reach out to our investor relations contact found on the IR.
Timothy Sheehy: 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. We look forward to updating you on our progress when we report our first quarter results in May. If anyone has any follow-up questions, please reach out to our investor relations contact, found in the IR section of our website. Thank you, and have a great day!
Tim Sheehy: Section of our website, thank you and have a great day.
Speaker Change: Thank you Mr. Sheehan, ladies and gentlemen that will conclude the Bridger Aerospace fourth quarter 2020 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.
Operator: Thank you, Mr. Sheehy. Ladies and gentlemen, that will conclude the Bridger Aerospace fourth 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.