Q4 2024 Bridger Aerospace Group Holdings Inc Earnings Call
Eric Gerratt, Austin Moeller
Groaning
Standby, we're about to begin.
Speaker Change: Greetings, everyone. Welcome to Bridger Aerospace' fourth quarter and fiscal 2024 Investor Conference call. As a reminder, today's call is being recorded. It is now my pleasure to introduce your host, Mr. Eric Gerratt, Chief Financial Officer. Thank you, Mr. Gerratt, you may begin.
Good afternoon and thank you for joining us today.
Speaker Change: Joining me on the call this afternoon is interim chief executive officer Sam Davis and senior vice president of finance and capital markets John Saunders.
Speaker Change: Before we begin, please note that certain statements contained in this conference call that do not describe historical facts are forelooking statements as defined in the private security litigation reform act of 1995.
Speaker Change: Factors that could cause results to different materially from those statements
Speaker Change: From those expressed include, but are not limited to those discussed in the company's filings with the US Securities and Exchange Commission, including expectations regarding financial results for 2025.
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.
Speaker Change: 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 statements.
Speaker Change: Throughout this afternoon's earnings release and call today, we refer to the non-GAAP financial measure 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.
Speaker Change: We believe adjusted EBIDA is useful in evaluating our reported results as a supplement to and not a substitute for results reported to under GAP. With that I'd like to turn the call over to Sam.
Sam Davis: Thank you, Eric. We are extremely proud to announce our fourth quarter and full year 2024 results which exceeded revenue guidance and were within our adjusted EBITDA guidance range.
Sam Davis: With two of our scoopers deployed into November , we saw a $14.5 million increase in fourth quarter revenue to a record $15.6 million.
Sam Davis: This was the latest our scoopers have ever remained in the field and the longest deployment in Bridger's history.
Sam Davis: We continue to see the wildfire years starting earlier and lasting longer, driving increased demand for aircraft. In fact, one of our scoopers logged over 400 contract hours this year, a record for
Sam Davis: Importantly, we generated over $9 million of cash from operating activities in 2024. This is a significant milestone for Bridger. For the first time, we have achieved positive cash flow from operations, and we intend to improve upon this in 2025.
Sam Davis: I'm extremely proud of our operations team and pilots who quickly mobilized to assist in the wildfire fighting efforts in California in January .
Sam Davis: Completing record required winter maintenance and preparations in record time with Bridger's adoption of year-round readiness to combat the persistent threat of wildfires across the country.
Sam Davis: With two scoopers deployed to California in mid-January, we mark the earliest scooper deployment in company history.
Sam Davis: With fires this year from the Palisades to Long Island, the Carolinas and now Texas and Oklahoma, the concept of a fire season is no longer relevant.
Sam Davis: While every year is unique, 2024 was more active, was a more active wildfire season than we saw in 2023, consuming 8.9 million acres compared to 2.7 million acres in 2023, and slightly above the five and ten year averages.
Sam Davis: and 2025 is already off to an early start. Just this week, we have deployed two scoopers to Oklahoma, which will be joining our multi-mission aircraft, which has already been deployed since mid-February.
Sam Davis: We also recently sent an additional aircraft at Texas where dry conditions make the current risk of wildfire high.
Sam Davis: This is in addition to the recently announced 5-year $20 million contract with the U.S. Department of the Interior, which will send to Air Attack Aircraft to support fire and resource management activities in Alaska.
Sam Davis: Currently, the Wildfire Outlook for the Texas Panhandle, West Texas, and Southeast US remain tight.
Sam Davis: for the National Interagency Fire Center or NISC, significant wildfire potential will be seen throughout most of Texas and parts of New Mexico and Arizona, and several southeastern states through March and into April .
Speaker Change: Our targeting of multi-year and exclusive use contracts serves to guarantee overall revenue by monetizing utilization in response to year-round wildfire threats.
Speaker Change: Maximizing the number of these exclusive use commitments will help to ensure our fleet remains dedicated to critical, wildfire response efforts with the goal of maximizing price and flight hours.
Speaker Change: We are actively looking for additional opportunities with states to provide exclusive use for our fire fighting assets, and are optimistic that current budgeting and planning cycles will lead to future opportunities.
Speaker Change: While these arrangements are good for Bridger, they are also a paramount for states against the backdrop of government agency contracting lags and budgeting delays. We do believe, on the heels of Texas last year in California this year, there are growing calls for regulatory change, as well as an increased in appropriations.
Speaker Change: We are aware of over 30 bills in the works in Washington making us optimistic that change is underway.
Speaker Change: It is also important to note that fighting wildfire is a nonpartisan issue. Fighting wildfire remains a growing threat across the US and its devastating effects impact people of every political affiliation, leading to increased support from all political parties.
Speaker Change: Turning to FMS, as a reminder, we closed the acquisition on June 28th last year and they contributed $3 million in revenue over the first six months of our ownership.
Speaker Change: FMS is partnering with Bridger on aircraft modifications to solidify our competitive edge and incorporate leading edge sensor technologies to enhance performance, reliability, and safety.
Speaker Change: We are seeing a number of contracting opportunities primarily with the DOD in active vids that Bridger and FMS are uniquely positioned to respond to. This will enable us to further diversify our customer base and add more year-round revenue to grow the business.
Speaker Change: A quick update on Ignis Technologies. As we mentioned last quarter, Ignis launched its mobile platform to support firefighters in the field. We have several counties, crews, and incident management teams piloting the app. As we move forward, many of these organizations are expected to transition to a subscription-based model for the 2025 wildfire season with flexible pricing based on organization size and features.
Speaker Change: A major focus of ongoing development is linking Bridger's real-time sensor imagery within the Ignisap, creating a seamless data flow from air to ground.
Speaker Change: This capability promises to unlock new levels of situational awareness, supporting multi-mission aviation contracts and enhancing both operational effectiveness and safety.
Speaker Change: Turning to the four Spanish scoopers which are owned under our partnership agreement with MAB Funding LLC.
Speaker Change: The Return to Service Work by your Spanish subsidiary, Albacete Arrow, is on track. The first aircraft aircraft has received a certificate of airworthiness with the ASSA, and the second aircraft is expected to receive flight acceptance in the next 60 days.
Speaker Change: Both are expected to be ready for the 2025 wildfire season.
Speaker Change: The other two scoopers are scheduled to be ready, albeit later in 2025. We remain in discussions with multiple parties, primarily in Europe , the source operating contracts. Once contracts are in place, we will then determine how best to bring these high margin assets into the business.
Speaker Change: As we look ahead to 2025, we are optimistic that the opportunities we have in front of us will drive organic growth in revenue, increases in adjusted EBITDA as we continue to focus on cost rationalization efforts and asset utilization to drive another year of positive cash
Eric Gerratt: Let me now turn it back to Eric, who we'll talk about our financial performance for the quarter.
Thanks, Sam.
Eric Gerratt: Looking at our results for the fourth quarter of 2024, Revenue increased to $15.6 million from $1.1 million in the fourth quarter of 2023.
Eric Gerratt: While Revenue has historically been lower in the fourth quarter, as Bridger schedules annual fleet maintenance activities after the U.S. wildfire season, in preparation for the following season, Revenue for the fourth quarter of 2024 benefited from the deployment of two scoopers into November .
Eric Gerratt: Revenue in the fourth quarter of 2024 also benefited from approximately $5.1 million related to return-to-service work performed on the Spanish scoopers by our subsidiary Albisa to Arrow as part of our partnership agreement with MAP Funding LLC.
Eric Gerratt: Cost of revenues was $15.4 million in the fourth quarter of 2024 and comprised of flight operations expenses of $5.8 million and maintenance expenses of $9.6 million.
Eric Gerratt: This compares to $8.4 million in the fourth quarter of 2023, which included $4.7 million of flight operations expenses and $3.7 million of maintenance expenses.
Eric Gerratt: The predominantly pass-through costs related to the return to service work for the Spanish scoopers of approximately $4.8 million and the addition of FMS, which was acquired in June of 2024, also contributed to the increase in Q4 maintenance expenses.
Eric Gerratt: Selling General and administrative expenses were $7.7 million in the 4th quarter of 2024 compared to $18.6 million in the 4th quarter of 2023
Eric Gerratt: The decrease was due to lower non-cash-based compensation expense in the fourth quarter of 2024 compared to the fourth quarter last year.
Eric Gerratt: The deep series was also partially due to lower professional services and non-tash impairment charges associated with our plan to phase out our use of certain aging aircraft platforms that we recorded in the third-fourth quarter of 2023.
Eric Gerratt: For the fourth quarter of 2024, we reported a net loss of $12.8 million or $36 per diluted share compared to a net loss of $31.1 million or $67 cents per diluted share in the fourth quarter of 2023.
Eric Gerratt: The reduced loss was primarily driven by increased fleet utilization in the fourth quarter of 2024.
Eric Gerratt: Due to seasonality, the company typically generates a net loss of negative EBITDA in the first and fourth quarters each year.
Eric Gerratt: Looking at our results for 2024 for the full year, revenue grew 48% to $98.6 million from $66.7 million in 2023.
Eric Gerratt: Revenue for 2024 included approximately $10.1 million related to the return to service work performed on the four Spanish scoopers as part of a partnership agreement with MAP funding LLC and approximately $3 million from the company's June Act
Eric Gerratt: Costa Revenue is a $57.5 million for 2024, which was comprised of flight operation expenses of $31 million and maintenance expenses of $26.5 million.
Eric Gerratt: Cost of Revenue for 2023 was $41.3 million, comprised of $24.4 million of flight operation expenses and maintenance expenses of $16.9 million.
Eric Gerratt: As DNA expenses declined to $35.8 million in 2024 compared to $82.9 million in 2023, which included non-cash stock-based compensation expense of $45.7 million for RSUs compared to $14.4 million in 2024.
Eric Gerratt: The decrease is also partially attributable to a decrease in the fair value of our outstanding warrant and higher professional services and other expenses associated with becoming a public company in 2023 compared to 2024.
Eric Gerratt: NetLost was $15.6 million in 2024 compared to a net loss of $77.4 million in 2023. Adjusted EBITDA for 2024 doubled to $37.3 million compared to $18.7 million last year.
Eric Gerratt: Turning to the balance sheet, we ended the year with total cash and cash equivalence of $39.3 million, which was up from $33.3 million at the end of September 2024, benefiting from the strong third quarter performance for which cash was received in the fourth quarter.
Eric Gerratt: With that, I'd like to turn the call over to John to discuss our 2025 game.
John Saunders: Thank you, Eric. 225 is off to an early start, with the deployment of two of our scoopers in January , to support the fires in California.
Sam Davis: As Sam mentioned, we also have deployed two scoopers of Oklahoma.
Sam Davis: One MMA clean to Oklahoma, and one air attack clean to Texas.
Sam Davis: While it is difficult to forecast our business this early in the year, there does appear to be a lengthening of the wildfire season behind the historically strong third quarter.
Sam Davis: With that said, we are taking a conservative approach to 2025 guidance with the bulk of the wildfire season still ahead of us.
Sam Davis: Our initial 2025 guidance assumes revenue of approximately 105 million to 111 million dollars.
Sam Davis: The majority of that is organic and is based on our six super scoopers and eat MMA and aerial surveillance aircraft.
Sam Davis: We will benefit from a full year of FMS Aerospace, which contributed 3 million in revenue over the course of six months in 2024.
Sam Davis: is important to note that return to service work performed on our Spanish super scoopers by our Spanish subsidiary Alba Sete Arrow, which amounted to just over 10 million in 2025, is projected to be approximately 50% of the 2024 amount in 2025.
Sam Davis: As a reminder, the return to service revenue is largely passed through and as such any decrease in RTS revenue will contribute to further expanding adjusted EBITDA margins.
Sam Davis: As we conclude, contracting for our initial two Spanish Super Scoopers and determine how to best employ them, we will update our guidance.
Sam Davis: For 2025, Adjusted EBITDA has expected to range from 42 million to 48 million dollars, also before any potential impact from the Spanish Super Scoopers.
Sam Davis: 2020-25 should benefit from additional cost rationalization efforts, including the exit of certain subscription maintenance programs and increased operating leverage.
Sam Davis: As a result, we will also expect to generate another Europe positive cash from operating activities in 2025.
Sam Davis: As a reminder, given the company's largely fixed cost structure and the seasonality of its revenue, Bridger still expects to generate the majority of its adjusted EBITDA in the third quarter during the bulk of the wildfire season.
Sam Davis: With that, I would like to turn back the call to Sam for final colors.
Speaker Change: Thank you, John . 2024 was a record year and one that we believe is indicative of Bridger's resilient dedication to the mission of fighting the pervasive threat of wildfires.
Sam Davis: We flew 652 missions in 16 states and dropped 8.8 million gallons of water on 385 fires.
Sam Davis: This led to revenue of almost $100 million and the doubling of our adjusted EBITDA to $37.3 million.
Sam Davis: As of the end of 2024, we are in compliance with all of our debt covenants and we will have the going concern disclosures removed when our 10K is filed in the tech coming days.
Sam Davis: As I look ahead, I'm incredibly proud of our team and I'm honored to be able to continue to lead them as we focus on our unwavering mission to protect lives, property, and the environment.
Sam Davis: From early detection using our sensor enhanced airtack, preventing lightning strikes from becoming larger incidents, command and control providing overwatch on an incident.
Sam Davis: The dropping water to suppress large fires and support firefighters on the ground. Bridger is a critical piece of the nation's aerial firefighting response network, and we continue to be ready to answer the call to our federal and state government clients in the growing battle against wildfires while generating returns to our stakeholders.
With that, I will open up to call the questions.
Sam Davis: Thank you. Ladies and gentlemen, our first questions come from Austin Moeller of Canacord who forwarded his questions via email due to connection issues. Gentlemen, the first question, what can you tell us about the delivery and operational cadence of the Spanish scoopers in Europe for the fire season relative to your most recent expectations?
Speaker Change: Thank you. I'll go ahead and take this. As I mentioned earlier in my script, the finish scoopers are all on track with their maintenance schedules.
Speaker Change: and the first has received Certificate of Airworthiness as of the second week of February with ESSA, and the second is on track to receive its Certificate of Airworthiness within 60 days. So we expect...
Speaker Change: in Europe to put those two planes on fire. The other two, we anticipate being ready within the season, maybe the early of the season or the end of the season.
Speaker Change: and we believe that those two can be added to those contracts as they come online, but will continue to monitor the progress as the return to services completed for those.
I'll go ahead and take the next question.
Speaker Change: Certainly, thank you, Jillman. How do you feel about your cash balance and do you expect it to be sufficient to support working capital and operations in the U.S. and upgrade of the Spanish scoopers and their initial operations in Europe ?
Eric, do you want to take this one? Sure.
Speaker Change: So we feel really good about where our cash is at this point. So we ended the year with available cash just over $39 million. And so between that cash and kind of the upcoming operations, we were very comfortable that we have sufficient cash to fund any working capital needs as well as our operations in the US.
Speaker Change: in terms of the Spanish scoopers and funding their upgrades.
Speaker Change: The funding for those upgrades actually comes from the partnership with the MAB Group and so that actually those upgrades are actually funded from the partnership versus from our available cash. So again, we feel really good about the cash position we have going into the year.
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Okay, next question.
Speaker Change: Budgets are past and how have the California fires impacted your commerce?
Congressional Lawmakers State Governments
Speaker Change: John , would you like to take this? Yeah, great question. In line with our conservative guidance, our revenue guidance for 2025 envisions funding at the same level as prior years.
Speaker Change: We have not factored in any increases in appropriations for the 2526 budget cycle and any additional funding or appropriations for the 2526 budget cycle would be upside to our current guidance.
Speaker Change: in regards to the impact of the California fires on state and federal outreach.
Speaker Change: We've seen increased interest and contracting opportunities at both the state and federal level.
Speaker Change: and we believe that there are continued opportunities there as a result of the California fires and the ongoing fires in South Carolina and the potential in Texas and the Panhandle. So it increased interest in contracting opportunities at both state and federal level. Thank you for the question. Can we move on to the next question?
Speaker Change: Certainly. Our final question, how would you expect lower fuel prices and travel costs to affect open and flight operations costs and is this reflected in your guidance?
Yeah, I'll go ahead and take that one.
Speaker Change: We did not reflect that into our guidance. We kept a conservative estimate for fuel based on
What we saw last year in fuel prices.
Speaker Change: and also tied to our utilization that we have budgeted for the year. We perceive that to be potential upside for us if we see a reduction in fuel prices.
Speaker Change: throughout the year. And as a reminder, most of our fuel, at least for our scooper operations in the field are borne by the customer. So really training and our air attack fuel costs are really all that we see run through our PNL throughout the year. But again, potential upside for us as we see that trend continue.
Speaker Change: and I believe that wraps up our question and answer periods so I will go ahead and close the call. Thank you again for joining our call today. We look forward to updating you on our progress when we report our Q1 results in May. We will also be attending the Roth Conference in California on Monday the 17th. We hope to see some of you there. If anyone has any follow-up questions, please reach out to our investor relations.
Thank you and have a good day.
Speaker Change: Thank you, Mr. Davis. Again, ladies and gentlemen, that will conclude today's Bridger Aerospace Force Quarter Conference call. Again, thanks so much for joining us, everyone, and we wish you all a great remainder of your day. Goodbye.
Eric Gerratt
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Sam Gerratt
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Eric Gerratt, Austin Moeller