Bridger Aerospace, a company specializing in aerial firefighting solutions, reported mixed financial performance in the second quarter of 2024.
During the earnings call, Interim CEO Sam Davis and CFO Eric Gerratt provided an overview of the company's financials, operational updates, and strategic initiatives. Despite a net loss of $10 million, the company's revenue increased, and it is taking strategic steps towards expansion and product development.
Key Takeaways
- Bridger Aerospace reported a net loss of $10 million for Q2 2024, an improvement from a $19 million loss in Q2 2023.
- Revenue for the second quarter stood at $13 million, with a slight adjusted EBITDA of $0.2 million.
- The company has acquired FMS Aerospace to enhance capabilities and expects additional revenue streams from this acquisition.
- Bridger Aerospace is expanding into Europe, with operations in Spain, and developing a mobile app for wildland firefighters.
- Full-year guidance remains unchanged, with adjusted EBITDA projected between $35 million and $51 million on revenue of $70 million to $86 million.
Company Outlook
- Bridger Aerospace expects to increase its cash balance in the upcoming months due to receivables from the fire season.
- The company's international expansion into Spain is on track and is anticipated to contribute to operational and revenue growth.
Bearish Highlights
- The company reported a net loss of $10 million in Q2 2024, indicating ongoing challenges in achieving profitability.
- Adjusted EBITDA was down to $0.2 million from $1 million in the same quarter of the previous year.
Bullish Highlights
- Revenue for the first half of 2024 increased to $18.5 million from $12 million in the same period of 2023.
- The acquisition of FMS Aerospace is expected to bolster Bridger's capabilities and open up new revenue opportunities.
- Bridger Aerospace is expanding its footprint with operations in Spain and a new mobile app for wildland firefighters.
Misses
- The company's net loss and reduced adjusted EBITDA suggest that Bridger Aerospace is still navigating through financial headwinds.
Q&A Highlights
- Bridger's cash flow is positive and expected to support operations until the next fire season.
- Costs for upgrading Spanish Super Scoopers are accounted for in agreements with Marathon and Avenue.
- The Ignis app, aimed at aiding wildland firefighters, is in the process of pricing determination, with a focus on state and local contracts initially.
In summary, Bridger Aerospace is focusing on strategic acquisitions, international expansion, and product development to drive future growth. The company remains committed to its full-year guidance and is actively engaging with the firefighting community to enhance its product offerings. Bridger Aerospace continues to appreciate the dedication of its employees during this period of transition and growth.
InvestingPro Insights
Bridger Aerospace's recent financial performance, highlighted by an increase in revenue despite a net loss, reflects a company at a pivotal stage of growth and expansion. InvestingPro data and tips offer valuable insights into the company's financial health and stock behavior, which can help investors understand Bridger Aerospace's potential risks and opportunities.
InvestingPro Data indicates a substantial market cap of $177.57 million, signaling investor confidence in the company's market value. Despite a negative P/E ratio of -1.96, the company has shown impressive revenue growth of 53.91% over the last twelve months as of Q1 2024. This growth is further underscored by a staggering quarterly revenue increase of 1408.77% in Q1 2024, a clear testament to Bridger Aerospace's expanding operations and market reach.
InvestingPro Tips suggest that while analysts anticipate sales growth in the current year, Bridger Aerospace has not been profitable over the last twelve months. Additionally, the stock price has seen a significant drop of 16.5% over the last three months, which could be due to various factors including market volatility or internal challenges. Interestingly, the stock often moves in the opposite direction of the market, which could present unique opportunities for investors looking to diversify their portfolio.
For those considering investing in Bridger Aerospace, there are additional InvestingPro Tips available that may shed light on the company's financial strategies and market position. In total, there are 7 more tips listed on InvestingPro, which can be found at https://www.investing.com/pro/BAER, providing a more comprehensive analysis for potential investors.
Full transcript - Bridger Aerospace Group Holdings Inc (NASDAQ:BAER) Q2 2024:
Operator: Good day, everyone, and welcome to today's Bridger Aerospace Second Quarter 2024 Conference Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. Please note today's call will be recorded and I will be standing by should you need any assistance. It is now my pleasure to turn the conference over to CFO, Eric Gerratt. Please go ahead.
Eric Gerratt: Good afternoon and thank you for joining us today. Joining me on the call this afternoon is Interim Chief Executive Officer, Sam Davis; and John Founders, who has recently joined Bridger as Senior Vice President of Finance and Capital Markets. 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 the 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. Listeners should not place undue reliance on forward-looking statements which reflect management's fees 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 statements or to make any other forward-looking statements. Throughout today's earnings release and our call today, we refer to 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. 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 Sam.
Sam Davis: Thank you, Eric. Good afternoon. I'm excited to be joining today's call, my first since being named Interim Chief Executive Officer on July 1st. While Bridger employees and customers know me well, I'd like to provide a brief introduction given our recent CEO transition. I joined Bridger in 2019 as Controller and more recently served as Chief of Staff. While this title is typically more common in the military, in essence it meant I was Tim's, our former CEO's right-hand man. In my five years at Bridger, I have been deeply involved in both the development and execution of our strategy. I held pivotal roles as the company transitioned from private to public, assisted in multiple capital raises, implemented operational efficiencies and executed strategic initiatives to expand our services and geographic footprint. The opportunities that brought me to Bridger back in 2019 are even more compelling today. Bridger is fortunate to have a deep bench of talent throughout our organization and this team is committed to delivering value creation for our customers and shareholders. As previously announced, the Nominating and Corporate Governance Committee of the Board has embarked on a comprehensive process to search for a permanent CEO and will consider both internal and external candidates. While there is no specified timeline for completion, the search will likely become more active after the peak of the 2024 wildfire season is behind us. I am fully committed to being part of the process and I'm confident that the Board's ultimate decision will be in the best interest of Bridger shareholders. Now, let me move on to our second quarter results. After starting the year off with the earliest seasonal deployment in Bridger history, activity moderated in the second quarter with our entire fleet not being fully deployed until July around the time the National Interagency Fire Center or NIFC elevated the national preparedness level to five. NPL 5, the highest level has not been breached since 2021 and it signifies that major fire incidents are occurring across multiple geographic areas with the potential to exhaust all agency fire resources. As states scramble to secure aerial firefighting resources, we have continued to evaluate our mix of contracts to increase our asset utilization. For the first time in our history, we have secured exclusive-use task orders for four out of our six Air Attack aircraft, two Multi-Mission aircraft and four out of our six Super Scoopers. These aircraft are committed for a guaranteed minimum period, ensuring they remain dedicated to critical wildfire response efforts. Some of these contracts are multiyear. As we move to a greater number of exclusive-use contracts versus call when needed, we expect to be able to help smooth out revenue during the wildfire season with the goal of maximizing price and flight hours. Additionally, the task orders for both of our Pilatus PC-12 Multi-Mission Aircraft, MMA, have been extended into the fall, marking a record 200 plus days of deployment this year, up from the originally scheduled 150 days. Furthermore, all of our Daher Kodiak 100s are all under multi-day exclusive-use task orders and are actively deployed in Washington and Alaska. The remaining two light fixed wing aircraft and two Super Scoopers operating on call-when-needed contracts have been called out and are actively flying missions. As a result, we remain on budget through the first half of 2024 and are on track to meet our published guidance for the year. I also want to spend a little time discussing the strategy behind our acquisition of FMS Aerospace, which closed on June 28th, 2024. By the numbers, the FMS transaction was an equity-only deal with a total value of approximately $21 million. Annually, FMS generates approximately $10.5 million of revenue with net income of approximately $2.5 million. We became acquainted with FMS when we partnered with them to develop our MMA program. FMS is a turnkey provider of airframe modification and integration solutions for government and commercial customers. Their engineering and modification work on two of our PC-12s enabled us to secure the five-year contract last year with the Department of the Interior and Bureau of Indian Affairs for high-resolution, surveillance, mapping, software and intelligence operations, critical components of tactical firefighting. Bringing FMS into the Bridger family will bring these critical capabilities in-house and allow us to continue to grow in mission-critical areas, including emergency air services, aerospace modifications and defense systems engineering. In turn, Bridger provides FMS with physical facilities, including hangers and equipment, qualified aviation personnel and repair station and flight testing capabilities to grow their business and enhance margins. Together, we believe we will be able to land larger contracts than either company could bid along. We are optimistic we could receive additional Department of Defense work as early as 2025. While we are not making forecasts, we expect meaningful operational synergies as well as opportunities to add more year-round revenue. FMS is expected to be immediately accretive to earnings. In addition to our strategy to offset fluctuations in wildfire activity by expanding our aerial firefighting services to new mission-critical areas, we continue to look to expand into new geographies as well. We remain on track with plans to expand into Europe. Our partnership with Marathon Asset Management LP and Avenue Sustainable Solutions Fund, completed the purchase of four Super scoopers from the Spanish government last fall and our Spanish subsidiary, Albacete Aero, is overseeing the return to service work on the four Spanish scoopers. We are pleased with the progress and remain on schedule for all four scoopers to be available by the 2025 fire season. A quick update on our subsidiary Ignis Technologies. We're excited to announce the launch of our mobile app for wildland firefighters. Released in June, the free version offers real-time wildfire updates, weather conditions and essential tools for mapping fire specific points, lines and polygons. The paid version provides additional features for fire crews and organizations, including a built-in mesh network for off-line data synchronization, 3D mapping, a web platform and other advanced capabilities. We are also exploring the integration of the app with our aerial surveillance technology to provide the latest fire intelligence, enabling firefighters and decision-makers to use near real-time data to enhance safety and operational effectiveness. As we look ahead to the third quarter, the wildfire season remains very active, continuing the overall trend of larger wildfires and longer fire seasons and driving continued long-term demand for our aerial surveillance and suppression services. In 2023, we saw 80% of our total revenue in the third quarter, which is generally the trend in the typical fire season. Year-to-date, we have dropped just shy of 5 million gallons of water on wildfires from our scoopers. Let me now turn it back to Eric, who will talk about our financial performance and guidance for the year.
Eric Gerratt: Thanks, Sam. Looking at our results for the second quarter of 2024, revenue was $13 million compared to $11.6 million in the second quarter of 2023, up 12%. Revenue in the second quarter of 2024 benefited from $1.8 million related to return-to-service work performed on the Spanish Super Scoopers by our Spanish subsidiary Albacete Aero as part of our partnership agreement. This was partially offset by lower flight revenue compared to last year, which benefited from the company's deployment to Canada beginning in June 2023. Cost of revenues was $9.9 million in the second quarter of 2024, down 6% from $10.5 million in the second quarter last year. Cost of revenues for the second quarter of 2024 was comprised of flight operation expenses of $5.1 million and maintenance expenses of $4.8 million. This compares to $6.3 million flight operation expenses and $4.2 million of maintenance expenses in the second quarter of 2023. The decrease quarter-over-quarter is due to lower flight operation expenses related to fewer flight hours in the second quarter of 2024 compared to the second quarter of 2023, which benefited from the company's deployment to Canada last year. Selling, general and administrative expenses were $7.9 million in the second quarter of 2024 compared to $15.2 million in the second quarter of 2023. The decrease was partially attributable to the decrease in the fair value of outstanding warrants in the second quarter of this year compared to the second quarter of 2023. The decrease was also partially attributable to lower noncash stock-based compensation expense in the second quarter of 2024 compared to the second quarter of 2023. Interest expense for the second quarter was $5.9 million compared to $5.5 million in the second quarter last year. Bridger also reported other income of $0.1 million in the second quarter of 2024 compared to $0.6 million in the second quarter of 2023. For the second quarter of 2024, we reported a net loss of $10 million compared to a net loss of $19 million in the second quarter last year. The decrease in net loss was primarily driven by the decrease in SG&A and cost of revenues. Adjusted EBITDA was $0.2 million compared to $1 million in the second quarter of 2023. A reconciliation of adjusted EBITDA to net loss is included in Exhibit A of our earnings release available on our website. Due to our seasonality, the company typically generates a net loss and negative EBITDA in the first and fourth quarters each year with positive adjusted EBITDA generated primarily in the second and third quarters coinciding with US wildfire season with the third quarter being the most profitable. Looking at our results for the first six months of 2024, revenue was $18.5 million compared to $12 million in the first six months of 2023. Cost of revenues was $19.1 million comprised of flight operation expenses of $10.1 million and maintenance expenses of $9 million. Cost of revenues for the first six months of 2023 was $17.8 million and comprised of $10 million of flight operation expenses and maintenance expenses of $7.7 million. SG&A expenses were $19.5 million compared to $48.4 million in the first six months of '23, with the decrease primarily driven by a decrease in noncash stock-based compensation expense of $32.4 million in the first six months of 2023 compared to $9.6 million in the first six months of 2024. Interest expense for the first six months of 2024 was $11.8 million compared to $11.2 million in the first six months last year. Bridger also reported other income of $1.2 million for the first six months of 2024 compared to $1.7 million for the first six months of 2023. Net loss was $30.1 million in the first six months of 2024 compared to a net loss of $63.7 million in the first six months of 2023. Adjusted EBITDA was negative $6.7 million for the first six months of 2024 compared to negative $9.7 million in the same period last year. Turning to the balance sheet. We ended the second quarter with total cash and restricted cash of $22.5 million. Incoming receivables from the fire season are expected to increase the cash balance in the coming months. With that, I'd like to now turn the call over to John to discuss our 2024 guidance.
Unidentified Company Representative: Thank you, Eric. Supported by the earlier-than-normal flight activity in the first quarter and acceleration in activity beginning in July and the expected contribution from FMS Aerospace in the second half of the year, we have increased confidence in our outlook of adjusted EBITDA of $35 million to $51 million on revenue of $70 million to $86 million for 2024. This guidance range is consistent with guidance first issued in November 2023 and we expect that after we report our third quarter results in November of this year, we will be able to fine-tune the range. Our international expansion into Spain, which commenced in the fourth quarter of 2023 is also on schedule and expected to provide meaningful operational and revenue growth in future years. With that, I would like to turn the call back to Sam for final comments.
Sam Davis: Thank you, John. I would like to conclude the call by taking the opportunity to draw attention to the most important contributor to our business, our employees. I've had the good fortune of working for Bridger since 2019, partnering with tremendously talented men and women as we pursue Bridger's mission to save lives, property and habitats affected by wildfires. The hard work, creativity and dedication of our team of maintenance, operations and aircraft personnel is best-in-class and their unwavering selfisness has resulted in the provision of multiple resources to combat wildfires and the dropping of greater than 4.9 million gallons of water year-to-date in 2024 alone. To this team, keep up the great work. Many of you put your lives on the line every day, and our customers, fellow citizens and cities and towns across the country greatly appreciate your sacrifice. As we all know, wildfire does not discriminate based on economics, religion, background and/or political affiliation and we continue to pursue our mission indiscriminately and without desire for recognition or public adulation. You all play a critical role in the preservation of life, property and livelihoods across the nation and you should be proud of the work you do. To our investors, thank you for your continuing support of our company and our mission. I appreciate your confidence in our employees, management team and Board of Directors as we execute on our business plan and long-term objectives. We are confident in our prospects for the future and appreciate the faith that you have placed in our entire organization. Bridger is a critical piece of the nation's aerial firefighting responder network. And with year-to-date total acres burned at already over 5.2 million acres, ahead of the total acres burned in each of the last five years we expect to report a strong third quarter. I'm honored to lead such an incredibly talented team and I look forward to continuing to pursue and execute our business plans in the future. And with that, I would like to open up the call for any questions.
Operator: [Operator Instructions] And we'll take a question from Austin Moeller with Canaccord. Your line is open.
Austin Moeller: Hi. Good afternoon. My first question here, can you just talk about Bridger's cash needs and the estimated upgrade costs for those four Spanish Super Scooper since you anticipate having operational in the 2025 fire season?
Sam Davis: Yes. Thank you for the question, Austin. I'll field this one and then open it up to either Eric or John if they have anything to add. Bridger's operating cash flow is positive based on its current path. While the majority of cash collections coming from the company in Q3, as we all know, we do believe this is enough to sustain operations until the next fire season. The return to service budget specific for the Spanish Scoopers is factored into the deal with Marathon and Avenue. And currently, we're on budget and on time to be able to complete that refurbishment through those funds. Okay. Nothing from John or Eric. I think does that answer your question, Austin?
Austin Moeller: Yes. That's helpful. And just a follow-up here. Will the Ignis contracts be won at the federal and state level or at the local level? Who are you really targeting that?
Sam Davis: Did you say Ignis? I kind of missed you there.
Austin Moeller: Yes. The Ignis app will contracts be won at the federal or state and local level.
Sam Davis: Over mostly at the state and local level. Right now, as we build out the application, we do plan to land larger federal contracts. We will need to build out the application as we continue. The goal is to corner the state and local firefighting teams to meet their needs. And then those needs and the application will develop at the incident management team level federally.
Austin Moeller: Great. And just one more if I may. Do you have any ballpark estimate on what you would charge for a subscription to an organization yet?
Sam Davis: I don't have that right at my fingertips. We are meeting on that right now as we speak to make sure we optimize that pricing. I will say that we are working closely with a strong pipeline of customers and giving them introductory pricing to make sure that we build this out well and scale the pricing so that based on features, functionality and user base, it's something that Bridger can benefit from while not punishing the customer with a heavy introductory price.
Austin Moeller: Excellent. Thanks for all the details.
Sam Davis: You bet.
Operator: And it does appear that there are no further questions at this time. I'd now like to turn it back to Sam Davis for any closing or additional remarks.
Sam Davis: Thank you. Thanks again for joining our conference call today. We look forward to updating you on our progress when we report our third quarter results in November. We also plan to be at the Canaccord Growth Conference in Boston presenting this Wednesday August 14 and in New York presenting at the Gabelli Aerospace and Defense Conference on September 5. Hopefully, we will see some of you there. And if anyone has any follow-up questions, please reach out to our Investor Relations team. Thank you and have a good day.
Operator: This does conclude today's program. Thank you for your participation. You may disconnect at any time and have a wonderful evening.
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