Earnings Labs

Bridger Aerospace Group Holdings, Inc. Common Stock (BAER)

Q4 2023 Earnings Call· Tue, Mar 19, 2024

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Transcript

Operator

Operator

Good afternoon, everyone. Welcome to today's Bridger Aerospace Fourth 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. Now, at this time, I would like to turn the call over to the Chief Financial Officer, Mr. Eric Gerratt. Please go ahead, sir.

Eric Gerratt

Management

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. 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. 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.

Tim Sheehy

Management

Thank you, Eric. Good afternoon. Thank you for joining 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 these 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 our aerial surveillance suppression, services and technology capabilities. In fact, 2023 saw a record contract awards for Bridger including a five year $60 million exclusive use fire surveillance and technology contract in support of the Department of the Interior and a 10-year Air Attack contract for up to $166 million from the U.S. Forest Service awarded in the third 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 to 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. 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. 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 into 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…

Eric Gerratt

Management

Thanks, Tim. 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 the shorter than average North American wildfire season. 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 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. 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. Interest expense for 2023 increased to $23.2 million from $20 million in 2022. Bridger also reported…

Tim Sheehy

Operator

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 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 Scooper 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. 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 section of our website. Thank you and have a great day. End of Q&A: 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. Good-bye.