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spk01: Greetings and welcome to the Bridger Aerospace second quarter 2023 conference call. At this time, all participants are in listen-only mode. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Eric Jarrett, Chief Financial Officer.
spk02: Good afternoon, and thank you for joining us today. Joining me on the call this afternoon are Chief Executive Officer, Founder, and Director, Tim Sheehy, and Chief Investment Officer and Director, McAndrew Rudisill. 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 2023. 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 assessments to change. However, we undertake no obligation to revise or update any forward-looking statement or to make any other forward-looking statement. For those joining by webcast, you can follow along with today's presentation. For those listening by phone, you can access today's presentation on our website at www.bridgeraerospace.com under the Investor Relations tab. Throughout this afternoon's earnings release and our call-in presentation 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. 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 Tim.
spk04: Thank you, Eric. Good afternoon, everyone, and welcome. I'm happy to be joining you today to discuss our second quarter results and our progress as becoming a public company in January this year, including recent contract wins and the announcement of our first acquisition, which will expand our aero firefighting services to new mission-critical areas and create the largest specialty wildfire aviation fleet in the country. Our second quarter update, as we entered the second quarter, we were prepared for the start of the wildfire season, which typically starts mid-April. Each fire season has its own complexion, and this year has been no different. Due to the considerable winter snowpack in the west and wet spring conditions, the season began approximately six weeks later than usual. We actively worked to offset the impact of the slow start in the U.S. by expanding our aero-firefighting operations into Canada for the first time in our history. With a relatively dry winter in Canada, wildfires kicked off early and a record Record acreage continues to be burned to this day. Our operations in Canada allowed Bridger to increase fleet utilization during the second quarter, despite the slower start in the United States. Now that we've operated in Canada and gone through the regulatory process to do so, we expect that Bridger will continue to operate in Canada in the future as part of normal operations going forward. I'm very proud of the team for doing so well on our first international operations. The wet spring in the western U.S. did result in vegetation growth, which created excess fuel in most U.S. mountain forests. As extreme hot and dry conditions spread through the West, we saw an acceleration of wildfire activity towards the end of the second quarter, as lightning strikes and human activity ignited this dried undergrowth. Today, all of our scoopers and air attack assets have been called back to the U.S. and are currently deployed, supporting active fire incidents from Washington State to Texas and many places in between. In previous years, with later starts at the core, the fire season is oftentimes pushed further into the fourth quarter. As a result, we believe our 2023 guidance remains achievable. The trend for government outsourcing of aerial firefighting continues to benefit Bridger. In July, we received notice that we were awarded two five-year exclusive contracts worth up to $24 million each and one culminated contract worth up to $20 million with the U.S. Department of Interior for high-resolution surveillance operations using specialized air attack assets, which is based on the Bridger architecture of proprietary software and data platforms, which is redefining the industry. With the recent decommissioning of the US Air Force's distributed real-time infrared aircraft, our modern fleet is ideally suited to serve the DOI to help detect new fires, provide situational awareness for larger fires, and real-time data transmission and updates to line personnel. These contracts, worth up to $68 million in revenue, also mark the first contract awards of a multi-year DOI contract to the private sector for this mission. As a small business with leading edge sensor and mapping capabilities, industry-leading software capabilities, and historic contract performance, we are well-positioned to support our federal, state, and government clients in the growing battle against wildfires. I will now turn it over to McCander Rudisill to discuss the recently announced acquisition of Bighorn Airways.
spk03: Thank you, Tim. We recently announced the addition of Wyoming-based Bighorn Airways to the Bridger family with the signing of a definitive purchase agreement. Bighorn's fleet of 12 aircraft is used for wildfire smokejumping, as well as special mission transport and delivery for government customers. The fleet includes three Bombardier Dash 8s featuring a 7,500-pound payload capacity and a range of 1,200 miles and the capability of low-level flights for paracargo operations. Bighorn also operates four CASA 212-200s and five Dornier 228-200 twin turboprop aircraft capable of short takeoff and landing. Bighorn is one of the only and few air carriers that are approved by the DoD Commercial Airlift Review Board, holds a DoD facility security clearance, and is a US Special Operations Command certified air carrier. The $39 million transaction is expected to close by the end of September and to be accretive to our financial results, with incremental revenue opportunities on these new assets, as well as cost synergies in 2024. With the addition of Bighorn's unique skills, equipment and personnel, BRIDGET will become the largest specialty wildfire aviation fleet in the country. We continue to see additional opportunities to further expand our fleet, both in the U.S. and abroad, which will create the opportunity for geographic expansion and flexibility to cover more territories and wildfire seasons. And with the potential for a long and aggressive fire season, combined with cost savings initiatives put in place to maximize earnings, we continue to expect 2023 to be a record year for the company. With that, I will turn it over to Eric, who will talk about our financial performance in the second quarter.
spk02: Thanks, Andrew. Revenue for the second quarter of 2023 was $11.6 million compared to $12.8 million in the second quarter of 2022. The decline was a result of the later start to the 2023 U.S. wildfire season, partially offset by utilization of our fleet in Canada, which was our first international deployment. Cost of revenues was $10.5 million in the second quarter of 2023 and was comprised of flight operation expenses of $6.3 million and maintenance expenses of $4.2 million. This compares the cost of revenues of $9.4 million in the second quarter of 2022, which included $5.8 million of flight operations expenses and $3.6 million of maintenance expenses. The increase primarily relates to higher personnel and other expenses related to the two additional Super Scooper aircraft that were placed into service in September 2022 and February 2023, respectively. Selling general and administrative expenses were $15.2 million in the second quarter of 2023 compared to $5.7 million in the second quarter of 2022. The increase was primarily driven by non-cash stock-based compensation of $7.9 million for restricted stock units granted to employees as well as $1.1 million in loss on disposal and non-cash impairment charges on aging surveillance aircraft. Interest expense for the second quarter of 2023 increased to $5.5 million from $2.3 million in the second quarter of 2022 due to the additional interest expense related to the Gallatin Municipal Bond, which closed in the third quarter of 2022. The company also reported other income of $0.6 million for the second quarter, which was comprised of interest income for the embedded derivative of preferred equity of $0.2 million and realized gains from available for sale securities of $0.3 million. For the second quarter of 2023, net loss was $19 million compared to a net loss of $4.6 million in the second quarter of 2022. The increase in the net loss was primarily driven by the increased SG&A I mentioned previously, as well as the impact of reduced second quarter revenue due to the delayed start of the U.S. wildfire season. Adjusted EBITDA was $1 million, compared to $2 million in the second quarter of 2022. Adjusted EBITDA excludes interest expense, depreciation and amortization, stock-based compensation, gains and losses on disposal of assets, legal fees and offering costs related to financing and other transactions, and business development and integration expenses. Looking at our results for the first six months of 2023, revenue was $12 million compared to $12.8 million in the first six months of 2022. Cost of revenues was $17.8 million compared to $15.9 million in the first six months of last year. SG&A expenses were $48.4 million compared to $10.6 million in the first six months of 2022, with the increase primarily driven by non-cash stock-based compensation expense. Interest expense for the first six months of 2023 increased to $11.2 million from $6 million in the first six months of 2022. Bridger also reported other income of $1.7 million in the first six months of 2023 compared to $0.3 million for the same period in 2022. Net loss was $63.7 million in the first six months of 2023 compared to $19.4 million in the first six months of 2022. Adjusted EBITDA was negative $9.7 million compared to negative $6.9 million in the same period last year. Turning to the balance sheet, we ended the second quarter with cash, restricted cash, and short-term investments of $25.7 million. Receivables from our second quarter firefighting activity are expected to increase the cash balance in the coming months. Current fleet activity should further boost incoming cash flow through the balance of the year with excess cash expected to be used for further growth capex and to repay debt, which at June 30, 2023, stood at $207.5 million. Due to the rapid acceleration of the U.S. wildfire season after its late start, combined with cost savings initiatives put in place to maximize earnings, we believe our 2023 guidance of $84 million to $96 million in revenue and $37 million to $45 million of adjusted EBITDA remains achievable. Bridger's entire fleet is currently deployed in the U.S., and the month of July was a company record in terms of revenue. As Tim mentioned, in years with a late start to the wildfire season, the core fire season is often pushed further into the fourth quarter. We remain on track to close our acquisition of Bighorn in late September. We do anticipate Bighorn being accretive to our 2024 results, and believe there will be incremental revenue opportunities as well as cost synergies. We've included a new investor presentation on our website that covers the Big Torn transaction in detail and provides updates about Bridger to answer any questions that you may have. With that, I'd like to send the call back to Tim for final comments.
spk04: Thank you, Eric, and thank you to everyone for joining us on today's call and for your support. With a growing number of opportunities to expand our fleet, we are well positioned to see significant growth and drive shareholder returns while supporting our federal, state, and international clients in the growing battle against wildfires. We look forward to updating you on our progress when we report our third quarter results in November. We will also be attending the Gabelli 29th Annual Aerospace and Defense Symposium on September 7th in New York and hope to see some of you there. Have a great day.
spk01: Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
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