Business Overview:

Bridger Aerospace was founded in 2012 in Belgrade, Montana, with the mission of protecting lives, property, and habitats threatened by wildfires. The company specializes in providing aerial wildfire surveillance, relief and suppression, as well as aerial firefighting services using next-generation technology and environmentally friendly and sustainable firefighting methods primarily throughout the United States.

A significant milestone in the company’s development came in 2020 when Bridger entered into two separate credit facilities backed by the U.S. Department of Agriculture for the purchase of its first two Viking CL-415EAF “Super Scooper” aircraft. This marked the beginning of Bridger’s expansion of its specialized fleet of firefighting aircraft.

In 2022, Bridger faced a challenge when it closed $160 million in municipal bond offerings to redeem existing preferred shares and finance the construction of additional aircraft hangars and the purchase of more Super Scoopers. However, this debt financing came with financial covenants that the company has since struggled to fully comply with due to the seasonal and unpredictable nature of its wildfire fighting operations.

The year 2023 brought significant changes for Bridger. The company completed the reverse recapitalization transaction with Jack Creek Investment Corp, becoming a publicly traded entity on the Nasdaq exchange under the ticker symbol BAER. This event provided Bridger with additional capital to continue growing its business but also introduced new compliance and reporting requirements as a public company.

Also in 2023, Bridger made two strategic acquisitions – Ignis Technologies, a fire technology company, and Flight Test Mechanical Solutions (FMS), an aerospace integration solutions provider. These deals allowed Bridger to expand its capabilities beyond just aerial firefighting services into related technology and engineering offerings.

Financials and Operational Highlights:

Bridger’s financial performance in recent years has been remarkable, with the company reporting record results in 2023 despite facing the slowest wildfire season in 20 years. The company’s revenue for the fiscal year 2023 reached $66.71 million, a testament to its ability to adapt and diversify its revenue streams. However, the company reported a net loss of $77.36 million for the year, with negative operating cash flow of $26.81 million and negative free cash flow of $47.87 million.

The company’s performance has significantly improved in 2024. For the third quarter of 2024, Bridger reported revenue of $64.51 million, representing a 20% increase year-over-year. Net income for the quarter stood at $27.35 million, a 56% increase compared to the same period in the previous year. Operating cash flow turned positive at $0.20 million, a substantial improvement from the negative $41.49 million in Q3 2023. Free cash flow for the quarter was $21.36 million.

Liquidity:

The company’s strong financial position is further evidenced by its robust liquidity, with $42.6 million in cash and restricted cash as of September 30, 2024. Bridger’s free cash flow for the first nine months of 2024 stood at $0.2 million, a significant improvement compared to the previous year’s negative free cash flow.

As of September 30, 2024, Bridger had $33.33 million in cash and cash equivalents. The company’s debt-to-equity ratio was 7.95, while its current ratio and quick ratio stood at 3.42 and 3.41, respectively, indicating a strong short-term liquidity position.

Bridger has several credit facilities, including $160 million in taxable industrial revenue bonds maturing in 2027, $17.76 million and $17.83 million permanent loans maturing in 2035, and $9.98 million and $3.39 million term loans maturing in 2030 and 2027, respectively.

Bridger’s operational performance has also been impressive, with the company achieving the earliest seasonal deployment of its Super Scooper and surveillance aircraft in its history, positioning it for another record year in 2024. The company’s fleet of specialized aircraft, including six Viking CL-415EAF Super Scoopers, three Twin Commander surveillance platforms, four Daher Kodiak 100s, and one Pilatus PC-12, has enabled Bridger to provide comprehensive firefighting and aerial surveillance services to its clients.

Strategic Initiatives and Growth Opportunities:

To further bolster its capabilities and diversify its revenue streams, Bridger has undertaken several strategic initiatives. In June 2024, the company acquired FMS Aerospace, a turn-key provider of airframe modification and integration solutions for government and commercial customers. This acquisition has not only strengthened Bridger’s in-house engineering capabilities but has also opened up new revenue opportunities outside of the traditional aerial firefighting business.

Additionally, Bridger has made significant progress in its international expansion efforts, with the completion of the purchase of four Spanish Super Scoopers through its partnership with Marathon Asset Management LP and Avenue Sustainable Solutions Fund. These four aircraft are currently undergoing the return-to-service process and are expected to be available for the 2025 wildfire season, further expanding Bridger’s global footprint.

The company’s software subsidiary, Ignis Technologies, has also been gaining traction, with its mobile platform being piloted by several counties, crews, and incident management teams. Bridger is focused on integrating the Ignis platform with its real-time sensor imagery, creating a seamless data flow from air to ground and unlocking new levels of situational awareness for its customers.

Product Segments:

Bridger operates across three core product segments: Fire Suppression, Aerial Surveillance, and Maintenance Repair.

Fire Suppression: This segment involves deploying specialized Viking CL-415EAF Super Scooper aircraft to quickly drop large amounts of water directly on wildfires. In the three months ended September 30, 2024, fire suppression revenue increased by $4.44 million, or 10%, to $50.59 million, compared to the same period in the prior year. This increase was primarily driven by increased flight hours for the Super Scoopers during the 2024 fire season.

Aerial Surveillance: This segment provides aerial surveillance via manned Air Attack aircraft to coordinate fire suppression aircraft over an incident and provide tactical coordination with incident commanders. Aerial surveillance revenue increased by $0.26 million, or 4%, to $7.62 million in the three months ended September 30, 2024, compared to the prior year period. The increase was primarily due to the higher utilization rate of the Pilatus aircraft versus the Twin Commander aircraft during the quarter.

Maintenance Repair: This segment provides maintenance and repair services, including return-to-service upgrades for the Spanish Scoopers acquired by the company, as well as airframe modifications and integration solutions for government and commercial customers. Maintenance repair revenue was $3.77 million in the three months ended September 30, 2024, compared to none in the prior year period. This new revenue stream is the result of the company’s acquisition of Flight Test Mechanical Solutions, Inc. and the services agreement to manage the return-to-service of the Spanish Scoopers.

Risks and Challenges:

While Bridger’s growth trajectory has been impressive, the company is not without its risks and challenges. As an aerial firefighting company, Bridger’s operations are heavily dependent on the intensity and duration of the wildfire season, which can be unpredictable and subject to the effects of climate change.

Additionally, Bridger operates in a highly regulated industry, and any changes in government policies or budgets could have a significant impact on the company’s operations and financial performance. The company’s reliance on a limited number of suppliers for specialized aircraft and replacement parts also exposes it to potential supply chain disruptions.

Bridger has also faced some political challenges, with the company’s former CEO running for public office and facing politically motivated attacks on the company’s business. The company has responded proactively to these concerns, reaffirming its focus on its core mission and the integrity of its operations.

Outlook and Conclusion:

Despite the challenges, Bridger’s comprehensive growth strategy, diversified revenue streams, and strong financial position position the company for continued success. The company has significantly increased its guidance for 2024, with revenue now expected to be in the range of $90 million to $95 million, representing a 35% to 42% increase over 2023. This includes approximately $6 million to $7 million related to pass-through work on the Spanish Super Scoopers and the acquisition of FMS Aerospace, which were not included in the initial guidance.

Bridger has also raised its adjusted EBITDA guidance for 2024 to a range of $35 million to $40 million, an increase of over 85% compared to the initial guidance. Importantly, the company expects to report positive free cash flow for the first time in 2024, projected to be in the range of $1 million to $10 million.

Bridger’s investments in technology, engineering capabilities, and international expansion are expected to further strengthen its competitive advantage and drive long-term value for its shareholders. As the company navigates the evolving landscape of the aerial firefighting industry, its commitment to its core mission and its focus on innovation and operational excellence will be critical to its ongoing success.

Disclaimer: This article is for informational purposes only. It does not constitute financial, legal, or other types of advice. While every effort has been made to ensure the accuracy of the information presented here, the author and the publisher do not make any guarantees about the completeness, reliability, and accuracy of this information.