Bridger Aerospace Group Holdings (NASDAQ:BAER) Q2 2026 Earnings Call

0:00 Greetings, and welcome to the Bridger Aerospace Second Quarter twenty twenty six Earnings Call. As a reminder, today's call is being recorded. It is now my pleasure to introduce your host, Ann Hayes, CFO. You may begin.

0:17 Thank you, and welcome, everyone, to our second quarter twenty twenty six earnings call. Joining me today is our President and Chief Executive Officer, Sam Davis. Before we begin, I would like to take this opportunity to remind everyone that during the course of this call, management may make forward looking statements, which are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such statements as described in our 2025 annual report on Form 10 ks and other filings we make with the SEC from time to time. Except to the extent otherwise required by law, we undertake no obligation to revise or update any forward looking statement.

1:07 In addition, we may discuss certain non GAAP financial measures such as adjusted EBITDA. Please refer to our earnings release for the calculation of these measures and the appropriate GAAP reconciliation.

1:20 With that, I'd like to turn the call over to Sam. Thank you, Anne, and welcome, everyone. As we entered 2026, our focus was on ensuring our fleet, our technology and our people were fully prepared for what we believe would be another active wildfire year. Today, just a few months later, we're seeing that preparation translate into execution. And I'm incredibly proud of the long hours and diligence the Bridger team has shown throughout the year so far. Our second quarter financial results were in line with our expectations. Revenue was $30,500,000 essentially flat compared to the prior year period, reflecting the timing of non recurring return to service work on our Spanish Scoopers in 2025. Excluding that impact, revenue increased year over year, which Ann will walk through in more detail shortly.

2:11 First, I'd like to start with an update on some of the highlights from the second quarter. During the quarter, the U. S. Forest Service awarded us two one hundred and sixty day task orders covering four of our Super Scoopers, the longest guaranteed task orders in Bridger's history. These orders will activate on a staggered basis into October and November, reflecting the agency's anticipated need for wildfire suppression well into the fourth quarter. Longer contract durations like these improve our fleet utilization, give us greater operational visibility and allow us to better plan maintenance and staffing. And we believe they reflect a broader shift toward year round wildfire preparedness among our government partners. We also deployed our most advanced platform, the King Air three fifty under a Department of the Interior task order.

3:01 This aircraft incorporates dual sensor capability and real time data dissemination into a software. As wildfire response becomes increasingly intelligence driven, we believe these aircraft are becoming force multipliers, providing incident commanders with real time situational awareness that improves proactive decision making throughout an incident. Shortly after quarter end, we announced a $58,000,000 contract with the Texas A and M Forest Service to acquire, modify, deliver three King Air three sixty multi mission aircraft over the next three years. Texas is building one of the nation's most advanced state wildfire aviation programs, and we are proud to have been selected to help design and deliver that capability. This contract is a notable example of how our opportunity extends beyond simply operating aircraft into engineering, modification and integrated intelligence work.

3:57 And we believe it represents an attractive new avenue of non seasonal long term growth. Also, following the quarter, we announced a collaboration with Da Vinci's, Europe's leading provider of emergency aerial services, deploying our two newest Super Scoopers in Portugal. We are glad to support one of Europe's most demanding fire seasons in recent history. Commitments there came somewhat later than expected, but consistent with Europe's more cautious approach to long term contracts with private operators. This has been more than offset however by the demand we're seeing here with our US based Super Scoopers. Now let's turn to look at the fire conditions. Fire conditions today accelerated throughout the quarter with above normal activity across multiple regions of the West.

4:45 As of early August, more than 5,500,000 acres have burned across The U. S, while Europe is experiencing one of its most severe wildfire seasons in years. We are currently at a preparedness level of five, the highest level on a national scale, meaning firefighting resources nationally are fully committed. We've even seen international crews mobilized to support US efforts, including more than 60 firefighters from Australia and New Zealand in recent weeks. Current drought conditions and long range forecasts suggest this activity will continue and we expect demand for our services to remain strong through the remainder of the season. Now let me provide a quick update on Ignis. Technology continues to be an important differentiator for Bridger. During the quarter, we expanded Ignis through a strategic partnership with TrackPlus, integrating real time aircraft tracking, mission information and aerial suppression intelligence into a unified operating picture.

5:42 Over time, we believe software and data will become an increasingly valuable complement to our aviation assets. These developments reinforce our conviction that Bridger has an evolving integration into solution that combines aerial suppression, airborne intelligence, engineering expertise and software, not simply an aerial operator. And we believe this diversification can help smooth our revenue and earnings visibility over the long term. This provides a competitive edge to our aviation contracts, increases our utilization while we're deployed and opens the door for standalone use of our software in the field. While the second quarter reflects the seasonal ramp up of our business, the underlying fundamentals remain strong. With demand continuing to build and our fleet fully engaged, we believe Bridger is well positioned and we remain focused on executing our mission with the utmost focus on safety and efficiency.

6:37 I'd like to thank our employees for their continued dedication and vigilance in the field and our government partners and shareholders for their continued trust and support. With that, I'll turn the call back over to Anne to review our financial results in more detail. Thanks, Sam. Bridger continues to execute against significant growth opportunity. And as the business scales, we're focused on ensuring we have the financial infrastructure, processes and discipline to support that growth over the long term.

7:07 As mentioned last quarter, I am focused on continuing to build and strengthen the finance function of the company and to support anticipated growth, especially as we ramp up for new programs with new fleets. With that, let me walk through our second quarter results. Looking at our results for the second quarter of twenty twenty six, revenue was 30,500,000 compared to $30,800,000 in the second quarter of twenty twenty five. While revenue was generally consistent with the prior year period, it's important to note that the prior year quarter benefited from $5,100,000 of nonrecurring return to service work on the Spanish Super Scoopers, which was mostly non contributing to margin compared to $800,000 in the current quarter, a delta of $4,300,000 Excluding this non reoccurring activity, revenue increased 16% year over year, primarily reflecting increased Super Scooper flight hours during the quarter and continued demand for our aerial firefighting services.

8:15 Cost of revenues was $19,200,000 compared to $18,700,000 for the second quarter of twenty twenty five. When excluding the return to service work on the Spanish Scoopers, cost of revenues increased 32%. The increase primarily reflects the operating costs required to support increased fleet utilization during the quarter. It also captures fleet expansion, including sensor modifications to our two new King Air three fifty aircraft and fleet readiness as we entered peak fire season towards the end of June. As a reminder, and given the continued volatility in fuel prices, I'd like to briefly touch on Bridger's exposure to fuel costs. Fuel expense is largely a pass through cost across our portfolio.

9:06 Under all of our Super Scooper fire suppression contracts, fuel is fully reimbursed by the customer while on contract. Across the majority of our light fixed wing contracts, we either benefit from economic price adjustment mechanisms or fuel is similarly treated as a pass through expense. As a result, fluctuations in fuel prices generally have limited impact to on contract flying. Where we do see an impact is across support areas like airfare and other workforce travel and costs for our MRU mobile repair unit diesel trucks that follow our fleet and act as on the ground repair stations when aircraft are not operating at night.

9:52 Selling, general and administrative expenses were $5,300,000 compared to $6,500,000 in the prior year period. The year over year decline was primarily driven by lower noncash expenses, including changes in the fair value of warrants, stock based compensation and contingent consideration. Interest expense for the second quarter was $6,600,000 compared to $5,700,000 in the prior year period, reflecting an additional $25,000,000 drawn for fleet expansion and $10,000,000 in short term borrowings on the credit facility revolver during heavy maintenance periods in Q1 and Q2. For the second quarter of twenty twenty six, we reported a net loss of $500,000 compared to net income of $300,000 in the prior year period.

10:46 As a reminder, our reported earnings per share include the impact of the adjustment to the redemption value of our Series A preferred stock. Loss attributable to common stockholders was $7,600,000 or $0.13 per diluted share compared to a loss of $6,300,000 in the prior year period or $0.12 per diluted share. Adjusted EBITDA was 8,100,000 compared to $10,800,000 in the second quarter of twenty twenty five. A reconciliation of adjusted EBITDA to net income is included in Exhibit A of the earnings release we issued today. Turning to the balance sheet. We ended the second quarter with 7,200,000 of cash and cash equivalents compared to $31,400,000 at year end twenty twenty five.

11:37 The decrease primarily reflects seasonal working capital usage, including the timing of customer receipts, strategic investment in aircraft production slots, continued investment in modernizing our fleet with sensor and other technology capabilities, capital expenditures and continued investment in fleet readiness to support peak fire season operations. As expected, the second quarter represents a period of elevated working capital investment as aircraft are deployed and operations ramp up during the peak fire season. We continue to expect cash generation to improve as the fire season progresses and receivables convert to cash.

12:22 We also continue to maintain significant financial flexibility through our credit facility, including a delayed draw feature of up to $100,000,000 which is designed to support future fleet expansion and capitalize on growing demand for our services. As of June 30, we had approximately $75,000,000 of remaining availability under the facility.

12:46 Turning to our outlook. We are reiterating our full year 2026 guidance of $135,000,000 to $145,000,000 in revenue and 55,000,000 to $60,000,000 in adjusted EBITDA. This represents continued strong growth, including 29% growth in revenue when excluding nonrecurring return to service work recognized in 2025 on the two Spanish Scoopers. As Sam mentioned, our two Spanish Scoopers are flying a shorter than planned summer fire season in Europe, after which we intend to reposition these aircraft to The U. S. For higher value opportunities. The third and fourth Spanish Scoopers are still undergoing return to service work.

13:33 We continue to expect improved operating cash flow generation over the course of the year, driven by increased fleet utilization and higher levels of fire activity during the peak season. As we expand our multi mission fleet midyear,

13:48 we expect the sensor enabled AIR ATT and CK program to contribute to growth in 2026 and support attractive margin expansion in our fleet over time. With that, operator, we are now ready for questions. Thank

14:18 Our first question is from Austin Moeller with Canaccord. Please go ahead. Your line is open. Hi. Good afternoon. You have the lease agreement in place for two scoopers with Portugal. Can you just talk about where we're at, with European negotiations just considering the catastrophic wildfire season there? And could those planes be moved to The USA in October if there's not further progress? Hey, Austin. Good to hear from you. Great question. Yeah. I'll just be candid. The the late pickup of those aircraft on contract is just an indication of the hesitancy for Europe to turn to private operators until things are developing like we see overseas right now.

15:08 That is heavily influencing our decision given the demand we see in our US fleet, for what happens to those aircraft as they finish their work there in Portugal. We did partner with Avinci's to lease those two Avinci's as they operate them. So that was a a great outcome for us just later than anticipated. And we do think there will be continued talks with European countries based on the year they're having, and we think the success they'll see with having these two scoopers in Portugal.

15:39 But for Bridger's internal purposes, we're planning on a move to The US without that commitment with the economics and demand we see here. Okay. And if we think about next year and the overall fleet, is the goal to lock up as many of your scoopers and MMAs as possible into a one hundred and twenty day or longer task order? Absolutely. That's been a a deep part of our strategy, and we've chipped away at that methodically year after year. This year, we look at eight of our nine surveillance aircraft on multiyear guaranteed, commitments. We have four of our six here in The US on guaranteed one hundred and sixty days.

16:24 And that's been a long and, drawn out process of improving that. So we continue to capitalize on that. And I will say given the demand we see, the extensions into Q3 and Q4 with the Forest Service,

16:37 the Department of the Interior, we now consider this to be the norm and something we can continue to move the baseline, for the entire fleet. We also see that the more of those days are guaranteed, the higher flight hours we, see across the fleet because once we're, committed and prepositioned, we're effective for flying in initial and direct attack. And so those two things seem to be symbiotic in our utilization.

17:05 Great. I'll pass it back there. Thank you. Thank you. Thank you for your question. Our next question comes from John Sigman with Stifel. Please go ahead. Your line is open. Hey. Good afternoon, guys. This is actually Sebastian Rivera on for John today. Apologies if I may have missed this in the opening remarks, but can you maybe is there any portion of these recent contracts with Texas A and M, Vinci's and the DOI King Air three fifty baked into this 2026 revenue guide?

17:44 Yes. I will say that, for the Avinci's and for the, the King Air that we have with the Department of the Interior, we anticipated those and had those into our guidance. The Texas A and M, because that's a three year program that starts more towards the end of this year, it's gonna be a slow ramp up, but we don't think it will be impacting our guidance overall. So that's where we're reiterating what we have. The Texas contract is a delivery of three aircraft starting in 2028 actually to the customer.

18:18 And so over the next three years, we recognize milestones with most of those starting effectively in 2027, if that makes sense. And then, yeah, on that Texas contract, can you maybe just walk through the accounting treatment there given it's a little bit different nature contract? Yes. I'll turn that as revenue recognition. Yeah. Yeah. I'll turn this again. Yeah. You're exactly right. So this this will be a different, you know, a different business for us. It's it's modification, so it's more of cost to cost accounting. That's why in 2026, the majority of the work will not be done until 2027. We may, you know, we may place orders for the three King Airs from Textron, and we may receive some cash payments. But as far as recognizing revenue, we anticipate you know, it's it's preliminary to say, but very little to be in this year. And if so, it may not be margin generating revenue.

19:22 Thanks. I'll turn it over. Thank you. Thank you for your question. Our next question is from Mark Smith with Lake Street. Please go ahead. Your line is open. Hi, guys. I wanted to ask a little bit about the guidance here, kind of looking at what we booked year to date in revenue versus reiterated guidance. Can you just walk us through kind of back half ramp, what's already contracted versus kind of dependent on fire activity?

19:52 And what gives you the confidence in holding the guidance range? Hey, Mark. Good to hear from you. I'll take that, then I'll let Anne add a little bit of flavor. So going into this year, last year I'll remind you that we had a below average fire year in terms of overall activity. And we saw some unique fire activity, especially in Q1 with the Palisades fire that made our typical bell curve a little bit different than normal. And then activity kind of dropped off in terms of fires in September and October.

20:27 This year we saw a fairly normal ramp up and we see the activity in Q3 now at an all time high and continued outlooks into Q3. And the commitments that we have that are coupled with that from the Forest Service and the DOI going into q four, which we've never had, is kind of the, shift from a from a one h, you know, to a two h half of the year recognition of the bulk of our revenue, even more so than maybe last year, but

21:05 fairly typical with what we see in Q3 being the bulk of our revenue. And then kind of the last comment I'll make there is, there could be a few days here or there or the fleet flying thirty hours in a day, which we've been seeing across the scooper fleet that could really move the needle a few million bucks, whether it's June 30 or July 1 that we've kind of see that take effect as things got ramped up. And maybe last comment there, we've also seen a little bit of a strategy with our agencies as they've committed later into Q3 and Q4 to making sure that our assets are set for the peak of the season. So as we got deployed, we noticed a little bit of a staggered deployment so that they had the last half of the year covered for fire activity.

21:53 Okay. And then just as we think about revenue coming out of Europe, with this this new contract in in Portugal, can you give us any more insight into maybe how much of an impact that this makes and and maybe how much was, you know, maybe disappointing on a on a late start, to that contract?

22:16 I can speak to it at a high level. I will tell you there's two components to this lease. We are leasing not by month, but also by hours. And as we've seen, even the headlines from Europe hitting over here that they they are having a very active fire season. So there is a variability to that contract as well. So I can't, you know, I can't say for sure how much we will make up. I, you know, I can say that we did miss in q two, in our internal estimates just when we thought Europe would pick up. Kind of what Sam has said, though, between The US flying more than a fire season like last year as well as Europe potentially flying these harder than we we are anticipating now, there is room to, you know, make up all of that gap that we have and and then some.

23:11 Okay. And and then I did just wanna confirm. It sounds like the the plan is still, to to roll these two planes, into The US, after the season's done? Yeah. That's currently the plan, Mark. Obviously, we have to see what materializes overseas, especially, what we hope is the commitment is now there, for unfortunately the terrible headlines we see on the activity. But I will tell you with the economics and the utilization demand here in The US, until that commitment materializes in a in a like for like comparison, the plan is to finish out the fire season and begin to move those over to The US. Thank you, guys.

24:00 Thanks, Mark. Thank you for your question. At this time, there are no further questions. I will now turn the call back to Sam Davis for closing comments. Thank you again for joining us today and your interest in Bridger. Please reach out to our Investor Relations team with any questions, and we'll be participating in a fireside chat at the Canaccord Growth Conference in Boston next week for any interested investors. Have a great day. Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.