Bridger Aerospace, the Gallatin County-based aerial firefighting company founded by Republican U.S. Senate hopeful Tim Sheehy, announced a record-high annual revenue of almost $67 million when it released its 2023 earnings report last month.
But the annual report the publicly traded company filed with the U.S. Securities and Exchange Commission also shows that Bridger is deeply in debt, hemorrhaging cash and at risk of failing to meet its financial obligations in the coming year.
“The Company has suffered recurring losses from operations, operating cash flow deficits, debt covenant violations, and insufficient liquidity to fund its operations that raise substantial doubt about its ability to continue as a going concern,” Bridger’s auditor said in a note to stockholders and the board of directors.
Or, as University of Montana accounting professor Terri Herron put it in an interview with Montana Free Press: “Management concluded that they may not be around in a year.”
That’s in part because Bridger reported a net loss of $77.4 million in 2023, a hole more than $30 million deeper than the previous year, according to its annual filing. The company’s current assets total about $45 million — only about $23 million of which is in the form of unrestricted cash or cash equivalents — down from $107 million the year before.
Of course, growing a company costs money, and the company’s operational expenses also increased in 2023 as it purchased new aircraft through a joint venture partnership in Spain. It reports that its adjusted EBITDA — a figure that attempts to show a normalized version of a company’s cash position without one-time or other irregular expenditures — is slated to grow by 80% in the next year. Federal and state contracts were responsible for about 88% of the company’s total revenue in 2023.
“The Spanish transaction took multiple years to execute and positions the Company to meaningfully expand our Scooper fleet, providing growth for years to come,” Sheehy said in a note to investors, adding that Bridger is “well positioned for 2024.”
But “well-positioned” is a subjective judgment. More material is the fact that Bridger is at risk of violating financial agreements enacted as a result of a $160 million municipal bond agreement with Gallatin County, which was used to finance hangar expansion and to purchase additional aircraft.
That bond, which brought the company’s long-term indebtedness to $204.6 million, came with a number of covenants, including that Bridger maintain a debt service coverage ratio — a figure that represents a firm’s ability to pay debt obligations with cash — above a certain level and that it have a minimum liquidity of at least $8 million in unrestricted cash.
The company’s management reported in the annual filing that Bridger is not in compliance with the debt service ratio covenant and likely won’t be at any point in the next 12 months. And while Bridger has more than $8 million on hand, management predicted that won’t be the case moving forward, in part because of forthcoming interest payments of $18.4 million.
Failure to comply with the bond covenants may mean the company will be required to ask a consultant to review its operations, according to the annual filing. In some instances, it could mean the company would default on the loan or have to pay it back ahead of schedule.
“From the looks of it, they’re investing in airplanes and contracts to be able to provide firefighting services, but they’re still burning through cash,” Herron, the UM professor, said.
The company attributed its poor performance in 2023 to, among other factors, that summer’s relatively mild and brief wildfire season.
Somewhere between a fifth and a quarter of publicly traded companies get a “going concern” report as Bridger did, Herron said. Of particular note in Bridger’s report, she said, is the phrase “substantial doubt about its ability to continue as a going concern.” According to federal accounting standards, that means that it’s more likely than not that the entity won’t be able to meet its financial obligations in the coming year. Management is thus required to develop a plan to right the ship and is subject to inspection by auditors, she said.
The company said in the report that it began cutting costs in November 2023. By the end of 2023, the company reported a staff of 148, down from 166 the year before, though it’s not clear whether the staffing reduction is related to the cost-cutting measures.
Regardless, management said in the report that the cost-reduction plan “is in progress” but “there is no assurance that management will be able to diligently prosecute the remediation plan to completion.”
The filing continued: “The uncertainty regarding the company’s ability to diligently prosecute the remediation plan to completion and the potential impact on the bonds maturity … raises substantial doubt about our ability to continue as a going concern as of the date our financial statements are issued.”
Sheehy, the GOP’s top pick to take on Democratic U.S. Sen. Jon Tester this cycle, founded Bridger Aerospace in 2014, shortly after leaving the Navy. On the campaign trail, the multimillionaire has presented himself as a bootstrapping entrepreneur who built a successful company from the ground up, even as he’s admitted to taking financial assistance from his family. And the company is a big part of his campaign image — Sheehy is frequently pictured in a hangar or in front of planes in materials on his campaign website and in other forums.
Bridger went public in January 2023, allowing the public access to greater detail about the company’s finances.
According to the annual filing, called a 10-K, Sheehy “continues to spend significant time with Bridger and remain highly active in our management during his candidacy…,” but he has not devoted his full time and attention to the company. Incidentally, the fact Sheehy is campaigning for the Senate creates some risk for Bridger, the report notes, including the possibility of bad publicity and that if he wins, he will be required to resign as an officer and director of the company.
“The loss of Mr. Sheehy as an officer and director of the Company could adversely affect our business because this could make it more difficult to, among other things, compete with other market participants, manage our operations, execute our growth strategy and retain existing customers or cultivate new ones,” the report reads.
A spokesperson for Sheehy’s campaign referred a number of questions — including why voters should trust Sheehy with their tax dollars if he can’t keep his company in the black and whether he would continue to take a salary — to Bridger.
“The quickest way to balance the budget is if you’re in Congress and you don’t have a balanced budget passed by a certain date, you don’t get a paycheck,” Sheehy told the audience at a campaign stop in Frenchtown last month, according to NBC Montana. “I’m a business owner. If my business isn’t doing well, I don’t get paid. My employees do, but I don’t.”
Outside of its immediate financial situation, the company also reported that it identified multiple “material weaknesses” in its internal financial reports. These weaknesses can cast doubt on the validity of a company’s financial statements, Herron said.
A spokesperson for Bridger said any responses the company would be able to provide to questions from MTFP are in the company’s public filings.
“Bridger Aerospace has been a fast-growing company and the leadership team is proud of its accomplishments, and it looks forward to furthering our critical mission to save lives, preserve our environment, and protect the people and communities that are impacted by the growing wildfire crises in Montana and throughout the country,” the spokesperson said.
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