Bridger Aerospace Group Holdings, Inc. (BAER) Earnings Call Transcript & Summary

Hi. Good morning, everyone. My name is Austin Moeller. I'm one of the sustainability analysts here at Canaccord Genuity. Today, we are joined by Peter Platzer, the CEO of Spire Global; and McAndrew Rudisill, the CIO of Bridger Aerospace, and we have a very exciting topic today. We're going to be talking about extreme weather events and the technology and equipment that's out there available to surveil it and provide that data to major stakeholders. So I'll just start with Peter, if you'd like for those in the audience who aren't familiar, just give a brief overview of Spire.

Absolutely Austin. It's a pleasure to be here on this important subject. My name is Peter Platzer. I am the CEO of Spire Global, a satellite-based global observation company operating one of the world's largest satellite constellation, collecting weather data and other data all across the world, over 100x covering the earth, selling it to both commercial and government customers. We're operational now for over a decade and went public about 2.5 years ago.

Excellent. And McAndrew, if you could just give everyone a brief overview here of Bridger Aerospace.

Sure, Austin. This is McAndrew Rudisill, I'm the Chief Investment Officer of Bridger Aerospace. And Bridger is the largest provider of wildfire suppression services globally at this point. We also have a large fleet of aerial surveillance assets that surveil wildfires in the U.S., and we're in the midst of an expansion into Europe right now with our fleet of Super Scoopers and have continued to grow our fleet surveillance aircraft in the U.S.

Excellent. So I think the most important question to start off with here is how important is it for governments and major enterprise stakeholders to collect real-time intelligence on the weather and extreme natural disaster events? And Peter, you're welcome to start.

Sure. Absolutely. My pleasure. Well, I think it's a reasonably straightforward question. So I think it's probably also fair to say that McAndrew and I were probably a little bit biased here and based on what we see from our customers. But I would argue that it is incredibly important. And more importantly, it is getting more important by the day. About 1/3 of the global economy is impacted by the weather, which is a number that is increasing and the large portion of that impact has to do increasingly with extreme weather events. So what we're seeing is, is that portion of the global GDP, some tens of trillions of dollars who stakeholders are responsible for managing that are increasingly aware and increasingly eager to collect information, not just on -- from a real-time basis of what is happening with right now, but even more importantly, having powerful predictions about what is going to happen and what they should be doing given what has been happening in the past, what is happening right now and what will be happening most likely in the future.

I agree with everything that Peter just said. And from what we've seen all around the world is that there's a very large demand from governments to understand what's going on, on a real-time basis, particularly with wildfires. And we're seeing a larger demand from insurance companies around the world recently as well to understand how wildfires are affecting the assets that they insure. And that's resulted in just a need for a lot more real-time surveillance. And obviously, we're doing it with aircraft and Peter is doing it with satellites. But the impacts from all these natural disasters caused billions of dollars of damage on an annual basis. And it's just something that you have to get ahead of with real-time information.

Excellent. And so just to follow up on that point, in recent years, how has climate change impacted the -- from what you've seen, the frequency and severity of wildfires, droughts, hurricanes, flooding and other weather emergencies based on the data you've collected and provided to key customers?

I'll start with the wildfires and I'll pass the torch to Peter on everything else. But from what we've seen on the wildfire front on all of the collection data that we've done over the last 10 years is -- unfortunately, the number of acres burned and the number of wildfires per year in the Northern and Southern hemispheres, has continued to go up into the right on an annual basis every single year. Climate change has caused wider variability in the amount of moisture in the atmosphere, in both the Northern and Southern hemispheres, which is -- it causes large changes in the aridity of all the forests, but the general trend is that the forest lands are becoming more aired as you head further North towards the North Pole and the Southern Poles. And what that's resulted in is, what you saw last year, huge forest fires in Canada. You've seen large forest fires all throughout Europe and Central Asia. And we just -- we don't see that trend really changing anywhere at this point in time.

Yes. I mean I can only add to that. I want to make a preface is that I'm just a high-energy and fusion physicist and space scientist. I'm not a climatologist. So I'm going to approach this from like the fact that I have seen and that I have been informed of, burn area, I think, has increased fivefold over the last 5 decades. We do a lot of work on hurricanes and tracking them and predicting where they will go. And the frequency of those has doubled over the last 100 years. As a matter of fact, the last 20 years have been 250% more often abnormally high, seen hurricane activity than the prior 50 years combined. So I think it's -- whatever is causing it, a true fact seems to be that extreme weather events are getting more frequent, more extreme, in more areas of the world. And as McAndrew has said, also far more variants so that harder to predict unless you capture substantially more data, substantially more information and really put your focus on this, causing massive disruption for communities, corporations and countries literally all across the globe.

It's definitely very concerning. So just on that point about data, and the collection of the data, what government agencies and key customers are primarily issuing contracts to you for your surveillance and remote sensing data and services around weather and wildfire conditions? And Peter, you're welcome to start.

Yes. If I maybe jump in with that one. We've seen it, of course, a lot from the civil agencies. So the national space agencies across the world, be that in Europe, the European Space Agency or the U.K. Space Agency, you have the Luxembourg Space Agency, or, of course, NASA in the U.S. We've also seen it increasingly from those weather institutes, be that NOAA in the U.S., be that in the U.K. Met Office, be that EUMETSAT in Europe and other places across the world. So those that are really charged with the protection of life and property. But then it reaches much, much further. And I think McAndrew is going to have a very, very good feel on that as well. As more local and specific agencies are also increasingly highly interested in this type of data, in this kind of predictions to protect their communities. And as you said, it is not just the government agencies. We have seen a tremendous increase on the commercial side as well, as more and more corporations lean into managing that extreme weather event risk for themselves and for their operations. More proactively and diminish the bottom line impact that those events have.

I'll echo what Peter said and specific to Bridger. I mean in terms of the government agencies that work with us on a contracting basis, it's all the land management agencies basically all around the world that are interested in working with us. On surveillance as well as suppression and the U.S. Forest Service and the Department of Interior are the largest customers in the United States, all the provincial governments in Canada, most of the European governments and their prior management agencies are customers of Bridger. So it's really -- the focus has been primarily that federal government customer all around the world, and we've more recently started to see almost all the states in the United States that have fire activity, our direct customers. And more recently, we've been seeing municipal agencies that have specific fire issues and surveillance needs come to us as potential customers. So the depth of the market, I think, for surveillance is highly global, but it's going down to a local level of the need for the data.

And McAndrew, you mentioned the government customers, but I think earlier, right at the intro, you mentioned that you started to hear from insurance companies as well, right? Are those some of the examples of enterprise customers or...

Yes. I mean, I think the best example to give is you look at coastal communities all throughout the Western United States. There's a lot of high dollar value homes all along the coast. You look at all the Rocky Mountain communities where a lot of homes have been built over the last couple of decades, and the insurance companies have hundreds of billions of dollars of exposure to all these assets, and they're very interested in understanding what's going on, on a real-time basis and what can be done to help their customers out and what changes have been occurring over time around where they're insuring these assets. And I think it's one of the obvious reasons why you're seeing wildfire insurance rates just go up on an annual basis every single year.

That's a great point. Peter, can you talk about Spire's business relationship with OroraTech and the satellites that have been built for them within the space services business?

Yes, 100%. So one of the things that we're really excited about is allowing more and more companies to leverage the deep infrastructure experience and expertise and IP of Spire to deploy their sensors rapidly, cost effectively and build their business. And OroraTech is a brilliant company that has developed a space-based census for wildfire detection and then additional modeling on top of that data to help with wildfire management and prediction and detection. And that really complements well with the weather prediction capabilities of Spire as well as some of the other modalities from Spire satellites, like, for example, soil moisture and that has a huge impact there as well. And so OroraTech leverage the space infrastructure by providing their sensor to Spire who then takes care of the integration of that sensor into a spacecraft, the launch, the licensing, the operation of that sensor and then provides OroraTech with a simple API that gives them full control over the sensor and the full data stream that they then can either further process or sell to their customers, either directly or in combination with other data sets, like, for example, the weather prediction data sets of Spire. And it's just one of a number of customers that are tackling extreme weather events and general environmental concerns, leveraging the Spire infrastructure for deploying their capabilities and their business model rapidly and cost effectively.

Excellent. So would you describe that as part of the portfolio of the picks and shovels model within space services and how you're able to provide multiple capabilities, modalities, different customers?

That's 100% correct. It's a very typical application. I think it's an application that is very, very dear to our heart. As you know, Spire was founded on the belief and the mission to tackle 2 generational challenges that we believe will be facing humanity in the century, global security, another 1 being climate change, and that is something that we share with OroraTech from a mission perspective, very, very deeply as well as a number of other companies that as you trademark, Austin Moeller, picks and shovel from our space services, use that to deploy their business model.

Awesome. That's really exciting. McAndrew, can you go into detail about the types of aircraft that you're using in your fleet for surveillance of the wildfires versus suppression of the wildfires? And then on the surveillance side, the types of sensors you host on board for detection.

Sure, I'm going to share a screen because it's going to be a lot easier to look at some pictures real quickly to go over these assets. So if everyone can see that, the first line we're looking at here is the CL-415 super scooper. It's a purpose-built aircraft that we have 6 of in the U.S., and we're retrofitting 4 of them in Europe through our partnership with Marathon and Avenue. And these are the most effective aircraft at putting out fires in the world. It's an old technology, but it's got brand-new engines, brand new avionics. It can fly 8 hours a day, drop 100,000 gallons a day. Land on the surface of a lake for just a couple of seconds and then continue to keep putting water on the fire for the entirety of a day. So when these things operate as a fleet, they're very effective assets at putting large fires out pretty quickly. And we've helped shift a lot of the federal agencies into this initial attack mode of using these assets to get these fires out fast. On the surveillance side of the equation, we have a very specific aircraft that we've custom modified. It's PC-12 but it's got electro optic sensor packages on it that provide extremely high resolution, infrared imaging, real-time full motion video and Internet downlink of all the data that's processed on board with its own workstation. And what it allows us to do is see wildfires and heat signatures in real time up to 40 nautical miles. We've got 2 of these flying for the Department of Interior on a long-term contract. And then we've got quite a backlog building now of interest for more of these MMA assets around the U.S. and in Europe. And here are a couple of pictures of kind of what you can see with these planes. And you can see, obviously, why it's so important. You can use them to pick up the heat signatures before fires become too big. You can see gas leaks with these planes, and then you can use them to direct the traffic over fire so that we can actually direct where the scoopers can most effectively put out the front side of the fires. So this is a brand-new asset. It took us about 2 years to develop. We use technology that we built and developed at a said vision and have now integrated these into the aircraft. And as I said, I think there's demand for this asset all around the world. I'm going to [ stop ] share with that.

Yes, that's really cool. Great to see all the different optical instruments on there. Peter, can you talk about -- actually, we have an announcement today that you just completed a successful launch with North Star. So I figured you utilized the opportunity just to talk about that briefly.

Yes. I mean another very, very important environment is, of course, space. I do admit that it is dear to our heart as one of the big global comments and monitoring space and the activities that are happening in space or as it's called space situation awareness is becoming a big task. But again, thankfully, you're seeing a lot of increased interest across the world and North Star, similar to OroraTech is using Spire's platforms, Spire's bias picks and shovels to deploy their capabilities rapidly and effectively. So they have sensors and analytics capabilities to monitor activity on orbit, space situation awareness and they are deploying them on this fire infrastructure. And thanks to a great collaboration with Rocket Lab today, these assets were launched into orbit successfully and we'll start deploying and offering their service very, very quickly here to both commercial and governmental customers from all across the world.

Excellent. Just back to McAndrew, can you talk a little bit more about the Super Scoopers from the perspective of those assets being portable and how you can move them to other geographies depending on where the fire season has the most demand?

Sure. I mean, Austin, last summer was a really good example. The fire started early in Nova Scotia. I know you're in New York a lot and the skies of New York in early June were covered in smoke and people all over the world saw that. While that was going on, our planes were in Nova Scotia fighting those fires. And then as they progress, we moved them into Quebec ended up fighting fires all the way across Canada throughout the course of the summer, ended up in British Columbia for a large part of the summer and then move back into the United States. And we haven't yet taken them over the Atlantic or over the Pacific, only because we have long-term contracts that dictate that we should -- we need to keep them in the U.S. and North America during the fire season here, but we have a whole separate feet of fleet scoopers that we're now working on to contract it in the EU. So the easy answer is they're very portable because they're planes, but most of the customers want to keep them in one place for the duration of the fire season.

And is it hard if you wanted to, to move some of the North American planes over to Europe? Does that just require a few stops for refuel or...

Yes, it will require about 3 stops. We can get them over going the northern route. We can get them to Europe. Getting them to Australia, where there's a lot of wildfires is a lot more complicated. You got to do a lot of island hopping and we've had a lot of inquiry from South America as well. And that's a little simpler because you can fly down the Spire of South America as you refuel, but I mean, they're globally portable assets.

Yes, that's really cool. Peter, if we talk about the LEMUR constellation and everyone can see the satellite they're behind you in low Earth orbit. But how can onboard processing and AI help your constellation and your software to more rapidly predict, attack and model inclement weather activity as it happens over time?

I think that there is a very, very big application. And one of the reasons that Spire, I believe, was the first company to deploy a supercomputer and one also particularly geared to its AI and machine learning and deep learning models into orbit a number of years ago. Because what it allows you to do is that spacecraft that collect massive amounts of data rather than having then to send them down, which trace already some latency and then do some processing on the ground, the spacecraft can actually on orbit directly analyze the data and then make decisions. For example, informing our customers on the ground directly about what is happening or what might be a potentially advisable course of action. And that capability of onboard processing gets them augmented when you start to connect spacecraft through inter-satellite links so that multiple streams of data and multiple collection points can be combined into one analysis on the ground. So you're really replicating the data center on the ground that is collecting data for multiple assets and then coming up with an analysis. You're replicating it on orbit, taking away the whole latency of sending the data down to the ground and doing it right on orbit. Decreasing the demand on your data downlink, which means you can download information and decision support right away and potentially download it right away to the area in demand. So for example, you could put something right next to a customer as in the case for OroraTech, I believe, there's download capabilities at close or at very, very important customer sites to take the data directly to them so that they can operate faster.

And McAndrew, can you talk a little bit about Bridger's fire track app and how people are able to use that to get real-time data?

Yes, I'm going to share my screen again here because we recently acquired Ignis Technologies in the fall of last year, and it's going to be a lot easier to just show you kind of how Ignis works. Ignis is a mobile application that allows firefighters in the field to see the real-time information that we're collecting with our aircraft as well as processing some satellite inventory. And the technology they're using today is really the same technology they've been using for the last 20 years. They get a printed packet of PDF paper every day, which is the fire information from days before they're communicating on analog radios, and they're looking at basic weather applications that everyone has access to. And so what we've developed is an application that allows a real-time incident dashboard with all the information for a fire, all the radio frequencies, all the different aircraft, everyone who's on a fire can have access to this information in one place which speeds up the information transfer dramatically. You've got dynamic real-time maps and then all of the information that we've collected is then put into this map, into an integrated map. So they've got real-time imagery to then be able to make decisions about the fire and communicate as a group together. So a lot of different types of customers are now interested in using this. I mean, municipal fire agencies, federal firefighting agencies, all the different organizations that manage disaster response, what we're seeing is a collective integration of all this information across all the various agencies in the United States have a use for this particular technology. So that is what we've built with our fire track Ignis application, and it's in the process of being rolled out right now to various fire management organizations in the U.S.