Sheehy’s firefighting company’s annual report shows business faces financial challenges

In the nearly 10 months since Tim Sheehy formally launched his campaign to try to unseat U.S. Sen. Jon Tester in Montana, the first-time politician has consistently touted his business bonafides and opposition to what he has referred to as the “climate cult” as reasons voters should send him to Washington over the three-term senator from Big Sandy.

But the annual report filed in March to the U.S. Securities and Exchange Commission for Bridger Aerospace, Sheehy’s aerial firefighting and surveillance company he founded in 2014, shows the company has concerns about how climate change is affecting the world and its business, and that the business faces challenges this year in paying its debt obligations and staying solvent.

The Montana Free Press first reported details of the company’s SEC 10-K filing earlier this month.

Sheehy has already loaned his campaign $1.4 million out of the $8.4 million he’s received so far, but the Republican faces one of the top fundraisers in all of Congress in Tester, a Democrat who brought in $8 million in the first quarter of the year alone, a record for the quarter, and has raised $33 million during the cycle.

In October, Sheehy reported in his personal finance disclosure that he makes about $7 million a year in non-investment income, including a $5 million salary from Bridger Aerospace, and that he is worth tens of millions of dollars due to investments.

As a political newcomer who was picked by the National Republican Senatorial Committee led by Montana’s U.S. Sen. Steve Daines and quickly endorsed by top Montana Republicans, Sheehy has utilized his company to market himself to Montanans as a veteran who hired veterans and built a successful business.

On several occasions, Sheehy has touted his businessman credentials to criticize Tester and President Joe Biden. He says on his website that as a business owner, he knows what it’s like to balance a checkbook – something he claims Washington politicians are failing to do.

“Progressive career politicians like @JoeBiden & @jontester have made it harder and harder to raise a family and achieve the American Dream,” he posted on social media in November. “We need conservative outsiders with business experience to get this country back on track and restore the American Dream.”

Sheehy took Bridger Aerospace public in January last year, and its earnings report, finalized on March 20, provides new insight into Sheehy’s business dealings and how he went from securing a $160 million “environmental, social, and governance” bond to expand the company in 2022 to deriding what he has called “the climate cult and their job-killing agenda” after being picked to run.

But the filing also shows the company lost more money than it made last year, risks being unable to repay its debts this year, and undertook cost-cutting measures in late 2023 to try and right the ship.

“Our liquidity position raises substantial doubt about our ability to continue as a going concern,” the company said in the report in a section detailing its risks. “We have incurred significant losses since inception, and we may not be able to achieve, maintain or increase profitability or positive cash flow.”

In response to questions sent to Sheehy’s campaign and the company regarding the filing and his stance on climate change, a spokesperson for his campaign issued the following statement:

“Sheehy founded Bridger Aerospace in his barn with all his savings and an all-veteran team, which heavily drew on Montana’s veteran community and land grant universities to create over 200 Montana jobs, become one of only a few publicly traded companies in Montana, and, most importantly, protect our communities from devastating wildfires,” the spokesperson said.

“Tim’s mission-oriented service as a Navy SEAL, job-creator, and aerial firefighter is a Montana success story that’s celebrated by Montanans but is now being questioned and attacked by cogs in the liberal propaganda machine because Tim Sheehy is a Republican running for office.”

Company’s SEC filing shows concerns about cash, debt servicing

Federal and state government contracts accounted for 88% of Bridger Aerospace’s revenue in 2023 and 99% of its revenue in 2022, according to the report.

It reported $67 million in revenue for 2023, a record haul for the company in what was one of the slowest firefighting years in recent history and a 44% increase over 2022. But it also reported a net loss of $77 million – up from the $42 million loss the company reported a year earlier.

The report says the company has about $35 million in total current assets but only $23 million of that is cash or cash equivalents, compared to about $25 million in current liabilities and $204 million in long-term debt.

For 2022, the company reported $106 million in assets, $30 million of which was cash, along with $24 million in current liabilities and $205 million in long-term debt.

In July and August 2022, Bridger Aerospace worked with Gallatin County to update an agreement to issue $160 million in industrial revenue bonds so the company could build two new hangars at Gallatin Field in Belgrade and buy four new “SuperScooper” firefighting airplanes to bring its fleet to six.

When the financial services firm D.A. Davidson priced and closed on the bonds, the firm promoted the deal as “one of the largest taxable non-rated municipal ESG bonds in the nation,” and Sheehy said in a statement that Bridger shared those same principles with the firm.

“Teaming up with a like-minded partner like D.A. Davidson that not only shares our fundamental business principles of environmental and social sustainability but provides the financing solutions we require, will position us well to effectively combat today’s changing climate,” Sheehy said at the time, according to a news release.

In order to receive industrial revenue bond proceeds, a government entity has to act as a conduit for the company seeking the funding but bears no financial liability in the event the company cannot repay the bonds on time.

But the agreements carry financial covenants that require Bridger to keep a certain debt service coverage ratio that shows the company has enough cash to pay back its debts, and to have, at minimum, $8 million in unrestricted cash at all times.

Failing to meet those requirements, according to the SEC filing, could force the company to have to hire an independent consultant to try to fix the company’s financial operations or risk a default. The company could also have to pay its debts back faster than it would have otherwise.

Bridger was out of compliance with the required debt service coverage ratio at the end of 2023, and the filing says company management does not believe it will come into compliance during the course of 2024, citing firefighting being primarily a seasonal business and the lack of fires to work in 2023.

It was compliant with the requirement that the company have $8 million in unrestricted cash, but company management said based on its financial projections and an interest payment on the bonds coming due, it might fall out of compliance on that as well.

“Based on projected cash use, management anticipates that without additional cash funding the company will not have sufficient cash on hand to comply with the minimum liquidity covenant or to fund operations, including $18.4 million of required interest payments associated with the Series 2022 Bonds, within the next 12 months, or until the company begins to collect cash from its seasonal firefighting operations in 2024,” the SEC filing, called a 10-K, says.

The filing says the company “identified material weaknesses in our internal control over financial reporting,” which it is focused on fixing.

The company in November worked with a bond counsel to develop and implement what the filing calls a “cost reduction plan” to try to get ahead of the expected violations of the covenants, but uncertainty remains about whether the company would be able to adhere to the plans that would go into effect in the event of violations. Bridger reported having 148 employees at the end of 2023 compared to 166 employees at the end of 2022.

The filing says if the company cannot adhere to the remediation plans, it faces a risk the bonds become immediately due, which would raise “substantial doubt” about the company’s future operations.

The company’s auditor from an Atlanta-based firm echoed similar sentiments in its opinion of the filing: “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.”

In a news release announcing the earnings report, however, the company said it believes it will have a better year than it did last year due in part to a more active fire season.

It said it expects revenue to be from $70 million to $86 million and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to be between $35 million and $51 million. The company’s adjusted EBITDA for 2023 was $18.7 million.

“This fleet growth, a lean cost structure as well as the earliest deployment in the company’s history has us well positioned for 2024,” Sheehy said in a statement in late March in conjunction with the company’s announcement of its filing.

Bridger Aerospace did not respond to multiple emails posing questions about the filing, the company’s stance on climate change, and its efforts to reduce overhead costs and ensure it can make its required payments this year.

Sheehy used to laud fight against climate change, now talks about ‘climate cult’

Since announcing his run for Senate last summer, Sheehy has not been putting his full attention toward the company nor working full-time, but “continues to spend significant time with Bridger and remain highly active in our management,” according to the filing.

But it says that one risk the company faces is that if he should win the election in November, he would have to resign as CEO and a director of the company because of Senate ethics rules.

“The loss of Mr. Sheehy as an officer and director of the Company would 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 filing says.

It also shows discrepancies between what Sheehy has said publicly as a candidate about environmental issues and climate change and what he has said in the past.

During his run for office, Sheehy has referenced what he calls the “climate cult” on multiple occasions. After a Lewis and Clark County District Court judge handed down her decision last August siding with the youth plaintiffs in the historic Held vs. Montana climate change case that the state was violating their right to a clean and healthful environment, Sheehy criticized the judge, saying she was “trying to legislate radical Green New Deal disastrous policies from the bench.”

“We must fight back and take a strong stand against the climate cult and their job-killing agenda,” he said in a social media post.

In September, he highlighted in an appearance on Fox News that the Pentagon was discussing declaring climate change to be a national security threat around the same time the Biden administration was pulling troops out of Afghanistan.

“The fact that we were paying for drag queen story time and climate change initiatives when we were losing our nation’s longest war, which was in response to the deadliest attack on American soil in history, was disgraceful,” Sheehy said.

The same month, he said Biden was “bending the knee to the climate cult again” when the administration canceled oil and gas leases in the Arctic National Wildlife Refuge in Alaska.

He also called Tester a member of the “climate cult,” although Tester said he was “bitterly disappointed” when the Keystone XL pipeline project was terminated. He referred to then-U.S. climate envoy John Kerry in December as the “Supreme Leader of the Climate Cult.”

But just months before announcing his campaign, Sheehy and his business consistently mentioned climate change as being a key part of Bridger’s growth. In a January 2023 interview about taking Bridger publicly, he said that demand for the company’s aerial firefighting capabilities was “skyrocketing,” in part because of how quickly fires had been getting larger and more threatening in populated areas.

“The wildfire crisis is really spreading globally,” Sheehy said. “As we see the effects of climate change and urbanization along the wildland urban interface, we’re seeing fires become larger; they move faster; they’re hotter. And most importantly, it’s becoming more and more critical to combat them early because of the amount of settlement we have in wildfire-prone areas.”

And as ABC News first reported last July, Bridger quietly scrubbed references to fighting climate change and supporting environmental, social and corporate governance from its website in the months before he announced his candidacy. The front page of the company’s website said the company was “fighting on the front lines of climate change” and parts of its mission involved using “sustainable and environmentally safe firefighting methods.”

Despite those changes, Bridger’s 10-K filings changed little in terms of the risks climate change poses to the company itself. The filings for 2022 and 2023 include sections acknowledging that the U.S. Environmental Protection Agency and “multiple studies” have found climate change is increasing the length of the wildfire season, the frequency fires occur, and the amount of land they burn, and that those issues will be exacerbated by rising global temperatures and more carbon emissions.

“Amid raging wildfires and changing climate, we use sustainable and environmentally friendly firefighting methods,” the filings also say. “By sourcing water near the fire for our fire suppression services, we minimize harm to the local water system by keeping water in the local ecology and reducing flight time between scoops and drops.”

Sheehy said in a written statement that he stands by what he has said in more recent months.

“The climate has always been changing, but the Leftist Climate Cult agenda is not about the environment, it’s about control,” Sheehy said. “We must stand strong against the radical climate cult agenda that senselessly kills Montana jobs, weakens our economy, crushes business, and strips Montanans of their freedoms by weaponizing ESG.”

But the company notes in the filing the inextricable ties between its business and climate change, and how if climate change is truly causing warmer global temperatures and leading to increased wildfire activity and severity, Bridger Aerospace would likely stand to benefit financially and put the business back on better footing.

Despite scrutiny, recent polls show close race with Tester

While he has faced ongoing scrutiny as a newcomer, including over what he says is a lie he told a Glacier National Park ranger about a gunshot wound to his arm, Montana’s changing political landscape and Trump’s early endorsement of Sheehy in the race, along with the early backing of the NRSC, mean he should have a leg up.

Trump defeated Joe Biden in 2020 in Montana by 16 percentage points, and citizens elected Republicans to every statewide office that year. Two years later, voters elected a Republican supermajority to the legislature. Trump is currently leading Biden in Montana polling for 2024 by 21 percentage points.

But Tester is widely known in Montana, having served in the legislature from 1999 to 2007, including as Senate President. He’s since defeated the sitting Republican U.S. senator, a Republican Montana Congressman, and the Republican State Auditor in his three U.S. Senate elections. 

Tester is also a formidable fundraiser and campaigner, having led the Democratic Senatorial Campaign Committee from 2015-2017, when Democrats picked up two seats in the Senate. He is also savvy with independents and Republicans, having run an ad in 2018 touting that Trump had signed 13 of his bills into law and taking out full-page ads in papers across the state when Trump came to visit.

But Sheehy’s campaign and the NRSC point to recent polls showing Sheehy has made up ground in polling since October and is now narrowly leading or statistically tied with Tester. They say that shows his messaging is resounding with Montanans, and Daines said he and the NRSC have found their right man.

“We fully support Tim Sheehy and so will a majority of Montanans,” Daines said in a statement. “Tim honorably served our country in uniform and then started multiple successful businesses in Montana. Tim Sheehy is currently leading Jon Tester in the polls because Montanans strongly disagree with Jon’s votes for the Biden agenda.”