BAER

• Wildfire Preparation and Demand: Management entered 2026 focused on preparing the fleet, technology, and workforce for another active wildfire season, and preparation has translated to strong on-the-ground execution. As of early August 2026, over 5.5 million acres have burned in the U.S., national preparedness is at the highest level (Level 5), and Europe is experiencing one of its most severe wildfire seasons on record. Current drought and long-term forecasts indicate strong demand will continue through the remainder of the 2026 fire season.
• Contract Wins and Operational Updates: The U.S. Forest Service awarded two 160-day task orders covering four Super Scoopers, the longest guaranteed task orders in the company's history, activating staggered through Q4 2026. The company deployed its advanced King Air 350 under a Department of the Interior task order, adding dual sensor and real-time data capability. Shortly after quarter-end, the company won a $58 million three-year contract with Texas A&M Forest Service to acquire, modify, and deliver three King Air 360 multi-mission aircraft. The company also entered a collaboration with Avinci to deploy two new Super Scoopers in Portugal for the 2026 European fire season, with commitments finalized later than expected.
• Technology and Business Diversification: Management continues to expand its IGNIS intelligence platform, recently adding a strategic partnership with TRAC+ to unify real-time aircraft tracking, mission data, and suppression intelligence. The company is evolving from a pure aerial firefighting operator to an integrated solutions provider combining aerial suppression, airborne intelligence, engineering expertise, and software. This diversification is expected to smooth long-term revenue and earnings visibility, improve competitive positioning for aviation contracts, and open new standalone software revenue opportunities.

• Management reiterated its full-year 2026 guidance, maintaining the revenue range of $135 million to $145 million and adjusted EBITDA range of $55 million to $60 million.
• Excluding 2025's non-recurring Spanish Super Scooper return-to-service work, the guidance represents 29% year-over-year revenue growth.
• Management expects operating cash flow generation to improve over the course of 2026, driven by higher fleet utilization and elevated peak-season fire activity, consistent with the seasonal nature of the business.
• The $58 million Texas A&M contract will ramp up slowly starting in late 2026, with most revenue recognition beginning in 2027 and the final aircraft delivery in 2028, so it does not meaningfully impact 2026 guidance.

The company does not break out performance across separate product segments in this call. Aggregate Q2 2026 total revenue was $30.5 million, flat year-over-year compared to $30.8 million in Q2 2025. Excluding $5.1 million in non-recurring 2025 return-to-service work on Spanish Super Scoopers, revenue grew 16% year-over-year. Cost of revenues was $19.2 million in Q2 2026 vs. $18.7 million in Q2 2025; excluding the 2025 non-recurring work, cost of revenues rose 32% year-over-year driven by higher fleet utilization, fleet expansion, and pre-season readiness costs. Selling, general and administrative expenses were $5.3 million in Q2 2026, down from $6.5 million in Q2 2025 due to lower non-cash expenses. Interest expense was $6.6 million in Q2 2026 vs. $5.7 million in Q2 2025 due to new borrowings for fleet expansion. Adjusted EBITDA was $8.1 million in Q2 2026, down from $10.8 million in Q2 2025. The company reported a net loss of $0.5 million in Q2 2026 vs. net income of $0.3 million in Q2 2025; loss attributable to common stockholders was $7.6 million (13 cents per diluted share) vs. a $6.3 million loss (12 cents per diluted share) in the prior year. End-of-period cash and cash equivalents totaled $7.2 million, down from $31.4 million at year-end 2025 due to seasonal working capital investment and strategic fleet modernization spending.

• Seasonal variability in fire activity and contract timing creates uncertainty in quarterly and full-year revenue outcomes; the delayed start of the Portuguese Super Scooper contract created a small Q2 2026 revenue gap relative to internal expectations.
• Fuel price volatility is a potential concern, though most fuel costs are pass-through to customers under existing contract terms, limiting overall exposure.
• European markets have historically been hesitant to commit to long-term contracts with private aerial operators, creating uncertainty around long-term deployment of the company's aircraft in the region.
• Working capital needs are elevated during the seasonal ramp-up to peak fire season, leading to near-term cash drawdowns before receivables are collected later in the year.

Q: What is the status of European contract negotiations for the two Portugal-deployed Super Scoopers, and will the planes return to the U.S. in October if no further European commitments are secured? / A: Management confirms the late activation of the Portugal contract reflects Europe's general hesitancy to partner with private operators until severe fire activity develops. The existing partnership with Avinci was a positive outcome, just delayed. While the company expects ongoing talks with European governments following this season's severe activity, current planning is to reposition the two aircraft to the U.S. after the Portugal season to take advantage of stronger U.S. demand and economics.

Q: Is the company's long-term strategy to secure 120+ day guaranteed task orders for most of its fleet? / A: Management confirms this is a core long-term strategy that the company has been methodically executing for years. Currently, 8 of 9 of the company's surveillance aircraft are on multi-year guaranteed commitments, and 4 of 6 U.S.-based Super Scoopers are on 160-day guaranteed contracts. Longer guaranteed contracts improve fleet utilization, because pre-positioned aircraft fly more hours in initial and direct attack, creating a symbiotic benefit to operational performance.

Q: Are the recent Texas A&M, DOI, and Avinci contracts included in the 2026 revenue guidance? / A: The Avinci and DOI King Air contracts were already included in the 2026 guidance. The $58 million Texas A&M three-year contract has very slow ramp-up, with most revenue recognition starting in 2027 and final aircraft delivery in 2028, so it will have almost no impact on 2026 revenue. The contract uses cost-to-cost accounting for aircraft modification work, and any 2026 activity will not generate meaningful margin this year.

Q: What supports the reiterated full-year guidance, and how does the back-half revenue ramp look after the Q2 European revenue miss? / A: The 2026 seasonal ramp has been normal, with Q3 already seeing all-time high fire activity and new long-term guaranteed commitments extending into Q4 2026, which is a new shift that increases second-half revenue visibility. Additional flying hours from elevated fire activity can move revenue by several million dollars, offsetting the small Q2 European gap. Management notes that strong U.S. fire activity and potentially higher-than-expected flying in Europe can fully offset the Q2 gap and potentially outperform the guidance range.