Volato Group Q2 2024 Earnings Call Transcript

Quartr
Provided by Quartr
August 14, 2024

There are 4 speakers on the call.

Operator

Good morning, and welcome to the Velado Group Second Quarter 20 24 Earnings Conference Call. I would now like to turn the call over to Jonathan Yohanan, Director of Communications. Thank you, operator. Good morning, everyone, and welcome to

Speaker 1

the Vellado conference call. Our press release was issued this morning and can be found in the Investors section of our corporate website, flyvalado.com. Joining me on the call today is Matt Liotta, our Chief Executive Officer and Mark Heynan, our Chief Financial Officer. During today's call, we will provide a business update and a financial overview of the Q2 2024. A Q and A session will follow our prepared remarks.

Speaker 1

Before we begin, I would like to remind everyone that any statements we make or information presented on this call that are not historical facts are forward looking statements that are based on our current beliefs, plans, expectations and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are subject to a variety of risks, uncertainties and other factors that could cause actual results to differ materially from those indicated or implied by such statements. Such risks and other factors are set forth in the company's most recently filed periodic report on Form 10 ks and subsequent filings. The company does not undertake any duty to update such forward looking statements. Additionally, during today's call, management will discuss non GAAP measures, which it believes can be useful in evaluating the company's performance.

Speaker 1

The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with U. S. GAAP. The reconciliation of these non GAAP measures made to the most comparable GAAP measure can be found in the company's earnings release. I'd now like to turn the call over to our Chief Executive Officer, Matt Liotta.

Speaker 2

Thank you, Jonathan, and good morning, everyone. I'll start with some updates on our business before going over our Q1 results. Later, our CFO, Mark Honan, will provide more details on our financials. We are excited to announce the delivery of our first Gulfstream G280 last week. We started a multi city tour where potential buyers will be able to get a firsthand look at the aircraft and purchase fractional shares.

Speaker 2

We've had great traction so far and are looking forward to finishing up the tour later this week. During the Q2, OEM supply chain delays continued to impact the timing of our previously announced aircraft deliveries, but we have taken steps to reduce costs and increase liquidity. In early Q3, we closed a $4,000,000 term loan, and we continue to evaluate additional sources of liquidity to support working capital and growth ahead of our remaining aircraft deliveries in 2024 and beyond. While we did not take delivery of any aircraft in the Q2 as supply chain issues waned, so far in Q3, we have taken delivery of 1 homijet in addition to the 1 G280 I mentioned previously. Based upon this progress in deliveries, we still expect to take delivery of 8 to 10 Hondas and 2 G280s total in 2024.

Speaker 2

Despite challenges in the timing of deliveries, we saw strong growth in key performance indicators, including total flight hours, blended yield and a year over year improvement in our empty percentage. Total flight hours grew 5 percent year over year and blended yield improved 6% as non owner demand increased to 56%. As a reminder, we are in a higher rate on non owner flights. So as non owner mix increases, it helps support our profitability. As we expand our floating fleet, we are able to better serve owner demand while also driving non owner usage through increased availability, and we achieved these results while maintaining a world class Net Promoter Score of 86.

Speaker 2

I also want to look at our empty percentage, which improved 3.5% year over year. Our floating fleet's flexibility enables us to have an empty percentage of 36.1%, in line with industry leaders. On our product offering that enables us to monetize entryway flights, is seeing great progress and reached an ARR of 1,000,000 for the first time during the quarter. Vont is a subscription based mobile app that allows users to subscribe for $1,000 per year and access unlimited empty lake flights at no additional cost. The program is a great way to drive recurring revenue and monetize existing flights that would not be able to otherwise, while reaching an expanded set of customers who may not otherwise consider flying private.

Speaker 2

Overall, I'm satisfied with our achievements in the Q2 and the strides we've made in strengthening our cash position and expanding our fleet since the quarter ended. I'd also like to welcome 2 new members of our leadership team who joined during the quarter and are great assets to our company. Mark Osnick, who is the Head of our Aircraft Management division and Luis Garcia, our new EVP of Sales. They are an excellent addition to the team and are already adding value to the business. Looking ahead, Elado is positioned for success and future growth as we move towards profitability by executing on our strategy and taking advantage of the significant market opportunity that private aviation represents.

Speaker 2

I will now turn it over to Mark for a review of our financials.

Speaker 3

Thank you, Matt, and good morning, everyone. As Matt mentioned, Q2 was a strong quarter for Vlado with improvements across our key performance indicators. These results combined with the funding received from the term loan we signed in early Q3 position us for continued growth while progressing toward EBITDA profitability, which we expect by the Q4 of this year. Looking at our Q2 results, revenue was $15,100,000 a 16% year over year increase. Aircraft usage revenue grew 28 percent to $12,500,000 as we grew the higher margin non owner demand mix, enabled by the expansion of our floating fleet from 18 to 25 Honda Jets since Q2 of 2023.

Speaker 3

Growth in flight hours and non owner demand has also driven a 6% improvement in our blended yield to 5,330 this quarter compared with $5,042 in Q2 of 2023. Looking at expenses, SG and A for the Q2 was $9,700,000 compared to $6,100,000 in the Q2 of 2023. The increase in expenses was driven by the cost of being a publicly traded company. Sequentially, SG and A declined to $9,700,000 in the current quarter from $11,700,000 in the Q1 of 2024 or 17% as a result of these cost saving measures introduced in the Q2. Net loss for the quarter was $16,900,000 compared to a net loss of $9,900,000 in Q2 of 2023.

Speaker 3

This quarter net loss included a $2,800,000 non cash charge related to the valuation of our forward purchase agreements. On a sequential basis, 2nd quarter net loss declined 2.7% when compared with 1st quarter net loss as a result of the cost saving measures implemented during the quarter, offset by the $2,800,000 non cash charge previously mentioned. Excluding the impact of the non cash charge, 2nd quarter net loss declined sequentially by 17.5% when compared to the Q1 net loss. Adjusted EBITDA loss in the quarter was $11,400,000 compared to $7,600,000 in Q2 20 23. The increase was driven by the cost of being a publicly traded company offset by revenue growth.

Speaker 3

Adjusted EBITDA loss declined sequentially 12.7% when compared to the Q1 as a result of these cost saving measures. Looking forward, we still expect to take delivery of 8 to 10 Honda Jets and 2 Gulfstream G280s this year. Based on these forecasts, we expect to generate between $72,000,000 $90,000,000 in revenue and $16,000,000 to $20,000,000 in margin from fractional HondaJet sales and approximately $50,000,000 in revenue and $10,000,000 in margin from fractional G280 sales this year. We also added contribution per flight hour as a new metric in our Q2 KPI press release to show progress in achieving positive gross margin from flight operations. As additional aircraft contribute to higher revenue usage, we expect gross margin from flight operations to continue improving through the rest of 2024 and turn positive in 2025.

Speaker 3

With the forecasted delivery of aircraft and the improvements in adjusted EBITDA, we expect to be EBITDA positive by the Q4 of 2024. Overall, we are pleased with the quarter's financial results and look forward to continuing to progress towards profitability in the coming months. We can now open the call for questions.

Operator

Thank you. We'll now be conducting a question and answer Thank you. At this time, we have reached the end. We will conclude today's conference. We thank you for your participation.

Operator

You may now disconnect your lines at this time and have a wonderful day.

Powered by Quartr
Earnings Conference Call
Volato Group Q2 2024
00:00 / 00:00