Sky Harbour Group Q2 Earnings Call Highlights

Sky Harbour Group Q2 Earnings Call Highlights

Revenue and cash flow improved: Second-quarter revenue rose 50% year over year and 13% sequentially, while consolidated operating cash flow turned positive at approximately $500,000. The company’s obligated group generated nearly $3 million in operating cash flow, marking its 10th consecutive positive quarter. Growth plans remain on track: Sky Harbour reaffirmed its year-end annualized revenue run-rate guidance of $42 million to $46 million and adjusted EBITDA guidance of $4 million to $6 million. Construction capacity is expected to more than double to over 1.2 million square feet by year-end, with new openings planned in Connecticut, Dallas and Salt Lake City. Liquidity supports expansion: The company ended the quarter with more than $207 million in cash and Treasuries, plus $130 million available under a construction loan, and raised an additional $40 million through a stock placement. Management said these resources, along with potential warrant proceeds, could cover equity needs for the foreseeable future.

Sky Harbour Group NYSE: SKYH reported higher second-quarter revenue and reached positive consolidated operating cash flow, as the private aviation hangar developer and operator continued to expand construction activity, add capacity at existing campuses and pursue larger opportunities at tier-one airports. Chief Financial Officer Francisco Gonzalez said consolidated assets under construction and completed construction exceeded $393 million at the end of the second quarter, up $65 million year to date. He described the increase as the company’s largest six-month investment and construction expansion to date.

Second-quarter revenue rose 50% from a year earlier and 13% sequentially, driven by campus openings over the past year as well as higher occupancy and rental rates, Gonzalez said. Operating expenses also increased as new campuses opened, including added campus staffing and non-cash accruals related to ground leases signed late last year for sites that are not yet operating.

On a consolidated basis, Sky Harbour generated roughly $500,000 of cash flow from operating activities during the quarter, its first positive result in that measure, according to Gonzalez. He said the company expects future equity proceeds to be directed toward capital expenditures for new projects rather than funding current operating expenses. For Sky Harbour Capital and its operating subsidiaries, which comprise the obligated group supporting the company’s bond financing, revenue increased 79% year over year and 22% from the prior quarter. Cash flow from operations was nearly $3 million, compared with $2.2 million a year earlier, marking 10 consecutive quarters of positive operating cash flow for that group.

Chief Accounting Officer Mike Schmitt said adjusted EBITDA improved to approximately negative $0.9 million in the second quarter. He attributed the improvement to rising revenue at operating campuses while operating expenses remained relatively flat. Schmitt noted that adjusted EBITDA is a non-GAAP measure and excludes certain non-cash expenses, including costs associated with non-operating campuses, stock compensation and changes in the fair value of liability-classified warrants.

Sky Harbour reaffirmed its year-end guidance for an annualized revenue run rate of $42 million to $46 million, compared with a $39.4 million run rate in the second quarter. The company also maintained its outlook for an annualized adjusted EBITDA run rate of $4 million to $6 million by year-end. Gonzalez said the projected improvement is expected to be supported by leasing at the second phase of the company’s Miami-Opa Locka campus and by...