flyExclusive, Inc. — Form 10-Q Summary
Reporting period: Three months ended March 31, 2024. Unaudited consolidated results; amounts below are in U.S. dollars unless noted. The company operates private jet charter, membership, fractional ownership, and maintenance businesses. Its December 2023 merger changed its capital structure, limiting comparability with prior periods.
Key financial results
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Revenue | $80.0 million | $77.0 million |
| Cost of revenue | $74.2 million | $65.2 million |
| Gross profit / margin | $5.7 million / 7.2% | $11.8 million / 15.4% |
| Operating loss | $27.4 million | $8.4 million |
| Net loss | $33.0 million | $11.7 million |
| Net loss attributable to common stockholders; EPS | $6.1 million; $(0.35) | EPS not presented due to merger-related capital structure change |
| Adjusted EBITDA (non-GAAP) | $(19.4) million | $(0.0) million |
| Cash used in operating activities | $26.0 million | $2.8 million |
| Cash used in investing activities | $30.1 million | $6.7 million |
| Cash provided by financing activities | $49.8 million | $8.8 million |
Revenue increased 3.8%. Jet club and charter revenue rose 47% to $74.4 million, and fractional revenue grew to $4.1 million. These gains were partly offset by the loss of $25.0 million of prior-year Guaranteed Revenue Program revenue after the Wheels Up agreement was terminated. Total costs and expenses increased 25.7%; SG&A rose 58.1% to $25.2 million, including higher personnel, professional fees, bad-debt, and insurance expenses. The company recorded a $2.8 million loss from changes in warrant fair values and a $1.5 million loss on aircraft held for sale.
Financial position and liquidity
- At March 31, cash and cash equivalents were $5.3 million; investments in securities were $71.4 million. Current assets were $125.2 million versus current liabilities of $207.7 million, a working-capital deficit of $82.5 million.
- Total liabilities were $502.6 million. Notes payable, including current and non-current related-party balances, were approximately $254.8 million; operating lease liabilities were $74.8 million. The company also reported $135.1 million of redeemable noncontrolling interest and $20.6 million of Series A preferred stock in temporary equity.
- Operating cash outflow increased to $26.0 million. Capital spending included $38.5 million of property and equipment purchases, partly offset by $11.0 million of note-receivable paydowns and net investment-sale proceeds.
- Management said cash on hand, operating cash flows, potential financings, and the fractional program should fund operations and capital needs for at least 12 months from issuance of the statements, but noted additional capital may be needed. It cited $124.4 million of anticipated cash requirements over the next 12 months and expects to refinance debt maturities.
Outlook, risks, and unusual items
- Management expects revenue to grow over time with fleet additions and membership growth, and expects near-term operating losses while modernizing the fleet and pursuing cost savings. It did not provide quantified earnings or revenue guidance.
- The fleet modernization plan involves selling older aircraft and replacing them with newer models over roughly two years. Three Gulfstream GIV aircraft were classified as held for sale; the company recorded a $0.9 million non-cash valuation loss on them. Total aircraft held for sale was $23.3 million at quarter-end.
- The company reported no GRP revenue in Q1 2024 and does not anticipate future GRP revenue. It disclosed $59.0 million of billed but unrecorded amounts through March 31 related to the Wheels Up agreement’s drawdown period, which ran through July 31, 2024.
- As of March 31, the company was not in compliance with certain financial covenants; lenders waived the covenants for the relevant periods. Debt agreements include collateral, financial covenants, and potential acceleration/default provisions.
- Series A preferred financing closed March 4, providing approximately $25 million gross capital, with dividends starting at 10% annually and rising over time. The company also issued penny warrants. Subsequent to quarter-end, it drew additional amounts under the senior secured note; in August 2024 it disclosed a Series B preferred financing with approximately $20.4 million received at initial closing and a further approximately $5.1 million expected.
- The company recorded $9.0 million of received Employee Retention Credit payments as a potential repayment liability. Despite counsel’s favorable opinion, eligibility remains uncertain.
- Wheels Up is litigating over termination of its agreement; flyExclusive plans to defend the case, but the company said the impact cannot currently be estimated.
- Management concluded disclosure controls and procedures were ineffective at March 31 because of continuing material weaknesses in internal control over financial reporting. Management reported no material changes in internal control during the quarter beyond remediation efforts.
- Principal risks include limited liquidity and need for refinancing or new capital, debt and covenant exposure, fuel and interest-rate movements, competition, economic sensitivity of private aviation demand, and pilot availability and retention.
Important facts for investors to verify
- Whether operating cash burn and the $124.4 million anticipated near-term cash requirements can be met through operations, investment sales, and financing.
- Progress and terms of debt refinancing, covenant waivers, and the senior secured note, including related-party exposure and cash interest costs.
- Whether membership and fractional growth can replace lost Wheels Up revenue while improving utilization and margins.
- Aircraft sale proceeds and any further valuation changes, alongside fleet replacement spending and expected cost savings.
- Resolution of the Wheels Up litigation and the company’s eligibility for the $9.0 million ERC received.
- Remediation of the disclosed material weaknesses and the potential dilution, dividend burden, and redemption or conversion terms of preferred stock and warrants.