Q1 2022 Blade Air Mobility Inc Earnings Call
[music].
We're getting welcome late urban.
Air mobility esports.
Fourth quarter of 2020 financial results Conference call.
At this time, all participants are in listen only mode.
A brief question and answer session will follow the formal presentation.
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I'll now like to turn the conference over to your host.
Cook.
Please go ahead good morning.
Ladies and gentlemen, this is Ravi Johnny Vice President of Investor Relations. Thank you for standing by and welcome to the Blade Air Mobility Conference call and webcast for the quarter ended March 31 2020.
We appreciate everyone joining us today before we get started I would like to remind you of the company's forward looking statement and Safe Harbor language statements made in this conference call that are not historical facts, including statements about future time curious may be deemed to constitute forward looking statements within the meaning of the private Securities Litigation Reform Act 1995. These forward looking statements.
Subject to risks and uncertainties and actual future results may differ materially from those expressed or implied by the forward looking statements. We refer you to our SEC filings, including our annual report on Form 10-K filed with the SEC for a more detailed discussion of the risk factors that could cause. These differences any forward looking statements provided during this conference.
All are made only as of the date of this call as stated in our SEC filings late disclaims any intent or obligation to update or revise these forward looking statements.
As required by law during today's conference call. We will also discuss non-GAAP financial measures, which we believe may be useful in evaluating our financial performance. A reconciliation of the most directly comparable GAAP financial measures to those non-GAAP financial measures is provided in our earnings press release, which will also be available on our website. These non-GAAP measures should not be considered a nicer.
Nation or as a substitute for financial results prepared in accordance with GAAP hosting today's conference call are Rob we saw founder and Chief Executive Officer, Wade will Hebron Chief Financial Officer.
I'll now turn the call over to Rob.
Rob Thank.
Thank you Ravi good morning, everyone I'd like to thank you for your interest in blade and welcome you to our earnings call for the first quarter ended March 31, 2020, I'll start with a short overview of our great results. This quarter before handing the call over to will to cover our financials in more detail I'm extremely happy to report that our growth in the first quarter ended March 30 <unk>.
<unk> 2022 was well ahead of our expectations even in the face of short term headwinds generated by omicron and our short this business revenues in the March 2022 quarter increased 187% and $26 6 million versus $9 3 million a 2021 comparable Gary it is.
Very rewarding to see such growth and why has seasonally been our lightest quarter for Blake.
It demonstrates our success in diversifying blades geographic footprint and consumer base, while staying true to our core strategy of aggregating the world's best existing use cases from urban air mobility and last mile precious cargo rep.
Revenue growth in the March 2022 quarter was driven in large part by a minimum of ability organ transport business, where we have 114, new clients year to date in 2020 students far more than we expected further expanding the footprint of our medical business to be at 20 U S. States. It is also a testament to our blade Nebaj operating in ACA.
Physician platform, which enabled us to quickly integrate Trinity Air Medical which we purchased in September 2021, and immediately begin realizing revenue and costs.
As a result, we've now armed our men and mobility still keep with what we believe is the most competitive cost structure strongest logistics technology platform and the absolute best client service and Oregon Transport today. This service oriented approaches inherited from our long history of providing seamless or as we say here at Dan's team level.
Mobility service business people and discerning travellers in our short business business precision and redundancy has always been a key part of our DNA here at blade, Andean or Oregon transport business. It means the faster response times and shorter trips and more economical prices when it comes to moving more against reducing <unk>.
And at times.
Leads to better clinical outcomes for the transplant were shipped yet and it is very rewarding for us to provide this critical service to every major transplant center in our hometown community of New York City, as well as across the United States.
Our consumer facing businesses as expected we saw headwinds Mommy cross during this past quarter, particularly in blade airport in Vancouver, where lower utilization led to a contraction flight margin. However, we chose to maintain service availability and in recent weeks, we have been rewarded for that decision with the record.
Volumes in our New York City Airport transfer business I'll, let will discuss recent demand signals in more detail, but it is incredible to see people getting back out and enjoying travel once again and as well as the decision by executives to get back on the road for business. I'm also excited to welcome Ravi Johnny to our team as VP of Investor Relations and ESG.
Ravi joins us instead of delegates prior strength as an equity research analysts at Bofa I look forward to introducing him to many of you in the coming weeks I could not be more happy with our progress and with that I'll turn the call over to will.
Rob I'll walk through a few highlights from our business lines and short distance revenues were up 300% to $4 2 million in the March 2022 quarter versus $1 1 million in the comparable 2021 period growth was driven by the resumption of our Blade Airport service, which began in June 2021 increased demand for personal and bid.
This helicopter charter as well as our acquisition of Helly Jets passenger routes in Vancouver, which contributed $1 8 million of revenues in the quarter. This was partially offset by reduced off season demand for our computer products, turning to meta mobility, Oregon transport and yet revenues increased 186% this quarter to 20.
$2 1 million versus $7 $7 million in the comparable 2021 period.
Growth was driven by the addition of new hospital and <unk> clients, our acquisition of Trinity Air Medical and stronger demand for our seasonal believed one jet service between New York and South Florida.
Trinity is firing on all cylinders and we're excited about the power of a combined bleed in trinity's platform, which has accelerated organic growth and significantly expanded our customer base turning to cost of revenue as discussed on our last earnings call. We made the decision to maintain full service levels throughout the past omicron wave and thus.
We did expect to see some margin pressure this quarter, given lower utilization in our consumer facing businesses as such flight margin decreased this quarter to 11% versus 16% in the comparable 2021 period driven by the resumption of bleeding Airport service in June 2021, which was operating below breakeven utilization during the ramp phase.
Quarter, coupled with omicron impacts to both blade Airport and Vancouver.
Our commitment to maintaining capacity has paid off and airport. We saw our best week ever this month with a 25000 acquired per year run rate and we will continue to invest in capacity and route expansion ahead of demand.
<unk> Coover is now operating at breakeven utilization and we expect to return to profitability in the coming weeks. Additionally, we expect recent cheap price increases as well as strong return to travel sentiment amongst our flyers to further improve slight margin in future quarters and short now let COVID-19 restrictions are being lifted folks are getting back to enjoying the.
Travel they'd missed for leisure and getting back on the road for business meetings and conferences.
Absent Blade airport in Vancouver flight margin would've been approximately 17% in the current quarter going forward. We will continue to provide detail regarding the impact of new routes on our quarterly flight margin in order to provide investors with greater clarity.
Practice margin profile of our more mature businesses.
Let's turn now to selling general and administrative expenses, which includes software development general and administrative and selling and marketing expenses total SG&A increased to $16 6 million in the March 'twenty two quarter from $5 7 million in the comparable 2021 period. The increase was primarily driven by.
A $2 7 million increase in staffing costs in order to support our public company transition as well as our acquisition of Trinity a $1 7 million increase in legal and regulatory advocacy fees, which we do not expect to reoccur at the same level, a $1 6 million increase in directors and officers insurance expense following the company becoming public.
A 1 million increase in noncash intangible amortization costs in connection with the Trinity and <unk> transactions and a 1 million increase in mergers and acquisitions got us most.
Most importantly, when excluding the onetime noncash and public company expenses that are added back the comparable adjusted EBITDA SG&A decreased as a percentage of revenues this quarter, demonstrating the operating leverage of our platform.
Given the significant amount of one time expenses in the quarter on an as reported basis. We expect this first quarter to be the high watermark for quarterly SG&A expense for the year, assuming we do no further M&A.
Today, we're seeing excellent momentum.
Spite this short term impact during the past quarter from the omicron variance in our blade Airport and Vancouver businesses, we have realized significant improvement in recent weeks and as discussed we expect a negative impact on our quite profit to improve in the quarters ahead.
Looking forward, we know pilot availability labor shortages and cost inflation had been top of mind for many of the travel industry and while we are not immune from these industry wide challenges I want to spend some time discussing why our business is uniquely positioned to mitigate them.
<unk> has a long term agreements in place with our operator partners, providing us with ample aircraft availability and pricing that is often walk down under multiyear contracts and exchange our operators benefit from a steady predictable flow of business effectively zero marketing, our customer service cost and the peace of mind from dealing with a rapidly growing and.
Well capitalized business partner on.
On the cost Brian , particularly in regards to the recent rise in fuel prices, we are well positioned by the fact that our men and mobility contracts are generally structured with more price pass throughs, which neutralized the economic impact of fuel unbleached organ transfer business and our short distance business the low fuel consumption of our aircraft and short flight time for the <unk>.
40 of our routes means that our costs are much less sensitive to fuel prices. For example on bleed Airport will utilize the Bell 407, Burns just 1.3 gallons of jet a per seat on a flight between Manhattan and the three New York airports are see prices start at $195 with the average check out in the two hundreds.
Putting add ons. Therefore, we do not expect fuel cost increases to have a material impact.
We will continue to monitor the cost environment, and making thoughtful decisions to take pricing where necessary in order to offset inflation and to maximize the value of our strong brand and service with that I'll turn it back over to Rob for a few closing remarks. Thank you will in short we are proud of our strong results and operating execution this quarter demonstrating the valley.
Q and operating the world's largest urban air mobility company and we are very encouraged by the operating metrics. We are now seeing in the current quarter.
We built this business from the ground up to be profitable and scalable using conventional aircraft and we are laser focused on deploying capital in a manner that generates attractive returns today and increases the long term intrinsic value of our business as evidenced by the recent acquisitions of treating air medical intelligence passenger business.
<unk> businesses are laying the groundwork for a seamless transition to electric vertical aircrafts or over the long term. We believe the unit economics of DVA will supercharge, our return profile and enable the creation of new more convenient landings downs generating actual incremental value for our shareholders and our customer.
Uh huh.
However, I cannot emphasize enough that we are not waiting I leave for the day. These next generation aircraft arrived we are the largest urban air mobility company in the World flying people in precious cargo on the highest frictions route that exists every single day.
Our business does not require EMEA or additional capital to reach profitability. We are extremely well capitalized not only to continue scaling our business, but also to take advantage of potential opportunistic acquisitions that may present themselves, especially given the current capital markets environment with that I'll turn it over to Ravi for quell.
Thanks, Rob as a reminder, we will take questions from analysts and investors on this call today reporters should send enquiries to me directly operator, we're now ready for questions.
Well now begin the question I have asked the question Mike per Star then one on your Touchtone phone.
We are using a speakerphone please pick up your handset before pressing the keys.
It's all your question. Please press Star then two.
This time with Paul's warm, apparently don't stumble to law school.
First question comes from Jason <unk> Oppenheimer. Please go ahead.
Thanks, I'll ask two so just first maybe give us an update on how you're seeing the initial reaction to some of the changes you've had to make for pricing for your summer commuter business on the east coast.
And then second on the.
Announcement of opening the Paris office I mean.
Just how should we think about like expansion in Europe versus expansion and in kind of the U S that you talked about like what happens sooner and is there a reason why you think.
It makes sense to be doing more on Europe right now thanks.
Great. Thanks for your question, it's Rob Wiesenthal.
Speaking.
In terms of the recent price increases.
For the summer.
We have seen real elasticity no pushback from our fliers.
I think certain products you will see us.
There are price increases and it's really to kind of balance the destinations the type of aircraft they kind of try to optimize our financial broke out going through the summer, but so far so good and we'll keep we'll obviously be keeping an eye on it you know we haven't raised prices I think it could be four or five years literally.
Really.
These commuter route so it was high time, especially given the high touch value product that we were giving our flyers in the recovery that we had in terms of if anything happens with the bad weather in cars in service. So I feel pretty good about it with respect to the opening of our international office.
We do see an opportunity there or acquisitions are we do see certain routes.
That's we are analyzing that could make sense.
As we've spoken before you know just because you know you're sitting in traffic doesn't mean, it's a good move for blade.
Talking about London, and but you know what.
Call. It you know Heathrow to London Theres no place that's great for land. Besides Battersea airport, it isn't competitive with ground or the Heathrow Express so we do see high friction routes.
Where we think we can replicate our model that provide value to the flyer. Both in terms of time savings and it can be done at an economical cost and.
And we need people on the ground, who are aware that you were very knowledgeable about the regulatory environment, but great relationship with the operators that we're building and this is something that.
We've been working on for quite some time, but wouldnt be very prudent in our strategy in terms of how we execute and win.
Thank you.
Thank you and that question will come from Stephen Ju of Credit Suisse. Please go ahead.
Ed.
Alright. Thank you so Rob I'll I guess I'll follow up on the price I guess year over year and sequentially. Your revenue per seat swelling is down presumably because of I guess, the changing mix of airport West Coast Vancouver.
Along with the East Coast. So can you talk about the ins and outs of the different corridor. That's your customers are fine yeah, and I guess another follow up on the on the Europe question. So can you talk about the industry. There in terms of the similarities and differences in terms of the operating environment, whether it's as fragmented as the United States.
What the seasonality you might there might be okay. Thanks.
Hey, Sean Let me let me let me take the second question first and I'll, let <unk>.
We will answer the first part of your question I'll go back.
To Europe again.
Again, we've always spoken to all of you our investors and they were great research analysts that follow us.
You're never going to see a global the world with dots all over saying or blade operates we're very specific on high friction routes.
It is very fragmented.
However, there are some routes that really do have.
That kind of volume kind of friction reduction that kind of you know.
Trust with the customer that are used.
Sorry off in some of them are seasonal some of them are not season at all.
But this is the idea of Europe . The areas, we're looking and we're not looking and doing science experiments. We wanted you crew then routes that reduced friction tube to people whether it be driving through mountainous terrain that ends up taking six hours instead of 30 hours by flight or going between resort destinations, where our brands as well.
So I think that's.
The opportunities there we've been looking at for some time and it was just time that we had people on the ground that can kind of take it to the next level. So with that I'll turn it over to will for the first part of your question on pricing.
Steven you nailed it with your guests there is really a shift in mix as you know last year in 2012.
One during this time, we didn't have the airport product available and we also didn't have Kelly jet those are both products that fly a whole lot of people at a much more affordable price and so if you look at the total number of Flyers that could give away. It's almost nine times, what we did in this quarter last year, and so thats really what youre seeing but I want to stress.
Nothing to do with with the <unk>.
Less business in the other areas like medical we're really seeing growth on all fronts.
Particularly the short distance business, which as you know a lot more passengers. So thats why youre seeing that math, one last point I think on airport again, our goal is to truly scale and to be a product that is affordable by many many people because of price increases and Uber and Lyft and near the New York City Mark.
Yes.
We really have shattered uber black pricing upwards of $195 or $95 with any airport path.
Zubair acts during rush hour. So we really do feel we're in a unique moment in time, where we're very competitive or more competitive than ground in terms of ridesharing cars.
Oftentimes in any geography, even more convenient train five minutes, turning two hour drive it's a five minute flight and that's a great way to introduce the product I can't tell you how long that that delta will be there, but right now we're enjoying it for sure.
Thank you.
Yes.
Okay.
Thank you next question will be from Hillary can cause them, though of Deutsche Bank. Please go ahead.
Oh, hi, Thanks for taking my question. So you said you have to back real quick months could you provide a little more color regarding the travel patterns of the flyer like it given by you know.
We're more flyers going to according to what I think or work with us to buy.
Bye bye.
So.
Ingalls Memoriam hybrid what if you could just kind of provide a little more color regarding the pattern.
Okay.
Hey, Hillary it's will yes look we're really thrilled to see folks getting back on the road again.
Best information I have for you if we do some surveys for all of our passengers and what we're hearing is that about 60% of the people who've been flying for traveling for business.
So you know typically you might expect a little bit more than that and when we look at kind of the back to work stats I know everybody looks at the castle back to work and all of that we still have a little bit of ways to go here in New York City, but the great thing about our blade airport product that people love it for leisure and they love it for business. So we still think there's a lot of room to grow.
As folks get back into the office and right now feels like about 60% of those folks are traveling for business one last one of them right.
Now I'll mention is.
The.
In terms of the comp the composition of the business Flyer these tend to be smaller businesses.
In terms of flying and these are the first guys to get on the road to be competitive maybe with the larger businesses, but also more flexible in terms of our policies, but we are starting to bigger companies finally come in.
Oh, that's good how does that 60% compared to a pre.
Pre COVID-19 level.
It's probably a little bit less than what we would see pre COVID-19, which makes sense because when we look at occupancy levels in offices around Manhattan, where we're not quite back to where we were pre COVID-19. So that's why we're pretty encouraged we think theres a lot more growth left to come here and just looking in terms of lease signings and some.
The areas that are near some of the blade terminals, such as like Hudson yards and others. We're looking at people fully occupied buildings.
Lease signings that are being renewed and some of them in the kind of hundreds of $200 foot range. So at least that kind of office space and less do you expect people to use it so.
We were very very encouraged by the amount of people we see.
Swiping and going back to work and lease renewals for office space.
A replay of terminals.
I don't think that's really helpful and just one more question on met and mobility.
What's in your plan do you have any target like that.
Tiger number of clients with a yes.
Okay got it.
Look what I'll say is the team over at that.
Trinity is just blowing it out of the water on meta mobility just to put it in perspective at this time last year Trinity did about 4 million, just a touch more than $4 million of revenue when.
When we bought them if you recall.
Towards the end of September of last year.
They were doing about $5 million of revenues a quarter. So it really shows you the power of plugging that business into the blade platform and how we've been able to supercharge the growth there. So.
It's a step function change as you add new contracts and we got a lot of folks that were onboarding and we want to provide great service. So I would say the team has already pointed out what we thought they could do and we know theyre going to keep pounding the pavement and show people, how we can deliver organs more quickly for a more cost effective price.
There's a lot of growth to come there, but we're really really encouraged with how much of a benefit we're able to provide combining those two businesses.
Yeah got it okay.
Thank you so much very helpful. Thank you.
Okay.
Okay. Thank you again, if you have a question. Please press Star then one.
Next question comes from Bill Peterson with Jpmorgan. Please go ahead.
Yes, hi, good morning, guys and nice job on the quarterly results here.
Will or Rob one a follow up on the on the last question.
I mean, I think this meta mobility and inject really came in much higher than anybody's expectations. So I guess I'm trying to understand what's what's what's within that I mean, I know you have blade worn in charter I think you mentioned that this is a seasonal business. So.
Help us understand what the true met a mobility sizes. If you if you could and you know based off the bookings trends and sign up new hospitals, I mean, how should we how should we think about that growth through the year.
Based on what you have in terms of visibility. Thanks.
Yes, sure happy to give a little.
Direction on that you know, we're not going to break out the businesses separately, but.
Mobility is the majority of that meta mobility, Oregon transport and jet line and the most important parts of our members. We do have to believe one scheduled by the seat service. That's in there that is seasonal and that service and at the beginning of April and so that that's about a 15% contributor to that line over.
We're all so youll see that fall off in the next quarter, but we do think that's going to be more than offset by some of the the growth in our commuter businesses, which goes into short distance. So it's kind of a nice counter seasonal business for us within the meta mobility, Oregon transport Inkjet and then the rims.
<unk> of what's in that line is jet charter.
Which has been growing really nicely both in terms of the volume of trips and also the price of those trips, but it can be very seasonal and it can also be a little bit lumpy in terms of the demand patterns. So you'd not always just predictable sequential grower the way meta mobility is a nice predictable.
Central grower.
Is that helpful.
Yes in that 15% was a Q1 or is that sort of like an annualized number for for the blade one.
No for blade, one that that's Q1, and then you know it'll be nothing.
In Q2 de Minimis in Q2, nothing in Q3, typically and then Q4 you start that historically are around Thanksgiving.
So a little bit of contributed contribution but not a lot of it's really that that Q1 that March quarter, where you see Boyd one goes through.
Okay.
Super helpful.
You talked about price increases and you also talked about how fuel prices is actually fairly minimal, but what about other what about other operating costs that they could pass through I'm thinking things like related to pilot shortages or just other inflationary environments and I guess really what I'm trying to get out is is how we should think about the impacts to your flight margins.
Yeah sure. So you know theres, a little bit of cost inflation in this business like you see anywhere I think we see it on more of a trailing basis given the nature of our agreements with operators, where we typically lock those kind of costs in for one two or three year periods. In some cases, they are able to pass through.
Fuel is typically in the minimum ability business, where we're passing it through to our customers anyway.
What I would say on that as you know, particularly on the rotorcraft side of things and the commuter business. That's the area, where you might see a little bit more of an impact because those flights are longer and that's actually the area, where we have the most pricing power. So you may have seen we've increased prices on a lot of those commuter routes by as much as 30%.
And so we think that more than offsets.
Any cost inflation when you think about it in terms of the margins.
And it's really designed to just balance our demand amongst the different places we can land.
Yes, Okay, great and I should have included in that question sorry is how to think about the meta mobility margins are.
Should we think of this as fairly stable or is there a potential for upward trajectory over time in that business.
It's a you know I think it's stable, there's an opportunity over time, particularly when we're onboarding a lot of new customers very quickly to get the margin to a better place basically what happens, though as you know and you can see from our numbers the contracted lift we have with our network of opera.
<unk> is a really small percentage of the overall flying we do so as we onboard new customers, sometimes where were going into the spot market to serve them on the meta mobility side for a period of time and then we will contract at a much more favorable price to fill that demand and sometimes there's a little bit of a lag on that so.
As we get in those longer term contracts to fill that demand you will see some margin expansion typically and bill I'd also I'll also add that when you.
You think about a new hospital was generally as they call. It a new route once that hospital side. There is no associated marketing cost there for ramp up.
The same helicopters that we use for our retail business in terms of flying consumers. If we start a new route for passengers that typically requires increased utilization ramping up and marketing costs. So the overall platform becomes a lot more leverage or bowl.
And.
Your cost of sales as a percentage of your cost as a percentage of sales should be mitigated as you increase the number of hospitals, serving your met mobility platform.
Great and then if I can sneak in one more kind of somewhat housekeeping, but related to your to your Opex I think you pointed out.
M&A cost and other public expenses, if I add it all up it looks like its about $4 9 million. So assuming it does that all come off and in the second quarter and then I guess from there how should we think about the trajectory in terms of your you know your spend in marketing cost in the trajectory of the Opex line.
Sure.
Sure Bill I think some of that that you added on there is noncash add backs. So some of the noncash stuff like the.
Intangible amortization for the acquisitions, we're going to be living with that for a period of time.
The M&A stuff, we believe will come down considerably probably won't go away entirely and then some of the regulatory advocacy fees.
Particularly related to some of the landing locations on long island, we expect that to significantly decrease.
Yeah.
Okay, and then going forward.
Yeah, Yeah going forward, we think that will not reoccur and so it's a one time expense associated with some of the advocacy for our particular airport on long Island.
Yeah, no understood I'm, just I'm kind of you know you obviously have new routes and Youre spending on acquisitions, just trying to understand how we should think about opex trends on a normalized basis.
Carrying that forward over the next several quarters.
Yeah.
So definitely we say this is the high watermark. So we believe it's going to decrease over future quarters, and we think it should become a smaller percentage of revenues over time as well.
So just a unique quarter here with all the one times.
Okay.
Thanks.
Thanks Bill.
Thank you. The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Hi.