Q4 2024 flyExclusive Inc Earnings Call
Greetings and welcome to the fly exclusive fourth quarter and full year 2024 earnings call.
Operator: Greetings, and welcome to the FLY exclusive fourth quarter and full year 2024 earnings call. At this time, all participants are in a listen-only mode.
At this time all participants are in a listen only mode.
Operator: A question-and-answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.
Speaker Change: <unk> and answer session will follow the formal presentation.
Speaker Change: If anyone should require operator assistance. Please press star zero on your telephone keypad as a reminder, this conference is being recorded.
Sloan Bolin: It is now my pleasure to introduce your host, Sloan Bolin of Vestry Relations. Thank you, Sloan. Thank you, Matt.
Speaker Change: It is now my pleasure to introduce your host Sloan Bohlen Investor Relations. Thank you. So long you may begin.
Speaker Change: Thank you Matt Good afternoon, and thank you for joining fly exclusive fourth quarter of 2024 earnings Conference call. Joining me on the call today is Jim Seagraves fly exclusive founder and Chief Executive Officer, and Bryan Garner, our Chief Financial Officer.
Sloan Bolin: Good afternoon and thank you for joining FlyExclusive's fourth quarter 2024 earnings conference call. Joining me on the call today is Jim Segrave, FlyExclusive's founder and chief executive officer, and Brad Garner, our chief financial officer.
Sloan Bolin: We announced 4Q and year-end financial results after the market closed today, along with the filing of our Form 10-K for the year ended December 31st, 2024. We'll be providing certain non-GAAP information during today's discussion, important disclosures about this information, and a reconciliation of the non-GAAP information to comparable GAAP information is included in our Form 10-K filed with the SEC and is available on our investor relations website. In addition, this discussion might include forward-looking statements. Actual results might differ materially for any number of reasons, including risk factors described in our annual report on Form 10-K, in our quarterly reports on Form 10-Q, and in the press release covering forward-looking statements.
Speaker Change: Announced for Q and year end financial results. After the market closed today, along with the filing of our Form 10-K for the year ended December 31, 2024 will be providing certain non-GAAP information during today's discussion important disclosures about this information and a reconciliation of the non-GAAP information to comparable GAAP information is included in our Form 10-K.
Speaker Change: With the SEC and is available on our Investor Relations website. In addition, this discussion might include forward looking statements actual results might differ materially from any number of root for any number of reasons, including risk factors described in our annual report on Form 10-K.
Jim Seagraves: In our quarterly reports on Form 10-Q, and in the press release covering our forward looking statements rather than rereading. This information, we're going to incorporate it by referenced in our prepared remarks and with that let me turn the call over to Jim.
Sloan Bolin: Rather than rereading this information, we're going to incorporate it by reference in our prepared remarks.
Jim Segrave: And with that, let me turn the call over to Jim. Thank you, Sloan, and thank you all for joining us today. It's a great way to kick off 2025 by reflecting on a year that fundamentally reshaped our business. 2024 was a year of bold decisions, hard execution, and clear results. We set out with an ambitious plan, and we delivered. When we entered the year, we had just completed our transition to a public company. We were still carrying the weight of 37 non-performing aircraft that had been in drag-on margins in operation. We lacked experience, expertise, and leadership in certain areas needed to execute our plan as a public company.
Jim Seagraves: Thank you Sloan and thank you all for joining us today.
Jim Seagraves: It's a great way to kick off 2025 by reflecting on a year that fundamentally reshape our business.
Jim Seagraves: 2024 wells a year, a bold decision hard execution and clear results, we set out with an ambitious plan and we delivered.
Jim Seagraves: When we entered the year, we had just completed our transition to a public company.
Jim Seagraves: We were still carrying the weight of 37 nonperforming aircrafts that had been a drag on margins and operations.
Jim Seagraves: The experience expertise and leadership in certain areas needed to execute our plan as a public company S.
Jim Segrave: SG&A was elevated, driven by the typical growing pains of going public, with outside consulting services peaking at over $1.3 million per month. And while our vertically integrated platform was in place, it was not being leveraged.
Jim Seagraves: SG&A was elevated tripping back a typical growing pains are going public.
Jim Seagraves: Outside consulting services, peaking at over $1 3 million per month, and while our vertically integrated platform was in place it was not being leveraged.
Jim Segrave: Twelve months later, the picture is dramatically different. Let's begin with a fleet refresh because that was the backbone of our strategy. We started 2024 with over 100 aircraft on our certificate. But 37 of those were non-performing aircraft. That's a polite way of saying most of them were losing money. They had a dispatch availability as low as 30 percent, which made them costly and inefficient to operate. These aircraft were down for maintenance more than twice the time they were available to generate revenue, creating more operational friction than value. These non-performing aircraft represented roughly $30 million in annual EBITDA draft.
Jim Seagraves: Months later, the picture is dramatically different.
Jim Seagraves: Let's begin with the fleet refresh because that was the backbone of our strategy. We started 2024 with over 100 aircraft on our certificate.
Jim Seagraves: 37 of those were nonperforming aircraft, that's a polite way of saying most of them were losing money.
Jim Seagraves: They had a dispatch availability and low at 30%, which made them costly and inefficient to operate these aircrafts were down for maintenance more than twice. The time they were available to generate revenue, creating more operational friction the value. These nonperforming aircraft represented roughly $30 million in annual EBITDA.
Jim Seagraves: Right.
Jim Seagraves: By the end of the year, we have sold or eliminated 20 of those aircrafts that number continues to improve in early 2020, and we expect fewer than eight remain by mid year at the same time, we began onboarding challenger three hundreds and 350 modern fuel efficient high performance.
Jim Segrave: By the end of the year, we had sold or eliminated 20 of those aircraft. That number continues to improve in early 2025, and we expect fewer than 8 to remain by mid-year. At the same time, we began onboarding Challenger 300s and 350s, modern, fuel-efficient, high-performance, super-midsize jets. Their dispatch availability has exceeded expectations, delivering better than 80 percent, nearly 300 percent better than the aircraft they are replacing. These jets are better for operations, better for customers, and better for our bottom line. Each Challenger contributes approximately $8 to $10 million in annual revenue and does so at significantly better margins.
Jim Seagraves: Super Midsized jet they for dispatch availability has exceeded expectations delivering better than 80% nearly 300% better than the aircraft they are replacing.
Jim Seagraves: These jets are better for operations better for customers and better for our bottom line each challenger contributes approximately $8 million to $10 million in annual revenue and does so at significantly better margins.
Jim Segrave: We ended 2024 with three operational challenges and as of today have five in the fleet. Multiple additional aircraft are in the immediate pipeline and we plan to bring the number up to 15 by the end of the year. Our Citation CJ3 Plus and XLE-S fleet continues to perform extremely well for us, and we will continue expanding these fleets in 2025 to support anticipated member growth.
Jim Seagraves: We ended 2024 with three operational challenges and as of today have five in the fleet multiple.
Additional aircraft are in the immediate pipeline and we plan to bring the number up to 15 by the end of the year.
Jim Seagraves: Our citation C. J, three plus X L. U S fleet continues to perform extremely well for us and we will continue expanding these fleets in 2025 to support anticipated member growth.
Jim Segrave: Now let's talk about operations, because that is the core of what makes our business work. With fewer aircraft on certificate, you might assume we'd be flying less and generating less revenue. But in fact, the opposite happened. We flew more. Flight hours increased 36% in the fourth quarter year over year, and hours per aircraft improved significantly. That speaks to both the quality of the refreshed fleet and the strength of our operating execution. We actually grew revenue in 2024 even as we removed 20 aircraft. That's a powerful testament to the strategy and the model we've built and is directly attributable to the great work of our team and operations and maintenance and of course to our pilots.
Jim Seagraves: Now, let's talk about operation because that is the core of what makes our business work with fewer aircraft. All certificate you might assume we'd be flying less generating less revenue.
Jim Seagraves: In fact, the opposite happened we flew more flight hours increased 36% in the fourth quarter year over year and hours per aircraft improved significantly that speaks to both the quality of their refreshed fleet and the strength of our operating execution. We actually grew revenue in 2024, even as we.
Jim Seagraves: We removed 20 aircrafts, that's a powerful testament to the strategy and the model. We've built and is directly attributable to the great work of our team and operation and maintenance and of course to our pilots.
Jim Segrave: We were the third-fastest-growing private jet operator in 2024 based on flight hours flown. And, even more impressively, we've been the fastest-growing company in the space since before the pandemic, with 208% growth in flight hours since 2019. Dispatch availability improved 5% quarter over quarter. That improvement alone represents significant operational leverage. Annualized, that translates into about $15 million in additional contribution margin. At our current size, every 1% increase in dispatch availability adds roughly $250,000 per month, or $3 million a year to the bottom line. That's the kind of operating leverage this transformation has unlocked, and we are not done yet.
Jim Seagraves: We're the third fastest growing private jet operator in 2024 based on flight hours work.
Jim Seagraves: And even more impressively, we've been the fastest growing company in the space, that's before the pandemic with 208% growth in flight hours since 2019.
Jim Seagraves: Dispatch availability improved 5% quarter over quarter that improvement alone represent significant operational leverage annualized that translates into about 15 million in additional contribution margin.
Jim Seagraves: At our current size every 1% increase in dispatch availability adds roughly 250000 per month or $3 million a year to the bottom line. That's the kind of operating leverage this transformation has unlocked and we are not done yet.
Jim Segrave: We also overhauled maintenance operations. Our MRO business isn't just supporting our internal fleet now. It's becoming a revenue driver.
Jim Seagraves: We also overhauled maintenance operations, our MRO business isn't just supporting our internal fleet now, it's becoming a revenue driver in 2024, we grew MRO revenues by $2 6 million and 55% over 2023, serving both internal and external customers our pay.
Jim Segrave: In 2024, we grew MRO revenues by 2.6 million and 55% over 2023, serving both internal and external customers. Our paint and interior business, which previously focused on internal projects, now generates more of its revenue from outside clients.
Jim Seagraves: An interior business, which previously focused on internal projects now generates more of its revenue from outside clients.
Jim Segrave: These are scalable, large and accretive capabilities that we believe will grow meaningfully in the years ahead.
Jim Seagraves: These are scalable margin accretive capabilities that we believe will grow meaningfully in the years ahead.
Jim Seagraves: Turning to the customer side, our jet club program continues to stand out membership grew 26% year over year, finishing at 1195 members.
Jim Segrave: Turning to the customer side, our Jet Club program continues to stand out. Membership grew 26% year-over-year, finishing at 1,195 members. That includes a 19% increase from Q3 alone, adding 190 new members in a single quarter.
Jim Seagraves: That includes a 19% increase from Q3 alone, adding 190, new members in a single quarter.
Jim Segrave: We focused on Jet Club Marketing in Q4, given the softness in fractional sales tied to tax policy, uncertainty, and the election cycle. That bet paid off. And just to be clear, even with all the membership growth, our customer-to-aircraft ratio continues to lead the industry. At 10.5 members per aircraft, we provide guaranteed access with unmatched service. Some of our competitors have 30-plus customers per aircraft. That model simply doesn't deliver the same experience, and customers know it.
Jim Seagraves: We focused on jet club marketing in Q4, given the softness in fractional sales tied to tax policy uncertainty and the election cycle that bet paid off and just to be clear even with all of the membership growth our customer to aircrafts. The ratio continues to lead the industry.
Jim Seagraves: At 10.5 members part of aircrafts, we provide guaranteed access with unmatched service some of our competitors have 30, plus customers part of aircrafts that marvell simply doesn't deliver the same experience and customers know it.
Jim Segrave: As we continue to grow the fractional and jet club lines of business, we expect to ultimately settle around 15 members per aircraft.
Jim Seagraves: As we continue to grow the fractional and jet club lines of business. We expect the ultimately settle around 15 remember it's part of aircrafts.
Jim Segrave: On the fractional side, we ended 2024 with 131 shares sold, up over 100% for the year. And while Q4 sales were slower than expected due to external factors, our pipeline remains strong and we anticipate many of those delayed decisions converting in the first half of this year. Our wholesale and retail sales teams did an incredible job delivering record revenue of 20% year over year in the face of a smaller fleet. A great validation of our market strategy, product delivery, and sales execution.
Jim Seagraves: On the fractional side, we ended 2024 with 131 share sold up over 100% for the year and while Q4 sales were slower than expected due to external factors our pipeline remains strong and we anticipate many of those delayed decisions converting in the first half of this year.
Jim Seagraves: Our wholesale and retail sales teams did an incredible job delivering record revenue up 20% year over year in the face of a smaller fleet.
Jim Seagraves: Great validation of our market strategy product delivery and sales execution.
Jim Segrave: On the financial side, the numbers speak volumes. Gross profit for Q4 was nearly $16 million, up 300% from the same quarter last year, and up 88% from Q3. Gross margin improved to 18%, up over 200% from the first half of 2024, and up 64% from Q3. Adjusted EBITDA loss narrowed to $6 million, a dramatic improvement from the $19 million loss in Q1, and improved from a $10.3 million loss in Q3.
Jim Seagraves: On the financial side the numbers speak volumes gross profit for Q4 was nearly 16 billion up 300% from the same quarter last year and up 88% from Q3 gross margin improved to 18% up over 200% from the first half of 2024 and 64 person.
Jim Seagraves: Sent from Q3.
Jim Seagraves: Adjusted EBITDA loss narrowed to $6 million, a dramatic improvement from the 19 million dollar loss in Q1 and improved from a $10 3 million dollar loss in Q3.
Jim Segrave: We also brought SG&A under control. As I mentioned, we were spending over $1.3 million a month on outside consulting in Q1 and Q2. In Q4, it averaged below $50,000 per month and has remained at or below this level so far in 2025. SG&A, as a percentage of revenue, fell from 31% in Q1 to 27% by Q4. That's a significant improvement in cost discipline and operating leverage that translates to over $14 million in annual savings. We have also identified another potential $1 million per month in continued additional cost optimization initiatives that we are implementing now and expect to realize over the balance of 2025.
Jim Seagraves: We also brought SG&A under control.
Jim Seagraves: As I mentioned, we were spending over 1.3 million are not an outside consulting in Q1 and Q2 and.
Jim Seagraves: In Q4, it averaged below $50000 per month and has remained at or below this level. So far in 2025, SG&A as a percentage of revenues fell from 31% in Q1 to 27% by Q4, that's a significant improvement and cost discipline and operating leverage that translates to over 14 million.
Jim Seagraves: Dollars and annual state.
Jim Seagraves: We have also identified another potential $1 million per month and continued additional cost optimization initiatives that we're implementing now and expect to realize over the balance of 2025.
Jim Segrave: Our revenue generated per SG&A employee increased nearly 50% year-over-year from roughly $103,000 per person up to over $147,000 per person per month. We also reduced the total number of SG&A employees per aircraft from a peak of over three down to just 2.4 today, a 60-person reduction with a goal of ultimately getting it down closer to two people per plane in 2025.
Jim Seagraves: Our revenue generated per SG&A employ increased nearly 50% year every year from rough with you 103000 per person up to over $147000 per person per month.
Jim Seagraves: We also reduced the total number of SG&A employees.
Jim Seagraves: Per aircraft from a peak of over three down to just two point for Tibet, Our 60 person reduction with a goal of ultimately getting it down closer to two people per plane in 2025.
Jim Segrave: Our liquidity position improved by $16 million in Q4 as we ended the year with $29 million in gas. We have been intentional and disciplined about how we have funded our fleet refresh, primarily through fractional share proceeds and strategic aircraft disposal.
Jim Seagraves: Our liquidity position improved by $16 million in Q4, as we ended the year with $29 million in cash.
Jim Seagraves: We have been intentional and disciplined about how we have funded our fleet refresh primarily through fractional share proceeds and strategic aircrafts disposal looking.
Jim Segrave: Looking ahead, we anticipate incremental liquidity from increased velocity in fractional sales and the pending JetAI merger transaction, which we view as a source of capital flexibility, continued growth investment, and further leveraging our operational platform.
Jim Seagraves: Looking ahead, we anticipate incremental liquidity from increased velocity in fractional sales and the pending jetty a merger transaction, which we view as a source of capital flexibility continued growth investment and further leveraging our operational platform.
Jim Segrave: On the strategic front, 2024 was a breakout year. Our agreement with Zalato brought nearly 200 new members into our ecosystem and validated our ability to scale. We integrated their fleet, absorbed their customers, and delivered a better experience, using 80% fewer employees than they needed before. That's the advantage of our vertically integrated platform.
Jim Seagraves: On the strategic front 2024 was a breakout year our agreement with a lot of it brought nearly 200, new members into our ecosystem and validated our ability to scale.
Jim Seagraves: We integrated their fleet absorbed with their customers and delivered a better experience using 80% fewer employees than they needed before that's the advantage of our vertically integrated platform.
Jim Segrave: The proposed Jet AI merger is the next evolution of that strategy, bringing capital, a complementary fleet, and additional customers into the FlyExclusive family. We also launched JC25, our newest club program that now includes our Super Mid category. Guaranteed continued access, simplified pricing, a streamlined contract, and better flexibility. Early adoption has been strong and we expect this to be a growth driver throughout 2025.
Jim Seagraves: The proposed.
Jim Seagraves: Merger is the next evolution of that strategy, bringing capital a complementary fleet and additional customers into the fly exclusive family. We also launched J C 25, our newest club program that now includes our Super mid category guaranteed continued access simplified pricing a streamlined contract and better <unk>.
Jim Seagraves: Facility.
Jim Seagraves: Early adoption has been strong and we expect this to be a growth driver throughout 2025.
Jim Segrave: I'd also like to acknowledge the incredible leadership team we've built. In 2024, we restructured, recruited, and or onboarded new leadership across the company, including a Chief Financial Officer, Chief Operations Officer, Senior VP of Technology, and a Director of Internal Audit, while also redeploying existing talent into key roles of Chief Commercial Officer, Chief Accounting Officer, and Chief Accounting Officer. We stood up a new internal finance function, established SOX compliance protocols, and have filed every SEC report on time since we put this leadership team in place. This was no small task. and the team executed with excellence.
Jim Seagraves: I'd also like to acknowledge the incredible leadership team we've built.
Jim Seagraves: In 2024, we restructured recruiting and Onboarding, new leadership across the company, including the Chief Financial Officer, Chief Operations Officer, Senior VP of technology, and and the director of internal audit.
Jim Seagraves: After redeploying existing talent into key roles of Chief Commercial Officer, Chief Accounting Officer, and Chief Accounting Officer, we stood up a new internal finance function established Socs compliance protocols and has filed every FCC report on time as we put this leadership team in place this was.
Jim Seagraves: No small task.
Jim Seagraves: And the team executed with excellence I could not be prouder of the professionalism accountability and resilience. This team brought into the company and all of this was accomplished at far less cost than what we experienced in the first half of 2023 relying heavily on outside consultants.
Jim Segrave: I could not be prouder of the professionalism, accountability, and resilience that this team brought to the company. And all of this was accomplished at far less cost than what we experienced in the first half of 2023, relying heavily on outside consultants. We also rolled out a comprehensive safety management system, reinforced our minutes matter operational philosophy, and passed an Argus audit with flying colors, receiving the platinum rating. The company is also Wyvern and ISBEA certified, all industry-leading, independent outside firms that have audited and approved our systems and procedures.
Jim Seagraves: We also rolled out a comprehensive safety management system reinforced our minutes matter operational philosophy and passed an Argus audit with flying colors, receiving the platinum rating.
Jim Seagraves: The company is also wyvern and is bad certified all industry, leading independent outside firms that have audited and approved our systems and procedures safety and culture remain the bedrock of our company.
Jim Segrave: Safety and culture remain the bedrock of our company.
Jim Segrave: Let me take a moment to walk through the biggest accomplishments of the year, each one a reflection of the day-to-day execution and hard work from our team. This is how we transformed our business last year. We delivered $91 million in Q4 revenue, up 20% year-over-year, even while operating a 17% smaller fleet. Flight hours rose 36% in the fourth quarter versus last year, driven by stronger utilization and improved dispatch availability. Membership in our Jet Club jumped 26% over the year. to 1,195 members. We removed or sold 20 of 37 non-performing aircraft in our fleet and added three challengers with over 80% dispatch availability.
Jim Seagraves: Let me take a moment to walk through the biggest accomplishments of the year. Each one a reflection of the day to day execution and hard work from our team.
Jim Seagraves: This is how we transformed our business last year.
Jim Seagraves: We delivered $91 million in Q4 revenue up 20% year over year, even while operating a 17% smaller fleet.
Jim Seagraves: Flight hours rose, 36% in the fourth quarter versus last year, driven by stronger utilization and improved dispatch availability.
Jim Seagraves: Membership in our jet club jumped 26% over the year.
Jim Seagraves: 1195 members.
Jim Seagraves: We removed or sold 20 or 37 nonperforming aircrafts in our fleet and added three challengers with over 80% dispatch availability margins expanded to 18% in Q4 up from 11% in Q3, and just 8% in the first half of the.
Jim Segrave: Margins expanded to 18% in Q4, up from 11% in Q3, and just 8% in the first half of the year. Adjusted EBITDA improved from a $19 million loss in Q1 to just a $6 million loss in Q4, a huge step forward, and we expect this trend to continue. SG&A dropped from 31% of revenue in Q1 to 27% in Q4. This increase in revenue per SG&A employee, up 50% over the year, speaks to how much more productive and efficient the team has become. And we cut outside consulting from 1.3 a month to under $50,000 a month at the same time.
Jim Seagraves: Adjusted EBITDA improved by $19 million loss in Q1 to just the 6 million dollar loss in Q4, a huge step forward and we expect this trend to continue SG&A dropped from 31% of revenue.
Jim Seagraves: Q1 to 27% in Q4 this increase in revenue per SG&A employee up 50% over the year speaks to how much more productive and efficient the team has become and we cut outside consulting for 1.3, a month to under 50000 a month at the same time, we ended 2024 with 29.
Jim Segrave: We ended 2024 with $29 million in cash, even after reducing the accounts table by $14 million from its peak mid-year. We onboarded nearly 200 Delato customers and signed a merger agreement with JetAI to expand our capital base and customer reach. We built out a finger. team in finance, tech, sales, marketing, and operations. We implemented SOX controls, launched SMS, and passed audits from Argus, Wyvern, and Isbez.
Jim Seagraves: Millions of dollars in cash even after reducing accounts payable by 14 million from its peak mid year.
Jim Seagraves: We on boarded nearly 200, a lot of customers and signed a merger agreement with jet a odd to expand our capital base and customer reach.
Jim Seagraves: We built out a finger.
Jim Seagraves: Internet sales marketing and operations, we implemented Sox control launched S. M S and past audits from Argus vibrant and is that all of this happened in a single year and incredible Testament to the passion drive and execution of this thing now.
Jim Segrave: All of this happened in a single year. An incredible testament to the passion, drive, and execution of this team.
Jim Segrave: Now we turn the corner and focus on 2025. Let me walk through a few things I'm excited about as we look ahead. We are on track to complete the removal of the remaining non-performing aircraft, with fewer than 12 expected to remain by the end of Q1. We plan to grow our Challenger fleet to 15 by year-end, further improving dispatch availability and enhancing the customer experience. And from a revenue standpoint, each Challenger generates between $700,000 and $800,000 per month at attractive margins. We continue to drive more revenue per SG&A employee, targeting two SG&A employees per aircraft by the end of 2025, making our operation leaner and more scalable.
Jim Seagraves: Now, we turn the corner and focus on 2025, let me walk through a few things I'm excited about as we look ahead.
Jim Seagraves: We are on track to complete the removal of the remaining nonperforming aircrafts with fewer than 12 expected to remain by the end of Q1.
Jim Seagraves: We plan to grow our challenge your fleet to 15 by year end further improving dispatch availability and enhancing the customer experience and from a revenue standpoint, each challenger generates between 700 and 800000 per month at attractive margins.
Jim Seagraves: We continue to drive more revenues per SG&A employee targeting to SG&A employees per aircraft by the end of 2025, making our operations leaner and more scalable.
Jim Segrave: We expect a 15 percent improvement in dispatch availability in 2025, driven by continued improvement in operations, the addition of more reliable aircraft, and the elimination of non-performing aircraft. With policy uncertainty fading and tax law clarity improving, we expect to convert many of the delayed fractional sales from last year in the first half of this year. Early momentum in the Jet Club program is strong, and we expect this to be a recurring revenue driver throughout 2025. We now meet the Russell 2000 Index Fund eligibility requirements with adequate public float, stock price, and market capitalization, and anticipate potential inclusion in June of this year.
Jim Seagraves: Expect a 15% improvement in dispatch availability in 2025, driven by continued improvement in operations. The addition of more reliable aircrafts and the elimination of nonperforming aircrafts with policy uncertainty fading and tax law clarity improving we expect to convert many of the delayed fractional.
Jim Seagraves: Sales from last year in the first half of this year.
Jim Seagraves: Early momentum in the Jet club program is strong and we expect this to be a recurring revenue driver throughout 2025.
Jim Seagraves: We now meet the Russell 2000 index fun eligibility requirement with adequate public float stock price and market capitalization and anticipate potential inclusion in June of this year also in June we expect to become shelf eligible, giving us greater flexibility in future capital planning, allowing us to pay.
Jim Segrave: Also in June, we expect to become shelf-eligible, giving us greater flexibility in future capital planning, allowing us to pay off existing expensive debt, and continue funding our growth organically and through opportunistic acquisitions. In Q2, we anticipate closing a financing facility with North Fork Capital to support the acquisition of multiple additional Challenger jets and two new Citation XOS aircraft while also unlocking significant equity currently tied up in our fleet through refinancing using this facility.
Jim Seagraves: Existing expensive debt and continue funding our growth organically and through opportunistic acquisitions.
In Q2, we anticipate closing a finance thing facility with North Fork capital to support the acquisition of multiple additional challenge of Jets and two New Citation X L. F. Aircrafts, while also unlocking significant equity currently caught up in our fleet through refinancing using this facility.
Jim Segrave: With a refreshed fleet, a more efficient organization, increasing recurring revenue from our Jet Club and fractional programs, and a clear path to profitability, we are set up to deliver sustained EBITDA and free cash flow growth in 2025 and beyond.
Jim Seagraves: With a refreshed to jet with a refreshed fleet a more efficient organization, increasing recurring revenue from Allergan club and fractional programs and a clear path to profitability. We are set up to deliver sustained EBITDA and free cash flow growth in 2025 and beyond.
Jim Segrave: To our investors, customers, and team, thank you. Your confident support, and in the case of all of our team members, your hard work and diligence made this transformation possible.
Jim Seagraves: Our investors customers and team. Thank you your confidence and support and in the case of all of our team members. Your hard work and diligence made this transformation possible and to our sales team pilot technician and frontline employees you are the heart of this company your professionalism hustle.
Jim Segrave: And to our sales team, pilots, technicians, and frontline employees, you are the heart of this company. Your professionalism, hustle, and pride in the FlyExclusive brand are what set us apart.
Jim Seagraves: Try it in the fly exclusive brands are what set us apart.
Brad Garner: With that, I'll turn it over to Brad to walk through the financial details in more detail.
Jim Seagraves: With that I'll turn it over to Brad to walk through the financial details in more detail.
Brad Garner: Thank you, Jim. I want to echo your gratitude to our incredible team. Their dedication continues to set the pace in our industry for growth, safety, customer experience, and service. Although I've only been with FlyExclusive for just over two quarters, I'm incredibly proud of our collective accomplishments in such a short time. As Jim mentioned, we closed 2024 with strong momentum, reinforcing our confidence in achieving progressive margin expansion and cash flow improvement in 2025. Based on our current trajectory, that confidence has only grown.
Brad: Thank you Jim I want to Echo your gratitude to our incredible team their dedication continues to set the pace in our industry for growth safety customer experience and service.
Speaker Change: Although I've only been with Phi exclusive or just over two quarters I'm incredibly proud of our collective accomplishments in such a short time.
Speaker Change: As Jim mentioned, we closed 2024 with strong momentum reinforcing our confidence in achieving progressive margin expansion and cash flow improvement in 2025.
Speaker Change: Based on our current trajectory that confidence has only grown.
Brad Garner: Let's start with our fourth quarter financial highlights. FLEXclusive reported Q4 revenues of approximately $91 million, as Jim referenced earlier, reflecting a 20% year-over-year increase despite a 17% reduction in fleet size. This growth underscores the strength of our operational execution and strategic initiatives. Both our fractional and Jet Club programs were standout performers, driving strong cash flow in the quarter. As Jim highlighted, at year-end, we had 1,195 Jet Club members, a 26% year-over-year increase, with 190 new members added in Q4 alone, a 19% growth over the third quarter. Importantly, we continue to maintain an industry-leading member-to-aircraft ratio of approximately 10.5 members per aircraft, significantly lower than competitors operating at more than triple that level.
Speaker Change: Let's start with our fourth quarter financial highlights fly exclusive reported Q4 revenues of approximately 91 million as Jim referenced earlier, reflecting a 20% year over year increase despite a 17% reduction in fleet says this growth underscores the strength of our operational execution.
Speaker Change: And strategic initiatives.
Speaker Change: Both our fractional and jet club programs were standout performers driving strong cash flow in the quarter as Jim highlighted at year end, we had 1100 and 95 jet club members, a 26% year over year increase with 190, new members added in Q4 alone a 19% growth over third.
Speaker Change: Quarter.
Speaker Change: Importantly, we continue to maintain an industry, leading member to aircraft ratio of approximately 10, and a half members per aircraft significantly lower than competitors operating in more than triple that level.
Brad Garner: It is this disciplined approach that ensures superior service quality and operational efficiency to all of our members. Similarly, fractional ownership contributed roughly $9 million in revenue in the fourth quarter of 2024, an increase of 73% quarter over quarter and 275% increase year over year. This growth highlights a significant shift in our revenue mix to recurring and sticky revenue through our Fractional and JetClub partner program.
Speaker Change: It is this disciplined approach than insurers superior service quality and operational efficiency to all of our members.
Speaker Change: Similarly, fractional ownership contributed roughly $9 million in revenue in the fourth quarter of 2024, an increase of 73% quarter over quarter, and 275% increase year over year.
Speaker Change: This growth highlights a significant shift in our revenue mix to recurring and sticky revenue through our fractional and jet club partner programs.
Brad Garner: Beyond membership growth, our flight activity reached unprecedented levels. We flew just short of 18,000 hours in Q4 2024, a 20% increase over the prior year, demonstrating continued demand for our service. The month of December was particularly strong, with a 29% increase in departures, which led the entire industry, compared to the same period of 2023. This volume growth underscores our ability to drive efficiency and profitability.
Speaker Change: Beyond membership grows our flight activity reached unprecedented levels. We flew just short of 18000 hours in fourth quarter, 2024% to 20% increase over the prior year demonstrating continued demand for our services.
Speaker Change: The month of December was particularly strong with a 29% increase in departures, which led the entire industry compared to the same period of 2023.
Speaker Change: This volume growth underscores our ability to drive efficiency and profitability.
Brad Garner: our maintenance, repair, and overhaul MRO business. also delivers solid results, with revenue growing $2.6 million year over year. Demand for these critical services continues to outstrip supply, positioning FlyExclusive as a key provider in this space. We believe that our MRO operation is an integral driver of our top-line growth and improvement in profitability in 2025, reinforcing our competitive advantage in servicing both aircraft owners and operators.
Speaker Change: Our maintenance repair and overhaul MRO business.
Speaker Change: Also deliver solid results with revenue growing to $6 million year over year dimmed.
Speaker Change: Demand for these critical services continues to outstrip supply positioning fly exclusive as a key provider in the space.
Speaker Change: We believe that our MRO operation is an integral driver of our topline growth and improvement in profitability in 2025, reinforcing our competitive advantage in servicing both aircraft owners and operators.
Brad Garner: Turning to profitability, we followed the Quarter over quarter improvements reported in the third quarter, with significant strides in our goal to drive sustained EBITDA growth in 2025. Operating margins improved meaningfully, increasing to 18%, up 700 basis points relative to Q3, which was the highest gross margin since becoming public. This continued improvement is a testament to the successfully executing on our Fleet While this performance is impressive compared to last year, we see a clear path to further margin expansion in 2025, driven by one, continued demand strength, two, execution on disposing of the remaining non-performing aircraft, and three, adding challengers.
Speaker Change: Turning to profitability, we followed the.
Speaker Change: Quarter over quarter improvements reported in the third quarter with significant strides in our goal to drive sustained EBITDA growth in 2025.
Speaker Change: Operating margins improved meaningfully increasing to 18% up 700 basis points relative to Q3, which was the highest gross margin since becoming public. This continued improvement is a testament to the successfully executing on our fleet refresh initiative and enhance fleet utilization.
Speaker Change: While this performance is impressive compared to last year, we see a clear path to further margin expansion in 2025, driven by one continued demand strength to execution on disposing of the remaining nonperforming aircrafts and three adding challengers.
Brad Garner: and XLS Gen 2's to the fleet. In conjunction with these margin enhancements, sustained cost management drove meaningful improvement in adjusted EBITDA. Quarter over quarter, we've demonstrated a clear trajectory of EBITDA improvement. If you recall, in Q1 2024, we reported an adjusted EBITDA loss of roughly $19 million, improving to $16 million in Q2, and further reducing to just over $10 million in Q3. Q4, as Jim shared earlier, was another step function improvement, bringing our adjusted EBITDA loss down to $6 million.
Speaker Change: And extra last Gen twos to the fleet.
Speaker Change: In conjunction with these margin enhancements sustained cost management drove meaningful improvement in adjusted EBITDA.
Speaker Change: Quarter over quarter, we've demonstrated a clear trajectory of EBITDA improvement. If you recall in Q1 'twenty 'twenty four we reported an adjusted EBITDA loss of roughly 19 million improving to $16 million in Q2, and further reducing to just over 10 in Q3 Q.
Speaker Change: Four as Jim shared earlier was another step function improvement, bringing our adjusted EBITDA loss down to $6 million.
Brad Garner: As we progress through 2025, we see additional opportunities to optimize our cost structure further and believe that we're on a path to make continued progress on delivering positive adjusted EBITDA and, most importantly, driving increasingly positive free cash flow.
Speaker Change: As we progress through 2025, and we see additional opportunities to optimize our cost structure further and believe that we're on a path to make continued progress on delivering positive adjusted EBITDA and most importantly, driving increasingly positive free cash flow.
Speaker Change: Moving to capitalization liquidity and the impact of our recent strategic announcements.
Brad Garner: Moving to capitalization, liquidity, and the impact of our recent strategic announcement. We generated positive free cash flow during the fourth quarter despite headwinds to fractional sales and aircraft disposals related to uncertainties around the election and the tax policy of this new administration. Amidst that uncertainty, we achieved record retail sales in our Jet Club program, with over $27 million of new and renewal business during the quarter. We anticipate continued momentum with our new JC-25 Jet Club program and our pipeline of fractional sales. We also expect that aircraft sales and disposals will accelerate its pace throughout 2025.
Speaker Change: We generated positive free cash flow during the fourth quarter, despite headwinds to fractional sales in aircraft disposals.
Speaker Change: The uncertainties around the election and the tax policy of this new administration.
Speaker Change: Amidst that and certainty.
Speaker Change: We achieved record retail sales in our jet club program with over $27 million of new and renewal business during the quarter.
Speaker Change: We anticipate continued momentum with our new JC twenty-five jet club program and our pipeline of fractional sales. We also expect that aircraft sales and disposals will accelerate its pace throughout 2025.
Brad Garner: In mid-February, we announced a proposed merger of JetAI's aviation operations that's expected to close in Q2 of this year. The proposed transaction will leverage our vertically integrated platform to achieve operational synergies while also providing capital to facilitate executing our 2025 growth plan.
Speaker Change: In mid February we announced the proposed merger of jet a S. A aviation operations that's expected to close in Q2 of this year. The proposed transaction will leverage our vertically integrated platform to achieve operational synergies, while also providing capital to facilitate executing.
Speaker Change: Our 2025 growth plan.
Brad Garner: I'll reiterate the comments that I began last quarter's call with as I close. Our priority as a management team, and mine since the first day I joined, is to drive continued progress on FlyExclusive's profitability in 2025, and I am very pleased by the progress to date. As Jim highlighted earlier, 2024 was a transitional year for FlyExclusive, and we demonstrated the resilience of our vertically integrated operating platform, the impact of our fleet modernization and cost management initiatives, and the grit, leadership, and commitment to excellence of each of our team members that culminated in realizing sequential improvements in our margins, a path to profitability.
Speaker Change: I'll reiterate the comments that I began last quarter's call with as I close our priority as a management team in mind since the first day I joined is to drive continued progress on fly exclusives profitability in 2025.
Speaker Change: And I'm very pleased by the progress to date.
Speaker Change: As Jim highlighted earlier 'twenty 'twenty four was a transitional year for fly exclusive and we demonstrated the resilience of our vertically integrated operating platform the impact of our fleet modernization and cost management initiatives and the grit leadership and commitment to excellence of each of our team members that color.
Speaker Change: <unk> and realizing sequential improvements in our margins our path to profitability.
Brad Garner: and strengthening our balance. With the momentum we built, we remain confident in our ability to achieve sustainable EBITDA growth and enhanced margins in 2025.
Speaker Change: And strengthening our balance sheet.
Speaker Change: With the momentum we built we remain confident in our ability to achieve sustainable EBITDA growth and enhanced margins in 2025.
Brad Garner: These financial improvements do not overshadow, however, the tremendous strides made in institutionalizing our business. As Jim referenced, we stood up an internal finance function, instituted SOX compliance protocols, and we now have filed three consecutive SEC reports on time and even earlier, all while nearly eliminating our reliance on outside consulting services. To accomplish this within a year is nothing short of amazing, and it's a testament to so many of our team, particularly those in finance.
Speaker Change: These financial improvements do not overshadow however, the tremendous strides made in institutionalizing our business as Jim referenced we stood up an internal finance function instituted Sox compliance protocols and we now have filed three consecutive SEC reports on time and even earlier.
Speaker Change: All while nearly eliminating our reliance on outside consulting services.
Speaker Change: To accomplish this within a year is nothing short of amazing and it's a testament to so many of our team, particularly those in finance.
Brad Garner: I'd like to extend my sincere gratitude to each of you for your dedication, teamwork, leadership and professionalism, and your role in our transformation as a public company.
Speaker Change: I'd like to extend my sincere gratitude to each of you for your dedication teamwork leadership and professionalism and your role in our transformation as a public company.
Sloan Bolin: Thank you all for joining, and now I'll turn it back to Sloan for questions. Great, thank you so much.
Speaker Change: Thank you all for joining and now I'll turn it back just one for questions.
Speaker Change: Great. Thank you so much and I will be conducting a question and answer session.
Operator: Now we'll be conducting a question-and-answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your headset before pressing the star keys. One moment please while we pull for questions.
Speaker Change: If you don't ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.
Speaker Change: You May press star two to remove yourself from the queue.
Speaker Change: Just been using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: Police when we poll for questions.
Speaker Change: Sure.
Speaker Change: First question is from Marvin Fong from <unk>. Please go ahead.
Marvin Fong: First question is from Marvin Fong from BCIG, please go ahead. All right, great. Good evening. Thanks for taking my questions here. A couple for me, maybe to kind of start with, you know, very much understandable what you said about fractional and, you know, there's some uncertainty out there. Just to kind of zero in on that topic, I mean, are there any particular items with respect to like tax policy that you're focusing on, that your potential customers are focusing on? Is it like bonus depreciation or something like that that we should be kind of looking for?
Marvin Fong: Hi, great. Good evening, Thanks for taking my questions here.
Marvin Fong: A couple for me maybe to kind of start with that.
Marvin Fong: Very much understandable, what you said about fractional and you know there was some uncertainty out there just to kind of.
Marvin Fong: This isn't a zero in on that topic I mean are there any particular items with respect to like tax policy.
That that you're focusing on that that your potential customers are focusing on is it isn't like bonus depreciation or or something like that that we should be kind of looking for and you know maybe a second question just on the on the macro environment it looks like.
Jim Segrave: And, you know, maybe a second question, just on the macro environment, it looks like, you know, flight activity is actually pretty healthy to start the year. Just would love your characterization, you know, about how demand is shaping up as well as pricing. You know, how does pricing feel, you know, as we stand currently? Thanks. Sure, Mario. Thanks for the question. From a tax standpoint, 100%, the bonus depreciation is what is on everyone's mind. Everyone expects that to be in the new tax law that they hope is passed sometime in the next few months. Most everyone believes that the president referenced that in his State of the Union speech, and everyone is very much so anticipating that to be put back in place.
Marvin Fong: Flight activity is actually pretty healthy to start the year just would love your characterization.
Marvin Fong: About how demand.
Marvin Fong: Demand is shaping up as well as as well as the pricing how has pricing feel.
Speaker Change: We stand currently thanks sure sure Mike. Thanks for the question from a tax standpoint, 100%. The bonus depreciation is what is on everyone's mind, everyone expects that to be in the new tax.
Marvin Fong: Tax law that they hope it's passed sometime in the next few months.
Marvin Fong: Most everyone believes that the president referenced that in his state of the Union speech in every one of his very much though anticipating that to be put back in place.
Marvin Fong: So that's the tax uncertainty part of what drove a lot of the people to think hey, what's let's wait until this.
Jim Segrave: So that's the tax uncertainty part of what drove a lot of the people to think, hey, let's wait until... this year before we make a decision in hoping that that tax policy comes in play. From a demand standpoint, we still get more requests every day than we can possibly fly. So the issue for us is to deliver dispatch availability, to improve that dispatch availability so we can take more of that demand. We don't have any issues still with the The amount of requests and quotes that we send out, it's more a function of do we have enough airplanes to deliver that demand.
Marvin Fong: This year before we make a decision and hoping that that tax policy comes in place from a demand standpoint, we still get more requests every day when we can possibly flat. So the issue for us is to deliver dispatch availability to improve that dispatch availability. So we can take.
Marvin Fong: More of that demand, we don't have any issues still with the the amount of a quick trip requesting quotes that we send out it's more a fact a function of can we.
Marvin Fong: Do we have enough airplanes to deliver that demand.
Jim Segrave: As you said, the flight hours have held up extremely nicely in the first quarter, and we anticipate that being the same going forward. From a pricing standpoint, we have been able to increase our pricing, certainly on the light and the mid sections of the business. offset some of the additional cost drivers that come in every year from engine programs and parts programs. But we've had some pricing power, which has been fairly nice as well. And I think I got all three of them there, didn't I, Marvin? Yeah, no, you did a great job. And your prepared remarks are very clear about what we should expect to see in 2025.
Marvin Fong: As you said Oh, the flight hours has held up extremely nicely.
Marvin Fong: In the first quarter, and we anticipate that being the same going going forward.
Marvin Fong: From a pricing standpoint.
Marvin Fong: We have been able to increase our pricing certainly on the light and the mid sections of the business to.
Marvin Fong: Offset some of the.
Speaker Change: Additional cost drivers that come in every year from engine programs and parts program, but we've had some pricing power, which has been fairly nice as well and Ah I think I got all three of them, they're getting them all of them [laughter]. Yeah. No you did a great job and in your prepared remarks, you are very clear about what we should expect to see in 2025.
Marvin Fong: Five <unk>.
Marvin Fong: I'm, so very very.
Marvin Fong: So very, very much appreciate those remarks.
Speaker Change: Very much appreciate those remarks, maybe maybe just the last one for me.
Jim Segrave: Maybe just the last one for me. I think you highlighted you're at five challengers now, hoping for 15 by the end of the year. Should we kind of expect that to be kind of spread evenly? I think you mentioned working on a new financing facility. Do you kind of want that in place before you get potentially a little more aggressive with the challenge acquisition? Just kind of how we should think about it? I think it'll be fairly smooth over the year. There are multiple options. The financing facility that we expect to put in place next month will be part of that.
Speaker Change: You've highlighted got five challengers now.
Speaker Change: Hoping for 15 by the end of the year should we kind of expect that to.
Speaker Change: And it would be kind of spread evenly I think Hugh you mentioned I'm working on a new financing facility do.
Speaker Change: Do you kind of want that in place before you get potentially a little more aggressive with the challenger acquisition, just kind of how we should think about.
Speaker Change: I think it'll be fairly smooth over the year. There are multiple options that financing facility that we are we expect to put in place next month will well will be part of that but I think we're really planning on that to support Q3 initiatives. We have structures in place that will support the acquisition of <unk>.
Jim Segrave: But I think we're really planning on that to support Q3 initiatives. We have structures in place that will support the acquisition of challengers over the next few months. And the next multiple airplanes have already been identified and are being evaluated in pre-purchase inspections now. So I think the simple answer is I expect a fairly smooth addition throughout the rest of the year. Got it. Okay.
Speaker Change: Challengers over the next few months and are the next multiple airplanes have already been identified and are being evaluated and pre purchase infections. Now. So I think the that's the simple answer is I expect a fairly smooth addition throughout the rest of the year.
Speaker Change: Got it okay.
Marvin Fong: That's all I had. Thanks for watching. Thanks, Bob.
Speaker Change: That's all I had thanks a lot Jim.
Martin: Thanks Martin.
Jim Segrave: This concludes the question and answer session.
Jim Seagraves: This concludes my question and answer session I'd like to turn the floor back to Jim <unk> for any closing comments.
Jim Segrave: I'd like to turn it forward back to Jim Seagrave for any closing comments. That's all I've got for today, guys. Thanks so much for joining the call. This concludes today's teleconference. You may disconnect your lines at this time. Thank you again for your participation. b re not
Martin: That's all I've got for today guys. Thanks, so much for joining the call.
Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time. Thank you again for your participation.
Martin: Thanks, guys.
Speaker Change: Okay.
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