Q2 2026 Sky Harbour Group Corp Earnings Call

August 12, 2026

Speaker #1: Hello, and thank you for standing by. My name is Lacey, and I will be your conference operator today. At this time, I would like to welcome everyone to the Sky Harbour 2026 second quarter earnings call and webinar.

Operator: Hello, and thank you for standing by. My name is Lacey, and I will be your conference operator today. At this time, I would like to welcome everyone to the Sky Harbour 2026 second quarter earnings call and webinar. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Francisco Gonzalez, CFO. Please go ahead.

Speaker #1: All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press 'star' followed by the number 1 on your telephone keypad.

Speaker #1: If you would like to withdraw your question, press Star 1 again. Thank you. I would now like to turn the call over to Francisco Gonzalez, CFO.

Speaker #1: Please go ahead.

Speaker #2: Thank you, operator. And good afternoon, everybody. And welcome to the 2026 second quarter investor conference call and webcast for the Sky Harbour Group Corporation.

Francisco Gonzalez: Thank you, operator, and good afternoon, everybody, and welcome to the 2026 second quarter investor conference call and webcast for the Sky Harbour Group Corporation. We have also invited our bondholder investors and lenders in our borrowing sub-series, Sky Harbour Capital, Sky Harbour Capital II, and Sky Harbour Capital III, to join and participate on this call as well. Before we begin, I have been asked by counsel to note that on today's call, the company will address certain factors that may impact this and next year's earnings. Some of the information that will be discussed today contain forward-looking statements.

Speaker #2: We have also invited our bondholder investors and lenders in our bargaining subseries, Sky Harbour Capital, Sky Harbour Capital II, and Sky Harbour Capital III, to join and participate on this call as well.

Speaker #2: Before we begin, I have been asked by counsel to note that on today's call, the company will address certain factors that may impact this and next year's earnings.

Speaker #2: Some of the information that will be discussed today contains forward-looking statements. These statements are based on management assumptions, which may or may not come true, and you should refer to the language on slides 1 and 2 of this presentation as well as our SEC filings for a description of the factors that may cause actual results to differ from our forward-looking statements.

Francisco Gonzalez: These statements are based on management assumptions which may or may not come true, and you should refer to the language on slides 1 and 2 of this presentation as well as our SEC filings for a description of the factors that may cause actual results to differ from our forward-looking statements. All forward-looking statements are made as of today, and we assume no obligation to update any such statements. Now let's get started. The team with us this afternoon you know from our prior webcasts, our CEO and Chair of the Board, Tal Keinan, our Treasurer, Tim Herr, our Chief Accounting Officer, Mike Schmitt, Accounting Manager, Tori Petro, and our Assistant Treasurer, Andreas Frank. We have a few slides we want to review with you before we open it to questions.

Speaker #2: All forward-looking statements are made as of today, and we assume no obligation to update any such statements. So now let's get started. The team with us this afternoon, you know from our prior webcast, our CEO and Chair of the Board, Tal Keinan, our Treasurer, Tim Her, our Chief Accounting Officer, Mike Schmidt, Accounting Manager, Tori Petro, and our Assistant Treasurer, Andreas Frank.

Speaker #2: We have a few slides we will want to review with you before we open it to questions. We're starting on this webcast today, which will be limited to those from the research analyst community that have us under coverage.

Francisco Gonzalez: We're starting on this webcast today will be limited to those from the research analyst community that have us under coverage. We decided that, as you may have remembered in the past, we have run out of time usually, and not all of the questions get addressed. So we decided to change to this structure. Obviously, we welcome any and all investor questions afterwards through our investor email at investors@skyharborgroup. I will make an effort to respond promptly. We just filed a few minutes ago our 10-Q with the SEC and our Q2 financials for Sky Harbour Capital related to the Series 2021 bonds and for the Sky Harbour Capital III, related to the Series 2026 bonds with the MSRB EMMA. We also just filed a prospectus supplement to our existing shelf registration program. Let's get started then. If we could go to the slide with our recent results.

Speaker #2: We decided that, as you may have remembered in the past, we have run out of time usually and not all of the questions get addressed.

Speaker #2: So we decided to change to this structure. Obviously, we will welcome any and all investor questions afterwards through our investor email at investors@skyharbourgroup. I will make an effort to respond promptly.

Speaker #2: We just filed a few minutes ago our 10-Q with the SEC, and our second quarter financials for Sky Harbour Capital related to the Series 2021 bonds, and for Sky Harbour Capital III related to the Series 2026 bonds with MSRB EMA.

Speaker #2: We also just filed a prospectus supplement to our existing shelf registration program. Let's get started then. If we could go to the slide with our recent results.

Speaker #2: At the end of the second quarter, on a consolidated basis, assets under construction and completed construction reached over $393 million. That is a $65 million increase year-to-date, and the highest in six months in our corporate history.

Francisco Gonzalez: At the end of the Q2, on a consolidated basis, assets under construction and completed construction reached over $393 million. That is a $65 million increase year to date and the highest in 6 months in our corporate history. What this means is that the pace of investment and new construction at Sky Harbour continues to accelerate, and these columns will continue to grow at an ever higher incremental rate. Q2 revenues experienced an increase of 50% over a year ago and 13% sequentially, given the new campus openings during the past year and increases in occupancy and rental rates. Operating expenses in Q2 continued to increase in tandem with new campus openings, impacted in particular by increases in campus headcount and the non-cash expense accruals of new ground leases entering in the past year, which are not yet constructed or in operations.

Speaker #2: What this means is that the pace of investment and new construction at Sky Harbour continues to accelerate, and these columns will continue to grow at an ever-higher incremental rate.

Speaker #2: Q2 revenues experienced an increase of 50% over a year ago, and 13% sequentially, given the new campus openings during the past year and increases in occupancy and rental rates.

Speaker #2: Operating expenses in Q2 continue to increase in tandem with new campus openings, impacted in particular by increases in campus headcount and the non-cash expense accruals of new ground leases entered into in the past year, which are not yet constructed or in operations.

Speaker #2: As in the prior quarter, a significant amount of the increase in OPEX is related to the signing of new ground leases at the end of last year and with that expense more than half is non-cash accruals of new ground leases payments into the future.

Francisco Gonzalez: As in the prior quarter, a significant amount of the increase in OpEx is related to the signing of new ground leases at the end of last year. With that expense, more than half is non-cash accruals of new ground leases payments into the future. We look forward to benefiting from the operating leverage for our phase II with Miami Opa-locka, which has now been open for 4 months, and later this year, with the opening of Addison phase II. We expect gross profit margin expansion with these two phases II with the same people and field trucks serving basically a doubling of those respective hangar campuses. We strive to keep SG&A in check as we grow, keeping frugality front and center in our expense and cost management initiatives.

Speaker #2: We look forward to benefiting from the operating leverage for our Phase Two, with Miami Opa-locka, which has now been open for four months, and later this year with the opening of Addison Phase Two.

Speaker #2: We expect gross profit margin expansion with these two phases two, with the same people and fuel trucks serving basically a doubling of those respective hangar campuses.

Speaker #2: We strive to keep SG&A in check as we grow, keeping frugality front and center in our expense and cost management initiatives. Cash flow provided by operating activities reached positive territory of roughly half a million dollars, reaching a significant milestone in the company's history.

Francisco Gonzalez: Cash flow provided by operating activities reached positive territory of roughly half a million dollars, reaching a significant milestone in the company's history. Going forward, equity proceeds will only go to new project CapEx and not to fund current operating expenses like in the past. Next slide, please. This is a summary of the financial results of our wholly owned subsidiary, Sky Harbour Capital, and its operating subsidiaries that form the obligated group. Assets under construction are still growing as we completed Opa-locka phase II in Q2 and will soon stabilize with the completion of Addison phase II at year-end, which, as many of you know, is the last project of the obligated group first vintage of campuses that were financed by the Series 2021 bonds. Revenues of the obligated group increased 79% year over year and 22% sequentially.

Speaker #2: Going forward, equity profits will only go to new product project capex and not to fund current operating expenses like in the past. Next slide, please.

Speaker #2: This is a summary of the financial results of our wholly owned subsidiary, Sky Harbour Capital. And its operating subsidiaries that form the obligated group.

Speaker #2: Assets under construction are still growing as we complete our Opaloka Phase Two in Q2, and will soon stabilize with the completion of Addison Phase Two at year-end.

Speaker #2: Which, as many of you know, is the last project of the obligated group’s first vintage of campuses that were financed by the Series 2021 bonds.

Speaker #2: Revenues at the obligated group increased 79% year over year and 22% sequentially, with expected continued step function increases in revenues in Q3 and Q4 with the continued new leasing of phase two in Opaloka and then in Q1 and Q2 of 2027 after the opening of Addison phase two.

Francisco Gonzalez: We expect continued step function increases in revenues in Q3 and Q4 with the continued new leasing of Phase II in Opa-locka and then Q1 and Q2 of 2027 after the opening of Addison Phase II. As I mentioned before, we expect a marked increase in gross profit and EBITDA margin expansion with those added revenues and limited increase in operating expenses, given the ability to use the same personnel and equipment with expanded campuses that double in size. Cash flow from operations reached almost $3 million in the quarter and increased from $2.2 million a year ago. This constitutes 10 consecutive quarters of positive cash flow from operations, providing ample and growing debt service coverage for our bondholders and bank facility lenders.

Speaker #2: As I mentioned before, we expect a marked increase in gross profit and EBITDA margin expansion with those added revenues. In addition, increasing operating expenses gives us the ability to use the same personnel and equipment with expanded campuses that have doubled in size.

Speaker #2: Cash flow from operations reached almost $3 million in the quarter and increased from $2.2 million a year ago. This constitutes 10 consecutive quarters of positive cash flow from operations, providing ample and growing debt service coverage for our bondholders and bank facility lenders.

Speaker #2: Let me pass it on to Mike Schmitt for a discussion of our adjusted EBITDA calculation. This is something we did a few quarters ago, but it's important to refresh, given the importance of this adjustment to our EBITDA.

Francisco Gonzalez: Let me pass it on to Mike Schmitt for a discussion of our adjusted EBITDA calculation, something we did a few quarters ago, but it is important to refresh given the importance of this adjustment to our EBITDA. Mike?

Speaker #2: Mike?

Speaker #3: Thank you, Francisco. As with prior quarter, I'd like to take this opportunity to provide additional context regarding elements of our reporting results. We've provided a reconciliation from our gap net income results for the quarter ended June 30th, 2026.

Michael Schmitt: Thank you, Francisco. As with prior quarter, I would like to take this opportunity to provide additional context regarding elements of our reported results. We have provided a reconciliation from our GAAP net income results for the quarter ended 30 June 2026. We believe this measure is important due to the impact of non-cash items within our reported results, particularly the non-cash operating expenses that are campuses that are not yet operational, stock compensation expense, and gains and losses arising from marking our liability-classified warrants to market. As seen in the diagram, adjusted EBITDA improved to approximately -$0.9 million in Q2 2026. This is driven by continued improvement of results at our operating campuses, where revenues continue to increase as operating expenses remained relatively flat. Adjusted EBITDA is supplemental in nature and is not calculated in accordance with GAAP.

Mike Schmitt: Thank you, Francisco. As with prior quarter, I would like to take this opportunity to provide additional context regarding elements of our reported results. We have provided a reconciliation from our GAAP net income results for the quarter ended 30 June 2026. We believe this measure is important due to the impact of non-cash items within our reported results, particularly the non-cash operating expenses that are campuses that are not yet operational, stock compensation expense, and gains and losses arising from marking our liability-classified warrants to market. As seen in the diagram, adjusted EBITDA improved to approximately -$0.9 million in Q2 2026. This is driven by continued improvement of results at our operating campuses, where revenues continue to increase as operating expenses remained relatively flat. Adjusted EBITDA is supplemental in nature and is not calculated in accordance with GAAP.

Speaker #3: We believe this measure is important due to the impact of non-cash items within our reported results. Particularly, the non-cash operating expenses that are compasses that are not yet operational, stock compensation expense, and gains and losses arising from marking our liability classified warrants to market.

Speaker #3: As seen in the diagram, adjusted EBITDA improved to approximately negative 0.9 million in Q2 '26. This is driven by continued improvement of results that are operating campuses where revenues continue to increase as operating expenses remain relatively flat.

Speaker #3: Adjusted EBITDA is supplemental in nature and is not calculated in accordance with GAAP. Our definition of EBITDA and other non-GAAP measures can be found in the Management Discussion and Analysis section of our Form 10-Q.

Michael Schmitt: Our definition of EBITDA and other non-GAAP measures can be found in the Management Discussion and Analysis section of our Form 10-Q. With that, I would like to pass to Tal.

Mike Schmitt: Our definition of EBITDA and other non-GAAP measures can be found in the Management Discussion and Analysis section of our Form 10-Q. With that, I would like to pass to Tal.

Speaker #3: And with that, I would like to pass the call.

Speaker #1: Thanks, Mike. All right. Leasing update. I'm not going to go through all of the cells on this chart. Let me just highlight a couple of things.

Tal Keinan: Thanks, Mike. All right. Leasing update. I am not going to go through all of the cells on this chart. Let me just highlight a couple things. First, take a look at APA-1. That is Denver Centennial, phase one. One of the things that should jump out at you on this chart is our relatively low economic occupancy. Leasing has been slow in Denver. That is just the state of affairs. Not all of these lease up at the same time. Some take longer than others. I will point to examples like Miami and Nashville. Miami took almost a year and a half to lease up phase one, and Nashville took even longer than that. Both of those are very robust cash flowing campuses today. We are not concerned about it. We wish we could move faster on this, but that is the state of affairs.

Speaker #1: First, take a look at APA 1. That's Denver Centennial Phase 1. One of the things that should jump out on this chart is our relatively low economic occupancy.

Speaker #1: So leasing has been slow in Denver. That's just the state of affairs. Not all of these lease up at the same time. Some take longer than others.

Speaker #1: I will point to examples like Miami and Nashville. Miami took almost a year and a half to lease up Phase 1, and Nashville took even longer than that.

Speaker #1: Both of those are very robust cash flow campuses today. So we're not concerned about it. We wish we could move faster on this, but that is the state of affairs.

Speaker #1: Two other cells that would jump out, I think, are the average rents per square foot in DVT 1, that's Phoenix, and Addison 1, that is Dallas, ADS 1.

Tal Keinan: Two other cells that would jump out, I think, are the average rents per square foot in DVT-1, that is Phoenix, and Addison one, that is Dallas, ADS-1. A couple things to point out here. This sort of obscures the reality, as I think if people have been paying attention on the last couple of calls will note. Our leasing strategy on specifically these three airports includes offering short-term leases at introductory rates just to get to full occupancy as quickly as possible, get the cash flowing, get the debt serviced, and then go back and revisit. Again, these are short-term leases. Go back and revisit. The longer term leases, of which all of these campuses have longer term leases, we do sign at target or, actually in all three of these cases, above target levels. Right?

Speaker #1: So, a couple of things to point out here. This sort of obscures the reality. I think, if people have been paying attention in the last couple of calls, you'll note our leasing strategy on specifically these three airports includes offering short-term leases at introductory rates, just to get to full occupancy.

Speaker #1: As quickly as possible. Get the cash flowing, get the debt serviced, and then go back and revisit. Again, these are short-term leases. Go back and revisit.

Speaker #1: The longer-term leases, of which all of these campuses have longer-term leases, we do sign at target or actually, in all three of these cases, above target levels, right?

Speaker #1: To give you a sense, in Dallas, our multi-year tenants are paying rents in the 40s and 50s per square foot. So the ambition is, as we proceed here, and we're pretty close to take Dallas as an example, pretty close to 100% lease at Dallas, is as these short-term leases come to term, start cycling back and replacing them with real long-term residents at the rates that we're looking for.

Tal Keinan: To give you a sense, in Dallas, our multi-year tenants are paying rents in the 40s and 50s per square foot. The ambition is as we proceed here, and we are pretty close to, take Dallas as an example, pretty close to 100% leased at Dallas, is as these short-term leases come to term, start cycling back and replacing them with real long-term residents at the rates that we are looking for. That explains those numbers. If we had done the same thing, I think we did not exactly do this in Nashville and Miami or in Houston at the beginning. Nashville is one that started even with long-term leases in the 20s. You see over a relatively short time that comes up and grows into pretty robust rates. Again, we expect that trend to continue on those.

Speaker #1: So that explains those numbers. Yeah, if we had done the same thing—I think we didn't exactly do this in Nashville and Miami, or in Houston at the beginning—but Nashville is one that started even with long-term leases in the 20s.

Speaker #1: And you see, over a relatively short time, that comes up and grows into pretty robust rates. So again, we expect that trend to continue.

Speaker #1: On those. The last thing I'll call everyone's attention to on this slide is the release update, lower left-hand corner. Just a reminder to people of what that metric is.

Tal Keinan: The last thing I will call everyone's attention to on this slide is the re-lease update, lower left-hand corner. Just a reminder to people of what that metric is in the last 12 months, we have had 100,360 square feet of hangar leases come to term, expire, and get renewed. In nearly all those cases, it is the same resident who is renewing, and the average step-up from the last year of the first lease term to the first year of the second lease term is 19%. You will notice that is a few points down from last quarter. The main reason for that is that a lot of these leases are now not the second turn, but the third turn of the lease, where we have expected and will continue to expect a bit of a smaller bump on that one. We are closer to what we would call the actual market rates. All right.

Speaker #1: In the last 12 months, we have had 100,000, 360 square feet of hangar leases come to term, expire, and get renewed. In nearly all those cases, it's the same resident who is renewing.

Speaker #1: And the average step-up from the last year of the first lease term to the first year of the second lease term is 19%. You'll notice that's a few points down from last quarter. The main reason for that is that a lot of these leases are now not the second term, but the third term of the lease.

Speaker #1: Where we've expected and will continue to expect a bit of a smaller bump on that one. We're closer to the what we would call the actual market rates.

Tal Keinan: We are closer to what we would call the actual market rates. All right.

Speaker #1: All right. Next slide is site acquisition. Again, more or less speaks for itself. And I've said on these calls how I think this company should be valued, which is look at the total rentable square footage of hangar that the company has secured underground lease.

Tal Keinan: Next slide is site acquisition. Again, more or less speaks for itself. I have said on these calls how I think this company should be valued, which is look at the total rentable square footage of hangar that the company has secured under ground lease. Not developed yet, but secured under ground lease, which is that 4 million number on the right. Multiply that times the Sky Harbour equivalent rent. Again, everyone can make their own rent projections on that. As you will see, we have beaten Sky Harbour equivalent rent on all of the existing campuses. So we think that is a pretty good conservative number to use. That gives you a top-line revenue number. We will talk a little bit about operating margins in a few slides. But that is your available revenue capture, which is currently under ground lease.

Speaker #1: Not developed yet, but secured underground lease, which is that $4 million number on the right. Multiply that times the Sky Harbor equivalent rent, and again, everyone can make their own rent projections on that.

Speaker #1: As you'll see, we've beaten Sky Harbor equivalent rent on all of the existing campuses. So we think that's a pretty good conservative number to use.

Speaker #1: That gives you a top-line revenue number. We'll talk a little bit about operating margins in a few slides, but that is your available revenue capture.

Speaker #1: Which is currently a ground lease. And again, I'll emphasize this—certainly on at least the next year of quarterly earnings calls—the entry ticket to this entire business is the ground lease.

Tal Keinan: I will emphasize this certainly on the next at least year of quarterly earnings calls is the entry ticket to this entire business is the ground lease. That is the most important move. At the extreme, this could be a site acquisition company that hands off construction and operations to somebody else. Now, we do not think we should do it that way, but fundamentally, that is where the value gets created, is when the ground lease is signed. Then take that number, you can put whatever multiple you want on that or cap rate, and then discount it for all of the risks that we are all familiar with, right? There is development risk, construction risk, there is lease-up risk, there is operating risk. All that stuff exists. So, it is appropriate to discount those, and obviously discount them for the time it takes to actually build these campuses.

Speaker #1: That is the most important move. At the extreme, this could be a site acquisition company that hands off construction and operations to somebody else.

Speaker #1: Now, we don't think we should do it that way. But fundamentally, that is where the value gets created, is when the ground lease is signed.

Speaker #1: So, and then take that number. You can put whatever multiple you want on that, or cap rate, and then discount it for all of the risks that we're all familiar with, right?

Speaker #1: There is development risk, construction risk, there's lease up risk, there's operating risk, all of that stuff exists. So it is appropriate to discount those.

Speaker #1: And obviously, discount them for the time it takes to actually build these campuses. But as you'll see, our focus is increasingly on Tier 1 airports.

Tal Keinan: But as you will see, our focus is increasingly on tier 1 airports. We have another slide on that, so I am not going to get deeper into that now. Next slide. One thing that I want to highlight and maybe just head off some concerns, and we have heard this from a number of people, and this is something that we thought of ourselves as this was happening, is you will notice there is a lot of expansion going on in California, just as there has been quite a bit of capital flight among the most wealthy residents of California. We are seeing that firsthand because those people are signing up in our Miami, Nashville, Dallas campuses. We have got a lot of wealthy California refugees, so to speak, in those campuses. The reason that we continue to invest in California and grow it, the first part is self-evident.

Speaker #1: And we have another slide on that, so I'm not going to get deeper into that now. Next slide. One thing that I want to highlight, and maybe just head off some concerns.

Speaker #1: And we've heard this from a number of people, and this is something that we thought of ourselves as this was happening. As you'll notice, there is a lot of expansion going on in California.

Speaker #1: Just as there's been quite a bit of capital flight among the most wealthy residents of California. We're seeing that firsthand because those people are signing up in our Miami, Nashville, Dallas campuses.

Speaker #1: We've got a lot of wealthy California refugees, so to speak, in those campuses. The reason that we continue to invest in California and grow it, the first part is self-evident.

Speaker #1: Look at the rents that we're getting in California. Other than the New York market, it's probably the best market in the country—that's both the Bay Area and Southern California.

Tal Keinan: Look at the rents that we are getting in California. Other than the New York market, it is probably the best market in the country. That is both Bay Area and Southern California. But if you look at the trend as well, most of the people who have left, and it is well over USD 1 trillion of wealth that has left in the last 12 months. Most of those people return with a frequency that justifies keeping permanent hangar space, and a lot of our residents in California exactly fit that bill. They are people who are no longer domiciled in California, but visit enough that they keep hangar space with us. The second is, and we put it on the slide, is of that USD 1 trillion-plus of wealth that has left California in the last year, the vast majority of that is 10 people. Okay? 10 people constitute the majority of that flight.

Speaker #1: But if you look at the trend as well, most of the people who have left—and it's well over a trillion dollars of wealth that's left in the last 12 months—most of those people return with a frequency that justifies keeping permanent hangar space.

Speaker #1: And a lot of our residents in California exactly fit that bill. They're people who are no longer domiciled in California, but visit enough that there is that they keep hangar space with us.

Speaker #1: The second is, and we actually we put it on the slide, is if of that trillion plus of wealth that's left California in the last year, the vast majority of that is 10 people.

Tal Keinan: The second is, and we put it on the slide, is of that USD 1 trillion-plus of wealth that has left California in the last year, the vast majority of that is 10 people. Okay? 10 people constitute the majority of that flight.

Speaker #1: Okay? 10 people constitute the majority of that flight. And in the same period, 37 new billionaires have been minted in California, primarily Northern California, not only.

Tal Keinan: And in the same period, 37 new billionaires have been minted in California, primarily Northern California, not only. I think the insight that will, I think, be intuitive to everyone on this call, the average number of aircraft owned by somebody with, let's say, $2 billion, is not significantly lower than the average number of aircraft owned by somebody with $80 billion. Our market in California continues growing even as wealth on a net basis is leaving California. Expect even more emphasis on California site acquisition in the coming quarters. We have very high conviction on that market. Our development update. This is one of the areas where, as I said, the rubber is meeting the road. We have spent a lot of time talking about our gear-up on the development and construction side of the business, a lot of increase in capacity.

Speaker #1: And I think the insight that we'll, I think, be intuitive to everyone on this call, the average number of aircraft owned by somebody with, let's say, $2 billion is not significantly lower than the average number of aircraft owned by somebody with $80 billion.

Speaker #1: So our market in California continues growing, even as wealth on a net basis is leaving California. So expect even more emphasis on California site acquisition in the coming quarters.

Speaker #1: We are we have very, very high conviction on that market. Okay. Our development update so this is one of the areas where the I say the rubber is meeting the road.

Speaker #1: We spent a lot of time talking about our gear up on the development and construction side of the business. A lot of increase in capacity, the vertical integration being completed, our entry into general contracting, building our own campuses.

Tal Keinan: The vertical integration being completed. Our entry into general contracting, building our own campuses. All of that was put in place to achieve scale. Right now, that is where that is being borne out. We are on track, both on budget and on time, with all of the developments in this plan. You can see some pictures on the right from the campuses that are going to open soon. Bottom right is Bradley, Connecticut. That is the nearest term. We have Dallas, Addison. Actually, we do not have pictures of that, sorry. We have Salt Lake City, which is going to be delivered early next year. We will talk a little bit about construction costs as we go, but again, this should give people a sense of just how much is under development at Sky Harbour right now.

Speaker #1: All of that was put in place to achieve scale. And right now, that's where that's being borne out. So we are on track, both on budget and on time, with all of the developments in this plan.

Speaker #1: And you can see some pictures on the right from the campuses that can open soon. Bottom right is Bradley, Connecticut. That is the nearest term.

Speaker #1: We've got Dallas, Addison. Actually, we don't have pictures of that. Sorry. We have Salt Lake City, which is going to be delivered early next year.

Speaker #1: And we'll talk a little bit about construction costs as we go. But again, this should give people a sense of just how much is under development at Sky Harbour right now.

Speaker #1: And with that, let me turn it back to Francisco to talk about liquidity.

Tal Keinan: With that, let me turn it back to Francisco to talk about liquidity.

Speaker #2: Thank you, Tal. We have closed the quarter with significant liquidity, with over $207 million in cash and U.S. Treasuries, and about $130 million still available from the JP Morgan committed construction loan.

Francisco Gonzalez: Thank you, Tal. We have closed the quarter with significant liquidity, with over $207 million in cash and US Treasuries, and about 130 million still available from JP Morgan committed construction loan. As Tal mentioned, those red bars in the prior slide, our pace of CapEx expenditure is accelerating. Very important to know that. These amounts that you see in this slide in terms of liquidity exclude the fresh $40 million cash proceeds we received earlier today at the holding company as part of our registered direct equity placement that settled today. Next slide, please. As in the past, from time to time, we have received reverse inquiries of investors interested in coming to our company. Discussions for the past couple weeks with two particular investors who have strategic value to us, especially from a leasing standpoint, have resulted in a $40 million straight common issuance at $10 per share.

Speaker #2: As Tal mentioned, those red bars in the prior slide are pace of CapEx expenditure is accelerating. Very important to know that. These amounts that you see in this slide in terms of liquidity exclude the fresh 40 million in cash proceeds we received earlier today at the holding company as part of a registered direct equity placement that settled today.

Speaker #2: Next slide, please. As in the past, from time to time, we have received reverse increase of investors' interest in coming to our company. Discussions for the past couple of weeks with two particular investors who have strategic value to us, especially from a leasing standpoint, have resulted in a 40 million straight common issuance at $10 per share.

Speaker #2: A roughly 4.6% discount to the last 30 days' volume-weighted average price of $10.49 through this past Monday, when we executed the stock purchase agreement for these placements.

Francisco Gonzalez: A roughly discount of 4.6% to the last 30 days volume weighted average price of $10.49 through this past Monday, when we executed the stock purchase agreement for this placement. This equity issuance was very cost effective, raised through direct placement from our shelf registration. We have now a cumulative surpass $300 million in equity investments by our shareholders in the company. We decided to take these funds now as a tactical measure as we await for the potential exercise of our public warrants at the end of next January. As many of you know, if fully exercised, the public warrants will yield around $94 million in primary proceeds for the company.

Speaker #2: This equity issuance was a very cost-effective registered direct placement from our shelf registration. We now have a cumulative total surpassing $300 million in equity investments by our shareholders in the company.

Speaker #2: We decided to take these funds now as a tactical measure as we await the potential exercise of our public warrants at the end of next January.

Speaker #2: As many of you know, if fully exercised, the public warrants will yield around 94 million in primary proceeds for the company. We see the current raise combined with the potential for an additional 94 million in January as covering all our equity needs at the company for the foreseeable future and maybe indefinitely as we await increasing operating cash flow to be available in the future to reinvest in more projects.

Francisco Gonzalez: We see the current raise combined with the potential for an additional $94 million in January as covering all our equity needs at the company for the foreseeable future, and maybe indefinitely as we await increasing operating cash flow to be available in the future to reinvest in more projects. Next slide, please. Just want to take a second to reiterate our guidance for the end of the year that we introduced back in May. On revenues, we reaffirm that we expect to finish the year with an annualized run rate of revenues between $42 million and $46 million, up from the $39.4 million run rate in this past quarter. This increase will be driven by the incremental revenues of phase 2 at Opa-locka as it approaches full occupancy and increased occupancy at DVT and APA.

Speaker #2: Next slide, please. I just want to take a second to reiterate our guidance for the end of the year that we introduced back in May.

Speaker #2: On revenues, we have reaffirmed that we expect to finish between $42 and $46 million, up from the $39.4 million run rate in this past quarter.

Speaker #2: This increase will be driven by the incremental revenues of phase two out of Aloca, as it approaches full occupancy and increased occupancy at DVT and APA.

Speaker #2: Similarly, we reaffirmed that adjusted EBITDA will end up the year at an annualized run rate of between 4 to 6 million, up from an annualized run rate of still negative in Q2.

Francisco Gonzalez: Similarly, we reaffirm that adjusted EBITDA will end up the year at an annualized run rate of between $4 million to $6 million, up from an annualized run rate of still negative in Q2. Let me now pass it back to Tal for a discussion on the highlights and next steps in the four pillars of our business model. Tal?

Speaker #2: Let me now pass it back to Tal for our discussion of the highlights and next steps in the four pillars of our business model.

Speaker #2: Tal?

Speaker #1: Record with one—oh, I'm sorry, I think we were muted. I'm going to start that again. On site, yep. Thank you. Thanks, Francisco. On the site acquisition side, the theme of the last quarter and going forward will continue to be big plays at tier-one airports, right?

Tal Keinan: Report with one. Oh, I'm sorry. I think we were muted. I'm going to start that again.

Francisco Gonzalez: Yes.

Tal Keinan: Yep, thank you. Thanks, Francisco. On the site acquisition side, the theme of the last quarter and going forward, will continue to be big plays at tier 1 airports, right? If you can expand on a tier 1 airport, put 300,000, 400,000 square feet on a tier 1 airport, that is worth a lot more than three smaller sites on a tier 2 or a tier 1 airport for that matter. Obviously, the revenue per square foot is higher, but also your OpEx, your operating margin goes up. Right? Because two phases, and we're seeing this right now very clearly in Miami, two phases cost almost the same to operate as one phase, but your revenue goes up, in this case, nearly doubles. Look out for that theme at the tier 1 airports.

Speaker #1: If you can expand—if you can expand on a Tier One airport, put 300,000 or 400,000 square feet on a Tier One airport—that is worth a lot more than three smaller sites on a Tier Two, or a Tier One airport for that matter.

Speaker #1: Obviously, the revenue per square foot is higher, but also your OpEx your operating margin goes up, right? Because two phases, and we're seeing this right now, very clearly in Miami, two phases is cost almost the same to operate as one phase, but your revenue goes up in this case nearly doubles.

Speaker #1: So look out for that theme at the tier one airports. On the development side, you've watched all of the steps we've taken to scale up the vertical integration, all the way to the general contracting.

Tal Keinan: On the development side, you've watched all the steps we've taken to scale up the vertical integration all the way to the general contracting. Now it's time to prove it out empirically. As I mentioned a couple slides ago, we are on schedule, on budget at all of the airports in the pipeline right now. So continue watching that. Then prototyping. The third version of our prototype has gone through third-party testing now. It's approved, it's ready to go, and the first airport at which that will launch is Fort Worth, which breaks ground later this year in Q4. We'll show you pictures of that. More functional, costs less per square foot to put up. It's a better hangar and for cheaper. That's obviously what we're striving to do here.

Speaker #1: Now, it's time to prove it out empirically. As I mentioned a couple of slides ago, we are on schedule and on budget at all of the airports in the pipeline right now.

Speaker #1: So continue watching that. And then prototyping. So, the third version of our prototype has gone through third-party testing now. It's approved. It's ready to go.

Speaker #1: And the first airport at which that will launch is Fort Worth, which breaks ground later this year in Q4. We'll show you pictures of that.

Speaker #1: More functional cost, less per square foot to put up. It's a better hangar and for cheaper. So that's obviously what we're striving to do here.

Speaker #1: On the leasing side, so we made the point about those larger footprints that we're trying to see at the tier one airports. The occupancy optimization program, as we've discussed, especially in the Newark campuses, you'll see this at Opelaka phase two, where we're working to achieve significantly greater than 100% occupancy on these campuses.

Tal Keinan: On the leasing side, we made the point about those larger footprints that we're trying to see at the tier 1 airports. The occupancy optimization program, as we've discussed, especially in the newer campuses, you'll see this at Opa-locka phase 2, where we're working to achieve significantly greater than 100% occupancy on these campuses. San Jose is the first airport that we've really, I think, maximized that. We already talked about the re-lease rates. Operations, you'll continue to see operating margins improve if we do this right. That program is in place and already saving us OpEx dollars. Then perhaps most importantly of all is the resident experience itself, which, yes, you need the physical asset in order to deliver it. But fundamentally, what our customers actually experience is the service. Consistently, we keep going out with resident surveys.

Speaker #1: San Jose is the first airport that we've really I think maximized that. We already talked about the release rates. Operations will continue to see operating margins improve if we do this right.

Speaker #1: That program is in place and already saving us OpEx dollars. Then, perhaps most importantly of all, is the resident experience itself. Yes, you need the physical asset in order to deliver it, but fundamentally, what our customers actually experience is the service.

Speaker #1: And consistently, we keep going out with resident surveys. We are being ranked by far as the number one home base solution in business aviation.

Tal Keinan: We are being ranked by far as the number one home base solution in business aviation. You can see that empirically that we charge a lot more than any other solution and still have waiting lists at all of the stabilized campuses. So we will continue working on that. That is increasingly, I think, the key differentiator in the HBO business model. Next slide. Looking forward, look for more of the same on site acquisition, meaning tier 1 airports, tier 1 geographies, and more same-field expansions to the extent that we can do those. On the development side, if you look what's happening over the next two quarters, we're going from a little over 600,000 square feet now under construction to a little over 1,200 square. Sorry. A little over 600,000 square feet now under construction to over 1.2 million square feet under construction by year-end.

Speaker #1: You can see that empirically, in that we charge a lot more than any other solution and still have waiting lists at all of the stabilized campuses.

Speaker #1: So, we will continue working on that. That is increasingly, I think, the key differentiator in the HBO business model. Next slide. Looking forward—so look for more of the same on site acquisition.

Speaker #1: We meaning tier one airports, tier one geographies. And more same field expansions to the extent that we can do those. On the development side, so if you look what's happening over the next two quarters, we're going from a little over 600,000 square feet now under construction to over 1,200 square sorry, sorry, 1.

Speaker #1: A little over 600,000 square feet now under construction to over 1.2 million square feet under construction by year end. So this is the scale up that we're talking about.

Tal Keinan: This is the scale-up that we're talking about. Watch our schedules, watch our budget versus actual. That's what we're going to be trying to deliver on. At the same time, as we grow and continue to refine the prototype, look for that cost per square foot to continue going lower. On the leasing side, just to give people a sense of what we hope to achieve in revenues. Let's start with the, I guess, it's the smaller component, but 65,000 square feet of lease that will come to term by the end of 2026 and will need to be re-leased, and we'll be looking for big step-ups on those. 161,000 square feet that are currently in lease-up at places like Dallas and Denver.

Speaker #1: Watch our schedules. Watch our budget versus actual. That's what we're going to be trying to deliver on. And at the same time, as we grow and continue to refine the prototype, look for that cost per square foot to continue going lower.

Speaker #1: On the leasing side, just to give people a sense of what we hope to achieve in revenues, so let's start with, I guess, it's the smaller component, but 65,000 square feet that of lease that will come to term by the end of 2026.

Speaker #1: And we'll need to be released, and we'll be looking for big step-ups on those. There are 161,000 square feet that are currently in lease-up, right?

Speaker #1: That places like Dallas and Denver. And then we have this is the big number, that 218,000 square feet that is currently under construction, but will be slated for lease up by the end of 2026.

Tal Keinan: We have, this is the big number, that 218,000 square feet that is currently under construction, but will be slated for lease-up by the end of 2026. So a big lift for the leasing team. We have an expanded team. We continue with our tried-and-true practice of bringing in military veterans, and our leasing team has expanded, I think, exclusively now with military veterans. We talked about pre-leasing on the last call, which had good results in Opa-locka phase 2. We have Bradley, Connecticut coming up in Q3, Q4. The proof will be in the pudding. Watch to see how that campus opens in terms of occupancy. Lastly, operations. We speak every time about starting with defense. Safety, security, and efficiency come before everything else. We spoke a little bit on the last slide about innovation, working with the residents.

Speaker #1: So a big lift for the leasing team. We haven't expanded team we continue with our tried and true practice of bringing in military veterans and our leasing team has expanded I think exclusively now with military veterans.

Speaker #1: And we talked about pre-leasing on the last call, which had good results in Opelika Phase Two. We have Bradley, Connecticut coming up in Q3 and Q4.

Speaker #1: The proof will be in the pudding. Watch to see how that campus opens in terms of occupancy. And then lastly, operations. So we speak every time about starting with defense, right?

Speaker #1: Safety, security, and efficiency come before everything else. We spoke a little bit on the last slide about innovation, working with the residents. The last point that I'll want to mention and people have asked about this a little bit because the network has grown to a point where it's starting to make sense.

Tal Keinan: The last point that I want to mention, and people have asked about this a little bit because the network has grown to a point where it's starting to make sense, which is people using multiple Sky Harbour campuses. We just rolled out a program called SkyKey, which gives Sky Harbour network access to some of our top residents. Those are our guinea pigs, where they get the full Sky Harbour service exactly as they're accustomed to with all of the privacy and the security that that entails wherever they go within the Sky Harbour network. That's a new revenue driver in the business. I don't think we've captured much revenue yet. We just rolled it out, but look for that to start contributing to our revenues going forward, and contributing, I think, to the value to residents of the Sky Harbour offering.

Speaker #1: Which is people using multiple Sky Harbor campuses. So we just rolled out a program called Sky Key which gives Sky Harbor network access to some of our top residents that's called those are guinea pigs where they get the full Sky Harbor service exactly as our custom to with all of the privacy and the security that that entails.

Speaker #1: Wherever they go within the Sky Harbour network. So that's a new revenue driver in the business. I don't think we've captured much revenue yet.

Speaker #1: We just rolled it out, but look for that to start contributing to our revenues going forward—and contributing, I think, to the value to residents of the Sky Harbour offering.

Speaker #1: With that, I think we are ready for questions.

Tal Keinan: With that, I think we are ready for questions.

Speaker #2: Yes. Operator, please go ahead with the question from a research cover analyst. And again, a reminder for everybody else to submit questions through investors@skyharbor.group, and we'll answer those promptly in the coming hours and days.

Francisco Gonzalez: Yes. Operator, please go ahead with the queue from our research cover analysts. Again, reminder for everybody else to submit questions through investors@skyharbor.group, and we will answer those promptly in the coming hours and day. Operator.

Speaker #2: Operator.

Speaker #3: At this time, I would like to remind everyone that in order to ask a question, please press star one on your telephone keypad. Your first question comes from the line of Michael Diana with Maxim Group.

Operator: At this time, I would like to remind everyone, in order to ask a question, please press star one on your telephone keypad. Your first question comes from the line of Michael Diana with Maxim Group. Please go ahead. Michael Diana, your line is open.

Speaker #3: Please go ahead. Michael, Diana, your line is open.

Michael Diana: Actually, I did not signal for a question.

Speaker #4: Actually, I didn't signal for a question.

Speaker #3: Your next question comes from the line of Tom Catherwood with BTIG. You may go ahead.

Operator: Your next question comes from the line of Thomas Catherwood with BTIG. You may go ahead.

Speaker #2: Great. Thank you. Good afternoon, everybody. Lots and lots of talk about here tall. Maybe starting with you, so appreciated all the detail that you gave on leasing at the operating properties and you quickly touched on the pre-leasing.

Thomas Catherwood: Great. Thank you. Good afternoon, everybody. Lots and lots to talk about here. Tal, maybe starting with you. I appreciated all the detail that you gave on leasing at the operating properties, and you quickly touched on the pre-leasing. It seems like you made some significant progress there in Q2, especially with the second phase in San Jose, which I think is fully wrapped up now before you even started construction. Can you talk a little bit more about pre-leasing progress, both there, maybe at Dulles as well? Then as you are rolling out that program, are you utilizing the kind of introductory rate strategy that you have done at ADS, DVT, and APA, or are you using a different approach?

Tom Catherwood: Great. Thank you. Good afternoon, everybody. Lots and lots to talk about here. Tal, maybe starting with you. I appreciated all the detail that you gave on leasing at the operating properties, and you quickly touched on the pre-leasing. It seems like you made some significant progress there in Q2, especially with the second phase in San Jose, which I think is fully wrapped up now before you even started construction. Can you talk a little bit more about pre-leasing progress, both there, maybe at Dulles as well? Then as you are rolling out that program, are you utilizing the kind of introductory rate strategy that you have done at ADS, DVT, and APA, or are you using a different approach?

Speaker #2: But it seems like you made some significant progress there into Q2, especially with the second phase in San Jose, which I think is fully wrapped up now before you even started construction.

Speaker #2: Can you talk a little bit more about pre-leasing progress—both there and maybe at Dulles as well? And then, as you're rolling out that program, are you utilizing the kind of introductory rate strategy that you've done at ADS, DVT, and APA, or are you using a different approach?

Tal Keinan: Thanks for the question. Thanks for the coverage, Tom. Look, I think what is maybe conspicuous about pre-leasing at San Jose, which is different from Bradley and Dulles, it is much more like Miami phase 2, is that when you have a phase 1 in operation in a market, we are, I think, maybe just now becoming a national brand in business aviation. What we have been to date is a collection of local brands in every geography. If you own an airplane in Miami, you are trying to get into Sky Harbour. There is a waiting list at Sky Harbour, Miami. In other locations, we are just not as known. Again, we think that is beginning to change now. There is a little more of a national recognition of where we are coming. It is definitely easier. There is so much pent-up demand in the phase 2 markets that pre-leasing goes a lot easier.

Speaker #1: Thanks for the question. Thanks for the coverage, Tom. So look, I think what may be conspicuous about pre-leasing at San Jose, which is different from Bradley and Dulles—it's much more like Miami phase two—is that when you have a phase one in operation in a market, I think maybe just now becoming a national brand in business aviation, what we've been to date is a collection of local brands in every geography.

Speaker #1: If you own an airplane in Miami, you're trying to get into Sky Harbour, right? There's a waiting list at Sky Harbour in Miami. In other locations, we're just not as known.

Speaker #1: Again, we think that's beginning to change now. There is a more of a national recognition of where we're coming. But it is definitely easier.

Tal Keinan: Again, we think that is beginning to change now. There is a little more of a national recognition of where we are coming. It is definitely easier. There is so much pent-up demand in the phase 2 markets that pre-leasing goes a lot easier.

Speaker #1: There's so much pent-up demands in the phase two markets. That pre-leasing goes a lot easier. San Jose too, I mean, I should say for all three of those airports, there is no introductory rate.

Tal Keinan: San Jose 2, I should say for all three of those airports, there is no introductory rate. If you think about it, I keep going back to Miami phase 1, where we opened up 12 new hangars, whatever that was, 160,000 square feet of hangar simultaneously. More hangar than never been put on a market at once, as far as we know, ever. I do not think we quite appreciated what that glut would do with a sophisticated customer base who understands that there are 12 hangars and 12 vacancies. There is a lot of leverage in that negotiation on the part of the resident. The main concern of a chief pilot or flight department negotiating a lease on an existing campus like Miami, at that time, was overpaying. He does not want to be the person who volunteered to pay more than their neighbors are paying.

Speaker #1: If you think about it, I keep going back to Miami, phase one, where we opened up 12 new hangars—whatever that was, 160,000 square feet of hangar.

Speaker #1: Simultaneously, more hangars than ever have been put on the market at once—as far as we know, ever. I don't think we quite appreciated what that glut would do with a sophisticated customer base who understands there's 12 hangars and 12 vacancies.

Speaker #1: There's a lot of leverage in that negotiation on the part of the resident. The main concern of a chief pilot or flight department, negotiating a lease on an existing campus like Miami at that time, was overpaying.

Speaker #1: It does not want to be the person who volunteered to pay more than their neighbors are paying. When you pre-lease, we're seeing that the main concern is really FOMO.

Tal Keinan: When you pre-lease, we are seeing that the main concern is really FOMO. As we get closer to fully leased, and as you see the rates climbing up. The first leases are signed, they are not introductory rates, but they are lower rates than the last leases are signed. That becomes the primary concern. So when you have a year before you open up, or in the case of San Jose, even more than a year before you open up, there are a lot of people who want to lock in that space and know it is going to be gone. By the way, we have, I am sorry to say, some angry people who did not get space in San Jose phase 2, and if you gave us a phase 3 there, we would grab it.

Speaker #1: And as we get closer to fully leased, and as you see the rates climbing up, right, the first leases that are signed—they're not introductory rates, but they're lower rates than the last leases that are signed.

Speaker #1: That becomes the primary concern. So when you have a year before you open up—or in the case of San Jose, even more than a year before you open up—there are a lot of people who want to lock in that space and know it’s going to be gone.

Speaker #1: By the way, we have I'm sorry to say some angry people who did not get space in San Jose phase two. And if you gave us a phase three there, we would grab it.

Speaker #2: Now, I appreciate those answers. Maybe, sticking with that last comment and what you had said about site selection, could we focus on top airports and top markets?

Thomas Catherwood: Now, appreciate those answers. Maybe sticking with that last comment, what you had said about site selection and this focus on top airports and top markets. You've talked in the past about how airports and municipalities are limited in their ability to push ground rents. Are you seeing airports looking for other avenues to extract higher economics? Maybe it's more required CapEx spending or infrastructure spending or fuel purchases. Because you have a sense of what it takes to do these now, does that give you an advantage over others that might be competing when it comes to site procurement?

Tom Catherwood: Now, appreciate those answers. Maybe sticking with that last comment, what you had said about site selection and this focus on top airports and top markets. You've talked in the past about how airports and municipalities are limited in their ability to push ground rents. Are you seeing airports looking for other avenues to extract higher economics? Maybe it's more required CapEx spending or infrastructure spending or fuel purchases. Because you have a sense of what it takes to do these now, does that give you an advantage over others that might be competing when it comes to site procurement?

Speaker #2: You've talked in the past about how airports and municipalities are limited in their ability to push ground rents. But are you seeing airports looking for other avenues to extract higher economics—maybe it's more required capex spending or infrastructure spending, or fuel purchases?

Speaker #2: And because you have a sense of what it takes to do these now, does that give you an advantage over others that might be competing when it comes to site procurement?

Tal Keinan: It's a good question. I don't think there's any one-size-fits-all answer. What I will say, a rule of thumb that can be applied pretty broadly is, by the way, and just to be specific, yeah, there are certain airports where the total CapEx is what's important. There are certain airports where there are other items that important. What seems to be fairly common, though, is that our interests are aligned with the airports, and our interests are aligned with base residents in that geography. So when you show up in Atlanta, there is a hangar deficit, and the FBO model doesn't really address that deficit because remember, the FBOs make their money outdoors from fueling. You're not allowed to fuel indoors, inside a hangar for regulatory fire code reasons. So their revenue is produced outdoors. They want as much outdoor space as possible.

Speaker #1: I mean, it's a good question. I don't think there's any one-size-fits-all answer. What I will say—a kind of rule of thumb that can be applied pretty broadly is, and I mean, by the way, just to be specific—yeah, there are certain airports where the total capex is what's important.

Speaker #1: There are certain airports where there are other items that are important. What seems to be fairly common, though, is that our interests are aligned with the airports, and our interests are aligned with base residents in that geography.

Speaker #1: Right? So when you show up in Atlanta, there is a hangar deficit. And the FBO model doesn't really address that deficit, because remember, the FBOs make their money outdoors, from fueling.

Speaker #1: You're not allowed to fuel indoors, inside a hangar, for regulatory fire code reasons. So, their revenue is produced outdoors. They want as much outdoor space as possible, right?

Speaker #1: Get the transient traffic in, get them fueled, and get them out as quickly as possible. That is the business model. So for the municipality or county that wants to maximize hangar space, they're not really getting everything they want out of the FBOs.

Tal Keinan: Get the transient traffic in, get them fueled, and get them out as quickly as possible. That is the business model. So for the municipality or county that wants to maximize hangar space, they're not really getting everything they want out of the FBOs. We come in and show them from the beginning, we make our money from rent. Our money is made indoors, not outdoors. Our interests are aligned with you. We want to maximize our hangar footprint. As you, I think, know, our campus layouts have very little ramp and a lot of hangar. They look very different from an FBO's campus layout. That is a winning proposition for a lot of airports. Take another is at repositioning, particularly in heavily trafficked markets, New York being primary among them, but also Southern California, Northern California, increasingly South Florida, Dallas area. There is simply no room.

Speaker #1: We come in and show them from the beginning: we make our money from rent. Our money is made indoors, not outdoors. Our interests are aligned with you.

Speaker #1: We want to maximize our hangar footprint. And as you, I think, know, our campus layouts have very little ramp and a lot of hangar.

Speaker #1: They look very different from an FBO's campus layout. That is a winning proposition for a lot of airports. Take another, is that repositioning, particularly in heavily trafficked markets—New York being maybe primary among them, but also Southern California, Northern California, increasingly South Florida, and the Dallas area.

Speaker #1: There is simply no room. You cannot get hangar space at Teterboro. So most of the New York, for example, Manhattan aircraft owners who operate out of Teterboro—their departures and arrivals with passengers are to Teterboro.

Tal Keinan: You cannot get hangar space at Teterboro. So most of the New York, for example, Manhattan aircraft owners who operate out of Teterboro, their departures and arrivals with passengers are to Teterboro. The airplane doesn't live at Teterboro. It lives at Bradley, Connecticut or Trenton, New Jersey. In those situations, there's a lot of pressure to reduce repositioning flights. Here's when I talk about that triple alignment of interest. From the aircraft owner's perspective, those repositioning flights are expensive. That's fuel. That's pilot hours. They're logistically cumbersome. If you're flying far, you're flying to Eastern Europe or Asia from New York, when your day began with a repositioning flight and a fueling and hold on the ground at Teterboro, your pilots will run out of duty hours. So we have people who fly with double cruises. Those are very logistically cumbersome to do that repositioning.

Speaker #1: The airplane doesn't live at Teterboro. It lives at Bradley, Connecticut, or Trenton, New Jersey. In those situations, there's a lot of pressure to reduce repositioning flights, right?

Speaker #1: And here's what I talk about—kind of that triple alignment of interest. From the aircraft owners' perspective, those repositioning flights are expensive. That's fuel, that's pilot hours.

Speaker #1: They're logistically cumbersome. If you're flying far—you're flying to Eastern Europe or Asia from New York—when your day began with a repositioning flight, and a fueling and hold on the ground at Teterboro, your pilots will run out of duty hours, right?

Speaker #1: So we have people who fly with double cruises. There's a very logistically cumbersome to do that repositioning. From the airport's perspective, and the local government's perspective, that's environmental impact.

Tal Keinan: From the airport's perspective and the local government's perspective, that's environmental impact. That's airplanes flying empty and no passengers. That's noise impact. Those flights are straight and low and loud. They're typically conducted under VFR when the weather permits. You're just going straight. You want to get there as quickly as you can. It's wear and tear on the airport infrastructure. Think about it, four operations for every round trip rather than two operations for every round trip, and it's taxing on the air traffic control system. Coming and say, "Look, when we come to your airport, we're actually going to reduce repositioning," that is a big deal, right? Again, from the FBO's perspective, and I'm not trying to knock the FBOs, great business model, and they're great partners to us as well, but you should understand, they are a hotel. Fundamentally, that movement drives fuel sales.

Speaker #1: That's airplanes flying empty and no passengers. That's noise impact, right? Those flights are straight and low and loud, right? They're typically conducted under VFR when the weather permits.

Speaker #1: You're just going straight. You want to get there as quickly as you can. It's wear and tear on the airport infrastructure, right?

Speaker #1: It's think about it four operations for every round trip rather than two operations. For every round trip. And it's taxing on the air traffic control system.

Speaker #1: So come in and say, look, when we come to your airport, we're actually going to reduce repositioning. That is a big deal, right? And again, from the FBO's perspective—and I'm not trying to knock the FBOs—great business model.

Speaker #1: And they're great partners to us as well. But you should understand, they are a hotel, fundamentally. That movement drives fuel sales. That is their incentive.

Tal Keinan: That is their incentive. We're incentivized very differently. I hope that answered your question. That's an example of how interests can align between us and the airports.

Speaker #1: We're incentivized very, very differently. So I hope that answered your question. That's an example of how interests can align between us and the airports.

Speaker #2: No, that's perfect. Thank you for all that insight, Tal. That's it for me, and I appreciate all the answers.

Thomas Catherwood: Yep. That's perfect. Thank you for all that insight, Tal. That's it for me, and appreciate all the answers.

Tom Catherwood: Yep. That's perfect. Thank you for all that insight, Tal. That's it for me, and appreciate all the answers.

Speaker #3: We are next question comes from the line of Timothy DeAgostinino with B. Riley Securities. You may go ahead.

Operator: Your next question comes from the line of Timothy D'Agostino with B. Riley Securities. You may go ahead.

Speaker #4: Yeah, hi. Thanks for taking the questions today. Just on the release—understanding the commentary, you kind of expect that to tick down over time.

Timothy D'Agostino: Yeah. Hi, thanks for taking the questions today. Just on the release, I understand the commentary of you kind of expect that to tick down over time. It sounded like, obviously it was 23% last quarter, 19% this quarter. But I guess, how should we think about that revenue escalation, maybe over the next 2, 3 years, given new campuses will come online, those leases will be reassigned, and as well, at ADS and APA, where you're dropping the lease lower to fill the hangar. Obviously, that next lease would have a pretty meaningful escalator, I would assume. Just trying to understand how we should think about that going forward, because it seems like with new campuses coming online, the churn there could push that maybe higher, but just trying to get your thoughts on that. Thank you.

Speaker #4: It sounded like, obviously, it was 23% last quarter and 19% this quarter. But I guess, how should we think about that revenue escalation, maybe over the next two to three years, given new campuses will come online and those leases will be re-signed?

Speaker #4: And then as well, at ADS and APA, you're dropping the lease lower to fill the hangar. Obviously, that next lease would have a pretty meaningful escalator, I would assume.

Speaker #4: So just trying to understand how we should think about that going forward because it seems like with new campuses, coming online, the churn there could push that maybe higher, but just trying to get your thoughts on that.

Speaker #4: Thank you.

Speaker #1: Yeah, thank you. Thank you, Tim. So, I think your instinct is probably right. Right now, we have almost three campuses where we're doing the introductory rate strategy.

Tal Keinan: Yeah. Thank you, Tim. So I think your instinct is probably right. On those 3 campuses where we're doing the introductory rate strategy, yeah, I think it's reasonable to expect a bigger bump up on that first release. You're right. Those introductory rates can be very low on some of those campuses. It's really about just not flying empty. While we do the re-lease out. And then on those pre-lease campuses where we're actually getting above-target rents before we even open the doors, probably less of a bump on the pre-lease. So, we've avoided trying to make predictions on inflation rates on airports. As I think you know, I think they're going to be completely divorced from CPI. There's just no land to develop on airports, and the fleet just keeps growing. There's nowhere to put these aircraft.

Speaker #1: Yeah, I think it's reasonable to accept to expect a bigger bump up on that first release. You're right. And we're those introductory rates can be very low on some of those campuses.

Speaker #1: It's really about just not flying empty while we do the real lease-up. And then, on those pre-lease campuses, where we're actually getting above target rents before we even open the doors, there's probably less of a bump on the pre-lease.

Speaker #1: So, we've avoided trying to make predictions on inflation rates on airports. As I think you know, I think they're going to be completely divorced from CPI.

Speaker #1: There's just no land to develop on airports, and the fleet just keeps growing. There's nowhere to put these aircraft. So, we think inflation is baked in, but we're not giving out numbers.

Tal Keinan: So we think inflation's baked in, but we're not giving out numbers. We figure the best we can do is just publish this re-lease rate, remind everybody that all of our leases feature annual escalators of CPI with a floor of 4%, and then let people come to their own conclusions about what the inflation rate should be. Because again, if you're building a model for a company, one of your most sensitive inputs is going to be your assumption on inflation rates going forward in hangar rents. Again, we're not making any predictions on that, but we want to provide you with as many tools as possible so you can.

Speaker #1: We figured the best we can do is just publish this release rate and remind everybody that all of our leases feature annual escalators tied to CPI, with a floor of 4%.

Speaker #1: And then let people come to their own conclusions about what the inflation rate should be. Because, again, if you're building a model for the company, one of your most sensitive inputs is going to be your assumption on inflation rates.

Speaker #1: Going forward in hangar rents. So again, we're not making any predictions on that, but we want to provide you with as many tools as possible so you can.

Speaker #4: Okay, great. Thanks for the answer there. And if I could just ask a second one, just on the half million of net cash provided by operating activities—obviously, this is the first quarter of positive operating cash flow in the company's history.

Timothy D'Agostino: Okay, great. Thanks for the answer there. And then if I could just ask a second one. Just on the half million of net cash provided by operating activities, obviously, this is first quarter of positive operating cash flow in the company's history. Was there anything in the quarter that stands out as maybe a one-time non-recurring item that would've pushed that positive? Should we think about that cash number being positive going forward? Or, as new campuses open up, it could tick back to negative? Thank you.

Speaker #4: Was there anything in the quarter that stands out as maybe a one-time, non-recurring item that would have pushed that positive? Should we think about that cash number being positive going forward, or as new campuses open up, could it tick back to negative?

Speaker #4: Thank you.

Speaker #5: Yeah, good question. And again, thank you for your coverage. So, this is a recurrent type of number. Of course, in the next two quarters, we're going to continue benefiting from increased revenues, as I mentioned earlier, from the leasing of, or the finished leasing of, Aloca Phase Two.

Francisco Gonzalez: Yeah, good question. Again, thank you for your coverage. This is a recurrent type of number. Of course, in the next 2 quarters, we are going to continue benefiting from increased revenues, as I mentioned earlier, from the leasing or the finished leasing of Opa-locka Phase 2, then continued leasing at APA and DVT. In Q1 of 2027, you are going to see the very strong effect of adding the opening of Bradley and the opening of ADS Dallas 2, that will make that number jump a step function into the positive, and from then never look at a negative number, hopefully, again.

Speaker #5: And then continue leasing at APA and DVT. Now, in Q1 of '27, you're going to see the very strong effect of adding the opening of Bradley and the opening of ADS Dallas 2.

Speaker #5: And that will make that number jump, step-function, into the positive and from then, hopefully, never look at a negative number again. But so between now and then, it's probably going to be trending higher because, again, of the continued leasing of the existing facilities.

Francisco Gonzalez: Between now and then, it is probably going to be trending higher because again, of the continued leasing of the existing facilities, but it will not be until Q1, Q2 of next year that it propels and never looks back on the back of the opening of Bradley and Addison 2.

Speaker #5: But it will not be until Q1 or Q2 of next year that it propels and never looks back, on the back of the opening of Bradley and Edison 2.

Speaker #4: Okay, great. Thanks for the commentary, and congrats again on the quarter.

Timothy D'Agostino: Okay, great. Thanks for the commentary, and congrats again on the quarter.

Speaker #5: Thank you.

Francisco Gonzalez: Thank you.

Speaker #3: Your next question comes from the line of Ryan Myers with Lake Street Capital Markets. Please go ahead.

Operator: Your next question comes from the line of Ryan Meyers with Lake Street Capital Markets. Please go ahead.

Speaker #6: Hey guys, thanks for taking my questions. First one for me with the unchanged guide and the roughly million dollar EBITDA loss here in the quarter, can you just walk us through sort of the key drivers required to reach the four to six million dollar annualized run rate by the year end on adjusted EBITDA?

Ryan Meyers: Hey, guys. Thanks for taking my questions. First one for me, with the unchanged guide and the roughly $1 million EBITDA loss here in the quarter, can you just walk us through sort of the key drivers required to reach the $4 million to $6 million annualized run rate by the year-end on adjusted EBITDA?

Speaker #5: Yes, let me put some comments, and then also, Mike, if you want to jump in as well. So, on revenues, obviously we're trending nicely to meet or exceed— but let's say right now, meet the guidance we provided.

Francisco Gonzalez: Yes. Let me put some comments and then also, Mike, if you want to jump in as well. On revenues, obviously, we're trending nicely to meet or exceed, but let's see right now, meet the guidance we provided. Obviously, we'll look at the guidance again in November at the time of our Q3. I wish time, by the way, let me take the opportunity to state that we will be starting to give guidance for 2027 in the next quarter webcast for Q3. Now, in the context of adjusted EBITDA, we're coming into these coming months with a lot of momentum of the leasing of Opa-locka phase 2 at a very attractive rate.

Speaker #5: And obviously, we'll look at the guidance again in November at the time of our Q3. At which time, by the way, let me take the opportunity to state that we will be starting to give guidance for 2027 in the next quarter webcast for Q3.

Speaker #5: Now, in the context of adjusted EBITDA, we're coming into the coming months with a lot of momentum with the leasing of Aloca Phase Two at a very, very attractive rate.

Speaker #5: And also remember that that is a phase that has a lot of operating leverage, because we're basically operating with the same staff, since it's an extension.

Francisco Gonzalez: Also remember that that is a phase that has a lot of operating leverage because we're basically operating with the same staff because it's an expansion, it's at a phase 2, and that does wonders for gross profits. So you don't need too much to move from the current run rate into the run rate in our guidance to meet the targets that we outlined. I don't know, Michael, if you have anything to add.

Speaker #5: It's a phase two, and that does wonders for gross profit. So, you don't need too much to move from the current run rate into the run rate in our guidance to meet the targets that we outlined.

Speaker #5: I don't know, Michael, if you have anything to add.

Speaker #1: Francisco, you hit on the two main things that I was going to touch on, particularly the operating leverage. As these revenues start to come in, OPEX is not increasing in tandem, and it’s essentially very accretive to adjusted EBIT, and I think it will be crucial to achieving the guidance, as we expect.

Michael Schmitt: Francisco, you hit on the two main things that I was going to touch on, particularly the operating leverage. As these revenues start to come in, OpEx is not moving, increasing in tandem, and it is essentially very accretive to adjusted EBITDA, and I think would be crucial to achieving the guidance as we expect.

Mike Schmitt: Francisco, you hit on the two main things that I was going to touch on, particularly the operating leverage. As these revenues start to come in, OpEx is not moving, increasing in tandem, and it is essentially very accretive to adjusted EBITDA, and I think would be crucial to achieving the guidance as we expect.

Speaker #6: Got it. No, that's great to hear. And then lastly for me, you guys noted that the development team continues to lower costs. So, where does current construction cost per square foot stand, and how much further opportunity do you think remains through just vertical integration? And then, just any prototype improvements that you guys have seen?

Ryan Meyers: Got it. No, that is great to hear. Then lastly for me, you guys noted the development team continues to lower costs. So where does current construction cost per square foot stand, and how much further opportunity do you think remains through just vertical integration and then just any prototype improvements that you guys have seen?

Speaker #5: Do you want to take that, and then maybe I'll add to that?

Francisco Gonzalez: Do you want to take that, then maybe I will add to that?

Francisco Gonzalez: Tal, do you want to take that, then maybe I will add to that?

Speaker #1: I'm sorry, can you repeat the question?

Tal Keinan: I am sorry, can you repeat the question?

Speaker #6: Yeah, just an update on current construction cost per square foot, and just how much opportunity you think remains with the vertical integration, and then just any of the prototype integration that you guys have done.

Ryan Meyers: Yeah, just an update on current construction cost per square foot and just how much opportunity you think remains with the vertical integration and then just any of the prototype integration that you guys have done.

Speaker #1: Ryan, we're kind of overdue, I think, for resetting a target. When we were up above 300, we set 250 as a target. We're at about 242 right now.

Tal Keinan: Ryan, we're kind of overdue, I think, for resetting a target. When we're up above 300, we set 250 as a target. We're at about 242 right now. We do think there's a lot more juice to squeeze, but we haven't actually set a target yet. What you'll see is that we're using. I think we should provide some photographs when we actually break ground on the version 3 of our prototype in Fort Worth, but you're going to see new and different construction materials, some different construction techniques. The layout of the hangar is going to look very similar. The outside actually looks a lot better. I think it's aesthetically a lot more pleasing. National procurement. We're no longer purchasing things like fixtures and lighting and electrical components campus by campus. We're now buying 10 airports ahead.

Speaker #1: We do think there's a lot more juice to squeeze, but we haven't actually set a target yet. What you'll see is, we're using—I think we should provide some photographs when we actually break ground on the version three of our prototype in Fort Worth. But you're going to see new and different construction materials, some different construction techniques.

Speaker #1: The layout of the hangar is going to look very similar. The outside actually looks a lot better. I think it's aesthetically a lot more pleasing.

Speaker #1: National procurement, right? So we're no longer purchasing things like fixtures, lighting, and electrical components campus by campus. We're now buying 10 airports ahead.

Speaker #1: So those numbers haven't really manifested yet, not completely at least, in that $242. So look for more to come. On the other side, we could have some macro headwinds from construction inflation that we're going to have to battle.

Tal Keinan: Those numbers haven't really manifested yet, or not completely at least, in that 242. Look for more to come. On the other side, we could have some macro headwinds on just construction inflation that we're going to have to battle. I'm glad you raised the point. I think maybe on the next call, we're going to have to set another target.

Speaker #1: But I think I'm glad you raised the point. I think maybe on the next call we're going to have to set another target.

Speaker #4: Yeah, let me add to that.

Francisco Gonzalez: Yeah, let me add to that, if I may. As you saw from the chart that Tal covered earlier, showing that now we're entering a couple of quarters where we're going to be in construction at about eight and moving probably to 10 different campuses at the same time. The coming quarters are going to provide a lot of data, a lot of volume and economies of scale to really turn what is right now a projection into hard numbers for us to share with our investor base and with you guys, and so on. Nothing pleases me more to hear that our manufacturing facility in Texas is at 2 and almost 2 and a half type of shifts. We don't go to 3 because people have to take someday off.

Speaker #5: If I may. So, as you saw from the chart that Tal covered earlier, we're now entering a couple of quarters where we will be in construction at about eight, and likely moving to 10 different campuses at the same time.

Speaker #5: The coming quarters are going to provide a lot of data—a lot of volume and economies of scale—to really turn what is right now a projection into hard numbers for us to share with our investor base, with you guys, and so on.

Speaker #5: Nothing pleases me more than to hear that our manufacturing facility in Texas is at two, and almost two and a half, shifts. And we don't go to three because people have to take Sunday off.

Speaker #5: But it is that type of economies of scale with volume that's going to be one of the key drivers of our taking, keeping, and maintaining construction costs overall low.

Francisco Gonzalez: But it is that type of economies of scale with volume that is going to be one of the key drivers of our keeping and maintaining construction costs overall low.

Speaker #6: Got it. No, that's helpful. Thanks, guys.

Ryan Meyers: Got it. No, that is helpful. Thanks, guys.

Speaker #3: Your next question comes from the line of Gaurav Mehta with Alliance Global Partners. Please go ahead.

Operator: Your next question comes from the line of Gaurav Mehta with Alliance Global Partners. Please go ahead.

Speaker #7: Yeah, thank you. I wanted to ask you, on your pre-leasing going forward, how should we think about how you would approach pre-leasing? Is it going to be a standard offering across the new construction, or would you be selective where you implement pre-leasing?

Gaurav Mehta: Yeah, thank you. I wanted to ask you on your pre-leasing going forward, how should we think about how you would approach pre-leasing? Is it going to be a standard offering across the new construction, or would you be selective where you implement pre-leasing?

Speaker #1: Hi, Gaurav. Yeah, thank you. Yes, that's standard going forward. Opa-locka Phase Two was the first campus we did with that. You'll see Bradley as next, and then Dallas Phase Two is the one after that, and that's Salt Lake City.

Tal Keinan: Hi, Gaurav. Yeah, thank you. Yes, that is standard going forward. Opa-locka phase II was the first campus we did with that. You will see Bradley as next, and then Dallas phase II is the one after that, and then Salt Lake City. We are working on all of those, as you know. We see no reason to change it. I think we might fiddle with the pre-leasing goals. Like right now, we are saying 50%, half to two-thirds leased by opening. That is what we are targeting. Obviously, you are leaving a little bit of money on the table when you do it like that because these are long-term leases. This is very different from Dallas, Phoenix, and Denver. So you are locking yourself in. The rates do creep up as you advance with the leasing of a campus.

Speaker #1: We're working on all of those, as you know. We see no reason to change it. I think we might fiddle with the pre-leasing goals.

Speaker #1: Right now we're saying 50%, half to two-thirds leased by opening. That's what we're targeting. Obviously, you're leaving a little bit of money on the table when you do it like that because these are long-term leases.

Speaker #1: This is very different from Dallas, Phoenix, and Denver. So, you are locking yourself in, and the rates do creep up as you advance with the leasing of a campus.

Speaker #1: So, we might adjust the total ambition of how much we want to get pre-leased over time. Again, we might not, but yes, look for that to be standard in all the campuses.

Tal Keinan: We might adjust the total ambition of how much we want to get pre-leased over time. Again, we might not, but yes, look for that to be standard in all the campuses.

Speaker #7: All right. Thanks for those details. Second question on the ground leases: How many new ground leases are you guys looking to add this year?

Gaurav Mehta: All right. Thanks for those details. Second question on the ground leases, how many new ground leases are you guys looking to add this year?

Speaker #1: So, as we discussed on the last call, we're not actually counting those in terms of number of ground leases anymore—it's square footage.

Tal Keinan: As we discussed on the last call, we are not actually counting those in terms of number of ground leases anymore. It is square footage. How much square footage of hangar are we able to put in? Again, ultimately, after everyone is accustomed to that metric, we are going to move to what is the real metric. Is what is the actual NOI that you can capture from an airport? Really, that is what you should be going after. I think everyone would agree, if we had five airports, each with 100,000 square feet of hangar, but you could achieve that with a single airport with 500,000 square feet of hangar in a tier 1 location, that is obviously preferable. Right? You are going to have lower OpEx, an easier lease-up. It has got a lot of advantages to do it that way. We have not actually put out a square foot target.

Speaker #1: How much square footage of hangar are we able to put in? And again, ultimately, after everyone's accustomed to that metric, we're going to move to what is the real metric, which is what is the actual NOI that you can capture from an airport?

Speaker #1: Really, that's what you should be going after. Because I think everyone would agree, if we had five airports, each with 100,000 square feet of hangar, you could achieve that with a single airport with 500,000 square feet of hangar in a tier-one location.

Speaker #1: That's obviously preferable, right? You're going to have lower opex and easier lease-up. It's got a lot of advantages to do it that way.

Tal Keinan: You are going to have lower OpEx, an easier lease-up. It has got a lot of advantages to do it that way. We have not actually put out a square foot target.

Speaker #1: We haven't actually put out a square foot target. We've kind of migrated on guidance to really the bottom line. What are we projecting in revenue?

Tal Keinan: We've kind of migrated on guidance to really the bottom line. What are we projecting in revenue? What are we projecting in EBITDA? But we announce these airports as they come. Sometimes the cities and counties announce them before we do. So I'm guessing everyone on the call is aware of some of those. But we haven't actually put out guidance on that.

Speaker #1: What are we projecting in EBITDA? But we announce these airports as they come, and sometimes the cities and counties announce them before we do.

Speaker #1: So I think, I'm guessing everyone on the call is aware of some of those, but we haven't actually put out guidance on that.

Speaker #7: All right. Then, lastly, in your prepared remarks, you mentioned something about leasing being slow in Denver. I was wondering if that's in line with what you guys wrote, or has that been a surprise?

Gaurav Mehta: All right. Then lastly, in your prepared remarks, you mentioned something around leasing being slow in Denver. I was wondering if that's in line with what you guys thought or has that been a surprise?

Speaker #1: It's been a surprise. It's been a disappointment. We wanted to be moving faster in Denver, and it's just, again, some of them are fast, some of them are slow.

Tal Keinan: It's been a surprise. It's been a disappointment. We want it to be moving faster in Denver, and it's just, again, some of them are fast, some of them are slow. Denver's a slow one.

Speaker #1: Denver is a slow one.

Speaker #7: All right. Thank you. That's all I had.

Gaurav Mehta: All right. Thank you. That's all I had.

Speaker #3: Your next question comes from the line of Dave Storms with Stonegate Capital Partners. Please go ahead.

Operator: Your next question comes from the line of Dave Storms with Stonegate Capital Partners. Please go ahead.

Speaker #8: Hello, this is Maximus. I'll be asking questions for Dave Storms today. I wanted to start off on STR and OPF. Economic occupancy hasn't been running above reported occupancy.

[Analyst] (Stonegate Capital Partners): Hello, this is Maximus. I will be asking questions for Dave Storms today. Wanted to start off on SGR and OPF. Economic occupancy has not been running above reported occupancy. Is that mainly a function of the private versus semi-private hangar mix, or is there something else about those campuses that limits how much you can optimize occupancy? Thank you.

Maximus Alexander-Nino: Hello, this is Maximus. I will be asking questions for Dave Storms today. Wanted to start off on SGR and OPF. Economic occupancy has not been running above reported occupancy. Is that mainly a function of the private versus semi-private hangar mix, or is there something else about those campuses that limits how much you can optimize occupancy? Thank you.

Speaker #8: Is that mainly a function of the private versus semi-private hangar mix, or is there something else about those gap campuses that limits how much you can optimize occupancy?

Speaker #8: Thank you.

Speaker #1: Yeah, you're exactly right, Maximus. The Sugar Land is 100% private hangars, right? I don't know if you were following us at the time, but the whole notion of semi-private kind of occurred to us later on.

Tal Keinan: Yeah. You are exactly right, Maximus. Sugar Land is 100% private hangar. I do not know if you were following us at the time, but the whole notion of semi-private kind of occurred to us later on, actually, toward the end of lease-up in Nashville. So Sugar Land had been completely leased up long-term at that point. It is private. It cannot go above 100%. We are capped there. Miami is similar in that the first round of leases were all private. We have a little bit of semi-private going on in Miami phase 1, but Miami phase 2 does have semi-private. Again, we have people taking full SH34 hangars in Miami phase 2. There is one case of a fully private hangar that is just a large tenant. But most of Miami phase 2 is semi-private. So we should see significantly more in Miami.

Speaker #1: Actually, toward the end of lease-up in Nashville—so Sugarland had been completely leased up long-term at that point. It is private; it can't go above 100%.

Speaker #1: We're capped there. Miami is similar, in that the first round of leases were all private. We have a little bit of semi-private going on in Miami Phase One, but Miami Phase Two does have semi-private.

Speaker #1: Again, we have people taking full SH 34 hangars in Miami Phase Two. So, they are—well, there's one case of a fully private hangar.

Speaker #1: That's just a large tenant. But most of Miami Phase Two is semi-private, so we should see significantly more in Miami.

Speaker #8: Thank you. I appreciate that, caller. I wanted to move forward with pre-leasing. Historically, based on our math, it has taken roughly three quarters for a new campus to reach full lease-up.

[Analyst] (Stonegate Capital Partners): Thank you. I appreciate that color. I wanted to move forward with pre-leasing. Historically, just based off our math, it has taken roughly three quarters for a new campus to reach full lease-up. With pre-leasing, can you see that accelerating, maybe closer to two quarters or even shorter on average?

Maximus Alexander-Nino: Thank you. I appreciate that color. I wanted to move forward with pre-leasing. Historically, just based off our math, it has taken roughly three quarters for a new campus to reach full lease-up. With pre-leasing, can you see that accelerating, maybe closer to two quarters or even shorter on average?

Speaker #8: With pre-leasing, can you see that accelerating, maybe closer to two quarters or even shorter, on average?

Speaker #1: Yeah, it's possible. Again, the proof will be in the pudding. So, yeah, I'd say on the next earnings call, look to see where Opelika Phase Two stands.

Tal Keinan: Yeah. It's possible. Again, the proof will be in the pudding. So, I'd say on the next earnings call, look to see where Opa-locka phase 2 stands. By the way, we're treating Opa-locka really as one campus now, because, A, it is one campus, but also we've actually done some shifts. We took people into phase 2 and then actually ended up moving them to phase 1, moving phase 1 people to phase 2. We've done a little bit of shuffling in Miami. But look to see, are we at 100% or higher by the next earnings call in Opa-locka. Then the next data point will be Bradley.

Speaker #1: By the way, we're treating Opa-locka really as one campus now. So, because A) it is one campus, but also we've actually done some shifts, right?

Speaker #1: We took people into phase two and then actually ended up moving them to phase one, moving phase one people to phase two. We've done a little bit of shuffling in Miami, but look to see: are we at 100% or higher by the next earnings call in Opelika?

Speaker #1: And then the next data point will be Bradley.

Speaker #8: Great. Thank you for answering my questions.

[Analyst] (Stonegate Capital Partners): Great. Thank you for answering my questions.

Maximus Alexander-Nino: Great. Thank you for answering my questions.

Speaker #3: Your final question comes from the line of Joe Gomes with Noble Capital Markets. Please go ahead.

Operator: Your final question comes from the line of Joe Gomes with Noble Capital Markets. Please go ahead.

Speaker #7: Good afternoon. Thanks for taking my questions. As you're moving more and more into the tier one, are you seeing the competitive environment start to tighten up there?

Joe Gomes: Good afternoon. Thanks for taking my questions. As you're moving more and more into the tier 1, are you seeing the competitive environment start to tighten up there? Given the dearth of airport land, how does that play into the old land grab, so to speak, strategy? Are you trying to be maybe a little more aggressive in trying to get land at various airports? Are you still trying to more focus on the ones that you currently have in hand?

Speaker #7: And given the dearth of airport land, how does that play into the old land grab, so to speak, strategy? Are you trying to be maybe a little more aggressive in trying to get land at various airports?

Speaker #7: Are you still trying to focus more on the ones that you currently have in hand?

Speaker #1: Yeah, thanks for the question, Joe. We remain aggressive. We remain creative and we remain patient because and I think the last one, patience and persistence is probably the most important of all three of those.

Tal Keinan: Yeah, thanks for the question, Joe. We remain aggressive, we remain creative, and we remain patient. I think the last one, patience and persistence, is probably the most important of all three of those. If you are following, you will see all of these wins have been the result of multi-year efforts, in some cases 5, 6 years, working on an airport. We have not figured out a way to really accelerate that. Maybe that already is accelerated. That is the bad news. The good news is that we started a process on dozens and dozens of airports 5 or 6 years ago. So, some of those are starting to pop now. Again, there are things that we have not exactly announced yet but are out there, and I think a lot of people on the call are aware of. These are all the result of multiple years of effort on those airports.

Speaker #1: If you're following, you'll see all of these wins have been the result of multi-year efforts. In some cases, five or six years working on an airport.

Speaker #1: We haven't figured out a way to really accelerate that. Maybe that already is accelerated; that's the bad news. The good news is that we started a process on dozens and dozens of airports five or six years ago.

Speaker #1: So, some of those are starting to pop now. Again, there are things that we haven't exactly announced yet, but are out there, and I think a lot of people on the call are aware of them.

Tal Keinan: Again, there are things that we have not exactly announced yet but are out there, and I think a lot of people on the call are aware of. These are all the result of multiple years of effort on those airports.

Speaker #1: These are all the result of multiple years of effort on those airports. So no, if anything, we're accelerating on the site acquisition side. No plan to slow that down.

Tal Keinan: So no, if anything, we are accelerating on the set acquisition side. No plans to slow that down.

Speaker #7: Okay, thanks. And then just maybe clarify something here. On your presentation, when you were talking about the registered direct placement, you talked about that and then kind of had a last point there that you acquired—or certain investors acquired—360,000 shares from Boston Omaha.

Joe Gomes: Okay, thanks. Then just maybe you could clarify something here. On your presentation, talking about the registered direct placement. You talked about that and then kind of had a last point there that certain investors acquired 360,000 shares from Boston Omaha. Maybe just give us a little more color on that. Who approached whom? What was all that transaction about?

Speaker #7: Maybe just give us a little more color on that. Who approached whom? What was that transaction all about?

Francisco Gonzalez: Yes. Let me take that on, Dave Maximov. Some of you may be aware, at the time of the de-SPAC, there is a shareholders' agreement in place that any investor, or anytime there is a transaction that the company does or any investor, as part of the shareholder agreement, institutes a process. We all kind of coordinate and give notices to all those legacy investors and so on, so forth. On that spirit, although we were not required on that spirit, when we were approached a couple of weeks ago to do the primary issuance that we just announced and closed today, we went around and asked all our "legacy investors," Center Capital, Due West, and Boston Omaha, if they had an interest in selling shares as part of this process.

Speaker #8: Yes, let me take that on. Maximus. And so, some of you may be aware, at the time of the lease pack, there is a shareholder agreement in place that any investor, or any time there's a transaction that the company does, or any investor as part of the shareholder agreement, institutes a process.

Speaker #8: We all kind of like coordinate and give notices to all the those legacy investors and so on and so forth. So on that spirit, although we were not required on that spirit, when we were approached a couple of weeks ago to do the primary issuance that we just announced and closed today, we went around and asked all our "legacy investors" center capital due west and Boss Omaha if they had an interest in selling shares as part of this process.

Speaker #8: And Due West and Center Capital said no. And then Boss Omaha said that if there was an opportunity, they would like to sell 300,000 shares.

Francisco Gonzalez: Due West and Center Capital said no, Boston Omaha said that if there was an opportunity, they would like to sell 300,000 shares. Prior to this process and conversations with a couple of investors that were also in discussions with us, we were successful in, not 300,000, but 360,000 being sold by Boston Omaha in a separate transaction to ours, to those investors. Those stock purchase agreements were executed also during the day-to-day. Those transactions, we understand, again, they are between Boston Omaha and certain investors, not us, but they were coordinated through us. I think the highlights here to take away from that, again, I do not want to speak for Boston Omaha, people should reach out to them directly. By the way, we are going to be attending their annual shareholders' conference next week in Omaha.

Speaker #8: So, parallel to this process, and in conversations with a couple of investors that were also in discussions with us, we were successful in not 300,000 but 360,000 being sold by Boss Omaha in a separate transaction to ours, to those investors. And those stock purchase agreements were executed also during the day-to-day, and those transactions, we understand — again, they're between Boss Omaha and certain investors, not us — but they were coordinated through us.

Speaker #8: But I think the highlights here to take away from that—again, I don't want to speak for Boss Omaha—people should reach out to them directly.

Speaker #8: By the way, we're going to be attending their annual shareholders conference next week in Omaha. We have not done so in three or four years now.

Francisco Gonzalez: We have not done so in four years now or three years now, so we are looking forward to be there. I think the two takeaways are, one, that all our shareholders at this juncture have reaffirmed their interest in continuing being long-term investors of Sky Harbour, and that the Boston Omaha appetite to sell right now at this moment was just 360,000 shares, and so on, so forth. Those who have been following our stock, that this is their first sale, like in a year and a half, and obviously of a very significantly low amount of shares. They have reaffirmed their interest of being long-term investors of Sky Harbour.

Speaker #8: And so we're looking forward to being there. But I think the two takeaways are, one, that all our shareholders at this juncture have reaffirmed their interest in continuing to be long-term investors of Sky Harbour.

Speaker #8: And that the Boss Omaha appetite to sell right now at this moment was just 360,000 shares, and so on and so forth. And those who have been following our stock know that this is their first sale in about a year and a half.

Speaker #8: And obviously, of a very significantly low amount of shares. They have reaffirmed their interest in being long-term investors in Sky Harbour.

Speaker #7: Okay, great for that, caller. Thank you for taking my questions.

Joe Gomes: Okay. Great for that color. Thank you for taking my questions.

Speaker #3: There are no further questions at this time. I would like to turn it back over to Francisco Gonzalez, CFO, for closing remarks.

Operator: There are no further questions at this time. I would like to turn it back over to Francisco Gonzalez, CFO, for closing remarks.

Speaker #8: Thank you, operator. And thank you, everybody, for participating. Before you go, let me just give an announcement that Tal Keinan, our CEO, is scheduled to participate.

Francisco Gonzalez: Thank you, operator, and thank you everybody for participating. Before you go, let me just give an announcement that Tal Keinan, our CEO, is going to be scheduled to participate tomorrow, Thursday, at 3:20 Eastern Time in the Claman Countdown show in Fox Business. Those of you guys who follow some, this will be Tal's first mass media appearance. Again, that's Claman Countdown around 3:20 Eastern Time on Fox Business Channel tomorrow, Thursday. Please tune in to see Tal Keinan be answering questions from Lee Clayman. With that, we have concluded our conference here. Again, please look for additional information in our website at www.skyharbor.group and reach out with additional questions directly to us at investors@skyharbor.group. Again, thank you again for your participation. With this, we have concluded our webcast. Operator?

Speaker #8: Tomorrow, Thursday, at 3:20 Eastern time, on the Clayman Countdown show on Fox Business. So those of you who follow, this is my first mass media appearance. Again, that's the Clayman Countdown, around 3:20 Eastern time, on the Fox Business Channel.

Speaker #8: Tomorrow, Thursday, please tune in to see Tal Keinan answering questions from this claim. And with that, we have concluded our conference here. Again, please look for additional information on our website at www.skyharbourgroup.

Speaker #8: And reach out with additional questions directly to us at investors@skyharbour.group. So again, thank you for your participation. With this, we have concluded our webcast. Operator.

Operator: Ladies and gentlemen, this concludes today's call. You may now disconnect.