flyExclusive, Inc. Class A

Greetings, and welcome to the FLY Exclusive Second Quarter 2025 Earnings Call. At this time, all participants are in a listen-only mode. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce to you Sloan Bolin with Investor Relations. Thank you, Sloan. You may begin.

Thank you, John. Good afternoon, and thank you for joining FLY Exclusive Second Quarter 2025 Earnings Conference Call. Joining me on the call today is Jim Seagraves, FLY exclusive founder and chief executive officer, and Brad Garner, our chief financial officer. We announced first quarter, or sorry, second quarter financial results yesterday after our market close, along with the filing of our Form 10-Q on the quarter ended June 30th, 2025. We will be providing certain non-GAAP information during today's discussion, important disclosures about this information, and reconciliation of the non-GAAP information to comparable GAAP information is included in our Form 10-Q filed with the SEC and is available on our investor relations website. In addition, this discussion might include forward-looking statements. Actual results may differ materially from any number or any number of reasons, including risk factors described in our annual report on Form 10-K and our quarterly reports on Form 10-Q and in the press release covering forward-looking statements. Rather than rereading this information, we are going to incorporate it by reference in our prepared remarks. And with that, let me turn it over to call to Jim.

Thank you, Sloan. I appreciate everyone joining us today. Fly Exclusive had another strong quarter, continuing to advance the successful transformation of our company. We have added a supplemental presentation this quarter that provides some visuals to go along with our message. But to summarize all the numbers, what is completely clear is our strategy is delivering results. I'll begin with an update on our fleet modernization. which continues to be a significant driver of our EBITDA improvement. We have reduced our non-performing aircraft to just 13, down from 37 when we launched the initiative to remove them last year. We expect the remaining pool of non-performing aircraft to be in the mid-single digits by year-end. And to that end, we have already eliminated two more of these aircraft since the end of the second quarter, and a third is under contract. On the other side of that equation, we now have five Challenger 350s in operation and will add the sixth in the next few weeks as it completes the conformity process with the FAA. It will contribute to third quarter revenue and gross profit starting later this month. By year end, we expect Fly Exclusive to have a fleet of Challengers in the low double digits. As a reminder, the power of this effort is meaningful for all stakeholders, our fractional owners, our jet club members, and our shareholders. The Challenger provides our fractional owners and jet club members with a larger and more reliable jet with more range than the aircraft it is replacing. The members have taken advantage by flying longer leg trips and enjoying the confidence that comes with the increased reliability of the Challenger, which has substantially reduced mechanical disruptions. It is clear from our pipeline of prospective fractional owners that the Challenger 350 has strong demand. As we've noted, the impact of the Challengers is also significant for our financial results. The Challenger has approximately 2.5 times better uptime efficiency compared to the underperforming, much older Gulfstream and Citation SuperMid fleet we've been eliminating. And every 1% improvement in our fleet-wide availability equates to approximately $3 million in EBITDA improvement. At peak, our underperforming fleet had an annual run rate EBITDA drag near $36 million. That impact is now less than $500,000 per month. Better yet, each challenger added to the fleet represents annual revenue in the $8 to $10 million range. and at margins that well exceed our fleet average. The fleet refresh has been one of the most impactful strategic priorities for the company. This has translated to much better utilization, efficiency, reliability, and bottom line financial performance. As we view 2024 and 2025 as transformational and evaluate the results of our strategy, we have even stronger conviction and clear momentum that the flight exclusive of 2026 will be one running much more efficient, reliable, and profitable. Let me now speak to our operating performance in the second quarter. Our charter flight hours grew 12% year-over-year and 7% quarter-over-quarter to 18,605 hours, which speaks to the continued improved efficiency of a fleet that now totals 86 revenue-generating jets. down by design and plan from 96 a year ago and 108 at our peak. Let me say that another way. We flew 12% more total flight hours as a company with 10% fewer total aircraft, comparing 2Q24 to 2Q25. We also generated 16% more revenue on 10 fewer jets and 119% more gross profits. an incredible overall performance improvement. Of the flight hours flown during the quarter, our membership hours, which comes from the fractional, club, and partner programs, also increased 32% compared to Q2 2024. Strong demand continues for our fractional program. We saw a 21% increase year over year in the number of fractional shares sold during the quarter, and our pipeline is stronger than ever. We also believe the clarity on bonus depreciation tax treatment will be a very positive catalyst for activity over the back half of 2025, which is always our strongest sales period historically. Comparing the second quarter to the same quarter last year, retail members were up 9%, retail sales were up 26%, and fractional sales were up 24%. Also, as a reminder, while we recognize 100% of the cash from these fractional transactions up front, only 20% of the revenue under GAAP is recognized per year on our P&L statement over a five-year period. Year-to-date, revenue is up 13% compared to this time in 2024, and our gross profit is up 109%. We are extremely happy with this rapid upward trend and, of course, the performance we expect over the rest of 2025 based on these results. Across the 18,605 hours flown in the quarter, we increased effective hourly rates by 3%, while our fuel cost has dropped by 6.6%. This demonstrates continued strength in the demand for private aviation our pricing power, and more specifically, demand for our best-in-class service. Our maintenance and repair organization also grew, generating $2.9 million in revenue, which is up 28% compared to a year ago. This is an acceleration compared to the 18% year-over-year growth we produced last quarter at the MRO. We've spoken to it before, but I will reiterate that our vertically integrated strategy is a valuable differentiator. both in terms of expense efficiency, service to our customers, and now also through incremental revenue opportunity outside of our fleet. And we have lots more capacity to continue growing this business as well. Moving to our margins and profitability, the second quarter performance was also strong across the board. Our fleet performed well from an operating perspective, and the ongoing fleet refresh continued to improve our overall cost efficiency. Additionally, we continue to drive improvement in our corporate overhead. SG&A costs declined by nearly $1.2 million compared to the second quarter of 2024, and now stands at just 22% of our revenue compared to 27% a year ago. This 5% improvement at our current size approaching $400 million in revenue represents nearly a $20 million cost improvement, and we are not done yet as we expect this ratio to continue to improve as a better position and more efficient fleet is realized. One of the primary drivers for the cost efficiency is a reduction in SG&A headcount. Our revenue per SG&A employee also increased to $157,000 per employee, a 29% increase compared to the second quarter 2024. In total, our adjusted EBITDA loss for the quarter improved 67% over last year to $5.2 million. In aggregate dollar terms, that is nearly an $11 million positive swing, which we are proud of and represents the cumulative impact of our overall strategic transformation. Lastly, let me touch on our Jet AI transaction and the Russell 2000. We continue to work through the close process for our Jet AI merger and expect the transaction to close before the end of the year. This transaction will benefit Fly Exclusive through the assumption of cash and assets that will strengthen our balance sheet as well as add customers and additional aircraft. Regarding the Russell 2000 index, we have eliminated the remaining lockup restrictions, and as a result, we should be included in the index at the end of the third quarter. Let me conclude, like I usually do, with a thank you to all our fractional owners, our partners, and Jet Club members for trusting us with your flying, to our shareholders for believing in our vision, and to our employees for making this all possible. Your support and hard work make Fly Exclusive the great organization and business that it is. Special thanks to our pilots, technicians, dispatchers, customer service, administrative, and sales and marketing teams for another great quarter. It is very rewarding to see the tangible results of your efforts and our financial results. With that, I'll turn it over to Brad to walk through the financials.