flyExclusive, Inc. Class A

Greetings and welcome to the FLY exclusive third quarter 2025 earnings call. At this time, all participants are in 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 your host, Sloan Bowden of Investor Relations. Thank you. You may begin.

Thank you, operator. Good afternoon and thank you for joining Fly Exclusive's third quarter 2025 earnings conference call. Joining me on the call today is Jim Seagrave, Fly Exclusive's founder and chief executive officer, and Brad Garner, our chief financial officer. We announced third quarter financial results yesterday after market closed along with the filing of our Form 10Q for the quarter ended September 30, 2025. We'll be providing certain non-GAAP information during today's discussion. Important disclosures about this information and the reconciliation of the non-GAAP information to comparable GAAP information is included in our Form 10Q 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 of reasons, including risk factors described in our annual report on Form 10K and in our quarterly reports on Form 10Q and in the press release covering forward-looking statements. Rather than rereading this information, we are going to incorporate it by reference into our prepared remarks. And with that, let me turn the call over to Jim.

Thank you, Sloan, and thanks to everyone joining us today. The third quarter marked another very strong step forward for Fly Exclusive. Our transformation is clearly working, our strategy is delivering results, and the positive impact is accelerating across the business. As a reminder, our results are outlined in an earnings presentation, which is posted on the investor relations page of the Fly Exclusive website. Like last quarter, the charts detail the incredible progress our team has made in every metric and category. We reduced costs, increased sales, grew our member base, increased utilization, and significantly improved our financial performance. Over the past year, we've modernized our fleet, streamlined our cost structure, and strengthened every area of the business, operationally, financially, and culturally. The result is a company generating stronger growth, more profitability, and more momentum than at any point in our history. We are flying smarter, running leaner, and serving our members with greater consistency, reliability, and value than ever before. Our fleet refresh continues to be a major driver of our transformation. Over the last 12 months, we eliminated 26 non-performing aircraft, including two more in the third quarter and already an additional two in the fourth quarter as well. That reduction has decreased the operational drag from these jets by roughly 85%. taking monthly losses associated from these aircraft from over $3 million per month in 2024 to just under half a million dollars per month today. At its peak, our non-performing fleet represented an annualized EBITDA drag of roughly $36 million. That drag is nearly gone, and our financial results show just how dramatic this transformation has improved our performance. We expect to reduce the number of non-performing aircraft to mid-single digits by the end of 2025 and to fully eliminate it in 2026. These non-performing aircraft have been replaced with high-performing Challenger 350s, XLSs, and CJ3 Pluses, which are delivering exactly what we expected, higher reliability, utilization, margin, and much better customer experiences. Each Challenger flies roughly 250% more flight hours per month than the aircraft it replaced and generated $8 to $10 million in annual revenue at far stronger margins. Our overall fleet utilization approached 7,000 hours in October, our largest month in history. We now have seven Challengers in operation and two more in the immediate pipelines. Additionally, we are still adding CJ3s and XLS aircraft to our fleet. Now that the elimination of the non-performing aircraft is nearly complete, we are planning for significant fleet growth in 2026 and beyond. These newer jets are driving increased jet club and fractional demand. That's the broader impact of the fleet strategy. More reliable aircraft lead directly to better economics, improved customer satisfaction, and stronger customer engagement. Even with a fleet that's about 20% smaller than a year ago, flight hours increased 15%, and our core fleet utilization, the CJ3s, XLSs, and Challengers, represented 12% of this increase. Our dispatch availability improved 650 basis points year over year, or about 16%, which reflects the performance of the new fleet and benefits of our vertical integration. Each percentage point of additional aircraft availability improvement at our current size contributes roughly $3 million to annual EBITDA. So this is and will continue to be a major driver of profitability going forward, as well as an important factor in our quality of service delivery. Total company revenue for the quarter rose 20% year-over-year to $92 million. And about half of this revenue is now contracted through our partner fractional and jet club program, giving us more visibility and more recurring volume than ever before. Across these programs, our contractually committed hours grew 30% compared to Q3 24. This increasing share of contracted revenue enhances our visibility in the market and visibility in our operating model. This also continues to strengthen the predictability and quality of our revenue base. At the same time, our wholesale channel remains an incredibly important part of the business. While we are rapidly growing our retail footprint and often highlight that growth, we are not reducing our wholesale flight hours or revenue to make room for retail. The wholesale channel is a critical part of our strategy we will continue to service. We receive on average over 500 quote requests per day from the wholesale market, which highlights the demand for our services. The broker community is just as important to our model and our performance as the retail side of our business is. Our maintenance, repair, and overall MRO operation continues to be both a revenue driver and a core differentiator. What began as a vertical integration strategy to support our fleet has become a revenue and profit center with solid growth potential. MRO revenue grew 103% year over year in Q3, reflecting both external demand and expanded internal throughput. As an example, our paint boat business stays book solid months in advance at this point, and over 80% of the work is from external customers. We are now also generating similar bookings in our maintenance shop, interior shop, and avionics shop. The MRO growth not only provides incremental profit, but also supports fleet uptime, which in turn drives dispatch availability and customer satisfaction. As we continue scaling our internal MRO, avionics, paint, and interior refurbishment operations, we expect this to remain a long-term competitive advantage. Few private operators have the same degree of in-house control over maintenance, quality, and cost. To this end, we have added six additional mobile service units in October, bringing the total to 12. Again, the intention was to service our aircraft and continue to increase our dispatch reliability. But the demand from other operators for this service is incredibly strong, and we expect to continue to build our mobile service unit division for our own needs and to meet this demand, creating yet another revenue stream in 2026. Now moving to our outstanding customer metrics. Retail membership grew 51% year-over-year, a testament to our brand momentum and service reliability. Year-to-date Jet Club sales increased 17% and fractional sales were up 68% year-to-date compared to last year. fueled by growing demand for the Challenger platform and reinforced by confirmation of 100% bonus depreciation in the latest tax legislation. The fourth quarter is traditionally our busiest for fractional activity, and based on the pipeline we've developed and new inquiries we're seeing, we expect that trend to continue this year. Together, our Jet Club and fractional programs continue to expand their contribution to the business, building recurring high-quality revenue and deepening our customer relationships. The operational results we've delivered are translating directly into stronger margins. Year-to-date gross profit increased 82% year-over-year, and gross margins expanded by roughly 500 basis points. Adjusted EBITDA improved 72%, and adjusted EBITDA increased 104% year-over-year, reflecting broad-based efficiency gains across every part of the business. Our adjusted EBITDA margin improved by 1,550 basis points year-to-date. That improvement was driven by fleet mix, better utilization, higher dispatch availability, allowing more utilization on each aircraft, and disciplined cross-control. On SG&A expenses declined 9% year-to-date, primarily from savings in third-party services and headcount efficiencies. This 9% alone translated to $7 million in savings year-to-date. Revenue per SG&A headcount rose 19%, and SG&A as a percentage of revenue improved 587 basis points. These gains demonstrate that our cost structure is now scalable and built for profitable growth. Each quarter this year has shown stronger operating leverage and profitability, and that pattern has continued into the fourth quarter. Given the efficiency gains achieved so far and the strength of our core programs, we expect our fourth quarter performance to continue to reflect the positive trajectory we've demonstrated all year, both operationally and financially. October was a record month for us in hours flown and revenue, and November has started off stronger than ever, even in the face of the restrictions imposed from the government shutdown. We also are now the number one charter operator in the United States, according to Aviation Research Group data, based on hours flown, with 6,810 hours flown in October. This was also 7% more than the number two operator in the United States. We are now operating from a position of sustained strength, And based on the trends over the past year, we expect to sustain positive adjusted EBITDA going forward into 2026 and beyond. Looking ahead, the fourth quarter is historically our busiest every year, and we are already seeing record demand across every part of the business. October set the record of the highest revenue month in our history, and November month to date is positioned to break that record again. That positions us well to deliver our best performance yet to close out 2025. With a modernized fleet, a growing base of committed members, and a leaner cost structure, we are also well positioned to keep compounding our gains into next year. There is no question that we're now running a more efficient, more profitable, and more reliable business than ever before, and you are seeing that in our numbers. The heavy lifting of our transformation is behind us, and we are entering the next phase of our growth story with confidence, momentum, and a clear line of sight to sustain the profitability. To our employees, our pilots, technicians, dispatchers, and every member of our administrative and customer-facing teams, member services, sales, and finance, thank you for the professionalism and dedication that make these results possible. To our shareholders and partners, We appreciate your confidence and your continued support as we move into what I believe will be the strongest period in our company's history. With that, let me turn the call over to Brad for his comments.