flyExclusive, Inc. Class A

Greetings, and welcome to the FLY Exclusive fourth quarter and full year 2025 earnings conference call. At this time, all participants are in listen-only mode. As a reminder, this conference call is being recorded. If anyone should require operator assistance, please press star zero on your telephone keypad. It's now my pleasure to turn the call over to C.J. Neal, Investor Relations. Please go ahead, sir.

Thank you, operator. Good afternoon, and thank you for joining FLY Exclusive's fourth quarter and full year 2025 earnings conference call. Joining me on the call today is Jim Seagrave, Fly Exclusives founder and chief executive officer, and Brad Garner, our chief financial officer. We announced fourth quarter and year end financial results this morning before the market opened, along with the filing of our Form 10-K for the year end December 31st, 2025. We'll 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-K filed with the SEC and is available on our Investor Relations website. In addition, this discussion might include forward-looking statements. Actual results might differ materially from any number of reasons, including risk factors described in our annual report on Form 10-K and 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 in our prepared remarks. And with that, let me turn the call over to Jim Segrate.

Thank you. Good morning and thank you for joining us. 2025 was a turning point for Fly Exclusive. Over the last two years, we made deliberate decisions to transform this company, modernizing the fleet, eliminating non-performing aircraft, restructuring costs, and raising our execution standards across the organization. Those decisions were not always easy, but in the fourth quarter, the results validated the strategy. We delivered $105 million in fourth quarter revenue, up 15% year over year. We generated $6.8 million of positive adjusted EBITDA, our first positive quarter since becoming a public company. That milestone matters, but what matters more is how we achieved it. We didn't grow the fleet to get there. We improved the fleet, and we executed at a higher level across the board. Let me walk through what changed last year. We removed 28 non-performing aircraft. We added seven highly profitable aircraft. Overall, we flew 13% more flight hours while operating 14% fewer aircraft. Our revenue was up 15% to $376 million for the year. Our gross profit was up 53%. In 2025, we flew over 74,000 flight hours, including over 20,000 in the fourth quarter. We are now the number one charter operator in the United States and the overall number three operator when including fractional, turboprop, and management operators. Core fleet utilization increased approximately 23% per aircraft to an average of 73 hours per plane over the full year. And we achieved this performance in the face of all the non-performing aircraft we have been eliminating. Dispatch availability improved roughly 7% year over year. And let me remind you that every 1% improvement at our current size translates to $2.5 million per year on our bottom line. To drive this initiative, we put 12 mobile service unit maintenance trucks in place late in 2025 and expect to double this fleet over the next six months. Adjusted EBITDA margin improved nearly 1,500 basis points. This is not a seasonal or cyclical improvement. This is structural improvement. We removed drag from the system and the system responded. SG&A as a percentage of revenue declined approximately 10%. generating more than $8 million in annualized savings. Revenue per SG&A employee increased approximately 28%, generating $1.9 million per person. And revenue per employee overall increased 15% to $800,000 per person. Contractually committed demand hours from our fractional club and partner programs increased approximately 33%. Again, all on a fleet size 14% smaller. Operating losses from the non-performing aircraft fleet declined from more than 3 million per month at the beginning of 2024 to approximately break even today. The reset is largely complete, but we are far from done. Now we scale from strength. Before moving forward, I want to recognize our team. We asked this organization to execute with discipline, focus, and a willingness to change. They delivered. They didn't just improve results. They changed the trajectory of this company. Every department executed, from accounting to flight control, maintenance control, technicians, pilots, sales, services, and the management teams. The fourth quarter was an example of what great teamwork across the board looks like. I'm incredibly proud of what we have accomplished. I also want to thank our investors for their continued support and trust. We are all focused on delivering results for you and our customers. Looking forward, while not providing formal long-term guidance, I want to be clear about our trajectory and future direction. First quarter 2026 will soundly exceed first quarter 2025. but it will not exceed our fourth quarter 2025 results as the fourth quarter is always our strongest quarter and we executed exceptionally well. But as we look forward quarter by quarter, we expect every quarter of 2026 to meaningfully outperform the corresponding quarter of 2025. And to put a little historical context on this, over the last eight quarters, we have improved our profitability every quarter by an average of $3.7 million per quarter. That is the trajectory we are on. We are continuing to execute and with the drag of the non-performing fleet behind us, fully expect to grow the number of aircraft, flight hours, and improve every financial performance metric in 2026, just like we did in 2025. Let me ground these expectations in some numbers. In the first quarter of 2025, Adjusted EBITDA was a negative 12.5 million, and management adjusted EBITDA was a negative 6.4 million. Today, more than two-thirds of the way through the first quarter of 2026, we believe it's appropriate to provide some directional commentary. Based on the current performance trend, we expect to reduce our first quarter 2026 loss by approximately 50% compared to the first quarter of 2025. continuing the positive trajectory we have been delivering over the last two years. This improvement reflects structural change, improved fleet economics, higher utilization, lower SG&A, and stronger demand from every revenue channel. We expect to improve our dispatch reliability another 10% in 2026, which will translate to another $25 million in annualized bottom-line performance improvements. We expect to increase our revenue per SG&A employee more than 15% to well more than $2 million per employee in 2026. This is not formal guidance. It's simply transparency around our trajectory and our momentum, and the momentum is clearly moving in the right direction. With the fleet reset largely complete, we are focused on disciplined growth. The government shut down late last year that delayed our plan to reach 10 Challenger aircraft by year-end 2025. But since then, aircraft 8 and 9 were added in January, and aircraft 10 just arrived 10 days ago. In 2026, we expect to add approximately 20 CJ-3, XLS, and Challenger aircraft. With these additions, the average age of our fleet will continue to reduce in age. And utilization along with dispatch reliability will continue to increase with these more reliable aircraft. Economics will also continue improving. We expect flight hours to grow again by more than 15% in 2026 and reach an annualized run rate of more than 100,000 hours by year end. Today, Fly Exclusive is the number one jet charter operator in the United States based on hours flown and the third largest overall. and we fully expect to continue our growth going forward. In Q4, we closed the first half of the Volato transaction, acquiring their aircraft sales division for $2.1 million. That acquisition contributed approximately $5.7 million in bottom-line improvement. Before the end of Q2 2026, we expect to close the second half of the Volato transaction. This second half brings the scheduling and optimization software platforms They internally called Mission Control into fly exclusive, as well as the cash flow positive empty leg program. Mission Control is an aircraft charter, operator-focused scheduling and optimization platform designed specifically for operations like ours. It includes an optimization engine along with AI scheduling, clothing, and workflows that will substantially improve operations and profitability as it is fully implemented in the coming months. Vaunt is a subscription-based software service that provides access to empty legs. This business was launched less than two years ago by Volato and has been rapidly expanding its client base. We expect immediate contribution from this part of the acquisition as soon as it is closed in the coming months. But the big news around this second half of the transaction is we plan to make the scheduling and optimization system available to all operators, and we intend to offer this access at no cost. The value for us is not selling scheduling software. The value is improving network efficiency. If operators can securely share aircraft availability without sharing or compromising customer identities or proprietary data, we believe the entire industry can find demand, source lift when needed, and execute their flights more efficiently. For Fly Exclusive, this means we can sell more flights, and deliver a more optimized schedule with confidence, especially with the ability to source internally and externally more effectively. We also receive over 500 trip requests every day, over half of which we are unable to sell and source. This software will allow us to fill more of these requests, potentially generating substantial additional revenue. As we continue to develop this system, we will leverage our operational expertise and deep experience in this business to deliver the best scheduling system in the space. And just for clarification, this is not a long-term goal. We expect to execute on this over the coming months. In fact, we are working hard to be able to show the beta version of the system at the NDAA Schedulers and Dispatchers Convention later this month. To summarize, this will increase our sales, improve the customer experience, improve our utilization, and optimize our schedule. And it will do this for any operator who wants to eliminate their scheduling software costs. The push into the technology space, fully leveraging AI, and our operational experience has the potential to be a game changer for fly exclusives. Now on to our balance sheet and capital planning for growth. Our ATM is now fully in place. And we have now exceeded the baby shelf restriction that requires a minimum $75 million of public float market cap. This gives us flexibility to support future growth while continuing to reduce debt, both of which we expect to deliver in 2026. Speaking of debt, we reduced our long-term debt in 2025 by approximately 36%, representing an $84 million reduction while maintaining our year-end cash position compared to 2024. In 2026, we expect to add approximately 20 aircraft to our fleet to continue reducing debt, deliver full-year EBITDA profitability, increase cash, and improve liquidity, and at the same time reduce fleet age. In the first quarter of 2026, we have already removed three additional non-performing aircraft and have few remaining operating at break-even. We have added another Challenger 350, We will close on another XLS Plus later this month for our fractional program, and we have already reduced our debt an additional $10 million between short-term and long-term elimination. Growth and discipline can coexist, and we are proving that. On the connectivity front, by year-end, we expect every aircraft in our fleet will have high-speed Internet installed, with the majority of them being the Starlink systems. High-speed connectivity has become one of the most requested capabilities in private aviation. We believe this will create pricing power, increase demand for our products, and drive incremental work across our maintenance, avionics, paint, and interior businesses. Few operators can deliver this vertically integrated solution. We can. In fact, we just finished our first Starlink installation in just nine days a week ago, and the pipeline of customers already exceeds the speed at which we can acquire the hardware. Starlink has built an incredible system that customers now expect in their aircraft, and we are excited to now be a dealer for this product. 2025 proved our business plan and model works. 2026 is about compounding that progress. We are excited about the trajectory, but we are far from done. Execution remains critical. Discipline remains non-negotiable. The momentum is real. Now we scale it. And now I'll turn the call over to Brad.