flyExclusive, Inc. Class A

Greetings and welcome to FLY Exclusive, Inc.'s first quarter 2026 earnings call. At this time, all participants are in a listen-only mode. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. I will now turn the call over to Chris Neal with marketing. Thank you, Chris. You may begin.

Thank you, Operator. Good evening and thank you for joining Fly Exclusive's first quarter 2026 earnings conference call. Joining me on the call today is Jim Segrave, Fly Exclusive's 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-Q for three months ended March 31, 2026. will be providing certain non-GAAP information during today's discussion. Important disclosures about this information and a reconciliation of the non-GAAP information to comparable GAAP information is included in our Form 10-K 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 material materially from any number of reasons, including risk factors described in our annual report on Form 10-K and our quarterly reports from 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 the call over to Jim.

Thank you, Chris, and thank you to everyone joining us this afternoon. The first quarter of 2026 was another important proof of concept point for Fly Exclusive. For the better part of two years, I have told the market that we were in the middle of a structural transformation and that when the transformation was complete, the financial results would reflect it. The first quarter continues to validate that thesis. We generated approximately $96 million in total revenue during the quarter, representing year-over-year growth of approximately 9% and we delivered positive adjusted EBITDA for the first time in the first quarter of the year. That result was not accidental and it was not a function of favorable seasonality. In fact, it was in spite of seasonality as the first quarter is historically the industry's most challenging. The company, like the entire aviation industry, was also negatively impacted by multiple major winter weather systems that shut down most of the East Coast for several days each. In the face of this, the company still improved year-over-year EBITDA by $6.6 million, representing an over 100% increase compared to 1Q25. Our performance exceeded even our own internal forecast as well as analysts' forecasts. This was the result of a more efficient fleet disciplined operations, and an increasingly high-quality revenue base. Long-term debt was reduced another $10 million in the first quarter, adding to the $86 million total reduction in 2025. The company now operates approximately $522 million of aircraft overall, but has reduced the directly owned portion down to $145 million. This, in part, represents our shift to the much more capital efficient, fractionally owned aircraft business. Debt on the directly owned fleet is approximately $112 million, resulting in roughly $33 million of equity in these aircraft. Let me spend a few minutes on what I believe are the most important themes from the quarter. First, the fleet transformation is essentially complete, and the impact on operating performance is unmistakable. At the beginning of 2024, we had 37 non-performing aircraft generating operating losses in excess of $3 million per month across the system. As of the end of the first quarter, we reduced that count to just six aircraft, and the aggregate operating loss from those remaining aircraft was less than $250,000 per month. That is a reduction of more than 90% in the financial drag associated with legacy aircraft. and this has been one of the single most consequential operational and financial improvements we have made as a company. By the end of the second quarter, we expect to eliminate three more of these aircraft cutting the monthly loss to under $100,000. The aircraft we have added to replace those legacy units, primarily Challenger 350s, CJ3s and XLS aircraft are performing exceptionally well. They fly more reliably and cause less scheduled disruptions They require less unscheduled maintenance, customers much prefer them, and they generate meaningfully better economics per flight hour than the aircraft they replaced. The quality of our fleet today is categorically, positively different from where we were 18 months ago, and that difference is increasingly evident in our financial results. For some additional context, the unencumbered contribution numbers on average are 27% for every CJ3 and XLS Plus we add to the operation, and 39% for every Challenger. We have now proven our transformation plan will deliver the financial performance we forecasted. Second, dispatch availability continues to improve, and I want to be clear again about why this matters. Dispatch availability improved approximately 7.6% year over year. At our current fleet scale, every one percentage point improvement in dispatch availability translates to approximately 2.5 million of annual bottom line contribution. The 7.6 improvement we delivered in the first quarter represents the equivalent of roughly 19 million of annualized EBITDA opportunity relative to where we were a year ago, and we're expecting to deliver much more than this in 2026. The work we have done on fleet modernization vertically integrated maintenance and mobile service unit expansion is directly responsible for this improvement. Speaking of the mobile service units, we intend to over double this fleet to 30 units over the next 12 months. We expect this to reduce our maintenance costs and further increase our dispatch availability. And we also plan to make the MSUs available to third party customers, which will generate a new profitable revenue stream for us. Third, our contracted and recurring revenue programs continue to strengthen. Approximately half of our revenue in the first quarter was derived from contractionally committed demand, fractional, jet club, and partner programs. This is strategically significant for several reasons. It improves revenue predictability, it enhances our ability to plan fleet deployment, and improves maintenance scheduling. It supports pricing discipline. and it keeps the kind of long-term customer relationships that are difficult for customers to replicate. Members contributing the revenue in the first quarter exceeded 1,000 members, marking our eighth consecutive quarter of membership growth. That consistency is meaningful. It tells us the product is working, that customer satisfaction is high and that word of mouth and retention dynamics within the program are working as we would expect for a premium aviation brand. Fractional sales, a segment we have been actively investing in, were particularly encouraging during the quarter. Retail fractional share sales increased approximately 47% year-over-year, with fractional revenue growing approximately 5% on a gap basis. The reinstatement of 100% bonus depreciation has materially accelerated customer interest in fractional ownership, and the pipeline we are seeing for the balance of the year, in part, reflects that dynamic. The Challenger 350 platform, in particular, continues to be a standout performer for the fractional and club programs. Customer retention on this aircraft type is exceptional. Stage lengths are longer, average revenue per trip is higher, and the profile of customers engaging with the platform is exactly what we want. High value, long tenure, and deeply engaged with our service ecosystem. Fourth, our MRO business continues to gain momentum. External MRO revenue increased approximately 14% year over year, driven by expanding demand for our product, avionics, interiors, and Starlink installation capabilities. We recently became a Starlink authorized dealership, which we believe positions us well to capture a growing revenue stream as connectivity upgrades become a standard expectation among high net worth aviation customers. Our vertically integrated maintenance platform is a primary differentiator of our operating model and we believe the external MRO business has a long runway for growth. Few operators in the private aviation space have the in-house capability, physical infrastructure, and licensing to serve the range of maintenance, avionics, and completion needs that we can address. As external demand continues to scale, this business will increasingly contribute to both revenue and margin while continuing to serve our in-house needs. Fifth, I want to address the macroeconomic backdrop directly because I know this is a topic of investor focus. The current global environment is frankly complex. Fuel costs have moved significantly higher. Broader market volatility has increased. Geopolitical uncertainty, including developments in the Middle East, have created incremental caution in certain aspects of the economy. We have not, however, seen any demand disruption within our customer base. In fact, our revenue in flight hours for the second quarter will significantly exceed first quarter results. We are halfway through the quarter and expect to deliver around 15% top line growth quarter to quarter. There are a few reasons for that. Within our contracted programs, fuel costs are passed through to customers, either directly or through defined surcharge mechanisms. We are not absorbing fuel price increases as a margin headwind within the fractional and jet club programs. Second, the customers we serve are among the most economically resilient in the world. Our fractional and club members are typically ultra-high net worth individuals and corporate accounts for whom private aviation represents A productivity tool and a lifestyle priority, not a discretionary expenditure that gets scrutinized in periods of market softness. The data we have seen through April continues to support this view. Booking activity, utilization trends, and member engagement have all remained healthy. That said, we remain clear-eyed about the external environment. We are not dismissing broader macro risks, and we continue to manage the business conservatively. But based on everything we can see today, we do not believe the current environment represents a material headwind to our near-term financial performance. Six, and finally, let me say a few words about where we are going. The transformation phase of this company is largely behind us. We are now in the execution phase. and that is an entirely different and more straightforward operating mode. Our job now is to continue improving utilization, continue growing the fractional and jet club programs, continue expanding the MRO and continue translating operational improvement into financial results. We are adding aircraft thoughtfully and expect approximately 20 aircraft will join the fleet in 2026. consisting primarily of CJ3s, XLS Pluses, and Challengers. Each aircraft we add has been underwritten at Attractive Economics, and each aircraft has the benefit of being added to a platform that is already operating efficiently rather than one that is still working through structural transformation. We expect to close the JetAI transaction next month. which also includes deposits on three CJ3 plus positions with Textron delivering early in 2027. The second tranche of the Vlado transaction closed in the first quarter which brought the Mission Control scheduling and optimization platform being rebranded as Contrails into our ecosystem. The Contrails platform in particular has the potential to be a meaningful operational differentiator allowing us to optimize scheduling, improve trip fulfillment rates, and provide network sharing infrastructure for third-party operators. We receive over 500 trip requests per day, and our ability to fulfill a greater share of those requests is directly tied to our scheduling efficiency and network. We expect to close the final part of the lotto transaction, the Vaunt empty leg subscription business, over the next quarter. I want to close my remarks by thanking our team. our pilots, maintenance technicians, dispatchers, member service professionals, sales organizations, and all of our administrative and support personnel. You are the reason these results are possible. This is a complex operational business, and the level of execution this team has demonstrated over the last two years is something of which I am genuinely proud of. To our shareholders and customers, Thank you for your continued confidence in Fly Exclusive. With that, I'll turn the call over to Brad.