Sky Harbour Group Corporation

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 Harbor 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 start, followed by the number one on your telephone keypad. 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. Please go ahead.

Thank you, operator, and good afternoon, everybody, and welcome to the 2026 Second Quarter Investor Conference Call and Webcast for the Sky Harbor Group Corporation. We have also invited our bondholder investors and lenders in our borrowing sub-series, Sky Harbor Capital, Sky Harbor Capital II and Sky Harbor Capital III to join and participate on this call as well. Before we begin, I have been asked by council 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. These statements are based on management assumptions which may or may not come true, and you should refer to the language on slides one and two 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. 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 Kanin, our treasurer, Tim Herr, our chief accounting officer, Mike Schmidt, Accounting Manager Tori Petro and our Assistant Treasurer Andreas Frank. We have a few slides we want to review with you before we open into questions. 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 at Sky Harbour Group. I will make an effort to respond promptly. We just filed a few minutes ago the R10Q with the SEC and our second quarter 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 MSRB EMA. We also just filed a prospective supplement to our existing sub-registration program. Let's get started then. You will go to this slide with our recent results. 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. What this means is that the pace of investment and new construction on Sky Harbor 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 in the past year and increases in occupancy and rental rates. 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 entering in the past year, which are not yet constructed or in operations. 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. We look forward to benefiting from the operating leverage for our Phases II with Miami Opeloka, which has now been open for four months, and later this year with the opening of Addison Phase 2. We expect gross profit margin expansion with these two Phases 2, with the same people and fuel 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. Cash flow provided by operating activities reach positive territory of roughly half a million 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 Scarborough Capital and its operating subsidiaries that formed the obligated group. Assets under construction are still growing as we complete Opaloka phase two in Q2 and will soon stabilize with the completion of Addison phase two 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. we expect continuous step function increases in revenues in Q3 and Q4 with the continued new leasing of Phase 2 in the Paloca and then Q1 and Q2 of 2027 after the opening of Addison Phase 2. 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, giving the ability to use the same personnel and equipment with expanded campuses that double in size. 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 bondholders and bank facility lenders. Let me pass it on to Mike Schmidt for a discussion of our adjusted EBITDA in calculation, something we did a few quarters ago, but it's important to refresh given the importance of this adjustment to our EBITDA. Mike?

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 GAAP net income results for the quarter end of June 30th, 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 compasses 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 negative 0.9 million in Q226. This is driven by continued improvement of results that are operating 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. And with that, I would like to pass it up.