Global Crossing Airlines Group Inc.

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to today's conference call to discuss Global Crossing Airlines financial results for the first quarter of 2024. At this time, all participants are in a listen-only mode. As a reminder, this conference is being recorded. Joining us on the call today are Chris Homross, Executive Chairman of Global Crossing Airlines, and the company's President and CFO, Ryan Gopel, please be advised that this conference call will contain statements that are considered forward-looking statements under the Private Securities Litigation and Reform Act of 1995. These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. These forward-looking statements are also subject to other risks and uncertainties that are described from time to time in the company's filings with the SEC. Please do not place undue reliance on any forward-looking statements which are being made only as of the date of this call. Except as required by law, the company undertakes no obligations to publicly update or revise any forward-looking statements. The company's presentation also includes certain non-GAAP financial measures including EBITDR, as supplement measures of performance of the business. All non-GAAP measures have been reconciled to most directly comparable GAAP measures in accordance with SEC rules. You will find reconciliation tables and other important information in the earnings press release and Form 8K furnished to the SEC earlier today, which are currently available on the company's EDGAR page on the sec websites which will be available on the company's investor relations section of its website within approximately 24 hours after this call has ended and now i would like to turn the call over to the company's executive chairman chris ramos chris please go ahead um thank you operator and good morning everyone thank you very much for dialing in um like we spoke last quarter um we

We expected the first quarter of 2024 to be effectively the beginning of the new chapter in the history, in our short corporate history of Global Crossings Airlines. And as you know, since our inception in 2019, we operated with a rather acute focus on driving scale and top line growth. And over the course of the last few years, and particularly since 2021, when we became a fully certified airline, We've developed a core competence in rather rapidly deploying new aircraft into revenue charter operations. And the speed to market has become our calling card. And that also enabled us to become effectively the nation's fastest growing charter airline. And we're very proud of that heritage. And obviously, we continue our focus on that. At the same time, like we talked last quarter, It appeared to us that we want to and we owe to focus a lot more on driving profitable growth and sustained profitability, which has really defined our actions we've taken across the business over the last month. Effectively, the next quarter would be a more substantive ability. We would have a more substantive ability to talk to you about this in great detail. But at this point, we have really refocused in on our core confidence, which is the narrow-body charter ACMI flying, which is effectively critical to sustained profitability for us. We have terminated peripheral initiatives, and we have taken significant write-offs this quarter to make sure we have a clean slate with anything that we would deem non-core to our focus on driving sustainability. At the same time, as you recall, when I stepped up and appointed Ryan to president, which is a decision that is beginning to pay off very well here, our mandate is effectively clear. The complete focus on operational excellence, driving sustainability initiatives, again closing and shutting down anything that would be contrary to that to that objective of ours and effectively we delivered the first quarter which was a good quarter particularly when you look at and ryan will dive into detail from a customer perspective yield perspective our ability to command premium based on our reliability of service but it was very transitional nature in terms of being a transitional quarter um and we we begin to see um the fruits of our labor and the end of march and and we're going to tell you that april has really been as well fairly um descriptive of everything we wanted to focus on um and as i said ryan will provide more color momentarily but i really wanted to reiterate our commitment to delivering on on the sustained profitability, which I continue to repeat to the point of nausea, and I recognize that. But we really have set up basically two strategic programs for the business. On-time performance as a reliable carrier and sustained profitability. And these are the words that are being uttered every day across all functions and verticals across the business. And we are very happy with the momentum we're gaining and the results we are going to be delivering on a go-forward basis. So with that, I do want to hand it over to Ryan, our president and CFO, to elaborate further on our strategy and review the Q1 financial highlights. Ryan?

Great. Thank you, Chris. As I mentioned this on our last call, but I am honored to be entrusted by the board to shepherd GlobalX to a new stage of profitability and growth. Now turning to our recent operational highlights. We achieved another quarter of significant revenue growth while increasing EBITDA by approximately 16 times compared to the prior year quarter. Our ECMI business delivered the largest contribution to these results, increasing four times compared to the prior year quarter. As a reminder, in our ECMI business, we provide outsourced cargo and passenger aircraft, crew, maintenance, and insurance, while customers assume fuel demand and price risk. We are typically responsible for landing, airports, and other operational fees. The increase in ACMI was attributable to strong customer demand and ongoing supply shortages. As well, we see an increase in our aircraft fleet and a growth in a key government agency relationship, and we'll discuss more of this later. Meanwhile, our charter business grew 27% from a year ago, period, to $34 million. As a reminder, in our charter business, we provide passenger and cargo aircraft while the customer pays a fixed fee that covers fuel insurance, landing, and other operational expenses such as travel. The increase in charter revenue is primarily attributable to the aforementioned growth in our aircraft fleet. Additionally, we booked 5,200 hours during the quarter, a 66% increase compared to the prior year quarter, and our average utilization per aircraft grew 4% on the same period to 416 block hours, representing a modest organic utilization growth on a per aircraft basis. Increased efficiency is more evident when looking at our average revenue per block hour. For ACMI, we generated an average of $6,480 per block hour, which is an increase of 46% from the prior year quarter. An average revenue per block hour on the charter increased 19% to 15,468 from approximately 13,000 in Q1 of 2023. Subsequent to quarter end, we announced we had received DOT authorization to increase the size of our fleet to 20 aircraft, a target we intend to achieve this summer. I'd also like to take a moment to touch upon our strategy, which Chris alluded to a few minutes ago. Earlier in my career, I was a strategic strategy executive for a nationally recognized quick service brand, and I often refer back to restaurants when explaining what drives successful execution for a charter airline. And this generally boils down to the same two key principles. Same store, or in our case, same aircraft growth, and two, cultivating the right relationships to drive predictable and reoccurring business. Similar to restaurant brands that select a specialization where they have the capacity to outperform, we deliver our best results when operating as a narrow-body charter airline. With our current operational profile, we believe we can achieve break-even operations if we have 12 passenger aircraft flying full-time, with each additional incremental aircraft delivering a creative benefit to our bottom line. In accordance, we have shuttered projects and business ventures that we've deemed non-core to our primary narrow-body passenger and cargo charter operations. We expect these actions will not only result in a more streamlined and focused profile for Global X, but will have a direct impact on near-term profitability as the costs associated with these non-core projects are avoided. Additionally, we recognize the importance of establishing repeat business with strategic customers. To further these efforts, we have deepened our relationship with a key government agency that is now utilizing eight dedicated aircraft with our fleet and chartering over 1,000 ACMI block hours per month. We expect this relationship to provide us with a solid foundation of predictable and reliable revenues as we continue to scale our business. We are still in the early innings of implementing our new strategy. However, we believe we are well positioned to execute on our objectives of growth and profitability. Now turning to our financial results. Please note that all financial results discussed today are as of March 31st, 2024, while variance commentary is on a year-over-year basis unless stated otherwise. Revenue increased 67% to $53.8 million from the $32.2 million in the prior year, driven primarily by higher block hours flown and aircraft fleet expansion, as well as continued strong demand for passenger ACMI and charter flights. Looking further into our sales, charter revenue increased 27% to $34 million compared to $26.7 million. ACMI revenue increased four times to $18.6 million compared to $4.7 million. All other revenue increased to $1.2 million compared to $700,000. Total operating expenses were $58.4 million compared to $32.3 million, driven primarily by higher aircraft rent, maintenance, and personnel costs associated with the expansion of our fleet, as well as higher travel costs related to a government contract. This also includes approximately $1 million of non-operational expenses and charges related to the unwinding of non-core businesses and other one-time items during the quarter. Net loss was $6.3 million compared to $6.1 million in the year-ago quarter. Net loss per share remained unchanged from a year ago at $0.11 per basic and diluted share. EBITDA increased approximately 16 times from $9.3 million compared to $600,000, driven primarily by the increase in revenue, improved operating margins, higher average charter rates, and higher utilization of aircraft. Turning to liquidity. We ended the quarter with cash and restricted cash of $12.1 million compared to $17.7 million at December 31, 2023. We remain very comfortable with the liquidity position as we have ample runway to execute on our growth objectives and turn cash flow positive. Before concluding and opening the call for Q&A, I'd like to reiterate a few key themes we've covered today. We've eliminated non-core businesses and are now operating with a renewed focus on our core competency as a narrow-body charter airline. This refined focus will enable us to continue to expand our fleet and provide customers with industry-leading service while delivering sustainable growth and profitability. We are still in the early stages of this new direction for GlobalX. However, we are well-positioned to execute on our plans. We look forward to providing you with an update in the quarters ahead. This concludes our prepared remarks. We'll be glad to answer any questions now. Operator, back to you.