Blade Air Mobility Q4 2023 Earnings Call Transcript

Quartr
Provided by Quartr
March 12, 2024

There are 6 speakers on the call.

Operator

Ladies and gentlemen, thank you for standing by. Welcome to Blade Air Mobility Fiscal 4th Quarter 2023 Earnings Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session and instructions will follow at that time. As a reminder, this call is being recorded.

Operator

I would like now to turn the conference over to Mr. Lee Gold, Investor Relations. Please go ahead.

Speaker 1

Thanks and good morning. Thank you for standing by and welcome to the Blade Air Mobility conference call and webcast for quarter ended December 31, 2023. We appreciate everyone joining us today. Before we get started, I would like to remind you of the company's forward looking statement and Safe Harbor language. Statements made in this conference call that are not historical facts, including statements about future time periods, may be deemed to constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Speaker 1

These forward looking statements are subject to risks and uncertainties, and actual future results may differ materially from those expressed or implied by the forward looking statements. We refer you to our SEC filings, including our annual report on Form 10 ks filed with the SEC for a more detailed discussion of the risk factors that could cause these differences. Any forward looking statements provided during this conference call are made only as of the date of this call. As stated in our SEC filings, Blade disclaims any intent or obligation to update or revise these forward looking statements except as required by law. During today's call, we will also discuss certain non GAAP financial measures, which we believe may be useful in evaluating our financial performance.

Speaker 1

A reconciliation of the most directly historical comparable consolidated GAAP financial measures to those historical non GAAP financial measures is provided in our earnings press release and our investor presentation. Our press release, investor presentation and our Form 10 Q and 10 ks filings are available on the Investor Relations section of our website at ir.blade.com. These non GAAP measures should not be considered in isolation or as substitute for financial results prepared in accordance with GAAP. Hosting today's call are Rob Wiesenthal, Founder and Chief Executive Officer of Blade and Will Hayburn, Chief Financial Officer. I will now turn the call over to Rob Wiesendahl.

Speaker 1

Rob?

Speaker 2

Thank you, Lee. Good morning, everyone. I am very pleased with our progress we made during 2023, another record year for Blade. Our financial trajectory is strong, sound and now tangible. In 2023, our full year revenue increased 54.1% versus the prior year to 225,200,000 while flight profit increased by 84% as our intense focus on margin enhancement initiatives generated results yet again this quarter.

Speaker 2

This led to a $10,800,000 improvement in adjusted EBITDA versus the prior year period to negative $16,600,000 for the full year 2023. I'm especially pleased to share that Blade Airport, our helicopter service between Manhattan and New York area airports starting at $195 per seat delivered positive flight profit not just for Q3 and Q4 but also for the full year 2023. When we launched Blade Airport in 2021, we set up the unit economics to be profitable at just above 2 out of 6 seats sold per flight. Though we knew along the way that our growth and customer acquisition metrics were pointing in the right direction, the 2 year ramp up process has required hard work from our operations team and patience from our investors. I'd like to take a minute to thank our flyer experience, flyer relations, operations and on the ground logistic teams and our ground transport partners at Mercedes Benz USA for working so diligently to make this product a success.

Speaker 2

We look forward to continued growth this year and beyond as we begin to transition to EVA Electric Vertical Aircraft or eVTOL in the coming years. On the operational front, we are excited to announce the acquisition of 8 fixed wing jet aircraft to support our continued rapid growth in medical, enabling lower cost service and improved availability for the hospitals we serve and improved unit economics for us. Our medical business has more than tripled since our acquisition of Trinity in 2021, presenting us with an opportunity to further leverage our scale through the purchase of a limited number of jet aircraft. By purchasing aircraft that we already use exclusively and by maintaining the existing operator and crews, we are well positioned to capture incremental fixed cost leverage without the risk of building a new medical aircraft operation from the ground up. We believe this change will further improve our competitive positioning without compromising the benefits of our asset light model as a vast majority of our medical flights and nearly 100% of our passenger flights will continue to be serviced by our very select group of third party owned and operated aircraft in the U.

Speaker 2

S, Europe and Canada. After this rewarding year of strong growth, flight profit margin expansion and cost structure improvements, we are now confident to begin providing guidance to our investors for revenue and adjusted EBITDA for the year ending December 31, 2024 2025. For the current year 2024, we expect to have positive adjusted EBITDA and for 2025, we expect adjusted EBITDA in the double digit millions. I'll let Will provide additional details shortly, but first I'd just like to emphasize that we do not take providing these public goals lightly, which is exactly why we waited to reach adequate scale in our medical and passenger businesses, which provided better forward visibility, enabling us to put a stake in the ground on achieving profitability. Now I'll provide a few quick highlights from our Q4 ending December 31, 20 23.

Speaker 2

Life profit increased 65.7 percent to $9,000,000 in the current quarter versus $5,400,000 in the prior year period, well ahead of our expectations, driven by strong growth in our medical business and improved profitability across our U. S. Short distance business. We're pleased to see flight profit growing significantly ahead of revenue, which increased 24.5% to $47,500,000 in Q4 2023. I'll let Will provide some additional details around our focus on flight profit maximization, but I'm happy to report that in medical, our increased use of dedicated aircraft and owned ground vehicles have helped us lower costs for our hospital customers while increasing average flight profit per trip, a win win for this important business segment.

Speaker 2

Starting in passenger, short distance delivered another quarter of significant growth with revenue in Q4 2023 up 14% versus the prior year period driven by improvements in Blade Airport, Europe and Canada. As mentioned previously, we are especially pleased that Blade Airport alone delivered 40% plus year over year revenue growth in addition to positive flight contribution for the Q2 in a row. Our growth across passenger coupled with continued improved profitability in Blade Airport contributed to a $1,100,000 increase in passenger segment adjusted EBITDA to negative $2,600,000 in Q4 2023. In medical, revenue Q4 2023 increased 48% versus the prior year period, driven by new hospital wins, business expansion with existing hospitals and strong end market growth. As a reminder, this is 100 percent organic growth as we completed the Trinity acquisition in 2021.

Speaker 2

Medical segment adjusted EBITDA increased 57.8 percent to $2,500,000 in Q4 2023, demonstrating the strong operating leverage of this business. As expected, our new tops organ placement service launched in December as planned. And I am very pleased with the initial progress our team has made with the Keyblade customer, NYU Langone. We're staying focused on providing great service. It's early days of this exciting new business line, but we'll have a lot more to share on our growth plans in the coming months.

Speaker 2

These profitability improvements in both segments coupled with a $700,000 year over year decrease in our adjusted unallocated corporate expenses led to a $2,700,000 improvement in adjusted EBITDA versus the prior year period to negative $5,200,000 in Q4 2023. Adjusted EBITDA improved as a percentage of revenues to negative 11.1% in Q4 2023 from negative 20.9% in Q4 2022. This proves the operating leverage we have enabling us to dramatically grow Blade without adding significant overhead. I'll let Will provide more details around Q4, but I will say that despite this being a seasonally light quarter for Blade, I'm very pleased with our success on continued cost structure improvements and significant expansion to our dedicated aircraft fleet highlighted by our acquisition of H Jet Aircraft for our Oregon Transportation business. And with $166,100,000 in cash and short term investments available to us, we believe Blade is in the best possible position to drive growth both organically and by acquisition.

Speaker 2

With that, I'll turn the call over to Will.

Speaker 3

Thank you, Rob. Before we dive in, I'd like to remind everyone that we manage our business primarily based on slight profit rather than revenue, which could be influenced by a number of factors like fuel costs and landing fees, which we largely pass through, depth charter market pricing, aircraft repositioning and mix shifts between air and grab and our medical business. Recently, we've made significant progress transitioning more and more of our medical flights to dedicated aircraft that provide us with fixed cost leverage as we grow and are strategically based near our hospital customers. This has enabled us to improve our flight profit dollars per trip while reducing costs for our hospital customers and more importantly increasing availability with shorter call out times, which can lead to better patient outcomes. When paired with our growing fleet of medical vehicles and new organ placement offering, we believe we've built the most cost effective and reliable end to end organ logistics platform in the United States.

Speaker 3

That's why even though we saw a slight sequential decrease in medical revenues from Q3 to Q4, medical flight profit increased sequentially over the same period. This shows us that our strategy is working. At the same time, we improved our passenger flight profit margins by 5 percentage points in Q4 2020 4 versus the prior year demonstrating our path to full year profitability in the passenger segment, which we expect in 2025. I'll now walk through a few highlights from our business segments in the Q4. We'll start with medical, where revenue increased 48% to $32,000,000 in the Q4 of 2023 versus $21,600,000 in the comparable 2022 period.

Speaker 3

Approximately 45% of this quarter's growth was driven by the addition of new customers with the remainder driven by growth with existing clients as well as strong overall market growth. Industry wide, we continue to see the longer distance trips versus the prior year period as transplant centers fly farther to enable more transplants resulting in more flight hours and increasing the revenue opportunity for Blade. Medical revenue was at the lower end of our expectations this quarter. Compared to Q3 2023, we saw a slightly higher percentage of organ transports traveling ground only, which we view as the typical ebb and flow, while our increased use of dedicated aircraft helped reduce repositioning for our hospital customers. Use of dedicated aircraft generally will slightly decrease flight hours and revenue per air trip, while flight profit per air trip will increase.

Speaker 3

As discussed earlier, we're keenly focused on slight profit performance, which exceeded our expectations. On last quarter's call, we guided towards medical flight margins in the 18% to 19% range for Q4 2023 with continued steady improvement toward 20% plus in the future. I'm happy to report that Q4 2023 Medical Flight Margin Exceeded Expectations at 20.1%, a 4 percentage point improvement year over year and a 2 percentage point sequential improvement versus Q3 2023. Our faster than planned adoption of dedicated aircraft and owned ground vehicles allowed us to achieve this important milestone more swiftly than originally anticipated. Medical segment flight profit was $6,400,000 in the current quarter, an increase of $2,900,000 or 81% versus $3,600,000 in the comparable 2022 period.

Speaker 3

Medical segment adjusted EBITDA was up 58% to $2,500,000 in the Q4 of 2023 versus $1,600,000 in the comparable 2022 period. Looking forward in medical, we continue to expect single digit percentage sequential revenue growth in the coming quarters with slight margins above 20% for the entirety of 2024 and gradual improvements towards 25% plus by the end of the year, driven by our new aircraft supply arrangements. Q4 2023 medical SG and A was a little heavier than we expected given startup costs associated with tops and some end of year commission catch up driven by great performance. We're expecting slightly lower medical SG and A in Q1 sequentially followed by low single digit sequential growth as we ramp up TOPS and add logistics staff. As Rob previously mentioned, we're excited to announce the acquisition of 8 Hawker 800 aircraft to bolster our medical operations.

Speaker 3

In our experience, the Hawker platform is longer range and lower cost with more cargo capacity than other aircraft utilized by our competitors. This new arrangement results in both lower costs for our customers and higher margins for Blade. Based on our average utilization of these aircraft in 2023, we should see a 5 to 10 percentage point flight profit margin uplift for flights utilizing these owned aircraft, which will help us to achieve our goal of 25% plus flight profit margins in medical over the coming quarters. We recently signed a purchase agreement and expect to start seeing improved margins during the month of March. I'd like to emphasize that these specific aircraft are among our most highly utilized, are under capacity purchase agreements today and are strategically positioned in areas with significant demand from overlapping customers.

Speaker 3

Going forward, we will continue to assess aircraft acquisitions only in areas where we are already servicing significant customer demand. We remain committed to our asset light model and expect the significant majority of our flying to remain with 3rd party owned and operated aircraft. For example, the specific owned aircraft discussed today are expected to represent only about 10% of Blade's overall flying activity in 2024. The opportunity for further margin expansion is apparent. The $21,000,000 acquisition costs will be funded through $11,700,000 in cash and $9,300,000 in existing deposits with the operator.

Speaker 3

Turning to our passenger business. In short distance, Q4 is always a seasonally light quarter, but we're pleased that revenue was up 14% to $10,700,000 in the Q4 of 2023 versus $9,400,000 in the comparable 2022 period, driven by an increase in seat volume and stronger pricing in our buy the seat airport product and increased revenue in Europe and Canada. Blade Europe continued to be a positive contributor to flight profit this quarter and was flight profit positive for the full year 2023, meaning it covered all costs related to air and infra terminal ground transportation for our flyers. In jet and other revenues decreased 32.4 percent to $4,800,000 in the current quarter versus $7,100,000 in the prior year period, driven primarily by our decision to discontinue Blade 1, our seasonal buy to seat jet service between New York and South Florida, which was a $1,700,000 impact and softness in Jet Charter. Passenger segment flight profit increased by $700,000 or 37 percent to $2,600,000 in the Q4 of 2023 from $1,900,000 in the same period of 2022.

Speaker 3

This increase was attributable primarily to improved pricing and utilization and our buy the seat Blade Airport product. All of this led to a $1,100,000 improvement in passenger segment adjusted EBITDA to negative $2,600,000 in the Q4 of 2023 versus negative $3,800,000 in the prior year period. Despite the solid growth this quarter, Europe is performing below our original acquisition expectations. As such, we took a non cash impairment charge on the intangible assets associated with our asset light aircraft operator agreement. Despite this write down of $20,800,000 next to the U.

Speaker 3

S, Europe is the largest urban air mobility market globally and is poised to be an early adopter of electric vertical aircraft. This was a strategic acquisition that enjoys exclusive infrastructure, exclusivity for flying between Nissan Monaco on a by the seat basis and a devoted customer base that secures our leading position as we transition to EBA. We're making great progress with our newly installed management team and expect improvement in both revenue and profitability in 2024. On the corporate cost side, yet again, we were able to reduce our adjusted unallocated corporate expenses, shrinking 11.3% in Q4 2023 versus the prior year period, which when coupled with our flight profit growth across medical and passenger led to a $2,700,000 improvement in adjusted EBITDA versus the prior year period to negative $5,200,000 in Q4 2023. Turning to our guidance.

Speaker 3

We expect to be profitable on an adjusted EBITDA basis for the full year 2024 and to achieve double digit adjusted EBITDA in 2025. To get there, we'll continue to employ the tools that led to our significant adjusted EBITDA improvement over the past year. Adjusted unallocated corporate expenses should stay near the average of recent quarters leading to low to mid single digit $1,000,000 of savings in the current year 2024 versus 2023. In passenger, we expect a 2 to 3 point improvement in flight profit margin as Blade Airport builds on its 1st flight profit positive year to become a more material contributor to overall flight profit. At the same time, we've built enough scale and brand awareness to reduce our U.

Speaker 3

S. Marketing spend. We've also realized cost savings from the finalization of our European integration. Together, we expect these items to have a low to mid single digit positive impact on adjusted EBITDA in 2024 with passenger segment EBITDA turning positive to low single digit millions in 2025. In medical, flight profit margins should continue to expand towards 25% plus by the end of 2024 driven by increased use of dedicated aircraft and the increased fixed cost leverage we're expecting from our recently acquired aircraft.

Speaker 3

This alone would result in mid to high single digit adjusted EBITDA improvement in 2024 based on just 2023 revenues. New customer growth could push that into the higher end of the range and would come with some additional SG and A. Though improvements will come gradually throughout 2024, we expect 25% plus flight profit margins in medical for the full year 2025. We expect that this margin expansion when coupled with just moderate growth in medical and passenger will get us to our adjusted EBITDA goal for 2025 and set us up for continued double digit adjusted EBITDA growth into the future. With respect to our balance sheet, given our improving financial performance, we expect that the majority of our $166,000,000 in cash and short term securities as of the end of Q4 of 2023 will be utilized for tactical acquisitions in our Medical segment or further accretive investments in our aircraft supply base.

Speaker 3

The best is yet to come and we're excited about the years ahead. With that, I'll turn it back over to Rob.

Speaker 2

Thank you, Will. In short, we are proud of the accomplishments of our team to deliver outstanding 4th quarter results and we look forward to building on this momentum, achieving adjusted EBITDA profitability this year and significant growth in this important metric in 2025 and beyond. I'll now turn it over to Lee for questions.

Speaker 1

Thanks, Rob. We'll start by taking questions from the analyst community and we'll follow with a few questions from the SAVE Q and A platform. I'll now turn it over to the operator for the analyst questions.

Operator

Thank The first question comes from Jason Helfstein with Oppenheimer. Your line is open.

Speaker 1

Hi, this is Steve on for Jason. So just two questions from us. Number 1, we were just wondering if you could give some views on 1Q? And secondly, if you could just clarify what you mean when you say positive adjusted EBITDA in 2024?

Speaker 3

Thanks. Thanks for the question, Steve. Look, as you know, Q1 is seasonally like quarter as well. So it will look a lot like Q4. Expect kind of 10 ish percent growth year over year, which would put you in the high 40s on revenue.

Speaker 3

And then EBITDA kind of in a similar area to what you see for Q4. When we say that we're going to be profitable on adjusted EBITDA basis in 2024, we mean more than 0. And we hope to exceed our own expectations there. Thanks very much.

Operator

Please standby for the next question. The next question comes from Bill Peterson with JPMorgan. Your line is open.

Speaker 4

Hi, good morning and thanks for taking the questions and thanks for providing the 2024 and 2025 targets. On the targets, the 2024 outlook implies kind of a high single digit revenue growth to midpoint with a fairly tight range. So I guess what's complicated what's contemplated between the low end and the high end on that? And then for 25, it actually implies an acceleration. So what's driving that?

Speaker 4

If you can kind of maybe break that out between passenger and metamobility and provide some guidepost on that, that'd be helpful.

Speaker 3

Sure, Bill. So there's a little bit of noise in the year over year comp between 2023 2024 because as you know, we discontinued the Blade 1 seasonal jet product between New York and South Florida. So that was kind of mid to high single digit $1,000,000 of revenue. So you're fighting that a little bit, which is why on a year over year, you see less in terms of the overall headline growth rate. That's probably the biggest factor coupled with just generally we're seeing slightly softer jet charter there.

Speaker 3

And then remind me the second half of your question.

Speaker 4

Well, like the low end and the high end of the range, it seems like a fairly tight range. But then I think you already answered the second part about 25 implies acceleration. I think that's just, I guess, normalized growth, but

Speaker 3

Yes. The biggest drivers in the range are new customer acquisition on the medical side. I think where we are in the passenger business and what you're seeing in the numbers, especially this quarter, is you're seeing flight profit grow really strongly and that's a result of putting more people on the same number of flights, particularly in the Blade Airport product. So we get great incremental margins as we sell a seat on a flight that's already going as you're well aware. And so on the passenger side, the story is really about improving that flight profit.

Speaker 3

On the medical side, we've got a big new customer pipeline, both on the top side and on the logistics side. And so the range really represents when do we think we'll win those new customers and how many of them will we get.

Speaker 2

It's Rob Wiesenthal. I think I'd also add on the passenger side, we are seeing strong growth in terms of our European needs to Monaco route, which is before Blade started the largest route in the world in terms of a by the seat business for vertical transport for customers competitive with ground. And as we restarted that line, what we call the line of 2 countries, the growth has been we've been very pleased with the growth.

Speaker 4

Thanks, Ron and Will. And the second question, I guess a few questions around the acquisition of the Hawker 800 aircraft. So it seems like these were used and already used for medical. So I guess what is buying these aircraft? How does that benefit Blade versus just I guess it seems like they were used for medical anyway.

Speaker 4

So like why do you need to buy them? What is the timing? It sounds like March, are all 8 going to be acquired in March? And then I guess how much do these aircrafts then address the current medical business? I guess, we could kind of try to figure out the margin uplift you alluded to?

Speaker 2

Yes. So a couple of

Speaker 3

things at play there, Bill. First, we've just grown so quickly in medical. We've actually kind of outgrown the balance sheets of some of our operators. And so we were supporting the growth at our operators with some deposits. You'll notice that almost half of the acquisition of these aircraft is funded by deposits we already have down with the operator.

Speaker 3

So we kind of got to a point where if we're putting deposits down of this size, we might as well own the aircraft. And then the reason that we want to own the aircraft is because it helps us benefit from more pass through economics. So it goes back to getting those economies of scale and that operating leverage as we fly more. Our agreements right now do allow us to pay a little bit less once we meet that full year guarantee of flight hours, but you're not getting the continued cost leverage as you fly more above that. Now for these aircraft and we're only focused on doing things like this in areas where we've got multiple contracts with overlapping centers, lots of demand, more than we could possibly handle with just the jets that we own.

Speaker 3

In those cases, we'll capture a lot more of the fixed cost leverage when we own the aircraft versus a capacity purchase agreement where you pay X for the first Y hours a year and then you pay X minus 15% afterwards.

Speaker 2

Phil, just one quick way we look at it here. On the medical side, when you're using sweating the acid so to speak using 100% of that time, you don't need kind of that middleman in between chewing up that margin, okay? And so as long as you're getting the hours, right? And when we do asset light, we have other people do whether it's news gathering or tours, say, on the helicopter side. On the medical side, it's a 20 fourseven business.

Speaker 2

You're sweating the assets. And the 3rd point, we're leaving these kind of deposits. If you own it, you capture that margin. And also you have more flexibility for the customer. We can position aircraft right by these hospitals, which means greater flight margin profit dollars for us and faster accessibility for our customers and a better deal frankly.

Speaker 2

It's a win win as Will said.

Speaker 4

Just on the timing and I guess how much of the medical business you can address with this?

Speaker 3

It's still going to be a really small part of our business. We think roughly 10% of our flying in 2024 should be on these aircraft. We're going to remain asset light. The vast majority of our flying is going to be with aircraft that are 3rd party owned and operated. But if we see situations where it's extremely accretive on a cash flow basis to own aircraft tactically, we're economic animals and we'll do that.

Speaker 1

Okay. Thank you.

Speaker 3

Thanks, Bill.

Operator

The next question comes from Edison Yu with Deutsche Bank. Your line is open.

Speaker 5

Thanks for taking our questions and congrats on the quarter. You have quite a bit of cash as you mentioned and it seems like a decent amount could be deployed on some type of acquisition. Did you mean that in terms of adding more aircraft or companies or both?

Speaker 2

It's both, Edison. I think, as Will said, when we the ability to strategically place assets in terms of aircraft or with our hospitals and have them have frankly really good solid deals and us to enjoy better economics, something we're going to continue to explore, but again, going to be opportunistic. We are extremely focused on tactical M and A in the medical area, things that basically are along the chain in terms of what we do with our business and leverage the relationships we have with the hospitals. Obviously, what we've started organically from the top of the Tops program is a good example of that, but there are a lot of ancillary businesses that can leverage our relationships and our core competencies, both in working with hospitals and in transportation overall. So we do see a fair amount of opportunities to deploy that capital.

Speaker 5

Understood. And then separately, I know you mentioned Europe was performing a bit below and you took that charge. I guess, how are you feeling about that in 2024, 2025? Are we going to see quite a bit of improvement? What are we sort of looking at going forward?

Speaker 2

Yes. I think look, what you really saw here with Europe, we knew it was delayed integration. We now have a brand new management team in place both the CEO and the Chief Operating Officer. So that was a little bit late in going. And right now as I said, we're seeing really strong performance in terms of the buy the seat business between Nissan Monaco.

Speaker 2

And we expect growth for this year and for next year in that business and improve profitability. So I think we feel good about the business. Obviously, we wish that it started earlier, But this remains again before Blade, this was the number one market in the world. We had dominant market share here. We continue to have dominant market share in almost all these routes.

Speaker 2

So I think we feel like we're in a pretty good place when it comes to Europe and just took a little bit longer than we expected.

Speaker 5

Great. Thank you.

Operator

I show no further questions. At this time, this concludes the analyst Q and A. I would now like to turn the call back over to Lee for additional questions.

Speaker 1

Thank you. As mentioned, we'll be taking questions from our Safe Q and A platform. The first question is regarding the current lease agreements in New York City and can we specify how many more years on these landing zone agreements? Also, what is stopping competition from taking these landing zones from place?

Speaker 2

Thanks, Lee. I'll take that question. Again, Rob Wiesenthal. New York City is without question the most important market in the U. S.

Speaker 2

For vertical transportation, especially when you think about our Blade Airport product with 28,000,000 people going by car between the New York City airports and Manhattan a year. This is a big market opportunity. The Westside, which is clearly our flagship, it's so large that we both have a departures and an arrival lounge and we're right next to Hudson Yards where 50,000 people live, work and recreate every day. That is a deal that is booked exclusive on a by the seat basis and our lease there is coterminous with the operator who's been there for over 40 years and has no expectations of leaving. On the east side, almost the same situation where we are coterminous with the operator who has been operating there for dozens of years and before that on 60th Street.

Speaker 2

So we have a terrific relationship with Atlantic and also in that specific location there literally is absolutely no footprint left in order to build any kind of building. It's basically the Blade facility and general aviation. It gives us a competitive moat because at the end of the day, if you want to do this be in this business, whether it be with helicopters or EVA or you may call eVTOL, you have to have a place to process passengers, get them set and move those aircraft very, very quickly in 2 to 5 minute turns. You can't do it on the sidewalk. So we do believe that captive infrastructure is critical to our strategy.

Speaker 1

Great. The following question is another transplant company has claimed 98 contracts with hospitals. Are these exclusive contracts? And how many lost customers maybe they had?

Speaker 3

I'll take that one. This is Will. We haven't lost any customer contracts. Not sure what the specific question is relating to, but I will say there's a bunch of device companies out there that have the same customers as us. We both work with the same hospitals.

Speaker 3

And as far as we're concerned, they're doing a great thing that's increased the number of organs that are available for transplant. So it's great. And we're focused on our job that we do have long term contracts with hospitals to perform, which is to handle all the air and ground logistics. And we think we do it better than anybody at the right price, but haven't lost any of those contracts.

Speaker 1

An additional question about medical is how do you see competition in the meta mobility space like TransMedics?

Speaker 2

It's Rob speaking. Let me take this one. I think TransMedics has a terrific device in terms of perfect devices. There are a lot of devices out there that can lengthen the time that an organ can be outside the body both for our core business in heart, liver and lung. And frankly, we recently did the longest trip ever from Boston to Alaska using a Paragonix device.

Speaker 2

The ability to travel longer distance is a big part of why we're so excited and you're going to see so much growth in our Oregon Transport business. We are now the largest Oregon air transporter in the United States. We continue to expect that. We expect that to continue to happen. And the more the devices that are out there, the more excited we are.

Speaker 2

And frankly, this is all we do. We don't make devices. So we are focused on logistics and servicing our customer and making sure we get our doctors in Oregon safely and quickly and cost effectively to where they need to be. I think that ability to focus on one thing is great, but we're excited about these device companies really supercharging our business.

Speaker 1

Our last question is what are the operating costs of EVA and how does this compare with Blade's traditional helicopters? Do you expect to see a complete replacement of helicopters by EVA in the future?

Speaker 2

A great question, a common question. Let me take a tack at it. So look, at the end of the day, it's all about vertical transportation in a way that is cost competitive with Ground. Right now, since Blade is 1 of 1, it doesn't have competition really in the buy the seat market, we are competitive with Ground. And frankly, in New York where we start at $195 for an airport seat $95 for the purchase of an airport pass, we are competitive.

Speaker 2

When it comes to the operating cost in the early years, we do believe the operating cost of electric vertical aircraft will be pretty much about the same, maybe slightly less and it will take some time before those costs go down. But overall, the costs will go down. But the big opportunity for our investors is the fact that because they're quiet and emission free, there will be more places to land. Not really so much happening cost, focus on the fact that the great unlock is that there are more places to land. Every pair of landing zones is a brand new business for Blade.

Speaker 2

So right now our strategy is to capture as many of these pre existing landing zones that we can, have our customers the routes and as more of these landing zones open up when these new aircraft are available, the bigger business becomes. There'll be a co habitation phase because a lot of the aircraft can't take 6 people like our aircraft can or can't take £12 like ours can, don't even have air conditioning. It's going to take a while, but expect the cohabitation phase where we have a portfolio of different vertical air transportation options, both including EVA and conventional helicopters.

Speaker 1

This concludes our question and answer session. At this time, I'll turn the call back to Bob.

Speaker 2

Thank you, Lee. I can't overemphasize how proud I am of this has been a long road since we've public to be in the position that we now have the confidence to give guidance to our investors of our 1st year as a public company of profitability on adjusted EBITDA basis for this year and double digit profitability in terms of dollars 1,000,000 of dollars for 2025. So we feel good about it. We do not take this lightly as I said before and we look forward to further encouraging news as we go forward and appreciate everyone on this call support.

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Key Takeaways

  • In 2023, Blade delivered 54.1% revenue growth to $225.2 million, an 84% increase in flight profit, and improved adjusted EBITDA by $10.8 million to –$16.6 million, with Blade Airport profitable for the full year.
  • The medical segment saw 48% Q4 revenue growth to $32 million, achieved a 20.1% flight profit margin, 81% increase in flight profit, 57.8% rise in adjusted EBITDA to $2.5 million, and is adding eight Hawker 800 jets to boost unit economics and fixed-cost leverage.
  • In passenger operations, Q4 revenue rose 14% to $10.7 million, Blade Airport grew >40% YoY with positive flight contribution for a third consecutive quarter, Blade Europe was flight profit positive for 2023, and passenger adjusted EBITDA improved to –$2.6 million.
  • Blade issued first profitability guidance: expecting positive adjusted EBITDA in 2024 and double-digit million adjusted EBITDA in 2025, driven by >25% medical flight profit margins and passenger segment break-even in 2025.
  • With $166.1 million in cash and short-term investments, Blade remains mostly asset-light but will deploy capital for tactical medical acquisitions and accretive aircraft investments to support growth.
AI Generated. May Contain Errors.
Earnings Conference Call
Blade Air Mobility Q4 2023
00:00 / 00:00