Volato Group Q2 2024 Earnings Report

Volato Group EPS Results

• Actual EPS: -$12.25
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Volato Group Revenue Results

• Actual Revenue: $15.13 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Volato Group Announcement Details

• Quarter: Q2 2024
• Date: 8/14/2024
• Time: N/A
• Conference Call Date: Wednesday, August 14, 2024
• Conference Call Time: 8:00AM ET

Volato Group (NYSEAMERICAN:SOAR) operates as a private aviation company. It offers fractional ownership, aircraft management, jet cards, deposit, and charter programs. As of December 31, 2023, the company operated a fleet of 24 HondaJets and a managed fleet of 6 aircraft. Volato Group, Inc. was founded in 2021 and is based in Chamblee, Georgia.

Volato Group Q2 2024 Earnings Call Transcript

Key Takeaways

• Supply chain delays led to no aircraft deliveries in Q2, though 1 HondaJet and 1 G280 were received in early Q3; company still expects to take delivery of 8–10 Hondajets and 2 G280s in 2024.
• Q2 revenue rose 16% year-over-year to $15.1 M, with aircraft usage revenue up 28% and a 6% improvement in blended yield driven by higher-rate non-owner demand.
• Net loss widened to $16.9 M in Q2 from $9.9 M a year ago, including a $2.8 M non-cash charge, though sequential net loss improved 2.7% (17.5% excluding the charge).
• $4 M term loan closed in early Q3 to enhance liquidity, and management is evaluating additional financing sources to support working capital and growth.
• The company forecasts ~$122 M–$140 M in full-year 2024 revenue from fractional sales and anticipates achieving EBITDA profitability by Q4 2024.

Presentation

[Operator]

Good morning, and welcome to the Volato Group second quarter 2024 earnings conference call. If anyone today should require operator assistance during the call, please press star zero from your telephone keypad. I would now like to turn the call over to Jonathan Yohannan, Director of Communications.

[Jonathan Yohannan, Senior Vice President of Marketing at Volato Group]

Thank you, operator. Good morning, everyone, and welcome to the Volato conference call. Our press release was issued this morning and can be found in the Investors section of our corporate website, flyvolato.com. Joining me on the call today is Matt Liotta, our Chief Executive Officer, and Mark Heinen, our Chief Financial Officer. During today's call, we will provide a business update and a financial overview of the second quarter 2024. A Q&A session will follow our prepared remarks. Before we begin, I would like to remind everyone that any statements we make or information presented on this call that are not historical facts are forward-looking statements that are based on our current beliefs, plans, expectations, and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

[Jonathan Yohannan, Senior Vice President of Marketing at Volato Group]

Such statements are subject to a variety of risks, uncertainties, and other factors that could cause actual results to differ materially from those indicated or implied by such statements. Such risks and other factors are set forth in the company's most recently filed periodic report on Form 10-K and subsequent filings. The company does not undertake any duty to update such forward-looking statements. Additionally, during today's call, management will discuss non-GAAP measures which it believes can be useful in evaluating the company's performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with US GAAP. The reconciliation of these non-GAAP measures made to the most comparable GAAP measure can be found in the company's earnings release. I'd now like to turn the call over to our Chief Executive Officer, Matt Liotta.

[Matt Liotta, CEO at Volato Group]

Thank you, Jonathan, and good morning, everyone. I'll start with some updates on our business before going over our first quarter results. Later, our CFO, Mark Heinen, will provide more details on our financials. We are excited to announce the delivery of our first Gulfstream G280 last week. We started a multi-city tour where potential buyers will be able to get a firsthand look at the aircraft and purchase fractional shares. We've had great traction so far and are looking forward to finishing up the tour later this week. During the second quarter, OEM supply chain delays continued to impact the timing of our previously announced aircraft deliveries, but we have taken steps to reduce costs and increase liquidity.

[Matt Liotta, CEO at Volato Group]

In early Q3, we closed a $4 million term loan, and we continued to evaluate additional sources of liquidity to support working capital and growth ahead of our remaining aircraft deliveries in 2024 and beyond. While we did not take delivery of any aircraft in the second quarter as supply chain issues waned, so far in Q3, we have taken the delivery of one HondaJet in addition to the one G280 I mentioned previously. Based upon this progress in deliveries, we still expect to take delivery of 8-10 HondaJets and two G280s total in 2024. Despite challenges in the timing of deliveries, we saw strong growth in key performance indicators, including total flight hours, blended yield, and a year-over-year improvement in our empty percentage.

[Matt Liotta, CEO at Volato Group]

Total flight hours grew 5% year-over-year, and blended yield improved 6% as non-owner demand increased to 56%. As a reminder, we earn a higher rate on non-owner flights, so as non-owner mix increases, it helps support our profitability. As we expand our floating fleet, we are able to better serve owner demand while also driving non-owner usage through increased availability, and we achieve these results while maintaining a world-class Net Promoter Score of 86. I also want to look at our empty percentage, which improved 3.5% year-over-year. Our floating fleet's flexibility enables us to have an empty percentage of 36.1% in line with industry leaders. Vaunt, our product offering that enables us to monetize empty leg flights, is seeing great progress and reached an ARR of $1 million for the first time during the quarter.

[Matt Liotta, CEO at Volato Group]

Vaunt is a subscription-based mobile app that allows users to subscribe for $1,000 per year and access unlimited empty leg flights at no additional cost. The program is a great way to drive recurring revenue and monetize existing flights that would not be able to otherwise, while reaching an expanded set of customers who may not otherwise consider flying private. Overall, I'm satisfied with our achievements in the second quarter and the strides we've made in strengthening our cash position and expanding our fleet since the quarter ended. I'd also like to welcome two new members of our leadership team who joined during the quarter and are great assets to our company. Mark Ozenick, who is the head of our aircraft management division, and Luis Garcia, our new EVP of Sales. They are an excellent addition to the team and are already adding value to the business.

[Matt Liotta, CEO at Volato Group]

Looking ahead, Volato is positioned for success and future growth as we move towards profitability by executing on our strategy and taking advantage of the significant market opportunity that private aviation represents. I will now turn it over to Mark for a review of our financials.

[Mark Heinen, CFO at Volato Group]

Thank you, Matt, and good morning, everyone. As Matt mentioned, Q2 was a strong quarter for Volato, with improvements across our key performance indicators. These results, combined with the funding received from the term loan we signed in early Q3, position us for continued growth while progressing toward EBITDA profitability, which we expect by the fourth quarter of this year. Looking at our Q2 results, revenue was $15.1 million, a 16% year-over-year increase. Aircraft usage revenue grew 28% to $12.5 million as we grew the higher margin non-owner demand mix, enabled by the expansion of our floating fleet from 18 to 25 HondaJets since Q2 of 2023. Growth in flight hours and non-owner demand has also driven a 6% improvement in our blended yield to $5,330 this quarter, compared with $5,042 in Q2 of 2023.

[Mark Heinen, CFO at Volato Group]

Looking at expenses, SG&A for the second quarter was $9.7 million, compared to $6.1 million in the second quarter of 2023. The increase in expenses was driven by the cost of being a publicly traded company. Sequentially, SG&A declined to $9.7 million in the current quarter from $11.7 million in the first quarter of 2024, or 17%, as a result of these cost-saving measures introduced in the second quarter. Net loss for the quarter was $16.9 million, compared to a net loss of $9.9 million in Q2 of 2023. This quarter, net loss included a $2.8 million non-cash charge related to the valuation of our Forward Purchase Agreements.

[Mark Heinen, CFO at Volato Group]

On a sequential basis, second quarter net loss declined 2.7% when compared with first quarter net loss as a result of the cost-saving measures implemented during the quarter, offset by the $2.8 million non-cash charge previously mentioned. Excluding the impact of the non-cash charge, second quarter net loss declined sequentially by 17.5% when compared to the first quarter net loss. Adjusted EBITDA loss in the quarter was $11.4 million, compared to $7.6 million in Q2 2023. The increase was driven by the cost of being a publicly traded company, offset by revenue growth. Adjusted EBITDA loss declined sequentially twelve point seven percent when compared to the first quarter as a result of these cost-saving measures. Looking forward, we still expect to take delivery of 8-10 HondaJets and two Gulfstream G280s this year.

[Mark Heinen, CFO at Volato Group]

Based on these forecasts, we expect to generate between $72 million and $90 million in revenue and $16 million to $20 million in margin from fractional HondaJet sales and approximately $50 million in revenue and $10 million in margin from fractional G280 sales this year. We also added contribution per flight hour as a new metric in our Q2 KPI press release to show progress in achieving positive gross margin from flight operations. As additional aircraft contribute to higher revenue usage, we expect gross margin from flight operations to continue improving through the rest of 2024 and turn positive in 2025. With the forecasted delivery of aircraft and the improvements in Adjusted EBITDA, we expect to be EBITDA positive by the fourth quarter of 2024. Overall, we are pleased with the quarter's financial results and look forward to continuing to progress towards profitability in the coming months.

[Mark Heinen, CFO at Volato Group]

We can now open the call for questions.

[Operator]

Thank you. We'll now be conducting a question-and-answer session. If you'd like to ask a question today, you may press star one from your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to withdraw your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we poll for questions. Thank you. At this time, we have reached the end. We will conclude today's conference. We thank you for your participation. You may now disconnect your lines at this time and have a wonderful day.

Participants

Executives

• Jonathan Yohannan, Senior Vice President of Marketing
• Mark Heinen, CFO
• Matt Liotta, CEO