SkyHarbour(SKYH)2024-11-13 20:05Financial Data and Key Metrics Changes - The company reported a significant increase in revenues due to the San Jose campus opening in Q2 and optimization of other campuses, with expectations for continued revenue growth even without new campus openings [7][10] - Operating expenses increased primarily due to higher ground lease payments in San Jose and the recognition of operating expenses ahead of cash payments for new ground leases [8][9] - The company aims to achieve breakeven on a consolidated basis by the same time next year, supported by the opening of three campuses and leasing activities [10][12] Business Line Data and Key Metrics Changes - Sky Harbour Capital, which includes all campuses except San Jose, showed positive operating results and cash flow, with incremental revenues from lease renewals at significantly higher rates [11][12] - The company continues to optimize its existing campuses, achieving occupancy rates above 100% and higher rental rates on renewals [11][12] Market Data and Key Metrics Changes - The company is revising its guidance to include an additional 9 airports by the end of 2025, bringing the total to 23 airports [23][49] - The demand for hangar space remains strong, particularly in markets like Miami, where the waiting list for aircraft is significantly higher than current occupancy [100] Company Strategy and Development Direction - The company is focused on site acquisition, development of existing airports, and enhancing operational efficiency through vertical integration and standardized hangar designs [40][45][52] - The strategy includes a shift towards semi-private hangars to accommodate a broader market, which has proven to be more profitable than fully private options [72][76] - The company is also looking to enhance services for pilots and maintenance professionals, aiming to provide a comprehensive experience for aircraft owners [55][57] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate economic cycles, emphasizing that the demand for hangar space is driven by the growing fleet of aircraft [66] - The company anticipates continued hangar price inflation, which is expected to outpace construction cost inflation, supporting revenue growth [100][102] Other Important Information - The company has a strong cash position, with $110 million in cash and investments, which will support upcoming construction projects and operational needs [27][28] - Management is optimistic about achieving investment-grade ratings for their bonds as construction projects are completed and cash flows stabilize [30][32] Q&A Session All Questions and Answers Question: Do you plan on contributing to Sky Harbour Capital again to help close the funding gap for the remaining construction? - The company has sufficient cash at the trustee to complete the remaining projects and is more than halfway through its equity raises for the 20 airports [62][63] Question: How do you foresee the Trump administration's policies will affect your business? - The company views itself as relatively insensitive to economic cycles, with potential benefits from policies like reinstating bonus depreciation for aircraft [66][68] Question: Can you talk about the shift to the semi-private hangars versus the original thesis of fully private? - The semi-private model has proven to be more profitable, with significant demand and occupancy exceeding 100% [72][76] Question: How is visibility on pricing looking for the 3 new fields expected to commence operations in Q1 of 2025? - The new fields are expected to compare favorably to existing locations, with provisions for significant semi-private occupancy to enhance total revenue [77][78] Question: What is the average weighted-average lease term on your hangar tenant leases? - The weighted-average lease term is 3.2 years, with a mix of shorter and longer-term leases to manage risk and maximize revenue [81][82] Question: Can you please walk us through the BSCR calculation and where you are as of the third quarter on a run rate basis? - The company expects to achieve more than 3x debt service coverage once stabilized, with current run rates being too early to assess accurately [97][98]