SkyHarbour(SKYH) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - As of the end of Q1 2025, assets under construction and completed construction reached over $275 million, driven by construction activities in Phoenix, Dallas, and Denver [7] - Revenues increased by 133% year-over-year and 20% sequentially, attributed to the acquisition of the Camarillo Campus [7] - Operating expenses increased moderately, with a notable rise in fuel expenses and startup costs due to increased headcount and full operations at the Camarillo Hangar Campus [10][12] Business Line Data and Key Metrics Changes - The financial results of Sky Harbor Capital, including Houston, Miami, and Nashville campuses, showed flat revenues in recent quarters, with expectations for significant increases in Q2, Q3, and Q4 as new campuses lease up [12] - Operating expenses rose due to onboarding personnel in anticipation of new campus operations [12] Market Data and Key Metrics Changes - The company is expanding its ground lease portfolio, with new leases in Seattle and Portland, and anticipates significant revenue growth from these locations [14][15] - The average rent per square foot has increased from$ 29.08 to $35.75, representing a 23% increase over the original estimate, with expectations of reaching$ 40.06 based on recent leases [17][18] Company Strategy and Development Direction - The company is focusing on vertical integration in construction to manage costs, improve build quality, and speed up project timelines [22][24] - The strategy includes a significant ramp-up in development activities, with plans for 23 campuses by the end of 2025 and 16 additional campuses in development [38][47] - The company aims to differentiate itself through a unique bundled real estate and service offering, targeting high-quality construction and operational efficiency [29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving cash flow breakeven by the end of 2025 as new campuses ramp up leasing [8] - The company remains optimistic about demand in business aviation, with no significant impacts from macroeconomic uncertainties reported [90] - Management acknowledged concerns about potential competition but emphasized the strength of their site acquisition capabilities and integrated operational model as competitive advantages [60][62] Other Important Information - The company has approximately $97.5 million in cash and U.S. Treasuries, with a focus on short-term investments for future construction [30] - The company is preparing for a debt issuance of$ 150 million to $175 million to fund new projects, monitoring market conditions closely [56][99] Q&A Session Summary Question: Plans to raise debt this year - The company is preparing for a financing of$ 150 million to $175 million for upcoming projects, keeping an eye on market conditions [56][57] Question: Competition from operators replicating the model - Management expressed concern about new competition but believes their integrated model and site acquisition expertise provide a sustainable competitive advantage [60][62] Question: Expected interest rate and timing on financing - Interest rates for a bond deal are expected to be around 5.5%, with bank facilities potentially in the SOFR plus 200 area [99][100] Question: Nashville occupancy - Nashville occupancy is reported at 92%, with actual occupancy exceeding 100% due to the nature of semi-private hangars [92][94]