Calgary, Alberta – April 6, 2022 – FLYHT Aerospace Solutions Ltd. (TSX-V: FLY) (OTCQX: FLYLF) (the “Company” or “FLYHT”) today reported financial results for the fourth quarter and full year ended December 31, 2021.
“FLYHT has made tremendous strategic and operational progress as we navigated the ongoing challenges besetting the global aviation industry these past two years,” said Bill Tempany, Interim CEO. “We advanced our efforts to build one of the industry’s premier platforms for Actionable Intelligence, creating multiple, durable revenue streams and positioning the company as a trusted, critical, value-adding partner for a growing list of customers. We are well positioned to serve our customers as they see more normalized flight activities across their businesses.”
“Our financial results in the fourth quarter reflect the choppiness of the recovery from the pandemic that is affecting the global aviation industry. While our revenues declined compared to last year’s strong fourth quarter, we have continued to invest in R&D as part of our transition to a SaaS driven model, and maintain a strong balance sheet. We are confident that our strategic investments will show results in 2022 as the aviation recovery unfolds.”
Concluded Tempany, “We enter 2022 with the right tools to support our airline customers. In particular, CrossConsense provides us with a maintenance capability and fulfills our goal to increase our presence in the European and Middle East markets, and we have already identified several customers who will benefit and are engaging with them. Additionally, the Edge platform delivers unprecedented capabilities to provide a replacement for the old 2G-3G systems installed on 4,000+ aircraft with a device that supports 3G, 4G and 5G, Iridium Certus, Bluetooth, Wi-Fi, and connection through virtual and in-flight entertainment systems. These are two of the initiatives which underscore our confidence in FLYHT’s outlook.”
Fourth Quarter 2021 Financial Overview
Total revenue decreased by 25% to $2,527,961 compared to $3,379,186 in Q4 2020. Growth in Licensing of 641% to $356,197 was offset by declines in SaaS of 8% to $1,500,110, Hardware declines of 60% to $590,975, and Technical Services declines of 62% to $80,679. Q4 2021’s hardware revenues were consistent with Q3 2021, but were down when compared to Q4 2020 mainly because of unusually high hardware revenues in Q4 2020. Hardware demand for the Company’s products has also been impacted, as many customers have parked aircraft throughout the pandemic, impacting the number of c-checks available for installation activities. SaaS revenues have varied throughout the pandemic, as although diversity in the Company’s customer base with respect to operations and geography tempers the fluctuations somewhat, the aviation industry continues to be impacted by each subsequent COVID wave and variant. FLYHT’s revenue tracks closely to passenger traffic in each geographic area, and continues to be affected by that industry reality.
Gross margin decreased to 49.5% of revenue compared to 56.0% in Q4 2020. The decrease in gross margin was due primarily to a reserve taken for slow-moving inventory, offsetting an increase in gross margin based on the mix of revenue sources during the quarter, as Q4 2021 revenue compared to Q4 2020 included a larger contribution from SaaS and Licensing, the two revenue sources with the highest gross margins.
Operating expenses decreased by 15% to $3,175,847 compared to Q4 2020, with reductions in Distribution expenses of 37% and Administrative expenses of 12%, partially offset by higher Research, Development & Certification Engineering expenses of 17%.
EBITDA1 loss increased to $1,745,000 compared to an EBITDA loss of $1,657,110 in Q4 2020.
Net loss increased slightly to $2,444,054 compared to a net loss of $1,999,715 in Q4 2020.
Full Year 2021 Financial Overview
2021 annual results reflect a full year of pandemic impact in 2021 versus three quarters in 2020. Total revenue decreased by 17% to $11,318,689 compared to $13,652,985 in 2020. Growth in Hardware of 47% to $3,394,228 was offset by declines in SaaS of 18% to $5,993,521, declines in Licensing of 57% to $1,551,000, and declines in Technical Services of 3% to $379,940.
Gross margin decreased to 57% of revenue compared to 68% in 2020. The decrease in gross margin was due primarily to changes in the mix of revenue sources during the year, as 2021 revenue compared to 2020 included a larger contribution from Hardware and a lower contribution from Licensing, the two revenue sources with the lowest and highest gross margins, respectively.
Operating expenses decreased 8% compared to 2020, to $11,700,652. This decrease included a 28% decrease in Distribution expenses, a 17% decrease in Administration expenses, partially offset by a 33% increase in Research, Development & Certification Engineering expenses. The shift from expenditures in administration and distribution type expenses to development is reflective of the Company’s focus on development of the AFIRS Edge product and its Actionable Intelligence SaaS solutions.
EBITDA1 loss was $4,538,193 in 2021, compared to an EBITDA loss of $1,854,413 in 2020.
Net loss was $5,859,206 compared to a net loss of $3,237,457 in 2020.
Balance Sheet and Liquidity
FLYHT had cash and short-term investments of $4,520,591 at December 31, 2021, a decrease from $5,127,963 at December 31, 2020 and $5,355,302 at September 30, 2021.
Trade and other receivables remained constant at $1,590,473 compared to YE 2020, and Trade payables and accrued liabilities decreased by 20% to $1,703,309 compared to YE 2020.
Intangible assets grew due to the September 2021 acquisition of the WVSS-II product line from SpectraSensors, Inc.
The current portion of Loans and borrowings decreased year over year by $1,712,124, reflecting the impact of the retirement in mid-2021 of the convertible debentures originally issued in 2018.
Fourth Quarter Achievements
During the 4th quarter of 2021, the Company signed a multi-year contract with Commercial Aircraft Corporation of China, Ltd. (“COMAC”) for the installation of AFIRS 228 on the COMAC C-919 aircraft, and received an initial order purchase. The aircraft is in final certification by the Civil Aviation Administration of China (CAAC) and AFIRS will be used for communication during the cold weather certification to be conducted in Canada. COMAC currently had confirmed orders for 305 aircraft mostly from Chinese leasing companies or airlines.
Also during the quarter, FLYHT announced an agreement with Frontier Airlines to equip Frontier’s near-term deliveries of A320 and A321 aircraft with FLYHT’s AFIRS solution, enabling Frontier to optimize its over water routes. By gaining access to real-time fleet information through FLYHT’s solutions, Frontier aims to improve operational efficiencies in both flight and ground operations, including reducing flying time and the associated fuel burn, while enhancing customer satisfaction.
On November 1, 2021, the Company announced that it had applied to the TSX Venture Exchange to amend the exercise price and expiry date of 2,667,610 previously issued and outstanding warrants (the “Warrants”) such that the Warrants will now expire on June 15, 2022 and have an exercise price of $1.25. The Warrants were originally set to expire on November 15, 2021 (2,396,200 Warrants) and November 25, 2021 (271,410 Warrants), both with an original exercise price of $1.75.
Conference Call Information
FLYHT will host a conference call to discuss its fourth quarter and full year 2021 financial results on April 7, 2022, at 7:30 am MT (9:30 am ET). The conference call will include a brief presentation from FLYHT’s Interim CEO Bill Tempany and CFO Alana Forbes followed by a question-and-answer session. To access the conference call by phone within Canada and the U.S., the toll-free number is 1-800-319-4610. Outside Canada and the U.S., dial 1-604-638-5340. Callers should dial in five to ten minutes prior to the scheduled start time.
Management will accept questions by telephone and e-mail. Individuals wishing to ask a question during the call can do so by pressing *1. Questions can be emailed in advance or during the conference call to email@example.com. An archive of the conference call will be posted on the Investor Communications section of FLYHT’s website following the meeting.
FLYHT’s Q4 2021 Report, which contains more detailed information including the CEO’s Letter to Shareholders, Management Discussion and Analysis and Financial Statements, can be accessed on the Company’s website. The MD&A and Financial Statements have also been filed with SEDAR and will be accessible at www.sedar.com.
About FLYHT Aerospace Solutions Ltd.
FLYHT provides airlines with Actionable Intelligence to transform operational insight into immediate, quantifiable action, and delivers industry leading solutions to improve aviation safety, efficiency, and profitability. This unique capability is driven by a suite of patented aircraft certified hardware products. These include AFIRS™, an aircraft satcom/interface device, which enables cockpit voice communications, real-time aircraft state analysis, and the transmission of aircraft data while inflight. The AFIRS Edge is a state-of-the-art 5G Wireless Quick Access Recorder (WQAR), Aircraft Interface Device (AID), and Aircraft Condition and Monitoring System (ACMS). The Edge can be interfaced with FLYHT’s TAMDAR probe or the FLYHT-WVSS-II relative humidity sensor to deliver airborne weather and humidity data in real-time.
CrossConsense, FLYHT’s wholly-owned subsidiary, offers highly skilled services to the commercial aviation industry and provides preventative maintenance solutions. These include Aircraft Fleet View, a native application that gives a real-time view of airline fleet status; AviationDW, a managed data warehouse for enhanced business intelligence; and ACSIS, a visualization and predictive maintenance alerting tool.
FLYHT is headquartered in Calgary, Canada, and is an AS9100 Quality registered company. CrossConsense, located in Frankfurt, Germany, is an ISO9001 certified operation. For more information, visit www.flyht.com
Cautionary Note Regarding Forward-Looking Statements
Except for statements of historical fact, this news release contains certain “forward-looking information” within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as “plan”, “expect”, “project”, “intend”, “believe”, “anticipate”, “estimate” and other similar words, or statements that certain events or conditions “may” or “will” occur. In particular, forward-looking information in this press release includes, but is not limited to, statements with respect to the anticipated/projected revenues and related matters. Although we believe that the expectations reflected in the forward-looking information are reasonable, there can be no assurance that such expectations will prove to be correct. We cannot guarantee future results, performance or achievements. Consequently, there is no representation that the actual results achieved will be the same, in whole or in part, as those set out in the forward-looking information.
Forward-looking information is based on the opinions and estimates of management at the date the statements are made and are founded on the basis of expectations, assumptions and hypotheses made by the Company, including, but not limited to projected revenues. Such forward-looking information is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking information. Some of the risks and other factors that could cause the results to differ materially from those expressed in the forward-looking information include, but are not limited to: general economic conditions in Canada, the United States and globally; industry conditions, and supply chain delays. Readers are cautioned that this list of risk factors should not be construed as exhaustive.
The forward-looking information contained in this news release is expressly qualified by this cautionary statement. We undertake no duty to update any of the forward-looking information to conform such information to actual results or to changes in our expectations except as otherwise required by applicable securities legislation. Readers are cautioned not to place undue reliance on forward-looking information.
FLYHT Aerospace Solutions Ltd. FNK IR LLC
Alana Forbes Matt Chesler, CFA
Chief Financial Officer Investor Relations
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1 EBITDA: a non-GAAP financial measure, defined as earnings before interest, income tax, depreciation and amortization. EBITDA is provided to aid in analysis and profitability comparisons among companies and industries, by segregating operating results from the effects of financing and capital expenditures.
2021 FLYHT Aerospace Solutions Ltd.