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FLYHT Reports Fourth Quarter and Full Year 2023 Results

Quarterly results highlighted by sequential increases in SaaS revenues and receipt of favorable amendment to debt terms

Calgary, Alberta – April 24, 2024 – 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, 2023 (“Q4 2023”). All figures are Canadian dollars unless otherwise stated.

Financial Summary

 Three Months Ended December 31 Twelve Months Ended December 31
 20232022Inc./ Dec. 20232022Inc./ Dec.
Revenue4,244,7877,241,758-41.4%20,144,57923,879,160-15.6%
  SaaS2,801,6612,253,61824.3%10,693,0988,157,88631.1%
  Hardware327,9411,217,860-73.1%4,273,4644,720,204-9.5%
  Licensing25,6493,030,368-99.2%1,962,2239,101,130-78.4%
  Technical Services1,089,536739,91247.3%3,215,7941,899,94069.3%
Gross Margin59.1%67.1%-800 bps58.7%63.7%-500 bps
EBITDA(1,226,783)1,170,183NM(2,833,517)251,453NM
Net Income (Loss)(1,494,795)718,689NM(4,049,371)(1,003,033)NM
EPS – Basic & Diluted(0.04)0.01(0.05)(0.10)(0.03)(0.07)

 

Management Commentary

“FLYHT finished 2023 with performance in-line with our expectations. We reported over $20 million in revenue for the full year driven by record SaaS revenue of nearly $10.7 million, a 31% increase compared to 2022. This included an all-time quarterly high of over $2.8 million in SaaS revenue for the fourth quarter of 2023. As expected, we did not report positive EBITDA in 2023 due to a large high margin OEM licensing order that did not repeat this year, but also because we are reinvesting our positive cash flow to fund R&D and commercialization of our emerging 5G solutions and weather businesses,” said Kent Jacobs, President and Interim CEO of FLYHT.

Continued Jacobs, “We continue to make significant progress on our two main strategic growth initiatives, 5G aviation solutions and weather. Less than two months after being issued the Supplemental Type Certificate (“STC”) for the AFIRS EdgeTM on Airbus A320 aircraft, the flange version Edge is now being installed on our first customer’s fleet, where we will operate WQAR functions through the 5G network. We are underway with efforts to familiarize this STC into other jurisdictions, starting with the U.S. and Europe. We are also on track to deploy the FLYHT-WVSS-II sensor, Edge, and Certus-100 satcom solution with a North American airline as part of NOAA’s FY2023 budget. As expected, NOAA was allocated FY2024 budget to purchase additional FLYHT-WVSS-II, Edge and satcom systems.”

Concluded Jacobs, “As we enter 2024, we have a higher cash and investments balance at December 31, 2023 as compared to the ending cash balance at Q3 2023, reflecting our disciplined allocation of resources. We are focused on the multiple opportunities for growth across our 5G solutions and weather businesses. We expect 2024 to be a milestone year as we commercialize these business opportunities.”

Fourth Quarter 2023 Results

Revenue decreased by 41% to $4,244,787 in Q4 2023 compared to Q4 2022. Excluding Licensing, revenue would have increased by 0.2% during the quarter.

SaaS revenue increased by 24% to $2,801,661, driven by the recovery of the Company’s customer base, as well as growth in weather-related software services. Licensing revenue decreased by 99% to $25,649 due to a large 2022 order from a long-term OEM customer that was not replicated in Q4 2023. Hardware revenue decreased by 73% to $327,941, with a total of 4 installation kits shipped in Q4 2023 compared to 16 kits shipped in Q4 2022. Technical Services revenue increased by 47% to $1,089,536 as a result of data migration work delivered and an increase in customer requests for certification services.

Gross margin was 59.1% of revenue in Q4 2023 compared to 67.1% in Q4 2022. The decrease in gross margin was due primarily to changes in the mix of revenue sources during the quarter.

Operating expenses increased by 1.2% from Q4 2022, driven by a 24% increase in Research and Development and certification engineering expenses, specifically an increase in Contract Labour. This was offset by a 15% decrease in Administration expenses and an 8% decrease in Distribution expenses.

EBITDA[1] loss totaled $1,226,783 in Q4 2023 compared to positive EBITDA of $1,170,183 in Q4 2022.

Net loss was $1,494,795 in Q4 2023 compared to a Net Income of $718,689 in Q4 2022.

Full Year 2023 Results

Revenue decreased by 16% to $20,144,579 in 2023 compared to 2022. Excluding Licensing, revenue would have increased by 23% compared to 2022.

SaaS revenue increased by 31% to $10,693,098, driven by an increase in customers’ flights and flight hours as well as growth in weather-related software services. Licensing revenue decreased by 78% to $1,962,223 due to a large 2022 order from a long-term OEM customer that was not replicated in 2023. Hardware revenue decreased by 9% to $4,372,464, with a total of 69 installation kits shipped in 2023 matching the 69 installation kits shipped in 2022. Technical Services revenue increased by 69% to $3,215,794 as a result of data migration work delivered and an increase in customer requests for certification services. CrossConsense revenues were also a significant factor in this YTD increase.

Gross margin was 58.7% of revenue in 2023 compared to 63.7% in 2022. The decrease in gross margin was due primarily to changes in the mix of revenue sources during the year.

Operating expenses decreased by 2% from 2022, driven by a 20% decrease in Administrative expenses offset by a 9% increase in Distribution expenses and a 5% increase in Research and Development and certification engineering expenses.

EBITDA[2] loss totaled $2,833,517 in 2023 compared to positive EBITDA of $251,453 in 2022.

Net loss was $4,049,371 in 2023 compared to a Net loss of $1,003,033 in 2022.

Balance Sheet and Liquidity                            

Cash and equivalents plus GICs totalled $2,042,203 at December 31, 2023, compared to $2,647,650 at December 31, 2022. When compared to Q3 2023 balances of $1,939,959, our cash position increased by $102,244 quarter-over-quarter.

Trade and other receivables decreased by 44% to $2,896,200 compared to YE 2022, and Trade payables and accrued liabilities increased by 13% to $3,097,494 compared to YE 2022.

During the quarter, Western Economic Diversification Canada granted FLYHT an amendment to the contribution agreements for the two government loans that are in the repayment phase. The amendment reduces payments required from April 2024 to March 2025, with the resulting difference of $750,204 added to the scheduled monthly payments remaining on the loans from April 2025 to October 2028. There were no costs, nor other changes to terms associated with this favorable amendment.

Conference Call Information

FLYHT will host a conference call to discuss the financial results for the fourth quarter and full year 2023 on Thursday, April 25, 2024, at 7:30 a.m. MT (9:30 a.m. ET). The conference call will include prepared remarks followed by a question-and-answer session with FLYHT’s President & Interim CEO Kent Jacobs and CFO Alana Forbes. 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.

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 investors@flyht.com. An archive of the conference call will be posted on the Investor Communications section of FLYHT’s website following the meeting.

Additional Information

FLYHT’s Q4 2023 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, AFIRS™. Solutions include an aircraft satcom/interface device that enables cockpit voice communications, the transmission of aircraft data both inflight via satellite and post-flight via 5G, real-time aircraft state and fleet status analysis, and preventative maintenance solutions. FLYHT’s hardware products can also be interfaced with FLYHT’s proprietary relative humidity sensors to deliver airborne weather and humidity data in real-time.

FLYHT is headquartered in Calgary, Canada, and is an AS9100 Quality registered company. 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.

Contact Information:

FLYHT Aerospace Solutions Ltd.FNK IR LLC
Alana ForbesMatt Chesler, CFA
Chief Financial OfficerInvestor Relations
403.291.7437646.809.2183
investors@flyht.commchesler@flyht.com

 

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[1] EBITDA: defined as earnings before interest, income tax, depreciation and amortization (a non-GAAP financial measure). 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.

[2] EBITDA: defined as earnings before interest, income tax, depreciation and amortization (a non-GAAP financial measure). 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.