flyExclusive, Inc. 2026 Q2 Earnings Call

Good afternoon, and thank you all for joining flyExclusive's second quarter 2026 earnings conference call. Joining me on the call today is Jim Segrave, flyExclusive's founder and Chief Executive Officer, and Brad Garner, our Chief Financial Officer. We announced second quarter financial results this morning before market open, along with the filing of our Form 10-Q for the three and six months ended June 30, 2026. We will be providing certain non-GAAP information during today's discussion. Important disclosures about this information and a reconciliation of the non-GAAP information to comparable GAAP information is included in our Form 10-Q filed with the SEC and is available on our investor relations website. In addition, this discussion might include forward-looking statements.

Actual results might differ materially for any number of reasons, including risk factors described in our annual report on Form 10-K, in our quarterly reports on Form 10-Q, and in the press release covering forward-looking statements. Rather than rereading this information, we are going to incorporate it by reference in our prepared remarks. With that, let me turn the call over to Jim.

Thank you, Hannah. Thank you to everyone joining us this afternoon. The second quarter represents another important milestone for flyExclusive and, I believe, provides clear evidence of how fundamentally this business has changed over the last two years. We generated approximately $111 million of revenue during the quarter, an increase of 22% year-over-year. Gross profit increased 65% to approximately $23 million, with gross margin expanding more than 500 basis points to approximately 20%. Most importantly, we generated $4.2 million of positive adjusted EBITDA. That represents a $9.4 million improvement from the second quarter of last year and marks our third consecutive quarter of positive adjusted EBITDA. For the last two years, we have been very clear about what needed to change at flyExclusive.

We needed to remove unproductive aircraft, modernize the fleet, dramatically improve dispatch availability and aircraft utilization, reduce our corporate cost structure, and create operating leverage. Quarter by quarter, we have executed against that plan, and I believe the results now demonstrate that flyExclusive is no longer a turnaround story. One of the clearest ways to see that transformation is to compare the number of aircraft we operate with the revenue we generate. In the second quarter of 2024, we generated approximately $79 million of revenue, with 96 revenue-producing aircraft. In the second quarter of 2025, revenue increased to approximately $91 million, while the number of aircraft declined to 86. In this quarter, we generated more than $111 million with only 81 revenue-producing aircraft. In two years, we have increased second quarter revenue by more than 40%, while reducing the number of aircraft required to produce that revenue by approximately 15%.

That is what the transformation of flyExclusive looks like in numbers. The first-half comparison is equally compelling. Revenue increased from approximately $159 million in the first half of 2024 to more than $207 million this year. Over that same period, revenue-producing aircraft declined from 96 to 81, and total flight hours increased from 33,000 to more than 38,000. We are simply getting significantly more productivity from every aircraft in the fleet. A major driver has been the transformation of the fleet itself. At the beginning of 2024, we had 37 non-performing aircraft. These aircraft consumed maintenance resources, pilot resources, and working capital while producing unacceptable financial returns. Today, only three non-performing aircraft remain, and all three of these are now under contract to be sold.

The operating losses associated with these 37 non-performing aircraft have declined from more than $3 million per month at the beginning of 2024 to less than $300,000 per month today. We are very close to completing one of the largest and most difficult pieces of the transformation we began two years ago. At the same time, we have substantially upgraded the productive portion of the fleet. We entered this transformation with no Challenger aircraft. Today, we operate 10 Challengers, and we expect that number to continue growing. These aircraft are significantly more reliable, generate substantially more revenue, and produce better economics than any of the legacy aircraft they replace. That transformation is showing up clearly in dispatch availability. Dispatch availability improved by more than 1,000 basis points year over year, increasing from 48% to 58%.

We believe that through continued fleet modernization and the efficiencies of our vertically integrated platform, we can ultimately produce dispatch availability well above 70%. The economics of that improvement are significant. At our current fleet size, every one percentage point of additional dispatch availability represents over $200,000 of monthly contribution or approximately $2.5 million annually. Utilization is improving as well. Despite operating 6% fewer revenue-producing aircraft than a year ago, flight hours topped 20,000, an increase of 8%. Core fleet utilization increased approximately 14%. Again, we are producing more with less. The scale of our operation is also increasingly significant. According to ARGUS, during the second quarter, flyExclusive was the largest North American Part 135 charter operator by both number of flights and flight hours. The same transformation is occurring in our corporate infrastructure.

Revenue per SG&A employee increased from approximately $668,000 during the first half of 2024 to more than $1 million during the first half of this year, a 50% improvement. At the same time, SG&A declined from approximately 29% of revenue down to approximately 18% today. We are not simply cutting costs to create profitability. We are growing revenue while becoming significantly more productive across both the fleet and our corporate infrastructure. That operating leverage is showing up directly in our financial performance. Gross profit increased from approximately $12 million in the first half of 2024 to almost $42 million so far this year. The EBITDA progression is even more significant.

First half adjusted EBITDA improved from a loss of approximately $35 million in 2024 to a loss of approximately $12 million in 2025 to a positive $4.4 million in the first half of this year. That is nearly $40 million of first-half EBITDA improvement in two years. Since the first quarter of 2024, we have increased our adjusted EBITDA by an average of approximately $2.5 million per quarter. In the fourth quarter of 2025, we delivered positive adjusted EBITDA and remained positive during the first quarter of 2026, despite that quarter historically being our most difficult seasonal quarter, and we generated another $4.2 million this quarter. That gives us three consecutive quarters of positive adjusted EBITDA. This is no longer the occasional good quarter.

We are demonstrating sustained performance and profitability. I also think it is important to put our GAAP results in the context of the underlying economics of our aircraft assets. We currently record approximately $5.5 million of depreciation each quarter, most of it associated with aircraft assets. That is a legitimate GAAP expense, but GAAP depreciation is an allocation of historical cost over an estimated useful life. It is not a mark-to-market adjustment reflecting the actual value of our aircraft each quarter. Over the last several years, the market values of the aircraft we operate have generally remained stable and in many cases have actually increased. So while approximately $5.5 million of depreciation reduces our reported GAAP earnings each quarter, the actual economic depreciation we have experienced on our aircraft has been substantially less.

I think that distinction is important when evaluating both our reported results and the underlying economics of the business. Based on the operating trends we are seeing today, we expect our positive EBITDA progression to continue. For the third quarter, we expect adjusted EBITDA of approximately $5 million-$7 million. If we achieve that result as expected, Q3 would represent our fourth consecutive quarter of positive adjusted EBITDA. We are now approximately 45 days away from potentially completing a full year of sustained quarterly adjusted EBITDA profitability, and immediately following Q3, we enter what historically has always been our strongest quarter of the year. We are not providing fourth quarter guidance, but based on the direction of the business, we fully expect the second half of 2026 to continue the consistent trend of year-over-year improvement we have demonstrated every quarter over the last two years.

That brings me to what I believe is the most important change in the flyExclusive story. Investors should no longer view flyExclusive as a company in transition. By the fourth quarter, we expect to have removed all of the non-performing aircraft. We have materially improved the dispatch availability and utilization. We have dramatically increased the productivity of our corporate infrastructure, and we are now producing sustained positive adjusted EBITDA. The question is no longer whether flyExclusive can become profitable. The question is how much earnings power this platform can generate as we continue growing it. One of our largest opportunities is fractional ownership. Fractional retail sales increased approximately 34% year-over-year during the second quarter and approximately 29% during the first half. More importantly, fractional aircraft generate substantially better economics for flyExclusive than comparable leased aircraft.

As fractional becomes a larger percentage of our fleet, we can grow revenue while simultaneously improving the economic profile of the fleet. We are seeing strong demand for the product, and we now have additional aircraft inventory coming into the business to support that growth. There is an important distinction between what we have done over the last two years and what comes next. For two years, we have been removing aircraft while growing revenue. Now we have the opportunity to begin adding aircraft back into a dramatically more efficient operating platform, and we are not adding the same aircraft we removed. We are adding highly productive CJ3, XLS, and Challenger aircraft with significantly higher dispatch reliability, utilization, and revenue expectations. The CJ3 and XLS class aircraft will generate approximately $5 million of annual revenue each. A Challenger can generate approximately $10 million annually.