FLYHT Reports First Quarter 2023 Results

CALGARY, AB / ACCESSWIRE / May 10, 2023 / FLYHT Aerospace Solutions Ltd.(TSXV:FLY)(OTCQX:FLYLF) (the "Company" or "FLYHT") today reported financial results for the first quarter ended March 31, 2023 ("Q1 2023"). All figures are Canadian dollars unless otherwise stated.

Financial Summary

Management Commentary

"We start 2023 in a strong position," said Kent Jacobs, President and Interim CEO. "FLYHT's strategic transformation into a provider of Actionable Intelligence (AI) over the past three years is enabling us to offer the aviation industry the tools and solutions increasingly demanded as the industry undergoes its own transformation. Our pipeline of potential business continues to increase and currently stands at the highest level in company history. In addition to a tailwind from the ongoing recovery of global passenger traffic, there is sustained demand for our legacy flagship products anchored by AFIRS™ 228 and surging interest in our new and innovative solutions built around our AFIRS Edge technology and SaaS solutions."

Continued Jacobs, "We achieved milestones on both fronts in the quarter as well as our weather business. Transport Canada awarded us a supplemental type certificate (STC) to install the AFIRS 228 on Boeing 737 MAX-8 aircraft, one of the world's most popular aircraft types, enabling airlines to now request that their new aircraft come off the factory line with Iridium satcom provisions which accommodate the AFIRS 228. We also received DO-160 environmental testing certification for the AFIRS Edge which means our 5G enabled device is ready for installation on commercial aircraft as we simultaneously work toward obtaining STCs for the product on multiple aircraft platforms. Finally, in weather, which is fast becoming another driver of potential growth for FLYHT, we are in active negotiations with the UKMet for an initial order to install our WVSS-II water vapor sensor system on aircraft for Aircraft Based Observations (ABOs) in Europe, and believe that there are many other governmental agencies and commercial entities that would benefit from our environmental solutions."

Continued Jacobs, "Financially, we delivered expected results in Q1 2023 especially considering we just completed two of the strongest quarters in years in the back half of 2022. SaaS revenue increased by 44%, and overall revenue growth would have been positive when adjusting for last year's large licensing orders. Our gross margins remain robust at 57.3%, and I am particularly pleased that our cash balance increased by $564,000 to $3.2 million as we collected on the large OEM order that we fulfilled last year."

Operating Results

Revenue decreased by 5% to $4,757,230 in Q1 2023 compared to Q1 2022, driven by growth in SaaS and Technical Services offset by decreases in Hardware and Licensing.

SaaS revenue increased by 44% to $2,413,200 in Q1 2023 due to the post-pandemic recovery of the Company's customer base and contribution of CrossConsense. Technical Services revenue increased by 407% to $563,848 with contributions from CrossConsense services offsetting a decrease of 57% from traditional services. Licensing revenue decreased by 99% due to decreases in the number of modems and associated license fees ordered for delivery as compared to the first quarter of 2022. Revenue in this category can be expected to vary quarter to quarter. Hardware revenue decreased by 16% to $1,771,445, as a total of 32 installation kits were shipped in Q1 2023 compared to 34 in Q1 2022.

Gross margin was 57.3% of revenue in Q1 2023 compared to 54.7% in Q1 2022. The increase in gross margin was due primarily to changes in the mix of revenue sources during the quarter.

Operating expenses increased by 9.8% from Q1 2022, driven by a 27.5% increase in Distribution expenses and a 21.2% increase in Research and Development and certification engineering expenses, offset by a 19.0% decrease in Administrative expenses. The increases were largely driven by the addition of personnel and expenses associated with the March 2022 acquisition of CrossConsense.

EBITDA¹ loss totaled $1,343,914 in Q1 2023 compared to an EBITDA loss of $937,630 in Q1 2022, due to higher operating expenses in Q1 2023 as compared to Q1 2022 with an increase in sales and marketing costs together with Edge development costs.

Net loss was $1,657,114 in Q1 2023 compared to a Net loss of $1,284,347 in Q1 2022.

Balance Sheet and Liquidity

Cash and short-term investments were $3,211,944 at March 31, 2023, compared to $2,647,650 at December 31, 2022.

Trade and other receivables decreased by 36% to $3,258,347 compared to YE 2022 as the Company collected on the large OEM order received in 2022. Trade payables and accrued liabilities decreased by 9% to $2,487,551 compared to YE 2022.

Conference Call Information

FLYHT will discuss its first quarter 2023 financial results at its Annual General Meeting to be held virtually via webinar at 2:00 pm MT (4:00 pm ET) on Thursday, May 11, 2023. The webinar will include a brief presentation followed by a question-and-answer session. Questions can be emailed in advance to investors@flyht.com.

The meeting and earnings discussion will be held online, accessible at:

https://incommconferencing.zoom.us/webinar/register/WN_2WozVtgTTWCthSc9baLjrw

The meeting will also be accessible by phone. The listen-only toll-free number is 1-800-319-4610 in Canada and the U.S. and 1-604-638-5340 outside of Canada and the U.S.

An archive of the conference call will be posted on the Investor Relations section of FLYHT's website as soon as it is available from the conference call provider.

Additional Information

FLYHT's Q1 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. 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.

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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.

SOURCE: FLYHT Aerospace Solutions Ltd.