Calgary, Alberta – May 10, 2023 – FLYHT Aerospace Solutions Ltd. (TSX-V: 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
| Three Months Ended March 31 | ||||
| 2023 | 2022 | Variance | ||
| Revenue | 4,757,230 | 5,030,657 | -5% | |
| SaaS | 2,413,200 | 1,675,072 | 44% | |
| Hardware | 1,771,445 | 2,109,598 | -16% | |
| Licensing | 8,737 | 1,134,706 | -99% | |
| Technical Services | 563,848 | 111,281 | 407% | |
| Gross Margin | 57.3% | 54.7% | +260 bps | |
| EBITDA | (1,343,914) | (937,630) | NM | |
| Net Income (Loss) | (1,657,114) | (1,284,347) | NM | |
| EPS – Basic & Diluted | (0.04) | (0.03) | (0.01) | |
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.
EBITDA 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.
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.