On this morning’s FLYHT second quarter conference call, CEO Bill Tempany addressed a number of topics and questions around the release of Q2 financials and business activities. Right out of the gate, Mr. Tempany commented on the weakness in revenues experienced in Q2. Quarterly revenue was $1.5 million, down 30% from last year’s Q2 results of $2.2 million. The company however, is ahead of Q1, which would indicate it is headed in the right direction. Recurring revenues increased slightly to ~$893,000 from last year’s ~$846,000 and it was explained that this should improve in Q3 as customers that had been shut off due to nonpayment have restarted and a customer in the middle of a fleet switch is up and running again.
Mr. Tempany noted that in Q2/2013, the company recognized significant orders from First Air and NetJets, which accounted for the strong second quarter in 2013. He emphasized that the third and fourth quarter of this year are looking to be very strong as the company has shipped more AFIRS units in July than in the entire second quarter.
Throughout the call, Mr. Tempany addressed a number of other items:
- He believes FLYHT is on track to be operations positive (EBITDA with IR and share based compensation removed) by the end of 2014.
- The company has approximately $5 million in modified working capital.
- The settlement with Sierra Nevada Corporation (SNC) has allowed the company to eliminate nearly $2 million in debt. The SNC relationship opened a new market to FLYHT. SNC will lead sales in the United States and NATO military and government manned and unmanned aircraft markets.
- An initial regulatory report on aircraft tracking by the International Civil Aviation Organization is anticipated in late September and FLYHT will ensure it meets regulatory requirements as they are developed.
- On the sales front, there has been a great deal of activity in Asia. The company has hired a Singapore based sales person based on identified opportunities in the region. FLYHT is planning to add one or two full time sales positions.
- The company is in discussions with Bombardier and other OEM’s with the objective of having AFIRS become a standard feature on aircraft.
- Mr. Tempany expressed that although its L-3 relationship has been successful and a good one, he believes that FLYHT does not require a third party to gain direct access to manufacturers. He is confident that the company is at the point where it can have those conversations directly with the manufacturers.
- When asked about progress in China, Mr. Tempany stated that FLYHT has already shipped 50 units and that the Company is the only certified Iridium provider in China.
- The company in Q2 launched FLYHTSafe, a new safety notification solution. Investors should expect to see more service add-ons being launched in Q3 & Q4, which will improve efficiencies and communications for aircraft and allow FLYHT to earn additional usage fees.
- In regards to the increase in expenses, it was explained that there will be a continuation of Investor Relations efforts focusing on U.S. and International investors and the company has experienced an increase in travel expenses as a result of ensuring that FLYHT has a presence at all the industry related meetings. Also, the reported R&D spending is a result of the continuation of securing AFIRS 228 Supplemental Type Certifications, which will continue for at least three years.
To listen to the conference call, please click here.