Deanna White, former CFO, will become Chief
Operating Officer and interim CEO, Stan Little to assume role of
“Founder”
Q1 2024 Revenue of $30.6 million, up 9.5%
Year-Over-Year on a Pro Forma Basis, Beats Guidance
Surf Air Mobility Inc. (NYSE: SRFM), a leading regional air
mobility platform, today reported its first quarter 2024 results.
Please visit the Surf Air Mobility investor relations website at
investors.surfair.com for more information and to listen to the
accompanying earnings call.
CEO Transition:
Surf Air Mobility Inc. today announced that Southern Airways
founder and current Surf Air CEO Stan Little will transition to a
“Founder’s” role. Former CFO and current Senior Advisor Deanna
White will become Chief Operating Officer and interim CEO.
Deanna is a seasoned industry leader with a track record of
success in the C-Suite of multiple innovative companies across the
air mobility sector. Previously, Deanna was CEO of Bombardier
Flexjet, a global leader in private aviation, which was ultimately
sold to Directional Aviation Capital. Following that, she was COO
of Kitty Hawk, an EVTOL startup, which was sold during her tenure
to Boeing and has subsequently been rebranded as Wisk Aero.
Stan Little will remain an active participant in the company’s
long-term strategy. “It was one of the high points of my career to
build Southern Airways from the ground up with such a dedicated
team, and I look forward to continuing to help Surf Air Mobility
transform itself into the premier “green” commuter airline in the
world,” said Little on Tuesday as he joined Purdue University
officials in launching the first commuter service in a generation
from the University to Chicago O’Hare.
“We are thrilled that Deanna has agreed to assume the role of
Chief Operating Officer and interim CEO as the company turns its
focus to profitability and efficiency across its flight
operations,” said Carl Albert, Surf Air Mobility’s Chairman of the
Board. “I would like to recognize Stan as the founder of Southern
Airways for building that company from birth into the largest
commuter airline by departure and largest operator of Cessna
Caravans and we are pleased to continue to benefit from his
experience as a Special Advisor to the company.”
First Quarter Financial Highlights:
Surf Air Mobility is providing unaudited results for the period
ended March 31, 2024, on a quarterly basis, as well as unaudited
pro forma results for the period ended March 31, 2023, which
assumes the Southern acquisition closed as of the beginning of
fiscal year 2023.
- Revenue
- Revenue of $30.6 million for first quarter 2024 compared to
$27.9 million for the same period of the prior year on a pro-forma
basis, beating first quarter 2024 guidance.
- Net Loss
- Net loss of $(37.0) million for first quarter 2024, compared to
$(15.5) million for the same period of the prior year on a
pro-forma basis, which includes investment in R&D for
electrification and software technology, stock-based compensation,
transaction costs and other non-recurring items.
- Adjusted EBITDA
- Adjusted EBITDA of $(16.5) million for the first quarter 2024,
compared to $(11.7) million for the same period of the prior year
on a pro-forma basis, meeting our first quarter 2024 guidance.
Adjusted EBITDA includes investment in R&D for electrification
and software technology.
- See the Adjusted EBITDA table for the reconciliation from Net
Loss to Adjusted EBITDA.
As of March 31, 2024, Surf Air Mobility had $1.3 million in cash
on hand, with the ability to draw $90 million in committed draws
and up to $296 million in follow-on draws subject to the terms of
the GEM share subscription facility.
Developments on Key Initiatives:
- Mobility
- Congress is expected to imminently pass the FAA Reauthorization
Act, which, in its current form, would positively impact the
Essential Air Service (“EAS”) program by raising the subsidy cap
from a maximum of $200 per passenger to a maximum of at least $650
per passenger.
- As of March 31, 2024, Surf Air Mobility supported 19
communities under the EAS program. The FAA Reauthorization Act
requires the total cost of an air carriers proposal to be equally
weighted with other factors such as local recommendations,
including frequency of service, and interline agreements. This
focus on cost favors Surf Air Mobility’s low-cost Caravan
fleet.
- Textron Aviation aircraft deliveries are on track for the third
and fourth quarter of 2024.
- Surf Air Mobility entered into an MOU to supply electric
powertrains to Tanzanian Cessna Caravan operator Auric Air,
bringing total penetration into Africa’s Caravan footprint to
~13%.
- Electrification
- Aircraft electrification program is on track to complete the
conceptual design phase by the fourth quarter of 2024.
- Software
- Continuing development of B2C and B2B software platform to
enable the regional aviation ecosystem, from passengers to air
operators, with a suite of software tools powered by AIP,
Palantir’s AI engine.
“Once again, Surf Air Mobility achieved many of our goals in the
first quarter, while also meeting or beating guidance. We worked
with Congressional leaders on both sides of the aisle to help
reform and expand the Essential Air Service program in a way that
benefits passengers, commuter air carriers, and taxpayers, while
continuing our drive toward electrification, which benefits
everyone,” said Stan Little, founder of Southern Airways.
Strategic Update:
To underpin the company’s ongoing efforts to balance growth with
profitability, Surf Air Mobility is undertaking a strategic review
that will ultimately result in cost reduction and other expense
control measures aimed at returning airline operations to
profitability.
Surf Air Mobility is also actively pursuing other strategic
initiatives with partners and affiliates, including the creation of
one or more joint ventures, to separately capitalize the company’s
electrification and software efforts and maximize shareholder value
creation from these substantial investments.
The company intends to provide a more comprehensive strategic
update on these, and other, initiatives at its investor day that
will now, in light of the CEO transition, be held in the third
quarter of 2024.
Capital Structure Update:
Surf Air Mobility has retained a leading investment bank to more
fully represent the company in its efforts to secure additional,
non-dilutive or less-dilutive capital in the form of a credit
facility.
“Management is continuously searching for ways to optimize our
capital structure and reduce dilution to our shareholders,” said
Oliver Reeves, CFO of Surf Air Mobility. “Our agreement with our
banking partner formalizes these efforts and we look forward to
updating the market of any success in due course.”
Second Quarter 2024 Financial Outlook:
- Revenue, in the range of $28.0 million to $31.0 million.
- Pro forma adjusted EBITDA, in the range of $(18.0) million to
$(16.0) million, which excludes the expected impact of stock-based
compensation, changes in fair value of financial instruments, and
other non-recurring items.
Surf Air Mobility will provide full-year 2024 guidance at its
Investor Day to be held in the third quarter of 2024.
About Surf Air Mobility
Surf Air Mobility, headquartered in Los Angeles, is a pioneering
regional air mobility platform dedicated to transforming regional
air travel through electrification. As the largest commuter airline
operator in the US, Surf Air Mobility partners with commercial
leaders to develop innovative powertrain technology for smaller
aircraft, facilitating the electrification of existing fleets and
the widespread adoption of electric aircraft. Surf Air Mobility’s
mission is to drive substantial cost reductions and environmental
benefits to make regional flying more accessible and affordable.
Backed by a management team with extensive expertise spanning
aviation, electrification, and consumer technology, Surf Air
Mobility is poised to advance the future of sustainable air
travel.
Forward-Looking Statements
This Press Release contains forward-looking statements within
the meaning of The Private Securities Litigation Reform Act of
1995, including statements regarding the anticipated benefits of
the transaction; Surf Air Mobility’s ability to anticipate the
future needs of the air mobility market; future trends in the
aviation industry, generally; Surf Air Mobility’s future growth
strategy and growth rate and its ability to access its financings
and expand its business. Readers of this release should be aware of
the speculative nature of forward-looking statements. These
statements are based on the beliefs of Surf Air Mobility’s
management as well as assumptions made by and information currently
available to Surf Air Mobility and reflect Surf Air Mobility’s
current views concerning future events. As such, they are subject
to risks and uncertainties that could cause actual results or
events to differ materially from those expressed or implied by such
forward-looking statements. Such risks and uncertainties include,
among many others: Surf Air Mobility’s future ability to pay
contractual obligations and liquidity will depend on operating
performance, cash flow and ability to secure adequate financing;
Surf Air Mobility’s limited operating history and that Surf Air
Mobility has not yet manufactured any hybrid-electric or
fully-electric aircraft; the powertrain technology Surf Air
Mobility plans to develop does not yet exist; any accidents or
incidents involving hybrid-electric or fully-electric aircraft; the
inability to accurately forecast demand for products and manage
product inventory in an effective and efficient manner; the
dependence on third-party partners and suppliers for the components
and collaboration in Surf Air Mobility’s development of
hybrid-electric and fully-electric powertrains and its advanced air
mobility software platform, and any interruptions, disagreements or
delays with those partners and suppliers; the inability to execute
business objectives and growth strategies successfully or sustain
Surf Air Mobility’s growth; the inability of Surf Air Mobility’s
customers to pay for Surf Air Mobility’s services; the inability of
Surf Air Mobility to obtain additional financing or access the
capital markets to fund its ongoing operations on acceptable terms
and conditions; the outcome of any legal proceedings that might be
instituted against Surf Air, Southern or Surf Air Mobility; changes
in applicable laws or regulations, and the impact of the regulatory
environment and complexities with compliance related to such
environment; and other risks and uncertainties indicated in the
prospectus. These and other risks are discussed in detail in the
periodic reports that Surf Air Mobility files with the SEC, and
investors are urged to review those periodic reports and Surf Air
Mobility’s other filings with the SEC, which are accessible on the
SEC’s website at www.sec.gov, before making an investment decision.
Surf Air Mobility assumes no obligation to update its
forward-looking statements except as required by law.
Footnotes
Use of Non-GAAP Financial Measures: Surf Air Mobility uses
Adjusted EBITDA to identify and target operational results which is
beneficial to management and investors in evaluating operational
effectiveness. Pro Forma Adjusted EBITDA is a supplemental measure
of Surf Air Mobility’s performance that is not required by, or
presented in accordance with, U.S. GAAP. Pro Forma Adjusted EBITDA
is not a measurement of Surf Air Mobility’s financial performance
under U.S. GAAP and should not be considered as an alternative to
net income (loss) or any other performance measure derived in
accordance with U.S. GAAP. Surf Air Mobility’s calculation of this
non-GAAP financial measure may differ from similarly titled
non-GAAP measures, if any, reported by other companies. This
non-GAAP financial measure should not be considered in isolation
from, or as a substitute for, financial information prepared in
accordance with U.S. GAAP.
Non-GAAP financial measures have limitations in their usefulness
to investors because they have no standardized meaning prescribed
by GAAP and are not prepared under any comprehensive set of
accounting rules or principles. In addition, non-GAAP financial
measures may be calculated differently from, and therefore may not
be directly comparable to, similarly titled measures used by other
companies.
Surf Air Mobility presents Pro Forma Adjusted EBITDA because it
considers this measure to be an important supplemental measure of
its performance and believes it is frequently used by securities
analysts, investors, and other interested parties in the evaluation
of companies in its industry. Management believes that investors’
understanding of Surf Air Mobility’s performance is enhanced by
including this non-GAAP financial measure as a reasonable basis for
comparing its ongoing results of operations.
Consolidated Balance Sheets as of March 31, 2024, and
December 31, 2023:
March 31, 2024
December 31, 2023
Assets:
Current assets:
Cash
$
1,278
$
1,720
Accounts receivable, net
4,710
4,965
Prepaid expenses and other current
assets
10,725
11,051
Total current assets
16,713
17,736
Restricted cash
713
711
Property and equipment, net
46,706
45,991
Intangible assets, net
25,777
26,663
Operating lease right-of-use assets
12,263
12,818
Finance lease right-of-use assets
1,352
1,343
Other assets
5,262
5,727
Total assets
$
108,786
$
110,989
Liabilities, Redeemable Convertible
Preferred Shares and Shareholders’ Deficit:
Current liabilities:
Accounts payable
$
20,575
$
18,854
Accrued expenses and other current
liabilities
72,233
59,582
Deferred revenue
18,122
19,011
Current maturities of long-term debt
5,080
5,177
Operating lease liabilities, current
4,837
4,104
Finance lease liabilities, current
249
215
SAFE notes at fair value, current
14
25
Convertible notes at fair value,
current
7,852
7,715
Due to related parties, current
36,508
25,431
Total current liabilities
165,470
140,114
Long-term debt, net of current
maturities
19,985
20,617
Operating lease liabilities, long term
4,666
5,507
Finance lease liabilities, long term
1,143
1,137
Due to related parties, long term
1,288
1,673
Other long-term liabilities
22,535
19,426
Total liabilities
$
215,087
$
188,474
Shareholders’ equity (deficit):
Common shares, $0.0001 par value;
800,000,000 and 35,803,199 shares authorized as of March 31, 2024
and December 31, 2023, respectively; 81,917,187 shares issued and
outstanding as of March 31, 2024 and 76,150,437 shares issued and
outstanding as of December 31, 2023
$
8
$
8
Additional paid-in capital
533,191
525,042
Accumulated deficit
(639,500
)
(602,535
)
Total shareholders’ deficit
$
(106,301
)
$
(77,485
)
Total liabilities, redeemable
convertible preferred shares and shareholders’ deficit
$
108,786
$
110,989
Consolidated Statements of Operations for the Three Months
Ended March 31, 2024 and 2023: (in thousands, except share and per
share data):
Three Months Ended March
31,
2024
2023
Revenue
$
30,624
$
5,507
Operating expenses:
Cost of revenue, exclusive of depreciation
and amortization
28,489
6,650
Technology and development
7,009
812
Sales and marketing
3,009
1,394
General and administrative
24,609
8,441
Depreciation and amortization
1,978
258
Total operating expenses
65,094
17,555
Operating loss
$
(34,470
)
$
(12,048
)
Other income (expense):
Changes in fair value of financial
instruments carried at fair value, net
$
(515
)
$
(8,096
)
Interest expense
(1,671
)
(171
)
Other expense
(355
)
(258
)
Total other income (expense),
net
$
(2,541
)
$
(8,525
)
Loss before income taxes
(37,011
)
(20,573
)
Income tax benefit
46
—
Net loss
$
(36,965
)
$
(20,573
)
Net loss per share applicable to common
shareholders, basic and diluted
$
(0.48
)
$
(1.46
)
Weighted-average number of common shares
used in net loss per share applicable to common shareholders, basic
and diluted
77,309,329
14,100,926
Unaudited Pro Forma Financial Measures; Reconciliation of Net
Loss to Adjusted EBITDA for the Three Months Ended March 31,
2024 and Pro forma Net Loss to Pro forma Adjusted EBITDA for
the Three Months Ended March 31, 2023 (in thousands):
Three-Months Ended March
31,
2024
2023 (Pro forma)
Net Loss
(36,965
)
(15,511
)
Addback:
Depreciation and amortization
1,978
1,801
Interest expense
1,671
1,055
Income tax expense (benefit)
(46
)
(152
)
Stock-based compensation expense
12,643
1,145
Changes in fair value of financial
instruments
515
-
Transaction costs
588
-
Data license fees
3,125
-
Adjusted EBITDA
(16,491
)
(11,662
)
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