Flyht Reports Third Quarter 2020 Results
-- Strong Cost Control Contributes to Increase in Cash Balance
-- Company Advances Strategic Re-focus on Recurring Software with Two Launch Partners for Actionable Intelligence
-- SaaS Revenue Represented 86% of Total, Driving 69% Gross Margins
Calgary, Alberta – November 5, 2020 – FLYHT Aerospace Solutions Ltd. (TSX-V: FLY) (OTCQX: FLYLF) (the “Company” or “Flyht”) today reported financial results for the third quarter ended September 30, 2020.
“We are encouraged that our customers have started a slow recovery from the May 2020 lows, with consistent increases in the number of flights and hours month over month, even as the aviation industry continues to suffer from a historic reduction in passenger travel resulting from COVID-19,” remarked Bill Tempany, Interim CEO. “Our business continued to feel the impact with revenue categories well below average and far below last quarter in most cases. Despite the unprecedented pandemic induced headwinds, we strengthened our cash position compared to the first two quarters of the year due to prudent cash management, strong collections and helpful government support programs. We also saw a sequential recovery of our SaaS revenue, which now represents 86% of our total revenue with gross margins approaching 70%.”
Tempany continued, “Downsizing costs will become an even higher priority for airlines in the era of curtailed demand, and the challenging environment is accelerating our strategic re-focus on our software-first strategy. To date we have signed up the first two launch partners for our Actionable Intelligence suite of SaaS applications, which is uniquely suited to help the global aviation industry improve operations and profitability. Our tools bring substantial cost savings to airlines and highly profitable recurring revenue to Flyht.”
Concluded Tempany, “We are well positioned to help our customers as their businesses recover, with the right team in place to use the new technologies to deliver on the industry stated goals of using digital technology and artificial intelligence to assist in recovery. Our efforts in recent months to refocus, retrain and return to our roots as a value added SaaS provider to the airlines will be the linchpin to our success as our customers recover and people’s lives return to normal.”
Third Quarter 2020 Financial Overview
Total revenue decreased by 63% to $1,918,410 compared to the third quarter of 2019. This decrease was seen across all revenue categories, including SaaS -38% to $1,652,001, Hardware -93% to $137,137, Licensing -85% to $86,033, and Technical Services -54% to $43,239. While down over last year, SaaS increased sequentially by 27% and now represents 86% of revenue.
Other income of $0 in the third quarter of 2020 compared to $623,544 in the third quarter of 2019. The last of the reconciling items from the October 2018 asset acquisition of Panasonic Weather Solutions was recognized in the second quarter of 2020.
Gross margin was 69.2% of revenue, compared to 48.5% in the third quarter of 2019. The increase in gross margin was due to a favorable overall mix shift toward higher margin SaaS revenue.
Operating expenses decreased by 31% from the third quarter of 2019. A 70% decrease in Distribution expense was partially offset by modest increases in Administration (9%) and Research and Development expenses (8%). COVID-19 governmental funding of $823,291 recognized in the quarter contributed significantly toward the year over year decrease, with the remainder of the decrease reflecting cost containment efforts.
EBITDA1 loss totaled $1,079,873 in the quarter compared to a loss of $460,907 in the third quarter of 2019.
Net loss was $1,647,249, compared to net loss of $460,907 in the third quarter of 2019.
Balance Sheet and Liquidity
Flyht’s balance sheet ended the quarter with a cash balance of $4,107,483, an increase compared to the second quarter of 2020 balance of $3,702,824 and approximately even with 2019 year-end’s balance of $4,127,648.
Trade and other receivables decreased from 2019 year-end by $1,608,598, or 32%, reflecting strong collections of outstanding customer balances.
The balance sheet also shows an increase in Property and Equipment, with a corresponding increase in Lease Liability, as Flyht brought a new building lease for its Calgary headquarters onto the balance sheet, having taken possession of the space in March 2020.
Total basic and diluted weighted average shares outstanding for the three months ended September 30, 2020 were 26,663,861.
Conference Call Information
Flyht will host a live conference call to discuss its third quarter results on Friday, November 6, 2020 at 7 am MDT (9 am EDT, 6 am PDT). The conference call will include a brief presentation from Flyht’s CEO Bill Tempany and CFO Alana Forbes followed by a question and answer session. To access the conference call by phone within Canada and the U.S.A., the toll-free number is 1-800-319-4610. Outside Canada and the U.S.A., dial 1-604-638-5340. Callers should dial in 5 to 10 minutes prior to the scheduled start time.
Management will accept questions by telephone and e-mail. Individuals wishing to ask a question during the call can do so by pressing *1. Questions can be emailed in advance or during the conference call to email@example.com. An archive of the conference call will be posted on Flyht’s website as soon as it is available from the conference call provider.
Flyht’s Q3 2020 Report, which contains more detailed information including the CEO’s Message, Management Discussion and Analysis and Financial Statements, has been posted to the Company’s website at http://flyht.com/financial-reports/. The MD&A and Financial Statements have also been filed with SEDAR, accessible at www.sedar.com.
About FLYHT Aerospace Solutions Ltd.
Flyht provides airlines with Actionable Intelligence to transform operational insight into immediate, quantifiable action, delivering industry leading solutions to improve aviation safety, efficiency and profitability. This unique capability is driven by Flyht’s patented aircraft certified hardware products including AFIRS™, a satcom aircraft interface device which enables real-time streaming of flight information, cockpit voice and black box data streaming and TAMDAR™, which aggregates and streams airborne weather data in real-time. Flyht is headquartered in Calgary, Canada with an office in Littleton, Colorado, and is an AS9100 Quality registered company. For more information, view our latest presentation here, or visit www.flyht.com.
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1 EBITDA: defined as earnings before interest, income tax, depreciation and amortization (a non-GAAP financial measure).