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    Sky Harbour Group Corp (SKYH)

    Business Description

    Sky Harbour Group Corporation (NYSE American: SKYH) is an aviation infrastructure development company focused on building a nationwide network of home-basing hangar campuses for business aircraft. The company develops, leases, and manages general aviation hangars across the United States, targeting airfields in markets with significant aircraft populations and high demand for hangar space. Sky Harbour's primary offering is rental revenue from its hangar campuses, which constitutes the entirety of its revenue.

    1. Rental Revenue - Generates income through leasing exclusive private hangars optimized for home-based aircraft, providing a full suite of dedicated services tailored to the needs of business jet owners and operators.

    Q3 2024 Summary

    Initial Price$9.08July 1, 2024
    Final Price$10.99October 1, 2024
    Price Change$1.91
    % Change+21.04%

    What went well

    • Sky Harbour is experiencing unprecedented demand, with occupancy exceeding 100% and airport revenues significantly surpassing forecasts.
    • Hangar rent inflation has outpaced construction cost inflation by a massive margin, leading to higher yields on new projects like Opa-Locka Phase 2.
    • The company is more than halfway through funding for its 20 airports, with $87.3 million of cash sufficient to complete current projects, supporting aggressive expansion plans.

    What went wrong

    • Significant construction cost inflation and design corrections have required additional equity injections over the past 3.5 years, potentially impacting profitability and causing shareholder dilution. ,
    • The ongoing battle against construction cost inflation is uncertain, raising concerns about the company's ability to reduce per square foot construction costs.
    • The company does not prelease its space before project completion and relies on post-completion leasing, which may pose occupancy risks and affect revenue generation.

    Key Metrics

    View all financials →

    Executive Team

    NamePositionStart DateShort Bio
    Tal KeinanChairman of the Board and CEOJanuary 25, 2022Tal Keinan has led Sky Harbour since its inception in October 2017. He is also the Co-Founder and Executive Chairman of Clarity Capital KCPS Ltd. since 2005 and Chairman of Koret Israel Economic Development Funds since 2010. A veteran F-16 pilot in the Israel Air Force, he holds an MBA from Harvard Business School.
    Will WhitesellChief Operating OfficerJanuary 3, 2024Will Whitesell has over 20 years of experience in construction and development. He previously served as COO for Suffolk Construction's New York region (2018–2023) and held senior roles at Related Companies and Turner Construction. He holds an MBA from Fordham University and a BS in Engineering from Temple University.
    Francisco X. GonzalezChief Financial OfficerJuly 1, 2021Francisco X. Gonzalez oversees financial, capital markets, and accounting functions. He previously held roles at Goldman Sachs, RBC Capital Markets, and Fortress Investment Group, focusing on municipal bond financings and public-private partnerships. He holds a BA in Economics and an MBA from Harvard Business School.
    Michael W. SchmittChief Accounting OfficerJanuary 2022Michael W. Schmitt has over 15 years of accounting and audit experience, previously working at PwC as an Assurance Director and Senior Manager. He focused on clients in transportation, logistics, and SEC registrants. He holds a BS in Accountancy from Bryant University and is a licensed CPA.
    Gerald AdlerInterim General Counsel and SecretaryN/AGerald Adler has over 35 years of corporate law experience. He previously served as COO and General Counsel of Paine Schwartz Partners and held partner roles at major law firms. He holds a BA in Economics from Yeshiva University and a J.D. from Columbia University School of Law. He is admitted to practice law in New York.

    Questions to Ask Management

    1. Given the significant construction inflation you've faced, requiring additional equity injections into your construction funds twice over the past 3.5 years, can you elaborate on the specific strategies you're implementing to mitigate future cost overruns and keep projects within budget?
    2. You mentioned plans to achieve investment-grade ratings in 2025; what concrete steps are you taking to reach this goal, and what key challenges do you anticipate in obtaining investment-grade status?
    3. With the aggressive expansion plan to reach 23 airports by the end of 2025 and being only halfway through your equity raises, how do you intend to fund the remaining expansion without causing significant dilution to shareholders, especially considering the substantial capital expenditures required?
    4. Operating expenses have increased due to higher ground lease payments, particularly in San Jose, and recognizing expenses ahead of cash payments; how do you plan to manage or offset these increased costs to protect your margins and overall profitability?
    5. You mentioned scaling challenges due to accelerated growth and the need to reduce per square foot costs through prototyping and in-sourcing; can you provide more details on how the new Sky Harbour 37 prototype and the RapidBuilt integration will contribute to lowering costs and improving efficiency in your development projects?

    Past Guidance

    Summary of Sky Harbour (SKYH) Guidance from the Last Four Earnings Calls

    ### Q3 2024 Earnings Call

    • Issued Period: Q3 2024
    • Guided Period: Q1 2025 and FY 2025
    • Guidance:
      1. Number of Airports: Revised guidance to 9 additional airports by the end of FY 2025, bringing the total to 23 airports.
      2. Construction Projects: 14 fields in some state of completion or starting construction in FY 2025, and 20 fields starting or finishing construction in FY 2026.
      3. Revenue Growth: Expect continued growth due to 100%+ occupancy, higher rental rates on renewals, and other monetization arrangements.
      4. Cash Flow: Breakeven cash flow expected by Q3 2025, supported by the opening of three campuses in Dallas, Denver, and Phoenix in spring and summer 2025.
      5. Debt Service Coverage: Once stabilized (2–3 years), expect cash flow available for debt service to exceed projections, achieving 3x debt service coverage.
      6. Investment-Grade Ratings: Plan to approach rating agencies in FY 2025 to seek investment-grade ratings.
      7. Additional Debt: Aiming to raise $150 million in additional debt in the coming months.
      8. Internal Cash Flow Utilization: Internally generated cash flow expected by Q3 2025 to fund growth or consider dividend policy.

    ### Q2 2024 Earnings Call

    • Issued Period: Q2 2024
    • Guided Period: Q3 2024, FY 2025, and FY 2026
    • Guidance:
      1. Airport Expansion: Updated guidance to 22 airports under ground lease by the end of FY 2025, up from the previous target of 20 airports.
      2. Cash Flow: Expect to reach cash flow positive on a consolidated basis by fall 2025.
      3. Revenue Capture: Total revenue capture potential of land under ground lease estimated at $125 million to $130 million, with actual revenue capture exceeding estimates.
      4. Debt Service Coverage: Future debt service coverage ratios expected to exceed forecasts made at the time of bond issuance.
      5. Investment-Grade Rating: Aim to achieve investment-grade rating in FY 2025.
      6. Construction and Development: Targeting 30%+ ROE for newer airport projects compared to those initiated three years ago.
      7. Growth Plan: 33 projects (starts and completions) planned over FY 2025 and FY 2026.

    ### Q1 2024 Earnings Call

    • Issued Period: Q1 2024
    • Guided Period: N/A
    • Guidance: The documents do not contain information about the Q1 2024 earnings call. Therefore, no guidance metrics or periods are available.

    ### Q4 2023 Earnings Call

    • Issued Period: Q4 2023
    • Guided Period: N/A
    • Guidance: The documents do not contain information about the Q4 2023 earnings call. Therefore, no guidance metrics or periods are available.