Q2 2024 Earnings Summary
Reported on Aug 13, 2024 (After Market Close)
Pre-Earnings Price$8.91Last close (Aug 13, 2024)
Post-Earnings Price$9.45Open (Aug 14, 2024)
Price Change
$0.54(+6.06%)
- Strong Revenue Growth and Pricing Power: Sky Harbour is exceeding revenue projections by about 32-33% on their campuses, indicating robust demand for their services. Additionally, they are achieving a 20% average markup on renewed or replaced leases, demonstrating significant pricing power and ability to increase revenues over time.
- Accelerated Expansion and Market Leadership: The company is aggressively expanding its portfolio, raising guidance from 20 to 22 airports by the end of 2025. With Salt Lake City as airport #14, they are on track to meet and exceed their growth targets. Sky Harbour is already the largest hangar developer in the country, perhaps in the world, and is capitalizing on economies of scale and standardization.
- Strong Financial Position and High Return on Equity: Sky Harbour has a strong liquidity position with $150 million in cash and U.S. treasury bills, allowing them to be fully funded for the first 10 airports without any additional capital raise. They are targeting a 30%+ return on equity for their core business, highlighting strong profitability potential. They expect to reach cash flow positive on a consolidated basis in the fall of 2025 as new campuses open.
- Increasing Operating Expenses Due to Higher Ground Lease Payments: The company's operating expenses have risen mainly due to the incorporation of ground lease payments from San Jose International Airport, which are "significantly higher than in our typical greenfield projects." This increase could pressure profitability as the company expands into similar high-cost airports.
- Challenges in Scaling Development Capacity: While aiming for rapid expansion, management admits limitations in their ability to develop multiple projects simultaneously. "Right now, we're developing 10 airports in parallel, can we develop 20 airports in parallel today? No, I don't think we can." This constraint could hinder growth projections and strain resources.
- Difficulty in Acquiring Airport Land: The company faces challenges in acquiring land for expansion. "It is very hard to get land at airports full stop." This difficulty could limit expansion opportunities and impact future revenue growth.
Research analysts covering Sky Harbour Group.