Sky Harbour Group Corp (SKYH)·Q3 2025 Earnings Summary

Executive Summary

• Q3 2025 consolidated revenue was $7.3M, up 78.2% year over year and 10.8% sequential; management reiterated guidance to reach operating cash‑flow breakeven on a consolidated run‑rate basis by year‑end 2025 .
• Liquidity remained solid with $47.9M of consolidated cash and US Treasuries, plus an undrawn $200M tax‑exempt construction warehouse facility swapped to a 4.73% fixed rate for five years .
• Occupancy ramp at newly opened campuses progressed: ADS (Dallas) Phase 1 and DVT (Phoenix) Phase 1 surpassed 50% occupancy; Denver (APA) commenced resident flight operations with certificates of occupancy substantially in hand .
• Strategic capital formation lever: binding LOI for a JV where a partner buys 75% of a new SH34 hangar at OPF Phase 2 for $30.75M, implying ~$1,200 per constructed rentable sq ft; management framed potential further transactions as opportunistic to minimize cost of capital versus equity issuance .

What Went Well and What Went Wrong

• What Went Well

  • Revenue growth and campus ramp: consolidated revenues +78.2% YoY / +10.8% QoQ; ADS and DVT Phase 1 >50% occupancy; APA operational with multiple tenant leases .
  • Liquidity and financing: $47.9M cash/Treasuries and a $200M tax‑exempt warehouse facility locked at 4.73% fixed to fund BDL, SLC, ORL, POU, IAD with expandability to $300M .
  • Scaling narrative: “Although we will continue to refine the methodology, the company’s focus is shifting to repeatable execution at scale. We are prepared for a step‑change in development pace in 2026…” (Tal Keinan) .

• What Went Wrong

  • SG&A non‑cash uptick: share‑based compensation totaled ~$2M in Q3 including certain non‑recurring items, adding noise to adjusted EBITDA reconciliation .
  • Pre‑leasing risk acknowledged: management highlighted the risk of underestimating market rent when locking leases ahead of completion, though mitigated by GMP contracts and leaving some capacity un‑preleased .
  • Timing sensitivities on DSCR and ratings path: company deferred its investment‑grade target to mid‑2026 post ramp and completion of additional phases, prioritizing stronger coverage and construction de‑risking .

Financial Results

KPIs and Balance Sheet

Consensus estimates (S&P Global): Q3 2025 EPS and revenue consensus were unavailable via S&P Global.

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We are prepared for a step‑change in development pace in 2026 and will be prepared for the associated step‑up in airport operations volume in 2027.” — Tal Keinan .
• “We closed the quarter with $48 million in cash on U.S. Treasuries… enhanced with the $200 million committed J.P. Morgan facility… exploring additional private activity bonds… five‑year part of the curve looks attractive.” — Francisco Gonzalez .
• “Stabilized campuses continue to grow revenues at a really robust pace… the longer‑term leases are above our target rents… going forward, pre‑leasing will be the strategy.” — Tal Keinan .

Q&A Highlights

• Pre‑leasing risk: Mitigated by GMP contracts and reserving capacity; biggest risk is underestimating market rent; pre‑leases target >50% not 100% .
• Occupancy efficiency: Semi‑private layouts enable >100% effective occupancy (e.g., SJC); Sky Harbour 37 hangars fit significantly more aircraft per hangar square foot .
• Capital markets: Considering a $75–$100M 5‑year tax‑exempt holdco bond at ~6% if market conditions allow; otherwise defer .
• JV monetization: $30.75M for 75% of SH34 at OPF Phase 2; implied ~$1,200/RSF valuation; used to fund growth and reduce equity reliance; repeatable but opportunistic .
• Ratings timeline: Aim for mid‑2026 post ramp and phase completions to approach BBB‑/BBB with stronger DSCR and construction de‑risking .

Estimates Context

• Wall Street consensus estimates for Q3 2025 EPS and revenue via S&P Global were unavailable at the time of analysis. As a result, comparisons to consensus could not be made.

Key Takeaways for Investors

• Revenue ramp is tracking: $7.3M in Q3 (up 78% YoY), with ADS/DVT >50% occupancy and APA operational, supporting the YE 2025 cash‑flow breakeven run‑rate guidance .
• Capital structure flexibility is a core advantage: undrawn $200M tax‑exempt facility fixed at 4.73%, potential incremental tax‑exempt issuance, and selective asset monetizations to avoid dilutive equity .
• Leasing strategy maturation: pre‑leasing institutionalized, shorter initial lease terms to reach 100% occupancy faster, then convert to longer‑tenor leases at higher rents; semi‑private mix expands revenue per sq ft .
• Scale catalysts: internal GC/manufacturing, QA program, and a 2026–2027 step‑function in development volume position the company for multi‑year growth .
• Valuation signal from JV: $1,200/RSF implied at OPF Phase 2 underscores asset value vs build cost ($353/RSF target), highlighting potential capital recycling optionality in peak markets .
• Ratings path prudence: shifting the investment‑grade target to mid‑2026 is sensible given the ramp and construction completion cadence; focus remains on stronger coverage and de‑risking .
• Near‑term catalysts: continued lease‑up at ADS/DVT/APA, formalization of JV agreements, progress on BDL/SLC permits and groundbreakings, and potential debt issuance if pricing is attractive .

Citations: Q3 press release and 8‑K ; Q3 call transcript ; Q2 call ; Q1 press release and call .