Operator
Good afternoon, ladies and gentlemen. Welcome to Fly Exclusive's second quarter 2026 Earnings Conference call. All participants are in listen-only mode. If you should require operator assistance during the conference, please key in star and in zero on your telephone keypad. Please note that this event is being recorded. I will now hand the conference over to Hannah Rose. Please go ahead, ma'am.
Thank you, Operator. Good afternoon, and thank you all for joining Flight Exclusive's second quarter 2026 earnings conference call. Joining me on the call today is Jim Seagrave, Flight Exclusive's founder and chief executive officer, and Brad Garner, our chief financial officer. We announced second quarter financial results this morning before market opened, along with the filing of our Form 10-Q for the three and six months ended June 30, 2026. We'll be providing certain non-GAAP information during today's discussion. Important disclosures about this information and a reconciliation of the non-GAAP information to comparable GAAP information is included in our Form 10-Q filed with the SEC and is available on our Investor Relations website. In addition, this discussion might include forward-looking statements. Actual results might differ materially for any number of reasons, including risk factors described in our annual report on Form 10-K, in our quarterly reports on Form 10-Q, and in the press release covering forward-looking statements. Rather than rereading this information, we're going to incorporate it by reference in our prepared remarks. And with that, let me turn the call over to Jim.
Thank you, Hannah, and thank you to everyone joining us this afternoon. The second quarter represents another important milestone for Ply Exclusive and, I believe, provides clear evidence of how fundamentally this business has changed over the last two years. We generated approximately $111 million of revenue during the quarter, an increase of 22% year-over-year. Gross profit increased 65% to approximately $23 million, with gross margin expanding more than 500 basis points to approximately 20%. And more importantly, most importantly, we generated $4.2 million of positive adjusted EBITDA. That represents a $9.4 million improvement from the second quarter of last year and marks our third consecutive quarter of positive adjusted EBITDA. For the last two years, we have been very clear about what needed to change at Fly Exclusive. We needed to remove unproductive aircraft, modernize the fleet, dramatically improve dispatch availability and aircraft utilization, reduce our corporate cost structure, and create operating leverage. Quarter by quarter, we have executed against that plan, and I believe the results now demonstrate that Ply Exclusive is no longer a turnaround story. One of the clearest ways to see that transformation is to compare the number of aircraft we operate with the revenue we generate. In the second quarter of 2024, we generated approximately $79 million of revenue, with 96 revenue-producing aircraft. In the second quarter of 2025, revenue increased to approximately $91 million, while the number of aircraft declined to 86. In this quarter, we generated more than $111 million with only 81 revenue-producing aircraft. In two years, we have increased second quarter revenue by more than 40% while reducing the number of aircraft required to produce that revenue by approximately 15%. That is what the transformation of Fly Exclusive looks like in numbers. The first half comparison is equally compelling. Revenue increased from approximately $159 million in the first half of 2024 to more than $207 million this year. Over that same period, revenue-producing aircraft declined from 96 to 81, and total flight hours increased from 33,000 to more than 38,000. We are simply getting significantly more productivity from every aircraft in the fleet. A major driver has been the transformation of the fleet itself. At the beginning of 2024, we had 37 non-performing aircraft. These aircraft consumed maintenance resources, pilot resources, and working capital while producing unacceptable financial returns. Today, only three non-performing aircraft remain, and all three of these are now under contract to be sold. The operating losses associated with these 37 non-performing aircraft have declined from more than $3 million per month at the beginning of 2024 to less than $300,000 per month today. We are very close to completing one of the largest and most difficult pieces of the transformation we began two years ago. At the same time, we have substantially upgraded the productive portion of the fleet. We entered this transformation with no Challenger aircraft. Today, we operate 10 Challengers, and we expect that number to continue growing. These aircraft are significantly more reliable, generate substantially more revenue, and produce better economics than any of the legacy aircraft they replaced. That transformation is showing up clearly in dispatch availability. Dispatch availability improved by more than 1,000 basis points year over year, increasing from 48% to 58%. And we believe that through continued fleet modernization and the efficiencies of our vertically integrated platform, we can ultimately produce dispatch availability well above 70%. The economics of that improvement are significant. At our current fleet size, every one percentage point of additional dispatch availability represents over $200,000 of monthly contribution, or approximately $2.5 million annually. Utilization is improving as well. Despite operating 6% fewer revenue-producing aircraft than a year ago, flight hours topped $20,000, an increase of 8%. Core fleet utilization increased approximately 14%. Again, we are producing more with less. The scale of our operation is also increasingly significant. According to Argus, during the second quarter, Fly Exclusive was the largest North American Part 135 charter operator by both number of flights and flight hours. The same transformation is occurring in our corporate infrastructure. Revenue per SG&A employee increased from approximately $668,000 during the first half of 2024.
