Sky Harbour Group Corp (SKYH) Q2 2026 Earnings Call Transcript

Hello, and thank you for standing by. My name is Lacey, and I will be your conference operator today. At this time, I would like to welcome everyone to the Sky Harbor 2026 Second Quarter Earnings Call and Webinar. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press start, followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the call over to Francisco Gonzalez, CFO. Please go ahead.

Thank you, Operator, and good afternoon, everybody, and welcome to the 2026 second quarter investor conference call and webcast for the Sky Harbor Group Corporation. We have also invited our bondholder investors and lenders in our barring subseries, Sky Harbor Capital, Sky Harbor Capital II, and Sky Harbor Capital III to join and participate on this call as well. Before we begin, I have been asked by counsel to note that on today's call, the company will address certain factors that may impact this and next year's earnings. Some of the information that will be discussed today contain forward-looking statements. These statements are based on management assumptions which may or may not come true and you should refer to the language on slides one and two of this presentation as well as our SEC filings for a description of the factors that may cause actual results to differ from our forward looking statements. All forward looking statements are made as of today and we assume no obligation to update any such statements. So now let's get started. The team with us this afternoon you know from our prior webcasts, our CEO and Chair of the Board, Tal Kanin, our Treasurer, Tim Herr, our Chief Accounting Officer, Mike Schmidt, Accounting Manager, Tori Petro, and our Assistant Treasurer, Andreas Frank. We have a few slides we'll want to review with you before we open into questions, which starting on this webcast today will be limited to those from the research analyst community that have us under coverage. We decided that, as you may have remembered in past we have run out of time usually and not all of the questions get addressed so we decided to change to this structure. Obviously we welcome any and all investor questions afterwards through our investor email at investors at sky harbor the group and we'll make an effort to respond promptly. We just filed a few minutes ago the R10Q with the SEC and our second quarter financials for Sky Harbor Capital related to the Series 2021 bonds and for the Sky Harbor Capital III related to the Series 2026 bonds with MSRB EMA. We also just filed a prospective supplement to our existing self-registration program. Let's get started then. We will go to the slide with our recent results. At the end of the second quarter, on a consolidated basis, assets under construction and completed construction reached over 393 million dollars that is a 65 million increase year to date and the highest in six months in our corporate history what this means is that the pace of investment and new construction and sky harbor continues to accelerate and these columns will continue to grow at an ever higher a incremental rate q2 revenues experienced an increase of 50 percent over a year ago and 13% sequentially, given the new campus openings in the past year and increases in occupancy and rental rates. Operating expenses in Q2 continue to increase in tandem with new campus openings, impacted in particular by increases in campus headcount and the non-cash expense accruals of new ground leases entering in the past year, which are not yet constructed or in operations. As in the prior quarter, a significant amount of the increase in OPEX is related to the signing of new ground leases at the end of last year and with that expense more than half more than half is non-cash accruals of new ground leases payments into the future. We look forward to benefiting from the operating leverage for our phases two with Miami Opaloka which has now been open for four months and later this year with the opening of Addison phase two. They expect gross profit margin expansion with these two phases two with the same people and fuel trucks serving basically a doubling of those respective hangar campuses. We strive to keep SG&A in check as we grow, keeping frugality front and center in our expense and cost management initiatives. Cash flow provided by operating activities reached positive territory of roughly half a million dollars, reaching a significant milestone in the company's history. Going forward, equity proceeds will only go to new project CAPEX and not to fund current operating expenses like in the past. Next slide, please. This is a summary of the financial results of our wholly owned subsidiary Sky Harbor Capital and its operating subsidiaries that formed the obligated group. Assets under construction are still growing as we completed Opaloka Phase 2 in Q2 and will soon stabilize with the completion of Addison Phase 2 at year-end, which, as many of you know, is the last project of the obligated group first vintage of campuses that were financed by the 2021 bonds. Revenues of the obligated group increased 79% year-over-year and 22% sequentially. We expect continuous step-function increases in revenues in Q3 and Q4 with the continued new leasing of phase 2 in Apoloca and then Q1 and Q2 of 2027 after the opening of Addison phase 2. As I mentioned before we expect a marked increase in gross profit and EBITDA margin expansion with those added revenues and limited increase in operating expenses given the ability to use the same personnel and equipment with expanded campuses that double in size. Cash flow from operations reached almost 3 million dollars in the quarter and increased from 2.2 million a year ago This constitutes 10 consecutive quarters of positive cash flow from operations, providing ample and growing debt service coverage for bondholders and bank facility lenders. Let me pass it on to Mike Schmidt for a discussion of our adjusted EBITDA calculation, something we did a few quarters ago, but it's important to refresh given the importance of this adjustment to our EBITDA. Mike.

Thank you, Francisco. As with prior quarter, I'd like to take this opportunity to provide additional context regarding elements of our reporting results. We've provided a reconciliation from our gap net income results for the quarter ended. We believe this measure is important due to the impact of non-cashions, particularly the non-cashions in gains and losses, as seen in the diagram adjusted even by continued improvement.

Thanks, Mike. All right. Leasing update. I'm not going to go through all the cells on this chart. let me just highlight a couple things things that should jump out sometimes take longer uh longer than others i i will point to concerned about it you know we would jump out i think are the average uh rents per square foot a couple things to our leasing strategy on stay at the cash flow these are short-term leases go back and revisit the longer-term leases of which all of these campuses have longer-term leases, we do sign at our multi-year, pretty close to, you know, take Dallas as an example, pretty close to term leases come to term, start cycling back and replacing them. Yeah, if we had actually do this in Nashville is one that started even with long-term leases in the 20s. The last thing I'll call everyone's attention to on this, just a reminder to people of what 100,000 hanger leases, all those cases, the second lease term is 19%. you'll notice that's a few points down a lot of these leases are now not the second turn but the third continue to expect next slide is site should be valued we apply that times the sky harbor equivalent rent everyone can make their own rent for the number to use that gives you a top line operating margin a few slides but that is your available revenue capture which is currently underground the entire business position company that hands off essentially that is that is where And then take that number, you can put whatever multiple you want on that or cap rate, all of the risks, the operating rate, all that to actually build up. But as you have a slide on that, so I'm not going to get deeper into that. To highlight and maybe just head off some from a number of people, just as there's been quite a bit of capital flight, we're seeing that firsthand because those people are signing up. It's self-evident. Look at the rents that we're getting in California, you know, other than the New York market. But if you look at the trend as well, most of the people who have left, it's well over a trillion dollars of wealth that's left in the last 12 months. Most of those people return with a frequency that the second is, and we actually, we put it on the slide, of that trillion plus of the last majority of that, the majority of that same period. and i think the the insight that will i think everyone on this call the average number of aircraft owned by somebody with let's say two billion dollars is not significantly lower than the average number of aircraft owned by somebody with our market in california continues growing okay our development update so this is one of the areas where the i say the rubber is meeting the road we spent a lot of time talking about our gear up on the side of the business a lot of increase in the vertical integration being completed, our entry into contracting campuses. All of that was put in place. The campuses are going to go open soon. Bottom right is Bradley, Connecticut. Nearest term, Salt Lake City, which is going to... And we'll talk a little bit about construction costs as we go. And with that, let me...

Thank you, Tal. We have closed the quarter with significant liquidity with over $207 million in cash and U.S. treasuries. and about $130 million still available from G.P. Morgan committed construction loan. As Tal mentioned, you know, those red bars in the power slide, you know, our pace of capex expenditure is accelerating. Very important to know that. These amounts that you see in this slide in terms of liquidity exclude the fresh $40 million in cash proceeds we received earlier today at the holding company as part of a raised share direct equity placement that settled today.

Next slide, please.

As in the past, from time to time, we have received reverse increase of investors' interest in going to our company. Discussions for the past couple of weeks with two particular investors who have strategic value to us, especially from a leasing standpoint, have resulted in a $40 million straight common issuance at $10 per share, a roughly discount of up 4.6% to the last 30 days' volume-weighted average price of $10.49 through this past Monday when we executed the stock purchase agreement for this placement. This equity issuance was very cost-effective raised to direct placement from our shelf registration. We have now a cumulative surpassed $300 million in equity investments by our shareholders in the company. We decided to take these funds now as a practical measure as we await for the potential exercise of our public warrants at the end of next January. As many of you know, it's fully exercised The public warrants will yield around $94 million in primary process for the company. We see the current rates combined with the potential for an additional $94 million in January as covering all our equity needs at the company for the foreseeable future, and maybe indefinitely as we await increasing operating cash flow to be available in the future to reinvest in more projects. Next slide, please. I just want to take a second to reiterate our guidance for the end of the year that introduced back in May. On revenues, we have reaffirmed that we expect to finish the year with an annualized run rate of revenues between $42 and $46 million, up from the $39.4 million run rate in this past quarter. This increase will be driven by the incremental revenues of Phase II at Opaloka as it approaches full occupancy and increased occupancy at DVT and APA. Similarly, we reaffirmed that adjusted EBITDA will end up the year at an annualized run rate of between $4 to $6 million, up from an annualized run rate of still negative in Q2. Let me now pass it back to Tal for a discussion on the highlights and next steps in the four pillars of our business model. Tal?

Tal, we won. Oh, I'm sorry. I think we were muted. I'm going to start that again. On site… Yeah, thank you. Thanks, Francisco. On the site acquisition side, the theme of the last quarter and going forward will continue to be big plays at tier one airports, right? If you can expand on a tier one airport, you know, put 300, 400,000 square feet on a tier one airport, that is worth a lot more than three smaller sites on a tier two or a tier one airport for that matter obviously the revenue per square foot is higher but also your opex your operating margin goes up right because two phases and we're seeing this right now you know very clearly in miami two phases does cost almost the same to operate as one phase but your revenue goes up in this case nearly uh doubles so look out for that theme you know at the at the tier one airports on the development side so you've watched all the steps we've taken to scale up the vertical integration all the way to the general contracting uh now it's time to prove it out empirically as i mentioned a couple slides ago we are on schedule on budget at all of the airports in the in in the pipeline right now so continue watching that uh and then uh prototyping so our the third version of our prototype has been gone through third-party testing now it's approved it's ready to go and the first airport at which that will launch is fort worth which breaks breaks around later this year in uh in q4 uh we'll show you pictures of that more functional uh cost less per square foot to put up it's it's a better hanger and uh for for cheaper so that's that's obviously we're striving to do here on the leasing side so we made the point about the those larger footprints that we're trying to see at the at the tier one airports the occupancy optimization program as we've discussed especially in the newer campuses you'll see this at opelaka phase two where we're we're working to achieve significantly greater than 100 occupancy on these campuses San Jose is the first airport that we've maximized that. We already talked about the release rates. Operations, will you continue to see operating margins improve if we do this right? That program is in place and already. And then perhaps most importantly of all is the resident experience itself, which, yes, you need the physical asset in order to deliver it. But fundamentally, what our customers actually experience is the service. And consistently, we keep going out with resident surveys. We are being ranked by far as the number one home base solution in business aviation. You can see that empirically, that we charge a lot more than any other solution and still have a waiting list. And we'll continue working on that. Looking forward, more of the same on meaning Tier 1 airports, Tier 1 geographies, and more same field expansions. On the development side, so if you look what's happening over the next two quarters, we're going from a little over 600,000 square feet now under construction to a little over 1,200 a little over 600,000 square feet now under construction to over 1.2 million square feet under construction by year end. So this is the scale up that we're talking about. Watch our schedules, watch our budget versus actual. That's what we're going to be trying to deliver on. And at the same time as we grow and continue to refine the prototype look for that cost of per square foot to continue going lower on the leasing side just to give people a sense of what we hope to achieve in revenues so let's start with i guess it's a smaller component but 65 000 square feet that of lease that will come to term by the end of 2026 and will need to be released and we'll be looking for big step ups on those 161,000 square feet that are currently in lease up right places like Dallas and and Denver and then we have this is a big number that 218,000 square feet that is currently under construction but will be slated for lease up by the end of 2026 so a big list for the leasing team we have an expanded team you know we're we continue with our uh tried and true practice of bringing in military veterans and our leasing team has expanded I think exclusively now with military veterans uh and we talked about pre-leasing on the last call which had a good results in opalaka phase two we have bradley connecticut coming up uh in q3 q4 uh the proof will be on the pudding watch to see how uh how that campus opens in terms of occupancy uh and then lastly operations so we you know we speak every time about starting with defense right safety security and efficiency come before everything else uh we spoke a little bit on the last slide about innovation working with with the residents um the the last point that i want to mention and people have asked about this a little bit because the network has grown to a point where it's starting to make sense which is people using multiple sky harbor campuses so we just rolled out a program called skykey which gives sky harbor network access to some of our top residents uh that's uh you know call those our guinea pigs where they get the full sky harbor service exactly as they're accustomed to with all of the privacy and the security that that entails wherever they go within the sky harbor network so that's a new revenue driver in the business i don't think we've captured much revenue yet we just rolled it out but look look for that to start contributing to our revenues going forward and contributing i think to the value. With that, I think we are ready for questions.

Yes, operator, please go ahead with the cue from a research cover analyst. And again, reminder for everybody else to submit questions through investors at Sky Harbor Group, and we'll answer those promptly in the coming hours and days. Operator.

At this time, I would like to remind everyone in order to ask a question, please press star one on your telephone keypad. Your first question comes from the line of Michael Diana with Maxim Group. Please go ahead. Michael Diana, your line is open.

I didn't signal for a question.

Your next question comes from the line of Tom Catherwood with ETIG. You may go ahead.

Great. Thank you. Good afternoon, everybody. Lots and last talk about here. Tal, maybe starting with you. So I appreciated all the detail that you gave on leasing at the operating properties. And you quickly touched on the pre-leasing, but it seems like you made some significant progress there in 2Q, especially with the second phase in San Jose, which I think is fully wrapped up now before you even started construction. Can you talk a little bit more about pre-leasing progress, both there, maybe at Dulles as well? And then as you're rolling out that program, are you utilizing the kind of introductory rate strategy that you've done at ADS and DVT and APA, or are you using a different approach?

Thanks for the question. Thanks for the coverage, Tom. So, look, I think what's maybe conspicuous about pre-leasing at San Jose, which is different from Bradley and Dulles, it's much more like Miami Phase 2. you, is that when you have a phase one in operation in a market, you know, I think maybe just now becoming a national brand in business aviation, what we've been to date is, you know, a collection of local brands in every geography. If you own an airplane in Miami, you're trying to get into Sky Harbor, right? There's a waiting list in Sky Harbor, Miami. In other locations, we're just not as known. Again, we think that's beginning to change now. there's a little you know more of a national recognition of of of where we're coming but it is definitely easier there's so much pent-up demand in the phase two markets uh that pre-leasing goes a lot easier uh san jose two i mean i should say for all three of those airports there is no introductory rate uh if you think about it you know i keep going back to miami phase one you where we opened up 12 new hangers, whatever that was, 160,000 square feet of hangar simultaneously, more hangar than never been put on a market at once, as far as we know, ever. I don't think we quite appreciated what that glut would do with a sophisticated customer base. Who understands, you know, there's 12 hangars and 12 vacancies. There's a lot of leverage in that negotiation on the part of the resident. The main concern of a chief pilot or flight department negotiating a lease on an existing campus like Miami at that time was overpaying. He does not want to be the person who volunteered to pay more than their neighbors are paying. When you pre-lease, we're seeing that the main concern is really FOMO. And as we get closer to fully lease, and as you see the rates climbing up, right, the first leases are signed. They're not introductory rates, but they're lower rates than the last leases are signed. That becomes the primary concern. So when you have a year before you open up, or in the case of San Jose, even more than a year before you open up, There are a lot of people who want to lock in that space and know it's going to be gone. And by the way, we have, I'm sorry to say, some angry people who did not get space in San Jose Phase 2. And if you gave us a Phase 3 there, we would grab it.

I appreciate those answers. Maybe sticking with that kind of last comment, what you had said about site selection and this focus on top airports and top markets. You've talked in the past about how airports and municipalities are limited in their ability to push ground rents, but are you seeing airports looking for other avenues to extract higher economics?

Maybe it's more required CapEx spending or infrastructure spending or fuel purchases, and because you have a sense of what it takes to do these now, does that give you an advantage over others that might be competing when it comes to site procurement? uh it's a i mean it's a good question the i don't think there's any one-size-fits-all answer what i will say a kind of a rule of thumb that that can be applied pretty broadly is you know and i mean to by the way and just be speaking out there are certain airports where the total capex is what's important there are certain airports where you know there are other you know other items that are important what seems to be fairly common though is that our interests are aligned with the airports and our interests are aligned with base residents in that geography, right? So when you show up in Atlanta, there is a hangar deficit and the FBO model doesn't really address that deficit because remember the FBOs make their money outdoors from fueling. You're not allowed to fuel indoors inside a hangar for regulatory fire code reasons. So their revenue is produced outdoors. they want as much outdoor space as possible right get the uh you know transient traffic in get them fueled and get them out as quickly as possible that is the business model so for the municipality or county that wants to maximize anger space they're not really getting everything they want out of the fbo's we come in and show them from the beginning we make our money from rent our money is made indoors not outdoors our interests are aligned with you we want to maximize our hangar footprint. And as you know, I think know, our campus layouts have very little ramp and a lot of hangar. They look very different from an FBO's campus layout. That is a winning proposition for a lot of airports. You know, take another is that repositioning, you know, particularly in heavily trafficked markets, New York being the primary among them, but also Southern California, in Northern California, increasingly South Florida, Dallas area. There is simply no room. You cannot get hangerspace at Teterboro. So most of the New York, for example, Manhattan aircraft owners who operate out of Teterboro, their departures and arrivals with passengers are to Teterboro. The airplane doesn't live at Teterboro. It lives at Bradley, Connecticut, or Trenton, New Jersey. In those situations, there's a lot of pressure to reduce repositioning flights, right? And here's what I'm talking about, kind of that triple alignment of interest. From the aircraft owner's perspective, those repositioning flights are expensive. That's fuel, that's, you know, pilot hours. They're logistically cumbersome. You know, if you're flying far, you know, you're flying to, you know, Eastern Europe or Asia from New York, when your day began with a repositioning flight and a fueling and hold on the ground at Teterboro, your pilots will run out of duty hours, right? So we have of people who fly with double cruises. There's a very logistically cumbersome to do that repositioning. From the airport's perspective and the local government's perspective, that's environmental impact. That's airplanes flying empty and no passengers. That's noise impact, right? Those flights are straight and low and loud, right? They're typically conducted under VFR when the weather permits. You're just going straight. You wanna get there as quickly as you can. it's wear and tear on the airport infrastructure right it's you know think about it four four operations for every round trip rather than uh two operations uh for every round trip and it's it's taxing on on the air traffic control system so come in and say look when we come to your airport we're actually going to reduce repositioning that is a big deal right and again from the fbo's perspective and i'm not not trying to knock the fbo's great business model uh and they're great partners to us as well, but you should understand they are a hotel. Fundamentally, that movement drives fuel sales. That is their incentive. We're incentivized very, very differently. So I hope that answered your question. That's an example of how interests can align between us and the airports.

That's perfect. Thank you for all that insight, Paul. That's it for me. I appreciate all the answers.

Your next question comes from the line of Timothy D'Agostino with B-Riley Securities. You may go ahead.

Yeah, hi. Thanks for taking the questions today. Just on the release, I understand the commentary of you kind of expect that to tick down over time. It sounded like, you know, obviously it was 23% last quarter, 19% this quarter. But I guess how should we think about that revenue escalation? you know maybe over the next two three years given new campuses will come online those leases will be resigned and then as well you know at ads and apa where you're dropping the lease lower to fill the hangar um obviously that that next lease would have a pretty meaningful escalator i would assume so just trying to understand how we should think about that going forward because it seems like with new campuses um coming online like the churn there could push that maybe higher but just trying to get your your thoughts on that thank you yeah thank you thank you tim um so i i think

your instinct is is probably right right on those three campuses where we're doing the introductory rate strategy yeah i i think it's it's reasonable to accept to expect a bigger bump up on that first release. You're right. Those introductory rates can be very low on some of those campuses. It's really about just not flying empty while we do kind of the release up. And then on those pre-lease campuses where we're actually getting above target rents before we even open the doors, probably less of a bump on the pre-lease. So we've avoided trying to make predictions on inflation rates on airports, you know, we, you know, as I think, you know, I think they're going to be completely divorced from CPI. There's just no land to develop on airports and the fleet just keeps growing. There's nowhere to put these aircraft. So we think inflation is baked in, but we're not, we're not giving out numbers. We figured the best we can do is just publish this release rate, remind everybody that all of our leases feature annual escalators of CPI with a floor of 4%, and then let people come to their own conclusions about what the inflation rate should be. Because again, if you're building a model for the company, one of your most sensitive inputs is going to be your assumption on inflation rates going forward in hangar rents. So again, we're We're not making any predictions on that, but we want to provide you with as many tools as possible.

Okay, great. Thanks for the answer there. And if I could just ask a second one. Just on the half million net cash provided by operating activities, obviously this is first quarter of positive operating cash flow and company's history. Was there anything in the quarter that stands out as maybe a one-time non-recurring item that would have pushed that positive? Should we think about that cash number being positive going forward or, you know, as new campuses open up, it could take back to negative? Thank you.

Yeah, good question. And, again, thank you for your coverage. So, you know, this is a recurrent type of number. Of course, in the next two quarters, we're going to continue benefiting for increased revenues, as I mentioned earlier, from the finished leasing of Paloka Phase II, and then continue leasing at APA and DBT. Now, in Q1 of 27, you're going to see the very strong effect of adding the opening of Bradley and the opening of BDS Dallas 2, and that will make that number jump a step function into the positive, and from then, never look at negative number, hopefully again. But so between now and then, it's probably going to be trending higher because, again, of the continued leasing of the existing facilities. But it will not be until Q1, Q2 of next year that it propels and never looks back on the back of the opening of Bradley and Edison, too.

Okay, great. Thanks for the commentary and congrats again on the quarter. Thank you.

Your next question comes from the line of Ryan Myers with Lake Street Capital Markets. Please go ahead.

Thanks for taking my question. You know, first of all, for me, with the unchanged guide and the roughly, you know, million-dollar EBITDA loss here in the corridor, can you just walk us through sort of the key drivers required to reach the $4 million to $6 million annualized run rate by the year-end on adjusted EBITDA?

And yes, let me put some comments and then also, Mike, if you want to jump in as well. So on revenues, obviously, we're trending nicely to meet or exceed, but let's see right now, meet the guidance we provided. And obviously, we'll look at the guidance again in November at the time of our Q3. I wish time, by the way, let me take the opportunity to state that we will be starting to get guidance for 2027 in the next quarter webcast for Q3. Now, in the context of adjusted EBITDA, we're coming into this coming month with a lot of momentum of the leasing of Aloka Phase II at a very, very attractive rate. and also remember that that is a phase that has a lot of operating leverage because we're basically operating with the same staff because it's an extension. It's a phase two. And that does wonders for gross profits. So you don't need too much to move from the current run rate into the run rate in our guidance to meet the targets that we outlined. I don't know, Michael, if you have anything to add.

Francisco, you hit on the two main things that I was going to touch on, particularly the operating leverage. You know, as these revenues start to come in, OPEX is not moving, increasing in tandem, and it's essentially very accretive to adjust to the event, and I think would be crucial.

Got it. No, that's great to hear. And then lastly for me, you know, you guys noted the development team continues to lower costs. So where does current construction cost per square foot stand and, you know, how much further opportunity do you think remains through just, you know, vertical integration and then just, you know, any prototype improvements that you guys have seen?

Do you want to take that and then maybe I'll add to that?

I'm sorry, can you repeat the question?

Yeah, just, you know, an update on current construction costs per square foot and just, you know, how much opportunity you think remains with the vertical integration and then just any of the prototype integration that you guys have done.

You know, Ryan, we're kind of overdue, I think, for resetting a target. You know, when we're up above 300, we set 250 as a target. We're at about 242 right now. Now, we do think there's a lot more juice to squeeze, but we haven't actually set a target yet. What you'll see is we're using – I think we should provide some photographs when we actually break ground on the version 3 of our prototype in Fort Worth. But you're going to see new and different construction materials, some different construction techniques. the layout of the hangar is going to look very similar the outside actually looks a lot better I think it's aesthetically a lot more pleasing national procurement right so we're no longer purchasing you know things like fixtures and lighting and you know electrical components campus by campus we're now you know buying 10 airports ahead so those numbers haven't really manifested yet, or not completely at least, in that 242. So look for more to come. On the other side, we could have some macro headwinds on just construction inflation that we're going to have to battle. But I'm glad you raised the point. I think maybe on the next call, we're going to have to set another target.

Yeah. Let me add to that, if I may. So as you saw from the chart that Tal covered earlier, showing that now we're entering a couple of quarters where we're going to be in construction at about eight and moving probably to 10 different campuses at the same The coming quarters are going to provide a lot of data, a lot of volume and economies of scale to really turn what is right now a projection into hard numbers for us to share with our investor base and with you guys and so on. Nothing pleases me more to hear that our manufacturing facility in Texas is a two, you know, a two and almost two and a half type of shifts. And, you know, we don't go to three because, you know, people have to take Sunday off. But it is that type of economic scale with volume that's going to be one of the key drivers of our keeping and maintaining construction costs overall low.

Got it. No, that's helpful. Thanks, guys.

Your next question comes from the line of Gaurav Mehta with Alliance Global Partners. Please go ahead.

Yeah, thank you. I wanted to ask you on your pre-lasing going forward, how should we think about how you would approach pre-lasing? Is it going to be a standard offering across the new construction, or would you be selected where you implement pre-lasing?

Hi, Gaurav. Yeah, thank you. Yes, that's standard going forward. opalaka phase two was the first first campus we did with that you'll see bradley uh as next and then dallas phase two as the one after that and then salt lake city we're working on all of those uh as you know uh no we see no reason to change it i think you know we we might fiddle with the pre-leasing goals like right now we're saying 50 you know half to two-thirds leased uh by opening that's what we're targeting you know obviously you're leaving a little bit of money on the table when you do it like that because these are long-term leases this is you know very different from dallas phoenix and denver so you are locking yourself in uh and the rates do you know creep up as you as you advance with the leasing of a campus so we we might adjust the the you know total ambition of you know how much we want to get pre-leased over time again we might not but yes look for that to be standard in all the campuses all right thanks for those details second question on the ground leases how many new ground leases are you guys looking to add this year so and you know as we discussed on the last call we've we're not actually counting those in terms of number of ground leases anymore it's it's square footage how much square footage of hangar are we uh are are we able to put in and again ultimately after everyone's accustomed to that metric we're going to move to what is the real metric is what is the actual noi that you can capture from uh at an airport really that's that's what you should be going after because that yeah i think everyone would agree if we if we had you know five airports each with a hundred thousand uh square feet of hangar uh but you could achieve that with a single airport with five hundred thousand square feet of hangar in a tier one location, that's obviously preferable, right? You're going to have lower OPEX and easier lease up. It's got a lot of advantages to do it that way. We haven't actually put out a square foot target. We've kind of migrated on guidance to really the bottom line. What are we projecting in revenue? What are we projecting in EBITDA? But we announce these airports as they come and sometimes the cities and counties announce them before we do uh so i i think i'm guessing everyone on the call is uh you know is aware of some of those uh but um but we haven't haven't actually put out guidance all right then lastly in your prepared remarks you mentioned something around leasing being slow in denver i was wondering if it is that in line with what you guys wrote or has that been a surprise it's been a surprise we it's been a disappointment we wanted to be moving faster in in in Denver and it's it's just again some of them are fast some of them are slow Denver's a slow one all right thank you that's full of hands

your next question comes from the line of Dave Storms with Stonegate Capital Partners please go ahead hello this is Maximus I'll be asking questions for Dave Storms today wanted to start off on str and opf economic occupancy has hasn't been running above reported occupancy is that mainly a function of the private versus semi-private hanger mix or is there something else about those campuses that limits how much you can optimize occupancy thank you yeah you're exactly right maximus the sugarland is 100 private right we you know and if you were following us at the time but

the whole notion of semi-private kind of occurred to us later on actually toward the end of lease up in nashville uh so sugarland had been completely leased up long term at that point it is private it can't go above 100%, we're capped there. Miami is similar in that the first round of leases were all private. We have a little bit of semi-private going on in Miami phase one, but Miami phase two does have semi-private. Again, we have people taking full SH-34 hangars in Miami phase two. So there's one case of a fully private hanger, that's just a large tenant. But most of Miami Phase II is semi-private, so we should see significantly more in Miami.

Thank you. I appreciate that color. I wanted to move forward with pre-leasing. Historically, kind of just based off our math, it's taken roughly three quarters for a new campus to reach full lease up. With pre-leasing, can you see that accelerating maybe closer to two quarters or even shorter on average?

Yeah, it's possible. Well, again, the proof will be in the pudding again. So yeah, I'd say on the next earnings call, look to see where Opelaka phase two stands. By the way, we're treating Opelaka really as one campus now. So because A, it is one campus, but also we've actually done some shifts, right? We took people into phase two and then actually ends up moving them to phase one, moving phase one people to phase two. We've done a little bit of shuffling in Miami. But look to see, you know, are we at 100% or higher by the next earnings call in Opelaka? And then the next data point will be Bradley.

Great. Thank you for answering my questions.

Your final question comes from the line of Joe Gomes with Noble Capital Markets. Please go ahead.

Good afternoon. Thanks for taking my questions. As you're moving more and more into the tier one, are you seeing that, you know, the competitive environment start to tighten up there and, you know, given the dearth of airport land, you know, how does that play into, you know, the old land grabs, so to speak, strategy? Are you trying to be maybe a little more aggressive in trying to get land at various airports? Are you still trying to more, you know, focus on the ones that you currently have in hand?

Yeah, thanks for the question, Joe. We remain aggressive, we remain creative, and we remain patient because – and I think the last one, patience and persistence, is probably the most important of all three of If you're following, you'll see all of these wins have been the result of multi-year efforts, in some cases, five, six years working on an airport. We haven't figured out a way to really accelerate that. Maybe that already is accelerated. That's the bad news. The good news is that we started a process on dozens and dozens of airports five or six years ago. So, you know, some of those are starting to pop now. Again, there are things that we haven't exactly announced yet but are out there and I think a lot of people on the call are aware of. These are all the result of multiple years of effort on those airports. So, no, if anything, we're accelerating on the set acquisition side. No plan to slow that down.

Okay, thanks. And then just maybe clarify something here on your presentation on talking about the registered direct placement. You talked about that, and then kind of you had a last point there that you acquired. Are certain investors acquired 360,000 shares from Boston, Omaha? Maybe just give a little more color on that, who approached whom, you know, what was all about that transaction about.

Yes, let me take that on, Maximus. And so, as some of you may be aware, at the time of the dispatch, there is a shareholder's agreement in place that any investor or any time there's a transaction that the company does or any investor, as part of the shareholder agreement, institutes a process. You know, we all kind of like coordinate and give notices to all those legacy investors and so on and so forth. So on that spirit, although we were not required on that spirit, when we were approached a couple of weeks ago to do the primary issuance that we just announced and closed today, We went around and asked all our, quote-unquote, legacy investors, Center Capital, Due West, and Boss Omaha, if they had an interest in selling shares as part of this process. And the Western Center Capital said no, and then Bosomha said that if there was an opportunity, they would like to sell 300,000 shares. So, prior to this process and conversations with a couple of investors that were also in discussions with us, We were successful in not 300,000 but 360,000 being sold by Boston Omaha in a separate transaction to ours, to those investors, and those stock purchase agreements were executed also during day-to-day, and those transactions we understand. And, again, they're between Boston Omaha and certain investors, not us, but they were coordinated through us. But I think the highlights here to take away from that, again, I don't want to speak for Boston Omaha. People should reach out to them directly. By the way, we're going to be attending their annual shareholders conference next week in Omaha. We have not done so in four years now or three years now. And so we're looking forward to be there. But I think the two takeaways are, one, that all our shareholders at this juncture have reaffirmed their interest in continuing being long-term investors of Sky Harbor, and that the Boston Omaha appetite to sell right now at this moment was just 360,000 shares and so on and forth. and those who have been following our stock that this is their first sale like in a year and a half and obviously of a very significantly low amount of shares they have reaffirmed their interest of being long-term investors of Sky Harbor okay great for that caller thank you for taking my questions there are no further questions at this time I would like to turn it back over to Francisco Gonzalez CFO for closing remarks thank you operator and thank you everybody for participating Before you go, let me just give an announcement that Tal Kanan, our CEO, is going to be scheduled to participate tomorrow, Thursday at 3.20 Eastern time in the Clayman Countdown Show in Fox Business. So those of you guys who, you know, follow some visibility, Tal's first mass media appearance, again, that's Clayman Countdown around 3.20 Eastern Time in Fox Business Channel tomorrow, Thursday. You know, please tune in to see Tal Kanan, you know, be answering questions from Lee's Clayman. And with that, we have concluded our conference here. And, again, please look for additional information in our website at www.skyharbor.group and reach out with additional questions directly to us at investors at skyharbor.group. So, again, thank you again for your participation. And with this, we have concluded our webcast operator.

Ladies and gentlemen, this concludes today's call. You may now disconnect.