Wheels Up Experience Inc 8-K/A, filed Mar 31, 2023
Wheels Up Experience Inc. (UP)
8-K/A
2023-03-31
For: 2022-11-09
View Original
Added on
April 09, 2026
About this 8-K/A
Wheels Up Experience Inc filed this 8-K/A on March 31, 2023, reporting on events of November 9, 2022.
Items reported
- Item 2.02: Financial results
- Item 4.02: Earlier financial statements no longer reliable
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 9, 2022
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction | (Commission | (I.R.S. Employer | ||||||
| of incorporation) | File Number) | Identification No.) | ||||||
| (Address of principal executive offices) | (Zip Code) | ||||
(212 ) 257-5252
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||||||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||||||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | ||||||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | ||||||||
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Explanatory Note
On November 9, 2022, Wheels Up Experience Inc. (the “Company” or “Wheels Up”) filed a Current Report on Form 8-K (the “Original 3Q Filing”) with the U.S. Securities and Exchange Commission (the “SEC”) that furnished under Items 2.02 and 9.01 the Company’s press release announcing its unaudited financial results as of and for the three and nine months ended September 30, 2022 (the “Original 3Q Press Release”). The full text of the Original 3Q Press Release was furnished as Exhibit 99.1 to, and incorporated by reference into, the Original 3Q Filing.
In addition, on March 9, 2023, Wheels Up filed a Current Report on Form 8-K (the “Original 4Q Filing” and, together with the Original 3Q Filing, the “Original Filings”) with the SEC that furnished under Items 2.02 and 9.01 the Company’s press release announcing its unaudited financial results as of and for the three months and year ended December 31, 2022 (the “Original 4Q Press Release” and, together with the Original 3Q Press Release, the “Original Press Releases”). The full text of the Original 4Q Press Release was furnished as Exhibit 99.1 to, and incorporated by reference into, the Original 4Q Filing.
The purpose of this Current Report on Form 8-K/A (this “Amendment No. 1”) is to:
i.reflect adjustments to certain financial information set forth in the Original Press Releases that were made by the Company while finalizing its audited financial statements for inclusion in its Annual Report on Form 10-K for the year ended December 31, 2022 (the “Annual Report on Form 10-K”), which include (a) recognizing a goodwill impairment charge of $62.0 million during the three and nine months ended September 30, 2022 and related adjustments that were not reflected in the Original 3Q Press Release for the three months and nine months ended September 30, 2022, and (b) adjustments related to, or derived from, a goodwill impairment charge of $118.0 million that should have been recognized by the Company during the three months ended December 31, 2022, which was disclosed as $132 million for the three months and year ended December 31, 2022 in the Original 4Q Press Release; and
ii.disclose that the Company’s previously issued unaudited condensed consolidated financial statements as of and for the three months and nine months ended September 30, 2022 (the “Prior Financial Statements”) should no longer be relied upon and are expected to be imminently restated by the Company.
Item 2.02 Results of Operations and Financial Condition.
The Company is filing this Amendment No. 1 to the Original Filings to reflect adjustments to the presentation of the Company’s unaudited financial statements and reconciliations of Net loss to Adjusted EBITDA, in each case contained in the Original 3Q Press Release and the Original 4Q Press Release and incorporated by reference into the Original 3Q Filing and the Original 4Q Filing, respectively. In connection with the preparation of the audited financial statements to be included in the Annual Report on Form 10-K, the Company determined that non-cash goodwill impairment charges of (i) $62.0 million should have been recognized by the Company during the three months ended September 30, 2022, based on the Company’s reassessment of the fair value of the legacy Wheels Up reporting unit (excluding Air Partner) (“WUP Legacy”) as of September 30, 2022, and (ii) $118.0 million should have been recognized by the Company during the three months ended December 31, 2022, based on the assessment of the fair value of WUP Legacy as of December 31, 2022, in each case that were necessary to reflect the diminished fair value of WUP Legacy as of the applicable measurement dates.
The recognition of non-cash goodwill impairment charges of $62.0 million for the three months ended September 30, 2022 and $118.0 million for the three months ended December 31, 2022 resulted in the following changes to the Company’s unaudited condensed consolidated financial statements set forth in the Original Press Releases:
•For the three and nine months ended September 30, 2022, the Company recognized a charge for “Impairment of goodwill” of $62.0 million in the Company’s unaudited condensed consolidated statements of operations, which resulted in:
◦a $62.0 million increase to the Company’s Net loss for the three and nine months ended September 30, 2022 versus the previously reported financial results;
◦a revised Net loss of $148.8 million, or $0.61 per share, for the three months ended September 30, 2022, and $330.6 million, or $1.35 per share, for the nine months ended September 30, 2022; and
◦corresponding adjustments, and associated impacts of the adjustments, to:
▪the balances of the “Goodwill” and “Accumulated deficit” line items in the Company’s unaudited condensed consolidated balance sheets as of September 30, 2022;
▪the balances of “Net loss” and “Impairment of goodwill” in the Company’s unaudited condensed consolidated statements of cash flows for the nine months ended September 30, 2022; and
▪the balances of “Net loss” and “Impairment of goodwill” and the “Impairment of goodwill” reconciling item in the Company’s reconciliations of Net loss to Adjusted EBITDA for the three and nine months ended September 30, 2022.
•For the three months ended December 31, 2022, the Company decreased the charge for “Impairment of goodwill” by $14.0 million in the Company’s unaudited condensed consolidated statements of operations versus what was reported in the Original 4Q Press Release, which resulted in:
◦a $14.0 million decrease to the Company’s Net loss for the three months ended December 31, 2022 and, taking into account the impact of the non-cash goodwill impairment charge for the three months ended September 30, 2022, a $48 million increase to the Company's Net loss for the year ended December 31, 2022, in each case versus the previously reported financial results;
◦a revised Net loss of $224.9 million, or $0.91 per share, for the three months ended December 31, 2022, and $555.5 million, or $2.26 per share, for the year ended December 31, 2022; and
◦corresponding adjustments, and associated impacts of the adjustments, to the following items, in each case in the same manner described with respect to the “Impairment of goodwill” charge recognized during the three and nine months ended September 30, 2022 above:
▪the Company’s unaudited condensed consolidated balance sheets as of December 31, 2022;
▪the unaudited condensed consolidated statements of cash flows for the year ended December 31, 2022; and
▪the reconciliations of Net loss to Adjusted EBITDA for the three months and year ended December 31, 2022.
•The adjustments did not impact the Company’s Adjusted EBITDA results for the three and nine months ended September 30, 2022 or the three months and year ended December 31, 2022.
The Company has provided updated unaudited condensed consolidated financial statements and reconciliations of Net loss to Adjusted EBITDA as of and for three and nine months ended September 30, 2022 and the three months and year ended December 31, 2022 reflecting the adjustments described above, which are furnished as Exhibits 99.1 and 99.2, respectively, to this Amendment No. 1 and are incorporated by reference herein. These updated unaudited financial statements and reconciliations of Net loss to Adjusted EBITDA replace the corresponding unaudited financial statements presented in the Original Press Releases. Each reference to Net loss and the charge for the impairment of goodwill (or similar terms) set forth in the Original Press Releases are similarly adjusted and replaced. The descriptions of the updated unaudited financial statements and reconciliations set forth above in Item 2.02 of this Amendment No. 1 are qualified in their entirety reference to the respective unaudited financial statements and reconciliations set forth in Exhibits 99.1 and 99.2 furnished herewith.
In addition, the Company is also making conforming corrections to the slide presentations that were utilized in conjunction with the Company's related earnings calls and made available on the Company's investor relations website.
Non-GAAP Financial Measures
The Company reports certain key financial measures, including Adjusted EBITDA, that are not required by, or presented in accordance with, generally accepted accounting principles in the United States of America (“GAAP”). These non-GAAP financial measures are an addition, and not a substitute for or superior to, measures of financial performance prepared in accordance with GAAP and should not be considered as an alternative to any performance measures derived in accordance with GAAP. The Company believes that these non-GAAP financial measures of financial results provide useful supplemental information to investors, about Wheels Up. However, there are a number of limitations related to the use of these non-GAAP financial measures and their nearest GAAP equivalents, including that they exclude significant expenses that are required by GAAP to be recorded in Wheels Up’s financial measures. In addition, other companies may calculate non-GAAP financial measures differently, or may use other measures to calculate their financial performance, and therefore, Wheels Up’s non-GAAP financial measures may not be directly comparable to similarly titled measures of other companies.
For more information on Adjusted EBITDA and other non-GAAP financial measures used by Wheels Up, see the section titled “Non-GAAP Financial Measures” included in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Wheels Up’s Quarterly Report on Form 10-Q, which was filed with the SEC on November 9, 2022.
Incorporation by Reference
The information in the Explanatory Note and Item 2.02 of this Amendment No. 1 and Exhibits 99.1 and 99.2 is being furnished pursuant to Item 2.02 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing made by the Company under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as may be expressly set forth by specific reference in such filing.
Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.
(a) On March 27, 2023, the Company, on the recommendation of the Audit Committee of the Company’s Board of Directors, concluded that the Prior Financial Statements should no longer be relied upon. This determination resulted from the identification of an error in the Prior Financial Statements, which resulted in a non-cash goodwill impairment charge related to WUP Legacy for the three months ended September 30, 2022 that is described in Item 2.02 of this Amendment No. 1.
The Company has assessed the materiality of this error in accordance with applicable SEC rules, and has concluded that the Prior Financial Statements should be restated. The Company intends to include the restated Prior Financial Statements in an amended Quarterly Report on Form 10-Q/A (the “Amended Quarterly Report”) to be imminently filed with the SEC. As a result of the restatement of the Prior Financial Statements and the Amended Quarterly Report, management has determined that a material weakness existed in the Company’s internal control over financial reporting related to the financial statement close process for the three months ended September 30, 2022. The identified material weakness will be described in the Amended Quarterly Report, and the Company’s remediation plan will be described in the Annual Report on Form 10-K to be imminently filed with the SEC.
The Audit Committee has discussed the matters disclosed in this Amendment No. 1 with Grant Thornton LLP, the Company's independent registered public accounting firm.
Cautionary Note Regarding Forward-Looking Statements
This Current Report on Form 8-K of Wheels Up contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and
assumptions and, as a result, are subject to known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside Wheels Up’s control, that could cause actual results to differ materially from the results discussed in the forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding the expectations, hopes, beliefs, intentions or strategies of Wheels Up regarding the future including, without limitation, statements regarding: (i) the plan to remediate the material weakness identified in Item 4.02 of this Amendment No. 1, including whether such remediation plan will be effective at preventing or avoiding potential future significant deficiencies or material weaknesses in our internal controls, or prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements; (ii) the timing of the Company’s filings of the Amended Quarterly Report and Annual Report on Form 10-K with the SEC; and (iii) the potential impacts of items discussed in this Amendment No. 1 on Wheels Up’s business, results of operations, cash flows, liquidity, financial condition and ability to execute its strategic business plan. In addition, any statements that refer to projections, forecasts, or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “strive,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that statement is not forward-looking. Factors that could cause actual results to differ materially from those expressed or implied in forward-looking statements can be found in the Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC by Wheels Up on March 10, 2022, and the other documents filed by Wheels Up from time to time with the SEC. In addition, these risks and uncertainties include, among other things: the risk that the Company may incur additional impairment losses in the future related to its tangible or intangible assets, including goodwill, due to changes in business or market conditions impacting the Company's forecasts or the market price of the Company’s Class A common stock, par value $0.0001 per share (“Common Stock”), which may adversely impact the perception of the Company held by stockholders, investors, members and customers, or impact the Company's business, results of operations, financial condition or the market price and volatility of the Company's Common Stock and public warrants; the risk that the Company may identify new material weaknesses in the future or will not be able to successfully remediate the material weakness identified in Item 4.02 of Amendment No. 1 and related deficiencies in the Company’s disclosure controls and procedures, and that the accuracy and timing of the Company’s financial reporting may be adversely affected; and the risk that stockholders, investors, members and customers may lose confidence in the accuracy and completeness of the Company's financial reports, which could harm the Company's reputation, cause the market price of the Company's Common Stock and public warrants to decline, subject the Company to sanctions or investigations by the SEC, the New York Stock Exchange or other regulatory authorities, and adversely impact the Company’s ability to source external financing for the Company's capital needs on acceptable terms or at all. Moreover, Wheels Up operates in a very competitive and rapidly changing environment. New risks and uncertainties arise from time to time, and it is impossible for Wheels Up to predict these events or how they may affect the Company. You are cautioned not to place undue reliance upon any forward- looking statements, which speak only as of the date made, and Wheels Up undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, changes in expectations, future events or otherwise. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Wheels Up does not give any assurance that it will achieve its expectations.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit Number | Description | |||||||
| 99.1 | ||||||||
| 99.2 | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |||||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
WHEELS UP EXPERIENCE INC. | |||||||||||
Date: March 31, 2023 | By: | /s/ Kenneth Dichter | |||||||||
| Name: | Kenneth Dichter | ||||||||||
| Title: | Chief Executive Officer | ||||||||||
Exhibit 99.1
WHEELS UP EXPERIENCE INC.
UPDATED UNAUDITED FINANCIAL STATEMENTS AND NON-GAAP RECONCILIATIONS
| AS OF AND FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 | ||
Explanatory Note
Wheels Up Experience Inc. (the “Company” or “Wheels Up”) is furnishing this Exhibit 99.1 to the Company’s Current Report on Form 8-K/A (the “Current Report”) filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 31, 2023 to reflect the updated unaudited condensed consolidated financial statements and reconciliations of Net loss to Adjusted EBITDA (as defined herein) based on the adjustments as of and for the three and nine months ended September 30, 2022 described in the Current Report. These updated unaudited condensed consolidated financial statements and reconciliations of Net loss to Adjusted EBITDA replace the corresponding unaudited financial statements presented in the Company’s press release announcing its unaudited financial results as of and for the three and nine months ended September 30, 2022 that was furnished as Exhibit 99.1 to the Company’s Current Report on Form 8-K filed with the SEC on November 9, 2022.
Updated Financial Statements and Reconciliations
Financial Highlights
| Three Months Ended September 30, | |||||||||||||||||
(In thousands, except percentages) | 2022 | 2021 | % Change | ||||||||||||||
| Net loss | $ | (148,838) | $ | (76,608) | 94 | % | |||||||||||
| Nine Months Ended September 30, | |||||||||||||||||
(In thousands, except percentages) | 2022 | 2021 | % Change | ||||||||||||||
| Net loss | $ | (330,637) | $ | (197,230) | 68 | % | |||||||||||
WHEELS UP EXPERIENCE INC.
UPDATED UNAUDITED FINANCIAL STATEMENTS AND NON-GAAP RECONCILIATIONS
| AS OF AND FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 | ||
WHEELS UP EXPERIENCE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except share data)
| September 30, 2022 (Unaudited) | December 31, 2021 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 285,498 | $ | 784,574 | |||||||
| Accounts receivable, net | 127,354 | 79,403 | |||||||||
| Other receivables | 8,920 | 8,061 | |||||||||
| Parts and supplies inventories, net | 18,127 | 9,410 | |||||||||
| Aircraft inventory | 33,231 | — | |||||||||
| Aircraft held for sale | 20,113 | 18,101 | |||||||||
| Prepaid expenses | 38,561 | 21,789 | |||||||||
| Other current assets | 19,790 | 11,736 | |||||||||
| Total current assets | 551,594 | 933,074 | |||||||||
| Property and equipment, net | 387,802 | 317,836 | |||||||||
| Operating lease right-of-use assets | 111,250 | 108,582 | |||||||||
| Goodwill | 459,847 | 437,398 | |||||||||
| Intangible assets, net | 146,881 | 146,959 | |||||||||
| Restricted cash | 26,416 | 2,148 | |||||||||
| Other non-current assets | 63,948 | 35,067 | |||||||||
| Total assets | $ | 1,747,738 | $ | 1,981,064 | |||||||
| LIABILITIES AND EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 48,962 | $ | 43,672 | |||||||
| Accrued expenses | 128,557 | 107,153 | |||||||||
| Deferred revenue, current | 966,367 | 933,527 | |||||||||
| Operating lease liabilities, current | 30,051 | 31,617 | |||||||||
| Intangible liabilities, current | 2,000 | 2,000 | |||||||||
| Other current liabilities | 18,126 | 17,068 | |||||||||
| Total current liabilities | 1,194,063 | 1,135,037 | |||||||||
| Deferred revenue, non-current | 1,885 | 1,957 | |||||||||
| Operating lease liabilities, non-current | 87,027 | 83,461 | |||||||||
| Warrant liability | 2,003 | 10,268 | |||||||||
| Intangible liabilities, non-current | 12,583 | 14,083 | |||||||||
| Other non-current liabilities | 2,742 | 30 | |||||||||
| Total liabilities | 1,300,303 | 1,244,836 | |||||||||
| Equity: | |||||||||||
Class A common stock, $0.0001 par value; 2,500,000,000 authorized; 248,131,546 shares issued and 245,744,961 shares outstanding as of September 30, 2022; and 245,834,569 shares issued and outstanding as of December 31, 2021 | 25 | 25 | |||||||||
| Additional paid-in capital | 1,522,368 | 1,450,839 | |||||||||
| Accumulated deficit | (1,050,964) | (720,713) | |||||||||
| Accumulated other comprehensive loss | (16,647) | — | |||||||||
Treasury stock, at cost, 2,386,585 and 0 shares, respectively | (7,347) | — | |||||||||
| Total Wheels Up Experience Inc. stockholders’ equity | 447,435 | 730,151 | |||||||||
| Non-controlling interests | — | 6,077 | |||||||||
| Total equity | 447,435 | 736,228 | |||||||||
| Total liabilities and equity | $ | 1,747,738 | $ | 1,981,064 | |||||||
2
WHEELS UP EXPERIENCE INC.
UPDATED UNAUDITED FINANCIAL STATEMENTS AND NON-GAAP RECONCILIATIONS
| AS OF AND FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 | ||
WHEELS UP EXPERIENCE INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands except share and per share data)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Revenue | $ | 420,356 | $ | 301,978 | $ | 1,171,503 | $ | 849,215 | |||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
| Cost of revenue | 403,042 | 283,495 | 1,144,698 | 773,191 | |||||||||||||||||||
| Technology and development | 16,639 | 8,769 | 42,436 | 23,818 | |||||||||||||||||||
| Sales and marketing | 30,830 | 22,157 | 87,761 | 55,846 | |||||||||||||||||||
| General and administrative | 44,323 | 42,490 | 130,200 | 76,444 | |||||||||||||||||||
| Depreciation and amortization | 16,500 | 13,639 | 46,862 | 40,952 | |||||||||||||||||||
| Gain on sale of aircraft held for sale | (1,316) | — | (3,950) | — | |||||||||||||||||||
| Impairment of goodwill | 62,000 | — | 62,000 | — | |||||||||||||||||||
| Total costs and expenses | 572,018 | 370,550 | 1,510,007 | 970,251 | |||||||||||||||||||
| Loss from operations | (151,662) | (68,572) | (338,504) | (121,036) | |||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||
| Change in fair value of warrant liability | 2,504 | 12,271 | 8,265 | 12,271 | |||||||||||||||||||
| Loss on extinguishment of debt | — | (2,379) | — | (2,379) | |||||||||||||||||||
| Interest income | 1,130 | 7 | 1,612 | 25 | |||||||||||||||||||
| Interest expense | — | (782) | — | (9,503) | |||||||||||||||||||
| Other expense, net | (625) | — | (1,505) | — | |||||||||||||||||||
| Total other income (expense) | 3,009 | 9,117 | 8,372 | 414 | |||||||||||||||||||
| Loss before income taxes | (148,653) | (59,455) | (330,132) | (120,622) | |||||||||||||||||||
| Income tax expense | (185) | — | (505) | — | |||||||||||||||||||
| Net loss | (148,838) | (59,455) | (330,637) | (120,622) | |||||||||||||||||||
| Less: Net loss attributable to non-controlling interests | — | (970) | (387) | (6,572) | |||||||||||||||||||
| Net loss attributable to Wheels Up Experience Inc. | $ | (148,838) | $ | (58,485) | $ | (330,250) | $ | (114,050) | |||||||||||||||
| Net loss per share of Class A common stock: | |||||||||||||||||||||||
| Basic | $ | (0.61) | $ | (0.25) | $ | (1.35) | $ | (0.60) | |||||||||||||||
| Diluted | $ | (0.61) | $ | (0.25) | $ | (1.35) | $ | (0.60) | |||||||||||||||
| Weighted-average shares of Class A common stock outstanding: | |||||||||||||||||||||||
| Basic | 244,350,959 | 235,341,054 | 244,347,871 | 191,057,091 | |||||||||||||||||||
| Diluted | 244,350,959 | 235,341,054 | 244,347,871 | 191,057,091 | |||||||||||||||||||
3
WHEELS UP EXPERIENCE INC.
UPDATED UNAUDITED FINANCIAL STATEMENTS AND NON-GAAP RECONCILIATIONS
| AS OF AND FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 | ||
WHEELS UP EXPERIENCE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
| Nine Months Ended September 30, | |||||||||||
| 2022 | 2021 | ||||||||||
| OPERATING ACTIVITIES: | |||||||||||
| Net loss | $ | (330,637) | $ | (120,622) | |||||||
| Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
| Depreciation and amortization | 46,862 | 40,952 | |||||||||
| Amortization of deferred financing costs and debt discount | — | 618 | |||||||||
| Equity-based compensation | 65,839 | 30,668 | |||||||||
| Change in fair value of warrant liability | (8,265) | (12,271) | |||||||||
| Provision for (recovery of) expected credit losses | (489) | 1,163 | |||||||||
| Gain on sale of aircraft held for sale | (3,950) | — | |||||||||
| Loss on extinguishment of debt | — | 2,379 | |||||||||
| Impairment of goodwill | 62,000 | — | |||||||||
| Changes in operating assets and liabilities, net of effects from acquisitions: | |||||||||||
| Accounts receivable | (31,474) | (9,074) | |||||||||
| Other receivables | (859) | (1,906) | |||||||||
| Parts and supplies inventories | (8,544) | (2,749) | |||||||||
| Aircraft inventory | (33,231) | — | |||||||||
| Prepaid expenses | (8,065) | (11,673) | |||||||||
| Other current assets | (2,477) | — | |||||||||
| Other non-current assets | (27,534) | (256) | |||||||||
| Operating lease liabilities, net | (624) | (1,414) | |||||||||
| Accounts payable | (2,885) | 11,807 | |||||||||
| Accrued expenses | (1,131) | (9,742) | |||||||||
| Other current liabilities | 812 | (1,037) | |||||||||
| Other non-current liabilities | (1,036) | 131 | |||||||||
| Deferred revenue | (2,653) | (69,390) | |||||||||
| Net cash used in operating activities | (288,341) | (152,416) | |||||||||
| INVESTING ACTIVITIES: | |||||||||||
| Purchases of property and equipment | (80,039) | (6,683) | |||||||||
| Purchases of aircraft held for sale | (39,894) | — | |||||||||
| Proceeds from sale of aircraft held for sale, net | 41,833 | — | |||||||||
| Acquisitions of businesses, net of cash acquired | (75,093) | 7,844 | |||||||||
| Capitalized software development costs | (18,532) | (9,589) | |||||||||
| Net cash used in investing activities | (171,725) | (8,428) | |||||||||
| FINANCING ACTIVITIES: | |||||||||||
| Proceeds from stock option exercises | — | 1,332 | |||||||||
| Proceeds from Business Combination and PIPE Investment | — | 656,304 | |||||||||
| Purchase of Shares for Treasury | (7,347) | — | |||||||||
| Transaction costs in connection with the Business Combination and PIPE Investment | — | (70,406) | |||||||||
| Repayments of long-term debt | — | (213,934) | |||||||||
| Repayment of loans to employees | — | 102 | |||||||||
| Net cash provided by (used in) financing activities | (7,347) | 373,398 | |||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (7,395) | — | |||||||||
| NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (474,808) | 212,554 | |||||||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH BEGINNING OF PERIOD | 786,722 | 324,876 | |||||||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH END OF PERIOD | $ | 311,914 | $ | 537,430 | |||||||
| SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | |||||||||||
| Non-cash consideration issued for business acquisition of Mountain Aviation, LLC | $ | — | $ | 30,172 | |||||||
| Assumption of warrant liability in Business Combination | $ | — | $ | 28,219 | |||||||
4
WHEELS UP EXPERIENCE INC.
UPDATED UNAUDITED FINANCIAL STATEMENTS AND NON-GAAP RECONCILIATIONS
| AS OF AND FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 | ||
Non-GAAP Financial Measures
The Company reports certain key financial measures that are not required by, or presented in accordance with, generally accepted accounting principles in the United States of America (“GAAP”). These non-GAAP financial measures are an addition, and not a substitute for or superior to, measures of financial performance prepared in accordance with GAAP and should not be considered as an alternative to any performance measures derived in accordance with GAAP. The Company believes that these non-GAAP financial measures of financial results provide useful supplemental information to investors, about Wheels Up. However, there are a number of limitations related to the use of these non-GAAP financial measures and their nearest GAAP equivalents, including that they exclude significant expenses that are required by GAAP to be recorded in Wheels Up’s financial measures. In addition, other companies may calculate non-GAAP financial measures differently, or may use other measures to calculate their financial performance, and therefore, Wheels Up’s non-GAAP financial measures may not be directly comparable to similarly titled measures of other companies.
Definition of Non-GAAP Financial Measure
The Company calculates Adjusted EBITDA as net income (loss) adjusted for (i) interest income (expense), (ii) income tax expense, (iii) depreciation and amortization, (iv) equity-based compensation expense, (v) acquisition and integration related expenses, (vi) public company readiness related expenses, (vii) restructuring charges, (viii) change in fair value of warrant liability, (ix) losses on the extinguishment of debt and (x) other items not indicative of the Company’s ongoing operating performance.
The Company includes Adjusted EBITDA because it is a supplemental measure used by the Company’s management team for assessing operating performance. Adjusted EBITDA is used in conjunction with bonus program target achievement determinations, strategic internal planning, annual budgeting, allocating resources and making operating decisions. In addition, Adjusted EBITDA provides useful information for historical period-to-period comparisons of the Company’s business, as it removes the effect of certain non-cash expenses and variable amounts.
For more information on Adjusted EBITDA and other non-GAAP financial measures used by Wheels Up, see the section titled “Non-GAAP Financial Measures” included in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Wheels Up’s Quarterly Report on Form 10-Q, which was filed with the SEC on November 9, 2022.
5
WHEELS UP EXPERIENCE INC.
UPDATED UNAUDITED FINANCIAL STATEMENTS AND NON-GAAP RECONCILIATIONS
| AS OF AND FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 | ||
Reconciliations of Non-GAAP Financial Measures
Adjusted EBITDA
The following table reconciles Adjusted EBITDA to net loss, which is the most directly comparable GAAP measure (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Net loss | $ | (148,838) | $ | (59,455) | $ | (330,637) | $ | (120,622) | |||||||||||||||
| Add back (deduct) | |||||||||||||||||||||||
Interest expense | — | 782 | — | 9,503 | |||||||||||||||||||
Interest income | (1,130) | (7) | (1,612) | (25) | |||||||||||||||||||
| Income tax expense | 185 | — | 505 | — | |||||||||||||||||||
| Other expense, net | 625 | — | 1,505 | — | |||||||||||||||||||
Depreciation and amortization | 16,500 | 13,639 | 46,862 | 40,952 | |||||||||||||||||||
Equity-based compensation expense | 22,504 | 27,906 | 65,839 | 30,668 | |||||||||||||||||||
Public company readiness expense(1) | — | 2,455 | — | 3,298 | |||||||||||||||||||
Acquisition and integration expense(2) | 4,747 | 644 | 16,092 | 5,017 | |||||||||||||||||||
Restructuring charges(3) | 682 | — | 6,165 | — | |||||||||||||||||||
| Change in fair value of warrant liability | (2,504) | (12,271) | (8,265) | (12,271) | |||||||||||||||||||
| Loss on extinguishment of debt | — | 2,379 | — | 2,379 | |||||||||||||||||||
| Corporate headquarters relocation expense | — | — | — | 31 | |||||||||||||||||||
Impairment of goodwill(4) | 62,000 | — | 62,000 | — | |||||||||||||||||||
Adjusted EBITDA | $ | (45,229) | $ | (23,928) | $ | (141,546) | $ | (41,070) | |||||||||||||||
__________________
(1)Includes costs primarily associated with compliance, updated systems and consulting in advance of transitioning to a public company.
(2)Consists mainly of system conversions, merging of operating certificates, re-branding costs and fees paid to external advisors in connection with strategic transactions.
(3)During 2022, we recorded restructuring charges for employee separation programs following strategic business decisions.
(4)Represents non-cash impairment charges related to goodwill realized in the third quarter.
6
WHEELS UP EXPERIENCE INC.
UPDATED UNAUDITED FINANCIAL STATEMENTS AND NON-GAAP RECONCILIATIONS
| AS OF AND FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 | ||
The following tables reconcile Adjusted EBITDA to net loss, including the impact of reconciled items on individual income statement expense classifications (in thousands):
| Three Months Ended September 30, 2022 | |||||||||||||||||||||||||||||||||||
| GAAP as reported | Equity-based compensation expense | Acquisition and integration expense | Restructuring | Non-GAAP | |||||||||||||||||||||||||||||||
| Revenue | $ | 420,356 | $ | — | $ | — | $ | — | $ | 420,356 | |||||||||||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||||||||||||||
| Cost of revenue | 403,042 | (3,581) | (650) | — | 398,811 | ||||||||||||||||||||||||||||||
| Technology and development | 16,639 | (751) | — | — | 15,888 | ||||||||||||||||||||||||||||||
| Sales and marketing | 30,830 | (2,756) | — | — | 28,074 | ||||||||||||||||||||||||||||||
| General and administrative | 44,323 | (15,416) | (4,097) | (682) | 24,128 | ||||||||||||||||||||||||||||||
| Depreciation and amortization | 16,500 | — | — | — | 16,500 | ||||||||||||||||||||||||||||||
| Gain on sale of aircraft held for sale | (1,316) | — | — | — | (1,316) | ||||||||||||||||||||||||||||||
| Impairment of goodwill | 62,000 | — | — | — | 62,000 | ||||||||||||||||||||||||||||||
| Total costs and expenses: | 572,018 | (22,504) | (4,747) | (682) | 544,085 | ||||||||||||||||||||||||||||||
| Loss from operations | (151,662) | 22,504 | 4,747 | 682 | (123,729) | ||||||||||||||||||||||||||||||
| Other income (expense) | |||||||||||||||||||||||||||||||||||
| Change in fair value of warrant liability | 2,504 | 2,504 | |||||||||||||||||||||||||||||||||
| Interest income | 1,130 | 1,130 | |||||||||||||||||||||||||||||||||
| Other expense, net | (625) | (625) | |||||||||||||||||||||||||||||||||
| Total other income | 3,009 | 3,009 | |||||||||||||||||||||||||||||||||
| Income tax expense | (185) | (185) | |||||||||||||||||||||||||||||||||
| Net loss | $ | (148,838) | (120,905) | ||||||||||||||||||||||||||||||||
| Add back (deduct) | |||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 16,500 | ||||||||||||||||||||||||||||||||||
| Impairment of goodwill | 62,000 | ||||||||||||||||||||||||||||||||||
| Change in fair value of warrant liability | (2,504) | ||||||||||||||||||||||||||||||||||
| Interest income | (1,130) | ||||||||||||||||||||||||||||||||||
| Income tax expense | 185 | ||||||||||||||||||||||||||||||||||
| Other expense, net | 625 | ||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | (45,229) | |||||||||||||||||||||||||||||||||
7
WHEELS UP EXPERIENCE INC.
UPDATED UNAUDITED FINANCIAL STATEMENTS AND NON-GAAP RECONCILIATIONS
| AS OF AND FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 | ||
| Nine Months Ended September 30, 2022 | |||||||||||||||||||||||||||||
| GAAP as reported | Equity-based compensation expense | Acquisition and integration expense | Restructuring | Non-GAAP | |||||||||||||||||||||||||
| Revenue | $ | 1,171,503 | $ | — | $ | — | $ | — | $ | 420,356 | |||||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||||||||
| Cost of revenue | 1,144,698 | (11,320) | (650) | — | 1,132,728 | ||||||||||||||||||||||||
| Technology and development | 42,436 | (2,047) | — | — | 40,389 | ||||||||||||||||||||||||
| Sales and marketing | 87,761 | (8,314) | — | — | 79,447 | ||||||||||||||||||||||||
| General and administrative | 130,200 | (44,158) | (15,442) | (6,165) | 64,435 | ||||||||||||||||||||||||
| Depreciation and amortization | 46,862 | — | — | — | 46,862 | ||||||||||||||||||||||||
| Gain on sale of aircraft held for sale | (3,950) | — | — | — | (3,950) | ||||||||||||||||||||||||
| Impairment of goodwill | 62,000 | — | — | — | 62,000 | ||||||||||||||||||||||||
| Total costs and expenses: | 1,510,007 | (65,839) | (16,092) | (6,165) | 1,421,911 | ||||||||||||||||||||||||
| Loss from operations | (338,504) | 65,839 | 16,092 | 6,165 | (1,001,555) | ||||||||||||||||||||||||
| Other income (expense) | |||||||||||||||||||||||||||||
| Change in fair value of warrant liability | 8,265 | 8,265 | |||||||||||||||||||||||||||
| Interest income | 1,612 | 1,612 | |||||||||||||||||||||||||||
| Other expense, net | (1,505) | (1,505) | |||||||||||||||||||||||||||
| Total other income | 8,372 | 8,372 | |||||||||||||||||||||||||||
| Income tax expense | (505) | (505) | |||||||||||||||||||||||||||
| Net loss | $ | (330,637) | (242,541) | ||||||||||||||||||||||||||
| Add back (deduct) | |||||||||||||||||||||||||||||
| Depreciation and amortization | 46,862 | ||||||||||||||||||||||||||||
| Impairment of goodwill | 62,000 | ||||||||||||||||||||||||||||
| Change in fair value of warrant liability | (8,265) | ||||||||||||||||||||||||||||
| Interest income | (1,612) | ||||||||||||||||||||||||||||
| Income tax expense | 505 | ||||||||||||||||||||||||||||
| Other expense, net | 1,505 | ||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | (141,546) | |||||||||||||||||||||||||||
* — * — * — * — *
8
Exhibit 99.2
WHEELS UP EXPERIENCE INC.
UPDATED UNAUDITED FINANCIAL STATEMENTS AND NON-GAAP RECONCILIATIONS
| AS OF AND FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31, 2022 | ||
Explanatory Note
Wheels Up Experience Inc. (the “Company” or “Wheels Up”) is furnishing this Exhibit 99.2 to the Company’s Current Report on Form 8-K/A (the “Current Report”) filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 31, 2023 to reflect the updated unaudited condensed consolidated financial statements and reconciliations of Net loss to Adjusted EBITDA (as defined herein) based on the adjustments as of and for the three months and year ended December 31, 2022 described in the Current Report. These updated unaudited condensed consolidated financial statements and reconciliations of Net loss to Adjusted EBITDA replace the corresponding unaudited financial statements presented in the Company’s press release announcing its unaudited financial results as of and for the three months and year ended December 31, 2022 that was furnished as Exhibit 99.1 to the Company’s Current Report on Form 8-K filed with the SEC on March 9, 2023.
Updated Financial Statements and Reconciliations
Financial Highlights
| Three Months Ended December 31, | |||||||||||||||||
(In thousands, except percentages) | 2022 | 2021 | % Change | ||||||||||||||
| Net loss | $ | (224,910) | $ | (76,608) | 194 | % | |||||||||||
| Twelve Months Ended December 31, | |||||||||||||||||
(In thousands, except percentages) | 2022 | 2021 | % Change | ||||||||||||||
| Net loss | $ | (555,547) | $ | (197,230) | 182 | % | |||||||||||
WHEELS UP EXPERIENCE INC.
UPDATED UNAUDITED FINANCIAL STATEMENTS AND NON-GAAP RECONCILIATIONS
| AS OF AND FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31, 2022 | ||
WHEELS UP EXPERIENCE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except share data)
| December 31, 2022 | December 31, 2021 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 585,881 | $ | 784,574 | |||||||
| Accounts receivable, net | 112,383 | 79,403 | |||||||||
| Other receivables | 5,524 | 8,061 | |||||||||
| Parts and supplies inventories, net | 29,000 | 9,410 | |||||||||
| Aircraft inventory | 24,826 | — | |||||||||
| Aircraft held for sale | 8,952 | 18,101 | |||||||||
| Prepaid expenses | 39,715 | 21,789 | |||||||||
| Other current assets | 13,338 | 11,736 | |||||||||
| Total current assets | 819,619 | 933,074 | |||||||||
| Property and equipment, net | 394,559 | 317,836 | |||||||||
| Operating lease right-of-use assets | 106,735 | 108,582 | |||||||||
| Goodwill | 348,118 | 437,398 | |||||||||
| Intangible assets, net | 141,765 | 146,959 | |||||||||
| Restricted cash | 34,272 | 2,148 | |||||||||
| Other non-current assets | 78,157 | 35,067 | |||||||||
| Total assets | $ | 1,923,225 | $ | 1,981,064 | |||||||
| LIABILITIES AND EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Current maturities of long-term debt | $ | 27,006 | $ | — | |||||||
| Accounts payable | 43,166 | 43,672 | |||||||||
| Accrued expenses | 148,947 | 107,153 | |||||||||
| Deferred revenue, current | 1,075,133 | 933,527 | |||||||||
| Operating lease liabilities, current | 29,945 | 31,617 | |||||||||
| Intangible liabilities, current | 2,000 | 2,000 | |||||||||
| Other current liabilities | 18,023 | 17,068 | |||||||||
| Total current liabilities | 1,344,220 | 1,135,037 | |||||||||
| Long-term debt, net | 226,234 | — | |||||||||
| Deferred revenue, non-current | 1,742 | 1,957 | |||||||||
| Operating lease liabilities, non-current | 82,755 | 83,461 | |||||||||
| Warrant liability | 751 | 10,268 | |||||||||
| Intangible liabilities, non-current | 12,083 | 14,083 | |||||||||
| Other non-current liabilities | 3,520 | 30 | |||||||||
| Total liabilities | 1,671,305 | 1,244,836 | |||||||||
| Commitments and contingencies | |||||||||||
| Equity: | |||||||||||
| Class A common stock, $0.0001 par value; 2,500,000,000 authorized; 251,982,984 and 245,834,569 shares issued and 249,338,569 and 245,834,569 common shares outstanding as of as of December 31, 2022 and December 31, 2021, respectively | 25 | 25 | |||||||||
| Additional paid-in capital | 1,545,508 | 1,450,839 | |||||||||
| Accumulated deficit | (1,275,873) | (720,713) | |||||||||
| Accumulated other comprehensive loss | (10,053) | — | |||||||||
Treasury stock, at cost, 2,644,415 and 0 shares, respectively | (7,687) | — | |||||||||
| Total Wheels Up Experience Inc. stockholders’ equity | 251,920 | 730,151 | |||||||||
| Non-controlling interests | — | 6,077 | |||||||||
| Total equity | 251,920 | 736,228 | |||||||||
| Total liabilities and equity | $ | 1,923,225 | $ | 1,981,064 | |||||||
2
WHEELS UP EXPERIENCE INC.
UPDATED UNAUDITED FINANCIAL STATEMENTS AND NON-GAAP RECONCILIATIONS
| AS OF AND FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31, 2022 | ||
WHEELS UP EXPERIENCE INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands except share and per share data)
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Revenue | $ | 408,257 | $ | 345 | $ | 1,579,760 | $ 1,194,259 | ||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
| Cost of revenue | 395,627 | 344,442 | 1,540,325 | 1,117,633 | |||||||||||||||||||
| Technology and development | 14,804 | 9,761 | 57,240 | 33,579 | |||||||||||||||||||
| Sales and marketing | 29,349 | 24,225 | 117,110 | 80,071 | |||||||||||||||||||
| General and administrative | 53,331 | 36,887 | 183,531 | 113,331 | |||||||||||||||||||
| Depreciation and amortization | 19,074 | 13,246 | 65,936 | 54,198 | |||||||||||||||||||
| Gain on sale of aircraft held for sale | (425) | (1,275) | (4,375) | (1,275) | |||||||||||||||||||
| Impairment of goodwill | 118,000 | — | 180,000 | — | |||||||||||||||||||
| Total costs and expenses | 629,760 | 427,286 | 2,139,767 | 1,397,537 | |||||||||||||||||||
| Loss from operations | (221,503) | (82,242) | (560,007) | (203,278) | |||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||
| Change in fair value of warrant liability | 1,251 | 5,680 | 9,516 | 17,951 | |||||||||||||||||||
| Loss on extinguishment of debt | — | — | — | (2,379) | |||||||||||||||||||
| Interest income | 2,058 | 28 | 3,670 | 53 | |||||||||||||||||||
| Interest expense | (7,515) | (16) | (7,515) | (9,519) | |||||||||||||||||||
| Other expense, net | 464 | — | (1,041) | — | |||||||||||||||||||
| Total other income (expense) | (3,742) | 5,692 | 4,630 | 6,106 | |||||||||||||||||||
| Loss before income taxes | (225,245) | (76,550) | (555,377) | (197,172) | |||||||||||||||||||
| Income tax expense | 335 | (58) | (170) | (58) | |||||||||||||||||||
| Net loss | (224,910) | (76,608) | (555,547) | (197,230) | |||||||||||||||||||
| Less: net income (loss) attributable to non-controlling interests | — | (654) | (387) | (7,210) | |||||||||||||||||||
| Net loss attributable to Wheels Up Experience Inc. | $ | (224,910) | $ (75,954) | $ | (555,160) | $ (190,020) | |||||||||||||||||
| Net loss per share of Class A common stock: | |||||||||||||||||||||||
| Basic | $ | (0.91) | $ (0.31) | $ | (2.26) | $ (0.93) | |||||||||||||||||
| Diluted | $ | (0.91) | $ (0.31) | $ | (2.26) | $ (0.93) | |||||||||||||||||
| Weighted-average shares of Class A common stock outstanding: | |||||||||||||||||||||||
| Basic | 247,834,303 | 245,370,685 | 245,672,099 | 204,780,896 | |||||||||||||||||||
| Diluted | 247,834,303 | 245,370,685 | 245,672,099 | 204,780,896 | |||||||||||||||||||
3
WHEELS UP EXPERIENCE INC.
UPDATED UNAUDITED FINANCIAL STATEMENTS AND NON-GAAP RECONCILIATIONS
| AS OF AND FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31, 2022 | ||
WHEELS UP EXPERIENCE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
| Year Ended December 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| OPERATING ACTIVITIES: | |||||||||||
| Net loss | $ | (555,547) | $ | (197,230) | |||||||
| Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | |||||||||||
| Depreciation and amortization | 65,936 | 54,198 | |||||||||
| Amortization of deferred financing costs and debt discount | 766 | 618 | |||||||||
| Equity-based compensation | 88,979 | 49,673 | |||||||||
| Change in fair value of warrant liability | (9,516) | (17,951) | |||||||||
| Provision for expected credit losses | 8,129 | 3,264 | |||||||||
| Loss on extinguishment of debt | — | 2,379 | |||||||||
| Gain on sale of aircraft held for sale | (4,375) | — | |||||||||
| Impairment of goodwill | 180,000 | — | |||||||||
| Other | 1,575 | — | |||||||||
| Changes in operating assets and liabilities, net of effects from acquisitions: | |||||||||||
| Accounts receivable | (23,946) | (21,923) | |||||||||
| Other receivables | 2,537 | 144 | |||||||||
| Parts and supplies inventories | (21,693) | (3,418) | |||||||||
| Aircraft inventory | (29,470) | — | |||||||||
| Prepaid expenses | (3,058) | (11,360) | |||||||||
| Other non-current assets | (41,555) | (34,218) | |||||||||
| Operating lease liabilities, net | (490) | (1,949) | |||||||||
| Accounts payable | (9,702) | 13,116 | |||||||||
| Accrued expenses | 19,143 | 14,616 | |||||||||
| Deferred revenue | 103,313 | 278,827 | |||||||||
| Other assets and liabilities | (1,715) | (2,296) | |||||||||
| Net cash (used in) provided by operating activities | (230,689) | 126,490 | |||||||||
| INVESTING ACTIVITIES: | |||||||||||
| Purchases of property and equipment | (83,559) | (15,234) | |||||||||
| Acquisition of businesses, net of cash acquired | (75,093) | 7,844 | |||||||||
| Purchases of aircraft held for sale | (40,105) | (31,669) | |||||||||
| Proceeds from sale of aircraft held for sale, net | 51,208 | 13,568 | |||||||||
| Capitalized software development costs | (27,693) | (13,179) | |||||||||
| Net cash provided by (used in) investing activities | (175,242) | (38,670) | |||||||||
| FINANCING ACTIVITIES: | |||||||||||
| Proceeds from stock option exercises | — | 2,107 | |||||||||
| Purchase of shares for treasury | (7,687) | — | |||||||||
| Proceeds from Business Combination and PIPE Investment | — | 656,304 | |||||||||
| Transaction costs in connection with the Business Combination and PIPE Investment | — | (70,406) | |||||||||
| Proceeds from long-term debt, net of discount | 259,200 | — | |||||||||
| Repayments of long-term debt | — | (214,081) | |||||||||
| Loans to employees | — | 102 | |||||||||
| Payment of debt issuance costs | (6,727) | — | |||||||||
| Net cash provided by (used in) financing activities | 244,786 | 374,026 | |||||||||
4
WHEELS UP EXPERIENCE INC.
UPDATED UNAUDITED FINANCIAL STATEMENTS AND NON-GAAP RECONCILIATIONS
| AS OF AND FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31, 2022 | ||
| Effect of exchange rate changes on cash | (5,424) | — | |||||||||
| NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (166,569) | 461,846 | |||||||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH BEGINNING OF PERIOD | 786,722 | 324,876 | |||||||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH END OF PERIOD | $ | 620,153 | $ | 786,722 | |||||||
| CASH PAID DURING THE PERIOD FOR: | |||||||||||
| Interest | $ | — | $ 11,661 | ||||||||
| SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | |||||||||||
| Non-cash consideration issued for business acquisition of Mountain Aviation, LLC | $ | — | $ 30,172 | ||||||||
| Assumption of warrant liability in Business Combination | $ | — | $ 28,219 | ||||||||
5
WHEELS UP EXPERIENCE INC.
UPDATED UNAUDITED FINANCIAL STATEMENTS AND NON-GAAP RECONCILIATIONS
| AS OF AND FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31, 2022 | ||
Non-GAAP Financial Measures
The Company reports certain key financial measures that are not required by, or presented in accordance with, generally accepted accounting principles in the United States of America (“GAAP”). These non-GAAP financial measures are an addition, and not a substitute for or superior to, measures of financial performance prepared in accordance with GAAP and should not be considered as an alternative to any performance measures derived in accordance with GAAP. The Company believes that these non-GAAP financial measures of financial results provide useful supplemental information to investors, about Wheels Up. However, there are a number of limitations related to the use of these non-GAAP financial measures and their nearest GAAP equivalents, including that they exclude significant expenses that are required by GAAP to be recorded in Wheels Up’s financial measures. In addition, other companies may calculate non-GAAP financial measures differently, or may use other measures to calculate their financial performance, and therefore, Wheels Up’s non-GAAP financial measures may not be directly comparable to similarly titled measures of other companies.
Definition of Non-GAAP Financial Measure
The Company calculates Adjusted EBITDA as net income (loss) adjusted for (i) interest income (expense), (ii) income tax expense, (iii) depreciation and amortization, (iv) equity-based compensation expense, (v) acquisition and integration related expenses, (vi) public company readiness related expenses, (vii) restructuring charges, (viii) change in fair value of warrant liability, (ix) losses on the extinguishment of debt and (x) other items not indicative of the Company’s ongoing operating performance.
The Company includes Adjusted EBITDA because it is a supplemental measure used by the Company’s management team for assessing operating performance. Adjusted EBITDA is used in conjunction with bonus program target achievement determinations, strategic internal planning, annual budgeting, allocating resources and making operating decisions. In addition, Adjusted EBITDA provides useful information for historical period-to-period comparisons of the Company’s business, as it removes the effect of certain non-cash expenses and variable amounts.
For more information on Adjusted EBITDA and other non-GAAP financial measures used by Wheels Up, see the section titled “Non-GAAP Financial Measures” included in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Wheels Up’s Quarterly Report on Form 10-Q, which was filed with the SEC on November 9, 2022.
6
WHEELS UP EXPERIENCE INC.
UPDATED UNAUDITED FINANCIAL STATEMENTS AND NON-GAAP RECONCILIATIONS
| AS OF AND FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31, 2022 | ||
Reconciliations of Non-GAAP Financial Measures
Adjusted EBITDA
The following table reconciles Adjusted EBITDA to net loss, which is the most directly comparable GAAP measure (in thousands):
| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Net income (loss) | $ | (224,910) | $ | (76,608) | $ | (555,547) | $ | (197,230) | |||||||||||||||
| Add back (deduct) | |||||||||||||||||||||||
| Interest expense | 7,515 | 16 | 7,515 | 9,519 | |||||||||||||||||||
| Interest income | (2,058) | (28) | (3,670) | (53) | |||||||||||||||||||
| Income tax expense | (335) | 58 | 170 | 58 | |||||||||||||||||||
| Other expense, net | (464) | — | 1,041 | — | |||||||||||||||||||
| Depreciation and amortization | 19,074 | 13,246 | 65,936 | 54,198 | |||||||||||||||||||
| Equity-based compensation expense | 23,140 | 19,005 | 88,979 | 49,673 | |||||||||||||||||||
Public company readiness expense(1) | — | — | — | 3,298 | |||||||||||||||||||
Acquisition and integration expenses(2) | 5,177 | 3,695 | 21,269 | 8,712 | |||||||||||||||||||
Restructuring charges(3) | 4,215 | — | 10,380 | — | |||||||||||||||||||
| Changes in fair value of warrant liability | (1,251) | (5,680) | (9,516) | (17,951) | |||||||||||||||||||
| Loss on extinguishment of debt | — | — | — | 2,379 | |||||||||||||||||||
| Corporate headquarters relocation expense | — | — | — | 31 | |||||||||||||||||||
| Impairment of goodwill | 118,000 | — | 180,000 | — | |||||||||||||||||||
Other(4) | 8,192 | — | 8,192 | — | |||||||||||||||||||
| Adjusted EBITDA | $ | (43,705) | $ | (46,296) | $ | (185,251) | $ | (87,366) | |||||||||||||||
__________________
(1)Includes costs primarily associated with compliance, updated systems and consulting in advance of transitioning to a public company.
(2)Consists mainly of system conversions, merging of operating certificates, re-branding costs and fees paid to external advisors in connection with strategic transactions.
(3)During 2022, we recorded restructuring charges for employee separation programs following strategic business decisions.
(4)Related to a one-time charge for certain aged receivables and inventory.
7
WHEELS UP EXPERIENCE INC.
UPDATED UNAUDITED FINANCIAL STATEMENTS AND NON-GAAP RECONCILIATIONS
| AS OF AND FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31, 2022 | ||
The following tables reconcile Adjusted EBITDA to net loss, including the impact of reconciled items on individual income statement expense classifications (in thousands):
| Three Months Ended December 31, 2022 | |||||||||||||||||||||||||||||||||||
| GAAP as reported | Equity-based compensation expense | Acquisition and integration expense(1) | Restructuring(2) | Other(3) | Non-GAAP | ||||||||||||||||||||||||||||||
| Revenue | $ | 408,257 | $ | 408,257 | |||||||||||||||||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||||||||||||||
| Cost of revenue | 395,627 | (3,136) | (2,410) | (34) | (961) | 389,086 | |||||||||||||||||||||||||||||
| Technology and development | 14,804 | (1,133) | — | (591) | — | 13,080 | |||||||||||||||||||||||||||||
| Sales and marketing | 29,349 | (2,695) | — | (332) | — | 26,322 | |||||||||||||||||||||||||||||
| General and administrative | 53,331 | (16,176) | (2,767) | (3,258) | (7,231) | 23,899 | |||||||||||||||||||||||||||||
| Depreciation and amortization | 19,074 | — | — | — | — | 19,074 | |||||||||||||||||||||||||||||
| Gain on sale of aircraft | (425) | — | — | — | — | (425) | |||||||||||||||||||||||||||||
| Impairment of goodwill | 118,000 | — | — | — | — | 118,000 | |||||||||||||||||||||||||||||
| Total costs and expenses: | 629,760 | (23,140) | (5,177) | (4,215) | (8,192) | 589,036 | |||||||||||||||||||||||||||||
| Loss from operations | (221,503) | 23,140 | 5,177 | 4,215 | 8,192 | (180,779) | |||||||||||||||||||||||||||||
| Other income (expense) | |||||||||||||||||||||||||||||||||||
| Change in fair value of warrant liability | 1,251 | 1,251 | |||||||||||||||||||||||||||||||||
| Interest income | 2,058 | 2,058 | |||||||||||||||||||||||||||||||||
| Interest expense | (7,515) | (7,515) | |||||||||||||||||||||||||||||||||
| Other expense, net | 464 | 464 | |||||||||||||||||||||||||||||||||
| Total other income (expense) | (3,742) | (3,742) | |||||||||||||||||||||||||||||||||
| Income tax expense | 335 | 335 | |||||||||||||||||||||||||||||||||
| Net loss | $ | (224,910) | (184,186) | ||||||||||||||||||||||||||||||||
| Add back (deduct) | |||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 19,074 | ||||||||||||||||||||||||||||||||||
| Impairment of goodwill | 118,000 | ||||||||||||||||||||||||||||||||||
| Change in fair value of warrant liability | (1,251) | ||||||||||||||||||||||||||||||||||
| Interest income | (2,058) | ||||||||||||||||||||||||||||||||||
| Interest expense | 7,515 | ||||||||||||||||||||||||||||||||||
| Other expense, net | (464) | ||||||||||||||||||||||||||||||||||
| Income tax expense | (335) | ||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | (43,705) | |||||||||||||||||||||||||||||||||
__________________
(1)Consists mainly of system conversions, merging of operating certificates, re-branding costs and fees paid to external advisors in connection with strategic transactions.
(2)During 2022, we recorded restructuring charges for employee separation programs following strategic business decisions.
(3)Related to a one-time charge for certain aged receivables and inventory.
8
WHEELS UP EXPERIENCE INC.
UPDATED UNAUDITED FINANCIAL STATEMENTS AND NON-GAAP RECONCILIATIONS
| AS OF AND FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31, 2022 | ||
| Twelve Months Ended December 31, 2022 | |||||||||||||||||||||||||||||||||||
| GAAP as reported | Equity-based compensation expense | Acquisition and integration expense(1) | Restructuring charges(2) | Other(3) | Non-GAAP | ||||||||||||||||||||||||||||||
| Revenue | $ | 1,579,760 | $ | 1,579,760 | |||||||||||||||||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||||||||||||||
| Cost of revenue | 1,540,325 | (14,456) | (3,060) | (34) | (961) | 1,521,814 | |||||||||||||||||||||||||||||
| Technology and development | 57,240 | (3,180) | (591) | 53,469 | |||||||||||||||||||||||||||||||
| Sales and marketing | 117,110 | (11,009) | (332) | 105,769 | |||||||||||||||||||||||||||||||
| General and administrative | 183,531 | (60,334) | (18,209) | (9,423) | (7,231) | 88,334 | |||||||||||||||||||||||||||||
| Depreciation and amortization | 65,936 | 65,936 | |||||||||||||||||||||||||||||||||
| Gain on sale of aircraft | (4,375) | (4,375) | |||||||||||||||||||||||||||||||||
| Impairment of goodwill | 180,000 | 180,000 | |||||||||||||||||||||||||||||||||
| Total costs and expenses: | 2,139,767 | (88,979) | (21,269) | (10,380) | (8,192) | 1,921,968 | |||||||||||||||||||||||||||||
| Loss from operations | (560,007) | 88,979 | 21,269 | 10,380 | 8,192 | (431,187) | |||||||||||||||||||||||||||||
| Other (expense) income | |||||||||||||||||||||||||||||||||||
| Change in fair value of warrant liability | 9,516 | 9,516 | |||||||||||||||||||||||||||||||||
| Interest income | 3,670 | 3,670 | |||||||||||||||||||||||||||||||||
| Interest expense | (7,515) | (7,515) | |||||||||||||||||||||||||||||||||
| Other expense, net | (1,041) | (1,041) | |||||||||||||||||||||||||||||||||
| Total other expense | 4,630 | 4,630 | |||||||||||||||||||||||||||||||||
| Income tax expense | (170) | (170) | |||||||||||||||||||||||||||||||||
| Net loss | $ | (555,547) | (426,727) | ||||||||||||||||||||||||||||||||
| Add back (deduct) | |||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 65,936 | ||||||||||||||||||||||||||||||||||
| Impairment of goodwill | 180,000 | ||||||||||||||||||||||||||||||||||
| Change in fair value of warrant liability | (9,516) | ||||||||||||||||||||||||||||||||||
| Interest income | (3,670) | ||||||||||||||||||||||||||||||||||
| Interest expense | 7,515 | ||||||||||||||||||||||||||||||||||
| Other expense, net | 1,041 | ||||||||||||||||||||||||||||||||||
| Income tax expense | 170 | ||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | (185,251) | |||||||||||||||||||||||||||||||||
__________________
(1)Consists mainly of system conversions, merging of operating certificates, re-branding costs and fees paid to external advisors in connection with strategic transactions.
(2)During 2022, we recorded restructuring charges for employee separation programs following strategic business decisions.
(3)Related to a one-time charge for certain aged receivables and inventory.
* — * — * — * — *
9