Sky Harbour Group 2026 Q1 Earnings Call - Revenue Acceleration and Tier 1 Focus

Kate, Conference Operator, Sky Harbour Group Corporation: Thank you for standing by. My name is Kate. I will be your conference Operator today. At this time, I would like to welcome everyone to the Sky Harbour 2026 first 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. In order to ask a question, you can send via webcast in the Q&A box. Thank you. I would now like to turn the call over to Francisco Gonzalez, CFO. Please go ahead.

Francisco Gonzalez, Chief Financial Officer (CFO), Sky Harbour Group Corporation: Thank you, Kate, hello and welcome to the 2026 first quarter investor conference call and webcast for the Sky Harbour Group Corporation. We have also invited our bondholder investors and lenders in our borrowing subsidiaries, Sky Harbour Capital, Sky Harbour Capital Two, and Sky Harbour Capital Three to join and participate on this call. Before we begin, I’ve 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 contains 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 1 and 2 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. Now let’s get started. The team with us this afternoon you know from our prior webcast, our CEO and Chair of the Board, Tal Keinan, our Treasurer, Tim Herr, our Chief Accounting Officer, Michael Schmitt, our Accounting Manager, Tori Petro, and our Assistant Treasurer, Andreas Frank. We have a few slides we will want to review with you before we open it to questions. These were filed with the SEC 1 hour ago in form 8-K along with our 10-Q, and will also be available on our website later this evening. We also filed our first quarter Sky Harbour Capital Obligated Group financials with MSRB EMMA 1 hour ago.

As Kate mentioned, you may have submit written questions during the webcast using the Q4 platform, We will address them shortly after our prepared remarks. Let’s get started. At the end of the first quarter, on a consolidated basis, assets under construction and completed construction reached over $352 million. That is a $75 million increase from one year ago. Let me highlight that the pace of investment and new construction at Sky Harbour is accelerating, This column will continue to grow at a higher rate. Revenues experienced an increase of 56% year-over-year and 8% sequentially, given the new campus openings during the past year and increases in occupancy and rental rates.

Operating expenses in Q1 continued to increase in tandem with new campus openings, impacted in particular by increases in campus headcount and the cash and non-cash expense accruals of new ground leases entering into the past year, which are not yet in construction or in operations. More than half of the increase in OpEx in quarter-over-quarter or, you know, quarter sequentially, is related to the signing of these new ground leases at the end of the year. Within that expense, more than half of that is non-cash accruals, you know, payments that will be made in the future. We look forward to benefiting from the operating leverage of our phases 2, both in Miami Opa-locka we just opened, and in early 2027 with the opening of Addison to phase 2.

We expect gross profit margin expansion with these 2 phase, phases 2 with the same people and field trusts basically serving a doubling of hangar campuses. In terms of SG&A, we strive to keep this in check as we grow, keeping frugality front and center in our expense and cost management initiatives. Cash flow used in operations moved higher than last quarter of 2025, which usually happens in each of our 1st quarters, given the seasonality of our cash performance, bonuses paid to our employees in February, the annual increases in base salaries that occur as of January 1st, and also some minor items related to 401(k) corporate matches, Social Security employer contributions, and the like that they all tend to be concentrated in Q1.

If you look historically, that pattern has been the case in terms of Q1, prior Q1 quarters in prior years. Also, the figure in Q4 had the non-recurrent benefit of the $5.9 million upfront payment we received by one tenant in terms of a lease renegotiation in Miami. On a normalized basis, as we have disclosed previously, we have reached cash flow breakeven at the operating level. More on this when we talk about our guidance for 2026 shortly. Next slide, please. This slide is a summary of the financial results of our wholly owned subsidiary, Sky Harbour Capital, and its operating projects that form the Obligated Group. Assets under construction are still growing as we complete Opa-locka phase 2 and will only stabilize once we complete Addison phase 2 at the end of the year.

This will constitute the last project of the Obligated Group’s first vintage of campuses that were financed primarily by the Series 2021 bonds. Revenues at the Obligated Group in Q1 increased 76% year-over-year and 15% sequentially. We expect another step function increase in revenues in Q2 and Q3 of this year following the opening of phase 2 in Opa-locka, and then in Q1 and Q2 of 2027 after the opening of phase 2 in Addison. As I mentioned earlier, we expect a significant increase in the Obligated Group’s gross profit and EBITDA margins, given the additional revenues of these 2 phases with limited increases in operating costs, given the ability to use the same personnel and equipment with an expanded campus doubling the size, both in Dallas and in Miami.

Cash flow from operations of the operating group reached $2.9 million, almost tripling of the same amount of $1 million a year ago, a 14% increase from the prior quarter after adjusting for that non-recurrent $5.9 million influx in the prior quarter with the prepaid rent that we discussed also earlier. At this point, let me pass it on to Tal to provide our leasing and development update. Tal?

Tal Keinan, Chief Executive Officer (CEO) and Chair of the Board, Sky Harbour Group Corporation: Thanks, Francisco. The slide is self-explanatory, and it’s the same format we’ve been using in the, in the last few earnings calls. I think I’m just gonna highlight a few specific rubrics here for people’s attention. Starting with the campuses that are in initial lease-up. We’ll speak specifically about Opa-locka, Miami Phase 2, in a later slide. What I’d just call attention to is Denver, APA Phase 1, where we’re only 44% leased at this point. Sometimes they go a little bit slower than others. This one has definitely lagged a bit. Again, that’s, you know, I think Nashville looked quite similar 6 months after it opened. We don’t really attach that much significance to it.

Obviously, we wish everything moved a little bit faster. On the left side, you can see the economic occupancy, which now on all but 1 campus is at 100% or above. What’s the upper limit of that? I’m gonna go out on a limb and say San Jose is probably somewhere near the upper limit of that. We might find a few more creative ways to increase occupancy beyond 130%. But it’s probably not gonna go much beyond that. However, what I really want to point out is the lower left-hand corner of the slide, that re-lease update.

In the last 12 months, we have re-leased about 119,000 sq ft of hangar, meaning leases that have come to term and either been renewed by the existing resident or taken over by a new resident. The average escalation between 1 lease and the next is 23%. By the way, that’s up from 22% in the last quarter. All of this is on top of the annual escalators, the contractual escalators that feature in all of our leases, which escalate at CPI with a floor of 4%. Anyone who is running a model for Sky Harbour knows that your inflation, your inflation assumption is 1 of the most sensitive inputs in the entire model.

I don’t wanna make a claim here that we’ll always be getting 23% escalations, but for the time being, at least, I think what we’re seeing is more or less what we forecast a couple of years ago on these calls, which is that hangar inflation has nothing to do with CPI. We are on the island of Manhattan from a real estate perspective. You just cannot build new airports. We think that this scarcity is what is, say, one of the key components of driving the value on a macro level in this company going forward. Next slide. A little bit of kind of forecast versus actual.

Again, things that I’ll point out, you’ve got 2 rows here of third-party forecasts for revenue per square foot on different campuses. What we’re showing right now is whatever is gray is gonna be within the range of those forecasts. Whatever is green is gonna be above both forecasts. Whatever is red is gonna be below both forecasts. You know, what you see at first blush might look like a mixed bag. To us, it does not because that high range, if you look, you know, we’ve got high, average, and low. The high range in the campuses that are in lease-up, okay? Look at DVT, APA, and ADS. The high range are the long-term leases, okay?

I think as people might remember, our strategy on initial lease-up, this is before we moved to the pre-leasing strategy, which we’ll get to soon, has been to get these campuses to 100% as quickly as possible. If somebody wants to come in on a six-month lease, at some, you know, very low introductory rate, we’re fine with that. We wanna start actually negotiating in earnest with our long-term tenants on the basis of 100% occupancy or higher. You know, rather than let these hangars ride empty for the month that it takes to get to 100% and surpass it, we rent them out like this, which skews your averages. All of those, higher the green numbers on those lease-up campuses are long-term leases.

That’s what that looks like. Then another thing I’ll call everyone’s attention to is if you look at the legacy campuses, or, you know, we can call those stabilized campuses. BNA, that’s Nashville, OPF1, that’s Miami, phase one, even Camarillo TMA, at the end, what you’ll see is the lows are the first leases that we signed. In fact, if you take BNA, that might actually be the very first lease we signed at BNA. The highs tend to be the last leases that we signed, which again, I think corroborates the trend that we’re talking about, that 23% re-lease rate.

As time goes by, these leases go up, which is why we’re getting a lot of demand from new residents, especially long-term residents, to maximize the term of their leases because there’s an increasing appreciation that this inflation trend is here to stay in business aviation. Okay, next slide. A little bit about pre-leasing. Miami Phase Two is the first campus on which we’ve applied this pre-leasing strategy, where we’re going out and offering people certain incentives to sign leases before we even open the doors, which has resulted in, you know, what we consider, you know, pretty significant success. We’re 68% leased in Miami Phase Two the day we open the doors. That means we’re leaving some money on the table, no question.

We think all things considered, this is probably the right way for us to continue. A few things that we learned from Opa-locka Phase Two. I’m starting at the top of the slide. Number 1, this is the first, at least partial trial of the Ascend Integrated Construction Program that we have in place. We’re using the prototype hangar. It’s a derivative of the SH-37, the SH-34 hangar. We’re using Stratus Construction. That steel that you see in the picture is our Stratus steel. We’re using Ascend Construction Management. What we don’t have yet here is, number 1, our GMP was priced before we implemented the program, before Ascend came in, so that budget construction cost, you know, it is what it is. Number 2, we’re using a third-party general contractor in Miami.

Other than that, this is the Ascend Integrated Construction Program. We’re very happy to demonstrate an on time, on budget, delivery. The next thing I think is, it’s worth understanding is, you’ll see this in some of the upcoming slides. Same campus expansion can be a lot more valuable than putting a new dot on the map, in that we know the market. We’ll take Miami in this case as sort of the first example of this. We know the market, even more importantly, the market knows us, okay? It’s not like we’re getting more speculative when we increase the size. You’ll see when we talk about Stewart and Dulles, that’s exactly what we’re doing. It’s just that we know the battle space a lot better. Again, our counterparties know us better.

There’s a lot of pent-up demand in Miami. There’s about to be a lot of pent-up demand in Dallas. Once people experience the Sky Harbour, the Sky Harbour model, the churn is extremely low. People tend not to leave us. Most of those 23% markups are to existing residents who just understand that, you know, there is a market. This is what people are paying now. If I want to stay, that’s what I have to pay. The churn has been extremely low. Look out for a lot more of that going forward, and we’ll show as we, you know I don’t know if people have already seen our press release. The guidance that we’re putting forward is based a lot more on that, meaning more dots on the map is not really what we’re going after.

I’ll explain more in the coming slides. Next slide. A few things that jump out on site acquisition. You’ll start conspicuously to perhaps some view, up in Seattle, a dot has been removed. You might remember we had a one-year lease at Boeing Field in Seattle. We allowed that lease to lapse. We were not happy enough with the terms of the long-term lease that was put in front of us. Add to that some macro trends on wealth flight from Washington State made us say, "Listen, let’s allow that lease to lapse. We can be on the fence for a little while. There are other opportunities, other avenues of attack at Boeing Field.

We still like the airport a lot, we don’t think that that’s the right entry point. We will hopefully come back to that at some point, but it’s not gonna be right now. Just to help people understand what we’re looking at, and we’ve had a lot of questions over this about this over the last quarter or so is tiering. Okay, what do we mean when we say tier one? Which I’m glad we got the questions because kind of for us it was a little bit less structured internally. We’ve put some pretty rigid criteria down. I think that that’s gonna work really well. What we call a tier one airport is an airport that’s gonna deliver us $50 per square foot or better. That’s Sky Harbour’s internal underwriting.

That’s not what any third party is telling us. That’s our internal underwriting. Again, if you can compare it to what we showed in some of the previous slides, we tend to undershoot on what we attribute to a field, meaning we’re making more per square foot on the field than even we forecast. We think it’s a pretty solid number. It’s the same methodology we’ve, you know, we’ve always used internally. Tier 2 is airports where we think we’re gonna be making $30-$50 a square foot in revenue. Tier 3 is below $30 per square foot. Just to be clear, Tier 2 is good. It’s great. Like, you know, look at Miami, look at Nashville.

These are, you know, healthy, double-digit, unlevered yield on cost airports, and they’re tier 2 airports. That works really well. Tier 1 is great, obviously, right? Your denominator in yield on cost is relatively static. It, you know, it varies within a pretty tight range, your denominator primarily being development cost. Your numerator, right? We’re in the real estate business. It’s really about location. There are jurisdictions where you’re gonna get a lot more per square foot, even, you know, for the same product that you put out. Then tier 3 can actually work pretty often, but it’s not our focus right now. I think it will be down the road as our construction costs, which we’ll talk about soon.

As our construction costs continue to come down, as Francisco and the financing get our cost of capital down over time, many, many more airports in the country become viable, and those tier 3s airports start becoming interesting, right? There are plenty of scenarios where we can generate those double-digit under unlevered yields on costs, even on tier 3 airports. We’re just not doing that right now, because there are juicier targets in front of us. A couple things to point out. The green dots are currently open and operating airports. The flags represent the tiers.

One of the things that you’ll see is on the yellow dots, meaning the airports that are in development, not operating yet, there is a much, much higher incidence of tier 1 airports, and this is exactly what we’ve been telling you from the beginning. We started out with a relatively arbitrary portfolio of airports. We knew we wanted to stay out of the New York market because we knew we’d make some big mistakes, and we did, in our, you know, in our early days. Once we became comfortable that the model is working and is established, we could build these things at the cost that we thought we could build them, we could lease them at the rates that we thought we could lease them, we started expanding to the tier 1 markets.

As you can see, we actually tabulated it here. 48% of the rentable square footage that is currently fully funded and in the construction pipeline, either under construction or in pre-construction right now, 48% of that square footage is in tier 1 markets. If you express that in $, it would be obviously a much higher level, right? Because your dollar per square foot is higher. We didn’t want to get into that. It’s a tough calculation, and that starts getting close to guidance, so we didn’t want to put it out there. You can kind of back into the math yourself. That will be increasingly the story, at least for the next 2 years, meaning our major focus is on tier 1 airports and some tier 2 airports.

Occasionally, there’s going to be a tier 3 that just lines up very, you know, very easily, and we’ll jump on that. Our primary focus for at least the 2 years ahead is tier 1 airports. The only thing I think that bears a little explanation in this is Miami having the red and blue flag. To be clear, Miami phase 1 is still solidly within tier 2 territory. We’ve got a lot of legacy leases. Again, the latest leases signed in Miami phase 1 are coming into tier 1 territory, on average, we’re still tier 2. Our second phase in Miami is a solid tier 1, and we think that entire kind of quarter in South Florida will continue accelerating on that same path.

I think that’s all I had on this slide. Next slide, please. Okay. A little bit about development. We call it projected fully funded construction pipeline. Projected because the sequence might shift a bit as, you know, as conditions change. Again, sometimes we wanna put an airport where there’s a, you know, we think there’s a great leasing opportunity, move it up a little bit in the chain. Largely, this is what it’s gonna look like. A few things that should jump out at kind of some of the more astute observers of Sky Harbour. Number one, revenue run rate step-ups are not linear. They’re a step function, okay? That’s how this company works.

It almost doesn’t matter what’s going on month by month or quarter by quarter. It matters what’s going on project by project. Bradley’s gonna get delivered in Q4. Addison 2’s gonna get delivered, you know, by the beginning of Q1. That’s when you have your big step-ups. We are re-leasing in the interim, right? There are Nashville hangars that are going for 23% higher than they were going for before. Your big quantum step-ups are every time a project gets delivered. What you’re seeing here as well, it shows the importance why we’ve invested so much over the last 18 months in the Ascend Integrated Construction Program. What you’re seeing on this chart is an order of magnitude increase in the square footage that’s being parallel processed at this company.

We’ve never had this much anywhere near this amount of construction underway in parallel. Let’s hope it keeps up, that it’s all going smoothly, on schedule, on budget, and that is really a testament to the Ascend team. Just as a reminder, what that includes is prototyping, in-house architecture and engineering, in-house manufacturing, and increasingly in-house general contracting. That’s what that program constitutes. You can see also when that revenue really starts to fire, right? You’ll see a big bulge in revenues coming on in 2027. Which is, should be clear to anyone who’s watching how this company grows. You know, we’re not gonna make huge forecasts for the years ahead.

Just understand that the intention is to do another order of magnitude leap in the volume of parallel processing going forward. You know, it, it’s all a matter of, you know, getting these top-tier airports into the portfolio, getting them financed, and now unleashing the Ascend team on those projects. I think that’s all I had on this slide. Let me hand it back to Francisco.

Francisco Gonzalez, Chief Financial Officer (CFO), Sky Harbour Group Corporation: Thank you, Tal. We have been focused on creating a fortress of liquidity at Sky Harbour, now with $368 million of available resources following our two debt transactions, the $200 million bank facility through JP Morgan last September, and the $150 million taxes and bond issuance that closed in the middle of this past February. Of this amount, $187 million is in cash and U.S. Treasuries sitting on our balance sheet. We continue to cash manage our cash management strategy led by our Treasurer, Tim Herr, of rolling out these funds in short-term treasuries, pending their use in construction. We also have drawn only $19 million of the JP Morgan facility so far and have $181 million left of committed available capacity in that facility.

In terms of capital formation, we now have a significant runway ahead of us and are fully funded, as Tal mentioned, to double in size without additional capital. As we always have mentioned before, we continue to be deliberate and conservative on raising capital way in advance for any time that we need it and at the lowest cost of capital possible. Next slide. For the past four years since going public, we have been asked by all of you, investors and analysts alike, to provide formal guidance of our expected results. We have avoided doing so until today, given our early-stage nature of our business and the variability of our outlook, driven by, you know, past capital formation availability and project cadence and so on.

As Tal mentioned, now that we have everything in place, we have the capital funding in place, the development and construction and manufacture teams locked and loaded to execute on our plan, the visibility of our results is more predictable and clear. Unfortunately, I cannot give guidance but for this year, which is, you know, again, similar that looking historically, our results or current quarter results or the subsequent quarters, it is really, I don’t want to say meaningless, but in terms of grasping really the cash flow generation potential of this platform. It is, as Tal mentioned, in 2027 and really 2028 calendar years, which we will be able to show the results of all these projects that are now in development or construction.

Having said that, we are gonna provide today formal guidance in terms of revenues. We expect to finish this year, 2026, with an annualized run rate of revenues between $42 million and $46 million. Again, annualized run rate of revenues between $42 million and $46 million, and that’s up from $35 million annualized run rate this quarter that we just filed today for this year. This increase will be driven by the incremental revenues of the phase 2 at Opa Locka that opened this week and increased occupancy at DVT and APA. Similarly, we’re introducing guidance for an estimated adjusted EBITDA that we expect to end the year at an annualized run rate of between $4 million-$6 million, up from the annualized run rate of -$6 million in Q1.

This guidance, as you may notice, is slightly lower than we’re showing some of our analyst models for two reasons. It is guidance which we intend to meet or exceed. Second, it does not include any revenues or EBITDA from the Bradley and ADS2 campuses that will open at the end of the year, which from a timing perspective, those future revenues and EBITDA are not reflected in our guidance. Let me now pass it back to Tal for some final comments regarding highlights and next steps of our four pillars for business model, land acquisition, development construction, leasing, and operations.

Tal Keinan, Chief Executive Officer (CEO) and Chair of the Board, Sky Harbour Group Corporation: All right. Thanks, Francisco. On site acquisition, Stewart expansion, I think people might remember ’cause the Port Authority announced it in Q4, but we only executed it in Q1. We doubled our footprint at Stewart International Airport in N.Y., tier 1 market, you know, hundreds of thousands of sq ft of hangar. We’re actually considering at this point going straight to developing the entire project rather than doing it in phases. That’s our level of conviction in the demand and market uptake in the N.Y. market. We’ll report on that soon enough. 2026 in site acquisition, again, it’s not anymore just about putting more dots on the map. It’s more than that about rentable sq ft, even more than that about revenue per sq ft.

Ultimately, what it’s really about is NOI per square foot. We’re choosing our targets on that basis. Development, we talked about Miami phase 2, which is delivered and the Ascend platform in action. Bradley, Connecticut, Dallas, Addison phase 2, Salt Lake City, Hudson Valley Regional, all of those are under construction. We’re in the ground, on schedule, for the time being, and let’s hope it stays this way, on budget as well. We have additional airports, like Dallas International, Trenton, New Jersey, Orlando, that are in development right now, pre-construction. Cost per square foot, last time we reported was $253.

Our current GMPs that are out on projects that have not yet been delivered, this is what’s out there, is $244.37. We’re not done. We’re fighting to keep getting that cost per square foot down. Reminder to everyone that not only does that improve our unit economics, it dramatically expands our total addressable market, right? Those tier 3 airports start getting very attractive as your cost per square foot continues going down. That fight is nowhere near over for us. On leasing, again, we discussed Miami Phase 2. This occupancy optimization program, you know, if you guys I think a lot of you are familiar with how we run that.

It’s primarily a geometric optimization when you have semi-private hangars. An aircraft that is occupies 10,000 square feet, meaning length times wingspan is 10,000 square feet, doesn’t actually occupy that entire rectangle. This is a convention in the industry that, you know, we didn’t invent. This has been here for a long time. The corners of that rectangle remain vacant, and you could put other aircraft in those corners. We don’t get them too close. You know, we’re, you know, try to keep things, you know, very safe in Sky Harbour hangars. We have been able to get, as you’ve seen, to far beyond 100% occupancy. We’re now beginning to introduce temporal occupancy programs, right?

Some may have noticed the Opa-locka Phase 2, there was one lease that was actually below $50 a foot. That aircraft is in Miami on a seasonal basis. That space is available to lease to other prospective re-residents at specific parts of the year. That’s, again, something that will over time increase occupancy. We’ve treated that as, you know, the revenue per square foot we’re getting from that aircraft, we don’t discount in any sort of way. Functionally, if you’re putting it in your model, understand that square footage will be leased to somebody else as well. Again, that’s the small piece. The big piece, as we discussed, is re-lease revenue step-ups.

Every time a lease comes to term, we get a very, very healthy escalation in revenues. On the operations side, we discussed the OpEx efficiency program. We’ll share interim results in one of the upcoming earnings calls. It’s a little bit early to do that, but that is underway. And we’ve begun a quarterly survey of Sky Harbour residents, which has gotten, you know, very gratifying participation, and the vast majority of our residents participate in that. And what we use it mainly to do is figure out where we can improve, both in the physical product that we put down and in the service offering. But we also obviously look for people’s overall satisfaction ratings relative to alternatives in the industry.

All of our residents are familiar with all of the alternatives in the industry. I don’t think it could be any better than, although we will continue trying to make it better. A few testimonials on the bottom of the page. Let’s move on to the last slide. Okay. Looking ahead, like I said, we feel like the model is increasingly established. We’re happy with really all parts of the model. Obviously, we’re refining everything. We’re happy with where we’re going. It’s now much more of a rinse and repeat exercise. The focus is on scale. That’s across the board. On site acquisition, it’s not number of dots on the map anymore. It’s maximize NOI capture, right? That’s square footage, Sky Harbour equivalent rent, and OpEx.

Those are the inputs to that. The same-field expansion is gonna be a theme. You know, we’re getting everybody ready for that. That’s gonna be a big part of what’s going forward. What we saw in Miami, we think is something that could be replicated in a lot of, a lot of markets where we can expand. The fact that you know the market and the market knows you very well gives you a massive head start in leasing. You can see also the rates are, you know, significantly improved. On the development side, again, we’ve seen this in different charts. I won’t go through them all. To be clear, we’re gonna be at over 1 million square feet in development by the end of this year.

That again will only accelerate in the years ahead. Lastly, that cost per square foot, again, that fight’s not over. There are major architecture and engineering initiatives in progress right now. I think there’s a real opportunity there. As soon as we have Yeah, we’ll be reporting this on every earnings call. We’ll see that, you know, $244 a foot number hopefully continue coming down. On the leasing side, again, I won’t go through all of the numbers. What I will focus on is that last bullet, team growth. We are in the process of onboarding additional team members. I think what’s worked for us at Sky Harbour traditionally is recruiting out of the military.

We’ve continued with that. As you can see, we have a really the rubber hits the road in a very big way starting in 2027. We’ve got a massive leasing challenge. Because we’re pre-leasing now, like we did in Miami phase 2, that challenge is now. The team has to grow right now, and that is underway. Lastly, operations. Again, the defensive side of operations where we don’t wanna be too innovative here is just absolutely bulletproof safety, bulletproof security, and the highest efficiency, meaning shortest time to wheels up in business aviation. What we consider offense is continue working with our residents, in some cases very intimately, to constantly improve both the physical offering and the service offering and create this virtuous circle of value creation.

With that, I think we can move on to questions.

Francisco Gonzalez, Chief Financial Officer (CFO), Sky Harbour Group Corporation: Operator, please go ahead with the queue for the questions.

Kate, Conference Operator, Sky Harbour Group Corporation: At this time, I would like to remind everyone, in order to ask a question, you can send via webcast in the Q&A box. Your first question comes from Ryan Meyers with Lake Street Capital Markets. How are lease-up and pricing trends progressing at the newer campuses, and what evidence today best demonstrates the operating leverage in the model?

Tal Keinan, Chief Executive Officer (CEO) and Chair of the Board, Sky Harbour Group Corporation: Okay. That second question is interesting. Thanks, Ryan, for that. I think the lease-up and pricing trends, you may have logged us before we went through the presentation. I my understanding is the presentation probably answered your question there. What evidence best demonstrates the operating leverage in the model? You know, it’s an interesting question. Look, first of all, you know, time has been our friend here, in that our major capital investment is upfront, right? This is a high CapEx, low OpEx business. Once you lock in a price per square foot or a cost per square foot on a campus, that’s it forever.

The revenue that’s associated with that numerator in your yield on cost has been growing at really gratifying rates, much higher than we thought. That’s maybe one piece of evidence that I think demonstrates the operating leverage. You can go around the table here if anyone else has a good example of that. I like the question. Nobody else?

Kate, Conference Operator, Sky Harbour Group Corporation: Your next question comes from Michael Thompson with BTIG. During the Q4 2025 call, you mentioned prioritizing site acquisition targets based on those with the highest NOI generation potential. How many locations would be on the top tier of your wish list, and how many of these are you actively pursuing ground leases on?

Tal Keinan, Chief Executive Officer (CEO) and Chair of the Board, Sky Harbour Group Corporation: Okay. By top tier, what we’re calling tier 1, meaning airports with $50 and up a foot rent. We for, you know, competitive reasons don’t provide any kind of list or even number of airports there. What I will say, you can see on the map that we show, the site acquisition map, more or less where those airports tend to be concentrated. How many are we going after? All of them. Every airport that’s in that space is something that we’re going after. The last thing I think that’s worth saying about that is we feel that the number of airports that are crossing into tier 1 territory is going up, right? I think a good example of that is Opa-locka, where phase 1 is still solidly in tier 2.

Phase 2 is solidly in tier 1.

Kate, Conference Operator, Sky Harbour Group Corporation: Your next question comes from Dave Storms with Stonegate Capital Partners. Based on your properties and development table on page 25 of the 10-Q, it is estimated that your rentable square feet per hangar is expected to grow by 8,000 feet over the next three years. Can you break out this growth between growing our square footage versus increased occupancy efficiency? Also, marketing expense took a step up this quarter. Can you speak to what this looks like on the ground and what the expectations are here?

Tal Keinan, Chief Executive Officer (CEO) and Chair of the Board, Sky Harbour Group Corporation: Can you reread the second part of that question? We didn’t hear that.

Kate, Conference Operator, Sky Harbour Group Corporation: Also marketing expense took a step up this quarter. Can you speak to what this looks like on the ground and what the expectations are here?

Tal Keinan, Chief Executive Officer (CEO) and Chair of the Board, Sky Harbour Group Corporation: Okay. Thank you. All right. If I, if I understand correctly, the first part of the question is about growing rentable square footage while also increasing occupancy efficiency. We don’t see a tension there, right? The demand is there. You know, in most of the airports that we’re at, we need to get very creative about accommodating new residents, right? Once you get deep into that, you know, above 100% occupancy category, it becomes a little bit tricky fitting in new new residents. You know, fundamentally, if we could be growing square footage at a faster rate, we would be. We think it’s totally foolproof. I don’t think there’s really a tension between those.

The question about marketing expense, what does it look like on the ground? Well, look, first of all, we have more and more people in leasing, and we need even more to pursue that. You know, we don’t advertise. I don’t know if this is where you’re going with the question. You know, I think I would say most of our marketing is really existing residents bringing in, you know, friends and colleagues and advocating for us. I think I hope that answers the question about marketing.

Kate, Conference Operator, Sky Harbour Group Corporation: Your next question comes from John. What are annual rent escalators in the leases? Is the 23% release tap compared to the initial rent or the rent accounting for annual rent increases?

Tal Keinan, Chief Executive Officer (CEO) and Chair of the Board, Sky Harbour Group Corporation: Okay. The annual increases in our standard tenant leases are CPI, consumer price index, with a floor of 4%. It’s actually a very good nuanced question. That 23% step up between leases is after the 4% escalators. Meaning if a 3-year lease ends, it will have escalated, you know, twice by the time it ends. The 23% increase is after those escalations, right? If your lease ends December 31st, the new lease starts January 1st, it’s 23% on average higher than it was on December 31st.

Kate, Conference Operator, Sky Harbour Group Corporation: Your next question from Mike. What’s the tenant retention rate for the portfolio?

Tal Keinan, Chief Executive Officer (CEO) and Chair of the Board, Sky Harbour Group Corporation: Tenant retention rate. I don’t know that we’ve actually ever compiled those statistics. I would say the vast majority of our residents whose leases come to term are the next resident, right? That’s released. But I don’t think we actually have those numbers. Well, let’s talk about that over the-

Francisco Gonzalez, Chief Financial Officer (CFO), Sky Harbour Group Corporation: You know, as we grow and time passes, we’re gonna be providing a lot of statistics on vintages and our various, you know, vintages of phases and so on and so forth. I think it’s still too early. As Tom mentioned, you know, again, renewals are mostly with our existing tenants. Obviously, there’s a back and forth that starts several months before their term ends. Then they know that obviously there’s a people out there that we could replace them with at higher rents, and that creates competitive tension for that increase in rates for that renewal. Next question.

Kate, Conference Operator, Sky Harbour Group Corporation: Your next question from CK. Can you speak about your recent investor relations initiatives and co-conversations you’re having with potential investors or partners?

Tal Keinan, Chief Executive Officer (CEO) and Chair of the Board, Sky Harbour Group Corporation: Yeah. I’m not sure which initiatives you’re referring to specifically.

Francisco Gonzalez, Chief Financial Officer (CFO), Sky Harbour Group Corporation: Let me just mention the following. You know, from, you know, now, after having completed the 2 debt financings, we have increased our activities in terms of outreach to investors existing and potential. We are attending more conferences going forward. Tim and I are going to be next week at the B. Riley Securities conference in Marina del Rey, California. A couple weeks later, we’re going to be at the RPC, Inc. conference here in New York, and so on and so forth. We’re going to be more active, you’ll see, both in person and in virtual conferences, going forward in terms of, you know, our outreach to investors. Next question.

Kate, Conference Operator, Sky Harbour Group Corporation: Your next question from Steve. What’s your G&A expectations as you grow the company?

Francisco Gonzalez, Chief Financial Officer (CFO), Sky Harbour Group Corporation: Yes. Listen, one of the most important things at Sky Harbour, as you know, is that, as most of you know, is our ability to have operating leverage. Not just as we move from phase 1 to a phase 2, but in general, as in terms of the scale of the company. We are looking to yes, we’re increasing the leasing team, but we look to basically after those people are onboarded to basically limit the amount of SG&A that will you know, grow at this company. As we scale, we’ll be able to basically generate a significant EBITDA expansion and so on the back of that fixed, very fixed SG&A, you know, expense. Next question.

Kate, Conference Operator, Sky Harbour Group Corporation: Your next question from Jack. What are annual rent escalators in the leases, is the 23% really stepped compared to the initial rent or the rent accounting for annual rent increases?

Tal Keinan, Chief Executive Officer (CEO) and Chair of the Board, Sky Harbour Group Corporation: Yeah. I think we answered that one already. Next question.

Kate, Conference Operator, Sky Harbour Group Corporation: I’d now like to hand over the call to Francisco Gonzalez.

Francisco Gonzalez, Chief Financial Officer (CFO), Sky Harbour Group Corporation: Operator, I think there are more questions here, still.

Tal Keinan, Chief Executive Officer (CEO) and Chair of the Board, Sky Harbour Group Corporation: Yeah. We just had a repeat of a question. Let’s see if I think there are others now.

Kate, Conference Operator, Sky Harbour Group Corporation: We’ll wait for a moment for the next question. Your next question from CK. I noticed you issued some shares using your ATM facility. Why was this needed given the robust liquidity you have? Do you expect this to continue?

Francisco Gonzalez, Chief Financial Officer (CFO), Sky Harbour Group Corporation: Thanks for the question. As some of you may be aware, we entering to a facility with Yorkville Advisors late December, early January. That facility, also as part of that facility or separate from that facility, we also added them to our ATM program that is also run with B. Riley. We basically in Q1 test drove Yorkville as an ATM agent, you know, on a few days during the quarter. Next question.

Tal Keinan, Chief Executive Officer (CEO) and Chair of the Board, Sky Harbour Group Corporation: Okay, here we go.

Kate, Conference Operator, Sky Harbour Group Corporation: This is the next question. Can you provide details on economic occupancy that is 103% for campuses open for more than six months? How high can economic occupancy go?

Tal Keinan, Chief Executive Officer (CEO) and Chair of the Board, Sky Harbour Group Corporation: Yeah. Okay, okay, I addressed this a little bit during the presentation. Look, San Jose is probably somewhere near the limit. We’re at 132% in San Jose. We never want to. Remember, you can only exceed 100% on a semi-private hangar. A fully private hangar is what it is. You, right, you take the entire square footage of the hangar, irrespective of the square footage of aircraft that’s actually in the hangar. It’s only semi-private hangars that we’re doing it in. We never want it to get crowded. We never want it to get too busy in these hangars. I think San Jose is probably approaching the top of that range.

Maybe if we introduce some temporal, like we were talking about, those seasonal residents like we have in Miami, we can go a little bit higher than that. I don’t think it’s going much higher. One of the things that we’re seeing, though, this is maybe combines, you know, 2 of these questions here, is a trend of people going from semi-private to fully private hangars, right? Once they experience it and understand exactly what the service offering is, we do see people saying, "All right, I’m willing to spring for a fully private hangar." Those are happening, of course, at, you know, significantly higher rents. That trend is going on. We’re always gonna, I think, keep some sort of a balance between private and semi-private hangars.

Kate, Conference Operator, Sky Harbour Group Corporation: Your next question comes from Joe. Can you talk about the competitive landscape? Have there been additional competitors entering the market?

Tal Keinan, Chief Executive Officer (CEO) and Chair of the Board, Sky Harbour Group Corporation: We still haven’t seen anyone who does exactly what we do. You know, the FBO companies, Signature and Atlantic, we cooperate with as much as we compete with. It’s kind of, as I said, the Venn diagram has just not that much overlap between what we do to the extent that, you know, one of them actually refers residents to us sometimes, which has been great. We haven’t seen that. We have seen people come and acquire hangar assets. That is going on.

Again, I think, you know, many of the people on the call understand, we don’t acquire assets because we think the economics of acquiring raw land and building them, especially when you get to this scale, are just so much better than acquiring them. We just don’t want to be on that side of the trade. We like where we are there.

Kate, Conference Operator, Sky Harbour Group Corporation: Your next question from Mr. DeHalt. On an occupied square feet basis, OpEx per square feet is running around $15 for the Obligated Group. Why should future properties be any different?

Francisco Gonzalez, Chief Financial Officer (CFO), Sky Harbour Group Corporation: Yes. Thanks for the question. You know, one of the things we mentioned, you know, the two remaining campuses at the Obligated Group is this Opa-Locka phase 2 that just opened this week, and then ADS 2 in Dallas that will open at the end of the year. If, you know, we expect these campuses to run basically the same personnel, the same fuel trucks, and then just a marginal increase in OpEx expenses. That will allow us to really expand the operating margin, the gross profit and EBITDA margin of the Obligated Group as those two campuses come into being.

Similarly, as we finish leasing both Phoenix and Denver, we’ll also see the expansion in the gross profit margin of the Obligated Group.

Tal Keinan, Chief Executive Officer (CEO) and Chair of the Board, Sky Harbour Group Corporation: I’ll say in addition. First, you’re welcome to email your numbers if That’s not the numbers that we come up with. Happy to look at your logic, and if it’s worth putting out a clarification, we’ll happily do that. We’re not at $15 a square foot. What I can say is, you know, when we started this, there’s a very deliberate decision to over-equip, overstaff, all of our campuses, right? What we wanted to do is create by far the best service offering in business aviation, and then with a scalpel, go back and, you know, make it efficient. That’s what that OpEx efficiency program is about, is how do we become more efficient on OpEx without touching the magic, right?

Without compromising the service level we have. That’s ongoing, and again, we’ll start putting out numbers on that, as we go forward. You know, welcome to email your numbers to us, and we’ll have a look at how you got to that.

Kate, Conference Operator, Sky Harbour Group Corporation: Your next question from Dave. The conflict in the Middle East has impacted fuel prices. Do you anticipate this impact being immaterial, providing a tailwind or creating headwinds for fuel revenue on the income statement?

Tal Keinan, Chief Executive Officer (CEO) and Chair of the Board, Sky Harbour Group Corporation: Yeah, I’d say probably immaterial. I don’t think it helps. It doesn’t hurt. You know, remember what drives our business is the existence of aircraft square footage. We really don’t care how much you fly. As long as you exist, you’ve gotta be housed somewhere. The FBO model is a little bit different, where they do, I mean, fuel is the major source of revenue for the FBO industry. I think even in the FBO industry, you haven’t seen a incredibly material impact. You’ve got I mean, this is obviously a very economically resilient cut of the population. If they have to get somewhere, they’re gonna get there. If it costs them a bit more with on fuel to do it, that’s, you know, so be it.

Now, I, you know, if this remains protracted, maybe that changes a little bit on the FBO side. From our perspective, again, unless this becomes a permanent, you know, higher than $100, barrel oil and, you know, aviation just, it kind of falls out of favor over time, I’m, I suppose that could happen. I don’t foresee it.

Kate, Conference Operator, Sky Harbour Group Corporation: Your next question from Pete. What are the 2026 guidance assumptions to achieve revenues of $42 million-$46 million and adjusted EBITDA of $4 million-$6 million?

Francisco Gonzalez, Chief Financial Officer (CFO), Sky Harbour Group Corporation: Yes, thanks for the question. Yes, our main assumptions is that Opa-Locka phase 2 that just opened this week, it will continue to move from the 68% occupancy towards 100% occupancy. We’re not, You know, we’re not including revenues beyond that 100% occupancy. We also are including in the assumptions that both Denver and Phoenix will continue the trajectory towards 100% occupancy as well by the end of the year. Again, as I mentioned in the prepared remarks, we’re not including there the contributions from Bradley or Addison 2.

One last comment, just to reiterate what I said earlier, that we in finance are If the lawyers allow us to give 2027 and 2028 guidance, we’ll provide that because this company, and with all the projects that we have broken ground on and about to break ground, as Tal showed in the picture, are gonna be in construction in the next year and a half. It’s really 2027 revenues and 28 revenues and EBITDA that really are the things that people need to be focused on and not what happens in 2026. Obviously, trajectory matters, and keeping these guidances and these milestones makes sense.

In terms of the cash flow potential of this platform, it’s really gonna be shown in 2027 and 2028, both on the back of the scaling of all these projects, and the resulting cash flows.

Kate, Conference Operator, Sky Harbour Group Corporation: I’d now like to turn.

Francisco Gonzalez, Chief Financial Officer (CFO), Sky Harbour Group Corporation: Yeah, go ahead.

Kate, Conference Operator, Sky Harbour Group Corporation: I’d now like to turn your call over to Francisco Gonzalez for closing remarks.

Francisco Gonzalez, Chief Financial Officer (CFO), Sky Harbour Group Corporation: Thank you, operator. It’s clear that there were more questions on the queue and that we ran out of time. Please reach out to us through [email protected]. I would be happy to answer them either via email or with a follow-up call. Also, additional information is available on our website at www.skyharbour.group. Again, we wanna thank you for your participation this afternoon. We have concluded our webcast, operator. Thank you.

Kate, Conference Operator, Sky Harbour Group Corporation: Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.