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Greetings, and welcome to flyExclusive, Inc.'s first quarter 2026 earnings call. At this time, all participants are in a listen-only mode. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. I will now turn the call over to Chris Neal with marketing. Thank you, Chris. You may begin.

Thank you, operator. Good evening, and thank you for joining flyExclusive's first quarter 2026 earnings conference call. Joining me on the call today is Jim Segrave, flyExclusive's Founder and Chief Executive Officer, and Brad Garner, our Chief Financial Officer. We announced fourth quarter and year-end financial results this morning before the market opened, along with the filing of our Form 10-Q for three months ended March 31st, January or March 31st, 2026. We'll be providing certain non-GAAP information during today's discussion. Important disclosures about this information and a reconciliation of the non-GAAP information to comparable GAAP information is included in our Form 10-K filed with the SEC and is available on our investor relations website. In addition, this discussion might include forward-looking statements.

Actual results might differ materially from any number of reasons, including risk factors described in our annual report on Form 10-K, in our quarterly reports from Form 10-Q, and in the press release covering forward-looking statements. Rather than rereading this information, we are going to incorporate it by reference in our prepared remarks. With that, let me turn the call over to Jim Segrave.

Thank you, Chris, and thank you to everyone joining us this afternoon. The first quarter of 2026 was another important proof of concept point for flyExclusive. For the better part of two years, I have told the market that we were in the middle of a structural transformation, and that when the transformation was complete, the financial results would reflect it. The first quarter continues to validate that thesis. We generated approximately $96 million in total revenue during the quarter, representing year-over-year growth of approximately 9%. We delivered positive adjusted EBITDA for the first time in the first quarter of the year. That result was not accidental, and it was not a function of favorable seasonality. In fact, it was in spite of seasonality, as the first quarter is historically the industry's most challenging.

The company, like the entire aviation industry, was also negatively impacted by multiple major winter weather systems that shut down most of the East Coast for several days each. In the face of this, the company still improved year-over-year EBITDA by $6.6 million, representing an over 100% increase compared to 1Q 2025. Our performance exceeded even our own internal forecast as well as analyst forecasts. This was the result of a more efficient fleet, disciplined operations, and an increasingly high-quality revenue base. Long-term debt was reduced another $10 million in the first quarter, adding to the $86 million total reduction in 2025. The company now operates approximately $522 million of aircraft overall, but has reduced the directly owned portion down to $145 million.

This, in part, represents our shift to the much more capital-efficient, fractionally owned aircraft business. Debt on the directly owned fleet is approximately $112 million, resulting in roughly $33 million of equity in these aircraft. Let me spend a few minutes on what I believe are the most important things from the quarter. First, the fleet transformation is essentially complete, and the impact on operating performance is unmistakable. At the beginning of 2024, we had 37 non-performing aircraft generating operating losses in excess of $3 million per month across the system. As of the end of the first quarter, we reduced that count to just six aircraft, and the aggregate operating loss from those remaining aircraft was less than $250,000 per month.

That is a reduction of more than 90% in the financial drag associated with legacy aircraft, this has been one of the single most consequential operational and financial improvements we have made as a company. By the end of the second quarter, we expect to eliminate three more of these aircraft, cutting the monthly loss to under $100,000. The aircraft we have added to replace those legacy units, primarily Challenger 350s, CJ3s, and XLS aircraft, are performing exceptionally well. They fly more reliably and cause less schedule disruptions. They require less unscheduled maintenance. Customers much prefer them, they generate meaningfully better economics per flight hour than the aircraft they replaced. The quality of our fleet today is categorically positively different from where we were 18 months ago, that difference is increasingly evident in our financial results.

For some additional context, the unencumbered contribution numbers on average are 27% for every CJ3 and XLS Plus we add to the operation, and 39% for every Challenger. We have now proven our transformation plan will deliver the financial performance we forecasted. Second, dispatch availability continues to improve, and I want to be clear again about why this matters. Dispatch availability improved approximately 7.6% year-over-year. At our current fleet scale, every one percentage point improvement in dispatch availability translates to approximately $2.5 million of annual bottom line contribution. The 7.6 improvement we delivered in the first quarter represents the equivalent of roughly $19 million of annualized EBITDA opportunity relative to where we were a year ago, and we are expecting to deliver much more than this in 2026.

The work we have done on fleet modernization, vertically integrated maintenance, and Mobile Service Unit expansion is directly responsible for this improvement. Speaking of the Mobile Service Units, we intend to over double this fleet to 30 units over the next 12 months. We expect this to reduce our maintenance costs and further increase our dispatch availability. We also plan to make the MSUs available to third-party customers, which will generate a new profitable revenue stream for us. Third, our contracted and recurring revenue programs continue to strengthen. Approximately half of our revenue in the first quarter was derived from contractually committed demand, fractional, Jet Club, and partner programs. This is strategically significant for several reasons. It improves revenue predictability, it enhances our ability to plan fleet deployment and improves maintenance scheduling.

It supports pricing discipline, and it keeps the kind of long-term customer relationships that are difficult for customers to replicate. Members contributing to revenue in the first quarter exceeded 1,000 members, marking our eighth consecutive quarter of membership growth. That consistency is meaningful. It tells us the product is working, that customer satisfaction is high, and that word-of-mouth and retention dynamics within the program are working as we would expect for a premium aviation brand. Fractional sales, a segment we have been actively investing in, were particularly encouraging during the quarter. Retail fractional share sales increased approximately 47% year-over-year, with fractional revenue growing approximately 5% on a GAAP basis. The reinstatement of 100% bonus depreciation has materially accelerated customer interest in fractional ownership, and the pipeline we are seeing for the balance of the year in part reflects that dynamic.

The Challenger 350 platform in particular continues to be a standout performer for the fractional and club programs. Customer retention on this aircraft type is exceptional. Stage lengths are longer, average revenue per trip is higher, and the profile of customers engaging with the platform is exactly what we want: high value, long tenure, and deeply engaged with our service ecosystem. Fourth, our MRO business continues to gain momentum. External MRO revenue increased approximately 14% year-over-year, driven by expanding demand for our products, avionics, interiors, and Starlink installation capabilities. We recently became a Starlink authorized dealership, which we believe positions us well to capture a growing revenue stream as connectivity upgrades become a standard expectation among high-net-worth aviation customers. Our vertically integrated maintenance platform is a primary differentiator of our operating model, and we believe the external MRO business has a long runway for growth.

Few operators in the private aviation space have the in-house capability, physical infrastructure, and licensing to serve the range of maintenance, avionics, and completion needs that we can address. As external demand continues to scale, this business will increasingly contribute to both revenue and margin while continuing to serve our in-house needs. Fifth, I want to address the macroeconomic backdrop directly because I know this is a topic of investor focus. The current global environment is frankly complex. Fuel costs have moved significantly higher. Broader market volatility has increased. Geopolitical uncertainty, including developments in the Middle East, have created incremental caution in certain aspects of the economy. We have not, however, seen any demand disruption within our customer base. In fact, our revenue and flight hours for the second quarter will significantly exceed first quarter results.

We are halfway through the quarter and expect to deliver around 15% top-line growth quarter-to-quarter. There are a few reasons for that. First, within our contracted programs, fuel costs are passed through to customers, either directly or through defined surcharge mechanisms. We are not absorbing fuel price increases as a margin headwind within the fractional and Jet Club programs. Second, the customers we serve are among the most economically resilient in the world. Our fractional and club members are typically ultra-high-net-worth individuals and corporate accounts for whom private aviation represents a productivity tool and a lifestyle priority, not a discretionary expenditure that gets scrutinized in periods of market softness. The data we have seen through April continues to support this view. Booking activity, utilization trends, and member engagement have all remained healthy. That said, we remain clear-eyed about the external environment.

We are not dismissing broader macro risks, Based on everything we can see today, we do not believe the current environment represents a material headwind to our near-term financial performance. Sixth, finally, let me say a few words about where we are going. The transformation phase of this company is largely behind us. We are now in the execution phase, that is an entirely different and more straightforward operating mode. Our job now is to continue improving utilization, continue growing the fractional and Jet Club programs, continue expanding the MRO, continue translating operational improvement into financial results. We are adding aircraft thoughtfully and expect approximately 20 aircraft will join the fleet in 2026, consisting primarily of CJ3s, XLS Pluses, and Challengers.

Each aircraft we add has been underwritten at attractive economics, and each aircraft has the benefit of being added to a platform that is already operating efficiently rather than one that is still working through structural transformation. We expect to close the Jet.AI transaction next month, which also includes deposits on three Citation CJ3+ positions, with Textron delivering early in 2027. The second tranche of the Volato transaction closed in the first quarter, which brought the mission control scheduling and optimization platform, being rebranded as Contrails, into our ecosystem. The Contrails platform, in particular, has the potential to be a meaningful operational differentiator, allowing us to optimize scheduling, improve trip fulfillment rates, and provide network-sharing infrastructure for third-party operators.

We receive over 500 trip requests per day, and our ability to fulfill a greater share of those requests is directly tied to our scheduling efficiency and network. We expect to close the final part of the Volato transaction, the empty leg subscription business, over the next quarter. I want to close my remarks by thanking our team, our pilots, maintenance technicians, dispatchers, member service professionals, sales organization, and all of our administrative and support personnel. You are the reason these results are possible. This is a complex operational business, and the level of execution this team has demonstrated over the last two years is something of which I am genuinely proud of. To our shareholders and customers, thank you for your continued confidence in flyExclusive. With that, I'll turn the call over to Brad.

Thank you, Jim, and good evening, everyone. Our fleet modernization initiative, improved dispatch availability, higher aircraft utilization, disciplined cost management, and the continued growth of our contracted revenue programs all contributed meaningfully to the quarter. Similar to what we discussed throughout 2025, we believe the key takeaway from this quarter is not simply the growth itself, it's the quality and the efficiency of that growth. We continue to generate more revenue, more flight activity, and significantly more profitability from a smaller, more efficient, and higher-performing fleet. That operational leverage is becoming increasingly visible in our financial results. FlyExclusive generated approximately $96.3 million in consolidated revenue during the first quarter of 2026, representing a year-over-year growth of approximately 9% compared to the first quarter of 2025. Revenue growth remained diversified across the business.

Flight revenue, which represents the core of our business, increased approximately 9% year-over-year to $92.5 million, supported by stronger utilization, improved aircraft availability, healthier fleet mix, and continued strong demand across both retail and wholesale channels. Importantly, this growth was achieved while continuing to operate a smaller fleet than a year ago, as we completed the vast majority of our fleet modernization initiative. Flight hours for the first quarter were up 7% compared to Q1 of 2025, totaling 18,537 hours. As a reference point, while Q1 is historically the slowest quarter of the year, this represents the third-largest volume quarter in company history. That speaks directly to the productivity improvements we've achieved across the fleet.

Our utilization, measured on our core operating fleet of CJ3s, XLSs, and Challengers, averaged 75 hours per aircraft per month in the first quarter, up about 15% from 65 hours in Q1 of 2025. We believe there remains additional runway to realize further increased utilization as we continue to layer in newer, more capable aircraft, expand dispatch availability, and integrate and leverage the rebranded Contrails software platform we acquired in the Volato AMS agreement. On revenue mix, approximately half of our revenue base is now derived from contractually committed programs, including fractional, Jet Club, and partnership relationships. This mix continues to shift favorably, and we view that trajectory as strategically and financially important. Contractually committed revenue improves yield visibility, enhances our ability to pre-position maintenance resources, and supports pricing durability relative to spot market dynamics.

Within our wholesale business, revenue grew to approximately $50.9 million in the quarter, an increase of 24% year-over-year. Wholesale continues to serve as a critical utilization maximizer for the fleet. We manage this channel actively to ensure we're balancing the margin optimization against fleet productivity, and we continue to believe the wholesale channel is both structurally important and financially complementary to our retail programs, especially as we transition in 2026 into a fleet growth mode with younger, more efficient aircraft. GAAP fractional revenue increased approximately 5% year-over-year.

However, as we've noted previously, the GAAP recognition of fractional revenue does not always capture the full activity picture in a given quarter. On a retail sales basis, which includes fractional shares sold and flight funds deployed, total fractional retail activity increased approximately 27% year-over-year, with fractional shares sold in the quarter up 47% from Q1 of 2025. Total fractional retail sales reached approximately $14 million in the quarter. The demand pipeline for fractional remains strong, particularly on the Challenger platform, and we believe full-year fractional activity will continue to outperform 2025 levels. Jet Club sales totaled approximately $25.8 million in Q1, with renewal activity of $16.6 million and new member sales of over $9 million. Member retention remains healthy and new member acquisition trends are consistent with the prior several quarters.

As Jim mentioned, total members contributing to revenue in the quarter reached over 1,000 members, marking the eighth consecutive quarter of member growth. Lastly, during the quarter, our MRO reported external revenue of approximately $2 million, representing a year-over-year growth of approximately 14%. As Jim noted, the Starlink installation program and expanded external demand across our paint, avionics, and interior capabilities are driving incremental growth. We continue to view the external MRO business as a high-margin, capital-light, incremental revenue stream, and we expect full-year external MRO revenue to continue to compound meaningfully. Turning to profitability, contribution margin in the quarter was approximately 50.5% compared to 46.9% in Q1 of 2025, a roughly 360 basis point improvement year-over-year.

The increasing contribution margin reflects not only better gross economics per flight, but also the favorable shift in revenue mix towards higher yield contracted demand. Gross profit increased approximately 69% year-over-year to $19.1 million during the quarter. Gross margin for the quarter was 20%, an expansion of roughly 700 basis points compared to the first quarter of 2025. The expansion in gross margin reflects the compounding benefit of several structural improvements. First, the continued reduction in non-performing aircraft drag. As Jim mentioned, the operating loss from those aircraft declined from a peak of over $3 million per quarter to under $250,000 by the end of Q1 of 2026. That improvement flows directly through the gross margin line. Second, the improved fleet mix.

Newer aircraft carry lower unscheduled maintenance costs and higher dispatch availability, both of which reduce the cost of generating a given unit of flight revenue. Third, utilization improvement. With 75 hours per aircraft per month on the core fleet versus 65 a year ago, we're spreading fixed operating costs over a larger revenue base, generating meaningful incremental margin from the same cost structure. Fourth, the ongoing benefit of our vertically integrated MRO capability, which continues to reduce reliance on third-party maintenance providers, lowering our costs and accelerating our return to service of aircraft. As we've highlighted historically, dispatch availability is a key performance indicator of our operational efficiency.

In Q1 of 2026, dispatch availability increased approximately 760 basis points compared to the prior year as the benefits from the removal of the non-performing aircraft and the addition of newer Challenger CJ3 and XLS aircraft continue transforming our fleet. The impact of that improvement cannot be understated. Each 1% improvement in DA at our current fleet size represents annual improvement in contribution of $2.5 Million. As we've consistently emphasized, our ability to produce higher utilization, stronger dispatch availability, and greater revenue productivity per aircraft is where the operating leverage in this model becomes increasingly powerful. Importantly, these improvements were not driven by a single event or temporary benefit.

Rather, they are the direct result of the strategic initiatives we have been executing over the last two years: modernizing the fleet, eliminating operational inefficiencies, leveraging our integrated platform, improving scheduling and maintenance execution, and building a more scalable infrastructure. We continue to believe there remains additional runway for operational leverage and margin expansion as utilization continues to improve and the remaining legacy drag is fully eliminated. SG&A expense for the quarter was approximately $22.7 million, representing 24% of revenue. On an absolute basis, SG&A increased modestly year-over-year, primarily reflecting some seasonal timing and one-time non-cash costs. Revenue per SG&A headcount in the quarter was approximately $481,000, up 9% year-over-year. We continue to view SG&A leverage as an important component of our path to sustained profitability.

As revenue scales supported by additional aircraft, growing membership, and an expanding MRO, we expect the fixed cost component of SG&A to generate increasing operating leverage throughout 2026. flyExclusive reported positive adjusted EBITDA of approximately $200,000 in the first quarter. This compares to an adjusted EBITDA loss of approximately $6.4 million in Q1 of 2025, an improvement of $6.6 million on an absolute basis year-over-year. Adjusted EBITDA margin for the quarter was approximately 0.2% compared to -7.2% in Q1 of 2025, a year-over-year improvement of 740 basis points. As we've highlighted, the first quarter is historically the slowest period of the calendar year for private aviation, as leisure demand moderates post holidays and corporate activity is slower in January and February.

Our first quarter's results further validate the trajectory and scalability we've outlined throughout 2025. Over the last eight quarters, we have consistently improved profitability through revenue mix improvement, fleet optimization, operational execution, and disciplined cost management. Turning to our balance sheet and liquidity position. We ended the first quarter of 2026 with cash and cash equivalents of approximately $18.7 billion. We expect cash to build through the stronger seasonal quarters and as we complete the Jet.AI acquisition in Q2 following the S-4 registration statement being declared effective by the SEC just a few weeks ago. We continue the progress we achieved in 2025 during the first quarter of deleveraging our balance sheet. We reduced our long-term notes payable by approximately $10 million during Q1 of 2026. Since the beginning of 2025, we've reduced our long-term notes payable by roughly 40%.

This consistent deleveraging reflects both our operational cash generation progress and our disciplined approach to capital allocation. We continue to prioritize balance sheet health alongside fleet investment, and we believe our trajectory on debt reduction is meaningful to the company's longer-term equity story. On our ATM facility, we have currently approximately $98 million of availability remaining under our equity offering program. We view the ATM as a strategic tool that provides optionality and flexibility rather than as a primary source of capital. We have not been aggressive in deploying it, and we intend to continue using it judiciously, specifically to support accretive fleet additions, reduce debt where appropriate, and enhance liquidity if and when the risk-adjusted returns on doing so is favorable.

Let me also offer a few comments on cost trends that I think are important as we continue to gain scale and operational efficiencies in our platform. Fuel costs have increased year-over-year, largely in response to global geopolitical factors. Within our co-contracted programs, fuel increases are passed through to customers through defined surcharge mechanisms, so the net margin impact within fractional and Jet Club is marginal and manageable. Within our wholesale channel, fuel represents a more direct cost input, and we manage our pricing in that channel to reflect current fuel economics in a real-time manner. We do not, however, use fuel as a profit center, and we don't attempt to expand margin through fuel surcharges beyond cost recovery. Aircraft maintenance costs per flight hour have continued to trend favorably as the fleet mix improves.

Newer aircraft, on average, carry meaningfully lower unscheduled maintenance cost profiles than the legacy aircraft they're replacing. Our MRO vertical integration continues to provide cost insulation relative to operators who rely entirely on third-party maintenance providers, particularly in a market where MRO capacity is constrained. Looking ahead, we remain highly encouraged by the operational trends and financial trajectory of the business entering the historically stronger quarters of the year. As such, I want to provide some directional commentary. We're not providing formal full-year guidance, and I want to be clear about why. Visibility in our business, while improving as our contractually committed revenue mix grows, still has inherent limitations driven by seasonality, macroeconomic dynamics, and the timing of aircraft additions and transitions. Given those constraints, we believe it would not be appropriate to provide specific financial targets at this time.

With that said, I do want to provide a few observations. Every quarter of 2026 is expected to outperform the corresponding quarter of 2025 on revenue, adjusted EBITDA, and flight hours. That expectation is grounded in the structural improvements we've already delivered: a more efficient fleet, higher dispatch availability, and stronger utilization per aircraft. The seasonal pattern should produce progressively stronger results relative to Q1, consistent with historical seasonality for the industry and for our business specifically. The combination of a modernized fleet, improving dispatch availability, growing contractually committed demand, increasing utilization, continued SG&A leverage, and the scalability of our vertically integrated operating platform positions us well for continued improvement moving forward. With the first quarter demonstrating that the transformation phase of the business is largely behind us, we're intensely focused on scaling a structurally improved platform.

We're operating from a position of significantly greater strength than at any point since becoming a public company. The operating model is more efficient, the fleet's materially stronger, the margins are growing, the quality and predictability of our revenue base continues to strengthen, and the liquidity flexibility is improving. Most importantly, first quarter's financial results are increasingly validating the long-term scalability and earnings power of our platform. As we continue through 2026, our focus remains consistent: disciplined execution, cost management, profitable growth, continued operational improvement, and sustained margin expansion. We believe the trajectory of the business continues to move decisively in the right direction, and we remain confident in our ability to continue to scale the platform while driving towards sustained profitability and longer-term shareholder value creation. Lastly, I'll echo Jim and thank our entire team across the organization.

From our pilots to our dispatchers, our technicians and maintenance controllers, to our member services team, to all of our operational administrative employees, thank you for your hard work, your dedication, your commitment to our customers and our shareholders. The transformation and progress we're delivering would not be possible without the collective execution of the entire organization. For our shareholders and analysts, thank you for your time and continued engagement in our story. We remain deeply focused on converting operational progress into sustainable financial performance, and we believe the trajectory of this business continues to move in the right direction. With that, I'll turn the call back to the operator.

Thank you. With that, ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time, and have a wonderful rest of your day.

Welcome to the flyExclusive fourth quarter and full year 2025 earnings conference call. At this time, all participants are in listen-only mode. As a reminder, this conference call is being recorded. If anyone should require operator assistance, please press star zero on your telephone keypad. It's now my pleasure to turn the call over to CJ Neale, Investor Relations. Please go ahead, sir.

Thank you, operator. Good afternoon, thank you for joining flyExclusive's fourth quarter and full year 2025 earnings conference call. Joining me on the call today is Jim Segrave, flyExclusive's Founder and Chief Executive Officer, and Brad Garner, our Chief Financial Officer. We announced fourth quarter and year-end financial results this morning before the market opened, along with the filing of our Form 10-K for the year-end December 31st, 2025. We'll be providing certain non-GAAP information during today's discussion. Important disclosures about this information and reconciliation of the non-GAAP information to comparable GAAP information is included in our Form 10-K filed with the SEC and is available on our investor relations website. In addition, this discussion might include forward-looking statements. Actual results might differ materially from any number of reasons, including risk factors described in our annual report on Form 10-K and our quarterly reports on Form 10-Q and in the press release covering forward-looking statements. Rather than rereading this information, we are going to incorporate it by reference in our prepared remarks. With that, let me turn the call over to Jim Segrave.

Thank you. Good morning, thank you for joining us. 2025 was a turning point for flyExclusive. Over the last two years, we made deliberate decisions to transform this company, modernizing the fleet, eliminating non-performing aircraft, restructuring costs, and raising our execution standards across the organization. Those decisions were not always easy, in the fourth quarter, the results validated the strategy. We delivered $105 million in fourth quarter revenue, up 15% year-over-year. We generated $6.8 million of positive Adjusted EBITDA, our first positive quarter since becoming a public company. That milestone matters, what matters more is how we achieved it. We didn't grow the fleet to get there. We improved the fleet, we executed at a higher level across the board. Let me walk through what changed last year. We removed 28 non-performing aircraft.

We added 7 highly profitable aircraft. Overall, we flew 13% more flight hours while operating 14% fewer aircraft. Our revenue was up 15% to $376 million for the year. Our gross profit was up 53%. In 2025, we flew over 74,000 flight hours, including over 20,000 in the fourth quarter. We are now the number 1 charter operator in the United States and the overall number 3 operator when including fractional turboprop and management operators. Core fleet utilization increased approximately 23% per aircraft to an average of 73 hours per plane over the full year. We achieved this performance in the face of all the non-performing aircraft we have been eliminating. Dispatch availability improved roughly 7% year-over-year.

Let me remind you that every 1% improvement at our current size translates to $2.5 million per year on our bottom line. To drive this initiative, we put 12 mobile service unit maintenance trucks in place late in 2025 and expect to double this fleet over the next 6 months. Adjusted EBITDA margin improved nearly 1,500 basis points. This is not a seasonal or cyclical improvement. This is structural improvement. We removed drag from the system, and the system responded. SG&A, as a percentage of revenue, declined approximately 10%, generating more than $8 million in annualized savings. Revenue per SG&A employee increased approximately 28%, generating $1.9 million per person, and revenue per employee overall increased 15% to $800,000 per person.

Contractually committed demand hours from our fractional club and partner programs increased approximately 33%. All on a fleet size 14% smaller. Operating losses from the non-performing aircraft fleet declined from more than $3 million per month at the beginning of 2024 to approximately breakeven today. The reset is largely complete. We are far from done. Now we scale from strength. Before moving forward, I want to recognize our team. We asked this organization to execute with discipline, focus, and a willingness to change. They delivered. They didn't just improve results. They changed the trajectory of this company. Every department executed, from accounting to flight control, maintenance control, technicians, pilots, sales, services, and the management teams. The fourth quarter was an example of what great teamwork across the board looks like. I'm incredibly proud of what we have accomplished.

I also want to thank our investors for their continued support and trust. We are all focused on delivering results for you and our customers. Looking forward, while not providing formal long-term guidance, I want to be clear about our trajectory and future direction. First quarter 2026 will soundly exceed first quarter 2025, but it will not exceed our fourth quarter 2025 results, as the fourth quarter is always our strongest quarter and we executed exceptionally well. As we look forward quarter by quarter, we expect every quarter of 2026 to meaningfully outperform the corresponding quarter of 2025. To put a little historical context on this, over the last 8 quarters, we have improved our profitability every quarter by an average of $3.7 million per quarter. That is the trajectory we are on.

We are continuing to execute, and with the drag of the non-performing fleet behind us, fully expect to grow the number of aircraft flight hours and improve every financial performance metric in 2026, just like we did in 2025. Let me ground these expectations in some numbers. In the first quarter of 2025, Adjusted EBITDA was a negative $12.5 million and management Adjusted EBITDA was a negative $6.4 million. Today, more than two-thirds of the way through the first quarter of 2026, we believe it's appropriate to provide some directional commentary. Based on the current performance trends, we expect to reduce our first quarter 2026 loss by approximately 50% compared to the first quarter of 2025, continuing the positive trajectory we have been delivering over the last 2 years.

This improvement reflects structural change, improved fleet economics, higher utilization, lower SG&A and stronger demand from every revenue channel. We expect to improve our dispatch reliability another 10% in 2026, which will translate to another $25 million in annualized bottom line performance improvement. We expect to increase our revenue per SG&A employee more than 15% to well more than $2 million per employee in 2026. This is not formal guidance. It's simply transparency around our trajectory and our momentum. The momentum is clearly moving in the right direction. With the fleet reset largely complete, we are focused on disciplined growth. The government shut down late last year that delayed our plan to reach 10 Challenger aircraft by year-end 2025. Since then, aircraft 8 and 9 were added in January and aircraft 10 just arrived 10 days ago.

In 2026, we expect to add approximately 20 , XLS, and Challenger aircraft. With these additions, the average age of our fleet will continue to reduce in age. Utilization, along with dispatch reliability, will continue to increase with these more reliable aircraft. Economics will also continue improving. We expect flight hours to grow again by more than 15% in 2026 and reach an annualized run rate of more than 100,000 hours by year-end. Today, flyExclusive is the number-one jet charter operator in the United States based on hours flown and the third largest overall, and we fully expect to continue our growth going forward. In Q4, we closed the first half of the Volato transaction, acquiring their aircraft sales division for $2.1 million. That acquisition contributed approximately $5.7 million in bottom line improvement.

Before the end of Q2 2026, we expect to close the second half of the Volato transaction. This second half brings the scheduling and optimization software platform they internally call Mission Control into flyExclusive, as well as the cash flow positive Vault empty leg program. Mission Control is an aircraft charter operator-focused scheduling and optimization platform designed specifically for operations like ours. It includes an optimization engine along with AI scheduling, closing, and workflows that will substantially improve operations and profitability as it is fully implemented in the coming months. Vault is a subscription-based software service that provides access to empty legs. This business was launched less than two years ago by Volato and has been rapidly expanding its client base. We expect immediate contribution from this part of the acquisition as soon as it is closed in the coming months.

The big news around this second half of the transaction is we plan to make the scheduling and optimization system available to all operators, and we intend to offer this access at no cost. The value for us is not selling scheduling software. The value is improving network efficiency. If operators can securely share aircraft availability without sharing or compromising customer identities or proprietary data, we believe the entire industry can find demand, source lifts when needed, and execute their flights more efficiently. For flyExclusive, this means we can sell more flights and deliver a more optimized schedule with confidence, especially with the ability to source internally and externally more effectively. We also receive over 500 trip requests every day, over half of which we are unable to sell and source. This software will allow us to fill more of these requests, potentially generating substantial additional revenue.

As we continue to develop this system, we will leverage our operational expertise and deep experience in this business to deliver the best scheduling system in the space. Just for clarification, this is not a long-term goal. We expect to execute on this over the coming months. In fact, we are working hard to be able to show the beta version of the system at the NBAA Schedulers & Dispatchers Conference later this month. To summarize, this will increase our sales, improve the customer experience, improve our utilization, and optimize our schedule. It will do this for any operator who wants to eliminate their scheduling software costs. The push into the technology space, fully leveraging AI and our operational experience has the potential to be a game changer for flyExclusive. Now onto our balance sheet and capital planning for growth.

Our ATM is now fully in place. We have now exceeded the baby shelf restriction that requires a minimum $75 million of public float market cap. This gives us flexibility to support future growth while continuing to reduce debt, both of which we expect to deliver in 2026. Speaking of debt, we reduced our long-term debt in 2025 by approximately 36%, representing an $84 million reduction, while maintaining our year-end cash position compared to 2024. In 2026, we expect to add approximately 20 aircraft to our fleet to continue reducing debt, deliver full-year EBITDA profitability, increase cash and improve liquidity, at the same time, reduce fleet age. In the first quarter of 2026, we have already removed three additional non-performing aircraft and have a few remaining operating at breakeven.

We have added another Challenger 350. We will close on another Citation XLS+ later this month for our fractional program. We have already reduced our debt an additional $10 million between short-term and long-term elimination. Growth and discipline can coexist. We are proving that. On the connectivity front, by year-end, we expect every aircraft in our fleet will have high-speed internet installed, with the majority of them being the Starlink system. High-speed connectivity has become one of the most requested capabilities in private aviation. We believe this will create pricing power, increase demand for our products, and drive incremental work across our maintenance, avionics, paint, and interior businesses. Few operators can deliver this vertically integrated solution. We can.

In fact, we just finished our first Starlink installation in just nine days, a week ago, and the pipeline of customers already exceeds the speed at which we can acquire the hardware. Starlink has built an incredible system that customers now expect in their aircraft, and we are excited to now be a dealer for this product. Two thousand and twenty-five proved our business plan and model works. Two thousand and twenty-six is about compounding that progress. We're excited about the trajectory, but we are far from done. Execution remains critical. Discipline remains non-negotiable. The momentum is real. Now we scale it. Now I'll turn the call over to Brad.

Thank you. I'll begin by reinforcing Jim's comments that the fourth quarter and full year 2025 represented another decisive and positive step in the transformation of flyExclusive. What we're now seeing is not episodic improvement. It's the result of intentional structural change. The fleet modernization is being executed, the cost base is being right-sized, the revenue mix is improving in quality, and the operating leverage in our model is increasingly evident. The progress we delivered in 2025 reinforces our belief that the trajectory of this business is sustainable and accelerating. Let me begin my review of the summary financials for the fourth quarter and full year. Revenue for the fourth quarter totaled $104.3 million, which is a 14% increase over Q4 of 2024.

For the full year of 2025, revenue expanded 15% to $375.9 million. Importantly, and largely as a result of removing non-performing aircraft during 2025, we delivered this growth with a fleet that is 14% smaller than it was a year ago. This is proof that the quality of our fleet and the leverage in our model are both improving and real. Revenue growth was strong and broad-based across each charter, fractional, and MRO. Charter flight revenue topped $98 million in Q4 of 2025, an increase of 13% year-over-year. Flight hours for the fourth quarter also increased 13% to approximately 20,400, as compared to the same period in the prior year.

For the full year, flight hours increased 12% to nearly 75,000 hours, which, as Jim referenced, places us as the 3rd-largest private operator in the United States. As we've highlighted historically, we have intentionally focused on slowly shifting our revenue mix towards contractually committed demand. For the full year of 2025, our fractional and jet club programs increased approximately 33% year-over-year. Members contributing to revenue in 2025 were approximately 1,300, an increase of 9% compared to 2024. This continued product mix shift towards recurring contracted programs enhances predictability, improves pricing durability, and stabilizes margins. Our wholesale business, which is and will continue to be foundational to maximizing our fleet utilization, grew to $185.5 million in full year of 2025, an increase of 7% compared to the prior year.

As we transition in 2026 to a fleet growth mode with younger, more efficient aircraft, we will continue to optimize both our retail and wholesale channels to maximize productivity and margin per aircraft. Fractional revenue, driven by the expanding fractional offerings of our Challenger fleet additions, the popular CJ3 and XLS inventory, and the reinstatement of bonus depreciation drove a 21% increase compared to fourth quarter of 2024. For the full year, fractional sales revenue increased nearly 56% compared to prior year. With the addition of Challengers to the fractional fleet, fractional share sales increased 26% compared to the prior year, generating approximately $60 million in fractional retail sales. For the fourth quarter of 2025, our MRO reported external revenue of approximately $2.9 million, up 52% from fourth quarter of 2024.

For the full year, the MRO reported an increase of 48% compared to prior year. With the world-class capabilities of our in-house MRO operations, spanning from paint to interiors to maintenance and avionics, which is especially enhanced by our recent Starlink authorized dealership announcement, we expect aggressive continued growth in 2026 for our MRO. Turning to profitability. Gross margin for the fourth quarter of 2025 was 18%, and for the full year was 15%, a 32% increase compared to full year 2024. This margin expansion reflects an improved fleet mix, higher utilization, increased dispatch availability, and disciplined cost control. Sequentially, margins improved each quarter, signaling a structural trend.

We expect our operating leverage to continue to expand as we complete the disposal of the remaining non-performing aircraft by the end of 2026, and we add more profitable CJ3s, XLSs, and Challengers to the fleet. As I've highlighted each quarter, we continue to drive meaningful scale in our cost structure. SG&A declined to 21% of revenue in the fourth quarter, a 616 basis point reduction compared to fourth quarter of 2024. For the full year, SG&A, as a percentage of revenue, declined to 22%, a nearly 600 basis point reduction and roughly $9 million in annual savings. We expect that the SG&A base will remain stable throughout 2026, and that SG&A, as a percentage of revenue, will continue to tighten as our revenue and top line accelerates.

The fourth quarter was monumental for flyExclusive as it marked the first quarter with positive Adjusted EBITDA of $6.6 million, representing an Adjusted EBITDA margin of 6%. Compared to the fourth quarter of 2024, we reported an improvement on a gross basis of over $13 million. As Jim mentioned, our strategic acquisition of Volato's aircraft sales division generated a Q4 profit of approximately $5.7 million. Even without that addition, flyExclusive generated positive Adjusted EBITDA in Q4 from our normal operations. That tells the powerful story of the structural transformation of our operations. For the full year, Adjusted EBITDA improved over $49 million, narrowing the loss to just $7 million. Adjusted EBITDA margin for the full year improved 1,531 basis points compared to 2024.

A transformation of this magnitude is not the result of a single lever, but rather the compounding effect of sustainable and sequential gains across growing customer demand, revenue mix, fleet modernization, aircraft utilization, cost discipline, and operational efficiency. The trajectory is clear and durable. Lastly, I'll conclude with several key updates on flyExclusive's ongoing effort to improve our liquidity and balance sheet flexibility. During 2025, we made significant progress on reducing our leverage. As Jim highlighted, we reduced our long-term notes payable by approximately $84 million, a 36% reduction year-over-year. Importantly, cash on hand increased despite this debt reduction, reflecting improved operating performance and disciplined cost management. In January, we utilized our shelf and raised $15 million in an offering at $6.65 per share. Additionally, as Jim mentioned, our ATM is now fully operational.

As we've highlighted in previous quarters, we have a merger agreement with Jet.AI that will not only provide operational synergies with the acquisition of their aviation operations, but will provide capital for growth and delevering of our balance sheet. We've extended the outside date for the completion of that merger agreement, which was delayed in part due to the government shutdown. We expect the deal to go to a Jet.AI shareholder vote shortly and close in early Q2, 2026. We also anticipate that we'll close the second tranche of the Volato acquisition, as Jim mentioned, which grants us the right to acquire the high-growth technology platform, including Vault, a subscription-based experiential travel app, providing access to empty legs and Mission Control, an AI-enabled flight management private aviation operation software.

We believe the acquisition of these assets and the IP related will enable flyExclusive to strengthen our vertical integration strategy and position us as a technological leader in the space. As we enter 2026, we expect to strengthen liquidity and provide additional flexibility to support our fleet growth and balance sheet optimization. Our capital structure today is materially stronger than it was just a year ago. All of which positions us to accelerate and build upon the transformation that we accomplished in 2025. As I close, I'd like to underscore those accomplishments. Over the past two years, we made difficult decisions, rationalizing the fleet, reducing structural costs, tightening execution standards, and rebuilding the foundation of the business.

Those decisions are now translating into measurable financial performance, increased operational efficiency, expanding margins, higher utilization, stronger recurring demand, and positive Adjusted EBITDA. We are operating with a fundamentally different fleet, a fundamentally different cost structure, and a fundamentally different level of discipline than we had just 12 months ago. That matters. Durable profitability in this industry is not achieved through growth alone. It's achieved through utilization, availability, mix, and cost control. We have improved in every single facet. Our business today is more predictable, it's more productive per aircraft, it's more efficient per employee, and it's better positioned to compound earnings. We remain focused on execution that will yield increasing market share and profitability. We're no longer correcting structural inefficiencies. We're scaling a refined platform. The heavy lifting of the transformation is behind us.

What lies ahead is disciplined growth built on a stronger base, and that's a very different company than the one investors saw just a year ago. Before I do turn it back to the operator, I wanna take a last moment to recognize the team behind these results. Transformations like the one we've executed doesn't happen by accident. It happens because of people. People willing to challenge processes, raise the bar, lead, and build systems that can support a company operating at a much higher level. We have not only improved our financial and operational performance, we have institutionalized the company, strengthening internal controls, establishing a disciplined reporting cadence, building the infrastructure required of a public company, and creating the processes that allow this organization to scale responsibly. To our team from finance, flight operations, maintenance, sales, customer service, and administration, thank you.

The progress we're reporting today reflects your discipline, professionalism, and commitment to building something exceptional. I'm incredibly proud of what this organization has accomplished, and am even more excited about what lies ahead. Thank you all again, and now I'll turn it back to the operator.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.