• Revenue: Increased 11.4% year-over-year in Q2 2024.

• Adjusted EBITDA: Positive $1 million, improved by $5.4 million from negative $4.4 million in the prior year period.

• Medical Segment Revenue: $38.3 million, up 11.5% year-over-year.

• Medical Segment Adjusted EBITDA: Increased 82.7% to $5.5 million.

• Medical Flight Margin: Increased 700 basis points year-over-year to 23.6%.

• Passenger Segment Revenue: Grew 11.3% year-over-year.

• Passenger Segment Adjusted EBITDA: Positive $0.8 million, improved from a loss of $2.1 million in the prior year period.

• Cash and Short-term Investments: $142 million at the end of the quarter.

• Share Repurchase: Approximately 80,000 shares repurchased under a $20 million program.

• Aircraft and Ground Vehicle Investments: Targeting 30%+ return on invested capital.

• Warning! GuruFocus has detected 2 Warning Signs with MIRM.

Release Date: August 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Blade Air Mobility Inc (NASDAQ:BLDE) reported its first positive adjusted EBITDA for Q2 2024, marking a significant milestone as a public company.

• Revenue increased by 11.4% year-over-year, with flight profit rising by 57.7%, showcasing strong financial performance.

• The medical segment achieved record high revenue of $38.3 million, with adjusted EBITDA increasing by 82.7% year-over-year.

• The company successfully closed on seven of the eight planned jet aircraft acquisitions, delivering over 30% returns on invested capital.

• Blade Air Mobility Inc (NASDAQ:BLDE) executed a $20 million share repurchase program, demonstrating confidence in its financial position and future prospects.

Negative Points

• The company decided to exit the Canadian market due to consistent unprofitability, indicating challenges in certain geographic expansions.

• There was a $5.8 million write-off related to the Canadian exit, impacting the financials for the quarter.

• Despite strong performance, the passenger segment still faces challenges, with the discontinuation of the Blade One seasonal jet service affecting revenue.

• The company acknowledged the inherent volatility in the jet and other non-flight revenue streams, which could impact future financial stability.

• Blade Air Mobility Inc (NASDAQ:BLDE) faces potential risks from economic downturns, although it believes its affluent customer base is more resilient.

Q & A Highlights

Q: Now that you've exited Canada, will the Passenger gross margin of 25% be the run rate going forward, considering seasonality? Also, what are the growth initiatives for airport and other partnerships? Lastly, was the $5.8 million impairment in G&A? A: The $5.8 million impairment flowed through G&A. Exiting Canada, which was a loss-making business, might slightly improve flight profit margins. The revenue was counter-seasonal, mainly in Q1 and Q4. Regarding airport growth, partnerships like the JetBlue deal and interline agreements with Emirates are driving passenger growth. We also have partnerships with Bilt credit card and Marriott hotels to boost traffic.

Q: Given the strong return profiles for aircraft and ground investments, how much more leverage can you potentially get from these assets? A: We see great returns from aircraft and plan to expand this program while remaining asset-light. Currently, only about 10% of our flying uses owned aircraft, so there's room for expansion. Ground vehicles are being added in areas with high density, with payback in less than a year. Expect low single-digit aircraft additions over the next 6 to 12 months.

Q: What are the learnings from the Canada exit, and how will this impact future acquisitions? Are there any attractive markets you would consider entering ahead of electric vertical aircraft (EVA) deployment? A: The Canada exit was due to a lack of recovery in business travel post-COVID. We focus on profitability and core markets like North America and Europe. Future market entries will depend on congestion and geographic factors. EVA deployment will be considered in markets like Paris and London, but these are long-term prospects.

Q: Can you elaborate on the trajectory of flight margins over the next 12 to 18 months, considering the different segments like owned aircraft and ground logistics? A: We aim for a 25% flight margin in Medical by year-end. Owned aircraft and organ placement services are performing well above this target. Ground logistics grew 50% year-over-year in Q2, and we expect continued growth in these high-margin areas.

Q: What's the plan for achieving profitability, and what is the expected timeline? A: We reaffirm our guidance for positive adjusted EBITDA in 2024 and double-digit adjusted EBITDA in 2025. We're expanding owned aircraft and ground services in Medical and optimizing pricing and routes in Passenger. Exiting unprofitable markets like Canada helps focus on core profitable areas.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.