Mr. Kent Jacobs reports

FLYHT REPORTS THIRD QUARTER 2023 RESULTS

Flyht Aerospace Solutions Ltd. has released its financial results for the third quarter ended Sept. 30, 2023 (Q3 2023). All figures are Canadian dollars unless otherwise stated.

Management commentary

"Flyht delivered solid results in Q3 2023, as demonstrated by our double-digit growth in SaaS and technical services and triple-digit growth in hardware," said Kent Jacobs, president and interim chief executive officer of Flyht. "The reported licensing revenue decline is due to last year's large OEM order not being repeated. These results affirm that our solutions are in demand as the aviation industry recognizes the need for improved efficiency, profitability and a more sustainable environment."

Continued Mr. Jacobs: "We continue to make significant progress on our two main strategic growth initiatives, the AFIRS Edge and weather. As announced in the quarter, we have signed up airline partners to help launch the AFIRS Edge on both the Boeing 737 and A320 aircraft types, and just last week completed the installation and engineering tests on the A320. We are now working through certification testing before we submit our final package to Transport Canada as we seek the supplemental type certificate (STC). In our weather business, during the quarter, we signed agreements with the world's two largest meteorological agencies, the U.K. Met Office and NOAA, to collaborate and improve weather forecasting, which leverages the Flyht-WVSS-II water vapour sensor system in conjunction with the AFIRS Edge.

"At the same time, we are realizing the contributions of our MRO systems business CrossConsense, which landed a significant data management migration for a large flag carrier in Europe. This is the largest win for CrossConsense since we acquired the business last year."

Concluded Mr. Jacobs: "The entire Flyht organization is laser focused on delivering on the AFIRS Edge and Weather opportunities ahead of what we expect to be an exciting 2024. We are making great progress and will continue to source opportunities for growth to further scale the business."

Operating results

Revenue decreased by 24 per cent to $5,099,019 in Q3 2023 compared with Q3 2022. Excluding licensing, revenue would have increased 44 per cent year over year, driven by growth in SaaS (software as a service), hardware and technical Services.

SaaS revenue increased by 34 per cent to $2,787,664, driven by an increase in customers' flights and flight hours, as well as growth in weather-related software services. Licensing revenue decreased by 86 per cent to $494,573, due to a large order from a long-term OEM (original equipment manufacturer) customer that was not replicated in Q3 2023. Hardware revenue increased by 109 per cent to $1,001,817, with a total of 18 installation kits shipped in Q3 2023. Technical services revenue increased by 28 per cent to $814,965 as a result of data migration work delivered and an increase in customer requests for certification services.

Gross margin was 59 per cent of revenue in Q3 2023, compared with 72 per cent in Q3 2022. The decrease in gross margin was due primarily to changes in the mix of revenue sources during the quarter.

Operating expenses decreased by 11 per cent from Q3 2022, driven by a 25-per-cent decrease in administration expenses, a 14-per-cent decrease in research and development and certification engineering expenses, and a 1-per-cent increase in distribution expenses.

EBITDA (1) (earnings before interest, taxes, depreciation and amortization) loss totalled $430,865 in Q3 2023, compared with positive EBITDA of $924,680 in Q3 2022.

Net loss was $728,655 in Q3 2023, compared with a net income of $703,765 in Q3 2022.

Balance sheet and liquidity

Cash and short-term investments totalled $1,939,959 at Sept. 30, 2023, compared with $2,647,650 at Dec. 31, 2022. When compared with Q2 2023, cash and short-term investments of $1,719,904, the company's cash position increased by $220,055 quarter over quarter.

Trade and other receivables decreased by 26 per cent to $3,751,129 compared with year-end 2022, and trade payables and accrued liabilities increased by 0.9 per cent to $2,759,864 compared with year-end 2022.

Conference call information

Flyht will host a conference call to discuss its financial results for Q3 2023 on Friday, Nov. 10, 2023, at 7:30 a.m. MT (9:30 a.m. ET). The conference call will include prepared remarks followed by a question-and-answer session with Mr. Jacobs and chief financial officer Alana Forbes. To access the conference call by phone within Canada and the United States, the toll-free number is 1-800-319-4610. Outside Canada and the U.S., dial 1-604-638-5340.

Management will accept questions by telephone and e-mail. Individuals wishing to ask a question during the call can do so by pressing star and No. 1. Questions can be e-mailed in advance or during the conference call to investors@Flyht.com. An archive of the conference call will be posted on the investor communications section of Flyht's website following the meeting.

Additional information

Flyht's Q3 2023 report, which contains more detailed information including the CEO's letter to shareholders, management's discussion and analysis, and financial statements, can be accessed on the company's website. The MD&A and financial statements have also been filed with SEDAR+.

About Flyht Aerospace Solutions Ltd.

Flyht provides airlines with actionable intelligence to transform operational insight into immediate, quantifiable action and delivers industry-leading solutions to improve aviation safety, efficiency and profitability. This unique capability is driven by a suite of patented aircraft certified hardware products. These include AFIRS, an aircraft satcom/interface device, which enables cockpit voice communications, real-time aircraft state analysis and the transmission of aircraft data while inflight. The AFIRS Edge is a state-of-the-art 5G wireless quick access recorder (WQAR), aircraft interface device (AID), and aircraft condition and monitoring system (ACMS). The Edge can be interfaced with Flyht's TAMDAR probe or the Flyht-WVSS-II relative humidity sensor to deliver airborne weather and humidity data in real time.

CrossConsense, Flyht's wholly owned subsidiary, offers highly skilled services to the commercial aviation industry and provides preventative maintenance solutions. These include: Aircraft Fleet View, a native application that gives a real-time view of airline fleet status; AviationDW, a managed data warehouse for enhanced business intelligence; and ACSIS, a visualization and predictive maintenance alerting tool.

Flyht is headquartered in Calgary, Canada, and is an AS9100 Quality-registered company. CrossConsense, located in Frankfurt, Germany, is an ISO9001-certified operation.

(1) EBITDA is a non-GAAP (generally accepted accounting principles) financial measure. EBITDA is provided to aid in analysis and profitability comparisons among companies and industries, by segregating operating results from the effects of financing and capital expenditures.

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