New investment and deeper alignment with Delta
underscore company's improving position
NEW
YORK, Nov. 9, 2023 /PRNewswire/ -- Wheels Up
Experience Inc. (NYSE:UP) today announced financial results for the
third quarter, which ended September 30,
2023.
Third Quarter 2023 Highlights
- Revenue decreased $100 million
year-over-year to $320 million
- Adjusted Contribution increased $14
million year-over-year to $35
million
- Net loss decreased slightly year-over-year to $145 million, and includes a $56 million non-cash goodwill impairment
charge
- Adjusted EBITDA improved $27
million year-over-year to a loss of $19 million
"The strategic investment from Delta Air Lines, along with our
new partners, demonstrates their confidence in our operational and
commercial plan to deliver a compelling and differentiated
experience for our customers," said George
Mattson, Chief Executive Officer. "I look forward to
leveraging a deeper relationship with Delta and further integrating
our collective offerings to provide a truly seamless connection
between private and premium commercial travel."
"Despite the challenging year, we are proud of the progress we
have made on our operating and profitability goals and the renewed
market confidence resulting from the recently closed capital
infusion," said Todd Smith, Chief
Financial Officer. "Our on-time performance and controllable
interruption rates are improving, and the third quarter marked our
best profit performance since 2021."
Recent Initiatives
- Secured $450 million of new
capital backed by Delta Air Lines, Certares Management, Knighthead
Capital Management, and Cox Enterprises. In active conversations
with potential investors on remaining $50
million term loan.
- Appointed directors designated by majority owners who have
vested interest in long-term success of the company.
- Named longstanding Delta board member, George Mattson, as CEO to lead the company.
- Introduced new Up for Business program, offering a tailored
private aviation solution for small and medium-sized enterprises
jointly sold through Wheels Up and Delta sales organizations.
- Divested aircraft management business as part of previously
communicated plan to focus on core operations.
Financial and Operating Highlights
|
As of September
30,
|
|
|
|
2023
|
|
2022
|
|
%
Change
|
Active
Members(1)
|
10,775
|
|
12,688
|
|
(15) %
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
(In thousands,
except Active Users, Live Flight Legs and Flight revenue
per
Live Flight Leg)
|
2023
|
|
2022
|
|
%
Change
|
Active
Users(1)
|
11,988
|
|
13,339
|
|
(10) %
|
Live Flight
Legs(1)
|
16,581
|
|
21,025
|
|
(21) %
|
Flight revenue per Live
Flight Leg
|
12,945
|
|
13,266
|
|
(2) %
|
Revenue
|
$
320,063
|
|
$
420,356
|
|
(24) %
|
Net loss
|
$
(144,813)
|
|
$
(148,838)
|
|
3 %
|
Adjusted
EBITDA(1)
|
$
(18,529)
|
|
$
(45,229)
|
|
59 %
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
(In
thousands)
|
2023
|
|
2022
|
|
%
Change
|
Revenue
|
$
1,006,937
|
|
$
1,171,503
|
|
(14) %
|
Net loss
|
$
(406,272)
|
|
$
(330,637)
|
|
(23) %
|
Adjusted
EBITDA(1)
|
$
(107,747)
|
|
$
(141,546)
|
|
24 %
|
|
(1) For information
regarding Wheels Up's use and definition of this measure see
"Definitions of Key Operating Metrics and Non-GAAP Financial
Measures" and "Reconciliations of Non-GAAP Financial Measures"
sections herein.
|
For the third quarter:
- Active Members decreased 15% year-over-year to 10,775 offset by
a higher mix of Core members, primarily as a result of the
regionalization of our member programs and focus on more profitable
flying.
- Active Users decreased 10% year-over-year to 11,988.
- Live Flight Legs decreased 21% year-over-year to 16,581
reflecting a slowdown in the industry and our efforts to focus on
profitable flying.
- Flight revenue per Live Flight Leg was relatively consistent
year-over-year.
- Revenue decreased 24% year-over-year primarily driven by
reduced flight revenue and reduced aircraft sales.
- Net loss improved by $4.0 million
year-over-year to $144 million,
including a $56.2 million non-cash
goodwill impairment charge recognized during the quarter.
- Adjusted EBITDA loss improved by $26.7
million to $18.5 million,
reflecting our operational efficiency and other spend reduction
efforts, as well as one-time software license revenue and increased
gains on sales of aircraft.
About Wheels Up
Wheels Up is a leading provider of on-demand private aviation in
the U.S. and one of the largest private aviation companies in the
world. Wheels Up offers a complete global aviation solution with a
large, modern and diverse fleet, backed by an uncompromising
commitment to safety and service. Customers can access membership
programs, charter, aircraft management services and whole aircraft
sales, as well as unique commercial travel benefits through a
strategic partnership with Delta Air Lines. Wheels Up also offers
freight, safety and security solutions and managed services to
individuals, industry, government and civil organizations.
Wheels Up is guided by the mission to connect private flyers to
aircraft, and one another, through an open platform that seamlessly
enables life's most important experiences. Powered by a global
private aviation marketplace connecting its base of approximately
11,000 members and customers to a network of approximately 1,500
safety-vetted and verified private aircraft, Wheels Up is widening
the aperture of private travel for millions of consumers globally.
With the Wheels Up mobile app and website, members and customers
have the digital convenience to search, book and fly.
Cautionary Note Regarding Forward-Looking Statements
This press release contains certain "forward-looking statements"
within the meaning of the federal securities laws. Forward-looking
statements are predictions, projections and other statements about
future events that are based on current expectations and
assumptions and, as a result, are subject to known and unknown
risks, uncertainties, assumptions and other important factors, many
of which are outside of the control of Wheels Up Experience Inc.
("Wheels Up", or "we", "us", or "our"), that could cause actual
results to differ materially from the results discussed in the
forward-looking statements. These forward-looking statements
include, but are not limited to, statements regarding: (i)
the impact of Wheels Up's cost reduction efforts and measures
intended to increase Wheels Up's operational efficiency on its
business and results of operations, including the timing and
magnitude of such expected actions and any associated expenses in
relation to liquidity levels and working capital needs; (ii) Wheels
Up's liquidity, future cash flows and certain restrictions related
to its debt obligations; (iii) the size, demands, competition in
and growth potential of the markets for Wheels Up's products and
services and Wheels Up's ability to serve and compete in those
markets; (iv) the degree of market acceptance and adoption of
Wheels Up's products and services, including member program changes
implemented in June 2023 and the new
corporate member program introduced in November 2023; (v) Wheels Up's ability to perform
under its contractual obligations and maintain or establish
relationships with third-party vendors and suppliers; (vi) the
expected impact of any potential strategic actions involving Wheels
Up or its subsidiaries or affiliates, including realizing any
anticipated benefits relating to any such transactions or asset
sales, and any potential impacts on the trading market and prices
for the Company's Class A common stock, $0.0001 par value per share ("Common Stock"),
including due to future dilutive Common Stock issuances; (vii) the
impact of the goodwill impairment charges recognized for the three
and nine months ended September 30,
2023 or future impairment losses, which may adversely impact
the perception of Wheels Up held by stockholders, investors,
members and customers or the Company's business and results of
operations or the market price of Common Stock; and (viii) general
economic and geopolitical conditions, including due to fluctuations
in interest rates, inflation, foreign currencies, consumer and
business spending decisions, and general levels of economic
activity. In addition, any statements that refer to projections,
forecasts, or other characterizations of future events or
circumstances, including any underlying assumptions, are
forward-looking statements. The words "anticipate," "believe,"
continue," "could," "estimate," "expect," "intend," "may," "might,"
"plan," "possible," "potential," "predict," "project," "should,"
"strive," "would" and similar expressions may identify
forward-looking statements, but the absence of these words does not
mean that statement is not forward-looking. We have identified
certain known material risk factors applicable to Wheels Up in our
Annual Report on Form 10-K for the year ended December 31, 2022 filed with the U.S. Securities
and Exchange Commission ("SEC") and our other filings with the SEC.
Moreover, it is not always possible for us to predict how new risks
and uncertainties that arise from time to time may affect us. You
are cautioned not to place undue reliance upon any forward-looking
statements, which speak only as of the date made. Except as
required by law, we do not intend to update any of these
forward-looking statements after the date of this press
release.
Use of Non-GAAP Financial Measures
This press release includes certain non-GAAP financial measures
such as Adjusted EBITDA, Adjusted Contribution and Adjusted
Contribution Margin. These non-GAAP financial measures are an
addition, and not a substitute for or superior to, measures of
financial performance prepared in accordance with generally
accepted accounting principles in the
United States of America ("GAAP") and should not be
considered as an alternative to net income (loss), operating income
(loss) or any other performance measures derived in accordance with
GAAP. Definitions and reconciliations of non-GAAP financial
measures to their most comparable GAAP counterparts are included in
the "Definitions of Non-GAAP Financial Measures" and
"Reconciliations of Non-GAAP Financial Measures" sections,
respectively, in this press release. Wheels Up believes that these
non-GAAP financial measures of financial results provide useful
supplemental information to investors about Wheels Up. However,
there are a number of limitations related to the use of these
non-GAAP financial measures and their nearest GAAP equivalents,
including that they exclude significant expenses that are required
by GAAP to be recorded in Wheels Up's financial measures. In
addition, other companies may calculate non-GAAP financial measures
differently, or may use other measures to calculate their financial
performance, and therefore, Wheels Up's non-GAAP financial measures
may not be directly comparable to similarly titled measures of
other companies. Additionally, to the extent that forward-looking
non-GAAP financial measures are provided, they are presented on a
non-GAAP basis without reconciliations of such forward-looking
non-GAAP financial measures due to the inherent difficulty in
forecasting and quantifying certain amounts that are necessary for
such reconciliations.
For more information on these non-GAAP financial measures, see
the sections titled "Definitions of Key Operating Metrics,"
"Definitions of Non-GAAP Financial Measures" and "Reconciliations
of Non-GAAP Financial Measures" included at the end of this
earnings press release.
WHEELS UP EXPERIENCE
INC. CONDENSED CONSOLIDATED BALANCE
SHEETS (Unaudited, in thousands, except share
data)
|
|
|
September 30,
2023
|
|
December 31,
2022
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
244,847
|
|
$
585,881
|
Accounts receivable,
net
|
46,773
|
|
112,383
|
Other
receivables
|
7,452
|
|
5,524
|
Parts and supplies
inventories, net
|
23,979
|
|
29,000
|
Aircraft
inventory
|
2,073
|
|
24,826
|
Aircraft held for
sale
|
26,855
|
|
8,952
|
Prepaid
expenses
|
46,506
|
|
39,715
|
Other current
assets
|
11,283
|
|
13,338
|
Total current
assets
|
409,768
|
|
819,619
|
Property and equipment,
net
|
362,053
|
|
394,559
|
Operating lease
right-of-use assets
|
73,788
|
|
106,735
|
Goodwill
|
214,808
|
|
348,118
|
Intangible assets,
net
|
122,783
|
|
141,765
|
Other non-current
assets
|
144,494
|
|
112,429
|
Total
assets
|
$
1,327,694
|
|
$
1,923,225
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Current maturities of
long-term debt
|
$
25,227
|
|
$
27,006
|
Accounts
payable
|
25,568
|
|
43,166
|
Accrued
expenses
|
100,814
|
|
148,947
|
Deferred revenue,
current
|
691,214
|
|
1,075,133
|
Other current
liabilities
|
26,197
|
|
49,968
|
Total current
liabilities
|
869,020
|
|
1,344,220
|
Long-term debt,
net
|
235,429
|
|
226,234
|
Deferred revenue,
non-current
|
1,155
|
|
1,742
|
Operating lease
liabilities, non-current
|
58,912
|
|
82,755
|
Warrant
liability
|
66
|
|
751
|
Other non-current
liabilities
|
17,873
|
|
15,603
|
Total
liabilities
|
1,182,455
|
|
1,671,305
|
|
|
|
|
Equity:
|
|
|
|
Common Stock, $0.0001
par value; 250,000,000 authorized; 167,080,450
and 25,198,298 shares issued and 166,804,743 and 24,933,857 shares
outstanding as
of September 30, 2023 and December 31, 2022,
respectively
|
17
|
|
3
|
Additional paid-in
capital
|
1,849,093
|
|
1,545,530
|
Accumulated
deficit
|
(1,682,145)
|
|
(1,275,873)
|
Accumulated other
comprehensive loss
|
(14,007)
|
|
(10,053)
|
Treasury stock, at
cost, 275,707 and 264,441 shares, respectively
|
(7,718)
|
|
(7,687)
|
Total Wheels Up
Experience Inc. stockholders' equity
|
145,239
|
|
251,920
|
Non-controlling
interests
|
—
|
|
—
|
Total
equity
|
145,239
|
|
251,920
|
Total liabilities
and equity
|
$
1,327,694
|
|
$
1,923,225
|
WHEELS UP EXPERIENCE
INC. CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited, in thousands except share and per
share data)
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenue
|
$
320,063
|
|
$
420,356
|
|
$
1,006,937
|
|
$
1,171,503
|
|
|
|
|
|
|
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
Cost of
revenue
|
299,887
|
|
403,042
|
|
981,581
|
|
1,144,698
|
Technology and
development
|
19,962
|
|
16,639
|
|
50,265
|
|
42,436
|
Sales and
marketing
|
22,548
|
|
30,830
|
|
71,500
|
|
87,761
|
General and
administrative
|
42,853
|
|
44,323
|
|
122,334
|
|
130,200
|
Depreciation and
amortization
|
15,459
|
|
16,500
|
|
45,027
|
|
46,862
|
Gain on sale of
aircraft held for sale
|
(7,841)
|
|
(1,316)
|
|
(11,328)
|
|
(3,950)
|
Impairment of
goodwill
|
56,200
|
|
62,000
|
|
126,200
|
|
62,000
|
Total costs and
expenses
|
449,068
|
|
572,018
|
|
1,385,579
|
|
1,510,007
|
|
|
|
|
|
|
|
|
Loss from
operations
|
(129,005)
|
|
(151,662)
|
|
(378,642)
|
|
(338,504)
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
Loss on
divestiture
|
(2,991)
|
|
—
|
|
(2,991)
|
|
—
|
Loss on extinguishment
of debt
|
(1,936)
|
|
—
|
|
(2,806)
|
|
—
|
Change in fair value
of warrant liability
|
(61)
|
|
2,504
|
|
685
|
|
8,265
|
Interest
income
|
404
|
|
1,130
|
|
6,090
|
|
1,612
|
Interest
expense
|
(11,258)
|
|
—
|
|
(27,035)
|
|
—
|
Other income
(expense), net
|
613
|
|
(625)
|
|
(822)
|
|
(1,505)
|
Total other income
(expense)
|
(15,229)
|
|
3,009
|
|
(26,879)
|
|
8,372
|
|
|
|
|
|
|
|
|
Loss before income
taxes
|
(144,234)
|
|
(148,653)
|
|
(405,521)
|
|
(330,132)
|
|
|
|
|
|
|
|
|
Income tax benefit
(expense)
|
(579)
|
|
(185)
|
|
(751)
|
|
(505)
|
|
|
|
|
|
|
|
|
Net
loss
|
(144,813)
|
|
(148,838)
|
|
(406,272)
|
|
(330,637)
|
Less: Net loss
attributable to non-controlling
interests
|
—
|
|
—
|
|
—
|
|
(387)
|
Net loss
attributable to Wheels Up Experience Inc.
|
$
(144,813)
|
|
$
(148,838)
|
|
$
(406,272)
|
|
$
(330,250)
|
|
|
|
|
|
|
|
|
Net loss per share
of Common Stock
|
|
|
|
|
|
|
|
Basic and
diluted
|
$
(3.51)
|
|
$
(6.09)
|
|
$
(13.22)
|
|
$
(13.52)
|
|
|
|
|
|
|
|
|
Weighted-average
shares of Common Stock
outstanding:
|
|
|
|
|
|
|
|
Basic and
diluted
|
41,261,003
|
|
24,435,096
|
|
30,737,324
|
|
24,434,787
|
WHEELS UP EXPERIENCE
INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (Unaudited, in thousands)
|
|
|
Nine Months Ended
September 30,
|
|
2023
|
|
2022
|
Cash flows from
operating activities
|
|
|
|
Net loss
|
$
(406,272)
|
|
$
(330,637)
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
Depreciation and
amortization
|
45,027
|
|
46,862
|
Equity-based
compensation
|
21,650
|
|
65,839
|
Payment in kind
interest
|
972
|
|
—
|
Amortization of
deferred financing costs and debt discount
|
2,390
|
|
—
|
Change in fair value of
warrant liability
|
(685)
|
|
(8,265)
|
Gain on sale of
aircraft held for sale
|
(11,328)
|
|
(3,950)
|
Loss on
divestiture
|
2,991
|
|
—
|
Loss on extinguishment
of debt
|
2,806
|
|
—
|
Impairment of
goodwill
|
126,200
|
|
62,000
|
Other
|
(2,099)
|
|
(489)
|
Changes in assets and
liabilities:
|
|
|
|
Accounts
receivable
|
22,513
|
|
(31,474)
|
Parts and supplies
inventories
|
5,074
|
|
(8,544)
|
Aircraft
inventory
|
386
|
|
(33,231)
|
Prepaid
expenses
|
(8,589)
|
|
(8,065)
|
Other non-current
assets
|
(36,988)
|
|
(27,534)
|
Accounts
payable
|
(15,177)
|
|
(2,885)
|
Accrued
expenses
|
(36,293)
|
|
(1,131)
|
Deferred
revenue
|
(378,949)
|
|
(2,653)
|
Other assets and
liabilities
|
4,877
|
|
(4,184)
|
Net cash used in
operating activities
|
(661,494)
|
|
(288,341)
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
Purchases of property
and equipment
|
(12,312)
|
|
(80,039)
|
Purchases of aircraft
held for sale
|
(2,311)
|
|
(39,894)
|
Proceeds from sale of
aircraft held for sale, net
|
53,911
|
|
41,833
|
Proceeds from sale of
divested business, net
|
13,200
|
|
—
|
Acquisitions of
businesses, net of cash acquired
|
—
|
|
(75,093)
|
Capitalized software
development costs
|
(16,041)
|
|
(18,532)
|
Other
|
172
|
|
—
|
Net cash (used in)
provided by investing activities
|
36,619
|
|
(171,725)
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
Purchase shares for
treasury
|
—
|
|
(7,347)
|
Purchase of fractional
shares
|
(3)
|
|
—
|
Proceeds from notes
payable
|
70,000
|
|
—
|
Repayment of notes
payable
|
(70,000)
|
|
—
|
Proceeds from
long-term debt, net
|
343,000
|
|
—
|
Payment of debt
issuance costs in connection with debt
|
(19,630)
|
|
—
|
Repayments of
long-term debt
|
(40,196)
|
|
—
|
Net cash (used in)
provided by financing activities
|
283,171
|
|
(7,347)
|
|
|
|
|
Effect of exchange
rate changes on cash, cash equivalents and restricted
cash
|
(4,287)
|
|
(7,395)
|
|
|
|
|
Net decrease in
cash, cash equivalents and restricted cash
|
(345,991)
|
|
(474,808)
|
Cash, cash
equivalents and restricted cash, beginning of period
|
620,153
|
|
786,722
|
Cash, cash
equivalents and restricted cash, end of period
|
$
274,162
|
|
$
311,914
|
Definitions of Key Operating Metrics
Active Members. We define Active Members as the
number of Connect, Core, and Business membership accounts that
generated membership revenue in a given period and are active as of
the end of the reporting period. We use Active Members to assess
the adoption of our premium offerings which is a key factor in our
penetration of the market in which we operate and a key driver of
membership and flight revenue.
Active Users. We define Active Users as Active
Members and jet card holders as of the reporting date plus unique
non-member consumers who completed a revenue generating flight at
least once in the given quarter and excludes wholesale flight
activity. While a unique consumer can complete multiple revenue
generating flights on our platform in a given period, that unique
user is counted as only one Active User. We use Active Users to
assess the adoption of our platform and frequency of transactions,
which are key factors in our penetration of the market in which we
operate and our growth in revenue.
Live Flight Legs. We define Live Flight Legs as the
number of completed one-way revenue generating flight legs in a
given period. The metric excludes empty repositioning legs and
owner legs related to aircraft under management. We believe Live
Flight Legs are a useful metric to measure the scale and usage of
our platform, and our growth in flight revenue.
Definitions of Non-GAAP Financial Measures
Adjusted EBITDA. We calculate Adjusted EBITDA as net
income (loss) adjusted for (i) interest income (expense), (ii)
income tax expense, (iii) depreciation and amortization, (iv)
equity-based compensation expense, (v) acquisition and integration
related expenses and (vi) other items not indicative of our ongoing
operating performance, including but not limited to, restructuring
charges.
We include Adjusted EBITDA because it is a supplemental measure
used by our management team for assessing operating performance.
Adjusted EBITDA is used in conjunction with bonus program target
achievement determinations, strategic internal planning, annual
budgeting, allocating resources and making operating decisions. In
addition, Adjusted EBITDA provides useful information for
historical period-to-period comparisons of our business, as it
removes the effect of certain non-cash expenses and variable
amounts.
Adjusted Contribution and Adjusted Contribution Margin.
We calculate Adjusted Contribution as gross profit (loss) excluding
depreciation and amortization and adjusted further for (i)
equity-based compensation included in cost of revenue, (ii)
acquisition and integration expense included in cost of revenue,
(iii) restructuring expense in cost of revenue and (iv) other items
included in cost of revenue that are not indicative of our ongoing
operating performance. Adjusted Contribution Margin is calculated
by dividing Adjusted Contribution by total revenue.
We include Adjusted Contribution and Adjusted Contribution
Margin as supplemental measures for assessing operating
performance. Adjusted Contribution and Adjusted Contribution Margin
are used to understand our ability to achieve profitability over
time through scale and leveraging costs. In addition, Adjusted
Contribution and Adjusted Contribution Margin provides useful
information for historical period-to-period comparisons of our
business and to identify trends.
Reconciliations of Non-GAAP Financial Measures
Adjusted EBITDA
The following table reconciles Adjusted EBITDA to net loss,
which is the most directly comparable GAAP measure (in
thousands):
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net
loss
|
$ (144,813)
|
|
$ (148,838)
|
|
$
(406,272)
|
|
$ (330,637)
|
Add back
(deduct)
|
|
|
|
|
|
|
|
Interest
expense
|
11,258
|
|
—
|
|
27,035
|
|
—
|
Interest
income
|
(404)
|
|
(1,130)
|
|
(6,090)
|
|
(1,612)
|
Income tax
expense
|
579
|
|
185
|
|
751
|
|
505
|
Other expense,
net
|
(613)
|
|
625
|
|
822
|
|
1,505
|
Depreciation and
amortization
|
15,459
|
|
16,500
|
|
45,027
|
|
46,862
|
Change in fair value of
warrant liability
|
61
|
|
(2,504)
|
|
(685)
|
|
(8,265)
|
Loss on
divestiture
|
2,991
|
|
—
|
|
2,991
|
|
—
|
Equity-based
compensation expense
|
3,508
|
|
22,504
|
|
21,650
|
|
65,839
|
Acquisition and
integration expenses(1)
|
—
|
|
4,747
|
|
2,108
|
|
16,092
|
Restructuring
charges(2)
|
22,213
|
|
682
|
|
40,905
|
|
6,165
|
Atlanta Member
Operations Center set-up
expense(3)
|
10,765
|
|
—
|
|
26,895
|
|
—
|
Certificate
consolidation expense(4)
|
3,279
|
|
—
|
|
10,799
|
|
—
|
Impairment of
goodwill(5)
|
56,200
|
|
62,000
|
|
126,200
|
|
62,000
|
Other(5)
|
988
|
|
—
|
|
117
|
|
—
|
Adjusted
EBITDA
|
$
(18,529)
|
|
$
(45,229)
|
|
$
(107,747)
|
|
$ (141,546)
|
__________________
|
(1)
|
Consists of expenses
incurred associated with acquisitions, as well as
integration-related charges incurred within one year of acquisition
date primarily related to system conversions, re-branding costs and
fees paid to external advisors.
|
(2)
|
For the three and nine
months ended September 30, 2023, includes restructuring charges
related to the Restructuring Plan and related strategic business
expenses incurred to support significant changes to our member
programs and certain aspects of our operations, primarily
consisting of consultancy fees associated with designing and
implementing changes to our member programs and obtaining
financing, and severance and recruiting expenses associated with
executive transitions and other employee separation programs as
part of our cost reduction initiatives. For the three and nine
months ended September 30, 2022, includes restructuring
charges for employee separation programs following strategic
business decisions.
|
(3)
|
Consists of expenses
associated with establishing the Atlanta Member Operations Center
and its operations primarily including redundant operating expenses
during the transition period, relocation expenses for employees and
costs associated with onboarding new employees. The Atlanta Member
Operations Center began operating on May 15, 2023.
|
(4)
|
Consists of expenses
incurred to execute consolidation of our FAA operating certificates
primarily including pilot training and retention programs and
consultancy fees associated with planning and implementing the
consolidation process.
|
(5)
|
Represents non-cash
impairment charge related to goodwill recognized in the second and
third quarters of 2023. See Note 1, Summary of Business and
Significant Accounting Policies of the Notes to Condensed
Consolidated Financial Statements included in our Quarterly Report
on Form 10-Q for the quarter ended September 30, 2023.
|
(6)
|
Includes collections of
certain aged receivables which were added back to Net Loss in the
reconciliation presented for the twelve months ended December 31,
2022, as well as recognition of charges related to an individually
immaterial litigation settlement.
|
Refer to "Supplemental
Expense Information" below, for further information
|
Adjusted Contribution and Adjusted Contribution
Margin
The following table reconciles Adjusted Contribution to gross
profit (loss), which is the most directly comparable GAAP measure
(in thousands):
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenue
|
$
320,063
|
|
$
420,356
|
|
$
1,006,937
|
|
$
1,171,503
|
Less: Cost of
revenue
|
(299,887)
|
|
(403,042)
|
|
(981,581)
|
|
(1,144,698)
|
Less: Depreciation and
amortization
|
(15,459)
|
|
(16,500)
|
|
(45,027)
|
|
(46,862)
|
Gross profit
(loss)
|
4,717
|
|
814
|
|
(19,671)
|
|
(20,057)
|
Gross margin
|
1.5 %
|
|
0.2 %
|
|
(2.0) %
|
|
(1.7) %
|
Add
back:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
15,459
|
|
16,500
|
|
45,027
|
|
46,862
|
Equity-based
compensation expense in cost of revenue
|
826
|
|
3,581
|
|
3,097
|
|
11,320
|
Acquisition and
integration expense in cost of
revenue(1)
|
—
|
|
650
|
|
—
|
|
650
|
Restructuring expense
in cost of revenue(2)
|
320
|
|
—
|
|
1,075
|
|
—
|
Atlanta Member
Operations Center set-up expense in
cost of revenue(3)
|
10,642
|
|
—
|
|
22,440
|
|
—
|
Certificate
consolidation expense in cost of
revenue(4)
|
3,279
|
|
—
|
|
7,720
|
|
—
|
Adjusted
Contribution
|
$
35,243
|
|
$
21,545
|
|
$
59,688
|
|
$
38,775
|
Adjusted
Contribution Margin
|
11.0 %
|
|
5.1 %
|
|
5.9 %
|
|
3.3 %
|
__________________
|
(1)
|
Consists of expenses
incurred associated with acquisitions, as well as
integration-related charges incurred within one year of acquisition
date
|
(2)
|
For the three and nine
months ended September 30, 2023, includes restructuring charges
related to the Restructuring Plan and other strategic business
initiatives.
|
(3)
|
Consists of expenses
associated with establishing the Atlanta Member Operations Center
and its operations primarily including redundant operating expenses
during the transition period, relocation expenses for employees and
costs associated with onboarding new employees. The Atlanta Member
Operations Center began operating on May 15, 2023.
|
(4)
|
Consists of expenses
incurred to execute consolidation of our FAA operating certificates
primarily including pilot training and retention programs and
consultancy fees associated with planning and implementing the
consolidation process.
|
Supplemental Revenue
Information
|
|
(In
thousands)
|
Three Months Ended
September 30,
|
|
Change
in
|
2023
|
|
2022
|
|
$
|
|
%
|
Membership
|
$
20,622
|
|
$
22,409
|
|
$
(1,787)
|
|
(8) %
|
Flight
|
214,645
|
|
278,917
|
|
(64,272)
|
|
(23) %
|
Aircraft
management
|
53,235
|
|
58,962
|
|
(5,727)
|
|
(10) %
|
Other
|
31,561
|
|
60,068
|
|
(28,507)
|
|
(47) %
|
Total
|
$
320,063
|
|
$
420,356
|
|
$
(100,293)
|
|
(24) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In
thousands)
|
Nine Months Ended
September 30,
|
|
Change
in
|
2023
|
|
2022
|
|
$
|
|
%
|
Membership
|
$
63,780
|
|
$
67,076
|
|
$
(3,296)
|
|
(5) %
|
Flight
|
681,691
|
|
799,351
|
|
(117,660)
|
|
(15) %
|
Aircraft
management
|
165,431
|
|
180,186
|
|
(14,755)
|
|
(8) %
|
Other
|
96,035
|
|
124,890
|
|
(28,855)
|
|
(23) %
|
Total
|
$
1,006,937
|
|
$
1,171,503
|
|
$
(164,566)
|
|
(14) %
|
Supplemental Expense
Information
|
|
|
Three Months Ended
September 30, 2023
|
|
Cost of
revenue
|
|
Technology
and
development
|
|
Sales and
marketing
|
|
General and
administrative
|
|
Total
|
Equity-based
compensation expense
|
$
826
|
|
$
620
|
|
$
440
|
|
$
1,622
|
|
$
3,508
|
Acquisition and
integration expenses
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Restructuring
charges
|
320
|
|
4,641
|
|
703
|
|
16,549
|
|
22,213
|
Atlanta Member
Operations Center set-up
expense
|
10,642
|
|
—
|
|
—
|
|
123
|
|
10,765
|
Certificate
consolidation expense
|
3,279
|
|
—
|
|
—
|
|
—
|
|
3,279
|
Other
|
—
|
|
—
|
|
—
|
|
988
|
|
988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, 2023
|
|
Cost of
revenue
|
|
Technology
and
development
|
|
Sales and
marketing
|
|
General and
administrative
|
|
Total
|
Equity-based
compensation expense
|
$
3,097
|
|
$
1,777
|
|
$
1,781
|
|
$
14,995
|
|
$
21,650
|
Acquisition and
integration expenses
|
—
|
|
53
|
|
134
|
|
1,921
|
|
2,108
|
Restructuring
charges
|
1,075
|
|
6,940
|
|
2,761
|
|
30,130
|
|
40,905
|
Atlanta Member
Operations Center set-up
expense
|
22,440
|
|
201
|
|
—
|
|
4,254
|
|
26,895
|
Certificate
consolidation expense
|
7,720
|
|
—
|
|
—
|
|
3,079
|
|
10,799
|
Other
|
—
|
|
—
|
|
—
|
|
117
|
|
117
|
|
|
|
Three Months Ended
September 30, 2022
|
|
Cost of
revenue
|
|
Technology
and
development
|
|
Sales and
marketing
|
|
General and
administrative
|
|
Total
|
Equity-based
compensation expense
|
$
3,581
|
|
$
751
|
|
$
2,756
|
|
$
15,416
|
|
$
22,504
|
Acquisition and
integration expense
|
650
|
|
—
|
|
—
|
|
4,097
|
|
4,747
|
Restructuring
charges
|
—
|
|
—
|
|
—
|
|
682
|
|
682
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, 2022
|
|
Cost of
revenue
|
|
Technology
and
development
|
|
Sales and
marketing
|
|
General and
administrative
|
|
Total
|
Equity-based
compensation expense
|
$
11,320
|
|
$
2,047
|
|
$
8,314
|
|
$
44,158
|
|
$
65,839
|
Acquisition and
integration expense
|
650
|
|
—
|
|
—
|
|
15,442
|
|
16,092
|
Restructuring
charges
|
—
|
|
—
|
|
—
|
|
6,165
|
|
6,165
|
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SOURCE Wheels Up