DALLAS, TX -- May 29th, 2025 --  Sky Harbour Group Corp. (NYSE: SKYH): Stonegate Capital Partners updates their coverage on Sky Harbour Group Corp. (NYSE: SKYH). Sky Harbour continued to demonstrate strong momentum in 1Q25, driven by expanding its aviation infrastructure footprint and ramping operational capacity. During the quarter, the Company initiated operations at its Phoenix Deer Valley (DVT) campus and prepared for openings at Dallas Addison (ADS) and Denver Centennial (APA), scheduled for 2Q25. SKYH added a key facility at Seattle’s Boeing Field (BFI), with ~90,000 sq ft of rentable space, and signed new ground leases at Hillsboro (HIO) and Stewart International (SWF), reinforcing its national footprint. As of quarter-end, the Company’s portfolio included eight operational campuses, one under construction, and ten in pre-development, positioning it for significant long-term growth. 

Company Updates:

Occupancy and Revenue Performance: For 1Q25, SKYH reported total revenue of $5.6M, a 133% increase from $2.4M in 1Q24 and a 20% increase sequentially. This growth was primarily driven by new lease commencements at the San José (SJC) campus, partial lease-up at the DVT campus, and contributions from the newly acquired Camarillo (CMA) facility. Rental revenue grew to $4.5M, while fuel revenue rose to $1.1M. The Company noted peak leasing activity driven by the ADS and DVT openings, with initial tenant agreements secured and additional leases in negotiation across the portfolio. Occupancy is expected to accelerate in 2Q25 and 3Q25 as new campuses come online.

New Leases and Upcoming Construction: Sky Harbour significantly expanded its infrastructure pipeline during the quarter. It executed a long-term lease for 90,000 sq ft at BFI in March and finalized new ground leases in April at HIO (~13 acres) and SWF (~250,000 sq ft planned across seven structures). Construction progressed across multiple sites, with DVT opening in 1Q25 and APA and ADS scheduled for near-term completion. Additionally, Phase 2 construction at OPF began in April. As of 1Q25, the Company’s portfolio included ~580,000 sq ft of leasable space, with over 2.1 million sq ft in development, representing ~$37.6M in annualized revenue potential once stabilized

Margins and Profitability: Gross margins improved to 1.3% in 1Q25, up from (222.2)% sequentially and down from 13.4% in the first quarter of the prior year. Operating income decreased to $(6.8)M from $(5.2)M in 1Q24, primarily due to increased ground lease expenses and higher salaries, wages, and benefits associated with increased headcount. EBITDA improved sequentially to $(5.7M), as the Company works through the new leases and upcoming constructions mentioned above. We expect EBITDA to gradually improve and turn positive in FY26.

Balance Sheet Strength and Guidance: Sky Harbour ended 1Q25 with total assets of $553.7M. Liquidity remained strong, with $83.7M in consolidated cash and restricted cash, and $13.7M in restricted U.S. Treasury investments. The Company maintains capital flexibility supported by prior equity placements, including a $75.0M PIPE in December 2024. Management reiterated its 2025 guidance to achieve consolidated run-rate breakeven cash flow and adjusted EBITDA by year-end, underpinned by new campus contributions.

Valuation: We use a Discounted Cash Flow Analysis to guide our valuation of SKYH. Our DCF analysis produces a valuation range of $14.40 to $22.46 with a mid-point of $17.72. This analysis relies on a range of discount rates between 8.75% and 9.25% with a midpoint of 9.00% and accounts SKYH's debt being assumable, which has an estimated blended interest rate of 4.25%.

About Stonegate
Stonegate Capital Partners is a leading capital markets advisory firm providing investor relations, equity research, and institutional investor outreach services for public companies. Our affiliate, Stonegate Capital Markets (member FINRA) provides a full spectrum of investment banking services for public and private companies.

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