First Quarter 2021 Highlights
- Revenue of $58.4 million.
- GAAP net income of $10.0 million, or 17.1% of sales.
- Adjusted EBITDA of $16.5 million, or 28.3% of sales.
- Continued strong demand for freighters and improving commercial
activity.
- AerAware flight testing by FAA in progress.
- Finalizing the sale/lease of 18 Boeing 757s.
- 2021 guidance unchanged: revenue of $340 - $360 million and
adjusted EBITDA of $60 - $70 million1.
AerSale Corporation (Nasdaq: ASLE) (the “Company”) today
reported results for the first quarter ended March 31, 2021.
AerSale reported first quarter 2021 revenue of $58.4 million
that included $13.8 million of flight equipment sales consisting of
one B737-800 airframe and two Pratt & Whitney PW4000 engines
sold to three different freighter operators, and one Pratt &
Whitney PW4000 sold for parts. Revenue performance continued to
improve during the period, with near capacity MRO maintenance
schedules, at capacity storage facilities, and contributions from
select engine sales. Offsetting this strength was softer demand for
USM parts from the continued effect of COVID-19 on AerSale’s
commercial customers and the conclusion of three B747 lease
programs that contributed to the prior-year results.
GAAP net income for the first quarter of 2021 was $10.0 million
or 17.1% of sales, up from $1.1 million or 1.9% of sales, in the
first quarter of 2020. Adjusted EBITDA in the first quarter of 2021
was $16.5 million, or 28.3% of sales, compared to $9.8 million, or
17.2% of sales in the first quarter of 2020. Higher adjusted EBITDA
and margins during the period reflected stronger margins from sales
mix and cost reduction efforts. The Company also recognized $6.4
million in Payroll Support Programs during the period, while
incurring offsetting costs related to program eligibility.
Looking forward to the rest of 2021, the Company expects
continued growth driven by anticipated strong MRO volume due to the
recommissioning of commercial aircraft, sales from its Boeing 757
procurement program, contributions from its innovative AerAware
product launch, and the gradual recovery of commercial markets.
Nicolas Finazzo, AerSale’s Chief Executive Officer, commented,
“We are performing well and as expected in our first full quarter
as a public company. The gradual recovery in commercial markets
continues to materialize, with our aircraft MRO services operating
at near capacity as airlines recommission parked aircraft. We are
also making meaningful progress on our 24 aircraft B757 fleet
acquisition with 18 aircraft contracted or under letters of intent
for sale or lease, including four Passenger-to-Freighter
conversions that we expect to complete in 2021 at our Goodyear
facility. We believe that this positions us well for accelerating
performance throughout the balance of 2021, particularly in the
second half.”
Finazzo added, “We are proud of the demonstrated resilience of
our business model in a dynamic and rapidly changing environment.
Our multidimensional and fully integrated business model was
purpose built for consistent performance throughout the cycle.
These effects are evident in our ability to service all aspects of
customer needs throughout the cycle and our ability to quickly
pivot to higher demand categories. We are grateful for the
dedication of our employees and remain committed to driving value
to all of our stakeholders.”
_______________________ 1 A reconciliation of non-GAAP adjusted
EBITDA guidance to net income, the most directly comparable GAAP
measure, has not been provided due to the lack of predictability
regarding the various reconciling items such as the provision for
income taxes and depreciation and amortization, which are expected
to have a material impact on these measures and are out of
AerSale’s control or cannot be reasonably predicted without
unreasonable efforts.
First Quarter 2021 Results of Operations
For the first quarter of 2021, AerSale reported revenue of $58.4
million that included flight equipment sales of $13.8 million. In
the first quarter of 2020 which was prior to the effects of
COVID-19, revenue was $57.1 million. Asset Management Solutions
(AMS) revenue declined in the first quarter of 2021 primarily due
to three B747 leases that ended as scheduled, combined with lower
used serviceable material (USM) sales as AerSale’s commercial
customers were adversely impacted by the effects of COVID-19. The
decline in AMS revenue in the first quarter of 2021 was partially
offset by an increase in TechOps volume.
AMS revenue was $29.3 million compared to $30.8 million in the
first quarter of 2020. In addition to the above-mentioned timing of
flight equipment sales, USM revenue declined as a result of fewer
opportunities to buy attractively-priced feedstock, soft demand for
existing inventory, longer lead times in the USM parts repair
cycle, and lower utilization rates on flight equipment against the
backdrop of the COVID-19 pandemic. However, with the recovery
strengthening and passenger air travel beginning to increase,
AerSale is expected to benefit from the rise in demand for USM
parts consumption for maintenance and overhaul activity as airlines
begin reversing the process of grounding large portions of the
global passenger fleet.
Revenue from TechOps increased 10.9% to $29.2 million in the
first quarter of 2021. The increase was largely driven by the
Company’s aircraft MRO facilities as this business benefited from
the increased maintenance demand from the groundings noted
above.
Looking forward, AerSale expects the substantial quantity of
aircraft at its on-airport MRO facilities to provide the Company
with upside opportunities for reactivation work, heavy maintenance,
and cargo conversion; and a strategic advantage in identifying
feedstock for its Asset Management segment.
Gross margin increased to 33.9% in the first quarter of 2021
compared to 26.8% in the first quarter of 2020. The improvement was
due in part to the high-margin sale of select flight equipment
after channeling these assets through the Company’s unique
multi-dimensional redistribution machinery, and determining whether
to sell, lease or part-out. Maintenance performed on stored
customer aircraft also garnered high margins during the
quarter.
Selling, general and administrative expenses declined
approximately 48.3% to $6.9 million from the first quarter of 2020
to the first quarter of 2021, largely due to Payroll Support
Program contributions of $6.4 million. Excluding this contribution,
the Company continued to benefit from the cost savings and
efficiencies measures taken during 2020.
Income from operations was $12.9 million in the first quarter of
2021, compared to $1.9 million in the first quarter of 2020.
The provision for income tax was $2.5 million in the first
quarter of 2021 versus $0.3 million in the first quarter of
2020.
GAAP net income for the first quarter of 2021 was $10.0 million
or 17.1% of sales, up from $1.1 million, or 1.9% of sales, in the
first quarter of 2020.
Fully diluted earnings per share was $0.23 for the first quarter
of 2021. Fully diluted earnings per share for the first quarter of
2021 is not comparable to the first quarter of 2020 due to the
public listing of AerSale on December 23, 2020.
Adjusted EBITDA for the first quarter of 2021 was $16.5 million,
or 28.3% of sales, compared to Adjusted EBITDA of $9.8 million, or
17.2% of sales, in the first quarter of 2020. Adjusted EBITDA
increased as a result of a favorable mix of revenue, strong cost
controls, and the recognition of Payroll Support Program proceeds
during the period.
2021 Guidance
AerSale expects revenue of $340–$360 million and adjusted EBITDA
of $60-$70 million in 2021. This outlook reflects an increase in
activity in the Company’s AMS segment, strong demand for its
on-airport MRO services, accelerating demand in cargo and
E-Commerce markets, and increased requests for
passenger-to-freighter conversions and other TechOps products and
services. The main growth driver of the Asset Management segment is
expected to be the monetization of the 24 aircraft Boeing 757 fleet
acquisition. Because of the strong demand for cargo conversion
aircraft, AerSale continues to expect to sell the majority of the
available aircraft in 2021. For TechOps, in addition to the
continued contributions from storage activities, the Company also
expects increased contribution from its component MRO businesses
and is positioned to commence sales of its AerAware product in late
2021.
Subsequent to AerSale reporting its fourth quarter 2020 and full
year 2020 results on March 15, 2021, the Company was awarded grant
proceeds of $5.5 million under the American Rescue Plan. These
proceeds are in addition to Payroll Support Program proceeds of
$9.2 million awarded to AerSale in 2021.
Conference Call Information
The Company will host a conference call today at 8:30 am Eastern
Time to discuss these results. A live webcast will also be
available at https://ir.aersale.com/news-events/events.
Participants may access the call at 1- 877-407-3982, international
callers may use 1-201-493-6780, and request to join the AerSale
Corporation earnings call.
A telephonic replay will be available shortly after the
conclusion of the call and until May 21, 2021. Participants may
access the replay at 1-844-512-2921, international callers may use
1- 412-317-6671, and enter access code 13719483. An archived replay
of the call will also be available on the Investors portion of the
AerSale website at https://ir.aersale.com until May 21, 2021.
Non-GAAP Financial Measures
This press release includes non-GAAP financial measures,
including adjusted EBITDA. AerSale defines adjusted EBITDA as net
income (loss) after giving effect to interest expense, depreciation
and amortization, income tax expense (benefit), and other
non-recurring items.
AerSale believes these non-GAAP measures of financial results
provide useful information to management and investors regarding
certain financial and business trends relating to AerSale’s
financial condition and results of operations. AerSale’s management
uses certain of these non-GAAP measures to compare AerSale’s
performance to that of prior periods for trend analyses and for
budgeting and planning purposes. These non- GAAP measures should
not be construed as an alternative to net income or net income
margin as an indicator of operating performance or as an
alternative to cash flow provided by operating activities as a
measure of liquidity (each as determined in accordance with
GAAP).
You should review AerSale’s audited financial statements, and
not rely on any single financial measure to evaluate AerSale’s
business. Other companies may calculate adjusted EBITDA
differently, and therefore AerSale’s adjusted EBITDA measure may
not be directly comparable to similarly titled measures of other
companies.
First Quarter 2021 Financial
Results
AERSALE CORPORATION
CONSOLIDATED BALANCE SHEET
(in thousands, except per share
data)
March 31,
December 31,
Assets
2021
2020
(Unaudited)
Current assets:
Cash and cash equivalents
$
19,609
$
29,317
Accounts receivable, net of allowance for
doubtful accounts of $1,442 and $1,652 as of March 31, 2021 and
December 31, 2020
48,510
50,215
Inventory:
Aircraft, airframes, engines, and parts,
net
99,299
85,192
Advance vendor payments
10,719
6,205
Due from related party
—
474
Deposits, prepaid expenses, and other
current assets
5,609
7,560
Total current assets
183,746
178,963
Fixed assets:
Aircraft and engines held for lease,
net
82,332
86,844
Property and equipment, net
7,771
7,839
Inventory:
Aircraft, airframes, engines, and
parts
65,943
55,463
Deferred income taxes
5,992
5,708
Deferred financing costs, net
1,268
367
Deferred customer incentives and other
assets, net
271
271
Due from related party
5,421
5,450
Goodwill
19,860
19,860
Other intangible assets, net
27,839
28,364
Total assets
$
400,443
$
389,129
Current liabilities:
Accounts payable
$
19,221
$
16,364
Accrued expenses
8,207
8,576
Income tax payable
1,329
1,324
Lessee and customer purchase deposits
1,480
2,820
Deferred revenue
818
2,595
Total current liabilities
31,055
31,679
Long-term lease deposits
2,485
1,145
Maintenance deposit payments and other
liabilities
3,744
3,664
Warrant Liability
1,410
1,186
Total liabilities
$
38,694
$
37,674
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.0001 par value.
Authorized 200,000,000 shares; issued and outstanding 42,949,261
shares
4
4
Additional paid-in capital
292,869
292,593
Retained earnings
68,876
58,858
Total equity
361,749
351,455
Total liabilities and stockholders’
equity
$
400,443
$
389,129
AERSALE CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except per share
data)
(Unaudited)
Three Months Ended March
31,
2021
2020
Revenue:
Products
$
25,126
$
18,031
Leasing
6,256
15,782
Services
27,053
23,322
Total net revenue
58,435
57,135
Cost of sales and operating expenses:
Cost of products
13,806
13,439
Cost of leasing
2,767
7,432
Cost of services
22,027
20,978
Total cost of sales
38,600
41,849
Gross profit
19,835
15,286
Selling, general, and administrative
expenses
13,310
13,201
Payroll support program proceeds
(6,363
)
—
Transaction costs
—
231
Income from operations
12,888
1,854
Other income (expenses):
Interest expense, net
(258
)
(536
)
Other income (expenses), net
94
57
Change in fair value of warrant
liability
(224
)
—
Total other expenses
(388
)
(479
)
Income from operations before income tax
provision
12,500
1,375
Income tax (expense)
(2,482
)
(316
)
Net income
10,018
1,059
Earnings per share - basic
$
0.24
$
28.61
Earnings per share - diluted
$
0.23
$
28.61
AERSALE CORPORATION
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(in thousands)
(Unaudited)
Three Months Ended March
31,
2021
2020
Cash flows from operating activities:
Net income
$
10,018
$
1,059
Adjustments to reconcile net income to net
cash (used in) provided by operating activities:
Depreciation and amortization
3,487
7,937
Amortization of debt issuance costs
150
202
Inventory reserve
74
421
Provision for doubtful accounts
(144
)
114
Deferred income taxes
(284
)
—
Change in fair value of warrant
liability
224
—
Decreases (increases) in operating assets
and liabilities, net of acquisition:
Accounts receivable
1,713
12,321
Inventory
(27,020
)
(1,511
)
Deposits, prepaid expenses, and other
current assets
2,590
5,015
Deferred customer incentives and other
assets
—
320
Advance vendor payments
(4,514
)
580
Accounts payable
2,857
849
Income tax receivable
5
313
Accrued expenses
(1,420
)
(414
)
Deferred revenue
(1,777
)
(5,913
)
Lessee and customer purchase deposits
—
406
Other liabilities
80
(262
)
Net cash (used in) provided by operating
activities
(13,961
)
21,437
Cash flows from investing activities:
Business acquisition
—
(16,976
)
Proceeds from sale of assets
4,420
—
Acquisition of aircraft and engines held
for lease, including capitalized cost
—
(293
)
Purchase of property and equipment
(443
)
(914
)
Net cash provided by (used in) investing
activities
3,977
(18,183
)
Cash flows from financing activities:
Repayments of 8% Senior Secured Notes
—
(1,448
)
Proceeds from revolving credit
facility
—
79,500
Repayments of revolving credit
facility
—
(19,096
)
Cash paid for employees taxes on
withholding shares
(269
)
—
Proceeds from exercise of warrants
545
—
Net cash provided by financing
activities
276
58,956
(Decrease) increase in cash and cash
equivalents
(9,708
)
62,210
Cash and cash equivalents, beginning of
period
29,317
17,505
Cash and cash equivalents, end of
period
$
19,609
$
79,715
AERSALE CORPORATION
ADJUSTED EBITDA RECONCILIATION
TABLE
(in thousands)
(Unaudited)
Three months ended March
31,
EBITDA Reconciliation
2021
% of Total Revenue
2020
% of Total Revenue
Reported Net Income/(Loss)
$
10,018
17.1
%
$
1,059
1.9
%
Addbacks:
Interest Expense
258
0.4
%
536
0.9
%
Income Tax Expense (Benefit)
2,482
4.2
%
316
0.6
%
Depreciation and Amortization
3,487
6.0
%
7,937
13.9
%
Change in FV of Warrant Liability
224
0.4
%
-
0.0
%
Stock Compensation
75
0.1
%
-
0.0
%
Adjusted EBITDA
$
16,544
28.3
%
$
9,848
17.2
%
Forward-Looking Statements
This press release includes “forward-looking statements” within
the meaning of the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995, including without
limitation statements regarding our anticipated financial
performance; our growth trajectory; the impact of investments in
our Boeing 757 program on our financial performance; our ability to
sell our aircraft on the timelines we anticipate; the expected
operating capacity of our MRO facilities; the expected commencement
date of sales of our AerAware product; and our anticipated revenue
split between our two segments. AerSale’s actual results may differ
from their expectations, estimates and projections and
consequently, you should not rely on these forward looking
statements as predictions of future events. Words such as “expect,”
“estimate,” “project,” “budget,” “forecast,” “anticipate,”
“intend,” “plan,” “may,” “will,” “could,” “should,” “believes,”
“predicts,” “potential,” “continue,” and similar expressions are
intended to identify such forward-looking statements. Many factors
could cause actual future events to differ materially from the
forward-looking statements in this presentation, including without
limitation, the impact of the COVID-19 pandemic; factors adversely
impacting the commercial aviation industry; the fluctuating market
value of our products; our ability to repossess mid-life commercial
aircraft and engines; our ability to comply with stringent
government regulation; the shortage of skilled personnel, including
as a result of work stoppages; the highly competitive nature of the
markets in which we operate; and risks associated with our
international operations. You should carefully consider the
foregoing factors and the other risks and uncertainties described
in the “Risk Factors” section of the Company's Annual Report on
Form 10-K for the year ended December 31, 2020, filed with the
Securities and Exchange Commission ("SEC") on March 16, 2021, and
its other filings with the SEC, including its quarterly report on
Form 10-Q for the quarter ended March 31, 2021 to be filed with the
SEC. These filings identify and address other important risks and
uncertainties that could cause actual events and results to differ
materially from those contained in the forward-looking statements.
Forward-looking statements speak only as of the date they are made.
Readers are cautioned not to put undue reliance on forward-looking
statements, and AerSale Corporation assumes no obligation and does
not intend to update or revise these forward-looking statements,
whether as a result of new information, future events, or
otherwise, except as required by law
About AerSale
AerSale serves airlines operating large jets manufactured by
Boeing, Airbus and McDonnell Douglas and is dedicated to providing
integrated aftermarket services and products designed to help
aircraft owners and operators to realize significant savings in the
operation, maintenance and monetization of their aircraft, engines,
and components. AerSale’s offerings include: Aircraft &
Component MRO, Aircraft and Engine Sales and Leasing, Used
Serviceable Material sales, and internally developed ‘Engineered
Solutions’ to enhance aircraft performance and operating economics
(e.g. AerSafe™, AerTrak™, and now AerAware™).
For more information about AerSale, please visit our website:
www.AerSale.com. Follow us on: LinkedIn | Twitter | Facebook |
Instagram
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version on businesswire.com: https://www.businesswire.com/news/home/20210507005106/en/
Media Contacts: AerSale: Craig Wright Telephone: (305)
764-3200 Email: media.relations@aersale.com
Investor Contact: AerSale: AersaleIR@icrinc.com
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