Second Quarter 2024 Highlights
- Revenue of $77.1 million versus $69.3 million in the prior year
period.
- GAAP net loss of $3.6 million versus GAAP net loss of $2.7
million in the prior year period.
- Adjusted Net Loss of $2.6 million versus Adjusted Net Loss of
$0.6 million in the prior year period.
- Adjusted EBITDA1 of $3.2 million versus $(0.5) million in the
prior year period.
- Flight equipment sales consisted of five engines and no
aircraft compared to four engines and two unserviceable airframes
in the prior year period.
- Feedstock acquisitions of $36 million and additional $71
million under contract as of June 30, 2024.
- Flight Equipment inventory of $378.8 million as of June 30,
2024.
AerSale Corporation (Nasdaq: ASLE) (the “Company”) today
reported results for the second quarter ended June 30, 2024. The
Company’s revenue for the second quarter of 2024 was $77.1 million
compared to $69.3 million in the second quarter of 2023. Revenue
for the second quarter of 2024 included $17.9 million of flight
equipment sales compared to $17.6 million of flight equipment sales
in the prior-year period. Flight equipment sales in the second
quarter of 2024 consisted of five engines compared to four engines
and two unserviceable airframes in the prior year period. The
increase in sales was primarily the result of higher volume of USM
sold and strong MRO revenue amid a robust commercial backdrop. As a
reminder to investors, the Company’s revenues are likely to
fluctuate from quarter-to-quarter and year-to-year based on flight
equipment sales and therefore, progress should be monitored based
on MRO activity, asset purchases and related sales.
Nick Finazzo, AerSale’s Chief Executive Officer, commented, “Our
results improved over the prior year driven by higher feedstock
acquisitions over the past 18 months, continued demand in MRO and
incremental volume of AerSafe™. We have also advanced on a set of
initiatives to drive future growth and more consistently exceed our
fixed cost hurdles. We have progressed on the multi-year expansion
of both capacity and capabilities at our on and off-airport MRO
facilities, which includes our new on-airport MRO in Millington,
Tennessee, pneumatics capability at our Miami, Florida accessories
shop, and tripling the size of our aerostructures shop also located
in Miami. Our Millington on-airport MRO was completed in May and is
presently serving our first airline customer. We expect both of our
Miami component MROs to be serving customers before year-end, at
which time we anticipate a sharp rise in sales from these business
units.”
Finazzo added, “Beside our investment in new facilities,
capacity and capabilities, we have continued to use our balance
sheet to acquire feedstock to supply our asset management group,
which will enhance our ability to generate investor returns through
USM, leased equipment and whole asset sales.”
Asset Management Solutions (“Asset Management") revenue
increased to $41.8 million during the second quarter of 2024
compared to $37.1 million in the second quarter of 2023, primarily
because of stronger USM sales as the Company monetizes feedstock
acquired in the past 12-months. Used Serviceable Material (“USM”)
revenue increased 19.2% compared to the prior year quarter, while
the Company had one additional engine on lease in 2024 compared to
2023. There were no aircraft on lease in either period.
TechOps revenue increased 9.4% to $35.3 million in the second
quarter of 2024 from $32.3 million in the second quarter of 2023
primarily due to a continued strong demand for MRO services during
the quarter specifically in AerSale’s Roswell, New Mexico
on-airport MRO facility, as well as higher revenue from component
MROs. The company also benefitted from higher sales of its AerSafe™
product, as operators begin upgrades in advance of 2026 compliance
deadlines.
Gross margin was 28.2% versus 29.1% in the same period last year
primarily due to lower margins at our component MROs as the team
goes through an efficiency improvement curve on recently awarded
contracts.
Selling, general and administrative expenses were $23.6 million
in the second quarter of 2024 versus $27.1 million in the second
quarter of 2023 primarily due to a reduction in payroll related
expenses. AerSale incurred $1.1 million of stock-based compensation
expense in the second quarter of 2024, versus $3.0 million in the
second quarter of 2023.
Loss from operations was $1.9 million in the second quarter of
2024 compared to $7.0 million in the second quarter of 2023.
Income tax expense was $0.5 million in the second quarter of
2024, compared to income tax benefit of $2.4 million in the second
quarter of 2023.
GAAP net loss for the second quarter of 2024 was $3.6 million,
compared to GAAP net loss of $2.7 million in the prior year period.
AerSale recognized a mark-to-market adjustment benefit of $0.1
million related to the private warrant liability, $1.1 million of
stock-based compensation expenses within payroll expenses, and $0.4
million in facility relocation costs during the second quarter of
2024. In the second quarter of 2023, the mark-to-market adjustment
expense related to the private warrant liability was $1.4 million,
stock-based compensation expenses were $3.0 million and relocations
costs were $0.3 million. Excluding these non-cash and unusual items
adjusted for tax, Adjusted Net Loss was $2.6 million in the second
quarter of 2024, compared to Adjusted Net Loss of $0.6 million in
the second quarter of 2023.
Diluted loss per share was $0.07 for the second quarter of 2024
and diluted loss per was $0.08 in the second quarter of 2023.
Adjusted for the non-cash and unusual items noted above, adjusted
diluted loss per share was $0.05 for the second quarter of 2024,
while adjusted diluted loss per share of $0.03 in the second
quarter of 2023.
Adjusted EBITDA in the second quarter of 2024 was $3.2 million
versus $(0.5) million in the second quarter of 2023. Higher
adjusted EBITDA was primarily due higher sales volume during the
period and lower period costs.
AerSale ended the quarter with $101.8 million of liquidity
consisting of $4.3 million of cash and available capacity of $97.5
million on our $180 million revolving credit facility, expandable
to $200 million. Cash used in operating activities was $36.8
million, mainly due to continued investment in inventory.
Martin Garmendia, AerSale’s Chief Financial Officer, said, “Our
continued investment in feedstock has resulted in improvements
being realized compared to the prior period. Based on available
inventory balances and MRO capacity we have the tools needed to
continue this upward momentum through the remainder of 2024. In
addition, a strong liquidity position of over $100 million
available will enable us to continue to acquire properly priced
feedstock, amid a constrained supply side environment that has
resulted from reduced OEM deliveries.”
Update on Engineered Solutions
The Company continues to progress forward with prospective
customers while educating multiple aircraft operators on how its
Enhanced Flight Vision System (“EFVS”), AerAware™, could capture
significant safety and efficiency benefits after implementing the
system in their fleets.
In December 2023, the Federal Aviation Administration (“FAA”)
issued AerSale a Supplemental Type Certificate (“STC”) for
“AerAware™”, the Company’s revolutionary Enhanced Flight Vision
System (“EFVS”) for the Boeing B737NG product line. This
achievement marked the world's first commercial EFVS system to
achieve a 50% visual advantage (over unaided natural vision) and
the first large transport aircraft to be certified with a complete
dual-pilot EFVS solution featuring a Head-Wearable Display. AerSale
developed the AerAware™ certification program under license with
The Boeing Company, which included access to necessary technical
services, maintenance, and engineering data.
Please see the link below to get a visual sense as to how
AerAware's SkyLens Head Wearable Display enables pilots to benefit
from significantly enhanced situational awareness, with full visual
mobility for primary flight data and expansive, "eyes out" views of
the enhanced 3D synthetic terrain: AerAware™ (AerAware
Testimonial).
Conference Call Information
The Company will host a conference call today, August 7, 2024,
at 4:30 pm 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 1-877-300-8521, international callers may use
1-412-317-6026, and request to join the AerSale Corporation
earnings call.
A telephonic replay will be available shortly after the
conclusion of the call and until November 7, 2024. Participants may
access the replay at 1-844-512-2921, international callers may use
1-412-317-6671, and enter access code 10190507. An archived replay
of the call will also be available on the Investors portion of the
AerSale website at https://ir.aersale.com/.
Non-GAAP Financial Measures
This press release includes non-GAAP financial measures,
including adjusted EBITDA, adjusted Net Income, and adjusted
diluted Earnings per Share. 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 or unusual items. Adjusted Net Income is defined as
net income (loss) after giving effect to mark-to-market adjustments
relating to our Private Warrants, stock-based compensation expense
and other non-recurring or unusual items. Adjusted diluted earnings
per share also exclude these material non-recurring or unusual
items.
AerSale believes these non-GAAP measures 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 from operating
activities as a measure of liquidity (each as determined in
accordance with GAAP).
You should review AerSale’s financial statements, and not rely
on any single financial measure to evaluate AerSale’s business.
Other companies may calculate adjusted EBITDA, Adjusted Net Income,
or Adjusted diluted earnings per share differently, and therefore
AerSale’s adjusted EBITDA, adjusted Net Income, or adjusted diluted
earnings per share measures may not be directly comparable to
similarly titled measures of other companies.
Reconciliations of Net Income, the Company’s closest GAAP
measure, to adjusted EBITDA, Adjusted Net Income, and adjusted
diluted earnings per share, are outlined in the tables below
following the Company’s condensed consolidated financial
statements.
Second Quarter 2024 Financial Results
AERSALE CORPORATION
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands, except per
share data)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Revenue:
Products
$
43,298
$
37,623
$
104,908
$
83,118
Leasing
4,286
3,286
7,368
8,908
Services
29,517
28,417
55,365
55,571
Total revenue
77,101
69,326
167,641
147,597
Cost of sales and operating expenses:
Cost of products
28,531
26,931
68,150
58,479
Cost of leasing
1,894
1,079
3,087
2,202
Cost of services
24,956
21,176
45,888
42,385
Total cost of sales
55,381
49,186
117,125
103,066
Gross profit
21,720
20,140
50,516
44,531
Selling, general, and administrative
expenses
23,572
27,097
47,705
52,321
(Loss) income from operations
(1,852
)
(6,957
)
2,811
(7,790
)
Other (expenses) income:
Interest (expense) income, net
(1,528
)
381
(2,463
)
1,428
Other income, net
102
138
271
371
Change in fair value of warrant
liability
138
1,393
2,117
1,059
Total other (expenses) income
(1,288
)
1,912
(75
)
2,858
(Loss) income before income tax
provision
(3,140
)
(5,045
)
2,736
(4,932
)
Income tax (expense) benefit
(497
)
2,357
(96
)
2,249
Net (loss) income
$
(3,637
)
$
(2,688
)
$
2,640
$
(2,683
)
(Loss) earnings per share:
Basic
$
(0.07
)
$
(0.05
)
$
0.05
$
(0.05
)
Diluted
$
(0.07
)
$
(0.08
)
$
0.05
$
(0.07
)
Weighted average shares outstanding:
Basic
53,029,359
51,227,484
53,010,425
51,217,990
Diluted
53,029,359
51,404,653
53,111,439
51,417,889
AERSALE CORPORATION
CONDENSED CONSOLIDATED BALANCE
SHEET
(in thousands, except share
data)
(Unaudited)
June 30,
December 31,
2024
2023
Current assets:
Cash and cash equivalents
$
4,285
$
5,873
Accounts receivable, net of allowance for
credit losses of $978 as of June 30, 2024 and December 31, 2023
37,266
31,239
Income tax receivable
1,700
1,628
Inventory:
Aircraft, airframes, engines, and parts,
net
221,371
177,770
Advance vendor payments
13,589
35,757
Deposits, prepaid expenses, and other
current assets
17,617
12,507
Total current assets
295,828
264,774
Fixed assets:
Aircraft and engines held for lease,
net
31,491
26,475
Property and equipment, net
32,683
27,692
Inventory:
Aircraft, airframes, engines, and parts,
net
157,442
151,398
Operating lease right-of-use assets
26,022
27,519
Deferred income taxes
12,032
12,203
Deferred financing costs, net
1,342
1,506
Deferred customer incentives and other
assets, net
525
525
Goodwill
19,860
19,860
Other intangible assets, net
21,469
21,986
Total assets
$
598,694
$
553,938
Current liabilities:
Accounts payable
$
29,388
$
29,899
Accrued expenses
6,360
5,478
Lessee and customer purchase deposits
644
1,467
Current operating lease liabilities
4,237
4,593
Current portion of long-term debt
93
1,278
Deferred revenue
2,286
2,998
Total current liabilities
43,008
45,713
Revolving credit facility
80,955
29,000
Long-term debt
522
7,281
Long-term lease deposits
767
102
Long-term operating lease liabilities
23,315
24,377
Maintenance deposit payments and other
liabilities
59
64
Warrant liability
269
2,386
Total liabilities
148,895
108,923
Stockholders’ equity:
Common stock, $0.0001 par value.
Authorized 200,000,000 shares; issued and outstanding 53,084,214
and 52,954,430 shares as of June 30, 2024 and December 31, 2023
5
5
Additional paid-in capital
313,883
311,739
Retained earnings
135,911
133,271
Total stockholders' equity
449,799
445,015
Total liabilities and stockholders’
equity
$
598,694
$
553,938
AERSALE CORPORATION
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Six Months Ended June
30,
2024
2023
Cash flows from operating activities:
Net income (loss)
$
2,640
$
(2,683
)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization
6,434
5,069
Amortization of debt issuance costs
164
225
Amortization of operating lease assets
79
198
Inventory reserve
627
709
Deferred income taxes
171
(1,729
)
Change in fair value of warrant
liability
(2,117
)
(1,059
)
Share-based compensation
1,943
5,759
Changes in operating assets and
liabilities:
Accounts receivable
(6,027
)
(3,615
)
Income tax receivable
(72
)
-
Inventory
(56,566
)
(134,278
)
Deposits, prepaid expenses, and other
current assets
(5,110
)
4,144
Deferred customer incentives and other
assets
(543
)
78
Advance vendor payments
22,167
(11,326
)
Accounts payable
(509
)
4,957
Accrued expenses
795
(3,296
)
Deferred revenue
(712
)
1,719
Lessee and customer purchase deposits
(158
)
6,530
Other liabilities
(6
)
(599
)
Net cash used in operating activities
(36,800
)
(129,197
)
Cash flows from investing activities:
Proceeds from sale of assets
3,800
12,700
Acquisition of aircraft and engines held
for lease, including capitalized cost
(5,610
)
-
Purchase of property and equipment
(7,190
)
(4,814
)
Net cash (used in) provided by investing
activities
(9,000
)
7,886
Cash flows from financing activities:
Proceeds from long-term debt
615
8,559
Repayments of long-term debt
(8,559
)
-
Proceeds from revolving credit
facility
106,936
-
Repayments of revolving credit
facility
(54,981
)
-
Taxes paid related to net share settlement
of equity awards
(124
)
(70
)
Proceeds from the issuance of Employee
Stock Purchase Plan shares
325
278
Net cash provided by financing
activities
44,212
8,767
Decrease in cash and cash equivalents
(1,588
)
(112,544
)
Cash and cash equivalents, beginning of
period
5,873
147,188
Cash and cash equivalents, end of
period
$
4,285
$
34,644
Supplemental disclosure of cash
activities
Income tax payments, net
73
1,276
Interest paid
2,435
286
Supplemental disclosure of noncash
investing activities
Reclassification of aircraft and aircraft
engines inventory to (from) aircraft and engine held for lease,
net
2,494
3,711
AERSALE CORPORATION Adjusted
EBITDA Net Income and Diluted EPS Reconciliation Table
(In thousands, except per share data) (Unaudited)
Three months ended June
30,
Six months ended June
30,
2024
% of Total Revenue
2023
% of Total Revenue
2024
% of Total Revenue
2023
% of Total Revenue
Reported Net (Loss)/Income
(3,637
)
(4.7
)%
(2,688
)
(3.9
)%
2,640
1.6
%
(2,683
)
(1.8
)%
Addbacks:
Change in FV of Warrant Liability
(138
)
(0.2
)%
(1,393
)
(2.0
)%
(2,117
)
(1.3
)%
(1,059
)
(0.7
)%
Stock Compensation
1,144
1.5
%
3,028
4.4
%
1,943
1.2
%
5,759
3.9
%
Payroll taxes related to stock-based
compensation
-
(0.0
)%
-
0.0
%
36
0.0
%
-
0.0
%
Inventory Write-Off
(237
)
(0.3
)%
-
0.0
%
(237
)
(0.1
)%
-
0.0
%
Secondary Offering Costs
-
0.0
%
309
0.4
%
55
0.0
%
309
0.2
%
Facility Relocation Costs
364
0.5
%
342
0.5
%
824
0.5
%
722
0.5
%
Income Tax Effect of Adjusting Items
(1)
(87
)
(0.1
)%
(188
)
(0.3
)%
(211
)
(0.1
)%
(297
)
(0.2
)%
Adjusted Net (Loss)/Income
(2,591
)
(3.3
)%
(590
)
(0.9
)%
2,933
1.7
%
2,751
1.8
%
Interest Expense
1,528
2.0
%
(381
)
(0.5
)%
2,463
1.5
%
(1,428
)
(1.0
)%
Income Tax Expense (Benefit)
497
0.6
%
(2,357
)
(3.4
)%
96
0.1
%
(2,249
)
(1.5
)%
Depreciation and Amortization
3,655
4.7
%
2,600
3.8
%
6,434
3.8
%
5,069
3.4
%
Reversal of Income Tax Effect of Adjusting
Items (1)
87
0.1
%
188
0.3
%
211
0.1
%
297
0.2
%
Adjusted EBITDA
3,176
4.1
%
(540
)
(0.8
)%
12,137
7.3
%
4,440
2.9
%
Reported Basic (loss) earnings per
share
(0.07
)
(0.05
)
0.05
(0.05
)
Addbacks:
Change in fair value of warrant
liability
(0.00
)
(0.03
)
(0.04
)
(0.02
)
Stock-based compensation
0.02
0.06
0.04
0.11
Payroll taxes related to stock-based
compensation
-
-
0.00
-
Inventory Write-Off
(0.00
)
-
(0.00
)
-
Secondary Offering Costs
-
0.01
0.00
0.01
Facility Relocation Costs
0.01
0.01
0.02
0.01
Income Tax Effect of Adjusting Items
-
(0.00
)
(0.00
)
(0.01
)
Adjusted Basic (loss) earnings per
share
(0.05
)
(0.00
)
0.06
0.05
Reported Diluted (loss) earnings per
share
(0.07
)
(0.08
)
0.05
(0.07
)
Addbacks:
Change in FV of warrant liability
(0.00
)
(0.03
)
(0.04
)
(0.02
)
Stock-based compensation
0.02
0.06
0.04
0.11
Payroll taxes related to stock-based
compensation
(0.00
)
-
0.00
-
Inventory Write-Off
(0.00
)
-
(0.00
)
-
Secondary Offering Costs
0.00
0.01
0.00
0.01
Facility Relocation Costs
0.01
0.01
0.02
0.01
Income Tax Effect of Adjusting Items
(0.00
)
-
(0.00
)
(0.01
)
Adjusted Diluted (loss) earnings per
share
(0.05
)
(0.03
)
0.06
0.03
Forward Looking Statements
This press release includes “forward-looking statements”. We
intend such forward-looking statements to be covered by the safe
harbor provisions for forward-looking statements contained in
Section 27A of the Securities Act of 1933, as amended (the
“Securities Act”), and Section 21E of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”). All statements other than
statements of historical facts contained in this press release may
constitute forward-looking statements, and include, but are not
limited to, statements regarding our anticipated financial
performance, including anticipations regarding greater demand for
AerSale’s USM business; expectations regarding feedstock and
commercial demand; expectations from letters of intent on an
additional $71 million in inventory during the year; our belief
that we are well positioned to take advantage of the current market
dynamic; our belief that we are well positioned to take advantage
of asset availability; our growth trajectory; the expected
operating capacity of our MRO facilities and demand for such
services; expectation that AerAware™ is a technology that will be
broadly adopted and that sales of AerAware™ will be a meaningful
contributor to long-term performance; and expected benefits from an
improving backdrop in commercial aerospace, and end markets;
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,” or the
negative of these or other similar expressions are intended to
identify such forward-looking statements. The forward-looking
statements in this press release are only predictions. We have
based these forward-looking statements largely on our current
expectations and projections about future events and financial
trends that we believe may affect our business, financial condition
and results of operations. You should carefully consider the
foregoing factors and the other risks and uncertainties described
in the Risk Factors, Management’s Discussion and Analysis of
Financial Condition and Results of Operations sections of the
Company's most recent Annual Report on Form 10-K filed with the
Securities and Exchange Commission ("SEC"), and its other filings
with the SEC, including its subsequent quarterly reports on Form
10-Q. 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.
Moreover, we operate in an evolving environment. New risk factors
and uncertainties may emerge from time to time, and it is not
possible for management to predict all risk factors and
uncertainties.
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 we qualify all of our
forward-looking statements by these cautionary statements. Except
as required by applicable law, we do not plan to publicly update or
revise any forward-looking statements contained herein, whether as
a result of any new information, future events, changed
circumstances or otherwise.
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™).
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