First Quarter 2024 Highlights
- Revenue of $90.5 million versus $78.3 million in the prior year
period.
- GAAP net income of $6.3 million versus $5 thousand in the prior
year period.
- Adjusted Net Income1 of $5.5 million versus $3.3 million in the
prior year period.
- Adjusted EBITDA1 of $9.0 million versus $5.0 million in the
prior year period.
- Flight equipment sales consisted of one aircraft and four
engines in the first quarter of 2024, compared to two aircraft and
one engine in the prior year period.
- Feedstock acquisitions of $28.2 million and an additional $51.7
million under contract.
- Flight Equipment inventory of $350.1 million as of March 31,
2024.
AerSale Corporation (Nasdaq: ASLE) (the “Company”) today
reported results for the first quarter ended March 31, 2024. The
Company’s revenue for the first quarter of 2024 was $90.5 million
compared to $78.3 million in the first quarter of 2023. Revenue for
the first quarter of 2024 included $38.6 million of flight
equipment sales compared to $27.7 million of flight equipment sales
in the prior-year period. Flight equipment sales in the first
quarter of 2024 consisted of one aircraft and four engines,
compared to two cargo aircraft (a 737 and 757), and one engine in
the first quarter of 2023. Higher sales were primarily the result
of the pacing of flight equipment sales, a 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.
Nicolas Finazzo, AerSale’s Chief Executive Officer, commented,
“We are off to a good start in the first quarter of 2024,
underscored by higher feedstock purchases in 2023 that drove a
greater level of sales. Our MRO facilities are benefitting from
robust demand as airlines are operating at elevated capacity
levels.”
Finazzo added, “As we look to the balance of 2024, we expect
commercial demand to remain strong resulting from a favorable
operating backdrop. We have acquired $30.6 million of feedstock
year-to-date and have letters of intent on an additional $51.7
million of inventory that we expect during the year. Feedstock
availability remains pressured as a result of OEM delivery issues,
but we believe we are positioned in the market to drive returns
from available aircraft as a result of our purpose-built end-to-end
solution that is unique to the industry.”
Asset Management Solutions (“Asset Management") revenue
increased to $59.3 million during the first quarter of 2024
compared to $48.4 million in the first quarter of 2023, due to the
pacing of flight equipment sales mentioned above. Used Serviceable
Material (“USM”) revenue increased 15.7% compared to the prior year
quarter, while no aircraft in the lease portfolio resulted in
overall lower leasing revenue. Excluding flight equipment sales,
Asset Management revenue would have been $20.7 million in the first
quarter of 2024, same as in the prior year period as improvements
in USM offset the reduction in leasing.
TechOps revenue increased 4.8% to $31.3 million in the first
quarter of 2024 from $29.8 million in the prior year period. The
increase is primarily due to a continued strong demand environment
for MRO services during the quarter in the Company’s Component MRO
facilities as the commercial aircraft market remains robust, along
with stronger demand for MRO generated USM sales compared to the
prior year period.
Gross margin was 31.8% in the first quarter of 2024 versus 31.2%
in the same period last year, mostly as a result of the sales mix
that comprised of additional higher margin flight equipment
sales.
Selling, general and administrative expenses decreased $1.1
million to $24.1 million in the first quarter of 2024 compared to
$25.2 million in the first quarter of 2023. AerSale incurred $0.8
million of stock-based compensation expenses in the first quarter
of 2024, versus $2.7 million in the first quarter of 2023.
Income from operations was $4.7 million in the first quarter of
2024, compared to a loss from operations of $0.8 million in the
first quarter of 2023.
Income tax benefit was $0.4 million in the first quarter of
2024, compared to income tax expense of $0.1 million in the first
quarter of 2023.
GAAP net income was $6.3 million in the first quarter of 2024,
compared to $5 thousand in the first quarter of 2023. AerSale
recognized a mark-to-market adjustment benefit of $2.0 million
related to the private warrant liability, $0.8 million of
stock-based compensation expenses within payroll expenses, and $0.5
million in facility relocation costs during the first quarter of
2024. In the first quarter of 2023, the mark-to-market adjustment
expense related to the private warrant liability was $0.3 million,
stock-based compensation expenses were $2.7 million and relocations
costs were $0.4 million. Excluding these non-cash and unusual items
adjusted for tax, Adjusted Net Income was $5.5 million in the first
quarter of 2024, compared to Adjusted Net Income of $3.3 million in
the first quarter of 2023.
Diluted earnings per share was $0.12 for the first quarter of
2024 and $0.00 in the first quarter of 2023. Adjusted for the
non-cash and unusual items noted above, adjusted diluted earnings
per share was $0.11 for the first quarter of 2024 same as earnings
per share of $0.07 in the first quarter of 2023.
Adjusted EBITDA in the first quarter of 2024 was $9.0 million
versus $5.0 million in the first quarter of 2023. Higher adjusted
EBITDA was primarily due to the increase in flight equipment sales,
which generally have higher margins.
AerSale ended the quarter with $128.9 million of liquidity
consisting of $2.6 million of cash and available capacity of $126.3
million on our $180 million revolving credit facility, expandable
to $200 million. Cash used in operating activities was $21.5
million, mainly due to continued investment in inventory.
Update on Engineered Solutions
The Company is continuing its go-to-market strategy for its
Enhanced Flight Vision System (“EFVS”), AerAware™, and remains in
open dialogue with multiple aircraft operators to secure a first
order while continuing to educate potential customers on the
benefits of having the AerAware™ 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
Conference Call Information
The Company will host a conference call today, May 8, 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 July 8, 2024. Participants may
access the replay at 1-844-512-2921, international callers may use
1-412-317-6671, and enter access code 10188062. 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.
First Quarter 2024 Financial Results
AERSALE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
(in thousands, except per share
data)
(Unaudited)
Three Months Ended March
31,
2024
2023
Revenue:
Products
$
61,610
$
45,495
Leasing
3,082
5,622
Services
25,848
27,154
Total revenue
90,540
78,271
Cost of sales and operating expenses:
Cost of products
39,619
31,548
Cost of leasing
1,193
1,123
Cost of services
20,932
21,209
Total cost of sales
61,744
53,880
Gross profit
28,796
24,391
Selling, general, and administrative
expenses
24,133
25,224
Income (loss) from operations
4,663
(833
)
Other income (expenses):
Interest (expense) income, net
(935
)
1,047
Other income, net
169
233
Change in fair value of warrant
liability
1,979
(334
)
Total other income
1,213
946
Income before income tax provision
5,876
113
Income tax benefit (expense)
401
(108
)
Net income
$
6,277
$
5
Earnings per share:
Basic
$
0.12
$
-
Diluted
$
0.12
$
-
Weighted average shares outstanding:
Basic
52,991,506
51,206,226
Diluted
53,247,979
52,958,555
AERSALE CORPORATION
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except share data
and par value)
March 31,
December 31,
2024
2023
(Unaudited)
Current assets:
Cash and cash equivalents
$
2,637
$
5,873
Accounts receivable, net of allowance for
credit losses of $978 as of March 31, 2024 and December 31,
2023
30,057
31,239
Income tax receivable
1,628
1,628
Inventory:
Aircraft, airframes, engines, and parts,
net
203,652
177,770
Advance vendor payments
37,560
35,757
Deposits, prepaid expenses, and other
current assets
12,840
12,507
Total current assets
288,374
264,774
Fixed assets:
Aircraft and engines held for lease,
net
23,262
26,475
Property and equipment, net
30,387
27,692
Inventory:
Aircraft, airframes, engines, and parts,
net
147,193
151,398
Operating lease right-of-use assets
26,307
27,519
Deferred income taxes
12,906
12,203
Deferred financing costs, net
1,424
1,506
Deferred customer incentives and other
assets, net
525
525
Goodwill
19,860
19,860
Other intangible assets, net
21,456
21,986
Total assets
$
571,694
$
553,938
Current liabilities:
Accounts payable
$
26,278
$
29,899
Accrued expenses
5,720
5,478
Lessee and customer purchase deposits
805
1,467
Current operating lease liabilities
4,401
4,593
Current portion of long-term debt
1,033
1,278
Deferred revenue
2,009
2,998
Total current liabilities
40,246
45,713
Revolving credit facility
51,969
29,000
Long-term debt
3,527
7,281
Long-term lease deposits
102
102
Long-term operating lease liabilities
23,398
24,377
Maintenance deposit payments and other
liabilities
62
64
Warrant liability
407
2,386
Total liabilities
119,711
108,923
Stockholders’ equity:
Common stock, $0.0001 par value.
Authorized 200,000,000 shares; issued and outstanding 53,009,026
and 52,954,430 shares as of March 31, 2024 and December 31,
2023
5
5
Additional paid-in capital
312,430
311,739
Retained earnings
139,548
133,271
Total stockholders' equity
451,983
445,015
Total liabilities and stockholders’
equity
$
571,694
$
553,938
AERSALE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(in thousands)
(Unaudited)
Three Months Ended March
31,
2024
2023
Cash flows from operating activities:
Net income
$
6,277
$
5
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization
2,779
2,469
Amortization of debt issuance costs
82
39
Amortization of operating lease assets
40
101
Inventory reserve
504
773
Deferred income taxes
(703
)
72
Change in fair value of warrant
liability
(1,979
)
334
Share-based compensation
799
2,731
Changes in operating assets and
liabilities:
Accounts receivable
1,182
(7,996
)
Inventory
(23,961
)
(48,983
)
Deposits, prepaid expenses, and other
current assets
(332
)
(2,966
)
Deferred customer incentives and other
assets
-
68
Advance vendor payments
(1,803
)
(12,476
)
Accounts payable
(3,619
)
14,018
Accrued expenses
914
(3,396
)
Deferred revenue
(989
)
1,343
Lessee and customer purchase deposits
(662
)
(7,985
)
Other liabilities
(2
)
(593
)
Net cash used in operating activities
(21,473
)
(62,442
)
Cash flows from investing activities:
Proceeds from sale of assets
3,800
4,500
Purchase of property and equipment
(3,574
)
(1,481
)
Net cash provided by investing
activities
226
3,019
Cash flows from financing activities:
Repayments of long-term debt
(4,000
)
-
Proceeds from revolving credit
facility
61,600
-
Repayments of revolving credit
facility
(39,481
)
-
Taxes paid related to net share settlement
of equity awards
(108
)
(70
)
Net cash provided by (used in) financing
activities
18,011
(70
)
Decrease in cash and cash equivalents
(3,236
)
(59,493
)
Cash and cash equivalents, beginning of
period
5,873
147,188
Cash and cash equivalents, end of
period
$
2,637
$
87,695
Supplemental disclosure of cash
activities
Income tax payments, net
3
(100
)
Interest paid
822
141
Supplemental disclosure of noncash
investing activities
Reclassification of aircraft and aircraft
engines inventory to (from) aircraft and engine held for lease,
net
(2,020
)
3,573
AERSALE CORPORATION
Adjusted EBITDA, Net Income and
Diluted EPS
Reconciliation Table (In ‘000s,
except per share data)
(Unaudited)
Three months ended March
31,
2024
% of Total Revenue
2023
% of Total Revenue
Reported Net Income
6,277
6.9
%
5
0.0
%
Addbacks:
Change in FV of Warrant Liability
(1,979
)
(2.2
%)
334
0.4
%
Stock Compensation
799
0.9
%
2,731
3.5
%
Payroll taxes related to stock-based
compensation
36
0.0
%
-
0.0
%
Secondary Offering Costs
55
0.1
%
-
0.0
%
Facility Relocation Costs
460
0.5
%
380
0.5
%
Income Tax Effect of Adjusting Items
(1)
(124
)
(0.1
%)
(109
)
(0.1
%)
Adjusted Net Income
5,524
6.1
%
3,341
4.2
%
Interest Expense (Income)
935
1.0
%
(1,047
)
(1.3
%)
Income Tax Expense (Benefit)
(401
)
(0.4
%)
108
0.1
%
Depreciation and Amortization
2,779
3.1
%
2,469
3.2
%
Reversal of Income Tax Effect of Adjusting
Items (1)
124
0.1
%
109
0.1
%
Adjusted EBITDA
8,961
9.9
%
4,980
6.4
%
Reported Basic earnings per
share
0.12
0.00
Addbacks:
Change in FV of Warrant Liability
(0.04
)
0.01
Stock Compensation
0.02
0.05
Payroll taxes related to stock-based
compensation
0.00
-
Secondary Offering Costs
0.00
-
Facility Relocation Costs
0.01
0.01
Income Tax Effect of Adjusting Items
(1)
(0.00
)
(0.00
)
Adjusted Basic earnings per
share
0.11
0.07
Reported Diluted earnings per
share
0.12
0.00
Addbacks:
Change in FV of Warrant Liability
(0.04
)
0.01
Stock Compensation
0.02
0.05
Payroll taxes related to stock-based
compensation
0.00
-
Secondary Offering Costs
0.00
-
Facility Relocation Costs
0.01
0.01
Income Tax Effect of Adjusting Items
(1)
(0.00
)
(0.00
)
Adjusted Diluted earnings per
share
0.11
0.07
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 $51.7 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™).
____________________________ 1 Adjusted net income, adjusted
EBITDA and adjusted diluted earnings per share are non-GAAP
measures. See “Non-GAAP Financial Measures” and “Adjusted EBITDA,
Net Income and Diluted EPS Reconciliation Table” at the end of this
press release for a discussion of why we believe these non-GAAP
measures are useful and a detailed reconciliation of these measures
to the most directly comparable GAAP (Generally Accepted Accounting
Principles) measure, respectively.
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Media Contacts: For more information
about AerSale, please visit our website: www.AerSale.com. Follow us
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AerSale: Jackie Carlon Telephone: (305) 764-3200 Email:
media.relations@aersale.com
Investor Contact: AerSale:
AersaleIR@icrinc.com
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