AerSale Reports First Quarter 2022 Results
AerSale Corporation (Nasdaq: ASLE) reported a strong first quarter of 2022, with revenues reaching $122.8 million, a 110% increase year-over-year. GAAP net income surged by 72% to $17.2 million, and adjusted net income rose 115% to $22.2 million. Adjusted EBITDA was $29.9 million, reflecting a strong margin of 24.4%. Flight equipment sales contributed $75.9 million, primarily from five Boeing 757 aircraft. AerSale reaffirmed its 2022 revenue guidance of $420 - $450 million and adjusted EBITDA of $80 - $90 million.
- Revenue increased by 110% to $122.8 million compared to Q1 2021.
- GAAP net income up 72% to $17.2 million, or 14.0% of sales.
- Adjusted net income surged 115% to $22.2 million, or 18.1% of sales.
- Cash from operating activities reached $43.0 million.
- Company ended the quarter with $171.7 million in cash and no debt.
- Adjusted EBITDA margin decreased from 28.3% in Q1 2021 to 24.4%.
- Selling, general, and administrative expenses rose significantly to $23.8 million.
First Quarter 2022 Highlights
-
Revenue of
, up$122.8 million 110% as compared to prior year period. -
GAAP net income of
, or$17.2 million 14.0% of sales, up72% as compared to prior year period. -
Adjusted Net Income of
, or$22.2 million 18.1% of sales, up115% as compared to prior year period. -
Adjusted EBITDA of
or$29.9 million 24.4% of sales, up81% as compared to prior year period. - Flight equipment sales consistent of six aircraft and four engines, which included five Boeing 757 assets
- Continue to anticipate the monetization of the remaining Boeing 757 package in the remainder of 2022 and 2023.
-
Reaffirms 2022 guidance: expects revenue in the range of
-$420 and adjusted EBITDA in the range of$450 million -$80 1.$90 million
TechOps revenue climbed during the first quarter, primarily driven by the flight equipment sale of the Boeing 737 NG which served as the initial experimental aircraft for testing of the Company’s AerAware technology. This aircraft was highly modified to meet the specific requirements of a governmental agency. This improvement was somewhat offset by lower revenue from maintenance, repair and overhaul (MRO) activities at AerSale’s Goodyear facility, following the previously mentioned reallocation of resources to the Company’s Boeing 757 passenger-to-cargo conversion program , as well as decreases at AerSale’s Roswell facility as airlines continue to return aircraft into operation, reducing storage and related maintenance activities.
Within AerSale’s USM business, the Company anticipates an increasingly favorable market for feedstock availability against the backdrop of growing demand for airframe and engine parts as airline demand expands. In addition, demand for passenger-to-freighter conversions has remained elevated and will allow monetization of the remaining Boeing 757 aircraft during the balance of 2022 and through 2023.
GAAP net income for the first quarter of 2022 was
Adjusted EBITDA in the first quarter of 2022 was
Cash flows from operating activities were
Finazzo added, “Over the past few months, we have noted a sharp improvement in the feedstock market and our team has identified significant asset acquisition opportunities at attractive prices. Feedstock is a cornerstone of our strategy, and we are extremely well positioned to take advantage of the current market dynamic with over
First Quarter 2022 Results of Operations
Asset Management Solutions (AMS) revenue increased by
Revenue from TechOps was up
Gross margin was
Selling, general and administrative expenses net of Payroll Support Program proceeds were
Income from operations was
Income tax expense was
GAAP net income was
Adjusted EBITDA in the first quarter of 2022 was
2022 Guidance
Furthermore, this outlook is based on an improvement in the Company’s AMS segment, ongoing demand for its on-airport MRO services, accelerating demand in cargo and e-commerce markets, and continued requests for passenger-to-freighter conversions and other TechOps products and services.
The ongoing and continued monetization of the Boeing 757 fleet acquisition is expected to be the predominant driver of the AMS segment.
Conference Call Information
The Company will host a conference call today,
A telephonic replay will be available shortly after the conclusion of the call and until
Non-GAAP Financial Measures
This press release includes non-GAAP financial measures, including adjusted EBITDA, adjusted Net Income, and adjusted diluted Earnings per Share.
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, 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 2022 Financial Results
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CONDENSED CONSOLIDATED BALANCE SHEET |
||||||
(in thousands, except per share data) |
||||||
|
|
|
|
|
||
|
|
2022 |
|
2021 |
||
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
171,724 |
|
$ |
130,188 |
Accounts receivable, net of allowance for doubtful accounts of |
|
|
42,894 |
|
|
42,571 |
Inventory: |
|
|
|
|
|
|
Aircraft, airframes, engines, and parts, net |
|
|
80,295 |
|
|
81,759 |
Advance vendor payments |
|
|
16,228 |
|
|
14,287 |
Deposits, prepaid expenses, and other current assets |
|
|
3,208 |
|
|
2,724 |
Total current assets |
|
|
314,349 |
|
|
271,529 |
Fixed assets: |
|
|
|
|
|
|
Aircraft and engines held for lease, net |
|
|
53,579 |
|
|
73,364 |
Property and equipment, net |
|
|
8,494 |
|
|
7,350 |
Inventory: |
|
|
|
|
|
|
Aircraft, airframes, engines, and parts, net |
|
|
68,816 |
|
|
77,534 |
Deferred income taxes |
|
|
10,788 |
|
|
10,013 |
Deferred financing costs, net |
|
|
887 |
|
|
999 |
Deferred customer incentives and other assets, net |
|
|
470 |
|
|
598 |
|
|
|
19,860 |
|
|
19,860 |
Other intangible assets, net |
|
|
25,713 |
|
|
26,238 |
Total assets |
|
$ |
502,956 |
|
$ |
487,485 |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
20,168 |
|
$ |
19,967 |
Accrued expenses |
|
|
6,811 |
|
|
8,424 |
Income tax payable |
|
|
8,418 |
|
|
3,443 |
Lessee and customer purchase deposits |
|
|
25,849 |
|
|
33,212 |
Deferred revenue |
|
|
2,322 |
|
|
2,860 |
Total current liabilities |
|
|
63,568 |
|
|
67,906 |
|
|
|
|
|
|
|
Long-term lease deposits |
|
|
605 |
|
|
2,053 |
Maintenance deposit payments and other liabilities |
|
|
2,320 |
|
|
3,403 |
Deferred income taxes, net |
|
|
1,113 |
|
|
1,113 |
Warrant liability |
|
|
5,365 |
|
|
4,131 |
Total liabilities |
|
|
72,971 |
|
|
78,606 |
Commitments and contingencies |
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
Common stock, |
|
|
5 |
|
|
5 |
Additional paid-in capital |
|
|
317,781 |
|
|
313,901 |
Retained earnings |
|
|
112,199 |
|
|
94,973 |
Total stockholders' equity |
|
|
429,985 |
|
|
408,879 |
Total liabilities and stockholders’ equity |
|
$ |
502,956 |
|
$ |
487,485 |
|
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (Unaudited) |
|||||||
|
Three Months Ended |
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|
2022 |
2021 |
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Revenue: |
|
|
|
|
|||
Products |
$ |
92,368 |
|
$ |
25,126 |
|
|
Leasing |
|
8,201 |
|
|
6,256 |
|
|
Services |
|
22,237 |
|
|
27,053 |
|
|
Total revenue |
|
122,806 |
|
|
58,435 |
|
|
Cost of sales and operating expenses: |
|
|
|
|
|||
Cost of products |
|
57,928 |
|
|
13,806 |
|
|
Cost of leasing |
|
2,189 |
|
|
2,767 |
|
|
Cost of services |
|
15,986 |
|
|
22,027 |
|
|
Total cost of sales |
|
76,103 |
|
|
38,600 |
|
|
Gross profit |
|
46,703 |
|
|
19,835 |
|
|
Selling, general, and administrative expenses |
|
23,766 |
|
|
13,310 |
|
|
Payroll support program proceeds |
|
- |
|
|
(6,363 |
) |
|
Income from operations |
|
22,937 |
|
|
12,888 |
|
|
Other income (expenses): |
|
|
|
|
|||
Interest expense, net |
|
(195 |
) |
|
(258 |
) |
|
Other income, net |
|
365 |
|
|
94 |
|
|
Change in fair value of warrant liability |
|
(1,234 |
) |
|
(224 |
) |
|
Total other expenses |
|
(1,064 |
) |
|
(388 |
) |
|
Income before income tax provision |
|
21,873 |
|
|
12,500 |
|
|
Income tax expense |
|
(4,647 |
) |
|
(2,482 |
) |
|
Net income |
$ |
17,226 |
|
$ |
10,018 |
|
|
|
|
|
|
|
|||
Earnings per share - basic |
$ |
0.33 |
|
$ |
0.24 |
|
|
Earnings per share - diluted |
$ |
0.32 |
|
$ |
0.23 |
|
|
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited) |
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|
Three Months Ended |
||||||
|
2022 |
2021 |
|||||
Cash flows from operating activities: |
|
|
|
|
|||
Net income |
$ |
17,226 |
|
$ |
10,018 |
|
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
|
|
|
|
|||
Depreciation and amortization |
|
2,865 |
|
|
3,487 |
|
|
Amortization of debt issuance costs |
|
112 |
|
|
150 |
|
|
Inventory reserve |
|
(50 |
) |
|
74 |
|
|
Provision for doubtful accounts |
|
(424 |
) |
|
(144 |
) |
|
Deferred income taxes |
|
(775 |
) |
|
(284 |
) |
|
Change in fair value of warrant liability |
|
1,234 |
|
|
224 |
|
|
Stock-based compensation |
|
3,755 |
|
|
- |
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|||
Accounts receivable |
|
(5,527 |
) |
|
1,713 |
|
|
Inventory |
|
28,174 |
|
|
(27,020 |
) |
|
Deposits, prepaid expenses, and other current assets |
|
(484 |
) |
|
2,590 |
|
|
Deferred customer incentives and other assets |
|
123 |
|
|
- |
|
|
Advance vendor payments |
|
(1,941 |
) |
|
(4,514 |
) |
|
Accounts payable |
|
201 |
|
|
2,857 |
|
|
Income tax payable |
|
4,975 |
|
|
5 |
|
|
Accrued expenses |
|
(1,611 |
) |
|
(1,420 |
) |
|
Deferred revenue |
|
(538 |
) |
|
(1,777 |
) |
|
Lessee and customer purchase deposits |
|
(3,184 |
) |
|
- |
|
|
Other liabilities |
|
(1,083 |
) |
|
80 |
|
|
Net cash provided by (used in) operating activities |
|
43,048 |
|
|
(13,961 |
) |
|
Cash flows from investing activities: |
|
|
|
|
|||
Proceeds from sale of assets |
|
- |
|
|
4,420 |
|
|
Purchase of property and equipment |
|
(1,637 |
) |
|
(443 |
) |
|
Net cash (used in) provided by investing activities |
|
(1,637 |
) |
|
3,977 |
|
|
Cash flows from financing activities: |
|
|
|
|
|||
Cash paid for employee taxes on withholding shares |
|
- |
|
|
(269 |
) |
|
Proceeds from exercise of warrants |
|
- |
|
|
545 |
|
|
Proceeds from the issuance of ESPP shares |
|
125 |
|
|
- |
|
|
Net cash provided by financing activities |
|
125 |
|
|
276 |
|
|
|
|
|
|
|
|||
Increase (decrease) in cash and cash equivalents |
|
41,536 |
|
|
(9,708 |
) |
|
Cash and cash equivalents, beginning of period |
|
130,188 |
|
|
29,317 |
|
|
Cash and cash equivalents, end of period |
$ |
171,724 |
|
$ |
19,609 |
|
|
|
|
|
|
|
|||
Supplemental disclosure of cash activities |
|
|
|
|
|||
Income taxes |
|
277 |
|
|
98 |
|
|
Interest |
|
141 |
|
|
167 |
|
|
Supplemental disclosure of noncash investing activities |
|
|
|
|
|||
Reclassification of aircraft and aircraft engines inventory (from) equipment held for lease, net |
|
(17,942 |
) |
|
(2,061 |
) |
Adjusted EBITDA, Net Income and Diluted EPS
(Unaudited) |
||||||||
Three months ended |
||||||||
2022 |
% of Total
|
2021 |
% of Total
|
|||||
Reported Net Income/(Loss) |
$ |
17,226 |
14.0 |
% |
$ |
10,018 |
17.1 |
% |
Addbacks: |
||||||||
Change in Fair Value of Warrant Liability |
1,234 |
1.0 |
% |
224 |
0.4 |
% |
||
Stock-Based Compensation |
3,755 |
3.1 |
% |
75 |
0.1 |
% |
||
Adjusted Net Income |
$ |
22,215 |
18.1 |
% |
$ |
10,317 |
17.7 |
% |
Interest Expense |
195 |
0.2 |
% |
258 |
0.4 |
% |
||
Income Tax Expense (Benefit) |
4,647 |
3.8 |
% |
2,482 |
4.2 |
% |
||
Depreciation and Amortization |
2,865 |
2.3 |
% |
3,487 |
6.0 |
% |
||
Adjusted EBITDA |
$ |
29,922 |
24.4 |
% |
$ |
16,544 |
28.3 |
% |
Reported Basic EPS |
0.33 |
0.24 |
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Addbacks: |
||||||||
Change in Fair Value of Warrant Liability |
0.02 |
0.01 |
||||||
Stock-based Compensation |
0.07 |
0.00 |
||||||
Adjusted Basic EPS |
$ |
0.43 |
$ |
0.24 |
||||
Reported Diluted EPS |
0.32 |
0.23 |
||||||
Addbacks: |
||||||||
Change in FV of warrant liability |
0.02 |
0.01 |
||||||
Stock-based compensation |
0.07 |
0.00 |
||||||
Adjusted Diluted EPS |
$ |
0.41 |
$ |
0.24 |
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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, including all statements set forth in the “2022 Guidance” section above such as expectations of revenue in the range of
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1 A reconciliation of non-GAAP adjusted EBITDA guidance to net income, the most directly comparable GAAP (Generally Accepted Accounting Principles) 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 cannot be reasonably predicted without unreasonable efforts.
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