AerSale Reports First Quarter 2023 Results
First Quarter 2023 Highlights
- Revenue and earnings reflect the pacing of flight equipment sales.
-
Revenue of
versus$78.3 million in the prior year period.$122.8 million -
GAAP net income of
versus$5 thousand in the prior year period.$17.2 million -
Adjusted Net Income1 of
versus$3.3 million in the prior year period.$22.2 million -
Adjusted EBITDA1 of
versus$5.0 million in the prior year period.$29.9 million - Flight equipment sales consisted of two aircraft, one airframe, and one engine.
- On track to convert 11 additional 757 aircraft to freighters by third parties.
- Eight converted aircraft are anticipated to become available for sale or lease in 2023.
-
Reaffirms 2023 guidance: expects revenue in the range of
-$460 and adjusted EBITDA in the range of$490 million -$70 , which excludes any potential AerAware sales2.$80 million
Nicolas Finazzo, AerSale’s Chief Executive Officer, commented, “Our first quarter results were in-line with our internal forecast and expectations for the year. As we have noted in the past, the timing of flight equipment sales can cause substantial fluctuations in year-over-year comparisons, which was pronounced in the first quarter of 2023. Our whole asset program is a critical and important component of our end-to-end solution, which we believe offers an attractive ROI. I am pleased to note that our feedstock acquisitions have been strong year-to-date, which positions us well to deliver on our full-year commitments as we convert this equipment in the second half of 2023.”
Asset Management Solutions (“Asset Management") revenue declined to
TechOps revenue decreased
GAAP net income was
Diluted earnings per share was
Adjusted EBITDA in the first quarter of 2023 was
Cash used in operating activities was
Update on AerAware
The Company has been testing its Enhanced Flight Vision System “AerAware” on two aircraft since August 2020 in order to obtain FAA approval to commercialize this product and be issued a Supplemental Type Certificate (“STC”). The FAA required, among other things, that AerSale prove this system through FAA-observed flight tests, with the FAA scheduling five sets of flight tests beginning in February 2023. The Company successfully completed the first four sets of flight tests from February through the end of April, the most important of which proved that the enhanced flight vision capability met the criteria set out by both the Company and the FAA for certification. AerSale is currently working diligently to schedule the fifth test flight, which, once executed will complete the flight testing aspect of the certification process.
Regarding AerAware, Finazzo added: “The FAA approval process is lengthy and exhaustive to ensure public safety, which is underscored by the excellent safety record of US commercial aviation. Through this process we have continually improved the system, resulting in safety and quality advancements that lead us to believe we have a system superior to anything available on the commercial market today. Further, given the advanced technology we are bringing to the market, combined with the substantial investment of time and resources to obtain an STC, we believe we will be in an excellent position to become the leader in the category. To that end, after demonstrating to the FAA how the system worked in low visibility conditions, we received positive feedback on the low visibility function of our enhanced flight vision system. We are excited to be near completion considering all the progress we have made with the FAA and the interest we have received from multiple potential customers.”
First Quarter 2023 Results of Operations
AerSale reported revenue of
Asset Management revenue declined
TechOps revenue declined
Gross margin was
Selling, general and administrative expenses were
Loss from operations was
Income tax expense was
GAAP net income for the first quarter of 2023 was
Adjusted EBITDA in the first quarter of 2023 was
Martin Garmendia, AerSale’s Chief Financial Officer, said: “As anticipated, our results for the first quarter of 2023 included significantly lower flight equipment sales compared to the prior year, which adversely impacted our margins. We expect this trend to continue through the second quarter of this year given that the second quarter of 2022 included
2023 Guidance
AerSale still expects to generate revenue of
Conference Call Information
The Company will host a conference call today, May 9, 2023, 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 1-888-886-7786, international callers may use 1-416-764-8658, 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 23, 2023. Participants may access the replay at 1-844-512-2921, international callers may use 1-412-317-6671, and enter access code 07342899. 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 2023 Financial Results
AERSALE CORPORATION |
||||||
CONDENSED CONSOLIDATED BALANCE SHEET |
||||||
(in thousands, except share data) |
||||||
(Unaudited) |
||||||
|
||||||
|
March 31, |
December 31, |
||||
|
2023 |
2022 |
||||
|
(Unaudited) |
|
||||
|
|
|
||||
Current assets: |
|
|
||||
Cash and cash equivalents |
$ |
87,695 |
$ |
147,188 |
||
Accounts receivable, net of allowance for credit losses of |
|
36,269 |
|
28,273 |
||
Inventory: |
|
|
||||
Aircraft, airframes, engines, and parts, net |
|
146,408 |
|
117,488 |
||
Advance vendor payments |
|
29,008 |
|
27,585 |
||
Deposits, prepaid expenses, and other current assets |
|
27,040 |
|
13,022 |
||
Total current assets |
|
326,420 |
|
333,556 |
||
Fixed assets: |
|
|
||||
Aircraft and engines held for lease, net |
|
33,555 |
|
31,288 |
||
Property and equipment, net |
|
13,481 |
|
12,638 |
||
Inventory: |
|
|
||||
Aircraft, airframes, engines, and parts, net |
|
77,259 |
|
66,042 |
||
Operating lease right-of-use assets |
|
30,952 |
|
31,624 |
||
Deferred income taxes |
|
11,215 |
|
11,287 |
||
Deferred financing costs, net |
|
432 |
|
544 |
||
Deferred customer incentives and other assets, net |
|
560 |
|
628 |
||
Goodwill |
|
19,860 |
|
19,860 |
||
Other intangible assets, net |
|
23,587 |
|
24,112 |
||
Total assets |
$ |
537,321 |
$ |
531,579 |
||
|
|
|
||||
Current liabilities: |
|
|
||||
Accounts payable |
$ |
35,148 |
$ |
21,131 |
||
Accrued expenses |
|
5,373 |
|
8,843 |
||
Lessee and customer purchase deposits |
|
9,100 |
|
17,085 |
||
Current operating lease liabilities |
|
4,600 |
|
4,426 |
||
Deferred revenue |
|
2,698 |
|
1,355 |
||
Total current liabilities |
|
56,919 |
|
52,840 |
||
|
|
|
||||
Long-term lease deposits |
|
152 |
|
152 |
||
Long-term operating lease liabilities |
|
27,539 |
|
28,283 |
||
Maintenance deposit payments and other liabilities |
|
75 |
|
668 |
||
Warrant liability |
|
4,990 |
|
4,656 |
||
Total liabilities |
|
89,675 |
|
86,599 |
||
Commitments and contingencies |
|
|
||||
Stockholders’ equity: |
|
|
||||
Common stock, |
|
5 |
|
5 |
||
Additional paid-in capital |
|
308,802 |
|
306,141 |
||
Retained earnings |
|
138,839 |
|
138,834 |
||
Total stockholders' equity |
|
447,646 |
|
444,980 |
||
Total liabilities and stockholders’ equity |
$ |
537,321 |
$ |
531,579 |
||
AERSALE CORPORATION |
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||
(in thousands, except per share data) |
||||||||
(Unaudited) |
||||||||
|
|
|
|
|
|
|
||
|
|
Three Months Ended March 31, |
||||||
|
|
2023 |
|
2022 |
||||
Revenue: |
|
|
|
|
|
|
||
Products |
|
$ |
45,495 |
|
|
$ |
92,368 |
|
Leasing |
|
|
5,622 |
|
|
|
8,201 |
|
Services |
|
|
27,154 |
|
|
|
22,237 |
|
Total revenue |
|
|
78,271 |
|
|
|
122,806 |
|
Cost of sales and operating expenses: |
|
|
|
|
|
|
||
Cost of products |
|
|
31,548 |
|
|
|
57,928 |
|
Cost of leasing |
|
|
1,123 |
|
|
|
2,189 |
|
Cost of services |
|
|
21,209 |
|
|
|
15,986 |
|
Total cost of sales |
|
|
53,880 |
|
|
|
76,103 |
|
Gross profit |
|
|
24,391 |
|
|
|
46,703 |
|
Selling, general, and administrative expenses |
|
|
25,224 |
|
|
|
23,766 |
|
(Loss) income from operations |
|
|
(833 |
) |
|
|
22,937 |
|
Other income (expenses): |
|
|
|
|
|
|
||
Interest income (expense), net |
|
|
1,047 |
|
|
|
(195 |
) |
Other income, net |
|
|
233 |
|
|
|
365 |
|
Change in fair value of warrant liability |
|
|
(334 |
) |
|
|
(1,234 |
) |
Total other income (expenses) |
|
|
946 |
|
|
|
(1,064 |
) |
Income before income tax provision |
|
|
113 |
|
|
|
21,873 |
|
Income tax expense |
|
|
(108 |
) |
|
|
(4,647 |
) |
Net income |
|
$ |
5 |
|
|
$ |
17,226 |
|
|
|
|
|
|
|
|
||
Earnings per share - basic |
|
$ |
0.00 |
|
|
$ |
0.33 |
|
Earnings per share - diluted |
|
$ |
0.00 |
|
|
$ |
0.32 |
|
AERSALE CORPORATION |
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
(in thousands) |
||||||||
(Unaudited) |
||||||||
|
|
|
|
|
|
|
||
|
|
Three Months Ended March 31, |
||||||
|
|
2023 |
|
2022 |
||||
Cash flows from operating activities: |
|
|
|
|
|
|
||
Net income |
|
$ |
5 |
|
|
$ |
17,226 |
|
Adjustments to reconcile net income to net cash (used in) provided by operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
2,469 |
|
|
|
2,865 |
|
Amortization of debt issuance costs |
|
|
39 |
|
|
|
112 |
|
Amortization of operating lease assets |
|
|
101 |
|
|
|
- |
|
Inventory reserve |
|
|
773 |
|
|
|
(50 |
) |
Provision for credit losses |
|
|
- |
|
|
|
(424 |
) |
Deferred income taxes |
|
|
72 |
|
|
|
(775 |
) |
Change in fair value of warrant liability |
|
|
334 |
|
|
|
1,234 |
|
Share-based compensation |
|
|
2,731 |
|
|
|
3,755 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable |
|
|
(7,996 |
) |
|
|
(5,527 |
) |
Inventory |
|
|
(48,983 |
) |
|
|
28,174 |
|
Deposits, prepaid expenses, and other current assets |
|
|
(14,019 |
) |
|
|
(484 |
) |
Deferred customer incentives and other assets |
|
|
68 |
|
|
|
123 |
|
Advance vendor payments |
|
|
(1,423 |
) |
|
|
(1,941 |
) |
Accounts payable |
|
|
14,018 |
|
|
|
201 |
|
Income tax payable |
|
|
- |
|
|
|
4,975 |
|
Accrued expenses |
|
|
(3,396 |
) |
|
|
(1,611 |
) |
Deferred revenue |
|
|
1,343 |
|
|
|
(538 |
) |
Lessee and customer purchase deposits |
|
|
(7,985 |
) |
|
|
(3,184 |
) |
Other liabilities |
|
|
(593 |
) |
|
|
(1,083 |
) |
Net cash (used in) provided by operating activities |
|
|
(62,442 |
) |
|
|
43,048 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
||
Proceeds from sale of assets |
|
|
4,500 |
|
|
|
- |
|
Purchase of property and equipment |
|
|
(1,481 |
) |
|
|
(1,637 |
) |
Net cash provided by (used in) investing activities |
|
|
3,019 |
|
|
|
(1,637 |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
||
Taxes paid related to net share settlement of equity awards |
|
|
(70 |
) |
|
|
- |
|
Proceeds from the issuance of Employee Stock Purchase Plan shares |
|
|
- |
|
|
|
125 |
|
Net cash (used in) provided by financing activities |
|
|
(70 |
) |
|
|
125 |
|
|
|
|
|
|
|
|
||
(Decrease) increase in cash and cash equivalents |
|
|
(59,493 |
) |
|
|
41,536 |
|
Cash and cash equivalents, beginning of period |
|
|
147,188 |
|
|
|
130,188 |
|
Cash and cash equivalents, end of period |
|
$ |
87,695 |
|
|
$ |
171,724 |
|
|
|
|
|
|
|
|
||
Supplemental disclosure of cash activities |
|
|
|
|
|
|
||
Income tax (refund) payment |
|
|
(100 |
) |
|
|
277 |
|
Interest paid |
|
|
141 |
|
|
|
141 |
|
Supplemental disclosure of noncash investing activities |
|
|
|
|
|
|
||
Reclassification of aircraft and aircraft engines inventory to (from) aircraft and engine held for lease, net |
|
|
3,573 |
|
|
|
(17,942 |
) |
AERSALE CORPORATION |
||||||||
Adjusted EBITDA, Net Income and Diluted EPS Reconciliation Table (In ‘000s, except per share data) |
||||||||
(Unaudited) |
||||||||
Three months ended March 31, |
||||||||
2023 |
% of Total Revenue |
2022 |
% of Total Revenue |
|||||
Reported Net (Loss)/Income |
5 |
|
17,226 |
|
||||
Addbacks: |
||||||||
Change in FV of Warrant Liability |
334 |
|
1,234 |
|
||||
Stock Compensation |
2,731 |
|
3,755 |
|
||||
Facility Relocation Costs |
380 |
|
- |
|
||||
Income Tax Effect of Adjusting Items (1) |
(109) |
( |
- |
|
||||
Adjusted Net (Loss)/Income |
3,342 |
|
22,215 |
|
||||
Interest Expense |
(1,047) |
( |
195 |
|
||||
Income Tax Expense (Benefit) |
108 |
|
4,647 |
|
||||
Depreciation and Amortization |
2,469 |
|
2,865 |
|
||||
Reversal of Income Tax Effect of Adjusting Items (1) |
109 |
|
- |
|
||||
Adjusted EBITDA |
4,980 |
|
29,922 |
|
||||
Reported Basic (loss) earnings per share |
0.00 |
0.33 |
||||||
Addbacks: |
||||||||
Change in fair value of warrant liability |
0.01 |
0.02 |
||||||
Stock-based compensation |
0.05 |
0.07 |
||||||
Facility Relocation Costs |
0.01 |
- |
||||||
Income Tax Effect of Adjusting Items |
(0.00) |
- |
||||||
Adjusted Basic (loss) earnings per share |
0.07 |
0.43 |
||||||
Reported Diluted (loss) earnings per share |
0.00 |
0.32 |
||||||
Addbacks: |
||||||||
Change in FV of warrant liability |
0.01 |
0.02 |
||||||
Stock-based compensation |
0.05 |
0.07 |
||||||
Facility Relocation Costs |
0.01 |
- |
||||||
Income Tax Effect of Adjusting Items |
(0.00) |
- |
||||||
Adjusted Diluted (loss) earnings per share |
0.07 |
0.41 |
||||||
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 all statements set forth in the “2023 Guidance” section above such as expectations of revenue in the range of
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™).
For more information about AerSale, please visit our website: www.AerSale.com.
Follow us on: LinkedIn | Twitter | Facebook | Instagram
____________________________
1 Adjusted Net Income and adjusted EBITDA are non-GAAP financial measures. See “Non-GAAP Financial Measures” and “First Quarter 2023 Financial Results – Adjusted EBITDA, Net Income and Diluted EPS Reconciliation Table” for a discussion of why we believe these non-GAAP measures are useful and a detailed reconciliation of these non-GAAP measures to the most directly comparable GAAP (Generally Accepted Accounting Principles) measure.
2 A reconciliation of non-GAAP adjusted EBITDA guidance to forecasted net (loss) 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 cannot be reasonably predicted without unreasonable efforts.
View source version on businesswire.com: https://www.businesswire.com/news/home/20230509006086/en/
Media:
AerSale: Jackie Carlon
(305) 764-200
media.relations@aersale.com
Investors:
AerSale: AersaleIR@icrinc.com
Source: AerSale Corporation