AerSale Reports Second Quarter 2022 Results
AerSale Corporation (Nasdaq: ASLE) reported a strong second quarter for 2022, with revenue of $139.6 million, reflecting a 51.9% increase year-over-year. GAAP net income stood at $26.5 million, or 18.9% of sales, up 59.9% from the previous year. Adjusted Net Income was $31.7 million, representing 22.7% of sales. The company reaffirmed its 2022 guidance, expecting revenue between $420 million and $450 million and adjusted EBITDA of $80 million to $90 million. Key highlights included increased flight equipment sales and positive demand trends for Used Serviceable Material (USM).
- Revenue increased by 51.9% to $139.6 million compared to the prior year.
- GAAP net income rose to $26.5 million, up 59.9% year-over-year.
- Adjusted EBITDA was $41.1 million, a 35.2% increase from last year.
- Flight equipment sales included two AerSale converted Boeing 757 freighters.
- Successfully completed software validation for the AerAware program.
- TechOps revenue decreased by 20.7% due to lower maintenance activities.
- Higher selling, general, and administrative expenses at $23.5 million, up from $17 million.
Second Quarter 2022 Highlights
-
Revenue of
, up$139.6 million 51.9% as compared to prior year period. -
GAAP net income of
, or$26.5 million 18.9% of sales, up59.9% as compared to prior year period. -
Adjusted Net Income of
, or$31.7 million 22.7% of sales, up45.3% as compared to prior year period. -
Adjusted EBITDA of
or$41.1 million 29.4% of sales, up35.2% as compared to prior year period. -
Flight equipment sales consisted of three aircraft and three engines, which included two
AerSale converted Boeing 757 freighter aircraft. -
Continue to monetize Boeing 757s with one additional
AerSale converted freighter aircraft scheduled to be sold in 2022 and up to twelve additional aircraft to be converted to freighters by third parties and become available to lease or sell in 2023 and 2024. -
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 declined during the second quarter when compared to the same quarter in the prior year, driven in part by lower storage maintenance at both AerSale’s Roswell and Goodyear facilities as the return of aircraft into operation gained momentum. In addition, allocation of labor and hangar space to support AerSale’s Boeing 757 passenger-to-freighter (P2F) conversion line reduced available capacity and MRO revenue for third party work at our Goodyear facility compared to the same quarter in 2021 in which no
Finazzo added, “We reached an important milestone in our AerAware program, with the completion of software validation by our partner, Elbit Systems subsidiary,
GAAP net income for the second quarter of 2022 was
Adjusted EBITDA in the second quarter of 2022 was
Year-to-date cash flows from operating activities was
Second Quarter 2022 Results of Operations
Asset Management Solutions (AMS) revenue increased by
Revenue from TechOps decreased
Gross margin was
Selling, general and administrative expenses, excluding Payroll Support Program proceeds, were
Income from operations was
Income tax expense was
GAAP net income was
Adjusted EBITDA in the second quarter of 2022 was
2022 Guidance
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.
Second Quarter 2022 Financial Results
CONDENSED CONSOLIDATED BALANCE SHEET (in thousands, except share data) (Unaudited) |
|||||||||||
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2022 |
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2021 |
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(Unaudited) |
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Current assets: |
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|
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Cash and cash equivalents |
|
$ |
197,240 |
|
$ |
130,188 |
|
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Accounts receivable, net of allowance for doubtful accounts of |
|
|
43,896 |
|
|
42,571 |
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Inventory: |
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|
|
|
|
|
||||
Aircraft, airframes, engines, and parts, net |
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|
74,327 |
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|
81,759 |
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Advance vendor payments |
|
|
20,994 |
|
|
14,287 |
|
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Deposits, prepaid expenses, and other current assets |
|
|
3,206 |
|
|
2,724 |
|
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Total current assets |
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339,663 |
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|
271,529 |
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Fixed assets: |
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|
|
|
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|
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Aircraft and engines held for lease, net |
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42,313 |
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|
73,364 |
|
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Property and equipment, net |
|
|
10,052 |
|
|
7,350 |
|
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Inventory: |
|
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|
|
|
|
|
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Aircraft, airframes, engines, and parts, net |
|
|
67,083 |
|
|
77,534 |
|
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Deferred income taxes |
|
|
12,326 |
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|
10,013 |
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Deferred financing costs, net |
|
|
774 |
|
|
999 |
|
||||
Deferred customer incentives and other assets, net |
|
|
478 |
|
|
598 |
|
||||
|
|
|
19,860 |
|
|
19,860 |
|
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Other intangible assets, net |
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|
25,183 |
|
|
26,238 |
|
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Total assets |
|
$ |
517,732 |
|
$ |
487,485 |
|
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|
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|
|
|
|
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|
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Current liabilities: |
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|
|
|
|
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|
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Accounts payable |
|
$ |
22,180 |
|
$ |
19,967 |
|
||||
Accrued expenses |
|
|
6,817 |
|
|
8,424 |
|
||||
Income tax payable |
|
|
7,537 |
|
|
3,443 |
|
||||
Lessee and customer purchase deposits |
|
|
6,437 |
|
|
33,212 |
|
||||
Deferred revenue |
|
|
7,207 |
|
|
2,860 |
|
||||
Total current liabilities |
|
|
50,178 |
|
|
67,906 |
|
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|
|
|
|
|
|
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|
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Long-term lease deposits |
|
|
- |
|
|
2,053 |
|
||||
Maintenance deposit payments and other liabilities |
|
|
1,881 |
|
|
3,403 |
|
||||
Deferred income taxes, net |
|
|
1,113 |
|
|
1,113 |
|
||||
Warrant liability |
|
|
3,983 |
|
|
4,131 |
|
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Total liabilities |
|
|
57,155 |
|
|
78,606 |
|
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Commitments and contingencies |
|
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|
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Stockholders’ equity: |
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|
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Common stock, |
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|
5 |
|
|
5 |
|
||||
Additional paid-in capital |
|
|
321,918 |
|
|
313,901 |
|
||||
Retained earnings |
|
|
138,654 |
|
|
94,973 |
|
||||
Total stockholders' equity |
|
|
460,577 |
|
|
408,879 |
|
||||
Total liabilities and stockholders’ equity |
|
$ |
517,732 |
|
$ |
487,485 |
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (Unaudited) |
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Three Months Ended |
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Six Months Ended |
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2022 |
|
2021 |
|
2022 |
|
2021 |
|
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Revenue: |
|
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Products |
|
$ |
108,622 |
|
$ |
56,175 |
|
$ |
200,990 |
|
$ |
81,301 |
|
Leasing |
|
|
7,355 |
|
|
6,366 |
|
|
15,556 |
|
|
12,622 |
|
Services |
|
|
23,631 |
|
|
29,380 |
|
|
45,868 |
|
|
56,433 |
|
Total revenue |
|
|
139,608 |
|
|
91,921 |
|
|
262,414 |
|
|
150,356 |
|
Cost of sales and operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
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Cost of products |
|
|
63,019 |
|
|
40,387 |
|
|
120,947 |
|
|
54,193 |
|
Cost of leasing |
|
|
2,531 |
|
|
2,464 |
|
|
4,720 |
|
|
5,231 |
|
Cost of services |
|
|
19,078 |
|
|
18,332 |
|
|
35,064 |
|
|
40,359 |
|
Total cost of sales |
|
|
84,628 |
|
|
61,183 |
|
|
160,731 |
|
|
99,783 |
|
Gross profit |
|
|
54,980 |
|
|
30,738 |
|
|
101,683 |
|
|
50,573 |
|
Selling, general, and administrative expenses |
|
|
23,503 |
|
|
16,966 |
|
|
47,269 |
|
|
30,276 |
|
Payroll support program proceeds |
|
|
- |
|
|
(8,405) |
|
|
- |
|
|
(14,768) |
|
Income from operations |
|
|
31,477 |
|
|
22,177 |
|
|
54,414 |
|
|
35,065 |
|
Other income (expenses): |
|
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|
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Interest expense, net |
|
|
(183) |
|
|
(251) |
|
|
(378) |
|
|
(509) |
|
Other income, net |
|
|
116 |
|
|
155 |
|
|
481 |
|
|
249 |
|
Change in fair value of warrant liability |
|
|
1,382 |
|
|
(407) |
|
|
148 |
|
|
(631) |
|
Total other income (expenses) |
|
|
1,315 |
|
|
(503) |
|
|
251 |
|
|
(891) |
|
Income before income tax provision |
|
|
32,792 |
|
|
21,674 |
|
|
54,665 |
|
|
34,174 |
|
Income tax expense |
|
|
(6,337) |
|
|
(5,126) |
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|
(10,984) |
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|
(7,608) |
|
Net income |
|
$ |
26,455 |
|
$ |
16,548 |
|
$ |
43,681 |
|
$ |
26,566 |
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Earnings per share - basic |
|
$ |
0.51 |
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$ |
0.39 |
|
$ |
0.85 |
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$ |
0.62 |
|
Earnings per share - diluted |
|
$ |
0.47 |
|
$ |
0.38 |
|
$ |
0.81 |
|
$ |
0.61 |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited) |
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Six Months Ended |
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|
2022 |
2021 |
||
Cash flows from operating activities: |
|
|
|
|
Net income |
$ |
43,681 |
$ |
26,566 |
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
Depreciation and amortization |
|
5,757 |
|
6,699 |
Amortization of debt issuance costs |
|
225 |
|
257 |
Inventory reserve |
|
1,810 |
|
5,016 |
Impairment of aircraft held for lease |
|
857 |
|
- |
Provision for doubtful accounts |
|
(419) |
|
(151) |
Deferred income taxes |
|
(2,313) |
|
(284) |
Change in fair value of warrant liability |
|
(148) |
|
631 |
Stock-based compensation |
|
7,672 |
|
150 |
Changes in operating assets and liabilities: |
|
|
|
|
Accounts receivable |
|
(907) |
|
(1,586) |
Inventory |
|
13,369 |
|
(33,417) |
Deposits, prepaid expenses, and other current assets |
|
(482) |
|
5,750 |
Deferred customer incentives and other assets |
|
111 |
|
(19) |
Advance vendor payments |
|
(6,707) |
|
(4,536) |
Accounts payable |
|
2,213 |
|
28 |
Income tax payable |
|
4,094 |
|
1,013 |
Accrued expenses |
|
(1,609) |
|
(3,425) |
Deferred revenue |
|
4,347 |
|
(306) |
Lessee and customer purchase deposits |
|
(28,825) |
|
5,934 |
Other liabilities |
|
(1,522) |
|
316 |
Net cash provided by operating activities |
|
41,204 |
|
8,636 |
Cash flows from investing activities: |
|
|
|
|
Proceeds from sale of assets |
|
35,707 |
|
4,420 |
Acquisition of aircraft and engines held for lease, including capitalized cost |
|
(6,463) |
|
- |
Purchase of property and equipment |
|
(3,741) |
|
(841) |
Net cash provided by investing activities |
|
25,503 |
|
3,579 |
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 Employee Stock Purchase Plan shares |
|
345 |
|
- |
Net cash provided by financing activities |
|
345 |
|
276 |
|
|
|
|
|
Increase in cash and cash equivalents |
|
67,052 |
|
12,491 |
Cash and cash equivalents, beginning of period |
|
130,188 |
|
29,317 |
Cash and cash equivalents, end of period |
$ |
197,240 |
$ |
41,808 |
|
|
|
|
|
Supplemental disclosure of cash activities |
|
|
|
|
Income taxes |
|
9,572 |
|
1,815 |
Interest |
|
426 |
|
308 |
Supplemental disclosure of noncash investing activities |
|
|
|
|
Reclassification of aircraft and aircraft engines inventory (from) equipment held for lease, net |
|
(17,060) |
|
(7,307) |
Reclassification of customer purchase deposits to sale of assets |
|
12,500 |
|
- |
Adjusted EBITDA, Net Income and Diluted EPS
(Unaudited) |
|||||||||
Three months ended |
|||||||||
|
2022 |
|
% of Total
|
|
2021 |
% of Total
|
|||
Reported Net Income/(Loss) |
$ |
26,455 |
|
18.9 |
% |
$ |
16,548 |
18.0 |
% |
Addbacks: |
|||||||||
Change in FV of Warrant Liability |
(1,382 |
) |
(1.0 |
%) |
407 |
0.4 |
% |
||
Stock Compensation |
3,917 |
|
2.8 |
% |
75 |
0.1 |
% |
||
Inventory Write-Off |
1,845 |
|
1.3 |
% |
4,776 |
5.2 |
% |
||
Impairment in Flight Equipment |
857 |
|
0.6 |
% |
- |
0.0 |
% |
||
Adjusted Net Income |
$ |
31,693 |
|
22.7 |
% |
$ |
21,806 |
23.7 |
% |
Interest Expense |
183 |
|
0.1 |
% |
251 |
0.3 |
% |
||
Income Tax Expense (Benefit) |
6,337 |
|
4.5 |
% |
5,126 |
5.6 |
% |
||
Depreciation and Amortization |
2,891 |
|
2.1 |
% |
3,212 |
3.5 |
% |
||
Adjusted EBITDA |
$ |
41,104 |
|
29.4 |
% |
$ |
30,395 |
33.1 |
% |
Reported Basic EPS |
0.51 |
|
0.39 |
||||||
Addbacks: |
|||||||||
Change in fair value of warrant liability |
(0.03 |
) |
0.01 |
||||||
Stock-based compensation |
0.08 |
|
0.00 |
||||||
Inventory Write-Off |
0.04 |
|
0.11 |
||||||
Impairment in Flight Equipment |
0.02 |
|
- |
||||||
Adjusted Basic EPS |
$ |
0.61 |
|
$ |
0.51 |
||||
Reported Diluted EPS |
0.47 |
|
0.38 |
||||||
Addbacks: |
|||||||||
Change in FV of warrant liability |
(0.03 |
) |
0.01 |
||||||
Stock-based compensation |
0.07 |
|
0.00 |
||||||
Inventory Write-Off |
0.03 |
|
0.11 |
||||||
Impairment in Flight Equipment |
0.02 |
|
- |
||||||
Adjusted Diluted EPS |
$ |
0.56 |
|
$ |
0.50 |
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
About
____________________________________
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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FAQ
What were AerSale's Q2 2022 financial results for ASLE?
What is AerSale's guidance for 2022?
How did flight equipment sales perform in Q2 2022?
What impact did the AerAware program have on AerSale's performance?