2020 Highlights
- Full year 2020 revenue of $208.9 million.
- Full year 2020 GAAP net income of $8.5 million, or 4.1% of
sales.
- Adjusted EBITDA of $51.9 million or 24.8% of sales for full
year 2020.
- Achieved significant progress towards obtaining FAA
certification of our AerAware product and initiated discussions
with potential launch customer.
- 2021 guidance: expects revenue in the range of $340 - $360
million and adjusted EBITDA in the range of $60 - $70
million1.
AerSale Corporation (Nasdaq: ASLE) (the “Company”) today
reported results for the fourth quarter and full year ended
December 31, 2020.
The Company reported fourth quarter 2020 revenue of $49.4
million and full year 2020 revenue of $208.9 million. Revenue in
the fourth quarter and full-year of 2020 were adversely impacted by
the effects of COVID-19 on AerSale’s commercial customers, which
resulted in lower used serviceable material (USM) and whole asset
sales. Fourth quarter GAAP net income was $0.6 million and full
year 2020 net income was $8.5 million. Full year 2020 adjusted
EBITDA was $51.9 million and fourth quarter adjusted EBITDA was
$3.3 million. Adjusted EBITDA reflected benefits from the CARES
Act, cost reductions in response to COVID-19, and strong
performance in the Company’s aircraft MRO business.
Looking forward to 2021, the Company expects continued growth
driven by anticipated strong MRO volume due to the recommissioning
of commercial aircraft, a return of whole asset sales primarily
from its Boeing 757 procurement program, contributions from its
innovative AerAware product launch, and the gradual recovery of
commercial markets.
Nicolas Finazzo, AerSale’s Chief Executive Officer, commented,
“We are pleased to report our first quarterly and year-end results
as a public company, and are grateful for the confidence our
shareholders have placed in the AerSale team to generate long-term
value. 2020 marked a challenging year globally and particularly in
the aerospace industry as a result of the effects of COVID-19. We
believe our ability to navigate these headwinds is a testament to
the extraordinary efforts of our dedicated and skilled workforce,
demonstrates the resilience of our business, and validates the
fully-integrated aircraft service model we have established. Our
ability to service aircraft at every point in the cycle not only
adds tremendous value to our customers, but also allows us to
emerge into 2021 positioned to resume our growth trajectory.”
Finazzo continued, “In the year ahead we expect our MRO
facilities to be operating at or near capacity as we continue to
work on freighter aircraft conversions and support the continued
maintenance and reactivation of parked aircraft as commercial
aviation gradually recovers. Our team was also able to make
important investments in our Boeing 757 program, which is expected
to bolster operating performance as we finalize customer contracts.
Finally, we anticipate launching our AerAware program with our
first customer in 2021, which will bring innovative military
technology to commercial aviation through a partnership with
Universal Avionics, an ELBIT Systems company. We believe the
AerAware program represents a significant long-term revenue
opportunity for AerSale.”
Fourth Quarter 2020 Results of Operations
For the fourth quarter of 2020, AerSale reported consolidated
revenue of $49.4 million, which did not include any whole asset
sales. In the fourth quarter of 2019, revenue was $120.9 million,
which included $57 million of whole asset sales. The Company’s
revenue was adversely impacted by the effects of COVID-19 on its
commercial customers, which resulted in declines in whole asset and
USM sales. These effects were partially offset by stronger aircraft
storage volume and related aircraft maintenance work.
Asset Management Solutions (AMS) revenue was $17.4 million
compared to $98.2 million in the prior year period. In addition to
whole asset sales, USM revenue declined as a result of fewer
opportunities to buy feedstock, the decrease in demand for existing
inventory, and lower utilization rates on flight equipment against
the backdrop of the COVID-19 pandemic. The pandemic also led to the
grounding of a significant portion of the global passenger fleet
and reduced passenger air travel, which negatively impacted the
demand for USM parts consumption for maintenance and overhaul
activity.
Revenue from TechOps increased 41% to $32 million in the fourth
quarter of 2020 and partially offset the decline in AMS volume. The
increase in TechOps revenue was largely driven by our aircraft MRO
facilities as this business benefitted from the increased storage
demand from the groundings noted above. AerSale’s aircraft MRO
facilities are strategically located in dry desert environments in
New Mexico and Arizona, which are ideal for aircraft storage.
Gross margin remained consistent with the fourth quarter of 2019
at 26.6%, as measures taken by AerSale during 2020 translated into
efficiencies and cost savings across its business lines.
Selling, general and administrative expenses declined 15.5% from
the fourth quarter of 2019 to $15 million in the fourth quarter of
2020, primarily due to cost savings initiatives taken as a result
of COVID-19.
Loss from operations was $26 thousand in the fourth quarter of
2020, compared to income from operations of $12.1 million in the
fourth quarter of 2019.
The benefit from income tax was $0.9 million in the fourth
quarter of 2020, while the provision for income tax was $2.5
million in the fourth quarter of 2019.
GAAP net income for the fourth quarter of 2020 was $0.6 million,
or 1.3% of sales, compared to $9 million, or 7.4% of sales, in the
fourth quarter of 2019.
Adjusted EBITDA for the fourth quarter of 2020 was $3.3 million,
or 6.7% of sales, compared to adjusted EBITDA of $23.8 million, or
19.7% of sales, in the fourth quarter of 2019.
Full Year 2020 Results of Operations
For the fiscal year 2020, AerSale reported consolidated revenue
of $208.9 million, which included whole asset sales of $3.1
million, compared to $304.2 million in 2019, which included $70.1
million of whole asset sales. The Company’s revenues may fluctuate
from quarter-to-quarter and year-to-year for whole asset sales, and
therefore, progress should be monitored based on asset purchases
and related sales. In addition, the Company’s revenue was adversely
impacted by the effects of COVID-19 on its commercial customers.
These effects were partially offset by stronger aircraft storage
volume and related MRO work.
AMS revenue was $98.7 million compared to $221.8 million in the
prior year period. In addition to whole asset sales, USM revenue
declined as a result of fewer opportunities to buy feedstock, the
decrease in demand for existing inventory, and lower utilization
rates on flight equipment against the backdrop of the COVID-19
pandemic. The pandemic also led to the grounding of a significant
portion of the global passenger fleet and lowered passenger air
travel, which resulted in diminished demand for USM parts
consumption for maintenance and overhaul activity.
Revenue from TechOps increased by approximately 33.8% to $110.2
million and partially offset the decline in ASM volume. The
increase in TechOps revenue was largely driven by our heavy MRO
operations as these businesses benefitted from increased storage
demand.
AerSale expects the significant number of aircraft currently
stored at its facilities to provide upside opportunities for
reactivation work, heavy maintenance, and cargo conversion going
forward; as well as an advantage in identifying well-maintained
feedstock for our Asset Management segment.
The revenue split between the AMS and TechOps segments was
fairly balanced in 2020 as the business mix changed as a result of
the pandemic, demonstrating AerSale’s ability to respond
effectively to changing market dynamics. However, as the passenger
aviation market recovers, the Company expects both AMS and TechOps
to benefit.
Gross margin was 25.3% in 2020 compared to 28% in 2019, which
was primarily driven by the change in sales mix noted above.
Selling, general and administrative expenses declined 7% to
$55.6 million primarily due to cost reduction efforts taken during
the pandemic. The Company also benefitted from a CARES Act grant
received in 2020 that reduced cost of sales and operating expenses
by $12.7 million.
Income from operations for the year 2020 was $11.3 million,
compared to $22.1 million for 2019. The provision for income tax
was $1.6 million for 2020, compared to $4.2 million in 2019.
GAAP net income for 2020 was $8.5 million, or 4.1% of sales,
compared to $15.5 million, or 5.1% of sales, in 2019.
Adjusted EBITDA for 2020 was $51.9 million, or 24.8% of sales,
compared to adjusted EBITDA of $56.9 million, or 18.7% of sales, in
2019. The improvement in adjusted EBITDA margin primarily reflects
benefits from the CARES Act, cost reduction efforts and strong
performance in the Company’s MRO and aircraft storage business.
Martin Garmendia, AerSale’s Chief Financial Officer, said: “Our
strong financial performance is the result of the multi-dimensional
and fully-integrated business model we spent the last decade
building. Following the onset of the COVID-19 pandemic, we made
adjustments in areas impacted by the pandemic, but continued to
invest in our business units experiencing the greatest demand. The
diversity of our revenue sources has created a counter-cyclical
hedge, enabling AerSale to thrive in a challenging commercial
aviation market. We believe we are well positioned to outperform
our competitors in the upcoming recovery.”
2021 Guidance
AerSale expects revenue of $340–$360 million and adjusted EBITDA
of $60-$70 million in 2021. This outlook reflects an increase in
activity in the Company’s AMS segment, strong demand for its
on-airport MRO services, accelerating demand in cargo and
E-Commerce markets, and increased requests for
passenger-to-freighter conversions and other TechOps products and
services. The main growth driver of the Asset Management segment is
expected to be the monetization of the Boeing 757 feedstock
acquisition in 2020. Because of the strong demand for cargo
conversion aircraft, AerSale expects to sell the majority of the
available aircraft in 2021. For TechOps, in addition to the
continued contributions from storage activities, the Company also
expects increased contribution from its component MRO businesses as
well as the commencement of sales of its AerAware product in late
2021. In 2021, additional CARES Act grant proceeds of $9.2 million
were awarded to the Company.
Conference Call Information
The Company will host a conference call today at 5:00 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- 407-3982, international
callers may use 1-201-493-6780, and request to join the AerSale
Corporation earnings call.
A telephonic replay will be available shortly after the
conclusion of the call and until, March 29, 2021. Participants may
access the replay at 1-844-512-2921, international callers may use
1-412-317-6671, and enter access code 13717491. An archived replay
of the call will also be available on the Investors portion of the
AerSale website at https://ir.aersale.com until March 29, 2021.
Non-GAAP Financial Measures
This press release includes non-GAAP financial measures,
including adjusted EBITDA and adjusted EBITDA margin. AerSale
defines adjusted EBITDA as net income (loss) after giving effect to
interest expense, depreciation and amortization, income tax expense
(benefit), management fees, and other non-recurring items. AerSale
defines adjusted EBITDA margin as adjusted EBITDA divided by net
sales.
AerSale believes these non-GAAP measures of financial results
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 provided by operating activities as a
measure of liquidity (each as determined in accordance with
GAAP).
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 and
adjusted EBITDA margin differently, and therefore AerSale’s
adjusted EBITDA and adjusted EBITDA margin measures may not be
directly comparable to similarly titled measures of other
companies.
Fourth Quarter and Full Year 2020 Financial Results
AERSALE CORPORATION AND SUBSIDIARIES Consolidated Balance
Sheets
December 31, 2020
December 31, 2019
Assets
Current assets: Cash and cash equivalents
$
29,316,946
$
17,505,002
Accounts receivable, net of allowance for doubtful accounts of
$1,652,000 and $1,545,000 as of December 31, 2020 and 2019
50,214,991
51,867,653
Inventory: Aircraft, airframes, engines, and parts, net
85,191,747
57,918,723
Advance vendor payments
6,205,479
3,247,255
Due from related party
474,257
6,130,990
Deposits, prepaid expenses, and other current assets
7,560,391
5,116,175
Total current assets
178,963,811
141,785,798
Fixed assets: Aircraft and engines held for lease, net
86,844,145
111,896,294
Property and equipment, net
7,839,045
7,461,792
Inventory: Aircraft, airframes, engines, and parts
55,463,352
37,043,804
Deferred income taxes
5,707,912
4,753,679
Deferred financing costs, net
366,750
1,034,564
Deferred customer incentives and other assets, net
270,782
324,869
Due from related party
5,449,739
5,449,739
Goodwill
19,860,168
13,858,551
Other intangible assets, net
28,363,988
20,375,166
Total assets
$
389,129,692
$
343,984,256
Current liabilities: Accounts payable
$
16,363,699
$
17,030,404
Accrued expenses
8,576,941
9,629,084
Income tax payable
1,324,481
-
Lessee and customer purchase deposits
2,819,987
3,473,921
Current portion of long-term debt, net
-
3,351,714
Deferred revenue
2,594,979
7,708,761
Total current liabilities
31,680,087
41,193,884
Long-term lease deposits
1,144,935
4,184,874
Maintenance deposit payments and other liabilities
3,663,571
4,620,133
Total liabilities
$
36,488,593
$
49,998,891
Commitments and contingencies Stockholders' equity: Common stock,
$0.0001 par value. Authorized 200,000,000 shares; issued and
outstanding 41,046,216 shares and 5,285,054 shares, respectively
4,105
529
Additional paid-in capital
293,390,354
243,220,709
Retained earnings
59,246,640
50,764,127
Total equity
352,641,099
293,985,365
Total liabilities and stockholders' equity
$
389,129,692
$
343,984,256
AERSALE CORPORATION AND SUBSIDIARIES Consolidated
Statements of Operations Three months endedDecember
31, Year endedDecember 31,
2020
2019
2020
2019
Revenue: Products
11,663,743
83,614,464
49,390,126
170,566,047
Leasing
8,012,230
17,065,062
55,649,323
64,245,884
Services
29,706,030
20,196,834
103,898,798
69,389,272
Total net revenue
49,382,003
120,876,360
208,938,247
304,201,203
Cost of sales and operating expenses: Cost of products
8,683,045
63,741,487
49,889,691
131,671,553
Cost of leasing
2,928,022
7,774,874
24,243,806
29,217,035
Cost of services
24,645,728
17,187,912
82,015,605
58,263,856
Total cost of sales
36,256,795
88,704,273
156,149,102
219,152,444
Gross profit
13,125,208
32,172,087
52,789,145
85,048,759
Selling, general, and administrative expenses
15,015,731
17,767,361
55,634,855
59,813,607
CARES Act proceeds
-
-
(12,692,702
)
-
Transaction costs (recovered) incurred
(1,864,386
)
2,331,318
(1,435,705
)
3,176,797
Income from operations
(26,137
)
12,073,408
11,282,697
22,058,355
Other income (expenses): Interest expense, net
(337,992
)
(779,638
)
(1,644,969
)
(3,006,663
)
Other income (expenses), net
136,328
161,259
494,465
611,109
Total other expenses
(201,664
)
(618,379
)
(1,150,504
)
(2,395,554
)
Income from operations before income tax provision
(227,801
)
11,455,029
10,132,193
19,662,801
Income tax (expense) benefit
869,625
(2,451,560
)
(1,649,680
)
(4,163,663
)
Net income
641,824
9,003,469
8,482,513
15,499,138
AERSALE CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
Years ended December
31,
2020
2019
Cash flows from operating activities: Net income from continuing
operations
$
8,482,513
$
15,499,138
Adjustments to reconcile net income to net cash (used in) provided
by operating activities: Depreciation and amortization
24,222,907
30,080,936
Amortization of debt issuance costs
740,372
802,280
Inventory impairment
13,651,271
5,557,481
Impairment of aircraft held for lease
3,035,578
-
Provision for doubtful accounts
211,696
54,939
Deferred income taxes
21,611
2,461,865
Stock-based compensation
1,042,456
-
Decreases (increases) in operating assets and liabilities, net of
acquisitions: Accounts receivable
(2,586,940
)
(21,535,624
)
Inventory
(55,275,418
)
3,420,729
Deposits, prepaid expenses, and other current assets
3,373,540
(2,848,692
)
Deferred customer incentives and other assets
55,754
23,477
Advance vendor payments
(2,958,224
)
(250,697
)
Accounts payable
(800,943
)
3,771,721
Income tax receivable
1,324,481
384
Accrued expenses
(1,697,118
)
3,159,718
Deferred revenue
(5,893,782
)
1,748,328
Lessee and customer purchase deposits
1,775,908
2,822,894
Other liabilities
(956,562
)
686,957
Net cash (used in) provided by operating activities
(12,230,900
)
45,455,834
Cash flows from investing activities: Business acquisitions
(16,975,595
)
(26,081,080
)
Proceeds from sale of assets
3,100,000
2,115,441
Acquisition of aircraft and engines held for lease, including
capitalized cost
(5,127,892
)
(36,478,888
)
Purchase of property and equipment
(2,137,219
)
(1,648,618
)
Net cash (used in) provided by investing activities
(21,140,706
)
(62,093,145
)
Cash flows from financing activities: Repayments of Long Term
Secure Debt
-
-
Repayments of 8% Senior Secured Notes
(3,424,273
)
(5,512,054
)
Proceeds from revolving credit facility
96,725,970
77,703,575
Repayments of revolving credit facility
(96,725,970
)
(77,703,575
)
Payments of debt issuance costs
-
-
Proceeds from Merger (Refer to Note N)
48,607,823
-
Net cash provided by (used in) financing activities
45,183,550
(5,512,054
)
Cash flows from discontinued operations Net cash provided by
(used in) operating activities
-
18,050,201
Net cash used in financing activities
-
-
Net cash flows provided by (used in) discontinued operations
-
18,050,201
Increase (decrease) in cash and cash equivalents
11,811,944
(4,099,164
)
Cash and cash equivalents, beginning of period
17,505,002
21,604,166
Cash and cash equivalents, end of period
$
29,316,946
$
17,505,002
AERSALE CORPORATION
ADJUSTED EBITDA RECONCILIATION
TABLE
Three months ended December 31, Year ended
December 31, EBITDA Reconciliation
2020
% of Total Revenue
2019
% of Total Revenue
2020
% of Total Revenue
2019
% of Total Revenue
Reported Net Income/(Loss)
641,824
1.3
%
9,003,469
7.4
%
8,482,513
4.1
%
15,499,138
5.1
%
Addbacks: Interest Expense
337,992
0.7
%
779,638
0.6
%
1,644,969
0.8
%
3,006,663
1.0
%
Income Tax Expense (Benefit)
(869,625
)
(1.8
%)
2,451,560
2.0
%
1,649,680
0.8
%
4,163,663
1.4
%
Depreciation and Amortization
3,709,737
7.5
%
8,243,320
6.8
%
24,222,907
11.6
%
30,080,935
9.9
%
Management Fees
-
0.0
%
137,423
0.1
%
-
0.0
%
557,005
0.2
%
Inventory Adjustment
-
0.0
%
-
0.0
%
15,923,729
7.6
%
-
0.0
%
Stock Compensation
1,378,742
2.8
%
-
0.0
%
1,378,742
0.7
%
-
0.0
%
One-Time Adjustment
(1,869,386
)
(3.8
%)
3,150,000
2.6
%
(1,435,705
)
(0.7
%)
3,600,000
1.2
%
Adjusted EBITDA
3,329,284
6.7
%
23,765,409
19.7
%
51,866,835
24.8
%
56,907,404
18.7
%
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; our growth trajectory; the impact of investments in
our Boeing 757 program on our financial performance; our ability to
sell our aircraft on the timelines we anticipate; the expected
operating capacity of our MRO facilities; the expected commencement
date of sales of our AerAware product; and our anticipated revenue
split between our two segments. 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,” and similar expressions are
intended to identify such forward-looking statements. Many factors
could cause actual future events to differ materially from the
forward-looking statements in this presentation, including without
limitation, the impact of the COVID-19 pandemic; factors adversely
impacting the commercial aviation industry; the fluctuating market
value of our products; our ability to repossess mid-life commercial
aircraft and engines; our ability to comply with stringent
government regulation; the shortage of skilled personnel, including
as a result of work stoppages; the highly competitive nature of the
markets in which we operate; and risks associated with our
international operations. You should carefully consider the
foregoing factors and the other risks and uncertainties described
in the “Risk Factors” section of the final prospectus filed by
AerSale Corporation on February 10, 2021 pursuant to Rule 424(b)(3)
and its other filings with the U.S. Securities and Exchange
Commission (SEC), including its Annual Report on Form 10-K to be
filed with the SEC. 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. 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 AerSale
Corporation assumes no obligation and does not intend to update or
revise these forward-looking statements, whether as a result of new
information, future events, or otherwise, except as required by
law
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
A reconciliation of non-GAAP adjusted
EBITDA guidance to net income, the most directly comparable GAAP
measure, has not been provided due to the lack of predictability
regarding the various reconciling items such as provision for
income taxes and depreciation and amortization, which are expected
to have a material impact on these measures and are out of
AerSale’s control or cannot be reasonably predicted without
unreasonable efforts.
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Media Contacts: For more information about AerSale,
please visit our website: www.AerSale.com. Follow us on: LinkedIn |
Twitter | Facebook | Instagram AerSale: Craig Wright Telephone:
(305) 764-3200 Email: media.relations@aersale.com Investor
Contact: AerSale: AersaleIR@icrinc.com
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