First Quarter 2022 Highlights
- Revenue of $122.8 million, up 110% as compared to prior year
period.
- GAAP net income of $17.2 million, or 14.0% of sales, up 72% as
compared to prior year period.
- Adjusted Net Income of $22.2 million, or 18.1% of sales, up
115% as compared to prior year period.
- Adjusted EBITDA of $29.9 million or 24.4% of sales, up 81% 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 -
$450 million and adjusted EBITDA in the range of $80 - $90
million1.
AerSale Corporation (Nasdaq: ASLE) (the “Company”) today
reported results for the first quarter ended March 31, 2022. The
Company’s revenue for the first quarter of 2022 was $122.8 million
compared to $58.4 million in the first quarter of 2021. Revenue for
the first quarter of 2022 included $75.9 million of flight
equipment sales versus $13.8 million of flight equipment sales in
the prior-year period. Flight equipment sales in the first quarter
of 2022 consisted of six aircraft and four engines, which included
the sale of five Boeing 757 aircraft with four being sold to cargo
operators and one to a passenger airline. Leasing revenue for the
current quarter was also higher due to additional engines put on
lease and increased utilization from the Company’s leased assets
compared to the year ago period. Revenue from Used Serviceable
Material (USM) also increased compared to the same quarter last
year due to increase in demand and availability of feedstock.
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 $17.2 million
or 14.0% of sales compared to $10.0 million or 17.1% in the first
quarter of 2021. AerSale recognized a mark-to-market adjustment to
the private warrant liability of $1.2 million, and $3.8 million of
stock-based compensation expenses within payroll expenses during
the first quarter. This is compared to a $0.2 million
mark-to-market adjustment to the private warrant liability and $0.1
million of stock-based compensation expenses in the first quarter
of 2021. Adjusted Net Income excluding these items was $22.2
million in the first quarter of 2022 and $10.3 million in the first
quarter of 2021. Diluted earnings per share was $0.32 for the first
quarter of 2022 compared to $0.23 in the first quarter of 2021.
Adjusted for stock-based compensation expenses and the
mark-to-market adjustments to the private warrant liability,
diluted earnings per share was $0.41 for the first quarter of 2022
and $0.24 in the first quarter of 2021. Please see the non-GAAP
reconciliation table at the end of this press release for
additional details on adjusted Net Income and adjusted diluted
earnings per share.
Adjusted EBITDA in the first quarter of 2022 was $29.9 million,
or 24.4% of sales, compared to $16.5 million, or 28.3% of sales in
the first quarter of 2021. Higher adjusted EBITDA reflected higher
contributions from flight equipment sales during the current
quarter, partially offset by $6.4 million in Payroll Support
Program proceeds recognized during the first quarter of 2021. There
were no corresponding proceeds in the current quarter. Please see
the non-GAAP reconciliation table at the end of this press release
for additional details on adjusted EBITDA.
Cash flows from operating activities were $43.0 million in the
first quarter of 2022 primarily due to strong GAAP net income
results and $28.2 million of cashflow related to monetization of
inventory. The Company ended the quarter with $171.7 million of
cash and has an undrawn $150 million credit facility.
Nicolas Finazzo, AerSale’s Chief Executive Officer, commented,
“We are off to a great start in 2022 and our continued achievements
are evidence of the success of our purpose-built, integrated,
multi-dimensional adaptive business model. This is underscored by
revenue that more than doubled compared to the prior year period,
coupled with adjusted EBITDA margins approaching 25%. We continue
to direct our resources toward the highest generating rates of
return for our shareholders, as demonstrated by our resource
allocation to in-house work on our Boeing 757 program, which has
yielded strong margin improvement on record company sales.
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 $171 million in cash as of quarter-end, no debt, and a
$150 million undrawn revolver.”
First Quarter 2022 Results of Operations
AerSale reported revenue of $122.8 million in the first quarter
of 2022, which included $75.9 million of flight equipment sales.
The Company’s revenue for the first quarter of 2021 was $58.4
million and included $13.8 million of flight equipment sales. As a
reminder to investors, flight equipment sales may significantly
vary quarter-to-quarter, and AerSale believes full-year analysis,
rather than year-over-year quarterly comparisons is a more
appropriate measurement of Company progress.
Asset Management Solutions (AMS) revenue increased by 154.8% to
$74.5 million in the first quarter of 2022 primarily due to the
above-mentioned flight equipment sales. USM parts sales were higher
in the first quarter of 2022, driven by an increase in feedstock
acquisitions and greater demand for USM parts related to the
recovery in passenger travel as compared to the prior year period.
In addition, leasing revenue was up in the first quarter of 2022 as
compared to the first quarter of 2021, as volume and utilization of
the Company’s leased assets was stronger. Due to sanctions
resulting from the ongoing war between Russia and Ukraine, two
aircraft and one engine lease was terminated during the first
quarter of 2022 with such flight equipment being actively
remarketed.
Revenue from TechOps was up 65.4% to $48.3 million in the first
quarter of 2022, mainly from the sale of a Boeing 737NG which was
highly modified for a US governmental agency and previously used
for AerAware flight testing. This increase was offset in part by
lower revenue from MRO activities at AerSale’s Goodyear facility,
following the previously mentioned reallocation of resources to the
Company’s passenger-to-cargo conversion line for its Boeing 757
aircraft and at AerSale’s Roswell facility due to a decline in
maintenance related activities as aircraft are returned to
service.
Gross margin was 38.0% in the first quarter of 2022 compared to
33.9% in the year ago period as a result of higher margin flight
equipment sales and improved leasing margins.
Selling, general and administrative expenses net of Payroll
Support Program proceeds were $23.8 million in the first quarter of
2022 compared to $6.9 million in the first quarter of 2021. AerSale
received $6.4 million in Payroll Support Program proceeds during
the first quarter of 2021 and did not receive any Payroll Support
Program proceeds in the first quarter of 2022. The Company also
incurred $3.8 million of stock-based compensation expenses in the
first quarter of 2022, compared to $0.1 million in the first
quarter of 2021.
Income from operations was $22.9 million in the first quarter of
2022 versus $12.9 million in the first quarter of 2021.
Income tax expense was $4.6 million in the first quarter of 2022
compared to $2.5 million in the first quarter of 2021.
GAAP net income was $17.2 million in the first quarter of 2022,
up 72.0% from $10.0 million in the first quarter of 2021. Adjusted
for stock-based compensation and mark-to-market adjustment to the
private warrant liability, Adjusted Net Income was $22.2 million in
the first quarter of 2022 and $10.3 million in the first quarter of
2021. Diluted earnings per share increased to $0.32 for the first
quarter of 2022 from $0.23 in the first quarter of 2021. Adjusted
for stock-based compensation expense and the non-cash
mark-to-market adjustment to the private warrant liability, diluted
earnings per share was $0.41 in the first quarter of 2022 and $0.24
in the first quarter of 2021.
Adjusted EBITDA in the first quarter of 2022 was $29.9 million,
or 24.4% of sales, compared to $16.5 million, or 28.3% of sales in
the first quarter of 2021. The improvement in adjusted EBITDA was
largely attributable to higher revenues. Adjusted EBITDA for the
first quarter of 2021 reflected the benefit from $6.4 million in
Payroll Support Program proceeds, for which there were no
corresponding proceeds in the first quarter of 2022.
Martin Garmendia, AerSale’s Chief Financial Officer, said: “Our
purpose built model continues to generate strong returns to
stakeholders and is supported by best-in-class execution. As the
market backdrop evolves, we are very well positioned to take
advantage of asset availability given the strong cash returns we
have generated combined with our untapped revolver.”
2022 Guidance
AerSale reaffirmed its guidance for revenue of $420 - $450
million and adjusted EBITDA of $80 - $90 million in 2022. In
providing this guidance, the Company is mindful that recent
geopolitical events related to the Russian invasion of Ukraine may
impact the global commercial aerospace industry, but has not
specifically adjusted for these factors beyond known impacts that
the Company has already identified.
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. AerSale continues to make progress
on the FAA certification of its innovative AerAware product. The
Company is progressing toward certification, however the extensive
process of software validation needed for certification is expected
to be ongoing through the second quarter of 2022. While AerSale
remains confident that certification will be completed in 2022, it
has only included modest AerAware sales in its guidance for 2022 to
account for the ramp-up phase to commercialize this product once
the Supplemental Type Certificate for AerAware is issued to AerSale
by the FAA.
The ongoing and continued monetization of the Boeing 757 fleet
acquisition is expected to be the predominant driver of the AMS
segment. AerSale expects to sell the remaining Boeing 757s as
converted freighters in 2022 and 2023 as a result of strong demand
for dedicated cargo aircraft.
Conference Call Information
The Company will host a conference call today, May 9, 2022 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 1-855-327-6837, international
callers may use 1-631-891-4304, 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, 2022. Participants may
access the replay at 1-844-512-2921, international callers may use
1-412-317-6671, and enter access code 10019020. 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 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, 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
AERSALE CORPORATION
CONDENSED CONSOLIDATED BALANCE
SHEET
(in thousands, except per share
data)
March 31,
December 31,
2022
2021
(Unaudited)
Current assets:
Cash and cash equivalents
$
171,724
$
130,188
Accounts receivable, net of allowance for
doubtful accounts of $1,267 and $1,692 as of March 31, 2022 and
December 31, 2021
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
Goodwill
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, $0.0001 par value.
Authorized 200,000,000 shares; issued and outstanding 51,688,057
and 51,673,099 shares as of March 31, 2022 and December 31, 2021,
respectively
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
AERSALE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
(in thousands, except per share
data)
(Unaudited)
Three Months Ended March
31,
2022
2021
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
AERSALE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(in thousands)
(Unaudited)
Three Months Ended March
31,
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 Reconciliation Table (In ‘000s, except per share
data)
(Unaudited)
Three months ended March
31,
2022
% of Total Revenue
2021
% of Total Revenue
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
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
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 $420 - $450 million and adjusted EBITDA in the range of
$80 - $90 million; our expectations that demand for
passenger-to-freighter conversions will allow monetization of the
remaining Boeing 757 package in the remainder of 2022 and 2023;
anticipations regarding an increasingly favorable market for
feedstock availability within AerSale’s USM business; our plans to
continue to direct our resources toward the highest generating
rates of return for our shareholders; expectations regarding
feedstock as a cornerstone of our strategy, and our belief that we
are extremely well positioned to take advantage of the current
market dynamic; our belief that our purpose built model continues
to generate strong returns to stakeholders and is supported by
best-in-class execution; our belief that we are very well
positioned to take advantage of asset availability; 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 and demand for such services; expectations of market
recovery and recommissioning of aircraft; 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; events related to the
war in Ukraine including economic and trade sanctions; 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, including
geopolitical events such as the Russian invasion of Ukraine. You
should carefully consider the foregoing factors and the other risks
and uncertainties described in the “Risk Factors” section 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.
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 (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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version on businesswire.com: https://www.businesswire.com/news/home/20220509005903/en/
Media Contacts: For more information about AerSale,
please visit our website: www.AerSale.com. Follow us on: LinkedIn |
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AerSale: Craig Wright Telephone: (305) 764-3200 Email:
media.relations@aersale.com
Investor Contact: AerSale: AersaleIR@icrinc.com
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