• Revenue: $82.7 million in Q3 2024, down from $92.5 million in Q3 2023.
• Flight Equipment Sales: $22.6 million in Q3 2024, compared to $44.8 million in Q3 2023.
• Adjusted EBITDA: $8.2 million in Q3 2024, up from $1.9 million in Q3 2023.
• Gross Margin: 28.6% in Q3 2024, compared to 25.4% in Q3 2023.
• Net Income: $0.5 million in Q3 2024, compared to a net loss of $0.1 million in Q3 2023.
• Adjusted Net Income: $1.8 million in Q3 2024, compared to $0.9 million in Q3 2023.
• Diluted Earnings Per Share: $0.01 in Q3 2024, compared to $0.00 in Q3 2023.
• Adjusted Diluted Earnings Per Share: $0.04 in Q3 2024, compared to $0.03 in Q3 2023.
• Cash Used in Operating Activities: $26.4 million year-to-date.
• Liquidity: $103.5 million, including $9.8 million in cash and $93.7 million available on the credit facility.

• Warning! GuruFocus has detected 8 Warning Signs with ASLE.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• AerSale Corp (NASDAQ:ASLE) expanded its lease pool, leading to a significant increase in leasing revenue, which is expected to continue throughout the lease terms.
• The company's MRO business showed an 18% year-over-year growth, driven by strong commercial demand.
• AerSale Corp (NASDAQ:ASLE) is on track with its expansion projects, which are expected to incrementally increase revenue and improve margins in 2025.
• Adjusted EBITDA improved significantly to $8.2 million from $1.9 million in the previous year, due to stronger gross margins and lower operating expenses.
• The company has a substantial balance sheet with $103.5 million in liquidity, providing a strong financial position to support future growth.

Negative Points

• Third-quarter revenue decreased to $82.7 million from $92.5 million in the previous year, primarily due to lower flight equipment sales.
• The competitive market for feedstock acquisitions remains challenging, with a success rate of only 3.1% for awarded deals, compared to a historical win rate of approximately 10%.
• The Millington facility, although operational, contributed negatively to EBITDA due to initial ramp-up costs and low volume.
• The commercialization phase for the Airware system is taking longer than expected, with no confirmed launch customer yet.
• The company is facing challenges in acquiring feedstock due to OEM production delays and increased competition, impacting its ability to meet its annual target.

Q & A Highlights

Q: How close is AerSale to securing a customer for Airware, and what are the challenges in getting customers on board? A: Nick Finazzo, CEO, explained that while they are in advanced discussions with multiple customers, the complexity of implementation, especially for larger carriers, is a challenge. This includes pilot training, updating manuals, and budgetary considerations. The commercialization phase is taking longer than expected, but there is ongoing interest from potential customers.

Q: Who are AerSale's competitors in the USM feedstock market, and what is the competitive landscape like? A: Nick Finazzo, CEO, noted that competition comes from various sources, including airlines retaining midlife aircraft, leasing companies, and new entrants like private equity and hedge funds. AerSale remains disciplined in its bidding, focusing on its integrated value extraction capabilities to ensure profitability.

Q: What are the expectations for AerSale's fourth-quarter performance, and is there any seasonal benefit anticipated? A: Nick Finazzo, CEO, mentioned that while there is no inherent seasonality, the fourth quarter's performance depends on prior feedstock purchases. Martin Garmendia, CFO, added that while there is visibility on some engine sales, the timing of flight equipment sales often influences quarterly results.

Q: What is the expected revenue and margin contribution from the MRO investments, and how is the current MRO business performing? A: Martin Garmendia, CFO, stated that the MRO expansions are expected to add $50 million in revenue with 20-30% margins. The current MRO business contributes $8-10 million in EBITDA, with growth expected as new facilities come online and existing capacity is better utilized.

Q: How is AerSale addressing the initial low volume at the Millington facility, and what is the plan for new MRO projects? A: Nick Finazzo, CEO, explained that they are actively seeking customers for Millington and expect to fill the facility over time. For new projects, they have existing customer interest and are expanding capabilities, such as pneumatics, to attract more business.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.