AerSale Reports Fourth Quarter and Full Year 2022 Results

2022 Highlights

  • Full year 2022 revenue of $408.5 million, up 20.0% year-over-year.
  • Full year 2022 GAAP net income of $43.9 million, or 10.7% of sales, up 21.4% year-over-year.
  • Full Year 2022 Adjusted Net Income of $63.6 million, or 15.5% of sales.
  • Adjusted EBITDA of $87.4 million or 21.4% of sales for the full year 2022.
  • Flight equipment sales included 12 aircraft, two airframes, and 15 engines during 2022.
  • Up to 12 additional aircraft to be converted to freighters by third parties, of which 9 are scheduled to become available for sale or lease in 2023.
  • Provides 2023 guidance: expects revenue in the range of $460 - $490 million and adjusted EBITDA in the range of $70 - $80 million, which excludes any potential AerAware sales1.

MIAMI--(BUSINESS WIRE)-- AerSale Corporation (Nasdaq: ASLE) (the “Company”) today reported results for the fourth quarter and full year ended December 31, 2022.

The Company’s revenue for the fourth quarter of 2022 was $95.1 million compared to $116.8 million in the fourth quarter of 2021. Revenue for the fourth quarter of 2022 included $51.4 million of flight equipment sales compared to $73.1 million of flight equipment sales in the prior year period. Flight equipment sales in the fourth quarter of 2022 consisted of six engines and three aircraft, which included one AerSale converted passenger to freighter (P2F) aircraft versus three aircraft and four engines in the fourth quarter of 2021. The decline in sales was largely a result of the pacing of flight equipment sales, which tend to occur at irregular intervals throughout the year. As a reminder to investors and as evidenced by the fluctuations that saw record first and second quarters in 2022, the Company’s revenues will fluctuate from quarter-to-quarter and year-to-year based on flight equipment sales and therefore, progress should be monitored based on asset purchases and related sales.

Asset Management Solutions (“Asset Management") revenue decreased to $67.9 million during the fourth quarter of 2022 compared to $93.6 million in the fourth quarter of 2021, primarily due to the pacing of flight equipment sales as mentioned above. Excluding flight equipment sales, Asset Management revenue would have been $16.5 million in the fourth quarter of 2022 compared to $20.5 million in the prior year period. Lower Asset Management revenue was partially offset by improved results from TechOps, fueled by better performance from landing gear and aerostructure maintenance, repair and overhaul (MRO), as well as increased revenue from AerSale’s Goodyear on-airport MRO facility due to additional capacity dedicated to customer aircraft.

AerSale continues to benefit from an ongoing recovery in the commercial aerospace end markets which generated higher revenue from MRO activities at AerSale’s Goodyear facility, which was partially offset by lower revenue at the Company’s Roswell facility due to fewer customer aircraft in storage programs compared to prior periods. As previously mentioned, the Company sub-contracted third-party providers at the beginning of the fourth quarter of 2022 to perform 12 757 P2F conversions initially planned to be completed at AerSale’s Goodyear facility, enabling the Company to increase capacity for third-party services.

Fourth quarter 2022 GAAP net income was $9.2 million versus $11.2 million in the prior year period, mainly due to lower flight equipment sales, which tend to have better margins.

AerSale recognized mark-to-market adjustment income of $1.4 million related to private warrant liability, $4.5 million of stock-based compensation expenses within payroll expenses, $0.6 million in secondary offering costs, $0.8 million in facility relocation costs, and a $1.7M gain on an aircraft insurance claim during the fourth quarter of 2022. In the fourth quarter of 2021, AerSale recognized an unrealized loss on investment of $5.4 million, a mark-to-market adjustment expense to warrant liability of $0.2 million, $3.8 million of non-cash stock-based compensation expense within payroll expenses, and $1.6 million in non-cash inventory write-down recorded in the cost of products line. Excluding these non-cash and unusual items adjusted for tax, Adjusted Net Income was $12.3 million in the fourth quarter of 2022 versus Adjusted Net Income of $22.3 million in the fourth quarter of 2021.

Diluted earnings per share was $0.17 for the fourth quarter of 2022 and $0.21 for the fourth quarter of 2021. Adjusted for the non-cash and unusual items noted above, adjusted diluted earnings per share was $0.23 for the fourth quarter of 2022 compared to $0.41 for the fourth 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.

Fourth quarter 2022 adjusted EBITDA was $17.7 million, compared to $28.6 million in the prior-year period. The drop in adjusted EBITDA and margins reflected lower flight equipment sales, which generally have higher margins. Please see the non-GAAP reconciliation table at the end of this press release for additional details on these amounts.

Cash used in operating activities was $0.1 million, primarily due to the application of $18.0 million in customer deposits associated with the sale of a 747 freighter aircraft that closed during 2022, for which the sale proceeds are reflected under investment activities. AerSale continued its investment in the 757 P2F conversion program, which is largely the driver of the $13.3 million increase in advance vendor payments, as well as investing an additional $37.6 million to increase inventory available for sale. AerSale ended the year with $147.2 million of cash and has an undrawn $150 million credit facility.

Nicolas Finazzo, AerSale’s Chief Executive Officer, commented, “We delivered another year of excellent performance driven by strong execution and the broad success of our 757 P2F freighter conversion program. While our results were unevenly distributed throughout the year, our full-year results came in within our expected range and marked a record result for the Company. As we look forward to 2023, we anticipate the 757 P2F program to again be a strong contributor, and we will continue to benefit from an improving backdrop in commercial aerospace.”

Finazzo added, “We are also in the final stages of obtaining a Supplemental Type Certificate (“STC”) from the FAA for our Enhanced Flight Vision System “AerAware” with FAA certification flight testing already in progress. This marks a significant milestone in a multi-year period of product development, and we expect this technology to become a meaningful contributor to our long-term performance. AerAware offers substantial safety and efficiency benefits to airline operators with an attractive ROI, and we believe these attributes will lead this innovative enhanced flight vision technology to be broadly adopted over the long-term.”

Update on AerAware
Depending on the complexity of the modification, the FAA requires that it observe flight testing of new products incorporated into FAA type certificated aircraft. In the case of AerAware, the FAA has scheduled five different sets of demonstration flight tests that began in February and will continue into April. AerSale has successfully completed the first two sets of flight tests, with the third and fourth sets scheduled in March, and the fifth set expected in April. All flight tests are subject to changes due to FAA staffing and weather. Upon successful completion of flight testing, it is typical to receive an STC within 30 days.

Fourth Quarter 2022 Results of Operations
AerSale reported revenue of $95.1 million in the fourth quarter of 2022, which included $51.4 million of flight equipment sales consisting of six engines and three aircraft, which included one 757 P2F converted aircraft. The Company’s revenue for the fourth quarter of 2021 was $116.8 million and included $73.1 million of flight equipment sales consisting of three aircraft and four engines. Excluding flight equipment sales, revenue would have been $43.7 million in the fourth quarter of 2022 and 2021. The delivery of one 757 P2F AerSale converted aircraft, which was initially forecasted to close during the third quarter of 2022, was delivered at the beginning of the fourth quarter. Again, 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 the Company’s progress.

Asset Management revenue fell 27.4% to $67.9 million in the fourth quarter of 2022 on account of lower flight equipment sales. Leasing revenue for the fourth quarter of 2022 decreased as a result of expected reductions in the number of aircraft in the leasing portfolio. Fourth quarter 2022 Used Serviceable Material (“USM”) parts sales were similar to the year ago quarter levels. Asset Management revenue would have been $16.5 million in the fourth quarter of 2022 compared to $20.5 million in the prior year period excluding flight equipment sales.

Technical Operations (“TechOps”) revenue was $27.1 million in the fourth quarter of 2022, an improvement of 17.2% compared to the fourth quarter of 2021, which was largely due to better performance from our landing gear facility and the AerSale’s Goodyear MRO. Revenue growth from the Goodyear facility was offset by lower revenue at the Company’s Roswell facility due to fewer customer aircraft in storage as compared to prior periods.

Gross margin was 36.0% in the fourth quarter of 2022 compared to 37.8% in the year ago period on account of the sales mix across both the operating segments of AerSale.

Selling, general and administrative expenses were $25.1 million in the fourth quarter of 2022 compared to $24.4 million in the fourth quarter of 2021. Payroll expenses were higher and AerSale incurred $4.5 million of stock-based compensation expenses in the fourth quarter of 2022, compared to $3.8 million in the fourth quarter of 2021.

Income from operations was $9.1 million in the fourth quarter of 2022 and $19.8 million in the fourth quarter of 2021.

Income tax expense was $4.1 million in the fourth quarter of 2022 and $2.9 million in the fourth quarter of 2021.

GAAP net income was $9.2 million in the fourth quarter of 2022 compared to $11.2 million in fourth quarter of 2021.

Adjusted for stock-based compensation, inventory write-down, mark-to-market adjustment to the private warrant liability, gain an aircraft insurance claim, secondary offering and facility relocation costs, Adjusted Net Income was $12.3 million in the fourth quarter of 2022 versus $22.3 million in the fourth quarter of 2021. Diluted earnings per share was $0.17 for the fourth quarter of 2022 and $0.21 in the fourth quarter of 2021. Adjusted for the above-mentioned non-cash and unusual items, adjusted diluted earnings per share was $0.23 for the fourth quarter of 2022 and $0.41 for the fourth quarter of 2022.

Adjusted EBITDA in the fourth quarter of 2022 was $17.7 million, compared to $28.6 million in the fourth quarter of 2021. The decline in adjusted EBITDA and related margins was mainly on account of lower flight equipment sales, which generally produce higher margins. AerSale did not receive Payroll Support Program proceeds during the fourth quarter of 2021 or 2022.

Full Year 2022 Results of Operations
For the full year 2022, AerSale reported consolidated revenue of $408.5 million, an increase of 20.0% from $340.4 million for full year 2021. Full year 2022 included flight equipment sales of $222.5 million consisting of 12 aircraft, two airframes, and 15 engines. Flight equipment sales were $156.9 million in the full year 2021 consisting of nine aircraft, two airframes, and 10 engines.

AerSale has contracted for 12 additional 757 P2F conversions from multiple providers, resulting in the 757 P2F program being extended into 2024.

Asset Management revenue was $277.6 million in full year 2022, up 19.7% from $232.0 million in full year 2021 largely due to higher flight equipment sales, partially offset by lower leasing volume. Asset Management parts business benefitted from growing demand for airframe and engine parts as airlines expand their USM parts consumption. AerSale expects USM sales to improve as the availability of feedstock improves.

Revenue from TechOps was 20.8% higher at $130.9 million in 2022 and was led by the Engineered Solutions’ sale of the AerAware dedicated 737NG aircraft, which was partially offset by lower heavy MRO activities due to reduced storage related maintenance activity in Roswell. The Company expects to benefit from a pickup in MRO volume due to the ongoing recommissioning of commercial aircraft and greater demand for USM parts consumption for overhaul activity.

Gross margin was 37.1% in 2022 compared to 35.1% in 2021, which was primarily driven by higher flight equipment sales.

Selling, general and administrative expenses were $96.3 million in 2022 compared to $77.5 million in 2021. While payroll expenses increased in 2022, selling, general and administrative expenses in 2021 reflects the benefit of $14.8 million in Payroll Support Program proceeds. There was no such corresponding benefit in 2022. The Company incurred $16.5 million of non-cash stock-based compensation within payroll expenses in 2022, compared to $12.7 million in 2021.

Income from operations was $55.0 million in 2022, up from $56.7 million in 2021.

Income tax expense was $14.0 million in 2022 compared to $11.7 million in 2021.

GAAP net income was $43.9 million in 2022 compared to $36.1 million in 2021. Adjusted for stock-based compensation, inventory write-down, impairment of flight equipment, mark-to-market adjustment to the private warrant liability, and secondary offering and facility relocation costs as well as the gain on an aircraft insurance claim, Adjusted Net Income was $63.6 million in 2022 and in 2021.

Adjusted EBITDA for 2022 was $87.4 million, or 21.4% of sales, compared to adjusted EBITDA of $89.3 million, or 26.1% of sales, in 2021. Adjusted EBITDA benefitted from $14.8 million in Payroll Support Program proceeds during 2021, while there was no such corresponding benefit in 2022.

Martin Garmendia, AerSale’s Chief Financial Officer, said: “Aside from the variability in the timing of flight equipment sales, the business has continued to gain strong traction and the underlying momentum remains on a robust growth trajectory. With a strong balance sheet and liquidity, we are well positioned to capitalize on increasing flight equipment feedstock availability, as well as other internal and external opportunities in order to continue generating high returns going forward.”

2023 Guidance
AerSale expects revenue of $460 to $490 million and adjusted EBITDA of $70 - $80 million in 2023. This guidance reflects the Company’s expected whole asset sales during the year and anticipated volume in its ongoing operations. Guidance for 2023 does not reflect potential sales of AerAware as the product is in its final stages of approval and will be updated once the STC is issued and the Company can assess initial order and delivery schedules.

Conference Call Information
The Company will host a conference call today, March 6, 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 1-877-407-3982, 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 20, 2023. Participants may access the replay at 1-844-512-2921, international callers may use 1-412-317-6671, and enter access code 13735594. 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.

Fourth Quarter and Full Year 2022 Financial Results

AERSALE CORPORATION

CONSOLIDATED BALANCE SHEET

(in thousands, except per share data)

 

 

December 31,

 

December 31,

 

 

2022

 

2021

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

147,188

 

$

130,188

Accounts receivable, net of allowance for doubtful accounts of $1,074 and $1,692 as of December 31, 2022 and December 31, 2021

 

 

28,273

 

 

29,350

Inventory:

 

 

 

 

 

 

Aircraft, airframes, engines, and parts, net

 

 

117,488

 

 

81,759

Advance vendor payments

 

 

27,585

 

 

14,287

Deposits, prepaid expenses, and other current assets

 

 

13,022

 

 

15,945

Total current assets

 

 

333,556

 

 

271,529

Fixed assets:

 

 

 

 

 

 

Aircraft and engines held for lease, net

 

 

31,288

 

 

73,364

Property and equipment, net

 

 

12,638

 

 

7,350

Inventory:

 

 

 

 

 

 

Aircraft, airframes, engines, and parts, net

 

 

66,042

 

 

77,534

Operating lease right-of-use assets

 

 

31,624

 

 

-

Deferred income taxes

 

 

11,287

 

 

10,013

Deferred financing costs, net

 

 

544

 

 

999

Deferred customer incentives and other assets, net

 

 

628

 

 

598

Goodwill

 

 

19,860

 

 

19,860

Other intangible assets, net

 

 

24,112

 

 

26,238

Total assets

 

$

531,579

 

$

487,485

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

21,131

 

$

19,967

Accrued expenses

 

 

8,843

 

 

8,424

Income tax payable

 

 

-

 

 

3,443

Lessee and customer purchase deposits

 

 

17,085

 

 

33,212

Current operating lease liabilities

 

 

4,426

 

 

-

Deferred revenue

 

 

1,355

 

 

2,860

Total current liabilities

 

 

52,840

 

 

67,906

 

 

 

 

 

 

 

Long-term lease deposits

 

 

152

 

 

2,053

Long-term operating lease liabilities

 

 

28,283

 

 

-

Maintenance deposit payments and other liabilities

 

 

668

 

 

3,403

Deferred income taxes, net

 

 

-

 

 

1,113

Warrant liability

 

 

4,656

 

 

4,131

Total liabilities

 

 

86,599

 

 

78,606

Commitments and contingencies

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock, $0.0001 par value. Authorized 200,000,000 shares; issued and outstanding 51,189,461 and 51,673,099 shares as of December 31, 2022 and 2021, respectively

 

 

5

 

 

5

Additional paid-in capital

 

 

306,141

 

 

313,901

Retained earnings

 

 

138,834

 

 

94,973

Total stockholders' equity

 

 

444,980

 

 

408,879

Total liabilities and stockholders’ equity

 

$

531,579

 

$

487,485

AERSALE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(Unaudited)

 

 

 

Years ended December 31,

 

 

 

2022

 

2021

 

2020

Revenue:

 

 

 

 

 

 

 

 

 

 

Products

 

 

$

284,554

 

 

$

209,881

 

 

$

49,390

 

Leasing

 

 

 

28,732

 

 

 

30,657

 

 

 

55,649

 

Services

 

 

 

95,258

 

 

 

99,899

 

 

 

103,899

 

Total revenue

 

 

 

408,544

 

 

 

340,437

 

 

 

208,938

 

Cost of sales and operating expenses:

 

 

 

 

 

 

 

 

 

 

Cost of products

 

 

 

176,074

 

 

 

139,475

 

 

 

49,890

 

Cost of leasing

 

 

 

6,929

 

 

 

9,804

 

 

 

24,244

 

Cost of services

 

 

 

74,147

 

 

 

71,766

 

 

 

82,015

 

Total cost of sales

 

 

 

257,150

 

 

 

221,045

 

 

 

156,149

 

Gross profit

 

 

 

151,394

 

 

 

119,392

 

 

 

52,789

 

Selling, general, and administrative expenses

 

 

 

96,348

 

 

 

77,498

 

 

 

55,635

 

Payroll support program proceeds

 

 

 

-

 

 

 

(14,768

)

 

 

(12,693

)

Transaction costs recovered

 

 

 

-

 

 

 

-

 

 

 

(1,436

)

Income from operations

 

 

 

55,046

 

 

 

56,662

 

 

 

11,283

 

Other income (expenses):

 

 

 

 

 

 

 

 

 

 

Interest income (expense), net

 

 

 

1,093

 

 

 

(980

)

 

 

(1,645

)

Other income, net

 

 

 

2,268

 

 

 

458

 

 

 

494

 

Unrealized loss on investment

 

 

 

-

 

 

 

(5,421

)

 

 

-

 

Change in fair value of warrant liability

 

 

 

(525

)

 

 

(2,945

)

 

 

(388

)

Total other income (expenses)

 

 

 

2,836

 

 

 

(8,888

)

 

 

(1,539

)

Income before income tax provision

 

 

 

57,882

 

 

 

47,774

 

 

 

9,744

 

Income tax expense

 

 

 

(14,021

)

 

 

(11,659

)

 

 

(1,650

)

Net income

 

 

 

43,861

 

 

 

36,115

 

 

 

8,094

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share - basic

 

 

$

0.85

 

 

$

0.84

 

 

$

7.85

 

Earnings per share - diluted

 

 

$

0.83

 

 

$

0.76

 

 

$

7.39

 

AERSALE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

 

Years ended December 31,

 

 

2022

 

2021

 

2020

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

Net income

 

$

43,861

 

 

$

36,115

 

 

$

8,094

 

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

10,984

 

 

 

12,998

 

 

 

24,223

 

Amortization of debt issuance costs

 

 

455

 

 

 

494

 

 

 

740

 

Amortization of operating lease assets

 

 

873

 

 

 

-

 

 

 

-

 

Inventory reserve

 

 

2,376

 

 

 

6,942

 

 

 

13,651

 

Impairment of aircraft held for lease

 

 

857

 

 

 

-

 

 

 

3,036

 

Provision for doubtful accounts

 

 

(395

)

 

 

212

 

 

 

212

 

Deferred income taxes

 

 

(2,387

)

 

 

(3,192

)

 

 

22

 

Change in fair value of warrant liability

 

 

525

 

 

 

2,945

 

 

 

388

 

Share-based compensation

 

 

16,498

 

 

 

12,721

 

 

 

1,042

 

Loss on related party investment

 

 

-

 

 

 

5,421

 

 

 

-

 

Gain on legal settlement

 

 

(1,695

)

 

 

-

 

 

 

-

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(1,029

)

 

 

(3,342

)

 

 

9,919

 

Inventory

 

 

(37,637

)

 

 

(35,672

)

 

 

(55,275

)

Deposits, prepaid expenses, and other current assets

 

 

2,923

 

 

 

12,685

 

 

 

(9,132

)

Deferred customer incentives and other assets

 

 

893

 

 

 

(333

)

 

 

56

 

Advance vendor payments

 

 

(13,298

)

 

 

(8,090

)

 

 

(2,958

)

Accounts payable

 

 

1,164

 

 

 

3,603

 

 

 

(801

)

Income tax payable

 

 

(3,443

)

 

 

2,157

 

 

 

1,324

 

Accrued expenses

 

 

417

 

 

 

(1,280

)

 

 

(1,697

)

Deferred revenue

 

 

(1,505

)

 

 

265

 

 

 

(5,894

)

Lessee and customer purchase deposits

 

 

(18,027

)

 

 

34,690

 

 

 

1,776

 

Other liabilities

 

 

(2,523

)

 

 

(260

)

 

 

(957

)

Net cash (used in) provided by operating activities

 

 

(113

)

 

 

79,079

 

 

 

(12,231

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

Business acquisition

 

 

-

 

 

 

-

 

 

 

(16,976

)

Proceeds from sale of assets

 

 

52,771

 

 

 

17,095

 

 

 

3,100

 

Proceeds from legal settlement, net

 

 

4,195

 

 

 

-

 

 

 

-

 

Acquisition of aircraft and engines held for lease, including capitalized cost

 

 

(7,133

)

 

 

(2,383

)

 

 

(5,128

)

Purchase of property and equipment

 

 

(8,462

)

 

 

(1,508

)

 

 

(2,137

)

Net cash provided by (used in) investing activities

 

 

41,371

 

 

 

13,204

 

 

 

(21,141

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

Repayments of 8% Senior Secured Notes

 

 

-

 

 

 

-

 

 

 

(3,424

)

Proceeds from Revolving Credit Facility

 

 

-

 

 

 

-

 

 

 

96,726

 

Repayments of Revolving Credit Facility

 

 

-

 

 

 

-

 

 

 

(96,726

)

Purchase of treasury stock

 

 

(22,204

)

 

 

-

 

 

 

-

 

Cash paid for employee taxes on withholding shares

 

 

-

 

 

 

(694

)

 

 

-

 

Taxes paid related to net share settlement of equity awards

 

 

(2,592

)

 

 

-

 

 

 

-

 

Proceeds from exercise of warrants

 

 

-

 

 

 

9,282

 

 

 

-

 

Proceeds from the issuance of Employee Stock Purchase Plan shares

 

 

538

 

 

 

-

 

 

 

-

 

Proceeds from Merger

 

 

-

 

 

 

-

 

 

 

48,608

 

Net cash (used in) provided by financing activities

 

 

(24,258

)

 

 

8,588

 

 

 

45,184

 

 

 

 

 

 

 

 

 

 

 

Increase in cash and cash equivalents

 

 

17,000

 

 

 

100,871

 

 

 

11,812

 

Cash and cash equivalents, beginning of period

 

 

130,188

 

 

 

29,317

 

 

 

17,505

 

Cash and cash equivalents, end of period

 

$

147,188

 

 

$

130,188

 

 

$

29,317

 

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash activities

 

 

 

 

 

 

 

 

 

Income taxes paid

 

 

21,489

 

 

 

8,340

 

 

 

2,650

 

Interest paid

 

 

573

 

 

 

595

 

 

 

855

 

Supplemental disclosure of noncash investing activities

 

 

 

 

 

 

 

 

 

Reclassification of aircraft and aircraft engines inventory (from) to aircraft and engine held for lease, net

 

 

(25,803

)

 

 

(7,002

)

 

 

6,228

 

Reclassification of customer purchase deposits to sale of assets

 

 

12,500

 

 

 

-

 

 

 

-

 

Reclassification of amounts due from related party to investments

 

 

-

 

 

 

5,421

 

 

 

-

 

AERSALE CORPORATION

Adjusted EBITDA, Net Income and Diluted EPS Reconciliation Table (In ‘000s)

(Unaudited)

Three months ended December 31,

 

Twelve months ended December 31,

2022

 

% of Total
Revenue

 

2021

 

% of Total
Revenue

 

2022

 

% of Total
Revenue

 

2021

 

% of Total
Revenue

Reported Net Income

9,193

 

9.7

%

11,185

9.6

%

43,861

 

10.7

%

36,115

10.6

%

Addbacks:

Change in FV of Warrant Liability

(1,356

)

(1.4

%)

210

0.2

%

525

 

0.00

 

2,945

0.9

%

Stock-based Compensation

4,470

 

4.7

%

3,822

3.3

%

16,498

 

0.04

 

12,721

3.7

%

Payroll taxes related to stock-based compensation

250

 

0.3

%

-

0.0

%

250

 

0.00

 

-

0.0

%

Inventory Write-down

-

 

0.0

%

1,640

1.4

%

1,845

 

0.00

 

6,416

1.9

%

Unrealized loss on investment

-

 

0.0

%

5,421

4.6

%

-

 

-

 

5,421

1.6

%

Impairment in Flight Equipment

-

 

0.0

%

-

0.0

%

857

 

0.00

 

-

0.0

%

Secondary Offering Costs

579

 

0.6

%

-

0.0

%

579

 

0.1

%

-

0.0

%

Relocation Costs

804

 

0.8

%

-

0.0

%

804

 

0.2

%

-

0.0

%

Gain on legal settlement

(1,695

)

(1.8

%)

-

0.0

%

(1,695

)

(0.4

%)

-

0.0

%

Income Tax Effect of Adjusting Items (1)

96

 

0.1

%

-

0.0

%

76

 

0.0

%

-

0.0

%

Adjusted Net Income

12,341

 

12.9

%

22,278

19.1

%

63,600

 

15.5

%

63,618

18.6

%

Interest Expense

(1,078

)

(1.1

%)

230

0.2

%

(1,093

)

(0.3

%)

980

0.3

%

Income Tax Expense (Benefit)

4,108

 

4.3

%

2,922

2.5

%

14,021

 

3.4

%

11,659

3.4

%

Depreciation and Amortization

2,395

 

2.5

%

3,130

2.7

%

10,984

 

2.7

%

12,998

3.8

%

Reversal of Income Tax Effect of Adjusting Items (1)

(96

)

(0.1

%)

-

0.0

%

(76

)

(0.0

%)

-

0.0

%

Adjusted EBITDA

17,670

 

18.6

%

28,561

24.5

%

87,436

 

21.4

%

89,255

26.1

%

 

Reported Basic earnings per share

0.18

 

0.24

0.85

 

0.84

Addbacks:

Change in fair value of warrant liability

(0.03

)

0.00

0.01

 

0.07

Stock-based compensation

0.09

 

0.08

0.32

 

0.29

Inventory Write-down

-

 

0.04

0.04

 

0.15

Unrealized loss on investment

-

 

0.12

-

 

0.13

Secondary Offering Costs

0.01

 

-

0.01

 

-

Relocation Costs

0.02

 

-

0.02

 

-

Gain on legal settlement

(0.03

)

Income Tax Effect of Adjusting Items

0.00

 

-

0.00

 

-

Adjusted Basic earnings per share

0.24

 

0.49

1.24

 

1.48

 

Reported Diluted earnings per share

0.17

 

0.21

0.83

 

0.76

Addbacks:

Change in FV of warrant liability

(0.03

)

0.00

0.01

 

0.06

Stock-based compensation

0.08

 

0.07

0.31

 

0.27

Inventory Write-down

-

 

0.03

0.03

 

0.14

Impairment in Flight Equipment

-

 

0.10

-

 

0.11

Secondary Offering Costs

0.01

 

-

0.01

 

-

Relocation Costs

0.02

 

-

0.02

 

-

Gain on legal settlement

(0.03

)

Income Tax Effect of Adjusting Items

0.00

 

-

0.00

 

-

Adjusted Diluted earnings per share

0.23

 

0.41

1.20

 

1.34

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 $460 - $490 million and adjusted EBITDA in the range of $70 - $80 million; our expectations that up to twelve additional aircraft will be converted to freighters by third parties; the anticipation that the 757 P2F conversion program is expected to be a strong contributor to the Company; anticipations regarding an increasingly favorable market for feedstock availability within AerSale’s USM business and greater demand for USM parts; expectations regarding feedstock, and our belief that we are extremely well positioned to take advantage of the current market dynamic; our belief that we are well positioned to take advantage of asset availability; our growth trajectory; the expected operating capacity of our MRO facilities and demand for such services; expectations of increased capacity for third party work and revenue at our Goodyear, AZ facility; the anticipated receipt and typical timeline of receipt from the FAA of an STC for our AerAware product; expectation that AerAware is a technology that will be broadly adopted and that sales of AerAware will be a meaningful contributor to long-term performance; and expected benefits from an improving backdrop in commercial aerospace, and end markets; 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,” or the negative of these or other similar expressions are intended to identify such forward-looking statements. The forward-looking statements in this press release are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. You should carefully consider the foregoing factors and the other risks and uncertainties described in the Risk Factors, Management’s Discussion and Analysis of Financial Condition and Results of Operations sections 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. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties.

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.
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____________________________
1 A reconciliation of non-GAAP adjusted EBITDA guidance to net (loss) 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.

Media:
AerSale: Jackie Carlon
(305) 764-3200
media.relations@aersale.com

Investors: AerSale: AersaleIR@icrinc.com

Source: AerSale Corporation