| INVENTORY |
NOTE D — INVENTORY
Following are the major classes of inventory as of the below dates (in thousands):
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June 30, 2024 |
|
December 31, 2023 |
USM |
|
$ |
126,807 |
|
$ |
120,053 |
Work-in-process |
|
|
25,028 |
|
|
22,270 |
Whole assets |
|
|
226,978 |
|
|
186,845 |
|
|
$ |
378,813 |
|
|
329,168 |
Less short term |
|
|
(221,371) |
|
|
(177,770) |
Long term |
|
$ |
157,442 |
|
$ |
151,398 |
The Company recorded inventory scrap loss reserves of $0.4 million and $0.9 million for the three and six months ended June 30, 2024, respectively. The Company recorded inventory scrap loss reserves of $0.2 million and $0.7 million for the three and six months ended June 30, 2023, respectively. Additions to inventory reserves are included in cost of products in the accompanying condensed consolidated statements of operations.
Our allocation of inventory between short term and long term reflects the inventory’s operating cycle, which is longer than one year due to teardown and repair lead times. Inventory expected to be monetized within 18 months as well as work-in-process are reported under current assets.
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In April 2024, one of the Company’s leased secondary parts warehouses in Roswell, New Mexico, was destroyed by a fire. Inside the warehouse were various aircraft parts typically sold by AerSale as USM. The replacement value of that inventory, which was also destroyed or rendered not sellable by the fire, is estimated at $52.8 million. AerSale carries insurance covering these parts, with a limit of $50 million and a $10,000 deductible, for which it has submitted a claim. The cost of the destroyed inventory is $6.0 million; accordingly, since the insurance claim has yet to be paid, the Company recorded an impairment of $6.0 million and a $6.0 million non-trade receivable within Deposits, prepaid expenses, and other current assets, in the condensed consolidated balance sheets as of June 30, 2024. The recovery of the $6.0 million claim is deemed to be probable. Pursuant to ASC 450-30, Gain Contingencies, any higher amount than our book value that is to be collected from the insurance claim, will not be recorded until the insurance claim is paid. |
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