Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2021 | May 04, 2021 | |
Document Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2021 | |
Entity File Number | 001-38801 | |
Entity Registrant Name | AerSale Corporation | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 84-3976002 | |
Entity Address, Address Line One | 121 Alhambra Plaza Suite 1700 | |
Entity Address, City or Town | Coral Gables | |
Entity Address, State or Province | FL | |
Entity Address, Postal Zip Code | 33134 | |
City Area Code | (305) | |
Local Phone Number | 764-3200 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 42,949,261 | |
Entity Central Index Key | 0001754170 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Common stock | ||
Document Information | ||
Title of 12(b) Security | Common stock, $0.0001 par value per share | |
Trading Symbol | ASLE | |
Security Exchange Name | NASDAQ | |
Redeemable warrants | ||
Document Information | ||
Title of 12(b) Security | Redeemable warrants, each warrant exercisable for one share of Common Stock at an exercise price of $11.50 | |
Trading Symbol | ASLEW | |
Security Exchange Name | NASDAQ |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Current Assets: | ||
Cash and cash equivalents | $ 19,609 | $ 29,317 |
Accounts receivable, net of allowance for doubtful accounts of $1,442 and $1,652 as of March 31, 2021 and December 31, 2020 | 48,510 | 50,215 |
Inventory: | ||
Aircraft, airframes, engines, and parts, net | 99,299 | 85,192 |
Advanced vendor payments | 10,719 | 6,205 |
Due from related party | 474 | |
Deposits, prepaid expenses and other current assets | 5,609 | 7,560 |
Total current assets | 183,746 | 178,963 |
Fixed assets: | ||
Aircraft and engines held for lease, net | 82,332 | 86,844 |
Property and equipment, net | 7,771 | 7,839 |
Inventory: | ||
Aircraft, airframes, engines, and parts | 65,943 | 55,463 |
Deferred income taxes | 5,992 | 5,708 |
Deferred financing costs, net | 1,268 | 367 |
Deferred customer incentives and other assets, net | 271 | 271 |
Due from related party | 5,421 | 5,450 |
Goodwill | 19,860 | 19,860 |
Other intangible assets, net | 27,839 | 28,364 |
Total assets | 400,443 | 389,129 |
Current liabilities: | ||
Accounts payable | 19,221 | 16,364 |
Accrued expenses | 8,207 | 8,576 |
Income tax payable | 1,329 | 1,324 |
Lessee and customer purchase deposits | 1,480 | 2,820 |
Deferred revenue | 818 | 2,595 |
Total current liabilities | 31,055 | 31,679 |
Long-term lease deposits | 2,485 | 1,145 |
Maintenance deposit payments and other liabilities | 3,744 | 3,664 |
Warrant liability | 1,410 | 1,186 |
Total liabilities | 38,694 | 37,674 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock, $0.0001 par value. Authorized 200,000,000 shares; issued and outstanding 42,949,261 and 41,046,216 shares | 4 | 4 |
Additional paid-in capital | 292,869 | 292,593 |
Retained earnings | 68,876 | 58,858 |
Total equity | 361,749 | 351,455 |
Total liabilities and stockholders' equity | $ 400,443 | $ 389,129 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Condensed Consolidated Balance Sheets | ||
Accounts receivable, allowance for doubtful accounts | $ 1,442 | $ 1,652 |
Common Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
Common Stock, Shares Authorized | 200,000,000 | 200,000,000 |
Common Stock, Shares, Issued | 42,949,261 | 41,046,216 |
Common Stock, Shares, Outstanding | 42,949,261 | 41,046,216 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Total revenues | $ 58,435 | $ 57,135 |
Leasing | 6,256 | 15,782 |
Cost of sales and operating expenses: | ||
Cost of leasing | 2,767 | 7,432 |
Total cost of sales | 38,600 | 41,849 |
Gross profit | 19,835 | 15,286 |
Selling, general, and administrative expenses | 13,310 | 13,201 |
Payroll support program proceeds | 6,363 | |
Transaction costs | 231 | |
Income from operations | 12,888 | 1,854 |
Other income (expenses): | ||
Interest expense, net | (258) | (536) |
Other income (expenses), net | 94 | 57 |
Change in fair value of warrant liability | (224) | |
Total other expenses | (388) | (479) |
Income from operations before income tax provision | 12,500 | 1,375 |
Income tax expense | (2,482) | (316) |
Net income | $ 10,018 | $ 1,059 |
Earnings per share - basic and diluted: | ||
Earnings per share - basic | $ 0.24 | $ 28.61 |
Earnings per share - diluted | $ 0.23 | $ 28.61 |
Products | ||
Total revenues | $ 25,126 | $ 18,031 |
Cost of sales and operating expenses: | ||
Cost of products | 13,806 | 13,439 |
Services | ||
Total revenues | 27,053 | 23,322 |
Cost of sales and operating expenses: | ||
Total cost of sales | $ 22,027 | $ 20,978 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common stock | Additional paid-in capital | Retained earnings | Total |
Balance at beginning at Dec. 31, 2019 | $ 1 | $ 243,221 | $ 50,764 | $ 293,986 |
Balance at beginning (in shares) at Dec. 31, 2019 | 5,285,054 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 1,059 | 1,059 | ||
Balance at ending at Mar. 31, 2020 | $ 1 | 243,221 | 51,823 | 295,045 |
Balance at ending (in shares) at Mar. 31, 2020 | 5,285,054 | |||
Balance at beginning at Dec. 31, 2020 | $ 4 | 292,593 | 58,858 | 351,455 |
Balance at beginning (in shares) at Dec. 31, 2020 | 41,046,216 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Issuance of Earn-Out shares | (269) | (269) | ||
Issuance of Earn-Out shares (in shares) | 1,855,634 | |||
Shares issued upon exercise of warrants | 545 | 545 | ||
Shares issued upon exercise of warrants (in shares) | 47,411 | |||
Net income | 10,018 | 10,018 | ||
Balance at ending at Mar. 31, 2021 | $ 4 | $ 292,869 | $ 68,876 | $ 361,749 |
Balance at ending (in shares) at Mar. 31, 2021 | 42,949,261 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Cash flows from operating activities: | ||
Net income | $ 10,018 | $ 1,059 |
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||
Depreciation and amortization | 3,487 | 7,937 |
Amortization of debt issuance costs | 150 | 202 |
Inventory reserve | 74 | 421 |
Provision for doubtful accounts | (144) | 114 |
Deferred income taxes | (284) | |
Change in fair value of warrant liability | 224 | |
Decreases (increases) in operating assets and liabilities, net of acquisitions: | ||
Accounts receivable | 1,713 | 12,321 |
Inventory | (27,020) | (1,511) |
Deposits, prepaid expenses, and other current assets | 2,590 | 5,015 |
Deferred customer incentives and other assets | 320 | |
Advance vendor payments | (4,514) | 580 |
Accounts payable | 2,857 | 849 |
Income tax payable | (5) | (313) |
Accrued expenses | (1,420) | (414) |
Deferred revenue | (1,777) | (5,913) |
Lessee and customer purchase deposits | 406 | |
Other liabilities | 80 | (262) |
Net cash (used in) provided by operating activities | (13,961) | 21,437 |
Cash flows from investing activities: | ||
Business acquisitions | (16,976) | |
Proceeds from sale of assets | 4,420 | |
Acquisition of aircraft and engines held for lease, including capitalized cost | (293) | |
Purchase of property and equipment | (443) | (914) |
Net cash provided by (used in) investing activities | 3,977 | (18,183) |
Cash flows from financing activities: | ||
Repayments of 8% Senior Secured Notes | (1,448) | |
Proceeds from revolving credit facility | 79,500 | |
Repayments of revolving credit facility | (19,096) | |
Cash paid for employee taxes on withholding shares | (269) | |
Proceeds from exercise of warrants | 545 | |
Net cash provided by financing activities | 276 | 58,956 |
(Decrease) increase in cash and cash equivalents | (9,708) | 62,210 |
Cash and cash equivalents, beginning of period | 29,317 | 17,505 |
Cash and cash equivalents, end of period | 19,609 | 79,715 |
Supplemental disclosure of cash activities | ||
Income taxes, net | 98 | 46 |
Interest | 167 | 344 |
Supplemental disclosure of noncash investing activities | ||
Reclassification of aircraft and aircraft engines inventory from equipment held for lease, net. | $ (2,061) | $ (1,111) |
DESCRIPTION OF THE BUSINESS
DESCRIPTION OF THE BUSINESS | 3 Months Ended |
Mar. 31, 2021 | |
DESCRIPTION OF THE BUSINESS | |
DESCRIPTION OF THE BUSINESS | NOTE A — DESCRIPTION OF THE BUSINESS Organization Monocle Acquisition Corporation (“Monocle”) was initially formed on August 20, 2018 for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or similar business combination with one or more businesses. On December 22, 2020, (the “Closing Date”), Monocle consummated the previously announced business combination pursuant to that certain Amended and Restated Agreement and Plan of Merger, dated September 8, 2020 (the “Merger Agreement”) by and among Monocle, AerSale Corporation (f/k/a Monocle Holdings Inc.), a Delaware corporation (the “Company”), AerSale Aviation, Inc. (f/k/a AerSale Corp.), a Delaware corporation (“AerSale Aviation”), Monocle Merger Sub 1 Inc., a Delaware corporation (“Merger Sub 1”), Monocle Merger Sub 2 LLC, a Delaware limited liability company (“Merger Sub 2”), and Leonard Green & Partners, L.P., a Delaware limited partnership, solely in its capacity as the initial Holder Representative (as defined in the Merger Agreement). The transactions contemplated by the Merger Agreement are referred to herein as the “Merger” or the “Business Combination” and in connection therewith, Monocle merged with and into us, whereby we survived the merger and became the successor issuer to Monocle by operation of Rule 12g-3 under the Exchange Act. Upon the consummation of the Merger: (a) Merger Sub 1 was merged with and into Monocle, with Monocle surviving the merger as a wholly-owned direct subsidiary of the Company (the “First Merger”), and (b) Merger Sub 2 was merged with and into AerSale Aviation, with AerSale Aviation surviving the merger as a wholly-owned indirect subsidiary of the Company (the “Second Merger”). In connection with the closing of the Business Combination (the “Closing”), AerSale Aviation changed its name from “AerSale Corp.” to “AerSale Aviation, Inc.” and the Company changed its name from “Monocle Holdings Inc.” to “AerSale Corporation.” Immediately following the Merger, the Company contributed all of its ownership in Monocle to AerSale Aviation which will continue as a wholly owned subsidiary of the Company. The Company’s corporate headquarters are based in Miami, Florida, with additional offices, hangars, and warehouses globally. Revision of Prior Period Financial Statements During the quarter ended March 31, 2021, the Company identified and corrected immaterial errors that affected certain of its previously issued consolidated financial statements. These errors related to the misapplication of generally accepted accounting principles in the United States in connection with the classification of the Company’s private warrants as equity. The SEC released a Public Statement on April 12, 2021 noting that when one or more features common to warrants in SPAC transactions is included in a warrant, the warrant “should be classified as a liability measured at fair value, with changes in fair value each period reported in earnings.” Following review of the SEC’s statement, the Company concluded that our private warrants do not meet the conditions to be classified as equity and instead, the private warrants meet the definition of a derivative under Accounting Standards Codification (“ASC”) 815 “Derivatives and Hedging.” This requires the Company to record the private warrants as a liability measured at fair value on the Company’s Condensed Consolidated Balance Sheets with the changes in fair value each period reported in earnings. As a result, the Company recorded $0.2 million of expense in the three months ended March 31, 2021, reflected as change in fair value of warrant liability. Accordingly, the Company is revising its December 31, 2020 financial statements by recognizing the private warrants as a liability upon the consummation of the Business Combination on December 22, 2020 in the amount of $1.2 million with a corresponding reduction to additional paid-in capital and retained earnings of $0.8 million and $0.4 million, respectively. The Company determined the impact of the error related to the accounting treatment of private warrants had an immaterial impact with respect to the Company’s condensed consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2020. However, in order to correctly present the immaterial errors noted above, previously issued comparative financial statements have been revised during the quarter ended March 31, 2021. New Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU 2016-02 Leases (Topic 842), which generally requires companies to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet. In July 2018, FASB issued ASU No. 2018-10, “Codification Improvements to Topic 842, Leases” and ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements.” Although early adoption is permitted, we plan to adopt Topic 842 during the first quarter of 2022, on a modified retrospective basis. We are currently evaluating the impact this guidance will have on our consolidated financial statements and related disclosures. In June 2016, the FASB issued ASU No. 2016-13 (“ASU 2016-13”), “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” In November 2018, FASB issued ASU No. 2018-19, “Codification Improvements to Topic 326, Financial Instruments — Credit Losses,” which amends the scope and transition requirements of ASU 2016-13. Topic 326 requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount. Topic 326 will become effective for the Company beginning January 1, 2023, with early adoption permitted, on a modified retrospective basis. We are currently evaluating the impact this guidance will have on our consolidated financial statements and related disclosures. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE B — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Interim Financial Statements The accompanying unaudited interim consolidated financial statements have been prepared from the books and records of the Company in accordance with Accounting Principles Generally Accepted in the United States (“U.S. GAAP”) for interim financial information and Rule 10-01 of Regulation S-X promulgated by the U.S. Securities and Exchange Commission (“SEC”), which permits reduced disclosures for interim periods. Although these interim consolidated financial statements do not include all of the information and footnotes required for complete annual consolidated financial statements, management believes all adjustments, consisting only of normal recurring adjustments, and disclosures necessary for a fair presentation of the accompanying condensed consolidated balance sheets, statements of operations, stockholders’ equity, and cash flows have been made. Unaudited interim results of operations and cash flows are not necessarily indicative of the results that may be expected for the full year. Unaudited interim condensed consolidated financial statements and footnotes should be read in conjunction with the audited consolidated financial statements and footnotes included in Part II, Item 8 of the Annual Report Revenue Recognition Products — Used Serviceable Material Sales (“USM”) Revenues from sales of USM are measured based on consideration specified within customer contracts, and excludes any sales commissions and taxes collected and remitted to government agencies. We recognize revenue when performance obligations are satisfied by transferring control of a product or service to a customer. The parts are sold at a fixed price with no right of return. In determining the performance obligation, management has identified the promise in the contract to be the shipment of the spare parts to the customer. Title passes to the buyer when the goods are shipped, the buyer is responsible for any loss in transit and the Company has a legal right to payment for the spare parts once shipped. We generally sell our USM products under standard 30-day payment terms, subject to certain exceptions. Customers neither have the right to return products nor do they have the right to extended financing. The Company has determined that physical acceptance of the spare parts to be a formality in accordance with ASC Topic 606, “Revenue from Contracts with Customers” (“ASC 606”). Spare parts revenue is based on a set price for a set number of parts as defined in the purchase order. The performance obligation is completed once the parts have shipped and as a result, all of the transaction price is allocated to that performance obligation. The Company has determined that it is appropriate to recognize spare parts sales at a point in time (i.e., the date the parts are shipped) in accordance with ASC 606. Products — Whole Asset Sales Revenues from whole asset sales are measured based on consideration specified in the contract with the customer. The Company and customer enter into an agreement which outlines the place and date of sale, purchase price, condition of the whole asset, bill of sale and the assignment of rights and warranties from the Company to the customer. The Company believes the whole asset holds standalone value to the customer as it is not dependent on any other services for functionality purposes and therefore is distinct within the context of the contract and as described in ASC 606-10. Accordingly, the Company has identified the transfer of the whole asset as the performance obligation. The transaction price is set at a fixed dollar amount per fixed quantity (number of whole assets) and is explicitly stated in each contract. Whole asset sales revenue is based on a set price for a set number of assets, which is allocated to the performance obligation discussed above, in its entirety. The Company has determined the date of transfer to the customer is the date the customer obtains control over the asset and would cause the revenue recognition. Payment is required in full upon a customer’s acceptance of the whole asset on the date of the transfer. Leasing Revenues The Company leases flight equipment under operating leases that contain monthly base rent and reports rental income straight line over the life of the lease as it is earned. Additionally, the Company’s leases provide for supplemental rent, which is calculated based on actual hours or cycles of utilization and, for certain components, based on the amount of time until maintenance of that component is required. In certain leases, the Company records supplemental rent paid by the lessees as maintenance deposit payment liabilities in recognition of the Company’s contractual commitment to reimburse qualifying maintenance. Reimbursements to the lessees upon receipt of evidence of qualifying maintenance work are charged against the existing maintenance deposit payments liabilities. In leases where the Company is responsible for performing certain repairs or replacement of aircraft components or engines, supplemental rent is recorded as revenue in the period earned. In the event of premature lease termination or lessee default on the lease terms, revenue recognition will be discontinued when outstanding balances are beyond the customers’ deposits held. Payment terms for leased flight equipment are due upon receipt. Service Revenues Service revenues are recognized as performance obligations are fulfilled and the benefits are transferred to the customer. At contract inception, we evaluate if the contract should be accounted for as a single performance obligation or if the contract contains multiple performance obligations. In some cases, our service contract with the customer is considered one performance obligation as it includes factors such as the good or service being provided is significantly integrated with other promises in the contract, the service provided significantly modifies or customizes the other good or service or the goods or services are highly interdependent or interrelated with each other. If the contract has more than one performance obligation, the Company determines the standalone price of each distinct good or service underlying each performance obligation and allocates the transaction price based on their relative standalone selling prices. The transaction price of a contract, which can include both fixed and variable amounts, is allocated to each performance obligation identified. Some contracts contain variable consideration, which could include incremental fees or penalty provisions related to performance. Variable consideration that can be reasonably estimated based on current assumptions and historical information is included in the transaction price at the inception of the contract but limited to the amount that is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Variable consideration that cannot be reasonably estimated is recorded when known. For most service contracts, performance obligations are satisfied over time as work progresses based on transfer of control of products and services to our customers. We receive payments from our customers based on billing schedules or contract terms. For performance obligations that are satisfied over time, we measure progress in a manner that depicts the performance of transferring control to the customer. As such, we utilize the input method of cost-to-cost to recognize revenue over time as this depicts when control of the promised goods or services are transferred to the customer. Revenue is recognized based on the relationship of actual costs incurred to date to the estimated total cost at completion of the performance obligation. We are required to make certain judgments and estimates, including estimated revenues and costs, as well as inflation and the overall profitability of the arrangement. Key assumptions involved include future labor costs and efficiencies, overhead costs and ultimate timing of product delivery. Differences may occur between the judgments and estimates made by management and actual program results. Under most of our Maintenance, Repair and Overhaul (“MRO”) contracts, if the contract is terminated for convenience, we are entitled to payment for items delivered, fair compensation for work performed, the costs of settling and paying other claims and a reasonable profit on the costs incurred or committed. Changes in estimates and assumptions related to our arrangements accounted for using the input method based on labor hours are recorded using the cumulative catchup method of accounting. These changes are primarily adjustments to the estimated profitability for our long term programs where we provide MRO services. We have elected to use certain practical expedients permitted under ASC 606. Shipping and handling fees and costs incurred associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost, are included in cost of sales in our condensed consolidated statements of operations and are not considered a performance obligation to our customers. Our reported sales on our condensed consolidated statements of operations are net of any sales or related non income taxes. We also utilize the “as invoiced” practical expedient in certain cases where performance obligations are satisfied over time and the invoiced amount corresponds directly with the value we are providing to the customer. Payroll Support Programs The Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law on March 27, 2020 and is intended to assist the economy by issuing a relief package to preserve jobs in industries adversely impacted by the COVID-19 outbreak. On June 8, 2020, the Company entered into an agreement with the U.S. Department of the Treasury to receive $16.4 million in emergency relief through the CARES Act Payroll Support Program to be paid in installments. The proceeds of the grant are recorded within accrued expenses when received and are recognized as payroll support program proceeds in the condensed consolidated statement of operations over the periods that the funds are intended to compensate. During the three months ended March 31, 2021, we received the remaining balance of $3.7 million in grant proceeds under the CARES Act Payroll Support Program and this amount has been recognized as payroll support program proceeds in the condensed consolidated statement of operations. As part of the Payroll Support Program Extension Law, we entered into a new agreement with the U.S. Department of the Treasury on March 4, 2021 for the receipt of relief funds of $5.5 million. Pursuant to the American Rescue Plan Act of 2021 (“ARP”), we entered into a new agreement with the U.S. Department of the Treasury on April 16, 2021 for the receipt of relief funds of an additional $5.5 million. |
SIGNIFICANT RISKS AND UNCERTAIN
SIGNIFICANT RISKS AND UNCERTAINTIES | 3 Months Ended |
Mar. 31, 2021 | |
SIGNIFICANT RISKS AND UNCERTAINTIES | |
SIGNIFICANT RISKS AND UNCERTAINTIES | NOTE C — SIGNIFICANT RISKS AND UNCERTAINTIES Impact of Coronavirus (COVID-19) COVID-19 has been declared a global health pandemic by the World Health Organization. In early March 2020, as AerSale began to see the impacts to its customers, the Company took decisive actions to position itself for the short-term impacts of COVID-19, while allowing the Company the flexibility to quickly pursue the opportunities that would follow. The Company cancelled approximately $20 million of feedstock opportunities under negotiation, as it evaluated the impacts of COVID-19 on asset valuations. The Company also reexamined its structure and executed measures in 2020 to adjust the business through strategic headcount reductions and suspension of various other initiatives, resulting in reduced costs of over $20 million on an annualized basis. While the duration and extent of the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the extent and effectiveness of containment actions, it has already had an adverse effect on the global economy and the ultimate societal and economic impact of the COVID-19 pandemic remains unknown. |
REVENUE
REVENUE | 3 Months Ended |
Mar. 31, 2021 | |
REVENUE | |
REVENUE | NOTE D — REVENUE The timing of revenue recognition, customer billings and cash collections results in a contract asset or contract liability at the end of each reporting period. Contract assets consist of unbilled receivables or costs incurred where revenue recognized over time exceeds the amounts billed to customers. Contract liabilities include advance payments and billings in excess of revenue recognized. Certain customers make advance payments prior to the satisfaction of performance obligations on the contract. These amounts are recorded as contract liabilities until such performance obligations are satisfied. Contract assets and contract liabilities are determined on a contract by contract basis. Contract assets are as follows (in thousands): March 31, 2021 December 31, 2020 Change Contract assets $ 24,485 $ 20,431 $ 4,054 Contract assets are reported within accounts receivable on our condensed consolidated balance sheets. Changes in contract assets primarily results from the timing difference between our performance of services. Contract liabilities are reported as deferred revenue on our condensed consolidated balance sheets and amounted to $2.6 million as of December 31, 2020, of which $2.3 million was related to contract liabilities for services performed. For the three months ended March 31, 2021, we recognized as revenue $1.8 million of our contract liabilities for services performed as the timing between customer payments and our performance of the services is generally no longer than six months. Disaggregation of Revenue The Company reports revenue by segment. The following tables present revenue by segment, as well as a reconciliation to total revenue for the three months ended March 31, 2021 and 2020 (in thousands): 2021 Asset Management Solutions Tech Ops Total Revenues USM $ 9,225 $ 1,143 $ 10,368 Whole Asset Sales 13,771 — 13,771 Engineered Solutions — 987 987 Total Products 22,996 2,130 25,126 Leasing 6,256 — 6,256 Services — 27,053 27,053 Total Revenues $ 29,252 $ 29,183 $ 58,435 2020 Asset Management Solutions Tech Ops Total Revenues USM $ 15,049 $ 1,324 $ 16,373 Engineered Solutions — 1,658 1,658 Total Products 15,049 2,982 18,031 Leasing 15,782 — 15,782 Services — 23,322 23,322 Total Revenues $ 30,831 $ 26,304 $ 57,135 |
INVENTORY
INVENTORY | 3 Months Ended |
Mar. 31, 2021 | |
INVENTORY | |
INVENTORY | NOTE E — INVENTORY Following are the major classes of inventory as of March 31, 2021 and December 31, 2020 (in thousands): 2021 2020 USM $ 62,877 $ 63,277 Whole Assets 79,679 56,767 Work in Process 22,686 20,611 165,242 140,655 Less Short Term (99,299) (85,192) Long Term $ 65,943 $ 55,463 The Company evaluated the inventory’s net realizable value as of March 31, 2021 and 2020 and determined no adjustment was required. The Company recorded inventory scrap loss reserves of $0.1 million and $0.4 million for the three months ended March 31, 2021 and 2020, respectively, each of which was included in cost of products in the accompanying condensed consolidated statements of operations. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2021 | |
INTANGIBLE ASSETS | |
INTANGIBLE ASSETS | NOTE F — INTANGIBLE ASSETS In accordance with ASC 350, Intangibles — Goodwill and Other, goodwill and other intangible assets deemed to have indefinite lives are not amortized, but are subject to annual impairment tests. We review and evaluate our goodwill and indefinite life intangible assets for potential impairment at a minimum annually or more frequently if circumstances indicate that impairment is possible. We determined the fair value of assets acquired and liabilities assumed using a variety of methods. An income approach based on discounted cash flows was used to determine the values of our trademarks, certifications, customer relationships and FAA certificates. The assumptions we used to estimate the fair value of our reporting units are based on historical performance, as well as forecasts used in our current business plan and require considerable management judgment The Company’s goodwill and intangible assets as defined by ASC 350 is related to our subsidiaries, AerSale Component Solutions (d/b/a AerSale Landing Gear Solutions) (“ALGS”), Avborne Component Solutions (d/b/a AerSale Component Solutions) (“ACS”), and the most recently acquired Aircraft Composite Technologies (“ACT”), which are included in the TechOps segment, as well as Qwest, which is included under the Asset Management Solutions segment. Goodwill and other intangibles as of March 31, 2021 and December 31, 2020 are (in thousands): 2021 2020 Qwest: FAA Certifications $ 724 $ 724 Goodwill 13,416 13,416 ALGS: FAA Certifications 710 710 Goodwill 379 379 ACS: Trademarks 600 600 FAA Certifications 7,300 7,300 Goodwill 63 63 ACT: Trademarks 200 200 FAA Certifications 796 796 Goodwill 6,002 6,002 Total intangible assets with indefinite lives $ 30,190 $ 30,190 As a result of the COVID-19 pandemic and its impact on the aviation industry, the Company performed a qualitative impairment analysis as of March 31, 2020 on the indefinite lived intangible assets and concluded there was no impairment. Additionally, the Company performed an impairment analysis on the goodwill for both the Asset Management Solutions and TechOps segment and concluded that goodwill was not impaired as of March 31, 2020. Intangible assets with definite useful lives are amortized on a straight-line basis over their estimated useful lives. Intangible assets with definite lives as of March 31, 2021 and December 31, 2020 are as follows (in thousands): Useful Life In Years 2021 2020 Qwest: Customer relationships 10 $ 7,843 $ 8,083 ALGS: Customer relationships 10 85 90 ACS: Customer relationships 10 1,610 1,663 ACT: Customer relationships 10 7,971 8,198 Total intangible assets with definite lives $ 17,509 $ 18,034 Total amortization expense amounted to $0.5 million and $0.3 million for the three months ended March 31, 2021 and 2020, respectively. Accumulated amortization amounted to $3.5 million and $3.0 million as of March 31, 2021 and December 31, 2020, respectively. Other intangible assets are reviewed at least annually or more frequently if any event or change in circumstance indicates that an impairment may have occurred. As a result of the COVID-19 pandemic and its impact on the aviation industry, the Company performed an impairment analysis as of March 31, 2020 on the definite-lived intangible assets and concluded there was no impairment. There was no goodwill activity for the three months ended March 31, 2021. For the three-month period ended March 31, 2020, goodwill increased by $6.0 million. |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 3 Months Ended |
Mar. 31, 2021 | |
PROPERTY AND EQUIPMENT, NET | |
PROPERTY AND EQUIPMENT, NET | NOTE G — PROPERTY AND EQUIPMENT, NET Property and equipment, net, as of March 31, 2021 and December 31, 2020 consist of the following (in thousands): Useful Life In Years 2021 2020 Tooling and equipment 7 - 15 $ 13,636 $ 13,465 Furniture and other equipment 5 7,567 7,379 Computer software 5 2,378 2,378 Leasehold improvements 3 - 6 3,397 3,314 Equipment under capital lease 5 197 197 27,175 26,733 Less accumulated depreciation (19,404) (18,894) $ 7,771 $ 7,839 Depreciation expense, which includes amortization of equipment under capital lease, amounted to $0.5 million and $0.6 million for the three months ended March 31, 2021 and 2020, respectively. As a result of the COVID-19 pandemic and its impact on the aviation industry, the Company performed an impairment analysis as of March 31, 2020 on the property, plant and equipment and concluded there was no impairment. |
LEASE RENTAL REVENUES AND AIRCR
LEASE RENTAL REVENUES AND AIRCRAFT AND ENGINES HELD FOR LEASE | 3 Months Ended |
Mar. 31, 2021 | |
LEASE RENTAL REVENUES AND AIRCRAFT AND ENGINES HELD FOR LEASE | |
LEASE RENTAL REVENUES AND AIRCRAFT AND ENGINES HELD FOR LEASE | NOTE H — LEASE RENTAL REVENUES AND AIRCRAFT AND ENGINES HELD FOR LEASE Aircraft and engines held for operating leases, net, as of March 31, 2021 and December 31, 2020 consists of the following (in thousands): 2021 2020 Aircraft and engines held for operating leases $ 221,456 $ 228,942 Less accumulated depreciation (139,124) (142,098) $ 82,332 $ 86,844 Total depreciation expense amounted to $2.5 million and $7.1 million for the three months ended March 31, 2021 and 2020, respectively, and is included in cost of leasing in the condensed consolidated statements of operations. Supplemental rents recognized as revenue totaled $1.1 million and $5.5 million for the three months ended March 31, 2021 and 2020, respectively. The Company’s current operating lease agreements for flight equipment on lease expire over the next month to three years. The amounts in the following table are based upon the assumption that flight equipment under operating leases will remain on lease for the length of time specified by the respective lease agreements. Minimum future annual lease rentals contracted to be received under existing operating leases of flight equipment at were as follows (in thousands): Year ending December 31: Remainder of 2021 $ 12,741 2022 10,021 2023 2,231 Total minimum lease payments $ 24,993 |
ACCRUED EXPENSES
ACCRUED EXPENSES | 3 Months Ended |
Mar. 31, 2021 | |
ACCRUED EXPENSES | |
ACCRUED EXPENSES | NOTE I — ACCRUED EXPENSES The following is a summary of the components of accrued expenses as of March 31, 2021 and December 31, 2020 (in thousands): 2021 2020 Accrued compensation and related benefits $ 3,947 $ 6,624 Accrued legal fees 61 18 Commission fee accrual 79 103 Accrued federal, state and local taxes and fees 89 130 Deferred payroll support program proceeds 2,877 — Other 1,154 1,701 $ 8,207 $ 8,576 |
WARRANT LIABILITY
WARRANT LIABILITY | 3 Months Ended |
Mar. 31, 2021 | |
WARRANT LIABILITY | |
WARRANT LIABILITY | NOTE J – WARRANT LIABILITY Monocle issued certain public warrants in 2018 which, upon the Closing, were converted into AerSale warrants. Each of the Company’s warrants entitles the registered holder to purchase one share of the Company’s common stock at a price of $11.50 per share. The warrants will expire at 5:00 p.m., New York City time, on the fifth anniversary of the completion of the Merger, or earlier upon redemption or liquidation. Warrants to purchase a total of 17,952,589 shares of the Company’s common stock were outstanding as of March 31, 2021, of which 750,000 warrants were issued to founders in a private placement (the “Private Warrants”) and subject to a twelve- month The Private Warrants include provisions that affect the settlement amount. Such variables are outside of those used to determine the fair value of a fixed-for-fixed instrument, and as such, the warrants do not meet the criteria for equity treatment under guidance contained in ASC Topic 815, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in a Company’s Own Stock.” The Company classifies the Private Warrants as a liability at their fair value subject to re-measurement at each balance sheet date and adjusted at each reporting period until exercised or expired, and any change in fair value is recognized in the Company's condensed consolidated statement of operations. The fair value of the private warrants is determined using the market price of the public warrants adjusted for their lack of liquidity. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Mar. 31, 2021 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | NOTE K — EARNINGS PER SHARE The computation of basic and diluted earnings per share (“EPS”) is based on the weighted average number of common shares outstanding during each period. The following table provides a reconciliation of the computation for basic and diluted earnings per share for the three months ended March 31, 2021 and 2020, respectively (in thousands, except share and per share data): 2021 2020 Net income $ 10,018 $ 1,059 Reversal of loss on change in value of warrant liability 224 — Net income attributable to common shareholders for EPS - diluted $ 10,242 $ 1,059 Weighted-average number of shares outstanding - basic 42,212,134 37,010 Additional shares from assumed stock-settled restricted stock units 115,959 — Additional shares from assumed exercise of warrants 1,869,098 — Weighted-average number of shares outstanding - diluted 44,197,191 37,010 Earnings per share – basic: $ 0.24 $ 28.61 Earnings per share – diluted: $ 0.23 $ 28.61 |
BUSINESS SEGMENTS
BUSINESS SEGMENTS | 3 Months Ended |
Mar. 31, 2021 | |
BUSINESS SEGMENTS | |
BUSINESS SEGMENTS | NOTE L — BUSINESS SEGMENTS Consistent with how our chief operating decision maker (Chairman and Chief Executive Officer) evaluates performance and utilizes gross profit as a profitability measure, we report our activities in two business segments: ● Asset Management Solutions — comprised of activities to extract value from strategic asset acquisitions through leasing, trading, or disassembling for product sales ● Tech Ops — comprised of MRO activities; and product sales of internally developed engineered solutions and other serviceable products. The Asset Management Solutions segment provides short-term and long-term leasing solutions of aircraft and jet engines to passenger and cargo operators worldwide. Assets considered to be at or near the end of their useful lives, supplied by our leasing portfolio or acquisitions, are analyzed for return maximization to assess whether they will be traded as whole assets or disassembled and sold as individual spare parts and components. The Tech Ops segment consists of aftermarket support and services businesses that provide maintenance support for aircraft and aircraft components, and sale of engineered solutions. Our MRO business also engages in longer term projects such as aircraft modifications, cargo conversions of wide-body aircraft, and aircraft storage. The segment also includes MRO of landing gear, thrust reversers, and other components. Cost of sales consists principally of the cost of product, direct labor, and overhead. Our engineered solutions revenues consist of sales of products internally developed as permitted by Supplemental Type Certificates issued by the FAA. These products are proprietary in nature and function as non-original equipment manufacturer solutions to airworthiness directives and other technical challenges for operators. In order to develop these products, we engage in research and development activities. Periodically, our Tech Ops division will engage in the repair and sale of used serviceable materials through their ability to overhaul existing inventory. The accounting policies for the segments are the same as those described in Note B to our consolidated financial statements included in our annual report. Gross Profit is calculated by subtracting cost of sales from sales. The assets and certain expenses related to corporate activities are not allocated to the segments. Our reportable segments are aligned principally around the differences in products and services. The segment reporting excludes the allocation of selling, general and administrative expenses, interest expense and income tax expense. Selected financial information for each segment for the three months ended March 31, 2021 and 2020 is as follows (in thousands): 2021 2020 Revenues Asset Management Solutions Aircraft $ 10,452 $ 14,238 Engine 18,800 16,593 29,252 30,831 Tech Ops MRO Services 27,053 23,322 Product Sales 2,130 2,982 29,183 26,304 $ 58,435 $ 57,135 2021 2020 Gross Profit Asset Management Solutions Aircraft $ 4,463 $ 3,662 Engine 9,124 8,105 13,587 11,767 Tech Ops MRO Services 5,026 2,344 Product Sales 1,222 1,175 6,248 3,519 $ 19,835 $ 15,286 The following table reconciles segment gross profit to net income for the three months ended March 31, 2021 and 2020 (in thousands): 2021 2020 Segment gross profit $ 19,835 $ 15,286 Selling, general and administrative expenses (13,310) (13,201) Payroll support program proceeds 6,363 — Transaction costs — (231) Interest expense, net (258) (536) Other income, net 94 57 Change in fair value of warrant liability (224) — Income tax expense (2,482) (316) Net income $ 10,018 $ 1,059 Intersegment sales includes amounts invoiced by a segment for work performed for another segment. Amounts are based on actual work performed or products sold and agreed-upon pricing which is intended to be reflective of the arm’s length value of the contribution made by the supplying business segment. All intersegment transactions have been eliminated upon consolidation. Intersegment revenue for the three months ended March 31, 2021 and 2020, is as follows (in thousands): 2021 2020 Asset Management Solutions $ 1,447 $ 269 Tech Ops 2,158 920 Total intersegment revenues $ 3,605 $ 1,189 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2021 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE M— COMMITMENTS AND CONTINGENCIES Litigation The Company could be involved in litigation incidental to the operation of the business. The Company intends to vigorously defend all matters in which the Company is named as defendant and, for insurable losses, maintain significant levels of insurance to protect against adverse judgments, claims or assessments that may affect the Company. Although the adequacy of existing insurance coverage of the outcome of any legal proceedings cannot be predicted with certainty, based on the current information available, the Company does not believe the ultimate liability associated with known claims or litigation, if any, in which the Company is involved will materially affect the Company’s condensed consolidated financial condition or results of operations. Lease Commitments The Company leases office space, warehouses, hangars, computers and equipment in connection with its operations under various operating leases, many of which contain escalation clauses. Future minimum lease payments under non-cancelable operating leases (with initial lease terms in excess of one year) are (in thousands): Year ending December 31: Remainder of 2021 $ 3,665 2022 3,591 2023 2,755 2024 2,308 2025 1,811 2026 1,846 Thereafter 2,601 Total minimum lease payments $ 18,577 Expenses incurred under the operating lease agreements was $1.6 million and $1.5 million for the three months ended March 31, 2021 and 2020, respectively. Operating lease expense is recognized on a straight-line basis over the term of the lease, including any option periods, as appropriate. The same lease term is used for lease classification, the amortization period of related leasehold improvements, and the estimation of future lease commitments. Purchase Commitments As of March 31, 2021, the Company has purchase commitments for the acquisition of Flight Equipment in the amount of $22.4 million to be fulfilled during the remainder of 2021, of which a 10% deposit has been paid. |
BUSINESS COMBINATION
BUSINESS COMBINATION | 3 Months Ended |
Mar. 31, 2021 | |
BUSINESS COMBINATION | |
BUSINESS COMBINATION | NOTE N — BUSINESS COMBINATION On January 7, 2020 the Company acquired all of the outstanding shares of Aircraft Component Technologies, Inc. (ACT), a Florida corporation located in Miami, Florida, for $17.0 million in cash. The results of ACT operations have been included in the condensed consolidated financial statements since the acquisition date. All assets and liabilities of ACT were recorded at their fair market value, and to the extent that the purchase cost exceeded the fair market value of the net assets, that excess was recorded as goodwill, all of which is deductible for federal income tax purposes. The goodwill is attributable to the general reputation of the business and the collective experience of ACT’s management and employees. This business operates as part of our TechOps segment. ACT’s revenues and income from operations from January 7, 2020 through March 31, 2020 were $2.1 million and $0.7 million, respectively. The purchase price for ACT was allocated as follows (in thousands): Acquisition Date Fair Values Accounts receivable $ 1,442 Deposits, prepaid expenses, and other current assets 22 Property and equipment 381 Other intangible assets 10,096 Goodwill 6,002 Accounts payable (134) Accrued expenses (833) Total purchase price $ 16,976 The intangible assets included above consist of the following (in thousands): Fair Value Trademark and trade name (indefinite lived) $ 200 Fair Value FAA part 145 certificate (indefinite lived) $ 796 Useful Life In Years Fair Value Customer relationships 10 $ 9,100 The acquisition of ACT did not have a material pro forma impact on the consolidated results of operations for the three months ended March 31, 2020. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended |
Mar. 31, 2021 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | NOTE O — STOCKHOLDERS’ EQUITY The Consolidated Statements of Stockholders’ Equity reflect the Reverse Recapitalization as defined in Item 8, Note B of the Annual Report. As AerSale Aviation was deemed the accounting acquirer in the Reverse Recapitalization with Monocle, all periods prior to the consummation date reflect the balances and activity of AerSale Aviation. The share activity (preferred stock and common stock) and per share amounts in the Consolidated Statements of Stockholders’ Equity as of December 31, 2019, from the previously reported audited consolidated financial statements of AerSale Aviation, were retroactively adjusted using the recapitalization exchange ratio of 74.0%. Common Stock Prior to the Merger, holders of AerSale Aviation’s common stock were entitled to one vote per share, and to receive dividends and, upon liquidation or dissolution, were entitled to receive all assets available for distribution to stockholders. The holders had no preemptive or other subscription rights and there were no redemption or sinking fund provisions with respect to such shares. Common stock was subordinated to the preferred stock with respect to dividend rights and rights upon liquidation, winding up, and dissolution of the Company. Upon the consummation of the Merger, holders of AerSale Aviation’s common stock received shares of the Company’s common stock at $10.00 per share as merger consideration. The Company’s common stock consist of $0.0001 par value, 200,000,000 shares authorized, of which 42,949,261 shares were issued and outstanding Earn-Out Shares Upon consummation of the Merger, the pre-closing holders of AerSale Aviation’s common stock and the holders of in-the-money SARs received a contingent right to receive up to 3,000,000 additional shares of the Company’s common stock. Additionally, certain pre-closing holders of AerSale Aviation’s common stock received a contingent right to receive 746,876 shares of the Company’s common stock. Effective February 8, 2020, the contingency event related to the Minimum Target Earn-Out Shares was met and 1,855,634 shares were issued. We determined the Earn-Out Shares to be classified as equity under ASC Topic 815, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in a Company’s Own Stock” as the contingent right is indexed to the Company’s stock and accordingly, the accrual of the Earn-Out shares as of March 31, 2021 had no impact on our consolidated financial statements. Unvested Founder Shares Upon the Merger, certain pre-closing holders of AerSale Corporation’s common stock agreed to defer the vesting of an aggregate of 700,000 shares (the “Unvested Founder Shares”), half of which will vest at such time as the Minimum Target (as defined in the Merger Agreement) and the other half of which will vest at the Maximum Target (as defined in the Merger Agreement). Effective February 8, 2021, the contingency event related to the Minimum Target was met and half of the Unvested Founder Shares vested. 2020 Equity Incentive Plan The Company maintains a 2020 Equity Incentive Plan (the “2020 Plan”) and has registered 4,200,000 shares of common stock issuable under the Plan. The 2020 Plan authorizes discretionary grants of incentive stock options to employees of the Company and its qualifying subsidiaries. The 2020 Plan also authorizes discretionary grants of non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalents or other equity or cash-based awards to employees and consultants of the Company and its subsidiaries and to members of the Board of Directors of the Company. To the extent that an award under the 2020 Plan expires, is cancelled, forfeited, terminated, settled in cash or is otherwise settled without issuance of the full number of shares to which it relates, will become or again be available for awards under the 2020 Plan. The 2020 Plan is administered by the Company's Compensation Committee. The Compensation Committee has complete, full and final authority to: designate participants; determine the types of awards to be granted; determine the terms of awards; interpret and administer the 2020 Plans and any agreements and awards thereunder. Restricted stock unit activity under the 2020 Plan for the three months ended March 31, 2021 was as follows Weighted Average Weighted Average Amount Grant Date Fair Value Contractual Life Outstanding at December 31, 2020 $ — $ — $ — Granted 1,634,000 10.00 2.96 Outstanding March 31, 2021 $ 1,634,000 $ 10.00 $ 2.96 The Company’s restricted stock units include 1,595,000 performance-based awards that have vesting provisions subject to both time vesting and the achievement of certain business milestones, while the remaining 39,000 awards vest over a period ranging from one 2020 Employee Stock Purchase Plan The Company also maintains a 2020 Employee Stock Purchase Plan (the “ESPP”) and has registered 500,000 shares of common stock issuable under the ESPP. The Company has not issued shares pursuant to the ESPP as of March 31, 2021. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Interim Financial Statements | Interim Financial Statements The accompanying unaudited interim consolidated financial statements have been prepared from the books and records of the Company in accordance with Accounting Principles Generally Accepted in the United States (“U.S. GAAP”) for interim financial information and Rule 10-01 of Regulation S-X promulgated by the U.S. Securities and Exchange Commission (“SEC”), which permits reduced disclosures for interim periods. Although these interim consolidated financial statements do not include all of the information and footnotes required for complete annual consolidated financial statements, management believes all adjustments, consisting only of normal recurring adjustments, and disclosures necessary for a fair presentation of the accompanying condensed consolidated balance sheets, statements of operations, stockholders’ equity, and cash flows have been made. Unaudited interim results of operations and cash flows are not necessarily indicative of the results that may be expected for the full year. Unaudited interim condensed consolidated financial statements and footnotes should be read in conjunction with the audited consolidated financial statements and footnotes included in Part II, Item 8 of the Annual Report |
Revenue Recognition | Revenue Recognition Products — Used Serviceable Material Sales (“USM”) Revenues from sales of USM are measured based on consideration specified within customer contracts, and excludes any sales commissions and taxes collected and remitted to government agencies. We recognize revenue when performance obligations are satisfied by transferring control of a product or service to a customer. The parts are sold at a fixed price with no right of return. In determining the performance obligation, management has identified the promise in the contract to be the shipment of the spare parts to the customer. Title passes to the buyer when the goods are shipped, the buyer is responsible for any loss in transit and the Company has a legal right to payment for the spare parts once shipped. We generally sell our USM products under standard 30-day payment terms, subject to certain exceptions. Customers neither have the right to return products nor do they have the right to extended financing. The Company has determined that physical acceptance of the spare parts to be a formality in accordance with ASC Topic 606, “Revenue from Contracts with Customers” (“ASC 606”). Spare parts revenue is based on a set price for a set number of parts as defined in the purchase order. The performance obligation is completed once the parts have shipped and as a result, all of the transaction price is allocated to that performance obligation. The Company has determined that it is appropriate to recognize spare parts sales at a point in time (i.e., the date the parts are shipped) in accordance with ASC 606. Products — Whole Asset Sales Revenues from whole asset sales are measured based on consideration specified in the contract with the customer. The Company and customer enter into an agreement which outlines the place and date of sale, purchase price, condition of the whole asset, bill of sale and the assignment of rights and warranties from the Company to the customer. The Company believes the whole asset holds standalone value to the customer as it is not dependent on any other services for functionality purposes and therefore is distinct within the context of the contract and as described in ASC 606-10. Accordingly, the Company has identified the transfer of the whole asset as the performance obligation. The transaction price is set at a fixed dollar amount per fixed quantity (number of whole assets) and is explicitly stated in each contract. Whole asset sales revenue is based on a set price for a set number of assets, which is allocated to the performance obligation discussed above, in its entirety. The Company has determined the date of transfer to the customer is the date the customer obtains control over the asset and would cause the revenue recognition. Payment is required in full upon a customer’s acceptance of the whole asset on the date of the transfer. Leasing Revenues The Company leases flight equipment under operating leases that contain monthly base rent and reports rental income straight line over the life of the lease as it is earned. Additionally, the Company’s leases provide for supplemental rent, which is calculated based on actual hours or cycles of utilization and, for certain components, based on the amount of time until maintenance of that component is required. In certain leases, the Company records supplemental rent paid by the lessees as maintenance deposit payment liabilities in recognition of the Company’s contractual commitment to reimburse qualifying maintenance. Reimbursements to the lessees upon receipt of evidence of qualifying maintenance work are charged against the existing maintenance deposit payments liabilities. In leases where the Company is responsible for performing certain repairs or replacement of aircraft components or engines, supplemental rent is recorded as revenue in the period earned. In the event of premature lease termination or lessee default on the lease terms, revenue recognition will be discontinued when outstanding balances are beyond the customers’ deposits held. Payment terms for leased flight equipment are due upon receipt. Service Revenues Service revenues are recognized as performance obligations are fulfilled and the benefits are transferred to the customer. At contract inception, we evaluate if the contract should be accounted for as a single performance obligation or if the contract contains multiple performance obligations. In some cases, our service contract with the customer is considered one performance obligation as it includes factors such as the good or service being provided is significantly integrated with other promises in the contract, the service provided significantly modifies or customizes the other good or service or the goods or services are highly interdependent or interrelated with each other. If the contract has more than one performance obligation, the Company determines the standalone price of each distinct good or service underlying each performance obligation and allocates the transaction price based on their relative standalone selling prices. The transaction price of a contract, which can include both fixed and variable amounts, is allocated to each performance obligation identified. Some contracts contain variable consideration, which could include incremental fees or penalty provisions related to performance. Variable consideration that can be reasonably estimated based on current assumptions and historical information is included in the transaction price at the inception of the contract but limited to the amount that is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Variable consideration that cannot be reasonably estimated is recorded when known. For most service contracts, performance obligations are satisfied over time as work progresses based on transfer of control of products and services to our customers. We receive payments from our customers based on billing schedules or contract terms. For performance obligations that are satisfied over time, we measure progress in a manner that depicts the performance of transferring control to the customer. As such, we utilize the input method of cost-to-cost to recognize revenue over time as this depicts when control of the promised goods or services are transferred to the customer. Revenue is recognized based on the relationship of actual costs incurred to date to the estimated total cost at completion of the performance obligation. We are required to make certain judgments and estimates, including estimated revenues and costs, as well as inflation and the overall profitability of the arrangement. Key assumptions involved include future labor costs and efficiencies, overhead costs and ultimate timing of product delivery. Differences may occur between the judgments and estimates made by management and actual program results. Under most of our Maintenance, Repair and Overhaul (“MRO”) contracts, if the contract is terminated for convenience, we are entitled to payment for items delivered, fair compensation for work performed, the costs of settling and paying other claims and a reasonable profit on the costs incurred or committed. Changes in estimates and assumptions related to our arrangements accounted for using the input method based on labor hours are recorded using the cumulative catchup method of accounting. These changes are primarily adjustments to the estimated profitability for our long term programs where we provide MRO services. We have elected to use certain practical expedients permitted under ASC 606. Shipping and handling fees and costs incurred associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost, are included in cost of sales in our condensed consolidated statements of operations and are not considered a performance obligation to our customers. Our reported sales on our condensed consolidated statements of operations are net of any sales or related non income taxes. We also utilize the “as invoiced” practical expedient in certain cases where performance obligations are satisfied over time and the invoiced amount corresponds directly with the value we are providing to the customer. |
Payroll Support Programs | Payroll Support Programs The Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law on March 27, 2020 and is intended to assist the economy by issuing a relief package to preserve jobs in industries adversely impacted by the COVID-19 outbreak. On June 8, 2020, the Company entered into an agreement with the U.S. Department of the Treasury to receive $16.4 million in emergency relief through the CARES Act Payroll Support Program to be paid in installments. The proceeds of the grant are recorded within accrued expenses when received and are recognized as payroll support program proceeds in the condensed consolidated statement of operations over the periods that the funds are intended to compensate. During the three months ended March 31, 2021, we received the remaining balance of $3.7 million in grant proceeds under the CARES Act Payroll Support Program and this amount has been recognized as payroll support program proceeds in the condensed consolidated statement of operations. As part of the Payroll Support Program Extension Law, we entered into a new agreement with the U.S. Department of the Treasury on March 4, 2021 for the receipt of relief funds of $5.5 million. Pursuant to the American Rescue Plan Act of 2021 (“ARP”), we entered into a new agreement with the U.S. Department of the Treasury on April 16, 2021 for the receipt of relief funds of an additional $5.5 million. |
REVENUE (Tables)
REVENUE (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
REVENUE | |
Schedule of contract assets | March 31, 2021 December 31, 2020 Change Contract assets $ 24,485 $ 20,431 $ 4,054 |
Schedule of present revenue by segment, as well as a reconciliation to total revenue | 2021 Asset Management Solutions Tech Ops Total Revenues USM $ 9,225 $ 1,143 $ 10,368 Whole Asset Sales 13,771 — 13,771 Engineered Solutions — 987 987 Total Products 22,996 2,130 25,126 Leasing 6,256 — 6,256 Services — 27,053 27,053 Total Revenues $ 29,252 $ 29,183 $ 58,435 2020 Asset Management Solutions Tech Ops Total Revenues USM $ 15,049 $ 1,324 $ 16,373 Engineered Solutions — 1,658 1,658 Total Products 15,049 2,982 18,031 Leasing 15,782 — 15,782 Services — 23,322 23,322 Total Revenues $ 30,831 $ 26,304 $ 57,135 |
INVENTORY (Tables)
INVENTORY (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
INVENTORY | |
Schedule of major classes of inventory | 2021 2020 USM $ 62,877 $ 63,277 Whole Assets 79,679 56,767 Work in Process 22,686 20,611 165,242 140,655 Less Short Term (99,299) (85,192) Long Term $ 65,943 $ 55,463 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
INTANGIBLE ASSETS | |
Schedule of intangible assets with indefinite lives | 2021 2020 Qwest: FAA Certifications $ 724 $ 724 Goodwill 13,416 13,416 ALGS: FAA Certifications 710 710 Goodwill 379 379 ACS: Trademarks 600 600 FAA Certifications 7,300 7,300 Goodwill 63 63 ACT: Trademarks 200 200 FAA Certifications 796 796 Goodwill 6,002 6,002 Total intangible assets with indefinite lives $ 30,190 $ 30,190 |
Schedule of intangible assets with definite lives | Useful Life In Years 2021 2020 Qwest: Customer relationships 10 $ 7,843 $ 8,083 ALGS: Customer relationships 10 85 90 ACS: Customer relationships 10 1,610 1,663 ACT: Customer relationships 10 7,971 8,198 Total intangible assets with definite lives $ 17,509 $ 18,034 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
PROPERTY AND EQUIPMENT, NET | |
Schedule of Property, Plant and equipment | Useful Life In Years 2021 2020 Tooling and equipment 7 - 15 $ 13,636 $ 13,465 Furniture and other equipment 5 7,567 7,379 Computer software 5 2,378 2,378 Leasehold improvements 3 - 6 3,397 3,314 Equipment under capital lease 5 197 197 27,175 26,733 Less accumulated depreciation (19,404) (18,894) $ 7,771 $ 7,839 |
LEASE RENTAL REVENUES AND AIR_2
LEASE RENTAL REVENUES AND AIRCRAFT AND ENGINES HELD FOR LEASE (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
LEASE RENTAL REVENUES AND AIRCRAFT AND ENGINES HELD FOR LEASE | |
Summary of aircraft and engines held for operating leases, net | 2021 2020 Aircraft and engines held for operating leases $ 221,456 $ 228,942 Less accumulated depreciation (139,124) (142,098) $ 82,332 $ 86,844 |
Summary of minimum future annual lease rentals contracted to be received under existing operating leases of flight equipment | Year ending December 31: Remainder of 2021 $ 12,741 2022 10,021 2023 2,231 Total minimum lease payments $ 24,993 |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
ACCRUED EXPENSES | |
Schedule of components of accrued expenses | 2021 2020 Accrued compensation and related benefits $ 3,947 $ 6,624 Accrued legal fees 61 18 Commission fee accrual 79 103 Accrued federal, state and local taxes and fees 89 130 Deferred payroll support program proceeds 2,877 — Other 1,154 1,701 $ 8,207 $ 8,576 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
EARNINGS PER SHARE | |
Summary of reconciliation of the computation for basic earnings per share | 2021 2020 Net income $ 10,018 $ 1,059 Reversal of loss on change in value of warrant liability 224 — Net income attributable to common shareholders for EPS - diluted $ 10,242 $ 1,059 Weighted-average number of shares outstanding - basic 42,212,134 37,010 Additional shares from assumed stock-settled restricted stock units 115,959 — Additional shares from assumed exercise of warrants 1,869,098 — Weighted-average number of shares outstanding - diluted 44,197,191 37,010 Earnings per share – basic: $ 0.24 $ 28.61 Earnings per share – diluted: $ 0.23 $ 28.61 |
BUSINESS SEGMENTS (Tables)
BUSINESS SEGMENTS (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
BUSINESS SEGMENTS | |
Summary of selected financial information for each segment | 2021 2020 Revenues Asset Management Solutions Aircraft $ 10,452 $ 14,238 Engine 18,800 16,593 29,252 30,831 Tech Ops MRO Services 27,053 23,322 Product Sales 2,130 2,982 29,183 26,304 $ 58,435 $ 57,135 2021 2020 Gross Profit Asset Management Solutions Aircraft $ 4,463 $ 3,662 Engine 9,124 8,105 13,587 11,767 Tech Ops MRO Services 5,026 2,344 Product Sales 1,222 1,175 6,248 3,519 $ 19,835 $ 15,286 |
Summary of reconciles segment gross profit to net income | The following table reconciles segment gross profit to net income for the three months ended March 31, 2021 and 2020 (in thousands): 2021 2020 Segment gross profit $ 19,835 $ 15,286 Selling, general and administrative expenses (13,310) (13,201) Payroll support program proceeds 6,363 — Transaction costs — (231) Interest expense, net (258) (536) Other income, net 94 57 Change in fair value of warrant liability (224) — Income tax expense (2,482) (316) Net income $ 10,018 $ 1,059 |
Summary of intersegment revenues | 2021 2020 Asset Management Solutions $ 1,447 $ 269 Tech Ops 2,158 920 Total intersegment revenues $ 3,605 $ 1,189 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
COMMITMENTS AND CONTINGENCIES | |
Summary of future minimum lease payments under non-cancelable operating leases | Year ending December 31: Remainder of 2021 $ 3,665 2022 3,591 2023 2,755 2024 2,308 2025 1,811 2026 1,846 Thereafter 2,601 Total minimum lease payments $ 18,577 |
BUSINESS COMBINATION (Tables)
BUSINESS COMBINATION (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
BUSINESS COMBINATION | |
Summary of purchase price allocation | Acquisition Date Fair Values Accounts receivable $ 1,442 Deposits, prepaid expenses, and other current assets 22 Property and equipment 381 Other intangible assets 10,096 Goodwill 6,002 Accounts payable (134) Accrued expenses (833) Total purchase price $ 16,976 |
Summary of intangible assets acquired | Fair Value Trademark and trade name (indefinite lived) $ 200 Fair Value FAA part 145 certificate (indefinite lived) $ 796 Useful Life In Years Fair Value Customer relationships 10 $ 9,100 |
Summary of unaudited pro forma information | The acquisition of ACT did not have a material pro forma impact on the consolidated results of operations for the three months ended March 31, 2020. |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
STOCKHOLDERS' EQUITY | |
Share-based Payment Arrangement, Restricted Stock Unit, Activity [Table Text Block] | Weighted Average Weighted Average Amount Grant Date Fair Value Contractual Life Outstanding at December 31, 2020 $ — $ — $ — Granted 1,634,000 10.00 2.96 Outstanding March 31, 2021 $ 1,634,000 $ 10.00 $ 2.96 |
DESCRIPTION OF THE BUSINESS (De
DESCRIPTION OF THE BUSINESS (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2021 | Dec. 31, 2020 | Dec. 22, 2020 | |
DESCRIPTION OF THE BUSINESS | |||
Change in fair value of warrant liability | $ 224 | ||
Reduction of additional paid-in capital | 292,869 | $ 292,593 | $ 1,200 |
Corresponding reduction to additional paid in capital | 800 | ||
Retained earnings | $ 68,876 | $ 58,858 | $ 400 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Mar. 31, 2021 | Apr. 16, 2021 | Mar. 04, 2021 | Jun. 08, 2020 |
Short-term Debt [Line Items] | |||||
Payroll support program proceeds | $ (6,363) | ||||
Payroll Support Programs | |||||
Short-term Debt [Line Items] | |||||
Debt instrument, face | $ 5,500 | $ 16,400 | |||
CARES Act proceeds | 3,700 | ||||
Payroll support program proceeds | $ 2,900 | 2,700 | |||
PSP 3 | |||||
Short-term Debt [Line Items] | |||||
Debt instrument, face | $ 5,500 | $ 5,500 | $ 5,500 |
SIGNIFICANT RISKS AND UNCERTA_2
SIGNIFICANT RISKS AND UNCERTAINTIES (Details) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2020 | |
SIGNIFICANT RISKS AND UNCERTAINTIES | ||
Feedstock opportunities cancelled | $ 20 | |
Headcount reductions and suspension of various other initiatives | $ 20 |
REVENUE (Details)
REVENUE (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | |
REVENUE | ||
Contract assets | $ 24,485 | $ 20,431 |
Contract assets, change | 4,054 | |
Deferred revenue | 818 | 2,595 |
Contract Liabilities | $ 2,300 | |
Revenue recognized of the entire opening balance of our contract liabilities | $ 1,800 |
REVENUE - Disaggregation of Rev
REVENUE - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Disaggregation of Revenue [Line Items] | ||
Total revenues | $ 58,435 | $ 57,135 |
Asset Management Solutions | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 29,252 | 30,831 |
Tech Ops | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 29,183 | 26,304 |
Products | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 25,126 | 18,031 |
Products | Asset Management Solutions | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 22,996 | 15,049 |
Products | Tech Ops | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 2,130 | 2,982 |
USM | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 10,368 | 16,373 |
USM | Asset Management Solutions | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 9,225 | 15,049 |
USM | Tech Ops | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 1,143 | 1,324 |
Whole Asset Sales | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 13,771 | |
Whole Asset Sales | Asset Management Solutions | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 13,771 | |
Engineered Solutions | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 987 | 1,658 |
Engineered Solutions | Tech Ops | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 987 | 1,658 |
Leasing | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 6,256 | 15,782 |
Leasing | Asset Management Solutions | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 6,256 | 15,782 |
Services | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 27,053 | 23,322 |
Services | Tech Ops | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | $ 27,053 | $ 23,322 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
INVENTORY | |||
USM | $ 62,877 | $ 63,277 | |
Work in Process | 22,686 | 20,611 | |
Whole Assets | 79,679 | 56,767 | |
Inventory | 165,242 | 140,655 | |
Less Short Term | (99,299) | (85,192) | |
Long Term | 65,943 | $ 55,463 | |
Inventory scrap loss reserves | $ 74 | $ 421 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 |
Schedule Of Intangible Assets And Goodwill [Line Items] | |||
Goodwill | $ 19,860 | $ 19,860 | $ 6,000 |
Total intangible assets with indefinite lives | 30,190 | 30,190 | |
Qwest | Asset Management Solutions | |||
Schedule Of Intangible Assets And Goodwill [Line Items] | |||
Goodwill | 13,416 | 13,416 | |
Qwest | Asset Management Solutions | Certifications | |||
Schedule Of Intangible Assets And Goodwill [Line Items] | |||
Total intangible assets with indefinite lives | 724 | 724 | |
ALGS | Tech Ops | |||
Schedule Of Intangible Assets And Goodwill [Line Items] | |||
Goodwill | 379 | 379 | |
ALGS | Tech Ops | Certifications | |||
Schedule Of Intangible Assets And Goodwill [Line Items] | |||
Total intangible assets with indefinite lives | 710 | 710 | |
ACS | Tech Ops | |||
Schedule Of Intangible Assets And Goodwill [Line Items] | |||
Goodwill | 63 | 63 | |
ACS | Tech Ops | Certifications | |||
Schedule Of Intangible Assets And Goodwill [Line Items] | |||
Total intangible assets with indefinite lives | 7,300 | 7,300 | |
ACS | Tech Ops | Trademarks | |||
Schedule Of Intangible Assets And Goodwill [Line Items] | |||
Total intangible assets with indefinite lives | 600 | 600 | |
ACT | Tech Ops | |||
Schedule Of Intangible Assets And Goodwill [Line Items] | |||
Goodwill | 6,002 | 6,002 | |
ACT | Tech Ops | FAA Certificates | |||
Schedule Of Intangible Assets And Goodwill [Line Items] | |||
Total intangible assets with indefinite lives | 796 | 796 | |
ACT | Tech Ops | Trademarks | |||
Schedule Of Intangible Assets And Goodwill [Line Items] | |||
Total intangible assets with indefinite lives | $ 200 | $ 200 |
INTANGIBLE ASSETS - Estimated u
INTANGIBLE ASSETS - Estimated useful lives (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | |
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets with definite lives | $ 17,509 | $ 18,034 |
Asset Management Solutions | Qwest | Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Life In Years | 10 years | |
Total intangible assets with definite lives | $ 7,843 | 8,083 |
Tech Ops | ALGS | Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Life In Years | 10 years | |
Total intangible assets with definite lives | $ 85 | 90 |
Tech Ops | ACS | Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Life In Years | 10 years | |
Total intangible assets with definite lives | $ 1,610 | 1,663 |
Tech Ops | ACT | Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Life In Years | 10 years | |
Total intangible assets with definite lives | $ 7,971 | $ 8,198 |
INTANGIBLE ASSETS - Additional
INTANGIBLE ASSETS - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
INTANGIBLE ASSETS | |||
Total amortization expense | $ 500 | $ 300 | |
Accumulated amortization | 3,500 | $ 3,000 | |
Goodwill | $ 19,860 | $ 6,000 | $ 19,860 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 27,175 | $ 26,733 | |
Less accumulated depreciation | (19,404) | (18,894) | |
Property and equipment, net | 7,771 | 7,839 | |
Depreciation expense | 500 | $ 600 | |
Tooling and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 13,636 | 13,465 | |
Furniture and other equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 7,567 | 7,379 | |
Useful Life In Years | 5 years | ||
Computer software | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 2,378 | 2,378 | |
Useful Life In Years | 5 years | ||
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 3,397 | 3,314 | |
Equipment under capital lease | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 197 | $ 197 | |
Useful Life In Years | 5 years | ||
Minimum | Tooling and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Useful Life In Years | 7 years | ||
Minimum | Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Useful Life In Years | 3 years | ||
Maximum | Tooling and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Useful Life In Years | 15 years | ||
Maximum | Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Useful Life In Years | 6 years |
LEASE RENTAL REVENUES AND AIR_3
LEASE RENTAL REVENUES AND AIRCRAFT AND ENGINES HELD FOR LEASE - Components of Aircraft and engines held for operating leases, net (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
LEASE RENTAL REVENUES AND AIRCRAFT AND ENGINES HELD FOR LEASE | |||
Aircraft and engines held for operating leases | $ 221,456 | $ 228,942 | |
Less accumulated depreciation | (139,124) | (142,098) | |
Aircraft and engines held for operating leases, net | 82,332 | $ 86,844 | |
Depreciation | 2,500 | $ 7,100 | |
Supplemental rents recognized as revenue | $ 1,100 | $ 5,500 | |
Term of lease | 3 years |
LEASE RENTAL REVENUES AND AIR_4
LEASE RENTAL REVENUES AND AIRCRAFT AND ENGINES HELD FOR LEASE - Minimum future annual lease rentals contracted to be received under existing operating leases of flight equipment (Details) $ in Thousands | Mar. 31, 2021USD ($) |
LEASE RENTAL REVENUES AND AIRCRAFT AND ENGINES HELD FOR LEASE | |
Remainder of 2021 | $ 12,741 |
2022 | 10,021 |
2023 | 2,231 |
Total minimum lease payments | $ 24,993 |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
ACCRUED EXPENSES | ||
Accrued compensation and related benefits | $ 3,947 | $ 6,624 |
Accrued legal fees | 61 | 18 |
Commission fee accrual | 79 | 103 |
Accrued federal, state and local taxes and fees | 89 | 130 |
Deferred payroll support program proceeds | 2,877 | |
Other | 1,154 | 1,701 |
Total accrued expenses | $ 8,207 | $ 8,576 |
WARRANT LIABILITY - Additional
WARRANT LIABILITY - Additional Information (Details) | 1 Months Ended |
Jan. 31, 2021$ / sharesshares | |
WARRANT LIABILITY | |
Number of shares per warrant | 1 |
Warrants exercise price | $ / shares | $ 11.50 |
Warrants outstanding | 17,952,589 |
Number of warrants issued to founders | 750,000 |
Lock-up period | 12 months |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
EARNINGS PER SHARE | ||
Net income | $ 10,018 | $ 1,059 |
Reversal of loss on change in value of warrant liability | 224 | |
Net income attributable to common shareholders for EPS - dilutes | $ 10,242 | $ 1,059 |
Weighted-average number of shares outstanding - basic | 42,212,134 | 37,010 |
Additional shares from assumed stock-settled restricted stock units | 115,959 | |
Additional shares from assumed exercise of warrants | 1,869,098 | |
Weighted-average number of shares outstanding - diluted | 44,197,191 | 37,010 |
Earnings per share - basic | $ 0.24 | $ 28.61 |
Earnings per share - diluted | $ 0.23 | $ 28.61 |
BUSINESS SEGMENTS (Details)
BUSINESS SEGMENTS (Details) | 3 Months Ended |
Mar. 31, 2021segment | |
BUSINESS SEGMENTS | |
Number of business segments | 2 |
BUSINESS SEGMENTS - Selected fi
BUSINESS SEGMENTS - Selected financial information for each segment (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Segment Reporting Information [Line Items] | ||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 58,435 | $ 57,135 |
Revenues | 58,435 | 57,135 |
Gross Profit | 19,835 | 15,286 |
Services | ||
Segment Reporting Information [Line Items] | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 27,053 | 23,322 |
Products | ||
Segment Reporting Information [Line Items] | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 25,126 | 18,031 |
Asset Management Solutions | ||
Segment Reporting Information [Line Items] | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 29,252 | 30,831 |
Gross Profit | 13,587 | 11,767 |
Asset Management Solutions | Aircraft | ||
Segment Reporting Information [Line Items] | ||
Revenues | 10,452 | 14,238 |
Gross Profit | 4,463 | 3,662 |
Asset Management Solutions | Engine | ||
Segment Reporting Information [Line Items] | ||
Revenues | 18,800 | 16,593 |
Gross Profit | 9,124 | 8,105 |
Asset Management Solutions | Products | ||
Segment Reporting Information [Line Items] | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 22,996 | 15,049 |
Tech Ops | ||
Segment Reporting Information [Line Items] | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 29,183 | 26,304 |
Revenues | 29,183 | 26,304 |
Gross Profit | 6,248 | 3,519 |
Tech Ops | MRO services | ||
Segment Reporting Information [Line Items] | ||
Revenues | 27,053 | 23,322 |
Tech Ops | Services | ||
Segment Reporting Information [Line Items] | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 27,053 | 23,322 |
Gross Profit | 5,026 | 2,344 |
Tech Ops | Products | ||
Segment Reporting Information [Line Items] | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 2,130 | 2,982 |
Revenues | 2,130 | 2,982 |
Gross Profit | $ 1,222 | $ 1,175 |
BUSINESS SEGMENTS - Reconciles
BUSINESS SEGMENTS - Reconciles segment gross profit to net income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
BUSINESS SEGMENTS | ||
Segment gross profit | $ 19,835 | $ 15,286 |
Selling, general and administrative expenses | (13,310) | (13,201) |
Payroll support program proceeds | (6,363) | |
Transaction costs | (231) | |
Interest expense, net | (258) | (536) |
Other income, net | 94 | 57 |
Change in fair value of warrant liability | (224) | |
Income tax expense | (2,482) | (316) |
Net income | $ 10,018 | $ 1,059 |
BUSINESS SEGMENTS - Intersegmen
BUSINESS SEGMENTS - Intersegment revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Segment Reporting Information [Line Items] | ||
Revenue | $ 58,435 | $ 57,135 |
Intersegment | ||
Segment Reporting Information [Line Items] | ||
Revenue | 3,605 | 1,189 |
Asset Management Solutions | ||
Segment Reporting Information [Line Items] | ||
Revenue | 29,252 | 30,831 |
Asset Management Solutions | Intersegment | ||
Segment Reporting Information [Line Items] | ||
Revenue | 1,447 | 269 |
Tech Ops | ||
Segment Reporting Information [Line Items] | ||
Revenue | 29,183 | 26,304 |
Tech Ops | Intersegment | ||
Segment Reporting Information [Line Items] | ||
Revenue | $ 2,158 | $ 920 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Future minimum lease payments under non-cancelable operating leases (Details) $ in Thousands | Mar. 31, 2021USD ($) |
Future minimum lease payments under non-cancelable operating leases | |
Remainder of 2021 | $ 3,665 |
2022 | 3,591 |
2023 | 2,755 |
2024 | 2,308 |
2025 | 1,811 |
2026 | 1,846 |
Thereafter | 2,601 |
Total minimum lease payments | $ 18,577 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
COMMITMENTS AND CONTINGENCIES | ||
Expenses incurred under the operating lease agreements | $ 1.6 | $ 1.5 |
Purchase commitments for the acquisition of Flight Equipment | $ 22.4 | |
Percentage of deposit paid to acquisition of Flight Equipment | 10.00% |
BUSINESS COMBINATION - Purchase
BUSINESS COMBINATION - Purchase price allocation (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 | Jan. 07, 2020 |
Acquisition Date Fair Values | ||||
Goodwill | $ 19,860 | $ 19,860 | $ 6,000 | |
Aircraft Component Technologies, Inc. (ACT) | ||||
Acquisition Date Fair Values | ||||
Accounts receivable | $ 1,442 | |||
Deposits, prepaid expenses, and other current assets | 22 | |||
Property and equipment | 381 | |||
Other intangible assets | 10,096 | |||
Goodwill | 6,002 | |||
Accounts payable | (134) | |||
Accrued expenses | (833) | |||
Total purchase price | $ 16,976 |
BUSINESS COMBINATION - Intangib
BUSINESS COMBINATION - Intangible assets (Details) - Aircraft Component Technologies, Inc. (ACT) $ in Thousands | Jan. 07, 2020USD ($) |
Customer relationships | |
Acquired Indefinite-lived Intangible Assets [Line Items] | |
Fair value of definite intangible assets acquired | $ 9,100 |
Useful Life In Years | 10 years |
Trademarks | |
Acquired Indefinite-lived Intangible Assets [Line Items] | |
Fair value of indefinite intangible assets acquired | $ 200 |
FAA part 145 certificate | |
Acquired Indefinite-lived Intangible Assets [Line Items] | |
Fair value of indefinite intangible assets acquired | $ 796 |
BUSINESS COMBINATION - Addition
BUSINESS COMBINATION - Additional Information (Details) - USD ($) $ in Thousands | Jan. 07, 2020 | Mar. 31, 2020 | Mar. 31, 2020 |
Business Acquisition [Line Items] | |||
Cash consideration | $ 16,976 | ||
Aircraft Component Technologies, Inc. (ACT) | |||
Business Acquisition [Line Items] | |||
Cash consideration | $ 17,000 | ||
Revenues from operations since acquisition | $ 2,100 | ||
Income from operations since acquisition | $ 700 |
STOCKHOLDERS' EQUITY - Common S
STOCKHOLDERS' EQUITY - Common Stock (Details) | Dec. 21, 2021USD ($) | Dec. 31, 2019 | Mar. 31, 2021$ / sharesshares | Dec. 31, 2020$ / sharesshares | Dec. 22, 2020$ / shares |
Class of Stock [Line Items] | |||||
Recapitalization exchange ratio | 74.00% | ||||
Par value per share | $ / shares | $ 0.0001 | $ 0.0001 | |||
Shares authorized | 200,000,000 | 200,000,000 | |||
Shares issued | 42,949,261 | 41,046,216 | |||
Shares outstanding | 42,949,261 | 41,046,216 | |||
AerSale Aviation | |||||
Class of Stock [Line Items] | |||||
Number of votes per common share | $ | 1 | ||||
Merger consideration per share | $ / shares | $ 10 | ||||
Shares issued | 42,949,261 | ||||
Shares outstanding | 42,949,261 |
STOCKHOLDERS' EQUITY - Earn-Out
STOCKHOLDERS' EQUITY - Earn-Out Shares and Unvested Founder Shares (Details) - shares | Dec. 22, 2020 | Feb. 08, 2020 | Mar. 31, 2021 |
Class of Stock [Line Items] | |||
Number of earn-out shares issuable | 1,855,634 | ||
Pre-closing holders of AerSale Aviation's common stock and the holders of In-the-Money SARs | Maximum | AerSale Aviation | |||
Class of Stock [Line Items] | |||
Number of earn-out shares issuable | 3,000,000 | ||
Pre-closing holders of AerSale Aviation's common stock | |||
Class of Stock [Line Items] | |||
Unvested Founder Shares, Number of Shares Deferred for Vesting | 700,000 | ||
Monocle's founder shareholders | |||
Class of Stock [Line Items] | |||
Number of earn-out shares issuable | 746,876 |
STOCKHOLDERS' EQUITY - 2020 Equ
STOCKHOLDERS' EQUITY - 2020 Equity Incentive Plan (Details) | 3 Months Ended |
Mar. 31, 2021shares | |
2020 Equity Incentive Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Common stock issuable | 4,200,000 |
Performance-based Awards | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting provisions | 1,595,000 |
Remaining vested provisions | 39,000 |
Performance-based Awards | Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Remaining vested term | 1 year |
Performance-based Awards | Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Remaining vested term | 3 years |
2020 Employee Stock Purchase Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Common stock issuable | 500,000 |
STOCKHOLDERS' EQUITY - Restrict
STOCKHOLDERS' EQUITY - Restricted Stock Unit Activity (Details) - 2020 Employee Stock Purchase Plan | 3 Months Ended |
Mar. 31, 2021$ / sharesshares | |
Stock Option (in Shares) | |
Outstanding at December 31, 2020 | shares | 0 |
Granted | shares | 1,634,000 |
Outstanding March 31, 2021 | shares | 1,634,000 |
Weighted Average Grant Date Fair Value | |
Weighted Average Exercise Price Beginning Balance | $ / shares | $ 0 |
Weighted Average Exercise Price Granted | $ / shares | 10 |
Weighted Average Exercise Price Ending Balance | $ / shares | $ 10 |
Weighted Average Contractual Life | |
Weighted Average Contractual Life Granted | 2 years 11 months 15 days |
Weighted Average Contractual Life | 2 years 11 months 15 days |