Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2022 | May 02, 2022 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2022 | |
Document Transition Report | false | |
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 | 255 Alhambra Circle, Suite 435 | |
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 | |
Title of 12(b) Security | Common stock, $0.0001 par value per share | |
Trading Symbol | ASLE | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 51,688,057 | |
Entity Central Index Key | 0001754170 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 171,724 | $ 130,188 |
Accounts receivable, net of allowance for doubtful accounts of $1,267 and $1,692 as of March 31, 2022 and December 31, 2021 | 42,894 | 42,571 |
Inventory: | ||
Aircraft, airframes, engines, and parts, net | 80,295 | 81,759 |
Advance vendor payments | 16,228 | 14,287 |
Deposits, prepaid expenses, and other current assets | 3,208 | 2,724 |
Total current assets | 314,349 | 271,529 |
Fixed assets: | ||
Aircraft and engines held for lease, net | 53,579 | 73,364 |
Property and equipment, net | 8,494 | 7,350 |
Inventory: | ||
Aircraft, airframes, engines, and parts, net | 68,816 | 77,534 |
Deferred income taxes | 10,788 | 10,013 |
Deferred financing costs, net | 887 | 999 |
Deferred customer incentives and other assets, net | 470 | 598 |
Goodwill | 19,860 | 19,860 |
Other intangible assets, net | 25,713 | 26,238 |
Total assets | 502,956 | 487,485 |
Current liabilities: | ||
Accounts payable | 20,168 | 19,967 |
Accrued expenses | 6,811 | 8,424 |
Income tax payable | 8,418 | 3,443 |
Lessee and customer purchase deposits | 25,849 | 33,212 |
Deferred revenue | 2,322 | 2,860 |
Total current liabilities | 63,568 | 67,906 |
Long-term lease deposits | 605 | 2,053 |
Maintenance deposit payments and other liabilities | 2,320 | 3,403 |
Deferred income taxes, net | 1,113 | 1,113 |
Warrant liability | 5,365 | 4,131 |
Total liabilities | 72,971 | 78,606 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock, $0.0001 par value. Authorized 200,000,000 shares; issued and outstanding 51,688,057 and 51,673,099 shares as of March 31, 2022 and December 31, 2021, respectively | 5 | 5 |
Additional paid-in capital | 317,781 | 313,901 |
Retained earnings | 112,199 | 94,973 |
Total stockholders' equity | 429,985 | 408,879 |
Total liabilities and stockholders' equity | $ 502,956 | $ 487,485 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Condensed Consolidated Balance Sheets | ||
Allowance for doubtful accounts | $ 1,267 | $ 1,692 |
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 | 51,688,057 | 51,673,099 |
Common Stock, Shares, Outstanding | 51,688,057 | 51,673,099 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Revenue: | ||
Total revenue | $ 122,806 | $ 58,435 |
Cost of sales and operating expenses: | ||
Total cost of sales | 76,103 | 38,600 |
Gross profit | 46,703 | 19,835 |
Selling, general, and administrative expenses | 23,766 | 13,310 |
Payroll support program proceeds | (6,363) | |
Income from operations | 22,937 | 12,888 |
Other income (expenses): | ||
Interest expense, net | (195) | (258) |
Other income, net | 365 | 94 |
Change in fair value of warrant liability | (1,234) | (224) |
Total other expenses | (1,064) | (388) |
Income before income tax provision | 21,873 | 12,500 |
Income tax expense | (4,647) | (2,482) |
Net income | $ 17,226 | $ 10,018 |
Earnings per share - basic | ||
Earnings per share - basic | $ 0.33 | $ 0.24 |
Earnings per share - diluted | ||
Earnings per share - diluted | $ 0.32 | $ 0.23 |
Product | ||
Revenue: | ||
Total revenue | $ 92,368 | $ 25,126 |
Cost of sales and operating expenses: | ||
Total cost of sales | 57,928 | 13,806 |
Leasing | ||
Revenue: | ||
Total revenue | 8,201 | 6,256 |
Cost of sales and operating expenses: | ||
Total cost of sales | 2,189 | 2,767 |
Services | ||
Revenue: | ||
Total revenue | 22,237 | 27,053 |
Cost of sales and operating expenses: | ||
Total cost of sales | $ 15,986 | $ 22,027 |
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, 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] | ||||
Shares issued under the 2020 Employee Stock Purchase Plan (in shares) | 0 | |||
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 | |||
Balance at beginning at Dec. 31, 2021 | $ 5 | 313,901 | 94,973 | 408,879 |
Balance at beginning (in shares) at Dec. 31, 2021 | 51,673,099 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Stock-based compensation | 3,755 | 3,755 | ||
Shares issued under the 2020 Employee Stock Purchase Plan | 125 | $ 125 | ||
Shares issued under the 2020 Employee Stock Purchase Plan (in shares) | 11,988 | 11,988 | ||
Shares issued under the 2020 Equity Incentive Plan (in shares) | 2,970 | |||
Net income | 17,226 | $ 17,226 | ||
Balance at ending at Mar. 31, 2022 | $ 5 | $ 317,781 | $ 112,199 | $ 429,985 |
Balance at ending (in shares) at Mar. 31, 2022 | 51,688,057 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Cash flows from operating activities: | ||
Net income | $ 17,226 | $ 10,018 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 2,865 | 3,487 |
Amortization of debt issuance costs | 112 | 150 |
Inventory reserve | (50) | 74 |
Provision for doubtful accounts | (424) | (144) |
Deferred income taxes | (775) | (284) |
Change in fair value of warrant liability | 1,234 | 224 |
Stock-based compensation | 3,755 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (5,527) | 1,713 |
Inventory | 28,174 | (27,020) |
Deposits, prepaid expenses, and other current assets | (484) | 2,590 |
Deferred customer incentives and other assets | 123 | |
Advance vendor payments | (1,941) | (4,514) |
Accounts payable | 201 | 2,857 |
Income tax payable | 4,975 | 5 |
Accrued expenses | (1,611) | (1,420) |
Deferred revenue | (538) | (1,777) |
Lessee and customer purchase deposits | (3,184) | |
Other liabilities | (1,083) | 80 |
Net cash provided by (used in) operating activities | 43,048 | (13,961) |
Cash flows from investing activities: | ||
Proceeds from sale of assets | 4,420 | |
Purchase of property and equipment | (1,637) | (443) |
Net cash (used in) provided by investing activities | (1,637) | 3,977 |
Cash flows from financing activities: | ||
Cash paid for employee taxes on withholding shares | (269) | |
Proceeds from exercise of warrants | 545 | |
Proceeds from the issuance of ESPP shares | 125 | |
Net cash provided by financing activities | 125 | 276 |
Increase (decrease) in cash and cash equivalents | 41,536 | (9,708) |
Cash and cash equivalents, beginning of period | 130,188 | 29,317 |
Cash and cash equivalents, end of period | 171,724 | 19,609 |
Supplemental disclosure of cash activities | ||
Income taxes | 277 | 98 |
Interest | 141 | 167 |
Supplemental disclosure of noncash investing activities | ||
Reclassification of aircraft and aircraft engines inventory (from) equipment held for lease, net | $ (17,942) | $ (2,061) |
DESCRIPTION OF THE BUSINESS
DESCRIPTION OF THE BUSINESS | 3 Months Ended |
Mar. 31, 2022 | |
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 the Company 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. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2022 | |
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 Generally Accepted Accounting Policies 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 2021 Annual Report Revenue Recognition Products — Used Serviceable Material (“USM”) Sales 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. The Company recognizes 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. The Company generally sells its 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 Accounting Standards Codification (“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 payment 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 beyond the customers’ deposits are held. Payment terms for leased flight equipment are due upon receipt. Service Revenues Service revenues are recognized as performance obligations when they are fulfilled and the benefits are transferred to the customer. At contract inception, the Company evaluates if the contract should be accounted for as a single performance obligation or if the contract contains multiple performance obligations. In some cases, the Company’s 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. The Company receives payments from our customers based on billing schedules or contractual terms. For performance obligations that are satisfied over time, the Company measures progress in a manner that depicts the performance of transferring control to the customer. As such, the Company utilizes 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. The Company is 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 the Company’s Maintenance, Repair and Overhaul (“MRO”) contracts, if the contract is terminated for convenience, the Company is 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 the Company provides MRO services. The Company has 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. The Company’s reported sales on our Condensed Consolidated Statements of Operations are net of any sales or related non income taxes. The Company also utilizes the “as invoiced” practical expedient in certain cases where performance obligations are satisfied over time and the invoiced amount corresponds directly with the value the Company is providing to the customer. New Accounting Pronouncements Not Yet Adopted On February 2016, the Financial Accounting Standards Board (“FASB”) issued “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, the FASB issued ASU No. 2018-10, “Codification Improvements to Topic 842, Leases,” and ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements.” Topic 842 will be effective for the Company for the annual period beginning on January 1, 2022, the impact of which will be reflected in the fourth quarter of 2022 recorded retroactively at the beginning of the period of adoption through a cumulative-effect adjustment. We plan to elect the practical expedients, which permits us to not reassess (i) whether any expired or existing contracts are or contain leases, (ii) the lease classification for any expired leases and (iii) indirect costs for any existing leases. In addition, the practical expedient allows us not to separate lease and non-lease components for both lessee and lessor relationships and to not apply the recognition requirements to leases with terms of less than 12 months. Based on preliminary estimates, our adoption is expected to result in the recognition of operating lease right of use assets of approximately $13.8 million and lease liabilities of approximately $14.9 million on January 1, 2022. We are continuing our assessment, which may identify additional impacts that Topic 842 could have on our financial statements. 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, the 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. The Company is currently evaluating the impact this guidance will have on our consolidated financial statements and related disclosures. On May 3, 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This new standard provides clarification and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange. This standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Under this standard, issuers should apply the new standard prospectively to modifications or exchanges occurring after the effective date of the new standard. Early adoption is permitted, including adoption in an interim period. If an issuer elects to early adopt the new standard in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes that interim period. The Company is evaluating this new standard, but does not expect it to have a material impact on the Company's financial statements or disclosures. Payroll Support Programs The Company has also taken steps to improve our liquidity, including seeking financial assistance under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). Certain of the Company’s subsidiaries have received $16.4 million from the U.S. Treasury Department (“Treasury”) through the Payroll Support Program under the CARES Act, of which $3.7 million was received and recognized as payroll support program proceeds during the first quarter of 2021. As part of the Payroll Support Extension Law, the Company entered into an agreement with the Treasury on March 4, 2021 for the receipt of relief funds of $5.5 million, of which $2.7 million was recognized as payroll support program proceeds during the first quarter of 2021. The total unrecognized amount of collected proceeds from payroll support programs as of March 31, 2021 is $2.9 million. Pursuant to the American Rescue Plan Act of 2021 (“ARP”), we entered into an agreement with the Treasury on April 16, 2021 for the receipt of relief funds of an additional $5.5 million. No amounts were received or recognized under any of these programs during the three months ended March 31, 2022. In connection with the financial assistance the Company has received under the Payroll Support Program, it is required to comply with certain provisions of the CARES Act, including the requirement that funds provided pursuant to the Payroll Support Program be used exclusively for the continuation of payment of employee wages, salaries and benefits; the requirement against involuntary terminations and furloughs and reductions in employee pay rates and benefits from the signing date of the Payroll Support Program agreement through September 30, 2021. The agreement requires the Company to issue a recall to any employee who was terminated or furloughed between October 1, 2020 and March 4, 2021 and enable such employee to return to employment. In addition, the Company is subject to provisions prohibiting the repurchase of common stock and the payment of common stock dividends through September 30, 2022, as well as limitations on the payment of certain employee compensation through April 1, 2023. These restrictions may affect the Company’s operations and if the Company does not comply with these provisions, it may be required to reimburse up to 100% of any previously received relief funds. In particular, limitations on compensation may adversely impact our ability to attract and retain senior management or attract other key employees during this critical time. As of March 31, 2022, we have been in compliance with all applicable provisions of the CARES Act, Payroll Support Program and ARP. |
SIGNIFICANT RISKS AND UNCERTAIN
SIGNIFICANT RISKS AND UNCERTAINTIES | 3 Months Ended |
Mar. 31, 2022 | |
SIGNIFICANT RISKS AND UNCERTAINTIES | |
SIGNIFICANT RISKS AND UNCERTAINTIES | NOTE C — SIGNIFICANT RISKS AND UNCERTAINTIES Impact of Ukraine Conflict and Russia Sanctions In February of 2022, Russia invaded Ukraine and is still engaged in an active conflict against the country. As a result, governments in the European Union, the United States, the United Kingdom, Switzerland, and other countries have enacted sanctions against Russia and Russian interests. These sanctions include controls on the export and re-export of certain goods, supplies, and technologies, supply of aircraft and aircraft components to Russian persons or for use in Russia, subject to certain wind-down periods, and the imposition of restrictions on doing business with certain state-owned Russian customers and other investments and business activities in Russia. In order to comply with these sanctions, we ceased pursuing future business in Russia and terminated our three leases with operators doing business in Russia, successfully recovering two aircraft and seeking to recover one engine with a low book value and for which we have insurance coverage. Although the current sanctions prohibit the continuation of certain business activities, the three leases referenced were naturally scheduled to expire in 2022 and therefore will not have a material impact on our business or 2022 financial condition. While it is difficult to predict the short or long term implications of this conflict and sanctions on the global economy and the aviation industry, we intend to fully comply with all applicable sanctions and embargoes, and do not expect the current situation will have a material adverse effect on our results of operations. |
REVENUE
REVENUE | 3 Months Ended |
Mar. 31, 2022 | |
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, 2022 December 31, 2021 Change Contract assets $ 14,173 $ 13,221 $ 952 Contract assets are reported within accounts receivable on our Condensed Consolidated Balance Sheets. Changes in contract assets primarily results from the timing difference between the performance of services. Contract liabilities are reported as deferred revenue on our Condensed Consolidated Balance Sheets and amounted to $2.9 million as of December 31, 2021, of which $2.6 million was related to contract liabilities for services performed. For the three months ended March 31, 2022, the Company recognized as revenue $1.3 million of contract liabilities included in the beginning balance 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, 2022 and 2021 (in thousands): Three months ended March 31, 2022 Asset Management Solutions TechOps Total Revenues USM $ 14,409 $ 819 $ 15,228 Whole asset sales 51,920 23,955 75,875 Engineered solutions - 1,265 1,265 Total products 66,329 26,039 92,368 Leasing 8,201 - 8,201 Services - 22,237 22,237 Total revenues $ 74,530 $ 48,276 $ 122,806 Three months ended March 31, 2021 Asset Management Solutions TechOps 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 |
INVENTORY
INVENTORY | 3 Months Ended |
Mar. 31, 2022 | |
INVENTORY | |
INVENTORY | NOTE E — INVENTORY Following are the major classes of inventory as of the below dates (in thousands): March 31, 2022 December 31, 2021 Used serviceable materials $ 62,990 $ 65,496 Work-in-process 20,104 12,462 Whole assets 66,017 81,335 $ 149,111 159,293 Less short term (80,295) (81,759) Long term $ 68,816 $ 77,534 The Company did not record inventory reserves for the three months ended March 31, 2022 and 2021. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2022 | |
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. The Company reviews and evaluates our goodwill and indefinite life intangible assets for potential impairment at a minimum annually or more frequently if circumstances indicate that impairment is possible. The Company 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 the Company 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 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 the below dates are (in thousands): March 31, 2022 December 31, 2021 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 Certificates 796 796 Goodwill 6,002 6,002 Total intangible assets with indefinite lives $ 30,190 $ 30,190 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 the below dates are as follows (in thousands): Useful Life In Years March 31, 2022 December 31, 2021 Qwest: Customer relationships 10 $ 6,870 $ 7,109 ALGS: Customer relationships 10 65 70 ACS: Customer relationships 10 1,400 1,453 ACT: Customer relationships 10 7,048 7,276 Total intangible assets with definite lives $ 15,383 $ 15,908 Total amortization expense amounted to $0.5 million and $0.5 million for the three months ended March 31, 2022 and 2021, respectively. Accumulated amortization amounted to $5.6 million and $5.1 million as of March 31, 2022 and December 31, 2021, 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. |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 3 Months Ended |
Mar. 31, 2022 | |
PROPERTY AND EQUIPMENT, NET | |
PROPERTY AND EQUIPMENT, NET | NOTE G — PROPERTY AND EQUIPMENT, NET Property and equipment, net, as of the below dates consisted of the following (in thousands): Useful Life In Years March 31, 2022 December 31, 2021 Tooling and equipment 7 - 15 $ 13,674 $ 13,530 Furniture and other equipment 5 9,107 7,928 Computer software 5 2,160 1,998 Leasehold improvements 3 - 6 3,787 3,632 Equipment under capital lease 5 192 192 28,920 27,280 Less accumulated depreciation (20,426) (19,930) $ 8,494 $ 7,350 Depreciation expense, which includes amortization of equipment under capital lease, amounted to $0.5 million and $0.5 million for the three months ended March 31, 2022 and 2021, respectively. |
LEASE RENTAL REVENUES AND AIRCR
LEASE RENTAL REVENUES AND AIRCRAFT AND ENGINES HELD FOR LEASE | 3 Months Ended |
Mar. 31, 2022 | |
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 the below dates consisted of the following (in thousands): March 31, 2022 December 31, 2021 Aircraft and engines held for operating leases $ 172,486 $ 197,397 Less accumulated depreciation (118,907) (124,033) $ 53,579 $ 73,364 Total depreciation expense amounted to $1.9 million and $2.5 million for the three months ended March 31, 2022 and 2021, respectively, and is included in cost of leasing in the Condensed Consolidated Statements of Operations. Supplemental rents recognized as revenue totaled $3.5 million and $1.1 million for the three months ended March 31, 2022 and 2021, respectively. The Company’s current operating lease agreements for leased flight equipment expire over the next month to two years. The amounts in the following table are based upon the assumption that flight equipment under operating leases will remain leased 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 were as follows (in thousands): Year ending December 31: Remainder of 2022 $ 6,424 2023 1,026 Total minimum lease payments $ 7,450 |
ACCRUED EXPENSES
ACCRUED EXPENSES | 3 Months Ended |
Mar. 31, 2022 | |
ACCRUED EXPENSES. | |
Accrued expenses | NOTE I — ACCRUED EXPENSES The following is a summary of the components of accrued expenses as of the below dates (in thousands): March 31, 2022 December 31, 2021 Accrued compensation and related benefits $ 3,897 $ 6,294 Accrued legal fees 559 377 Commission fee accrual 220 115 Accrued federal, state and local taxes and fees 154 243 Other 1,981 1,395 $ 6,811 $ 8,424 |
WARRANT LIABILITY
WARRANT LIABILITY | 3 Months Ended |
Mar. 31, 2022 | |
WARRANT LIABILITY | |
WARRANT LIABILITY | NOTE J – WARRANT LIABILITY Warrants to purchase a total of 750,000 and 835,014 shares of the Company’s common stock were outstanding as of March 31, 2022 and December 31, 2021. 750,000 warrants were issued to founders in a private placement (the “Private Warrants”). Each of the Private Warrants entitles the registered holder to purchase one share of the Company’s common stock at a price of $11.50 per share. The Private 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. 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 as of March 31, 2021 was determined using the market price of the Company’s public warrants adjusted for their lack of liquidity. Effective December 29, 2021 all public warrants were redeemed on a cashless basis and ceased trading on Nasdaq. As a result, the Black-Scholes option pricing model was adopted as of March 31, 2022 with the following assumptions: March 31, 2022 Risk-free interest rate 2.51% Expected volatility of common stock 41.16% Dividend yield - Expected option term in years 3.7 The significant assumptions utilized in the Black-Scholes calculation consist of interest rate for U.S. Treasury Bonds, as published by the U.S. Federal Reserve, and expected volatility estimated using historical daily volatility of guideline public companies. Change in fair value of warrant liability expense recognized in the Company's Condensed Consolidated Statement of Operations was $1.2 million and $0.2 million during the three months ended March 31, 2022 and 2021, respectively. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Mar. 31, 2022 | |
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, 2022 and 2021, respectively (in thousands, except share and per share data): Three Months Ended March 31, 2022 2021 Net income $ 17,226 $ 10,018 Reversal of loss on change in fair value of warrant liability - 224 Net income adjusted for EPS - diluted $ 17,226 $ 10,242 Weighted-average number of shares outstanding - basic 51,686,583 42,212,134 Additional shares from assumed stock-settled restricted stock units 1,818,745 115,959 Additional shares from assumed exercise of public warrants 481 1,869,098 Additional shares purchasable for employee stock purchase plan 4,703 - Weighted-average number of shares outstanding - diluted 53,510,512 44,197,191 Earnings per share – basic: $ 0.33 $ 0.24 Earnings per share – diluted: $ 0.32 $ 0.23 Anti-dilutive shares/units excluded from earnings per share - diluted: Additional shares from assumed exercise of Private Warrants 188,913 - |
BUSINESS SEGMENTS
BUSINESS SEGMENTS | 3 Months Ended |
Mar. 31, 2022 | |
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, the Company reports its 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. ● TechOps — 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 TechOps 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, the Company engages in research and development activities. Periodically, the Company’s TechOps segment engages in the repair and sale of used serviceable materials through its ability to overhaul existing inventory, or sale of whole assets dedicated to its business. 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, 2022 and 2021 is as follows (in thousands): Three Months Ended March 31, 2022 2021 Revenues Asset Management Solutions Aircraft $ 14,983 $ 10,452 Engine 59,547 18,800 74,530 29,252 TechOps MRO services 22,237 27,053 Product sales 2,084 2,130 Whole asset sales 23,955 — 48,276 29,183 Total $ 122,806 $ 58,435 Three Months Ended March 31, 2022 2021 Gross profit Asset Management Solutions Aircraft $ 5,365 $ 4,463 Engine 26,010 9,124 31,375 13,587 TechOps MRO services 6,251 5,026 Product sales 1,204 1,222 Whole asset sales 7,873 — 15,328 6,248 Total $ 46,703 $ 19,835 March 31, 2022 December 31, 2021 Total Assets Asset Management Solutions $ 378,369 $ 370,378 Tech Ops 117,848 112,742 Corporate 6,739 4,365 $ 502,956 $ 487,485 The following table reconciles segment gross profit to net income for the three months ended March 31, 2022 and 2021 (in thousands): Three Months Ended March 31, 2022 2021 Segment gross profit $ 46,703 $ 19,835 Selling, general and administrative expenses (23,766) (13,310) Payroll support program proceeds - 6,363 Interest expense, net (195) (258) Other income, net 365 94 Change in fair value of warrant liability (1,234) (224) Income tax expense (4,647) (2,482) Net income $ 17,226 $ 10,018 Intersegment sales include 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, 2022 and 2021, is as follows (in thousands): Three Months Ended March 31, 2022 2021 Asset Management Solutions $ 64 $ 1,447 TechOps 7,005 2,158 Total intersegment revenues $ 7,069 $ 3,605 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2022 | |
COMMITMENTS AND CONTINGENCIES. | |
COMMITMENTS AND CONTINGENCIES | NOTE M— COMMITMENTS AND CONTINGENCIES Litigation The Company may 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 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 2022 $ 3,071 2023 3,618 2024 3,150 2025 2,149 2026 1,851 Thereafter 2,601 Total minimum lease payments $ 16,440 Expenses incurred under the operating lease agreements was $1.4 million and $1.6 million for the three months ended March 31, 2022 and 2021, 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. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended |
Mar. 31, 2022 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | NOTE N — STOCKHOLDERS’ EQUITY Common Stock The Company’s common stock, $0.0001 par value, consists of 200,000,000 authorized shares, of which 51,688,057 and 42,949,261 shares were issued outstanding Earn-Out Shares Upon consummation of the Merger and in each case on or prior to the fifth anniversary of the Closing, the pre-closing holders of AerSale Aviation’s common stock and the holders of in-the-money SARs (as defined in the Merger Agreement) 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, 2021, the contingent event related to the Minimum Target Earn-Out Shares (as defined by the Merger Agreement) was met and 1,855,634 shares were issued. Effective October 22, 2021, the contingent event related to the Maximum Target Earn-Out Shares was met and 1,854,169 shares were issued. The remaining shares pursuant to the contingent rights were withheld to cover employee taxes. The Company determined the Earn-Out Shares (as defined by the Merger Agreement) 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 the Company’s condensed consolidated financial statements. There are no Earn-Out Shares contingent as of March 31, 2022 and December 31, 2021. Unvested Founder Shares Upon the consummation of 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). The Unvested Founder Shares will also vest upon the occurrence of a Liquidity Event (as defined by the Merger Agreement) on or prior to the fifth anniversary of the date of the Amended and Restated Founder Shares Agreement, solely to the extent the Liquidity Event Consideration (as defined in the Merger Agreement) is greater than $13.50, in which case half of the Unvested Founder Shares which will vest, or $15.00, in which case the other half of the Unvested Founder Shares will also vest. Pursuant to the Amended and Restated Founder Shares Agreement, the holders of the Unvested Founder Shares have retained the right to vote such Unvested Founder Shares prior to vesting. Unvested Founder Shares that have not vested on or prior to the fifth anniversary of the Closing Date will be forfeited. Effective February 8, 2021, the contingency event related to the Minimum Target was met and half of the Unvested Founder Shares vested. Effective October 22, 2021, the contingent event related to the Maximum Target was met and the other half of the Unvested Founder Shares vested. There are no Unvested Founder Shares as of March 31, 2022 and December 31, 2021. 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 Plan and any agreements and awards thereunder. Restricted stock unit activity under the 2020 Plan for the three months ended March 31, 2022 and 2021 was as follows: Weighted Average Weighted Average Remaining Contractual Amount Grant Date Fair Value Life (Years) Outstanding at December 31, 2021 1,669,300 $ 10.10 $ 2.02 Granted 41,156 15.39 1.92 Forfeited (3,370) 12.46 2.25 Issued (2,970) 10.00 - Outstanding March 31, 2022 1,704,116 $ 10.22 $ 2.02 Weighted Average Weighted Average Remaining Contractual Amount Grant Date Fair Value Life (Years) 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 restricted stock units (“2021 PSUs”) that achieved the 200% performance milestone as of March 31, 2022. This is the highest level of performance condition to be achieved and results in total shares to be issued of 3,190,000, subject to a time vesting schedule of one-third two-thirds one For the restricted stock unit awards granted under the 2020 Plan containing both service and performance conditions, the Company recognizes compensation expense when the awards are considered probable of vesting. Restricted stock units are considered granted, and the service inception date begins, when a mutual understanding of the key terms and conditions between the Company and the employee have been established. The fair value of these awards is determined based on the closing price of the shares on the grant date. The probability of restricted share awards granted with future performance conditions is evaluated at each reporting period and compensation expense is adjusted based on the probability assessment. For the three months ended March 31, 2022, the Company recognized share-based compensation expense for the 2021 PSUs of $3.5 million, given the achievement of the 200% performance milestone. For the three months ended March 31, 2021, no expense was recognized for the 2021 PSUs given that the milestone achievements were not deemed probable for accounting purposes. 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. During the three-months ended March 31, 2022, the Company issued 11,988 shares pursuant to the ESPP. No shares were issued during the three month period ended March 31, 2021. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
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 Generally Accepted Accounting Policies 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 2021 Annual Report |
Revenue Recognition | Revenue Recognition Products — Used Serviceable Material (“USM”) Sales 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. The Company recognizes 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. The Company generally sells its 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 Accounting Standards Codification (“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 payment 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 beyond the customers’ deposits are held. Payment terms for leased flight equipment are due upon receipt. Service Revenues Service revenues are recognized as performance obligations when they are fulfilled and the benefits are transferred to the customer. At contract inception, the Company evaluates if the contract should be accounted for as a single performance obligation or if the contract contains multiple performance obligations. In some cases, the Company’s 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. The Company receives payments from our customers based on billing schedules or contractual terms. For performance obligations that are satisfied over time, the Company measures progress in a manner that depicts the performance of transferring control to the customer. As such, the Company utilizes 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. The Company is 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 the Company’s Maintenance, Repair and Overhaul (“MRO”) contracts, if the contract is terminated for convenience, the Company is 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 the Company provides MRO services. The Company has 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. The Company’s reported sales on our Condensed Consolidated Statements of Operations are net of any sales or related non income taxes. The Company also utilizes the “as invoiced” practical expedient in certain cases where performance obligations are satisfied over time and the invoiced amount corresponds directly with the value the Company is providing to the customer. |
New Accounting Pronouncements Not Yet Adopted | New Accounting Pronouncements Not Yet Adopted On February 2016, the Financial Accounting Standards Board (“FASB”) issued “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, the FASB issued ASU No. 2018-10, “Codification Improvements to Topic 842, Leases,” and ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements.” Topic 842 will be effective for the Company for the annual period beginning on January 1, 2022, the impact of which will be reflected in the fourth quarter of 2022 recorded retroactively at the beginning of the period of adoption through a cumulative-effect adjustment. We plan to elect the practical expedients, which permits us to not reassess (i) whether any expired or existing contracts are or contain leases, (ii) the lease classification for any expired leases and (iii) indirect costs for any existing leases. In addition, the practical expedient allows us not to separate lease and non-lease components for both lessee and lessor relationships and to not apply the recognition requirements to leases with terms of less than 12 months. Based on preliminary estimates, our adoption is expected to result in the recognition of operating lease right of use assets of approximately $13.8 million and lease liabilities of approximately $14.9 million on January 1, 2022. We are continuing our assessment, which may identify additional impacts that Topic 842 could have on our financial statements. 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, the 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. The Company is currently evaluating the impact this guidance will have on our consolidated financial statements and related disclosures. On May 3, 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This new standard provides clarification and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange. This standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Under this standard, issuers should apply the new standard prospectively to modifications or exchanges occurring after the effective date of the new standard. Early adoption is permitted, including adoption in an interim period. If an issuer elects to early adopt the new standard in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes that interim period. The Company is evaluating this new standard, but does not expect it to have a material impact on the Company's financial statements or disclosures. |
CARES ACTS | Payroll Support Programs The Company has also taken steps to improve our liquidity, including seeking financial assistance under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). Certain of the Company’s subsidiaries have received $16.4 million from the U.S. Treasury Department (“Treasury”) through the Payroll Support Program under the CARES Act, of which $3.7 million was received and recognized as payroll support program proceeds during the first quarter of 2021. As part of the Payroll Support Extension Law, the Company entered into an agreement with the Treasury on March 4, 2021 for the receipt of relief funds of $5.5 million, of which $2.7 million was recognized as payroll support program proceeds during the first quarter of 2021. The total unrecognized amount of collected proceeds from payroll support programs as of March 31, 2021 is $2.9 million. Pursuant to the American Rescue Plan Act of 2021 (“ARP”), we entered into an agreement with the Treasury on April 16, 2021 for the receipt of relief funds of an additional $5.5 million. No amounts were received or recognized under any of these programs during the three months ended March 31, 2022. In connection with the financial assistance the Company has received under the Payroll Support Program, it is required to comply with certain provisions of the CARES Act, including the requirement that funds provided pursuant to the Payroll Support Program be used exclusively for the continuation of payment of employee wages, salaries and benefits; the requirement against involuntary terminations and furloughs and reductions in employee pay rates and benefits from the signing date of the Payroll Support Program agreement through September 30, 2021. The agreement requires the Company to issue a recall to any employee who was terminated or furloughed between October 1, 2020 and March 4, 2021 and enable such employee to return to employment. In addition, the Company is subject to provisions prohibiting the repurchase of common stock and the payment of common stock dividends through September 30, 2022, as well as limitations on the payment of certain employee compensation through April 1, 2023. These restrictions may affect the Company’s operations and if the Company does not comply with these provisions, it may be required to reimburse up to 100% of any previously received relief funds. In particular, limitations on compensation may adversely impact our ability to attract and retain senior management or attract other key employees during this critical time. As of March 31, 2022, we have been in compliance with all applicable provisions of the CARES Act, Payroll Support Program and ARP. |
REVENUE (Tables)
REVENUE (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
REVENUE. | |
Schedule of contract assets | Contract assets are as follows (in thousands): March 31, 2022 December 31, 2021 Change Contract assets $ 14,173 $ 13,221 $ 952 |
Schedule of revenue by segment, as well as total 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, 2022 and 2021 (in thousands): Three months ended March 31, 2022 Asset Management Solutions TechOps Total Revenues USM $ 14,409 $ 819 $ 15,228 Whole asset sales 51,920 23,955 75,875 Engineered solutions - 1,265 1,265 Total products 66,329 26,039 92,368 Leasing 8,201 - 8,201 Services - 22,237 22,237 Total revenues $ 74,530 $ 48,276 $ 122,806 Three months ended March 31, 2021 Asset Management Solutions TechOps 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 |
INVENTORY (Tables)
INVENTORY (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
INVENTORY | |
Schedule of inventory | Following are the major classes of inventory as of the below dates (in thousands): March 31, 2022 December 31, 2021 Used serviceable materials $ 62,990 $ 65,496 Work-in-process 20,104 12,462 Whole assets 66,017 81,335 $ 149,111 159,293 Less short term (80,295) (81,759) Long term $ 68,816 $ 77,534 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
INTANGIBLE ASSETS | |
Schedule of intangible assets with indefinite lives | Goodwill and other intangibles as of the below dates are (in thousands): March 31, 2022 December 31, 2021 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 Certificates 796 796 Goodwill 6,002 6,002 Total intangible assets with indefinite lives $ 30,190 $ 30,190 |
Schedule of intangible assets with definite lives | 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 the below dates are as follows (in thousands): Useful Life In Years March 31, 2022 December 31, 2021 Qwest: Customer relationships 10 $ 6,870 $ 7,109 ALGS: Customer relationships 10 65 70 ACS: Customer relationships 10 1,400 1,453 ACT: Customer relationships 10 7,048 7,276 Total intangible assets with definite lives $ 15,383 $ 15,908 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
PROPERTY AND EQUIPMENT, NET | |
Schedule of Property, Plant and equipment | Property and equipment, net, as of the below dates consisted of the following (in thousands): Useful Life In Years March 31, 2022 December 31, 2021 Tooling and equipment 7 - 15 $ 13,674 $ 13,530 Furniture and other equipment 5 9,107 7,928 Computer software 5 2,160 1,998 Leasehold improvements 3 - 6 3,787 3,632 Equipment under capital lease 5 192 192 28,920 27,280 Less accumulated depreciation (20,426) (19,930) $ 8,494 $ 7,350 |
LEASE RENTAL REVENUES AND AIR_2
LEASE RENTAL REVENUES AND AIRCRAFT AND ENGINES HELD FOR LEASE (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
LEASE RENTAL REVENUES AND AIRCRAFT AND ENGINES HELD FOR LEASE | |
Summary of aircraft and engines held for operating leases, net | Aircraft and engines held for operating leases, net, as of the below dates consisted of the following (in thousands): March 31, 2022 December 31, 2021 Aircraft and engines held for operating leases $ 172,486 $ 197,397 Less accumulated depreciation (118,907) (124,033) $ 53,579 $ 73,364 |
Summary of minimum future annual lease rentals contracted to be received under existing operating leases of flight equipment | Minimum future annual lease rentals contracted to be received under existing operating leases of flight equipment were as follows (in thousands): Year ending December 31: Remainder of 2022 $ 6,424 2023 1,026 Total minimum lease payments $ 7,450 |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
ACCRUED EXPENSES. | |
Schedule of Accrued expenses | The following is a summary of the components of accrued expenses as of the below dates (in thousands): March 31, 2022 December 31, 2021 Accrued compensation and related benefits $ 3,897 $ 6,294 Accrued legal fees 559 377 Commission fee accrual 220 115 Accrued federal, state and local taxes and fees 154 243 Other 1,981 1,395 $ 6,811 $ 8,424 |
WARRANT LIABILITY (Tables)
WARRANT LIABILITY (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
WARRANT LIABILITY | |
Assumptions of Black-Scholes option pricing model | March 31, 2022 Risk-free interest rate 2.51% Expected volatility of common stock 41.16% Dividend yield - Expected option term in years 3.7 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
EARNINGS PER SHARE | |
Summary of reconciliation of the computation for basic earnings per share | The following table provides a reconciliation of the computation for basic and diluted earnings per share for the three months ended March 31, 2022 and 2021, respectively (in thousands, except share and per share data): Three Months Ended March 31, 2022 2021 Net income $ 17,226 $ 10,018 Reversal of loss on change in fair value of warrant liability - 224 Net income adjusted for EPS - diluted $ 17,226 $ 10,242 Weighted-average number of shares outstanding - basic 51,686,583 42,212,134 Additional shares from assumed stock-settled restricted stock units 1,818,745 115,959 Additional shares from assumed exercise of public warrants 481 1,869,098 Additional shares purchasable for employee stock purchase plan 4,703 - Weighted-average number of shares outstanding - diluted 53,510,512 44,197,191 Earnings per share – basic: $ 0.33 $ 0.24 Earnings per share – diluted: $ 0.32 $ 0.23 Anti-dilutive shares/units excluded from earnings per share - diluted: Additional shares from assumed exercise of Private Warrants 188,913 - |
BUSINESS SEGMENTS (Tables)
BUSINESS SEGMENTS (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
BUSINESS SEGMENTS | |
Summary of selected financial information for each segment | Selected financial information for each segment for the three months ended March 31, 2022 and 2021 is as follows (in thousands): Three Months Ended March 31, 2022 2021 Revenues Asset Management Solutions Aircraft $ 14,983 $ 10,452 Engine 59,547 18,800 74,530 29,252 TechOps MRO services 22,237 27,053 Product sales 2,084 2,130 Whole asset sales 23,955 — 48,276 29,183 Total $ 122,806 $ 58,435 Three Months Ended March 31, 2022 2021 Gross profit Asset Management Solutions Aircraft $ 5,365 $ 4,463 Engine 26,010 9,124 31,375 13,587 TechOps MRO services 6,251 5,026 Product sales 1,204 1,222 Whole asset sales 7,873 — 15,328 6,248 Total $ 46,703 $ 19,835 March 31, 2022 December 31, 2021 Total Assets Asset Management Solutions $ 378,369 $ 370,378 Tech Ops 117,848 112,742 Corporate 6,739 4,365 $ 502,956 $ 487,485 |
Summary of reconciliation segment gross profit to net income, continuing operations | The following table reconciles segment gross profit to net income for the three months ended March 31, 2022 and 2021 (in thousands): Three Months Ended March 31, 2022 2021 Segment gross profit $ 46,703 $ 19,835 Selling, general and administrative expenses (23,766) (13,310) Payroll support program proceeds - 6,363 Interest expense, net (195) (258) Other income, net 365 94 Change in fair value of warrant liability (1,234) (224) Income tax expense (4,647) (2,482) Net income $ 17,226 $ 10,018 |
Summary of intersegment revenues | Intersegment revenue for the three months ended March 31, 2022 and 2021, is as follows (in thousands): Three Months Ended March 31, 2022 2021 Asset Management Solutions $ 64 $ 1,447 TechOps 7,005 2,158 Total intersegment revenues $ 7,069 $ 3,605 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
COMMITMENTS AND CONTINGENCIES. | |
Summary of future minimum lease payments under non-cancelable operating leases | 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 2022 $ 3,071 2023 3,618 2024 3,150 2025 2,149 2026 1,851 Thereafter 2,601 Total minimum lease payments $ 16,440 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
STOCKHOLDERS' EQUITY | |
Schedule of Restricted Stock Unit activity | Weighted Average Weighted Average Remaining Contractual Amount Grant Date Fair Value Life (Years) Outstanding at December 31, 2021 1,669,300 $ 10.10 $ 2.02 Granted 41,156 15.39 1.92 Forfeited (3,370) 12.46 2.25 Issued (2,970) 10.00 - Outstanding March 31, 2022 1,704,116 $ 10.22 $ 2.02 Weighted Average Weighted Average Remaining Contractual Amount Grant Date Fair Value Life (Years) Outstanding at December 31, 2020 - $ - $ - Granted 1,634,000 10.00 2.96 Outstanding March 31, 2021 1,634,000 $ 10.00 $ 2.96 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - New Accounting Pronouncements Not Yet Adopted (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Jan. 01, 2022 | Dec. 31, 2021 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Operating lease right of use assets | $ 53,579 | $ 73,364 | |
Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Operating lease right of use assets | $ 13,800 | ||
Operating lease liabilities | $ 14,900 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Cares Act (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Mar. 31, 2021 | Apr. 16, 2021 | Mar. 04, 2021 | Jun. 08, 2020 |
Short term debt | |||||
Payroll support program proceeds | $ (6,363) | ||||
Paycheck Protection Program, Cares Act | |||||
Short term debt | |||||
Debt instrument, face | $ 5,500 | $ 5,500 | $ 16,400 | ||
Proceeds from short term debt | 3,700 | ||||
Payroll Support Programs | |||||
Short term debt | |||||
Payroll support program proceeds | $ 2,900 | $ 2,700 |
SIGNIFICANT RISKS AND UNCERTA_2
SIGNIFICANT RISKS AND UNCERTAINTIES - Impact of Ukraine Conflict and Russia Sanctions (Details) | 1 Months Ended |
Feb. 28, 2022leaseaircraftengine | |
SIGNIFICANT RISKS AND UNCERTAINTIES | |
Number of leases terminated | lease | 3 |
Number of aircrafts | aircraft | 2 |
Number of engines | engine | 1 |
REVENUE (Details)
REVENUE (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Dec. 31, 2021 | |
ASC impact, balance sheet | ||
Contract assets | $ 14,173 | $ 13,221 |
Increase (decrease) customer asset | 952 | |
Customer liability, current | 2,322 | 2,860 |
Customer liability | $ 2,600 | |
Contract liabilities, revenue recognized | $ 1,300 |
REVENUE - Disaggregation (Detai
REVENUE - Disaggregation (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Revenue disaggregation | ||
Total revenue | $ 122,806 | $ 58,435 |
Product | ||
Revenue disaggregation | ||
Total revenue | 92,368 | 25,126 |
USM | ||
Revenue disaggregation | ||
Total revenue | 15,228 | 10,368 |
Whole Asset Sales | ||
Revenue disaggregation | ||
Total revenue | 75,875 | 13,771 |
Engineered Solutions | ||
Revenue disaggregation | ||
Total revenue | 1,265 | 987 |
Leasing | ||
Revenue disaggregation | ||
Total revenue | 8,201 | 6,256 |
Services | ||
Revenue disaggregation | ||
Total revenue | 22,237 | 27,053 |
Asset Management Solutions | ||
Revenue disaggregation | ||
Total revenue | 74,530 | 29,252 |
Asset Management Solutions | Product | ||
Revenue disaggregation | ||
Total revenue | 66,329 | 22,996 |
Asset Management Solutions | USM | ||
Revenue disaggregation | ||
Total revenue | 14,409 | 9,225 |
Asset Management Solutions | Whole Asset Sales | ||
Revenue disaggregation | ||
Total revenue | 51,920 | 13,771 |
Asset Management Solutions | Leasing | ||
Revenue disaggregation | ||
Total revenue | 8,201 | 6,256 |
TechOps | ||
Revenue disaggregation | ||
Total revenue | 48,276 | 29,183 |
TechOps | Product | ||
Revenue disaggregation | ||
Total revenue | 26,039 | 2,130 |
TechOps | USM | ||
Revenue disaggregation | ||
Total revenue | 819 | 1,143 |
TechOps | Whole Asset Sales | ||
Revenue disaggregation | ||
Total revenue | 23,955 | |
TechOps | Engineered Solutions | ||
Revenue disaggregation | ||
Total revenue | 1,265 | 987 |
TechOps | Services | ||
Revenue disaggregation | ||
Total revenue | $ 22,237 | $ 27,053 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
INVENTORY | ||
Used serviceable materials | $ 62,990 | $ 65,496 |
Work-in-process | 20,104 | 12,462 |
Whole assets | 66,017 | 81,335 |
Inventory, Net, Total | 149,111 | 159,293 |
Less short term | (80,295) | (81,759) |
Inventory, Noncurrent | $ 68,816 | $ 77,534 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Intangible assets | ||
Goodwill | $ 19,860 | $ 19,860 |
Intangible assets with indefinite lives and goodwill | 30,190 | 30,190 |
TechOps | ACS | ||
Intangible assets | ||
Goodwill | 63 | 63 |
TechOps | ACS | Certifications | ||
Intangible assets | ||
Intangible assets with indefinite lives excluding goodwill | 7,300 | 7,300 |
TechOps | ACS | Trademarks | ||
Intangible assets | ||
Intangible assets with indefinite lives excluding goodwill | 600 | 600 |
TechOps | ALGS | ||
Intangible assets | ||
Goodwill | 379 | 379 |
TechOps | ALGS | Certifications | ||
Intangible assets | ||
Intangible assets with indefinite lives excluding goodwill | 710 | 710 |
TechOps | ACT | ||
Intangible assets | ||
Goodwill | 6,002 | 6,002 |
TechOps | ACT | FAA Certificates | ||
Intangible assets | ||
Intangible assets with indefinite lives excluding goodwill | 796 | 796 |
TechOps | ACT | Trademarks | ||
Intangible assets | ||
Intangible assets with indefinite lives excluding goodwill | 200 | 200 |
Asset Management Solutions | Qwest | Certifications | ||
Intangible assets | ||
Intangible assets with indefinite lives excluding goodwill | 724 | 724 |
Goodwill | $ 13,416 | $ 13,416 |
INTANGIBLE ASSETS - Estimated u
INTANGIBLE ASSETS - Estimated useful lives (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Dec. 31, 2021 | |
Intangible assets | ||
Total intangible assets with definite lives | $ 15,383 | $ 15,908 |
Asset Management Solutions | Qwest | Customer relationships | ||
Intangible assets | ||
Useful life (in years) | 10 years | |
Total intangible assets with definite lives | $ 6,870 | 7,109 |
TechOps | ACS | Customer relationships | ||
Intangible assets | ||
Useful life (in years) | 10 years | |
Total intangible assets with definite lives | $ 1,400 | 1,453 |
TechOps | ALGS | Customer relationships | ||
Intangible assets | ||
Useful life (in years) | 10 years | |
Total intangible assets with definite lives | $ 65 | 70 |
TechOps | ACT | Customer relationships | ||
Intangible assets | ||
Useful life (in years) | 10 years | |
Total intangible assets with definite lives | $ 7,048 | $ 7,276 |
INTANGIBLE ASSETS - Amortizatio
INTANGIBLE ASSETS - Amortization expense (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
INTANGIBLE ASSETS | |||
Amortization expense | $ 0.5 | $ 0.5 | |
Accumulated amortization | $ 5.6 | $ 5.1 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment | ||
Property and equipment, gross | $ 28,920 | $ 27,280 |
Less accumulated depreciation | (20,426) | (19,930) |
Property and equipment, net | 8,494 | 7,350 |
Tooling and equipment | ||
Property, Plant and Equipment | ||
Property and equipment, gross | 13,674 | 13,530 |
Furniture and other equipment | ||
Property, Plant and Equipment | ||
Property and equipment, gross | $ 9,107 | 7,928 |
Useful life (in years) | 5 years | |
Computer software | ||
Property, Plant and Equipment | ||
Property and equipment, gross | $ 2,160 | 1,998 |
Useful life (in years) | 5 years | |
Leasehold improvements | ||
Property, Plant and Equipment | ||
Property and equipment, gross | $ 3,787 | 3,632 |
Equipment under capital lease | ||
Property, Plant and Equipment | ||
Property and equipment, gross | $ 192 | $ 192 |
Useful life (in years) | 5 years | |
Minimum | Tooling and equipment | ||
Property, Plant and Equipment | ||
Useful life (in years) | 7 years | |
Minimum | Leasehold improvements | ||
Property, Plant and Equipment | ||
Useful life (in years) | 3 years | |
Maximum | Tooling and equipment | ||
Property, Plant and Equipment | ||
Useful life (in years) | 15 years | |
Maximum | Leasehold improvements | ||
Property, Plant and Equipment | ||
Useful life (in years) | 6 years |
PROPERTY AND EQUIPMENT, NET - D
PROPERTY AND EQUIPMENT, NET - Depreciation expense (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
PROPERTY AND EQUIPMENT, NET | ||
Depreciation expense | $ 0.5 | $ 0.5 |
LEASE RENTAL REVENUES AND AIR_3
LEASE RENTAL REVENUES AND AIRCRAFT AND ENGINES HELD FOR LEASE - Components (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
LEASE RENTAL REVENUES AND AIRCRAFT AND ENGINES HELD FOR LEASE | |||
Depreciation expense | $ 1,900 | $ 2,500 | |
Contingent rental fees | $ 3,500 | $ 1,100 | |
Lease term (in years) | 2 years | ||
Aircraft and Engines | |||
Aircraft and engines held for operating leases | $ 172,486 | $ 197,397 | |
Less accumulated depreciation | (118,907) | (124,033) | |
Property held for operating leases, net | $ 53,579 | $ 73,364 |
LEASE RENTAL REVENUES AND AIR_4
LEASE RENTAL REVENUES AND AIRCRAFT AND ENGINES HELD FOR LEASE - Future payments received (Details) $ in Thousands | Mar. 31, 2022USD ($) |
Minimum future annual lease rentals contracted to be received | |
Remainder of 2022 | $ 6,424 |
2023 | 1,026 |
Total minimum lease payments | $ 7,450 |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
ACCRUED EXPENSES. | ||
Accrued compensation and related benefits | $ 3,897 | $ 6,294 |
Accrued legal fees | 559 | 377 |
Commission fee accrual | 220 | 115 |
Accrued federal, state and local taxes and fees | 154 | 243 |
Other | 1,981 | 1,395 |
Total accrued expenses | $ 6,811 | $ 8,424 |
WARRANT LIABILITY (Details)
WARRANT LIABILITY (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Class of Warrant or Right [Line Items] | |||
Number of shares of common stock called by each warrant | 1 | ||
Exercise price of warrants | $ 11.50 | ||
Number of warrants outstanding | 750,000 | 835,014 | |
Change in fair value of warrant liability | $ 1,234 | $ 224 | |
Private Placement | |||
Class of Warrant or Right [Line Items] | |||
Number of warrants outstanding | 750,000 |
WARRANT LIABILITY - Black-Schol
WARRANT LIABILITY - Black-Scholes option pricing model (Details) | Mar. 31, 2022 |
Risk-free interest rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants and Rights Outstanding, Measurement Input | 2.51 |
Expected volatility of common stock | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants and Rights Outstanding, Measurement Input | 41.16 |
Expected option term in years | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants and Rights Outstanding, Measurement Input | 3.7 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
EARNINGS PER SHARE | ||
Net income | $ 17,226 | $ 10,018 |
Reversal of loss on change in fair value of warrant liability | 1,234 | 224 |
Net income adjusted for EPS - diluted | $ 17,226 | $ 10,242 |
Weighted-average number of shares outstanding - basic | 51,686,583 | 42,212,134 |
Additional shares from assumed exercise of Private Warrants | 188,913 | |
Additional shares from assumed stock-settled restricted stock units | 1,818,745 | 115,959 |
Additional shares from assumed exercise of public warrants | 481 | 1,869,098 |
Additional shares purchasable for employee stock purchase plan | 4,703 | |
Weighted-average number of shares outstanding - diluted | 53,510,512 | 44,197,191 |
Earnings per share-basic | ||
Earnings per share-basic: | $ 0.33 | $ 0.24 |
Earnings per share-diluted | ||
Earnings per share-diluted: | $ 0.32 | $ 0.23 |
BUSINESS SEGMENTS (Details)
BUSINESS SEGMENTS (Details) | 3 Months Ended |
Mar. 31, 2022segment | |
BUSINESS SEGMENTS | |
Number of business segments | 2 |
BUSINESS SEGMENTS - Selected fi
BUSINESS SEGMENTS - Selected financial information (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Segments | |||
Revenues | $ 122,806 | $ 58,435 | |
Gross profit | 46,703 | 19,835 | |
Total assets | 502,956 | $ 487,485 | |
Asset Management Solutions | |||
Segments | |||
Revenues | 74,530 | 29,252 | |
Gross profit | 31,375 | 13,587 | |
Total assets | 378,369 | 370,378 | |
Asset Management Solutions | Aircraft | |||
Segments | |||
Revenues | 14,983 | 10,452 | |
Gross profit | 5,365 | 4,463 | |
Asset Management Solutions | Engine | |||
Segments | |||
Revenues | 59,547 | 18,800 | |
Gross profit | 26,010 | 9,124 | |
TechOps | |||
Segments | |||
Revenues | 48,276 | 29,183 | |
Gross profit | 15,328 | 6,248 | |
Total assets | 117,848 | 112,742 | |
TechOps | Product | |||
Segments | |||
Revenues | 2,084 | 2,130 | |
Gross profit | 1,204 | 1,222 | |
TechOps | Whole Asset Sales | |||
Segments | |||
Revenues | 23,955 | ||
Gross profit | 7,873 | ||
TechOps | MRO services | |||
Segments | |||
Revenues | 22,237 | 27,053 | |
Gross profit | 6,251 | $ 5,026 | |
Corporate | |||
Segments | |||
Total assets | $ 6,739 | $ 4,365 |
BUSINESS SEGMENTS - Gross profi
BUSINESS SEGMENTS - Gross profit to net income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
BUSINESS SEGMENTS | ||
Segment gross profit | $ 46,703 | $ 19,835 |
Selling, general, and administrative expenses | (23,766) | (13,310) |
Payroll support program proceeds | (6,363) | |
Interest expense, net | (195) | (258) |
Other income, net | 365 | 94 |
Change in fair value of warrant liability | (1,234) | (224) |
Income tax expense | (4,647) | (2,482) |
Net income | $ 17,226 | $ 10,018 |
BUSINESS SEGMENTS - Intersegmen
BUSINESS SEGMENTS - Intersegment revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Segment Reporting Information [Line Items] | ||
Revenue from contract with customer | $ 122,806 | $ 58,435 |
Intersegment | ||
Segment Reporting Information [Line Items] | ||
Revenue from contract with customer | 7,069 | 3,605 |
Asset Management Solutions | ||
Segment Reporting Information [Line Items] | ||
Revenue from contract with customer | 74,530 | 29,252 |
Asset Management Solutions | Intersegment | ||
Segment Reporting Information [Line Items] | ||
Revenue from contract with customer | 64 | 1,447 |
TechOps | ||
Segment Reporting Information [Line Items] | ||
Revenue from contract with customer | 48,276 | 29,183 |
TechOps | Intersegment | ||
Segment Reporting Information [Line Items] | ||
Revenue from contract with customer | $ 7,005 | $ 2,158 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Future minimum lease payments under non-cancelable operating leases (Details) $ in Thousands | Mar. 31, 2022USD ($) |
Future minimum lease payments under non-cancelable operating leases | |
Remainder of 2022 | $ 3,071 |
2023 | 3,618 |
2024 | 3,150 |
2025 | 2,149 |
2026 | 1,851 |
Thereafter | 2,601 |
Total minimum lease payments | $ 16,440 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - Expense charged to operations under the operating lease agreements (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
COMMITMENTS AND CONTINGENCIES. | ||
Rent expense | $ 1.4 | $ 1.6 |
STOCKHOLDERS' EQUITY - Common S
STOCKHOLDERS' EQUITY - Common Stock (Details) - $ / shares | Mar. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2021 |
Class of Stock [Line Items] | |||
Par value per share | $ 0.0001 | $ 0.0001 | |
Shares authorized | 200,000,000 | 200,000,000 | |
Shares issued | 51,688,057 | 51,673,099 | |
Shares outstanding | 51,688,057 | 51,673,099 | |
AerSale Aviation | |||
Class of Stock [Line Items] | |||
Shares issued | 51,688,057 | 51,688,057 | |
Shares outstanding | 42,949,261 | 42,949,261 |
STOCKHOLDERS' EQUITY - Earn-Out
STOCKHOLDERS' EQUITY - Earn-Out Shares (Details) - shares | Oct. 22, 2022 | Feb. 08, 2021 | Dec. 22, 2020 | Mar. 31, 2022 | Dec. 31, 2021 |
Class of Stock [Line Items] | |||||
Number of earn-out shares issuable | 1,854,169 | 1,855,634 | |||
Contingent earn-out shares outstanding | 0 | 0 | |||
Monocle's founder shareholders | |||||
Class of Stock [Line Items] | |||||
Number of earn-out shares issuable | 746,876 | ||||
AerSale Aviation | Pre-closing holders of AerSale Aviation's common stock and the holders of In-the-Money SARs | Maximum | |||||
Class of Stock [Line Items] | |||||
Number of earn-out shares issuable | 3,000,000 |
STOCKHOLDERS' EQUITY - Unvested
STOCKHOLDERS' EQUITY - Unvested Founder Shares (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2022 | Dec. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unvested founder shares outstanding | 0 | 0 |
If the closing price per share of the Company's common stock is greater than $13.50 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Issuance Of Unvested Founder Shares, Stock Price Trigger | $ 13.50 | |
If the closing price per share of the Company's common stock is greater than $15.00 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Issuance Of Unvested Founder Shares, Stock Price Trigger | $ 15 | |
Pre-closing holders of AerSale Aviation's common stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unvested Founder Shares, Number of Shares Deferred for Vesting | 700,000 |
STOCKHOLDERS' EQUITY - 2020 Equ
STOCKHOLDERS' EQUITY - 2020 Equity Incentive Plan (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares issued under the 2020 Employee Stock Purchase Plan (in shares) | 11,988 | 0 |
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 | |
Share-based compensation expense | $ 3.5 | |
Performance-based Awards | Vesting on December 22, 2022 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting percentage | 33.33% | |
Performance-based Awards | Vesting on December 22, 2023 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting percentage | 66.66% | |
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) - $ / shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 2021 | |
Weighted Average Contractual Life | ||
Weighted Average Contractual Life | 2 years 7 days | |
2020 Employee Stock Purchase Plan | ||
Stock Option (in Shares) | ||
Outstanding at December 31, 2021 | 1,669,300 | |
Granted | 41,156 | |
Forfeited | (3,370) | |
Issued | (2,970) | |
Outstanding March 31, 2022 | 1,669,300 | |
Weighted Average Grant Date Fair Value | ||
Weighted Average Fair Value Beginning Balance | $ 10.10 | |
Weighted Average Fair Value Granted | 15.39 | |
Weighted Average Fair Value Forfeited | 12.46 | |
Weighted Average Fair Value Issued | $ 10 | |
Weighted Average Fair Value Ending Balance | $ 10.10 | |
Weighted Average Contractual Life | ||
Weighted Average Contractual Life Granted | 1 year 11 months 1 day | |
Weighted Average Contractual Life Forfeited | 2 years 3 months | |
Weighted Average Contractual Life | 2 years 7 days |