ASLE - Earnings call transcript Q2 2022

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Operator

Greetings. Welcome to AerSale Inc., Second Quarter 2022 Earnings Conference Call. [Operator Instructions]. I would now like to turn the conference over to your host, Kristen Gallagher. Please go ahead.

Kristen Gallagher

afternoon. Good welcome second to call. XXXX to everyone like quarter AerSale's earnings I'd the Finazzo, Financial Garmendia, Nick today Officer. Executive Conducting are Martin Chief call Officer and Chief

involve results the and Before and considered future to any but do our securities regarding not differ to financial company's XX-K to statements forward-looking to statements matters the we our statements of we federal fact be website that call in presentation turn guarantees, With actual the laws to on in GAAP XXXX, materials known important other year as uncertainties earnings ir.aersale.com. within the relate could we cause Form actual its filed statements the differ from quarter's those that to December cause indicated the important These our I'll refer different should this the are historical for results. with those nor performance found materially to that events other Risk view of by be measures made annual XX, over reconciliation that statements and and XXXX, you that, from the statements the Important Exchange and the These current unknown all uncertainties may want March Factors promises section discussed achievements the call forward-looking on and on on the be this on available for section materially and filings in with of are the other discuss Nick metric factors this We'll risks, and forward-looking identify including filings and results results, business remind that report performance. SEC. business. important the Commission nearest or on to risks expectations performance neither cause of results, factors could ended Finazzo. AerSale address Securities Investors of XX, non-GAAP actual assessing also at that non-GAAP materially made metrics can from the our call. A meaning

Nicolas Finazzo

in for quarter then you, afternoon begin the Martin updates. Thank Good our And and of with for thank numbers. call the I'll quarter PXF, the improving operational brief was to as received achieved a pandemic. joining call over a overview AerSale We I'll and another with XX.X% today. Boeing the XXXX. of turn serviceable to review as produced and use we to record million, the Kristen. program, the compared XXX XXX.X This depending be broad-based investors lumpy passenger the parts. This which the transactions demand of USM material, during can be that conversion flight backdrop I'll performance result exceptional as refer equipment case will in This of commercial on success with profitability this to adjusted was were business of period. our and higher Notably, notwithstanding, remind X.X million freighter through million. quarter-to-quarter the sales XX.X% which important is think CARES of primarily achieved prior our support year, to was total Act up an payroll proceeds the absence to up to to I'll will which EBITDA in for that that prior year XX.X was you refer combined it despite

the equipment flight transactions year. in half As occurred a disproportionate of the first amount of

management. Turning asset and beginning to with performance segment

and AerSale of a of PXF marks XX.X over increase freighter million converted sold XXX-XXX million, Second which quarter flight a three total prior the XX% sales the two were period, XXXs, which year. of three during equipment XXX.X We included an engines. aircraft, which of were

XXX XXXs an additional parties, XX sale in of schedules, XXX we on PXF by owned of do moderate four conversions negotiations. AerSale have final program PXF in based the facility, aircraft continue the substantially expect available to XX the leased AerSale's have by six utilizing available XXXX. stage completion XX purchase on and positioned have third pace conversion with Upon second perform already Goodyear committed sales half, AerSale to early equipment PXF we we another the through PXF Besides delivery lease for or sold, these freighters. and the While to flight conversions seven additional or will for of remain aircraft converted

revolver our This of our feedstock parts generally markedly and less for and lease. are such environment even feedstock in market over some view flight seen competitors pipeline $XXX and These capitalized current less this AXXX, aircraft us in We past our available In the medium-term the packages our has years. liquidity their an for and for Beyond XXX significant backdrop XXX, differentiator market increase or the stronger recent XXX. as include AXXX, positive and quarters, and purchase sale where business, grew Airbus strongest AXXX, change the it approximately increase capacity aircraft stronger XXX million an has also availability the the of and prior XXX, tailwind to and feedstock XX become sales equipment parts their becomes opportunities to financing our year, enable engine compared USM a of capital as the scarcer, the platforms available to to benefit of the outlook, cash to backdrop, reflecting as commercial return acquisitions. will than and leverage we've has in several of a improve USN PXF further cost engines parts smaller eroded smaller the program, airframe continued opportunities. are or Boeing of

able market. couple availability feedstock beyond execute will availability out further the we're quarters, in next look as to improve the we aircraft we anticipate broadening on of As the

General bodied one freighter plenty and passenger powder consideration freighter XXX-XXX there we previously down our flight as opportunities lease a XXX-XXX utilizing strong to wide quarter these exceptional operators be soft CSX-ADC value-added During being increased from to purposely current the lease reduced portfolio market improves. older leasing just for quarter, revenue specialized aircraft of market utilizing engines, Electric our lease the engines. equipment, leasing portfolio X leasing rebuild we for multi-dimensional demand sold believe also dry freighter due In the had the on during aircraft of will aircraft price. capabilities, ample to we at an with our With our

by As just the Russian in own Russia customer. quarter, noted and located in we engine prior our one airline currently held

aircraft value be the the our engine the of sanctions this was was It want it record ultimately and Although aircraft considered associated asset returned to appears management to compared AerSale and with until year. on ledger. since have the quarter. of our whether Combined aircraft which progress resources the at to benefit as any facilities, which prudent of in TechOps to is of Without for time, value-added to will this taken engine certainty of the on us In soon not possible. the a and approximately back which revenue full capacity been for were engine We side stifling the the political TechOps book our prior lack the situation they insurance the to have took result subsequently revenue the declined in fewer into impairment results continue reallocation Russian XX.X the brought reallocation segment, XXX-PXF the This work our million, as the sold, margin million will of effect they reassure the strategic using deferral return airlines conversion Lower program. process. is these service. sales continued engine, of X.X an total storage as performed appear claim.

may the we at and full company higher MRO, Although value created Goodyear distort perform the our level. true value this of the we of the on PXF timing at benefit airport receive the still work

final which capacity end is the completed converted the Our to expected AerSale third and in that work by be fourth will sixth quarter. party quarter, open of third for XXX the up

Regarding important AerAware, than process. very this Systems reach This the And more our announce together with we've effort. and development of completed to engineering software subsidiary, excited to represents years Universal two I'm milestone. validation partner Elbit we're pleased Avionics and that

of have we're following with positive provides developed a System reviews AerAware's that many is nearing our phase system today”. We've existing pilots technology we've technology been to that marketing strong board. commercialization airline our the the with As up favorable flights, across Vision over operators AerAware, noting frequently the ahead about hearing received The were head stepped “Decades our anything demonstration and advantage older decades of efforts displays visual advanced feedback ago. Flight compared clarity enhanced of up two

helps alleviate burn, increasing and operational AerAware timelier the meet emissions. airport be important congestion availability to safety, while product for AerAware issues, commercial weather airline travel diversions, struggles other delays. could fuel Importantly, industry higher amid and and airline and as not minimizing stakeholders, addresses related directly passenger volume global operators, carbon improving these air

FAA an on universal at at the excellent we customers. of that by deliver In believe As from million in final our of we to the our delivering we installations our components summary, end, in in the subsidiary prospective earliest granted AerAware Elbit position we're Systems, the the will certification begin July, are AerAware to that year so avionics, time. in near-term, commitments. to full ordered year, To $XX AerAware the ability begin we investing be can point halfway

Our program XXX conversion schedule. PXF is on

recover business our pandemic. as from the operators continues of momentum balance While gain to the airline

commercialization I million this business of with their on continue and built, reach over Martin thank our and $XXX us the has to our I'll performance this executed $XXX to AerAware comprised Regarding our a all opportunities, we're look our feedstock nearly At time, $XXX adaptive want closer at balance for turn of as development allowed to of employees toward to for integrated record model. multi-dimensional deploy, and stakeholders of the Martin? purpose nearly call revolver. business and progressing which seek numbers. to million the cash support, we capacity on ready on efforts, sheet undrawn actively million

Martin Garmendia

overview Thanks, of end Nick. an with with performance our XXXX. for I and guidance will second quarter our start financial

XXXX million sales. was and million of quarter included equipment revenue second flight included Our in XX.X which XX.X of sales. XXX.X million million, Revenue quarter flight second the equipment XX.X of was

quarter to ongoing demand from before. year prior sales the Solutions Asset period. as account U.S. million in and mentioned due recovery XX.X flight Second parts sales the million Primarily quarter travel passenger to on and Management equipment the compared of to improved XXX.X increased second pent-up the in also revenue of XXXX. the

business, utilization our of leased leasing equipment. favorable our engine volume In addition, from business backdrop availability, as benefited of parts increasingly for parts expands. the and demand higher growing Within feedstock U.S. for airframe our and airline USM against parts an consumption and we see flight market

early in strong, demand XX remain X expected to aircraft we XXX are XXXX. an In in on to and well additional addition, for aircraft positioned XXXX PXF XX is converted monetize and

million, airlines quarter Second XX.X revenue million of of in Goodyear That decline facilities storage lower XXXX. at and from the in quarter into the return TechOps aircraft reflected was by second to compared as Roswell maintenance largely continued. operations XX.X revenue

In capacity addition, facility PXF due third-party the conversion we program. at our XXX have company Goodyear reduced to

sale higher this As generate to we XXXX internally have second margins result of the a able reallocation. from XXXs you're half aware, of since been the five converted as of

from the to additional We in by for of from to increase XX in MROs. work was third-party will sold decrease which one to conversion perform revenue internal will expect a allow offset airport Goodyear. transition we on MRO after partially third-party additional The us capacity higher component activities at an revenue provider XXXX, to which completed and our our be remainder conversions,

million account of We XXXX. received Support and the not period. second on proceed million quarter margin Payroll quarter, the to XXXX. margin the mainly administrative Selling, product XX.X% by general Second of and in second proceeds of second during expenses receive a quarter was absence Act comprised driven in X.X compared Support equipment the second mix CARES of Program did quarter compared million in in XXXX in XXXX, of favorable Largely quarter high any quarter the Program corresponding of flight XX.X prior to sales. X.X of in the Payroll were second the gross received proceeds XX.X%

non-cash and quarter, Net the quarter second in million which de in quarter, was of non-cash from second Income and impairments the second the XX.X earnings second XX.X $X.XX XXXX. compensation operations net XXXX. second We second Diluted the quarter quarter, million XX.X million Warrants, second quarter of adjusted our in related quarter, per adjustments the second was for million $X.XX related non-cash Warrants, earnings for to to compared of the to impairments for quarter in XXXX. of second in to XX.X was Private million second XXXX Adjusted was income the second in versus the mark-to-market $X.XX also equity million versus the share for of million incurred the mark-to-market quarter, was the X.X of compared expense diluted Private in based quarter quarter minimis in XXXX. was XX.X per adjustments share compensation quarter of compared $X.XX XX.X equity-based in XXXX. second Adjusted XXXX. compensation our the equity-based in income to of

EBITDA Second in primarily the margin businesses. of XX.X% million The quarter period due increase from million, in in corresponding is revenues, XX.X% EBITDA adjusted XX.X adjusted the was year to sales. or our or XX.X adjusted revenues ago of while higher was improvement EBITDA

million in corresponding million the second the $XXX operating Payroll in Year-to-date, adjusted of quarter and equipment of its XXXX. of of generation flow addition, in XXXX proceeds, second cash cash was which million an At of sheet, quarter provided had balance XX.X the million. increase were undrawn the proceeds revolver operating drivers XXXX. X.X of sales. by end, for cash no flight second benefit X.X million The Support on to for AerSale in the XXX.X income and quarter, were Program of activities In in second key EBITDA quarter compared the reflected stronger there quarter

to summary. guidance moving our XXXX and Finally, for

from reduction first supportive XX million. our of XXX EBITDA the in compared result XXXX and are performance outlook to implied XXX XX second half performance The and a of million for reaffirming a revenue the of the the half as million in a third reflects to an remainder As program guidance year, which of to second conversion quarter adjusted million strong for we XXX order of sale XXX Also in quarter, XXX at earlier consideration risks quarter. freighter ongoing the economy. PXF two our than the the anticipated and returns the third-party the deferral benefit to margin in end aircraft planned of of second to the for was global of higher XXXX

take we our product our have we as contributions XXXX, deliveries as this expect the that are questions. to meaningful excellent of strength positioned in forward up. program Looking summary, are PXF deliveries are ready purpose-built as our we capabilities. generate all accelerate again model to beyond well demonstrated continue record well our returns we execution quarter, excited report XXX to AerAware performance operator, with our strong believe to With we We to to some on flight stakeholders. XXXX coupled ramp equipment from In

Operator

Thank you. [Operator Instructions].

we go first Cowen. is Gautam The question from have from Khanna Please ahead.

Gautam Khanna

the elaborate Universal. installed, these talk Hi, good with afternoon the guys. and of for I was placed the wondering airline if an you it's AerAware manufactured what's could just that order an and quickly and once actually placed about once has you on now? by how around can just FAA, And could how sort planning process you're order approved be

Nicolas Finazzo

afternoon. Okay. I'm sure. good Gautham,

aircraft. delivering complete the doing harnesses we on the that components conversion process. we the the location in is the certificate system So bin we installation everything for an order put means a can to bin mount the of eyebrow only radome, Universal issue authorization that store the eyebrow we basically tracker, made for amount the the airplane start equipment that Elbit not where specific head and display. AerAware we substantial or That we the supplemental that wearable eye do modify and and And a we wire have to we put calibrate, tests, through mount type we with ensure make a

full install to a of got of completed in of to being anticipation we've all that able systems. So do fleet

for a which day can several doing work is components. that work, concurrently the period be be to those described, we I installation of over the us believe do step first done would that So with of all just

a it's need other enough We installation than to just in aircraft. the or we components radon, order, of that of the cetera of set large and components modified and perform a aircraft, However, take size have large the the et don't components to the several an need accept AerSale’s least we delivering just order start of hardware it then, conversion. for converted us order, And installation with wouldn't sales. an aircraft. our to can several hand to start if years enough or AerAware it to all making comply order kit, certify to ability we depending components on -- on XXXXs Universal months sale believe available, of components take have to on And sets the certify reinstallation half an have enough doing may could so need to were remanufacturing, became overnight build could just AerSale potentially the do we of that of start aircraft aircraft, our that to to portion of develop the the an basically of affect overnight. the hardware our once an Once we setup for of we of the then to had an hardware all on was -- certified, Elbit think at the

a When already done. of could the we we eventually complete installation. But pieces. part. install Elbit manufacturing complete that had component would been if half really our huge up our we Universal And order, on would component do there pieces, the have of half then could So catches the

Gautam Khanna

system that And is it any the on if fleet going interesting. FAA over do clarity fly requires of they're still you that all? at half Okay, to have -- greater the them? whether changed have operators the guys has AerAware Or

Nicolas Finazzo

not yet. That's changed

the aircraft system, an operator it not would requirement that new trained pilots FAA a sure is an hop they pilots still system their an airplane the the an to understanding been hearing sense Our and installed requirement, we're all to they an they installed, into are rotating before aircraft use operator operation, it's so there they already another, release But from with that some know FAA using it. get would proficiency how equipment or enough would in makes now whether that we're into to that's have on aircraft around AerAware they that one flying there's out it, as enough requirement. have trained,

or think system. whether get before wait not, using it's I they the So an their they FAA modified it's requirement that half the start fleet airlines, prudent until

Gautam Khanna

your regulatory guys it Okay. submitted? actually you is how was interactions have when the software think on and And package with described soon kind earliest the you just might do as timetable get the And of approval? it I as finalized gone, bodies since a

Nicolas Finazzo

them because is had of set requested with were third the tests Factors from flights, comfortably region, weeks Factors And another of pilots the engineers our do when round to are certification those people with flying wearing it the flights, already the it the Atlanta that of out out we of region, the conducted operation those our the working few verify some wear want so now a people we had flights aircraft. they ago, that that they what for systems the familiarization Seattle So different head the they that because us with actually FAA human system, the do that can interfere factors of can this was to in doesn't Human some up area started wearable requested already guys people. use is, the and we've to with it that Human actually familiarization their the that familiar display, they some other reason ready, FAA take FAA, demonstration, on be

effectively the weather. it flights, of it's the certification boxes. participate they'll we it aircraft people approve that and that required we that that that going to able functions And ultimately It we've engineers to think we correctly, us. it's that -- of pilots already it's do it test the for how when place, that does through really believe at the understand it seen to think check all validate the are boxes just And to things all to do see the demonstrated the we will works. doesn't going they've interfere. airplane to check our that does the FAA system with say final now certification We the be the all FAA in and that So

optimistic So homestretch we're the extremely -- that we're on we're now.

Gautam Khanna

one, USM last to competition mentioned I some waning is for over, it be And acquiring some of that Okay. and I market wanted before turn a life seems the bit. the ask, just that you to showing

are more size, your elaborate of you a could it's what's fact market right more rational on are would maybe a the Thank there you. was is now for who market just color that kind actually these in So if be of by I in prevailing against helpful? pursuits, bids assets? terms of of maybe competing buyers-market. Any seeing pipeline in you wondering in you, and/or

Nicolas Finazzo

aircraft seller's trying starting airlines equipment, whereas what So with it it going market. be whatever and them found take have to those our kept down, a those keep now idle market they're seller's after is going to they're companies that, term years going need those into take have or determine equipment off that companies whether the and sell going of we have that feel not to market that has Again, near to into to wane. leasing aircraft do that where the X.X or their and Leasing have landing APUs, gear feel who operate they to to in in our been to do aircraft. point looked, to storage, or that aircraft, going writing to gotten they're the engines the they're -- customers them

be and could we're we're a could aircraft engine, getting seeing gear, out with aircraft, be whole and aircraft more landing or more no engines no So could run with an whatever, it landing gear. it one be an that it

serviceable, have coming it through overhauled we've gear, out to engines infrastructure for with an have missing So or that's got we're because we're engine the really the acquire Because gear to airframe know that's or that flight putting of airframe that's because an landing a perfectly landing capability we to equipment this last breadth overall our with buyers run cash, dimensional has an restore buying capacity multi-dimensional who shop they the we to gear. positioned And missing of on the do or what type they created in we're competitors on the we aircraft left, from experience don't what that had apart the life market, based we landing they we've infrastructure that some that that's the over still basically sets maybe an one come that us space, do. that somebody have but decade. want to have has into financial

or ability so outlets they lease, we've to got well And their aircraft whole aircraft a multi-dimensional profitable less an find than we a where as can on integrated for can't fashion do that as an capability. in

sure that much, AerSale I'm the is composition evolution So maybe we've Or just are of that or market the that not changing where of the business it's the it's the model gotten equipment. extracting changing. of at differentiates that everybody. And pieces midlife I to out a what midlife gotten good value or decade after we've the think that's really equipment of buyers point from us

leasees, lease for nonperforming combination aircraft candidly, on So had them put who aircraft years time, storage there because, they didn't X.X leasors, no to them. to a have it's and back, was capacity of take

So that leasors last we we found storage two we space, didn't the for is any. in us years asking had have and

And leasees to put place because flight they so, literally with nonperforming leasing were had no equipment leading it. companies

out seeing the of lessees now ultimately up customers. are and out that to new starting aircraft Now as coming again that availability we're paying. going weren't We're desert, with fly the see to free an influx ones aircraft coming of of storage are

all aircraft But we I to with a aircraft we're So previously. storage whether storage, we're had that of coming going seeing not replenish performing. that know companies out the out coming recovery of leasing -- how of airlines don't that were definitely

that's all take look together, So and going all then value off than you leasees, situated do that extract of out that we storage non-performing other peers back we're to greater things equipment flight into do. advantage equipment this the well at our lease all to that from when of of coming with

Gautam Khanna

you. Thank

Nicolas Finazzo

Welcome.

Operator

Nick back we question-and-answer I [Operator the the Ladies to to end closing and reached remarks. And turn Instructions]. like would it call session. Finazzo of gentlemen, for seems have our

Nicolas Finazzo

Okay, thank you.

transaction maybe to as place had end and great. going it performing quarter of we've able and But the we second because happened was take at we're very record the another a So ahead, XXX third exactly quarter expected, the were close just we thought we little instead, to the quarter. in that's that

So understand we to on about you But need year. that. to for that's focused expect great. we the to do make We're excited stay sure that what

yet we're increasing our well we're And to year we're we're that hit the do despite guidance the whole the fact confident for to So not that. that the underway for year. guidance going

of had two, the situated, XX, will a for year. to increase basically We that our reassess next and And will history and XXX we've don't, we the company, we'll if things, converted the going under with are XXXX. it our out we've way our that in be we're we're in of guidance. conversions there to into we've opportunities year backlog equipment done got this to evaluate available contract year revenue come largest beat I'm figure XXXX. next defer up to performance freighter quarter well the whether in to-date guidance But the that that doesn't And optimistic based on a matter, because

sizable in be of we'd that able never we take with amount to had available much equipment, the So that knew we've equipment that coming to that market year.

as we year, margin. to getting hold were aircraft undervalued, But thought or that 'XX transaction whole converted a a sell it sell convert feel a we would as this for that rather aircraft felt we 'XX PXF aircraft, to we not to higher as pulled return, have going a much in about then, or of two, XXX, a from and us a that one we So that also lease the we year put not great didn't -- that conversion. that we're and next XX converted aircraft freighter selling get that that. greater would There was

good where that pulled into fact actually could indication the guidance, year revenue we've the fourth give our have will that engineering we're two product. software expect ought and things that out run, in an of a a of million have worth we placed have we Finishing that fact of 'XX, equipment, So we worth multiple big from going to we that give we're $XX we to how take have are idea ought that gain development system with debt we so to our AerAware our margin, going in how can't all customers that milestone number higher move this equipment. to internal I and an have more despite to that confidence return. of for the waiting finished a confident big order 'XX next certified forecast years’ validation to of you deal. that hitting and you be taken is them overstate of we short to The

in we're about confident optimistic position our we -- vis-à-vis feel So very AerAware. and also

we of end the So, into will how lot work position. happy If conversions at we're definitely available and of commercialization XXX 'XX don't AerAware yet, start be the not the to in this of finish confident. We're will perfect patting the and product beyond, which of year, -- ourselves the amount a we'll we we're do, we on that and that our 'XX that in 'XX. completed and with of about but back are and 'XX we we have confident going always future experience are experiencing 'XX

again, We'll you see I for thank you evening. all Goodnight. wonderful a you next quarter. hope So listening and have

Operator

us. concludes for you Ladies sir. that Thank conference. today's gentlemen and Thank you, joining

disconnect may lines. your You now

AerSale (ASLE) 9 Aug 222022 Q2 Earnings call transcript