Earnings call transcript Q1 2023

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Operator

Good afternoon ladies and gentlemen and welcome to the AerSale Inc.

First Quarter 2023 Earnings Conference Call. At this time, all lines are in a listen-only mode.

Following the presentation, we will conduct a question-and-answer session. [Operator Instructions] This call is being recorded on Tuesday, May 9th, 2023.

to Compliance. conference like Padron, to now of VP would turn over the Christine I ahead. go Please

Christine Padron

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

the all not be Before discuss of relate current statements the of facts should that to forward-looking including results, on statements this meaning to remind we business matters securities we made want call considered regarding within for quarter's expectations performance. you and this laws, statements federal that do historical financial our our the

to neither are materially future any factors statements unknown may different risks, but and results. promises These achievements involve that known results, and be nor guarantees, actual cause from important other our uncertainties, or performance,

in that materially filings results the could are on XXXX, the Commission, SEC, on Form other actual and forward-looking XX-K SEC. statements March and Xth, XXst, company's filed Exchange report year the December cause Factors factors annual to with Risk for from XXXX, its Important differ ended section Securities the the of with discussed

These to by identify materially and could events cause those and results uncertainties important on address actual and filings risks indicated this statements the that forward-looking from call. differ other

in metrics to the website at also We'll non-GAAP A can earnings refer nearest the Investors AerSale in performance materials as of GAAP Section presentation on important reconciliation the assessing found to we the be those view the non-GAAP ir.aersale.com. made measures of that business. of available metrics our

call the over turn Nick to I'll that, Finazzo. With

Nick Finazzo

brief joining operational begin Good detail. you quarter Christine. explanation I'll thank greater turning overview review in for a call numbers updates the to before of today. call provide over Martin the the for Thank you and with our and to that afternoon

compared results sales equipment resulted to of quarter million last and first of were in total quarter the we XXXX. our expectations sales quarter the in with This in first flight reflect $XX.X first of line $XXX.X shared million Our cadence quarter.

the included the to remind used I would TechOps compared investors modified highly a margin for that decline aircraft in prior timing segment, was the in compared million which million of XXX XXXX had sale as of remaining The testing sales. result million our AerAware year was asset quarter of prior $XX.X and during quarter entirely added quarter $XX high the that the in period the year of the in of XXXX. we whole aircraft first engine sales $XX.X first to sales

XXX, remainder sale grew management. Excluding segment the AerAware the and modest decline business strong in of growth approximately offset X X% our year-over-year more of asset the as in TechOps whole assets than a our

capture every quarter, for year investors full equipment is performance fully sales note whole we volatility As asset and and our is sales a analyze transactions. to feedstock quarterly, the AerSale assess as based common basis flight on important of to it on size

Further, end-to-end activities equipment component is variability while solution. by an these recurring understand are to quarter, essential, of and flight sales important substantial profitable, our that add it

PXF XXX expect to asset half. sales the Specific higher continue our to program conversion we whole to XXXX, in related second

be sales asset year-over-year toward weighted in a the will was half. XXXX quarterly the result, more as heavier we As year as this whole comparisons first report dramatic

to feedstock expect included acquisitions, million bolster success year-to-date awarded we in $XXX the deals second our our Further, of which have results. nearly half

in million or or XXXX was million the of period. EBITDA quarter prior in sales adjusted compared XX.X% sales $X our profitability, to the first year X.X% to Turning $XX.X of of

whole from absorption in period the unfavorable observed asset from from mix during lower an lower resulted EBITDA margin lower combined quarter sales high-margin the The cost with fewer sales.

planned of first $XX.X reductions lower in in the primarily million quarter sales aircraft with period, prior and level million compared segment asset result portfolio. the and year $XX.X beginning management, our to the were sales flight lease At equipment

quarter four two and sold and that six aircrafts. In This aircraft in compares we XXXX, sold the to airframe, first quarter. we engines one engine, the one of prior year

Looking to expectation equipment flight forward beginning to aircraft. third is of stronger the start at deliveries quarter. be the with a the This year year, strong XXX to of expect acquisition in the sales we supported balance very continue forecasted the by cycle combined PXF feedstock of

eight guidance, will As of been Martin one an our and in has which XXXX, from QX additional expected XX and for be remainder multiple of to completed detail three QX over XXXX. in and we've providers sold more subcontracted are completed the conversions in

were was flat constrained business, and year, stronger XXXX. parts less early lower feedstock XXXX, sale in somewhat in resulting prior the which airframe to engine despite in roughly a available feedstock by In Parts compared our backdrop, for sales USM commercial purchased

As progresses we on feedstock expect the to noted, year-to-date. improve materially sales based as from completed acquisitions asset year

the the In to year one on during compared leasing our revenue down portfolio, period. aircraft had engines prior was lease as and fewer we only

of to whole market to in our USM and parts, type on seek on assets. As between maximize highest the conditions leasing, agnostic business in sale we're return management a sales, current investors, the through to investment reminder return asset feedstock or

favorable continued flight to a lease less of remaining than we this leasing sale aircraft would on As in decided as equipment. freighter sell for during that type ROI concluded a XXX-XXX market a the our associated a be we the very result, quarter, with significantly

our compared year. were TechOps sales $XX.X $XX.X the million to million in segment, reported prior In

$XX XXXX, as sales Excluding and a volume backdrop XXX in in mi aerospace the the our MRO grew availability AerAware the X better XX.X% bolstered quarter. of underlying commercial stronger sale

of order obtain during in which been testing system, quarter. AerAware We've product. Type and commercialize In to since August our this product XXXX Engineered to FAA made two this as vision may aircraft product to an on substantial our in a to the issued Solutions unit, flight Supplemental progress approval referred STC our enhanced be we Certificate, effort

XXXX. flight the four flight successfully tests completed the scheduling the flight of met from part the tests the of prove certification. process, through criteria through of that other FAA by for sets of required February April. set that February with up As FAA of The we flight certification the FAA among and in beginning capability important system the this We end vision FAA five observed most things first both the STC AerSale which proved sets enhanced tests

schedule set diligently working process. tests, the of will to aspect certification currently the which flight flight fifth We're the complete of testing

this to first expect has We a software team completed the comments from to our address flights. occur once FAA engineering change four minor

and exhaustive safety, market the have aspects of The the continually to on and believe this quality a safety result, is we safety Through process we and the available underscored technology is today. aviation near-perfection commercial the our system FAA to advanced the approval which by public commercial improved of network. is record excellent ensure lengthy superior US product as to anything

the the the position given an in and market time to leader an to substantial complexity, we Further, in obtain of STC of be become resources believe excellent investment category. this we'll

that how We're To the and near-completion, to to the considering end, all that the demonstrating the be from customers. the after was comments at very positive worked system multiple complementary. of FA conditions, low potential excited feedback visibility interest FAA

$XXX we execute our growth balance revolver. sheet deploy satisfy with program, our our we financial million In have $XXX comprised allocation additional our to undrawn total, our and capital of more to to an capital liquidity ample ready and of on equipment that than million on million support to on strategy feedstock packages remain requirements. Turning $XX

million closed during $XXX weeks several have availability our into we noted a at first we months in end Year-to-date, equipment with call, million over uptick As year million and year. notable and year already nearly won couple in in packages, awarded had of slightly $XX the the closing. ago we $XX process and of end feedstock the another of flight

year this our expect year. stronger of to We drive a half the and second added inventory full support projections

to our further most add of segment. management the and context, acquisitions this compares in $XX just feed to leading million stock important future performance of To the rate asset XXXX is of all indicator

Before telecommunications a over thrilled joins Andrew Avelo announced Founder experience and to aviation to in Directors, and Andrew also to I and would Board to corporate forward Andrew of over wealth of the of as three him. which as our a of have the in his and with CFO turning AerSale on brings April. We're with to look the us Board the sectors, we like he Levy of entrepreneurial working call welcome decades founder United, work the as we of Airlines. to knowledge Legionnaire, Martin, and

higher conclude, volume half where securing in exactly we as drive and back the progress we To make quarter first we're expected of the to we year. to to need feedstock the of the be in continue

On look STC, our passed of awarded process. the to have to certification significant being final AerAware, forward we steps milestones the and

stakeholders. our for and for delivering would to dedication to like all thank commitments our AerSale I employees on their to their efforts our all to

Now, to closer I'll numbers. at the turn the call for a Martin over Martin? look

Nick Finazzo

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

$XX.X was $XX.X revenue of included quarter first comprising million, engine. equipment flight aircraft, one airframe, two one Our and cargo sales million which of

in equipment of engines. Our flight and sales million consisting aircraft first was $XXX.X revenue included quarter $XX.X of of million and the four XXXX six

the the underlying growth continued to companies our equipment, prior as $XX.X flight Excluding to year. million base demonstrate $XX.X in from million revenue increased

multiple progress sales during the pointed significantly is have and believe appropriate. on and our we calls, from sales asset quarter-to-quarter over we earnings As purchases equipment flight long-term out more fluctuates based monitoring

result down one $XX.X two of flight of lower and airframe, management million, these engine. equipment consisting one cargo XX% of was as result As a asset factors, mainly a quarter first revenue to sales aircraft,

availability prior revenue were planned increase in leasing portfolio. close demand the and number due leasing aircraft year of forward. quarter in expected the of to lower because Parts are but the feedstock going of improved sales a to Aircraft to reduction was USM levels,

TechOps year XXXNG flight to $XX.X $XX.X XXXX. in a The highly the testing. first XX.X% for XXXNG previously sale AerAware primarily and due in US of the quarter governmental million a the first The of revenue used Boeing period. quarter Boeing to from million agency ago in for decrease is modified the was fell

a the for typical MRO services, strong particularly in XX.X% sale, Excluding TechOps our of on facility. aircraft grew is sales as result airport segment, our which Goodyear at demand not

volume previous of we line expand third-party the our be subcontracted fourth In the to the with facility. PXF at our for quarter perform our services XXX completed opened As drive plan, were have growth. planned to capacity initially beginning call, XX and own and revenue AerSale up earnings transition third-party at conversions, of providers Goodyear to margin on XXXX mentioned which

quarter margin due to gross the higher in margin XX% in largely XX.X% quarter which fewer included was quarter, XXXX, mix first sales. sales to the compared First first equipment the of flight

general, million of non-cash of quarter first first expense XXXX in expenses. compensation million XXXX, quarter which were of million and equity-based and in included general, administrative and Selling, the included the compensation non-cash were administrative $X.X Selling, of million expenses $XX.X expenses. $XX.X equity-based $X.X

while income liability, million million quarter in income operations XXXX. non-cash, facility million, adjustment was $X.X First the of Net quarter quarter income $XX.X to was quarter was million, from was equity-based in in the loss quarter XXXX. of XXXX. was and compared from to the compensation, Adjusted operations $X,XXX million the first for first private $XX.X quarter first first of adjusted while mark-to-market relocation, net adjusted income net warrant $X.X the first $XX.X in

quarter First $X.XX share was $X.XX earnings compared of XXXX. diluted per quarter first to in the

the Excluding adjusted $X.XX earnings to XXXX. first quarter was diluted compared mentioned, adjustments first the $X.XX per quarter of for share

EBITDA The consequence adjusted to $XX.X in of of prior the first compared equipment adjusted $X a Our was lower year. EBITDA largely was the flight XXXX in million quarter in sales. decrease million

deployed primarily $XX.X to as Cash operating result a used cash increase million, inventory of availability. in was activities

Finally, moving to XXXX. for guidance our

expect of $XX of million equipment in We our $XXX $XXX flight generate million year expected are anticipated $XX million ongoing and full XXXX. sales our operations. volume to during and to our This to EBITDA million continue the guidance and year adjusted reiterating reflects to guidance revenue in

of not be product will for as order and delivery is we is can updated once of stages its schedules. issued approval Guidance the final XXXX potential and initial STC does AerAware sales assess reflect in and the

As anticipated, our the results margins. first impacted equipment year, our quarter prior in which flight adversely sales than included lower significantly

of the the improve trend We half this the and to continue year. quarter into through expect second second

produce record half. variation performance flight half first with while flight half significant this a the equipment second have the in is in low this reminder, in sales year a half, equipment As stronger first included expected softness with second as sales XXXX will to year-over-year

remain perform we our to continue The underlying are that strong of businesses they confident and will well. other momentum

on We to be program, USM flight aerospace. incremental underscored equipment our stronger recovery deliveries a by by and in expect half second commercial continued our and conversion PXF sales, supported

to going We forward. feedstock ample on acquisition have revenue margin growth will and available liquidity program execute our that drive

to ready are we take operator, that With questions.

Operator

the begin session. Ladies will we [Operator question-and-answer you. and Instructions] gentlemen, now Thank

Your first ahead. Stifel. question comes from Bert, please Bert go Subin,

Bert Subin

Nick, afternoon, good Hey, Martin.

Nick Finazzo

Hey, Bert.

Martin Garmendia

Good afternoon.

Bert Subin

there year you USM to about the up pick expectation an that from think coming Maybe the were substantially feedstock pretty going revenue starting think the you USM your Hey. year just tailwind to this acquisitions that as to was talk Can onto could versus be I was ramp. comments, XXXX? what

the intended on were you this feedstock USM acquisitions were so and acquired when comments side whole for what asset more acquisitions And the then delineate far you between year? your can that about feedstock talking you

Nick Finazzo

You want I'll that one? it. do

regard of Okay. feed of XXXX. quarter the the USM, seeing of of and both whole and/or to asset available pickup the would end With tailwind at available lease and towards the we USM a sale revenue first USM refurbishment on started into or feedstock end XXXX that

really $XXX contract were types. engines consisted as million feedstock announced call, everything. the Aircraft, expecting all was earnings of we to that that under had in which And we of airframes, buy, of -- last we

CFMXX-X, AXXXs, AXXX, know they I'm XXXs, I anything, don't missing XXX. -X, -- CFM if

And give leasing end potential fed because into don't equipment going and the really as some our will whole equipment portfolio. I that up -- that of I'm aircraft trading some you not that will of it, to be but breakdown aircraft have

refurbished of and portfolio whole USM that airframes be it will as engines some the into parts. leasing engine into of will fed down broken be will be Some engines our and

half. in we're of with shape halfway to of quite XX -- The USM, we've we're what thus So, to -- sales by finished we're the acquisition very the year based whole cadence to what projected and for first purchase follows on yet far. we from the days. anywhere USM acquired not buy not the We're XXX good almost

refurbished of ultimate resale And a modified equipment, it during that level. or completing we're piece time, art we're records, the getting acquiring as asset for or the whole we're at

buying at buy half seeing but what portion sale that find if work, as start results substantial could second will level be for it, piece in in again flow the much you the lease half, sales of that half, days second doesn't think as but substantial what about of so part into a although that half, we're it XXX but we something some we sale the our acquired some early it in and will late of as making not it will as in be half that thus in the available the far So of of it, second we've need XX days first start we most or it or XXXX. second

don't I second think that was one. your first question. your remember I

Bert Subin

No. or the No. that That's which so to clarify, year-to-date period the good. That the XXX was? that's was the what was through just number what

Nick Finazzo

of -- it's is XXX as too. year-to-date

finished. So, we're not

Bert Subin

Yes. Got it.

nine I the Could XXX and cadence. think had Okay. deliveries, XXXX. And that on that. Thanks you think you I mentioned say just quarter the for of the was again? you for scheduled this what three year first

you acquire? many how many XXXs, And those you to lower How Of are of need impact cargo from you demand you the do any will market? seeing in already do -- own? sort

Nick Finazzo

have equipment to that both and XX need flight flight all conversions engines the the and aircraft to we now accommodate committed we've we So, to.

was was the aircraft and quarter. first actual in First converted sold

quarter So, to of the there three left there's eight available lease. we for this sale available expect and in will And that we or first XX more be then think become have So, still two year -- will for aircraft XXXX.

deliveries second is of or aircraft off STC have eight track three precision. So, year. this in set we we next now slow third again started and our are But year the holder getting more of because delay on by a provider to and everything

Bert Subin

question, do getting fifth close just pretty additional there finish clear? I that you'd the sounds It Once are turn Okay. sort test completed, to like otherwise and not or with back they line. time the to any hurdles have become I'll of mean, testing, is it but compelled, at that guess, I flight rule? Got And is to AerAware over. final flight my FAA it.

the that dynamics and a steps about it? towards If talk fleet get flows? you thus can And booking revenue the around to of or, what does sort once customer, ultimately any assuming you've clear taken wait far how you actually final this outfit half you until of customer just you initial have stage,

Nick Finazzo

varies actually, So, it's from that -- varying customer-to-customer.

-- system Some want they won't don't indicated they operational the customers get the that until they have fleet. until half

become seem doesn't when to to They is going customers it the to -- get get as available. don't Other Everybody they to to seem wants can them. matter whatever know they system as want soon can it.

at We're be the to we year. of at We're on for that diligently. working definitely that the build kits of indicated beginning would XXX number year track the the we installed

we're I and think halfway not already, we're point. at at the XX

we're now to and that we're, increasing month. XX So, per

track Elbit take produce still the customer we're to hardware to available have to still has we selling. can now. we installations. kits to has, So that so finish these got need on Universal start the the a and ready is to Elbit kits We've find

As have soon this training. is the the to their the their simulator are can airlines start have so time the take before installed talked into with to after. even more the in want take customers to fly We've It's to do modifications we got we to system simulator. airplane. orders the and thing that customers going tremendous approved, just can more we to have all simulators one. them time. using We We customers. process talking to receive why take multiple will going may soon make from is and them. It's pilot system they interest STC. But not do their pilots as get to Which if training And, that we've

the they they when will this in candidly, do bad to they their lucky and it, to If airplane the conditions, they're at enough appreciate them for other weather they're weather to have face When it airports. system inclement we can and potentially what get aircraft divert fly them system. fly on amazed,

customers talking The still, large good to will that nothing's launch major a changed. that So, customer including customer to, U.S. substantial customer for Multiple a I thus feedback far. been be am aircraft, still talking domestic. of our we're number we've optimistic

Bert Subin

Thanks a lot, Nick.

Operator

Thank you.

RBC question ahead. next go Your Herbert, comes Ken, Markets. Capital from Ken please

Ken Herbert

Hey, many initially, to for under conversion Martin. you the those this the the in back many Nick. get at a year are just Hey, Nick then and how on some three good Maybe sort expect eight afternoon, Yes. of and how sort or XXXX, agreement XXXs, that timing purchase sort a see? for? be left aircraft? of contracts you commitments the is what on this risk And you get for to customer have of do up still of And these locking would

Nick Finazzo

one didn't answer a freight the So clearly in the softness I softness a is, market? of questions market. answer yes. is And the in generally, was, is the there There freight

Now, XXXs And operating that to answer I is market available a to freight the customers would in softness of Is converted say no. there is no. The with is XXXs? demand? satisfy that to a answer supply freighters there that the

airlines Now, airlines are cash. tight, holding to They're or are today tight. on cargo

easy needing market with flush a sell these it's cash, this you've that ability so XXXs cargo to are easy into not where got the So carriers year.

for a lease, out for So it customers. is we at with less put we customers on customers way an that cash that a customers, challenge and for both And aircraft these the the aircraft found be But find desirable pay financial was would longer-term them to out historically talking us that clearly them the If leases. lease desirable and would get to cash cash preference is lease us ROI very on buy take that are buyer. customers on airplanes, have put alternative the the a But a selling for cash. can to we

the can been aircraft of on we get it. not lease if route We're number aircraft so sold help we delivered, will to the seek customers financial to to a on to when if because going go lease at we we've unable we these purchased the So sit we lease. them on time buyers put them find have aircraft put

are we naked. we ways one We the sold lease. multiple will to just the place doesn't sold sell fact, It or sell Matter and that be them of an were you aircraft. one there way to aircraft aircraft first have other on

answer. question I another think there's I could

Ken Herbert

contract? the maybe Well, I total then it guess maybe sounds eight none how are of currently many year this or are? of like them Or under XX

Nick Finazzo

no, not say No, going I'm to that.

contract, working available got put had clearly risk can under all. the them is not thing on have is, us. that we got of a that that XXXs all it. We're is forecast. factor we've Again, pretty We freighter. the some we've converted in ones, of remaining The ones our much be hard good to for That balance

yes, with going to is not will. do. some attached. So for is finding we're and put we've all we a on purchaser out deny And lease, sell don't, we've we'll optimistic it that risk, working And lease to maybe these that on. got got of to it, work something that if we'll I'm we a them But still them continue

on not something that So early slip to we has are don't that that's will later ones nothing It work right may our are changed aircraft got bit, bit, we may that, of year, give It I'm and know view the should discussing are I we that's the we on we've yet. I that's don't how committed, think lot at this time left worth I to as package. the not still of in on. little that that a perform which the far to on mean, the specific a And perform plenty package. deliveries, will a -- some have to slip we that little think numbers. but right that we you be and have how that of that -- point. going ones as the

Ken Herbert

Nick. fair, that's No, Okay.

last and pretty to in the asset sounds It fourth the like see a be looks million sale you indicated, to asset an step you sales, you second test similar significant did quarter, first third quarter, sales. you the standpoint quarters. in then XXX, the I asset up and did about in excluding, aircraft AerAware the So, you $XXX I year think mean, sold,

about similar I leased of third the but visibility asset and appreciate we can and current sort under gets whole what through timing, the with year quarters think fourth do sales? around look progression plan? risk today, and how how it for this does your Are the there's

Nick Finazzo

loaded second the of Well, it's the end to half definitely back year.

next that And be in additional only we'll I it's to the, would have in think we it that's late think quarter. this aircraft one in be available late going June.

even changes this and in to that most going in They're the track. because track It's work. equipment where a on so late They them be it in a getting delivering aircraft work, is get as far That of how already where all quarter there's And to or input and once getting are position. to need delays they are we being be. customer in So it to needs quarter be lot it to things as on no all delivery converted, where delivered. airplane to is is problematic how get of is third everything fourth into just in the -- getting out.

Ken Herbert

Okay.

I we I think got whole you've asset think make to what's capture, think for think, you correctly? million. you full target XXX, capital indicated for sure the year asset okay, obviously XXX I got for, I wanted that or -- you, deployed think I that committed I acquisitions? or agreements

Nick Finazzo

Correct, correct, XXX.

Ken Herbert

All back. pass perfect. Okay, it I'll right,

Nick Finazzo

going, at the a expectation. think We reasonable that rate we're is

Ken Herbert

Thank ahead. you. to starting see Go --? Are you

Operator

My apologies, comes Instructions] go Securities. Ciarmoli, you. question next thank Truist ahead. from Michael Michael, Your [Operator please

Michael Ciarmoli

question. Hey, good evening, for the Thanks taking guys.

Nick Finazzo

Mike. Hi,

Michael Ciarmoli

you? are How just... Nick,

Nick Finazzo

Good.

Michael Ciarmoli

AerAware. -- good. good, Just on

too assuming really, inventory you something to existing And on make you if happen software that looking building your Can there. up, was that well? should fifth some what what complicated can, everything needs with. after mentioned it's to because details, were, software, came maybe you give then, that back that for? upgrades FAA modifications be just assuming flight, you're goes And they the I'm You, were

Nick Finazzo

flights. observed already we've switch flights. we Elbit software system So, we've identified -- the all a perform FAA, minor Universal, get to between on some of some very already to but Not we the better flights, on the the of the us, -- and than

all FAA. on the So agreed we've reviewed We've that it. with

As now fact, lab, up a know works of the lab. we solution that with tested independently. been the matter It's they did we the it same came in in so

software in We our in we're saw solves installing an the lab. really just solves the changing it the it one in the another. confident make think source it from it are problem to patch We aircraft, aircraft. because -- input going It's to so we're we

That's see a period. we Basically, just tell will it it What tests. is works they they've flight of how wanted. hours could I our over start XX we're exactly the That with Once airplane we sets the that XX-hour what It flying, it's do? fly want XX we FAA that it less. multiple complicated. have FAA, ready is hours. test pilots about us. the on expectation of think given to in be they see of high last and to it reliable works we've the lab, like We'll the airplane done, hey, of and the which and because confidence not

take I'm of flying. pretty And don't days We be in That confident on will I we should a think their week. scheduled. pretty get or days. that full more once schedule, four five we'll -- that's than finish that it

Now hours and perform first forms reliability of that expect we to second as the system, they which and between that assumes on aircraft. everything got the we've it does already that the that the over see aircraft XXX

we're other think anomaly demonstrate what the long minor which we there. does it's flights, that system we we do the observed we'll I and update. than to supposed So mean, one on this think

less. going of could and take change. to the the get results software take of going to done, days. they're typically, when they're all assemble Now, their you Could longer, the paperwork review They're STC XX within

paperwork with final things Some time to we're work to is doing ask concurrently to start do the going we of the testing. flight FAA now all between and the reviewing the the

know. get When the I final testing don't That set done? will of we flight last tests,

guys when's best said a know not going that Well, that times. many going me be? are case too to I'm I press say. on. What's the And I've so you to to going in worst case?

soon as fact said that FAA imminent. before. the you has guys, schedule test. to it's think hey, we thing, as flight let The I know us the that I've confirm this want said,

that a I too. sign this want real think to they that's finish positive

I in and there's cap this big their think today. it's technology further, going feather to be equipment just superior to a approve like in it this out there nothing

any major so to And to future. flight done such of a so wants like to the and get creates time really for takes speed through barrier is the FAA up bring to that a to this testing system at going that foreseeable hours fact this anybody rigor else entry a in and many long the

that a confident be leader with this going market we're to we're So product.

Michael Ciarmoli

good. okay, Okay,

think to at like XX supply sounds to a get everything well. said XX I that, it the chain. hardware. level produce going you component meet Universal kind kits able the say, -- Are demands? Elbit need be you're they still to goes of but and What's you everything FAA just let's approval, mean, I doing your month, confidence

Martin Garmendia

them. it's got for that we while a their on order if big get fleet. the that no, that depends will of hundred to several the number first XXXNGs in one, and quickly get The MAXs up one first, mean, going take how we to smaller. no talking installing are I they've Bill, that way, staff and A It carriers start to airline the we're

take will to So customer. supply up years that to build that

been an that. they'll to for capacity Again, reassured said know continually They've as Elbit the what it. and as I've and got this build they build they Universal requirement do is, I've before by the soon that order

optimistic committed. what deliver am they they've will that I So on

Michael Ciarmoli

Got it.

jump Okay. here. queue one, last in back the I'll And

opt leases? to -- think of the about Ken those of revenue had on tweaking guidance commentary On XXXs you be The guidance was customers guidance more the the sales talking assume there'd your all presumably, for have if I for some XXXs.

Martin Garmendia

now has us and mix sales. the write right No, leasing of and out guidance a

Martin Garmendia

obviously, that But seeing Right that. that. adjustments, we for any to not like -- change that. right for our indicate projections working And now, a included. there's need But on have now come already Nick said, we'll we're need we'll see

Michael Ciarmoli

Thanks perfect. jump Okay, queue. I'll the back in guys.

Martin Garmendia

Okay.

Mike. You're welcome,

Operator

you. Thank

Ken, comes Herbert, question Your please from go next Ken Capital ahead. Markets. RBC

Ken Herbert

of second the we're XXX obviously, how's some of assets. Hey, market sort opportunity desire and maybe to and but months move on in your to environment in regarding last the year-to-date, quarter, Yes. changed follow-up maybe just three terms the asset acquisitions. Nick. for the wanted I airlines The lessors in the feedstock comments early older

utilization continue delays and the certainly And seems to seems coming be be strong increased to aircraft in we deliveries some to mean, of aircraft. new face there older there of back I traffic

how that do of has market sort next out months? over how evolved? to And the So you few expect play

Martin Garmendia

talk winning have we're can more we why I bid on historically. we about deals that than So

to exact substantially Our it hit the higher is but is I than give higher. rate got been. has it number, you

to because they're keep to work, refurbish before, but those why need get unless they're And to still long-term, don't they're and work, flight going and overhaul, and hoping that heavy taking they heavy going for I've on structures the new refurbishing older to And want pieces the checks, money they'll leasing and the worth invest eventually gear reiterating. this and intensive not is more return engine not what that equipment, that than it's airplanes, need get owners is doing said investing that landing because airlines Airlines not the maintenance investment. equipment companies airframe of these the that? aircraft they're aircraft are the the overhaul,

the where we things to whole do wholesome can peace many way. necessary have are those So the And we reason those others multi-dimensional and that at refurbish than engines. we're the those is more level coming at because our the level part including of assets assets integrated aircraft of winning the are very, the infrastructure

do can't they there, out buyers financial the So that.

much They an away. we they than can aircraft stepping which can buy IRR a they're seek. getting So lease pay would at and lower price on

deals. or our has an and an right value just we're work airframe engines. something of to engine or and needs only and not those That's But our that process it's it's lot getting up market maximum that alley. a that's the much today. if extract got pretty So We've machinery

and have that But this on we of up they that's for on pop a tea. our work good other put stuff can to and that's do thought lot find buy rare part a most airplane it. much of cup equipment place can if an than it don't the that better with occasionally, they to work, needs And decent because it. wow, the people we the was we a But picked that, airplane

Nick Finazzo

to better could if add, get a our allowed multi-dimensional competitors. has think lot returns I Yes, also us model I than our of

target that again, and their in levered where to have our big of of with !re our the target IRRs XX% of bite more of and some way. used And really been high that That's think that apple capital profits much cost Because the we have way operating going past a we that's do greater. ability I and the and taking we noted of are we've we an environment competitors IRR. than have not monetize to a we the the do.

Martin Garmendia

adjustment. we Just or uses that wiped and Well, that almost investors several that capital assets the for you're hurdle the rate when have to to has on risk let deals XX% by I single-digit digits been work single this mean, acquiring work digits That's go very seen that me imputed people capital an return. with deals. look get high a why in high we're further waiting even that interest doesn't just out that's that. alternate last another you of where years completely double-digit rate, expectation and acquire they deal effort reason feel the low are a we've and have, got or the and the a doesn't out there approaching at double factor even as low a elaborate

Ken Herbert

Nick. Thanks, Okay. Very helpful. Thanks, Martin.

Martin Garmendia

Welcome. Okay.

Operator

you. and Thank this for There I reminder are CEO you. apologize Nick, closing questions will at AerSale back I now as to no time. turn remarks. for Ladies -- gentlemen, a it further

Nick Finazzo

for financial listening and the listening you first quarter Mike, Ken questions. for good AerSale’s And to results. today, And for thanks everyone Bert. our Okay, thank

to hope work in our year go will good next We to we a to Have I and on on continue deliver everyone. as update you'll guidance. forward. listen evening, hard on full progress our an smart quarter's get call

Operator

for for please concludes ask your your disconnect lines. that Thank and you conference this and thank call participating you. Ladies you today. We gentlemen,

AerSale (ASLE) 9 May 232023 Q1 Earnings call transcript