AirSale Conference Call Summary Company Overview - **Company**: AirSale - **Industry**: Aircraft asset management and maintenance, repair, and overhaul (MRO) Key Business Segments - **Asset Management**: Focuses on servicing large commercial aircraft, specifically Boeing and Airbus platforms. The company acquires midlife equipment (10-12 years old) and manages it through leasing, selling, or breaking down into components for their used serviceable material (USM) business [3][4] - **Tech Operations**: Includes MRO facilities and engineered solutions to improve aircraft operations, with three on-airport and three off-airport MROs in the U.S. [4] Financial Outlook - **2024 Expectations**: AirSale anticipates exceeding 2024 results due to a strong inventory position and growth in leasing, particularly in engine leasing [11][12] - **Revenue Growth**: The company expects revenue to ramp up from new expansion projects and increased capacity utilization in MRO facilities [13][14] Market Conditions - **Tariff Impact**: AirSale has managed to mitigate tariff impacts through strategies like using bonded warehouses and passing costs to customers. Currently, there is no significant impact from tariffs or supply chain issues [7][8] - **Used Serviceable Material (USM)**: Demand for USM has increased, especially post-COVID, as operators seek cost-effective alternatives to OEM parts [63][64] Asset Management Strategy - **Acquisition and Monetization**: The company employs proprietary models to assess asset value and determine the best monetization strategy, targeting a 25% internal rate of return [22][54] - **Market Dynamics**: The market for used aircraft and engines remains tight, with operators hesitant to retire assets until new OEM production stabilizes [19][24] MRO Capacity and Demand - **MRO Demand**: There is strong demand for MRO services, particularly from ultra-low-cost carriers and cargo operators. AirSale is expanding its MRO capabilities to meet this demand [39][42] - **Labor and Parts Availability**: While there are challenges in sourcing parts and labor, improvements have been noted, particularly in airframe repairs [43][44] Capital Deployment - **Share Buybacks**: AirSale has conducted stock buybacks to alleviate stock pressure and believes its shares are undervalued [46][47] - **M&A Strategy**: The company is cautious about M&A, preferring organic growth but remains open to opportunities that align with its business model [48][49] Competitive Advantage - **Multidimensional Extraction Process**: AirSale's ability to extract value from assets through leasing, selling, or parting out gives it a competitive edge in the market [50][52] Future Opportunities - **Freighter Conversion Market**: Demand for converted freighter aircraft is increasing, with AirSale actively marketing six converted 757s [69][70] - **Military Market**: Although currently a small part of the business, there are opportunities to grow in the military sector, particularly in MRO services [72][74] Conclusion - AirSale is well-positioned for growth in 2024, with strong inventory management, expanding MRO capabilities, and a strategic approach to capital deployment. The company is navigating market challenges effectively while exploring new opportunities in both commercial and military sectors.

Financial Data and Key Metrics Changes - Consolidated revenue for Q1 2025 was $65.8 million, down from $90.5 million in the prior year period, reflecting a decline in whole asset sales [6][17] - Adjusted EBITDA for Q1 2025 was $3.2 million compared to $9 million in the prior year, primarily due to lower whole asset transactions [7][20] - First quarter gross margin decreased to 27.3% from 31.8% in Q1 2024, attributed to lower whole asset sales which typically carry higher margins [18] Business Line Data and Key Metrics Changes - Asset management segment sales declined by 33.8%, entirely due to lower whole asset sales; however, excluding whole assets, segment revenue increased by 81.7% to $37.5 million, driven by stronger USM sales and a larger active lease pool [7][22] - Tech Ops segment revenue decreased by 15.1% to $26.6 million, anticipated due to the conclusion of a maintenance check line with a large customer [10][22] - The engineered solutions unit saw an increase in AirSafe deliveries, with a backlog totaling $11 million at quarter end [11] Market Data and Key Metrics Changes - The availability of favorably priced feedstock improved significantly in Q1, allowing the company to acquire $43.4 million of feedstock, leading to a 10.4% win rate [8] - The company noted a strong demand for engines, with every engine type in high demand, despite a lack of supply [31] Company Strategy and Development Direction - The company is balancing lease pool expansion against quicker turn whole asset transactions to generate cash and EBITDA [9] - Strategic decisions are being made to pursue longer-term, more predictable contracts in MRO services to better match staffing levels with volume [10] - The company expects to generate new incremental revenue from component MRO facility expansion projects within the next 30 to 60 days [11][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underlying fundamentals of the business, despite lower whole asset sales, and expects EBITDA growth to outpace revenue growth for the year [15][21] - The company anticipates a strong recovery in the second half of the year, driven by a robust air safe backlog and efficiency measures implemented [15][22] Other Important Information - The company ended the quarter with $48.9 million in liquidity, consisting of $4.7 million in cash and $44.2 million available on its revolving credit facility [20] - Management emphasized the importance of monitoring progress based on asset purchases and sales over the long term rather than quarterly fluctuations [17] Q&A Session Summary Question: Whole asset sales outlook for 2025 - Management indicated it is difficult to predict whole asset sales but noted they have 21 engines available for trading or leasing, with expectations for a higher amount in the second half of the year [25][27] Question: Demand shifts from airline customers - Management reported that there is currently high demand for engines, with a lack of supply affecting the ability to meet that demand [30][31]

AerSale (ASLE) Q1 2025 Earnings Call May 07, 2025 04:30 PM ET Speaker0 Day, and welcome to the AirSale Corporation First Quarter twenty twenty five Earnings Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Jackie Carlin, Vice President of Marketing and Communication at AirSale. Please go ahead. Speaker1 Good afternoon. I'd like to ...