AerSale(ASLE) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Consolidated revenue for the first quarter was $65.8 million compared to $90.5 million in the prior year period, reflecting a decline due to fewer whole asset sales [5][15] - Adjusted EBITDA was $3.2 million in the first quarter, down from $9 million in the prior year, primarily due to lower whole asset transactions [6][18] - First quarter gross margin was 27.3%, down from 31.8% in the first quarter of the previous year, attributed to lower whole asset sales [16] Business Line Data and Key Metrics Changes - Asset management segment sales declined 33.8%, entirely related to lower whole asset sales, but excluding whole assets, segment revenue increased 81.7% to $37.5 million driven by stronger USM sales [6][19] - Tech Ops segment revenue declined 15.1% to $26.6 million, anticipated due to the conclusion of a maintenance check line with a large customer [9] - Component MRO facility expansion projects are expected to generate new incremental revenue within the next 30 to 60 days [10] Market Data and Key Metrics Changes - The availability of favorably priced feedstock improved considerably, allowing the company to acquire $43.4 million of feedstock during the quarter [7] - The company achieved a 10.4% win rate in feedstock acquisitions, indicating a favorable market position [7] Company Strategy and Development Direction - The company is balancing lease pool expansion against quicker turn whole asset transactions to generate cash and EBITDA [8] - There is a focus on pursuing longer-term, more predictable contracts in MRO services to better match staffing levels with volume [9] - The company anticipates building a robust AirSafe backlog as it approaches the 2026 compliance deadline [12] Management's Comments on Operating Environment and Future Outlook - Management noted strong demand for engines, with a lack of supply affecting the market, and emphasized the importance of managing cash flow expectations [28][29] - The company expects significantly improved results incrementally each quarter, with full-year growth in sales and EBITDA growth expected to exceed revenue growth [11][13] Other Important Information - The company ended the quarter with $48.9 million of liquidity, consisting of $4.7 million in cash and $44.2 million available on its revolving credit facility [18] - The company has made efficiency measures to enhance profitability, which are expected to yield results in the second half of the year [20] Q&A Session Summary Question: Can whole asset sales be at 2024 levels this year? - Management indicated it is difficult to predict exact whole asset sales but noted they have enough whole assets on hand and expect a higher amount of engines to become available in the second half of the year [23][25] Question: Have there been any shifts in demand from airline customers? - Management stated that there is high demand for nearly every engine type owned, but a lack of supply is creating challenges [28]