AerSale Corp Q4 FY2024 earnings call

• Fourth quarter revenue was $94.7 million, slightly higher than the previous year, with adjusted EBITDA up 118% to $13.1 million when excluding volatile whole asset sales.
• Full year 2024 revenue was $345.1 million, up 3.2% compared to 2023, and adjusted EBITDA rose to $33.4 million from $12.3 million in 2023, driven by higher volume, favorable sales mix, and better cost controls (partially offset by lower whole asset sales).
• Asset Management: Q4 sales fell 1% y-o-y to $64 million due to fewer whole asset sales, but excluding whole assets, revenue rose 91.7%; full year sales were flat at $215 million, and excluding whole assets, segment revenue increased 34% to $105.7 million.
• Acquired $18.4 million of feedstock in Q4 and $61.7 million for the full year, with a 17.2% win rate in Q4 surpassing the long-term average of 10%.
• 757 passenger to freighter conversion program: End market demand increased in Q4, with 1 aircraft leased and 6 remaining, and discussions ongoing with potential customers.
• TechOps: Q4 revenue rose 3.1% to $30.7 million, full year up 8.6% to $129.6 million; Goodyear completed a contract with a major commercial airline, but expected reduced volume at Goodyear in H1 2025 as it works to secure long-term agreements; facility expansions at pneumatics and Miami Aerostructures delayed to Q2 2025, with potential for $50 million additional annualized revenue at full capacity.
• Engineered Solutions: AerSafe backlog reached $14 million in Q4 approaching the 2026 FAA deadline; AerAware continued to be marketed with 2 new customer demonstration flights, and the product was improved based on customer feedback.

Fourth quarter revenue was $94.7 million, slightly higher than the previous year, with a $16.4 million reduction in whole asset sales compared to 2023. Excluding whole asset sales, fourth quarter sales increased by 35.5%. For the full year 2024, revenue was $345.1 million, an increase of 3.2% compared to 2023. Excluding whole asset sales, full year revenue increased by 18.7%. In Asset Management, sales fell by about 1% year-over-year to $64 million in Q4 due to fewer whole asset sales, but excluding whole assets, revenue rose by 91.7%. For the full year, sales remained flat at $215 million, while excluding whole assets, segment revenue increased by 34% to $105.7 million.

• 2025 is expected to be a growth year for AerSale on both top and bottom line, with performance improving incrementally excluding whole asset sales as new capacity comes online and efficiency programs take effect.
• Expect to capitalize on expanding lease pool, monetizing remaining 757 freighter aircraft, generating additional MRO revenue from facility expansions, and strong performance of AerSafe in 2025-2026.
• Efficiency program expected to save $10.4 million annually, in addition to $10 million saved in 2024.

• Revenue can be volatile due to whole asset sales.
• Competitive feedstock market with inventory constraints likely to persist until OEM production and deliveries enable retirement of older aircraft.
• Delays in facility expansions (e.g., pneumatics and Miami Aerostructures) may impact revenue growth.
• Uncertainty regarding the insurance claim process.

Q: Michael Ciarmoli from Truist asked about feedstock availability as of early Q1 2025.

A: Nicolas Finazzo responded that feedstock market remains tight due to OEM production, engine, and FAA issues, but AerSale continues to win deals by working on flight equipment that needs a lot of work, leveraging its infrastructure and ability to extract value, with less new money being invested by potential competitors as they struggle to close deals.