AerSale Corporation Q3 FY2025 earnings call

Nick started by noting Q3 revenue was $71.2 million, down from $82.7 million prior year due to absence of engine/aircraft sales. Excluding whole asset sales, balance of business grew 18.5%. Adjusted EBITDA was $9.5 million or 13.3% of sales. Asset Management had revenue decline but strong USM and leasing. TechOps had modest revenue decline but component sales and AerSafe offset. Progress on 757 conversion program, feedstock acquisitions disciplined, strong inventory position. TechOps expansion projects complete, AerSafe on track for regulatory compliance. Martin reviewed financials: revenue $71.2M, gross margin 30.2%, SG&A $18.6M, operating income $2.9M, adjusted EBITDA $9.5M. Liquidity $58.9M, cash used in ops $34.3M YTD.

Asset Management: Revenue was $39.2 million in Q3 2025, down from $50.4 million in the prior year period. Excluding whole asset transactions, segment revenue increased nearly 40.9% year-over-year. Had 15 engines and 1,757 freighter aircraft on lease, acquired $13.7 million in feedstock in the quarter, with over $371.1 million of feedstock inventory including 9 engines available for sale/lease and 10 undergoing repairs. TechOps: Revenue was $32.0 million, down modestly from $32.3 million in the prior year period. Strong component sales and AerSafe volume offset modest decline in MRO services. Roswell facility transitioning to teardown/decommissioning, Goodyear facility stabilized with strong pipeline. Expansion projects in Aerostructures and pneumatics complete, transitioning to production. Engineered Solutions: Strong increase in AerSafe deliveries year-over-year, backlog over $22 million, expected to support 2025 financial plan. AerAware: Enhancing functionality, engaging with customers, expanding outreach to government authorities.

Excluding flight equipment sales, expect full year revenue over 2024 levels with greater EBITDA increase due to robust lease pool, USM inventory monetization, and cost reductions. 2026 expected to see growth from MRO facility transitions and expanded lease pool.

Volatility in revenue due to lumpy whole asset sales. Supply of attractively priced feedstock limited. Delays in engine repair shops affecting availability. Uncertainty in timing of aircraft lease placements.

Q: Thoughts on baseline EBITDA for MRO business in 2026?

A: 2026 MRO revenue expected $25M, margins $4M-$5M.

Q: Passenger to freighter conversions market?

A: 757 demand strong as no competitive replacement, 2 more under LOI, 3 left to place.

Q: USM strategy?

A: Disciplined in acquiring feedstock to extract value through multidimensional model.

Q: Roswell/Goodyear facilities transition?

A: Roswell mostly transitioned, Goodyear almost full, Millington has LOI for regional carrier work.

Q: Engines availability?

A: 9 available, 10 under repair, demand high, decision on lease vs sale