AerSale Corp (ASLE)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 missed Street expectations on both revenue and EPS as whole asset sales were light in the quarter; revenue was $65.8M vs $90.5M prior year and vs S&P Global consensus of $89.3M*, and Primary EPS was -$0.05 vs $0.085* consensus; GAAP diluted EPS was -$0.10, with adjusted diluted EPS at -$0.05 . Values retrieved from S&P Global.
• Core operations were strong: excluding flight equipment sales, revenue rose 23.4% YoY to $64.0M on robust USM, AerSafe and leasing demand; gross margin was 27.3% vs 31.8% a year ago, reflecting mix (fewer high-margin whole asset sales) .
• Management guided qualitatively to sequential improvement each quarter with FY sales growth and EBITDA growing faster than revenue, supported by feedstock wins ($43.4M acquired in Q1; $23.8M under contract), expanding lease pool, MRO capacity additions, and rising AerSafe backlog ($11M) .
• Liquidity stood at $48.9M (cash $4.7M + $44.2M revolver capacity), with operating cash use of $45.2M driven by inventory investment; in March, ASLE repurchased ~6.43M shares for $45M (~12% reduction), a potential support for per-share metrics in coming periods .

What Went Well and What Went Wrong

• What Went Well

  • Core business momentum: revenue ex flight equipment rose 23.4% YoY to $64.0M on strong USM/AerSafe/leasing demand .
  • Management expects sequential improvement with FY revenue growth and EBITDA growth outpacing revenue as MRO expansions come online in 30–60 days and AerSafe demand accelerates into the 2026 FAA deadline .
  • Feedstock pipeline strengthened: $43.4M acquired in Q1 and $23.8M under contract; management cited higher win rate and optionality to trade or lease engines as demand remains broad-based across engine types .

• What Went Wrong

  • Whole asset sales timing: only one engine closed in Q1 ($1.8M of flight equipment sales) vs one aircraft and four engines a year ago ($38.6M), driving the top-line/margin shortfall vs Street .
  • Margin compression: gross margin was 27.3% vs 31.8% prior year due to mix (fewer high-margin whole asset transactions); adjusted EBITDA fell to $3.2M (4.8% margin) vs $9.0M (9.9%) a year ago .
  • Cash burn: operating cash used was $45.2M, largely from inventory investment ($39.7M build), while revolver utilization increased (revolver balance $133.1M at 3/31) .

Financial Results

Segment revenue

KPIs

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Our first quarter results were highlighted by continued growth in our USM, landing gear and component MRO business units, higher leasing revenue and increased sales of AerSafe… This was offset by fewer aircraft in work at our Goodyear facility and Roswell on‑airport MROs” .
• “Excluding whole asset sales, the underlying fundamentals of our business were strong… a 23.4% increase in revenue to $64.0 million” .
• “We expect significantly improved results incrementally each quarter, continue to expect full year growth in sales and expect EBITDA growth to exceed our growth in revenue” .
• On engine demand/supply: “We’ve never experienced a period… where just about every engine type we own is in high demand… there’s no lack of demand for engines today. There’s just a lack of supply and the time it takes to get an engine through the shop has not gotten any better” .
• On AerAware improvements: “Making the SkyLens foldable and adding ADS‑B In capability… increased visibility of nearby objects such as other aircraft” .

Q&A Highlights

• Whole asset cadence and 2025 outlook: Management emphasized unpredictability in quarter timing but highlighted 10 engines on hand and 11 in work early in the year, with many becoming available in H2; trade vs lease decisions are risk‑adjusted and opportunity‑driven .
• Demand environment: Broad‑based engine demand across types, with shop turn times the bottleneck; AerSale has engines available and more exiting maintenance to support both leasing growth and opportunistic trading .
• Mix/optionalities: Management will balance lease pool expansion against high‑IRR trading when market conditions favor it, aiming to accelerate cash and EBITDA generation .

Estimates Context

• Q1 2025 vs S&P Global consensus: Revenue $65.8M vs $89.3M estimate*; Primary EPS -$0.05 vs $0.085 estimate*; number of estimates: 2 for both EPS and revenue* . Values retrieved from S&P Global.
• GAAP diluted EPS was -$0.10; adjusted diluted EPS was -$0.05, aligning more closely with the Primary EPS actual referenced in consensus frameworks .
• Implications: Street likely revises near‑term revenue/EBITDA lower on timing of whole asset sales, while ex‑whole‑asset momentum and post‑quarter engine closings (April) may temper full‑year cuts .

Q1 2025 Actual vs Consensus

Values retrieved from S&P Global.

Key Takeaways for Investors

• Core demand is intact: ex-flight equipment revenue +23.4% YoY underscores healthy USM/AerSafe/leasing demand even as trading lags; watch sequential progression as MRO capacity ramps in Q2–Q3 .
• The miss was timing‑driven: only one engine sale ($1.8M) in Q1, with additional sales closing in April; margin profile should lift as whole asset activity normalizes .
• EBITDA leverage expected: management targets EBITDA growth > revenue growth for FY25 as mix improves, AerSafe installations accelerate into the 2026 deadline, and efficiency measures take hold .
• Working capital a near‑term headwind: Operating cash use of $45.2M reflects inventory build ($39.7M); monitor inventory monetization and revolver usage ($48.9M liquidity at quarter‑end) .
• Capital allocation supportive: $45M buyback (~12% share reduction) potentially boosts per‑share metrics; funded via cash and revolver amendment .
• Watch MRO contract signings and Goodyear volumes in H2, pace of engine shop turn‑times, AerSafe backlog conversion, and 757 P2F placements (6 remaining) as catalysts for sequential improvement .
• Stock reaction catalyst: dual miss vs consensus is a negative surprise, but management’s sequential improvement narrative and April engine closings set up a potential rebound narrative into Q2 prints .

Why the Quarter Looked This Way (Diagnostic)

• Revenue/EPS shortfalls were chiefly a function of fewer whole asset sales (1 engine) vs a stronger year‑ago comparator (1 aircraft + 4 engines), pressuring gross margin and adjusted EBITDA; core activity (USM/AerSafe/leasing) remained solid .
• Mix effect: gross margin declined to 27.3% from 31.8% due to the reduced contribution from high‑margin trading; adjusted EBITDA margin fell to 4.8% accordingly .
• Strategic inventory build and feedstock wins ($43.4M acquired; $23.8M under contract) set up higher monetization in coming quarters, with MRO expansion adding capacity within 30–60 days .

Additional Relevant Q1 2025 Items

• Share repurchase: repurchased ~6.428M shares at $7.00 per share for $45M; expected ~12% reduction in shares outstanding; credit agreement amended to allow repurchase .
• Liquidity and balance sheet: quarter‑end liquidity $48.9M (cash $4.7M; revolver availability $44.2M); revolver outstanding $133.1M; stockholders’ equity $406.5M .

Appendix: Prior Two Quarters Reference

• Q4 2024: Revenue $94.7M; diluted EPS $0.05; adjusted EPS $0.09; gross margin 31.4%; adjusted EBITDA $13.0M (13.7%); flight equipment sales $31.0M (6 engines); revenue ex flight equipment $63.7M .
• Q3 2024: Revenue $82.7M; diluted EPS $0.01; adjusted EPS $0.04; gross margin 28.6%; adjusted EBITDA $8.25M (10.0%); flight equipment sales $22.6M (5 engines); revenue ex flight equipment $60.1M .