AerSale(ASLE) - 2024 Q4 - Annual Report

Financial Performance - Total revenue for 2024 was $345.066 million, a slight increase from$ 334.503 million in 2023, but a decrease from $408.544 million in 2022[271]. - Gross profit increased to$ 103.936 million in 2024, compared to $92.421 million in 2023, reflecting a gross margin improvement[271]. - Net income for 2024 was$ 5.851 million, a recovery from a net loss of $5.563 million in 2023[271]. - Total assets grew to$ 604.723 million in 2024, up from $553.938 million in 2023, indicating strong asset management[268]. - Current liabilities increased significantly to$ 74.970 million in 2024, compared to $45.713 million in 2023, primarily due to higher accounts payable and accrued expenses[268]. - Cash and cash equivalents decreased to$ 4.698 million in 2024 from $5.873 million in 2023, indicating a need for improved cash flow management[268]. - The company reported a basic earnings per share of$ 0.11 in 2024, recovering from a loss of $0.11 in 2023[271]. - The total stockholders' equity increased to$ 455.620 million in 2024, up from $445.015 million in 2023, reflecting positive retained earnings growth[268]. - Operating cash flow improved to$ 11,184 million in 2024, compared to a cash outflow of $174,150 million in 2023[276]. - Total revenue for the year ended December 31, 2024, was$ 345,066 thousand, representing an increase of 3.4% from $334,503 thousand in 2023[360]. - The Company reported a significant increase in USM revenue, which grew to$ 83,174 thousand in 2024, up from $63,418 thousand in 2023, marking a 31% increase[360]. - Domestic revenue increased significantly to$ 215.198 million in 2024, up from $145.076 million in 2023, representing a growth of 48.3%[422]. Asset Management - Goodwill related to the Asset Management Solutions (AMS) and Aircraft Composite Technologies (ACT) reporting units was$ 13.4 million and $6.0 million, respectively, as of December 31, 2024[259]. - The Asset Management Solutions segment generated$ 215.467 million in revenue for 2024, consistent with $215.167 million in 2023[417]. - The company reported a segment income from operations of$ 55.004 million for Asset Management Solutions in 2024, compared to $36.705 million in 2023, marking a significant increase of 50.5%[420]. Inventory and Capital Expenditures - The company’s inventory of aircraft, airframes, engines, and parts increased to$ 224.832 million in 2024 from $177.770 million in 2023, indicating expansion in operational capacity[268]. - Inventory as of December 31, 2024, totaled$ 355,790 thousand, up from $329,168 thousand in 2023, indicating an 8.1% increase[361]. - The Company recorded scrap loss reserves of$ 2,798,000 for the year ended December 31, 2024, compared to $1,507,000 in 2023, indicating an increase in inventory scrap losses[297]. - Total capital expenditures for 2024 were$ 29.030 million, a substantial increase from $11.359 million in 2023[421]. Debt and Interest - As of December 31, 2024, AerSale had$ 39.2 million in outstanding variable rate borrowings under the Revolving Credit Agreement and $1.8 million under the CIBC Equipment Loan[244]. - The total outstanding debt obligations rose to$ 41.0 million in 2024 from $37.6 million in 2023, marking a 6.5% increase[382]. - Interest expense on the Revolving Credit Agreement for the year ended December 31, 2024, was$ 4.8 million, a significant increase from $0.7 million in 2023[388]. - The interest rate on the Wells Fargo Senior Secured Revolving Credit Agreement was 7.52% as of December 31, 2024, down from 7.69% in 2023[387]. - The effective interest rate on the CIBC Equipment Loan was 7.37% as of December 31, 2024, with no interest expense recorded for the year[393]. Risk Factors - The company operates in a highly competitive market with risks including supply chain disruptions and the fluctuating market value of products[18]. - The company is subject to significant government regulation, which may require incurring substantial compliance costs[18]. - The company’s financial position is influenced by interest rate fluctuations and foreign exchange rates, representing a market risk[243]. - The company’s future results may differ materially from expectations due to various risk factors, including economic conditions and operational challenges[11]. - The Company is subject to various risks, including economic conditions in the commercial aviation industry and potential defaults by lessees[347]. Accounting and Compliance - The company evaluates the cost of used serviceable material (USM) inventory based on a ratio of the cost of dismantled aircraft to the estimated sales value, which requires significant management judgment[254]. - The Company recognized revenue from Used Serviceable Material (USM) sales upon shipment, with no right of return for customers, adhering to ASC 606 standards[312]. - Revenue from whole asset sales is recognized when control is transferred to the customer, with payment required in full upon acceptance of the asset[314]. - Leasing revenue is reported on a straight-line basis over the life of the lease, including supplemental rent based on utilization and maintenance requirements[315]. - The Company capitalizes costs for planned major maintenance that materially increases the long-term value of Flight Equipment, depreciating these costs over the lesser of the remaining useful life or the estimated useful life of the improvements[322]. - The carrying value of inventory is regularly reviewed, with adjustments made for slow-moving, obsolete, or damaged inventory as necessary[295]. - The Company’s annual assessment date for goodwill is October 1st, with no impairments recorded as of the last assessment[303]. - Intangible assets with indefinite lives are assessed for impairment annually, with no impairments identified in the latest evaluations[306]. - Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in future years[337]. Shareholder Information - The Company issued 89,923 shares under the 2020 Employee Stock Purchase Plan (ESPP) in 2024, compared to 45,755 shares in 2023[412]. - As of December 31, 2024, the Company had 1,380,277 outstanding restricted stock units, with a weighted average grant date fair value of$ 8.38[405]. - The Company granted 646,301 stock options in 2024, with a weighted average exercise price of $7.02[411]. - The Company recognized share-based compensation expense of$ 7.9 million for performance-based awards in 2023, while no expense was recognized for 2024 due to performance milestones not being probable[408].