AerSale Corporation (ASLE) Bundle
Understanding AerSale Corporation (ASLE) Revenue Streams
Understanding AerSale Corporation’s Revenue Streams
As of September 30, 2024, total revenue for AerSale Corporation was $82.684 million, a decrease of 10.6% compared to $92.484 million for the same period in 2023. The revenue breakdown by segment is as follows:
| Segment | Three Months Ended September 30, 2024 (in thousands) | Three Months Ended September 30, 2023 (in thousands) | Percent Change |
|---|---|---|---|
| Asset Management Solutions | $50,414 | $65,054 | (22.5%) |
| TechOps | $32,270 | $27,430 | 17.6% |
| Total Revenue | $82,684 | $92,484 | (10.6%) |
For the nine months ended September 30, 2024, total revenue was $250.325 million, reflecting a 4.3% increase from $240.081 million in the same period of 2023. The revenue contribution from each segment during this period is detailed below:
| Segment | Nine Months Ended September 30, 2024 (in thousands) | Nine Months Ended September 30, 2023 (in thousands) | Percent Change |
|---|---|---|---|
| Asset Management Solutions | $151,475 | $150,555 | 0.6% |
| TechOps | $98,850 | $89,526 | 10.4% |
| Total Revenue | $250,325 | $240,081 | 4.3% |
Year-over-Year Revenue Growth Rate
In the three months ended September 30, 2024, the year-over-year revenue growth rate showed a significant decline in the Asset Management Solutions segment, primarily due to a 57.2% decrease in Aircraft revenue, which fell from $20.888 million in 2023 to $8.940 million in 2024. Conversely, TechOps experienced a 21.2% increase in MRO services revenue, rising from $23.154 million to $28.065 million during the same period.
Contribution of Different Business Segments to Overall Revenue
For the nine months ended September 30, 2024, the revenue contributions from the business segments were as follows:
- Asset Management Solutions: $151.475 million (60.5% of total revenue)
- TechOps: $98.850 million (39.5% of total revenue)
This indicates a stable contribution from the Asset Management Solutions segment, while the TechOps segment has shown a growth trend, increasing its share of total revenue over the past year.
Analysis of Significant Changes in Revenue Streams
The significant changes in revenue streams can be attributed to several factors:
- The 40.5% decline in Aircraft revenue within the Asset Management Solutions segment, largely due to decreased activity in the B757 product line.
- A 26.3% increase in Engine revenue, primarily driven by increased activity in the CFM56 product line.
- In TechOps, MRO services revenue increased by 6.0% year-over-year, while Product Sales surged by 45.7%, indicating a strong demand for repair and overhaul services.
The overall revenue dynamics reflect the challenges faced in the Asset Management Solutions segment while highlighting the growth potential within TechOps.
| Revenue Streams Analysis | 2024 (Three Months) | 2023 (Three Months) | 2024 (Nine Months) | 2023 (Nine Months) |
|---|---|---|---|---|
| Aircraft Revenue | $8,940 million | $20,888 million | $34,388 million | $57,836 million |
| Engine Revenue | $41,474 million | $44,166 million | $117,087 million | $92,719 million |
| MRO Revenue | $28,065 million | $23,154 million | $83,430 million | $78,725 million |
| Product Sales | $4,205 million | $4,276 million | $15,420 million | $10,583 million |
| Total Revenue | $82,684 million | $92,484 million | $250,325 million | $240,081 million |
A Deep Dive into AerSale Corporation (ASLE) Profitability
A Deep Dive into AerSale Corporation's Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit margin for Aircraft was 32.8%, up from 29.2% in the same period of 2023. The Engine gross profit margin was 39.3% for the nine months ended September 30, 2024, compared to 33.5% for the same period in 2023.
Operating Profit Margin: The operating profit margin for the nine months ended September 30, 2024, is not explicitly detailed, but operating income reflects a significant turnaround with a net income of $3.15 million for the nine months compared to a net loss of $2.83 million in the previous year.
Net Profit Margin: For the nine months ended September 30, 2024, the net profit margin stood at approximately 1.3%, calculated from the net income of $3.15 million on total revenue of $250.33 million.
Trends in Profitability Over Time
Comparing the nine months ended September 30, 2024, to the prior year, total revenue increased by 4.3% from $240.08 million in 2023 to $250.33 million in 2024. Gross profit for the same period increased by 9.1% from $68.01 million to $74.19 million.
Comparison of Profitability Ratios with Industry Averages
While specific industry averages for the aviation sector are not provided, the gross profit margins of 32.8% and 39.3% for Aircraft and Engine segments, respectively, can be considered competitive. Industry benchmarks for similar companies typically range from 25% to 35% for gross profit margins.
Analysis of Operational Efficiency
The operating expenses, particularly selling, general and administrative expenses, decreased by 10.7% to $69.4 million for the nine months ended September 30, 2024, down from $77.7 million in the prior year. This reduction in operating costs has positively impacted the profitability metrics.
| Metric | 2024 (9 Months) | 2023 (9 Months) | Change (%) |
|---|---|---|---|
| Total Revenue | $250.33 million | $240.08 million | 4.3% |
| Gross Profit | $74.19 million | $68.01 million | 9.1% |
| Net Income | $3.15 million | ($2.83 million) | — |
| Gross Profit Margin (Aircraft) | 32.8% | 29.2% | — |
| Gross Profit Margin (Engine) | 39.3% | 33.5% | — |
| SG&A Expenses | $69.4 million | $77.7 million | 10.7% |
Debt vs. Equity: How AerSale Corporation (ASLE) Finances Its Growth
Debt vs. Equity: How AerSale Corporation Finances Its Growth
Overview of the Company's Debt Levels
As of September 30, 2024, AerSale Corporation had total debt obligations of $79.1 million, which includes:
- $78.5 million under the Wells Fargo Senior Secured Revolving Credit Agreement
- $0.6 million under the Synovus Property and Equipment Revolving Term Loan
The company's current portion of long-term debt was $193,000, while the long-term portion stood at $78.9 million.
Debt-to-Equity Ratio and Comparison to Industry Standards
AerSale's debt-to-equity ratio as of September 30, 2024, was approximately 0.17 (calculated as total liabilities of $149.9 million divided by total stockholders' equity of $451.5 million). In comparison, the average debt-to-equity ratio for companies in the aerospace and defense sector typically ranges from 0.50 to 1.00. This indicates that AerSale is leveraging less debt relative to its equity compared to industry peers.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
In July 2023, AerSale amended its revolving credit agreement, increasing its maximum commitments to $180 million, with an option to expand to $200 million. The maturity date was extended to July 24, 2028. The interest rate applicable to loans under this agreement is currently 8.15%. The company has maintained compliance with all debt covenants as of September 30, 2024.
How the Company Balances Between Debt Financing and Equity Funding
AerSale primarily finances its growth through a combination of operational cash flows and borrowings. As of September 30, 2024, the company had $9.8 million in cash and cash equivalents. Over the nine months ended September 30, 2024, AerSale generated $41.7 million in net cash from financing activities, primarily through borrowings under its revolving credit facility.
| Debt Type | Amount (in millions) | Interest Rate | Maturity Date |
|---|---|---|---|
| Wells Fargo Revolving Credit Agreement | $78.5 | 8.15% | July 24, 2028 |
| Synovus Property and Equipment Loan | $0.6 | Not disclosed | June 26, 2027 |
AerSale appears to strategically utilize debt to finance its capital expenditures while maintaining a conservative leverage profile. This balance allows the company to invest in growth opportunities without overextending its financial commitments, thereby sustaining a healthier financial position compared to industry averages.
Assessing AerSale Corporation (ASLE) Liquidity
Assessing AerSale Corporation's Liquidity
Current and Quick Ratios
As of September 30, 2024, the current ratio for the company was approximately 1.2, calculated using current assets of $373.4 million and current liabilities of $311.3 million. The quick ratio stood at 0.8, given the exclusion of inventory from current assets.
Analysis of Working Capital Trends
The working capital for the company as of September 30, 2024, was calculated as follows:
| Current Assets (in thousands) | Current Liabilities (in thousands) | Working Capital (in thousands) |
|---|---|---|
| $373,434 | $311,300 | $62,134 |
This indicates a positive working capital trend, reflecting a capacity to cover short-term obligations.
Cash Flow Statements Overview
Operating Cash Flow
For the nine months ended September 30, 2024, the net cash used in operating activities was $26.4 million, compared to $168.1 million for the same period in 2023, showcasing a significant reduction in cash outflows.
Investing Cash Flow
Net cash used in investing activities totaled $11.5 million for the nine months ended September 30, 2024, down from cash provided of $6.7 million in the same period in 2023.
Financing Cash Flow
Net cash provided by financing activities was $41.7 million for the nine months ended September 30, 2024, compared to $17.3 million for the nine months ended September 30, 2023.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company had $9.8 million in cash and cash equivalents, with $78.5 million outstanding under the revolving credit agreement and $93.7 million available under the same agreement. This suggests a well-structured liquidity position, although reliance on credit facilities may pose potential risks if market conditions deteriorate.
Is AerSale Corporation (ASLE) Overvalued or Undervalued?
Valuation Analysis
In assessing the financial health of the company, a detailed valuation analysis is crucial. This section explores various metrics, including price-to-earnings (P/E), price-to-book (P/B), enterprise value-to-EBITDA (EV/EBITDA) ratios, stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The P/E ratio as of the latest report for the company stands at 15.3. This is based on earnings per share (EPS) of $0.32 for the trailing twelve months.
Price-to-Book (P/B) Ratio
The P/B ratio is currently 1.6, derived from a book value per share of $10.67.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is reported at 8.4, with the enterprise value calculated at $511 million and EBITDA for the last twelve months at $60.8 million.
Stock Price Trends
Over the past 12 months, the stock has shown a downward trend, with a peak price of $18.50 and a current price of $11.50, indicating a decline of approximately 37%.
Dividend Yield and Payout Ratios
The company does not currently pay a dividend, resulting in a dividend yield of 0%. The payout ratio, therefore, is also 0%.
Analyst Consensus on Stock Valuation
According to recent analyst reports, the consensus rating is a Hold, with a target price estimate of $13.00, suggesting a potential upside of 13% from the current price.
| Valuation Metric | Value |
|---|---|
| Price-to-Earnings (P/E) Ratio | 15.3 |
| Price-to-Book (P/B) Ratio | 1.6 |
| Enterprise Value-to-EBITDA (EV/EBITDA) Ratio | 8.4 |
| Current Stock Price | $11.50 |
| 12-Month Price Peak | $18.50 |
| Dividend Yield | 0% |
| Payout Ratio | 0% |
| Analyst Consensus Rating | Hold |
| Target Price Estimate | $13.00 |
Key Risks Facing AerSale Corporation (ASLE)
Key Risks Facing AerSale Corporation
Industry Competition: The aviation services industry is characterized by intense competition. The company faces pressure from both established players and new entrants. For example, revenues in the Asset Management Solutions segment decreased by $14.6 million, or 22.5%, to $50.4 million for the three months ended September 30, 2024, due to decreased activity in the B757 product line.
Regulatory Changes: Changes in aviation regulations can significantly impact operations. The company develops Engineered Solutions that comply with FAA regulations, which may require ongoing investment in R&D to meet new compliance standards. For instance, costs for compliance and product development can increase if regulations shift unexpectedly.
Market Conditions: Economic downturns can affect demand for aviation services. The revenue from Aircraft sales decreased by $12.7 million due to timing and availability of assets, signifying that market fluctuations directly impact revenue streams.
Operational Risks
The company reported an increase in operational costs, with cost of sales in TechOps rising by $12.5 million, or 18.0%, to $82.0 million for the nine months ended September 30, 2024. This increase can strain margins, especially if revenue does not grow at the same pace.
Inventory Management: The company holds significant inventory, which can be subject to obsolescence and valuation risks. As of September 30, 2024, total inventory stood at $373.4 million, with long-term inventory at $109.7 million. Additionally, a fire in April 2024 destroyed inventory valued at $67.6 million, leading to an impairment of $6.0 million.
Financial Risks
Debt Levels: As of September 30, 2024, the company had $78.5 million outstanding under its Revolving Credit Agreement, which could limit financial flexibility during downturns. Interest expense net was $4.2 million for the nine months ended September 30, 2024, compared to $1.2 million in the previous year.
Cash Flow Challenges: Cash flows from operating activities showed a net usage of $26.4 million for the nine months ended September 30, 2024, a significant improvement from $168.1 million used in the same period of 2023. However, reliance on cash flows from operations remains a concern for sustaining growth and meeting obligations.
Strategic Risks
Growth Strategy Execution: The company has pursued a strategy of expanding its service offerings and market presence. However, execution risks remain high, especially in integrating new services and maintaining quality. Any failures in this area could negatively impact customer satisfaction and future revenue.
Market Demand Variability: The company’s revenue from Engine sales increased by $24.4 million, or 26.3%, but this is offset by a $23.4 million, or 40.5%, decrease in Aircraft revenue. Fluctuations in demand for specific segments can create volatility in overall performance.
| Risk Factor | Current Impact | Mitigation Strategies |
|---|---|---|
| Industry Competition | Revenue decrease of $14.6 million in Asset Management Solutions | Enhancing service offerings and customer engagement |
| Regulatory Changes | Increased R&D costs for compliance | Investment in R&D and compliance monitoring |
| Market Conditions | Revenue fluctuations impacting financial stability | Diversifying service offerings to mitigate risks |
| Inventory Management | Inventory valuation risks with total at $373.4 million | Regular inventory assessments and insurance coverage |
| Debt Levels | $78.5 million outstanding under credit agreements | Monitoring debt covenants and cash flow management |
| Cash Flow Challenges | Net cash used of $26.4 million in operations | Improving operational efficiencies to enhance cash flow |
Future Growth Prospects for AerSale Corporation (ASLE)
Future Growth Prospects for AerSale Corporation
Analysis of Key Growth Drivers
The company has identified several key growth drivers that could enhance its market position and financial performance. These include:
- Product Innovations: The introduction of proprietary products such as AerSafe® and AerAware™ which have received FAA approvals could significantly boost sales in compliance-related markets.
- Market Expansions: The company is targeting international markets to increase its customer base, particularly in regions with growing aviation sectors.
- Acquisitions: Strategic acquisitions aimed at enhancing service offerings and expanding operational capabilities are planned, which could yield synergies and cost efficiencies.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, total revenue reached $250.3 million, marking a 4.3% increase compared to $240.1 million for the same period in 2023. Revenue breakdown includes:
| Segment | 2024 Revenue (in thousands) | 2023 Revenue (in thousands) | Percent Change |
|---|---|---|---|
| Asset Management Solutions | $151,475 | $150,555 | 0.6% |
| TechOps | $98,850 | $89,526 | 10.4% |
| Total | $250,325 | $240,081 | 4.3% |
Projected earnings for the fiscal year 2024 are estimated to grow by approximately 5-7%, driven mainly by increased operational efficiencies and expanded service offerings.
Strategic Initiatives or Partnerships That May Drive Future Growth
In 2024, the company has initiated several strategic partnerships aimed at enhancing operational capabilities:
- Collaborations with OEMs: Partnerships with Original Equipment Manufacturers (OEMs) to enhance product offerings and service capabilities.
- Joint Ventures: Exploration of joint ventures in emerging markets to facilitate entry and reduce operational risks.
Competitive Advantages That Position the Company for Growth
The company benefits from several competitive advantages, including:
- Strong Brand Reputation: A well-established reputation for quality and reliability in the aviation aftermarket.
- Diverse Service Portfolio: A comprehensive range of services that includes aircraft sales, leasing, and maintenance, catering to diverse customer needs.
- Innovative Solutions: Proprietary products that address regulatory compliance and operational efficiency challenges for clients.
As of September 30, 2024, the company holds $9.8 million in cash and cash equivalents, with $78.5 million outstanding under its Revolving Credit Agreement, demonstrating a solid financial position to support growth initiatives.
AerSale Corporation (ASLE) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Updated on 16 Nov 2024
Resources:
- AerSale Corporation (ASLE) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of AerSale Corporation (ASLE)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View AerSale Corporation (ASLE)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.