AerSale Corp

Previous wording

In addition to our aircraft and USM parts offerings, we develop Engineered Solutions consisting of Supplemental Type Certificates (“STCs”) that can be installed on existing Flight Equipment to improve performance, comply with regulatory requirements, or improve safety. An example of these solutions is the AerSafe® product line, which we designed and for which we obtained Federal Aviation Administration (“FAA”) approval to sell as a solution for compliance with the FAA’s fuel tank flammability regulations. Another example of these solutions is our AerAware™ product, an industry-leading, next generation Enhanced Flight Vision System that has recently received approval by the FAA for the Boeing B737NG product line. These products are proprietary in nature and function as non-OEM solutions to regulatory requirements and other technical challenges, often at reduced delivery time and cost for operators. In order to develop these products, we engage in research and development activities (“R&D”) that are expensed as incurred.

Current wording

In addition to our aircraft and USM parts offerings, we develop Engineered Solutions consisting of Supplemental Type Certificates (“STCs”) that can be installed on existing Flight Equipment to improve performance, comply with regulatory requirements, or improve safety. An example of these solutions is the AerSafe® product line, which we designed and for which we obtained Federal Aviation Administration (the “FAA”) approval to sell as a solution for compliance with the FAA’s fuel tank flammability regulations. Another example of these solutions is our AerAware™ product, an industry-leading, next generation Enhanced Flight Vision System that has recently received approval by the FAA for the Boeing B737NG product line. These products are proprietary in nature and function as non-OEM solutions to regulatory requirements and other technical challenges, often at reduced delivery time and cost for operators. In order to develop these products, we engage in research and development activities (“R&D”) that are expensed as incurred.

Previous wording

The most recently adopted and to be adopted accounting pronouncements are described in Note B of our condensed consolidated financial statements included in this Quarterly Report, as well as in Note B within our consolidated annual financial statements in Part II, Item 8 of the 2024 Form 10-K.

Current wording

The most recently adopted and to be adopted accounting pronouncements are described in Note B of our condensed consolidated financial statements included in this Quarterly Report and in Note B within our consolidated annual financial statements in Part II, Item 8 of the 2024 Form 10-K.

Previous wording

Cost of sales in Asset Management Solutions decreased $9.4 million, or 25.8%, to $27.2 million for the three months ended March 31, 2025, compared to the prior year period. The decrease in cost of sales was primarily driven by the decrease in Flight Equipment sales discussed above. Gross profit in the Asset Management Solutions segment decreased $10.6 million to $12.0 million, or 46.8%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The gross profit decrease is mainly attributable to lower revenue generated for the three months ended March 31, 2025, as noted above.

Current wording

Cost of sales in Asset Management Solutions increased $22.9 million or 86.5%, to $49.3 million for the three months ended June 30, 2025, compared to the prior year period. The increase in cost of sales was primarily driven by the sales increase discussed above. Gross profit in the Asset Management Solutions segment increased $11.6 million, or 75.5%, to $27.0 million for the three months ended June 30, 2025, compared to the three months ended June 30, 2024. The gross profit increase is mainly attributable to higher revenue generated for the three months ended June 30, 2025, as noted above.

Previous wording

Aircraft gross profit margins decreased to 21.4% for the three months ended March 31, 2025, from 29.6% for the three months ended March 31, 2024 due to higher margins generated on the prior period Flight Equipment sales with margins generated on USM sales remaining consistent. Engine gross profit margin was 32.9% for the three months ended March 31, 2025, a decrease from 41.5% for the three months ended March 31, 2024, which was primarily the result of changes to the product mix and lower margins on USM sales.

Current wording

Aircraft gross profit margins increased to 42.0% for the three months ended June 30, 2025, from 37.6% for the three months ended June 30, 2024 due to higher margin contribution from leasing revenue and USM product mix. Engine gross profit margin was 34.3% for the three months ended June 30, 2025, a decrease from 36.5% for the three months ended June 30, 2024, which was primarily the result of lower margins on USM sales due to product mix.

Previous wording

Our revenue from TechOps decreased by $4.7 million, or 15.1%, to $26.6 million for the three months ended March 31, 2025, compared to the prior year period. The decrease is driven by lower sales volume in our Goodyear, Arizona facility and a focus on higher margin work at our Roswell, New Mexico facility. This was partially offset by higher revenues from the Company's component MROs.

Current wording

Our revenue from TechOps decreased by $4.2 million or 11.9%, to $31.1 million for the three months ended June 30, 2025, compared to the prior year period. The decrease was driven by lower sales volume in our Goodyear, Arizona and Roswell, New Mexico facilities, partly offset by higher revenue from the Company’s component MROs.

Previous wording

The effective tax rate for the three months ended March 31, 2025 was 12.0% compared to (6.8%) for the three months ended March 31, 2024. The difference between the effective tax rate and the statutory tax rate of 21% for the three months ended March 31, 2025 is primarily due to the benefit of the foreign derived intangible income deduction and R&D credits. The difference between the effective tax rate and the statutory tax rate of 21% for the three months ended March 31, 2024, is primarily due to the benefit of the foreign derived intangible income deduction and R&D credits.

Current wording

The effective tax rate for the three months ended June 30, 2025, was 17.0% compared to (15.8%) for the three months ended June 30, 2024. The difference between the effective tax rate and the statutory tax rate of 21% for the three months ended June 30, 2025, is primarily due to the impact of state income taxes, offset by the foreign derived intangible income deduction and R&D tax credits. The difference between the effective tax rate and the statutory tax rate of 21% for the three months ended June 30, 2024 was primarily due to the exclusion of the foreign derived intangible income deduction and the change in fair market value of the warrants.

Previous wording

Total revenue for the three months ended March 31, 2025 decreased $24.8 million, or 27.4%, compared to the same period in 2024, driven by a decrease of $20.0 million, or 33.8%, within Asset Management Solutions, and a decrease of $4.7 million, or 15.1%, within TechOps.

Current wording

Total revenue for the six months ended June 30, 2025 increased $5.5 million or 3.3% compared to the six months ended June 30, 2024, driven by an increase of $14.4 million, or 14.3%, in revenue within Asset Management Solutions and a decrease of $8.9 million, or 13.4%, in revenue within TechOps.

Previous wording

Sales in the Asset Management Solutions segment decreased $20.0 million, or 33.8%, to $39.2 million for the three months ended March 31, 2025, due to a $11.1 million, or 25.8%, decrease in revenue from Engine, and a $9.0 million, or 55.0%, decrease in revenue from Aircraft. The decrease in Engine revenue is due to lower Flight Equipment sales in the amount of $25.7 million primarily attributable tolower activity in the CFM56 and V2500 product lines, partly offset by higher USM sales in the amount of $11.3 million, and higher leasing revenue in the amount of $3.8 million. The decrease in Aircraft revenue is primarily attributable to reduced activity in the B737 product line as a result of lower Flight Equipment sales in the amount of $11.2 million, as well as lower USM sales.

Current wording

Sales in the Asset Management Solutions segment increased $14.4 million or 14.3%, to $115.5 million for the six months ended June 30, 2025, due to a $22.1 million, or 29.2%, increase in revenue from Engine; offset by a $7.7 million, or 30.2%, decrease in revenue from Aircraft. The increase in Engine revenue is primarily attributable to increased activity in the CF6-80 and PW4000 product lines as a result of higher USM sales in the amount of $25.3 million and higher leasing revenue in the amount of $6.5 million, partly offset by lower sales of Flight Equipment. The decrease in Aircraft revenue is primarily attributable todecreased activity in the B737 product line due to lower Flight Equipment sales in the amount of $12.3 million, partially offset by higher leasing revenue from the B757 product line.

Previous wording

Cost of sales in TechOps decreased $4.5 million, or 17.9%, to $20.6 million for the three months ended March 31, 2025 compared to the prior year period, driven by the sales decrease discussed above. Gross profit in TechOps decreased $0.2 million, or 3.7%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, driven by lower gross profit of $1.0 million on MRO services. Gross profit margin increased to 22.3% for the three months ended March 31, 2025 compared to 19.6% for the prior year period, and was largely attributable to higher margin on Product Sales of 35.6% for the three months ended March 31, 2025 compared to 22.6% for the prior year period, driven by higher demand for AerSafe products.

Current wording

Cost of sales in TechOps decreased $10.7 million, or 19.8%, to $43.4 million for the six months ended June 30, 2025, compared to the prior year period, driven by the lower revenue discussed above. Gross profit in TechOps increased $1.8 million, or 14.3% for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, driven by higher profit generated on product sales. Gross profit margin increased to 24.8% for the six months ended June 30, 2025 compared to 18.8% for the six months ended June 30, 2024, and was largely attributable to higher margins from the Company’s on airport and Landing Gear MROs.

Previous wording

We account for our private warrants as a liability at their fair value, with changes in fair value recognized in our results from operations for the period. The fair value of our private warrants is determined using a Black Scholes option pricing model. For the three months ended March 31, 2025, we recorded a $0.1 million change in fair value of warrant liability expense, compared to a $2.0 million income in the prior year period.

Current wording

We account for our private warrants as a liability at their fair value, with changes in fair value recognized in our results from operations for the period. The fair value of our private warrants is determined using a Black Scholes option pricing model. For the six months ended June 30, 2025, we recorded a change in fair value of the warrant liability income of $0.1 million, compared to a $2.1 million income in the prior year period.

Previous wording

Revolving Credit Agreement (as defined below) as of March 31, 2025, and we had $44.2 million of availability thereunder. We used cash in operations of $45.2 million for the three months ended March 31, 2025, and used cash in investing activities of $3.5 million for the three months ended March 31, 2025.

Current wording

As of June 30, 2025, we had $5.7 million of cash and cash equivalents. We finance our growth through cash flows generated from operations and borrowings secured by our assets. We had $114.5 million outstanding under the Revolving Credit Agreement (as defined below) as of June 30, 2025, and we had $63.1 million of availability thereunder. We used cash in operations of $25.4 million for the six months ended June 30, 2025, primarily for feedstock acquisitions, and used cash in investing activities of $3.8 million for the six months ended June 30, 2025.

Previous wording

Net cash used in operating activities was $45.2 million for the three months ended March 31, 2025, compared to cash used of $21.5 million for the same period in 2024. The increase in cash used in operating activities of $23.7 million was primarily due to higher feedstock acquisitions of $15.7 million and lower results from operations.

Current wording

Net cash used in operating activities was $25.4 million for the six months ended June 30, 2025, compared to cash used of $36.8 million for the same period in 2024. The decrease in cash deployed of $11.4 million was primarily due to higher USM sales and higher results from operations during the six months ended June 30, 2025 compared to the prior year period.

Previous wording

Net cash used in investing activities was $3.5 million for the three months ended March 31, 2025, compared to cash provided of $0.2 million in the same period for 2024. Cash used in investing activities during the three months ended March 31, 2025, was driven by purchases of property and equipment. Cash provided by investing activities during the three months ended March 31, 2024, was driven by the sale of Flight Equipment, partly offset by purchases of property and equipment.

Current wording

Net cash used in investing activities was $3.8 million for the six months ended June 30, 2025, compared to cash used of $9.0 million in the same period for 2024. Cash used in investing activities was driven by purchases of property and equipment during the six months ended June 30, 2025 and June 30, 2024 due to the completion of the Company’s expansion projects.

Previous wording

Net cash provided by financing activities was $48.8 million for the three months ended March 31, 2025, compared to cash provided of $18.0 million for the three months ended March 31, 2024. Cash provided by financing activities during the three months ended March 31, 2025, resulted from borrowing under our Revolving Credit Agreement, offset by cash used in the repurchase of common stock. Cash provided by financing activities during the three months ended March 31, 2024 resulted from borrowing under our Revolving Credit Agreement.

Current wording

Net cash provided by financing activities was $30.2 million for the six months ended June 30, 2025, compared to cash provided of $44.2 million in the same period for 2024. Cash provided by financing activities during the six months ended June 30, 2025 resulted from borrowing under our Revolving Credit Agreement, offset by cash used in the repurchase of common stock in the first quarter of 2025. Cash provided by financing activities during the six months ended June 30, 2024 is the result of proceeds from net borrowings under the CIBC Equipment Loan (as defined below) and net borrowings under the Revolving Credit Agreement (as defined below).

Previous wording

amount, expandable to $200.0 million, subject to conditions and the availability of lender commitments and borrowing base limitations, and to extend the maturity date to July 24, 2028, subject to certain conditions.

Current wording

Effective July 25, 2023, we amended our revolving credit agreement (as amended, the “Revolving Credit Agreement”) to increase our maximum commitments under the Revolving Credit Agreement to $180.0 million aggregate amount, expandable to $200.0 million, subject to conditions and the availability of lender commitments and borrowing base limitations, and to extend the maturity date to July 24, 2028, subject to certain conditions.

Previous wording

The maximum amount of such commitments available at any time for borrowings and letters of credit is determined according to a borrowing base calculation equal to the sum of eligible inventory and eligible accounts receivable reduced by the aggregate amount, if any, of trade payables of the loan parties, as defined in the Revolving Credit Agreement. Extensions of credit under the Revolving Credit Agreement are available for working capital and general corporate purposes.

Current wording

The maximum amount of such commitments available at any time for borrowings and letters of credit is determined according to a borrowing base calculation equal to the sum of eligible inventory and eligible accounts receivable reduced by the aggregate amount, if any, of trade payables of the loan parties, as defined in the Revolving Credit Agreement, and is subject to contractual restrictions. Extensions of credit under the Revolving Credit Agreement are available for working capital and general corporate purposes.

Previous wording

As of March 31, 2025, there was $133.1 million outstanding under the Revolving Credit Agreement and we had $44.2 million of availability thereunder. We were in compliance with our debt covenants for the Revolving Credit Agreement as of March 31, 2025.

Current wording

As of June 30, 2025, there was $114.5 million outstanding under the Revolving Credit Agreement and we had $63.1 million of availability thereunder. We were in compliance with our debt covenants for the Revolving Credit Agreement as of June 30, 2025.

Previous wording

On November 22, 2024, the Company entered into the CIBC Equipment Loan with a total advance commitment of $10.0 million for the purpose of financing capital expenditures on property and equipment. Advances made by the lender are convertible into term loans at the option of the lender at a rate of SOFR plus 3.0% and have a maturity date of thirty-six (36) months from the term loan conversion date. Advances under this loan are collateralized by the property and equipment it finances and require interest only payment until converted to a term loan, at which point, principal and interest payments are required.

Current wording

On November 22, 2024, the Company entered into a property and equipment revolving term loan (the “CIBC Equipment Loan”) with a total advance commitment of $10.0 million for the purpose of financing capital expenditures on property and equipment. Advances made by the lender are convertible into term loans at the option of the lender at a rate of SOFR plus 3.0% and have a maturity date of thirty-six (36) months from the term loan conversion date. Advances under this loan are collateralized by the property and equipment it finances and require interest only payments until converted to a term loan, at which point, principal and interest payments are required.

Previous wording

During the three months ended March 31, 2025, the Company borrowed $0.2 million, which has not been converted to a term loan as of March 31, 2025. As of March 31, 2025, $1.9 million remained outstanding under this facility.

Current wording

During the six months ended June 30, 2025, the Company borrowed $0.2 million, which has not been converted to a term loan as of June 30, 2025. As of June 30, 2025, $1.7 million remained outstanding under this facility.

Previous wording

The Company has entered into a purchase commitment with Universal Avionics, a subsidiary of Elbit Systems, valued at $19.8 million for the acquisition of technical equipment for manufacturing our AerAware TM product. The commitment is expected to be satisfied in 2026.

Current wording

The Company has entered into a purchase commitment with Universal Avionics valued at $7.3 million for the acquisition of technical equipment for manufacturing our AerAware TM product. The commitment is expected to be satisfied in 2025.

Previous wording

The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. A summary of our critical accounting estimates is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the 2024 Form 10-K. We continually review these estimates and their underlying assumptions to ensure they are appropriate for the circumstances. Changes in the estimates and assumptions we use could have a material impact on our financial results. During the three months ended March 31, 2025, there were no material changes in our critical accounting estimates and policies.

Current wording

The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. A summary of our critical accounting estimates is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the 2024 Form 10-K. We continually review these estimates and their underlying assumptions to ensure they are appropriate for the circumstances. Changes in the estimates and assumptions we use could have a material impact on our financial results. During the six months ended June 30, 2025, there were no material changes in our critical accounting estimates and policies.