ASLE 10-K & 10-Q changes, risk factors and insider trading
AerSale Corp · Nasdaq · Wholesale-Machinery, Equipment & Supplies · CIK 1754170 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
Largest changes
When a lessee defaults on its obligations under a lease and does not cure such default in a timely manner, we typically seek to terminate the applicable lease and repossess the leased Flight Equipment. If a defaulting lessee contests the termination and repossession or is under court protection, enforcement of our rights under the lease may be difficult, expensive and time-consuming. In the event the Flight Equipment is located outside of the United States, we may need to obtain governmental consents to export the Flight Equipment back to the United States. During times of military conflict or geopolitical tension, we may not be able to physically repossess Flight Equipment if it is located in a hostile country or at an airport location that is under no fly status. For example, as a result of the recent military action by the U.S. and Israel in Iran, Iran has retaliated against many civilian airport targets in the Middle East which shutdown or severely limited air travel in the region. As a result, the relevant asset may be off-lease and not generating revenue for a prolonged period. In addition, we will incur direct costs associated with repossessing our Flight Equipment, which may include legal and similar costs, costs of transporting, storing and insuring the Flight Equipment, and costs associated with necessary maintenance and recordkeeping to make the Flight Equipment available for re-lease or sale. During this time, we will not realize revenue from the Flight Equipment being repossessed and will continue to be obligated to pay any debt financing related to the Flight Equipment. If an engine is installed on an airframe, the airframe may be owned by an aircraft lessor or other third party. Our ability to recover engines installed on airframes owned by third-parties may depend on the cooperation of the airframe owner.see in full comparison
As a provider of products and services to the commercial aviation industry, we are generally affected by overall economic conditions of that industry. The commercial aviation industry is historically cyclical and has been negatively affected in the past by geopolitical events, such assee in full comparisonongoingpoliticalconflictsinstability (including between Russia andUkraine andUkraine, between Israel andHamasHamas, and most recently, as a result of military action in Iran by the U.S. and Israel), escalating tensions (such as between China and the U.S.), terrorism, high fuel and oil prices, labor issues, lack of capital, continued inflation, high interest rates, and weak economic conditions. As a result of these and other events, from time to time certain of our customers have filed for bankruptcy protection or ceased operations. The impact of instability in the global financial markets has led, and may in the future lead, airlines to reduce domestic or international capacity. In addition, certain of our airline customers have in the past been impacted by tight credit markets, which limited their ability to buy parts, services, and Flight Equipment.
“Any costs found to be misclassified or inaccurately allocated to a specific contract are not reimbursable, and, to the extent already reimbursed, must be refunded. Also, any inadequacies in our systems and policies could result in payments being withheld, penalties and reduced future business, and may adversely affect our results of operations and financial condition.”see in full comparison
In October 2023, a military conflict commenced between Israel and Hamas. Although ceasefire negotiations have been underway, whether such negotiations will ultimately be successful in ending the war is difficult to predict, as are such war’s global economic impact, which could include further sanctions, embargoes, regional instability, energy shortages, geopolitical shifts and adverse effects on macroeconomic conditions, security conditions, currency exchange rates and financial markets, and the impact on the Company’s business and operations and on the businesses and operations of the Company’s suppliers, customers and other third parties with which the Company conducts business. The recent military conflict in Iran, and the international response to such conflict, may also have an adverse impact on the global economy, which could adversely affect the Company’s business and operations and those of its suppliers, customers and third parties with which the Company conducts business. Of note, the Company’s enterprise resource planning vendor and the supplier of most of the components of our EFVS offering designated as AerAware™ are both based in Israel. In addition, as a result of the ongoing military actions and tensions in the Middle East, armed conflicts have resulted, and could in the future result, in shutdowns or significant limitations on commercial airspace throughout the Middle East. The inability of commercial and cargo carriers to operate generally in the Middle East could affect our business and operations and those of our suppliers, customers and third parties which could have a material adverse affect on our business. The impact on companies, such as AerSale, that are in the aviation industry, could be more severe compared to companies that do not depend on unrestricted air or sea travel in the Middle East region.see in full comparison
In addition, because we contract directly with the U.S. government or act as a subcontractor to customers contracting with the U.S. government, we may be subject to U.S. government inquiries and investigations, including periodic audits of costs that we determine are reimbursable under government contracts. U.S. government agencies routinely audit government contractors to review performance under contracts, cost structure and compliance with applicable laws, regulations, and standards, as well as the adequacy of and compliance with internal control systems and policies, including the contractor’s purchasing, property, estimating, compensation and management information systems. Any costs found to be misclassified or inaccurately allocated to a specific contract are not reimbursable, and, to the extent already reimbursed, must be refunded. Also, any inadequacies in our systems and policies could result in payments being withheld, penalties and reduced future business, and may adversely affect our results of operations and financial condition.see in full comparison
Our facilities or our customers’ facilities could be damaged or disrupted by a natural disaster, war, or terrorist activity. For example, in April 2024, one of our leased secondary parts warehouses in Roswell, New Mexico, which stored various aircraft parts inventory typically sold as USM, was destroyed by a fire.see in full comparisonWhile we submitted a claim for the replacement value of the inventory that was destroyed or rendered not sellable due to the fire in the amount of $67.6 million, the cost basis of the destroyed inventory was $6.0 million. To date, we have collected a total of approximately $34.6 million in connection with such claim.A major catastrophe, such as an earthquake, hurricane, fire, flood, tornado, pandemic, or other natural disaster at any of our sites, or war or terrorist activities in any of the areas where we conduct operations, could result in a prolonged interruption of our business. Any disruption resulting from these events could cause significant delays in shipments of products, and the loss of sales and customers, and we may not have insurance to adequately compensate us for any of these events. For leased facilities, timely renewal of leases, and risk mitigation from the sale of our leased facilities, is required to avoid any business interruption.
Full comparison: every changed paragraph (10)
We source parts and components for our business from various suppliers around the world. Current geopolitical conditions, including sanctions and other trade restrictive actions and strained intercountry relations, could cause significant materials and parts shortages, as well as delivery delays, labor shortages, distribution issues, energy cost increases and price increases. These issues could lead to significant supplier performance failures and delays. Disruptions to our supply chain and business operations, or to our suppliers’ supply chains and business operations, could have adverse effects on our ability to provide aftermarket support and services to our customers.
As a provider of products and services to the commercial aviation industry, we are generally affected by overall economic conditions of that industry. The commercial aviation industry is historically cyclical and has been negatively affected in the past by geopolitical events, such as ongoingpolitical conflictsinstability (including between Russia and Ukraine andUkraine, between Israel and HamasHamas, and most recently, as a result of military action in Iran by the U.S. and Israel), escalating tensions (such as between China and the U.S.), terrorism, high fuel and oil prices, labor issues, lack of capital, continued inflation, high interest rates, and weak economic conditions. As a result of these and other events, from time to time certain of our customers have filed for bankruptcy protection or ceased operations. The impact of instability in the global financial markets has led, and may in the future lead, airlines to reduce domestic or international capacity. In addition, certain of our airline customers have in the past been impacted by tight credit markets, which limited their ability to buy parts, services, and Flight Equipment.
When a lessee defaults on its obligations under a lease and does not cure such default in a timely manner, we typically seek to terminate the applicable lease and repossess the leased Flight Equipment. If a defaulting lessee contests the termination and repossession or is under court protection, enforcement of our rights under the lease may be difficult, expensive and time-consuming. In the event the Flight Equipment is located outside of the United States, we may need to obtain governmental consents to export the Flight Equipment back to the United States. During times of military conflict or geopolitical tension, we may not be able to physically repossess Flight Equipment if it is located in a hostile country or at an airport location that is under no fly status. For example, as a result of the recent military action by the U.S. and Israel in Iran, Iran has retaliated against many civilian airport targets in the Middle East which shutdown or severely limited air travel in the region. As a result, the relevant asset may be off-lease and not generating revenue for a prolonged period. In addition, we will incur direct costs associated with repossessing our Flight Equipment, which may include legal and similar costs, costs of transporting, storing and insuring the Flight Equipment, and costs associated with necessary maintenance and recordkeeping to make the Flight Equipment available for re-lease or sale. During this time, we will not realize revenue from the Flight Equipment being repossessed and will continue to be obligated to pay any debt financing related to the Flight Equipment. If an engine is installed on an airframe, the airframe may be owned by an aircraft lessor or other third party. Our ability to recover engines installed on airframes owned by third-parties may depend on the cooperation of the airframe owner.
Global conflicts, including the war in the Ukraine and conflict in the Middle EastEast, including the recent military conflict in Iran, are creating an adverse climate for our business. The U.S. government has imposed enhanced export restrictions and controls on certain products and technology, as well as sanctions on certain industry sectors and parties inin, among others, Russia, Belarus and parts of the Ukraine. The governments of other jurisdictions in which we may conduct business, such as the European Union, have also implemented sanctions or other restrictive measures. These sanctions and enhanced export controls, as well as any responses from Russia, could adversely affect the Company and/or our supply chain, business partners or customers, flight activity, demand for MRO and leasing services and the related macro environment. The economic and security conditions could also limit the Company’s ability to provide its services or products to certain customers, as well as limit its ability to receive payments. The totality of these events, sanctions and restrictions may have a material adverse effect on our business, financial condition, liquidity and results of operations. These sanctions and restrictions may also jeopardize and adversely impact the availability and cost of insurance which covers any assets or operations that may be subject to these restrictions and enhanced sanctions.
In October 2023, a military conflict commenced between Israel and Hamas. Although ceasefire negotiations have been underway, whether such negotiations will ultimately be successful in ending the war is difficult to predict, as are such war’s global economic impact, which could include further sanctions, embargoes, regional instability, energy shortages, geopolitical shifts and adverse effects on macroeconomic conditions, security conditions, currency exchange rates and financial markets, and the impact on the Company’s business and operations and on the businesses and operations of the Company’s suppliers, customers and other third parties with which the Company conducts business. The recent military conflict in Iran, and the international response to such conflict, may also have an adverse impact on the global economy, which could adversely affect the Company’s business and operations and those of its suppliers, customers and third parties with which the Company conducts business. Of note, the Company’s enterprise resource planning vendor and the supplier of most of the components of our EFVS offering designated as AerAware™ are both based in Israel. In addition, as a result of the ongoing military actions and tensions in the Middle East, armed conflicts have resulted, and could in the future result, in shutdowns or significant limitations on commercial airspace throughout the Middle East. The inability of commercial and cargo carriers to operate generally in the Middle East could affect our business and operations and those of our suppliers, customers and third parties which could have a material adverse affect on our business. The impact on companies, such as AerSale, that are in the aviation industry, could be more severe compared to companies that do not depend on unrestricted air or sea travel in the Middle East region.
In addition, because we contract directly with the U.S. government or act as a subcontractor to customers contracting with the U.S. government, we may be subject to U.S. government inquiries and investigations, including periodic audits of costs that we determine are reimbursable under government contracts. U.S. government agencies routinely audit government contractors to review performance under contracts, cost structure and compliance with applicable laws, regulations, and standards, as well as the adequacy of and compliance with internal control systems and policies, including the contractor’s purchasing, property, estimating, compensation and management information systems. Any costs found to be misclassified or inaccurately allocated to a specific contract are not reimbursable, and, to the extent already reimbursed, must be refunded. Also, any inadequacies in our systems and policies could result in payments being withheld, penalties and reduced future business, and may adversely affect our results of operations and financial condition.
Any costs found to be misclassified or inaccurately allocated to a specific contract are not reimbursable, and, to the extent already reimbursed, must be refunded. Also, any inadequacies in our systems and policies could result in payments being withheld, penalties and reduced future business, and may adversely affect our results of operations and financial condition.
Our facilities or our customers’ facilities could be damaged or disrupted by a natural disaster, war, or terrorist activity. For example, in April 2024, one of our leased secondary parts warehouses in Roswell, New Mexico, which stored various aircraft parts inventory typically sold as USM, was destroyed by a fire. While we submitted a claim for the replacement value of the inventory that was destroyed or rendered not sellable due to the fire in the amount of $67.6 million, the cost basis of the destroyed inventory was $6.0 million. To date, we have collected a total of approximately $34.6 million in connection with such claim. A major catastrophe, such as an earthquake, hurricane, fire, flood, tornado, pandemic, or other natural disaster at any of our sites, or war or terrorist activities in any of the areas where we conduct operations, could result in a prolonged interruption of our business. Any disruption resulting from these events could cause significant delays in shipments of products, and the loss of sales and customers, and we may not have insurance to adequately compensate us for any of these events. For leased facilities, timely renewal of leases, and risk mitigation from the sale of our leased facilities, is required to avoid any business interruption.
The trading market for our common stock will rely in part on the research and reports that industry or financial analysts publish about us or our business. If our analysts do not continue to cover us, or if no additional analysts commence coverage of us, the trading price of our stock could be negatively affected. Even with analyst coverage, if one or more of the analysts covering our business downgrade their evaluations of our stock, the price of our common stock could decline. If one or more of these analysts cease to cover our common stock, we could lose visibility in the market for our stock, which in turn could cause our common stock price to decline.
If one or more of these analysts cease to cover our common stock, we could lose visibility in the market for our stock, which in turn could cause our common stock price to decline.
Management's Discussion & Analysis (MD&A)
Removed heading “Year ended December 31, 2024 compared to the year ended December 31, 2023”
Removed heading “Synovus Equipment Loan”
Largest changes
“We source parts and components for our business from various suppliers around the world. Current geopolitical conditions, including trade restrictive actions, strained intercountry relations, and continued shutdowns of the U.S. …”see in full comparison
“The fair value determination of the Company’s reporting units and goodwill is judgmental in nature and requires the use of estimates and assumptions that are sensitive to changes. Such estimates include revenue growth rates, profit margins, and discount rates which consider the risk-free rate as well as company and market specific risk premiums. Revenue estimates for the Asset Management Solutions reporting unit are dependent on our ability to monetize existing Flight Equipment and meet our feedstock acquisition targets. …”see in full comparison
“As part of our quantitative assessment as of December 31, 2024, we noted that our fair value estimates of the Asset Management Solutions reporting unit exceeded their carrying value by a small margin, which indicates a higher potential risk of goodwill impairment in the future; especially if this reporting unit is unable to achieve projected performance metrics. As of December 31, 2024, the amount of goodwill in the Asset Management Solutions reporting unit amounted to $13.4 million.”see in full comparison
“Year ended December 31, 2024 compared to the year ended December 31, 2023”see in full comparison
see in full comparisonInThe Company performed a qualitative impairment assessment as of thefirstCompany’squarterannual impairment testing date of2024,Octoberthe1,Company2025identifiedandaconcluded there were no triggeringeventevents that mayindicatehave indicated the fair value of one or more of the Company’s reporting units more likely than not did not exceed their carrying values.The triggering event was due toDuring thesignificantquarterdeclineendedinDecemberthe31,market price of the Company’s common stock. As a result and due to the lack of recovery of2025, the Company’s stock priceduringdecreasedthesignificantlyyearandendedhad not recovered by December 31,2024,2025, which management considered a triggering event. As a result, management decided that one or more of the Company’s reporting units more likely than not did not exceed their carrying values. Therefore, the Company performed a quantitative goodwill impairmenttestassessment for the Asset Management Solutions and ACT reporting unitsfor eachas ofthe quarters ended March 31, 2024, June 30, 2024, September 30, 2024, andDecember 31,2024,2025, and determined that the fair values exceeded the carrying values for each reporting unitofasthe endofeachDecemberquarter31,tested.2025. As such, the quantitative tests did not result in a goodwill impairment for the Company’s reporting units.
Selling, general and administrative expenses decreased bysee in full comparison$9.0$4.2 million to$94.2$90.0 million, or8.7%,4.5%, for the year ended December 31,2024, as2025 compared to2023.2024. The decrease wasprimarilyrelated to lowershare-basedvariablecompensation,and fixed payroll costs that benefited from the efficiency initiatives that were implemented earlier in the year, partially offset byhigher laborinflationary costat our heavy MRO facilities from our expansion projects.increases.
Full comparison: every changed paragraph (42)
You should read the following management’s discussion and analysis together with the Consolidated Financial Statements. This discussion contains forward-looking statements about AerSale’s business, operations and industry that involve risks and uncertainties, such as statements regarding AerSale’s plans, objectives, expectations and intentions. AerSale’s future results and financial condition may differ materially from those currently anticipated by AerSale because of the factors described in the sections entitled “Risk Factors” and “Special Note Regarding Forward-looking Statements.” A discussion of the year ended December 31, 20232024 compared to the year ended December 31, 20222023 is included in our Annual Report on Form 10-K for the year endingended December 31, 2023,2024, filed with the SEC on March 8,11, 2024,2025, under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
We are a worldwide provider of aftermarket commercial Flightaircraft, Equipment,engines, and their parts to passenger and cargo airlines, leasing companies, original equipment manufacturers (“OEM”), government and defense contractors, and maintenance, repair and overhaul (“MRO”) service providers. We report our activities in two business segments: Asset Management Solutions, comprised of activities that extract value from strategic Flight Equipment acquisitions either as whole assets or by disassembling for used serviceable material (“USM”), and TechOps, comprised of MRO activities for aircraft and their components, and sales of internally developed engineeredadvanced solutionstechnical repairs, modifications and products, which we market under the tradename “Engineered Solutions”, and other serviceable products.
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 (“EFVS”) 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 (“R&D”) activities that are expensed as incurred.
We source parts and components for our business from various suppliers around the world. Current geopolitical conditions, including trade restrictive actions, strained intercountry relations, and continued shutdowns of the U.S. government, could cause significant materials and parts shortages, as well as delivery delays, labor shortages, disruptions to government contracts such as delayed payments or halted projects, effects on supply chains due to reduced staffing for customs, inspections and transportation authorities, or delays in regulatory approvals, distribution issues, energy cost increases and price increases. Furthermore, the U.S. government’s adoption of new approaches to trade policy and imposition of tariffs on certain foreign goods (as well as the possibility of imposing significant, additional tariffs in the future) may make it more difficult or costly for us to procure components and other material supplies and, in turn, may increase the cost to our customers, which may materially and adversely impact demand for our products and services, our results of operations or our financial condition. In addition, these U.S. actions have, and could in the future, result in other countries imposing retaliatory tariffs on our goods and services provided to foreign customers, which similarly could materially and adversely impact demand for our products and services. We continue to monitor the current economic environment and its potential impact on our business, results of operations or financial condition, as well as potential impact on our end customers whose demand for our products and services may be adversely impacted as a result of changes in policies by the U.S. or other governments, and closely manage our costs and capital resources so that we can respond appropriately as circumstances change.
Year ended December 31, 2024 compared to the year ended December 31, 2023
Total revenue for the year ended December 31, 20242025 increaseddecreased by $10.6$9.8 million or 3.2%2.8% compared to 2023,2024, driven by ana increasedecrease of $0.3$3.9 million, or 0.1%,1.8%, within Asset Management Solutions and ana increasedecrease of $10.3$5.9 million, or 8.6%,4.5%, within TechOps.
Sales in the Asset Management Solutions segment increaseddecreased by $0.3$3.9 million to $215.5$211.6 million, or 0.1%,1.8%, for the year ended December 31, 20242025 compared to 2023,2024, due to a $39.1$5.8 million decrease in revenue from Aircraft, and a $39.4$1.9 million increase in revenue from Engines.Engine. The decrease in Aircraft revenue is due to lower Flight Equipment sales in the amount of $36.7$14.1 million primarily attributable to decreasedlower activityB737 inFlight theEquipment B757compared productto line2024, resultingpartly fromoffset softerby demand in the freighter market, and lowerhigher leasing revenue of $1.8$5.5 million,million partly offset byand higher USM sales. The increase in EnginesEngine revenue is due to higher USM sales of $19.7 million, Flight Equipment sales of $9.4$34.0 million, and higher leasing revenue,revenue of $7.5 million, primarily attributable to greater activity in the PW4000 and CFM56CF6-80 product lines as we continue to monetize our feedstock.feedstock, partly offset by lower Flight Equipment sales of $39.6 million.
Cost of sales in Asset Management Solutions decreasedincreased by $14.5$4.5 million to $133.0$137.5 million, or 9.8%,3.4%, for the year ended December 31, 20242025 compared to 2023.2024. The decreaseincrease in cost of sales in Asset Management Solutions was driven by an increase in cost of sales for Engine as a result of fluctuations in our product mix, which generated lower gross profit margins, partially offset by a decrease in Aircraft that was primarily driven by the sales decrease discussed above. The increase in cost of sales for Engine was primarily driven by the sales increase discussed above. Gross profit in Asset Management Solutions increaseddecreased by $14.8$8.4 million to $82.4$74.1 million, or 21.9%,10.2%, for the year ended December 31, 20242025 compared to 2023.2024. The gross profit increasedecrease is mainly attributable to the higherlower margin generated on Flight EquipmentUSM sales, as noted below.
Aircraft gross profit margins increaseddecreased to 33.2% for the year ended December 31, 2025, from 34.8% for the year ended December 31, 2024, from 28.1% for the year ended December 31, 2023, due to higherlower margin on USM sales resulting from changes in our product mix. EnginesEngine gross profit margins increaseddecreased to 35.4% for the year ended December 31, 2025, from 39.1% for the year ended December 31, 2024, from 33.4% for the year ended December 31, 2023, mainly due to higherlower margin on FlightUSM Equipmentsales sales,resulting offset byfrom changes in the USMour product mix.
AerSale’s revenue from the TechOps segment increaseddecreased by $10.3$5.9 million to $129.6$123.7 million, or 8.6%,4.5%, for the year ended December 31, 2024,2025 compared to 2023.2024. The increasedecrease was primarily driven by higher MRO product sales and higherlower service revenue of $22.5 million from componentour repairheavy activities.MROs as we concluded a maintenance contract in Goodyear, Arizona, which was partly offset by higher revenue of $16.6 million from our Component MROs and Engineered Solutions products.
Cost of sales in TechOps increaseddecreased by $13.5$16.1 million to $108.1$92.0 million, or 14.3%,14.9%, for the year ended December 31, 20242025 compared to 2023,2024, driven by revenue fluctuations noted above.above and gross profit improvements. Gross profit in TechOps decreasedincreased $3.3$10.2 million to $21.5$31.7 million, or 13.2%,47.5%, for the year ended December 31, 2024,2025 compared to 2023,2024, driven by lowerhigher profit generated on MROproduct services.sales. Gross profit margin decreasedincreased to 25.6% for the year ended December 31, 2025 compared to 16.6% for the year ended December 31, 2024 compared to 20.8% for the year ended December 31, 2023,2024, driven by lowerhigher margin on MRO services asand aEngineered result of our facility expansion projects, partly offset by higher margins on product sales.Solutions.
Selling, general and administrative expenses decreased by $9.0$4.2 million to $94.2$90.0 million, or 8.7%,4.5%, for the year ended December 31, 2024, as2025 compared to 2023.2024. The decrease was primarily related to lower share-basedvariable compensation,and fixed payroll costs that benefited from the efficiency initiatives that were implemented earlier in the year, partially offset by higher laborinflationary cost at our heavy MRO facilities from our expansion projects.increases.
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 was determined using the Black-Scholes option pricing model. We recorded a $2.3$0.1 million gain on the change in fair value of the warrant liability for each of the yearsyear ended December 31, 20242025, andcompared 2023,to respectively.$2.3 million in 2024. The Private Warrants expired unexercised during the year ended December 31, 2025.
Interest expense, net for the year ended December 31, 20242025 was $5.7$8.3 million, as compared to interest income, net of $0.2$5.7 million for the year ended December 31, 2023.2024. The increase in interest expense, net was primarily related to interest expense incurred on higher borrowings under our debt facilities during the current year as a result of feedstockthe acquisitionstiming of changes in working capital and MROfunding expansionof investments.the stock buyback executed in the first quarter of 2025.
Other income (expense),income, net
Other income, net for the year ended December 31, 20242025 increased by $0.8$1.5 million to $1.5$3.0 million, as compared to 2023,2024, primarily due to $1.0$2.7 million gain on insurance proceeds partiallyrelated offsetto byan unfavorableengine foreignseized exchangeas ratea fluctuations.result of the Russia-Ukraine conflict.
The effective tax rate for the year ended December 31, 20242025 was 25.3%18.5% compared to 27.5%25.3% for the year ended December 31, 2023. The decrease in effective tax rate was mainly a result of the change in fair market value of the warrants, the impact of state income taxes, and stock-based compensation.2024. The difference between the effective tax rate and the statutory tax rate of 21% for the year ended December 31, 2024,2025 was primarily due to theresearch changeand indevelopment fairtax marketcredits valueand offoreign tax credits partially offset by the warrants,foreign tax, share-based compensation, and returnexecutive tocompensation provisionsdeduction adjustments, among others.limitations. The difference between the effective tax rate and the statutory tax rate of 21% for the year ended December 31, 2023,2024 was primarily due to the impactchange in fair market value of athe valuation allowance releasewarrants, and anreturn increaseto inprovisions creditsadjustments, offsetamong by executive compensation.others.
As of December 31, 2024,2025, we had $4.7$4.4 million of cash and cash equivalents. We finance our growth through cash flows generated fromfor operations and borrowings secured by our assets. We had $39.2$110.1 million outstanding under the Revolving Credit Agreement (as defined below) as of December 31, 2024,2025, with $138.1$67.2 million of availability thereunder. We generatedused cash$23.0 from operationsmillion of $11.2 million, primarily as a result of our income from operations, utilized cash for operating activities, primarily related to feedstock acquisition, used $3.9 million in investing activities of $16.1 million,activities, and generated cash from financing activities in the amount of $3.8$26.5 million for the year ended December 31, 2024.2025.
During the year ended December 31, 2023, we entered into a revolving term loan collateralized by our property and equipment (the “Synovus Equipment Loan”) and borrowed $8.6 million. During the year ended December 31, 2024, the Company financed additional equipment purchases of $0.6 million under this facility and paid off the entire loan balance in the amount of $9.2 million.
During the year ended December 31, 2024, we entered into a revolving term loan collateralized by our property and equipment purchases (the “CIBC Equipment Loan”) and borrowed $1.8 million under this facility, which remains outstanding as of December 31, 2024.
We believe our equity base, internally generated funds, and existing availability under our debt facilities are sufficient to maintain our level of operations over the next 12twelve months. Any projections of future cash needs and cash flows beyond the next twelve months are subject to substantial uncertainty, but we believe our sources of liquidity, as discussed above, will be sufficient to meet our long-term cash requirements. If an event occurs that affects our ability to meet our capital requirements, our ability to continue to grow our asset base consistent with historical trends could be impaired and our future growth limited to that which can be funded from internally generated capital.
We may, from time to time, purchase our outstanding shares of common stock through cash purchases and/or exchanges for equity or debt, open-market purchases, privately negotiated transactions or otherwise including, but not limited to, privately negotiated transactions with certain of our stockholders who have rights to require us to file a registration statement covering shares of our common stock. Such purchases or exchanges, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, legal and regulatory considerations, contractual restrictions and other factors. Purchases, if any, will be funded through our available cash fromand operations.cash equivalents. The amounts involved may be material.
On March 18, 2025, the Company repurchased, directly from a selling stockholder, 6,428,571 shares of the Company’s common stock, par value $0.0001 per share, at a price of $7.00 per share for total consideration of $45.0 million.
Net cash providedused byin operating activities was $11.2$23.0 million for the year ended December 31, 20242025, compared to cash usedprovided by operating activities of $174.2$11.2 million for the same period in 2023.2024. The increasedecrease in cash provided of $185.3$34.2 million was primarily due to lowerhigher feedstock acquisitions oftotaling $99.6 million during 2025 compared to $61.7 million during 20242024, comparedthe totiming $131.9of millionvendor duringadvances 2023,of as$27.8 wellmillion, asand $31.9 million related to proceeds from insurance claims.claims received during 2024.
Net cash used in investing activities was $16.1$3.9 million for the year ended December 31, 2024,2025, compared to cash provided of $3.1$16.1 million in the2024. sameThe perioddecrease forin 2023. Cashcash used in investing activities during the year ended December 31, 20242025 was driven by lower purchases of property and equipment anddue Flightto Equipmentthe in supportcompletion of ourthe TechOpsCompany’s expansion projects. Cash generated by investing activities during year ended December 31, 2023 was driven by Flight Equipment sales offset in part by purchase of property and equipment.
Net cash provided by financing activities for the year ended December 31, 20242025 was $3.8$26.5 million, compared to $29.7$3.8 million in the same period for 2023.2024. Cash provided by financing activities during the year ended December 31, 20242025 was primarily related to the proceeds from net borrowings under our Revolving Credit Agreement,Agreement along withand borrowings under the CIBC Equipment Loan,Loan (as defined below), offset in part by netcash repaymentsused underin the Synovusrepurchase Equipmentof Loan.common stock in the first quarter of 2025. Cash provided by financing activities during the year ended December 31, 20232024 is the result of proceeds from net borrowings under the Synovus Equipment Loan, as well as net borrowings under the Revolving Credit Agreement.Agreement partially offset by net repayments of the CIBC Equipment Loan.
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 aggregatein amount,the aggregate, 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.
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.Agreement, and is subject to contractual restrictions. Extensions of credit under the Revolving Credit Agreement are available for working capital and general corporate purposes.
As of December 31, 2024,2025, there was $39.2$110.1 million outstanding under the Revolving Credit Agreement and we had $138.1$67.2 million of availability thereunder.thereunder, subject to borrowing base limitations. We were in compliance with our debt covenants for the Revolving Credit Agreement as of December 31, 2024.2025.
Synovus Equipment Loan
On June 30, 2023, the Company entered into the Synovus Equipment Loan with a total advance commitment of $10.0 million for the purpose of financing capital expenditures on property and equipment. This facility became a term loan during the quarter ended June 30, 2024, with a maturity date of June 26, 2027. The Equipment Loan was collateralized by the property and equipment it financed and required interest only payment until converted to a term loan, at which point, principal and interest payments were required.
During the year ended December 31, 2024, the Company borrowed an additional $0.6 million to finance equipment purchases and paid off the entire loan balance in the amount of $9.2 million.
On November 22, 2024, the Company entered into a property and equipment 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 payment until converted to a term loan, at which point, principal and interest payments are required.
Effective November 30, 2025, we amended the CIBC Equipment Loan to extend the term of the advance commitment until November 30, 2026 and reduce the total advance commitment to $2.5 million.
During the year ended December 31, 2024,2025, the Company borrowed $1.8an additional $1.2 million under this facility, whichand $2.3 million remained outstanding as of December 31, 2024. As of December 31, 2024, borrowings under this facility were converted to a term loan maturing on December 23, 2027.2025.
The Company has entered into a purchase commitment with Universal Avionics, a subsidiary of Elbit Systems, valued at $21.0 million for the acquisition of technical equipment for manufacturing our AerAware™ product. The commitment is expected to be partially satisfied during 2025, with the remaining commitment delivery date to be determined.
The preparation of 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 Consolidated Financial Statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. Refer to Note B to the Consolidated Financial Statements in Item 8 of this Annual Report for a discussion of our significant accounting policies and estimates.policies. The following is a summary of critical accounting estimates and additional information on the level of uncertainty regarding relevant changes to the estimates and assumptions.
We measure revenue based on the consideration specified in a contract with a customer, and exclude any sales commissions and taxes collected and remitted to government agencies. We recognize revenue when itwe satisfiessatisfy a performance obligation by transferring control over a product or service to a customer. Our performance obligations are satisfied over time as work progresses or at a point in time based on transfer of control of products and services to our customers. For service revenue, we utilize the input method of cost-to-cost to measure progress and recognize revenue over time as this depicts when control of the promised goods or services are transferred to the customer. Revenue is recognized based on the relationship of actual costs incurred to date to the estimated total cost at completion of the performance obligation. We make certain judgments and estimates, including estimated revenue and costs, as well as inflation and the overall profitability of the arrangement. Key assumptions involved include future labor costs and efficiencies, overhead costs, and ultimate timing of product delivery. Differences may occur between the judgments and estimates made by management and actual program results.
Additionally, we purchase certain whole Flight Equipment to disassemble and supply material for our engine and airframe USMparts inventory. For Flight Equipment parts that originate from such dismantled aircraft and engines, cost is determined using a ratio calculated based on the relationship of the cost of the dismantled aircraft or engine at the time of purchase to the total estimated sales value of the dismantled aircraft or engine at the time of purchase. At the time of sale, this ratio is applied to the sale price of each individual airframe and/or engine part to determine its allocated cost. At the time of sale, the sum of an individual part’s allocated cost and actual repair or overhaul costs incurred represent the total cost for such part.
InThe Company performed a qualitative impairment assessment as of the firstCompany’s quarterannual impairment testing date of 2024,October the1, Company2025 identifiedand aconcluded there were no triggering eventevents that may indicatehave indicated the fair value of one or more of the Company’s reporting units more likely than not did not exceed their carrying values. The triggering event was due toDuring the significantquarter declineended inDecember the31, market price of the Company’s common stock. As a result and due to the lack of recovery of2025, the Company’s stock price duringdecreased thesignificantly yearand endedhad not recovered by December 31, 2024,2025, which management considered a triggering event. As a result, management decided that one or more of the Company’s reporting units more likely than not did not exceed their carrying values. Therefore, the Company performed a quantitative goodwill impairment testassessment for the Asset Management Solutions and ACT reporting units for eachas of the quarters ended March 31, 2024, June 30, 2024, September 30, 2024, and December 31, 2024,2025, and determined that the fair values exceeded the carrying values for each reporting unit of as the end of eachDecember quarter31, tested.2025. As such, the quantitative tests did not result in a goodwill impairment for the Company’s reporting units.
As part of our quantitative assessment as of December 31, 2024, we noted that our fair value estimates of the Asset Management Solutions reporting unit exceeded their carrying value by a small margin, which indicates a higher potential risk of goodwill impairment in the future; especially if this reporting unit is unable to achieve projected performance metrics. As of December 31, 2024, the amount of goodwill in the Asset Management Solutions reporting unit amounted to $13.4 million.
The fair value determination of the Company’s reporting units and goodwill is judgmental in nature and requires the use of estimates and assumptions that are sensitive to changes. Such estimates include revenue growth rates, profit margins, and discount rates which consider the risk-free rate as well as company and market specific risk premiums. Revenue estimates for the Asset Management Solutions reporting unit are dependent on our ability to monetize existing Flight Equipment and meet our feedstock acquisition targets. While the Company believes it has made reasonable estimates and assumptions to calculate the fair values of the reporting units, it is possible a material change could occur. As a result, there can be no assurance that the estimates and assumptions made for purposes of the quantitative goodwill and indefinite-lived intangible impairment tests will prove to be an accurate prediction of future results.
What changed in the latest 10-Q
Risk Factors
There are no material changes in the information reported under Part I – Item 1A “Risk Factors” contained in the 2025 Form 10-K.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “Change in Fair Value of Warrant Liability”
New heading “Six months ended June 30, 2026 compared to the six months ended June 30, 2025”
New heading “Selling, General and Administrative Expenses”
New heading “Change in Fair Value of Warrant Liability”
New heading “Interest Expense, Net”
Largest changes
The following discussion and analysis provides information that our management believes is relevant to an assessment and understanding of our condensed consolidated results of operations and financial condition. You should read the following management’s discussion and analysis and the accompanying financial statements and related notes with AerSale’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”). This discussion contains forward-looking statements about AerSale’s business, operations and industry that involve risks and uncertainties, such as statements regarding AerSale’s plans, objectives, expectations and intentions. AerSale’s future results and financial condition may differ materially from those currently anticipated because of the factors described in the section titled “Risk Factors” in the 2025 Formsee in full comparison10-K10-K, in the section of this Quarterly Report titled “Forward-Looking Statements” and in any of AerSale’s subsequent reports filed with the Securities and Exchange Commission.Events relating to the possibility of customer demand fluctuations, supply chain constraints, continuing inflationary pressures, the effects of foreign currency fluctuations and high interest rates, geopolitical uncertainties including continuing hostilities and tensions, trade restrictions and sanctions, tariffs and retaliatory countermeasures.Should one or more of these risks or uncertainties materialize, actual outcomes, including the future results of AerSale’s operations, may vary materially from those indicated.
“Six months ended June 30, 2026 compared to the six months ended June 30, 2025”see in full comparison
Full comparison: every changed paragraph (45)
The following discussion and analysis provides information that our management believes is relevant to an assessment and understanding of our condensed consolidated results of operations and financial condition. You should read the following management’s discussion and analysis and the accompanying financial statements and related notes with AerSale’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”). This discussion contains forward-looking statements about AerSale’s business, operations and industry that involve risks and uncertainties, such as statements regarding AerSale’s plans, objectives, expectations and intentions. AerSale’s future results and financial condition may differ materially from those currently anticipated because of the factors described in the section titled “Risk Factors” in the 2025 Form 10-K10-K, in the section of this Quarterly Report titled “Forward-Looking Statements” and in any of AerSale’s subsequent reports filed with the Securities and Exchange Commission. Events relating to the possibility of customer demand fluctuations, supply chain constraints, continuing inflationary pressures, the effects of foreign currency fluctuations and high interest rates, geopolitical uncertainties including continuing hostilities and tensions, trade restrictions and sanctions, tariffs and retaliatory countermeasures. Should one or more of these risks or uncertainties materialize, actual outcomes, including the future results of AerSale’s operations, may vary materially from those indicated.
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 (“R&D”) activities that are expensed as incurred.
We source parts and components for our business from various suppliers around the world. Current geopolitical conditions, including trade restrictive actions and strained intercountry relations, and potential shutdowns of the U.S. government could cause significant materials and parts shortages, disruptions to government contracts such as delayed payments or halted projects, effects on supply chains due to reduced staffing for customers, inspections and transportationstransportation authorities, or delays in regulatory approvals, distribution issues, energy cost increases and price increases. Furthermore, the U.S. government’s adoption of new approaches to trade policy and imposition of tariffs on certain foreign goods (as well as the possibility of imposing significant, additional tariffs in the future) may make it more difficult or costly for us to procure components and other material supplies and, in turn, may increase the cost to our customers, which may materially and adversely impact demand for our products and services, our results of operations or our financial condition. In addition, these U.S. actions have, and could in the future, result in other countries imposing retaliatory tariffs on our goods and services provided to foreign customers, which similarly could materially and adversely impact demand for our products and services. We continue to monitor the current economic environment and its potential impact on our business, results of operations orand financial condition, as well as the potential impact on our end customers whose demand for our products and services may be adversely impacted as a result of increased geopolitical instability or changes in policies by the U.S. or other governments, and closely manage our costs and capital resources so that we can respond appropriately as circumstances change. Our estimates may change as new events occur and additional information is obtained. Actual results could differ from these estimates under different assumptions or conditions.
Three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025
SalesRevenue and gross profit for AerSale’s two business segments for the three months ended MarchJune 31,30, 2026 and 2025 were as follows:
Total revenue for the three months ended MarchJune 31,30, 2026 increaseddecreased $4.8$36.5 million, or 7.4%,33.9%, compared to the samethree periodmonths inended June 30, 2025, driven by ana increasedecrease of $3.9$39.1 million, or 10.0%,51.3%, in revenue within Asset Management Solutions, and an increase of $0.9$2.7 million, or 3.4%,8.7%, in revenue within TechOps.
SalesRevenue in the Asset Management Solutions segment increaseddecreased $3.9$39.1 million,million or 10.0%,51.3%, to $43.1$37.1 million for the three months ended MarchJune 31,30, 2026, due to a $2.6$39.8 million, or 8.1%,60.4%, increasedecrease in revenue from Engine, andpartially aoffset $1.3by $0.6 million, or 18.3%,6.0%, increase in revenue from Aircraft. The increasedecrease in Engine revenue is primarily attributable to lower activity in the PW4000 and CF6-80 product lines due to higherlower Flight Equipment sales in the amount of $3.5$33.0 millionmillion, and higherlower leasingUSM revenuesales of $3.0$9.6 million primarily attributable to higher activity in the RB211 and CF6-80 product lines,million, partly offset by lowerhigher USMleasing salesactivity driven by growth in the amountengine ofleasing $3.9 million.portfolio. The increase in Aircraft revenue is primarily attributabledue to higher activity in the B757 product line as a result of higher leasing revenue from B757 freighters in the amount of $1.2$1.0 million.million driven by additional assets deployed.
Cost of sales in Asset Management Solutions decreased $1.0$24.8 million,million or 3.5%,50.3%, to $26.2$24.5 million for the three months ended MarchJune 31,30, 2026, compared to the prior year period. The decrease in cost of sales was primarily drivendue byto the sales decrease in USM sales discussed above. Gross profit in the Asset Management Solutions segment increaseddecreased $4.9 million to $16.9$14.4 million, or 40.6%,53.3%, to $12.6 million for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025. The gross profit increase is mainly attributable to higher revenue generated on our Flight Equipment sales for the three months ended March 31, 2026, as noted above.
The gross profit decrease is mainly attributable to lower revenue generated for the three months ended June 30, 2026, as noted above.
Aircraft gross profit margins increaseddecreased to 30.9%26.0% for the three months ended MarchJune 31,30, 2026, from 21.4%42.0% for the three months ended MarchJune 31,30, 2025 due to higherlower marginsmargin generatedcontribution onfrom leasedleasing Flightrevenue Equipment as well as higher margins generated onand USM sales. Engine gross profit margin was 41.4%37.3% for the three months ended MarchJune 31,30, 2026, an increase from 32.9%34.3% for the three months ended MarchJune 31,30, 2025, which was primarily the result of changes in the revenue mix, mainly higher marginsleasing generatedrevenue onwhich, Flighthistorically, Equipmenttend sales.to generate higher margins.
Our revenue from TechOps increased by $0.9$2.7 million,million or 3.4%,8.7%, to $27.5$33.8 million for the three months ended MarchJune 31,30, 2026, compared to the prior year period. The increase was primarily driven by higher volume in our heavy MRO facilitiesMROs as our facility in Millington, Tennessee returnedexpands tooperations. serviceAdditional andrevenue Goodyear,growth Arizonaalso filledcame somefrom our component MROs as a result of itshigher previously available capacity. Component MRO revenue also increased following the relocation and commencement of operationsvolume at both our expandedAeroStructure facility in Hialeah Gardens, Florida.Florida Theseand increasesour wereLanding partiallyGear offsetshop byin lowerRio revenueRancho, fromNew MRO product sales.Mexico.
Cost of sales in TechOps increased $4.9$7.4 million,million or 23.6%,32.5%, to $25.5$30.1 million for the three months ended MarchJune 31,30, 2026 compared to the prior year period, driven by the sales increase discussed above. Gross profit in TechOps decreased $4.0$4.7 million, or 67.1%,56.1% for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025, driven by lower margin generated from our heavy MROs, as a result of higher initiallabor costscosts, atwhich ourincludes facilitynon-recurring inhiring Millington,and Tennesseetraining asexpenses itassociated returnedto the return to service; asof wellMillington, as higher margin work completed during the prior year in our facility in Goodyear, Arizona.Tennessee. Gross profit margin decreased to 7.1%10.9% for the three months ended MarchJune 31,30, 2026 compared to 22.3%26.9% for the prior year period, andwhich was largely attributable to lower margin on Serviceservice Revenuerevenue of 0.9%2.0% for the three months ended MarchJune 31,30, 2026 compared to 18.9%23.6% for the prior year period, driven by the gross profit reduction from our heavy MROs noted above.
Selling, general and administrative expenses decreased $2.4$1.8 million, or 9.7%,7.9% to $22.2$21.0 million for the three months ended MarchJune 31,30, 2026, compared to the prior year period. The decrease was mostlymainly related to lower payrollsales costscommissions, as well as severancelower rent expense for our AeroStructures business unit, which incurred rent expense for two locations in the prior year2025 period asuntil partthe completion of costits reductionexpanded initiatives.Hialeah Gardens, Florida facility.
Change in Fair Value of Warrant Liability
We accounted for 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 was determined using the Black-Scholes option pricing model. For the three months ended MarchJune 31,30, 2025, we recorded a $0.1 million change in fair value of warrant liability expense. The Private Warrants expired unexercised during the year ended December 31, 2025.
Interest expense, net was $2.1$2.5 million for the three months ended MarchJune 31,30, 2026,2026 compared to $1.2 million interest expense, net for the three months ended March 31,and 2025. The increaseinterest wasexpense is primarily relateddriven to higher outstandingby borrowings under our debt facilities.
The effective tax rate for the three months ended MarchJune 31,30, 2026 was 22.6% compared to 12.0%17.0% for the three months ended MarchJune 31,30, 2025. The difference between the effective tax rate and the statutory tax rate of 21%21.0% for the three months ended MarchJune 31,30, 2026 is primarily due to the impact of state income taxestaxes, offset by the foreign derived intangible income deduction and stock-basedforeign compensation.tax credits. The difference between the effective tax rate and the statutory tax rate of 21%21.0% for the three months ended MarchJune 31,30, 2025 is primarily due to the benefitimpact of state income taxes, offset by the foreign derived intangible income deduction and R&D tax credits.
Six months ended June 30, 2026 compared to the six months ended June 30, 2025
Revenue and gross profit for AerSale’s two business segments for the six months ended June 30, 2026 and 2025 were as follows:
Total revenue for the six months ended June 30, 2026 decreased $31.6 million, or 18.3%, compared to the six months ended June 30, 2025, driven by a decrease of $35.2 million, or 30.5%, in revenue within Asset Management Solutions, partially offset by an increase of $3.6 million, or 6.2%, in revenue within TechOps.
Revenue in the Asset Management Solutions segment decreased $35.2 million or 30.5%, to $80.3 million for the six months ended June 30, 2026, due to a $37.2 million, or 38.1%, decrease in revenue from Engine; offset by a $2.0 million, or 11.1%, increase in revenue from Aircraft. The decrease in Engine revenue is primarily attributable to lower activity in the PW4000 and CF6-80 product lines due to lower Flight Equipment sales of $29.5 million and lower USM sales of $13.7 million, partly offset by higher leasing revenue in the amount of $6.0 million. The increase in Aircraft revenue is primarily attributable to increased leasing activity of our B757 freighters in the amount of $2.0 million, partially offset by lower USM sales.
Cost of sales in Asset Management Solutions decreased $25.7 million, or 33.7%, to $50.7 million for the six months ended June 30, 2026, compared to the prior year period. The decrease in cost of sales was primarily driven by the sales decrease noted above. Gross profit in the Asset Management Solutions segment decreased $9.5 million, or 24.3%, to $29.5 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The gross profit decrease is mainly attributable to lower Flight Equipment sales, as well as lower USM for the six months ended June 30, 2026.
Aircraft gross profit margin decreased to 28.1% for the six months ended June 30, 2026, from 33.5% for the six months ended June 30, 2025, due to lower USM margins as a result of fluctuations in product mix. Engine gross profit margin was 39.6% for the six months ended June 30, 2026, an increase from 33.8% for the six months ended June 30, 2025, which was primarily due to changes in our revenue mix, mainly from higher leasing revenue which, historically, tends to generate higher margins.
Our revenue from TechOps increased by $3.6 million, or 6.2%, to $61.3 million for the six months ended June 30, 2026, compared to the prior year period. The increase was primarily driven by higher volume in our heavy MROs, as our Millington, Tennessee facility continues to expand its services.
Cost of sales in TechOps increased $12.3 million, or 28.3%, to $55.7 million for the six months ended June 30, 2026, compared to the prior year period, driven by the higher revenue discussed above. Gross profit in TechOps decreased $8.7 million, or 60.6%, for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, driven by lower margin generated from our heavy MROs, as a result of higher labor costs, which include non-recurring hiring and training expenses associated with the return to service of Millington, Tennessee. Gross profit margin decreased to 9.2% for the six months ended June 30, 2026 compared to 24.8% for the six months ended June 30, 2025, and was largely attributable to lower margins on service revenue of 1.5% for the six months ended June 30, 2026 compared to 21.4% for the prior year period, driven by gross profit reduction from our heavy MROs noted above.
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased $4.2 million, or 8.9%, to $43.2 million for the six months ended June 30, 2026, compared to the prior year period. The decrease was mainly related to lower sales commissions, lower legal fees, and lower rent expense in our AeroStructures business unit, which incurred rent expense for two locations in the 2025 period until the completion of its expanded Hialeah Gardens, Florida facility.
Change in Fair Value of Warrant Liability
We accounted for 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 was determined using the Black-Scholes option pricing model. For the six months ended June 30, 2025, we recorded a $0.1 million change in fair value of warrant liability expense. The Private Warrants expired unexercised during the year ended December 31, 2025.
Interest Expense, Net
Interest expense, net was $4.6 million for the six months ended June 30, 2026, compared to $3.6 million for the six months ended June 30, 2025. The increase was primarily related to higher outstanding borrowings under our debt facilities during the current year period compared to the prior period related to the timing of changes in working capital and feedstock acquisitions.
Income Taxes
The effective tax rate for the six months ended June 30, 2026 was 22.6% compared to 23.8% for the six months ended June 30, 2025. The difference between the effective tax rate and the statutory tax rate of 21.0% for the six months ended June 30, 2026 is primarily due to the impact of state income taxes, offset by the foreign derived intangible income deduction and foreign tax credits. The difference between the effective tax rate and the statutory tax rate of 21.0% for the six 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.
As of MarchJune 31,30, 2026, we had $2.1$2.2 million ofin cash and cash equivalents. We finance our growth through cash flows generated from operations and borrowings secured by our assets. We had $137.8$146.2 million outstanding under the Revolving Credit Agreement (as defined below) as of MarchJune 31,30, 2026, andwith we had $39.7$31.8 million of availability thereunder. We used $26.7cash in operations of $33.5 million offor cashthe six months ended June 30, 2026, primarily for operatingfeedstock activities,acquisition primarilyand relatedimprovements to feedstockflight acquisition,equipment, and used cash in investing activities of $3.1$4.4 million for the threesix months ended MarchJune 31,30, 2026.
Cash Flows— ThreeSix months ended MarchJune 31,30, 2026 compared to threethe six months ended MarchJune 31,30, 2025
Net cash used in operating activities was $26.7$33.5 million for the threesix months ended MarchJune 31,30, 2026, compared to cash used of $45.2$25.4 million for the same period in 2025. The decreaseincrease in cash used in operating activitiesdeployed of $18.6$8.0 million was primarily due to lower feedstockresults acquisitionsfrom operations and the timing of $11.6changes million.in working capital levels during the six months ended June 30, 2026 compared to the prior year period.
Net cash used in investing activities was $3.1$4.4 million for the threesix months ended MarchJune 31,30, 2026, compared to cash used of $3.5$3.8 million in the same period for 2025. CashThe increase in cash used in investing activities during the three months ended March 31, 2026 was driven by capitalizedcash costsgenerated onfrom Flightthe Equipment and purchasessale of propertyassets andduring equipment.the six months ended June 30, 2025.
Net cash provided by financing activities was $27.5$35.7 million for the threesix months ended MarchJune 31,30, 2026, compared to cash provided of $48.8$30.2 million forin the threesame monthsperiod ended March 31,for 2025. Cash provided by financing activities during the threesix months ended MarchJune 31,30, 2026 resulted from net borrowing under our Revolving Credit Agreement. Cash provided by financing activities during the threesix months ended MarchJune 31,30, 2025 resulted from net borrowing under ourthe Revolving Credit Agreement, offset by cash used in the repurchase of common stock.
As of MarchJune 31,30, 2026, there was $137.8$146.2 million outstanding under the Revolving Credit Agreement and we had $39.7$31.8 million of availability thereunder. We were in compliance with our debt covenants for the Revolving Credit Agreement as of MarchJune 31,30, 2026.
On November 22, 2024, the Company entered into a property and equipment 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 the Secured Overnight Financing Rate (“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.
During the threesix months ended MarchJune 31,30, 2026, the Company repaid $0.2$0.5 million under this facility, and $2.0$1.8 million remained outstanding as of MarchJune 31,30, 2026.
We were in compliance with our debt covenants for the CIBC Equipment Loan as of MarchJune 31,30, 2026.
We did not have any off-balance sheet arrangements as of MarchJune 31,30, 2026. Refer to Note Q – Leases, within our consolidated annual financial statements in our 2025 Form 10-K for a summary of our non-cancelable contractual obligations under operating leases.
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 2025 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, 2026, there were no material changes in our critical accounting estimates and policies.
During the three months ended March 31, 2026, there were no material changes in our critical accounting estimates and policies.
ASLE insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 8 filings (6 insiders, 3 trade dates, 25,320 shares, about $159.8K; 8 of these filings say the sales were made under a Rule 10b5-1 trading plan). Net open-market shares: -25,320 (purchases minus sales); net value about -$159.8K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-01 | Tschirhart Benjamin Thomas |
Open-market sale |
882 | $5.44 | $4.8K |
| 2026-08-19 | Finazzo Nicolas |
Grant/award | 259,965 | — | — |
| 2026-08-19 | Garmendia Martin |
Grant/award | 29,246 | — | — |
| 2026-08-19 | Hechenberger Paul Andrew |
Grant/award | 29,246 | — | — |
| 2026-08-19 | Jones Gary Edmund |
Grant/award | 32,495 | — | — |
| 2026-08-19 | Pizzi Enrique |
Grant/award | 15,164 | — | — |
| 2026-08-19 | Tschirhart Benjamin Thomas |
Grant/award | 15,164 | — | — |
| 2026-08-19 | Wright Frederick Craig |
Grant/award | 17,331 | — | — |
| 2026-07-06 | Tschirhart Benjamin Thomas |
Open-market sale |
77 | $6.56 | $505 |
| 2026-06-09 | Pizzi Enrique |
Open-market sale |
3,122 | $6.34 | $19.8K |
| 2026-06-09 | Tschirhart Benjamin Thomas |
Open-market sale |
1,886 | $6.34 | $12.0K |
| 2026-06-09 | Jones Gary Edmund |
Open-market sale |
7,491 | $6.34 | $47.5K |
| 2026-06-09 | Garmendia Martin |
Open-market sale |
6,094 | $6.34 | $38.6K |
| 2026-06-09 | Hechenberger Paul Andrew |
Open-market sale |
1,586 | $6.34 | $10.1K |
| 2026-06-09 | Wright Frederick Craig |
Open-market sale |
4,182 | $6.34 | $26.5K |
| 2026-06-05 | Nichols Robert B. |
Grant/award | 19,623 | — | — |
| 2026-06-05 | Mullins Thomas Wiese |
Grant/award | 19,623 | — | — |
| 2026-06-05 | Mitchell Thomas Duncan |
Grant/award | 19,623 | — | — |
| 2026-06-05 | Levy Andrew C |
Grant/award | 19,623 | — | — |
| 2026-06-05 | Fedder Judith Ann |
Grant/award | 19,623 | — | — |
| 2026-06-05 | Dibattiste Carol |
Grant/award | 19,623 | — | — |
Well-known investors holding ASLE (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 651,918 | $4.1M | 0.0% | Added 24% |
| D. E. Shaw & Co. | 2026-06-30 | 396,300 | $2.5M | 0.0% | Added 4% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 198,163 | $1.3M | 0.0% | Reduced 31% |
| Millennium Management (Israel Englander) | 2026-06-30 | 184,146 | $1.2M | 0.0% | Reduced 69% |
| Two Sigma Investments | 2026-06-30 | 43,778 | $276.7K | 0.0% | Reduced 76% |