AerSale Corporation (NASDAQ:ASLE) Q4 2022 Earnings Call Transcript

Michael Ciarmoli: Got it. Yes, on that customer, I realized the 500 plus 737s. But do you have an idea of what their initial take rate might be? You get the SPC, are they going to take five right out of the gate? Do they take 10? I guess, I’m asking what kind of cadence you see from them?

Nick Finazzo: Again, we don’t know. Let’s — however, what we have been told is that the airline will start using the system so they get at least 50% of their fleet installed. So, I would expect that they would want them installed as fast as they could get and because they could if it takes a year or more to get to those 250 kits, they’re not going to be able to use the system for that period of time. So, they would want it as fast as we could deliver it. And that’s why we’ve been working on production of kits in advance of their requirement, because it’s just going to take time for us to build the kits, put the kits in and it’s going to take time for Elbit Universal to manufacture the kits and gear up their manufacturing capacity for this level of requirement.

Michael Ciarmoli: Got it. Helpful. And then you talked about, kind of, potential revenue accelerating-second half €˜23 into €˜24. Obviously, AerAware, you talked if obviously the feedstock purchase conversions continue and then some of your capability expansion. I’m not going to ask you for specific revenue numbers, but if we were to look second-half this year even into next year. Can you maybe size or kind of rank order what you think would be the bigger growth driver? And I guess, AerAware into next year would be a big one, kind of, based on what you just said. But any color as you, kind of, think about maybe the contribution from those growth drivers?

Nick Finazzo: It would be too speculative at this point for me to answer that question.

Michael Ciarmoli: Okay, okay. That’s fair. What about last one on kind of the feedstock? I mean, are you guys seeing kind of hinted at it? Do you know how many kind of entities you’re competing against for purchases? Are you seeing less competition out there? And then I guess with, sort of, all the airlines running all of their assets burning all of the green time. Do you think that’s potentially driving the need for more USM?

Nick Finazzo: Of course. Of course, the increasing utilization of the flight equipment is driving the need for more USM, but we’ve not seen other — once the market started to recover as far as utilization, we’ve not seen our issue with USM is getting the USM out of the shop. So, we were force feeding USM into the shop even when there wasn’t the demand. And I’m glad we did that, because now we’re seeing very strong demand and that’s why we feel optimistic about increasing our USM sales continuing to increase, because now we have more product. As long as we get the stuff out of the shop, it doesn’t seem like we’re having any trouble selling it to somebody who needs it. So that’s having a lot of material that we put into work is helping our availability of ready USM to sell demand continues to rise.

So, I don’t see that changing. Again, it’s the availability of feedstock that is the issue. Now with regard to competitors that we bid against, look, we bid on over $1.4 billion in deals last year. I could have won hundreds of millions of dollars if we chose to push our numbers up and really push our margins down. And we’re just not going to do that. We’ve never done that, not certainly not intentionally we’re disciplined. I’d rather pass on hundreds of millions of dollars’ worth of crappy deals than to win $50 million worth of terrible deals, because $50 million worth of terrible deals can light about hundreds of millions worth of good deals. So, we remain very disciplined I’d say we won $50 million of deals last year. We won them. Those were properly priced deals.