Nicolas Finazzo: Well, some of the margins we saw in ’21 and ’22 related to our 757 program, which really — which had a pretty exceptional margin. So I wouldn’t expect you’re going to see the same 40% plus margins that we were seeing on some of the — Martin, correct me if I’m wrong, as to what the margins were, but —
Martin Garmendia: That’s right. They average around 40%.
Nicolas Finazzo: Yeah. Pretty exceptional margin on our 757 transactions. That was — we were able to take advantage of a very unique time in the market, and we had the assets available. So I don’t think at that level. But consistently, margins that we have seen over the history of the company, and we target a 25% margin, also coincidentally targets 25% IRR. Those continue to be our minimum target thresholds, and we’ve been successful over time in reaching those.
Kenneth Herbert: Perfect. Thanks.
Nicolas Finazzo: We can’t continue that.
Kenneth Herbert: Okay, perfect. Thanks, guys. I’ll pass it back there.
Nicolas Finazzo: Okay. You’re welcome.
Operator: Thank you. Our final question comes from Sam Struhsaker of Truist Securities. Please go ahead.
Sam Struhsaker: Hey, good evening, guys. On for Mike Ciarmoli, this evening. Thanks for taking the question. I guess thinking about all of the inventory that you guys have on hand. I’m just kind of curious, I guess, first of all, how much of that you mentioned, a lot of the issues that you guys have been facing in terms of getting those things fully through and sold to customers. So I guess, first of all, how much of that inventory would you say is just ready to go right now versus might still have some things you need to overcome? And then in addition to that, are the kind of issues you guys have discussed so far really the only thing, or is there anything else going on that might kind of lead to delays in getting it out the door?
Nicolas Finazzo: Martin, do you have the numbers on what’s available?
Martin Garmendia: Yeah. Overall.
Nicolas Finazzo: What’s already available today?
Martin Garmendia: Yeah. Overall available that we have that potentially will go into leasing, USM or whole assets would be about — almost about over $200 million of that overall inventory. Again, the notion will be whether it goes into the leasing portfolio, or it goes into trading or ultimately it goes into the USM bucket overall. But that’s what’s already available, the rest of the material is obviously in inventory being processed. And as Ken noted earlier, we have an additional $80 million of inventory that’s been awarded that is going to close in the first half of the year.
Sam Struhsaker: Okay, that’s very helpful. And then on the engine inventory, do you guys have any metrics on, I guess, how much of that is parts versus full engines?
Martin Garmendia: That’s part of the — again the challenge of kind of doing the overall forecasting, these old asset opportunities. And Nick gave a perfect example. We can get an engine that we can sell some of these fast-moving parts, and the market would love and take them out of our hands extremely quickly. But the right decision there is to really get the engine and rebuild it. But again, as we’ve noted kind of earlier, we’re truly agnostic on how we monetize that overall asset. It’s just looking for the highest return.
Sam Struhsaker: Understood. Yeah, that’s helpful. And then one more would be, I think you guys mentioned, you were seeing some potentially longer-term contracts, more stability. Was that really just the landing gear and the accessory contracts that you guys alluded to, or is there some more there that you guys are looking at?
Martin Garmendia: Yeah, that comment was specifically related to our component MROs. We’ve had some pretty significant wins in ’23, both with airlines and one particular OEM, on giving us pretty much a line of sight on specific overall business. So that is going to improve our volume that we’re running through those units. It’s also going to allow us to use the greater capacity that we have available in those units. And we’ve noted earlier, we’ve actually been making investments to increase capacity at a lot of our businesses. So all of those investments are starting to bear fruit. These contracts are going to start using that capacity and that capability. That’s also going to improve efficiencies in us operating those units.
So we’re going to have a good strong start in 2024. As these contracts start maturing, that’ll also give us greater visibility into kind of recurring revenue patterns. But as we did note, those were wins in 2023, so we’ll start seeing exactly how those contracts perform in ’24.
Sam Struhsaker: Great. That’s very helpful. Thank you, guys.
Nicolas Finazzo: You’re welcome.
Operator: Ladies and gentlemen, we have reached the end of the question-and-answer session. I will now hand over to Nick Finazzo for closing remarks.
Nicolas Finazzo: Okay. Well, thank you again for listening to our call today and for your interest in AerSale. We look forward to updating you again next quarter. Good evening.
Operator: Thank you. Ladies and gentlemen, that concludes today’s event. Thanks for attending and you may now disconnect your lines.
