AerSale Corporation

Good day and thank you for standing by. Welcome to the AirSail Corp Q4 2025 earnings conference call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session. To ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. I would now like to hand the conference over to your speaker today. Jackie Carlon, Senior Vice President of Marketing.

Good afternoon. I'd like to welcome everyone to Airfield's fourth quarter and full year 2025 earnings call. Conducting the call today are Nick Bonazzo, Chief Executive Officer, and Martin Garmendia, Chief Financial Officer. Before we discuss this quarter's results, we want to remind you that all statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements within the meaning of the federal security laws, including statements regarding our current expectations for the business and our financial performance. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties, and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results. Important factors that could cause actual results to differ materially from forward-looking statements are discussed in the Risk Factors section of the company's annual report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission, SEC, to be filed on March 9, and its other filings with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those indicated by the forward-looking statements on this call. We'll also refer to non-GAAP measures that we view as important in assessing the performance of our business, a reconciliation of those non-GAAP metrics to the nearest gap metric can be found in the earnings presentation materials made available on the Investors section of the AirSale website at ir.airsale.com. With that, I'll turn the call over to Nick Finazzo.

Thank you, Jackie. Good afternoon, everyone, and thank you for joining us today. I'll begin with an overview of our fourth quarter and full year 2025 results, highlight key operational developments, and then discuss our priorities for 2026 before turning the call over to Martin to review the numbers in greater detail. We finished 2025 on a strong note. Our fourth quarter adjusted EBITDA increased 2.2 million or 17.1% to 15.2 million compared to 13 million in the fourth quarter of 2024. Fourth quarter revenue was 90.9 million a 4% decrease from the prior year period. Excluding flight equipment sales, which tend to be volatile quarter to quarter, fourth quarter revenue actually increased 9.8%, reflecting continued growth across our component MROs, USM, and leasing. Sales of our engineered solutions product AirSafe also increased as operators began upgrades in advance of a Federal Aviation Administration 2026 compliance deadline for a fuel quantity indication system airworthiness directive related to fuel tank safety systems. You'll hear me refer to this as the FQISAD. This overall growth has improved profitability and provides more consistency in our quarter-over-quarter performance. This also led to improvement in our adjusted EBITDA, supported by stronger operating performance and the continued benefits of the efficiency initiatives we implemented in early 2025. For the full year, we generated $335.3 million in total revenue, a decrease of $9.8 million, or 2.8% year over year, primarily due to fewer flight equipment sales. Excluding flight equipment sales, full year revenue increased 18.7%. driven by stronger USM demand, higher average lease rates and asset yields, and robust growth in sales at our component MROs and of AirSafe products. Full-year adjusted EBITDA also increased $12.8 million to $46.1 million, up 38.2% year-over-year, reflecting higher volumes, favorable mix, and margin and cost benefits from our efficiency programs. During the fourth quarter of 2025, we acquired 15.4 million of feedstock, bringing full-year acquisitions to 99.6 million. While the feedstock environment remains constrained, we have been steadfast in our disciplined acquisition pricing and believe opportunities will improve as OEM production normalizes. Our win rate in the quarter was 4.8% versus 17.2% in the fourth quarter of 2024. We disclosed this number to provide investors with a measure of how conservative we are when buying feedstock in a hypercompetitive environment, although a quarter-over-quarter comparison may not fully reflect this discipline. Year-over-year, our win rate was 6% in 2025 versus 8.6% in 2024. Regarding our Boeing 757 passenger-to-freighter converted aircraft, we ended 2025 with two on lease and five aircraft we converted remaining in inventory. We're actively engaged in discussions with potential customers. Increased demand for cargo and the FAA's recent grounding of the MD-11 freighter fleet continue to make us bullish. We'll deploy all our 757 freighters in 2026. with two of these aircraft under letters of intent at year end. During 2025, we made several strategic adjustments across our on-airport MRO facilities. In Goodyear, we transitioned from an expiring contract to new business at higher rates, resulting in improved profitability. In Roswell, we shifted our focus to storage and end-of-life fleet activities. largely offsetting lost heavy check margin. Our on-airport MRO expansion project in Millington, Tennessee is now fully operational and productive with heavy check work that began in December following the award of a multi-year maintenance agreement with a regional airline, positioning the facility to significantly contribute to profitability in 2026. Regarding our component MRO facility expansion initiatives, we moved into our new 90,000-square-foot aerostructures facility in January 2026. With existing customer approvals and more underway, we expect aerostructures volumes to ramp up throughout 2026. Our pneumatic expansion project is also progressing with all construction now complete, and we expect this additional capability will come online by the end of the first quarter. As these three expansion initiatives begin to contribute in 2026, we remain confident in their revenue potential. While we previously communicated an incremental annualized opportunity of approximately $50 million, updated assessments indicate that the full capacity potential is likely to exceed that original estimate. As we ramp up in 2026, we will provide an update on the progress of these projects as contributions from this additional capacity and capability are realized. We're also proud to announce that our landing gear shop received FAA approval to overhaul Boeing 737 MAX and 787 landing gear, which supplements our existing authority to overhaul gear for 737 Classic and NG Series, 757, 767, and the Airbus A320 series of aircraft. This expansion to include MRO for new technology flight equipment allows us to better support our expanding customer base as mid-technology flight equipment is eventually replaced. Looking ahead to 2026, we're mitigating earnings volatility by growing the more recurring and predictable parts of our business. These initiatives include filling capacity at all our on-airport MRO facilities, growing USM sales, generating significant additional component MRO revenue with our available expanded capacity and new capabilities, increasing the number of assets deployed in our lease pool, and continued strength in airsafe revenue as the FAA's November 2026 deadline to comply with the FQIS-AD comes due. Finally, we remain committed to the success of our revolutionary enhanced flight vision system, AeroWare, by marketing this to select interested customers, both commercial and governmental. Concurrently, we are taking steps to educate our U.S. regulators and the agencies responsible for the safety of our air transportation system on how the unique features of airware will improve safety and provide economic efficiency to the industry. On the cost side, the enhanced efficiency programs we implemented last year have allowed us to streamline workflow at each facility with a goal to better match facility scheduling with volume while opening available capacity at other facilities to maximize profitability. Taken together, we expect 2026 to be another growth year for air sale on both the top and bottom lines. Our strong balance sheet will support increased USM sales and leasing, thereby providing improving recurring revenue from our asset management segment. Customer expansion, increased capacity, and efficiency initiatives have put us in a position with all our MROs to see significant incremental revenue progression quarter over quarter. I want to conclude by thanking our employees for their dedication and hard work in meeting our growth of initiatives in 2025 and and our investors for their continued support as we work on maturing the business and reducing volatility. We look forward to updating you on our progress throughout 2026. With that, I'll turn the call over to our Chief Financial Officer, Martin Garmendia.