AerSale Corporation

Hello, and thank you for standing by. My name is Ian, and I will be your conference operator today. At this time, I would like to welcome everyone to the AirSail Inc. Q1 2026 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 again. I would like to now turn the call over to Christine Padron, Vice President, Global Trade and Compliance. Christine, please go ahead.

Christine Padron Good afternoon. I'd like to welcome everyone to Airfield's first quarter 2026 earnings call. Conducting the call today are Nick Bonalzo, 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 securities 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 31st, 2025, filed with the Securities and Exchange Commission, SEC, on March 10th, 2026, and its other filings with the SEC. These findings 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 column. 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 with the nearest GAAP metric can be found in the earnings presentation materials made available in the investors' section of Airstill's website at ir.airstill.com. After prepared remarks, we will open the call for questions. With that, I'll turn the call over to Nick Van Alpen.

Thank you, Christine, and good afternoon, everyone. Thank you for joining us today. I'll begin with an overview of our first quarter performance and key operational developments and then discuss how we're progressing against our strategic priorities for 2026. I'll then turn the call over to Martin to walk through the financials in more detail. This quarter, our team stayed focused on executing our strategy across asset management and tech ops, prioritizing, one, disciplined acquisition and monetization of flight equipment and used serviceable material, you're going to expanding and optimizing our MRO capabilities, and three, building a recurring and more predictable revenue base through MRO services and leasing while maintaining our high standards for safety, quality, and on-time performance. First quarter revenue was $70.6 million, an increase of 7.4% from the prior year period. Adjusted EBITDA also increased by 4.2 million or 131.9% to 7.4 million from the prior year period. Excluding flight equipment sales, which tend to be volatile quarter to quarter, revenue increased 2.2% year over year, reflecting growth in leasing and increased demand across our MRO facilities. This is supported by healthy activity across our core aviation end markets. Customer demand remains supported by high utilization levels and the ongoing need for reliable parts availability and turnaround performance. Leasing demand remained a key driver of performance during the quarter, growing 47-57.9%, compared to the prior year period. We placed an additional Boeing 757 freighter aircraft into service, ending the quarter with three aircraft on lease and one additional aircraft under a letter of intent for lease. We continue to engage in discussions with potential customers as increased demand for cargo continues to make us bullish on deploying the remaining four 757 freighters we converted in 2026. We also expanded our engine lease portfolio, ending the quarter with 18 engines on lease, compared to 16 engines in the prior year period. Higher average lease rates and improved utilization contributed to stronger asset yields across both aircraft and engines and reflect our continued progress towards building a larger and more consistent recurring revenue base. Partially offsetting the increased leasing revenue was a decrease in USM sales resulting from the internal consumption of engine material for our own engine builds. At present, we have multiple engines in work where most of the material required has come from our own inventory. And our decision to utilize this USM results from our determination that we will achieve a higher value and total dollar margin consuming this material rather than selling as USM piece parts to third parties. Across our TechOps platform, we continue to make progress on several strategic growth initiatives. At our OnAirport MRO facility in Millington, Tennessee, we commenced work under a recently awarded long-term multi-line aircraft maintenance agreement for a fleet of CRJ-700 and CRJ-900 regional jets. In addition, operations began at our expanded aerostructures facility located in the Hialeah Gardens, Florida. Both initiatives contributed to higher tech ops revenue in the quarter. As expected, when ramping up operations at new facilities, We incurred incremental training costs and early-stage operating inefficiencies that created margin pressure during the quarter. We view these impacts as temporary and expect margins and throughput to improve as volumes continue to increase and operations stabilize. TechOps was also impacted by lower MRO part sales in the quarter. Lastly, our Roswell facility experienced revenue and gross profit declines due to fewer aircraft in storage during the quarter. Related to our engineered solutions products, AirSafe continues to remain strong in advance of a Federal Aviation Administration November 2026 compliance deadline for the fuel quantity indication system, Airworthiness Directive, related to fuel tank safety systems. We closed the quarter with a backlog of $15.3 million, of which the majority will close in 2026. In addition, we continue to market our revolutionary enhanced flight vision system, AeroWare, to select interested customers. We're also continuing our efforts to educate our U.S. regulators and the agencies responsible for the safety of our air transportation system on how the unique features of AeroWare can improve safety and provide economic efficiency to the industry. During the quarter, we deployed $25.1 million in feedstock acquisitions to support future leasing and monetization opportunities. We remain disciplined in our acquisition approach and continue to focus on assets where we see strong long-term demand and attractive risk-adjusted returns. Our win rate in the quarter was 6.3% compared to 10.4% in the first quarter of 2025, which shows our commitment to discipline on pricing and as we continue to evaluate opportunities to redeploy and monetize inventory in ways that improve velocity and cash conversion without compromising value. Looking ahead, our priorities for the remainder of 2026 remain consistent with those we have previously outlined. These include increasing the number of assets deployed in our lease pool, including the placement of the remaining four 757 freighters during this year, continuing to monetize our inventory through USM sales, filling available capacity across our MRO network, and improving overall operational profitability as recent expansion initiatives continue to gain scale. Despite the expected startup costs incurred in the first quarter, we remain confident in our ability to deliver improved financial performance as we progress throughout the year. With a strong inventory position, an active leasing pipeline, and expanded operational capabilities, we believe AirSail is well positioned to deliver more consistent and growing earnings. With that... I'll turn the call over to our Chief Financial Officer, Martin Garmendia.