AerSale Corporation (ASLE) Earnings

Management highlights

- Overall Quarterly Performance * Total Q2 2026 revenue was $70.9 million and adjusted EBITDA was $2.2 million, both below prior year levels, due entirely to the absence of flight equipment sales in the quarter (not a negative shift in underlying business trajectory) * Incremental improvements were seen across most business units, with lower year-over-year revenue excluding flight equipment sales driven only by reduced USM sales * First-half margin pressure reflects temporary investments to stand up new capacity at Goodyear, Millington, and the Landing Gear division, not structural cost increases; operating leverage is already improving * The company's core 2026 strategic priorities are unchanged: expand the lease pool, strategically monetize existing inventory, expand MRO network capacity, and improve operational profitability as new initiatives scale - Operational Updates by Business Line * Goodyear: Additional labor was carried in anticipation of heavy maintenance work tied to the Spirit Airlines shutdown, which developed slower than expected. Stored aircraft volume at the facility is now increasing, with growth expected to accelerate in H2 2026 * Millington: The new CRJ700-900 multi-line program drove higher MRO revenue this quarter; labor efficiency and turn times have already improved significantly during ramp-up * Landing Gear: Received gear for two key customer programs (737 MAX and 787) during the quarter, building confidence in the segment's long-term trajectory as volume grows * Leasing: Placed the fourth 757 converted freighter on lease in July 2026, and executed a lease for a fifth scheduled for delivery in August 2026. Only two freighters remain from the P2F conversion program to monetize, with multiple active opportunities underway * Asset Monetization: Secured a $35 million 737 aircraft sale to the U.S. Marshals Service and multiple engine sales expected to close in late Q3 or early Q4 2026. The company prioritizes higher-margin, shorter-cycle flight equipment sales over piece-part USM sales where economically advantageous - Financial & Balance Sheet Updates * Total gross margin was 22.9% vs 32.9% YoY; SG&A expenses decreased to $21 million from $22.8 million YoY, driven by lower rent and variable costs * Year-to-date cash used in operating activities was $33.5 million, all for intentional investments in inventory and make-ready costs for flight equipment to be monetized in H2 2026 * End-of-quarter inventory totaled $376 million, aircraft and engines held for lease totaled $133 million, and total available liquidity was $34 million, leaving the balance sheet well-positioned to support growth strategy

Guidance

- Management confirms full confidence in a meaningfully stronger second half of 2026, with improved earnings, stronger cash flow, improved liquidity, and a more predictable financial profile as asset monetization concludes and recurring revenue grows - Margins are expected to improve across all new MRO facilities in H2 2026 as volume increases, operations gain scale and efficiency, and fixed costs are absorbed - Demand for the AirSafe product is expected to peak in Q3 2026, ahead of the FAA's November 2026 compliance deadline for the Fuel Tank Flammability Airworthiness Directive - Full operational profitability at target 20-30% full-scale MRO margins is expected to be achieved as capacity is filled through 2027 and beyond

Segment performance

1. Asset Management Solutions: Total Q2 2026 revenue was $37.1 million, down 51.3% year-over-year from the prior year's $76.3 million which included $33.4 million in flight equipment sales. Excluding flight equipment sales, revenue was $37 million, down 13.6% YoY. Leasing revenue grew 50% YoY to $12.4 million, and contributed 33.4% of total segment revenue (excluding flight equipment sales). The decline in overall segment revenue is driven by lower USM revenue, which stems from disciplined feedstock acquisition ($5.6 million in Q2 2026 vs $27.1 million YoY) in a competitive market, plus reallocation of USM material to build serviceable flight equipment for higher-return sale/lease. This segment accounted for 52.3% of Aerosale's total Q2 2026 revenue. 2. TechOps: Total Q2 2026 revenue was $33.8 million, up 8.7% year-over-year. Growth was led by the ramp-up of the CRJ700-900 multi-line maintenance program at Millington, additional aircraft storage volume at Goodyear, and higher landing gear/aerostructures activity. Strong demand for the AirSafe product continues, with peak demand expected in Q3 2026. This segment accounted for 47.7% of Aerosale's total Q2 2026 revenue. Margins decreased in the quarter due to lower accessory shop throughput and ramp-up costs for new capacity, which are expected to improve as volume scales. 3. AeroWare: No material Q2 2026 revenue was reported; the business remains in regulatory and stakeholder engagement for its enhanced flight vision product.

Risks & headwinds

- Feedstock acquisition markets remain hyper-competitive, requiring disciplined pricing that has reduced near-term USM revenue - Engine delivery delays have held up maintenance and return-to-service work on stored ex-Spirit Airlines aircraft at Goodyear, delaying revenue recognition for that facility - Labor ramp-up and learning curves for new MRO lines have reduced near-term margins and held back profitability ahead of volume scaling - Current Goodyear capacity is insufficient to meet all potential heavy maintenance demand if all stored ex-Spirit aircraft require return-to-service work in a short timeframe - New product development carries inherent timeline and commercial uncertainty: products require up to a year of development and regulatory work, and are only pursued for confirmed customer orders to avoid wasted investment

Analyst Q&A

• Q: What are the current utilization rates for the new MRO facilities, and when will they reach capacity? /

  A: Millington currently has 2 of 4 total lines operational, with labor still moving through the learning curve, but efficiency improved in the latter half of Q2. Goodyear is currently operating at less than 20% of available capacity, but stored aircraft volume is growing, with meaningful pickup in hangar work expected in H2. The landing gear shop operates at ~80% capacity on a single shift, and will add a second shift with incoming new volume.

• Q: Why were there no flight equipment sales in Q2 2026, and what is the pipeline for future sales? /

  A: Multiple contracted engine and aircraft sales were delayed for administrative and processing reasons, including the $35 million U.S. Marshals Service 737 sale that will close in late Q3 or early Q4 2026. 17 engines are currently undergoing overhaul, with most exiting the shop in the coming months; these will either be added to the leasing portfolio (the preferred option for recurring revenue) or sold if buyers offer attractive valuations. All assets processed deliver higher total margins than selling piece-part USM.

• Q: What is the long-term margin difference between selling USM piece parts versus monetizing as whole serviceable assets (sale or lease)? /

  A: USM piece parts typically deliver ~25% margins, while whole flight equipment/engine sales regularly deliver far higher margins, because this approach captures value from components that would otherwise be unsold as low-demand piece parts. Large asset transactions can generate $4M to $10M+ in margin per transaction, far more than incremental small USM sales, justifying the reallocation of USM material to build whole serviceable assets.

• Q: What is MRO long-term margin potential at full scale, and what new product development is planned after AirSafe demand peaks? /

  A: Mature full-scale MRO operations deliver 20-30% margins, with margins improving as volume grows and fixed costs are absorbed. The company is evaluating new PMA parts and DER repair opportunities driven by customer demand, especially from the CRJ MRO line, but will only develop new products for confirmed customer orders to avoid wasted investment. No material revenue from new products is expected in the next 12 months.