AerSale’s MRO Margins and 2027 Growth Outlook Clash in Q2 2026 Earnings Call

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Date of Call: Aug 6, 2026

Financials Results

• Revenue: $70.9M, down 4.2% YOY excluding flight equipment sales; $4M total revenue, down from $33.4M flight equipment sales in prior year period
• EPS: Adjusted diluted loss per share of $0.09 vs adjusted net income of $9.4M last year; diluted loss per share of $0.12
• Gross Margin: 22.9%, down from 32.9% last year
• Operating Margin: Adjusted EBITDA margin of 3.1% vs 17% prior year period

Guidance:

• Expect meaningfully stronger second half results as volume builds and operations gain scale.
• Leasing revenue growth expected from expanded portfolio and remaining 757 freighters.
• MRO margins to improve with increased utilization and operational efficiencies.
• Several pending flight equipment sales expected to close in late third or early fourth quarter, providing revenue and liquidity.
• Expect higher profits and more consistent earnings going forward.

Business Commentary:

Revenue Decline and Strategic Priorities:

• Aerosale Inc. reported revenue of $70.9 million for Q2 2026, down from the prior year period. Adjusted EBITDA was $2.2 million, compared to $18.3 million in the prior year period.
• The decline was primarily due to the absence of flight equipment sales and lower USM sales, as well as costs associated with setting up new capabilities at Goodyear, Millington, and Landing Gear.

MRO Operations and Utilization:

• TechOps revenue was $33.8 million, up 8.7%, driven by the ramp-up of the CRJ multi-line maintenance program at Millington and higher component MRO volume.
• Utilization rates at Millington and Goodyear were below capacity, but improvements were noted in labor efficiency and turn times, with expectations for increased volume and improved margins in the second half.

Leasing and Asset Management:

• Leasing revenue grew approximately 50% in the engine and freighter lease portfolio, with 18 engines and three 757 freighters on lease.
• Growth in leasing was offset by lower USM revenue due to disciplined feedstock acquisitions and a shift towards higher-value flight equipment sales and leases.

Flight Equipment Sales and Inventory Monetization:

• There were no flight equipment sales in Q2 2026, unlike the prior year period which included sales of eight engines.
• The company is focusing on strategic sales and leases that provide higher margin realization and improved returns, with several potential transactions expected to close in the second half.

Cash Flow and Liquidity:

• Cash used in operating activities was $33.5 million year-to-date, reflecting investments in inventory and flight equipment.
• The company ended the quarter with $376 million in assets held for lease and $34 million in available liquidity, positioning it to support growth strategies and monetize assets in the second half.

Sentiment Analysis:

Overall Tone: Positive

• "We made progress against these priorities, giving me confidence in our momentum heading into the second half." "We expect a meaningfully stronger second half." "We are confident this combination, supported by a healthy balance sheet, positions us for meaningfully improved performance."

Q&A:

• Question from Stephens Trackhouse (RBC): I guess one of the questions I have just on the MRO facilities, I know you're still in the process of kind of ramping those up, but at this point, what is the utilization rate running on those facilities?
  Response: Millington has capacity for two more lines, Goodyear is at <20% capacity but storage is filling with aircraft, Landing Gear is at ~80% capacity. Expect improvements and increased volume in second half.

• Question from Stephens Trackhouse (RBC): Okay, great to hear. And then maybe you could just touch on any thoughts you have on the reasons for no flight equipment sales in the quarter?
  Response: Several engines were ready for sale/lease but timing missed; preference is to lease for recurring revenue, but will sell if financially advantageous. Expect strong engine sales/lease activity in coming months.

• Question from Stephens Trackhouse (RBC): okay that's great to hear um and then if i could squeeze one more in just um curious i know you mentioned some yellow aircraft of those aircraft is are they give a sense of the status that are being stored and i'm wondering what you think that they know um what do you think happens there Are they ready to fly? Do they need MRO?
  Response: Stored ex-Spirit Airlines aircraft (84 at Goodyear) need maintenance/engine replacement; most owned by banks/lessors. Many will be parted out due to high engine value, but some may be leased. Provides future heavy maintenance work.

• Question from Stephens Trackhouse (RBC): Hey, Martin. Thanks for taking my questions. Nick, I'm hoping you might be able to just follow up on the part that you said that investors don't maybe appreciate in terms of what it takes to kind of foregoing the near-term USM piece part sales in favor of bills to really put the assets together. Maybe kind of speaking to that trade-off, I think the longer-term, you know, leasing assets kind of is a strategic choice. Can you assign any value or margins between the two to kind of level set us up? Numbers to that, maybe in terms of the margins that you can kind of
  Response: USM margins typically ~25%, but leasing/selling whole assets provides higher total margin and faster capital recovery. Trade-off involves investment to prepare assets; value is in using infrastructure to assemble for greater overall return.

• Question from Stephens Trackhouse (RBC): That is really, really helpful color. And a couple of questions here are really just around. I can appreciate the investment that you guys are making to really kind of get the revenue model into a recurring stream and to really take advantage of the margin potential. So my second question is also the Goodyear labor that you're making, maybe not even in a similar line of thought where I know you talked about the CRJ RAM kind of when they turn accretive to like the back half, but what can kind of some of the incremental margins or the margin capability look like on that MRO work in like 2027 or 2028?
  Response: On-airport MRO margins typically 20-30% at full volume; ramp-up currently lowers margins due to low volume/high fixed costs. Expect improvement with increased volume and additional shifts, especially at Goodyear.

• Question from Stephens Trackhouse (RBC): And then very last question from me. I can appreciate that there's a bit of a drop off after air safe in the peak of like 3Q26. But can you talk about the investment cycle that you could be making in new product offerings? We've heard a lot from a lot of other peer companies this quarter on their earnings calls talk about new product development. I was wondering if you could share any investments that you're making into other new products that could eventually replace AirSafe and drive some longer-term growth.
  Response: Looking at PMA opportunities and additional services for customers (e.g., CRJ line). No specific new product development announced; any future projects would require customer commitment and take significant time, similar to AirAware.

Contradiction Point 1

MRO Facility Utilization Trends

Contradictory statements on the operational status and capacity utilization of MRO facilities. These discrepancies could mislead investors about the company's current operational efficiency and growth prospects.

What were the key questions from Stephens (RBC) during the Trackhouse earnings call? - Stephens Trackhouse (RBC)

2026Q2: Millington: Two lines are operational with capacity for two more... Goodyear: Less than 20% capacity utilization... Landing Gear: Operating at ~80% capacity with two shifts. - [Martin Garmendia](CFO)

What is the current utilization rate of the MRO facilities? - Jeff Van Sinderen (B. Riley Securities)

2026Q2: Millington facility has two lines in work with capacity for two more; Goodyear facility operating at less than 20% capacity but storage field filling with aircraft; LandingGear shop operating at about 80% capacity on one shift. - [Martin Garmendia](CFO), [Nicolas Finazzo](CEO)

Contradiction Point 2

Goodyear Storage Aircraft Outlook

Inconsistent guidance on the future utilization and demand drivers for the Goodyear facility. This impacts the predictability of future revenue streams and business strategy.

Stephens Trackhouse (RBC) - Stephens Trackhouse (RBC)

2026Q2: Heavy maintenance work is expected to increase significantly as these aircraft are returned to service. The large volume creates a sustained demand for heavy maintenance at Goodyear, supporting future revenue. - [Nick Finazzo](CEO)

What is the current status and expected future of the "yellow aircraft" stored at Goodyear? - Jeff Van Sinderen (B. Riley Securities)

2026Q2: Goodyear storage expected to drive meaningful growth; ... capacity will be filled for next year as lessors find lessees. - [Nicolas Finazzo](CEO), [Martin Garmendia](CFO)

Contradiction Point 3

MRO Ramp-Up Cost Impact

Contradiction on the current margin pressure and its cause related to facility ramp-up. This affects understanding of the company's financial health and cost management.

Stephens Trackhouse (RBC) - Stephens Trackhouse (RBC)

2026Q2: Ramp-up is causing lower margins due to learning curves, but improvements are seen. - [Martin Garmendia](CFO)

What is the current utilization rate of the MRO facilities? - Stephen Strackhouse (RBC)

2026Q2: Margins depressed due to low volume and ramp-up costs. - [Nicolas Finazzo](CEO)

Contradiction Point 4

MRO Margin Expectations

Contradiction on expected gross margins for new MRO capacity. This is critical for financial forecasting and investor valuation.

What is the earnings call analysis for Stephens Trackhouse (RBC)? - Stephens Trackhouse (RBC)

2026Q2: Full-volume MRO margins typically range from 20% to 30%. - [Martin Garmendia](CFO)

What are the expected incremental margins for MRO work at Goodyear and Millington in 2027/2028? - Ken Herbert (RBC Capital Markets)

2026Q1: Future gross margins at Millington are expected to exceed 20%. - [Martin Garmendia](CFO)

Contradiction Point 5

Growth Trajectory into 2027

Contradiction on the GTF storage opportunity normalization timeline and the primary driver of 2027 growth. This impacts strategic planning and market expectations for future growth.

Stephens Trackhouse (RBC) - Stephens Trackhouse (RBC)

2026Q2: The status of the GTF storage opportunity is not addressed in this answer. - N/A

What is the current status and expected future of the "yellow aircraft" stored at Goodyear? - Michael Ciarmoli (Truist)

20260306-2025 Q4: Clarified that the GTF storage opportunity is not normalizing in 2026. The main opportunity is the return-to-service work on parked GTF-powered aircraft... a process that will extend into 2027. - [Nicolas Finazzo](CEO)

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