AerSale Corporation (NASDAQ:ASLE), an aviation industry player specializing in the sale of aftermarket aircraft, engines, and inventory, has revised the terms of its Credit Agreement. The company announced today that it has entered into Amendment No. 5 to its Amended and Restated Credit Agreement, originally dated July 20, 2018.
The amendment, which was executed on Thursday, involves modifications to the fixed charge coverage ratio covenant for the fiscal quarter ending June 30, 2024. Additionally, it provides clarification on the treatment of certain components of interest expense for the purpose of calculating EBITDA, as defined within the Credit Agreement. These changes are detailed in the amendment agreement, which is incorporated by reference and attached as Exhibit 1.1 to the report.
This adjustment to the Credit Agreement was agreed upon by AerSale Corporation, the lenders involved, and Synovus (NYSE:SNV) Bank, acting as the documentation agent. Wells Fargo Bank, National Administration, serves as the administrative agent and collateral agent for the agreement.
The company, headquartered in Doral, Florida, operates under the Wholesale-Machinery, Equipment & Supplies industry as classified by the Standard Industrial Classification. The fiscal year for AerSale Corporation ends on December 31.
The significance of this amendment to the Credit Agreement is not disclosed in terms of its immediate financial impact or strategic implications for AerSale Corporation. The company has not provided additional commentary on the reasons for these modifications or their expected benefits.
In other recent news, Aersale, a provider of aftermarket aircraft, engines, and components, has experienced a series of noteworthy developments. Aersale's second quarter revenue increased by 11.2% year-over-year, reaching $77.1 million. This growth was accompanied by an improvement in its adjusted EBITDA, which turned positive at $3.2 million. The company is making strides in expanding its Maintenance, Repair, and Overhaul (MRO) capacity and specialized leasing platform, a move anticipated to add significant annual sales.
Truist Securities, however, has revised its price target for Aersale, reducing it to $8.00 from the previous target of $10.00, while maintaining a Buy rating. This adjustment followed lowered estimates for the fiscal years 2024 and 2025, primarily due to a tight Used Serviceable Material (USM) market. Despite the challenges, Truist Securities expects robust core demand for Aersale's MRO and USM sales.
On the other hand, Aerosol, an aviation industry supplier, anticipates stronger demand for its Engineered Solutions and a more favorable second half of the year, despite reporting a loss from operations of $1.9 million in the second quarter.
InvestingPro Insights
AerSale Corporation's recent amendment to its Credit Agreement comes at a time when the company is facing some financial challenges, as revealed by InvestingPro data. The company's market capitalization stands at $282 million, with a revenue of $354.55 million for the last twelve months as of Q2 2024. Despite a robust revenue growth of 20.71% over the same period, AerSale is currently not profitable, with a negative operating income of $0.17 million.
InvestingPro Tips highlight that AerSale is "quickly burning through cash" and its "valuation implies a poor free cash flow yield." These factors may have contributed to the need for adjusting the credit agreement terms, particularly the fixed charge coverage ratio covenant. On a positive note, analysts predict that the company will be profitable this year, which aligns with the InvestingPro Tip indicating that "net income is expected to grow this year."
The company's stock performance has been challenging, with the price falling significantly over the last year and the last three months. Currently, AerSale is trading at only 31.7% of its 52-week high, reflecting investor concerns about its financial health and future prospects.
For investors seeking a more comprehensive analysis, InvestingPro offers 10 additional tips for AerSale Corporation, providing a deeper understanding of the company's financial position and market performance.
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