Aerospace and defense company AerSale (NASDAQ: ASLE) fell short of the markets revenue expectations in Q3 CY2025, with sales falling 13.9% year on year to $71.19 million. Its non-GAAP profit of $0.04 per share was 77.1% below analysts’ consensus estimates.

Is now the time to buy ASLE? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

AerSale’s third quarter results were met with a significant negative market reaction, reflecting both a substantial revenue shortfall and profit miss compared to Wall Street expectations. Management attributed the underperformance primarily to the lack of engine or aircraft sales, a segment known to produce volatile quarter-to-quarter swings. CEO Nicolas Finazzo acknowledged that “the year-over-year decline was entirely driven by the absence of engine or aircraft sales in the quarter compared to 5 engine sales in the prior year period.” Despite this, management emphasized improved profitability within its core operations, citing stronger leasing activity and ongoing cost reduction efforts.

Looking ahead, AerSale’s outlook centers on expanding its recurring revenue base, launching new operational capacity, and capitalizing on regulatory-driven product demand. Management believes that the completion of new Maintenance, Repair, and Overhaul (MRO) facility expansions, combined with steady AerSafe product deliveries ahead of a regulatory deadline, will support revenue growth into 2026. Finazzo stated, “these additions will be an important growth driver in 2026, enhancing both capacity and capability,” while CFO Martin Garmendia noted that “progress we've made in leveraging our strong inventory position, improving operating efficiency and optimizing working capital is translating into a more resilient business model.”

Key Insights from Management’s Remarks

Management attributed the quarter’s results to the absence of whole asset sales, while highlighting progress in leasing, USM, and MRO segments.

• Whole asset sales volatility: The entire year-over-year revenue decline stemmed from not selling any engines or aircraft this quarter, in contrast to five engine sales last year. Management reiterated that these large transactions tend to be unpredictable and can significantly impact short-term results.

• Leasing and USM growth: Excluding whole asset sales, leasing and used serviceable materials (USM) activity grew robustly, supported by disciplined feedstock acquisitions. Management highlighted that its inventory position enabled an 18.5% increase in the balance of the business, reflecting strong demand for leased assets and USM parts.

• TechOps transition and margin improvement: The Roswell facility shifted focus toward higher-margin teardown and decommissioning work, while Goodyear stabilized with a healthy pipeline of recommissioning projects. Margin gains were attributed to this operational pivot and ongoing cost control.

• MRO expansion projects complete: Construction on new MRO facilities was finalized, with management expecting “significant revenue growth in 2026 and beyond” as production ramps up. This includes new capabilities at Aerostructures and pneumatics facilities.

• AerSafe and regulatory tailwinds: Deliveries of AerSafe, a safety solution required to meet Federal Aviation Administration (FAA) directives, increased and are expected to remain strong through 2026 as airlines work to comply with regulatory deadlines. Management reported a $22 million backlog for AerSafe, signaling stable near-term demand.

Drivers of Future Performance

AerSale’s forward outlook is underpinned by recurring revenue growth, expanded MRO capacity, and regulatory-driven product demand, but faces supply chain constraints and feedstock pricing pressures.

• Recurring revenue focus: Management is prioritizing stable income streams from leasing and USM, aiming to reduce quarter-to-quarter volatility historically driven by large asset sales. The company’s growing lease pool and deep feedstock inventory are expected to support more predictable results.

• Operational expansion and capacity: With new MRO facilities now operational, AerSale forecasts a significant step-up in service revenue and margin contribution beginning in 2026. Long-term contracts for these facilities, especially in Millington and Goodyear, are expected to provide a balanced mix of steady and higher-margin, short-term work.

• Feedstock and supply chain risks: While management is optimistic about acquiring feedstock to sustain future USM and leasing growth, it cautioned that competitive market dynamics and higher pricing for used assets could impact margins. The ability to extract value from feedstock through AerSale’s integrated business model remains a key differentiator, but supply tightness and repair shop delays remain ongoing challenges.

Catalysts in Upcoming Quarters

In coming quarters, the StockStory team will be focused on (1) the ramp-up of new MRO facilities and the ability to secure long-term contracts, (2) successful placement of remaining 757 freighter conversions with airline operators, and (3) continued robust AerSafe deliveries as FAA compliance deadlines approach. Additionally, the company’s performance in acquiring attractively priced feedstock and navigating supply chain constraints will be closely monitored as key drivers of future growth and margin stability.

AerSale currently trades at $5.94, down from $6.99 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free for active Edge members).

High Quality Stocks for All Market Conditions

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.