Slide 1: Monocle Acquisition Corporation AerSale Corp. Investor Presentation
Monocle Acquisition Corporation AerSale Corp. Investor Presentation September 2020
Slide 2: No Offer or Solicitation
2 No Offer or Solicitation This investor presentation (“Investor Presentation”) is for informational purposes only and does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation to purchase any equity, debt or other financial instruments of Monocle Acquisition Corpo
Slide 3: Industry and Market Data; Non-GAAP Financial Measures
3 Industry and Market Data In this Investor Presentation, we rely on and refer to information and statistics regarding market participants in the sectors in which AerSale competes and other industry data . We obtained this information and statistics from third - party sources, including reports by m
Slide 4: Table of Contents
4 Table of Contents I. Introduction & Situation Overview II. Business Overview & Growth Opportunities III. Financial Detail & Transaction Summary IV. Appendix
Slide 5: Section I: Introduction & Situation Overview
Section I Introduction & Situation Overview
Slide 6: Presenters and Senior Leadership
6 Presenters and Senior Leadership Richard Townsend Chief Financial Officer ▪ 39 years of finance, operating and strategy experience ▪ Managing Partner at Rangeley Capital ▪ Former EVP & CFO of Loral Space & Communications (NASDAQ:LORL) ▪ Previously served as Corporate Controller & Director of Strat
Slide 7: Overview of Monocle Acquisition Corporation and Leonard Green & Partners
7 Overview of Monocle Acquisition Corporation and Leonard Green & Partners Monocle Acquisition Corporation (“Monocle”) (NASDAQ:MNCL) completed its IPO on February 11, 2019 for $172.5 million along with a private placement raise of $7.2 million at $10.00 per unit Background Sources: Company websites.
Slide 8: Updated Transaction Overview
8 Updated Transaction Overview Note: This presentation includes forecasted 2020 and 2021 adjusted EBITDA for AerSale. This presentation does not provide a reco nciliation of this forward - looking non - GAAP financial measure. (1) Assumes a $10.00 illustrative share price. Assumes no redemption by M
Slide 9: Global Leader in Aviation Aftermarket Products and Services
9 Global Leader in Aviation Aftermarket Products and Services Source: AerSale Management. Note: Pro forma adjusted figures include the run - rate contribution of recent acquisitions, public company cost assumptions, CARE S Act contributions and exclude impairment charges. (1) Please refer to slide 4
Slide 10: AerSale Investment Highlights
10 7 Business combination at an attractive valuation relative to public commercial aerospace peers 4 Multiple levers for sustained organic growth across existing and new business lines 6 Proven leadership team with deep industry expertise across multiple aviation business cycles 2 Differentiated bus
Slide 11: Section II: Business Overview & Growth Opportunities
Section II Business Overview & Growth Opportunities
Slide 12: Two 'Purpose Built' Segments Maximizing Value of Mid-Technology Flight Equipment
12 Two ‘Purpose Built’ Segments Maximizing the Value of Mid - Technology Flight Equipment ▪ High demand aftermarket for mid - technology aircraft, engines, and USM parts ▪ Cost - efficient fleet acquisition sourcing ▪ Opportunistic early monetizing of portfolio aircraft and engines ▪ ‘One stop’ airc
Slide 13: AerSale Well Positioned to Support the Global Aviation Recovery
13 0% 10% 20% 30% 40% 50% 60% 70% 0 3,000 6,000 9,000 12,000 15,000 18,000 Jul-00 Jul-04 Jul-08 Jul-12 Jul-16 Jul-20 % of Global Fleet Parked Aircraft AerSale is Well Positioned to Support the Global Aviation Recovery with Lower Cost Aftermarket Alternatives Parked Aircraft Since July 2000 Parked Ai
Slide 14: Increased Aircraft Retirements Generate Attractive Opportunities
14 Increased Aircraft Retirements Generate Attractive Opportunities for AerSale Focus Aircraft Platforms 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 1990 1994 1998 2002 2006 2010 2014 2018 2022E 0% 1% 2% 3% 4% 5% 6% 7% 8% Deliveries Retirements Retirements as a % of prior year's fleet: 2020E = 5.0% Deliveries
Slide 15: AerSale is Purpose Built to Capitalize on Market Dislocation
15 AerSale is Purpose Built to Capitalize on Market Dislocation Current Market Dislocation Presents Strong Expansion Opportunity for AerSale ▪ AerSale has the demonstrated ability to identify and acquire the right aircraft and engines to generate outsized returns in a recovering market Other indus
Slide 16: Strong Cargo Market Has Created Upside for AerSale
16 0 20 40 60 80 100 120 Feb-09 Feb-23 Mar-08 Mar-22 Apr-05 Apr-19 May-03 May-17 May-31 Jun-14 Jun-28 Jul-12 Airline Freighter Express Freighter Passenger Belly Strong Cargo Market Has Created Upside for AerSale (1) Corrected for day - of - week fluctuations, smoothened for clarification. (2) Freigh
Slide 17: Significant Opportunity to Capitalize on Current Market Conditions
17 Significant Opportunity to Capitalize on Current Market Conditions USM Ripe for Recovery 1 ▪ As an attractive alternative to expensive “new” replacement parts , USM is well positioned to rapidly expand as air travel normalizes ▪ Required inspections to bring thousands of mid - life aircraft / eng
Slide 18: Select Near-Term Acquisition Opportunities
18 Select Near - Term Acquisition Opportunities Opportunity #1 Opportunity #2 Opportunity #3 Type / Quantity Up to 62 737 - 800s 12 757 - 200s (PW2000 Engines) 9 A330 - 300s Expected Bid Timing Sep 2020 Oct / Nov 2020 Oct 2020 AerSale Asset Acquisition History (1) ($ in millions) AerSale Has a Highl
Slide 19: Focus on Mid-Technology Flight Equipment Platforms
19 B737NG Mid - Technology Flight Equipment Aircraft & Engine Platform Focus Ear l y mode l A 320 A330CEO M D - 9 0 CRJ 100/2 0 0 M D - 1 1 T rent B757 C F 6 - 80 C 2 V250 0 - A 1 CFM 5 6 - 3 / - 5 A B73 7 - 300/ 400/5 00 A 340 A330NEO PW 4000 A320CEO CFM 5 6 - 5 B / - 5 C / - 7 B V 250 0 - A 5 / -
Slide 20: Integrated Business Segments Identify Highest Demand and Markets
20 Integrated Business Segments Identify Highest Demand and Markets Business Segment Alternatives Realizes the highest value of mid - technology flight equipment by ensuring each aircraft, engine, and sub - component is returned to service in it s highest profitability capacity: ▪ Out - right retail
Slide 21: Significant Market Opportunity for Proprietary Engineered Solutions
21 Significant Market Opportunity for Proprietary Engineered Solutions $10B Total Market Opportunity 5,000+ 4,000+ 16,000+ Market Opportunity (# of Aircraft) ▪ Fuel Tank Ignition Mitigation System to meet FAA mandated Fuel Tank Flammability Reduction (FTFR) requirements ▪ FAA approved for B737CL, B7
Slide 22: Nose-to-Tail MRO Facilities Augment Inter-Business Unit Performance
22 Nose - to - Tail MRO Facilities Augment Inter - Business Unit Performance and Profits Select Capabilities Comprehensive MRO Capabilities Reduce Cost of Parts for Internal Utilization, While Providing Profitable End User Revenue Str eam MRO Service Offerings Source: AerSale Management. Systems Com
Slide 23: Deep Customer Relationships Supported by Diversified Service Offering
23 Deep Customer Relationships Supported by Diversified Service Offering 55 % of Top 100 Customers Generated Multi - Business Unit Sales (FY 201 9 ) Asset Management Solutions Aircraft & Engine Acquisition Aircraft & Engine Management USM Sales Customers Airlines MROs & OEMs Lessors & Lessees Parts
Slide 24: Executive Management Team Features Unrivaled Aftermarket Expertise
24 Executive Management Team Features Unrivaled Aftermarket Expertise ▪ Highly qualified executive leadership team with an average of 25 years of relevant industry experience , through multiple industry cycles, and wide - ranging business conditions ▪ Deep industry relationships through years of bus
Slide 25: Attractive Global Opportunities For Scalable Business Platform
25 Attractive Global Opportunities For Scalable Business Platform Expanded Sales to U.S. Government Agencies • Stable and increasing DoD O&M budget — ~5% CAGR from FY2016 to FY2020 • Defense sector in early stage of outsourced solutions for aging aircraft platforms • AerSale has successfully execute
Slide 26: Section III: Financial Detail & Transaction Summary
Section III Financial Detail & Transaction Summary
Slide 27: Integrated Business Model Provides Opportunities for Cross Selling
27 Heavy MRO Component MRO ▪ Storage of aircraft ▪ Passenger to freighter conversions ▪ C&D Checks ▪ Nacelles ▪ Flight Controls ▪ Avionics ▪ Pneumatics ▪ Hydraulics ▪ Landing Gear ▪ Hull Introducing Unprecedented Operational Efficiency Lowers Cost of Regulatory Compliance Sale and Lease of Aircraft
Slide 28: AerSale Historical and Projected Financial Performance
28 $29 $54 $60 $42 $54 $101 $122 $135 PF2017A PF2018A PF2019A 2020F 2021F 2022F 2023F 2024F AerSale Historical and Projected Financial Performance Source: AerSale Management. Note: Pro forma adjusted figures include the run - rate contribution of recent acquisitions and public company cost assumptio
Slide 29: Performance Summary of Historical Feedstock Purchases
29 Performance Summary of AerSale Historical Feedstock Purchases Since Inception AerSale has purchased >$1.2 Billion in feedstock Note: Analysis per Management analysis; IRR is unaudited and includes refurbishment costs. Graphical data reflects thirty - two i ndividual asset purchases. Data Points w
Slide 30: Business Integration Case Study: B747 Fleet Purchase
30 Business Integration - Case Study: B747 Fleet Purchase Situation Overview 4 (Sold) 6 (Leased) ▪ AerSale acquired 19 Boeing CF6 - 80C2 powered 747 - 400 aircraft from a major Asian operator downsizing its fleet following the last recession of 2008/2009, for ~ $214M (paid over two years) ▪ Utilized
Slide 31: Asset Alternative Applications Case Study: A300 Fleet Purchase
31 Asset Alternative Applications - Case Study: A300 Fleet Purchase AerSale’s Deep Knowledge of Inter - Fleet Dynamics Realized Higher Value for Engines Situation Overview ▪ The Airbus A300 and A310 aircraft market was rapidly entering its sunset phase ▪ AerSale acquired a fleet of eight CF6 - 80C2A
Slide 32: Post-Covid Investment Opportunity: Boeing Fleet Acquisition
32 Post - Covid Investment Opportunity: Boeing 757 Fleet Acquisition Lease Aircraft ▪ In September 2020 AerSale contracted to acquire 24 Boeing 757 - 200 aircraft equipped with Rolls - Royce RB 211 - 535 engines, and 16 spare engines Significant advantages of on - site delivery of all aircraft and
Slide 33: PF2019A–2021F Adjusted EBITDA Bridge
33 PF2019A – 2021F Adjusted EBITDA Bridge Source: AerSale Management. Note: Pro forma adjusted figures include the run - rate contribution of recent acquisitions, public company cost assumptions, CAR ES Act contributions and exclude impairment charges. Due to rounding, numbers presented may not add
Slide 34: Projected Liquidity to Support Attractive Growth Opportunities
34 Projected Liquidity to Support Attractive Growth Opportunities Source: AerSale Management. Note: Pro forma adjusted figures include the run - rate contribution of recent acquisitions, public company cost assumptions, CAR ES Act contributions and exclude impairment charges. Financial forecast excl
Slide 35: Monocle and AerSale Joining Forces to Accelerate Growth and Profitability
35 Current Status Margin Expansion Organic Growth Accretive Acquisitions Multiple Expansion Shareholder Value Creation Monocle and AerSale Joining Forces to Accelerate Growth and Profitability Margin Expansion Strong Organic Revenue Growth Disciplined Value - Add Acquisitions ▪ Increasing contributi
Slide 36: Initial Valuation at Discount to Public Aerospace Peers
36 14.5x 13.2x 12.4x 11.3x 11.3x 9.5x 8.3x 7.6x 5.5x Median 11.3x Mean 11.0x AerSale Initial Valuation at Discount to Public Aerospace Peers 36 Source: Wall Street research, Company filings, Capital IQ, Bloomberg and AerSale Management. Note: Market data as of September 3, 2020. (1) Assumes no debt
Slide 37: AerSale Will Be Debt-Free at Transaction Close
37 5.2x 3.5x 3.5x 2.5x 2.0x 1.5x 1.4x 1.3x -- Mean 2.6x Median 2.2x AerSale Will Be Debt - Free at Transaction Close 37 Source: Wall Street research, Company filings, Capital IQ, Bloomberg and AerSale Management. Note: Market data as of September 3, 2020. (1) Assumes no debt outstanding at close. (2
Slide 38: Operational Benchmarking
38 18.4% 17.6% 17.4% 15.2% 13.8% 12.8% 11.1% 7.4% 6.5% Median 13.3% Operational Benchmarking 2018A - 2021F Revenue Growth CAGR 2021F EBITDA Margin (2) (3) (3) (1) (1) (2) Source: Wall Street research, Company filings, Capital IQ, Bloomberg and AerSale Management. Note: Market data as of September 3,
Slide 39: Compelling Valuation Relative to Peers
39 5.5x 6.3x 7.3x 11.3x $10.00 $11.00 $12.00 Peer Median Compelling Valuation Relative to Peers 39 Source: Wall Street research, Company filings, Capital IQ, Bloomberg and AerSale Management. Note: Market data as of September 3, 2020. (1) Assumes Treasury Stock Method for 17.968 million in - the - m
Slide 40: Transaction Capitalization and Ownership
40 Transaction Capitalization and Ownership Note: The sources and uses of funds presented herein are forward - looking statements and reflect the Company’s current plans and expectations regarding financing for the business combination. Pro forma adjusted figures include the run - rate contribution
Slide 41: Section IV: Appendix
Section IV Appendix
Slide 42: Non-GAAP Reconciliation: Fiscal Years 2018A and 2019A
42 FY Ending December 31st, ($ in millions) 2018A 2019A Revenue, Net $290.7 $304.2 AerLine Divestiture Adjustment (53.7) -- Adjusted Revenue $237.0 $304.2 Normalized Full-Year Avborne Revenue 15.6 -- Normalized Full-Year Qwest Revenue 19.0 10.8 Normalized Full-Year ACT Revenue 7.9 9.9 Pro Forma Adju
Slide 43: Non-GAAP Reconciliation: Quarterly 2019 and 2020
43 ($ in millions) Q1 2019A Q2 2019A YTD Q2 2019A Q1 2020A Q2 2020A YTD Q2 2020A Revenue, Net $52.2 $63.0 $115.2 $55.9 $46.6 $102.5 AerLine Divestiture Adjustment -- -- -- -- -- -- Adjusted Revenue $52.2 $63.0 $115.2 $55.9 $46.6 $102.5 Normalized Full-Year Avborne Revenue -- -- -- -- -- -- Normalize
Slide 44: Disciplined Acquisition of Targeted Flight Equipment Feedstock
44 Disciplined Acquisition of Targeted Flight Equipment Feedstock AerSale’s Formal Feedstock Procurement Process Efficiently Manages Capital Optimal Business Unit Assignment Rolling 500 – 600 Aircraft and Engines Tracked Weekly Feedstock Procurement Review Meeting Final Review Execution AerSale assi
Slide 45: Cross-Selling Case Study: Passenger-to-Freighter Conversions
45 Cross - Selling - Case Study: Passenger - to - Freighter Conversions ▪ In 2018 AerSale TechOps secured a B757 - 200 passenger - to - freighter (P2F) conversion contract for ten aircraft conversions ▪ To support the P2F program, AerSale initiated an Engine Pylon rotation program to facilitate pylo
Slide 46: Disciplined, Accretive Acquisitions
46 46 Disciplined, Accretive Acquisitions Business Description Established supplier of USM to Commercial Operators & Government Agencies MRO operation focused on: composite flight control surfaces, nacelle & fan / thrust reversers Date of Acquisition January 2020 May 2019 Headquarters Miami, FL Memp