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Aircraft leasing company FTAI Aviation (NASDAQ:FTAI) missed Wall Street’s revenue expectations in Q1 CY2025, but sales rose 53.7% year on year to $502.1 million. Its non-GAAP profit of $1.02 per share was 16.3% above analysts’ consensus estimates.

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FTAI Aviation (FTAI) Q1 CY2025 Highlights:

• Revenue: $502.1 million vs analyst estimates of $512.8 million (53.7% year-on-year growth, 2.1% miss)

• Adjusted EPS: $1.02 vs analyst estimates of $0.88 (16.3% beat)

• Adjusted EBITDA: $268.6 million vs analyst estimates of $244.4 million (53.5% margin, 9.9% beat)

• Operating Margin: 30.1%, up from 28.4% in the same quarter last year

• Free Cash Flow was -$297.5 million compared to -$278.6 million in the same quarter last year

• Market Capitalization: $12.08 billion

StockStory’s Take

FTAI Aviation’s first quarter was characterized by a substantial year-over-year increase in sales, supported by increased production of refurbished engine modules and ongoing demand in the aerospace aftermarket. Management attributed these results to operational throughput improvements at its Montreal and Miami facilities and highlighted a significant rise in adjusted EBITDA from both Leasing and Aerospace Products segments. CEO Joe Adams stated, “We are production-constrained, and so we are being very heavy leaning towards owning more material than less material at this point.”

For the remainder of the year, management focused its guidance on continued production ramp-up, further monetization through the Strategic Capital Initiative (SCI) partnership, and stable demand despite tariff concerns. Adams reiterated full-year EBITDA targets and emphasized confidence in the company’s ability to meet free cash flow objectives, noting, “We do not currently see tariffs having any material negative effect on our business, and we are reiterating our guidance for both 2025 and 2026.”

Key Insights from Management’s Remarks

FTAI Aviation’s management outlined the main contributors to the quarter’s financial results, providing context for the company’s strategy in the engine maintenance and leasing markets. The company’s approach to asset sales, capacity expansion, and risk mitigation were prominent discussion points.

• SCI Partnership Impact: Management prioritized asset sales and engine exchanges through the SCI, viewing it as a tool to secure future engine rebuilding demand and enhance operating efficiency. Approximately 30% of activity in the quarter came from SCI-related transactions, with expectations this will normalize to 20% for the full year.

• Production Constraints and Ramp-Up: The company is currently limited by production capacity rather than demand for refurbished engines. Management detailed an ongoing ramp-up in Montreal and Miami facilities, aiming to increase market share in restorations from 5% to 25% over time.

• Geographic Diversification: FTAI operates facilities in Canada, the U.S., and soon the EU (Rome), allowing flexibility to optimize deliveries and mitigate the impact of tariffs by leveraging multiple regions for production and distribution.

• Parts Inventory Strategy: To avoid missing sales opportunities, FTAI invested heavily in parts inventory, with a planned $200 million increase in the first half of the year. Management sees this as a temporary working capital step to support higher throughput.

• PMA Parts Adoption: The company continues to pursue approvals for Parts Manufacturer Approval (PMA) components and sees upside potential in margins as industry adoption increases. Management believes airline focus on cost will drive further acceptance of PMA parts, supporting long-term margin expansion.