Tourlite Capital Management, an investment management company, released its fourth-quarter 2025 investor letter. A copy of the letter is available to download here. In Q4, Tourlite Fund, LP returned 0.2% compared to 2.7% for the S&P 500 Index and 2.2% for the Russell 2000. The Fund posted 2.8% for the full year 2025, substantially below the 17.9% and 12.8% returns of the indexes. In 2025, the fund underperformed below the target return range, primarily due to poor stock selection in the long book, which fo ...

Core Viewpoint - FTAI Aviation Ltd. is recognized as a strong growth stock with long-term potential, despite recent earnings falling slightly short of expectations [1][3]. Financial Performance - FTAI Aviation's fourth-quarter earnings were marginally below expectations, with a decrease in 2026 free cash flow projections due to further SCI II capital options [1]. - The Aerospace Products segment, which provides maintenance solutions for CFM56 and V2500 engines, was the best performer, with EBITDA increasing by 76% year-over-year, from $381 million in 2024 to $671 million for the full year [4]. Market Position and Outlook - Barclays raised its price target for FTAI Aviation from $260 to $350, maintaining an Overweight rating, indicating confidence in the company's long-term growth drivers [1]. - The firm views any significant dip in the stock price as a buying opportunity, suggesting strong underlying momentum for the company [3]. Company Focus - FTAI Aviation specializes in the Maintenance, Repair, and Exchange (MRE) of commercial jet engines, specifically targeting the CFM56 and V2500 engines used in Airbus and Boeing aircraft [5].

Company Updates - FTAI Aviation Ltd. announced leadership changes with Nicholas McAleese appointed as chief financial officer and Michael Hazan as chief accounting officer, effective immediately [1] - Lam Research Corporation reported second-quarter earnings of $1.27 per share, exceeding the Street estimate of $1.17 by 8.45%, and quarterly revenue of $5.35 billion, surpassing the analyst consensus estimate of $5.24 billion, and up from $4.38 billion in the same period last year [3] Price Movements - FTAI Aviation shares fell 4.3% to close at $259.91 [4] - Goldman Sachs shares decreased by 1.2% to close at $823.76 [4] - State Street SPDR S&P Regional Banking ETF declined by 1.1% [4] - Lam Research shares increased by 1.7% to close at $218.87 [4] Analyst Recommendations - Jason Snipe expressed a favorable view on The Goldman Sachs Group, supported by J.P. Morgan analyst Kian Abouhossein raising the price target from $815 to $826 [2] - Joseph Terranova recommended Lam Research Corporation [3]

Core Insights - FTAI Aviation's shares increased by 12.3% in February, continuing a strong performance with a 178% rise over the past year and a 38% increase in 2026 [1] - The company's core aviation market is thriving, and its new business, FTAI Power, is poised to support AI data center needs [1] Company Overview - FTAI is primarily known for servicing narrow-body aircraft engines from Boeing and Airbus, with opportunities for cost-effective servicing after long-term service agreements (LTSA) expire [2] - The company benefits from the current market conditions where engine manufacturers are struggling to ramp up production, leading to increased usage of older engines [3] Market Outlook - CEO Joseph Adams indicated a strengthening long-term outlook for the aftermarket, as airlines prefer to extend the life of existing fleets rather than retire them [4] - Total industry maintenance spending is projected to grow from $22 billion in 2023 to $25 billion in 2026, driven by historically low engine retirements and heavier maintenance overhauls [4] Strategic Partnerships - FTAI signed a multi-year agreement with CFM International to provide component and service support for CFM56 engines, which benefits both companies by ensuring engine longevity and allowing GE to focus on servicing newer LEAP engines [4]

Core Insights - Identifying a great stock is not sufficient; timing and strategy for buying and taking profits are crucial [1] - The Cash Management Discipline (CMD) emphasizes the importance of cash as a strategic position for overall success [1] - Stock picking is highlighted as a key focus, even for well-known stocks, which require careful selection [1] Sector Focus - The company provides curated lists for various sectors, including Microcap Biotech, Aviation+Space, and Asset Light Stocks [1] - A two-week trial is offered for paying subscribers to access these curated lists [1]

Core Viewpoint - FTAI Aviation Ltd. has appointed Nicholas McAleese as Chief Financial Officer and Michael Hazan as Chief Accounting Officer, effective immediately, following the departure of Eun (Angela) Nam [1][2][3]. Group 1: Leadership Changes - Nicholas McAleese, previously Senior Vice President of FP&A, succeeds Eun (Angela) Nam as CFO, while Michael Hazan, who served as Senior Vice President, Controller, takes over as CAO [2][3]. - Angela Nam is leaving FTAI to pursue a new opportunity outside the aviation industry but will assist in the transition [2][4]. Group 2: Executive Backgrounds - Nicholas McAleese joined FTAI in 2022 and has been instrumental in developing corporate finance functions and financial planning [3][5]. - Michael Hazan has been with FTAI since 2017, overseeing accounting, financial reporting, and operational efforts [3][6]. Group 3: Company Overview - FTAI Aviation combines advanced turbine technology and asset ownership to serve essential markets globally [7].

Group 1: Fund Performance - Crossroads Capital LLC reported a 2.7% net return in Q4 2025, leading to an annual return of 37.7% net [1] - Since inception, the Fund has compounded at a rate of 21.2% gross and 17.1% net [1] - By the end of December 2025, the Fund's overall non-delta adjusted gross and net exposure were 89.7% and 72.1%, respectively [1] Group 2: Market Sentiment and Outlook - The market sentiment shifted rapidly in November 2025 due to concerns over the AI bubble, Federal Reserve uncertainty, and bearish positioning [1] - Q4 2025 demonstrated increased market volatility and reflexivity, with cautious optimism for a positive trend in market breadth and interest in small-cap stocks into 2026 [1] Group 3: Company Focus - FTAI Aviation Ltd. - FTAI Aviation Ltd. (NASDAQ:FTAI) is highlighted as a key stock, with a market capitalization of $31.367 billion [2] - The stock closed at $305.80 per share on February 27, 2026, with a one-month return of 11.45% and a 52-week gain of 157.82% [2] - FTAI Aviation Ltd. is transforming into a capital-light, high-visibility model through its Strategic Capital Initiative (SCI), despite being valued as a cyclical lessor [3]

Financial Performance - Total revenues for the year ended December 31, 2025, increased to $2.51 billion, up 44.6% from $1.73 billion in 2024[183] - Net income attributable to shareholders for 2025 was $477.5 million, compared to a loss of $32.1 million in 2024[183] - Total expenses for 2025 were $1.77 billion, an increase of 17.9% from $1.50 billion in 2024[183] - Adjusted EBITDA increased by $328.9 million to $1,190.9 million in 2025, reflecting improved performance across segments[188] - Net income attributable to shareholders rose to $477.5 million in 2025, a $509.6 million increase compared to a net loss of $32.1 million in 2024[184] - Total revenues for 2025 reached $1,936.2 million, an increase of $856.4 million compared to 2024[200] - Net income attributable to shareholders for 2025 was $548.3 million, up by $202.0 million from 2024[201] - Adjusted EBITDA for 2025 increased to $671.3 million, a rise of $290.6 million compared to 2024[202] Revenue Breakdown - Aerospace products revenue reached $1.60 billion, a 48.3% increase from $1.08 billion in 2024[183] - Total revenues increased by $772.5 million in 2025, driven by a $520.6 million increase in Aerospace products revenue and a $335.8 million increase in MRE Contract revenue[185] - Aerospace products revenue increased by $624.9 million in 2024, primarily due to a $546.0 million increase in engine and module sales[190] - Aerospace products revenue increased by $520.6 million, primarily driven by a $499.7 million increase in engine and module sales[204] - MRE Contract revenue rose to $335.8 million, reflecting increased engine and module sales to the 2025 Partnership[204] Expenses and Charges - The company recognized an impairment charge of $120.0 million for leasing equipment assets due to the impact of sanctions related to Russia's invasion of Ukraine[174] - The provision for income taxes increased by $100.1 million in 2025, driven by higher income in the Aerospace Products and Aviation Leasing segments[186] - Total expenses decreased by $38.1 million in 2025, reflecting a reduction in sales transactions of commercial aircraft and engines[213] - Total expenses increased by $287.4 million, driven by a $300.0 million internalization fee to an affiliate[229] Strategic Initiatives - The Strategic Capital Initiative raised $2.0 billion in equity commitments for the 2025 Partnership, focusing on acquiring 737NG and A320ceo aircraft[177] - The company launched FTAI Power in December 2025, focusing on converting CFM56 engines to power turbines[195] - The company launched a Strategic Capital Initiative with $2.0 billion in equity commitments for acquiring aircraft[239] Asset Management - Total consolidated assets as of December 31, 2025, were $4.4 billion, with total equity of $334.2 million[171] - As of December 31, 2025, the Aviation Leasing segment managed 290 aviation assets, including 47 commercial aircraft and 243 engines[208] - The utilization rate of aviation equipment was approximately 77% during the last quarter of 2025[209] Cash Flow and Liquidity - Cash used for investments was $1,130.3 million in 2025, compared to $1,526.2 million in 2024[246] - Net cash used in operating activities increased by $122.8 million, reflecting adjustments related to net income[248] - The company expects to meet future liquidity requirements through cash on hand and unused borrowing capacity[251] Interest Rate and Risk Management - The company is exposed to interest rate risk, particularly related to its Revolving Credit Facility, which may affect net income due to variable interest rates[268] - A hypothetical 100-basis point increase/decrease in the variable interest rate on borrowings would not have increased or decreased interest expense over the next 12 months as of December 31, 2025[271] - Changes in interest rates could cause fluctuations in the company's results of operations and cash flows, highlighting the importance of managing interest rate exposure[267] Maintenance and Asset Valuation - The company recognizes maintenance payments as current and non-current Maintenance Deposits in the Consolidated Balance Sheets, with excess payments recorded as Maintenance revenue[258] - Maintenance payments are typically required to be made monthly in arrears, based on hours or cycles of utilization, and are crucial for funding major maintenance events[257] - The estimated useful life of aircraft is 25 years from the date of manufacture, with residual value estimates generally not exceeding 15% of the manufacturer's list price when new[260] - The company performs recoverability assessments of long-lived assets whenever indicators suggest that the carrying amount may not be recoverable, which could lead to impairment charges[262] - Goodwill is tested for impairment at least annually, with management making assumptions about industry and economic factors[265]

Financial Data and Key Metrics Changes - In Q4 2025, adjusted EBITDA reached $277.2 million, a 10% increase from $252 million in Q4 2024 [24] - For the full year 2025, adjusted EBITDA was $1.2 billion, up 38% from $862 million in 2024 [24] - The company generated $724 million of adjusted free cash flow in 2025, exceeding the original guidance of $650 million [27] Business Line Data and Key Metrics Changes - Aerospace products generated $195 million of Q4 adjusted EBITDA at a 35% margin, a 66% increase year-over-year [7] - For the full year, aerospace products delivered $671 million of adjusted EBITDA, aligning with the revised target of $650 million-$700 million [25] - Aviation leasing posted approximately $113 million of adjusted EBITDA in Q4, contributing to a total of $609 million for the year [26] Market Data and Key Metrics Changes - The total maintenance spend in the market is expected to grow at a double-digit rate to approximately $25 billion per annum, up from $22 billion projected last year [9] - The company aims to achieve a 25% market share in the aerospace aftermarket through new and repeat customers [10] Company Strategy and Development Direction - The company launched the Strategic Capital Initiative (SCI), raising $2 billion in equity commitments for acquiring narrow-body aircraft [5] - The company plans to start investing from SCI Two by June 30, 2026, following the success of SCI One [12] - FTAI Power was launched to convert CFM56 engines into aeroderivative power turbines, targeting a significant contribution to long-term growth [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the updated guidance for 2026, increasing total EBITDA expectations to $1.625 billion [31] - The company anticipates continued growth in both aerospace products and aviation leasing segments, driven by strong market demand [30] - Management highlighted the importance of maintaining a strong balance sheet and improving credit ratings, achieving a BB rating across all three agencies [26] Other Important Information - The company has made significant investments in infrastructure and workforce, increasing the Montreal workforce by approximately 60% to support growth [20] - A multiyear materials agreement with CFM enhances supply resilience and supports the scaling of the core module remanufacturing platform [11] Q&A Session Summary Question: On aerospace products margins and support from PMA blades - Management discussed three key factors for margin growth: PMA HPT blade approval, lower-cost parts supplies, and increased piece part repair capabilities [38] Question: On FTAI Power and production ramp-up - Management indicated confidence in achieving 100 units of production by leveraging existing infrastructure and hiring rapidly [42] Question: On sourcing environment for SEI One and SEI Two - Management noted a strong investment opportunity in current generation narrow bodies and emphasized their ability to source high-intensity engine shop visit assets [49] Question: On cash flow and investment cadence for 2026 - Management expects to generate $1.2 billion in free cash flow before new growth initiatives, with an increase in cash flow from both aerospace products and leasing [76] Question: On the power initiative and delivery ramp - Management stated that they have ample time to plan for production rates and may diversify assembly locations to smooth out production [84] Question: On margins in the power business - Management expects margins in the power business to be as good or better than those in aerospace products, leveraging nearly fully depreciated assets [90]

Financial Data and Key Metrics Changes - In Q4 2025, adjusted EBITDA reached $277.2 million, a 10% increase from $252 million in Q4 2024 [24] - For the full year 2025, adjusted EBITDA was $1.2 billion, up 38% from $862 million in 2024 [24] - The company generated $724 million of adjusted free cash flow in 2025, exceeding the original guidance of $650 million [27] Business Line Data and Key Metrics Changes - Aerospace products generated $195 million of Q4 adjusted EBITDA at a 35% margin, a 66% year-over-year increase [7] - For the full year, aerospace products delivered $671 million of adjusted EBITDA, aligning with the revised target of $650 million to $700 million [25] - Aviation leasing posted approximately $113 million of adjusted EBITDA in Q4, including $20 million from SCI management fees [26] Market Data and Key Metrics Changes - Total maintenance spend is expected to grow at a double-digit rate to approximately $25 billion per annum, up from $22 billion projected last year [9] - The company aims to achieve a 25% market share in the aerospace aftermarket through new and repeat customers [10] Company Strategy and Development Direction - The company launched the Strategic Capital Initiative (SCI), raising $2 billion in equity commitments for acquiring narrow-body aircraft [5] - Plans to start investing from SCI Two by June 30, 2026, with an anchor equity commitment already in place [12] - The company is revising its 2026 production target upward from 1,000 to 1,050 modules, representing a 39% growth compared to 2025 [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the updated guidance for 2026, expecting total EBITDA of $1.625 billion, up from $1.525 billion [31] - The company anticipates strong demand and a robust production pipeline, with significant growth opportunities in both aerospace and power sectors [34] Other Important Information - The company announced an increase in its quarterly dividend from $0.35 to $0.40 per share, marking its 43rd dividend as a public company [33] - The integration of Palantir's AI platform is expected to enhance productivity and optimize the supply chain [15] Q&A Session Summary Question: On aerospace products margins and support from PMA blades - Management discussed initiatives to grow margins from 35% to 40%, including access to lower-cost parts and enhanced repair capabilities [38] Question: On FTAI Power and production ramp-up - Management confirmed confidence in achieving 100 units of production by 2027, leveraging existing infrastructure and workforce [42] Question: On sourcing environment for SCI One and SCI Two - Management highlighted a favorable sourcing environment, focusing on high engine shop visit intensity assets [50] Question: On the power initiative and delivery ramp - Management indicated plans for a smooth ramp-up in production, with multiple locations considered for assembly [82] Question: On margins in the power business - Management expects margins in the power business to be as good or better than those in aerospace products, leveraging nearly fully depreciated assets [88]