Core Viewpoint - FTAI Aviation aims to be the largest provider of aftermarket engine power for the commercial aviation industry, focusing on the current generation 737NGs and A320CEO engines, which are widely used globally [1][2] Company Overview - FTAI Aviation operates as a vertically integrated company that owns and maintains airplanes, providing a full-service product that includes managing the entire asset class and maintenance activities [1] - The company offers airlines a combination of time and money savings, along with significant flexibility in their operations [1] Industry Position - FTAI Aviation positions itself as an outsourced engine maintenance provider for airlines that prefer not to manage maintenance in-house [2]

Financial Data and Key Metrics Changes - The company is on track to produce approximately $750 million in free cash flow for the year [70] - The company aims to achieve a strong BB rating from credit agencies, with a debt to total EBITDA ratio under three times [70] Business Line Data and Key Metrics Changes - The company has closed or is under letter of intent for 145 aircraft in its new leasing partnership, ahead of its target of 250 aircraft by year-end [8][9] - The goal for this year is to produce 750 modules across three facilities, with expectations to grow production to 1,000 modules by 2026 [27][28] Market Data and Key Metrics Changes - The addressable market for V2500 and CFM56 maintenance spend is approximately $22 billion annually, with the company currently holding about 9% market share, up from 5% a year ago [29] - The company expects to achieve a 25% market share in the future, indicating significant growth potential [29] Company Strategy and Development Direction - The company aims to be the largest provider of aftermarket engine power for the commercial aviation industry, focusing on the 737 NG and A320 engines [1][2] - The strategy includes vertical integration by owning maintenance facilities and managing the entire asset class, which differentiates it from traditional lessors and MROs [3][4] - Future partnerships and investments are planned annually, with a focus on maintaining good returns from the first partnership before proceeding to the next [12] Management's Comments on Operating Environment and Future Outlook - Management believes that the current aircraft market is tight, but they are confident in achieving return hurdles through efficient maintenance and inventory management [13][16] - The company sees a long-term demand for midlife aircraft, as airlines are extending the operational life of their fleets due to economic reasons [49][52] Other Important Information - The company has made strategic acquisitions, including Pacific Aerodynamic, to enhance its repair capabilities and reduce costs [35][36] - Management emphasizes the importance of solving customer problems, such as avoiding lengthy shop visits, which has led to positive customer reception and repeat business [40][42] Q&A Session Summary Question: How is the company achieving return hurdles in a tight aircraft market? - The company is achieving return hurdles primarily through efficient maintenance and inventory management, which allows for cost savings and quicker turnaround times [13][16] Question: What are the production goals and market share aspirations? - The company aims to produce 750 modules this year and grow to 1,000 modules by 2026, with a target of achieving a 25% market share in the future [27][29] Question: What is the company's capital allocation strategy? - The company plans to prioritize growth initiatives, including piece part repair and maintenance capacity investments, and may consider stock buybacks towards the end of the fourth quarter [70][71]

Financial Data and Key Metrics Changes - The company is on track to produce approximately $750 million in free cash flow for the year [66] - The company aims to achieve a strong BB rating from credit agencies, with a debt to total EBITDA ratio under three times [66] Business Line Data and Key Metrics Changes - The company has closed or is under letter of intent for 145 aircraft in its new leasing partnership, ahead of its target of 250 aircraft [8][9] - The goal for 2026 is to produce around 1,000 modules, representing a 33% growth in production [24] Market Data and Key Metrics Changes - The addressable market spend on V2500s and CFM56 engines is approximately $22 billion annually, with the company currently holding about 9% market share, up from 5% a year ago [26] - The company expects to achieve a market share of 25% or higher in the future [26] Company Strategy and Development Direction - The company aims to be the largest provider of aftermarket engine power for the commercial aviation industry, focusing on the 737 NG and A320 engines [1][2] - The strategy includes vertical integration by owning and maintaining engines, which differentiates it from traditional lessors and MROs [3][4] - Future growth initiatives include piece part repair and maintenance capacity investments, as well as potential acquisitions [67] Management's Comments on Operating Environment and Future Outlook - Management believes that the current aircraft market is tight, but they are confident in achieving return hurdles through efficient maintenance and inventory management [13][14] - The company sees significant opportunities in the market due to the aging fleet and the need for cost-effective maintenance solutions [48][50] Other Important Information - The company has made strategic acquisitions, including Pacific Aerodynamic, to enhance its repair capabilities and reduce costs [32][36] - The company is exploring the possibility of expanding its facilities geographically, particularly in Southeast Asia or the Middle East [28] Q&A Session Summary Question: How will the company achieve return hurdles in a tight aircraft market? - Management indicated that efficient maintenance and inventory management are key to achieving return hurdles, as they can provide immediate engine solutions to customers [13][14] Question: What are the production goals and market share aspirations? - The company aims to produce 750 modules this year and grow to 1,000 modules by 2026, targeting a market share of 25% [24][26] Question: What is the company's capital allocation strategy? - The company plans to prioritize growth initiatives, potential stock buybacks, and maintaining a strong credit rating [66][67]

Company Overview - FTAI Aviation Ltd. focuses on owning and maintaining commercial jet engines, particularly CFM56 and V2500 engines [2] - The company offers a proprietary portfolio of products, including the Module Factory and a joint venture for manufacturing engine PMA, which provides cost savings and flexibility to its customers [2] - FTAI also owns and leases jet aircraft, facilitating the acquisition of engines at attractive prices [2] - The company invests in aviation assets and aerospace products that generate strong and stable cash flows, with potential for earnings growth and asset appreciation [2] Recent Developments - Joe Adams, the Chief Executive Officer of FTAI, is scheduled to present at the Deutsche Bank 15th Annual Aviation Forum on September 3, 2025 [1] - The presentation will be available via live webcast [1]

Core Points - FTAI Aviation Ltd. will present at the Jefferies 2025 Industrials Conference on September 4, 2025, at 3:30 PM ET [1] - The presentation will be available via live webcast [1] Company Overview - FTAI Aviation Ltd. specializes in owning and maintaining commercial jet engines, particularly CFM56 and V2500 engines [2] - The company offers a proprietary portfolio of products, including the Module Factory and a joint venture for engine PMA manufacturing, which provides cost savings and flexibility to its customers [2] - FTAI also owns and leases jet aircraft, facilitating the acquisition of engines at competitive prices [2] - The company invests in aviation assets and aerospace products that yield strong and stable cash flows, with potential for earnings growth and asset appreciation [2]

Company Overview - FTAI Aviation focuses on narrow-body airplane parts, repair, and leasing, utilizing advanced technologies such as 3D printing to enhance its operations [1]. Investment Strategy - The investment approach involves analyzing earnings reports to identify potential growth opportunities, with successful identification of companies like OPRX, OTRK, FUBO, and PLUG during the pandemic [1].

Market Overview - The S&P 500 index has experienced an increase of over 8% year-to-date despite a significant decline in early April due to tariff announcements from the Trump administration, indicating underlying market uncertainty [1] - Investor sentiment was affected in late July following the Federal Reserve's decision to maintain interest rates amid persistent inflation [1] Qifu Technology - Qifu Technology Inc. (NASDAQ: QFIN) is undergoing a rebranding to Qfin Holdings and has shown strong year-over-year profit growth, with a non-GAAP net income increase of 59.9% in the latest quarter [3] - The company has established new partnerships with mid-to-large municipal banks in China, resulting in a 144% year-over-year growth in loan volume for its technology solutions business [4] - Current stock price is $33.65, with a 12-month price forecast of $51.73, indicating a potential upside of 53.74% [2] Expand Energy - Expand Energy Corp. (formerly Chesapeake, NASDAQ: EXE) is positioned to benefit from increasing natural gas demand, particularly in the AI and data center sectors [7] - The company reported revenue of $3.7 billion, significantly exceeding analyst expectations of $2.1 billion, although it missed EPS estimates by 4 cents [8] - Current stock price is $101.97, with a 12-month price forecast of $129.50, suggesting a 27% upside potential [6] FTAI Aviation - FTAI Aviation Ltd. (NASDAQ: FTAI) has transitioned from losses to profitability, reporting a major EPS beat of 24 cents per share, driven by strong aerospace product performance [11] - The company has increased revenue by over 52% in the last year and is expected to continue double-digit growth [11] - Current stock price is $137.32, with a 12-month price forecast of $174.33, indicating a potential upside of 26.95% [10]

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Unaudited Consolidated Financial Statements](index=5&type=section&id=Item%201.%20Unaudited%20Consolidated%20Financial%20Statements%20of%20FTAI%20Aviation%20Ltd.) The unaudited statements show significant revenue growth and a return to profitability in H1 2025, driven by the Aerospace Products segment [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$4,101,075** | **$4,037,952** | | Cash and cash equivalents | $301,911 | $115,116 | | Leasing equipment, net | $1,849,116 | $2,373,730 | | Inventory, net | $752,866 | $551,156 | | **Total Liabilities** | **$3,936,131** | **$3,956,584** | | Long-term debt, net | $3,444,612 | $3,440,478 | | **Total Shareholders' Equity** | **$164,944** | **$81,368** | - Key changes from year-end 2024 include a **significant increase in cash and inventory**, a decrease in net leasing equipment, and a **doubling of shareholders' equity**[14](index=14&type=chunk) [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | **$676,237** | **$443,594** | **$1,178,317** | **$770,288** | | Aerospace products revenue | $420,686 | $245,200 | $685,111 | $434,257 | | MRE Contract revenue | $69,585 | $— | $170,223 | $— | | **Total Expenses** | **$465,753** | **$606,189** | **$816,875** | **$839,949** | | Internalization fee to affiliate | $— | $300,000 | $— | $300,000 | | **Net Income (Loss) Attributable to Shareholders** | **$161,689** | **$(228,205)** | **$251,633** | **$(196,918)** | | **Diluted EPS** | **$1.57** | **$(2.26)** | **$2.44** | **$(1.96)** | - The company reported a significant turnaround in profitability, driven by a **52% YoY increase in total revenues for Q2 2025** and the absence of the **$300 million internalization fee** paid in Q2 2024[16](index=16&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(136,284) | $(187,636) | | Net cash provided by (used in) investing activities | $496,148 | $(219,383) | | Net cash (used in) provided by financing activities | $(173,069) | $485,748 | | **Net increase in cash** | **$186,795** | **$78,729** | - Investing activities shifted from a net use of cash to a significant source of cash, primarily due to **$397.1 million in proceeds from asset sales** to the 2025 Partnership and **$589.3 million from other asset sales**[22](index=22&type=chunk) - Financing activities became a net use of cash, mainly due to **lower debt proceeds ($430M vs $1.84B YoY)** and a **$124.2 million redemption of preferred shares** in 2025[24](index=24&type=chunk) [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) - On May 28, 2024, the company **terminated its external management agreement** and internalized its management functions, involving a **$150.0 million cash payment** and share issuance[31](index=31&type=chunk) - The company launched a Strategic Capital Initiative, creating the "2025 Partnership" to acquire aircraft, selling **37 aircraft to this partnership in H1 2025 for a gain of $45.5 million**[47](index=47&type=chunk)[48](index=48&type=chunk) - In September 2024, the company **acquired Lockheed Martin Commercial Engine Solutions (LMCES) for $170.0 million** to enhance its MRE business[66](index=66&type=chunk) Segment Net Income (Loss) Attributable to Shareholders (in thousands) | Segment | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Aviation Leasing | $183,457 | $95,377 | | Aerospace Products | $240,225 | $151,308 | | Corporate and Other | $(160,164) | $(443,603) | | Eliminations | $(11,885) | $— | | **Total** | **$251,633** | **$(196,918)** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes improved financial results to strong Aerospace Products performance, the elimination of external management fees, and a new asset-light strategy [Results of Operations](index=36&type=section&id=Results%20of%20Operations) Consolidated Results of Operations Summary (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | **$676,237** | **$443,594** | **$1,178,317** | **$770,288** | | **Net Income (Loss) Attributable to Shareholders** | **$161,689** | **$(228,205)** | **$251,633** | **$(196,918)** | | **Adjusted EBITDA (Non-GAAP)** | **$347,805** | **$213,904** | **$616,363** | **$378,005** | - Total revenues for H1 2025 increased by **$408.0 million YoY**, primarily due to a **$250.9 million increase in Aerospace products revenue** and **$170.2 million from new MRE Contract revenue**[166](index=166&type=chunk) - Total expenses for H1 2025 decreased by **$23.1 million YoY**, mainly because of the **$300.0 million internalization fee incurred in 2024**[166](index=166&type=chunk) [Segment Analysis](index=41&type=section&id=Segment%20Analysis) Aviation Leasing Segment Results (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total Revenues | $322,979 | $319,747 | | Net Income Attributable to Shareholders | $183,457 | $95,377 | | Adjusted EBITDA (Non-GAAP) | $361,292 | $229,788 | Aerospace Products Segment Results (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total Revenues | $855,334 | $434,257 | | Net Income Attributable to Shareholders | $240,225 | $151,308 | | Adjusted EBITDA (Non-GAAP) | $295,809 | $161,517 | - The **Aerospace Products segment nearly doubled its revenue** in H1 2025 compared to H1 2024, driven by strong engine and module sales and the new MRE contract[185](index=185&type=chunk) [Liquidity and Capital Resources](index=48&type=section&id=Liquidity%20and%20Capital%20Resources) - The company launched a Strategic Capital Initiative to maintain an **asset-light model**, with partnerships acquiring on-lease aircraft while FTAI acts as servicer[197](index=197&type=chunk) - Principal uses of liquidity include aircraft/engine acquisitions, shareholder dividends, and debt service, while sources are revenues, asset sales, and borrowings[198](index=198&type=chunk)[201](index=201&type=chunk) Historical Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(136,284) | $(187,636) | | Net cash provided by (used in) investing activities | $496,148 | $(219,383) | | Net cash (used in) provided by financing activities | $(173,069) | $485,748 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=49&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk from its variable-rate debt, though no borrowings were outstanding as of June 30, 2025 - The company's main market risk exposure is to **interest rate fluctuations** on its variable-rate debt, primarily the Revolving Credit Facility[214](index=214&type=chunk) - As of June 30, 2025, there were **no outstanding borrowings on the floating rate debt**, meaning a hypothetical 100-basis point interest rate change would have no immediate impact[217](index=217&type=chunk) [Item 4. Controls and Procedures](index=50&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - The CEO and CFO concluded that the company's **disclosure controls and procedures were effective** as of the end of the quarter[218](index=218&type=chunk) - **No material changes** occurred during the fiscal quarter that affected the company's internal control over financial reporting[219](index=219&type=chunk) [PART II - OTHER INFORMATION](index=50&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=51&type=section&id=Item%201.%20Legal%20Proceedings) The company does not expect current legal proceedings to have a material adverse effect on its business or financial results - Management does not anticipate that current or threatened legal proceedings will have a **material adverse effect** on the company's financial results[221](index=221&type=chunk) [Item 1A. Risk Factors](index=51&type=section&id=Item%201A.%20Risk%20Factors) The company identifies key business, taxation, and share-related risks, including macroeconomic uncertainty, reliance on specific engine types, and its past PFIC status - Business risks include macroeconomic conditions, geopolitical instability, industry oversupply, and **high concentration in CFM56/V2500 engines**[223](index=223&type=chunk)[225](index=225&type=chunk)[226](index=226&type=chunk)[236](index=236&type=chunk) - The new Strategic Capital Initiative introduces risks such as market, liquidity, and **potential conflicts of interest** in allocating investment opportunities[248](index=248&type=chunk)[251](index=251&type=chunk) - Taxation risks are significant, with the company having been a **Passive Foreign Investment Company (PFIC) in 2022 and 2023**, which has lingering adverse U.S. tax implications[296](index=296&type=chunk)[297](index=297&type=chunk) - Share-related risks include market price volatility, potential dilution, and **anti-takeover provisions** that could deter a change in control[305](index=305&type=chunk)[312](index=312&type=chunk)[319](index=319&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=66&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities during the period - None[321](index=321&type=chunk) [Item 3. Defaults Upon Senior Securities](index=66&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the period - None[321](index=321&type=chunk) [Item 5. Other Information](index=66&type=section&id=Item%205.%20Other%20Information) There is no other information to report for the period - None[321](index=321&type=chunk) [Item 6. Exhibits](index=66&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including governance documents, debt agreements, and officer certifications

Core Insights - Ftai Aviation reported strong Q2 2025 earnings, with diluted EPS of $1.57, exceeding analyst estimates of $1.29, and GAAP revenue of $676.2 million, up 52.5% year-over-year from $443.6 million in Q2 2024, indicating robust growth in aerospace products and effective execution of its asset-light strategy [1][2][5] Financial Performance - Q2 2025 GAAP net income attributable to shareholders surged to $161.7 million, a significant recovery from a loss of $228.2 million in Q2 2024 [2][5] - Adjusted EBITDA (non-GAAP) increased to $347.8 million, reflecting a 62.6% rise compared to $213.9 million in Q2 2024 [2][5] - Aerospace Products revenue reached $420.7 million in Q2 2025, up from $245.2 million, with an EBITDA margin of 39% [6][7] Business Overview - Ftai Aviation specializes in aircraft engine modules, particularly the CFM56 model, and offers asset management services including aircraft leasing and engine maintenance [3] - The company has focused on scaling production of CFM56 engine modules and enhancing repair operations, supported by partnerships like the Strategic Capital Initiative (SCI) [4] Production and Market Share - CFM56 engine module production increased to 184 units in Q2 2025, a 33% rise from the previous quarter, leading to an estimated market share increase to 9% from 5% year-over-year [8] - Management aims to achieve a 25% market share in the CFM56 module market in the coming years [8] Strategic Initiatives - The SCI partnership expanded to include 145 aircraft, up from 98, with a goal of 250 by the end of 2025, facilitating asset sales and fee-based income [9] - The company made a strategic acquisition of Pacific Aerodynamic, enhancing its repair capabilities for key engine components [12] Outlook - Management maintains a full-year EBITDA target of $1.1–1.15 billion for FY2025, with plans to invest approximately $200 million in parts inventory to support increased module output [14] - The company continues to prioritize growth capital expenditures and debt reduction, with potential for increased dividends or share buybacks as leverage decreases [15]

Market Performance - U.S. stocks showed mixed trading results, with the Nasdaq Composite gaining approximately 0.5% [1] - The Dow increased by 0.02% to 44,639.69, while the S&P 500 rose by 0.21% to 6,384.38 [1] - Utilities shares experienced a rise of 0.8%, while energy stocks fell by 1.2% [1] Commodities - Crude oil prices increased by 0.8% to $69.73, while gold rose by 1% to $3,356.50 [5] - Silver prices decreased by 1.3% to $37.775, and copper fell by 0.9% to $5.5750 [5] European Markets - European shares were mostly higher, with the eurozone's STOXX 600 gaining 0.01% and Spain's IBEX 35 Index rising by 0.21% [6] - London's FTSE 100 fell by 0.08%, while Germany's DAX 40 and France's CAC 40 rose by 0.20% and 0.26%, respectively [6] Asian Markets - Asian markets closed mixed, with Japan's Nikkei 225 down by 0.05% and Hong Kong's Hang Seng down by 1.36% [7] - China's Shanghai Composite rose by 0.17%, and India's BSE Sensex gained 0.18% [7] Company Earnings - Wingstop Inc. shares surged by 24% to $360.20 after reporting better-than-expected second-quarter EPS and sales [9] - FTAI Aviation Ltd. shares increased by 20% to $137.34 following strong quarterly EPS and sales [9] - Rocky Brands Inc. shares rose by 26% to $29.00 after announcing better-than-expected quarterly earnings [9] - Vyne Therapeutics Inc. shares plummeted by 74% to $0.3764 after failing to meet trial endpoints [9] - Sos Ltd. shares dropped by 55% to $2.7184 after announcing a $7.5 million registered direct offering [9] - Avis Budget Group, Inc. shares fell by 15% to $172.40 following worse-than-expected quarterly EPS and sales [9] Economic Indicators - The U.S. economy expanded at an annualized rate of 3% in the second quarter, recovering from a 0.5% contraction in the previous quarter [11] - Private businesses added 104,000 jobs in July, surpassing market estimates of a 75,000 increase [11] - Crude oil inventories in the U.S. rose by 7.698 million barrels, contrasting with market expectations of a 2 million barrel decline [11]