FORTRESS TRSP(FTAIN) - 2025 Q4 - Annual Report

Financial Performance - Total revenues for 2025 reached $2.51 billion, a 44.6% increase from $1.73 billion in 2024[183] - The company recognized a net income of $501.06 million for 2025, compared to a net loss of $32.08 million 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] - 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 rose to $548.3 million, reflecting an increase of $202.0 million from 2024[201] - Net income decreased by $61.1 million in 2025, primarily due to the changes in revenues and expenses noted above[215] Revenue Breakdown - Aerospace products revenue was $1.60 billion, up 48.5% from $1.08 billion in 2024[183] - 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] Expenses - The company incurred total expenses of $1.77 billion in 2025, an increase of 18% from $1.50 billion in 2024[183] - Total expenses increased by $269.0 million in 2025, primarily due to a $523.8 million increase in cost of sales[185] - Total expenses for 2025 were $1,293.8 million, an increase of $584.6 million compared to 2024[200] - Total expenses decreased by $38.1 million in 2025, driven by a reduction in sales transactions of commercial aircraft and engines[213] - Total expenses in the Corporate and Other segment decreased by $277.4 million in 2025, largely due to the internalization fee recorded in 2024[223] - Total expenses increased by $287.4 million, driven by a $300.0 million internalization fee to an affiliate effective May 28, 2024[229] Taxation - 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] - The provision for income taxes increased by $80.2 million, primarily due to higher income from Aerospace Products activities[200] - Provision for income taxes increased by $29.3 million in 2025, reflecting changes in income from leasing activities[214] Assets and Liabilities - As of December 31, 2025, total consolidated assets were $4.4 billion, with total equity of $334.2 million[171] - As of December 31, 2025, the company had outstanding principal and interest payment obligations of $3.5 billion and $1.2 billion, respectively[248] 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, a platform focused on converting CFM56 engines to power turbines[195] - The company entered into an agreement to supply replacement aircraft engines and modules for the life of the 2025 Partnership in 2025[197] - The company acquired Lockheed Martin Commercial Engine Solutions (LMCES) in 2024 to enhance manufacturing capabilities[196] Leasing and Maintenance - Lease income decreased to $235.21 million in 2025 from $255.34 million in 2024, a decline of 7.9%[183] - Lease income in the Aviation Leasing segment was $235.2 million, a slight increase of $0.8 million from 2024[211] - Maintenance revenue increased by $17.7 million in 2025, attributed to higher aircraft maintenance revenue[213] - The company recognizes maintenance payments as current and non-current Maintenance Deposits on the Consolidated Balance Sheets, with excess payments recorded as Maintenance revenue[258] Impairment and Recoverability - The company reported an impairment charge of $120 million related to leasing equipment assets due to the impact of sanctions on Russia[174] - 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 to assess recoverability[265] Interest and Cash Flow - Interest expense increased by $60.1 million in 2024, reflecting an increase in average debt outstanding of approximately $779.3 million[194] - Interest expense increased by $26.0 million, reflecting higher costs associated with various senior notes[230] - Cash used for investments was $1,130.3 million in 2025, compared to $1,526.2 million in 2024 and $861.5 million in 2023[246] - Net cash used in operating activities increased by $122.8 million, reflecting adjustments related to net income[248] Risk Management - The company is exposed to interest rate risk, particularly related to its Revolving Credit Facility, which may impact net income if borrowing costs increase without a corresponding increase in rents or cash flow[268] - The company may manage interest rate exposure through derivatives such as interest rate swaps and caps[269] - A hypothetical 100-basis point increase/decrease in variable interest rates on borrowings would not have affected interest expense over the next 12 months as of December 31, 2025[271] Other Income - Total other income in the Aviation Leasing segment increased by $109.5 million, reaching $123.9 million[211] - Total other income increased by $109.5 million in 2025, driven by gains on asset sales and insurance settlements[213]