Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of $297.4 million for Q3 2025, up 28% from $232 million in Q3 2024, and in line with Q2 2025 results [18][19] - Adjusted free cash flow for Q3 was $268 million, contributing to a year-to-date total of $638 million, on track to meet the revised goal of $750 million for 2025 [14][16] - The aerospace products segment generated $180.4 million in EBITDA with a margin of 35%, reflecting a 77% increase year-over-year [9][19] Business Line Data and Key Metrics Changes - Aerospace products segment saw a significant increase in EBITDA, reaching $180 million, up from $101.8 million in Q3 2024 [9][19] - The leasing segment posted approximately $134 million in adjusted EBITDA, with pure leasing component at $122 million for Q3 [20][21] - The company refurbished 207 CFM56 modules in Q3, a 13% increase from the previous quarter, and is on track to produce 750 modules in 2025 [10][13] Market Data and Key Metrics Changes - The company is targeting a total portfolio size of approximately 375 aircraft, with full capital deployment anticipated by mid-2026 [7] - The market for aircraft engine assets is characterized by a significant number of older aircraft being sold by lessors, creating opportunities for the company to acquire assets [35][36] Company Strategy and Development Direction - The company aims to pivot to an asset-light model focused on aerospace products and strategic capital, expecting substantial growth in free cash flow [15][16] - The successful launch of the Strategic Capital Initiative (SCI) is expected to create significant value and position the company for long-term earnings growth [5][7] - The company plans to continue launching additional SCI partnerships each year, enhancing returns for equity partners [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a market share of 25% in the engine aftermarket maintenance sector in the coming years [10] - The company anticipates total business segment EBITDA of $1.525 billion in 2026, up from the original estimate of $1.4 billion [17] - Management highlighted the importance of maintaining strong relationships with airline customers and the benefits of their Maintenance Repair Exchange (MRE) model [39][40] Other Important Information - The company announced an increase in the quarterly dividend from $0.30 to $0.35 per share, marking its 42nd dividend as a public company [15] - The acquisition of ATOPS for approximately $15 million is expected to enhance production capacity and operational efficiency [12][30] Q&A Session Summary Question: Financial implications of the upsizing of SCI - Management indicated that the upsizing will accelerate growth under SCI, potentially increasing its contribution to aerospace products volume from 20% to 25% [25][26] Question: Details on the ATOPS acquisition - The ATOPS acquisition is aimed at increasing production capacity ahead of needs, with a focus on synergy with existing facilities [28][30] Question: Availability of aircraft engine assets - Management noted that there is a significant supply of older aircraft being sold by lessors, providing opportunities for acquisition [35][36] Question: Treatment of SCI in financials - The 19% equity portion of SCI will be reflected in the equity income line and will also generate servicing revenue [40][41] Question: Guidance for 2026 - Management expects growth in both volume and margin, driven by new and existing customer orders [68][70] Question: Management and performance fees for SCI - The asset management fee is market-based, typically around 1% of total assets, with incentive compensation tied to performance [76][77] Question: Long-term partnerships and margin impact - Future deals are expected to be similar to existing large programs, with margins improving as customer orders increase [84][86]

Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of $297.4 million for Q3 2025, a 28% increase from $232 million in Q3 2024, and consistent with Q2 2025 results after excluding one-time benefits [17][18] - Adjusted EBITDA from the aerospace product segment was $180.4 million, with a margin of 35%, up 77% year-over-year [17][18] - Year-to-date, the company generated $638 million in positive free cash flow, on track to meet the revised goal of $750 million for 2025 [12][15] Business Line Data and Key Metrics Changes - Aerospace products segment delivered $180 million in adjusted EBITDA, reflecting strong global demand for pre-built engines and modules [7][18] - The leasing segment posted approximately $134 million in adjusted EBITDA, with pure leasing component at $122 million for Q3 [19] - The company refurbished 207 CFM56 modules in Q3, a 13% increase from the previous quarter, and is on track to produce 750 modules in 2025 [8][11] Market Data and Key Metrics Changes - The company anticipates a total business segment EBITDA of $1.525 billion in 2026, up from the original estimate of $1.4 billion [16] - The aerospace products segment is expected to achieve EBITDA of $1 billion in 2026, significantly higher than the $650 to $700 million projected for 2025 [15][16] Company Strategy and Development Direction - The company successfully closed on the final round of equity commitments for its Strategic Capital Initiative (SCI), increasing total equity capital to $2 billion, with a target to deploy over $6 billion in capital through the partnership [4][5] - The company aims to achieve a 25% market share in the engine aftermarket maintenance sector in the coming years [8] - The acquisition of ATOPS for approximately $15 million is expected to enhance production capacity and operational efficiency [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth trajectory, emphasizing the strong demand for engine exchanges and the benefits of the Maintenance Repair Exchange (MRE) model [6][34] - The company expects to see margins grow to over 40% in the aerospace products segment next year, driven by optimized parts procurement and repair strategies [12][15] - Management highlighted the importance of maintaining a disciplined approach to capital allocation, focusing on high-impact growth initiatives [14][15] Other Important Information - The company announced an increase in the quarterly dividend from $0.30 to $0.35 per share, marking the 42nd dividend as a public company [14] - The company is actively pursuing investments in high-impact growth initiatives, with a focus on expanding margins and differentiating product offerings [13][14] Q&A Session Summary Question: Financial implications of the upsizing of SCI - Management indicated that the upsizing will accelerate growth under SCI, potentially increasing its contribution to aerospace products volume from 20% to 25% [24][25] Question: Details on the ATOPS acquisition - The ATOPS acquisition is aimed at increasing production capacity ahead of needs, with the main facility in Florida expected to process 150 modules [26][27] Question: Availability of aircraft engine assets - Management noted that there is a significant supply of older aircraft being sold by lessors, which presents opportunities for acquisition [31][32] Question: Treatment of SCI in financials - The 19% equity portion of SCI will be reflected in the equity income line and will contribute to adjusted EBITDA in the leasing segment [35][36] Question: Insights on the V2500 program - The company is halfway through its commitment to the V2500 program, with strong demand expected to continue [80]

Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of $347.8 million in Q2 2025, up 30% from $268.6 million in Q1 2025 and up 63% from $213.9 million in Q2 2024 [19] - The overall estimated EBITDA for 2025 has been raised from $1.1 billion to a new range of $1.25 billion to $1.3 billion [14] Business Line Data and Key Metrics Changes - Aerospace products generated $164.9 million in EBITDA with a margin of 34%, up 26% from $130.9 million in Q1 2025 and up 81% from $91.2 million in Q2 2024 [21] - The leasing segment posted approximately $199 million of EBITDA, with the pure leasing component at $169 million, an increase from $152 million in Q1 2025 [20] Market Data and Key Metrics Changes - The company estimates a market share of 9%, approximately double from the previous year, with a long-term goal of reaching 25% [7] - The demand for prebuilt engines and modules is growing globally, providing a cost-effective alternative to traditional maintenance [7] Company Strategy and Development Direction - The company is focusing on an asset-light business model, with plans to manage debt and achieve a strong BB rating by the end of the year [13] - The acquisition of Pacific Aerodynamic is expected to enhance operational efficiencies and further differentiate the company's offerings [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term sustainability of the aerospace products market, driven by the aging of current aircraft and engines [16] - The company anticipates significant growth in free cash flow in the coming years, with an adjusted free cash flow target increased from $650 million to $750 million for 2025 [13] Other Important Information - The company has executed a sizable engine exchange program with a major U.S. airline, which is expected to drive repeat business and higher volumes [8] - The company is actively reviewing other M&A opportunities in the global market [12] Q&A Session Summary Question: What are the margin improvements expected for Aerospace products? - Management indicated that margin improvements are expected to be multifaceted, with potential increases of 5 to 10 percentage points in 2026 due to various initiatives [26][27] Question: Can you elaborate on the Pacific Aerodynamic acquisition? - The acquisition is expected to provide significant savings and enhance the company's repair capabilities, with a payback period of about one year [29][30] Question: What is the customer reception for the CFM56 modules? - Customer reception has been positive, with airlines recognizing the benefits of outsourcing engine maintenance to avoid cost overruns [41][42] Question: How does the company view the Chinese market opportunity? - The company sees significant growth potential in the Chinese market, particularly for engine exchanges, due to the aging fleet and limited local capacity for shop visits [112][114] Question: What is the outlook for the Strategic Capital Initiative (SCI)? - The company is optimistic about the SCI's performance and plans to decide on SCI 2 in the near future, with a strong pipeline of activity [68][69]

Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of $268.6 million in Q1 2025, up 7% from $252 million in Q4 2024 and up 64% from $164.1 million in Q1 2024 [9][10] - Adjusted free cash flow is expected to be in the range of $300 million to $350 million for the first half of the year, aligning with the target of $650 million for all of 2025 [6][9] Business Line Data and Key Metrics Changes - The Leasing segment generated approximately $162 million of EBITDA, with the pure leasing component at $152 million, up from $128 million in Q4 2024 [10] - Aerospace Products segment achieved $130.9 million of EBITDA with a margin of 36%, up 12% from $117.3 million in Q4 2024 and up 86% from $70.3 million in Q1 2024 [11] Market Data and Key Metrics Changes - The company anticipates a significant ramp in production in Q2, particularly in Montreal, to meet growing demand for aerospace products and services [5][8] - The company aims to increase its market share of restorations from the current 5% to 25% [5][21] Company Strategy and Development Direction - The company is focused on expanding production capabilities and enhancing operational efficiency through partnerships, including a joint venture with IAG Engine Center Europe [8] - The Strategic Capital Initiative (SCI) is expected to deploy over $4 billion in capital by the end of the year, with a focus on engine exchanges to improve asset ownership and operational efficiency [6][7] Management's Comments on Operating Environment and Future Outlook - Management does not foresee any material negative effects from tariffs, citing the nature of their business and the ability to pass on price increases to customers [31] - The company remains confident in achieving its EBITDA goal of $1.1 billion to $1.15 billion for 2025, with expectations to rise to approximately $1.4 billion in 2026 [8] Other Important Information - The company announced a dividend of $0.30 per share, marking its 40th dividend as a public company [4] - The company has recovered $30 million in insurance claims in Q1 and expects to recover an additional $24 million in Q2, with remaining claims of approximately $100 million still to be settled [78] Q&A Session Summary Question: Insights on Aerospace Product Segment Revenue Related to SCI Program - Management confirmed that approximately 30% of Q1 activity was related to the SCI program, with expectations that this will represent about 20% of total activity for 2025 [20][21] Question: Impact of Tariffs on Aerospace Products Margins - Management stated that they do not see any material negative effects from tariffs due to the nature of their business and their ability to pass on price increases [29][31] Question: Growth CapEx and Inventory Investment - The company plans to invest about $200 million in parts inventory in the first half of the year to avoid missing sales opportunities, while still expecting to generate $350 million in free cash flow [32][35] Question: Adoption of PMA Parts by Airlines - Management noted that airlines are increasingly focused on cost-saving techniques, leading to greater adoption of PMA parts, which is expected to enhance margins [49][56] Question: Update on SCI Aircraft Ownership and Target Customers - The majority of the aircraft owned or under MOUs are powered by CFM engines, with sourcing primarily from lessors and airlines looking to offload older equipment [98][100]

Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of $268.6 million in Q1 2025, up 7% from $252 million in Q4 2024 and up 64% from $164.1 million in Q1 2024 [9][10] - The adjusted free cash flow is expected to be in the range of $300 million to $350 million for the first half of the year, aligning with the target of $650 million for the entire year [7][9] - The company announced a dividend of $0.30 per share, marking the 40th dividend as a public company [5] Business Line Data and Key Metrics Changes - The Leasing segment generated approximately $162 million of EBITDA, with the pure leasing component at $152 million, up from $128 million in Q4 2024 [10] - Aerospace Products segment achieved $130.9 million of EBITDA with a margin of 36%, up 12% from $117.3 million in Q4 2024 and up 86% from $70.3 million in Q1 2024 [11] - The company aims to grow its market share of restorations from 5% to 25% [6] Market Data and Key Metrics Changes - The company expects to generate $600 million to $650 million in EBITDA from Aerospace Products in 2025, up from $381 million in 2024 [11] - The company is experiencing strong demand for rebuilt engines across the industry, with production constrained by current capacity [16][20] Company Strategy and Development Direction - The company is focused on increasing production capacity and operational efficiency, particularly in Montreal and Miami, with plans to ramp up production significantly in Q2 [6][8] - The Strategic Capital Initiative (SCI) is expected to deploy over $4 billion in capital by the end of the year, with a focus on engine exchanges to enhance operational efficiency [7][20] - The company is committed to maintaining a strong balance sheet, targeting a debt-to-EBITDA ratio of around three times by the end of the year [60][64] Management's Comments on Operating Environment and Future Outlook - Management does not foresee any material negative effects from tariffs, citing the nature of their business and geographic diversification as mitigating factors [31] - The company remains optimistic about the growth in demand for aerospace products and services, reiterating guidance for both 2025 and 2026 [8][31] Other Important Information - The company has been actively working on operational plans with IAG Engine Center Europe to ramp up production following an acquisition [8] - The company has recovered $30 million in insurance claims this quarter, with additional recoveries expected [82] Q&A Session Summary Question: Insights on Aerospace product segment revenue related to SCI program - Management confirmed that approximately 30% of Q1 activity was related to SCI, with significant demand for rebuilt engines across the industry [20][16] Question: Impact of tariffs on Aerospace products margins - Management stated that tariffs are not expected to have a material negative effect due to the nature of their business and ability to pass on price increases [31][30] Question: Growth CapEx and inventory management - The company plans to invest about $200 million in parts inventory in the first half of the year to avoid missing sales opportunities [34][36] Question: Adoption of PMA parts by airlines - Management noted increasing focus on cost-saving techniques among airlines, leading to greater adoption of PMA parts [50][51] Question: Update on SCI ownership assets and customer base - The majority of assets in the SCI partnership are powered by CFM engines, with significant activity expected from both lessors and airlines [104][105] Question: Future capital deployment strategy - The company prioritizes growth CapEx, debt repayment, and shareholder returns, with plans to focus on shareholder returns towards the end of the year [60][61]