FTAI Aviation(US:FTAI)2025-10-28 13:02Financial 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, with a target of $750 million for the full year [14][16] - The aerospace products segment generated $180.4 million in EBITDA, with a margin of 35%, reflecting a 77% year-over-year increase [9][19] Business Line Data and Key Metrics Changes - Aerospace products segment saw a significant increase in EBITDA, up 77% year-over-year, driven by strong global demand for pre-built engines [9][19] - The leasing segment posted approximately $134 million in adjusted EBITDA, with a pure leasing component of $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][19] 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 [6][7] - The company aims to achieve a 25% market share in the engine aftermarket maintenance sector in the coming years [10] Company Strategy and Development Direction - The company is pivoting to an asset-light model focused on aerospace products and strategic capital, with plans to launch additional SCI partnerships annually [15][16] - The acquisition of ATOPS for approximately $15 million is expected to enhance production capacity and operational efficiency [12][30] - The company is targeting growth in production to 1,000 CFM56 modules next year, a 33% increase compared to this year's production [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year 2025 estimates of $1.25 to $1.3 billion in business segment EBITDA, with significant growth expected in 2026 [16][17] - The company anticipates generating $1 billion in adjusted free cash flow in 2026, representing a 33% increase over the $750 million targeted for 2025 [17] 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 company is focused on enhancing margins and production capabilities through strategic acquisitions and partnerships [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, which presents 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 margins, 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% or higher, with incentive compensation tied to performance [76][77] Question: Long-term partnerships and margin impact - Management anticipates continued growth in partnerships, with margins expected to improve to 40% next year [84][86]