FTAI Q1 Earnings Call: Growth in Aerospace Aftermarket, Asset Sales, and Expansion Plans

Aircraft leasing company FTAI Aviation (NASDAQ: FTAI) missed Wall Street’s revenue expectations in Q1 CY2025, but sales rose 53.7% year on year to $502.1 million. Its non-GAAP profit of $1.02 per share was 16.3% above analysts’ consensus estimates.

Is now the time to buy FTAI? Find out in our full research report (it’s free).

StockStory’s Take

FTAI Aviation’s first quarter was characterized by a substantial year-over-year increase in sales, supported by increased production of refurbished engine modules and ongoing demand in the aerospace aftermarket. Management attributed these results to operational throughput improvements at its Montreal and Miami facilities and highlighted a significant rise in adjusted EBITDA from both Leasing and Aerospace Products segments. CEO Joe Adams stated, “We are production-constrained, and so we are being very heavy leaning towards owning more material than less material at this point.”

For the remainder of the year, management focused its guidance on continued production ramp-up, further monetization through the Strategic Capital Initiative (SCI) partnership, and stable demand despite tariff concerns. Adams reiterated full-year EBITDA targets and emphasized confidence in the company’s ability to meet free cash flow objectives, noting, “We do not currently see tariffs having any material negative effect on our business, and we are reiterating our guidance for both 2025 and 2026.”

Key Insights from Management’s Remarks

FTAI Aviation’s management outlined the main contributors to the quarter’s financial results, providing context for the company’s strategy in the engine maintenance and leasing markets. The company’s approach to asset sales, capacity expansion, and risk mitigation were prominent discussion points.

• SCI Partnership Impact: Management prioritized asset sales and engine exchanges through the SCI, viewing it as a tool to secure future engine rebuilding demand and enhance operating efficiency. Approximately 30% of activity in the quarter came from SCI-related transactions, with expectations this will normalize to 20% for the full year.
• Production Constraints and Ramp-Up: The company is currently limited by production capacity rather than demand for refurbished engines. Management detailed an ongoing ramp-up in Montreal and Miami facilities, aiming to increase market share in restorations from 5% to 25% over time.
• Geographic Diversification: FTAI operates facilities in Canada, the U.S., and soon the EU (Rome), allowing flexibility to optimize deliveries and mitigate the impact of tariffs by leveraging multiple regions for production and distribution.
• Parts Inventory Strategy: To avoid missing sales opportunities, FTAI invested heavily in parts inventory, with a planned $200 million increase in the first half of the year. Management sees this as a temporary working capital step to support higher throughput.
• PMA Parts Adoption: The company continues to pursue approvals for Parts Manufacturer Approval (PMA) components and sees upside potential in margins as industry adoption increases. Management believes airline focus on cost will drive further acceptance of PMA parts, supporting long-term margin expansion.

Drivers of Future Performance

Looking ahead, FTAI Aviation’s performance will hinge on successful execution of its production ramp, asset-light strategy, and the continued expansion of its aftermarket service offerings.

• Capacity Expansion and Production Efficiency: Management’s ability to increase module output in Montreal, Miami, and Rome will be a central driver of future revenue and margin expansion, with a goal of reaching up to 25% industry market share in restored engines.
• Leasing Segment Transition: The shift toward an asset-light business model, including sales to SCI and a focus on recurring engine exchanges, is intended to improve cash flow stability and reduce capital intensity.
• Tariff and Supply Chain Management: The company sees minimal direct risk from tariffs due to its geographic footprint and capacity to pass on price increases, but ongoing monitoring of supply chain costs and pricing dynamics remains a key focus area.

Top Analyst Questions

• Giuliano Bologna (Compass Point): Asked about the rationale for prioritizing SCI asset sales and whether this cannibalizes third-party business; management emphasized that SCI transactions are additive and that demand exceeds production capacity.
• Sheila Kahyaoglu (Jefferies): Questioned the potential tariff impact and inventory investment; CEO Joe Adams explained that used and refurbished assets are less affected by tariffs, and the inventory build-up is a temporary strategy to support growth.
• Kristine Liwag (Morgan Stanley): Queried about working capital tied up in inventory and the sourcing of CFM56 parts at attractive prices; management highlighted in-house repair capabilities and expects used part costs to rise with new part tariffs.
• Ken Herbert (RBC Capital Markets): Inquired about lease rates and underlying demand; management reported stable to modestly higher lease rates and strong global demand for extensions, with minimal fleet storage indicating a robust market.
• Hillary Cacanando (Deutsche Bank): Sought clarification on module production guidance and insurance recoveries; management stated that capacity expansion will enable up to 200 modules per quarter across all facilities and detailed progress on insurance settlements.

Catalysts in Upcoming Quarters

In future quarters, the StockStory team will be watching (1) the pace of production increases in Montreal, Miami, and Rome and their impact on market share, (2) the progress of additional SCI asset sales and the effect on free cash flow and leverage targets, and (3) further adoption of PMA parts and their contribution to margin expansion. Monitoring tariff developments and supply chain stability will also be important for tracking execution against management’s strategic objectives.

FTAI Aviation currently trades at a forward P/E ratio of 20.4×. In the wake of earnings, is it a buy or sell? See for yourself in our free research report.

High-Quality Stocks for All Market Conditions

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.