FTAI Aviation (NASDAQ:FTAI) held its first-quarter earnings conference call on Thursday. Below is the complete transcript from the call.
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Summary
FTAI Aviation reported strong financial performance in Q1 2026, with adjusted EBITDA of $325.6 million, marking a 17% increase from the previous quarter.
The company is focusing on accelerating its market share growth in aerospace products, expanding production capacity, and launching new strategic capital vehicles.
FTAI Aviation provided a positive future outlook, reaffirming their EBITDA outlook of $1.625 billion for 2026, and announced a dividend increase.
Operational highlights include a significant increase in module production and a joint venture agreement with Jarrah Group for the power business.
Management expressed confidence in their strategic initiatives amid a challenging geopolitical environment, emphasizing strong demand and execution capabilities.
Full Transcript
OPERATOR
Good day and thank you for standing by. Welcome to the first quarter 2026 FTAI Aviation earnings Conference Call. At this time, all participants are listen-only mode. After the speaker’s presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear automated messages when your hand is raised to withdraw your question, please press star 1-1 again. Please be advised that today’s conference will be recorded. I would like to hand the conference over to your first speaker today, Alan Andrini, Investor Relations. Please go ahead.
Alan Andrini (Investor Relations)
Thank you Marvin. I would like to welcome you all to the FTAI Aviation first quarter 2026 earnings call. Joining me here today are Joe Adams, our Chief Executive Officer, David Marino, Our president, Nicholas McLease, Our chief financial Officer and Stacy Kuperis, our Chief Operating Officer. We have posted an investor presentation and our press release on our website which we encourage you to download if you have not already done so. Also please note that this call is open to the public in listen-only mode and is being webcast. In addition, we will be discussing some non-GAAP financial measures during the call today, including EBITDA. The reconciliation of those measures to the most directly comparable GAAP measures can be found in the Earnings Supplement. Before I turn the call over to Joe, I would like to point out that certain statements made today will be forward looking statements including regarding future earnings. These statements by their nature are uncertain and may differ materially from actual results. We encourage you to review the disclaimers in our press release and investor presentation regarding non-GAAP financial measures and forward looking statements and to review the risk factors contained in our quarterly report filed with the SEC. Now I would like to turn the call over to Joe.
Joe Adams (Chief Executive Officer)
Thank you Alan. The first quarter was a solid start to the year for us and we’d like to begin this morning by highlighting the key objectives for each of our businesses in 2026 and the progress we made during this first quarter across Aerospace products, strategic capital and power. We are scaling platforms with strong structural demand in a disciplined manner and deploying capital to support growth where we see the most attractive long term returns. I’ll start with aerospace products first. A top priority for us in 2026 is to focus on accelerating our market share growth as our production capabilities, parts procurement strategies and overall MRE customer adoption reach an inflection point. Now is the time for us to take full advantage of our competitive moat and focus on market share growth. As a reminder, we’re only five years into building our aerospace products business and as the business continues to mature and grow, we have the opportunity to leverage our our enhanced execution capabilities to take more market share more quickly from traditional engine maintenance shops. Second, as the market for the CFM56 and V2500 engines continues to mature, we’ve seen a notable increase in demand for leased engine solutions from top tier airlines, even those with in house engine MRO capabilities. We offer flexibility, customized pricing and scale that no one else can fulfill and these large programs are very sticky. It’s a key priority for us in 2026 to win more of this business. Third is production. We’ve always talked about expanding production capacity well ahead of growth, as well as adding maintenance facilities in parts of the world where we see strong traction with our customer base. It’s notable today that when you look at the map, we have no major maintenance facilities east of Rome, Italy. I’d expect this to look different when we are on next year’s first quarter call Turning to results Aerospace products results support the objective I just outlined, with top line revenue growth accelerating both year over year and quarter over quarter up 104% year over year and 32% quarter over quarter respectively. First quarter adjusted EBITDA of 223 million is an increase of 70% year over year and up 14% from 195 million in Q4 of 2025. EBITDA margins for the quarter of 30% are indicative of an increased mix of deals with large airline customers and a larger mix of full performance restoration shop visits. We expect this to be the trend line going forward as our capabilities have been built out and we’re able to bring volumes to the market that others simply cannot. Shifting now to strategic capital where our top priority is completing the deployment of the 2025 special purpose vehicle (SPV) or special purpose vehicle. Our deployment pace for the first vehicle has been strong and our engine maintenance focused approach to adding value to aircraft ownership has been well received by the market. As we approach the end of the second quarter, the 2025 special purpose vehicle (SPV) will be fully invested and we will shift from the deployment period to the harvest period where quarterly distribution will now begin. David will share more with you about the goals for adding value to the portfolio during this phase. As an active asset manager, we’re always pursuing ways to enhance the returns above what is the contractual lease stream. Our second area of focus for strategic capital is the launch of the 2026 special purpose vehicle (SPV). We continue to plan to have a first close at the end of the second quarter and we’ll start acquiring aircraft in the third quarter of this year. The investment strategy, 12 to 15 month deployment period and size of the vehicle will be consistent with the 2025 special purpose vehicle (SPV). Last to support the build of the strategic capital business, we’ve added to the team and now have over 40 dedicated individuals focused on sourcing, underwriting and servic the portfolio across offices in Dublin, Dubai, Cardiff and New York. The growth ambitions and differentiated strategy around engine maintenance has resonated in the market and we’ve been able to attract great talent to supplement our existing team and scale the platform. Finally, the F type power business continues to make strong progress towards its commercial launch in the fourth quarter of this year. This week we signed an important joint venture agreement with the Jarrah Group for packaging and customer conversions that are in advanced stages, both of which David will share more details about. Shortly before I pass it over to David, I want to address the conflict in the Middle east that began at the end of February. In the broader geopolitical environment our industry is navigating today, we are hopeful for a peaceful resolution and a return to more normal energy trading and prices, but we’re also realistic about some of the challenges of today’s environment beginning with aerospace products. Our exposure to the Middle east is limited. Less than 3% of our global current gen narrow body fleet is based in the region and we have very little customer exposure. More generally, we’ve not seen any meaningful change in shop visit demand to date. That said, elevated oil prices and fuel prices do negatively impact our customers financial situation and while this can create some volatility, it’s the exact environment where our FTI value proposition becomes even more critical to the customer. When an airline is facing a multimillion dollar engine shop visit in comparison to a faster lower cost engine exchange with fti, the decision is even easier to make when liquidity is top of mind. It’s also worth remember that airlines cannot meaningfully change their fleets in response to short term volatility. New aircraft orders are locked in for the next four to five years and the current generation aircraft will continue to be a vital part of the global fleet for many, many years. In short market share gains in aerospace products are much more consequential to us and compared to overall market growth. For strategic capital, periods of volatility create opportunities investment opportunities. When liquidity is tight, sale leaseback transactions help raise funds and avoid future shop visits. As the only lessor in the world that covers all engine maintenance for its aircraft portfolio, we are uniquely positioned to help airlines in this manner. And lastly for power Our business is largely insulated from the geopolitical dynamic today. The Mod one Our product runs predominantly on natural gas and to the extent we see additional aviation retirements, it will just provide additional feedstock to grow our conversion efforts. So I will now hand it over to David Moreno.
David Marino (President)
Thanks Joe. I will start by providing an update on aerospace products production. We refurbished 270 CFM56 module this quarter across our four facilities, an increase of 96% compared to Q1 2025. This is a good start to our 2026 production goal of 1,050 modules and continues to reflect the hard work of our fast growing team. As Joe mentioned, we have built a strong aerospace products foundation over the last five years and we are ready to further accelerate our market share growth. From a commercial perspective, we are seeing customer engagements expand to larger, more programmatic partnership as airline adoption accelerates. This is driven by both the overall market tightness as well as FTAI’s capabilities continuing to broaden to now include engine and module exchanges, engine leasing and aircraft leasing. We can’t emphasize enough the stickiness that that’s created. As our relationships with airlines and asset owners expand, we become a solution provider that is integrated into the operational plans for the airline’s future growth. Our close relationship with airline customers is something we are very proud of and we believe this will continue to accelerate our market share in the years to come. Next, I’ll share a further update on our strategic capital to support the full deployment of the 2025 SPD, we upsized the vehicle’s warehouse debt facility at the end of March, adding 1 billion of committed capacity. This facility is now 3.5 billion in size across 10 lenders, creating a strong roster of partners for our significant debt capital needs in the business going forward. As we mentioned last quarter, capital deployment for the 2025 is largely complete. We have closed 165 aircraft as of the end of Q1 and after we sign a few LOIs that are in process, all new aircraft will go into the 20. All new future aircraft will go into the 2026 special purpose vehicle (SPV). With the 2025 special purpose vehicle (SPV) transitioning from investment mode to harvest mode, we are very focused on maximizing the value of potential cash flows for our investors. We do this through active management of maintenance events, both airframe and engines, as well as through lease extensions. We continue to see strong desire from our airlines to fly current gen aircraft as long as possible, especially when they do not have to worry about engine shop visits. Our all in one solution of combining leasing and engine maintenance has resulted in many lease extensions and we believe this will continue to be an important trend in the portfolio. Finally, on FTI Power, I want to share updates on the timing of our commercial launch, our packaging integration and progress with customers. First, we remain firmly on track to commercially launch the Mod one in the fourth quarter and our prototype testing is actually running ahead of schedule. We have completed all the major mechanical testing milestones including testing our redesigned Mod 1 fan stage at synchronous speed and we expect to wrap up final testing in the third quarter. The results to date have exceeded our expectations. We have been also hosting customers on site to observe the MOD1 prototype directly and that has become an important part of how we sell this product. Second, as Joe mentioned, we signed a joint venture agreement with Jarrah Group, one of the leading packagers for mobile gas turbines. This is a foundational step for the program as Jarrah will be our primary partner responsible for taking our turbine and combining it with the mobile package that includes the key components like the generator and gearbox. Through the joint venture, we will draw on Jarrah’s manufacturing footprint across the United States, the uae, Canada and China, which gives us scale, geographic reach and a clear path to global product rollout. The joint venture de risks our supply chain, accelerates our speed to market and aligns the incentives of both parties across the long term success of the platform. Third, we are building a customer base committed to the long term deployment of the Mod one. The customer momentum we discussed last quarter has accelerated meaningfully. We are in deep and active negotiations with leaders across the energy and digital infrastructure landscape and every one of these deals is anchored by Long Term Service Agreement or LTSA on the turbine. One exciting element is that customers are coming to us with a range of commercial structures in mind from outright purchase to lease, which speaks to the flexibility of our model and the strength of the underlying demand. The interest in lease structure in particular fits naturally with our Strategic Capital Initiative and gives us the ability to offer customers a sought out after leasing solution while preserving capital efficiency. Several of these conversations are framed around multi year multi block deployment plans which gives us visibility well beyond 2027. Last, what has resonated most with customers is the maintenance model. The ability to swap a turbine in place in just two days rather than take the unit offline for an extended overhaul is a capability that power the industry. The power industry has not had to before and it translates directly into a lower levelized cost of energy or LCOE for the customer. Based on these conversations stand today we expect to be mostly sold out of our 2027 target production in the near term with a meaningful portion of 2028. Spoken for. Before I hand it over to Nicholas, I want to take a moment to congratulate him on his promotion to CFO as well as Mike Hazan on his promotion to cao. Both Nicholas and Mike have been key contributors to our operational success and their new leadership roles. They are positioned to have a large impact on our future success. With that, I’ll now hand it over to Nicholas to talk through the first quarter numbers in more detail.
Nicholas McLease (Chief Financial Officer)
Thanks David. The key metric for us is adjusted EBITDA. We started 2026 with adjusted EBITDA of 325.6 million in Q1 of 2026, which represents a 17% increase compared to 277.2 million in the fourth quarter of 2025. The $325.6 million EBITDA number was comprised of $222.6 million from our Aerospace Products segment, $153 million from our Aviation Leasing segment, negative $50 million from Corporate and other, including interest segment eliminations and startup expenses associated with our Power initiative. Aerospace Products delivered another good quarter with 222.6 million of EBITDA and an overall EBITDA margin of 30%. This is up 14% sequentially from 195 million in Q4 of 2025 and up 70% year over year compared to 131 million in Q1 of 2025, reflecting continued momentum from production growth and operating leverage. Turning to aviation leasing, the segment continued to perform well, generating approximately $153 million of EBITDA in the first quarter. This included $45 million of insurance recoveries, $12 million in gains on sale, $25 million from 2025 SPV management fees and co investment returns, and $71 million from leasing assets held on our balance sheet for insurance recoveries. In addition to the $45 million recognized in the …
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