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FTAI Aviation Ltd. (FTAI)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered strong top-line and EBITDA performance: revenue $498.8M, diluted EPS $0.84, and Adjusted EBITDA $252.0M; EBITDA rose 9% q/q and 55% y/y, driven by Leasing ($133.9M) and Aerospace Products ($117.3M) with corporate including a $18.7M gain on offshore vessel sales .
  • Management initiated a 2025 target adjusted free cash flow of ~$650M and reaffirmed 2025 segment Adjusted EBITDA of ~$1.1–$1.15B (Leasing ~$500M; Aerospace $600–$650M); 2026 segment Adjusted EBITDA raised from ~$1.25B to ~$1.4B, supported by SCI scaling and MRE capacity expansion including QuickTurn Europe JV .
  • Dividend maintained at $0.30 per ordinary share for Q4; preferred dividends declared of $0.51563 (Series C) and $0.59375 (Series D) .
  • Strategic Capital Initiative secured $2.5B asset-level debt (Atlas SP/Deutsche Bank) enabling $4B+ deployable capital into on-lease 737NG/A320ceo aircraft, positioning FTAI as an asset-light operator and growth catalyst for Aerospace Products .

What Went Well and What Went Wrong

What Went Well

  • Segment momentum: Q4 Adjusted EBITDA $252.0M, up 9% q/q and 55% y/y; Leasing ~$133.9M and Aerospace Products ~$117.3M; Aerospace Products EBITDA up 15% q/q and 115% y/y, with an overall segment margin of ~34% .
  • Strategic scale-up: SCI financing commitment of $2.5B facilitates $4B+ deployable capital; Rome JV adds capacity to 1,800 CFM56 modules (600 engines) and >600 tests annually; CEO: “We significantly expanded our Maintenance, Repair and Exchange capabilities… and added financial firepower” .
  • Insurance recoveries: $11M received in Q4, and >$22M in Q1 2025 already; management expects total recoveries to exceed ~$88M write-offs in 2022 during 2025 .

What Went Wrong

  • Diluted EPS down y/y to $0.84 (from $1.09) despite stronger EBITDA, reflecting higher interest expense, positive tax provision vs prior-year tax benefit, and a $8.0M loss on redemption of preferred shares in Q4 2024 .
  • Montreal legacy work remained a modest margin headwind (1–2pp) in Q4 with sub-10% margin on <~$20M of legacy contracts; expected to fully roll off by end of Q1 2025 .
  • Elevated interest expense ($60.9M in Q4 vs $43.7M in Q4 2023) and continued depreciation/amortization growth reflect the capital-intensive ramp and internalization transition earlier in 2024 .

Financial Results

Quarterly trend (last 3 quarters)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$443.6 $465.8 $498.8
Diluted EPS ($)$(2.26) $0.76 $0.84
Adjusted EBITDA ($USD Millions)$213.9 $232.0 $252.0
Adjusted EBITDA Margin (%)48.2% (calc: 213.9/443.6) 49.8% (calc: 232.0/465.8) 50.5% (calc: 252.0/498.8)

YoY comparison

MetricQ4 2023Q4 2024
Revenue ($USD Millions)$312.7 $498.8
Diluted EPS ($)$1.09 $0.84
Adjusted EBITDA ($USD Millions)$162.3 $252.0
Adjusted EBITDA Margin (%)51.9% (calc: 162.3/312.7) 50.5% (calc: 252.0/498.8)

Segment breakdown (Q4 2024)

SegmentAdjusted EBITDA ($USD Millions)
Aviation Leasing$133.9
Aerospace Products$117.3 (34% segment margin)
Corporate & Other$0.8 (includes $18.7M gain on vessel sales)
Total Adjusted EBITDA$252.0

KPIs

KPIQ2 2024Q3 2024Q4 2024
Aerospace Products Adjusted EBITDA ($USD Millions)$91.2 $101.8 $117.3
Montreal modules produced (units)——75
Dividend per ordinary share ($)$0.30 $0.30 $0.30
Gain on sale of assets ($USD Millions)——$18.7
Insurance recoveries ($USD Millions)——$11.0

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA (segments combined)FY2025~$1.1–$1.15B (segments) ~$1.1–$1.15B (segments) Maintained
Aviation Leasing Adjusted EBITDAFY2025~$500M ~$500M Maintained
Aerospace Products Adjusted EBITDAFY2025N/A$600–$650M Initiated
Adjusted EBITDA (segments combined)FY2026~$1.25B ~$1.4B Raised
Adjusted free cash flow (target)FY2025N/A~$650M Initiated
Montreal module production (assumption)FY2025N/AAvg. ~100 modules/quarter Parameter added
V2500 engine MRE transactions (assumption)FY2025N/A25–35 transactions Parameter added
Ordinary dividendQ4 2024$0.30 (Q3) $0.30 Maintained
Preferred dividendsQ4 2024Series C/D per contracts$0.51563 (C), $0.59375 (D) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
Aerospace Products scale/marginsQ2: segment EBITDA $91.2M; Module Factory >50 customers . Q3: >$100M Aero EBITDA .Q4: $117.3M Aero EBITDA; 34% segment margin; continued ramp in Montreal/Miami, Rome to commence .Upward scale and margin expansion.
Maintenance capacity/geographyNo Rome JV; focus on Montreal/Miami .QuickTurn Europe JV; capacity to 1,800 modules; ~40% customer base in Europe; China cert in facility .Capacity and regional access expanding.
SCI capital and structureNot disclosed in Q2/Q3 press releases .$2.5B asset-level debt; $4B+ deployable capital; FTAI GP; minority LP interest plus fees/incentives .New scalable, asset-light capital engine.
PMA adoptionPMA JV longstanding; no new detail in Q2/Q3 PRs .Latest PMA part performing well (100k+ hours on prior part); more approvals “very close” .Ongoing validation; pipeline advancing.
Macro/tariffs/new aircraft supplyNo commentary in PRs .Tariffs impact uncertain; constrained new deliveries and durability issues on new tech extend legacy platform lives .Tailwinds for NG/A320ceo aftermarket persist.

Management Commentary

  • CEO on quarter/strategy: “We significantly expanded our Maintenance, Repair and Exchange capabilities and added financial firepower and flexibility with the successful launch of our Strategic Capital Initiative.”
  • Competitive moat: “We’ve copied the majors and offer that to ~600 operators… we added PMAs years ago… and SCI adds institutional asset management—something you can’t just raise a first fund for easily.”
  • Cash flow and outlook: “We generated approximately $670M from business operations in 2024… expect adjusted free cash flow of approximately $650M in 2025… annual aviation EBITDA to be approximately $1.4B in 2026.”
  • Europe expansion: “About 40% of our customers today are in Europe… facility has Chinese certification… we believe we can start the MRE process immediately after acquisition.”

Q&A Highlights

  • Margins sustainability: Management decomposed margin drivers (repair, green time optimization, parts/USM/PMA, JIT field service) and sees sustainability across cycles, with PMA adding 5–10pp margin upside over time .
  • SCI details: Structure targets ~70% debt / ~30% equity; FTAI minority LP and GP; fees and performance incentives “in line with market”; first equity closing done, second closing expected soon .
  • Montreal legacy roll-off: Legacy contracts impacted Q4 margins by 1–2pp; expected to fully roll off by end of Q1 2025 .
  • Insurance recoveries: $11M received in Q4; >$22M in Q1; total recovery expected to exceed ~$88M write-off from 2022 within 2025 .
  • Production cadence: No notable seasonality; focus on ramping to ~100 modules/quarter in Montreal and scaling MRE network productivity via specialization, standardization, and incentives .

Estimates Context

  • S&P Global (Capital IQ) consensus EPS/revenue/EBITDA for Q4 2024 and forward quarters were unavailable due to access limits at query time. As a result, we cannot quantify beats/misses vs consensus for Q4 2024 at this time. Values would ordinarily be retrieved from S&P Global.

Key Takeaways for Investors

  • Earnings quality: Robust q/q and y/y EBITDA growth with balanced contributions from Leasing and Aerospace Products; the latter continues to scale, underpinning margin durability and multi-year growth .
  • Structural catalysts: SCI financing and QuickTurn Europe materially expand capacity and capital flexibility—supports 2025 FCF ~$650M, maintained 2025 segment EBITDA of ~$1.1–$1.15B, and a raised 2026 segment EBITDA to ~$1.4B .
  • Margin path: PMA adoption and green time optimization drive differentiated margin profile; PMA pipeline offers incremental margin uplift; legacy Montreal headwinds scheduled to fully roll off by Q1 2025 .
  • Asset-light pivot: Leasing EBITDA steady at ~$500M for 2025 while SCI shifts capital needs off-balance sheet, enabling shareholder-friendly capital allocation options over time .
  • Platform durability: Extended life of NG/A320ceo fleets and constrained new aircraft supply support sustained aftermarket demand and FTAI’s penetration goals (from ~5% of a ~$22B TAM to potentially 20–25%) .
  • Dividend continuity: Ordinary dividend maintained at $0.30/share; preferred dividends consistent—cash returns remain part of the playbook alongside growth investments .
  • Monitoring items: Track PMA approvals cadence, SCI equity closings, Rome JV ramp milestones (test-cell within ~24 months; piece-part repair H2 2025), and insurance recovery timing .