0001628280-26-029335
SEC filingRevenue surged 65% YoY to $830.7M, driven by Aerospace Products, but net income rose 34% to $134.2M due to higher costs.
The three months ended March 31, 2026, saw total revenues of $830.7 million, a 65% increase from $502.1 million in the prior year period. The growth was primarily driven by a $258.2 million surge in Aerospace Products revenue, reflecting strong demand for CFM56-5B, -7B, and V2500 engine and module sales. MRE Contract revenue added $120.6 million, largely from sales to the 2025 Partnership. However, Aviation Leasing segment revenue declined $50.1 million due to lower lease and maintenance income following the sale of Seed Assets. Gross profit rose to $306.4 million from $253.4 million, but gross margin compressed to 36.9% from 50.5%, largely due to a shift toward lower-margin product sales. Net income attributable to shareholders increased 49% to $134.2 million, supported by higher other income including insurance proceeds and gains on asset sales. Adjusted EBITDA grew 21% to $325.6 million.
Aerospace Products continued to be the primary growth engine, with segment revenue nearly doubling to $743.8 million. The increase reflects both organic engine sales and the impact of the 2025 Partnership, which purchases engines and modules via MRE contracts. Segment operating income rose to $217.4 million, though margins moderated due to higher cost of sales. Aviation Leasing faced headwinds as the portfolio shifted toward the asset-light Strategic Capital model; revenue fell 37% to $86.9 million, but operating income remained strong at $82.8 million due to servicing fees and gains on Seed Asset sales. Corporate and Other costs escalated, with operating expenses up $24.5 million and acquisition costs rising $8.9 million, reflecting investments in headcount and technology.
Management highlighted the successful launch of the Strategic Capital Initiative with $2.0 billion in equity commitments for the 2025 Partnership. This partnership is expected to be the primary buyer of on-lease narrowbody aircraft, transitioning the company to a more asset-light model. The company expects to generate sufficient cash from operations to meet near-term obligations, though investing activities remain elevated. No specific forward guidance on revenue or earnings was provided, but the focus on MRE and strategic partnerships suggests continued momentum in Aerospace Products. Key risks include cost inflation and the integration of recent acquisitions.
CFO of -$160.1M compares unfavorably to net income of $137.9M, a gap driven largely by a $186.9M inventory build and other working capital outflows. The company generated significant investing cash flow ($317.0M) from asset sales, which helped offset capex of $94.4M. Capital returns totaled $44.7M in dividends, with no share repurchases. Notable anomalies include the large gain on asset sales ($92.5M) and insurance recoveries ($44.6M) that boosted net income but were non-cash adjustments. Overall, operating cash flow remains negative and heavily reliant on asset sales to fund investments and dividends.