FTAI Aviation Ltd. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help you understand FTAI Aviation Ltd. (the “Company,” “we,” “our” or “us”). Our MD&A should be read in conjunction with our unaudited consolidated financial statements and the accompanying notes, and with Part II, Item 1A, “Risk Factors” included elsewhere in this Quarterly Report on Form 10-Q. Overview We specialize in the acquisition, lease, repair and sale of aviation equipment, primarily CFM56-5B, CFM56-7B and V2500 aircraft engines. We repair and sell or lease, through our maintenance facilities, commercial expertise and exclusivity arrangements, refurbished aircraft engines and aftermarket components of aircraft engines, including PMA parts developed and manufactured through a joint venture. We target assets which require maintenance repairs that can be performed through our proprietary Module Factory process of engineering. Refurbishing our own engines, modules and parts at significant scale incentivizes us to conduct repairs as efficiently as possible, which we believe creates a large opportunity to provide a low-cost, flexible, customer-driven alternative to engine maintenance for airlines and lessors worldwide. As of June 30, 2025, we had total consolidated assets of $4.1 billion and total equity of $164.9 million. Internalization of Management On May 28, 2024, the Company entered into definitive agreements with the Former Manager and Master GP to internalize the Company’s management function. As part of the termination of the Management Agreement, the Company (i) paid the Former Manager (for itself and on behalf of the Master GP, as applicable) the Cash Consideration, the compensation accrued and payable, but not yet paid, under the Management Agreement and the expenses that were reimbursable, but not yet reimbursed, under the Management Agreement; (ii) issued to the Former Manager (for itself and on behalf of the Master GP, as applicable) the Share Consideration; (iii) purchased from Master GP all of its partnership interests in FTAI Aviation Holdco Ltd., a subsidiary of the Company, in exchange for $30 thousand. Following the Internalization, the Company no longer pays management fees or incentive distributions to the Former Manager and Master GP. In connection with the termination of the Management Agreement, the Company also entered into a Transition Services Agreement with the Former Manager. Under the Transition Services Agreement, the Former Manager was required to continue to provide the Company and its affiliates with all of the Services for a transition period until October 31, 2024, during which the Company procured replacements for the Services. In addition, the Former Manager was required to continue to provide the services that were reasonably required by the Company to prepare its quarterly and annual financial statements until May 31, 2025. The Services were provided to the Company for a fee equal to the Former Manager’s cost of providing the Services, including the allocated cost of, among other things, overhead, employee wages and compensation, rent and related real estate expenses and actually incurred out-of-pocket expenses, plus a mark-up of ten percent (10%). Impact of Russia’s Invasion of Ukraine Economic sanctions and export controls against Russia and Russia’s aviation industry were imposed due to its invasion of Ukraine during the three months ended March 31, 2022. As a result of the sanctions imposed on Russian airlines, we terminated all lease agreements with Russian airlines. We determined that it is unlikely that we will regain possession of the aircraft and engines that had not yet been recovered from U kraine and Russia. As a result, we recognized an impairment charge totaling $120.0 million, net of maintenance deposits for the year ended December 3 1, 2022, to write-off the entire carrying value of leasing equipment assets that we did not expect to recover from Ukraine and Russia. As of June 30, 2025, eight aircraft and seventeen engines were still located in Russia. Our lessees are required to provide insurance coverage with respect to leased aircraft and engines, and we are named as insureds under those policies in the event of a total loss of an aircraft or engine. We also purchase insurance which provides us with coverage when our aircraft or engines are not subject to a lease or where a lessee’s policy fails to indemnify us. The insured value of the aircraft and engines that remain in Russia is $210.7 million. We intend to pursue all of our claims under these policies. However, the timing and amount of any recoveries under these policies are uncertain. The extent of the impact of Russia’s invasion of Ukraine and the related sanctions on our results, including the ability for us to recover our leasing equipment in the region, will depend on future developments, including the duration of the conflict, sanctions and restrictions imposed by Russian and international governments, all of which remain uncertain. Strategic Capital Initiative On December 30, 2024, the Company announced the launch of a Strategic Capital Initiative in collaboration with third-party institutional investors. The first partnership under the initiative, the 2025 Partnership, will focus on acquiring 737NG and A320ceo aircraft. The Strategic Capital Initiative, and its related partnerships, will allow the Company to maintain an asset-light business model while the partnerships actively acquire on-lease narrowbody aircraft at scale. The Company has agreed that the 2025 Partnership, and follow-on partnerships, will be the primary buyer of on-lease 737NG and A320ceo aircraft. The Company, as the Servicer, will manage the aircraft in the 2025 Partnership, and the Company will receive customary, market-based compensation. 34 The Company has also made a minority investment and will make future investments in the 2025 Partnership. The Company expects to manage the aircraft for and make minority investments in, future partnerships. Operating Segments The key factors used to identify the reportable segments are the organization and alignment of our internal operations and the nature of our products and services. Our two reportable segments are (i) Aviation Leasing and (ii) Aerospace Products. The Aviation Leasing segment owns and manages aviation assets, including aircraft and aircraft engines, which it leases and sells to lessees, directly and also through its equity method investment. The Aerospace Products segment, through our maintenance facilities, equity method investment and exclusivity arrangements, develops and manufactures, repairs/refurbishes and sells aircraft engines and aftermarket components for the CFM56-5B, CFM56-7B and V2500 commercial aircraft engines. Corporate and Other primarily consists of debt, unallocated corporate general and administrative expenses, internalization fee and management fees and incentive compensation pursuant to the Management Agreement prior to the Internalization effective May 28, 2024. Additionally, Corporate and Other also includes offshore energy related assets, which consist of equipment that support offshore oil and gas activities and production. Results of Operations Adjusted EBITDA (Non-GAAP) Besides net income (loss), the chief operating decision maker (“CODM”) utilizes Adjusted EBITDA as a key performance measure. Adjusted EBITDA is not a financial measure in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). This performance measure provides the CODM with the information necessary to assess operational performance and make resource and allocation decisions. We believe Adjusted EBITDA is a useful metric for investors and analysts for similar purposes of assessing our operational performance. Adjusted EBITDA is defined as net income (loss) attributable to shareholders from continuing operations, adjusted (a) to exclude the impact of provision for (benefit from) income taxes, equity-based compensation expense, acquisition and transaction expenses, losses on the modification or extinguishment of debt and preferred shares and capital lease obligations, changes in fair value of non-hedge derivative instruments, asset impairment charges, incentive allocations, depreciation and amortization expense, dividends on preferred shares and interest expense, internalization fee to affiliate, (b) to include the impact of our pro-rata share of Adjusted EBITDA from unconsolidated entities and (c) to exclude the impact of equity in earnings (losses) of unconsolidated entities and the non-controlling share of Adjusted EBITDA, if any. 35 Comparison of the three and six months ended June 30, 2025 and 2024 The following table presents our consolidated results of operations: Three Months Ended June 30, Change Six Months Ended June 30, Change (in thousands) 2025 2024 2025 2024 Revenues Aerospace products revenue $ 420,686 $ 245,200 $ 175,486 $ 685,111 $ 434,257 $ 250,854 MRE Contract revenue 69,585 — $ 69,585 170,223 — $ 170,223 Lease income 62,439 70,754 (8,315) 130,879 123,915 6,964 Maintenance revenue 73,104 51,187 21,917 122,711 96,977 25,734 Asset sales revenue 47,915 72,433 (24,518) 66,854 111,040 (44,186) Other revenue (1) 2,508 4,020 (1,512) 2,539 4,099 (1,560) Total revenues 676,237 443,594 232,643 1,178,317 770,288 408,029 Expenses Cost of sales 369,258 205,857 163,401 617,972 348,661 269,311 Operating expenses 34,328 29,099 5,229 66,766 54,416 12,350 General and administrative 2,442 2,969 (527) 5,558 6,652 (1,094) Acquisition and transaction expenses 4,489 8,019 (3,530) 11,781 14,198 (2,417) Management fees and incentive allocation to affiliate — 3,554 (3,554) — 8,449 (8,449) Internalization fee to affiliate — 300,000 (300,000) — 300,000 (300,000) Depreciation and amortization 55,236 56,691 (1,455) 114,798 106,611 8,187 Asset impairment — — — — 962 (962) Total expenses 465,753 606,189 (140,436) 816,875 839,949 (23,074) Other (expense) income Interest expense (63,965) (55,196) (8,769) (126,005) (102,903) (23,102) Equity in losses of unconsolidated entities (2) (5,003) (694) (4,309) (12,617) (1,361) (11,256) Loss on extinguishment of debt — (13,920) 13,920 — (13,920) 13,920 Gain on sale to the 2025 Partnership 34,604 — 34,604 45,474 — 45,474 Other income (expense) 27,156 (498) 27,654 60,227 136 60,091 Total other expense (7,208) (70,308) 63,100 (32,921) (118,048) 85,127 Income (loss) from before income taxes 203,276 (232,903) 436,179 328,521 (187,709) 516,230 Provision for (benefit from) income taxes 37,878 (13,033) 50,911 60,737 (7,461) 68,198 Net income (loss) 165,398 (219,870) 385,268 267,784 (180,248) 448,032 Less: Dividends on preferred shares 3,709 8,335 (4,626) 9,824 16,670 (6,846) Less: Loss on redemption of preferred shares — — — 6,327 — 6,327 Net income (loss) attributable to shareholders $ 161,689 $ (228,205) $ 389,894 $ 251,633 $ (196,918) $ 448,551 ______________________________________________________ (1) Includes servicing fees of $2,052 and $2,600 for the three and six months ended June 30, 2025, respectively, from the 2025 Partnership (2) Includes the profit elimination of $(4,935) and $(11,885) for the three and six months ended June 30, 2025, respectively, and $0 and $0 for the three and six months ended June 30, 2024, respectively, for sales to the 2025 Partnership. 36 The following table sets forth a reconciliation of net income (loss) attributable to shareholders to Adjusted EBITDA: Three Months Ended June 30, Change Six Months Ended June 30, Change (in thousands) 2025 2024 2025 2024 Net income (loss) attributable to shareholders $ 161,689 $ (228,205) $ 389,894 $ 251,633 $ (196,918) $ 448,551 Add: Provision for (benefit from) income taxes 37,878 (13,033) 50,911 60,737 (7,461) 68,198 Add: Equity-based compensation expense 5,515 638 4,877 10,404 1,148 9,256 Add: Acquisition and transaction expenses 4,489 8,019 (3,530) 11,781 14,198 (2,417) Add: Losses on the modification or extinguishment of debt and preferred shares and capital lease obligations — 13,920 (13,920) 6,327 13,920 (7,593) Add: Changes in fair value of non-hedge derivative instruments — — — — — — Add: Asset impairment charges — — — — 962 (962) Add: Incentive allocations — 3,148 (3,148) — 7,456 (7,456) Add: Depreciation and amortization expense (1) 65,677 65,809 (132) 134,064 124,931 9,133 Add: Interest expense and dividends on preferred shares 67,674 63,531 4,143 135,829 119,573 16,256 Add: Internalization fee to affiliate — 300,000 (300,000) — 300,000 (300,000) Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2) 4,815 (617) 5,432 4,856 (1,165) 6,021 Less: Equity in losses of unconsolidated entities (3) 68 694 (626) 732 1,361 (629) Less: Non-controlling share of Adjusted EBITDA — — — — — — Adjusted EBITDA (non-GAAP) $ 347,805 $ 213,904 $ 133,901 $ 616,363 $ 378,005 $ 238,358 ________________________________________________________ (1) Includes the following items for the three months ended June 30, 2025 and 2024: (i) depreciation and amortization expense of $55,236 and $56,691, (ii) lease intangible amortization of $2,153 and $3,786 and (iii) amortization for lease incentives of $8,288 and $5,332, respectively. Includes the following items for the six months ended June 30, 2025 and 2024: (i) depreciation and amortization expense of $114,798 and $106,611, (ii) lease intangible amortization of $5,359 and $7,762 and (iii) amortization for lease incentives of $13,907 and $10,558, respectively. (2) Includes the following items for the three months ended June 30, 2025 and 2024: (i) net loss of $68 and $694, (ii) interest expense of $1,490 and $0, (iii) depreciation and amortization expense of $3,470 and $77, and (iv) acquisition and transaction expenses of $(77) and $0, respectively. Includes the following items for the six months ended June 30, 2025 and 2024: (i) net loss of $732 and $1,361, (ii) interest expense of $1,490 and $0, (iii) depreciation and amortization expense of $3,628 and $196, and (iv) acquisition and transaction expenses of $470 and $0, respectively. (3) Excludes the profit elimination of $4,935 and $11,885 for the three and six months ended June 30, 2025, respectively, and $0 and $0 for the three and six months ended June 30, 2024, respectively, for sales to the 2025 Partnership. Revenues Comparison of the three months ended June 30, 2025 and 2024 Total revenues increased by $232.6 million, driven by the following: • Aerospace products revenue increased by $175.5 million, primarily due to a $172.1 million increase in CFM56-5B, CFM56-7B and V2500 engine and module sales, as well as a $3.2 million increase in other maintenance service revenues. • MRE Contract revenue increased by $69.6 million, primarily due to an increase in CFM56-5B and CFM56-7B engine and module sales made to the 2025 Partnership. • Maintenance revenue increased by $21.9 million, primarily due to an increase in aircraft maintenance revenue of $23.1 million driven by an increase in utilization and higher maintenance reserves taken into revenue, partially offset by the sale of Seed Assets to the 2025 Partnership. • Asset sales revenue decreased by $24.5 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines. Specifically, one engine sold in Q2 2025 as compared to six engines sold in Q2 2024. • Lease income decreased by $8.3 million, primarily due to a decrease of $10.0 million in the Offshore Energy business driven by the sale of the two vessels during Q4 2024 and a decrease in aircraft lease revenue of $2.4 million driven by the sale of Seed Assets to the 2025 Partnership. This was partially offset by an increase in engine lease revenue of $4.1 million. 37 • Other revenue decreased by $1.5 million, primarily due to the sale of the two vessels during Q4 2024 in the Offshore Energy business. Comparison of the six months ended June 30, 2025 and 2024 Total revenues increased by $408.0 million, driven by the following: • Aerospace products revenue increased $250.9 million, primarily due to a $237.0 million increase in CFM56-5B, CFM56-7B and V2500 engine and module sales, as well as a $11.9 million increase in other maintenance service revenues. • MRE Contract revenue increased by $170.2 million, primarily due to an increase in CFM56-5B and CFM56-7B engine and module sales made to the 2025 Partnership. • Maintenance reve nue increased by $25.7 million, primarily due to an increase in aircraft maintenance revenue of $24.7 million driven by an increase in utilization and higher maintenance reserves taken into revenue, partially offset by the sale of Seed Assets to the 2025 Partnership. • Lease income increased by $7.0 million, primarily due to an increase in aircraft lease revenue of $9.2 million and an increase in engine lease revenue of $10.1 million, driven by an increased number of aircraft and engines on lease in addition to higher rental rates. This was partially offset by a decrease of $12.3 million in the Offshore Energy business driven by the sale of the two vessels during Q4 2024. • Asset sales revenue decreased by $44.2 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines. Specifically, one engine sold in 2025 as compared to 10 engines sold in the prior-year period. • Other revenue decreased by $1.6 million, primarily due to the sale of the two vessels during Q4 2024 in the Offshore Energy business. Expenses Comparison of the three months ended June 30, 2025 and 2024 Total expenses decreased by $140.4 million, driven by the following: • Internalization fee to affiliate decreased by $300.0 million relating to the Internalization effective May 28, 2024. • Depreciation and amortization decreased by $1.5 million, primarily driven by the increase of assets held-for-sale and the sale of Seed Assets to the 2025 Partnership. • Acquisition and transaction expenses decreased by $3.5 million primarily due to lower professional fees associated with the Internalization and the sale of the Offshore Energy vessels. • Management fees and incentive allocation to affiliate decreased by $3.6 million, due to no management and incentive fees paid to the Former Manager during 2025, with the Internalization effective May 28, 2024 . • Cost of sales increased by $163.4 million, primarily due to increases in CFM56-5B, CFM56-7B and V2500 engine and module sales, and parts inventory sales, which directly corresponds to components of increases in Aerospace products revenue over the same period. This was partially offset by a decrease of $7.2 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines, which is in line with an overall decrease in the corresponding asset sales revenue. • Operating expenses increased by $5.2 million, primarily due to higher compensation and benefits expense due to an increase in employee headcount and increased overall compensation. Comparison of the six months ended June 30, 2025 and 2024 Total expenses decreased by $23.1 million, driven by the following: • Internalization fee to affiliate decreased by $300.0 million relating to the Internalization effective May 28, 2024. • Management fees and incentive allocation to affiliate decreased by $8.4 million, due to no management and incentive fees paid to the Former Manager during 2025, with the Internalization effective May 28, 2024 . • Acquisition and transaction expenses decreased by $2.4 million, primarily due to lower professional fees associated with the Internalization and the sale of the Offshore Energy vessels. • Cost of sales increased by $269.3 million, primarily due to increases in CFM56-5B, CFM56-7B and V2500 engine and module sales, and parts inventory sales, which directly corresponds to components of increases in Aerospace products revenue over the same period. This was partially offset by a decrease of $19.1 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines, which is in line with an overall decrease in the corresponding asset sales revenue. 38 • Operating expenses increased by $12.4 million, primarily due to higher compensation and benefits expense due to an increase in employee headcount and increased overall compensation. • Depreciation and amortization increased by $8.2 million, primarily driven by an increase in the number of assets owned and on lease during the period, partially offset by an increase of assets held-for-sale and the sale of Seed Assets to the 2025 Partnership. Other (expense) income Total other expense decreased by $63.1 million during the three months ended June 30, 2025 due to the following: • Gain on sale to the 2025 Partnership increased by $34.6 million, primarily driven by the sale of 33 aircraft to the 2025 Partnership within the Aviation Leasing Segment. • Other income increased by $27.7 million, primarily due to a $24.2 million insurance settlement and a $2.2 million increase in interest income earned on financing receivables within the Aviation Leasing Segment. • Loss on debt extinguishment decreased by $13.9 million driven by the 2024 redemption of Senior Notes due 2025 and partial redemption of Senior Notes due 2027. • Interest expense increased by $8.8 million, reflecting an increase in the average debt outstanding of approximately $657.4 million, primarily due to increases in (i) the Senior Notes due 2032 of $533.3 million, which were issued in June 2024, (ii) the Senior Notes due 2033 of $497.7 million, which were issued in October 2024, partially offset by decreases in (iii) the Senior Notes due 2027 of $310.3 million, which were redeemed in October 2024, and (iv) the Revolving Credit Facility of $63.3 million. • Equity in losses of unconsolidated entities increased by $4.3 million, primarily driven by the profit elimination of $4.9 million for sales to the 2025 Partnership. Total other expense decreased by $85.1 million during the six months ended June 30, 2025 due to the following: • Other income increased by $60.1 million, primarily due to a $54.3 million insurance settlement and a $4.5 million increase in interest income earned on financing receivables within our Aviation Leasing Segment. • Gain on sale to the 2025 Partnership increased by $45.5 million, primarily driven by the sale of 37 aircraft to the 2025 Partnership within the Aviation Leasing Segment. • Loss on debt extinguishment decreased by $13.9 million driven by the 2024 redemption of Senior Notes due 2025 and partial redemption of Senior Notes due 2027. • Interest expense increased $23.1 million, reflecting an increase in the average debt outstanding of approximately $806.5 million, primarily due to increases in (i) the Senior Notes due 2032 of $666.7 million, which were issued in June 2024, (ii) the Senior Notes due 2033 of $497.7 million, which were issued in October 2024, and (iii) the Senior Notes due 2031 of $350.0 million, which were issued in April 2024, partially offset by decreases in (iv) the Senior Notes due 2027 of $355.2 million, which were redeemed in October 2024, (v) the Senior Notes due 2025 of $325.9 million, which were redeemed in April 2024, and (vi) the Revolving Credit Facility of $26.7 million. • Equity in losses of unconsolidated entities increased by $11.3 million, primarily driven by the profit elimination of $11.9 million for sales to the 2025 Partnership. Provision for (benefit from) income taxes The provision for income taxes increased $50.9 million and $68.2 million during the three and six months ended June 30, 2025, respectively, primarily driven by higher income discussed above generated in the Aircraft Leasing and Aerospace Products segments within taxable jurisdictions. Net income (loss) Net income increased by $385.3 million and $448.0 million for the three and six months ended June 30, 2025 as compared to prior years primarily due to the changes noted above. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased by $133.9 million and $238.4 million during the three and six months ended June 30, 2025 as compared to prior years primarily due to the changes noted above. 39 Aviation Leasing Segment As of June 30, 2025, in our Aviation Leasing segment, we own and manage 375 aviation assets, consisting of 63 commercial aircraft and 312 engines, including eight aircraft and seventeen engines that were still located in Russia. As of June 30, 2025, 53 of our commercial aircraft and 166 of our engines were leased to operators or other third parties. Aviation assets currently off lease are either undergoing repair and/or maintenance, being prepared to go on lease or held in short term storage awaiting a future lease. Our aviation equipment was approximately 70% utilized during the three months ended June 30, 2025, based on the percent of days on-lease in the quarter weighted by the monthly average equity value of our aviation leasing equipment, excluding airframes. Our aircraft currently have a weighted average remaining lease term of 46 months, and our engines currently on-lease have an average remaining lease term of 30 months. The table below provides additional information on the assets in our Aviation Leasing segment, including transfers which involve aircraft breakdowns, engine transfers from leasing equipment to inventory for manufacturing and sales, and engine transfers from inventory to leasing equipment for rebuilding and sales: Aviation Assets Widebody Narrowbody Total Aircraft Assets at January 1, 2025 5 104 109 Purchases — 16 16 Sales — (37) (37) Transfers — (25) (25) Assets at June 30, 2025 5 58 63 Engines Assets at January 1, 2025 23 289 312 Purchases — 45 45 Sales (1) — (1) Transfers — (44) (44) Assets at June 30, 2025 22 290 312 The following table presents our results of operations for our Aviation Leasing segment: Three Months Ended June 30, Change Six Months Ended June 30, Change (in thousands) 2025 2024 2025 2024 Revenues Lease income $ 62,439 $ 60,759 $ 1,680 $ 130,879 $ 111,605 $ 19,274 Maintenance revenue 73,104 51,187 21,917 122,711 96,977 25,734 Asset sales revenue 47,915 72,433 (24,518) 66,854 111,040 (44,186) Other revenue (1) 2,508 58 2,450 2,535 125 2,410 Total revenues 185,966 184,437 1,529 322,979 319,747 3,232 Expenses Cost of sales 51,789 58,969 (7,180) 71,748 90,858 (19,110) Operating expenses 11,089 8,782 2,307 18,515 16,989 1,526 Acquisition and transaction expenses 577 1,969 (1,392) 3,482 4,730 (1,248) Depreciation and amortization 50,423 52,672 (2,249) 105,484 98,756 6,728 Asset impairment — — — — 962 (962) Total expenses 113,878 122,392 (8,514) 199,229 212,295 (13,066) Other income (expense) Equity in losses of unconsolidated entities (782) (61) (721) (1,559) (207) (1,352) Gain on sale to the 2025 Partnership 34,604 — 34,604 45,474 — 45,474 Other income (expense) 26,974 (911) 27,885 59,593 (542) 60,135 Total other income (expense) 60,796 (972) 61,768 103,508 (749) 104,257 Income before income taxes 132,884 61,073 71,811 227,258 106,703 120,555 Provision for income taxes 26,453 8,293 18,160 43,801 11,326 32,475 Net income attributable to shareholders $ 106,431 $ 52,780 $ 53,651 $ 183,457 $ 95,377 $ 88,080 ______________________________________________________ (1) Includes servicing fees of $2,052 and $2,600 for the three and six months ended June 30, 2025, respectively, from the 2025 Partnership. 40 The following table sets forth a reconciliation of net income attributable to shareholders to Adjusted EBITDA: Three Months Ended June 30, Change Six Months Ended June 30, Change (in thousands) 2025 2024 2025 2024 Net income attributable to shareholders $ 106,431 $ 52,780 $ 53,651 $ 183,457 $ 95,377 $ 88,080 Add: Provision for income taxes 26,453 8,293 18,160 43,801 11,326 32,475 Add: Equity-based compensation expense 264 128 136 439 233 206 Add: Acquisition and transaction expenses 577 1,969 (1,392) 3,482 4,730 (1,248) Add: Losses on the modification or extinguishment of debt and preferred shares and capital lease obligations — — — — — — Add: Changes in fair value of non-hedge derivative instruments — — — — — — Add: Asset impairment charges — — — — 962 (962) Add: Incentive allocations — — — — — — Add: Depreciation and amortization expense (1) 60,864 61,790 (926) 124,750 117,076 7,674 Add: Interest expense and dividends on preferred shares — — — — — — Add: Internalization fee to affiliate — — — — — — Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2) 3,932 (40) 3,972 3,804 (123) 3,927 Less: Equity in losses of unconsolidated entities 782 61 721 1,559 207 1,352 Less: Non-controlling share of Adjusted EBITDA — — — — — — Adjusted EBITDA (non-GAAP) $ 199,303 $ 124,981 $ 74,322 $ 361,292 $ 229,788 $ 131,504 ________________________________________________________ (1) Includes the following items for the three months ended June 30, 2025 and 2024: (i) depreciation expense of $50,423 and $52,672, (ii) lease intangible amortization of $2,153 and $3,786 and (iii) amortization for lease incentives of $8,288 and $5,332, respectively. Includes the following items for the six months ended June 30, 2025 and 2024: (i) depreciation expense of $105,484 and $98,756, (ii) lease intangible amortization of $5,359 and $7,762 and (iii) amortization for lease incentives of $13,907 and $10,558, respectively. (2) Includes the following items for the three months ended June 30, 2025 and 2024: (i) net loss of $782 and $61, (ii) interest expense of $1,490 and $0, (iii) depreciation and amortization of $3,301 and $21 and (iv) acquisition and transaction expenses of $(77) and $0, respectively. Includes the following items for the six months ended June 30, 2025 and 2024: (i) net loss of $1,559 and $207, (ii) interest expense of $1,490 and $0, (iii) depreciation and amortization of $3,403 and $84 and (iv) acquisition and transaction expenses of $470 and $0, respectively. Revenues Comparison of the three months ended June 30, 2025 and 2024 Total reven ue increased by $1.5 million, driven by the following: • Maintenance revenue increased by $21.9 million, primarily due to an increase in aircraft maintenance revenue of $23.1 million driven by an increase in utilization and higher maintenance reserves taken into revenue, partially offset by the sale of Seed Assets to the 2025 Partnership. • Other revenue increased by $2.5 million as a result of servicing fees earned in our capacity as the Servicer to the 2025 Partnership. • Lease income increased by $1.7 million due to an increase in engine lease revenue of $4.1 million, partially offset by a decrease in aircraft lease revenue of $2.4 million driven by the sale of Seed Assets to the 2025 Partnership. • Asset sales revenue decreased by $24.5 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines. Specifically, one engine sold in Q2 2025 as compared to six engines sold in Q2 2024. Comparison of the six months ended June 30, 2025 and 2024 Total revenue increased $3.2 million, driven by the following: • Maintenance revenue increased by $25.7 million, primarily due to an increase in aircraft maintenance revenue of $24.7 million driven by an increase in utilization and higher maintenance reserves taken into revenue, partially offset by the sale of Seed Assets to the 2025 Partnership. • Lease income increased by $19.3 million, due to an increase in aircraft lease revenue of $9.2 million and an increase in engine lease revenue of $10.1 million, driven by an increased number of aircraft and engines on lease in addition to higher rental rates. 41 • Other revenue increased by $2.4 million as a result of servicing fees earned in our capacity as the Servicer to the 2025 Partnership. • Asset sales revenue decreased by $44.2 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines. Specifically, one engine sold in 2025 as compared to 10 engines sold in the prior-year period. Expenses Comparison of the three months ended June 30, 2025 and 2024 Total expenses decreased by $8.5 million, driven by the following: • Cost of sales decreased by $7.2 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines, which is in line with an overall decrease in the corresponding asset sales revenue. • Depreciation and amortization expense decreased by $2.2 million, primarily driven by the increase of assets held-for-sale and the sale of Seed Assets to the 2025 Partnership. Comparison of the six months ended June 30, 2025 and 2024 Total expenses decreased by $13.1 million, driven by the following: • Cost of sales decreased by $19.1 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines, which is in line with an overall decrease in the corresponding asset sales revenue. • Depreciation and amortization expense increased by $6.7 million, primarily driven by an increase in the number of assets owned and on lease during the period, partially offset by an increase of assets held-for-sale and the sale of Seed Assets to the 2025 Partnership. Other income (expense) Total other income increased by $61.8 million and $104.3 million during the three and six months ended June 30, 2025, primarily due to (i) an insurance settlement of $24.2 million and $54.3 million, respectively, (ii) gains on sale to the 2025 Partnership of $34.6 million and $45.5 million, respectively, and (iii) a $2.2 million and $4.5 million increase in interest income earned on financing receivables during 2025, respectively. Provision for income taxes The provision for income taxes increased by $18.2 million and $32.5 million during the three and six months ended June 30, 2025, respectively, primarily due to the increase in income discussed above from leasing activities in jurisdictions subject to taxes. Net income Net income increased by $53.7 million and $88.1 million during the three and six months ended June 30, 2025, respectively, primarily due to the changes noted above. Adjusted EBITDA (Non-GAAP) Adjusted EBITD A increased by $74.3 million and $131.5 million during the three and six months ended June 30, 2025, respectively, primarily due to the changes noted above. 42 Aerospace Products Segment The Aerospace Products segment, through our maintenance facilities, equity method investment and exclusivity arrangements, develops and manufactures, repairs/refurbishes, and sells aircraft engines and aftermarket components primarily for the CFM56-5B, CFM56-7B, and V2500 commercial aircraft engines. Our engine, module, and parts sales are facilitated through a dedicated commercial maintenance program designed to focus on modular and parts repair and refurbishment of these engines. We entered into an agreement with our MRE business to supply replacement aircraft engines and modules for the life of the 2025 Partnership. To further enhance this business and establish permanent engine and module manufacturing capabilities, we acquired Lockheed Martin Commercial Engine Solutions (LMCES). Refer to Note 3, “Acquisition of Lockheed Martin Commercial Engine Solutions,” for additional information. Other serviceable used modules and parts are sold through our exclusive partnership, which is responsible for the teardown, repair, marketing, and sales of parts from our CFM56-5B and CFM56-7B engine pool. We also acquired the remaining interest in Quick Turn Engine Center LLC, or “QuickTurn” (formerly iAero Thrust LLC), a hospital maintenance and testing facility specializing in the CFM56-5B and CFM56-7B engines. We further expanded our footprint in engine services by acquiring a 50% equity interest in QuickTurn Europe, which will operate as a dedicated maintenance, repair, and overhaul facility for CFM56 engines. Additionally, we maintain a 25% ownership stake in the Advanced Engine Repair joint venture, which is focused on developing innovative cost-saving programs for engine repairs. The following table presents our results of operations: Three Months Ended June 30, Change Six Months Ended June 30, Change (in thousands) 2025 2024 2025 2024 Revenues Aerospace products revenue $ 420,686 $ 245,200 $ 175,486 $ 685,111 $ 434,257 $ 250,854 MRE Contract revenue 69,585 — 69,585 170,223 — 170,223 Total revenues 490,271 245,200 245,071 855,334 434,257 421,077 Expenses Cost of sales 317,469 146,888 170,581 546,224 257,803 288,421 Operating expenses 8,989 6,423 2,566 14,676 13,893 783 Acquisition and transaction expenses 1,414 525 889 2,546 771 1,775 Depreciation and amortization 3,704 938 2,766 7,288 1,871 5,417 Total expenses 331,576 154,774 176,802 570,734 274,338 296,396 Other income (expense) Equity in earnings (losses) of unconsolidated entities 714 (633) 1,347 827 (1,154) 1,981 Total other income (expense) 714 (633) 1,347 827 (1,154) 1,981 Income before income taxes 159,409 89,793 69,616 285,427 158,765 126,662 Provision for income taxes 25,827 4,918 20,909 45,202 7,457 37,745 Net income attributable to shareholders $ 133,582 $ 84,875 $ 48,707 $ 240,225 $ 151,308 $ 88,917 43 The following table sets forth a reconciliation of net income attributable to shareholders to Adjusted EBITDA: Three Months Ended June 30, Change Six Months Ended June 30, Change (in thousands) 2025 2024 2025 2024 Net income attributable to shareholders $ 133,582 $ 84,875 $ 48,707 $ 240,225 $ 151,308 $ 88,917 Add: Provision for income taxes 25,827 4,918 20,909 45,202 7,457 37,745 Add: Equity-based compensation expense 168 (72) 240 323 (2) 325 Add: Acquisition and transaction expenses 1,414 525 889 2,546 771 1,775 Add: Losses on the modification or extinguishment of debt and preferred shares and capital lease obligations — — — — — — Add: Changes in fair value of non-hedge derivative instruments — — — — — — Add: Asset impairment charges — — — — — — Add: Incentive allocations — — — — — — Add: Depreciation and amortization expense 3,704 938 2,766 7,288 1,871 5,417 Add: Interest expense and dividends on preferred shares — — — — — — Add: Internalization fee to affiliate — — — — — — Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (1) 883 (577) 1,460 1,052 (1,042) 2,094 Less: Equity in (earnings) losses of unconsolidated entities (714) 633 (1,347) (827) 1,154 (1,981) Less: Non-controlling share of Adjusted EBITDA — — — — — — Adjusted EBITDA (non-GAAP) $ 164,864 $ 91,240 $ 73,624 $ 295,809 $ 161,517 $ 134,292 ________________________________________________________ (1) Includes the following items for the three months ended June 30, 2025 and 2024: (i) net income of $714 and net loss of $633 and (ii) depreciation and amortization expense of $169 and $56, respectively. Includes the following items for the six months ended June 30, 2025 and 2024: (i) net income of $827 and net loss of $1,154 and (ii) depreciation and amortization expense of $225 and $112, respectively. Revenues Comparison of the three months ended June 30, 2025 and 2024 Total revenues increased by $245.1 million, due to the following: • Aerospace Products revenue increased by $175.5 million, primarily due to a $172.1 million increase in CFM56-5B, CFM56-7B and V2500 engine and module sales, as well as a $3.2 million increase in other maintenance service revenues. • MRE Contract revenue increased by $69.6 million, primarily due to an increase in CFM56-5B and CFM56-7B engine and module sales made to the 2025 Partnership. Comparison of the six months ended June 30, 2025 and 2024 Total revenues increased by $421.1 million, due to the following: • Aerospace Products revenue increased by $250.9 million, primarily due to a $237.0 million increase in CFM56-5B, CFM56-7B and V2500 engine and module sales, as well as a $11.9 million increase in other maintenance service revenues. • MRE Contract revenue increased by $170.2 million, primarily due to an increase in CFM56-5B and CFM56-7B engine and module sales made to the 2025 Partnership. Expenses Comparison of the three months ended June 30, 2025 and 2024 Tota l expenses increased by $176.8 million, due to the following: • Cost of sale s increased by $170.6 million, primarily due to increases in CFM56-5B, CFM56-7B and V2500 engine and module sales, and parts inventory sales, which directly corresponds to components of increases in Aerospace products revenue over the same period. • Operating expenses increased by $2.6 million, primarily due to higher compensation and benefits expense due to the acquisition of LMCES and an increase in shipping and logistics expense. 44 Comparison of the six months ended June 30, 2025 and 2024 Tota l expenses increased by $296.4 million, due to the following: • Cost of sale s increased by $288.4 million, primarily due to increases in CFM56-5B, CFM56-7B and V2500 engine and module sales, and parts inventory sales, which directly corresponds to components of increases in Aerospace products revenue over the same period. • Operating expenses increased by $0.8 million, primarily due to higher compensation and benefits expense due to the acquisitions of LMCES. • Depreciation and amortization increased by $5.4 million due to the acquisition of LMCES in the third quarter of 2024. Provision for income taxes The provision for income taxes increased by $20.9 million and $37.7 million during the three and six months ended June 30, 2025, respectively, primarily due to the increase in income discussed above from Aerospace Products activities in jurisdictions subject to taxes. Net income Net income increased $48.7 million and $88.9 million during the three and six months ended June 30, 2025, respectively, primarily due to the changes noted above. Adjusted EBITDA (Non-GAAP) Adjusted EBITD A increased $73.6 million and $134.3 million during the three and six months ended June 30, 2025, respectively, primarily due to the changes noted above. Corporate and Other The following table presents our results of operations: Three Months Ended June 30, Change Six Months Ended June 30, Change (in thousands) 2025 2024 2025 2024 Revenues Lease income $ — $ 9,995 $ (9,995) $ — $ 12,310 $ (12,310) Other revenue — 3,962 $ (3,962) 4 3,974 $ (3,970) Total revenues — 13,957 (13,957) 4 16,284 (16,280) Expenses Operating expenses 14,250 13,894 356 33,575 23,534 10,041 General and administrative 2,442 2,969 (527) 5,558 6,652 (1,094) Acquisition and transaction expenses 2,498 5,525 (3,027) 5,753 8,697 (2,944) Management fees and incentive allocation to affiliate — 3,554 (3,554) — 8,449 (8,449) Internalization fee to affiliate — 300,000 (300,000) — 300,000 (300,000) Depreciation and amortization 1,109 3,081 (1,972) 2,026 5,984 (3,958) Total expenses 20,299 329,023 (308,724) 46,912 353,316 (306,404) Other income (expense) Interest expense (63,965) (55,196) (8,769) (126,005) (102,903) (23,102) Loss on extinguishment of debt — (13,920) 13,920 — (13,920) 13,920 Other income 182 413 (231) 634 678 (44) Total other expense (63,783) (68,703) 4,920 (125,371) (116,145) (9,226) Loss before income taxes (84,082) (383,769) 299,687 (172,279) (453,177) 280,898 Benefit from income taxes (14,402) (26,244) 11,842 (28,266) (26,244) (2,022) Net loss (69,680) (357,525) 287,845 (144,013) (426,933) 282,920 Less: Dividends on preferred shares — 8,335 (8,335) 6,327 16,670 (10,343) Less: Loss on redemption of preferred shares 3,709 — 3,709 9,824 — 9,824 Net loss attributable to shareholders $ (73,389) $ (365,860) $ 292,471 $ (160,164) $ (443,603) $ 283,439 45 The following table sets forth a reconciliation of net loss attributable to shareholders to Adjusted EBITDA: Three Months Ended June 30, Change Six Months Ended June 30, Change (in thousands) 2025 2024 2025 2024 Net loss attributable to shareholders $ (73,389) $ (365,860) $ 292,471 $ (160,164) $ (443,603) $ 283,439 Add: Benefit from income taxes (14,402) (26,244) 11,842 (28,266) (26,244) (2,022) Add: Equity-based compensation expense 5,083 582 4,501 9,642 917 8,725 Add: Acquisition and transaction expenses 2,498 5,525 (3,027) 5,753 8,697 (2,944) Add: Losses on the modification or extinguishment of debt and preferred shares and capital lease obligations — 13,920 (13,920) 6,327 13,920 (7,593) Add: Changes in fair value of non-hedge derivative instruments — — — — — — Add: Asset impairment charges — — — — — — Add: Incentive allocations — 3,148 (3,148) — 7,456 (7,456) Add: Depreciation and amortization expense 1,109 3,081 (1,972) 2,026 5,984 (3,958) Add: Interest expense and dividends on preferred shares 67,674 63,531 4,143 135,829 119,573 16,256 Add: Internalization fee to affiliate — 300,000 (300,000) — 300,000 (300,000) Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities — — — — — — Less: Equity in losses (earnings) of unconsolidated entities — — — — — — Less: Non-controlling share of Adjusted EBITDA — — — — — — Adjusted EBITDA (non-GAAP) $ (11,427) $ (2,317) $ (9,110) $ (28,853) $ (13,300) $ (15,553) Revenues Total revenues decreased $14.0 million and $16.3 million during the three and six months ended June 30, 2025 primarily due to the sale of the two vessels within the Offshore Energy business during the fourth quarter of 2024. Expenses Comparison of the three months ended June 30, 2025 and 2024 Total expens es decreased by $308.7 million, due to the following: • Internalization fee to affiliate decreased $300.0 million relating to the Internalization effective May 28, 2024. • Management fees and incentive allocation to affiliate decreased by $3.6 million, due no management and incentive fees paid to the Former Manager during 2025, with the Internalization effective May 28, 2024. • Acquisition and transaction expense decreased $3.0 million primarily due to lower professional fees associated with the Internalization. • Depreciation and amortization decreased by $2.0 million, due to the sale of the two vessels within the Offshore Energy business during the fourth quarter of 2024. • Operating expenses increased $0.4 million primarily due to higher compensation and benefits expense due to an increase in employee headcount and increased overall compensation. Comparison of the six months ended June 30, 2025 and 2024 Total expenses decreased by $306.4 million, due to the following: • Internalization fee to affiliate decreased $300.0 million relating to the Internalization effective May 28, 2024. • Management fees and incentive allocation to affiliate decreased by $8.4 million, due to no management and incentive fees paid to the Former Manager during 2025, with the Internalization effective May 28, 2024. • Depreciation and amortization decreased by $4.0 million, due to the sale of the two vessels within the Offshore Energy business during the fourth quarter of 2024. • Acquisition and transaction expense decreased $2.9 million primarily due to lower professional fees associated with the Internalization and the sale of the Offshore Energy vessels. • Operating expenses increased $10.0 million primarily due to higher compensation and benefits expense due to an increase in employee headcount and increased overall compensation. 46 Other income (expense) Total other expense decreased by $4.9 million during the three months ended June 30, 2025, due to the following: • Loss on extinguishment of debt decreased by $13.9 million, driven by the 2024 redemption of Senior Notes due 2025 and partial redemption of Senior Notes due 2027. • Interest expense increased by $8.8 million, reflecting an increase in the average debt outstanding of approximately $657.4 million, primarily due to increases in (i) the Senior Notes due 2032 of $533.3 million, which were issued in June 2024, (ii) the Senior Notes due 2033 of $497.7 million, which were issued in October 2024, partially offset by decreases in (iii) the Senior Notes due 2027 of $310.3 million, which were redeemed in October 2024, and (iv) the Revolving Credit Facility of $63.3 million. Total other expense increased by $9.2 million during the six months ended June 30, 2025, due to the following: • Interest expense increased by $23.1 million, reflecting an increase in the average debt outstanding of approximately $806.5 million, primarily due to increases in (i) the Senior Notes due 2032 of $666.7 million, which were issued in June 2024, (ii) the Senior Notes due 2033 of $497.7 million, which were issued in October 2024, and (iii) the Senior Notes due 2031 of $350.0 million, which were issued in April 2024, partially offset by decreases in (iv) the Senior Notes due 2027 of $355.2 million, which were redeemed in October 2024, (v) the Senior Notes due 2025 of $325.9 million, which were redeemed in April 2024, and (vi) the Revolving Credit Facility of $26.7 million. • Loss on extinguishment of debt decreased by $13.9 million, driven by the 2024 redemption of Senior Notes due 2025 and partial redemption of Senior Notes due 2027. Benefit from income taxes The benefit from income taxes decreased by $11.8 million for the three months ended June 30,2026, and increased by $2.0 million during the six months ended June 30, 2025. The decrease in the three-month period was primarily attributable to a tax benefit recognized in connection with the internalization fee paid to affiliate, which was deductible for tax purposes. The increase in the six-month period was mainly driven by higher corporate overhead expenses deductible for 2025 tax purposes. Net loss Net loss decreased by $287.8 million and $282.9 million during the three and six months ended June 30, 2025, respectively, primarily due to the changes noted above. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA decreased by $9.1 million and decreased $15.6 million during the three and six months ended June 30, 2025, respectively, primarily due to the changes noted above. Liquidity and Capital Resources We believe we have sufficient liquidity to satisfy our cash needs, however, we continue to evaluate and take action, as necessary, to preserve adequate liquidity and ensure that our business can continue to operate during various environments. This includes limiting discretionary spending across the organization and re-prioritizing our investments as necessary. On December 30, 2024, the Company announced the launch of a Strategic Capital Initiative in collaboration with third-party institutional investors. The first partnership under the initiative, the 2025 Partnership, will focus on acquiring 737NG and A320ceo aircraft. The Strategic Capital Initiative, and its related partnerships, will allow the Company to maintain an asset-light business model while the partnerships actively acquire on-lease narrowbody aircraft at scale. The Company has agreed that the 2025 Partnership, and follow-on partnerships, will be the primary buyer of on-lease 737NG and A320ceo aircraft. The Company, as the Servicer, will manage the aircraft in the 2025 Partnership, and the Company will receive customary, market-based compensation. The Company has also made a minority investment and will make future investments in the 2025 Partnership. The Company expects to manage the aircraft for and make minority investments in, future partnerships. Our principal uses of liquidity have been and continue to be (i) acquisitions of aircraft and engines, (ii) dividends to our ordinary and preferred shareholders, (iii) expenses associated with our operating activities, and (iv) debt service obligations associated with our investments. In the future, instead of acquiring on-lease aircraft directly, as part of the Strategic Capital Initiative, we will invest in the related partnerships and such partnerships will acquire on-lease aircraft. • Cash used for the purpose of making investments was $594.9 million and $563.1 million during the six months ended June 30, 2025 and 2024, respectively. • Distributions to shareholders, including cash dividends, were $71.4 million and $76.8 million during the six months ended June 30, 2025 and 2024, respectively. • Uses of liquidity associated with our operating expenses are captured on a net basis in our cash flows from operating activities. Uses of liquidity associated with our debt obligations are captured in our cash flows from financing activities. 47 Our principal sources of liquidity to fund these uses have been and continue to be (i) revenues from our aviation assets (including finance lease collections and maintenance reserve collections) net of operating expenses, (ii) proceeds from borrowings or the issuance of securities and (iii) proceeds from asset sales. • Cash flows used in operating activities, plus the principal collections on finance leases and maintenance reserve collections were $107.2 million and $165.3 million during the six months ended June 30, 2025 and 2024, respectively. • During the six months ended June 30, 2025, additional borrowings and total principal repayments in connection with the Revolving Credit Facility were $430.0 million and $430.0 million, respectively. During the six months ended June 30, 2024, additional borrowings were obtained in connection with the (i) Senior Notes due 2032 of $800.0 million, (ii) Senior Notes due 2031 of $700.0 million and (iii) Revolving Credit Facility of $360.0 million and made total principal repayments of (i) $650.0 million related to the Senior Notes due 2025, (ii) $360.0 million relating to the Revolving Credit Facility and (iii) $269.1 million related to the Senior Notes due 2027. • Proceeds from the sale of assets were $986.5 million and $333.7 million during the six months ended June 30, 2025 and 2024, respectively. • In February 2025, the Company redeemed in full the outstanding Series B preferred shares at a redemption price equal to $25.00 per share in cash, plus $2.4 million of accumulated and unpaid distributions thereon to, but not including, the redemption date of February 16, 2025. We are currently evaluating several potential transactions and related financings, including, but not limited to, certain additional debt and equity financings, which could occur within the next 12 months. None of these potential transactions, negotiations, or financings are definitive or included within our planned liquidity needs. We cannot assure if or when any such transaction will be consummated or the terms of any such transaction or related financing. Historical Cash Flow Comparison of the six months ended June 30, 2025 and 2024 The following table compares the historical cash flow for the six months ended June 30, 2025 and 2024: Six Months Ended June 30, (in thousands) 2025 2024 Cash Flow Data: Net cash used in operating activities $ (136,284) $ (187,636) Net cash provided by (used in) investing activities 496,148 (219,383) Net cash (used in) provided by financing activities (173,069) 485,748 Net cash used in operating activities decreased $51.4 million, which primarily reflects (i) an increase in our Net income of $448.0 million and certain adjustments to reconcile net income to cash used in operating activities including increases in (ii) Deferred income taxes of $57.5 million, (iii) Equity in losses of unconsolidated entities of $11.3 million, (iv) Equity-based compensation of $9.3 million and (v) Depreciation and amortization of $8.2 million partially offset by decreases in (vi) Non-cash termination fee to affiliate of $150.0 million, (vii) Gain on sale of assets of $80.0 million, (viii) Gain on insurance recoveries of $54.3 million, (ix) Gain on sale of assets to the 2025 Partnership of $45.5 million,(x) Security deposits and maintenance claims included in earnings of $25.9 million, (xi) Loss on extinguishment of debt of $13.9 million, and (xii) Changes in net working capital of $117.3 million. Net cash provided by investing activities increased $715.5 million, primarily due to increases in (i) Proceeds from the sale of assets to the 2025 Partnership of $397.1 million, (ii) Proceeds from the sale of assets of $255.7 million, (iii) Proceeds from settlement of insurance claims of $54.3 million, and (iv) Return of deposits for acquisition of leasing equipment of $43.8 million, as well as a decrease in (v) Deposits for acquisition of leasing equipment of $54.4 million. These were partially offset by decreases related to (vi) Acquisitions of leasing equipment of $24.0 million and (vii) Investments in financing receivables of $17.0 million, and by increases in (viii) Investment in unconsolidated entities of $118.7 million and (ix) Acquisition of property, plant and equipment of $8.6 million. Net cash used in financing activities increased $658.8 million, primarily due to a decrease in (i) Proceeds from debt of $1.4 billion and an increase in (ii) Redemption of preferred shares of $124.2 million, partially offset by decreases in (iii) Repayment of debt of $857.4 million and (iv) Payment of deferred financing costs of $9.7 million and an increase in (v) Receipt of maintenance deposits under operating lease agreements of $6.7 million. Contractual Obligations Our material cash requirements include the following contractual and other obligations: Debt Obligations — As of June 30, 2025, we had outstanding principal and interest payment obligations of $3.5 billion and $1.3 billion, respectively, of which only interest payments of $228.8 million are due in the next twelve months. See Note 7 to the consolidated financial statements for additional information about our debt obligations. Lease Obligations —As of June 30, 2025, we had outstanding operating and finance lease obligations of $37.0 million, of which $3.6 million is due in the next twelve months. 48 Other Cash Requirements —In addition to our contractual obligations, we pay quarterly cash dividends on our ordinary shares and preferred shares, which are subject to change at the discretion of our Board of Directors. During the last twelve months, we declared cash dividends of $123.0 million and $25.9 million on our ordinary shares and preferred shares, respectively. We expect to meet our future short-term liquidity requirements through cash on hand, unused borrowing capacity or future financings and net cash provided by our current operations. We expect that our operating subsidiaries will generate sufficient cash flow to cover operating expenses and the payment of principal and interest on our indebtedness as they become due. We may elect to meet certain long-term liquidity requirements or to continue to pursue strategic opportunities through utilizing cash on hand, cash generated from our current operations and the issuance of securities in the future. Management believes adequate capital and borrowings are available from various sources to fund our commitments to the extent required. Critical Accounting Estimates and Policies There were no material changes to our critical accounting estimates described in our Annual Report on Form 10-K for the year ended December 31, 2024. Recent Accounting Pronouncements See Note 2 to our Consolidated Financial Statements for recent accounting pronouncements.