You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes thereto included in this Quarterly Report and our audited consolidated financial statements and related notes thereto for the year ended December 31, 2025, included in our 2025 Form 10-K. Some of the information included in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties you should review about our business. Our future results and financial condition may differ materially from those we currently anticipate. You should review the “Forward-Looking Statements” section of this Quarterly Report and the “Risk Factors” section of our 2025 Form 10-K for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
We believe that we are the world’s largest independent, pure-play provider of aerospace engine aftermarket services for fixed and rotary wing aircraft, serving the commercial, military and business aviation end markets. We provide a comprehensive suite of critical, value-added aftermarket solutions, including scheduled and unscheduled engine maintenance, repair and overhaul, engine component repair, on-wing and field service support, asset management and engineering solutions. We serve a crucial role in the engine aftermarket value chain, connecting engine OEMs with aircraft operators through our aftermarket services, maintaining longstanding relationships with both. We command a leading reputation that is based upon our strong track record of safety, reliability and operational performance built over our more than 100 years of successful operations in the aerospace aftermarket.
Operating Segments
We manage our business in line with our service offerings with two reportable segments: Engine Services and Component Repair Services.
Our Engine Services segment provides a full suite of aftermarket services, including maintenance, repair and overhaul, on-wing and field service support, asset management, and engineering and related solutions to customers in the commercial aerospace, military and helicopter, and business aviation end markets. Revenue in the Engine Services segment is primarily derived from the repair and overhaul of a wide variety of gas turbine engines and auxiliary power units that power fixed and rotary wing aircraft. We also provide complementary maintenance, repair, upgrade and other related services for airframes and avionics systems in the business aviation and helicopter end markets. Cost of revenue consists primarily of cost of materials, direct labor and overhead.
Our Component Repair Services segment provides engine component and accessory repairs to commercial aerospace, military and other end markets. Revenue in the Component Repair Services segment is derived from the engine piece part and accessory repairs that we perform, repair development engineering and other related services, and some engine new part manufacturing. Cost of revenue consists primarily of cost of materials, direct labor and overhead.
Key Factors and Trends Affecting Our Business
Manufacturer specifications, government regulations and military maintenance regimens generally require that aircraft and engines undergo aftermarket servicing at regular intervals or upon the occurrence of certain events during the serviceable life of each asset. As a result, the aggregate volume of services required for any particular engine platform is a function of four factors: (i) the number of aircraft and engines in operation (the “installed base”), (ii) the age of the installed base, (iii) the reliability of the installed base and (iv) the utilization rate of the installed base.
The number of aircraft in operation and the utilization of those aircraft are generally tied to global air travel over the long-term, which has historically grown in excess of gross domestic product driven by secular tailwinds such as globalization, rising middle class population and wealth, increasing demand for leisure travel, growth in corporate earnings and e-commerce and technological advancements in aviation. The age and utilization of the existing installed base have increased as supply chain issues and regulatory constraints delay the delivery of new aircraft. Engine aftermarket services demand is also expected to further increase through the remainder of the decade due to upcoming shop visits resulting from a large number of engines delivered in the 2010s continuing to age and entering prime maintenance periods. In the military and helicopter end market, ongoing geopolitical tensions continue to drive significant defense investment. In the business aviation end market, continued fleet growth is expected to drive an increase in demand for business jet engine maintenance services.
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While the recent supply chain disruptions across our end markets are causing older aircraft and engines to remain in service longer and increasing their maintenance demand, our business also depends on maintaining a sufficient supply of parts, components and raw materials to meet the requirements of our customers. In recent years, we have experienced supply chain delays that impacted the availability of parts and ultimately engine throughput across all of our end markets. Any disruption to our supply chain and business operations, or to our suppliers’ supply chains and business operations, could have adverse effects on our ability to provide aftermarket support to our customers timely and efficiently and may increase our working capital as we wait for parts for the engines we service. Any such disruptions could adversely affect our business, results of operations and financial condition. See “Part I. Item 1A. Risk Factors—Risks Related to Our Business and Industry—We depend on certain component parts and material suppliers for our engine repair and overhaul operations, and any supply chain disruptions or loss of key suppliers could adversely affect our business, results of operations and financial condition” in our 2025 Form 10-K.
In addition, the Company continues to closely monitor the implementation of tariffs, which have the potential to disrupt global trade and existing supply chains and impose additional costs on our business. While negotiations regarding tariffs are ongoing, if the resulting environment of retaliatory tariffs or other practices of additional trade restrictions or barriers require us to increase prices for our products or services, this could lead to decreased demand for our products and services, which would negatively impact our results of operations, cash flows, and financial condition. While tariff levels and related trade actions remain fluid, we expect to pass associated cost increases through to customers where possible, though timing delays may impact margins. Factors such as our operations and supply chains, which are primarily located in regions where our products are sold, along with the applicability of the United States-Mexico-Canada Agreement, help reduce our exposure to trade disruptions, but there can be no assurance that these factors, or our pricing actions, will be effective mitigants given the uncertain environment. Most recently, in February 2026, the U.S. Supreme Court ruled that the use of the International Emergency Economic Powers Act (“IEEPA”) to impose tariffs was not authorized by Congress, invalidating a significant portion of tariffs that had been in effect since April 2025. While the ruling struck down the IEEPA-based tariffs, it does not prevent the administration from imposing tariffs using other legal authorities, and the Trump administration has indicated its intention to pursue alternative statutory mechanisms to reinstate or impose new tariffs. In July 2026, the Trump administration imposed tariffs on goods from more than 80 countries under Section 301 of the Trade Act of 1974, which enables the government to impose tariffs in response to unfair trade practices. These tariffs are the subject of pending litigation, the outcome of which remains uncertain. See “Part I, Item 1A. Risk Factors—Risks Related to Our Business and Industry—United States trade policies that restrict imports or increase import tariffs may have a material adverse effect on our business” in our 2025 Form 10-K.
Key Factors Affecting the Comparability of Our Results of Operations
Our results have been affected by, and may in the future be affected by, the following factors, which must be understood in order to assess the comparability of our period-to-period financial performance and condition.
Recent Developments
March 2025 Secondary Offering
In March 2025, two of our stockholders (the “Selling Stockholders”), affiliates of The Carlyle Group Inc. (“Carlyle”) and GIC Private Limited (“GIC”), completed a public offering of an aggregate of 36,000,000 shares of Common Stock at a price to the public of $28.00 per share. The Selling Stockholders received all of the net proceeds from this offering. No shares were sold by the Company.
May 2025 Secondary Offering
In May 2025, the Selling Stockholders completed a public offering of an aggregate of 34,500,000 shares of Common Stock (including the full exercise by the underwriters of their option to purchase up to an additional 4,500,000 shares) at a price to the public of $28.00 per share. The Selling Stockholders received all of the net proceeds from this offering. No shares were sold by the Company.
January 2026 Secondary Offering and Share Repurchase
On January 29, 2026, the Selling Stockholders completed a public offering of an aggregate of 57,500,000 shares of Common Stock (including the full exercise by the underwriters of their option to purchase up to an additional 7,500,000 shares) at a price to the public of $31.00 per share (the “January 2026 Offering”).
On January 29, 2026, we completed the repurchase of 1,637,465 shares of Common Stock from a selling stockholder affiliated with GIC (the “GIC Stockholder”) in a private transaction at a price of $30.54 per share (the “Share Repurchase”). The Share Repurchase was made pursuant to our existing stock repurchase program approved by our board of directors in December 2025 and pursuant to a stock purchase agreement, dated January 20, 2026, with the GIC Stockholder. The Share Repurchase was
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conditioned upon the completion of the January 2026 Offering and closed concurrently with such offering. The repurchased shares of Common Stock are no longer outstanding.
As of June 30, 2026, Carlyle and GIC own approximately 25.5% and 5.8% of the Company’s outstanding Common Stock, respectively.
Public Company Expenses
We have incurred, and expect to continue to incur, certain professional fees and other expenses as part of our transition to a public company not recurring in the ordinary course of business. As a public company, we are implementing additional procedures and processes for the purpose of addressing the standards and requirements applicable to public companies, for which we expect to incur additional recurring expenses. In particular, our accounting, legal and personnel-related expenses and directors’ and officers’ insurance costs have increased as we establish more comprehensive compliance and governance functions, establish, maintain and review internal control over financial reporting in accordance with the Sarbanes-Oxley Act and prepare and distribute periodic reports in accordance with SEC rules. Our financial statements following the IPO have reflected and will continue to reflect the impact of these expenses. See “Part I. Item 1A. Risk Factors—Risks Related to Management and Employees—The requirements of being a public company may strain our resources, increase our costs, divert management’s attention, and affect our ability to attract and retain executive management and qualified board members” in our 2025 Form 10-K.
Key Performance Indicators and Non-GAAP Financial Measures
We use certain non-GAAP key performance indicators to evaluate our business operations, including Adjusted EBITDA and Adjusted EBITDA Margin.
The non-GAAP financial measures presented in this Quarterly Report are supplemental measures of our performance that we believe help investors understand our financial condition and operating results and assess our future prospects. We believe that these non-GAAP financial measures, in addition to the corresponding GAAP financial measures, are important supplemental measures that exclude non-cash or other items that may not be indicative of or are unrelated to our core operating results and the overall health of our company. We believe that these non-GAAP financial measures provide investors greater transparency into the information used by management for its operational decision-making and allow investors to see our results “through the eyes of management.” We further believe that providing this information assists our investors in understanding our operating performance and the methodology used by management to evaluate and measure such performance. When read in conjunction with our GAAP results, these non-GAAP financial measures provide a baseline for analyzing trends in our underlying businesses and can be used by management as one basis for financial, operational and planning decisions. Finally, these measures are often used by analysts and other interested parties to evaluate companies in our industry.
Management recognizes that these non-GAAP financial measures have limitations, including that they may be calculated differently by other companies or may be used under different circumstances or for different purposes, thereby affecting their comparability from company to company. In order to compensate for these and the other limitations discussed below, management does not consider these measures in isolation from or as alternatives to the comparable financial measures determined in accordance with GAAP. Readers should review the reconciliations below and should not rely on any single financial measure to evaluate our business. See below for the reasons we use these non-GAAP financial measures and the reconciliations to their most directly comparable GAAP financial measures.
Adjusted EBITDA and Adjusted EBITDA Margin
We define Adjusted EBITDA as net income before interest expense, income tax expense, depreciation and amortization, further adjusted for certain non-cash items that we may record each period, as well as items not recurring in the ordinary course of business such as acquisition costs, integration and severance costs, refinancing fees, business transformation costs and other discrete expenses, when applicable. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue. We believe that Adjusted EBITDA and Adjusted EBITDA Margin are important metrics for management and investors, as they remove the impact of items that we do not believe are indicative of our core operating results or the overall health of our company and allows for consistent comparison of our operating results over time and relative to our peers.
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The following table presents a reconciliation of net income and net income margin to Adjusted EBITDA and Adjusted EBITDA Margin, respectively:
Three months ended June 30, Six months ended June 30,
2026 2025 2026 2025
(in thousands, except percentages)
Net income $ 97,278 $ 67,713 $ 177,208 $ 130,656
Income tax expense 29,926 24,022 54,943 46,211
Depreciation and amortization 47,043 48,547 93,504 97,223
Interest expense 41,279 43,835 79,430 87,626
Business transformation costs (LEAP and CFM) (1) 3,698 5,264 10,320 18,181
Non-cash stock compensation expense 6,267 3,830 9,725 5,875
Integration costs and severance (2) 346 1,360 687 2,740
Secondary offering costs — 3,860 1,350 3,860
Other (3) 4,040 6,206 5,866 10,492
Adjusted EBITDA $ 229,877 $ 204,637 $ 433,033 $ 402,864
Revenue $ 1,599,693 $ 1,528,943 $ 3,226,550 $ 2,964,531
Net income margin 6.1 % 4.4 % 5.5 % 4.4 %
Adjusted EBITDA Margin 14.4 % 13.4 % 13.4 % 13.6 %
(1)Represents new product industrialization costs with the business transformation of the LEAP 1A/1B engine line in San Antonio, Texas and the expansion of the Company’s CFM56 capabilities into Dallas, Texas.
(2)Represents integration costs incurred, including any facility or platform consolidation associated with the integration of an acquisition that does not meet capitalization criteria and severance related to reduction in workforce or acquisitions. Examples of integration costs may include lease breakage or run-off fees, consulting costs, demolition costs or training costs.
(3)Represents other costs not recurring in the ordinary course of business including professional fees related to business transformation and quarterly management fees payable to Carlyle Investment Management L.L.C. and Beamer Investment Inc. under consulting services agreements, representation and warranty insurance costs associated with acquisitions and other non-comparable events to measure operating performance as these events arise outside of the Company’s ordinary course of continuing operations. See Note 13, “Related Party Transactions” to the Company’s condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for descriptions of the consulting services agreements with Carlyle Investment Management L.L.C. and Beamer Investment Inc.
Key Components of Results of Operations
The following discussion provides a brief description of certain items that appear in our consolidated financial statements and the general factors that impact these items.
Revenue
Revenue consists of gross sales principally resulting from the engine and component repair services that we perform for commercial, military and business aviation fixed wing and rotary wing aircraft engines, as well as aeroderivative engines for the land and marine and other markets. Within these end markets, our Engine Services segment primarily provides a variety of value-added services in support of the maintenance, repair, testing and recertification of aerospace and aeroderivative engines. Our Component Repair Services segment supports commercial aerospace, military aerospace, land and marine and other markets with engine piece part repair and accessory repair.
Cost of revenue
Cost of revenue primarily consists of direct costs required to provide our services. These costs include the cost of materials, direct labor for inspection and disassembly, assembly and repair, rental engines, subcontracted services and overhead costs directly related to the performance of aftermarket services. Overhead costs include the cost of our facilities, engineering, quality and production management, including indirect labor supporting production, depreciation of equipment and facilities and amortization of the costs associated with OEM authorizations and licenses. The cost of materials accounts for the largest portion of our cost of revenue.
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Selling, general and administrative expense
Selling, general and administrative (“SG&A”) expense primarily consists of expenses related to the selling of our services to our customers and maintaining a global sales support network, including salaries of our direct sales force. General costs to support the administrative requirements of the business such as finance, accounting, information technology, human resources and general management are also included.
Amortization of intangible assets
Intangible assets are amortized over the estimated useful life for customer relationships, trademarks and technology and other assets.
Interest expense
Interest expense primarily consists of interest on our debt obligations, including the amortization of debt discount and deferred finance charges. Interest expense also includes the portion of the gain or loss on our interest rate swap and interest rate cap agreements that is reclassified into earnings.
Income tax expense
Our provision for income tax expense is based on permanent book/tax differences and statutory tax rates in the various jurisdictions in which we operate. Significant estimates and judgments are required in determining the provision for income taxes.
Results of Operations
Comparison of the Three Months Ended June 30, 2026 and 2025
The following table sets forth our consolidated statements of operations data for the three months ended June 30, 2026 and 2025:
Three months ended June 30, Change
2026 2025 $ %
(in thousands, except percentages)
Revenue $ 1,599,693 $ 1,528,943 $ 70,750 4.6 %
Cost of revenue 1,330,915 1,292,768 38,147 3.0 %
Selling, general and administrative expense 75,597 76,002 (405 ) (0.5 )%
Amortization of intangible assets 24,698 24,603 95 0.4 %
Operating income 168,483 135,570 32,913 24.3 %
Interest expense 41,279 43,835 (2,556 ) (5.8 )%
Income before income taxes 127,204 91,735 35,469 38.7 %
Income tax expense 29,926 24,022 5,904 24.6 %
Net income $ 97,278 $ 67,713 $ 29,565 43.7 %
Revenue. Revenue increased $70.8 million, or 4.6%, to $1,599.7 million for the three months ended June 30, 2026 from $1,528.9 million for the three months ended June 30, 2025. The increase was driven by continued strong demand in our commercial aerospace and business aviation businesses, partially offset by the previously announced elimination of low-to-no margin material pass-through revenue on restructured contracts and lower military sales at our Component Repairs Services segment. The Commercial Aerospace end market grew 5.7% compared to the prior year period, the Business Aviation end market grew 5.6% compared to the prior year period, and the Military and Helicopter end market decreased 2.6%, compared to the prior year period.
Cost of revenue. Cost of revenue increased $38.1 million, or 3.0%, to $1,330.9 million for the three months ended June 30, 2026 from $1,292.8 million for the three months ended June 30, 2025. This increase was primarily driven by higher sales volume, as revenue increased 4.6% compared to the prior year period. The lower year-over-year growth rate in cost of revenue compared to revenue reflects in part lower material costs as a percentage of revenue from the elimination of low-to-no margin material pass-through revenue on restructured contracts.
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The following table sets forth our total cost of revenue for the three months ended June 30, 2026 and 2025:
2026 2025
(in thousands)
Material $ 898,001 $ 918,799
Labor 337,914 286,807
Other 95,000 87,162
Total cost of revenue $ 1,330,915 $ 1,292,768
Selling, general and administrative expense. SG&A expense was $75.6 million and $76.0 million for the three months ended June 30, 2026 and 2025, respectively, and was 4.7% and 5.0% of revenue for the three months ended June 30, 2026 and 2025, respectively. The $0.4 million or 0.5% decrease in SG&A expense for the three months ended June 30, 2026 was primarily due to a $3.5 million loss on disposal and professional services fees related to the May secondary offering incurred in the prior year period, partially offset by increased personnel expenses related to bonuses and increased headcount.
Amortization of intangible assets. Amortization of intangible assets was $24.7 million and $24.6 million for the three months ended June 30, 2026 and 2025, respectively.
Interest expense. Interest expense decreased $2.5 million, or 5.8%, from $43.8 million for the three months ended June 30, 2025 to $41.3 million for the three months ended June 30, 2026. This decrease in interest expense was largely driven by a weighted average interest rate of borrowings for the three months ended June 30, 2026 of 6.1% compared to 6.8% for the three months ended June 30, 2025. See “—Liquidity and Capital Resources” for further discussion of our debt and financing activities.
Income tax expense. Income tax expense was $29.9 million for the three months ended June 30, 2026, as compared to $24.0 million for the three months ended June 30, 2025, an increase of $5.9 million, or 24.6%. This increase in income tax expense is primarily due to an increase in pre-tax income which, for the three months ended June 30, 2026, increased to $127.2 million as compared to $91.7 million for the three months ended June 30, 2025. The income tax expense and corresponding estimated effective tax rate for the three months ended June 30, 2026 and 2025 were higher than the statutory rate of 21% primarily due to non-deductible expenses and state taxes. Additionally, for the three months ended June 30, 2025, the effective rate was higher than the statutory rate due to the Global Intangible Low-tax Income (“GILTI”) provision. Effective January 1, 2026, the One Big Beautiful Bill Act (the “OBBBA”) eliminates the requirements to allocate interest expense against Net CFC tested income (“NCTI”, formerly GILTI). As a result, we are utilizing foreign tax credits to offset NCTI.
Comparison of the Six Months Ended June 30, 2026 and 2025
The following table sets forth our consolidated statements of operations data for the six months ended June 30, 2026 and 2025:
Six months ended June 30, Change
2026 2025 $ %
(in thousands, except percentages)
Revenue $ 3,226,550 $ 2,964,531 $ 262,019 8.8 %
Cost of revenue 2,718,400 2,510,626 207,774 8.3 %
Selling, general and administrative expense 147,539 140,477 7,062 5.0 %
Amortization of intangible assets 49,030 48,935 95 0.2 %
Operating income 311,581 264,493 47,088 17.8 %
Interest expense 79,430 87,626 (8,196 ) (9.4 )%
Income before income taxes 232,151 176,867 55,284 31.3 %
Income tax expense 54,943 46,211 8,732 18.9 %
Net income $ 177,208 $ 130,656 $ 46,552 35.6 %
Revenue. Revenue increased $262.0 million, or 8.8%, to $3,226.6 million for the six months ended June 30, 2026 from $2,964.5 million for the six months ended June 30, 2025. The increase was driven by continued demand for our services and products across all three major end markets. The business aviation end market grew 12.4% compared to the prior year period, the commercial aerospace end market grew 8.5% compared to the prior year period, and the military and helicopter end market grew 3.5%, compared to the prior year period.
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Cost of revenue. Cost of revenue increased $207.8 million, or 8.3%, to $2,718.4 million for the six months ended June 30, 2026 from $2,510.6 million for the six months ended June 30, 2025. This increase was primarily driven by higher sales volume, as revenue increased 8.8% compared to the prior year period. The lower year-over-year growth rate in cost of revenue compared to revenue reflects in part lower material costs as a percentage of revenue from the elimination of low-to-no margin material pass-through revenue on restructured contracts.
The following table sets forth our total cost of revenue for the six months ended June 30, 2026 and 2025:
Six months ended June 30,
2026 2025
(in thousands)
Material $ 1,927,606 $ 1,784,029
Labor 601,753 550,850
Other 189,041 175,747
Total cost of revenue $ 2,718,400 $ 2,510,626
Selling, general and administrative expense. SG&A expense was $147.5 million and $140.5 million for the six months ended June 30, 2026 and 2025, respectively, and was 4.6% and 4.7% of revenue for the six months ended June 30, 2026 and 2025, respectively. The $7.0 million or 5.0% increase in SG&A expense for the six months ended June 30, 2026 was primarily due to increased personnel expenses and headcount.
Amortization of intangible assets. Amortization of intangible assets was $49.0 million and $48.9 million for the six months ended June 30, 2026 and 2025, respectively.
Interest expense. Interest expense decreased $8.2 million, or 9.4%, from $87.6 million for the six months ended June 30, 2025 to $79.4 million for the six months ended June 30, 2026. This decrease in interest expense was largely driven by a weighted average interest rate of borrowings for the six months ended June 30, 2026 of 6.1% compared to 6.9% for the six months ended June 30, 2025. See “—Liquidity and Capital Resources” for further discussion of our debt and financing activities.
Income tax expense. Income tax expense was $54.9 million for the six months ended June 30, 2026, as compared to $46.2 million for the six months ended June 30, 2025, an increase of $8.7 million, or 18.9%. This increase in income tax expense is primarily due to an increase in year-to-date pre-tax income. Year-to-date income before taxes for the six months ended June 30, 2026 increased to $232.2 million as compared to $176.9 million for the six months ended June 30, 2025. The income tax expense, and corresponding estimated effective tax rate for the six months ended June 30, 2026 and 2025, of 23.6% and 26.1%, respectively, were higher than the statutory rate of 21% primarily due to non-deductible expenses and state taxes as well as GILTI impact for the six months ended June 30, 2025. Effective January 1, 2026, the OBBBA eliminates the requirements to allocate interest expense against NCTI (formerly GILTI). As a result, we are utilizing foreign tax credits to offset NCTI.
Segment Result
The following table presents revenue by segment, Segment Adjusted EBITDA and Segment Adjusted EBITDA Margin:
Three months ended June 30, Six months ended June 30,
2026 2025 2026 2025
(in thousands, except percentages)
Engine Services
Segment Revenue $ 1,405,084 $ 1,350,677 $ 2,852,228 $ 2,618,990
Segment Adjusted EBITDA $ 204,213 $ 178,509 $ 382,846 $ 352,518
Segment Adjusted EBITDA Margin 14.5 % 13.2 % 13.4 % 13.5 %
Component Repair Services
Segment Revenue $ 194,609 $ 178,266 $ 374,322 $ 345,541
Segment Adjusted EBITDA $ 51,198 $ 51,640 $ 103,599 $ 99,001
Segment Adjusted EBITDA Margin 26.3 % 29.0 % 27.7 % 28.7 %
For a discussion of Segment Adjusted EBITDA, see Note 19 “Segment Information” to our condensed consolidated financial statements included in this Quarterly Report.
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Comparison of the Three Months Ended June 30, 2026 and 2025
Engine Services
Engine Services segment revenue increased $54.4 million, or 4.0%, to $1,405.1 million for the three months ended June 30, 2026, compared to $1,350.7 million for the three months ended June 30, 2025. The increase was driven primarily by continued year-over-year growth across all three major end markets, offset by the elimination of low-to-no margin material pass-through revenues on restructured contracts.
Engine Services Segment Adjusted EBITDA increased $25.7 million, or 14.4%, to $204.2 million for the three months ended June 30, 2026, from $178.5 million for the three months ended June 30, 2025. The increase was driven by volume, productivity gains, and mix. Segment Adjusted EBITDA Margin of 14.5% increased compared to 13.2% in the prior year period driven by productivity gains, the elimination of material pass-through revenue, and mix, offset partially by the continued ramp in the LEAP and CFM56 DFW programs.
Component Repair Services
Component Repair Services segment revenue increased $16.3 million, or 9.2%, to $194.6 million for the three months ended June 30, 2026, compared to $178.3 million for the three months ended June 30, 2025. The increase was driven by strong demand on commercial aerospace products and aeroderivative platforms, which were partially offset by lower revenues on certain military platforms due to timing.
Component Repair Services Segment Adjusted EBITDA decreased $0.4 million, or 0.9%, to $51.2 million for the three months ended June 30, 2026, from $51.6 million for the three months ended June 30, 2025. Segment Adjusted EBITDA Margin of 26.3% decreased compared to 29.0% in the prior year period, driven primarily by negative mix.
Comparison of the Six Months Ended June 30, 2026 and 2025
Engine Services
Engine Services segment revenue increased $233.2 million, or 8.9%, to $2,852.2 million for the six months ended June 30, 2026, compared to $2,619.0 million for the six months ended June 30, 2025. The increase was driven primarily by a strong ramp in our growth platforms, including LEAP and CFM56, along with continued momentum on other key commercial, military, and business aviation platforms.
Engine Services Segment Adjusted EBITDA increased $30.3 million, or 8.6%, to $382.8 million for the six months ended June 30, 2026, from $352.5 million for the six months ended June 30, 2025. The increase was driven by volume and productivity gains, partially offset by mix headwinds from ramping LEAP and CFM56 growth programs which continue to climb the learning curve. Segment Adjusted EBITDA Margin of 13.4% decreased compared to 13.5% in the prior year period driven by mix including the ramp in LEAP and CFM56 DFW.
Component Repair Services
Component Repair Services segment revenue increased $28.8 million, or 8.3%, to $374.3 million for the six months ended June 30, 2026, compared to $345.5 million for the six months ended June 30, 2025. The increase was driven by continued robust demand on key commercial aerospace products, partially offset by softness during the three months ended March 31, 2026 in the military end market from the delayed effect of the U.S. government shutdown in the prior year and timing of delayed revenues during the three months ended June 30, 2026.
Component Repair Services Segment Adjusted EBITDA increased $4.6 million, or 4.6%, to $103.6 million for the six months ended June 30, 2026, from $99.0 million for the six months ended June 30, 2025. Segment Adjusted EBITDA Margin of 27.7% decreased compared to 28.7% in the prior year period, driven by unfavorable mix related to softness on key military programs.
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Liquidity and Capital Resources
The following table summarizes select financial data relevant to our liquidity and capital resources as of June 30, 2026 and December 31, 2025:
As of June 30, As of December 31,
2026 2025
(in thousands)
Cash $ 179,063 $ 289,717
Net working capital (total current assets less total current liabilities) 1,610,193 1,580,122
Total debt (including current portion) (1) 2,325,170 2,214,605
Total stockholders’ equity 2,753,493 2,667,311
(1)Includes unamortized discounts of $17.5 million and $19.2 million as of June 30, 2026 and December 31, 2025, respectively, and unamortized deferred finance charges of $12.3 million and $13.4 million as of June 30, 2026 and December 31, 2025, respectively.
Our principal historical cash requirements have been to fund working capital, capital expenditures and acquisitions and to service our indebtedness. As of June 30, 2026, we had $792.7 million of available liquidity, consisting of $179.1 million cash on hand and, $613.6 million available under the 2024 Revolving Credit Facility. Based on our current operations, we believe that our current sources of liquidity, including cash on hand and availability under the 2024 Revolving Credit Facility, are adequate to meet our cash requirements for the next twelve months and for the foreseeable future. See Note 8, “Long-Term Debt” for further discussion of the Credit Agreement and Senior Secured Credit Facilities. However, our ability to make scheduled payments of principal and interest on our debt, refinance our debt, comply with the financial covenants under our debt agreements and fund our other liquidity requirements will depend on our ability to generate cash in the future, which is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Any future acquisitions, joint ventures or other similar transactions may require additional capital and there can be no assurance that any such capital will be available to us on acceptable terms, if at all.
As of June 30, 2026 and December 31, 2025, our debt outstanding consisted of the following:
As of June 30, As of December 31,
2026 2025
(in thousands)
2024 Term Loan Facilities $ 2,216,250 $ 2,227,500
2024 Revolving Credit Facility 120,000 —
Finance leases 17,751 18,525
Other 967 1,172
2,354,968 2,247,197
Less: Current portion (23,322 ) (23,444 )
Unamortized discounts (17,527 ) (19,170 )
Unamortized deferred finance charges (12,271 ) (13,422 )
Long-term debt $ 2,301,848 $ 2,191,161
As of June 30, 2026, we had the following debt outstanding:
•The 2024 Term Loan Facilities under the Credit Agreement, under which we had outstanding indebtedness in an aggregate principal amount of $2,216.3 million, maturing on October 31, 2031; and
•The $750.0 million 2024 Revolving Credit Facility under the Credit Agreement, under which we had outstanding indebtedness of $120.0 million; and
•$18.7 million in finance leases and other debt.
Credit Agreement Covenant Compliance
The 2024 Revolving Credit Facility is subject to a springing financial covenant, which requires us to maintain a maximum consolidated first lien net leverage ratio that is tested quarterly, at the end of any fiscal quarter, when more than 40% of the 2024 Revolving Credit Facility (excluding, among other things, all letters of credit incurred under the 2024 Revolving Credit Facility (whether or not cash collateralized) and adjusted cash and cash equivalents of the Borrowers and their restricted subsidiaries) is utilized on such date.
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The Credit Agreement contains certain financial reporting covenants that require us to present periodic financial metrics to our lenders. One such financial reporting metric is Consolidated EBITDA as defined in the Credit Agreement. The definition of Consolidated EBITDA utilized for these debt reporting covenants differs from the definition of Adjusted EBITDA presented in this Quarterly Report in that it represents Adjusted EBITDA as further adjusted for certain additional items, as set forth in the Credit Agreement. The table below highlights the differences between Adjusted EBITDA presented in this Quarterly Report and Consolidated EBITDA as defined in the Credit Agreement and presented to our creditors:
Increases from Adjusted EBITDA to Consolidated EBITDA (as defined in the Credit Agreement) Amount
(in thousands)
Six months ended June 30, 2026 $ 2,329
Six months ended June 30, 2025 $ 1,979
Compliance with these covenants is essential to our ability to continue to meet our liquidity needs, as a failure to comply under the Credit Agreement could result in an event of default under the Credit Agreement and permit the senior lenders to accelerate the maturity of our indebtedness. Such an acceleration of our indebtedness would have a material adverse effect on our liquidity, including our ability to make payments on our other indebtedness and our ability to operate our business.
As of June 30, 2026, we were in compliance with the covenants in the Credit Agreement.
Cash Flows
The following table summarizes our cash flows for the six months ended June 30, 2026 and 2025:
Six months ended June 30,
2026 2025
Consolidated statements of cash flows data: (in thousands)
Net cash used in operating activities $ (47,227 ) $ (21,103 )
Net cash used in investing activities (69,552 ) (72,371 )
Net cash provided by financing activities 7,230 81,714
Effect of exchange rate changes on cash (1,105 ) 692
Net decrease in cash (110,654 ) (11,068 )
Cash at beginning of period 289,717 102,581
Cash at end of period $ 179,063 $ 91,513
Six Months Ended June 30, 2026
Net cash used in operating activities for the six months ended June 30, 2026 was $47.2 million. The factors affecting our operating cash flows during the period included net income of $177.2 million and non-cash charges of $102.6 million, partially offset by a $327.0 million change in our operating assets and liabilities. The non-cash charges primarily consisted of $93.5 million in depreciation and amortization and $9.7 million in stock compensation expense, partially offset by a $4.7 million decrease in deferred income taxes. The increase in our net working capital was primarily due to the increase in trade working capital driven by continued growth in the business.
Net cash used in investing activities for the six months ended June 30, 2026 of $69.6 million primarily consisted of $36.6 million of purchases of property, plant and equipment, and $33.3 million of acquisitions, net of cash and other, partially offset by $0.8 million of proceeds from disposal of property, plant and equipment.
Net cash provided by financing activities for the six months ended June 30, 2026 of $7.2 million was primarily attributable to $100.1 million in repurchases of the Company’s common stock and $126.8 million in repayments of long-term debt, offset by proceeds from long-term debt of $235.0 million.
Acquisition of intangible assets, liability incurred, but not paid, for the six months ended June 30, 2026 of $180.8 million is largely attributable to a $180.0 million license fee incurred during the period with one of our OEM partners.
Six Months Ended June 30, 2025
Net cash used in operating activities for the six months ended June 30, 2025 was $21.1 million. The factors affecting our operating cash flows during the period included net income of $130.7 million and non-cash charges of $99.5 million, partially offset by a $251.3 million change in our operating assets and liabilities. The non-cash charges primarily consisted of $97.2 million in depreciation and amortization and $5.9 million in stock compensation expense, partially offset by an $11.6 million decrease in deferred income taxes. The increase in our net working capital was primarily due to the increase in trade working capital driven by continued growth in the business.
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Net cash used in investing activities for the six months ended June 30, 2025 of $72.4 million primarily consisted of $47.3 million of purchases of property, plant and equipment, rental engines and $30.0 million in payment of our licensing agreement acquired during the year ended December 2024.
Net cash provided by financing activities for the six months ended June 30, 2025 of $81.7 million was primarily attributable to the proceeds from long-term debt of $345.0 million, offset by $261.8 million in repayments of long-term debt.
Critical Accounting Estimates
Our financial statements are prepared in accordance with GAAP in the United States. The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires our management to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities, revenue, expenses, and related disclosures during the period. We evaluate our significant estimates on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ significantly from these estimates. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, results of operations, financial condition, and cash flows will be affected.
Our accounting estimates discussed below are important to the presentation of our results of operations and financial condition and require the application of judgment by our management in determining the appropriate assumptions and estimates. These assumptions and estimates are based on our previous experience, trends in the industry, the terms of existing contracts and information available from other outside sources and factors. Adjustments to our financial statements are recorded when our actual experience differs from the expected experience underlying these assumptions. These adjustments could be material if our experience is significantly different from our assumptions and estimates. Below are those policies applied in preparing our financial statements that management believes are the most dependent on the application of estimates and assumptions.
We describe our critical accounting estimates used in the preparation of our consolidated financial statements in "Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates," in our 2025 Form 10-K. We consider the following policies to be our most critical accounting policies because they involve critical accounting estimates and a significant degree of management judgment:
•revenue recognition,
•business combinations,
•goodwill,
•inventories, and
•income taxes.
Recent Accounting Pronouncements
See Note 2 “Summary of Significant Accounting Policies” to our consolidated financial statements included elsewhere in this Quarterly Report for a description of recent accounting pronouncements, if any, including the expected dates of adoption and the anticipated impact on our consolidated financial statements.