Quarterly report [Sections 13 or 15(d)]

INVENTORY

v3.25.1
INVENTORY
3 Months Ended
Mar. 31, 2025
INVENTORY  
INVENTORY

NOTE D — INVENTORY

Following are the major classes of inventory as of the below dates (in thousands):

    

March 31, 2025

    

December 31, 2024

USM

$

136,640

$

118,025

Whole assets

149,719

141,770

Work-in-process

28,003

27,358

MRO and engineered solutions

76,800

68,637

$

391,162

355,790

Less short term

 

(265,617)

 

(224,832)

Long term

$

125,545

$

130,958

The Company recorded inventory scrap loss reserves of $0.8 million and $0.5 million for the three months ended March 31, 2025 and 2024, respectively. Additions to inventory reserves are included in cost of products in the accompanying condensed consolidated statements of operations.

Our allocation of inventory between short term and long term reflects the inventory’s operating cycle, which is longer than one year due to teardown and repair lead times. Inventory expected to be monetized within 18 months, along with work-in-process and inventory used in MRO activities, is reported under current assets.

In April 2024, one of the Company’s leased secondary parts warehouses in Roswell, New Mexico, was destroyed by a fire. Inside the warehouse were various aircraft parts typically sold by the Company as USM. The Company carries insurance covering these parts, with a limit of $100 million and $10,000 deductible. The Company filed a claim for the replacement value of the inventory that was destroyed or rendered not sellable by the fire in the amount of $67.6 million.

The cost basis of the destroyed inventory was $6.0 million. As of March 31, 2025, the Company has collected approximately $34.6 million from insurance companies in connection with this claim, of which $3.7 million was collected during the three months ended March 31, 2025. The recognition of any gain on insurance proceeds exceeding the related loss has been deferred until the claim is fully settled with the insurers. The deferred gain in the amount of $28.6 million as of March 31, 2025 is presented under deferred insurance proceeds in the condensed consolidated balance sheets.