Quarterly report [Sections 13 or 15(d)]

BUSINESS SEGMENTS

v3.25.1
BUSINESS SEGMENTS
3 Months Ended
Mar. 31, 2025
BUSINESS SEGMENTS  
BUSINESS SEGMENTS

NOTE L — BUSINESS SEGMENTS

Our Chairman and Chief Executive Officer is our Chief Operating and Decision Maker (“CODM”). We report operational data to our CODM at the segment level, which the CODM uses to evaluate performance and allocate resources based on gross profit and income (loss) from operations by segment. While the Company believes there are synergies between the two business segments, they are managed separately because they have different risks and opportunities. The two reportable segments are:

Asset Management Solutions — comprised of activities to extract value from strategic asset acquisitions through leasing, trading, or disassembling for product sales.
TechOps — comprised of MRO activities and product sales of internally developed engineered solutions and other serviceable products.

The Asset Management Solutions segment provides leasing solutions of Flight Equipment to passenger and cargo operators worldwide. Assets considered to be at or near the end of their useful lives, supplied by our leasing portfolio or acquisitions, are analyzed for return maximization to assess whether they will be sold as whole assets or disassembled and sold as individual spare parts and components.

The TechOps segment consists of aviation maintenance and services business that provide maintenance support for aircraft and aircraft components, and sale of engineered solutions. Our MRO business also engages in longer term

projects such as aircraft modifications, aircraft cargo conversions, and aircraft storage. The segment also includes MRO of landing gear, thrust reversers, and other components. Cost of sales consists principally of the cost of product, direct labor, and overhead. Our engineered solutions revenue consist of sales of products internally developed as permitted by Supplemental Type Certificates issued by the FAA. These products are proprietary in nature and function as non-original equipment manufacturer solutions to airworthiness directives and other technical challenges. In order to develop these products, we engage in research and development activities. Our TechOps division will engage in the repair and sale of used serviceable materials through its ability to overhaul existing inventory.

The accounting policies for the segments are the same as those described in Note B. Our reportable segments are aligned principally around the differences in products and services. Gross Profit is calculated by subtracting cost of sales from revenue; income (loss) from operations is calculated by subtracting unapplied operating expenses and selling, general and administrative expenses. The assets and certain expenses related to corporate activities are not allocated to the segments. The segment reporting excludes the allocation of interest expense, interest income, other income (expense), net, change in fair value of warrant liability and income tax expense (benefit).

Selected financial information for each segment is as follows (in thousands):

Three Months ended March 31, 

2025

    

2024

Revenue

 

Asset Management Solutions

 

Aircraft

$

7,350

$

16,338

Engine

 

31,863

 

42,924

 

39,213

 

59,262

TechOps

 

 

MRO services

 

21,153

 

25,848

Product sales

 

5,410

 

5,430

 

26,563

 

31,278

Total

$

65,776

$

90,540

Three Months ended March 31, 

2025

    

2024

Cost of sales and operating expenses

 

 

Asset Management Solutions

 

 

Aircraft

$

5,774

$

11,501

Engine

 

21,390

 

25,109

 

27,164

 

36,610

TechOps

 

 

MRO services

 

17,164

 

20,932

Product sales

 

3,483

 

4,202

 

20,647

 

25,134

Total

$

47,811

$

61,744

Three Months ended March 31, 

2025

    

2024

Gross profit

 

 

Asset Management Solutions

 

 

Aircraft

$

1,576

$

4,837

Engine

 

10,473

 

17,815

 

12,049

 

22,652

TechOps

 

 

MRO services

 

3,989

 

4,916

Product sales

 

1,927

 

1,228

 

5,916

 

6,144

Total

$

17,965

$

28,796

The following table reports segment operating income (loss) and reconciles (loss) income from operations to (loss) income before income tax provision for the three months ended March 31, 2025 and 2024 (in thousands):

    

Three Months ended March 31, 2025

Three Months ended March 31, 2024

Asset Management Solutions

TechOps

Total

Asset Management Solutions

TechOps

Total

Gross Profit

$

12,049

$

5,916

$

17,965

$

22,652

$

6,144

$

28,796

Operating expenses

 

(3,650)

(2,092)

(5,742)

 

(3,275)

(2,887)

(6,162)

Selling, general and administrative expenses

 

(3,736)

(5,046)

(8,782)

 

(3,663)

(5,167)

(8,830)

Segment income (loss) from operations

$

4,663

$

(1,222)

$

3,441

$

15,714

$

(1,910)

$

13,804

Other corporate expenses (1)

 

(10,088)

 

(9,141)

(Loss) income from operations

 

(6,647)

 

4,663

Other (expenses) income:

Interest expense, net

(1,181)

(935)

Other income, net

1,888

169

Change in fair value of warrant liability

(57)

1,979

(Loss) income before income tax provision

$

(5,997)

$

5,876

(1)Other corporate expenses include other unapplied payroll expenses and benefits, telecommunications and IT support, professional fees, office rent, and depreciation, among others.

March 31, 

December 31, 

    

2025

    

2024

Total Assets

 

  

 

  

Asset Management Solutions

$

424,925

$

383,336

TechOps

207,188

 

205,655

Corporate

13,940

 

15,732

$

646,053

$

604,723

Three Months ended March 31, 

    

2025

    

2024

Total Depreciation and Amortization Expense

 

  

 

  

Asset Management Solutions

$

3,348

$

1,562

TechOps

1,304

 

959

Corporate

291

 

258

$

4,943

$

2,779

Total Capital Expenditures

Asset Management Solutions

$

2,321

$

3,036

TechOps

1,172

 

288

Corporate

46

 

250

$

3,539

$

3,574

Intersegment sales include amounts invoiced by a segment for work performed for another segment. Amounts are based on actual work performed or products sold and agreed-upon pricing which is intended to be reflective of the contribution made by the supplying business segment. All intersegment transactions have been eliminated upon consolidation. Intersegment revenue for the three months ended March 31, 2025 and 2024, is as follows (in thousands):

    

Three Months ended March 31, 

2025

    

2024

Asset Management Solutions

$

423

$

437

TechOps

 

3,094

 

5,578

Total intersegment revenue

$

3,517

$

6,015