Good day and thank you for standing by. Welcome to the AirSail Corp Q4 2025 earnings conference call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session. To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. I would now like to hand the conference over to your speaker today, Jackie Carlon, Senior Vice President of Marketing.

Good afternoon. I'd like to welcome everyone to Airfield's fourth quarter and full year 2025 earnings call. Conducting the call today are Nick Finazzo, Chief Executive Officer, and Martin Garmendia, Chief Financial Officer. Before we discuss this quarter's results, We want to remind you that all statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements within the meaning of the federal security laws, including statements regarding our current expectations for the business and our financial performance. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties, and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results. Important factors that could cause actual results to differ materially from forward-looking statements are discussed in the risk factors section of the company's annual report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission, SEC, to be filed on March 9, 2026 and its other filings with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those indicated by the forward-looking statements on this call. We'll also refer to non-GAAP measures that we view as important in assessing the performance of our business. A reconciliation of those non-GAAP metrics to the nearest GAAP metric can be found in the earnings presentation materials made available on the Investors section of the AirSail website at ir.airsail.com. With that, I'll turn this all over to Nick Fanazzo.

Nick Fanazzo Thank you, Jackie. Good afternoon, everyone, and thank you for joining us today. I'll begin with an overview of our fourth quarter and full year 2025 results, highlight key operational developments, and then discuss our priorities for 2026 before turning the call over to Martin to review the numbers in greater detail. We finished 2025 on a strong note. Our fourth-quarter adjusted EBITDA increased $2.2 million, or 17.1%, to $15.2 million, compared to $13 million in the fourth quarter of 2024. Fourth-quarter revenue was $90.9 million, a 4% decrease from the prior year period. Excluding flight equipment sales, which tend to be volatile quarter to quarter, fourth quarter revenue actually increased 9.8%, reflecting continued growth across our component MROs, USM, and leasing. Sales of our engineered solutions product AirSafe also increased as operators began upgrades in advance of a Federal Aviation Administration 2026 compliance deadline for a fuel quantity indication system airworthiness directive related to fuel tank safety systems. You'll hear me refer to this as the FQIS-AD. This overall growth has improved profitability and provides more consistency in our quarter-over-quarter performance. This also led to improvement in our adjusted EBITDA, supported by stronger operating performance and the continued benefits of the efficiency initiatives we implemented in early 2025. For the full year, we generated $333.335.3 million in total revenue, a decrease of $9.8 million, or 2.8% year-over-year, primarily due to fewer flight equipment sales. Excluding flight equipment sales, full-year revenue increased 18.7%, driven by stronger USM demand, higher average lease rates and asset yields, and robust growth in sales at our component MROs and of air-safe products. Full-year adjusted EBITDA also increased $12.8 million to $46.1 million, up 38.2% year-over-year, reflecting higher volumes, favorable mix, and margin and cost benefits from our efficiency program. During the fourth quarter of 2025, we acquired $15.4 million of feedstock, bringing full-year acquisitions to $99.6 million. While the feedstock environment remains constrained, we have been steadfast in our disciplined acquisition pricing and believe opportunities will improve as OEM production normalizes. Our win rate in the quarter was 4.8% versus 17.2% in the fourth quarter of 2024. We disclosed this number to provide investors with a measure of how conservative we are when buying feedstock in a hyper-competitive environment, although a quarter-over-quarter comparison may not fully reflect this discipline. Year-over-year, our win rate was 6% in 2025 versus 8.6% in 2024. Regarding our Boeing 757 passenger-to-freighter converted aircraft, we ended 2025 with two on-lease and five aircraft we converted remaining in inventory. We are actively engaged in discussions with potential customers. Increased demand for cargo and the FAA's recent grounding of the MD-11 freighter fleet continue to make us bullish. We'll deploy all our 757 freighters in 2026 with two of these aircraft under letters of intent at year end. During 2025, we made several strategic adjustments across our on-airport MRO facilities. In Goodyear, we transitioned from an expiring contract to new business at higher rates, resulting in improved profitability. In Roswell, we shifted our focus to storage and end-of-life fleet activities, largely offsetting lost heavy check margin. Our on-airport MRO expansion project in Millington, Tennessee is now fully operational and productive, with heavy check work that began in December following the award of a multi-year maintenance agreement with a regional airline, positioning the facility to significantly contribute to profitability in 2026. Regarding our component MRO facility expansion initiatives, we moved into our new 90,000-square-foot Aerostructures facility in January 2026. With existing customer approvals and more underway, we expect Aerostructures volumes to ramp up throughout 2026. Our pneumatic expansion project is also progressing with all construction now complete and we expect this additional capability will come online by the end of the first quarter. As these three expansion initiatives begin to contribute in 2026, we remain confident in their revenue potential. While we previously communicated an incremental annualized opportunity of approximately 50 million, updated assessments indicate that the full capacity potential is likely to exceed that original estimate. As we ramp up in 2026, we will provide an update on the progress of these projects as contributions from this additional capacity and capability are realized. We're also proud to announce that our landing gear shop received FAA approval to overhaul Boeing 737 MAX and 787 landing gear, which supplements our existing authority to overhaul gear for 737 Classic and NG series, 757, 767, and the Airbus A320 series of aircraft. This expansion to include MRO for new technology flight equipment allows us to better support our expanding customer base as mid-technology flight equipment is eventually replaced. Looking ahead to 2026, we're mitigating earnings volatility by growing the more recurring and predictable parts of our business. These initiatives include filling capacity at all our on-airport MRO facilities, growing USM sales, generating significant additional component MRO revenue with our available expanded capacity and new capabilities, increasing the number of assets deployed in our lease pool, and continued strength in air safe revenue as the FAA's November 2026 deadline to comply with the FQIS-AD comes due. Finally, we remain committed to the success of our revolutionary enhanced flight vision system, AirWare, by marketing this to select interested customers, both commercial and governmental. Concurrently, we are taking steps to educate our U.S. regulators and the agencies responsible for the safety of our air transportation system on how the unique features of airware will improve safety and provide economic efficiency to the industry. On the cost side, the enhanced efficiency programs we implement last year have allowed us to streamline workflow at each facility with a goal to better match facility scheduling with volume while opening available capacity at other facilities to maximize profitability. Taken together, we expect 2026 to be another growth year for AirSale on both the top and bottom lines. Our strong balance sheet will support increased USM sales and leasing, thereby providing improving recurring revenue from our asset management segment. Customer expansion, increased capacity, and efficiency initiatives have put us in a position with all our MROs to see significant incremental revenue progression quarter over quarter. I want to conclude by thanking our employees for their dedication and hard work in meeting our growth of initiatives in 2025, and our investors for their continued support as we work on maturing the business and reducing volatility. We look forward to updating you on our progress throughout 2026. With that, I'll turn the call over to our Chief Financial Officer, Martin Garamendia.

Thanks, Nick, and good afternoon, everyone. I'll walk through some additional details on our fourth quarter and full-year financial results, then touch on cash flow and liquidity, and close with our outlook for 2026. Fourth quarter revenue was $90.9 million, which includes $20.9 million of flight equipment sales, consisting of four engines. This compares to $94.7 million in the fourth quarter of last year, which included $31 million of flight equipment sales, consisting of six engines. As we note each quarter, flight equipment sales can vary meaningfully from period to period. As a result, we believe performance is best assessed over time with a focus on feedstock acquisition, monetization of those investments, and profitability trends. Fourth quarter revenue for asset management declined approximately 11.1 percent year-over-year to $56.9 million due to fewer flight equipment sales. Excluding flight equipment sales, revenue increased 9.1% driven by continued strength in USM and an expanded lease pool. For the full year, asset management revenue was $211.6 million down 1.8% year-over-year. Excluding flight equipment sales, segment revenue increased 47.3%, supported by strong inventory levels and demand that allowed us to grow our USM and Turning to TechOps, fourth quarter revenue increased 10.7% to $34 million, driven by higher sales in our Aerostructures and Landing Gear MROs as we have been successful in winning new contracts. A focus on higher margin opportunities and the efficiency measures taken in early 2025 allowed us to further improve our profitability and set the foundation to grow our on-airport MROs beyond historical levels and with a greater profit profile in 2026 and beyond. TechOps was also strengthened by strong demand from our component MROs and continued momentum in Airsafe products as customers prepare for the 2026 compliance deadline. For the full year, TechOps revenue declined 4.5% to $123.7 million, primarily due to lower on-airport MRO activity. However, improved mix and efficiency initiatives improved gross margin for the year to 25.6% compared to 16.6% in the prior year period, due to favorable mix and benefits of the efficiency measures taken in early 2020. Selling general and administrative expenses for the year were $90 million, including $4.9 million of non-cash equity-based compensation, compared to $94.2 million last year, which included $4.3 million payroll-related expenses from the efficiency measures taken in 2025. Income from operations was $15.8 million for the full year of 2025 compared to $9.7 million in the prior year. On an adjusted basis, net income for the year was $15.8 million compared to adjusted net income of $9.5 million last year. Adjusted diluted earnings per share for the year was 33 cents compared to adjusted diluted earnings per share of 18 cents in 2024. Adjusted EBITDA for the year was 46.1 million compared to 33.4 million in the prior year period which benefited from a higher margin product mix as well as improved overall margins and lower expenses. Year-to-date cash used in operating activities was 23 million primarily related to seed stock acquisitions as we continue to make strategic investments to grow the asset management segment we ended the year with 71.6 million of total liquidity including 4.4 million in cash and 67.2 million of revolver availability on our 180 million asset-backed revolver which can be expanded to an additional 200 million sorry to an additional 20 million this available liquidity and our strong inventory position to provide us with the fuel to continue to grow our business into 2026. Looking ahead, as we shift our emphasis away from trading and toward expanding the more recurring core elements of our business, we expect both full-year revenue and profitability to increase relative to 2025. We anticipate steady incremental improvements as new revenue streams ramp up and their efficiency initiatives continue to gain traction. With that operator, we're ready to take questions.

As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again.

One moment for questions.

Our first question comes from Michael Ciarmole with Truist. You may proceed.

Hey, evening, guys. Thanks for taking the questions. I guess, Nick or Martin, do you have a sort of a goal in mind of, you know, kind of how much material feed stock you think you can buy? I know you're being pretty conservative and it's still a tight market out there. Just trying to get a sense of, you know, what do you think you can close and out of maybe the other part, out of what you have on hand right now, you know, do you think you can move all of that product this year?

As far as feedstock, this is Nick speaking. Thanks for the question, Mike. As far as feedstock purchases, we anticipate a lower level of feedstock purchases this year than we did last year. And why is that? The market is just hyper-competitive at this point. The pricing that we see, you know, the reason that I mentioned our win rate, not that it's materially different from last year, it's just under 10%, which means that we lose, you know, 9 out of 10 deals that we bid on, not to mention the hundreds of deals that we don't bid on at all because we just don't think we would be competitive. and because of the extreme competition in the market for, I candidly believe, less informed people who don't understand how difficult it is to make money buying used flight equipment and then parting it out and then finding a way to extract value out of it, that we see people buying stuff at prices, and I've said this many quarters in a row, at prices that are you know well beyond what we believe we can make in total margin based on what they have to have to pay for to win the deal so we were you know we will continue to be disciplined on our on our buy side and look I've been doing this for a long time this isn't the first company I've been with or that I've been that I founded that buys it that has bought in the aftermarket and in my prior experience lots of money moves into the space uneducated investors don't know what they're buying don't know how to properly monetize it they spend too much money and then eventually they go away and so we have to remain disciplined because overpaying kills companies so as far as what do we think we could do this year we think we can do if last year we did a hundred million we don't think we'll do a hundred million this year but it could happen and as far as as far as monetizing the existing inventory that we have I may defer a little bit of that to Martin but we have ample inventory to continue to grow to grow our business without buying as much as we did last year I mean I don't know if Martin if you want to add any more color to that yeah absolutely I was gonna say we're coming in to starting 2026 with about 364 million dollars of inventory and that includes about a hundred and almost roughly 150 million dollars that's ready to be deployed in the USM of channel as well as almost 118 million dollars

that's still in whole assets that we can put as USM or continue to grow our leasing portfolio so on a positive even as we're being very prudent as we always have been in deploying capital we have more than enough to continue our growth trajectories and that'll increase our liquidity positions so when the opportunities are right we'll continue to deploy capital okay okay got it that's really helpful and then just on that growth trajectory i think the press release mentioned you know some of the storage uh revenues may have been benefiting from gtf if i if i think about kind of gtf revenues and as that normalizes and then you've got the the air safe uh 26 deadline which you know we kind of always see this dynamic across various end markets and industries that that probably is going to create a big uptick this year but then maybe backfilling that should we think about you know gtf normalization maybe air safe kind of how you backfill that maybe some of the new capacity coming online and I guess I guess I'm thinking you know into 27 too as maybe those two trends normalize a bit with the GTF and air safe is that maybe the right way to think about it well not 100% sure I got your question but with regard to the GTF situation we don't see that normalizing in 26 because we're hearing that that you know before prac can get the engines back to the aircraft that is going to drag into 27 so the opportunity

for us isn't so much in the gtf storage as it is in returning the aircraft that have been parked now for for several years and returning those to service that those aircraft require heavy checks and we have i don't know how many 70 80 airplanes sitting in goodyear yeah and roswell so we've got We have got a lot of GTF-powered airplane sitting in our facility in Goodyear and Roswell. The Goodyear ones are going to require return to service if they're not parted out, believe it or not. We are staying to part out of a relatively brand-new, several-year-old A320 NEOs. But the opportunity for us is really yet to come. It's not through storing these airplanes and pulling engines off and putting engines on. It's that. It's helping. And at this point, because of the volume of it, it kind of reminds me of the COVID situation where we had 500 airplanes parked. And although you wouldn't think you'd make much money doing storage, you're removing engines, putting engines on, putting airplanes into storage, taking airplanes out of storage, and then prepping them for the next lessee. you know that with that number of airplanes in one facility that really creates a capacity issue not so much a you know a demand issue so the demand is there we see that that will continue through 26 and 27 as we begin doing return to service work on the aircraft that are parked and are getting engines that are coming back from from Pratt now the other part of your question the part of your question was okay yeah just arrow where does that create a big headwind next year as everybody preps for the the deadline later this year with regard to it's air safe actually with our guard sorry yeah with regard to air safe you know the the greatest amount of sales are going to happen this year I mean we have a we have a backlog that already exceeds last year all sales for all of last year and then we're still in the first quarter as we it doesn't mean that it goes away altogether but it will be significantly diminished now so that we're sitting around waiting to sell these and then we have nothing else to sell we are working on other engineered products and STC's that airlines have asked us about to say hey can you make this product for us can you help us resolve this technical issue so you know we are our engineering group is working on on airline demand for engineering products or engineered products that they need to keep their fleet flying because they're not getting they're not getting it's not getting properly addressed by the OEMs that are producing those components so you know that is an active business that we are pursuing now which will help us with our customers you know not to mention that we continue to look for opportunities to deploy our airware product not just across the 737 but we're talking across multiple other platforms including 757 and even ATR 72 got it okay good stuff guys very helpful thank you okay Mike thank you thank you and I'm not showing any further questions at this time I would not like to turn the call back over to Nick Fanazo for any closing remarks.

Okay, thank you very much. Thanks again.

So, you know, as we've explained and mentioned the last quarter, even with just a few whole asset trades, no airware sales and no incremental revenue from our facility expansion projects in the fourth quarter, our operating margins have continued to grow. I believe this validates our unique, multidimensional, and fully integrated business model. And as our businesses continue to develop, will put us in an excellent position to achieve substantial growth in the years ahead. As always, I want to thank Mike Ciaramoli for his questions, which I believe provides additional insight into our business model and progress to date. I very much appreciate your interest in listening to our call today and look forward to bringing you up to date during our next earnings call. I wish you all a good evening. Thank you.

Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.