FTAI Infrastructure (FIP)

Infrastructure investment and operations firm FTAI Infrastructure (NASDAQ:FIP) missed Wall Street’s revenue expectations in Q1 CY2025, but sales rose 16.5% year on year to $96.16 million. Its GAAP profit of $0.89 per share was significantly above analysts’ consensus estimates.

Company Overview

Spun off from FTAI Aviation in 2021, FTAI Infrastructure (NASDAQ:FIP) invests in and operates infrastructure and related assets across the transportation and energy sectors.

Areas like the energy transition and emission reduction are thematic and front of mind today. This can be a double-edged sword for the energy products and services industry. Those who innovate and build new expertise can jolt demand while those who cling to legacy technologies or fall behind in the trending areas could see their market shares diminish. Bigger picture, energy products and services companies are still at the whim of construction and infrastructure project volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates.

Public competitors in the infrastructure sector include Brookfield Infrastructure (NYSE:BIP), Macquarie Infrastructure (NYSE:MIC), and AECOM (NYSE:ACM).

Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Thankfully, FTAI Infrastructure’s 33.3% annualized revenue growth over the last three years was incredible. Its growth beat the average industrials company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within industrials, a stretched historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. FTAI Infrastructure’s annualized revenue growth of 8.7% over the last two years is below its three-year trend, but we still think the results were respectable.

This quarter, FTAI Infrastructure’s revenue grew by 16.5% year on year to $96.16 million but fell short of Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 78.2% over the next 12 months, an improvement versus the last two years. This projection is eye-popping and suggests its newer products and services will spur better top-line performance.

All else equal, we prefer higher gross margins because they usually indicate that a company sells more differentiated products and commands stronger pricing power.

FTAI Infrastructure has bad unit economics for an industrials business, signaling it operates in a competitive market. As you can see below, it averaged a 21.9% gross margin over the last four years. That means FTAI Infrastructure paid its suppliers a lot of money ($78.14 for every $100 in revenue) to run its business.

Although FTAI Infrastructure was profitable this quarter from an operational perspective, it’s generally struggled over a longer time period. Its expensive cost structure has contributed to an average operating margin of negative 1.8% over the last four years. Unprofitable industrials companies require extra attention because they could get caught swimming naked when the tide goes out. It’s hard to trust that the business can endure a full cycle.

On the plus side, FTAI Infrastructure’s operating margin rose by 80.2 percentage points over the last four years, as its sales growth gave it operating leverage. Still, it will take much more for the company to show consistent profitability.

This quarter, FTAI Infrastructure generated an operating profit margin of 125%, up 137.6 percentage points year on year. The increase was solid and shows its expenses recently grew slower than its revenue, leading to higher efficiency.

We track the change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Although FTAI Infrastructure’s full-year earnings are still negative, it reduced its losses and improved its EPS by 12.1% annually over the last two years.

In Q1, FTAI Infrastructure reported EPS at $0.89, up from negative $0.54 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects FTAI Infrastructure to improve its earnings losses. Analysts forecast its full-year EPS of negative $1.32 will advance to negative $0.84.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

FTAI Infrastructure’s demanding reinvestments have drained its resources over the last four years, putting it in a pinch and limiting its ability to return capital to investors. Its free cash flow margin averaged negative 71.5%, meaning it lit $71.48 of cash on fire for every $100 in revenue.

Taking a step back, an encouraging sign is that FTAI Infrastructure’s margin expanded by 71.7 percentage points during that time. In light of its glaring cash burn, however, this improvement is a bucket of hot water in a cold ocean.

FTAI Infrastructure burned through $152.2 million of cash in Q1, equivalent to a negative 158% margin. The company’s cash burn increased from $17.14 million of lost cash in the same quarter last year.

We were impressed by how significantly FTAI Infrastructure blew past analysts’ EPS and EBITDA expectations this quarter. On the other hand, its revenue missed significantly. Still, we think this was a decent quarter. The stock remained flat at $4.66 immediately after reporting.

Updated: May 19, 2025 at 11:18 PM EDT

We think that the latest earnings result is only one piece of the bigger puzzle. If you’re deciding whether to own FTAI Infrastructure, you should also grasp the company’s longer-term business quality and valuation.

We think FTAI Infrastructure is a solid business. First off, its revenue growth was exceptional over the last three years and is expected to accelerate over the next 12 months. And while its declining EPS over the last three years makes it a less attractive asset to the public markets, its rising cash profitability gives it more optionality. On top of that, its expanding operating margin shows the business has become more efficient.

FTAI Infrastructure’s EV-to-EBITDA ratio based on the next 12 months is 2.2x. Looking at the industrials space right now, FTAI Infrastructure trades at a compelling valuation. If you’re a fan of the business and management team, now is a good time to scoop up some shares.

Wall Street analysts have a consensus one-year price target of $11.33 on the company (compared to the current share price of $5), implying they see 127% upside in buying FTAI Infrastructure in the short term.

Want to invest in a High Quality big tech company? We’d point you in the direction of Microsoft and Google, which have durable competitive moats and strong fundamentals, factors that are large determinants of long-term market outperformance.

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