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).

A company’s long-term sales performance can indicate its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Luckily, FTAI Infrastructure’s sales grew at an incredible 33.3% compounded annual growth rate over the last three years. Its growth beat the average industrials company and shows its offerings resonate with customers, a helpful starting point for our analysis.

Long-term growth is the most important, but within industrials, a stretched historical view may miss new industry trends or demand cycles. 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 implies its newer products and services will fuel better top-line performance.

Gross profit margin is a critical metric to track because it sheds light on its pricing power, complexity of products, and ability to procure raw materials, equipment, and labor.

FTAI Infrastructure has bad unit economics for an industrials company, giving it less room to reinvest and develop new offerings. As you can see below, it averaged a 22.6% gross margin over the last five years. Said differently, FTAI Infrastructure had to pay a chunky $77.42 to its suppliers for every $100 in revenue.

FTAI Infrastructure’s gross profit margin came in at 30.3% this quarter, up 8.5 percentage points year on year. FTAI Infrastructure’s full-year margin has also been trending up over the past 12 months, increasing by 5 percentage points. If this move continues, it could suggest a less competitive environment where the company has better pricing power and leverage from its growing sales on the fixed portion of its cost of goods sold (such as manufacturing expenses).

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.

FTAI Infrastructure’s high expenses have contributed to an average operating margin of negative 12.8% over the last five years. Unprofitable industrials companies require extra attention because they could get caught swimming naked when the tide goes out.

On the plus side, FTAI Infrastructure’s operating margin rose by 44.4 percentage points over the last five years, as its sales growth gave it operating leverage. Still, it will take much more for the company to reach long-term profitability.

FTAI Infrastructure’s operating margin was negative 3.7% this quarter.

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.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

FTAI Infrastructure’s demanding reinvestments have drained its resources over the last five 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 $71.53 of cash on fire for every $100 in revenue.

Taking a step back, an encouraging sign is that FTAI Infrastructure’s margin expanded by 71.6 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 $152.7 million of cash in Q1, equivalent to a negative 159% 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 expectations this quarter. We were also excited its EBITDA outperformed Wall Street’s estimates by a wide margin. On the other hand, its revenue missed. Overall, we think this was a decent quarter with some key metrics above expectations. The stock remained flat at $6.11 immediately after reporting.

Updated: July 9, 2025 at 11:30 PM EDT

A common mistake we notice when investors are deciding whether to buy a stock or not is that they simply look at the latest earnings results. Business quality and valuation matter more, so we urge you to understand these dynamics as well.

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 2.7x. Looking at the industrials space right now, FTAI Infrastructure trades at a compelling valuation. If you trust the business and its direction, this is an ideal time to buy.

Wall Street analysts have a consensus one-year price target of $11.67 on the company (compared to the current share price of $6.26), implying they see 86.4% upside in buying FTAI Infrastructure in the short term.