Magellan Aerospace Reports Second Quarter 2025 Financial Results
Magellan Aerospace Corporation (“Magellan” or “the Corporation”) has announced its financial results for the second quarter of 2025, with all figures expressed in Canadian dollars unless otherwise noted. The quarter showcased a mix of revenue growth, strategic contract wins, and continued investment in long-term programs, while also facing certain cost pressures and foreign exchange impacts.
1. Company Overview
Magellan Aerospace is a diversified supplier to the global aerospace industry, producing advanced aeroengine and aerostructure components, along with specialized products for defence and space markets. The Corporation’s operations are consolidated under one primary segment—Aerospace—covering the design, manufacture, repair, and sale of systems and components for both civil and defence aviation.
In the first half of 2025, 63.5% of Magellan’s revenue came from commercial aerospace markets, with the remaining 36.5% from defence-related contracts. The company also supports the aftermarket through spare parts supply and repair and overhaul services.
2. Strategic Business Updates
The second quarter saw several important contract and program developments:
- F414-GE-400K Engine Components – On April 28, 2025, Magellan amended a long-term Revenue Sharing Agreement with GE Aerospace to include production of major components for the Korean KF-21 fighter jet’s F414-GE-400K engine. Under the deal, Magellan facilities in Mississauga, Ontario, and Winnipeg, Manitoba, will serve as the sole-source provider of F414 engine frames for multiple programs, including the KF-21, US Navy spares, and Gripen F414-39E engines, over a seven-year period.
- Pratt & Whitney Canada Contracts – On April 30, 2025, Magellan announced new agreements and extensions with Pratt & Whitney Canada, an RTX business. These agreements cover complex machined components to be delivered through 2034 from Magellan’s plant in Tumakuru, Karnataka, India.
- Share Buyback Renewal – On June 11, 2025, the company renewed its normal course issuer bid (NCIB), allowing for the purchase of up to 2,856,929 common shares through June 12, 2026.
- Credit Facility Extension – On June 24, 2025, Magellan extended its $75 million bank credit facility by two years, now maturing on June 30, 2027.
3. Financial Performance – Second Quarter 2025
Revenue: $249.8 million, up $6.9 million from $242.9 million in Q2 2024.
- Canada: Revenue increased 14.9%, driven by higher casting product sales. The prior year’s comparable period was negatively affected by a work stoppage at Magellan’s Canadian casting facility.
- United States: Revenue grew 1.0% due to higher engine shaft sales and favorable currency impacts, partially offset by lower single-aisle aircraft program sales. On a currency-neutral basis, revenue fell slightly by 0.1%.
- Europe: Revenue declined 8.4%, primarily due to weaker demand for single-aisle and widebody aircraft parts and reduced maintenance, repair, and overhaul (MRO) activity. Currency-neutral revenue fell 14.8%.
Gross Profit: $33.3 million (13.3% of revenue), up from $26.6 million (11.0%) in Q2 2024. Gains came from increased volumes, contract adjustments, and a favorable product mix, offset by higher material and supply costs.
Net Income: $5.4 million, compared to $7.4 million last year.
Expenses: Administrative and general expenses rose 19.1% to $17.7 million due to higher salaries, benefits, IT investments, and a one-time redundancy charge of $1.0 million.
Foreign Exchange: The quarter saw a $6.3 million foreign exchange loss, compared to a $0.2 million gain in Q2 2024.
Interest Expense: $0.5 million, down $0.6 million from last year, thanks to higher cash balances and reduced debt.
Income Tax: $3.3 million, with an effective tax rate of 38.4%, up from 25.0% in 2024, reflecting changes in income mix across jurisdictions.
4. EBITDA and Non-IFRS Measure
EBITDA for Q2 2025 was $21.1 million, slightly below the $21.9 million recorded last year. The decrease was mainly due to higher administrative costs and foreign exchange losses, partially offset by improved gross profit.
5. Liquidity and Capital Resources
Magellan ended the quarter with strong liquidity, supported by cash on hand, operating cash flow, and available credit facilities.
- Operating Cash Flow: $25.8 million, up from $14.5 million in Q2 2024, driven by favorable changes in working capital, including reduced accounts receivable and contract assets.
- Investing Activities: $8.3 million cash used, primarily for property, plant, equipment, and intangible assets.
- Financing Activities: $9.0 million cash provided, down from $23.5 million last year, due to reduced bank borrowings, partly offset by higher dividends.
Capital Commitments: As of June 30, 2025, Magellan had $29.5 million in capital asset purchase commitments.
6. Dividends and Share Repurchases
In Q1 and Q2 2025, Magellan declared quarterly cash dividends of $0.025 and $0.05 per share, paying a total of $4.3 million. A further $0.05 per share dividend was declared for payment on September 29, 2025.
Under the NCIB, Magellan repurchased 400 shares for $4,000 in the first half of 2025, compared to 87,242 shares for $0.7 million in the same period last year.
7. Foreign Exchange Risk Management
Magellan actively manages currency risk through forward contracts. As of June 30, 2025, the company held USD $4.0 million and GBP £23.5 million in forward contracts, with a derivative asset value of under $0.1 million. Mark-to-market adjustments on these contracts resulted in a $1.6 million gain (net of taxes) in other comprehensive income.
