FTAI - Earnings call transcript Q3 2020

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Q3 2020 Fortress Transportation and Infrastructure Investors LLC Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mr. Andreini. Alan please Sir, ahead. go you, Thank

Alan Andreini

I Thank all Earnings to you like the you, Call. Fortress XXXX operator. to Quarter Transportation welcome Third would and Infrastructure's

Joining Chief Adams, Christopher, me Chief are and our Officer; Scott our Officer. Financial here today Executive Joe

is investor to open listen-only have you note press release we if that webcast. Also, to please you've in not being this and on We presentation and our is website, the our public mode an which so. call posted download encourage already done

In including of non-GAAP directly call to addition, be discussing measures financial some most supplement. can we will FAD. be found during the earnings in comparable the those today, GAAP measures reconciliations the The measures

certain to the release I forward-looking be call regarding regarding disclaimers earnings. statements, our may We will over the future turn including out in forward-looking with encourage results. from quarterly materially like and report to and press statements statements, are Before financial you uncertain non-GAAP factors that nature, review the made filed our by statements contained actual SEC. risk presentation differ their These I in review measures today investor Joe, would the to and to and point

to call turn I Now like would over to the Joe.

Joseph Adams

based $X.XX start, of To the per and as shareholder a share our announce be I'm public on Alan. you, dividend November our XX. will Thank on company inception. record since XXth to pleased XXnd XX, November The dividend date consecutive of paid dividend

EBITDA in XXXX $XX.X sales, QX $XX.X million of QX for the QX or items, On and QX On million EBITDA QX $XX.X basis, in XXXX available EBITDA QX in XXXX XXXX million FAD million million FAD, XXXX. million XXXX. $XXX to in turn and sale or from million XXXX $XX.X was million to funds and QX in million XXXX normalized a us $XX.X $XX.X nonrecurring key excluding the and QX $XX.X QX proceeds was FAD Adjusted versus are distribution. QX and losses XXXX. compared in let's $XX.X basis, numbers. the was adjusted adjusted $XXX.X XXXX compared a $XX.X $XX.X XXXX QX to of XXXX metrics was to gains normalized Now The in QX million. compared million for and for excluding

was from During and the million $XX.X million number third other. portfolio, our and $XX.X FAD $XXX,XXX the aviation business from comprised quarter from corporate our million $XX.X negative infrastructure leasing of negative

business work that hours flattened good and The to have Now battle the let's fleet continue we cargo short and pretty to a the came on expectations. aviation little Financially a of turn continued passenger every to shine. our virus and aviation. effective continue was April vaccine. quarter. QX countries month recovery an trend for Passenger out, our so we to since flight improved economies expect as towards up

engine utilization As is is up we XXXX. fleet visits with ended now with approximately expected, green engaging several on consumed. shop engine cut are as our maintenance We the for all to XX% available programs until restoration demand set dramatically for airlines leasing types up picking time optional quarter leasing for airlines and engine

XX%. $XXX of generate investor existing EBITDA should Looking fleet our to million or capital approximately target of total billion annum XXXX, $X.X our approximately per of of

engines extremely of and annum. EBITDA XX, $XX to attractive ample of we with on $XXX And of cash XX% capitalize engines that have also generate million approximately in incremental liquidity return million totaling bringing in would approximately September We and million XXXX LOI capital. We at targeting revolver, million approximately higher total $XXX are EBITDA related $XXX investments investment under a to annum a or approximately these per million and XX per aviation undrawn investment aircraft $XXX opportunities. EBITDA new have expect to of CFM XX

giving exciting We owned last FTAI fleet with will Martin, and Montréal Lockheed in providing with Martin to services FTAI visits in shop numerous provide XX week benefits should while supply a the growing which an steady to maintenance airlines, managing partnership Financially entered of their for CFM facility. and into our materialize partnership XXXX. of early Lockheed third-party also this and advantages soon benefits impressive

approximately XX our to and excess owned we visit save Firstly, per XXXX. XXXX or per with of represents savings XXX in a annum fleet $XX shop shop expect in in visits $XXX,XXX million engines

goal of XXXX. of setting approximately by to engine out Secondly, engines the million $XX equivalent and $X monetize a optimize our is part additional in the of per for or engines XX module up million the can an factory, we gain

to plan we all-time already many programs with time spares of begun for cash negotiations. we've an optimal. programs with establish and discussions which our timing airlines, at CFM high, is down, available green Lastly, With conservation XX and running airlines

or into engines XXX annual visits. with contracts, shop FTAI a three our the to providing airline innovative and enter savings new targeting of are set programs excess with practices due in per module for also profit airlines goal of visit airline significantly a with to million while our is With $X the Our factory two approach. to XX of quicker current we churn for that for times shop XXXX covering

million joint exciting per our very incremental Also $XXX generate in advanced our annum in venture. total, is XXXX. engine starting goal So an is to repair

very million per approximately us all a of the As be approval available commercially and visit in is the for to $X first if will final to position parts, million, have and million should shop and give be products soon. will over these a the us savings proprietary visit $X.X reminder, stage and five for we shop when $X average perform

Exxon the Now turning to perspective projects, Aramco, Saudi the both from deals major and a Motiva other owned commercial negotiations The Jefferson continues pipeline and creditworthy significant and construction Jefferson big news third three at from parties. be on infrastructure. progress made with by around to connection management

two which or a major connect completion As the and are now months two in North from America. three will refineries terminal operation, the Jefferson largest reminder, these with three hardwire to projects,

refined numerous are store and combinations Jefferson quarter engaged the XXX% expanding utilization our driven the options both with versus spreads opportunities costs downturn wide number was and of by storage. at refineries are EBITDA crude of third volumes closer blend, up and connections regarding and having actively improvement from positive and As was variety and we $X.X during product terminal million, the and consecutive million crudes rationalization solidify competitive our pandemic operation, driven in with adding increased QX of position projects refinery of this such in as demand. keep And in $X to of in its achieved receive, WTI the moves and QX market have get note, further of we products. into export post spite looking compression due actual a no to additional to to Of by refined WCS less and advantages. rail pipeline QX In was able to the been

of Canadian of are diluent DRUs will showing near-term see this is scheduled in again regular Gulf to today increased the with spreads and and heavy of movements is again, to now we recovery Utah starting blending planned And a year. the crude least long-term. We demand both for project Jefferson half storing, with from of forward widening provide one to fully steady rail moving QX second waxy the crude flow At handle. or which market Coast in DRU receiving, activity and which XXXX, are is by shipping. unit capable positioned well have trains

connectivity a not all, bad advances here, in in So QX and environment result demand an about in extremely optionality wait we XXXX. can't and challenging just with for major in

Turning as commissioning is butane ship work transloading quarter, is size of to scheduled our is took XXX,XXX propane Phase last are to the due longer to it. than because complete. COVID successfully issues. pressure us we The with much Repauno, important now This the X liquids construction we NGL natural train the construction testing larger in market. and barrel of to And process has been our ability market to tested, related operation our cavern the of complete, But loading gas than propane in system. confirming the store communicated originally

beginning offtakers we either XXXX. late to XXXX. delivery both and QX going expect commitments The negotiations QX XXXX, or are in and well early We propane producers are firm negotiations QX have currently of with for in early

our be cargos propane to of expect first shipping QX of We XXXX. early

for of discussions business, the drilling the and Long to quarters XXX,XXX be transloaded sand, completed at commercial good tons at first parties QX which tons is approximately and has COVID-XX the XX% The caused Ridge, but XXXX, with which we when is is particularly progressing activity. we going bypass manufacturer So of of other component wind the alternatively gas our opportunities three over expected finally was sand of for frac Repauno, in the ahead this frac natural well. over to are Repauno a some on construction the continued is of wide bottom with frac as and industry seeing discussions, budget And re-engaging was QX farm considering of discussions are a into well manufacturers. We On slowdown challenges biofuel sand, XXXX. road additional transloaded XXX,XXX we and and budget. in Repauno, quarter line line in

and level Long to Furthermore, is our one from quarter an contract our to largest power and commodities Utica The result new construction customers indicated the the third high budget, Ridge's facilities site company date our salt. second of by Long with road in continue Long a of see to a we construction Marcellus extending trading XXXX, be store and November signed a in location tracking has the continues to firm. earlier and is existing term Ridge contract for interest five-year in guaranteed intensive strategic As a in power looking on interest a to at core regions, of transload completion plant Ridge. shale of industries which in addition two-year

the industry, to we believe landscape Martin, our of we're our Lockheed initiative see the for we PMA pressure offerings XX-XB, vision data plant years. will found that Fortress initiative to put carbon and change and have will blend Zero power early talented hydrogen we airline going as will next position We're for We gas match. continue part to moved in a blend as four whose announced In the with with market to in purpose power term taken people, as becoming partner. years burning this lot combined on centers, for by having be been all very addition, in to in Long had for and looked in we our initiated find able progress to us our ongoing the the companies This is focus, about in ago but of of worldwide have good CFM our we two continue one long the maintenance year. QX. Division States most is recently Together to like initiative the make New years right plans. discussions a be as be able work, but next reality. GE GE, years fuel hydrogen interest plant a which Decision no to This and first conclusion, Ridge MRO close have hard numerous In from Energy free of on XX XB we of with partner, to businesses turbine. right excited times sure, the has United to hydrogen dedication that relationship, H-class the built to driven

remaining center GE, in and impact Division in initiative having As conversations Energy the of that accelerated meaningful. initiative its an is Long we're the hydrogen with fact New have our already to hydrogen will in of Ridge Long that with mind XX% to in market. financial are we this goal and users zero that equal our felt be power interest of be will Fortress important in announced the more step first The importance is data emissions. serious. Of The Ridge, world's being the kind major the Zero

with equal investments. that in of the is we of sure more will importance important power emissions initiative role lead we zero gains not us project aspirational to that confident are this from free experience now are and an For the are but goal the worldwide playing carbon our financial carbon project this fact lost,

expansion build has goal For but place, opportunities. a projects neighbors, lead once that Jefferson our margin in additional are with generates our will return, which to fair a now multiple to we up several could infrastructure with an engaged and opens business such high major core outcome. that Right been

opportunity public, went MRO compare to and it back the Martin, to since and call earlier, FTAI the think as With I one important quarters a QX this the from our strategic mentioned away, of PMA other turn company. our out days hydrogen As standpoint. to the a at stronger the pandemic, Ridge, From Long on growth deal hopefully with to come I I all aviation side initiative that, of we me back initiative the look will to Alan. we let Lockheed remembered are better, most deal

Alan Andreini

now Q&A. Thank you, call may to you the open Operator, Joe.

Operator

[Operator instructions] question line of Compass Your the first from of Guiliano comes Bologna Point.

Giuliano Bologna

morning and taking thank you my Good for questions.

I think, the for here, savings, roughly topics discussing the Lockheed in the concerning related is XXX,XXX EBITDA and we that you're fiscal on shop included that about per for XXXX guess visit $XXX I that two aviation? transaction, think when of million

Joseph Adams

$XXX the parts and incremental million. total the totaled that of incremental $XXX that's no, the to No, Lockheed be meant million was of the to three

Giuliano Bologna

more of accretion that additional the the aviation on the included think and accretive that brought engines will makes $XXX and offer then so $XXX the be that when sense, think you of the will kind million planning I now you're about purchasing? we million, segment if to discussion up That I through and guidance

Joseph Adams

Yes, that is right.

Giuliano Bologna

few further, out it step approval perspective catalysts mentioned timing days thinking a a from central a is taking bit PMA just you initiatives the hopefully about little and for away. there, Then, different

on quick If second around the for awaiting you first timing in second the have you around you a process, be if a application part part if have first think and curious I you part, could the give are is the I'd just part? in of application sense the and approval into you're update and where the the

Joseph Adams

That's correct.

essentially ago two built and part, engineered, are The first there's parts developed. we years that three started fully

anticipate will part be the the of all mentioned, awaiting FAA first delays us The that and has we're way, is so the application don't days from I along so been away. the hopeful here, significant with we're complete way as we very

finalized The as year. be the thing that. don't will this by part has should second involved beyond the application fourth made be The so way, all anticipate way the final same we of major along quarter. delays in the end FAA the And been

XXXX. three and as you that the on would in we So first year, then to in those are -- two, remember, done would so started parts we additional last expect work be

Giuliano Bologna

obviously about remaining of probably the the when And different that, we closer makes that potentially sense. as to little then get you a bit incentive to completing That and increases topic, sell think [indiscernible] XX.X% interest, stake dramatically.

monetization more need bit assets infrastructure monetization side? of was, monetization Jefferson opportunities thinking bit before progress situation that potentially we And think in a about so, target I what about little part, and am about becomes obviously from there, sure and obviously on the that first thinking but you your asset little and But different obviously, early and multiples a just percent you higher you the that was much about can is of than how projects having because probably stake might XX.X% just have perspective side a sellable think that a completed to sold. on

Joseph Adams

-- mean I we would of should that's now. than and something year, in be operational next look definitely at would year are even now about. year Yes from or from a earlier think you that right, be QX a It

maximum revenue. that's point, that at and you the of contracted amount when have So,

of interest, the to running that something to but people operating, lot over a So when and were wanted years was not invest that prior up construction. expressed there under we've only and talked they

a that's power to many. we are as higher and I I market also also that carbon which to of be So path through if significantly carbon have going power there value plant a widens hydrogen, mentioned free out than think generation the

that the probably two make than So I two would the think consider those that other it of things combination something will mentioned. we earlier you

Giuliano Bologna

of sense. I and Thank lot back the the makes That will queue. in time, appreciate you. I jump

Joseph Adams

Thanks.

Operator

question Sullivan Josh of next Your comes Benchmark. from

Josh Sullivan

Good morning.

Joseph Adams

Good morning.

Josh Sullivan

traffic confidence looking you're green metrics your of aerospace the the confidence that, parts overall out? the is were quarters, shop chewing schedules or in than tightness time on visit are with sense Just that couple to engine the what next market? give gives is that that the any Just what you know were, air are the in you into prices you Now, over remaining? regards dynamic playing that market, there this tightening secondary other curious, of industry at are

Joseph Adams

of by but another, be look we indicated Well, have out the can't. you'd they efficiently QX we be and capacity spare information at engines all we engine from the are -- that numbers data can XXXX one and indicate and airline previously same to that that's moved if our we, had of

so, indicator going airlines real that have airlines customers And are I they're airlines that's much conversations now, would maybe planning and seeing is, at in we see looking start conversations engines as XXXX, and because like. are think their with that they're where available going may earlier capacity with as most regarding need or have to now, that, to recent the they own think that than that not they're -- I why would quickly they happening to we're going having programs that

So things is to looking starting think there position. now, a I time they because are getting programs these in at lead

begin think timing started we've the into engines program moving optimal I airlines modules So now, pretty quickly you Martin is XXXX. and that's was, supplying facility that because in engines Lockheed and know, can to why our

of as maximize as that, really we feel save well optimal the like to airlines cash. know So is you and of are time up looking using timing as the green and cash

attractive. that with into having going so, is older we program to with can you engines invest you to without supply really a say that engines And in

would the the up over can, much -- also, be a isn't in a which position meaningful we that provider, get valuable. contribution be I that we'd a and really as which not that world, our to XX,XXX well goal XXX mentioned, as I to is as with service provider, engines, have hopeful, sign think us we're much engines quite to leasing it's So is

Josh Sullivan

it. of distribution expand here the I partnerships other do see play capabilities the Got coming other mean into Lockheed with or kind you parts as you relationship? there, other overall

Joseph Adams

something think give a material working one and which whole component across the used really important is is solution more serviceable part there we're an that's on, comprehensive would the us Yes, is I that engine. that

meaningful had and So that's all something know the given our we that -- we've discussions. players

an -- adding engines, We have we're have quite an to we're that. to partner XXX going be we and attractive because

think is can and I of that that lot the sort that is done the I of we So that we've work something last on is -- something a of think piece puzzle.

Josh Sullivan

it airlines And it. remained the just the kind global one it has we'll wave active, market, on just interest here? think another into settle do as you new reality see sale leaseback of of Got

Joseph Adams

Yes, a to going I it's very tough think, airlines. for be winter

source So to sale to they're survive cash, cash of they're everything a leaseback doing that can they is going tap. and

into I government deals a you've activity, a have just party the think because think look airlines and there was coming longer money are to at another done I been pushed of lot government the coming when back got that takes everything. airlines, you get then the earlier this some and of then lot and some of you money got summer, of because deals everything the in negotiate

I be I but at not least will market, those leaseback an they're sale there's next think deals be year. going think for dead to very, So, the and that are active actually,

Josh Sullivan

time. Got you for it. Thank the

Joseph Adams

Yes.

Operator

Citi. Wetherbee Chris from of comes question next Your

Christian Wetherbee

so much outlook I touch guys. wanted to next thanks EBITDA year. on the Hi, aviation for

terms that of the about could question bit from in about what assumptions unpack included but to of market incremental a of I today it leasebacks sale make well, happen kind you into is what to then kind is of, know we I If underlying I XXX obviously, talked if to what as that up that little the what where talk kind of little that anything see sort through of going can last kind that? understand need around exactly you a And at just you that? is engines walk are around in XX number? support to make that, conditions and kind you and bit of that is included walk want that sure

Joseph Adams

Yes.

So billion of sort at fleet, in current what, impact which below about on should so EBITDA about, that that million we is $X.X million $XX COVID year, mentioned probably is impact and of if right and our our do of target million $XXX the I $XX $XXX range to it's this of million, you year. had look this

normal. we see that to more we've of really year France to think an a XX%, we the good returning which We of airlines. up chunk and added the freight our okay, that margin do to on backed high a have we're XX%, going XX%, that market, assets was see the XX%, will like saying, EBITDA, analysis based airlines EBITDA we do a in but will and and well next XX% return had well in actually portfolio. is So and are couple we've Air sovereign And customers of survivors, we pre-COVID a continue other doing of

we the about about that's million. turning pretty billion, engines. we million incremental under XX the invest engines, So to $X.X XX% LOI in investment, to feel Then, CFM capital $XXX have all so on XX of this, $XXX good

attractive, is to competitors we've assets very what attractive, that with And been because So talking it we've are the the and been targeting. looking on now. capital what are right pricing few buy that's about there

So we're engine pricing. able It's about per $X good get to million very on average.

$X we're is have million as actually some dollars. buying that We as cheap engines

a and is a will could utilization for we million. for because EBITDA that generates up be there's XX% I think on million we approximately our as So and generate upside there's of bit CFM but XX% within a on be I that to mentioned, likely on XX there assumption I a market. XX% I tight could $XXX $X that a think could of assumption, some that's think range, end average reasonable believe it a be, margin there But utilization

incremental an XX million. that's So

Lockheed number for approximately EBITDA which approximately without annum million million. partnership, that's $XXX any XXX us the which So Martin mentioned, for believe add for in benefits XXX $XX $XXX we million, I incremental and if the will adding per XXXX, you take

Christian Wetherbee

anything Okay. national sale And like carrier involved well? or as that there's nothing leaseback incremental from

Joseph Adams

no, think really see good and opportunities. No, do. other investment I we'll I

present in think at market you point. likely as I know, stressed. not other it's but It's, this opportunities, the and we're that is factoring to

Christian Wetherbee

that. helpful. by guess very on I of touch you opportunities the XXXX? decelerated appreciate wanted slowed and into then, as I business out I pretty maybe in obviously, connections that I just Jefferson mentioned, crude And to That's Okay. to pipeline understand base have of of Can try trajectory coming to meaningfully. Jefferson as kind rail and we you potential talk sort opportunities about other maybe roll think,

Joseph Adams

Yes.

we'll projects is the us that's three us and really only to the refinery. got initially, upside should in December plan be being of have will for Exxon six provide it's, today. one connect connectivity will we've completed So utilized And and that that pipes the meaningful those

be So Mexico. products refined to would that the

that's complete a about stages and serious there's you other going I and obviously, a conversation of in the have something conversations actually get building are what those effect pipes utilizing of you are to things. opportunities and about when focus you're So mentioned. you definite it, we lots have The and and planning much early more when

been and a significant. pretty the difficult they'll that those. lot of are higher [ph] refiners we're has slowdown The predict that So in to demand hopeful that seeing be the demand the is on timing destruction definitely utilization

is is part the So, probably That's pipes once the but it. of challenge, leverage are one the significant. done, timing the

crude, crude the will able you to crude to with be by parts are so you part we an other important as is of Cushing, for type for blend, crude it that connection from and where crude. pipeline another which refinery inbound blend connect to because our bring need us rail have The very

the us crude blend competitive very rail, for to the crude Cushing a will as from So Then and connection pay by by connection mentioned I -- cheap the signs line crude rail. from other stock We've activity again. the part is the the of Motiva is of got other showing into and pipeline trains connection. outbound terminal for Motiva is Utah booked give

So we're from Motiva. pipe building Jefferson the to

blend in crude and by we So blend, can rail ship bring by pipe. then

Then I connections interested So supply they I these give chain. as we've that then lastly, options other the it's you more refineries, got pipeline very mentioned, efficient to, become. and alluded the more

will around. we now as a have if can provide additional then we move service switch sources but they connections, really high add so can we And multiple because prices value options,

expecting significant side, side. use just again are opportunity there, upside is timing the on well on once to predicting as refined as we're hard, going It's the them. again pipes crude the the but So of we're product that

Christian Wetherbee

Yes, appreciate the Thank okay. you. I That's detail. great time.

Operator

Stephens. question comes next from Long of Justin Your

Justin Long

on and is to the share anything assets to good gave that circle LOIs XXXX some the Thanks guidance morning. on wanted to XXXX think October? and when I there just be at clarify, is will wanted the utilization back said existing aviation that assumption and you that can trend expecting utilization your XX%. assumption that you I utilization Joe, will for in on be of a I in similar the for the level commentary. is you're you close,

Joseph Adams

And with engine existing the the overall as and portfolio. for Yes, the utilization I quarter we we're fleet. the existing the assumption is exited September XX% on in the approximately same freighter very on high mentioned, seeing portfolio, utilization XX%

for So it's been The quarter up low XXs. coming every quarter. the is average the in

So and expecting we expect in then, and is that And and pick that challenging -- we're quarter, at we trending, have fourth I the we're trend in delivered, staying that things as as and of the longer see out to -- But and getting QX deploy just it increased we didn't that up quarter engines an will didn't given mentioned, to delivered later there we engines building. we expecting going August mentioned, and the up market, I engines reason restrictions September. and was be And moved travel XXXX or we closer to that the as new get QX it so then until it lower the it's part during in been tightening started July expect be around. XX% XX%. also took

Justin Long

seen you that steady any or XX% have October, in and there rate improvement? has been Okay, hold exit

Joseph Adams

I would steady. say

Justin Long

assets Okay. update expect some I just mentioned you assets And the this you curious you your aviation quarter? that in in was And we quarter third in this forward maybe harvested customer non-core provide or on then, continue was by something something going today? to if down should how could aviation. break that's an if isolated

Joseph Adams

Sure.

and rather the we unserviceable that primarily mostly fly -- we reason engines engines XXXs which than engines. most were in PrattXXXXs, is, sold of freighter market. as those invest are and on CFXXX did And or some were So the harvest the some those XXX of those

So invest sell part visit you given the flying. you And the demand market strong them to shop freight either or is then another have in market. pretty into the part for can

from a an another point more the or four for made market to for it into year partout view, it us put them than cycle. sell them five did full and of through sense investment to So invest restoration

issue is for terms five here. So is XX The or not for for it was of year in another investment taking shop months XX a a to outlook or the for pretty may XX in good. visit, timing from be just putting cloudy months sort which four may bid really parts little outlook of those an engines making then and better market the them

of In the have terms and the in freighter pretty that the about XX% well. portfolio, doing of market we portfolio is

that's obviously of bigger a our revenues. portion So

those cargo XX% not a in XX of in which owned those XXX in them engines which the and cargo. and and XX strong XXXs narrow-body in We and market, we that to have cargo that is about but bid most there's convert companies is AXXXs planes today, CFM planes buying about underpinned are from to XX% XX market,

in what to So we've customer similar Air now the I'd France, total credits. and added state a was customer sovereign say is concentration QX. is it our on largest portfolio couple owned

So number I'd shift bit push we're there's closed you has where that another say a even there to little on been that far on of narrow-body side. way And, the that's that deal a along can towards fairly higher.

is the credits have that's on trend stayed I So think side. the in sovereign narrow-body you'll line more

Justin Long

the appreciate I helpful. very Okay, time.

Joseph Adams

Thanks.

Operator

comes JMP from question next Ryan Your Devin Securities. of

Devin Ryan

to to at back question element business. that here, the of aviation when least interesting one combination Hey and it's vertical the program good come Lockheed is from Joe. us the me very the one There morning, integration is really of I of

I think over competitive of number other a that lessors. gives advantages the platform

also the could over I time. think valuation it change relative others framework potentially to

business, consider from guys of are level of you're would to projected, especially getting numbers industry. sad quite given the next curious a separating whether in the the I'm types infrastructure aviation if So that's you year that a scale that just

this based the about current so, platforms obviously if structure and open the separate it's to structure, the exploring? thinking or debt you're corporate can to story simplify actually potential even something clean And on the you whether just do up and to

Joseph Adams

Yes, we've, are talked about that before and to it. at open we looking

did them expressed would I we connected to billion have liquidity to goal have each both. them, we so think cap market dollar like, $X there's if in we separate and the that aviation infrastructure enough

or have that's action so And we that is moment. manage it got we debt but plan and a timeline And could the with one specific goal. something don't this ideas, at structure, we've I think

going that it believe think the something make to out longer and we're of would and figure continue best though think -- term it's lot to a I timing. something about that try sense, would to it's we

Devin Ryan

you. Thank great. Okay,

Joseph Adams

Thanks.

Operator

Your David next Barclays. comes of Zazula question from

David Zazula

question. Thanks for my taking

having side, in are aviation Air and deal on here? is, geographic the you do a your harvesting has markets from this question of guess did shift quarter, markets? kind you engines the the of shift last did what benefits you Just of I that in geographic given and given my France And end end your current the quarter you risks feel

Joseph Adams

we've fungible. but a Europe being America the U.S. we being smallest, smallest, fairly assets the Well, are adding, but U.S., diversified still the Europe very, we haven't, Air slightly Asia, to have between and North France I with shifted very and mean,

extremely So terms better significant right I right There move now you where in that's moving think, of being is are certain much pretty them now, in regions market the it's the do around beauty market aviation global of move versus and that in is see there's it than times we assets not in don't lockstep. others, another. a But and direction. for can relatively, one

to the that the because think see owned funding sovereign the we're we from just those state bigger think going as I are airlines, a or I said, getting and shift have stable with we be the most are that the I I most So and assets solid. to governments, where happy and mix the are will airlines think, that's

we're we're So think, trying, I specifically. tiers targeting those

say, sense. sure I'm make would as would So everybody

So we'll see a shift in region particular. any to sovereign credits as opposed to

David Zazula

to Thanks. how you to could orders? ramp appears so, have quickly, gotten orders up start if And stepping then, processing Thanks. approval up, And on the your you maintenance side, timeline as the in? FAA be

Joseph Adams

inventory there Yes, the parts in pretty the so there's is and orders are for already. quick production works, availability

is quickly, for and our So engines be approved, owned interest our once as given indicated orders our can in orders we've owned year. for next it aircraft, part our well made the very

big been, of been been a not a process it's plan of there's long has plenty getting time This to so approval, there's lag. So production.

David Zazula

Great, thanks Joe.

Joseph Adams

Thanks.

Operator

Ari America. question Rosa next of comes Bank Your from of

Ari Rosa

Joe. morning, good Hey,

year. covering for. softer of probably being your expect of on kind this what kind in So should forward, it of remarks, of confidence is something EBITDA sort? of in than with this is EBITDA quarter line sounds we you kind $XXX the see of for because going some in have you're to I in FAD mentioned million that in what kind great? recovery as you for bit able were to contingent think, little to what us as a dividend, that, still of or that be a and Similar looking do obviously, like lot next extent traffic that, trough a And in figure was But the terms of question, which passenger Chris' prepared a you

of that So, much you implies maybe of around in that have at business? looking give the you and how XXX if just could number XXXX, some for across in confidence what that terms kind parameters

Joseph Adams

again. pretty about see you and good out to we and Europe steps feel obviously, is and Well, still taking France, Germany now it. obviously, shut but But, there down COVID

have pre-COVID levels. to On and flying Taiwan, you China's in back no countries where had the in Asia infections they've other hand,

around are pushing, varied how are flying. are vaccine. quite will to, know in better it's it, think that So the from pretty the that there therapeutics September, world, hoping U.S. airlines be and The something million people people but people had without a out passengers getting figuring so a are are I manage I vaccine sounds soon. there and pretty than for that people the optimistic people many know and that available around Obviously, is

or a to then how now rapid a you plane. to for can three do Airways, flying see that rapid you and if test quickly Now on the effective you are everybody not, get airlines starting week days London, testing. also British is

So countries airlines back out the try to are working to the people in flying figure traveling. want and to

it's bit think quickly And People but rushing a it's little there just as So feels like not not I that, what getting keep they it it that seemed without like the moving is were going it better. up quarter third and were. snapback, a some took to get risk as is in there to longer. happened

on can, although manage. we this about XXXX feel get risk but know, lot a people week the side, people think the you it's, hope. I better something, be that And, will much more it of doesn't how to better on there's like good timing great signs So there, and feel pretty they a feel are and should it getting a are hard does we handle is it, that but feel lot out we of, people good improving

Ari Rosa

perspective, Maybe is you think if the in little Got could do then of FTAI as could bit chose this of MRO with And, kind ask understood. you I discussions the you nature just, that it, partner? a the obviously you them? very had And reputable their Lockheed to deal, in speculate, talk from about they why space. a terms of

Joseph Adams

And for to Well, who we trying talking find years. valued looking about what we've for our visits us year to at for business, already, were of XX engines, someone shop two been been going our I see this XXX mentioned, looking for see and is, grow. and partner have, We've and the we which they a right we flow business. as that's is opportunities

pushed we of and needed, all And don't many as got we flow reputable, a best point of And And is, year, outlook so any Air parties. have a brought had out. there, it's what we post-COVID, that's, what's further order with the over lot have world that's out. they Lockheed we facility that -- But you the different saw very with the They people engine interested. facility to I of were then Canada timing shop their with probably mean, XXX the of they very is conversations a shop. them, of many, fantastic lots is just the attractive, visits table. even

we module ability they been something what to you we can get shop have restoration to avoid in an that's -- think the factory be I to available, talking modules this and nine What visit to So also have before, cases pre-COVID taking you if was we've liked. because is customer create about a can wanted important months. full some

XX on So out that a you and off, you days. if have can an turbine work can you pressure and need only low module, need within engine you to pull the actually

So you can dramatically reduce engine idle. the be time to that needs

They to they didn't different for wouldn't the of that space get or from MROs. have availability. easy to us not was lot be able a just that So the accommodate or

have they're excited looking their attract and without ability discussion us room. capability we to invest So part business. have buy big a very did for what interest. weren't do capability for They that it the to that they to and about of was in did deal and the will having and other And the shop. their an that They actually business

and would were had to equity Some would to all avoid had we have of that. the able had at, have looking to capital. We tooling. buy we We have an other were we interest invest buy would deals to

that, to we without do something needed think to I what we got that having didn't was So we everything really do. want

Ari Rosa

time. Got color thanks Joe, it. the for That's great

Joseph Adams

Thanks.

Operator

line Frank of from Your the comes next Stifel. of question Galanti

Frank Galanti

But MRO You you're One on the actually a much. this taking too question million that get maybe or so guess, question. Lockheed giving than write feels the too targeting which yes? or are it why I'm that save to desperate on in able you're dollars I dollars a and volume Yes, and shop visits. need in guess is the able module hi, is year that said a Thanks I on isn't up or XXX more they into I of Are had partnership, that million much shop to proprietary Lockheed last visits like to But follow-up business, Joe. that XX guys reading the directly? guys bring part. for to you engine, for the doing visits Lockheed on

Joseph Adams

an MRO. think I Well, time for difficult is it a

helps I think that, I look you them it time. I think don't to the we've vertical I need a a million want do when create team build I at But saying them business, of owners but these wouldn't I few want to very so whatever, of MRO as have leasing in you engine capability the have to engines I'm I several factory, maintenance are don't and to their or not couldn't a they critical And integration. or So mass. MRO and at business They and do business critical it, $XXX desperate, they it's them order don't, be go own the leasing if do a mean, characterize and to have few inventory but module lot very you to a to say that shops and board of invest need go or and no airlines history talked it. engines they a you in

of came at private engines. provider shops we business with of label it other do we a a amount as MRO fair and So

times for pitch an spares. and get their us? say come will airline and engine leasing of visit we're an out of have you label a MROs you And is the MRO an private do will so the can my lot shop? like So while providers us shop go a says, me the to an to And services engine in and engine

we and been we've serve aftermarket. the So

the we OEM. So we're don't, not

And also to that number is as of find the OEM have limits -- in further that aftermarket people that market. you those So MRO have oriented opposed oriented. an who to are

a long that think it's and timing bringing there's but and of we other a I start on gets as well, doing them us if started could program customers do flowing was that be to it hopefully good wise. we Lockheed as going to up and deal for And with PMA, a develop great lot a it them So other this for hunt, worked an because, well. out businesses. airline flow end And then

just see upside not this in deal think So is addition they to they had a do. I

Frank Galanti

Okay, that. color. that's really great appreciate I actually

how in sort you you effectively, to share much are this cost and guys of to of any So engines with bear out are is guys so CapEx and space. is What economic is you're And leasing then bringing in going form the much Lockheed the that deal? minimum there how volumes?

Joseph Adams

We don't rent space.

And point that, committed would we don't of but volume manageable pay that's them very characterize into So, and seven year. but are to view. important that rent. as and commitments we do have we that very the I modest some to from our minimum was But, something

and also we're the modules visits, be shop for modules just keep there. the using shop ability to and to have going So store

engines. that. of if in that's of are you one places shops have are willing about attractive are very that And to have few in we -- actually the you capital. airlines we industry, So the And don't don't Maintenance think invest terms capital.

a us we on now partner if a the be proposition to lower to cost we think a that huge save didn't going can do and compelling it we and can is us that and capital, a go your to boost gives you and or But going provide business significant big say So needs, we see very all for that of that for I pretty kick forward. that's right a ago. timing the anticipate year didn't airlines

Frank Galanti

like deal. Yes, great it a sounds

me. one Just question last from

on of utilization that power, expect question around for utilization you guys to next back is having your bounces kind XX% of Just kind the where you in engines pricing reduce to get, are are the XXXX. year? following-up Most pricing having in of you scenario,

Joseph Adams

an under the to they because never the and they actually No, been that prices, view prices the from sensitive that that very charging point it parts people to umbrella. engine, they a And go so OEMs. by business we've get the engine a the price a don't -- has And typically they handful they're usually somebody has raising fall engine tend of It's on set we RFT, set when a out with to that maintenance -- always side. it's an for they because call who business engine their high and someone not need prices negotiating is really be of you. leasing CFO fly plane needs and with is get lot an

very every decision more and move going engines a keep we saying. is much reserves because So seen haven't it's it's based -- to on prices. and need I'm raising price not demand of the it's maintenance OEMs by really driven what the also And year up difficult rents pressure keep cutting

Frank Galanti

Okay, Thanks great. had. I That's so all much.

Joseph Adams

Thanks.

Operator

Binner Randy Riley. from Your B. next of question comes

Randy Binner

morning. good Hey,

I So about shifting the financial Jefferson could? Ridge defined talked Yes, appreciate maybe and into comments aviation, did for quantification I term, back longer aviation, from Long know, December. was the and term pipes but and opportunity, kind you some there, the in coming it's if timing completion data center terminal in as parameters saving I impacts but on just apologize then it, of on digging financial also longer impact, not everything Looking that? we kind to missed you as if away I of of any there, the give possibly

Joseph Adams

is that. of commercial is $XX get we're delays we'll timing million us that to thereafter or that have the higher. little to we pipes approximately and shortly done run said when at exactly an for the hopeful months that are place What a operating be have harder, the Jefferson, two predicting EBITDA we number the three deals pipelines the and But to next we've so in to Yes, will those, the in built rate. will given refineries COVID even

play, very data with that because it's is hydrogen it's site one is a that's which data the very centers have actually helpful. providing And at engaged hydrogen In power talked helpful, Ridge, number out. not and data proposals on a Long them story play a them have hydrogen the multiple and terms I about to we and so just of site any of we center point, the think

our hopeful So so a project quarter of turn and the next we're the is then early it XXXX goal. construction tenant on, we'll before that power have plant by a we year signed turn third and hopefully, and we in actually then on for in

Randy Binner

no can point in you numbers, this negotiations? still give at numbers but Okay, there's as broad you're

Joseph Adams

able we Right, per in today. tenant we sign of if sort did XXs generate our up, because will that on we say a we're terms closer mean, to mid up high to dollars versus sign of if megawatt site, I hour XXs

be for power total the So if hydrogen power to the power component devaluation the to million that significantly $XXX a higher to that, or half revenue, million higher. and increase think up the million. $XXX multiple output, if there's also And from would much obviously, able would contract multiple of $XXX we're to play plant EBITDA we

Randy Binner

you. thank Perfect,

Joseph Adams

Thanks.

Operator

Your Research. next question comes Rob of Salmon Wolfe from

Robert Salmon

Hi, and Joe morning, the good taking thanks for question.

run XX% better there to roughly September exiting timing the to vaccine some from a XX? a average? rate forecast? utilization XXXX from Is or up help you us the XX, to overall this kind is about think recent for we that’s related of of related can kind of As improvement Is the September your outlook in than deals that embedded the something it of bridge real

Joseph Adams

the exited Sure, and steadily so been XX% we about quarter trending it's up. so a at average

up. demand it's now have. talked at months If have few next XXXX we're of and programs a we taken up month the And early also we for the every over trending you that engines have some number been over April, about airlines last been look seeing since by that we

numbers the to COVID and utilization as we we've was were as taken So our high engine prior XX%. --

continue the to we it's of is is were. visits the utilization freighter to up basically out we to the way as historically of fact So numbers I really the taking pasture mapped recovery mentioned part the shop down. markets are where see that back And that levels fleets. on high and And that, they

because well increase have shop you have utilizations shop all and very So quickly to available if long you'll engine and into every see up you utilization, you aircraft use time, go engines available engines a lasts aircraft before doing engines excess visits, years. five stop

Robert Salmon

a amount you I units deal And, you that's need but the how facilities with where guys follow probably a on into can't you're annually. level, Lockheed. of above for XXX put the speak us clearly realized you segue capacity kind at that tap visits have minimum up going sense kind Joe, to nice have increase a Actually, of that required to factory? exactly through a XX MRO to for the kind up year, shop guys of give of my module the to visits you is? to question Can got are many

Joseph Adams

The not that minimum amount, it. would be well below above

So it's not commitment something or significant, I know, that minimum. you is about meet think able being worry us to that

Robert Salmon

below you're But number XXX. I'm I the find like shops but shop XX, of obviously the above it's the you're XX assuming annually. mean, required basically visits significantly are required, is

Joseph Adams

fleet Oh would what be? you mean our

Robert Salmon

basis an Correct? anyway, be Yes, on required required your going like is - throughput to what annual minimum.

Joseph Adams

well very we now of minimum When deal, required, requirements committed low give to what be current is below have a as of minimum going part you to the say the what our are.

committed CFM the visits to XXX had we've number. expect we that today I of below we which the is own, if engines we a about XX% how shop that can -- is total many you well number that just and taking approximate XX% is but minimum by you'll if XX have shop grow, year So engines, visits of said

Robert Salmon

LOIs you us there. question that's Okay, with from understand that parameter kind of when we're of LOIs, Is can EBITDA incorporating just return of right my you expect that the sense to helpful, that regard so, final significantly…? the kind be capital million XXXX? is $XXX risk of of And kind for deployed, to can really so a the of you give level

Joseph Adams

QX. QX, will it early think be I late and

Robert Salmon

guys. the time, appreciate I Perfect.

Joseph Adams

Thanks.

Operator

Your of comes Dodd Raymond Robert final question from James.

Robert Dodd

guys. Hi,

should Just one that other then this one first follow-up a be and on quick.

or the minimum on growth minimums, color? over the minimum the – minimum have Joe, or of escalator is now MROs the building that does the in time is an On assumption the

Joseph Adams

points it's a, is, it has rollover it And like too.

can you it, use don't you it. if roll So,

get very it's So minimum flexible. be that it. significant. ever very that as have anywhere I I near little about will think don't that concern we

Robert Dodd

perfect. Okay,

spelled the year. like elements talked to out the part, million million $XXX from of you a could components you that $XXX eventually obviously the EBITDA On on up Lockheed other about, an the in incremental add equipment, various various the that, that

perspective, tomorrow, your approved in say from what you've us so FAA put impact it on what contracts, et from part and would mentioned that, based You And not? a if that, the if or approval approvals, could got incremental when FDA, it to first be that that, the top would existing said that give if you any be cetera, parts or that by another did would the benefit of incremental? discussed you already on in included be ballpark include

Joseph Adams

to airline a year. million. make through the that will get the when think element will to that a that mentioned I to dollars pieces save for those I I and partnering visits of and be for that facilitated, shop The Well, us helpful approval or the being other is parts necessarily think the visits XXX engines but you go be able million not shop to of XX required airlines, manage

entirely facilitated So We it, it that. without be do it's by impossible. not will but couldn't that

I function a these say really portion $XXX next parts of of us So the a first would having is million two available year.

Robert Dodd

Got Thank appreciate it. it. I you.

Joseph Adams

Yes.

Operator

to no further like to the questions would closing for back time. are Andreini There conference turn at over remarks. this I Mr.

Alan Andreini

We you. operator, today's QX. in and updating all after you, you you look call. to conference thank for participating Thank forward Thank

Operator

today's concludes conference. This

You at may time. this disconnect

FTAI Aviation (FTAI) 30 Oct 202020 Q3 Earnings call transcript