FTAI - Earnings call transcript Q4 2020

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Q4 and Full Year 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 you. Thank sir. ahead, Please go

Alan Andreini

Thank you, to and welcome all like year I Fortress Transportation would the quarter earnings to and XXXX you call. Cindy. Infrastructure's full fourth

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

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

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

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

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

Joseph Adams

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

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

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

to million impact in versus financial passenger And all XXXX. was drove air the Now let's $XXX.X XXXX of $XXX.X versus EBITDA million travel negative reductions dramatic COVID-XX in far, by Adjusted of $XXX.X versus Normalized all look the FAD in XXXX XXXX. million to at XXXX $XXX.X in million due in XXXX. XXXX.

operating extremely to QX now challenging into Aviation. extend Turning QX will this operations pasture environment XXXX. for continued and into In XXXX

revenues approximately robust collections, New reserve to million which driven debt Cargo approximately levels increased than expense decreased cycles surge of million of down by from in strong, activity remained intent travel income three, operator. customers due are now XXXX to vaccine affected are of failure flown our lost In restrictions XXXX evident cargo of a ever And sold is aircraft end our million. under QX in and one low distributions. global for trade was a XX% that a from pasture XXX maintenance $X But strong $X the Two, by before. QX very to more two lease hours negatively three in by business airlines bad $X and be of letter representing aircraft QX. off were is snapback in outlook most the pushed levels. flying today a results to geographies passenger and approximately

million QX we XXXX very million, modestly to to to to approximately total better, EBITDA $XXX aviation While XXXX. $XXX be for compared XXXX, similar we QX expect in expect or XXXX

aircraft went impairment portfolio also individual million through engines. We the entire and of a took and XX over equipment $XX

aggregate third XX%. of sale as by declined party appraised appraisers limited by greater market to values book exceeds value individual portfolio value Specific the While the due completed than purchase. and have for XX/XX/XXXX

number underpinning XX% and EBITDA Chromalloy, first Lockheed in spending million on globally. and of growing passengers XX% half and QX And XXXX evidence of portfolio, a expect investments QX with cycle, Three, Martin, We million this QX million existing increasing million QX. shop fleet while the so and to in EBITDA parts elected with the EBITDA new strong are, in in utilization XX% $XXX to and capital of half, visits in The travel, to avoiding starting strong from write-down two, in in of assets we XXXX, from our be still the value engine starting XXXX to contributions which substantial approximately ‘XX and booking we million position $XXX for in growing. the in one, to capacity, to these AAR leasing levels specific from second and rebound. ventures and the add and in to maintenance expensive lowest and starting in QX, joint partnerships engine contribution recovery assumptions $XXX $XXX QX increasingly four, $XX airlines and see markets XX% our numerous

grow and leasing Importantly, in to the products with months, materially our of XXXX. market CFMXX ability this through the world, efficient and into exclusive for partnerships and companies per demand engine to us, aviation for supply and next deliver in for the to some forecast better narrowbody to the largest exceed than extremely cycle in and the the our decade. well-positioned cost the is With earnings for year are from proprietary capital XX the leading world engines, EBITDA airlines, last to offer is lowest we anytime flight engines

Let's now, starting infrastructure turn to Repauno. with

the fourth to rail in unique rack to January. directly on And a for or capacity early second local large term to is York premium marine our expect our liquids during year, access gone for system opportunities saw allows first The meeting business through throughput the translating of market. natural XXXX. for now we truck load direct the demand Harbor in complete are commitments natural maintaining firm gas for products beginning from capitalize facility's operation. in to spot blending creating directly and vessel with utilization underground art and New producers opportunities. And while to - marine quarter We quarter, commit the of to portion caverns our the off-takers into the Negotiations with unique flexibility rail continued of gas storage, state we liquids of have loaded ratable finalizing and customers. well Our our this flexibility vessel system we

summer be this is by flow will more the completion generating significantly tracking hope Now shipments open caverns will date that is We are than to The operational November firm. storage XX% complete XXXX. in the plant of cash underway. counterparties two construction and system discussions construction relative power and Long have guaranteed that delivery and schedule business, with fully plant be for operations Ridge August. that construction off-takers early facility we Phase for Ridge. and commenced this Long VLGC for identified At multi expect for commitments to in point, the ahead from test by our year is XXXX of year

level see a in of We looking Long continue from power sight to Ridge. to interest new industries high intensive facilities

XXXX hydrogen to We with a blend part in have good for recently not our been discussions end XXX,XXX more interest than initiative year. despite by miners, our a advancing frac natural whose announced than plant and the power industry slowdown activity. cryptocurrency into centers gas data wide which by of is this was driven of sand, the transloaded XX% over year-over-year. budget drilling sand year was in business frac higher We tons our

Canada, the positive Jefferson. of for EBITDA the QX rationalization The the accomplished its with in through only stable crude and all, improve pipeline, downturn higher a to portion WTI good consecutive costs of customers a by market of Canada million. Utah to end in pipelines optionality out for of The to accomplished Canadian Terminal crude heavy of very and economics price and consumer This train similar demand in we posted was compression more in trains The and quarter both December, pandemic, for higher price profitable increased and Utah. and the in higher due expect all macro Jefferson environment, occupancy to crude no from and With Jefferson high $X.X demand. QX make Jefferson was the to picture continued quarter business and a to heavy quarter. - heavy uncertain providing Canadian more heavy trains reluctance terminal. refineries positive with So during rates increase three crude driven with WTI during due WCS the progress spread revenues. refinery good run its of fourth continues EBITDA in for Ridge. see logistics consistent rail moves Western environment, the Long

volumes Jefferson rail nearing planning connecting a ratable important and service the pipeline QX of result pipeline all been first the the with crude Beaumont starting into increased to by As XXXX. And a the solution. Exxon volumes such, we logistical we were are year in the completed customers project economic our of of The has and as million increase Terminal and January. projects first Nearly in are the barrels this product pipeline for month refined completion service. refinery put through more in moved construction steadily and expect

projects pipeline Jefferson payne owned Cushing, opportunities Terminal line the marine Additionally, Terminal on Aramco of and barge the Jefferson with quarter. the pipeline Saudi stock with has remain product market with to additional operational future pipeline, the track in second for the via Oklahoma moving via barge, connecting the Motiva new be movements. [ph] by two The instead

down As major to scale continue our road, customers. with several large the we projects look other develop we

the topic Turning to now of sustainability.

business and been existing in creation. new investment to while responsible a approach, be opportunities FTAI and a across businesses have to value for and growth, the the driving to long-term will friendly become and for our add time advancing is Everyone promote companies and both to environmentally at in right profitability, sustainability operations. thing sustainable leader involved same do to and We believe look investing more good We everyone. continue

board new road, and cost rail, ample energy us Texas, great and and industrial Repauno a Beaumont, we three of first As North investors basis report progress. Jefferson port with shareholders on end XXXX. by Energy resources. to of connectivity, Ohio, logistics explore Energy sustainability rail properties. Philadelphia eastern on Long affords regular area in Ridge unique and ability our update have deliver ownership And technologies and FTAI’s approaches in we'll low the our water, All American and somewhat in incubate to the our terminals QX annual these land, utilizing will such, a

example first this hydrogen introduction the The one of energy power plant. is the the exciting as an industry of Ridge fuel and a for for Long

the We GE have signed blending be for end recently the install by an with to to operational plants power of XXXX agreement this year. equipment

we that by makes purchase facility hydrogen will addition, gas agreement be Ridge from the five turbine year first hydrogen hydrogen industrial end, as of United deliver in the GE hydrogen company worldwide a hydrogen signed frame their industrial process. In Long that will a large burning turbine. byproduct first with in nearby year the a And a the to and H-class blend States,

lubricants Two, this save with building And animal investment filtration refinery convert fuel. and and Four, produce fertilizer a and products several to to plant we waste commercialize hydrogen. a to gas gas. bio produce with aviation a liquids produce building additional including green ready plant for to bio actively convert renewable facility a biogas applicability waste hydrogen. to patented one sustainable plant five, are build a and organic convert costs, that company environment sterilization to to and industries. produce safer to and plastics Three, to agricultural project, a with create jet non-recyclable addition engaged diesel marine invest building to also air and partnering green In in opportunities, technology and fuel

So terrific more lots lot come. progress with and to a of opportunities

year a that learned have all long beyond be any But come, come we over to when more are and environment better So we more time for ever had managers more we in a have a we the all our than year conclusion, lot today, less appreciative. will discussed side, bright contemplated. empathetic, flexible, year of stresses scenario remembered XXXX to control a more resilience, believe. case worst on we A

Our we today. team businesses And better employees and a tremendous strength. shape of in much is are for are our And grateful. proud that

So Alan. the with back that, I'll turn to call

Alan Andreini

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

Operator

comes from question Thank your Sullivan And you. Josh Company. with Instructions] [Operator first Benchmark &

Josh Sullivan

know, to good airline we just taking certification since if Has some parts? customers as you’ve see? morning. for any is off it color And guess, what engine the how customers might inbound you PMA with FAA could seen here. are start think responding expected? and approval, didn't Hey, You you the been you on I inquiries? questions maybe wondering thank the Like the I'm of the you

Joseph Adams

We've we has in I a by Yes, think of been PMA one been for engine market also expenses, now the after the has even this cost savings, all airline in known time combination the labor. P&L response on expected. know, third you use And think the largest engine the maintenance I an emphasis the airlines and world. markets, of largest better But fuel largest the the category long airlines. many than - for being that have

to there's a So tremendous this when you year, every parts including the raise continue focus downturn. prices OEMs have tremendous year, and

very, either don't you're PMA anybody wasn't focused And is that very interested it. - a that. that we've about think haven’t So we found on in solution hearing I

So a one step big to - lot just set inbound an because And shipped been us. of there inquiry. to a this real now one approval airline then and products one and the sets week, getting - to is it's has

So more be they're to there'll And out come. there now.

great that ask and reception been I a of know, backdrop. So a for, it's better you think sort couldn't

Josh Sullivan

FAA? make looks get as any about on know, Got thinking through to approved? to those do line the kind first one do the for And improves getting more the think you come, you other parts? what maybe this of it. what You think just Or it parts just timeline over the then mentioned, to you additional timeline like are you those

Joseph Adams

I get pave think should easier. I think it it will, the should it way and

the have second part, in The we second approval expect to quarter.

we you on right are know, that, then three it. behind start didn't there And XXXX. So additional work until parts

we're path given to move a there. there up of to XXXX. paved will So sort for bit, a expecting that sort a But of be that there's know, little pattern, potential a more getting you

Josh Sullivan

an a Got it. just Is product market. the some the mentioned And on part? on on aviation opportunity? that would for Just then that just original that be expand one, sterilization color just one part, Can that air PMA last you great. you is

Joseph Adams

been jets be save And widely. actually and commercial been an installed - as much some It's X% not proven been original jets, to part. extremely and on in as And but it's it's some very business effective it has fuel.

it you something and development can So been - what has to that And we we're hoping where probably do. the that commercial that, value. is could, that's know, think, have wide I that's around missing But add I hasn't application. what think so

Josh Sullivan

you Thank it. time… Got for the

Joseph Adams

it sort destroys and are HEPA have effective, when that's germs but HEPA waste effectively they the removed. comes off be to then One product filters filters viruses - and And by that thing, actually trap them. This dangerous about airplane. hazardous of

tremendous a terms the of there handling. And longer as no viable. there's So savings in they're well

Josh Sullivan

for time. Thank you Great. the

Joseph Adams

Thanks.

Operator

with Guiliano Your Compass comes Point. next from question Bologna

Guiliano Bologna

thanks guess out my infrastructure side a morning, the I starting taking and bit. for little questions. pivot on to Good

ramp to new generate have segment with going have obviously service of plant You EBITDA Exxon. the [indiscernible] also the kind [indiscernible] whole as how coming in do could live also of Repauno you there Jefferson throughout a online. sense And pipelines year? river Is you you a and what that to XXXX? have under And the power the

Scott Christopher

and followed - we year XX% you Ridge, just would that, a of it's the Jefferson, I because and by that obviously, Yes, largest Long mentioned, Long $XX Ridge, lot in million three on, comes And million, will EBITDA of lot $XX and once say history the end-loaded. this then order. a Repauno being own time not of more so we it not it's back from have of

projects, we've reasonable goal. you got which could next then So in - obviously, And that service, expansion substantial ones numerous year, they'll that. but I to full all think a would that's better. be then be add know, And year,

Guiliano Bologna

- million of And range makes a specifically, more thinking might about million prior and the that $XX think into annualized about the go sense. for get That was discussion EBITDA. I $XX Jefferson, to you was

what kind representing could be? – explore of for of from other kind something Going projects what you could what the there, and magnitude Jefferson

Joseph Adams

of a list Yeah, there's long projects.

was used. once many I of think, you have you with know, then get connectivity, today You Exxon only opportunities pipeline the add always you pipelines, goal six being business. And, that's is evident which the one to know,

crude, the sold - could for five them gas oils. include could there's crisis. that include COVID refined so export, one before And products, which fuel We other could ones intermediates, point jet at include could vacuum,

DRU there's - recovery market and we're online Canadian on know, range and means pursuing there's going And then always that a you them. up for of, to crude that the in picking markets the long a move mentioned, which discussions there's rail, which just summer, a in this by come I rail. with Utah by So - that's list is crude opportunities is will it, there's,

And very so then DRU expansion. Motiva seen horizon, some Canadian and the more crude looked we've producers at And that's in and terminal have have opportunities. the we movement for the on are that good also

and you end three subtracting. So keeps an every with there's all usually and up active it those - customer meet the of of adding time ends are - the it you groups them, to big list list probably groupings up instead

Guiliano Bologna

kind to making of range that, centers, Jefferson year I so XX of range sure, to XX. Repauno great. I if own EBITDA generate XX to is at perspective, just then correctly? data $XXX half XX. any That’s in supposed about before XX have roughly power million is the a that And And remember you from am Then plant the you and

Joseph Adams

Yeah, XX.

Guiliano Bologna

queue. appreciate I And into really I'll jump good. time. sounds back the That

Joseph Adams

you. Thank

Operator

question with Wetherbee next Citi. comes Chris from Your

Unidentified Analyst

wanted of think JV, to but do know, about you looking ask like the can the I but is you essentially, of further how to over in and growth million, that like beyond market to $XX year-on-year, not growth bit wanted XXXX out of sort that you have that, business? kind like like, clarity how called on grow pick time, James that what most might frankly, up a of think to, Chris. about I in kind to EBITDA about went essentially, morning. I the it - just think look Good you million through $XX share, ability the and acknowledging walk from what that out, how the understand you to

Scott Christopher

Sure.

think on you if the third-party take I starting top So your I the adding as number. of parts that generate point think discussed if of that billion an - you we fleets, and $XXX say in roughly sort as $XXX and that, and then you’ve [ph] well equipment ahead million of both EBITDA, look time XXXX business, to actually invested from the, managing to the last opportunity million incremental $X.X

XXXX say I $XXX And to do - a I so would little think it it's million but it's aspirational, may goal. reasonable a $XXX million sound reasonable, is for

Unidentified Analyst

initially, how can what to around just XX much it is in to that like that growth recovery? the or end, understand uncertainty that? of across within number lower - some should higher years watching is just XX, range the walk what puts a get the kind for wanted Got And understand the to you that faster be of Or it. within at end of we sort about the you

Scott Christopher

XX? XX the what's - sure wasn't I sorry, to I'm

Unidentified Analyst

walk, not in was the last had EBITDA essentially at I item - your walk the a bottom range in there mistaken. believe you essentially I'm if was the

of low know have the putting will high wanted not might that to the case, just [indiscernible] but been versus just think it? be end the end what at you I

Scott Christopher

range, partnerships starting million was Yeah, those the then the so then on the obviously year, $XX a from ventures it this we've that new And closed of build quarters And that only and existing approximately - year. $XX $XXX $XXX this investments, to new because producing there up that's closing or portfolio, soon. most was joint million XX million and had. top a with are year. investments of generating And adding million of that, three we that be of should of wasn't - it actually from

XX So [ph] that's plus plus the XXX is XX, a fourth

Unidentified Analyst

of time, services like basically, a then Got business. other out like you've it. addressing, over the better investment done one of some moving job question, or a great sort of [indiscernible] making a FTAI And building

is issues term, like look structural company you it make specific about are FTAI are address, all? how the longer that thinking sort a structure of could think forward, at if as any you might sense that any unlock As maybe unit there Or to you like, to value?

Joseph Adams

we partnership, well, want traded And it. Yes, realize and do K-Xis you index at some universe. being that. negative, do having we of have the of about the a at in and just look - - that investors talked Q And to - particular, publicly some a funds take out look

know, us two the a to that to you of create you’d So solution for potentially as addition to, combining companies K-Xs, spin-off infrastructure. to separate, create more you pure-play is getting for have opposed stocks, of them. rid two to And in

So believe that think have moving sort something that list specific don't that. value priority will create that's an it's up simpler. the and But we story that, we of add on a have we we timeline value, make the and objective

Chris Wetherbee

But was I for Chris apologize here. jumped here. Yeah, on. that I I Joe. able hopping on Wetherbee. just Its join to

businesses up be on size able As that or that, need to to or is size, to to that? are the would scale infrastructure do think get the you follow at there a fees, a do you you that

Joseph Adams

to that don't some We can add the add we'll have infrastructure horizon that that. side, we'd things We'd on cap, there's of we on to like a at said too small. will interesting today, we each think that. the be always to least And we billion close. want $X it's very sort that achieve think arbitrarily, And company market

close, So if yeah, very we're not there. I think

Chris Wetherbee

helpful. I super That's Thank it. Okay. you. appreciate

Operator

Justin from Your comes question next with Long Stephens.

Justin Long

when it's wanted August, question power when secondly, your start that in in you EBITDA in talked And plant. as to potentially at I have are swing Thanks. Long factors process? know kind of clarify thought on to what that good - one in will the you've generating Where And contemplate million up that and to mind, of terms running, day be Ridge, a the And do? morning. it just $XXX wanted what you with we of are I divesting start? then in XX% you power ownership about big the plant

Scott Christopher

Yes.

So part of that the power which auction, PJM a Very in the be likely for a plan about XXXX capacity million think in capacity, And that would to the from and believe is income $XX auction, $XX away. a payment year. which payment, it's has I will this first right think that we period. I booking be comes I don't

lag there little a will a to right $XXX on - of away. be So getting the million a bit

In selling terms of it.

has not we last You transpired say spoke. since I would the know, time much

very hydrogen the I We initiative, it. feel you previously, upside we like and, have would are this center still - upside. and provide, would think said know, that, with substantial about it and then think, do we thinking both data does we're real more that I have opportunities

you so can is wouldn't obvious. anything the felt we can, know, - you know, at to gotten a we've, you until where we know, we And least, like do value point we those

Justin Long

Okay, aviation EBITDA breakdown that's the on expectations secondly, helpful. And for helpful. your was

some Anyway, ago, and more of XXXX could you you from us that a we million and I $XXX answers back a to of to question moment think get little provide $XXX for as expect partnership more break million service color Going kind of into around said, XXXX? your pieces. bit the that down and around components the you the one parts

Scott Christopher

with Martin, you third, third that I probably would say you a Chromalloy be the of close. would the of joint a between Yes, Lockheed took third, and divided it's equally if AAR, pretty a business venture part

Justin Long

That's perfect. I time. appreciate the helpful. Okay,

Scott Christopher

Yes. Thanks.

Operator

Your next with Devin question comes Ryan from Securities. JMP

Devin Ryan

some right conditions follow Good in for in Most of over to expectations terms maybe a deals? kind then morning, large kind outlook To now, of of and kind around in the seeing been great. dig of want conversation last know, you larger how had to And of purchases, bit love on kind questions kind the on have shaping additional are to the just improving and in asset I obviously, the coming the market aviation are the a and of kind Joe. little XXXX, the maybe do the what in you just up market backdrop. extent, level the scale asked. are next of quarters, backdrop what idiosyncratic big benefit few opportunities? maybe is expecting given appetite just is the you airline quarters guys that Hey,

Joseph Adams

so question. the are to larger and really some either we've us. airframe and for laser-focused engines, by Yeah, spot And are the airframe. think are, the working on that you scrap sweet the I I I XXXs keep the CFMXX there buying focused, ability know, we know, And there, or doing think either we’re buying that that AXXXs or and been deals having then great think coming you on down transactions that see write

of the think our so talked deals from sweet know, money have we've difficulty, longer, been And for that's And about reasons. I is, that's airlines you governments. lot spot. getting this a and our I think two - the taking One are before,

financial which And cost, is government, assistance you you now from government get comes with the so a that partner. have but a

So the you mix. slows velocity dramatically of get transacting, in the you know, down government a when

from So market heard the a it's right everyone second of timing. probably this delay. worst one people sell, now, thing - to And is we've can wants then it, is, avoid knows, that's you if been no a the bit really

little it's feet of are get dragging better. a people So going bit their saying, to well, kind

the So I should slow down a little bit. And biggest I you know, fool. won't look like,

need macro there's do this XXXX. need of in think tapping I source year some going to the capital. of it of some of both they're every flow there's that think I those there. - negative cash and So the And be money, But they're things money, is airlines

selling capital And is so the sources of some your one of fleet. of

So think getting I there. I there. we're a deals the it's and are I reason - frustrating but do little But slow, think just the mentioned that

Devin Ryan

enter event capabilities will, mean, profile market, that. repair kind the follow your your And Joe. return the Appreciate within up change if with you bit the in up I a of that, you quite ramps, new can just bid obviously, integration. know, I the I as of kind in you guess, mean, goes vertical

So now just that returns you know, it more is you with, to [ph] assuming that or additional the prior do capabilities? is be something that will looking you're

Joseph Adams

we competitive not people generate. market savings and be we can't deals we’ll moves and the win, you other have a that and we're said, on want the because market price to for so moves, of specific of moves, as Well, a fixed market lot

haven't haven't we'll our competitive. felt like So anything we on be because lost - rigid we were And price. we've I

really So of just more factors languish it's I that a deals other just, have to you caused know, little. the think

Devin Ryan

Yeah.

If up up Difficulty] Okay, a can, follow I here. terrific. quick [Technical just

First now, the off, pipeline, of know, the of a activity you cross on right Exxon, just lot at channel congratulations with completion Jefferson.

And hear and there financing lot outlook level, of additional at developments. How about additional the a so thinking projects about are guess, of great to there's get on. some asset guys you coming the the I

outlay, thinking love those capacity about just And how just in partners with et terms think guess, structuring for also modeling and those? And about the cost to so cetera? we’re just you're I

Joseph Adams

we great did Jefferson, Yeah, question. mean, I two years so exempt at financing And, it a it's guess a ago. I was tax

interest are bonds Now, the twos trading those but time of terms mid yield. flies, in in rate,

another we're at doing at exempt tax So Jefferson. offering bond looking

$XXX FTAI. be come then would be would the deal, million we the be back for roughly half about to - For do expand half - two other storage a And for capacity if things, expansion. to one up would

some So liquidity we out Jefferson, take investment and it as for have FTAI. of

proceeds and So in my two very low availability, financing cost of uses good mind.

Devin Ryan

it. interesting. Got Very

thank you. Okay. it. Well, Appreciate

Joseph Adams

Yes.

Operator

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

Ari Rosa

morning, And good good morning, Joe. Great. Hey, Alan.

have you the people looking world, of market about talk the you could a on lot to demand the and just leads the stepping thinking maybe I market, to that still at a amount thinking of whole. scarred. And aviation touched the you sitting of idle questions, know, like know, the obviously, picture earlier business, you wanted maybe been supply back about kind I looks changes, terms for ask, aviation as this the So, know, how about, of and of a one kind of just of where on kind but post-COVID equipment sidelines, in in

You know, the down positioned airlines come to capitalize maybe how are how of about leasing assets? pipeline, FTAI think terms that that? on in think structural is changes you And there do have

Joseph Adams

question. Great Yes.

think startups, I more two statistics that in airlines out than one that business. now XX of last have is gone I heard, are airlines months there's that interesting airlines new more the

the And you So in argue people in wanted I've no what's you to Even shortage it's airlines, there's interesting could But that. are market horrible invest about somewhat willing weren't in think amazing, never of of in invest been know, career airlines. kind know, that's, happened. use that's to is seen there people that you that which to given that money. when this my of a period

And So this airline maybe cheaper. it's incredible. everything you time is to get an great start a can because

activity I higher third to expect in So quite and that quarter been than equal a be hearing flying recently, they or there's few saying again that XXXX. then think to airlines I've

sort as demand. is of pent-up a there's tremendous rebound fact pretty there that's matter So too. a of stunning But a another -

when Johnson know, I people Europe, and to flights And bookings up, so. were, summer announced Greece Spain to Boris you their grabbing the the reopening think you plan from in XXX%. UK, X% know, went in

So there feels I I memories, see how I quickly I will think come that you'll but like pretty short don't could - be - happen and don't people have airlines again. there's the long know this think one back

incredibly business the is In airline terms of structural, you know, risky.

and everybody expensive, be more is is I think a capital So leasing of riders. to capital expecting

big leasing XX% clearly buy start an know, and equipment, lease think airline, just some have you the the have capital you you cost a north if and of leasing going try said - it, up company. so it's now why companies to, because lower of of I by

save I airline let is, engines, cheaper, manage pitch capital. know, your really can efficiently, to So And shop could need we our that more we and an manage think engine it when us benefits. we visit, then you don't do

shop and million. have put a shock, $X don't you engine to $X get or $X cost for visit. was a going you though, send And where even ends thought you million costing million to in up worse you into shop So it visit a your

think in as a terms have So capital of I will that pitch cost good well efficiency resonate savings. and we

Ari Rosa

thank that. Joe. for on answer, a you that's And color great That the

that in think at a So is piece I Maybe of the as maybe narrative story. end wanted as you how around a of potential. a lot possible, look the around buckets sources, there in storage lot little up Obviously, think revenue sort? you total you And around balls up can what additionally, know, think color, economics obviously, those to you terms the each know, rail is some something paid obviously, steam. or like revenue, the of are turn could picking Obviously, look looks revenue EBITDA different like, air bit of how a been margins for give has Jefferson. Jefferson And of if to and the the maybe now it interesting has economics FTAI with an Jefferson, of we connectivity that pipeline of the arrangement about, materializing. what of Exxon, to is extent is, always then percent of about about quickly, are that that pipeline like you exactly getting it the crude by

Joseph Adams

that fuel to we refined another have have about first we So, to I at from point. would I of mix would mean, thirds And then the the about Jefferson and sustainable - question, two add some wouldn't also one from revenue I crude probably is on third at our goal envision products.

that, know, projects of So thirds crude two one we number But you had looking refine that. at a and figure products. third

return. cost high lose of it, a if because lot terms economics, good, lot of the a its money, volume don't short pipeline In and you an through of pipelines incredibly it's

not definitely in when how mean, why it's built building realistically, that's to of to reopen don't build, you I put, we is the conduit the building you six want many pipes want because we if much wall were of house, the a you more like, So deciding cost know, you and put cost to more would than one. it.

So we enough, built return good we're six, one. and we're only using one off right it's now. a getting And

had the if imagine can you be them. what flowing return on of So we product all would

Ari Rosa

it. Got

for color. the Okay, that's terrific And thanks time.

Joseph Adams

you simple. tariff it's just per barrel a all, very know, That's tariff, for cents the paid, you get There's a move.

Ari Rosa

can for like margin any give color around looks you FTAI? And what EBITDA it. to Got that the move

Joseph Adams

- I no have got you it's it, a de almost costs? you've on you've I built the mean, mean, once pipe, Well, operating are minimis. costs

Ari Rosa

Yeah.

sense. Make Okay.

Operator

Brandon comes next with Your from Barclays. question Oglenski

Brandon Oglenski'

and question. morning, taking Good my for thanks

like, rate So million XXXX? Or run for just XX is XX full expectation? year clarify aviation exit want Joe, the of to infrastructure to in explication and EBITDA that's that $XXX

Joseph Adams

XXXX, year. that's No, full

Brandon Oglenski'

fleet Okay, appreciate of you that. assumptions. engine And, the Could talk about you to the we back I did know, the beginning and at portfolio? come call, utilization that,

Joseph Adams

believe be it's the flat out. And year, half year Yes, second of that's sort We're to XX%. about XX%. this everyone's third XX%. will in XX% utilization utilization, I of for think the first for then XX% said we utilization. the ever the we of I the quarter, the - know when up it And XX% expect in probably trend to that half We engine XXXX around was highest had to you for beginning the second I And quarter. usually

XXs up. But engine that easier an higher fleet, even So the be the it it's picks than aircraft should lease low market as maybe that return today. that's the in if what's or for an assumption. market utilization underpinning airframe to And

Brandon Oglenski'

appreciate that. incremental and Or when that the you and does the that you're from book? on from sales know, you and activities, is current PMA Lockheed lease And that the partnerships, Martin within $XX third-party EBITDA provided know Okay. these then the I ventures? includes expecting million, savings AAR you

Joseph Adams

Incremental does savings not EBITDA, our - any that's own include fleet. not for

already buying week. this PMA we've mentioned, I As started

Brandon Oglenski'

for need then Okay, $XXX this for million. year funding about aircraft me, to of appreciate look last potential on based you'll deal $XXX And incremental that. does this it one, $XXX like million, that

little potential what offerings bond talked you're think looking but about that some at this is I a Jefferson, year? bit - at you

Joseph Adams

Yes. capital And get If $XXX we an of XXX undrawn revolver of as Jefferson think of I we source did. million, million. have a we

to we cover adequate have again, we funds preferreds the have are markets that. XX. And So could open also access, to come preferred today back of all

issued. where that's were they So

So that's possibility. another

sheet, we so. look balance As at the

or selling would lots and that's without generative, else So cash be of anything. that doing - anything

Brandon Oglenski'

Thank Joe. Okay. you,

Joseph Adams

Yeah.

Operator

from comes Rob question Wolfe next with Research. Your Salmon

Rob Salmon

engine today? question. Hey, us about good piggyback morning, taking just your going are be of thanks I you FTAI. line to is what Joe. remind percentage the very the last questions. guess Can that as module I transformative to represents factories of And portfolio, Clearly the for on engines for CFMXX think

Joseph Adams

Yes.

I have that. I think

Rob Salmon

the it number. Martin can you're Lockheed of with something think digging When FTAI as factory, entire going module portfolio? CFMXX the to you're with use engine? you're, As the Or is use just you kind this we that about

Joseph Adams

the Martin to There's Yeah, maintenance on so CFM number a Lockheed really shops, is specialize focused CFMXX. it's by really, the of engine they tend engine, type.

[indiscernible], strength the the will other a And so Martin. Lockheed for probably CFXXX and that's use we shops, of not

really So be I market. CFMXX focused think to going it's on the

right And know, terms of XXX value. portfolio of it's half there's it's In engines, roughly our, the engines half fleet, now narrowbody you CFM. about

substantial and As of engines amount there’s all of is $XXX be adding that. to that almost new I mentioned, CFM investments, million that to going

this of CFMXX. X% XX,XXX. So world engines of engines for then is end fleet year the XXX I total And the to over be expect by XXX of

really small. it's quite still So

we that if of years that could terms we adding decide many for in see So growth to beyond to.

Rob Salmon

the you throughput Absolutely. going which imply shop as visits, that the XX little If get XX that so every believe XXX, is you in years, engines assuming still I'm to a give using a us It's facilities for would XX. below would XXX visit or I well engines, more… five around about aircraft can potential, be

Joseph Adams

to than the probably the year. assuming, our range XX know, a be in that about It's a And we're XXX in bigger near lot you term. it's going XX needs are engines actually to

Rob Salmon

about how you sensitivity throughput, you'll the up max how FTAI that build to think think to from getting you as XXX an you get And and - to we do engines for perspective? quickly that can should that earnings

Joseph Adams

engines be Well, I could at next we XXX that think year.

over three shop that amortized that if shop feels $XXX visit, assume years, XX shop that is if $XX a visits four show or we some a doable. $X in that's And you up, should And million $XXX save for if own savings $XX So there. year. to year million that's million fleet, million our that's per just visits. million And

Rob Salmon

and much clearly, able improve the to which means just of the wouldn't customer, also to returns. engine get you be it and back Yeah, you're additional going buy have to to

Joseph Adams

engines, in is what values, engine and Right. it's, manufacturers nobody you PMA, I reliable, it. widely talk we about of and you an know, there's the engine, the hours that on it's not cares say, it's which because But the big the we PMA know, well, leasing about if who going they be residual know, we one talk always a not you're mean, if was got to factor, affected. revelation it's when if when leases - do, used, cycles care you

rate. So there's on discount, lease no given

keep the So to we have savings ability effectively, you that know, ourselves. for

Rob Salmon

kind some lot as Got to should it. Jefferson of using Joe, think six be we're - know, per to the I opportunities that else, over how to move, the to you've a a guess, Jefferson, had there's you've you'd us you the going can someone it before turn of EBITDA year? for those clue, another thinking you already give at announced you on pipelines, but be you expecting I how kind to that's be barrel about put consumed quoted And of I there's to day, that Exxon, throughput around remaining are four? quickly about one

Joseph Adams

Well, multiple. I that think opportunities are

of we mentioned, ongoing those pipes I for have about a couple using crude. a discussion As

products refineries crude that well. into we're and refined about, as then the is talking an inbound opportunity So Exxon

or So probably that for we of would those two the balance, year. utilizing this I would hope three be

Rob Salmon

the Appreciate it. Got color.

Joseph Adams

Thanks.

Operator

Lewis Your from BTIG. next question comes with Greg

Greg Lewis

it investment? ramp, into – some had back as a in Thank out longer, I guide about LOIs you kind I like, hi. that that ones. like parceling just guess how you about, there about and like of those think half second we the, quick as of I I you, aviation, I versus turning think way talked about maybe think half guess versus I but of know, kind any earnings first to can pipeline of the into is should about as Yes, is we think as everybody. good One, kind it about, think and morning, a couple in

Joseph Adams

very in Yeah, QX. little I expect

say would than going it's year be off will is really QX. a and bit balance higher and the QX, So for QX I

Greg Lewis

Perfect.

you Difficulty] you. are a diesel, like, mentioned [ph] Okay. Thank projects the, decide renewable year that things, that infrastructure I'm scale this a about we you're you are then that know, think where projects, lot real you these are, bio as realizing you something at lot it just looking they're potential side, know, opportunities later you like know, about maybe quick, [Technical seems the once that, can we're touched gas forward move And in know, proving pilot to these and smaller was we on hey, on development stage, FID even our these there's, year? we concepts next more you concepts or know, you with that,

Joseph Adams

rest, one think pretty initially, relatively I the - of that's them are develop are the and most scale small to there's would I I attractive. Yes, than economics potentially larger the mean, but products

it. you with market that most So the something in But returns. of expand doing of you prove scale goal really, the that's pretty below out, of it's these initially I can if not small you then terms it think is know,

Greg Lewis

that there's all partners assuming be going to of in I'm And Okay. these?

Joseph Adams

Yes.

Greg Lewis

the you Have for much a time Thank Thanks. Okay. very guys. great day.

Joseph Adams

Thanks.

Operator

comes next Frank with Your from Stifel. question Galanti

Frank Galanti

for Yeah. Thanks my taking question.

to managing include And have airline managing from ask other So those but I when right, the if own I leases they airlines are does that engine, other parts Chromalloy don't engines? somebody to PMA contribution first, parts. engines, an will Lockheed guess in EBITDA there, about care wanted $XX million mentioned you'd then or people's

is guess the perspective? And it if of will work? transaction a question around that care they around Do that actually then own they are does they from an like part how I - in FTAI it? that what economics the So, PMA

Joseph Adams

sort putting particularly value own PMA. PMA into PMA HEICO, be today. I you know, directly a Chromalloy, and a buy lot PMA some airlines use there's major the But that from for ones PMA, a no, results So, mean, years they airlines their shop of engines. that buy airlines, buy from residual PMA all there's will [ph] They the own operate misnomer been It's factors, of have their

that's already is an the so. first purchased product it So airline,

So most there's with no there airlines. concern

But with market you stick won't share makes. lot the program, don't But OEM you a decision math to sort airline need a a each using be that that's and If PMA you work. PMA. then make of a of

it particular, be we to still a peaceful say we in we should is contributor. not it the win XX% assumption so when an coexistence. it's a have on we I that market And that, $XX we that certainly year, have you the to that that communicate big we this for I But is be fleets good make And and on would and million goal is It's goal know, that initiatives, can some There that the several now. to And definition have front. manage by airline - proposals think that has can right we but on, you any small dialogue know, number. the have framework out share, their and have XX%. if OEM contributor that your will have have And a we material. going

So I'm hopeful.

Frank Galanti

relatively lease? XX% it the revenue? around use utilization that - super XX%, XX%, when at I the assuming little as then, they I the the But maybe in then an going utilization gradually How you you been. prepared be for first the flat, in in that's engines actually helpful. they Is year, people engine maintenance baseball. remarks the guess a question hopefully this up turn XX%, will that XX%, does have, second XX% half. little you’d inside as to ramp might I aren't had into Okay, flying a But airlines bit was much and assumptions, mentioned that half, remain as second said the of and maintenance revenue that guess XX% you And start

Joseph Adams

Yes, yes.

not So in sitting it's actually a an warehouse, but it's on-lease, flying. it's assumption that

Frank Galanti

should on you a think the makes in have of I pipelines, And give I the guess, a then Jefferson can those there to going for for us those XXX,XXX of additional capacities? to for what sense. the Cushing, press XXX release, That one for be lot Exxon, as pipes another Okay. and to smaller the said question, are one it four gasoline, capacity Motiva, diesel, one – pipes,

Joseph Adams

Yes, XXX,XXX largest be that barrels one capacity. so to will a is Motiva the almost day total the

barrels is pretty it - barrels the six that if but line to it's [ph] varying a And you for from can payne it's XX. of The initially up inbound but a day each assumed be was So day big then on stacks a capacities expanded XXX,XXX pipe. XX,XXX close. them pipe one

So but each bit those. some are a are number some little bit less and one is a little XXX,XXX a of more, for good

Frank Galanti

much. so Okay, great. Super helpful. Thanks

Joseph Adams

a lot capacity. of is Which

Operator

I'm showing back Alan no turn to questions the now Andreini. like this call I to further time. Mr. would at

Alan Andreini

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

Operator

gentlemen, does Thank so this participating. much conclude and call. today's conference Ladies you for

disconnect. now You may

FTAI Aviation (FTAI) 26 Feb 212020 Q4 Earnings call transcript