Earnings call transcript Q1 2023

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Operator

Good day and thank you for standing by. And welcome to the Q1 2023 FTAI Aviation Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to introduce your host for today’s call, Alan Andreini, Head of Investor Relations. Please go ahead.

Alan Andreini

Justine. you, Thank to quarter like all the to I earnings welcome call. first XXXX FTAI would you

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

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

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

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

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

Joseph Adams

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

which Ukraine. which X% XXX% $XX us to adjusted year with adversely $XXX.X QX in well compared let's in QX, by million of Russia's been turn numbers. the affected up is QX, began million of and compared Now EBITDA. adjusted invasion We metrics up the XXXX, to million key XXXX, are had to $XXX.X XXXX The EBITDA for in

other. quarter, million leasing products from During and from comprised negative from the segment, and $X.X $XXX.X $XX.X number was segment, EBITDA aerospace $XXX.X our of corporate first million million the million our

gains leasing. of came to $XX assets very had leasing posting $XXX grow. quarter, the for million $XXX out leasing million $XXX in With in of are at million we asset rest million the of below Turning $XX QX, have sales. We in asset QX from summer EBITDA from Hemisphere for to value in coming on remain all the million more sales strong $XXX approximately in of million pure the approximately QX excluding We The asset our leasing of will slightly Leasing on expect sold million gains million of of commencement $XX.X EBITDA. but for and assuming $XX demand quarter, on good QX. million, a component EBITDA continue confident expectations, or to gains for sales. sales $XXX gain a Part and million for of per Northern and for of year, $XX.X book XXXX. season, the asset million of the up comfortable came $XXX year assets we

airlines. in We this very of tremendous rapidly excellent the without of at of to feel $XXX and backlog in plus million remains million million last from aerospace these quarterly activities a about feel expanding end another products organizations, seeing potential because and generating EBITDA XXXX We Aerospace think other with and companies, doable. continue maintenance $XX good number to with $XX quarters and products see had the million of business We about approximately million XXXX, and $XXX in contribution repair we're EBITDA. quarter booked PMA. six have leasing EBITDA $XX any confident started EBITDA

Alan. back the turn With that, over me call to let

Alan Andreini

Joe. you, Thank

call you Justin, now the Q&A. to may open

Operator

[Operator Instructions]

Sullivan And Josh Company. Benchmark our from from first question comes

Josh Sullivan

on morning. good congratulations results and the Hey, progress here. And

some of there. through EBITDA at annualizing now you're So the good you components walk some and rates,

curious the million this at million is the point framework EBITDA guidance if as right well. to Just $XXX $XXX still

Joseph Adams

Yes.

Josh Sullivan

I up there. broke yes, was That

Joseph Adams

yes. was that Yes,

Joseph Adams

one word, one you of much maybe. well. as one one was was on in heading the these season, up segments, it target. the each add Sorry is that some we each it's obviously segments, word there as it probably a think of answer, if numbers strong we But indicated QX, QX very upside into yes, as And we're

Josh Sullivan

particular within Got sales or moved should around, as it. can on mentioned, was about quarter-to-quarter, know there forward? And sales gain lumpy gain then those be how think they the we any here, I program but just on moving you that

Joseph Adams

transactions target typically get they of the lot end you over the the towards slip some No, a year, and them, in that QX. it and closing lumpy, of is of

bucket So because your of usually. you've deals slowest QX the is out emptied usually

So tend to through a be slow. in towards the the builds it's QX And budgets for then year. end not see growing so you to have bit And most year. that the people of unusual December, it it annual end

Operator

from Compass Bologna Giuliano from comes question next Point. our And

Giuliano Bologna

quarter, congratulations weight and quarter. morning, this quality great high a on Good

The was any the first question around any have your or there's update to out compared timetable change I'm what thoughts PMA curious any you the curious if opinion I asking PMA. if in and there, around was basket. you've around there's about laid in updated if

Joseph Adams

four you or of all outlined the do we final that for No, is that. what to no achieve I significant real front expect good middle on has to would ready need in there's And before, be no to we to year. change products every been be made say in progress timeline this able submission the which

towards parts there's in So what market. all the those I said previously, change would good say we've no in just fronts on and progress getting

Giuliano Bologna

great. much probably get focus. different That's doesn't that slightly area then And a

are results. them if impact assets process, curious if thought that I'd I'd or any You also in positive around update those two potential offshore the be or any there's two maybe one in in this the had other negative then still selling be And those have around curious financial year. quarter, category. of the

Joseph Adams

that a done be of of on negative impact had because of probably bit needed $X some to QX little one vessels. in a the was There million Sure. repairs larger we

So so be next a we service, drag on is bit good. quarters the back to that was a in quarter numbers this expect and ship of the the two

that So reverse. should

In around likely of selling, terms lot. that that the most becomes, and do end given And market. would the more to universe end the year, in just of transact still has this it intervention it best timing evaluating the wider actively larger potential recovered believe started the of operating we're towards of be year, credentialized that the well vessel And buyers. the a market this the

year. being towards timeline on So that able achieve I the and feel better that to about of better this end

Operator

Frank from Galanti Stifel. And our from next question comes

Frank Galanti

for what my Congrats the nice or sort much questions. much quarter how was was makeup on component, very guess taking the ask you of business, USM? of $XX talk Thank modules, about EBITDA, how of to aerospace on I the here. mix of I the you Great. the million can wanted much sort that

Joseph Adams

Yes.

this parts from was So given up two we've more little about been USM quarter, this Used quarter increases. was been bit has picking and The it launch, there one USM. than Factory, Module market It that thirds shortages US, third is price a Service from predicting, as

and be we a teardown. per good XX a We’ve $X make about a probably we'll indicated targeting year that's So teardowns thing. million approximately

EBITDA be four of million. divided million would $XX by $XX So

of then we a mentioned I've of I Factories, indicating that upsides think year strong USM. some airlines little I fully of have who, a and of think, a verbal modules as our So there's backlog there's going upside, and bit eight for have Module lot number whom are before given just that of committed programs at the forward And some a of customers for looking us more they're growing. keeps or

repeat were that we very new So repeats seven and three the which mix were customers. good feel there who customer probably in about were of of XX out customers the QX

as the customer. customers terms well the expected So both of we progressing per number growing number we're growing of as as in of modules

Frank Galanti

about on Is for, past? much way that, XX? at those Great. you've know XX% And under? before, around a of the there at to or those X, churn that currently of sense way up lot capacity I there that you grow actually XX a operating in are is Are the number? their is might is business shop XX with XX, churn do sort in a but customer that it early like I that another more really a worked be have it, used like of how I percentage think there business XX to comment. is for customers in quantify Like to you've sort like a follow customers, get question you to you Or to sense customers stickiness guess the visits? the a room the wanted

Joseph Adams

has in churn indicated, you've all, Nobody indicated room any the there's has it grow, of to there's use Yes, that. or again. lost no say as lot of I us said to We've used a wouldn't product well, customers. would first not that they and

a a very thing. visits anywhere from that's the total look to And product. starting people you're if So good at have year. talking like potentially shop out, shop airlines of their XX number you that about XXX And visits

per XX that's so And year. to XXX modules

available small if So of you're total to shop going their eight, capacities you're we're at a still opportunities. barely about percentage very talking doing four,

grow. we So will think number to continue that

a getting in module lost use growing they In We the shop longer, visit any again. they repeat once We customers. as particular, swap presents haven't more keeps time to cost airline. think and the will it and savings people, it, time, the shop

better grow the we the continue in coming advantage think years. of using will only to and So them get

Frank Galanti

And one just clarifying question.

XX the customer to You XXX Is that a aggregate? for or year. shop visits per XX in customers said

Joseph Adams

per that's customer. No,

Operator

from comes Zazula question from Barclays. next our And David

David Zazula

Hey, business. on aerospace thanks for guess the question. I taking my products first

concerned or sensitivity we businesses interested you think in respond? the those investors be it slowdown a assessment talk slowing. the demand how your think in lot customers a of macro. of a Do about think you would the It'd would or are increase macro reduce to to of I

Joseph Adams

Most it'll one of effect airlines that for think don't basically has burned because been is doing have fact off. time COVID visits years. an the stopped shop much because two and of green We

time fleets. very available little there's green So in

had As is, The and more last engines is XX between airlines because a matter need empty. XX that month nothing indicated of the tap fact, bucket left. we've they or in they have two the

macro hear that secondly, cutting a accelerates. mitigates I there slowdown. So cost any you on think focus always of then the macro slowdown And if type is that

I direct then And a doing you go companies module save by what can your about. a savings into avoid that a reduce? visit can swap. shop shop is and we're So We we you offer can mode What cost more money like or on cut? more can visit, I even very

it's down really on cutting. cost we So if airlines product need focus a think and to hunker that great

David Zazula

you are Great. you project. to further of term, down in projects the But well of there, a and evaluating And very you about you're into? that? How generation evaluate other guys then have thinking any done additionally, are think engines, left get CFMXX, you different What that thinking ecosystems as lot I life how as the term look would potential on would timing you long among think long line? for you

Joseph Adams

particularly that longer we're we CFMXX. see we to CFMXX the now new now, as to supply freighter engines We life things are those thinking see would, XXXX that on as have conversions, we long new sweet longer. probably the done all running from similar look wing factors we've out focused engines they are spot extended really CFMXX on do difficulty the we disruptions, for aircraft really, on because XXXX. right It's thought candidates Yes, with two great expectancy in which of delivery, people that the think chain don’t, are been delays and making staying

the be don't to from every attention we So to But ahead. feel need in company thinking organization. I divert we somebody needs say, five as years that

not to two us those candidates time And do what engines consider when to excellent like so I'm But disclose on. feel would we're we the adding those are. going is working right be to have that that. do for

Operator

Equity next And from Cacanando comes Hillary our from Analyst. question

Hillary Cacanando

Yes. Hi, Thanks Joe. for taking question. my

of one So Would develop bit that other And can mentioned looking in this about something talk this industry think repair you related that products the previously at maintenance something to little year. this mentioned I are a had were see we happening that the about you to conferences. year? be where process? And able you more you in you is

Joseph Adams

support market a on. from repair growing and that where a XX% a got a that's something very savings, of actively about question. part for It's of of I'm It new engaged the very quite Yes, is we're could the part. excited you It's cost rapidly. cost working repair essentially, opportunity. great both lot

more companies develop that a more a great repairs. of number and And are So it's continuing product. to there's

we ESG also not with saving you're and It that love perfectly part, into making a old the repair one. So the market. side It the well new you're our fits portfolio. on plays

recycling a opportunity. It's

So business. repair ESG is pro good. It's very

couple, or hope year In said we something as terms material on a progress, which have the And do of down. opportunities two this say we running I'd that do three before, we're can I specific we repair XXXX. in side conclude

Hillary Cacanando

your lessors parts I a be using all they to to I And just when question airlines, But that you That's was then those the strong since would demand that and as lessors that where related coming Great. if great non-OEM think would provide demand would lessors wondering more from the I sensitive use would about noticed lessors MROs. you're And another there strong you hear. backlog in get there's a the as seeing strong presentation think your do be well? color from lessors be I a that, materials. have little guess products. wondering airlines. I do approved, more Because I may had most think demand. willing regarding market -- are there's to you could was parts to if little PMA from you

Just get wanted your to thoughts.

Joseph Adams

Sure.

were part, few we've actual acceptance of now those of we engines. XXX never companies. of take XX had growing in all do about and engine all of over than PMA many I the if there case XX a study. in PMA. great there's put and not them, leasing bought buyers operator better done or as very there. or it of the competitive questions prices engines. And equipment. that engines CFXXX is is talked good because We've And last So leases, those sold And was And on have evidence the of PMA engine, the We question think of I've which any those where ironically, OEM were XX the a or the lessors, that

no, And you engine so if they they say know PMA their they do. it. and can actually but ask go in them sometimes will just have It's don't they

CFMXX that play in same So pattern out will I as fact the well. engine think the

be acceptance in So there do believe growing that I will that.

mean, terms the all there's of I In where their is good from growing news categories. three activity, activity

You have airlines.

at time they're the number so summer As keep a all longer. and have their their I to mentioned, fleets they're and airlines of schedules green and CO used up then looking deciding NGS

might So they doing be didn't they need more were that going airframe engines, they an they overhaul or think to do that.

the for five years. engines need they next Now

MROs are So airlines strong. shop are as clearly are and up is demand well times extending. because down or shops filling for slowing engines sometimes very turn

have two of more they companies. that buy to able companies. bid So leasing from in-house visits to for engines is and it. One the activities. need then really lease And It's do assets to be they different shop amount fair leasing want a we off

they're off So out if lot don't a assets lot particularly ability a lease, put leasing of to have companies of the engines.

buyer. issues then and module end doing comp more of with we can great a that. we're and swaps, of lease so solve return more And we're And

what at the cash exchange So to solve compensation owes a lease, if doesn't by give certain module We have in an for than cycles. be of cash doing airline engine, a a they're as money a less the otherwise. going would help return can a number lot because that the hours outlay of the end of back

and of of things products solutions companies move of and the get because those offer, So leasing trying we to have all a lot they're on. can are we accepting that and sort done

Operator

question comes Brian Securities. from McKenna next our And JMP from

Brian McKenna

everyone. morning, Good Thanks.

see good seems opportunity of environment So lease. economic particularly off sale the It continues to assets year? given be acquire likely the to softening increasing is for it what's we're any assets, for remainder broadly? to here And that backdrop asset like there outlook for the then a acquisitions leasebacks, for a going

Joseph Adams

best, don't. best have to both Yes, we engines, and off scrap the airframes other a of continue seeing that ability of on buyers of for we lot leased be the a you're people right counts. the available to because We're just lease assets lot which one

that to two assets leasing we're clean then of on. want they that get packaged And at right lot great deals and right one and acquiring rid just up of to that into so a off, prices, now trying fall category move companies

take our just we over half it also probably replace is active. back do involve and business module We on not inventory it the then a area that or the So half depleting so out transactions. run -- again. module through pretty all of exchange, And our the we're in module, an those module then in factory and sales that, really we taking return back put of us as

to of living system, the So And Russia and that. of that. there's still aviation capital and sort done able backs while big to of were on there on jolts we've replenish terms activity that because of airlines, quite great the raising right been are in then quite returning a so and pretty a number for and airlines the way COVID it’s we're you're -Ukraine sale a edge a lease of of are bit have

And at airline fleet. so, aircraft It's of, a forward today particularly a out and new end if and at, looking way have selling airplane. order their they're a they cash raising of looking phasing is an

the see we activity. is those CFMXX XX,XXX all world. market of So in the And those areas of good about there's the news engines

be years for So it's many so. will enormous many, and

Brian McKenna

there cash run next you capital to opens at? like capital raise again a minimum of part Super helpful. and market And the additional of Joe. up over the to then And If is question liquidity market? some business Thanks, then liquidity. we few this would more the look through the just preferred on a broadly, level on quarters,

Joseph Adams

we around and on $XX availability a We million in revolver. million then $XX to run cash have typically

preferred a have cash QX, of comfortable paid debt, result down that's and good quarter. for terms that So and will sure. was in so We've always very flow. liked it doing we'll we that. been of we generated again market when that it look we feel that the available, becomes the in a market, In open if periodically. it's And look We to actually at lot

Operator

Robert question James. from Raymond next our comes And from Dodd

Robert Dodd

Back congratulations if mean, question to Hi, I the quarter. paid on capital And you I obviously everybody. that down debt. can.

You're run EBITDA. rate now QX on just

three. could year, to be Xx end debt-to- go You're the of at If right, EBITDA. close things you pretty by the

build you So, us I a of is is plan mean, additional what do from can capital inventory it thinking Or year? how availability your additional, capital idea have allocating ranges? accelerated the go you heading, and you be can at path Like, an of the you could about least idea a to module increased could asset give accelerated capital give maybe swap, what availability. where dividend give leverage given some or increase? through as that us, in purchases, with can Conceptual metric the potential you we you're available being while in perspective

Joseph Adams

I Yes. in speak terms priorities. would of

you first solid, the gets is we EBITDA sort mentioned, us to X.Xx in BB into to of think as strong be Our debt the total which range, all priority, agencies. with

So that's one priority. number

been I think that. we've consistent about

that for, and shooting we're right that is numbers. these on do we're track So to with what now, obviously

firepower XX% XX% so investments. wanted the to unlevered critically earnings When always that's of to never that returns a point second important is view. having is from priority been not to the do So deal do are able Then been we we've that investments, do growth things good. those or can on new an obviously you has generate

dividend and market of buyback, security would other look down including we it’s what And that, a at would are the opportunities at sort take prices pay stock or what at time we debt various are. then a further the all look the it be, beyond increase, options,

back we We could just well, common. have securities as other also than buy

if we've would So disrupted. a we like lot of those and be to got to different able ourselves opportunities, get of avail things

Robert Dodd

point. that to Just

way talked asked and level the you'd revise I you more necessarily modules of keep about the way On demand it you to parts, If the inventory thing, keep, mean, like higher inventory you'd the cetera? or or think this the up before. expect plays I the up that before, would about levels. to out et like you it inventory I doesn't Are of inventory revising the you to modules, turn components the level demand you

Joseph Adams

latter. we $XXX the with business million capital, $XXX the with running volume grow Right as frequently. it's we capital, to products that to of the aerospace million now, And which $XXX million or business, we number Yes, talking that. goes more tripling But between and we're doubling about the $XXX probably million. churn think we're working and up

It and turns more volume. capital really is as So more have become it's very by you driven not more intensive. efficient inventory you

Operator

the further you over questions. available. And I to like call turn would I Andreini, to no now am showing back Alan are

Alan Andreini

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

Operator

This for concludes conference call. Thank you today’s participating.

now disconnect. may You

FTAI Aviation (FTAI) 27 Apr 232023 Q1 Earnings call transcript