FTAI - Earnings call 2 2023 | FTAI Aviation Ltd.

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Operator

Good day, and thank you for standing by. Welcome to the Q2 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

Justin. you, Thank to second like all the to I XXXX welcome earnings Aviation quarter call. FTAI would you

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

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

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 August inception. XX, as XXth announce consecutive August 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 XXrd to a our of shareholder $X.XX on

million QX in million gains up XXXX, we up XXXX, us million X% adjusted strong of $XXX.X with $XXX.X in quarter sale XXXX let's had QX to million of QX over turn numbers. another compared which got to quarter. XX% Now EBITDA. adjusted We metrics is on the key and of $XXX.X are in to compared $XX The EBITDA that of for where in of

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

of $XX Turning pure at of million good component peak leasing. expect versus QX assets $XXX for grow the a Northern of million The EBITDA. demand Leasing we $XXX in approximately Hemisphere the now leasing strong to summer incrementally. came for and had in QX of will $XX million With XXXX. QX quarter, season, posting million

of sales. on for sales. Part Additionally gains on million XX% we leasing $XX.X to will the $XXX at of contribute million prices, leasing on and EBITDA gain a in assets value engines of million of from globally. asset EBITDA growth $XXX future acquisition confident $XXX attractive in side, at aircrafts for on closed very million XX the XX in benefiting We to the from assets year, gains strong further margin remain leasing demand for million, came asset EBITDA. which excluding We $XX.X sold book

of margin for have million $XX had We EBITDA customers in to to unique and customers. XX asset QX yet Alan. repair or gains we're call maintenance $XXX other leasing X backlog seeing and year back companies, new million and products We of let or very MROs in EBITDA $XX assuming think to and X feel X million and business quarter because over expanding products airlines. With feel tremendous XXXX confident more quarter, EBITDA of $XX of overall We XX%. approximately per XXXX. Aerospace coming another of with customers excellent sold repeat on continue and be sales sales of the asset all the and remainder this of number remains comfortable an that, modules organizations, million $XX the to million see overhaul and aerospace million in potential generating about doable. We plus me good and with an turn continue about $XXX to EBITDA comprised quarterly

Alan Andreini

Joe. you, Thank

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

Operator

our Instructions] from question Sullivan [Operator comes Benchmark Josh from And Company. first

Joshua Sullivan

here. quarter Nice

don't Given and we newest starting the turbofan and already to RTX have generation GTFs. the any the engines of an engine the geared aviation are MRO of GTF you now the facing, visit issues demand services? accelerated and pressure have shop strength seen side looking your in But leasing into at any cycles you playout have in and tight market, for products some

Joseph Adams

Yes. old The to all airlines their holding equipment. we talked on to are last-generation

It's GTF, extend for seen looking CL leases. the XXX, are we've So or very airlines to decide those additional family going the to capacity. get AXXX This assets, tight. They're more very the markets hard on XXX is engine to next more those months. you'll X,XXX XX it's to you're visits pressure X put XXX because have fleets, the months, the X over -- next shop estimated with have to going in

trying that's in is the and that to challenging. be schedule summer to going season, September now busy between So extremely

that demand for to has spare anybody existing assets is and looking be them more for So keep they're there'll flying going more, and engines.

is So as the going to for terms levels I turn market, putting this own. pointed of a couple another stress assets it's of more think, demand tight you up the and in we very out, that already

Joshua Sullivan

far bidding your what sale-leaseback like? Or look pipeline are maybe seeing large market? really what process, There as going maybe, the deals does as then you And again? gets are the market in the

Joseph Adams

it's saying it previously, are And the been in assets now calls, us to sale-leaseback is really for Yes, few we're are relying a starting I leasing lot transactions with companies much the interesting, create have it's with debt up. attached that cost we've ABS the that see can again, which or that of to cash cheap market, value And -- buys and -- it's that the that picking then airlines. think very We're lease, We for that flow and best put debt. people available. very price we we competitive, been or buy on mean, higher provided off no out -- by it's way. have I on last debt financing assets are mid-tier lease either the on to not deals challenging think primarily because with with

increased to It's market seems pricing. that the that it's come we've our So us. to have not

So seem totally deals to money. never with and attractive we're away sale-leasebacks, because that portfolio need which several seeing airlines are always go cash in attached very flow

So to recent those for X X -- next investment very a see fairly good for development. the think, that's months, we at least markets, the I opportunities, next

Operator

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

Giuliano Anderes-Bologna

Great new some product quarter here. module driving performance One question this and curious material I'd be strong Obviously, at factory, is segment. very we're about. seeing the service

to of leasing seeing and EBITDA level. at the you've segment look also million the at first $XXX already, strong level at million million You're million at talking about corporate, year you're of EBITDA. If before the been segment the to $XXX half I analyzing $XXX $XXX

range the you're level you're that first out confidence closer of Just the the high about of range, in running and how curious already thinking end the because around growing that year. half rapidly to

Joseph Adams

Yes, confidence pretty high. level our is

the So and it's you you, every quarter have hit year. easier to behind look it's

we this can I -- at So as have good from backlog and tell comments. my pretty point think you

think all that I we've So confident against in we're likely, got if fashion which the through pretty look swerve doesn't at some in -- this, doesn't year. the numbers environment those

in what X generally, out on And X you've to months good. that's pretty decent pipeline. the is got activity visibility So

Giuliano Anderes-Bologna

to a for on side. the But of good That's the thinking terms probably sense we the good but context. and side few little just that continuing I'm leasing, little module -- the a pipeline, yes, of great. give maybe more looks -- -- then have the factory If you've step you if seeing just see, M&A have on it curious bit product where and the that sense a quarters? to drivers, a is, how last also demand volume in module where And of been where Obviously, on you confidence continuing side? backlog for the the there. you're up

Joseph Adams

Yes.

already customers. don't business we've have think with going next they level anybody what the their as of balance of a And on visits. indicated in for this put and many orders repeat to visibility of mentioned do they So I hasn't might done that it's had shop customers year -- those more. do year, indicated they're high we've we've have

very add customers good. it's well. we So as And new

-- but we will quarter of customers, we're see, also also can adding handful you the develop a repeat new continue will which we to grow. business, each As add

increasing. And is will pipeline look all can shop going visibility also, gives it, in backlog my us the on allows the is used they've think it once I a well, like. use that to And I'm So us what modules visits. now people inventory. say, into excellent prebuild longer It and to view term helpfully,

more to increase that the visibility is to and way. have -- turn throughput we preposition we is time, our So in can do, us customer because what easier the the going assets for we it about

but We've been are see XX taken business probably and at a The half that a the -- year, other approximately that increase of that business, material we've going we're the in the to had indicated, of as little rate of the last bit the increasing. than processes. used And inventory serviceable downs year. higher tear we tear to USM, first we we We've downs. this and been in started running, running engines is number

of be aware, the get tear those the to X about many have down repaired. you months it are parts probably revenue, you parts and because takes X As you to inspect before engine, have all label

So they to be and have back. sent then brought out

in aware original -- to and you're in see tear equipment very previously are strong increasing a it. year, see they've that done year of which engines level very, we on August XX a as the X price this this than was as putting earlier activity bit So probably quite increase down over demand of manufacturers,

annualize into digits. So rate -- I that's also guess double the if you increase, it's well that

So new part rapidly. prices going up are

gives have who get of a serviceable other cross business very material the we valuable. OEM material sell like to doesn't other that modules So But in than probably tool anyway. quite used supply world, to and that, is USM serviceable the sell services. And maintenance additional good maybe biggest used and us the

level take next activity to the going we're USM X So quarters. in up

Operator

Deutsche question And Hillary from our comes Cacanando from Bank. next

Hillary Cacanando

EBITDA the related guess you quarter. what's us that, continue just should So was last on margin revenue total quarter the forward? last lot the XX% versus we And but declined some going XX% than a stronger aerospace to difference? that in some color to Could at give causing lumpiness segment, sequentially, I

Joseph Adams

core tend it's It's quarter-to-quarter. used mix that serviceable primarily sales which hard we more to that we had quarter had also we a higher because less sold, slightly favorable this control that it margin. But be to and modules material was

the middle of number will the is that for less had hold sustainable in still the and we at which an just place the think of to a opportunistic continue -- there's time -- it not that's driven somebody sale the mix. And modeling needs the by -- good highest was occasionally, not to margin the you -- right a right and always it we asset there's it. to really was just would lowest margin. quarter, that to right So We have degree it be this above suggest happen purposes, for as desperately XX% more who then

that also intentionally see sure you asset. make sometimes can So we we have

part of business. that's So the

Hillary Cacanando

Got included their and index? was know it. the to gotten I you If on And if can stocks. of just included that? are then, indices kind more you number in indices last Russell the provide Since of FTAI looking on a month. has other stock you to Do guess, add got K-X, to recently color XXXX any in you

Alan Andreini

index estimates million considered We and number that early of are think end end could as to for that that is XX the the shares. another one of be the we're to the as is million Alan. be XXX, at is could from S&P the the that, be -- that QX. XX going This folks And next

Operator

And from comes Brandon Barclays. from question our next Oglenski

Brandon Oglenski

and the that approval provide on wondering update was where an with if you I FAA process the product stands? Joe, could us

Joseph Adams

And that, and progressing the additional on more we which this is we've we're providing process year. about the of X the products be than line talked end available any not everything Yes, expect detail previously, about to time that. that is around around other

Brandon Oglenski

assets And it's portfolio? or on is still is think that going third-party something powerful flourish But of think track this be sales? you your look in Do be going that end for for you to to leverage you Joe, I do year. strategically, Okay. own more more you to guess, how

Joseph Adams

quick Both. I like adopter. a always be felt going mean, and to we've use we're I think it we'll

an put And So them. issue in previously, CFX-XX will that other believe lease adopting and the leasing world we it. engines -- as in we the PMA. had airline with facilitate with people we saw engine no and PMA any with those And engine

wouldn't And airlines necessarily lease some we own well, no one engine. will engines, put on PMA say, would but our an not

of is. nobody of sell And powerful think similar have the is that as expense, out stands a there as drivers. it CASM we that offer our can't engine aware. to we maintenance are P&L's increasingly for So value similarly, in solution cross on integration something that's that expect products you're one particularly everyone. is to maintenance and save is big this There's why out to maintenance The well and going we an ability up and on very to which help I market numbers -- be the of airlines, of the and

that this really wide range think an engine to our to an anybody powerful. -- we ability that engine offer a flies of owns So products is or

Brandon Oglenski

more the capital you think right I is comfortable And do you're So side, Okay. required little now? need are Appreciate that. running you cash? with then debt capital guess And on there a forward? you bit where going levels

Joseph Adams

to our that we've access debt markets markets. always liquidity. access revolver a have and access we that the mean, I -- access to good we've And had the had had preferred We've

credit think the to to the hoping you the year. EBITDA, the quarter, we people to we've were that which we saying numbers be as end achieved achieve just -- the So debt metrics achieved by are were mid-Xs we of which that told we improving We this expect look we that total in at

So be BB, strong And always us we that's access will pretty to you're you have that, think much that long as BB. In experience, my good. position capital. to as strong

thing. is close an good of and as are opportunities need position. things changing. seeing in a world expect. always which we're the capital off increase really we and But So are to driven very We're mentioned, opportunities, I funny in really is didn't which that is for good The investment a we think And

So we're our opportunities well present further themselves positioned. If market. increase to in position CFMXX

Operator

question Frank Stifel. comes next from with our Galanti And

Frank Galanti

ask ask the -- about and to module for wanted I factory. airlines the PMA approval leasing both on in

the possible, those sort on past a in if sold, PMA of acceptance? percentage of know, it'd months further modules helpful in what PMA has be So it? there of LPT change been And to of couple the have

Joseph Adams

I we've fleet leased any PMA don't our fleet. We About engines our the that with it, what case. of or with are XX the and in modules sold We've CFX-XX Pratt PMA has has correct? CFMXX in in had think been And XXX% PMA. XXXX engines? fleet flying which so always XX is fleet

to engines PMA. airlines, that we've about we're that So in the flying -- CFMXX flying and have leasing are fleet, we with XX other

Frank Galanti

be LPT or from particular any there customer module like, market PMA strategic, from the Is entry reason a why wouldn't a in there perspective?

Joseph Adams

to you I engine No. expect the And CFX-XX as said, of if it look at the we development similar. be market,

use a So a when LPTs. an ultimately, timing opportunity it's of as when to does, to there's purely And that's when restoration of matter it PMA. an the engine needs

parts shop not take -- swap can't doesn't necessarily wouldn't -- a wing good You an engine you is -- just off that due for visit you and PMA. OEM out for

in the ready You just do when and it's shop. it

Frank Galanti

And Okay. of switching then up. sort it

the affect from how perspective your rates? business, Just environment, from that interest rate generally lease lease higher a does particularly

Joseph Adams

the was X.X% in issue rate, right Well, -- of mean, our And did an X.X%. I range of -- our probably we say debt at -- debt this cost capital. estimates I lowest a it's on we're now, would trading had cost of

wise our is bring is about it XXX our looking probably return I that basis our basis we're So situation, on of at to to -- personal our say just points. XXX would to deal XXX assets debt But cost up points. up

of it's point view investment an from So fine.

than cost We are debt. covering we're increased more of the

leverage That's were think and sort are is, able the that the companies equity assume relatively be raise struggling. not The with and and a that magnitude, used mid-tier hard. side an points, of hard to debt way that lot The And debt. orders It's cheap before debt is go to XXX by alluded industry? of multiples that. was but get it to other earlier does it fund they out it of how of I to affect I more basis to than and going expensive leasing

in work, don't numbers leads the all each competitive good that not prices pretty position, not down come a cost leverage bit, individual little or a or is And don't and lot. to they're of that what of be is because which either up So deal. a debt we us -- sort means our of

So good has he in who where, we're environment a XXXX or XXXX is spot. and has who like she more an in money money

So kind that's of -- the the macro. that's

On new in the aircraft that side, don't participate really market. we

So have you'd than orders be us. to new aircraft ask better who the people big

Operator

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

Brian Mckenna

U.S. the the build in opportunity to repair But to this an some organically you in potentially I'm and more then And Joe, today, about create here thinking talk trying about you've bit curious look well. do versus about to little as the market. could from past. you opportunity acquisition initially both spoken a how I this in the Europe So, scratch? would in scale you're it know

Joseph Adams

great up spoke we've met progress a a joint and repair quite through on have last few venture, and we took narrowed the Yes, with different trip question. We -- Europe we in made down. we since Montreal, it options

think And expected would very still year this interested. and we're believe that in something that on are we of so place. we or had and still progressing the be doable that And seems we by that, hoped I would that end -- with I have

volume us an increasing As our have who products. people fairly for Which partner we're tear activity I to better materially. repair mentioned, is repair be meaningfully, up even down means which going our makes

of prices better people So market and lot up OEM and and up attention it the is, parts keep to going up. are I only gotten paying think repair a because it's now

or And it's attractive repairing, so -- everyone. is for business pretty fixing pretty attractive or recycling a

we're think takes is a time. I from And overall economics, trying build? long versus buy we that. Would long, best the about it probably building excited scratch but very something So

get that it's It if could out sooner, going avoid some something sort company of rather but think So be I we're amount not -- I portfolio there modest one can don't I would we investing we there's to capital, that -- -- the acquire. that into it's could involve And that. that we'd -- has doubt better. of no

more partnership so structure. it's of a probably And

Brian Mckenna

Got it. Very question helpful. on And managed just then externally structure. maybe a your

internalize clearly business and longstanding move of just and the But had of you relationship with ago, size of just the since have the under scale the growth a couple Fortress you Fortress the So years ever look versus trajectory given to a business today umbrella? inception. and from out would FTAI

Joseph Adams

in got the part are being Fortress. of of also a lot benefits And of Well, being we sold. we in process

contract be Fortress likely is Mubadala, would to under the close around the sold end year. not to which until of

So new owner the it's really a need would decision .

Operator

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

Robert Dodd

quarter on Congratulations the and the EBITDA growth.

you allocation. well question, it, obviously, from The about the capital partly mean, free answered covered I is flow. Right. dividend ask So dividend. usually I extremely about think, I cash

assets the attractive? mean, BB. I Your us acquisition leverage leverage of that your Or just target. give the target of for acquisition, appetite delever, mean, you've for for opportunities the is to of now you've given the strong the investment us -- already of any more just and -- what's type your in hit allocating of you I it dividend? are before, in is range priority order can there much in capital middle is dividend kind but increase kind

you can priorities given where allocation has So view the improved on significantly. leverage you capital rank the now

Joseph Adams

opportunities. been one number in previously, And mentioned activity has an there's there. the investment always I mean, I similar. it's Yes, as priority uptick

the at attention our got is that think I moment. So

never We've wanted able to to one. been number that's assets that buy not So buy. we

keep we want that to unbroken. string so And

credit as maintain said, we making strong the they're BB, So that's a ahead one. And sure which probably be to BB of secondly, to it's good and that little schedule. you we're number metrics have

after is one, X, then buybacks. we And and that, at think dividends priority and number But is stock good. activity. look that's then number debt level still the acquisitions would then I So equity

Robert Dodd

clear, Obviously, $XXX I taken if can increase to still very guidance. the And have in products. for confident confidence it you're it What exactly take what it. would the your Got is one, you You've wise? very million would indication aerospace for the plus indication. been

with a already effectively this million building at You're for year pipeline. $XX

unless are or you you about Are conservative or conservatism? just market worried it against swerves where the being pure market the just So swerve you? is a comment

Joseph Adams

Well, I I'm always X had worried them and predict. We've didn't about the swerves. of markets

Robert Dodd

Yes.

Joseph Adams

I it favor. never to But having from mean, -- So feels good. went I us everything having know. And everything very we in mentioned, against everything working as working

up, about wake -- I'm And that. I say, continues. hope I So I'm day every this happy I

the it business. no, worried and think new So We've no, about very we're not so is airline got still be feedback This it's have always that's just customers about you But -- but a the is new worried it, time. it, relatively of passage really is industry. because that just industry. innings. for sort But just think -- positive record. and And need -- we is the in early what time just I early build is in track I it's really actually of to building still time innings really the really think continue orders. I it's the It's to us

Operator

showing over I'm the Andreini further I would remarks. back no to now call closing turn And to for like questions. Alan

Alan Andreini

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

Operator

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

You disconnect. may now

FTAI Aviation (FTAI) 27 Jul 232023 Q2 Earnings call transcript