FTAI - Earnings call 3 2023 | FTAI Aviation Ltd.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Hello, and welcome to FTAI Aviation Third Quarter 2023 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to Alan Andreini, Investor Relations. Sir, you may begin.

Alan Andreini

Thank you, [ Towanda ]. I would like to welcome you all to the FTAI Aviation Third Quarter 2023 Earnings Call.

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

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

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

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

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

Joseph Adams

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

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

segment was $XXX.X $XXX.X negative Leasing quarter, and Other. million from Products $X million from EBITDA the our third our from the and million comprised Aerospace of Corporate number segment, $XX.X million During

came quarter of another in Leasing. $XXX million to now had leasing EBITDA component million of million Leasing million versus in for the The QX EBITDA. $XXX pure posting $XX good at approximately $XXX Turning of QX.

on sales. closed future aircraft contribute at EBITDA. gains to prices, We Additionally, a at sales the asset $XX.X for attractive on gain XX% of growth in benefiting in million for Part which of XX more in asset demand globally. million engines on XX this book came from and had value Leasing from Leasing $XX.X quarter sold assets And we final acquisition the will the $XXX year. EBITDA side, of margin strong further of for assets million we've coming a

with sold potential an quarter million EBITDA of consistent X overall in Aerospace comprised and XX%. of We in and customers. customers generating very and XX Products Aerospace see QX good unique tremendous margin Products about excellent feel yet of EBITDA customers had new EBITDA repeat $XX.X We another growth. XX X modules to

see XXXX, XXXX. As $XXX to to which in coming million of FTAI $XXX end beginning above we we of million range, at the the the the communicated high balance of EBITDA

to Looking expectation the Leasing for ahead sales. on to $XX total year, million EBITDA $XXX gains for our XXXX, is current including asset from million

customer Aerospace aviation expanding including million in million and $XXX looking million million Overall, an in to Other. $XXX base, to to Products therefore XXXX. and for and backlog strong not expect we of XXXX between for $XX $XXX we from a up on Based year-to-date million XXXX, annual Corporate be XXXX are $XX EBITDA $XXX EBITDA million,

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

Alan Andreini

Towanda call now Joe. ], you Q&A. open [ Thank you, the may to

Operator

The with first Our Benchmark the Josh comes from which of Instructions] Sullivan, Company. question [Operator line

Joshua Sullivan

quarter strong the on here. Congratulations

earnings Just with some had this we've the updates from the large week, OEMs. aerospace

Fortress generation engine market particularly of the issues. these is on relates turbofan as GEXX the as new to offering? Fortress Just what on leasing And to these it options ongoing in geared wanted module check face seen engines has and versus [indiscernible] the

Joseph Adams

Yes.

new XXX you half So AXXXs what approximately accelerated in prior XXX engines some is are estimating them with can on GTF the imagine, to or of through on the going approximately light that on grounded will the others the in very average and be demand XXXX be maintenance of equipment is very, as technology technology XXXX. high and estimates, for company first

that's So of for of a amount to assets extended that of going are out an period significant service be time.

that the And them keeping engine. maintenance refresh AXXXceos has the just to so doing and is anybody

rates So both to of now. us, increases very you week, can week are trending are Almost lease for and up. right those good that see

positive that's so likely And it's and continue time. some for to going

to part assets them we're estimating not visit were delaying out or service do that of they another that. take shop and are people events, out maintenance might going And or deferring

be longer. there'll assets more will last maintenance So and

those of all maintain the good equipment and we very factors own. that for are So very,

Joshua Sullivan

what from Got like that baking guidance sooner then And stocking And secondly, to check? on the for you assumptions provided, into actually number? customer it. you does ramp if PMA are the manufacturing later, PMA getting just XXXX in a look we get approval what than to an then

Joseph Adams

Yes, would forecast in of the to million from we've It's EBITDA that come million $XX included million about both sure on that. the from ramp. of hard PMA And to sale $XXX not as $XXX as million PMA. number, well we're parts $XX to actually modules. And that

current the that is our back of assumption. end that assume towards would I of So the year most is

Operator

[Operator the Myles from next question Research. with of Walton line Wolfe Instructions] comes Our

Louis Raffetto

that well? just strong in in growth not and I in It's Aerospace Lou obviously, as EBITDA the the you Raffetto Products, million step-up but did drove want on equates X sequential for quarter? understand in step-up I EBITDA module to to the sales sure and what I mean Myles. more sales the I'm $XX make within sure Maybe swaps,

Joseph Adams

Yes.

raw had in sale used material. the also growth we of service So

higher was grow. USM to So continue to is likely and going

number teardowns and As to it up to we've show for mentioned months second previously, that X quarter, we takes in started a in generally of X the revenue EBITDA.

way of that's money saving a key for strong shop seeing X shop demand increasing with we're visits visit. So USM obviously, on and

activity see than matters growing. and has low-pressure we raw modules modules, the the So in then the within core of fan service and revenue the terms mix turbine. the of the And teardown in more material used the revenue

had we more -- quarter. in in activity the than quarter this third we had it's sales second So core

So sell it's sell we're we've longer for exactly proving turbine It's sell. little a of a we've savings week. what easier couple to we've days a substantial now customers harder been years core core. low-pressure in to been lot there and expecting pitching but recognizing It's a a is more and in a It's selling. what got or that's -- X The a bit now of complicated, a do the there. that fan

Louis Raffetto

All right. Great.

I'm so on USM. just the clear so And

that maybe step-up the million saw, that inventory? but not we now. linked, necessarily sort building think, linked, Does just you're that's at CFM sort line? of same tied along not sell? is directly it the -- I again, step-up So the to all inventory to Or but not parts good in It's engine that $XX a of

Eun Nam

Yes. This Angela. is

Joe won't generation mentioned, X inventory, the but months. for to equates revenue of you As the number to of X see teardowns increase

revenue a and QX. teardowns So had we through that lot QX, of come in you'll and QX QX, see

Louis Raffetto

Right.

at a leading kind So extent? to -- almost of a like look some that as that's indicator

Eun Nam

Yes.

Louis Raffetto

and step-up year-over-year as strong -- I maybe income just did lease down on Leasing, sequentially, actually step year-over-year can the well? while the within then think And revenue maintenance the in sequentially, comment you Okay. sequentially and

Joseph Adams

elected in to on. there's to terminate went to terms. X One carrier that a aircraft Asia. did rates And we X is Yes, get AXXX and leases Southeast higher better things we

to them. so multiple And demand such get parties for are that intentionally. There's we've already we negotiating did got that strong these assets,

from So the had a we you -- maintenance you lease you prior come through. lease when have that terminate recognize lease, revenues

off, why we we book for lease in value. there's lease, that is do in that's take an engine value accounting swaps the the a aircraft increase an you and are then a And put on going When So the engine in side of old When revenue. from you in. bit step generally issue. an the a see engine an aircraft up you maintenance difference new new the on engine

incentive. gets rules, as accounting That under lease lease the a amortized the rules

down. contra so a revenue, reduces item, actually, And so up those your it -- going lease it's too. -- why as strangely. revenue, it It's that shows But see that's you noncash a

point more view. confusing So that of even it's from

Louis Raffetto

I'm thoroughly confused, so...

Operator

from Instructions] Giuliano the Point. line question comes of Bologna Our with Compass next [Operator

Giuliano Anderes-Bologna

great Congratulations a quarter. on

Joseph Adams

Thanks.

Giuliano Anderes-Bologna

thing is, mentioned curious about the obviously contribution PMA of outlook. that million -- $XX to about you One in asking million you're I'm including products $XX

So there's in confidence some PMA approval about great obviously being to for able the term. receive near

you're I'm impact PMA FAA the is What thinking shutdown with? just there's I with the slowed dealing At the government asking about parts, you turbofan is, about all timeline being and of about approval curious issues, the approval [indiscernible] think PMA timeline? be of could that [indiscernible] how down concerns. how you think moment, said by the curious issues was at do that kind

Joseph Adams

Sure.

a very good had good very a we've parts that dialogue. progress the and are yes, the on works So in

seen So plate, But anything have now on never a administrator. on lot probably does more its front. have we haven't and than they that -- recognizing in the more an that significant history, ever FAA

So they've that's a good people. and thing, added

it it actually difficult you be expect to very but ahead, be resolved. things see to we moving So inherently precise when is about

Giuliano Anderes-Bologna

that and about a your tightening very capacity That's helpful. up a that the curious how trend topic continue? industry. of think And could earlier, obviously And across that but you there's I'm of one could more -- then it. MRO on long kind impacting Got in lot came business how that

Joseph Adams

Yes, MRO, sending longer events. spend to you'd it's by time more And good money for into save our the have on pitch savings you and you airlines is an the time we maintenance save provide. can because us engine we an to the

of is have through GTF I and years in couple -- GTF to next to basically, -- every the So on visit shop engine there's an a go issue, think the basis. some accelerated going

going out So used GTF. the available to push is capacity what up going be to potentially was by that's

people or them of -- getting to is of going good and very modules pre-building tighter, in we're just skip tight agony So because essentially the the very supply shop have a for short period market that's definitely time to us avoid visit. and and a get

Operator

Cacanando [Operator Bank. Instructions] line Our of next the question comes Hillary Deutsche from with

Hillary Cacanando

quarter. the on great Congratulations

could was Just on to a XXXX guidance. I that can you're maybe as guidance expecting the some sell? well? you if also you wondering you many us give quick how modules on of kind provide -- If question

to the then like expect USM EBITDA quarter? how part the the year attributed the from on USM many XXXX, during for like third you how talk to could And the about of us then if engines for was side, out USM? you much tell And you could

Joseph Adams

Okay. and I'll X I'll give take X, Angela. to

think expect we're per million $X this XX. engine and out think part to next XX And year, go I to that make we're expecting from year, engines of approximately parting to we it out essentially -- I roughly we activity.

XXX of there's modules that of that next year the range On assumption year. different wide is we're in But for neighborhood there's on modules and mix. number our next -- the a

So of What that's I year we this wouldn't -- sort was not we would year order of what precise. this are. that's think But be, -- XXX? a will where terribly magnitude

Eun Nam

XXX. Yes.

Unknown Executive

XXX.

Joseph Adams

XXX this year.

of And Angela? that's order of growth So magnitude sort on then the USM, that. of

Eun Nam

USM quarter? for fourth

Joseph Adams

QX.

Eun Nam

our from EBITDA QX. USM. of It's aerospace about XX%

Joseph Adams

third No, quarter for year. the of this

Eun Nam

Third quarter EBITDA. of of our XX% Yes, year. this

Joseph Adams

XX%. Okay,

So this roughly million quarter. $XX

Hillary Cacanando

it. more Got helpful. And Okay. I have follow-up then X just That's question. really

third engines demand why it that I and X just just environment, last the deliberate or than So in fewer you strong Was strong last quarter? for looks just quarter engines versus given wondering fewer engines just timing? XX like sold you the sold engines, was quarter,

Joseph Adams

or selling engines. the been non-VXXXX non-CFMXX mostly have We

a last the So lot in now RBXXXs, those been own of engine we've few and been those. of fewer quarters Pratt up fewer XXXXs, sales, we CFX-XXs, have which signing

going why lot -- value. assets today VXXXX not CFMXX we're that's of our think in interested because a still selling up engine we they're or sales I So think in

going up expect hold be gain, would very monetize mean We we in they're today at I could monetize actually that go rather And short-lived. would value. to those a it. but them than nice probably to

think have increasingly we're of and we've VXXXX. year more looking we've the we one up that all repositioned down next they're CFMXX reasons sale that's stepped to assets And sell, fewer value. also -- now So our in going we and as gain and we're for to on why fleet

Hillary Cacanando

Okay.

just than So CSM, rather leasing lease engines strategy would You towards the them, the rather right? sell? more rather than is your selling

Joseph Adams

we're effectively Yes. On that -- modules. basis, also yes. still selling We're

engines selling shop engine and then we're them. visits So for rebuilding

So activity. a we but engine, that outright selling as see -- an don't big just

Operator

Mckenna Instructions] [Operator Brian next of with line the question Securities. JMP Our from comes

Brian Mckenna

both the remind of and And process will it these just update around And liquidity updated ships much Russia just claims be great Ukraine in? related to in portfolio? where you get is bring an how us to on then war? insurance there So are any you situations can selling the around the timeline could

Joseph Adams

Yes.

be it's a both to -- million. proceeds and break of half. roughly think number we that reasonable half I get I combined expect $XXX would would those I good would think for to the out from that around And

So into a on wrongfully couple they're the the a has done Russian insurance using side, took it's our who airlines assets, with of Aeroflot now money already. occasions negotiation but turned like

separate X that settle. advancing negotiations have We to are

So fallback avoid litigation lengthy that that would the the strategy. is

or resolve of by, other next soon one So X of possibly the we're and hoping can the middle fairly X year. we say, those

On the that People ship industry both we any and assets, The new marketed. macro are also X are strong building demand. which side, not there's of for good. ships is very have really being

reasonable a fairly on we but could also year by expect would soon, as those I that smaller that So middle the of well. next be monetize one would the target possibly ships,

Brian Mckenna

gears switching a bit. just then And little Helpful.

acquired been it's few QuickTurn. you So since quarters a

you far the going you and of environment, can integration how that this where M&A. us longer growth just then the accelerate on seeing strategic term? strategy an acquisition give more are opportunities so update the process? just or could on uptick So the In then in any are And broadly is in you company this

Joseph Adams

Yes.

is doing QuickTurn So great.

module on driver September streamlined what's mostly in shop big we engine XX hospital for facility. tests the and very the estimate October? in light that have focused interested over tests engine why which were really and our activity was visits did We of We and swaps,

Unknown Executive

XX.

Joseph Adams

XX. About

good. airlines a pretty industry run major is that's world rate. from the So And good demand partners, around

nicely, very So modules. we and out that exchanging playing continue we'll use to is delivering and for that think

So we're very happy that acquisition. with

of in are performing a the industry. the It's a things topic industry, happening well. where there broader obviously It's lot segment very performing has market the are On M&A, people's things in of the not aftermarket attention. well got

of things sale. And sort a for a are are being seeing that that's sector. rising of So bit offered we

focused engine on and engines We're very maintenance.

would to us a that that, on get at. have to think segments going and interesting repair is not segment we've aspects but us part of bigger be track. an that still we're So engine looking that before, that in. we're to progress that, I mentioned off made for I that get is for are there But interesting And still piece focus us

Brian Mckenna

Great. on Congrats nice another quarter.

Joseph Adams

Thanks.

Operator

Our next Instructions] line Elmaghrabi question of from [Operator comes the Sherif with BTIG.

Sherif Elmaghrabi

shift of see some core going a the trajectory? Or talked sales in kind Could QX. more So between fan? about this forward first, more hockey you as having is lumpiness we stick mix core and of

Joseph Adams

again, I different going think X going point. at all moderate. it's is -- them you some mix has move I mean to not have engine the so you're to shift modules, ultimately dramatically because, of an

over just longer really that I quarter-to-quarter that be it's period. fluctuation say not would a So dramatic a something would measurement

Sherif Elmaghrabi

where and of in we you that do timeline right PMA sounding the hard then approval through can story, is given And for PMA I it's start precise, when we be PMAs going to on modules? said more show And approval a know remind of but you us now? Okay. up XXXX the X them timeline and seeing between the sit

Joseph Adams

as of -- I on them. said, there progress all So good

soon We will put part them will as into are our approved, numbers -- engines. -- as parts those we

so immediately. when And inventory submit, will be begins ahead they Chromalloy usually submit -- they so available immediately. production of there's available almost finally

is. engineering is longer who and period airline lead difficult how review talking sales take predict approval why what years. the an airline, process varies months, go airlines ramp you're not to and third-party to through long or -- other always time an But that have be What to the that will will which and it's

Operator

with from the Our of comes Frank Instructions] [Operator Galanti Stifel. line next question

Frank Galanti

an dig this be you to of expect something to modules that that indeed be said number you Earlier correct question. modules like would sort if in want in That of sort just a XXX comments, true-up to give just year, to your wanted I wrong. I XX in sold. sort Great. number is XQ. opportunity of

mentioned a of year, you cores. in that, the then then of especially kind around order do if range, on XXX sequential growth sort are more see of cash percent -- But modules lumpiness growing of about sort EBITDA sequentially the to sold? you means you sold, prepared in of the of How bigger only think and margins out there's a scale, kind which in modules remarks, next lot the XX-plus flows your that

Joseph Adams

question, On is year The to you're should year low, -- XXX modules. total the right. in we first XXX for the for modules the the for be XXX for

margins module margins. was question talking XX% Aerospace So we've be been correct. And I for than about lower that margins. around the Products. tend USM blended is the second margins of to mean

and variations. what So it there is it some could quarters we've indicating, the of mid-XXs was XXs. where to out been in a sort had blends We've be

any We could. haven't yet, low quarters had we but

I we'll really about range. how we're out it it to it's it talk so -- mid-XXs each when quarter have plays the with to is think actually, And hard going But -- comfortable happens. -- to be

Frank Galanti

helpful. sort That's switching And side. of aviation on over the Sure. the lease income to

income eats amortization that only $X intangible lease lease number. looking But amortization. is in quarter-over-quarter, a mentioned sort of increase lease You into that's million

back what increasing. $XX comment secondly, is and is perspective? to in you're then lease if are relative perspective million, that? 'XX, which to really, quarter a only a your $X that a on sort can utilization assumptions like there's you in, for you And maybe growth guide income break the much at that the for if But the too from portfolio any relative down of question So seems utilization still million

Joseph Adams

Yes.

engines acquisitions few be we're that seeing sale. quite And rates, and So put we are lease and exclude have QX we approximately added lease we you making. in for on have would QX, have on -- some gain a and we higher leasing we XXXX if indicated $XXX million,

million growth modest take some think, market, provide, think, I $XXX certainly, And would for run put which very potential million currently, it I strong So continues, XXXX together, assumes, going seeing Leasing. that when if rate you forward for $XXX a we're you it if upside.

Frank Galanti

I Okay. more, That's one helpful. could. if And

the graining engineering to for be comment On the side, PMA complete approved? can work you there is on if modules is possibility the X any

Joseph Adams

No, I at wouldn't this on comment specific parts point.

Operator

[Operator question with Oglenski line comes Instructions] Brandon from next the Barclays. of Our

David Zazula

Brandon. is I Products one the Joe, kind this in ask This of broad a could real on to start. growth for on quarter. if Zazula Congrats David Aerospace

can years, a the have guys we appeared anyway, little thinking about and talk on You Can been there side pressure those hearing very bit what cargo your more little right tell. customers under during a from cargo least has of what done at it about us how you well, type you're you're bit that mix, to exposure from couple the market of last the now? and

Joseph Adams

Yes.

we is think market Our decided, ago, of cargo get out. was e-commerce, I driven exposure saw a sort months XX COVID very de we lot see and It starting -- minimis. upside. than downside a very, didn't strong We more basically to by and

the And got immediate market. rebound. we don't of out basically so I an cargo see

So rush in. I to wouldn't go back

David Zazula

module an those of about And talk guess had seems the you in it and composition customers. then anything the customers uptick like getting there? repeat side, I you can feedback on you're what

Joseph Adams

every come for module we've getting a had to think back has We're more. Yes. mean repeat. I great customer I sold

number those X and X XXX% X customers we repeat success they've who've or So next rate we said, LPTs fans have we or XXXX want we customers want indications, cores orders or a for of have given us year. actually on a

for simple people and position have mean, money. can really amazingly it that that it's us is -- And really the an time because year that of helps time. and So saves concept ahead plan -- we I people

do the we they had people comment like, wouldn't we've So wouldn't we don't years?" it, And they it side it once more. haven't think -- do a from it's I they on they're I negative anybody indicating -- didn't customer single why this "Wow, for use do so mean, --

David Zazula

or was as drew you anything capital And a Graet. what then about this exciting it now? about about of kind thinking pike. policy you some you're right then down like of kind opportunities quarter, the little for revolver there talking Joe us Angela, Is you incremental looks can down stand the least bit and tell at the

Joseph Adams

do investment some opportunities, of financing and $XXX we some very ship at we're the attractive alternatives several not looking Russia some be huge sales. We from a may potential have amount, assets are get Yes. the of amount. but leads the now. debt temporary the liquidity And for the opportunities it million given right of And

really So just we're timing. in good It's potentially shape.

Operator

[Operator Herbert Instructions] from comes Our Markets. with next the line of question Ken RBC Capital

Kenneth Herbert

if into MRO turnaround reflected of next an see to first narrowbody yet network. where to a sort just where I times wanted we broadly Are the you in year? around see or tightness times comment as quotes they the I think starting earlier are question specifically the in more you maybe made CFMXX part the sort CFMXX, now on of ask could turn could Joe, that for about extended they of and the on go

Joseph Adams

to take want that? you Do

Unknown Executive

Sure.

So broadly time piece on speaking, we are starting repair. to see part a longer lead

one seeing drivers time chain our for that in shop we're piece what So side be And part on repairs. the business. of delay supply the going visit a turn key is of to is

position we're we a program to Our able have piece [indiscernible] material. parts on is carry where

demand use of turn XX those times. lot And a As tearing a engines you that lot a traditional can to a way, we've delays going discussed, visit. teardown a of these overhaul of replacement of and the engines full engines, shop on mitigate that's in modules a of of those And this and do modules, lot visits can year, outside down the for we are doing also we're a shop drive shop. because lot a

to see to So the mitigated are up capacity engines our new that way OEM module the for we and and up are expecting to continue the up, creep delay MRO more program, a very our that through creep we're in delay program. repairs good and take part we're to in having teardown going But technology piece space. starting in is as

Kenneth Herbert

pricing you to piece XXXX? for you for even about and ability the As a your dynamic Are pushback part of parts, of and expecting how your was airline or pricing marketplace? any playing just USM Great. the demand sort customers follow-up. Helpful. new parts on material And sort is incremental that think one going in alternative continue maybe And be the out? to PMA nice tailwind from

Joseph Adams

mean double have that price significant full so XXXX low as year. It's it in year, was it a was of of and hike it OEMs And aware, digits August on I a the taken XX% X% that great in -- even sure a wasn't you price tailwind. was parts I'm hikes. sort to implemented this you're

So that's sort of the pricing umbrella that USM operates under.

And believe like so continue raise it the whole engine goes part the it will prices. the replacement a really in with to the And lockstep I piece OEMs basically, extent will, we up they the from to also of prices lot value benefit that as that, is with that. which worth more makes

Operator

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

Alan Andreini

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

Operator

today's conference this and concludes participation. for Thank Ladies call. you gentlemen, your

You may now disconnect.

FTAI Aviation (FTAI) 26 Oct 232023 Q3 Earnings call transcript