FTAI - Earnings call 4 2023 | FTAI Aviation Ltd.

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Operator

Good day, and welcome to the Q4 2023 FTAI Aviation Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded.I'd now like to hand the call over to Alan Andreini, Investor Relations.

You may begin.

Alan Andreini

Thank you, Michelle. I would like to welcome you all to the FTAI fourth quarter and full year 2023 earnings call.

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

our and posted in if download listen-only will the this EBITDA. not Also be press the investor and reconciliation discussing call supplement. non-GAAP have so. have in we presentation mode done note We addition, release you is an to during including you on webcast.In the financial public comparable please can measures call website, already those we to is which encourage today, to directly our that GAAP The being of measures earning most be some the measures open found

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

Joseph Adams

per March dividend $X.XX $XXX.X in up with We to public record $XXX.X metric adjusted QX adjusted date XXXX, as you, shareholder key our compared QX Thank XXXX. of turn announce XX X.Now to X% is XX% will in XXXX EBITDA XXth to inception. just up Alan. The based million let's compared to over EBITDA. of numbers. To on is $XXX.X ended in and the start the company million us March and a which year strongly million The a dividend pleased XXth dividend be today, of our on I'm consecutive paid since share QX of for

Product negative $XXX.X XX% versus Corporate our Other.Now the of up million million and segment comprised $XXX.X million was all million XXXX, million versus EBITDA number Aerospace XXXX quarter, EBITDA let's million in $XXX.X all XXXX. the Adjusted in XXXX. of from from $XX.X $XX.X of segment, our leasing During fourth $XXX.X at was look and from

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

further clear sold assets assuming side, very customers million our million. our end Aerospace middle on or million of Products which asset Aerospace asset in $XX.X repeat gains and approximately acquisition producing XXXX We the another XX strong exceptionally sales, higher for benefits of of on Part towards of programs. projected XX we engines, equipment good a for benefiting prices $XXX and comprised in from portfolio sales. X yet on from excellent had of came we million quarter sold EBITDA XX% $XX in $XX.X tremendous value XX of and customers. million new gains EBITDA We MRE million XXXX.Aerospace Products generating XX on of million growth in $XX potential about the for EBITDA and new comprised to We $XXX sales the experience of demand asset margin at strong $XXX of will Additionally, contribute attractive per growth book leasing customers in of to the quarter of for to XX globally future Products $XX.X million million assets the remain million $XX.X for to leasing an in approximately comfortable in margin a gain quarter, the and XXXX, approximately gains leasing customers as excluding XX%. $XXX modules expect EBITDA or aircraft range.We of overall all and continuing feel $XXX EBITDA.We're unique in for products with of acquired comfortable at continue EBITDA million an see QX

expanding the number customers both per at usage pace. the customer accelerating are We of and an

EBITDA be aircraft for not Additionally, including very $XXX become AXXX-NEO service we expect ability are acceptance between we of and pleased to all continue for the and globally.Overall, and call aviation the introduction, aftermarket to we million back with leading Corporate the Other.With to XXXNG $XXX our this, have for second looking the Alan. full million, provider VXXXX. to I'll focus turn ahead, engine, annual XXXX power demand to our With the that,

Alan Andreini

Michelle, Thank to may answers. questions now you, the call and Joe. you open

Operator

first comes Our Morgan Kristine [Operator question Liwag Stanley. with from Instructions]

Kristine Liwag

leasing a revenue. we the in you about Can step-down? what saw talk this on sequential Joe, drove portion, decline slight

Joseph Adams

to Yes. lease on was quarter The year. biggest had which driver [ aircraft, we we third Bamboo AXXXs last terminated ], in the X Airlines

were that other put leased They back. QX off wasn't great And about taken out on did rates opportunities and EBITDA. credit is QX. represents better the at we were of be they'll for quarter That those higher million in and reason lease we per terms. that $X leased for they off to the So had

EBITDA us, in so XXXX. on affect also impact NPV a QX it And revenues will a had but it's for ultimately in very of and QX positive negative

Kristine Liwag

you are monthly can there assets? those release in suggests when assets demand that a lease like to lease step were outpace up got rate is monthly So for you've much at for it that how general re-lease? assets about seeing Like able overall these up supply? talk higher that a you view the you Joe, environment continues a better seems saying and the rate to terms, of

Joseph Adams

in anywhere XX%. lease depends the was done, for are general lease to on when it originally but Well, XX% up rates aircraft from

where a rates, is. always willing So it isn't the market you it keep move if the pay is to than to great operator more move the assets. not or either to operator then operator It's expensive

confidence so we in company, So we didn't over decided you favor leases. have much was the it them. new to move But extensions just better in this case,

Kristine Liwag

Can acquire Great. the engines and degree could some to XX I squeeze very In XX are MRO you're I assets about the market? unique in other maybe have may be assets guess able if this you you were an being capability. availability quarter, because last you assets Does that buy aircrafts. to interested guys also the And talk owner pure an of question. as one you leasing and not to in? give asset the or operators edge in able just you

Joseph Adams

which engine low prices. very, engine out that We, absolutely. pay the there're side, Yes, if few on other typically buyers very engine very for pure tagged part companies, unserviceable, particularly is an than

it's because because we tagged engine of it so could one positioned we be can they unserviceable module, best the an is other with trading we unserviceable And because repair do modules uniquely which case And it. anything. at get module.So take a situation can the an discount that's shouldn't are discount, unserviceable that they in only but it's and X really we a it's at not, when coupled buy be

with that like, so buyer. up one, I I when to put want don't to and I deal The nitpick sellers, that one don't people I say, And packages that that. and want one. want some but like they'll want one, want I buyers

more think can't than to able other that acquire, There's nothing for people effectively reason. much I we're so digest. And we

Operator

with Benchmark Sullivan Josh Company. from comes question The next Our

Joshua Sullivan

from on in walked rents the just to market So the earlier maybe response lease for put rents max pre-COVID FA wanted it to today. production the And cap how get color lease after have this to I I some would understand be the year. helpful guess just on also levels

Joseph Adams

Sure. take that. David Moreno will

David Moreno

So lease rates typically reserves. maintenance are $XX,XXX plus

special were maintenance Those the to now let's arrangements there made rates that are gone. Today... long powered by were reserves. hour or COVID, During $XX,XXX say $XX,XXX plus days

Joseph Adams

engine. That's for one CFMXX

David Moreno

VXXXXs Today, $XX,XXX Yes. CFM Lease plus as shortage long are rates reserves. of days a those engine. maintenance those up Yes. continue today in gone. there's market. to per the That's And and rise are

Joseph Adams

the mentioned, max people cap projections meet growth aircraft. COs NGs because the they to with are production going the And can't as longer their their you means and that on new keep cap, the

couple for at years. least extend a supply So cap the between imbalance is likely and that to of demand

Joshua Sullivan

million-plus And around what are EBITDA then maybe you've parts in the EBITDA, around quarter know margins, I this EBITDA secondly, business a module? result obviously about moving the but is parts averaging per $XX talked XX% good

Joseph Adams

margins the customer of function certain of we mix of urgency a size core. on modules, a the it'll the they module. higher particularly It'll the be it's on have and function which So function and on need a the timing be the

that been module can we've outsize been steady forward that up times end very that might cheaply, all into quarterly good and And of P&A. of per I would reason. assumption But we a in had say buy had I the $XXX,XXX mix we years buy because we couple we basis pretty an the package as of of another until really of for module has produces sort quarters.We've reason $XXX,XXX averaging basis. engines, it have a surprises mentioned going So positive is some a where about on the low we've and a couple a often is things goes with last a each more gain over the

Operator

comes Research. Myles Our next Wolfe from Walton with question

Myles Walton

worked, just the give for the XX then in the the comment full the and globally a about that picture service of to VXXXX us FTAI it's provider does where is and mean respect to of be your program, you power be? you leader the could to VXXXX that how could aftermarket for today? in the can Joe, vision the being who MRO you, talk quantum, And contribution and your what leading terms engine, NG CFM big

Joseph Adams

Sure.

history. I several years. So owned mean, the VXXXX maybe have we of bit a for

much, So in years, we XX our in they scene, for going those of in phasing VXXXX issue on Starting obvious piqued was particularly thought ago, about up portfolio powder metal about end main them X would with got engines GTF while. to that who the the that's just interested we XX out engine. had months that be many next driver coming the had X those the X it's discovered, much to we're to it not longer.And it interest the a what that we've keeping over operators engines

been high I months fallen a we ago MRO there's do about lot opportunity and is started tremendous in have talent, up step place It's demand than ability And don't So expertise, successful. probably it's engines for people, talking today, up to have the engineering hiring in either a very for the very, operators better and building extremely or our lining would us of to those ever to shop to lot assets capital buy. X that. partners, the shop a expected.As so

will There's of sort we drive work few on probably -- ultimately about we're We shops. we've it's deals.And right side with or the engines have that a now X over long-term now. MRO bit We're select right haven't multiple discussed X a shops providers partner done where we very XX different But to and some a we've test got maintenance in using today attractive short-term of the fully. next years. that

We a also aircraft where management for an we on engine take of for are be and engines large fleet on the over exchanges. then airline responsible XX would VXXXXs very over deal we close would

So needs performance as and out need through and restoration, when visit, an cycles we to then maintain, hours gives a exchange.So run they airline have used that an been term keep and them MRE, back that's and we we the repair a to us give shop flying. the that has engine engine is

like a on, we're couple have the So close I in that. next expect fairly deals we weeks. few of other that And

to the offering airlines CFMXX are is for they and flexibility an the a does that prospects anybody power XXXNG really it need. our pretty So and and give or VXXXX operates it's provide complete AXXXCO.We provide a that or power is us of sort to mission can exciting

need return if over always a give we So without compensation. if too they engine have many, it it back available they have to an us they and fight

don't engineering don't So isn't $X into, thought say that's they as provide airlines. cost to because and like visit shop to recognition don't lot was them, growing an And out don't that's of to have a for million.So unpalatable. is cost have visit, unpalatable? savings then tangible of them is million go them They department. provision the them we to shop have they we there an compelling have to you and that find we that time about buy they they and great spares have cost that can and part a easy $X immediate save provide thing it part airlines money to going very what to Which a is flexibility, don't that? there's And manage for a

for add global shooting terms as that's think a aircraft.In easily sell I some reason it's what that upside. our leading the So of should for next VXXXX of to power year, a million of provider to $XX industry for and as contribution is aftermarket great company I with those we're being the EBITDA mean, provide

on we've received but So need still it's got well and and I because that I then couple of and one a think swing it we're engine. of could the deals or timing early -- running as another, for and off great mentioned, very and that large way

Operator

question next with Our from comes Compass Giuliano Bologna Point.

Giuliano Anderes-Bologna

on the great quarter. Congratulations

For my question, I'm in acceptance first seeing think you curious aerospace you're why area? accelerated the

Joseph Adams

departments look amount to people people the airline because back ever and once used tell in fact a what of have a and then to they once is experience they it's a visit also and and the at painful they saved their and I I shop for this? experienced on. that provide I known have they button helps wouldn't worked really it in and I've why has think great have the which come mean, afterwards word mouth is talked flexibility time go easy and have have visit, that this avoid they that conferences a so can I often Well, people. one them, it ease and well. engineering And airline it that I before. I told one was great say, caught should people this usually which very No they've think the had money wish want you of shop they and experience.So airlines, and other does to with about me scars all And they industry we after do

momentum. keeps just the that of All building

Giuliano Anderes-Bologna

And Can program? That's you and question. an great. inevitable update PMA give us initiatives the then on

Joseph Adams

Sure.

speaks of which is the test great what of the We're critical performance results, very and to underlying important. operation, very they're seen in the progress actually parts with when development those continues. So happy we've which in

for the So runs very all an careful extremely on program It's that.Obviously process. TMA. thorough. never FA They've safety them, but good are been a side, the timing on and any issues, successful rigorous had they extremely

to are We those when received. a So excited. processes completion the we're it's inherently very it's difficult the are actual wait. approval But XXX% of definitely worth predict sure very

Giuliano Anderes-Bologna

like quarter. discounts assets in bought for And helpful. off-lease a still one you of last very assets? That's It then looks lot one. Are off-lease seeing fourth you the

Joseph Adams

Yes.

As I immediately an people. you of you've -- handful that have to you asset if down like mentioned, needs buyers it off-lease maintenance, and narrowed it's if maintenance, needs the field a of

And so dynamic changed I'm that will. and yet sure not it not has

I think capital in with invest on lease maintenance. are we the are of people people marketplace are assets still, need looking don't that see the most for to that

anything really that's relish said, how and fix we we because things fixing So where I -- add we that's as value. you can and

Operator

Frank from comes question next Stifel. Our Galanti with

Frank Galanti

Aviation's competitive of I wanted in to about module FTAI sort positioning the business. swap talk

the PMA, my if my a PMA, VXXXXs And is is not the new airlines you dynamic here. relative to the on the that other perception the dynamics? a perspective, sort a my CFMXX? it. other so or you from modular understanding and of sort first-party feels about advantage sort modularity relative from that swaps CFMXX. do I'm competitive get you And it can Can you where of having see swaps broader misunderstanding of or That's don't those talk function.And on about see PMA I that other like perspective, talk to MROs sort this module of first with from of then people, it's MROs, that to sort the not do So that VXXXX, of

Joseph Adams

mixed there is that there for are available there's Sure. but together, of couple a VXXXX. the PMA concepts in Well,

to that savings on an There that.So So There other be that's cost for on. a don't be good opportunities if working working of that's as PMA. the would basis we the opportunity PMA, utilize able team material sight commercial serviceable we able are the for have some an to have utilize. line option We a repairs develop to arrangement and our where to use is be us more decided have engineering on we a manufacturers used are same the are consumer such and to we with on VXXXX. we of so

struck of agreements Our we've maintenance the shops. favorable that with some

can all which do the a we where that and out million. full take for And smarter you so think of not when shop about $XX same million. the the can think better.We you a it's VXXXX, out list add it's playbook but costs CFMXX, process full a you we figuring and same has We up, visit it $X.X of where exactly as price restoration can and today of going through can things do the of perform cost

for So it's or $X.X both available roughly savings for our be about either customers us. for million for to a or us of

compare that you our and million visit $X.X is percentage-wise can $X.XX dollar today a terms, If CFM it's it's a that is to we better about about we bring with shop and good. million still availability think full savings so.So on the favorable but in CFMXX better, is roughly on VXXXX or amount-wise little, PMA

one inventory modules.There's CFM our an have for so of availability of that aware that competitive X,XXX looking that's I'm fleet an And can question module was We they second modules from ad buy hoc because MROs an are modules on actually and we that the buy we of. that you there -- from engines, module near basis buy always is MRO. over our you're in has some, you anywhere about XXX don't is from one The us. advantages have availability and and module, find factory the no

if a I them point odd worthless pretty repaired from we inventory say do is and and they're advantage because airline's state not we repaired, of view. an state repair and modules restore repaired then them So they're in is competitive a

a we're maintain, we it's MRE. ability above. and the say, very well, all we We we to say, power. And which things And people package.It's combine is the an what different of repair anybody in So you? when then else industry. those with than And say, that are exchange provide

We competitive our have to and savings. is pitch. ability ultimate flexibility the think is cost I deliver advantage, That's which our what

Frank Galanti

helpful. Okay. That's

sold modules to customers. In sort of modules thinking XXX that said it releases quarter.You then each little you experience customer said, on there over new customers, XQ guess or And in through get side. release, the sort sort a based if are or 'XX, had a XX guys look X at of hey, those XXX module Sort to And about deck up said the go on customers. further the had last, you 'XX, I X this the to XX XX. press the X of this and are of add in quarter, in there you you

right can sort customers, is customers you a And customers my why from XX come about that in then from those be away that in in so customers there way sort saw XXXX, if So think -- talk that 'XX, XX would to sort of you of numbers? of that leaves back about Is in were perspective but understanding their XX didn't year? XX customers the 'XX. that that going

Joseph Adams

but are a to don't think I be are No, right, have times repeat has a the exactly to customer need. where customer a numbers there

quarter. repeat customer So every not is every customer a

need visit, other a you shop module.So issue. don't words, a you have in a it's So don't timing if

XXX% very customer have a It repeat we in have happen is think of business, quarter. out a high can't we've you might just so way. customer every have what goes of a that you customer level repeat But doesn't I sometimes that business. very, said

always customers it our need, that the to when great was have again very have they a to had they do like again need. experience that would but been have it's said have The and modules very, do I have and used that You high. will a

Operator

from Brian JMP. Citizens question next comes Our McKenna with

Brian Mckenna

Products. see was within strong great it very So to quarter Aerospace another

start and increasing one-off in was quarter, of business million continued to strength fourth just given services? for off benefits? the demand levels sense of is products get the really year-end trying the any a Or adjusted segment $XX And I'm within of a just to the seasonality EBITDA jumping or the XXXX. there just So good point across for it any

Joseph Adams

QuickTurn. mentioned we've think up was I in $X of value there people to million Yes, write the one-time a

Eun Nam

That's right.

remaining to So initial and made January we at fair your an value requires December. of in the QuickTurn then initial you in But interest time consolidation. investment in and investment consolidated accounting revalue the to bought

about So $X a one-time, that million. resulted in noncash gain of accounting

Joseph Adams

fourth what too And and we I It's think experienced I to the penetration history And seasonality any fast. in yet. effects on market we there actually think that have be don't don't growing see will enough seasonality quarter. still business

Brian Mckenna

Yes. Got it.

out the levels then step And broadly, is so really just of over going quarter new cash flow higher. couple of Great. the clearly I is reaching another take here every business years, Okay. to next and scale stair if look

how the And CapEx business maybe the So liquidity some and a about cash trying how business? back of to uses flow will of some of should needs that what the over we investment about of cash into then sense of the excess think the generating timing of level absolute thinking for again, be? excess needed I'm time, the you're get just

Joseph Adams

Sure.

with deduct $XX to number in gain and you between on engines, is if do So and million flying about then you out as the condition, is repair flow engines annum. that we to $XX and you need EBITDA we which per from a maintenance million strip think sale keep availability, would for you the about cash it think start what CapEx

with B available to therefore, want to So we agencies we double $XXX manage the strong but think so a X plus And achieve we leaves been we coverages. to upgraded, be strong to want want we our we are capital to that should that. there already, have priorities with.So rating. million And maintain whatever do

we own do of to own XX.I now, end expect the be year. VXXXX, XXX is engine those will of have this obviously will engines so VXXXXs. Today, a deals by new we we we new probably to about Second and investing would capital XXX the more in

thirdly, we or an for then stock to for it's dividends us when either would we And look that's invest, discretionary. buybacks cash, So generate to but capital. opportunity excess

year those a is are pretty still priorities.I this the opportunity. investing active think So

So I results would very good generate shareholders. really deals, see accretive I think be for good which we'll some think and

lack So at we don't of see investment point. a this opportunities

Operator

Barclays. Our with next question comes from David Zazula

David Zazula

cash the you little you're needs First kind that working what talk stronger. is bit that given thinking capacity a products about and near-term? out, the near-term and capital needs Could have business position the one working intensity, for of revolver expanding capital working capital you're is changing the near-term of cash and in

Joseph Adams

of mean, at had -- undrawn I million No. $XXX of year-end, the on we so we almost $XX available had $XXX liquidity. cash, million revolver, million

for of we LOIs $XXX have pipeline deals. think I now right in the million

we're this don't And we'll year, point. so or see assets some too so the And selling needs any generate good. by more cash throughout at issues significant also

David Zazula

then Great. the FAA and the Boeing you specifically kind do of having of your and shift with the see the TMA impacting those there, FAA about around over talked events having And then the new with of either near medium you term? FAA, of leadership the process, to of kind with changes resources kind process of focus broadly but PMA some

Joseph Adams

of from had -- long and the personnel. the turnaround that just issues FAA they some were they turnover our high think COVID. There perspective experienced lost during main I had was personnel, that times

addressed those largely been have So and have what fixed problems we been from see.

and from which the coming But there's sign new those. not into people the impact have a had administrator -- has the thing max and staffing So of either been have main any that that you the issues thing the addressed. mentioned, office we was the no other

Operator

that Elmaghrabi We BTIG. Sherif comes have last time for from and one question with question

Sherif Elmaghrabi

both well the intervention given, are bit going recycled didn't especially cash start to assets, with It want well these that's thinking quarter. of could an How vessels. through portfolio? and upcycle during into you about I that the be looks So work like the a interventions

Joseph Adams

on It bit a Yes, The vessels a headwind is was generate $X smaller -- hire. in I now us December, in about that quarter that off-hire. for a vessel that's Pioneer, started the fourth you're its a now charter. charter EBITDA.So were in on think. of that's million the X-year correct. and And It should both year in

and in we're good that for shape marketing So actively sale. it's vessel

April It's that The the in a they breakdown, other event repair charter pretty Pride, until expect to maintenance charter. a a the still good and there's which March a go is crane. actually that in on on for vessel, in had we place hire

you and will then see and we first hire in and headwinds to be So onward both both in second quarter year. vessels quarter hopefully the will continuing hopefully sell the this vessels on hope

Sherif Elmaghrabi

That's planning pay on year, leverage next due early helpful. refinanced just sooner? and see coming the XXXX notes down And then we you to those could are that reduce or

Joseph Adams

so. It late actually think was next year, I

Eun Nam

October of next year.

Joseph Adams

Yes.

we lot So that have a of time. --

months deadline evaluate XX and have over important time-to-time a real yet. We those, market the we from and think about but there's not

monitoring it. So we're

Operator

the call for Andreini question-and-answer to back any Alan closing I'd session. remarks. over like to turn the concludes That

Alan Andreini

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

Operator

may a and Thank conclude the you does you great This have for now day. program your Everyone, participation. disconnect.

FTAI Aviation (FTAI) 23 Feb 242023 Q4 Earnings call transcript