FTAI - Earnings call transcript Q4 2024

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Operator

Hello, and welcome to FTAI Aviation Fourth Quarter 2024 Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to Alan Andreini, Head of Investor Relations.

You may begin.

Alan Andreini

Thank you, Towanda. welcome Full to Year to Fourth FTAI like and Quarter XXXX would you the all Aviation I Earnings Call.

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

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

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

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

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

Joseph Adams

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

posted to start today by website. I'd about talking investor to also presentation the like our

the our proposition, to by business. slide, Aerospace scalability our go and to market wanted we going of slide to not Products durability speak value opportunity, While

the with opportunity. Starting market

of VXXXX the the addressable XX% small medium-sized a and all you total number our provide competitors powered significant value our these customers engines spend, owned represent approximately worldwide, $XX our the lower which FTAI maintenance capabilities large price and to target of creates and focus compared of flown, possible customers through what This are of We made operators maintenance products a of focuses XXX is billion fixed fragmented where by They expertise downtime market do. airlines, have annual with to customer. and and CFMXX fleets these engines, which and engines. minimal engine number look our offer the unique operators, narrow-body fleet. majority at If of and large can a

repair. modules FTAI engineering every approach capabilities green optimization, that engines maintenance require traditional our module. and we to is Unlike leverages time MROs, each cycle from rebuild to Central is in-house available extract which how maintenance and

for enables optimize combine to modules customers. scale rightsized build our us deployment to Our or module engines

engine the me life. explain You life The the have useful fan, engines, them and unserviceable presentation, still of CFMXX for one and acquire and reassemble a sell X of various life. hits in similar refurbish usually the other a let to modules can one Engine is modules strategy modules: or see maintenance LPT. remaining And have needed turbine them modules rightsized limit. these is when X all or the And otherwise consists the where process low-pressure a their this that modules XX but individually X optimization Slide called to When to a into is remaining occurs, time the we in now the little green engine rightsized dismantle -- key the viable engines core customers. our modules a the moment on the typical detailed example take more detail.

shop to the bright unique significant by in repair visit, in customers -- and opportunities. which while This well our regarding offer role savings engine a Rome, supported made we share generating addition to allows ahead at scale, our support facility strategic aftermarket, call help cycle creates in maintenance the in maintenance their to benefits margins to a maintenance yesterday traditional capital our investments see than new us XXXX long-term cost announcements we We needs. typical in Performing accelerate the as facility MROs. sustainably owning we as also made significant future significant the airlines throughout in initiatives, compared higher module and the SCI, market to

Center strong rebranded and Engine demand customer complements location. Montreal be as new Europe, from a help repair in venture Europe, or address and FTAI's MRE and which QuickTurn the services for facilities in critical exchange maintenance agreement joint Our with global our base IAG existing Miami, will will our geographic

yesterday opportunity the is the in round that Deutsche billion for late Atlas, raise we of billion announce way believe the to market of than stages deploy team level this more from equity debt in SPVs has a in excited closing in majority-owned to of is capital asset currently $X a received we commitment subsidiary and which Bank. region financing, SCI these $X.X SCI Secondly, were is the of The Apollo annually. financing and second

of adjusted of cash generated purchase investments vessels. parts strategy At In time, and included the both same growth of we $X.X Montreal billion flow. which to and XXXX, facility, to which free operations, approximately approximately $XXX million support to management of we business related from assets, the beyond. particular, maintenance Fortress, aviation the the our in from now in the termination engines in XXXX major $XXX Turning with million invested our sale range growth agreement in initiatives, and offshore the

in confident detail billion, more approximately also on cash of $X.XX and out corporate feel expecting adjusted free to in and million in broken which we flow excluding billion XXXX XXXX, $X.X other. Slide more our be for between We're EBITDA $XXX is segment annual XX. business Overall,

in We will to the strategic make continue business. reinvestments

beyond. launch strategic our capital initiative our XXXX needs asset of the in However, capital reduce will acquisition and

prioritize we growth to opportunities, to will also will redistribution capital we So continue consider while shareholders.

our current to expect from now our billion to previously EBITDA rise we XXXX. be $X.X pipeline, annual $X.XX now we look projected approximately in our aviation billion, Finally, as at

to numbers over Angela talk to detail. in it hand I'll that, the through more With

Eun Nam

Thanks, for metric EBITDA. million $XXX.X $XXX up $XXX is us QX to in in of ended XXXX, with and million which strongly X% Joe. in EBITDA compared QX adjusted adjusted XX% QX to million is year The XXXX, We XXXX. the of compared up key

offshore our fourth the $X.X Other, on segment million $XXX Aerospace from which During million segment, quarter, sale million number included and to our $XXX.X gain both of from our of Corporate million EBITDA related Products $XX.X the comprised was the million $XXX.X from Leasing vessels. and of

look of versus Adjusted is XXXX. $XXX.X $XXX.X was XXXX million all of XXXX. in XXXX, Now versus in EBITDA at which million all let's up XX%

strong results, QX versus approximately adjusted Leasing. now to in $XXX $XX written pure of component Turning $XXX in in settlement million $XXX million the to assets continued million off Aviation to million was Leasing for EBITDA. at XXXX. posting in Russian deliver the of XXXX. QX related The Leasing came million $XXX million Included $XX

the of sold we margin Additionally, $X.X year $XX.X a book with gain assets ended million. million value a XX% or for a of

million with XXXX our Overall, of alignment generated in year. estimates in Leasing, $XXX the for original for Aviation EBITDA adjusted we

adjusted in our we Leasing assuming business XXXX comfortable an asset-light to towards pivot $XXX focus EBITDA as remain model. we ahead, remain Looking at million

million of EBITDA and is which Products $XX.X margin QX $XXX.X EBITDA adjusted at of up an Aerospace XX%, compared overall yet QX of XXX% million compared had $XXX.X with to this another XX% to in up million in excellent quarter year, XXXX.

on Rome. remain in $XXX in of generate EBITDA, Miami $XXX XXXX, operations continue commencing In focused Aerospace to the $XXX and as generated and in tremendous ramping up our growth million expect of to million million Montreal $XXX million both usage in as well to up Products our we facilities We see of and XXXX. from our production in adoption in XXXX

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

Alan Andreini

to open Q&A. Towanda, you you, now Thank may Angela. call the

Operator

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

Kristine Liwag

the way, business layout the But third-party proposition back, pretty is And that a out appetite competitive been investor like by questions that you out I clearly investor when why companies. has lays why that found other But vertically like just landscape, integrated the you it very the the spot. provides. Joe, like step of leasing a presentation aircraft model at value look else else thought sweet is had interesting. really good one you put But are this it key others you airlines, nobody where doing isn't internal this this? seems model of it anybody MRO, had a taking because

-- hurdle? what And why doing think competitive you true you do it, moats So think do are? your what's others the aren't

Joseph Adams

of to a maybe lot moats. the X, this X different over It's us Sure. place years. put in We've years to get taken point. There's

simple sequential a not number steps of that took. a It So was it's we process.

is what Delta -- type which own compete have maintenance and do American have capability what of United, your same to then basically, But the similar to you do is facilities. large own a we to engine and to and fleet of do,

operators there's have and so that majors doing then copied the other offer sort did from nothing world stop And the But what don't of the facility. that. people that around to is we've to a we XXX maintenance

type. it's effectively, single a it's an function So for engine outsourcing

well, and So world, other the But They're facilities oftentimes, engines. servicing maintenance the they around own have own that, multiple could do like, don't look people could engines who that when they do that. you engine. clearly, people's

engine, an business, a their the then set they that to find third-party up that all assemble doesn't an So parts. asset try work facility to reorganize they team, pick have have management displace and have to other

And be this the invested go The in other where you we started, if impediment, X product will ago. we only that is X, engine. PMAs PMA years back for

OEMs, I strong So the them have significant exclusive And from will mentioned, PMA to of any ties that facilities, maintenance many commercially that on using that. we just an own have prohibit degree. with very companies likely which

advantage something copy. that can So nobody is that

that all but built else it up, The not it maintenance were but looking and at could, it, the people a that path -- when like did advantages own And we we our are and we time a when own people clear, is it, doing wasn't that mean what you I nobody to decided diversify and us other so of seems outcome to focus. doing? lot we today, went clear. takes down facilities,

frankly. if just we're can't And I it, going -- every a that's don't and we've now we So go a added -- it lot it think up time. mix, that quality the actually to all work SCI fund another I think which something of other is times. hurdle putting you of of management put it's -- we -- -- barriers. about raise to paranoid, it year because We're asset barrier so it's know always a that big and institutional the done people to couple yet add for easily. keep know, make try because harder, on we've to first you It a takes top to I

Kristine Liwag

your form Bank. Joe. helpful, the $XXX -- maybe in putting you're capital and SCI. in to $X.X segue on you've XX Deutsche I really Apollo of lease Bank And mean aircraft, recent got from in a That's and billion million announcement, Deutsche the to

You're into partners your what SCI? for investment? What's not you're for billion? what's at driving as of $X and $X mean, define for billion the the And calling previous lastly, I you your you billion. capital $X and appetite for would the successful now this increase further

Joseph Adams

Sure.

over leverage, we So that higher billion, $X the the we we of of effectively terms to close indicated debt originally targeting were and size, just were able that in allowed to the found terms for XX%. obtain we

that very $X gives SCI. strong investments and seeing invest. already time, deal still for capital at we're So And February, committed It's same a we over now flow. billion in more the us have to

market So -- opportunity. and a huge there's it's

leasing look think COs, lessors. -- itself, If AXXX about by the of fleet are XXXNG those you ], CFM and market XX,XXX lessors you there's just [ at if ] half owned [ owned

those to trade a deliveries lessors and sell year. fleet older manage up So need longer buy average start less assets up their in as and they to the been There's on age pick strong assets. and bit held the of of given have environment. But X,XXX, newer we because and a roughly to so new little their see pandemic XX% that to people ramping market

billion a So the $XX investable that we of alone of think lessor just market year assets. north is

we've airlines for of we have have lot ever number a leasebacks. up. love perfect And a one that leasebacks a because There's is that of in us then on We're category. engines they sale for to And And fit visits no met else on likes shop sale coming shop one visits. that shop that visit. one I've airlines top of that, of you because opting doing seen

are fleet, we shop are also on avoid out looking leasebacks -- visit. competitive very phase but So the to sale engine phase ultimately when out airlines

area. of we've deals up a that lined in So got number

So the asset lessor the there dominant that. account happens And that we the which largest a become of really this class, goal by in our isn't we -- think in -- sort world. is to be to

business, investor the else the investors. return returns trying ultimately the can returns. generates that's have believe to, when we because and it's higher product that a And is can manage no what wants about risk. think for we a higher deliver and you're investment risk lower and to engine has exchanges quadrant always the believe we -- offer one get can actually that I efficiently, a more Now we And we always lower

So nothing to there's like really it. not about

Kristine Liwag

are and that, at really Great. helpful. I'll it leave these

Operator

Sheila Kahyaoglu Jefferies. Our of next with the comes line question from

Sheila Kahyaoglu

for great the margins. both Joe, on you, questions X on Congrats maybe quarter.

off XX%. margins we if could First, start at with your

go that bit those think and generate they If some a because on I misunderstanding how through could how you are? you sustainable margins there's

through of course drivers it as optimization And the like versus us million you've secondly, and again previously. the at beyond, about 'XX well. facilities Slide with to the the EBITDA then you're seems $XXX over talking XX% just potential XX, XX% walk adding whether productivity about it's you you've margin margins bar your Can and profit XX% and once talked green better PMA time upped

could you those things. on just if touch So X

Joseph Adams

Sure. Yes.

additive really to like it we you It's and work. X another, XX% gets margins, mechanic. someone. When for a So to one paid of with start margin are when down repair. they're many but a about which we think typical fix MRO generally, categories the for something different into repair break earning And

You and you labor pay parts. the the pay

So that's sort of the easy part.

but time and that major the something really just as don't is combine us we've cycles, we unique any a slide optimization, and in to it's have that's second I -- hours practiced through and have and own an you cycles. deck, mentioned, does. which it's And by detail, given that no will example The but walk facility waste we if your fleet green David else airlines, to in been more that maintenance available that so one

and whole is of that's and shop have all part strategy, we third the going. The the mountain. the a and team LLPs use And because our we do, of strategy on working PMA, is serviceable been material, of big buying is all people, part top for many of ultimately, which We've a they years, those used have part part. any visit is which

So -- ultimately, own will upside of repairs. and do be part more more which as moving on margins our more we and further we're piece repair, into

in can we cases, we And inducting for avoid and then -- airline, many provide just-in-time into lastly, a that on work. shop. them help We field service engine product a the do

white product. glove a we have So just-in-time

And we that combines out we're you those those of line. activities break though. when we this that any So economic only value seem environment. is service the what all in can way. that margin is. market sustainability, of the then or None and believe And the down glove repair components party The the the about climate white no adds sustainable think matter

the And will then we in there, grow. more more mathematical. optimization. we and green at And own, the engines a numbers and get model, just you have believe optimization the optimization the you X and time better chart little X, It's parts, modules

believe the upside there's in we So further optimization.

can that facility the factory, improvements, been engines, by You of one only standardizing drive like working so margins. on higher able we also we it approach running can to efficiency mentioned having believe to demonstrate we to we've that productivity the a your engine, mechanics --

is which upside X lastly number. complement to percentage is is the to product adds function reasonable full really somewhat numbers, not margins the be to we a but XX points then percentage believe that in of we think PMA, And of but X It of will available. points XX the a mix, is PMA when

David green optimization. walk you the will time

David Moreno

walk the XX to happy presentation. everyone Sheila, through of Page

is So optimization. secret to time to this meant bring which example sauce, FTAI's green life is

is monetize cycle So business maintenance. engine to our in through the built every

group starting is of the engines. a generally, So unserviceable point

X unserviceable. In has cost exchanging through of left, are our run see the $X.X them the engines million. sourced well. on engine engines either acquisition scenario, we as unserviceable of life. is of X its modules unserviceable So this these you'll one have are of this become because or These the that leasing books out acquire can engines example And

Next, engines then the are into modules. down broken separate

and a address Maintenance to the limited. last million X modules to total it's recap, to are performed these modules, ensure durability engines each Just the X $XX until scenario, bring modules. of In total issues this of investment engine we $X.X million. to so it's of can is is each investing

you right, X life it's for across its In total, consistent reuse the its create engine create million. via And total that for value assemble actually is of -- assembled, can the the you with on scenario, $XX an each not third Finally, modules. builds modules to engine teardown the now parts. this in these of serviceable is future engines we engines

of we value. million So effectively, created $X additional

optimization, time to the X as business demonstrates more of example the only a X And to where than this grow, X. increases. continues green ability the is lot plus optimize green So time power

the in on into think actually also growth was effectively. And backlog optimize ties Our a strategic will in into volumes. business. I looks talking Joe that with initiative illustrate have on that insight about, enhance XX our and because exponential producing we'll green will more capital efficient like, more we we'll be time committed backlog that be what engines further ability to which scale And modules Page higher and

Operator

comes Benchmark of Our the Sullivan Josh Company. from line question with next

Joshua Sullivan

this your QuickTurn into times FTAI? joint How dig Maybe Europe venture turnaround might right a local new percentage facility just was the new or of are center should what of for and having think Why customers capabilities we already even the ramp? in Europe? in we politics the Rome? or what for do Can

David Moreno

I'll is This question. David. Sure. take that

add So our MRE is excited the excited we're we're out, pointed to Rome geography. first focus you to very network. And as very because

well Chinese into this us customers great in the has are Europe, So Middle and of our about has XX% East, as connectivity Rome China. gives the then specific actually facility which today to certification, as access

As the its second capabilities. reason is

has facility CFMXX. is facility, maintenance to on test has as a has the this focused where access So as a It MRE Miami capability lot our capabilities similar to it of cell. well it

So our cell in that years X test plan is next to online. reactivate bring the that test and cell

at also deep it it from one maintenance investments history. [ the airline, particular a access they It history Where in point, with a differs Like an to is all [indiscernible], repair. had facility has piece which, have all partnership. power our one has Alitalia has Miami a facilities, with had ]. This

So that been they capabilities. And facility developed lot a has underutilized. of

excited we're process we ramp test cell start to over So up very and can can We facility volume the and MRE acquisition, to the immediately for time. believe grow we then and that bring after our that. piece-part capability

Joshua Sullivan

Got as part? how resistance? the Or Are but the PMA lessors touch then there maybe performed? on any it. approvals, and has part just for just load year I'm using that is second to any question, stone ask last if also updates here there's late PMA And approved going a the

Joseph Adams

long engines. part engines, part, prior in The over is Yes. I'll been years, in XXX,XXX which from what quality experiencing. take is our And is in we're that's last high first. are has our what what last time, And that's and in operators has almost approved hours being service part is mean, operators and ultimately, -- the installed performing now and the I are durable second and seeing -- X own that's flown that's the part year extremely well. and matters a what PMA

So that's great news.

still we close say be approval, same again, amount there's said that's when pretty of time, stands We actual very to last part. be thing substantial the been it but forecast part of next on a numbers terms But the that and did true. In much we the don't issued. progress we're the made, will

Operator

from Point. the Bologna comes of line question Compass with Next Giuliano

Giuliano Anderes-Bologna

Congratulations quarter on fundamentally another the and expanding great execution runway for the continued and business. also the

to more come I will what more the of think lot the asking macro curious for was the opportunities and of about of terms the well. industry? -- assets fragmented it some the fractured MRE some of And start be operators operators One And in expand midlife off the how and questions was larger industry. you over the even assets, SCI question operators out and that you the you the curious midsized platform of legacy of a will impacts But globally? legacy those MRE to of in their as of impact on the do more I'm time to you become smaller as legacy evolution sell the as platform creates business, a operators [indiscernible]

Joseph Adams

a you those great have of it's function dynamic for facilities about are today, by question. operated that in they at the get harder that others way very the outsource to No, Yes. -- evolution And aircraft of us an it do. in the and because maintenance carriers don't are important engines is large that XX% large have that the probably

fleets, -- into almost all will and or our going not they all, of of all time, meet those to the to will and those are come out go world going airlines and over them, which medium-sized they're but small- But around aircraft of services.

on phenomenon coming probably of So a XX% think into those have world. cascade third-tier you all cargo just airplanes charter that airlines around you -- operators, having can second the down opportunity growth operators, out of

has very a dynamic, in happened aircraft which So platform. important industry every other that's

aviation, we relatively maintenance constant spend, on billion total new put CFMXX is on $XX thing the macro you at at XXXX. just other remaining spend for VXXXX look numbers the on and The through expected if out industry engines

X% as be which those years so we is you've now. going of that at to maintenance forecasting where is the X we're constant got spend, relatively another our And addressable engines. they're right said, This And for market.

increase don't why And couldn't to over penetration so see that market time. XX% reason XX%, we any we

Giuliano Anderes-Bologna

to slight -- a mid-tier it you opportunity opportunity, try acquire assets that them the to a that operators on cycle of intercept would meter to that them and sold maybe to that And the helpful. then the that curious, kind the you're into of those scaling recapture transact. lessor aircraft that when very typically as follow-up a out curious mid-life good about cycle. you programs, SCI vehicles capture become part that conversion question. to lease you And maybe operators But all normally that does then maintenance? I I'm the now SCI I'm and of and give and to out and curious the intercept an think lot That's of for if happens opportunity think need maybe very also obviously, that kind maintenance there's there's and provider be

David Moreno

these we're Yes. yes. a that buyer capitalized capital the strategic fantastic and And to initiative that's of And we're is answer where I only through the well think assets. accelerated

the can can own aircraft we can do this which the then can offer initiative, and strategic do Now via we leasing we entire the we service, maintenance. is capital

entire it's So program. the

our that really does accelerate more aircraft So rapidly. to ability penetrate

Joseph Adams

customer, SCI. other the is of other dynamic the And they important don't mean, any Aviation see FTAI difference which eyes and I airline, -- from is the the the between

entire the relationship. are We managing

of going they're one we're fleet. -- view, becoming doing going of to -- to business point we're us and do -- from as because And they're more FTAI, their also engine biggest do so have their with they're said, many of with their owners of dealing them that's

Giuliano Anderes-Bologna

back That's everything making queue And very in on move [indiscernible] jump congratulations helpful. the the I'll from happen and there. quickly. and on

Operator

Oglenski from of Barclays. Brandon comes question line the next Our with

Brandon Oglenski

the and the Congrats volatility on surviving developments all recent obviously here.

I talk to given years. from how [indiscernible] wondered that they're the is could prior taken next remain platform the appreciate Joe, NG I about could something thinking think? you and longer if that to the I is just and get onwards running, the the be But going -- up the talk flat you going how X you Because upwards. base, just [indiscernible] generation wonder and airlines than this quoted think Boeing aviation and family? maintenance back AXXX it. customer for I expectation to Joe, So if to people runs your is a

Joseph Adams

the there's generation new to points assets going to Yes. our means hole lack longer. that, current you people's a that That's this bet. growth deliveries, hold from on mentioned, expected And X these of in they're

And engine on type new because then technology durability airlines the as causing the more some have there's of the costs to requirement same that coming operating new industry cases in old schedule to expected. and the issues are higher have a where fly off than the type is still secondly, in aircraft the earlier they

those dynamics change to are are anytime going that don't think So I soon.

hold operators, can speak we to think So David going but they're to the on.

David Moreno

seeing X We're let's of lot Yes. a extend, airlines say, X to years.

So we're seeing further. that and the longevity of further this platform

AXXX a durable very just XXXNG product. the COs mentioned, Joe are As

the predictable. costs very to be, are what know you it's exactly going So

these on of holding long a So as aircraft lot airlines are possible. to as

Brandon Oglenski

contracts of And giving you I that the then you in forward can base Appreciate your engine doing, lot guys think, during are response. to know for have future? to how events folks customer one-off you But the successful quarter? been, transactions. I talk a

David Moreno

Yes.

a programs So have with X say, as, far combination lot -- a of, airlines. it's and then let's we're say, we we're transactions And years. of spot seeing these large let's programs as

do want example, to X So in exchanges an have the we for to we'll years. airline say, fan come next for

contracted are effectively backlog. our So those in

the is backlog. As capital initiative to contractual a going us we mentioned, give strategic

those anywhere years. to future. going also to X that's the around greater us leases to duration access let's give think are typically I from say, being X years, X So And but average the

a backlog duration X-year to those going leases. we're on have So

said this again, the working buy every but has bought the who I we've think customer more. come And calls, -- far who as has as a to back product, in tried product, few

product offers mentioned, I that a predictable savings, your engine. it's as cost it's savings product and -- versus shopping So it's a a time

Operator

question Our comes on next of see mute. Hillary from the line check Hillary, if Cacanando Bank. to Deutsche you're with

Hillary Cacanando

sorry. Well,

now, could Sorry guess I on mute. about was hear that. you me right? I

if initiative? residual risk capital Is example, you purpose market? over investor just For investor those the special And of then the Could assets? a ultimately the asset? risk? the go that what core residual it investing special assets could of in strategic type Is the who the could And vehicle? you of takes from the owns value takes LP LP expect vehicle value the those in the structure purpose of talk returns who it about

Joseph Adams

we do capital, by the structure, except last But I in yesterday. Sure. to simply, that provided out sort terms we part. will of XX% be of if announced it can the providers total assume of everything approximately just the of billion it's debt that lay $X

is $X.X billion of so XX% that partnership, FTAI general those up $XXX Then capital, capital which effectively will be manage call will owner the asset Aviation. is partnership. we'll is risk investors of number, the FTAI Aviation call partnership. value equity. is put And it, XX% are, a of will lies the And and residual that asset of partnership call partnership. the that it the from and So Aviation third-party partner the and FTAI million that with the And be for remaining a that billion. there $X.X SCI

of airlines, And owner decisions. partnership. be I relationships in... with not we'll decisions And but asset the as management legal it make mentioned, the will So investment manage we're we'll and the

Hillary Cacanando

helpful. very okay. you. sense. That's it. Got Got The returns, makes That

as How I they like are Could for were, then incentive yes, interest. go receive management and And to to I much probably as management just example, criteria you'll minority SCI. new work? fees? these revenue are the items how tied fees what well And get I for you charging SCI, do over how incentive fees? you'll guess staying fees earnings guess guess from fees get on you

Eun Nam

that. Hillary, take Sure. I'll

high to SCI. holder LP level, we in a minority on So interest a be expect the

And line balance see earnings P&L. equity one get on So presented the as partnership, rata the you'll as from perspective, it sheet, an the on our investment. pro from then earnings we'll

management on for to that the able addition partnership in addition incentives. we'll as be based mentioned, to get as percentage. assets to In that, the you earn hurdle calculation, And a also owns a fee we'll that,

Hillary Cacanando

to criteria some have fees? for meet you're percentage the what's incentive management of what do get like you And are So like charging -- to fees? sort

Joseph Adams

Yes. it's for investment just but disclosing market type But line in we're I content the would say this partnership. this not with of at point,

Operator

comes next Markets. Capital RBC line the Herbert of Ken Our question from with

Kenneth Herbert

of that fourth headwind maybe legacy they quarter? you you how the third-party the some start, fourth recovery the in And was It think in of third the like about in a facility the to Have contracts into off? to we there XXXX? do there? What Joe, quarter. with margins And was headwind some completely had seeing how just are seems that rolled Montreal quarter. much

Joseph Adams

the fourth There some of Yes. in were quarter. it still

it impacted sort I was points. X percentage of by the to margins X think

a little million we under it $XX below So business think, had, margin. XX% I of legacy and was

quarter. that, So I And in XX% it drag margins been as the margins. on XX%, would without fourth said, was a we have

totally of and that tag-ins, impact if most, not end QX. couple there -- it It's probably -- of end it's gone less QX the lot be the is the a of gone should in December, an of but still by of a at it's are

Kenneth Herbert

Okay. called the Perfect. sort customer new quarter, you last additions. out And of

about not As how comment XXX penetration you sort any working maybe sort in MRE added obviously, operators, with today you're Or you many on fleets assumptions can of the of, fourth think you from an underlying standpoint? customers fleet quarter? of the

Joseph Adams

quarter. was that going -- we're Yes. to not It do every

and As looking my double But on think, harder. gets I customer market once. That's fear It at now in and digits I adds, and we're penetration customer only more of new be said, new it of this. can terms focused, share you market that. was a

billion our With spend, revenues are billion the XXXX. $XX in $X of about

we're and X%, period penetration. much ultimately market under over higher we're targeting of a So

a we're so off -- that basis. be more go-forward off on to And measuring of going

said, highly in -- operators great there. -- fragmented, People how out there AXXX fleet realize and world we XXX. XXX dependable, they're everyone's don't or operates it's or airline and every like reliable, a of virtually airplanes. But core the It's as the are cargo owns an they're

So it's on this there's going long fleet. -- to a tail long,

Kenneth Herbert

Yes. Perfect. I agree.

Operator

Walton Myles question with next of Our the from Wolfe. comes line

Myles Walton

just the in of a far you said that to moving SCI, partner you clarify, are you closing than you on just currently have yourselves relationship. first outside the the think partner on are? clarify in can curious equity larger is Just if wanted at stake to you equity second I partnership? you're XX% how that your that the And Joe, I

Joseph Adams

Yes.

in closing, the had end first we're it's organizing So are be may where a months. couple that possible And equity smaller what -- not at we that have expect a third our was we to closing December. third we of closing plan I've substantial a -- we It It than in in we next the planning the But not probably invest. with in could And of was group. that of the third there to equity. of which that second the greater occur just partner. we've process It's the what capital raise total said -- closing, quarter but also to is a that's out the amount is we're and on a are fill invested investors the in the seeking. some what

Myles Walton

to of in you that then is billion Okay. that seeding in with? of Perfect. portfolio million mentioned your addition the that investments one And now $X the you're you're $XXX remarks, seeing

Joseph Adams

it that. includes No,

Myles Walton

Okay.

more to it CapEx something of mean, approach. I I is million, putting you're capital-light guess, thanks I for other aircraft the seeding Or And the relative of SCI to to cash go-forward replacement of flow replacement In CapEx, part go -- more CapEx is, had is on you're for color replacement there I presenting and that of that that $XXX Okay. question and expect in? on know a the a the Is that the XXXX. basis? is you'd the

Joseph Adams

be to Yes. replacement. that It's meant

million number. keep $XXX buy that year, same number. last assets business to of to order assets. going, $XXX of you if go-forward be honest should intellectually the sell look not to it's if thing at you And a we million way at look the you sell -- in clear, the So That's

invest we've purchases selling the historically. have of done We balance MRE. the opportunistic scrap we that so types some in and of expect are some airframe would that the that and engines, engines we same our And might assets sheet the of from money in engines put to we aircraft could buy

that we would at lot would So Aviation. into FTAI to fit SCI that be eligible to there's a continue of on deals do not

Myles Walton

Okay.

adding getting were slide? cycles quite margin high. I'm just not next obviously is then on It were curious, through and the you how the you didn't I if look could. but are The margins kind lot went one, optimization. implied last which larger Slide cycles David, return, margins like And on time exercise, of you Okay. that in than the XX, the a adding green often

David Moreno

Yes.

So often, we'll were that cycles where an not do illustration cycles. of was via performance each adding we We modules. that's happening that had on restorations its

cycles we is build depending asset, the every going different is So So what on And to unique. adding work that's LLP replacements. via restoration performance it, be doing on module we're are every right? and

Joseph Adams

make doing last We're or as also repairs as the less. long those on that they sure limit modules to

So there is work on being it. done

Operator

Our next question the Trent line with comes Citi. of from Stephen

Stephen Trent

the received, memory you some-odd I equipment rest Yes. that of mentioned my Angela believe sort where [indiscernible]? million earlier Russian outstanding stuck had Federation. that from from in Could claims your your that claims insurance the I you guys refresh believe, of $XX got

Joseph Adams

-- starts, the left, in -- it year, million our because it first moving typically is accelerates received that insurers we now. million of question the positive in Yes. settle the major to this And already ends $XX of I that And fourth bill. up with over good that also one with developments are and set, We've receive insurers. big side did once $XX doesn't in insurance this think it on in quarter. legal Good quarter whoever the

So claims fairly to we remaining out expect settle the quickly.

in back about $XX total, were We wrote XXXX, assets off lost that in at in million in Russia.

$XX total, expect, ] should date, recover $XX be more it we this in to expect recovered all I we've [ and I think I hope. million year. and to million than the

Stephen Trent

color. Okay. of industry. one there's think a with know great that about the do happen competitors That's us into actually detail other the of love pushing and few onetime that tariffs here at Maybe Do just point. I tariff appreciate tariffs very what asked weeks rather it hear more engine But import get at And would than of this, little I you one ago. tariffs you. of enacted, of could I'm the push but points for purchases? the is just this airlines to leads sort have impact and aircraft of that. point paying thoughts. to couple Really might a do a So thinking What your purchase? more oversimplifying whatever, leasing basis direct long-term your

Joseph Adams

hope do. if to actually impacts us. to so is what that -- it's No. for tariffs good really good going Well, are it's I sort yet. there's are That's But what leasing, heard, hadn't but many for what even to we know hit happens that good about theories going hard of it's

going And on in deliveries. an affected to as is new aerospace, be industry

buying becomes So that to me aircraft is it expensive we're and new advantage new an there more If have not buy immediate. to new. because more we parts,

Operator

of comes Andre with Madrid BTIG. question the next from Our line

Andre Madrid

pivot current equipment? account the to I elephant of the format? the room, the at of is accounting looking to accounting way there? any But concluded. helpful. address a successfully it's leasing and Any the becoming color mean, there for increasingly an model to good more To guess, that portion acquisition plans in of smaller the away I Super currently the see and leasing from audit the are mix, COGS you fact

Eun Nam

think Yes. the I'll already XXXX, take XXXX aerospace that making and started over have our that as to of business we'll move business. that, make Andre. end industrial we to more definitely shifting Yes, is in continue manufacturing I of products

that our on I year. diligently, we in purchases filings and So presentation, that related our added It's working cash something But flow see we've with you've absolutely disclosures additional I we've that to of as are seen our and think operating change you not that do outflow next color that's that something over think more overnight. fair. the through added will should

Joseph Adams

company than company. to products aerospace whole EBITDA is convert once that of can And goal to do more accounting. the the is half the industrial business the Our we hopefully,

Andre Madrid

the coming mean, And helpful. are what of another And that or moving it you. Got like? it. Got EBITDA upward I for then What the things year? expect out? outlook Super we might play go the guess I I maybe balance looking cadence the mean, it. the year, how we some both should through for as of pieces drive at one downward look of would the to

Joseph Adams

it's no last, we X the back ruler, what, not, but years, cadence. -- don't use the look can mean you any you there's it's change -- I if Well, in kind of see over a

Andre Madrid

seasonality X? in typical the the through of up kind the step So contributing a the of quarter, next first balance to then

Joseph Adams

that an to -- an we something do is And have any third it we the solution. business. engine an airline try argument immediate doing haven't -- But not an of they there was tried that maintenance an the and just-in-time historically, engine in that's an year There's needs quarter. really provide the if them. in if first Yes, in quarter avoid we'll in -- airlines seasonality in engine detected August this for August, to

So have downtime any they product. use they if don't our

up So on -- is XXX% -- been a EBITDA we've growth so far, we and haven't obviously, -- year-over-year. We're rapid rate. pretty up

seasonality business of this effect an see point. at don't we the So in

David Moreno

Montreal modules we're XXX we an I'd more right? quarter average for And outlined in on focused facility. say I overall production, of the targets, per think XXXX in So

up We finished the extremely XX modules. year ramping focused on at at we're QX Montreal. So

think in earnings supplement. the I that's

our focus, right? is that So

touches to a do we as day. that kind specific It's have initiatives an ramping around X where mentioned, up, say, workforce we module. module, They're of day that And all really every going right? LPT the let's specialization, have

a going lot efficiency. that's to bring of So up

which we when we modules, on standardization, work know means depending find. what second doctrine is to we we The what that have get a scopes, exactly on meaning do,

since that's number employees, And for and program September, quality production is we've incentive three -- launched launched in we've on we've an metrics. acquired based then

very production Miami. that at on as -- we're well as strictly we're facility us, for So focused

have that is network. think we in the MRE the I increase -- Rome capacity in going facility overall to

Operator

Alan over to to Ladies and gentlemen, at would this back remarks. now the closing time, I for like call turn

Alan Andreini

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

Operator

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

may disconnect. You now

FTAI Aviation (FTAI) 27 Feb 252024 Q4 Earnings call transcript