FTAI Aviation Ltd (NASDAQ:FTAI) Q1 2024 Earnings Call Transcript

FTAI Aviation Ltd (NASDAQ:FTAI) Q1 2024 Earnings Call Transcript April 26, 2024

FTAI Aviation Ltd isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good day, and thank you for standing by. Welcome to the FTAI Aviation First Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today Alan Andreini, Investor Relations. Please go ahead.

Alan Andreini: Thank you, Shannon. I would like to welcome you all to the FTAI Aviation first quarter 2024 earnings call. Joining me here today are Joe Adams, our Chief Executive Officer; Angela Nam, our Chief Financial Officer; and David Moreno our Chief Operating Officer. We have posted an investor presentation and our press release on our website, which we encourage you to download, if you have not already done so. Also, please note that this call is open to the public in listen-only mode and is being webcast. In addition, we will be discussing some non-GAAP financial measures during the call today including EBITDA. The reconciliation of those measures to the most directly comparable GAAP measures can be found in the earnings supplement.

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

Joe Adams: Thank you, Alan. To start today, I'm pleased to announce our 36th dividend as a public company and our 51st consecutive dividend since inception. The dividend of $0.30 per share will be paid on May 21 based on a shareholder record date of May 10. Now let's turn to the numbers. The key metric for us is adjusted EBITDA. We began the year strongly with adjusted EBITDA of $164.1 million in Q1 2024, which is up 1% compared to $162.3 million in Q4 2023 and up 29% compared to $127.7 million in Q1 of 2023. During the first quarter, the $164.1 million EBITDA number was comprised of $104.8 million from our Leasing segment, $70.3 million from our Aerospace Products segment and negative 11% from Corporate & Other. Turning now to Leasing.

A team of airline employees surrounded by flight deck controls, with a variety of aircraft outside.

Leasing had another good quarter, posting approximately $105 million of EBITDA. The pure Leasing component of the $105 million came in at $98 million for Q1 versus $99 million of Q4 of last year. With exceptionally strong demand for assets and the commencement of the Northern Hemisphere summer season, we expect meaningful growth in Q2. We remain very confident in Leasing EBITDA of $425 million for the year excluding gains on asset sales. Part of the $105 million in EBITDA for Leasing came from gains on asset sales. We sold $31.9 million book value of assets for a gain of $6.7 million, slightly below our expectations but we have more assets that are coming in Q2 and the rest of the year and are comfortable assuming gains on asset sales of approximately $12.5 million per quarter or $50 million for all of 2024.

Aerospace Products had yet another excellent quarter with $70.3 million of EBITDA at an overall EBITDA margin of 37%. We sold 72 CFM56 modules in Q1 to 16 unique customers. Additionally, we sold six V2500 engines in Q1 to three customers through our recently launched V2500 engine program. We continue to see the tremendous potential in Aerospace products and are comfortable that we will generate approximately $250 million of EBITDA in 2024, the high end of our previous range. Our Maintained Repair and Exchange or MRE model for the two most widely used engines in commercial aviation produces cost savings and operational flexibility for airlines and aircraft lessors by allowing them to avoid shop visits through engine or module exchanges. Our recently executed perpetual power agreement with LATAM covering over 60 V2500 and CFM56 engines illustrates the growing acceptance of airlines and lessors to outsource this activity to FTAI aviation.

Overall, looking ahead, we continue to expect our annual aviation EBITDA for 2024 to be approximately $725 million not including Corporate & Other. With that, I'll turn the call back to Alan.

Alan Andreini: Thank you, Joe. Shannon, you may now open the call to Q&A.

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