FTAI Aviation Ltd. Q3 FY2024 earnings call

• Announced the 38th dividend as a public company and 53rd consecutive dividend since inception, with $0.30 per share to be paid on November 25th.
• Adjusted EBITDA was $232 million in Q3 2024, up 8% from Q2 2024 and 50% from Q3 2023.
• Leasing segment had approximately $136 million EBITDA in Q3, with plans to generate $500 million in leasing EBITDA in 2024 including $50 million in asset sale gains.
• Aerospace Products segment had $101.8 million EBITDA with a 34% margin, revised 2024 estimated EBITDA to $360 million to $375 million from previous $325 million to $350 million.
• Overall 2024 aviation EBITDA expected to be between $860 million to $875 million, up from prior guidance.
• Acquisition of Montreal facility (FTAI Canada) increased production rates, with plans to reach 100 modules per quarter in 2025.

In Q3 2024, FTAI Aviation's adjusted EBITDA was $232 million. The leasing segment contributed $136.4 million (approximately 58.8% of total adjusted EBITDA), with a pure leasing component of $122 million in Q3, up from $112 million in Q2 2024 and $102 million in Q3 2023. They also sold $20.7 million book value of assets for a gain of $14.3 million. The aerospace product segment had $101.8 million EBITDA (approximately 43.9% of total adjusted EBITDA), with an overall EBITDA margin of 34%, up from $91.2 million in Q2 2024 and $43.3 million in Q3 2023. Corporate and other had negative $6.2 million (-2.7% of total adjusted EBITDA).

• 2024 adjusted EBITDA expected to be between $860 million to $875 million (excluding corporate and other), up from prior guidance of $825 million to $850 million.
• Aerospace Products segment 2024 estimated EBITDA revised to $360 million to $375 million from $325 million to $350 million.
• Leasing segment aims to generate $500 million in EBITDA in 2024 including $50 million in asset sale gains.

• Uncertainty around forward-looking statements, which may differ materially from actual results.
• Insurance settlements still in progress with potential impacts, though progress is being made.
• Supply chain risks managed but still a consideration, as seen in working capital increases due to inventory purchases.

Q: Sheila Kahyaoglu asks about FTAI's business model in a normalized world and the duration of the CFM56 platform.

A: Joe Adams states customers have no desire to revert to old ways as they see tangible cost and time savings, and the acquisition of FTAI Canada helps ensure engine availability.

Q: Sheila Kahyaoglu asks about new customers onboarded and their module usage.

A: David Moreno says Q3 was record for new customers with 19 new customers, typically starting with 1-2 modules, with repeat customers requesting 5-10 modules and strong demand for field service.

Q: Jason Holcomb asks about V2500 progress and customer agreements.

A: David Moreno says V2500 engines are in shop with 90-120 day turnaround, LATAM program started, and secured large North American airline agreements.

Q: Joshua Sullivan asks about implications of Chromalloy's V2500 blade FAA approval.

A: Joe Adams says it's a positive sign for future parts, and they use data to decide on product usage.

Q: Hillary Cacanando asks about Aerospace segment EBITDA margin and capacity expansion.

A: Joe Adams says margin impact from legacy contracts running off, and they'll expand capacity by repurposing employees at FTAI Canada.

Q: Giuliano Bologna asks about growth sources in the product segment.

A: Joe Adams says organic growth from under 5% market share in large engine markets.

Q: Kenneth Herbert asks about supply chain risk management.

A: Joe Adams says working capital increased due to inventory purchases to avoid supply chain disruptions.

Q: Brandon Oglenski asks about contractual business backlog and margin sustainability.

A: David Moreno says backlog correlated with repeat customers, and margins expected to increase with business growth.

Q: Unidentified Analyst asks about V2500 engine green time and work responsibilities.

A: Joe Adams says they acquire and market engines, Pratt manages performance restoration.

Q: Stephen Trent asks about insurance settlements and stock split.

A: Joe Adams says insurance settlements in progress, and open to considering stock split with supporting data.

Q: Andre Madrid asks about field services margin and mix.

A: David Moreno says field service enhances module velocity more than a margin play, with small dollar events but important for aircraft turnaround.