Latest news with #FTAIAviationLtd
Yahoo
29-05-2025
- Business
- Yahoo
Should You Think About Buying FTAI Aviation Ltd. (NASDAQ:FTAI) Now?
Let's talk about the popular FTAI Aviation Ltd. (NASDAQ:FTAI). The company's shares saw a significant share price rise of 36% in the past couple of months on the NASDAQGS. While good news for shareholders, the company has traded much higher in the past year. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company's outlook is already priced into the stock. However, what if the stock is still a bargain? Today we will analyse the most recent data on FTAI Aviation's outlook and valuation to see if the opportunity still exists. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. According to our valuation model, FTAI Aviation seems to be fairly priced at around 9.73% above our intrinsic value, which means if you buy FTAI Aviation today, you'd be paying a relatively reasonable price for it. And if you believe that the stock is really worth $107.75, then there isn't really any room for the share price grow beyond what it's currently trading. Although, there may be an opportunity to buy in the future. This is because FTAI Aviation's beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company's shares will likely fall by more than the rest of the market, providing a prime buying opportunity. Check out our latest analysis for FTAI Aviation Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let's also take a look at the company's future expectations. FTAI Aviation's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value. Are you a shareholder? It seems like the market has already priced in FTAI's positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven't considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value? Are you a potential investor? If you've been keeping an eye on FTAI, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it's worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop. If you want to dive deeper into FTAI Aviation, you'd also look into what risks it is currently facing. For instance, we've identified 4 warning signs for FTAI Aviation (1 is a bit concerning) you should be familiar with. If you are no longer interested in FTAI Aviation, you can use our free platform to see our list of over 50 other stocks with a high growth potential. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Yahoo
13-05-2025
- Business
- Yahoo
FTAI Aviation Ltd. (FTAI): A Bull Case Theory
We came across a bullish thesis on FTAI Aviation Ltd. (FTAI) on Substack by Autumn Capital. In this article, we will summarize the bulls' thesis on FTAI. FTAI Aviation Ltd. (FTAI)'s share was trading at $110.01 as of May 8th. FTAI's trailing and forward P/E were 458.38 and 21.14 respectively according to Yahoo Finance. Engineers examining stress tests of an aircraft engine, working to make sure its ready for flight. FTAI Aviation (FTAI) began as an aircraft and engine leasing business, but it is now undergoing a strategic transformation into a high-margin, capital-efficient maintenance, repair, and overhaul (MRO) company. Its MRO operations primarily focus on CFM56 and V2500 engines, which power a significant portion of Boeing and Airbus narrow-body aircraft and are expected to remain in wide use for decades. Despite only holding approximately 5% share of the fragmented MRO market for these engine types, FTAI is growing rapidly and has a long runway for further expansion. What sets FTAI apart is its unique approach to engine servicing — rather than performing full overhauls, the company repairs or swaps out individual engine modules using a proprietary inventory. This significantly reduces customer downtime and repair costs, enabling FTAI to achieve superior margins compared to traditional MRO providers. The company's legacy leasing business plays a synergistic role in fueling the growth of its MRO segment by supplying used modules and generating consistent demand for swaps, effectively accelerating the MRO flywheel. Earlier this year, the company faced pressure following the release of short-seller reports, which triggered a stock price decline. However, at the same time, FTAI announced a transformative multi-billion-dollar capital transaction, shifting a significant portion of its leasing assets into a new partnership structure. This move not only reduced capital intensity but also unlocked further growth opportunities for the leasing side while freeing FTAI to focus more aggressively on its higher-return MRO operations. The combination of the stock pullback and this capital realignment created a compelling entry point for investors. FTAI now trades at roughly 10x next-twelve-month EV/EBITDA, an attractive multiple given its strong growth outlook. Even without any multiple expansion, organic growth toward a 10–12% MRO market share, bolstered by its capital-light leasing structure, points to a high-teens IRR potential. If the stock re-rates to a 20x multiple—inline with top-tier MRO peers—and as the company rolls out higher-margin PMA parts and scales its operations, the return profile becomes even more compelling. With the possibility of exceeding 10% market share and capturing significant per-unit EBITDA growth, FTAI offers a rare opportunity to earn 20%+ IRRs over the long term, making it one of the most attractively positioned aerospace aftermarket plays in the public markets today. FTAI Aviation Ltd. (FTAI) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 54 hedge fund portfolios held FTAI at the end of the fourth quarter which was 41 in the previous quarter. While we acknowledge the risk and potential of FTAI as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than FTAI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock. Disclosure: None. This article was originally published at Insider Monkey.
Yahoo
05-05-2025
- Business
- Yahoo
Q1 2025 FTAI Aviation Ltd Earnings Call
Alan Andreini; Investor Relations; FTAI Aviation Investors LLC Joseph Adams; Chairman of the Board, Chief Executive Officer; FTAI Aviation Ltd Eun Nam; Chief Financial Officer, Chief Accounting Officer; FTAI Aviation Ltd David Moreno; Chief Operating Officer; FTAI Aviation Ltd Giuliano Bologna; Analyst; Compass Point Research & Trading LLC Sheila Kahyaoglu; Analyst; Jefferies Kristine Liwag; Analyst; Morgan Stanley Josh Sullivan; Analyst; The Benchmark Company LLC Andre Madrid; Analyst; BTIG Brandon Oglenski; Analyst; Barclays Estimate Hillary Cacanando; Analyst; Deutsche Bank Brian McKenna; Analyst; Citizen Ken Herbert; Analyst; RBC Capital Markets Myles Walton; Analyst; Wolfe Research Stephen Trent; Analyst; Citi Operator Thank you for standing by and welcome to FTAI Aviation's first quarter, 2025 earnings conference call. At this time, all participants are in a listen-only mode. (Operator Instructions) I would now like to hand the call over to Alan Andreini, Investor Relations. Please go ahead. Alan Andreini Thank you, Latif. I would like to welcome you all to the FTI Aviation first quarter 2025 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 in 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-gap 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 you to review of 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 FCC. Now I would like to turn the call over to Joe. Joseph Adams Thank you, Alan. I'm pleased to announce our 40 dividend as a public company and our 55 consecutive dividend since inception. The dividend of $0.30 per share will be paid on May 23, based on a shareholder record date of May 16. Angela's going to take you through the numbers in more detail, but before that, I wanted to highlight a few things. We started the year with momentum recording another strong quarter in aerospace products with $131 million in adjusted EBITDA at a margin of 36%. With a consistently growing backlog of purchase orders for 2025 and beyond, demand for our aerospace products and services continues to accelerate, strengthening our position as a leader in the engine maintenance aftermarket. Turning to production, we refurbished 138 CFM56 modules this quarter between our two facilities in Montreal and Miami. We anticipate a significant ramp to occur in Q2, particularly in Montreal, as we execute on our growth initiatives and operational throughput to enhance efficiency. As we expand production of refurbished modules and engines, our core focus is to increase our market share of restorations beyond the current 5% to 25%. Now let's talk about adjusted free cash flow. In the first quarter we closed on approximately 234 million of aviation equipment at attractive prices as replacement CapEx for the seed portfolio of aircraft which are being sold to Strategic Capital Initiative or SCI. The transition of these aircraft started in Q1, where we sold four aircraft for $59 million and we are proceeding on plan to have completed the sale of the remaining assets by the end of Q2, generating a significant inflow of approximately $440 million. We expect adjusted free cash flow to be in the range of $300 million to $350 million for the first half of the year, which is in line with our target to achieve $650 million in adjusted free cash flow for all of 2025. For the Strategic Capital Initiative, or SCI, it was great to announce one investment management as an equity investor to the partnership. Since then we have secured an additional equity partner and expect further closing in Q3 of this year. We remain on track to deploy $4 billion plus in capital by the end of the year through a combination of these commitments and our $2.5 billion secured asset level financing facility with Atlas, a wholly owned affiliate of Apollo and Deutsche Bank. Finally, we've been working extensively on operational plans with our partner IAG Engine Center Europe and Rome, and are confident we can ramp up production immediately following the acquisition to support our regional customer base in Europe and the Middle East. We already have five engines in the facility and expect to close the new joint venture very soon. Therefore, overall, we feel increasingly confident in our business segment EBITDA 2025 goal of between $1.1 billion to 1.15 billion, excluding corporate and other, rising to approximately $1.4 billion in 2026. While tariffs create some challenges and opportunities, we do not currently see tariffs having any material negative effect on our business, and we are reiterating our guidance for both 2025 and 2026 as we continue to see growing and accelerating demand for a proprietary set of aerospace products. With that, I'll hand it over to Angela to talk through the numbers. Eun Nam Thanks, Joe. The key metric for us is adjusted EBITDA. We began the year strongly with the adjusted EBITDA of $268.6 million in Q1,2025, which is up 7% compared to $252 million in Q4 2024 and up 64% compared to $164.1 million in Q1 of 2024. During the first quarter, the $268.6 million EBITDA number was comprised of $162 million from our leasing segment, $130.9 million from our aerospace products segment, and negative $17.4 million from corporate and other excluding intra-entity eliminations. Turning now to leasing continued to deliver strong results, posting approximately $162 million of EBITDA. The pure leasing component of the $162 million came in at $152 million for Q1 versus $128 million in Q4 2024, included in the $152 million was a $30 million settlement related to Russian assets written off in 2022. Which is an additional settlement to the $11 million we announced we received last quarter. For gains on sales, we began the year of $68 million in book value of assets being sold for a 13% margin gain of $9.8 million which will significantly increase next quarter as we close out the transition of the seed assets to the SCI. Looking ahead, we remain comfortable assuming leasing EBITDA will be $500 million in 2025 as we pivot our focus towards an asset-like business model. Aerospace products had yet another good quarter with $130.9 million of EBITDA at an overall EBITDA margin of 36%, which is up 12% compared to $117.3 million in Q4 of last year and up 86% compared to $70.3 million in Q1 2024. We continue to see accelerating growth and adoption and usage of our aerospace products, and we remain focused on ramping up production in both of our facilities in Montreal and Miami, as well as commencing operations in Rome. In 2025, we continue to expect to generate a $600 million to $650 million in EBITDA, up from $381 million in 2024 and $160 million in 2023. With that, let me turn the call back over to Alan. Alan Andreini Thank you, Angela. Latif, you may now open the call to Q&A. Operator Thank you. (Operator Instructions) Giuliano Bologna, Compass Point. Giuliano Bologna Hello, good morning. Congratulations on other great successful quarter. The first question I had, and it's Something I want to dig into is that you know we can generate, a few questions is that it looks like in the aerospace product segment you had roughly $100 million of revenue that was related to the 2025 partnership or the or the SCI program and I'm curious when you think about that, my assumption there is that you're that was kind of a selective thing where you're seeding portfolio to help the SCI program, launch the program and acquire a lot of assets, and as it relates to the SCI program would be good to see understand the rationale there. And then it'd be good to, if you can provide any perspective around, the third party or non-SCI business because it seems like this is, an opportunistic thing to do and that there's actually a tremendous amount of demand from third parties if not growing pretty materially. And you know the limitation, as you highlighted before is capacity at Montreal, and that's expected to increase materially in 2Q and beyond 2Q. So you should have, a lot of demand is the assumption, but it'd be great to get your perspective around all of that. Joseph Adams Sure, great question. And let me talk about several points. First of all, you're correct, there's today there's tremendous demand, and for the next few years we see tremendous demand for our rebuilt engines across the entire industry, and today we are constrained by production, which what that means is we can sell everything that we produce. So for those engines we have multiple options to sell to third party customers, and we could have done so and had no material different financial outcome than selling to the SCI, but we did prioritize SCI for a couple of reasons. One is we're committed to engine exchanges with the partnership and we also want to see that that partnership grow significantly. And there are significant benefits and material cost savings for an owner of an airline that are achieved through engine exchanges, which is our underlying whole business rationale through the MRE. And that's why demand across the entire industry is growing for these products because you save money and you save time and money and it's very efficient. And so our purpose of creating SCI was to make that entity a better owner of these assets by conferring those benefits onto that partnership, particularly when there are engine maintenance events in the next few years for engines, and that, is for the vast majority of assets out there have engine maintenance events coming up fairly soon. So in return, so if SCI becomes a better owner, meaning they make, higher returns, that means over time they'll own more assets. Which means SCI will get more committed engine exchanges, which means we will then have more visibility on our future needs for engine rebuilding, which makes us more efficient. We should lower our costs, which means we end up with better margins. So it's really a virtuous circle, and that was the whole point of, why we were setting this up or one of the main points. In Q1, it's roughly about 30% of our activity went to SCI, and that's because we've been lining up assets for the last six months, so there was a bit of pent-up demand since we started closing, and we now own, 30 aircraft in the partnership, and we expect overall it'll be about 20% of all of 2025. And we think that 20% number is probably representative for future years as we see both SCI and the market growing significantly, as I mentioned in the opening remarks, our goal is to grow our market share from 5% to 25% of the whole industry. So when we look at what happened, this is exactly what we hoped would have happened in in Q1 when we set up SCI and we view this as a huge positive for both the near term and the long term for FTI and the shareholders. Giuliano Bologna That is extremely helpful and maybe just a quick follow up just to make sure. I have everything, exactly right, but kind of just looking at that 20% number and what that kind of implies, yeah, that implies somewhere in the range of 130 million of people we're looking on the EBITDA target basis for of 650 for the year, and that implies that, the non-SCI would be something you know (technical difficulty). Some, high 30%, if not 40% growth in kind of a non-SCI business. So it seems to me and hopefully, that you get the same, you see it the same way as that, this is additive and there's no cannibalization happening and it's just that you're filling based on your order book or your ability to produce the modules and as that goes up, you'll fill the orders as fast as you can and you have a huge backlog to continue doing that. So this is really additive and the core business, pre-SCI is actually still growing pretty materially at a great pace. Joseph Adams Yes, and I think that I agree. I think that we would have had growth even without SCI, but even if we didn't sell SCI, we would have engines available for someone. So we'll have growth without it, but you can't zero it out because we would do something else with those assets. But no, I agree with the math that you laid out. It's basically right. But I, but we see the entire market growing for the products and there's no cannibalization. These aircraft that are being acquired into SCI, we would not have been doing these engines on this other than the fact that we now own them in the partnership. Giuliano Bologna That's very helpful. I really appreciate it and I will jump back in the queue. Joseph Adams Thanks. Operator Thank you. Sheila Kah of Jefferies. Sheila Kahyaoglu Good morning, team, and thank you so much. My first question is maybe on tariffs. If you look at aerospace products, margins improved sequentially to 36% even with a two point drag from legacy Montreal in the quarter. So how are you sizing the potential impact and opportunities with tariffs to the business and any workarounds at your disposal? Joseph Adams And we don't see any material negative effect from tariffs on our business, and I think there's three reasons I would cite for that. One is that it's the nature of our business, which is to rebuild assets, and we use a lot of used material, and this is not a new asset that's being, delivered into a market, so it's typically not, the target of tariffs. The second is we operate in three different geographies, so we have a facility in Canada, one in the United States and one in the EU, and effectively we do essentially the same thing in each one of those jurisdictions. So we could deliver products to different markets from different source location if we needed to do some optimization, but today we don't see the need to do that. And then lastly, we have an ability to pass on, price increases to customers and you know we see public comments from OEMs and others indicating similar philosophy as if their costs go up, they're going, they have the power and they have the capability to price to flex price and pass it on, and if that happens, then we would obviously follow suit and we feel like we have a similar capability to pass on as well. And then, longer term, ultimately if these tariffs stick for an extended period of time, you should see the price of new assets go higher, which means ultimately you know the price comparison for used assets should be more attractive as a result, and that's good for us ultimately if prices increase, it gives our products more value and also more cost savings. Sheila Kahyaoglu Great, thank you for that answer. And, maybe Joe, when you set the or Angela, when you set the $650 million free cash flow guide for the year, it was sort of pre-growth CapEx and that you could hit 2026 targets without further investment. You invested $127 million of parts in Q1, so just curious how you're thinking about growth CapEx and opportunities this year and that how that translates into the airspace products ramp over the next few years. Joseph Adams Yeah, I'll take that. I mean, we are planning to invest about $200 million in parts in the first half of this year as part of our cash flow, and I would characterize this as, being heavy on parts inventory and we view that. Because we think the cost of having extra parts inventory is way less than the cost of missing a sale, so we don't want to miss a sale, and as I mentioned in the beginning, we're production constrained and so we are, being very heavy, leaning towards owning more material than less material at this point. So I think we're taking the view that we're going to, we're ramping up our production, we're going to ramp up our inventory as well. That will level off. That's not a continuing, item, but I would say in the next few months, that's what I would expect, and that's in our assumption for 2025 on the cash flow side. So I think we're expecting a roughly $200 million parts increase in the first half of this year. And even with that, we still generate $350 million approximately of free cash flow. Sheila Kahyaoglu Great. Thank you. Joseph Adams Thanks. Operator Thank you. Kristine Liwag Morgan Stanley. Kristine Liwag Hey, good morning, everyone, and Joe, just want to follow up on the commentary you made on cash now. So when you said that the inventory step up of $200 million in cash for the first half for aerospace product and the $350 million of free cash flow, is that at the same time, or do you mean $350 million of positive free cash flow for the full year? I guess my question is, ultimately trying to understand the cash stream with aerospace products, especially if you're trying to grow from 5% to 20%, how much more inventory investment do you need to make and when, does that become, a positive working capital event. Joseph Adams Sure. Well, let me first, I'll walk you through my numbers for the first half of the year in terms of cash flow. I started with operating cash flow, which is EBITDA minus interest and maintenance CapEx of about $450 million for the six months. Then we're going to have $500 million of asset sales, mostly to the SCI. So you start with $950 million. We've invested, we're expected to invest in total replacement CapEx of about $300 million which was in our, previous numbers for 2025, and that will be front end loaded in the first half of the year. Then equity in the SCI roughly $100 million. So that brings the number to $550 million. And then if you take $200 million in the first half of the year for parts inventory, that gets you to the $350 million of free cash flow for the first half of 2025. So that's kind of the building blocks. As I said, the $200 million of, inventory investment is a bit higher than what we, would have expected in the first half of the year, but we think it's a good investment and we still are able to achieve our numbers given the growth in, free cash flow and EBITDA from the business. So, do you have any thoughts on, going forward, the growth rate of parts? David Moreno As we mentioned, we want to provision parts ahead of shop visits. So generally speaking, working capital as far as what we have today, we'd like to maintain that and we provisioned ahead for the remainder of the year, so we don't see that growing materially quarter over quarter. Kristine Liwag Great thanks and maybe following up just on this parts thing, the $127 million CFM56 that you acquired at opportunistic attractive prices. Can you talk more about how you source that, how you're able to get a deal like that in this environment where there's a lot of demand, not enough supply, and also as you provision ahead of time, are you seeing these prices go up more? I mean, in anticipation of the tariff costs, the engine OEMs have been pretty clear that pricing pass throughs would be part of their strategy to offset some of the pain they could have on tariffs. Thanks. David Moreno Yes, so we're sourcing these parts in a number of fashions, but where we have a competitive advantage is we're sourcing these parts unserviceable from asset owners and airlines. So we're buying, for example, LLPs, and then we have the backstop capabilities in Montreal to repair them. Montreal, just to give you kind of overall has repair capability for about 70% of the CFM 56 in-house. That includes LLPs, combustors, cases, frames, other band veins, amongst other parts. So we buy these parts as removed and then we have special repairs where we can repair these parts and bring them back serviceable. So, by doing so we're able to really get into them at a much lower cost as well as we have salvage repairs that are able to increase yields. So we're again we're very knowledgeable about scrap rates and specific parts and then we can maximize the value through our repair network. We are starting see, yes, parts starting to increase again as they mentioned, manufacturers are going to be passing through certain tariff surcharges, so we're expecting that to, flow through like any OE annual escalation. So we do expect that to increase the parts used parts as well. I think generally speaking we're in a positive position because as prices for replacement parts get more expensive for new parts, we can offer more cost savings. So we're starting to see that unfold it's early days, at the moment. Kristine Liwag Thanks. And then I'll follow up to that, if I may, on the repair that you're doing in Montreal, it sounds like the tariff duties are on places of manufacture. The value added that you do on repair, does that trigger some sort of tariff piece when you bring it back to the US, or is that why you're having a lower expected tariff? Impact and then as a second question to that, with airlines being more focused on cost, are you seeing more adoption of your PMA parts in engines today? Joseph Adams Yeah, the first part, the answer is no. We don't see a tariff impact on the repair portion. And the second part is, yes, we think airlines are, increasingly focused on engine maintenance costs as they continue to go up, in a disproportionate way for all airlines. So there's a lot of focus on cost saving techniques and people are opening, any alternative they have is on the table and PMA being one. So we think that that will be, obviously we have a huge competitive advantage on PMA, and we see that as, not really in our numbers yet, but a tremendous upside for our margins, and we think industry adoption will be quite good. Kristine Liwag Great thank you. Thanks. Operator Thank you. Josh Sullivan, Benchmark Company. Josh Sullivan Hey, good morning. Can you just, update, just following up on the PMA conversation there, can you update us on the approval progress for the remaining PMAs at this point? Joseph Adams I would say that we continue to make excellent progress. And we are very close on approval on the next part. And that's kind of where I stopped. Josh Sullivan Got it. And then just on aerospace products in general, on PMAs, how obviously a conversation that continues to be out there is, how accepting our airlines and the sources of PMA parts and, you just expand on the adoption and, how any other metrics you have on how important they've been the margins for you. Joseph Adams Yeah, I mean, one of usually the part in the beginning is getting assets into service and then people want to see how they perform and that's what you would hope would happen, right, is people look at the part for the quality of the part and how it performs when they make the decision and the history is that these parts have performed extremely well, and that's what we're seeing in the first two parts that are in service. And then, from there, once the assets are in service and have a lot of hours flown on them, the adoption increases, and we also have the ability to increase that adoption rate significantly through SCI. So that's a tool that no one ever had and one of the big reasons that, PMA always had struggled or struggled in the early periods was last summers not being willing to take a risk on residual value, but we're over that. So and we're a pretty big glass or so that is a different market environment than I think we've ever had before. So I think it's, I think people are open-minded, particularly if they have data and facts and the parts perform well. Josh Sullivan Great, thank you for the time. Joseph Adams Thanks. Operator Thank you. Andre Madrid, BTIG. Andre Madrid Hey, good morning, everyone. I know we're talking about the free cash flow cadence through the year, and I think this was first mentioned last quarter, but could you give me maybe any more update about how you're thinking about shareholder friendly capital deployment moving forward? Joseph Adams Sure, so we've the priorities we've set are, growth CapEx numberone , debt repayment number two, and third, shareholder, repayments. So we expect by the end of this year to be, on the debt side down close to 3 times debt to total EBITDA , which is kind of a low end of the range of what we said. So if we assume we don't have significant, growth CapEx opportunities and we've paid down debt to 3 times, then we would move to the third bucket which is shareholder repayment or dividends or stock buybacks and I would say probably, towards the end of this year was when we achieved, that objective. Andre Madrid Got it. I'll keep it in one actually, thanks. Operator Thank you. Brandon Oglenski, Barclays. Brandon Oglenski Hey, good morning team and thanks for taking the question. Joe, maybe just following up on that, I think you guys are tar you just said 3 times, net leverage, right, that you're targeting this year? Joseph Adams Yes, well, we've communicated previously our range. We expect to be in a range of 3 times to 3.5 times and we think by the end of this year we will be at 3 times. Brandon Oglenski Okay, I mean, maybe this question is really for Angela, but how do we think about the moving pieces with the SCI aircraft out new assets and, impacting the debt profile of the business and maybe like from a ratings agency perspective too. Eun Nam Sure, so as Joe mentioned, we had previously said that we're targeting load 3 and 3. 5 by the end of this year, and with the SCI we think we can accelerate that and get closer to 3 by the end of the year, which would give us a strong double be with the rating agencies which they we've communicated that's our goal. And that's possible by the fact that in prior years we've spent a good amount of acquisition cap backs on buying aircraft, which with the SCI we're no longer required to do. And in addition to that, we'll generate about 500 million of proceeds from the sales of our seed assets. So, all those things combined, we think we'll definitely be in position to be in strong that be with the rating agencies by the end of the year. Brandon Oglenski Okay, and Angela, does that give you any opportunity maybe to think about refunding things in the future? Eun Nam I think that's definitely possible. Yeah, currently our $3.5 billion debt, which isn't maturing until 2028. We're at weighted average interest rate of about $6.5 million so that's something that we can definitely look at, but not something that's a priority given our rates. Brandon Oglenski Okay, and then Joe, can you talk to, I know you signed the deal with Pratt last year, but have you put any V2500 through that relationship yet and what's your initial thoughts on, the relationship in the margin, the profitability of that business? Joseph Adams Oh yes, we've put quite a few engines through their network and you know we're very happy with the relationship and how it's developed and the margins, as I said, would not be dilutive to our aerospace products business, and that's been true, the actual results and we see that as a very important part of our product offering because as I mentioned, we are offering to airlines and owners full coverage of 737 NGs and A320 COs, no matter what engine they have. So it's a very positive marketing customer relations development for us that we think is going to be in place for many years and we don't see, anybody with the market position that we have, coming in at this stage. So we feel very good about, that market for the next 10 years, really being the dominant, provider for engines in the aftermarket. Brandon Oglenski Thank you. Joseph Adams Thanks. Operator Thank you. Hillary Cacanando, Deutsche Bank. Hillary Cacanando Thank you. So Joe, I know you are excited to, about 100 modules to be sold per quarter, but now that you're significantly ramping up production, through the remainder of the year and you have over 100 customers worldwide, what would you be looking for in order to revise that guidance of 100 modules, per quarter? Joseph Adams Well, the original 100 modules per quarter was only Montreal. So when you add in Miami and then soon to be Rome, that total capacity will be, what do you think, 200 modules per quarter, Yes, production. Yeah, capacity. Now that doesn't mean that we have enough mechanics to, produce 200 yet, but we are moving as fast as we can to fill up that capacity. And if you look across when I talk about a 25% market share, if you think, roughly 3,000 engines a year, that's about 700 to 800 engines, I'm shifting now to engines for modules, so excuse my convention change, but that's about 750 we currently have capacity, physical capacity across the network of about 600. So we're pretty well equipped to have the physical capacity, we need to build up the manpower and all of the related assets, but we're doing that, as fast as we can, and David can talk about, Montreal bar. David Moreno Yeah we're keenly focused on output in Montreal. For Q1, we produce 77 modules, which is in line with our plan of 100 modules per quarter on average. It's been just to recap, it's been six months since our acquisition we acquired the facility in September, really focus on specialization as well as moving out any non-CSM56 work. We've been, we're very proud of all the work that's been done in Montreal and we've officially now completed the specialization effort which we're going to see significant benefits going into Q2 in the remainder of the year. Just to give you a little more color for Q2 we're expecting between 90 to 100 modules in Montreal, and we're expecting to grow thereafter. So we're very happy with all the progress, with team and where we're at right now. Hillary Cacanando So the 90 to 100 module produced, right, that's the production number. David Moreno Correct this is production, yeah, 90 to 100 and that's just in Montreal, only Montreal, yeah. Hillary Cacanando Got it. Great. That's helpful. Thank you very much. And then just on insurance, you recover $30 million this quarter, $11 million last quarter. Could you just remind us, how much more you expect to recover this year versus, how much was written off originally and, where you are in the settlement process? Joseph Adams Yes, we'll have another, yeah, thanks, we did have $30 million in recovery in Q1. We have agreements. I don't know if we've actually closed, but $24 million in Q2 is committed, and then remaining claims are roughly $100 million and we don't have, necessarily clear visibility on the timing of that, so we will have collected in excess of what we wrote off without that 100 million. So we're in a pretty good position, net debt but that 100 is still to be settled, recovered, litigated, but we'll have 54 in this year. Hillary Cacanando Oh, that's great. Thank you very much. Joseph Adams Thanks. Operator Thank you. Brian McKenna of Citizens. Please go ahead, Brian. Brian McKenna Thanks. Good morning all. It's great to see that the module factory now has over 100 customers globally. I'm curious though, is there a way to think about the usage or consumption per third party customer on average at the module factory today and then where this ultimately goes over the next couple of years? Joseph Adams Well, we originally go way back, we were doing about four modules per customer and then that increased to about six, and we think it's probably closer to eight now, which was our original number, and it's what we've always expected and hoped is that you get somebody to try it. Our pitch is always just try it once, and if you don't like it, don't do it again. And we find that people like it, so they do it again, and then they do it for more of their fleet, and that's our goal. So we have some customers who've done 25-30 modules in a year. And we ultimately would love to get 100% of their business, but we're only shooting for 25% market share, so we won't, we're not going to get that. But we do see, usage per customer going up and numbers of customers continuing to go up, which is a great, multiplier and then. And then as we have more cost savings from PMA, we'll see margins per module go up. So that's how you get to the original algorithm was, if you double the modules per customer, you double the customers and you double the margin, that's a factor of 2 cube is 8. So it's a great, multiplier effect and that's why we think this is just such a great business. Brian McKenna Okay, great, that's helpful. And then maybe just a governance question for you, Joe, you're still the Chairman of the Board of FI Infrastructure, so do you plan on being the Chairman of fi longer term, or should we expect that role to transition to someone like Ken over time? Joseph Adams We haven't really discussed any changes, so I mean, Ken and I have worked together for 20 years and, we have a great relationship and, I don't, we don't have any intention of changing that to my knowledge at this point. It's controlled by Fortress, so I don't just Fortress is the manager so they could change, that equation, but I don't intend to. Brian McKenna Yeah, got it. That's helpful. I'll leave it there and congrats on another great quarter. Joseph Adams Thanks. Operator Thank you. Ken Herbert, RBC Capital Markets. Ken Herbert Yeah, hi, good morning, Joe and team. Thanks for thanks for the time. I wanted to maybe first ask Joe with all the uncertainty just not only from tariffs but the macro backdrop, can you comment on what you've seen in lease rates on either aircraft or engines in the first quarter around either sort of absolute lease rates, year over year and what you're seeing there, and I guess also as part of that lease extensions which had been running incredibly high for the last few years, have you seen any softening in either of these metrics and can you level set us on just what you're seeing there in terms of the underlying demand? Joseph Adams Sure, so no, we haven't seen any softening. I think rates are pretty relatively stable, no deterioration and modest increases. We do see tremendous demand for extensions, when you go talk to airlines, virtually every airline in the world, would take a 15-year-old 737 NG if you could find it for them. So the demand is very high. The number that I always watch in terms of market strength or weakness is the percentage of fleet that's in storage, and so I track how many narrow bodies are stored and a very, strong market is 5% and a weaker market is 10%, and it kind of, tends to move between those two numbers. And I think today the last numbers I saw were a little bit under 5%. So it's a very strong market and you can see traffic weakness in the United States, which tends to get a proportionate amount of headlines and United might retire some A3319s, but those assets are probably going to go to Indonesia or the Philippines or the Middle East or 20 other places they could go. So that ultimately is good for us if they go out of the hands of the majors into the second and third tier operators, which is what usually happens so. So I think you know there's a very strong bid globally for assets, and that's kind of what we look at as the most important indicator of strength. These are the most easily repositioned assets in the world. So that's the beauty of it is, it's a global market. Ken Herbert That's helpful. And coming out of the first quarter, can you just remind us either in terms of aerospace products, any discrepancies or any underlying geographic exposures we should think about. I know obviously now with the geographic footprint, it helps offset tariff risk from a delivery standpoint, but are you overindexed to any part of the world as we think about the aerospace product segment? Joseph Adams No, I think we've been indicating over the last few quarters we see probably the biggest growth in our portfolio will be Southeast Asia, but that's just because we were underrepresented there previously, so we don't see any weakness or change significantly. We have talked about, China because originally we thought of China as kind of a zero for us, but increasingly, we see that as potentially a big upside in that China has significantly underordered for the last four years, really, and which means to keep, their flying levels, they're going to have to maintain and keep assets, older assets longer and older assets longer flying in China need engines and so we have the ability to do engine exchanges into China. We have the Rome facility that we just are acquiring has a CAAC, which is the Chinese equivalent of the FAA for China license. So, we see China as a potential, wildcard on the upside. We have virtually no exposure there at all or very little, but it's all, it's all upside from our point of view and it could be significant. Ken Herbert Great thanks Joe. I'll pass it back there. Joseph Adams Yeah. Operator Thank you. Myles Walton, Wolfe Research. Myles Walton Thanks. Good morning. Joe, I was wondering if you could comment on the SCI ownership assets and of the 98 you have either now owned or under MOUs. What about what percentage is powered by [bees] versus CFM 56 and is that similar to the 30-year craft you had in the first quarter? Joseph Adams So we currently own the partnership like 30 aircraft 98 NRLI. It's probably 90% CFM, right? David Moreno Yeah, the vast majority of CFM. Myles Walton Okay, and in terms of your target customer base to acquire the assets from in the 250 for the year, can you give us some colors to airlines, lessors, other financial sponsors or buyers or owners? What's the target audience and and where are you seeing the most activity? David Moreno Yeah, we're sourcing from two avenues. The first are from lessors, where there are large lessors looking to keep their fleet young. They're motivated by maintaining rating agency by maintaining investment grade. So as part of that, they have mandates to sell older equipment. So we're a fantastic buyer and we're buying quite a bit. So we have The ability to do bilaterals. So over the last few months we've been executing on bilaterals with large lessors. We expect that to continue for the remainder of the year. The second avenue is direct from airlines. So airlines, many airlines had expected, let's say, receiving new orders. So now let's say tier, airlines we have engines that are tired and they need to continue to operate these aircraft for longer. So here we're really a source for them to offload maintenance. So we've entered into numerous sale leasebacks with airlines where we take on the maintenance. So effectively we power everything through engine exchanges. In those type of transactions, we're really one of one because the airline really is focused on the counterparty's ability to execute on engine exchanges and based on our, capabilities and our asset, we're the only folks that can deliver that service. So we've seen tremendous opportunities from the sale lease back side and we expect that to continue. So quite a bit of that 98 aircraft relates to sale leasebacks as well. Myles Walton Okay, got it. And maybe one for Angela. The $7 million of profit elim is that simply your 20% stake on the $100 million of sales to the SCI or about 35% margins? And then what should we expect from the full year corporate and elim sort of contra account to total reported EBITDA. Eun Nam Yeah, sure, yeah, that's correct. The $7 million elim is the intra-entity profit on the $100 million on airspace products, that we're eliminating. On the corporate and another I think included in that is are these elim also included are about a little over $3 million in costs that we've incurred this quarter related to the first report, so that is also not included in the run rate, so I would incorporate both of those items. Myles Walton Okay, got it. And the last one, Joe, just to square it for me, sorry for the question of cash flow again, slide 9, you have sort of two different cash flows. You've got one adjusted cash flow and one cash flow from operations, less investing. When you talk about the $350 million for the first half, is that comparable to the $54 million of cash flow or the $73 million of cash flow listed on the slide 9? Joseph Adams $73 million. Myles Walton Okay, got it, understood thanks so much. Yes. Operator Thank you. Stephen Trent of Citi. Stephen Trent Good morning, everybody, and thanks for taking my question. The first one for me just sort of keen to follow up on the geographic color you mentioned Southeast Asia, and I believe in the past you may have even been considering, potential acquisitions in that region, and I'm kind of curious whether the noise from tariffs has accelerated or decelerated the extent to which you might still be, looking for targets in that market. Thank you. Joseph Adams Sure, so I think long term that is an option and it's something we'll look at. Short term though, we're in the process of acquiring Rome and we want to make sure we get that set up and bedded down and manage that. So I would say in the near term I wouldn't, that's not a corporate priority for us and we will be able to serve that market pretty efficiently from Rome. It's, and as I mentioned, just a few minutes ago, it also has a CAAC license so we could serve Rome into China as well. So for the near term, I would say, we're good on what we've got longer term, if you look at a few years and he said, where would you think you might end up with a facility, I would say it's probably likely it would be Southeast Asia. What we've done in acquiring these facilities is interesting in that we, if you think about our facilities, they're all former airline engine shops. So in Montreal it was an x Air Canada shop, in Miami it was an ex-Pan Am engine shop and in Rome it's an ex-Alitalia engine shop, and the characteristics they all had is they had, tremendous physical capacity and no business. And so we're able to acquire these facilities at less than replacement cost and then fill them with our own engines, and that's a unique capability that we bring. No other party can come in and say, I am going to deliver engines to this facility immediately. Because most people are relying on getting third party customers to give them business and then move the engines in, we bring our own business, so we're a great buyer for assets at, very, low cost, low price because we bring our own business to the to the table. Stephen Trent That's super helpful. Joe, appreciate that, and maybe just a quick sort of accounting follow up for for Angela, maybe, when we think about the partnership you guys have, the SCI, from an accounting perspective longer term, should we think about, eventual, equity method, inclusion, of those earnings, or, am I thinking about that incorrectly, but thank you. Eun Nam I think you're asking, currently we do pick up our equity income related to the SAA partnership now. If you're asking, will we include earnings of that going forward, it depends on materiality, that we'll do every quarter, and if it meets the materiality threshold for that equity investment, then yes, you're required to include the earnings and assets related to that equity investment, if that's your question. Stephen Trent Yes, and if I have anything further, I'll maybe follow up with you guys offline, but that's very helpful Thanks very much. Joseph Adams I would just add on that as that business grows, the asset side of the business, the management fees from that will grow, and we will break that out as a separate line item and once it, is at a certain level of materiality, but that could become a significant source of income for us. Stephen Trent Very helpful. Thank you very much. Joseph Adams Thanks. Operator Thank you. I would now like to turn the conference back to Alan Andreini for closing remarks, sir. Alan Andreini Thank you, Latif, and thank you all for participating in today's conference call. We look forward to updating you after Q2. Operator This concludes today's conference call. Thank you for participating. You may now disconnect. Sign in to access your portfolio
Yahoo
05-05-2025
- Business
- Yahoo
FTAI Aviation Ltd. to Participate in the Barclays Americas Select Franchise Conference 2025
NEW YORK, May 05, 2025 (GLOBE NEWSWIRE) -- FTAI Aviation Ltd. (NASDAQ:FTAI) (the 'Company') today announced that Joe Adams, Chief Executive Officer, will present at the Barclays Americas Select Franchise Conference 2025 at 10:15AM (ET) on Tuesday, May 6, 2025 in London. As part of his presentation, Mr. Adams will discuss, among other items, the information in the below: A detailed walkthrough of FTAI's outlook on Adjusted Free Cashflow for 2025. Expected uses of proceeds for excess cashflows generated throughout the year. FTAI's pivot to an asset-light business model following the launch of the Strategic Capital Initiative. A supplemental presentation relating to the Company's Adjusted Free Cashflow for 2025 has been posted to the Investor Relations section of the Company's website and the webcast will be broadcast live at definitions and reconciliations of non-GAAP measures, please refer to the exhibit to this press release. 2025 Adjusted EBITDA guidance reflects the following assumptions: (i) an average of 100 modules per quarter produced at the Company's Montréal facility in fiscal year 2025, (ii) net Aerospace margins in line with or better than those for fiscal year 2024, and (iii) 25 to 35 V2500 engine MRE transactions for fiscal year 2025. About FTAI Aviation Ltd. FTAI owns and maintains commercial jet engines with a focus on CFM56 and V2500 engines. FTAI's propriety portfolio of products, including the Module Factory and a joint venture to manufacture engine PMA, enables it to provide cost savings and flexibility to our airline, lessor, and maintenance, repair, and operations customer base. Additionally, FTAI owns and leases jet aircraft which often facilitates the acquisition of engines at attractive prices. FTAI invests in aviation assets and aerospace products that generate strong and stable cash flows with the potential for earnings growth and asset appreciation. Cautionary Note Regarding Forward-Looking Statements Certain statements in this press release may constitute 'forward-looking statements' within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements related to the Company's 2025 Adjusted EBITDA guidance and related assumptions, 2025 target Adjusted Free Cash Flow, completion of the sales of the Seed Portfolio to SCI and investments and returns in SCI, ability to recycle $300 million of proceeds into attractive Leasing assets, and ability to execute on inventory strategy. These statements are based on management's current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements, many of which are beyond the Company's control. The Company can give no assurance that its expectations will be attained and such differences may be material. Accordingly, you should not place undue reliance on any forward-looking statements contained in this press release. For a discussion of some of the risks and important factors that could affect such forward-looking statements, see the sections entitled 'Risk Factors' and 'Management's Discussion and Analysis of Financial Condition and Results of Operations' in the Company's most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which are available on the Company's website ( In addition, new risks and uncertainties emerge from time to time, and it is not possible for the Company to predict or assess the impact of every factor that may cause its actual results to differ from those contained in any forward-looking statements. Such forward-looking statements speak only as of the date of this press release. The Company expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or change in events, conditions, or circumstances on which any statement is based. This release shall not constitute an offer to sell or the solicitation of an offer to buy any securities. Contacts InvestorsAlan AndreiniInvestor RelationsFTAI Aviation Ltd.(646) 734-9414aandreini@ MediaTim Lynch / Aaron Palash / Kelly SullivanJoele Frank, Wilkinson Brimmer Katcher(212) 355-4449 Exhibit – Non-GAAP Financial Statements This press release includes information based on financial measures that are not recognized under U.S. generally accepted accounting principles (GAAP), such as Adjusted EBITDA and Adjusted Free Cash Flow. You should use non‐GAAP information in addition to, and not as an alternative to, financial information prepared in accordance with GAAP. Our non-GAAP measures may not be identical or comparable to measures with the same name presented by other companies. Reconciliations of forward-looking non-GAAP financial measures to their most directly comparable GAAP financial measures are not included in this press release because the most directly comparable GAAP financial measures are not available on a forward-looking basis without unreasonable effort. Adjusted EBITDA is defined as net income (loss) attributable to shareholders, adjusted (a) to exclude the impact of provision for (benefit from) income taxes, equity-based compensation expense, acquisition and transaction expenses, losses on the modification or extinguishment of debt and preferred shares and capital lease obligations, changes in fair value of non-hedge derivative instruments, asset impairment charges, incentive allocations, depreciation and amortization expense, dividends on preferred shares and interest expense, internalization fee to affiliate, (b) to include the impact of our pro-rata share of Adjusted EBITDA from unconsolidated entities and (c) to exclude the impact of equity in earnings (losses) of unconsolidated entities and the non-controlling share of Adjusted EBITDA, if any. Adjusted Free Cash Flow is defined as net operating and investing cashflows adjusted to exclude certain non-recurring expenses, extraordinary items, and other adjustments deemed necessary to present a more accurate reflection of the Company's cash-generating ability. A photo accompanying this announcement is available at
Yahoo
04-05-2025
- Business
- Yahoo
FTAI Aviation (NASDAQ:FTAI) Will Pay A Dividend Of $0.30
FTAI Aviation Ltd. (NASDAQ:FTAI) will pay a dividend of $0.30 on the 23rd of May. This means that the annual payment will be 1.3% of the current stock price, which is in line with the average for the industry. We've discovered 4 warning signs about FTAI Aviation. View them for free. We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Based on the last payment, earnings were actually smaller than the dividend, and the company was actually spending more cash than it was making. This high of a dividend payment could start to put pressure on the balance sheet in the future. According to analysts, EPS should be several times higher next year. If the dividend continues along recent trends, we estimate the payout ratio will be 15%, which would make us comfortable with the dividend's sustainability, despite the levels currently being elevated. View our latest analysis for FTAI Aviation The company has a long dividend track record, but it doesn't look great with cuts in the past. The annual payment during the last 10 years was $1.32 in 2015, and the most recent fiscal year payment was $1.20. Payments have been decreasing at a very slow pace in this time period. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges. With a relatively unstable dividend, it's even more important to see if earnings per share is growing. FTAI Aviation's EPS has fallen by approximately 32% per year during the past five years. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited. In summary, while it is good to see that the dividend hasn't been cut, we think that at current levels the payment isn't particularly sustainable. The company seems to be stretching itself a bit to make such big payments, but it doesn't appear they can be consistent over time. Overall, this doesn't get us very excited from an income standpoint. It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. To that end, FTAI Aviation has 4 warning signs (and 1 which is concerning) we think you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Sign in to access your portfolio
