Q3 2023 Earnings Summary
Reported on Jan 4, 2025 (After Market Close)
Pre-Earnings Price$35.64Last close (Oct 26, 2023)
Post-Earnings Price$36.24Open (Oct 27, 2023)
Price Change
$0.60(+1.68%)
- Strong growth in the Aerospace Products segment, driven by increased module sales and USM (used serviceable material) activities. Module sales are expected to grow from approximately 130 units in 2023 to around 200 units in 2024, contributing to a blended margin of around 35%.
- Robust demand for leasing assets, leading to higher lease rates and better terms. The company intentionally terminated leases to a carrier in Southeast Asia to secure higher rates and better terms, capitalizing on the strong demand for their assets globally. Additionally, issues with new technology engines are increasing demand for prior technology equipment, benefiting FTAI's leasing business.
- Successful repeat business in module sales, achieving a 100% success rate with customers returning for additional purchases. Customers have placed orders for 2024, indicating confidence in FTAI's offerings and supporting future growth.
- Decrease in Lease Income: FTAI experienced a decline in lease income, both sequentially and year-over-year. This was due in part to the intentional termination of four A320 aircraft leases to secure higher rates and better terms. Additionally, accounting treatments like amortization of lease incentives reduced lease revenue, leading to confusion among analysts.
- Uncertainty in Recovering Assets from Russia and Ukraine: The company has assets tied up due to the Russia and Ukraine conflict, including insurance claims and ships awaiting sale. While FTAI expects combined proceeds of around $300 million, the timing is uncertain, with negotiations possibly resolving by the middle of next year. This dependency introduces liquidity risks.
- Potential Increase in Debt Financing: FTAI is considering additional debt financing to fund attractive investment opportunities. This may increase the company's leverage and financial risk, especially given the uncertain timing of liquidity from asset recoveries related to Russia and ship sales.