FTAI Aviation Ltd. (FTAIP)

FTAI Aviation benefits from Boeing and Airbus delivery delays, driving demand for aftermarket services, especially in engine leasing and maintenance. Despite higher input costs and inflationary pressures, FTAI Aviation's Q2 2024 revenues grew 61.7%, with adjusted EBITDA up 40% to $213.9 million. FTAI Aviation raised its 2024 EBITDA guidance to $825-$850 million and its 2026 target to $1.25 billion, reflecting strong demand and growth prospects.

FTAI Aviation's 8.25% Fix/Float Series A Cumulative Preferred Shares offer strong dividend coverage, with a potential yield over 12% and a 13.37x coverage factor. FTAI's asset base includes 53.4% aircraft and 47% aircraft engines, with high utilization rates and a focus on narrowbody assets. Despite a one-time $300M restructuring expense, FTAI expects significant annual savings and strong future EBITDA growth, bolstered by recent acquisitions.

In the first half of 2024, our long book performed strong relative to the Russell 2000, driven by our high-conviction positions. We are pleased with our relative performance and believe the Russell 2000 remains a more appropriate benchmark for comparison. Top gainers include FTAI Aviation and FTAI Infrastructure, while top detractors include Latch and Industrial Short.

FTAI Aviation is a key player in aviation equipment leasing and aftermarket components, aiming for $1.25 billion EBITDA by 2026. Strong demand for aviation assets and operational efficiencies continue to drive growth in its leasing and aerospace products segments. The business has an extensive runway to deploy funds into its growth operations where each $1 of incremental capital is valued >$1 by the market.

FTAI Aviation stock has gained more than 173% in the past year, prompting a reevaluation of its price target. Q1 2024 saw robust growth in revenues, driven by higher aerospace products revenues and increased maintenance revenues. FTAI Aviation expects a strong year with solid demand and EBITDA growth of >15% targeted.

FTAI Aviation Ltd. (NASDAQ:FTAI ) Q1 2024 Earnings Conference Call April 26, 2024 8:00 AM ET Company Participants Alan Andreini - Investor Relations Joe Adams - Chief Executive Officer Angela Nam - Chief Financial Officer David Moreno - Chief Operating Officer Conference Call Participants Kristine Liwag - Morgan Stanley Louis Raffetto - Wolfe Research Josh Sullivan - The Benchmark Company Giuliano Bologna - Compass Point Hillary Cacanando - Deutsche Bank Brian Mckenna - Citizens JMP David Zazula - Barclays Sherif Elmaghrabi - BTIG Stephen Trent - Citi Frank Galanti - Stifel Robert Dodd - Raymond James Operator Good day, and thank you for standing by.

FTAI Aviation Ltd. 8.25% Fix/Float Series A Cumulative Preferred Share has provided a solid 20%-plus return since inception. FTAI's earnings in Q4 '23 showed year-over-year gains in both segments, with overall revenue rising 14% and net income jumping 4.5X. FTAI acquired the remaining 50% of the QuickTurn Engine Center and had $200M in Letters of Intent in its pipeline for new deals.

FTAI preferred shares have a higher dividend yield of 8.7% compared to the common shares' yield of 2.3%. The market has favored FTAIN in 2023, with a total return of 28.44% compared to 4.9% for the Leasing Industry and 19% for the S&P 500. FTAIN has an attractive future floating rate, which may go over 12%, and strong dividend coverage.

FTAI Aviation is a spin-off from FTAI Infrastructure and is a relatively underfollowed mid-cap company. FTAIP preferred stock is currently undervalued compared to other preferred issues of FTAI. Management is likely to call FTAIP in September 2024, offering an attractive return to current investors.