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spk_0: the day and welcome to the second quarter twenty twenty two fortress transportation and infrastructure investors earnings call today call is being recorded and i would tell it to turn to do conference of the allen andreani please go ahead sir
spk_1: the regulated i would like to welcome all of you to the fortress reservation infrastructure do second quarter twenty twenty two are you go jogging here today er joe adams the feel that i can nicholson the ceo at epcot you for structure scott christopher the see it though of fdr infrastructure and kids le nom the seem to be see a bow of if that aviation we have posted an industry presentation and our press releases and or wednesday which we encourage you to download if you have not already done so also bleed know the did called get rid of the public in listen only mode and is being webcast in addition we'll be discussing some non get finance measures during a call today including that the reconciliation of those measures to the most directly comparable gap measures can be found inheriting settlement before during the call over to gel again i would like to point out that certain statements made today will be forward looking statements including regarding future versions the statement by their nature are uncertain and may differ materially from actual results we carry to to review the disclaimers in our press release and event the presentation regarding non gaps in a your measures and forward looking statements and review the risk factors get in our quarterly report filed with the ftc now i would like to turned the call over to joe
spk_2: oh thanks hello and welcome to the f size second quarter earnings call today we have presented in will be discussing the financials as of june thirtieth on a consolidation basis but we're very excited that everything is in place for the spinoff of f tie infrastructure to be completed next monday so we were also provide some pro forma information about the two separate companies which will be trading next tuesday under the symbols f t i n f i p to start i'm pleased to announce our twenty nine dividends a public company and are forty fourth consecutive dividends since inception the dividend of thirty three cents per share will be paid on august twenty ninth based on a shareholder record day of august fifteenth they'll turn to the consolidated numbers the key metrics or us are adjusted ebitda and fad or funds available for distribution the just need the dog was a hundred and sixty five point three million up two hundred and twenty percent compared to fifty one point six million and que one twenty twenty two and up one hundred and forty three percent
spk_1: compared to sixty point zero million in queue to twenty twenty one
spk_2: that was one hundred nine point four million up fifty three percent compared to seventy one point four million and que one twenty twenty two and up sixty percent compared to sixty point three million in two to twenty twenty one during the second quarter the one hundred nine point four million fad number was comprised of one hundred and sixty one point six million from our aviation leasing portfolio nine point nine million from our infrastructure business and negative sixty two point one million from corporate another starting out with aviation aviation's had a really good quarter posting approximately one hundred and sixty million of the the dog and one hundred and five million of net income we're benefiting from stronger than globally driven by the recovery and traveled a man which in turn is feeling growth in engine aftermarket services leafs rates of return to at or above pre trial that levels and improving asset utilization is pushing maintenance reserve collection up while inflation is driving higher per hour and cycle rates asset prices are also up we took advantage by selling about one hundred million books value of assets for again of fifty five million and we have more asset sales coming into three and queue for both to recycle capital invested in some of our twenty twenty one larger acquisitions and continue capitalizing on the robust freighter market aerospace products had an excellent quarter was seventeen million have anybody and a significant increase in water backlog
spk_1: where in the process of completing to separate asset sales reps i will retain engine maintenance service contracts for the next eight years covering twenty two engines we believe this marks a unique way to scale the number of engines we manage while recycling capital for new investments
spk_2: in addition we've been awarded a major engine exchange program covering between ten and twenty engines for a large southeast asian airline all told today we now have five airlines three leasing companies and five maintenance or terror organizations or m r i was signed up to use the module factory factory for a significant portion of their cfm fifty six fleet and every user we've had so far has been a repeat customer good service service will material us m sales experience more activity include to as shocked as it's increased demand for use cfm fifty six material is high and growing and sufficient to easily support twenty to thirty seconds and tear downs per year which continue to generate approximately a million in profit per engine for us er p n p m a initiative made significant progress and due to on the next four parts development although the process is slower than expected we're very happy with the parts being produced and are probably supplying all data requested at this point we expect all for new products to be submitted for final approval by this time next year the currently expect to complete an additional two hundred million asset sales and you three and as concurrently signed up three hundred million dollars in in attractive new acquisitions to replace these the new deals are expected to be a creative by adding more either die than and since removed although from a timing prospective que three likely will experience a slight decrease in leasing he'd done until those new investments have fully closed turning to the insurance claims were making good progress by supplying all information requested by the insurers regarding our two hundred ninety million in claims for assets lost in russia ukraine with three different buckets of claims we think it is possible to realize a partial recovery by your and twenty twenty two this year with the balance collected in twenty twenty three and twenty twenty four
spk_1: as a reminder any recoveries will be a one hundred percent income since all related assets were written off fully and que one
spk_2: to pull it all together we expect aviation without any insurance recoveries will produce per quarter ninety to one hundred million and even to off from leasing twenty to thirty million and asset sale james which we think will be recurring each corner and twenty to thirty may and neither does from aerospace products totaling five hundred and fifty to six hundred million in per annum either tough for mediation
spk_1: with this level the the dog we expect f tie aviation to pay a dividend going forward of one dollar and twenty cents per annum while set fortress of tie infrastructure expects to pay twelve cents per annum for the total of a dollar thirty two for the to stocks posting
spk_2: are now turn the color of the can to discuss infrastructure
spk_1: joe and good morning everyone has your mentioned our infrastructure business will be a standalone company committing next tuesday are extremely excited about the prospects of our infrastructure platform and beleaguer well positioned to drop substantial growth that each of our for existing businesses it's a dynamic time in industrial energy markets with inflation and focus on energy secure are idiots prominent as ever and our assets are extremely well positioned to capitalize on several opportunities ah quickly to their second quarter results in total our infrastructure business posted twenty six point seven million of a bit on the second quarter of thirty four point eight percent sequentially from nineteen point eight million in the first quarter of two thousand twenty two importantly each of our for core companies report sequential growth in revenue and de bitter as we head into the second half of the year we're seeing that momentum across the portfolio and expect to continue to generate meaningful sequential growth and our businesses continue to ramp up operations following recently completed developments and as new contracts kick in the aggregate were targeting achieving annual adjusted ebitda in excess of two hundred million dollars in the next twelve to twenty four months with no additional investment required to meet that target i'll weekly review each of our infrastructure companies are starting with trounced are friends or had an excellent quarter posting growth across all aspects of the business including volumes pricing revenue and it up either die increased from fourteen point eight million it's one to eighteen point eight million for que to a twenty nine percent quarter over quarter gain more importantly cashflow was twenty million for the quarter sales and encore assets continued to seed capital expenditures volumes a trance star increased from fifty four thousand to fifty seven thousand and carloads from she wanted you to while pricing or average rate per car grew from five hundred and sixty two dollars to five hundred and ninety nine dollars per carlo are insulated from inflation and higher fuel costs a tramp star with a blade a path through higher operating costs under our contract with us steel and ancillary services also director and start with car repair efforts bringing in new revenue for the quarter while the third quarter is typically seasonally little soft of ah softer than other corners during the year we expect adults to remain steady as we look ahead driven by continued progress on a number of initiatives to gain new customers and bro revenue from other sources including car repair and real income next on the jefferson to to a guitar jefferson was four point two million up eleven percent compared to three point eight million if you want of two thousand and twenty two which are increases in volumes of both refined products a pre aisle and utilization of our terminal capacity continued to steadily ramp up during the corner we're very bullish about the second half of the or jefferson and expect revenue only be taught to grow materially and the third and fourth quarters received substantial pick up in volumes of refined products ship the mexico and yellow wax crude trains are now running nine to ten trains per month more importantly and exxon mobil request we now expect to complete construction of new storage tanks increments terminal operations under our ten year contract during the fourth quarter of this year ahead of our original schedule of january two thousand and twenty three expect his contract degenerate approximate twenty million of incrementally but damn the annually bringing substantial committed through confined to the terminal and provide a springboard for increased volumes and our growth and volumes for also an actor discussions with exxon about activating an additional connecting pipeline which are being incremental crude volume from jefferson to expanded exxon beaumont refinery additionally we will have to compliment this expansion by providing by directional service on the southern star crude oil pipeline between jefferson and motiva allowing for increased blending capabilities and higher friedel throughput at the terminal in short much inches better grasp of the jeffersons now a pass ah moving out along rich language generated seven point five million inhabitants you to vs six point one gg one as we communicate in the past we target quarterly a bit off for our fifty percent share of longer needs to be in the range of twelve to fifteen million per quarter or results for to queue included the impact of gas purchases during the quarter that were required from external suppliers as we transitioned our internal gas production to new wells later the planned this combination of constrained labour availability in limited supply of drilling equipment meditech approximately three weeks longer than expected to bring the gas production online necessitating the purchase of the purchase for our power plant from third party that historically high prices fortunately was an isolated event and not something we expected repeat by the month of june we were running on our own gas and generated either adopted a month within our targets don't board we expect to continue steady a bit off and power plant in line with our targets
spk_3: development along ridge continues to be robust and july we entered into agreements with new like technologies for the construction of a new three hundred million dollar facility to be built on long reach property which will produce carbon negative and biodegradable plastic products from natural gas long read will sell power and natural gas and delight as well as provide landowner law
spk_1: long term lease in addition we expect to be an investor in the project if certain conditions are met we expect of sell it to be operational to two thousand and twenty fourth follow the close up with report know of upon our keep focuses on commencing a development of our phase to lpg train voting system the system is expected to triple or throughput capacity and pleasurable are or operating margins when it comes online and a couple of years we have the man from multiple international off takers and our goals to enter or into a long time agreement with one or more parties during the third quarter we've completed engineering for the new storage tank and associating piping and systems and a negotiated construction contracts we plan to finance all construction costs with taxes and
spk_3: in the meantime in the second quarter expanded our existing capabilities by loading fully refrigerated lpg to large gas carry marine vessels with it's important step we moved closer to our goal of loading the lg they're very large cat carriers across our doc facility tradition the newly expanded lpg truck racks continue to see how you do
spk_4: nation providing both propane and butane to local heating and lending markets meeting additional customer needs
spk_1: in the area finally we continue to see increased interest in renewable energy space with two hundred and fifty acres primed for development we have announced a coordinated efforts developer a unique marine table i mean factoring facility with drive light with to provide a critical american made superstructure length bring renewable electricity from offshore wind generation
spk_2: and to local consumers also are mean planet joint venture continue to progress to the permitting process for the first plastics recycling plant of reported are expected to complete construction the we plan facility in two thousand and twenty four with adults and back to jail thanks can the next week of a big week for f tie shareholders with the consternation the skin sip will eliminate k ones for shareholders upon the spin and f ty will begin a six to eight weeks read on the sailing which when complete will eliminate k ones for all shareholders as well index funds e t f send a broader investor universe will be able to own both stocks and importantly both companies will focus refine and articulate their uniqueness and value add in the respective market served for aviation advertise capitalizing on global travel recovery and growth and after market engine services to be the leading low cost commercial engine power provider for narrow body aircraft globally the unique combination of engine leasing and maintenance management provides airlines cost savings and cap
spk_1: preservation through proprietary products and practices while focusing on the largest and most liquid hangs and market in the world and i would just say for infrastructure we very much with for the updating investors on a standalone days starting next quarter do expect the post meaningful growth in the near term across each of our forty business units to very of times on long term assets well insulated from inflation and with high scarcity value in the country's largest industrial energy markets the do the growth a train star this quarter as good indication of things to come and following years of development where accelerating the pace of ramp up at jefferson or upon of terminals while a long ridge with powerpoint complete with now beginning to driving little cash flow and value and an impact our
spk_0: thank you can lead the you may now open the call to queue and a thank you you would like to ask a question on a phone lines today please press star one on your telethon keypad once again every one that a star one to ask a question
spk_2: what are their first question from giuliano polonium from contests point
spk_1: thank you in a judo as as some sort of the on the on the aviation side epicurus a couple of things are they of work in the other on see mapped out and home out of those from somebody called before them are important together from africa years
spk_5: last quarter the effect to the record are you going are going on sale when you had a a handful of box boss and and use a gun fact that new reconfiguring on the these i'm furious out when we look at the asset sale numbers as hmm
spk_1: hire them what i'd expect expected i'm curious what the composition of the guys and gals website or if we saw and if it's or more of the russian assets and our emotions are no of his mother in the call and them tottenham than looking on the other side for his work on an average you're looking at on the allies side because you're the have a a pretty from oh i like on and you mentioned call for going to plant life as if he's from interesting with atrocities that are you selling with sense as a to requiring and hasn't think about
spk_2: get up their contribution going out on the salesman back and on the activities and so on
spk_1: yeah the composition is
spk_2: a little you know as i mentioned as two different groupings one is cargo and the others recycling capital from mainly job yonker deal that also some others with long term leases and we did last year the cargo assets we also sold and decided to you know selling some of the as it's the some vitamins and seven six evans we took back from
spk_1: russia and ukraine we've we've also sold some seven forty sevens
spk_2: in the in this corner so that's that's that's why the game is you know higher than than we had originally projected that market is a bench i you know we we downturn
spk_1: we don't know when the cargo market will be no will slow down but we don't want to miss it so we decided that i'm sort of a good time then yeah we'd rather be early and late and that markets in a week we had bought those assets in a very attractive time several years ago and no one was trying to ensure figure map cargo so they were quite quite good returns for us
spk_2: but we decided it was time to answer like up on the cargo side
spk_1: and then in it's in the third quarter i think you know i looted to the the deals that were selling with long term leases attached so you know there's still a lot of capital that's been raised by noon leasing companies who likes the wants to buy deals and
spk_2: and we and the structure those that we can retain the engine maintenance service contract and and do that for the lot less or which is great for us because we could use or as other lesser as capital and retain the best part of the deal so so those are the deals were targeting to close in them
spk_1: mostly a cute story and yeah we'll add a lot of we are back onto our aerospace products business that way and we think we can continue to grow and and we're very pleased that you know the less or acceptance of at his is been up
spk_2: not not by one less or but by to us source and we see that is something that's a very very significant for us to continue to grow a service business and i like our ability to create value out of portfolio deals which is why reference that i think this gain on sale is something we think is i'm rick severe occurring for us each quarter i think we can do that we can buy packages of assets in and find you know the parts that are most attractive other people and and take advantage at at and in this case were able to even keep on the engine mean and service as part of that ah and the by side
spk_1: we're focused on all cfm fifty six engines are mostly the that's been the folk song we acquired twenty five engines and que to there were all off lease so that's that's where you get the best prices when you have an acid this and some you have to put revenue you have to attach revenue to it's is
spk_2: that's marketed very few people know compete with us on that so so that was a great job on by side of them
spk_1: additionally we've got some the elsewhere sound a big
spk_2: airlines that we've have existing relationships with that we've established eg a good relations with their also also cfm fifty six engines and would add to very similar to the transactions we did last year with fan of young candy eater so we think it's a it's a great combination we pick up
spk_1: either da by doing that you know so it's
spk_6: both recognizing again and increasing needed ah seems i got out of a very good very good when that's great i prefer and and that says he covers over to our infrastructure
spk_1: what are my closer or mom jefferson or of accuracy or other there's there's like i'm very on on the on about sharks and amazon amazon and an hour or not or up or not the age of dropping on a regular i'm curious know what gives you like a lot more i got what what gives you a more conference at the they'll get there and than figure out the different components officers yeah cambio coming on ah that as a to the last ah the up the last night train car volume snook their tax increase sorrow start a going to kill i'm curious how work with the different components are and out of the your contribution from some the during an extent were going on jackson yep yep yeah look where we're we're pretty bullish on now the second half of the at at jefferson on the i loved all the assets are are in place ah we are we're finishing up the new asset store exxon mobil contract and we're really happy that for to start operations on an eye contract now in the fourth quarter are not up to get p sounds on the bridge to eighty million ah but but a bigger piece is just continued increases and utilization all of our assets and place today are of lucky the percent gallon and it's nj process for frankly of few years and building out those assets and cultivating the relationships with yet on mobiles and achievers and others in that valmont refinery complex at and shape and a lengthy process by you we're now find the air on and it mentioned in a rubbing up another crude pipe ah between jefferson and ah exxon were up were on are kind of that making small change to the spa southern star pipeline between exxon and motiva do allowed to be by directional all of the things plan to two more demand and warm requests for through pike from or two largest customers ah guess we're thrilled that yellow act strange continue to to accelerate you know the second quarter was a good quarter i think the third quarter be even better quarter or find products and in mexico or strong arm and getting stronger and terminals are being opened in mexico and south we're seeing indications and seeing
spk_6: business and this month of july that make us very comfortable with our outlook for a million of you've got you know him an extra twenty four months that's right i present are now
spk_0: fixing the gotten so that i can get
spk_7: what's our next question from just just sullivan from the benchmark company
spk_1: the your mine
spk_8: morning i just us your question the overall easy market and would we had both airbus and boeing come out here via lowering delivery assumptions do the supply chain issues used within the engine availability market their vertical your so first is that lack of only an engine supply supporting a module does
spk_1: this and you are some at that and then secondly on the aircraft lisi market or how are your lines responding to that that lack of the liam aircraft supplies and a conversation you guys are having the gallons of a capacity at this point ah yes it's good for us i like i like that fact that you know it's hard to make new airplanes to the next owning the ones we on better and more demand says there's a lot of demand for and you know that exists a nz seventy seven and she's and a three twenty an seo asset so we've got
spk_2: as travel the man has been very very robust and in relative a price elastic airlines you know need lift need to pass he said to extend this new delivers had stretched out a just extends the longevity of the fleet that we own which is good and the the other thing i mention would sell so good is for us as inflation because as inflation you know in increases the on and the price of in a shop visit our advantage gets bigger and also our revenue collected for maintenance reserves goes up so we like both of those trends and and does the own seems like as people vindicated it's not going to be
spk_1: and he said he said they're not going to be talking about stop talking others probably provincial twenty twenty four fours the expectations are we get pretty good
spk_8: the period where it's going to be positive i think for us
spk_9: and the in a month for can just just done face to for been a good do have customers and place there or what are you see their to drive the next says
spk_1: ha they got ah where are very close on i can tell you we have a contract signed with a we can half taker i will tell you the team and reply know it has spent the better part of two weeks and europe
spk_10: ah recently and ah and i think we're in of in a very good position to hands on the up the third quarter ah with the have plenty of demand from very large investment grade counterparties we want to make sure we find the best deals ah and
spk_0: ah ah but but we're close seventy trade ago but where where we're not a good point yet where we have a contract executed but more class
spk_1: the given done and what's our next question from chris one of the city
spk_11: a nice more guys as you lie went on for chris
spk_1: thinking that some of the sensitivity around to the structure side and going over jefferson and you're talking about you know you obviously get yes on contract in that you're gonna have some better as a race but were that would have some of the puts in takes to getting better asked you to listen specifically on the rail congestion side how does that impacts trying some of that business
spk_12: a really no issues with congestion are we can handle double the train activity or handling today and he now that's one of the things we can ah i'm working on as we developed that the terminal ah you know ensuring that whether it's inbound create trained or out pound refined products trains ah
spk_11: we got plenty of capacity to add to handle the additional not say when we when we go through the calculation of you know exactly what our through about the kids are stuff one hundred thousand barrels per day
spk_1: that's the capacity ah i'm yeah we take all that stuff into consideration i mean i don't i will not too concerned about congestion issues ah we got plenty of track tracking the terminal ah i'm and so we haven't certainly haven't experienced as congested a date night i don't i don't think suggestion is is gonna be an issue for us
spk_3: organic accent and then on the exxon side
spk_1: he said you have a lot of the assets and place but but what is left and then separately on the twenty million of incremental he the what is that ramp up there and look like so he said as twenty million annually the that really start to pick up when should we expect a lot of it becoming and what's what's left that that really there should be very short ramp up to that the that contract i mean they could be operations commence when everything is built what is being built specifically is ah just under two million barrels of total storage that we have storage tanks that are under construction and we built for million barrels today this is an additional two million were bringing online and then knowledge of piping and manifolds ah the way that system will work we will receive refined products by pipe ah accumulate and store the refined products and then we will load large ships for export of of those products really religious down to storage tanks typing and manifolds are all stuff we've built before so far on track for completion during the fourth quarter feel pretty good ah with our ability to get it done i would say need part of the of the fourth quarter of the the team down there is a very focused on completing as quickly as possible they're not i wouldn't say at a stages of construction now where most of the risks that he would typically see our geotechnical and what have you are behind us and now where you know where welding and painting we're not getting any holes are driving piles or anything like that they can typically be a cause for black yes on the proceeds are over onset mexico or refined products how involved the government right now still in in restricting moves these are the during his substantial pick up there but yeah but what if the government by gallup i'll tell you where i mean it's it's always a ongoing dialogue right now we're not seeing any reduction in
spk_13: movements ah i'm you know like a bagging that exxon as as active as ever and loading trains for movements on the next we watch closely and dub you know there are you know
spk_0: odd occasion percolates knows you know a story here story there but but at the end of the day the country needs gasoline and diesel and jackson's going a bases
spk_14: ah but a thousand joe exxon mobil gas stations that they need to serve and so we we have not seen on any issues or any flow downs job ah come across from some of that some of the some some is what you might read and in the papers about government interaction or either make sense that you are we'll take our next question from justin long with stevens
spk_1: thanks and good morning i know in the slides you called out at two hundred million dollar plus he bit now run rate for the infrastructure businesses over the next one to two years he referenced a million from jefferson earlier i think he gave the number of hundred million for train star and five so when i add up the pieces it's sounds like we could be a decent at a bug two hundred million size wondering if you could just kind a refresher on your latest thoughts on the bedard contribution from each of the different assets as you look out the next couple of years and and maybe what level of corporate past they're getting factored into that forecast as well yup yup that fully you are spot on on on the companies that you mention france star his jaw hundred million of the of the total of two hundred jefferson eighty long range you know we're targeting fifty could easily be more to the that we produce access gas for to put it at your current market pricing but behold fifty plus for long rich and reply know right now we're we're including ten which is really only leading in a phase one and little bit of incremental activity that is not include these do so that's not enough to hundred million are after the at all that up and yes you get you get in excess of two hundred closer to two hundred he forty million
spk_14: and then we conduct thirty to forty million of corporate expanse
spk_2: and accuracy to your just north of two hundred man perfect to an and secondly i wanted to ask about the pro forma dad for the two businesses post and next week and know you gave the numbers am in the slides that at how are you thinking about targeted leverage for each of these businesses the year from now on based on that target what's that
spk_1: pasadena you feel like you had for each entity to investing growth the so very the reason we're we're targeting maintaining double be ratio and and somewhere probably in the neighborhood of four to five times that either so there's compasses getting to go up as we grow he the dog but but i think we're we're we're comfortable where it is know at this point now it's a group restructure it's generally the same in terms of the ratios i was to give such have been slightly smaller business right now ah ah but that in terms of the a ratio it's in that sort of forty five times the target that the beauty of of you know the infrastructure businesses in terms of you know
spk_14: investment capital for growth a lot of what we do is eligible for taxis and financing and that's something we've used historically at jefferson ah and and and we can use ever porno and and potentially long range and so on your get capacity ah
spk_0: absolutely will be will be smart and discipline and about you know incurring that but ah than we'd been successful in the past
spk_15: growing through investment arm by accessing the tax and markets and jefferson our average rate of borrowing is you know and like choose as an example and will will i'm not sure in this current market environment report over face to will be at a similar rate but i'm still be significantly lower rate than where the more traditional taxable markets would be so on the feel like we need we can maintain a forty five times as leverage ratio but at the same time and continue to encourage that for specific projects that attractive levels
spk_16: got it thanks for the time
spk_15: thanks
spk_2: we'll take our next question from frankel on t with stiefel yeah hi thanks for taking my questions and then congratulations i get in the fired thing done to be able to spend the infrastructure business i wanted to follow up on that and maintenance program
spk_1: the third you'd mentioned when you told a couple the engines you're able to me to keep the maintenance portion a nice or a talk about what that is physically pales and then for the economic so it is that simply using the module factor years that for overhaul services up in montreal and then how do as we think about that from an economic udall economic perspective
spk_2: i sure it's good question so how it works is that we've we sell the the aircraft to the new owner and agree to provide replacement engines for the life of those leases when when needed so when an engine is due for chavez if we would take the engine
spk_1: that needs a shop is it and exchange in return a engine that is meets minimum requirements says of cycles hours available
spk_2: in in a swath and so that and and then
spk_1: becomes our ends and we leader played in the module factory or do an overhaul or sell it and in the economic meantime what we're doing is we're collecting the for maintenance reserves from the airline for that engine along the way so so the way reap price it out
spk_2: given our advances cost with on the mainland side is that we could we could generate an additional million dollars per aircraft per year after that transaction so it's a
spk_1: as a very attractive
spk_2: for us it's and it's also an attractive for the new owner obviously they're doing it you know voluntarily because managing those engine events is not something everybody's capable or experience or and hang his had the good outcomes on so so we think it's and know it's are viability provided you from
spk_17: pettitte of service at a yard
spk_15: at something that we can then you know generate significant profit because of our mean own proprietary products and advantage so so very exciting yeah i think because it opens up a a very very large market a know sixty percent of the world's fleet leaders own by leasing company so
spk_18: as we looked out that was that's an important area for us to have been out to spend time and and try to grow into and profit from and so this is of the way to do that on a pretty significant scale
spk_15: at at a super helpful and and stuff did he get on aviation path
spk_19: the one the ask about that the module factory
spk_15: i'm in user a talk about customer interest since the inception of that
spk_1: in in the i guess what hi something that that it's taking up but the in that in that way
spk_2: are there needs to put more engines into their business and that if i remember correctly as about ten that was originally put in and then is there any interest or need to move past the three modules that you guys have developed i'm in expand that the services in terms of this scale on in yes we were probably as volume grows and yeah we see what we're doing is we're turning modules so we would increase them or modules in the module factory as as the business girls we we are seeing very broad based growth in in non users as i mentioned we've got you know it takes a while the market this but we've we've spent time with many many airlines and you know each week we we are educating airlines are spending time with them and and finding that they have needs and demands and and we're building backlog for twenty twenty three right now so so we're seeing a very broad base acceptance of the the level of the magnet shops it and very
spk_1: i would say much easier to sell because they are in the business of doing this regularly and and there's never been from for many shops they never had a place to go to buy a fan or a to buy and lpt so this is a this is something now that they're they're recognizing they can use to to generate additional income for their own
spk_2: i'm amazed shop and then now and then as i the leasing companies were seeing leasing companies use this now for of return compensation so the end of a lease and ends and you often have returned com issues with ya on the airline has to provide a certain you know that i'm a member of our in cycles back and if they don't they have to pay cash and so we can often times if it's now p t that doesn't meet the requirements we could sell an l p t to the
spk_1: airliner the leasing company says the return calm conditions are met and they saved money the off to do a shop and so it's becoming a useful tool so that for people to save money on their on and of least issues so really developing a very broad market for our this and it is an education process it takes time but the given we can you know celtic almost everybody and ecosystem it's it's a huge shot a huge growth opportunity for us and in the back long as i mentioned is continuing to build and as we get our the sale of these assets and retaining and maintenance agreements
spk_2: that that gives us committed volume which we like as with the west at the oh we have an eight year deal seven year deal we now have two eight year deal so glad to that so we say that and younger a nice
spk_1: a nice ramp in terms of
spk_15: and you know if we did doubled of i am if we had ten ends in sweden might have no fifteen engines and or you know as much as twenty but if each engine and sort of two to three million dollars is not a huge investment to get that kind of a turnover ramp which we would expect to turn know a module within three to six months and in inserm
spk_1: and do multiple times a year so so i don't see that as a big capital user and it should scale quite quite easily
spk_20: in terms of going beyond these three modules around we don't see anything quite as track the business right now so our focus is really on on that and hum
spk_2: we could develop something later in the future but right now it's everybody's all eyes on on those on this opportunity right and and that at squeeze in not one more question of i could ah and and the pm a business it's a nice or talk about that approval process and and why it's taking longer than it is anticipated and an egg as
spk_21: a other customers are interested in just one part that approved or are they sort of waiting until there's a ah a number of parts before engaging
spk_0: yeah
spk_1: wow ticket so i mean people know that additional part shares in development so having a critical masses very helpful psychic that's that's sad that's part of what were you know it's tempting their chief from the very beginning and so once once we have a critical mass and i think people know that that's coming so they tend to keep
spk_0: yup that
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