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spk04: Good day, and thank you for standing by. Welcome to the FTIA Aviation First Quarter 2024 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Alan Andreini, Investor Relations. Please go ahead.
spk07: Thank you, Shannon. I would like to welcome you all to the FTIA Aviation First Quarter 2024 Earnings Call. Joining me here today are Joe Adams, our Chief Executive Officer, Angela Nam, our Chief Financial Officer, and David Marino, our Chief Operating Officer. We have posted an investor presentation and 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-GAAP 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 supplements. 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 the disclaimers in our press release and investor presentations regarding non-GAAP financial measures and forward-looking statements, and to review the risk factors contained in our quarterly report filed with the SEC. Now I would like to turn the call over to Joe.
spk10: Thank you, Alan. To start today, I'm pleased to announce our 36th dividend as a public company and our 51st consecutive dividend since inception. The dividend of 30 cents per share will be paid on May 21, based on a shareholder record date of May 10. Now let's turn to the numbers. The key metric for us is adjusted EBITDA. We began the year strongly with adjusted EBITDA of $164.1 million in Q1 2024, which is up 1% compared to $162.3 million in Q4 2023 and up 29% compared to $127.7 million in Q1 of 2023. During the first quarter, The 164.1 million EBITDA number was comprised of 104.8 million from our leasing segment, 70.3 million from our aerospace product segment, and negative 11 from corporate and other. Turning now to leasing, leasing had another good quarter, hosting approximately 105 million of EBITDA. The pure leasing component of the 105 million came in at $98 million for Q1 versus $99 million of Q4 of last year. With exceptionally strong demand for assets and the commencement of the Northern Hemisphere summer season, we expect meaningful growth in Q2. We remain very confident in leasing EBITDA of $425 million for the year, excluding gains on asset sales. Part of the $105 million in EBITDA for leasing came from gains on asset sales. We sold 31.9 million book value of assets for a gain of 6.7 million, slightly below our expectations, but we have more asset sales coming in Q2 and the rest of the year and are comfortable assuming gains on asset sales of approximately 12.5 million per quarter or 50 million for all of 2024. Aerospace products had yet another excellent quarter with 70.3 million of EBITDA at an overall EBITDA margin of 37%. We sold 72 CFM56 modules in Q1 to 16 unique customers. Additionally, we sold six V2500 engines in Q1 to three customers through our recently launched V2500 engine program. We continue to see the tremendous potential in aerospace products and are comfortable that we will generate approximately 250 million in EBITDA in 2024. the high end of our previous range. Our maintain, repair, and exchange, or MRE model, for the two most widely used engines in commercial aviation produces cost savings and operational flexibility for airlines and aircraft lessors by allowing them to avoid shop visits through engine or module exchanges. Our recently executed perpetual power agreement with LATAM covering over 60 V2500 and CFM56 engines, illustrates the growing acceptance of airlines and lessors to outsource this activity to FTI Aviation. Overall, looking ahead, we continue to expect our annual aviation EBITDA for 2024 to be approximately $725 million, not including corporate and other. With that, I'll turn the call back to Alan.
spk07: Thank you, Joe. Shannon? You may now open the call to Q&A.
spk04: Thank you. As a reminder, to ask a question, please press star 1-1 on your touchtone telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Christine Leweg with Morgan Stanley. Your line is now open.
spk05: Hey, good morning, guys.
spk04: Good morning. Good morning.
spk05: You know, yesterday you announced a successful execution of a perpetual power agreement with LATAM Airlines. Can you provide more color on what this agreement entails? How meaningful is this contract?
spk13: Hey, Christine, this is David. So to provide additional color on LATAM, the deal itself is predominantly a V2500 maintenance, repair, and exchange contract. It does have a smaller component related to the Sale Lease Act. But what we're doing is we're building engines ahead of shop visits, and we're providing engine exchanges that are avoiding shop visits for LATAM and offering flexibility. As far as EBITDA and how that's going to show up, we're going to be recognizing B2500 MRE contribution as soon as engines are exchanged. there's going to be a ramp up period. So as we exchange more engines, there's going to be a ramp up on aerospace EBITDA. We're expecting ramp up to take about two to three years, as well as there's a smaller contribution on the leasing side that's going to commence as soon as we close those airplanes.
spk05: I see. Thanks, David. And then when you said the ramp up over two to three years, you said over 30 aircraft would be part of this agreement. Can you parse out the timing of when that could occur? And also regarding the EBITDA contribution of this deal, what are the economics?
spk10: Well, we're not giving a specific number on that yet. I think it's a bit of a function of how many engine exchanges occur and how quickly they occur, and we don't have certainty on that yet. But we do expect that it will ramp up such that it'll be a needle mover in years two, three, four, five. for our aerospace products business. So that's really all we're saying at the moment at this point. It's going to take a little bit of time for that to kick in, but then once it does, it's a needle mover and it's very stable.
spk05: Thanks. If I could do one more follow-up on this. You know, with the V25 MRE that you've announced earlier this year, how should we think about the LATAM contract as a proxy for Economics 4? additional V25 MRE. Should this be what we look at for additional V2500 contracts? Is this a good starting point? Is this better? Any sort of context would be helpful.
spk10: It's a great starting point, and we would love to do more of these, and we hope we will. We have several projects that are of a similar nature. Each airline obviously has their own requirements and their own specs, so they'll all be a little bit different, but We hope this model is used by other airlines. And in discussions with the big operators, the V2500s, we've gotten very positive feedback on this. So we expect to do more, and we hope to do more.
spk05: Great. Thank you. I'll stop there.
spk04: Thank you. Our next question comes from the line of Louis Raffetto with Wolf Research. Your line is now open.
spk14: Thank you. Good morning. Joe, on the last or maybe October earnings call, you said you thought maybe 200 module swaps, not a precise number, but ballpark for 24, but doing 72 in the first quarter. Any thoughts on that now? And then sort of rolling into that, obviously you've got module swaps, you've got the MRE and the V2500 where you just said you're kind of doing these shop visits ahead of time. How should we think about capacity limitations at this point?
spk10: So on the first point, I think my recollection is we indicated between 250 and 300 module swaps or exchange sales for this year, for 2024. And so we're obviously on a great path, you know, given the first quarter of that, and we have pretty strong backlog. So I feel very good about that number. We have built our plan around being able to deliver that. So we have ample capacity at our two maintenance facilities that we use, the Montreal facility and the Miami facility. So we've got adequate capacity to do that. Obviously we're working to increase capacity and ramp up because we want to stay ahead of this and we do see substantial upside in the years ahead. We're building additional capacity, but we have in place what we need to deliver this year. Okay, great. Thank you. And then, I'm sorry, go for it, Joe. What was the second question, or did I?
spk14: No, you covered both of them, so I was just going to ask a quick one. Angela, just any commentary around how to think about cash flow in the quarter and the rest of the year?
spk06: Sure. So our cash flows for this quarter, as you can see, our operating cash flows were about neutral, but that's because part of our proceeds from sales is sitting and investing. We believe for the rest of the year, our cash flow operations will improve significantly.
spk14: Okay. Thank you very much.
spk04: Thank you. Our next question comes from the line of Josh Sullivan with the Benchmark Company. Your line is now open.
spk01: Hey, good morning. Good morning. Just with the addition of the V2500 here, can you just help us understand some of the relative savings maybe versus the GE56 for an airline? I want to say in the past you've talked about a $3.5 million differential on the GE56, but is there a way to think about that for the V2500? Yes. We have the same set of
spk10: same approach to that engine as we've taken with the CFM56 engine. We've looked at sourcing used serviceable material, doing hospital repairs, potentially PMA, being able to get better deals with MROs because of volume commitments, and it's all on the table. The shop visit cost for the V is higher than the CFM56. It's typically a full front to back is 9 to 10 million versus probably 7 million for the CFM 56. So we think we can get similar dollar savings out of using all those, albeit on a higher price. So it's a lower percentage, but it's still the same amount of savings. So I think we feel very good about that. We haven't locked in all of the partners that we will have that we're talking to right now on this program. And as the volumes, you know, increase and build, we'll be able to give more specifics around, you know, who we're working with and what, you know, what are the components of that.
spk01: And then, you know, just given the move in the stock, all the changes, you know, do you have a sense of the investor base at this point versus last year, any major changes you're seeing?
spk07: Hi, it's Alan. There have been, and I think that there are people that are initiating on the stock right here, and I think when you see the 13Fs filed for this quarter in May 15, you're going to see some names that you've never seen before.
spk01: Great. Thank you for your time. Thanks.
spk04: Thank you. Our next question comes from the line of Juliano Bologna with CompassPoint. Your line is now open.
spk00: Good morning, and congrats on the continued outperformance on the product segment. What I was curious about asking was that, you know, We would obviously love to have an update about PMA. But with that being said, we've heard a lot of discussion recently about the industry pushing into PMA and increased demand for PMA from airlines. I'm curious if you agree with that, and why do you think that's happening?
spk10: Sure. So on the first part, we continue to make very good progress on getting approval on the next set of parts. We're not giving a specific estimate on the timetable, but very good progress, and the quality and the performance of those parts is going to be terrific, and we're very excited about that. So as I said consistently, it's worth the wait. On the acceptance of VMA, I think that a lot of – in the recent last year or so, people have focused a lot on supply chain reliability. And when you have a sole source for critical parts, that's a bad dynamic. And so I think people are recognizing that PMA not only delivers cost savings in a very high-quality product, but it delivers a second source of product, which can be very, very important if you have an engine sitting in a shop and shop turn times are stretching out beyond six months now. If you're waiting for a single part and you have a single supplier, And they tell you they can't get you that for a year, then you're in a bad position. So that's, I think, why it's becoming, you know, more talked about or maybe more people are recognizing it's not just, you know, a cost-saving opportunity.
spk00: That's very helpful. And I will jump back into you. Thank you. Thanks.
spk04: Thank you. Our next question comes from the line of Hillary Coconando with Deutsche Bank. Your line is now open.
spk03: Hi, thank you for taking my question. So this one's for Angela. So Angela, you have two preferreds that go from fixed to floating this year, one in September and one in December. And obviously, you've had some great returns on those securities. Could you talk about what your plans are for them and how your discussions are going with the rating agencies?
spk06: Sure. Hey, Hilary. So yes, you're correct in our series A's and B's are converting to floating later this year. And we're currently planning on refinancing those preferreds before those reset dates. So we'll continue to reassess that. In regards to the rating agencies, our current analysts are those that typically cover aircraft blessures. Each rating agency is recognizing the great contribution that we're getting from the aerospace products business and the different metrics that will be involved in those sectors. So we are bringing in aerospace products business coverage analysts to each of our discussions with the rating agencies this year, which we think will be beneficial to our ratings.
spk03: Great. Thank you. It's just on the leasing side. You know, you mentioned that the demand for these assets remains strong. You know, I know the gains could be lumpy. So how should we think about the segment for the rest of the year? And, you know, could you just talk about the pipeline for that segment? You sounded pretty excited about it in terms of what the pipeline looks like for the second quarter.
spk10: Sure. You know, two things in the first quarter that depressed leasing, you know, EBITDA, pure leasing EBITDA. One is As you may recall, we had four airplanes we took back, terminated the lease with a Vietnamese airline in the fourth quarter last year, and those are off-lease. They go on lease in the second quarter, and that had about a $5 million negative impact to EBITDA. And then secondly, the first quarter is typically seasonally the slowest period for flying hours, and a lot of airlines don't fly the same schedules, and some of our EBITDA is driven off of hours flown. All of that changes in Q2 and Q3, and we expect, as I said, a meaningful uptick starting next quarter. And we're reaffirming our $425 million of leasing and development for the year without gains on asset sales.
spk03: Okay, great. Thank you so much.
spk04: Thank you. Our next question comes from the line of Brian McKenna with Citizens JMP. Your line is now open.
spk02: Okay, great. Thanks. Good morning, everyone. Joe, I appreciate the comments on the $250 million of EBITDA expected from aerospace products for this year, but if I analyze first quarter results, you know, you're already running at $280 million. You know, it sounds like and it seems like there's, you know, quite a bit of momentum, you know, heading into 2.2 and beyond. Um, yeah, I would, so I would think it's, it's reasonable to assume continued growth from the first quarter level. So why not move the upper end of the range for 2024 for the segment?
spk10: Well, it's just one quarter. I mean, it is a good quarter and we see good things ahead, but it's, it's, you know, 25% of the year. And so we're just not ready to do that. We'll reassess, you know, on the second quarter, but at this point we're, we're sticking with the two 50. Got it.
spk02: Okay. Makes sense. And then just to follow up, it's great to see the V2500 program ramping, but how should we think about the incremental margin from this business? It would seem like there are some synergies with your existing platform and ways to leverage the infrastructure already in place. So could this business actually be margin accretive to the segment over time?
spk10: It could. I think the Latam deal is a good example where it's both V2500 and CFM56 engines, and we offer engine solutions to every airline in the world that operates either a 737NG or an A320CO family aircraft, which is basically every airline. So it's pretty powerful that we can combine and sell them essentially in a single transaction, those services. There are some unique aspects right now because the V2500, the demand is so high given that there's reportedly over 600 GTF powered aircraft that are grounded right now, which is times two, that's 1,200 engines that are out of service. And so the demand for the V2500 is extremely high and will likely stay that way for the next three years. And it's a smaller market, so airlines, I think, are a little more fearful that they may not be able to get a V2500 at all. So we see airlines willing to talk about longer-term leases on that product, which inevitably leads to more value creation, right? If we can do the MRE, put it on a long-term lease, then you can sell it as a cash-flowing asset and create value two different ways. So I think that possibility is something that we're seeing now likely to play out. So I do think it has some added upside.
spk02: All right, great. I'll leave it there, and congrats on another great quarter. Thanks.
spk04: Thank you. Our next question comes from the line of David Zazula with Barclays. Your line is now open.
spk08: Hey, thanks for taking my question. For David, my understanding is with the V2500, you have a little bit less flexibility in how you execute the maintenance and operations of that type of engine. And just with high demand overall, can you just talk about some of the challenges you have in balancing the V2500 versus CFM56 and how you're managing that?
spk13: Sure. So on the V2500, you have a lot of the same components that you do on any engine, right, which is you have access to used serviceable material, you have access to independent MROs, and then you have access to new parts via either OEM or PMA. The V2500, as we discussed, is a more expensive shop visit. It is a little more complicated from engineering, which therefore creates more demand for ways to avoid that shop visit. So we're seeing a lot of folks come to us not wanting to shop those engines and wanting us to come with solutions. We're able to integrate those solutions and provide a better product. So we are working through all that. There's a lot of innovations around the hospital side of that engine that are coming out just because there's not enough B2500s today in the market. So we're going to continue to... develop our capabilities and continue to, you know, find innovative ways to, to maintain those engines.
spk10: And it's continuous improvement. We did the same thing on the CFM 56. When we started that program, we knew about 10% of what we know now. So I would expect in a year or two, we're going to be a lot, we're going to have a lot more, um, tools to, to work with on the V 2900 that we didn't have today. But even without the tools, it's still a great market.
spk08: Great. Very helpful. For Joe or Angela, impressive work on the tender for the October 2025 notes. Just curious as to what the plan is for that funding. If your balance sheet, you're not looking at expanding the leasing balance sheet significantly, would you consider potentially funding from the aerospace product side a refi of those notes, or what the plan would be?
spk10: I think the refi is done. The next opportunity is the nine and three quarters that are callable The call price drops in August, so that's the next opportunity for, you know, refi to lower our interest costs. In terms of cash flow generation, we will look at using cash flow to repay debt. And, you know, our priority on cash flow is to, one, make investments, and two, then obtain a strong double B rating from all three agencies, which we're on track to do. And then three, we would look at increased dividends or stock buyback. On the investment side, we are expecting to increase the balance sheet slightly for the V2500 investments that we're making this year. We expect to end the year at 150 to 200 engines of V2500, which is up from 70 now. So we will be... increasing slightly that. But I think the opportunity will come at some point later this year probably to look at repaying debt and paying some of that more expensive debt off.
spk08: Great, thanks. If I could just squeeze one more in. Any update on insurance or where you stand there?
spk10: Yes, we have four separate work... streams going. Three of them are negotiations with counterparties that are not insurance companies and they're very advanced and we expect hopefully to get those done around the middle of this year which represents about 75 million out of the expected 150 that we expect in total to recover. The balance of that will be with insurance companies which we think will take somewhat longer which we're expecting to be the middle of next year. But we think we'll get 150. We think half of that in the middle of this year and the other half in the middle of next year.
spk08: Awesome. Thanks, Joe. Much appreciated.
spk10: Yeah.
spk04: Thank you. Our next question comes from the line of Sharif El-Moghrabi with CIG. Your line is now open.
spk11: Hey, good morning. Thanks for taking my questions. So a couple on the lead-in deals. what's the lead time on the V2500 exchanges? You touched on your capacity, but I'm curious on the timing side, you said you'd be sort of prepping the engines for exchange ahead of time. And I'm wondering how long it takes before SI can recognize revenue.
spk13: Yep. So we have engines in shop right now and we're starting to deliver those engines as soon as we will close the transaction. So the engine exchanges will start, you know, relatively soon. The ramp up will take time. So we are, you know, we have a schedule right now for this year of shop visits and expected dates, but we're, you know, still working on the next out of years. So we're going to be receiving that soon and working through that and producing those engines ahead of time. But those engines have been produced and some of them are finalizing shop visit at the moment.
spk10: We started, I mean, we have 15 engines in the shop right now, the V2500. We started that earlier this year, so some of them are already coming out, and we've got a schedule where we expect to be able to meet the requirements for LATAM when they need them, and we'll have those engines ready. Thank you. They spent a lot of time asking us that question. So... we went through the ringer on that. That was one of their key criteria given the shortages in the industry.
spk11: Yeah, that makes sense. And then on the sale-leaseback side of the deal, obviously that generates some liquidity for LATAM, right? So does a deal like that potentially for a future customer, not just this airline, does that open up opportunities for asset sales under the leasing business? Is that sort of multi-phase deal something you're thinking about?
spk10: Yes, yes, it does. I mean, LATAM in this situation wasn't really focused as much as some airlines are on generating a lot of liquidity from this deal, so it's not a huge amount to them, but they were more focused on the engine exchange program. But every deal ends up being a snowflake, and it's always a different set of priorities. But The demand for unleased aircraft is very high again, so there's a lot of money that's come into the leasing segment again. If you have a six-year lease with a mountain airline, you can easily monetize that. We will be doing more of that in the second quarter so that we'll generate some more cash and more gains from that activity. So, yes, we do like that.
spk11: Okay. Thanks for taking my questions, everyone.
spk04: Thank you. Our next question comes from the line of Stephen Trent with Citi. Your line is now open.
spk12: Good morning, everybody, and thanks for taking my question. You know, a couple of my questions have already been answered, but I'm curious as well when we think about, you know, the engine module side, you've got, you know, very good exposure. In U.S., you acquired that 50% stake in QuickTurn, I believe a facility in Montreal. When you think about this high level, are there sort of any other geographic spots where you maybe think you can add your footprint?
spk10: Yes, it would be Southeast Asia, which we did a relatively very good job early on of covering North and South America and Europe. And we started about... six, nine months ago, really, with a more intense focus on Southeast Asia. And we see we've had success there, but there's a lot. I mean, it's a huge, huge market opportunity, and we're relatively underrepresented. But that will be changing this year, and we see that as a future significant growth opportunity. Whether we add maintenance capacity there or not is something we've started thinking about. So I don't have, you know, anything conclusive yet, but we will look at maintenance facilities and potentially either our own or partners in that market in the coming months.
spk12: Okay, I appreciate that. That's super helpful, and thanks for the time. Thanks.
spk04: Thank you. Our next question comes from the line of Frank Galante with Stifel. Your line is now open.
spk02: great thank you hi thanks for taking my questions and congrats on the great quarter I wanted to ask about the aerospace segment can you help us understand what the breakdown in the segment was between module swaps USM sales and full engine sales or exchanges given the varying levels of differentiation and margin between those businesses sure so we in the starting with the module
spk10: factory we generate about this quarter was about 600,000 EBITDA per module sale or exchange that's up a little bit from the last quarter and it's consistent with what we've been seeing since really when we started the module factory module transactions happen in either one two or three So a customer can choose any of those flavors that you want. Three modules is a whole engine. And in some cases, what airlines realize is that rather than them working to try to keep their fan or their low-pressure turbine, that they could actually save more money by just doing a whole engine exchange and not having to deal with that because then they have zero days of downtime. But on average... The average transaction averages out to two modules per transaction. In terms of the rest of the, so we call that in the module factory in the MRE V2500 business is very similar. And the profitability for the V2500 on an equivalent basis is probably a little bit higher than the equivalent on the CFM56 today. but they're pretty comparable and we expect that to remain similar. That's assuming that an engine has three modules for the V2500. On USM, we've indicated in the past that it was roughly previously about 25% of EBITDA from aerospace products, but as we have ramped up the MRE business, that percentage is going down. to where it's less than 15% of EBITDA at this point, and will continue as a percentage to decline because that's not a high-growth business. So hopefully that helps.
spk02: That does. Thanks. So sort of digging in onto the three whole-engine DFM sales, So based on last quarter's reclassification of the V2500 gain on sale from that leasing segment into the aviation segment, it's sort of my understanding, right, that when you sell a full CFM56 engine, that shows up as three modules, and it results in a gain on sale that shows up in the aerospace segment. So just confirm for me that that's correct. And then so how many of those 72 modules were full engines? And of those full engines sold, How many of those engines did you sell with sort of the same three modules that you had purchased them with?
spk10: I have no idea. You know, when we sell a whole engine, as I said, it's the customer's choice. If they wanted to take their fan off and only buy two modules, they can do that. So we don't really think of it any differently, and we don't break it out that way. It's not relevant to us anymore. as it, you know, from, from a business operation. So I don't, I don't have any numbers on that.
spk02: Okay. But just like if you'd purchased an engine in COVID, um, and did no work on it, it's just sort of no value added work. Um, when you sell that, is that showing up in aerospace EBITDA?
spk10: Well, we, there's no such thing as an engine that sits around for two to three years. So that doesn't happen. When we buy an engine, we put it into the facility and it's split into three modules. It's either repaired, torn down or combined, reassembled into an engine. So that doesn't happen.
spk02: Okay. So then just to be clear, every CFM 56 engine goes through the module factory, um, in some capacity.
spk10: No, I mean, we've bought airplanes, sold the airframe and leased engines directly. If the engine doesn't require work, it doesn't go into the module factory.
spk02: Okay, that's really helpful. I appreciate you taking my question. Thank you very much.
spk04: Thank you. Our next question comes from the line of Robert Dodd with Raymond James. Your line is now open.
spk09: Morning, everybody, and congrats on the quarter. Thanks for all the detail about cash flow and potential use of funds, et cetera, paid on debt. You did mention the dividend. I'm going to ask about the dividend. I mean, you're barely yielding more than the S&P 500, given the stock performance. Is there, I mean, you mentioned maybe increasing the dividend later this year with the cash flow you're going to generate. Is there a rule of thumb you're thinking? I mean, Way back in the past, there used to be a two times fat coverage. We'll think about the dividend. Obviously, the metrics are different now. But is there a rule of thumb we should think about as to what would give you the comfort necessary to increase the dividend from what I just said?
spk10: Yes, you're right. We really haven't thought about the coverage calculation recently for the last four years or five years, but you have the history. I don't think that's necessarily the way we're approaching it today. We have investments. We want to have a strong double B, and then when we have excess cash, we'll return it to shareholders somehow. That's kind of the waterfall.
spk09: Got it. Thank you. And one more if I can. On the capacity question, you were very opportunistic when you added the Lockheed capacity, for example, during COVID and the facility was being underutilized and you were very opportunistic kind of locking that up long term. Are those kind of facilities aren't being underutilized now, right? There's backlogs everywhere. Are those kind of opportunities going to be available or is it going to be any, is an expansion in capacity going to be more, is it going to necessitate an acquisition or be capital intensive or are you going to be able to find capacity on an as-needed basis, do you think?
spk10: There's capacity out there. There are some shops that The successful shops and the large shops are very busy, and many of them have now geared turbofan work that they either want to do or have to do, which is sort of squeezing out some other capacity. But there are lots of other facilities out in the world that we look at and see, and we also have partners in different parts of the world. The opportunity for the maintenance side, it's more of a, you know, it's available, and we have plenty of capacity right now, but we are always, you know, looking ahead and trying to stay in front of it. So, yes, there's still opportunities. Maybe not the same as, you know, during COVID, but it's a big industry, and it's global, and there's lots of, you know, smaller and medium-sized players out there.
spk09: Got it. Thank you.
spk04: Thank you. And I'm currently showing no further questions at this time. I'd like to hand the call back over to Alan Andrini for closing remarks.
spk07: Thank you, Shannon. And thank you all for participating in today's conference call. We look forward to updating you after Q2.
spk04: This concludes today's conference call. Thank you for your participation. You may now disconnect.
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