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Fortress Transportation and Infrastructure Investors LLC Common Shares
Q1 2021 Earnings Conference Call
4/30/2021
spk10: Good day and thank you for standing by. Welcome to the Q1 2021 Fortress Transportation and Infrastructure Investors LLC Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press TORN and then zero on your touchtone telephone. As a reminder, this conference call may be recorded. I would now like to turn the conference over to your host, Mr. Alan Andrini. Please go ahead, sir.
spk00: Thank you, Patricia. I would like to welcome you to the Fortress Transportation Infrastructure First Quarter 2021 Earnings Call. Joining me here today are Joe Adams, our Chief Executive Officer, Scott Christopher, our Chief Financial Officer, and Bo Woolley, the CEO of our Long Ridge Energy Terminal. 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. 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 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 SEC. Now, I would like to turn the call over to Joe.
spk12: Thanks, Alan. To start, I'm pleased to announce our 24th dividend as a public company and our 39th consecutive dividend since inception. The dividend of 33 cents per share will be paid on May 25th based on a shareholder record date of May 14th. Now let's turn to the numbers. The key metrics for us are adjusted EBITDA and FAD, or funds available for distribution. The adjusted EBITDA for Q1 2021 was $47.2 million compared to Q4 2020 of $46.2 million and Q1 2020 of $72 million. FAT was $14.4 million in Q1 2021 versus $54.2 million in Q4 2020 and $96 million in Q1 2020. On a normalized basis excluding sales proceeds and non-recurring items, Q1 2021 FAD was 9.8 million compared to 35.7 million in Q4 2020 and 67.4 million in Q1 2020. During the first quarter, the 14.1 million FAD number was comprised of 60.6 million from our aviation leasing portfolio, negative 3.8 million from our infrastructure businesses, and negative 42.4 million from corporate and other. Now turning first to aviation, Q1 EBITDA for aviation of 61 million was a slight improvement from Q4, as we expected. But also, as we expected, we are seeing a meaningful uptick in activity in April and expect Q2 aviation EBITDA to exceed 80 million. As an example, we have signed 20 new leases for CFM56 engines of which eight have already been delivered in the last few weeks. Seventy-five percent of our fleet is 737NG and A320CO aircraft and engines, which are flown mostly in domestic shorter-haul markets, which are poised for strong rebound by Q3 of this year, with many airlines planning flight schedules that are equal to or greater than Q3 of 2019. and 20% of our fleet is operating in the cargo markets, which continue to experience record high demand. Thus, our fleet is extremely well positioned for the recovery. Our PMA initiative is progressing well, with the second part expected to be formally submitted to the FAA in July or August, having had some minor tweaks to the final parts, which are now complete. But the big development for us This quarter is the opening of our module store. We believe commercializing modules will disrupt traditional CFM56 engine maintenance by enabling airlines, operators, owners, and MROs to save money, reduce turnaround time, eliminate cost surprises, and in many cases, keep the engine on wing during the maintenance. We're well positioned to be the leader in modules with our comprehensive suite of services, including PMA parts developed with Chromaloy, our USM, or Used Serviceable Material Supply, coming out of our AAR partnership, and the Lockheed Martin Maintenance Venture, combined with our large inventory of 250 CFM56 engines. On Monday of this week, we formally launched the module store to the trade and invite everyone to take a tour. You can find the website and a QR code link on page six of our investor presentation, which will be posted today. We've received a strong positive reaction from all industry participants and are convinced that this approach can change how major engine maintenance is conducted for a meaningful segment of the market due to the substantial savings generated by maintaining our inventory of readily available modules. And the potential financial impact to FTI is significant. For the CFM56 engine fleet today, there are roughly 2,500 aftermarket overhaul shop visits per annum, and that's projected to grow to over 3,000 by 2024. Approximately 20% or say 500 of those shop visits only require work on one module, which makes it a perfect candidate for our module factory. If FTIE could capture 20% of that market or 100 module swaps per annum, we would expect to generate $50 million in annual EBITDA for FTIE while saving an equal amount or more for the engine owner and operator. And as the more complete PMA product line becomes available, This number will only get bigger. Now let's turn to infrastructure. First, on Rapano, after loading our first marine vessel in January through our state-of-the-art MGL, or natural gas liquids, rail transloading system, we have completed some facility operational enhancements, which will increase flow rates from our existing cavern by over 40%. and ultimately enable us to quickly change service between butane and propane to best meet market demand. In addition, we've now completed the loading of our second marine vessel and we have 30 additional vessels scheduled over the coming months. We have successfully negotiated firm contracts for NGL volumes at Rapano beginning in the second quarter this quarter and committing up to 90% of the current capacity through the third quarter of 2021. We plan to have volume moving to international, local, and regional markets from Rapana this year, demonstrating the optimization capabilities associated with the strategic location of our facility. We continue to discuss long-term strategic contracts with both producers and off-takers, which will yield commercial justification for expansion of our facility through the construction of additional underground caverns. We see also increased interest and more discussions in renewable opportunities, including renewable fuels manufacturing and, most notably, potential customers for offloading, staging, and manufacturing wind farm components. At the moment, we have multiple conversations going with the leading wind farm developers off the east coast of the United States, in particular New Jersey and New York, But as mentioned previously, Rapano is well positioned for these opportunities with heavy load roll-on, roll-off dock capabilities and 200 available acres for development. Turning now to Longridge, the Longridge Power Plant is nearing completion. First fire of the gas turbine is scheduled for May, and we will be fully operational by mid-summer, which is significantly ahead of schedule relative to our planned November 2021 completion date, which was guaranteed by our EPC contractor. And importantly, starting next month, Longridge will be generating cash flow from test operations. By controlling our own natural gas and having the world's most efficient plant, Longridge has one of the lowest power production costs in North America. This provides many ways for us to create additional values, And a good example of this is crypto mining. We've seen a lot of interest from global crypto mining companies as they search for sites that have the lowest cost around 24-7 power and scale. Several have identified Longridge as the best possible location for their operations. As such, we evaluated two different alternatives to approach this and increase EBITDA for the power plant. The first way would be to lease land and sell power to these miners at approximately $35 to $40 a megawatt hour, which is a premium to our existing contracts of approximately $30 a megawatt hour. The second approach would be to enter the mining business. And at current Bitcoin prices, mining, Longridge, would be the equivalent of selling power for over $150 a megawatt hour after capital cost recovery and expenses, which is five times higher than our existing power sales agreements. This strategy could make a lot of sense, in particular since our power plant is capable of generating more than the 485 megawatts that it is currently rated for. The economics of using this extra capacity are extremely attractive. If we were to utilize just 20 megawatts for crypto mining, Longridge EBITDA could increase from 120 million per annum to nearly 165 million per annum at current Bitcoin prices. So as such, we are arranging for the first machines to be delivered this Monday to our property and are negotiating for a larger order representing approximately two megawatts of power for an August 2021 startup. We also continue to be excited about our hydrogen power plans at Longridge. We are progressing on the design and engineering of the blending skid in partnership with GE and remain on track to start blending hydrogen by the end of this year. This will make Longridge the first purpose-built hydrogen-burning power plant in the United States, and the first worldwide to blend hydrogen in a GE H-class gas turbine. We're in discussions with numerous customers who have expressed interest in the carbon-free electricity that we will be able to provide. Finally, the quarter was good for our Fraxan business. Despite continued industry-wide slowdown in natural gas drilling, we translated over 210,000 tons of frac sand and 33,000 tons of road salt. Turning now to Jefferson, activity at the Jefferson Terminal remains robust. Near-term product movements combined with long-term project development continues to increase Jefferson's competitive positioning in the Houston-Beaumont-Port Arthur Terminal landscapes. While total terminal throughput and economics continued to face headwinds in the short term, Jefferson posted its fifth consecutive positive quarter with EBITDA of $2.8 million down from $4.2 million in Q4. The lower quarter-on-quarter EBITDA can be attributed to challenged crude-by-rail economics across North America and lost throughput and refinery demand due to the ice storm and deep freeze in Texas in February. As we look towards Q2 in the second half of 2021, we're very optimistic about increased refinery demand and production, increased oil production, which should drive terminal throughput higher in the next few months. Combined with improved customer demand and a more stable economic picture globally and certainly domestically, Jefferson's completed pipeline projects have strategically aligned Jefferson with long-term top quartile end users. Jefferson is becoming an essential logistical extension of two of the largest refineries in North America, and the long-term strategy and vision continues to make excellent progress in providing increased logistics optionality for customers and consistent and profitable business revenues for Jefferson. As we described last quarter, the pipeline project connecting the Jefferson terminal with Exxon Beaumont Refinery has been completed and it's been in service since January. The gasoline and diesel pipelines account for two of the six pipelines that go under the river connecting Jefferson with Exxon, and we're already realizing approximately 20% higher throughput volumes compared to the pre-pipeline volumes. We expect to find product volumes to continue to steadily increase as a result of a more economic and radical logistical solution. Additionally, project development work is well underway to put the additional four pipelines into service for other products in the near future. Line fill safety and startup procedures began in Q1 for the two other pipeline projects. The pipeline to Motiva, which is owned by Saudi Aramco, is now operational, and the Payline pipeline connecting Jefferson to Cushing, Oklahoma, we are projecting will be operational in May. This crude optionality from both the inbound and outbound perspectives will expand the reach of accessible crude oils available to Jefferson and our customers, create enhanced blending options, and it's a start to balancing out crude flows in and out of the terminal via pipe, rail, and marine. As to the balance of this year, we remain in close contact with our customers in the U.S. Gulf Coast, Canada, Mexico, and Utah, and are getting closer in finalizing several large-scale projects with our major customers. So in conclusion, as we look back over the last few months, if we were to mark the end of the pandemic and the beginning of the recovery on the calendar, the end of Q1 feels like a pretty good guess. Even still in Q1, in infrastructure, we completed the three pipeline projects at Jefferson, the natural gas loading export terminal at Rapano, and are well on the way to commissioning the power plant at Longridge. And in aviation, we continue to improve the positioning of our fleet for the recovery and have added an excellent group of new airline customers to our network. And very importantly, we have combined our CFM56 products into an ecosystem that can reach and appeal to the entire CFM56 user base through our brand new module factory. So while feeling a great sense of relief that the travel and infrastructure worlds are growing again, I'm extremely excited about what other new things we can do to make 2021 and 2022 truly exceptional for our employees, our customers, and our investors. So with that, I will turn the call back to Alan.
spk00: Thank you, Joe. Operator, you may now open the call to Q&A.
spk10: Thank you, and as a reminder, If you have a question at this time, please press the star and then the number one key on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Again, the star one to ask your question. We'll pause for a moment to compile the tenure roster. Your first question comes from the line of Josh Sullivan from Benchmark Company. Your line is open.
spk07: Hey, good morning, Joe, Alan, Scott. Nice quarter here. Good morning. Sounds like you guys have a lot of irons in the fire here, but maybe if we could start with the Lockheed joint venture on the new module store. You mentioned strong initial demand in the remarks. Can you just elaborate or maybe quantify what that initial response looks like? Any common thread among early adopters as far as customer profile or assets they're registering here?
spk12: Yes, we have a lot of information. We timed the launch on Monday to sort of which the big Orlando maintenance and repair conference started on Tuesday, so that was intentional. And so as part of an initial marketing effort, we were with a lot of the right people to be in front of and a very good response from the target group. And the target group is primarily going to be three different people. categories. It will be aviation maintenance procurement folks who buy and manage the parts supply and the engine, things that are bought from outside for their maintenance businesses. And a module simplifies their life in a lot of ways. So it's a very positive response from some very big airlines. So big airlines who in some cases have their own maintenance shop. So It illustrates the degree they're looking at cost savings as well as capital efficiency. So that was positive. And also small airlines who don't have the resources. So that group was very intrigued and interested in this following up. The second is a lot of maintenance shops. So if you have a big maintenance operation, Injecting, having the ability to buy and sell and exchange modules gives you a lot of flexibility. So the big independent MRO shops we were also very engaged with. And then thirdly is ultimately lessors because lessors are managing, you know, maintenance reserves and maintenance expenses and avoiding shop visits is becoming a higher and higher priority. So the Orlando Conference primarily had the first two, not a lot of lessors there, but it was really more of a maintenance-oriented conference. And at that conference, or during the first week, we got about 50 people to sign up. And it is, you know, mostly, you know, airlines and the maintenance people. And signing up means you get access to look at our inventory. And today, you know, in advance of this, we built up our module inventory, so we have 43 modules listed on the website. You can click on a fan, a core, an LPT, and you can see what we have available and get detailed technical information. And then you can also request a swap, so if you have an exchange that you want to do. So if you have an LPT, for example, that needs a shop visit and you're looking for replacing that with one that doesn't, it has hours and cycles available. You can specify what you'd like to exchange. You can specify the timing of when you want to do it. You can also screen and scan, you know, our inventory to see if the requirements that you need are met by any of our available inventory. And we intend to keep probably about that level of number of modules available. You want to have enough inventory so people can find what they want. It's a bit like having a store. You want to have probably 50 or so modules on the shelf. So all in all, it's off to a great start. Obviously, to consummate a sale, you're not going to do that over the website. You're going to want to follow up with people and make sure that they're real and what we have meets their needs. But it is a great tool and a great efficiency to get people using it and thinking about how they can reduce the downtime. And ultimately, we're going to move more as well, and I think there's a lot of enthusiasm about being able to do some maintenance when the engine's on wing. So we have partnerships we're talking about with other maintenance shops that can allow us to provide that service, and if you can avoid taking an engine off a wing, that's a huge, huge cost savings. So I think it was a great launch, and we're very excited, and the customer base seems very enthused, and it's truly a unique offering. There's nobody that has done, nobody has anything like this available, including the OEM. So the OEM is never going to have PMA. So we feel like we've got another sort of barrier to entry or another leg up on the market.
spk07: I got it. That's all very helpful. And then maybe just as a second question, you know, that The demand you're seeing on the aviation side, you know, the step up you're pointing to here in 2Q, you know, implies some strong sequential activity. You know, what are you seeing that gives you that confidence? And then maybe, you know, what is your domestic versus international travel profile breakdown?
spk12: So when you talk about domestic, are you talking about U.S. or are you talking about domestic markets around the world?
spk07: Domestic markets around the world.
spk12: So we're about, as I mentioned, at 70%, 75% of our fleet is A320s, COs, and 737NGs, which are really domestic, you know, airplanes. So 75%, and we've been consciously, you know, targeting that market, and we're going to, that's likely to keep growing. The rest of our fleet is in the cargo market, so it's really between Those are our primary focus and those are two of the best markets in aviation right now. So we're heavily concentrated on domestic, which we like. And what we're seeing is what we thought is there's still a fair amount of inventory and green time available out there that airlines can continue to use before they do shop visits. So shop visits are being deferred. But airlines are looking ahead and saying, look, if I'm going to fly my fleet all out in Q3 of this year and maybe Q4 and Q1 next year because there's a lot of pent-up demand, they're going to run out of capacity fairly soon in terms of engines available. And airlines are notoriously not good at planning. So they're starting to – so as I mentioned, we've put out a number of engines on lease, and I think some of those – Some of those are to carriers that were coming out of restructuring and were coming out of bankruptcy in some cases who need lift and don't have a lot of options. And then the next group is going to be airlines that realize that pretty soon they're going to run out of engines. And what they're doing now is lining up. We're negotiating lease agreements. We're negotiating. They're going through inventory they want availability. They would like engines, you know, on their facility available. So they're starting to get ready for when they're going to need to lease engines. And there are some RFPs coming out with some airlines, you know, looking to specify they want 10 or 15 engines. These are bigger airlines available. So they're seeing it and they're starting to plan. And so that's kind of the second wave. And then the third wave is really when you use up all the green time. And that, I think, will be Q4, Q1 of, you know, call it Q1 of 2022 where people have to start doing shop visits again in, you know, in good number. And that is, there's a fair amount of lead time because if you want to get into a shop, you have to order parts, you have to get a slot. And so that takes, you know, advanced planning. And that's, I think, where our module factor really fits in extremely well because If an engine only needs work on the LPT, you don't want to put the entire engine in the shop and wait for the LPT to be fixed. So doing a swap is really very, very efficient. And as I said, it's disruptive to the way it's done now because people don't do it that way. They think of everything as, that's my engine, so don't give me a different module. But it's changed significantly. Airlines themselves do it, and I think the rest of the industry is going to get there very quickly.
spk07: Got it. I'll get back in the queue. Appreciate the time.
spk10: Your next question comes from the line of Juliano Bologna from Compass Point. Your line is open.
spk09: I guess a quick question kind of going back to what you were mentioning last quarter on the aviation segment. you'd said roughly there are three different components from a contribution from existing engines, then there's a contribution from new investments, and then from the parts and maintenance JV initiatives. Then we got to call it $450 million of aviation, leave it out for 21, and there's roughly call it $50 or $60 million for infrastructure, and 21 is what you're calling for, and leaving out the corporate segment. I'm curious how those pieces still come together and how you're thinking about that for 21, given the the early results in the air.
spk12: Yeah, well, we didn't really expect much out of Q1, as I mentioned in the last call, and that has proved to be true because restrictions were heavily in place in Q1, as you know, but they're now opening up and everybody's planning for more flying. So we're still of the view that the $450 million for 2021 is achievable, and the components were roughly, I think it was $300 million, $20 million from the existing portfolio, $80 million from new investments, and $50 million from the three JV, you know, the partnerships with Komoly, Lockheed Martin, and AAR. And so it's obviously going to be heavily, you know, back-end loaded. So big jump in Q3 and Q4, which makes sense given, you know, what I was just talking about. So we believe that that is, that's still our view is for the year. And then on infrastructure, also, I think the $50 million is very achievable. We've got, as I mentioned, we've got good initiatives now at Rapano with lots of activity around natural gas liquids, and we're sold out for the summer, and I think that's just going to build, and the momentum is going to build there. And we'll come up with new ways to make money on the fact that we're now doing business with lots of different counterparties. Longridge starts first fire this month, or May, and turns on in August. So that will start contributing. And Jefferson, you know, very helpful about the volumes picking up as well as, you know, landing one or more big contracts here in the next couple of months.
spk09: That's great. And then moving a little bit kind of to the comments you were making about, you know, potentially, you know, starting to have a Bitcoin mining venture initiative at Longridge. One of the most important components of Bitcoin mining is usually power costs. And I guess I have a couple questions there. I'm kind of curious what your cost per megawatt hour is at the power plant. And then from there, there are kind of two follow-ons. One was that you have two existing contracts or supply agreements. And I think you have the ability to cancel those because you've been talking about some of the data centers that may have involved canceling those. I'm kind of curious. If it's possible to cancel or partially cancel any of those, if the venture were to be successful, I think kind of the third part of that is I'm kind of curious if you selected any specific type of Bitcoin mining equipment because there are a few different providers out there. I'm kind of curious if you've made it to the stage where you have like a specific mining equipment in mind.
spk12: Yes. Well, I'll take the first and then I'll let Doug talk about the equipment. In terms of the cost of power, I mean, we've looked at a lot of these companies that are starting up and converting coal-fired power plants and other older assets that are being repositioned. And we think we have by far the lowest cost. And it's in several different categories. And we are already vertically integrated. So years ago, we decided to go develop our own gas. So we're actually vertically integrated back to the gas in the ground. And no one has that. capability, which means we think our cost of power on the first 20 megawatts is about $12 a megawatt hour. So that is far lower than anybody has seen, and I think far lower in reality than most people, because a lot of people are ignoring costs that they just are convenient to ignore. So I think we've got $12. And one of the reasons why the first 20 megawatts is interesting to us and sort of got us thinking is that our power plant is going to be rated 485 megawatts by the manufacturer. So initially, that's the most amount of power you can sell under the capacity auction. So you can get paid for capacity without ever using it, and it's only the rated amount we can get paid for. Until there's a couple of years of operating data, you can't really upsize that 485, but we can actually produce 505 megawatts. So the first 20 megawatts is the cheapest electricity. It's just marginally, the only thing we pay for is the cost of fuel. So that's what got us thinking and gives us sort of the lowest cost of power that Beyond that, we have another, was it 40 megawatts that we never contracted?
spk03: Yeah, we have about 457 contracted today.
spk12: Yeah, so 457 is under these long-term contracts, which is like 94% of production. And so we have another 40 megawatts or 30 megawatts that we could use without terminating any of our existing contracts. The plan was just to sell that into the merchant market. And then thirdly, if we wanted to go beyond that, we have the right under our long-term off-take agreements to terminate those contracts under make-hold provisions. So think of it like an interest rate swap, that if the market moves, you just have to be able to replace. The counterparty has to go out in the market and replace what they have with us with someone else. And right now, because of the way the power markets have moved, they actually would pay, if we elected to terminate those contracts under the MACL provisions, the counterparty would owe us money. So quite an interesting dynamic. And it's a one-way option. We have the right to terminate, but the counterparty does not have the right to terminate. And we structured it that way deliberately so we could find other off-takers and then immediately replace those with higher, behind the meter, users. So really lots of, I mean, we have tremendous amount of flexibility to grow at very, very attractive prices. We have, you know, the most efficient turbine in the world, the highest heat rate is the 7HA.02, which is what we're using. So I don't think anybody in the world's got that, you know, sort of firepower against, you know, what we can. So as obviously the markets become more competitive and, you know, people are putting more resource towards it, it's going to be the lowest cost provider is going to win. So that's where I think we have a, and we're more vertically integrated than anybody in the business that we know of. So do you want to talk about the machines?
spk03: Yeah, so the machines that will start running Monday are the S19 Pros, and then for the next batch that we're looking at, most likely the S19J Pro, which is the newest model and one of the most efficient in terms of energy usage.
spk12: And there are 100 terahash per second, or 110 for the non-J.
spk09: Right. That's great. That's very helpful. I just had one very quick one, and then I'll jump right back in the queue after that. I really appreciate all the help. I'd be curious kind of what the power cost is. You kind of identified the roughly call it 12 per megawatt hour for the kind of access component. I'd be curious kind of as you go further down the structure kind of what the average is if you look at kind of the core production capacity and kind of where that cost might shake out.
spk12: Probably 16, 17. Yeah, I think order 19, 16, 17, and that would be representative for the entire remaining capacity.
spk09: That's great. I really appreciate all the time and answering my questions. Congrats on all the initiatives. Thank you.
spk10: We have the line of Chris Weatherby from CV. Your line is open.
spk03: Hey, thanks. Good morning, guys. Joe, maybe we can start on the aviation side. I mean, you mentioned, obviously, the ramp-up that you're expecting in the second quarter from what you did in the first quarter. If I look back over the last couple of years, and obviously last year was a significant under-earning year, but if I wanted to kind of get a better sense of what the portfolio looks like today and what the potential initiatives that you're working on look like in terms of a walk from where we were last year. Can you sort of help sort of build the pieces back up so we can get maybe more of a clean run rate of what aviation is capable of on an adjusted EBITDA basis once some of these new initiatives are in place?
spk12: Yes. Well, I think what we've done is we've, moved more towards the CFM 56 engine, which I think now is about 50% of our total investment. So that's probably up from maybe 30% prior to this period. And we have a couple of other deals that we're still working on that we think will add to that and grow that. And then we've also increased our cargo business. So I think that where you've seen the decrease has been in 767 passenger business we had and some 757 passenger. And so I would say those two have gone down and the CFM 56 and cargo have gone up. And so that's strategically, I think, where we've been. We decided, you know, really two years ago to start doing that and then accelerated it with the pandemic. And then on top of that, You know, what we've expressed is that we want, not only do we want to earn 25% EBITDA on invested aviation capital, but we want to develop revenue and EBITDA from other services that are not tied to owning assets. Think of the, you know, the Cromoy Lockheed Martin AAR, which we say we think we can earn $50 million this year. And that number on the upper bound is somewhat unlimited. And I think we talked the last time about how do you accelerate that and you get airlines to basically let us outsource the maintenance of their CFM56 fleet. And I think that the module factory is one of those moments where you say, that's how we do it. That's exactly, that's the mechanism. And it isn't that complicated. And it allows airlines to, to sort of use that service on an ad hoc basis as they want without going through some major RFP process that involves the OEM and 10 other people. So you can deal with solutions that save the maintenance department a lot of money, and it's very accessible, easy to use, allows them to be flexible in how they use PMA, for example, that's not sort of in the face of anybody. it's the solution to what we were looking for. So I think that number is unbounded. I really do.
spk03: Okay. Okay. That's helpful. And then I guess, you know, maybe a question on Jefferson. So I'm kind of curious your take here. So obviously, you know, some rail M&A news, you know, has been sort of building over the course of the last couple of weeks, in particular the last two weeks. And so I was curious what your perspective is if you have one. There's two potential competing carriers for the KCS assets. You guys obviously get served by KCS at the facility. And as that business continues to sort of develop as you've gotten access to incremental refinery production, do you have any take there? Is there any sort of view on where you'd like to see that transaction go? Or do you think there is any impact at all on Jefferson as a result of the transaction? Any thoughts you have there would be helpful. I'm curious sort of how this plays out for a critical rail shipper.
spk12: Yes, we have a point of view, and we've been engaged with both the Canadians who are looking for support. So I think it is an interesting dynamic, and, you know, it changes, too, so as you think about, you know, the different permutations and options. But I think that it's going to work out better for us. I think we've gotten very good dialogue. I mean, it's amazing how quickly now they return your calls and things like that. It is, we are focused on sort of developing a long-term flow of products from, you know, the Canadian market by rail. And that, you know, probably involves a DRU. There's one that's being built that's about to be finished. And then there's a couple more that are being planned. And so we're having good dialogue with both of them. And I ultimately think if they have a, if there's a Canadian carrier that has a through rate all the way to Beaumont, that that's good for us and good for the customers. And also it might enable us to make sure that there is no way that we get cut out either. So you get most favored nations no matter what happens. So I think we have our thoughts together. I think it's going to be good for us. I think the dialogue around, you know, the plans are much accelerated and much more open maybe than they were before. And it's a multi-party dialogue, too, because not only are we talking to the Canadian railroads, but we're talking to the Exxons and Motivas who are impacted and also thinking about it. So it's fun, I think.
spk03: Yeah, I can imagine that they're being fairly responsive. It seems like an interesting opportunity for you guys potentially to, you know, to maybe benefit from all this.
spk12: You know, we also, Exxon has a big move. We do a lot of, we're doing like 30,000, 35,000 barrels a day to Mexico for Exxon. And that, you know, KCS is the carrier. So that's going to be impacted. So there's a lot of things going on, but I do think it's, ultimately it's usually good for the shippers. Yeah, okay.
spk03: That's helpful. Thanks for the time. Appreciate it. Thanks.
spk10: Next, we have the line of Rob Salmon from Walsh Research. Your line is open.
spk02: Hey, good morning, guys, and thanks for taking the question. I guess kind of another topical item has been the President's kind of infrastructure plans. Could you discuss some thoughts about potential government grants to help reduce FTI's capital allies for both in terms of the magnitude and timing, just given how many project-ready investments you have across the entire portfolio?
spk12: Yes. So that's another area of a lot of focus and interest because, for instance, last week we were talking about Rapano in New Jersey and And I think there's four government grant programs that we're looking at right now that potentially we could apply for and could involve grant money. So that's a good example. There's one at Longridge which we already have, and I think we could supplement that as well. And, yes, there's going to be a lot of – I mean, as the plan starts to take shape, there's obviously some key elements to it. A lot of it is green-focused programs. So that's going to be something we're thinking about. We've got a number of initiatives on new projects around that, around ammonia, around hydrogen, around plastics recycling. So yes, I think it's great because you do have to have projects that are semi-ready. They're not all going to be shovel-ready, but if you have something that's semi-ready, it's so much easier to get money than if you're, in the permitting phase and you have to do a NEPA. You know, that's like four years. So I think we're going to figure out there's going to be some good things we're going to be able to tap into.
spk02: Got it. But probably a little bit too early in terms of figuring out what that can mean from a capital investment avoidance or the timeline.
spk12: Yes, but I'm pretty sure we're going to get some. I mean, I remember at Rail America we got, I think, like $300 million of government grant money over a seven-year period, so it was huge. And there are projects that come up that you never expect, so it's going to have an impact. There's going to be $2 trillion invested, and I think it's going to be beneficial.
spk02: That's helpful. And then if I think bigger picture about some of the proposed projects, changes in taxes, you know, including kind of capitalized capital gains and carried interest. Will that have any impact in terms of your bigger picture plans to kind of unlock some value by spitting off kind of aviation and infrastructure or how the manager is compensated or even how you guys monetize assets more broadly across the portfolio?
spk12: I don't think so. I mean, we've started thinking about that. Obviously, there's very little to look at yet in terms of specifics. It's mostly concepts. But so far, you know, setting up a USC corp is not, you know, anything that it might be that instead of a 21% rate, you pay 28%, but everybody's going to be in the same boat. And if there's a minimum tax, maybe, you know, you don't get to shelter as much income. So but it's still a better structure for us to get rid of K1s, and that's something that we are looking at, and it's on the target list of things to do, and hopefully we'll be able to do something by the end of this year, but we're working on it, and I don't see any impediments.
spk02: Really appreciate the perspective.
spk12: Thanks.
spk10: Next, we have the line of Justin Long from Seasons. Your line is open.
spk06: Thanks. Good morning. So, Joe, you gave the guidance for the aviation business to do over $80 million of EBITDA in the second quarter, but could you talk a little bit more about what you're expecting for aviation EBITDA in the third and fourth quarter, just as we think about the exit rate this year and how that sets the stage for 2022?
spk12: Sure. Well, if you do the math, you know it's going to be over $100 million for each of the Q3 and Q4. So it's pretty simple. How much? We're thinking obviously Q3 historically has been one of the biggest quarters, and that's where you can high utilization and you can get everything moving. But I also think that this year I expect to be somewhat different in that I mean, people have a lot of trips that they haven't taken for the last 15 months, and you can't take 10 trips in a week. So I think there's going to be a rollover in the seasonality. I think this year will probably be less than it has been historically in that people will be traveling in Q4 and Q1 to see their relatives or their customers or their friends or just to get out of wherever they have been. So I think that the flying levels should be sustained, I think, more so than they have been in the past. So that's kind of the rough guidance, and we're expecting a good fourth quarter as well.
spk06: Okay, got it. So 3Q and 4Q, it sounds like maybe pretty similar. I know the other element that I was thinking about was just the parts and service business and some of the partnerships you've announced and how that could ramp, but it sounds like a pretty even split in the back half between the two quarters.
spk12: Yes, you know, I think that some of the initiatives could, you know, there's a little bit of a flywheel effect as you get bigger as you go, and you might do more part-out and more trading in the fourth quarter than we have in the third quarter. Because in Q3, you want to use everything you've got. People will be, you know, hoarding, and Q4 will probably be more trading opportunities. But, you know, I think it would be better than, you know, any other year, but they're comparable, I think.
spk06: Okay, great. And then just a bigger picture strategic question. I know there have been discussions on prior calls about splitting up the company at some point. Any updated thoughts around the probability of that materializing and the potential timing of that decision?
spk12: Yes, it is on the list of priorities, things to do, and I think we have a couple of other items we need ahead of that, but then I believe it will be fairly top of the list, and hopefully we get something done by the end of this year. That would be my personal goal. Not a stake in the ground yet, but it's a goal that I think is something we all agree we want to do it. Got it. Thanks. I appreciate the time. Thanks.
spk10: Next, we have the line of Robert Dodd from Raymond James. Your line is open.
spk08: Hi, guys, and congratulations on the outlook. If I can go to Vipano. You said, I mean, basically you sold out through the third quarter. Can you give us any color on that? You know, there's congestion in other areas of shipping, et cetera, et cetera. How's the competition to get slots at Lepano? And are the potential customers starting to try and talk to you about longer-term deals to kind of lock up either dock slots or storage slots or anything like that longer-term rather than, you know, an as-needed basis?
spk12: Yes, they are. Quite a good, you know, commercial response. And I think it gets to the, what we always felt was that before you are in operation, people are inherently skeptical and not willing to commit because they've seen too many projects that didn't get, you know, that didn't complete. So the big step for us was in January, loading that first vessel, being in service, and now And now we're basically, we've got 30 ships. We're going to be very, very busy for Q2 and Q3, which is seasonally the very, you know, the strong market for propane and butane. But the number of PEH plants being built around the world and the volume of export of natural gas liquids continues to grow. And we are really the only other terminal to market silk on the East Coast of the United States. So I think the commercial response has been great. So now it's about how do we grow, how do we expand our capacity because as you point out, we will be, our slots, our dock will be occupied pretty much fully in second and third quarter. So then the next expansion is going to be a dock two and additional underground storage. And we're in the process of getting both of those permitted. So that's the sequence. I think once we have This summer is over. I think our plan is to go to off-takers and try to get multi-year commitments from them by the end of this year for that additional capacity. The other thing we're looking at right now, we're primarily going to be rail served, and so we're also looking at other options for connectivity, meaning pipes. That would be another big jump up in terms of capacity and efficiency.
spk08: Thank you, Joe. I appreciate it. One quick one on the aviation side. A full shop visit obviously takes months, not just the booking time but the actual time in the shop. What's the time differential between a full shop visit module swap because obviously we can sell people save people 50 million on the cost plus three months right that's a it's not just the cost it's the time versus say an and then an on-wing module swap how fast is that a fly-in fly-out like two days later kind of thing yes well you can't you couldn't do a module swap on wing but you can do certain repairs on wing and then we're looking at you know um
spk12: and doing more of them is sort of very efficient. So there are partnerships we're talking about now to provide that ongoing service that will give us really a more, it just expands our portfolio of things we can do to save airlines money. In terms of a module swap into a full shop visit, you're talking about the difference in time is probably between six months for a full shop visit versus under 30 days for a module swap. So you can show an airline, and we've done this, a million dollars of cost savings just from that, the time savings. So there's huge amounts of money involved in savings through people figuring out how to use this service. And we today have 43 modules in inventory. So it's not like you're going to a store that's about to open and say, do you have anything or can I preorder? It's like we have it. So the savings are going to be, you know, people are going to learn and then experiment and say, well, I could do that. And we think it's going to be quite a big thing. Thank you.
spk10: Next, we have a question from the line of Ari Rosa from Bank of America. Your line is open.
spk13: Great. Good morning, Joe, Alan, Scott. So I want to start on the aviation side. You know, obviously, last year, thinking about acquiring aviation assets was kind of toxic in some spaces. And increasingly, as the market improves, it seems like you know, basically consensus that, you know, demand for air travel is going to continue. I'm wondering, has that changed the availability of assets as you look to build the portfolio? And do you think the pace of, you know, asset acquisitions potentially slows because of that? Or how do you see that kind of playing out? And how has the market evolved for aviation assets over the last couple of months?
spk12: It's a good question. I mean, Typically, when you have these severe downturns, I mean, the answer is we think there will be a very good market for, you know, investing in additional assets, and particularly assets that are off-lease, because that is something that's very tough for any, you know, anybody with a portfolio doesn't want to have more assets off-lease. So that's really where I think our primary opportunity will has arisen and will arise. And typically when you get a severe downturn at the bottom and everybody knows you're in the worst downturn, no one wants to sell. And so there are some great deals and we've picked up a few and we've bought some, but generally the volume is not very significant because nobody's, people are not that stupid. They know this is not a good time to sell. But as markets start to recover and prices have moved up, and they already have, I think, a little bit, so if they were down 40%, now they're down 30%, then I think you start to see a lot more volume. And so I think we'll see a number of cleanup trades where people are saying, I've got 10 aircraft off lease, I just want to get rid of them. And that is starting. And you also still have airlines looking at, you know, if I'm going to, you know, phase out of my older assets and buy newer assets, then I'll do a sale-lease backside. I think the market opportunity is going to be good because of that. It's not the rock-bottom steals that we might have seen in 2020, but it will be good prices that have a lot of upside, and I think it will be more volume.
spk13: So within that, Joe, any expectation on kind of what the portfolio looks like in terms of assets by the end of the year?
spk12: Well, historically, we've invested between $300 million and $500 million in assets a year. I would suspect we'll be in that range, potentially higher. But that's more episodic. It's harder to project. And maybe by the end of this year, people will be doing more of these cleanup trades, as I said. So I think that that's still a good number to plan with.
spk13: Okay, great. That's really helpful. And then just turning to Jefferson, congratulations on completing pipeline construction with Motiva. Just obviously building a pipeline implies a long-term commitment. I just wanted to get a better understanding of how you're thinking about structuring those contracts with Exxon and Motiva and how you guys are thinking about that long-term commitment and maybe how you're kind of anticipating the short-term benefits balanced against kind of those you know, the longer-term outlook for the pipeline?
spk12: Yes. The goal was to get five- to ten-year contracts, and the first few deals we did were shorter because we wanted to get, first of all, the first deal we did with Exxon was a three-year deal on refined products. Then we built six pipelines, and we didn't really have much of a commitment. Now we're talking about extending those terms, as I said, between five and ten years and adding a lot of volume to it for contracts between five and ten years. Motiva, the first deal we did on the storage, they contracted for a million barrels of storage. And the deal was structured so that if we never built the pipeline, the term on the storage was three years. But when we complete the pipeline, those storage contracts, changed from three years to five years. So that's exactly what they wanted. They wanted the pipe being built because that's more efficient for them and saves them money. So I think that's the goal is five to ten year contracts. There's obviously sometimes you'll do a shorter deal to get in and get started and then look for growth which usually happens. The beauty of this business is usually people go, you know, they add things. They don't take things away once you're wired in and once you're set up. The other market that we're still, you know, Canadian market has been an on and off market, and it's sort of not ideal because you don't want to just be moving barrels when the ARB is open. So the key to that, I think, is the DRU. The DRU makes it a rattleable flow. And if people invest in, you know, hundreds of millions of dollars in the DRU, it can only move by rail. So there I think you can get 10-year contracts. And there is, you know, one that's been built that had a 10-year contract, and we think more will be built. So ideally I'd like to transform that Canadian move into a 10-year, you know, fixed contract, which I think is doable. And I think we're closer to that than ever before.
spk13: Got it. All very exciting in terms of the prospects for Jefferson. Thanks for the time. Thanks.
spk10: Your next question comes from the line of Brandon Oglenski from Barclays. Your line is open.
spk04: Hey, good morning, and thanks for taking the question. Joe, I just want to come back to the $450 million guidance for aviation EBITDA this year. Because I think, you know, in the back half of the year, it would actually imply something closer to like 150 million run rate for 3Q and 4Q. Do we have our math off there? And maybe what are we missing?
spk12: No. You know, it's obviously, yes, if we have 60 in Q1, let's call it, you know, more than 80 in Q2 is, you know, you're close to 150. You get to 450, that's 300. So you've got to come up with 300 in the back half of the year. That is correct.
spk04: I guess is it utilization in the fleet, or can you speak more to how you're going to get paid on this module idea with Lockheed? Because we do understand it's a partnership, so where do you generate the revenue and the EBITDA opportunity from that?
spk12: So every module swap or exchange or sale, we're estimating half a million or more in EBITDA. So we think that... that there's potential for that. We have 43 modules in inventory right now and we expected, you know, we would hope to turn those, you know, frequently. So it is, um, some of the income obviously comes from that, but we also have the Cromwell joint venture and we have the AR part out business as well. So that the USM, uh, the AR deal on the, uh, uh, part out has been very well received and is, is actually, um, you know, fully operational now, and we have torn down, I believe, like seven engines, so it is, and AR is very happy with it, and there's large, there's a lot of demand for USM, so really it's all of those things. It'll be increased flying, which generates a lot more maintenance reserves from the portfolio. It will be, it will be Cromoy, it will be AR, it will be the module factory, and it will be the part-out business all combined.
spk04: Okay, so still confident that the full year will be $450,000. It's not like an exit rate of $450,000.
spk12: No, no.
spk04: Okay, understood. And then I guess just last one for me, Joe. Strategically, infrastructure has obviously been the one that we've been waiting to get pretty solid contribution from over the years. Just wondering if you know, the cryptocurrency opportunity, obviously it could be very lucrative for you, but I think that would involve another capital outlay and introduce volatility. So is that the right step forward, especially as you think about potentially separating the company in the future?
spk12: Well, I do think when you think about that business, the integration with low-cost energy is, to me, very compelling. And so that's kind of what drove us to think about That is, when you think about the highest and best use for electricity, that's $150 a megawatt hour today versus, you know, $30 for industrial activities. So really, I don't know exactly where that will go, but it felt like worth exploring and figuring it out so that we can, because we do have an asset. We had so many people coming to us saying they want to use our asset, and they wanted to make all the money. So it's like, well, it's not that hard. to buy the machines and get in the business, so why don't we make the money? And then see where that leads us, you know, whether that's a separate, you know, activity or a, you know, where it evolves or how it turns into, it just felt like a good, we have one of the best assets in the world for that activity right now. And it happened to be, we got lucky that it's actually coming online in August with Bitcoin at $50,000. So it was really, It's a little opportunistic in that sense and how it evolves into, you know, infrastructure and how people think about it is TBD. It's not that much of a capital outlay and paybacks are under two years. So, you know, I think the break even on, you know, getting the money back on Bitcoin is like $20,000. So then you can stop the activity. You don't have to keep doing it. And some people say, oh, it's really volatile. Volatility is a negative. And it's like, well, I don't know. If Bitcoin goes to $100,000, we'll have all of our money back in a couple months. So why is that bad?
spk04: I appreciate the response.
spk12: Thanks.
spk10: And again, as a reminder, if you have any questions, please press star, then the number one on your touchtone telephone. Again, that's star one. Your next question comes from Devin Ryan from JMP Securities. Your line is open.
spk01: Okay, great. Good morning. Most questions have been asked, but I want to ask one just about the dividend. I think Before the pandemic, there was a lot of talk about progressing the dividend or at least moving towards an increase. And obviously, the past year, I think, was a good reminder around capital and potentially overcapitalization and the ability to be opportunistic, as you guys clearly have been. And so just maybe to talk briefly about that. how you guys are thinking about the trajectory of the dividend, just, just kind of taking that into consideration. Also just the fact that there are so many compelling opportunities to deploy capital back into the business for growth right now. So just, yeah, it's kind of thoughts have changed or revolved around that.
spk12: Yeah, it, it hasn't really changed, but obviously we're looking, you know, to maintain a two to one coverage and, um, towards the back half of this year with the numbers we're looking at, we would be greater than that. So we would potentially, that would put us in a position where we'd be looking for a dividend increase. So we haven't changed our philosophy on the dividend.
spk01: Okay, great. And then just one last follow-up here on Longridge. Really interesting conversation on crypto, especially kind of given your clean energy angle. So I think it makes a lot of sense. Do you have, I guess it's early, but is the intention to hold kind of Bitcoin beyond kind of operating costs or have you guys kind of thought that through if you're comfortable holding it on the balance sheet or if you just want to sell it as you mine, if there's kind of a consideration there. And then I'm assuming that With this kind of increased opportunity, this probably pushes off, you know, the thoughts around selling the remaining stake in Longridge or, you know, potentially, you know, maybe it doesn't make sense to do at all to the extent there's this, you know, terrific kind of newer opportunity. So I'll just maybe a little bit more flavor for that as well.
spk12: Well, there's a lot there, as you can imagine. I mean, our base case right now is to sell the coins that we mine as we mine them. But it obviously is something that we should think about in terms of buy, sell, hold. But our base case plan is to sell as we mine them. That's the way we look at the model today. But obviously, there's flexibility there. In terms of whether it accelerates or not, the disposition, it's really a valuation issue. I mean, if you look at some of the other public comps that don't stack up as well as we do, the valuations are astounding. So I don't know what it does to our timeline on holding. It's hard to know.
spk01: Yeah, I understand. A lot of moving parts, but very interesting. So I appreciate you taking my questions.
spk10: Thanks. Your next question comes from the line of Frank Volante from CISO. Your line is open.
spk11: Great. Thank you very much. I wanted to dig into the PMA business a little bit and kind of ask about the – if there's been any progress on acceptance of the part from the broader community. I guess specifically, how many parts have been sold and how many have been put into your engines so far? And then – How many engines have you repaired in the Montreal facility and what percentage of that has been yours?
spk12: So I don't have actual specifics on every one of those questions, but we have in the Montreal facility, everything that we've inducted is ours. So it's not for third parties. We're using that for our own assets are in there. And I believe there have been like 30 engines inducted. something like that. I wouldn't get you an exact number on that, but those are all our engines. The PMA, we have ordered sets. I think we ordered 10 sets of the vane. I don't know if any of those have yet been installed. I mean, we received them, say, a month ago, and we're planning... the installation of those as we have outlook for the rest of the year in terms of shop visits. So I don't know. There are a couple of other airlines that have also ordered those parts from Chromoly, and I don't have the exact status as to where. I know one of them has been installed, but I don't know the status of all of the deliveries so far. What was the other –
spk11: No, I think you got most of it. I guess just following up on that, the Montreal facility, you said roughly 30, directionally is fine. But the intention for that is over time to have third-party engines in there, correct, in addition to your own?
spk12: Well, when you say third-party, I mean, we would be – They're all 43R engines. So we're not managing shop visits for other people at that facility. Those are our engines that we own.
spk11: Okay. That's helpful. And then kind of switching gears a little bit to the Jefferson facility. With the pipeline completed and a little bit of progress potentially up north and with the DRU, Do you have like a base case, long-term profitability outlook for that asset, right, with several hundred million dollars invested? I guess what do you look at as like a base and upside case for what those assets could realistically earn?
spk12: Well, I think we've – indicated in the past, we believe based on the assets we have today, we could generate $150 million of EBITDA out in the future. And this year, obviously, we projected a ramp such that we'd be exiting the year at 80. So then it's a question of how you layer in that incremental business and when does it kick in in 2022 or 2023? How do you What's the ramp on that? We haven't given a specific quarter-by-quarter estimate on that.
spk11: Okay. No, those general numbers are fine. And one last question, if I could. Can you give us an update on CapEx needs for the company? Outside of additional engine purchases, right, that $170 million LOI, what CapEx is needed to kind of keep the aviation business operating? And how does that compare? So, like, how does this year, kind of a weird year compared to a more normalized environment? And then what additional CapEx is needed at the other three infrastructure projects?
spk12: Yeah, so one way we've talked about maintenance CapEx is if you were to do the shop visits for every engine that we own, when it's due to be done, which is not something you necessarily have to do, we estimate that to keep that fleet running permanently would be about $50 million per annum of investment per year. So think of maintenance capex and the existing aviation assets is roughly $50. The second part of it is the capital expenditure programs we had for Longridge, Upano, and Jefferson are really behind us. So other than new contracts that we would get, we don't really have significant capex at those at those investments today. But, you know, we're hoping we will have CapEx. That's not a bad thing. It's just we would only do it to expand and grow at this point. And obviously the biggest one would be if we expand Rapano with additional, say, for instance, 3 million barrels of storage, which is what we're, you know, sort of our target number, of underground granite storage caverns, that would be another $300 million of capital. But we believe that we could generate $150 million of EBITDA from that. So that's the biggest one that is out there remaining, but it's not committed at this point.
spk11: And I guess just on Longridge, on the Bitcoin investment, what's the CapEx requirements? for the various projects? Like the 20 million, or sorry, 20 megawatt power, how much do you need to put in mining equipment to... About 70 million, I think.
spk12: So the first two million, the first two megawatts represents about, I think, 630 machines. And there are about 11,000, 12,000 today. They're at an elevated price, so It's roughly about $7 million for this investment that we're making in August, and it would be 10 times that if we wanted to go to $20 million. And we also have a 50-50 partner at Longridge, so we'd expect that to be halved.
spk11: Sure, yeah, that makes sense. Great. Thank you for the time. Really appreciate it. Thank you.
spk10: We have a question coming from the line of Sal Salman from Wolf Research. Your line is open.
spk02: So just to piggyback on the discussion in terms of Bitcoin, can you give us a sense of what the sensitivity is to changing in Bitcoin prices to what kind of FTIs annualized EBITDA would be? If you're thinking whether you want to talk about the two or talk about the 20, just so we can get a sense of how that would impact our models if we see prices gyrate. either upwards or downwards?
spk03: Yeah, so I could speak to that. Yeah, so just if we want to take a sensitivity of let's call it 10% a year whether this is an increase or decrease. It's about 12 million of EBITDA impact in either direction on the 20 megawatts. So I think Joe touched on that today's Bitcoin prices, it's about a $45 million per year EBITDA increase of 20 megawatts. And so if you move Bitcoin price up or down, it's cost $12 million a year of EBITDA impact.
spk02: Thanks, Scott. That's really helpful. And I guess the other kind of real quick follow-up that I had is with regard to the aviation expectations for the second quarter, can you give us a sense of what you have built into the model from a maintenance revenue perspective that's obviously been really depressed the past two quarters, as well as kind of the the other revenue contributions from the JV just so we, you know, if we're seeing a better underlying demand environment just so we can kind of better sensitize our models for either upside or downside there.
spk12: Yeah, so the maintenance activity, we're seeing a big uptick in maintenance and flying hours in April. So I'll call it, what, probably 30%, 40% increase in maintenance revenue from Q1 to Q2. And that's just April, which, you know, we don't know, obviously, the rest of the quarter yet. And then what was the second question?
spk02: I was just curious how much from maintenance versus other revenue. But that kind of gives me enough of a sensitivity there. We don't have that quarter.
spk12: We do, actually.
spk02: Oh, you do. Okay. I really appreciate the time and follow-up, guys.
spk12: Yeah, it's probably order of magnitude 10 million or so from that in Q2. Up from, you know, negligible in Q1.
spk02: Makes sense. Thank you. Thanks.
spk10: I am sure. I am showing no further questions at this time. I would like to turn it back to Mr. Alan Adriani for any further comments.
spk00: Thank you, Patricia, and thank you all for participating in today's conference call. We look forward to updating you after Q2. Thanks.
spk12: Thanks.
spk10: And this concludes today's conference call. Thank you all for joining. You may now disconnect.
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