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1. Company Snapshot

1.a. Company Description

Fortress Transportation and Infrastructure Investors LLC owns and acquires infrastructure and related equipment for the transportation of goods and people in Africa, Asia, Europe, North America, and South America.It operates through three segments: Aviation Leasing, Jefferson Terminal, and Ports and Terminals.The Aviation Leasing segment leases aircraft and aircraft engines.


As of December 31, 2020, this segment owned and managed 264 aviation assets, including 78 commercial aircraft and 186 engines.The Jefferson Terminal segment engages in the development of a multi-modal crude oil and refined products handling terminal in Beaumont, Texas; and ownership of various other assets for the transportation and processing of crude oil and related products.The Ports and Terminals segment operates Repauno, a 1,630 acre deep-water port located along the Delaware River; and Long Ridge, which is a 1,660 acre multi-modal port located along the Ohio River.


The company also owns and leases offshore energy equipment and shipping containers.It serves operators of transportation and infrastructure networks comprising airlines, offshore energy service providers, energy providers, and shipping lines.The company is externally managed by FIG LLC, an affiliate of Fortress Investment Group LLC.


Fortress Transportation and Infrastructure Investors LLC was founded in 2011 and is headquartered in New York, New York.

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1.b. Last Insights on FTAIP

Key drivers behind Fortress Transportation and Infrastructure Investors LLC's recent momentum include FTAI Aviation's strong demand for aviation assets and operational efficiencies, driving growth in its leasing and aerospace products segments. The business has an extensive runway to deploy funds into its growth operations, with each $1 of incremental capital valued >$1 by the market. Additionally, the company's long assets are on path to creating significant value, with FTAI Aviation and FTAI Infrastructure being top gainers in the first half of 2024.

1.c. Company Highlights

2. FTAI Aviation Flies High with Profitable Growth

FTAI Aviation delivered a powerful second quarter, exceeding analysts' expectations. Revenue surged, driven by both the Aerospace Products segment and the asset-light Leasing division. Adjusted EBITDA reached $347.8 million, a 30% sequential increase and a remarkable 63% year-over-year jump. This performance translates to an impressive 46% EBITDA margin for the quarter, highlighting the company's operational efficiency.

Publication Date: Aug -14

📋 Highlights
  • Strong EBITDA Growth:: Total adjusted EBITDA reached $347.8M (30% sequential, 63% YoY), with Aerospace Products contributing $164.9M (34% margin) and Leasing $199M.
  • Strategic M&A & Margin Expansion:: Acquisition of Pacific Aerodynamic enhances differentiation, while procurement programs aim for 40%+ EBITDA margin in Aerospace Products by 2026.
  • Asset-Light Leasing Success:: Leasing segment targets $600M EBITDA in 2025, with 33 seed aircraft sales closed and 8 pending, boosting asset-light model efficiency.
  • SCI Program Momentum:: $4B target investment through 2025 (145 aircraft owned/under LOI), generating $70M in Q2 Aerospace Products revenue (14% of total sales).
  • Operational & Market Gains:: Montreal shop turnaround improved to 66 days (from 83) in Q2; Chinese market potential and 1,800 CFM56 engine capacity target by 2027 drive long-term growth.

Aerospace Products Dominates

The Aerospace Products segment, a key driver of growth, boasts a 9% market share, a significant leap from last year's figure. This segment's EBITDA reached $164.9 million, representing a robust 34% margin. FTAI is actively expanding its production capacity, aiming to reach 1,800 CFM56 engine production capacity within two years. This expansion, however, is constrained by skilled technician availability, which the company is addressing through a training academy and immersive training programs.

Leasing Segment Shifts Gears

The Leasing segment is undergoing a strategic shift towards an asset-light model. The company has successfully divested a significant portion of its seed portfolio aircraft, generating $199 million in EBITDA for the quarter. This move focuses on maximizing returns while minimizing capital investment. The company anticipates achieving $600 million in EBITDA from the Leasing segment by the end of 2025.

Strategic Capital Initiative Fuels Growth

FTAI's Strategic Capital Initiative (SCI) is proving to be a powerful growth engine. This program, which involves partnerships to acquire and lease aircraft, significantly contributes to the company's revenue. In the second quarter, SCI generated $70 million in Aerospace Products revenue, demonstrating its potential for future expansion. The company is actively seeking additional equity partners for SCI 2, with a decision expected in the coming months.

Valuation: Growth at a Premium

FTAI Aviation's impressive growth trajectory is reflected in its valuation metrics. The company's P/E ratio stands at 33.73, suggesting that investors are willing to pay a premium for its future earnings potential. The high P/B ratio of 90.1 further indicates that the market anticipates significant growth and value creation.

3. NewsRoom

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FTAI Aviation: An Expensive Buy On Airbus And Boeing Airplane Shortages

Sep -23

Source: seekingalpha.com

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FTAI Aviation Preferred: 12% Floating Rate Soon

Sep -22

Source: seekingalpha.com

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Long Assets On Path To Creating Significant Value, Shorting Remains Very Challenging

Aug -06

Source: seekingalpha.com

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FTAI Aviation: Extensive Reinvestment Runway To Deploy Funds At Statistical Advantage

Aug -06

Source: seekingalpha.com

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FTAI Aviation: Still A Buy After Stock Price Doubles

May -17

Source: seekingalpha.com

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FTAI Aviation Ltd. (FTAI) Q1 2024 Earnings Call Transcript

Apr -26

Source: seekingalpha.com

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FTAI Aviation: 8.25% Fix/Float Preferreds, 11% Yield Coming

Mar -01

Source: Seeking Alpha

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FTAI Aviation Series C Preferred: 8.8% Yield, Strong Q3 '23

Nov -26

Source: Seeking Alpha

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (13.69%)

6. Segments

Aviation Leasing

Expected Growth: 15%

Fortress Transportation and Infrastructure Investors LLC's Aviation Leasing segment growth is driven by increasing global air travel demand, limited airline balance sheet capacity, and a growing need for fleet modernization. Additionally, the company's diversified portfolio, strong relationships with airlines, and ability to provide customized leasing solutions contribute to its 15% growth.

Aerospace Products

Expected Growth: 12%

Fortress Transportation and Infrastructure Investors LLC's Aerospace Products segment growth is driven by increasing demand for commercial aircraft, rising defense spending, and growing adoption of advanced materials and technologies. Additionally, the company's strategic acquisitions and partnerships have expanded its product offerings and customer base, contributing to the 12% growth rate.

Corporate and Other

Expected Growth: 10%

Fortress Transportation and Infrastructure Investors LLC's Corporate and Other segment growth is driven by increasing demand for infrastructure investments, strategic acquisitions, and expansion into new markets. Additionally, the company's diversified portfolio and strong management team contribute to its 10% growth rate.

7. Detailed Products

Railcars

Fortress Transportation and Infrastructure Investors LLC offers a diverse fleet of railcars for lease, including tank cars, hopper cars, and boxcars, to support the transportation of various commodities such as crude oil, petroleum products, and dry bulk goods.

Shipping Containers

The company provides a range of shipping containers for lease, including dry containers, refrigerated containers, and tank containers, to support international trade and commerce.

Infrastructure Investments

Fortress Transportation and Infrastructure Investors LLC invests in and manages a portfolio of infrastructure assets, including ports, terminals, and rail yards, to support the efficient movement of goods and commodities.

Equipment and Vehicles

The company offers a range of equipment and vehicles for lease, including locomotives, railcars, and construction equipment, to support the transportation and infrastructure industries.

Energy and Infrastructure Services

Fortress Transportation and Infrastructure Investors LLC provides a range of services, including energy logistics, infrastructure development, and operations and maintenance, to support the energy and infrastructure sectors.

8. Fortress Transportation and Infrastructure Investors LLC's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes is low for Fortress Transportation and Infrastructure Investors LLC because the company's diversified portfolio of infrastructure assets and transportation equipment makes it difficult for substitutes to emerge.

Bargaining Power Of Customers

The bargaining power of customers is medium for Fortress Transportation and Infrastructure Investors LLC because while customers have some negotiating power, the company's diversified portfolio and long-term contracts mitigate this power.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low for Fortress Transportation and Infrastructure Investors LLC because the company's scale and diversified portfolio give it significant negotiating power over suppliers.

Threat Of New Entrants

The threat of new entrants is high for Fortress Transportation and Infrastructure Investors LLC because the company operates in a highly competitive industry with low barriers to entry, making it easy for new entrants to emerge.

Intensity Of Rivalry

The intensity of rivalry is high for Fortress Transportation and Infrastructure Investors LLC because the company operates in a highly competitive industry with many established players, leading to intense competition for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 93.49%
Debt Cost 4.87%
Equity Weight 6.51%
Equity Cost 13.63%
WACC 5.44%
Leverage 1435.62%

11. Quality Control: Fortress Transportation and Infrastructure Investors LLC passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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McGrath Rent

A-Score: 6.4/10

Value: 4.6

Growth: 7.8

Quality: 6.6

Yield: 4.0

Momentum: 6.5

Volatility: 8.7

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Ryder System

A-Score: 6.3/10

Value: 7.5

Growth: 6.8

Quality: 3.1

Yield: 5.0

Momentum: 8.0

Volatility: 7.3

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FTAI Aviation

A-Score: 5.6/10

Value: 3.0

Growth: 4.7

Quality: 8.5

Yield: 6.0

Momentum: 5.0

Volatility: 6.7

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Avis Budget Group

A-Score: 5.6/10

Value: 9.6

Growth: 5.8

Quality: 5.0

Yield: 1.0

Momentum: 9.5

Volatility: 2.7

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Fortress Transportation

A-Score: 5.1/10

Value: 3.0

Growth: 4.7

Quality: 8.5

Yield: 6.0

Momentum: 5.0

Volatility: 3.3

1-Year Total Return ->

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FTAI Aviation

A-Score: 4.9/10

Value: 3.0

Growth: 4.7

Quality: 8.5

Yield: 5.0

Momentum: 6.5

Volatility: 2.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

25.37$

Current Price

25.37$

Potential

-0.00%

Expected Cash-Flows