Q4 2024 Willis Lease Finance Corp Earnings Call
Please stand by, we're about to begin.
Speaker Change: Good day and welcome to the Willis Lease Finance Corporation 4th quarter 2024 earnings call. Today's conference is being recorded.
Speaker Change: We would like to remind you that during this conference call, management will be making forward-looking statements including statements regarding our expectations related to financial guidance, outlook for the company, and our expected investment and growth initiatives.
Speaker Change: Please note these forward-looking statements are based on current expectations and assumptions which are subject to risk and uncertainties.
Speaker Change: These statements reflect WLFC's views only as of today. They should not be relied upon as representative of views as of any squintured date, and WLFC undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events.
Speaker Change: These statements are subject to a variety of risk and uncertainties that could cause actual results to differ materially from expectations.
Speaker Change: for further discussion of the material risk and other important factors that could affect WLFC's reports on
Speaker Change: Form 10Q Annual Reports of Form 10K and other periodic reports which are available on the Investor Relations section of WLFC's website.
at HTTPS, Forward Flash, Forward Flash.
Speaker Change: At this time, I'd like to join the conference over to Austin Willis, Chief Executive Officer, please go ahead.
Austin Willis: Thank you, operator, and thank you all for joining us. On our call today, I'm joined by Scott Flaherty, our Chief Financial Officer, and Brian Holt, our President.
Austin Willis: Willis has historically been a company of industry firsts. In the early 1980s, Charlie Willis created the first independent engine leasing platform.
In 2005, we did the first aircraft engine ABS [inaudible]
Austin Willis: in 2022. We were the first lessor to establish a presence in Gift City, India.
Austin Willis: In 2023, we did the first engine gelco financing Also in 2023, we were the first aviation ABS to reopen the market And last year, once again, we created the first engine warehouse financing [inaudible]
Austin Willis: 2024 was a fantastic year for our business underpin not only by innovation but by solid execution and results.
Austin Willis: In the fourth quarter, we delivered strong financial performance and on an annual basis, 2024 represents our strongest year as a publicly traded company, generating an industry leading return on equity of 21 percent.
Austin Willis: Our fourth quarter and full year results were driven by the ongoing strength of our core leasing business.
Austin Willis: For the fourth quarter, our total revenues were 152.8 million, and pre-tax income was 30.4 million.
Austin Willis: For full year 2024, our total revenues were 569.2 million and pre-tax income was 152.6 million.
Austin Willis: Our exceptional company performance has allowed us to return capital to our shareholders while still supporting growth and leverage targets.
Austin Willis: To that end, in February of this year, we paid our third consecutive quarterly dividend of 25 cents per share.
Austin Willis: I would also like to point out that we acquired nearly 1 billion in engines and aircraft in 2024.
Austin Willis: comprised of 35% current technology assets and 65% future technology assets like the lead and GTS engines that power the A320 NEO and 737 MAX aircraft.
Austin Willis: Some of these assets were on lease, but others were purchased off lease and then subsequently put on lease.
Austin Willis: When we acquire engines, some of these are serviceable, while others are immediately disassembled for parts, depending upon their remaining service life.
Austin Willis: Our success at Profitably Deploying Capital is a testament to the platform we have built and our ability to maximize the value of these assets.
Austin Willis: Over the past year, we have enhanced our engagement with the investment community to improve its understanding of the strength of our platform and long-standing track record.
Austin Willis: We held an analyst day in December and I encourage you to review those materials which can be found in the investor section of our website.
Austin Willis: One of the key attributes is our Flywheel business model which we believe is a differentiator for Willis outpacing the sector in terms of value creation in terms of value creation.
Austin Willis: How business model also enables us to generate a premium return and greater investment opportunities than others in our space?
Austin Willis: We also outlined the multiple strategies currently being pursued by aftermarket maintenance and services providers to address the maintenance needs of a maturing fleet of CFM 56 and V2500 engines.
Austin Willis: Specifically, there are three primary strategies that I will describe today.
Austin Willis: The first is the traditional MRO route, where an airline will send an unserviceable engine for a full overhaul. This is often the most expensive path, but will return the engine with the greatest amount of life remaining.
Austin Willis: Additionally, the process can take approximately six months to a year, during which the airline will need to lease in a spare engine if the airline doesn't already have one available.
Austin Willis: Just the spare engine lease could easily cost over $1 million, and that is if you can find a spare engine available to lease.
The second route is through module optimization and exchange [inaudible]
Austin Willis: This is a more bespoke solution that can offer time efficiency compared to a full overhaul While this process is faster than an overhaul, the engine will still need to be sent to a repair facility like our two 145 engine MROs in the US and the UK [inaudible]
Austin Willis: The modules will need to be exchanged and the engine needs to be sent to a test facility tested and shipped back to the airline.
Austin Willis: The third option is Constant Thrust, a product that we have successfully fielded with multiple airlines over the past decade.
Austin Willis: This is where we do a sail and leaseback on the airline's fleet of aircraft or engines, and when an engine becomes unserviceable, we replace it with another from our fleet.
Austin Willis: Building on that, I'm proud to announce that as of last week we signed another constant thrust deal, this time for more than 20 CFN 56-7B engines. We expect that this will provide a good return for us and significant savings for our customer.
Austin Willis: Moreover, it will enable us to deploy a meaningful amount of capital in a single transaction and create more feedstock of engines that we can repair in our two MROs, cell or part out.
Austin Willis: It's important to highlight this transaction because we believe constant thrusts will become more and more sought after as airlines look to transition from legacy fleets into neo and max aircraft and also because it's a good example of how our different businesses operate in concert to create value. You know, it's a good example of how we're going to be able to create value.
Austin Willis: Our earnings reflect the benefits of scale and the premium we can achieve through our global platform.
Speaker Change: We run our business with transparency and integrity and we're now starting to realize the fruits of our labor and with that I'll hand, it over to Scott Flaherty, our CFO to discuss our financial performance in greater depth.
Austin Willis: <unk>.
Scott Flaherty: Thank you Austin and good morning, all as you can see from our P&L 2024 was a record year for Willis lease Finance Corporation. The company produced earnings before tax EBT of 152 6 million. This performance was up $85 5 million or 127%.
Scott Flaherty: <unk> from our prior year performance, our stand alone fourth quarter 2024 results of $34 million of EBT compared to $21 million in the fourth quarter of 2023 up nine 4 million or 44, 8%.
Scott Flaherty: Walking through the P&L revenues for the year were $569 2 million, an all time milestone for the business significant revenue drivers where core lease rent revenues for the year of $238 2 million in interest revenues of $11 seven.
Scott Flaherty: Which reflects interest income on long term loan like financings, which we have been offering as a product for several years growth in these lines.
Scott Flaherty: Items, primarily reflect our increased total portfolio size of 287 billion at year end 2024 hour total owned portfolio as reflected on our balance sheet as equipment held for operating lease maintenance rights notes receivable and investments and sales type leases.
Scott Flaherty: In 2024, the company purchased the equipment, including capitalized shop visit costs totaling $932 million.
Scott Flaherty: This growth was partially offset on the balance sheet by $126 million of equipment book value sales $88 7 million of lease asset depreciation $26 million of assets transferred to held for sale of $11 million of impairment write downs and $40 million.
Scott Flaherty: Payments received against our outstanding notes receivable and sales type leases.
Scott Flaherty: Its reserve revenues for the year were $213 9 million.
Scott Flaherty: Up $80 2 million or 60% from 2023 as you Peel back the numbers you can see that $39 4 million of these maintenance reserve revenues will long term maintenance reserves associated with engines coming off lease and the associated release of any maintenance.
Scott Flaherty: Serve liabilities long term maintenance reserve revenues were up $24 million from the $15 4 million in 2023, as we had 20 engines and aircraft assets with long term leases ending and heavy maintenance reserve realizations compared to six assets in 2023.
$174 5 million of our maintenance reserve revenues for short term maintenance reserves compared to $118 3 million in 2023. This 47, 5% or $56 2 million increase in short term maintenance reserves was influenced by our overall portfolio.
Scott Flaherty: And more specifically the increase in the number of engines on short term lease conditions.
Scott Flaherty: Aiming of revenue recognition of any substance fixed payments and the systematic contractual increase in the hourly and cyclical usage rates on our engines fair.
Scott Flaherty: Fair parts and equipment sales to third parties of $27 1 million in 2024 compared to 24.
Scott Flaherty: $4 million in 2023 up $6 7 million or 33%.
Scott Flaherty: Our <unk> sales channel provides a valuable outlet to recognize residual values on our engine portfolio, while also providing feedstock.
Scott Flaherty: For our in our customer fleets in a tight parts market.
Scott Flaherty: Gain on sale of lease equipment net revenue metric was $45 1 million in 2024 and was associated with $171 2 million of gross equipment sales, representing an effective 26, 3% margin on such sales. This compares to a gain of $10 six.
Scott Flaherty: In 2023, an $85 1 million of gross sales or 12, 5% margin.
Scott Flaherty: In 2024, we sold or exchanged forty-three engines and airframes compared to 29 assets in 2023 and trading activities are an important part of Willis keeping the portfolio relevant.
Maintenance service revenue, which represents fleet management engine and aircraft storage and repair services and revenues related to management of fixed based operators services was flat to 2023 at $24 2 million in 2024.
Scott Flaherty: Gross margins were slightly negative at minus 1% as we are in the build out stages of our fixed base, operator services, which influenced our aggregate margins.
Scott Flaherty: We believe that our maintenance service offering both enhanced and create lease opportunities for the business and provides further vertical integration supporting the full cycle of the company's assets.
Scott Flaherty: On the expense side of the equation depreciation for 2024 was up one 7% to $92 5 million as we increase the portfolio size, but also managed portfolio profitability through strategic sales breakdown and equipment was $11 2 million for the year of which 10.
Scott Flaherty: Four was from the fourth quarter of which six three was related to our annual impairment review write down of equipment in 2023 was $4 4 million.
Scott Flaherty: As an aside as we go through our annual impairment process, we obtain appraisals on all of our engines and aircraft assets when looking at our year end 2024, appraisals and comparing these appraisals to our 2000 2040 year end asset book values, we see in excess market value beyond the book values.
Scott Flaherty: On our balance sheet approaching $600 million.
Scott Flaherty: We believe that this highlights the effects of buying over the long term long lived engine assets that tend to appreciate in value over time, while the gap depreciate through the P&L.
Scott Flaherty: G&A was $146 8 million in 2024 compared to $115 7 million and 23 G&A margin decreased from 27, 7% to 25, 8% as we benefited from the increased scale of the business.
Scott Flaherty: Increases in the overall G&A spend were predominantly related to personnel cost components of personnel costs driving the increase included approximately $14 4 million of share based compensation, which was influenced by the rise in the company's share price throughout the year as well as onetime payments.
Speaker Change: The company's executive Chairman and the company's president of three and $1 7 million respectively.
Speaker Change: Increased incentive compensation of $9 2 million, which is formulaic derived from consolidated pre tax pre incentive compensation earnings.
Speaker Change: Approximately $9 2 million of wage increases due to hiring in general salary escalation as we grow the footprint of our overall business.
Speaker Change: Technical expense, which is predominantly unplanned maintenance was $22 3 million and 24, which is down from $28 1 million in 'twenty three.
Speaker Change: $5 8 million decrease in technical expense was due to a lower level of engine repair activity throughout the year technical expenses generally unplanned maintenance, whereas engine performance restorations tend to be planned capitalized events.
Speaker Change: Net finance costs were $104 $8 million and 24 compared to $78 8 million in 'twenty three the increasing costs related to an increase in indebtedness as total debt obligations increased from one 8 billion at year end 2003 to two three.
Speaker Change: At year end 25, as well as an increase in the quarterly average weighted average cost of debt inclusive of our interest rate hedge positions from four 2% in 2023 to five 1% in 2024, which was partially influenced by the maturity of <unk>.
Speaker Change: Two interest rate swaps.
Speaker Change: In 2021.
Speaker Change: The company also picked up $8 2 million in ratable earnings from our 50% ownership interest in our Willis Mitsui in Catholic Willis Joint ventures, the <unk>.
Speaker Change: Company produced $104 4 million of net income attributable to common shareholders factoring GAAP taxes, and the cost of our preferred equity, which was up 159% from our $44 million in 2023.
Speaker Change: Diluted weighted average income per share was $15 34 in 2024 up 146% from that in 2023.
Speaker Change: Cash flow from operations was up 23, 8% to $284 4 million in 2024, the increase in cash flow from operations was driven primarily by the growth in pre tax earnings.
Speaker Change: And the related tax benefits.
Speaker Change: On the financing and capital structure side of the business. The company completed a series of financings and refinancings to diversify and increase its sources of funding to support the future growth of the business in 2024. The company completed its third Joel co financing completed the companies in the industry.
Speaker Change: First ever engine warehouse financing for $500 million expanded and extended its preferred equity investment with the development bank of Japan and in the fourth quarter refinanced and expanded its $500 million credit facility into a new five year $1 billion revolving credit facility. We continue.
Speaker Change: We look to diversify our sources of funding and minimize our overall cost of capital and had been successful accessing numerous markets over the years. We appreciate all the help we received from our banking and Investor partners.
Speaker Change: In 2024, we were successful in returning capital to shareholders through our second quarter, one time special dividend of $1 per share and two subsequent regular quarterly dividends of 25 per share.
Speaker Change: Subsequent to year end, we declared and paid in February our third consecutive regular quarterly dividend of 25 per share.
Speaker Change: We believe that our ability to pay a recurring dividend speaks to the health of the business provides our shareholders with a moderate current yield on their investment while not degrading the strong cash flow characteristic and equity growth of the business, which supports our overall growth.
Speaker Change: With respect to leverage as defined as total debt obligations net of cash and restricted cash.
Speaker Change: Equity inclusive of preferred stock our leverage ticked slightly higher to 348 times in the fourth quarter from three to five times at the end of Q3 2024, as we took advantage of some year end asset purchase opportunities to better position the company for the future.
Speaker Change: We will continue to target net leverage in the low threes, recognizing that leverage may at times as it did in Q4 of 24 tick slightly higher as we execute on opportunities that enhance the characteristics of the overall business with that I will now open the call up to questions operate.
Speaker Change: Sure.
Speaker Change: Thank you if you'd like to ask a question. Please signal by pressing star one on your telephone keypad, if you're using a speaker phone. Please make sure. Your mute function is turned off <unk> said no to reach our equipment our voice prompt on the phone line will indicate when your line is open. Please state your name and company before posing your question again Presto.
Speaker Change: Want to ask a question, we'll pause for just a moment to allow everyone an opportunity to signal for questions.
Speaker Change: And well go to our first caller.
Louis Raffetto: Hey, you have Louis Raffetto from Wolfe research good morning, guys.
Speaker Change: Good morning Louis.
Speaker Change: Austin, maybe I was wondering if you could you or anyone else I would say you could update us on the engine market and sort of what youre seeing as it relates to values, obviously values were up really strong.
Speaker Change: First half or so of 2024 are you sort of continuing to see values rise at a stabilized at all obviously the.
Speaker Change: Gain on sale margins jumped.
Speaker Change: Pretty strongly from 23 to 24, so just kind of looking for an update there.
Speaker Change: Yeah. Thanks Louis.
Speaker Change: <unk> seen strong we've seen a strong engine market generally as you mentioned and Thats both on.
Speaker Change: On the whole engine asset side as well as parts and on the parts side, it's not only the sales of parts, but also selling engines to third parties as well.
Speaker Change: We do see some scarcity in the market for originating transactions for a typical engine that you might buy to put on lease to third parties.
Speaker Change: That being said, we've been very successful at originating ourselves.
Speaker Change: And it's worth mentioning.
Speaker Change: The value for assets right now.
Speaker Change: It makes it a little bit more difficult periodically to originate deals, but we're also beneficiaries on the sell side in the market and as you mentioned, we've had a good gain on sale margin, but going back to originating transactions, we've been pretty darn successful at originating and in fact, we have a pipeline.
Speaker Change: That.
Speaker Change: Considerably well frankly, very robust and it's really a function of our ability to originate transactions, where we offer some kind of added advantage to the customer. So if you. If you look at somebody who is just buying an engine to try to put on lease to a third party I think they are going to face some challenge.
Speaker Change: But for us there.
Speaker Change: Constant thrust transaction I mentioned in my prepared remarks is a great example, we're seeing a lot of opportunities to originate and in this case over 20, CFM $56 70 engines, where we can actually solve a problem for the customer and in this particular circumstance. The problem is bridging them from a maintenance standpoint.
Speaker Change: So we're helping the customer to avoid shop visits were in sourcing that maintenance and they are really only paying for the incremental hours and cycles that they consume.
Speaker Change: I hope that helps all right great.
Speaker Change: Just a follow up you mentioned the two repair shops are one the U S. One over in Europe, I believe I can't recall do you have a test cell or is that something that you actually have to.
Speaker Change: Go out and sort of sign for those engines. When you do do work on and if that is the case, what's the availability of slots like.
Speaker Change: Thanks, Louis we do not have a test cell and Youre right. We have a $1 45 repair station work in the UK and another in the U S.
Speaker Change: Do everything from Boris Scopes to lease returns preservation, teardown, QVC installation and heavy maintenance.
Speaker Change: We do not currently have a test cell, it's something that we are looking into and it really varies sometimes it's difficult to get a test cell slot. Other times there is a greater availability. So just it just depends.
Speaker Change: Great I appreciate it.
Speaker Change: No problem.
Speaker Change: We will go to our next caller.
Speaker Change: Yes.
Eric Greg: Hi, Eric Greg from 43, an advisory a few questions here.
Eric Greg: The first step is the 30 engines you announced in December exercising the option on the leap <unk>.
Speaker Change: Even assuming inflation normal inflation escalators, given when you bought about missing a pretty significant discount to where these are being listed in the market right. Now maybe 30 odd percent is that is that a reasonable assumption.
Speaker Change: Yes, I can't speak to any any discounts, we may or may not be getting from the Oems on.
Speaker Change: The new purchase side I will say, we've been successfully purchasing engines new from the Oems for quite a long time.
Speaker Change: We've been we've been good at both deploying those assets out on lease and recognizing the value when we when we sell them.
Speaker Change: Great and over what period are you are those engines are likely to be delivered is that should we be expecting 25% in 2026, there wasn't a lot of specificity in the news release.
Speaker Change: Yes, so we don't have a specific delivery data schedule, yet we expect to work that out in the coming months.
Speaker Change: Okay.
Speaker Change: So the announcement in June on the 15, Pratt <unk> Whitney engines.
Speaker Change: That were potentially you need to be purchased before yearend, where all of those purchased.
Speaker Change: There were nine and those those were purchased yes.
Speaker Change: And then.
Speaker Change: There's been talk about the each one eight HPT durability kits.
Speaker Change: Are those something that Willis is going to be investing in and how long does it take to implement those durability kits.
Speaker Change: Yes, so the durability kits.
Speaker Change: We do plan to implement some of those at the shop visits in the future, but it's a ways off and it's going to be a while before those fully make their way through the through the fleet.
Speaker Change: Theres a few different elements to the durability to get though it is not just the HPT blades Theres also other durability components like the reverse split system and optimized client for us to actually now that you mentioned I'm pleased to mention that our 145 repair station completed its first RBS reverse belief system.
Speaker Change: Installation I believe earlier earlier this year.
Speaker Change: Okay great.
Speaker Change: Just higher level with these durability kitchen, as well as being pretty.
Speaker Change: Close on its gene TFA engines being certified some of these newest technology engines are likely to become more durable and therefore needing fewer shop visits how is this impacting your plans for the growth of your MRO operations.
Speaker Change: Sure. So our MRO is currently serve primarily the CFM 56, and <unk> 500 markets. We do limited work on the GTS and belief, but we do intend to grow that into the future.
Speaker Change: It's hard to say what the ultimate result is going to be with the GTS advantage.
Speaker Change: The durability enhancements on the leap.
Speaker Change: Theres some optimism that it will.
Speaker Change: We'll increase on wing life, and we certainly hope that that's the case.
Speaker Change: But I think Theres also a likelihood that this generation of equipment will have more shop visits than the previous generation and we also think that we're well positioned to take advantage of that both on the leasing side and the MRO side.
Speaker Change: Yeah, that's great and just one last one the last couple of quarters. The earnings from the JV has had been a little bit thinner than they were in some of the prior quarters and such a strong engine leasing environment. What do you attribute the lower levels of JV earnings for the last couple of quarters.
Speaker Change: Okay.
Speaker Change: We have seen the earnings from the JV is doing pretty well.
Speaker Change: The JV is like our own company are going to benefit from from scale over time as we continue to grow them out.
Speaker Change: Thanks.
Speaker Change: Hold on hold on let's say is Scott would you like to add anything to that I think you'd see similar similar characteristics in the JV as you see in our overall business and I do believe that sometimes you see gain on sales and the JV businesses that provide some pumps.
Speaker Change: To the earnings hit any specific period.
Speaker Change: Thanks, Jeff.
Speaker Change: Thank you.
Speaker Change: And we'll go to our next caller.
Speaker Change: Hi, Thanks for taking my question can you talk about the difference between the fair market value of the engine portfolio in the book value at the end of the portfolio today.
Speaker Change: Sure.
Speaker Change: I think as we as.
Speaker Change: As we mentioned or as I mentioned upfront is actually as we've shown in some prior presentations with investors I think about a year ago today, we highlighted to the Investor group that looking at the book value of our overall portfolio and then looking at the market value.
Speaker Change: As defined by the appraisals that we do on an annual basis on our portfolio at that point in time, it was approaching a $400 million disparity in the value of that we see on our balance sheet and the value the value of market value of the assets now part of.
Speaker Change: Our thesis.
Speaker Change: Part of the Willis thesis over the last 40 years is that these engines continue to appreciate over time as they depreciate through the P&L right. So you're creating a disparity between the market value of the engine and what you're seeing on the book value well that trend has continued.
Speaker Change: As we did our year end appraisals.
Speaker Change: In December of 2024, we compared to year end appraisals of our engines the market value of appraisals to the book values and we've seen that that disparity is increased to approaching $600 million today.
Speaker Change: Got it thanks, so much I appreciate it.
Speaker Change: And just as a reminder to ask a question on today's call that is star one on your telephone keypad.
Speaker Change: Well go to our next caller.
Speaker Change: Okay.
Speaker Change: Yes, Hello, everyone.
Speaker Change: Sure.
Speaker Change: So digging in a complaint in broker.
Speaker Change: I have a.
Speaker Change: Couple of questions.
Speaker Change: Jeff I began I want to.
Speaker Change: Dave I want to give my congratulations because it's really successful.
Speaker Change: The successful quarter and the first question is.
Speaker Change: Sure Tim.
Speaker Change: Non brain bus bell usage fees.
Speaker Change: Total quarter reserve revenue, it's about 74%.
Speaker Change: But do you expect about the proportion of Reimbursable and non Reimbursable revenue.
Bob: Thank you, thank you, Bob and what trends that impact on.
Bob: Do you expect the impact on this and then push.
Bob: Bush at the head.
Bob: And what's the proportion of short and long term thoughts on portfolio, you imply or expect for next year and beyond.
Bob: Sure.
Bob: Sure.
Bob: Thanks for the question.
Bob: So Jay.
Bob: It was hard for me to completely understand your question, but I believe you were asking about the short term maintenance reserves and you can see that those have increased significantly.
Bob: Significantly on a year over year basis.
Bob: And as I mentioned earlier that that's really been driven by the increased number in engines that we have on short term conditions, which are non reimbursable.
Bob: And which has been supported by the growth of our overall portfolio.
Bob: We see this as a trend that that will continue and really this has been supported a lot by the programs and the programs that we have been rolling out which is supporting a lot of the engine transition we don't provide forecasts.
Bob: For our business, but I would say that we expect to see this trend continue.
Speaker Change: Okay. Thank you.
Bob: And the last one is.
Bob: What are the main factors.
Bob: Drive take rates you expect.
Bob: Well it is monetary policy <unk> east.
Bob: Could you reduce bridge on margins and transferred a burden to rent price at least partially.
Speaker Change: Thanks Sergei.
Speaker Change: 100% sure I understand the question, but I believe you're asking about interest rates and the impact on our portfolio.
Speaker Change: We've been.
Speaker Change: Unable to reprice, our portfolio historically as rates came up and in fact, if you look at the ABS. We did in 2023 I believe we were the only ones to do one that year and we really reopened at the market and that was a function of our ability to reprice as as interest rates increase.
Jay: Is that generally answered your questions there Jay.
Jay: Yes, yes. Thank you. Thank you.
Jay: No problem.
Jay: We'll go to our next caller.
Jay: Okay.
Jay: This is will Waller with <unk>.
Speaker Change: Question on the long term lease portfolio I've heard just through the <unk>.
Speaker Change: Industry articles and conferences that the extension rate is above average what are you guys experiencing on that.
Speaker Change: On extensions of the long term leases is it above average.
Speaker Change: In your portfolio as well.
Speaker Change: Hey, well, yes, I think it's safe to say I mean, the rate of extensions is higher than what it historically has been.
Speaker Change: That being said, we don't blindly extend our assets, we take it as an opportunity to reprice.
Speaker Change: So we are seeing.
Speaker Change: More extensions, but we're also seeing a lot of opportunity there as well.
Speaker Change: So if you have a long term.
Speaker Change: We sit extends and you adjust the price do you recognize the maintenance reserved income at that point in time or do you still defer it until the assets returned.
Speaker Change: Generally speaking will deferred until the assets returned.
Speaker Change: Okay and is it still the portfolio is still the mix similar to what it was at September 30th where it's about then it was 54% long term, 46% short term is it still roughly that mix at the end of the year.
Speaker Change: It's fairly consistent with that.
Speaker Change: You brought up the mix of the portfolio. So we'll take that as an opportunity to talk about our modernization just briefly.
Speaker Change: I believe we announced in our last call that we were about 47% 46 or 47% of future technology assets.
Speaker Change: And as of the end of the year, we're at 53% future technology. So I think that's.
Speaker Change: It is important just as we think about how the how the market changes and the transitions, we're going to have going forward.
Great. Thanks, a lot.
Speaker Change: Thank you.
Austin Willis: And at this time there are no further questions I'll turn the call back to Austin for any additional or closing remarks.
Speaker Change: Thank you all for your time and have a good day.
Speaker Change: This does concludes today's conference we thank you for your participation.
Speaker Change: Okay.
Speaker Change: [music].