Q4 2024 AerSale Corp Earnings Call
Good afternoon, everyone, and welcome to the Aircel, Inc., fourth quarter 2024 earnings conference call.
Important factors that could cause actual results to differ materially from forward looking statements are discussed in the in the risk factors section of the company's annual report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission S. E. C to be followed in March 10th 2025, and it's a.
Other filings with U S E T.
These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those indicated by the forward looking statements on this call.
We'll also refer to non-GAAP measures that we view as important in assessing the performance of our business.
A reconciliation of those non-GAAP metrics. The nearest GAAP metric can be found in the earnings presentation materials made available on the industrial sectors section of the Arizona website at IR Dot Aircell Dot com.
Nick Vanessa: With that I'll turn the call over to Nick Vanessa.
Nick Vanessa: Thank you Christine good afternoon, and thank you for joining our call today.
Speaker Change: I'll begin with a brief overview of the quarter, then provide operational updates before turning the call over to Martin to review the numbers in greater detail.
Speaker Change: We concluded the year positively with fourth quarter revenue amounting to $94 7 million, which was slightly higher than the previous year, even with a $16 $4 million reduction in whole asset sales compared to 2023.
Speaker Change: When excluding whole asset sales, which can be volatile on a quarterly basis, our fourth quarter sales increased by 35, 5%.
Speaker Change: This growth was evident across U S M leasing and sales of our engineered solutions products are safe.
Speaker Change: Increased revenue boosted profitability with adjusted EBITDA up 118% to $13 1 million.
Speaker Change: Operational performance improved in 2024 due to strategic initiatives, such as deploying capital to cost effective feedstock expanding our lease pool to stabilize revenue monetizing our remaining 757 assets and growing our MRO capabilities amid strong demand.
Speaker Change: This strategy is gaining momentum and is reflected in our results.
Speaker Change: For the full year of 'twenty 'twenty four we reported revenue of $345 1 million, representing an increase of three 2% compared to 2023.
Speaker Change: Excluding whole asset sales revenue for the full year increased by 18, 7%, reflecting stronger U S. M volume robust demand for MRO services, and an expanded lease pool.
Speaker Change: Full year, adjusted EBITDA rose to $33 4 million from $12 3 million last year.
Speaker Change: This increase was due to higher volumes, a favorable sales mix and better cost controls, although it was partially offset by lower whole asset sales.
Speaker Change: In asset management sales fell by about 1% year over year to $64 million due to fewer whole asset sales.
Speaker Change: Excluding whole assets revenue rose by 91, 7% driven by strong U S. M engine part sales and a larger lease pool.
Speaker Change: For the full year sales remained flat at $215 million.
Speaker Change: Excluding whole assets segment revenue increased by 34% to $105 7 million, thanks to better feedstock availability in the U S M business and an expanded lease pool.
Speaker Change: We remind investors quarterly that due to a whole asset sales our revenue can be volatile.
We believe our business should be evaluated based on long term performance focusing on feedstock acquisition and the value. Our team is able to extract from these investments.
Speaker Change: We acquired $18 4 million of feedstock in Q4, and $61 7 million for the full year <unk>.
Speaker Change: Despite a competitive market, our multi dimensional fully integrated value extraction approach led to a 17, 2% win rate in Q4, surpassing our long term average of 10%.
Speaker Change: We remain disciplined in acquisitions and I are our targets. Additionally, our strong finish and feedstock acquisitions. In 2023 has provided ample inventory for 2025 offering us extra flexibility.
Speaker Change: We anticipate future opportunities similar to this quarter that will help us meet our financial goals.
Speaker Change: Deal pacing may be uneven due to tight feedstock conditions likely persisting until OEM production and deliveries enable retirement of older aircraft by airlines.
Speaker Change: In our 757 passenger to freighter conversion program and market demand increased in the fourth quarter with an uptick in bidding activity leading to the leasing of one aircraft.
Speaker Change: This is the first transaction for the 757 program since late 2023, reflecting a steady improvement in the end market over the fast over the past few quarters.
The quarter concluded with six 750 Sevens remaining from the conversion program and discussions continue with multiple potential customers.
Speaker Change: Turning to Tech ops revenue rose three 1% to $30 7 million in Q4, driven by strong commercial demand for MRO and increased aerospace unit sales ahead of the 2026 FAA compliance deadlines for fuel tank protection systems.
Speaker Change: This was partially offset by lower parts sales in our MRO units.
Speaker Change: For the full year, our tech ops segment saw a revenue increase of eight 6%, reaching $129 6 million.
This growth was primarily driven by heightened demand for MRO services across our system, along with a robust increase in sales of aerospace.
Speaker Change: At our Goodyear facility, we completed a contract with a major commercial airline which has opened up additional capacity at the site.
Speaker Change: Demand for MRO services in the end market remains robust and we are focusing on securing long term predictable contracts that align our staffing levels with anticipated volume.
Speaker Change: These contracts typically take longer to initiate and finalized, especially considering the maintenance planning timelines involved with larger airlines. Consequently, we expect to see reduced volume at Goodyear and the first half of 2025 as we work to bring in new long term agreements.
Speaker Change: This strategy will also impact our ramp up at our Millington facilities as both locations provide complementary services.
Speaker Change: By maintaining lower sample staffing levels in Millington, we can effectively manage resources, while building volume at Goodyear and securing customers, who prefer a millington as a maintenance location.
Speaker Change: We made progress on our ability or our facility expansion projects in the fourth quarter and into early 2025. However.
Speaker Change: However continued construction delays at our pneumatics and Miami Aerostructures facilities have pushed the opening dates to the second quarter of 2025.
Speaker Change: As these facilities become operational we anticipate incremental revenue growth each quarter with a potential to achieve $50 million in additional an additional annualized revenue at full capacity.
Speaker Change: In our engineered solutions business, we increased the backlog in the fourth quarter for aerospace as we approach the 2026 deadline to comply with an FAA airworthiness directive concerning aircraft fuel quantity indication systems.
Speaker Change: At the end of the quarter, our backlog totaled $14 million.
Speaker Change: We anticipate that quarterly revenue from this program will grow as we near the deadline and aircraft come in for routine maintenance.
Speaker Change: Regarding our revolutionary enhanced flight vision system are aware, we have continued to market the product and hosted two new customer demonstration flights since our last earnings call customer.
Speaker Change: Interest is ongoing although no customer orders have been secured at this time.
Speaker Change: As commercial safety has gained more attention in recent months.
Speaker Change: It highlights the potential use case of the system.
Speaker Change: The FAA faces challenging challenges in maintaining a high level of safety due to increasing congestion in the skies into airports limited availability of experienced candidates for air traffic control positions.
Speaker Change: Outdated systems restricting capacity.
Speaker Change: These factors underscore the urgency of enhanced flight safety and air aims to address and simplify many of these issues.
Speaker Change: Additionally, while working with potential customers, we have improved the system by adding new features and indicators requested by airlines.
Speaker Change: This is a direct feedback loop has significantly enhanced our product, which is anticipated to support its long term success.
Speaker Change: Next I would like to provide an update on our cash position and the status of our insurance claim.
Speaker Change: We ended the quarter with $4 7 million in cash and total debt of $41 million during.
Speaker Change: During the year, we generated $11 2 million and free cash flow, which included a payment of $39 million in insurance proceeds related to the Roswell fire previously disclosed.
Speaker Change: As noted in our 8-K on January eight this was a payment made toward the claim while the insurers continue their review process.
Based on this.
Speaker Change: We have recorded the amounts received as a liability until the claim is fully adjusted.
Speaker Change: We will update investors on the conclusion of this matter at the earliest opportunity.
Speaker Change: Before I hand, the call over to Martin for a detailed analysis of the numbers I would like to provide an overview of our goals for 2025 and discuss some key drivers for the coming year.
Speaker Change: Our primary focus will be on expanding growth opportunities and converting our inventory into cash.
Martin: The main contributors to our top line in 2025 will include expanding our lease pool, which saw significant progress in 2024, ending the year with 17 engines and $1 757 freighter aircrafts on lease.
Martin: This revenue stream is expected to recur and grow as we add more assets to the lease pool.
Martin: Second monetizing our remaining 757 freighter aircrafts.
Martin: We have successfully leased one in the fourth quarter and have six additional aircraft available.
Martin: These assets are highly attractive due to their recent conversion and servicing low flight hours and are amongst the youngest of the 757 fleet converted to freighters.
Martin: Third generating additional MRO revenue from our facility expansions and the growth of our customer base at our Goodyear facility as the year progresses and.
Martin: And fourth anticipating strong performance for <unk> in 2025, and 2026 as we assist customers in achieving a D. Compliance ahead of the November 2026 deadline.
Martin: We're improving our margin profile with an enhanced efficiency program at air sale aiming to optimize operations.
Martin: We streamlined workflow and facility scheduling opening spare capacity to increase profitability.
Martin: We examined cost against the current revenue expectations, leading to a reduction in head count.
Martin: Our efficiency program is expected to save $10 4 million annually accumulating throughout the year based on demand.
Martin: This is in addition to the $10 million saved in 2024 through increased efficiency.
Martin: In summary, we're starting the year with a stronger foundation multiple revenue streams and an optimized cost structure.
Martin: Taken together, we expect 2025 to be a growth year for air sale on both the top and bottom line.
Martin: Performance should improve incrementally excluding any impacts from whole asset sales as new capacity comes online and efficiency programs flow through to the bottom line.
On balance we're entering 2025 on a much stronger foundation with multiple growing revenue streams.
Martin: And an optimized cost structure.
Martin: I want to thank our dedicated employees for their hard work and our investors for their ongoing support.
Martin: We look forward to providing you with updates on our progress now I'll turn the call over to Martin for a closer look at the numbers Martin.
Martin: Thanks, Nick our fourth quarter revenue was $94 7 million, which included $31 million in flight equipment sales consisting of six engines.
Martin: Revenue in the fourth quarter of 2023 was $94 4 million and included $47 4 million applied equipment sales consisting of five engines and one pizza web converted Boeing 757 aircraft.
Martin: As we pointed out during all of our earnings calls flight equipment sales will significantly vary from quarter to quarter, and we believe monitoring our progress based on asset purchases and sales over the long term is a more appropriate measure of our progress.
Martin: Fourth quarter gross margin was 31, 4% compared to 25, 9% in the fourth quarter of 2023, primarily driven by sales mix that included higher margin engine leasing and flight equipment sales.
Martin: Selling general and administrative expenses were $24 8 million in the fourth quarter of 2024, which included $1 2 million of noncash equity based compensation expenses.
Martin: Selling general and administrative expenses were $25 5 million in the fourth quarter of 'twenty, three and included $3 1 million of noncash equity based compensation expenses.
Martin: The decrease in selling general and administrative expenses were primarily driven by the lower payroll related expenses during the quarter.
Martin: Fourth quarter income from operations was $4 9 million compared to a loss from operations of $1 1 million in the fourth quarter of 2023.
Martin: Net income was $2 7 million in the fourth quarter compared to a net loss of $2 7 million in the fourth quarter of 2023.
Martin: Adjusted for noncash equity based compensation Mark to market adjustment to the private warrant liability facility relocation costs inventory reserves restructuring costs and the gain on the insurance proceeds adjusted net income was $4 8 million in the fourth quarter of 2024.
Martin: Adjusted for the same items the fourth quarter of 2023 had an adjusted net loss of <unk> 1 million.
Martin: Fourth quarter diluted earnings per share was five comp.
Martin: Compared to a diluted loss per share of <unk> <unk> in the fourth quarter of 'twenty three.
Martin: Excluding the adjustments mentioned above fourth quarter adjusted diluted earnings per share was <unk> <unk> compared to adjusted diluted loss per share of <unk> for the fourth quarter of 2023.
Martin: Adjusted EBITDA was $13 million in the fourth quarter of 2024 compared to $6 million in the prior year period.
Martin: The growth in adjusted EBITDA was a result of higher sales volume during the period and lower expenses.
Martin: Next in terms of our cash flow metrics year to date cash provided in operating activities was $11 2 million, resulting from the benefit of insurance proceeds received related to the Roswell fire, which occurred in April 2024.
Martin: These amounts partially offset cash utilized for growth investments of over $78 million in newly acquired feedstock and make ready cost to prepare inventory for sale.
Martin: These investments should drive our revenue and earnings going forward.
Martin: This is an improvement for the quarter of $43 6 million in cash generated from operations as we begin to monetize previously purchased feedstock.
Martin: We ended the quarter with a substantial balance sheet with $142 8 million of liquidity, consisting of $4 7 million in cash and available capacity of $138 1 million on our $180 million revolving credit facility, which can be expanded to $200 million.
Martin: Looking forward to 2025, we are well positioned to capitalize on the favorable market conditions, we're seeing.
Martin: As Nick mentioned, we expect to start from a lower base in the first quarter of 2025 relative to the fourth quarter and step up incrementally as new revenue streams come online and cost reduction programs gain traction.
Martin: In total for the year, we expect to grow both the top and bottom line relative to 2024.
Martin: We are supported by a strong commercial environment robust activity in our asset management segment, and multiple expansion projects, which will increase our capacity and capabilities in.
Martin: In addition efficiencies changes instituted at the end of the fourth quarter and through the first quarter will also start to improve our profitability in 2025.
Martin: With that operator, we are ready to take questions.
Martin: Ladies and gentlemen at this time well begin the question and answer session to ask a question you May Press Star and then one on your Touchtone phone you are using a speaker phone. We do ask you. Please pick up your handset prior to pressing the key.
Martin: Withdraw your question you May press Star and two.
Martin: But again that is star and then one to join the question queue.
Martin: So momentarily to assemble the roster.
Speaker Change: Our first question comes from Michael <unk> from <unk>. Please go ahead with your question.
Michael: Hey, Yeah. Good evening guys. Thanks for taking the questions.
Michael: I think just on an era, where you mentioned.
Michael: Some enhancements you obviously you mentioned the two more customers can you maybe just talk to us.
How would the enhancements kind of.
Michael: Thank god with your already existing inventory, presumably I wouldn't imagine there's any rework and then may be just watch what's kind of happening with with your other partners on that program Elbit. It.
Michael: It seems like it's just in a holding pattern I guess, but as everybody, presumably ready to ramp if orders do come.
Mike: Hey, Mike Okay answering the questions the enhancements that we had been working on.
Michael: Mostly are being done by <unk>.
Mike: <unk> subsidiary Universal.
Okay and Tucson. So most of them are software some of them are hardware as an example, our head wearable display today is.
Mike: He is not foldable the all the new head wearable displays that we've ordered and worried and we are receiving are actually replacing the initial order of head wearable displays, which we're not foldable. So that just allows us to still the head wearable displays differently.
Mike: <unk>.
Mike: Customers have requested that we add capability to the system and I may have mentioned some of these before you know what.
Mike: And this comes from different customers. So it's not all the same one that's requesting these but.
Mike: Some have requested that we add runway length, so that as a as the pilot is approaching that runway whether he's taken off our landing he knows what the remaining runway leg phase.
Mike: As he is making that approach or or or taking off verifies whether.
Mike: It's got enough runway to stop or enough runway to take off so that's that's one additional feature besides the the.
Mike: Folding of the skylines. Another is a tail strike indication, which is which allows the pilots to see if the airplane is likely to incur a tail strike, whether it be on landing or takeoff and.
Speaker Change: With a lot of young pilots transitioning from smaller regional aircraft up to these larger transport category aircraft Airlines are having issues with pilots.
Speaker Change: Suffering tail strikes in tail strikes can be extremely damaging to an aircraft take it out of service for a prolonged period of time expensive to repair.
Speaker Change: Finally, and I think that this is that this is the most important feature that is in work now the certification of this has yet to happen, but it's in flight testing.
Speaker Change: Not on our aircraft at this point, but on a on an elbit aircraft Elbit Universal aircrafts. It's on a I think it's their flight testing it on a king air.
Speaker Change: And it's not really much different whether you are seeing it through the head wearable display on a king are you seeing it through the head wearable display on a 737, but the feature that I'm about to describe is is oh.
Speaker Change: It's called a DSP in now if you don't know what that is I'll just describe it this way our aircraft currently in all aircraft flying in the United States.
Speaker Change: Have equipment installed.
Speaker Change: That's called a DSP out actually our air track system is a DSP out what that allows the aircraft to do is to transmit information through the global satellite system to.
Speaker Change: To be received by air traffic control at the other end again through satellite not through traditional radar at the other end of the system. The FAA air traffic control system receives that data using what is what's called a DSP in the transponders, we have in our aircrafts are capable of both.
Speaker Change: Doing a DSP out, which we have and receiving a DSP in signals. So what universe, what Albert and Universal had been working on is taking the ASB in data and putting it on the sky lands. So that the pilots can see traffic.
Speaker Change: On their skylanders, rather than not seeing that or having to rely on the FAA to tell it what traffic is in its vicinity now in light of recent events. You know safety is a big issue in knowing where other aircraft or is a is super important it's a major safety issue and I.
Speaker Change: And we believe that the addition of <unk> in to the system will eventually add up.
Speaker Change: A feature and functionality.
Speaker Change: That is as good as what the system can do from an from a weather point of view because if pilots can see through their head wearable display where other aircrafts are.
Speaker Change: Just on how they transmit data to the FDA to the air traffic control system.
Speaker Change: That's a huge benefit from a safety perspective.
Speaker Change: Yeah sure makes sense.
Speaker Change: Pretty interesting.
Speaker Change: And then I guess on aerospace I mean, it sounds like.
Speaker Change: Coming quarters.
Speaker Change: I mean any color on it.
Speaker Change: Maybe the revenue cadence 26 isn't that far off I mean can we expect.
Speaker Change: Wade.
Speaker Change: Yes.
Speaker Change: As we get closer to that mandate.
Speaker Change: Previously I anticipated that we would reach a $20 million backlog, where we're at 14 million now I think last year, we were at 11 and we have delivered kits.
Speaker Change: So we are seeing a backlog growing the there is no one wants to spend money today, if they can push the expenditure of funds off into a later year, but because of the volume of aircraft that need to be made compliant airlines don't really have much of a choice because they they really want to.
Speaker Change: Install these kits when they're when an aircraft is down for maintenance. So if you've got.
Speaker Change: Five or 10 or 15 aircraft that need to be done you can't wait until November because you'll put all these aircraft down at the same time and you know obviously, that's not good for an airline so what we're finding now is that yes. The airlines have been pushing this off as long as they can but as we get closer to that compliance deadline I would bet by the time.
Speaker Change: We get to November December because of scheduling issues.
Speaker Change: We will probably see a peak backlog by you know as we approached the end of the year.
Speaker Change: Okay. That's good color.
Speaker Change: Great guys I'll jump back in the queue and compilers chatter.
Okay. Thanks, Mike.
Speaker Change: And our next question.
Speaker Change: Comes from Ken.
Barry: Hey, Barry from RBC capital. Please go ahead with your question.
Track Hanson: Hey, Nick This is Hfc's track has on for Ken Herbert.
Ken Herbert: Just to touch on that more of a services. It looks like your revenue was about 100.
Track Hanson: Full year 'twenty can.
Track Hanson: Can you maybe just give us hope that we would.
Track Hanson: Grow organically and then maybe just.
Track Hanson: So on some of the new MRO capacity, you have coming up on the quarter as well.
Track Hanson: Yeah.
Speaker Change: Yes, so as Nick noted, we expect our component MRO suite continue to increase throughout the year, even from Q4's levels.
Speaker Change: One is we've talked about some of them are some of the cost reductions that we've done and really kind of greater efficiency and running those units better. So not only do we expect revenue growth, but we're expecting margins to also improve.
Speaker Change: Nick did note that we did have a program that did six at our Goodyear facility that was Oh My line maintenance program. Our heavy maintenance program that is causing a temporary decline and I think the biggest impact of that youre going to see is in the in the first quarter of this year compared to the fourth quarter of last year again, we've right sized that unit and we expect that.
Speaker Change: Profitability to start to increase in the second quarter, and then really to grow in the second half of the overall year. So we're in a good position, we still see a real focus on improving our profitability and our heavy M arose. We've also right sized our millington facility understanding that it's better it's better economies to focus on the Goodyear.
Speaker Change: Our facility fill that all of the eight days and that facility before we move over to Sydney Millington, but having said that we're getting already customer interest in that facility due to its central geographic location.
Speaker Change: And then we will have plans to start increasing that but we're taking a much more cautious approach being very cost cost conscious of making sure that we focus on profitability.
Speaker Change: As we grow.
Speaker Change: Great and then maybe just specifically on the air where I think even more so in terms of the good testimonial where is there still maybe some way you can demonstrate excuse me the airline customer.
Speaker Change: To the FAA administrators of wind, which are where baidu can prevent and reduce the likelihood of maybe one of the aircraft.
Speaker Change: Whether it was weather related or just say visibility. It just seems like you guys might have an opportunity there.
Speaker Change: See you know on the on the on the recent event whenever they're going to I don't really comment on that because all the details about that event are yet to be determined. So we don't know if our system would've helped or not but I will say this.
Speaker Change: As far as.
Speaker Change: Improving pilot awareness of their surroundings, and other aircraft regardless of whether it's at you know day or night, but probably especially at night.
Speaker Change: We believe and we've seen our pilots have told us that their what they see is dramatically improved when they look through the head wearable display versus looking through the naked eye, so whether whether the in this in the circumstances that caused this recent tragedy.
Speaker Change: Whether our system would've made a difference or not we don't know we just don't have enough facts to we don't have enough facts to to conclude that one way or the other that we may we may eventually and give an opinion on that on whether we think that would've helped but in general we think it does help with visibility.
Speaker Change: And anything that improves pilot situational awareness is going to improve safety, so whether you're whether you're landing in inclement weather, whether you're approaching a runway with traffic on the runway that you didn't see for whatever reason, but you have a head wearable display that is going to a camera that is going to display what's on the runway we.
Speaker Change: Think that you know all of the events that have led to tragedies recently.
Speaker Change: Could be could be helped by using a system that has an enhanced night vision camera and ahead wearable display.
Speaker Change: Sounds good thanks, guys I'll jump back in queue.
Speaker Change: Okay.
Speaker Change: Once again, if he would like to ask a question. Please press star and one to withdraw. Your question you May Press Star and two again that is star and then one to join the question queue.
Speaker Change: We do have a follow up question from Michael at Yours. Please go ahead with your question.
Michael Yours: Hey, guys. Thanks for taking the follow up.
Michael Yours: Just maybe any color on on the availability of feedstock.
Speaker Change: First quarter here.
Michael Yours: Oh I think it was.
Michael Yours: In early January one of your competitors.
Speaker Change: <unk> talked about.
Speaker Change: Hitting the marketplace and anything you're seeing out there I know Boeing and Airbus are obviously struggling like it plays out the doors.
Speaker Change: I mean I and.
Speaker Change: Retirements are down but any any color you can add.
Speaker Change: And we we continue to see a very tight feedstock market.
Speaker Change: Because of the OEM production issues engine issues and FAA issues that are preventing the two Oems from putting aircraft out that are staying in service and enable the displacement of the older equipment. That's kind of that's what we that's what we're looking for.
Speaker Change: Notwithstanding what I just said.
Speaker Change: We continue to win deals and why do we continue to win deals.
Speaker Change: If it's not an aircraft on lease for an aircraft. That's that's coming off lease that meets all kinds of return conditions and as you know is in perfect condition.
Speaker Change: That's not our we don't win those deals with the deals we win and I've said this many times in prior earnings calls we win deals when flight equipment comes out and it needs a lot of work and because of the infrastructure, we have and the multiple ways that we can.
Speaker Change: We can work that flight equipment to get value.
Speaker Change: That's how we're finding that when we win a deal and we weren't deals today, not even from being like the.
Speaker Change: The most aggressive bidder and we typically are not the most aggressive bidder. There's other people who are bit more than we do but we close and when we would have.
Speaker Change: Pay the most but we close and today, there's a lot of money.
Speaker Change: Chasing assets in this space and investors that have placed money with companies that can't get the value out of camp squeezed. The sponge like we can and are finding that they're stuck with assets that.
The assets have less value than their carrying costs and so we're not seeing as much new money.
Speaker Change: Being invested.
Speaker Change: With with with.
Speaker Change: Potential competitors out there out there on the buy side and so and the sellers are figuring that out and they've now come across.
Speaker Change: <unk> potential.
Speaker Change: Potential buyers that they look at and they they find out that hey, These guys don't close date, they'll tie up an asset they'll try to round up the money, but they can't close because they don't have the money and where again our advantages we have the balance sheet. We have the available availability of cash we have the infrastructure to monetize.
Speaker Change: Flight equipment that needs a lot of work and and so that's why we keep winning deals and and.
Speaker Change: And we're so we're able to continue to maintain our buy rate.
Speaker Change: And our win rate was pretty good in this first quarter I don't say, we're going to consistently win 17% of our deals, but that's really a testament to our ability to extract value in multiple ways. So maybe that will continue and will continue and we'll have a maintain a higher than historical win rate in this market.
Speaker Change: The market is going to be tough.
Speaker Change: Inventory is gonna be constrained very competitive on the buy side <unk>.
Speaker Change: Despite the fact that there are investors that have previously invested and found that they've not made good deals.
Speaker Change: May not be investing there are still other investors that step into this space and are willing to invest with somebody else and that continues to you know in a way poison the market for us because we remain extremely disciplined on the buy side, we are not going to chase deals, where we don't feel we can attain our 25% Unlevered IRR.
Speaker Change: Or more or high margins.
Speaker Change: Got it thanks, Scott Thanks, Scott.
Mike: Thank you Mike.
Speaker Change: And ladies and gentlemen at this time, we will be ending today's question and answer session I'd like to turn the floor back over to Nick Synagro for any closing remarks.
Speaker Change: I want to thank Mike from Truest, and Steve from RBC for their insightful questions, which which I believe will help investors understand our business model and the progress that we've made to date I also very much appreciate your interest in listening to our call today and I look forward to bring.
Speaker Change: And do you up to date during our next earnings call I wish you all a good evening. Thank you.
Speaker Change: And ladies and gentlemen, with that we'll conclude today's conference call and presentation. We do thank you for joining you may now disconnect your lines.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.