Avation (AVAP) Sidoti Micro-Cap Investor Conference summary

Industry environment and market positioning

• Aircraft leasing market is experiencing a supply-demand imbalance, with OEMs unable to meet demand, creating a seller's market for lessors with available aircraft slots.

• Older aircraft remain in demand due to delivery delays, supporting higher lease rates and market values.

• The company is one of only a few listed lessors globally, with a focus on the ATR turboprop segment, which faces limited competition and offers higher yields.

• Geographic exposure is concentrated in Asia-Pacific, with ongoing diversification into the Americas and Europe.

• The company has weathered industry cycles, including COVID, and is positioned for growth as air travel returns to trend.

Growth strategy and fleet development

• Order book guarantees at least 10% fleet CAGR through the decade, with potential for 14% CAGR if secondary market acquisitions continue.

• 13 aircraft on firm order and 19 additional purchase rights extend growth opportunities to 2034.

• Focus on profitable growth through selective secondary market acquisitions and customer diversification.

• Lease terms are expected to lengthen as the business grows, with current average aircraft age at nine years.

• All new aircraft are 100% SAF compatible, supporting sustainability initiatives.

Financial performance and capital management

• Revenue and operating profit have remained stable or grown despite the sale of a large wide-body asset.

• Net debt to equity and interest cover have improved compared to pre-COVID levels.

• Bond refinancing extended debt maturity to 2031, and credit ratings have improved.

• The company has bought back 22% of its shares and some bonds, reflecting confidence in its undervalued position.

• Trading at a significant discount to net asset value, with a 20%-50% gap depending on treatment of purchase rights.