FTAI Reports Third Quarter 2020 Results, Dividend of $0.33 per Common Share

Fortress Transportation and Infrastructure Investors LLC
·20-min read

NEW YORK, Oct. 29, 2020 (GLOBE NEWSWIRE) -- Fortress Transportation and Infrastructure Investors LLC (NYSE:FTAI) (the “Company” or “FTAI”) today reported financial results for the third quarter 2020. The Company’s consolidated comparative financial statements and key performance measures are attached as an exhibit to this press release.

Financial Overview

(in thousands, except per share data)

Selected Financial Results

Q3’20

Net Cash Used in Operating Activities

$

(16,259

)

Net Loss Attributable to Shareholders

$

(25,958

)

Basic and Diluted Loss per Common Share

$

(0.30

)

Funds Available for Distribution (“FAD”) (1)

$

39,856

Adjusted EBITDA(1)

$

58,636

_______________________________
(1) For definitions and reconciliations of non-GAAP measures, please refer to the exhibit to this press release.

For the third quarter of 2020, total FAD was $39.9 million. This amount includes $74.5 million from our aviation leasing portfolio, offset by $(0.3) million from our infrastructure business and $(34.3) million from corporate and other.

Third Quarter 2020 Dividends

On October 29, 2020, the Company’s Board of Directors (the “Board”) declared a cash dividend on its common shares of $0.33 per share for the quarter ended September 30, 2020, payable on November 30, 2020 to the holders of record on November 16, 2020.

Additionally, on October 29, 2020, the Board declared cash dividends on its Fixed-to-Floating Rate Series A Cumulative Perpetual Redeemable Preferred Shares (“Series A Preferred Shares”) and Fixed-to-Floating Rate Series B Cumulative Perpetual Redeemable Preferred Shares (“Series B Preferred Shares”) of $0.51563 and $0.50000 per share, respectively, for the quarter ended September 30, 2020, payable on December 15, 2020 to the holders of record on December 1, 2020.

Additional Information

For additional information that management believes to be useful for investors, please refer to the presentation posted on the Investor Relations section of the Company’s website, www.ftandi.com, and the Company’s Quarterly Report on Form 10-Q, when available on the Company’s website. Nothing on the Company’s website is included or incorporated by reference herein.

Conference Call

The Company will host a conference call on Friday, October 30, 2020 at 8:00 A.M. Eastern Time. The conference call may be accessed by dialing (877) 447-5636 (from within the U.S.) or (615) 247-0080 (from outside of the U.S.) ten minutes prior to the scheduled start of the call; please reference "FTAI Third Quarter 2020 Earnings Call." A simultaneous webcast of the conference call will be available to the public on a listen-only basis at www.ftandi.com.

Following the call, a replay of the conference call will be available after 12:00 P.M. on Friday, October 30, 2020 through 10:30 A.M. Friday, November 6, 2020 at (855) 859-2056 (from within the U.S.) or (404) 537-3406 (from outside of the U.S.), Passcode: 8578125.

About Fortress Transportation and Infrastructure Investors LLC

Fortress Transportation and Infrastructure Investors LLC owns and acquires high quality infrastructure and equipment that is essential for the transportation of goods and people globally. FTAI targets assets that, on a combined basis, generate strong and stable cash flows with the potential for earnings growth and asset appreciation. FTAI is externally managed by an affiliate of Fortress Investment Group LLC, a leading, diversified global investment firm.

Cautionary Note Regarding Forward-Looking Statements

Certain statements in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements, many of which are beyond the Company’s control. The Company can give no assurance that its expectations will be attained and such differences may be material. Accordingly, you should not place undue reliance on any forward-looking statements contained in this press release. For a discussion of some of the risks and important factors that could affect such forward-looking statements, see the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which are available on the Company’s website (www.ftandi.com). In addition, new risks and uncertainties emerge from time to time, and it is not possible for the Company to predict or assess the impact of every factor that may cause its actual results to differ from those contained in any forward-looking statements. Such forward-looking statements speak only as of the date of this press release. The Company expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or change in events, conditions or circumstances on which any statement is based. This release shall not constitute an offer to sell or the solicitation of an offer to buy any securities.

For further information, please contact:

Alan Andreini
Investor Relations
Fortress Transportation and Infrastructure Investors LLC
(212) 798-6128
aandreini@fortress.com

Withholding Information for Withholding Agents

This announcement is intended to be a qualified notice as provided in the Internal Revenue Code (the “Code”) and the Regulations thereunder. For U.S. federal income tax purposes, the common dividend and the Series A Preferred and Series B Preferred dividends declared in October 2020 will be treated as a partnership distribution and guaranteed payments, respectively. For U.S. tax withholding purposes, the per share distribution components are as follows:

Common Distribution Components

Non-U.S. Long Term Capital Gain

$

U.S. Portfolio Interest Income(1)

$

0.10809

U.S. Dividend Income(2)

$

Income Not from U.S. Sources(3)

$

0.22191

U.S. Long Term Capital Gain (4)

$

Distribution Per Share

$

0.33000


Series A Preferred Distribution Components

Guaranteed Payments(5)

$

0.51563

Distribution Per Share

$

0.51563


Series B Preferred Distribution Components

Guaranteed Payments(5)

$

0.50000

Distribution Per Share

$

0.50000

(1) Eligible for the U.S. portfolio interest exemption for any holder not considered a 10-percent shareholder under §871(h)(3)(B) of the Code.

(2) This income is subject to withholding under §1441 or §1442 of the Code.

(3) This income is not subject to withholding under §1441, §1442 or §1446 of the Code.

(4) U.S. Long Term Capital Gain attributable to the sale of a U.S. Real Property Holding Corporation. As a result, the gain will be treated as income that is effectively connected with a U.S. trade or business and be subject to withholding.

(5) Brokers and nominees should treat this income as subject to withholding under §1441 or §1442 of the Code.

For U.S. shareholders: In computing your U.S. federal taxable income, you should not rely on this qualified notice, but should generally take into account your allocable share of the Company’s taxable income as reported to you on your Schedule K-1.


Exhibit - Financial Statements

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Dollar amounts in thousands, except per share data)

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

Revenues

Equipment leasing revenues

$

69,799

$

87,259

$

236,082

$

238,911

Infrastructure revenues

13,910

65,441

54,776

178,531

Total revenues

83,709

152,700

290,858

417,442

Expenses

Operating expenses

23,128

82,719

81,144

222,812

General and administrative

4,241

5,535

13,292

13,270

Acquisition and transaction expenses

2,442

5,343

9,297

9,125

Management fees and incentive allocation to affiliate

4,591

7,378

14,113

16,926

Depreciation and amortization

42,626

43,265

126,543

124,180

Asset impairment

3,915

14,391

Interest expense

26,904

25,190

71,559

71,318

Total expenses

107,847

169,430

330,339

457,631

Other (expense) income

Equity in losses of unconsolidated entities

(2,501

)

(974

)

(5,445

)

(1,527

)

(Loss) gain on sale of assets, net

(1,114

)

37,060

(2,165

)

61,400

Loss on extinguishment of debt

(4,724

)

Interest income

58

121

121

452

Other income

1,131

32

3,465

Total other (expense) income

(3,557

)

37,338

(12,181

)

63,790

(Loss) income from continuing operations before income taxes

(27,695

)

20,608

(51,662

)

23,601

(Benefit from) provision for income taxes

(2,486

)

872

(6,334

)

(1,189

)

Net (loss) income from continuing operations

(25,209

)

19,736

(45,328

)

24,790

Net income from discontinued operations, net of income taxes

940

1,331

1,883

Net (loss) income

(25,209

)

20,676

(43,997

)

26,673

Less: Net (loss) income attributable to non-controlling interests in consolidated subsidiaries:

Continuing operations

(3,876

)

(5,111

)

(12,724

)

(13,051

)

Discontinued operations

116

101

Dividends on preferred shares

4,625

13,243

Net (loss) income attributable to shareholders

$

(25,958

)

$

25,671

$

(44,516

)

$

39,623

(Loss) earnings per share:

Basic

Continuing operations

$

(0.30

)

$

0.29

$

(0.53

)

$

0.44

Discontinued operations

$

$

0.01

$

0.02

$

0.02

Diluted

Continuing operations

$

(0.30

)

$

0.29

$

(0.53

)

$

0.44

Discontinued operations

$

$

0.01

$

0.02

$

0.02

Weighted average shares outstanding:

Basic

86,022,302

85,996,067

86,013,485

85,990,131

Diluted

86,022,302

86,005,604

86,013,485

86,013,539


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollar amounts in thousands, except per share data)

(Unaudited)

September 30, 2020

December 31, 2019

Assets

Cash and cash equivalents

$

119,799

$

226,512

Restricted cash

43,607

16,005

Accounts receivable, net

78,054

49,470

Leasing equipment, net

1,703,498

1,707,059

Operating lease right-of-use assets, net

62,588

37,466

Finance leases, net

13,189

8,315

Property, plant, and equipment, net

917,872

732,109

Investments

158,215

180,550

Intangible assets, net

21,142

27,692

Goodwill

122,735

122,639

Other assets

134,631

129,105

Total assets

$

3,375,330

$

3,236,922

Liabilities

Accounts payable and accrued liabilities

$

88,050

$

144,855

Debt, net

1,801,573

1,420,928

Maintenance deposits

154,661

208,944

Security deposits

35,836

45,252

Operating lease liabilities

62,209

36,968

Other liabilities

32,154

41,118

Total liabilities

$

2,174,483

$

1,898,065

Commitments and contingencies

Equity

Common shares ($0.01 par value per share; 2,000,000,000 shares authorized; 85,617,146 and 84,917,448 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively)

$

856

$

849

Preferred shares ($0.01 par value per share; 200,000,000 shares authorized; 9,120,000 and 8,050,000 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively)

91

81

Additional paid in capital

1,130,121

1,110,122

Retained earnings

60,760

190,453

Accumulated other comprehensive (loss) income

(16,450

)

372

Shareholders' equity

1,175,378

1,301,877

Non-controlling interest in equity of consolidated subsidiaries

25,469

36,980

Total equity

1,200,847

1,338,857

Total liabilities and equity

$

3,375,330

$

3,236,922


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollar amounts in thousands, unless otherwise noted)

Nine Months Ended September 30,

2020

2019

Cash flows from operating activities:

Net (loss) income

$

(43,997

)

$

26,673

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Equity in losses of unconsolidated entities

5,445

1,527

Gain on sale of subsidiaries

(1,331

)

Loss (gain) on sale of assets, net

2,165

(61,416

)

Security deposits and maintenance claims included in earnings

(12,275

)

(3,863

)

Loss on extinguishment of debt

4,724

Equity-based compensation

1,323

1,604

Depreciation and amortization

126,543

125,877

Asset impairment

14,391

Change in current and deferred income taxes

(7,374

)

(1,906

)

Change in fair value of non-hedge derivative

181

4,130

Amortization of lease intangibles and incentives

23,394

24,008

Amortization of deferred financing costs

6,156

5,995

Bad debt expense

1,997

3,139

Other

1,152

748

Change in:

Accounts receivable

(43,014

)

(16,002

)

Other assets

1,253

(15,128

)

Accounts payable and accrued liabilities

(32,415

)

2,101

Management fees payable to affiliate

(20,965

)

8,961

Other liabilities

1,040

(13,735

)

Net cash provided by operating activities

28,393

92,713

Cash flows from investing activities:

Investment in unconsolidated entities

(4,407

)

(13,500

)

Principal collections on finance leases

7,001

13,094

Acquisition of leasing equipment

(252,859

)

(287,508

)

Acquisition of property, plant and equipment

(209,662

)

(243,707

)

Acquisition of lease intangibles

1,997

(101

)

Purchase deposits for acquisitions

(5,320

)

(45,852

)

Proceeds from sale of leasing equipment

53,707

166,290

Proceeds from sale of property, plant and equipment

7

Return of capital distributions from unconsolidated entities

1,424

Return of deposit on sale of engine

2,350

Net cash used in investing activities

$

(407,193

)

$

(409,853

)

Cash flows from financing activities:

Proceeds from debt

$

883,981

$

568,704

Repayment of debt

(495,991

)

(218,934

)

Payment of deferred financing costs

(20,416

)

(31,585

)

Receipt of security deposits

1,564

5,802

Return of security deposits

(3,815

)

(368

)

Receipt of maintenance deposits

25,102

49,356

Release of maintenance deposits

(12,429

)

(23,822

)

Proceeds from issuance of preferred shares, net of underwriter's discount and issuance costs

20,223

82,888

Purchase of non-controlling interest

(110

)

Cash dividends - common shares

(85,177

)

(85,154

)

Cash dividends - preferred shares

(13,243

)

Net cash provided by financing activities

$

299,689

$

346,887

Net (decrease) increase in cash and cash equivalents and restricted cash

(79,111

)

29,747

Cash and cash equivalents and restricted cash, beginning of period

242,517

120,837

Cash and cash equivalents and restricted cash, end of period

$

163,406

$

150,584

Key Performance Measures

The Chief Operating Decision Maker (“CODM”) utilizes Adjusted EBITDA as our key performance measure.

Adjusted EBITDA provides the CODM with the information necessary to assess operational performance, as well as make resource and allocation decisions. Adjusted EBITDA is defined as net income (losses) attributable to shareholders from continuing operations, adjusted (a) to exclude the impact of provision for income taxes, equity-based compensation expense, acquisition and transaction expenses, losses on the modification or extinguishment of debt and capital lease obligations, changes in fair value of non-hedge derivative instruments, asset impairment charges, incentive allocations, depreciation and amortization expense, and interest expense, (b) to include the impact of our pro-rata share of Adjusted EBITDA from unconsolidated entities, and (c) to exclude the impact of equity in earnings (losses) of unconsolidated entities and the non-controlling share of Adjusted EBITDA.

The following table sets forth a reconciliation of net (loss) income attributable to shareholders from continuing operations to Adjusted EBITDA for the three and nine months ended September 30, 2020 and 2019:

Three Months Ended
September 30,

Nine Months Ended
September 30,

(in thousands)

2020

2019

2020

2019

Net (loss) income attributable to shareholders from continuing operations

$

(25,958

)

$

24,847

$

(45,847

)

$

37,841

Add: (Benefit from) provision for income taxes

(2,486

)

872

(6,334

)

(1,189

)

Add: Equity-based compensation expense

621

405

1,323

1,166

Add: Acquisition and transaction expenses

2,442

5,343

9,297

9,125

Add: Losses on the modification or extinguishment of debt and capital lease obligations

4,724

Add: Changes in fair value of non-hedge derivative instruments

4,380

181

4,130

Add: Asset impairment charges

3,915

14,391

Add: Incentive allocations

3,736

6,109

Add: Depreciation and amortization expense (1)

52,532

49,985

149,937

148,188

Add: Interest expense

26,904

25,190

71,559

71,318

Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2)

120

(801

)

(167

)

(895

)

Less: Equity in losses of unconsolidated entities

2,501

974

5,445

1,527

Less: Non-controlling share of Adjusted EBITDA (3)

(1,955

)

(2,928

)

(7,406

)

(7,866

)

Adjusted EBITDA (non-GAAP)

$

58,636

$

112,003

$

197,103

$

269,454

________________________________________________________
(1) Includes the following items for the three months ended September 30, 2020 and 2019: (i) depreciation and amortization expense of $42,626 and $43,265, (ii) lease intangible amortization of $953 and $1,072 and (iii) amortization for lease incentives of $8,953 and $5,648, respectively. Includes the following items for the nine months ended September 30, 2020 and 2019: (i) depreciation and amortization expense of $126,543 and $124,180, (ii) lease intangible amortization of $3,016 and $5,736 and (iii) amortization for lease incentives of $20,378 and $18,272, respectively.

(2) Includes the following items for the three months ended September 30, 2020 and 2019: (i) net loss of $(2,590) and $(1,096), (ii) interest expense of $367 and $30, (iii) depreciation and amortization expense of $1,389 and $265, (iv) acquisition and transaction expenses of $(79) and $0 and (v) changes in fair value of non-hedge derivatives of $1,033 and $0, respectively. Includes the following items for the nine months ended September 30, 2020 and 2019: (i) net loss of $(5,593) and $(1,793), (ii) interest expense of $848 and $101, (iii) depreciation and amortization expense of $3,797 and $797, (iv) acquisition and transaction expenses of $533 and $0 and (v) changes in fair value of non-hedge derivatives of $248 and $0, respectively.

(3) Includes the following items for the three months ended September 30, 2020 and 2019: (i) equity-based compensation of $97 and $57, (ii) provision for income taxes of $1 and $12, (iii) interest expense of $322 and $813, (iv) depreciation and amortization expense of $1,535 and $1,261 and (v) changes in fair value of non-hedge derivative instruments of $0 and $785, respectively. Includes the following items for the nine months ended September 30, 2020 and 2019: (i) equity based compensation of $196 and $176, (ii) provision for income taxes of $44 and $38, (iii) interest expense of $1,553 and $2,758, (iv) depreciation and amortization expense of $4,583 and $3,633, (v) changes in fair value of non-hedge derivative instruments of $38 and $1,261 and (vi) loss on extinguishment of debt of $992 and $0, respectively.

The Company uses Funds Available for Distribution (“FAD”) in evaluating its ability to meet its stated dividend policy. FAD is not a financial measure in accordance with GAAP. The GAAP measure most directly comparable to FAD is net cash provided by operating activities. The Company believes FAD is a useful metric for investors and analysts for similar purposes.

The Company defines FAD as: Net Cash Provided by Operating Activities plus principal collections on finance leases, proceeds from sale of assets, and return of capital distributions from unconsolidated entities, less required payments on debt obligations and capital distributions to non-controlling interest, and excluding changes in working capital.

The following table sets forth a reconciliation of Net Cash Provided by Operating Activities to FAD for the nine months ended September 30, 2020 and 2019:

Nine Months Ended September 30,

(in thousands)

2020

2019

Net Cash Provided by Operating Activities

$

28,393

$

92,713

Add: Principal Collections on Finance Leases

7,001

13,094

Add: Proceeds from Sale of Assets

53,707

166,297

Add: Return of Capital Distributions from Unconsolidated Entities

1,424

Less: Required Payments on Debt Obligations (1)

(29,513

)

Less: Capital Distributions to Non-Controlling Interest

Exclude: Changes in Working Capital

94,101

33,803

Funds Available for Distribution (FAD)

$

183,202

$

277,818

________________________________________________________
(1) Required payments on debt obligations for the nine months ended September 30, 2020 exclude repayments of $220,000 for the Revolving Credit Facility, $144,200 for the Series 2016 Bonds, $50,262 for the Jefferson Revolver, $45,520 for the Series 2012 Bonds and $36,009 for the FTAI Pride Credit Agreement and for the nine months ended September 30, 2019 exclude repayments of $175,000 for the Revolving Credit Facility and $14,421 for the CMQR Credit Agreement.

The following tables set forth a reconciliation of Net Cash Used in Operating Activities to FAD for the three months ended September 30, 2020:

Three Months Ended September 30, 2020

(in thousands)

Equipment
Leasing

Infrastructure

Corporate and
Other

Total

Funds Available for Distribution (FAD)

$

74,521

$

(297

)

$

(34,368

)

$

39,856

Less: Principal Collections on Finance Leases

(3,681

)

Less: Proceeds from Sale of Assets

(16,020

)

Less: Return of Capital Distributions from Unconsolidated Entities

Add: Required Payments on Debt Obligations

Add: Capital Distributions to Non-Controlling Interest

Include: Changes in Working Capital

(36,414

)

Net Cash Used in Operating Activities

$

(16,259

)

The following tables set forth a reconciliation of Net Cash Provided by Operating Activities to FAD for the nine months ended September 30, 2020:

Nine Months Ended September 30, 2020

(in thousands)

Equipment
Leasing

Infrastructure

Corporate and
Other

Total

Funds Available for Distribution (FAD)

$

277,917

$

(5,275

)

$

(89,440

)

$

183,202

Less: Principal Collections on Finance Leases

(7,001

)

Less: Proceeds from Sale of Assets

(53,707

)

Less: Return of Capital Distributions from Unconsolidated Entities

Add: Required Payments on Debt Obligations

Add: Capital Distributions to Non-Controlling Interest

Include: Changes in Working Capital

(94,101

)

Net Cash Provided by Operating Activities

$

28,393

FAD is subject to a number of limitations and assumptions and there can be no assurance that the Company will generate FAD sufficient to meet its intended dividends. FAD has material limitations as a liquidity measure of the Company because such measure excludes items that are required elements of the Company’s net cash provided by operating activities as described below. FAD should not be considered in isolation nor as a substitute for analysis of the Company’s results of operations under GAAP, and it is not the only metric that should be considered in evaluating the Company’s ability to meet its stated dividend policy. Specifically:

  • FAD does not include equity capital called from the Company’s existing limited partners, proceeds from any debt issuance or future equity offering, historical cash and cash equivalents and expected investments in the Company’s operations.

  • FAD does not give pro forma effect to prior acquisitions, certain of which cannot be quantified.

  • While FAD reflects the cash inflows from sale of certain assets, FAD does not reflect the cash outflows to acquire assets as the Company relies on alternative sources of liquidity to fund such purchases.

  • FAD does not reflect expenditures related to capital expenditures, acquisitions and other investments as the Company has multiple sources of liquidity and intends to fund these expenditures with future incurrences of indebtedness, additional capital contributions and/or future issuances of equity.

  • FAD does not reflect any maintenance capital expenditures necessary to maintain the same level of cash generation from our capital investments.

  • FAD does not reflect changes in working capital balances as management believes that changes in working capital are primarily driven by short term timing differences, which are not meaningful to the Company’s distribution decisions.

  • Management has significant discretion to make distributions, and the Company is not bound by any contractual provision that requires it to use cash for distributions.

If such factors were included in FAD, there can be no assurance that the results would be consistent with the Company’s presentation of FAD.