U.S. Markets closed

FTAI Reports Second Quarter 2019 Results, Dividend of $0.33 per Common Share

NEW YORK, Aug. 01, 2019 (GLOBE NEWSWIRE) -- Fortress Transportation and Infrastructure Investors LLC (FTAI) (the “Company”) today reported financial results for the three months ended June 30, 2019. 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   Q2’19  
  Net Cash Provided by Operating Activities $ 37,842  
  Net Income Attributable to Shareholders $ 20,332  
  Basic and Diluted Earnings per Share $ 0.24  
     
  Funds Available for Distribution (“FAD”) (1) $ 86,894  
  Adjusted EBITDA(1) $ 94,130  

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

For the second quarter of 2019, our total FAD was $86.9 million. This amount includes $126.8 million from aviation leasing

activities, offset by $(10.0) million and $(29.9) million from infrastructure and corporate and other activities, respectively.

Second Quarter 2019 Dividend

On August 1, 2019, the Company’s Board of Directors declared a cash dividend on its common shares of $0.33 per share for the quarter ended June 30, 2019, payable on August 27, 2019 to the holders of record on August 16, 2019.

“We just completed our most profitable quarter ever both in terms of net income and adjusted EBITDA. Aviation continues to exceed our expectations and we are executing long-term contracts at all four of our infrastructure companies at a pace we have never experienced before,” said Joe Adams, the Company’s Chief Executive Officer.

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, August 2, 2019 at 8:00 A.M. Eastern Time. The conference call may be accessed by dialing 1-877-447-5636 (from within the U.S.) or 1-615-247-0080 (from outside of the U.S.) ten minutes prior to the scheduled start of the call; please reference “FTAI Second Quarter 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, August 2, 2019 through midnight Friday, August 9, 2019 at 1-855-859-2056 (from within the U.S.) or 1-404-537-3406 (from outside of the U.S.), Passcode: 7549869.

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 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 dividend declared in August 2019 will be treated as a partnership distribution.  For tax withholding purposes, the per share distribution components are as follows:

  Distribution Components      
  Non-U.S. Long Term Capital Gain $  
  U.S. Portfolio Interest Income(1) $ 0.0975  
  U.S. Dividend Income(2) $  
  Income Not from U.S. Sources(3) $ 0.2325  
  Distribution Per Share
$ 0.3300  


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

  Three Months Ended June 30,   Six Months Ended June 30,
  2019   2018   2019   2018
Revenues              
Equipment leasing revenues $ 79,200     $ 59,330     $ 151,652     $ 115,114  
Infrastructure revenues 79,805     12,649     131,980     25,709  
Total revenues 159,005     71,979     283,632     140,823  
               
Expenses              
Operating expenses 92,763     27,593     154,681     55,172  
General and administrative 4,297     4,573     9,029     8,159  
Acquisition and transaction expenses 2,308     1,508     3,782     3,274  
Management fees and incentive allocation to affiliate 5,710     4,495     9,548     8,234  
Depreciation and amortization 42,600     32,844     82,133     62,431  
Interest expense 25,472     12,857     46,775     24,728  
Total expenses 173,150     83,870     305,948     161,998  
               
Other income (expense)              
Equity in losses of unconsolidated entities (169 )   (251 )   (553 )   (156 )
Gain on sale of equipment, net 22,630     4,996     24,355     4,991  
Interest income 240     74     331     250  
Other income 4,938     1,157     2,334     1,337  
Total other income 27,639     5,976     26,467     6,422  
               
Income (loss) before income taxes 13,494     (5,915 )   4,151     (14,753 )
(Benefit from) provision for income taxes (2,299 )   534     (1,846 )   1,029  
Net income (loss) 15,793     (6,449 )   5,997     (15,782 )
Less: Net loss attributable to non-controlling interests in consolidated subsidiaries (4,539 )   (7,288 )   (7,955 )   (16,049 )
Net income attributable to shareholders $ 20,332     $ 839     $ 13,952     $ 267  
               
Earnings per share              
Basic $ 0.24     $ 0.01     $ 0.16     $  
Diluted $ 0.24     $ 0.01     $ 0.16     $  
               
Weighted Average Shares Outstanding:              
Basic 85,987,769     83,160,037     85,987,115     82,351,736  
Diluted 85,989,029     83,160,047     85,987,115     82,351,858  
                       

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

CONSOLIDATED BALANCE SHEETS

(Dollar amounts in thousands, unless otherwise noted)

  (Unaudited)    
  June 30, 2019   December 31, 2018
Assets      
Cash and cash equivalents $ 115,559     $ 99,601  
Restricted cash 58,817     21,236  
Accounts receivable, net 61,878     53,789  
Leasing equipment, net 1,509,848     1,432,210  
Operating lease right-of-use assets, net 42,993      
Finance leases, net 20,092     18,623  
Property, plant, and equipment, net 855,013     708,853  
Investments 38,727     40,560  
Intangible assets, net 32,409     38,513  
Goodwill 116,584     116,584  
Other assets 236,589     108,809  
Total assets $ 3,088,509     $ 2,638,778  
       
Liabilities      
Accounts payable and accrued liabilities $ 117,280     $ 112,188  
Debt, net 1,631,136     1,237,347  
Maintenance deposits 180,824     158,163  
Security deposits 41,103     38,539  
Operating lease liabilities 43,459      
Other liabilities 36,474     38,759  
Total liabilities $ 2,050,276     $ 1,584,996  
       
Commitments and contingencies      
       
Equity      
Common shares ($0.01 par value per share; 2,000,000,000 shares authorized; 84,846,083 and 84,050,889 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively) $ 848     $ 840  
Additional paid in capital 972,836     1,029,376  
Accumulated deficit (18,865 )   (32,817 )
Accumulated other comprehensive income 34,058      
Shareholders' equity 988,877     997,399  
Non-controlling interest in equity of consolidated subsidiaries 49,356     56,383  
Total equity 1,038,233     1,053,782  
Total liabilities and equity $ 3,088,509     $ 2,638,778  
               

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Dollar amounts in thousands, unless otherwise noted)

  Six Months Ended June 30,
  2019   2018
Cash flows from operating activities:      
Net income (loss) $ 5,997     $ (15,782 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:      
Equity in losses of unconsolidated entities 553     156  
Gain on sale of equipment, net (24,355 )   (4,991 )
Security deposits and maintenance claims included in earnings (2,869 )   (4,325 )
Equity-based compensation 928     437  
Depreciation and amortization 82,133     62,431  
Change in current and deferred income taxes (2,655 )   564  
Change in fair value of non-hedge derivative (250 )   (182 )
Amortization of lease intangibles and incentives 17,288     12,943  
Amortization of deferred financing costs 4,043     2,483  
Bad debt expense 3,062     1,521  
Other 547     21  
Change in:      
Accounts receivable (14,675 )   (10,064 )
Other assets (13,105 )   (10,318 )
Accounts payable and accrued liabilities 8,661     22,091  
Management fees payable to affiliate 871     (668 )
Other liabilities (8,062 )   2,835  
Net cash provided by operating activities 58,112     59,152  
       
Cash flows from investing activities:      
Investment in notes receivable     (912 )
Investment in unconsolidated entities and available for sale securities     (1,115 )
Principal collections on finance leases 2,996     539  
Acquisition of leasing equipment (209,171 )   (205,819 )
Acquisition of property, plant and equipment (159,252 )   (124,039 )
Acquisition of lease intangibles 623     (2,225 )
Purchase deposits for acquisitions (33,637 )   (17,890 )
Proceeds from sale of leasing equipment 71,497     26,499  
Proceeds from sale of property, plant and equipment 7     31  
Return of capital distributions from unconsolidated entities 1,280      
Return of purchase deposit for aircraft and aircraft engines     240  
Return of deposit on sale of engine     (400 )
Net cash used in investing activities $ (325,657 )   $ (325,091 )
       
Cash flows from financing activities:      
Proceeds from debt $ 529,477     $ 204,350  
Repayment of debt (128,835 )   (45,874 )
Payment of deferred financing costs (32,443 )   (1,819 )
Receipt of security deposits 3,475     3,748  
Return of security deposits (233 )   (805 )
Receipt of maintenance deposits 28,903     22,355  
Release of maintenance deposits (22,493 )   (4,276 )
Proceeds from issuance of common shares, net of underwriter's discount     128,450  
Common shares issuance costs     (789 )
Purchase of non-controlling interest     (3,700 )
Cash dividends (56,767 )   (54,662 )
Net cash provided by financing activities $ 321,084     $ 246,978  
       
Net increase (decrease) in cash and cash equivalents and restricted cash 53,539     (18,961 )
Cash and cash equivalents and restricted cash, beginning of period 120,837     92,806  
Cash and cash equivalents and restricted cash, end of period $ 174,376     $ 73,845  
               

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 attributable to shareholders, 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 income attributable to shareholders to Adjusted EBITDA for the three and six months ended June 30, 2019 and 2018:

  Three Months Ended June 30,   Change   Six Months Ended
June 30,
  Change
(in thousands) 2019   2018     2019   2018  
Net income attributable to shareholders $ 20,332     $ 839     $ 19,493     $ 13,952     $ 267     $ 13,685  
Add: (Benefit from) provision for income taxes (2,299 )   534     (2,833 )   (1,846 )   1,029     (2,875 )
Add: Equity-based compensation expense 700     229     471     928     437     491  
Add: Acquisition and transaction expenses 2,308     1,508     800     3,782     3,274     508  
Add: Losses on the modification or extinguishment of debt and capital lease obligations                      
Add: Changes in fair value of non-hedge derivative instruments (3,470 )   (441 )   (3,029 )   (250 )   182     (432 )
Add: Asset impairment charges                      
Add: Incentive allocations 2,211     573     1,638     2,373     573     1,800  
Add: Depreciation and amortization expense (1) 51,554     38,506     13,048     99,421     75,320     24,101  
Add: Interest expense 25,472     12,857     12,615     46,775     24,728     22,047  
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2) 24     (192 )   216     (94 )   (17 )   (77 )
Less: Equity in losses of unconsolidated entities 169     251     (82 )   553     156     397  
Less: Non-controlling share of Adjusted EBITDA (3) (2,871 )   (2,447 )   (424 )   (5,174 )   (5,612 )   438  
Adjusted EBITDA (non-GAAP) $ 94,130     $ 52,217     $ 41,913     $ 160,420     $ 100,337     $ 60,083  

________________________________________________________

(1) Includes the following items for the three months ended June 30, 2019 and 2018: (i) depreciation and amortization expense of $42,600 and $32,844, (ii) lease intangible amortization of $2,202 and $2,010 and (iii) amortization for lease incentives of $6,752 and $3,652, respectively. Includes the following items for the six months ended June 30, 2019 and 2018: (i) depreciation and amortization expense of $82,133 and $62,431, (ii) lease intangible amortization of $4,664 and $4,002 and (iii) amortization for lease incentives of $12,624 and $8,887, respectively.
   
(2) Includes the following items for the three months ended June 30, 2019 and 2018: (i) net loss of $(276) and $(299), (ii) interest expense of $34 and $94 and (iii) depreciation and amortization expense of $266 and $13, respectively. Includes the following items for the six months ended June 30, 2019 and 2018: (i) net loss of $(696) and $(251), (ii) interest expense of $70 and $206 and (iii) depreciation and amortization expense of $532 and $28, respectively.
   
(3) Includes the following items for the three months ended June 30, 2019 and 2018: (i) equity based compensation of $110 and $25, (ii) provision for income taxes of $10 and $3, (iii) interest expense of $1,109 and $1,032, (iv) depreciation and amortization expense of $1,345 and $1,200, and (v) changes in fair value of non-hedge derivative instruments of $297 and $187, respectively. Includes the following items for the six months ended June 30, 2019 and 2018: (i) equity based compensation of $135 and $62, (ii) provision for income taxes of $46 and $7, (iii) interest expense of $2,008 and $2,324, (iv) depreciation and amortization expense of $2,509 and $3,276 and (v) changes in fair value of non-hedge derivative instruments of $476 and $(57), respectively.

We use Funds Available for Distribution (“FAD”) in evaluating our ability to meet our 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. We believe FAD is a useful metric for investors and analysts for similar purposes.

We define 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 excludes changes in working capital.

The following table sets forth a reconciliation of Net Cash Provided by Operating Activities to FAD for the six months ended June 30, 2019 and 2018:

  Six Months Ended June 30,
(in thousands) 2019   2018
Net Cash Provided by Operating Activities $ 58,112     $ 59,152  
Add: Principal Collections on Finance Leases 2,996     539  
Add: Proceeds from Sale of Assets 71,504     26,530  
Add: Return of Capital Distributions from Unconsolidated Entities 1,280      
Less: Required Payments on Debt Obligations (1) (3,125 )   (3,124 )
Less: Capital Distributions to Non-Controlling Interest      
Exclude: Changes in Working Capital 26,310     (3,876 )
Funds Available for Distribution (FAD) $ 157,077     $ 79,221  

________________________________________________________

(1) Required payments on debt obligations for the six months ended June 30, 2019 exclude repayments of $115,000 for the Revolving Credit Facility and $10,710 for the CMQR Credit Agreement, and for the six months ended June 30, 2018 exclude repayments of $25,000 for the Revolving Credit Facility and $17,750 for the CMQR Credit Agreement, all of which were voluntary refinancings as repayments of these amounts were not required at such time.

The following tables set forth a reconciliation of FAD to Net Cash provided by Operating Activities for the three and six months ended June 30, 2019:

  Three Months Ended June 30, 2019
(in thousands) Aviation Leasing   Infrastructure   Corporate and Other   Total
Funds Available for Distribution (FAD) $ 126,817   $ (9,994 )   $ (29,929 )   $ 86,894  
Less: Principal Collections on Finance Leases             (1,707
Less: Proceeds from Sale of Assets             (44,205
Less: Return of Capital Distributions from Unconsolidated Entities             (882 )
Add: Required Payments on Debt Obligations (1)             1,563  
Add: Capital Distributions to Non-Controlling Interest              
Include: Changes in Working Capital             (3,821
Net Cash provided by Operating Activities             $ 37,842  


(1) Required payments on debt obligations for the three months ended June 30, 2019 exclude repayments of $75,000 for the Revolving Credit Facility and $5,050 for the CMQR Credit Agreement, both of which were voluntary refinancings as repayments of these amounts were not required at such time.


  Six Months Ended June 30, 2019
(in thousands) Aviation Leasing   Infrastructure   Corporate and Other   Total
Funds Available for Distribution (FAD) $ 227,958   $ (14,179 )   $ (56,702 )   $ 157,077  
Less: Principal Collections on Finance Leases             (2,996
Less: Proceeds from Sale of Assets             (71,504
Less: Return of Capital Distributions from Unconsolidated Entities             (1,280 )
Add: Required Payments on Debt Obligations (2)             3,125  
Add: Capital Distributions to Non-Controlling Interest              
Include: Changes in Working Capital             (26,310
Net Cash provided by Operating Activities             $ 58,112  


(2) Required payments on debt obligations for the six months ended June 30, 2019 exclude repayments of $115,000 for the Revolving Credit Facility and $10,710 for the CMQR Credit Agreement, both of which were voluntary refinancings as repayments of these amounts were not required at such time.

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.