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

NEW YORK, April 30, 2020 (GLOBE NEWSWIRE) -- Fortress Transportation and Infrastructure Investors LLC (NYSE:FTAI) (the “Company” or “FTAI”) today reported financial results for the first 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 ResultsQ1’20  
Net Cash Used in Operating Activities$(11,806)  
Net Loss Attributable to Shareholders$(2,863)  
Basic and Diluted Loss per Common Share$(0.03)  
    
Funds Available for Distribution (“FAD”) (1)$96,037   
Adjusted EBITDA(1)$71,995   

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

For the first quarter of 2020, total FAD was $96.0 million. This amount includes $121.3 million from our aviation leasing portfolio, and $1.7 million from our infrastructure business, offset by $(27.0) million from corporate and other.

First Quarter 2020 Dividends

On April 28, 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 March 31, 2020, payable on May 26, 2020 to the holders of record on May 15, 2020.

Additionally, on April 28, 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 March 31, 2020, payable on June 15, 2020 to the holders of record on June 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, May 1, 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 First 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, May 1, 2020 through midnight Friday, May 8, 2020 at (855) 859-2056 (from within the U.S.) or (404) 537-3406 (from outside of the U.S.), Passcode: 1623849.

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 April 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 
U.S. Portfolio Interest Income(1)$0.02500 
U.S. Dividend Income(2)$ 
Income Not from U.S. Sources(3)$0.13690 
U.S. Long Term Capital Gain (4) $0.16810 
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 March 31,
  2020 2019
Revenues    
Equipment leasing revenues $86,449    $72,452   
Infrastructure revenues 26,391    42,442   
Total revenues 112,840    114,894   
Expenses    
Operating expenses 33,444    54,310   
General and administrative 4,663    4,184   
Acquisition and transaction expenses 3,194    1,474   
Management fees and incentive allocation to affiliate 4,766    3,838   
Depreciation and amortization 42,197    38,863   
Interest expense 22,861    20,734   
Total expenses 111,125    123,403   
Other income (expense)    
Equity in earnings (losses) of unconsolidated entities 265    (384) 
(Loss) gain on sale of assets, net (1,819)  1,718   
Loss on extinguishment of debt (4,724)  —   
Interest income 41    91   
Other income (expense) 33    (2,603) 
Total other expense (6,204)  (1,178) 
Loss from continuing operations before income taxes (4,489)  (9,687) 
(Benefit from) provision for income taxes (98)  267   
Net loss from continuing operations (4,391)  (9,954) 
Net income from discontinued operations, net of income taxes 1,331    158   
Net loss (3,060)  (9,796) 
Less: Net loss attributable to non-controlling interests in consolidated subsidiaries:    
Continuing operations (4,736)  (3,360) 
Discontinued operations —    (56) 
Dividends on preferred shares 4,539    —   
Net loss attributable to shareholders $(2,863)  $(6,380) 
     
Earnings (loss) per share:    
Basic    
Continuing operations $(0.05)  $(0.07) 
Discontinued operations $0.02    $0.00   
Diluted    
Continuing operations $(0.05)  $(0.07) 
Discontinued operations $0.02    $0.00   
Weighted average shares outstanding:    
Basic 86,008,099    85,986,453   
Diluted 86,008,099    85,986,453   

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollar amounts in thousands, except per share data)

  (Unaudited)  
  March 31, 2020 December 31, 2019
Assets    
Cash and cash equivalents $45,120   $226,512  
Restricted cash 78,268   16,005  
Accounts receivable, net 57,945   49,470  
Leasing equipment, net 1,680,646   1,707,059  
Operating lease right-of-use assets, net 62,965   37,466  
Finance leases, net 7,995   8,315  
Property, plant, and equipment, net 789,300   732,109  
Investments 194,352   180,550  
Intangible assets, net 25,115   27,692  
Goodwill 122,735   122,639  
Other assets 112,147   129,105  
Total assets $3,176,588   $3,236,922  
     
Liabilities    
Accounts payable and accrued liabilities $82,928   $144,855  
Debt, net 1,445,735   1,420,928  
Maintenance deposits 198,694   208,944  
Security deposits 42,182   45,252  
Operating lease liabilities 62,524   36,968  
Other liabilities 32,701   41,118  
Total liabilities $1,864,764   $1,898,065  
     
Commitments and contingencies    
     
Equity    
Common shares ($0.01 par value per share; 2,000,000,000 shares authorized; 85,114,636 and 84,917,448 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively) $851   $849  
Preferred shares ($0.01 par value per share; 200,000,000 shares authorized; 8,050,000 and 8,050,000 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively) 81   81  
Additional paid in capital 1,110,028   1,110,122  
Retained earnings 159,199   190,453  
Accumulated other comprehensive income 9,130   372  
Shareholders' equity 1,279,289   1,301,877  
Non-controlling interest in equity of consolidated subsidiaries 32,535   36,980  
Total equity 1,311,824   1,338,857  
Total liabilities and equity $3,176,588   $3,236,922  

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollar amounts in thousands, unless otherwise noted)

 Three Months Ended March 31,
 2020 2019
Cash flows from operating activities:   
Net loss$(3,060)  $(9,796) 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:   
Equity in (earnings) losses of unconsolidated entities(265)  384   
Gain on sale of subsidiaries(1,331)  —   
Loss (gain) on sale of assets, net1,819    (1,725) 
Security deposits and maintenance claims included in earnings8,844    (2,953) 
Loss on extinguishment of debt4,724    —   
Equity-based compensation291    228   
Depreciation and amortization42,197    39,533   
Change in current and deferred income taxes3,822    338   
Change in fair value of non-hedge derivative181    3,220   
Amortization of lease intangibles and incentives6,868    8,334   
Amortization of deferred financing costs2,065    2,025   
Bad debt expense632    2,950   
Other362    221   
Change in:   
 Accounts receivable(10,780)  (1,127) 
 Other assets7,063    (5,295) 
 Accounts payable and accrued liabilities(46,316)  (14,348) 
 Management fees payable to affiliate(20,865)  (1,158) 
 Other liabilities(8,057)  (561) 
Net cash (used in) provided by operating activities(11,806)  20,270   
    
Cash flows from investing activities:   
Investment in unconsolidated entities(2,452)  —   
Principal collections on finance leases320    1,289   
Acquisition of leasing equipment(57,570)  (108,919) 
Acquisition of property, plant and equipment(60,402)  (81,241) 
Acquisition of lease intangibles1,161    (589) 
Purchase deposits for acquisitions(3,100)  (4,625) 
Proceeds from sale of leasing equipment28,568    27,292   
Proceeds from sale of property, plant and equipment—      
Return of capital distributions from unconsolidated entities—    398   
Return of deposit on sale of engine2,350    —   
Net cash used in investing activities (91,125)   (166,388) 
        
Cash flows from financing activities:   
Proceeds from debt 303,980     352,680   
Repayment of debt(275,991)  (47,222) 
Payment of deferred financing costs(11,767)  (28,611) 
Receipt of security deposits130    1,935   
Return of security deposits(3,815)  (233) 
Receipt of maintenance deposits13,626    13,495   
Release of maintenance deposits(9,185)  (9,807) 
Issuance costs of preferred shares(246)  —   
Cash dividends - common shares(28,391)  (28,383) 
Cash dividends - preferred shares(4,539)  —   
Net cash (used in) provided by financing activities (16,198)   253,854   
    
Net (decrease) increase in cash and cash equivalents and restricted cash(119,129)  107,736   
Cash and cash equivalents and restricted cash, beginning of period242,517    120,837   
Cash and cash equivalents and restricted cash, end of period$123,388    $228,573   

Key Performance Measures

The Chief Operating Decision Maker (“CODM”) utilizes Adjusted EBITDA as the 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 (loss) attributable to shareholders from continuing operations, adjusted (a) to exclude the impact of (benefit from) 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 from continuing operations to Adjusted EBITDA for the three months ended March 31, 2020 and 2019:

 Three Months Ended March 31,
(in thousands)2020 2019
Net loss attributable to shareholders from continuing operations$(4,194)  $(6,594) 
Add: (Benefit from) provision for income taxes(98)  267   
Add: Equity-based compensation expense291    182   
Add: Acquisition and transaction expenses3,194    1,474   
Add: Losses on the modification or extinguishment of debt and capital lease obligations4,724    —   
Add: Changes in fair value of non-hedge derivative instruments181    3,220   
Add: Asset impairment charges—    —   
Add: Incentive allocations—    162   
Add: Depreciation and amortization expense (1)49,064    47,197   
Add: Interest expense22,861    20,734   
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2)(413)  (118) 
Less: Equity in (earnings) losses of unconsolidated entities(265)  384   
Less: Non-controlling share of Adjusted EBITDA (3)(3,350)  (2,153) 
Adjusted EBITDA (non-GAAP)$71,995    $64,755   

________________________________________________________

(1) Includes the following items for the three months ended March 31, 2020 and 2019: (i) depreciation and amortization expense of $42,197 and $38,863, (ii) lease intangible amortization of $1,132 and $2,462 and (iii) amortization for lease incentives of $5,735 and $5,872, respectively.

(2) Includes the following items for the three months ended March 31, 2020 and 2019: (i) net income (loss) of $223 and $(420), (ii) interest expense of $35 and $36, (iii) depreciation and amortization expense of $962 and $266, (iv) acquisition and transaction expenses of $81 and $0 and (v) changes in fair value of non-hedge derivatives of $(1,714) and $0, respectively.

(3) Includes the following items for the three months ended March 31, 2020 and 2019: (i) equity based compensation of $47 and $21, (ii) provision for income taxes of $28 and $18, (iii) interest expense of $720 and $845, (iv) depreciation and amortization expense of $1,524 and $1,090, (v) changes in fair value of non-hedge derivative instruments of $38 and $179 and (vi) loss on extinguishment of debt of $993 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 (Used In) Provided by Operating Activities to FAD for the three months ended March 31, 2020 and 2019:

 Three Months Ended March 31,
(in thousands)2020 2019
Net Cash (Used in) Provided by Operating Activities$(11,806)  $20,270   
Add: Principal Collections on Finance Leases320    1,289   
Add: Proceeds from Sale of Assets28,568    27,299   
Add: Return of Capital Distributions from Unconsolidated Entities—    398   
Less: Required Payments on Debt Obligations (1)—    (1,562) 
Less: Capital Distributions to Non-Controlling Interest—    —   
Exclude: Changes in Working Capital78,955    22,489   
Funds Available for Distribution (FAD)$96,037    $70,183   

________________________________________________________

(1) Required payments on debt obligations for the three months ended March 31, 2020 exclude repayments of $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 three months ended March 31, 2019 exclude repayments of $40,000 for the Revolving Credit Facility and $5,660 for the CMQR Credit Agreement.

The following tables set forth a reconciliation of Net Cash (Used in) Provided by Operating Activities to FAD for the three months ended March 31, 2020:

 Three Months Ended March 31, 2020
(in thousands)Equipment Leasing Infrastructure Corporate and Other Total
Funds Available for Distribution (FAD)$121,254  $1,703  $(26,920) $96,037  
Less: Principal Collections on Finance Leases      (320 )
Less: Proceeds from Sale of Assets      (28,568 )
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      (78,955) 
Net Cash Used in Operating Activities      $(11,806) 

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.

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