Fortress Transportation and Infrastructure Investors LLC
(NYSE:FTAI) (the “Company”) today reported financial results for
the quarter and full year ended December 31, 2018. 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(1) |
Q4’18 |
|
FY18 |
|
Net Cash Provided by Operating Activities |
$ |
47,282 |
|
|
|
$ |
133,697 |
|
Net Income Attributable to Shareholders |
$ |
1,037 |
|
|
|
$ |
5,882 |
|
Basic and Diluted Earnings per Share |
$ |
0.01 |
|
|
|
$ |
0.07 |
|
|
|
|
|
|
Funds Available for Distribution (“FAD”) |
$ |
57,729 |
|
|
|
$ |
181,665 |
|
Adjusted Net (Loss) Income |
$ |
(1,675 |
) |
|
|
$ |
10,128 |
|
Adjusted Net (Loss) Income per Share |
$ |
(0.02 |
) |
|
|
$ |
0.12 |
|
Adjusted EBITDA |
$ |
63,128 |
|
|
|
$ |
222,237 |
|
(1) For definitions and reconciliations of
Non-GAAP measures, please refer to the exhibit to this press
release.
For the fourth quarter of 2018, our total FAD
was $57.7 million. This amount includes $82.9 million from
equipment leasing activities, offset by $(1.8) million and $(23.4)
million from infrastructure and corporate activities,
respectively.
Joe Adams, FTAI’s CEO, stated “I am pleased to
see infrastructure be a positive contributor to EBITDA for the
first time, in Q4. I am also pleased to see our increasingly
differentiated and value added aviation leasing business continue
to grow while maintaining our profitability goals.”
Fourth Quarter 2018
Dividend
On February 27, 2019, the Company’s Board of
Directors declared a cash dividend on its common shares of $0.33
per share for the quarter ended December 31, 2018, payable on March
27, 2019 to the holders of record on March 15, 2019.
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 Annual Report
on Form 10-K, 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
Thursday, February 28, 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 2018 Fourth 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 Thursday, February 28,
2019 through midnight Thursday, March 7, 2019 at 1-855-859-2056
(from within the U.S.) or 1-404-537-3406 (from outside of the
U.S.), Passcode: 9968637.
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 AndreiniInvestor RelationsFortress
Transportation and Infrastructure Investors LLC(212)
798-6128aandreini@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 February 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) |
$ |
0.2200 |
|
U.S. Dividend
Income(2) |
$ |
— |
|
Income Not from U.S.
Sources(3) |
$ |
0.1100 |
|
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 LLCCONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)(Dollar amounts in thousands, except share and
per share data) |
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2018 |
|
2017(1) |
|
2018 |
|
2017 |
Revenues |
|
|
|
|
|
|
|
|
Equipment
leasing revenues |
|
$ |
67,035 |
|
|
$ |
48,613 |
|
|
$ |
253,039 |
|
|
$ |
170,000 |
|
Infrastructure revenues |
|
70,865 |
|
|
12,817 |
|
|
126,839 |
|
|
47,659 |
|
Total
revenues |
|
137,900 |
|
|
61,430 |
|
|
379,878 |
|
|
217,659 |
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
Operating
expenses |
|
70,675 |
|
|
26,360 |
|
|
167,514 |
|
|
92,385 |
|
General
and administrative |
|
4,955 |
|
|
3,955 |
|
|
17,126 |
|
|
14,570 |
|
Acquisition and transaction expenses |
|
2,234 |
|
|
2,242 |
|
|
6,968 |
|
|
7,306 |
|
Management fees and incentive allocation to affiliate |
|
3,646 |
|
|
4,203 |
|
|
15,726 |
|
|
15,732 |
|
Depreciation and amortization |
|
39,501 |
|
|
25,728 |
|
|
136,354 |
|
|
88,110 |
|
Interest
expense |
|
17,984 |
|
|
17,535 |
|
|
57,854 |
|
|
38,827 |
|
Total
expenses |
|
138,995 |
|
|
80,023 |
|
|
401,542 |
|
|
256,930 |
|
|
|
|
|
|
|
|
|
|
Other income
(expense) |
|
|
|
|
|
|
|
|
Equity in
losses of unconsolidated entities |
|
(410 |
) |
|
(140 |
) |
|
(1,008 |
) |
|
(1,601 |
) |
(Loss)
gain on sale of assets, net |
|
(1,342 |
) |
|
11,555 |
|
|
3,911 |
|
|
18,281 |
|
Loss on
extinguishment of debt |
|
— |
|
|
— |
|
|
— |
|
|
(2,456 |
) |
Asset
impairment |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Interest
income |
|
127 |
|
|
106 |
|
|
488 |
|
|
688 |
|
Other
income |
|
1,867 |
|
|
893 |
|
|
3,941 |
|
|
3,073 |
|
Total
other income |
|
242 |
|
|
12,414 |
|
|
7,332 |
|
|
17,985 |
|
|
|
|
|
|
|
|
|
|
Loss before income taxes |
|
(853 |
) |
|
(6,179 |
) |
|
(14,332 |
) |
|
(21,286 |
) |
(Benefit)
provision for income taxes |
|
(208 |
) |
|
369 |
|
|
1,372 |
|
|
1,954 |
|
Net loss |
|
(645 |
) |
|
(6,548 |
) |
|
(15,704 |
) |
|
(23,240 |
) |
Less: Net loss attributable to non-controlling interests in
consolidated subsidiaries |
|
(1,682 |
) |
|
(9,558 |
) |
|
(21,586 |
) |
|
(23,374 |
) |
Net income
attributable to shareholders |
|
$ |
1,037 |
|
|
$ |
3,010 |
|
|
$ |
5,882 |
|
|
$ |
134 |
|
|
|
|
|
|
|
|
|
|
Basic and
Diluted Earnings per Share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.01 |
|
|
$ |
0.04 |
|
|
$ |
0.07 |
|
|
$ |
- |
|
Diluted |
|
$ |
0.01 |
|
|
$ |
0.04 |
|
|
$ |
0.07 |
|
|
$ |
- |
|
Weighted
Average Shares Outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
85,065,125 |
|
|
75,771,738 |
|
|
83,654,068 |
|
|
75,766,811 |
|
Diluted |
|
85,068,966 |
|
|
75,772,867 |
|
|
83,664,833 |
|
|
75,766,811 |
|
(1) Results of operations for the three months
ended December 31, 2017 include a $5.9 million out of period
adjustment, to interest expense, including non-controlling interest
of $2.3 million, which primarily relates to interest previously
capitalized that should have been expensed ratably during the first
nine months of 2017. We do not believe this out of period
adjustment is material to our financial position or results of
operations for any prior periods.
|
FORTRESS TRANSPORTATION AND INFRASTRUCTURE
INVESTORS LLCCONSOLIDATED BALANCE SHEETS
(Unaudited)(Dollar amounts in thousands, except share and
per share data) |
|
|
December 31, |
|
2018 |
|
|
2017 |
|
Assets |
|
|
|
Cash and cash
equivalents |
$ |
99,601 |
|
|
$ |
59,400 |
|
Restricted cash |
21,236 |
|
|
33,406 |
|
Accounts receivable,
net |
53,789 |
|
|
31,076 |
|
Leasing equipment,
net |
1,432,210 |
|
|
1,074,130 |
|
Finance leases,
net |
18,623 |
|
|
9,244 |
|
Property, plant, and
equipment, net |
708,853 |
|
|
489,949 |
|
Investments |
40,560 |
|
|
42,538 |
|
Intangible assets,
net |
38,513 |
|
|
40,043 |
|
Goodwill |
116,584 |
|
|
116,584 |
|
Other assets |
108,809 |
|
|
59,436 |
|
Total
assets |
$ |
2,638,778 |
|
|
$ |
1,955,806 |
|
|
|
|
|
Liabilities |
|
|
|
Accounts payable and
accrued liabilities |
$ |
112,188 |
|
|
$ |
68,226 |
|
Debt, net |
1,237,347 |
|
|
703,264 |
|
Maintenance
deposits |
158,163 |
|
|
103,464 |
|
Security deposits |
38,539 |
|
|
27,257 |
|
Other liabilities |
38,759 |
|
|
18,520 |
|
Total
liabilities |
1,584,996 |
|
|
920,731 |
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
Equity |
|
|
|
Common shares ($0.01
par value per share; 2,000,000,000 shares authorized; 84,050,889
and 75,771,738 shares issued and outstanding as of December 31,
2018 and December 31, 2017, respectively) |
840 |
|
|
758 |
|
Additional paid in
capital |
1,029,376 |
|
|
985,009 |
|
Accumulated
deficit |
(32,817 |
) |
|
(38,699 |
) |
Accumulated other
comprehensive income |
— |
|
|
— |
|
Shareholders'
equity |
997,399 |
|
|
947,068 |
|
Non-controlling
interest in equity of consolidated subsidiaries |
56,383 |
|
|
88,007 |
|
Total
equity |
1,053,782 |
|
|
1,035,075 |
|
Total
liabilities and equity |
$ |
2,638,778 |
|
|
$ |
1,955,806 |
|
|
|
|
|
|
|
|
|
|
FORTRESS
TRANSPORTATION AND INFRASTRUCTURE INVESTORS
LLCCONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)(Dollar amounts in thousands, unless otherwise
noted) |
|
|
Year Ended December 31, |
|
2018 |
2017 |
|
Cash flows from
operating activities: |
|
|
|
Net loss |
$ |
(15,704 |
) |
|
$ |
(23,240 |
) |
Adjustments to
reconcile net loss to cash provided by operating activities: |
|
|
|
Equity in losses of
unconsolidated entities |
1,008 |
|
|
1,601 |
|
Gain on sale of assets,
net |
(3,911 |
) |
|
(18,281 |
) |
Security deposits and
maintenance claims included in earnings |
(6,323 |
) |
|
(60 |
) |
Loss on extinguishment
of debt |
— |
|
|
2,456 |
|
Equity-based
compensation |
901 |
|
|
1,343 |
|
Depreciation and
amortization |
136,354 |
|
|
88,110 |
|
Gain on settlement of
liabilities |
— |
|
|
(1,093 |
) |
Asset impairment |
— |
|
|
— |
|
Change in current and
deferred income taxes |
649 |
|
|
227 |
|
Change in fair value of
non-hedge derivative |
(5,523 |
) |
|
(1,022 |
) |
Amortization of lease
intangibles and incentives |
26,659 |
|
|
8,306 |
|
Amortization of
deferred financing costs |
5,430 |
|
|
4,202 |
|
Operating distributions
from unconsolidated entities |
— |
|
|
— |
|
Bad debt expense |
1,771 |
|
|
701 |
|
Other |
(4 |
) |
|
732 |
|
Change in: |
|
|
|
Accounts receivable |
(23,340 |
) |
|
(12,001 |
) |
Other assets |
(26,212 |
) |
|
6,475 |
|
Accounts payable and accrued liabilities |
30,471 |
|
|
10,266 |
|
Management fees payable to affiliate |
1,820 |
|
|
899 |
|
Other liabilities |
9,651 |
|
|
(1,124 |
) |
Net cash
provided by operating activities |
133,697 |
|
|
68,497 |
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
Investment in notes
receivable |
(912 |
) |
|
— |
|
Investment in
unconsolidated entities and available for sale securities |
(1,115 |
) |
|
(30,309 |
) |
Principal collections
on finance leases |
1,981 |
|
|
473 |
|
Acquisition of leasing
equipment |
(497,988 |
) |
|
(425,769 |
) |
Acquisition of
property, plant and equipment |
(229,963 |
) |
|
(116,031 |
) |
Acquisition of lease
intangibles |
(11,396 |
) |
|
(10,149 |
) |
Purchase deposit for
aircraft and aircraft engines |
(10,150 |
) |
|
(12,299 |
) |
Proceeds from sale of
finance leases |
— |
|
|
— |
|
Proceeds from sale of
leasing equipment |
44,062 |
|
|
91,130 |
|
Proceeds from sale of
available-for-sale securities |
— |
|
|
30,238 |
|
Proceeds from sale of
property, plant and equipment |
23 |
|
|
51 |
|
Proceeds from deposit
on sale of leasing equipment |
240 |
|
|
400 |
|
Return of deposit on
sale of leasing equipment |
(400 |
) |
|
— |
|
Return of capital
distributions from unconsolidated entities |
2,085 |
|
|
— |
|
Net cash used
in investing activities |
$ |
(703,533 |
) |
|
$ |
(472,265 |
) |
|
|
|
|
|
|
|
|
|
FORTRESS
TRANSPORTATION AND INFRASTRUCTURE INVESTORS
LLCCONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)(Dollar amounts in thousands, unless otherwise
noted) |
|
|
Year Ended December 31, |
|
2018 |
2017 |
|
Cash flows from
financing activities: |
|
|
|
Proceeds from debt |
$ |
750,980 |
|
|
$ |
567,191 |
|
Repayment of debt |
(218,819 |
) |
|
(125,223 |
) |
Payment of other
liabilities to non-controlling interest holder |
— |
|
|
— |
|
Payment of deferred
financing costs |
(3,055 |
) |
|
(3,377 |
) |
Receipt of security
deposits |
9,264 |
|
|
7,290 |
|
Return of security
deposits |
(1,775 |
) |
|
(3,231 |
) |
Receipt of maintenance
deposits |
53,645 |
|
|
27,049 |
|
Release of maintenance
deposits |
(25,582 |
) |
|
(6,270 |
) |
Proceeds from issuance
of common shares, net of underwriter's discount |
148,318 |
|
|
— |
|
Common shares issuance
costs |
(820 |
) |
|
— |
|
Capital contributions
from non-controlling interests |
— |
|
|
35 |
|
Capital distributions
to non-controlling interests |
— |
|
|
(254 |
) |
Settlement of
equity-based compensation |
— |
|
|
(74 |
) |
Purchase of
non-controlling interest shares |
(3,705 |
) |
|
— |
|
Cash dividends |
(110,584 |
) |
|
(100,058 |
) |
Net cash
provided by (used in) financing activities |
597,867 |
|
|
363,078 |
|
|
|
|
|
Net increase
(decrease) in cash and cash equivalents and restricted
cash |
28,031 |
|
|
(40,690 |
) |
Cash and cash
equivalents and restricted cash, beginning of period |
92,806 |
|
|
133,496 |
|
Cash and cash
equivalents and restricted cash, end of period |
$ |
120,837 |
|
|
$ |
92,806 |
|
|
|
|
|
Supplemental
disclosure of cash flow information: |
|
|
|
Cash paid for interest,
net of capitalized interest |
$ |
43,636 |
|
|
$ |
25,068 |
|
Cash paid for
taxes |
721 |
|
|
1,726 |
|
|
|
|
|
Supplemental
disclosure of non-cash investing and financing
activities: |
|
|
|
Proceeds from
borrowings of debt |
511 |
|
|
108,339 |
|
Repayment and
settlement of debt |
— |
|
|
(102,352 |
) |
Acquisition of leasing
equipment |
(14,263 |
) |
|
(35,332 |
) |
Acquisition of
property, plant and equipment |
(17,587 |
) |
|
(37,281 |
) |
Financing of property,
plant and equipment |
— |
|
|
— |
|
Settled and assumed
security deposits |
3,793 |
|
|
3,312 |
|
Billed, assumed and
settled maintenance deposits |
24,518 |
|
|
37,292 |
|
Deferred financing
costs |
(4,500 |
) |
|
(8,802 |
) |
Non-cash contribution
of non-controlling interest |
— |
|
|
1,261 |
|
Equity compensation to
non-controlling interest |
892 |
|
|
1,343 |
|
Change in fair value of
cash flow hedge |
— |
|
|
— |
|
Transfer of
non-controlling interest |
7,225 |
|
|
(2,798 |
) |
Issuance of common
shares |
301 |
|
|
— |
|
|
|
|
|
|
|
Key Performance Measures
The Chief Operating Decision Maker (“CODM”)
utilizes Adjusted Net Income (Loss) and Adjusted EBITDA as
performance measures.
Adjusted Net Income (Loss) is our key
performance measure and provides the CODM with the information
necessary to assess operational performance, as well as make
resource and allocation decisions. Adjusted Net Income (Loss) 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, and
equity in earnings of unconsolidated entities, (b) to include the
impact of cash income tax payments, and our pro-rata share of the
Adjusted Net Income (Loss) from unconsolidated entities, and (c) to
exclude the impact of the non-controlling share of Adjusted Net
Income (Loss). We evaluate investment performance for each
reportable segment primarily based on Adjusted Net Income (Loss).
We believe that net income attributable to shareholders, as defined
by GAAP, is the most comparable earnings measurement with which to
reconcile Adjusted Net Income.
The following table presents our consolidated
reconciliation of net income attributable to shareholders to
Adjusted Net (Loss) Income for the three months ended and years
ended December 31, 2018 and December 31, 2017:
|
Three Months
Ended December 31, |
|
Year Ended
December 31, |
(in thousands) |
2018 |
|
2017 |
|
2018 |
|
2017 |
Net income
attributable to shareholders |
$ |
1,037 |
|
|
$ |
3,010 |
|
|
$ |
5,882 |
|
|
$ |
134 |
|
Add:
(Benefit) provision for income taxes |
(208 |
) |
|
369 |
|
|
1,372 |
|
|
1,954 |
|
Add:
Equity-based compensation expense |
232 |
|
|
648 |
|
|
901 |
|
|
1,343 |
|
Add:
Acquisition and transaction expenses |
2,234 |
|
|
2,242 |
|
|
6,968 |
|
|
7,306 |
|
Add:
Losses on the modification or extinguishment of debt and capital
lease obligations |
— |
|
|
— |
|
|
— |
|
|
2,456 |
|
Add:
Changes in fair value of non-hedge derivative instruments |
(6,090 |
) |
|
14 |
|
|
(5,523 |
) |
|
(1,022 |
) |
Add:
Asset impairment charges |
— |
|
|
— |
|
|
— |
|
|
— |
|
Add:
Pro-rata share of Adjusted Net Loss from unconsolidated entities
(1) |
(604 |
) |
|
(2 |
) |
|
(1,196 |
) |
|
(1,601 |
) |
Add:
Incentive allocations |
(146 |
) |
|
514 |
|
|
407 |
|
|
514 |
|
Less:
Cash payments for income taxes |
189 |
|
|
(693 |
) |
|
(721 |
) |
|
(1,726 |
) |
Less:
Equity in losses of unconsolidated entities |
410 |
|
|
140 |
|
|
1,008 |
|
|
1,601 |
|
Less:
Non-controlling share of Adjusted Net Income (2) |
1,271 |
|
|
(55 |
) |
|
1,030 |
|
|
(558 |
) |
Adjusted Net
(Loss) Income |
$ |
(1,675) |
|
|
$ |
6,187 |
|
|
$ |
10,128 |
|
|
$ |
10,401 |
|
(1) Includes the Company’s proportionate share
of the unconsolidated entities’ net income adjusted for the
excluded and included items detailed in the table above.
(2) Includes the following items for the three
months ended December 31, 2018 and 2017: (i) equity-based
compensation of $35 and $51 and (ii) (benefit) provision for income
tax of $(57) and $4 and (iii) changes in fair value of non-hedge
derivative instruments of $(1,248) and $0, less (iv) cash tax
payments of $1 and $0, respectively.
Includes the following items for the years ended
December 31, 2018 and 2017: (i) equity-based compensation of
$131 and $169, (ii) (benefit) provision for income tax of $(47) and
$16 and (iii) changes in fair value of non-hedge derivative
instruments of $(1,099) and $404, less (iv) cash tax payments of
$15 and $31, respectively.
We view Adjusted EBITDA as a secondary
measurement to Adjusted Net Income (Loss), which we believe serves
as a useful supplement to investors, analysts and management to
measure economic performance of deployed revenue generating assets
between periods on a consistent basis, and which we believe
measures our financial performance and helps identify operational
factors that management can impact in the short-term, namely our
cost structure and expenses. Adjusted EBITDA may not be comparable
to similarly titled measures of other companies because other
entities may not calculate Adjusted EBITDA in the same manner.
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 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 months ended and years ended December 31, 2018 and
December 31, 2017:
|
Three Months
Ended December 31, |
|
Year Ended
December 31, |
(in thousands) |
2018 |
|
2017 |
|
2018 |
|
2017 |
Net income
attributable to shareholders |
$ |
1,037 |
|
|
$ |
3,010 |
|
|
$ |
5,882 |
|
|
$ |
134 |
|
Add:
(Benefit) provision for income taxes |
(208 |
) |
|
369 |
|
|
1,372 |
|
|
1,954 |
|
Add:
Equity-based compensation expense |
232 |
|
|
648 |
|
|
901 |
|
|
1,343 |
|
Add:
Acquisition and transaction expenses |
2,234 |
|
|
2,242 |
|
|
6,968 |
|
|
7,306 |
|
Add:
Losses on the modification or extinguishment of debt and capital
lease obligations |
— |
|
|
— |
|
|
— |
|
|
2,456 |
|
Add:
Changes in fair value of non-hedge derivative instruments |
(6,090 |
) |
|
14 |
|
|
(5,523 |
) |
|
(1,022 |
) |
Add:
Asset impairment charges |
— |
|
|
— |
|
|
— |
|
|
— |
|
Add:
Incentive allocations |
(146 |
) |
|
514 |
|
|
407 |
|
|
514 |
|
Add:
Depreciation and amortization expense (3) |
48,531 |
|
|
28,842 |
|
|
163,013 |
|
|
96,417 |
|
Add:
Interest expense |
17,984 |
|
|
17,535 |
|
|
57,854 |
|
|
38,827 |
|
Add:
Pro-rata share of Adjusted EBITDA from unconsolidated entities
(4) |
(27 |
) |
|
(34 |
) |
|
359 |
|
|
(243 |
) |
Less:
Equity in losses of unconsolidated entities |
410 |
|
|
140 |
|
|
1,008 |
|
|
1,601 |
|
Less:
Non-controlling share of Adjusted EBITDA (5) |
(829 |
) |
|
(5,491 |
) |
|
(10,004 |
) |
|
(12,763 |
) |
Adjusted EBITDA
(non-GAAP) |
$ |
63,128 |
|
|
$ |
47,789 |
|
|
$ |
222,237 |
|
|
$ |
136,524 |
|
(3) Includes the following items for the
three months ended December 31, 2018 and 2017: (i) depreciation and
amortization expense of $39,501 and $25,728, (ii) lease intangible
amortization of $2,675 and $1,221 and (iii) amortization for lease
incentives $6,355 and $1,893, respectively.
Includes the following items for the years ended
December 31, 2018 and 2017: (i) depreciation and amortization
expense of $136,354 and $88,110, (ii) lease intangible amortization
of $8,588 and $4,716 and (iii) amortization for lease incentives of
$18,071 and $3,591, respectively.
(4) Includes the following items for the
three months ended December 31, 2018 and 2017: (i) net loss of
$463 and $187, (ii) interest expense of $174 and $135 and
(iii) depreciation and amortization expense of $262 and $18,
respectively.
Includes the following items for the years ended
December 31, 2018 and 2017: (i) net loss of $1,196 and $1,786,
(ii) interest expense of $477 and $785, and
(iii) depreciation and amortization expense of $1,078 and
$758, respectively.
(5) Includes the following items for the
three months ended December 31, 2018 and 2017: (i) equity based
compensation of $35 and $51, (ii) (benefit) provision for income
taxes of $(57) and $4, (iii) interest expense of $899 and $3,542,
(iv) depreciation and amortization expense of $1,200 and $1,894 and
(iv) changes in fair value of non-hedge derivative instruments of
$(1,248) and $0, respectively.
Includes the following items for the years ended
December 31, 2018 and 2017: (i) equity based compensation of $131
and $169, (ii) (benefit) provision for income taxes of $(47) and
$16, (iii) interest expense of $4,722 and $5,030, (iv) depreciation
and amortization expense of $6,297 and $7,144, and (v) changes in
fair value of non-hedge derivative instruments of $(1,099) and
$404, respectively.
We use 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. 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
excluding changes in working capital.
The following table sets forth a reconciliation
of Net Cash Provided by Operating Activities to FAD for the years
ended December 31, 2018 and 2017:
|
Year Ended December 31, |
(in thousands) |
2018 |
|
2017 |
Net Cash
Provided by Operating Activities |
$ |
133,697 |
|
|
$ |
68,497 |
|
Add:
Principal Collections on Finance Leases |
1,981 |
|
|
473 |
|
Add:
Proceeds from Sale of Assets |
44,085 |
|
|
121,419 |
|
Add:
Return of Capital Distributions from Unconsolidated Entities |
2,085 |
|
|
— |
|
Less:
Required Payments on Debt Obligations (1) |
(7,793 |
) |
|
(8,368 |
) |
Less:
Capital Distributions to Non-Controlling Interest |
— |
|
|
(254 |
) |
Exclude:
Changes in Working Capital |
7,610 |
|
|
(4,515 |
) |
Funds Available
for Distribution (FAD) |
$ |
181,665 |
|
|
$ |
177,252 |
|
(1) Required payments on debt obligations for the year
ended December 31, 2018 exclude $175,000 repayment of the
Revolving Credit Facility and $36,026 repayment of the CMQR Credit
Agreement, and for the year ended December 31, 2017 exclude
$100,000 repayment of the Term Loan, $95,000 repayment of the
Revolving Credit Facility and $21,855 repayment of the CMQR Credit
Agreement.
The following tables set forth a reconciliation of Net Cash
Provided by Operating Activities to FAD for the three months ended
and year ended December 31, 2018:
|
Three
Months Ended December 31, 2018 |
(in thousands) |
Equipment Leasing |
|
Infrastructure |
|
Corporate |
|
Total |
Funds Available for Distribution
(FAD) |
$ |
82,924 |
|
|
$ |
(1,769 |
) |
|
$ |
(23,426 |
) |
|
$ |
57,729 |
|
Less: Principal Collections on
Finance Leases |
|
|
|
|
|
|
(1,323 |
) |
Less: Proceeds from Sale of
Assets |
|
|
|
|
|
|
(13,598 |
) |
Less: Return of Capital
Distributions from Unconsolidated Entities |
|
|
|
|
|
|
(1,213 |
) |
Add: Required Payments on Debt
Obligations |
|
|
|
|
|
|
1,562 |
|
Add: Capital Distributions to
Non-Controlling Interest |
|
|
|
|
|
|
— |
|
Include: Changes in Working
Capital |
|
|
|
|
|
|
4,125 |
|
Net Cash Provided by Operating
Activities |
|
|
|
|
|
|
$ |
47,282 |
|
|
Year Ended
December 31, 2018 |
(in thousands) |
Equipment Leasing |
|
Infrastructure |
|
Corporate |
|
Total |
Funds Available for Distribution
(FAD) |
$ |
289,777 |
|
|
$ |
(34,177 |
) |
|
$ |
(73,935 |
) |
|
$ |
181,665 |
|
Less: Principal Collections on
Finance Leases |
|
|
|
|
|
|
(1,981 |
) |
Less: Proceeds from Sale of
Assets |
|
|
|
|
|
|
(44,085 |
) |
Less: Return of Capital
Distributions from Unconsolidated Entities |
|
|
|
|
|
|
(2,085 |
) |
Add: Required Payments on Debt
Obligations |
|
|
|
|
|
|
7,793 |
|
Add: Capital Distributions to
Non-Controlling Interest |
|
|
|
|
|
|
— |
|
Include: Changes in Working
Capital |
|
|
|
|
|
|
(7,610 |
) |
Net Cash Provided by Operating
Activities |
|
|
|
|
|
|
$ |
133,697 |
|
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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