Fortress Transportation and Infrastructure Investors LLC
(NYSE:FTAI) (the “Company” or “FTAI”) today reported financial
results for the second 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 |
Q2’20 |
|
|
Net Cash Provided by Operating Activities |
$ |
56,458 |
|
|
|
Net Loss Attributable to Shareholders |
$ |
(15,695 |
) |
|
|
Basic and Diluted Loss per Common Share |
$ |
(0.18 |
) |
|
|
|
|
|
|
Funds Available for Distribution (“FAD”) (1) |
$ |
47,309 |
|
|
|
Adjusted EBITDA(1) |
$ |
66,472 |
|
|
|
________________________ |
|
|
|
|
|
(1) For definitions and reconciliations of
non-GAAP measures, please refer to the exhibit to this press
release. |
For the second quarter of 2020, total FAD was
$47.3 million. This amount includes $82.1 million from our aviation
leasing portfolio, offset by $(6.7) million from our infrastructure
business and $(28.1) million from corporate and other.
Second Quarter 2020
Dividends
On July 30, 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 June 30, 2020,
payable on August 31, 2020 to the holders of record on August 17,
2020.
Additionally, on July 30, 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 June 30, 2020, payable on September 15, 2020 to the holders
of record on September 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, July 31, 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
Second 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, July 31, 2020
through midnight Friday, August 7, 2020 at (855) 859-2056 (from
within the U.S.) or (404) 537-3406 (from outside of the U.S.),
Passcode: 2065269.
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 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 common dividend and the Series A Preferred and Series B
Preferred dividends declared in July 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) |
$ |
0.14500 |
|
|
|
|
U.S. Dividend Income(2) |
$ |
— |
|
|
|
|
Income Not from U.S.
Sources(3) |
$ |
0.18500 |
|
|
|
|
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
LLCCONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)(Dollar amounts in thousands, except per share
data) |
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2020 |
|
2019 |
|
2020 |
2019 |
Revenues |
|
|
|
|
|
|
|
Equipment leasing revenues |
|
$ |
79,834 |
|
|
$ |
79,200 |
|
|
$ |
166,283 |
|
|
$ |
151,652 |
|
Infrastructure revenues |
|
14,475 |
|
|
70,648 |
|
|
40,866 |
|
|
113,090 |
|
Total revenues |
|
94,309 |
|
|
149,848 |
|
|
207,149 |
|
|
264,742 |
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
24,572 |
|
|
85,783 |
|
|
58,016 |
|
|
140,093 |
|
General and
administrative |
|
4,388 |
|
|
3,551 |
|
|
9,051 |
|
|
7,735 |
|
Acquisition and transaction
expenses |
|
3,661 |
|
|
2,308 |
|
|
6,855 |
|
|
3,782 |
|
Management fees and incentive
allocation to affiliate |
|
4,756 |
|
|
5,710 |
|
|
9,522 |
|
|
9,548 |
|
Depreciation and
amortization |
|
41,720 |
|
|
42,052 |
|
|
83,917 |
|
|
80,915 |
|
Asset impairment |
|
10,476 |
|
|
— |
|
|
10,476 |
|
|
— |
|
Interest expense |
|
21,794 |
|
|
25,394 |
|
|
44,655 |
|
|
46,128 |
|
Total expenses |
|
111,367 |
|
|
164,798 |
|
|
222,492 |
|
|
288,201 |
|
Other (expense)
income |
|
|
|
|
|
|
|
Equity in losses of
unconsolidated entities |
|
(3,209 |
) |
|
(169 |
) |
|
(2,944 |
) |
|
(553 |
) |
Gain (loss) on sale of assets,
net |
|
768 |
|
|
22,622 |
|
|
(1,051 |
) |
|
24,340 |
|
Loss on extinguishment of
debt |
|
— |
|
|
— |
|
|
(4,724 |
) |
|
— |
|
Interest income |
|
22 |
|
|
240 |
|
|
63 |
|
|
331 |
|
Other (expense) income |
|
(1 |
) |
|
4,937 |
|
|
32 |
|
|
2,334 |
|
Total other (expense)
income |
|
(2,420 |
) |
|
27,630 |
|
|
(8,624 |
) |
|
26,452 |
|
(Loss) income from
continuing operations before income taxes |
|
(19,478 |
) |
|
12,680 |
|
|
(23,967 |
) |
|
2,993 |
|
Benefit from income taxes |
|
(3,750 |
) |
|
(2,328 |
) |
|
(3,848 |
) |
|
(2,061 |
) |
Net (loss) income from continuing operations |
|
(15,728 |
) |
|
15,008 |
|
|
(20,119 |
) |
|
5,054 |
|
Net income from discontinued operations, net of income taxes |
|
— |
|
|
785 |
|
|
1,331 |
|
|
943 |
|
Net (loss)
income |
|
(15,728 |
) |
|
15,793 |
|
|
(18,788 |
) |
|
5,997 |
|
Less: Net (loss) income
attributable to non-controlling interests in consolidated
subsidiaries: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
(4,112 |
) |
|
(4,580 |
) |
|
(8,848 |
) |
|
(7,940 |
) |
Discontinued operations |
|
— |
|
|
41 |
|
|
— |
|
|
(15 |
) |
Dividends on preferred
shares |
|
4,079 |
|
|
— |
|
|
8,618 |
|
|
— |
|
Net (loss) income
attributable to shareholders |
|
$ |
(15,695 |
) |
|
$ |
20,332 |
|
|
$ |
(18,558 |
) |
|
$ |
13,952 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) earnings per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
$ |
(0.18 |
) |
|
$ |
0.23 |
|
|
$ |
(0.23 |
) |
|
$ |
0.15 |
|
Discontinued operations |
|
$ |
— |
|
|
$ |
0.01 |
|
|
$ |
0.02 |
|
|
$ |
0.01 |
|
Diluted |
|
|
|
|
|
|
|
Continuing operations |
|
$ |
(0.18 |
) |
|
$ |
0.23 |
|
|
$ |
(0.23 |
) |
|
$ |
0.15 |
|
Discontinued operations |
|
$ |
— |
|
|
$ |
0.01 |
|
|
$ |
0.02 |
|
|
$ |
0.01 |
|
Weighted average
shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
86,009,959 |
|
|
85,987,769 |
|
|
86,009,029 |
|
|
85,987,115 |
|
Diluted |
|
86,009,959 |
|
|
85,989,029 |
|
|
86,009,029 |
|
|
85,987,115 |
|
|
FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS
LLCCONSOLIDATED BALANCE SHEETS
(Unaudited)(Dollar amounts in thousands, except per share
data) |
|
|
|
(Unaudited) |
|
|
|
|
June 30, 2020 |
|
December 31, 2019 |
Assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
50,870 |
|
|
$ |
226,512 |
Restricted cash |
|
49,178 |
|
|
16,005 |
Accounts receivable, net |
|
62,966 |
|
|
49,470 |
Leasing equipment, net |
|
1,769,799 |
|
|
1,707,059 |
Operating lease right-of-use
assets, net |
|
62,816 |
|
|
37,466 |
Finance leases, net |
|
7,657 |
|
|
8,315 |
Property, plant, and
equipment, net |
|
849,129 |
|
|
732,109 |
Investments |
|
175,872 |
|
|
180,550 |
Intangible assets, net |
|
23,720 |
|
|
27,692 |
Goodwill |
|
122,735 |
|
|
122,639 |
Other assets |
|
112,752 |
|
|
129,105 |
Total assets |
|
$ |
3,287,494 |
|
|
$ |
3,236,922 |
|
|
|
|
|
Liabilities |
|
|
|
|
Accounts payable and accrued
liabilities |
|
$ |
108,360 |
|
|
$ |
144,855 |
Debt, net |
|
1,602,304 |
|
|
1,420,928 |
Maintenance deposits |
|
185,332 |
|
|
208,944 |
Security deposits |
|
38,795 |
|
|
45,252 |
Operating lease
liabilities |
|
62,436 |
|
|
36,968 |
Other liabilities |
|
38,776 |
|
|
41,118 |
Total liabilities |
|
$ |
2,036,003 |
|
|
$ |
1,898,065 |
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
Common shares ($0.01 par value
per share; 2,000,000,000 shares authorized; 85,610,800 and
84,917,448 shares issued and outstanding as of June 30, 2020 and
December 31, 2019, respectively) |
|
$ |
856 |
|
|
$ |
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 June 30, 2020 and
December 31, 2019, respectively) |
|
81 |
|
|
81 |
Additional paid in
capital |
|
1,109,631 |
|
|
1,110,122 |
Retained earnings |
|
115,113 |
|
|
190,453 |
Accumulated other
comprehensive (loss) income |
|
(2,982 |
) |
|
372 |
Shareholders' equity |
|
1,222,699 |
|
|
1,301,877 |
Non-controlling interest in
equity of consolidated subsidiaries |
|
28,792 |
|
|
36,980 |
Total equity |
|
1,251,491 |
|
|
1,338,857 |
Total liabilities and
equity |
|
$ |
3,287,494 |
|
|
$ |
3,236,922 |
|
|
|
|
|
|
|
|
|
FORTRESS
TRANSPORTATION AND INFRASTRUCTURE INVESTORS
LLCCONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)(Dollar amounts in thousands, unless otherwise
noted) |
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
2020 |
|
|
|
2019 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(18,788 |
) |
|
$ |
5,997 |
|
Adjustments to reconcile net (loss) income to net cash (used
in) provided by operating activities: |
|
|
|
|
|
|
|
|
Equity in losses of unconsolidated entities |
|
|
2,944 |
|
|
|
553 |
|
Gain on sale of subsidiaries |
|
|
(1,331 |
) |
|
|
— |
|
Loss (gain) on sale of assets, net |
|
|
1,051 |
|
|
|
(24,355 |
) |
Security deposits and maintenance claims included in
earnings |
|
|
2,951 |
|
|
|
(2,869 |
) |
Loss on extinguishment of debt |
|
|
4,724 |
|
|
|
— |
|
Equity-based compensation |
|
|
702 |
|
|
|
928 |
|
Depreciation and amortization |
|
|
83,917 |
|
|
|
82,133 |
|
Asset impairment |
|
|
10,476 |
|
|
|
— |
|
Change in current and deferred income taxes |
|
|
(4,506 |
) |
|
|
(2,655 |
) |
Change in fair value of non-hedge derivative |
|
|
181 |
|
|
|
(250 |
) |
Amortization of lease intangibles and incentives |
|
|
13,488 |
|
|
|
17,288 |
|
Amortization of deferred financing costs |
|
|
4,010 |
|
|
|
4,043 |
|
Bad debt expense |
|
|
1,761 |
|
|
|
3,062 |
|
Other |
|
|
759 |
|
|
|
547 |
|
Change in: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(24,140 |
) |
|
|
(14,675 |
) |
Other assets |
|
|
6,210 |
|
|
|
(13,105 |
) |
Accounts payable and accrued liabilities |
|
|
(18,894 |
) |
|
|
8,661 |
|
Management fees payable to affiliate |
|
|
(20,987 |
) |
|
|
871 |
|
Other liabilities |
|
|
124 |
|
|
|
(8,062 |
) |
Net cash provided by operating activities |
|
|
44,652 |
|
|
|
58,112 |
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Investment in unconsolidated entities |
|
|
(2,514 |
) |
|
|
— |
|
Principal collections on finance leases |
|
|
3,320 |
|
|
|
2,996 |
|
Acquisition of leasing equipment |
|
|
(206,299 |
) |
|
|
(209,171 |
) |
Acquisition of property, plant and equipment |
|
|
(130,073 |
) |
|
|
(159,252 |
) |
Acquisition of lease intangibles |
|
|
1,997 |
|
|
|
623 |
|
Purchase deposits for acquisitions |
|
|
(4,590 |
) |
|
|
(33,637 |
) |
Proceeds from sale of leasing equipment |
|
|
37,687 |
|
|
|
71,497 |
|
Proceeds from sale of property, plant and equipment |
|
|
— |
|
|
|
7 |
|
Return of capital distributions from unconsolidated
entities |
|
|
— |
|
|
|
1,280 |
|
Return of deposit on sale of engine |
|
|
2,350 |
|
|
|
— |
|
Net cash used in investing activities |
|
$ |
(298,122 |
) |
|
$ |
(325,657 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Proceeds from debt |
|
$ |
458,981 |
|
|
$ |
529,477 |
|
Repayment of debt |
|
|
(275,991 |
) |
|
|
(128,835 |
) |
Payment of deferred financing costs |
|
|
(12,629 |
) |
|
|
(32,443 |
) |
Receipt of security deposits |
|
|
853 |
|
|
|
3,475 |
|
Return of security deposits |
|
|
(3,815 |
) |
|
|
(233 |
) |
Receipt of maintenance deposits |
|
|
18,499 |
|
|
|
28,903 |
|
Release of maintenance deposits |
|
|
(9,185 |
) |
|
|
(22,493 |
) |
Issuance costs of preferred shares |
|
|
(267 |
) |
|
|
— |
|
Purchase of non-controlling interest |
|
|
(45 |
) |
|
|
— |
|
Cash dividends - common shares |
|
|
(56,782 |
) |
|
|
(56,767 |
) |
Cash dividends - preferred shares |
|
|
(8,618 |
) |
|
|
— |
|
Net cash provided by financing activities |
|
$ |
111,001 |
|
|
$ |
321,084 |
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents
and restricted cash |
|
|
(142,469 |
) |
|
|
53,539 |
|
Cash and cash equivalents and restricted cash, beginning of
period |
|
|
242,517 |
|
|
|
120,837 |
|
Cash and cash equivalents and restricted cash, end of
period |
|
$ |
100,048 |
|
|
$ |
174,376 |
|
|
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 six months ended
June 30, 2020 and 2019:
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
(in thousands) |
2020 |
|
2019 |
|
|
2020 |
|
2019 |
Net (loss) income attributable to shareholders from
continuing operations |
$ |
(15,695 |
) |
|
$ |
19,588 |
|
|
|
$ |
(19,889 |
) |
|
$ |
12,994 |
|
Add: Benefit from income
taxes |
(3,750 |
) |
|
(2,328 |
) |
|
|
(3,848 |
) |
|
(2,061 |
) |
Add: Equity-based compensation
expense |
411 |
|
|
579 |
|
|
|
702 |
|
|
761 |
|
Add: Acquisition and
transaction expenses |
3,661 |
|
|
2,308 |
|
|
|
6,855 |
|
|
3,782 |
|
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 |
— |
|
|
(3,470 |
) |
|
|
181 |
|
|
(250 |
) |
Add: Asset impairment
charges |
10,476 |
|
|
— |
|
|
|
10,476 |
|
|
— |
|
Add: Incentive
allocations |
— |
|
|
2,211 |
|
|
|
— |
|
|
2,373 |
|
Add: Depreciation and
amortization expense (1) |
48,341 |
|
|
51,006 |
|
|
|
97,405 |
|
|
98,203 |
|
Add: Interest expense |
21,794 |
|
|
25,394 |
|
|
|
44,655 |
|
|
46,128 |
|
Add: Pro-rata share of
Adjusted EBITDA from unconsolidated entities (2) |
126 |
|
|
24 |
|
|
|
(287 |
) |
|
(94 |
) |
Less: Equity in losses of
unconsolidated entities |
3,209 |
|
|
169 |
|
|
|
2,944 |
|
|
553 |
|
Less: Non-controlling share of
Adjusted EBITDA (3) |
(2,101 |
) |
|
(2,785 |
) |
|
|
(5,451 |
) |
|
(4,938 |
) |
Adjusted EBITDA
(non-GAAP) |
$ |
66,472 |
|
|
$ |
92,696 |
|
|
|
$ |
138,467 |
|
|
$ |
157,451 |
|
____________________________________________
(1) Includes the following items for the three
months ended June 30, 2020 and 2019: (i) depreciation and
amortization expense of $41,720 and $42,052, (ii) lease intangible
amortization of $931 and $2,202 and (iii) amortization for lease
incentives of $5,690 and $6,752, respectively. Includes the
following items for the six months ended June 30, 2020 and
2019: (i) depreciation and amortization expense of $83,917 and
$80,915, (ii) lease intangible amortization of $2,063 and $4,664
and (iii) amortization for lease incentives of $11,425 and $12,624,
respectively.
(2) Includes the following items for the three
months ended June 30, 2020 and 2019: (i) net loss of $(3,226)
and $(276), (ii) interest expense of $446 and $34,
(iii) depreciation and amortization expense of $1,446 and
$266, (iv) acquisition and transaction expenses of $531 and $0 and
(v) changes in fair value of non-hedge derivatives of $929 and $0,
respectively. Includes the following items for the six months ended
June 30, 2020 and 2019: (i) net loss of $(3,003) and $(696),
(ii) interest expense of $481 and $70, (iii) depreciation
and amortization expense of $2,408 and $532, (iv) acquisition and
transaction expenses of $612 and $0 and (v) changes in fair value
of non-hedge derivatives of $(785) and $0, respectively.
(3) Includes the following items for the three
months ended June 30, 2020 and 2019: (i) equity-based compensation
of $52 and $98, (ii) provision for income taxes of $15 and $8,
(iii) interest expense of $512 and $1,100, (iv) depreciation and
amortization expense of $1,522 and $1,282 and (v) changes in fair
value of non-hedge derivative instruments of $0 and $297,
respectively. Includes the following items for the six months ended
June 30, 2020 and 2019: (i) equity based compensation of $99 and
$119, (ii) provision for income taxes of $43 and $26, (iii)
interest expense of $1,231 and $1,945, (iv) depreciation and
amortization expense of $3,048 and $2,372, (v) changes in fair
value of non-hedge derivative instruments of $38 and $476 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 six
months ended June 30, 2020 and 2019:
|
Six Months Ended June 30, |
(in thousands) |
2020 |
|
2019 |
Net Cash Provided by Operating Activities |
$ |
44,652 |
|
$ |
58,112 |
|
Add: Principal Collections on
Finance Leases |
3,320 |
|
2,996 |
|
Add: Proceeds from Sale of
Assets |
37,687 |
|
71,504 |
|
Add: Return of Capital
Distributions from Unconsolidated Entities |
— |
|
1,280 |
|
Less: Required Payments on
Debt Obligations (1) |
— |
|
(3,125 |
) |
Less: Capital Distributions to
Non-Controlling Interest |
— |
|
— |
|
Exclude: Changes in Working
Capital |
57,687 |
|
26,310 |
|
Funds Available for
Distribution (FAD) |
$ |
143,346 |
|
$ |
157,077 |
|
____________________________________________
(1) Required payments on debt obligations for
the six months ended June 30, 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 six months ended
June 30, 2019 exclude repayments of $115,000 for the Revolving
Credit Facility and $10,710 for 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 June 30, 2020:
|
Three Months
Ended June 30, 2020 |
(in thousands) |
EquipmentLeasing |
|
Infrastructure |
|
Corporate andOther |
|
Total |
Funds
Available for Distribution (FAD) |
$ |
82,142 |
|
$ |
(6,681 |
) |
|
$ |
(28,152 |
) |
|
$ |
47,309 |
|
Less: Principal Collections on Finance Leases |
|
|
|
|
|
|
(3,000 |
) |
Less: Proceeds from Sale of Assets |
|
|
|
|
|
|
(9,119 |
) |
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 |
|
|
|
|
|
|
21,268 |
|
Net Cash Provided by Operating Activities |
|
|
|
|
|
|
$ |
56,458 |
|
The following tables set forth a reconciliation
of Net Cash Provided by Operating Activities to FAD for the six
months ended June 30, 2020:
|
Six Months
Ended June 30, 2020 |
(in thousands) |
EquipmentLeasing |
|
Infrastructure |
|
Corporate andOther |
|
Total |
Funds
Available for Distribution (FAD) |
$ |
203,396 |
|
$ |
(4,978 |
) |
|
$ |
(55,072 |
) |
|
$ |
143,346 |
|
Less: Principal Collections on Finance Leases |
|
|
|
|
|
|
(3,320 |
) |
Less: Proceeds from Sale of Assets |
|
|
|
|
|
|
(37,687 |
) |
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 |
|
|
|
|
|
|
(57,687 |
) |
Net Cash Provided by Operating Activities |
|
|
|
|
|
|
$ |
44,652 |
|
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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