Fortress Transportation and Infrastructure Investors LLC
(NYSE:FTAI) (the “Company”) today reported financial results for
the three months ended March 31, 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 |
Q1’19 |
Net Cash Provided by Operating Activities |
$ |
20,270 |
|
Net Loss Attributable to Shareholders |
$ |
(6,380 |
) |
Basic and Diluted Loss per Share |
$ |
(0.07 |
) |
|
|
Funds Available for Distribution (“FAD”) (1) |
$ |
70,183 |
|
Adjusted EBITDA(1) |
$ |
66,290 |
|
________________________________(1) For
definitions and reconciliations of Non-GAAP measures, please refer
to the exhibit to this press release.
For the first quarter of 2019, our total FAD was
$70.2 million. This amount includes $101.1 million from aviation
leasing activities, offset by $(4.1) million and $(26.8) million
from infrastructure and corporate and other activities,
respectively.
First Quarter 2019 Dividend
On May 2, 2019, the Company’s Board of Directors
declared a cash dividend on its common shares of $0.33 per share
for the quarter ended March 31, 2019, payable on May 28, 2019 to
the holders of record on May 17, 2019.
“Considering our net loss attributable to
shareholders, we achieved our best adjusted EBITDA quarter ever
with infrastructure again being a positive EBITDA
contributor. In addition, this was also our best quarter from
a value creation perspective. We increased our products and
relationships in our value add engine leasing business, including a
new partnership with United Airlines, grew contractual
relationships at Jefferson Terminal, signed long-term offtakes at
Long Ridge energy terminal and we are seeing strong customer demand
for terminal services at Repauno,” said Joe Adams, the Company’s
CEO.
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 3, 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 First 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, May 3, 2019
through midnight Friday, May 10, 2019 at 1-855-859-2056 (from
within the U.S.) or 1-404-537-3406 (from outside of the U.S.),
Passcode: 5076638.
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 including, but not
limited to, statements regarding future value creation. 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 May 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) |
$ |
0.1100 |
U.S. Dividend
Income(2) |
$ |
— |
Income Not from U.S.
Sources(3) |
$ |
0.2200 |
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) |
|
|
|
Three Months Ended March 31, |
(Dollar amounts in
thousands, except share and per share data) |
2019 |
|
2018 |
Revenues |
|
|
|
Equipment leasing
revenues |
$ |
72,452 |
|
|
$ |
55,784 |
|
Infrastructure
revenues |
52,175 |
|
|
13,060 |
|
Total revenues |
124,627 |
|
|
68,844 |
|
|
|
|
|
Expenses |
|
|
|
Operating expenses |
61,918 |
|
|
27,579 |
|
General and
administrative |
4,732 |
|
|
3,586 |
|
Acquisition and
transaction expenses |
1,474 |
|
|
1,766 |
|
Management fees and
incentive allocation to affiliate |
3,838 |
|
|
3,739 |
|
Depreciation and
amortization |
39,533 |
|
|
29,587 |
|
Interest expense |
21,303 |
|
|
11,871 |
|
Total expenses |
132,798 |
|
|
78,128 |
|
|
|
|
|
Other income
(expense) |
|
|
|
Equity in (losses)
earnings of unconsolidated entities |
(384 |
) |
|
95 |
|
Gain (loss) on sale of
equipment, net |
1,725 |
|
|
(5 |
) |
Interest income |
91 |
|
|
176 |
|
Other (expense)
income |
(2,604 |
) |
|
180 |
|
Total other (expense)
income |
(1,172 |
) |
|
446 |
|
|
|
|
|
Loss before
income taxes |
(9,343 |
) |
|
(8,838 |
) |
Provision for income
taxes |
453 |
|
|
495 |
|
Net
loss |
(9,796 |
) |
|
(9,333 |
) |
Less: Net loss
attributable to non-controlling interests in consolidated
subsidiaries |
(3,416 |
) |
|
(8,761 |
) |
Net loss
attributable to shareholders |
$ |
(6,380 |
) |
|
$ |
(572 |
) |
|
|
|
|
Loss per
share |
|
|
|
Basic |
$ |
(0.07 |
) |
|
$ |
(0.01 |
) |
Diluted |
$ |
(0.07 |
) |
|
$ |
(0.01 |
) |
|
|
|
|
Weighted
Average Shares Outstanding: |
|
|
|
Basic |
85,986,453 |
|
|
81,534,454 |
|
Diluted |
85,986,453 |
|
|
81,534,454 |
|
|
|
|
|
|
FORTRESS TRANSPORTATION AND INFRASTRUCTURE
INVESTORS LLCCONSOLIDATED BALANCE
SHEETS |
|
|
(Unaudited) |
|
|
(Dollar amounts in
thousands, except share and per share data) |
|
March 31, 2019 |
|
December 31, 2018 |
Assets |
|
|
|
|
Cash and cash
equivalents |
|
$ |
120,515 |
|
|
$ |
99,601 |
|
Restricted cash |
|
108,058 |
|
|
21,236 |
|
Accounts receivable,
net |
|
50,586 |
|
|
53,789 |
|
Leasing equipment,
net |
|
1,471,794 |
|
|
1,432,210 |
|
Operating lease
right-of-use assets, net |
|
44,241 |
|
|
— |
|
Finance leases,
net |
|
21,158 |
|
|
18,623 |
|
Property, plant, and
equipment, net |
|
788,668 |
|
|
708,853 |
|
Investments |
|
39,778 |
|
|
40,560 |
|
Intangible assets,
net |
|
35,604 |
|
|
38,513 |
|
Goodwill |
|
116,584 |
|
|
116,584 |
|
Other assets |
|
150,714 |
|
|
108,809 |
|
Total assets |
|
$ |
2,947,700 |
|
|
$ |
2,638,778 |
|
|
|
|
|
|
Liabilities |
|
|
|
|
Accounts payable and
accrued liabilities |
|
$ |
97,415 |
|
|
$ |
112,188 |
|
Debt, net |
|
1,540,017 |
|
|
1,237,347 |
|
Maintenance
deposits |
|
166,749 |
|
|
158,163 |
|
Security deposits |
|
38,638 |
|
|
38,539 |
|
Operating lease
liabilities |
|
44,719 |
|
|
— |
|
Other liabilities |
|
87,108 |
|
|
38,759 |
|
Total liabilities |
|
$ |
1,974,646 |
|
|
$ |
1,584,996 |
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
Common shares ($0.01
par value per share; 2,000,000,000 shares authorized; 84,477,791
and 84,050,889 shares issued and outstanding as of March 31, 2019
and December 31, 2018, respectively) |
|
845 |
|
|
840 |
|
Additional paid in
capital |
|
1,001,223 |
|
|
1,029,376 |
|
Accumulated
deficit |
|
(39,197 |
) |
|
(32,817 |
) |
Accumulated other
comprehensive loss |
|
(43,012 |
) |
|
— |
|
Shareholders'
equity |
|
919,859 |
|
|
997,399 |
|
Non-controlling
interest in equity of consolidated subsidiaries |
|
53,195 |
|
|
56,383 |
|
Total equity |
|
973,054 |
|
|
1,053,782 |
|
Total liabilities and
equity |
|
$ |
2,947,700 |
|
|
$ |
2,638,778 |
|
|
|
FORTRESS TRANSPORTATION AND INFRASTRUCTURE
INVESTORS LLCCONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)(Dollar amounts in thousands, unless otherwise
noted) |
|
|
|
Three Months Ended March 31, |
|
2019 |
|
2018 |
Cash flows from
operating activities: |
|
|
|
Net loss |
$ |
(9,796 |
) |
|
$ |
(9,333 |
) |
Adjustments to
reconcile net loss to net cash provided by operating
activities: |
|
|
|
Equity in losses
(earnings) of unconsolidated entities |
384 |
|
|
(95 |
) |
(Gain) loss on sale of
equipment, net |
(1,725 |
) |
|
5 |
|
Security deposits and
maintenance claims included in earnings |
(2,953 |
) |
|
(383 |
) |
Equity-based
compensation |
228 |
|
|
208 |
|
Depreciation and
amortization |
39,533 |
|
|
29,587 |
|
Change in current and
deferred income taxes |
338 |
|
|
504 |
|
Change in fair value of
non-hedge derivative |
3,220 |
|
|
(624 |
) |
Amortization of lease
intangibles and incentives |
8,334 |
|
|
7,226 |
|
Amortization of
deferred financing costs |
2,025 |
|
|
1,151 |
|
Bad debt expense |
2,950 |
|
|
1,441 |
|
Other |
221 |
|
|
9 |
|
Change in: |
|
|
|
Accounts
receivable |
(1,127 |
) |
|
(7,387 |
) |
Other
assets |
(5,295 |
) |
|
1,176 |
|
Accounts
payable and accrued liabilities |
(14,348 |
) |
|
(9,768 |
) |
Management fees payable to affiliate |
(1,158 |
) |
|
(1,300 |
) |
Other
liabilities |
(561 |
) |
|
(947 |
) |
Net cash
provided by operating activities |
20,270 |
|
|
11,470 |
|
|
|
|
|
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 |
1,289 |
|
|
129 |
|
Acquisition of leasing
equipment |
(108,919 |
) |
|
(86,043 |
) |
Acquisition of
property, plant and equipment |
(81,241 |
) |
|
(23,641 |
) |
Acquisition of lease
intangibles |
(589 |
) |
|
(1,029 |
) |
Purchase deposits for
acquisitions |
(4,625 |
) |
|
(6,886 |
) |
Proceeds from sale of
leasing equipment |
27,292 |
|
|
6,136 |
|
Proceeds from sale of
property, plant and equipment |
7 |
|
|
38 |
|
Return of capital
distributions from unconsolidated entities |
398 |
|
|
— |
|
Return of purchase
deposit for aircraft and aircraft engines |
— |
|
|
240 |
|
Return of deposit on
sale of engine |
— |
|
|
(400 |
) |
Net cash used
in investing activities |
|
(166,388 |
) |
|
|
(113,483 |
) |
Cash flows from
financing activities: |
|
|
|
Proceeds from debt |
|
352,680 |
|
|
|
18,600 |
|
Repayment of debt |
(47,222 |
) |
|
(12,612 |
) |
Payment of deferred
financing costs |
(28,611 |
) |
|
(71 |
) |
Receipt of security
deposits |
1,935 |
|
|
1,864 |
|
Return of security
deposits |
(233 |
) |
|
(700 |
) |
Receipt of maintenance
deposits |
13,495 |
|
|
9,720 |
|
Release of maintenance
deposits |
(9,807 |
) |
|
(1,840 |
) |
Proceeds from issuance
of common shares, net of underwriter's discount |
— |
|
|
128,450 |
|
Common shares issuance
costs |
— |
|
|
(132 |
) |
Cash dividends |
(28,383 |
) |
|
(27,333 |
) |
Net cash
provided by financing activities |
|
253,854 |
|
|
|
115,946 |
|
|
|
|
|
Net increase in
cash and cash equivalents and restricted cash |
107,736 |
|
|
13,933 |
|
Cash and cash
equivalents and restricted cash, beginning of period |
120,837 |
|
|
92,806 |
|
Cash and cash
equivalents and restricted cash, end of period |
$ |
228,573 |
|
|
$ |
106,739 |
|
|
|
|
|
|
|
|
|
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 (loss) 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 loss attributable to shareholders to Adjusted EBITDA for the
three months ended March 31, 2019 and 2018:
|
Three Months Ended March 31, |
(in thousands) |
2019 |
|
2018 |
Net loss
attributable to shareholders |
$ |
(6,380 |
) |
|
$ |
(572 |
) |
Add: Provision for
income taxes |
453 |
|
|
495 |
|
Add: Equity-based
compensation expense |
228 |
|
|
208 |
|
Add: Acquisition and
transaction expenses |
1,474 |
|
|
1,766 |
|
Add: Losses on the
modification or extinguishment of debt and capital lease
obligations |
— |
|
|
— |
|
Add: Changes in fair
value of non-hedge derivative instruments |
3,220 |
|
|
624 |
|
Add: Asset impairment
charges |
— |
|
|
— |
|
Add: Incentive
allocations |
162 |
|
|
— |
|
Add: Depreciation and
amortization expense (1) |
47,867 |
|
|
36,814 |
|
Add: Interest
expense |
21,303 |
|
|
11,871 |
|
Add: Pro-rata share of
Adjusted EBITDA from unconsolidated entities (2) |
(118 |
) |
|
175 |
|
Less: Equity in losses
(earnings) of unconsolidated entities |
384 |
|
|
(95 |
) |
Less: Non-controlling
share of Adjusted EBITDA (3) |
(2,303 |
) |
|
(3,165 |
) |
Adjusted EBITDA
(non-GAAP) |
$ |
66,290 |
|
|
$ |
48,121 |
|
___________________________________________
(1) Includes the following items for the three
months ended March 31, 2019 and 2018: (i) $39,533 and $29,587
of depreciation and amortization expense, (ii) $2,462 and $1,992 of
lease intangible amortization and (iii) $5,872 and $5,235 of
amortization for lease incentives, respectively.
(2) Includes the following items for the three
months ended March 31, 2019 and 2018: (i) net (loss) income of
$(420) and $48, (ii) interest expense of $36 and $112 and
(iii) depreciation and amortization expense of $266 and $15,
respectively.
(3) Includes the following items for the three
months ended March 31, 2019 and 2018: (i) equity based compensation
of $25 and $37, (ii) provision for income taxes of $36 and $4,
(iii) interest expense of $899 and $1,292, (iv) depreciation and
amortization expense of $1,164 and $2,076 and (v) changes in fair
value of non-hedge derivative instruments of $179 and $(244),
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 three
months ended March 31, 2019 and 2018:
|
Three Months Ended March 31, |
(in thousands) |
2019 |
|
2018 |
Net Cash
Provided by Operating Activities |
$ |
20,270 |
|
|
$ |
11,470 |
|
Add: Principal
Collections on Finance Leases |
1,289 |
|
|
129 |
|
Add: Proceeds from Sale
of Assets |
27,299 |
|
|
6,174 |
|
Add: Return of Capital
Distributions from Unconsolidated Entities |
398 |
|
|
— |
|
Less: Required Payments
on Debt Obligations (1) |
(1,562 |
) |
|
(1,562 |
) |
Less: Capital
Distributions to Non-Controlling Interest |
— |
|
|
— |
|
Exclude: Changes in
Working Capital |
22,489 |
|
|
18,226 |
|
Funds Available
for Distribution (FAD) |
$ |
70,183 |
|
|
$ |
34,437 |
|
___________________________________________
(1) Required payments on debt obligations 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, and for the three months ended March 31,
2018 exclude repayment of $11,050 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 months ended
March 31, 2019:
|
Three Months Ended March 31,
2019 |
(in thousands) |
AviationLeasing |
|
Infrastructure |
|
Corporate andOther |
|
Total |
Funds Available for Distribution (FAD) |
$ |
101,141 |
|
|
$ |
(4,185 |
) |
|
$ |
(26,773 |
) |
|
$ |
70,183 |
|
Less: Principal Collections on
Finance Leases |
|
|
|
|
|
|
(1,289 |
) |
Less: Proceeds from Sale of
Assets |
|
|
|
|
|
|
(27,299 |
) |
Less: Return of Capital
Distributions from Unconsolidated Entities |
|
|
|
|
|
|
(398 |
) |
Add: Required Payments on Debt
Obligations (1) |
|
|
|
|
|
|
1,562 |
|
Add: Capital Distributions to
Non-Controlling Interest |
|
|
|
|
|
|
— |
|
Include: Changes in Working
Capital |
|
|
|
|
|
|
(22,489 |
) |
Net Cash provided by Operating
Activities |
|
|
|
|
|
|
$ |
20,270 |
|
(1) Required payments on debt obligations 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, 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.
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