FTAI Aviation Ltd. — Filing summary
Registrant identification: The supplied filing is for Fortress Transportation and Infrastructure Investors LLC (NYSE: FTAI), not a registrant named FTAI Aviation Ltd. This summary reflects the filing’s named registrant.
Business context and reporting period
Unaudited Form 10-Q for the three months ended March 31, 2021, compared with the three months ended March 31, 2020. The company owns and leases aviation equipment and offshore energy assets, and operates or invests in transportation infrastructure, including Jefferson Terminal, Repauno and Long Ridge. Amounts below are in U.S. dollars; financial statement amounts are generally in millions unless stated otherwise.
Financial performance and position
| Metric | Q1 2021 | Q1 2020 / prior date |
|---|---|---|
| Total revenue | $77.1 million | $112.8 million |
| Net loss | $34.9 million | $3.1 million |
| Net loss attributable to shareholders | $34.5 million | $2.9 million |
| Adjusted EBITDA (non-GAAP) | $47.2 million | $72.0 million |
| Net cash used in operating activities | $48.9 million | $11.8 million |
| Net cash used in investing activities | $154.4 million | $91.1 million |
| Net cash provided by (used in) financing activities | $235.4 million | ($16.2 million) |
| Cash and cash equivalents | $160.3 million | $121.7 million at Dec. 31, 2020 |
| Restricted cash | $33.2 million | $39.7 million at Dec. 31, 2020 |
| Debt, net | $2,077.4 million | $1,904.8 million at Dec. 31, 2020 |
| Total assets / total equity | $3,592.0 million / $1,143.7 million | $3,388.0 million / $1,099.3 million at Dec. 31, 2020 |
| Basic and diluted loss per share | ($0.40) | ($0.05) continuing operations |
No GAAP gross margin is presented in the filing. Adjusted EBITDA is a non-GAAP measure and should not be treated as a substitute for net income or operating cash flow.
Material changes versus the prior period
- Revenue fell $35.7 million, or about 31.6%. Equipment leasing revenue declined $29.8 million, primarily reflecting aircraft redeliveries, fewer engines on lease, non-accrual customers and reduced utilization and maintenance activity amid COVID-19.
- Infrastructure revenue decreased $5.8 million. Jefferson Terminal revenue fell $14.0 million, including the absence of crude-marketing revenue after the company exited that strategy in 2019 and lower terminal volumes. Ports and Terminals revenue rose $7.8 million, largely due to an unrealized butane-derivative gain.
- Adjusted EBITDA declined $24.8 million. Interest expense rose $10.1 million, reflecting higher average debt, while lower operating expenses and lower acquisition and management fees partly offset the increase. A $2.1 million aviation leasing impairment was recorded.
- Operating cash use worsened by $37.1 million. Investing cash use increased $63.3 million, including higher leasing-equipment purchases. Financing cash flow benefited from debt proceeds and a $101.2 million net Series C preferred-share offering.
- Long Ridge equity-method investment income contributed to stronger Ports and Terminals results; the company’s share of equity-method earnings was $1.4 million, compared with $0.3 million in Q1 2020.
Liquidity, debt and capital allocation
- At quarter-end, debt included $150 million drawn on the revolving credit facility, $25 million on the DRP revolver, $21.6 million under an EB-5 loan, and senior notes and bonds. The filing reports $575 million of debt due within one year at March 31, principally the $400 million 2022 notes and $150 million revolving facility, plus the $25 million DRP revolver.
- The company reported compliance with all debt covenants at March 31. The filing states it had no off-balance-sheet arrangements.
- After quarter-end, the company issued $500 million of 5.50% senior notes due 2028 and said it intended to use some proceeds to redeem the $400 million 2022 notes. It also reported repaying a net $100 million under its revolver during April, leaving $200 million of additional borrowing capacity.
- Q1 cash dividends were $28.4 million on common shares and $4.6 million on preferred shares. The company declared a $0.33 common dividend for the quarter. Funds Available for Distribution (FAD), a non-GAAP measure, was $14.4 million versus $96.0 million a year earlier; FAD excludes working-capital changes and several significant cash uses, so it is not equivalent to cash available after investment spending.
Outlook, commentary, risks and unusual items
- Management said it believed liquidity was sufficient, while citing spending controls and reprioritization of capital projects. It provided no consolidated numerical earnings or revenue guidance in this filing.
- Management expected Jefferson Terminal to generate positive Adjusted EBITDA in 2021 and anticipated COVID-related refining-volume effects normalizing over 2021, with volumes returning toward normal by 2022. It acknowledged delays in anticipated contracts and volumes and said further delays could impair the terminal’s outlook. Only about 20.3% of its planned 21.7 million barrels of storage capacity—4.4 million barrels—was operational.
- COVID-19 continued to pressure aviation leasing and terminal demand. A number of aviation lessees were on non-accrual status; management cited $175.6 million of maintenance and security deposits as protection against defaults. Aviation equipment utilization was approximately 73% in Q1.
- The $7.9 million unrealized gain on Repauno butane forward contracts materially lifted reported Ports and Terminals revenue; it is not equivalent to realized operating cash revenue. Aviation leasing impairment charges were $2.1 million.
- Jefferson Terminal entered a pipeline-capacity agreement taking effect in Q2 2021, requiring minimum marketing fees of $10.2 million per year for two years. The company also recorded a $5 million payable for a Repauno contingent payment, included in asset acquisition cost. An offshore lessee dispute had a stated potential loss range of $0 to $3.3 million.
- Key risks include further pandemic impacts, lessee defaults and asset redeliveries, aviation asset values and utilization, terminal volume and contract execution, construction and environmental issues at development sites, interest-rate and refinancing risk, and the company’s reliance on external management. The company also highlighted the LIBOR transition and reported $175 million of floating-rate debt at March 31.
Important facts for investors to verify
- Confirm the registrant and security being analyzed: this filing is for Fortress Transportation and Infrastructure Investors LLC (FTAI), notwithstanding the request metadata naming FTAI Aviation Ltd.
- Review subsequent filings for completion and terms of the 2028 notes issuance, 2022-note redemption and April revolver repayment.
- Track aviation lessee non-accruals, lease renewals and utilization, and whether maintenance and security deposits adequately protect against defaults.
- Assess Jefferson Terminal’s progress on contracts, throughput, pipeline operations and planned storage capacity against management’s outlook.
- Compare recurring operating cash generation and dividend payments with investment needs; evaluate FAD’s exclusions and the company’s reliance on financing and asset proceeds.
- Monitor debt maturities, floating-rate exposure, covenant headroom, and development, environmental and contingent-payment obligations at infrastructure assets.