FTAI 2021 Form 10-K Summary
Registrant and period: The supplied filing is for Fortress Transportation and Infrastructure Investors LLC (NYSE: FTAI), not an entity named FTAI Aviation Ltd. It reports the fiscal year ended December 31, 2021, with comparisons to 2020 and 2019; it is not a standalone Q4 report.
Business context
FTAI owns and operates aviation-leasing and transportation infrastructure assets. Its reportable segments are Aviation Leasing, Jefferson Terminal, Ports and Terminals, and Transtar. At year-end, it reported $4.9 billion of consolidated assets and $1.1 billion of equity. It is externally managed by an affiliate of Fortress.
Key financial metrics
| Metric | FY 2021 | FY 2020 |
|---|---|---|
| Revenue | $455.8 million | $366.5 million |
| Net loss attributable to shareholders | $129.0 million | $105.0 million |
| Adjusted EBITDA, non-GAAP | $336.3 million | $243.3 million |
| Net cash from (used in) operating activities | $(22.0) million | $63.1 million |
| Cash and cash equivalents | $188.1 million | $121.7 million |
| Restricted cash | $252.0 million | $39.7 million |
| Debt, net of issuance costs | $3.22 billion | $1.90 billion |
Revenue increased 24%; Adjusted EBITDA increased 38%. FTAI recorded a GAAP net loss, and operating cash flow turned negative. Adjusted EBITDA is a non-GAAP measure and should not be treated as a substitute for earnings or cash flow. The filing does not provide a single comparable consolidated margin measure.
Cash used in investing activities was $1.287 billion and cash provided by financing activities was $1.588 billion. Funds Available for Distribution (FAD), a non-GAAP measure, was $242.2 million; its calculation includes asset-sale proceeds and excludes working-capital changes. Cash dividends paid were $118.0 million on common shares and $24.8 million on preferred shares. Management disclosed that operating cash flow had been below shareholder distributions.
Material changes versus 2020
- Transtar was acquired in July for approximately $636 million. Its results contributed $57.5 million of revenue and $28.1 million of Adjusted EBITDA from the acquisition date through year-end.
- Equipment-leasing revenue rose, led by maintenance revenue and engine-parts sales; lease income declined amid aircraft redeliveries. Aviation equipment utilization was approximately 78% in Q4.
- Infrastructure revenue rose, primarily due to Transtar. Jefferson Terminal revenue fell as lower volumes affected terminal services; the company had exited its crude-marketing strategy in 2019.
- Interest expense rose $72.8 million to $171.0 million, principally reflecting higher average debt. Total debt, net, increased by about $1.32 billion year over year.
- Net loss widened by $24.0 million. The year included $49.0 million of net gains on asset sales, $10.5 million of asset impairment charges, and $3.3 million of debt-extinguishment losses.
Outlook, risks and unusual items
- Planned infrastructure separation: Announced in Q4, the proposed spin-off was expected in Q2 2022. The infrastructure entity was expected to remit approximately $800 million in cash to FTAI and retain related project-level debt; FTAI expected to retain aviation, certain other assets, and corporate debt. Completion and terms remained subject to board approval and could change or the transaction might not occur.
- Management outlook: Management expected Jefferson Terminal activity to normalize and ramp toward normal levels in 2022, and said it remained positive on the segment’s earnings potential. It also stated that liquidity was sufficient for cash needs, while describing uncertainty from COVID-19 and prioritization of spending. No formal earnings guidance was provided.
- Liquidity and leverage: Contractual debt principal and interest obligations were $3.3 billion and $1.2 billion, respectively; $100.5 million of principal and $185.4 million of interest were due within 12 months. The company reported $100.5 million of bridge loans due in 2022, in addition to other obligations. It was in compliance with debt covenants at year-end.
- Business risks: COVID-19 continued to pressure aviation customers and Jefferson volumes; some aviation lessees were on non-accrual status. Other material risks include customer concentration, asset values and lease renewals, acquisition integration, financing costs and rates, environmental and regulatory exposure, and execution of infrastructure development plans. The largest customer accounted for 11% of revenue and 36% of receivables; a Transtar customer accounted for approximately 12% of revenue based on FTAI’s ownership period.
- Other items: The $10.5 million impairment related to aviation equipment, including early lease terminations and pandemic-related market-value declines. Long Ridge recorded equity-method losses, including unrealized power-swap losses; its earn-out receivable was written off. The auditors issued unqualified opinions on the financial statements and internal controls, but Transtar—16% of year-end assets and 13% of annual revenue—was excluded from the internal-control assessment while integration continued.
Most important facts for investors to verify
- Whether the proposed spin-off closed, its final structure and cash/debt allocation, and the resulting liquidity and leverage of each company.
- Whether operating cash generation improves and supports dividends without relying on asset sales, new debt, or equity issuance.
- Whether aviation utilization, lessee collections, non-accrual exposure, and maintenance-revenue assumptions recover as expected.
- Whether Transtar meets expectations, retains its U.S. Steel business under the long-term service agreement, and completes control integration.
- Whether Jefferson secures delayed contracts and volumes, and whether its limited goodwill valuation cushion or development assumptions change.