FTAI 2020 Form 10-K Summary
Entity and period: The filing identifies the registrant as Fortress Transportation and Infrastructure Investors LLC (NYSE: FTAI), not FTAI Aviation Ltd. It is an annual report for the fiscal year ended December 31, 2020; the figures below are full-year results unless noted, not standalone fourth-quarter results. The company is externally managed and invests in aviation leasing and transportation infrastructure, including terminals and ports.
Financial performance and position
| Metric | 2020 | 2019 |
|---|---|---|
| Revenue | $366.5 million | $578.8 million |
| Net income (loss) attributable to shareholders | $(105.0) million | $223.3 million |
| Adjusted EBITDA (non-GAAP) | $243.3 million | $503.4 million |
| Net cash from operating activities | $63.1 million | $151.0 million |
| Net cash used in investing activities | $(509.1) million | $(495.2) million |
| Net cash from financing activities | $364.9 million | $465.9 million |
| Total assets / total equity at year-end | $3.388 billion / $1.099 billion | $3.237 billion / $1.339 billion |
| Debt, net at year-end | $1.905 billion | $1.421 billion |
| Cash and restricted cash at year-end | $161.4 million | $242.5 million |
- Revenue fell 36.7%; expenses were $460.6 million, exceeding revenue. The reported net loss from continuing operations was $105.0 million, or $1.24 per share.
- Adjusted EBITDA, a company-defined non-GAAP measure, fell about 52%. The filing attributes the deterioration to pandemic-related aviation weakness and the absence of substantial 2019 gains from asset and subsidiary sales. 2019 earnings included a $203.3 million net gain on asset sales and $73.5 million of income from discontinued operations.
- Operating cash flow was below 2020 cash distributions to shareholders of $131.4 million. The company reported Funds Available for Distribution (FAD) of $237.4 million, but notes that this non-GAAP measure excludes, among other things, acquisitions, capital expenditures and changes in working capital.
- Common dividends declared were $1.32 per share for 2020. The board subsequently declared a $0.33-per-share fourth-quarter common dividend, payable in March 2021.
Material changes and segment developments
- Aviation Leasing: Revenue decreased to $281.2 million from $336.7 million and Adjusted EBITDA to $288.8 million from $429.4 million. COVID-19 reduced aircraft and engine utilization, increased aircraft redeliveries and led some lessees to non-accrual status. Year-end utilization was approximately 73%; 70 of 78 aircraft and 111 of 186 engines were on lease. The segment recorded $34.0 million of asset impairment charges.
- Jefferson Terminal: Revenue decreased to $60.3 million from $204.3 million, largely because the terminal exited its crude-marketing strategy in late 2019. Terminal-services revenue increased by $15.0 million, and segment Adjusted EBITDA improved to $16.1 million from a $6.2 million loss. About 4.4 million barrels of storage capacity was operational against designed capacity of 21.7 million barrels.
- Ports and Terminals: Revenue was $3.9 million versus $22.2 million, and Adjusted EBITDA was a $2.6 million loss versus $114.8 million. Prior-year results included the Long Ridge transaction gain. FTAI retained a 50% interest in Long Ridge and accounts for it under the equity method.
- The company sold substantially all of its railroad business in December 2019; its results are presented as discontinued operations. An aviation-segment organizational restructuring was completed in early 2020.
Liquidity, debt and outlook
- During 2020, the company issued $400 million of 9.75% senior notes due 2027, issued an additional $400 million of 6.50% notes due 2025, and refinanced Jefferson debt through $264 million of Series 2020 Bonds. It repaid $300 million of 2022 notes and $50 million of revolving-facility borrowings in December. Debt principal reported at year-end totaled approximately $1.939 billion; $25 million under the DRP Revolver was due in 2021 and $400 million of senior notes were due in 2022. The company reported $250 million of additional borrowing capacity under its revolving facility after year-end repayments and compliance with debt covenants at December 31, 2020.
- Management said it believed liquidity was sufficient, while describing steps to limit discretionary spending and reprioritize capital projects. It expected short-term needs to be met through cash and operating cash flow; future acquisitions may require cash, operations, or new securities.
- Management expected Jefferson Terminal to generate positive Adjusted EBITDA in 2021. Pipeline projects were expected to become operational early in 2021; management anticipated refining and throughput recovery toward normal levels by 2022, while acknowledging delayed contracts and volumes. Long Ridge’s 485 MW power project was reported on time and on budget, tracking ahead of its guaranteed November 2021 completion date. Repauno completed its rail-to-ship transloading system shortly after year-end, with LPG vessel loading planned for 2021.
Risks, contingencies and unusual items
- COVID-19 materially affected aviation demand and leasing revenue; the duration and financial impact remained uncertain. Some aviation lessees were on non-accrual status. The company cited $185.4 million of maintenance reserves and security deposits as protection against lessee defaults.
- Other key risks include customer concentration and default, asset utilization and residual values, refinancing and capital access, substantial leverage and debt covenants, interest-rate and LIBOR transition exposure, infrastructure construction and contract ramp-up, environmental liabilities, regulation, and conflicts of interest with the external Manager and its affiliates.
- Interest expense was $98.2 million. The company reported $25.0 million of floating-rate debt and estimated a 100-basis-point rate increase would add approximately $0.2 million of interest expense over the next 12 months, assuming no hedging.
- Potential offshore-energy charter losses were estimated at $0–$3.3 million. A Repauno non-controlling-interest arrangement could require contingent payments of up to $15 million; $1.0 million of related expense was recorded in 2020. Management did not expect current or threatened legal proceedings to have a material adverse effect, while noting outcomes remain uncertain.
- The auditor issued unqualified opinions on the financial statements and internal control over financial reporting. Management and the auditor concluded internal controls were effective. Critical audit matters included Jefferson Terminal goodwill valuation and aircraft-lease maintenance revenue estimates.
Investor verification priorities
- Confirm the registrant and security being analyzed: this filing is for Fortress Transportation and Infrastructure Investors LLC (FTAI), not FTAI Aviation Ltd.
- Assess how much of the 2020 loss and EBITDA decline reflects recurring operations versus pandemic impacts, impairments, debt-extinguishment losses and the comparison with 2019 asset-sale gains.
- Review aviation lessee credit quality, non-accrual exposures, lease returns, utilization and the recoverability of maintenance reserves and deposits.
- Test Jefferson Terminal’s contract and volume ramp-up assumptions, pipeline commissioning, storage utilization and goodwill valuation sensitivity.
- Evaluate debt maturities, refinancing needs, interest costs, liquidity sources and distributions against operating cash generation; distinguish FAD from cash available after investment and maintenance needs.
- Track completion, cost and permitting risks at Long Ridge and Repauno, alongside environmental obligations and contingent commitments.