Business Context and Reporting Period
This Form 8-K, filed on February 6, 2019, by Fortress Transportation and Infrastructure Investors LLC (FTAI Aviation Ltd.), discloses estimated preliminary financial results for the fourth quarter and full year ended December 31, 2018. The filing also announces a private offering of $100.0 million in additional senior notes and provides updates on recent financing activities and risk factors.
Key Financial Metrics
The following estimated preliminary results are presented as ranges due to incomplete closing procedures. Figures are in millions unless otherwise noted.
| Metric | Q4 2018 (Low) | Q4 2018 (High) | Full Year 2018 (Low) | Full Year 2018 (High) |
|---|---|---|---|---|
| Total Revenue | $134.5 | $138.7 | $376.5 | $380.7 |
| Net (Loss) Income Attributable to Shareholders | $(2.4) | $1.8 | $2.5 | $6.7 |
| Adjusted EBITDA | $59.7 | $63.9 | $218.8 | $223.0 |
Debt and Liquidity: As of September 30, 2018, the company had approximately $1.3 billion in aggregate indebtedness. Outstanding borrowings under the Jefferson Revolver were $49.8 million as of February 6, 2019. The company has the capacity to borrow an additional $125.0 million under its Revolving Credit Facility, subject to conditions.
Material Changes and Recent Developments
- Private Offering: Commenced a private offering of $100.0 million aggregate principal amount of 6.75% senior notes due 2022. Proceeds are intended for general corporate purposes, repayment of revolving borrowings, and future aviation investments.
- Repauno Revolver: A subsidiary entered into a $25.0 million revolver in November 2018; $6.0 million was drawn in January 2019.
- Jefferson Revolver Amendment: Aggregate commitments temporarily increased from $50.0 million to $75.0 million, expiring August 1, 2019.
- Potential Financing: Evaluating increasing Revolving Credit Facility commitments by up to $125.0 million and potential infrastructure financing for a power plant in Hannibal, Ohio.
Guidance, Risks, and Contingencies
Management Commentary: Management notes that estimates are inherently uncertain and final results may vary. Adjusted EBITDA is used as a non-GAAP measure to assess economic performance of deployed assets, excluding items such as depreciation, amortization, and interest expense.
Risks and Contingencies:
- Internal Controls: The company is no longer an emerging growth company and must comply with Section 404 of the Sarbanes-Oxley Act. Management is evaluating control deficiencies in the Aviation segment that may constitute a material weakness. If not remediated by the 10-K filing, the company may disclose a material weakness, potentially impacting share price and capital raising ability.
- Debt Service: The company relies on dividends and intercompany transfers from subsidiaries to service debt. Unrestricted subsidiaries are not subject to indenture covenants and may incur additional debt structurally senior to the notes.
- Forward-Looking Statements: Actual results may differ materially from estimates due to various risks, including market conditions and the ability to complete potential financing transactions.
Investor Verification Checklist
- Verify the final audited financial results for Q4 and Full Year 2018 in the upcoming Form 10-K to confirm if they fall within the estimated ranges provided.
- Monitor the outcome of the Section 404 internal control review and whether a material weakness is disclosed in the 2018 Annual Report.
- Confirm the successful closing of the $100.0 million private offering of 6.75% senior notes due 2022.
- Track the status of the potential $125.0 million increase to the Revolving Credit Facility and the infrastructure financing for the Hannibal, Ohio power plant.
- Review the impact of the temporary increase in the Jefferson Revolver commitments expiring in August 2019 on future liquidity.