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FTAI Reports First Quarter 2018 Results, Dividend of $0.33 per Common Share

NEW YORK, May 03, 2018 (GLOBE NEWSWIRE) -- Fortress Transportation and Infrastructure Investors LLC (NYSE:FTAI) (the “Company”) today reported financial results for the three months ended March 31, 2018. 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(1) Q1’18  
Net Cash Provided by Operating Activities $ 11,470      
Net Loss Attributable to Shareholders $ (572 )    
Basic and Diluted Loss per Share $ (0.01 )    
     
Funds Available for Distribution (“FAD”) $ 34,437      
Adjusted Net Income $ 2,728      
Adjusted Net Income per Share $ 0.03      
Adjusted EBITDA $ 48,121      

________________________________
(1) For definitions and reconciliations of Non-GAAP measures, please refer to the exhibit to this press release.

For the first quarter of 2018, our total FAD was $34.4 million. This amount includes $62.0 million from equipment leasing activities, offset by $(12.3) million and $(15.3) million from infrastructure and corporate activities, respectively.

First Quarter 2018 Dividend

On May 3, 2018, 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, 2018, payable on May 29, 2018 to the holders of record on May 17, 2018.

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 4, 2018 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 4, 2018 through midnight Friday, May 11, 2018 at 1-855-859-2056 (from within the U.S.) or 1-404-537-3406 (from outside of the U.S.), Passcode: 7889396.

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. 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 Andreini
Investor Relations
Fortress Transportation and Infrastructure Investors LLC
(212) 798-6128
aandreini@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 2018 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) $ 0.1270  
U.S. Dividend Income(2) $  
Income Not from U.S. Sources(3) $ 0.2030  
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 LLC
 
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
 
    Three Months Ended March 31,
(Dollar amounts in thousands, except share and per share data)
  2018   2017
Revenues        
Equipment leasing revenues   $ 55,784     $ 31,388  
Infrastructure revenues   13,060     13,285  
Total revenues   68,844     44,673  
         
Expenses        
Operating expenses   27,579     21,013  
General and administrative   3,586     3,835  
Acquisition and transaction expenses   1,766     1,452  
Management fees and incentive allocation to affiliate   3,739     3,893  
Depreciation and amortization   29,587     17,377  
Interest expense   11,871     4,694  
Total expenses   78,128     52,264  
         
Other income (expense)        
Equity in earnings (losses) of unconsolidated entities   95     (1,266 )
(Loss) gain on sale of equipment, net   (5 )   2,018  
Loss on extinguishment of debt       (2,456 )
Interest income   176     283  
Other income   180     12  
Total other income (expense)   446     (1,409 )
         
Loss before income taxes   (8,838 )   (9,000 )
Provision for income taxes   495     212  
Net loss   (9,333 )   (9,212 )
Less:  Net loss attributable to non-controlling interests in consolidated subsidiaries   (8,761 )   (4,798 )
Net loss attributable to shareholders   $ (572 )   $ (4,414 )
         
Loss per share        
Basic and Diluted   $ (0.01 )   $ (0.06 )
Weighted Average Shares Outstanding:        
Basic   81,534,454     75,762,283  
Diluted   81,534,454     75,762,283  


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC 
 
CONSOLIDATED BALANCE SHEETS
 
    (Unaudited)    
    March 31,   December 31,
(Dollar amounts in thousands, except share and per share data)
  2018   2017
Assets        
Cash and cash equivalents   $ 80,916     $ 59,400  
Restricted cash   25,823     33,406  
Accounts receivable, net   36,847     31,076  
Leasing equipment, net   1,128,493     1,074,130  
Finance leases, net   9,115     9,244  
Property, plant, and equipment, net   512,052     489,949  
Investments   43,702     42,538  
Intangible assets, net   37,978     40,043  
Goodwill   116,584     116,584  
Other assets   56,316     59,436  
Total assets   $ 2,047,826     $ 1,955,806  
         
Liabilities        
Accounts payable and accrued liabilities   $ 56,031     $ 68,226  
Debt, net   710,638     703,264  
Maintenance deposits   107,444     103,464  
Security deposits   28,921     27,257  
Other liabilities   18,298     18,520  
Total liabilities   921,332     920,731  
         
Equity        
Common shares ($0.01 par value per share; 2,000,000,000 shares authorized; 82,779,232 and 75,771,738 shares issued and outstanding as of March 31, 2018 and December 31, 2017, respectively)   828     758  
Additional paid in capital   1,085,492     985,009  
Accumulated deficit   (39,271 )   (38,699 )
Accumulated other comprehensive income        
Shareholders' equity   1,047,049     947,068  
Non-controlling interest in equity of consolidated subsidiaries   79,445     88,007  
Total equity   1,126,494     1,035,075  
Total liabilities and equity   $ 2,047,826     $ 1,955,806  
                 


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC 
 
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) 
 
(Dollar amounts in thousands, unless otherwise noted)
 
  Three Months Ended March 31,
  2018   2017
 Cash flows from operating activities:      
 Net loss $ (9,333 )   $ (9,212 )
 Adjustments to reconcile net loss to net cash provided by operating activities:      
Equity in (earnings) losses of unconsolidated entities (95 )   1,266  
Loss (gain) on sale of equipment, net 5     (2,018 )
Security deposits and maintenance claims included in earnings (383 )    
Loss on extinguishment of debt     2,456  
Equity-based compensation 208     87  
Depreciation and amortization 29,587     17,377  
Change in current and deferred income taxes 504     209  
Change in fair value of non-hedge derivative (624 )    
Amortization of lease intangibles and incentives 7,226     1,949  
Amortization of deferred financing costs 1,151     1,133  
Bad debt expense 1,441     31  
Other 9     37  
Change in:      
 Accounts receivable (7,387 )   (1,626 )
 Other assets 1,176     11,227  
 Accounts payable and accrued liabilities (9,768 )   (4,992 )
 Management fees payable to affiliate (1,300 )   (347 )
 Other liabilities (947 )   103  
 Net cash provided by operating activities 11,470     17,680  
       
 Cash flows from investing activities:      
Investment in notes receivable (912 )    
Investment in unconsolidated entities and available for sale securities (1,115 )   (14,654 )
Principal collections on finance leases 129     110  
Acquisition of leasing equipment (86,043 )   (67,695 )
Acquisition of property plant and equipment (23,641 )   (14,796 )
Acquisition of lease intangibles (1,029 )    
Purchase deposits for acquisitions (6,886 )   (1,120 )
Proceeds from sale of leasing equipment 6,136     9,834  
Proceeds from sale of property, plant and equipment 38     52  
Proceeds from deposit on sale of leasing equipment 240     60  
Return of deposit on sale of engine (400 )    
 Net cash used in investing activities $ (113,483 )   $ (88,209 )
       
 Cash flows from financing activities:      
Proceeds from debt 18,600     235,411  
Repayment of debt (12,612 )   (1,562 )
Payment of deferred financing costs (71 )   (366 )
Receipt of security deposits 1,864     1,425  
Return of security deposits (700 )   (32 )
Receipt of maintenance deposits 9,720     4,424  
Release of maintenance deposits (1,840 )    
Proceeds from issuance of common shares, net of underwriter's discount 128,450      
Common shares issuance costs (132 )    
Cash dividends (27,333 )   (25,013 )
 Net cash provided by financing activities $ 115,946     $ 214,287  
       
 Net increase in cash and cash equivalents and restricted cash $ 13,933     $ 143,758  
 Cash and cash equivalents and restricted cash, beginning of period 92,806     133,496  
 Cash and cash equivalents and restricted cash, end of period $ 106,739     $ 277,254  

Key Performance Measures

The Chief Operating Decision Maker (“CODM”) utilizes Adjusted Net Income and Adjusted EBITDA as performance measures.

Adjusted Net Income (Loss) is our key performance measure and provides the CODM with the information necessary to assess operational performance, as well as make resource and allocation decisions. Adjusted Net Income (Loss) 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, and equity in earnings of unconsolidated entities, (b) to include the impact of cash income tax payments, and our pro-rata share of the Adjusted Net Income (Loss) from unconsolidated entities, and (c) to exclude the impact of the non-controlling share of Adjusted Net Income (Loss). We evaluate investment performance for each reportable segment primarily based on Adjusted Net Income (Loss). We believe that net income (loss) attributable to shareholders, as defined by GAAP, is the most comparable earnings measurement with which to reconcile Adjusted Net Income (Loss).

The following table presents our consolidated reconciliation of net loss attributable to shareholders to Adjusted Net Income (Loss) for the three months ended March 31, 2018 and March 31, 2017:

  Three Months Ended
March 31,
(in thousands) 2018   2017
Net loss attributable to shareholders $ (572 )   $ (4,414 )
Add: Provision for income taxes 495     212  
Add: Equity-based compensation expense 208     87  
Add: Acquisition and transaction expenses 1,766     1,452  
Add: Losses on the modification or extinguishment of debt and capital lease obligations     2,456  
Add: Changes in fair value of non-hedge derivative instruments 624      
Add: Asset impairment charges      
Add: Pro-rata share of Adjusted Net Income (Loss) from unconsolidated entities (1) 95     (1,266 )
Add: Incentive allocations      
Less: Cash payments for income taxes 9     (3 )
Less: Equity in (earnings) losses of unconsolidated entities (95 )   1,266  
Less: Non-controlling share of Adjusted Net Loss (Income) (2) 198     (39 )
Adjusted Net Income (Loss) (non-GAAP) $ 2,728     $ (249 )
               

______________________________________________________________________________________

(1) Pro-rata share of Adjusted Net Income (Loss) from unconsolidated entities includes the Company’s proportionate share of the unconsolidated entities’ net income adjusted for the excluded and included items detailed in the table above.

(2) Non-controlling share of Adjusted Net (Loss) Income is comprised of the following for the three months ended March 31, 2018 and 2017: (i) equity-based compensation of $37 and $25, (ii) provision for income tax of $4 and $15, and (iii) changes in fair value of non-hedge derivative instruments of $(244) and $0, less (iv) cash tax payments of $(5) and $1, respectively.

We view Adjusted EBITDA as a secondary measurement to Adjusted Net Income (Loss), which we believe serves as a useful supplement to investors, analysts and management to measure economic performance of deployed revenue generating assets between periods on a consistent basis, and which we believe measures our financial performance and helps identify operational factors that management can impact in the short-term, namely our cost structure and expenses. Adjusted EBITDA may not be comparable to similarly titled measures of other companies because other entities may not calculate Adjusted EBITDA in the same manner.

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 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, 2018 and March 31, 2017:

  Three Months Ended
March 31,
(in thousands) 2018   2017
Net loss attributable to shareholders $ (572 )   $ (4,414 )
Add: Provision for income taxes 495     212  
Add: Equity-based compensation expense 208     87  
Add: Acquisition and transaction expenses 1,766     1,452  
Add: Losses on the modification or extinguishment of debt and capital lease obligations     2,456  
Add: Changes in fair value of non-hedge derivative instruments 624      
Add: Asset impairment charges      
Add: Incentive allocations      
Add: Depreciation & amortization expense (3) 36,814     19,306  
Add: Interest expense 11,871     4,694  
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (4) 175     (680 )
Less: Equity in (earnings) losses of unconsolidated entities (95 )   1,266  
Less: Non-controlling share of Adjusted EBITDA (5) (3,165 )   (2,242 )
Adjusted EBITDA (non-GAAP) $ 48,121     $ 22,137  
               

________________________________________________________

(3) Depreciation and amortization expense includes the following items for the three months ended March 31, 2018 and 2017: (i) depreciation and amortization expense of $29,587 and $17,377, (ii) lease intangible amortization of $1,992 and $1,283, and (iii) amortization for lease incentives of $5,235 and $646, respectively.

(4) Pro-rata share of Adjusted EBITDA from unconsolidated entities includes the following items for the three months ended March 31, 2018 and 2017: (i) net income (loss) of $48 and $(1,309), (ii) interest expense of $112 and $251, and (iii) depreciation and amortization expense of $15 and $378, respectively.

(5) Non-controlling share of Adjusted EBITDA is comprised of the following items for the three months ended March 31, 2018 and 2017: (i) equity based compensation of $37 and $24, (ii) provision for income taxes of $4 and $15, (iii) interest expense of $1,292 and $529, (iv) depreciation and amortization expense of $2,076 and $1,674, and (v) changes in fair value of non-hedge derivative instruments of $(244) and $0, 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 excluding changes in working capital.

The following table sets forth a reconciliation of FAD to Cash from Operating Activities for the three months ended March 31, 2018 and 2017:

  Three Months Ended March 31,
(in thousands) 2018   2017
Net Cash Provided by Operating Activities $ 11,470     $ 17,680  
Add: Principal Collections on Finance Leases 129     110  
Add: Proceeds from sale of assets 6,174     9,885  
Add: Return of Capital Distributions from Unconsolidated Entities      
Less: Required Payments on Debt Obligations (1) (1,562 )   (1,562 )
Less: Capital Distributions to Non-Controlling Interest      
Exclude: Changes in Working Capital 18,226     (4,365 )
Funds Available for Distribution (FAD) $ 34,437     $ 21,748  
               

_____________________________________________________

(1) Required payments on debt obligations for the three months ended March 31, 2018 excludes $11,050 repayment of the Central Maine and Québec Railway (“CMQR”) Credit Agreement, and for the three months ended March 31, 2017 excludes $100,000 repayment of the Term Loan, both of which were voluntary refinancing as repayment of these amounts was not required at such time.

The following tables set forth a reconciliation of FAD to Cash from Operating Activities for the three months ended March 31, 2018:

  Three Months Ended March 31, 2018
(in thousands) Equipment
Leasing
  Infrastructure   Corporate   Total
Funds Available for Distribution (FAD) $ 62,068     $ (12,328 )   $ (15,303 )   $ 34,437  
Less: Principal Collections on Finance Leases             (129 )
Less: Proceeds from sale of assets             (6,174 )
Less: Return of Capital Distributions from Unconsolidated Entities              
Add: Required Payments on Debt Obligations (1)             1,562  
Add: Capital Distributions to Non-Controlling Interest              
Include: Changes in Working Capital             (18,226 )
Net Cash provided by Operating Activities             $ 11,470  
                   

(1) Required payments on debt obligations for the three months ended March 31, 2018 excludes $11,050 repayment of the CMQR loan, which was a voluntary refinancing, as repayment of this amount was 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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