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FTAI Announces Third Quarter 2015 Results and Dividend of $0.33 Per Common Share

NEW YORK, Nov. 03, 2015 (GLOBE NEWSWIRE) -- Fortress Transportation and Infrastructure Investors LLC (NYSE:FTAI) (the “Company”) today reported financial results for the period ended September 30, 2015. The Company’s consolidated comparative financial statements and key performance measures are attached as an exhibit to this press release.

Financial Overview

($ in 000s, except per share data)
Selected Financial Results(1)Q3’15
Funds Available for Distribution (“FAD”)$ 15,884
Adjusted Net Income$ 1,858
Adjusted Net Income per Share$ 0.02
Adjusted EBITDA$ 32,619
Net Income (Loss) Attributable to Shareholders$ (11,738)
Basic and Diluted Earnings (Loss) per Share$ (0.16)
Net Cash Provided by Operating Activities$ 12,239


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

For the third quarter of 2015, our total FAD was $15.9 million. This amount includes $33.4 million from equipment leasing activities, offset by $(8.1) million and $(9.4) million from infrastructure and corporate activities, respectively. Net Income (Loss) Attributable to Shareholders for the quarter ending September 30, 2015 includes a non-cash impairment charge of $10.5 million recorded by an investment within our shipping containers segment.

Third Quarter 2015 Dividend

The Company’s Board of Directors declared a cash dividend of $0.33 per common share, payable on November 30, 2015, to holders of record on November 20, 2015.

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 November 4, 2015 at 8:00 A.M. Eastern Time. The conference call may be accessed by dialing 1-855-548-8666 (from within the U.S.) or 1-412-455-6183 (from outside of the U.S.) ten minutes prior to the scheduled start of the call; please reference “FTAI Third 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 November 4, 2015 through midnight Tuesday, November 10, 2015 at 1-855-859-2056 (from within the U.S.) or 1-404-537-3406 (from outside of the U.S.), Passcode: 59243984.

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” incorporated by reference in the Company’s 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.

U.S. FEDERAL INCOME TAX IMPLICATIONS OF DIVIDEND

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 November 2015 will be treated as a partnership distribution. The per share distribution components are as follows:

Distribution Components
U.S. Long Term Capital Gain (1)$0.0000
Non-U.S. Long Term Capital Gain$0.0000
U.S. Portfolio Interest Income (2)$0.1100
U.S. Dividend Income (3)$0.0000
Income Not from U.S. Sources(4) / Return of Capital$0.2200
Distribution Per Share$0.3300


1) U.S. Long Term Capital Gain realized on the sale of a United States Real Property Holding Corporation. As a result, the gain from the sale will be treated as income that is effectively connected with a U.S. trade or business.
2) 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.
3) This income is subject to withholding under §1441 of the Code.
4) This income is not subject to withholding under §1441 or §1446 of the Code.

It is possible that a common shareholder’s allocable share of FTAI’s taxable income may differ from the distribution amounts reflected above.

Exhibit - Financial Statements

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Dollar amounts in thousands, except share and per share data)
Three Months Ended September 30, Nine Months Ended September 30,
2015 2014 2015 2014
Revenues
Equipment leasing revenues $24,360 $10,571 $70,031 $28,018
Infrastructure revenues 10,873 5,509 32,739 6,493
Total revenues 35,233 16,080 102,770 34,511
Expenses
Operating expenses 17,879 9,360 50,198 12,705
General and administrative 2,568 401 4,905 1,349
Acquisition and transaction expenses 2,206 808 4,172 11,281
Management fees and incentive allocation to affiliate 4,606 1,698 10,505 3,535
Depreciation and amortization 11,548 4,118 32,875 8,741
Interest expense 4,668 1,348 14,240 2,920
Total expenses 43,475 17,733 116,895 40,531
Other income (expense)
Equity in (loss) earnings of unconsolidated entities (9,584) 1,700 (7,118) 4,831
Gain on sale of equipment, net 1,746 1,849 2,037 4,064
Interest income 159 52 462 66
Other income, net 15 154 6 134
Total other income (expense) (7,664) 3,755 (4,613) 9,095
(Loss) Income before income taxes (15,906) 2,102 (18,738) 3,075
Provision for income taxes 150 156 646 714
Net (loss) income (16,056) 1,946 (19,384) 2,361
Less: Net loss attributable to non-controlling interests in consolidated subsidiaries (4,318) (2,085) (12,257) (1,744)
Net (loss) income attributable to shareholders $(11,738) $4,031 $(7,127) $4,105
(Loss) Earnings per Share:
Basic and Diluted $(0.16) $0.08 $(0.11) $0.08
Weighted Average Shares Outstanding:
Basic 75,718,183 53,502,873 64,114,734 53,502,873
Diluted 75,718,183 53,502,873 64,114,734 53,502,873

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollar amounts in thousands, except share and per share data)
September 30,
2015
December 31, 2014
Assets
Cash and cash equivalents $448,299 $22,125
Restricted cash 16,169 21,084
Accounts receivable, net 11,849 9,588
Leasing equipment, net 616,019 509,379
Finance leases, net 85,401 102,813
Property, plant, and equipment, net 294,352 227,381
Investment in and advances to unconsolidated entity 11,370 21,569
Tendered bonds 298,000
Intangible assets, net 46,648 52,169
Goodwill 116,584 116,584
Other assets 35,445 24,048
Total assets $1,682,136 $1,404,740
Liabilities
Accounts payable and accrued liabilities $32,367 $43,174
Debt 274,942 592,867
Maintenance deposits 30,001 35,575
Security deposits 15,950 13,622
Other liabilities 8,066 6,005
Total liabilities 361,326 691,243
Equity
Common shares ($0.01 par value per share; 2,000,000,000 shares authorized; 75,718,183 and 53,502,873 shares issued and outstanding as of September 30, 2015 and December 31, 2014, respectively) 757 535
Additional paid in capital 1,209,183 613,683
Accumulated deficit (14,070)
Accumulated other comprehensive (loss) income (16) 214
Shareholders' equity 1,195,854 614,432
Non-controlling interest in equity of consolidated subsidiaries 124,956 99,065
Total equity 1,320,810 713,497
Total liabilities and equity $1,682,136 $1,404,740

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollar amounts in thousands, unless otherwise noted)
Nine Months Ended September 30,
2015 2014
Cash flows from operating activities:
Net (loss) income$(19,384) $2,361
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in loss (earnings) of unconsolidated entities7,118 (4,831)
Gain on sale of equipment(2,037) (4,064)
Security deposits and maintenance claims included in earnings(439)
Equity-based compensation3,694 284
Depreciation and amortization32,875 8,741
Change in current and deferred income taxes127 714
Change in fair value of non-hedge derivative14 19
Amortization of lease intangibles and incentives5,380 1,652
Amortization of deferred financing costs1,101 188
Operating distributions from unconsolidated entities160 6,942
Bad debt expense255 175
Other(362) (9)
Change in:
Accounts receivable(2,718) (4,917)
Other assets(3,540) (4,365)
Accounts payable and accrued liabilities4,109 (32,884)
Management fees payable to affiliate(1,207) 434
Other liabilities1,724 1,774
Net cash provided by (used in) operating activities26,870 (27,786)
Cash flows from investing activities:
Change in restricted cash4,915 (6,120)
Investment in notes receivable(10,776)
Construction deposit related to vessel (3,725)
Principal collections on finance leases17,412 9,028
Acquisition of leasing equipment(136,672) (215,770)
Acquisition of property plant and equipment(88,068) (16,038)
Acquisition of lease intangibles(2,447) (3,745)
Acquisition of CMQR (11,308)
Acquisition of Jefferson Terminal (47,811)
Acquisition of pre-existing debt relationships (97,616)
Purchase deposit for aircraft and aircraft engines(250) (7,427)
Proceeds from sale of leasing equipment9,000 18,975
Proceeds from sale of property, plant and equipment253 428
Proceeds from sale of equipment held for sale 135
Return of capital distributions from unconsolidated entities2,921 6,307
Net cash used in investing activities$(203,712) $(374,687)

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollar amounts in thousands, unless otherwise noted)
Nine Months Ended September 30,
2015 2014
Cash flows from financing activities:
Proceeds from debt$200 $175,349
Repayment of debt(19,764) (26,886)
Payment of deferred financing costs (4,793)
Receipt of security deposits1,695 1,974
Return of security deposits(710) (500)
Receipt of maintenance deposits7,127 2,274
Release of maintenance deposits(10,673)
Proceeds from issuance of common shares, net of underwriter's discount354,057
Common shares issuance costs(2,998)
Capital contributions from shareholders295,879 290,930
Capital distributions to shareholders(44,917) (43,410)
Capital contributions from non-controlling interests34,787 43,612
Capital distributions to non-controlling interests(309) (422)
Cash dividends paid(11,358)
Net cash provided by financing activities603,016 438,128
Net increase in cash and cash equivalents426,174 35,655
Cash and cash equivalents, beginning of period22,125 7,236
Cash and cash equivalents, end of period$448,299 $42,891
Supplemental disclosure of non-cash investing and financing activities:
Acquisition of leasing equipment$(1,083) $(25,748)
Acquisition of CMQR$ $(2,991)
Acquisition of Jefferson$ $(38,207)
Acquisition of property, plant and equipment$(59) $(5,000)
Settled and assumed security deposits$2,463 $940
Billed, assumed and settled maintenance deposits$(2,710) $13,042
Non-cash contribution of non-controlling interest$ $38,207
Common share issuance costs$(1,908) $
Change in fair value of cash flow hedge$(230) $(25)


Key Performance Measures

Management utilizes Adjusted Net Income and Adjusted EBITDA as performance measures. Adjusted Net Income is the key performance measure and reflects the current management of our businesses and provides us with the information necessary to assess operational performance as well as make resource and allocation decisions. Adjusted Net Income should not be considered as an alternative to net income attributable to shareholders as determined in accordance with Generally Accepted Accounting Principles (“GAAP”).

Adjusted Net Income is defined as net income 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, our pro-rata share of the Adjusted Net Income from unconsolidated entities (collectively “Adjusted Net Income”), and (c) to exclude the impact of the non-controlling share of Adjusted Net Income. We evaluate investment performance for each reportable segment primarily based on Adjusted Net Income. We believe that net income attributable to shareholders as defined by GAAP is the most appropriate earnings measurement with which to reconcile Adjusted Net Income.

The following table presents our consolidated reconciliation of net income attributable to shareholders to Adjusted Net Income for the three and nine months ended September 30, 2015 and September 30, 2014:

Three Months Ended
September 30,
Nine Months Ended
September 30,
2015 2014 2015 2014
(in thousands)
Net (loss) income attributable to shareholders$(11,738) $4,031 $(7,127) $4,105
Add: Provision for income taxes150 156 646 714
Add: Equity-based compensation expense1,094 284 3,694 284
Add: Acquisition and transaction expenses2,206 808 4,172 11,281
Add: Losses on the modification or extinguishment of debt and capital lease obligations
Add: Changes in fair value of non-hedge derivative instruments5 (1) 14 19
Add: Asset impairment charges
Add: Pro-rata share of Adjusted Net Income from unconsolidated entities (1)924 1,762 3,390 4,893
Add: Incentive allocations
Less: Cash payments for income taxes3 (507)
Less: Equity in earnings of unconsolidated entities9,584 (1,700) 7,118 (4,831)
Less: Non-controlling share of Adjusted Net Income (2)(370) (233) (1,050) (233)
Adjusted Net Income$1,858 $5,107 $10,350 $16,232

______________________________________________________________________________________
(1) Pro-rata share of Adjusted Net Income from unconsolidated entities includes the Company’s proportionate share of the unconsolidated entities’ net income adjusted for asset impairment charges of $10,508 for the three and nine months ended September 30, 2015. Pro-rata share of Adjusted Net Income from unconsolidated entities includes the Company’s proportionate share of the unconsolidated entities’ net income adjusted for loss on extinguishment of debt of $62 for the three and nine months ended September 30, 2014.
(2) Non-controlling share of Adjusted Net Income is comprised of the following for the three months ended September 30, 2015 and 2014, respectively: (i) equity-based compensation of $368 and $114, (ii) provision for income tax of $1 and $119, and (iii) cash tax payments of $1 and $0. Non-controlling share of Adjusted Net Income is comprised of the following for the nine months ended September 30, 2015 and 2014, respectively: (i) equity-based compensation of $1,099 and $114, (ii) provision for income tax of $21 and $119, and (iii) cash tax payments of $(70) and $0.

In addition, we view Adjusted EBITDA as a secondary measurement to Adjusted Net Income, which serves as a useful supplement to investors, analysts and management to measure operating performance of deployed assets and to compare the Company’s operating results to the operating results of our peers and between periods on a consistent basis. 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 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 principal collections on direct finance leases (collectively, “Adjusted EBITDA”) and 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 income attributable to shareholders to Adjusted EBITDA for the three and nine months ended September 30, 2015 and September 30, 2014:

Three Months Ended
September 30,
Nine Months Ended
September 30,
2015 2014 2015 2014
(in thousands)
Net (loss) income attributable to shareholders$(11,738) $4,031 $(7,127) $4,105
Add: Provision for income taxes150 156 646 714
Add: Equity-based compensation expense1,094 284 3,694 284
Add: Acquisition and transaction expenses2,206 808 4,172 11,281
Add: Losses on the modification or extinguishment of debt and capital lease obligations
Add: Changes in fair value of non-hedge derivative instruments5 (1) 14 19
Add: Asset impairment charges
Add: Incentive allocations
Add: Depreciation & amortization expense (3)13,015 4,914 38,255 10,393
Add: Interest expense4,668 1,348 14,240 2,920
Add: Principal collections on direct finance leases11,270 3,363 17,412 9,028
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (4)5,369 17,351 16,200 33,946
Less: Equity in earnings of unconsolidated entities9,584 (1,700) 7,118 (4,831)
Less: Non-controlling share of Adjusted EBITDA (5)(3,004) (795) (9,041) (978)
Adjusted EBITDA$32,619 $29,759 $85,583 $66,881

______________________________________________________________________________________
(3) Depreciation and amortization expense includes $11,548 and $4,118 of depreciation and amortization expense, $1,405 and $796 of lease intangible amortization, and $62 and $0 of amortization for lease incentives in the three months ended September 30, 2015 and 2014, respectively. Depreciation and amortization expense includes $32,875 and $8,741 of depreciation and amortization expense, $5,198 and $1,652 of lease intangible amortization, and $182 and $0 of amortization for lease incentives in the nine months ended September 30, 2015 and 2014, respectively.
(4) The Company’s pro-rata share of Adjusted EBITDA from unconsolidated entities includes the following items for the three months ended September 30, 2015 and 2014: (i) net income (loss) of $(9,635) and $1,633, (ii) interest expense of $474 and $793, (iii) depreciation and amortization expense of $299 and $240, (iv) principal collections of finance leases of $3,723 and $14,685, and (v) asset impairment charges of $10,508 and $0, respectively. The Company’s pro-rata share of Adjusted EBITDA from unconsolidated entities includes the following items for the nine months ended September 30, 2015 and 2014: (i) net income (loss) of $(7,278) and $4,614, (ii) interest expense of $1,422 and $2,066, (iii) depreciation and amortization expense of $910 and $922, (iv) principal collections of finance leases of $10,638 and $26,344, and (v) asset impairment charges of $10,508 and $0, respectively.
(5) Non-controlling share of Adjusted EBITDA is comprised of the following items for the three months ended September 30, 2015 and 2014: (i) equity based compensation of $368 and $114, (ii) provision for income taxes of $1 and $119, (iii) interest expense of $1,185 and $206, and (iv) depreciation and amortization expense of $1,450 and $356, respectively. Non-controlling share of Adjusted EBITDA is comprised of the following items for the nine months ended September 30, 2015 and 2014: (i) equity based compensation of $1,099 and $114, (ii) provision for income taxes of $21 and $119, (iii) interest expense of $3,630 and $277, and (iv) depreciation and amortization expense of $4,291 and $468, respectively.

The Company uses Funds Available for Distribution (“FAD”) in evaluating its ability to meet its 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. The Company believes FAD will be a useful metric for investors and analysts for similar purposes. The Company defines FAD as: net cash provided by (used in) 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 net cash provided by operating activities to FAD for the nine months ended September 30, 2015 and 2014:

Nine Months Ended
September 30,
2015
September 30,
2014
(in thousands)
Net Cash Provided by (Used in) Operating Activities$26,870 $(27,786)
Add: Principal Collections on Finance Leases17,412 9,028
Add: Proceeds from sale of assets9,253 19,538
Add: Return of Capital Distributions from Unconsolidated Entities2,921 6,307
Less: Required Payments on Debt Obligations(19,764) (26,886)
Less: Capital Distributions to Non-Controlling Interest(309) (422)
Exclude: Changes in Working Capital1,632 39,958
Funds Available for Distribution (FAD)$38,015 $19,737


The following tables set forth a reconciliation of net cash provided by operating activities to FAD for the three and nine months ended September 30, 2015:

Three Months Ended September 30, 2015
(in thousands)
Equipment
Leasing
Infrastructure Corporate Total
Funds Available for Distribution (FAD)$33,368 $(8,096) $(9,388) $15,884
Less: Principal Collections on Finance Leases (11,270)
Less: Proceeds from sale of assets (7,628)
Less: Return of Capital Distributions from Unconsolidated Entities (1,637)
Add: Required Payments on Debt Obligations 11,131
Add: Capital Distributions to Non-Controlling Interest 55
Include: Changes in Working Capital 5,704
Net Cash from Operating Activities $12,239


Nine Months Ended September 30, 2015
(in thousands)
Equipment
Leasing
Infrastructure Corporate Total
Funds Available for Distribution (FAD)$78,177 $(20,597) $(19,565) $38,015
Less: Principal Collections on Finance Leases (17,412)
Less: Proceeds from sale of assets (9,253)
Less: Return of Capital Distributions from Unconsolidated Entities (2,921)
Add: Required Payments on Debt Obligations 19,764
Add: Capital Distributions to Non-Controlling Interest 309
Include: Changes in Working Capital (1,632)
Net Cash from Operating Activities $26,870


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 when evaluating the Company’s ability to meet its stated dividend policy. Specifically: (i) FAD does not include equity capital raised, proceeds from any debt issuance or future equity offering, historical cash and cash equivalents and expected investments in the Company’s operations; (ii) FAD does not give pro forma effect to prior acquisitions, certain of which cannot be quantified; (iii) 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; (iv) 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; (v) FAD does not reflect any maintenance capital expenditures necessary to maintain the same level of cash generation from our capital investments; (vi) 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; and (vii) 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.

For further information, please contact: Alan Andreini Investor Relations Fortress Transportation and Infrastructure Investors LLC (212) 798-6128 aandreini@fortress.com

Source:Fortress Transportation and Infrastructure Investors LLC