FTAI Aviation Ltd. Reports Second Quarter 2023 Results, Declares Dividend of $0.30 per Ordinary Share

Jul 26, 2023

NEW YORK, July 26, 2023 (GLOBE NEWSWIRE) -- FTAI Aviation Ltd. (NASDAQ: FTAI) (the “Company” or “FTAI”) today reported financial results for the second quarter 2023. 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	Q2’23
Net Income Attributable to Shareholders	$	46,418
Basic Earnings per Ordinary Share from Continuing Operations	$	0.47
Diluted Earnings per Ordinary Share from Continuing Operations	$	0.46
Adjusted EBITDA⁽¹⁾	$	153,077
____________________________
⁽¹⁾ For definitions and reconciliations of non-GAAP measures, please refer to the exhibit to this press release.

Second Quarter 2023 Dividends

On July 25, 2023, the Company’s Board of Directors (the “Board”) declared a cash dividend on our ordinary shares of $0.30 per share for the quarter ended June 30, 2023, payable on August 29, 2023 to the holders of record on August 14, 2023.

Additionally, on July 25, 2023, the Board declared cash dividends on its Fixed-to-Floating Rate Series A Cumulative Perpetual Redeemable Preferred Shares (“Series A Preferred Shares”), Fixed-to-Floating Rate Series B Cumulative Perpetual Redeemable Preferred Shares (“Series B Preferred Shares”), Fixed-Rate Reset Series C Cumulative Perpetual Redeemable Preferred Shares (“Series C Preferred Shares”) and Fixed-Rate Reset Series D Cumulative Perpetual Redeemable Preferred Shares (“Series D Preferred Shares”) of $0.51563, $0.50000, $0.51563 and $0.59375 per share, respectively, for the quarter ended June 30, 2023, payable on September 15, 2023 to the holders of record on September 1, 2023.

Business Highlights

Q2 2023 Net Income attributable to Shareholders of $46.4 million
$30.1 million Aerospace Products Adj. EBITDA at 44% overall margin
Generated $148.0 million positive cashflow for asset acquisition & investment activity

Additional Information

For additional information that management believes to be useful for investors, please refer to the presentation posted on the Investor Center section of the Company’s website, https://www.ftaiaviation.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

In addition, management will host a conference call on Thursday, July 27, 2023 at 8:00 A.M. Eastern Time. The conference call may be accessed by registering at https://register.vevent.com/register/BI7cde64c0dac24e88bb4ba97051465bde. Once registered, participants will receive a dial-in and unique pin to access the call.

A simultaneous webcast of the conference call will be available to the public on a listen-only basis at https://www.ftaiaviation.com. Please allow extra time prior to the call to visit the site and download the necessary software required to listen to the internet broadcast.

A replay of the conference call will be available after 11:30 A.M. on Thursday, July 27, 2023 through 11:30 A.M. on Thursday, August 3, 2023 on https://ir.ftaiaviation.com/news-events/presentations.

The information contained on, or accessible through, any websites included in this press release is not incorporated by reference into, and should not be considered a part of, this press release.

About FTAI Aviation Ltd.

FTAI owns and maintains commercial jet engines with a focus on CFM56 engines. FTAI’s propriety portfolio of products, including The Module Factory and a joint venture to manufacture engine PMA, enables it to provide cost savings and flexibility to our airline, lessor, and maintenance, repair, and operations customer base. Additionally, FTAI owns and leases jet aircraft which often facilitates the acquisition of engines at attractive prices. FTAI invests in aviation assets and aerospace products that generate strong and stable cash flows with the potential for earnings growth and asset appreciation.

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 most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which are available on the Company’s website (www.ftaiaviation.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
FTAI Aviation Ltd.
(646) 734-9414
aandreini@fortress.com

Exhibit - Financial Statements


FTAI AVIATION LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Dollar amounts in thousands, except share and per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
		2023			2022			2023			2022
Revenues
Lease income	$	59,541		$	39,640		$	115,519		$	78,965
Maintenance revenue		42,065			39,932			77,206			76,664
Asset sales revenue		101,486			—			210,177			—
Aerospace products revenue		68,075			26,497			153,188			40,810
Other revenue		3,178			5,995			10,973			7,316
Total revenues		274,345			112,064			567,063			203,755
Expenses
Cost of sales		104,532			15,141			250,202			24,191
Operating expenses		24,797			19,000			47,331			80,800
General and administrative		3,188			3,906			7,255			8,467
Acquisition and transaction expenses		2,672			3,219			5,934			5,492
Management fees and incentive allocation to affiliate		5,563			—			8,560			—
Depreciation and amortization		38,514			39,303			79,440			80,608
Asset impairment		—			886			1,220			123,676
Interest expense		38,499			47,889			77,791			92,030
Total expenses		217,765			129,344			477,733			415,264
Other (expense) income
Equity in (losses) earnings of unconsolidated entities		(380	)		35			(1,715	)		233
Gain on sale of assets, net		—			63,645			—			79,933
Other income		408			1,118			416			1,246
Total other income (expense)		28			64,798			(1,299	)		81,412
Income (loss) from continuing operations before income taxes		56,608			47,518			88,031			(130,097	)
Provision for income taxes		1,855			1,829			3,881			3,168
Net income (loss) from continuing operations		54,753			45,689			84,150			(133,265	)
Net loss from discontinued operations, net of income taxes		—			(35,929	)		—			(86,634	)
Net income (loss)		54,753			9,760			84,150			(219,899	)
Less: Net loss attributable to non-controlling interests in consolidated subsidiaries:
Continuing operations		—			—			—			—
Discontinued operations		—			(8,480	)		—			(15,946	)
Less: Dividends on preferred shares		8,335			6,791			15,126			13,582
Net income (loss) attributable to shareholders	$	46,418		$	11,449		$	69,024		$	(217,535	)

Earnings (loss) per share:
Basic
Continuing operations	$	0.47		$	0.40		$	0.69		$	(1.48	)
Discontinued operations	$	—		$	(0.28	)	$	—		$	(0.71	)
Diluted
Continuing operations	$	0.46		$	0.39		$	0.69		$	(1.48	)
Discontinued operations	$	—		$	(0.28	)	$	—		$	(0.71	)
Weighted average shares outstanding:
Basic		99,732,179			99,370,301			99,730,223			99,367,597
Diluted		100,462,277			99,805,455			100,314,508			99,367,597

FTAI AVIATION LTD.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollar amounts in thousands, except share and per share data)

	(Unaudited)
	June 30, 2023			December 31, 2022
Assets
Cash and cash equivalents	$	21,134		$	33,565
Restricted cash		—			19,500
Accounts receivable, net		117,546			99,443
Leasing equipment, net		1,891,263			1,913,553
Property, plant, and equipment, net		12,123			10,014
Investments		39,822			22,037
Intangible assets, net		44,683			41,955
Inventory, net		232,043			163,676
Other assets		167,018			125,834
Total assets	$	2,525,632		$	2,429,577

Liabilities
Accounts payable and accrued liabilities	$	79,765		$	86,452
Debt, net		2,173,108			2,175,727
Maintenance deposits		98,354			78,686
Security deposits		37,192			32,842
Other liabilities		45,895			36,468
Total liabilities	$	2,434,314		$	2,410,175

Commitments and contingencies

Equity
Common shares ($0.01 par value per share; 2,000,000,000 shares authorized; 99,737,046 and 99,716,621 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively)	$	997		$	997
Preferred shares ($0.01 par value per share; 200,000,000 shares authorized; 15,920,000 and 13,320,000 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively)		159			133
Additional paid in capital		331,080			343,350
Accumulated deficit		(241,452	)		(325,602	)
Shareholders’ equity		90,784			18,878
Non-controlling interest in equity of consolidated subsidiaries		534			524
Total equity		91,318			19,402
Total liabilities and equity	$	2,525,632		$	2,429,577

FTAI AVIATION LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollar amounts in thousands, unless otherwise noted)

	Six Months Ended June 30,
		2023			2022
Cash flows from operating activities:
Net income (loss)	$	84,150		$	(219,899	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Equity in losses of unconsolidated entities		1,715			37,836
Gain on sale of assets, net		(75,960	)		(79,933	)
Security deposits and maintenance claims included in earnings		(12,215	)		(30,208	)
Equity-based compensation		618			2,294
Depreciation and amortization		79,440			114,923
Asset impairment		1,220			123,676
Change in deferred income taxes		3,127			6,200
Change in fair value of non-hedge derivative		—			(748	)
Change in fair value of guarantees		(1,902	)		—
Amortization of lease intangibles and incentives		18,264			23,818
Amortization of deferred financing costs		4,190			13,328
Provision for credit losses		1,032			47,218
Other		(658	)		(407	)
Change in:
Accounts receivable		(21,918	)		(47,061	)
Inventory		11			(12,373	)
Other assets		(2,583	)		(25,319	)
Accounts payable and accrued liabilities		(15,350	)		5,045
Management fees payable to affiliate		1,892			(1,829	)
Other liabilities		2,168			(5,130	)
Net cash provided by (used in) operating activities		67,241			(48,569	)

Cash flows from investing activities:
Investment in unconsolidated entities		(19,500	)		(2,232	)
Principal collections on notes receivable		1,624			—
Principal collections on finance leases		1,939			575
Acquisition of business, net of cash acquired		—			(3,819	)
Acquisition of leasing equipment		(325,462	)		(320,766	)
Acquisition of property, plant and equipment		(2,298	)		(118,729	)
Acquisition of lease intangibles		(10,795	)		(5,282	)
Investment in promissory notes		(11,500	)		—
Purchase deposits for acquisitions		(11,200	)		(7,100	)
Proceeds from sale of leasing equipment		273,229			138,020
Proceeds from sale of property, plant and equipment		—			4,304
Proceeds for deposit on sale of aircraft and engine		1,817			8,245
Receipt of deposits for sale of aircraft and engine		300			—
Net cash used in investing activities	$	(101,846	)	$	(306,784	)

		Six Months Ended June 30,
		2023			2022
Cash flows from financing activities:
Proceeds from debt	$	325,000		$	503,980
Repayment of debt		(330,000	)		(224,724	)
Payment of deferred financing costs		(1,437	)		(14,405	)
Receipt of security deposits		5,577			1,890
Return of security deposits		(1,295	)		—
Receipt of maintenance deposits		18,070			24,418
Release of maintenance deposits		—			(878	)
Capital contributions from non-controlling interests		10			1,187
Proceeds from issuance of preferred shares, net of underwriter’s discount and issuance costs		61,729			—
Cash dividends - common shares		(59,854	)		(65,789	)
Cash dividends - preferred shares		(15,126	)		(13,582	)
Net cash provided by financing activities	$	2,674		$	212,097

Net decrease in cash and cash equivalents and restricted cash		(31,931	)		(143,256	)
Cash and cash equivalents and restricted cash, beginning of period		53,065			440,061
Cash and cash equivalents and restricted cash, end of period	$	21,134		$	296,805

Key Performance Measures

The Chief Operating Decision Maker (“CODM”) utilizes Adjusted EBITDA as our key performance measure.

Adjusted EBITDA provides the CODM with the information necessary to assess operational performance, as well as make resource and allocation decisions. Adjusted EBITDA is defined as net income (loss) attributable to shareholders from continuing operations, 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, dividends on preferred shares, 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 (losses) of unconsolidated entities and the non-controlling share of Adjusted EBITDA.

The following table sets forth a reconciliation of net income (loss) attributable to shareholders to Adjusted EBITDA for the three and six months ended June 30, 2023 and 2022:

	Three Months Ended June 30,					Change			Six Months Ended June 30,						Change
(in thousands)	2023			2022		Change				2023			2022		Change
Net income (loss) attributable to shareholders from continuing operations	$	46,418	$	38,898		$	7,520		$	69,024		$	(146,847	)	$	215,871
Add: Provision for income taxes		1,855		1,829			26			3,881			3,168			713
Add: Equity-based compensation expense		510		—			510			618			—			618
Add: Acquisition and transaction expenses		2,672		3,219			(547	)		5,934			5,492			442
Add: Losses on the modification or extinguishment of debt and capital lease obligations		—		—			—			—			—			—
Add: Changes in fair value of non-hedge derivative instruments		—		—			—			—			—			—
Add: Asset impairment charges		—		886			(886	)		1,220			123,676			(122,456	)
Add: Incentive allocations		5,324		—			5,324			8,266			—			8,266
Add: Depreciation and amortization expense ⁽¹⁾		48,934		51,108			(2,174	)		97,704			104,425			(6,721	)
Add: Interest expense and dividends on preferred shares		46,834		54,680			(7,846	)		92,917			105,612			(12,695	)
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities ⁽²⁾		150		152			(2	)		(546	)		406			(952	)
Less: Equity in losses (earnings) of unconsolidated entities		380		(35	)		415			1,715			(233	)		1,948
Less: Non-controlling share of Adjusted EBITDA		—		—			—			—			—			—
Adjusted EBITDA (non-GAAP)	$	153,077	$	150,737		$	2,340		$	280,733		$	195,699		$	85,034

___________________________________________________________________________________

⁽¹⁾Includes the following items for the three months ended June 30, 2023 and 2022: (i) depreciation and amortization expense of $38,514 and $39,303, (ii) lease intangible amortization of $3,616 and $3,310 and (iii) amortization for lease incentives of $6,804 and $8,495, respectively. Includes the following items for the six months ended June 30, 2023 and 2022: (i) depreciation and amortization expense of $79,440 and $80,608, (ii) lease intangible amortization of $7,599 and $6,968 and (iii) amortization for lease incentives of $10,665 and $16,849, respectively.

⁽²⁾Includes the following items for the three months ended June 30, 2023 and 2022: (i) net (loss) income of $(380) and $35, (ii) depreciation and amortization expense of $435 and $117 and (iii) acquisition and transaction expense of $95 and $0, respectively. Includes the following items for the six months ended June 30, 2023 and 2022: (i) net (loss) income of $(1,715) and $233, (ii) depreciation and amortization expense of $835 and $173 and (iii) acquisition and transaction expense of $334 and $0, respectively.

Source: FTAI Aviation Ltd.