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FTAI Reports Third Quarter 2016 Results, Dividend of $0.33 per Common Share

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NEW YORK, November 1, 2016 – Fortress Transportation and Infrastructure Investors LLC (NYSE:FTAI) (the “Company”) today reported financial results for the three months ending September 30, 2016. The Company’s consolidated comparative financial statements and key performance measures are attached as an exhibit to this press release.

Financial Overview

 

For the third quarter of 2016, our total FAD was $10.1 million. This amount includes $25.76 million from equipment leasing activities, offset by $(6.00) million and $(9.62) million from infrastructure and corporate activities, respectively.  There were no equipment leasing asset sales during the three months ended September 30, 2016.

Third Quarter 2016 Dividend

On November 1, 2016, the Company’s Board of Directors declared a cash dividend on its common stock of $0.33 per share for the quarter ended September 30, 2016, payable on November 30, 2016 to the holders of record on November 18, 2016.

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 Wednesday, November 2, 2016 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 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 Wednesday, November 2, 2016 through midnight Wednesday, November 9, 2016 at 1-855-859-2056 (from within the U.S.) or 1-404-537-3406 (from outside of the U.S.), Passcode: 94263507.

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

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 2016 will be treated as a partnership distribution. The per share distribution components are as follows:

(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)

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Dollar amounts in thousands, except share and per share data)

		September 30, 2016				December 31, 2015
Assets
Cash and cash equivalents		$	197,874			$	381,703
Restricted cash			63,891				21,610
Accounts receivable, net			21,798				14,466
Leasing equipment, net			694,568				636,681
Finance leases, net			9,824				82,521
Property, plant, and equipment, net			345,146				299,678
Investments in and advances to unconsolidated entities			10,522				10,675
Intangible assets, net			37,328				44,129
Goodwill			116,584				116,584
Other assets			57,048				36,758
Total assets		$	1,554,583			$	1,644,805
Liabilities
Accounts payable and accrued liabilities		$	32,382			$	34,995
Debt, net			261,543				266,221
Maintenance deposits			39,570				30,494
Security deposits			18,442				15,990
Other liabilities			17,460				6,419
Total liabilities			369,397				354,119
Equity
Common shares ($0.01 par value per share; 2,000,000,000 shares authorized; 75,750,943 and 75,718,183 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively)			758				757
Additional paid in capital			1,109,755				1,184,198
Accumulated deficit			(37,020	)			(18,769	)
Accumulated other comprehensive income			—				97
Shareholders’ equity			1,073,493				1,166,283
Non-controlling interest in equity of consolidated subsidiaries			111,693				124,403
Total equity			1,185,186				1,290,686
Total liabilities and equity		$	1,554,583			$	1,644,805

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Dollar amounts in thousands, unless otherwise noted)

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Dollar amounts in thousands, unless otherwise noted)

 

Key Performance Measures

Management utilizes Adjusted Net Income (Loss) 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 is defined as net (loss) 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 and our pro-rata share of the Adjusted Net Income from unconsolidated entities, 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 comparable earnings measurement with which to reconcile Adjusted Net Income.

The following table presents our consolidated reconciliation of net loss attributable to shareholders to Adjusted Net Income (Loss) for the three and nine months ended September 30, 2016 and September 30, 2015:

 

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(1)	Pro-rata share of Adjusted Net Income from unconsolidated entities for the three months ended September 30, 2016 and 2015 includes the Company’s proportionate share of the unconsolidated entities’ net income adjusted for $0 and $10,508 of asset impairment charges, respectively.

(2)

Non-controlling share of Adjusted Net Income (Loss) is comprised of the following for the three months ended September 30, 2016 and 2015: (i) equity-based compensation of $6 and $368, (ii) provision for income tax of $8 and $1, and (iii) transaction and acquisition expense of $156 and $0 less (iv) cash tax payments of $0 and $(1), respectively.

We view Adjusted EBITDA as a secondary measurement to Adjusted Net Income, 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 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 income attributable to shareholders to Adjusted EBITDA for the three and nine months ended September 30, 2016 and September 30, 2015:

 

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(3)	Depreciation and amortization expense includes $15,376 and $11,548 of depreciation and amortization expense, $1,403 and $1,405 of lease intangible amortization, and $106 and $62 of amortization for lease incentives in the three months ended September 30, 2016 and 2015, respectively.

 

(4)

Pro-rata share of Adjusted EBITDA from unconsolidated entities includes the following items for the three months ended September 30, 2016 and 2015: (i) net income (loss) of $(1,208) and $(9,635), (ii) interest expense of $270 and $474, (iii) depreciation and amortization expense of $651 and $299, (iv) asset impairment charges of $0 and $10,508, respectively.

(5)

Non-controlling share of Adjusted EBITDA is comprised of the following items for the three months ended September 30, 2016 and 2015: (i) equity based compensation of $6 and $368, (ii) provision for income taxes of $8 and $1, (iii) interest expense of $1,538 and $1,185, and (iv) depreciation and amortization expense of $1,671 and $1,450, and (v) transaction and acquisition expense of $156 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 Cash from Operating Activities to FAD for the nine months ended September 30, 2016 and September 30, 2015:

 

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(1)	Proceeds from sale of assets includes $500 received in December 2015 for a deposit on the sale of a commercial jet engine, which was completed in the nine months ended September 30, 2016.

(2)

Required payments on debt obligations excludes $98,750 repayment upon the termination of the Jefferson Terminal Credit Agreement and $6,748 repayment under the CMQR Credit Agreement in the nine months ended September 30, 2016, which were voluntary refinancing as repayment of these amounts were not required at this time.

The following tables set forth a reconciliation of Cash from Operating Activities to FAD for the three and nine months ended September 30, 2016 and September 30, 2015:

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:

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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.

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FAD does not give pro forma effect to prior acquisitions, certain of which cannot be quantified.

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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.

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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.

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FAD does not reflect any maintenance capital expenditures necessary to maintain the same level of cash generation from our capital investments.

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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.

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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.