FTAI FTAI Aviation Ltd

FTAI Aviation Ltd. (NASDAQ: FTAI) (the “Company” or “FTAI”) today reported financial results for the third 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	Q3’23
Net Income Attributable to Shareholders	$	32,973
Basic Earnings per Ordinary Share from Continuing Operations	$	0.33
Diluted Earnings per Ordinary Share from Continuing Operations	$	0.33
Adjusted EBITDA(1)	$	154,218

_______________________________(1) For definitions and reconciliations of non-GAAP measures, please refer to the exhibit to this press release.Third Quarter 2023 Dividends

On October 25, 2023, the Company’s Board of Directors (the “Board”) declared a cash dividend on FTAI’s ordinary shares of $0.30 per share for the quarter ended September 30, 2023, payable on November 28, 2023 to the holders of record on November 14, 2023.

Additionally, on October 25, 2023, the Board declared cash dividends on FTAI’s 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 September 30, 2023, payable on December 15, 2023 to the holders of record on December 1, 2023.

Business Highlights

• $107.1 million Aerospace Products revenue in Q3 2023 generating $40.6 million of Adjusted EBITDA(1) at a 38% margin.
• 41 modules sold in Q3’23 to 11 unique customers including 2 new customers and 9 repeat customers.
• Generated $492 million year to date positive free cashflow available for asset acquisition & investment activity.
• Closed on 23 Engines & 10 Aircraft at attractive prices to help generate future growth in Aviation Leasing Adjusted EBITDA(1).(1)  For definitions and reconciliations of non-GAAP measures, please refer to the exhibit to this press release.

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, October 26, 2023 at 8:00 A.M. Eastern Time. The conference call may be accessed by registering via the following link https://register.vevent.com/register/BIc75f7efaa03d41108edf9a7cf4d4ec2f. 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, October 26, 2023 through 11:30 A.M. on Thursday, November 2, 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 AndreiniInvestor RelationsFTAI Aviation Ltd.(646) 734-9414aandreini@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 September 30,							Nine Months Ended September 30,
		2023			2022				2023				2022
Revenues
Lease income	$	45,622		$	50,198			$	161,141			$	129,163
Maintenance revenue		63,925			35,507				141,131				112,171
Asset sales revenue		72,990			85,488				283,167				85,488
Aerospace products revenue		107,085			53,401				260,273				94,211
Other revenue		1,474			5,771				12,447				13,087
Total revenues		291,096			230,365				858,159				434,120
Expenses
Cost of sales		116,707			95,948				366,909				120,139
Operating expenses		33,887			27,393				81,218				108,197
General and administrative		3,015			3,354				10,270				11,821
Acquisition and transaction expenses		4,261			2,848				10,195				8,340
Management fees and incentive allocation to affiliate		4,577			4				13,137				4
Depreciation and amortization		43,959			34,853				123,399				115,461
Asset impairment		—			4,495				1,220				128,171
Interest expense		40,185			40,171				117,976				132,197
Total expenses		246,591			209,066				724,324				624,330
Other income (expense)
Equity in earnings (losses) of unconsolidated entities		46			(358	)			(1,669	)			(125	)
Gain on sale of assets, net		—			—				—				79,933
Loss on extinguishment of debt		—			(19,861	)			—				(19,861	)
Other income (expense)		461			(1,038	)			877				208
Total other income (expense)		507			(21,257	)			(792	)			60,155
Income (loss) from continuing operations before income taxes		45,012			42				133,043				(130,055	)
Provision for income taxes		3,705			4,189				7,586				7,357
Net income (loss) from continuing operations		41,307			(4,147	)			125,457				(137,412	)
Net loss from discontinued operations, net of income taxes		—			(14,782	)			—				(101,416	)
Net income (loss)		41,307			(18,929	)			125,457				(238,828	)
Less: Net loss attributable to non-controlling interests in consolidated subsidiaries:
Continuing operations		—			—				—				—
Discontinued operations		—			(2,871	)			—				(18,817	)
Less: Dividends on preferred shares		8,334			6,791				23,460				20,373
Net income (loss) attributable to shareholders	$	32,973		$	(22,849	)		$	101,997			$	(240,384	)

	Three Months Ended September 30,											Nine Months Ended September 30,
	2023							2022				2023				2022
Earnings (loss) per share:
Basic
Continuing operations		$	0.33				$	(0.11		)		$	1.02				$	(1.59		)
Discontinued operations		$	—				$	(0.12		)		$	—				$	(0.83		)
Diluted
Continuing operations		$	0.33				$	(0.11		)		$	1.02				$	(1.59		)
Discontinued operations		$	—				$	(0.12		)		$	—				$	(0.83		)
Weighted average shares outstanding:
Basic			99,927,594					99,378,771					99,796,736					99,372,016
Diluted			100,482,309					99,378,771					100,269,203					99,372,016

FTAI AVIATION LTD.CONSOLIDATED BALANCE SHEETS (Unaudited)(Dollar amounts in thousands, except share and per share data)
		(Unaudited)
		September 30, 2023				December 31, 2022
Assets
Cash and cash equivalents		$	52,879			$	33,565
Restricted cash			—				19,500
Accounts receivable, net			107,825				99,443
Leasing equipment, net			1,924,198				1,913,553
Property, plant, and equipment, net			13,454				10,014
Investments			39,868				22,037
Intangible assets, net			41,471				41,955
Inventory, net			274,832				163,676
Other assets			179,259				125,834
Total assets		$	2,633,786			$	2,429,577
Liabilities
Accounts payable and accrued liabilities		$	108,579			$	86,452
Debt, net			2,279,330				2,175,727
Maintenance deposits			61,497				78,686
Security deposits			39,901				32,842
Other liabilities			49,417				36,468
Total liabilities		$	2,538,724			$	2,410,175
Commitments and contingencies
Equity
Common shares ($0.01 par value per share; 2,000,000,000 shares authorized; 100,238,075 and 99,716,621 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively)		$	1,002			$	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 September 30, 2023 and December 31, 2022, respectively)			159				133
Additional paid in capital			293,512				343,350
Accumulated deficit			(200,145	)			(325,602	)
Shareholders' equity			94,528				18,878
Non-controlling interest in equity of consolidated subsidiaries			534				524
Total equity			95,062				19,402
Total liabilities and equity		$	2,633,786			$	2,429,577

FTAI AVIATION LTD.CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)(Dollar amounts in thousands, unless otherwise noted)
	Nine Months Ended September 30,
		2023				2022
Cash flows from operating activities:
Net income (loss)	$	125,457			$	(238,828	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Equity in losses of unconsolidated entities		1,669				46,727
Gain on sale of assets, net		(110,511	)			(106,427	)
Security deposits and maintenance claims included in earnings		(34,458	)			(31,558	)
Loss on extinguishment of debt		—				19,861
Equity-based compensation		1,128				2,623
Depreciation and amortization		123,399				155,780
Asset impairment		1,220				128,171
Change in deferred income taxes		5,974				14,923
Change in fair value of non-hedge derivative		—				(1,567	)
Change in fair value of guarantees		(1,677	)			—
Amortization of lease intangibles and incentives		33,685				30,315
Amortization of deferred financing costs		6,429				17,142
Provision for credit losses		6,583				47,226
Other		(995	)			(693	)
Change in:
Accounts receivable		(34,358	)			(61,892	)
Inventory		(4,845	)			(13,370	)
Other assets		(3,727	)			(23,576	)
Accounts payable and accrued liabilities		321				4,329
Management fees payable to affiliate		824				(2,530	)
Other liabilities		648				(7,955	)
Net cash provided by (used in) operating activities		116,766				(21,299	)
Cash flows from investing activities:
Investment in unconsolidated entities		(19,500	)			(7,344	)
Principal collections on notes receivable		2,438				—
Principal collections on finance leases		3,624				2,165
Acquisition of business, net of cash acquired		—				(3,819	)
Acquisition of leasing equipment		(506,923	)			(360,642	)
Acquisition of property, plant and equipment		(3,906	)			(138,750	)
Acquisition of lease intangibles		(10,474	)			(6,542	)
Investment in promissory notes		(11,500	)			—
Purchase deposits for acquisitions		(10,533	)			(28,621	)
Proceeds from sale of leasing equipment		366,065				262,096
Proceeds from sale of property, plant and equipment		—				5,289
(Refunds) proceeds for deposit on sale of aircraft and engine		(683	)			7,801
Return of purchase deposits		300				—
Net cash used in investing activities	$	(191,092	)		$	(268,367	)
Cash flows from financing activities:
Proceeds from debt	$	430,000			$	503,980
Repayment of debt		(330,000	)			(984,529	)
Payment of deferred financing costs		(1,805	)			(18,151	)
Receipt of security deposits		7,355				2,636
Return of security deposits		(2,385	)			(941	)
Receipt of maintenance deposits		22,747				37,586
Release of maintenance deposits		(275	)			(878	)
Capital contributions from non-controlling interests		10				1,187
Settlement of equity-based compensation		—				(148	)
Proceeds from issuance of preferred shares, net of underwriter's discount and issuance costs		61,729				—
Dividend from spin-off of FTAI Infrastructure, net of cash transferred		—				500,562
Cash dividends - ordinary shares		(89,776	)			(98,584	)
Cash dividends - preferred shares		(23,460	)			(20,373	)
Net cash provided by (used in) financing activities	$	74,140			$	(77,653	)
Net decrease in cash and cash equivalents and restricted cash		(186	)			(367,319	)
Cash and cash equivalents and restricted cash, beginning of period		53,065				440,061
Cash and cash equivalents and restricted cash, end of period	$	52,879			$	72,742

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 from continuing operations to Adjusted EBITDA for the three and nine months ended September 30, 2023 and 2022:

	Three Months Ended September 30,								Change				Nine Months EndedSeptember 30,							Change
(in thousands)		2023				2022								2023			2022
Net income (loss) attributable to shareholders from continuing operations	$	32,973			$	(10,938	)		$	43,911			$	101,997		$	(157,785	)		$	259,782
Add: Provision for income taxes		3,705				4,189				(484	)			7,586			7,357				229
Add: Equity-based compensation expense		510				—				510				1,128			—				1,128
Add: Acquisition and transaction expenses		4,261				2,848				1,413				10,195			8,340				1,855
Add: Losses on the modification or extinguishment of debt and capital lease obligations		—				19,861				(19,861	)			—			19,861				(19,861	)
Add: Changes in fair value of non-hedge derivative instruments		—				—				—				—			—				—
Add: Asset impairment charges		—				4,495				(4,495	)			1,220			128,171				(126,951	)
Add: Incentive allocations		4,274				—				4,274				12,540			—				12,540
Add: Depreciation and amortization expense(1)		59,380				41,329				18,051				157,084			145,754				11,330
Add: Interest expense and dividends on preferred shares		48,519				46,962				1,557				141,436			152,570				(11,134	)
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities(2)		642				(241	)			883				96			165				(69	)
Less: Equity in (earnings) losses of unconsolidated entities		(46	)			358				(404	)			1,669			125				1,544
Less: Non-controlling share of Adjusted EBITDA		—				—				—				—			—				—
Adjusted EBITDA (non-GAAP)	$	154,218			$	108,863			$	45,355			$	434,951		$	304,558			$	130,393

___________________________________________________

(1) Includes the following items for the three months ended September 30, 2023 and 2022: (i) depreciation and amortization expense of $43,959 and $34,853, (ii) lease intangible amortization of $3,726 and $3,291 and (iii) amortization for lease incentives of $11,695 and $3,185, respectively. Includes the following items for the nine months ended September 30, 2023 and 2022: (i) depreciation and amortization expense of $123,399 and $115,461, (ii) lease intangible amortization of $11,325 and $10,259 and (iii) amortization for lease incentives of $22,360 and $20,034, respectively.

(2) Includes the following items for the three months ended September 30, 2023 and 2022: (i) net income (loss) of $46 and $(358), (ii) depreciation and amortization expense of $367 and $117 and (iii) acquisition and transaction expense of $229 and $0, respectively. Includes the following items for the nine months ended September 30, 2023 and 2022: (i) net loss of $1,669 and $125, (ii) depreciation and amortization expense of $1,202 and $290 and (iii) acquisition and transaction expense of $563 and $0, respectively.