Form 8-K - Current report

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

 

Date of Report (Date of Earliest Event Reported): July 26, 2023

 

FTAI Aviation Ltd.

(Exact Name of Registrant as Specified in its Charter)

Cayman Islands	001-37386	98-1420784
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

 

1345 Avenue of the Americas, 45th Floor, New York, New York 10105

(Address of Principal Executive Offices) (Zip Code)

 

[phone]

(Registrant’s Telephone Number, Including Area Code)

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:	Trading Symbol:	Name of each exchange on which registered:
Class A Common shares, $0.01 par value per share	FTAI	The Nasdaq Global Select Market
8.25% Fixed-to-Floating Rate Series A Cumulative Perpetual Redeemable Preferred Shares	FTAIP	The Nasdaq Global Select Market
8.00% Fixed-to-Floating Rate Series B Cumulative Perpetual Redeemable Preferred Shares	FTAIO	The Nasdaq Global Select Market
8.25% Fixed Rate Reset Series C Cumulative Perpetual Redeemable Preferred Shares	FTAIN	The Nasdaq Global Select Market
9.50% Fixed Rate Reset Series D Cumulative Perpetual Redeemable Preferred Shares	FTAIM	The Nasdaq Global Select Market

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Item 2.02.

Results of Operations and Financial Condition.

 

On July 26, 2023, FTAI Aviation Ltd. (“FTAI” or the “Company”) issued a press release announcing the Company’s results for its fiscal quarter ended June 30, 2023. A copy of the Company’s press release is attached to this Current Report on Form 8-K (the “Current Report”) as Exhibit 99.1 and is incorporated herein solely for purposes of this Item 2.02 disclosure.

 

This Current Report, including the exhibit attached hereto, is being furnished and shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into any of the Company’s filings under the Securities Act of 1933, as amended, or the Exchange Act, unless expressly set forth as being incorporated by reference into such filing.

 

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits.

Exhibit Number		Description
99.1		Press release, dated July 26, 2023, issued by FTAI Aviation Ltd.
104		Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document

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SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	FTAI Aviation Ltd.
	By:	/s/ Eun (Angela) Nam
	Name:	Eun (Angela) Nam
	Title:	Chief Financial Officer and Chief Accounting Officer
Date: July 26, 2023

 

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Exhibit 99.1

PRESS RELEASE

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

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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

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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.

[phone]

[e-mail]

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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

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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

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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	)
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

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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,												Six Months Ended June 30,
(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

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(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.

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Document and Entity Information	Jul. 26, 2023
Entity Listings [Line Items]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Jul. 26, 2023
Entity File Number	001-37386
Entity Registrant Name	FTAI Aviation Ltd.
Entity Central Index Key	0001590364
Entity Incorporation, State or Country Code	E9
Entity Tax Identification Number	98-1420784
Entity Address, Address Line One	1345 Avenue of the Americas
Entity Address, Address Line Two	45th Floor
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10105
City Area Code	212
Local Phone Number	798-6100
Entity Emerging Growth Company	false
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Common Class A [Member]
Entity Listings [Line Items]
Title of 12(b) Security	Class A Common shares, $0.01 par value per share
Trading Symbol	FTAI
Security Exchange Name	NASDAQ
Series A Preferred Stock [Member]
Entity Listings [Line Items]
Title of 12(b) Security	8.25% Fixed-to-Floating Rate Series A Cumulative Perpetual Redeemable Preferred Shares
Trading Symbol	FTAIP
Security Exchange Name	NASDAQ
Series B Preferred Stock [Member]
Entity Listings [Line Items]
Title of 12(b) Security	8.00% Fixed-to-Floating Rate Series B Cumulative Perpetual Redeemable Preferred Shares
Trading Symbol	FTAIO
Security Exchange Name	NASDAQ
Series C Preferred Stock [Member]
Entity Listings [Line Items]
Title of 12(b) Security	8.25% Fixed Rate Reset Series C Cumulative Perpetual Redeemable Preferred Shares
Trading Symbol	FTAIN
Security Exchange Name	NASDAQ
Series D Preferred Stock [Member]
Entity Listings [Line Items]
Title of 12(b) Security	9.50% Fixed Rate Reset Series D Cumulative Perpetual Redeemable Preferred Shares
Trading Symbol	FTAIM
Security Exchange Name	NASDAQ

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