What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2021-02-26 compared with 2020-02-28 · 31 added, 35 removed, 170 unchanged (28% of the section changed)

2 unchanged sentences

Our business has been, and will continue to be, conducted through Holdco for the purpose of acquiring, managing and disposing of transportation and transportation-related infrastructure and equipment assets.

Fortress Worldwide Transportation and Infrastructure Master GP LLC (the “Master GP”), owns approximately 0.05% of Holdco and is the general partner of Holdco, which was formed on May 9, 2011 and commenced operations on June 23, 2011.

Fortress Worldwide Transportation and Infrastructure Master GP LLC (the “Master GP”), owns approximately 0.05% of Holdco and is the general partner of Holdco.

We are externally managed by FIG LLC (the “Manager”), an affiliate of Fortress Investment Group LLC (“Fortress”), which has a dedicated team of experienced professionals focused on the acquisition of transportation and infrastructure assets since 2002.

On December 27, 2017, SoftBank Group Corp.

(“SoftBank”) announced that it completed its previously announced acquisition of Fortress (the “SoftBank Merger”).

(“SoftBank”) acquired Fortress (the “SoftBank Merger”).

In connection with the SoftBank Merger, Fortress operates within SoftBank as an independent business headquartered in New York.

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In determining the amount of leverage for each acquisition, we consider a number of characteristics, including, but not limited to, the existing cash flow, the length of the lease or contract term, and the specific counterparty.

While leverage on any individual asset may vary, we target overall leverage for our assets on a consolidated basis of no greater than 50% of total capital.

Management Agreement

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Leasing Equipment

As of December 31, 2019, in our Aviation Leasing segment, we own and manage 238 aviation assets, including 74 aircraft and 164 commercial engines.

As of December 31, 2020, in our Aviation Leasing segment, we own and manage 264 aviation assets, consisting of 78 commercial aircraft and 186 engines.

As of December 31, 2020, 70 of our commercial aircraft and 111 of our engines were leased to operators or other third parties.

Aviation assets currently off lease are either undergoing repair and/or maintenance, being prepared to go on lease or held in short term storage awaiting a future lease.

Our aviation equipment was approximately 80% utilized as of December 31, 2019, based on the equity value of our on-hire leasing equipment as a percentage of the total equity value of our aviation leasing equipment.

Our aviation equipment was approximately 73% utilized during the three months ended December 31, 2020, based on the percent of days on-lease in the quarter weighted by the monthly average equity value of our aviation leasing equipment, excluding airframes.

Our aircraft currently have a weighted average remaining lease term of 39 months, and our engines currently on-lease have an average remaining lease term of 22 months.

3 unchanged sentences

Purchases 1 19 20

Sales (1) (4) (5)

Transfers (1) (15) (16)

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Jefferson Terminal is developing a large multi-modal crude oil and refined products handling terminal at the Port, and also owns several other assets for the transportation and processing of crude oil and related products.

Jefferson Terminal has a unique combination of direct rail service from three Class I railroads, barge docks and deep water ship loading capacity, capabilities to handle multiple types of products including refined products and both free-flowing crude oil and bitumen, and a prime location close to Port Arthur and Lake Charles, which are home to refineries with over 2.3 million barrels per day of capacity.

Today, Jefferson Terminal has approximately 4.4 (1) million barrels of storage tanks in operation.

Jefferson Terminal has a unique combination of direct rail service from three Class I railroads, multiple direct pipeline connections to a large local refinery, barge docks and deep water ship loading capacity, capabilities to handle multiple types of products including refined products and both free-flowing crude oil and bitumen, and a prime location close to Port Arthur and Lake Charles, which are home to refineries with over 2.3 million barrels per day of capacity.

Jefferson Terminal currently has approximately 4.4 (1) million barrels of storage tanks in operation.

As we secure new storage/handling contracts, we expect to expand storage capacity and/or develop new assets.

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Jefferson Terminal has storage tanks with capacity to hold approximately 3.7 (1) million barrels configured for crude oil in service.

Of the 3.7 (1) million barrels, 0.8 (1) million and 1.4 (1) million barrels were brought online in 2019, in April and October, respectively.

Mexican demand for U.S.-sourced refined products continues to increase, however Mexico lacks the infrastructure required to efficiently import, store and distribute large volumes of gasoline and diesel.

Mexican demand for U.S.-sourced refined products continues to increase;

however, Mexico lacks the infrastructure required to efficiently import, store and distribute large volumes of gasoline and diesel.

This has spurred the rapid build-out of new Mexican transloading rail terminals, as well as storage capacity on both sides of the U.S.-Mexico border.

To meet such increased demand, Jefferson operates a refined products system which receives three grades of products by inland tank barge via the barge dock, stores the cargo in six tanks with a combined capacity of approximately 0.7 (1) million barrels, and operates a 20 spot rail car loading system with the capacity to load approximately 40,000 barrels per day.

To meet such increased demand, Jefferson operates a refined products system which receives three grades of products by direct pipeline connection from a large area refiner, as well as inland tank barge via the barge dock, stores the cargo in six tanks with a combined capacity of approximately 0.7 (1) million barrels, and operates a 20 spot rail car loading system with the capacity to load approximately 70,000 barrels per day.

This system may be further expanded to meet additional market demand.

Expansion projects currently under various stages of construction include:

(1) three pipeline projects with diameters of 10” to 24” being built to move crude and other refined products to and from customers outside the Jefferson Terminal;

(2) an electrical substation and a pump station to support pipeline operations;

(3) conversion of rail track previously used for ethanol service to crude oil service;

and (4) a rail expansion of approximately 24,850 feet of new track to maximize Jefferson Terminal’s Class I rail services.

As of early 2020, the rail expansion and ethanol unloading rack conversion projects are substantially complete.

The majority of the pipeline expansions are expected to be completed in 2020.

Completion of construction is subject to a number of factors, some of which are beyond our control, and there can be no assurance that we will not experience delays.

Recent expansion projects completed include the construction of a 25 MW substation to support the new pipeline construction, six 12” to 20” pipelines to a large area refinery for refined and crude product movements, and a rail expansion of approximately 19,570 feet of track.

Two additional pipelines, one incoming from Cushing, Oklahoma, and one outgoing to a refinery in the Port Arthur area, are nearing completion and expected to be in service by the end of Q1 2021.

In addition to the Jefferson Terminal, Jefferson owns several other energy and transportation-related assets, including 299 tank railcars which are leased to third parties;

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We no longer have a controlling interest in Long Ridge but still maintain significant influence through our retained interest and, therefore, now account for this investment in accordance with the equity method.

At December 31, 2020, Long Ridge continues its construction of a 485 MW combined-cycle power plant at the site, along with its associated plans to self-supply the natural gas fuel requirements for the plant.

The construction project remains on-time and on-budget and is tracking ahead of its guaranteed completion date of November 2021.

Long Ridge’s natural gas self-supply projects also remain on-time and on-budget.

During 2016, through Delaware River Partners LLC (“DRP”), a consolidated subsidiary, we purchased the assets of Repauno, which consisted primarily of land, a storage cavern, and riparian rights for the acquired land, site improvements and rights.

Currently there are no operational processes that could be applied to these assets that would result in outputs without significant green field development.

We currently hold an approximately 98% economic interest, which includes the additional 8% economic interest we purchased from non-controlling interest holders in DRP for $4.5 million in April 2019, and a 100% voting interest in DRP.

We currently hold an approximately 98% economic interest, and a 100% voting interest in DRP.

DRP is solely reliant on us to finance its activities and therefore is a variable interest entity (“VIE”).

We concluded that we are the primary beneficiary and, accordingly, DRP has been presented on a consolidated basis in the accompanying financial statements.

Shortly after the end of 2020, DRP completed its new state of the art rail-to-ship transloading system.

This will allow DRP to load Liquified Petroleum Gas marine vessels from its new wharf beginning in 2021.

As the newest marine terminal on the Delaware River, Repauno is designed to safely and efficiently handle a wide variety of freight, providing critical logistics services to a multitude of industrial segments.

Corporate and Other

In addition to the above investments, our Corporate and Other segment includes (i) offshore energy related assets which consist of vessels and equipment that support offshore oil and gas activities and are typically subject to long-term operating leases, (ii) an investment in an unconsolidated entity engaged in the leasing of shipping containers on both an operating lease and finance lease basis and (iii) railroad assets retained after the December 2019 sale of our railroad business, which consists of equipment that support a railcar cleaning business.

In addition to the above investments, our Corporate and Other segment includes (i) offshore energy related assets which consist of vessels and equipment that support offshore oil and gas activities and are typically subject to long-term operating leases, (ii) an investment in an unconsolidated entity engaged in the leasing of shipping containers and (iii) railroad assets retained after the December 2019 sale of our railroad business, which consist of equipment that support a railcar cleaning business.

Asset Management

Our Manager actively manages and monitors our portfolios of assets on an ongoing basis, and in some cases engages third parties to assist with the management of those assets.

Invoices from each of our customers are typically issued and collected on a monthly basis.

Our Manager frequently reviews the status of all of our assets, and in the case that any are returning from lease or undergoing repair, outlines our options, which may include the re-lease or sale of that asset.

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Where helpful, we reach out to third parties who assist in leasing our assets.

As an example, we often partner with MRO facilities in the aviation sector to lease these engines and support airlines’ fleet management needs.

As an example, we often partner with MRO facilities in the aviation sector to lease engines and support airlines’ fleet management needs.

While we expect to hold our assets for extended periods of time, we and our Manager continually review our assets to assess whether we should sell or otherwise monetize them.

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See “Customers.”

Our customers consist of global operators of transportation and infrastructure networks, including airlines, offshore energy service providers and major shipping lines.

Our customers consist of global operators of transportation and infrastructure networks, including airlines, offshore energy service providers, global energy providers and major shipping lines.

We maintain ongoing relationships and discussions with our customers and seek to have consistent dialogue.

In addition to helping us monitor the needs and quality of our customers, we believe these relationships help source additional opportunities and gain insight into attractive opportunities in the transportation and infrastructure sector.

Given our limited operating history, a substantial portion of our revenue has historically been derived from a small number of customers.

For the year ended December 31, 2019, we earned approximately 19% of our revenue from our largest customer.

A substantial portion of our revenue has historically been derived from a small number of customers.

As of and for the year ended December 31, 2020, our largest customer accounted for 11% of our revenue and 40% of total accounts receivable, net.

We derive a significant percentage of our revenue within specific sectors from a limited number of customers.

However, we do not think that we are dependent upon any particular customer, or that the loss of one or more of them would have a material adverse effect on our business or the relevant segment, because of our ability to release assets at similar terms following the loss of any such customer.

However, we do not think that we are dependent upon any particular customer, or that the loss of one or more of them would have a material adverse effect on our business or the relevant segment, because of our ability to re-lease assets at similar terms following the loss of any such customer.

See “Risk Factors-Contractual defaults may adversely affect our business, prospects, financial condition, results of operations and cash flows by decreasing revenues and increasing storage, positioning, collection, recovery and lost equipment expenses.”

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In addition, changes to environmental standards or regulations in the industries in which we operate could limit the economic life of the assets we acquire or reduce their value, and also require us to make significant additional investments in order to maintain compliance.

Our Manager provides a management team and other professionals who are responsible for implementing our business strategy and performing certain services for us, subject to oversight by our board of directors, and as a result, as of December 31, 2019, we have no employees other than 70 individuals employed by Jefferson, three individuals employed by the Offshore Energy segment and ten individuals employed by Repauno.

From time to time, certain of our officers may enter into written agreements with us that memorialize the provision of certain services;

these agreements do not provide for the payment of any cash compensation to such officers from us.

The employees of our Manager are not a party to any collective bargaining agreement.

In addition, our Manager expects to utilize third party contractors to perform services and functions related to the operation and leasing of our assets such as aircraft, jet engines and shipping containers.

These functions may include billing, collections, recovery and asset monitoring.

Human Capital Management

As a result, as of December 31, 2020, we have no employees other than 101 employees at certain subsidiaries across our business segments, none of whom are party to a collective bargaining agreement.

We consider our relationship with our employees to be good and we focus heavily on employee engagement.

We have invested substantial time and resources in building our team, and our human capital management objectives include, as applicable, identifying, recruiting, retaining, incentivizing and integrating our existing and new employees.

To facilitate attraction and retention, we strive to create a diverse, inclusive, and safe workplace, with opportunities for our employees to grow and develop in their careers, supported by strong compensation and benefits programs.

Our leases generally require that our customers carry physical damage and liability insurance providing primary insurance coverage for loss and damage to our assets as well as for related cargo and third parties while the assets are on lease.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business