What changed in this filing

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Item 7. Management’s Discussion and Analysis

2021-02-26 compared with 2020-02-28 · 201 added, 186 removed, 457 unchanged (46% of the section changed)

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Our MD&A should be read in conjunction with our consolidated financial statements and the accompanying notes, and with Part I, Item 1A, “Risk Factors” and “Forward-Looking Statements” included elsewhere in this Annual Report on Form 10-K.

A discussion of our results of operations for 2018 compared to 2017 is included in our Annual Report on Form 10-K for the year ended December 31, 2018, under Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations.

A discussion of our results of operations and cash flows for 2019 compared to 2018 is included in our Annual Report on Form 10-K for the year ended December 31, 2019, under Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations.

We own and acquire high quality infrastructure and related equipment that is essential for the transportation of goods and people globally.

We target assets that, on a combined basis, generate strong cash flows with potential for earnings growth and asset appreciation.

We believe that there are a large number of acquisition opportunities in our markets, and that our Manager’s expertise and business and financing relationships, together with our access to capital, will allow us to take advantage of these opportunities.

We believe that there is a large number of acquisition opportunities in our markets, and that our Manager’s expertise and business and financing relationships, together with our access to capital, will allow us to take advantage of these opportunities.

We are externally managed by the Manager, an affiliate of Fortress, which has a dedicated team of experienced professionals focused on the acquisition of transportation and infrastructure assets since 2002.

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• Commercial air travel and air freight activity have historically been long-term growth sectors and are tied to the underlying demand for passenger and freight movement.

We continue to see strong demand for aviation related assets.

We continue to see long-term demand for aviation related assets.

• Offshore energy service equipment refers to vessels supporting the extraction, processing and transportation of oil and natural gas from deposits located beneath the sea floor, as well as the ongoing inspection, repair, maintenance and ultimate abandonment of subsea wells and associated infrastructure.

The prolonged oil price decline has led to oil and gas companies reducing and deferring spending decisions, creating an oversupply of offshore energy assets, and in turn, lower day-rates, utilization and earnings for offshore service companies.

These rates, however, have partially rebounded over the course of 2018 and 2019.

These rates, however, have partially rebounded over the course of the past three years.

• The intermodal transport market includes the efficient movement of goods throughout multiple modes of transportation, making it possible to move cargo from a point of origin to a final destination without repeated unpacking and repacking.

Over the last year, new container prices have decreased slightly, but remain above the lows reached in 2015.

Over the last year, new container prices have increased significantly.

• Land-based infrastructure refers to facilities that enable the storage, unloading, loading and movement of crude oil and refined products from producers to end users, such as refineries.

Customers of land-based infrastructure typically purchase capacity on a take-or-pay basis, and the economics of these assets directly relate to the volume of throughput.

Impact of COVID-19

Due to the outbreak of COVID-19, we have taken measures to protect the health and safety of our employees, including having employees work remotely, where possible.

Market conditions due to the outbreak of COVID-19 resulted in asset impairment charges and a decline in our equipment leasing revenues during the year ended December 31, 2020.

A number of our lessees continue to experience increased financial stress due to the significant decline in travel demand, particularly as various regions experience spikes in COVID-19 cases.

A number of these lessees have been placed on non-accrual status as of December 31, 2020;

however, we believe our overall portfolio exposure is limited by maintenance reserves and security deposits which are secured against lessee defaults.

The value of these deposits was $185.4 million as of December 31, 2020.

The extent of the impact of the COVID-19 pandemic on our operational and financial performance will depend on future developments, including the duration, severity and spread of the pandemic, as well as additional waves of COVID-19 infections and the ultimate impact of related restrictions imposed by the U.S.

and international governments, all of which remain uncertain.

For additional detail, see Liquidity and Capital Resources and Item 1A.

Risk Factors—“The COVID-19 pandemic has severely disrupted the global economy and may have, and the emergence of similar crises could have, material adverse effects on our business, results of operations or financial condition.”

Operating Segments

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The Aviation Leasing segment consists of aircraft and aircraft engines held for lease and are typically held long-term.

The Jefferson Terminal segment consists of a multi-modal crude and refined products terminal and other related assets which were acquired in 2014.

The Ports and Terminals segment consists of Repauno, acquired in 2016, a 1,630 acre deep-water port located along the Delaware River with an underground storage cavern and multiple industrial development opportunities.

The Jefferson Terminal segment consists of a multi-modal crude and refined products terminal and other related assets.

The Ports and Terminals segment consists of Repauno, a 1,630 acre deep-water port located along the Delaware River with an underground storage cavern and multiple industrial development opportunities.

Additionally, Ports and Terminals includes an equity method investment (“Long Ridge”), which is a 1,660 acre multi-modal port located along the Ohio River with rail, dock, and multiple industrial development opportunities, including a power plant under construction.

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Under ASC 205-20, this disposition met the criteria to be reported as discontinued operations and the assets, liabilities and results of operations have been presented as discontinued operations for all periods presented.

Corporate and Other primarily consists of debt, unallocated corporate general and administrative expenses, and management fees.

Additionally, Corporate and Other 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, which consists of equipment that support a railcar cleaning business.

During 2019, we updated our segment performance measure from Adjusted Net Income to Adjusted EBITDA (see definition below) as this is the primary performance measure that our Chief Operating Decision Maker (“CODM”) utilizes to assess operational performance, as well as make resource and allocation decisions.

In connection with the change in our performance measure, in accordance with ASC 280, we also assessed our reportable segments.

We determined that our Offshore Energy and Shipping Containers segments no longer met the requirement as reportable segments.

In addition, with the December 2019 sale of substantially all of our railroad business, the Railroad segment no longer met the requirement as a reportable segment.

Accordingly, we have presented these operating segments, along with Corporate results, within Corporate and Other effective in 2019.

Additionally, in accordance with ASC 280, we assessed our reportable segments and determined that our retained investment of the railroad business no longer met the requirement as a reportable segment.

Accordingly, we have presented this operating segment, along with Corporate results, within Corporate and Other effective in 2019.

All prior periods have been restated for historical comparison across segments.

Corporate and Other primarily consists of debt, unallocated corporate general and administrative expenses, and management fees.

Additionally, Corporate and Other 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, which consist of equipment that support a railcar cleaning business.

Our reportable segments are comprised of investments in different types of transportation infrastructure and equipment.

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however, financial information presented by segment includes the impact of intercompany eliminations.

Aviation Leasing Organizational Restructuring

In early 2020, we completed an organizational restructuring of the Aviation Leasing segment.

Previously, Aviation Leasing’s employees were employed by the Manager and compensation and related costs associated with these employees were reimbursed to the Manager, per the Management Agreement.

These costs were reported within Corporate and Other.

Effective in the first quarter of 2020, Aviation Leasing’s employees are employed by one of our subsidiaries.

Compensation and related costs incurred by this subsidiary are reported within the Aviation Leasing segment.

Prior periods have been restated for historical comparison.

See Note 17 to the consolidated financial statements for additional details.

Results of Operations

Adjusted EBITDA (non-GAAP)

The CODM utilizes Adjusted EBITDA as the key performance measure.

This performance measure provides the CODM with the information necessary to assess operational performance, as well as make resource and allocation decisions.

The chief operating decision maker (“CODM”) utilizes Adjusted EBITDA as the key performance measure.

Adjusted EBITDA is not a financial measure in accordance with U.S.

generally accepted accounting principles (“GAAP”).

This performance measure provides the CODM with the information necessary to assess operational performance, as well as making resource and allocation decisions.

We believe Adjusted EBITDA is a useful metric for investors and analysts for similar purposes of assessing our operational performance.

Adjusted EBITDA is defined as net income attributable to shareholders from continuing operations, adjusted (a) to exclude the impact of provision for (benefit from) 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 (losses) of unconsolidated entities and the non-controlling share of Adjusted EBITDA.

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Depreciation and amortization 172,400 169,023 133,908 3,377 35,115

Asset impairment 33,978 4,726 — 29,252 4,726

Interest expense 98,206 95,585 56,845 2,621 38,740

Total expenses 460,642 631,493 367,143 (170,851) 264,350

Other income (expense)

Other (expense) income

Equity in losses of unconsolidated entities (5,039) (2,375) (1,008) (2,664) (1,367)

Gain on sale of assets, net 203,250 3,911 18,593 199,339 (14,682)

(Loss) gain on sale of assets, net (308) 203,250 3,911 (203,558) 199,339

Loss on extinguishment of debt (11,667) — — (11,667) —

Asset impairment (4,726) — — (4,726) —

Interest income 162 531 488 (369) 43

Other income 70 3,445 3,983 (3,375) (538)

Total other income 200,125 7,374 18,297 192,751 (10,923)

Income (loss) from continuing operations before income taxes 152,132 (17,657) (20,549) 169,789 2,892

Provision for income taxes 17,810 2,449 1,954 15,361 495

Net income (loss) from continuing operations 134,322 (20,106) (22,503) 154,428 2,397

Net income (loss) from discontinued operations, net of income taxes 73,462 4,402 (737) 69,060 5,139

Net income (loss) 207,784 (15,704) (23,240) 223,488 7,536

Total other (expense) income (16,782) 204,851 7,374 (221,633) 197,477

(Loss) income from continuing operations before income taxes (110,928) 152,132 (17,657) (263,060) 169,789

(Benefit from) provision for income taxes (5,905) 17,810 2,449 (23,715) 15,361

Net (loss) income from continuing operations (105,023) 134,322 (20,106) (239,345) 154,428

Net income from discontinued operations, net of income taxes 1,331 73,462 4,402 (72,131) 69,060

Net (loss) income (103,692) 207,784 (15,704) (311,476) 223,488

Net (loss) income attributable to non-controlling interest in consolidated subsidiaries:

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Dividends on preferred shares 17,869 1,838 — 16,031 1,838

Net income attributable to shareholders $ 223,270 $ 5,882 $ 134 $ 217,388 $ 5,748

The following table sets forth a reconciliation of net income attributable to shareholders from continuing operations to Adjusted EBITDA:

Net (loss) income attributable to shareholders $ (105,039) $ 223,270 $ 5,882 $ (328,309) $ 217,388

The following table sets forth a reconciliation of net (loss) income attributable to shareholders from continuing operations to Adjusted EBITDA:

Year Ended December 31, Change

(in thousands) 2020 2019 2018 '20 vs '19 '19 vs '18

Net income attributable to shareholders from continuing operations $ 150,055 $ 1,819 $ 801 $ 148,236 $ 1,018

Provision for income taxes 17,810 2,449 1,954 15,361 495

Net (loss) income attributable to shareholders from continuing operations $ (106,370) $ 150,055 $ 1,819 $ (256,425) $ 148,236

(Benefit from) provision for income taxes (5,905) 17,810 2,449 (23,715) 15,361

Equity-based compensation expense 2,325 1,509 717 816 792

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(2) Includes the following items for the years ended December 31, 2020, 2019 and 2018:

(i) net loss of $(2,563), $(1,196) and $(1,786), (ii) interest expense of $131, $477 and $785 and (iii) depreciation and amortization expense of $1,045, $1,078 and $758, respectively.

(i) net loss of $(5,435), $(2,563) and $(1,196), (ii) interest expense of $1,138, $131 and $477, (iii) depreciation and amortization expense of $5,513, $1,045 and $1,078, (iv) acquisition and transaction expense of $581, $0 and $0 and (v) changes in fair value of non-hedge derivative instruments of $(589), $0 and $0, respectively.

(3) Includes the following items for the years ended December 31, 2020, 2019 and 2018:

(i) equity based compensation of $230, $113 and $125, (ii) provision for income taxes of $60, $57 and $16, (iii) interest expense of $3,400, $4,624 and $4,968, (iv) depreciation and amortization expense of $4,833, $6,049 and $7,022 and (v) changes in fair value of non-hedge derivative instruments of $1,336, $(1,099) and $404, respectively.

Comparison of the year ended December 31, 2019 to the year ended December 31, 2018

Total revenues increased $236.7 million primarily due to higher revenues in the Aviation Leasing, Jefferson Terminal and Ports and Terminals segments.

(i) equity based compensation of $374, $230 and $113, (ii) provision for income taxes of $59, $60 and $57, (iii) interest expense of $2,025, $3,400 and $4,624, (iv) depreciation and amortization expense of $6,149, $4,833 and $6,049, (v) changes in fair value of non-hedge derivative instruments of $38, $1,336 and $(1,099) and (vi) loss on extinguishment of debt of $992, $0 and $0, respectively.

Comparison of the years ended December 31, 2020 and 2019

Total revenues decreased $212.3 million primarily due to lower revenues in the Jefferson Terminal, Aviation Leasing and Ports and Terminals segments.

Equipment Leasing

• Lease income increased $49.9 million primarily driven by an increase in assets on lease in the Aviation Leasing segment.

• Maintenance revenue increased by $45.0 million as we increased the number of aircraft and engines subject to leases with maintenance arrangements.

• Maintenance revenue decreased by $33.5 million primarily due to lower aircraft and engine utilization as a result of the COVID-19 pandemic and lower end-of-lease maintenance compensation, partially offset by the recognition of maintenance deposits due to the early redelivery of eleven aircraft.

• Lease income decreased $29.6 million primarily due to an increase in aircraft redelivered, a decrease in the number of engines on lease and an increase in the number of customers placed on non-accrual status, partially offset by an increase in the number of aircraft placed on lease.

• Other revenue increased by $12.1 million, which primarily reflects (i) an increase of $9.4 million in the Aviation Leasing segment due to an increase in end-of-lease redelivery compensation and settlement of an engine loss and (ii) an increase of $2.6 million in the offshore energy business related to victualling income as our vessels were on-hire longer in 2020 compared to 2019.

Infrastructure

• Crude marketing revenues increased $105.6 million primarily due to the Jefferson Terminal segment.

During the third quarter of 2018, Jefferson initiated a strategy in Canada sourcing crude from producers, arranging logistics to Jefferson Terminal and marketing crude to third parties.

Jefferson exited this strategy in the fourth quarter of 2019.

• Terminal services revenue increased $32.9 million which primarily reflects increases of approximately (i) $25.8 million due to increased storage capacity and activity at Jefferson Terminal and (ii) $7.1 million due to increased activity at Long Ridge.

Total expenses increased $259.6 million primarily due to increases in (i) operating expenses, (ii) interest expense, (iii) depreciation and amortization and (iv) management fees and incentive allocation to affiliate.

Operating expenses increased $151.5 million primarily due to increases in:

• cost of sales of $125.6 million primarily due to costs associated with crude marketing in the Jefferson Terminal segment;

• facility operations of $16.0 million primarily in the Jefferson Terminal and Ports and Terminals segments due to higher volume associated with crude marketing and increased activity at Jefferson Terminal and an increas e in transloading volumes at Long Ridge;

• compensation and benefits of $7.6 million primarily due to an increase in headcount in the Jefferson Terminal and Ports and Terminals segments.

Interest expense increased $38.7 million primarily due to an increase in our average outstanding debt of approximately $623.9 million, which primarily consists of increases in the (i) senior unsecured notes due 2025 (“2025 Notes”) of $400.0 million, (ii) Long Ridge Generation LLC (“LREG”) Credit Agreement of $73.4 million, (iii) senior unsecured notes due 2022 (“2022 Notes”) of $65.8 million, (iv) Revolving Credit Facility of $48.8 million, (v) our subsidiary's revolving credit facility (“Jefferson Revolver”) of $25.1 million and (vi) our subsidiary’s revolving credit facility (“DRP Revolver”) of $18.9 million.

Depreciation and amortization increased $35.1 million primarily due to additional assets acquired in the Aviation Leasing segment and assets placed into service in the Jefferson Terminal and Ports and Terminals segments.

Management fees and incentive allocation to affiliate increased $20.3 million primarily due to incentive fees paid to the Manager related to gains on sale recognized during the period.

Total other income increased $192.8 million which primarily reflects (i) a gain on sale of $116.7 million due to the sale of a 49.9% interest in Long Ridge (the “Long Ridge Transaction”), (ii) an increase in gains on sale of $78.0 million due to asset sales in the Aviation Leasing segment, partially offset by (iii) an impairment of $4.7 million at Long Ridge due to the expiration of unused gas leases.

• Crude marketing revenues decreased $157.9 million primarily due to Jefferson Terminal exiting the crude marketing strategy in the fourth quarter of 2019.

Revenues in 2020 include contracts executed in 2019 but delivered in 2020.

• Other revenue decreased $8.7 million which primarily reflects (i) a decrease of $6.3 million at Long Ridge due to Long Ridge being accounted for as an equity method investment starting in the fourth quarter of 2019 (the “Long Ridge Transaction”), (ii) a decrease of $3.9 million at Repauno due to lower sales of butane, partially offset by (iii) an increase of $1.5 million in our railcar cleaning business due to higher volumes.

• Terminal services revenue increased $7.9 million which primarily reflects (i) an increase of $15.0 million due to increased activity and storage capacity at Jefferson Terminal, partially offset by (ii) a decrease of $7.1 million due to the Long Ridge Transaction.

Total expenses decreased $170.9 million primarily due to decreases in (i) operating expenses, (ii) management fees and incentive allocation to affiliate and (iii) acquisition and transaction expenses, partially offset by an increase in (iv) asset impairment, (v) depreciation and amortization and (vi) interest expense.

Operating expenses decreased $182.1 million primarily due to decreases in:

• cost of sales of $167.2 million primarily due to Jefferson Terminal exiting the crude marketing strategy in the fourth quarter of 2019 and

• facility operations of $8.7 million which primarily reflects (i) a decrease of $4.9 million at Jefferson Terminal due to lower railcar expenses associated with the crude marketing strategy and (ii) a decrease of $4.1 million due to the Long Ridge Transaction.

Management fees and incentive allocation to affiliate decreased $17.5 million which reflects (i) lower incentive fees of $21.2 million due to the decrease in gains on sale of assets, net, partially offset by (ii) an increase of $3.7 million in the base management fee as our average total equity was higher in 2020 compared to 2019.

Acquisition and transaction expenses decreased $7.8 million which primarily reflects lower professional fees and other acquisition-related costs due to fewer transactions in 2020 compared to 2019.

Asset impairment increased $29.3 million primarily due to asset impairment charges in 2020 in the Aviation Leasing segment.

See Note 4 to the consolidated financial statements for additional information.

Depreciation and amortization increased $3.4 million which primarily reflects (i) an increase of $6.2 million due to assets placed into service at Jefferson Terminal, (ii) an increase of $4.9 million in the Aviation Leasing segment primarily due to a change in the estimated useful lives and residual values of certain aircraft engines and additional assets owned and on lease, partially offset by (iii) a decrease of $8.4 million due to the Long Ridge Transaction.

Interest expense increased $2.6 million primarily due to:

• an increase of $9.8 million in Corporate and Other primarily due to (i) the issuance of $400 million of senior notes due 2027 (“2027 Notes”), (ii) an increase in the average outstanding debt of $83.6 million for the senior notes due 2025 (“2025 Notes”), partially offset by (iii) a decrease in interest expense related to the FTAI Pride Credit Agreement which was repaid in full in March 2020;

• a decrease of $6.8 million at Jefferson Terminal due to the issuance of the Series 2020 Bonds (“Jefferson Refinancing”), which reduced its weighted average interest rate.

See Note 9 to the consolidated financial statements for additional information.

Total other income decreased $221.6 million which primarily reflects:

• a decrease of $203.6 million in gains on sale of assets, net due to the Long Ridge Transaction and asset sales in the Aviation Leasing segment in 2019;

• a loss on extinguishment of debt of $11.7 million due to (i) the early repayment of $300 million of senior unsecured notes due 2022 (“2022 Notes”) in December 2020 and (ii) the Jefferson Refinancing.

See Note 9 to the consolidated financial statements for additional information;

• a decrease in other income of $3.4 million due to the Long Ridge Transaction;

• an increase of $2.7 million in equity in losses of unconsolidated entities.

Provision for income taxes

The provision for income taxes increased $15.4 million which primarily reflects deferred tax expense in the Ports and Terminals segment due to the gain on sale for the Long Ridge Transaction.

The provision for income taxes decreased $23.7 million which primarily reflects deferred tax expense in 2019 due to the gain on sale for the Long Ridge Transaction.

Net income from continuing operations

Net income from continuing operations increased $154.4 million primarily due to the changes discussed above.

Net income from continuing operations decreased $239.3 million primarily due to the changes discussed above.

Net income from discontinued operations, net of income taxes

Net income from discontinued operations, net of income taxes increased $69.1 million due to the sale of our railroad business in December 2019.

Net income from discontinued operations, net of income taxes decreased $72.1 million due to the sale of our railroad business in December 2019.

Adjusted EBITDA (non-GAAP)

Adjusted EBITDA increased $287.5 million primarily due to the changes noted above.

Adjusted EBITDA decreased $260.1 million primarily due to the changes noted above.

Aviation Leasing Segment

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.

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Purchases 1 19 20

Sales (1) (4) (5)

Transfers (1) (15) (16)

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Depreciation and amortization 133,904 128,990 102,419 4,914 26,571

Asset impairment 33,978 — — 33,978 —

Total expenses 195,236 155,299 117,434 39,937 37,865

Other (expense) income

Equity in losses of unconsolidated entities (1,932) (1,829) (743) (103) (1,086)

Gain on sale of assets, net 81,954 3,911 7,188 78,043 (3,277)

(Loss) gain on sale of assets, net (300) 81,954 3,911 (82,254) 78,043

Interest income 94 104 202 (10) (98)

Total other income 80,229 3,370 6,209 76,859 (2,839)

Total other (expense) income (2,138) 80,229 3,370 (82,367) 76,859

Income before income taxes 83,837 261,605 130,206 (177,768) 131,399

Provision for income taxes 2,826 2,280 1,966 546 314

(Benefit from) provision for income taxes (4,812) 2,826 2,280 (7,638) 546

Net income 88,649 258,779 127,926 (170,130) 130,853

Net (loss) income attributable to non-controlling interest in consolidated subsidiaries — (24) 697 24 (721)

Net loss attributable to non-controlling interest in consolidated subsidiaries — — (24) — 24

Net income attributable to shareholders $ 88,649 $ 258,779 $ 127,950 $ (170,130) $ 130,829

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Net income attributable to shareholders $ 88,649 $ 258,779 $ 127,950 $ (170,130) $ 130,829

Provision for income taxes 2,826 2,280 1,966 546 314

(Benefit from) provision for income taxes (4,812) 2,826 2,280 (7,638) 546

Equity-based compensation expense — — — — —

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(1) Includes the following items for the years ended December 31, 2020, 2019 and 2018:

(i) depreciation expense of $128,990 and $102,419 and $61,795, (ii) lease intangible amortization of $7,181, $8,588 and $4,716 and (iii) amortization for lease incentives of $22,981, $18,071 and $3,591, respectively.

(i) depreciation expense of $133,904, $128,990 and $102,419, (ii) lease intangible amortization of $3,747, $7,181 and $8,588 and (iii) amortization for lease incentives of $26,599, $22,981 and $18,071, respectively.

(2) Includes the proportionate share of the unconsolidated entities' net income adjusted for the excluded and included items detailed in the table, for which there were no adjustments.

(3) Includes depreciation and amortization expense of $0, $172 and $537 for the years ended December 31, 2019, 2018 and 2017, respectively.

Comparison of the year ended December 31, 2019 to the year ended December 31, 2018

Total revenues increased $92.4 million driven by higher lease income and maintenance revenue.

• Lease income increased $45.8 million mainly due to an increase in (i) aircraft lease income of $35.1 million primarily driven by the addition of 14 aircraft on lease and (ii) engine lease income of $10.7 million primarily driven by an additional 15 revenue generating engines in 2019 compared to 2018.

• Maintenance revenue increased $45.0 million due to an increase in (i) the number of aircraft and engines on lease and (ii) end-of-lease maintenance compensation for four aircraft.

Total expenses increased $31.8 million primarily due to an increase in depreciation and amortization expense and operating expenses.

• Depreciation and amortization expense increased $26.6 million driven by additional aircraft and engines owned and on lease in 2019 compared to 2018.

• Operating expenses increased $5.0 million primarily as a result of increases in (i) shipping and storage fees of $1.6 million due to the positioning of our assets for lease, (ii) bad debt expense of $1.5 million related to an engine loss receivable deemed uncollectible due to bankruptcy, (iii) repairs and maintenance expenses of $0.6 million, (iv) professional fee expenses of $0.5 million and (v) other operating expenses of $0.8 million.

Total other income increased $76.9 million primarily due to an increase of $78.0 million in gain on the sale of leasing equipment in 2019 partially offset due to a decrease of $1.1 million in Aviation Leasing’s proportionate share of the unconsolidated entities’ net income.

(3) Includes depreciation and amortization expense of $172 for the year ended December 31, 2018.

Comparison of the years ended December 31, 2020 and 2019

Total revenues decreased $55.5 million driven by lower lease income and maintenance revenue partially offset by higher other revenue.

• Maintenance revenue decreased $33.5 million primarily due to lower aircraft and engine utilization as a result of the COVID-19 pandemic and lower end-of-lease maintenance compensation, partially offset by the recognition of maintenance deposits due to the early redelivery of eleven aircraft.

• Lease income decreased $31.0 million primarily due to an increase in aircraft redelivered, a decrease in the number of engines on lease and an increase in the number of customers placed on non-accrual status, partially offset by an increase in the number of aircraft placed on lease.

• Other revenue increased $9.4 million primarily due to the increase in end-of lease redelivery compensation and settlement of an engine loss.

Total expenses increased $39.9 million primarily due to an increase in asset impairment, depreciation and amortization expense and operating expenses, partially offset by a decrease in acquisition and transaction expense.

• Asset impairment increased $34.0 million for the adjustment of the carrying value of leasing equipment to fair value, net of redelivery compensation.

See Note 4 to the consolidated financial statements for additional information.

• Depreciation and amortization expense increased $4.9 million driven by a change in the estimated useful lives and residual values of certain aircraft engines and additional assets owned and on lease, partially offset by additional aircraft redelivered and parted out into our engine leasing pool.

• Operating expenses increased $3.0 million primarily as a result of an increase in shipping and storage fees, compensation and benefit expense and professional fees, partially offset by a decrease in repairs and maintenance expenses and other operating expenses.

• Acquisition and transaction expense decreased $2.0 million driven by lower compensation and related costs associated with the acquisition of aviation leasing equipment.

Total other income decreased $82.4 million primarily due to a decrease of $82.3 million in gain on the sale of leasing equipment in 2020.

Adjusted EBITDA (non-GAAP)

Adjusted EBITDA increased $167.9 million primarily due to the changes in net income attributable to shareholders noted above, and higher depreciation and amortization expense for the additional aircraft and engines owned and on lease.

Adjusted EBITDA decreased $140.6 million primarily due to the changes noted above.

Jefferson Terminal Segment

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Total expenses 91,532 270,568 129,880 (179,036) 140,688

Other income (expense)

Other (expense) income

Equity in losses of unconsolidated entities — (292) (574) 292 282

Gain on sale of assets, net 4,636 — — 4,636 —

(Loss) gain on sale of assets, net (8) 4,636 — (4,644) 4,636

Loss on extinguishment of debt (4,724) — — (4,724) —

Interest income 22 118 270 (96) (152)

Other income 70 634 3,983 (564) (3,349)

Total other income 5,096 3,679 2,035 1,417 1,644

Total other (expense) income (4,640) 5,096 3,679 (9,736) 1,417

Loss before income taxes (35,889) (61,124) (55,216) 25,235 (5,908)

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(2) Includes the following items for the years ended December 31, 2020, 2019 and 2018:

(i) equity-based compensation of $221, $106 and $125, (ii) provision for income taxes of $60, $57 and $16, (iii) interest expense of $3,400, $4,465 and $4,886, (iv) changes in fair value of non-hedge derivative instruments of $1,336, $(1,099) and $404 and (v) depreciation and amortization expense of $4,803, $5,847 and $6,320, respectively.

Comparison of the year ended December 31, 2019 to the year ended December 31, 2018

Total revenues increased $133.4 million primarily due to an increase in crude marketing revenue of $105.6 million.

During the third quarter of 2018, Jefferson initiated a strategy in Canada sourcing crude from producers, arranging logistics to Jefferson Terminal and marketing crude to third parties.

Jefferson exited this strategy in the fourth quarter of 2019.

Additionally, terminal services revenue increased $25.8 million primarily due to increased storage capacity and activity.

Total expenses increased $140.7 million primarily reflecting higher operating expenses of $136.9 million.

The increase in operating expenses reflected higher:

• cost of sales of $125.7 million, resulting from costs associated with crude marketing;

• facility operations expense of $9.2 million due to higher volume associated with crude marketing and increased activity at the terminal;

• compensation and benefits expense of $4.1 million resulting from an increase in headcount.

Additionally, the increase in expense reflected higher depreciation expense of $3.1 million due to additional assets placed into service.

Total other income increased $1.4 million primarily due to a gain on sale of $4.6 million, partially offset by a decrease in other income of $3.3 million due to lower gains on our derivatives in 2019.

(i) equity-based compensation of $352, $221 and $106, (ii) provision for income taxes of $59, $60 and $57, (iii) interest expense of $1,979, $3,400 and $4,465, (iv) changes in fair value of non-hedge derivative instruments of $38, $1,336 and $(1,099), (v) depreciation and amortization expense of $6,097, $4,803 and $5,847 and (vi) loss on extinguishment of debt of $992, $0 and $0, respectively.

Comparison of the years ended December 31, 2020 and 2019

Total revenues decreased $144.1 million which primarily reflects (i) a decrease in crude marketing revenue of $157.9 million due to Jefferson Terminal exiting the crude marketing strategy in the fourth quarter of 2019, partially offset by (ii) an increase in terminal services of $15.0 million due to increased activity and storage capacity.

Total expenses decreased $179.0 million which reflects (i) a decrease in operating expenses of $178.4 million primarily due to Jefferson Terminal exiting the crude marketing strategy in the fourth quarter of 2019, (ii) a decrease in interest expense of $6.8 million due to the Jefferson Refinancing, partially offset by (iii) an increase in depreciation and amortization of $6.2 million due to additional assets placed into service.

Other (expense) income

Total other income decreased $9.7 million which primarily reflects (i) a loss on extinguishment of debt of $4.7 million due to the Jefferson Refinancing and (ii) a decrease in gains on sale of assets, net due to a $4.6 million gain recognized in 2019.

Adjusted EBITDA (non-GAAP)

Adjusted EBITDA increased $5.5 million primarily due to an increase in the changes in non-hedge derivative instruments offset with the changes in net loss attributable to shareholders as described above.

Adjusted EBITDA increased $22.3 million primarily due to the changes in net loss attributable to shareholders noted above.

Ports and Terminals

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Depreciation and amortization 1,497 9,849 5,139 (8,352) 4,710

Asset impairment — 4,726 — (4,726) 4,726

Interest expense 1,335 1,712 649 (377) 1,063

Total expenses 14,066 46,149 24,100 (32,083) 22,049

Other (expense) income

Equity in losses of unconsolidated entities (3,222) (192) — (3,030) (192)

Gain on sale of assets, net — 116,660 — (116,660) 116,660

Asset impairment (4,726) — — (4,726) —

Interest income — 289 — (289) 289

Other income — 1,809 — (1,809) 1,809

Total other income 113,840 — — 113,840 —

Income (loss) before income taxes 94,604 (6,656) (7,040) 101,260 384

Provision for income taxes 14,700 1 — 14,699 1

Net income (loss) 79,904 (6,657) (7,040) 86,561 383

Total other (expense) income (3,222) 118,566 — (121,788) 118,566

(Loss) income before income taxes (13,433) 94,604 (6,656) (108,037) 101,260

(Benefit from) provision for income taxes (1,791) 14,700 1 (16,491) 14,699

Net (loss) income (11,642) 79,904 (6,657) (91,546) 86,561

Net loss attributable to non-controlling interest in consolidated subsidiaries (39) (215) (100) 176 (115)

Net income (loss) attributable to shareholders $ 80,119 $ (6,557) $ (6,556) $ 86,676 $ (1)

The following table sets forth a reconciliation of net income (loss) attributable to shareholders to Adjusted EBITDA:

Net (loss) income attributable to shareholders $ (11,603) $ 80,119 $ (6,557) $ (91,722) $ 86,676

The following table sets forth a reconciliation of net (loss) income attributable to shareholders to Adjusted EBITDA:

Year Ended December 31, Change

(in thousands) 2020 2019 2018 '20 vs '19 '19 vs '18

Net income (loss) attributable to shareholders $ 80,119 $ (6,557) $ (6,556) $ 86,676 $ (1)

Provision for income taxes 14,700 1 — 14,699 1

Net (loss) income attributable to shareholders $ (11,603) $ 80,119 $ (6,557) $ (91,722) $ 86,676

(Benefit from) provision for income taxes (1,791) 14,700 1 (16,491) 14,699

Equity-based compensation expense 649 455 349 194 106

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3,304 (153) — 3,457 (153)

Equity in earnings of unconsolidated entities 192 — — 192 —

Equity in losses of unconsolidated entities 3,222 192 — 3,030 192

Non-controlling share of Adjusted EBITDA (2)

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(1) Includes (i) net loss of $(193) and (ii) depreciation expense of $40 for the year ended December 31, 2019.

(1) Includes the following items for the years ended December 31, 2020 and 2019:

(i) net loss of $(3,222) and $(193), (ii) depreciation expense of $5,513 and $40, (iii) interest expense of $1,021 and $0, (iv) acquisition and transaction expense of $581 and $0 and (v) changes in fair value of non-hedge derivative instruments of $(589) and $0, respectively.

(2) Includes the following items for the years ended December 31, 2020, 2019 and 2018:

(i) equity-based compensation of $22, $9 and $7, (ii) interest expense of $46, $0 and $159 and (iii) depreciation expense of $52, $30 and $30, respectively.

Comparison of the year ended December 31, 2019 to the year ended December 31, 2018

Total revenues increased $4.7 million, primarily due to additional trans-loading revenue of $2.5 million and revenue related to oil and gas activities of $1.7 million at Long Ridge.

The in crease was accompanied by an additional $0.5 million from Repauno relating to butane sales.

Total expenses increased $17.3 million primarily due to increases in (i) operating expenses of $6.5 million (ii) acquisition and transaction expense of $5.0 million and (iii) depreciation expense of $4.7 million related to property, plant and equipment.

The increase in operating expenses was primarily driven by higher:

• operating expenses to operate proved developed natural gas wells of $1.4 million;

• compensation and benefits of $1.8 million due to increased headcount;

• facility operations of $1.7 million related to an increas e in transloading volumes at Long Ridge;

• repair and maintenance cost of $0.7 million;

• cost of sales of $0.6 million related to the sale of butane;

• bad debt expense of $0.3 million.

Acquisition and transaction expense increased due to transaction costs associated with the Long Ridge Transaction.

Depreciation expense increased due to a larger asset base as a result of assets placed into service during the year, the depletion of gas reserves and a revision to total proved reserve volumes at Long Ridge.

Total other income increased $113.8 million which primarily reflects (i) a gain on sale of $116.7 million from the Long Ridge Transaction, partially offset by (ii) an impairment of $4.7 million at Long Ridge due to the expiration of unproved gas leases.

Comparison of the years ended December 31, 2020 and 2019

Total revenues decreased $18.3 million, primarily due to (i) the Long Ridge Transaction and (ii) a decrease of $3.9 million in butane sales at Repauno .

Total expenses decreased $32.1 million primarily due to decreases in (i) operating expenses of $14.5 million (ii) depreciation expense of $8.4 million related to the Long Ridge Transaction (iii) asset impairment of $4.7 million in 2019 at Long Ridge due to the expiration of unproved gas leases and (iv) acquisition and transaction expense of $4.1 million.

The decrease in operating expenses was primarily driven by lower:

• operating expenses of $12.7 million primarily due to the Long Ridge Transaction;

• cost of sales of $2.6 million related to the sale of butane at Repauno.

The decrease in operating expenses was offset by an increase in compensation and benefits of $1.1 million due to increased headcount.

Acquisition and transaction expense decreased due to transaction costs associated with the Long Ridge Transaction during 2019.

Total other income decreased $121.8 million primarily due to decreases in (i) gain on sale of $116.7 million from the Long Ridge Transaction in 2019 (ii) equity method income of $3.0 million from Long Ridge in 2020 and (iii) other income of $1.8 million due to unrealized gains on power swap derivatives, which was deconsolidated with the Long Ridge Transaction.

Provision for income taxes

The provision for income taxes increased $14.7 million which primarily reflects deferred tax expense due to the gain on sale for the Long Ridge Transaction.

The provision for income taxes decreased $16.5 million which primarily reflects a deferred tax benefit due to pre-tax losses in 2020 compared to a gain in 2019 from the Long Ridge Transaction.

Adjusted EBITDA (non-GAAP)

Adjusted EBITDA increased $115.4 million primarily due to the changes in net income (loss) attributable to shareholders noted above.

Adjusted EBITDA decreased $117.4 million primarily due to the changes in net income (loss) attributable to shareholders noted above.

Corporate and Other

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Total expenses 159,808 159,477 95,729 331 63,748

Other expense

Equity in (losses) earnings of unconsolidated entities (62) 309 (4) (371) 313

Gain on sale of assets, net — — 11,405 — (11,405)

Other (expense) income

Equity in earnings (losses) of unconsolidated entities 115 (62) 309 177 (371)

Loss on extinguishment of debt (6,943) — — (6,943) —

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Other income — 1,002 — (1,002) 1,002

Total other income 960 325 10,053 635 (9,728)

Total other (expense) income (6,782) 960 325 (7,742) 635

Loss before income taxes (145,443) (142,953) (85,991) (2,490) (56,962)

Benefit from income taxes — (93) (54) 93 (39)

Provision for (benefit from) income taxes 420 — (93) 420 93

Net loss (145,863) (142,953) (85,898) (2,910) (57,055)

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Net loss attributable to shareholders $ (163,732) $ (144,791) $ (85,898) $ (18,941) $ (58,893)

Benefit from income taxes — (93) (54) 93 (39)

Provision for (benefit from) income taxes 420 — (93) 420 93

Equity-based compensation expense — — 9 — (9)

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(164) (61) 624 (103) (685)

Equity in earnings of unconsolidated entities 62 (309) 4 371 (313)

Equity in (earnings) losses of unconsolidated entities (115) 62 (309) (177) 371

Non-controlling share of Adjusted EBITDA — — — — —

— — (247) — 247

Adjusted EBITDA (non-GAAP) $ (58,964) $ (34,590) $ (35,034) $ (24,374) $ 444

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(i) net (loss) income of $(281), $(192) and $121, (ii) interest expense of $117, $131 and $477 and (iii) depreciation expense of $0, $0 and $26, respectively.

(2) Includes (i) interest expense of $82 and (ii) depreciation expense of $165 for the year ended December 31, 2017.

Comparison of the year ended December 31, 2019 to the year ended December 31, 2018

Equipment Leasing

• Equipment leasing revenues increased $3.9 million due to (i) an increase in lease income of $4.1 million due to our vessels being on-hire for longer in 2019 compared to 2018, (ii) an increase in other revenue of $1.2 million due to higher victualling income as our vessels were on-hire for longer in 2019 compared to 2018, partially offset by (iii) a decrease in finance lease income of $1.5 million as one of our vessels was on nonaccrual status due to a casualty event.

Infrastructure

• Other revenue increased $2.3 million due to the railcar cleaning business being operational for all of 2019 compared to the second half of 2018.

Total expenses increased $69.9 million primarily due to increases in:

• interest expense of $37.0 million which reflects an increase in the average outstanding debt of approximately $507.8 million, which primarily consists of the 2025 Notes of $400.0 million, 2022 Notes of $65.8 million and Revolving Credit Facility of $48.8 million;

• management fees and incentive allocation to affiliate of $20.3 million due to incentive fees paid to the Manager related to gains on sale recognized during the period;

• acquisition and transaction expenses of $5.4 million primarily due to a higher volume of transactions in 2019.

Comparison of the years ended December 31, 2020 and 2019

Equipment leasing revenues increased $4.1 million primarily due to higher victualling income and lease income as our vessels were on-hire for longer in 2020 compared to 2019.

Infrastructure revenues increased $1.5 million due to higher volume in our railcar cleaning business.

Total expenses increased slightly due to higher (i) interest expense and (ii) operating expenses, partially offset by lower (iii) management fees and incentive allocation to affiliate and (iv) acquisition and transaction expenses.

Interest expense increased $9.8 million which reflects an increase in the average outstanding debt of approximately $190.1 million, which primarily consists of increases in (i) the 2027 Notes of $200.0 million and (ii) the 2025 Notes of $83.6 million, partially offset by decreases in (iii) the Revolving Credit Facility of $43.8 million, (iv) the FTAI Pride Credit Agreement of $38.4 million, which was repaid in full in March 2020 and (v) the 2022 Notes of $11.3 million.

Operating expenses increased $7.9 million which primarily reflects higher (i) charter costs of $4.2 million in our offshore energy business, (ii) repairs and maintenance of $1.6 million in our offshore energy business and (iii) compensation and benefits of $1.1 million in our railcar cleaning business due to higher volumes.

Acquisition and transaction expenses decreased $1.7 million primarily due to a higher volume of transactions in 2019.

Other (expense) income

Other income decreased $7.7 million primarily due to a loss on extinguishment of debt of $6.9 million due to the early repayment of $300 million of the 2022 Notes in December 2020.

Adjusted EBITDA (non-GAAP)

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Liquidity and Capital Resources

On July 28, 2020, we issued $400 million aggregate principal amount of 2027 Notes.

We used a portion of the proceeds to repay $220 million of outstanding borrowings under the Revolving Credit Facility, and intend to use the remaining proceeds for general corporate purposes, and the funding of future acquisitions and investments, including aviation investments.

On June 30, 2020, we entered into an At Market Issuance Sales Agreement with a third party to sell shares of our Series A Preferred Shares and Series B Preferred Shares (collectively, the “ATM Shares”), having an aggregate offering price of up to $100 million, from time to time, through an “at-the market” equity offering program.

During the third quarter of 2020, we sold 1,070,000 ATM Shares for net proceeds of approximately $20.6 million.

On December 23, 2020, we issued an additional $400 million aggregate principal amount of 2025 Notes.

We used a portion of the proceeds to repay $300 million of outstanding 2022 Notes through the Tender Offer and $50 million of outstanding borrowings under the Revolving Credit Facility, and intend to use the remaining proceeds for general corporate purposes, and the funding of future acquisitions and investments, including aviation investments.

Following the repayment, we have additional borrowing capacity of $250 million under the Revolving Credit Facility.

We believe we have sufficient liquidity to satisfy our cash needs, however, we continue to evaluate and take action, as necessary, to preserve adequate liquidity and ensure that our business can continue to operate during these uncertain times.

This includes limiting discretionary spending across the organization and re-prioritizing our capital projects amid the COVID-19 pandemic.

Our principal uses of liquidity have been and continue to be (i) acquisitions or expansion of transportation infrastructure and equipment, (ii) distributions to our shareholders, (iii) expenses associated with our operating activities and (iv) debt service obligations associated with our investments.

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• Cash flows from operating activities, plus the principal collections on finance leases and maintenance reserve collections were $110.3 million, $229.7 million and $189.3 million during the years ended December 31, 2020, 2019, and 2018, respectively.

• During the year ended December 31, 2020, additional borrowings were obtained in connection with the (i) 2025 Notes of $407.0 million, (ii) 2027 Notes of $400.0 million, (iii) Revolving Credit Facility of $270.0 million and (iv) Series 2020 Bonds (as defined in Note 9) of $264.0 million.

We made principal payments of $852.2 million related to the 2022 Notes, Revolving Credit Facility, Series 2016 Bonds, Jefferson Revolver, Series 2012 Bonds and FTAI Pride Credit Agreement.

During the year ended December 31, 2019, additional borrowings were obtained in connection with (i) the Revolving Credit Facility of $250.0 million, (ii) LREG Credit Agreement of $173.5 million, (iii) the 2025 Notes of $148.7 million, (iv) the 2022 Notes of $147.8 million, (v) the DRP Revolver of $25.0 million, (vi) the Jefferson Revolver of $23.2 million and (vii) CMQR Credit Agreement of $20.9 million.

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We made principal payments of $218.8 million primarily related to the Revolving Credit Facility and the CMQR Credit Agreement.

During the year ended December 31, 2017, additional borrowings were obtained in connection with (i) the Term Loan of $97.2 million, net of deferred financing costs, (ii) the Revolving Credit Facility of $95.0 million, (iii) the CMQR Credit Agreement of $32.0 million and (iv) the Senior Notes of $343.0 million, net of deferred financing costs and repayment of the Term Loan.

We made principal repayments of $125.2 million, primarily related to the FTAI Pride Credit Agreement, the Revolving Credit Facility and the CMQR Credit Agreement.

• Proceeds from the sale of subsidiaries and assets were $72.2 million, $432.3 million and $44.1 million during the years ended December 31, 2020, 2019, and 2018, respectively.

• Proceeds from the issuance of common shares were $148.3 million, net of issuance costs of $0.8 million, during the year ended December 31, 2018.

There were no issuances of common shares in 2019.

• Proceeds from the issuance of preferred shares, net of underwriters discount and issuance costs, were $194.0 million during the year ended December 31, 2019.

There were no issuances of common shares in 2020 or 2019.

• Proceeds from the issuance of preferred shares, net of underwriters discount and issuance costs, were $19.7 million and $194.0 million during the years ended December 31, 2020 and 2019, respectively.

Our net cash provided by operating activities has been less than the amount of distributions to our shareholders.

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We are currently evaluating several potential Infrastructure and Equipment Leasing transactions, which could occur within the next 12 months.

However, as of the date of this filing, none of these pipeline transactions or negotiations are definitive or included within our planned liquidity needs.

However, as of the date of this filing, none of these transactions or negotiations are definitive or included within our planned liquidity needs.

We cannot assure if or when any such transaction will be consummated or the terms of any such transaction.

We have a dividend reinvestment plan in place which allows shareholders to automatically reinvest dividends in our common shares.

The plan became effective on February 24, 2017.

Historical Cash Flow

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Comparison of the years ended December 31, 2020 and 2019

Net cash provided by operating activities increased $17.3 million primarily due to an increase in net income of $223.5 million and adjustments to reconcile net income which includes (i) an increase in depreciation and amortization of $34.9 million, (ii) a change in current and deferred income taxes of $13.8 million and (iii) a change in fair value of non-hedge derivatives of $10.1 million.

These increases were partially offset by (iv) a change in gain on sale of subsidiaries and assets of $276.8 million.

Net cash used in investing activities decreased $208.3 million primarily due to (i) proceeds from the sale of subsidiaries of $183.8 million and (ii) an increase in proceeds from the sale of leasing equipment of $204.4 million.

These increases were partially offset by (iii) an increase in acquisitions of property, plant and equipment of $101.2 million, (iv) an increase in acquisitions of leasing equipment of $70.6 million and (v) the acquisition of the remaining interest in a JV investment of $28.8 million.

Net cash provided by financing activities decreased $132.0 million primarily due to (i) an increase in repayments of debt of $186.3 million, (ii) a decrease in proceeds from the issuance of common shares, net of $147.5 million and (iii) an increase in payment of deferred financing costs of $31.2 million.

These decreases were partially offset by (iv) proceeds from the issuance of preferred shares, net of $194.0 million and (v) an increase in proceeds from debt of $37.8 million .

Comparison of the years ended December 31, 2018 and 2017

Net cash provided by operating activities increased $65.2 million primarily due to an increase in net income of $7.5 million and adjustments to reconcile net income which include increases in (i) depreciation and amortization of $48.2 million, (ii) amortization of lease intangibles and incentives of $18.4 million and (iii) a change in gain on sale of equipment of $14.4 million.

These increases were partially offset by security deposits and maintenance claims included in earnings of $6.3 million and a change in fair value of non-hedge derivatives of $4.5 million.

Also contributing to the offset were the changes in accounts receivable, other assets, and other liabilities due to the continued expansion of operations across all business segments.

Net cash used in investing activities increased $231.3 million primarily due to (i) the acquisition of property, plant and equipment of $113.9 million, (ii) the acquisition of leasing equipment and lease intangibles of $73.5 million in the Aviation Leasing segment and (iii) lower proceeds from the sale of leasing equipment and available-for-sale securities of $47.1 million and $30.2 million, respectively.

Partially offsetting this increase was a change in cash used for investments of $30.4 million.

Net cash provided by financing activities increased $234.8 million primarily due to proceeds from borrowings under (i) the 2025 Notes of $291.0 million, (ii) a net increase in the Revolving Credit Facility of $180.0 million and (iii) the Jefferson Revolver of $49.5 million.

Additionally, we received proceeds from the issuance of common shares, net of issuance costs of $147.5 million.

Partially offsetting these increases were (i) a net decrease in proceeds from borrowings under the 2022 Notes of $340.2 million and (ii) a net increase in repayments of the Revolving Credit Facility and the CMQR Credit Agreement of $80.0 million and $14.2 million, respectively.

Net cash provided by operating activities decreased $87.9 million, which primarily reflects (i) a decrease in net income of $311.5 million and (ii) changes in management fees payable to affiliate, accounts receivable, accounts payable and accrued liabilities, other assets and other liabilities of $83.6 million, partially offset by (iii) a change in gain on sale of subsidiaries and assets of $279.7 million and (iv) a change in security deposits and maintenance claims included in earnings of $14.0 million

Net cash used in investing activities increased $13.9 million primarily due to (i) a decrease in proceeds from the sale of subsidiaries of $183.8 million and (ii) a decrease in proceeds from the sale of leasing equipment of $176.3 million, partially offset by (iii) an decrease in acquisitions of leasing equipment of $247.0 million, (iv) a decrease in acquisitions of property, plant and equipment of $66.3 million and (v) a decrease in the acquisition of the remaining interest in a JV investment of $28.8 million.

Net cash provided by financing activities decreased $101.0 million primarily due to (i) an increase in repayments of debt of $447.1 million, (ii) a decrease in proceeds from the issuance of preferred shares, net of $174.3 million and (iii) a decrease in receipt of maintenance deposits of $31.9 million, partially offset by (iv) an increase in proceeds from debt of $552.2 million.

Funds Available for Distribution (non-GAAP)

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 U.S.

generally accepted accounting principles (“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.

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 define FAD as:

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_____________________________________________________

(1) Required payments on debt obligations for the year ended December 31, 2019 exclude repayments of $350,000 for the Revolving Credit Facility and $18,572 for the CMQR Credit Agreement, and for the year ended December 31, 2018 exclude repayments of $175,000 for the Revolving Credit Facility and $36,026 for the CMQR Credit Agreement, and for the year ended December 31, 2017 exclude repayments of $100,000 for a certain tern loan, $95,000 for the Revolving Credit Facility and $21,855 for the CMQR Credit Agreement, all of which were voluntary refinancings as repayments of these amounts were not required at such time.

(1) Required payments on debt obligations for the year ended December 31, 2020 exclude repayments of $306,206 for the 2022 Notes, $270,000 for the Revolving Credit Facility, $144,200 for the Series 2016 Bonds, $50,262 for the Jefferson Revolver, $45,520 for the Series 2012 Bonds and $36,009 for the FTAI Pride Credit Agreement, and for the year ended December 31, 2019 exclude repayments of $350,000 for the Revolving Credit Facility and $18,572 for the CMQR Credit Agreement, and for the year ended December 31, 2018 exclude repayments of $175,000 for the Revolving Credit Facility and $36,026 for the CMQR Credit Agreement, all of which were voluntary refinancings as repayments of these amounts were not required at such time.

FAD is subject to a number of limitations and assumptions and there can be no assurance that we will generate FAD sufficient to meet our intended dividends.

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(in thousands) Total 2021 2022 2023 2024 2025 Thereafter

FTAI Pride Credit Agreement

$ 36,009 $ 36,009 $ — $ — $ — $ — $ —

Jefferson Revolver (1)

50,000 — 50,000 — — — —

DRP Revolver $ 25,000 $ 25,000 $ — $ — $ — $ — $ —

1 unchanged sentence

Series 2020 Bonds 263,980 — — — — 79,060 184,920

39,550 1,810 1,960 2,120 2,295 2,485 28,880

Series 2016 Bonds (1)

144,200 144,200 — — — — —

Senior Notes due 2022 400,000 — 400,000 — — — —

Senior Notes due 2025 850,000 — — — — 850,000 —

Senior Notes due 2027 400,000 — — — — — 400,000

Total principal payments on loans and bonds payable

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______________________________________________________________________________________

(1) In February 2020, we refinanced the Series 2012 Bonds and Series 2016 Bonds which extended the earliest maturity date to 2025 and also paid off the Jefferson Revolver.

See Note 21 to the consolidated financial statements for additional details.

(1) Estimated interest payments based on rates as of December 31, 2020.

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When collectability is not reasonably assured, the customer is placed on non-accrual status and revenue is recognized when cash payments are received.

Generally, under our aircraft lease and engine agreements, the lessee is required to make periodic maintenance payments calculated based on the lessee’s utilization of the leased asset.

Generally, under our aircraft lease and engine agreements, the lessee is required to make periodic maintenance payments calculated based on the lessee’s utilization of the leased asset or at the end of the lease.

Typically, under our aircraft lease agreements, the lessee is responsible for maintenance, repairs and other operating expenses throughout the term of the lease.

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Significant changes to these estimates could have a material effect on the amount of revenue recognized in the period.

Finance Leases —From time to time we enter into finance lease arrangements that include a lessee obligation to purchase the leased equipment at the end of the lease term, include a bargain purchase option, or provides for minimum lease payments with a present value of 90% or more of the fair value of the leased equipment at the date of lease inception.

For purchase and lease back transactions, we account for the transaction as a single arrangement.

We allocate the consideration paid based on the fair value of the aircraft and lease.

The fair value of the lease may include a lease premium or discount.

Finance Leases —From time to time we enter into finance lease arrangements that include a lessee obligation to purchase the leased equipment at the end of the lease term, a bargain purchase option, or provides for minimum lease payments with a present value that equals or exceeds substantially all of the fair value of the leased equipment at the date of lease inception.

Net investment in finance lease represents the minimum lease payments due from lessee, net of unearned income.

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The principal component of the lease payment is reflected as a reduction to the net investment in finance leases.

Revenue is not recognized when collection is not reasonably assured.

When collectability is not reasonably assured, the customer is placed on non-accrual status and revenue is recognized when cash payments are received.

Variable Interest Entities —The assessment of whether an entity is a VIE and the determination of whether to consolidate a VIE requires judgment.

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If a lessee is making monthly maintenance payments, we would typically be obligated to reimburse the lessee for costs they incur for heavy maintenance, overhaul or replacement of certain high-value components to the extent of maintenance payments received in respect of the specific maintenance event, usually shortly following the completion of the relevant work.

We record the portion of maintenance payments paid by the lessee that are expected to be reimbursed as maintenance deposit liabilities on the Consolidated Balance Sheet.

We record the portion of maintenance payments paid by the lessee that are expected to be reimbursed as maintenance deposit liabilities in the Consolidated Balance Sheets.

Reimbursements made to the lessee upon the receipt of evidence of qualifying maintenance work are recorded against the maintenance deposit liability.

In certain leases, we or the lessee may be obligated to make a payment to the other party at lease termination based on redelivery conditions stipulated at the inception of the lease.

In certain acquired leases, we or the lessee may be obligated to make a payment to the other party at lease termination based on redelivery conditions stipulated at the inception of the lease.

When the lessee is required to return the aircraft in an improved maintenance condition, we record a maintenance right asset, as a component of other assets, for the estimated value of the end-of-life maintenance payment at acquisition.

We recognize payments received as end-of-lease compensation adjustments, within lease revenue or as a reduction to the maintenance right asset, when payment is received or collectability is assured.

In the event we are required to make payments at the end of the lease for redelivery conditions, amounts are accrued as additional maintenance liability when we are obligated and can reasonably estimate such payment.

In the event we are required to make payments at the end of the lease for redelivery conditions, amounts are accrued as additional maintenance liability and expensed when we are obligated and can reasonably estimate such payment.

Property, Plant and Equipment, Leasing Equipment and Depreciation —Property, plant and equipment and leasing equipment are stated at cost (inclusive of capitalized acquisition costs, where applicable) and depreciated using the straight-line method, over estimated useful lives, to estimated residual values which are summarized as follows:

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The factors considered in estimating the undiscounted cash flows are impacted by changes in future periods due to changes in contracted lease rates, terminal service, and freight rail rates, residual values, economic conditions, technology, demand for a particular asset type and other factors.

With respect to our offshore segment, although we expect current market conditions to improve, if such conditions persist for an extended period of time, this could result in the impairment of some of our offshore vessels.

With respect to our offshore energy business, although we expect current market conditions to improve, if such conditions persist for an extended period of time, this could result in the impairment of some of our offshore vessels.

Goodwill —Goodwill includes the excess of the purchase price over the fair value of the net tangible and intangible assets associated with the acquisition of Jefferson Terminal.

The carrying amount of goodwill was approximately $122.7 million and $122.6 million as of December 31, 2020 and 2019, respectively.

The increase relates to our purchase of the remaining 50% interest in JGP Energy Partners LLC.

See Note 7 to the consolidated financial statements for additional details.

We review the carrying values of goodwill at least annually to assess impairment since these assets are not amortized.

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A qualitative analysis was not elected for the years ended December 31, 2020 or 2019.

The first step of an impairment assessment compares the fair value of a respective reporting unit with its carrying amount, including goodwill.

Beginning in 2020, we adopted new guidance regarding the testing and recognition of a goodwill impairment which prior to 2020 required two steps.

A goodwill impairment assessment compares the fair value of a respective reporting unit with its carrying amount, including goodwill.

The estimate of fair value of the respective reporting unit is based on the best information available as of the date of assessment, which primarily incorporates certain factors including our assumptions about operating results, business plans, income projections, anticipated future cash flows and market data.

If the estimated fair value of the reporting unit is less than the carrying amount, a second step must be completed in order to determine the amount of goodwill impairment that should be recorded, if any.

If the estimated fair value of the reporting unit is less than the carrying amount, a goodwill impairment is recorded to the extent of any goodwill recorded in the reporting unit.

We estimate the fair value of the reporting units using an income approach, specifically a discounted cash flow analysis.

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The estimates and assumptions used consider historical performance if indicative of future performance, and are consistent with the assumptions used in determining future profit plans for the reporting units.

We also utilize market valuation models and other financial ratios, which require us to make certain assumptions and estimates regarding the applicability of those models to our assets and businesses.

Although we believe the estimates of fair value are reasonable, the determination of certain valuation inputs is subject to management’s judgment.

Changes in these inputs, including as a result of events beyond our control, could materially affect the results of the impairment review.

If the forecasted cash flows of the Jefferson Terminal and Railroad reporting units or other key inputs are negatively revised in the future, the estimated fair value of the Jefferson Terminal and Railroad reporting units could be adversely impacted, potentially leading to an impairment in the future that could materially affect our operating results.

Specifically, as it relates to the Jefferson Terminal segment, forecasted revenue is dependent on the ramp up of volumes under current contracts and the acquisition of additional storage contracts for the heavy and light crude and refined products during 2020 subject to obtaining rail capacity for crude, permits for pipeline and movements in future oil spreads.

If the forecasted cash flows of the Jefferson Terminal reporting unit or other key inputs are negatively revised in the future, the estimated fair value of the Jefferson Terminal reporting unit could be adversely impacted, potentially leading to an impairment in the future that could materially affect our operating results.

The Jefferson Terminal segment forecasted revenue is dependent on the ramp up of volumes under current and expected future contracts for storage of heavy and light crude and refined products during 2021 and beyond subject to obtaining rail capacity for crude, expansion of refined product distribution to Mexico and movements in future oil spreads.

Jefferson Terminal was designed to reach a storage capacity of 21.7 million barrels, and 4.4 million of storage, or approximately 20.3% of capacity, is currently operational.

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and Canada, are expected to result in increased demand for storage on the U.S.

Although we do not have significant direct exposure to volatility of crude oil prices, changes in crude oil pricing that effect long term refining planned output could impact Jefferson Terminal operations.

Other assumptions utilized in our annual impairment analysis that are significant in determination of the fair value of the reporting unit include the discount rate utilized in our discounted cash flow analysis of 13.5% and our terminal growth rate of 2%.

Furthermore, development of both inbound and outbound pipelines to and from the Jefferson Terminal over the next year to two to years will affect our forecasted growth and therefore our estimated fair value.

We continue to expect the Jefferson Terminal segment to generate positive Adjusted EBITDA during 2020.

Although certain of our anticipated contracts or expected volumes from existing contracts for Jefferson Terminal have been delayed, we continue to believe our projected revenues are achievable and have not yet modified those projections based on ongoing negotiations with our customers and discussions with major pipeline companies.

Furthermore, both inbound and outbound pipelines projects are becoming fully operational early in 2021 to and from the Jefferson Terminal and will affect our forecasted growth and therefore our estimated fair value.

We expect the Jefferson Terminal segment to continue to generate positive Adjusted EBITDA during 2021.

Although certain of our anticipated contracts or expected volumes from existing contracts for Jefferson Terminal have been delayed, we continue to believe our projected revenues are achievable.

Further delays in executing these contracts or achieving our projections could adversely affect the fair value of the reporting unit.

However, strengthening macroeconomic conditions such as increased oil prices and the increasing spread between Western Canadian Crude and Western Texas Intermediate are better than we anticipated, and we remain positive for the outlook of Jefferson Terminal’s earnings potential.

For the years ended December 31, 2019, 2018, and 2017 there was no impairment of goodwill.

The impact of the COVID-19 global pandemic during 2020 certainly negatively affected refining volumes and therefore Jefferson Terminal crude throughput but we anticipate the impact to normalize over 2021 and ramp back to normal levels by 2022.

Furthermore, we anticipate strengthening macroeconomic demand for storage and the increasing spread between Western Canadian Crude and Western Texas Intermediate as Canadian crude pipeline apportionment increases and our pipeline connections become fully operational during 2021, we remain positive for the outlook of Jefferson Terminal’s earnings potential.

There were no impairments of goodwill for the years ended December 31, 2020, 2019, and 2018.

Income Taxes —A portion of our income earned by our corporate subsidiaries is subject to U.S.

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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 7. Management’s Discussion and Analysis