What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-04-30 compared with 2020-10-30 · 159 added, 254 removed, 348 unchanged (54% of the section changed)

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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 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.

As of September 30, 2020, we had total consolidated assets of $3.4 billion and total equity of $1.2 billion.

As of March 31, 2021, we had total consolidated assets of $3.6 billion and total equity of $1.1 billion.

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.

While the outbreak did not have a material impact on operating results on our Aviation Leasing business during the nine months ended September 30, 2020, and we have not yet seen a meaningful decline in the timing of lease payments, 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 September 30, 2020.

Market conditions due to the outbreak of COVID-19 resulted in asset impairment charges and a decline in our equipment leasing revenues during the three months ended March 31, 2021.

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 March 31, 2021;

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 $190.5 million as of September 30, 2020.

The value of these deposits was $175.6 million as of March 31, 2021.

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 IA.

Risk Factors—The current outbreak of the novel coronavirus (COVID-19) 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.

For additional detail, see Liquidity and Capital Resources and Part II, 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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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.

In December 2019, we completed the sale of substantially all of our railroad business, which was formerly reported as our Railroad segment.

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.

Additionally, in accordance with ASC 280, we assessed our reportable segments.

We 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 consists of equipment that support a railcar cleaning business.

Aviation Leasing Organizational Restructuring

In early 2020, we completed an organizational restructuring of the Aviation Leasing segment (“Aviation Restructuring”).

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 will be reported within the Aviation Leasing segment.

Prior periods have been restated for historical comparison.

See Note 16 to the consolidated financial statements for additional details.

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 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 consists 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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On December 27, 2017, SoftBank Group Corp.

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

(“SoftBank”) completed its acquisition of 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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Adjusted EBITDA (Non-GAAP)

The CODM utilizes Adjusted EBITDA as the key performance measure.

The chief operating decision maker (“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.

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 (loss) 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.

Comparison of the three and nine months ended September 30, 2020 and 2019

Comparison of the three months ended March 31, 2021 and 2020

The following table presents our consolidated results of operations:

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

Three Months Ended March 31, Change

(in thousands) 2021 2020

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Other (expense) income

Equity in losses of unconsolidated entities (2,501) (974) (1,527) (5,445) (1,527) (3,918)

(Loss) gain on sale of assets, net (1,114) 37,060 (38,174) (2,165) 61,400 (63,565)

Equity in earnings of unconsolidated entities 1,374 265 1,109

Gain (loss) on sale of assets, net 811 (1,819) 2,630

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

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Other income 181 33 148

Total other (expense) income (3,557) 37,338 (40,895) (12,181) 63,790 (75,971)

(Loss) income from continuing operations before income taxes (27,695) 20,608 (48,303) (51,662) 23,601 (75,263)

(Benefit from) provision for income taxes (2,486) 872 (3,358) (6,334) (1,189) (5,145)

Net (loss) income from continued operations (25,209) 19,736 (44,945) (45,328) 24,790 (70,118)

Total other income (expense) 2,651 (6,204) 8,855

Loss from continuing operations before income taxes (34,707) (4,489) (30,218)

Provision for (benefit from) income taxes 169 (98) 267

Net loss from continued operations (34,876) (4,391) (30,485)

Net income from discontinued operations, net of income taxes — 1,331 (1,331)

Net (loss) income (25,209) 20,676 (45,885) (43,997) 26,673 (70,670)

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

Continuing operations (3,876) (5,111) 1,235 (12,724) (13,051) 327

Discontinued operations — 116 (116) — 101 (101)

Net loss (34,876) (3,060) (31,816)

Net loss attributable to non-controlling interest in consolidated subsidiaries (4,961) (4,736) (225)

Dividends on preferred shares 4,625 4,539 86

Net (loss) income attributable to shareholders $ (25,958) $ 25,671 $ (51,629) $ (44,516) $ 39,623 $ (84,139)

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

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

Net loss attributable to shareholders $ (34,540) $ (2,863) $ (31,677)

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

Three Months Ended March 31, Change

(in thousands) 2021 2020

Net (loss) income attributable to shareholders from continuing operations $ (25,958) $ 24,847 $ (50,805) $ (45,847) $ 37,841 $ (83,688)

(Benefit from) provision for income taxes (2,486) 872 (3,358) (6,334) (1,189) (5,145)

Net loss attributable to shareholders from continuing operations $ (34,540) $ (4,194) $ (30,346)

Provision for (benefit from) income taxes 169 (98) 267

Equity-based compensation expense 1,114 291 823

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2,402 (413) 2,815

Equity in losses of unconsolidated entities 2,501 974 1,527 5,445 1,527 3,918

Equity in earnings of unconsolidated entities (1,374) (265) (1,109)

Non-controlling share of Adjusted EBITDA (3)

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(1) Includes the following items for the three months ended September 30, 2020 and 2019:

(i) depreciation and amortization expense of $42,626 and $43,265, (ii) lease intangible amortization of $953 and $1,072 and (iii) amortization for lease incentives of $8,953 and $5,648, respectively.

Includes the following items for the nine months ended September 30, 2020 and 2019:

(1) Includes the following items for the three months ended March 31, 2021 and 2020:

(i) depreciation and amortization expense of $44,535 and $42,197, (ii) lease intangible amortization of $752 and $1,132 and (iii) amortization for lease incentives of $7,356 and $5,735, respectively.

(2) Includes the following items for the three months ended September 30, 2020 and 2019:

(i) net loss of $(2,590) and $(1,096), (ii) interest expense of $367 and $30, (iii) depreciation and amortization expense of $1,389 and $265, (iv) acquisition and transaction expenses of $(79) and $0 and (v) changes in fair value of non-hedge derivatives of $1,033 and $0, respectively.

Includes the following items for the nine months ended September 30, 2020 and 2019:

(i) net loss of $(5,593) and $(1,793), (ii) interest expense of $848 and $101, (iii) depreciation and amortization expense of $3,797 and $797, (iv) acquisition and transaction expenses of $533 and $0 and (v) changes in fair value of non-hedge derivatives of $248 and $0, respectively.

(3) Includes the following items for the three months ended September 30, 2020 and 2019:

(i) equity-based compensation of $97 and $57, (ii) provision for income taxes of $1 and $12, (iii) interest expense of $322 and $813, (iv) depreciation and amortization expense of $1,535 and $1,261 and (v) changes in fair value of non-hedge derivative instruments of $0 and $785, respectively.

Includes the following items for the nine months ended September 30, 2020 and 2019:

(2) Includes the following items for the three months ended March 31, 2021 and 2020:

(i) net income of $1,180 and $223, (ii) interest expense of $187 and $35, (iii) depreciation and amortization expense of $1,912 and $962, (iv) acquisition and transaction expenses of $0 and $81 and (v) changes in fair value of non-hedge derivatives of $(877) and $(1,714), respectively.

(3) Includes the following items for the three months ended March 31, 2021 and 2020:

(i) equity-based compensation of $198 and $47, (ii) provision for income taxes of $13 and $28, (iii) interest expense of $281 and $720, (iv) depreciation and amortization expense of $1,811 and $1,524, (v) changes in fair value of non-hedge derivative instruments of $(274) and $38 and (vi) loss on extinguishment of debt of $0 and $993 respectively.

Comparison of the three months ended September 30, 2020 and 2019

Total revenues decreased $69.0 million primarily due to lower revenues of $48.8 million in the Jefferson Terminal segment and $19.8 million in the Aviation Leasing segment.

Total revenues decreased $35.7 million primarily due to lower revenues of $26.9 million in the Aviation Leasing segment and $14.0 million in the Jefferson Terminal segment, partially offset by higher revenues of $7.8 million in the Ports and Terminals segment.

Equipment Leasing

Lease income decreased $9.6 million, primarily due to an increase in aircraft redelivered and 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.

Maintenance revenue decreased $9.8 million primarily due to lower aircraft and engine utilization as a result of the COVID-19 pandemic, partially offset by the recognition of maintenance deposits due to the early redelivery of four aircraft.

Other revenue increased $2.7 million, which primarily reflects (i) an increase of $1.5 million in the Aviation Leasing segment due to an increase in end-of-lease redelivery compensation and (ii) an increase of $1.1 million in the offshore energy business related to victualling income as one of our vessels was on-hire in 2020 while it was off-hire in 2019.

Infrastructure

Crude marketing revenue decreased $50.4 million due to Jefferson Terminal exiting the crude marketing strategy in the fourth quarter of 2019.

Comparison of the nine months ended September 30, 2020 and 2019

Total revenues decreased $126.6 million due to lower revenues of $114.5 million in the Jefferson Terminal segment, $10.6 million in the Ports and Terminals segment and $7.0 million in the Aviation Leasing segment, partially offset by higher revenues of $5.5 million in Corporate and Other.

Equipment Leasing

Lease income decreased $17.1 million primarily due to an increase in aircraft redelivered and 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 $12.9 million, which primarily reflects (i) an increase of $9.9 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 $3.0 million in the offshore energy business related to victualling income as our vessels were on-hire longer in 2020 compared to 2019.

Maintenance revenue increased $2.1 million primarily due to the recognition of maintenance deposits due to the early redelivery of eleven aircraft, partially offset by lower aircraft and engine utilization as a result of the COVID-19 pandemic.

Maintenance revenue decreased $16.5 million, primarily due to the reasons mentioned above and lower aircraft and engine utilization as a result of the COVID-19 pandemic.

Other revenue decreased $3.7 million, primarily due to the settlement of an engine loss during the three months ended March 31, 2020.

Infrastructure

Crude marketing revenue decreased $132.2 million 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 $3.2 million, which primarily reflects (i) a decrease of $4.2 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”), partially offset by (ii) an increase of $1.4 million in our railcar cleaning business due to higher volumes.

Terminal services revenue increased $13.4 million which primarily reflects (i) an increase of $18.6 million due to increased activity and storage capacity at Jefferson Terminal, partially offset by (ii) a decrease of $5.2 million due to the Long Ridge Transaction.

Comparison of the three months ended September 30, 2020 and 2019

Total expenses decreased $61.6 million, primarily due to lower (i) operating expenses, (ii) acquisition and transaction expense, (iii) management fees and incentive allocation to affiliate and (iv) general and administrative expense, partially offset by higher (v) asset impairment and (vi) interest expense.

Operating expenses decreased $59.6 million, primarily due to a decrease in cost of sales of $55.6 million primarily due to Jefferson Terminal exiting the crude marketing strategy in the fourth quarter of 2019.

Acquisition and transaction expense decreased $2.9 million which primarily reflects a lower reimbursement to the Manager of $2.5 million due to fewer acquisitions in 2020 compared to 2019.

Management fees and incentive allocation to affiliate decreased $2.8 million, which reflects (i) lower incentive fees of $3.7 million due to the decrease in gains on sale of assets, net, partially offset by (ii) an increase of $0.9 million in the base management fee as our average total equity is higher in 2020 compared to 2019.

General and administrative expenses decreased $1.3 million primarily due to a lower reimbursement to the Manager.

Asset impairment increased $3.9 million due to an impairment charge in 2020 in the Aviation Leasing segment.

Crude marketing revenues decreased $8.2 million due to Jefferson Terminal exiting the crude marketing strategy in the fourth quarter of 2019.

Terminal services revenues decreased $6.0 million which primarily reflects lower volumes at Jefferson Terminal due to lower global oil demand related to COVID-19.

Other revenue increased $8.0 million, primarily due to an unrealized gain of $7.9 million recorded on butane forward purchase and sale contracts at Repauno.

Total expenses increased $3.4 million, primarily due to higher (i) interest expense, (ii) depreciation and amortization and (iii) asset impairment charges, partially offset by lower (iv) operating expenses, (v) acquisition and transaction expense and (vi) management fees and incentive allocation to affiliate.

Interest expense increased $10.1 million, primarily due to:

• an increase of $4.3 million in Corporate and Other which primarily reflects (i) an increase in our average outstanding debt due to the issuance of the 2027 Notes, partially offset by (ii) a decrease in interest expense related to the FTAI Pride Credit Agreement, which was repaid in full in March 2020;

• a decrease of $2.4 million at Jefferson Terminal due to the Jefferson Refinancing.

Comparison of the nine months ended September 30, 2020 and 2019

Total expenses decreased $127.3 million, primarily due to lower (i) operating expenses and (ii) management fees and incentive allocation to affiliate, partially offset by (iii) an asset impairment charge.

Operating expenses decreased $141.7 million, primarily due to decreases in:

• cost of sales of $137.5 million primarily due to Jefferson Terminal exiting the crude marketing strategy in the fourth quarter of 2019;

• facility operations of $4.1 million primarily due to the Long Ridge Transaction.

Management fees and incentive allocation to affiliate decreased $2.8 million, which reflects (i) lower incentive fees of $6.1 million due to the decrease in gains on sale of assets, net, partially offset by (ii) an increase of $3.3 million in the base management fee as our average total equity is higher in 2020 compared to 2019.

The above decreases were partially offset by an asset impairment charge of $14.4 million in 2020 in the Aviation Leasing segment.

Other (expense) income

Total other expense increased $40.9 million during the three months ended September 30, 2020, which primarily reflects (i) a decrease of $38.2 million in gain on sale of assets, net as we had more asset sales in 2019 compared to 2020 and (ii) an increase of $1.5 million in equity in losses of unconsolidated entities.

Total other expense increased $76.0 million during the nine months ended September 30, 2020, which primarily reflects (i) a decrease of $63.6 million in gain on sale of assets, net as we had more asset sales in 2019 compared to 2020, (ii) a loss on extinguishment of debt of $4.7 million due to the Jefferson Refinancing, (iii) an increase of $3.9 million in equity in losses of unconsolidated entities and (iv) a decrease in other income of $3.4 million primarily due to the Long Ridge Transaction.

• an increase of $12.5 million in Corporate and Other which reflects an increase in the average outstanding debt of approximately $521.5 million due to increases in (i) the Senior Notes due 2025 of $407.5 million, (ii) the Senior Notes due 2027 of $400.0 million, (iii) the Revolving Credit Facility (as defined below in Liquidity and Capital Resources) of $36.7 million, partially offset by decreases in (iv) the Senior Notes due 2022 of $296.5 million and (v) the FTAI Pride Credit Agreement of $24.0 million, which was repaid in full in March 2020;

• a decrease of $2.2 million at Jefferson Terminal due a debt refinancing in the first quarter of 2020 which lowered their average interest rate.

Depreciation and amortization increased $2.3 million primarily due to assets placed into service at Repauno and Jefferson Terminal.

Asset impairment increased $2.1 million due to an impairment charge in 2021 in the Aviation Leasing segment.

Operating expenses decreased $8.4 million which primarily reflects decreases in (i) cost of sales of $8.4 million primarily due to Jefferson Terminal exiting the crude marketing strategy in the fourth quarter of 2019 and (ii) facility operations of $1.6 million primarily due to lower volumes at Jefferson Terminal.

Acquisition and transaction expense decreased $1.6 million which primarily reflects lower compensation and related costs associated with the acquisition of aviation leasing equipment.

Management fees and incentive allocation to affiliate decreased $0.8 million, which reflects a decrease in the base management fee as our average total equity is lower in 2021 compared to 2020.

Other income (expense)

Total other income increased $8.9 million during the three months ended March 31, 2021, which primarily reflects (i) a loss on extinguishment of debt of $4.7 million in 2020 and (ii) an increase of $2.6 million in gain on sale of assets, net in the Aviation Leasing segment.

Net (loss) income from continuing operations

Net income from continuing operations decreased $44.9 million and $70.1 million during the three and nine months ended September 30, 2020, respectively, primarily due to the changes noted above.

Net income from continuing operations decreased $30.5 million during the three months ended March 31, 2021, primarily due to the changes noted above.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA decreased $53.4 million and $72.4 million during the three and nine months ended September 30, 2020, respectively, primarily due to the changes noted above.

Adjusted EBITDA decreased $24.8 million during the three months ended March 31, 2021, primarily due to the changes noted above.

Aviation Leasing Segment

As of September 30, 2020, in our Aviation Leasing segment, we own and manage 272 aviation assets, consisting of 79 commercial aircraft and 193 engines.

As of September 30, 2020, 70 of our commercial aircraft and 110 of our engines were leased to operators or other third parties.

As of March 31, 2021, in our Aviation Leasing segment, we own and manage 279 aviation assets, consisting of 80 commercial aircraft and 199 engines.

As of March 31, 2021, 67 of our commercial aircraft and 114 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 71% utilized during the three months ended September 30, 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 aviation equipment was approximately 73% utilized during the three months ended March 31, 2021, 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 38 months, and our engines currently on-lease have an average remaining lease term of 20 months.

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Transfers — (4) (4)

Assets at September 30, 2020 15 64 79

Assets at March 31, 2021 15 65 80

Assets at January 1, 2021 88 98 186

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Transfers — 6 6

Assets at September 30, 2020 93 100 193

Assets at March 31, 2021 85 114 199

The following table presents our results of operations:

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

Three Months Ended March 31, Change

(in thousands) 2021 2020

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Equity in losses of unconsolidated entities (340) (591) 251

(Loss) gain on sale of assets, net (1,114) 37,060 (38,174) (2,158) 61,388 (63,546)

Gain (loss) on sale of assets, net 811 (1,819) 2,630

Interest income 267 12 255

Total other (expense) income (1,320) 36,206 (37,526) (3,520) 60,145 (63,665)

Total other income (expense) 738 (2,398) 3,136

Income before income taxes 16,730 41,168 (24,438)

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

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

Three Months Ended March 31, Change

(in thousands) 2021 2020

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________________________________________________________

(1) Includes the following items for the three months ended September 30, 2020 and 2019:

(i) depreciation expense of $33,014 and $33,911, (ii) lease intangible amortization of $953 and $1,072 and (iii) amortization for lease incentives of $8,953 and $5,648, respectively.

Includes the following items for the nine months ended September 30, 2020 and 2019:

(1) Includes the following items for the three months ended March 31, 2021 and 2020:

(i) depreciation expense of $32,563 and $32,631, (ii) lease intangible amortization of $752 and $1,132 and (iii) amortization for lease incentives of $7,356 and $5,735, respectively.

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

Comparison of the three months ended September 30, 2020 and 2019

(2) Includes the following items for the three months ended March 31, 2021 and 2020:

(i) net loss of $(340) and $(591) and (ii) depreciation and amortization of $32 and $0, respectively.

Total revenue decreased $26.9 million driven by lower lease income and maintenance revenue.

• Lease income decreased $7.2 million primarily due to an increase in aircraft redelivered and 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.

• Maintenance revenue decreased $9.8 million primarily due to lower aircraft and engine utilization as a result of the COVID-19 pandemic, partially offset the recognition of maintenance deposits due to the early redelivery of four aircraft.

• Other revenue increased $1.5 million primarily due to the increase in end-of-lease redelivery compensation.

Comparison of the nine months ended September 30, 2020 and 2019

Total revenue decreased $7.0 million driven by lower lease income.

• Lease income decreased $18.2 million primarily due to an increase in aircraft redelivered and the number of customers placed on non-accrual status, partially offset by an increase in the number of aircraft placed on lease.

• Maintenance revenue increased $2.1 million primarily due to the recognition of maintenance deposits due to the early redelivery of eleven aircraft, partially offset by lower aircraft and engine utilization as a result of the COVID-19 pandemic.

• Other revenue increased $9.9 million primarily due to the increase in end-of-lease redelivery compensation and settlement of an engine loss.

Comparison of the three months ended September 30, 2020 and 2019

Total expenses increased $5.3 million primarily due to an increase in asset impairment, acquisition and transaction expenses and operating expenses partially offset by a decrease in depreciation and amortization expense.

• Asset impairment increased $3.9 million for the adjustment of the carrying value of leasing equipment to fair value, net of redelivery compensation.

• Acquisition and transaction expense increased $1.0 million driven by additional compensation and related costs associated with the acquisition of aviation leasing equipment.

• Depreciation and amortization expense decreased $0.9 million driven by a decrease in the number of engines on lease and an increase in the number of aircraft redelivered and parted out into our engine leasing pool, partially offset by additional aircraft owned and on lease.

• Operating expenses increased $1.3 million primarily as a result of an increase in professional fees, shipping and storage fees, partially offset by a decrease in other operating expenses.

Comparison of the nine months ended September 30, 2020 and 2019

Total expenses increased $18.7 million primarily due to an increase in asset impairment, depreciation and amortization expense and acquisition and transaction expenses, partially offset by a decrease in operating expenses.

• Maintenance revenue decreased $16.5 million primarily due to the reasons mentioned above and lower aircraft and engine utilization as a result of the COVID-19 pandemic.

• Other revenue decreased $3.2 million primarily due to the settlement of an engine loss during the three months ended March 31, 2020.

Total expenses increased $0.7 million, primarily due to an increase in asset impairment and operating expenses, partially offset by a decrease in acquisition and transaction expenses.

• Asset impairment increased $2.1 million for the adjustment of the carrying value of leasing equipment to fair value, net of redelivery compensation.

• Acquisition and transaction expense increased $3.8 million driven by additional compensation and related costs associated with the acquisition of aviation leasing equipment.

• Depreciation and amortization expense increased $0.7 million driven by additional aircraft owned and on lease, partially offset by a decrease in the number of engines on lease and additional aircraft redelivered and parted out into our engine leasing pool.

• Operating expenses decreased $0.2 million primarily as a result of a decrease in bad debt expense and repairs and maintenance expenses, partially offset by an increase in professional fees, compensation and benefit and other operating expenses.

Other (expense) income

Total other income decreased $37.5 million during the three months ended September 30, 2020, primarily due to a decrease of $38.2 million in gain on the sale of leasing equipment in 2020, partially offset by a decrease of $0.6 million in Aviation Leasing’s proportionate share of the unconsolidated entities’ net loss.

Total other income decreased $63.7 million during the nine months ended September 30, 2020, primarily due to a decrease of $63.5 million in gain on the sale of leasing equipment in 2020 and an increase of $0.1 million in Aviation Leasing’s proportionate share of the unconsolidated entities’ net loss.

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

• Operating expenses increased $0.2 million primarily as a result of an increase in shipping and storage fees, professional fees and other operating expenses, partially offset by a decrease in bad debt expense.

• Acquisition and transaction expense decreased $1.5 million driven by lower compensation and related costs associated with the acquisition of aviation leasing equipment.

Other income (expense)

Total other income increased $3.1 million primarily due to an increase of $2.6 million in gain on the sale of leasing equipment in 2021, an increase of $0.3 million in interest income and a decrease of $0.3 million in Aviation Leasing’s proportionate share of the unconsolidated entities’ net loss.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA decreased $55.4 million and $71.1 million during the three and nine months ended September 30, 2020, respectively, primarily due to the changes noted above.

Adjusted EBITDA decreased $22.7 million primarily due to the changes noted above.

Jefferson Terminal Segment

The following table presents our results of operations:

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

Three Months Ended March 31, Change

(in thousands) 2021 2020

9 unchanged sentences

Other (expense) income

Equity in losses of unconsolidated entities — (162) 162 — (290) 290

(Loss) gain on sale of assets, net — — — (7) 12 (19)

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

8 unchanged sentences

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

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

Three Months Ended March 31, Change

(in thousands) 2021 2020

10 unchanged sentences

Pro-rata share of Adjusted EBITDA from unconsolidated entities — — —

— 103 (103) — 434 (434)

Equity in (earnings) losses of unconsolidated entities — 162 (162) — 290 (290)

Equity in earnings of unconsolidated entities — — —

Non-controlling share of Adjusted EBITDA (1)

2 unchanged sentences

________________________________________________________

(1) Includes the following items for the three and nine months ended September 30, 2019:

(i) net loss of $(162) and $(363) and (ii) depreciation and amortization expense of $265 and $797, respectively.

(2) Includes the following items for the three months ended September 30, 2020 and 2019:

(i) equity-based compensation of $90 and $57, (ii) provision for income taxes of $1 and $12, (iii) interest expense of $312 and $825, (iv) changes in fair value of non-hedge derivative instruments of $0 and $785 and (v) depreciation and amortization expense of $1,522 and $1,199, respectively.

Includes the following items for the nine months ended September 30, 2020 and 2019:

(1) Includes the following items for the three months ended March 31, 2021 and 2020:

(i) equity-based compensation of $189 and $45, (ii) provision for income taxes of $13 and $28, (iii) interest expense of $271 and $720, (iv) changes in fair value of non-hedge derivative instruments of $0 and $38, (v) depreciation and amortization expense of $1,735 and $1,517 and (vi) loss on extinguishment of debt of $0 and $993, respectively.

Total revenues decreased $48.8 million during the three months ended September 30, 2020, primarily due to (i) a decrease in crude marketing revenue of $50.4 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 $1.8 million due to increased activity and storage capacity.

Total revenues decreased $114.5 million during the nine months ended September 30, 2020, primarily due to (i) a decrease in crude marketing revenue of $132.2 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 $18.6 million due to increased activity and storage capacity.

Total expenses decreased $61.0 million during the three months ended September 30, 2020, which reflects (i) a decrease in operating expenses of $60.1 million primarily due to Jefferson Terminal exiting the crude marketing strategy in the fourth quarter of 2019, (ii) a decrease in interest expense of $2.4 million due to the Jefferson Refinancing, partially offset by (iii) an increase in depreciation and amortization of $1.5 million due to additional assets being placed into service.

Total expenses decreased $139.4 million during the nine months ended September 30, 2020, which reflects (i) a decrease in operating expenses of $139.5 million primarily due to Jefferson Terminal exiting the crude marketing strategy in the fourth quarter of 2019, (ii) a decrease in interest expense of $5.2 million due to the Jefferson Refinancing, partially offset by (iii) an increase in depreciation and amortization of $5.2 million due to additional assets being placed into service.

Other (expense) income

Total other expense increased $5.1 million during the nine months ended September 30, 2020, which primarily reflects a loss on extinguishment of debt of $4.7 million due to the Jefferson Refinancing.

Total revenues decreased $14.0 million primarily due to decreases in (i) crude marketing revenues of $8.2 million due to Jefferson Terminal exiting the crude marketing strategy in the fourth quarter of 2019 and (ii) terminal services revenue of $6.1 million which primarily reflects lower volumes due to lower global oil demand related to COVID-19.

Total expenses decreased $12.0 million which reflects:

• a decrease in operating expenses of $10.2 million, primarily due to (i) Jefferson Terminal exiting the crude marketing strategy in the fourth quarter of 2019 and (ii) a decrease in facility operations expense due to lower volumes;

• a decrease in interest expense of $2.2 million due to a debt refinancing in the first quarter of 2020 which lowered the average interest rate;

• an increase in depreciation and amortization of $0.5 million due to additional assets being placed into service.

Other income (expense)

Total other income increased $4.9 million which primarily reflects a loss on extinguishment of debt of $4.7 million in 2020.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA increased $6.5 million and $17.9 million during the three and nine months ended September 30, 2020, respectively, primarily due to the changes noted above.

Adjusted EBITDA decreased $1.7 million primarily due to the changes noted above.

Ports and Terminals

The following table presents our results of operations:

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

Three Months Ended March 31, Change

(in thousands) 2021 2020

Infrastructure revenues

Lease income $ — $ 249 $ (249) $ — $ 869 $ (869)

Terminal services revenues $ 132 $ — $ 132

6 unchanged sentences

Total expenses 5,592 3,551 2,041

Other (expense) income

Equity in losses of unconsolidated entities (2,285) — (2,285) (3,961) — (3,961)

Interest income — 47 (47) — 241 (241)

Other (expense) income — (644) 644 — 1,873 (1,873)

Total other (expense) income (2,285) (597) (1,688) (3,961) 2,114 (6,075)

Loss before income taxes (4,433) (3,983) (450) (11,972) (7,148) (4,824)

Benefit from income taxes (656) — (656) (1,534) — (1,534)

Net loss (3,777) (3,983) 206 (10,438) (7,148) (3,290)

Net loss attributable to non-controlling interest in consolidated subsidiaries (67) (80) 13 (234) (166) (68)

Net loss attributable to shareholders $ (3,710) $ (3,903) $ 193 $ (10,204) $ (6,982) $ (3,222)

Equity in earnings of unconsolidated entities 1,542 906 636

Total other income 1,542 906 636

Income (loss) before income taxes 4,046 (2,331) 6,377

Provision for (benefit from) income taxes 154 (281) 435

Net income (loss) 3,892 (2,050) 5,942

Net income (loss) attributable to non-controlling interest in consolidated subsidiaries 55 (75) 130

Net income (loss) attributable to shareholders $ 3,837 $ (1,975) $ 5,812

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

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

Three Months Ended March 31, Change

(in thousands) 2021 2020

Net loss attributable to shareholders $ (3,710) $ (3,903) $ 193 $ (10,204) $ (6,982) $ (3,222)

Benefit from income taxes (656) — (656) (1,534) — (1,534)

Net income (loss) attributable to shareholders $ 3,837 $ (1,975) $ 5,812

Provision for (benefit from) income taxes 154 (281) 435

Equity-based compensation expense 273 76 197

8 unchanged sentences

2,705 228 2,477

Equity in losses of unconsolidated entities 2,285 — 2,285 3,961 — 3,961

Equity in earnings of unconsolidated entities (1,542) (906) (636)

Non-controlling share of Adjusted EBITDA (2)

(30) 44 (74) (91) (87) (4)

Adjusted EBITDA (non-GAAP) $ 132 $ (1,316) $ 1,448

________________________________________________________

(1) Includes the following items for the three and nine months ended September 30, 2020:

(i) net loss of $(2,285) and $(3,961), (ii) interest expense of $337 and $759, (iii) depreciation and amortization expense of $1,389 and $3,797, (iv) acquisition and transaction expenses of $(79) and $533 and (v) changes in fair value of non-hedge derivative instruments of $1,033 and $248, respectively.

(2) Includes the following items for the three months ended September 30, 2020 and 2019:

(i) equity-based compensation of $7 and $0, (ii) interest expense of $10 and $(41) and (iii) depreciation and amortization expense of $13 and $(3), respectively.

Includes the following items for the nine months ended September 30, 2020 and 2019:

(i) equity-based compensation of $16 and $4, (ii) interest expense of $36 and $71 and (iii) depreciation and amortization expense of $39 and $12, respectively.

Total revenue decreased $2.9 million during the three months ended September 30, 2020, primarily due to the Long Ridge Transaction .

Total revenue decreased $10.6 million during the nine months ended September 30, 2020, primarily due to (i) the Long Ridge Transaction and (ii) a decrease of $0.4 million in butane sales at Repauno.

Total expenses decreased $4.2 million during the three months ended September 30, 2020, which primarily reflects lower operating expenses of $2.7 million and depreciation and amortization of $1.3 million, primarily due to the Long Ridge Transaction.

Total expenses decreased $11.8 million during the nine months ended September 30, 2020, which primarily reflects lower operating expenses of $8.5 million and depreciation and amortization of $4.1 million, primarily due to the Long Ridge Transaction.

This was offset by an increase in acquisition and transaction expenses relating to the Long Ridge joint venture of $0.8 million.

Other (expense) income

Total other income decreased $1.7 million during the three months ended September 30, 2020, primarily due to equity in losses of $2.3 million from Long Ridge and $0.6 million in unrealized losses on power swap derivatives in 2019, which was deconsolidated with the Long Ridge Transaction in 2020.

Total other income decreased $6.1 million during the nine months ended September 30, 2020, respectively, primarily due to equity in losses of $3.9 million from Long Ridge and $1.9 million in unrealized gains on power swap derivatives in 2019, which was deconsolidated with the Long Ridge Transaction in 2020.

(1) Includes the following items for the three months ended March 31, 2021 and 2020:

(i) net income of $1,542 and $894, (ii) interest expense of $160 and $5, (iii) depreciation and amortization expense of $1,880 and $962, (iv) acquisition and transaction expenses of $0 and $81 and (v) changes in fair value of non-hedge derivative instruments of $(877) and $(1,714), respectively.

(2) Includes the following items for the three months ended March 31, 2021 and 2020:

(i) equity-based compensation of $9 and $2, (ii) interest expense of $10 and $0, (iii) depreciation and amortization expense of $76 and $7 and (iv) changes in fair value of non-hedge derivative instruments of $(274) and $0, respectively.

Total revenue increased $7.8 million primarily due to an unrealized gain of $7.9 million recorded on butane forward purchase and sale contracts at Repauno.

Total expenses increased $2.0 million which reflects higher (i) depreciation and amortization of $1.8 million at Repauno due to additional assets placed into service and (ii) operating expenses of $1.1 million, primarily due to higher compensation and related costs at Repauno, partially offset by lower (iii) acquisition and transaction expense of $0.8 million at Long Ridge due to lower professional fees.

Total other income increased $0.6 million due to an increase in equity in earnings at Long Ridge .

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA increased $0.1 million and decreased $0.8 million during the three and nine months ended September 30, 2020, respectively, primarily due to the changes noted above.

Adjusted EBITDA increased $1.4 million primarily due to the changes noted above.

Corporate and Other

The following table presents our results of operations:

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

Three Months Ended March 31, Change

(in thousands) 2021 2020

17 unchanged sentences

Interest income 18 7 11

Other income — 1,003 (1,003) — 1,003 (1,003)

Total other income (expense) 190 (43) 233

6 unchanged sentences

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

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

Three Months Ended March 31, Change

(in thousands) 2021 2020

10 unchanged sentences

Pro-rata share of Adjusted EBITDA from unconsolidated entities (1)

(28) (19) (9) (111) (1) (110)

Equity in losses (earnings) of unconsolidated entities (172) 50 (222)

Non-controlling share of Adjusted EBITDA — — —

— (94) 94 — (268) 268

Adjusted EBITDA (non-GAAP) $ (16,535) $ (14,648) $ (1,887)

________________________________________________________

(1) Includes the following items for the three months ended September 30, 2020 and 2019:

(i) net loss of $(58) and $(49) and (ii) interest expense of $30 and $30, respectively.

Includes the following items for the nine months ended September 30, 2020 and 2019:

(1) Includes the following items for the three months ended March 31, 2021 and 2020:

(i) net loss of $(22) and $(80) and (ii) interest expense of $27 and $30, respectively.

(2) Includes the following items for the three and nine months ended September 30, 2019:

(i) interest expense of $29 and $88 and (ii) depreciation and amortization expense of $65 and $180, respectively.

Total revenues increased $2.6 million during the three months ended September 30, 2020, which primarily reflects an increase of $1.2 million and $1.1 million in lease income and other revenue, respectively, as one of our vessels was on-hire in 2020 while it was off-hire in 2019.

Total revenues increased $5.5 million during the nine months ended September 30, 2020, which primarily reflects (i) an increase of $3.0 million in other revenue related to victualling income in the offshore energy business as our vessels were on-hire longer in 2020 compared to 2019, (ii) an increase of $1.4 million in other revenue due to higher volume in our railcar cleaning business and (iii) an increase of $1.1 million in lease income as our vessels were on-hire longer in 2020 compared to 2019.

Comparison of the three months ended September 30, 2020 and 2019

Total expenses decreased $1.8 million primarily due to lower (i) acquisition and transaction expense, (ii) management fees and incentive allocation to affiliate and (iii) general and administrative expenses, partially offset by higher (iv) interest expense and (v) operating expenses.

Acquisition and transaction expense decreased $3.9 million which primarily reflects a lower reimbursement to the Manager of $2.5 million and lower professional fees of $1.2 million due to fewer acquisitions in 2020 compared to 2019.

Management fees and incentive allocation to affiliate decreased $2.8 million due to (i) a decrease of $3.7 million in incentive fees due to lower gains on sale in 2020 compared to 2019, partially offset by (ii) an increase of $0.9 million in base management fees as our average total equity is higher in 2020 compared to 2019.

General and administrative expense decreased $1.3 million which primarily reflects a lower reimbursement to the Manager.

Interest expense increased $4.3 million which reflects an increase in our average outstanding debt of approximately $287.4 million, which primarily consists of (i) an increase of $400.0 million for the 2027 Notes, (ii) a decrease of $70.0 million for the Revolving Credit Facility and (iii) a decrease of $44.1 million for the FTAI Pride Credit Agreement, which was repaid in full in March 2020.

Operating expenses increased $1.9 million which primarily reflects higher (i) project costs of $1.0 million in our offshore energy business and (ii) facility operations and compensation and benefits of $0.6 million in our railcar cleaning business due to higher volumes.

Comparison of the nine months ended September 30, 2020 and 2019

Total expenses increased $5.2 million primarily due to higher (i) operating expenses and (ii) interest expense, partially offset by lower (iii) acquisition and transaction expense and (iii) management fees and incentive allocation to affiliate.

Operating expenses increased $6.4 million which primarily reflects higher (i) project costs of $2.5 million in our offshore energy business, (ii) repairs and maintenance of $1.1 million in our offshore energy business, (iii) compensation and benefits of $0.7 million in our railcar cleaning business due to higher volumes and (iv) vessel operating and general and administrative expenses of $0.7 million.

Interest expense increased $5.5 million which reflects an increase in our average outstanding debt of approximately $138.4 million, which primarily consists of (i) an increase of $133.3 million for the 2027 Notes, (ii) an increase of $66.7 million for the 2025 Notes, (iii) an increase of $17.2 million for the 2022 Notes, (iv) a decrease of $41.1 million for the Revolving Credit Facility and (v) a decrease of $37.7 million for the FTAI Pride Credit Agreement, which was repaid in March 2020.

Acquisition and transaction expense decreased $4.5 million which primarily reflects a lower reimbursement to the Manager of $3.3 million and lower professional fees of $1.0 million due to fewer acquisitions in 2020 compared to 2019.

Management fees and incentive allocation to affiliate decreased $2.8 million due to (i) a decrease of $6.1 million in incentive fees due to lower gains on sale in 2020 compared to 2019, partially offset by (ii) an increase of $3.3 million in base management fees as our average total equity is higher in 2020 compared to 2019.

Other income (expense)

Other income decreased $1.0 million and $1.1 million during the three and nine months ended September 30, 2020, respectively, primarily due to a gain of approximately $1.0 million from casualty insurance proceeds received in 2019 on one of our vessels.

Equipment Leasing

Total revenues decreased $3.0 million in the offshore energy business as one of our vessels was off-hire in 2021 while it was on-hire in 2020.

Infrastructure

Total revenues increased $0.4 million due to higher volumes in our railcar cleaning business.

Total expenses increased $12.6 million primarily due to higher (i) interest expense and (ii) acquisition and transaction expense, partially offset by lower (iii) management fees and incentive allocation to affiliate.

Interest expense increased $12.5 million, which reflects an increase in the average outstanding debt of approximately $521.5 million due to increases in (i) the Senior Notes due 2025 of $407.5 million, (ii) the Senior Notes due 2027 of $400.0 million, (iii) the Revolving Credit Facility of $36.7 million, partially offset by decreases in (iv) the Senior Notes due 2022 of $296.5 million and (v) the FTAI Pride Credit Agreement of $24.0 million, which was repaid in full in March 2020.

Acquisition and transaction expense increased $0.8 million, primarily due to higher professional fees.

Management fees and incentive allocation to affiliate decreased $0.8 million, which reflects a decrease in the base management fee as our average total equity is lower in 2021 compared to 2020.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA decreased $4.5 million and $18.3 million during the three and nine months ended September 30, 2020, respectively, primarily due to the changes noted above.

Adjusted EBITDA decreased $1.9 million primarily due to the changes noted above.

Liquidity and Capital Resources

On July 28, 2020, we issued $400 million aggregate principal amount of senior unsecured notes due 2027 (the “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 April 12, 2021, we issued $500 million aggregate principal amount of senior unsecured notes due 2028 (see Note 20 to the consolidated financial statements).

On May 7, 2021, we intend to use a portion of the net proceeds to redeem in full the Senior Notes due 2022, which total $400 million aggregate principal plus accrued and unpaid interest.

On June 16, 2017, we entered in a revolving credit facility (the “Revolving Credit Facility”).

During April 2021, we repaid a net $100 million of outstanding borrowings under the Revolving Credit Facility.

Following the repayment, we have additional borrowing capacity of $200 million under the Revolving Credit Facility.

Additionally, 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.

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.

1 unchanged sentence

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

• Cash used for the purpose of making investments was $470.3 million and $590.7 million during the nine months ended September 30, 2020 and 2019, respectively.

• Dividends to shareholders and holders of eligible participating securities were $98.4 million and $85.2 million during the nine months ended September 30, 2020 and 2019, respectively.

• Cash used for the purpose of making investments was $165.0 million and $122.4 million during the three months ended March 31, 2021 and 2020, respectively.

• Dividends to shareholders and holders of eligible participating securities were $33.0 million and $32.9 million during the three months ended March 31, 2021 and 2020, respectively.

• Uses of liquidity associated with our operating expenses are captured on a net basis in our cash flows from operating activities.

1 unchanged sentence

Our principal sources of liquidity to fund these uses have been and continue to be (i) revenues from our transportation infrastructure and equipment assets (including finance lease collections and maintenance reserve collections) net of operating expenses, (ii) proceeds from borrowings or the issuance of securities and (iii) proceeds from asset sales.

• Cash flows from operating activities, plus the principal collections on finance leases and maintenance reserve collections were $60.5 million and $155.2 million during the nine months ended September 30, 2020 and 2019, respectively.

• During the nine months ended September 30, 2020, additional borrowings were obtained in connection with the (i) 2027 Notes of $400.0 million, (ii) Series 2020 Bonds of $264.0 million and (iii) Revolving Credit Facility of $220.0 million.

We made total principal repayments of $496.0 million relating to the Revolving Credit Facility, Series 2016 Bonds, Series 2012 Bonds, Jefferson Revolver and FTAI Pride Credit Agreement.

During the nine months ended September 30, 2019, additional borrowings were obtained in connection with the (i) 2025 Notes of $148.7 million, (ii) 2022 Notes of $147.8 million, (iii) Revolving Credit Facility of $105.0 million, (iv) LREG Credit Agreement of $104.4 million, (v) DRP Revolver of $25.0 million, (vi) Jefferson Revolver of $23.2 million and (vii) CMQR Credit Agreement of $15.6 million.

We made total principal repayments of $218.9 million, primarily relating to the Revolving Credit Facility, Jefferson Revolver and CMQR Credit Agreement.

• Proceeds from the sale of assets were $53.7 million and $166.3 million during the nine months ended September 30, 2020 and 2019, respectively.

• Proceeds from the issuance of preferred shares, net of underwriter’s discount and issuance costs were $20.2 million and $82.9 million during the nine months ended September 30, 2020 and 2019, respectively.

• Cash flows (used in) provided from operating activities, plus the principal collections on finance leases and maintenance reserve collections were $(39.8) million and $2.1 million during the three months ended March 31, 2021 and 2020, respectively.

• During the three months ended March 31, 2021, additional borrowings were obtained in connection with the (i) Revolving Credit Facility of $150.0 million and (ii) EB-5 Loan Agreement of $21.6 million.

During the three months ended March 31, 2020, additional borrowings were obtained in connection with the (i) Series 2020 Bonds of $264.0 million and (ii) Revolving Credit Facility of $40.0 million.

We made total principal repayments of $276.0 million relating to the Series 2016 Bonds, Series 2012 Bonds, Jefferson Revolver and FTAI Pride Credit Agreement.

• Proceeds from the sale of assets were $4.6 million and $28.6 million during the three months ended March 31, 2021 and 2020, respectively.

• Proceeds from the issuance of preferred shares, net of underwriter’s discount and issuance costs were $101.2 million during the three months ended March 31, 2021.

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.

Historical Cash Flow

Comparison of the nine months ended September 30, 2020 and 2019

The following table compares the historical cash flow for the nine months ended September 30, 2020 and 2019:

Nine Months Ended September 30,

Comparison of the three months ended March 31, 2021 and 2020

The following table compares the historical cash flow for the three months ended March 31, 2021 and 2020:

Three Months Ended March 31,

(in thousands) 2021 2020

Cash Flow Data:

Net cash provided by operating activities $ 28,393 $ 92,713

Net cash used in operating activities $ (48,932) $ (11,806)

Net cash used in investing activities (154,418) (91,125)

Net cash provided by financing activities 299,689 346,887

Net cash provided by operating activities decreased $64.3 million, which primarily reflects (i) changes in accounts payable and accrued liabilities, management fees payable, accounts receivable, and other assets and other liabilities of $60.3 million, primarily due to the timing of payments and (ii) a decrease in net income of $70.7 million.

These decreases were partially offset by changes in (iii) gain on sale of assets, net of $63.6 million and (iv) asset impairment of $14.4 million.

Net cash used in investing activities decreased $2.7 million primarily due to (i) a decrease in purchase deposits for acquisitions of $40.5 million, (ii) a decrease in acquisitions of property, plant and equipment of $34.0 million and (iii) a decrease in acquisitions of leasing equipment of $34.6 million, partially offset by (iv) lower proceeds from the sale of leasing equipment of $112.6 million.

Net cash provided by financing activities decreased $47.2 million primarily due to (i) an increase in repayments of debt of $277.1 million, (ii) a decrease in proceeds from the issuance of preferred shares of $62.7 million and (iii) a decrease in receipt of maintenance deposits of $24.3 million, partially offset by (iv) an increase in proceeds from debt of $315.3 million.

Net cash provided by (used in) financing activities 235,408 (16,198)

Net cash used in operating activities increased $37.1 million, which reflects an increase in our net loss of $31.8 million primarily due to lower total revenues.

Net cash used in investing activities increased $63.3 million, primarily due to (i) an increase in acquisitions of leasing equipment of $57.2 million and (ii) lower proceeds from the sale of leasing equipment of $24.0 million, partially offset by (iii) a decrease in acquisitions of property, plant and equipment of $21.1 million.

Net cash provided by financing activities increased $251.6 million, primarily due to (i) a decrease in repayments of debt of $276.0 million and (ii) an increase in proceeds from the issuance of preferred shares of $101.4 million, partially offset by (iii) a decrease in proceeds from debt of $132.4 million.

We use Funds Available for Distribution (“FAD”) in evaluating our ability to meet our stated dividend policy.

5 unchanged sentences

The following table sets forth a reconciliation of Net Cash Provided by Operating Activities to FAD:

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands) 2021 2020

Net Cash Provided by Operating Activities $ 28,393 $ 92,713

Net Cash Used in Operating Activities $ (48,932) $ (11,806)

Principal Collections on Finance Leases 395 320

6 unchanged sentences

________________________________________________________

(1) Required payments on debt obligations for the nine months ended September 30, 2020 exclude repayments of $220,000 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 nine months ended September 30, 2019 exclude repayments of $175,000 for the Revolving Credit Facility and $14,421 for the CMQR Credit Agreement.

(1) Required payments on debt obligations for the three months ended March 31, 2020 exclude repayments of $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.

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.

5 unchanged sentences

• While FAD reflects the cash inflows from sale of certain assets, FAD does not reflect the cash outflows to acquire assets as we rely on alternative sources of liquidity to fund such purchases.

• FAD does not reflect expenditures related to capital expenditures, acquisitions and other investments as we have multiple sources of liquidity and intends to fund these expenditures with future incurrences of indebtedness, additional capital contributions and/or future issuances of equity.

• FAD does not reflect expenditures related to capital expenditures, acquisitions and other investments as we have multiple sources of liquidity and intend to fund these expenditures with future incurrences of indebtedness, additional capital contributions and/or future issuances of equity.

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

5 unchanged sentences

Contractual Obligations

The following table summarizes our future obligations, by period due, as of September 30, 2020, under our various contractual obligations and commitments.

We had no off-balance sheet arrangements as of September 30, 2020.

The following table summarizes our future obligations, by period due, as of March 31, 2021, under our various contractual obligations and commitments.

We had no off-balance sheet arrangements as of March 31, 2021.

(in thousands) Remainder of 2021 2022 2023 2024 2025 Thereafter Total

1 unchanged sentence

DRP Revolver 25,000 — — — — — 25,000

EB-5 Loan Agreement — — — — — 21,600 21,600

Revolving Credit Facility — 150,000 — — — — 150,000

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

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99,997 113,461 107,432 107,432 92,521 168,972 689,815

Third-party obligations (2)

7,000 10,220 3,220 20,440

Operating lease obligations 3,856 5,081 5,192 4,983 4,852 145,874 169,838

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________________________________________________________

(1) Estimated interest rates as of September 30, 2020.

(1) Estimated interest rates as of March 31, 2021.

(2) Relates to a two-year pipeline capacity agreement at Jefferson Terminal.

We expect to meet our future short-term liquidity requirements through cash on hand, unused borrowing capacity or future financings and net cash provided by our current operations.

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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 September 30, 2020 and December 31, 2019, respectively.

The carrying amount of goodwill was approximately $122.7 million as of both March 31, 2021 and December 31, 2020.

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

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For an annual goodwill impairment assessment, an optional qualitative analysis may be performed.

If the option is not elected or if it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then a two-step goodwill impairment test is performed to identify potential goodwill impairment and measure an impairment loss.

If the option is not elected or if it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then a quantitative impairment test is performed to identify potential goodwill impairment and measure an impairment loss.

A qualitative analysis was not elected for the year ended December 31, 2020.

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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 effects long term refining planned output could impact Jefferson Terminal operations.

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 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, with a strengthening macroeconomic demand for storage and the increasing spread between Western Canadian Crude and Western Texas Intermediate, we remain positive for the outlook of Jefferson Terminal’s earnings potential.

For the year ended December 31, 2019, 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 was no impairment of goodwill for the year ended December 31, 2020.

Recent Accounting Pronouncements

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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-Q

Item 2. Management’s Discussion and Analysis