What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-10-29 compared with 2021-07-29 · 228 added, 177 removed, 432 unchanged (48% of the section changed)

6 unchanged sentences

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 June 30, 2021, we had total consolidated assets of $3.6 billion and total equity of $1.0 billion.

As of September 30, 2021, we had total consolidated assets of $4.7 billion and total equity of $1.2 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.

Market conditions due to the outbreak of COVID-19 resulted in asset impairment charges and a decline in our equipment leasing revenues during the six months ended June 30, 2021.

Market conditions due to the outbreak of COVID-19 resulted in asset impairment charges and a decline in our equipment leasing revenues during the nine months ended September 30, 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 June 30, 2021;

A number of these lessees have been placed on non-accrual status as of September 30, 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 $155.1 million as of June 30, 2021.

The value of these deposits was $134.4 million as of September 30, 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.

10 unchanged sentences

Our reportable segments are comprised of interests in different types of infrastructure and equipment leasing assets.

We currently conduct our business through the following three reportable segments:

(i) Aviation Leasing, which is within the Equipment Leasing Business, and (ii) Jefferson Terminal and (iii) Ports and Terminals, which together comprise our Infrastructure Business.

We currently conduct our business through the following four reportable segments:

(i) Aviation Leasing, which is within the Equipment Leasing Business, and (ii) Jefferson Terminal, (iii) Ports and Terminals and (iv) Transtar, which together comprise our Infrastructure Business.

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

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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 July 2021, we acquired Transtar and it operates as a separate reportable segment.

Transtar is comprised of five freight railroads and one switching company that provide rail service to certain manufacturing and production facilities.

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

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 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.

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 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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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 six months ended June 30, 2021 and 2020

Comparison of the three and nine months ended September 30, 2021 and 2020

The following table presents our consolidated results of operations:

Three Months Ended June 30, Change Six Months Ended

June 30, Change

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

(in thousands) 2021 2020 2021 2020

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Lease income 791 368 423 1,653 775 878

Rail revenues 24,182 — 24,182 24,182 — 24,182

Terminal services revenues 11,469 11,329 140 33,010 40,534 (7,524)

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Other (expense) income (8,068) — (8,068) (8,771) 32 (8,803)

Total other expense (6,849) (2,420) (4,429) (4,198) (8,624) 4,426

Total other income (expense) 1,018 (3,557) 4,575 (3,180) (12,181) 9,001

Loss from continuing operations before income taxes (39,937) (27,695) (12,242) (112,892) (51,662) (61,230)

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

Three Months Ended June 30, Change Six Months Ended

June 30, Change

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

(in thousands) 2021 2020 2021 2020

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________________________________________________________

(1) Includes the following items for the three months ended June 30, 2021 and 2020:

(1) Includes the following items for the three months ended September 30, 2021 and 2020:

(i) depreciation and amortization expense of $53,368 and $42,626, (ii) lease intangible amortization of $1,266 and $953 and (iii) amortization for lease incentives of $5,177 and $8,953, respectively.

Includes the following items for the six months ended June 30, 2021 and 2020:

Includes the following items for the nine months ended September 30, 2021 and 2020:

(i) depreciation and amortization expense of $145,274 and $126,543, (ii) lease intangible amortization of $3,216 and $3,016 and (iii) amortization for lease incentives of $18,132 and $20,378, respectively.

(2) Includes the following items for the three months ended June 30, 2021 and 2020:

(i) net loss of $(7,353) and $(3,226), (ii) interest expense of $340 and $446, (iii) depreciation and amortization expense of $1,900 and $1,446, (iv) acquisition and transaction expenses of $0 and $531, (v) changes in fair value of non-hedge derivative instruments of $5,078 and $929 and (vi) asset impairment of $24 and $0, respectively.

Includes the following items for the six months ended June 30, 2021 and 2020:

(2) Includes the following items for the three months ended September 30, 2021 and 2020:

(i) net loss of $(4,163) and $(2,590), (ii) interest expense of $300 and $367, (iii) depreciation and amortization expense of $3,009 and $1,389, (iv) acquisition and transaction expenses of $0 and $(79) and (v) changes in fair value of non-hedge derivative instruments of $8,324 and $1,033, respectively.

Includes the following items for the nine months ended September 30, 2021 and 2020:

(i) net loss of $(10,336) and $(5,593), (ii) interest expense of $827 and $848, (iii) depreciation and amortization expense of $6,821 and $3,797, (iv) acquisition and transaction expenses of $0 and $533, (v) changes in fair value of non-hedge derivative instruments of $12,525 and $248 and (vi) asset impairment of $24 and $0, respectively.

(3) Includes the following items for the three months ended June 30, 2021 and 2020:

(3) Includes the following items for the three months ended September 30, 2021 and 2020:

(i) equity-based compensation of $130 and $97, (ii) provision for income taxes of $10 and $1, (iii) interest expense of $927 and $322, (iv) depreciation and amortization expense of $2,194 and $1,535 and (v) changes in fair value of non-hedge derivative instruments of $159 and $0, respectively.

Includes the following items for the six months ended June 30, 2021 and 2020:

Includes the following items for the nine months ended September 30, 2021 and 2020:

(i) equity based compensation of $620 and $196, (ii) provision for income taxes of $36 and $44, (iii) interest expense of $1,940 and $1,553, (iv) depreciation and amortization expense of $6,177 and $4,583, (v) changes in fair value of non-hedge derivative instruments of $(67) and $38 and (vi) loss on extinguishment of debt of $0 and $992, respectively.

Comparison of the three months ended June 30, 2021 and 2020

Total revenues increased $2.6 million primarily due to higher revenues of $3.2 million in the Aviation Leasing segment and $2.3 million in the Ports and Terminals segment, partially offset by lower revenues of $1.6 million in the Jefferson Terminal segment and $1.4 million in Corporate and Other.

Comparison of the three months ended September 30, 2021 and 2020

Total revenues increased $52.3 million primarily due to higher revenues of $24.5 million in the Transtar segment and $27.4 million in the Aviation Leasing segment.

Equipment Leasing

Lease income decreased $1.7 million, primarily due to an increase in aircraft redelivered and an increase in the number of customers placed on non-accrual status, partially offset by an increase in the number of aircraft and engines placed on lease.

Maintenance revenue increased $4.9 million, primarily due to an increase in the number of engines placed on lease and higher aircraft and engine utilization, partially offset by a decrease in the recognition of maintenance deposits due to the early redelivery of aircraft.

Other revenue decreased $1.5 million, which primarily reflects (i) a decrease of $2.0 million in the offshore energy business primarily due to one of our vessels being on hire longer in 2020 compared to 2021, partially offset by (ii) an increase of $0.6 million in the Aviation Leasing segment primarily due to an increase in engine parts sales, partially offset by lower end-of-lease redelivery compensation.

Maintenance revenue increased $14.6 million, primarily due to an increase in the number of engines placed on lease and higher aircraft and engine utilization.

Other revenue increased $12.5 million, which primarily reflects (i) an increase of $11.1 million in the Aviation Leasing segment primarily due to an increase in engine parts sales and higher end-of-lease redelivery compensation and (ii) an increase of $1.4 million in the offshore energy business which reflects higher victualling income on one of our vessels.

Lease income increased $2.3 million, primarily due to an increase in the number of aircraft and engines placed on lease, partially offset by an increase in aircraft redelivered.

Infrastructure

Terminal services revenues decreased $1.7 million which primarily reflects lower volumes at Jefferson Terminal due to lower global oil demand related to COVID-19.

Other revenue increased $2.4 million, primarily due to operations commencing at the LPG facility at Repauno.

Comparison of the six months ended June 30, 2021 and 2020

Total revenues decreased $33.1 million, primarily due to lower revenues of $23.7 million in the Aviation Leasing segment, $15.6 million in the Jefferson Terminal segment and $3.9 million in Corporate and Other, partially offset by higher revenues of $10.1 million in the Ports and Terminals segment.

Rail revenues increased $24.2 million due to our acquisition of Transtar in July 2021.

Other revenue decreased $1.9 million, primarily due to a loss on butane forward purchase contracts at Repauno.

Comparison of the nine months ended September 30, 2021 and 2020

Total revenues increased $19.2 million, primarily due to higher revenues of $24.5 million in the Transtar segment, $8.4 million in the Ports and Terminals segment and $3.7 million in the Aviation Leasing segment, partially offset by lower revenues of $15.4 million in the Jefferson Terminal segment.

Equipment Leasing

Lease income decreased $9.0 million, primarily due to an increase in aircraft redelivered and an increase in the number of customers placed on non-accrual status, partially offset by an increase in the number of aircraft and engines placed on lease.

Maintenance revenue decreased $11.6 million, primarily due to an increase in aircraft and engines redelivered and a decrease in the recognition of maintenance deposits due to the early redelivery of aircraft, partially offset by an increase in aircraft and engine utilization and an increase in the number of engines placed on lease.

Other revenue decreased $5.2 million, primarily due to (i) a decrease of $2.7 million in the Aviation Leasing segment primarily due to lower end-of-lease redelivery compensation and the settlement of an engine loss during the six months ended June 30, 2020, partially offset by an increase in engine parts sales and (ii) a decrease of $2.5 million in the offshore energy business primarily due to one of our vessels being on hire longer in 2020 compared to 2021.

Other revenue increased $7.3 million, primarily due to an increase in engine parts sales, partially offset by lower end-of-lease redelivery compensation and the settlement of an engine loss during the nine months ended September 30, 2020.

Maintenance revenue increased $3.1 million, primarily due to an increase in aircraft and engine utilization, partially offset by an increase in aircraft and engines redelivered and a decrease in the recognition of maintenance deposits due to the early redelivery of aircraft.

Infrastructure

Rail revenues increased $24.2 million due to our acquisition of Transtar in July 2021.

Other revenue increased $8.6 million, primarily due to (i) a gain on butane forward purchase and sale contracts at Repauno and (ii) operations commencing at the LPG facility at Repauno.

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 $7.5 million which primarily reflects lower volumes at Jefferson Terminal due to lower global oil demand related to COVID-19.

Other revenue increased $10.4 million, primarily due to (i) an unrealized gain of $6.6 million recorded on butane forward purchase and sale contracts at Repauno and (ii) operations commencing at the LPG facility at Repauno.

Comparison of the three months ended June 30, 2021 and 2020

Total expenses increased $16.9 million, primarily due to higher (i) interest expense, (ii) operating expenses and (iii) depreciation and amortization, partially offset by lower (iv) asset impairment charges.

Comparison of the three months ended September 30, 2021 and 2020

Total expenses increased $69.1 million, primarily due to higher (i) interest expense, (ii) operating expenses, (iii) depreciation and amortization and (iv) acquisition and transaction expenses, partially offset by lower (v) asset impairment charges.

Interest expense increased $27.6 million, primarily due to:

• an increase of $14.9 million in Corporate and Other which reflects an increase in the average outstanding debt of approximately $652.1 million due to increases in (i) the Senior Notes due 2028 of $500.0 million, (ii) the Senior Notes due 2025 of $407.1 million and (iii) the Senior Notes due 2027 of $400.0 million, partially offset by decreases in (iv) the Senior Notes due 2022 of $565.0 million, which was redeemed in full in May 2021 and (v) the Revolving Credit Facility (as defined below in Liquidity and Capital Resources) of $90.0 million;

• an increase of $0.9 million at Jefferson Terminal due to the EB-5 Loan Agreement which commenced in January 2021.

• an increase of $25.0 million in Corporate and Other which reflects an increase in the average outstanding debt of approximately $892.7 million due to increases in (i) the Senior Notes due 2028 of $667.5 million, (ii) the Bridge Loans (as defined below in Liquidity and Capital Resources) of $433.3 million, (iii) the Senior Notes due 2025 of $406.8 million and (iv) the Revolving Credit Facility (as defined below in Liquidity and Capital Resources) of $83.3 million, partially offset by a decrease in (v) the Senior Notes due 2022 of $698.3 million, which was redeemed in full in May 2021.

• an increase of $2.6 million at Jefferson Terminal due to the issuance of the Series 2021 Bonds in August 2021 and EB-5 Loan Agreement which commenced in January 2021.

Operating expenses increased $29.7 million which primarily reflects:

• an increase of approximately $4.0 million in costs associated with the sale of inventory in the Aviation Leasing segment;

• an increase of $1.0 million in compensation and benefits primarily in the Ports and Terminals segment and Corporate and Other;

• an increase of $0.8 million in repairs and maintenance in our offshore energy business.

Depreciation and amortization increased $5.7 million primarily due to assets placed into service at Repauno and Jefferson Terminal and additional assets acquired in the Aviation Leasing segment.

• an increase in compensation and benefits of $8.9 million primarily due to the acquisition of Transtar in July 2021;

• an increase of $8.2 million in facility operating expense which primarily reflects (i) an increase of $3.2 million due to the acquisition of Transtar in July 2021, (ii) an increase of $2.6 million in the Aviation Leasing segment primarily due to shipping and storage costs and (iii) an increase of $1.3 million in the Jefferson Terminal segment primarily due to an increase in third-party services;

• an increase of $6.4 million in costs associated with the sale of inventory in the Aviation Leasing segment;

• an increase of $1.5 million in repairs and maintenance primarily due to (i) the acquisition of Transtar in July 2021 and (ii) increases in the Aviation Leasing segment and our offshore energy business;

• an increase of $1.3 million in bad debt expense in the Aviation Leasing segment.

Depreciation and amortization increased $10.7 million primarily due to (i) the acquisition of Transtar in July 2021 and (ii) assets placed into service at Repauno and Jefferson Terminal.

Acquisition and transaction expenses increased $4.7 million primarily due to professional fees related to the acquisition of Transtar in July 2021.

Asset impairment decreased $3.1 million due to higher impairment charges in 2020 compared to 2021 in the Aviation Leasing segment.

Comparison of the six months ended June 30, 2021 and 2020

Total expenses increased $20.3 million, primarily due to higher (i) interest expense and (ii) depreciation and amortization, partially offset by lower (iii) asset impairment charges, (iv) operating expenses and (v) management fees and incentive allocation to affiliate.

Comparison of the nine months ended September 30, 2021 and 2020

Total expenses increased $89.4 million, primarily due to higher (i) interest expense, (ii) operating expenses and (iii) depreciation and amortization, partially offset by lower (iv) asset impairment charges.

Interest expense increased $53.4 million, primarily due to:

• an increase of $27.3 million in Corporate and Other which reflects an increase in the average outstanding debt of approximately $586.8 million due to increases in (i) the Senior Notes due 2025 of $407.3 million, (ii) the Senior Notes due 2027 of $400.0 million and (iii) the Senior Notes due 2028 of $250.0 million, partially offset by decreases in (iv) the Senior Notes due 2022 of $431.9 million, which was redeemed in full in May 2021, (v) the Revolving Credit Facility of $26.7 million and (vi) the FTAI Pride Credit Agreement of $12.0 million, which was repaid in full in March 2020;

• a decrease of $1.3 million at Jefferson Terminal due to (i) a debt refinancing in the first quarter of 2020 which lowered their average interest rate, partially offset by (ii) the EB-5 Loan Agreement which commenced in January 2021.

Depreciation and amortization increased $8.0 million primarily due to assets placed into service at Repauno and Jefferson Terminal and additional assets acquired in the Aviation Leasing segment.

• an increase of $52.3 million in Corporate and Other which reflects an increase in the average outstanding debt of approximately $688.8 million primarily due to increases in (i) the Senior Notes due 2025 of $407.1 million, (ii) the Senior Notes due 2028 of $389.2 million, (iii) the Senior Notes due 2027 of $266.7 million, (iv) the Bridge Loans of $144.4 million and (v) the Revolving Credit Facility of $10.0 million, partially offset by a decrease in (vi) the Senior Notes due 2022 of $520.7 million, which was redeemed in full in May 2021.

• an increase of $1.3 million at Jefferson Terminal due to (i) the issuance of the Series 2021 Bonds in August 2021 and the EB-5 Loan Agreement which commenced in January 2021, partially offset by (ii) a debt refinancing in the first quarter of 2020 which lowered their average interest rate.

Operating expenses increased $27.8 million which primarily reflects:

• an increase of $10.7 million in compensation and benefits primarily due to (i) the acquisition of Transtar in July 2021 and (ii) increases at Repauno and our railcar cleaning business due to an increase in headcount;

• an increase of $7.0 million in facility operating expense which primarily reflects (i) an increase of $4.1 million in the Aviation Leasing segment primarily due to shipping and storage costs, (ii) an increase of $3.2 million due to the acquisition of Transtar in July 2021 and (iii) an increase of $1.1 million at Repauno primarily due to increased activity;

• an increase of $3.4 million in repairs and maintenance primarily due to (i) our offshore energy business and (ii) the acquisition of Transtar in July 2021;

• an increase of $2.2 million in insurance costs in the Jefferson Terminal segment due to build out of new assets.

Depreciation and amortization increased $18.7 million primarily due to (i) assets placed into service at Repauno and Jefferson Terminal, (ii) the acquisition of Transtar in July 2021 and (iii) additional assets acquired in the Aviation Leasing segment.

Asset impairment decreased $11.3 million due to higher impairment charges in 2020 compared to 2021 in the Aviation Leasing segment.

Operating expenses decreased $1.8 million which primarily reflects:

• a decrease in cost of sales of $8.2 million primarily due to Jefferson Terminal exiting the crude marketing strategy in the fourth quarter of 2019;

• a decrease in bad debt expense of $2.5 million primarily in the Aviation Leasing segment;

partially offset by

• an increase of approximately $4.0 million in costs associated with the sale of inventory in the Aviation Leasing segment;

• an increase in repairs and maintenance of $1.9 million primarily in our offshore energy business;

• an increase of $1.8 million in compensation and benefits primarily in the Ports and Terminals segment and Corporate and Other.

Management fees and incentive allocation to affiliate decreased $1.4 million, which reflects a decrease in the base management fee as our average total equity is lower in 2021 compared to 2020.

Other expense

Total other expense increased $4.4 million during the three months ended June 30, 2021, which primarily reflects (i) an increase of $3.9 million in equity in losses of unconsolidated entities primarily due to unrealized losses on power swaps at Long Ridge and (ii) a loss on extinguishment of debt of $3.3 million related to the redemption of the Senior Notes due 2022, partially offset by (iii) an increase of $3.2 million in gain on sale of assets, net in the Aviation Leasing segment.

Total other expense decreased $4.4 million during the six months ended June 30, 2021, which primarily reflects (i) an increase of $5.8 million in gain on sale of assets, net in the Aviation Leasing segment and (ii) a net decrease in loss on extinguishment of debt of $1.5 million, partially offset by (iii) an increase of $2.8 million in equity in losses in unconsolidated entities primarily due to unrealized losses on power swaps at Long Ridge.

Other income (expense)

Total other income increased $4.6 million during the three months ended September 30, 2021, which primarily reflects (i) an increase of $13.8 million in gain on sale of assets, net in the Aviation Leasing segment, partially offset by (ii) an increase of $8.1 million in other expense primarily due to (a) a write-off of an earn-out receivable at Long Ridge and (b) losses related to crude oil forward transactions at Jefferson Terminal and (iii) an increase of $1.6 million in equity in losses of unconsolidated entities primarily due to an unrealized loss on power swaps at Long Ridge.

Total other expense decreased $9.0 million during the nine months ended September 30, 2021, which primarily reflects (i) an increase of $19.6 million in gain on sale of assets, net in the Aviation Leasing segment, partially offset by (ii) an increase of $8.8 million in other expense primarily due to (a) a write-off of an earn-out receivable at Long Ridge and (b) losses related to crude oil forward transactions at Jefferson Terminal and (iii) an increase of $4.4 million in equity in losses in unconsolidated entities primarily due to an unrealized loss on power swaps at Long Ridge.

Net loss from continuing operations

Net loss from continuing operations increased $20.9 million and $51.4 million during the three and six months ended June 30, 2021, respectively, primarily due to the changes noted above.

Net loss from continuing operations increased $14.2 million and $65.6 million during the three and nine months ended September 30, 2021, respectively, primarily due to the changes noted above.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA increased $1.5 million and decreased $23.4 million during the three and six months ended June 30, 2021, respectively, primarily due to the changes noted above.

Adjusted EBITDA increased $37.8 million and $14.4 million during the three and nine months ended September 30, 2021, respectively, primarily due to the changes noted above.

Aviation Leasing Segment

As of June 30, 2021, in our Aviation Leasing segment, we own and manage 284 aviation assets, consisting of 77 commercial aircraft and 207 engines.

As of June 30, 2021, 68 of our commercial aircraft and 134 of our engines were leased to operators or other third parties.

As of September 30, 2021, in our Aviation Leasing segment, we own and manage 294 aviation assets, consisting of 90 commercial aircraft and 204 engines.

As of September 30, 2021, 77 of our commercial aircraft and 127 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 74% utilized during the three months ended June 30, 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 aviation equipment was approximately 74% utilized during the three months ended September 30, 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 36 months, and our engines currently on-lease have an average remaining lease term of 18 months.

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Transfers 1 (9) (8)

Assets at June 30, 2021 12 65 77

Assets at September 30, 2021 12 78 90

Assets at January 1, 2021 88 98 186

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Transfers (2) 7 5

Assets at June 30, 2021 82 125 207

Assets at September 30, 2021 75 129 204

The following table presents our results of operations:

Three Months Ended June 30, Change Six Months Ended

June 30, Change

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

(in thousands) 2021 2020 2021 2020

14 unchanged sentences

Interest income 339 41 298 963 70 893

Other expense (1,680) — (1,680) (1,680) — (1,680)

Total other income (expense) 10,975 (1,320) 12,295 15,700 (3,520) 19,220

Income before income taxes 53,497 21,667 31,830 108,855 88,975 19,880

Benefit from income taxes (4) (3,427) 3,423 (46) (3,382) 3,336

Provision for (benefit from) income taxes 129 (1,873) 2,002 83 (5,255) 5,338

Net income 53,368 23,540 29,828 108,772 94,230 14,542

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

Three Months Ended June 30, Change Six Months Ended

June 30, Change

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

(in thousands) 2021 2020 2021 2020

Net income attributable to shareholders $ 53,368 $ 23,540 $ 29,828 $ 108,772 $ 94,230 $ 14,542

Benefit from income taxes (4) (3,427) 3,423 (46) (3,382) 3,336

Provision for (benefit from) income taxes 129 (1,873) 2,002 83 (5,255) 5,338

Equity-based compensation expense — — — — — —

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________________________________________________________

(1) Includes the following items for the three months ended June 30, 2021 and 2020:

(1) Includes the following items for the three months ended September 30, 2021 and 2020:

(i) depreciation expense of $34,288 and $33,014, (ii) lease intangible amortization of $1,266 and $953 and (iii) amortization for lease incentives of $5,177 and $8,953, respectively.

Includes the following items for the six months ended June 30, 2021 and 2020:

Includes the following items for the nine months ended September 30, 2021 and 2020:

(i) depreciation expense of $100,583 and $97,848, (ii) lease intangible amortization of $3,216 and $3,016 and (iii) amortization for lease incentives of $18,132 and $20,378, respectively.

(2) Includes the following items for the three months ended June 30, 2021 and 2020:

(2) Includes the following items for the three months ended September 30, 2021 and 2020:

(i) net loss of $(369) and $(247) and (ii) depreciation and amortization of $57 and $0, respectively.

Includes the following items for the six months ended June 30, 2021 and 2020:

Includes the following items for the nine months ended September 30, 2021 and 2020:

(i) net loss of $(1,050) and $(1,432) and (ii) depreciation and amortization of $144 and $0, respectively.

Comparison of the three months ended June 30, 2021 and 2020

Total revenue increased $3.2 million driven by higher maintenance revenue and other revenue, partially offset by lower lease income.

• Maintenance revenue increased $4.9 million primarily due to an increase in the number of engines placed on lease and higher aircraft and engine utilization, partially offset by a decrease in the recognition of maintenance deposits due to the early redelivery of aircraft.

• Other revenue increased $0.6 million primarily due to an increase in engine parts sales, partially offset by lower end-of-lease redelivery compensation.

• Lease income decreased $2.3 million primarily due to an increase in aircraft redelivered and an increase in the number of customers placed on non-accrual status, partially offset by an increase in the number of aircraft and engines placed on lease.

Comparison of the six months ended June 30, 2021 and 2020

Total revenue decreased $23.7 million driven by lower lease income, maintenance revenue and other revenue.

• Maintenance revenue decreased $11.6 million primarily due to an increase in aircraft and engines redelivered and a decrease in the recognition of maintenance deposits due to the early redelivery of aircraft, partially offset by an increase in aircraft and engine utilization and an increase in the number of engines placed on lease.

Comparison of the three months ended September 30, 2021 and 2020

Total revenue increased $27.4 million driven by higher maintenance revenue, other revenue and lease income.

• Maintenance revenue increased $14.6 million primarily due to an increase in the number of engines placed on lease and higher aircraft and engine utilization.

• Other revenue increased $11.1 million primarily due to an increase in engine parts sales and higher end-of-lease redelivery compensation.

• Lease income increased $1.9 million primarily due to an increase in the number of aircraft and engines placed on lease, partially offset by an increase in aircraft redelivered.

Comparison of the nine months ended September 30, 2021 and 2020

Total revenue increased $3.7 million driven by higher other revenue and maintenance revenue, partially offset by lower lease income.

• Other revenue increased $8.4 million primarily due to an increase in engine parts sales, partially offset by lower end-of-lease redelivery compensation and the settlement of an engine loss during the nine months ended September 30, 2020.

• Maintenance revenue increased $3.1 million primarily due to an increase in aircraft and engine utilization, partially offset by an increase in aircraft and engines redelivered and a decrease in the recognition of maintenance deposits due to the early redelivery of aircraft.

• Lease income decreased $7.6 million primarily due to an increase in aircraft redelivered and an increase in the number of customers placed on non-accrual status, partially offset by an increase in the number of aircraft and engines placed on lease.

• Other revenue decreased $2.7 million primarily due to lower end-of-lease redelivery compensation and the settlement of an engine loss during the six months ended June 30, 2020, partially offset by an increase in engine parts sales.

Comparison of the three months ended June 30, 2021 and 2020

Total expenses decreased $5.5 million, primarily due to a decrease in asset impairment and acquisition and transaction expenses, partially offset by an increase in operating expenses and depreciation and amortization expense.

Comparison of the three months ended September 30, 2021 and 2020

Total expenses increased $7.9 million primarily due to an increase in operating expenses and depreciation and amortization expense, partially offset by a decrease in asset impairment and acquisition and transaction expenses.

• Operating expenses increased $10.9 million primarily as a result of an increase in costs associated with the sale of engine parts, shipping and storage fees, bad debt expense and other operating expenses.

• Depreciation and amortization expense increased $1.3 million driven by an increase in the number of assets owned and on lease, partially offset by an increase in the number of aircraft redelivered and parted out into our engine leasing pool.

• Asset impairment decreased $3.1 million for the adjustment of the carrying value of leasing equipment to fair value, net of redelivery compensation.

1 unchanged sentence

• Acquisition and transaction expense decreased $1.2 million driven by lower compensation and related costs associated with the acquisition of aviation leasing equipment.

• Operating expenses increased $4.6 million primarily as a result of an increase in costs associated with the sale of engine parts, shipping and storage fees, professional fees and other operating expenses, partially offset by a decrease in bad debt expense.

Comparison of the nine months ended September 30, 2021 and 2020

Total expenses increased $3.1 million primarily due to an increase in operating expenses and depreciation and amortization expense, partially offset by a decrease in asset impairment and acquisition and transaction expenses.

• Operating expenses increased $15.6 million primarily as a result of an increase in costs associated with the sale of engine parts, shipping and storage fees and other operating expense.

• Depreciation and amortization expense increased $2.7 million driven by an increase in the number of assets owned and on lease, partially offset by an increase in the number of aircraft redelivered and parted out into our engine leasing pool.

Comparison of the six months ended June 30, 2021 and 2020

Total expenses decreased $4.8 million, primarily due to a decrease in asset impairment and acquisition and transaction expenses, partially offset by an increase in operating expenses and depreciation and amortization expense.

• Asset impairment decreased $11.3 million for the adjustment of the carrying value of leasing equipment to fair value, net of redelivery compensation.

1 unchanged sentence

• Acquisition and transaction expense decreased $4.0 million driven by lower compensation and related costs associated with the acquisition of aviation leasing equipment.

• Operating expenses increased $4.7 million primarily as a result of an increase in costs associated with the sale of engine parts, shipping and storage fees, professional fees and other operating expenses, partially offset by a decrease in bad debt expense.

• Depreciation and amortization expense increased driven $1.5 million by an increase in the number of assets owned and on lease, partially offset by an increase in the number of aircraft redelivered and parted out into our engine leasing pool.

Other income (expense)

Total other income increased $3.8 million during the three months ended June 30, 2021, primarily due to an increase of $3.2 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.

Total other income increased $6.9 million during the six months ended June 30, 2021, primarily due to an increase of $5.8 million in gain on the sale of leasing equipment in 2021, an increase of $0.6 million in interest income and a decrease of $0.5 million in Aviation Leasing’s proportionate share of the unconsolidated entities’ net loss.

Total other income increased $12.3 million during the three months ended September 30, 2021, primarily due to an increase of $13.8 million in gain on the sale of leasing equipment in 2021 and an increase of $0.3 million in interest income, partially offset by an increase of $1.7 million in other expenses and an increase of $0.1 million in Aviation Leasing’s proportionate share of the unconsolidated entities’ net loss.

Total other income increased $19.2 million during the nine months ended September 30, 2021, primarily due to an increase of $19.6 million in gain on the sale of leasing equipment in 2021, an increase of $0.9 million in interest income and a decrease of $0.4 million in Aviation Leasing’s proportionate share of the unconsolidated entities’ net loss, partially offset by an increase of $1.7 million in other expenses.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA decreased $2.6 million and $20.0 million during the three and six months ended June 30, 2021, respectively, primarily due to the changes noted above.

Adjusted EBITDA increased $25.4 million and $5.4 million during the three and nine months ended September 30, 2021, respectively, primarily due to the changes noted above.

Jefferson Terminal Segment

The following table presents our results of operations:

Three Months Ended June 30, Change Six Months Ended

June 30, Change

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

(in thousands) 2021 2020 2021 2020

3 unchanged sentences

Crude marketing revenues — — — — 8,210 (8,210)

Total infrastructure revenues 11,527 13,081 (1,554) 22,246 37,822 (15,576)

Total revenues 11,902 11,697 205 34,148 49,519 (15,371)

15 unchanged sentences

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

Three Months Ended June 30, Change Six Months Ended

June 30, Change

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

(in thousands) 2021 2020 2021 2020

15 unchanged sentences

________________________________________________________

(1) Includes the following items for the three months ended June 30, 2021 and 2020:

(1) Includes the following items for the three months ended September 30, 2021 and 2020:

(i) equity-based compensation of $124 and $90, (ii) provision for income taxes of $10 and $1, (iii) interest expense of $918 and $312 and (iv) depreciation and amortization expense of $2,115 and $1,522, respectively.

Includes the following items for the six months ended June 30, 2021 and 2020:

Includes the following items for the nine months ended September 30, 2021 and 2020:

(i) equity-based compensation of $599 and $180, (ii) provision for income taxes of $36 and $44, (iii) interest expense of $1,911 and $1,517, (iv) changes in fair value of non-hedge derivative instruments of $0 and $38, (v) depreciation and amortization expense of $5,946 and $4,544 and (vi) loss on extinguishment of debt of $0 and $992, respectively.

Total revenues decreased $1.6 million during the three months ended June 30, 2021, primarily due to a decrease in terminal services revenue of $1.7 million which primarily reflects lower volumes due to lower global oil demand related to COVID-19.

Total revenues decreased $15.6 million during the six months ended June 30, 2021, 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 $7.8 million which primarily reflects lower volumes due to lower global oil demand related to COVID-19.

Total expenses increased $2.5 million during the three months ended June 30, 2021, which reflects:

Total revenues decreased $15.4 million during the nine months ended September 30, 2021, 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 $7.7 million which primarily reflects lower volumes due to lower global oil demand related to COVID-19.

Total expenses increased $7.5 million during the three months ended September 30, 2021, which reflects:

• an increase in interest expense of $2.6 million due to the issuance of the Series 2021 Bonds in August 2021 and EB-5 Loan Agreement which commenced in January 2021;

• an increase in operating expenses of $2.8 million primarily due to increases in (i) facility operations expense of $1.3 million due to an increase in third-party services, (ii) insurance expense of $0.8 million due to build out of new assets and (iii) compensation and benefits of $0.6 million due to increased headcount;

• an increase in depreciation and amortization of $2.2 million due to additional assets being placed into service.

• an increase in interest expense of $0.9 million primarily due to the EB-5 Loan Agreement which commenced in January 2021.

Total expenses decreased $9.4 million during the six months ended June 30, 2021, which reflects:

• a decrease in operating expenses of $10.7 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 $1.3 million due to a debt refinancing in the first quarter of 2020 which lowered the average interest rate, partially offset by the EB-5 Loan Agreement which commenced in January 2021;

Total expenses decreased $1.9 million during the nine months ended September 30, 2021, which reflects:

• a decrease in operating expenses of $8.0 million, primarily due to (i) Jefferson Terminal exiting the crude marketing strategy in the fourth quarter of 2019, partially offset by (ii) an increase in facility operations expense;

• an increase in depreciation and amortization of $4.8 million due to additional assets being placed into service;

• an increase in interest expense of $1.3 million due to (i) the issuance of the Series 2021 Bonds in August 2021 and the EB-5 Loan Agreement which commenced in January 2021, partially offset by (ii) a debt refinancing in the first quarter of 2020 which lowered their average interest rate.

Other expense

Total other expense increased $0.9 million during the three months ended June 30, 2021, primarily due to losses related to crude oil forward transactions.

Total other expense decreased $4.0 million during the six months ended June 30, 2021, which primarily reflects a loss on extinguishment of debt of $4.7 million in 2020, partially offset by losses related to crude oil forward transactions.

Total other expense increased $2.1 million during the three months ended September 30, 2021, primarily due to losses related to crude oil forward transactions.

Total other expense decreased $1.9 million during the nine months ended September 30, 2021, which primarily reflects a loss on extinguishment of debt of $4.7 million in 2020, partially offset by losses related to crude oil forward transactions.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA increased $0.6 million and decreased $1.2 million during the three and six months ended June 30, 2021, respectively, primarily due to the changes noted above.

Adjusted EBITDA decreased $2.4 million and $3.6 million during the three and nine months ended September 30, 2021, respectively, primarily due to the changes noted above.

Ports and Terminals

The following table presents our results of operations:

Three Months Ended June 30, Change Six Months Ended

June 30, Change

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

(in thousands) 2021 2020 2021 2020

12 unchanged sentences

Interest income 145 — 145 236 — 236

Other expense (4,100) — (4,100) (4,100) — (4,100)

Total other expense (7,744) (2,285) (5,459) (13,110) (3,961) (9,149)

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

Three Months Ended June 30, Change Six Months Ended

June 30, Change

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

(in thousands) 2021 2020 2021 2020

16 unchanged sentences

________________________________________________________

(1) Includes the following items for the three months ended June 30, 2021 and 2020:

(i) net loss of $(7,015) and $(2,570), (ii) interest expense of $314 and $417, (iii) depreciation and amortization expense of $1,845 and $1,446, (iv) acquisition and transaction expenses of $0 and $531, (v) changes in fair value of non-hedge derivative instruments of $5,078 and $929 and (vi) asset impairment of $24 and $0, respectively.

Includes the following items for the six months ended June 30, 2021 and 2020:

(1) Includes the following items for the three months ended September 30, 2021 and 2020:

(i) net loss of $(3,789) and $(2,285), (ii) interest expense of $274 and $337, (iii) depreciation and amortization expense of $2,952 and $1,389, (iv) acquisition and transaction expenses of $0 and $(79) and (v) changes in fair value of non-hedge derivative instruments of $8,324 and $1,033, respectively.

Includes the following items for the nine months ended September 30, 2021 and 2020:

(i) net loss of $(9,262) and $(3,961), (ii) interest expense of $748 and $759, (iii) depreciation and amortization expense of $6,677 and $3,797, (iv) acquisition and transaction expenses of $0 and $533, (v) changes in fair value of non-hedge derivative instruments of $12,525 and $248 and (vi) asset impairment of $24 and $0, respectively.

(2) Includes the following items for the three months ended June 30, 2021 and 2020:

(2) Includes the following items for the three months ended September 30, 2021 and 2020:

(i) equity-based compensation of $6 and $7, (ii) interest expense of $9 and $10, (iii) depreciation and amortization expense of $79 and $13 and (iv) changes in fair value of non-hedge derivative instruments of $159 and $0, respectively.

Includes the following items for the six months ended June 30, 2021 and 2020:

Includes the following items for the nine months ended September 30, 2021 and 2020:

(i) equity-based compensation of $21 and $16, (ii) interest expense of $29 and $36, (iii) depreciation and amortization expense of $231 and $39 and (iv) changes in fair value of non-hedge derivative instruments of $(67) and $0, respectively.

Total revenue increased $2.3 million during the three months ended June 30, 2021, primarily due to operations commencing at the LPG facility at Repauno.

Total revenue increased $10.1 million during the six months ended June 30, 2021, primarily due to (i) an unrealized gain of $6.6 million recorded on butane forward purchase and sale contracts at Repauno and (ii) operations commencing at the LPG facility at Repauno.

Total expenses increased $3.7 million during the three months ended June 30, 2021 which reflects (i) higher operating expenses of $2.0 million due to increased activit y at Repauno and (ii) higher depreciation and amortization of $1.8 million due to operations commencing at the LPG facility and additional assets placed into service at Repauno.

Total expenses increased $5.8 million during the six months ended June 30, 2021 which reflects (i) higher operating expenses of $3.1 million due to increased activit y at Repauno and (ii) higher depreciation and amortization of $3.7 million due to operations commencing at the LPG facility and additional assets placed into service at Repauno, partially offset by (iii) lower acquisition and transaction expense of $0.8 million at Long Ridge due to lower professional fees.

Total revenue decreased $1.7 million during the three months ended September 30, 2021, primarily due to a loss on butane forward purchase contracts at Repauno.

Total revenue increased $8.4 million during the nine months ended September 30, 2021, primarily due to (i) a gain on butane forward purchase and sale contracts at Repauno and (ii) operations commencing at the LPG facility at Repauno.

Total expenses increased $4.5 million during the three months ended September 30, 2021 which reflects (i) higher operating expenses of $2.6 million due to increased activit y at Repauno and (ii) higher depreciation and amortization of $1.9 million due to operations commencing at the LPG facility and additional assets placed into service at Repauno.

Total expenses increased $10.2 million during the nine months ended September 30, 2021 which reflects (i) higher operating expenses of $5.6 million due to increased activit y at Repauno and (ii) higher depreciation and amortization of $5.6 million due to operations commencing at the LPG facility and additional assets placed into service at Repauno, partially offset by (iii) lower acquisition and transaction expense of $0.8 million at Long Ridge due to lower professional fees.

Other expense

Total other expense increased $4.3 million and $3.7 million during the three and six months ended June 30, 2021, respectively, which reflects an increase in equity in losses primarily due to unrealized losses on power swaps at Long Ridge.

Total other expense increased $5.5 million and $9.1 million during the three and nine months ended September 30, 2021, respectively, which reflects an increase in other expense and equity in losses in unconsolidated entities primarily due to unrealized losses on power swaps at Long Ridge.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA increased $1.3 million and $2.7 million during the three and six months ended June 30, 2021, respectively, primarily due to the changes noted above.

Adjusted EBITDA increased $3.6 million and $6.3 million during the three and nine months ended September 30, 2021, respectively, primarily due to the changes noted above.

The following table presents our results of operations:

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

(in thousands) 2021 2020 2021 2020

Infrastructure revenues

Lease income $ 358 $ — $ 358 $ 358 $ — $ 358

Rail revenues 24,182 — 24,182 24,182 — 24,182

Total revenues 24,540 — 24,540 24,540 — 24,540

Operating expenses 12,877 — 12,877 12,877 — 12,877

Acquisition and transaction expenses 851 — 851 851 — 851

Depreciation and amortization 5,270 — 5,270 5,270 — 5,270

Interest expense 37 — 37 37 — 37

Total expenses 19,035 — 19,035 19,035 — 19,035

Other expense

Other expense (197) — (197) (197) — (197)

Total other expense (197) — (197) (197) — (197)

Income before income taxes 5,308 — 5,308 5,308 — 5,308

Provision for income taxes 1,128 — 1,128 1,128 — 1,128

Net income 4,180 — 4,180 4,180 — 4,180

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

Net income attributable to shareholders $ 4,180 $ — $ 4,180 $ 4,180 $ — $ 4,180

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

(in thousands) 2021 2020 2021 2020

Net income attributable to shareholders $ 4,180 $ — $ 4,180 $ 4,180 $ — $ 4,180

Provision for income taxes 1,128 — 1,128 1,128 — 1,128

Equity-based compensation expense — — — — — —

Acquisition and transaction expenses 851 — 851 851 — 851

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 5,270 — 5,270 5,270 — 5,270

Interest expense 37 — 37 37 — 37

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

Equity in earnings of unconsolidated entities — — — — — —

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

Adjusted EBITDA $ 11,466 $ — $ 11,466 $ 11,466 $ — $ 11,466

All variances during the three and nine months ended September 30, 2021 reflect our acquisition of Transtar in July 2021.

Corporate and Other

The following table presents our results of operations:

Three Months Ended June 30, Change Six Months Ended

June 30, Change

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

(in thousands) 2021 2020 2021 2020

18 unchanged sentences

Interest income (1) 17 (18) 23 29 (6)

Other income 2 — 2 2 — 2

Total other expense (3,042) (28) (3,014) (2,852) (71) (2,781)

Other (expense) income (1) — (1) 1 — 1

Total other income (expense) 74 48 26 (2,778) (23) (2,755)

Loss before income taxes (66,572) (38,228) (28,344) (164,622) (100,752) (63,870)

(Benefit from) provision for income taxes (74) 200 (274) (74) 203 (277)

Provision for (benefit from) income taxes — 40 (40) (74) 243 (317)

Net loss (66,572) (38,268) (28,304) (164,548) (100,995) (63,553)

3 unchanged sentences

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

Three Months Ended June 30, Change Six Months Ended

June 30, Change

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

(in thousands) 2021 2020 2021 2020

Net loss attributable to shareholders $ (73,363) $ (42,893) $ (30,470) $ (182,515) $ (114,238) $ (68,277)

(Benefit from) provision for income taxes (74) 200 (274) (74) 203 (277)

Provision for (benefit from) income taxes — 40 (40) (74) 243 (317)

Equity-based compensation expense — — — — — —

12 unchanged sentences

________________________________________________________

(1) Includes the following items for the three months ended June 30, 2021 and 2020:

(i) net income (loss) of $3 and $(62) and (ii) interest expense of $26 and $29, respectively.

Includes the following items for the six months ended June 30, 2021 and 2020:

(1) Includes the following items for the three months ended September 30, 2021 and 2020:

(i) net loss of $(5) and $(58) and (ii) interest expense of $26 and $30, respectively.

Total revenues decreased $1.4 million during the three months ended June 30, 2021, primarily due to one of our vessels being on hire longer in 2020 compared to 2021 in the offshore energy business.

Total revenues decreased $3.9 million during the six months ended June 30, 2021, primarily due to (i) a decrease of $4.4 million in the offshore energy business primarily due to one of our vessels being on hire longer in 2020 compared to 2021, partially offset by (ii) an increase of $0.5 million in our railcar cleaning business due to higher volumes.

Comparison of the three months ended June 30, 2021 and 2020

Total expenses increased $16.2 million primarily due to higher (i) interest expense and (ii) acquisition and transaction expense, partially offset by lower (iii) general and administrative expense.

Interest expense increased $14.9 million, which reflects an increase in the average outstanding debt of approximately $652.1 million due to increases in (i) the Senior Notes due 2028 of $500.0 million, (ii) the Senior Notes due 2025 of $407.1 million and (iii) the Senior Notes due 2027 of $400.0 million, partially offset by decreases in (iv) the Senior Notes due 2022 of $565.0 million, which was redeemed in full in May 2021 and (v) the Revolving Credit Facility (as defined below in Liquidity and Capital Resources) of $90.0 million.

Acquisition and transaction expense increased $2.0 million, primarily due to higher professional fees.

General and administrative expense decreased $0.7 million, primarily due to lower professional fees.

Comparison of the six months ended June 30, 2021 and 2020

Total expenses increased $28.8 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 and (iv) general and administrative expense.

Interest expense increased $27.3 million, which reflects an increase in the average outstanding debt of approximately $586.8 million due to increases in (i) the Senior Notes due 2025 of $407.3 million, (ii) the Senior Notes due 2027 of $400.0 million and (iii) the Senior Notes due 2028 of $250.0 million, partially offset by decreases in (iv) the Senior Notes due 2022 of $431.9 million, which was redeemed in full in May 2021, (v) the Revolving Credit Facility of $26.7 million and (vi) the FTAI Pride Credit Agreement of $12.0 million, which was repaid in full in March 2020.

Acquisition and transaction expense increased $2.7 million, primarily due to higher professional fees.

Includes the following items for the nine months ended September 30, 2021 and 2020:

(i) net loss of $(24) and $(200) and (ii) interest expense of $79 and $89, respectively.

Total revenues increased $1.8 million during the three months ended September 30, 2021, primarily due to an increase of $1.9 million in the offshore energy business which reflects higher victualling income on one of our vessels.

Total revenues decreased $2.2 million during the nine months ended September 30, 2021, primarily due to a decrease of $2.5 million in the offshore energy business as one of our vessels was on hire longer in 2020 compared to 2021.

Comparison of the three months ended September 30, 2021 and 2020

Total expenses increased $30.1 million primarily due to higher (i) interest expense and (ii) acquisition and transaction expenses.

Interest expense increased $25.0 million, which reflects an increase in the average outstanding debt of approximately $892.7 million due to increases in (i) the Senior Notes due 2028 of $667.5 million, (ii) the Bridge Loans (as defined in Note 8) of $433.3 million, (iii) the Senior Notes due 2025 of $406.8 million and (iv) the Revolving Credit Facility (as defined below in Liquidity and Capital Resources) of $83.3 million, partially offset by a decrease in (v) the Senior Notes due 2022 of $698.3 million, which was redeemed in full in May 2021.

Acquisition and transaction expense increased $5.1 million, primarily due to professional fees related to the acquisition of Transtar in July 2021.

Comparison of the nine months ended September 30, 2021 and 2020

Total expenses increased $58.9 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 $52.3 million, which reflects an increase in the average outstanding debt of approximately $688.8 million primarily due to increases in (i) the Senior Notes due 2025 of $407.1 million, (ii) the Senior Notes due 2028 of $389.2 million, (iii) the Senior Notes due 2027 of $266.7 million, (iv) the Bridge Loans of $144.4 million and (v) the Revolving Credit Facility of $10.0 million, partially offset by a decrease in (vi) the Senior Notes due 2022 of $520.7 million, which was redeemed in full in May 2021.

Acquisition and transaction expense increased $7.8 million, primarily due to professional fees related to the acquisition of Transtar in July 2021.

Management fees and incentive allocation to affiliate decreased $2.2 million, which reflects a decrease in the base management fee as our average total equity is lower in 2021 compared to 2020.

General and administrative expense decreased $1.1 million, primarily due to lower professional fees.

Other expense

Total other expense increased $3.0 million and $2.8 million during the three and six months ended June 30, 2021, respectively, primarily due to a loss on extinguishment of debt of $3.3 million related to the redemption of the Senior Notes due 2022 in May 2021.

Total other expense increased $2.8 million during the nine months ended September 30, 2021, primarily due to (i) a loss on extinguishment of debt of $3.3 million related to the redemption of the Senior Notes due 2022 in May 2021, partially offset by (ii) an increase of $0.5 million in equity in earnings of unconsolidated entities.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA decreased $3.0 million and $4.9 million during the three and six months ended June 30, 2021, respectively, primarily due to the changes noted above.

Adjusted EBITDA decreased $0.4 million and $5.2 million during the three and nine months ended September 30, 2021, respectively, primarily due to the changes noted above.

Liquidity and Capital Resources

1 unchanged sentence

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

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

In July 2021, we drew down an additional $50 million under the Revolving Credit Facility.

Following the drawdown, we have additional borrowing capacity of $100 million under the Revolving Credit Facility.

In July 2021, we entered into a senior unsecured bridge term loan facility (the “Bridge Facility”) in an aggregate principal amount of $650 million in order to finance the acquisition of Transtar, LLC, which closed on July 28, 2021.

The Bridge Facility matures in one year and bears interest at the Adjusted Eurodollar Rate (determined in accordance with the credit agreement) plus 5.50% per annum (the “Initial Margin”) for the first three-month period.

The Initial Margin will increase by an additional 50 basis points at the end of each three-month period thereafter until maturity.

During the third quarter of 2021 we plan to raise debt and/or equity to refinance the Bridge Facility.

In July 2021, we entered into a senior unsecured bridge term loan facility (the “Bridge Loans”) in an aggregate principal amount of $650 million in order to finance the acquisition of Transtar, which closed on July 28, 2021.

We issued new equity and debt in September 2021, as described below, and repaid in full the Bridge Loans.

In August 2021, Jefferson issued $425 million aggregate principal amount of Series 2021 Bonds (see Note 10 to the consolidated financial statements).

Jefferson used a portion of the net proceeds from the Series 2021 Bonds to repay certain indebtedness, and intend to use a portion of the net proceeds to pay for or reimburse the cost of development, construction and acquisition of certain facilities.

In September 2021, we issued 12,000,000 common shares and received net proceeds of approximately $291.7 million after deducting underwriting discounts and offering expenses (see Note 20 to the consolidated financial statements).

The proceeds were used to repay a portion of the Bridge Loans.

Additionally, in October 2021, the underwriters exercised an option to purchase an additional 1,283,863 common shares and we received net proceeds of approximately $31 million.

In September 2021, we issued an additional $500 million aggregate principal amount of the Senior Notes due 2028 (see Note 10 to the consolidated financial statements).

We used a portion of the net proceeds to repay in full the Bridge Loans.

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 $265.1 million and $341.5 million during the six months ended June 30, 2021 and 2020, respectively.

• Dividends to shareholders and holders of eligible participating securities were $68.0 million and $65.4 million during the six months ended June 30, 2021 and 2020, respectively.

• Cash used for the purpose of making investments was $484.7 million and $470.3 million during the nine months ended September 30, 2021 and 2020, respectively.

• Cash used for the acquisition of a business, net of cash acquired was $627.4 million during the nine months ended September 30, 2021.

• Dividends to shareholders and holders of eligible participating securities were $103.2 million and $98.4 million during the nine months ended September 30, 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.

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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 (used in) provided from operating activities, plus the principal collections on finance leases and maintenance reserve collections were $(46.4) million and $66.5 million during the six months ended June 30, 2021 and 2020, respectively.

• During the six months ended June 30, 2021, additional borrowings were obtained in connection with the (i) Senior Notes due 2028 of $500.0 million, (ii) Revolving Credit Facility of $250.0 million and (iii) EB-5 Loan Agreement of $26.1 million.

We made total principal repayments of $552.7 million relating to the Senior Notes due 2022 and Revolving Credit Facility.

During the six months ended June 30, 2020, additional borrowings were obtained in connection with the (i) Series 2020 Bonds of $264.0 million and (ii) Revolving Credit Facility of $195.0 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 $57.2 million and $37.7 million during the six months ended June 30, 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 six months ended June 30, 2021.

• Cash flows provided from operating activities, plus the principal collections on finance leases and maintenance reserve collections were $4.1 million and $60.5 million during the nine months ended September 30, 2021 and 2020, respectively.

• During the nine months ended September 30, 2021, additional borrowings were obtained in connection with the (i) Senior Notes due 2028 of $1,002.5 million, (ii) Bridge Loans of $650.0 million, (iii) Revolving Credit Facility of $450.0 million, (iv) Series 2021 Bonds of $425.0 million and (v) EB-5 Loan Agreement of $26.1 million.

We made total principal repayments of $1,452.7 million relating to the Bridge Loans, Senior Notes due 2022 and Revolving Credit Facility.

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.

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.

• Proceeds from the sale of assets were $78.5 million and $53.7 million during the nine months ended September 30, 2021 and 2020, respectively.

• Proceeds from the issuance of common shares, net of underwriter’s discount and issuance costs were $291.8 million during the nine months ended September 30, 2021.

• Proceeds from the issuance of preferred shares, net of underwriter’s discount and issuance costs were $101.2 million and $20.2 million during the nine months ended September 30, 2021 and 2020, respectively.

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

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Historical Cash Flow

Comparison of the six months ended June 30, 2021 and 2020

The following table compares the historical cash flow for the six months ended June 30, 2021 and 2020:

Six Months Ended June 30,

Comparison of the nine months ended September 30, 2021 and 2020

The following table compares the historical cash flow for the nine months ended September 30, 2021 and 2020:

Nine Months Ended September 30,

(in thousands) 2021 2020

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Net cash provided by financing activities 1,349,020 299,689

Net cash used in operating activities increased $108.6 million, which primarily reflects (i) an increase in our net loss of $52.7 million primarily due to lower revenues and higher interest expense and (ii) changes in working capital of $30.6 million.

Net cash used in investing activities decreased $93.9 million, primarily due to (i) a decrease in acquisitions of property, plant and equipment of $45.9 million, (ii) a decrease in acquisitions of leasing equipment of $36.2 million and (ii) lower proceeds from the sale of leasing equipment of $19.5 million.

Net cash provided by financing activities increased $139.0 million, primarily due to (i) an increase in proceeds from debt of $317.1 million, (ii) an increase in proceeds from the issuance of preferred shares of $101.5 million, partially offset by (iii) an increase in repayments of debt of $276.7 million.

Net cash used in operating activities increased $49.1 million, which primarily reflects (i) an increase in our net loss of $66.9 million primarily due to higher interest expense and operating expenses and (ii) changes in working capital of $31.5 million.

Net cash used in investing activities increased $623.1 million, primarily due to (i) our acquisition of Transtar, (ii) an increase in investments in unconsolidated entities of $50.1 million, (iii) an increase in acquisitions of leasing equipment of $46.7 million, partially offset by (iv) a decrease in acquisitions of property, plant and equipment of $100.3 million and (v) lower proceeds from the sale of leasing equipment of $24.8 million.

Net cash provided by financing activities increased $1,049.3 million, primarily due to (i) an increase in proceeds from debt of $1,669.6 million, (ii) an increase in proceeds from the issuance of common shares of $291.8 million and (iii) an increase in proceeds from the issuance of preferred shares of $81.0 million, partially offset by (iv) an increase in repayments of debt of $956.7 million.

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

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

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands) 2021 2020

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________________________________________________________

(1) Required payments on debt obligations for the six months ended June 30, 2021 exclude repayments of $402,704 for the Senior Notes due 2022 and $150,000 for the Revolving Credit Facility and for the six months ended June 30, 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.

(1) Required payments on debt obligations for the nine months ended September 30, 2021 exclude repayments of $650,000 for the Bridge Loans, $400,000 for the Revolving Credit Facility and $402,704 for the Senior Notes due 2022 and 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.

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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Contractual Obligations

The following table summarizes our future obligations, by period due, as of June 30, 2021, under our various contractual obligations and commitments.

We had no off-balance sheet arrangements as of June 30, 2021.

The following table summarizes our future obligations, by period due, as of September 30, 2021, under our various contractual obligations and commitments.

We had no off-balance sheet arrangements as of September 30, 2021.

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

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

Series 2021 Bonds — — — — — 425,000 425,000

DRP Revolver 25,000 — — — — — 25,000

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Operating lease obligations 4,224 9,589 7,875 6,901 6,677 148,455 183,721

Capital lease obligations 223 890 763 237 21 — 2,134

44,674 196,126 186,752 184,324 168,973 589,519 1,370,368

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________________________________________________________

(1) Estimated interest rates as of June 30, 2021.

(1) Estimated interest rates as of September 30, 2021.

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

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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 as of both June 30, 2021 and December 31, 2020.

The carrying amount of goodwill was approximately $239.9 million and $122.7 million as of September 30, 2021 and December 31, 2020.

The increase in goodwill was due to our acquisition of Transtar in July 2021.

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

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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