FTAI Aviation Ltd. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help you understand Fortress Transportation and Infrastructure Investors LLC (the “Company,” “we,” “our” or “us”). Our MD&A should be read in conjunction with our unaudited consolidated financial statements and the accompanying notes, and with Part II, Item 1A, “Risk Factors” included elsewhere in this Quarterly Report on Form 10-Q. Overview We own and acquire high quality infrastructure and related equipment that is essential for the transportation of goods and people globally. We target assets that, on a combined basis, generate strong cash flows with potential for earnings growth and asset appreciation. We believe that there 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, 2022, we had total consolidated assets of $2,278.0 million and total equity of $26.0 million. Impact of Russia’s Invasion of Ukraine Due to Russia’s invasion of Ukraine during the first quarter of 2022, the United States, European Union, United Kingdom, and others have imposed economic sanctions and export controls against Russia and Russia’s aviation industry. The sanctions include but are not limited to the ban on the export and sale or lease of all aircraft, engines, and equipment and on all related repair and maintenance services to Russia and Russian airlines. We have complied, and will continue to comply, with all applicable sanctions and we have terminated the leases of all our aircraft and engines with Russian airlines. As a result of the sanctions imposed on Russian airlines and related lease terminations, we recognized approximately $47.1 million in provision for credit losses during the nine months ended September 30, 2022. We continue to pursue efforts to remove and repossess all of our aircraft and engines from Russia and Ukraine. As of September 30, 2022, four aircraft and two engines were still located in Ukraine and eight aircraft and seventeen engines were still located in Russia. We determined that it is unlikely that we will regain possession of the aircraft that had not been recovered from Ukraine and Russia during the first quarter of 2022. As a result, we recognized an impairment charge totaling $120.0 million, net of maintenance deposits, to write-off the carrying value of leasing equipment assets that we have not recovered from Ukraine and Russia for the nine months ended September 30, 2022. Our lessees are required to provide insurance coverage with respect to leased aircraft and engines, and we are named as insureds under those policies in the event of a total loss of an aircraft or engine. We also purchase insurance which provides us with coverage when our aircraft or engines are not subject to a lease or where a lessee’s policy fails to indemnify us. The insured value of the aircraft and engines that remain in Ukraine and Russia is approximately $294.0 million. We are pursuing all our claims under these policies. However, the timing and amount of any recoveries under these policies are uncertain. The extent of the impact of Russia’s invasion of Ukraine and the related sanctions on our operational and financial performance, including the ability for us to recover our leasing equipment in the region, will depend on future developments, including the duration of the conflict, sanctions and restrictions imposed by Russian and international governments, all of which remain uncertain. 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 revenues during the years ended December 31, 2021 and 2020. However, our revenues have continued to recover during the nine months ended September 30, 2022. 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 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.” Spin-Off of FTAI Infrastructure Inc. (“FTAI Infrastructure”) On April 28, 2022, the Board of Directors of the Company unanimously approved the spin-off of the Company’s infrastructure business held by FTAI Infrastructure (a wholly owned subsidiary of the Company). The spin-off was effected as a distribution of all of the shares owned by the Company of common stock of FTAI Infrastructure to the holders of the Company’s common shares as of July 21, 2022. The distribution was completed on August 1, 2022. FTAI Infrastructure is a corporation for U.S. federal income tax purposes and holds, among other things, the Company’s previously held interests in the (i) Jefferson Terminal business, (ii) Repauno business, (iii) Long Ridge investment, and (iv) Transtar business. FTAI Infrastructure retained all related project-level debt of those entities. In connection with the spin-off, FTAI Infrastructure paid a dividend of $730.3 million to the Company. The Company used these proceeds to repay all 39 outstanding borrowings under its 2021 bridge loans, $200.0 million of its 6.50% senior unsecured notes due 2025, and approximately $175.0 million of the outstanding borrowings under its revolving credit facility. FTAI retained the aviation business and certain other assets, and FTAI’s remaining outstanding corporate indebtedness. In connection with the spin-off, the Company and the Manager assigned the Company’s then-existing management agreement to FTAI Infrastructure, and FTAI Infrastructure and the Manager executed an amended and restated agreement. The Company and certain of its subsidiaries executed a new management agreement with the Manager. The new management agreement has an initial term of six years. The Manager is entitled to a management fee and reimbursement of certain expenses on substantially similar terms as the previous arrangements with the Manager, which were assigned to FTAI Infrastructure. Prior to the merger described below, our Manager will remain entitled to incentive allocations (comprised of income incentive allocation and capital gains incentive allocation) on the same terms as they exist today. Following the merger, the Company will enter into a Services and Profit Sharing Agreement (the “Services and Profit Sharing Agreement”), with a subsidiary of the Company and Fortress Worldwide Transportation and Infrastructure Master GP LLC (“Master GP”), pursuant to which Master GP will be entitled to incentive allocations on substantially similar terms as the previous arrangements. On August 12, 2022, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, FTAI Finance Holdco Ltd. (which following the completion of the merger will be named FTAI Aviation Ltd.), a Cayman Islands exempted company and an indirect subsidiary of the Company (“FTAI Aviation”), and FTAI Aviation Merger Sub LLC, a Delaware limited liability company and a direct, wholly-owned subsidiary of FTAI Aviation (“Merger Sub”), pursuant to which, among other things, Merger Sub will merge with and into the Company (the “merger”), with the Company surviving as a wholly owned subsidiary of FTAI Aviation. If the merger is approved by the Company’s public common shareholders, shares of the Company will be exchanged automatically for shares of FTAI Aviation without any further action from the shareholders. The merger is subject to a number of conditions to closing as specified in the Merger Agreement. These closing conditions include, among others, holders of Company common shares having approved the merger. A proposal to approve and adopt the merger agreement will be presented at a special meeting of the Company’s shareholders to be held on November 9, 2022 at 8:00 a.m. Operating Segments During the third quarter of 2022, as a result of the spin-off of FTAI Infrastructure effective on August 1, 2022, the Company reevaluated its operating segments. The key factors used to identify the reportable segments are the organization and alignment of our internal operations and the nature of our products and services. Our two reportable segments are (i) Aviation Leasing and (ii) Aerospace Products. The Aviation Leasing segment owns and manages aviation assets, including aircraft and aircraft engines, which it leases and sells to customers. The Aerospace Products segment develops, manufactures, repairs, and sells aircraft engines and aftermarket components for aircraft engines. The interim periods disclose the reportable segments under the basis that prior periods were restated to reflect the change in accordance with the requirements of ASC 280. Corporate and Other primarily consists of debt, unallocated corporate general and administrative expenses, shared services costs, and management fees. Additionally, Corporate and Other also includes offshore energy related assets, which consist of vessels and equipment that support offshore oil and gas activities and production which are typically subject to operating leases. Our Manager On December 27, 2017, SoftBank Group Corp. (“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. Results of Operations Adjusted EBITDA (Non-GAAP) The chief operating decision maker (“CODM”) utilizes Adjusted EBITDA as the key performance measure. Adjusted EBITDA is not a financial measure in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). 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. During the third quarter of 2022, the Company changed its measure of segment profit to include the add back of dividends on preferred shares in Adjusted EBITDA. 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, dividends on preferred shares and interest expense, (b) to include the impact of our pro-rata share of Adjusted EBITDA from unconsolidated entities, and (c) to exclude the impact of equity in earnings (losses) of unconsolidated entities and the non-controlling share of Adjusted EBITDA. 40 Comparison of the three and nine months ended September 30, 2022 and 2021 The following table presents our consolidated results of operations: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2022 2021 2022 2021 Revenues Lease income $ 50,079 $ 42,778 $ 7,301 $ 128,831 $ 125,907 $ 2,924 Maintenance revenue 35,507 40,252 (4,745) 112,171 87,763 24,408 Finance lease income 119 439 (320) 332 1,285 (953) Aerospace products revenue 53,401 7,730 45,671 94,211 13,284 80,927 Asset sales revenue 85,488 — 85,488 85,488 — 85,488 Other revenue 5,771 7,975 (2,204) 13,087 9,113 3,974 Total revenues 230,365 99,174 131,191 434,120 237,352 196,768 Expenses Operating expenses 27,393 15,339 12,054 108,197 34,191 74,006 Cost of sales 95,948 5,367 90,581 120,139 8,577 111,562 General and administrative 3,354 3,679 (325) 11,821 9,618 2,203 Acquisition and transaction expenses 2,848 6,583 (3,735) 8,340 12,626 (4,286) Management fees and incentive allocation to affiliate 4 16 (12) 4 704 (700) Depreciation and amortization 34,853 36,237 (1,384) 115,461 106,374 9,087 Asset impairment 4,495 859 3,636 128,171 3,048 125,123 Interest expense 40,171 50,096 (9,925) 132,197 115,598 16,599 Total expenses 209,066 118,176 90,890 624,330 290,736 333,594 Other (expense) income Equity in losses of unconsolidated entities (358) (369) 11 (125) (1,050) 925 Gain on sale of assets, net — 12,685 (12,685) 79,933 17,467 62,466 Loss on extinguishment of debt (19,861) — (19,861) (19,861) (3,254) (16,607) Other (expense) income (1,038) (1,341) 303 208 (717) 925 Total other (expense) income (21,257) 10,975 (32,232) 60,155 12,446 47,709 Income (loss) from continuing operations before income taxes 42 (8,027) 8,069 (130,055) (40,938) (89,117) Provision for income taxes 4,189 485 3,704 7,357 824 6,533 Net loss from continued operations (4,147) (8,512) 4,365 (137,412) (41,762) (95,650) Net loss from discontinued operations, net of income taxes (14,782) (30,931) 16,149 (101,416) (69,165) (32,251) Net loss (18,929) (39,443) 20,514 (238,828) (110,927) (127,901) Less: Net loss attributable to non-controlling interests in consolidated subsidiaries: Continuing operations — — — — — — Discontinued operations (2,871) (7,363) 4,492 (18,817) (18,949) 132 Less: Dividends on preferred shares 6,791 6,791 — 20,373 17,967 2,406 Net loss attributable to shareholders $ (22,849) $ (38,871) $ 16,022 $ (240,384) $ (109,945) $ (130,439) 41 The following table sets forth a reconciliation of net loss attributable to shareholders from continuing operations to Adjusted EBITDA: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2022 2021 2022 2021 Net loss attributable to shareholders from continuing operations $ (10,938) $ (15,303) $ 4,365 $ (157,785) $ (59,729) $ (98,056) Add: Provision for income taxes 4,189 485 3,704 7,357 824 6,533 Add: Equity-based compensation expense — — — — — — Add: Acquisition and transaction expenses 2,848 6,583 (3,735) 8,340 12,626 (4,286) Add: Losses on the modification or extinguishment of debt and capital lease obligations 19,861 — 19,861 19,861 3,254 16,607 Add: Changes in fair value of non-hedge derivative instruments — — — — — — Add: Asset impairment charges 4,495 859 3,636 128,171 3,048 125,123 Add: Incentive allocations — — — — — — Add: Depreciation and amortization expense (1) 41,329 42,681 (1,352) 145,754 127,723 18,031 Add: Interest expense and dividends on preferred shares 46,962 56,887 (9,925) 152,570 133,565 19,005 Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2) (241) (312) 71 165 (906) 1,071 Less: Equity in losses of unconsolidated entities 358 369 (11) 125 1,050 (925) Less: Non-controlling share of Adjusted EBITDA — — — — — — Adjusted EBITDA (non-GAAP) $ 108,863 $ 92,249 $ 16,614 $ 304,558 $ 221,455 $ 83,103 ________________________________________________________ (1) Includes the following items for the three months ended September 30, 2022 and 2021: (i) depreciation and amortization expense of $34,853 and $36,237, (ii) lease intangible amortization of $3,291 and $1,266 and (iii) amortization for lease incentives of $3,185 and $5,178, respectively. Includes the following items for the nine months ended September 30, 2022 and 2021: (i) depreciation and amortization expense of $115,461 and $106,374, (ii) lease intangible amortization of $10,259 and $3,216 and (iii) amortization for lease incentives of $20,034 and $18,133, respectively. (2) Includes the following items for the three months ended September 30, 2022 and 2021: (i) net loss of $358 and $369 and (ii) depreciation and amortization expense of $117 and $57, respectively. Includes the following items for the nine months ended September 30, 2022 and 2021: (i) net loss of $125 and $1,050 and (ii) depreciation and amortization expense of $290 and $144, respectively. Revenues Presentation of assets sales During the three months ended September 30, 2022, we updated our corporate strategy based on the opportunities available in the market such that the sale of aircraft and engines is now an output of our recurring, ordinary activities. As a result of this update, the transaction price allocated to the sale of assets is included in Revenues in the Consolidated Statement of Operations for the three months ended September 30, 2022 and are accounted for in accordance with ASC 606. The corresponding net book values of the assets sold are recorded in Cost of sales in the Consolidated Statement of Operations for the three months ended September 30, 2022. Sales transactions of aircraft and engines prior to the three months ended September 30, 2022 were accounted for in accordance with ASC 610-20, Gains and losses from the derecognition of nonfinancial assets and were included in Gain on sale of assets, net on the Consolidated Statement of Operations, as we were previously only occasionally selling these assets. Generally, assets sold were under leasing arrangements with customers prior to sales and are included in leasing equipment, net, on the Consolidated Balance Sheets. Comparison of the three months ended September 30, 2022 and 2021 Total revenues increased $131.2 million driven by an increase in asset sales revenue, Aerospace Products revenue and lease income partially offset by decreases in maintenance revenue and other revenue. Asset sales revenue increased $85.5 million primarily due to an increase in the sale of commercial aircraft and engines in our Aviation Leasing segment during 2022. See above discussion regarding presentation of asset sales. Aerospace Products revenue increased $45.7 million driven by an increase in sales relating to the CFM56-7B and CFM56-5B engines, engine modules, spare parts and used material inventory as operations continue to ramp-up in 2022. See above discussion regarding presentation of asset sales. Lease income increased $7.3 million, which primarily reflects an increase of $7.4 million in the Offshore Energy business as two of our vessels were on-hire longer in 2022 compared to 2021. 42 Maintenance revenue decreased $4.7 million in the Aviation Leasing segment, primarily due to the early redelivery of aircraft and lower maintenance billings related to the early termination of aircraft leases with Russian airlines as a result of the sanctions imposed on Russian airlines, partially offset by an increase in the number of aircraft and engines placed on lease and higher aircraft and engine utilization. Other revenue decreased $2.2 million, which primarily reflects a decrease of $1.7 million in the Aviation Leasing segment due to lower end-of lease redelivery compensation. Comparison of the nine months ended September 30, 2022 and 2021 Total revenues increased $196.8 million driven by an increase in asset sales revenue, Aerospace Products revenue, maintenance revenue, other revenue and lease income. Asset sales revenue increased $85.5 million primarily due to an increase in the sale of commercial aircraft and engines in our Aviation Leasing segment in 2022. See above discussion regarding presentation of asset sales. Aerospace Products revenue increased $80.9 million driven by an increase in sales relating to the CFM56-7B and CFM56-5B engines, engine modules, spare parts and used material inventory as operations continue to ramp-up in 2022. See above discussion regarding presentation of asset sales. Maintenance revenue increased $24.4 million in the Aviation Leasing segment, primarily due to an increase in the number of aircraft and engines placed on lease, higher aircraft and engine utilization and higher end-of-lease return compensation, partially offset by a decrease in the recognition of maintenance deposits due to the early redelivery of aircraft and lower maintenance billings related to the early termination of aircraft leases with Russian airlines as a result of the sanctions imposed on Russian airlines. Other revenue increased $4.0 million, which primarily reflects (i) an increase of $2.9 million in the Aviation Leasing segment due to an increase in end-of lease redelivery compensation and (ii) an increase of $1.0 million in the Offshore Energy business as two of our vessels were on-hire longer in 2022 compared to 2021. Lease income increased $2.9 million, which primarily reflects (i) an increase of $12.0 million in the Offshore Energy business as two of our vessels were on-hire longer in 2022 compared to 2021, partially offset by (ii) a decrease of $9.1 million in the Aviation Leasing segment primarily due to the early termination of aircraft and engine leases as a result of the sanctions imposed on Russian airlines. Basic lease revenues from our owned aircraft and engines leased to Russian airlines would have been approximately $30.2 million for the nine months ended September 30, 2022. This decrease is partially offset by an increase in the number of aircraft and engines placed on lease. Expenses Comparison of the three months ended September 30, 2022 and 2021 Total expenses increased $90.9 million, primarily due to higher (i) cost of sales, (ii) operating expenses, and (iii) asset impairment, partially offset by lower (iv) interest expense, (v) acquisition and transaction expenses, and (vi) depreciation and amortization. Cost of Sales increased $90.6 million primarily as a result of increased asset sales and the gross presentation of asset sales revenue and Aerospace Product revenues as described above. Operating expenses increased $12.1 million which primarily reflects: • an increase of $7.1 million in the Offshore Energy business which reflects increases of offshore crew expenses, project costs and other operating expenses as our vessels were on-hire longer in 2022 compared to 2021. • an increase of $3.3 million in the Aviation Leasing Segment primarily as a result of an increase in insurance expense, shipping and storage fees, professional fees and other operating expenses, partially offset by a decrease in provision for credit losses. • an increase of $1.7 million in the Aerospace Products Segment primarily due to an increase in commission expenses due to the increase in sales from the used material program as well as an increase in professional fees and other operating expenses due to the ramp-up of Aerospace Products. Asset impairment increased $3.6 million for the adjustment of the carrying value of leasing equipment to fair value in our Aviation Leasing segment. See Note 4 to the consolidated financial statements for additional information. Interest expense decreased $9.9 million, which reflects a decrease in the average outstanding debt of approximately $113.2 million due to decreases in (i) the Bridge Loans of $433 million, which were fully paid off in September 2021, (ii) the Senior Notes due 2025 of $132.8 million, which were partially redeemed in August 2022, partially offset by increases in (iii) the Senior Notes due 2028 of $334.7 million, (iv) the 2021 Bridge Loans issued in December 2021 and February 2022 of $113.3 million, and (v) the Revolving Credit Facility of $5.0 million. Acquisition and transaction expenses decreased $3.7 million primarily due to a decrease in professional fees related to the Transtar acquisition in 2021. 43 Depreciation and amortization decreased $1.4 million primarily due to an increase in the number of aircraft redelivered and parted out into our engine leasing pool. Comparison of the nine months ended September 30, 2022 and 2021 Total expenses increased $333.6 million, primarily due to higher (i) asset impairment charges, (ii) cost of sales, (iii) operating expenses, (iv) interest expense, (v) depreciation and amortization, partially offset by lower (vi) acquisition and transaction expenses. Asset impairment increased $125.1 million primarily due to the write down of aircraft and engines located in Ukraine and Russia that may not be recoverable. See Note 4 to the consolidated financial statements for additional information. Cost of sales increased $111.6 million primarily as a result of an increase in asset sales and the gross presentation of asset sales revenue and Aerospace Product revenues as described above. Operating expenses increased $74.0 million which primarily reflects: • an increase of $58.0 million in the Aviation Leasing segment primarily as a result of an increase in provision for credit losses as a result of the sanctions imposed on Russian airlines, an increase in insurance expense, shipping and storage fees, professional fees and repairs and maintenance expenses. • an increase of $11.5 million in the Offshore Energy business which reflects increases of offshore crew expenses, project costs and other operating expenses as our vessels were on-hire longer in 2022 compared to 2021. • an increase of $4.6 million in the Aerospace Products segment primarily due to an increase in commission expenses due to the increase in sales from the used material program as well as an increase in professional fees and other operating expenses due to the ramp-up of Aerospace Products. Interest expense increased $16.6 million, which reflects an increase in the average outstanding debt of approximately $577.8 million due to increases in (i) the Senior Notes due 2028 of $613.1 million, (ii) the 2021 Bridge Loans issued in December 2021 and February 2022 of $237.7 million and (iii) the Revolving Credit Facility of $73.4 million, partially offset by a decrease in (iv) the Bridge Loans of $144.4 million, (v) the Senior Notes due 2022 of $177.4 million, which was redeemed in full in May 2021, and (vi) the Senior Notes due 2025 of $44.6 million, which were partially redeemed in August 2022. Depreciation and amortization increased $9.1 million primarily driven by an increase in the number of asset s owned and on lease in the Aviation Leasing segment, partially offset by an increase in the number of aircraft redelivered and parted out into our engine leasing pool. Acquisition and transaction expenses decreased $4.3 million primarily due to a decrease in professional fees related to the Transtar acquisition in 2021. Other income (expense) Total other income decreased $32.2 million during three months ended September 30, 2022 which primarily reflects (i) a loss on extinguishment of debt of $19.9 million related to the pay-down of the 2021 Bridge Loan issued in December 2021 and February 2022 and the partial redemption of the Senior Notes due 2025 and (ii) a decrease of $12.7 million in gain on sale of assets, net in the Aviation Leasing and Aerospace Products segments from less opportunistic asset sales. See above discussion regarding presentation of asset sales. Total other income increased $47.7 million during nine months ended September 30, 2022 which primarily reflects (i) an increase of $62.4 million in gain on sale of assets, net in the Aviation Leasing and Aerospace Products segments from opportunistic asset sales transactions, partially offset by (ii) an increase of $16.6 million in loss on extinguishment of debt primarily related to the 2022 pay-down of the 2021 Bridge Loan issued December 2021 and February 2022 and the partial redemption of the Senior Notes due 20 25. See above discussion regarding presentation of asset sales. Net income (loss) from continuing operations Net loss from continuing operations decreased $4.4 million for the three months ended September 30, 2022 and increased $95.7 million for the nine months ended September 30, 2022 as compared to the same periods during the prior year primarily due to the changes noted above. Net income (loss) from discontinued operations Net loss from discontinued operations decreased $16.1 million for the three months ended September 30, 2022 compared to the prior year due to: • Increased terminal services revenues at Jefferson due to additional storage and increased volume year over year; • An increase from a full quarter of income from Transtar, which was acquired in July 28, 2021; and • Offset by an increase in our equity pick-up in net losses of the Long Ridge investment. 44 Net loss from discontinued operations increased $32.3 million for the nine months ended September 30, 2022 as compared to the prior year due to: • An increase in acquisition and transaction expenses due to spin-related costs incurred during 2022 for the spin-off of Infrastructure on August 1, 2022; • An increase in interest expense related to the Series 2021A Bonds issued during Q3 2021; • An increase in our equity pick-up in net losses of the Long Ridge investment; and • Offset by a full quarter of income from Transtar, which was acquired in July 28, 2021. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased $16.6 million and $83.1 million during the three and nine months ended September 30, 2022, respectively, primarily due to the changes noted above. Aviation Leasing Segment As of September 30, 2022, in our Aviation Leasing segment, we own and manage 325 aviation assets, consisting of 96 commercial aircraft and 229 engines, including four aircraft and two engines that were still located in Ukraine and eight aircraft and seventeen engines that were still located in Russia. As of September 30, 2022, 73 of our commercial aircraft and 124 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 72% utilized during the three months ended September 30, 2022, based on the percent of days on-lease in the quarter weighted by the monthly average equity value of our aviation leasing equipment, excluding airframes. Our aircraft currently have a weighted average remaining lease term of 39 months, and our engines currently on-lease have an average remaining lease term of 13 months. The table below provides additional information on the assets in our Aviation Leasing segment: Aviation Leasing Assets Widebody Narrowbody Total Aircraft Assets at January 1, 2022 13 95 108 Purchases 1 22 23 Sales (3) (2) (5) Transfers (2) (28) (30) Assets at September 30, 2022 9 87 96 Engines Assets at January 1, 2022 68 139 207 Purchases 2 43 45 Sales (26) (24) (50) Transfers 5 22 27 Assets at September 30, 2022 49 180 229 45 The following table presents our results of operations: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2022 2021 2022 2021 Revenues Lease income $ 40,273 $ 40,392 $ (119) $ 111,316 $ 120,389 $ (9,073) Maintenance revenue 35,507 40,252 (4,745) 112,171 87,763 24,408 Finance lease income 119 439 (320) 332 1,285 (953) Asset sales revenue 85,488 — 85,488 85,488 — 85,488 Other revenue 3,461 5,125 (1,664) 8,687 5,761 2,926 Total revenues 164,848 86,208 78,640 317,994 215,198 102,796 Expenses Operating expenses 10,533 7,282 3,251 72,135 14,177 57,958 Cost of sales 64,855 — 64,855 64,855 — 64,855 Acquisition and transaction expenses 247 234 13 624 804 (180) Depreciation and amortization 32,728 34,181 (1,453) 109,147 100,381 8,766 Asset impairment 4,495 859 3,636 128,171 3,048 125,123 Total expenses 112,858 42,556 70,302 374,932 118,410 256,522 Other (expense) income Equity in (losses) earnings of unconsolidated entities (45) — (45) 753 — 753 Gain on sale of assets, net — 10,961 (10,961) 61,371 15,751 45,620 Other income (expense) 42 (1,341) 1,383 245 (717) 962 Total other (expense) income (3) 9,620 (9,623) 62,369 15,034 47,335 Income before income taxes 51,987 53,272 (1,285) 5,431 111,822 (106,391) Provision for income taxes 926 595 331 2,116 909 1,207 Net income 51,061 52,677 (1,616) 3,315 110,913 (107,598) Less: Net loss attributable to non-controlling interest in consolidated subsidiaries — — — — — — Net income attributable to shareholders from continuing operations $ 51,061 $ 52,677 $ (1,616) $ 3,315 $ 110,913 $ (107,598) 46 The following table sets forth a reconciliation of net income attributable to shareholders from continuing operations to Adjusted EBITDA: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2022 2021 2022 2021 Net income attributable to shareholders from continuing operations $ 51,061 $ 52,677 $ (1,616) $ 3,315 $ 110,913 $ (107,598) Add: Provision for income taxes 926 595 331 2,116 909 1,207 Add: Equity-based compensation expense — — — — — — Add: Acquisition and transaction expenses 247 234 13 624 804 (180) Add: Losses on the modification or extinguishment of debt and capital lease obligations — — — — — — Add: Changes in fair value of non-hedge derivative instruments — — — — — — Add: Asset impairment charges 4,495 859 3,636 128,171 3,048 125,123 Add: Incentive allocations — — — — — — Add: Depreciation and amortization expense (1) 39,204 40,625 (1,421) 139,440 121,730 17,710 Add: Interest expense and dividends on preferred shares — — — — — — Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2) 16 — 16 875 — 875 Less: Equity in (earnings) losses of unconsolidated entities 45 — 45 (753) — (753) Less: Non-controlling share of Adjusted EBITDA — — — — — — Adjusted EBITDA (non-GAAP) $ 95,994 $ 94,990 $ 1,004 $ 273,788 $ 237,404 $ 36,384 ________________________________________________________ (1) Includes the following items for the three months ended September 30, 2022 and 2021: (i) depreciation expense of $32,728 and $34,181, (ii) lease intangible amortization of $3,291 and $1,266 and (iii) amortization for lease incentives of $3,185 and $5,178, respectively. Includes the following items for the nine months ended September 30, 2022 and 2021: (i) depreciation expense of $109,147 and $100,381, (ii) lease intangible amortization of $10,259 and $3,216 and (iii) amortization for lease incentives of $20,034 and $18,133, respectively. (2) Includes the following items for the three and nine months ended September 30, 2022: (i) net loss of $45 and net income of $753 and (ii) depreciation and amortization of $61 and $122, respectively. Revenues Comparison of the three months ended September 30, 2022 and 2021 Total revenue increased $78.6 million driven by an increase in asset sales revenue, partially offset by lower maintenance revenue and other revenue. • Asset sales revenue increased $85.5 million primarily due to an increase in the sale of commercial aircraft and engines during 2022. See above discussion regarding presentation of asset sales. • Maintenance revenue decreased $4.7 million primarily due to the early redelivery of aircraft and lower maintenance billings related to the early termination of aircraft leases with Russian airlines as a result of the sanctions imposed on Russian airlines, partially offset by an increase in the number of aircraft and engines placed on lease and higher aircraft and engine utilization. • Other revenue decreased $1.7 million primarily due to lower end-of lease redelivery compensation. Comparison of the nine months ended September 30, 2022 and 2021 Total revenue increased $102.8 million driven by an increase in asset sales revenue, maintenance revenue and other revenue, partially offset by a decrease in lease income. • Asset sales revenue increased $85.5 million primarily due to an increase in the sale of commercial aircraft and engines during 2022. See above discussion regarding presentation of asset sales. • Maintenance revenue increased $24.4 million primarily due to an increase in the number of aircraft and engines placed on lease, higher aircraft and engine utilization and higher end-of-lease return compensation, partially offset by a decrease in the recognition of maintenance deposits due to the early redelivery of aircraft and lower maintenance billings related to the early termination of aircraft leases with Russian airlines as a result of the sanctions imposed on Russian airlines. • Other revenue increased $2.9 million primarily due to an increase in end-of lease redelivery compensation. 47 • Lease income decreased $9.1 million primarily due to the early termination of aircraft and engine leases as a result of the sanctions imposed on Russian airlines. Basic lease revenues from our owned aircraft and engines leased to Russian airlines would have been approximately $30.2 million for the nine months ended September 30, 2022. This decrease is partially offset by an increase in the number of aircraft and engines placed on lease. Expenses Comparison of the three months ended September 30, 2022 and 2021 Total expenses increased $70.3 million primarily driven by an increase in the cost of sales, asset impairment and operating expenses, partially offset by a decrease in depreciation and amortization expense. • Cost of sales increased $64.9 million primarily as a result of an increase in asset sales and the gross presentation of asset sales revenues and related cost of sales as described above. • Asset impairment increased $3.6 million for the adjustment of the carrying value of leasing equipment to fair value. See Note 4 to the consolidated financial statements for additional information. • Operating expenses increased $3.3 million primarily as a result of an increase in insurance expense, shipping and storage fees, professional fees and other operating expenses, partially offset by a decrease in provision for credit losses. • Depreciation and amortization expense decreased $1.5 million driven by an increase in the number of aircraft redelivered and parted out into our engine leasing pool. Comparison of the nine months ended September 30, 2022 and 2021 Total expenses increased $256.5 million primarily driven by an increase in asset impairment, cost of sales, operating expenses and depreciation and amortization expense. • Asset impairment increased $125.1 million primarily due to the write down of aircraft and engines located in Ukraine and Russia that may not be recoverable. See Note 4 to the consolidated financial statements for additional information. • Cost of sales increased $64.9 million primarily as a result of an increase in asset sales and the gross presentation of asset sales revenues and related costs of sales as described above. • Operating expenses increased $58.0 million primarily as a result of an increase in provision for credit losses as a result of the sanctions imposed on Russian airlines, an increase in insurance expense, shipping and storage fees, professional fees, and repairs and maintenance expenses. • Depreciation and amortization expense increased $8.8 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. Other income (expense) Total other income decreased $9.6 million during the three months ended September 30, 2022 primarily due to a decrease of $11.0 million in gain on sale of assets, net. See above discussion regarding presentation of asset sales. Total other income increased $47.3 million during the nine months ended September 30, 2022 primarily due to (i) an increase of $45.6 million in gain on the sale of assets, net due to more opportunistic sales transactions and (ii) an increase of $0.8 million in our proportionate share of unconsolidated entities’ net income. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased $1.0 million and $36.4 million during the three and nine months ended September 30, 2022, respectively, primarily due to the changes noted above. 48 Aerospace Products Segment The Aerospace Products segment develops, manufactures, repairs, and sells aircraft engines and aftermarket components primarily for the CFM56-7B and CFM56-5B commercial aircraft engines. Our engine and module sales are facilitated through The Module Factory, a dedicated commercial maintenance center designed to focus on modular repair and refurbishment of CFM56-7B and CFM56-5B engines. Used serviceable material is sold through our exclusive partnership with AAR Corp, who is responsible for the teardown, repair, marketing and sales of spare parts from our CFM56 engine pool. We also hold a 25% interest in the Advanced Engine Repair JV which focuses on developing new cost savings programs for engine repairs. The following table presents our results of operations: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2022 2021 2022 2021 Aerospace products revenue $ 53,401 $ 7,730 $ 45,671 $ 94,211 $ 13,284 $ 80,927 Expenses Operating expenses 3,491 1,774 1,717 8,094 3,519 4,575 Cost of sales 31,093 5,367 25,726 55,284 8,577 46,707 Acquisition and transaction expenses 15 — 15 15 — 15 Depreciation and amortization 77 40 37 178 40 138 Total expenses 34,676 7,181 27,495 63,571 12,136 51,435 Other (expense) income Equity in losses of unconsolidated entities (313) (369) 56 (878) (1,050) 172 Gain on sale of assets, net — 1,724 (1,724) 18,562 1,716 16,846 Total other (expense) income (313) 1,355 (1,668) 17,684 666 17,018 Income before income taxes 18,412 1,904 16,508 48,324 1,814 46,510 Provision for (benefit from) income taxes 2,586 (110) 2,696 5,055 (11) 5,066 Net income 15,826 2,014 13,812 43,269 1,825 41,444 Less: Net loss attributable to non-controlling interest in consolidated subsidiaries — — — — — — Net income attributable to shareholders from continuing operations $ 15,826 $ 2,014 $ 13,812 $ 43,269 $ 1,825 $ 41,444 49 The following table sets forth a reconciliation of net income attributable to shareholders from continuing operations to Adjusted EBITDA: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2022 2021 2022 2021 Net income attributable to shareholders from continuing operations $ 15,826 $ 2,014 $ 13,812 $ 43,269 $ 1,825 $ 41,444 Add: Provision for (benefit from) income taxes 2,586 (110) 2,696 5,055 (11) 5,066 Add: Equity-based compensation expense — — — — — — Add: Acquisition and transaction expenses 15 — 15 15 — 15 Add: Losses on the modification or extinguishment of debt and capital lease obligations — — — — — — Add: Changes in fair value of non-hedge derivative instruments — — — — — — Add: Asset impairment charges — — — — — — Add: Incentive allocations — — — — — — Add: Depreciation and amortization expense 77 40 37 178 40 138 Add: Interest expense and dividends on preferred shares — — — — — — Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (1) (257) (312) 55 (710) (906) 196 Less: Equity in losses of unconsolidated entities 313 369 (56) 878 1,050 (172) Less: Non-controlling share of Adjusted EBITDA — — — — — — Adjusted EBITDA (non-GAAP) $ 18,560 $ 2,001 $ 16,559 $ 48,685 $ 1,998 $ 46,687 ________________________________________________________ (1) Includes the following items for the three months ended September 30, 2022 and 2021: (i) net loss of $313 and $369 and (ii) depreciation and amortization of $56 and $57, respectively. Includes the following items for the nine months ended September 30, 2022 and 2021: (i) net loss of $878 and $1,050 and (ii) depreciation and amortization of $168 and $144, respectively. Revenues Comparison of the three and nine months ended September 30, 2022 and 2021 Total Aerospace Products revenue increased $45.7 million during the three months ended September 30, 2022 driven by an increase in sales relating to the CFM56-7B and CFM56-5B engines, engine modules, spare parts and used material inventory as operations continue to ramp-up in 2022. See above discussion regarding presentation of asset sales. Total Aerospace Products revenue increased $80.9 million during the nine months ended September 30, 2022 driven by an increase in sales relating to the CFM56-7B and CFM56-5B engines, engine modules, spare parts and used material inventory as operations continue to ramp-up in 2022. See above discussion regarding presentation of asset sales. Expenses Comparison of the three months ended September 30, 2022 and 2021 Total expenses increased $27.5 million primarily due to an increase in costs of sales and operating expenses. 50 • Cost of sales increased $25.7 million primarily as a result of an increase in Aerospace product revenues and the gross presentation described above. • Operating expenses increased $1.7 million primarily due to an increase in commission expenses due to the increase in sales from the used material program as well as an increase in professional fees and other operating expenses due to the ramp-up of Aerospace Products. Comparison of the nine months ended September 30, 2022 and 2021 Total expenses increased $51.4 million primarily due to an increase in costs of sales and operating expenses. • Cost of sales increased $46.7 million primarily as a result of an increase in Aerospace product revenues and the gross presentation described above. • Operating expenses increased $4.6 million primarily due to an increase in commission expenses due to the increase in sales from the used material program as well as an increase in professional fees and other operating expenses due to the ramp-up of Aerospace Products. Other income (expense) Total other income decreased $1.7 million during three months ended September 30, 2022 which primarily reflects a decrease of $1.7 million in gain on sale of assets, net. See above discussion regarding presentation of asset sales. Total other income increased $17.0 million during nine months ended September 30, 2022 which primarily reflects an increase of $16.8 million in gain on sale of assets, net due to an increase in sales relating to the CFM56-7B and CFM56-5B engines as operations continue to ramp-up in 2022. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased $16.6 million and $46.7 million during the three and nine months ended September 30, 2022, respectively, primarily due to the changes noted above. 51 Corporate and Other The following table presents our results of operations: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2022 2021 2022 2021 Revenues Lease income $ 9,806 $ 2,386 $ 7,420 $ 17,515 $ 5,518 $ 11,997 Other revenue 2,310 2,850 (540) 4,400 3,352 1,048 Total revenues 12,116 5,236 6,880 21,915 8,870 13,045 Expenses Operating expenses 13,369 6,283 7,086 27,968 16,495 11,473 General and administrative 3,354 3,679 (325) 11,821 9,618 2,203 Acquisition and transaction expenses 2,586 6,349 (3,763) 7,701 11,822 (4,121) Management fees and incentive allocation to affiliate 4 16 (12) 4 704 (700) Depreciation and amortization 2,048 2,016 32 6,136 5,953 183 Interest expense 40,171 50,096 (9,925) 132,197 115,598 16,599 Total expenses 61,532 68,439 (6,907) 185,827 160,190 25,637 Other expense Loss on extinguishment of debt (19,861) — (19,861) (19,861) (3,254) (16,607) Other expense (1,080) — (1,080) (37) — (37) Total other expense (20,941) — (20,941) (19,898) (3,254) (16,644) Loss before income taxes (70,357) (63,203) (7,154) (183,810) (154,574) (29,236) Provision for (benefit from) income taxes 677 — 677 186 (74) 260 Net loss (71,034) (63,203) (7,831) (183,996) (154,500) (29,496) Less: Net (loss) income attributable to non-controlling interests in consolidated subsidiaries: — — — — — — Less: Dividends on preferred shares 6,791 6,791 — 20,373 17,967 2,406 Net loss attributable to shareholders from continuing operations $ (77,825) $ (69,994) $ (7,831) $ (204,369) $ (172,467) $ (31,902) 52 The following table sets forth a reconciliation of net loss attributable to shareholders from continuing operations to Adjusted EBITDA: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2022 2021 2022 2021 Net loss attributable to shareholders from continuing operations $ (77,825) $ (69,994) $ (7,831) $ (204,369) $ (172,467) $ (31,902) Add: Provision for (benefit from) income taxes 677 — 677 186 (74) 260 Add: Equity-based compensation expense — — — — — — Add: Acquisition and transaction expenses 2,586 6,349 (3,763) 7,701 11,822 (4,121) Add: Losses on the modification or extinguishment of debt and capital lease obligations 19,861 — 19,861 19,861 3,254 16,607 Add: Changes in fair value of non-hedge derivative instruments — — — — — — Add: Asset impairment charges — — — — — — Add: Incentive allocations — — — — — — Add: Depreciation and amortization expense 2,048 2,016 32 6,136 5,953 183 Add: Interest expense and dividends on preferred shares 46,962 56,887 (9,925) 152,570 133,565 19,005 Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities — — — — — — Less: Equity in earnings of unconsolidated entities — — — — — — Less: Non-controlling share of Adjusted EBITDA — — — — — — Adjusted EBITDA (non-GAAP) $ (5,691) $ (4,742) $ (949) $ (17,915) $ (17,947) $ 32 Revenues Total revenues increased $6.9 million during the three months ended September 30, 2022 due to an increase of $7.4 million in the Offshore Energy business as two of our vessels were on-hire longer in Q3 2022 compared to Q3 2021. Total revenues increased $13.0 million during the nine months ended September 30, 2022 primarily due to an increase of $12.0 million in the Offshore Energy business as two of our vessels were on-hire longer in 2022 compared to 2021. Expenses Comparison of the three months ended September 30, 2022 and 2021 Total expenses decreased $6.9 million primarily due to lower interest expense and acquisition and transaction expenses, partially offset by higher operating expenses. • Interest expense decreased $9.9 million, which reflects a decrease in the average outstanding debt of approximately $113.2 million due to decreases in (i) the Bridge Loans of $433 million, which were fully paid off in September 2021, (ii) the Senior Notes due 2025 of $132.8 million, which were partially redeemed in August 2022, partially offset by increases in (iii) the Senior Notes due 2028 of $334.7 million, (iv) the 2021 Bridge Loans issued in December 2021 and February 2022 of $113.3 million, and (v) the Revolving Credit Facility of $5.0 million. • Acquisition and transaction expense decreased $3.8 million primarily due to a decrease in professional fees related to the Transtar acquisition in Q3 2021. • Operating expenses increased $7.1 million which reflects increases of offshore crew expenses, project costs and other operating expenses as our vessels were on-hire longer in Q3 2022 compared to Q3 2021. Comparison of the nine months ended September 30, 2022 and 2021 Total expenses increased $25.6 million primarily due to higher interest expense, operating expenses, general and administrative expenses partially offset by lower acquisition and transaction expenses. • Interest expense increased $16.6 million, which reflects an increase in the average outstanding debt of approximately $577.8 million due to increases in (i) the Senior Notes due 2028 of $613.1 million, (ii) the 2021 Bridge Loans issued in December 2021 and February 2022 of $237.7 million and (iii) the Revolving Credit Facility of $73.4 million, partially offset by a decrease in (iv) the Bridge Loans of $144.4 million, (v) the Senior Notes due 2022 of $177.4 million, which was redeemed in full in May 2021, and (vi) the Senior Notes due 2025 of $44.6 million, which were partially redeemed in August 2022. • Operating expenses increased $11.5 million, which reflects increases of of offshore crew expenses, project costs and other operating expenses as our vessels were on-hire longer in 2022 compared to 2021. 53 • General and administrative increased $2.2 million primarily due to an increase in reimbursable expenses to the Manager. • Acquisition and transaction expense decreased $4.1 million primarily due a decrease in professional fees related to the Transtar acquisition in 2021. Other expense Total other expense increased $20.9 million during the three months ended September 30, 2022, which primarily reflects a loss on extinguishment of debt of $19.9 million related to the pay-down of the 2021 Bridge Loans and the partial redemption of the Senior Notes due 2025. Total other expense increased $16.6 million during the nine months ended September 30, 2022, which primarily reflects $16.6 million increase in loss on extinguishment of debt primarily related to the pay-down of the 2021 Bridge Loans and the partial redemption of the Senior Notes due 2025. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA decreased $0.9 million and $0.0 million during the three and nine months ended September 30, 2022, respectively, primarily due to the changes noted above. Liquidity and Capital Resources On April 28, 2022, the Board of Directors unanimously approved the spin-off of FTAI Infrastructure. The spin-off was effected as a distribution of all of the shares owned by the Company of common stock of FTAI Infrastructure to the holders of the Company’s common shares as of July 21, 2022. The distribution was completed on August 1, 2022. In connection with the spin-off, FTAI Infrastructure paid a dividend of $730.3 million to the Company. The Company used these proceeds to repay all outstanding borrowings under its 2021 bridge loans, $200.0 million of its 6.50% senior unsecured notes due 2025, and approximately $175.0 million of the outstanding borrowings under its revolving credit facility. FTAI retained the aviation business and certain other assets, and FTAI’s remaining outstanding corporate indebtedness. We believe we have sufficient liquidity to satisfy our cash needs, however, we continue to evaluate and take action, as necessary, to preserve adequate liquidity and ensure that our business can continue to operate during these uncertain times. This includes limiting discretionary spending across the organization and re-prioritizing our investments amid the COVID-19 pandemic and market volatility. Our principal uses of liquidity have been and continue to be (i) acquisitions of aircraft and engines, (ii) dividends to our common and preferred shareholders, (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 $545.7 million and $1,112.1 million during the nine months ended September 30, 2022 and 2021, respectively. • Dividends to shareholders were $119.0 million and $103.2 million during the nine months ended September 30, 2022 and 2021, respectively. • Uses of liquidity associated with our operating expenses are captured on a net basis in our cash flows from operating activities. Uses of liquidity associated with our debt obligations are captured in our cash flows from financing activities. Our principal sources of liquidity to fund these uses have been and continue to be (i) revenues from our aviation 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 operating activities, plus the principal collections on finance leases and maintenance reserve collections were $18.5 million and $4.1 million during the nine months ended September 30, 2022 and 2021, respectively. • During the nine months ended September 30, 2022, additional borrowings were obtained in connection with the (i) 2021 Bridge Loans of $239.5 million (ii) Revolving Credit Facility of $255.0 million and (iii) EB-5 Loan Agreement of $9.5 million. We made total principal repayments of (i) $444.5 million relating to the Revolving Credit Facility, (ii) $340.0 million related to the 2021 Bridge Loans and (iii) $200.0 million related to the Senior Notes due 2025. 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 and (ii) 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. • Proceeds from the sale of assets were $267.4 million and $78.5 million during the nine months ended September 30, 2022 and 2021, respectively. 54 • Proceeds from the issuance of common shares, net of underwriter’s discount were $291.8 million, and proceeds from the issuance of preferred shares, net of underwriter’s discount and issuance costs were $101.2 million during the nine months ended September 30, 2021. We are currently evaluating several potential transactions and related financings, which could occur within the next 12 months. None of these potential transactions, negotiations, or financings 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 or related financing. Historical Cash Flow Comparison of the nine months ended September 30, 2022 and 2021 The following table compares the historical cash flow for the nine months ended September 30, 2022 and 2021: Nine Months Ended September 30, (in thousands) 2022 2021 Cash Flow Data: Net cash used in operating activities $ (21,299) $ (20,708) Net cash used in investing activities (268,367) (1,030,280) Net cash (used in) provided by financing activities (77,653) 1,349,020 Net cash used in operating activities increased $0.6 million, which primarily reflects (i) an increase in our net loss of $127.9 million, and certain adjustments to reconcile net loss to cash used in operating activities including (ii) an increase in gain on sale of assets of $88.9 million, and (iii) changes in working capital of $42.4 million, partially offset by (iv) increases in asset impairment of $125.1 million, provision for credit losses of $46.4 million, deferred income taxes of $17.2 million, equity in losses of unconsolidated entities of $36.9 million and loss on extinguishment of debt of $16.6 million. Net cash used in investing activities decreased $761.9 million, primarily due to (i) an decrease in acquisitions of business, net of cash acquired, of $623.6 million, (ii) higher proceeds from the sale of leasing equipment of $183.6 million and (iii) a decrease in investment of unconsolidated entities of $47.2 million, partially offset by (iv) an increase in acquisition of leasing equipment of $61.1 million and (ii) an increase in acquisitions of property, plant and equipment of $29.3 million. Net cash provided by financing activities decreased $1,426.7 million, primarily due to (i) a decrease in proceeds from debt of $2,049.6 million, partially offset by (ii) a decrease in repayments of debt of $468.2 million. Cash Flows of Discontinued Operations The cash flows related to discontinued operations have not been segregated and are included in the Consolidated Statements of Cash Flows for all periods presented. The absence of cash flows from discontinued operations is not expected to adversely affect our liquidity or our ability to fund capital expenditures or working capital needs. The discontinued operations historically generated negative operating and investing cash flows. We also have current availability for borrowing of up to $225.0 million. Debt Obligations Refer to Note 8 of the Consolidated Financial Statements for additional information. Contractual Obligations Our material cash requirements include the following contractual and other obligations: Debt Obligations — As of September 30, 2022, we had outstanding principal and interest payment obligations of $2.1 billion and $0.6 billion, respectively, of which, $0.0 million and $136.3 million, respectively, are due in the next twelve months. See Note 8 to the consolidated financial statements for additional information about our debt obligations. Lease Obligations —As of September 30, 2022, we had outstanding operating and finance lease obligations of $3.1 million, of which, $0.8 million is due in the next twelve months. Other Cash Requirements —In addition to our contractual obligations, we pay quarterly cash dividends on our common shares and preferred shares, which are subject to change at the discretion of our Board of Directors. During the last twelve months, we declared cash dividends of $131.4 million and $27.2 million on our common shares and preferred shares, respectively. 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. We expect that our operating subsidiaries will generate sufficient cash flow to cover operating expenses and the payment of principal and interest on our indebtedness as they become due. We may elect to meet certain long-term liquidity requirements or to continue to pursue strategic opportunities through utilizing cash on hand, cash generated from our current operations and the issuance of securities in the future. Management believes adequate capital and borrowings are available from various sources to fund our commitments to the extent required. 55 Critical Accounting Estimates and Policies There were no material changes to our critical accounting estimates described in our Annual Report on Form 10-K for the year ended December 31, 2021. Recent Accounting Pronouncements See Note 2 to our Consolidated Financial Statements for recent accounting pronouncements.