What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-07-29 compared with 2022-04-29 · 260 added, 160 removed, 421 unchanged (50% of the section changed)

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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 March 31, 2022, we had total consolidated assets of $4.8 billion and total equity of $0.8 billion.

Transfer of Stock Exchange Listing to Nasdaq

Effective on April 26, 2022, the listings of our common shares and preferred shares were transferred to The Nasdaq Global Select Market from the New York Stock Exchange.

Our common shares continue to trade under the ticker symbol “FTAI,” and our preferred shares will trade under the ticker symbols “FTAIP,” “FTAIO” and “FTAIN,” respectively.

As of June 30, 2022, we had total consolidated assets of $4.9 billion and total equity of $0.7 billion.

Impact of Russia’s Invasion of Ukraine

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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 $47.9 million in bad debt expense during the three months ended March 31, 2022.

As a result of the sanctions imposed on Russian airlines and related lease terminations, we recognized approximately $47.2 million in bad debt expense during the six months ended June 30, 2022.

We continue to pursue efforts to remove and repossess all of our aircraft and engines from Russia and Ukraine.

As of March 31, 2022, we had detained six of our aircraft and four of our engines outside of Russia.

As of March 31, 2022, four aircraft and two engines were still located in Ukraine and eight aircraft and 18 engines were still located in Russia.

We determined that it is unlikely that we will regain possession of the aircraft that have not yet been recovered from Ukraine and Russia.

As a result, we recognized an impairment charge totaling $122.8 million, net of maintenance deposits, to write-off the carrying value of leasing equipment assets that we have not recovered from Ukraine and Russia.

As of June 30, 2022, we had detained six of our aircraft and four of our engines outside of Russia.

As of June 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 six months ended June 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.

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Market conditions due to the outbreak of COVID-19 resulted in asset impairment charges and a decline in our equipment leasing revenues during the years ended December 31, 2021 and 2020.

However, our equipment leasing revenues have continued to recover during the three months ended March 31, 2022.

However, our equipment leasing revenues have continued to recover during the six months ended June 30, 2022.

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

A number of these lessees have been placed on non-accrual status as of March 31, 2022;

A number of these lessees have been placed on non-accrual status as of June 30, 2022;

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 $103.8 million as of March 31, 2022.

The value of these deposits was $84.8 million as of June 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.

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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.”

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

Operating Segments

Our operations consist of two primary strategic business units – Infrastructure and Equipment Leasing.

Our Infrastructure Business acquires long-lived assets that provide mission-critical services or functions to transportation networks and typically have high barriers to entry.

Our Infrastructure Business acquires long-lived assets that provide mission-critical services or functions to transportation networks and typically

have high barriers to entry.

We target or develop operating businesses with strong margins, stable cash flows and upside from earnings growth and asset appreciation driven by increased use and inflation.

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Spin-Off of FTAI Infrastructure

On April 28, 2022, the Board of Directors unanimously approved the previously announced spin-off of FTAI’s infrastructure business (“FTAI Infrastructure”).

FTAI Infrastructure publicly filed Form 10 with the SEC on April 29, 2022.

FTAI Infrastructure will be spun out in an entity taxed as a corporation for U.S.

federal income tax purposes and will hold, among other things, FTAI’s (i) Jefferson Terminal business, (ii) Repauno business, (iii) Long Ridge investment, and (iv) Transtar business.

The Board of Directors delegated to a special committee comprised solely of independent and disinterested board members the full power and responsibility to, among other things, (i) review, evaluate and negotiate certain transactions relating to the management agreements, the treatment of certain income incentive allocations and capital gains incentive allocations and the treatment of certain outstanding options held by the Manager and the non-employee directors of the Company (collectively, the “Specified Matters”) and (ii) act with respect to the Specified Matters.

The special committee, after consultation with its independent legal and financial advisors, unanimously approved the terms of, and the entry into the agreements providing for, the Specified Matters.

Following the determination of the special committee, on April 28, 2022, the Board of Directors unanimously approved the previously announced spin-off of the Company’s infrastructure business (“FTAI Infrastructure”), subject to the Board of Directors declaring the distribution prior to the closing of the transaction.

FTAI Infrastructure has been approved to list its common stock on The Nasdaq Global Select Market under the symbol “FIP.” On July 11, 2022, the Board of Directors unanimously approved the details and timing of the spin-off.

The spin-off will be effected as a distribution of all of the shares owned by the Company of common stock of FTAI Infrastructure, a majority-owned subsidiary of the Company, to the holders of the Company’s common shares as of July 21, 2022.

The distribution is expected to occur on or about August 1, 2022, subject to certain conditions.

FTAI Infrastructure is expected to be spun out in an entity taxed as a corporation for U.S.

federal income tax purposes and will hold, among other things, the Company’s (i) Jefferson Terminal business, (ii) Repauno business, (iii) Long Ridge investment, and (iv) Transtar business.

FTAI Infrastructure will retain all related project-level debt of those entities.

In connection with the closing of the spin-off, FTAI Infrastructure intends to issue up to $300.0 million of preferred stock and warrants and incur up to $500.0 million of senior secured indebtedness, the net proceeds of which will be remitted to FTAI as part of the separation.

FTAI expects to use the proceeds received from FTAI Infrastructure to repay all outstanding borrowings under its 2021 bridge loans and its revolving credit facility with the remaining proceeds to repay a portion of its 6.50% senior unsecured notes due 2025.

In connection with the spin-off, FTAI Infrastructure entered into subscription agreements to issue $300.0 million of preferred stock and warrants and sold $500.0 million of senior secured notes due 2027, the net proceeds of which will be remitted to the Company in connection with the separation.

The Company expects to use the proceeds received from FTAI Infrastructure to repay all outstanding borrowings under its 2021 bridge loans and a portion of borrowings under its revolving credit facility with the remaining proceeds to repay a portion of its 6.50% senior unsecured notes due 2025 (the “2025 Notes”).

On June 30, 2022, the Company issued a conditional notice of partial redemption to redeem $200 million aggregate principal amount of its outstanding 2025 Notes.

FTAI expects to retain the aviation business and certain other assets and FTAI’s remaining outstanding corporate indebtedness.

FTAI Infrastructure will be externally managed by the Manager.

In connection with the spin-off, the Company and the Manager have agreed to assign the Company’s existing management agreement to FTAI Infrastructure, and FTAI Infrastructure and the Manager have agreed to amend and restate the agreement effective upon on the closing of the spin.

The amended and restated management agreement will have an initial term of six years.

Similar to the Company’s existing management arrangements, the Manager will be entitled to a management fee, incentive allocations (comprised of income incentive allocation and capital gains incentive allocation) and reimbursement of certain expenses on substantially similar terms as the existing arrangements with the Manager, except that all fees will be paid pursuant to the amended and restated management agreement rather than by one of FTAI Infrastructure’s subsidiaries.

FTAI and certain of its subsidiaries will enter into a new management agreement with the Manager.

arrangements with the Manager, except that all fees will be paid pursuant to the amended and restated management agreement rather than by one of FTAI Infrastructure’s subsidiaries.

The Company and certain of its subsidiaries will enter into a new management agreement with the Manager.

The new management agreement will have an initial term of six years.

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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, FTAI will enter into a Services and Profit Sharing Agreement (the “Services Agreement”), with a subsidiary of FTAI 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 existing arrangements.

Following the merger, the Company will enter into a Services and Profit Sharing Agreement (the “Services 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 existing arrangements.

Following the completion of the spin-off, the Company plans to pursue a merger transaction with a subsidiary of the Company pursuant to which the Company will become a wholly-owned subsidiary of a company organized under the laws of the Cayman Islands and shareholders of the Company would become shareholders of the Cayman Islands entity.

This merger transaction will be subject to approval by holders of the Company’s common shares.

On December 27, 2017, SoftBank Group Corp.

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Adjusted EBITDA is defined as net income (loss) attributable to shareholders, 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 months ended March 31, 2022 and 2021

Comparison of the three and six months ended June 30, 2022 and 2021

The following table presents our consolidated results of operations:

Three Months Ended March 31, Change

Three Months Ended June 30, Change Six Months Ended

June 30, Change

(in thousands) 2022 2021 2022 2021

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Total expenses 213,577 128,314 85,263 570,061 242,821 327,240

Other (expense) income

Equity in (losses) earnings of unconsolidated entities (24,013) 1,374 (25,387)

Other income (expense)

Equity in losses of unconsolidated entities (13,823) (7,152) (6,671) (37,836) (5,778) (32,058)

Gain on sale of assets, net 63,645 3,987 59,658 79,933 4,798 75,135

Loss on extinguishment of debt — (3,254) 3,254 — (3,254) 3,254

Interest income 590 454 136 1,246 739 507

Other (expense) income (1,596) (884) (712) (2,055) (703) (1,352)

Total other (expense) income (7,528) 2,651 (10,179)

Loss from before income taxes (226,173) (34,707) (191,466)

Provision for income taxes 3,486 169 3,317

Net loss (229,659) (34,876) (194,783)

Total other income (expense) 48,816 (6,849) 55,665 41,288 (4,198) 45,486

Income (loss) from before income taxes 13,171 (38,248) 51,419 (213,002) (72,955) (140,047)

Provision for (benefit from) income taxes 3,411 (1,640) 5,051 6,897 (1,471) 8,368

Net income (loss) 9,760 (36,608) 46,368 (219,899) (71,484) (148,415)

Net loss attributable to non-controlling interest in consolidated subsidiaries (8,480) (6,625) (1,855) (15,946) (11,586) (4,360)

Dividends on preferred shares 6,791 6,551 240 13,582 11,176 2,406

Net loss attributable to shareholders $ (228,984) $ (34,540) $ (194,444)

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

Three Months Ended March 31, Change

Net income (loss) attributable to shareholders $ 11,449 $ (36,534) $ 47,983 $ (217,535) $ (71,074) $ (146,461)

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

Three Months Ended June 30, Change Six Months Ended

June 30, Change

(in thousands) 2022 2021 2022 2021

Net loss attributable to shareholders $ (228,984) $ (34,540) $ (194,444)

Provision for income taxes 3,486 169 3,317

Net income (loss) attributable to shareholders $ 11,449 $ (36,534) $ 47,983 $ (217,535) $ (71,074) $ (146,461)

Provision for (benefit from) income taxes 3,411 (1,640) 5,051 6,897 (1,471) 8,368

Equity-based compensation expense 1,585 1,439 146 2,294 2,553 (259)

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6,977 (11) 6,988 12,638 2,391 10,247

Equity in losses (earnings) of unconsolidated entities 24,013 (1,374) 25,387

Equity in losses of unconsolidated entities 13,823 7,152 6,671 37,836 5,778 32,058

Non-controlling share of Adjusted EBITDA (3)

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(1) Includes the following items for the three months ended March 31, 2022 and 2021:

(1) Includes the following items for the three months ended June 30, 2022 and 2021:

(i) depreciation and amortization expense of $56,622 and $47,371, (ii) lease intangible amortization of $3,310 and $1,198 and (iii) amortization for lease incentives of $8,495 and $5,599, respectively.

(2) Includes the following items for the three months ended March 31, 2022 and 2021:

(i) net (loss) income of $(21,890) and $1,180, (ii) interest expense of $6,463 and $187, (iii) depreciation and amortization expense of $6,340 and $1,912, (iv) acquisition and transaction expenses of $3 and $0, (v) changes in fair value of non-hedge derivative instruments of $14,615 and $(877), (vi) equity-based compensation of $98 and $0 and (vii) asset impairment of $32 and $0, respectively.

(3) Includes the following items for the three months ended March 31, 2022 and 2021:

Includes the following items for the six months ended June 30, 2022 and 2021:

(i) depreciation and amortization expense of $114,923 and $91,906, (ii) lease intangible amortization of $6,968 and $1,950 and (iii) amortization for lease incentives of $16,850 and $12,955, respectively.

(2) Includes the following items for the three months ended June 30, 2022 and 2021:

(i) net loss of $(13,883) and $(7,353), (ii) interest expense of $6,795 and $340, (iii) depreciation and amortization expense of $6,465 and $1,900, (iv) acquisition and transaction expenses of $387 and $—, (v) changes in fair value of non-hedge derivative instruments of $7,118 and $5,078, (vi) equity-based compensation of $95 and $— and (vii) asset impairment of $— and $24, respectively.

Includes the following items for the six months ended June 30, 2022 and 2021:

(i) net loss of $(35,773) and $(6,173), (ii) interest expense of $13,258 and $527, (iii) depreciation and amortization expense of $12,805 and $3,812, (iv) acquisition and transaction expenses of $391 and $—, (v) changes in fair value of non-hedge derivative instruments of $21,732 and $4,201, (vi) equity-based compensation of $193 and $— and (vii) asset impairment of $32 and $24, respectively.

(3) Includes the following items for the three months ended June 30, 2022 and 2021:

(i) equity-based compensation of $124 and $292, (ii) provision for income taxes of $14 and $13, (iii) interest expense of $1,319 and $732, (iv) depreciation and amortization expense of $2,321 and $2,172 and (v) changes in fair value of non-hedge derivative instruments of $(62) and $48, respectively.

Comparison of the three months ended March 31, 2022 and 2021

Total revenues increased $60.7 million primarily due to higher revenues of $34.1 million in the Transtar segment and $28.9 million in the Aviation Leasing segment, partially offset by lower revenues of $10.1 million in the Ports and Terminals segment.

Includes the following items for the six months ended June 30, 2022 and 2021:

(i) equity-based compensation of $250 and $490, (ii) provision for income taxes of $30 and $26, (iii) interest expense of $2,703 and $1,013, (iv) depreciation and amortization expense of $4,585 and $3,983 and (v) changes in fair value of non-hedge derivative instruments of $(36) and $(226), respectively.

Comparison of the three months ended June 30, 2022 and 2021

Total revenues increased $81.0 million primarily due to higher revenues of $50.5 million in the Infrastructure business mostly attributable to the Transtar segment and $30.5 million in the Aviation Leasing segment.

Equipment Leasing

Maintenance revenue increased $21.2 million, primarily due to an increase in the number of aircraft and engines placed on lease, higher aircraft and engine utilization and the recognition of maintenance deposits due to the early lease termination.

Other revenue increased $26.3 million, which primarily reflects an increase of $25.9 million in the Aviation Leasing segment primarily due to an increase in engine modules, spare parts and used material inventory sales.

Lease income decreased $1.0 million, which primarily reflects (i) a decrease of $5.9 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, partially offset by an increase in the number of aircraft and engines placed on lease, partially offset by (ii) an increase of $4.9 million in the offshore energy business as one of our vessels was on-hire longer in 2022 compared to 2021.

Maintenance revenue increased $7.9 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.

Lease income decreased $3.4 million, which primarily reflects (i) a decrease of $3.0 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, and (ii) a decrease of $0.4 million in the offshore energy business as one of our vessels was on-hire longer in 2021 compared to 2022 due to a necessary crane repair in 2022.

Infrastructure

Rail revenues increased $37.5 million due to our acquisition of Transtar in July 2021.

Other revenue decreased $10.8 million, primarily due to a loss on butane forward purchase contracts at Repauno.

Comparison of the three months ended March 31, 2022 and 2021

Other revenue increased $9.5 million, primarily due to the acquisition of a majority stake in and consolidation of FYX during the quarter.

Comparison of the six months ended June 30, 2022 and 2021

Total revenues increased $141.7 million primarily due to higher revenues of $72.1 million in the Transtar segment, $59.4 million in the Aviation Leasing segment, $10.1 million attributable to the acquisition of FYX, partially offset by lower revenues of $10.8 million in the Ports and Terminals segment.

Equipment Leasing

Other revenue increased $41.4 million, which primarily reflects an increase of $39.8 million in the Aviation Leasing segment primarily due to an increase in engine modules, spare parts and used material inventory sales.

Maintenance revenue increased $29.2 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.

Lease income decreased $4.4 million, which primarily reflects (i) a decrease of $9.0 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, partially offset by (ii) an increase of $4.6 million in the offshore energy business as two of our vessels were on-hire longer in 2022 compared to 2021.

Infrastructure

Rail revenues increased $71.2 million due to our acquisition of Transtar in July 2021.

Other revenue decreased $1.4 million, primarily due to a loss on butane forward purchase contracts at Repauno, partially offset by the acquisition of a majority stake in and consolidation of FYX during the second quarter.

Comparison of the three months ended June 30, 2022 and 2021

Total expenses increased $85.3 million, primarily due to higher (i) operating expenses, (ii) interest expense, (iii) depreciation and amortization and (iv) acquisition and transaction expenses.

Operating expenses increased $52.8 million which primarily reflects:

• an increase in compensation and benefits of $12.7 million primarily due to the acquisition of Transtar in July 2021;

• an increase of $21.1 million in costs of sales which primarily reflects (i) an increase of $13.5 million in costs associated with the sale of inventory in the Aviation Leasing segment and (ii) an increase of $7.8 in Corporate and Other related to the acquisition and consolidation of FYX in the second quarter;

• an increase of $8.2 million in facility operating expense which primarily reflects (i) an increase of $6.9 million due to the acquisition of Transtar in July 2021 and (ii) an increase of $1.3 million in the Jefferson Terminal segment due to increased activity.

Interest expense increased $16.9 million, primarily due to:

• an increase of $13.9 million in Corporate and Other which reflects an increase in the average outstanding debt of approximately $830.4 million due to increases in (i) the Senior Notes due 2028 of $502.3 million, (ii) the 2021 Bridge Loans of $339.8 million and (iii) the Revolving Credit Facility of $121.8 million, partially offset by a decrease in (iv) the Senior Notes due 2022 of $133.1 million, which was redeemed in full in May 2021;

• an increase of $2.9 million at Jefferson Terminal due to the issuance of the Series 2021 Bonds in August 2021 and additional borrowings related to the EB-5 Loan Agreement.

Depreciation and amortization increased $9.3 million primarily due to (i) additional assets acquired in the Aviation Leasing segment, (ii) the acquisition of Transtar in July 2021 and (ii) assets placed into service at Jefferson Terminal.

Acquisition and transaction expenses increased $5.2 million primarily due to professional fees related to strategic transactions.

Comparison of the six months ended June 30, 2022 and 2021

Total expenses increased $327.2 million, primarily due to higher (i) asset impairment charges, (ii) operating expenses, (iii) interest expense, (iv) depreciation and amortization and (v) acquisition and transaction expenses.

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Operating expenses increased $136.7 million which primarily reflects:

• an increase in bad debt of $48.5 million which reflects the write-off of receivables related to assets in Russia and Ukraine;

• an increase in bad debt of $48 million which mainly reflects the write-off of receivables related to assets in Russia and Ukraine;

• an increase in compensation and benefits of $23.6 million primarily due to the acquisition of Transtar in July 2021;

• an increase of $23.3 million in costs associated with the sale of inventory in the Aviation Leasing segment;

• an increase of $9.0 million in facility operating expense which primarily reflects (i) an increase of $4.4 million due to the acquisition of Transtar in July 2021, (ii) an increase of $1.4 million in the Jefferson Terminal segment due to increased activity, (iii) an increase of $1.8 million in the offshore energy business due to higher vessel utilization and (iv) an increase of $1.4 million in the Aviation Leasing segment primarily due to shipping and storage costs.

• an increase of $14.6 million in facility operating expense which primarily reflects (i) an increase of $12.1 million due to the acquisition of Transtar in July 2021, and (ii) an increase of $2.7 million in the Jefferson Terminal segment due to increased activity.

Interest expense increased $34.5 million, primarily due to:

• an increase of $12.6 million in Corporate and Other which reflects an increase in the average outstanding debt of approximately $956.1 million due to increases in (i) the Senior Notes due 2028 of $1.0 billion, (ii) the 2021 Bridge Loans of $260.0 million and (iii) the Revolving Credit Facility of $93.5 million, partially offset by a decrease in (iv) the Senior Notes due 2022 of $400.0 million, which was redeemed in full in May 2021;

• an increase of $26.5 million in Corporate and Other which reflects an increase in the average outstanding debt of approximately $893.3 million due to increases in (i) the Senior Notes due 2028 of $752.3 million, (ii) the 2021 Bridge Loans of $299.9 million and (iii) the Revolving Credit Facility of $107.6 million, partially offset by a decrease in (iv) the Senior Notes due 2022 of $266.1 million, which was redeemed in full in May 2021;

• an increase of $7.8 million at Jefferson Terminal due to the issuance of the Series 2021 Bonds in August 2021 and additional borrowings related to the EB-5 Loan Agreement.

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Other income (expense)

Total other income decreased $10.2 million which primarily reflects (i) an increase of $25.4 million in equity in losses of unconsolidated entities primarily due to unrealized losses on power swaps at Long Ridge and (ii) an increase of $15.5 million in gain on sale of assets, net in the Aviation Leasing segment.

Net loss increased $194.8 million primarily due to the changes noted above.

Total other income increased $55.7 million during three months ended June 30, 2022 which primarily reflects an increase of $59.7 million in gain on sale of assets, net in the Aviation Leasing segment, partially offset by an increase of $6.7 million in equity in losses of unconsolidated entities primarily due to unrealized losses on power swaps at Long Ridge.

Total other income increased $45.5 million during six months ended June 30, 2022 which primarily reflects an increase of $75.1 million in gain on sale of assets, net in the Aviation Leasing segment, partially offset by an increase of $32.1 million in equity in losses of unconsolidated entities primarily due to unrealized losses on power swaps at Long Ridge.

Net income (loss)

Net loss decreased $46.4 million for the three months ended June 30, 2022 and increased $148.4 million for the six months ended June 30, 2022 as compared to prior years primarily due to the changes noted above.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA decreased $4.4 million primarily due to the changes noted above.

Adjusted EBITDA increased $97.4 million and $101.8 million during the three and six months ended June 30, 2022, respectively, primarily due to the changes noted above.

Aviation Leasing Segment

As of March 31, 2022, in our Aviation Leasing segment, we own and manage 343 aviation assets, consisting of 117 commercial aircraft and 226 engines, including four aircraft and two engines that were still located in Ukraine and eight aircraft and 18 engines that were still located in Russia.

As of March 31, 2022, 81 of our commercial aircraft and 126 of our engines were leased to operators or other third parties.

As of June 30, 2022, in our Aviation Leasing segment, we own and manage 351 aviation assets, consisting of 107 commercial aircraft and 244 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 June 30, 2022, 78 of our commercial aircraft and 135 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 77% utilized during the three months ended March 31, 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 aviation equipment was approximately 73% utilized during the three months ended June 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 41 months, and our engines currently on-lease have an average remaining lease term of 14 months.

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Purchases 1 21 22

Sales (3) (1) (4)

Transfers (2) (17) (19)

Assets at March 31, 2022 12 105 117

Assets at June 30, 2022 9 98 107

Assets at January 1, 2022 68 139 207

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Transfers 5 24 29

Assets at March 31, 2022 71 155 226

Assets at June 30, 2022 64 180 244

The following table presents our results of operations:

Three Months Ended March 31, Change

Three Months Ended June 30, Change Six Months Ended

June 30, Change

(in thousands) 2022 2021 2022 2021

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Total expenses 65,359 43,802 21,557 294,710 83,911 210,799

Other income (expense)

Equity in earnings (losses) of unconsolidated entities 35 (341) 376 233 (681) 914

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Total other income 63,718 3,987 59,731 80,369 4,725 75,644

(Loss) income before income taxes (127,675) 16,730 (144,405)

Income (loss) before income taxes 107,290 38,628 68,662 (20,385) 55,358 (75,743)

Provision for (benefit from) income taxes 1,963 (4) 1,967 3,020 (46) 3,066

Net (loss) income (128,732) 16,772 (145,504)

Net income (loss) 105,327 38,632 66,695 (23,405) 55,404 (78,809)

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

Net (loss) income attributable to shareholders $ (128,732) $ 16,772 $ (145,504)

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

Three Months Ended March 31, Change

Net income (loss) attributable to shareholders $ 105,327 $ 38,632 $ 66,695 $ (23,405) $ 55,404 $ (78,809)

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

Three Months Ended June 30, Change Six Months Ended

June 30, Change

(in thousands) 2022 2021 2022 2021

Net (loss) income attributable to shareholders $ (128,732) $ 16,772 $ (145,504)

Net income (loss) attributable to shareholders $ 105,327 $ 38,632 $ 66,695 $ (23,405) $ 55,404 $ (78,809)

Provision for (benefit from) income taxes 1,963 (4) 1,967 3,020 (46) 3,066

14 unchanged sentences

________________________________________________________

(1) Includes the following items for the three months ended March 31, 2022 and 2021:

(1) Includes the following items for the three months ended June 30, 2022 and 2021:

(i) depreciation expense of $37,328 and $33,732, (ii) lease intangible amortization of $3,310 and $1,198 and (iii) amortization for lease incentives of $8,495 and $5,599, respectively.

(2) Includes the following items for the three months ended March 31, 2022 and 2021:

Includes the following items for the six months ended June 30, 2022 and 2021:

(i) depreciation expense of $76,657 and $66,295, (ii) lease intangible amortization of $6,968 and $1,950 and (iii) amortization for lease incentives of $16,850 and $12,955, respectively.

(2) Includes the following items for the three months ended June 30, 2022 and 2021:

(i) net income (loss) of $36 and $(341) and (ii) depreciation and amortization of $116 and $55, respectively.

Comparison of the three months ended March 31, 2022 and 2021

Total revenue increased $28.9 million driven by higher maintenance revenue and other revenue, partially offset by lower lease income.

• Maintenance revenue increased $21.2 million primarily due to an increase in the number of aircraft and engines placed on lease, higher aircraft and engine utilization and the recognition of maintenance deposits due to the early termination of aircraft leases with Russian airlines as a result of the sanctions imposed on Russian airlines;

Includes the following items for the six months ended June 30, 2022 and 2021:

(i) net income (loss) of $234 and $(681) and (ii) depreciation and amortization of $172 and $87, respectively.

Comparison of the three months ended June 30, 2022 and 2021

Total revenue increased $30.5 million driven by higher other revenue and maintenance revenue, partially offset by lower lease income.

• Other revenue increased $25.9 million primarily due to an increase in engine modules, spare parts and used material inventory sales;

• Maintenance revenue increased $7.9 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;

• Lease income decreased $3.0 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 $10.8 million for the three months ended March 31, 2022.

Basic lease revenues from our owned aircraft and engines leased to Russian airlines would have been approximately $10.1 million for the three months ended June 30, 2022.

This decrease is partially offset by an increase in the number of aircraft and engines placed on lease.

Comparison of the three months ended March 31, 2022 and 2021

Comparison of the six months ended June 30, 2022 and 2021

Total revenue increased $59.4 million driven by higher other revenue and maintenance revenue, partially offset by lower lease income.

• Other revenue increased $39.8 million primarily due to an increase in engine modules, spare parts and used material inventory sales;

• Maintenance revenue increased $29.2 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;

• Lease income decreased $9.0 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 $20.9 million for the six months ended June 30, 2022.

This decrease is partially offset by an increase in the number of aircraft and engines placed on lease.

Comparison of the three months ended June 30, 2022 and 2021

Total expenses increased $21.6 million primarily due to an increase in operating expenses and depreciation and amortization expense.

• Operating expenses increased $17.1 million primarily as a result of an increase in costs associated with the sale of engine modules, spare parts and used material inventory and increases in shipping and storage fees, professional fees and other operating expenses.

• Depreciation and amortization expense increased $3.6 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, 2022 and 2021

Total expenses increased $210.8 million primarily due to an increase in asset impairment expense, operating expenses and depreciation and amortization expense.

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See Note 3 to the consolidated financial statements for additional information;

• Operating expenses increased $62.0 million primarily as a result of an increase in bad debt expense as a result of the sanctions imposed on Russian airlines, an increase in costs associated with the sale of engine modules, spare parts and used material inventory and an increase other operating expenses;

• Operating expenses increased $79.0 million primarily as a result of an increase in bad debt expense as a result of the sanctions imposed on Russian airlines, an increase in costs associated with the sale of engine modules, spare parts and used material inventory and increases in shipping and storage fees, professional fees, repairs and maintenance fees and other operating expenses;

• Depreciation and amortization expense increased $10.4 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 increased $15.9 million primarily due to an increase of $15.5 million in gain on the sale of leasing equipment in 2022 and an increase of $0.5 million in Aviation Leasing’s proportionate share of unconsolidated entities’ net income.

Total other income increased $59.7 million during the three months ended June 30, 2022 primarily due to an increase of $59.7 million in gain on the sale of leasing equipment in 2022.

Total other income increased $75.6 million during the six months ended June 30, 2022 primarily due to an increase of $75.2 million in gain on the sale of leasing equipment in 2022 and an increase of $0.9 million in Aviation Leasing’s proportionate share of unconsolidated entities’ net income.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA decreased $13.2 million primarily due to the changes noted above.

Adjusted EBITDA increased $78.2 million and $65.0 million during the three and six months ended June 30, 2022, respectively, primarily due to the changes noted above.

Jefferson Terminal Segment

The following table presents our results of operations:

Three Months Ended March 31, Change

Three Months Ended June 30, Change Six Months Ended

June 30, Change

(in thousands) 2022 2021 2022 2021

7 unchanged sentences

Total expenses 30,127 24,305 5,822 59,060 44,947 14,113

Other (expense) income

Other (expense) income (99) 181 (280)

Total other (expense) income (99) 181 (280)

Other expense

Other expense (1,291) (886) (405) (1,390) (705) (685)

Total other expense (1,291) (886) (405) (1,390) (705) (685)

Loss before income taxes (16,890) (13,664) (3,226) (32,876) (23,406) (9,470)

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

Three Months Ended March 31, Change

Three Months Ended June 30, Change Six Months Ended

June 30, Change

(in thousands) 2022 2021 2022 2021

15 unchanged sentences

________________________________________________________

(1) Includes the following items for the three months ended March 31, 2022 and 2021:

(1) Includes the following items for the three months ended June 30, 2022 and 2021:

(i) equity-based compensation of $115 and $286, (ii) provision for income taxes of $14 and $13, (iii) interest expense of $1,299 and $722 and (iv) depreciation and amortization expense of $2,063 and $2,096, respectively.

Comparison of the three months ended March 31, 2022 and 2021

Total revenues increased $2.3 million which reflects an increase in terminal services revenue of $2.4 million primarily due to higher volumes.

Total expenses increased $8.3 million which reflects:

Includes the following items for the six months ended June 30, 2022 and 2021:

(i) equity-based compensation of $235 and $475, (ii) provision for income taxes of $30 and $26, (iii) interest expense of $2,673 and $993 and (iv) depreciation and amortization expense of $4,245 and $3,831, respectively.

Total revenues increased $3.0 million during the three months ended June 30, 2022 which reflects an increase in terminal services revenue of $3.1 million primarily due to higher volumes.

Total revenues increased $5.3 million during the six months ended June 30, 2022 which reflects an increase in terminal services revenue of $5.5 million primarily due to higher volumes.

Total expenses increased $5.8 million during the three months ended June 30, 2022, which reflects:

• an increase in interest expense of $2.9 million due to the issuance of the Series 2021 Bonds in August 2021 and additional borrowings related to the EB-5 Loan Agreement;

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• an increase in depreciation and amortization of $0.4 million due to additional assets being placed into service.

Total expenses increased $14.1 million during the six months ended June 30, 2022, which reflects:

• an increase in interest expense of $7.8 million due to the issuance of the Series 2021 Bonds in August 2021 and additional borrowings related to the EB-5 Loan Agreement;

• an increase in operating expenses of $3.9 million primarily due to increased terminal activity;

• an increase in depreciation and amortization of $2.4 million due to additional assets being placed into service.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA increased $1.0 million primarily due to the changes noted above.

Adjusted EBITDA increased $0.6 million and $1.6 million during the three and six months ended June 30, 2022, respectively, primarily due to the changes noted above.

Ports and Terminals

The following table presents our results of operations:

Three Months Ended March 31, Change

Three Months Ended June 30, Change Six Months Ended

June 30, Change

(in thousands) 2022 2021 2022 2021

Infrastructure revenues

Rail revenues $ — $ — $ — $ 86 $ — $ 86

6 unchanged sentences

Total expenses 7,001 6,339 662 13,540 11,931 1,609

Other (expense) income

Equity in (losses) earnings of unconsolidated entities (23,549) 1,542 (25,091)

Total other (expense) income (23,549) 1,542 (25,091)

(Loss) income before income taxes (32,074) 4,046 (36,120)

Provision for income taxes — 154 (154)

Net (loss) income (32,074) 3,892 (35,966)

Net (loss) income attributable to non-controlling interest in consolidated subsidiaries (330) 55 (385)

Net (loss) income attributable to shareholders $ (31,744) $ 3,837 $ (35,581)

Other expense

Equity in losses of unconsolidated entities (12,971) (7,015) (5,956) (36,520) (5,473) (31,047)

Gain on sale of equipment, net — 16 (16) — 16 (16)

Interest income — 91 (91) — 91 (91)

Total other expense (12,971) (6,908) (6,063) (36,520) (5,366) (31,154)

Loss before income taxes (18,332) (10,903) (7,429) (50,406) (6,857) (43,549)

Benefit from income taxes — (1,621) 1,621 — (1,467) 1,467

Net loss (18,332) (9,282) (9,050) (50,406) (5,390) (45,016)

Net loss attributable to non-controlling interest in consolidated subsidiaries (320) (87) (233) (650) (32) (618)

Net loss attributable to shareholders $ (18,012) $ (9,195) $ (8,817) $ (49,756) $ (5,358) $ (44,398)

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

Three Months Ended March 31, Change

Three Months Ended June 30, Change Six Months Ended

June 30, Change

(in thousands) 2022 2021 2022 2021

Net (loss) income attributable to shareholders $ (31,744) $ 3,837 $ (35,581)

Provision for income taxes — 154 (154)

Net loss attributable to shareholders $ (18,012) $ (9,195) $ (8,817) $ (49,756) $ (5,358) $ (44,398)

Benefit from income taxes — (1,621) 1,621 — (1,467) 1,467

Equity-based compensation expense 150 169 (19) 321 442 (121)

13 unchanged sentences

________________________________________________________

(1) Includes the following items for the three months ended March 31, 2022 and 2021:

(i) net (loss) income of $(21,380) and $1,542, (ii) interest expense of $6,443 and $160, (iii) depreciation and amortization expense of $6,284 and $1,880, (iv) acquisition and transaction expenses of $3 and $0, (v) changes in fair value of non-hedge derivative instruments of $14,615 and $(877), (vi) equity-based compensation of $98 and $0 and (vii) asset impairment of $32 and $0, respectively.

(2) Includes the following items for the three months ended March 31, 2022 and 2021:

(1) Includes the following items for the three months ended June 30, 2022 and 2021:

(i) net (loss) of $(12,972) and $(7,015), (ii) interest expense of $6,604 and $314, (iii) depreciation and amortization expense of $6,240 and $1,845, (iv) acquisition and transaction expenses of $387 and $—, (v) changes in fair value of non-hedge derivative instruments of $7,118 and $5,078, (vi) equity-based compensation of $95 and $—, and (vii) asset impairment of $— and $24, respectively.

Includes the following items for the six months ended June 30, 2022 and 2021:

(i) net loss of $(34,352) and $(5,473), (ii) interest expense of $13,047 and $474, (iii) depreciation and amortization expense of $12,524 and $3,725, (iv) acquisition and transaction expenses of $391 and $—, (v) changes in fair value of non-hedge derivative instruments of $21,732 and $4,201, (vi) equity-based compensation of $193 and $— and (vii) asset impairment of $32 and $24, respectively.

(2) Includes the following items for the three months ended June 30, 2022 and 2021:

(i) equity-based compensation of $9 and $6, (ii) interest expense of $20 and $10, (iii) depreciation and amortization expense of $143 and $76 and (iv) changes in fair value of non-hedge derivative instruments of $(62) and $48, respectively.

Comparison of the three months ended March 31, 2022 and 2021

Total revenue decreased $10.1 million primarily due to a loss on butane forward purchase contracts at Repauno.

Total expenses increased $0.9 million which reflects higher operating expenses of $0.8 million due to increased activit y at Repauno.

Includes the following items for the six months ended June 30, 2022 and 2021:

(i) equity-based compensation of $15 and $15, (ii) interest expense of $30 and $20, (iii) depreciation and amortization expense of $225 and $152 and (iv) changes in fair value of non-hedge derivative instruments of $(36) and $(226), respectively.

Total revenue decreased $0.7 million during the three months ended June 30, 2022 primarily due to a loss on butane forward purchase contracts at Repauno.

Total revenue decreased $10.8 million during the six months ended June 30, 2022 primarily due to a loss on butane forward purchase contracts at Repauno.

Total expenses increased $0.7 million during the three months ended June 30, 2022 which reflects (i) higher operating expenses of $0.5 million due to increased activity at Repauno and (ii) higher depreciation and amortization of $0.2 million due to additional assets placed into service at Repauno.

Total expenses increased $1.6 million during the six months ended June 30, 2022 which reflects (i) higher operating expenses of $1.2 million due to increased activity at Repauno and (ii) higher depreciation and amortization of $0.3 million due to additional assets placed into service at Repauno.

Other expense

Total other expense increased $25.1 million which reflects an increase in equity in losses in unconsolidated entities primarily due to unrealized losses on power swaps at Long Ridge.

Total other expense increased $6.1 million and $31.2 million during the three and six months ended June 30, 2022, respectively, which reflects an increase in equity method losses from unconsolidated entities primarily due to unrealized and realized losses on power swaps at Long Ridge.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA increased $1.2 million primarily due to the changes noted above.

Adjusted EBITDA increased $3.3 million and $4.5 million during the three and six months ended June 30, 2022, respectively, primarily due to the changes noted above.

The following table presents our results of operations:

Three Months Ended March 31, Change

Three Months Ended June 30, Change Six Months Ended

June 30, Change

(in thousands) 2022 2021 2022 2021

14 unchanged sentences

Net income 10,852 — 10,852 18,395 — 18,395

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

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

Net income attributable to shareholders $ 10,852 $ — $ 10,852 $ 18,395 $ — $ 18,395

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

Three Months Ended March 31, Change

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

(in thousands) 2022 2021 2022 2021

13 unchanged sentences

Adjusted EBITDA $ 18,826 $ — $ 18,826 $ 33,473 $ — $ 33,473

Financial results for the three months ended March 31, 2022

Total revenues were $34.1 million, which primarily consists of switching, interline, and ancillary rail services.

Total expenses were $24.1 million, which primarily consists of (i) operating expenses of $19.1 million which primarily includes compensation and benefits of $11.8 million and facility operating expense of $5.2 million and (ii) depreciation and amortization of $4.8 million.

Financial results for the three and six months ended June 30, 2022

Total revenues were $38.1 million and $72.1 million for the three and six months ended June 30, 2022, respectively, which primarily consists of switching, interline, and ancillary rail services.

Total expenses were $24.7 million and $48.8 million during the three and six months ended June 30, 2022, respectively.

Expenses primarily consist of (i) operating expenses of $19.8 million and $38.9 million during the three and six months ended June 30, 2022, respectively, comprised of mostly compensation and benefits of $11.8 million and $23.6 million, respectively, and facility operating expense of $6.9 million and $12.1 million, respectively, and (ii) depreciation and amortization of $4.7 million and $9.5 million, respectively.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA was $14.6 million primarily due to the activity noted above.

Adjusted EBITDA was $18.8 million and $33.5 million during the three and six months ended June 30, 2022, respectively, primarily due to the activity noted above.

Corporate and Other

The following table presents our results of operations:

Three Months Ended March 31, Change

Three Months Ended June 30, Change Six Months Ended

June 30, Change

(in thousands) 2022 2021 2022 2021

16 unchanged sentences

Equity in (losses) earnings of unconsolidated entities (887) 204 (1,091) (1,549) 376 (1,925)

Loss on extinguishment of debt — (3,254) 3,254 — (3,254) 3,254

Interest income 552 6 546 1,043 24 1,019

Total other (expense) income (171) 190 (361)

Other (expense) income — 2 (2) — 2 (2)

Total other expense (335) (3,042) 2,707 (506) (2,852) 2,346

Loss before income taxes (71,966) (52,309) (19,657) (132,026) (98,050) (33,976)

Provision for income taxes 281 — 281

Benefit from income taxes (837) (74) (763) (556) (74) (482)

Net loss (71,129) (52,235) (18,894) (131,470) (97,976) (33,494)

3 unchanged sentences

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

Three Months Ended March 31, Change

Three Months Ended June 30, Change Six Months Ended

June 30, Change

(in thousands) 2022 2021 2022 2021

Net loss attributable to shareholders $ (77,895) $ (58,786) $ (19,109) $ (145,027) $ (109,152) $ (35,875)

Provision for income taxes 281 — 281

Benefit from income taxes (837) (74) (763) (556) (74) (482)

Equity-based compensation expense — — — — — —

10 unchanged sentences

Non-controlling share of Adjusted EBITDA (2)

(115) — (115) (115) — (115)

Adjusted EBITDA (non-GAAP) $ (19,677) $ (16,114) $ (3,563) $ (35,481) $ (32,649) $ (2,832)

________________________________________________________

(1) Includes the following items for the three months ended March 31, 2022 and 2021:

(i) net loss of $(708) and $(22) and (ii) interest expense of $20 and $27, respectively.

Comparison of the three months ended March 31, 2022 and 2021

Total revenues increased $5.5 million primarily due to (i) an increase of $6.2 million in the offshore energy business as one of our vessels was on-hire in 2022 while it was off-hire in 2021 and (ii) a decrease of $0.7 million in our railcar cleaning business due to lower volumes.

Total expenses increased $19.4 million primarily due to higher (i) interest expense and (ii) acquisition and transaction expenses.

Interest expense increased $12.6 million, which reflects an increase in the average outstanding debt of approximately $956.1 million due to increases in (i) the Senior Notes due 2028 of $1.0 billion, (ii) the 2021 Bridge Loans of $260.0 million and (iii) the Revolving Credit Facility of $93.5 million, partially offset by a decrease in (iv) the Senior Notes due 2022 of $400.0 million, which was redeemed in full in May 2021.

(1) Includes the following items for the three months ended June 30, 2022 and 2021:

(i) net (loss) income of $(947) and $3, (ii) interest expense of $191 and $26 and (iii) depreciation and amortization expense of $109 and $—, respectively.

Includes the following items for the six months ended June 30, 2022 and 2021:

(i) net loss of $(1,655) and $(19), (ii) interest expense of $211 and $53 and (iii) depreciation and amortization expense of $109 and $—, respectively.

(2) Includes the following items for the three months ended June 30, 2022 and 2021:

depreciation and amortization expense of $115 and $— respectively.

Includes the following items for the six months ended June 30, 2022 and 2021:

depreciation and amortization expense of $115 and $—, respectively.

Total revenues increased $10.2 million during the three months ended June 30, 2022 primarily due to an increase of $10.2 million in the other revenues from the acquisition of a majority interest in and consolidation of FYX during the second quarter of 2022.

Total revenues increased $15.6 million during the six months ended June 30, 2022 primarily due to (i) an increase of $10.2 million in the other revenues from the acquisition of a majority interest in and consolidation of FYX during the second quarter of 2022 and (ii) an increase of $4.6 million in the offshore energy business as two of our vessels were on-hire longer in 2022 compared to 2021.

Comparison of the three months ended June 30, 2022 and 2021

Total expenses increased $32.5 million primarily due to higher (i) interest expense, (ii) acquisition and transaction expenses and (iii) operating expenses.

Interest expense increased $13.9 million, which reflects an increase in the average outstanding debt of approximately $830.4 million due to increases in (i) the Senior Notes due 2028 of $502.3 million, (ii) the 2021 Bridge Loans of $339.8 million and (iii) the Revolving Credit Facility of $121.8 million, partially offset by a decrease in (iv) the Senior Notes due 2022 of $133.1 million, which was redeemed in full in May 2021.

Acquisition and transaction expense increased $5.0 million primarily due to professional fees related to strategic transactions.

Operating expenses increased $13.0 million which reflects increases of (i) cost of sales of $7.8 million, (ii) project costs of $1.9 million and (iii) compensation and benefits of $1.5 million primarily related to the consolidation of FYX during the second quarter of 2022.

Comparison of the six months ended June 30, 2022 and 2021

Total expenses increased $51.9 million primarily due to higher (i) interest expense and (ii) acquisition and transaction expenses and (iii) operating expenses.

Interest expense increased $26.5 million, which reflects an increase in the average outstanding debt of approximately $893.3 million due to increases in (i) the Senior Notes due 2028 of $752.3 million, (ii) the 2021 Bridge Loans of $299.9 million and (iii) the Revolving Credit Facility of $107.6 million, partially offset by a decrease in (iv) the Senior Notes due 2022 of $266.1 million, which was redeemed in full in May 2021.

Acquisition and transaction expense increased $9.3 million primarily due to professional fees related to strategic transactions.

Operating expenses increased $13.7 million which reflects increases of (i) cost of sales of $7.8 million, (ii) project costs of $3.6 million and (iii) compensation and benefits of $1.7 million primarily related to the consolidation of FYX during the second quarter of 2022.

Other expense

Total other expense increased $0.4 million primarily due to (i) an increase of $0.8 million in equity in losses of unconsolidated entities, partially offset by (ii) an increase of $0.5 million in interest income related to certain outstanding notes.

Total other expense decreased $2.7 million and $2.3 million during the three and six months ended June 30, 2022, respectively, 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 $1.1 million and $1.9 million in equity in losses of unconsolidated entities during the three and six months ended June 30, 2022, respectively.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA increased $0.7 million primarily due to the changes noted above.

Adjusted EBITDA decreased $3.6 million and $2.8 million during the three and six months ended June 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 special committee, after consultation with its independent legal and financial advisors, unanimously approved the terms of, and the entry into the agreements providing for, the Specified Matters.

Following the determination of the special committee, on April 28, 2022, the Board of Directors unanimously approved the previously announced spin-off of the Company’s infrastructure business, subject to the Board of Directors declaring the distribution prior to the closing of the transaction.

On July 11, 2022, the Board of Directors unanimously approved the details and timing of the previously announced and approved spin-off.

The distribution is expected to occur on or about August 1, 2022, subject to certain conditions.

The Company expects to use the proceeds received from FTAI Infrastructure to repay all outstanding borrowings under its 2021 bridge loans and its revolving credit facility with the remaining proceeds to repay a portion of the 2025 Notes.

On June 30, 2022, the Company issued a conditional notice of partial redemption to redeem $200 million aggregate principal amount of its outstanding 2025 Notes.

See “Spin-off of FTAI Infrastructure” above for more information related to our liquidity plans.

2 unchanged sentences

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 $284.4 million and $165.0 million during the three months ended March 31, 2022 and 2021, respectively.

• Dividends to shareholders and holders of eligible participating securities were $39.5 million and $33.0 million during the three months ended March 31, 2022 and 2021, respectively.

• Cash used for the purpose of making investments was $457.9 million and $265.1 million during the six months ended June 30, 2022 and 2021, respectively.

• Dividends to shareholders and holders of eligible participating securities were $79.4 million and $68.0 million during the six months ended June 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.

1 unchanged sentence

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

• Cash flows provided from operating activities, plus the principal collections on finance leases and maintenance reserve collections were $12.8 million and $(39.8) million during the three months ended March 31, 2022 and 2021, respectively.

• During the three months ended March 31, 2022, additional borrowings were obtained in connection with the (i) 2021 Bridge Loans of $239.5 million, (ii) Revolving Credit Facility of $160.0 million and (iii) EB-5 Loan Agreement of $9.5 million.

We made total principal repayments of $224.5 million relating to the Revolving Credit Facility.

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

• Proceeds from the sale of assets were $54.4 million and $4.6 million during the three months ended March 31, 2022 and 2021, respectively.

• Proceeds from the issuance of preferred shares, net of underwriter’s discount and issuance costs were $0.0 million and $101.2 million during the three months ended March 31, 2022 and 2021, respectively.

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

None of these transactions or negotiations are definitive or included within our planned liquidity needs.

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

• Cash flows used in operating activities, plus the principal collections on finance leases and maintenance reserve collections were $23.6 million and $46.4 million during the six months ended June 30, 2022 and 2021, respectively.

• During the six months ended June 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.

made total principal repayments of $224.5 million relating to the Revolving Credit Facility.

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.

• Proceeds from the sale of assets were $142.3 million and $57.2 million during the six months ended June 30, 2022 and 2021, 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.

We are currently evaluating several potential Equipment Leasing 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 three months ended March 31, 2022 and 2021

The following table compares the historical cash flow for the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

Comparison of the six months ended June 30, 2022 and 2021

The following table compares the historical cash flow for the six months ended June 30, 2022 and 2021:

Six Months Ended June 30,

(in thousands) 2022 2021

Cash Flow Data:

Net cash provided by (used in) operating activities $ 1,923 $ (48,932)

Net cash used in operating activities $ (48,569) $ (63,924)

Net cash used in investing activities (306,784) (204,209)

Net cash provided by financing activities 212,097 249,960

Net cash provided by operating activities increased $50.9 million, which primarily reflects (i) certain adjustments to reconcile net loss to cash provided by operating activities including, asset impairment of $120.7 million, bad debt expense of $48.5 million and equity in losses of unconsolidated entities of $25.4 million and (ii) changes in working capital of $43.4 million, partially offset by (iii) an increase in our net loss of $194.8 million.

Net cash used in operating activities decreased $15.4 million, which primarily reflects (i) certain adjustments to reconcile net loss to cash used in operating activities including, asset impairment of $121.5 million, bad debt expense of $48.0 million and equity in losses of unconsolidated entities of $32.1 million and (ii) changes in working capital of $1.6 million, partially offset by (iii) an increase in our net loss of $148.4 million.

Net cash used in investing activities increased $102.6 million, primarily due to (i) an increase in acquisitions of leasing equipment of $150.6 million and (ii) an increase in acquisitions of property, plant and equipment of $34.6 million, partially offset by (iii) higher proceeds from the sale of leasing equipment of $80.9 million.

Net cash provided by financing activities decreased $89.6 million, primarily due to (i) an increase in repayments of debt of $224.5 million and (ii) an decrease in proceeds from the issuance of preferred shares of $101.2 million, partially offset by (iii) an increase in proceeds from debt of $237.4 million.

Net cash provided by financing activities decreased $37.9 million, primarily due to (i) a decrease in repayments of debt of $328.0 million and (ii) a decrease in proceeds from the issuance of preferred shares of $101.2 million, and (iii) a decrease in proceeds from debt of $272.1 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:

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands) 2022 2021

Net Cash Provided by (Used in) Operating Activities $ 1,923 $ (48,932)

Net Cash Used in Operating Activities $ (48,569) $ (63,924)

Principal Collections on Finance Leases 575 1,269

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________________________________________________________

(1) Required payments on debt obligations for the three months ended March 31, 2022 exclude repayments of $224,473 for the Revolving Credit Facility.

(1) Required payments on debt obligations for the six months ended June 30, 2022 exclude repayments of $224,473 for the Revolving Credit Facility.

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

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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Our material cash requirements include the following contractual and other obligations:

Debt Obligations — As of March 31, 2022, we had outstanding principal and interest payment obligations of $3.5 billion and $1.1 billion, respectively, of which, $340.1 million and $188.5 million, respectively, are due in the next twelve months.

Debt Obligations — As of June 30, 2022, we had outstanding principal and interest payment obligations of $3.6 billion and $1.1 billion, respectively, of which, $339.8 million and $198.4 million, respectively, are due in the next twelve months.

See Note 7 to the consolidated financial statements for additional information about our debt obligations.

Lease Obligations —As of March 31, 2022, we had outstanding operating and finance lease obligations of $180.5 million, of which, $10.1 million is due in the next twelve months.

Other Obligations —As of March 31, 2022, in connection with a pipeline capacity agreement at Jefferson Terminal, we had an obligation to pay a minimum of $10.2 million in marketing fees 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.

Lease Obligations —As of June 30, 2022, we had outstanding operating and finance lease obligations of $176.6 million, of which, $9.2 million is due in the next twelve months.

Other Obligations —As of June 30, 2022, in connection with a pipeline capacity agreement at Jefferson Terminal, we had an obligation to pay a minimum of $9.2 million in marketing fees 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 $127.0 million and $27.2 million on our common shares and preferred shares, respectively.

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Critical Accounting Estimates and Policies

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 and Transtar.

The carrying amount of goodwill was approximately $258.0 million and $257.1 million as of March 31, 2022 and December 31, 2021, respectively.

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, Transtar, and FYX.

The carrying amount of goodwill was approximately $262.8 million and $257.1 million as of June 30, 2022 and December 31, 2021, respectively.

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

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

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

If the option is not elected or if it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then a goodwill impairment test is

performed to identify potential goodwill impairment and measure an impairment loss.

A qualitative analysis was not elected for the year ended December 31, 2021.

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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