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Fortress Transportation and Infrastructure Investors (FTAI)

Filed: 28 Jul 22, 9:37pm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____ to ____
Commission file number 001-37386

ftai-20220630_g1.jpg
FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
(Exact name of registrant as specified in its charter)
Delaware32-0434238
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
1345 Avenue of the Americas, 45th FloorNew YorkNY10105
(Address of principal executive offices)(Zip Code)

(Registrant’s telephone number, including area code) (212) 798-6100
(Former name, former address and former fiscal year, if changed since last report) N/A
Securities registered pursuant to Section 12(b) of the Act:
Title of each class:Trading Symbol:Name of exchange on which registered:
Class A common shares, $0.01 par value per shareFTAIThe Nasdaq Global Select Market
8.25% Fixed-to-Floating Rate Series A Cumulative Perpetual Redeemable Preferred SharesFTAIPThe Nasdaq Global Select Market
8.00% Fixed-to-Floating Rate Series B Cumulative Perpetual Redeemable Preferred SharesFTAIOThe Nasdaq Global Select Market
8.25% Fixed-Rate Reset Series C Cumulative Perpetual Redeemable Preferred SharesFTAINThe Nasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨ 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨ 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerþAccelerated filer¨
Non-accelerated filer¨Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No þ
There were 99,378,771 common shares outstanding representing limited liability company interests at July 25, 2022.



FORWARD-LOOKING STATEMENTS AND RISK FACTORS SUMMARY
This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact but instead are based on our present beliefs and assumptions and on information currently available to us. You can identify these forward-looking statements by the use of forward-looking words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” “target,” “projects,” “contemplates” or the negative version of those words or other comparable words. Any forward-looking statements contained in this report are based upon our historical performance and on our current plans, estimates and expectations in light of information currently available to us. The inclusion of this forward-looking information should not be regarded as a representation by us, that the future plans, estimates or expectations contemplated by us will be achieved.
Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business, prospects, growth strategy and liquidity. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. The following is a summary of the principal risk factors that make investing in our securities risky and may materially adversely affect our business, financial condition, results of operations and cash flows. This summary should be read in conjunction with the more complete discussion of the risk factors we face, which are set forth in Part II, Item 1A. “Risk Factors” of this report. We believe that these factors include, but are not limited to:
changes in economic conditions generally and specifically in our industry sectors, and other risks relating to the global economy, including, but not limited to, the Russia-Ukraine conflict, the ongoing COVID-19 pandemic and other public health crises, and any related responses or actions by businesses and governments;
reductions in cash flows received from our assets, as well as contractual limitations on the use of our aviation assets to secure debt for borrowed money;
our ability to take advantage of acquisition opportunities at favorable prices;
changes in our asset composition, investment strategy and liquidity as a result of the previously announced spin-off of our infrastructure business or other factors;
a lack of liquidity surrounding our assets, which could impede our ability to vary our portfolio in an appropriate manner;
the relative spreads between the yield on the assets we acquire and the cost of financing;
adverse changes in the financing markets we access affecting our ability to finance our acquisitions;
customer defaults on their obligations;
our ability to renew existing contracts and enter into new contracts with existing or potential customers;
the availability and cost of capital for future acquisitions;
concentration of a particular type of asset or in a particular sector;
competition within the aviation, energy and intermodal transport sectors;
the competitive market for acquisition opportunities;
risks related to operating through joint ventures, partnerships, consortium arrangements or other collaborations with third parties;
our ability to successfully integrate acquired businesses;
obsolescence of our assets or our ability to sell, re-lease or re-charter our assets;
exposure to uninsurable losses and force majeure events;
infrastructure operations and maintenance may require substantial capital expenditures;
the legislative/regulatory environment and exposure to increased economic regulation;
exposure to the oil and gas industry’s volatile oil and gas prices;
difficulties in obtaining effective legal redress in jurisdictions in which we operate with less developed legal systems;
our ability to maintain our exemption from registration under the Investment Company Act of 1940 and the fact that maintaining such exemption imposes limits on our operations;
our ability to successfully utilize leverage in connection with our investments;
foreign currency risk and risk management activities;
effectiveness of our internal control over financial reporting;
exposure to environmental risks, including natural disasters, increasing environmental legislation and the broader impacts of climate change;
changes in interest rates and/or credit spreads, as well as the success of any hedging strategy we may undertake in relation to such changes;
actions taken by national, state, or provincial governments, including nationalization, or the imposition of new taxes, could materially impact the financial performance or value of our assets;
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our dependence on our Manager and its professionals and actual, potential or perceived conflicts of interest in our relationship with our Manager;
effects of the merger of Fortress Investment Group LLC with affiliates of SoftBank Group Corp.;
volatility in the market price of our shares;
the inability to pay dividends to our shareholders in the future
the risk that the contemplated spin-off of our infrastructure business may not be completed or may not achieve the intended benefits; and
other risks described in the “Risk Factors” section of this report.
These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this report. The forward-looking statements made in this report relate only to events as of the date on which the statements are made. We do not undertake any obligation to publicly update or review any forward-looking statement except as required by law, whether as a result of new information, future developments or otherwise.
If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, our actual results may vary materially from what we may have expressed or implied by these forward-looking statements. We caution that you should not place undue reliance on any of our forward-looking statements. Furthermore, new risks and uncertainties arise from time to time, and it is impossible for us to predict those events or how they may affect us.
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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
INDEX TO FORM 10-Q
PART I - FINANCIAL INFORMATION
Item 1.
Item 2.
Item 3.
Item 4.
PART II - OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.


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PART I—FINANCIAL INFORMATION
Item 1. Financial Statements

FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share and per share data)
(Unaudited)
NotesJune 30, 2022December 31, 2021
Assets
Cash and cash equivalents2$118,854 $188,078 
Restricted cash2177,951 251,983 
Accounts receivable, net166,562 175,225 
Leasing equipment, net31,844,095 1,891,649 
Operating lease right-of-use assets, net73,549 75,344 
Property, plant, and equipment, net41,642,536 1,555,857 
Investments599,543 77,325 
Intangible assets, net695,845 98,699 
Goodwill262,819 257,137 
Other assets2400,394 292,557 
Total assets$4,882,148 $4,863,854 
Liabilities
Accounts payable and accrued liabilities$253,207 $202,669 
Debt, net73,497,566 3,220,211 
Maintenance deposits58,553 106,836 
Security deposits27,761 40,149 
Operating lease liabilities72,140 73,594 
Other liabilities283,650 96,295 
Total liabilities$4,192,877 $3,739,754 
Commitments and contingencies1600
Equity
Common shares ($0.01 par value per share; 2,000,000,000 shares authorized; 99,200,196 and 99,180,385 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively)$992 $992 
Preferred shares ($0.01 par value per share; 200,000,000 shares authorized; 13,320,000 and 13,320,000 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively)133 133 
Additional paid in capital1,332,968 1,411,940 
Accumulated deficit(336,345)(132,392)
Accumulated other comprehensive loss(298,874)(156,381)
Shareholders' equity698,874 1,124,292 
Non-controlling interest in equity of consolidated subsidiaries(9,603)(192)
Total equity689,271 1,124,100 
Total liabilities and equity$4,882,148 $4,863,854 


See accompanying notes to consolidated financial statements.
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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(Dollars in thousands, except share and per share data)
Three Months Ended June 30,Six Months Ended June 30,
Notes2022202120222021
Revenues
Equipment leasing revenues$112,064 $81,571 $203,755 $138,178 
Infrastructure revenues65,868 15,344 112,016 35,886 
Total revenues9177,932 96,915 315,771 174,064 
Expenses
Operating expenses284,004 31,183 192,920 56,180 
General and administrative5,004 3,655 10,695 7,907 
Acquisition and transaction expenses9,626 4,399 15,650 6,042 
Management fees and incentive allocation to affiliate133,062 4,113 7,226 8,103 
Depreciation and amortization3, 4, 656,622 47,371 114,923 91,906 
Asset impairment886 89 123,676 2,189 
Interest expense54,373 37,504 104,971 70,494 
Total expenses213,577 128,314 570,061 242,821 
Other income (expense)
Equity in losses of unconsolidated entities5(13,823)(7,152)(37,836)(5,778)
Gain on sale of assets, net63,645 3,987 79,933 4,798 
Loss on extinguishment of debt (3,254) (3,254)
Interest income590 454 1,246 739 
Other expense(1,596)(884)(2,055)(703)
Total other income (expense)48,816 (6,849)41,288 (4,198)
Income (loss) before income taxes13,171 (38,248)(213,002)(72,955)
Provision for (benefit from) income taxes123,411 (1,640)6,897 (1,471)
Net income (loss)9,760 (36,608)(219,899)(71,484)
Less: Net loss attributable to non-controlling interests in consolidated subsidiaries(8,480)(6,625)(15,946)(11,586)
Less: Dividends on preferred shares6,791 6,551 13,582 11,176 
Net income (loss) attributable to shareholders$11,449 $(36,534)$(217,535)$(71,074)
Income (loss) per share:15
Basic$0.12 $(0.42)$(2.19)$(0.83)
Diluted$0.11 $(0.42)$(2.19)$(0.83)
Weighted average shares outstanding:
Basic99,370,301 86,030,652 99,367,597 86,029,305 
Diluted99,805,455 86,030,652 99,367,597 86,029,305 



See accompanying notes to consolidated financial statements.
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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (unaudited)
(Dollars in thousands)
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Net income (loss)$9,760 $(36,608)$(219,899)$(71,484)
Other comprehensive loss:
Other comprehensive loss related to equity method investees, net (1)
(47,714)(32,832)(142,493)(22,878)
Comprehensive loss(37,954)(69,440)(362,392)(94,362)
Comprehensive loss attributable to non-controlling interest(8,480)(6,625)(15,946)(11,586)
Comprehensive loss attributable to shareholders$(29,474)$(62,815)$(346,446)$(82,776)
________________________________________________________
(1) Net of deferred tax benefit of $— and $(7,118) for the three months ended June 30, 2022 and 2021, respectively, and $— and $(4,472) for the six months ended June 30, 2022 and 2021, respectively.



See accompanying notes to consolidated financial statements.
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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (unaudited)
(Dollars in thousands)

Three and Six Months Ended June 30, 2022
Common SharesPreferred SharesAdditional Paid In CapitalAccumulated Deficit Accumulated Other Comprehensive Loss Non-Controlling Interest in Equity of Consolidated SubsidiariesTotal Equity
Equity - December 31, 2021$992 $133 $1,411,940 $(132,392)$(156,381)$(192)$1,124,100 
Net loss(222,193)(7,466)(229,659)
Other comprehensive loss(94,779)(94,779)
Total comprehensive loss(222,193)(94,779)(7,466)(324,438)
Issuance of common shares164 164 
Dividends declared - common shares(32,749)(32,749)
Dividends declared - preferred shares(6,791)(6,791)
Equity-based compensation709 709 
Equity - March 31, 2022$992 $133 $1,372,564 $(354,585)$(251,160)$(6,949)$760,995 
Net income (loss)18,240 (8,480)9,760 
Other comprehensive loss(47,714)(47,714)
Total comprehensive income (loss)18,240 (47,714)(8,480)(37,954)
Acquisition of consolidated subsidiary3,054 3,054 
Contributions from non-controlling interest1,187 1,187 
Issuance of common shares235 235 
Dividends declared - common shares(33,040)(33,040)
Dividends declared - preferred shares(6,791)(6,791)
Equity-based compensation1,585 1,585 
Equity - June 30, 2022$992 $133 $1,332,968 $(336,345)$(298,874)$(9,603)$689,271 

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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (unaudited)
(Dollars in thousands)

Three and Six Months Ended June 30, 2021
Common SharesPreferred SharesAdditional Paid In CapitalAccumulated Deficit Accumulated Other Comprehensive (Loss) Income Non-Controlling Interest in Equity of Consolidated SubsidiariesTotal Equity
Equity - December 31, 2020$856 $91 $1,130,106 $(28,158)$(26,237)$22,663 $1,099,321 
Net loss(29,915)(4,961)(34,876)
Other comprehensive income9,954 09,954 
Total comprehensive (loss) income(29,915)9,954 (4,961)(24,922)
Settlement of equity-based compensation(183)(183)
Issuance of common shares150 150 
Dividends declared - common shares(28,383)(28,383)
Issuance of preferred shares42 101,138 101,180 
Dividends declared - preferred shares(4,625)(4,625)
Equity-based compensation1,114 1,114 
Equity - March 31, 2021$856 $133 $1,198,386 $(58,073)$(16,283)$18,633 $1,143,652 
Net loss(29,983)(6,625)(36,608)
Other comprehensive loss(32,832)(32,832)
Total comprehensive loss(29,983)(32,832)(6,625)(69,440)
Issuance of common shares305 305 
Dividends declared - common shares(28,412)(28,412)
Issuance of preferred shares20 20 
Dividends declared - preferred shares(6,551)(6,551)
Equity-based compensation1,439 1,439 
Equity - June 30, 2021$856 $133 $1,163,748 $(88,056)$(49,115)$13,447 $1,041,013 


See accompanying notes to consolidated financial statements.
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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(Dollars in thousands)
Six Months Ended June 30,
20222021
Cash flows from operating activities:
Net loss$(219,899)$(71,484)
Adjustments to reconcile net loss to net cash used in operating activities:
Equity in losses of unconsolidated entities37,836 5,778 
Gain on sale of assets, net(79,933)(4,798)
Security deposits and maintenance claims included in earnings(30,208)(15,413)
Loss on extinguishment of debt 3,254 
Equity-based compensation2,294 2,553 
Depreciation and amortization114,923 91,906 
Asset impairment123,676 2,189 
Change in deferred income taxes6,200 (1,632)
Change in fair value of non-hedge derivative(748)(6,573)
Amortization of lease intangibles and incentives23,818 14,905 
Amortization of deferred financing costs13,328 4,489 
Provision for (benefit from) credit losses47,218 (733)
Other(407)(117)
Change in:
 Accounts receivable(47,061)(86,661)
 Other assets(37,692)(44,639)
 Accounts payable and accrued liabilities5,045 47,320 
 Management fees payable to affiliate(1,829)(631)
 Other liabilities(5,130)(3,637)
Net cash used in operating activities(48,569)(63,924)
Cash flows from investing activities:
Investment in unconsolidated entities(2,232)(1,105)
Principal collections on finance leases575 1,269 
Acquisition of business, net of cash acquired(3,819)— 
Acquisition of leasing equipment(320,766)(170,132)
Acquisition of property, plant and equipment(118,729)(84,134)
Acquisition of lease intangibles(5,282)(517)
Purchase deposits for acquisitions(7,100)(9,180)
Proceeds from sale of leasing equipment138,020 57,155 
Proceeds from sale of property, plant and equipment4,304 — 
Proceeds for deposit on sale of aircraft and engine8,245 1,425 
Return of purchase deposits 1,010 
Net cash used in investing activities$(306,784)$(204,209)



See accompanying notes to consolidated financial statements.
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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(Dollars in thousands)
Six Months Ended June 30,
20222021
Cash flows from financing activities:
Proceeds from debt$503,980 $776,100 
Repayment of debt(224,724)(552,704)
Payment of deferred financing costs(14,405)(10,653)
Receipt of security deposits1,890 1,020 
Return of security deposits (1,034)
Receipt of maintenance deposits24,418 16,255 
Capital contributions from non-controlling interests1,187 — 
Release of maintenance deposits(878)(12,071)
Proceeds from issuance of preferred shares, net of underwriter's discount and issuance costs 101,201 
Settlement of equity-based compensation (183)
Cash dividends - common shares(65,789)(56,795)
Cash dividends - preferred shares(13,582)(11,176)
Net cash provided by financing activities212,097 249,960 
Net decrease in cash and cash equivalents and restricted cash(143,256)(18,173)
Cash and cash equivalents and restricted cash, beginning of period440,061 161,418 
Cash and cash equivalents and restricted cash, end of period$296,805 $143,245 
Supplemental disclosure of non-cash investing and financing activities:
Acquisition of leasing equipment$105,635 $23,299 
Acquisition of property, plant and equipment(1,346)(891)
Settled and assumed security deposits(12,055)(1,042)
Billed, assumed and settled maintenance deposits(55,108)(22,123)
Non-cash change in equity method investment(142,493)(22,878)
Conversion of interests in unconsolidated entities(21,302)— 
Issuance of common shares399 455 



See accompanying notes to consolidated financial statements.
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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)

1. ORGANIZATION
Fortress Transportation and Infrastructure Investors LLC (“we”, “us”, “our” or the “Company”) is a Delaware limited liability company which, through its subsidiary, Fortress Worldwide Transportation and Infrastructure General Partnership (the “Partnership”), owns and leases aviation equipment and also owns and operates (i) a multi-modal crude oil and refined products terminal in Beaumont, Texas (“Jefferson Terminal”), (ii) a deep-water port located along the Delaware River with an underground storage cavern and multiple industrial development opportunities (“Repauno”), (iii) an equity method investment in a multi-modal terminal located along the Ohio River with multiple industrial development opportunities, including a power plant in operation (“Long Ridge”) and (iv) five freight railroads and one switching company (“Transtar”) that provide rail service to certain manufacturing and production facilities. Additionally, we own and lease offshore energy equipment and shipping containers. We have 4 reportable segments, (i) Aviation Leasing, (ii) Jefferson Terminal, (iii) Ports and Terminals and (iv) Transtar, which operate in 2 primary businesses, Equipment Leasing and Infrastructure (see Note 14).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of AccountingThe accompanying consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and include the accounts of us and our subsidiaries.
Principles of ConsolidationWe consolidate all entities in which we have a controlling financial interest and control over significant operating decisions, as well as variable interest entities (“VIEs”) in which we are the primary beneficiary. All significant intercompany transactions and balances have been eliminated. All adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The ownership interest of other investors in consolidated subsidiaries is recorded as non-controlling interest.
We use the equity method of accounting for investments in entities in which we exercise significant influence but which do not meet the requirements for consolidation. Under the equity method, we record our proportionate share of the underlying net income (loss) of these entities as well as the proportionate interest in adjustments to other comprehensive income (loss).
Use of EstimatesThe preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Risks and UncertaintiesIn the normal course of business, we encounter several significant types of economic risk including credit, market, and capital market risks. Credit risk is the risk of the inability or unwillingness of a lessee, customer, or derivative counterparty to make contractually required payments or to fulfill its other contractual obligations. Market risk reflects the risk of a downturn or volatility in the underlying industry segments in which we operate, which could adversely impact the pricing of the services offered by us or a lessee’s or customer’s ability to make payments, increase the risk of unscheduled lease terminations and depress lease rates and the value of our leasing equipment or operating assets. Capital market risk is the risk that we are unable to obtain capital at reasonable rates to fund the growth of our business or to refinance existing debt facilities. We, through our subsidiaries, also conduct operations outside of the United States; such international operations are subject to the same risks as those associated with our United States operations as well as additional risks, including unexpected changes in regulatory requirements, heightened risk of political and economic instability, potentially adverse tax consequences and the burden of complying with foreign laws. We do not have significant exposure to foreign currency risk as all of our leasing arrangements and the majority of terminal services revenue are denominated in U.S. dollars.
Variable Interest EntitiesThe assessment of whether an entity is a VIE and the determination of whether to consolidate a VIE requires judgment. VIEs are defined as entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. A VIE is required to be consolidated by its primary beneficiary, and only by its primary beneficiary, which is defined as the party who has the power to direct the activities of a VIE that most significantly impact its economic performance and who has the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.
Delaware River Partners LLC
During 2016, through Delaware River Partners LLC (“DRP”), a consolidated subsidiary, we purchased the assets of Repauno, which consisted primarily of land, a storage cavern, and riparian rights for the acquired land, site improvements and rights. Upon acquisition there were no operational processes that could be applied to these assets that would result in outputs without significant green field development. We currently hold an approximately 98% economic interest, and a 100% voting interest in DRP. DRP is solely reliant on us to finance its activities and therefore is a VIE. We concluded that we were the primary beneficiary; and accordingly, DRP has been presented on a consolidated basis in the accompanying financial statements. Total VIE assets of DRP were $331.2 million and $316.5 million, and total VIE liabilities of DRP were $48.2 million and $32.6 million as of June 30, 2022 and December 31, 2021, respectively.
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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
Cash and Cash EquivalentsWe consider all highly liquid short-term investments with a maturity of 90 days or less when purchased to be cash equivalents.
Restricted CashRestricted cash consists of prepaid interest and principal pursuant to the requirements of certain of our debt agreements (see Note 7) and other qualifying construction projects at Jefferson Terminal.
InventoryWe hold aircraft engine modules, spare parts and used material inventory for trading and to support operations within our Aviation Leasing segment. Aviation inventory is carried at the lower of cost or net realizable value on our balance sheet. We had Aviation inventory of $112.7 million and $100.3 million as of June 30, 2022 and December 31, 2021, respectively, which is included in Other assets in the Consolidated Balance Sheets.
Commodities inventory is carried at the lower of cost or net realizable value on our balance sheet. Commodities are removed from inventory based on the average cost at the time of sale. We had commodities inventory of $5.9 million and $6.8 million as of June 30, 2022 and December 31, 2021, respectively, which is included in Other assets in the Consolidated Balance Sheets.
Deferred Financing CostsCosts incurred in connection with obtaining long term financing are capitalized and amortized to interest expense over the term of the underlying loans. Unamortized deferred financing costs of $66.0 million and $64.5 million as of June 30, 2022 and December 31, 2021, respectively, are recorded as a component of debt in the Consolidated Balance Sheets.
We also have unamortized deferred revolver fees related to our revolving debt of $2.5 million and $2.9 million as of June 30, 2022 and December 31, 2021, respectively, which are included in Other assets in the Consolidated Balance Sheets.
Amortization expense was $7.6 million and $2.2 million for the three months ended June 30, 2022 and 2021, respectively, and $13.3 million and $4.5 million for the six months ended June 30, 2022 and 2021, respectively, and is included in Interest expense in the Consolidated Statements of Operations.
Revenue Recognition
Equipment Leasing Revenues
Operating Leases—We lease equipment pursuant to operating leases. Operating leases with fixed rentals and step rentals are recognized on a straight-line basis over the term of the lease, assuming no renewals. Revenue is not recognized when collection is not reasonably assured. When collectability is not reasonably assured, the customer is placed on non-accrual status and revenue is recognized when cash payments are received.
Generally, under our aircraft lease and engine agreements, the lessee is required to make periodic maintenance payments calculated based on the lessee’s utilization of the leased asset or at the end of the lease. Typically, under our aircraft lease agreements, the lessee is responsible for maintenance, repairs and other operating expenses throughout the term of the lease. These periodic maintenance payments accumulate over the term of the lease to fund major maintenance events, and we are contractually obligated to return maintenance payments to the lessee up to the cost of maintenance events paid by the lessee. In the event the total cost of maintenance events over the term of a lease is less than the cumulative maintenance payments, we are not required to return any unused or excess maintenance payments to the lessee.
Maintenance payments received for which we expect to repay to the lessee are presented as Maintenance Deposits in our Consolidated Balance Sheets. All excess maintenance payments received that we do not expect to repay to the lessee are recorded as Maintenance revenues. Estimates in recognizing revenue include mean time between removal, projected costs for engine maintenance and forecasted utilization of aircraft which are affected by historical usage patterns and overall industry, market and economic conditions. Significant changes to these estimates could have a material effect on the amount of revenue recognized in the period.
For purchase and lease back transactions, we account for the transaction as a single arrangement. We allocate the consideration paid based on the relative fair value of the aircraft and lease. The fair value of the lease may include a lease premium or discount, which is recorded as a favorable or unfavorable lease intangible.
Finance Leases—From time to time we enter into finance lease arrangements that include a lessee obligation to purchase the leased equipment at the end of the lease term, a bargain purchase option, or provides for minimum lease payments with a present value that equals or exceeds substantially all of the fair value of the leased equipment at the date of lease inception. Net investment in finance leases represents the minimum lease payments due from lessee, net of unearned income. The lease payments are segregated into principal and interest components similar to a loan. Unearned income is recognized on an effective interest method over the lease term and is recorded as finance lease income. The principal component of the lease payment is reflected as a reduction to the net investment in finance leases. Revenue is not recognized when collection is not reasonably assured. When collectability is not reasonably assured, the customer is placed on non-accrual status and revenue is recognized when cash payments are received.
Other Revenue—Other revenue primarily consists of revenue related to the sale of engine modules, spare parts and used material inventory and other income. Revenues for the sale of engine modules, spare parts and used material inventory are recognized when a performance obligation is satisfied by transferring control of inventory to a customer.
13


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
Infrastructure Revenues
Terminal Services Revenues—Terminal services are provided to customers for the receipt and redelivery of various commodities. These revenues relate to performance obligations that are recognized over time using the right to invoice practical expedient, i.e., invoiced as the services are rendered and the customer simultaneously receives and consumes the benefit over the contract term. The Company’s performance of service and right to invoice corresponds with the value delivered to our customers. Revenues are typically invoiced and paid on a monthly basis.
Rail Revenues—Rail revenues generally consist of the following performance obligations: industrial switching, interline services, demurrage and storage. Switching revenues are derived from the performance of switching services, which involve the movement of cars from one point to another within the limits of an individual plant, industrial area, or a rail yard. Switching revenues are recognized as the services are performed, and the services are generally completed on the same day they are initiated.
Interline revenues are derived from transportation services for railcars that originate or terminate at our railroads and involve one or more other carriers. For interline traffic, one railroad typically invoices a customer on behalf of all railroads participating in the route directed by the customer. The invoicing railroad then pays the other railroads its portion of the total amount invoiced on a monthly basis. We record revenue related to interline traffic for transportation service segments provided by carriers along railroads that are not owned or controlled by us on a net basis. Interline revenues are recognized as the transportation movements occur.
Our ancillary services revenue primarily relates to demurrage and storage services. Demurrage represents charges assessed by railroads for the detention of cars by shippers or receivers of freight beyond a specified free time and is recognized on a per day basis. Storage services revenue is earned for the provision of storage of shippers’ railcars and is generally recognized on a per day, per car basis, as the storage services are provided.
Lease Income—Lease income consists of rental income from tenants for storage space. Lease income is recognized on a straight-line basis over the terms of the relevant lease agreement.
Other Revenue—Other revenue primarily consists of revenue related to the handling, storage and sale of raw materials. Revenues for the handling and storage of raw materials relate to performance obligations that are recognized over time using the right to invoice practical expedient, i.e., invoiced as the services are rendered and the customer simultaneously receives and consumes the benefit over the contract term. Our performance of service and right to invoice corresponds with the value delivered to our customers. Revenues for the sale of raw materials relate to contracts that contain performance obligations to deliver the product over the term of the contract. The revenues are recognized when the control of the product is transferred to the customer, based on the volume delivered and the price within the contract. Other revenues are typically invoiced and paid on a monthly basis.
Additionally, other revenue consists of revenue related to derivative trading activities. See Commodity Derivatives below for additional information.
Other revenue also includes revenue related to providing roadside assistance services to customers in the intermodal and over-the-road trucking industries. Revenue is recognized when a performance obligation is satisfied by completing a repair service at a point in time. Revenues are typically invoiced for each repair and generally have 30-day payment terms.
Payment terms for Infrastructure Revenues are generally short term in nature.
Leasing ArrangementsAt contract inception, we evaluate whether an arrangement is or contains a lease for which we are the lessee (that is, arrangements which provide us with the right to control a physical asset for a period of time). Operating lease right-of-use (“ROU”) assets and lease liabilities are recognized in Operating lease right-of-use assets, net and Operating lease liabilities in our Consolidated Balance Sheets, respectively. Finance lease ROU assets are recognized in Property, plant and equipment, net and lease liabilities are recognized in Other liabilities in our Consolidated Balance Sheets.
All lease liabilities are measured at the present value of the unpaid lease payments, discounted using our incremental borrowing rate based on the information available at commencement date of the lease. ROU assets, for both operating and finance leases, are initially measured based on the lease liability, adjusted for prepaid rent and lease incentives. ROU assets are subsequently measured at the carrying amount of the lease liability adjusted for prepaid or accrued lease payments and lease incentives. The finance lease ROU assets are subsequently amortized using the straight-line method.
Operating lease expenses are recognized on a straight-line basis over the lease term. With respect to finance leases, amortization of the ROU asset is presented separately from interest expense related to the finance lease liability. Variable lease payments, which are primarily based on usage, are recognized when the associated activity occurs.
We have elected to combine lease and non-lease components for all lease contracts where we are the lessee. Additionally, for arrangements with lease terms of 12 months or less, we do not recognize ROU assets, and lease liabilities and lease payments are recognized on a straight-line basis over the lease term with variable lease payments recognized in the period in which the obligation is incurred.
14


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
Concentration of Credit RiskWe are subject to concentrations of credit risk with respect to amounts due from customers on our finance leases and operating leases. We attempt to limit our credit risk by performing ongoing credit evaluations and, when deemed necessary, enter into collateral arrangements. During the three and six months ended June 30, 2022, one customer in the Transtar segment accounted for approximately 20% and 22% of total revenue, respectively. During the three and six months ended June 30, 2021, one customer in the Aviation Leasing segment accounted for approximately 10% and 11% of total revenue, respectively.
As of June 30, 2022, there was one customer in the Aviation Leasing segment that represented 14% of total Accounts receivable, net, one customer in the Ports and Terminals segment that represented 12% of total Accounts receivable, net, and one customer in the Transtar segment that represented 11% of total Accounts receivable, net. As of December 31, 2021, Accounts receivable from two customers in the Aviation Leasing segment represented 36% and 13% of total Accounts receivable, net, respectively. As of December 31, 2021, no other customers in other segments represented more than 10% of total Accounts receivable, net.
We maintain cash and restricted cash balances, which generally exceed federally insured limits, and subject us to credit risk, in high credit quality financial institutions. We monitor the financial condition of these institutions and have not experienced any losses associated with these accounts.
Allowance for Doubtful AccountsWe determine the allowance for doubtful accounts based on our assessment of the collectability of our receivables on a customer-by-customer basis. The allowance for doubtful accounts was $55.6 million and $16.9 million as of June 30, 2022 and December 31, 2021, respectively. There were bad debt reversals of $0.7 million and $0.2 million for the three months ended June 30, 2022 and 2021, respectively. There was a provision for credit losses of $47.2 million and a bad debt reversal of $0.7 million for the six months ended June 30, 2022 and 2021, respectively, and is included in Operating expenses in the Consolidated Statements of Operations.
Economic sanctions and export controls against Russia and Russia’s aviation industry were imposed due to its invasion of Ukraine during the first quarter of 2022. As a result of the sanctions imposed on Russian airlines, we terminated all lease agreements with Russian airlines during the first quarter of 2022 and recognized approximately $47.2 million in bad debt expense during the six months ended June 30, 2022. Our allowance for doubtful accounts at June 30, 2022 includes all accounts receivable exposure to Russian and Ukrainian customers.
Comprehensive Income (Loss)Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances, excluding those resulting from investments by and distributions to owners. Our comprehensive income (loss) represents net income (loss), as presented in the Consolidated Statements of Operations, adjusted for fair value changes for our pension and other postretirement benefits and other comprehensive income related to cash flow hedges of our equity method investees.
Derivative Financial Instruments
Electricity DerivativesThrough our equity method investment in Long Ridge, we enter into derivative contracts as part of a risk management program to mitigate price risk associated with certain electricity price exposures. We primarily use swap derivative contracts, which are agreements to buy or sell a quantity of electricity at a predetermined future date and at a predetermined price.
Cash Flow Hedges
Certain of these derivative instruments are designated and qualify as cash flow hedges. Our share of the derivative's gain or loss is reported as Other comprehensive income (loss) related to equity method investees, net in our Consolidated Statements of Comprehensive Loss and recorded in Accumulated other comprehensive income in our Consolidated Balance Sheets.
Derivatives Not Designated As Hedging Instruments
Certain of these derivative instruments are not designated as hedging instruments for accounting purposes. Our share of the change in fair value of these contracts is recognized in Equity in earnings (losses) in unconsolidated entities in the Consolidated Statements of Operations. The cash flow impact of derivative contracts that are not designated as hedging instruments is recognized in Equity in losses (earnings) in unconsolidated entities in our Consolidated Statements of Cash Flows.
Commodity DerivativesDepending on market conditions, we enter into short-term forward purchase and sales contracts for butane. Gains and losses related to our butane derivatives are recorded on a net basis and are included in Other revenue in our Consolidated Statements of Operations, as these contracts are considered part of central operating activities. The cash flow impact of these derivatives is recognized in Change in fair value of non-hedge derivatives in our Consolidated Statements of Cash Flows.
We record all derivative assets and liabilities on a gross basis at fair value, which are included in Other assets and Other liabilities, respectively, in our Consolidated Balance Sheets.
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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
Other Assets—Other assets is primarily comprised of lease incentives of $37.1 million and $46.9 million, purchase deposits of $7.2 million and $13.7 million, prepaid expenses of $26.1 million and $21.4 million, notes receivable of $112.6 million and $40.4 million, maintenance right assets of $9.1 million and $5.1 million, aircraft engine modules, spare parts and used material inventory of $112.7 million and $100.3 million, commodities inventory of $5.9 million and $6.8 million, and finance leases, net of $6.5 million and $7.6 million as of June 30, 2022 and December 31, 2021, respectively. As a result of the sanctions imposed on Russian airlines, we terminated all lease agreements with Russian airlines and recognized approximately $7.5 million in amortization for the remaining lease incentives during the three and six months ended June 30, 2022.
Dividends—Dividends are recorded if and when declared by the Board of Directors. For both the three and six months ended June 30, 2022 and 2021, the Board of Directors declared cash dividends of $0.33 per common share.
Additionally, in the quarter ended June 30, 2022, the Board of Directors declared cash dividends on the Series A Preferred Shares, Series B Preferred Shares and Series C Preferred Shares of $0.52, $0.50 and $0.52 per share, respectively.
Recent Accounting PronouncementsIn July 2021, the FASB issued ASU 2021-05, Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments. This ASU requires lessors to classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease if (i) the lease would have been classified as a sales-type lease or a direct financing lease under Topic 842 and (ii) the lessor would have otherwise recognized a day-one loss. This standard is effective for all reporting periods beginning after December 15, 2021. We adopted this guidance in the first quarter of 2022, which did not have a material impact on our consolidated financial statements.
3. LEASING EQUIPMENT, NET
Leasing equipment, net is summarized as follows:
June 30, 2022December 31, 2021
Leasing equipment$2,354,087 $2,356,219 
Less: Accumulated depreciation(509,992)(464,570)
Leasing equipment, net$1,844,095 $1,891,649 
Economic sanctions and export controls against Russia and Russia’s aviation industry have been imposed due to its invasion of Ukraine during the six months ended June 30, 2022. As a result of the sanctions imposed on Russian airlines, we terminated all lease agreements with Russian airlines. 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 have not yet been recovered from Ukraine and Russia. As a result, we recognized an impairment charge totaling $120.0 million, net of maintenance deposits, to write-off the entire carrying value of leasing equipment assets that we do not expect to recover from Ukraine and Russia. Additionally, we identified certain assets in our leasing equipment portfolio with indicators of impairment. As a result, we adjusted the carrying value of these assets to fair value and recognized transactional impairment charges of $3.7 million, net of redelivery compensation during the six months ended June 30, 2022.
The following table presents information related to our acquisitions and dispositions of aviation leasing equipment during the six months ended June 30, 2022:
Acquisitions:
Aircraft22 
Engines37 
Dispositions:
Aircraft
Engines29 
Depreciation expense for leasing equipment is summarized as follows:
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Depreciation expense for leasing equipment$39,444 $35,899 $80,923 $70,594 
16


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
4. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment, net is summarized as follows:
June 30, 2022December 31, 2021
Land, site improvements and rights$168,786 $149,914 
Construction in progress243,552 154,859 
Bridges and tunnels177,337 174,889 
Buildings and improvements16,114 19,164 
Terminal machinery and equipment972,123 962,552 
Track and track related assets100,067 100,014 
Railroad equipment8,364 8,331 
Railcars and locomotives105,614 111,574 
Computer hardware and software10,635 5,335 
Furniture and fixtures3,190 3,119 
Other11,481 10,548 
1,817,263 1,700,299 
Less: Accumulated depreciation(174,727)(144,442)
Property, plant and equipment, net$1,642,536 $1,555,857 
During the six months ended June 30, 2022, we added property, plant and equipment of $117.0 million, which primarily consisted of land, terminal machinery and equipment placed in service or under development at Jefferson Terminal.
Depreciation expense for property, plant and equipment is summarized as follows:
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Depreciation expense$15,293 $10,583 $30,240 $19,535 
5. INVESTMENTS
The following table presents the ownership interests and carrying values of our investments:
Carrying Value
InvestmentOwnership PercentageJune 30, 2022December 31, 2021
Advanced Engine Repair JVEquity method25%$20,752 $21,317 
Falcon MSN 177 LLCEquity method50%1,886 1,600 
Intermodal Finance I, Ltd.Equity method51% — 
Long Ridge Terminal LLC (1)
Equity method50% — 
FYX Trust Holdco LLCEquity at
December 31, 2021
65% and 14% as of June 30, 2022 and December 31, 2021, respectively (2)
 1,255 
GM-FTAI Holdco LLCEquity methodSee below72,475 52,295 
Clean Planet Energy USA LLCEquity method50%4,430 858 
$99,543 $77,325 
________________________________________________________
(1) The carrying value of $188.0 million and $17.5 million as of June 30, 2022 and December 31, 2021 is included in Other liabilities in the Consolidated Balance Sheets.
(2) See “Equity Investments - FYX Holdco LLC” below for additional information regarding the FYX Trust Holdco LLC acquisition in May 2022.
We did not recognize any other-than-temporary impairments for the three and six months ended June 30, 2022 and 2021.
17


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
The following table presents our proportionate share of equity in (losses) income:
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Advanced Engine Repair JV$(212)$(341)$(566)$(681)
Falcon MSN 177 LLC247 — 799 — 
Intermodal Finance I, Ltd.45 204 89 376 
Long Ridge Terminal LLC(12,971)(7,015)(36,520)(5,473)
GM-FTAI Holdco LLC(688)— (1,121)— 
Clean Planet Energy USA LLC(244)— (517)— 
Total$(13,823)$(7,152)$(37,836)$(5,778)
Equity Method Investments
Clean Planet Energy USA LLC
In November 2021, we acquired 50% of the Class A shares of Clean Planet Energy USA LLC (“CPE”) with an initial investment of $1.0 million. CPE intends on building waste plastic-to-fuel plants in the United States. The plants will convert various grades of non-recyclable waste plastic to renewable diesel in the form of jet fuel, diesel, naphtha, and low sulfur fuel oil. We account for our investment in CPE as an equity method investment as we have significant influence through our ownership of Class A shares.
Falcon MSN 177 LLC
In November 2021, we invested $1.6 million for a 50% interest in Falcon MSN 177 LLC, an entity that consists of one Dassault Falcon 2000 aircraft. Falcon MSN 177 LLC leases the aircraft to charter operators on aircraft, crew, maintenance and insurance contracts. We account for our investment in Falcon as an equity method investment as we have significant influence through our interest.
GM-FTAI Holdco LLC
In September 2021, we acquired 1% of the Class A shares and 50% of the Class B shares of GM-FTAI Holdco LLC for $52.5 million. GM-FTAI Holdco LLC owns 100% interest in Gladieux Metals Recycling (“GMR”) and Aleon Renewable Metals LLC (“Aleon”). GMR specializes in recycling spent catalyst produced in the petroleum refining industry.
Aleon plans to develop a lithium-ion battery recycling business across the United States. Each planned location will collect, discharge and disassemble lithium-ion batteries to extract various metals in high-purity form for resale into the lithium-ion battery production market. Aleon and GMR are governed by separate boards of directors. Our ownership of Class A and B shares in GM-FTAI Holdco LLC provides us with 1% and 50% economic interest in GMR and Aleon, respectively. We account for our investment in GM-FTAI Holdco LLC as an equity method investment as we have significant influence through our ownership of Class A and Class B shares of GM-FTAI Holdco LLC.
On June 15, 2022, we exchanged our Class B shares which gave us economic interest in Aleon for an additional 20% interest in Class A shares. In addition, we also terminated our credit agreements with GMR and Aleon in exchange for an approximate 8.5% of additional interest in Class A shares. At June 30, 2022 as a result of these exchange transactions, we own approximately 27% of GM-FTAI Holdco LLC, which owns 100% of both GMR and Aleon.
Long Ridge Terminal LLC
In December 2019, Ohio River Shareholder LLC (“ORP”), a wholly owned subsidiary, contributed its equity interests in Long Ridge into Long Ridge Terminal LLC and sold a 49.9% interest (the “Long Ridge Transaction”) for $150 million in cash, plus an earn out. We no longer have a controlling interest in Long Ridge but still maintain significant influence through our retained interest and, therefore, now account for this investment in accordance with the equity method. Following the sale, we deconsolidated ORP, which held the assets of Long Ridge.
18


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
The tables below present summarized financial information for Long Ridge Terminal LLC:
June 30, 2022December 31, 2021
Balance Sheet
Assets
Cash and cash equivalents$2,470 $2,932 
Restricted cash25,096 32,469 
Accounts receivable, net24,876 17,896 
Property, plant, and equipment, net788,215 764,607 
Intangible assets, net4,750 4,940 
Goodwill89,390 89,390 
Other assets16,975 14,441 
Total assets$951,772 $926,675 
Liabilities
Accounts payable and accrued liabilities$46,338 $16,121 
Debt, net606,174 604,261 
Derivative liabilities671,577 339,033 
Other liabilities2,979 2,246 
Total liabilities1,327,068 961,661 
Equity
Shareholders’ equity(272,779)(1,035)
Accumulated deficit(102,517)(33,951)
Total equity(375,296)(34,986)
Total liabilities and equity$951,772 $926,675 
Three Months Ended June 30,Six Months Ended June 30,
Income Statement2022202120222021
Total revenues$19,801 $8,849 $15,043 $17,270 
Expenses
Operating expenses19,909 6,715 32,356 10,987 
Depreciation and amortization12,454 3,683 24,998 7,436 
Interest expense13,181 627 26,042 946 
Total expenses45,544 11,025 83,396 19,369 
Total other expense(149)(11,825)(213)(8,826)
Net loss$(25,892)$(14,001)$(68,566)$(10,925)
Advanced Engine Repair JV
In December 2016, we invested $15 million for a 25% interest in an advanced engine repair joint venture. We focus on developing new cost savings programs for engine repairs. We exercise significant influence over this investment and account for this investment as an equity method investment.
In August 2019, we expanded the scope of our joint venture and invested an additional $13.5 million and maintained a 25% interest.
19


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
Equity Investments
FYX Trust Holdco LLC
In July 2020, we invested $1.3 million for a 14% interest in an operating company that provides roadside assistance services for the intermodal and over-the-road trucking industries. FYX Trust Holdco LLC (“FYX”) has developed a mobile and web-based application that connects fleet managers, owner-operators, and drivers with repair vendors to efficiently and reliably quote, dispatch, monitor, and bill roadside repair services.
In May 2022, we purchased an additional 51% interest in FYX from an unrelated third party for a purchase price of $4.6 million, which resulted in our ownership of a majority stake in the entity. From the purchase date in May 2022 through and as of June 30, 2022, FYX is presented on a consolidated basis in the Consolidated Statement of Operations and the Consolidated Balance Sheet. $4.2 million is recorded as non-controlling interest for interest held by other parties at June 30, 2022. At the purchase date, assets of FYX were $13.7 million, liabilities were $10.1 million, and goodwill of $5.4 million was recorded. Since purchase, we have recorded total revenue from FYX of $10.1 million and net loss from FYX of $0.4 million.

6. INTANGIBLE ASSETS AND LIABILITIES, NET
Intangible assets and liabilities, net are summarized as follows:
June 30, 2022
Aviation LeasingJefferson TerminalTranstarTotal
Intangible assets
Acquired favorable lease intangibles$75,726 $ $ $75,726 
Less: Accumulated amortization(43,858)  (43,858)
Acquired favorable lease intangibles, net31,868   31,868 
Customer relationships 35,513 60,000 95,513 
Less: Accumulated amortization (27,814)(3,722)(31,536)
Acquired customer relationships, net 7,699 56,278 63,977 
Total intangible assets, net$31,868 $7,699 $56,278 $95,845 
Intangible liabilities
Acquired unfavorable lease intangibles$18,227 $ $ $18,227 
Less: Accumulated amortization(6,906)  (6,906)
Acquired unfavorable lease intangibles, net$11,321 $ $ $11,321 
December 31, 2021
Aviation LeasingJefferson TerminalTranstarTotal
Intangible assets
Acquired favorable lease intangibles$67,013 $— $— $67,013 
Less: Accumulated amortization(36,051)— — (36,051)
Acquired favorable lease intangibles, net30,962 — — 30,962 
Customer relationships— 35,513 60,000 95,513 
Less: Accumulated amortization— (26,038)(1,738)(27,776)
Acquired customer relationships, net— 9,475 58,262 67,737 
Total intangible assets, net$30,962 $9,475 $58,262 $98,699 
Intangible liabilities
Acquired unfavorable lease intangibles$14,795 $— $— $14,795 
Less: Accumulated amortization(6,068)— — (6,068)
Acquired unfavorable lease intangibles, net$8,727 $— $— $8,727 
20


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
Intangible liabilities relate to unfavorable lease intangibles and are included as a component of Other liabilities in the Consolidated Balance Sheets.
Amortization of intangible assets and liabilities is as follows:
Classification in Consolidated Statements of OperationsThree Months Ended June 30,Six Months Ended June 30,
2022202120222021
Lease intangiblesEquipment leasing revenues$3,310 $1,198 $6,968 $1,950 
Customer relationshipsDepreciation and amortization1,885 889 3,760 1,777 
Total$5,195 $2,087 $10,728 $3,727 
As of June 30, 2022, estimated net annual amortization of intangibles is as follows:
Remainder of 2022$9,508 
202315,462 
202411,063 
20255,948 
20264,518 
Thereafter38,025 
Total$84,524 
21


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)

7. DEBT, NET
Our debt, net is summarized as follows:
June 30, 2022December 31, 2021
Outstanding BorrowingsStated Interest RateMaturity DateOutstanding Borrowings
Loans payable
Revolving Credit
Facility (1)
$220,000 
(i) Base Rate + 2.00%; or
(ii) Adjusted Term SOFR Rate + 3.00%
12/2/24$189,473 
DRP Revolver (2)
25,000 
(i) Base Rate + 2.75%; or
(ii) Base Rate + 3.75% (Eurodollar)
11/5/2425,000 
EB-5 Loan Agreement35,550 5.75%1/25/2626,100 
2021 Bridge Loans339,805 
(i) Base Rate + 1.75%; or
(ii) Adjusted Term SOFR Rate + 2.75%
12/15/22100,527 
Total loans payable620,355 341,100 
Bonds payable
Series 2020 Bonds263,980 
(i) Tax Exempt Series 2020A Bonds: 3.625%
(ii) Tax Exempt Series 2020A Bonds: 4.00%
(iii) Taxable Series 2020B Bonds: 6.00%
(i) 1/1/35
(ii) 1/1/50
(iii) 1/1/25
263,980 
Series 2021 Bonds425,000 
(i) Series 2021A Bonds: 1.875% to 3.000%
(ii) Series 2021B Bonds: 4.100%
(i) 1/1/26 to 1/1/50
(ii) 1/1/28
425,000 
Senior Notes due
2025 (3)
851,951 6.50%10/1/25852,198 
Senior Notes due 2027400,000 9.75%8/1/27400,000 
Senior Notes due 2028 (4)
1,002,255 5.50%5/1/281,002,416 
Total bonds payable2,943,186 2,943,594 
Debt3,563,541 3,284,694 
Less: Debt issuance costs(65,975)(64,483)
Total debt, net$3,497,566 $3,220,211 
Total debt due within one year$339,805 $100,527 
________________________________________________________
(1) Requires a quarterly commitment fee at a rate of 0.50% on the average daily unused portion, as well as customary letter of credit fees and agency fees.
(2) Requires a quarterly commitment fee at a rate of 1.00% on the average daily unused portion, as well as customary letter of credit fees and agency fees.
(3) Includes an unamortized discount of $3,090 and $3,509 at June 30, 2022 and December 31, 2021, respectively, and an unamortized premium of $5,041 and $5,707 at June 30, 2022 and December 31, 2021, respectively.
(4) Includes an unamortized premium of $2,255 and $2,416 at June 30, 2022 and December 31, 2021, respectively.
We were in compliance with all debt covenants as of June 30, 2022.
8. FAIR VALUE MEASUREMENTS
Fair value measurements and disclosures require the use of valuation techniques to measure fair value that maximize the use of observable inputs and minimize use of unobservable inputs. These inputs are prioritized as follows:
Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities or market corroborated inputs.
Level 3: Unobservable inputs for which there is little or no market data and which require us to develop our own assumptions about how market participants price the asset or liability.
The valuation techniques that may be used to measure fair value are as follows:
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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
Market approach—Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.
Income approach—Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about those future amounts.
Cost approach—Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost).
The following tables set forth our financial assets measured at fair value on a recurring basis as of June 30, 2022 and December 31, 2021, by level within the fair value hierarchy. Assets measured at fair value are classified in their entirety based on the lowest level of input that is significant to their fair value measurement.
Fair Value as ofFair Value Measurements Using Fair Value Hierarchy as of
June 30, 2022June 30, 2022
TotalLevel 1Level 2Level 3Valuation Technique
Assets
Cash and cash equivalents$118,854 $118,854 $ $ Market
Restricted cash177,951 177,951   Market
Derivative assets748  748  Income
Total assets$297,553 $296,805 $748 $ 
Fair Value as ofFair Value Measurements Using Fair Value Hierarchy as of
December 31, 2021December 31, 2021
TotalLevel 1Level 2Level 3Valuation Technique
Assets
Cash and cash equivalents$188,078 $188,078 $— $— Market
Restricted cash251,983 251,983 — — Market
Derivative assets2,220 — 2,220 — Income
Total$442,281 $440,061 $2,220 $— 
Our cash and cash equivalents and restricted cash consist largely of demand deposit accounts with maturities of 90 days or less when purchased that are considered to be highly liquid. These instruments are valued using inputs observable in active markets for identical instruments and are therefore classified as Level 1 within the fair value hierarchy.
The fair value of our commodity derivative assets are classified as Level 2 measurements are estimated by applying the income and market approaches, based on quotes of observable market transactions, and adjusted for estimated differential factors based on quality and delivery locations.
Except as discussed below, our financial instruments other than cash and cash equivalents and restricted cash consist principally of accounts receivable, notes receivable, accounts payable and accrued liabilities, loans payable, security deposits, maintenance deposits and management fees payable, whose fair values approximate their carrying values based on an evaluation of pricing data, vendor quotes, and historical trading activity or due to their short maturity profiles.
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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
The fair value of our bonds and notes payable reported as Debt, net in the Consolidated Balance Sheets are presented in the table below:
June 30, 2022December 31, 2021
Series 2020 A Bonds (1)
$143,857 $189,773 
Series 2020 B Bonds (1)
80,014 81,637 
Series 2021 A Bonds (1)
161,095 222,023 
Series 2021 B Bonds (1)
177,616 194,278 
Senior Notes due 2025802,766 881,408 
Senior Notes due 2027396,668 448,848 
Senior Notes due 2028829,500 1,019,470 
________________________________________________________
(1) Fair value is based upon market prices for similar municipal securities.
The fair value of all other items reported as Debt, net in the Consolidated Balance Sheets approximate their carrying values due to their bearing market rates of interest and are classified as Level 2 within the fair value hierarchy.
We measure the fair value of certain assets on a non-recurring basis when GAAP requires the application of fair value, including events or changes in circumstances that indicate that the carrying amounts of assets may not be recoverable. Assets subject to these measurements include goodwill, intangible assets, property, plant and equipment and leasing equipment. We record such assets at fair value when it is determined the carrying value may not be recoverable. Fair value measurements for assets subject to impairment tests are based on an income approach which uses Level 3 inputs, which include our assumptions as to future cash flows from operation of the underlying businesses and the leasing and eventual sale of assets.
9. REVENUES
We disaggregate our revenue from contracts with customers by products and services provided for each of our segments, as we believe it best depicts the nature, amount, timing and uncertainty of our revenue. Revenues attributed to our Equipment Leasing business unit are within the scope of ASC 842 and ASC 606, while revenues attributed to our Infrastructure business unit are within the scope of ASC 606, unless otherwise noted. We have elected to exclude sales and other similar taxes from revenues.

Three Months Ended June 30, 2022
Equipment LeasingInfrastructure
Aviation LeasingJefferson TerminalPorts and TerminalsTranstarCorporate and OtherTotal
Equipment leasing revenues
Lease income$37,196 $ $ $ $2,342 $39,538 
Maintenance revenue39,932     39,932 
Finance lease income102     102 
Other revenue31,701    791 32,492 
Total equipment leasing revenues108,931    3,133 112,064 
Infrastructure revenues
Lease income 314  553  867 
Rail revenues   37,507  37,507 
Terminal services revenues 14,214 13   14,227 
Other revenue  1,627  11,640 13,267 
Total infrastructure revenues 14,528 1,640 38,060 11,640 65,868 
Total revenues$108,931 $14,528 $1,640 $38,060 $14,773 $177,932 
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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
Three Months Ended June 30, 2021
Equipment LeasingInfrastructure
Aviation LeasingJefferson TerminalPorts and TerminalsTranstarCorporate and OtherTotal
Equipment leasing revenues
Lease income$40,208 $— $— $— $2,694 $42,902 
Maintenance revenue32,003 — — — — 32,003 
Finance lease income443 — — — — 443 
Other revenue5,789 — — — 434 6,223 
Total equipment leasing revenues78,443 — — — 3,128 81,571 
Infrastructure revenues
Lease income— 432 — — — 432 
Terminal services revenues— 11,095 25 — — 11,120 
Other revenue— — 2,319 — 1,473 3,792 
Total infrastructure revenues— 11,527 2,344 — 1,473 15,344 
Total revenues$78,443 $11,527 $2,344 $— $4,601 $96,915 

Six Months Ended June 30, 2022
Equipment LeasingInfrastructure
Aviation LeasingJefferson TerminalPorts and TerminalsTranstarCorporate and OtherTotal
Equipment leasing revenues
Lease income$71,043 $ $ $ $7,709 $78,752 
Maintenance revenue76,664     76,664 
Finance lease income213     213 
Other revenue46,036    2,090 48,126 
Total equipment leasing revenues193,956    9,799 203,755 
Infrastructure revenues
Lease income 666  1,041  1,707 
Rail revenues  86 71,089  71,175 
Terminal services revenues 26,908 103   27,011 
Other revenue  (535) 12,658 12,123 
Total infrastructure revenues 27,574 (346)72,130 12,658 112,016 
Total revenues$193,956 $27,574 $(346)$72,130 $22,457 $315,771 
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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
Six Months Ended June 30, 2021
Equipment LeasingInfrastructure
Aviation LeasingJefferson TerminalPorts and TerminalsTranstarCorporate and OtherTotal
Equipment leasing revenues
Lease income$79,997 $— $— $— $3,132 $83,129 
Maintenance revenue47,511 — — — — 47,511 
Finance lease income846 — — — — 846 
Other revenue6,190 — — — 502 6,692 
Total equipment leasing revenues134,544 — — — 3,634 138,178 
Infrastructure revenues
Lease income— 862 — — — 862 
Terminal services revenues— 21,384 157 — — 21,541 
Crude marketing revenues— — — — — — 
Other revenue— — 10,283 — 3,200 13,483 
Total infrastructure revenues— 22,246 10,440 — 3,200 35,886 
Total revenues$134,544 $22,246 $10,440 $— $6,834 $174,064 
Presented below are the contracted minimum future annual revenues to be received under existing operating leases across several market sectors as of June 30, 2022:
Operating Leases
Remainder of 2022$78,238 
2023108,931 
202472,467 
202545,869 
202626,816 
Thereafter67,740 
Total$400,061 
10. EQUITY-BASED COMPENSATION
In 2015, we established a Nonqualified Stock Option and Incentive Award Plan (“Incentive Plan”) which provides for the ability to grant equity compensation awards in the form of stock options, stock appreciation rights, restricted stock, and performance awards to eligible employees, consultants, directors, and other individuals who provide services to us, each as determined by the Compensation Committee of the Board of Directors.
As of June 30, 2022, the Incentive Plan provides for the issuance of up to 29.8 million shares. We account for equity-based compensation expense in accordance with ASC 718 Compensation-Stock Compensation and is reported within operating expenses and general and administrative in the Consolidated Statements of Operations.
The Consolidated Statements of Operations includes the following expense related to our stock-based compensation arrangements:
Three Months Ended June 30,Six Months Ended June 30,Remaining Expense To Be Recognized, If All Vesting Conditions Are MetWeighted Average Remaining Contractual Term (in years)
2022202120222021
Restricted Shares$538 $1,270 $1,076 $2,111 $2,655 0.8 years
Common Units1,047 169 1,218 442 3,599 1.2 years
Total$1,585 $1,439 $2,294 $2,553 $6,254 
Options
During the six months ended June 30, 2022, FIG LLC (the “Manager”), an affiliate of Fortress Investment Group LLC, transferred 336,862 of its options to certain of the Manager’s employees.
26


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
Common Units
During the six months ended June 30, 2022, we issued common units of our subsidiary that had a grant date fair value of $1.9 million and vest over three years. These awards are subject to continued employment, and the compensation expense is recognized ratably over the vesting periods. The fair value of these awards was based on the fair value of the operating subsidiary on the grant date, which was estimated using a discounted cash flow analysis that requires the application of discount factors and terminal multiples to projected cash flows. Discount factors and terminal multiples were based on market-based inputs and transactions, as available at the measurement date.
Additionally, during the six months ended June 30, 2022, we issued separate common units of our subsidiary that had a grant date fair value of $1.9 million and vest over three years. These awards are subject to performance targets based on EBITDA as defined in the agreements, and the total expected compensation expense is recognized ratably over the vesting periods if it is probable that the performance conditions will be met. The fair value of these awards was based on the fair value of the operating subsidiary on the grant date, which was estimated using a discounted cash flow analysis that requires the application of discount factors and terminal multiples to projected cash flows. Discount factors and terminal multiples were based on market-based inputs and transactions, as available at the measurement date.
11. RETIREMENT BENEFIT PLANS
In connection with the acquisition of Transtar, we established a defined benefit pension plan as well as a postretirement benefit plan to assume certain retirement benefit obligations related to eligible Transtar employees.
Defined Benefit Pensions
Our partially funded pension plan is a tax qualified plan. Our pension plan covers certain eligible Transtar employees. These plans are noncontributory. Pension benefits earned are generally based on years of service and compensation during active employment.
Postretirement Benefits
Our unfunded postretirement plan provides healthcare and life insurance benefits for eligible retirees and dependents of Transtar. Depending on retirement date and employee classification, certain healthcare plans contain contribution and cost-sharing features such as deductibles and co-insurance. The remaining healthcare and life insurance plans are non-contributory.
The following table summarizes our retirement benefit plan costs for the three and six months ended June 30, 2022. Service costs and interest costs are recorded in Operating expenses and Other (expense) income, respectively, in the Consolidated Statements of Operations.
Three Months Ended June 30, 2022Six Months Ended June 30, 2022
Pension BenefitsPostretirement BenefitsPension BenefitsPostretirement Benefits
Service costs$438 $538 $876 $1,075 
Interest costs74 225 148 450 
Total$512 $763 $1,024 $1,525 
The total amount of employer contributions paid for the six months ended June 30, 2022 was $0.3 million, and the expected remaining scheduled employer contributions for the fiscal year ending December 31, 2022 is $1.2 million.

27


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
12. INCOME TAXES
The current and deferred components of the income tax provision (benefit) included in the Consolidated Statements of Operations are as follows: 
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Current:
Federal$36 $37 $413 $56 
State and local(213)90 215 161 
Foreign(224)(64)69 (56)
Total current (benefit) provision(401)63 697 161 
Deferred:
Federal3,346 (1,622)4,967 (1,467)
State and local475 — 930 — 
Foreign(9)(81)303 (165)
Total deferred provision (benefit)3,812 (1,703)6,200 (1,632)
Provision for (benefit from) income taxes$3,411 $(1,640)$6,897 $(1,471)
We are taxed as a flow-through entity for U.S. income tax purposes and our taxable income or loss generated is the responsibility of our owners. Taxable income or loss generated by our corporate subsidiaries is subject to U.S. federal, state and foreign corporate income tax in locations where they conduct business.
Our effective tax rate differs from the U.S. federal tax rate of 21% primarily due to a significant portion of our income not being subject to U.S. corporate tax rates, or being deemed to be foreign sourced and thus either not taxable or taxable at effectively lower tax rates.
As of and for the six months ended June 30, 2022, we had not established a liability for uncertain tax positions as no such positions existed. In general, our tax returns and the tax returns of our corporate subsidiaries are subject to U.S. federal, state, local and foreign income tax examinations by tax authorities. Generally, we are not subject to examination by taxing authorities for tax years prior to 2018. We do not believe that it is reasonably possible that the total amount of unrecognized tax benefits will significantly change within 12 months of the reporting date of June 30, 2022.
13. MANAGEMENT AGREEMENT AND AFFILIATE TRANSACTIONS
The Manager is paid annual fees in exchange for advising us on various aspects of our business, formulating our investment strategies, arranging for the acquisition and disposition of assets, arranging for financing, monitoring performance, and managing our day-to-day operations, inclusive of all costs incidental thereto. In addition, the Manager may be reimbursed for various expenses incurred by the Manager on our behalf, including the costs of legal, accounting and other administrative activities. Additionally, we have entered into certain incentive allocation arrangements with Master GP, which owns approximately 0.05% of the Partnership and is the general partner of the Partnership.
The Manager is entitled to a management fee, incentive allocations (comprised of income incentive allocation and capital gains incentive allocation, defined below) and reimbursement of certain expenses. The management fee is determined by taking the average value of total equity (excluding non-controlling interests) determined on a consolidated basis in accordance with GAAP at the end of the two most recently completed months multiplied by an annual rate of 1.50% and is payable monthly in arrears in cash.
The income incentive allocation is calculated and distributable quarterly in arrears based on the pre-incentive allocation net income for the immediately preceding calendar quarter (the “Income Incentive Allocation”). For this purpose, pre-incentive allocation net income means, with respect to a calendar quarter, net income attributable to shareholders during such quarter calculated in accordance with GAAP excluding our pro rata share of (1) realized or unrealized gains and losses, and (2) certain non-cash or one-time items, and (3) any other adjustments as may be approved by our independent directors. Pre-incentive allocation net income does not include any Income Incentive Allocation or Capital Gains Incentive Allocation (described below) paid to the Master GP during the relevant quarter.
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FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
One of our subsidiaries allocates and distributes to the Master GP an Income Incentive Allocation with respect to its pre-incentive allocation net income in each calendar quarter as follows: (1) no Income Incentive Allocation in any calendar quarter in which pre-incentive allocation net income, expressed as a rate of return on the average value of our net equity capital (excluding non-controlling interests) at the end of the two most recently completed calendar quarters, does not exceed 2% for such quarter (8% annualized); (2) 100% of pre-incentive allocation net income with respect to that portion of such pre-incentive allocation net income, if any, that is equal to or exceeds 2% but does not exceed 2.2223% for such quarter; and (3) 10% of the amount of pre-incentive allocation net income, if any, that exceeds 2.2223% for such quarter. These calculations will be prorated for any period of less than three months. 
Capital Gains Incentive Allocation is calculated and distributable in arrears as of the end of each calendar year and is equal to 10% of our pro rata share of cumulative realized gains from the date of the IPO through the end of the applicable calendar year, net of our pro rata share of cumulative realized or unrealized losses, the cumulative non-cash portion of equity-based compensation expenses and all realized gains upon which prior performance-based Capital Gains Incentive Allocation payments were made to the Master GP. 
The following table summarizes the management fees, income incentive allocation and capital gains incentive allocation:
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Management fees$3,062 $4,113 $7,226 $8,103 
Income incentive allocation —  — 
Capital gains incentive allocation —  — 
Total$3,062 $4,113 $7,226 $8,103 
We pay all of our operating expenses, except those specifically required to be borne by the Manager under the Management Agreement. The expenses required to be paid by us include, but are not limited to, issuance and transaction costs incident to the acquisition, disposition and financing of our assets, legal and auditing fees and expenses, the compensation and expenses of our independent directors, the costs associated with the establishment and maintenance of any credit facilities and other indebtedness of ours (including commitment fees, legal fees, closing costs, etc.), expenses associated with other securities offerings of ours, costs and expenses incurred in contracting with third parties (including affiliates of the Manager), the costs of printing and mailing proxies and reports to our shareholders, costs incurred by the Manager or its affiliates for travel on our behalf, costs associated with any computer software or hardware that is used for us, costs to obtain liability insurance to indemnify our directors and officers and the compensation and expenses of our transfer agent.
We pay or reimburse the Manager and its affiliates for performing certain legal, accounting, due diligence tasks and other services that outside professionals or outside consultants otherwise would perform, provided that such costs and reimbursements are no greater than those which would be paid to outside professionals or consultants. The Manager is responsible for all of its other costs incident to the performance of its duties under the Management Agreement, including compensation of the Manager’s employees, rent for facilities and other “overhead” expenses; we do not reimburse the Manager for these expenses.
29


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
The following table summarizes our reimbursements to the Manager:
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Classification in the Consolidated Statements of Operations:
General and administrative$2,817 $1,978 $5,695 $4,211 
Acquisition and transaction expenses381 554 729 971 
Total$3,198 $2,532 $6,424 $5,182 
If we terminate the Management Agreement, we will generally be required to pay the Manager a termination fee. The termination fee is equal to the amount of the management fee during the 12 months immediately preceding the date of the termination. In addition, an Incentive Allocation Fair Value Amount will be distributable to the Master GP if the Master GP is removed due to the termination of the Management Agreement in certain specified circumstances. The Incentive Allocation Fair Value Amount is an amount equal to the Income Incentive Allocation and the Capital Gains Incentive Allocation that would be paid to the Master GP if our assets were sold for cash at their then current fair market value (as determined by an appraisal, taking into account, among other things, the expected future value of the underlying investments).
Upon the successful completion of an offering of our common shares or other equity securities (including securities issued as consideration in an acquisition), we grant the Manager options to purchase common shares in an amount equal to 10% of the number of common shares being sold in the offering (or if the issuance relates to equity securities other than our common shares, options to purchase a number of common shares equal to 10% of the gross capital raised in the equity issuance divided by the fair market value of a common share as of the date of issuance), with an exercise price equal to the offering price per share paid by the public or other ultimate purchaser or attributed to such securities in connection with an acquisition (or the fair market value of a common share as of the date of the equity issuance if it relates to equity securities other than our common shares). Any ultimate purchaser of common shares for which such options are granted may be an affiliate of Fortress.
The following table summarizes amounts due to the Manager, which are included within Accounts payable and accrued liabilities in the Consolidated Balance Sheets:
June 30, 2022December 31, 2021
Accrued management fees$929 $1,495 
Other payables1,063 2,326 
As of June 30, 2022 and December 31, 2021, there were no receivables from the Manager.

Other Affiliate Transactions
As of June 30, 2022 and December 31, 2021, affiliates of our Manager own an approximately 20% interest in Jefferson Terminal which has been accounted for as a component of non-controlling interest in consolidated subsidiaries in the consolidated financial statements. The carrying amount of this non-controlling interest at June 30, 2022 and December 31, 2021 was $(24.3) million and $(9.1) million, respectively.
The following table presents the amount of this non-controlling interest share of net loss:
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Non-controlling interest share of net loss$(8,135)$(6,538)$(15,271)$(11,554)
On June 21, 2018, we, through a wholly owned subsidiary, completed a private offering with several third parties (the “Holders”) to tender their approximately 20% stake in Jefferson Terminal. We increased our majority interest in Jefferson Terminal in exchange for Class B Units of another wholly owned subsidiary, which provide the right to convert such Class B Units to a fixed amount of our shares, equivalent to approximately 1.9 million shares, at a Holder’s request. We have the option to satisfy any exchange request by delivering either common shares or cash. The Holders are entitled to receive distributions equivalent to the distributions paid to our shareholders. This transaction resulted in a purchase of non-controlling interest shares.
In July 2020, we purchased a 14% interest in FYX from an affiliate of our Manager, which retained a non-controlling interest in FYX subsequent to the transaction. In May 2022, we purchased an additional 51% interest in FYX from an unrelated third party for a purchase price of $4.6 million, which resulted in our ownership of a majority stake in the entity. From the purchase date in May 2022 through and as of June 30, 2022, FYX is presented on a consolidated basis in the Consolidated Statement of Operations and the Consolidated Balance Sheet.Additionally, other investors in FYX are also affiliates of our Manager.
30


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
14. SEGMENT INFORMATION
Our reportable segments represent strategic business units comprised of investments in different types of transportation and infrastructure assets. We have 4 reportable segments which operate in the Equipment Leasing and Infrastructure businesses across several market sectors. Our reportable segments are (i) Aviation Leasing, (ii) Jefferson Terminal, (iii) Ports and Terminals and (iv) Transtar. The Aviation Leasing segment consists of aircraft and aircraft engines held for lease and are typically held long-term. The Jefferson Terminal segment consists of a multi-modal crude oil and refined products terminal and other related assets. The Ports and Terminals segment consists of Repauno, which is a 1,630-acre deep-water port located along the Delaware River with an underground storage cavern, a new multipurpose dock, a rail-to-ship transloading system and multiple industrial development opportunities, and an equity method investment in Long Ridge, which is a 1,660-acre multi-modal port located along the Ohio River with rail, dock, and multiple industrial development opportunities, including a power plant in operation.
In July 2021, we acquired Transtar and it operates as a separate reportable segment within our Infrastructure business. Transtar is comprised of 5 freight railroads and one switching company that provide rail service to certain manufacturing and production facilities.
Corporate and Other primarily consists of debt, unallocated corporate general and administrative expenses, and management fees. Additionally, Corporate and Other includes (i) offshore energy related assets, which consist of vessels and equipment that support offshore oil and gas activities and production which are typically subject to operating leases, (ii) an investment in an unconsolidated entity engaged in the acquisition and leasing of shipping containers and (iii) railroad assets which consist of equipment that support a railcar cleaning business and (iv) various clean technology and sustainability investments (see Note 5 for additional information).
The accounting policies of the segments are the same as those described in the summary of significant accounting policies; however, financial information presented by segment includes the impact of intercompany eliminations. The chief operating decision maker evaluates investment performance for each reportable segment primarily based on Adjusted EBITDA.
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.
We believe that net income (loss) attributable to shareholders, as defined by GAAP, is the most appropriate earnings measurement with which to reconcile Adjusted EBITDA. Adjusted EBITDA should not be considered as an alternative to net income (loss) attributable to shareholders as determined in accordance with GAAP.
31


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
The following tables set forth certain information for each reportable segment:
I. For the Three Months Ended June 30, 2022
Three Months Ended June 30, 2022
Equipment LeasingInfrastructure
Aviation LeasingJefferson TerminalPorts and TerminalsTranstarCorporate and OtherTotal
Revenues
Equipment leasing revenues$108,931 $ $ $ $3,133 $112,064 
Infrastructure revenues 14,528 1,640 38,060 11,640 65,868 
Total revenues108,931 14,528 1,640 38,060 14,773 177,932 
Expenses
Operating expenses26,226 14,261 4,283 19,826 19,408 84,004 
General and administrative    5,004 5,004 
Acquisition and transaction expenses919   149 8,558 9,626 
Management fees and incentive allocation to affiliate    3,062 3,062 
Depreciation and amortization37,328 9,739 2,376 4,696 2,483 56,622 
Asset impairment886     886 
Interest expense 6,127 342 15 47,889 54,373 
Total expenses65,359 30,127 7,001 24,686 86,404 213,577 
Other income (expense)
Equity in earnings (losses) of unconsolidated entities35  (12,971) (887)(13,823)
Gain on sale of assets, net63,645     63,645 
Interest income38    552 590 
Other expense (1,291) (305) (1,596)
Total other income (expense)63,718 (1,291)(12,971)(305)(335)48,816 
Income (Loss) before income taxes107,290 0(16,890)(18,332)13,069 (71,966)13,171 
Provision for (benefit from) income taxes1,963 68  2,217 (837)3,411 
Net income (loss)105,327 (16,958)(18,332)10,852 (71,129)9,760 
Less: Net loss attributable to non-controlling interests in consolidated subsidiaries (8,135)(320) (25)(8,480)
Less: Dividends on preferred shares    6,791 6,791 
Net income (loss) attributable to shareholders$105,327 $(8,823)$(18,012)$10,852 $(77,895)$11,449 
32


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
The following table sets forth a reconciliation of Adjusted EBITDA to net income attributable to shareholders:
Three Months Ended June 30, 2022
Equipment LeasingInfrastructure
Aviation LeasingJefferson TerminalPorts and TerminalsTranstarCorporate and OtherTotal
Adjusted EBITDA$158,345 $4,158 $3,675 $18,826 $(19,677)$165,327 
Add: Non-controlling share of Adjusted EBITDA3,716 
Add: Equity in losses of unconsolidated entities(13,823)
Less: Pro-rata share of Adjusted EBITDA from unconsolidated entities(6,977)
Less: Interest expense(54,373)
Less: Depreciation and amortization expense(68,427)
Less: Incentive allocations 
Less: Asset impairment charges(886)
Less: Changes in fair value of non-hedge derivative instruments1,514 
Less: Losses on the modification or extinguishment of debt and capital lease obligations 
Less: Acquisition and transaction expenses(9,626)
Less: Equity-based compensation expense(1,585)
Less: Provision for income taxes(3,411)
Net income attributable to shareholders$11,449 
Summary information with respect to our geographic sources of revenue, based on location of customer, is as follows:
Three Months Ended June 30, 2022
Equipment LeasingInfrastructure
Aviation LeasingJefferson TerminalPorts and TerminalsTranstarCorporate and OtherTotal
Revenues
Asia$20,953 $ $ $ $3,133 $24,086 
Europe32,060     32,060 
North America40,902 14,528 1,640 38,060 11,640 106,770 
South America15,016     15,016 
Total$108,931 $14,528 $1,640 $38,060 $14,773 $177,932 
33


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
II. For the Six Months Ended June 30, 2022
Six Months Ended June 30, 2022
Equipment LeasingInfrastructure
Aviation LeasingJefferson TerminalPorts and TerminalsTranstarCorporate and OtherTotal
Revenues
Equipment leasing revenues$193,956 $ $ $ $9,799 $203,755 
Infrastructure revenues 27,574 (346)72,130 12,658 112,016 
Total revenues193,956 27,574 (346)72,130 22,457 315,771 
Expenses
Operating expenses92,428 27,384 8,166 38,889 26,053 192,920 
General and administrative    10,695 10,695 
Acquisition and transaction expenses1,949   355 13,346 15,650 
Management fees and incentive allocation to affiliate    7,226 7,226 
Depreciation and amortization76,657 19,439 4,745 9,455 4,627 114,923 
Asset impairment123,676 — —  — 123,676 
Interest expense 12,237 629 75 92,030 104,971 
Total expenses294,710 59,060 13,540 48,774 153,977 570,061 
Other income (expense)
Equity in earnings (losses) of unconsolidated entities233  (36,520) (1,549)(37,836)
Gain on sale of assets, net79,933     79,933 
Interest income203    1,043 1,246 
Other expense (1,390) (665) (2,055)
Total other income (expense)80,369 (1,390)(36,520)(665)(506)41,288 
(Loss) income before income taxes(20,385)0(32,876)(50,406)22,691 (132,026)(213,002)
Provision for (benefit from) income taxes3,020 137  4,296 (556)6,897 
Net (loss) income(23,405)(33,013)(50,406)18,395 (131,470)(219,899)
Less: Net loss attributable to non-controlling interests in consolidated subsidiaries (15,271)(650) (25)(15,946)
Less: Dividends on preferred shares    13,582 13,582 
Net (loss) income attributable to shareholders$(23,405)$(17,742)$(49,756)$18,395 $(145,027)$(217,535)
34


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
The following table sets forth a reconciliation of Adjusted EBITDA to net loss attributable to shareholders:
Six Months Ended June 30, 2022
Equipment LeasingInfrastructure
Aviation LeasingJefferson TerminalPorts and TerminalsTranstarCorporate and OtherTotal
Adjusted EBITDA$205,888 $7,964 $5,044 33,473 $(35,481)$216,888 
Add: Non-controlling share of Adjusted EBITDA7,532 
Add: Equity in losses of unconsolidated entities(37,836)
Less: Pro-rata share of Adjusted EBITDA from unconsolidated entities(12,638)
Less: Interest expense(104,971)
Less: Depreciation and amortization expense(138,741)
Less: Incentive allocations 
Less: Asset impairment charges(123,676)
Less: Changes in fair value of non-hedge derivative instruments748 
Less: Losses on the modification or extinguishment of debt and capital lease obligations 
Less: Acquisition and transaction expenses(15,650)
Less: Equity-based compensation expense(2,294)
Less: Provision for income taxes(6,897)
Net loss attributable to shareholders$(217,535)
Summary information with respect to our geographic sources of revenue, based on location of customer, is as follows:
Six Months Ended June 30, 2022
Equipment LeasingInfrastructure
Aviation LeasingJefferson TerminalPorts and TerminalsTranstarCorporate and OtherTotal
Revenues
Africa$850 $ $ $ $ $850 
Asia38,016    9,799 47,815 
Europe64,036     64,036 
North America66,674 27,574 (346)72,130 12,658 178,690 
South America24,380     24,380 
Total$193,956 $27,574 $(346)$72,130 $22,457 $315,771 
35


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
III. For the Three Months Ended June 30, 2021
Three Months Ended June 30, 2021
Equipment LeasingInfrastructure
Aviation LeasingJefferson TerminalPorts and TerminalsTranstarCorporate and OtherTotal
Revenues
Equipment leasing revenues$78,443 $— $— $— $3,128 $81,571 
Infrastructure revenues— 11,527 2,344 — 1,473 15,344 
Total revenues78,443 11,527 2,344 — 4,601 96,915 
Expenses
Operating expenses9,145 11,777 3,828 — 6,433 31,183 
General and administrative— — — — 3,655 3,655 
Acquisition and transaction expenses836 — — — 3,563 4,399 
Management fees and incentive allocation to affiliate— — — — 4,113 4,113 
Depreciation and amortization33,732 9,315 2,216 — 2,108 47,371 
Asset impairment89 — — — — 89 
Interest expense— 3,213 295 — 33,996 37,504 
Total expenses43,802 24,305 6,339 — 53,868 128,314 
Other income
Equity in (losses) earnings of unconsolidated entities(341)— (7,015)— 204 (7,152)
Gain on sale of assets, net3,971 — 16 — — 3,987 
Loss on extinguishment of debt— — — — (3,254)(3,254)
Interest income357 — 91 — 454 
Other (expense) income— (886)— — (884)
Total other income (expense)3,987 (886)(6,908)— (3,042)(6,849)
Income (loss) before income taxes38,628 (13,664)(10,903)— (52,309)(38,248)
(Benefit from) provision for income taxes(4)59 (1,621)— (74)(1,640)
Net income (loss)38,632 (13,723)(9,282)— (52,235)(36,608)
Less: Net loss attributable to non-controlling interests in consolidated subsidiaries— (6,538)(87)— — (6,625)
Less: Dividends on preferred shares— — — — 6,551 6,551 
Net income (loss) attributable to shareholders$38,632 $(7,185)$(9,195)$— $(58,786)$(36,534)











36


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)

The following table sets forth a reconciliation of Adjusted EBITDA to net loss attributable to shareholders:
Three Months Ended June 30, 2021
Equipment LeasingInfrastructure
Aviation LeasingJefferson TerminalPorts and TerminalsTranstarCorporate and OtherTotal
Adjusted EBITDA$80,137 $3,555 $376 $— $(16,114)$67,954 
Add: Non-controlling share of Adjusted EBITDA3,257 
Add: Equity in income of unconsolidated entities(7,152)
Less: Pro-rata share of Adjusted EBITDA from unconsolidated entities11 
Less: Interest expense(37,504)
Less: Depreciation and amortization expense(54,168)
Less: Incentive allocations— 
Less: Asset impairment charges(89)
Less: Changes in fair value of non-hedge derivative instruments(1,391)
Less: Losses on the modification or extinguishment of debt and capital lease obligations(3,254)
Less: Acquisition and transaction expenses(4,399)
Less: Equity-based compensation expense(1,439)
Less: Benefit from income taxes1,640 
Net loss attributable to shareholders$(36,534)
Summary information with respect to our geographic sources of revenue, based on location of customer, is as follows:
Three Months Ended June 30, 2021
Equipment LeasingInfrastructure
Aviation LeasingJefferson TerminalPorts and TerminalsTranstarCorporate and OtherTotal
Revenues
Africa$235 $— $— $— $— $235 
Asia32,479 — — — 3,128 35,607 
Europe30,662 — — — — 30,662 
North America13,358 11,527 2,344 — 1,473 28,702 
South America1,709 — — — — 1,709 
Total$78,443 $11,527 $2,344 $— $4,601 $96,915 
37


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
IV. For the Six Months Ended June 30, 2021
Six Months Ended June 30, 2021
Equipment LeasingInfrastructure
Aviation LeasingJefferson TerminalPorts and TerminalsTranstarCorporate and OtherTotal
Revenues
Equipment leasing revenues$134,544 $— $— $— $3,634 $138,178 
Infrastructure revenues— 22,246 10,440 — 3,200 35,886 
Total revenues134,544 22,246 10,440 — 6,834 174,064 
Expenses
Operating expenses13,395 23,498 6,930 — 12,357 56,180 
General and administrative— — — — 7,907 7,907 
Acquisition and transaction expenses2,032 — — — 4,010 6,042 
Management fees and incentive allocation to affiliate— — — — 8,103 8,103 
Depreciation and amortization66,295 17,033 4,427 — 4,151 91,906 
Asset impairment2,189 — — — — 2,189 
Interest expense— 4,416 574 — 65,504 70,494 
Total expenses83,911 44,947 11,931 — 102,032 242,821 
Other income (expense)
Equity in (losses) income of unconsolidated entities(681)— (5,473)— 376 (5,778)
Gain on sale of assets, net4,782 — 16 — — 4,798 
Loss on extinguishment of debt— — — 0(3,254)(3,254)
Interest income624 — 91 — 24 739 
Other (expense) income— (705)— — (703)
Total other income (expense)4,725 (705)(5,366)— (2,852)(4,198)
Income (loss) before income taxes55,358 (23,406)(6,857)— (98,050)(72,955)
(Benefit from) provision for income taxes(46)116 (1,467)— (74)(1,471)
Net income (loss)55,404 (23,522)(5,390)— (97,976)(71,484)
Less: Net loss attributable to non-controlling interests in consolidated subsidiaries— (11,554)(32)— — (11,586)
Less: Dividends on preferred shares— — — — 11,176 11,176 
Net income (loss) attributable to shareholders$55,404 $(11,968)$(5,358)$— $(109,152)$(71,074)
38


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
The following table sets forth a reconciliation of Adjusted EBITDA to net loss attributable to shareholders:
Six Months Ended June 30, 2021
Equipment LeasingInfrastructure
Aviation LeasingJefferson TerminalPorts and TerminalsTranstarCorporate and OtherTotal
Adjusted EBITDA$140,866 $6,383 $508 $— $(32,649)$115,108 
Add: Non-controlling share of Adjusted EBITDA5,286 
Add: Equity in losses of unconsolidated entities(5,778)
Less: Pro-rata share of Adjusted EBITDA from unconsolidated entities(2,391)
Less: Interest expense(70,494)
Less: Depreciation and amortization expense(106,811)
Less: Incentive allocations— 
Less: Asset impairment charges(2,189)
Less: Changes in fair value of non-hedge derivative instruments6,573 
Less: Losses on the modification or extinguishment of debt and capital lease obligations(3,254)
Less: Acquisition and transaction expenses(6,042)
Less: Equity-based compensation expense(2,553)
Less: Benefit from income taxes1,471 
Net loss attributable to shareholders$(71,074)
Summary information with respect to our geographic sources of revenue, based on location of customer, is as follows:
Six Months Ended June 30, 2021
Equipment LeasingInfrastructure
Aviation LeasingJefferson TerminalPorts and TerminalsTranstarCorporate and OtherTotal
Revenues
Africa$235 $— $— $— $— $235 
Asia57,503 — — — 3,634 61,137 
Europe53,401 — — — — 53,401 
North America20,950 22,246 10,440 — 3,200 56,836 
South America2,455 — — — — 2,455 
Total$134,544 $22,246 $10,440 $— $6,834 $174,064 

39


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
V. Balance Sheet and Location of Long-Lived Assets
The following tables sets forth summarized balance sheet information and the geographic location of property, plant and equipment and leasing equipment, net:
June 30, 2022
Equipment LeasingInfrastructure
Aviation LeasingJefferson TerminalPorts and TerminalsTranstarCorporate and OtherTotal
Total assets$2,124,335 $1,304,515 $331,843 $748,210 $373,245 $4,882,148 
Debt, net 704,410 25,000  2,768,156 3,497,566 
Total liabilities150,085 835,714 236,890 110,761 2,859,427 4,192,877 
Non-controlling interests in equity of consolidated subsidiaries (16,799)1,559 897 4,740 (9,603)
Total equity1,974,250 468,801 94,953 637,449 (2,486,182)689,271 
Total liabilities and equity$2,124,335 $1,304,515 $331,843 $748,210 $373,245 $4,882,148 
June 30, 2022
Equipment LeasingInfrastructure
Aviation LeasingJefferson TerminalPorts and TerminalsTranstarCorporate and OtherTotal
Property, plant and equipment and leasing equipment, net
Africa$21,253 $ $ $ $ $21,253 
Asia275,387    176,114 451,501 
Europe688,800     688,800 
North America321,148 874,719 280,733 469,654 9,336 1,955,590 
South America369,487     369,487 
Total$1,676,075 $874,719 $280,733 $469,654 $185,450 $3,486,631 
December 31, 2021
Equipment LeasingInfrastructure
Aviation LeasingJefferson TerminalPorts and TerminalsTranstarCorporate and OtherTotal
Total assets$2,098,979 $1,284,432 $316,899 $762,294 $401,250 $4,863,854 
Debt, net— 693,624 25,000 — 2,501,587 3,220,211 
Total liabilities214,564 820,725 50,651 109,325 2,544,489 3,739,754 
Non-controlling interests in equity of consolidated subsidiaries— (2,604)1,888 — 524 (192)
Total equity1,884,415 463,707 266,248 652,969 (2,143,239)1,124,100 
Total liabilities and equity$2,098,979 $1,284,432 $316,899 $762,294 $401,250 $4,863,854 
December 31, 2021
Equipment LeasingInfrastructure
Aviation LeasingJefferson TerminalPorts and TerminalsTranstarCorporate and OtherTotal
Property, plant and equipment and leasing equipment, net
Asia$368,298 $— $— $— $175,313 $543,611 
Europe839,555 — — — — 839,555 
North America265,203 786,566 280,210 481,826 5,003 1,818,808 
South America245,532 — — — — 245,532 
Total$1,718,588 $786,566 $280,210 $481,826 $180,316 $3,447,506 
40


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
15. EARNINGS PER SHARE AND EQUITY
Basic earnings per common share (“EPS”) is calculated by dividing net income (loss) attributable to shareholders by the weighted average number of common shares outstanding, plus any participating securities. Diluted EPS is calculated by dividing net income attributable to shareholders by the weighted average number of common shares outstanding, plus any participating securities and potentially dilutive securities. Potentially dilutive securities are calculated using the treasury stock method.
The calculation of basic and diluted EPS is presented below:
Three Months Ended June 30,Six Months Ended June 30,
(in thousands, except share and per share data)2022202120222021
Net income (loss)$9,760 $(36,608)(219,899)(71,484)
Less: Net loss attributable to non-controlling interests in consolidated subsidiaries(8,480)(6,625)(15,946)(11,586)
Less: Dividends on preferred shares6,791 6,551 13,582 11,176 
Net income (loss) attributable to shareholders$11,449 $(36,534)$(217,535)$(71,074)
Weighted Average Common Shares Outstanding - Basic (1)
99,370,301 86,030,652 99,367,597 86,029,305 
Weighted Average Common Shares Outstanding - Diluted (1)
99,805,455 86,030,652 99,367,597 86,029,305 
Income (loss) per share:
Basic$0.12 $(0.42)$(2.19)$(0.83)
Diluted$0.11 $(0.42)$(2.19)$(0.83)
________________________________________________________
(1) Three and six months ended June 30, 2022 and 2021 include participating securities which can be converted into a fixed amount of our shares.
For the three months ended June 30, 2022 and 2021, 407,124 and 964,696 shares, respectively, and for the six months ended June 30, 2022 and 2021, 595,047 and 890,300 shares, respectively, have been excluded from the calculation of Diluted EPS because the impact would be anti-dilutive.
During the six months ended June 30, 2022, we issued 19,811 common shares to certain directors as compensation.
16. COMMITMENTS AND CONTINGENCIES
In the normal course of business we, and our subsidiaries, may be involved in various claims, legal proceedings, or may enter into contracts that contain a variety of representations and warranties and which provide general indemnifications. Within our offshore energy business, a lessee did not fulfill its obligation under its charter arrangement, therefore we are pursuing rights afforded to us under the charter and the range of potential losses against the obligation is $0.0 million to $3.3 million. Our maximum exposure under other arrangements is unknown as no additional claims have been made. We believe the risk of loss in connection with such arrangements is remote.
We have also entered into an arrangement with our non-controlling interest holder of Repauno, as part of the initial acquisition, whereby the non-controlling interest holder may receive additional payments contingent upon the achievement of certain conditions, not to exceed $15.0 million. We will account for such amounts when and if such conditions are achieved. The contingency related to $5.0 million of the total $15.0 million was resolved during the year ended December 31, 2021. The $5.0 million payment was included in the cost of the asset acquisition.
Jefferson entered into a two-year pipeline capacity agreement for a recently completed pipeline. Under the agreement, which took effect in the second quarter of 2021, Jefferson is obligated to pay fixed marketing fees over the two-year agreement, which totals a minimum of $9.2 million for the next twelve months.
17. SUBSEQUENT EVENTS
Dividends
On July 26, 2022, our Board of Directors declared a cash dividend on our common shares and eligible participating securities of $0.33 per share for the quarter ended June 30, 2022, payable on August 29, 2022 to the holders of record on August 15, 2022.
Additionally, on July 26, 2022, our Board of Directors also declared cash dividends on the Series A Preferred Shares, Series B Preferred Shares and Series C Preferred Shares of $0.52, $0.50 and $0.52 per share, respectively, payable on September 15, 2022 to the holders of record on September 1, 2022.
41


FORTRESS TRANSPORTATION AND INFRASTRUCTURE INVESTORS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
Spin-off of Infrastructure Business
On July 11, 2022, the Board of Directors unanimously approved the details and timing of the previously announced and approved 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.

42




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 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
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 $47.2 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 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. 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 intend to pursue 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 equipment leasing revenues during the years ended December 31, 2021 and 2020. 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 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 $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. 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.”
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
43



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. Our Equipment Leasing Business acquires assets that are designed to carry cargo or people or provide functionality to transportation infrastructure. Transportation equipment assets are typically long-lived, moveable and leased by us on either operating leases or finance leases to companies that provide transportation services. Our leases generally provide for long-term contractual cash flow with high cash-on-cash yields and include structural protections to mitigate credit risk.
Our reportable segments are comprised of interests in different types of infrastructure and equipment leasing assets. We currently conduct our business through the following four reportable segments: (i) Aviation Leasing, which is within the Equipment Leasing Business, and (ii) Jefferson Terminal, (iii) Ports and Terminals and (iv) Transtar, which together comprise our Infrastructure Business. The Aviation Leasing segment consists of aircraft and aircraft engines held for lease and are typically held long-term. The Jefferson Terminal segment consists of a multi-modal crude and refined products terminal and other related assets. The Ports and Terminals segment consists of Repauno, which is a 1,630-acre deep-water port located along the Delaware River with an underground storage cavern, a new multipurpose dock, a rail-to-ship transloading system and multiple industrial development opportunities, and an equity method investment (“Long Ridge”), which is a 1,660-acre multi-modal port located along the Ohio River with rail, dock, and multiple industrial development opportunities, including a power plant in operation.
In July 2021, we acquired Transtar and it operates as a separate reportable segment within our Infrastructure business. Transtar is comprised of five freight railroads and one switching company that provide rail service to certain manufacturing and production facilities.
Corporate and Other primarily consists of debt, unallocated corporate general and administrative expenses, and management fees. Additionally, Corporate and Other includes (i) offshore energy related assets which consist of vessels and equipment that support offshore oil and gas activities and are typically subject to operating leases, (ii) an investment in an unconsolidated entity engaged in the leasing of shipping containers and (iii) railroad assets which consist of equipment that support a railcar cleaning business and (iv) various clean technology and sustainability investments.
Our reportable segments are comprised of investments in different types of transportation infrastructure and equipment. Each segment requires different investment strategies. The accounting policies of the segments are the same as those described in Note 2 to the consolidated financial statements; however, financial information presented by segment includes the impact of intercompany eliminations.
Spin-Off of FTAI Infrastructure
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 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 in connection with the closing of the spin-off. 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
44



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. The Manager will be entitled to a management fee and reimbursement of certain expenses on substantially similar terms as the existing arrangements with the Manager. 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 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.
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.
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.

45



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 June 30,ChangeSix Months Ended
June 30,
Change
(in thousands)2022202120222021
Revenues
Equipment leasing revenues
Lease income$39,538 $42,902 $(3,364)$78,752 $83,129 $(4,377)
Maintenance revenue39,932 32,003 7,929 76,664 47,511 29,153 
Finance lease income102 443 (341)213 846 (633)
Other revenue32,492 6,223 26,269 48,126 6,692 41,434 
Total equipment leasing revenues112,064 81,571 30,493 203,755 138,178 65,577 
Infrastructure revenues
Lease income867 432 435 1,707 862 845 
Rail revenues37,507 — 37,507 71,175 — 71,175 
Terminal services revenues14,227 11,120 3,107 27,011 21,541 5,470 
Other revenue13,267 3,792 9,475 12,123 13,483 (1,360)
Total infrastructure revenues65,868 15,344 50,524 112,016 35,886 76,130 
Total revenues177,932 96,915 81,017 315,771 174,064 141,707 
Expenses
Operating expenses84,004 31,183 52,821 192,920 56,180 136,740 
General and administrative5,004 3,655 1,349 10,695 7,907 2,788 
Acquisition and transaction expenses9,626 4,399 5,227 15,650 6,042 9,608 
Management fees and incentive allocation to affiliate3,062 4,113 (1,051)7,226 8,103 (877)
Depreciation and amortization56,622 47,371 9,251 114,923 91,906 23,017 
Asset impairment886 89 797 123,676 2,189 121,487 
Interest expense54,373 37,504 16,869 104,971 70,494 34,477 
Total expenses213,577 128,314 85,263 570,061 242,821 327,240 
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, net63,645 3,987 59,658 79,933 4,798 75,135 
Loss on extinguishment of debt (3,254)3,254  (3,254)3,254 
Interest income590 454 136 1,246 739 507 
Other (expense) income(1,596)(884)(712)(2,055)(703)(1,352)
Total other income (expense)48,816 (6,849)55,665 41,288 (4,198)45,486 
Income (loss) from before income taxes13,171 (38,248)51,419 (213,002)(72,955)(140,047)
Provision for (benefit from) income taxes3,411 (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)
Less: Net loss attributable to non-controlling interest in consolidated subsidiaries(8,480)(6,625)(1,855)(15,946)(11,586)(4,360)
Less: Dividends on preferred shares6,791 6,551 240 13,582 11,176 2,406 
Net income (loss) attributable to shareholders$11,449 $(36,534)$47,983 $(217,535)$(71,074)$(146,461)

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The following table sets forth a reconciliation of net income (loss) attributable to shareholders to Adjusted EBITDA:
Three Months Ended June 30,ChangeSix Months Ended
June 30,
Change
(in thousands)2022202120222021
Net income (loss) attributable to shareholders$11,449 $(36,534)$47,983 $(217,535)$(71,074)$(146,461)
Add: Provision for (benefit from) income taxes3,411 (1,640)5,051 6,897 (1,471)8,368 
Add: Equity-based compensation expense1,585 1,439 146 2,294 2,553 (259)
Add: Acquisition and transaction expenses9,626 4,399 5,227 15,650 6,042 9,608 
Add: Losses on the modification or extinguishment of debt and capital lease obligations 3,254 (3,254) 3,254 (3,254)
Add: Changes in fair value of non-hedge derivative instruments(1,514)1,391 (2,905)(748)(6,573)5,825 
Add: Asset impairment charges886 89 797 123,676 2,189 121,487 
Add: Incentive allocations — —  — — 
Add: Depreciation and amortization expense (1)
68,427 54,168 14,259 138,741 106,811 31,930 
Add: Interest expense54,373 37,504 16,869 104,971 70,494 34,477 
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2)
6,977 (11)6,988 12,638 2,391 10,247 
Less: Equity in losses of unconsolidated entities13,823 7,152 6,671 37,836 5,778 32,058 
Less: Non-controlling share of Adjusted EBITDA (3)
(3,716)(3,257)(459)(7,532)(5,286)(2,246)
Adjusted EBITDA (non-GAAP)$165,327 $67,954 $97,373 $216,888 $115,108 $101,780 
________________________________________________________
(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. 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. 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.
Revenues
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
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.
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.
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Infrastructure
Rail revenues increased $37.5 million due to our acquisition of Transtar in July 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.
Expenses
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; and
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; and
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.
Asset impairment increased $121.5 million due to impairment charges related to assets held in Ukraine and Russia.
Operating expenses increased $136.7 million which primarily reflects:
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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; and
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 $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; and
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.
Depreciation and amortization increased $23.0 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 $9.6 million primarily due to professional fees related to strategic transactions.
Other income (expense)
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 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.
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Aviation Leasing Segment

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 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. The table below provides additional information on the assets in our Aviation Leasing segment:
Aviation AssetsWidebodyNarrowbodyTotal
Aircraft
Assets at January 1, 202213 95 108 
Purchases21 22 
Sales(3)(1)(4)
Transfers(2)(17)(19)
Assets at June 30, 20229 98 107 
Engines
Assets at January 1, 202268 139 207 
Purchases36 37 
Sales(10)(19)(29)
Transfers24 29 
Assets at June 30, 202264 180 244 

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The following table presents our results of operations:
Three Months Ended June 30,ChangeSix Months Ended
June 30,
Change
(in thousands)2022202120222021
Equipment leasing revenues
Lease income$37,196 $40,208 $(3,012)$71,043 $79,997 $(8,954)
Maintenance revenue39,932 32,003 7,929 76,664 47,511 29,153 
Finance lease income102 443 (341)213 846 (633)
Other revenue31,701 5,789 25,912 46,036 6,190 39,846 
Total revenues108,931 78,443 30,488 193,956 134,544 59,412 
Expenses
Operating expenses26,226 9,145 17,081 92,428 13,395 79,033 
Acquisition and transaction expenses919 836 83 1,949 2,032 (83)
Depreciation and amortization37,328 33,732 3,596 76,657 66,295 10,362 
Asset impairment886 89 797 123,676 2,189 121,487 
Total expenses65,359 43,802 21,557 294,710 83,911 210,799 
Other income
Equity in earnings (losses) of unconsolidated entities35 (341)376 233 (681)914 
Gain on sale of assets, net63,645 3,971 59,674 79,933 4,782 75,151 
Interest income38 357 (319)203 624 (421)
Total other income63,718 3,987 59,731 80,369 4,725 75,644 
Income (loss) before income taxes107,290 38,628 68,662 (20,385)55,358 (75,743)
Provision for (benefit from) income taxes1,963 (4)1,967 3,020 (46)3,066 
Net income (loss)105,327 38,632 66,695 (23,405)55,404 (78,809)
Less: Net loss attributable to non-controlling interest in consolidated subsidiaries — —  — — 
Net income (loss) attributable to shareholders$105,327 $38,632 $66,695 $(23,405)$55,404 $(78,809)

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The following table sets forth a reconciliation of net income (loss) attributable to shareholders to Adjusted EBITDA:
Three Months Ended June 30,ChangeSix Months Ended
June 30,
Change
(in thousands)2022202120222021
Net income (loss) attributable to shareholders$105,327 $38,632 $66,695 $(23,405)$55,404 $(78,809)
Add: Provision for (benefit from) income taxes1,963 (4)1,967 3,020 (46)3,066 
Add: Equity-based compensation expense — —  — — 
Add: Acquisition and transaction expenses919 836 83 1,949 2,032 (83)
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 charges886 89 797 123,676 2,189 121,487 
Add: Incentive allocations — — — — — 
Add: Depreciation and amortization expense (1)
49,133 40,529 8,604 100,475 81,200 19,275 
Add: Interest expense — —  — — 
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2)
152 (286)438 406 (594)1,000 
Less: Equity in (earnings) losses of unconsolidated entities(35)341 (376)(233)681 (914)
Less: Non-controlling share of Adjusted EBITDA — —  — — 
Adjusted EBITDA (non-GAAP)$158,345 $80,137 $78,208 $205,888 $140,866 $65,022 
________________________________________________________
(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. 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. 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.
Revenues
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; and
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 $10.1 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 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
52



billings related to the early termination of aircraft leases with Russian airlines as a result of the sanctions imposed on Russian airlines; and
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.
Expenses
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.
Asset impairment increased $121.5 million for the adjustment of the carrying value of leasing equipment to fair value, primarily due to the write down of aircraft and engines located in Ukraine and Russia that may not be recoverable. See Note 3 to the consolidated financial statements for additional information;
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; and
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 $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 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.
53



Jefferson Terminal Segment
The following table presents our results of operations:
Three Months Ended June 30,ChangeSix Months Ended
June 30,
Change
(in thousands)2022202120222021
Infrastructure revenues
Lease income$314 $432 $(118)$666 $862 $(196)
Terminal services revenues14,214 11,095 3,119 26,908 21,384 5,524 
Total revenues14,528 11,527 3,001 27,574 22,246 5,328 
Expenses
Operating expenses14,261 11,777 2,484 27,384 23,498 3,886 
Depreciation and amortization9,739 9,315 424 19,439 17,033 2,406 
Interest expense6,127 3,213 2,914 12,237 4,416 7,821 
Total expenses30,127 24,305 5,822 59,060 44,947 14,113 
Other expense
Other expense(1,291)(886)(405)(1,390)(705)(685)
Total other expense(1,291)(886)(405)(1,390)(705)(685)
Loss before income taxes(16,890)(13,664)(3,226)(32,876)(23,406)(9,470)
Provision for income taxes68 59 137 116 21 
Net loss(16,958)(13,723)(3,235)(33,013)(23,522)(9,491)
Less: Net loss attributable to non-controlling interest in consolidated subsidiaries(8,135)(6,538)(1,597)(15,271)(11,554)(3,717)
Net loss attributable to shareholders$(8,823)$(7,185)$(1,638)$(17,742)$(11,968)$(5,774)
54



The following table sets forth a reconciliation of net loss attributable to shareholders to Adjusted EBITDA:
Three Months Ended June 30,ChangeSix Months Ended
June 30,
Change
(in thousands)2022202120222021
Net loss attributable to shareholders$(8,823)$(7,185)$(1,638)$(17,742)$(11,968)$(5,774)
Add: Provision for income taxes68 59 137 116 21 
Add: Equity-based compensation expense538 1,270 (732)1,076 2,111 (1,035)
Add: Acquisition and transaction expenses — —  — — 
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 expense9,739 9,315 424 19,439 17,033 2,406 
Add: Interest expense6,127 3,213 2,914 12,237 4,416 7,821 
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities — —  — — 
Less: Equity in earnings of unconsolidated entities — —  — — 
Less: Non-controlling share of Adjusted EBITDA (1)
(3,491)(3,117)(374)(7,183)(5,325)(1,858)
Adjusted EBITDA (non-GAAP)$4,158 $3,555 $603 $7,964 $6,383 $1,581 
________________________________________________________
(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. 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.
Revenues
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.
Expenses
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;
an increase in operating expenses of $2.5 million primarily due to increased terminal activity; and
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; and
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 $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.
55



Ports and Terminals
The following table presents our results of operations:
Three Months Ended June 30,ChangeSix Months Ended
June 30,
Change
(in thousands)2022202120222021
Revenues
Rail revenues$ $— $— $86 $— $86 
Terminal services revenues13 25 (12)103 157 (54)
Other revenue1,627 2,319 (692)(535)10,283 (10,818)
Total revenues1,640 2,344 (704)(346)10,440 (10,786)
Expenses
Operating expenses4,283 3,828 455 8,166 6,930 1,236 
Depreciation and amortization2,376 2,216 160 4,745 4,427 318 
Interest expense342 295 47 629 574 55 
Total expenses7,001 6,339 662 13,540 11,931 1,609 
Other expense
Equity in losses of unconsolidated entities(12,971)(7,015)(5,956)(36,520)(5,473)(31,047)
Gain on sale of equipment, net 16 (16) 16 (16)
Interest income 91 (91) 91 (91)
Total other expense(12,971)(6,908)(6,063)(36,520)(5,366)(31,154)
Loss before income taxes(18,332)(10,903)(7,429)(50,406)(6,857)(43,549)
Benefit from income taxes (1,621)1,621  (1,467)1,467 
Net loss(18,332)(9,282)(9,050)(50,406)(5,390)(45,016)
Less: Net loss attributable to non-controlling interest in consolidated subsidiaries(320)(87)(233)(650)(32)(618)
Net loss attributable to shareholders$(18,012)$(9,195)$(8,817)$(49,756)$(5,358)$(44,398)
56



The following table sets forth a reconciliation of net loss attributable to shareholders to Adjusted EBITDA:
Three Months Ended June 30,ChangeSix Months Ended
June 30,
Change
(in thousands)2022202120222021
Net loss attributable to shareholders$(18,012)$(9,195)$(8,817)$(49,756)$(5,358)$(44,398)
Add: Benefit from income taxes (1,621)1,621  (1,467)1,467 
Add: Equity-based compensation expense150 169 (19)321 442 (121)
Add: Acquisition and transaction expenses — —  — — 
Add: Losses on the modification or extinguishment of debt and capital lease obligations — —  — — 
Add: Changes in fair value of non-hedge derivative instruments(1,514)1,391 (2,905)(748)(6,573)5,825 
Add: Asset impairment charges — —  — — 
Add: Incentive allocations — —  — — 
Add: Depreciation and amortization expense2,376 2,216 160 4,745 4,427 318 
Add: Interest expense342 295 47 629 574 55 
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (1)
7,472 246 7,226 13,567 2,951 10,616 
Less: Equity in losses of unconsolidated entities12,971 7,015 5,956 36,520 5,473 31,047 
Less: Non-controlling share of Adjusted EBITDA (2)
(110)(140)30 (234)39 (273)
Adjusted EBITDA (non-GAAP)$3,675 $376 $3,299 $5,044 $508 $4,536 
________________________________________________________
(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. 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.
Revenues
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.
Expenses
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 $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 $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.
57



Transtar
The following table presents our results of operations:
Three Months Ended June 30,ChangeSix Months Ended
June 30,
Change
(in thousands)2022202120222021
Infrastructure revenues
Lease income$553 $— $553 $1,041 $— $1,041 
Rail revenues37,507 — 37,507 71,089 — 71,089 
Total revenues38,060 — 38,060 72,130 — 72,130 
Expenses
Operating expenses19,826 — 19,826 38,889 — 38,889 
Acquisition and transaction expenses149 — 149 355 — 355 
Depreciation and amortization4,696 — 4,696 9,455 — 9,455 
Interest expense15 — 15 75 — 75 
Total expenses24,686 — 24,686 48,774 — 48,774 
Other expense
Other expense(305)— (305)(665)— (665)
Total other expense(305)— (305)(665)— (665)
Income before income taxes13,069 — 13,069 22,691 — 22,691 
Provision for income taxes2,217 — 2,217 4,296 — 4,296 
Net income10,852 — 10,852 18,395 — 18,395 
Less: 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 income attributable to shareholders to Adjusted EBITDA:
Three Months Ended June 30,ChangeSix Months Ended
June 30,
Change
(in thousands)2022202120222021
Net income attributable to shareholders$10,852 $— $10,852 $18,395 $— $18,395 
Add: Provision for income taxes2,217 — 2,217 4,296 — 4,296 
Add: Equity-based compensation expense897 — 897 897 — 897 
Add: Acquisition and transaction expenses149 — 149 355 — 355 
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 expense4,696 — 4,696 9,455 — 9,455 
Add: Interest expense15 — 15 75 — 75 
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$18,826 $— $18,826 $33,473 $— $33,473 
58




Financial results for the three and six months ended June 30, 2022
Revenues
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.
Expenses
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 $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.
59



Corporate and Other
The following table presents our results of operations:
Three Months Ended June 30,ChangeSix Months Ended
June 30,
Change
(in thousands)2022202120222021
Revenues
Equipment leasing revenues
Lease income$2,342 $2,694 $(352)$7,709 $3,132 $4,577 
Other revenue791 434 357 2,090 502 1,588 
Total equipment leasing revenues3,133 3,128 9,799 3,634 6,165 
Infrastructure revenues
Other revenue11,640 1,473 10,167 12,658 3,200 9,458 
Total infrastructure revenues11,640 1,473 10,167 12,658 3,200 9,458 
Total revenues14,773 4,601 10,172 22,457 6,834 15,623 
Expenses
Operating expenses19,408 6,433 12,975 26,053 12,357 13,696 
General and administrative5,004 3,655 1,349 10,695 7,907 2,788 
Acquisition and transaction expenses8,558 3,563 4,995 13,346 4,010 9,336 
Management fees and incentive allocation to affiliate3,062 4,113 (1,051)7,226 8,103 (877)
Depreciation and amortization2,483 2,108 375 4,627 4,151 476 
Interest expense47,889 33,996 13,893 92,030 65,504 26,526 
Total expenses86,404 53,868 32,536 153,977 102,032 51,945 
Other (expense) income
Equity in (losses) earnings of unconsolidated entities(887)204 (1,091)(1,549)376 (1,925)
Loss on extinguishment of debt (3,254)3,254  (3,254)3,254 
Interest income552 546 1,043 24 1,019 
Other (expense) income (2) (2)
Total other expense(335)(3,042)2,707 (506)(2,852)2,346 
Loss before income taxes(71,966)(52,309)(19,657)(132,026)(98,050)(33,976)
Benefit from income taxes(837)(74)(763)(556)(74)(482)
Net loss(71,129)(52,235)(18,894)(131,470)(97,976)(33,494)
Less: Net loss attributable to non-controlling interest in consolidated subsidiaries(25)— (25)(25)— (25)
Less: Dividends on preferred shares6,791 6,551 240 13,582 11,176 2,406 
Net loss attributable to shareholders$(77,895)$(58,786)$(19,109)$(145,027)$(109,152)$(35,875)
60



The following table sets forth a reconciliation of net loss attributable to shareholders to Adjusted EBITDA:
Three Months Ended June 30,ChangeSix Months Ended
June 30,
Change
(in thousands)2022202120222021
Net loss attributable to shareholders$(77,895)$(58,786)$(19,109)$(145,027)$(109,152)$(35,875)
Add: Benefit from income taxes(837)(74)(763)(556)(74)(482)
Add: Equity-based compensation expense — —  — — 
Add: Acquisition and transaction expenses8,558 3,563 4,995 13,346 4,010 9,336 
Add: Losses on the modification or extinguishment of debt and capital lease obligations 3,254 (3,254) 3,254 (3,254)
Add: Changes in fair value of non-hedge derivative instruments — —  — — 
Add: Asset impairment charges — —  — — 
Add: Incentive allocations — —  — — 
Add: Depreciation and amortization expense2,483 2,108 375 4,627 4,151 476 
Add: Interest expense47,889 33,996 13,893 92,030 65,504 26,526 
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (1)
(647)29 (676)(1,335)34 (1,369)
Less: Equity in losses (earnings) of unconsolidated entities887 (204)1,091 1,549 (376)1,925 
Less: 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 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.
Revenues
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.
Expenses
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.
61



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 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 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
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, 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 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. 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.
We believe we have sufficient liquidity to satisfy our cash needs, however, we continue to evaluate and take action, as necessary, to preserve adequate liquidity and ensure that our business can continue to operate during these uncertain times. This includes limiting discretionary spending across the organization and re-prioritizing our capital projects amid the COVID-19 pandemic.
Our principal uses of liquidity have been and continue to be (i) acquisitions 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 $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. 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 transportation infrastructure and equipment assets (including finance lease collections and maintenance reserve collections) net of operating expenses, (ii) proceeds from borrowings or the issuance of securities and (iii) proceeds from asset sales.
Cash flows used in 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. We
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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 $101.2 million during the six months ended June 30, 2021.
We are currently evaluating several potential Equipment Leasing transactions and related financings, which could occur within the next 12 months. None of these potential transactions, negotiations, or financings are definitive or included within our planned liquidity needs. We cannot assure if or when any such transaction will be consummated or the terms of any such transaction or related financing.
Historical Cash Flow
Comparison of the six months ended June 30, 2022 and 2021
The following table compares the historical cash flow for the six months ended June 30, 2022 and 2021:
Six Months Ended June 30,
(in thousands)20222021
Cash Flow Data:
Net cash used in operating activities$(48,569)$(63,924)
Net cash used in investing activities(306,784)(204,209)
Net cash provided by financing activities212,097 249,960 
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 $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 $272.1 million.
We use Funds Available for Distribution (“FAD”) in evaluating our ability to meet our stated dividend policy. FAD is not a financial measure in accordance with GAAP. The GAAP measure most directly comparable to FAD is net cash provided by operating activities. We believe FAD is a useful metric for investors and analysts for similar purposes.
We define FAD as: net cash provided by operating activities plus principal collections on finance leases, proceeds from sale of assets, and return of capital distributions from unconsolidated entities, less required payments on debt obligations and capital distributions to non-controlling interest, and excludes changes in working capital. The following table sets forth a reconciliation of Net Cash (Used in) Provided by Operating Activities to FAD:
Six Months Ended June 30,
(in thousands)20222021
Net Cash Used in Operating Activities$(48,569)$(63,924)
Add: Principal Collections on Finance Leases575 1,269 
Add: Proceeds from Sale of Assets142,324 57,155 
Add: Return of Capital Distributions from Unconsolidated Entities — 
Less: Required Payments on Debt Obligations (1)
(251)— 
Less: Capital Distributions to Non-Controlling Interest — 
Exclude: Changes in Working Capital86,667 88,248 
Funds Available for Distribution (FAD)$180,746 $82,748 
________________________________________________________
(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
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Limitations
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. FAD has material limitations as a liquidity measure because such measure excludes items that are required elements of our net cash provided by operating activities as described below. FAD should not be considered in isolation nor as a substitute for analysis of our results of operations under GAAP, and it is not the only metric that should be considered in evaluating our ability to meet our stated dividend policy. Specifically:
FAD does not include equity capital called from our existing limited partners, proceeds from any debt issuance or future equity offering, historical cash and cash equivalents and expected investments in our operations.
FAD does not give pro forma effect to prior acquisitions, certain of which cannot be quantified.
While FAD reflects the cash inflows from sale of certain assets, FAD does not reflect the cash outflows to acquire assets as we rely on alternative sources of liquidity to fund such purchases.
FAD does not reflect expenditures related to capital expenditures, acquisitions and other investments as we have multiple sources of liquidity and intend to fund these expenditures with future incurrences of indebtedness, additional capital contributions and/or future issuances of equity.
FAD does not reflect any maintenance capital expenditures necessary to maintain the same level of cash generation from our capital investments.
FAD does not reflect changes in working capital balances as management believes that changes in working capital are primarily driven by short term timing differences, which are not meaningful to our distribution decisions.
Management has significant discretion to make distributions, and we are not bound by any contractual provision that requires us to use cash for distributions.
If such factors were included in FAD, there can be no assurance that the results would be consistent with our presentation of FAD.
Debt Obligations
Refer to Note 7 of the Consolidated Financial Statements for additional information.
Contractual Obligations
Our material cash requirements include the following contractual and other obligations:
Debt ObligationsAs 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 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.
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.
Critical Accounting Estimates and Policies
GoodwillGoodwill 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. An annual impairment review is conducted as of October 1st of each year. Additionally, we review the carrying value of goodwill whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. The determination of fair value involves significant management judgment.
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
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performed to identify potential goodwill impairment and measure an impairment loss. A qualitative analysis was not elected for the year ended December 31, 2021.
A goodwill impairment assessment compares the fair value of the respective reporting unit with its carrying amount, including goodwill. The estimate of fair value of the respective reporting unit is based on the best information available as of the date of assessment, which primarily incorporates certain factors including our assumptions about operating results, business plans, income projections, anticipated future cash flows and market data. If the estimated fair value of the reporting unit is less than the carrying amount, a goodwill impairment is recorded to the extent that the carrying value of the reporting unit exceeds its fair value.
We estimate the fair value of the Jefferson and Transtar reporting units using an income approach, specifically a discounted cash flow analysis. This analysis requires us to make significant assumptions and estimates about the forecasted revenue growth rates, EBITDA margins, capital expenditures, the timing of future cash flows, and discount rates. The estimates and assumptions used consider historical performance if indicative of future performance and are consistent with the assumptions used in determining future profit plans for the reporting units.
In connection with our impairment analysis, although we believe the estimates of fair value are reasonable, the determination of certain valuation inputs is subject to management's judgment. Changes in these inputs, including as a result of events beyond our control, could materially affect the results of the impairment review. If the forecasted cash flows or other key inputs are negatively revised in the future, the estimated fair value of the reporting unit could be adversely impacted, potentially leading to an impairment in the future that could materially affect our operating results. Due to the acquisition of Transtar in 2021, the estimated fair value of that reporting unit approximates the book value. The Jefferson reporting unit had an estimated fair value that exceeded its carrying value by more than 10% but less than 20%. The Jefferson Terminal segment forecasted revenue is dependent on the ramp up of volumes under current and expected future contracts for storage and throughput of heavy and light crude and refined products and is subject to obtaining rail capacity for crude, expansion of refined product distribution to Mexico and movements in future oil spreads. At October 31, 2021, approximately 4.3 million barrels of storage was currently operational with 1.9 million barrels currently under construction for new contracts which will complete our storage development for our main terminal. Our discount rate for our 2021 goodwill impairment analysis was 9.0% and our assumed terminal growth rate was 2.0%. If our strategy changes from planned capacity downward due to an inability to source contracts or expand volumes, the fair value of the reporting unit would be negatively affected, which could lead to an impairment. The expansion of refineries in the Beaumont/Port Arthur area, as well as growing crude oil production in the U.S. and Canada, are expected to result in increased demand for storage on the U.S. Gulf Coast. Although we do not have significant direct exposure to volatility of crude oil prices, changes in crude oil pricing that affect long term refining planned output could impact Jefferson Terminal operations.
We expect the Jefferson Terminal segment to continue to generate positive Adjusted EBITDA in future years. Although certain of our anticipated contracts or expected volumes from existing contracts for Jefferson Terminal have been delayed, we continue to believe our projected revenues are achievable. Further delays in executing these contracts or achieving our projections could adversely affect the fair value of the reporting unit. The impact of the COVID-19 global pandemic during 2020 and 2021 negatively affected refining volumes and therefore Jefferson Terminal crude throughput but we have seen the activity starting to normalize and are expected to ramp back to normal during 2022. Furthermore, we anticipate strengthening macroeconomic demand for storage and the increasing spread between Western Canadian Crude and Western Texas Intermediate as Canadian crude pipeline apportionment increases. Also, as our pipeline connections became fully operational during 2021, we remain positive for the outlook of Jefferson Terminal's earnings potential.
There was no impairment of goodwill for the year ended December 31, 2021.
Recent Accounting Pronouncements
See Note 2 to our Consolidated Financial Statements for recent accounting pronouncements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market risk represents the risk of changes in value of a financial instrument, caused by fluctuations in interest rates and foreign exchange rates. Changes in these factors could cause fluctuations in our results of operations and cash flows. We are exposed to the market risks described below.
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Interest Rate Risk
Interest rate risk is the exposure to loss resulting from changes in the level of interest rates and the spread between different interest rates. Interest rate risk is highly sensitive to many factors, including the U.S. government’s monetary and tax policies, global economic factors and other factors beyond our control. We are exposed to changes in the level of interest rates and to changes in the relationship or spread between interest rates. Our primary interest rate exposure relates to our term loan arrangements.
LIBOR and other indices which are deemed “benchmarks” are the subject of recent national, international, and other regulatory guidance and proposals for reform. The ICE Benchmark Administration ceased publication of one-week and two-month USD LIBOR settings after December 31, 2021 and intends to cease publishing the remaining USD LIBOR settings after June 30, 2023. We are monitoring related reform proposals and evaluating the related risks and, as a result of LIBOR’s phase out, amended our revolving credit facility to incorporate SOFR as the successor rate to LIBOR; however, it is not possible to predict the effects of any of these developments, and any future initiatives to regulate, reform or change the manner of administration of LIBOR, SOFR or other benchmark indices could result in adverse consequences to the rate of interest payable and receivable on, market value of and market liquidity for financial instruments tied to variable interest rate indices.
Our borrowing agreements generally require payments based on a variable interest rate index, such as SOFR. Therefore, to the extent our borrowing costs are not fixed, increases in interest rates may reduce our net income by increasing the cost of our debt without any corresponding increase in rents or cash flow from our leases. We may elect to manage our exposure to interest rate movements through the use of interest rate derivatives (interest rate swaps and caps).
The following discussion about the potential effects of changes in interest rates is based on a sensitivity analysis, which models the effects of hypothetical interest rate shifts on our financial condition and results of operations. Although we believe a sensitivity analysis provides the most meaningful analysis permitted by the rules and regulations of the SEC, it is constrained by several factors, including the necessity to conduct the analysis based on a single point in time and by the inability to include the extraordinarily complex market reactions that normally would arise from the market shifts modeled. Although the following results of a sensitivity analysis for changes in interest rates may have some limited use as a benchmark, they should not be viewed as a forecast. This forward-looking disclosure also is selective in nature and addresses only the potential interest expense impacts on our financial instruments and, in particular, does not address the mark-to-market impact on our interest rate derivatives, if any. It also does not include a variety of other potential factors that could affect our business as a result of changes in interest rates. In addition, the following discussion does not take into account our Series A and Series B preferred shares, on which distributions currently accrue interest at a fixed rate but will accrue interest at a floating rate based on a certain variable interest rate index plus a spread from and after September 15, 2024.
As of June 30, 2022, assuming we do not hedge our exposure to interest rate fluctuations related to our outstanding floating rate debt, a hypothetical 100-basis point increase/decrease in our variable interest rate on our borrowings would result in an increase of approximately $4.4 million or a decrease of approximately $4.4 million in interest expense over the next 12 months.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
As of the end of the period covered by this report, an evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of and for the period covered by this report.
Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings
We are and may become involved in legal proceedings, including but not limited to regulatory investigations and inquiries, in the ordinary course of our business. Although we are unable to predict with certainty the eventual outcome of any litigation, regulatory investigation or inquiry, in the opinion of management, we do not expect our current and any threatened legal proceedings to have a material adverse effect on our business, financial position or results of operations. Given the inherent unpredictability of these types of proceedings, however, it is possible that future adverse outcomes could have a material adverse effect on our financial results.
Item 1A. Risk Factors
You should carefully consider the following risks and other information in this Form 10-Q in evaluating us and our shares. Any of the following risks, as well as additional risks and uncertainties not currently known to us or that we currently deem immaterial, could materially and adversely affect our results of operations or financial condition. The risk factors generally have been separated into the following categories: risks related to our business, risks related to our Manager, risks related to taxation, risks related to our common shares and general risks. However, these categories do overlap and should not be considered exclusive.
Risks Related to the Spin-Off of Our Infrastructure Business
The proposed plan to spin-off our infrastructure business into a separate, publicly traded company may not be completed on the currently contemplated timeline or terms, or at all, and may not achieve the intended benefits.
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, (x) 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 (y) 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, our board of directors unanimously approved the previously announced plan to spin off our 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. We expect the spin-off to be completed on or around August 1, 2022, subject to certain conditions, through a pro-rata distribution to the Company’s common shareholders of all of the shares of common stock of FTAI Infrastructure Inc. that the Company owns as of July 21, 2022. The infrastructure business 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, our Jefferson, Repauno, Long Ridge and Transtar assets, and will retain all related project-level debt of those entities. FTAI Infrastructure’s common stock has been approved to be listed on The Nasdaq Global Select Market under the ticker symbol “FIP”. We expect to retain our aviation business and certain other assets and our remaining outstanding corporate indebtedness.
The spin-off poses risks and challenges that could negatively impact our business, and there can be no assurance that the spin-off will be completed as anticipated or at all. Our ability to complete the spin-off is subject to, among other things, the formal declaration of the distribution by our board of directors. Such conditions and other unforeseen developments, including in the debt or equity markets or general market conditions, could delay or prevent the spin-off or cause the spin-off to occur on terms or conditions that are less favorable and/or different than anticipated. Moreover, even if all the conditions have been satisfied, if our board of directors determines, in its sole discretion, that the spin-off is not in the best interests of the Company and its shareholders, our board may terminate the spin-off. Failure to complete the spin-off could negatively affect the price of our common shares.
In addition, the spin-off may not have the full or any strategic and financial benefits that we expect, or such benefits may be delayed or may not materialize at all. The anticipated benefits of the spin-off are based on a number of assumptions, which may prove incorrect. For example, the Company believes that having two independent companies with distinct investment profiles will maximize the strategic focus and financial flexibility of each company to grow and return capital to shareholders. In the event that the spin-off does not have these and other expected benefits, the costs associated with the transaction could have a negative effect on our financial condition and ability to make distributions to shareholders. There may also be disruptions to our business as a result of the separation, including a diversion of management’s time and attention from our regular business operations, which could result in a loss of revenue. We and FTAI Infrastructure are expected to incur significant one-time costs and ongoing costs in connection with, or as a result of, the spin-off, including costs of operating each business as an independent, publicly traded company and paying separate management and incentive fees, among others. Further, the combined value of the shares of the two publicly traded companies may not be equal to or greater than the value of the Company’s common shares if the spin-off had not occurred. These costs, disruptions and uncertainties, or others, may exceed our estimates or could negate some or all of the benefits we expect to realize from the spin-off, which could have a material adverse effect on our business, financial condition, results of operations and prospects, whether the proposed spin-off is completed or not.
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Risks Related to Our Business
A pandemic, including COVID-19, could have an adverse impact on our business, financial condition, and results of operations.
In recent years, the outbreaks of certain highly contagious diseases have increased the risk of a pandemic resulting in economic disruptions. In particular, the ongoing COVID-19 pandemic has led to severe disruptions in the market and the global, U.S. and regional economies that may continue for a prolonged duration and trigger a recession or a period of economic slowdown. In response, various governmental bodies and private enterprises have implemented, and may in the future implement, numerous measures intended to mitigate the outbreak, such as travel bans and restrictions, quarantines, shutdowns and testing or vaccination mandates. The COVID-19 pandemic continues to be dynamic and evolving, including a resurgence of COVID-19 cases in certain geographies, and its ultimate scope, duration and impact, including the efficacy and availability of vaccines, remain uncertain.
The ongoing COVID-19 pandemic adversely affected our Jefferson Terminal business in several material ways during the years ended December 31, 2020 and 2021. Although difficult to quantify the impact, the pandemic adversely affected macro trends in refinery utilization rates in the United States and the global consumption of petroleum and liquid fuels in 2020 and part of 2021, which adversely affected our revenue potential at our Jefferson Terminal business. In addition, we were unable to complete anticipated new customer contracts and certain of our existing customers did not increase volumes as anticipated which also a