FTAI AVIATION(FTAIM) - 2023 Q4 - Annual Report

Financial Performance - For the year ended December 31, 2023, total revenues increased to $1,170.9 million, a 65.2$708.4 million in 2022[202]. - Net income attributable to shareholders for 2023 was $212.0 million, compared to a net loss of$220.4 million in 2022[202]. - Net income attributable to shareholders from continuing operations for 2023 was $212,022,000, a significant increase of$349,797,000 compared to a loss of $137,775,000 in 2022[203]. - The aviation leasing segment reported a net income attributable to shareholders of$291.6 million for 2023, a significant increase from $56.9 million in 2022[237]. - Net income attributable to shareholders surged to$180.18 million in 2023, up from $70.66 million in 2022, marking an increase of$109.52 million[254]. Revenue Breakdown - Lease income for 2023 was $207.9 million, up 15.9$179.3 million in 2022[202]. - Maintenance revenue rose to $191.3 million, a 28.5$148.8 million in 2022[202]. - Aerospace products revenue surged to $455.0 million, reflecting a 255.5$178.5 million in 2022[202]. - Total revenues for the Aviation Leasing segment increased by $178.7 million to$681.6 million in 2023, driven by increases in asset sales revenue, maintenance revenue, and lease income[239]. - Asset sales revenue rose by $119.6 million primarily due to increased sales of commercial aircraft and engines[241]. Expenses and Costs - Total expenses rose by$122 million, mainly due to higher cost of sales, management fees, and depreciation and amortization[210]. - Cost of sales increased by $253.7 million, attributed to higher asset sales and Aerospace Product sales[210][225]. - Total expenses decreased by$76.2 million to $427.4 million, mainly due to reductions in asset impairment and operating expenses[240]. - Total expenses rose by$181.2 million, totaling $303.12 million in 2023, primarily due to increased costs of sales and operating expenses[256]. - Operating expenses rose by$48.5 million, largely due to increased provisions for credit losses and other operational costs[253]. Adjusted EBITDA - The company reported Adjusted EBITDA as a key performance measure, which is not in accordance with U.S. GAAP but is used for assessing operational performance[200]. - Adjusted EBITDA for 2023 reached $597,282,000, reflecting an increase of$169,185,000 from $428,097,000 in 2022[203][217]. - Adjusted EBITDA increased by$87.2 million to $467.4 million, reflecting improved operational performance[244]. - Adjusted EBITDA increased by$85.7 million, reaching $160.01 million in 2023 compared to$74.35 million in 2022[259]. Impairments and Charges - The company recognized an impairment charge of $120.0 million for leasing equipment assets related to the impact of Russia's invasion of Ukraine[189]. - Other income decreased by$51.2 million, primarily due to a reduction in gain on sale of assets in the Aviation Leasing and Aerospace Products segments[213]. Tax and Deferred Assets - The benefit from income taxes increased by $65.1 million, largely due to the establishment of a deferred tax asset of$72.2 million in Bermuda[214]. - The company established a deferred tax asset of $46.6 million in Bermuda, contributing to a$38.7 million increase in the benefit from income taxes[243]. - The benefit from income taxes increased by $27.4 million, primarily due to a deferred tax asset of$25.6 million established in Bermuda[258]. Cash Flow and Financing - Net cash used in operating activities decreased by $149.6 million, primarily due to a reduction in net loss and changes in working capital[290]. - Net cash provided by financing activities increased by$237.3 million, driven by a decrease in debt repayment and an increase in proceeds from debt and preferred shares[292]. - Cash flows from operating activities, including principal collections on finance leases, totaled $163.0 million in 2023, up from$29.4 million in 2022[293]. - The company issued $500 million in Senior Notes due 2030, using part of the proceeds to repay$250 million of outstanding borrowings[280]. - Cash used for investments was $861.5 million in 2023, compared to$831.5 million in 2022[284]. Dividends and Liquidity - The company declared cash dividends of $119.8 million on ordinary shares and$31.8 million on preferred shares during 2023[299]. - The company expects to meet future short-term liquidity requirements through cash on hand, unused borrowing capacity, and net cash provided by current operations[300]. Interest Rate Risk - Interest rate risk is a significant concern, with potential increases in interest rates possibly reducing net income by increasing the cost of debt without a corresponding increase in cash flow from leases[317]. - A hypothetical 100-basis point increase or decrease in the variable interest rate on borrowings would not have affected interest expense over the next 12 months as of December 31, 2023[319]. Asset Management - As of December 31, 2023, the Aviation Leasing segment owned and managed 363 aviation assets, including 96 commercial aircraft and 267 engines[234]. - As of December 31, 2023, the aviation equipment utilization rate was approximately 77%, with a weighted average remaining lease term of 47 months for aircraft and 16 months for engines[235]. - The company acquired the remaining interest in Quick Turn Engine Center LLC in December 2023, enhancing its maintenance and testing capabilities for CFM56 engines[251].