FTAI AVIATION(FTAIM) - 2024 Q2 - Quarterly Report

Financial Performance - For the three months ended June 30, 2024, total revenues increased by $169.2 million, reaching$443.6 million, compared to $274.3 million in the same period of 2023, representing a 61.6$228.2 million, compared to a profit of $46.4 million in the same period of 2023 [147]. - Total revenues increased by$169.2 million for the three months ended June 30, 2024, primarily due to a $152.5 million increase in Aerospace products revenue [150]. - Net income attributable to shareholders decreased by$19.8 million to $52.8 million for the three months ended June 30, 2024 [183]. - The company reported a net loss attributable to shareholders of$365.9 million for the six months ended June 30, 2024, compared to a loss of $119.7 million in the same period of 2023 [198]. - Net loss attributable to shareholders increased by$306.4 million to $(365.9) million for the three months ended June 30, 2024, compared to$(59.4) million in 2023 [207]. Revenue Breakdown - Aerospace products revenue surged by 164.5% to $245.2 million, compared to$92.7 million in the prior year [147]. - Lease income for the same period rose to $70.8 million, an increase of 18.8$59.5 million in 2023 [147]. - Lease income rose by $11.2 million due to an increase in the number of engines placed on lease, while Maintenance revenue increased by$9.1 million [151]. - Aerospace products revenue increased by $256.4 million for the six months ended June 30, 2024, driven by sales of CFM56-7B, CFM56-5B, and V2500 engines [154]. - Total revenues for the three months ended June 30, 2024, increased by$17.1 million to $184.4 million, driven by increases in Lease income and Maintenance revenue [176]. - Total revenues for the six months ended June 30, 2024, decreased by$46.7 million to $319.7 million, primarily due to a decline in Asset sales revenue [177]. Expenses and Losses - Total expenses increased by$443.6 million for the three months ended June 30, 2024, mainly driven by a $300 million increase in the internalization fee to affiliate [157]. - Total expenses for the three months ended June 30, 2024, increased by$28.3 million to $122.4 million, mainly due to higher Depreciation and amortization, Cost of sales, and Operating expenses [179]. - Total expenses increased by$319.1 million for the three months ended June 30, 2024, primarily due to higher internalization fees, interest expenses, and acquisition expenses [201]. - Total other expense increased by $15.1 million during the three months ended June 30, 2024, primarily due to a$13.9 million increase in the loss on extinguishment of debt [168]. - Total expenses rose by $96.2 million (approximately 164.2$157.9 million (approximately 135.7%) for the three and six months ended June 30, 2024, primarily due to increased costs of sales and operating expenses [190][191]. Adjusted EBITDA - Adjusted EBITDA is utilized as a key performance measure, providing insights into operational performance [145]. - Adjusted EBITDA increased by $60.8 million for the three months ended June 30, 2024, reaching$213.9 million [171]. - Adjusted EBITDA for the three months ended June 30, 2024, increased by $3.8 million to$125.0 million [184]. - Adjusted EBITDA decreased by $3.2 million to$(13.3) million for the six months ended June 30, 2024, compared to $(10.1) million in 2023 [208]. - Adjusted EBITDA increased by$56.5 million (approximately 162.5%) and $99.4 million (approximately 159.9$3.4 billion, with total equity of $69.6 million [137]. - As of June 30, 2024, the Aviation Leasing segment owned and managed 391 aviation assets, including 99 commercial aircraft and 292 engines [172]. - The utilization rate of aviation equipment was approximately 81$300 million [138]. Impairments and Charges - The company recognized an impairment charge of $120 million due to the inability to recover aircraft and engines from Russia and Ukraine [140]. - Transition Services Agreement costs incurred during the three and six months ended June 30, 2024, amounted to$3.4 million, reported under Acquisition and transaction expenses [139]. Financing and Cash Flow - Cash used in operating activities increased by $254.9 million to$(187.6) million for the six months ended June 30, 2024, primarily due to an increase in net loss and adjustments [216]. - Net cash provided by financing activities increased by $483.1 million, primarily due to proceeds from debt of$1.5 billion [218]. - As of June 30, 2024, the company had outstanding principal and interest payment obligations of $3.1 billion and$1.3 billion, respectively [219]. Interest Rate Risk - The company is exposed to interest rate risk, which may affect net income due to increased borrowing costs without corresponding increases in rents or cash flow from leases [226]. - The company amended its revolving credit facility to incorporate SOFR as the successor rate to LIBOR in anticipation of LIBOR's phase-out [227]. - The company may manage its exposure to interest rate movements through the use of interest rate derivatives such as swaps and caps [228]. - The sensitivity analysis indicates that changes in interest rates could have limited use as a benchmark for forecasting financial impacts [229].