FORTRESS TRSP(FTAIN) - 2024 Q2 - Quarterly Report

Financial Performance - Total consolidated assets as of June 30, 2024, were $3.4 billion, with total equity of$69.6 million[137]. - Lease income for the three months ended June 30, 2024, was $70.754 million, an increase of 18.8$59.541 million in the same period of 2023[147]. - Aerospace products revenue surged to $245.200 million for the three months ended June 30, 2024, compared to$92.725 million in 2023, reflecting a growth of 164.5%[147]. - Total revenues for the six months ended June 30, 2024, reached $770.288 million, up 35.8$567.063 million in 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]. - Aerospace products revenue for the six months ended June 30, 2024, increased by $256.4 million, 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 - The company incurred$300 million in internalization fees during the three months ended June 30, 2024, as part of the management function internalization[138]. - An impairment charge of $120 million was recognized due to the inability to recover aircraft and engines from Russia and Ukraine[140]. - Total expenses for the three months ended June 30, 2024, were$661.385 million, significantly higher than $217.765 million in the same period of 2023, marking an increase of 203.5$443.6 million for the three months ended June 30, 2024, mainly due to a $300.0 million increase in internalization fees to affiliates[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 rose by$96.2 million (164.2%) and $157.9 million (135.7$228.205 million, compared to a profit of $46.418 million in 2023[147]. - Net loss attributable to shareholders was$365.9 million for the three months ended June 30, 2024, compared to a loss of $59.4 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]. Income and EBITDA - Adjusted EBITDA increased by $60.8 million for the three months ended June 30, 2024, totaling$213.9 million[171]. - Net income attributable to shareholders decreased by $274.6 million for the three months ended June 30, 2024, compared to the prior year[170]. - Net income attributable to shareholders decreased by$19.8 million to $52.8 million for the three months ended June 30, 2024[183]. - 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 (162.0$99.4 million (159.9%) for the three and six months ended June 30, 2024, respectively[195]. Assets and Utilization - As of June 30, 2024, the company owned and managed 391 aviation assets, including 99 commercial aircraft and 292 engines[172]. - The aviation equipment utilization rate was approximately 81% during the six months ended June 30, 2024[173]. - The average remaining lease term for aircraft was 45 months, while for engines it was 22 months as of June 30, 2024[173]. Cash Flow and Financing - Cash used in operating activities increased by $254.9 million to$(187.6) million for the six months ended June 30, 2024, compared to $67.2 million in 2023[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]. Management and Strategy - The company expects to continue pursuing acquisition opportunities in its markets, leveraging its expertise and access to capital[137]. - The company acquired the remaining interest in Quick Turn Engine Center LLC in December 2023, enhancing its capabilities in engine maintenance and testing[185]. - The company is evaluating several potential transactions and related financings in the aviation sector, which could occur within the next 12 months[215]. - The company anticipates savings in operation costs as a result of the internalization of management[214]. 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]. - As of June 30, 2024, a hypothetical 100-basis point increase/decrease in the variable interest rate on borrowings would not have increased or decreased interest expense over the next 12 months[230]. - 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 potential impacts on financial instruments, but these should not be viewed as forecasts[229].