Fortress Transportation and Infrastructure Investors LLC Common Shares

Good day and thank you for standing by. Welcome to the Q1 2022 Fortress Transportation and Infrastructure Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to our speaker today, Mr. Alan Andrini. Please go ahead.

Thank you, Tanya. I would like to welcome you to the Fortress Transportation and Infrastructure First Quarter 2022. our newly appointed CEO of FTI Infrastructure, Scott Christopher, the Chief Financial Officer of FTI, who will become the CFO of FTI Infrastructure, and Angela Nam, the Chief Accounting Officer of FTI, who will become the CFO of FTI Aviation, which will be the new name of FTI. We have posted an investor presentation and our press release on our website, which we encourage you to download if you have not already done so. Also, please note that this call is open to the public in listen-only mode and is being webcast. In addition, we will be discussing some non-GAAP financial measures during the call today, including FAB. The reconciliations of those measures to the most directly comparable GAAP measures can be found in the earnings supplement. Before I turn the call over to Joe and Ken, I would like to point out that certain statements made today will be forward-looking statements, including regarding future earnings. Statements by their nature are uncertain and may differ materially from actual results. We encourage you to review the disclaimers in our press release and investor presentation regarding non-GAAP financial measures and forward-looking statements, and to review the risk factors contained in our quarterly report filed with the FCC. Now I would like to turn the call over to Joe.

Thank you, Alan. To start the call, I'm pleased to announce our 28th dividend as a public company and our 43rd consecutive dividend since inception. The dividend of 33 cents per share will be paid on May 24th, based on a shareholder record date of May 13th. First, a couple of highlights. Yesterday, our board formally approved the spin of FTI infrastructure from FTI, and we expect the spin to be completed in the next four to eight weeks. Secondly, as to Russia-Ukraine war and our assets lost in that conflict, we are writing off $195 million in Q1 for impairments, bad debt, and lost revenue. But we expect to recapture all of that $195 million over the coming year. Now let's turn to the numbers. The key metrics for us are adjusted EBITDA and FAD, or funds available for distribution. Absent the impact to our assets in the Russian-Ukraine war, which we estimate to be approximately 70 million in Q1, adjusted EBITDA would have been approximately 122 million, down 2% compared to 124.8 million in Q4 of 2021, and up 158% compared to 47.2 million in Q1 2021, including one-time charges, Actual adjusted EBITDA was 51.6 million in Q1 2022, which is down 60% compared to Q4 2021, and down 9% compared to Q1 2021. FAD was 71.4 million in Q1 2022, down 41% compared to 120.1 million in Q4 2021, and up 396% compared to 14.4 million in Q1 of 2021. During the first quarter, the 71.4 million FAD number was comprised of 117.1 million from our aviation leasing portfolio, 7.1 million from our infrastructure businesses, and negative 52.8 million from corporate and other. Turning now to aviation, let's start with the impact of Russia's war in Ukraine. We reported Q1 2022 aviation EBITDA of $48 million. Write-off of uncollectible debt or canceled leases with customers that ceased operations reduced EBITDA on the quarter by about $70 million. So we estimate EBITDA without the war effect would have been approximately $120 million or an improvement from Q4 2021 of $104 million. In addition, we are writing off 100% of the book value of $125 million of the 12 aircraft and 20 engines that remain today in Russia or Ukraine. For those aircraft and engines, we have filed insurance claims totaling $290 million, which we ultimately expect to recover most, if not all, of this amount. So when we do recover, all proceeds will be booked as income when received. We also took back nine aircraft from Russian and Ukrainian operators and are under LOI to sell four of these aircraft to cargo operators at a gain of approximately 30 million, while the remaining five aircraft are all 737 NGs for which there is very strong demand for both the aircraft and the engines. So we expect all nine of those aircraft to be on lease or sold by the end of Q2. We'll be taking further advantage of the strong cargo market and expect to sell other 747 and 767 aircraft and engines for significant additional gains in Q2. Turning to our aerospace products, we posted Q1 22 EBITDA of $16 million, comprised mostly of income from CFM 56 module sales again this quarter. And looking ahead, given the very visible and robust recovery in air travel demand worldwide, we're seeing a significant ramp in activity and backlog for our aerospace products. We currently have a backlog of approximately 180 modules contracted or on order and over $100 million of used serviceable material USM sales on order through multiple programs with MROs, maintenance and repair organizations, and airlines. We continue seeing growing market acceptance of our CFM56 product offerings with today over 20 active customers, including many of the world's largest airlines and independent maintenance shops, and are importantly seeing a very high level of repeat usage. We expect demand to accelerate as heavy volumes of CFM56 shop visits are being scheduled now for the second half of this year. Let me now turn the call over to Ken to discuss infrastructure.