10-QPeriod: Q1 FY2020

FTAI Aviation Ltd. Quarterly Report for Q1 Ended Mar 31, 2020

Filed May 1, 2020For Securities:FTAIFTAIMFTAIN

Summary

FTAI Aviation Ltd. (FTAI) in its May 1, 2020, 10-Q filing highlights ongoing compliance with Sarbanes-Oxley Act Section 404, requiring rigorous internal control evaluations and independent auditor attestation. The company notes potential adverse effects on its operations, financial condition, and liquidity should control deficiencies arise, including material weaknesses, which could negatively impact its share price and capital-raising ability. The filing also addresses potential share dilution due to equity awards granted to its Manager under the Management Agreement and Incentive Plan, as well as future issuances of common shares or other equity securities. Significant sales or perceptions of sales of common shares, or issuances for acquisitions, could adversely affect the market price. FTAI utilizes leverage for acquisitions, which may reduce returns on assets and funds available for distribution, and while intending to pay regular dividends, this policy can be changed at any time by the board of directors.

Financial Highlights

41 data points
Beta

Revenue

$112.84M

Net Income

-$2.86M

-2.5% Net Margin

Total Assets

$3.18B

Cash & Equivalents

$123.39M

Free Cash Flow

-$72.21M

Financial Statements
Beta
Revenue$112.84M
Operating Expenses$111.13M
Operating Income-$4.19M
Interest Expense$22.86M
Net Income-$2.86M
Shares Outstanding (Basic)86.01M
Shares Outstanding (Diluted)86.01M

Key Highlights

  • 1FTAI is subject to Sarbanes-Oxley Act Section 404, requiring ongoing assessment and independent auditing of internal controls over financial reporting, with potential adverse consequences from identified deficiencies.
  • 2Potential for shareholder dilution exists due to equity awards to the Manager and future equity issuances, which could also negatively impact the share price.
  • 3The company employs leverage in its acquisition strategy, which can impact asset returns and distributable funds.
  • 4While currently intending to pay quarterly dividends, FTAI's board of directors has the discretion to alter or suspend this policy.
  • 5Anti-takeover provisions within the operating agreement and Delaware law could deter unsolicited acquisition attempts.
  • 6The company's operating agreement offers potentially less shareholder protection regarding director and officer exculpation and indemnification compared to Delaware General Corporation Law.
  • 7As a public company, FTAI incurs increased costs and demands on management due to regulatory compliance, including enhanced disclosure requirements and independent auditor attestations.

Frequently Asked Questions

FTAI must regularly evaluate and report on the effectiveness of its internal controls over financial reporting, with an independent auditor attesting to management's assessment. Any identified material weaknesses could lead to increased costs for remediation, potential adverse impacts on operations, financial condition, liquidity, share price, and the ability to raise capital.

Your ownership percentage could be diluted through equity awards granted to FTAI's Manager under existing agreements and the Incentive Plan. Future issuances of common shares or other equity securities, whether for capital raising or acquisitions, will also dilute existing shareholders. The company is not obligated to offer new shares to existing shareholders on a preemptive basis.

FTAI utilizes leverage to finance acquisitions. While the Manager aims for reasonable leverage, the company's strategy does not cap leverage for specific assets. The use of leverage means certain lenders are paid before shareholders receive returns. Changes in market conditions could increase financing costs relative to asset income, potentially reducing returns on assets and funds available for shareholder distributions.

FTAI currently intends to pay regular quarterly dividends. However, this policy is discretionary and can be changed by the board of directors at any time. Dividend payments depend on various factors including financial results, liquidity, contractual restrictions, and other considerations deemed relevant by the board. Furthermore, distributions from subsidiaries can be limited by their financing agreements, and preferred shareholders may have priority for distributions.