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SEGMENT INFORMATION

9 Months Ended

Sep. 30, 2022

12. SEGMENT INFORMATION

During the third quarter of 2022, as a result of the Parent’s spin-off of its infrastructure business effective on August 1, 2022 and its reevaluation of segments, the Company reevaluated its operating segments. The key factors used to identify the reportable segments are the organization and alignment of our internal operations and the nature of our products and services. Our two reportable segments are (i) Aviation Leasing and (ii) Aerospace Products. The Aviation Leasing segment owns and manages aviation assets, including aircraft and aircraft engines, which it leases and sells to customers. The Aerospace Products segment develops, manufactures, repairs, and sells aircraft engines and aftermarket components for aircraft engines. The interim periods disclose the reportable segments under this basis with prior periods restated to reflect the change in accordance with the requirements of ASC 280.

Corporate and Other primarily consists of debt, allocated corporate general and administrative expenses, shared services costs, and management fees.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies; however, financial information presented by segment includes the impact of intercompany eliminations. Our Chief Executive Officer is our Chief Operating Decision Maker (“CODM”). Segment information is presented in the same manner that our CODM reviews the operating results in assessing performance and allocating resources. The CODM evaluates performance for each reportable segment primarily based on Adjusted EBITDA. Historically, the CODM’s assessment of segment performance included asset information. During the third quarter of 2022, the CODM determined that segment asset information is not a key factor in measuring performance or allocating resources. Therefore, segment asset information is not included in the tables below as it is not provided to or reviewed by our CODM.

Adjusted EBITDA is defined as net income (loss) attributable to shareholders, adjusted (a) to exclude the impact of provision for (benefit from) income taxes, equity-based compensation expense, acquisition and transaction expenses, losses on the modification or extinguishment of debt and capital lease obligations, changes in fair value of non-hedge derivative instruments, asset impairment charges, incentive allocations, depreciation and amortization expense, (b) to include the impact of our pro-rata share of Adjusted EBITDA from unconsolidated entities, and (c) to exclude the impact of equity in earnings (losses) of unconsolidated entities and the non-controlling share of Adjusted EBITDA.

We believe that net income attributable to shareholders, as defined by GAAP, is the most appropriate earnings measurement with which to reconcile Adjusted EBITDA. Adjusted EBITDA should not be considered as an alternative to net income attributable to shareholders as determined in accordance with GAAP.

The following tables set forth certain information for each reportable segment:

I. For the Three Months Ended September 30, 2022

	Three Months Ended September 30, 2022
	Aviation Leasing			Aerospace Products			Corporate and Other			Total
Revenues	$	164,848		$	53,401		$	—		$	218,249

Expenses
Operating expenses		10,533			3,491			588			14,612
Cost of sales		64,855			31,093			—			95,948
General and administrative		—			—			3,354			3,354
Acquisition and transaction expenses		247			15			2,586			2,848
Management fees and incentive allocation to affiliate		—			—			539			539
Depreciation and amortization		32,728			77			72			32,877
Asset impairment		4,495			—			—			4,495
Interest expense		—			—			644			644
Total expenses		112,858			34,676			7,783			155,317

Other expense
Equity in losses of unconsolidated entities		(45	)		(313	)		—			(358	)
Other income		42			—			—			42
Total other expense		(3	)		(313	)		—			(316	)
Income (loss) before income taxes		51,987			18,412			(7,783	)		62,616
Provision for income taxes		1,232			2,586			—			3,818
Net income (loss) attributable to shareholders	$	50,755		$	15,826		$	(7,783	)	$	58,798

The following table sets forth a reconciliation of Adjusted EBITDA to net income attributable to shareholders:

	Three Months Ended September 30, 2022
	Aviation Leasing		Aerospace Products		Corporate and Other			Total
Adjusted EBITDA	$	95,994	$	18,560	$	(4,481	)	$	110,073
Add: Equity in losses of unconsolidated entities									(358	)
Less: Pro-rata share of Adjusted EBITDA from unconsolidated entities									241
Less: Interest expense									(644	)
Less: Depreciation and amortization expense									(39,353	)
Less: Asset impairment charges									(4,495	)
Less: Acquisition and transaction expenses									(2,848	)
Less: Provision for income taxes									(3,818	)
Net income attributable to shareholders								$	58,798

Summary information with respect to our geographic sources of revenue, based on location of customer, is as follows:

	Three Months Ended September 30, 2022
	Aviation Leasing		Aerospace Products		Corporate and Other		Total
Revenues
Africa	$	250	$	—	$	—	$	250
Asia		23,496		1,200				24,696
Europe		41,869		15,511		—		57,380
North America		90,183		36,690				126,873
South America		9,050		—		—		9,050
Total revenues	$	164,848	$	53,401	$	—	$	218,249

II. For the Nine Months Ended September 30, 2022

	Nine Months Ended September 30, 2022
	Aviation Leasing		Aerospace Products			Corporate and Other			Total
Revenues	$	317,994	$	94,211		$	—		$	412,205

Expenses
Operating expenses		72,135		8,094			3,422			83,651
Cost of sales		64,855		55,284			—			120,139
General and administrative		—		—			9,125			9,125
Acquisition and transaction expenses		624		15			4,810			5,449
Management fees and incentive allocation to affiliate		—		—			4,692			4,692
Depreciation and amortization		106,180		178			209			106,567
Asset impairment		128,171		—			—			128,171
Interest expense		—		—			1,910			1,910
Total expenses		371,965		63,571			24,168			459,704

Other expense
Equity in earnings (losses) of unconsolidated entities		753		(878	)		—			(125	)
Gain on sale of assets, net		61,371		18,562			—			79,933
Other income		245		—			—			245
Total other income		62,369		17,684			—			80,053
Income (loss) before income taxes		8,398		48,324			(24,168	)		32,554
Provision for income taxes		2,197		5,055			—			7,252
Net income (loss) attributable to shareholders	$	6,201	$	43,269		$	(24,168	)	$	25,302

The following table sets forth a reconciliation of Adjusted EBITDA to net income attributable to shareholders:

	Nine Months Ended September 30, 2022
	Aviation Leasing		Aerospace Products		Corporate and Other			Total
Adjusted EBITDA	$	273,788	$	48,685	$	(17,239	)	$	305,234
Add: Equity in losses of unconsolidated entities									(125	)
Less: Pro-rata share of Adjusted EBITDA from unconsolidated entities									(165	)
Less: Interest expense									(1,910	)
Less: Depreciation and amortization expense									(136,860	)
Less: Asset impairment charges									(128,171	)
Less: Acquisition and transaction expenses									(5,449	)
Less: Provision for income taxes									(7,252	)
Net income attributable to shareholders								$	25,302

Summary information with respect to our geographic sources of revenue, based on location of customer, is as follows:

	Nine Months Ended September 30, 2022
	Aviation Leasing		Aerospace Products		Corporate and Other		Total
Revenues
Africa	$	250	$	850	$	—	$	1,100
Asia		60,111		2,601		—		62,712
Europe		94,751		26,410		—		121,161
North America		130,362		64,350		—		194,712
South America		32,520		—		—		32,520
Total revenues	$	317,994	$	94,211	$	—	$	412,205

III. For the Three Months Ended September 30, 2021

	Three Months Ended September 30, 2021
	Aviation Leasing			Aerospace Products			Corporate and Other			Total
Revenues	$	86,208		$	7,730		$	—		$	93,938

Expenses
Operating expenses		7,282			1,774			1,074			10,130
Cost of sales		—			5,367			—			5,367
General and administrative		—			—			2,862			2,862
Acquisition and transaction expenses		234			—			898			1,132
Management fees and incentive allocation to affiliate		—			—			2,116			2,116
Depreciation and amortization		34,718			40			67			34,825
Asset impairment		859			—			—			859
Interest expense		—			—			584			584
Total expenses		43,093			7,181			7,601			57,875

Other income (expense)
Equity in losses of unconsolidated entities		—			(369	)		—			(369	)
Gain on sale of assets, net		10,961			1,724			—			12,685
Other expense		(1,341	)		—			—			(1,341	)
Total other income		9,620			1,355			—			10,975
Income (loss) before income taxes		52,735			1,904			(7,601	)		47,038
Provision for (benefit from) income taxes		610			(110	)		—			500
Net income (loss)	$	52,125		$	2,014		$	(7,601	)	$	46,538

The following table sets forth a reconciliation of Adjusted EBITDA to net income attributable to shareholders:

	Three Months Ended September 30, 2021
	Aviation Leasing		Aerospace Products		Corporate and Other			Total
Adjusted EBITDA	$	94,990	$	2,001	$	(6,052	)	$	90,939
Add: Equity in losses of unconsolidated entities									(369	)
Less: Pro-rata share of Adjusted EBITDA from unconsolidated entities									312
Less: Interest expense									(584	)
Less: Depreciation and amortization expense									(41,269	)
Less: Asset impairment charges									(859	)
Less: Acquisition and transaction expenses									(1,132	)
Less: Provision for income taxes									(500	)
Net income attributable to shareholders								$	46,538

Summary information with respect to our geographic sources of revenue, based on location of customer, is as follows:

	Three Months Ended September 30, 2021
	Aviation Leasing		Aerospace Products		Corporate and Other		Total
Revenues
Asia	$	36,420	$	—	$	—	$	36,420
Europe		35,709		—		—		35,709
North America		10,422		7,730		—		18,152
South America		3,657		—		—		3,657
Total revenues	$	86,208	$	7,730	$	—	$	93,938

IV. For the Nine Months Ended September 30, 2021

	Nine Months Ended September 30, 2021
	Aviation Leasing			Aerospace Products			Corporate and Other			Total
Revenues	$	215,198		$	13,284		$	—		$	228,482

Expenses
Operating expenses		14,177			3,519			2,945			20,641
Cost of sales		—			8,577			—			8,577
General and administrative		—			—			7,166			7,166
Acquisition and transaction expenses		804			—			2,906			3,710
Management fees and incentive allocation to affiliate		—			—			7,027			7,027
Depreciation and amortization		101,992			40			162			102,194
Asset impairment		3,048			—			—			3,048
Interest expense		—			—			1,734			1,734
Total expenses		120,021			12,136			21,940			154,097

Other (expense) income
Equity in losses of unconsolidated entities		—			(1,050	)		—			(1,050	)
Gain on sale of assets, net		15,751			1,716			—			17,467
Other expense		(717	)		—			—			(717	)
Total other income		15,034			666			—			15,700
Income (loss) before income taxes		110,211			1,814			(21,940	)		90,085
Provision (benefit from) for income taxes		1,048			(11	)		—			1,037
Net income (loss) attributable to shareholders	$	109,163		$	1,825		$	(21,940	)	$	89,048

The following table sets forth a reconciliation of Adjusted EBITDA to net income attributable to shareholders:

	Nine Months Ended September 30, 2021
	Aviation Leasing		Aerospace Products		Corporate and Other			Total
Adjusted EBITDA	$	237,404	$	1,998	$	(17,138	)	$	222,264
Add: Equity in losses of unconsolidated entities									(1,050	)
Less: Pro-rata share of Adjusted EBITDA from unconsolidated entities									906
Less: Interest expense									(1,734	)
Less: Depreciation and amortization expense									(123,543	)
Less: Asset impairment charges									(3,048	)
Less: Acquisition and transaction expenses									(3,710	)
Less: Provision for income taxes									(1,037	)
Net income attributable to shareholders								$	89,048

Summary information with respect to our geographic sources of revenue, based on location of customer, is as follows:

	Nine Months Ended September 30, 2021
	Aviation Leasing		Aerospace Products		Corporate and Other		Total
Revenues
Africa	$	235	$	—	$	—	$	235
Asia		93,925		—		—		93,925
Europe		88,296		812		—		89,108
North America		26,630		12,472		—		39,102
South America		6,112		—		—		6,112
Total revenues	$	215,198	$	13,284	$	—	$	228,482

V. Location of Long-Lived Assets

The following tables set forth summarized geographic location of leasing equipment, net:

	September 30, 2022
	Total
Leasing equipment, net
Africa	$	17,776
Asia		222,830
Europe		602,833
North America		391,219
South America		324,917
Total leasing equipment, net	$	1,559,575

	December 31, 2021
	Total
Leasing equipment, net
Asia	$	365,331
Europe		839,555
North America		263,718
South America		245,532
Total leasing equipment, net	$	1,714,136

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8924-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 34
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8981-108599

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
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-Section 50
-Paragraph 21
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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-Publisher FASB
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+ Details