FTAI Infrastructure Inc. Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Acquisition of Wheeling & Lake Erie Railway: Acquired for $1.05 billion. Wheeling has ~1,000 miles of track and generated $150 million revenue in the latest 12 months. Expect $20 million annual cost savings and $200 million targeted annual EBITDA for the combined rail business by 2026.
• Financing: Issuing $1 billion preferred stock at a rail subsidiary with a 10% annual noncash dividend; $1.25 billion corporate debt refinancing to reduce cash fixed charges from over $130 million to under $100 million annually.
• Segment Highlights: Transtar expects impact from Nippon's U.S. Steel acquisition; Long Ridge anticipates higher EBITDA with gas sales and capacity revenues; Jefferson has new contracts; Repauno has Phase 2 financing and LOIs in place.

Segment Performance

• Transtar: Q2 2025 revenue was $42.1 million with adjusted EBITDA of $20.7 million. Compared to Q1 2025, revenue was $42.6 million and adjusted EBITDA was $19.9 million. Carloads, average rates, and revenues were largely unchanged.
• Long Ridge: Q2 2025 EBITDA was $23 million, up from $18.1 million in Q1. Power plant capacity factor was 83% due to a 14-day maintenance outage. Expect annual run rate EBITDA of $160 million by end of Q3 2025 with gas sales commencing in August.
• Jefferson: Q2 2025 EBITDA was $11.1 million, up from $8 million in Q1. Brought 4 storage tanks into service and has $20 million of incremental annual EBITDA commencing in the second half.
• Repauno: Completed tax-exempt financing for Phase 2. Construction underway. Has contracts and LOI for 71,000 barrels per day and $80 million of annual contracted EBITDA.

Guidance

• Expect to consummate the Wheeling acquisition in August 2025, with regulatory approval expected by end of 2025. Target $200 million annual EBITDA for the combined rail business by 2026.
• Long Ridge expects annual run rate EBITDA of $160 million by end of Q3 2025.
• Repauno's Phase 2 transloading project is expected to start generating EBITDA in Q4 2026.

Risks

• Regulatory approval for the Wheeling acquisition is a potential risk, though it's a common process in the freight rail sector.
• Execution risks related to integrating the Wheeling and Transtar businesses, including implementing cost savings and achieving revenue targets.
• Construction timelines and potential delays for Repauno's Phase 2 and Phase 3 projects.

Q: Congrats, Ken, on continued execution on the Wheeling transaction. Can you talk a little bit more about the synergies of putting Transtar and Wheeling together?

A: Yes, we have experience in rail integration. Expect $20 million annual savings with a long list of discrete items, and feel confident in realizing these savings in 6-12 months.

Q: Greg Lewis on Long Ridge EBITDA bridge. Can you talk about what's in the $70 million and what's not?

A: The bar chart shows locked-in EBITDA. Long Ridge has dynamic EBITDA with capacity revenues and gas sales, with more to be locked in over time.

Q: Brian McKenna on Repauno Phase 3 permitting.

A: Permit for Phase 3 expected by Sept 30, with construction on Phase 2 on track and expected to be operational in Q4 2026.

Q: Giuliano Bologna on future focus.

A: Focus on freight rail M&A, with potential to monetize other assets once stabilized and continue growing the freight rail segment.

Q: Brian McKenna on preferred stock cash flow.

A: Preferred stock is noncash pay, allowing significant excess cash flow to the holding company after debt service, with minimal growth capital needed at the rail level.