FTAI Infrastructure Q1 2026 Earnings Call - Long Ridge Sale Drives Deleveraging and Rail M&A Focus

Jason, Conference Specialist: Good morning, welcome to the FTAI Infrastructure first quarter 2026 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal conference specialist by pressing the star key followed by 0. After today’s remarks, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your touch-tone phone. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Alan Andreini of Investor Relations. Please go ahead.

Alan Andreini, Investor Relations, FTAI Infrastructure: Thank you, Jason. I would like to welcome you all to the FTAI Infrastructure earnings call for the 1st quarter of 2026. Joining me here today are Ken Nicholson, the CEO of FTAI Infrastructure, and Buck Fletcher, the company’s CFO. 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 adjusted EBITDA. 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 Ken, I would like to point out that certain statements made today will be forward-looking statements, including regarding future earnings.

These 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 SEC. Now I would like to turn the call over to Ken.

Ken Nicholson, Chief Executive Officer, FTAI Infrastructure: Thank you, Alan. Good morning, everyone. Welcome to the call. As we typically do, we’ll be referring to the earnings supplement, which you can find posted on our website. Before we get into the quarterly financial results, we’re going to kick things off with a discussion of Long Ridge and provide some details on the sale transaction that we announced last week. I’m going to briefly walk through the transaction terms. Then I’ll talk a little bit about why we believe it to be an important and highly accretive event for our company. Just over a week ago, we signed an agreement to sell Long Ridge to MARA Holdings for an aggregate transaction value of $1.52 billion. We expect to close the transaction in the third quarter of this year after receiving required regulatory approvals. There are no other material conditions to closing.

Existing Long Ridge debt will either be repaid or assumed by the purchaser, bringing expected net proceeds to FIP in excess of $300 million. We’re pleased with the outcome of the sale process and believe Mara is a great fit as the next owner of Long Ridge. I want to recognize and thank Robert Wholey and the Long Ridge team for doing a remarkable job throughout the entire lifecycle of our investment, developing the business plan, building the power plant, acquiring gas reserves, and turning on and maintaining operations to ultimately create what today is one of the most efficient and profitable power assets in the country. The transaction value reflects the uniqueness of the Long Ridge asset and results in a meaningful economic return for FIP over the life of our investment. More importantly, the sale of Long Ridge will allow us to accomplish two key goals.

First, deleveraging. We plan to use the bulk of the net proceeds received at closing to repay higher cost debt at our parent level, resulting in lower interest expense and higher free cash flow going forward. Second, increasing our focus on our core freight rail business. We expect 2026 to be an active year for our railroad, with growth driven internally by integration of Transtar and the Wheeling, and externally as we pursue a number of acquisition opportunities that leverage our existing platform. Having higher cash flow and additional debt capacity to fund acquisitions puts us in a good position to make accretive investments in the rail sector in the near future. I’m going to flip to page 4, and we’ll talk a little bit more about deleveraging.

As you may recall, our existing corporate debt contains terms allowing for repayment with proceeds from the Long Ridge sale to be made at a lower premium than would otherwise be due if funded with other sources of cash. With less premium required, we’re able to repay more principal. In total, we expect to reduce parent debt by at least $300 million and reduce our parent level interest expense by about $30 million per year, meaningfully improving our leverage metrics. We expect our leverage metrics to continue to improve over the next several quarters as we realize more integration efficiencies at our rail business and bring online 1 new business at our terminals, especially Repauno. Turning to slide 5. With the deleveraged balance sheet and higher free cash flow generation, we expect the bulk of our long-term growth going forward to be driven in the rail sector.

We have an enormous opportunity set in front of us in the North American freight rail space and an exceptional platform from which to grow. We expect the remainder of 2026 to be a particularly active one for the rail sector M&A. We’re actively evaluating multiple opportunities and look forward to reporting back on our progress. While we expect our freight rail business to emerge as the dominant source of earnings for us going forward, we’re also excited about the future of our two terminals and are focused on ensuring that both Jefferson and Repauno each reach their earnings potential with a view to monetizing both assets in the future. Jefferson is currently engaged in conversations with customers for new business, representing at least $50 million of additional annual EBITDA.

Repauno similarly is expected to complete its phase two expansion at the end of this year and start revenue service shortly thereafter. Now we’ll go into the results for the quarter. Adjusted EBITDA for Q1 came in at $70.6 million, up materially from $35.2 million for the first quarter of 2025. Given the investment activity during last year-over-year comparisons are less meaningful, but I can say that the quarter was a strong one that reflected great progress across our portfolio. At Long Ridge, we took an outage for 25 days that impacted revenues and EBITDA for the quarter. The outage was planned, but longer than typical as it related to inspection of the hot gas section of the power turbine, which requires more time, but is only required to take place every four to five years.

The inspection resulted in a clean bill of health, but did result in lost revenues for the quarter. Excluding the impact of the outage or consolidated Q1, EBITDA would have exceeded $80 million for FIP and represented a new record. It’s important to note that our Q1 results do not reflect a tremendous amount of activity across our business that we expect to contribute to EBITDA in the future. We provide some detail around some of those specific items in the math on the right side of slide 7. Each of the lighter blue shaded bars represents specific items that require no incremental capital and are either already contracted or otherwise represent cash flow streams that we have confidence in. Importantly, the bar chart does not include any organic growth or new business wins that we believe could be material and also contribute to incremental EBITDA going forward.

I’ll quickly flip to slide eight and talk through the highlights at each of our segments. In our rail segment, adjusted EBITDA was $40.2 million in Q1, up 31% on an apples-to-apples basis versus the same quarter last year. Q1 was the first full quarter during which we had active control of the Wheeling, and we’ve already begun to realize a portion of our targeted integration savings. At Long Ridge, EBITDA for the quarter was $26.4 million. As I mentioned, without the 25-day planned outage, we estimate that EBITDA for the quarter would have approached $40 million. Gas production for the quarter continued above amounts required to fuel the power plant, so we also generated revenues from excess gas sales during the quarter.

At Jefferson, EBITDA for Q1 was $14.4 million and included a full quarter of results from our new ammonia transloading contract. At Repauno, construction of our phase 2 transloading product continues to progress on plan. Once phase 2 is operational, which is planned for early next year, we expect Repauno to be capable of handling over 80,000 barrels per day of natural gas liquids, generating approximately $80 million of annual EBITDA. Moving to slide 9, our detailed capital structure. During Q1, we closed our new term loan of approximately $1.35 billion. The net proceeds were used to repay in full the initial loan we issued in connection with the acquisition of the Wheeling last year. The new term loan represents the only debt at our parent level and carries a coupon of 9.75% per annum.

As I mentioned, the loan is pre-payable at a reduced premium with proceeds of the Long Ridge sale. We expect the balance of the term loan to be approximately $300 million lower following closing of the sale. During the quarter, we received commitments for the refinancing of a little over $200 million of debt at Jefferson. The net result of everything is a stable balance sheet with no near-term maturities and a path for meaningful deleveraging in the coming months following the Long Ridge sale. Moving to slide 11. We’ll dig a little deeper into the results at each of our segments, and we’re gonna start with our railroads. We posted revenue of $85 million and adjusted EBITDA of $40.2 million in Q1, compared with pro forma Q1 2025 revenue of $79.3 million and adjusted EBITDA of $30.6 million.

Our actual reported results for last year exclude the results of the Wheeling, so we’re showing pro forma figures to demonstrate what revenues and EBITDA would have been if we include the Wheeling standalone results for last year. Growth versus last year was driven by a combination of revenue growth from both higher volumes and rates, as well as reduced expenses as a result of the initial impact of a large set of cost savings initiatives, which we started to implement in Q1. I will note that the first quarter is typically the softest quarter for our business, especially at the Wheeling, where volumes of aggregates and other construction materials always slow down during the winter months. We’re particularly pleased with our results for Q1. Flipping to slide 12. We’re off to a great start with the combination of Transtar and the Wheeling.

We expect the combination to result in 2 sources of financial gains. The first is cost savings, which we expect to impact our results in the near term, and the second is new revenue opportunities, which we expect to occur over the longer term. Cost savings fall into 2 primary buckets: personnel reductions, purchasing power savings, and reduced overhead. In total, we’re targeting about $23 million of annual cost savings, of which $10 million of annual savings was enacted in Q1, representing $2.5 million of EBITDA for the quarter. The additional $13 million of annual cost savings should be in effect in the relatively near term. On the revenue side, we continue to grow the list of opportunities now that the 2 railroads are operating as one. Additional propane car loads are planned to start early next year when Repauno’s phase two commences operations.

Additional car loads of propane should be substantial given the volumes originate on the Wheeling and move to Repauno. The pipeline of additional opportunities is substantial. In total, we’re estimating in excess of $50 million of incremental annual EBITDA potential from the various new revenue sources manifesting in the future. I’m gonna shift to slide 13, talk about Jefferson. At Jefferson, we reported $27.3 million of revenue and $14.4 million of adjusted EBITDA in Q1 versus $19.5 million of revenue and $8 million of EBITDA in Q1 of last year.

Volumes at the terminal averaged 275,000 barrels per day, driven by the startup of the new ammonia export contract, which commenced in late November last year, as well as increased volumes of inbound crude oil during the quarter. To date, inbound crude volumes have been unaffected by the conflict in the Middle East and the blockage of the Strait of Hormuz, as crude destined to Jefferson has originated largely from Saudi west coast terminals. We continue to see crude volumes steady so far in the second quarter. We’re negotiating new contracts to expand our business at Jefferson. The largest opportunities we are pursuing are with existing customers and involve expansions of the services we currently provide to them. Our customers have been investing heavily in their nearby facilities to increase production and market reach, which would require more products to flow through Jefferson.

We hope to execute on all 3 opportunities during this year and commence revenue shortly thereafter. In total, the 3 opportunities represent an excess of $50 million of annual incremental EBITDA and utilize existing assets requiring little to no incremental investment CapEx. Now shifting to Repauno on slide 14. Our primary focus at Repauno is on phase 2, where construction continues to proceed as planned toward our goal of completion by the end of 2026, with revenue commencing shortly thereafter. We have long-term contracts in place for a substantial portion of our capacity and are seeing high demand for the remaining available space. With the disruption in the Middle East, spreads for propane exports are extremely attractive. Based on conversations we’re having, we continue to expect to commence revenue service in early 2027 at full capacity.

In the aggregate, we can handle a total of just over 80,000 barrels per day, representing $80 million of annual EBITDA for the combined assets of phase 1 and phase 2. Finally, on slide 15, we’ll briefly close out with Long Ridge. Given the pending sale, I’m only going to hit the highlights for the quarter. Adjusted EBITDA came in at $26.4 million in Q1 versus $18.1 million in Q1 of last year. Power plant capacity factor of 73% was impacted by the 25-day planned outage that I described earlier. Away from the outage, the fundamentals continue to be strong, with power prices and capacity revenue continuing at historically high levels. We averaged a little more than 86,000 MMBtu per day of gas production versus the little more than 70,000 required at the plant.

We expect to maintain production significantly in excess of plant requirements and generate continued revenues from excess gas sales in the quarters ahead. So far in Q2, Long Ridge is off to a great start with capacity factor at 100% currently and gas production continuing in excess of our plant’s needs. I’m going to conclude our remarks there, and I will now turn it back to Alan.

Alan Andreini, Investor Relations, FTAI Infrastructure: Thank you, Ken. Jason, you may now open the call to Q&A.

Jason, Conference Specialist: Thank you. We will now begin the question-and-answer session. To ask a question, you may press star 1 on your touch-tone phone. If you’re using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star 2. Our first question comes from Brian McKenna from Citizens. Please go ahead.

Brian McKenna, Analyst, Citizens: Okay, great. Thanks. Good morning, everyone. On the regulatory approvals for the Long Ridge sale, can you walk through exactly what these are? Do you have any sense when the transaction will close in the third quarter? Are we talking the first half of the quarter or the second half of the quarter, et cetera?

Ken Nicholson, Chief Executive Officer, FTAI Infrastructure: Yeah. Good morning, Brian. Really just one approval, FERC. There’s a requirement to file with FERC. FERC needs to approve the change of control. That filing kicks off the process. I think that filing is imminent. It’s possible the filing is made today, otherwise early next week. That’ll get things started. The FERC regulatory process is not a exact science. It’s not a. There isn’t a set number of days per se, but we don’t see any reasons why it should be a prolonged process. You know, I would guide folks toward the middle of the third quarter for regulatory approval. Obviously, we would. We’re going to be using these proceeds to repay debt, the sooner we close, the more interest we save on the debt we repay.

We’re very focused on a speedy closing, and I know our friends at Mara Holdings share that view. Hopefully, if we can do anything to accelerate closing, we will. Otherwise, yeah, we feel pretty comfortable with the mid-third quarter target.

Brian McKenna, Analyst, Citizens: Okay, that’s helpful. Thanks, Ken. In terms of the Holdco debt pay down, the plan is to pay down $300 million of debt there. It looks like there should be another $50 million or so of remaining cash from the transaction. I guess, is my math correct there? If you do have, you know, call it $40 million-$50 million of incremental cash, you know, what’s the plan for that? I guess, you know, related with the stock trading where it is, I mean, do you think about authorizing some kind of a buyback just to support the stock a little bit?

Ken Nicholson, Chief Executive Officer, FTAI Infrastructure: Yeah. Your math is correct. Final net proceeds will depend upon the timing of close, cash generated by Long Ridge between now and then, et cetera. Don’t have precision, science, but you’re right, there should be some excess cash. We can either use that to repay debt. We are permitted to just keep it on our balance sheet to fund acquisitions, and we’ve got a couple smaller situations that we think could be highly accretive in the rail space. We may choose to retain some of the cash to make those small investments. We have a handful of transaction fees as well that’ll crystallize at the moment of closing.

In terms of, you know, other uses for cash, look, I would just say we’re, of course, always evaluating the, you know, the various things we can do. We want to continue to grow the business. I still think the more likely use of proceeds is either to deleverage or otherwise invest accretively. Obviously everything’s on the table and, you know, we and our board are always considering, you know, different options.

Brian McKenna, Analyst, Citizens: All right. That’s helpful. I’ll leave it there. Thanks so much.

Ken Nicholson, Chief Executive Officer, FTAI Infrastructure: Thanks.

Jason, Conference Specialist: The next question comes from Craig Shere from Tuohy Brothers. Please go ahead.

Craig Shere, Analyst, Tuohy Brothers: Morning. Jefferson’s doing well, obviously, with the new contracts kicking in in November. The volumes are up, but it looks like the per barrel unit pricing is somewhat softening sequentially and even a tad year-over-year. Could you provide any color on that?

Ken Nicholson, Chief Executive Officer, FTAI Infrastructure: Hey, Craig. Yeah, good morning. There’s a lot in the mix there. What I can tell you is when you think about Jefferson’s different business lines for refined products, crude oil, and now ammonia, there are multiple contracts under which Jefferson provides those transloading services. I think a total of seven contracts that Jefferson has with various customers, in some cases with one customer with multiple contracts or different destinations or rail handling or ship loading or whatever it may be. What I can tell you is there’s certainly been no realized downward pricing for any particular contract or any particular, you know, product. I think what’s going on to affect those numbers is just a mix, a little bit more of a lower priced movement and a little bit less of a higher price moves.

For example, crude oil. We handle crude oil, it’s usually a higher rate because it requires more handling. Sometimes it requires steam unloading and blending, and that can be at a much higher rate than the refined products which flow more easily and we handle more volumes of, and so that’s usually a lower price point. That doesn’t mean one product conveys more or less margin. We may have a, you know, a lower rate for refined products, but it’s also a lot easier to handle, and so the margins in some cases may be better than crude oil, even though crude oil is a higher priced product. There’s a lot going on there. There has been no deterioration in price for any particular contract. It’s just a matter of mix.

Craig Shere, Analyst, Tuohy Brothers: Gotcha. Maybe you could elaborate on the next steps for commercializing Repauno phase 3 underground storage and potentially monetizing that business. Would it be reasonable to still think that could be accretively divested by mid-next year?

Ken Nicholson, Chief Executive Officer, FTAI Infrastructure: Yeah, I think so. Yeah. You know, there’s plenty going on with Repauno and the natural gas liquids, you know, global trade market. Spreads are as attractive as I think we’ve seen them for a number of years. There are supply issues and terminal loading issues in the Marcellus and Utica for liquids that would be destined to Repauno, but there is significant demand at very attractive pricing. Recently, just, you know, with the conflict in Iran, we’ve had increased dialogue with a number of large, you know, NGL producers. We like that, of course. That bodes very well for phase three.

I didn’t talk at all about phase III, just in our prepared remarks because at the end of the day, phase II is really our core focus. You know, completing, it’s so important to Repauno, completing the construction, and, you know, starting to demonstrate the $80 million of annual EBITDA. We in management are singularly focused on phase II. Phase III is continuing. That’s not to say we’ve, you know, we’ve slowed down at all. I think in order for phase III to be, you know, fully financed, fully committed, fully contracted on the construction work, we wanna have all the commercial contracts in place. We’re in a good market environment to do that.

frankly, in terms of the monetization of the asset, yeah, I think next year is certainly doable. It’s been important to us, and we think any buyer would really wanna see phase II complete and operating and, you know, hence again, the reason why we’re so focused on phase II. Yeah, I feel pretty comfortable with next year being a good year to, you know, think about monetization of Repauno and, you know, quite possibly Jefferson.

Craig Shere, Analyst, Tuohy Brothers: Great. Thank you.

Jason, Conference Specialist: The next question comes from Gregory Lewis from BTIG. Please go ahead.

Gregory Lewis, Analyst, BTIG: Yeah. Thank you. Good morning, and thanks for taking my question. I did wanna go back to Jefferson. You know, you kind of mentioned the incremental contract awards. You know, how should we think about the scaling of that EBITDA from those existing service contracts that are gonna start to ramp here?

Ken Nicholson, Chief Executive Officer, FTAI Infrastructure: There are a number of existing, you know, customers who basically wanna expand the volumes that they put through Jefferson. Particularly in this market, folks are considering, you know, alternate sources for crude, additional markets for refined products. The scale is look pretty significant. I mean, we’re moving 275,000 barrels per day. You know, with the contracts that we are discussing with customers, the expansions of business, we’re targeting total volumes of an excess of 500,000 barrels per day. We have capacity, operational capacity at Jefferson to probably do closer to 600,000 barrels per day. You know, we’re pretty capped out with the existing infrastructure at that number. You know, at 500,000, we can handle all of that volume.

It’s getting to the point where there would likely be incremental capital beyond that. you know, we’re running at just under a $60 million annual EBITDA run rate currently. you know, an additional $50 million between 3 primary new pieces of business, you know, takes us over the $100 million mark. That’s been a kind of an emotional level for Jefferson now for quite some time, and I’m really hopeful we can get all 3 of these expansions done this year.

Gregory Lewis, Analyst, BTIG: Oh, wow.

Ken Nicholson, Chief Executive Officer, FTAI Infrastructure: put Jefferson in a place where we can hit those numbers.

Gregory Lewis, Analyst, BTIG: Okay, great. Yeah, thanks for that. I did have a question on the relationship with U.S. Steel Transtar, realizing that, I guess, 2 weeks ago, U.S. Steel announced a major CapEx initiative at their Arkansas facility. Just kind of curious how you’re thinking about that, realizing that currently I don’t believe we have exposure in that kind of little pocket, but just how you think about that incremental volume at U.S. Steel there maybe creating more opportunities across the U.S. Steel rail network.

Ken Nicholson, Chief Executive Officer, FTAI Infrastructure: Yeah. Yep, good noting that. Yeah, unfortunately, Arkansas is not one of the Transtar properties, but at the end of the day, the folks at Nippon committed a total of $11 billion in new projects. The Arkansas invest is about 2 of it, there’s another 9 to go. We’re pretty sure about 5 of that remaining 9 is gonna be focused on the Mon Valley and Pittsburgh and Gary Works. They, Nippon and U.S. Steel have announced a handful of projects at both the Mon Valley and Gary Works. They’re both a little bit smaller or involve refurbishing a blast furnace, not necessarily new construction.

You know, we feel pretty confident that there are, you know, some additional projects coming that will be very good news for Transtar, you know, at some point during the course of this year. It’s a big commitment from Nippon and, you know, we’re of course eager. No, we won’t be benefiting from the Arkansas announcement, but I do think there will be some announcements coming that should be good news for us.

Gregory Lewis, Analyst, BTIG: No doubt. Super helpful. Thank Thank you very much.

Jason, Conference Specialist: The next question comes from Giuliano Bologna from Compass Point. Please go ahead.

Giuliano Bologna, Analyst, Compass Point: Good morning. Congrats on the performance and the announced sale of Long Ridge. Switch topics a little bit. You know, you’re obviously de-leveraging with the transaction, but until you know, sold Jefferson or Repauno, you know, how do you think you’d finance any incremental rail acquisitions?

Ken Nicholson, Chief Executive Officer, FTAI Infrastructure: You know, probably with incremental debt, I think it’d be the most efficient way to do it. You know, Brian asked earlier about maybe some incremental net proceeds and what we might use those for. There will be some cash from the Long Ridge transaction that could be invested into, you know, a rail acquisition. Otherwise, look, we’re repaying debt. That opens up new debt capacity. You know, I think it would be much more efficient for us, particularly, you know, where we’re trading right now to be an issuer of debt to make an accretive acquisition. I feel pretty comfortable we’ll have access to the capital we need for whatever acquisition opportunities come up at the railroad.

Giuliano Bologna, Analyst, Compass Point: That’s all good. Are you seeing a good flow of rail deals in the market now? I mean, because in the past, you kind of mentioned that rail deal flow, you know, tends to be episodic and go in waves.

Ken Nicholson, Chief Executive Officer, FTAI Infrastructure: Yes. Yes. Very definitely episodic. You know, there are. The stars are aligning, I would say. There are 3 things driving an increase in activity. 1 is, of course, you know, class 1 mergers, both pending and, you know, under, I would say, you know, speculation. You know, when 2 class 1s get together, it’s pretty likely there are gonna be divestitures of various lines, and that opens up a set of opportunities, carve-outs of short lines and regional lines. You know, I think that’s gonna stimulate some M&A activity. 2, there was a lot of activity where private equity firms, institutional investors, you know, bought into the rail sector 5 to 10 years ago. Most of those funds have 10-year lives.

Many of them are approaching, you know, their mandated monetization time frames. We expect a number of assets held by institutional investors to come to the market over the next, call it 6 to 12 months. Finally, when you really think back, there are a number of large properties that are owned by individuals, very entrepreneurial individuals who’ve, you know, really established their ownership all the way back in the Staggers Rail Act of 1980 and, you know, 40+ years ago. They’ve owned these things for a very long time. They’re starting to think about, you know, what they wanna do going forward. Values have grown materially since they first, you know, entered the business.

We’re having dialogues with a number of just individual owners who, you know, are starting to think about it. I think those 3 dynamics are at play and, you know, I think we’re gonna have a nice wave of M&A opportunities here in the next 12 months.

Giuliano Bologna, Analyst, Compass Point: That’s very helpful. I appreciate it, and I will jump back into queue.

Ken Nicholson, Chief Executive Officer, FTAI Infrastructure: Thanks.

Jason, Conference Specialist: This concludes our question and answer session. I would like to turn the conference back over to Alan Andreini for any closing remarks.

Alan Andreini, Investor Relations, FTAI Infrastructure: Thank you, Jason. Thank you all for participating in today’s call. We look forward to updating you after Q2.

Jason, Conference Specialist: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.