FTAI Infrastructure: American Hard Assets With Upside

Company Overview - FTAI Infrastructure (NASDAQ:FIP) is an asset manager focused on American rail, crude, and natural gas infrastructure assets, primarily in Texas, Pennsylvania, Ohio, and New Jersey [3] - The company was spun off from FTAI Aviation Ltd. in August 2022 to develop its rail and energy assets [3] - FIP operates four segments: Railroad Services, Ports and Terminals, Power and Gas, and Sustainability and Energy Transition, with the first three being the main contributors to revenue [3][5] Financial Performance - FIP is projected to generate approximately $200 million in EBITDA by Q2 2025, with an intrinsic value of $14 per share, considering potential project delays [2] - Total revenue is expected to grow from $320.5 million in 2023 to $478.2 million by 2026, with significant contributions from the Rails and Terminals segments [6] - The company anticipates a total EBITDA increase from $59.9 million in 2023 to $229.1 million by 2026 [6] Segment Analysis - The Railroad Services segment, Transtar, is the largest unit, consisting of six short-line freight operators and one switching company, with a focus on industrial and steel businesses [3][11] - The Terminals segment includes the Jefferson Terminal in Texas and the Repauno Terminal in New Jersey, with Jefferson Terminal expected to generate significant revenues from crude storage and throughput [3][12] - The Power and Gas segment operates a 485-megawatt natural gas-hydrogen power plant in Ohio, with potential for increased EBITDA through new agreements [4][15] Growth Opportunities - Management expects to achieve $30 million to $35 million in annual third-party revenue from Transtar, with an incremental $10 million per year thereafter [11] - Jefferson Terminal's expansion into hydrogen and ammonia export facilities is projected to enhance revenue streams, with commercial operations targeted for 2025 [14] - Long Ridge's potential behind-the-meter agreements could significantly increase EBITDA, with current contracts generating $40 million annually [15] Debt and Valuation - FIP's corporate debt is non-recourse, leaving Transtar debt-free, which provides a strong financial position for future projects [12] - The company has a low-cost debt structure, allowing for ample financing opportunities for new projects [13] - An estimated enterprise value of $2 billion reflects 85% of FIP's total present-day $2.4 billion enterprise value, based on a modest 2025 EV/EBITDA multiple of 10 [12]