Financial Data and Key Metrics - Adjusted EBITDA before corporate expenses for Q2 2024 was $41.8 million, up 15% YoY and 12% sequentially [4] - The company forecasts generating over $200 million of run-rate annual EBITDA by the end of 2024 and expects to exceed this in 2025 [6] - Total debt as of June 30 was $1.6 billion, with $564 million at the corporate level and the rest at business units [9] Business Segment Performance Transtar - Adjusted EBITDA for Transtar was $22.1 million in Q2, with steady carload volumes and record average rates of $667 per carload [6][10] - The company added new third-party customers and expects to add more in H2 2024, diversifying its revenue base [11] - Transtar is debt-free and has potential for acquisitions of short-line and regional rail assets [9][12] Jefferson - Jefferson generated $12.3 million in adjusted EBITDA in Q2, handling record volumes of 215,000 barrels per day [7] - Two long-term contracts commencing in 2025 are expected to contribute $20 million in annual EBITDA [14] - The company is negotiating additional contracts that could generate $60 million in annual revenue [14] Repauno - Phase 2 construction is set to begin in Q3 2024, with expected capacity for 75,000 barrels per day of natural gas liquids [15] - Phase 2 is projected to contribute $75 million in annual EBITDA upon completion, up from initial expectations of $40 million [15] Long Ridge - Long Ridge generated $8.8 million in EBITDA in Q2, impacted by scheduled maintenance in May [16] - Capacity auction results for 2025-2026 indicate a 10x increase in pricing, potentially adding $32 million in incremental EBITDA [16][17] - The company is engaging with multiple parties for on-site data center projects, leveraging its power generation capabilities [18] Market and Strategic Direction - The company is focused on owning core infrastructure in major markets with long-term contracted cash flows and growth opportunities [5] - Strategic initiatives include expanding third-party customer bases, developing new facilities, and pursuing accretive acquisitions [6][12][34] - The company is well-positioned to benefit from macro trends such as AI-driven power demand and energy transitions [5][17] Management Commentary on Operating Environment and Outlook - Management expects continued momentum in H2 2024, driven by new business wins and strategic initiatives [4] - The company is optimistic about the growth potential across all segments, particularly Transtar and Long Ridge [34] - The favorable commercial landscape and strong demand for power and infrastructure support the company's growth trajectory [17][18] Other Key Information - The company declared a $0.03 per share quarterly dividend, payable on August 20 [4] - Transtar's new railcar repair facility handled 816 railcars in Q2, with plans to introduce a second shift to increase capacity [11] - Jefferson completed a new financing in Q2, refinancing near-term maturities and funding construction projects [7][9] Q&A Session Summary Question: Transtar's third-party revenue growth - When acquired, Transtar's revenue was 95% from U.S. Steel, now below 85%, with a goal to reduce it to the mid-60s [20] Question: Transtar acquisition strategy - The company is focusing on short-line railroads with regional overlap and industrial switching lines, aiming to diversify revenue [22] Question: Repauno cavern approvals - Cavern permits are expected in H2 2024, with construction starting in 2025, adding significant value to Repauno [24] Question: Long Ridge capacity auction impact - The capacity auction results have increased negotiating leverage with behind-the-meter customers, including data centers [26] Question: Jefferson's new contracts - Two contracts commencing in 2025 will contribute $20 million in annual EBITDA, with no ramp-up period [28][29] Question: Balance sheet refinancing - The company is planning a refinancing in H2 2024 to reduce borrowing costs and increase flexibility, potentially leveraging Transtar [30][31] Question: Management's priorities - Top priorities include accretive acquisitions at Transtar and development opportunities at Long Ridge [34] Question: Long Ridge swaps and merchant power - Swaps have 3-5 years remaining, and the plant is technically a merchant plant, free to provide power to any customer [36] Question: Long Ridge data center backup power - Backup power costs are likely borne by the company, with flexibility in power management being a key advantage [38][39]
FTAI Infrastructure (FIP) - 2024 Q2 - Earnings Call Transcript