FTAI Infrastructure (FIP) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q2 was $45.9 million, up 30% from Q1 2025 and up 34% from Q2 2024 [18] - The company expects annual EBITDA to exceed $450 million, including the acquisition of Wheeling and Lake Erie Railway [19] Business Line Data and Key Metrics Changes - TransStar reported adjusted EBITDA of $20.7 million, up 4% from Q1 2025 [20] - Long Ridge generated $23 million of EBITDA in Q2, up from $18.1 million in Q1 [21] - Jefferson's EBITDA was $11.1 million, up from $8 million in Q1 [22] Market Data and Key Metrics Changes - The Wheeling and Lake Erie Railway generated total revenue of approximately $150 million for the latest twelve months [7] - The company expects $20 million of annual cost savings from the Wheeling acquisition, primarily from network efficiencies [11] Company Strategy and Development Direction - The company announced a major acquisition of Wheeling and Lake Erie Railway for $1.05 billion, expected to transform its freight rail segment [6] - Plans to refinance the corporate balance sheet to increase free cash flow and provide flexibility for future growth [6] - The company aims to grow its freight rail segment and may consider monetizing other assets to focus on rail acquisitions [68] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving $200 million of targeted annual EBITDA from the combined rail companies by 2026 [10] - The company anticipates significant growth in revenues and EBITDA in 2025 due to the Wheeling acquisition and contracted business [19] - Management noted a mild pickup in M&A activity in the rail sector and sees opportunities for further acquisitions [44] Other Important Information - The company completed financing for its Phase II transloading project at Repauno, issuing $300 million of tax-exempt debt [22] - The company is actively pursuing additional acquisitions of complementary railroads to diversify revenue and commodity base [24] Q&A Session Summary Question: Can you talk about the synergies of putting TransStar and Wheeling together? - Management highlighted the expected $20 million of annual savings from the integration, emphasizing the strategic fit and immediate efficiencies [33][34] Question: What are the implications of the Wheeling acquisition on diversification? - The acquisition is expected to significantly enhance diversification, with TransStar's reliance on U.S. Steel decreasing from 85% to one-third of total business [36][38] Question: Are there continued opportunities for consolidation in the rail space? - Management noted a mild pickup in M&A activity and expressed confidence in pursuing additional acquisitions [44] Question: Can you elaborate on the $70 million EBITDA opportunity at Long Ridge? - Management clarified that the $70 million includes contracted revenue and potential future growth from data center opportunities, which are not yet included in the bar chart [48][49] Question: What is the status of Phase III at Repauno? - The permitting process is expected to be finalized by September 30, with a total cost of about $200 million and a projected payback period of two years [55] Question: How will the $1 billion of preferred stock impact cash flow? - The preferred stock will not trap cash, allowing significant excess cash flow to be distributed to the holding company after debt service [78]