Hello, and welcome to FTAI Infrastructure Third Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers presentation there will be a question and answer session. I would now like to hand the conference over to Alan Andreini, Investor Relations. You may begin.

Thank you, Towanda. I would like to welcome you all to the FTAI Infrastructure Third Quarter 2024 Earnings Call. Joining me here today are Ken Nicholson, the CEO of FTAI Infrastructure; and Scott Christopher, 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.

All right. Thank you, Alan. Good morning, everyone and welcome to our third quarter 2024 earnings call. For the call today, I'll be referring to the earnings supplement, which you can find posted on our website. Before getting into the financials, I'm pleased to report that our Board has authorized a $0.03 per share quarterly dividend to be paid on November 19 to the holders of record on November 12. Now on to the results. We recorded adjusted EBITDA of $36.9 million in the third quarter, a new quarterly record, up 8% from the second quarter of 2024 and up 50% year-over-year from the third quarter of 2023. We're pleased with the results, but we're even more excited about the opportunities that lie ahead. The third quarter was significant in terms of the momentum we established across our companies, with a number of events positioning us for substantial growth next year and beyond. Across our portfolio, we now have line of sight under executed contracts and commitments, representing approximately $70 million of incremental annual EBITDA, which when combined with our current run rate, represents total company annual EBITDA of approximately $220 million. The pipeline for new business is as strong as ever. Today, we are pursuing more new business opportunities than at any time since the spin-off of our company. If we're successful in converting these opportunities into contracted business, we estimate annual EBITDA potential in excess of $300 million. These estimates exclude the impact of any new investments or acquisitions we may act on, such as tuck-in acquisitions at Transtar or data center developments at Long Ridge. In terms of the highlights of each segment, Transtar delivered another strong quarter posting $21.1 million of adjusted EBITDA. Carloads and rates for the quarter held steady while third-party revenue continued to grow. Our focus for Transtar is to maintain organic EBITDA growth in the range of 15% annually and drive further value creation through accretive investments and acquisitions. We continue to actively pursue a number of acquisition opportunities and have added resources to the M&A team to ensure we are well positioned to act on opportunities as they arise. At Jefferson, EBITDA was $11.8 million for the quarter. Construction of our two contracted projects is proceeding on-budget and on-time for revenue service commencing in the spring and summer of 2025. Once operational, these two projects will contribute a total of $20 million of annual EBITDA under 5-year and 15-year terms. During Q3, we also entered into advanced negotiations on a number of projects involving volumes of both conventional and renewable products. These new business opportunities, if successfully contracted, represent another $60 million of annual EBITDA at Jefferson. At Repauno, the third quarter was pivotal with the execution of our first long-term contract for our Phase 2 transloading system. With the first contract in hand, we have commenced construction of the system and are in active discussions with several additional parties for the remainder of the system's capacity. We plan to raise all financing for Phase 2 construction in the tax-exempt debt markets in the coming months and the commercial landscape is extremely favorable, positioning us to have multiple contracts in place by year-end. Finally, at Long Ridge, we generated $11.1 million of EBITDA for the quarter, reflecting a nearly perfect capacity factor of 99%. I'll talk about our upcoming financing plans at Long Ridge shortly, but suffice to say we have ambitious plans for Long Ridge in the coming quarters and believe the asset has tremendous upside potential. On to the balance sheet. We had total debt of $1.5 billion at September 30; $567 million of debt was at the corporate level, while the rest of our debt was at our business units. Transtar continues to be completely debt-free, while approximately $925 million of debt was at Jefferson and $44 million was Repauno. We're planning a number of accretive debt financings in the coming months and I'm going to briefly talk about each. First, at Repauno, we will issue $300 million of low-cost tax-exempt debt to fund Phase 2 construction. The financing is slated to be launched in November and should close in December. We'll fully fund all required capital needs. Second, at Long Ridge, we're preparing to refinance existing debt, reducing our overall fixed charges and providing significantly more flexibility. In conjunction with the Long Ridge financing, we plan to also convert our existing power sale hedges into new arrangements that reflect the higher price received for the power we generate, resulting in higher cash flow at Long Ridge. To explain this opportunity more specifically, at Long Ridge, we sell power today under a series of financial contracts or hedges that we entered into at the time we started construction and that were required to arrange the initial debt funding to build the power plant. Those hedges are still in place today and are set at a price equal to approximately $28 per megawatt hour, a figure well below current market prices. In conjunction with the refinancing of our existing debt, we have an opportunity to reset the price of power by entering into new hedges closer to current market prices. Depending upon the final financing terms and pricing of the new power hedges, we anticipate the financial impact will be substantial. Our goal is to consummate the financing in new power hedges prior to year-end. Finally, upon completion of the Repauno and Long Ridge financings, both of which we expect to be accretive and credit-enhancing, we plan to refinance our corporate bonds and existing preferred stock to reduce fixed charges and increase cash flow after debt service for common shareholders. I'm going to talk through the detailed results at each of our segments and then I will plan to turn it over for questions. Starting with Transtar on Slide 7 of the supplement, Transtar posted revenue of $44.8 million and adjusted EBITDA of $21.1 million in Q3 compared with revenue of $45.6 million and adjusted EBITDA of $22.1 million in Q2. Carload volumes and average rates held steady for the quarter and we expect the environment for volumes and rates to remain strong for the remainder of the year. Operating expenses were also stable as fuel costs and other material costs were largely unchanged for the quarter. Third-party customer activity continues to grow with our railcar repair facility in Pittsburgh and new transloading locations all ramping up. At our transload facility in Michigan, we're completing an expansion this quarter to take the number of car slots for transloading from 15 to 90, as initial customer demand for truck-to-rail transshipments has exceeded our existing capacity. All in, we're currently expecting fourth quarter EBITDA to come in higher than the third quarter EBITDA and anticipating maintaining a roughly 15% organic growth rate next year, with incremental growth driven by opportunities as they arise. Now on to Jefferson. Jefferson generated $19.7 million of revenue and $11.8 million of adjusted EBITDA in Q3 versus $21.2 million of revenue and $12.3 million of EBITDA in Q2. Reduced volumes for the quarter were a result of lower refined products exports, as Exxon performed maintenance at one of their Beaumont production units, as well as fewer crude oil trains, which we now expect to receive in Q4. Lower volumes had little impact on revenue as all of our contracts contain minimum volume requirements, which mitigated most volume shortfalls. We expect throughput in the fourth quarter to return to over 200,000 barrels per day. Our two contracts, representing $20 million of incremental annual EBITDA, will commence in the spring and summer of next year, and we are currently in late-stage negotiations for additional contracts with multiple parties to handle conventional crude, refined products and renewable fuels. If we're successful in converting these opportunities to business wins, we'll post annual EBITDA in excess of $100 million, far exceeding our prior targets. Now, on to Repauno. We signed our first contract for our Phase II export system during Q3 and we expect to execute several additional contracts during the fourth quarter. Construction of the Phase II system has commenced, assuming full utilization and rates consistent with those already executed. Phase II can contribute $60 million to $70 million of annual EBITDA once complete. The total estimated construction costs of $300 million will be funded in the tax-exempt market as I described earlier. In the current capital markets environment, we're expecting interest rates in the range of 5% to 6%, making the Phase II project highly accretive to the equity value for Repauno. While Phase II remains our current priority, we're excited about the advancement of the next phase at Repauno, including the development of additional underground storage for which we expect to complete permitting in the months to come. Finally, closing out with Long Ridge. Long Ridge generated $11.1 million in EBITDA in Q3 versus $8.8 million in Q2. As I described, the power plant capacity factor was 99% for the quarter, while gas production continued to be managed down during the current lower gas price environment. We're advancing a number of developments that have the potential to significantly increase EBITDA and cash flow at Long Ridge. The recent capacity auction results take effect in June next year and represent a $32 million increase in annual revenue and EBITDA, or $16 million for our 50% share. All indications are that capacity pricing will remain at higher levels for the years to come, driven both by the anticipated surge in demand for power by hyperscalers, as well as mandated retirements of coal-fired power plants. Higher capacity revenue, together with the higher power sale revenue related to our previously described refinancing, will transform the cash flow profile and value proposition at Long Ridge. Meanwhile, we continue to advance a number of initiatives including the upgrade of the power plant to 505 megawatts and behind-the-meter projects, including negotiations with data center developers. Based on the current state of discussions, we anticipate entering into one or more transactions for data centers at Long Ridge during the first half of 2025. To wrap up, we're pleased with the quarter and excited about the remainder of 2024 and the 2025 year ahead. Now, I will turn the call back to Alan.

Thank you, Ken. Towanda, you may now open the call to Q&A.

Our first question comes from the line of Giuliano Bologna with Compass Point. Your line is open.

Hello. Good morning and congratulations on all the new initiatives you're working on; it seems like there has been a lot of progress in the last couple of quarters. As a first question, I'm curious if you can expand on the Long Ridge financing that you're discussing. Also, could you provide some insight into where the new contracts are priced? It seems that all the potential growth here is in addition to the $20-plus million a quarter and $80-plus million annualized EBITDA that you're already referring to in the supplement. I would like to understand the financing structure and what the potential upside could be.

Yes, absolutely. Good morning, Giuliano, and thanks for the question. Yes, you're right. It will be meaningfully accretive to the cash flow generation and what it would report for its 50% share. Just to give you some context, as I said, when we first started construction of the Long Ridge plants, we raised $600 million of debt to fund construction. And with that debt, we entered into power sale hedges to fix revenue and enhance credit as part of requirements under the debt agreement. As I described, those swaps were entered into at $28 per megawatt. Today, pricing is closer to $42 per megawatt. That price changes every day, but it's been steady in the low 40s for a number of weeks now. Assuming we enter into new swaps at that $42 per megawatt hour level, the incremental EBITDA at Long Ridge is approximately $50 million annually, which is pretty significant. There is a cost to terminating the existing swaps, and so we would incur more than the refinanced amount of $600 million to fund the termination cost, but it is a highly accretive transaction. The incremental EBITDA over time is well in excess of the incremental cost of financing in terminating those swaps. So it is a very financial attractive transaction. I suspect the new debt will be placed between now and the end of the year. Isolation will also reduce just the overall cost of borrowing. Our existing debt today has a high 8 handle on it on a blended basis. And we think we can be in the low 8s, if not the high 7s on a pro forma basis. So we expect that financing to be very accretive.

That's very helpful. I appreciate that. Now, regarding the holding company level, your holdco debt has obviously performed much better since it was established years ago. I'm curious about your thoughts on refinancing the 10.5% holdco notes today.

Yes. I think if we did a refinancing right now today, we could refinance with a 7 handle. Our bonds today have a 10.5% coupon, and our existing preferred stock is at 12%. So if we can refinance in the 7s, that in and of itself, that's extremely attractive. I think we do even better if we bring any transaction immediately after the Repauno and Long Ridge transactions are behind us because those are independently credit-enhancing to the whole story. So that's our plan. The sequencing of the three transactions of Repauno and Long Ridge as soon as humanly possible, to be followed by the refinancing immediately thereafter.

That's very helpful. I appreciate it. And congrats on all the progress working on all the different assets. And I'll jump back in the queue.

Thank you. Please standby for our next question. Our next question comes from the line of Brian McKenna with Citizens JMP. Your line is open.

Thanks. Good morning everyone. So I had a few questions on Transtar. First, do you have any updates on the U.S. Steel transaction from year-end? And just any updated thoughts on the potential implications here?

Hey, Brian, good morning. I'll start by just saying it's obviously uncertain as to whether Nippon gets the final approval. And I'm going to get to our view on that in just a second. That said, I can't tell you it won't have a material impact on Transtar. One way or the other, I would say, it's slightly better for us if Nippon is approved because they intend to invest significantly in the Pittsburgh, Mon Valley complex. And so that's obviously a good thing for Transtar. But at the end of the day, that transaction itself, we don't expect it to be terribly material or have meaningful downside to Transtar in the event Nippon is not approved. I am optimistic about Nippon being approved to close on the acquisition. I'm not sure if you saw, but just a few weeks ago, the labor unions that have been more difficult supported and finally recommended that the government approved the Nippon transaction. There were a fair number of headlines around negotiations with the unions, and it sounds like support of the union is now in hand. So that’s a big development. My understanding is, at this stage, since approval is slotted for some time in December, and that's what we're expecting, a decision is set for December. And if I had to guess, as I said, we're optimistic about it. In the event, Nippon were not approved, we don't think it will have a material impact on business at Transtar.

Yeah. Okay. Got it. That's helpful. And then I guess a follow-up on Transtar as well. You've clearly been talking about the potential for M&A in and around Transtar. So where do things stand on this front? And what's your expectation around the timing of any transactions? Is there a way to think about the potential accretion from a transaction? And then ultimately, how additive could some of this M&A be relative to the 50% annual organic growth target you've laid out?

It could be significant. We are continually exploring transactions. I can tell you that we've noticed an uptick in market activity. Currently, we are evaluating three opportunities; two of these are relatively smaller, generating between $5 million and $15 million in annual EBITDA, while one is larger. We are at an intermediate stage in those processes. A couple of them are negotiated deals, and one is in a more competitive setting. This will certainly be significant. It aligns with our strategy at Transtar, which serves as a strong platform for future acquisitions and is integral to our business plan. These are businesses; freight rail portfolios typically trade at a 15x EBITDA multiple, a well-recognized figure in the M&A arena. As Transtar broadens its revenue through external investments and acquisitions, I believe we will move toward that mid-double digit multiple. Just to illustrate: acquiring $50 million of EBITDA, taking total EBITDA to $150 million, and applying a 15x multiple, without leverage, creates substantial value. We have owned this business for three years now, which has consistently experienced over 15% annual EBITDA growth rates. I believe this organic growth will persist for several more years; however, M&A will be transformative for Transtar regarding our value proposition. We are highly committed to this initiative.

All right. That’s great. Appreciate it. I'll leave it there.

Thank you.

Thank you. Our next question comes from the line of Sherif Elmaghrabi with BTIG. Your line is open.

Hey, good morning. Thanks for taking my question. First with Jefferson. The $20 million of EBITDA from new contracts next year, could you unpack what contracts are included in that and what investment remains to get them across the line?

Yes. Good morning, Sherif. Happy to do that. Two contracts: The first is a contract for handling crude oil. It's a five-year contract with one of our two major refineries that commences on April 1 of next year, generating about $8 million of annual EBITDA. So that's $8 million of the $20 million. The second contract is with a global major ammonia producer, and it's an ammonia export ammonia transloading contract. It's a 15-year deal that commences July 1 and represents a minimum of $12 million of EBITDA annually with some escalators over the 15-year contract term. It's a great, great contract. Both projects are fully funded. We raised the money in the tax-exempt markets in the second quarter. They are on time and on budget. I don't see any risk of delay at this stage. We're pretty well advanced with both projects. So it's just a matter of completing the construction and then bringing the contracts online.

That's helpful. And then on Long Ridge, what is GE's role in the operating, if any? On their call, they mentioned a growing service backlog, and I'm wondering if there's a lead time associated with getting that into the queue, especially given we could see a data center contract in the first half of next year.

Yes, we purchased the technology from GE. There is no mechanical modification required for the turbine, which can currently generate 505 megawatts. At present, the turbine operates at 485 megawatts due to software that manages power generation. The only change needed is a software update, which we could implement in a day, pending regulatory approval for the additional 20 megawatts. There are no extra costs involved, just the reprogramming of the software to enable the turbine to produce 505 megawatts. Aside from utilizing GE's technology, we do not depend on anything from GE for this upgrade.

Got it. Thanks for taking my question.

Thank you.

Thank you. Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to Alan.

Thank you, Towanda, and thank you all for participating in today's conference call. We look forward to updating you after Q4.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.