FTAI Infrastructure Inc.

Good day, and thank you for standing by. Welcome to the FTI infrastructure fourth quarter 2025 earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Alan Andrini, Head of Investor Relations. Please go ahead.

Thank you, Shannon. I would like to welcome you all to the FTI Infrastructure Earnings Call for the fourth quarter of 2025. Joining me here today are Ken Nicholson, the CEO of FTI 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 reconciliation 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 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.

Okay, thank you, Alan, and 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. And I am going to get right into it starting on page three. Adjusted EBITDA for the fourth quarter was a new quarterly record coming in at $80.2 million, up from $70.9 million for the third quarter of 2025 and $29.2 million for the fourth quarter of 2024. The $80.2 million of fourth quarter EBITDA excludes a $9 million gain in the quarter from a write-up of one of our non-core investments in Clean Planet Energy. Since we don't necessarily expect that gain to continue in the periods ahead, we're excluding it for purposes of this discussion. For the full fiscal year of 2025, adjusted EBITDA was $232.3 million, up substantially from $127.6 million in fiscal 2024. Reflecting on the 2025 year, it was an extremely active one for FIPP, with many of the transactions we completed setting the stage for what we expect to be a highly productive 2026 ahead. It's important to note that as a result of the specific timing of closing of a number of investments during the year, our 2025 annual results reflect only a partial financial contribution from those events. In February, we purchased the 49% of Longridge that we didn't previously own and started reflecting 100% of Longridge's results. In August, we purchased the Wheeling and Lake Erie Railroad, a transformative transaction for our rail segment. And in November, we commenced activity under a new 15-year ammonia export contract at our Jefferson terminal. As a result of these events, we exited the year at an EBITDA run rate of just over 320 million annually, meaningfully higher than our reported figures. Flipping to slide four, I'll briefly talk through the highlights at each of our segments. In our rail segment, adjusted EBITDA was 41.3 million, with Q4 representing our first full quarter of ownership of the wheeling. We took active control of the Wheeling at the end of December and have begun to integrate its operations into our existing Transtar business. Of the total 41.3 million of adjusted EBITDA, 22 million was attributable to Transtar and 19.3 million was attributable to the Wheeling. I'll talk more about the Wheeling and our integration process here shortly, but we're thrilled with the Wheeling's early progress and the business continues to exceed our financial expectations. At Longridge, EBITDA for the quarter was $36.2 million, representing a new quarterly record. Q4 results included our planned October outage of 8.5 days, as well as an additional one-time outage of 19 days in December for steam turbine repair. We estimate that the additional outage impacted EBITDA by approximately $3.5 million for the quarter. Gas production for the quarter averaged approximately 105,000 MMBTU per day, also representing a new record for Longridge. The macro in the power space continues to be extremely strong, and we have been advancing several growth properties that should drive continued upside for the business in the years ahead. At Jefferson, EBITDA for Q4 was $13.6 million and included approximately one month of results from our new ammonia transloading contract. Going forward, our results will include the full impact of that contract, so we expect Jefferson to continue to post growth in the first quarter ahead. And a Rapano construction of our phase two transloating project continues to progress on plan. Once phase two is operational early next year, we expect Rapano 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 five and our capital structure. Yesterday, we announced the closing of a new term loan of approximately 1.3 billion. the net proceeds of which were used to repay in full the bridge loan we issued in connection with the Wheeling acquisition last year. The new term loan represents the only debt at our parent level and carries a coupon of nine and three quarters percent. The loan is prepayable at any time at a premium that reduces over its two year term. And more importantly, any proceeds from the potential sale of Longridge, which we'll discuss further in a bit, will be used for repayment of the loan at a lower premium than would otherwise be payable. The net result of the financing is a stable balance sheet with potential for meaningful deleveraging in the coming months and a path to more substantial free cash flow as we progress through the year. 2025 was a highly productive year, and now with the refinancing behind us, we have a handful of important priorities we're focused on, and we briefly list those on slide six. First, the integration of Transtar and the wheeling is off to a great start. We'll provide some more detail on the specifics, but year-to-date we've already implemented a little bit more than half of our total targeted cost savings of $20 million annually. The remaining cost savings should be implemented over the course of the first half of this year. Second, our plans to monetize Longridge continue to progress. It's a great asset and a great market environment for exploring a sale. Given the sensitive nature of the sale process, I'm not going to comment in detail other than to say that the process is continuing within our expectations, and we plan to report additional information to the market on our progress in the coming months. And finally, we're focused on driving continued growth across our portfolio. Activity in the rail M&A market is picking up, and we're currently pursuing a total of four opportunities that represent very good fits for our existing rail business. In addition, we have been advancing negotiations for new contracted business at Jefferson, which we expect to complete in the current months and can contribute meaningfully to revenues in EBITDA with no additional capital requirements. And with development permits in hand for Phase 3 at Rapano, we're making good progress in advancing commercial activity and construction planning. Moving to Slide 8, we'll dig a little deeper into the quarterly results and the activity at each of our segments, and we're going to start with the rail segments. We posted revenue of $86.4 million and adjusted EBITDA of $41.3 million in Q4, compared with revenue of $61.7 million and adjusted EBITDA of $29.1 million in Q3. At Transtar, carloads, average rates, and revenues for the quarter were stable. Coke volumes came in at slightly lower levels for the quarter, resulting from the incident at U.S. Steel's Claritin production unit that required the unit to remain down for the entire duration of the fourth quarter. Clareton returned to full operations in January, and Coke volumes have now recovered to normalized levels. Transtar's operating expenses also continue to be stable, as fuel costs and other material cost items have been largely unchanged. But the story for the quarter was at the wheeling, where revenue and EBITDA came in at levels exceeding our early expectations. Total wheeling fourth quarter revenue of $43.8 million was up 8% year over year, while wheeling's adjusted EBITDA for Q4 was of 19.3 million was up 34% year-over-year. We really just started our integration efforts after receiving STB approval for active control in the final days of December, so we plan to continue to see favorable year-over-year comparisons for the wheeling and the quarters ahead. Flipping to slide nine, I'll talk a little bit more about our integration plans for the wheeling. The integration of the two companies is underway, and I'm pleased to say that we're off to a promising start. We expect the combination of the two companies to result in two sources of financial gains. First, cost savings, which we expect to impact our results in the near term. And second, new revenue opportunities, which we expect to occur over the longer term. In terms of cost savings, we've broken out the totals into two components, those that have already been implemented and those we plan to implement during the first half of this year. Implemented savings represent $10 million of annual incremental EBITDA, while savings in process represent the remaining $10 million of annual savings. More importantly, on the revenue side, we continue to grow the list of opportunities now that the two railroads are operating as one. At U.S. Steel's Edgar Thompson Works facility, the first of a series of investments by Nippon Steel is underway with an announced $100 million investment in a new slag recycling unit. While it's a small investment compared to the total $2.4 billion committed by Nippon and U.S. Steel's Mon Valley Complex, the new recycling unit is a rail-intensive one and will generate important incremental volumes and revenues for Transtar. Also, additional propane carloads are planned to start early next year when Rapano's phase two commences operations. Additional carloads of propane should be substantial given the volumes originate on the wheeling and move to Rapano. And finally, the list of additional revenue opportunities on the combined system continues to grow. In total, we are now estimating over 50 million of incremental EBITDA potential from the various new sources of revenue manifesting in the future. Next on to Longridge. Longridge generated $36.2 million of EBITDA in Q4 versus $35.7 in Q3. Power plant capacity factor of 81% was impacted by the outages that I described earlier. But away from the outage, the fundamentals continue to be very strong with power prices averaging $45 per megawatt hour for the quarter and capacity revenue continuing at historically high levels and unaffected by the outage. We averaged approximately 105,000 MMBTU per day of gas production versus the 70,000 MMBTU per day required at the plant, and we expect to maintain production significantly in excess of plant requirements and generate continued revenues from excess gas sales in the quarters ahead. Importantly, we continue to push forward a number of initiatives to drive further growth. The 20 megawatt up rate in our power generation continues to advance. Adding 20 megawatts of generating capacity at today's power prices adds 5 to 10 million of annual EBITDA to the P&L. And with strong macro environment driving historic demand for power against the limited supply of modern, efficient power plants, we're advancing a number of opportunities that can provide substantial upside. We continue in detailed negotiations with a potential purchaser of our land holdings, which would represent value creation from the land monetization as well as potential new revenue streams from on-site generation. In addition, we've been approached by parties seeking long-term PPAs at prices well above the current market. And potential partners have invited Longridge to co-develop new plants on sites within our region. With so much activity underway, we're confident that during the course of this year ahead, we can act on one or more of these opportunities and drive incremental growth for Longridge. More importantly, these opportunities generate momentum for the sale process, which continues to progress. At Jefferson, we reported 23.5 million of revenue and 13.6 million of adjusted EBITDA in Q4 versus 21.1 million of revenue and 11 million of EBITDA in Q3. Volumes at the terminal averaged 210,000 barrels per day and revenue came in at a new quarterly record driven by the startup of the new ammonia export contract, which commenced in late November. We're in advanced negotiations for three new contracts with multiple parties to handle conventional crude and refined products, as well as renewable fuels. Each of these three opportunities are with existing customers and involve expansions of the services we currently provide. 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 three opportunities during this year and commence revenue shortly after execution. In total, the three opportunities represent in excess of 50 million of annual incremental EBITDA and utilize existing assets requiring little to no incremental investment or CapEx. And closing out with Jefferson, phase two construction is proceeding as planned and toward our goal of construction 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. Based on the conversations we're having, we expect to commence revenue 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 I and Phase II. While completing construction and commencing services are priority, we're quickly turning toward commercial discussions for Phase 3. Having received the permit during Q4 last year is a very big step toward advancing Phase 3 and achieving full build-out at Rapano. The permit allows for two storage caverns to be built, each capable of storing 640,000 barrels of liquids. So Phase 3 is currently planned to be twice the size of Phase 2. In conclusion, we're extremely happy with our team's progress during the fourth quarter, and we're very enthusiastic about 2026 ahead. We look forward to reporting updates on each of our key priorities, and now I'll turn it back to Alan. Thank you, Ken.