FTAI Infrastructure Inc.

Good day and thank you for standing by. Welcome to the FTI Infrastructure Second Quarter 2026 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the 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 advise that today's conference be recorded. I'd like to hand the conference over to your first speaker today, Alan Andreini, Investor Relations. Please go ahead.

Thank you, Marvin. I would like to welcome you all to the FTI Infrastructure Earnings Call for the second quarter of 2026. 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 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.

Okay, thank you very much, Alan, and good morning, everyone. Welcome to this morning's call. The second quarter was a very active one for us, and today we will walk through our various accomplishments for the quarter, our financial results, and we'll talk a little bit about our goals and expectations for the remainder of this year. Suffice to say, we're pleased with our overall results and excited about the momentum we're carrying into the months ahead. We'll kick things off on slide three of the supplement. As we stated before, our goals for this year have three primary components. Sell Longridge and deleverage our balance sheet, continue to grow our railroad portfolio, and position our terminals for monetization next year at attractive values. And I'm pleased to report that we made good progress on each of these goals during Q2. First, we announced the sale of Longridge at the end of April, and while timing is not necessarily an exact science, We currently expect to be in a position to close the transaction by the end of Q3. The sale will result in substantial deleveraging and a material reduction in our interest expense at our parent level. Second, our rail business posted another record quarter in both revenues and adjusted EBITDA. We made a small acquisition at the end of Q2 and are expecting several additional acquisition opportunities in the months ahead as the M&A market in the rail sector continues to heat up. We have an exceptional platform to continue to integrate acquisitions in the rail space, and I'm confident we'll be successful adding to our portfolio. And finally, our terminals make good progress on important projects that will create value and position each of Jefferson and Rapano for monetization next year. All in, we have good momentum carrying us into what we expect to be a very productive second half of 2026. Moving to slide four, we'll review the financial results for the quarter. Adjusted EBITDA for Q2 came in at $76.1 million materially from $45.9 million for the second quarter of 2025. On the right side of the slide, we illustrate adjusted EBITDA for each of our last four quarters, including the results of Longridge, which we now account for, excluding the results of Longridge, which we now account for as an asset held for sale. excluding Longridge, adjusted EBITDA was $48.7 million for Q2, which represents a new quarterly record and equates to just under $200 million on an annualized basis. In the quarters ahead, we expect revenues and adjusted EBITDA from our rail and terminal segments to continue to grow, driven by the contribution from our recently acquired Tidewater Logistics acquisition and developments at our terminals, including most notably Rapano's Phase 2 project. Looking to page five, We'll talk about our balance sheet and deleveraging. As you may recall, our existing corporate debt contains terms allowing for repayment with proceeds from the Longridge sale to be made at a lower premium than would otherwise be due if funded with other sources of cash. So with less premium required, we're able to repay more principal. In total, we expect to eliminate approximately $1.4 billion of total debt from our balance sheet, of which a little over $1.1 billion is at the Longridge level. and approximately $300 million is other debt in addition to the $1.1 billion at Longreach. Debt service at our parent level was declined by about $25 million annually, meaningfully improving our leverage metrics, and we expect our leverage metrics to continue to improve over the next several quarters as we bring online new business at our terminals, especially at Rapano. Altogether, with a deleveraged balance sheet and higher free cash flow generation, we expect to be well positioned to act on Moving to slide seven, we'll get into the details at each of our segments, starting with our railroad. We posted new quarterly records for both revenue and EBITDA on Q2. Revenue came in at $92.2 million and adjusted EBITDA was $42.4 million for the quarter, compared with pro forma Q2-25 revenue of $81.2 million and adjusted EBITDA of $37.6 million. Remember, our reported results for last year exclude the results of the wheeling, so we're showing pro forma Fletcher. Overall volumes for the quarter continue to be steady with higher car loads as wheeling offsetting slightly lower volumes at Tramp Star as US Steel continues to undertake a substantial overhaul and upgrade of the largest blast furnace at Gary Works, which, while dormant now for the upgrade, will ultimately be a meaningful plus for us. Since carloads at the Wheeling are generally at a higher average rate than at Transtar, on a blended basis we report higher average pricing for the quarter. Integration of the Wheeling and Lake Erie railways is going smoothly with anticipated synergies accumulating as expected and critical IT consolidation wrapping up here in Q3. On the revenue side, we continue to grow the list of opportunities now that the two railroads are operating as one. Additional propane carloads are planned to start early next year when RAPONOS Phase 2 commences, and the pipeline of additional opportunities is substantial. In total, we continue to estimate in excess of $50 million of incremental annual EBITDA potential from the various new revenue sources manifesting in the future. On slide 8, we'll talk a little bit about our acquisition of Tidewater Logistics. At the end of Q2, we acquired Tidewater for $45 million of cash consideration, funded with an add-on to our existing parent-level term loan. Tidewater operates a total of four rail-served terminals, the largest of which is directly served by the wheeling, making the acquisition a particularly creative one. Handling and transloading over 20,000 carloads annually of a variety of commodities, Tidewater's terminals play an important role in customer supply chains, enabling the transition of freight between rail and truck efficiently and flexibly. We expect Tidewater to contribute approximately $9 million of annual EBITDA, applying an attractive purchase multiple. But more importantly, we plan to leverage Tidewater's management expertise and relationships to expand the rail terminals business and drive additional growth going forward. As I mentioned, we expect the remainder of the year to be an active one on the rail M&A front, and on slide 9, we describe the Opportunities fall into three primary buckets. The first is portfolios of short-lining regional railroads, which are larger, needle-moving investment opportunities that can convey substantial combination efficiency. Second set of opportunities involves sales by corporate and industrial parties that today directly own the railroad that connects their facilities to the National Freight Network. Our acquisition of Transtar from U.S. Steel a number of years ago is a good example of that type of opportunity. and the third is more regional in nature involving tuck-ins of smaller single railroads or terminals, much like our recent exhibition of Tidewater. We're actively pursuing opportunities in each of these three categories, so I'm optimistic that we'll be able to continue to grow our existing platform here in the future. Now on to Jefferson. At Jefferson, we reported 24.3 million of revenue and 13 million of adjusted EBITDA on Q2 versus 21.6 million of revenue Refined Products and Ammonia came in at new quarterly records in terms of both volumes and revenues as our export business with customers for those products continues to grow. Crude volumes were impacted by volatility in the Middle East and we experienced a temporary reduction in inbound ship volumes during Q2. We've been informed that we should expect ship volumes to return here in Q3 and to be further supplemented by inbound volumes of crude by rail, so we forecast the remainder of the year We continue to negotiate new contracts to expand our business at Jefferson, and we lay out those opportunities on slide 11. The largest opportunities we're pursuing 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. Our goal is to execute on all three opportunities during this year and commence revenue shortly thereafter. In total, the three opportunities represent an excess of $50 million of annual incremental EBITDA and utilize existing assets requiring little to no incremental investment or capex. Now shifting to Rapano. Our focus continues on phase two where construction proceeds as planned toward our goal of completion by the end of this year with revenue commencing shortly thereafter. We have long-term contracts in place for a portion of our capacity and are seeing high demand for the remaining available space. With the disruption in the Middle East, spreads for propane exports continue to be attractive, and based on the conversations we're having, we expect to commence revenue service in early 2027, near or at full capacity. In the aggregate, we can handle close to 100,000 barrels per day for the combined assets of Phase I and Phase II, representing approximately $80 million of annual EBITDA. Construction of phase two is progressing well, and we're excited to start the commissioning process later this year. On slide 13, we show some images of the progress the team has been making with a large cryogenic tank now fully above ground and readying for completion, as well as the pipes and manifolds connecting the tank to our rail racks and ship dock. The majority of expenditures of phase two have been financed with long-term, low-cost tax debt, which is an ideal match for a project of this type, and we've had a great partnership and the Economic Development Authority, which we hope to continue to expand for future growth projects of Romano. Finally, on slide 14, we'll briefly close out with Longridge. Given the pending nature of the sale, I'll only hit the highlights for the quarter. Adjusted EBITDA came in at $27.4 million in Q2 versus $23 million in Q2 of last year. Power plant capacity factor of 85% was impacted by the planned outage we commenced in Q1 and continued for a total of 11 days into Q2. Away from that average, the fundamentals continue to be strong with power prices and capacity to revenue continuing at historically high levels. We average a little more than 73,000 MMBTU per day of gas production versus the 70,000 MMBTU per day required at the plant and we expect to maintain production well in excess of plant requirements and generate continued revenues from excess gas sales in the quarters ahead. So far in Q3, Longridge is off to a great start with capacity factor at nearly 100% currently and gas production continuing in excess of our plant's needs. I'm going to conclude our remarks there and now I will turn it back over to Alan.