Ftai Infrastructure Inc Stock

Good day, and thank you for standing by. Welcome to the FTAI Infrastructure Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being 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 FTAI Infrastructure earnings call for the second quarter of 2026. Joining me here today are Ken Nicholson, the CEO of FTAI 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 3 of the supplement.

As we stated before, our goals for this year have 3 primary components. Sell Long Ridge 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 Long Ridge at the end of April, and while timing is not necessarily an exact science, we currently expect to be in 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.

Finally, our terminals made good progress on important projects that will create value and position each of Jefferson and Repauno for monetization next year. All in, we have momentum carrying us into what we expect to be a very productive second half of 2026. Moving to Slide 4, we'll review the financial results for the quarter. Adjusted EBITDA for Q2 came in at $76.1 million, up materially from $45.9 million for the first quarter -- for the second quarter of 2025.

On the right side of the Slide, we illustrate adjusted EBITDA for each of our last 4 quarters, including the results of Long Ridge, which we now account for -- excluding the results of Long Ridge, which we now account for as an asset held for sale. Excluding Long Ridge, 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 Repauno's Phase 2 project.

Flipping to page 5, 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 Long Ridge 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 Long Ridge level, and approximately $300 million is other debt in addition to the $1.1 billion at Long Ridge.

Debt service at our parent level will decline 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 Repauno. Altogether, with a deleveraged balance sheet and higher free cash flow generation, we expect to be well-positioned to act on new investment opportunities, especially in the freight rail space.

Moving to Slide 7, 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 in 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 figures to demonstrate what revenues and EBITDA would have been if we included the Wheeling standalone results last year.

Overall volumes for the quarter continue to be steady with higher carloads at Wheeling offsetting slightly lower volumes at Transtar as U.S. 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 & Lake Erie Railway 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 as the 2 railroads are operating as 1. Additional propane carloads are planned to start early next year when Repauno's Phase 2 commences. 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 4 rail-served terminals, the largest of which is directly served by the Wheeling, making the acquisition a particularly accretive 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, implying 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 types of situations that we're currently evaluating.

Opportunities fall into 3 primary buckets. The first is portfolios of short-line and regional railroads, which are larger, needle-moving investment opportunities that can convey substantial combination efficiency. Second set of opportunities involve 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 acquisition of Tidewater. We are actively pursuing opportunities in each of these 3 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 in Q2 versus $21.6 million of revenue and $11.1 million of EBITDA in Q2 of last year. 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 to be strong on the crude front.

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 3 opportunities during this year and commence revenue planning shortly thereafter.

In total, 3 opportunities represent in excess of $50 million of annual incremental EBITDA and utilize existing assets requiring little to no incremental investment or CapEx. Now shifting to Repauno, our focus continues on Phase 2 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 1 and Phase 2, representing approximately $80 million of annual EBITDA. Construction of Phase 2 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 connected to tanks to our rail racks and ship docks. The majority of expenditures of Phase 2 have been financed with long-term, low-cost tax-exempt debt, which is an ideal match for a project of this type, and we've had a great partnership with the State of New Jersey's Economic Development Authority, which we hope to continue to expand for future growth projects at Repauno.

Finally, on Slide 14, we'll briefly close out with Long Ridge. 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 outage, the fundamentals continue to be strong with power prices and capacity revenue continuing at historically high levels.

We averaged a little more than 73,000 MMBTU per day of gas production versus 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, Long Ridge 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.

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

Thank you. [Operator Instructions] Our first question comes from the line of Giuliano Bologna of Compass Point. Your line is now open.

Congrats on the continued solid results and execution. Maybe, as a first question, it's been about a year since you made the acquisition of the Wheeling. Can you expand on how you feel now about that acquisition and how the progress has evolved since the acquisition?

Yes, definitely. Good morning, Giuliano. Yes, we actually announced the acquisition on August 6th of last year, so it's been exactly 1 year since we announced the Wheeling acquisition. So it's a timely question. I would say we are thrilled. The acquisition has been a game changer for our rail platform. Of course, the Wheeling itself is exceeding our original expectations. We're excited about the next 6 months ahead. Very excited about propane volumes continuing to grow. We've seen particular activity and strength in propane volumes on the Wheeling. Everything's working out super. The integration has worked out great.

Very few issues. I would say, you know, Transtar, as I mentioned in some of my remarks, it was a little bit softer in Q2 for a good reason. U.S. Steel is investing in their Gary, Indiana facility, upgrading their large blast furnace. But what that's meant is in Q2, things were a little softer in volumes. And by virtue of owning the Wheeling, we posted in the aggregate the great results, record results. So the impact on diversity, incremental growth opportunities, everything's checking out great, and I'm really thrilled that we were able to accomplish that acquisition and the management team has been doing a superb job integrating the 2 companies together.

Yes, that's very helpful. And as next question, you know, with respect to the third category of potential rail acquisitions, what is it about corporate systems and, you know, what is it about that category specifically?

Yes, it's interesting. The industrial carve-outs, you see those slightly less frequently. Obviously, Transtar was a great example of an industrial carve-out, but there are a number of corporate entities, very large corporate entities in the agricultural space, and the metals and mining space, and in other sectors that today own their own track systems. Most of them are shorter switching lines. Those create unique opportunities for those corporate parents to generate liquidity and, frankly, focus on their core business and divest a non-core asset.

The beauty of those opportunities in particular is, just like Transtar, most of those businesses have historically been operated solely for their parent owner. And just like with Transtar, they have not pursued third-party growth opportunities. And that's really fundamentally what makes them unique and particularly accretive.

We're seeing a pickup in activity and there are a few industrial parents that are beginning the process to divest their in-house short lines, connecting lines, and so we're going to be pretty aggressive on those situations. I think those are among the best situations out there.

I appreciate it, and I'll jump back in queue.

We'll move on to our next question. Our next question comes from Jeff Kauffman of Citizens JMP.

Congratulations on the quarterly results. I want to follow up on the Wheeling question. You'd identified a synergy target on the integration of Wheeling. I was just kind of curious, did you achieve all of the synergies you were looking for? How far along that process are you? And have you discovered any other opportunities as you've kind of worked through that process?

Yes, hi, Jeff. Good morning. I would say we're about 80% through the integration process. There's still a little bit more to do, particularly on the IT front, which we'll be wrapping up here in the third quarter. And it's going almost exactly as planned. I mean, we identified $20 million of cost efficiencies. We are right on that target. We're not demonstrating all of that necessarily in the second quarter results because some of those initiatives were enacted during Q2. So you'll start to see the full impact in Q3 and Q4.

But on the cost efficiencies, I can't say we've necessarily identified additional opportunities to reduce costs. I feel like we did a pretty complete job as we were assessing the Wheeling acquisition a year ago. And we've come in at the target there. Where we have, I think, done better than we originally expected is on additional revenue opportunities. There's a lot to do between the 2 companies. We are opening additional transload facilities in Pittsburgh that are stimulated by customers on the Wheeling. We would never have done that if we hadn't acquired the Wheeling.

We've been able to expand the industrial footprint, if you will, the 2 railroads are now operating as 1. So on the revenue side, we're doing better than expected. You know, those opportunities take time to flow and execute. You know, transload facilities need to be built. They're not terribly complicated, there is some time there. And so, look, we're building sustainable, permanent, you know, revenue bases with new customers at Transtar that we didn't necessarily envision we would have an opportunity to do when we made the acquisition a year ago.

So, I'm excited about that.

Okay, just 1 follow-up. As you're looking for additional properties to put in the portfolio, given that there's going to be a series of choices out there, could you identify kind of what the 2 or 3 things you're looking for at the top of that list as opposed to just whatever property is available? Are you looking to diversify the revenue mix at all? Is there a particular type of situation that you feel is a better fit with the franchise?

Great question, because every short line or regional railroad or rail terminal tends to be snowflakey in nature. And there are a lot of differentiating factors when we look at situations. Yes, things like diversity of commodities, diversity of customers are important, particularly where it helps us diversify our existing commodity base. Things like agricultural exposure, intermodal exposure, those are things we have less of today, so it would be nice to diversify into those commodity bases.

Most importantly, there are a handful of technical things, railroads that are leased versus owned. Obviously, you want to own property, if at all possible, railroads that have pricing freedom versus long-term restrictions on their ability to freely price freight and increase prices over time. So there are a whole bunch of smaller technical things that ideally go the right way. Fundamentally, though, it's growth. When we look at a new railroad, we try to identify the opportunities for growth, not just organically, but with additional capital.

Many railroads don't focus on investing more capital to grow their revenue base, building out a new transload facility, attracting new customers to locate on their rail lines, acquiring real estate adjacent to the rail line. Things like right-of-way income oftentimes are under-managed businesses within railroads and can be incredibly lucrative, especially with all the data center and power build-out and need for transmission lines and fiber optic cables. When you own railroads, you own those long corridors that have those rights.

So fundamentally, it's mostly growth. We really look for railroads we think over a 3- to 5-year period, we can double EBITDA. That's how we target things.

All right, those are my questions. Thank you.

Thank you. One moment for our next question. Our next question comes from the line of Sherif Elmaghrabi of BTIG. Your line is now open.

To pivot away from rail for a second, I want to focus on the terminals businesses ahead of monetization. At Jefferson, one of the regional partners has had to deal with, call them supply chain constraints due to what's going on in the Middle East. And, you know, you've talked about the ways that they're going to revive throughput in Q3. Can you just talk about a little bit of puts and takes there, you know, how much rail crude can supplement or kind of offset uncertainty going on with the tanker trade? And where is the throughput growth coming from ahead of monetization? I think that would be very helpful.

Yes, yes. Yes, it's been changes every day out in the Middle East as it relates to supply chain dynamics. And we saw the impact of that in the second quarter. What I would say is for our particular customer, we handle crude volumes through 3 modes. Inbound ships, which originate in the Middle East, trains, which largely originate in Utah, and then inbound by pipe from other pipe-connected sources. 2 of the 3 are not subject to volatility and interruption.

What our customer is doing is, well, a couple things. One, we've been informed ship volumes are expected to recover in Q3. And we just heard that very recently. And so I'm optimistic about Q3 crude volumes overall. Ships can hold, I mean, up to 500,000 barrels of crude oil on ship. A train holds about 50,000 barrels. So it gives you a sense of the scale and the importance of ship inbound volumes. We had a lot of ships come in Q1 and a lot fewer in Q2.

But we are transitioning actively to inbound rail. The beauty of inbound rail is you actually get like a 2x multiplier because inbound rail volumes from Utah require blending. And so for every 50,000-barrel train we bring in, we also have to bring in 50,000 barrels of pipeline-originated crude for blending. So we're really handling 100,000 barrels for every train. That transition is actively happening.

We completed a very important infrastructure project with our Southern Star pipeline, which is one of the many pipelines we built connecting Jefferson directly to refineries. We completed that just about a month ago. And that enables for the efficient handling of light crudes and heavy crudes back and forth. And now we are unloading trains coming from Utah and that business is growing pretty rapidly. So I think at Jefferson, we'll see a return of inbound ship volumes and we'll see a material increase of inbound rail volumes during Q3 and Q4. That is a very good thing as we're thinking about monetizing the business in 2027.

It's super helpful and obviously refining margins are very supportive at the moment to more throughput. Pivoting to Repauno, I don't want to put the horse before the cart, but is the plan to get any Phase 3 capacity under contract, or could we see a sale of at least a portion of the business before then? And if you could just remind us on timing for Phase 3, that's helpful. Okay.

Yes, we'd love to do that. Phase 3 is permitted, designed, engineered, ready to go. We won't finance or start construction on Phase 3 until we have a long-term contract in place. We are still contracting the remaining capacity of Phase 2. So we want to finish that up because that is, you know, ready for operation commencement in early 2027. So the focus right now is on completing Phase 2. We'd love to have Phase 3 contracted and under construction when we look to monetize Repauno.

It's not something we're necessarily planning on. I think we've already created a lot of value at Repauno in terms of obtaining the permits and having it designed and all fully scheduled. So, that's something a new owner can look forward to and hopefully underwrite. There is definitely a tremendous opportunity. Propane volumes coming out of the Marcellus and Utica, the Appalachian Basin overall continue to grow. And we are the only export-capable facility on the East Coast that actually has room to grow. So, it's a great asset we own.

I think it's valuable already in Phase 3, whether we've started construction or signed up customers by the time we monetize. It is certainly a helpful thing if we're able to do that. I don't think it's absolutely necessary. We're not going to wait for that for starting the sale process for Repauno.

Okay, super helpful, and thanks again.

Thank you. One moment for our next question. Our next question comes from the line of Matthew Erdner of JonesTrading. Your line is now open.

Building off of the terminals there and the disruption in the Middle East, do you feel like now is a good environment for sales on these? And then as a follow-up to that, I'm curious if you guys have had any reverse inquiry just given where these are located and who else is around you in those spots.

Yes, good morning. I think it's a good time and it can continue to be a good time for energy terminal M&A. We've definitely received some inbounds. And I would say that activity has picked up somewhat with the shifting of supply chains, largely driven by the conflict in the Middle East, people are sniffing around. And so we're engaged in a handful of very early conversations on that front.

I, you know, it's interesting, the terminal market is a big one, and there are all different types of terminals. But -- and they trade at very different valuations. Generic inland terminals that just transload liquids from rail to truck or pipe to truck for regional distribution. Those tend to trade at high single-digit multiples, typically to MLPs and structured vehicles. The strategic export terminals are much more valuable on a multiple basis and historically have traded at multiples between 12 and 15 times.

That's what we own at Jefferson and Repauno. And so, fingers crossed, we're hopeful we'll be at the high end of those multiple ranges. I mean, fundamentally, Jefferson and Repauno serve a highly strategic role. At Jefferson, we're connected to the 2 largest refineries in the Western Hemisphere, directly pipeline-connected. We are part of the supply chain and integrated part of the supply chain to those 2 refineries. And Repauno, as I said, really the only available gateway on the East Coast that has meaningful room for expansion. So with those differentiating characteristics, yes, I'm pretty optimistic about how things will play out next year.

Awesome, that's very helpful. I appreciate the color there. And then, you know, going back to the rail, I've got just kind of 1 question there. You guys touched on the Nippon investment. Do you guys have any line of sight as to when, you know, those, I guess, construction of that is going to be done and when rail will kind of start to increase from that facility?

Probably at some point over the next 6 months. Feeling -- everything's on time, on budget, on plan, but probably about a 6-month time.

Got it. That's helpful. Thank you, guys.

Thank you. I'm showing no further questions at this time. I'll now turn it back to Alan Andreini for closing remarks.

Thank you, Marvin, and thank you all for participating on today's call. We look forward to updating you after Q3.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Good morning, and welcome to the FTAI Infrastructure First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Alan Andreini of Investor Relations. Please go ahead.

Thank you, Jason. I would like to welcome you all to the FTAI Infrastructure Earnings Call for the First Quarter of 2026. Joining me here today are Ken Nicholson, the CEO of FTAI 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.

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. Before we get into the quarterly financial results, we're going to kick things off with a discussion of Long Ridge and provide some details on the sale transaction that we announced last week. I'm going to briefly walk through the transaction terms and then I'll talk a little bit about why we believe it to be an important and highly accretive event for our company.

Just over a week ago, we signed an agreement to sell Long Ridge to Mara Holdings for an aggregate transaction value of $1.52 billion. We expect to close the transaction in the third quarter of this year after receiving required regulatory approvals, and there are no other material conditions to closing. Existing Long Ridge debt will either be repaid or assumed by the purchaser, bringing expected net proceeds to FTAI in excess of $300 million. We're pleased with the outcome of the sale process and believe Mara is a great fit as the next owner of Long Ridge. I want to recognize and thank Bob Wholey and the Long Ridge team for doing a remarkable job throughout the entire life cycle of our investment, developing the business plan building a power plant, acquiring gas reserves and turning on and maintaining operations to ultimately create what today is one of the most efficient and profitable power assets in the country.

The transaction value reflects the uniqueness of the Long Ridge asset and results in a meaningful economic return for FTAI over the life of our investment. More importantly, the sale of Long Ridge will allow us to accomplish 2 key goals: First, deleveraging. We plan to use the bulk of the net proceeds received at closing to repay higher cost debt at a parent level, resulting in lower interest expense and higher free cash flow going forward; second, increasing our focus on our core freight rail business. We expect 2026 to be an active year for our railroad with growth driven internally by integration of Transtar and the Wheeling and externally as we pursue a number of acquisition opportunities that leverage our existing platform.

Having higher cash flow and additional debt capacity to fund acquisitions puts us in a good position to make accretive investments in the rail sector in the near future. I'm going to flip to Page 4, and we'll talk a little bit more about deleveraging. As you may recall, our existing corporate debt contains terms allowing for repayment with proceeds from the Long Ridge 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 were able to repay more principal. In total, we expect to reduce parent debt by at least $300 million and reduce our parent level interest expense by about $30 million per year meaningfully improving our leverage metrics.

We expect our leverage metrics to continue to improve over the next several quarters as we realize more integration efficiencies at our rail business and bring online new business at our terminals, especially Repauno.

Turning to Slide 5, with the deleveraged balance sheet and higher free cash flow generation, we expect the bulk of our long-term growth going forward to be driven in the rail sector. We have an enormous opportunity set in front of us in the North American freight rail space and an exceptional platform from which to grow. We expect the remainder of 2026 to be a particularly active one for the rail sector M&A, and we're actively evaluating multiple opportunities and look forward to reporting back on our progress. While we expect our freight rail business to emerge as the dominant source of earnings for us going forward, we're also excited about the future of our 2 terminals and are focused on ensuring that both Jefferson Repauno each reach their earnings potential with the view to monetizing both assets in the future.

Jefferson is currently engaged in conversations with customers for new business, representing at least $50 million of additional annual EBITDA and Repauno similarly is expected to complete its Phase 2 expansion at the end of this year and start revenue service shortly thereafter.

Now we'll go into the results for the quarter. Adjusted EBITDA for Q1 came in at $70.6 million, up materially from $35.2 million for the first quarter of 2025. Given the investment activity during last year, year-over-year comparisons are less meaningful, but I can say that the quarter was a strong one that reflected great progress across our portfolio. At Long Ridge, we took an outage for 25 days that impacted revenues and EBITDA for the quarter. The outage was planned but longer than typical as it related to inspection of the hot gas section of the power turbine, which requires more time but is only required to take place every 4 to 5 years. The inspection resulted in a clean bill of health, but did result in lost revenues for the quarter.

Excluding the impact of the outage, our consolidated Q1 EBITDA would have exceeded $80 million for FTAI and represented a new record. It's important to note that our Q1 results do not reflect a tremendous amount of activity across our business that we expect to contribute to EBITDA in the future. We provide some detail around some of those specific items and the math on the right side of Slide 7. Each of the lighter blue shaded bars represent specific items that require no incremental capital and are either already contracted or otherwise represent cash flow streams that we have confidence in.

Importantly, the bar chart does not include any organic growth or new business wins that we believe could be material and also contribute to incremental EBITDA going forward.

I'll quickly flip to Slide 8 and talk through the highlights of each of our segments. In our Rail segment, adjusted EBITDA was $40.2 million in Q1, up 31% on an apples-to-apples basis versus quarter last year. Q1 was the first full quarter during which we had active control of the Wheeling and we've already begun to realize a portion of our targeted integration savings. At Long Ridge, EBITDA for the quarter was $26.4 million. As I mentioned, without the 25-day planned outage, we estimate that EBITDA for the quarter would have approached $40 million. Gas production for the quarter continued above amounts required to fuel the power plant. So we also generated revenues from excess gas sales during the quarter.

At Jefferson EBITDA for Q1 was $14.4 million and included a full quarter of results from our new ammonia transloading contract. And at Repauno, construction of our Phase 2 transloading protect continues to progress on plan. Once Phase 2 is operational, which is planned for early next year, we expect Repauno to be capable of handling over 80,000 barrels per day of natural gas liquids, generating approximately $80 million of annual revenue -- EBITDA.

Moving to Slide 9, our detailed capital structure. During Q1, we closed our new term loan of approximately $1.35 billion. The net proceeds were used to repay in full the initial loan we issued in connection with acquisition of the wheeling last year. The new term loan represents the only debt at our parent level and carries a coupon of 9.75% per annum. As I mentioned, the loan is prepayable at a reduced premium with proceeds of Long Ridge sale. So we expect the balance of the term loan to be approximately $300 million lower following closing of the sale.

Also during the quarter, we received commitments for the refinancing of a little over $200 million of debt at Jefferson. The net result of everything is a stable balance sheet with no near-term maturities and a path for meaningful deleveraging in the coming months following the Long Ridge sale.

Moving to Slide 11. We'll dig a little deeper into the results at each of our segments, and we're going to start with our railroads. We posted revenue of $85 million and adjusted EBITDA of $40.2 million in Q1 compared with pro forma Q1 2025 revenue of $79.3 million and adjusted EBITDA of $30.6 million. Our actual reported results for last year exclude the results of the Wheeling. So we're showing pro forma figures to demonstrate where revenues and EBITDA would have been if we include the Wheeling stand-alone results for last year. Growth versus last year was driven by a combination of revenue growth from both higher volumes and rates as well as reduced expenses as a result of the initial impact of a large set of cost savings initiatives, which we started to implement in Q1. I will note that the first quarter is typically the softest quarter for our business, especially at the Wheeling where volumes of aggregates and other construction materials always slow down during the winter months. So we're particularly pleased with our results for Q1.

Flipping to Slide 12. We're off to a great start with the combination of Transtar and the Wheeling. We expect the combination to result in 2 sources of financial gains. The first is cost savings, which we expect to impact our results in the near term, and the second is new revenue opportunities, which we expect to occur over the longer term. Cost savings fall into 2 primary buckets: personnel reductions, purchasing power savings and reduced overhead. In total, we're targeting about $23 million of annual cost savings, of which $10 million of annual savings was enacted in Q1, representing $2.5 million of EBITDA for the quarter. The additional $13 million of annual cost savings should be in effect in the relatively near term.

On the revenue side, we continue to grow the list of opportunities now that the 2 railroads are operating as 1. Additional propane carloads are planned to start early next year when Repauno's Phase 2 commences operations. Additional carloads of propane should be substantial given the volumes originate on the wheeling and move to Repauno. And the pipeline of additional opportunities is substantial. In total, we're estimating in excess of $50 million of incremental annual EBITDA potential from the various new revenue sources manifesting in the future.

I'm going to shift to Slide 13, talk about Jefferson. At Jefferson, we reported $27.3 million of revenue and $14.4 million of adjusted EBITDA in Q1 versus $19.5 million of revenue and $8 million of EBITDA in Q1 last year. Volumes at the terminal averaged 275,000 barrels per day, driven by the start-up of the new ammonia export contract, which commenced in late November last year as well as increased volume of inbound crude oil during the quarter. To date, inbound crude volumes have been unaffected by the conflict in the Middle East and the blockage of the Strait of Hormuz, as crude destined to Jefferson has originated largely from Saudi West Coast terminals. We continue to see crude volume steady so far in the second quarter.

We're negotiating new contracts to expand our business at Jefferson. The largest opportunities we are pursuing are with existing customers and involve expansions of the services we currently provide to them. Our customers have been investing heavily in their nearby facilities to increase production and market reach, which will require more products to flow through Jefferson. We hope to execute on all 3 opportunities during this year and commence revenue shortly thereafter. In total, the 3 opportunities represent in excess of $50 million of annual incremental EBITDA and utilize existing assets requiring little to no incremental investment CapEx.

Now shifting to Repauno on Slide 14. Our primary focus at Repauno is on Phase 2, where construction continues to proceed as planned toward our goal of 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. With the disruption in the Middle East, spreads for propane exports are extremely attractive and based on conversations we're having, we continue to expect to commence revenue service 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 1 and Phase 2.

And finally, on Slide 15, we'll briefly close out with Long Ridge. Given the pending sale, I'm only going to hit the highlights for the quarter. Adjusted EBITDA came in at $26.4 million in Q1 versus $18.1 million in Q1 of last year. Power plant capacity factor of 73% was impacted by the 25-day planned outage as I described earlier. But away from the outage, the fundamentals continue to be strong with power prices and capacity revenue continuing at historically high levels. We averaged a little more than 86,000 MMBtu per day of gas production versus the little more than 70,000 required at the plant. We expect to maintain production significantly in excess of plant requirements and generate continued revenues from excess gas sales in the quarters ahead. So far in Q2, Long Ridge is off to a great start with capacity factor at 100% currently and gas production continuing in excess of our plants needs.

I'm going to conclude our remarks there, and I will now turn it back to Alan.

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

[Operator Instructions] Our first question comes from Brian McKenna from Citizens.

So on the regulatory approvals for the Long Ridge sale, can you walk through exactly what these are? And then do you have any sense when the transaction will close in the third quarter? Are we talking the first half of the quarter or the second half of the quarter, et cetera?

Really just one approval, FERC. There's a requirement to file with FERC. FERC needs to approve the change of control. That filing kicks off the process. I think that filing is imminent. It's possible the filing is made today, otherwise early next week. So that will get things started. The FERC regulatory process is not an exact science. It's not a -- there isn't a set number of days per se, but we don't see any reasons why it should be a prolonged process.

I would guide folks toward the middle of the third quarter for regulatory approval. Obviously, we would -- we're going to be using these proceeds to repay debt, so the sooner we close, the more interest we save on the debt we repay. So we're very focused on a speedy closing, and I know our friends at MARA Holdings share that view. So Hopefully, if we can do anything to accelerate closing, we will. But otherwise, yes, we feel pretty comfortable with the mid-third quarter target.

Okay. That's helpful. And then in terms of the holdco debt paydown, the plan is to pay down $300 million of debt there. And then it looks like there should be another $50 million or so of remaining cash from the transaction. So I guess, is my math correct there? And then if you have, call it, $40 million to $50 million of incremental cash, what's the plan for that? And then I guess related with the stock trading where it is, I mean do you think about authorizing some kind of a buyback just to support the stock a little bit?

Yes. Your math is correct. Final net proceeds will depend upon the timing of close, cash generated by Long Ridge between now and then, et cetera. So I don't have precision science. But you're right, there should be some excess cash. We can either use that to repay debt. We are permitted to just keep it on our balance sheet to fund acquisitions, and we've got a couple smaller situations that we think could be highly accretive in the rail space. And so we may choose to retain some of the cash to make those small investments. We have a handful of transaction fees as well that will crystallize at the moment of closing.

In terms of other uses for cash flow, look, I would just say we're, of course, always evaluating the various things we can do. We want to continue to grow the business. I still think the more likely use of proceeds is either to deleverage or otherwise invest accretively. But obviously, everything is on the table, and we and our board are always considering different options.

Next question comes from Craig Shere from Tuohy Brothers.

So Jefferson is doing well, obviously, with the new contracts kicking in, in November. The volumes are up, but it looks like the per barrel unit pricing is somewhat softening sequentially and even a tad year-over-year. Could you provide any color on that?

There's a lot in the mix there. What I can tell you is when you think about Jefferson's different business lines for refined products, crude oil and now ammonia. There are multiple contracts under which Jefferson provides those transloading services. I think a total of 7 contracts that Jefferson has with various customers, in some cases with 1 customer or multiple contracts or different destinations or rail handling or ship loading or whatever it may be. What I can tell you is there's certainly been no realized downward pricing for any particular contract or any particular product.

I think what's going on to affect those numbers is just a mix, a little bit more of a lower priced movement and a little bit less of a higher-priced moves, for example, crude oil. We have a crude oil. It's usually a higher rate because it requires more handling, sometimes it requires steam unloading and blending, and that can be at a much higher rate than then the refined products, which flow more easily and we handle more volumes of and so that's usually a lower price point. That doesn't mean 1 product conveys more or less margin. We may have a lower rate for refined products, but it's also a lot easier to handle. And so the margins, in some cases, may be better than crude oil, even though crude oil is a higher priced product. So there's a lot going on there. There has been no deterioration in price for any particular contract. It's just a matter of mix.

Got you. And maybe you could elaborate on the next steps for commercializing Repauno Phase 3 underground storage and potentially monetizing that business. Would it be reasonable to still think that could be accretively divested by mid-next year?

Yes, I think so. Yes. There's plenty going on with Repauno and the natural gas liquids global trade market. Spreads are as attractive as I think we've seen them for a number of years. There are supply issues and terminal loading issues in the Marcellus and Utica for liquids that would be destined to Repauno, but there is significant demand at very attractive pricing. So recently, just with the conflict in Iran, we've had increased dialogue with a number of large NGL producers. And so we like that, of course, that bodes very well for Phase 3.

I didn't talk much about -- I didn't talk at all about Phase 3, just in our prepared remarks because at the end of the day, Phase 2 is really our core focus, completing -- it's so important to Repauno, completing the construction and starting to demonstrate the $80 million of annual EBITDA. We are -- we and management are singularly focused on Phase 2. But Phase 3 is continuing. It's not to say we've slowed down at all. I think in order for Phase 3 to be fully financed, fully committed, fully contracted on the construction work, we want to have all the commercial contracts in place. So we're in a good market environment to do that.

Frankly, in terms of the monetization of the asset, yes, I think next year is certainly doable. It's been important to us, and we think any buyer would really want to see Phase 2 complete and operating. And hence, again, the reason why we're so focused on Phase 2. But yes, I feel pretty comfortable with next year being a good year to think about monetization of Repauno and quite possibly Jefferson.

The next question comes from Greg Lewis from BTIG.

I did want to go back to Jefferson. You kind of mentioned the incremental contract awards. How should we think about the scaling of that EBITDA from those existing service contracts that are going to start to ramp here?

There are a number of existing customers who basically want to expand the volumes that they put through Jefferson. Particularly in this market, folks are considering alternate sources for crude, additional markets for refined products. So the scale is, look, pretty significant. I mean we're moving 275,000 barrels per day. With the contracts that we are discussing with customers, the expansions of business, we're targeting total volumes of in excess of 500,000 barrels per day. We have capacity, operational capacity at Jefferson to probably do closer to 600,000 barrels per day.

We're pretty capped out with the existing infrastructure at that number. So at 500,000, we can handle all of that volume. It's getting to the point where there would likely be incremental capital beyond that. But we're running at just under a $60 million annual EBITDA run rate currently, an additional $50 million between 3 primary new pieces of business takes us over the $100 million mark. That's been a kind of an emotional level for Jefferson now for quite some time, and I'm really hopeful we can get all 3 of these expansions done this year. And put Jefferson in a place where we can hit those numbers.

Okay. Great. And then I did want to -- I did have a question on the relationship with U.S. Steel Transtar, realizing that, I guess, couple of weeks ago, U.S. Steel announced a major CapEx initiative at their Arkansas facility. Just kind of curious how you're thinking about that, realizing that currently we don't -- I don't believe we have exposure in that kind of a little pocket, but just how you think about that incremental volume of U.S. Steel there maybe creating more opportunities across the U.S. Steel rail network.

Yes, good noting that. Yes, unfortunately, Arkansas is not one of the Transtar properties. But at the end of the day, the folks at Nippon committed a total of $11 billion in new projects. The Arkansas invest is about $2 billion of it. So there's another $9 billion to go. We're pretty sure about $5 billion of that remaining $9 billion is going to be focused on the Mon Valley in Pittsburgh and Gary Works. They, Nippon and U.S. Steel have announced a handful of projects at both the Mon Valley and Gary work.

They're both a little bit smaller or involve refurbishing a blast furnace, not necessarily new construction. But we feel pretty confident that there are some additional projects coming that will be very good news for Transtar at some point during the course of this year. So it's a big commitment from Nippon and we're, of course, eager, but we won't be benefiting from the Arkansas announcement, but I do think there will be some announcements coming that should be good news for us.

Next question comes from Giuliano Bologna from Compass Point.

Congrats on the performance and the announced sale of Long Ridge. There is -- Switch topics a little bit. You're obviously deleveraging with the transaction. But until you have sold Jefferson or Repauno, how do you think you'd finance any incremental rail acquisitions?

Probably with incremental debt, I think it would be the most efficient way to do it. Brian asked earlier about maybe some incremental net proceeds and what we might use those for. So there will be some cash from the Long Ridge transaction that could be invested into a rail acquisition. Otherwise, look, we're repaying debt. That opens up new debt capacity. And I think it would be much more efficient for us, particularly where we're trading right now to be an issuer of debt to make an accretive acquisition. And so I feel pretty comfortable we'll have access to the capital we need for whatever acquisition opportunities come up at the railroad.

And are you seeing a good flow of rail deals in the market now? I mean, because in the past, you kind of mentioned that rail deal flow tends to be episodic and go in waves.

Yes, very definitely episodic. There are -- but we are -- the stars are aligning, I would say, there are 3 things driving an increase in activity. One is, of course, Class 1 mergers, both pending and under, I would say, speculation when two Class 1s get together, it's pretty likely there are going to be divestitures of various lines, and that opens up a set of opportunities, carve-outs of short lines and regional lines. And so I think that's going to stimulate some M&A activity.

Two, there was a lot of activity where private equity firms, institutional investors bought into rail sector 5 to 10 years ago. And most of those funds have 10-year lives. And so many of them are approaching their mandated monetization time frames. And so we expect the number of assets held by institutional investors to come to the market over the next, call it, 6 to 12 months. And then finally, when you really think back, there are a number of large properties that are owned by individuals, very entrepreneurial individuals who really established their ownership all the way back in the Staggers Act in 1980, and 40 plus years ago.

So they've owned these things for a very long time. They're starting to think about what they want to do going forward. Values have grown materially since they first entered the business and so we're having dialogues with a number of just individual owners, who are starting to think about it. And so I think those dynamics are at play. And I think we're going to have a nice wave of M&A opportunities here in the next 12 months.

This concludes our question-and-answer session. I would like to turn the conference back over to Alan Andreini for any closing remarks.

Thank you, Jason, and thank you all for participating in today's call. We look forward to updating you after Q2.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good day, and thank you for standing by. Welcome to the FTAI Infrastructure Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Alan Andreini, Head of Investor Relations. Please go ahead.

Thank you, Shannon. I would like to welcome you all to the FTAI Infrastructure Earnings Call for the fourth quarter of 2025. Joining me here today are Ken Nicholson, the CEO of FTAI 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 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 3. 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 noncore 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 FIP 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 Long Ridge that we didn't previously own and started reflecting 100% of Long Ridge'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 4, 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 Long Ridge, 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 a 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 Long Ridge. 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 1 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 at Repauno, construction of our Phase 2 transloading project continues to progress on plan. Once Phase 2 is operational early next year, we expect Repauno 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 5 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 9.75%. The loan is prepayable at any time at a premium that reduces over its 2-year term. And more importantly, any proceeds from the potential sale of Long Ridge, 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 6. First, the integration of Transtar into 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 Long Ridge continue to progress. It's a great asset in 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 4 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 and EBITDA with no additional capital requirements. And with development permits in hand for Phase 3 at Repauno, 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 segment. 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 Clairton production unit that required the unit to remain down for the entire duration of the fourth quarter. Clairton returned to full operations in January and coke volumes have now recovered to normalized levels.

Transtar's operating expenses also continued 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 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 in the quarters ahead.

Flipping to Slide 9, I'll talk a little bit more about our integration plans for the Wheeling. The integration of the 2 companies is underway, and I'm pleased to say that we're off to a promising start. We expect the combination of the 2 companies to result in 2 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 2 components, those that have already been implemented and those that 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 2 railroads are operating as one. At U.S. Steel's Edgar Thomson 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 in 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 Repauno's Phase 2 commences operations. Additional carloads of propane should be substantial given the volumes originate on the Wheeling and move to Repauno. 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 Long Ridge. Long Ridge generated $36.2 million of EBITDA in Q4 versus $35.7 million 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 upgrade in our power generation continues to advance, adding 20 megawatts of generating capacity at today's power prices adds $5 million to $10 million of annual EBITDA to the P&L. And with the 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 have been approached by parties seeking long-term PPAs at prices well above the current market. and potential partners have invited Long Ridge 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 Long Ridge.

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 start-up of the new ammonia export contract, which commenced in late November. We're in advanced negotiations for 3 new contracts with multiple parties to handle conventional crude and refined products as well as renewable fuels. Each of these 3 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 3 opportunities during this year and commence revenue shortly after execution. In total, the 3 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 2 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 1 and Phase 2. While completing construction and commencing service is our 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 Repauno. The permit allows for 2 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. Shannon, you may now open the call to Q&A.

[Operator Instructions] Our first question comes from the line of Giuliano Bologna with Compass Point.

Congrats on another great quarter of execution there. As a first question, it's great to see Jefferson Terminal really starting to ramp up during the fourth quarter. Can you expand on the business development opportunities that you're seeing at Jefferson and the upside related to some of the contracts like the ammonia contract that should flip to a full quarter of impact?

Yes, definitely. Yes, it does feel like all cylinders are firing. We're excited about the year ahead, and Jefferson is an important cylinder. Yes, we -- we've really seen a pickup in the commercial interest and activity level at Jefferson. What we particularly like about, as I said, is these are all expansions of existing services. So these are opportunities that don't require the capital to build out new infrastructure and take the time to build out new infrastructure. One of the stories with Jefferson has been timing based, among other things. But this would be quick, no capital and just incremental volumes through existing assets. They break into 3 categories. The first is more ammonia. The ammonia system now at Jefferson South is fully built out.

The additional ammonia volumes that we're talking about would roughly double the quantities that we're currently handling. So that's somewhere between $10 million and $15 million of incremental EBITDA just for that opportunity. The second is for additional refined products leaving by rail. More gas stations are being built in Mexico, and therefore, there's more demand for gasoline and diesel, and we expect to increase volumes through that contract in the coming months. That could represent meaningful additional EBITDA, another $10 million to $15 million.

And then finally, Utah crudes. There's a lot of investment in the 2 major refineries in Beaumont in handling and producing various products for which Utah crudes are the ideal input. And so we expect to significantly increase inbound volumes of Utah crudes once we've expanded the existing contract. That could be substantial, roughly another $25 million of EBITDA. So look, we're very focused on it. It's certainly subject to execution. But having had a series of conversations with all these players over the years, we feel like the probability for each of these is as high as it's ever been.

Our next question comes from the line of Brian McKenna with Citizens.

Just a couple of quick questions on Repauno to start. I think Phase 2 was previously expected to be operational by the fourth quarter of this year. It seems like that's got pushed out a little bit here to the first quarter of 2027. So just kind of curious some of the puts and takes there. And then on Phase 3, I appreciate the detail in the prepared remarks, but it would be great just to get some additional color on what's going on behind the scenes here in terms of planning? What are the next few major milestones in the process? And then can you remind us, when do you expect to break ground on construction? And then when is that construction expected to be completed?

Yes. Yes, the timing, we've always been end of this year for Phase 2 and whether we commence operations December 31 or January 15, it's not a precise science. There's going to be some commissioning of that whole system. If you went to Repauno today, you'd see the tank largely built. So a lot of the important work that would typically cause any meaningful delays or cost overruns is behind us. All the geotechnical work and driving of piles is done. So we're at a point where I think we've derisked a fair amount of that construction. I don't see a lot of risk in any meaningful delays, but we will need to commission it. And as we've been talking about it, we want our customers thinking about very early 2027 rather than late 2026, just to be a little cautious there. But no change.

The good news is we are expecting to be fully utilized when we commence operations. There has been significant demand, and this feeds into your second question, what's driving that demand? And the simple answer is more supply and a need for accessing more demand markets. Natural gas production in the Marcellus and Utica continues to grow and with the gas comes the liquids. Demand for things like propane in the Northeast is stable, but not growing as significantly as production. So producers are looking for more outlets, more demand markets. There are only 2 terminals in ourselves and the Sunoco Logistics Terminal at Marcus Hook that these guys can really access for exporting large volumes over time. And so look, we're getting a lot of interest, and it's caused us to really refocus and push on Phase 3.

At this stage, there are a number of things we need to do to put a shovel in the ground on Phase 3. We're finishing up construction estimates and all of the planning around construction. We obviously have the permits in place and then the commercial development. Those conversations are underway. I don't see us starting construction and building Phase 3 on spec. We're going to want to have some anchor customers. So our goal would be have some anchor customers over the next 6 months, while in parallel, we're advancing all the construction elements and hopefully, sometime later this year, potentially pretty late this year, we're starting construction.

That's great. And then just switching gears a little bit, going to the Rail segment. You highlighted you're actively pursuing multiple new additional M&A opportunities. I think you said there's 4 there. I think this makes sense longer term, and you've talked about transitioning FIP to more of a pure-play freight rail company. But it's still early days of the Wheeling integration and driving synergies there. It sounds like there's great kind of momentum. But -- and then I guess, looking at the balance sheet, you've made great progress there as well, but the capital structure still has some moving pieces. I think there are still some opportunities to enhance that. So why not focus entirely on execution and integration this year, starting to drive EBITDA and cash flow even higher, you deleverage with any excess capital and then you kind of look to do some of this M&A in '27 and beyond.

Yes. Look, the M&A opportunities, good observation. We are -- we're a higher leveraged business than we expect to be in the coming years, and we're very focused on deleveraging. I think there's a lot of equity value to create as we deleverage and reduce our cost of capital, right? We have a higher cost of capital than we hope to have in a couple of years and deleveraging is going to drive that. The Long Ridge transaction, if successful, which we're expecting, will go a long way in deleveraging at the parent level.

Make no mistake about it. The priority #1 is maximize the benefits of the combined Wheeling and Transtar for sure. And management is doing a phenomenal job every day, focused on that. That said, M&A opportunities come to us. And when some of them are in the no-brainer category and maybe they are smaller situations, but even more accretive, we're definitely going to look at those. Something that is local, that is connected to the Wheeling or Transtar, where we think we can acquire assets at a 5x, 6x, 7x EBITDA multiple, double, triple EBITDA out of the targets. It feels like we have a duty to do that because it's just so accretive. But look, we agree with you. We have our priorities of deleveraging and optimizing the railroad we own today before we start growing. But we certainly are going to look at additional rail properties as they come up, particularly if we think they're a very good fit for us.

Our next question comes from the line of Sherif Elmaghrabi with BTIG.

Ken, sticking with rail for a sec. I think you gave some very nice color about your ideal acquisition targets. But can you talk about the M&A market for rail a little bit more broadly? How many opportunities are there that kind of bolt on geographically to your existing footprint? And could you look at anything else maybe a bit further away? I think there's a rail line in Texas, for example.

Yes. There are -- the M&A market in rail, and we've been doing rail stuff here for 20 years. It comes in waves. And it feels like the wave is coming at us and not going away from us. We're looking at 4 opportunities that are all very actionable. Three actually are smaller properties that are very natural fits for the Wheeling and Transtar. Meaning they connect or are nearby. One is not connecting. I really hope we can be the best bidder on the things that are close to us because we can certainly perceive the most value. They're not huge dollars, but they're highly accretive, and so they're certainly worth doing. And they're easy to integrate. Management won't be distracted and this is in their backyard. And so they're pretty much no-brainers.

But look, as more opportunities come, there was a big transaction announced earlier this week, and that was in a slightly different space, more like rail services and switching. But a couple of great companies that we've got a lot of respect for. My understanding was that transaction occurred at pretty sporty multiples. So if you can acquire businesses at single-digit multiples and own a portfolio that trades at mid-double-digit multiples, that's got to be a smart thing to do. Yes, look, we are staffed up and we're going at it. Our goal, as Brian said earlier, is to increase the scale of our rail portfolio over time at FIP. And I think we have a good shot at doing that.

Got it. Very helpful. And then shifting gears a bit, the sustainability and energy transition business contributed $9 million of EBITDA this quarter. Do you have a sense of what's going on there? And if that is something that will become -- or if this business is something that will become a regular EBITDA contributor?

Yes. I'm glad you asked actually. The answer to your last question is yes. We have a handful of investments we don't talk about much in noncore entities. Some of the investments are minority stakes. Clean Planet Energy is a fantastic company that is in the waste-to-energy business. They're based in the U.K. It's a global company. And years ago, we invested in a U.S. subsidiary. We set up a JV to build waste-to-energy facilities in the United States. That market, no surprise, has slowed down. And so we had an opportunity to exchange our 50% interest in the U.S. JV to a 49% stake in the global company. That was a great transaction. It resulted in a write-up of our holdings in Clean Planet Energy.

Look, I am super bullish on Clean Planet Energy. They've got a great management team. And I think they're focused on the right markets. Waste-to-energy is a huge business globally. It's not seeing a lot of activity in the United States right now, but across Europe and other regions, there's a lot to do there. And at Clean Planet, there is 1 facility under construction, 2 under advanced development. Yes, those will contribute EBITDA over the coming years and will record our portion of EBITDA. So I do think we will be reporting EBITDA. Given this single transaction, the exchange from an interest in the U.S. entity to the global parent, that's not going to happen again. And so when we were describing EBITDA for purposes of this call, we excluded that as a one-time gain. But I do think Clean Planet will be a contributor in the quarters ahead starting in 2027.

Our last question comes from the line of Craig Shere with Tuohy Brothers Investment Research.

Congratulations on the good quarter. To start with, is your asset sales process at Long Ridge impacting the data center discussions you're talking about? Obviously, if you can make progress there, it would certainly help with the value of any ultimate sale. Can you give us any more color about the timing of the monetization process? Would there be -- would you expect any serious tax implications to it? And if you had, I don't know, call it, $450 million, $500 million in net proceeds, what are your thoughts about allocating something like that?

All good questions, and I'm going to do my best within the limits of, I think, what we'd like to say on this call as it relates to the sale process. Your first question about the level of activity, data center developments. No, there's no impact, the parties that are looking at Long Ridge are all very well capitalized and interested in data center development and other land uses and on-site generation. And any party we're talking to about utilizing the land would be very comfortable were someone else to own Long Ridge as long as it's a well-capitalized counterparty. So we're pushing hard to advance all the opportunities.

I completely agree, of course, as those opportunities advance, the visibility of value creation at Long Ridge becomes that much more clear. And so it's nice to have commercial momentum when you're in the midst of a monetization process. In terms of timing, look, I'll -- our goal would be to have an announced transaction, I'm just going to say, in the first half of this year. In terms of what the transaction would mean, look, it would be significant for us, hundreds of millions of dollars of net proceeds. I'm not going to go beyond that in terms of quantifying our expectations, but we set out with a certain expectation. And so far, we are certainly trending in line with those expectations.

No, there wouldn't be much of a tax drag on the sale. The beauty of being in the development business is for better or for worse, you generate a fair amount of net operating losses over the time of developing assets. And so no, we don't expect there to be much tax leakage. So most of the gross proceeds after debt repayment should flow to FIP. And finally, what do we do with those proceeds? I think we'll probably deleverage mostly. It will be a really good thing for us. It may give us an opportunity to actually refinance this loan we put in place. We deliberately put a loan in place that is not of very long-term duration that limits the prepayment premium. And so we negotiated an even lower premium with proceeds from the Long Ridge sale. So it gives us the flexibility to deleverage initially. Brian asked about some of the rail acquisitions. So obviously, we'll be disciplined. But needless to say, we're focused on deleveraging. I think you should assume we use proceeds from the Long Ridge sale to deleverage high-cost debt.

Got you. And how far down does new Phase 3 underground storage cavern development have to go? How far down the road does it have to go before thinking about monetizing that business as well?

I just think the more -- the closer we get to operational completion, the more value any buyer would perceive. So it's not a precise science. I think you certainly need construction underway and commercial contracts, right? Then you have the certainty. I think the team at Repauno has done a great job delivering on constructing. And I think any buyer of Repauno would give us credit for being able to get the job done. But at a minimum, we've got to get through the next 6 to 9 months and be under construction and at least have anchor customers for Phase 3 before we considering monetizing that asset.

Right. So if that's a 2026 goal, the idea that this could monetize, I don't know, by the first half of next year is not unthinkable.

Correct. Yes. I think that's a good way to think about it.

I would now like to hand the conference back over to Alan Andreini for closing remarks.

Thank you, Shannon, and thank you all for participating in today's conference call. We look forward to updating you again after Q1.

This concludes today's conference. Thank you for your participation. You may now disconnect.

Good day, and thank you for standing by. Welcome to the Q3 2025 FTAI Infrastructure Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Alan Andreini, Investor Relations. Please go ahead, sir.

Thank you, Michelle. I would like to welcome you all to the FTAI Infrastructure Earnings Call for the third quarter of 2025.

Joining me here today are Ken Nicholson, the CEO of FTAI 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 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 the 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.

Thank you, Alan, and good morning, everyone. Welcome to our earnings call for the third quarter of 2025.

As we typically do, we'll be referring to the earnings supplement, which you can all find posted on our website, and I will get right into it by kicking things off on Page 3. The quarter was an extremely active one. In our Rail segment, we closed on the acquisition of the Wheeling & Lake Erie Railway, a transformative transaction in many ways and expect to be one that sets the stage for significant growth in our Rail segment in the quarters to come. Also during the quarter at Long Ridge, we commenced gas production in West Virginia, and we're now producing in excess of 100,000 MMBtu per day, well above our power plants consumption.

And most importantly, the company delivered strong financial performance. Adjusted EBITDA for the quarter was $70.9 million, up 55% from $45.9 million last quarter and nearly double adjusted EBITDA year-over-year. Importantly, the reported figures reflected only 5 weeks of contribution from the Wheeling, which we closed into a voting trust on August 25 and just under 5 weeks of contribution from West Virginia gas production. Our results for Q4 and going forward will reflect these activities entirely, so we expect the reported results to continue to grow in the periods ahead. The events of the third quarter, together with agreements in place at our Jefferson and Repauno segments put us in a position to generate in excess of $450 million of adjusted EBITDA on an annual basis, excluding any organic growth or new business wins.

On the right side of Slide 3, we break down the components of that target, and I'm going to walk through it briefly. First, for purposes of the bar chart, we have adjusted our reported results to reflect the Wheeling acquisition and West Virginia gas production as if they had both occurred at the beginning of the quarter. Next, once approval is received to release the Wheeling from the voting trust, we have confidence in approximately $20 million of annual savings through realizing economies of scale.

And finally, we had the financial impact of agreements in place at Jefferson and Repauno, which will commence revenue service at various points between now and the end of next year. I will note that our $460 million annual target excludes several important opportunities, including a number of meaningful new revenue opportunities on the combined Transtar Wheeling platform, behind-the-meter developments at Long Ridge or any further activities at Jefferson and Repauno.

Flipping to Slide 4. I'll briefly touch on the highlights at each segment. At our Rail segment, adjusted EBITDA was $29.1 million, which included $8.4 million attributable to the Wheeling for the 5 weeks we owned the company. On a stand-alone basis, the Wheeling generated approximately $20 million of adjusted EBITDA for the full quarter. We hope to obtain active control of the Wheeling soon and are excited about the opportunities that lay ahead.

At Long Ridge, reported EBITDA for the quarter was $35.7 million, up materially from Q2, driven by the full period impact of higher capacity revenue and partially by sales of excess gas in West Virginia. With current production exceeding 100,000 MMBtus per day across our gas production operations, we anticipate Long Ridge to achieve its $160 million annual EBITDA run rate in this fourth quarter.

At Jefferson, EBITDA was $11 million, in line with last quarter's results as we prepare to commence revenue service under 2 contracts, each with minimum volume commitments that represent approximately $20 million of annual adjusted EBITDA.

And Repauno construction of our Phase 2 transloading project is fully funded and progressing on plan. We have 2 contracts and 1 LOI in place at Repauno for Phase 2 that together represent $80 million of annual EBITDA once operational. And earlier this month, Repauno received a long-awaited permit for the construction of our Phase 3 cavern system.

It's been a productive year-to-date, but we have a handful of important priorities we're focused on over the next few months, and we briefly list those on Slide 5. First, we'll take active control of the Wheeling immediately upon approval by the Surface Transportation Board. The timing is a bit uncertain, but given the current federal government shutdown, but we do believe our application is a priority for the STB.

Second, at Long Ridge, with the business reaching our base financial targets, we intend to pursue strategic alternatives, including a potential monetization of the business. It is a great asset and a great market environment to be exploring a sale, and I'll touch base some more on our plans for Long Ridge in just a bit.

And finally, we plan to refinance our existing parent level debt with a new bond issuance in the coming weeks. That financing should put us in a position with a strong long-term balance sheet that allows us for deleveraging over time.

Moving to Slide 6. I'll talk a little more about the capital structure. Our capitalization at the end of September reflected the new credit facility and preferred stock that we have issued in August, simultaneously with the acquisition of the Wheeling. Total debt was $3.7 billion, of which $1.2 billion was at our parent level and $2.5 billion was at our subsidiaries and is nonrecourse to the parent.

As I mentioned, prior to year-end, we plan to refinance our existing parent level credit facility with a new long-term bond issuance. We expect the new bonds to be the only debt at our parent level and benefit from cash flows that we receive from our business segments. All of the operating cash flow generated by our Rail segment is permitted to be distributed to the parent level. And with the new business coming online at Repauno and Jefferson, we expect to generate additional cash flow available for parent debt service from those entities. The result is more than ample cash flow beyond debt service for reinvestment or deleveraging. In addition, any proceeds in the event of the sale of Long Ridge will be available for further deleveraging.

Moving to Slide 8. We'll dig a little deeper into the quarterly results and activity at each of our segments, starting with the Rail segment. We posted revenue of $61.7 million and adjusted EBITDA of $29.1 million in Q3 compared with revenue of $42.1 million and adjusted EBITDA of $20.7 million in Q2. At Transtar, overall carloads, average rates and revenues for the quarter were stable.

Coke volumes came in lower for the quarter, resulting from the incident at U.S. Steel's Clairton production unit. We've seen coke volumes rebound and expect them to be back to historical levels in the coming months. Away from coke volumes were up for the quarter, offsetting the bulk of the lower coke volumes. Transtar operating expenses also continue to be stable as fuel costs and other material cost items have been largely unchanged. We're bullish about the quarters to come at Transtar and expect the investments committed by Nippon Steel to drive expansion of revenue and profits next year and beyond.

More importantly, the Wheeling. I'm pleased to say even in the short period of time that we have now owned the company, the business is exceeding our expectations. Volumes and revenues at the Wheeling were up approximately 10% versus the company's second quarter and EBITDA was up 20% versus the company's 2Q. These strong results reflected practically none of the $20 million of annual efficiencies that we are targeting and our outlook for the new business opportunities for the combined business continues to grow. While the third quarter is typically a seasonally stronger quarter for the Wheeling, we're off to a good start in October, and we hope to maintain the strong momentum in Q4.

Flipping to Slide 9, I'll talk a little bit more about our integration plans for the Wheeling. We went through a similar slide on our second quarter call. But given the recent strong performance from the Wheeling, we have slightly increased our financial targets from last quarter and now expect EBITDA for the combined Transtar and Wheeling of at least $220 million run rate by the end of 2026, up from our $200 million original estimate.

The building blocks to that target are provided in the bar chart. For the most recent third quarter, the 2 companies generated combined annual EBITDA as is of $164 million, with $83 million attributable to Transtar and $81 million to the Wheeling. Our $20 million target for annual cost savings is comprised of a detailed line item-based work plan that we plan to implement together with Wheeling senior management. We expect the entirety of these savings to be implemented within the next 12 months.

The 2 next components relate to high confidence revenue opportunities. The first is a specific opportunity connected to our Repauno terminal. For that project, Repauno customers plan to source natural gas liquids from fractionators located directly on the Wheeling rail system. Total quantities represent about 30,000 carloads annually. At current market rates per carload, that's approximately $20 million of incremental annual EBITDA at the Wheeling.

The second revenue opportunity is a Transtar where additional freight volumes into and out of U.S. Steel's facilities will be substantial as a result of the commitments made by Nippon Steel. Nippon has committed to invest a total of $5 billion to expand production, specifically at U.S. Steel's Pittsburgh and Gary, Indiana facilities. We expect these investments to result in 10% to 20% increases in shipments or approximately $15 million of annual EBITDA. The bar chart excludes a number of additional items, including organic growth and pricing gains and a pipeline of new business opportunities that we are pursuing at the Wheeling as well.

Next on to Long Ridge. Long Ridge generated $35.7 million of EBITDA in Q3 versus $23 million in Q2. Power plant capacity factor was again at the top of the industry at 96%. We did take a brief scheduled maintenance outage here in the month of October. So our capacity factor for Q4 will reflect that, but we expect West Virginia gas production revenues to more than offset the outage. With West Virginia now online, we're producing over 100,000 MMBtu per day versus the 70,000 MMBtu per day required at the plant. So we expect to see higher revenues from excess gas in Q4 and higher than we experienced in Q3, of course.

And we continue to push forward on a number of initiatives to drive growth at Long Ridge. The 20 million -- sorry, the 20-megawatt uprate in our power generation continues to advance. While precise timing of receiving approval and implementing the uprate is not a prescribed event, we are highly confident in the outcome. Adding 20 megawatts of generating capacity at today's power price adds $5 million to $10 million of annual EBITDA to the P&L.

And we continue to see more inbound interest from behind-the-meter projects. Potential structures we're considering include partnering with others to develop new data center facilities on our land or just a direct lease of the land that we own to generate a valuable fixed income stream or potentially providing backup power for a standby fee together with the land lease. Either way, the market continues to be active, and we think this bodes well for Long Ridge's value proposition in the months ahead.

Now moving on to Slide 11. With Long Ridge now running at its $160 million annual EBITDA target and continued strong momentum on behind-the-meter opportunities, we plan to explore strategic alternatives for the business. Long Ridge is an incredibly high-quality asset. The plant ranks at or near the top of the list nationally in efficiency, reliability and profitability on a per megawatt basis. With the macro environment as strong as ever in the current feeding frenzy for low-cost power generation, we have high expectations for the potential sale of the asset.

On to Jefferson. Jefferson generated $21.1 million of revenue and $11 million of adjusted EBITDA in Q3 versus $21.6 million of revenue and $11.1 million of EBITDA in Q2. Volumes at the terminal were slightly lower, driven by softer crude oil imports, but were offset largely through higher average rates per barrel. As discussed previously, we have 2 contracts, representing a total of $20 million of incremental annual EBITDA commencing in the coming months. In addition, we're in late-stage negotiations for additional contracts with multiple parties to handle conventional crude and refined products as well as renewable fuels. And some of these negotiations involve business that would commence in the coming months with little to no incremental investment or CapEx.

And finally, I'll close out with Repauno. Phase 2 construction is proceeding as planned and toward our goal of completion by the end of 2026. We have 2 customers signed up under long-term contracts and an additional customer with whom we executed a letter of intent and expect to finalize the long-term contract by the end of this year. In the aggregate, these 3 pieces of business represent minimum volumes of 71,000 barrels per day and approximately $80 million of annual EBITDA for Phase 2. The 2 contracts are each for 5-year terms commencing upon completion of Phase 2 construction, while the third letter of intent is for 5 years with a 2-year extension at the option of our customer.

And we're excited to have announced earlier this month that Repauno received the permit for the construction of our Phase 3 underground handling system. While it has been a long time coming, I want to reiterate how important a milestone this can be for Repauno. The cavern project, of course, can convey attractive economics and cash flows in the future. But in our view, receiving the permits also creates value in the near term as our market can now appreciate the much larger potential for our business and our strategic position in the growing market for liquid exports.

In conclusion, we're happy with our team's progress during the quarter, and we look forward to reporting to you all in the near term with updates on each of our key priorities in the months ahead.

I will now turn the call back to Alan.

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

[Operator Instructions] Our first question comes from the line of Giuliano Bologna with Compass Point.

Congrats on a very impressive quarter and this quarter. As a first question, it's pretty clear that FTAI is evolving into -- evolving from being a development company to being much more of an operating company. And with that transition, are you expecting any material increases in your SG&A and your cost structure?

Fundamentally, no. Our G&A really is more of a fixed expense. And as the company grows, revenues, EBITDA grow, G&A shouldn't be a variable item linked to that type of growth. It should stay relatively flat. I mean I will say, on a quarterly basis, if you just look back, Q4 has always come in slightly higher as we have some end-of-year adjustments in the G&A line and what have you. But that's just a quarterly thing. Across the year, the aggregate expense is something we expect to stay relatively consistent, Giuliano.

That's helpful. And now that you've completed the acquisition, can you give us some examples of the synergies that you'll really get between Wheeling and Transtar having those 2 businesses together?

Yes, absolutely. There's just a tremendous amount that we are identifying and eager to act upon. Obviously, we're not in a position to act on much of this until we're out of the voting trust. But immediately, thereafter, we're getting it going on a long list of opportunities. I mean we talked about the $20 million of cost savings and efficiencies. That's a long list of discrete items, pretty, frankly, straightforward stuff. We have high confidence in those items, combined purchasing power, elimination of redundant expenses, et cetera, et cetera. I think we feel very confident around that $20 million target.

Above and beyond that, there is a much longer list of potential combination, I would just say, enhancements, things like network optimization. I mean, an example would be where today, Transtar may take volumes out of a U.S. Steel facility and quickly hand those volumes at an interchange off to another freight rail provider for shipment of that product out to, let's just say, the West Coast. Well, tomorrow, when we jointly operate with the Wheeling, we will keep those volumes on the Wheeling system potentially for a longer period of time. And that just means more revenue for us. And then we'll still hand it off to the same railroad or maybe a different railroad at the end. But when you think about the math of that, that's good for the customer. And obviously, that's good for our business.

Other dynamics are existing customers who now can benefit from the expanded reach of the connected rail systems. Customers today who may not have access into the Pittsburgh market or into various markets in Ohio. If you're a customer who originates on Transtar and want access to the Ohio market in a more simple and direct way or vice versa, customer in Ohio who wants access to the Pittsburgh market, we now can provide that access holistically. So that's a new opportunity for the customer who may otherwise be using another railroad to access the markets we now serve on a combined basis.

There's a long list of those sorts of things, and we're eager to set out and make those things happen. None of that is included in our outlook or the $220 million target for the railroad. So I do think there's some, hopefully, upside in those targets we've laid out.

That's very helpful. And maybe a quick follow-up on a very similar topic. Now you have a sale platform with Wheeling and Transtar together. If you do more acquisitions going forward, what kind of synergies do you think you can realize by having a dorsal platform and continue to add tuck-in acquisitions even if the acquisitions are not physically next to the current system?

Yes. Yes. I mean I think bigger is better. And this is something we've done with our historical rail investments and each incremental investment is that much more accretive. So we're excited about it, and we're excited to keep up the effort to go execute on more M&A in the rail space. The types of synergies would be roughly the same. Obviously, if they're not a connecting railroad that we would be investing in, some of the revenue enhancements wouldn't be there, but the same types of cost eliminations would be there. And so -- and I'm excited about it. I think we've now got a bigger, better platform, and we're even better positioned to go out and buy more railroads.

Our next question will come from the line of Brian Mckenna with Citizens.

It's great to see all the momentum in the Rail segment, specifically with Wheeling. I appreciate all the detail on the quarterly trends and then the near-term and the longer-term outlook. But do you have an updated time line around STB approval? And then is it still a reasonable expectation that gets done by year-end? Or has that maybe gotten pushed a little bit just with the government shutdown?

No. My guess is that is still a reasonable expectation. I mean what I can say is look, yes, the federal government shutdown does affect the Surface Transportation Board. So prior to the shutdown, the STB had communicated a target for end of November for reaching a decision. I have a decent sense that at the STB, this is a priority for them. I'm not aware of any detractors regarding this combination. And so our assumption is when the government reopens, this will be -- continue to be a high item on their list of priorities. Yes, I think it's hopefully sooner versus later. It's anyone's guess as to when the government reopens, but hopefully, shortly thereafter, we should get the green light.

Okay. That's helpful. And then just a follow-up on the Rail segment. So how much cash did the segment generate in the quarter? And then is there a way to think about kind of the full quarter run rate of cash generation within the Rail segment? And then again, can you just remind us what is the top priority? I think I know the answer to it, but what's the top priority for uses of this excess cash?

Yes. The EBITDA on a combined basis, assuming the full -- the way to think about it is just the actual third quarter before anything, before $20 million of efficiencies, before all these revenue opportunities and what have you, EBITDA was about $40 million. CapEx at Transtar was near 0. CapEx at the Wheeling was, I want to say, $6 million or $7 million. It's a little higher in Q3 for them with a number of big projects that they took care of during the warmer weather will not be that high in the fourth quarter. So it's not necessarily a great indication of CapEx to come.

But call that cash flow, let's just say, on a normalized basis of about $35 million, rounding up $32 million to $35 million. All of that cash will be available to shoot up to our parent, and it will be used initially for debt service. We expect that cash flow to grow materially, $20 million a year of cost savings, revenue enhancements, what have you. And so -- but -- so we do expect there to be excess cash available at the parent level.

What will we use the excess cash for after debt service, that will depend in part upon the investment opportunities we see at the time. Look, deleveraging, I think we view would be a good thing for us and the debt we're putting in place will certainly be one we could deleverage with. Obviously, we talked about Long Ridge as well and with that transaction, should it occur, there'll be meaningful deleveraging as well. So I think that excess cash right here, absent a highly accretive investment opportunity, we would probably use to deleverage over time.

Yes. Okay. That's great. And then just one final question for me real quick. Just in terms of the bridge refi, what's the base case expectation in terms of getting that done? I'm assuming you maybe want to get that done by year-end. And so that's the first part of the question. And then just in terms of the specifics, like does an asset sale need to take place in order for that to get done? And then how are you thinking about the duration and cost of this debt capital?

Yes. So yes, definitely want to get done by year-end. Don't need any monetization of another asset in order to get it done. We're ready to go. I think we've got a great structure that is a great fit for the company. I'm not going to talk about duration. It will be at least 5 years or pricing, if that's okay. I just -- we're going to commence the marketing process here shortly. So I'll just -- I'm going to leave that to the side for now and maybe we can comment on that once we start the marketing. But look, it's going to be a bond, not terribly different than the bond we previously had outstanding.

The previous bond was a 5-year term, no call to I think you should expect something generally similar to that. I like a shorter call protection period because with the ramp-up in cash flow, particularly the cash that will be coming from Jefferson and Repauno starting throughout the next 12 months, we're going to want to use cash to deleverage and having a shorter window of expensive premiums and call protection, I think, will be advantageous for the company. But outside of that, it will be a typical senior notes offering.

Our next question comes from the line of Greg Lewis with BTIG.

I would love for you to talk a little bit about Repauno. We saw the news about getting the permit for Phase 3. Kind of curious what next steps are, maybe roughly how much CapEx that might be involved? And then probably more importantly, when we think that could be ready and start generating some revenue?

Greg, thanks for the question. Yes, it was a marathon getting here, needless to say, obtaining the Phase 3 permit was a lengthy occurrence, but we're thrilled to be where we are and now is when the sprint portion of the development begins. We are -- look, I think it's a very big deal for Repauno. This is really what it's been about for quite some time. It's a tremendous expansion of the asset. Phase 3 represents effectively a doubling of what Phase 2 is. Phase 2 is 1 aboveground storage tank at just over 600,000 barrels. Phase 3 as permitted is 2 underground caverns each at 640,000 barrels.

So it is a big deal, a game changer for the economics of Repauno. We have a great macro with continued demand for export and gateways out of the East Coast. We are effectively sold out on Phase 2. And so we're eager to get going on Phase 3. What we need to do is finalize some of the construction contracting. Our estimates today, estimates are that building 1 cavern, 1 cavern would take about $200 million. Whether there would be additional handling systems connected to that cavern or not will depend upon the ultimate throughput and what have you, generating about $70 million to $80 million of annual EBITDA. So the economics are pretty compelling. I mean it's like a 3-year payback.

Timing will depend upon the competitive bidding with our contractors. It's realistically probably between 2 and 3 years to build a cavern. If we build 2 at the same time, it would be the same time frame. It's not like a sequential event. But look, the economics are wildly compelling. The macro is super. And so we're eager to get going on commercial contracting, final cost estimating and getting construction contracts ready and then we can hit the financing markets and get the thing going.

Okay. Great. Appreciate the color. And then my other question is around Long Ridge. You highlighted the potential strategic alternatives. I wanted maybe a little bit more detailed question. What is the -- how does it -- how should we think about Long Ridge as a power generation facility versus the natural gas wells, which are outside of that? And I don't know who the buyer is, but I could see a situation where a lot of buyers might not be interested in having natural gas wells. Just kind of curious how you're thinking about that? And could we see a scenario where maybe we maintain those natural gas wells for the production? Just kind of curious how we should be thinking about how this plays out?

Yes. I think there is a broad spectrum of potentially interested parties from all types of backgrounds, and that's a good thing. You're right about the integrated gas, and that is, in our opinion, a huge differentiator and driver of value. So I would expect that the ultimate transaction involve a sale of the entire business, the entire asset, the entire business, the gas, the power plant, the land. It is, of course, possible, you're right that the buyer prefer to just take the plant and the land, we keep the gas that anything is possible, we could do anything. Our focus, of course, is on maximizing value.

I will tell you, right now, with the feedback and the inbounds that we've been getting, we haven't had anyone indicate they'd be interested in just one asset. The interest has been in the whole site. It's why it is such a wildly profitable asset, and those profits are effectively locked in with power swap sales. And I think maintaining that balance and that integrated aspect of the asset is actually an important thing and the buyer universe appreciates that. So I think it's possible. It could end up being cut in 2, if you will, with 1/2 sold and 1/2 kept. My view right now is that's less likely.

And I would now like to hand the conference back over to Alan Andreini for closing remarks.

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

This concludes today's conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day.