FTAIs Q3 2025: Contradictions Emerge on Wheeling-TransStar Synergy Expectations, Acquisition Strategy, and Repauno Phase 3 Timeline/Costs

Guidance:

• Target >$450M adjusted EBITDA annually (excludes organic growth/new wins).
• TransStar + Wheeling ≥ $220M EBITDA run-rate by end-2026; $20M of annual cost savings targeted within 12 months.
• Long Ridge to achieve $160M annual EBITDA run rate in Q4; exploring strategic alternatives including potential sale.
• Repauno phase two ~ $80M annual EBITDA; phase three ~ $200M capex per cavern, ~ $70–80M EBITDA per cavern, 2–3 year build.
• Jefferson contracts to add ~ $20M annual EBITDA in coming months.
• Plan to refinance parent-level debt with a bond by year-end to enable deleveraging.

Business Commentary:

* Acquisition and Revenue Growth: - FTAI Infrastructure reported adjusted EBITDA of $70.9 million for Q3 2025, up 55% from the previous quarter and nearly double year-over-year. - This growth was driven by the acquisition of the Wheeling & Lake Erie Railway Company, which contributed five weeks of its operations, and the commencement of gas production in West Virginia, exceeding 100,000 MMBTUs per day.

• Rail Segment Expansion:
• The rail segment's adjusted EBITDA was $29.1 million, including $8.4 million from the Wheeling for the five weeks it was owned.

• The Wheeling exceeded expectations, with volumes and revenues up approximately 10% and EBITDA up 20% from its second quarter, demonstrating potential for future growth.

• Long Ridge Power Generation and Gas Production:

• Long Ridge generated $35.7 million in EBITDA for Q3, with a capacity factor of 96%, reflecting a significant improvement from Q2.

• The increase was due to higher capacity revenue and sales of excess gas in West Virginia, with production now exceeding 100,000 MMBTUs per day.

• Strategic Initiatives and Future Plans:

• The company plans to take active control of the Wheeling immediately upon approval and will not renew its existing parent debt with a new bond issuance.
• These actions aim to pursue strategic alternatives for Long Ridge, potentially including its sale, and position the company for long-term growth and deleveraging.

Sentiment Analysis:

Overall Tone: Positive

• “Adjusted EBITDA for the quarter was $70.9 million, up 55% from $45.9 million last quarter and nearly double year over year.” Management: “in a position to generate in excess of $450 million of adjusted EBITDA on an annual basis.” Multiple comments on strong segment momentum, targets and upcoming bond refinancing support a positive outlook.

Q&A:

• Question from Giuliano Bologna (Compass Point): With the company transitioning to more of an operating company, should we expect material increases in SG&A; what synergies will you realize between Wheeling and TransStar; and if you do more acquisitions, what synergies can be expected?
  Response: G&A should remain largely fixed and not rise materially with growth; once Wheeling is out of the voting trust management targets ~$20M of annual cost savings (purchasing power, eliminate redundancies, network optimization) and expects additional revenue synergies across combined rail platform; similar cost synergies would apply to future rail M&A.

• Question from Brian McKenna (Citizens): Any updated timeline for STB approval of the Wheeling acquisition given the government shutdown; how much cash did the rail segment generate in the quarter and what is the run-rate to the parent; and what’s the plan/timing for the bridge refinancing and does a sale need to occur first?
  Response: STB approval expected soon after government reopens (prior target end-November); normalized rail cash flow available to parent is roughly $32–35M per quarter and will be used for debt service and deleveraging; parent-level refinancing via a bond is targeted by year-end and does not require an asset sale.

• Question from Greg Lewis (BTIG): Now that Repauno received the phase three permit, what are next steps, estimated capex, timeline to revenue; and regarding Long Ridge, should buyers expect the power plant and gas production to be sold together or separately?
  Response: Phase three is transformative — estimate ~ $200M capex per cavern, each generating ~ $70–80M annual EBITDA with a ~2–3 year build; next steps are finalizing contracts, cost estimates and financing; on Long Ridge, management expects most buyers prefer the integrated asset (plant + gas + land) though structures can vary, with focus on maximizing value.

Contradiction Point 1

Synergies between Wheeling and TransStar

It involves differing expectations and descriptions of synergies that can be achieved by combining Wheeling and TransStar, which impacts investment and strategic decisions.

Can you provide examples of the synergies from combining Wheeling and TransStar? - Giuliano Bologna(Compass Point Research & Trading, LLC, Research Division)

2025Q3: There are numerous opportunities for synergies, including cost efficiencies, network optimization, and revenue enhancements. Cost efficiencies include purchasing power and redundant expense elimination. Network optimization may involve keeping volumes on the Wheeling system for longer periods, benefiting both customers and the business. - Ken Nicholson(CEO)

What are the synergies of combining Transtar and Wheeling? - Giuliano Jude Anderes Bologna(Compass Point Research & Trading, LLC, Research Division)

2025Q2: We have extensive experience in integrating rail assets. We're very confident in achieving $20 million in annual savings, including network efficiencies, optimized assets, and purchasing power. The geographic fit enables immediate synergies and growth opportunities. - Kenneth J. Nicholson(CEO & President)

Contradiction Point 2

Focus on Future Acquisitions

It involves differing perspectives on the company's acquisition strategies and priorities, which affect long-term growth and diversification plans.

If you pursue further acquisitions, what synergies do you anticipate through consolidating Wheeling & Lake Erie Railway Company and TransStar? - Giuliano Bologna(Compass Point Research & Trading, LLC, Research Division)

2025Q3: Bigger is better for future acquisitions. The synergies would primarily consist of cost eliminations, although some revenue enhancements may also be possible. The company is well-positioned to grow through future M&A efforts. - Ken Nicholson(CEO)

Are there opportunities for smaller assets with high-single-digit to low-double-digit EBITDA margins or larger acquisitions similar to Wheeling? - Giuliano Jude Anderes Bologna(Compass Point Research & Trading, LLC, Research Division)

2025Q2: Smaller acquisitions aren't a priority, though we wouldn't ignore local tuck-ins. Focus remains on larger short line and regional railroads, with potential for chunky transactions in the double-digit EBITDA range. - Kenneth J. Nicholson(CEO & President)

Contradiction Point 3

Expected Timeline for Repauno Phase 3

It involves a discrepancy in the expected timeline for completing Repauno Phase 3, which could impact investor expectations and project timelines.

What are Repauno's next steps after securing the Phase 3 permit? What is the expected CapEx and when could revenue generation begin? - Greg Lewis(BTIG)

2025Q3: Repauno's phase three represents a significant expansion. It includes two underground caverns, each at 640,000 barrels. Construction is estimated at $200 million per cavern. The project has a three-year payback and could start generating revenue in two to three years after planning and construction. - Ken Nicholson(CEO)

How long after the May 14 public hearing do you estimate it will take to receive cavern approvals? - Giuliano Bologna(Compass Point Research & Trading, LLC, Research Division)

2025Q1: We expect to receive the permit within 30 days after the hearing, potentially up to 45 days. Upon receiving the permit, we plan to immediately start engineering and construction contracting, aiming to begin Phase 3 later this year. - Ken Nicholson(CEO)

Contradiction Point 4

Synergy Expectations

It highlights conflicting expectations regarding the synergies expected from the acquisition and integration of Wheeling and TransStar, which could impact strategic planning and financial forecasting.

Can you provide examples of synergies from combining Wheeling and TransStar? - Giuliano Bologna(Compass Point)

2025Q3: There are numerous opportunities for synergies, including cost efficiencies, network optimization, and revenue enhancements. Cost efficiencies include purchasing power and redundant expense elimination. Network optimization may involve keeping volumes on the Wheeling system for longer periods, benefiting both customers and the business. - Ken Nicholson(CEO)

Are any potential Transtar M&A deals delayed or passed on? What's the acquisition timeline? - Brian McKenna(Citizens)

2024Q4: The synergies would primarily consist of cost eliminations, although some revenue enhancements may also be possible. - Ken Nicholson(CEO)

Contradiction Point 5

Repauno Phase 3 Timeline and Construction Costs

This contradiction involves differing timelines and construction cost estimates for the Repauno Phase 3 expansion, which could impact investment decisions and expected revenue contributions.

What are the next steps for Repauno after receiving the phase three permit? What is the potential CapEx, and when could revenue generation begin? - Greg Lewis(BTIG)

2025Q3: Repauno's phase three represents a significant expansion. It includes two underground caverns, each at 640,000 barrels. Construction is estimated at $200 million per cavern. The project has a three-year payback and could start generating revenue in two to three years after planning and construction. - Ken Nicholson(CEO)

Are there any updates on permits for the Repauno underground cavern, and what is the long-term potential of Phase 3? - Brian Mckenna(Citizens)

2024Q4: We expect to have the cavern permits by the end of this quarter. Caverns are more cost-effective and maintenance-free than aboveground storage. Phase 3 could generate an additional $100 million of EBITDA, making Repauno even more valuable. - Ken Nicholson(CEO)