Sign in

You're signed outSign in or to get full access.

FI

FTAI Infrastructure Inc. (FIP)·Q4 2023 Earnings Summary

Executive Summary

  • Record quarter: consolidated Adjusted EBITDA $33.29M and core segment Adjusted EBITDA $42.46M; revenue $81.44M (+14.1% YoY) and diluted EPS of -$0.47, with Transtar and Jefferson delivering record segment EBITDA .
  • Jefferson throughput averaged 185,000 bpd and EBITDA hit $14.33M; management highlighted advanced negotiations across four projects totaling ~$75M annual EBITDA potential, plus ~$8M annual cost savings targeted by mid-2024 .
  • Repauno Phase 2 expected to be funded entirely with tax‑exempt debt (~$200M capex) and generate ~$40M annual EBITDA; caverns permitting targeted for 2H 2024, enhancing asset value and storage economics .
  • Long Ridge signed a data center LOI with nonrefundable deposits hitting Q1 P&L; management sees structural demand tailwinds in PJM and plans to refinance corporate debt in 2024 to lower fixed charges .
  • We could not retrieve S&P Global Wall Street consensus estimates; no beat/miss determination available at this time (SPGI request limit exceeded). Focus catalysts: Jefferson contract conversions, Repauno Phase 2 signing, Long Ridge data center agreements, and corporate refinancing .

What Went Well and What Went Wrong

What Went Well

  • Record core segment Adjusted EBITDA ($42.46M) and consolidated Adjusted EBITDA ($33.29M); Transtar posted $23.63M with margins exceeding 50% and Jefferson $14.33M amid strong throughput .
  • Jefferson business pipeline accelerating: advanced negotiations across clean fuels and crude projects (~$75M annual EBITDA once commenced); new lease at Jefferson South generating gains as acreage is leased above book value .
  • Clear path to >$200M run-rate Adjusted EBITDA in 2024 driven by segment momentum and new initiatives; management explicitly raised the target vs prior communications .

What Went Wrong

  • Continued net losses and negative net income margins due to high interest expense and equity losses in unconsolidated entities; Q4 interest expense was $26.17M and equity in losses $(17.53)M .
  • Long Ridge EBITDA declined to $5.10M (from $7.97M in Q3) on a 20-day planned maintenance outage and weak third-party gas sales amid low gas prices; production held back until ~$2/MMBtu threshold .
  • Repauno remained loss-making on Adjusted EBITDA (-$0.61M) pending Phase 2 signing; negotiations slower than hoped though scale of opportunity expanding .

Financial Results

MetricQ4 2022Q2 2023Q3 2023Q4 2023
Revenue ($USD Millions)$71.39 $81.83 $80.71 $81.44
Diluted EPS ($USD)-$0.59 -$0.38 -$0.55 -$0.47
Net Loss Attributable to Stockholders ($USD Millions)$(60.86) $(38.85) $(56.10) $(48.19)
Adjusted EBITDA – Consolidated ($USD Millions)N/A$27.68 $24.66 $33.29
Adjusted EBITDA – Four Core Segments ($USD Millions)N/A$36.15 $32.21 $42.46
Adjusted EBITDA Margin % (Consolidated)N/A33.8% ( )30.6% ( )40.9% ( )
Net Income Margin % (to Stockholders)-85.3% ()-47.5% ()-69.5% ()-59.2% ()

Segment breakdown (Adjusted EBITDA):

Segment Adj EBITDA ($USD Millions)Q2 2023Q3 2023Q4 2023
Railroad (Transtar)$20.30 $17.43 $23.63
Jefferson Terminal$7.08 $7.76 $14.33
Repauno$(1.64) $(0.96) $(0.61)
Power and Gas (Long Ridge)$10.40 $7.97 $5.10
Four Core Segments Total$36.15 $32.21 $42.46

KPIs:

KPIQ2 2023Q3 2023Q4 2023
Dividend per Share ($)$0.03 $0.03 $0.03
Jefferson Throughput (bpd)N/AN/A185,000
Jefferson Revenue ($USD Millions)N/A$16.6 $19.3
Transtar Revenue ($USD Millions)$42.5 $41.9 $44.0

Notes:

  • Q4 other income included $6.60M gain on sale of assets; management attributed gains to new lease accounting at Jefferson South and expects similar future gains as acreage is leased above book value .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Run-rate Adjusted EBITDA2024Target ~$200M early 2024 Forecast to exceed $200M during 2024 Raised
Jefferson Annual Cost Savings2024Not disclosed~$8M annual cost savings fully implemented by mid-2024 New
Jefferson Long-term Contracts PipelineMulti-year3 contracts totaling ~$20M annual EBITDA (Q3) 4 initiatives totaling ~$75M annual EBITDA potential Raised
Repauno Phase 2Post-completion>$40M annual EBITDA; ~$200M build ~$40M annual EBITDA; ~$200M build; funded with tax‑exempt debt Maintained/clarified
Long Ridge Data CenterNear termIncreased interest from behind-the-meter customers LOI signed; nonrefundable deposits to hit Q1 P&L; negotiating up to 200MW with existing tenant New/expanding
Corporate Refinancing2024Not highlightedExpect to refinance corporate debt in 2024 to reduce fixed charges New
DividendQ4 2023$0.03 per share $0.03 per share Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2023, Q3 2023)Current Period (Q4 2023)Trend
Clean fuels/hydrogen (Jefferson South)Q2: 15-year clean fuels contract executed ; Q3: 3 contracts secured, one clean fuels for 2025 Advanced negotiations; ammonia contract executed; Jefferson South positioned as largest carbon‑free ammonia exporter; 4 projects totaling ~$75M annual EBITDA Strengthening
Segment run-rate EBITDAQ3: $200M early next year target Forecast to exceed $200M in 2024 Raised
Railcar repair facility (Transtar)Q3: Initiatives to add ~$30M annual EBITDA Facility opened; ~$20M build funded by state; ~$10M revenue at full capacity; 30–40% margins; plan to replicate Ramping
Auto strike impact (Transtar)Q3: UAW strike softened mix and margins Expect similar impact in Q4 but EBITDA targeted Q2 levels ($20M) Normalizing
Jefferson throughput/mixQ3: refined products mix lowered revenue but raised EBITDA 185kbpd throughput; record EBITDA; lease-related gain Improving
Long Ridge data center demandQ3: behind-the-meter interest; upgrade to 505MW +$5–$10M EBITDA potential Data center LOI signed; deposits hitting Q1; separate negotiation up to 200MW Accelerating
Repauno Phase 2 & CavernsQ3: Phase 2 >$40M EBITDA target Confident signing in 30–60 days; ~$200M cost; ~$40M EBITDA; caverns permits expected 2H 2024 Progressing
Gas pricing threshold (Long Ridge)Q3: managed down third-party sales in low price environment Prefer ≥$2/MMBtu to ramp production; WV cost closer to $1.75/MMBtu Cautious

Management Commentary

  • “Fourth quarter adjusted EBITDA prior to corporate expenses came in at $42.4 million, up 32% quarter-over-quarter… we are now forecasting to exceed our previous target of $200 million of run rate EBITDA during 2024.”
  • “Jefferson generated $19.3 million of revenue and $14.3 million of adjusted EBITDA in Q4… we are in advanced negotiations… representing a total of $75 million of annual EBITDA once commenced.”
  • “Phase 2 [Repauno]… funded entirely with tax exempt debt and to generate approximately $40 million of annual EBITDA once complete.”
  • “Late last year, we entered into a letter of intent with a data center operator… includes nonrefundable deposits, a portion of which will hit the P&L in this first quarter.”
  • “Transtar… EBITDA margins exceeded 50% in Q4, a first-time accomplishment for the company.”

Q&A Highlights

  • Railcar repair facility: ~$20M project funded by the state; at full capacity ~$10M annual revenue with 30–40% EBITDA margins; plan to build more facilities across Transtar .
  • U.S. Steel sale to Nippon Steel: management expects positive implications; contract must be assumed; sees stronger investment-grade counterparty and blast furnaces focus in Pittsburgh/Gary .
  • Jefferson pipeline detail: 4 projects—two at Jefferson South (ammonia executed and larger hydrogen-based fuels in advanced stages) and two crude projects at main terminal (including waxy crudes and expansion with an existing customer); expect execution over next 3–6 months .
  • Repauno Phase 2: “when, not if” on anchor contract; expanded producer interest boosts volumes; ~$40M run-rate EBITDA target reiterated; caverns permitting expected in 2H 2024 with significant valuation impact .
  • Gas strategy (Long Ridge): hold third‑party sales until prices ≥$2/MMBtu; WV production cost ~$1.75/MMBtu; financing for WV gas resources closing near‑term .

Estimates Context

  • Wall Street consensus estimates for Q4 2023 could not be retrieved via S&P Global due to a daily request limit being exceeded; as a result, we cannot assess revenue/EPS beats or misses versus consensus at this time. We will update when SPGI access is restored.
  • Potential estimate revisions: Jefferson’s record EBITDA and clear pipeline, Transtar pricing increases and repair facility ramp, and Long Ridge data center LOI may drive upward revisions to 2024 segment EBITDA; Repauno Phase 2 signing would be another positive inflection .
Metric (Q4 2023)ActualConsensusSurprise
Revenue ($USD Millions)$81.44 N/AN/A
Diluted EPS ($USD)-$0.47 N/AN/A

Key Takeaways for Investors

  • Core EBITDA momentum is strong and diversified: Transtar and Jefferson posted records; consolidated Adj EBITDA margin rose to 40.9% in Q4 from 30.6% in Q3, underscoring operational leverage and cost discipline .
  • Near-term catalysts: execution of Jefferson’s four-project pipeline (~$75M annual EBITDA), Repauno Phase 2 anchor contract (30–60 days target), and Long Ridge data center agreements (LOI signed; deposits in Q1) .
  • Structural value creation: Jefferson South leasing above book value can generate periodic gains; caverns at Repauno materially enhance storage economics and asset durability; Long Ridge power upgrade and data center demand in PJM offer multi‑year opportunities .
  • Balance sheet watch: $1.34B total debt with significant nonrecourse at Jefferson/Repauno; planned 2024 corporate refinancing should lower interest burden, supporting distributable cash flow and dividend capacity .
  • Risk management: Results remain sensitive to interest expense and equity losses from unconsolidated entities; commodity price exposure impacts Long Ridge third‑party gas; permitting timelines at Repauno are critical .
  • Tactical trading lens: Stock should respond to contract conversion headlines (Jefferson/Repauno), data center agreements at Long Ridge, and refinancing progress; monitor quarterly EBITDA trajectory toward the >$200M run-rate .
  • Dividend maintained at $0.03/share; expect visibility to improve as EBITDA growth, cost saves, and refinancing crystallize .