Q3 2024 FTAI Infrastructure Inc Earnings Call
Speaker Change: Hello and welcome to FCAAT Infastructure, third quarter 2024 earnings call.
Speaker Change: At this time, all participants aren't in listen only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during the session, you would need to press star one one on your telephone. You would then hear automated message advising your hand is raised.
Speaker Change: To withdraw your question, please press start one more time again. I would now like to hand the conference over to Alan and Judy and Vestery Lations. You may begin.
Alan Vestery: Thank you, Joanna. I would like to welcome you all to the Italian Persector third quarter 2020 Corps Ernie Skoll joining me here today, our Ken Nicholson CEO of the Italian Persector and Scott Christopher, the company CFO.
Speaker Change: We have posted an investigation 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.
Speaker Change: Edition. We will be discussing some non-gaps in the actual measures during the calls today, including adjusted deep enough. The reconciliation of those measures to the most directly comparable gap measures can be found in the earnings supplement.
Speaker Change: 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.
Speaker Change: These statements by their nature are uncertain and may differ materially from actual results.
Speaker Change: We encourage you to review the disclaimers in our press release and investor presentation regarding non-gap 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.
Ken Nicholson: Alright, thank you Alan.
Ken Nicholson: Good morning everyone and welcome to our third quarter, 2024 earnings call. For the call today I'll be referring to the earnings supplement which you can find posted on our website.
Ken Nicholson: The Board is authorizing three cents per share quarterly dividend to be paid on November 19th to the holders of record on November 12th.
Ken Nicholson: Now, on to the results, we recorded a justidate about 36.9 million in the third quarter, a new quarterly record of 8% from the second quarter of 2024 and up 50% a year of re-ear from the third quarter of 2023.
Ken Nicholson: Replace with the results of what we're even more excited about the opportunities that lay ahead. The recorder was a significant one in terms of momentum we established across our companies with a number of events positioning us for substantial growth next year and beyond.
Ken Nicholson: A Processor portfolio, we now have line of sight under executed contracting commitment representing approximately 70 million of incremental annual even though.
Ken Nicholson: which we combined with our current runway represents total company annually but the offer price of the 220 million.
Ken Nicholson: and the Pipelines for New Businesses of Strongers Ever Today, we are pursuing more new business opportunities than any time since it's been off of our company.
Ken Nicholson: If we're successful in converting these opportunities into contractiveness, we have to make annual EBITDA potential in excess of 300 million. These estimates exclude the impact of any new investment-direct positions we may act on, such as tuck-in acquisitions of Trans-Star or data-centered developments at Long-Ritch.
Ken Nicholson: The terms of the high-light city segment trans start delivered another strong quarter, posting 21.1 million of a drop city to die.
Ken Nicholson: Carlos and Rates for the Quarter Health Study while third party revenue continued to grow.
Ken Nicholson: are focused at the trans stars to maintain organic, even dog growth in the range of 15% annually and drive further value creations to recruit of investments in acquisitions.
Ken Nicholson: We continue to actively pursue a number of acquisition opportunities and a battered resources to the M&-18 to ensure we are well positioned to act on opportunities as they rise.
Speaker Change: at Jefferson, either tell was 11.8 million for the quarter. Construction number two contracted projects is proceeding on budget and on time for revenue service commencing the spring and summer of 2025.
Speaker Change: and the first time I've been working on the project for 20 million years.
Speaker Change: is doing two three. We also entered a new advanced negotiation. So, I'm a number of projects involving volumes of both conventional and renewable products.
Speaker Change: He's new business opportunities at S6S and the contracted represent another 60 million of annual EBITDA Jefferson.
Speaker Change: I've reported that third quarter was a pivotal one, and with the execution of our first long-term contract for our Phase II Transloading System. With the first contract in hand, we've commenced construction of the system and are in active discussions with several additional parties for the remainder of the system's capacity.
Speaker Change: We plan to raise all financing for phase two construction in the tax exempt debt markets in the coming months and the commercial landscape that's extremely favorable positioning us to have multiple contracts in place by year end.
Speaker Change: and finally at Long Ridge we generate 11.1 million to be the doff of the quarter reflecting a nearly perfect capacity factor of 99%. I'll talk about our upcoming financing plans at Long Ridge here shortly but to quite say we have ambitious plans for Long Ridge in the coming quarters and believe the asset has tremendous upside potential.
Speaker Change: We are total dead of 1.5 billion at September 30th.
Speaker Change: 560,567 million a debt was at the corporate level while the rest of our debt was at our business units. Trans start continues to be completely debt-free while approximately 925 million a debt was at Jefferson and 44 million was ever upon.
Speaker Change: We're planning a number of creative depth in answering to the coming months that I'm going to briefly talk about each.
Speaker Change: First Everpano
Speaker Change: We will issue 300 million of low cost taxes I've debt to fund the pay to construction. The financing is slated to be launched in November and should close in December. We'll fully fund all required capital needs. Second, at long-rich, we're preparing to re-financial existing debt reducing our overall fixed charges and providing a uniquely more flexible ability.
Speaker Change: and Johnston with the Long Ridge Financing. We can also convert our existing power sail hedges into new arrangements that reflect the higher price received for the power we generate and therefore results in higher cash flow at Long Ridge.
Speaker Change: to explain this opportunity more specifically. At Longridge, we sell power today under a series of financial contracts or hankers.
Speaker Change: and we entered into at the time we started construction and it required in order to arrange the initial depth funding to build the power plant. Those hedges are still in place today, and are set at a price you can to approximately $28 per megawatt hour, if they're well below current market prices.
Speaker Change: and Conjunction with the refinancing are just of our existing debt. We have an opportunity to reset the price of power by entering into new hedges, close to the current market prices.
Speaker Change: is a Pentagon to find a financing term in pricing of the new power net is anticipate the financial impact and use of substantial.
Speaker Change: I've roles to consummate the financing and new powerhead is prior to your end.
Speaker Change: and finally, a point of completion of the Repondo and Longaged for Dancing, both of which we expect to be creative and credit in the dancing. We plan to re-finance our corporate bonds and existing preferred to reduce fixed charges and increase cash flow after death service for common shareholders.
Speaker Change: I'm going to talk through the detailed results of each of our segments and then I will plan to turn it over for questions.
Speaker Change: Starting the Transstar on Flight 7 of the Supplement, Transstar posted revenue of 44.8 million in a chocolatey-beth hour of 21.1 million in Q3 compared with a revenue of 45.6 million in a chocolatey-beth hour of 22.1 in Q2.
Speaker Change: Carl Williams and average rates have studied for the quarter and we expect the environment for volumes and rates to remain strong for the remainder of the year. Operating expenses were also stable as fuel costs and other material costs were largely unchanged for the quarter.
Speaker Change: Third Party Customer Activity continues to grow with a real-car repair facility in Pittsburgh and new transporting locations all ramping up.
Speaker Change: at our Translators Facility and Michigan, we're completing an expansion this quarter to take the number of car slots for translating from 15 slots to 90 slots. At the initial customer demand for truck-to-rail, Transchevments has exceeded our existing capacity.
Speaker Change: All in, we're currently expected for quarter-evitout to come in higher than the third quarter of e-bethout and it's just been maintaining a roughly 15% organic growth right next year with incremental growth driven by M&A, off to Trinity size they arise.
Speaker Change: Now I'm on to Jackson Jackson, generated 19.7 million of revenue in 11.8 million of adjusted EBITDA.
Speaker Change: and Q3 versus 21.2 million of revenue and 12.3 million of EAPT. and Q2. Reduce volumes for the quarter of the result of lower fine products exported to X-on for maintenance at one of their volumant production units.
Speaker Change: and as well as fewer crude oil trains which we now expect to receive in Q4. Lower volumes have little impact on revenue as all of our contracts contain minimum volume requirements which mitigate the majority of volume shortfalls.
Speaker Change: We expect three quick in the fourth quarter to return to over 200,000 girls per day.
Speaker Change: Our two contracts represent a 20 million-minute criminal annual EBITDA, commenced in the spring and summer of next year, and we're currently in late state negotiations for additional contracts with multiple parties, they handle conventional crude, refined products and renewable fuels.
Speaker Change: is where successful in converting these opportunities to business wins, we'll post annual e-billion access of a hundred million dollars for exceeding our prior targets.
Speaker Change: Now, under a phone, we signed our first contract for our Phase 2 export system during Q3. We expect to execute a number of additional contracts during the fourth quarter.
Speaker Change: Construction of the Phase 2 System is commenced, assuming full utilization and rates consistent with those already executed Phase 2 can contribute to 60 to 70 million of annual EBITDA once complete.
Speaker Change: Total estimated construction cost of 300 million will be funded in the tax attempt. Markets, as I described earlier, in the current capital markets and time report speculating interest rates in the range of 5 to 6 percent making the phase 2 project highly creative to the equity value of propondo.
Speaker Change: While Phase 2 remains our current priority we're excited about the advancement of the next phase of a component, including development of additional underground storage for which we expect to complete permitting in the months to come.
Speaker Change: Finally, closing out with Long Ridge. Long Ridge generated 11.1 million in EBITDA on 23 versus 8.8 million in 22.
Speaker Change: and then described power clinic capacity factor with 99 for the quarter-while gas production continue to be managed down during the quarter in the currently lower gas price environment.
Speaker Change: We're advancing a number of developments that have been introduced to significantly increase the E.B. on cash flow at long-rich, the recent capacity oxygen results take effect in June next year and represent a $32 million increase in annual revenue in E.B. or $16 million for our 50% share.
Speaker Change: All indications that it capacity pricing will remain at higher levels for the years to come, through and both by the anticipated surge in the balance of power by hyperscanners, as well as mandated retirements of coal-fired power plants.
Speaker Change: Higher Compensity Revenue Together with the Higher Power Sale Revenue Related to our frequency described refinancing. We'll be transformation into the Casual Profile and Value Proposition at Long Ridge.
Speaker Change: Meanwhile, we continue to advance a number of initiatives in cleaning the uprate of the Power Planet at 505 Megawatts and behind the meter projects, including most notably negotiations with data center developers.
Speaker Change: is the current state of discussions. We anticipate entering into one or more transactions for data centers of long-rich during the first half of 2025.
Speaker Change: Through Apple Police, with the quarter and excited about the remainder of 2024 and the 2025 year ahead. Now I will turn the call back down. Thank you again. To want to, you may now open the call to Q&A.
Speaker Change: Thank you ladies and gentlemen as a reminder to ask the question please for a start one one on your telephone and wait for your name to be a noun.
Speaker Change: to withdraw your question. Please restar one one again. Please stand by while we compile the Q&A roster.
Speaker Change: Our first question comes from the line of Juliana Balovna with Compass Point, your line is open.
Juliana Balovna: Good morning, I'm your congratulations on all the new initiatives you've working on since I've been a lot of progress.
Speaker Change: and I'm on a couple quarters.
Juliana Balovna: As a first question, I'm curious to be expanded on the longer financing that you were talking about. And you know, it seems like all that, all that potential.
Juliana Balovna: The creation of the other incremental to the 20-plus million-accorder 80-plus million annualized you've got that's, you know, you're already talking about it now.
Juliana Balovna: in the supplements I'd be curious to see the other side of that connection structure and also with the upside to look like that.
Speaker Change: Yeah, absolutely. Good morning, Joanna. And thanks for the question. Yes, you're right. It will be meaningfully created to the castled generation and what's that will report for a 50% share. Just to give some context, I've said, when we...
Speaker Change: First start a construction of the long-rich plans.
Speaker Change: We raised 600 million of deaths to fund construction.
Speaker Change: and with that debt we entered into these power-sale hedges to fix revenue and it enhanced the credit as part of the required number of debt agreements.
Speaker Change: As I described, those swaps were entered into at $28 for megawatt today, pricing is closer to $42 for megawatt. That price changes every day, but...
Speaker Change: It's been steady in the looks 40s now for a number of weeks and few months.
Speaker Change: Assuming we enter into new swaps at that $42 per megawatts hour level, the incrementally that they add at long-range to the approximately $50 million annually, pretty significant.
Speaker Change: There's a cost to terminating the existing swaps, and so we can incur more than the refinance amount of 600 million to fund the termination cost, but it is a highly creative transaction, the incremental EBITDA over time.
Speaker Change: is well in excess of the incremental cost of financing, and terminating those swaps, it is a very, very, you know, financially-directed transaction. You know, I suspect.
Speaker Change: the new get will be placed between now and the end of the year.
Speaker Change: The next relation will also reduce just the overall cost of borrowing or existing debt today is has a high heat handle on it on a blended basis. And we think we can be in the low-8s if not, you know, the high-7s on a pro-former basis. So we expect that the nation can be very creative.
Speaker Change: That's very helpful. I appreciate that. And then, you know, carrying over to the old company level, your whole crew deaths obviously traded a lot better, you know, since it is a shooting, you know, a couple years back ago. I'm curious where you think you could refinance the 10,000,000,000 co-co-go nodes today.
Speaker Change: I think if we did a refinancing right now today, we could refinance with a 7-handle, or a bond today, have a 10.5% coupon, our existing Fertstock is at 12.
Speaker Change: So if we can reach an answer in the seventh interview itself that's extremely attractive, I think we do even better.
Speaker Change: If we bring a transaction immediately after the Repano and Long Ridge transactions are behind us because those are independently credit enhancing the whole story. So that's our plan. The sequencing of the three transactions are Repano and Long Ridge.
Speaker Change: is soon assumed to be possible to be followed by the shift we financing immediately thereafter.
Speaker Change: That's very helpful. I appreciate it and I'm going to turn the all the progress right now on the two different assets and I'll jump back in to you.
Speaker Change: Thank you.
Speaker Change: Please stand by for our next question.
Speaker Change: I'm an ex-question comes from the line of Brian McKenna with Citizens JMP, your line is open.
Brian McKenna: Thanks for warning everyone. So I have a few questions on trans star first. Do you want me to update on the US deal, trans action from your end? And just any updated thoughts on the potential implications here?
Speaker Change: Hey, Brian Goodman, good morning.
Speaker Change: the Nakedel Starpipes is saying
Speaker Change: You don't obviously uncertain as to whether Nick Von gets the final approval.
Speaker Change: and I'm going to get to our view on that in just a second.
Speaker Change: that said.
Speaker Change: I can't tell you, it won't have a mature impact on transar one way or the other. I would say it's slightly better for us if Nikon is approved because it's intended best, significantly in the Pittsburgh Mon Valley Complex. And so that's obviously a good thing for transstar.
Speaker Change: But, John.
Speaker Change: at the end of the day that transaction itself, you don't expect to be terribly material or have much meaningful downside to transgender and even Nippon is not approved. I am optimistic about Nippon being approved.
Speaker Change: for closing the acquisition.
Speaker Change: I'm not sure if you saw it, but just a few weeks ago, the labor unions that had been...
Speaker Change: More different hopes.
Speaker Change: Um...
Speaker Change: supported, came around and finally supported the transaction and recommended that the government proved the Nepalian transactions. So there that that was a...
Speaker Change: The third number headlines around negotiations with the unions in its sounds like support the unions is now in hand.
Speaker Change: So that's a big development.
Speaker Change: My understanding is at this stage, if it's approval, it's a lot of for sometime in December, and that's what we're expecting. A decision that's fought in December, and if I had to, if I had to guess.
Speaker Change: is a set of optimistic about it in the event. Nikon were not approved. We don't think it has a material impact on business at Transstar.
Speaker Change: Yeah, okay, got it, that's helpful. And then just to follow up on Transstars, well, it's clearly been talking about potential for M&A and in a round trans star. So, we're to think, stand on this front, in what's your expectation around the timing of any trans action?
Speaker Change: is there a way to think about the potential accretion from the transaction. And then you'll ultimately, how aded it is, could some of this M&AB relative to the 15% annual organic growth target you've laid out?
Speaker Change: It could be meaningful. We are always looking at transactions. I would tell you there is a we'll see a bit of an increase in market activity. We're currently looking at free opportunities.
Speaker Change: to them on the slightly smaller side, some of which are between 5 and 15 million of Andy Aliveta and one is larger.
Speaker Change: and the
Speaker Change: I guess I would describe where in the middle innings, if you will, of those processes.
Speaker Change: and...
Speaker Change: a couple of them are negotiating transactions once a more competitive transaction.
Speaker Change: Look, it will be meaningful. That is part of the basis at Transdarr. It is an amazing platform for future acquisitions and it's part of the business plan.
Speaker Change: and these are businesses, Freig Rail for Folio's Trade at 15 Times, even though.
Speaker Change: It's a pretty well established multiple in the M&A market. And I think it's train start to diversify to threaten the base through external investments in acquisitions.
Speaker Change: We will migrate to that multiple in the mid-devil digits, so if you just do the math, the choir 50 million of me to be able to take combined to the dot of 150 million, put a 15-multiflon that no leverage that is significant in terms of value creation.
Speaker Change: This is a business we've owned now for three years. It has consistently over the past three years grown at 15% plus and we'll leave it to our tankers.
Speaker Change: and I think that organic growth is certainly still going to be there for several years to come, but M&A is a game changer at transstarters in the value proposition, so we are extremely focused on it.
Speaker Change: Alright, that's great. Appreciate it. I'll be there.
Speaker Change: Thank you. Thank you. Please stand by for our next question.
Speaker Change: I'm Nick's question comes from the line of Sharif El Magravi with BTAG, Yalanis Open.
Speaker Change: Thank you for taking my questions. First, first of Jefferson, the $20 million that he'd give it to us from new contracts next year. If you want to pack what contracts are included in that and what investment remains to get from across the line.
Speaker Change: Yeah, morning, sure you have to do that.
Speaker Change: 2 contracts. The first is a contract for handling crude oil. It's a five-year contract with one of our two major refineries. And that commences on April 1st of next year generates about 8 million of annually, but it's also that 8 of the 20.
Speaker Change: The second contract is with a global major ammonia producer, and it's an ammonia export, ammonia transloading contract. At the 15-year deal, it commences July 1st.
Speaker Change: and represents a minimum of $12 million of people that annually with some escalators over the 15-year contract term. It's a great, great contract.
Speaker Change: Both projects are fully funded. We raise the money in the tax and markets.
Speaker Change: and the second quarter. And they are on time on budget. I don't see any risk of the way at this stage. We're pretty well advanced with both projects and so it's just a matter of completing the construction and then bringing the contracts online.
Speaker Change: How helpful? And then on long-range, what GE's role in the operating, if any, on their call, they mentioned growing service backlog. And I'm wondering if there's a lead time associated with getting that into the queue, especially given, you know, could see as that a center contract with the first half next year.
Speaker Change: Yes, they, um, G, it is, of course, the turbine we've bought from G.E.
Speaker Change: There is no mechanical.
Speaker Change: Change, it needs to happen to determine the term. The term is capable of generating 500-500 megawatts as it's today. There is software.
Speaker Change: that regulates power generation today at 485 megawatts. There's no additional component or part that we require is literally good to software change. We could do it in a day.
Speaker Change: We just need greatly to recover to increase the generation by 20 megawatts. There is no incremental cost.
Speaker Change: and nothing other than a reprogramming of software to allow the turbine to generate the 500-500W.
Speaker Change: I'm out of a team, GE's technology. We don't rely on anything from GE to connect the effort.
Speaker Change: God, thank you for taking my questions.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, I'm showing no further questions than the queue. I would now like to turn the call back over to Alan.
Alan Vestery: Thank you all for participating in today's conference call. We look forward to updating you after Q4.
Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
Speaker Change: i