Q4 2024 FTAI Infrastructure Inc Earnings Call
Speaker Change: Good day, and thank you for standing by. Welcome to the FTIE Infrastructure 4th Quarter 2024 Earnings Conference Call. At this time, all participants are on a listen-only mode.
Speaker Change: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again.
Speaker Change: 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.
Alan Andreini: Thank you, Shannon. I would like to welcome you all to the FDI Infrastructure Earnings Call for fourth quarter and full year 2024. Joining me here today are Ken Nicholson, the CEO of FDI Infrastructure, and Scott Christerer, the company's CFO.
Alan Andreini: 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.
Alan Andreini: 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.
Alan Andreini: 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.
Alan Andreini: These statements by their nature are uncertain and may differ materially from actual results.
Alan Andreini: 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.
Ken Nicholson: Okay, thank you, Alan, and good morning everyone. Welcome to our earnings call for our fourth quarter and full year of 2024. For the call today, I'll be referring to the earnings supplement, which you can find posted on our website.
Ken Nicholson: I'm pleased to report that our board has authorized a three cent per share quarterly dividend to be paid on March 26th to the holders of record on March 14th.
Ken Nicholson: For the call this morning, I plan to review the reported results for the fiscal year and fourth quarter, but more importantly, I will also discuss our outlook for 2025 and the years ahead.
Ken Nicholson: On the 2024 results, adjusted EBITDA was $127.6 million, up from $107.5 million for 2023, and more than doubling over the past two years.
Ken Nicholson: EBITDA grew at each of our four core business units during the year. All in, 2024 was a highly productive year during which we accomplished a number of initiatives that set the stage for 2025 to be transformational for our company and our financial results.
Ken Nicholson: As the bar chart on the right side of slide 3 illustrates, we now have line of sight across our portfolio on approximately $195 million of incremental, locked-in annual EBITDA under executed contracts.
Ken Nicholson: which when combined with our 2024 results represents total company annual EBITDA of approximately 323 million.
Ken Nicholson: And the pipeline for new business is as strong as ever. Today, we are pursuing more new business opportunities than any time since the spinoff of our company. If we're successful in converting these opportunities into contracted business, we estimate annual EBITDA potential in excess of 400 million, up materially from our target of just over 300 million that we mentioned on our last quarterly call.
Ken Nicholson: Our 400 million dollar target excludes the impact of any new investments or acquisitions we may act upon, such as acquisitions at Transtar or data center developments at Longridge.
Ken Nicholson: Focusing on the near term, we expect 2025 to demonstrate substantial growth.
Ken Nicholson: It starts with Longridge. This month we completed our planned debt refinancing and closed on the acquisition of our equity partners 49.9% stake. In connection with the refinancing, we repriced a number of our power sale contracts, which will have a significant positive impact on Longridge's earnings and cash flow.
Ken Nicholson: Pro forma for the Longridge transactions, we expect to generate approximately 160 million of annual EBITDA with a bulk of that figure locked in for the next seven years. Based upon current discussions, I'm confident that this year we will announce an arrangement with a third-party customer at Longridge for the development of behind-the-meter data centers.
Ken Nicholson: Depending upon the scale of demand for third-party customers, we estimate incremental EBITDA from this opportunity could be between 50 and 75 million annually.
Ken Nicholson: Finally, a transtar the M&A market is as active as we've seen we are now in discussions with parties on a total of six opportunities, which in the aggregate represent well over $100 million of annual EBITDA.
Ken Nicholson: I'm going to spend a little bit more time, reviewing the recent longer transactions on slide five.
Ken Nicholson: On February 19th we closed the debt refinancing and repricing of our largest power sale contracts on February 26th we closed on the purchase of the 49, 9% interest in long ridge from our partner GCM Grosvenor for aggregate consideration of $189 million as.
Ken Nicholson: As a result of the debt financing transaction and repricing of our power contracts, we will sell power at an average price of $43 per megawatt hour compared to $28 per megawatt hour previously.
Ken Nicholson: The price increase of $15 per megawatt hour results in approximately 50 million of annual incremental EBITDA at long ridge asset level.
Ken Nicholson: On June 1st of this year, we will also start receiving higher capacity revenues stemming from the recent auction results.
Ken Nicholson: Higher capacity payments resulted in approximately $30 million of incremental annual EBITDA at the asset level and finally, we will commence gas production in west Virginia in the coming months, and we'll be producing gas well in excess of our power plants needs, resulting in approximately $10 million to $20 million of incremental annual EBITDA at current gas prices.
Ken Nicholson: Adding it up we forecast language to generate approximately $160 million at the asset level on an annual basis previously we would've reported half of that amount going forward for our 50% share of the company pro forma for our purchase which closed earlier. This week. We will now report all of the 160 million of EBITDA and language will be consolidated onto our balance sheet as opposed to equity.
Ken Nicholson: Method accounting.
Ken Nicholson: The $189 million purchase of the 49, 9% stake is being funded with $160 million of convertible preferred stock issued at the infrastructure level 9 million of cash and $20 million of long term note also issued at long Ridge.
Ken Nicholson: Together language transactions greatly enhance the earnings will generate going forward and allows us to participate in a 100% of the value creation, we expect to achieve in the coming months and years.
Ken Nicholson: I'm going to walk through the balance sheet briefly before getting into our specific company level results. We reported total debt of $1 6 billion at September 30th as I mentioned going forward. The language transactions will result in our consolidating languages assets and debt onto our balance sheet. So in addition to the reported balance sheet were showing the pro forma debt.
Ken Nicholson: On slide six debt at the corporate level is unchanged from last quarter at $567 million with the rest of our debt at our business units Transtar continues to be completely debt free while approximately $974 million of debt with a Jefferson and 44 million was at <unk>, We're planning to launch the O'connor financing in the coming weeks, we expect to close.
Ken Nicholson: That later here in the second quarter.
Ken Nicholson: At least $300 million of the low cost tax them that I recently described and we will also issue a term loan to refinance the existing debt at <unk>.
Ken Nicholson: Upon completion of their partner financing, we plan to refinance our corporate bonds and existing preferred stock in another accretive financing, which will reduce fixed charges and increased cash flow after debt service for common shareholders.
Ken Nicholson: That refinancing is also planned for later in the second quarter of this year.
Ken Nicholson: Sure.
I'll now talk through the detailed quarterly results in each of our segments and I plan to turn it over to questions.
Ken Nicholson: Starting with Transtar on slide eight of the supplement transtar posted revenue of $43 3 million and adjusted EBITDA of $19 4 million in Q4, compared with revenue of $44 8 million and adjusted EBITDA of $21 1 million in Q3 for.
Ken Nicholson: For the 2024 year, both revenue and EBITDA increased versus the prior 2023 fiscal year.
Ken Nicholson: While the fourth quarter saw slightly softer carloads and revenue versus Q3, we expect carloads and revenue to return to or exceed Q3 levels here in the first quarter of 2025, driven in part by the anticipated positive impact on domestic production at USD <unk> as a result of the recently announced tariffs.
Ken Nicholson: Operating expenses also continued to be stable as fuel costs and other material cost items have been largely unchanged third.
Ken Nicholson: Third party customer activity continues to grow with our railcar repair facility in Pittsburgh and new Trans loading locations, all ramping up and all in we are currently expecting 2025 EBITDA to experience a roughly 15% to 20% organic growth rate next year with incremental growth driven by M&A opportunities that continue to increase as I described earlier, we are seeing the most.
Ken Nicholson: Active M&A market in years and are currently evaluating a total of six opportunities one of our core investment objectives at Transtar has been to leverage the company's platform for strategic growth and I'm confident we'll be doing so this year.
Ken Nicholson: Now on to Jefferson.
Ken Nicholson: Jefferson generated $21 2 million of revenue and $11 1 million of adjusted EBITDA in Q4 versus $19 7 million of revenue and $11 8 million of EBITDA in Q3, it's important to note in comparing the two most recent quarters that the third quarter of 2024 included a $2 $7 million gain on the sale of assets that was not repeated in our fourth.
Ken Nicholson: Quarter results, so on an apples to apples basis, excluding gains on asset sales EBITDA for Q4 was up approximately $2 million from Q3.
Ken Nicholson: For the 2024 year, both revenue and EBITDA increased versus the prior to 2023 fiscal year.
Speaker Change: But our focus at Jefferson is on the year ahead as discussed as of this month, we now have three contracts representing a total of $25 million of incremental annual EBITDA commencing in the spring and summer of this year. In addition, we are in late stage negotiations for additional contracts with multiple parties to handle conventional crude and refined products as well as renewables with some of these negotiations.
Speaker Change: <unk> involving business that would commence this year in 2025, if we're successful in converting these opportunities to business wins will be in a position to post annual EBITDA of approximately $120 million.
Speaker Change: Now under a pan out we signed our second contract for Phase II, bringing our total committed volumes to 40000 barrels per day or $50 million of annual EBITDA. We continue to have capacity available for phase II and expect to have the remainder signed up during the second quarter ahead, assuming full utilization and rates consistent with those already executed.
Speaker Change: As to can contribute up to $70 million of annual EBITDA once complete.
Speaker Change: Total estimated construction cost of $300 million in dogs will be funded with the taxes that I described earlier and the current capital markets environment, We're expecting interest rates in the range of 5% to 6%, making the phase II project highly accretive to the equity value for panel.
Speaker Change: While phase II remains our current priority we're excited about the advancement.
Speaker Change: The next phase of upon including the development of additional underground storage for which we expect to complete permitting next month.
Speaker Change: Closing out with long ridge longer generated $9 9 million in EBITDA in Q4 versus $11 1 million in Q3 power plant capacity factor was 88% for the quarter versus 91% in Q3, reflecting a multi day planned maintenance outage at the power plant, while gas production increase to be more in line with the gas supply level required to run.
Speaker Change: The power plant.
Speaker Change: Bringing our west Virginia gas production online this summer, resulting in a substantial increase in gas production, allowing us to generate incremental revenue and EBITDA from excess gas sales.
Speaker Change: With the debt refinancing and consolidation behind US we're focused on a number of growth opportunities have the potential to significantly increase EBITDA and cash flow at long Ridge, we will start seeing the impact from the higher capacity revenues in June this year, representing $30 million in annual revenue and EBITDA. All indications are the capacity pricing will remain at higher levels for the years to come driven by both the <unk>.
Speaker Change: Anticipated surge in demand for power by Hyperscale as well as mandated retirements of coal fired power plants.
Speaker Change: We also continue to advance the upgrade of the power plant to 505 megawatts and expect our application to be fast tracked as a result of the Ferc's recent mandate to accelerate new generation projects in the PJM, including up rates.
Speaker Change: And most importantly, we are advancing multiple behind the meter projects, including most notably negotiations with data center developers based on the current state of discussions we anticipate entering into one or more transactions for data centers at long ridge in the coming months to wrap up we're very pleased with the quarter and extremely excited about the 2025 year ahead.
Alan Andreini: And I'll turn the call back over to Alan Thank.
Alan: Thank you Ken Shannon you May now open the call to Q&A.
Alan: Thank you as a reminder to ask a question. Please press star one wanting your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
Speaker Change: Our first question comes from the line of Giuliano Bologna with Compas point. Your line is now open.
Giuliano Bologna: Good morning, congratulations on the continued execution.
Tony: Yes, Tony contracts together.
Speaker Change: Moving forward with.
Speaker Change: With all the different brands one thing I'm curious about looking at Jefferson.
Speaker Change: But can you comment on the type of deals we're working on some new products.
Speaker Change: Looking to engage in.
Speaker Change: The contribution to rate overtime.
Speaker Change: Yes of course, good morning Giuliano.
Speaker Change: We're looking at a little bit of FX, everything crude oil natural gas liquids renewables, including ammonia.
Speaker Change: All of these.
Speaker Change: Energy flows primarily all exports are.
Speaker Change: Some form of negotiation with Counterparties at Jefferson crude oil is largely focused on waxy crudes coming out of Utah Jefferson was the first turn.
Speaker Change: Terminal in the U S to export waxy crudes to the European market I think that sets the stage for a long term contract with the counterparty, we engaged with last year to do so and so we're advancing those discussions.
Speaker Change: Natural gas liquids, there is a lot of natural gas liquids butane propane flowing out of the Permian and we don't have enough domestic demand for those products and so the export markets are where a lot of producers are looking.
Speaker Change: We've got the capability at at Jefferson to export.
Substantial volumes of products, particularly through our Jefferson South terminal.
Speaker Change: And so I'm excited about the NGL project in particular, I think that Scott significant potential it could be highly highly accretive.
Speaker Change: Ammonia, we have our one pneumonia contract in place that kicks off this summer there is a second opportunity that we have been negotiating that would double the volumes of ammonia that we export through the terminal and now and continues to be a negotiation, so I like having multiple products with different counterparties.
Speaker Change: Out there there are a handful of others as well, but those are the three big.
Speaker Change: Types of products and opportunities that we're negotiating currently.
Speaker Change: That's very helpful.
Speaker Change: On a different topic looking at long ridge, congrats on getting all the.
Speaker Change: Recent transactions done.
Speaker Change: I'm curious about is how soon you will see the 160 million views.
Speaker Change: From one room to start to show up in consolidated results.
Speaker Change: Yes, the third quarter of this year will reflect the entire 160 million obviously the first quarter.
Speaker Change: It will reflect.
Speaker Change: Half of this recent transaction, we really just closed this transaction really just closed the transaction.
Speaker Change: For the purchase of the.
Speaker Change: Minority equity stake this week and so we'll only see looking a little bit more than a one month impact of that in Q1.
Speaker Change: We will see all of it in Q2.
Speaker Change: June 1st is when the $30 million of increased capacity revenue kicks in and so we'll only see one month of incremental capacity revenue in Q2. So finally, I think when we get to Q3 will be running at that $160 million of EBITDA look there is potential we exceed that number we are going to bring online a significant amount of gas production.
Speaker Change: I can't tell you precisely of course with gas prices will be this summer, but we'll certainly be in a position to.
Speaker Change: To sell into the market and depending upon where gas prices are we could be running in the third quarter at a level higher than the $160 million. So third quarter is when you'll see it all.
Speaker Change: Sounds good that's very helpful and then moving over to transfer.
Speaker Change: Of all the options.
Speaker Change: For U S steel with respect to potential new ownership.
Speaker Change: Do you feel there is any one that's best for you.
Speaker Change: I knew that are concerning.
Speaker Change: Having any potential negative impacts for transfer.
Speaker Change: Yes, it's a good question. There's certainly continues to be a lot going on at U S steel in the media.
Speaker Change: I think the.
Speaker Change: The key takeaway is there is no outcome that I believe in any way is a negative outcome for transtar all outcomes are good even the status quo.
Speaker Change: I guess, if I had to pick one as you may be aware the drama between Nippon and U S. Steel is continuing Nippon has made some significant commitments to investments in the Mon Valley and at other U S. Steel properties that that's got to be a good thing for transtar, but at the same time I think all options are.
Speaker Change: Arguably good and.
Speaker Change: So it's something we're obviously watching closely but ultimately I think we're in a good place regardless of the outcome.
Speaker Change: That sounds good.
Speaker Change: One last one thinking about.
Speaker Change: The Hunter on doing since our holding company financing.
Most of your high yield notes to trade tighter.
Speaker Change: Or is it going to markets.
Speaker Change: To do something on the preferred as well I'm just curious if you have any restaurants. So now the type of yes.
Speaker Change: Interest and dividend savings.
Speaker Change: They were not as active pricing for some of it would happen in the future, but I'm just curious your outlook around that yes.
Speaker Change: Yes, I feel very confident will be a highly accretive transaction.
Speaker Change: With our existing bonds you are right. They are trading well that's great to see.
Speaker Change: They have a coupon at 10, 5%.
Speaker Change: And then the fixed preferred stock we have outstanding that's pretty high cost about 14%, both the existing debt and the preferred those are put in place at the moment, we spun off from <unk> and so given the circumstances those were relatively expensive.
Speaker Change: We definitely have an opportunity to reduce fixed charges I think new debt today.
Speaker Change: With an eight handle hopefully low eights.
Speaker Change: Our goal would also be to maximize the amount of new debt we issue.
Speaker Change: When we refinance our preferred stock.
Speaker Change: Obviously 10, five going to aid is a good thing <unk> going to eight is a great thing.
Speaker Change: And.
Speaker Change: So we're going to hope to do that I think this is a transaction that will be in a position to launch.
Speaker Change: We'd be in a position to launch in early April.
Fingers crossed capital market stay with us and with some good momentum going into that time period.
Speaker Change: That is very helpful. I appreciate the.
Speaker Change: Questions and ill jump back in the queue.
Speaker Change: Thank you. Our next question comes from the line of Brian Mckenna with citizens. Your line is now open.
Brian McKenna: Thanks, Good morning, everyone. So a question on <unk> to start is there any update on permits for the underground caverns and just the timing around this and then can you remind us of the potential from from state from phase III and longer term.
Brian McKenna: And kind of what when we get that into place and that path forward is clear I mean does that increase the probability of the sale of our panel at some point just curious your thoughts there.
Brian McKenna: Yes, good morning, Brian.
Brian McKenna: <unk>.
Brian McKenna: It's a marathon not a sprint.
Brian McKenna: Hi.
Brian McKenna: We're approaching mild 'twenty six.
Speaker Change: We expect to have the cabinet permits in hand by the end of this first quarter, we have been working very closely with New Jersey DDP.
Brian McKenna: We've got a great dialogue and.
Brian McKenna: I I think we're finally in the.
Brian McKenna: At the end of the process. It's been it's been a lengthy process, but I do think we're very close to the end look the economics on cabin development.
Brian McKenna: Well dependent upon precisely what we ended up developing.
Brian McKenna: At the end of the day, the economics are materially more attractive than above ground storage.
Brian McKenna: Caverns.
Speaker Change: Are less expensive to develop generate of course, the same amount of revenue and.
Brian McKenna: Require little to no maintenance capital going forward.
Brian McKenna: I'm really pleased with the results from the New Jersey Economic development authority and the support for Phase two I think it bodes well for potentially additional low cost.
Brian McKenna: Debt financing to support phase III.
Brian McKenna: Big picture I think phase III could be transformational for our ponto.
Brian McKenna: Easily generate an incremental $100 million of EBITDA for the business, yes, it would require some capital but in roughly 300 million of capital for $100 million of EBITDA Thats, a pretty good pretty good.
Brian McKenna: Investment.
Brian McKenna: I am not sure we need to go through the whole process of building caverns and bringing them all online yes, I think as soon as we're permitted and we're underway I think we've created a lot of value of <unk>. So yes. The idea of a monetization at that point in time is something we're certainly evaluating.
Speaker Change: Yeah. Okay. That's helpful and then a transtar so if I look at adjusted EBITDA increased 7% year over year in 2024, I think you've talked about 50% organic growth for this business over time, so I guess that 7% relative to the 15, it's a bit below so.
Speaker Change: Whats the thought there just in terms of the shortfall and then do you still feel good about kind of hit that 50% organic growth target moving forward before any incremental M&A.
Speaker Change: Yes, very good question, we don't have the crystal ball on volumes out of USD, but I do have to say we're encouraged both in terms of just overall production levels and I do think that the recently announced tariffs for U S steel and their specific facilities and the Mon Valley and Gary should be.
Speaker Change: Good things, we should see an uptick in volumes there volumes really do go to the domestic market in width.
Speaker Change: With.
Speaker Change: Pressure on imports for purchases of steel products. That's a good thing for these U S steel facilities. So some of our estimate is informed by that assumption, but we do have is we do have a bit of a crystal ball on things like rates.
Speaker Change: And <unk>.
Speaker Change: New business opportunities things that commenced last year that we will see the full year impact of this year and so there are a number of variables coming into that that forecast of 15% to 20% organic growth but.
Speaker Change: Based on all the variables, we have and some assumptions around <unk>.
Speaker Change: Production out of Gary in the Mon Valley, we feel pretty comfortable with that estimate.
Speaker Change: Yes, Okay, great and then if I can just another follow up on transtar cells, Yes, I know you're staffed up on on the corporate development front for some M&A and it sounds like the pipeline is still healthy I mean, I guess I would have thought we would have seen at least one acquisition by now sell.
Speaker Change: Did any deals get pushed or did you end up passing on some and then just thinking through the timing of when we could see some of these acquisition.
Speaker Change: Next quarter or two and then obviously there is no leverage on the books. There. So how should we think about just the financing of some of these transactions.
Speaker Change: Yes.
Speaker Change: Can't force someone to sell you their company.
Speaker Change: A bit of a process.
Speaker Change: But look the momentum is definitely growing I would be very surprised if at some point.
Speaker Change: And the next three months, we haven't announced and closed on one acquisition we have.
Speaker Change: About a half dozen.
Speaker Change: Opportunities were evaluating some are smaller real tuck ins.
Speaker Change: But those would be great situations to diversify the transtar base, both geographically and by commodity and then we have a handful of larger situations that would be transformative.
Speaker Change: Financing would be in the debt markets.
Speaker Change: The most accretive way to finance any acquisition, we make you write transtar is on leveraged new corporate financing that we're planning for the second quarter will allow for.
Speaker Change: Acquisition debt to be incurred and so well.
Speaker Change: We will have the ability to leverage in a disciplined way.
Leverage acquisitions that we make so look I'm actually really excited about it the staffing up last year.
Speaker Change: Has definitely started to pay some dividends or at least we're seeing that potential more and more.
Speaker Change: And again.
Speaker Change: I really hope we're in a position to announce something here over the next few months.
Speaker Change: Okay, Great I'll leave it there thanks again.
Speaker Change: Thank you our last question comes from the line of Greg Lewis with <unk>. Your line is now open.
Yes, hi, Thank you and good morning.
Greg Lewis: I was hoping to get a little bit more color around.
Greg Lewis: The the HBC opportunity long ridge and that it like my question really is around that.
Greg Lewis: Capacity demand response in Europe.
Greg Lewis: And that sort of this year and next year and I guess my question is as we look forward into.
Greg Lewis: The next capacity demand response, which I guess is coming up here.
Greg Lewis: And the next few months.
Greg Lewis: How old is participating in that going forward impact your ability to kind of.
Greg Lewis: Shift over to HBC customers.
Greg Lewis: Yes.
Greg Lewis: Well I'll say a couple of things the auction results of course were tremendous for the year starting June 1st and we're excited about that and we don't see any reason.
Greg Lewis: For those levels to be declining.
Greg Lewis: It's just an annual thing and so in the event there are multiple forms that.
Greg Lewis: Hey.
Greg Lewis: A transaction could.
Greg Lewis: Take.
Greg Lewis: One is buying power from our own power plant and that's certainly interesting we sell power today at $42 per megawatt and pricing for behind the meter Tran.
Greg Lewis: <unk> transactions is 70 to $80 a megawatt we would not in that case is abating in the capacity auction of course, but it would still be a highly accretive thing to do but remember at long ridge.
Greg Lewis: We have.
Greg Lewis: Significant land holdings, and we also have significant permits and access rights to the grid and so we're in a region that is highly favorable and frankly, there may be projects with data center developers that only required lease of land.
Greg Lewis: Access to the grid and the building of backup power and what I like is the conversations that we're in right now.
Greg Lewis: Multiple flavors and that allows us to have lots of different opportunities all of which are very good.
Greg Lewis: So I can't tell you precisely which direction, we're going I don't think the capacity auctions and participating in this capacity auctions are going to be a real speed bump for us given we're just committing on an annual basis. So for some reason we wanted to do something completely behind the meter, including the power plant by the time facilities or <unk>.
Greg Lewis: <unk>, we'd be out of our obligations to provide power under the grid.
Greg Lewis: Okay Super helpful and then and then.
Speaker Change: We've talked a little bit about M&A.
Speaker Change: I guess really it seems like the focus is around.
Speaker Change: The rail business could you maybe highlight or talk about how youre thinking about that the short rail opportunity set in that and that I believe you were looking at a transaction.
Speaker Change: Maybe a little around a year ago, and there were and I believe you were outbid. So just kind of trying to understand.
Speaker Change: Yes.
Speaker Change: I guess, what I'm wondering is I'm, assuming pricing for these deals is improving not going the other way and like yes.
Speaker Change: How are we thinking about <unk> and really the ability to fund that was transactions as well, yes. So there are 500 short line railroads in North America. So we have a large addressable market of opportunities now about 100 of those are owned by one party. So that leaves 400 that are that are more fragmented. So there's a very.
Speaker Change: Large addressable market.
Speaker Change: And this M&A opportunities come in waves.
Speaker Change: Our two types of processes of course, the ones, where there is more of an auction process and are the ones, where we're just individually negotiating with the counterparty.
Speaker Change: The latter is definitely the preferred way to go about it and half of our opportunities that we're looking at right now are the ladder negotiated transactions.
Speaker Change: So one of the reasons I'm, particularly excited about where we sit today youre absolutely right pricing in this market is.
Speaker Change: It's pretty high freight railroads are irreplaceable unique assets and they command a pretty high multiples.
Speaker Change: And.
Speaker Change: That said I think we're a great buyer, we have an existing platform and so where others see theyre buying 10 million of EBITDA, we're buying 12 to 15 million of EBITDA because of the synergies and cost savings associated with with our platform value. So I do think we can be competitive the one we lost.
Last year was.
Speaker Change: It's a bit of a special situation, we lost that to a class one railroad that was just adding in the short line as sort of an appendage and.
Speaker Change: So it was a highly strategic transaction and in that case for the winning bidder.
Speaker Change: We're not none of the opportunities we're looking at right now have a similar.
Speaker Change: Flavor, So look I'm Super optimistic I think these things are very Financeable I was just talking to some investment bankers yesterday and.
Speaker Change: They were telling me how in the transportation space. They are most aggressive Ed financing freight railroads there just the best infrastructure.
Speaker Change: Assets.
Speaker Change: In North America, just a sense of permanence the operational upside.
Speaker Change: The limited competition, there, they're super assets to finance and we've had a lot of success over the years with our various rail investments and.
Speaker Change: Financing these types of businesses, so I feel pretty confident we'll be able to finance virtually all of the purchase price for these things and the debt markets, we're obviously going to be disciplined and prudent and engage with the ratings agencies and do the right thing but.
Speaker Change: I do think theres plenty of access to accretive debt capital to fund the acquisitions.
Speaker Change: Thank you very much.
Alan: Thank you I would now like to hand, the call back over to Alan <unk> for closing remarks.
Alan: Thanks, Shannon and thank you all for participating on today's call. We look forward to updating you after Q1.
Alan: This concludes today's conference call. Thank you for your participation you may now disconnect.
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