Q1 2025 FTAI Infrastructure Inc Earnings Call

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Operator: Good day and welcome to the first quarter 2025 FTAI Infrastructure Earnings Conference. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. Instructions will be given at that time. As a reminder, this call is being recorded.

Speaker Change: Good day and welcome to the first quarter 2025 F. T AI infrastructure earnings conference call. At this time, all participants are in a listen only mode.

Speaker Change: After the Speakers' presentation, there'll be a question and answer session.

Speaker Change: It will be given at that time.

Speaker Change: As a reminder, this call is being recorded I would like to turn the call over to Alan Andreini Investor Relations. Please go ahead.

Alan Andreini: I would like to turn the call over to Alan Andreini, Investor Relations. Please go ahead. Thank you, Michelle.

Alan Andreini: I would like to welcome you all to the FTAI Infrastructure Earnings Call for the first quarter of 2025.

Alan Andreini: Thank you Michelle I would like to welcome you all to the <unk> infrastructure earnings call for the first quarter of 2025, joining me here today are getting of course.

Alan Andreini: Joining me here today are Ken Nicholson, the CEO of FTAI Infrastructure, and Buck Fletcher, the company's newly appointed CFO.

Alan Andreini: The CEO after all your infrastructure and packed Fletcher the company's newly appointed 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. 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.

Alan Andreini: We have posted an investor presentation in our press release on our website, which we carry 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 reconciliation 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. These statements, by their nature, are uncertain and may differ materially from actual results.

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. 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.

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.

Speaker Change: 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.

Alan Andreini: Now I would like to turn the call over to Ken. Okay. Thank you, Alan.

Kenneth Nicholson: Good morning, everyone, and welcome to our earnings call for our first quarter of 2025. As we typically do for today's call, we'll be referring to the earnings supplement, which you can find posted on our website.

Ken: Okay. Thank you Alan good morning, everyone and welcome to our earnings call for our first quarter of 2025 as.

Speaker Change: As we typically do for today's call, we'll be referring to the earnings supplement, which you can find posted on our website.

Kenneth Nicholson: Before digging into the quarterly results, I'm pleased to report that our board has authorized another quarterly dividend of three cents per share to be paid on May 27th to the holders of record on May 19th. I'd also like to take a minute to welcome Buck Fletcher to the company. Buck joined us officially as our new CFO in late March, and we're thrilled to have him on board. We have tremendous opportunities ahead of us on several fronts, including a number of financial and strategic objectives, and Buck comes to us with a skill set and experience that certainly will help us accomplish them.

Speaker Change: Before digging into the quarterly results I am pleased to report that our board has authorized another quarterly dividend of <unk> <unk> per share to be paid on may 27 to the holders of record on may 19th.

Speaker Change: Also I'd like to take a minute to welcome back to the company. Dr joined US officially as our new CFO in late March and we're thrilled to have him on board. We have tremendous opportunities ahead of us on several fronts, including a number of financial and strategic objectives and box comes to us with the skill set and experience. It certainly will help us accomplish at all.

Kenneth Nicholson: Now on to the financial results. Adjusted EBITDA was $35.2 million for the first quarter of 2025, up 21 percent from the fourth quarter and up 29 percent from the first quarter of last The quarter was a highly productive one, especially at our long-reach business unit where we completed a series of important transactions that have already started to generate materially higher reported financial results. As a result of the long-range transaction, we recorded a non-cash gain of $120 million, which is reflected in our financial statements. We are excluding from adjusted EBITDA in today's financial discussion for comparative purposes.

Speaker Change: Now onto the financial results adjusted EBITDA was $35 2 million for the first quarter of 2025 up 21% from the fourth quarter and up 29% from the first quarter of last year.

Speaker Change: A quarter with a highly productive one, especially at our long range business unit, where we completed a series of important transactions that have already started to generate materially higher reported financial results. As a result of the language transaction, we recorded a noncash gain of $120 million, which is reflected in our financial statements.

Speaker Change: Excluding from adjusted EBITDA in today's financial discussion for comparative purposes.

Kenneth Nicholson: The gain we recorded was related to purchase accounting adjustments as a result of our acquisition of our partner's 49.9% interest in late February and the resulting consolidation of Longridge into our financial statements going forward.

Speaker Change: The gain we recorded was related to purchase accounting adjustments as a result of our acquisition of our partner's 49, 9% interest in late February and the resulting consolidation of long ridge into our financial statements going forward.

Kenneth Nicholson: We are extremely optimistic about the year ahead. As a result of the long-reach activity, as well as a number of other developments, we expect 2025 to be transformational for our. As the bar chart on the right side of slide 3 illustrates, we continue to have a line of sight across our portfolio on approximately $190 million of incremental, locked-in annual EBITDA under executed agreements, which when combined with our first quarter results, represents total company annual EBITDA of over $330 million. And the pipeline for new business continues to be healthy. If we're successful in converting new opportunities into contracted business, we continue to estimate annual EBITDA potential in excess of 400 million.

Speaker Change: We are extremely optimistic about the year ahead as a result of the language activity as well as a number of other developments, we expect 2025 to be transformational for our company.

Speaker Change: As the Bar chart on the right side of slide three illustrates we continue to have a line of sight across our portfolio unapproved $190 million of incremental locked in annual EBITDA under executed agreements, which when combined with our first quarter results represents total company annual EBITDA of over $330 million and up.

Speaker Change: Pipeline for new business continues to be healthy if were successful in converting new opportunities into contracted business. We continue to estimate annual EBITDA potential in excess of $400 million.

Kenneth Nicholson: Our $400 million target excludes the impact of any new investments or acquisitions we may act on, such as acquisitions at Transtar or data center developments at Long.

Speaker Change: Our $400 million target excludes the impact of any new investments or acquisitions. We May act on such as acquisitions at Transtar or data center developments at long Ridge.

Kenneth Nicholson: On slide four, I'll briefly talk through the key highlights at each of our companies. A trans-star adjusted EBITDA of $19.9 million was up slightly from the fourth quarter as volumes remained steady notwithstanding the uncertain environment surrounding tariffs and the impacts on global trade. So far in the second quarter, we continue to see stable volumes from our core U.S. steel business and we remain focused on driving growth from third parties as well as through strategic investments. Ed Longridge reported EBITDA for the quarter was $18.1 million, excluding the non-cash $120 million gain which I referred to previously.

Speaker Change: On slide four I'll briefly talk through the key highlights at each of our companies at Transtar adjusted EBITDA of $19 9 million was up slightly from the fourth quarter as volumes remained steady notwithstanding the uncertain environment surrounding tariffs and the impact on global trade. So far in the second quarter. We continued to see stable volumes from our core U S steel busy.

Speaker Change: And we remain focused on driving growth from third parties as well as through strategic investments.

Speaker Change: At long Ridge reported EBITDA for the quarter was $18 1 million, excluding the noncash $120 million gain which I referred to previously.

Kenneth Nicholson: Importantly, the first quarter's results reflected only a portion of the impact of the transactions we closed in late February. We typically don't provide monthly results, but to give you a sense of the current run rate at Longridge, EBITDA for the month of March, which fully included the impact of the transactions, was over $10 million, approaching $130 million on an annualized basis. By mid-year, we expect Longreach to reach annual run rate EBITDA of approximately $160 million, which includes $30 million of annual EBITDA from higher capacity revenue, which starts on June 1st of this year. At Jefferson, EBITDA was up year-over-year, but slightly lower versus last quarter as we had four storage tanks off-lease during the quarter while we transitioned them to long-term service under a new, more profitable contract that commenced .

Speaker Change: Importantly, the first quarter's results reflected only a portion of the impact of the transactions. We closed in late February we typically don't provide monthly results, but to give you a sense of the current run rate at long Ridge EBITDA for the month of March which fully included the impact of the transactions with over $10 million approaching a $130 million on an annualized basis.

Speaker Change: By midyear, we expect language to reach annual run rate EBITDA of approximately $160 million, which includes $30 million of annual EBITDA from higher capacity revenue, which starts on June <unk> of this year.

Speaker Change: At Jefferson EBITA was up year over year, but slightly lower versus last quarter. As we had four storage tanks off lease during the quarter, while we transition them to long term service under a new more profitable contract that commenced on April one.

Kenneth Nicholson: EBITDA for the quarter would have exceeded $10 million had we had those four tanks on lease for the quarter. It's a big year ahead for Jefferson as we have $25 million of long-term annual EBITDA commencing this year under three contracts, all with minimum volume commitments.

Speaker Change: EBITDA for the quarter would have exceeded $10 million had we had those four tanks on lease for the quarter. It is a big year ahead for Jefferson as we have $25 million of long term annual EBITDA commencing this year under three contracts all with minimum volume commitments.

Kenneth Nicholson: And at Rapano, we recently launched the financing for our Phase 2 transloading project. We're issuing $300 million of tax-exempt debt to fund construction and a number of reserve accounts, and also refinancing existing debt with a new taxable term loan. Importantly, we recently signed an additional letter of intent for our Phase 2 project, bringing our total volumes under contract and LOI to just over 70,000 barrels per day and representing a total of approximately $80 million of annual EBITDA. Our new outlook is up $30 million from estimates we provided last month. Revenue from Phase 2 will commence upon completion of construction expected in late 2026.

Speaker Change: And every partner, we recently launched the financing for our phase II Trans loading project.

Speaker Change: <unk> $300 million of tax exempt debt to fund construction in a number of reserve accounts and also refinancing existing debt with a new taxable term loan importantly, we recently signed an additional letter of intent for our phase II project, bringing our total volumes under contract and LOI to just over 70000 barrels per day and representing a total of approximately.

Speaker Change: $80 million of annual EBITDA, our new outlook is up $30 million from estimates we provided last quarter revenue from phase two will commence upon completion of construction expected in late 2026.

Kenneth Nicholson: I'll briefly walk through the balance sheet before getting into our company's quarterly results. We reported total debt of $2.8 billion at March 31st. Debt at the corporate level is unchanged from last quarter at $572 million, with the rest of our debt at our business units non-recourse to FEPP. Transtar continues to be completely debt-free, while approximately $975 million of debt was at Jefferson, and $73 million was at Rapano. We now consolidate the full balance sheet of Longridge and reflected total Longridge debt of $1.1 billion at March 31st. Upon completion of Liverpondo financing, which we are planning for this month, we plan to refinance our corporate bonds and existing preferred stock in another creative financing which will reduce fixed charges and increase cash flow after death service for common debt.

I'll briefly walk through the balance sheet before getting into our company's quarterly results.

Speaker Change: We reported total debt of $2 8 billion at March 31 debt at the corporate level is unchanged from last quarter at $572 million with the rest of our debt at our business units nonrecourse to fab Transtar continues to be completely debt free while approximately $975 million of debt was at Jefferson and 73 million was it <unk>.

Speaker Change: No.

Speaker Change: We now consolidate the full balance sheet of long ridge and reflected total long ridge debt up $1 1 billion at March 31.

Speaker Change: Upon completion of their pound of financing, which we are planning for this month, we plan to refinance our corporate bonds and existing preferred stock and another accretive financing with park, which will reduce fixed charges and increased cash flow after debt service for common shareholders.

Kenneth Nicholson: Now, on to the detailed quarterly results at each of our segments, starting with TRANSTAR on slide seven of the supplement. Transtar posted revenue of $42.6 million and adjusted EBITDA of $19.9 million in Q1, compared with revenue of $43.3 million and adjusted EBITDA of $19.4 million in Q4. Car loads, average rates, and revenues for Q1 were largely unchanged versus last quarter. Operating expenses also continued to be stable as fuel costs and other material cost items have been largely unchanged. We expect third-party customer activity to pick up in the months to come, and we now have near-term line of sight on over a dozen third-party opportunities across Transstar's railroads, representing annual revenue of approximately $20 million and annual EBITDA of at least $10 million.

Speaker Change: Now onto the detailed quarterly results at each of our segments, starting with France on slide seven of the supplement.

Speaker Change: Transtar posted revenue of $42 6 million and adjusted EBITDA of $19 9 million in Q1, compared with revenue of $43 3 million and adjusted EBITDA of $19 4 million in Q4 carloads average rates and revenues for Q1 were largely unchanged versus last quarter operating expenses also continued to be.

Speaker Change: Stable as fuel costs and other material cost items have been largely unchanged.

Speaker Change: We expect third party customer activity pickup in the months to come and we now have near term line of sight on over a dozen third party opportunities across transtar as railroads, representing annual revenue of approximately $20 million in annual EBITDA of at least $10 million.

Kenneth Nicholson: Our strategic activity continues to progress. Our M&A efforts are focused on the acquisition of complementary railroads that diversify our revenue and commodity base and open up additional growth opportunities through an expanded platform. One of our primary goals has been to leverage TransStar to make highly creative investments, and I'm confident we'll be successful in doing so this year.

Speaker Change: Our strategic activity continues to progress our M&A efforts are focused on the acquisition of complementary railroads that diversify our revenue and commodity base and open up additional growth opportunities through an expanded platform.

Speaker Change: One of our primary goals has been to leverage transtar to make highly accretive investments and I'm confident we'll be successful in doing so this year.

Kenneth Nicholson: Next on to Longridge where we coupled strong operating performance in Q1 with a highly creative refinancing and an increase in our ownership of the company. Longridge generated $18.1 million of EBITDA in Q1 versus $9.9 million in Q4. Power plant capacity factor was a nearly perfect 99% for the quarter versus 87% in Q4, while gas production increased to be in line with the gas supply level required to run the power plant. We'll be bringing our West Virginia gas production online this summer, resulting in substantial increase in gas production and allowing us to generate incremental revenue in EBITDA from excess gas sales.

Speaker Change: Okay.

Speaker Change: Next under long Ridge, where we coupled strong operating performance in Q1 with a highly accretive refinancing and an increase in our ownership of the company language generated $18 1 million of EBITDA in Q1 versus $9 9 million in Q4 power plant capacity factor was a nearly perfect 99% for the quarter versus <unk> 87 per.

Speaker Change: In Q4, while gas production increased to be in line with the gas supply levels required to run the power plant.

Speaker Change: If you're bringing our west Virginia gas production online this summer, resulting in a substantial increase in gas production and allowing us to generate incremental revenue and EBITDA from excess gas sales.

Kenneth Nicholson: As I mentioned earlier, the reported results of Q1 reflect only one month of the impact of the refinancing and or ownership increase, so we expect to report significantly higher results in Q2 just by virtue of reflecting 100% ownership. Also higher capacity revenues kick in on June 1st, representing approximately 30 million of additional annual EBITDA.

Speaker Change: As I mentioned earlier the reported results for Q1 reflect only one month of the impact of the refinancing and our ownership increase so we expect to report significantly higher results in Q2, just by virtue of <unk>, reflecting a 100% ownership.

Speaker Change: Also higher capacity revenues kick in on June 1st representing approximately $30 million of additional annual EBITDA. In addition language was officially fast tracked by the PJM regulator for the 20 megawatt uprate in our power generation, meaning it's highly likely that we will receive authorization at some point here in the remainder of 2025.

Kenneth Nicholson: In addition, Longreach was officially fast-tracked by the PJM regulator for the 20 megawatt uprate in our power generation, meaning it's highly likely that we will receive authorization at some point here in the remainder of 2025. With the debt refinancing and consolidation behind us, we're focused on 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 Longridge in the coming months.

Speaker Change: With the debt refinancing and consolidation behind us we're focused on 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.

Kenneth Nicholson: Now on to Jefferson. Jefferson generated $19.4 million of revenue and $8 million of adjusted EBITDA on Q1 versus $21.2 million of revenue and $11.1 million of EBITDA on Q4. While volumes were slightly higher in the first quarter, average pricing per barrel was lower as the mix of product included a larger proportion of lower rate refined products.

Speaker Change: Now on to Jefferson Jefferson generated $19 4 million of revenue and $8 million of adjusted EBITDA in Q1 versus $21 $2 million of revenue and $11 1 million of EBITDA in Q4.

Speaker Change: While volumes were slightly higher in the first quarter average pricing per barrel was lower as the mix of products included a larger proportion of lower rate refined products for the duration of the first quarter four of our tanks were off lease as Jefferson cleaned and transition those tanks to a new customer and product type, which commenced revenue service on April.

Kenneth Nicholson: For the duration of the first quarter, four of our tanks were off-lease as Jefferson cleaned and transitioned those tanks to a new customer and product type, which commenced revenue service on April 1st. We estimate the impact of having the tanks off-lease for the quarter was approximately $2.8 million of revenue and $2.3 million of EBITDA that Jefferson did not record in the quarter. But our focus for Jefferson is on the months ahead. As discussed, we have three contracts representing a total of $25 million of incremental annual EBITDA commencing this year.

Speaker Change: <unk>.

Speaker Change: We estimate the impact of having the tanks off lease for the quarter was approximately $2 8 million of revenue and $2 3 million of EBITDA that Jefferson did not record in the quarter.

Speaker Change: But our focus for Jefferson as on the months ahead as discussed we have three contracts representing a total of $25 million of incremental annual EBITDA commencing. 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 renewable fuels with some of these negotiations involving business.

Kenneth Nicholson: 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, with some of these negotiations involving business that would still commence in 2025. If we're successful in converting those opportunities to business wins, we will be in a position to post annual EBITDA of approximately $120 million.

Speaker Change: That would still commence in 2025.

Speaker Change: If were successful in converting those opportunities to business wins, we will be in a position to post annual EBITDA of approximately $120 million.

Kenneth Nicholson: Closing out with Rapano, our commercial progress for phase two is proceeding well. We have two customers signed up under long-term contracts and an additional customer under a letter of intent that we expect to convert to a long-term contract this In the aggregate, these three pieces of business represent minimum volumes of 71,000 barrels per day and approximately $80 million of annual EBITDA for Phase II. The two contracts are each for five-year terms, commencing upon completion of Phase II construction while the third letter of intent is for five years with a two-year extension option at the option of our customers.

Speaker Change: Closing out with Ricardo our commercial progress for phase II is proceeding well, we have two customers signed up under long term contracts and an additional customer under a letter of intent that we expect to convert to a long term contract. This summer.

Speaker Change: In the aggregate. These three pieces of business represent minimum volumes of 71000 barrels per day, and approximately $80 million of annual EBITDA for phase III. The two contracts are each for five year terms commencing upon completion of phase two construction, while the third letter of intent is for five years with a two year extension option.

Speaker Change: At the option of our customer.

Kenneth Nicholson: As I previously mentioned, financing for Phase 2 construction is underway with Rapano's $300 million tax-exempt debt issuance currently in the market, and we expect to price and close the financing in this month of May.

Speaker Change: As I previously mentioned financing for phase II construction is underway with <unk> $300 million tax exempt debt issuance currently in the market and we expect to price and close the financing in this month of May.

Kenneth Nicholson: While Phase 2 remains our current priority, we're excited about the advancement of the next phase of Rapano, including the development of additional underground storage for which we expect to complete permitting in the months to come.

Speaker Change: Phase II remains our current priority. We're excited about the advancement of the next phase of <unk>, including the development of additional underground storage for which we expect to complete permitting in the months to come.

Kenneth Nicholson: To wrap up, we're pleased with the quarter and excited about the year ahead, and I will now turn the call back over to Alan. Thank you, Ken.

Speaker Change: To wrap up we're pleased with the quarter and excited about the year ahead, and I will now turn the call back over to Alan.

Operator: Michelle, you may now open the call to Q&A. Thank you. If you'd like to ask a question, please press star 1 1. If your question has been answered and you'd like to remove yourself please press star 11 again.

Speaker Change: Thank you Ken Michelle you May now open the call to Q&A.

Speaker Change: Thank you.

Speaker Change: I ask a question. Please press star one one if your question has been answered and you'd like to remove yourself from the queue. Please press star one again.

Giuliano Bologna: Our first question comes from Giuliano Bologna with Compass Point. Your line is open. Well, good morning.

Operator: Our first question comes from Giuliano Bologna with Compass point your line is open.

Kenneth Nicholson: Congrats on the continued progress across the House of Votes, maybe starting off on Rappano. I'm curious how much longer after the public hearing on May 14th do you estimate it would take for the CAVRN approvals to come through? Hey, Giuliano. Good morning. Yeah, we're very, very close. I'm excited about it. Typically, it's a 30-day wait after the hearing date. There's a period that the final permit has to set after the hearing, but it's typically a 30-day process. That is not sort of preordained, but we expect it to be 30 days, maybe 45 days max before we actually have the permit in hand.

Giuliano Bologna: Good morning, guys. Congrats on the continued progress and aircraft across the asset base.

Giuliano Bologna: Maybe starting off on <unk> I'm curious how much longer asking of loss sharing on May 14, geos or it take for the cavern for holes to come here.

Giuliano Bologna: Hey, Julien good morning.

Giuliano Bologna: Yes, we're very very close.

Giuliano Bologna: I'm excited about it.

Giuliano Bologna: <unk>.

Giuliano Bologna: Typically it's a 30 day.

Giuliano Bologna: Wait after after the hearing date Theres a period that the final permit has to set after the hearing but it's typically a 30 day process that is not.

Giuliano Bologna: Sort of preordained, but we expect it to be 30 days, maybe 45 days Max before we actually have the permit in hand, so it's conceivable as.

Kenneth Nicholson: So it's conceivable, you know, as quickly as we have that permit in hand, we'll complete engineering and construction contracting, and we could be underway on Phase 3, actually, later this year. That's great, very helpful.

Giuliano Bologna: As quickly as we have that permanent handle complete engineering and construction contracting and we could be underway.

Phase III actually later this year.

Kenneth Nicholson: And then pivoting over to Longridge, can you describe the type of data center deals that you're working on at Longridge and what those look like? Yeah, definitely. Very active. The various conversations we're having all have slightly different potential structures, but I would say the most typical structure would be where we would lease or sell the land that we own adjacent to the power plant. And, in addition, build and provide backup power to a data center developer. What that would mean is there would not be a need to disconnect our existing 485-megawatt power plant from the grid.

Giuliano Bologna: That's great very helpful and then.

Giuliano Bologna: Turning over to rich can you just kind of the types of data center deals that youre working on average amortized overtime.

Rich: Yes, definitely very active.

Rich: The various conversations we're having all have slightly different potential structures, but I would say the most typical structure would be.

Rich: Where we would lease or sell the land that we own adjacent to the power plant.

Bill: In addition, bill.

Bill: Build and provide backup power to a data center developer.

Bill: What that would mean is there would not be a need to disconnect. Our existing 485 megawatt power plant from the grid. That's a good thing because that is an element of that of the transat.

Kenneth Nicholson: That's a good thing, because that's an element of the transaction that could be subject to timing and a regulatory process. So, by doing it this way, data center developers can be up and running more quickly, and at the end of the day, it would allow us to maintain our existing, call it 160 million of EBITDA from the existing plant and gas, and then generate incremental EBITDA from the lease of land and the supply of backup power. I think we've said before, our estimates are that incremental EBITDA above and beyond the existing 160 million, we estimate to be in the 70 million plus or minus annual range.

Bill: Transaction that could could be subject to timing and.

Bill: <unk> been a regulatory process. So by doing it this way data center developers can be up and running more quickly and.

Bill: At the end of the day it would allow us to maintain our existing call it $160 million of EBITDA from the existing plant and gas and then generate incremental EBITDA from the lease of land in the supply of backup power I think we've said before our estimates are that incremental EBITDA.

Bill: Above and beyond the existing $160 million, we estimate to be in the $70 million plus or minus annual range.

Giuliano Bologna: That is very helpful. I appreciate that.

Speaker Change: That's very helpful. I appreciate that and then switching over to <unk>.

Kenneth Nicholson: And then, you know, switching over to PrimeStar for, you know, I'm curious to get an update on the Nippon deal or anything else about, you know, how things should play out there from an upside perspective. Yeah, related to the transaction. Yeah. Yep. Well, look, we're encouraged by the latest out of Washington. You might have seen President Trump ordered CFIUS. spend a 45-day period to subject the Nippon acquisition of U.S. steel again to an examination. He did that, I think it was back on April 6th, and so if you count 45 days from April 6th, that gets us to about two weeks from today.

Bill: Sure.

Bill: Curious if you have any update on the <unk> deal.

Speaker Change: In terms of Danielle. Thanks, you play out there from an oxide prospectus related to the trends.

Bill: Yes, well.

Speaker Change: Look we're encouraged by the latest out of Washington.

Bill: You might have seen.

Speaker Change: President Trump ordered Cps.

Speaker Change: To spend a 45 day period too.

Speaker Change: Subject.

Speaker Change: Nippon acquisition of USD <unk> <unk>.

Speaker Change: Again.

Speaker Change: Two.

Speaker Change: Two an examination he did that I think it was back on April six and so if you count 45 days from April six that gets us to about two weeks from today.

Kenneth Nicholson: So, you know, we're eager to hear what the findings are. I mean, the atmospherics generally are positive. I think we've always said if Nippon is, you know, approved or otherwise, you know, a investment by Nippon is approved, you know, that can only be a good thing. It's not necessarily a bad thing for Transtar if it goes the other way, but it's probably an incrementally good thing if Nippon is approved to make an investment or otherwise acquire a U.S. deal.

Speaker Change: So we're eager to hear what the findings are I mean, the atmospherics.

Speaker Change: Generally are positive I think we've always said if Nippon is.

Speaker Change: <unk> proved our otherwise.

Speaker Change: Investment by Nippon has approved that can only be a good thing it's not necessarily a bad thing for transtar. If if it goes the other way, but but it's probably an incrementally good thing if Nippon is approved to make an investment or otherwise require.

Speaker Change: U S steel.

Giuliano Bologna: That's very helpful, I appreciate it, and I will jump back. Thank you.

Speaker Change: Very helpful. I appreciate it and I will jump back in the queue.

Brian McKenna: Our next question comes from Brian McKenna with Citizens. Your line is Thanks. Good morning, Ken, Buck, and Alan. Hope everyone's doing well. You know, the situation clearly remains fluid here. But Ken, based on everything that we know today, I mean, can you just walk through some of the puts and takes from the tariffs on your business? I know there's some positives, maybe some negatives, but it'd just be helpful to get the latest. Yeah, good morning, Brian. The answer to the question is it depends. It is, of course, an uncertain environment. I think certain of our businesses are positioned to benefit from the direction global trade is going, particularly as it relates to our assets that have more direct exposure to the international energy markets and flows.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Brian Mckenna with citizens. Your line is open.

Speaker Change: Thanks, Good morning come back now and hope everyone is doing well.

Speaker Change: Yes, the situation clearly remains fluid here, but Ken based on everything that we know today and can you just walk through some of the puts and takes from the tariffs on your business I know there are some positive maybe some net gains but just be helpful to get the latest here.

Speaker Change: Yes, good morning, Brian.

Speaker Change: The I think the answer to the question is it depends.

Speaker Change: It is of course, an uncertain environment.

Speaker Change: Certain of our businesses are positioned to benefit from the direction.

Speaker Change: Uh huh.

Speaker Change: Global trade is going particularly as it relates to <unk>.

Speaker Change: Our assets that are more direct exposure to the international energy markets and flows you may have seen.

Kenneth Nicholson: You may have seen President Trump, a number of weeks ago, stated that one of his primary goals was, through all of this, to have it end up where Europe was committing to purchase more energy products from the United States, and I think he quoted up to $350 billion of energy products every year. Rapano is... obviously best positioned to take advantage of that with natural gas liquids you know being shipped out of the East Coast to the European market so I will tell you we have seen some positive indications at Rapano in particular and some increase in interest.

Speaker Change: President Trump a number of weeks ago.

Speaker Change: Stated that one of his primary goals was through all of this to have it end up where Europe was.

Speaker Change: Committing to purchase more energy products from the United States and I think he quoted up to $350 billion of energy products every year.

Mono.

Speaker Change: As.

Speaker Change: Obviously best positioned to take advantage of that with natural gas liquids being shipped out of the east coast to the European market. So.

Speaker Change: I will tell you we have seen.

Speaker Change: Some positive indications at at <unk> in particular, and some increase in interest we've as I mentioned on the call we've signed three.

Kenneth Nicholson: We've, as I mentioned on the call, we've signed three contracts and an LOI over the past several, several months, each consecutive signing has come at a higher rate. And, you know, as we've been utilizing supply and our remaining supply has diminished, we've seen customers willing to pay more for, you know, the declining supply that we have. That's a good sign. You know, people want to make sure they have the supply available at Rapano or anywhere, you know, in the event energy flows to Europe, you pick up in the coming months. So encouraged by Rapano. At the same time, Jefferson is also an export terminal.

Speaker Change: Contracts in an LOI.

Speaker Change: Over the past several several months each.

Speaker Change: Consecutive signing has come at a higher rate and.

Speaker Change: As we have been.

Speaker Change: Utilizing supply and our remaining supply has diminished we've seen customers willing to pay more for the declining supply that we have that's a good sign.

Speaker Change: People want to make sure they have the supply available.

Speaker Change: At <unk> or anywhere in the event energy flows to Europe pick up in the coming months. So encouraged by <unk> at the same time Jefferson is also an export terminal, we export waxy crudes out of Utah, and so that business I think could also benefit transtar.

Kenneth Nicholson: We export waxy crudes out of Utah. And so that business, I think, could also benefit Transtar. You know, it's certainly a potential benefit. I mean, there was certainly some good, good, good news out of the negotiations with Great Britain yesterday for, you know, steel imports into Great Britain from the US, you know, looking to increase. I can't say the Gary and Mon Valley, you know, complexes at Transtar are big players in the export markets, but that doesn't mean that they couldn't be. And so that's probably only a good thing as well.

Speaker Change: It's certainly a potential benefit I mean.

Speaker Change: Certainly some good good good news out of the negotiations with Great Britain yesterday for steel.

Speaker Change: Imports into Great Britain from the U S looking to increase.

Speaker Change: I can't say, the Gary and Monde Valley complex as a transfer are big players in the export markets, but that doesn't mean that they couldnt pay and so that's probably only a good thing as well at long Ridge, we are more focused on our internal business, there and the things that we're doing.

Kenneth Nicholson: At Longridge, you know, we're more focused on our internal business there and the things that we're doing. And so I'm not sure, you know, tariffs are a huge plus or minus at Longridge, but I think we have a lot of opportunity at Longridge, obviously, regardless of whatever happens on the international. Okay, super helpful.

Speaker Change: And so not sure tariffs are a huge plus or minus that language, but I think we have a lot of opportunity language, obviously, regardless of whatever happens on the international market.

Brian McKenna: And then maybe just following up on Rapano, and it's good to hear all that positive commentary. And it's good to see the incremental $30 million of adjusted EBITDA from that third contract. Is there any remaining capacity to contract beyond what you have today? And then thinking about the upside potential from phase two, I mean, is that $80 million at the top end of the range? Or could there actually be some upside to that? The There's not a tremendous amount of available capacity above and beyond the 70,000 barrels we have contracted at MDR-LOI for Phase II.

Speaker Change: Okay Super helpful.

Speaker Change: And then just following up on <unk> good to hear all of that positive commentary, it's good to see that incremental $30 million and adjusted EBITDA from that third contract is there any remaining capacity.

Speaker Change: Contract.

Speaker Change: And what you have today, and then thinking about the upside potential from stage. Two I mean is that $80 million at the top end of the range or could there actually some upside to that longer term.

Speaker Change: The.

Speaker Change: There's not a tremendous amount of available capacity.

Speaker Change: And beyond the 70000 barrels we have contracted under LOI for phase III.

Kenneth Nicholson: where there is available capacity. is remaining at phase one.

Speaker Change: Where there is available capacity.

Kenneth Nicholson: I'll give you a sort of an example. For phase one, which of course is operating today, we have a contract with a customer who is committed to minimum volumes of 8,500 barrels per day. That customer just recently nominated for next month, I think it was over 13,000 barrels per day. We have the total capacity to handle over 20,000 barrels per day for Phase 1. And so that is underutilized, and there's definitely upside for Phase 1. I think another, call it annual 10 million of EBITDA out of Phase 1 if we can increase utilization closer to the 80, 90%.

Speaker Change: Is remaining of phase one.

Speaker Change: Give me a sort of an example for phase one which of course is operating today, we have a contract with a customer who is committed to minimum volumes of 8500 barrels per day.

Speaker Change: That customer just recently nominated for next month I think it was over 13000 barrels per day, we have the total capacity to.

Speaker Change: To handle over 20000 barrels per day for phase one and so that is that is under utilized and there is definitely upside for phase one I think another call. It annual $10 million of EBITDA out of phase one if we can increase utilization closer to the 80% 90% for phase two.

Kenneth Nicholson: For Phase 2, the 70,000 barrels that we have in place is not a lot of remaining capacity based on the design of Phase 2. Yeah, got it. Okay.

Speaker Change: To the 70000 barrels at where we have in place is not a lot of remaining capacity based on the design of phase III that would have to come from phase III in the future.

Speaker Change: Yes got it okay.

Speaker Change: And then just the last one for me the 20 megawatt increase.

Brian McKenna: The last one, for me, you know, the 20-megawatt increase at the power plant at Longridge. It's great to hear that that's been fast-tracked. I think you said it should be authorized at some point later in 2025. I mean, are there any other, you know, any more specifics you can give here? Is it 3Q, 4Q, just trying to think through that? And then can you just remind us on the incremental earnings from the increase here? Yeah, it would likely be 4Q. I don't think it will be 3Q. It's a great sign. I mean, our confidence level now regarding the approval for the uprate is extremely high.

Speaker Change: At the power plant at long Ridge.

Speaker Change: That's been SaaS track.

Speaker Change: You said it should be authorized at some point later in 2025, I mean are there any other.

Speaker Change: Any more specifics you can give here is that <unk> just trying to think through that and then can you just remind us on the incremental earnings from the increase here, yes, it would likely be <unk> I don't I don't think it will be <unk>.

Speaker Change: A great sign I mean, our confidence level now regarding the approval for the operate is extremely high.

Kenneth Nicholson: There were a number of plants in the PGM that were on the list for being fast-tracked, and many did not get chosen. We did, and that's just, that's very encouraging. It's about $8 million of incremental EBITDA upon the uprate. The uprate requires no capital. It could happen effectively overnight. It's a quick, you know, software change. The turbine is certainly capable today of generating up to 505 megawatts. So as soon as we're approved, we'll turn it on. Timing is not a definitive thing with the PGM. There's no specific guidance on the timetable. Based on everything we're hearing, I would expect it would be.

Speaker Change: There were a number of.

Speaker Change: Our plants in the PJM that were on the list four being fast tracked and many did not get chosen we did and that's just that's very encouraging.

Speaker Change: It's about $8 million of incremental EBITDA.

Speaker Change: Upon the uprate the operate requires no capital it could happen effectively overnight, it's a quick software change.

Speaker Change: The turbine is certainly capable today of generating up to 505 megawatts. So as soon as we're approved we'll turn it on.

Speaker Change: Timing is not a definitive thing with the PJM.

Speaker Change: There is no specific guidance on the timetable based on everything we're hearing I would expect it would be late this year.

Brian McKenna: Okay, I'll leave it there. Thank you, Ken. Thank you.

unknown: Okay I'll leave it there thanks Ken.

Greg Lewis: Our next question comes from Greg Lewis. TIG, your line is open. Yes, thank you and good morning and thanks for taking my questions. Um, you know, Joe, I was hoping to get a little bit more color around TranSTAR, i.e. the $10 million of adjusted EBITDA site. Is that, I guess, a couple of things there, is that going to require any CapEx on the part of TranSTAR or is that just really squeezing more money out of the, you know, existing footprint? It is no additional capital. Nothing, certainly no material additional capital. We're talking maybe tens of thousands of dollars or $100,000 for a certain project here or there.

Speaker Change: Thank you. Our next question comes from Greg Lewis with BTG. Your line is open.

Greg Lewis: Yes, Thank you and good morning, and thanks for taking my questions.

Speaker Change: I was hoping to get a little bit more color around transtar I E that $10 million of adjusted EBITDA side is that I guess a.

Greg Lewis: Couple of things there is that going to require any capex on.

Greg Lewis: On the part of.

Greg Lewis: <unk> or is that just really squeezing more.

Greg Lewis: More money out of the existing footprint.

Greg Lewis: It is.

No additional capital.

Greg Lewis: Nothing certainly no material additional capital we're talking maybe 10.

Greg Lewis: Tens of thousands of dollars or a $100 for a certain project here or there.

Kenneth Nicholson: There are, as I said, over a dozen projects. We keep an active list. That active list probably has 30 to 40 opportunities. But in terms of the near-term activities that we expect to turn on this year, it's well over a dozen. The opportunities are across a number of the railroads at TranStar. Some, most are regarding new freight business, transloading or just serving new customers. And then a portion, I would say maybe 20% of the opportunities are additional mechanical work, primarily at our new car repair shop on the Union Railroad in the Pittsburgh area. So it's nice to have diversity across many different railroads.

Greg Lewis: There are as I said over a dozen projects. We keep an active list that active list probably has 30 to 40 opportunities, but in terms of the near term activities that we expect to turn on this year.

Greg Lewis: All over a dozen.

Greg Lewis: The opportunities are across.

Greg Lewis: A number of the railroads.

Greg Lewis: At Transtar, some most are regarding new freight business.

Greg Lewis: Trans loading or.

Greg Lewis: To just serving new customers and then a portion I would say, maybe 20% of the opportunities or additional mechanical work.

Greg Lewis: Primarily at our new car repair shop on the Union railroad in the Pittsburgh area. So it's nice to have diversity across many different railroads.

Kenneth Nicholson: These are the types of things where you have to pursue them for a number of months before they actually kick in and come to fruition, but once they've kicked in, they tend to be very sticky. And so, you know, we're always adding to the list of opportunities and have been staffing up at Transtar. So I'm pretty encouraged.

Greg Lewis: These are the types of things, where you have to pursue them for a number of months before they actually kicking in and come to fruition, but once they've kicked in they tend to be very sticky and so.

Greg Lewis: We're always we're always adding to the list of opportunities and bids.

Greg Lewis: And have been staffing up a transtar, so I'm pretty encouraged I think we're going to have some good momentum ahead.

Greg Lewis: I think we're going to have some good momentum ahead. Okay, great to hear.

Kenneth Nicholson: And then a little bit of a broad question, but when you called out the 2 million off hire at Jefferson, are there, as we look out over the next few quarters, you know, just so we're kind of all on the same page, are there any other contract roll offs across, I guess, maybe Transtar, Jefferson, and I don't think Longridge, or plan maintenances that we should be aware of as we look out over the next couple quarters? Nothing across Jefferson. The only, you know, consistent maintenance outages we have are really at Longridge, where every six months or so we have a brief maintenance outage that can last anywhere from 3, 4, 5 days to up to 10 days or so.

Speaker Change: Okay, great to hear and then a little bit of a broad question, but you called out.

Greg Lewis: The $2 million off hire at that.

Speaker Change: At Jefferson.

Speaker Change: As we look out over the next few quarters.

Speaker Change: So we're kind of on the same page or are there any are there any other contract roll offs across I guess, maybe transtar Jefferson.

Speaker Change: I don't think long ridge or planned maintenance is that we should be aware of as we look out over the next couple of quarters.

Speaker Change: Nothing across Jefferson.

Speaker Change: <unk>.

Speaker Change: The only consistent maintenance outages, we have are really at long ridge, where every six months or so we have a.

Speaker Change: Reef mountain and maintenance outage that.

Speaker Change: Can.

Speaker Change: Can last anywhere from.

Speaker Change: 345 days to up to 10 days or so it's a pretty typical thing it's required and we take those maintenance outages.

Kenneth Nicholson: It's a pretty typical thing. It's required. And we take those maintenance outages every six months. We try to manage to take those outages at times when we can dovetail it nicely with gas production or otherwise so that it has a minimal financial impact. We are going to take a maintenance outage here in the second quarter at Longridge. Again, don't expect it to have a material financial impact for the quarter. We expect certainly the full impact of the consolidation of Longridge to by far overwhelm any impact from a maintenance outage. Outside of that, no, no, no, no meaningful contract roles or episodes like we had in the first quarter with Okay, great, thank you very much.

Speaker Change: Every every six months, we try to manage to take those outages at times, when we can dovetail it nicely with gas production or otherwise so that it has a minimal <unk>.

Speaker Change: <unk> impact we are going to take a maintenance outage here in the second quarter at long Ridge again don't expect it to have a material financial impact for the quarter. We expect certainly the full impact of the consolidation of long ridge two by far overwhelmed.

Speaker Change: Any impact from a maintenance outage.

Speaker Change: Outside of that no no no no meaningful contract roles or episodes like we had in the first quarter with Jefferson.

Speaker Change: Okay, great. Thank you very much.

Operator: Thank you. I'm showing no further questions at this time.

Thank you I'm showing no further questions at this time I would like to turn the call back over to Alan Andreini for closing remarks.

Alan Andreini: I'd like to turn the call back over to Alan Andreini for closing. Thank you, Michelle, and thank you all for participating in today's call. We look forward to updating you after Q2.

Speaker Change: Thank you Michelle and thank you all for participating in today's call. We look forward to updating you after Q2.

Operator: Thank you for your participation. You may now disconnect. Everyone, have a great day. Copyright © 2020 Mooji Media Ltd. All Rights Reserved.

Speaker Change: Thank you for your participation you may now disconnect everyone have a great day.

Speaker Change: Okay.

Speaker Change: [music].