Executive Summary / Key Takeaways

• FTAI Infrastructure Inc. is undergoing a significant transformation, strategically consolidating its freight rail segment through the acquisition of Wheeling & Lake Erie Railway and optimizing its energy and port assets, targeting over $450 million in annual Adjusted EBITDA.
• The Wheeling acquisition is a game-changer for the rail segment, projected to achieve at least $220 million in annual EBITDA by the end of 2026 through $20 million in cost synergies and $35 million in new revenue opportunities.
• Long Ridge is poised to reach a $160 million annual EBITDA run rate by Q4 2025, driven by repriced power contracts, higher capacity revenues, and West Virginia gas production, with management exploring strategic alternatives including monetization.
• Repauno's Phase 2 transloading project is on track for late 2026 completion, expected to generate $80 million in annual EBITDA, while the recent permit for its Phase 3 underground cavern system unlocks an additional $70-$80 million in annual EBITDA per cavern.
• A planned refinancing of parent-level debt by year-end 2025, including a new long-term bond issuance, is set to reduce fixed charges by $30 million annually and materially increase free cash flow, strengthening the company's balance sheet for future growth and deleveraging.

The Infrastructure Powerhouse: A Strategic Evolution

FTAI Infrastructure Inc. (FIP) has rapidly evolved from its 2021 spin-off from FTAI Aviation Ltd. (FTAI) into a dynamic owner and operator of critical infrastructure assets across North America's transportation, energy, and industrial sectors. The company's overarching strategy centers on acquiring, developing, and optimizing long-lived assets that provide mission-critical services, often characterized by high barriers to entry, strong margins, and stable cash flows. This strategic focus is now accelerating, with a clear narrative of consolidation in freight rail, optimization of energy and port assets, and a concerted effort to fortify its financial structure.

The industry landscape in which FIP operates is shaped by several powerful trends. The growing demand for energy infrastructure, fueled by factors such as the AI and data center boom, is creating significant opportunities for low-cost power generation and energy logistics. Simultaneously, the North American freight rail sector, a cornerstone of FIP's business, continues to see opportunities for consolidation and efficiency gains, driven by a business-friendly regulatory environment and the inherent advantages of rail transport. FIP's history, marked by strategic investments in multi-modal terminals and rail networks, has positioned it to capitalize on these macro trends.

Technological Edge: Driving Efficiency and Value

FIP's competitive advantage is significantly underpinned by its differentiated technology and operational innovation across its segments. At the Long Ridge Power and Gas segment, the combined cycle gas-fired power plant stands out for its exceptional performance. The plant consistently ranks "at or near the top of the list nationally in efficiency, reliability and profitability on a per megawatt basis". It achieved a 96% capacity factor in Q3 2025 and a nearly perfect 99% in Q1 2025. Furthermore, it is one of the few plants capable of blending hydrogen, positioning it for future energy transition demands. An ongoing 20-megawatt uprate, fast-tracked by the PJM regulator, is expected to add $5 million to $10 million in annual EBITDA with no capital cost, further enhancing its profitability and asset value.

The Repauno segment showcases FIP's innovative approach to storage infrastructure with its underground cavern system. Management highlights that these caverns are "less costly to build and they last forever. They're much, much easier to maintain". The planned Phase 3 development includes two underground caverns, each with a 640,000-barrel capacity. Building one cavern is estimated to cost approximately $200 million and is projected to generate $70 million to $80 million in annual EBITDA, implying a compelling three-year payback period. This technology provides a significant competitive moat in NGL storage and export, offering superior economics and long-term asset life compared to conventional above-ground storage. Repauno's rail-to-ship transloading system further integrates its deep-water port with rail connections, enabling efficient multimodal transfer of commodities and offering customers seamless logistics solutions.

Strategic Consolidation: Forging a Rail Powerhouse

The Railroad segment is central to FIP's growth narrative, undergoing a transformative expansion. The acquisition of The Wheeling Corporation, owner of the Wheeling & Lake Erie Railway, for $1.05 billion in August 2025, is a pivotal move. This Class II regional freight railroad operates over 1,000 miles of track across Ohio, Pennsylvania, West Virginia, and Maryland, serving more than 250 customers. The geographic overlap with FIP's existing Transtar business creates substantial synergy opportunities.

Management projects the combined Transtar and Wheeling platform to achieve an annual EBITDA run rate of at least $220 million by the end of 2026, an increase from the initial $200 million estimate. This growth is driven by an anticipated $20 million in annual cost savings from network efficiencies, optimized asset utilization, and combined purchasing power, expected to be fully implemented within 12 months. Additionally, significant revenue enhancements are in sight, including approximately $20 million in incremental annual EBITDA from Repauno customers sourcing natural gas liquids via the Wheeling system, and an estimated $15 million in annual EBITDA from increased freight volumes at Transtar due to Nippon Steel (NPSCY)'s $5 billion investment in U.S. Steel (X)'s Pittsburgh and Gary, Indiana facilities.

This diversification is critical for FIP's competitive positioning. Pro forma for the Wheeling acquisition, U.S. Steel's contribution to the combined rail business will decrease to one-third, significantly reducing customer concentration risk. Management believes this enhanced diversity and growth profile will allow the rail asset to trade at industry multiples, which historically average 15x EBITDA. While the rail segment faces competition from larger Class I railroads like Union Pacific (UNP) and CSX (CSX), FIP's strategy of acquiring and integrating regional and short-line railroads leverages its platform value, enabling it to realize $12 million to $15 million of EBITDA from acquisitions where others might only see $10 million due to synergies and cost savings. The company's "bigger is better" philosophy in rail M&A positions it as a competitive buyer in a fragmented market.

Optimizing Energy & Ports: Jefferson and Repauno Drive Growth

The Jefferson Terminal segment, a multi-modal crude oil and refined products terminal, continues to be a significant contributor. In Q3 2025, Jefferson generated $11 million in EBITDA, consistent with the previous quarter. The company anticipates $20 million in incremental annual EBITDA from two new contracts with minimum volume commitments commencing in the near term. Furthermore, FIP is in late-stage negotiations for additional contracts to handle conventional crude, refined products, and renewable fuels, with some requiring "little to no incremental investment or CapEx". Successful conversion of these opportunities could drive Jefferson's annual EBITDA to approximately $120 million.

The Repauno deep-water port is another key growth driver. Its Phase 2 transloading project is fully funded and progressing towards completion by late 2026. Two long-term contracts and one letter of intent are in place, representing minimum volumes of 71,000 barrels per day and approximately $80 million in annual EBITDA once operational. A significant milestone was achieved in October 2025 with the receipt of the permit for the Phase 3 underground cavern system. This Phase 3 development, effectively doubling Phase 2 capacity, is projected to generate an incremental $70 million to $80 million in annual EBITDA per cavern, with an estimated cost of $200 million per cavern and a three-year payback. The successful financing of Phase 2 with $300 million of tax-exempt debt at an average pricing of 6.5% demonstrates FIP's ability to access low-cost, long-term capital for highly accretive projects.

Long Ridge: Monetization for Future Value Creation

The Power and Gas segment, primarily Long Ridge, has achieved significant operational and financial milestones. Following the acquisition of the remaining 49.9% interest in February 2025, Long Ridge is now fully consolidated, and its Q3 2025 EBITDA reached $35.7 million. Management anticipates Long Ridge will achieve a $160 million annual EBITDA run rate by Q4 2025. This is driven by a $50 million increase in annual EBITDA from repriced power contracts (from $28 to $43 per megawatt-hour), an additional $30 million from higher capacity revenues commencing June 1, 2025, and $10 million to $20 million from West Virginia gas production now exceeding the power plant's consumption.

With Long Ridge reaching its base financial targets and operating in a strong market for low-cost power generation, FIP is exploring strategic alternatives, including a potential monetization of the business. This aligns with FIP's broader strategy of potentially monetizing stabilized assets to fund further growth in the freight rail segment. Furthermore, the company is actively pursuing behind-the-meter data center projects at Long Ridge, which could generate an additional $50 million to $75 million in annual EBITDA through land leases and backup power provision.

Financial Fortification and Liquidity Management

FTAI Infrastructure's financial performance in 2025 reflects its strategic shifts. Adjusted EBITDA for Q3 2025 was $70.9 million, a 55% increase from Q2 2025 and nearly double year-over-year. For the nine months ended September 30, 2025, Adjusted EBITDA reached $272.07 million, a substantial increase from $98.42 million in the prior year period. Total revenues for the nine months ended September 30, 2025, were $359.00 million, up from $250.73 million in the prior year. However, the company reported a net loss of $104.54 million for Q3 2025 and $54.33 million for the nine months ended September 30, 2025, influenced by significant non-cash items and increased interest expenses.

A critical focus for FIP is its liquidity and capital structure. Management acknowledged that current liquidity and forecasted cash flows were not sufficient to fully repay $1.55 billion of debt due within approximately 12 months, but a comprehensive plan is underway to alleviate this risk. This plan includes refinancing existing debt and the consummation of the Wheeling acquisition. As of September 30, 2025, total debt stood at $3.73 billion, with $1.25 billion at the parent level and $2.21 billion at the subsidiary level. The company plans to refinance its existing parent-level credit facility with a new long-term bond issuance by year-end 2025.

This refinancing is expected to reduce cash fixed charges by $30 million annually, bringing them to just over $100 million, and materially increase free cash flow available at the parent level. The $1 billion preferred stock issued at the rail subsidiary level is non-cash paying, ensuring that the rail segment's operating cash flow can be fully distributed to the parent for debt service, reinvestment, or deleveraging.

Risks and Challenges

Despite the compelling growth narrative, FIP faces several pertinent risks. The successful integration of the Wheeling acquisition is crucial, with potential challenges including cost overruns, delays, and retaining key personnel. Regulatory approval from the Surface Transportation Board for active control of Wheeling is pending, and while management believes it is a priority, the timing remains uncertain. The company also faces customer concentration risk, with a significant portion of revenues in the Railroad and Jefferson Terminal segments derived from a limited number of customers. Environmental regulations and the inherent risks of transporting hazardous materials pose potential liabilities and compliance costs. Furthermore, FIP's reliance on its external Manager and potential conflicts of interest, as well as exposure to interest rate fluctuations on its variable rate debt, require careful monitoring.

Conclusion

FTAI Infrastructure Inc. is at an inflection point, strategically transforming its business through a series of bold acquisitions and operational optimizations. The core investment thesis hinges on the successful integration and expansion of its freight rail segment, leveraging technological advantages in its energy and port assets, and fortifying its balance sheet through strategic refinancing. The company's aggressive pursuit of growth opportunities, particularly in rail and data centers, combined with a disciplined approach to capital allocation, positions it for substantial Adjusted EBITDA expansion, targeting over $450 million annually. While regulatory approvals and integration challenges remain, FIP's clear strategic roadmap, coupled with its differentiated assets and management's execution, suggests a compelling long-term value proposition for discerning investors. The shift towards a more diversified, operating-centric model, underpinned by strong cash flow generation and a strengthened financial foundation, is set to unlock significant shareholder value in the years to come.