What changed in this filing

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Item 1. Financial Statements

2023-05-03 compared with 2022-11-03 · 311 added, 590 removed, 778 unchanged (54% of the section changed)

1 unchanged sentence

FTAI INFRASTRUCTURE INC.

CONSOLIDATED AND COMBINED CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share and per share data)

Notes September 30, 2022 December 31, 2021

Notes March 31, 2023 December 31, 2022

Current assets:

24 unchanged sentences

200,000,000 shares authorized;

300,000 shares issued and outstanding as of September 30, 2022;

redemption amount of $ 450 million at September 30, 2022)

Net Former Parent investment — 1,617,601

Common shares ($ 0.01 par value per share;

300,000 shares issued and outstanding as of March 31, 2023 and December 31, 2022;

redemption amount of $ 448.2 million at March 31, 2023 and December 31, 2022)

15 279,160 264,590

Common stock ($ 0.01 par value per share;

2,000,000,000 shares authorized;

99,387,467 shares issued and outstanding as of September 30, 2022)

99,445,074 shares issued and outstanding as of March 31, 2023 and December 31, 2022)

Additional paid in capital 892,992 911,599

1 unchanged sentence

Accumulated other comprehensive loss ( 247,293 ) ( 300,133 )

Stockholders' and Former Parent Company equity 573,589 1,462,137

Stockholders' equity 559,837 551,623

Non-controlling interest in equity of consolidated subsidiaries ( 39,412 ) ( 26,829 )

5 unchanged sentences

(Dollars in thousands, except share and per share data)

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

Notes 2023 2022

5 unchanged sentences

Depreciation and amortization 3, 4, 6 20,135 16,996

Asset impairment 141 —

Total expenses 91,890 65,891

Other income (expense)

Equity in losses of unconsolidated entities 6 ( 12,080 ) ( 1,545 ) ( 47,982 ) ( 8,810 )

(Loss) gain on sale of assets, net ( 134 ) — ( 134 ) 16

Equity in earnings (losses) of unconsolidated entities 5 4,366 ( 22,043 )

Loss on sale of assets, net ( 124 ) —

Interest expense ( 23,250 ) ( 6,459 )

Other expense ( 1,132 ) ( 6,244 ) ( 2,144 ) ( 6,855 )

Other income (expense) 221 ( 459 )

Total other expense ( 18,787 ) ( 28,961 )

Loss before income taxes ( 34,183 ) ( 48,704 )

Provision for (benefit from) income taxes 15 1,555 ( 1,634 ) 5,086 ( 2,755 )

Provision for income taxes 12 1,729 1,584

Net loss ( 35,912 ) ( 50,288 )

1 unchanged sentence

Dividends and accretion on redeemable preferred stock 14,570 —

Net loss attributable to Stockholders and Former Parent $ ( 44,076 ) $ ( 27,286 ) $ ( 116,378 ) $ ( 62,050 )

Net loss attributable to stockholders/Former Parent $ ( 40,589 ) $ ( 42,822 )

Loss per share:

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FTAI INFRASTRUCTURE INC.

CONSOLIDATED AND COMBINED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (unaudited)

CONSOLIDATED AND COMBINED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited)

(Dollars in thousands)

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Net loss $ ( 35,912 ) $ ( 50,288 )

Other comprehensive loss:

Other comprehensive loss related to equity method investees, net (1)

( 41,999 ) ( 57,373 ) ( 186,661 ) ( 78,921 )

Comprehensive loss ( 85,193 ) ( 92,022 ) ( 318,103 ) ( 159,920 )

Other comprehensive income (loss):

Other comprehensive income (loss) related to equity method investees, net 52,852 ( 96,948 )

Change in pension and other employee benefit accounts ( 12 ) —

Comprehensive income (loss) 16,928 ( 147,236 )

Comprehensive loss attributable to non-controlling interest ( 9,893 ) ( 7,466 )

Comprehensive loss attributable to Stockholders and Former Parent $ ( 76,812 ) $ ( 84,659 ) $ ( 293,776 ) $ ( 140,971 )

________________________________________________________

(1) Net of deferred tax expense (benefit) of $ — and $ 2,362 for the three months ended September 30, 2022 and 2021, respectively, and $ — and $( 1,271 ) for the nine months ended September 30, 2022 and 2021, respectively.

Comprehensive income (loss) attributable to stockholders/Former Parent $ 26,821 $ ( 139,770 )

See accompanying notes to consolidated and combined consolidated financial statements.

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(Dollars in thousands)

Three and Nine Months Ended September 30, 2022

Common Shares Net Former Parent Investment Additional Paid In Capital Accumulated Deficit Accumulated Other Comprehensive Loss Non-Controlling Interest in Equity of Consolidated Subsidiaries Total Equity

Three Months Ended March 31, 2023

Common Stock Additional Paid In Capital Accumulated Deficit Accumulated Other Comprehensive Loss Non-Controlling Interest in Equity of Consolidated Subsidiaries Total Equity

Equity - December 31, 2022 $ 994 $ 911,599 $ ( 60,837 ) $ ( 300,133 ) $ ( 26,829 ) $ 524,794

Net loss ( 26,019 ) ( 9,893 ) ( 35,912 )

Other comprehensive loss ( 144,662 ) ( 144,662 )

Total comprehensive loss — ( 72,302 ) — — ( 144,662 ) ( 15,946 ) ( 232,910 )

Acquisition of consolidated subsidiary 3,054 3,054

Contributions from non-controlling interest 562 562

Net transfers from Former Parent 111,396 111,396

Equity-based compensation 1,665 1,665

Equity - June 30, 2022 $ — $ 1,656,695 $ — $ — $ ( 300,126 ) $ ( 10,756 ) $ 1,345,813

Net loss ( 20,445 ) ( 14,368 ) ( 8,381 ) ( 43,194 )

Other comprehensive loss ( 41,999 ) ( 41,999 )

Total comprehensive loss — ( 20,445 ) — ( 14,368 ) ( 41,999 ) ( 8,381 ) ( 85,193 )

Net transfers to Former Parent ( 728,717 ) ( 728,717 )

Distribution by Former Parent 994 ( 907,533 ) 906,539 —

Contributions from non-controlling interests 170 170

Other comprehensive income 52,840 52,840

Total comprehensive (loss) income — — ( 26,019 ) 52,840 ( 9,893 ) 16,928

Settlement of equity-based compensation ( 90 ) ( 90 )

Issuance of warrants 13,764 13,764

Issuance of Manager options 18,127 18,127

Distribution to Manager ( 79 ) ( 79 )

Acquisition of consolidated subsidiary ( 953 ) ( 3,495 ) ( 4,448 )

Dividends declared on common stock ( 3,084 ) ( 3,084 )

Dividends and accretion on redeemable preferred stock ( 14,570 ) ( 14,570 )

Equity-based compensation 895 895

Equity - September 30, 2022 $ 994 $ — $ 929,088 $ ( 14,368 ) $ ( 342,125 ) $ ( 17,738 ) $ 555,851

FTAI INFRASTRUCTURE INC.

CONSOLIDATED AND COMBINED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (unaudited)

(Dollars in thousands)

Three and Nine Months Ended September 30, 2021

Net Former Parent Investment Accumulated Other Comprehensive Income (Loss) Non-Controlling Interest in Equity of Consolidated Subsidiaries Total Equity

Equity - March 31, 2023 $ 994 $ 892,992 $ ( 86,856 ) $ ( 247,293 ) $ ( 39,412 ) $ 520,425

Three Months Ended March 31, 2022

Net Former Parent Investment Accumulated Other Comprehensive Loss Non-Controlling Interest in Equity of Consolidated Subsidiaries Total Equity

Equity - December 31, 2021 $ 1,617,601 $ ( 155,464 ) $ ( 91 ) $ 1,462,046

Net loss ( 42,822 ) ( 7,466 ) ( 50,288 )

Other comprehensive income ( 21,548 ) ( 21,548 )

Total comprehensive (loss) income ( 34,764 ) ( 21,548 ) ( 11,586 ) ( 67,898 )

Net transfers from Former Parent 121,577 121,577

Equity-based compensation 2,553 2,553

Equity - June 30, 2021 $ 1,086,104 $ ( 47,785 ) $ 13,310 $ 1,051,629

Net loss ( 27,286 ) ( 7,363 ) ( 34,649 )

Other comprehensive loss ( 96,948 ) ( 96,948 )

2 unchanged sentences

Equity-based compensation 709 709

Equity - September 30, 2021 $ 1,631,568 $ ( 105,158 ) $ 6,675 $ 1,533,085

Equity - March 31, 2022 $ 1,609,049 $ ( 252,412 ) $ ( 6,848 ) $ 1,349,789

See accompanying notes to consolidated and combined consolidated financial statements.

2 unchanged sentences

(Dollars in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

1 unchanged sentence

Adjustments to reconcile net loss to net cash used in operating activities:

Equity in losses of unconsolidated entities 47,982 8,810

Loss (gain) on sale of assets, net 134 ( 16 )

Equity in (earnings) losses of unconsolidated entities ( 4,366 ) 22,043

Loss on sale of assets, net 124 —

Equity-based compensation 895 709

Depreciation and amortization 20,135 16,996

Asset impairment 141 —

Change in deferred income taxes 1,547 1,512

1 unchanged sentence

Amortization of deferred financing costs 1,429 841

Provision for (benefit from) credit losses 418 ( 4 )

Amortization of bond discount 1,045 —

(Benefit from) provision for credit losses ( 165 ) 25

Accounts receivable ( 10,825 ) 13,744

6 unchanged sentences

Investment in unconsolidated entities ( 2,126 ) ( 1,637 )

Investment in convertible promissory notes ( 20,000 ) —

Acquisition of business, net of cash acquired ( 3,819 ) ( 627,399 )

Acquisition of consolidated subsidiary ( 4,448 ) —

Acquisition of property, plant and equipment ( 39,861 ) ( 51,728 )

Investment in promissory notes and loans ( 20,500 ) —

Proceeds from sale of property, plant and equipment 93 2,092

3 unchanged sentences

Payment of deferred financing costs ( 649 ) ( 277 )

Proceeds from issuance of redeemable preferred stock 291,000 —

Redeemable preferred stock issuance costs ( 16,418 ) —

Distribution to Manager ( 79 ) —

Capital contribution from non-controlling interests 732 —

Net transfers (to) from Former Parent, net ( 617,322 ) 694,327

Cash dividends - common stock ( 3,084 ) —

Net transfers from Former Parent, net — 34,270

Settlement of equity-based compensation ( 90 ) —

Net cash provided by financing activities 37,777 43,443

Net (decrease) increase in cash and cash equivalents and restricted cash ( 105,224 ) 283,221

Net decrease in cash and cash equivalents and restricted cash ( 41,209 ) ( 21,979 )

Cash and cash equivalents and restricted cash, beginning of period 149,642 301,855

2 unchanged sentences

Acquisition of property, plant and equipment $ ( 2,245 ) $ —

Conversion of interests in unconsolidated subsidiaries ( 21,302 ) —

Dividends and accretion on redeemable preferred stock ( 14,570 ) —

5 unchanged sentences

FTAI Infrastructure Inc.

(“we”, “us”, “our”, or the “Company”) is a Delaware corporation and was incorporated on December 13, 2021 in connection with the separation of the infrastructure business (“FTAI Infrastructure”) of Fortress Transportation and Infrastructure Investors LLC (the “Former Parent” or “FTAI”).

(“we”, “us”, “our”, or the “Company”) is a Delaware corporation and was originally formed as a limited liability company on December 13, 2021 in connection with the spin-off of the infrastructure business (“FTAI Infrastructure”) of FTAI Aviation Ltd.

(previously Fortress Transportation and Infrastructure Investors LLC, “FTAI” or “Former Parent”).

The Company owns and operates (i) five freight railroads and one switching company that provide rail service to certain manufacturing and production facilities (“Transtar”), (ii) a multi-modal crude oil and refined products terminal in Beaumont, Texas (“Jefferson Terminal”), (iii) a deep-water port located along the Delaware River with an underground storage cavern, a multipurpose dock, a rail-to-ship transloading system and multiple industrial development opportunities (“Repauno”), (iv) an equity method investment in a multi-modal terminal located along the Ohio River with multiple industrial development opportunities, including a power plant (“Long Ridge”), and (v) an equity method investment in two ventures developing battery and metal recycling technology (“Aleon” and “Gladieux”).

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(i) Railroad, (ii) Jefferson Terminal, (iii) Repauno, (iv) Power and Gas, and (v) Sustainability and Energy Transition, which all operate in the infrastructure sector (see Note 14).

The Company is headquartered in New York, New York.

FTAI Infrastructure Spin-off

On July 11, 2022, the Former Parent announced that its Board of Directors unanimously approved the details and timing of the previously announced spin-off of its infrastructure business, which was contributed to or merged into the Company and resulted in the infrastructure business being considered as our predecessor.

Prior to the spin-off, FTAI consisted of an equipment leasing business and an infrastructure business.

On August 1, 2022 (the “Separation Date”), FTAI distributed to the holders of FTAI common shares as of July 21, 2022, one share of FTAI Infrastructure Inc.

common stock for each FTAI common share and we became an independent, publicly-traded company trading on The Nasdaq Global Select Market under the symbol “FIP.”

In connection with the spin-off, the Company made a payment to the Former Parent on the Separation Date from the proceeds of the issuance of new debt (see Note 8) and the Redeemable Preferred Stock raise (see Note 18).

The Former Parent retained no ownership interest in the Company following the spin-off.

The Company entered into several agreements with the Former Parent and FIG LLC (the “Manager”), an affiliate of Fortress Investment Group LLC (“Fortress”) that, among other things, effect the separation and govern the relationship of the parties following the separation.

The Company also entered into a management agreement with the Manager (the “Management Agreement”), with substantially the same terms as the previously held management agreement between the Former Parent and the Manager.

On August 1, 2022 (the “Spin-off Date”), FTAI distributed to the holders of FTAI common shares, one share of FTAI Infrastructure Inc.

common stock for each FTAI common share held by such shareholder at the close of business on July 21, 2022 and we became an independent, publicly-traded company trading on The Nasdaq Global Select Market under the symbol “FIP.” The Company is headquartered in New York, New York.

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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Unaudited Consolidated and Combined Consolidated Financial Statements

The Company’s financial statements for the periods through the Separation Date are Combined Consolidated Financial Statements.

The Company’s financial statements for the period after the Separation Date through September 30, 2022 are Consolidated Financial Statements based on the reported results of FTAI Infrastructure Inc.

The Company’s financial statements for the periods through the Spin-off Date are combined consolidated financial statements.

The Company’s financial statements for the period after the Spin-off Date are consolidated financial statements based on the reported results of FTAI Infrastructure Inc.

as a standalone company.

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Prior to spin-off

The Company’s financial statements for the periods through the Separation Date were prepared on a standalone basis as if the operations had been conducted independently from the Former Parent and have been derived from the consolidated financial statements and accounting records of the Former Parent.

Accordingly, Former Parent’s net investment in our operations (Former Parent Company equity) was shown in lieu of stockholders’ equity in the accompanying Combined Consolidated Financial Statements, which include the historical operations, assets, and liabilities comprising the infrastructure business of FTAI.

Prior to the Separation Date, the Combined Consolidated Financial Statements include certain assets and liabilities that have historically been held by the Former Parent but are specifically identifiable or otherwise attributable to FTAI Infrastructure.

All significant intercompany transactions between Former Parent and FTAI Infrastructure have been included as components of Net Former Parent investment in the Combined Consolidated Financial Statements, as they are to be considered effectively settled upon effectiveness of the separation.

The Company’s financial statements for the periods through the Spin-off Date were prepared on a standalone basis as if the operations had been conducted independently from the Former Parent and have been derived from the consolidated financial statements and accounting records of the Former Parent.

Accordingly, Former Parent’s net investment in our operations (Net Former Parent investment) was shown in lieu of stockholders’ equity in the accompanying combined consolidated financial statements, which include the historical operations comprising the infrastructure business of FTAI.

Prior to the Spin-off Date, the combined consolidated financial statements include certain assets and liabilities that have historically been held by the Former Parent but are specifically identifiable or otherwise attributable to FTAI Infrastructure.

All significant intercompany transactions between Former Parent and FTAI Infrastructure have been included as components of Net Former Parent investment in the combined consolidated financial statements, as they are to be considered effectively settled upon effectiveness of the spin-off.

The combined consolidated financial statements are presented as if our businesses had been combined for all periods presented.

Principles of Combination —FTAI Infrastructure has elected the principles of combined consolidated financial statements as the basis of presentation for the periods through the Spin-off Date due to common ownership and management of the entities, which includes the financial results of the Railroad, Jefferson Terminal, Repauno, Power and Gas, and Sustainability and Energy Transition segments.

Cash and Cash Equivalents —The Cash and Cash Equivalents reflected in the financial statements through the Spin-off Date are Cash and Cash Equivalents that were legally held by FTAI Infrastructure during the periods presented in the financial statements and are directly attributed to and used in the operations of FTAI Infrastructure.

Debt and the Corresponding Interest Expense — The Debt reflected in the financial statements through the Spin-off Date was debt that was directly attributable to, and legally incurred by, FTAI Infrastructure.

The corresponding interest expense presented in the financial statements was derived solely from the Debt directly attributed to FTAI Infrastructure.

FTAI INFRASTRUCTURE INC.

1 unchanged sentence

(Dollars in tables in thousands, unless otherwise noted)

The Combined Consolidated Financial Statements are presented as if our businesses had been combined for all periods presented.

The assets and liabilities in the Combined Consolidated Financial Statements have been reflected on a historical cost basis, as immediately prior to the separation, all of the assets and liabilities presented are owned by the Former Parent and are being transferred to us at a carry-over basis.

Principles of Combination —FTAI Infrastructure has elected the principles of Combined Consolidated Financial Statements as the basis of presentation for the periods through the Separation Date due to common ownership and management of the entities, which includes the financial results of the Railroad, Jefferson Terminal, Repauno, Power and Gas, and Sustainability and Energy Transition segments.

Cash and Cash Equivalents —The Cash and Cash Equivalents reflected in the financial statements through the Separation Date are Cash and Cash Equivalents that were legally held by FTAI Infrastructure during the periods presented in the financial statements and are directly attributed to and used in the operations of FTAI Infrastructure.

Debt and the Corresponding Interest Expense — The Debt reflected in the financial statements through the Separation Date is debt that is directly attributable to, and legally incurred by, FTAI Infrastructure.

The corresponding interest expense presented in the financial statements is derived solely from the Debt directly attributed to FTAI Infrastructure.

Corporate Function —For the periods through the Separation Date, the Combined Consolidated Financial Statements include all revenues and costs directly attributable to FTAI Infrastructure and an allocation of certain expenses.

The Former Parent is externally managed by the Manager, which performs the Former Parent’s corporate function, and incurs a variety of expenses including, but not limited to, information technology, accounting, treasury, tax, legal, corporate finance and communications.

For purposes of the Combined Consolidated Statements of Operations, an allocation of these expenses is included to reflect our portion of such corporate overhead from the Former Parent.

Corporate Function —For the periods through the Spin-off Date, the combined consolidated financial statements include all revenues and costs directly attributable to FTAI Infrastructure and an allocation of certain expenses.

The Former Parent was externally managed by the Manager, which performed the Former Parent’s corporate function, and incurred a variety of expenses including, but not limited to, information technology, accounting, treasury, tax, legal, corporate finance and communications.

For purposes of the Combined Consolidated Statements of Operations, an allocation of these expenses was included to reflect our portion of such corporate overhead from the Former Parent.

The charges reflected have either been specifically identified or allocated based on an estimate of time spent on FTAI Infrastructure.

These allocated costs are recorded in general and administrative, and acquisition and transaction expenses in the Combined Consolidated Statements of Operations.

These allocated costs were recorded in general and administrative, and acquisition and transaction expenses in the Combined Consolidated Statements of Operations.

We believe the assumptions regarding allocations of the Former Parent’s Corporate expenses are reasonable.

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Refer to Note 13 for additional discussion on corporate costs allocated from the Former Parent that are included in these combined consolidated financial statements .

Subsequent to the Separation Date, the Company operated as a standalone company based on actual expenses incurred.

Unaudited Interim Financial Information —The accompanying interim Consolidated Balance Sheet as of September 30, 2022, and the Consolidated and Combined Consolidated Statements of Operations, Comprehensive Loss, Changes in Equity and Cash Flows for the three and nine months ended September 30, 2022 and 2021 are unaudited.

Subsequent to the Spin-off Date, the Company operated as a standalone company based on actual expenses incurred.

Unaudited Interim Financial Information —The accompanying interim Consolidated Balance Sheet as of March 31, 2023, and the Consolidated and Combined Consolidated Statements of Operations, Comprehensive Income (Loss), Changes in Equity and Cash Flows for the three months ended March 31, 2023 and 2022 are unaudited.

These unaudited interim consolidated and combined consolidated financial statements have been prepared in accordance with U.S.

In the opinion of our management, the unaudited interim Consolidated and Combined Consolidated Financial Statements include all adjustments necessary for the fair presentation of our financial position as of September 30, 2022, the results of operations, comprehensive loss, changes in equity and cash flows for the three and nine months ended September 30, 2022 and 2021.

The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any other period.

generally accepted accounting principles (“U.S.

In the opinion of our management, the unaudited interim consolidated and combined consolidated financial statements include all adjustments necessary for the fair presentation of our financial position as of March 31, 2023, the results of operations, comprehensive income (loss), changes in equity and cash flows for the three months ended March 31, 2023 and 2022.

The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or for any other period.

Principles of Consolidation — We consolidate all entities in which we have a controlling financial interest and control over significant operating decisions, as well as variable interest entities (“VIEs”) in which we are the primary beneficiary.

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Actual results could differ from those estimates.

FTAI INFRASTRUCTURE INC.

NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

Risks and Uncertainties — In the normal course of business, we encounter several significant types of economic risk including credit, market, and capital market risks.

3 unchanged sentences

We do not have significant exposure to foreign currency risk as all of our leasing and revenue arrangements are denominated in U.S.

Variable Interest Entities (“VIE”) — The assessment of whether an entity is a VIE and the determination of whether to consolidate a VIE requires judgment.

Variable Interest Entities — The assessment of whether an entity is a VIE and the determination of whether to consolidate a VIE requires judgment.

VIEs are defined as entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties.

A VIE is required to be consolidated by its primary beneficiary, and only by its primary beneficiary, which is defined as the party who has the power to direct the activities of a VIE that most significantly impact its economic performance and who has the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.

FTAI INFRASTRUCTURE INC.

NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

Delaware River Partners LLC

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DRP is solely reliant on us to finance its activities and therefore is a VIE.

We concluded that we were the primary beneficiary;

We concluded that we are the primary beneficiary;

and accordingly, DRP has been presented on a consolidated basis in the accompanying consolidated and combined consolidated financial statements.

Total VIE assets of DRP were $ 322.0 million and $ 316.5 million, and total VIE liabilities of DRP were $ 43.8 million and $ 32.6 million as of September 30, 2022 and December 31, 2021, respectively.

Total VIE assets of DRP were $ 302.6 million and $ 306.0 million, and total VIE liabilities of DRP were $ 34.9 million and $ 34.1 million as of March 31, 2023 and December 31, 2022, respectively.

Cash and Cash Equivalents — We consider all highly liquid short-term investments with a maturity of 90 days or less when purchased to be cash equivalents.

Restricted Cash — Restricted cash consists of prepaid interest and principal pursuant to the requirements of certain of our debt agreements (see Note 7) and other qualifying construction projects at Jefferson Terminal.

Other Current Assets —Other current assets is primarily comprised of commodities inventory of $ 4.6 million and $ 6.8 million, deposits of $ 28.6 million and $ 17.2 million, note receivable of $ 20.0 million and $ 7.5 million, prepaid expenses of $ 17.2 million and $ 17.4 million, and other assets of $ 7.4 million and $ 11.9 million as of September 30, 2022 and December 31, 2021, respectively.

Property, Plant, and Equipment, Leasing Equipment and Depreciation — Property, plant and equipment and leasing equipment are stated at cost (inclusive of capitalized acquisition costs, where applicable) and depreciated using the straight-line method, over their estimated useful lives, to estimated residual values which are summarized as follows:

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Significant spare parts are depreciated in conjunction with the underlying property, plant and equipment asset when placed in service.

FTAI INFRASTRUCTURE INC.

NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

We review our depreciation policies on a regular basis to determine whether changes have taken place that would suggest that a change in our depreciation policies, useful lives of our equipment or the assigned residual values is warranted.

We, through our equity method investment in Long Ridge, have a working interest in various natural gas reserves located in southeastern Ohio.

Capitalized Interest —The interest cost associated with major development and construction projects is capitalized and included in the cost of the project.

Interest capitalization ceases once a project is substantially complete or no longer undergoing construction activities to prepare it for its intended use.

We capitalized interest of $ 2.6 million, $ 6.9 million, $ 2.5 million, and $ 5.9 million during the three and nine months ended September 30, 2022 and 2021, respectively.

We capitalized interest of $ 1.4 million and $ 2.1 million during the three months ended March 31, 2023 and 2022, respectively.

Repairs and Maintenance —Repair and maintenance costs that do not extend the lives of the assets are expensed as incurred.

Our repairs and maintenance expense were $ 3.9 million, $ 9.3 million, $ 1.6 million, and $ 3.3 million during the three and nine months ended September 30, 2022 and 2021, respectively, and are included in Operating expenses in the Consolidated and Combined Consolidated Statements of Operations.

Our repairs and maintenance expenses were $ 4.3 million and $ 1.3 million during the three months ended March 31, 2023 and 2022, respectively, and are included in Operating expenses in the Consolidated and Combined Consolidated Statements of Operations.

Impairment of Long-Lived Assets —We perform a recoverability assessment of each of our long-lived assets whenever events or changes in circumstances, or indicators, indicate that the carrying amount or net book value of an asset may not be recoverable.

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When performing a recoverability assessment, we measure whether the estimated future undiscounted net cash flows expected to be generated by the asset exceeds its net book value.

The undiscounted cash flows consist of cash flows from currently contracted leases and terminal services contracts, future projected leases, terminal service and freight rail rates, transition costs, and estimated residual or scrap values.

The undiscounted cash flows consist of cash flows from terminal services contracts and currently contracted leases, future projected leases, terminal service and freight rail rates,

FTAI INFRASTRUCTURE INC.

NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

transition costs, and estimated residual or scrap values.

In the event that an asset does not meet the recoverability test, the carrying value of the asset will be adjusted to fair value resulting in an impairment charge.

1 unchanged sentence

The factors considered in estimating the undiscounted cash flows are impacted by changes in future periods due to changes in contracted lease rates, terminal service, and freight rail rates, residual values, economic conditions, technology, demand for a particular asset type and other factors.

Other Current Assets —Other current assets is primarily comprised of commodities inventory of $ 0.9 million and $ 3.6 million, deposits of $ 21.6 million and $ 22.8 million, note receivable of $ 20.0 million and $ 20.0 million, prepaid expenses of $ 10.9 million and $ 16.4 million, and other assets of $ 5.5 million and $ 4.5 million as of March 31, 2023 and December 31, 2022, respectively.

Other Assets —Other Assets primarily consists of a note receivable of $ 10.8 million as of both March 31, 2023 and December 31, 2022 from CarbonFree, a business that develops technologies to capture carbon dioxide from industrial emissions sources.

Accounts Payable and Accrued Liabilities —Accounts payable and accrued liabilities primarily include payables relating to construction projects, interline payables to other railroads, accrued compensation, interest and payables to Manager.

Other Current Liabilities —Other current liabilities primarily include environmental liabilities of $ 4.1 million and $ 4.1 million, and insurance premium liabilities of $ 4.1 million and $ 6.2 million as of March 31, 2023 and December 31, 2022, respectively.

Goodwill —Goodwill includes the excess of the purchase price over the fair value of the net tangible and intangible assets associated with the acquisition of Jefferson Terminal, Transtar and FYX.

The carrying amount of goodwill was approximately $ 263.1 million and $ 257.1 million as of September 30, 2022 and December 31, 2021, respectively.

The carrying amount of goodwill within the Jefferson Terminal, Railroad and Corporate and Other segments was $ 122.7 million, $ 132.1 million, and $ 5.4 million as of both March 31, 2023 and December 31, 2022, respectively.

We review the carrying values of goodwill at least annually to assess impairment since these assets are not amortized.

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If the option is not elected or if it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then a goodwill impairment test is performed to identify potential goodwill impairment and measure an impairment loss.

A qualitative analysis was not elected for the year ended December 31, 2021.

We estimate the fair value of the reporting units using an income approach, specifically a discounted cash flow analysis.

This analysis requires us to make significant assumptions and estimates about the forecasted revenue growth rates, EBITDA margins, capital expenditures, the timing of future cash flows, and discount rates.

A goodwill impairment assessment compares the fair value of a respective reporting unit with its carrying amount, including goodwill.

The estimate of fair value of the respective reporting unit is based on the best information available as of the date of assessment, which primarily incorporates certain factors including our assumptions about operating results, business plans, income projections, anticipated future cash flows and market data.

If the estimated fair value of the reporting unit is less than the carrying amount, a goodwill impairment is recorded to the extent that the carrying value of the reporting unit exceeds the fair value.

As of October 1, 2022, for our Jefferson Terminal reporting unit, we completed a quantitative analysis.

We estimate the fair value of Jefferson Terminal using an income approach, specifically a discounted cash flow analysis.

This analysis requires us to make significant assumptions and estimates about the forecasted revenue growth rates, EBITDA margins and discount rates.

The estimates and assumptions used consider historical performance if indicative of future performance and are consistent with the assumptions used in determining future profit plans for the reporting units.

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The Jefferson Terminal reporting unit had an estimated fair value that exceeded its carrying value by more than 10% but less than 20% as of October 1, 2022.

The Jefferson Terminal segment forecasted revenue is dependent on the ramp up of volumes under current and expected future contracts for storage and throughput of heavy and light crude and refined products and is subject to obtaining rail capacity for crude, expansion of refined product distribution to Mexico and movements in future oil spreads.

At October 1, 2021, approximately 4.3 million barrels of storage was currently operational with 1.9 million barrels currently under construction for new contracts which will complete our storage development for our main terminal.

The Jefferson Terminal reporting unit forecasted revenue is dependent on the ramp up of volumes under current and expected future contracts for storage and throughput of heavy and light crude and refined products, expansion of refined product distribution to Mexico and movements in future oil spreads.

At October 1, 2022, approximately 4.3 million barrels of storage was operational with 1.9 million barrels under construction for new contracts that came online in December 2022 and completed our storage development for our main terminal.

Our discount rate for our 2022 goodwill impairment analysis was 9.5 % and our assumed terminal growth rate was 2.0 %.

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and Canada, are expected to result in increased demand for storage on the U.S.

Although we do not have

Although we do not have significant direct exposure to volatility of crude oil prices, changes in crude oil pricing that affect long term refining planned output could impact Jefferson Terminal operations.

FTAI INFRASTRUCTURE INC.

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(Dollars in tables in thousands, unless otherwise noted)

significant direct exposure to volatility of crude oil prices, changes in crude oil pricing that affect long term refining planned output could impact Jefferson Terminal operations.

We expect the Jefferson Terminal segment to continue to generate positive Adjusted EBITDA in future years.

Although certain of our anticipated contracts or expected volumes from existing contracts for Jefferson Terminal have been delayed, we continue to believe our projected revenues are achievable.

Further delays in executing these contracts or achieving our projections could adversely affect the fair value of the reporting unit.

The impact of the COVID-19 global pandemic during 2020 and 2021 negatively affected refining volumes and therefore Jefferson Terminal crude throughput but we have seen the activity starting to normalize and have ramped back up to pre-pandemic levels during 2022.

Furthermore, we anticipate strengthening macroeconomic demand for storage and the increasing spread between Western Canadian Crude and Western Texas Intermediate as Canadian crude pipeline apportionment increases.

Also, as our pipeline connections became fully operational during 2021, we remain positive for the outlook of Jefferson Terminal's earnings potential.

There were no impairments of goodwill for the three and nine months ended September 30, 2022 and 2021.

We expect the Jefferson Terminal reporting unit to continue to generate positive Adjusted EBITDA in future years.

In December 2022, our multi-year refined products contract with Exxon Mobil Oil Corporation commenced.

Although certain of our anticipated contracts or expected volumes from existing contracts for Jefferson Terminal have been delayed, we continue to believe our projections are achievable.

Further delays in executing anticipated contracts or achieving our projected volumes could adversely affect the fair value of the reporting unit.

There were no impairments of goodwill for the three months ended March 31, 2023 and 2022.

Intangibles and Amortization —Intangible assets include the value of existing customer relationships acquired in connection with the acquisition of Jefferson Terminal and Transtar.

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Customer relationship intangible assets have useful lives ranging from 5 to 15 years, no estimated residual value, and amortization is recorded as a component of Depreciation and amortization in the Consolidated and Combined Consolidated Statements of Operations.

The weighted-average remaining amortization period for customer relationships was 149 months and 154 months as of September 30, 2022 and December 31, 2021, respectively.

Deferred Financing Costs —Costs incurred in connection with obtaining long-term financing are capitalized and amortized to interest expense over the term of the underlying loans .

Unamortized deferred financing costs of $ 31.5 million and $ 21.5 million as of September 30, 2022 and December 31, 2021, respectively, are included in Debt, net in the Consolidated and Combined Consolidated Balance Sheets.

Amortization expense was $ 1.3 million, $ 3.0 million, $ 0.7 million and $ 1.8 million for the three and nine months ended September 30, 2022 and 2021, respectively, and is included in Interest expense in the Consolidated and Combined Consolidated Statements of Operations.

Other Assets —Other Assets primarily consists of $ 10.0 million of note receivable as of both September 30, 2022 and December 31, 2021 from CarbonFree, a business that develops technologies to capture carbon dioxide from industrial emissions sources.

Additionally, the Other Assets balance included $ 5.1 million and $ 2.9 million of spare parts for the Railroad segment at September 30, 2022 and December 31, 2021, respectively.

Other Current Liabilities —Other current liabilities primarily include environmental liabilities of $ 4.1 million and $ 4.1 million, and insurance premium liabilities of $ 1.5 million and $ 1.7 million as of September 30, 2022 and December 31, 2021, respectively.

Redeemable Preferred Stock —We classify the Series A Senior Preferred Stock ("Redeemable Preferred Stock") as temporary equity in the Consolidated and Combined Consolidated Balance Sheets due to certain contingent redemption clauses that are at the election of the holders.

The weighted-average remaining amortization period for customer relationships was 147 months and 148 months as of March 31, 2023 and December 31, 2022, respectively.

Redeemable Preferred Stock —We classify the Series A Senior Preferred Stock ("Redeemable Preferred Stock") as temporary equity in the Consolidated Balance Sheets due to certain contingent redemption clauses that are at the election of the holders.

The carrying value of the Redeemable Preferred Stock is accreted to the redemption value at the earliest redemption date, which has been determined to be August 1, 2030.

We use the interest method to accrete to the redemption value.

Deferred Financing Costs —Costs incurred in connection with obtaining long-term financing are capitalized and amortized to interest expense over the term of the underlying loans .

Unamortized deferred financing costs of $ 29.5 million and $ 30.9 million as of March 31, 2023 and December 31, 2022, respectively, are included in Debt, net in the Consolidated Balance Sheets.

Amortization expense was $ 1.4 million and $ 0.8 million for the three months ended March 31, 2023 and 2022, respectively, and is included in Interest expense in the Consolidated and Combined Consolidated Statements of Operations.

Terminal Services Revenues —Terminal services are provided to customers for the receipt and redelivery of various commodities.

These revenues relate to performance obligations that are recognized over time using the right to invoice practical expedient, i.e., invoiced as the services are rendered and the customer simultaneously receives and consumes the benefit over the contract term.

The performance of service and right to invoice corresponds with the value delivered to our customers.

The Company’s performance of service and right to invoice corresponds with the value delivered to our customers.

Revenues are typically invoiced and paid on a monthly basis.

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The invoicing railroad then pays the other railroads its portion of the total amount invoiced on a monthly basis.

We record revenue related to interline traffic for transportation service segments provided by carriers along

FTAI INFRASTRUCTURE INC.

NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

railroads that are not owned or controlled by us on a net basis.

We record revenue related to interline traffic for transportation service segments provided by carriers along railroads that are not owned or controlled by us on a net basis.

Interline revenues are recognized as the transportation movements occur.

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Lease income is recognized on a straight-line basis over the terms of the relevant lease agreement.

Roadside Services Revenues — Roadside services revenue is revenue related to providing roadside assistance services to customers in the intermodal and over-the-road trucking industries.

Revenue is recognized when a performance obligation is satisfied by completing a repair service at a point in time.

Revenues are typically invoiced for each repair and generally have 30-day payment terms.

FTAI INFRASTRUCTURE INC.

NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

Other Revenue —Other revenue primarily consists of revenue related to the handling, storage and sale of raw materials.

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Other revenues are typically invoiced and paid on a monthly basis.

Additionally, other revenue consists of revenue related to derivative trading activities.

See Commodity Derivatives below for additional information.

Other revenue also includes revenue related to providing roadside assistance services to customers in the intermodal and over-the-road trucking industries.

Revenue is recognized when a performance obligation is satisfied by completing a repair service at a point in time.

Revenues are typically invoiced for each repair and generally have 30-day payment terms.

Additionally, other revenue includes revenue related to derivative trading activities.

Payment terms for revenues are generally short term in nature .

Leasing Arrangements — At contract inception, we evaluate whether an arrangement is or contains a lease for which we are the lessee (that is, arrangements which provide us with the right to control a physical asset for a period of time).

Operating lease right-of-use (“ROU”) assets and lease liabilities are recognized in Operating lease right-of-use assets, net and Operating lease liabilities within current liabilities and non-current liabilities in our Consolidated and Combined Consolidated Balance Sheets, respectively.

Finance lease ROU assets are recognized in Property, plant and equipment, net and lease liabilities are recognized in Other current liabilities and Other liabilities in our Consolidated and Combined Consolidated Balance Sheets.

All lease liabilities are measured at the present value of the unpaid lease payments, discounted using our incremental borrowing rate based on the information available at commencement date of the lease.

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We have elected to combine lease and non-lease components for all lease contracts where we are the lessee.

Additionally, for arrangements with lease terms of 12 months or less, we do not recognize ROU assets, and lease liabilities and lease payments are recognized on a straight-line basis over the lease term with variable lease payments recognized in the period in which the obligation is incurred.

Additionally, for arrangements with lease terms of 12 months or less, we do not recognize ROU assets and lease liabilities;

lease payments are recognized on a straight-line basis over the lease term with variable lease payments recognized in the period in which the obligation is incurred.

Concentration of Credit Risk —We are subject to concentrations of credit risk with respect to amounts due from customers.

We attempt to limit our credit risk by performing ongoing credit evaluations.

During the three and nine months ended September 30, 2022, one customer in the Railroad segment accounted for approximately 44 % and 54 % of total revenue, respectively.

Additionally, we earned approximately 10 % of our revenue for the nine months ended September 30, 2022 from one customer in the Jefferson Terminal segment.

For the three and nine months ended September 30, 2021, we earned 13 % and 20 % of our revenues from one customer in the Jefferson Terminal segment, respectively.

For the three and nine months ended September 30, 2021, we earned approximately 26 % and 10 % of our revenue from one customer in the Railroad segment, respectively.

As of September 30, 2022 and December 31, 2021, accounts receivable from two customers from the Jefferson Terminal and Railroad segments represented 44 % and 48 % of total accounts receivable, net, respectively.

During the three months ended March 31, 2023, one customer in the Railroad segment accounted for approximately 48 % of total revenue.

Additionally, we earned approximately 12 % of our revenue for the three months ended March 31, 2023 from one customer in the Jefferson Terminal segment.

For the three months ended March 31, 2022, we earned 70 % and 12 % of our revenues from one customer in the Railroad segment and one customer in the Jefferson Terminal segment, respectively.

As of March 31, 2023 accounts receivable from three customers from the Jefferson Terminal and Railroad segments represented 50 % of total accounts receivable, net.

As of December 31, 2022, accounts receivable from three customers from the Jefferson Terminal and Railroad segments represented 55 % of total accounts receivable, net.

We maintain cash and restricted cash balances, which generally exceed federally insured limits, and subject us to credit risk, in high credit quality financial institutions.

We monitor the financial condition of these institutions and have not experienced any losses associated with these accounts.

FTAI INFRASTRUCTURE INC.

NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

Allowance for Doubtful Accounts — We determine the allowance for doubtful accounts based on our assessment of the collectability of our receivables on a customer-by-customer basis.

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Comprehensive Income (Loss) — Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances, excluding those resulting from investments by and distributions to owners.

Our comprehensive income (loss) represents net income (loss), as presented in the Consolidated and Combined Consolidated Statements of Operations, adjusted for fair value changes recorded in other comprehensive income (loss) related to cash flow hedges of our equity method investees and pension and other postretirement benefits.

Our comprehensive income (loss) represents net loss, as presented in the Consolidated and Combined Consolidated Statements of Operations, adjusted for fair value changes recorded in other comprehensive income (loss) related to cash flow hedges of our equity method investees and pension and other employee benefit accounts.

FTAI INFRASTRUCTURE INC.

NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

Derivative Financial Instruments

Electricity Derivatives — Through our equity method investment in Long Ridge, we enter into derivative contracts as part of a risk management program to mitigate price risk associated with certain electricity price exposures.

Electricity Derivatives — Our equity method investee, Long Ridge, enters into derivative contracts as part of a risk management program to mitigate price risk associated with certain electricity price exposures.

Long Ridge primarily uses swap derivative contracts, which are agreements to buy or sell a quantity of electricity at a predetermined future date and at a predetermined price.

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Certain of these derivative instruments are designated and qualify as cash flow hedges.

Our share of the derivative's gain or loss is reported as Other comprehensive income (loss) related to equity method investees, net in our Consolidated and Combined Consolidated Statements of Comprehensive Loss and recorded in Accumulated other comprehensive income (loss) in our Consolidated and Combined Consolidated Balance Sheets.

Our share of the derivative's gain or loss is reported as Other comprehensive income (loss) related to equity method investees, net in our Consolidated and Combined Consolidated Statements of Comprehensive Income (Loss) and recorded in Accumulated other comprehensive loss in our Consolidated Balance Sheets.

The change in our equity method investment balance related to derivative gains or losses on cash flow hedges is disclosed as a Non-cash change in equity method investment in our Consolidated and Combined Consolidated Statements of Cash Flows.

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Certain of these derivative instruments are not designated as hedging instruments for accounting purposes.

Our share of the change in fair value of these contracts is recognized in Equity in earnings (losses) in unconsolidated entities in the Consolidated and Combined Consolidated Statements of Operations.

The cash flow impact of derivative contracts that are not designated as hedging instruments is recognized in Equity in earnings (losses) in unconsolidated entities in our Consolidated and Combined Consolidated Statements of Cash Flows.

Commodity Derivatives — Depending on market conditions, we enter into short-term forward purchase and sales contracts for butane.

Gains and losses related to our butane derivatives are recorded on a net basis and are included in Other revenue in our Consolidated and Combined Consolidated Statements of Operations, as these contracts are considered part of central operating activities.

The cash flow impact of these derivatives is recognized in Change in fair value of non-hedge derivatives in our Consolidated and Combined Consolidated Statements of Cash Flows.

We record all derivative assets on a gross basis at fair value, which are included in Other current assets, in our Consolidated and Combined Consolidated Balance Sheets.

Our share of the change in fair value of these contracts is recognized in Equity in earnings (losses) of unconsolidated entities in the Consolidated and Combined Consolidated Statements of Operations.

The cash flow impact of derivative contracts that are not designated as hedging instruments is recognized in Equity in earnings (losses) of unconsolidated entities in our Consolidated and Combined Consolidated Statements of Cash Flows.

Income Taxes —Prior to the spin-off, we were taxed as a disregarded entity for U.S.

federal income tax purposes and our taxable income or loss generated was the responsibility of our Former Parent, except as related to certain wholly owned corporate subsidiaries of the infrastructure business.

federal income tax purposes and our taxable income or loss generated was allocated to investors by our Former Parent, which was treated as a partnership for U.S.

federal income tax purposes.

In addition, certain of our subsidiaries were taxed as separate corporations for U.S.

federal income tax purposes.

The income tax provision included in the consolidated and combined consolidated financial statements prior to the spin-off was prepared on a separate return method.

Post spin-off, FTAI Infrastructure’s tax profile, certain return elections and assertions are different, including a single consolidated Federal tax filing in the U.S., and therefore the income taxes presented prior to the spin-off in the Consolidated and Combined Financial Statements are not expected to be indicative of the Company’s future income taxes.

Post spin-off, FTAI Infrastructure’s tax structure, certain return elections and assertions are different, including a single consolidated federal tax filing in the U.S., and therefore the income taxes presented prior to the spin-off in the consolidated and combined consolidated financial statements are not expected to be indicative of the Company’s future income taxes.

We account for these taxes using the asset and liability method under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

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Interest and penalties on uncertain tax positions are included as a component of the provision for income taxes in the Consolidated and Combined Consolidated Statements of Operations.

FTAI INFRASTRUCTURE INC.

NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

Pension and Other Postretirement Benefits —We have obligations for a pension and a postretirement benefit plan in connection with the acquisition of Transtar for certain eligible Transtar employees.

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Refer to Note 11 for additional discussion on the pension and postretirement benefit plans.

Recent Accounting Pronouncements — In July 2021, the FASB issued ASU 2021-05, Leases (Topic 842):

Lessors—Certain Leases with Variable Lease Payments .

This ASU requires lessors to classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease if (i) the lease would have been classified as a sales-type lease or a direct financing lease under Topic 842 and (ii) the lessor would have otherwise recognized a day-one loss.

This standard is effective for all reporting periods beginning after December 15, 2021.

We adopted this guidance in the first quarter of 2022, which did not have a material impact on our Consolidated or Combined Consolidated Financial Statements.

ACQUISITION OF TRANSTAR, LLC

On July 28, 2021, we completed the acquisition for 100 % of the equity interests of Transtar, LLC (“Transtar”) from United States Steel Corporation (“USS”) for total cash consideration of $ 636.0 million.

Transtar is comprised of five freight railroads and one switching company, of which two railroads are connected to USS’s largest production facilities.

We also entered into an exclusive rail partnership with USS, under which we will provide rail service to USS for an initial term of 15 years with minimum volume commitments for the first five years .

Transtar operates within the Railroad reportable segment.

See Note 17 for additional information.

The results of operations at Transtar have been included in the Consolidated and Combined Consolidated Statements of Operations as of the effective date of the acquisition.

In connection with the acquisition, we recorded $ 4.0 million and $ 7.0 million of acquisition and transaction expense during the three and nine months ended September 30, 2021, respectively.

The Former Parent funded the transaction with bridge loans in an aggregate principal amount of $ 650 million.

In September 2021, the Former Parent issued new equity and debt and repaid in full the bridge loans.

In accordance with ASC 805, Business Combinations , the following fair values assigned to assets acquired and liabilities assumed are based on management’s estimates and assumptions.

The significant assumptions used to estimate the fair value of the property, plant and equipment included replacement cost estimates, salvage values and market data for similar assets where available.

The significant assumptions used to estimate the value of the customer relationship intangible assets included discount rate and future revenues and operating expenses.

The following table summarizes the allocation of the purchase price, as presented in our Combined Consolidated Balance Sheet:

Fair value of assets acquired:

Cash and cash equivalents $ 8,918

Accounts receivable 18,625

Operating lease right-of-use assets 12,231

Property, plant and equipment 487,946

Intangible assets 60,000

Other assets 17,052

Total assets 604,772

Fair value of liabilities assumed:

Accounts payable and accrued liabilities 47,010

Operating lease liabilities 10,689

Pension and other postretirement benefits (1)

Other liabilities 8,487

Total liabilities 103,738

Total purchase consideration $ 636,009

________________________________________________________

(1) Included in Other liabilities in the Combined Consolidated Balance Sheet.

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NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

(2) Goodwill is primarily attributable to the assembled workforce of Transtar and the synergies expected to be achieved.

This goodwill is assigned to the Railroad segment and is tax deductible for income tax purposes.

The following table presents the identifiable intangible assets and their estimated useful lives:

Estimated useful life in years Fair value

Customer relationships 15

Total $ 60,000

The following table presents the property, plant and equipment and their estimated remaining useful lives:

Estimated remaining useful life in years Fair value

Railcars and locomotives 1 - 40

Track and track related assets 1 - 40

Land, site improvements and rights N/A 87,450

Bridges and tunnels 15 - 55

Buildings and improvements 3 - 25

Railroad equipment 2 - 15

Terminal machinery and equipment 2 - 15

Vehicles 2 - 5

Construction in progress N/A 1,928

Computer hardware and software 2 - 5

Total $ 487,946

The unaudited financial information in the table below summarizes the combined results of operations of FTAI Infrastructure and Transtar on a pro forma basis, as though the companies had been combined as of January 1, 2020.

These pro forma results were based on estimates and assumptions which we believe are reasonable.

The pro forma adjustments are primarily comprised of the following:

• The allocation of the purchase price and related adjustments, including adjustments to depreciation and amortization expense related to the fair value of property, plant and equipment and intangible assets acquired;

• Impacts of debt financing, including interest for debt issued and amortization of deferred financing costs;

• The exclusion of acquisition-related costs incurred during the year ended December 31, 2021 and allocation of substantially all acquisition-related costs to the year ended December 31, 2020;

• Associated tax-related impacts of adjustments.

The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place as of January 1, 2020.

Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021

Total revenue $ 47,059 $ 152,217

Net loss attributable to Former Parent ( 25,148 ) ( 37,634 )

LEASING EQUIPMENT, NET

Leasing equipment, net is summarized as follows:

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Leasing equipment $ 44,179 $ 44,179

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(Dollars in tables in thousands, unless otherwise noted)

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Depreciation expense for leasing equipment $ 276 $ 276

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Property, plant and equipment, net is summarized as follows:

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Land, site improvements and rights $ 183,526 $ 183,640

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Property, plant and equipment, net $ 1,685,242 $ 1,673,808

During the nine months ended September 30, 2022, we added property, plant and equipment of $ 169.7 million, which primarily consisted of terminal machinery and equipment placed in service or land under development at Jefferson Terminal.

During the three months ended March 31, 2023, we added property, plant and equipment of $ 29.4 million, which primarily consisted of terminal machinery and equipment placed in service or under development at Jefferson Terminal and Repauno.

Depreciation expense for property, plant and equipment is summarized as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Depreciation expense $ 17,973 $ 14,845

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Carrying Value

Investment Ownership Percentage September 30, 2022 December 31, 2021

Investment Ownership Percentage March 31, 2023 December 31, 2022

Intermodal Finance I, Ltd.

Equity method 51 % $ — $ —

Long Ridge Terminal LLC (1)

Long Ridge Energy & Power LLC (1)

Equity method 50 % — —

FYX Trust Holdco LLC (2)

Equity at December 31, 2021 65 % and 14 % as of September 30, 2022 and December 31, 2021, respectively (2)

GM-FTAI Holdco LLC Equity method See below 65,684 68,025

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________________________________________________________

(1) The carrying value of $ 235.2 million and $ 17.5 million as of September 30, 2022 and December 31, 2021 is included in Other liabilities in the Consolidated and Combined Consolidated Balance Sheets.

(2) See “Equity Investments - FYX Holdco LLC” below for additional information regarding the FYX Trust Holdco LLC acquisition in May 2022.

We did not recognize any other-than-temporary impairments for the three and nine months ended September 30, 2022 and 2021.

(1) The carrying value of $ 104.8 million and $ 187.2 million as of March 31, 2023 and December 31, 2022 is included in Other liabilities in the Consolidated Balance Sheets.

We did not recognize any other-than-temporary impairments for the three months ended March 31, 2023 and 2022.

FTAI INFRASTRUCTURE INC.

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(Dollars in tables in thousands, unless otherwise noted)

The following table presents our proportionate share of equity in (losses) income:

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

The following table presents our proportionate share of equity in income (losses):

Three Months Ended March 31,

Intermodal Finance I, Ltd.

$ 33 $ 77 $ 121 $ 452

Long Ridge Terminal LLC ( 9,222 ) ( 1,622 ) ( 43,574 ) ( 9,262 )

Long Ridge Energy & Power LLC 7,761 ( 21,381 )

GM-FTAI Holdco LLC ( 2,341 ) ( 433 )

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We do not have a variable interest in this investment as none of the criteria of ASC 810-10-15-14 were met.

As of September 30, 2022, Intermodal owns a portfolio of approximately 500 shipping containers subject to multiple operating leases.

Long Ridge Terminal LLC

In December 2019, Ohio River Shareholder LLC (“ORP”), a wholly owned subsidiary, contributed its equity interests in Long Ridge into Long Ridge Terminal LLC and sold a 49.9 % interest (the “Long Ridge Transaction”) for $ 150 million in cash, plus an earn out.

As of March 31, 2023, Intermodal owns a portfolio of approximately 239 shipping containers subject to multiple operating leases.

Long Ridge Energy & Power LLC

In December 2019, Ohio River Shareholder LLC (“ORP”), a wholly owned subsidiary, contributed its equity interests in Long Ridge into Long Ridge Energy & Power LLC and sold a 49.9 % interest (the “Long Ridge Transaction”) for $ 150 million in cash, plus an earn out.

We no longer have a controlling interest in Long Ridge but still maintain significant influence through our retained interest and, therefore, now account for this investment in accordance with the equity method.

Following the sale, we deconsolidated ORP, which held the assets of Long Ridge.

In addition to our equity method investment, in October 2022 we entered into a shareholder loan agreement maturing on October 15, 2023 and accruing paid-in-kind (“PIK”) interest at a 13 % rate.

The Company made an additional $ 20.5 million of investment in Long Ridge as part of the shareholder loan agreement in Q1 2023.

As of March 31, 2023, the balance of the note receivable was $ 49.2 million recorded as part of the Long Ridge investment in Other liabilities on the Consolidated Balance Sheet.

FTAI INFRASTRUCTURE INC.

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(Dollars in tables in thousands, unless otherwise noted)

The tables below present summarized financial information for Long Ridge Terminal LLC:

September 30, 2022 December 31, 2021

The tables below present summarized financial information for Long Ridge Energy & Power LLC:

March 31, 2023 December 31, 2022

Balance Sheet

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Total liabilities 1,286,151 1,416,210

Members' Equity

Shareholders' equity ( 168,105 ) ( 273,597 )

Accumulated deficit ( 139,293 ) ( 154,784 )

Total members' equity ( 469,538 ) ( 34,986 )

Total liabilities and members' equity $ 966,712 $ 926,675

Three Months Ended September 30, Nine Months Ended September 30,

Total equity ( 307,398 ) ( 428,381 )

Total liabilities and equity $ 978,753 $ 987,829

Three Months Ended March 31,

Income Statement 2023 2022

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Total other income (expense) 105 ( 29,234 )

Net loss $ ( 18,408 ) $ ( 7,562 ) $ ( 86,973 ) $ ( 18,487 )

Net income (loss) $ 15,492 $ ( 42,676 )

FTAI INFRASTRUCTURE INC.

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Clean Planet Energy USA LLC

In November 2021, we acquired 50 % of the Class A shares of Clean Planet Energy USA LLC (“Clean Planet”) with an initial investment of $ 1.0 million.

In November 2021, we acquired 50 % of the Class A shares of Clean Planet Energy USA LLC (“Clean Planet” or “CPE”) with an initial investment of $ 1.0 million.

CPE intends on building waste plastic-to-fuel plants in the United States.

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In May 2022, we purchased an additional 51 % interest in FYX from an unrelated third party for a purchase price of $ 4.6 million, which resulted in our ownership of a majority stake in the entity.

From the purchase date in May 2022 through and as of September 30, 2022, FYX is presented on a consolidated basis in the Consolidated and Combined Consolidated Statements of Operations and the Consolidated and Combined Consolidated Balance Sheets.

At September 30, 2022, $ 4.2 million is recorded as non-controlling interest for interest held by other parties.

At the purchase date, assets of FYX were $ 13.7 million, liabilities were $ 10.1 million, and goodwill of $ 5.4 million was recorded.

Since purchase, we have recorded total revenue from FYX of $ 30.4 million and net loss from FYX of $ 0.7 million.

In March 2023, we purchased the remaining non-controlling interest of FYX from an affiliate of our Manager for a purchase price of $ 4.4 million.

This resulted in 100 % ownership in FYX and the elimination of any non-controlling interest.

From the initial consolidation date in May 2022 through and as of March 31, 2023, FYX is presented on a consolidated basis in the Consolidated and Combined Consolidated Statements of Operations and the Consolidated Balance Sheets.

INTANGIBLE ASSETS, NET

Intangible assets, net are summarized as follows:

September 30, 2022

March 31, 2023

Jefferson Terminal Railroad Total

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Amortization of intangible assets is as follows:

Classification in Consolidated and Combined Consolidated Statements of Operations Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Classification in Consolidated and Combined Consolidated Statements of Operations Three Months Ended March 31,

Customer relationships Depreciation and amortization $ 1,886 $ 1,875

As of September 30, 2022, estimated net annual amortization of intangibles is as follows:

As of March 31, 2023, estimated net annual amortization of intangibles is as follows:

Remainder of 2023 $ 5,664

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Our debt, net is summarized as follows:

September 30, 2022 December 31, 2021

Outstanding Borrowings Stated Interest Rate Maturity Date Outstanding Borrowings

Outstanding Borrowings

Stated Interest Rate Maturity Date March 31, 2023 December 31, 2022

Loans payable

1 unchanged sentence

(i) Base Rate + 2.75 %;

(ii) Base Rate + 3.75 % (Eurodollar)

(ii) Base Rate + 3.75 % (Term SOFR)

11/5/24 $ 25,000 $ 25,000

EB-5 Loan Agreement 35,550 5.75 % 1/25/26 26,100

EB-5 Loan Agreement 5.75 % (i) 1/25/26

(ii) 11/26/27 63,800 62,200

Transtar Revolver (2)

(i) Base Rate + 2.00 %;

(ii) Adjusted Term SOFR + 3.00 %

12/27/25 50,000 10,000

Total loans payable 138,800 97,200

3 unchanged sentences

(iii) Taxable Series 2020B Bonds:

263,980 263,980

Series 2021 Bonds (i) Series 2021A Bonds:

2 unchanged sentences

(i) 1/1/26 to 1/1/50

425,000 425,000

Senior Notes due 2027 (3)

1 unchanged sentence

Total bonds payable 1,164,853 1,163,808

Debt 1,223,352 740,080

Total Debt 1,303,653 1,261,008

Debt issuance costs ( 29,504 ) ( 30,851 )

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(1) Requires a quarterly commitment fee at a rate of 1.000 % on the average daily unused portion, as well as customary letter of credit fees and agency fees.

(2) Includes an unamortized discount of $ 26,178 and $ — at September 30, 2022 and December 31, 2021, respectively.

Senior Notes due 2027 —In connection with the spin-off, we issued $ 500 million aggregate principal amount of Senior Notes due 2027 (the “2027 Notes”).

The 2027 Notes bear interest at a rate of 10.500 % per annum, payable semi-annually in arrears on June 1 and December 1 of each year, commencing on December 1, 2022.

The 2027 Notes were issued at an issue price equal to 94.585 %.

We were in compliance with all debt covenants as of September 30, 2022.

(2) Requires a quarterly commitment fee at a rate of 0.500 % on the average daily unused portion, as well as customary letter of credit fees and agency fees.

(3) Includes an unamortized discount of $ 24,127 and $ 25,172 at March 31, 2023 and December 31, 2022, respectively.

Transtar Revolver Amendment —In January 2023, our subsidiary entered into an amendment to an existing revolving credit facility (the “Transtar Revolver”) that provides for revolving loans in the aggregate amount of an additional $ 25.0 million, for a total facility of $ 50.0 million.

The terms of the amendment are substantially the same as the original agreement.

We were in compliance with all debt covenants as of March 31, 2023.

FTAI INFRASTRUCTURE INC.

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• Cost approach—Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost).

The following tables set forth our financial assets measured at fair value on a recurring basis as of September 30, 2022 and December 31, 2021, by level within the fair value hierarchy.

The following tables set forth our financial assets measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022, by level within the fair value hierarchy.

Assets measured at fair value are classified in their entirety based on the lowest level of input that is significant to their fair value measurement.

Fair Value as of Fair Value Measurements Using Fair Value Hierarchy as of

September 30, 2022 September 30, 2022

March 31, 2023 March 31, 2023

Total Level 1 Level 2 Level 3 Valuation Technique

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Restricted cash 68,470 68,470 — — Market

Derivative assets 1,058 — 1,058 — Income

Total assets $ 108,433 $ 108,433 $ — $ —

13 unchanged sentences

(Dollars in tables in thousands, unless otherwise noted)

The fair value of our bonds and notes payable reported as debt, net in the Consolidated and Combined Consolidated Balance Sheets are presented in the table below:

September 30, 2022 December 31, 2021

The fair value of our bonds and notes payable reported as debt, net in the Consolidated Balance Sheets are presented in the table below:

March 31, 2023 December 31, 2022

Series 2020 A Bonds (1)

6 unchanged sentences

160,396 163,238

2027 Notes 501,605 —

Senior Notes due 2027 496,575 498,035

________________________________________________________

(1) Fair value is based upon market prices for similar municipal securities.

The fair value of all other items reported as debt, net in the Consolidated and Combined Consolidated Balance Sheets approximate their carrying values due to their bearing market rates of interest and are classified as Level 2 within the fair value hierarchy.

The fair value of all other items reported as debt, net in the Consolidated Balance Sheets approximate their carrying values due

to their bearing market rates of interest and are classified as Level 2 within the fair value hierarchy.

We measure the fair value of certain assets on a non-recurring basis when U.S.

3 unchanged sentences

Fair value measurements for assets subject to impairment tests are based on an income approach which uses Level 3 inputs, which include our assumptions as to future cash flows from operation of the underlying businesses.

DERIVATIVE FINANCIAL INSTRUMENTS

Commodity Derivatives

Depending on market conditions, Repauno enters into forward purchase and sales contracts for butane.

These derivatives are short-term in nature and are used for trading purposes and classified as Level 2 derivatives.

The following table presents information related to our butane derivative contracts:

September 30, 2022 December 31, 2021

Notional Amount (BBL in thousands)

Fair Value of Assets (1)

$ 1,058 $ 2,220

Remaining term 1 to 6 months

1 to 3 months

________________________________________________________

(1) Included in Other assets in the Consolidated and Combined Consolidated Balance Sheets.

We disaggregate our revenue from contracts with customers by products and services provided for each of our segments, as we believe it best depicts the nature, amount, timing and uncertainty of our revenue.

1 unchanged sentence

We have elected to exclude sales and other similar taxes from revenues.

Three Months Ended September 30, 2022

Ports and Terminals

Railroad Jefferson Terminal Repauno Power and Gas Sustainability and Energy Transition Corporate and Other Total

Lease income $ 449 $ 309 $ — $ — $ — $ — $ 758

Rail revenues 38,737 — — — — — 38,737

Terminal services revenues — 16,868 96 — — — 16,964

Other revenue — — 1,783 — — 20,317 22,100

Total revenues $ 39,186 $ 17,177 $ 1,879 $ — $ — $ 20,317 $ 78,559

FTAI INFRASTRUCTURE INC.

NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

Three Months Ended September 30, 2021

Ports and Terminals

Railroad Jefferson Terminal Repauno Power and Gas Sustainability and Energy Transition Corporate and Other Total

Lease income $ 358 $ 433 $ — $ — $ — $ — $ 791

Rail revenues 24,986 — — — — — 24,986

Terminal services revenues — 11,469 — — — — 11,469

Other revenue — — ( 458 ) — — — ( 458 )

Total revenues $ 25,344 $ 11,902 $ ( 458 ) $ — $ — $ — $ 36,788

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

Ports and Terminals

3 unchanged sentences

Terminal services revenues — 18,786 362 — — — 19,148

Roadside services revenues — — — — — 17,850 17,850

Other revenue — — ( 1,815 ) — — — ( 1,815 )

Total revenues $ 41,005 $ 19,092 $ ( 1,453 ) $ — $ — $ 17,850 $ 76,494

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

Ports and Terminals

5 unchanged sentences

Total revenues $ 35,088 $ 13,046 $ ( 1,986 ) $ — $ — $ — $ 46,148

Presented below are the contracted minimum future annual revenues to be received under existing operating leases within the Jefferson Terminal segment as of September 30, 2022:

Operating Leases

Remainder of 2022 $ 3,062

Total $ 19,567

We have commitments as lessees under lease arrangements primarily for real estate, equipment and vehicles.

Our leases have remaining lease terms ranging from approximately one month to 40 years.

FTAI INFRASTRUCTURE INC.

1 unchanged sentence

(Dollars in tables in thousands, unless otherwise noted)

The following table presents lease related costs:

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Finance leases

Amortization of right-of-use assets $ 273 $ 161 $ 704 $ 161

Interest on lease liabilities 12 11 41 11

Finance lease expense 285 172 745 172

Operating lease expense 2,016 1,471 5,436 3,868

Short-term lease expense 319 42 1,431 417

Variable lease expense 543 540 2,125 1,177

Total lease expense $ 3,163 $ 2,225 $ 9,737 $ 5,634

The following table presents information related to our operating leases as of and for the nine months ended September 30, 2022 and the year ended December 31, 2021:

September 30, 2022

December 31, 2021

Right-of-use assets, net $ 70,567 $ 71,547

Lease liabilities 69,631 70,404

Weighted average remaining lease term 34.3 years 34.8 years

Weighted average incremental borrowing rate 5.7 % 5.7 %

The following table presents supplemental cash flow information for the nine months ended September 30, 2022 and 2021:

September 30, 2022

September 30, 2021

Cash paid for amounts included in the measurement of operating lease liabilities $ 5,300 $ 3,849

Noncash - ROU assets recorded for new and modified leases 1,284 10,831

The following table presents future minimum lease payments under non-cancellable operating leases as of September 30, 2022:

Presented below are the contracted minimum future annual revenues to be received under existing operating leases within the Jefferson Terminal segment as of March 31, 2023:

Operating Leases

Remainder of 2023 $ 9,572

Thereafter 143,033

Total undiscounted lease payments 169,122

Imputed interest 99,491

Total lease liabilities $ 69,631

Total $ 59,489

EQUITY-BASED COMPENSATION

Effective August 1, 2022, we established a Nonqualified Stock Option and Incentive Award Plan (“Incentive Plan”) which provides for the issuance of up to 30 million shares at inception.

The Incentive Plan provides us the ability to grant equity compensation awards in the form of stock options, stock appreciation rights, restricted stock, and performance awards to eligible employees, consultants, directors, and other individuals who provide services to us, each as determined by the Compensation Committee of the Board of Directors.

We account for equity-based compensation expense in accordance with ASC 718 Compensation-Stock Compensation and it is reported within operating expenses and general and administrative in the Consolidated and Combined Consolidated Statements of Operations.

FTAI INFRASTRUCTURE INC.

NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

The following table presents our stock-based compensation expense recognized in the Consolidated and Combined Consolidated Statements of Operations:

Three Months Ended September 30, Nine Months Ended September 30, Remaining Expense To Be Recognized, If All Vesting Conditions Are Met Weighted Average Remaining Contractual Term (in years)

2022 2021 2022 2021

On August 1, 2022, we established a Nonqualified Stock Option and Incentive Award Plan (“Incentive Plan”) which provides for the ability to grant equity compensation awards in the form of stock options, stock appreciation rights, restricted stock, and performance awards to eligible employees, consultants, directors, and other individuals who provide services to us, each as determined by the Compensation Committee of the board of directors.

As of March 31, 2023, the Incentive Plan provides for the issuance of up to 30.0 million shares.

We account for equity-based compensation expense in accordance with ASC 718, Compensation-Stock Compensation and report within operating expenses and general and administrative expenses in the Consolidated and Combined Consolidated Statements of Operations.

During the three months ended March 31, 2023, the Manager transferred 2,173,914 of its options to certain employees of the Manager.

Subsidiary stock-based compensation

The following table presents the expense related to our subsidiary stock-based compensation arrangements:

Expense Recognized During the Three Months Ended March 31, Remaining Expense To Be Recognized, If All Vesting Conditions Are Met Weighted Average Remaining Contractual Term (in years)

Restricted Shares $ 444 $ 538 $ 1,068 0.9

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Total $ 895 $ 709 $ 3,640

During the nine months ended September 30, 2022, we issued common units of our subsidiary that had a grant date fair value of $ 1.9 million and vest over three years .

These awards are subject to continued employment, and the compensation expense is recognized ratably over the vesting periods.

The fair value of these awards was based on the fair value of the operating subsidiary on the grant date, which was estimated using a discounted cash flow analysis that requires the application of discount factors and terminal multiples to projected cash flows.

Discount factors and terminal multiples were based on market-based inputs and transactions, as available at the measurement date.

Additionally, during the nine months ended September 30, 2022, we issued separate common units of our subsidiary that had a grant date fair value of $ 1.9 million and vest over three years .

These awards are subject to performance targets based on EBITDA as defined in the agreements, and the total expected compensation expense is recognized ratably over the vesting periods if it is probable that the performance conditions will be met.

Discount factors and terminal multiples were based on market-based inputs and transactions, as available at the measurement date.

Stock Options

In connection with our Redeemable Preferred Stock raise (see Note 18 for details), we granted to the Manager 10.9 million options to purchase common shares.

These options had a grant date fair value of $ 18.1 million, which was recorded in stockholders’ equity and treated as an issuance cost of the Redeemable Preferred Stock.

The fair value of these options was based on a Binomial Lattice Model and inputs were based on information available at the measurement date.

The assumptions used in valuing the options were:

a 2.58 % risk-free rate, a 3.6 % dividend yield, a 60 % volatility, an early exercise multiple of 2.5 x and a ten-year term.

RETIREMENT BENEFIT PLANS

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Defined Benefit Pensions

Our partially funded pension plan is a tax qualified plan.

Our underfunded pension plan is a tax qualified plan.

Our pension plan covers certain eligible Transtar employees.

5 unchanged sentences

The remaining healthcare and life insurance plans are non-contributory.

The following table summarizes our retirement benefit plan costs for the three and nine months ended September 30, 2022.

Service costs and interest costs are recorded in Operating expenses and Other (expense) income, respectively, in the Consolidated and Combined Consolidated Statements of Operations.

Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022

FTAI INFRASTRUCTURE INC.

NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

The following table summarizes our retirement benefit plan costs for the three months ended March 31, 2023 and 2022.

Service costs are recorded in Operating expenses, while interest and amortization costs are recorded in Other (expense) income within the Consolidated and Combined Consolidated Statements of Operations.

Three Months Ended March 31, 2023 Three Months Ended March 31, 2022

Pension Benefits Postretirement Benefits Pension Benefits Postretirement Benefits

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Interest costs 117 374 74 225

Amortization of prior service costs — 34 — —

Amortization of actuarial gains ( 46 ) — — —

Total $ 419 $ 854 $ 512 $ 762

FTAI INFRASTRUCTURE INC.

NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

The total amount of employer contributions paid for the three and nine months ended September 30, 2022 was $ 1.1 million and $ 1.4 million, respectively, and the expected remaining scheduled employer contributions for the year ending December 31, 2022 is $ 0.3 million.

The current and deferred components of the income tax provision (benefit) included in the Consolidated and Combined Consolidated Statements of Operations are as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

The total employer contributions for the three months ended March 31, 2023 was $ 0.3 million, and the expected remaining scheduled employer contributions for the year ending December 31, 2023 is $ 1.2 million.

The current and deferred components of the income tax provision included in the Consolidated and Combined Consolidated Statements of Operations are as follows:

Three Months Ended March 31,

Federal $ — $ —

State and local 182 72

Foreign — — — —

Total current provision 182 72

1 unchanged sentence

State and local 730 454

Foreign — — — ( 2 )

Total deferred provision 1,547 1,512

1 unchanged sentence

Prior to the spin-off, we were taxed as a disregarded entity for U.S.

Taxable income or loss generated by us following the spin-off and by our corporate subsidiaries is subject to U.S.

federal income tax purposes and our taxable income or loss generated was allocated to investors by our Former Parent, which was treated as a partnership for U.S.

federal income tax purposes.

In addition, certain of our subsidiaries were taxed as separate corporations for U.S.

federal income tax purposes.

Taxable income or loss generated by us and our corporate subsidiaries following the spin-off and by our corporate subsidiaries is subject to U.S.

federal, state and foreign corporate income tax in locations where they conduct business.

4 unchanged sentences

federal tax rate of 21% primarily due to state taxes and the valuation allowances against a significant portion of the deferred tax assets of our corporate subsidiaries.

As of and for the nine months ended September 30, 2022, we had not established a liability for uncertain tax positions as no such positions existed.

As of and for the three months ended March 31, 2023, we had not established a liability for uncertain tax positions as no such positions existed.

In general, our tax returns and the tax returns of our corporate subsidiaries are subject to U.S.

1 unchanged sentence

Generally, we are not subject to examination by taxing authorities for tax years prior to 2018.

We do not believe that it is reasonably possible that the total amount of unrecognized tax benefits will significantly change within 12 months of the reporting date of September 30, 2022.

We do not believe that it is reasonably possible that the total amount of unrecognized tax benefits will significantly change within 12 months of the reporting date of March 31, 2023.

FTAI INFRASTRUCTURE INC.

NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

MANAGEMENT AGREEMENT AND AFFILIATE TRANSACTIONS

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Pre-incentive allocation net income does not include any Income Incentive Fee or Capital Gains Incentive Fee (described below) paid to the Manager during the relevant quarter.

FTAI INFRASTRUCTURE INC.

NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

The Manager is entitled to an Income Incentive Fee with respect to its pre-incentive fee net income in each calendar quarter as follows:

4 unchanged sentences

Capital Gains Incentive Fee is calculated and paid in arrears as of the end of each calendar year and is equal to 10 % of our pro rata share of cumulative realized gains from the date of the spin-off through the end of the applicable calendar year, net of our pro rata share of cumulative realized or unrealized losses, the cumulative non-cash portion of equity-based compensation expenses and all realized gains upon which prior performance-based Capital Gains Incentive Fee payments were made to the Manager.

The management fee, income incentive allocation, and capital gains incentive allocation that are attributable to the operations of FTAI Infrastructure is recorded in the Management fees and incentive allocation to affiliate on the Consolidated and Combined Consolidated Statements of Operations.

The management fee, Income Incentive Fee, and Capital Gains Incentive Fee that are attributable to the operations of FTAI Infrastructure is recorded in the Management fees and incentive allocation to affiliate on the Consolidated and Combined Consolidated Statements of Operations.

These amounts are allocated on the following basis:

2 unchanged sentences

The following table summarizes the management fees, income incentive allocation and capital gains incentive allocation included in these consolidated and combined consolidated financial statements:

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Management fees $ 2,659 $ 3,829 $ 9,885 $ 11,244

Three Months Ended March 31,

Management fee $ 2,982 $ 4,161

Income Incentive Fee — —

1 unchanged sentence

Total $ 2,982 $ 4,161

FTAI INFRASTRUCTURE INC.

NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

For periods post-spin, we pay all of our operating expenses, except those specifically required to be borne by the Manager under the Management Agreement.

4 unchanged sentences

we do not reimburse the Manager for these expenses.

FTAI INFRASTRUCTURE INC.

NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

The following table summarizes our reimbursements to the Manager:

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Classification in the Consolidated and Combined Consolidated Statements of Operations:

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The termination fee is equal to the amount of the management fee during the 12 months immediately preceding such termination and an amount equal to the Income Incentive Fee and the Capital Gains Incentive Fee that would be paid to the Manager if the Company’s assets were sold for cash at their then current fair market value (as determined by an appraisal, taking into account, among other things, the expected future value of the underlying investments).

Upon the successful completion of an offering of our common shares or other equity securities (including securities issued as consideration in an acquisition), we grant the Manager options to purchase common shares in an amount equal to 10 % of the number of common shares being sold in the offering (or if the issuance relates to equity securities other than our common shares, options to purchase a number of common shares equal to 10 % of the gross capital raised in the equity issuance divided by the fair market value of a common share as of the date of issuance), with an exercise price equal to the offering price per share paid by the public or other ultimate purchaser or attributed to such securities in connection with an acquisition (or the fair market value of a common share as of the date of the equity issuance if it relates to equity securities other than our common shares).

Any ultimate purchaser of common shares for which such options are granted may be an affiliate of Fortress.

In connection with the spin-off, we issued 10.9 million options to purchase common shares to the Manager, with a term of 10 years and strike price of $ 2.76 as compensation to the Manager for services rendered in connection with the Redeemable Preferred Stock raise, as discussed in Note 18.

The following table summarizes amounts due to the Manager, which are included within Accounts payable and accrued liabilities in the Consolidated and Combined Consolidated Balance Sheets:

September 30, 2022 December 31, 2021

Upon the successful completion of an offering of our common stock or other equity securities (including securities issued as consideration in an acquisition), we grant the Manager options to purchase common stock in an amount equal to 10 % of the number of common stock being sold in the offering (or if the issuance relates to equity securities other than our common stock, options to purchase a number of common stock equal to 10 % of the gross capital raised in the equity issuance divided by the fair market value of a common stock as of the date of issuance), with an exercise price equal to the offering price per share paid by the public or other ultimate purchaser or attributed to such securities in connection with an acquisition (or the fair market value of our common stock as of the date of the equity issuance if it relates to equity securities other than our common stock).

Any ultimate purchaser of common stock for which such options are granted may be an affiliate of Fortress.

In connection with the spin-off, we issued 10.9 million options to purchase common stock to the Manager, with a term of 10 years as compensation to the Manager for services rendered in connection with the Redeemable Preferred Stock raise, as discussed in Note 15.

The following table summarizes amounts due to the Manager, which are included within Accounts payable and accrued liabilities in the Consolidated Balance Sheets:

March 31, 2023 December 31, 2022

Accrued management fees $ 2,982 $ 3,092

Other payables 1,906 —

As of September 30, 2022 and December 31, 2021, there were no receivables from the Manager.

As of March 31, 2023 and December 31, 2022, there were no receivables from the Manager.

Other Affiliate Transactions

As of September 30, 2022 and December 31, 2021, affiliates of our Manager and their related parties collectively own an approximately 20 % interest in Jefferson Terminal which has been accounted for as a component of non-controlling interest in consolidated subsidiaries in the Consolidated and Combined Consolidated Financial Statements.

The carrying amount of this non-controlling interest at September 30, 2022 and December 31, 2021 was $( 32.3 ) million and $( 9.1 ) million, respectively.

As of March 31, 2023 and December 31, 2022, affiliates of our Manager and their related parties collectively own an approximately 20 % interest in Jefferson Terminal which has been accounted for as a component of non-controlling interest in consolidated subsidiaries in the consolidated and combined consolidated financial statements.

The carrying amount of this non-controlling interest at March 31, 2023 and December 31, 2022 was $( 50.3 ) million and $( 41.1 ) million, respectively.

FTAI INFRASTRUCTURE INC.

NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

The following table presents the amount of this non-controlling interest share of net loss:

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Non-controlling interest share of net loss $ ( 9,185 ) $ ( 7,466 )

1 unchanged sentence

In May 2022, we purchased an additional 51 % interest in FYX from an unrelated third party for a purchase price of $ 4.6 million, which resulted in our ownership of a majority stake in the entity.

Additionally, other investors in FYX are also affiliates of our Manager.

In March 2023, we purchased the remaining non-controlling interest of FYX from an affiliate of our Manager for a purchase price of $ 4.4 million.

This resulted in 100 % ownership in FYX and the elimination of any non-controlling interest in FYX.

In October 2022, we entered into a shareholder loan agreement with our equity method investee, Long Ridge.

Refer to Note 5 for additional information.

The Company subleases a portion of office space from an entity controlled by certain principals of Fortress since February 2023.

For the three months ended March 31, 2023, the Company incurred approximately $ 0.1 million of rent and office related expenses.

SEGMENT INFORMATION

1 unchanged sentence

Additionally, during the third quarter of 2022, we modified our definition of Adjusted EBITDA to exclude the impact of interest costs on pension and other post-employment benefit (“OPEB”) liabilities and dividends and accretion expense of redeemable preferred stock.

During the first quarter of 2023 we modified our definition of Adjusted EBITDA to exclude the impact of other non-recurring items, such as severance expense.

All segment data and related disclosures for earlier periods presented herein have been recast to reflect the new segment reporting structure.

FTAI INFRASTRUCTURE INC.

NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

Our reportable segments represent strategic business units comprised of investments in different types of infrastructure assets.

7 unchanged sentences

Corporate and Other primarily consists of unallocated corporate general and administrative expenses, management fees, debt and redeemable preferred stock.

Additionally, Corporate and Other includes an investment in an unconsolidated entity engaged in the acquisition and leasing of shipping containers and an investment in the majority stake of an operating company that provides roadside assistance services for the intermodal and over-the-road trucking industries.

Additionally, Corporate and Other includes an operating company that provides roadside assistance services for the intermodal and over-the-road trucking industries and an investment in an unconsolidated entity engaged in the acquisition and leasing of shipping containers.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies.

The chief operating decision maker (“CODM”) evaluates investment performance for each reportable segment primarily based on Adjusted EBITDA.

Adjusted EBITDA is defined as net income (loss) attributable to stockholders and Former Parent, adjusted (a) to exclude the impact of provision for (benefit from) income taxes, equity-based compensation expense, acquisition and transaction expenses, losses on the modification or extinguishment of debt and capital lease obligations, changes in fair value of non-hedge derivative instruments, asset impairment charges, incentive allocations, depreciation and amortization expense, interest expense, interest costs on pension and OPEB liabilities, and dividends and accretion expense related to redeemable preferred stock, (b) to include the impact of our pro-rata share of Adjusted EBITDA from unconsolidated entities, and (c) to exclude the impact of equity in earnings (losses) of unconsolidated entities and the non-controlling share of Adjusted EBITDA.

We believe that net income (loss) attributable to stockholders and Former Parent, as defined by U.S.

GAAP, is the most appropriate earnings measurement with which to reconcile Adjusted EBITDA.

Adjusted EBITDA should not be considered as an alternative to net income (loss) attributable to stockholders and Former Parent as determined in accordance with U.S.

Adjusted EBITDA is defined as net income (loss) attributable to stockholders or Former Parent, adjusted (a) to exclude the impact of provision for (benefit from) income taxes, equity-based compensation expense, acquisition and transaction expenses, losses on the modification or extinguishment of debt and capital lease obligations, changes in fair value of non-hedge derivative instruments, asset impairment charges, incentive allocations, depreciation and amortization expense, interest expense, interest and other costs on pension and OPEB liabilities, dividends and accretion on redeemable preferred stock, and other non-recurring items, (b) to include the impact of our pro-rata share of Adjusted EBITDA from unconsolidated entities, and (c) to exclude the impact of equity in earnings (losses) of unconsolidated entities and the non-controlling share of Adjusted EBITDA.

We believe that net income (loss) attributable to stockholders or Former Parent, as defined by U.S.

GAAP, is the most appropriate earnings measure with which to reconcile Adjusted EBITDA.

Adjusted EBITDA should not be considered as an alternative to net income (loss) attributable to stockholders or Former Parent as determined in accordance with U.S.

FTAI INFRASTRUCTURE INC.

2 unchanged sentences

The following tables set forth certain information for each reportable segment:

For the Three Months Ended September 30, 2022

Three Months Ended September 30, 2022

For the Three Months Ended March 31, 2023

Three Months Ended March 31, 2023

Ports and Terminals

6 unchanged sentences

Depreciation and amortization 5,101 11,869 2,245 — — 920 20,135

Asset impairment 141 — — — — — 141

Total expenses 30,660 28,294 7,174 446 2 25,314 91,890

Other (expense) income

Equity in (losses) earnings of unconsolidated entities — — — ( 9,222 ) ( 2,891 ) 33 ( 12,080 )

Equity in earnings (losses) of unconsolidated entities — — — 7,761 ( 3,416 ) 21 4,366

Loss on sale of assets, net ( 124 ) — — — — — ( 124 )

3 unchanged sentences

Income (loss) before income taxes 8,714 ( 18,149 ) ( 9,215 ) 8,542 ( 2,811 ) ( 21,264 ) ( 34,183 )

(Provision for) benefit from income taxes ( 942 ) 2,114 — — ( 61 ) 444 1,555

Net income (loss) 12,055 ( 16,263 ) ( 5,129 ) ( 9,903 ) ( 2,357 ) ( 21,597 ) ( 43,194 )

Net income (loss) attributable to non-controlling interests in consolidated subsidiaries 6 ( 8,002 ) ( 212 ) — — ( 173 ) ( 8,381 )

Dividends and accretion on redeemable preferred stock — — — — — 9,263 9,263

Net income (loss) attributable to stockholders and Former Parent $ 12,049 $ ( 8,261 ) $ ( 4,917 ) $ ( 9,903 ) $ ( 2,357 ) $ ( 30,687 ) $ ( 44,076 )

FTAI INFRASTRUCTURE INC.

NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

The following table sets forth a reconciliation of Adjusted EBITDA to net loss attributable to stockholders and Former Parent:

Three Months Ended September 30, 2022

Ports and Terminals

Railroad Jefferson Terminal Repauno Power and Gas Sustainability and Energy Transition Corporate and Other Total

Adjusted EBITDA $ 18,419 $ 6,023 $ ( 2,471 ) $ 11,253 $ ( 1,340 ) $ ( 5,780 ) $ 26,104

Non-controlling share of Adjusted EBITDA 4,502

Equity in losses of unconsolidated entities ( 12,080 )

Interest costs on pension and OPEB liabilities ( 896 )

Dividends and accretion expense on redeemable preferred stock ( 9,263 )

Pro-rata share of Adjusted EBITDA from unconsolidated entities ( 9,770 )

Interest expense ( 19,161 )

Depreciation and amortization expense ( 18,136 )

Incentive allocations —

Asset impairment charges —

Changes in fair value of non-hedge derivative instruments 310

Losses on the modification or extinguishment of debt and capital lease obligations —

Acquisition and transaction expenses ( 2,754 )

Equity-based compensation expense ( 1,377 )

Provision for income taxes 598 198 114 — — 819 1,729

Net loss attributable to stockholders and Former Parent $ ( 44,076 )

FTAI INFRASTRUCTURE INC.

NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

For the Nine Months Ended September 30, 2022

Nine Months Ended September 30, 2022

Ports and Terminals

Railroad Jefferson Terminal Repauno Power and Gas Sustainability and Energy Transition Corporate and Other Total

Total revenues $ 113,887 $ 44,751 $ 1,533 $ — $ — $ 30,404 $ 190,575

Operating expenses 63,933 41,578 12,264 466 10 29,980 148,231

General and administrative — — — — — 8,136 8,136

Acquisition and transaction expenses 579 — — 358 29 14,896 15,862

Management fees and incentive allocation to affiliate — — — — — 9,885 9,885

Depreciation and amortization 15,128 29,187 7,055 — — 1,081 52,451

Total expenses 79,640 70,765 19,319 824 39 63,978 234,565

Other expense

Equity in losses of unconsolidated entities — — — ( 43,574 ) ( 4,529 ) 121 ( 47,982 )

Loss on sale of assets, net ( 134 ) — — — — — ( 134 )

Interest expense ( 143 ) ( 18,220 ) ( 1,060 ) — — ( 12,683 ) ( 32,106 )

Other (expense) income ( 976 ) ( 2,791 ) — ( 25 ) 1,553 95 ( 2,144 )

Total other expense ( 1,253 ) ( 21,011 ) ( 1,060 ) ( 43,599 ) ( 2,976 ) ( 12,467 ) ( 82,366 )

Income (loss) before income taxes 32,994 ( 47,025 ) ( 18,846 ) ( 44,423 ) ( 3,015 ) ( 46,041 ) ( 126,356 )

Provision for income taxes 2,391 2,251 — — — 444 5,086

Net income (loss) 8,116 ( 18,347 ) ( 9,329 ) 8,542 ( 2,811 ) ( 22,083 ) ( 35,912 )

1 unchanged sentence

Dividends and accretion on redeemable preferred stock — — — — — 14,570 14,570

Net income (loss) attributable to stockholders and Former Parent $ 30,597 $ ( 26,003 ) $ ( 17,984 ) $ ( 44,423 ) $ ( 3,015 ) $ ( 55,550 ) $ ( 116,378 )

Net income (loss) attributable to stockholders $ 8,098 $ ( 9,162 ) $ ( 8,831 ) $ 8,542 $ ( 2,811 ) $ ( 36,425 ) $ ( 40,589 )

FTAI INFRASTRUCTURE INC.

1 unchanged sentence

(Dollars in tables in thousands, unless otherwise noted)

The following table sets forth a reconciliation of Adjusted EBITDA to net loss attributable to stockholders and Former Parent:

Nine Months Ended September 30, 2022

The following table sets forth a reconciliation of Adjusted EBITDA to net loss attributable to stockholders:

Three Months Ended March 31, 2023

Ports and Terminals

2 unchanged sentences

Non-controlling share of Adjusted EBITDA 5,221

Equity in losses of unconsolidated entities ( 47,982 )

Interest costs on pension and OPEB liabilities ( 896 )

Dividends and accretion expense on redeemable preferred stock ( 9,263 )

Equity in earnings of unconsolidated entities 4,366

Interest and other costs on pension and OPEB liabilities ( 480 )

Dividends and accretion on redeemable preferred stock ( 14,570 )

Pro-rata share of Adjusted EBITDA from unconsolidated entities ( 8,190 )

7 unchanged sentences

Equity-based compensation expense ( 895 )

Benefit from income taxes ( 5,086 )

Net loss attributable to stockholders and Former Parent $ ( 116,378 )

Provision for income taxes ( 1,729 )

Other non-recurring items ( 1,288 )

Net loss attributable to stockholders $ ( 40,589 )

FTAI INFRASTRUCTURE INC.

1 unchanged sentence

(Dollars in tables in thousands, unless otherwise noted)

For the Three Months Ended September 30, 2021

Three Months Ended September 30, 2021

For the Three Months Ended March 31, 2022

Three Months Ended March 31, 2022

Port and Terminals

13 unchanged sentences

Income (loss) before income taxes 8,471 ( 15,986 ) ( 8,450 ) ( 21,456 ) ( 177 ) ( 11,106 ) ( 48,704 )

Provision for (benefit from) income taxes 681 48 — ( 2,363 ) — — ( 1,634 )

Provision for income taxes 1,515 69 — — — — 1,584

Net income (loss) 6,956 ( 16,055 ) ( 8,450 ) ( 21,456 ) ( 177 ) ( 11,106 ) ( 50,288 )

5 unchanged sentences

The following table sets forth a reconciliation of Adjusted EBITDA to net loss attributable to Former Parent:

Three Months Ended September 30, 2021

Three Months Ended March 31, 2022

Port and Terminals

3 unchanged sentences

Equity in income of unconsolidated entities ( 22,043 )

Interest costs on pension and OPEB liabilities —

Dividends and accretion expense on redeemable preferred stock —

Interest and other costs on pension and OPEB liabilities —

Dividends and accretion on redeemable preferred stock —

Pro-rata share of Adjusted EBITDA from unconsolidated entities ( 5,407 )

8 unchanged sentences

Provision for income taxes ( 1,584 )

Net loss attributable to Former Parent $ ( 27,286 )

FTAI INFRASTRUCTURE INC.

NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

For the Nine Months Ended September 30, 2021

Nine Months Ended September 30, 2021

Ports and Terminals

Railroad Jefferson Terminal Repauno Power and Gas Sustainability and Energy Transition Corporate and Other Total

Total revenues $ 28,544 $ 34,148 $ 9,982 $ — $ — $ — $ 72,674

Operating expenses 18,065 35,939 12,141 61 — — 66,206

General and administrative — — — — — 6,173 6,173

Acquisition and transaction expenses 851 — — — — 8,009 8,860

Management fees and incentive allocation to affiliate — — — — — 11,244 11,244

Depreciation and amortization 5,736 26,438 6,726 — — — 38,900

Total expenses 24,652 62,377 18,867 61 — 25,426 131,383

Other (expense) income

Equity in (losses) earnings of unconsolidated entities — — — ( 9,262 ) — 452 ( 8,810 )

Gain on sale of assets, net — — 16 — — — 16

Interest expense ( 42 ) ( 8,496 ) ( 858 ) — — — ( 9,396 )

Other expense ( 195 ) ( 2,795 ) — ( 3,864 ) — ( 1 ) ( 6,855 )

Total other (expense) income ( 237 ) ( 11,291 ) ( 842 ) ( 13,126 ) — 451 ( 25,045 )

Income (loss) before income taxes 3,655 ( 39,520 ) ( 9,727 ) ( 13,187 ) — ( 24,975 ) ( 83,754 )

Provision for (benefit from) income taxes 681 163 — ( 3,599 ) — — ( 2,755 )

Net income (loss) 2,974 ( 39,683 ) ( 9,727 ) ( 9,588 ) — ( 24,975 ) ( 80,999 )

Net loss attributable to non-controlling interests in consolidated subsidiaries — ( 18,742 ) ( 207 ) — — — ( 18,949 )

Net income (loss) attributable to Former Parent $ 2,974 $ ( 20,941 ) $ ( 9,520 ) $ ( 9,588 ) $ — $ ( 24,975 ) $ ( 62,050 )

FTAI INFRASTRUCTURE INC.

NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

The following table sets forth a reconciliation of Adjusted EBITDA to net loss attributable to Former Parent:

Nine Months Ended September 30, 2021

Ports and Terminals

Railroad Jefferson Terminal Repauno Power and Gas Sustainability and Energy Transition Corporate and Other Total

Adjusted EBITDA $ 10,284 $ 8,328 $ ( 3,512 ) $ 6,787 $ — $ ( 17,363 ) $ 4,524

Non-controlling share of Adjusted EBITDA 8,706

Equity in losses of unconsolidated entities ( 8,810 )

Interest costs on pension and OPEB liabilities —

Dividends and accretion expense on redeemable preferred stock —

Pro-rata share of Adjusted EBITDA from unconsolidated entities ( 10,767 )

Interest expense ( 9,396 )

Depreciation and amortization expense ( 38,900 )

Incentive allocations —

Asset impairment charges —

Changes in fair value of non-hedge derivative instruments 1,979

Losses on the modification or extinguishment of debt and capital lease obligations —

Acquisition and transaction expenses ( 8,860 )

Equity-based compensation expense ( 3,281 )

Benefit from income taxes 2,755

Other non-recurring items —

Net loss attributable to Former Parent $ ( 42,822 )

5 unchanged sentences

All property, plant and equipment and leasing equipment are located in North America.

September 30, 2022

March 31, 2023

Ports and Terminals

21 unchanged sentences

Total liabilities 111,600 871,834 34,121 188,071 — 483,389 1,689,015

Redeemable preferred stock — — — — — 264,590 264,590

Non-controlling interests in equity of consolidated subsidiaries 1,403 ( 33,048 ) 1,093 — — 3,723 ( 26,829 )

Total equity 617,306 430,513 271,899 ( 179,533 ) 105,137 ( 720,528 ) 524,794

Total liabilities and equity $ 768,596 $ 1,284,431 $ 316,543 $ 357 $ 60,833 $ 11,541 $ 2,442,301

Total liabilities, redeemable preferred stock and equity $ 728,906 $ 1,302,347 $ 306,020 $ 8,538 $ 105,137 $ 27,451 $ 2,478,399

FTAI INFRASTRUCTURE INC.

4 unchanged sentences

The shares were issued at a 3 % discount for net proceeds of $ 291.0 million.

The Company also issued two classes of warrants to the preferred stockholders (see Note 19).

The Company also issued two classes of warrants to the preferred stockholders.

The fair value of the Redeemable Preferred Stock and the warrants at issuance were determined to be $ 242.7 million and $ 13.8 million, respectively .

13 unchanged sentences

The dividend rate on the Preferred Stock will increase by 1.0 % per annum beginning on the fifth anniversary of the issuance date of the Redeemable Preferred Stock.

As of September 30, 2022, the Company has $ 8.2 million of dividends paid-in-kind increasing our Redeemable Preferred Stock balance.

As of March 31, 2023, the Company has $ 32.1 million of dividends PIK increasing our Redeemable Preferred Stock balance.

Dividends recorded in Dividends and accretion on redeemable preferred stock on the Consolidated and Combined Consolidated Statement of Operations totaled $ 12.9 million for the three months ended March 31, 2023.

The Company has presented the Redeemable Preferred Stock in temporary equity and is accreting the discount and debt issuance costs using the interest method to the earliest redemption date of August 1, 2030.

Such accretion, recorded in dividends and accretion on redeemable preferred stock on the Consolidated Statement of Operations, totaled $ 1.1 million for the three and nine months ended September 30, 2022.

Such accretion, recorded in Dividends and accretion on redeemable preferred stock on the Consolidated and Combined Consolidated Statement of Operations, totaled $ 1.6 million for the three months ended March 31, 2023.

Mandatory Redemption :

4 unchanged sentences

Upon certain contingent events or events of noncompliance, the preferred stockholders have the right to a majority of the board seats of the Company.

If the Redeemable Preferred Stock were redeemed as of September 30, 2022, it would be redeemable for $ 450.0 million.

If the Redeemable Preferred Stock were redeemed as of March 31, 2023, it would be redeemable for $ 448.2 million.

FTAI INFRASTRUCTURE INC.

2 unchanged sentences

EARNINGS PER SHARE AND EQUITY

Basic earnings (loss) per common share (“EPS”) is calculated by dividing net income (loss) attributable to stockholders by the weighted average number of common shares outstanding, plus any participating securities.

Diluted EPS is calculated by dividing net income attributable to stockholders by the weighted average number of common shares outstanding, plus any participating securities and potentially dilutive securities.

Basic loss per share of common stock (“LPS”) is calculated by dividing net loss attributable to stockholders and Former Parent by the weighted average number of common stock outstanding, plus any participating securities.

Diluted LPS is calculated by dividing net loss attributable to stockholders or Former Parent by the weighted average number of common stock outstanding, plus any participating securities and potentially dilutive securities.

Potentially dilutive securities are calculated using the treasury stock method.

The calculation of basic and diluted EPS is presented below:

Three Months Ended September 30, Nine Months Ended September 30,

The calculation of basic and diluted LPS is presented below:

Three Months Ended March 31,

(in thousands, except per share data) 2023 2022

2 unchanged sentences

Dividends and accretion on redeemable preferred stock 14,570 —

Net loss attributable to stockholders $ ( 44,076 ) $ ( 27,286 ) $ ( 116,378 ) $ ( 62,050 )

Weighted Average Common Shares Outstanding - Basic (1)

Net loss attributable to stockholders/Former Parent $ ( 40,589 ) $ ( 42,822 )

Weighted Average Common Stock Outstanding - Basic (1)

102,787,640 99,387,467

Weighted Average Common Shares Outstanding - Diluted (1)

Weighted Average Common Stock Outstanding - Diluted (1)

102,787,640 99,387,467

1 unchanged sentence

Basic $ ( 0.39 ) $ ( 0.43 )

Diluted $ ( 0.43 ) $ ( 0.27 ) $ ( 1.13 ) $ ( 0.62 )

$ ( 0.40 ) $ ( 0.43 )

(1) Three and nine months ended September 30, 2022 include penny warrants which can be converted into a fixed amount of our shares.

For the three and nine months ended September 30, 2022, 904,796 and 904,796 shares, respectively, have been excluded from the calculation of Diluted EPS because the impact would be anti-dilutive.

On the Separation Date, FTAI distributed one share of FTAI Infrastructure, Inc.

________________________________________________________

(1) Three months ended March 31, 2023 includes penny warrants which can be converted into a fixed amount of our stock.

(2) Diluted LPS for the three months ended March 31, 2023 includes the dilutive effect of subsidiary earnings per share .

For the three months ended March 31, 2023, 1,647,839 shares have been excluded from the calculation of Diluted LPS because the impact would be anti-dilutive.

On the Spin-off Date, FTAI distributed one share of FTAI Infrastructure, Inc.

common stock for each FTAI common share held by FTAI’s shareholders of record as of the record date.

1 unchanged sentence

This number of shares is utilized for the calculation of basic and diluted loss per share for all periods presented prior to the spin-off.

For the three and nine months ended September 30, 2021, these shares are treated as issued and outstanding for purposes of calculating historical earnings per share.

For the three months ended March 31, 2022, these shares are treated as issued and outstanding for purposes of calculating historical earnings per share.

For periods prior to the spin-off, it is assumed that there are no dilutive equity instruments as there were no equity awards of FTAI Infrastructure, Inc.

outstanding prior to the spin-off.

In addition, as of the Separation Date, each FTAI option held by the Manager or by the directors, officers, employees, service providers, consultants and advisors of the Manager was converted into an adjusted FTAI option and a new FTAI Infrastructure option.

The exercise price of each adjusted FTAI Infrastructure option was set to collectively maintain the intrinsic value of the FTAI option immediately prior to the spin-off and to maintain the ratio of the exercise price of the adjusted FTAI option and the FTAI Infrastructure option, respectively, to the fair market value of the underlying shares.

The terms and conditions applicable to each FTAI Infrastructure option are substantially similar to the terms and conditions otherwise applicable to the FTAI option.

Common Stock Warrants

On August 1, 2022, in connection with the Redeemable Preferred Stock raise, the Company issued two classes of warrants to the redeemable preferred stockholders.

The Series I Warrants represent the right to purchase 3,342,566 shares of common stock, at an exercise price of $ 10.00 per share, and the Series II Warrants represent the right to purchase 3,342,566 shares of common stock at an exercise price of $ 0.01 per share.

Both classes of warrants expire on the earlier of August 1, 2030 or a change in control.

The Series II Warrants will participate on an as-converted basis in any dividends with respect to the common stock.

FTAI INFRASTRUCTURE INC.

NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

A summary of the status of the Company’s outstanding stock warrants and changes during the nine months ended September 30, 2022 is as follows:

Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years)

A summary of the status of the Company’s outstanding stock warrants and changes during the three months ended March 31, 2023 is as follows:

Number of Warrants Weighted Average Exercise Price

Outstanding as of December 31, 2022

Issued 6,685,132 5.01 7.8

Expired — — —

6,685,132 $ 5.01

Exercised — —

Outstanding as of September 30, 2022

Outstanding as of March 31, 2023

6,685,132 $ 5.01

Warrants exercisable as of September 30, 2022

Warrants exercisable as of March 31, 2023

6,685,132 $ 5.01

The weighted average remaining contractual term of the outstanding warrants as of March 31, 2023 is 7.3 years.

The aggregate intrinsic value of the warrants as of March 31, 2023 is $ 9.5 million.

COMMITMENTS AND CONTINGENCIES

FTAI INFRASTRUCTURE INC.

NOTES TO CONSOLIDATED AND COMBINED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(Dollars in tables in thousands, unless otherwise noted)

In the normal course of business we, and our subsidiaries, may be involved in various claims, legal proceedings, or may enter into contracts that contain a variety of representations and warranties and which provide general indemnifications.

2 unchanged sentences

contingency related to $ 5.0 million of the total $ 15.0 million was resolved during the year ended December 31, 2021, and the

contingency related to an additional $ 5.0 million of the total $ 15.0 million was resolved during the quarter ended September 30, 2022.

contingency related to an additional $ 5.0 million of the total $ 15.0 million was resolved during year ended December 31, 2022.

Jefferson Terminal entered into a two-year pipeline capacity agreement for a recently completed pipeline.

Under the agreement, which took effect in the second quarter of 2021, Jefferson Terminal is obligated to pay fixed marketing fees over the two-year agreement, which totals a minimum of $ 6.4 million for the next twelve months.

SUBSEQUENT EVENTS

On October 31, 2022, our Board of Directors declared a cash dividend on our common shares of $ 0.03 per share for the quarter ended September 30, 2022, payable on November 28, 2022 to the holders of record on November 14, 2022.

Director Options

On October 31, 2022, the Company issued an aggregate of 15,000 stock options ( 5,000 options each) to its three independent directors pursuant to the Incentive Plan with a term of 10 years and strike price of $ 2.75 .

On April 3, 2023, our equity method investee, Long Ridge, entered into an agreement to sell certain of its assets to our subsidiary, Transtar, for $ 5.0 million.

On May 2, 2023, our board of directors declared a cash dividend on our common stock of $ 0.03 per share for the quarter ended March 31, 2023, payable on May 26, 2023 to the holders of record on May 15, 2023.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements