What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-05-03 compared with 2022-11-03 · 189 added, 256 removed, 318 unchanged (58% of the section changed)

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We are in the business of acquiring, developing and operating assets and businesses that represent critical infrastructure for customers in the transportation and energy industries.

We were formed as FTAI Infrastructure LLC, a Delaware limited liability company and subsidiary of Fortress Transportation and Infrastructure Investors LLC (the “Former Parent” or “FTAI”), on December 13, 2021.

In connection with the spin-off, as described below, we converted into FTAI Infrastructure Inc., a Delaware corporation, and hold all the material assets and investments that comprise FTAI's infrastructure business.

Prior to the spin-off, we were a subsidiary of FTAI, which is a Nasdaq-listed company that is externally managed and advised by FIG LLC (the “Manager”), an affiliate of Fortress Investment Group LLC (“Fortress”).

We were formed on December 13, 2021 as FTAI Infrastructure LLC, a Delaware limited liability company and subsidiary of FTAI Aviation Ltd.

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

In connection with the spin-off, FTAI Infrastructure LLC converted into FTAI Infrastructure Inc., a Delaware corporation, and acquired all of the material assets and investments that comprised FTAI's infrastructure business (“FTAI Infrastructure”).

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.”

Our operations consist of four primary business lines:

(i) Railroad, (ii) Ports and Terminals, (iii) Power and Gas and (iv) Sustainability and Energy Transition.

Our Railroads business primarily invests in and operates short line and regional railroads in North America.

Our Railroad business primarily invests in and operates short line and regional railroads in North America.

Our Ports and Terminals business, consisting of our Jefferson Terminal and Repauno segments, develops or acquires industrial properties in strategic locations that store and handle for third parties a variety of energy products, including crude oil, refined products and clean fuels.

Our Power and Gas business develops and operates facilities, such as a 485 megawatt power plant at our Long Ridge terminal in Ohio through our equity method investment, that leverage the property’s location and key attributes to generate incremental value.

Through an equity method investment, our Power and Gas business develops and operates facilities, such as a 485 megawatt power plant at the Long Ridge terminal in Ohio, that leverage the property’s location and key attributes to generate incremental value.

Our Sustainability and Energy Transition business focuses on investments in companies and assets that utilize green technology, produce sustainable fuels and products or enable customers to reduce their carbon footprint.

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We believe that there are a large number of acquisition opportunities in our markets and that our Manager’s expertise and business and financing relationships, together with our access to capital and generally available capital for infrastructure projects in today’s marketplace, will allow us to take advantage of these opportunities.

As of September 30, 2022, we had total consolidated assets of $2.5 billion and total temporary equity and equity of $0.8 billion.

Spin-Off of FTAI Infrastructure

On August 1, 2022, 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 held.

FTAI Infrastructure Inc.

was spun out in an entity taxed as a corporation for U.S.

federal income tax purposes and holds FTAI’s (i) Jefferson Terminal business, (ii) Repauno business, (iii) Long Ridge investment (iv) Transtar business, (v) Aleon and Gladieux investment, (vi) KRS business, (vii) Clean Planet USA investment, (viii) FYX business, (ix) CarbonFree business, and (x) Containers business.

FTAI Infrastructure retained all related project-level debt of those entities.

In connection with the spin-off, FTAI Infrastructure entered into subscription agreements to issue $300.0 million of redeemable preferred stock and warrants and sold $500.0 million of 10.500% senior secured notes due 2027, the net proceeds of which were remitted to FTAI in connection with the separation.

FTAI Infrastructure Inc.

is externally managed by the Manager.

In connection with the spin-off, FTAI Infrastructure Inc.

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.

The Management Agreement has an initial term of six years.

The Manager will be entitled to a management fee, incentive fees (comprised of income incentive fees and capital gains incentive fees) and reimbursement of certain expenses on substantially similar terms as the previously held agreements with the Manager, except that all fees will be paid pursuant to the Management Agreement rather than by one of FTAI Infrastructure Inc.’s subsidiaries.

Tax Legislation

On August 16, 2022, the U.S.

government enacted the Inflation Reduction Act of 2022, which includes, among other provisions, changes to the U.S.

corporate income tax system, including a 15% minimum tax based on “adjusted financial statement income” exceeding $1 billion.

We are continuing to evaluate the Inflation Reduction Act of 2022 and its requirements, as well as any potential impact on our business.

Impact of COVID-19

The ongoing COVID-19 pandemic has adversely affected our Jefferson Terminal business in several material ways since 2020.

In particular, although difficult to quantify the impact, the pandemic adversely affected macro trends in refinery utilization rates in the United States and the global consumption of petroleum and liquid fuels in 2020 and part of 2021, which adversely affected our revenues for our Jefferson Terminal business.

In addition, we were unable to complete certain new customer contracts and certain of our existing customers did not increase volumes as anticipated which also adversely affected our revenues for those periods.

Recently, however, we have seen the activity starting to normalize and Jefferson Terminal crude throughput has ramped back up to pre-pandemic levels.

Due to the outbreak of COVID-19, we have taken measures to protect the health and safety of our employees, including having employees work remotely, where possible.

As COVID-19 continues to evolve, the extent to which COVID-19 impacts operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration and severity of the outbreak, and the actions that may be required to try and contain COVID-19 or treat its impact.

We continue to monitor the pandemic and, the extent to which the continued spread of the virus adversely affects our customer base and therefore revenue.

As the COVID-19 pandemic is complex and rapidly evolving, our plans as described above may change.

At this point, we cannot reasonably estimate the duration and severity of this pandemic, which could have a material adverse impact on our business, results of operations, financial position and cash flows.

For additional detail, see “Risk Factors—A pandemic, including COVID-19, could have an adverse impact on our business, financial condition, and results of operations.”

As of March 31, 2023, we had total consolidated assets of $2.4 billion and total temporary equity and equity of $0.8 billion.

Operating Segments

Prior to the third quarter of 2022, we operated as three reportable segments.

During the third quarter of 2022, we reorganized our historical operating segments into five operating segments as described below.

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 benefits (“OPEB”) liabilities and dividends and accretion expense of the 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.

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The Repauno segment consists of a 1,630-acre deep-water port located along the Delaware River with an underground storage cavern, a new multipurpose dock, a rail-to-ship transloading system and multiple industrial development opportunities.

The Power and Gas segment is comprised of an equity method investment in Long Ridge, which is a 1,660-acre multi-modal port located along the Ohio River with rail, dock, and multiple industrial development opportunities, including a power plant in operation.

The Sustainability and Energy Transition segment is comprised of Aleon/Gladieux, Clean Planet, and CarbonFree and all three investments are development stage businesses focused on sustainability and recycling, and all three investments are in development stages.

The Power and Gas segment is comprised of an equity method investment in Long Ridge, which is a 1,660-acre multi-modal terminal located along the Ohio River with rail, dock, and multiple industrial development opportunities, including a power plant in operation.

The Sustainability and Energy Transition segment is comprised of Aleon/Gladieux, Clean Planet, and CarbonFree, and all three investments are development stage businesses focused on sustainability and recycling.

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.

On December 27, 2017, SoftBank Group Corp.

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Adjusted EBITDA is not a financial measure in accordance with U.S.

generally accepted accounting principles (“U.S.

generally accepted accounting principles (“U.S.GAAP”).

This performance measure provides the CODM with the information necessary to assess operational performance, as well as make resource and allocation decisions.

We believe Adjusted EBITDA is a useful metric for investors and analysts for similar purposes of assessing our operational performance.

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.

Comparison of the three and nine months ended September 30, 2022 and 2021

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 .

Comparison of the three months ended months ended March 31, 2023 and 2022

The following table presents our results of operations:

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

Three Months Ended March 31, Change

(in thousands) 2023 2022

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Terminal services revenues 19,148 12,784 6,364

Roadside services revenues 17,850 — 17,850

Other revenue (1,815) (2,162) 347

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Depreciation and amortization 20,135 16,996 3,139

Asset impairment 141 — 141

Total expenses 91,890 65,891 25,999

Other expense

Equity in losses of unconsolidated entities (12,080) (1,545) (10,535) (47,982) (8,810) (39,172)

(Loss) gain on sale of assets, net (134) — (134) (134) 16 (150)

Equity in earnings (losses) of unconsolidated entities 4,366 (22,043) 26,409

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

Interest expense (23,250) (6,459) (16,791)

Other expense (1,132) (6,244) 5,112 (2,144) (6,855) 4,711

Other income (expense) 221 (459) 680

Total other expense (18,787) (28,961) 10,174

Loss from before income taxes (34,183) (48,704) 14,521

Provision for (benefit from) income taxes 1,555 (1,634) 3,189 5,086 (2,755) 7,841

Provision for income taxes 1,729 1,584 145

Net loss (35,912) (50,288) 14,376

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

Net loss attributable to stockholders and Former Parent $ (44,076) $ (27,286) $ (16,790) $ (116,378) $ (62,050) $ (54,328)

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

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

Net loss attributable to stockholders/Former Parent $ (40,589) $ (42,822) $ 2,233

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

Three Months Ended March 31, Change

(in thousands) 2023 2022

Net loss attributable to stockholders and Former Parent $ (44,076) $ (27,286) $ (16,790) $ (116,378) $ (62,050) $ (54,328)

Provision for (benefit from) income taxes 1,555 (1,634) 3,189 5,086 (2,755) 7,841

Net loss attributable to stockholders/Former Parent $ (40,589) $ (42,822) $ 2,233

Provision for income taxes 1,729 1,584 145

Equity-based compensation expense 895 709 186

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8,190 5,407 2,783

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

Interest costs on pension and OPEB liabilities 896 — 896 896 — 896

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

Interest and other costs on pension and OPEB liabilities 480 — 480

Other non-recurring items (2)

1,288 — 1,288

Equity in losses of unconsolidated entities (4,366) 22,043 (26,409)

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(1) Includes the following items for the three months ended September 30, 2022 and 2021:

(i) net loss of $(12,177) and $(3,794), (ii) interest expense of $7,551 and $300, (iii) depreciation and amortization expense of $7,883 and $2,953, (iv) acquisition and transaction expenses of $(16) and $—, (v) changes in fair value of non-hedge derivative instruments of $6,432 and $8,323, (vi) equity-based compensation of $95 and $— and (vii) asset impairment of $2 and $—, respectively.

Includes the following items for the nine months ended September 30, 2022 and 2021:

(i) net loss of $(48,184) and $(9,286), (ii) interest expense of $20,809 and $827, (iii) depreciation and amortization expense of $20,516 and $6,678, (iv) acquisition and transaction expenses of $375 and $—, (v) changes in fair value of non-hedge derivative instruments of $28,164 and $12,524, (vi) asset impairment of $34 and $24 and (vii) equity-based compensation of $288 and $—, respectively.

(2) Includes the following items for the three months ended September 30, 2022 and 2021:

(i) equity-based compensation of $102 and $130, (ii) provision for income taxes of $464 and $11, (iii) interest expense of $1,326 and $926, (iv) depreciation and amortization expense of $2,507 and $2,195, (v) changes in fair value of non-hedge derivative instruments of $(15) and $158, (vi) acquisition and transaction expenses of $117 and $— and (vii) interest costs on pension and OPEB liabilities of $1 and $—, respectively.

Includes the following items for the nine months ended September 30, 2022 and 2021:

(i) equity based compensation of $352 and $620, (ii) provision for income taxes of $494 and $37, (iii) interest expense of $4,029 and $1,939, (iv) depreciation and amortization expense of $7,091 and $6,178, (v) changes in fair value of non-hedge derivative instruments of $(50) and $(68), (vi) acquisition and transaction expenses of $117 and $— and (vii) interest costs on pension and OPEB liabilities of $1 and $—, respectively.

Comparison of the three months ended September 30, 2022 and 2021

(1) Includes the following items for the three months ended March 31, 2023 and 2022:

(i) net income (loss) of $4,318 and $(22,088), (ii) interest expense of $8,032 and $6,463, (iii) depreciation and amortization expense of $5,666 and $6,284, (iv) acquisition and transaction expenses of $20 and $3, (v) changes in fair value of non-hedge derivative instruments of $(9,847) and $14,615, (vi) equity-based compensation of $1 and $98 and (vii) asset impairment of $— and $32, respectively.

(2) Includes the following items for the three months ended March 31, 2023:

subsidiary severance expense of $1,288.

(3) Includes the following items for the three months ended March 31, 2023 and 2022:

(i) equity-based compensation of $110 and $127, (ii) provision for income taxes of $53 and $15, (iii) interest expense of $1,857 and $1,384, (iv) depreciation and amortization expense of $3,136 and $2,263, (v) changes in fair value of non-hedge derivative instruments of $61 and $27, (vi) other non-recurring items of $3 and $— and (vii) interest and other costs on pension and OPEB liabilities of $1 and $—, respectively.

Comparison of the three months ended March 31, 2023 and 2022

Total revenues increased $30.3 million primarily due to higher revenues of $5.9 million in the Railroad segment, $6.0 million in the Jefferson Terminal segment and $17.9 million in the Corporate and Other segment.

Rail revenues increased $13.8 million due to our acquisition of Transtar in July 2021.

Terminal services revenues increased $5.5 million primarily due to higher volumes at Jefferson Terminal.

Other revenue increased $22.6 million, primarily due to the acquisition of a majority stake in and consolidation of FYX in May 2022.

Comparison of the nine months ended September 30, 2022 and 2021

Total revenues increased $117.9 million, primarily due to higher revenues of $85.3 million in the Railroad segment, $10.6 million in the Jefferson Terminal segme nt and $30.4 million in the Corporate and Other segment.

Rail revenues increased $84.3 million due to our acquisition of Transtar in July 2021.

Rail revenues increased $5.9 million due to an increase in car loads as well as the implementation of a fuel surcharge that went into effect beginning March 2022.

Terminal services revenues increased $6.4 million primarily due to higher volumes at Jefferson Terminal.

Other revenue increased $21.8 million, primarily due to the acquisition of a majority stake in and consolidation of FYX in May 2022.

Comparison of the three months ended September 30, 2022 and 2021

Total expenses increased $26.8 million, primarily due to increased operating expenses, offset by lower acquisition and transaction expenses.

Operating expenses increased $28.8 million which primarily reflects:

• an increase of $15.6 million in cost of sales in the Corporate and Other segment primarily related to the acquisition of FYX in May 2022;

• an increase of $6.1 million in compensation and benefits expense in the Railroad segment primarily due to the acquisition of Transtar in July 2021 and $2.8 million in the Corporate and Other segment primarily related to the acquisition of FYX in May 2022;

• an increase in facility operating expense of $2.8 million in the Railroad segment due to the acquisition of Transtar in July 2021;

• an increase of $2.3 million in repairs and maintenance expense in the Railroad segment primarily due to the acquisition of Transtar in July 2021.

Acquisition and transaction expenses decreased $2.6 million primarily due to professional fees related to the Transtar transaction costs incurred in 2021.

Comparison of the nine months ended September 30, 2022 and 2021

Total expenses increased $103.2 million, primarily due to higher (i) operating expenses, (ii) depreciation and amortization and (iii) acquisition and transaction expenses.

Roadside services revenue increased $17.9 million primarily due to the acquisition of a majority stake in and consolidation of FYX in May 2022.

Comparison of the three months ended March 31, 2023 and 2022

Total expenses increased $26.0 million, primarily due to increased operating expenses and depreciation and amortization, offset by lower acquisition and transaction expenses and management fees and incentive allocations to affiliate.

Operating expenses increased $27.1 million which primarily reflects:

• an increase of $29.2 million in compensation and benefits expense in the Railroad segment primarily due to the acquisition of Transtar in July 2021 and $4.1 million in the Corporate and Other segment primarily related to the acquisition of FYX in May 2022;

• an increase of $13.8 million in cost of sales in the Corporate and Other segment primarily related to the acquisition of FYX in May 2022;

• an increase in facility operating expense of $14.6 million in the Railroad segment due to the acquisition of Transtar in July 2021 and $3.4 million in the Jefferson Terminal segment due to increased terminal activity;

• an increase of $5.9 million in repairs and maintenance expense in the Railroad segment primarily due to the acquisition of Transtar in July 2021.

Depreciation and amortization increased $13.6 million primarily due to (i) assets placed into service at Jefferson Terminal and (ii) the acquisition of Transtar in July 2021.

Acquisition and transaction expenses increased $7.0 million primarily due to professional fees related to strategic transactions.

• an increase of $4.6 million in compensation and benefits expense in the Railroad segment primarily due to severance costs and additional employees hired at Transtar and $2.7 million in the Corporate and Other segment primarily related to the acquisition of FYX in May 2022;

• an increase in facility operating expense of $3.1 million in the Railroad segment due increased rail activity;

• an increase of $2.2 million in repairs and maintenance expense in the Railroad segment also primarily due to increased rail activity.

Depreciation and amortization increased $3.1 million due to additional assets placed in service at Jefferson as well as a result of the acquisition of a majority stake in and consolidation of FYX in May 2022.

Acquisition and transaction expenses decreased $4.0 million primarily due to higher acquisition and transaction expenses incurred in 2022 relating to the Spin-off of the Company.

Management fees and incentive allocations to affiliate decreased $1.2 million due to a lower equity base and losses during the period.

Other expense

Total other expense increased $20.3 million during the three months ended September 30, 2022 which primarily reflects (i) an increase of $10.5 million in equity in losses of unconsolidated entities primarily due to realized and unrealized losses on power swaps at Long Ridge and (ii) an increase of $14.8 million in interest expense which reflects an increase in the average outstanding debt of approximately $317.6 million from the Senior Notes due 2027 (the "2027 Notes”) issued in July 2022.

Total other expense increased $57.3 million during the nine months ended September 30, 2022, which primarily reflects (i) an increase of $39.2 million in equity in losses of unconsolidated entities primarily due to realized and unrealized losses on power swaps at Long Ridge and (ii) an increase of $22.7 million in interest expense, which reflects an increase in the average outstanding debt of approximately $158.8 million from the 2027 Notes issued in July 2022.

Net loss increased $8.5 million and $50.4 million during the three and nine months ended September 30, 2022, respectively, primarily due to the changes noted above.

Total other expense decreased $10.2 million during the three months ended March 31, 2023 which primarily reflects an increase of $26.4 million in equity in earnings of unconsolidated entities primarily due to realized and unrealized gains on power swaps at Long Ridge, offset by an increase of $16.8 million in interest expense which reflects an increase in the average outstanding debt of approximately $475.5 million from the Senior Notes due 2027 (the "2027 Notes”) issued in July 2022.

Net loss decreased $14.4 million during the three months ended March 31, 2023 primarily due to the changes noted above.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA increased $16.9 million and $54.7 million during the three and nine months ended September 30, 2022, respectively, primarily due to the changes noted above.

Adjusted EBITDA increased $10.3 million during the three months ended March 31, 2023 primarily due to the changes noted above.

Railroad Segment

The following table presents our results of operations:

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

Three Months Ended March 31, Change

(in thousands) 2023 2022

5 unchanged sentences

Depreciation and amortization 5,101 4,927 174

Asset impairment 141 — 141

Total expenses 30,660 26,195 4,465

5 unchanged sentences

Income before income taxes 8,714 8,471 243

(Benefit from) provision for income taxes (942) 681 (1,623) 2,391 681 1,710

Provision for income taxes 598 1,515 (917)

Net income 8,116 6,956 1,160

Net income attributable to non-controlling interest in consolidated subsidiaries 18 — 18

Net income attributable to stockholders and Former Parent $ 12,049 $ 3,795 $ 8,254 $ 30,597 $ 2,974 $ 27,623

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

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

Net income attributable to stockholders/Former Parent $ 8,098 $ 6,956 $ 1,142

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

Three Months Ended March 31, Change

(in thousands) 2023 2022

Net income attributable to stockholders and Former Parent $ 12,049 $ 3,795 $ 8,254 $ 30,597 $ 2,974 $ 27,623

(Benefit from) provision for income taxes (942) 681 (1,623) 2,391 681 1,710

Net income attributable to stockholders/Former Parent $ 8,098 $ 6,956 $ 1,142

Provision for income taxes 598 1,515 (917)

Equity-based compensation expense 325 — 325

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Pro-rata share of Adjusted EBITDA from unconsolidated entities — — —

Dividends and accretion expense on redeemable preferred stock — — — — — —

Interest costs on pension and OPEB liabilities 896 — 896 896 — 896

Dividends and accretion on redeemable preferred stock — — —

Interest and other costs on pension and OPEB liabilities 480 — 480

Other non-recurring items (1)

1,288 — 1,288

Equity in earnings of unconsolidated entities — — —

Non-controlling share of Adjusted EBITDA (2)

(20) — (20) (20) — (20)

Adjusted EBITDA $ 17,151 $ 13,666 $ 3,485

________________________________________________________

(1) Includes the following items for the three months ended September 30, 2022:

(i) equity-based compensation of $1, (ii) provision for income taxes of $2, (iii) depreciation and amortization expense of $16, and (iv) interest costs on pension and OPEB liabilities of $1.

Includes the following items for the nine months ended September 30, 2022:

(i) equity-based compensation of $1, (ii) provision for income taxes of $2, (iii) depreciation and amortization expense of $16, and (iv) interest costs on pension and OPEB liabilities of $1.

Total revenues increased $13.8 million and $85.3 million for the three and nine months ended September 30, 2022, respectively, primarily due to the acquisition of Transtar on July 28, 2021.

Total expenses increased $6.9 million and $55.0 million during the three and nine months ended September 30, 2022, respectively, primarily due to the acquisition of Transtar on July 28, 2021.

(1) Includes the following items for the three months ended March 31, 2023:

Transtar severance expense of $1,288.

(2) Includes the following items for the three months ended March 31, 2023:

(i) equity-based compensation of $1, (ii) provision for income taxes of $1, (iii) depreciation and amortization expense of $10, (iv) interest expense of $2, (v) other non-recurring items of $3 and (vi) interest and other costs on pension and OPEB liabilities of $1.

Total revenues increased $5.9 million for the three months ended March 31, 2023 due to an increase in car loads as well as the implementation of a fuel surcharge that went into effect beginning March 2022.

Total expenses increased $4.5 million during the three months ended March 31, 2023 primarily due to an increase in operating expenses caused by an increase in compensation and benefits related to severance costs and additional employees hired.

Other expense

Total other expense increased $0.3 million and $1.0 million during the three and nine months ended September 30, 2022, respectively, primarily due to the acquisition of Transtar on July 28, 2021.

Total other expense increased $1.2 million during the three months ended March 31, 2023 which primarily reflects an increase in interest expense due to draw downs made on the new revolver entered into in the fourth quarter of 2022.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA increased $7.6 million and $40.5 million during the three and nine months ended September 30, 2022, respectively, primarily due to the activity noted above.

Adjusted EBITDA increased $3.5 million during the three months ended March 31, 2023 primarily due to the activity noted above.

Jefferson Terminal Segment

The following table presents our results of operations:

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

Three Months Ended March 31, Change

(in thousands) 2023 2022

13 unchanged sentences

Net loss attributable to non-controlling interest in consolidated subsidiaries (9,185) (7,136) (2,049)

Net loss attributable to stockholders and Former Parent $ (8,261) $ (8,974) $ 713 $ (26,003) $ (20,941) $ (5,062)

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

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

Net loss attributable to stockholders/Former Parent $ (9,162) $ (8,919) $ (243)

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

Three Months Ended March 31, Change

(in thousands) 2023 2022

Net loss attributable to stockholders and Former Parent $ (8,261) $ (8,974) $ 713 $ (26,003) $ (20,941) $ (5,062)

Net loss attributable to stockholders/Former Parent $ (9,162) $ (8,919) $ (243)

Provision for income taxes 198 69 129

8 unchanged sentences

Pro-rata share of Adjusted EBITDA from unconsolidated entities — — —

Dividends and accretion expense on redeemable preferred stock — — — — — —

Interest costs on pension and OPEB liabilities — — — — — —

Dividends and accretion on redeemable preferred stock — — —

Interest and other costs on pension and OPEB liabilities — — —

Other non-recurring items — — —

Equity in earnings of unconsolidated entities — — —

3 unchanged sentences

________________________________________________________

(1) Includes the following items for the three months ended September 30, 2022 and 2021:

(i) equity-based compensation of $94 and $124, (ii) provision for income taxes of $462 and $11, (iii) interest expense of $1,306 and $917 and (iv) depreciation and amortization expense of $2,129 and $2,115, respectively.

Includes the following items for the nine months ended September 30, 2022 and 2021:

(1) Includes the following items for the three months ended March 31, 2023 and 2022:

(i) equity-based compensation of $102 and $121, (ii) provision for income taxes of $46 and $15, (iii) interest expense of $1,823 and $1,374 and (iv) depreciation and amortization expense of $2,744 and $2,182, respectively.

Total revenues increased $5.3 million during the three months ended September 30, 2022 which reflects an increase in terminal services revenue of $5.4 million primarily due to higher volumes.

Total revenues increased $10.6 million during the nine months ended September 30, 2022 which reflects an increase in terminal services revenue of $10.9 million primarily due to higher volumes.

Total expenses increased $2.1 million during the three months ended September 30, 2022, which reflects:

• an increase in operating expenses of $1.8 million primarily due to increased terminal activity;

• an increase in depreciation and amortization of $0.3 million due to additional assets being placed into service.

Total expenses increased $8.4 million during the nine months ended September 30, 2022, which reflects:

• an increase in operating expenses of $5.6 million primarily due to increased terminal activity;

Total revenues increased $6.0 million during the three months ended March 31, 2023 which reflects an increase in terminal services revenue of $6.1 million primarily due to higher volumes.

Total expenses increased $5.5 million during the three months ended March 31, 2023, which reflects:

• an increase in operating expenses of $3.3 million primarily due to increased terminal throughput activity;

• an increase in depreciation and amortization of $2.2 million due to additional assets being placed into service.

Other expense

Other expense increased $1.2 million during the three months ended September 30, 2022, which reflects an increase of $1.9 million due to the issuance of the Series 2021 Bonds in August 2021 and additional borrowings related to the EB-5 Loan Agreement.

Other expense increased $9.7 million during the nine months ended September 30, 2022, which reflects an increase of $9.7 million due to the issuance of the Series 2021 Bonds in August 2021 and additional borrowings related to the EB-5 Loan Agreement.

Other expense increased $2.7 million during the three months ended March 31, 2023, which reflects an increase of $1.8 million in interest expense due to additional borrowings related to the EB-5 Loan Agreement.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA increased $4.1 million and $5.7 million during the three and nine months ended September 30, 2022, respectively, primarily due to the changes noted above.

Adjusted EBITDA increased $2.7 million during the three months ended March 31, 2023 primarily due to the changes noted above.

Repauno Segment

The following table presents our results of operations:

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

Three Months Ended March 31, Change

(in thousands) 2023 2022

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Other expense

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

Interest expense (588) (287) (301)

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Net loss attributable to non-controlling interest in consolidated subsidiaries (498) (330) (168)

Net loss attributable to stockholders and Former Parent $ (4,917) $ (8,122) $ 3,205 $ (17,984) $ (9,520) $ (8,464)

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

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

Net loss attributable to stockholders/Former Parent $ (8,831) $ (8,120) $ (711)

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

Three Months Ended March 31, Change

(in thousands) 2023 2022

Net loss attributable to stockholders and Former Parent $ (4,917) $ (8,122) $ 3,205 $ (17,984) $ (9,520) $ (8,464)

Net loss attributable to stockholders/Former Parent $ (8,831) $ (8,120) $ (711)

Provision for income taxes 114 — 114

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Pro-rata share of Adjusted EBITDA from unconsolidated entities — — —

Dividends and accretion expense on redeemable preferred stock — — — — — —

Interest costs on pension and OPEB liabilities — — — — — —

Dividends and accretion on redeemable preferred stock — — —

Interest and other costs on pension and OPEB liabilities — — —

Other non-recurring items — — —

Equity in losses of unconsolidated entities — — —

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________________________________________________________

(1) Includes the following items for the three months ended September 30, 2022 and 2021:

(i) equity-based compensation of $7 and $6, (ii) interest expense of $20 and $9, (iii) depreciation and amortization expense of $110 and $80 and (iv) changes in fair value of non-hedge derivative instruments of $(15) and $158, respectively.

Includes the following items for the nine months ended September 30, 2022 and 2021:

(i) equity-based compensation of $22 and $21, (ii) interest expense of $50 and $29, (iii) depreciation and amortization expense of $334 and $232 and (iv) changes in fair value of non-hedge derivative instruments of $(50) and $(68), respectively.

Total revenue increased $2.3 million du ring the three months ended September 30, 2022 primarily due to gains on butane forward purchase contracts, offset by a net decrease in sales from margin compression.

Total revenue decreased $8.4 million du ring the nine months ended September 30, 2022 primarily due to a loss on butane forward purchase contracts and margin compression.

Total expenses decreased $1.0 million during the three months ended September 30, 2022 which reflects lower operating expenses of $1.0 million due to decreased activity and sales from margin compression.

Total expenses increased $0.5 million du ring the nine months ended September 30, 2022 which reflects higher depreciation and amortization of $0.3 million due to additional assets placed into service.

(1) Includes the following items for the three months ended March 31, 2023 and 2022:

(i) equity-based compensation of $7 and $6, (ii) interest expense of $32 and $10, (iii) depreciation and amortization expense of $122 and $81, (iv) provision for income taxes of $6 and $—, and (v) changes in fair value of non-hedge derivative instruments of $61 and $27, respectively.

Total revenue during the three months ended March 31, 2022 of $(2.0) million primarily includes losses on butane forward purchase contracts, offset by ordinary trading margins.

Total revenue during the three months ended March 31, 2023 of $(1.5) million primarily includes losses on butane forward purchase contracts and product margin losses due to the removal and sale of inventory in advance of commencing a throughput, fee-based business model.

Total expenses increased $1.0 million during the three months ended March 31, 2023 which reflects higher operating expenses of $1.1 million caused by an increase in professional fees and repairs and maintenance expense related to the continued development of the site.

Other expense

Total other expense increased $0.1 million and $0.2 million during the three and nine months ended September 30, 2022, respectively, which reflects an increase in interest expense due to an increase in the borrowing rate on the revolver.

Total other expense increased $0.3 million during the three months ended March 31, 2023 which reflects an increase in interest expense due to an increase in the borrowing rate on the revolver.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA decreased $1.4 million and $7.3 million during the three and nine months ended September 30, 2022, respectively, primarily due to the changes noted above.

Adjusted EBITDA decreased $0.2 million during the three months ended March 31, 2023 primarily due to the changes noted above.

Power and Gas Segment

The following table presents our results of operations:

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

Three Months Ended March 31, Change

(in thousands) 2023 2022

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Total expenses 446 75 371

Other expense

Equity in losses of unconsolidated entities (9,222) (1,620) (7,602) (43,574) (9,262) (34,312)

Other expense (25) (3,955) 3,930 (25) (3,864) 3,839

Total other expense (9,247) (5,575) (3,672) (43,599) (13,126) (30,473)

Loss before income taxes (9,903) (5,594) (4,309) (44,423) (13,187) (31,236)

Other income (expense)

Equity in earnings (losses) of unconsolidated entities 7,761 (21,381) 29,142

Interest expense (2) — (2)

Other income 1,229 — 1,229

Total other income (expense) 8,988 (21,381) 30,369

Income (loss) before income taxes 8,542 (21,456) 29,998

Benefit from income taxes — — —

Net loss (9,903) (3,231) (6,672) (44,423) (9,588) (34,835)

Net income (loss) 8,542 (21,456) 29,998

Net loss attributable to non-controlling interest in consolidated subsidiaries — — —

Net loss attributable to stockholders and Former Parent $ (9,903) $ (3,231) $ (6,672) $ (44,423) $ (9,588) $ (34,835)

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

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

Net income (loss) attributable to stockholders/Former Parent $ 8,542 $ (21,456) $ 29,998

The following table sets forth a reconciliation of net income (loss) attributable to stockholders or Former Parent to Adjusted EBITDA:

Three Months Ended March 31, Change

(in thousands) 2023 2022

Net loss attributable to stockholders and Former Parent $ (9,903) $ (3,231) $ (6,672) $ (44,423) $ (9,588) $ (34,835)

Net income (loss) attributable to stockholders/Former Parent $ 8,542 $ (21,456) $ 29,998

Benefit from income taxes — — —

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10,509 6,095 4,414

Dividends and accretion expense on redeemable preferred stock — — — — — —

Interest costs on pension and OPEB liabilities — — — — — —

Dividends and accretion on redeemable preferred stock — — —

Interest and other costs on pension and OPEB liabilities — — —

Other non-recurring items — — —

Equity in losses of unconsolidated entities (7,761) 21,381 (29,142)

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________________________________________________________

(1) Includes the following items for the three months ended September 30, 2022 and 2021:

(i) net loss of $(9,222) and $(3,789), (ii) interest expense of $6,720 and $274, (iii) depreciation and amortization expense of $7,565 and $2,953, (iv) acquisition and transaction expenses of $(16) and $—, (v) changes in fair value of non-hedge derivative instruments of $6,432 and $8,323, (vi) equity-based compensation of $95 and $—, and (vii) asset impairment of $2 and $—, respectively.

Includes the following items for the nine months ended September 30, 2022 and 2021:

(i) net loss of $(43,574) and $(9,262), (ii) interest expense of $19,767 and $748, (iii) depreciation and amortization expense of $20,089 and $6,678, (iv) acquisition and transaction expenses of $375 and $—, (v) changes in fair value of non-hedge derivative instruments of $28,164 and $12,524, (vi) equity-based compensation of $288 and $—, and (vii) asset impairment of $34 and $24, respectively.

Other expense

Total other expense increased $3.7 million and $30.5 million during the three and nine months ended September 30, 2022, respectively, which reflects an increase in equity method losses in unconsolidated entities of $7.6 million and $34.3 million, respectively.

This is primarily due to realized and unrealized losses on power swaps at Long Ridge, offset by a decrease in other expense of $3.9 million and $3.8 million, respectively, mostly attributable to a write-off of an earn-out receivable on the Long Ridge investment during the three months ended September 30, 2021.

(1) Includes the following items for the three months ended March 31, 2023 and 2022:

(i) net income (loss) of $7,761 and $(21,380), (ii) interest expense of $7,234 and $6,443, (iii) depreciation and amortization expense of $5,340 and $6,284, (iv) acquisition and transaction expenses of $20 and $3, (v) changes in fair value of non-hedge derivative instruments of $(9,847) and $14,615, (vi) equity-based compensation of $1 and $98, and (vii) asset impairment of $— and $32, respectively.

Other income (expense)

Total other income (expense) increased $30.4 million during the three months ended March 31, 2023 which reflects an increase in equity method earnings in unconsolidated entities of $29.1 million.

This is primarily due to unrealized gains on power swaps at Long Ridge, in conjunction with an increase in other income of $1.2 million due to an increase in interest income from a loan agreement entered into at the end of 2022 between the Company and Long Ridge Energy and Power LLC.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA increased $7.5 million and $17.9 million during the three and nine months ended September 30, 2022, respectively, primarily due to the changes noted above.

Adjusted EBITDA increased $5.3 million during the three months ended March 31, 2023 due to an increase in the pro-rata share of adjusted EBITDA from unconsolidated entities of $4.4 million and the changes noted above.

Sustainability and Energy Transition Segment

The following table presents our results of operations:

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

Three Months Ended March 31, Change

(in thousands) 2023 2022

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Loss before income taxes (2,811) (177) (2,634)

Benefit from income taxes (61) — (61) — — —

Provision for income taxes — — —

Net loss (2,811) (177) (2,634)

Net loss attributable to non-controlling interest in consolidated subsidiaries — — —

Net loss attributable to stockholders and Former Parent $ (2,357) $ — $ (2,357) $ (3,015) $ — $ (3,015)

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

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

Net loss attributable to stockholders/Former Parent $ (2,811) $ (177) $ (2,634)

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

Three Months Ended March 31, Change

(in thousands) 2023 2022

Net loss attributable to stockholders and Former Parent $ (2,357) $ — $ (2,357) $ (3,015) $ — $ (3,015)

Benefit from income taxes (61) — (61) — — —

Net loss attributable to stockholders/Former Parent $ (2,811) $ (177) $ (2,634)

Provision for income taxes — — —

Equity-based compensation expense — — —

8 unchanged sentences

(2,316) (706) (1,610)

Dividends and accretion expense on redeemable preferred stock — — — — — —

Interest costs on pension and OPEB liabilities — — — — — —

Dividends and accretion on redeemable preferred stock — — —

Interest and other costs on pension and OPEB liabilities — — —

Other non-recurring items — — —

Equity in losses of unconsolidated entities 3,416 705 2,711

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________________________________________________________

(1) Includes the following items for the three months ended September 30, 2022 and 2021:

(i) net loss of $(2,937) and $—, (ii) interest expense of $806 and $— and (iii) depreciation and amortization expense of $318 and $—, respectively.

Includes the following items for the nine months ended September 30, 2022 and 2021:

(1) Includes the following items for the three months ended March 31, 2023 and 2022:

(i) net loss of $(3,419) and $(706), (ii) interest expense of $777 and $— and (iii) depreciation and amortization expense of $326 and $—, respectively.

Other expense

Total other expense increased $2.4 million and $3.0 million during the three and nine months ended September 30, 2022, respectively, which reflects an increase in equity method losses in unconsolidated entities primarily due to increased losses at GM-FTAI Holdco LLC.

Total other expense increased $2.6 million during the three months ended March 31, 2023 which reflects an increase in equity method losses in unconsolidated entities primarily due to increased losses at GM-FTAI Holdco LLC.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA decreased $1.3 million and $1.6 million during the three and nine months ended September 30, 2022, respectively, primarily due to the changes noted above.

Adjusted EBITDA decreased $1.5 million during the three months ended March 31, 2023 primarily due to the changes noted above.

Corporate and Other

The following table presents our results of operations:

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

Three Months Ended March 31, Change

(in thousands) 2023 2022

Other revenue $ 20,317 $ — $ 20,317 $ 30,404 $ — $ 30,404

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

Total revenues 17,850 — 17,850

8 unchanged sentences

Interest expense (13,821) — (13,821)

Other income (expense) 132 (1) 133 95 (1) 96

Total other (expense) income (12,517) 74 (12,591) (12,467) 451 (12,918)

Other expense — (528) 528

Total other expense (13,800) (485) (13,315)

Loss before income taxes (21,264) (11,106) (10,158)

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

Net loss attributable to stockholders and Former Parent $ (30,687) $ (10,754) $ (19,933) $ (55,550) $ (24,975) $ (30,575)

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

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

Net loss attributable to stockholders/Former Parent $ (36,425) $ (11,106) $ (25,319)

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

Three Months Ended March 31, Change

(in thousands) 2023 2022

Net loss attributable to stockholders and Former Parent $ (30,687) $ (10,754) $ (19,933) $ (55,550) $ (24,975) $ (30,575)

Net loss attributable to stockholders/Former Parent $ (36,425) $ (11,106) $ (25,319)

Provision for income taxes 819 — 819

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Pro-rata share of Adjusted EBITDA from unconsolidated entities (1)

7 21 (14) 45 55 (10)

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

Interest costs on pension and OPEB liabilities — — — — — —

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

Interest and other costs on pension and OPEB liabilities — — —

Other non-recurring items — — —

Equity in losses (earnings) of unconsolidated entities (21) (43) 22

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________________________________________________________

(1) Includes the following items for the three months ended September 30, 2022 and 2021:

(i) net loss of $(18) and $(5) and (ii) interest expense of $25 and $26, respectively.

Includes the following items for the nine months ended September 30, 2022 and 2021:

(1) Includes the following items for the three months ended March 31, 2023 and 2022:

(i) net loss of $(24) and $(2) and (ii) interest expense of $21 and $20, respectively.

(2) Includes the following items for the three months ended September 30, 2022 and 2021:

(i) acquisition and transaction expenses of $117 and $— and (ii) depreciation and amortization expense of $252 and $—, respectively.

Includes the following items for the nine months ended September 30, 2022 and 2021:

(i) acquisition and transaction expenses of $117 and $— and (ii) depreciation and amortization expense of $367 and $—, respectively.

Total revenues increased $20.3 million and $30.4 million for the three and nine months ended September 30, 2022, respectively, primarily due to the acquisition of a majority stake and consolidation of FYX in May 2022.

Total expenses increased $18.1 million and $38.6 million during the three and nine months ended September 30, 2022, respectively, primarily due to the acquisition of a majority stake and consolidation of FYX in May 2022.

(2) Includes the following items for the three months ended March 31, 2023 and 2022:

depreciation and amortization expense of $260 and $—, respectively.

Total revenues increased $17.9 million for the three months ended March 31, 2023 primarily due to the acquisition of a majority stake and consolidation of FYX in May 2022.

Total expenses increased $14.7 million during the three months ended March 31, 2023 primarily due to the acquisition of a majority stake and consolidation of FYX in May 2022.

Other expense

Total other expense increased $12.6 million during the three months ended September 30, 2022 primarily due to increased interest expense of $12.7 million, which reflects an increase in the average outstanding debt of approximately $317.6 million from the 2027 Notes issued in July 2022.

Total other expense increased $12.9 million during the nine months ended September 30, 2022, primarily due to increased interest expense of $12.7 million, which reflects an increase in the average outstanding debt of approximately $105.9 million from the 2027 Notes issued in July 2022.

Total other expense increased $13.3 million during the three months ended March 31, 2023 primarily due to increased interest expense of $13.8 million, which reflects an increase in the average outstanding debt of approximately $475.5 million from the 2027 Notes issued in July 2022.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA increased $0.5 million and decreased $0.4 million during the three and nine months ended September 30, 2022, respectively, primarily due to the changes noted above.

Adjusted EBITDA increased $0.6 million during the three months ended March 31, 2023 primarily due to the changes noted above.

Liquidity and Capital Resources

We believe we have sufficient liquidity to satisfy our cash needs;

however, we continue to evaluate and take action, as necessary, to preserve adequate liquidity and ensure that our business can continue to operate during these uncertain times.

This includes limiting discretionary spending across the organization and re-prioritizing our capital projects amid the COVID-19 pandemic.

We believe we have sufficient liquidity to satisfy our cash needs, however, we continue to evaluate and take action, as necessary, to preserve adequate liquidity and ensure that our business can continue to operate during these uncertain times.

This includes limiting discretionary spending across the organization and re-prioritizing our capital projects.

Our principal uses of liquidity have been and continue to be (i) acquisitions of and investments in infrastructure assets, (ii) expenses associated with our operating activities and (iii) debt service obligations associated with our investments.

• Cash used for the purpose of making investments was $180.5 million and $779.4 million during the nine months ended September 30, 2022 and 2021, respectively.

• Cash used for the purpose of making investments was $66.9 million and $53.4 million during the three months ended March 31, 2023 and 2022, respectively.

• Uses of liquidity associated with our operating expenses are captured on a net basis in our cash flows from operating activities.

Uses of liquidity associated with our debt obligations are captured in our cash flows from financing activities.

Our principal sources of liquidity to fund these uses have been and continue to be (i) cash and restricted cash on hand as of September 30, 2022, (ii) revenues from our infrastructure business net of operating expenses, (iii) proceeds from borrowings and (iv) proceeds from asset sales.

• Cash flows used in operating activities were $37.7 million and $69.8 million during the nine months ended September 30, 2022 and 2021, respectively.

• During the nine months ended September 30, 2022, additional borrowings were obtained in connection with the (i) 2027 Notes of $473.8 million and (ii) EB-5 Loan Agreement of $9.5 million.

We did not make any principal repayments of debt during the nine months ended September 30, 2022.

During the nine months ended September 30, 2021, additional borrowings were obtained in connection with the EB-5 Loan Agreement of $26.1 million.

• Proceeds from the sale of assets were $5.7 million and $— during the nine months ended September 30, 2022 and 2021, respectively.

Our principal sources of liquidity to fund these uses have been and continue to be (i) cash and restricted cash on hand as of March 31, 2023, (ii) revenues from our infrastructure business net of operating expenses, (iii) proceeds from borrowings and (iv) proceeds from asset sales.

• Cash flows used in operating activities were $12.1 million and $14.1 million during the three months ended March 31, 2023 and 2022, respectively.

• During the three months ended March 31, 2023, additional borrowings were obtained in connection with the (i) Transtar revolver of $40.0 million and (ii) EB-5 Loan Agreement of $1.6 million.

We did not make any principal repayments of debt during the three months ended March 31, 2023.

During the three months ended March 31, 2022, additional borrowings were obtained in connection with the EB-5 Loan Agreement of $26.1 million.

• Proceeds from the sale of assets were $0.1 million and $2.1 during the three months ended March 31, 2023 and 2022, respectively.

We are currently evaluating several potential transactions and related financings, which could occur within the next 12 months.

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Historical Cash Flow

Comparison of the nine months ended September 30, 2022 and 2021

The following table compares the historical cash flow for the nine months ended September 30, 2022 and 2021:

Nine Months Ended September 30,

Comparison of the three months ended March 31, 2023 and 2022

The following table compares the historical cash flow for the three months ended March 31, 2023 and 2022:

Three Months Ended March 31,

(in thousands) 2023 2022

3 unchanged sentences

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

Net cash used in operating activities decreased $32.1 million, which primarily reflects (i) certain adjustments to reconcile net loss to cash used in operating activities including equity in losses of unconsolidated entities of $39.2 million and (ii) changes in working capital of $18.7 million, partially offset by (iii) an increase in our net loss of $50.4 million.

Net cash used in investing activities decreased $584.5 million, primarily due to a decrease of $623.6 million in acquisition of a business due to the acquisition of Transtar in the prior year.

Net cash provided by financing activities decreased $1.0 billion, primarily due to (i) a decrease in net contributions from Former Parent of $1.3 billion, (ii) an increase in the proceeds from the issuance of Preferred Stock of $274.6 million and (iii) an increase in proceeds from debt of $31.3 million.

Net cash used in operating activities decreased $2.0 million, which primarily reflects (i) certain adjustments to reconcile net loss to cash used in operating activities including equity in losses of unconsolidated entities of $(26.4) million and (ii) changes in working capital of $8.6 million, partially offset by (iii) a decrease in our net loss of $14.4 million.

Net cash used in investing activities increased $15.6 million, primarily due to (i) an investment of promissory notes and loans of $20.5 million, (ii) a decrease in the acquisition of property, plant and equipment of $11.9 million, and (iii) an increase of $4.4 million in acquisition of a business due to the acquisition of the remaining non-controlling interest in FYX during this period.

Net cash provided by financing activities decreased $5.7 million, primarily due to (i) a decrease in net contributions from Former Parent of $34.3 million, (ii) an increase in cash dividends paid of $3.1 million and (iii) an increase in proceeds from debt of $32.2 million.

Debt Obligations

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Our material cash requirements include the following contractual and other obligations:

Debt Obligations — As of September 30, 2022, we had outstanding principal and interest payment obligations of $1.2 billion and $0.6 billion, respectively, of which, $— and $89.6 million, respectively, are due in the next twelve months.

Debt Obligations — As of March 31, 2023, we had outstanding principal and interest payment obligations of $1.3 billion and $0.6 billion, respectively, of which, $— and $108.7 million, respectively, are due in the next twelve months.

See Note 7 to the consolidated and combined consolidated financial statements for additional information about our debt obligations.

Lease Obligations —As of September 30, 2022, we had outstanding operating and finance lease obligations of $171.5 million, of which $7.8 million is due in the next twelve months.

Lease Obligations —As of March 31, 2023, we had outstanding operating and finance lease obligations of $171.4 million, of which $8.5 million is due in the next twelve months.

Redeemable Preferred Stock Obligations —We are required to make a $1.8 million cash dividend payment on our redeemable preferred stock by December 31, 2023.

Other Obligations —As of September 30, 2022, in connection with a pipeline capacity agreement at Jefferson Terminal, we had an obligation to pay a minimum of $6.4 million in marketing fees in the next twelve months.

Other Obligations —As of March 31, 2023, in connection with a pipeline capacity agreement at Jefferson Terminal, we have an obligation to pay a minimum of $0.9 million in marketing fees in the next twelve months.

Other Cash Requirements —In addition to our contractual obligations, we intend to pay quarterly cash dividends on our common stock, which are subject to change at the discretion of our board of directors.

We expect to meet our future short-term liquidity requirements through cash on hand, unused borrowing capacity or future financings and net cash provided by our current operations.

We expect to meet our future short-term liquidity requirements through cash on hand or future financings and net cash provided

by our current operations.

We expect that our operating subsidiaries will generate sufficient cash flow to cover operating expenses and the payment of principal and interest on our indebtedness as they become due.

3 unchanged sentences

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.

As of December 31, 2022, 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, respectively.

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

An annual impairment review is conducted as of October 1 of each year.

An annual impairment review is conducted as of October 1st of each year.

Additionally, we review the carrying value of goodwill whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.

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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.

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

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 its fair value.

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.

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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If the forecasted cash flows or other key inputs are negatively revised in the future, the estimated fair value of the reporting unit could be adversely impacted, potentially leading to an impairment in the future that could materially affect our operating results.

The Jefferson Terminal reporting unit had an estimated fair value that exceeded its carrying value by more than 10% but less than 20%.

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 31, 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 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 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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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.

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 are expected to ramp back 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.

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 was no impairment of goodwill for the year ended December 31, 2022.

Recent Accounting Pronouncements

See Note 2 to our Consolidated and Combined Consolidated Financial Statements for recent accounting pronouncements.

The Company has reviewed recently issued accounting pronouncements and concluded that such pronouncements are either not applicable to the Company or no material impact is expected in the consolidated financial statements as a result of future adoption.

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 2. Management’s Discussion and Analysis