FTAI Infrastructure Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help you understand FTAI Infrastructure Inc. (the “Company,” “we,” “our” or “us”). Our MD&A should be read in conjunction with our unaudited consolidated and combined consolidated financial statements and the accompanying notes, and with Part II, Item 1A, “Risk Factors” included elsewhere in this Quarterly Report on Form 10-Q. Overview 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 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 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. 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. We expect to continue to invest in such market sectors, and pursue additional investment opportunities in other infrastructure businesses and assets we believe to be attractive and meet our investment objectives. Our team focuses on acquiring a diverse group of long-lived assets or operating businesses that provide mission-critical services or functions to infrastructure networks and typically have high barriers to entry, strong margins, stable cash flows and upside from earnings growth and asset appreciation driven by increased use and inflation. 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, 2023, we had total consolidated assets of $2.4 billion and redeemable preferred 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 on 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. Our reportable segments represent strategic business units comprised of investments in different types of infrastructure assets. We have five reportable segments which operate in infrastructure businesses across several market sectors, all in North America. Our reportable segments are (i) Railroad, (ii) Jefferson Terminal, (iii) Repauno, (iv) Power and Gas and (v) Sustainability and Energy Transition. The Railroad segment is comprised of five freight railroads and one switching company that provide rail service to certain manufacturing and production facilities, in addition to KRS, a railcar cleaning operation. The Jefferson Terminal segment consists of a multi-modal crude oil and refined products terminal and other related assets. 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 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 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. 45 Our Manager On May 22, 2023, Fortress and Mubadala announced that they have entered into definitive agreements pursuant to which, among other things, certain members of Fortress management and affiliates of Mubadala will acquire 100% of the equity of Fortress that is currently indirectly held by SoftBank. After the closing of the transaction, Fortress will continue to operate as an independent investment manager under the Fortress brand, with autonomy over investment processes and decision making, personnel and operations. Results of Operations Adjusted EBITDA (Non-GAAP) The chief operating decision maker (“CODM”) utilizes Adjusted EBITDA as the key performance measure. Adjusted EBITDA is not a financial measure in accordance with 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 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 . 46 Comparison of the three and nine months ended September 30, 2023 and 2022 The following table presents our results of operations: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2023 2022 2023 2022 Revenues Lease income $ 737 $ 758 $ (21) $ 2,199 $ 2,465 $ (266) Rail revenues 41,470 38,737 2,733 124,184 112,483 11,701 Terminal services revenues 20,354 16,964 3,390 60,370 43,975 16,395 Roadside services revenues 18,145 20,317 (2,172) 54,230 30,404 23,826 Other revenue — 1,783 (1,783) (1,951) 1,248 (3,199) Total revenues 80,706 78,559 2,147 239,032 190,575 48,457 Expenses Operating expenses 68,416 60,934 7,482 196,353 148,231 48,122 General and administrative 2,485 3,208 (723) 9,388 8,136 1,252 Acquisition and transaction expenses 649 2,754 (2,105) 1,554 15,862 (14,308) Management fees and incentive allocation to affiliate 3,238 2,659 579 9,304 9,885 (581) Depreciation and amortization 20,150 18,136 2,014 60,577 52,451 8,126 Asset impairment — — — 743 — 743 Total expenses 94,938 87,691 7,247 277,919 234,565 43,354 Other (expense) income Equity in losses of unconsolidated entities (9,914) (12,080) 2,166 (7,173) (47,982) 40,809 (Loss) gain on sale of assets, net (263) (134) (129) 260 (134) 394 Loss on extinguishment of debt (2,020) — (2,020) (2,020) — (2,020) Interest expense (25,999) (19,161) (6,838) (73,431) (32,106) (41,325) Other income (expense) 2,387 (1,132) 3,519 3,978 (2,144) 6,122 Total other expense (35,809) (32,507) (3,302) (78,386) (82,366) 3,980 Loss from before income taxes (50,041) (41,639) (8,402) (117,273) (126,356) 9,083 Provision for income taxes 8 1,555 (1,547) 2,560 5,086 (2,526) Net loss (50,049) (43,194) (6,855) (119,833) (131,442) 11,609 Less: Net loss attributable to non-controlling interest in consolidated subsidiaries (9,932) (8,381) (1,551) (30,101) (24,327) (5,774) Less: Dividends and accretion on redeemable preferred stock 15,984 9,263 6,721 45,811 9,263 36,548 Net loss attributable to stockholders/Former Parent $ (56,101) $ (44,076) $ (12,025) $ (135,543) $ (116,378) $ (19,165) 47 The following table sets forth a reconciliation of net loss attributable to stockholders or Former Parent to Adjusted EBITDA: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2023 2022 2023 2022 Net loss attributable to stockholders/Former Parent $ (56,101) $ (44,076) $ (12,025) $ (135,543) $ (116,378) $ (19,165) Add: Provision for income taxes 8 1,555 (1,547) 2,560 5,086 (2,526) Add: Equity-based compensation expense 4,277 1,377 2,900 5,814 3,042 2,772 Add: Acquisition and transaction expenses 649 2,754 (2,105) 1,554 15,862 (14,308) Add: Losses on the modification or extinguishment of debt and capital lease obligations 2,020 — 2,020 2,020 — 2,020 Add: Changes in fair value of non-hedge derivative instruments — (310) 310 1,125 (1,058) 2,183 Add: Asset impairment charges — — — 743 — 743 Add: Incentive allocations — — — — — — Add: Depreciation & amortization expense 20,150 18,136 2,014 60,577 52,451 8,126 Add: Interest expense 25,999 19,161 6,838 73,431 32,106 41,325 Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (1) 5,554 9,770 (4,216) 20,630 22,002 (1,372) Add: Dividends and accretion on redeemable preferred stock 15,984 9,263 6,721 45,811 9,263 36,548 Add: Interest and other costs on pension and OPEB liabilities 480 896 (416) 1,440 896 544 Add: Other non-recurring items (2) 1,131 — 1,131 2,470 — 2,470 Less: Equity in losses of unconsolidated entities 9,914 12,080 (2,166) 7,173 47,982 (40,809) Less: Non-controlling share of Adjusted EBITDA (3) (5,410) (4,502) (908) (15,577) (12,034) (3,543) Adjusted EBITDA (non-GAAP) $ 24,655 $ 26,104 $ (1,449) $ 74,228 $ 59,220 $ 15,008 ________________________________________________________ (1) Includes the following items for the three months ended September 30, 2023 and 2022: (i) net loss of $(9,941) and $(12,177), (ii) interest expense of $8,830 and $7,551, (iii) depreciation and amortization expense of $6,965 and $7,883, (iv) acquisition and transaction expenses of $50 and $(16), (v) changes in fair value of non-hedge derivative instruments of $(352) and $6,432, (vi) equity-based compensation of $2 and $95 and (vii) asset impairment of $— and $2, respectively. Includes the following items for the nine months ended September 30, 2023 and 2022: (i) net loss of $(7,283) and $(48,184), (ii) interest expense of $25,166 and $20,809, (iii) depreciation and amortization expense of $20,598 and $20,516, (iv) acquisition and transaction expenses of $307 and $375, (v) changes in fair value of non-hedge derivative instruments of $(18,162) and $28,164, (vi) equity-based compensation of $4 and $288 and (vii) asset impairment of $— and $34, respectively. (2) Includes the following items for the three months ended September 30, 2023: certain non-cash expenses related to cancellation of restricted shares of $1,131. Includes the following items for the nine months ended September 30, 2023: certain non-cash expenses related to cancellation of restricted shares and Railroad severance expense of $2,470. (3) Includes the following items for the three months ended September 30, 2023 and 2022: (i) equity-based compensation of $718 and $102, (ii) (benefit from) provision for income taxes of $(19) and $464, (iii) interest expense of $1,821 and $1,326, (iv) depreciation and amortization expense of $2,870 and $2,507, (v) changes in fair value of non-hedge derivative instruments of $— and $(15), (vi) acquisition and transaction expense of $19 and $117 and (vii) interest and other costs on pension and OPEB liabilities of $1 and $1, respectively. Includes the following items for the nine months ended September 30, 2023 and 2022: (i) equity-based compensation of $904 and $352, (ii) provision for income taxes of $69 and $494, (iii) interest expense of $5,558 and $4,029, (iv) depreciation and amortization expense of $8,950 and $7,091, (v) changes in fair value of non-hedge derivative instruments of $61 and $(50), (vi) other non-recurring items of $3 and $—, (vii) acquisition and transaction expense of $27 and $117, (viii) interest and other costs on pension and OPEB liabilities of $3 and $1 and (ix) asset impairment of $2 and $—, respectively. Revenue Comparison of the three months ended September 30, 2023 and 2022 Total revenues increased $2.1 million due to higher revenues of $2.7 million in the Railroad segment and $2.2 million in the Repauno segment, offset by lower revenues of $2.2 million in the Corporate and Other segment and $0.6 million in the Jefferson Terminal segment. Roadside services revenue decreased $2.2 million due to the decline of roadside services for FYX in 2023. Terminal services revenues increased $3.4 million primarily due to the commencement of a butane throughput contract at Repauno in April 2023. Rail revenues increased $2.7 million primarily due to an increase in both carloads and rates per car. 48 Comparison of the nine months ended September 30, 2023 and 2022 Total revenues increased $48.5 million due to higher revenues of $23.8 million in the Corporate and Other segment, $11.5 million in the Railroad segment, $8.1 million in the Jefferson Terminal segment and $5.0 million in the Repauno segment. Roadside services revenue increased $23.8 million due to the acquisition of a majority stake in and consolidation of FYX in May 2022. Terminal services revenues increased $16.4 million primarily due to higher throughput volumes at Jefferson Terminal and the commencement of a butane throughput contract at Repauno in April 2023. Rail revenues increased $11.7 million primarily due to (i) an increase in both carloads and rates per car and (ii) the implementation of a fuel surcharge that went into effect in March 2022. Expenses Comparison of the three months ended September 30, 2023 and 2022 Total expenses increased $7.2 million, primarily due to an increase in (i) operating expenses, (ii) depreciation and amortization and partially offset by a decrease in (iii) acquisition and transaction expenses. Operating expenses increased $7.5 million which primarily reflects: • an increase of $6.3 million in compensation and benefits primarily due to (i) an increase of $2.5 million in the Railroad segment primarily related to an increase in labor and other costs associated with higher carload activity, (ii) an increase of $2.6 million in the Jefferson segment primarily due to costs associated with stock-based compensation, higher labor and other costs associated with increased terminal throughput activity and (iii) an increase of $1.2 million in the Repauno segment due to costs associated with stock-based compensation and increased labor; • an increase of $3.6 million related to costs associated with Railroad operations due to increased traffic; partially offset by • a decrease of $2.5 million in cost of sales in the Corporate and Other segment due to fewer roadside service jobs at FYX. Depreciation and amortization increased $2.0 million primarily due to additional assets placed in service at Jefferson Terminal. General and administrative expense decreased $0.7 million primarily due to lower professional fees in the Corporate and Other segment. Acquisition and transaction expenses decreased $2.1 million primarily due to expenses incurred in 2022 related to the Spin-off. Comparison of the nine months ended September 30, 2023 and 2022 Total expenses increased $43.4 million, primarily due to an increase in (i) operating expenses, (ii) depreciation and amortization and (iii) general and administrative expense, partially offset by a decrease in (iv) acquisition and transaction expenses. Operating expenses increased $48.1 million which primarily reflects: • an increase of $17.0 million in cost of sales in the Corporate and Other segment due to the acquisition and consolidation of FYX in May 2022; • an increase of $20.0 million in compensation and benefits primarily due to (i) an increase of $11.2 million in the Railroad segment primarily related to (a) an increase in labor and other costs associated with higher carload activity and (b) severance costs at Transtar, (ii) an increase of $4.7 million in the Corporate and Other segment due to the acquisition and consolidation of FYX in May 2022 and (iii) an increase of $3.7 million in the Jefferson and Repauno segments due to costs associated with stock-based compensation; and • an increase of $5.2 million in repairs and maintenance expense due to increased activity at Transtar and Jefferson Terminal. Depreciation and amortization increased $8.1 million primarily due to (i) additional assets placed in service at Jefferson Terminal and (ii) the acquisition and consolidation of FYX in May 2022. Acquisition and transaction expenses decreased $14.3 million primarily due to expenses incurred in 2022 related to the Spin-off. Other expense Total other expense increased $3.3 million during the three months ended September 30, 2023 which primarily reflects: • an increase in interest expense of $6.8 million primarily due to an increase in the average outstanding debt of approximately $284.0 million which consists of (i) $255.7 million for the Senior Notes due 2027 and (ii) $28.3 million for the EB-5 Loan Agreement; and • an increase in loss on extinguishment of debt of $2.0 million due to repayment of amounts outstanding under the Transtar Revolver and Credit Agreement in full, partially offset by 49 • an increase of $2.2 million in equity in earnings of unconsolidated entities primarily due to unrealized gains on power swaps at Long Ridge; and • an increase of $3.5 million in Other income due to interest income from a loan agreement entered into at the end of 2022 between the Company and Long Ridge Energy and Power LLC. Total other expense decreased $4.0 million during the nine months ended September 30, 2023 which primarily reflects: • an increase of $40.8 million in equity in earnings of unconsolidated entities primarily due to unrealized gains on power swaps at Long Ridge; and • an increase of $6.1 million in Other income due to interest income from a loan agreement entered into at the end of 2022 between the Company and Long Ridge Energy and Power LLC, partially offset by • an increase in interest expense of $41.3 million primarily due to an increase in the average outstanding debt of approximately $471.4 million which consists of (i) $402.6 million for the Senior Notes due 2027, (ii) $33.3 million for the Transtar Revolver, (iii) $30.0 million for the EB-5 Loan Agreement and (iv) $5.5 million for the Credit Agreement; and • an increase in loss on extinguishment of debt of $2.0 million due to repayment of amounts outstanding under the Transtar Revolver and Credit Agreement in full. Net loss Net loss increased $6.9 million and decreased $11.6 million during the three and nine months ended September 30, 2023, respectively, primarily due to the changes noted above. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA decreased $1.4 million and increased $15.0 million during the three and nine months ended September 30, 2023, respectively, 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 (in thousands) 2023 2022 2023 2022 Revenues Lease income $ 394 $ 449 $ (55) $ 1,231 $ 1,490 $ (259) Rail revenues 41,470 38,737 2,733 124,184 112,397 11,787 Total revenues 41,864 39,186 2,678 125,415 113,887 11,528 Expenses Operating expenses 24,332 22,003 2,329 71,824 63,933 7,891 Acquisition and transaction expenses 186 224 (38) 553 579 (26) Depreciation and amortization 4,362 5,337 (975) 14,588 15,128 (540) Asset impairment — — — 743 — 743 Total expenses 28,880 27,564 1,316 87,708 79,640 8,068 Other expense Loss on sale of assets, net (264) (134) (130) (473) (134) (339) Loss on extinguishment of debt (937) — (937) (937) — (937) Interest expense (82) (64) (18) (2,252) (143) (2,109) Other expense (520) (311) (209) (1,616) (976) (640) Total other expense (1,803) (509) (1,294) (5,278) (1,253) (4,025) Income before income taxes 11,181 11,113 68 32,429 32,994 (565) Provision for (benefit from) income taxes 524 (942) 1,466 1,842 2,391 (549) Net income 10,657 12,055 (1,398) 30,587 30,603 (16) Less: Net income attributable to non-controlling interest in consolidated subsidiaries 37 6 31 83 6 77 Net income attributable to stockholders/Former Parent $ 10,620 $ 12,049 $ (1,429) $ 30,504 $ 30,597 $ (93) 50 The following table sets forth a reconciliation of net income attributable to stockholders or Former Parent to Adjusted EBITDA: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2023 2022 2023 2022 Net income attributable to stockholders/Former Parent $ 10,620 $ 12,049 $ (1,429) $ 30,504 $ 30,597 $ (93) Add: Provision for income taxes 524 (942) 1,466 1,842 2,391 (549) Add: Equity-based compensation expense 262 811 (549) 746 1,079 (333) Add: Acquisition and transaction expenses 186 224 (38) 553 579 (26) Add: Losses on the modification or extinguishment of debt and capital lease obligations 937 — 937 937 — 937 Add: Changes in fair value of non-hedge derivative instruments — — — — — — Add: Asset impairment charges — — — 743 — 743 Add: Incentive allocations — — — — — — Add: Depreciation and amortization expense 4,362 5,337 (975) 14,588 15,128 (540) Add: Interest expense 82 64 18 2,252 143 2,109 Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities — — — — — — Add: Dividends and accretion on redeemable preferred stock — — — — — — Add: Interest and other costs on pension and OPEB liabilities 480 896 (416) 1,440 896 544 Add: Other non-recurring items (1) — — — 1,339 — 1,339 Less: Equity in earnings of unconsolidated entities — — — — — — Less: Non-controlling share of Adjusted EBITDA (2) (19) (20) 1 (55) (20) (35) Adjusted EBITDA $ 17,434 $ 18,419 $ (985) $ 54,889 $ 50,793 $ 4,096 ________________________________________________________ (1) Includes the following items for the three and nine months ended September 30, 2023: Railroad severance expense of $— and $1,339, respectively. (2) Includes the following items for the three months ended September 30, 2023 and 2022: (i) equity-based compensation of $1 and $1, (ii) provision for income taxes of $3 and $2, (iii) depreciation and amortization expense of $13 and $16, (iv) interest and other costs on pension and OPEB liabilities of $1 and $1 and (v) acquisition and transaction expense of $1 and $—, respectively. Includes the following items for the nine months ended September 30, 2023 and 2022: (i) equity-based compensation of $2 and $1, (ii) provision for income taxes of $4 and $2, (iii) depreciation and amortization expense of $35 and $16, (iv) interest expense of $5 and $—, (v) other non-recurring items of $3 and $—, (vi) interest and other costs on pension and OPEB liabilities of $3 and $1, (vii) asset impairment of $2 and $— and (viii) acquisition and transaction expense of $1 and $—, respectively. Revenues Total revenues increased $2.7 million during the three months ended September 30, 2023 primarily due to both an increase in carloads and rates per car. Total revenues increased $11.5 million during the nine months ended September 30, 2023 due to both an increase in (i) carloads and rates per car and (ii) the implementation of a fuel surcharge that went into effect in early 2022. Expenses Total expenses increased $1.3 million during the three months ended September 30, 2023 which primarily reflects an increase in operating expense of $2.3 million due to (i) an increase in compensation, benefits and other costs associated with higher carload activity and is partially offset by (ii) a decrease in depreciation and amortization expense of $1.0 million due to a decrease in railcars. Total expenses increased $8.1 million during the nine months ended September 30, 2023 which primarily reflects an increase in operating expense of $7.9 million due to (i) an increase in compensation, benefits and other costs associated with higher carload activity and (ii) repairs and maintenance. 51 Other expense Total other expense increased $1.3 million and $4.0 million during the three and nine months ended September 30, 2023, respectively, which primarily reflects (i) an increase in interest expense related to the revolver entered into in the fourth quarter of 2022 and paid off in the third quarter of 2023 and (ii) an increase in loss on extinguishment of debt due to repayment of amounts outstanding under the Transtar Revolver in full. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA decreased $1.0 million and increased $4.1 million during the three and nine months ended September 30, 2023, respectively, 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 (in thousands) 2023 2022 2023 2022 Revenues Lease income $ 343 $ 309 $ 34 $ 968 $ 975 $ (7) Terminal services revenues 16,267 16,868 (601) 51,838 43,776 8,062 Total revenues 16,610 17,177 (567) 52,806 44,751 8,055 Expenses Operating expenses 17,548 14,194 3,354 49,963 41,578 8,385 Acquisition and transaction expenses 80 — 80 116 — 116 Depreciation and amortization 12,643 9,748 2,895 36,656 29,187 7,469 Total expenses 30,271 23,942 6,329 86,735 70,765 15,970 Other income (expense) Gain on sale of assets, net 1 — 1 733 — 733 Interest expense (8,280) (5,983) (2,297) (24,142) (18,220) (5,922) Other income (expense) 109 (1,401) 1,510 (1,303) (2,791) 1,488 Total other expense (8,170) (7,384) (786) (24,712) (21,011) (3,701) Loss before income taxes (21,831) (14,149) (7,682) (58,641) (47,025) (11,616) (Benefit from) provision for income taxes (126) 2,114 (2,240) 224 2,251 (2,027) Net loss (21,705) (16,263) (5,442) (58,865) (49,276) (9,589) Less: Net loss attributable to non-controlling interest in consolidated subsidiaries (9,688) (8,002) (1,686) (28,921) (23,273) (5,648) Net loss attributable to stockholders/Former Parent $ (12,017) $ (8,261) $ (3,756) $ (29,944) $ (26,003) $ (3,941) 52 The following table sets forth a reconciliation of net loss attributable to stockholders or Former Parent to Adjusted EBITDA: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2023 2022 2023 2022 Net loss attributable to stockholders/Former Parent $ (12,017) $ (8,261) $ (3,756) $ (29,944) $ (26,003) (3,941) Add: (Benefits from) provision for income taxes (126) 2,114 (2,240) 224 2,251 (2,027) Add: Equity-based compensation expense 2,932 430 2,502 3,679 1,506 2,173 Add: Acquisition and transaction expenses 80 — 80 116 — 116 Add: Losses on the modification or extinguishment of debt and capital lease obligations — — — — — — Add: Changes in fair value of non-hedge derivative instruments — — — — — — Add: Asset impairment charges — — — — — — Add: Incentive allocations — — — — — — Add: Depreciation and amortization expense 12,643 9,748 2,895 36,656 29,187 7,469 Add: Interest expense 8,280 5,983 2,297 24,142 18,220 5,922 Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities — — — — — — Add: Dividends and accretion on redeemable preferred stock — — — — — — Add: Interest and other costs on pension and OPEB liabilities — — — — — — Add: Other non-recurring items (1) 1,131 — 1,131 1,131 — 1,131 Less: Equity in earnings of unconsolidated entities — — — — — — Less: Non-controlling share of Adjusted EBITDA (2) (5,160) (3,991) (1,169) (14,641) (11,174) (3,467) Adjusted EBITDA (non-GAAP) $ 7,763 $ 6,023 $ 1,740 $ 21,363 $ 13,987 $ 7,376 ________________________________________________________ (1) Includes the following items for the three and nine months ended September 30, 2023: certain non-cash expenses related to cancellation of restricted shares of $1,131 and $1,131, respectively. (2) Includ es the following items for the three months ended September 30, 2023 and 2022: (i) equity-based compensation of $658 and $94, (ii) provision for income taxes of $(30) and $462, (iii) interest expense of $1,786 and $1,306, (iv) depreciation and amortization expense of $2,728 and $2,129 and (v) acquisition and transaction expense of $18 and $—, respectively. Includes the following items for the nine months ended September 30, 2023 and 2022: (i) equity-based compensation of $831 and $329, (ii) provision for income taxes of $51 and $492, (iii) interest expense of $5,453 and $3,979, (iv) depreciation and amortization expense of $8,280 and $6,374 and (v) acquisition and transaction expense of $26 and $—, respectively. Revenues Total revenues decreased $0.6 million during the three months ended September 30, 2023 due to a decrease in average crude oil throughput volumes. Total revenues increased $8.1 million during the nine months ended September 30, 2023 primarily due to an increase in average refined products throughput volumes. Expenses Total expenses increased $6.3 million during the three months ended September 30, 2023 which primarily reflects: • an increase in operating expenses of $3.4 million primarily due to costs associated with stock-based compensation, higher labor and other costs associated with increased terminal throughput activity; and • an increase in depreciation and amortization of $2.9 million due to additional assets being placed into service. Total expenses increase d $16.0 million during the nine months ended September 30, 2023, which primarily reflects: • an increase in operating expenses of $8.4 million p rimarily due to costs associated with stock-based compensation, higher labor and other costs associated with increased terminal throughput activity; a nd • an increase in depreciation and amortization o f $7.5 million due to additional assets being placed into service. 53 Other expense Other expense increased $0.8 million during the three months ended September 30, 2023, which primarily reflects (i) an increase in interest expense of $2.3 million due to additional borrowings for the EB-5 Loan Agreement, partially offset by (ii) a benefit of $1.5 million from the decrease in prior period losses related to the termination of a pipeline contract. Other expense increased $3.7 million during the nine months ended September 30, 2023, which primarily reflects (i) an increase in interest expense of $5.9 million due to additional borrowings for the EB-5 Loan Agreement, partially offset by (ii) a benefit of $1.5 million from the decrease in prior period losses related to the termination of a pipeline contract and (iii) a gain from the sale of land of $0.7 million. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased $1.7 million and $7.4 million during the three and nine months ended September 30, 2023, respectively, 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 (in thousands) 2023 2022 2023 2022 Revenues Rail revenues $ — $ — $ — $ — $ 86 $ (86) Terminal services revenues 4,087 96 3,991 8,532 199 8,333 Other revenue — 1,783 (1,783) (1,951) 1,248 (3,199) Total revenues 4,087 1,879 2,208 6,581 1,533 5,048 Expenses Operating expenses 6,179 4,266 1,913 16,884 12,264 4,620 Depreciation and amortization 2,390 2,310 80 6,916 7,055 (139) Total expenses 8,569 6,576 1,993 23,800 19,319 4,481 Other expense Interest expense (642) (432) (210) (1,845) (1,060) (785) Total other expense (642) (432) (210) (1,845) (1,060) (785) Loss before income taxes (5,124) (5,129) 5 (19,064) (18,846) (218) Provision for income taxes 103 — 103 257 — 257 Net loss (5,227) (5,129) (98) (19,321) (18,846) (475) Less: Net loss attributable to non-controlling interest in consolidated subsidiaries (281) (212) (69) (1,034) (862) (172) Net loss attributable to stockholders/Former Parent $ (4,946) $ (4,917) $ (29) $ (18,287) $ (17,984) $ (303) 54 The following table sets forth a reconciliation of net loss attributable to stockholders or Former Parent to Adjusted EBITDA: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2023 2022 2023 2022 Net loss attributable to stockholders/Former Parent $ (4,946) $ (4,917) $ (29) $ (18,287) $ (17,984) $ (303) Add: Provision for income taxes 103 — 103 257 — 257 Add: Equity-based compensation expense 1,083 136 947 1,309 457 852 Add: Acquisition and transaction expenses — — — — — — Add: Losses on the modification or extinguishment of debt and capital lease obligations — — — — — — Add: Changes in fair value of non-hedge derivative instruments — (310) 310 1,125 (1,058) 2,183 Add: Asset impairment charges — — — — — — Add: Incentive allocations — — — — — — Add: Depreciation and amortization expense 2,390 2,310 80 6,916 7,055 (139) Add: Interest expense 642 432 210 1,845 1,060 785 Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities — — — — — — Add: Dividends and accretion on redeemable preferred stock — — — — — — Add: Interest and other costs on pension and OPEB liabilities — — — — — — Add: Other non-recurring items — — — — — — Less: Equity in earnings of unconsolidated entities — — — — — — Less: Non-controlling share of Adjusted EBITDA (1) (231) (122) (109) (621) (356) (265) Adjusted EBITDA (non-GAAP) $ (959) $ (2,471) $ 1,512 $ (7,456) $ (10,826) $ 3,370 ________________________________________________________ (1) Includes the following items for the three months ended September 30, 2023 and 2022: (i) equity-based compensation of $59 and $7, (ii) interest expense of $35 and $20, (iii) depreciation and amortization expense of $129 and $110, (iv) provision for income taxes of $8 and $—, and (v) changes in fair value of non-hedge derivative instruments of $— and $(15), respectively. Includes the following items for the nine months ended September 30, 2023 and 2022: (i) equity-based compensation of $71 and $22, (ii) interest expense of $100 and $50, (iii) depreciation and amortization expense of $375 and $334, (iv) provision for income taxes of $14 and $—, and (v) changes in fair value of non-hedge derivative instruments of $61 and $(50), respectively. Revenues Total revenue increased $2.2 million and $5.0 million during the three and nine months ended September 30, 2023, respectively, primarily due to (i) the commencement of a butane throughput contract at Repauno in April 2023, partially offset by (ii) losses on the sale of butane inventory as the terminal prepared for the new throughput contract. Expenses Total expenses increased $2.0 million and $4.5 million during the three and nine months ended September 30, 2023, respectively, which primarily reflects higher operating expenses due to costs associated with stock-based compensation, and an increase in labor costs and professional fees related to the continued development of the site. Other expense Total other expense increased $0.2 million and $0.8 million during the three and nine months ended September 30, 2023, respectively, which reflects an increase in interest expense due to an increase in the borrowing rate on the revolver. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased $1.5 million and $3.4 million during the three and nine months ended September 30, 2023, respectively, primarily due to the changes noted above. 55 Power and Gas Segment The following table presents our results of operations: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2023 2022 2023 2022 Revenues Other revenue $ — $ — $ — $ — $ — $ — Total revenues — — — — — — Expenses Operating expenses 1,393 298 1,095 1,990 466 1,524 Acquisition and transaction expenses — 358 (358) 71 358 (287) Total expenses 1,393 656 737 2,061 824 1,237 Other (expense) income Equity in (losses) earnings of unconsolidated entities (7,057) (9,222) 2,165 2,343 (43,574) 45,917 Interest expense — — — (3) — (3) Other income (expense) 2,149 (25) 2,174 5,021 (25) 5,046 Total other (expense) income (4,908) (9,247) 4,339 7,361 (43,599) 50,960 (Loss) profit before income taxes (6,301) (9,903) 3,602 5,300 (44,423) 49,723 Provision for income taxes — — — — — — Net (loss) income (6,301) (9,903) 3,602 5,300 (44,423) 49,723 Less: Net loss attributable to non-controlling interest in consolidated subsidiaries — — — — — — Net (loss) income attributable to stockholders/Former Parent $ (6,301) $ (9,903) $ 3,602 $ 5,300 $ (44,423) $ 49,723 56 The following table sets forth a reconciliation of net income (loss) attributable to stockholders or Former Parent to Adjusted EBITDA: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2023 2022 2023 2022 Net (loss) income attributable to stockholders/Former Parent $ (6,301) $ (9,903) $ 3,602 $ 5,300 $ (44,423) $ 49,723 Add: Provision for income taxes — — — — — — Add: Equity-based compensation expense — — — — — — Add: Acquisition and transaction expenses — 358 (358) 71 358 (287) Add: Losses on the modification or extinguishment of debt and capital lease obligations — — — — — — Add: Changes in fair value of non-hedge derivative instruments — — — — — — Add: Asset impairment charges — — — — — — Add: Incentive allocations — — — — — — Add: Depreciation and amortization expense — — — — — — Add: Interest expense — — — 3 — 3 Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (1) 7,214 11,576 (4,362) 26,656 25,143 1,513 Add: Dividends and accretion on redeemable preferred stock — — — — — — Add: Interest and other costs on pension and OPEB liabilities — — — — — — Add: Other non-recurring items — — — — — — Less: Equity in losses (earnings) of unconsolidated entities 7,057 9,222 (2,165) (2,343) 43,574 (45,917) Less: Non-controlling share of Adjusted EBITDA — — — — — — Adjusted EBITDA (non-GAAP) $ 7,970 $ 11,253 $ (3,283) $ 29,687 $ 24,652 $ 5,035 ________________________________________________________ (1) Includes the following items for the three months ended September 30, 2023 and 2022: (i) net loss of $(7,057) and $(9,222), (ii) interest expense of $7,932 and $6,720, (iii) depreciation and amortization expense of $6,639 and $7,565, (iv) acquisition and transaction expenses of $50 and $(16), (v) changes in fair value of non-hedge derivative instruments of $(352) and $6,432, (vi) equity-based compensation of $2 and $95 and (vii) asset impairment of $— and $2, respectively. Includes the following items for the nine months ended September 30, 2023 and 2022: (i) net income (loss) of $2,343 and $(43,574), (ii) interest expense of $22,544 and $19,767, (iii) depreciation and amortization expense of $19,620 and $20,089, (iv) acquisition and transaction expenses of $307 and $375, (v) changes in fair value of non-hedge derivative instruments of $(18,162) and $28,164, (vi) equity-based compensation of $4 and $288, and (vii) asset impairment of $— and $34, respectively. Expenses Total expenses increased $0.7 million and $1.2 million during the three and nine months ended September 30, 2023, respectively, which primarily relates to an increase in operating administrative costs. Other income (expense) Total other income (expense) increased $4.3 million during the three months ended September 30, 2023 which reflects: • an increase in equity in earnings of unconsolidated entities of $2.2 million, primarily due to unrealized gains on power swaps at Long Ridge and lower costs to generate power; and • an increase in other income of $2.2 million due to interest income from a loan agreement entered into at the end of 2022 between the Company and Long Ridge Energy and Power LLC. Total other income (expense) increased $51.0 million during the nine months ended September 30, 2023 which reflects: • an increase in equity in earnings of unconsolidated entities of $45.9 million, primarily due to unrealized gains on power swaps at Long Ridge as power prices decreased; and • an increase in other income of $5.0 million due to interest income from a loan agreement entered into at the end of 2022 between the Company and Long Ridge Energy and Power LLC. 57 Adjusted EBITDA (Non-GAAP) Adjusted EBITDA decreased $3.3 million and increased $5.0 million during the three and nine months ended September 30, 2023, respectively, due to a decrease and increase in the pro-rata share of adjusted EBITDA from unconsolidated entities of $4.4 million and $1.5 million, respectively, 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 (in thousands) 2023 2022 2023 2022 Revenues Other revenue $ — $ — $ — $ — $ — $ — Total revenues — — — — — — Expenses Operating expenses — — — 29 10 19 Acquisition and transaction expenses — — — 1 29 (28) Total expenses — — — 30 39 (9) Other (expense) income Equity in losses of unconsolidated entities (2,867) (2,891) 24 (9,560) (4,529) (5,031) Other income 649 473 176 1,876 1,553 323 Total other expense (2,218) (2,418) 200 (7,684) (2,976) (4,708) Loss before income taxes (2,218) (2,418) 200 (7,714) (3,015) (4,699) Benefit from income taxes — (61) 61 — — — Net loss (2,218) (2,357) 139 (7,714) (3,015) (4,699) Less: Net loss attributable to non-controlling interest in consolidated subsidiaries — — — — — — Net loss attributable to stockholders/Former Parent $ (2,218) $ (2,357) $ 139 $ (7,714) $ (3,015) $ (4,699) 58 The following table sets forth a reconciliation of net loss attributable to stockholders or Former Parent to Adjusted EBITDA: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2023 2022 2023 2022 Net loss attributable to stockholders/Former Parent $ (2,218) $ (2,357) $ 139 $ (7,714) $ (3,015) $ (4,699) Add: Provision for income taxes — (61) 61 — — — Add: Equity-based compensation expense — — — — — — Add: Acquisition and transaction expenses — — — 1 29 (28) Add: Losses on the modification or extinguishment of debt and capital lease obligations — — — — — — Add: Changes in fair value of non-hedge derivative instruments — — — — — — Add: Asset impairment charges — — — — — — Add: Incentive Allocations — — — — — — Add: Depreciation and amortization expense — — — — — — Add: Interest expense — — — — — — Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (1) (1,654) (1,813) 159 (6,010) (3,186) (2,824) Add: Dividends and accretion on redeemable preferred stock — — — — — — Add: Interest and other costs on pension and OPEB liabilities — — — — — — Add: Other non-recurring items — — — — — — Less: Equity in losses of unconsolidated entities 2,867 2,891 (24) 9,560 4,529 5,031 Less: Non-controlling share of Adjusted EBITDA — — — — — — Adjusted EBITDA (non-GAAP) $ (1,005) $ (1,340) $ 335 $ (4,163) $ (1,643) $ (2,520) ________________________________________________________ (1) Includes the following items for the three months ended September 30, 2023 and 2022: (i) net loss of $(2,868) and $(2,937), (ii) interest expense of $888 and $806 and (iii) depreciation and amortization expense of $326 and $318, respectively. Includes the following items for the nine months ended September 30, 2023 and 2022: (i) net loss of $(9,567) and $(4,584), (ii) interest expense of $2,579 and $971 and (iii) depreciation and amortization expense of $978 and $427, respectively. Other expense Total other expense decreased $0.2 million during the three months ended September 30, 2023, which reflects changes in equity in losses of unconsolidated entities primarily due to lower operating losses at GM-FTAI Holdco LLC. Total other expense increased $4.7 million during the nine months ended September 30, 2023, which reflects changes in equity in losses of unconsolidated entities primarily due to operating losses at GM-FTAI Holdco LLC. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased $0.3 million and decreased $2.5 million during the three and nine months ended September 30, 2023, respectively, primarily due to the changes noted above. 59 Corporate and Other The following table presents our results of operations: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2023 2022 2023 2022 Revenues Roadside services revenues $ 18,145 $ 20,317 $ (2,172) $ 54,230 $ 30,404 $ 23,826 Total revenues 18,145 20,317 (2,172) 54,230 30,404 23,826 Expenses Operating expenses 18,964 20,173 (1,209) 55,663 29,980 25,683 General and administrative 2,485 3,208 (723) 9,388 8,136 1,252 Acquisition and transaction expenses 383 2,172 (1,789) 813 14,896 (14,083) Management fees and incentive allocation to affiliate 3,238 2,659 579 9,304 9,885 (581) Depreciation and amortization 755 741 14 2,417 1,081 1,336 Total expenses 25,825 28,953 (3,128) 77,585 63,978 13,607 Other income (expense) Equity in earnings of unconsolidated entities 10 33 (23) 44 121 (77) Loss on extinguishment of debt (1,083) — (1,083) (1,083) — (1,083) Interest expense (16,995) (12,682) (4,313) (45,189) (12,683) (32,506) Other income — 132 (132) — 95 (95) Total other expense (18,068) (12,517) (5,551) (46,228) (12,467) (33,761) Loss before income taxes (25,748) (21,153) (4,595) (69,583) (46,041) (23,542) (Benefit from) provision for income taxes (493) 444 (937) 237 444 (207) Net loss (25,255) (21,597) (3,658) (69,820) (46,485) (23,335) Less: Net income (loss) attributable to non-controlling interest in consolidated subsidiaries — (173) 173 (229) (198) (31) Less: Dividends and accretion on redeemable preferred stock 15,984 9,263 6,721 45,811 9,263 36,548 Net loss attributable to stockholders/Former Parent $ (41,239) $ (30,687) $ (10,552) $ (115,402) $ (55,550) $ (59,852) 60 The following table sets forth a reconciliation of net loss attributable to stockholders or Former Parent to Adjusted EBITDA: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2023 2022 2023 2022 Net loss attributable to stockholders/Former Parent $ (41,239) $ (30,687) $ (10,552) $ (115,402) $ (55,550) $ (59,852) Add: Provision for income taxes (493) 444 (937) 237 444 (207) Add: Equity-based compensation expense — — — 80 — 80 Add: Acquisition and transaction expenses 383 2,172 (1,789) 813 14,896 (14,083) Add: Losses on the modification or extinguishment of debt and capital lease obligations 1,083 — 1,083 1,083 — 1,083 Add: Changes in fair value of non-hedge derivative instruments — — — — — — Add: Asset impairment charges — — — — — — Add: Incentive allocations — — — — — — Add: Depreciation and amortization expense 755 741 14 2,417 1,081 1,336 Add: Interest expense 16,995 12,682 4,313 45,189 12,683 32,506 Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (1) (6) 7 (13) (16) 45 (61) Add: Dividends and accretion on redeemable preferred stock 15,984 9,263 6,721 45,811 9,263 36,548 Add: Interest and other costs on pension and OPEB liabilities — — — — — — Add: Other non-recurring items — — — — — — Less: Equity in earnings of unconsolidated entities (10) (33) 23 (44) (121) 77 Less: Non-controlling share of Adjusted EBITDA (2) — (369) 369 (260) (484) 224 Adjusted EBITDA (non-GAAP) (6,548) (5,780) (768) (20,092) (17,743) (2,349) ________________________________________________________ (1) Includes the following items for the three months ended September 30, 2023 and 2022: (i) net loss of $(16) and $(18) and (ii) interest expense of $10 and $25, respectively. Includes the following items for the nine months ended September 30, 2023 and 2022: (i) net loss of $(59) and $(26) and (ii) interest expense of $43 and $71, respectively. (2) Includes the following items for the three months ended September 30, 2023 and 2022: (i) depreciation and amortization expense of $— and $252 and (ii) acquisition and transaction expense of $— and $117, respectively. Includes the following items for the nine months ended September 30, 2023 and 2022: (i) depreciation and amortization expense of $260 and $367 and (ii) acquisition and transaction expense of $— and $117, respectively. Revenues Total revenues decreased $2.2 million during the three months ended September 30, 2023 compared to the three months ended September 30, 2022, primarily due to a decrease in roadside services at FYX in the period. Total revenues during the nine months ended September 30, 2023 increased $23.8 million , primarily due to new business acquired at FYX, in addition to FYX price increases during the period. Expenses Total expenses decreased $3.1 million during the three months ended September 30, 2023 which primarily reflects: • a decrease in operating expenses of $1.2 million due to a decrease in roadside services at FYX in 2023; • a decrease in general and administrative expense of $0.7 million primarily due to lower professional fees; and • a decrease in acquisition and transaction expenses of $1.8 million primarily due to expenses incurred in 2022 related to the Spin-off. Total expenses increased $13.6 million during the nine months ended September 30, 2023 which primarily reflects: • an increase in operating expenses of $25.7 million due to the acquisition and consolidation of FYX in May 2022; • an increase in general and administrative expense of $1.3 million primarily due to higher professional fees; and • a decrease in acquisition and transaction expenses of $14.1 million primarily due to expenses incurred in 2022 related to the Spin-off. 61 Other expense Total other expense increased $5.6 million and $33.8 million during the three and nine months ended September 30, 2023, respectively, which primarily reflects (i) an increase in interest expense due to the additional issuance of the Senior Notes due 2027 in July 2023 and (ii) an increase in loss on extinguishment of debt due to repayment of amounts outstanding under the Credit Agreement in full. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA decreased $0.8 million and $2.3 million during the three and nine months ended September 30, 2023, respectively, 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. 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 $89.2 million and $180.5 million during the nine months ended September 30, 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, 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 $2.2 million and $37.7 million during the nine months ended September 30, 2023 and 2022, respectively. • During the nine months ended September 30, 2023, additional borrowings were obtained in connection with the (i) Transtar Revolver of $40.0 million, (ii) Credit Agreement of $25.0 million, (iii) EB-5 Loan Agreement of $1.6 million, and (iv) 2027 Notes of $100.0 million. In July 2023, we used a portion of the net proceeds from the $100.0 million offering to repay the amounts outstanding under the Transtar Revolver and Credit Agreement in full during the nine months ended September 30, 2023. During the nine months ended September 30, 2022, additional borrowings were obtained in connection with the (i) 2027 Notes of $500.0 million and (ii) EB-5 Loan Agreement of $9.5 million. • Proceeds from the sale of assets were $1.3 million and $5.7 million during the nine months ended September 30, 2023 and 2022, respectively. We are currently evaluating several potential transactions and related financings, including, but not limited to, providing for increased debt capacity at certain of our subsidiaries, which could occur within the next 12 months. None of these transactions, negotiations or financings are definitive or included within our planned liquidity needs. We cannot assure if or when any such transaction will be consummated or the terms of any such transaction. Historical Cash Flow Comparison of the nine months ended September 30, 2023 and 2022 The following table compares the historical cash flow for the nine months ended September 30, 2023 and 2022: Nine Months Ended September 30, (in thousands) 2023 2022 Cash Flow Data: Net cash used in operating activities $ (2,214) $ (37,691) Net cash used in investing activities (139,010) (194,870) Net cash provided by financing activities 69,506 127,337 Net cash used in operating activities decreased $35.5 million, which primarily refle cts certain adjustments to reconcile net loss to cash used in operating activities including (i) a decrease in our net loss of $11.6 million, (ii) changes in working capital of $46.2 million, (iii) changes in depreciation and amortization of $8.1 million, (iv) changes in equity-based compensation of $2.8 million, (v) a loss on extinguishment of debt of $2.0 million, and (vi) changes in fair value of non-hedge derivatives of $2.2 million, partially offset by (vii) equity in losses of unconsolidated entities of $40.8 million. 62 Net cash used in investing activities decreased $55.9 million, primarily due to (i) a decrease in the acquisition of property, plant and equipment of $93.5 million, partially offset by (ii) an investment of convertible promissory notes and loans of $31.0 million and (iii) a decrease in the proceeds from sale of property, plant and equipment of $4.5 million. Net cash provided by financing activities decreased $57.8 million, primarily due to (i) a decrease in proceeds from debt of $320.3 million, (ii) cash dividends paid of $9.3 million, (iii) a decrease in proceeds from issuance of redeemable preferred stock of $291.0 million and (iv) repayment of debt proceeds of $75.1 million, partially offset by (v) a decrease in net contributions from Former Parent of $617.3 million, (vi) a decrease in redeemable preferred stock issuance costs of $16.4 million, and (vii) a decrease in payment of deferred financing costs of $6.3 million. Debt Obligations Refer to Note 7 of the consolidated and combined consolidated financial statements for additional information. Contractual Obligations Our material cash requirements include the following contractual and other obligations: Debt Obligations — As of September 30, 2023, we had outstanding principal and interest payment obligations of $1.4 billion and $0.5 billion, respectively, of which, $— million and $87.8 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, 2023, we had outstanding operating and finance lease obligations of $168.4 million, of which $8.5 million is due in the next twelve months. Redeemable Preferred Stock Obligations —We are required to m ake a $1.8 million cas h dividend payment on our redeemable preferred stock 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. On July 5, 2023, we issued an additional $100.0 million aggregate principal amount of 10.500% senior secured notes due 2027, at an issue price equal to 95.50% of principal, plus accrued interest from and including June 1, 2023. These notes have identical terms as the original notes, other than with respect to the date of issuance and the issue price, and bear interest at a rate of 10.500% per annum, payable semi-annually in arrears on June 1 and December 1 of each year. We used a portion of the net proceeds from the offering to repay in full the amount outstanding under the Transtar Revolver and Credit Agreement and the commitments thereunder were terminated in connection with the closing of the offering. We intend to use the remainder of net proceeds for general corporate purposes. 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. We may elect to meet certain long-term liquidity requirements or to continue to pursue strategic opportunities through utilizing cash on hand, cash generated from our current operations and the issuance of securities in the future. Management believes adequate capital and borrowings are available from various sources to fund our commitments to the extent required. Critical Accounting Estimates and Policies 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. As of September 30, 2023, the carrying amount of goodwill within the Jefferson Terminal, Railroad and Corporate and Other segments was $122.7 million, $147.2 million, and $5.4 million, 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 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. The determination of fair value involves significant management judgment. For an annual goodwill impairment assessment, an optional qualitative analysis may be performed. 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 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. 63 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. In connection with our impairment analysis, although we believe the estimates of fair value are reasonable, the determination of certain valuation inputs is subject to management's judgment. Changes in these inputs, including as a result of events beyond our control, could materially affect the results of the impairment review. 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% 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 which 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%. If our strategy changes from planned capacity downward due to an inability to source contracts or expand volumes, the fair value of the reporting unit would be negatively affected, which could lead to an impairment. The expansion of refineries in the Beaumont/Port Arthur area, as well as growing crude oil production in the U.S. and Canada, are expected to result in increased demand for storage on the U.S. Gulf Coast. 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 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 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.