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Item 7. Management’s Discussion and Analysis

2024-03-27 compared with 2023-03-09 · 203 added, 169 removed, 489 unchanged (43% of the section changed)

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Our MD&A should be read in conjunction with our consolidated and combined consolidated financial statements and the accompanying notes, and with Part I, Item 1A, “Risk Factors” and “Forward-Looking Statements” included elsewhere in this Annual Report on Form 10-K.

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 Fortress Transportation and Infrastructure Investors LLC (“Former Parent”).

Former Parent became a subsidiary of FTAI Aviation Ltd., a Cayman Islands exempted company and the surviving parent company (“FTAI Aviation”), upon completion of the transactions contemplated in that certain Agreement and Plan of Merger (the “Merger”) on November 10, 2022, between Former Parent and FTAI Aviation and certain other parties thereto.

Except as otherwise specified, prior to the Merger, “FTAI” refers to Former Parent and, following the Merger, “FTAI” refers to FTAI Aviation, in each case including their consolidated subsidiaries.

In connection with the spin-off, as described below, 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”).

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

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

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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 December 31, 2022, we had total consolidated assets of $2.5 billion and total redeemable preferred stock and equity of $789.4 million.

Spin-Off of FTAI Infrastructure

On August 1, 2022, 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.

FTAI Infrastructure Inc.

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

federal income tax purposes and holds FTAI’s (i) Transtar business, (ii) Jefferson Terminal business, (iii) Repauno business, (iv) Long Ridge investment, (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 Inc.

retained all related project-level debt of those entities.

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

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 “2027 Notes”), the net proceeds of which were remitted to FTAI in connection with the spin-off.

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 is 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 are paid pursuant to the Management Agreement rather than by one of FTAI Infrastructure Inc.’s subsidiaries.

As of December 31, 2023, we had total consolidated assets of $2.4 billion and redeemable preferred stock and equity of $0.7 billion.

Operating Segments

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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 of redeemable preferred stock.

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

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

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

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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 Railroad segment is comprised of six 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, Jefferson Terminal South 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.

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

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

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

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

generally accepted accounting principles (“U.S.

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 of 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.

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 of 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.

The following table presents our consolidated and combined consolidated results of operations:

Year Ended December 31, Change

(in thousands) 2022 2021 2020 '22 vs ‘21 '21 vs '20

(in thousands) 2023 2022 2021 '23 vs ‘22

Lease income $ 3,089 $ 3,221 $ 2,424 $ (132) $ 797

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Terminal services revenues 83,350 59,574 45,038 23,776 14,536

Crude marketing revenues — — 8,210 — (8,210)

Roadside services revenue 47,899 — — 47,899 —

Roadside services revenues 68,190 47,899 — 20,291 47,899

Other revenue (1,950) 3,468 11,243 (5,418) (7,775)

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Depreciation and amortization 80,992 70,749 54,016 10,243 16,733

Asset impairment 743 — — 743 —

Total expenses 364,847 319,605 191,758 45,242 127,847

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Equity in losses of unconsolidated entities (24,707) (67,399) (13,499) 42,692 (53,900)

(Loss) gain on sale of assets, net (1,603) 16 (8) (1,619) 24

Gain (loss) on sale of assets, net 6,855 (1,603) 16 8,458 (1,619)

Loss on extinguishment of debt (2,036) — — (2,036) —

Interest expense (99,603) (53,239) (16,019) (46,364) (37,220)

Other (expense) income (3,169) (8,930) 92 5,761 (9,022)

Other income (expense) 6,586 (3,169) (8,930) 9,755 5,761

Total other expense (112,905) (125,410) (38,432) 12,505 (86,978)

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Dividends and accretion of redeemable preferred stock 62,400 23,657 — 38,743 23,657

Net loss attributable to stockholders and Former Parent $ (177,241) $ (79,869) $ (55,201) $ (97,372) $ (24,668)

Net loss attributable to stockholders/Former Parent $ (183,736) $ (177,241) $ (79,869) $ (6,495) $ (97,372)

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

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(in thousands) 2023 2022 2021 '23 vs ‘22 '22 vs '21

Net loss attributable to stockholders and Former Parent $ (177,241) $ (79,869) $ (55,201) $ (97,372) $ (24,668)

Net loss attributable to stockholders/Former Parent $ (183,736) $ (177,241) $ (79,869) $ (6,495) $ (97,372)

Provision for (benefit from) income taxes 2,470 4,468 (3,630) (1,998) 8,098

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Depreciation & amortization expense (1)

81,541 70,749 54,016 10,792 16,733

Interest expense 99,603 53,239 16,019 46,364 37,220

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Dividends and accretion of redeemable preferred stock 62,400 23,657 — 38,743 23,657

Interest costs on pension and OPEB liabilities 1,232 445 — 787 445

Interest and other costs on pension and OPEB liabilities 2,130 1,232 445 898 787

Other non-recurring items (3)

2,470 — — 2,470 —

Equity in losses of unconsolidated entities 24,707 67,399 13,499 (42,692) 53,900

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(1) Includes the following items for the years ended December 31, 2023, 2022 and 2021:

(i) net loss of $(67,658), $(11,838) and $(3,503), (ii) interest expense of $28,702, $5,611 and $1,138, (iii) depreciation and amortization expense of $28,399, $12,443 and $5,513, (iv) acquisition and transaction expense of $616, $104 and $581, (v) changes in fair value of non-hedge derivative instruments of $21,218, $19,850 and $(589), (vi) asset impairment of $2,280, $2,146 and $— and (vii) equity-based compensation of $382, $779 and $—, respectively.

(i) depreciation and amortization expense of $80,992, $70,749 and $54,016 and (ii) capitalized contract costs amortization of $549, $— and $—, respectively.

(2) Includes the following items for the years ended December 31, 2023, 2022 and 2021:

(i) equity-based compensation of $470, $751 and $374, (ii) provision for income taxes of $670, $52 and $59, (iii) interest expense of $5,491, $3,370 and $2,025, (iv) depreciation and amortization expense of $9,699, $8,411 and $6,149, (v) changes in fair value of non-hedge derivative instruments of $(53), $(76) and $38 (vi) loss on extinguishment of debt of $—, $— and $992, (vii) acquisition and transaction expenses of $1, $— and $—, and (vii) interest costs on pension and OPEB liabilities of $1, $—, and $—, respectively.

(i) net loss of $(23,752), $(67,658) and $(11,838), (ii) interest expense of $34,686, $28,702 and $5,611, (iii) depreciation and amortization expense of $27,685, $28,399 and $12,443, (iv) acquisition and transaction expense of $445, $616 and $104, (v) changes in fair value of non-hedge derivative instruments of $(18,904), $21,218 and $19,850, (vi) asset impairment of $1,135, $2,280 and $2,146, (vii) equity-based compensation of $5, $382 and $779 and (viii) equity method basis adjustments of $(1,091), $— and $—, respectively.

(3) Includes the following items for the year ended December 31, 2023:

certain non-cash expenses related to cancellation of restricted shares and Railroad severance expense of $2,470.

(4) Includes the following items for the years ended December 31, 2023, 2022 and 2021:

(i) equity-based compensation of $1,412, $470 and $751, (ii) provision for income taxes of $578, $670 and $52, (iii) interest expense of $7,391, $5,491 and $3,370, (iv) depreciation and amortization expense of $11,752, $9,699 and $8,411, (v) changes in fair value of non-hedge derivative instruments of $63, $(53) and $(76), (vi) acquisition and transaction expenses of $307, $1 and $—, (vii) interest and other costs on pension and OPEB liabilities of $6, $1, and $—, (viii) asset impairment of $2, $— and $— and (ix) other recurring items of $4, $— and $— respectively.

Comparison of the years ended December 31, 2023 and 2022

Total revenues increased $58.5 million primarily due to higher revenues in the Railroad, Jefferson Terminal, and Corporate and Other segments.

• Rail revenue increased $20.0 million due to (i) an increase in both carloads and rates per car and (ii) a full year of fuel surcharges in 2023 compared to a partial year of fuel surcharges that went into effect at the beginning of the second quarter in 2022;

• Terminal services revenue increased $23.8 million due to higher throughput volumes at Jefferson Terminal and the commencement of a butane throughput contract at Repauno in April 2023;

• Roadside services revenue increased $20.3 million due to the acquisition and consolidation of FYX in May 2022, in addition to FYX price increases during the year.

Total expenses increased $45.2 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 $45.5 million primarily due to:

• an increase of $20.2 million in the Corporate and Other segment primarily due to the acquisition and consolidation of FYX in May 2022;

• an increase of $8.1 million in the Railroad segment primarily due to (i) an increase in labor and other costs associated with higher carload activity and severance costs at Transtar and (ii) an increase in repairs and maintenance expense due to increased activity at Transtar;

• an increase of $5.1 million at Repauno which primarily reflects (i) an increase in compensation and benefits due to costs associated with equity-based compensation and (ii) an increase in labor costs and professional fees related to the continued development of the site;

• an increase of $10.2 million at Jefferson Terminal which primarily reflects (i) an increase in compensation and benefits due to costs associated with equity-based compensation and (ii) an increase in repairs and maintenance expense due to increased activity at Jefferson Terminal;

• an increase of $1.9 million at Power and Gas primarily due to an increase in professional fees.

Depreciation and amortization increased $10.2 million which primarily reflects (i) additional assets placed into service at Jefferson Terminal and (ii) the acquisition and consolidation of FYX in May 2022.

General and administrative increased $1.9 million primarily due to higher professional fees in the Corporate and Other segment.

Acquisition and transaction expenses decreased $12.7 million primarily due to expenses incurred in 2022 related to the Spin-off.

Other (expense) income

Total other expense decreased $12.5 million which primarily reflects:

• a decrease in equity in losses of unconsolidated entities of $42.7 million which primarily reflects unrealized gains on power swaps at Long Ridge partially offset by operating losses at GM-FTAI Holdco LLC in the Sustainability and Energy Transition segment;

• an increase in gain on the sale of assets of $8.5 million due to a gain on a sales-type lease and a gain from the sale of land at Jefferson Terminal;

• an increase in other income of $9.8 million primarily 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 $46.4 million primarily due to an increase in the average outstanding debt of approximately $397.1 million which consists of (i) $327 million for the Senior Notes due 2027, (ii) $24.2 million for the Transtar Revolver, (iii) $25.5 million for the EB-5 Loan Agreement and (iv) $4.1 million for the Credit Agreement;

• 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.

Dividends and accretion of redeemable preferred stock

Dividends and accretion of redeemable preferred stock increased $38.7 million due to the redeemable preferred stock raise completed in August 2022.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA increased $46.5 million primarily due to the changes noted above.

Comparison of the years ended December 31, 2022 and 2021

Total revenues increased $141.7 million primarily due to higher revenues in the Railroad, Jefferson Terminal, and Corporate and Other segments.

• Rail revenue increased $86.3 million due to the acquisition of Transtar in July 2021;

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• Roadside services revenue increased $47.9 million due to the acquisition of a majority stake and consolidation of FYX in May 2022;

partially offset by

• Other revenue decreased $7.8 million primarily due to a loss on butane forward purchase contracts and margin compression at Repauno.

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• an increase in interest expense of $37.2 million which reflects an increase in the average outstanding debt of approximately $198.0 million from the 2027 Notes issued in July 2022 as well as the new EB-5.3 Loan Agreement taken out at Jefferson Terminal;

partially offset by

• a decrease in other expense of $5.8 million primarily due to (i) a write-off of an earn-out receivable in 2021 related to the sale of a portion of our Long Ridge investment and (ii) an increase in interest income within the Sustainability and Energy Transition segment in 2022.

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Adjusted EBITDA increased $27.3 million primarily due to the changes noted above.

Comparison of the years ended December 31, 2021 and 2020

Rail revenue increased $57.1 million due to the acquisition of Transtar in July 2021.

Crude marketing revenues decreased $8.2 million.

In 2019, Jefferson Terminal directly sourced crude from producers in Canada, arranging logistics to its terminal and then marketing crude to third parties to take advantage of favorable spreads.

The resulting crude sales and corresponding costs of sale, including logistical costs, are reflected in crude marketing revenues and operating expenses, respectively.

Jefferson Terminal exited this crude marketing strategy in the fourth quarter of 2019 as a result of unfavorable oil spreads and as certain logistical commitments expired.

All activities related to crude marketing revenues were terminated in 2019.

All crude marketing revenues in 2020 include contracts executed in 2019 but delivered in 2020.

Other revenue increased $7.4 million primarily due to (i) an increase in butane sales of $5.2 million at Repauno, (ii) a gain of $2.2 million on butane forward purchase contracts at Repauno and (iii) an increase of $0.4 million due to the commencement of transloading at Repauno.

Terminal services revenue decreased $5.8 million at Jefferson Terminal which reflects lower volumes in the first half of 2021 due to lower global oil demand related to COVID-19.

Total expenses increased $68.0 million primarily due to increases in (i) operating expenses, (ii) acquisition and transaction expenses, (iii) management fees and incentive allocation to affiliate and (iv) depreciation and amortization.

Operating expenses increased $29.2 million primarily due to:

• an increase of $29.8 million in the Railroad segment due to the acquisition of Transtar, which primarily consists of compensation and benefits and facility operating expenses;

• an increase of $5.3 million at Repauno which primarily reflects increases in (i) property taxes due to new assets, (ii) facility operating expenses due to higher butane volumes, (iii) compensation and benefits due to additional headcount and (iv) professional fees;

• a decrease of $4.8 million at Jefferson Terminal which primarily reflects (i) a decrease in cost of sales due to Jefferson Terminal exiting the crude marketing strategy in the fourth quarter of 2019, partially offset by (ii) higher insurance and other facility operating expenses.

Acquisition and transaction expenses increased $13.2 million primarily due to an increase in professional fees related to the acquisition of Transtar and other strategic initiatives.

Management fees and incentive allocation to affiliate increased $2.6 million which reflects an increase in the base management fee as our average total equity was higher in 2021, primarily due to the acquisition of Transtar.

Depreciation and amortization increased $22.9 million which primarily reflects (i) additional assets placed into service at Jefferson Terminal and Repauno and (ii) the acquisition of Transtar.

Other (expense) income

Total other expense increased $19.9 million which primarily reflects:

• an increase in other expense of $9.0 million primarily due to (i) losses related to crude oil forward transactions at Jefferson Terminal and (ii) a write-off of an earn-out receivable related to the sale of a portion of our Long Ridge investment;

• an increase in equity in losses of unconsolidated entities of $10.4 million which primarily reflects unrealized losses on power swaps at Long Ridge;

• an increase in interest expense of $5.3 million due to the issuance of the Series 2021 Bonds for $425 million and the commencement of the EB-5 Loan Agreement;

• a decrease in loss on extinguishment of debt of $4.7 million due to a debt refinancing at Jefferson Terminal in 2020.

Benefit from income taxes

The benefit from income taxes increased $1.6 million which primarily reflects higher pre-tax losses in the Power and Gas segment and Corporate and other, partially offset by a provision in the Railroad segment.

Adjusted EBITDA (non-GAAP)

Adjusted EBITDA increased $43.5 million primarily due to (i) the changes noted above and (ii) an increase in the Pro-rata share of Adjusted EBITDA from unconsolidated entities.

Railroad Segment

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Depreciation and amortization 19,590 20,164 8,951 (574) 11,213

Asset impairment 743 — — 743 —

Total expenses 114,042 105,790 47,616 8,252 58,174

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Loss on sale of assets, net (437) (1,603) — 1,166 (1,603)

Loss on extinguishment of debt (937) — — (937) —

Interest expense (2,284) (212) (60) (2,072) (152)

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Total other expense (5,822) (3,447) (482) (2,375) (2,965)

Income (loss) before income taxes 40,424 14,152 (2,154) 26,272 16,306

Provision for income taxes 1,287 64 — 1,223 64

Net income (loss) 39,137 14,088 (2,154) 25,049 16,242

Net loss attributable to non-controlling interest in consolidated subsidiaries 15 — — 15 —

Net income (loss) attributable to stockholders and Former Parent $ 39,122 $ 14,088 $ (2,154) $ 25,034 $ 16,242

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

Income before income taxes 49,581 40,424 14,152 9,157 26,272

(Benefit from) provision for income taxes (561) 1,287 64 (1,848) 1,223

Net income 50,142 39,137 14,088 11,005 25,049

Net income attributable to non-controlling interest in consolidated subsidiaries 143 15 — 128 15

Net income attributable to stockholders/Former Parent $ 49,999 $ 39,122 $ 14,088 $ 10,877 $ 25,034

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

Year Ended December 31, Change

(in thousands) 2023 2022 2021 '23 vs ‘22 '22 vs '21

Net income (loss) attributable to stockholders and Former Parent $ 39,122 $ 14,088 $ (2,154) $ 25,034 $ 16,242

Provision for income taxes 1,287 64 — 1,223 64

Net income attributable to stockholders/Former Parent $ 49,999 $ 39,122 $ 14,088 $ 10,877 25,034

(Benefit from) provision for income taxes (561) 1,287 64 (1,848) 1,223

Equity-based compensation expense 1,394 1,531 — (137) 1,531

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Dividends and accretion of redeemable preferred stock — — — — —

Interest costs on pension and OPEB liabilities 1,232 445 — 787 445

Interest and other costs on pension and OPEB liabilities 2,130 1,232 445 898 787

Other non-recurring items (1)

1,339 — — 1,339 —

Equity in losses of unconsolidated entities — — — — —

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(1) Includes the following items for the year ended December 31, 2023:

(i) equity-based compensation of $2, (ii) provision for income taxes of $2, (iii) acquisition and transaction expenses of $1, (iv) interest costs on pension and OPEB liabilities of $1, and (v) depreciation and amortization expense of $19.

Railroad severance expense of $1,339.

(2) Includes the following items for the years ended December 31, 2023, 2022 and 2021:

(i) equity-based compensation of $4, $2 and $—, (ii) (benefit from) provision for income taxes of $(1), $2 and $—, (iii) acquisition and transaction expenses of $1, $1 and $—, (iv) interest and other costs on pension and OPEB liabilities of $6, $1 and $—, (v) depreciation and amortization expense of $49, $19 and $—, (vi) interest expense of $6, $— and $—, (vii) asset impairment of $2, $— and $— and (viii) other recurring items of $4, $— and $—, respectively.

Comparison of the years ended December 31, 2023 and 2022

Total revenues increased $87.4 million which is primarily due to the acquisition of Transtar on July 28, 2021.

Total expenses increased $58.2 million which is primarily due to the acquisition of Transtar on July 28, 2021.

Total revenues increased $19.8 million which is primarily due to both an increase in (i) carloads and rates per car and (ii) a full year of fuel surcharges in 2023 compared to a partial year of fuel surcharges that went into effect at the beginning of the second quarter in 2022.

Total expenses increased $8.3 million which is primarily due to the increase in operating expense of $8.1 million due to (i) an increase in compensation, benefits and other costs associated with higher carload activity and severance costs and (ii) repairs and maintenance from increased transloading activity.

Other expense

Total other expense increased $2.4 million which primarily reflects an increase in interest expense due to a higher outstanding balance on the revolver and an increase in interest rate during 2023.

Adjusted EBITDA (Non-GAAP)

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Terminal services revenues 70,709 59,011 44,664 11,698 14,347

Crude marketing revenues — — 8,210 — (8,210)

Total revenues 72,146 60,289 46,352 11,857 13,937

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Total expenses 116,862 95,799 84,268 21,063 11,531

Other (expense) income

Loss on sale of assets, net — — (8) — 8

Loss on extinguishment of debt — — (4,724) — 4,724

Other income (expense)

Gain on sale of assets, net 7,292 — — 7,292 —

Interest expense (32,443) (24,798) (14,812) (7,645) (9,986)

Other (expense) income (4,317) (4,726) 92 409 (4,818)

Other expense (1,302) (4,317) (4,726) 3,015 409

Total other expense (26,453) (29,115) (19,538) 2,662 (9,577)

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Net loss attributable to non-controlling interest in consolidated subsidiaries (36,917) (32,018) (26,250) (4,899) (5,768)

Net loss attributable to stockholders and Former Parent $ (35,623) $ (31,433) $ (19,684) $ (4,190) $ (11,749)

Net loss attributable to stockholders/Former Parent $ (36,720) $ (35,623) $ (31,433) $ (1,097) $ (4,190)

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

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(in thousands) 2023 2022 2021 '23 vs ‘22 '22 vs '21

Net loss attributable to stockholders and Former Parent $ (35,623) $ (31,433) $ (19,684) $ (4,190) $ (11,749)

Net loss attributable to stockholders/Former Parent $ (36,720) $ (35,623) $ (31,433) $ (1,097) $ (4,190)

Provision for income taxes 2,468 3,016 229 (548) 2787

6 unchanged sentences

Depreciation and amortization expense (1)

49,465 39,318 36,013 10,147 3,305

Interest expense 32,443 24,798 14,812 7,645 9,986

1 unchanged sentence

Dividends and accretion of redeemable preferred stock — — — — —

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

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

Other non-recurring items (2)

1,131 — — 1,131 —

Equity in losses of unconsolidated entities — — — — —

4 unchanged sentences

(1) Includes the following items for the years ended December 31, 2023, 2022, and 2021:

(i) equity-based compensation of $440, $723 and $352, (ii) provision for income taxes of $660, $52 and $59, (iii) interest expense of $5,416, $3,331 and $1,979, (iv) loss on extinguishment of debt of $—, $— and $992, (v) depreciation and amortization expense of $8,587, $8,099 and $6,097, and (vi) changes in fair value of non-hedge derivative instruments of $—, $— and $38 respectively.

(i) depreciation and amortization expense of $48,916, $39,318 and $36,013 and (ii) capitalized contract costs amortization of $549, $— and $—, respectively.

(2) Includes the following items for the year ended December 31, 2023:

certain non-cash expenses related to cancellation of restricted shares of $1,131.

(3) Includes the following items for the years ended December 31, 2023, 2022, and 2021:

(i) equity-based compensation of $1,309, $440 and $723, (ii) provision for income taxes of $551, $660 and $52, (iii) interest expense of $7,242, $5,416 and $3,331, (iv) acquisition and transaction expenses of $306, $— and $—, and (v) depreciation and amortization expense of $10,920, $8,587 and $8,099, respectively.

Comparison of the years ended December 31, 2023 and 2022

Total revenues increased $11.9 million during the year ended December 31, 2023 primarily due to (i) an increase in terminal services revenues of $11.7 million due to an increase in average refined products throughput volumes and (ii) an increase in lease income of $0.2 million.

Total expenses increased $21.1 million which reflects:

• an increase in operating expenses of $10.2 million primarily due to costs associated with equity-based compensation, higher labor and other costs, including repairs and maintenance, associated with increased terminal throughput activity;

• an increase in depreciation and amortization of $9.6 million due to additional assets placed into service;

• an increase in acquisition and transaction expenses of $1.3 million associated with professional fees for a potential acquisition.

Other income (expense)

Total other expense decreased $2.7 million which primarily reflects (i) a benefit from the decrease in prior period losses related to the termination of a pipeline contract, (ii) a gain on the sales-type lease, and (iii) a gain from the sale of land, partially offset by an increase in interest expense due to additional borrowings for the EB-5 Loan Agreement.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA increased $17.2 million primarily due to the changes noted above.

Comparison of the years ended December 31, 2022 and 2021

Total revenues increased $13.9 million during the year ended December 31, 2022 primarily due to an increase in terminal services revenues of $14.3 million due to higher volumes.

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Adjusted EBITDA increased $7.9 million primarily due to the changes noted above.

Comparison of the years ended December 31, 2021 and 2020

Total revenues decreased $13.9 million which primarily reflects (i) a decrease in crude marketing revenue of $8.2 million due to Jefferson Terminal exiting the crude marketing strategy in the fourth quarter of 2019 and (ii) a decrease in terminal services

revenues of $6.2 million which reflects lower volumes in the first half of 2021 due to lower global oil demand related to COVID-19.

Total expenses increased $2.2 million which reflects (i) an increase in depreciation and amortization of $7.0 million due to additional assets placed into service, partially offset by (ii) a decrease in operating expenses of $4.8 million which primarily reflects (i) a decrease in cost of sales due to Jefferson Terminal exiting the crude marketing strategy in the fourth quarter of 2019, partially offset by (ii) higher insurance and other facility operating expenses.

Other (expense) income

Total other (expense) income increased $5.5 million which reflects:

• an increase in interest expense of $5.4 million due to the issuance of the Series 2021 Bonds for $425 million and the commencement of the EB-5 Loan Agreement;

• an increase in other expense of $4.8 million due to losses related to crude oil forward transactions;

• a decrease in loss on extinguishment of debt of $4.7 million due to a debt refinancing in 2020.

Adjusted EBITDA (non-GAAP)

Adjusted EBITDA decreased $5.5 million primarily due to the changes noted above.

Repauno Segment

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Total expenses 31,539 26,394 23,356 5,145 3,038

Other (expense) income

Other income (expense)

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

5 unchanged sentences

Net loss attributable to non-controlling interest in consolidated subsidiaries (1,412) (1,242) (222) (170) (1020)

Net loss attributable to stockholders and Former Parent $ (22,790) $ (12,648) $ (7,909) $ (10,142) $ (4,739)

Net loss attributable to stockholders/Former Parent $ (22,489) $ (22,790) $ (12,648) $ 301 $ (10,142)

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

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(in thousands) 2023 2022 2021 '23 vs ‘22 '22 vs '21

Net loss attributable to stockholders and Former Parent $ (22,790) $ (12,648) $ (7,909) $ (10,142) $ (4,739)

Net loss attributable to stockholders/Former Parent $ (22,489) $ (22,790) $ (12,648) $ 301 $ (10,142)

Provision for income taxes 496 165 — 331 165

9 unchanged sentences

Dividends and accretion of redeemable preferred stock — — — — —

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

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

Other non-recurring items — — — — —

Equity in losses of unconsolidated entities — — — — —

6 unchanged sentences

Comparison of the years ended December 31, 2023 and 2022

Total revenues increased $6.6 million, primarily due to the commencement of a butane throughput contract at Repauno in April 2023, partially offset by losses on the sale of butane inventory as the terminal prepared for the new throughput contract.

Total expenses increased $5.1 million primarily due to (i) an increase in operating expenses due to costs associated with equity-based compensation and (ii) an increase in labor costs and professional fees related to the continued development of the site.

Other income (expense)

Total other expense increased $1.0 million primarily due to an increase in interest expense due to an increase in the borrowing rate on the revolver.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA increased $4.7 million due to the changes noted above.

Comparison of the years ended December 31, 2022 and 2021

Total revenues decreased $7.5 million, primarily due to a $3.7 million loss on butane forward purchase contracts as well as overall margin compression.

6 unchanged sentences

Adjusted EBITDA decreased $8.6 million due to the changes noted above.

Comparison of the years ended December 31, 2021 and 2020

Total revenues increased $7.8 million, primarily due to (i) an increase in butane sales of $5.2 million, (ii) a gain of $2.2 million on butane forward purchase contracts and (iii) an increase of $0.4 million due to the commencement of transloading.

Total expenses increased $12.9 million primarily due to:

• an increase in operating expenses of $5.3 million which primarily reflects increases in (i) property taxes due to new assets, (ii) facility operating expenses due to higher butane volumes, (iii) compensation and benefits due to additional headcount and (iv) professional fees;

• an increase in depreciation expense of $7.6 million due to assets being placed into service.

Adjusted EBITDA (non-GAAP)

Adjusted EBITDA increased $0.4 million due to the changes noted above.

Power and Gas Segment

9 unchanged sentences

Equity in losses of unconsolidated entities (9,949) (60,538) (13,597) 50,589 (46,941)

Interest expense (3) — — (3) —

Other income (expense) 7,523 524 (3,782) 6,999 4,306

2 unchanged sentences

Benefit from income taxes — — (3,930) — 3,930

Net loss (61,298) (13,548) (3,220) (47,750) (10,328)

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

Net loss attributable to stockholders and Former Parent $ (61,298) $ (13,548) $ (3,220) $ (47,750) $ (10,328)

Net loss attributable to stockholders/Former Parent $ (5,249) $ (61,298) $ (13,548) $ 56,049 $ (47,750)

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

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(in thousands) 2023 2022 2021 '23 vs ‘22 '22 vs '21

Net loss attributable to stockholders and Former Parent $ (61,298) $ (13,548) $ (3,220) $ (47,750) $ (10,328)

Net loss attributable to stockholders/Former Parent $ (5,249) $ (61,298) $ (13,548) $ 56,049 $ (47,750)

Benefit from income taxes — — (3,930) — 3,930

10 unchanged sentences

Dividends and accretion of redeemable preferred stock — — — — —

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

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

Other non-recurring items — — — — —

Equity in losses of unconsolidated entities 9,949 60,538 13,597 (50,589) 46,941

3 unchanged sentences

(1) Includes the following items for the years ended December 31, 2023, 2022 and 2021:

(i) net loss of $(60,538), $(11,430) and $(3,222), (ii) depreciation expense of $27,625, $12,443 and $5,513, (iii) interest expense of $26,758, $5,513 and $1,021, (iv) acquisition and transaction expense of $616, $104 and $581, (v) changes in fair value of non-hedge derivative instruments of $21,218, $19,850 and $(589), (vi) asset impairment of $2,280, $2,146 and $— and (vii) equity-based compensation of $382, $779, and $—, respectively.

(i) net loss of $(8,858), $(60,538) and $(11,430), (ii) depreciation expense of $26,146, $27,625 and $12,443, (iii) interest expense of $31,109, $26,758 and $5,513, (iv) acquisition and transaction expense of $445, $616 and $104, (v) changes in fair value of non-hedge derivative instruments of $(18,904), $21,218 and $19,850, (vi) asset impairment of $1,135, $2,280 and $2,146, (vii) equity-based compensation of $5, $382, and $779 and (viii) equity method basis adjustments of $(1,091), $— and $—, respectively.

Comparison of the years ended December 31, 2023 and 2022

Total expenses increased $1.2 million primarily due to the acquisition and development of natural gas reserves.

Total expenses increased $1.5 million primarily due to an increase in professional fees.

Other (expense) income

Total other expense increased $42.6 million primarily due to increases in equity in losses in unconsolidated entities primarily due to realized and unrealized losses on power swaps at Long Ridge, as well as an unexpected power plant outage at the end of 2022.

Total other expense decreased $57.6 million primarily due to decreases in equity in losses in unconsolidated entities primarily due to unrealized gains on power swaps at Long Ridge as power prices decreased, as well as increases 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.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA decreased $7.5 million due to the changes noted above.

Adjusted EBITDA increased $16.7 million due to an increase in the pro-rata share of adjusted EBITDA from unconsolidated entities of $11.6 million, and the changes noted above.

Comparison of the years ended December 31, 2022 and 2021

Total expenses decreased $2.2 million which primarily reflects a decrease in acquisition and transaction expense due to no acquisitions in 2021.

Total expenses increased $1.2 million primarily due to the acquisition and development of natural gas reserves.

Other (expense) income

Total other expenses increased $14.2 million primarily due to increases in equity in losses in unconsolidated entities primarily due to unrealized losses on power swaps at Long Ridge.

Total other expenses increased $42.6 million primarily due to increases in equity in losses in unconsolidated entities primarily due to realized and unrealized losses on power swaps at Long Ridge, as well as an unexpected power plant outage at the end of 2022.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA increased $23.6 million due to an increase in the pro rata share of adjusted EBITDA from unconsolidated entities of $26.1 million and the changes noted above.

Adjusted EBITDA decreased $7.5 million due to the changes noted above.

Sustainability and Energy Transition Segment

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Total other expense (12,285) (4,889) (372) (7,396) (4,517)

Net loss attributable to stockholders and Former Parent $ (5,179) $ (372) $ — $ (4,807) $ (372)

Net loss attributable to stockholders/Former Parent $ (12,315) $ (5,179) $ (372) $ (7,136) $ (4,807)

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

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(in thousands) 2023 2022 2021 '23 vs ‘22 '22 vs '21

Net loss attributable to stockholders and Former Parent $ (5,179) $ (372) $ — $ (4,807) $ (372)

Net loss attributable to stockholders/Former Parent $ (12,315) $ (5,179) $ (372) $ (7,136) $ (4,807)

Provision for income taxes — — — — —

10 unchanged sentences

Dividends and accretion of redeemable preferred stock — — — — —

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

Equity in losses of unconsolidated entities 7,012 372 — 6,640 372

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

Other non-recurring items — — — — —

Equity in (earnings) losses of unconsolidated entities 14,814 7,012 372 7,802 6,640

Non-controlling share of Adjusted EBITDA — — — — —

5 unchanged sentences

Other (expense) income

Total other expense decreased $4.5 million which reflects an increase of $6.6 million in equity method losses in unconsolidated entities primarily due to increased losses at GM-FTAI Holdco LLC and Clean Planet Energy USA, as well as an increase in other income of $2.1 million due to interest income earned on outstanding notes.

Total other expense increased $7.4 million which reflects an increase of $7.8 million in equity in losses of unconsolidated entities primarily due to operating losses at GM-FTAI Holdco LLC, offset by an increase in other income of $0.4 million due to interest income earned on outstanding notes.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA decreased $2.0 million primarily due to the changes noted above.

Adjusted EBITDA decreased $4.9 million primarily due to a decrease in the pro-rata share of adjusted EBITDA from unconsolidated entities of $5.3 million, and the changes noted above.

Comparison of the years ended December 31, 2022 and 2021

Other expense

Other expense decreased $0.4 million primarily due to the investment in unconsolidated entities in the sustainability and energy transition sectors in the second half of 2021.

Other (expense) income

Other expense increased $4.5 million which reflects an increase of $6.6 million in equity method losses in unconsolidated entities primarily due to increased losses at GM-FTAI Holdco LLC and Clean Planet Energy USA, offset by an increase in other income of $2.1 million due to interest income earned on outstanding notes.

Adjusted EBITDA (Non-GAAP)

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Total expenses 99,554 90,048 36,419 9,506 53,629

Other (expense) income

Other income (expense)

Equity in earnings of unconsolidated entities 56 151 470 (95) (319)

Loss on extinguishment of debt (1,099) — — (1,099) —

Interest expense (62,316) (26,639) — (35,677) (26,639)

7 unchanged sentences

Dividends and accretion of redeemable preferred stock 62,400 23,657 — 38,743 23,657

Net loss attributable to stockholders and Former Parent $ (91,473) $ (35,956) $ (22,234) $ (31,860) $ (13,722)

Net loss attributable to stockholders/Former Parent $ (156,962) $ (91,473) $ (35,956) $ (65,489) $ (55,517)

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

1 unchanged sentence

(in thousands) 2023 2022 2021 '23 vs ‘22 '22 vs '21

Net loss attributable to stockholders and Former Parent $ (91,473) $ (35,956) $ (22,234) $ (55,517) $ (13,722)

Net loss attributable to stockholders/Former Parent $ (156,962) $ (91,473) $ (35,956) $ (65,489) $ (55,517)

Provision for income taxes 67 — 7 67 (7)

10 unchanged sentences

Dividends and accretion of redeemable preferred stock 62,400 23,657 — 38,743 23,657

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

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

Other non-recurring items — — — — —

Equity in (earnings) losses of unconsolidated entities (56) (151) (470) 95 319

5 unchanged sentences

(i) net loss of $(80), $(51) and $(36) and (ii) interest expense of $55, $96 and $98, respectively.

(2) Includes the following items for the year ended December 31, 2022:

(i) depreciation expense of $651.

(2) Includes the following items for the year ended December 31, 2023, 2022 and 2021:

(i) depreciation expense of $260, $651 and $—, respectively.

Comparison of the years ended December 31, 2023 and 2022

Total revenues increased $20.3 million primarily due to the acquisition and consolidation of FYX in May 2022, in addition to FYX price increases during the year.

Total expenses increased $9.5 million primarily due to:

• an increase in operating expenses of $20.2 million and an increase in depreciation and amortization expense of $1.2 million due to the acquisition and consolidation of FYX in May 2022;

• an increase in general and administrative expense of $1.9 million primarily due to higher professional fees;

partially offset by

• a decrease in acquisition and transaction expenses of $13.3 million primarily due to expenses incurred in 2022 related to the Spin-off.

Other income (expense)

Total other expense increased $37.0 million due primarily to (i) an increase in interest expense of $35.7 million due to the additional issuance of the Senior Notes due 2027 in July 2023 and (ii) an increase in loss on extinguishment of debt of $1.1 million.

Dividends and accretion of redeemable preferred stock

Dividends and accretion of redeemable preferred stock increased $38.7 million due to the redeemable preferred stock raise completed in August 2022.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA decreased $1.5 million primarily due to the changes noted above.

Comparison of the years ended December 31, 2022 and 2021

Total revenues increased $47.9 million due to the acquisition of a majority stake and consolidation of FYX in May 2022.

6 unchanged sentences

Adjusted EBITDA decreased $0.3 million primarily due to the changes noted above.

Comparison of the years ended December 31, 2021 and 2020

Acquisition and transaction expenses increased $11.2 million primarily due to an increase in professional fees related to the acquisition of Transtar and other strategic initiatives.

Adjusted EBITDA (non-GAAP)

Adjusted EBITDA decreased $2.6 million primarily due to the changes noted above.

Transactions with Affiliates and Affiliated Entities

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The liquidity required to fund our working capital, capital expenditures and other cash needs is provided from a combination of internally generated cash flows and external debt financing.

In July 2022, we issued $500 million aggregate principal amount of the 2027 Notes.

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

Additionally, in November 2022, Jefferson Terminal entered into a new EB-5 loan agreement maximum aggregate principal amount available of $28.0 million (the “EB5.3 Loan Agreement”).

In December 2022, Transtar entered into a $25.0 million revolver agreement (the “Transtar Revolver”).

In July 2023, we issued an additional $100.0 million aggregate principal amount of the Senior Notes due 2027 (the “2027 Notes”) .

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

Additionally, in December 2023, Repauno entered into an amendment to an existing revolver agreement (the “DRP Revolver”) that provides for revolving loans in the aggregate amount of an additional $25.0 million, for a total facility of $50.0 million.

Refer to Note 7 to the consolidated and combined consolidated financial statements for more information on our debt obligations.

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.

As discussed in Note 2 to the consolidated and combined consolidated financial statements, in performing the first step of the evaluation under ASC 205-40, management concluded that the Company’s current liquidity and forecasted cash flows from operations are not sufficient to support, in full, the repayment of Jefferson Terminal’s Taxable Series 2020B Bonds totaling $79.1 million that mature on January 1, 2025, the Company’s operating and capital expenditure commitments and dividend payments on Series A Preferred Stock.

In performing the second step of this assessment, the Company evaluated whether it is probable that the Company’s plans will be effectively implemented within one year after the financial statements are issued and whether it is probable that those plans will alleviate the liquidity risk raised in the first step of the evaluation.

Management has approved a plan to alleviate liquidity risk by:

(i) refinancing the Taxable Series 2020B Bonds prior to their maturity date, including contributing additional unencumbered assets as collateral;

(ii) delaying planned capital expenditures;

(iii) electing to defer payment of the management fee and expense reimbursements to the Manager;

(iv) continuing to accrue paid-in-kind dividends on its Series A Senior Preferred Stock;

and (v) eliminating future dividends on common stock, excluding the common dividend that our board of directors declared on February 29, 2024 that will be paid on April 5, 2024.

We believe such plans are probable of being implemented and the Company will have sufficient liquidity to meet its obligations as they become due over the next twelve months from the date that the consolidated and combined consolidated financial statements were issued.

In addition to the plans discussed above, we are currently evaluating several potential transactions and related financings, including, but not limited to, asset sales, debt refinancing, equity refinancing, and 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 assessment of our planned liquidity needs.

We cannot assure if or when any such transaction will be consummated or the terms of any such transaction.

To the extent the Company improves its liquidity and financial position, Management and the Company’s board of directors may consider reinstating certain of the activities included in (ii) through (v) of Management’s plan discussed above.

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.

Our principal uses of liquidity have been and continue to be (i) a cquisitions 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 $147.2 million, $267.3 million and $828.7 million during the years ended December 31, 2023, 2022 and 2021, respectively.

2 unchanged sentences

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

• During the year ended December 31, 2023, additional borrowings were obtained in connection with the (i) EB-5 Loan Agreement of $1.6 million, (ii) Transtar Revolver of $40.0 million, (iii) Credit Agreement of $25.0 million, (iv) 2027 Notes (as defined in Note 7 of the consolidated and combined consolidated financial statements) of $100.0 million, and (v) DRP Revolver of $19.3 million.

In July 2023, we used a portion of the net proceeds from the additional $100.0 million aggregate principal amount of the 2027 Notes to repay the amounts outstanding under the Transtar Revolver and Credit Agreement in full.

• During the year ended December 31, 2022, additional borrowings were obtained in connection with the (i) 2027 Notes (as defined in Note 7 of the consolidated and combined consolidated financial statements) of $473.8 million;

2 unchanged sentences

• During the year ended December 31, 2021, additional borrowings were obtained in connection with the (i) Series 2021 Bonds (as defined in Note 7 of the consolidated and combined consolidated financial statements) of $425.0 million and (ii) EB-5 Loan Agreement of $26.1 million.

• During the year ended December 31, 2020, additional borrowings were obtained in connection with the Series 2020 Bonds (as defined in Note 8 of the consolidated and combined consolidated financial statements) of $264.0 million.

We made principal payments of $240.0 million related to the Jefferson Terminal Revolver and the Series 2016 and 2012 Bonds.

Historical Cash Flow

3 unchanged sentences

Cash Flow Data:

Net cash used in operating activities $ (42,690) $ (61,716) $ (46,860)

Net cash provided by (used in) operating activities $ 5,513 $ (42,690) $ (61,716)

Net cash used in investing activities (147,123) (267,266) (828,716)

1 unchanged sentence

Comparison of the years ended December 31, 2023 and 2022

Net cash provided by operating activities increased $48.2 million, which primarily reflects (i) a decrease in net loss of $27.8 million, (ii) changes in accounts receivable, accounts payable and accrued liabilities, other assets and other liabilities of $46.5 million, (iii) an increase in depreciation and amortization of $10.2 million, (iv) an increase in equity-based compensation of $5.1 million, and (v) an increase in bad debt expense of $1.4 million, partially offset by (vi) a change in equity in losses of unconsolidated entities of $42.7 million.

Net cash used in investing activities decreased $120.1 million primarily due to (i) a decrease in acquisitions of property, plant and equipment of $118.1 million and (ii) a decrease in investment in convertible promissory notes of $11.4 million, partially offset by (iii) an increase in cash used for the acquisition of additional ownership interest in FYX of $0.6 million in 2023 as compared to 2022, (iv) an increase in the investment in unconsolidated entities of $1.1 million, (v) a decrease in the proceeds from sale of property, plant and equipment of $6.1 million and (vi) an increase in the acquisition of leasing equipment of $1.7 million.

Net cash provided by financing activities decreased $78.3 million primarily due to (i) a decrease in the proceeds from the issuance of Redeemable Preferred Stock of $274.6 million, (ii) a decrease in proceeds from debt of $337.7 million, (iii) repayment of debt proceeds of $75.1 million, (iv) cash dividends paid of $9.3 million, and (v) a decrease in settlement of equity-based compensation of $1.6 million, partially offset by (vi) a decrease in net transfers to Former Parent of $617.3 million and (vii) a decrease in payment of deferred financing costs of $4.8 million.

Comparison of the years ended December 31, 2022 and 2021

Net cash used in operating activities decreased $19.0 million, which primarily reflects (i) an increase in net loss of $81.2 million, partially offset by (ii) changes in accounts receivable, accounts payable and accrued liabilities, other assets and other liabilities of $14.7 million, (iii) an increase in depreciation and amortization of $16.7 million, (iv) a change in equity in losses of unconsolidated entities of $53.9 million, and (v) an increase in deferred income taxes of $7.8 million.

1 unchanged sentence

Net cash provided by financing activities decreased $979.1 million primarily due to (i) a decrease in net transfers from Former Parent of $1.3 billion partially offset by (ii) an increase in the proceeds from the issuance of Redeemable Preferred Stock of $274.6 million and (iii) an increase in proceeds from debt of $67.9 million.

Comparison of the years ended December 31, 2021 and 2020

Net cash used in operating activities increased $14.9 million, which primarily reflects (i) an increase in net loss of $34.6 million and (ii) changes in management fees payable to affiliate, accounts receivable, accounts payable and accrued liabilities, other assets and other liabilities of $7.6 million, partially offset by (iii) an increase in depreciation and amortization of $22.9 million, and (iv) a change in equity in losses of unconsolidated entities of $10.4 million.

Net cash used in investing activities increased $576.5 million primarily due to (i) an increase in the acquisition of business, net of cash acquired for $627.1 million, (ii) an increase in the investment in unconsolidated entities of $50.5 million, and (iii) an increase in investment in convertible promissory notes of $10.0 million partially offset by (iv) an increase in proceeds from sale of property, plant and equipment of $4.5 million, and (v) a decrease in acquisitions of property, plant and equipment of $106.6 million.

Net cash provided by financing activities increased $799.2 million primarily due to (i) an increase in net transfers from Former Parent of $372.7 million, (ii) a decrease in repayment of debt of $240.0 million and (iii) an increase in proceeds from debt of $187.1 million.

Debt Covenants

We are in compliance with all of our debt covenants as of December 31, 2022 and 2021.

We are in compliance with all of our debt covenants as of December 31, 2023.

See Note 7 to the consolidated and combined consolidated financial statements for information related to our debt obligations and respective covenants.

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Lease Obligations — As of December 31, 2023, we had operating and finance lease obligations of $169.1 million, of which $8.8 million is due within 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 December 31, 2022, in connection with a pipeline capacity agreement at Jefferson Terminal, we had an obligation to pay a minimum of $3.6 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.

Redeemable Preferred Stock Obligations — We have dividend payments of $22.2 million due on our redeemable preferred stock within the next twelve months with an option to paid-in-kind dividends at a higher interest rate and to defer payment for twelve months.

See Notes 2 and 16 for additional information related to our preferred stock obligations.

Other Cash Requirements —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, unused borrowing capacity 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.

See Note 2 for additional information related to other cash requirements.

Application of Critical Accounting Policies

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

Bridges and tunnels 15 - 55 years Scrap value at end of useful life

Bridges and tunnels 15 - 55 years

Scrap value at end of useful life

Buildings and site improvements 20 - 30 years

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As of December 31, 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, 2021, the carrying amount of goodwill within the Jefferson Terminal, Railroad and Corporate and Other segments was $122.7 million, $134.4 million, and $—, 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.

During 2023, an immaterial adjustment was recorded to the goodwill and property, plant and equipment balances of the Railroad segment.

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

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

As of October 1, 2022, we elected to complete a qualitative impairment assessment of the goodwill related to our Railroad reporting unit and concluded that it was more likely than not that the fair value of the Railroad reporting unit exceeded its carrying value.

As of October 1, 2023, we elected to complete a qualitative impairment assessment of the goodwill related to our Transtar and FYX reporting units and concluded that it was more likely than not that the fair value of the Transtar and FYX reporting units exceeded their respective carrying values.

Therefore, no quantitative impairment evaluation was completed.

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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.

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

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

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The Jefferson Terminal reporting unit had an estimated fair value that exceeded its carrying value by more than 10% but less than 20% as of October 1, 2023.

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.

At October 1, 2023, approximately 6.2 million barrels of storage was operational.

Our discount rate for our 2023 goodwill impairment analysis was 10.3% and our assumed terminal growth rate was 2.5%.

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.

The expansion of refineries in the Beaumont/Port Arthur area, as well as growing crude oil and natural gas production in the U.S.

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

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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 began.

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.

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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-K

Item 7. Management’s Discussion and Analysis