FTAI Infrastructure Inc. 10-K

Item 7. 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. (“we”, “us”, “our”, or the “Company”). 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. Overview 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: (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. For the year ended December 31, 2023, our Railroad business accounted for 53% of our total revenue and our Ports and Terminals business accounted for 26% of our total revenue. Corporate and other sources accounted for the remaining 21% of our total revenue. 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 December 31, 2023, we had total consolidated assets of $2.4 billion and redeemable preferred stock and equity of $0.7 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 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. 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 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. 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. 37 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 operating company that provides roadside assistance services for the intermodal and over-the-road trucking industries. 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 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. 38 The following table presents our consolidated and combined consolidated results of operations: Year Ended December 31, Change (in thousands) 2023 2022 2021 '23 vs ‘22 '22 vs '21 Revenues Lease income $ 3,089 $ 3,221 $ 2,424 $ (132) $ 797 Rail revenues 167,793 147,804 61,514 19,989 86,290 Terminal services revenues 83,350 59,574 45,038 23,776 14,536 Roadside services revenues 68,190 47,899 — 20,291 47,899 Other revenue (1,950) 3,468 11,243 (5,418) (7,775) Total revenues 320,472 261,966 120,219 58,506 141,747 Expenses Operating expenses 253,672 208,157 98,541 45,515 109,616 General and administrative 12,833 10,891 8,737 1,942 2,154 Acquisition and transaction expenses 4,140 16,844 14,826 (12,704) 2,018 Management fees and incentive allocation to affiliate 12,467 12,964 15,638 (497) (2,674) 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 Other (expense) income Equity in losses of unconsolidated entities (24,707) (67,399) (13,499) 42,692 (53,900) 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 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) Loss before income taxes (157,280) (183,049) (109,971) 25,769 (73,078) Provision for (benefit from) income taxes 2,470 4,468 (3,630) (1,998) 8,098 Net loss (159,750) (187,517) (106,341) 27,767 (81,176) Less: Net loss attributable to non-controlling interest in consolidated subsidiaries (38,414) (33,933) (26,472) (4,481) (7,461) Less: Dividends and accretion of redeemable preferred stock 62,400 23,657 — 38,743 23,657 Net loss attributable to stockholders/Former Parent $ (183,736) $ (177,241) $ (79,869) $ (6,495) $ (97,372) 39 The following table sets forth a reconciliation of net loss 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 loss attributable to stockholders/Former Parent $ (183,736) $ (177,241) $ (79,869) $ (6,495) $ (97,372) Add: Provision for (benefit from) income taxes 2,470 4,468 (3,630) (1,998) 8,098 Add: Equity-based compensation expense 9,199 4,146 4,038 5,053 108 Add: Acquisition and transaction expenses 4,140 16,844 14,826 (12,704) 2,018 Add: Losses on the modification or extinguishment of debt and capital lease obligations 2,036 — — 2,036 — Add: Changes in fair value of non-hedge derivative instruments 1,125 (1,125) (2,220) 2,250 1,095 Add: Asset impairment charges 743 — — 743 — Add: Incentive allocations — — — — — Add: Depreciation & amortization expense (1) 81,541 70,749 54,016 10,792 16,733 Add: Interest expense 99,603 53,239 16,019 46,364 37,220 Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2) 20,209 13,939 29,095 6,270 (15,156) Add: Dividends and accretion of redeemable preferred stock 62,400 23,657 — 38,743 23,657 Add: Interest and other costs on pension and OPEB liabilities 2,130 1,232 445 898 787 Add: Other non-recurring items (3) 2,470 — — 2,470 — Less: Equity in losses of unconsolidated entities 24,707 67,399 13,499 (42,692) 53,900 Less: Non-controlling share of Adjusted EBITDA (4) (21,515) (16,279) (12,508) (5,236) (3,771) Adjusted EBITDA (Non-GAAP) $ 107,522 $ 61,028 $ 33,711 $ 46,494 $ 27,317 ______________________________________________________________________________________ (1) Includes the following items for the years ended December 31, 2023, 2022 and 2021: (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) 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 Revenues 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; and • 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. Expenses 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; 40 • 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; and • 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; and • 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; 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. 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 Revenues 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; • Terminal services revenue increased $14.5 million due to higher volumes at Jefferson Terminal; and • 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. Expenses Total expenses increased $127.8 million primarily due to increases in operating expenses and depreciation and amortization. Operating expenses increased $109.6 million primarily due to: • an increase of $48.9 million in the Corporate and Other segment primarily due to the acquisition of a majority stake and consolidation of FYX in May 2022; 41 • an increase of $49.0 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 $2.8 million at Repauno which primarily reflects increased activity; and • an increase of $8.2 million at Jefferson Terminal which primarily reflects additional labor costs due to increased activity as well as higher insurance for the new Jefferson Terminal South property. Depreciation and amortization increased $16.7 million which primarily reflects (i) additional assets placed into service at Jefferson Terminal and (ii) the acquisition of Transtar in July 2021. Other (expense) income Total other expense increased $87.0 million which primarily reflects: • an increase in equity in losses of unconsolidated entities of $53.9 million which primarily reflects unrealized losses on power swaps at Long Ridge; • 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. Provision for income taxes The provision for income taxes increased $8.1 million which primarily reflects provisions booked in the Railroad and Jefferson Terminal segments. Dividends and accretion of redeemable preferred stock Dividends and accretion of redeemable preferred stock increased $23.7 million due to the redeemable preferred stock raise completed in August 2022. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased $27.3 million primarily due to the changes noted above. 42 Railroad Segment The following table presents our results of operations: Year Ended December 31, Change (in thousands) 2023 2022 2021 '23 vs ‘22 '22 vs '21 Revenues Lease income $ 1,652 $ 1,943 $ 736 (291) 1,207 Rail revenues 167,793 147,718 61,514 20,075 86,204 Total revenues 169,445 149,661 62,250 19,784 87,411 Expenses Operating expenses 92,972 84,863 35,824 8,109 49,039 Acquisition and transaction expenses 737 763 2,841 (26) (2,078) 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 Other expense 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) Other expense (2,164) (1,632) (422) (532) (1,210) Total other expense (5,822) (3,447) (482) (2,375) (2,965) 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 Less: 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 43 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 attributable to stockholders/Former Parent $ 49,999 $ 39,122 $ 14,088 $ 10,877 25,034 Add: (Benefit from) provision for income taxes (561) 1,287 64 (1,848) 1,223 Add: Equity-based compensation expense 1,394 1,531 — (137) 1,531 Add: Acquisition and transaction expenses 737 763 2,841 (26) (2,078) Add: Losses on the modification or extinguishment of debt and capital lease obligations 937 — — 937 — Add: Changes in fair value of non-hedge derivative instruments — — — — — Add: Asset impairment charges 743 — — 743 — Add: Incentive allocations — — — — — Add: Depreciation & amortization expense 19,590 20,164 8,951 (574) 11,213 Add: Interest expense 2,284 212 60 2,072 152 Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities — — — — — Add: Dividends and accretion of redeemable preferred stock — — — — — Add: Interest and other costs on pension and OPEB liabilities 2,130 1,232 445 898 787 Add: Other non-recurring items (1) 1,339 — — 1,339 — Less: Equity in losses of unconsolidated entities — — — — — Less: Non-controlling share of Adjusted EBITDA (2) (71) (25) — (46) (25) Adjusted EBITDA (Non-GAAP) $ 78,521 $ 64,286 $ 26,449 $ 14,235 $ 37,837 ______________________________________________________________________________________ (1) Includes the following items for the year ended December 31, 2023: 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 Revenues 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. Expenses 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) Adjusted EBITDA increased $14.2 million due to the changes noted above. Comparison of the years ended December 31, 2022 and 2021 Revenues Total revenues increased $87.4 million which is primarily due to the acquisition of Transtar on July 28, 2021. Expenses Total expenses increased $58.2 million which is primarily due to the acquisition of Transtar on July 28, 2021. 44 Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased $37.8 million due to the changes noted above. Jefferson Terminal Segment The following table presents our results of operations: Year Ended December 31, Change (in thousands) 2023 2022 2021 '23 vs ‘22 '22 vs '21 Revenues Lease income $ 1,437 $ 1,278 $ 1,688 $ 159 $ (410) Terminal services revenues 70,709 59,011 44,664 11,698 14,347 Total revenues 72,146 60,289 46,352 11,857 13,937 Expenses Operating expenses 66,576 56,417 48,255 10,159 8,162 Acquisition and transaction expenses 1,370 64 — 1,306 64 Depreciation and amortization 48,916 39,318 36,013 9,598 3,305 Total expenses 116,862 95,799 84,268 21,063 11,531 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 (1,302) (4,317) (4,726) 3,015 409 Total other expense (26,453) (29,115) (19,538) 2,662 (9,577) Loss before income taxes (71,169) (64,625) (57,454) (6,544) (7,171) Provision for income taxes 2,468 3,016 229 (548) 2,787 Net loss (73,637) (67,641) (57,683) (5,996) (9,958) Less: 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/Former Parent $ (36,720) $ (35,623) $ (31,433) $ (1,097) $ (4,190) 45 The following table sets forth a reconciliation of net loss 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 loss attributable to stockholders/Former Parent $ (36,720) $ (35,623) $ (31,433) $ (1,097) $ (4,190) Add: Provision for income taxes 2,468 3,016 229 (548) 2787 Add: Equity-based compensation expense 5,865 2,020 3,215 3,845 (1,195) Add: Acquisition and transaction expenses 1,370 64 — 1,306 64 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 (1) 49,465 39,318 36,013 10,147 3,305 Add: Interest expense 32,443 24,798 14,812 7,645 9,986 Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities — — — — — Add: Dividends and accretion of redeemable preferred stock — — — — — Add: Interest and other costs on pension and OPEB liabilities — — — — — Add: Other non-recurring items (2) 1,131 — — 1,131 — Less: Equity in losses of unconsolidated entities — — — — — Less: Non-controlling share of Adjusted EBITDA (3) (20,328) (15,103) (12,205) (5,225) (2,898) Adjusted EBITDA (Non-GAAP) $ 35,694 $ 18,490 $ 10,631 $ 17,204 $ 7,859 ______________________________________________________________________________________ (1) Includes the following items for the years ended December 31, 2023, 2022, and 2021: (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 Revenues 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. Expenses 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; and • 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. 46 Comparison of the years ended December 31, 2022 and 2021 Revenues 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. This increase was partially offset by a decrease in lease income of $0.4 million. Expenses Total expenses increased $11.5 million which reflects: • an increase in operating expenses of $8.2 million which primarily reflects additional labor costs due to increased activity as well as higher insurance for the new Jefferson Terminal South property; and • an increase in depreciation and amortization of $3.3 million due to additional assets placed into service. Other expense Total other expense increased $9.6 million which primarily reflects an increase in interest expense driven by incurred interest on outstanding borrowings and additional borrowings made under the new EB-5.3 Loan Agreement. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased $7.9 million primarily due to the changes noted above. Repauno Segment The following table presents our results of operations: Year Ended December 31, Change (in thousands) 2023 2022 2021 '23 vs ‘22 '22 vs '21 Revenues Rail revenues $ — $ 86 $ — $ (86) $ 86 Terminal services revenues 12,641 563 374 12,078 189 Other revenue (1,950) 3,468 11,243 (5,418) (7,775) Total revenues 10,691 4,117 11,617 6,574 (7,500) Expenses Operating expenses 22,203 17,072 14,304 5,131 2,768 Depreciation and amortization 9,336 9,322 9,052 14 270 Total expenses 31,539 26,394 23,356 5,145 3,038 Other income (expense) Gain on sale of assets, net — — 16 — (16) Interest expense (2,557) (1,590) (1,147) (967) (443) Total other expense (2,557) (1,590) (1,131) (967) (459) Loss before income taxes (23,405) (23,867) (12,870) 462 (10,997) Provision for income taxes 496 165 — 331 165 Net loss (23,901) (24,032) (12,870) 131 (11,162) Less: Net loss attributable to non-controlling interest in consolidated subsidiaries (1,412) (1,242) (222) (170) (1020) Net loss attributable to stockholders/Former Parent $ (22,489) $ (22,790) $ (12,648) $ 301 $ (10,142) 47 The following table sets forth a reconciliation of net loss 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 loss attributable to stockholders/Former Parent $ (22,489) $ (22,790) $ (12,648) $ 301 $ (10,142) Add: Provision for income taxes 496 165 — 331 165 Add: Equity-based compensation expense 1,770 595 823 1,175 (228) 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 1,125 (1,125) (2,220) 2,250 1,095 Add: Asset impairment charges — — — — — Add: Incentive allocations — — — — — Add: Depreciation and amortization expense 9,336 9,322 9,052 14 270 Add: Interest expense 2,557 1,590 1,147 967 443 Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities — — — — — Add: Dividends and accretion of 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 — — — — — Less: Non-controlling share of Adjusted EBITDA (1) (856) (500) (303) (356) (197) Adjusted EBITDA (Non-GAAP) $ (8,061) $ (12,743) $ (4,149) $ 4,682 $ (8,594) ______________________________________________________________________________________ (1) Includes the following items for the years ended December 31, 2023, 2022 and 2021: (i) equity-based compensation of $99, $28 and $28, (ii) provision for income taxes of $28, $8 and $—, (iii) interest expense of $143, $75 and $39, (iv) depreciation and amortization expense of $523, $442 and $312, and (v) changes in fair value of non-hedge derivative instruments of $63, $(53) and $(76), respectively. Comparison of the years ended December 31, 2023 and 2022 Revenues 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. Expenses 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 Revenues 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. Expenses Total expenses increased $3.0 million primarily due to: • an increase in operating expenses of $2.8 million due to increased terminal activity; and • an increase in depreciation expense of $0.3 million due to assets being placed into service. 48 Other (expense) income Total other expense increased $0.5 million primarily due to an increase in interest expense for the period relating to the revolver loan. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA decreased $8.6 million due to the changes noted above. Power and Gas Segment The following table presents our results of operations: Year Ended December 31, Change (in thousands) 2023 2022 2021 '23 vs ‘22 '22 vs '21 Revenues Other revenue $ — $ — $ — $ — $ — Total revenues — — — — — Expenses Operating expenses 2,726 826 99 1,900 727 Acquisition and transaction expenses 94 458 — (364) 458 Total expenses 2,820 1,284 99 1,536 1,185 Other (expense) income 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 Total other expense (2,429) (60,014) (17,379) 57,585 (42,635) Loss before income taxes (5,249) (61,298) (17,478) 56,049 (43,820) Benefit from income taxes — — (3,930) — 3,930 Net loss attributable to stockholders/Former Parent $ (5,249) $ (61,298) $ (13,548) $ 56,049 $ (47,750) 49 The following table sets forth a reconciliation of net loss 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 loss attributable to stockholders/Former Parent $ (5,249) $ (61,298) $ (13,548) $ 56,049 $ (47,750) Add: Benefit from income taxes — — (3,930) — 3,930 Add: Equity-based compensation expense — — — — — Add: Acquisition and transaction expenses 94 458 — (364) 458 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) 29,987 18,341 29,405 11,646 (11,064) Add: Dividends and accretion of 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 9,949 60,538 13,597 (50,589) 46,941 Less: Non-controlling share of Adjusted EBITDA — — — — — Adjusted EBITDA (Non-GAAP) $ 34,784 $ 18,039 $ 25,524 $ 16,745 $ (7,485) ______________________________________________________________________________________ (1) Includes the following items for the years ended December 31, 2023, 2022 and 2021: (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 Expenses Total expenses increased $1.5 million primarily due to an increase in professional fees. Other (expense) income 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 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 Expenses Total expenses increased $1.2 million primarily due to the acquisition and development of natural gas reserves. Other (expense) income 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 decreased $7.5 million due to the changes noted above. 50 Sustainability and Energy Transition Segment The following table presents our results of operations: Year Ended December 31, Change (in thousands) 2023 2022 2021 '23 vs ‘22 '22 vs '21 Revenues Other revenue $ — $ — $ — $ — $ — Total revenues — — — — — Expenses Operating expenses 29 10 — 19 10 Acquisition and transaction expenses 1 280 — (279) 280 Total expenses 30 290 — (260) 290 Other (expense) income Equity in losses of unconsolidated entities (14,814) (7,012) (372) (7,802) (6,640) Other income 2,529 2,123 — 406 2,123 Total other expense (12,285) (4,889) (372) (7,396) (4,517) 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: Year Ended December 31, Change (in thousands) 2023 2022 2021 '23 vs ‘22 '22 vs '21 Net loss attributable to stockholders/Former Parent $ (12,315) $ (5,179) $ (372) $ (7,136) $ (4,807) Add: Provision for income taxes — — — — — Add: Equity-based compensation expense — — — — — Add: Acquisition and transaction expenses 1 280 — (279) 280 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) (9,753) (4,447) (372) (5,306) (4,075) Add: Dividends and accretion of redeemable preferred stock — — — — — Add: Interest and other costs on pension and OPEB liabilities — — — — — Add: Other non-recurring items — — — — — Less: Equity in (earnings) losses of unconsolidated entities 14,814 7,012 372 7,802 6,640 Less: Non-controlling share of Adjusted EBITDA — — — — — Adjusted EBITDA (Non-GAAP) $ (7,253) $ (2,334) $ (372) $ (4,919) $ (1,962) ______________________________________________________________________________________ (1) Includes the following items for the years ended December 31, 2023, 2022 and 2021: (i) net loss of $(14,814), $(7,069) and $(372), (ii) depreciation expense of $1,539, $774 and $—, and (iii) interest expense of $3,522, $1,848 and $—, respectively. Comparison of the years ended December 31, 2023 and 2022 Other (expense) income 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. 51 Adjusted EBITDA (Non-GAAP) 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) 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) Adjusted EBITDA decreased $2.0 million due to the changes noted above. Corporate and Other The following table presents our results of operations: Year Ended December 31, Change (in thousands) 2023 2022 2021 '23 vs ‘22 '22 vs '21 Revenues Roadside services revenues $ 68,190 $ 47,899 $ — $ 20,291 $ 47,899 Total revenues 68,190 47,899 — 20,291 47,899 Expenses Operating expenses 69,166 48,969 59 20,197 48,910 General and administrative 12,833 10,891 8,737 1,942 2,154 Acquisition and transaction expenses 1,938 15,279 11,985 (13,341) 3,294 Management fees and incentive allocation to affiliate 12,467 12,964 15,638 (497) (2,674) Depreciation and amortization 3,150 1,945 — 1,205 1,945 Total expenses 99,554 90,048 36,419 9,506 53,629 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) Other income — 133 — (133) 133 Total other (expense) income (63,359) (26,355) 470 (37,004) (26,825) Loss before income taxes (94,723) (68,504) (35,949) (26,219) (32,555) Provision for income taxes 67 — 7 67 (7) Net loss (94,790) (68,504) (35,956) (26,286) (32,548) Less: Net loss attributable to non-controlling interest in consolidated subsidiaries: (228) (688) — 460 (688) Less: Dividends and accretion of redeemable preferred stock 62,400 23,657 — 38,743 23,657 Net loss attributable to stockholders/Former Parent $ (156,962) $ (91,473) $ (35,956) $ (65,489) $ (55,517) 52 The following table sets forth a reconciliation of net loss 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 loss attributable to stockholders/Former Parent $ (156,962) $ (91,473) $ (35,956) $ (65,489) $ (55,517) Add: Provision for income taxes 67 — 7 67 (7) Add: Equity-based compensation expense 170 — — 170 — Add: Acquisition and transaction expenses 1,938 15,279 11,985 (13,341) 3,294 Add: Losses on the modification or extinguishment of debt and capital lease obligations 1,099 — — 1,099 — Add: Changes in fair value of non-hedge derivative instruments — — — — — Add: Asset impairment charges — — — — — Add: Incentive allocations — — — — — Add: Depreciation and amortization expense 3,150 1,945 — 1,205 1,945 Add: Interest expense 62,316 26,639 — 35,677 26,639 Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (1) (25) 45 62 (70) (17) Add: Dividends and accretion of redeemable preferred stock 62,400 23,657 — 38,743 23,657 Add: Interest and other costs on pension and OPEB liabilities — — — — — Add: Other non-recurring items — — — — — Less: Equity in (earnings) losses of unconsolidated entities (56) (151) (470) 95 319 Less: Non-controlling share of Adjusted EBITDA (2) (260) (651) — 391 (651) Adjusted EBITDA (Non-GAAP) $ (26,163) $ (24,710) $ (24,372) $ (1,453) $ (338) ______________________________________________________________________________________ (1) Includes the following items for the years ended December 31, 2023, 2022 and 2021: (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, 2023, 2022 and 2021: (i) depreciation expense of $260, $651 and $—, respectively. Comparison of the years ended December 31, 2023 and 2022 Revenues 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. Expenses 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; and • 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. 53 Comparison of the years ended December 31, 2022 and 2021 Revenues Total revenues increased $47.9 million due to the acquisition of a majority stake and consolidation of FYX in May 2022. Expenses Total expenses increased $53.6 million primarily due to the acquisition of a majority stake and consolidation of FYX in May 2022. Other (expense) income Total other expense increased $26.8 million due to an increase in interest expense of $26.6 million which reflects an increase in the average outstanding debt from the 2027 Notes issued in July 2022. Dividends and accretion of redeemable preferred stock Dividends and accretion of redeemable preferred stock increased $23.7 million due to the redeemable preferred stock raise completed in August 2022. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA decreased $0.3 million primarily due to the changes noted above. Transactions with Affiliates and Affiliated Entities We are managed by the Manager, an affiliate of Fortress, pursuant to our Management Agreement, which provides for us to bear obligations for management fees and expense reimbursements payable to the Manager. Pursuant to the terms of the Management Agreement, the Manager provides a management team and other professionals who are responsible for implementing our business strategy and performing certain services for us, subject to oversight by our board of directors. Our Management Agreement has an initial six-year term and is automatically renewed for one-year terms thereafter unless terminated either by us or our Manager. For its services, our Manager is entitled to receive a management fee from us, payable monthly, that is based on the average value of our total equity (including redeemable preferred stock, but excluding non-controlling interests) determined on a consolidated basis in accordance with GAAP as of the last day of the two most recently completed months multiplied by an annual rate of 1.50%. In addition, we are obligated to reimburse certain expenses incurred by our Manager on our behalf. Geographic Information Please refer to Note 15 of our consolidated and combined consolidated financial statements for information by geographic area for each segment, all located in North America, of revenues from our external customers, for the years ended December 31, 2023, 2022 and 2021, as well as the geographic area for each segment of our total property, plant and equipment as of December 31, 2023 and 2022. Liquidity and Capital Resources 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 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. 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. 54 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) 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. • 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 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; (ii) Transtar Revolver of $10.0 million and (iii) EB-5.3 Loan Agreement of $26.4 million. We did not make any principal repayments of debt during the year ended December 31, 2022. • 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. Historical Cash Flow The following table presents our historical cash flow: Year Ended December 31, (in thousands) 2023 2022 2021 Cash Flow Data: 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) Net cash provided by financing activities 79,447 157,743 1,136,866 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. 55 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. Net cash used in investing activities decreased $561.5 million primarily due to a (i) decrease in the acquisition of business, net of cash acquired for $623.3 million and (ii) a decrease in the investment in unconsolidated entities of $49.2 million, partially offset by (iii) an increase in acquisitions of property, plant and equipment of $76.2 million and (iv) an increase in investment in convertible promissory notes of $37.5 million. 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. Debt Covenants 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. Contractual Obligations and Cash Requirements Our material cash requirements include the following contractual and other obligations: Debt Obligations — As of December 31, 2023, we have outstanding principal and interest payment obligations of $1.4 billion and $531.3 million, respectively, of which, there is no principal payment due and $97.2 million of interest payments due within the next twelve months. See Note 7 of the consolidated and combined consolidated financial statements for additional information about our debt obligations. 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 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 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. 56 Application of Critical Accounting Policies Property, Plant and Equipment, Leasing Equipment and Depreciation —Property, plant and equipment and leasing equipment are stated at cost (inclusive of capitalized acquisition costs, where applicable) and depreciated using the straight-line method, over their estimated useful lives, to estimated residual values which are summarized as follows: Asset Range of Estimated Useful Lives Residual Value Estimates Railcars and locomotives 40 - 50 years from date of manufacture Scrap value at end of useful life Track and track related assets 15 - 50 years from date of manufacture Scrap value at end of useful life Land, site improvements and rights N/A N/A Bridges and tunnels 15 - 55 years Scrap value at end of useful life Buildings and site improvements 20 - 30 years Scrap value at end of useful life Railroad equipment 3 - 15 years from date of manufacture Scrap value at end of useful life Terminal machinery and equipment 15 - 25 years from date of manufacture Scrap value at end of useful life Vehicles 5 - 7 years from date of manufacture Scrap value at end of useful life Furniture and fixtures 3 - 6 years from date of purchase None Computer hardware and software 3 - 5 years from date of purchase None Construction in progress N/A N/A Impairment of Long-Lived Assets — We perform a recoverability assessment of each of our long-lived assets whenever events or changes in circumstances, or indicators, indicate that the carrying amount or net book value of an asset may not be recoverable. Indicators may include, but are not limited to, a significant lease restructuring or early lease termination; a significant change in market conditions; or the introduction of newer technology. When performing a recoverability assessment, we measure whether the estimated future undiscounted net cash flows expected to be generated by the asset exceeds its net book value. The undiscounted cash flows consist of cash flows from currently contracted leases and terminal services contracts, future projected leases, terminal service and freight rail rates, transition costs, and estimated residual or scrap values. In the event that an asset does not meet the recoverability test, the carrying value of the asset will be adjusted to fair value resulting in an impairment charge. Management develops the assumptions used in the recoverability analysis based on its knowledge of active contracts, current and future expectations of the demand for a particular asset and historical experience, as well as information received from third party industry sources. The factors considered in estimating the undiscounted cash flows are impacted by changes in future periods due to changes in contracted lease rates, terminal service, and freight rail rates, residual values, economic conditions, technology, demand for a particular asset type and other factors. 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 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, 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. 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. 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. As part of our assessment, we considered numerous factors, including: • macroeconomic conditions and their potential impact on reporting unit fair value; 57 • industry and market conditions; • cost factors such as increases in raw materials, labor or other costs; • actual financial performance compared with budget and prior projections; and • events that may change the composition or carrying value of its net assets. 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, 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. 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, 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, expansion of volumes and execution of contracts related to sustainable fuels and movements in future oil spreads. 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 and natural gas 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. Further delays in executing anticipated contracts or achieving our projected volumes could adversely affect the fair value of the reporting unit. There were no impairments of goodwill for the years ended December 31, 2023, 2022 and 2021. Income Taxes — Prior to the spin-off, we were taxed as a disregarded entity for U.S. federal income tax purposes and our taxable income or loss generated was allocated to investors by our Former Parent, which was treated as a partnership for U.S. federal income tax purposes. In addition, certain of our subsidiaries were taxed as separate corporations for U.S. federal income tax purposes. The income tax provision included in the consolidated and combined consolidated financial statements prior to the spin-off was prepared on a separate return method. Post spin-off, FTAI Infrastructure’s tax profile, certain return elections and assertions are different, including a single consolidated federal tax filing in the U.S., and therefore the income taxes presented prior to the spin-off in the consolidated and combined consolidated financial statements are not expected to be indicative of the Company’s future income taxes. We account for these taxes using the asset and liability method under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. A valuation allowance is established when management believes it is more likely than not that a deferred tax asset will not be realized. Some of our entities file income tax returns in the U.S. federal jurisdiction, various state jurisdictions and in certain foreign jurisdictions. The income tax returns filed by us and our subsidiaries are subject to examination by the U.S. federal, state and foreign tax authorities. We recognize tax benefits for uncertain tax positions only if it is more likely than not that the position is sustainable based on its technical merits. Interest and penalties on uncertain tax positions are included as a component of the provision for income taxes in the Consolidated and Combined Consolidated Statements of Operations. Recent Accounting Pronouncements Please see Note 2 to our consolidated and combined consolidated financial statements included elsewhere in this filing for recent accounting pronouncements.