FTAI Infrastructure Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help you understand FTAI Infrastructure Inc. (“we”, “us”, “our”, or the “Company”). Our MD&A should be read in conjunction with our unaudited consolidated financial statements and the accompanying notes, and with Part II, Item 1A, “Risk Factors” and “Forward-Looking Statements” included elsewhere in this Quarterly Report on Form 10-Q. Overview We are in the business of acquiring, developing and operating assets and businesses that represent critical infrastructure for customers in the transportation, 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”). We are a publicly-traded company trading on The Nasdaq Global Select Market under the symbol “FIP.” Our operations consist of four primary business lines: (i) Railroad, (ii) Ports and Terminals, (iii) Power and Gas and (iv) Sustainability and Energy Transition. Our Railroad business primarily invests in and operates short line and regional railroads in North America. Our Ports and Terminals business, consisting of our Jefferson Terminal and Repauno segments, develops or acquires industrial properties in strategic locations that store and handle for third parties a variety of energy products, including crude oil, refined products and clean fuels. Through an equity method investment, our Power and Gas business develops and operates facilities, such as a 485 megawatt power plant at the Long Ridge terminal in Ohio, that leverage the property’s location and key attributes to generate incremental value. Our Sustainability and Energy Transition business focuses on investments in companies and assets that utilize green technology, produce sustainable fuels and products or enable customers to reduce their carbon footprint. We expect to continue to invest in such market sectors, and pursue additional investment opportunities in other infrastructure businesses and assets we believe to be attractive and meet our investment objectives. Our team focuses on acquiring a diverse group of long-lived assets or operating businesses that provide mission-critical services or functions to infrastructure networks and typically have high barriers to entry, strong margins, stable cash flows and upside from earnings growth and asset appreciation driven by increased use and inflation. We believe that there are a large number of acquisition opportunities in our markets and that our Manager’s expertise and business and financing relationships, together with our access to capital and generally available capital for infrastructure projects in today’s marketplace, will allow us to take advantage of these opportunities. As of June 30, 2024, we had total consolidated assets of $2.5 billion and redeemable preferred stock and equity of $0.6 billion. Operating Segments 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 multipurpose dock, a rail-to-ship transloading system and multiple industrial development opportunities. The Power and Gas segment is comprised of an equity method investment in Long Ridge, which is a 1,660-acre multi-modal terminal located along the Ohio River with rail, dock, and multiple industrial development opportunities, including a power plant in operation. The Sustainability and Energy Transition segment is comprised of Aleon/Gladieux, Clean Planet, and CarbonFree, and all three investments are development stage businesses focused on sustainability and recycling. Corporate and Other primarily consists of unallocated corporate general and administrative expenses, management fees, debt and redeemable preferred stock. Additionally, Corporate and Other includes an 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 14, 2024, certain members of Fortress management and affiliates of Mubadala Investment Company, through its wholly owned asset management subsidiary Mubadala Capital (“Mubadala”), completed their acquisition of 100% of the equity of Fortress. Fortress continues to operate as an independent investment manager under the Fortress brand, with autonomy over investment processes and decision making, personnel and operations. 44 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, 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 . Comparison of the three and six months ended June 30, 2024 and 2023 The following table presents our results of operations: Three Months Ended June 30, Change Six Months Ended June 30, Change (in thousands) 2024 2023 2024 2023 Revenues Lease income $ 1,184 $ 719 $ 465 $ 2,392 $ 1,462 $ 930 Rail revenues 45,256 42,146 3,110 91,157 82,714 8,443 Terminal services revenues 24,234 20,868 3,366 46,132 40,016 6,116 Roadside services revenues 14,213 18,235 (4,022) 27,741 36,085 (8,344) Other revenue — (136) 136 — (1,951) 1,951 Total revenues 84,887 81,832 3,055 167,422 158,326 9,096 Expenses Operating expenses 61,225 62,775 (1,550) 125,800 127,937 (2,137) General and administrative 2,840 3,702 (862) 7,701 6,903 798 Acquisition and transaction expenses 921 636 285 1,847 905 942 Management fees and incentive allocation to affiliate 2,776 3,084 (308) 5,777 6,066 (289) Depreciation and amortization 20,163 20,292 (129) 40,684 40,427 257 Asset impairment — 602 (602) — 743 (743) Total expenses 87,925 91,091 (3,166) 181,809 182,981 (1,172) Other (expense) income Equity in (losses) earnings of unconsolidated entities (12,788) (1,625) (11,163) (24,690) 2,741 (27,431) (Loss) gain on sale of assets, net (150) 647 (797) (163) 523 (686) Loss on modification or extinguishment of debt (9,170) — (9,170) (9,170) — (9,170) Interest expense (29,690) (24,182) (5,508) (57,283) (47,432) (9,851) Other income 6,963 1,370 5,593 9,328 1,591 7,737 Total other expense (44,835) (23,790) (21,045) (81,978) (42,577) (39,401) Loss from before income taxes (47,873) (33,049) (14,824) (96,365) (67,232) (29,133) Provision for income taxes 267 823 (556) 2,072 2,552 (480) Net loss (48,140) (33,872) (14,268) (98,437) (69,784) (28,653) Less: Net loss attributable to non-controlling interest in consolidated subsidiaries (11,400) (10,276) (1,124) (22,090) (20,169) (1,921) Less: Dividends and accretion of redeemable preferred stock 17,610 15,257 2,353 34,585 29,827 4,758 Net loss attributable to stockholders $ (54,350) $ (38,853) $ (15,497) $ (110,932) $ (79,442) $ (31,490) 45 The following table sets forth a reconciliation of net loss attributable to stockholders to Adjusted EBITDA: Three Months Ended June 30, Change Six Months Ended June 30, Change (in thousands) 2024 2023 2024 2023 Net loss attributable to stockholders $ (54,350) $ (38,853) $ (15,497) $ (110,932) $ (79,442) $ (31,490) Add: Provision for income taxes 267 823 (556) 2,072 2,552 (480) Add: Equity-based compensation expense 1,799 642 1,157 4,139 1,537 2,602 Add: Acquisition and transaction expenses 921 636 285 1,847 905 942 Add: Losses on the modification or extinguishment of debt and capital lease obligations 9,170 — 9,170 9,170 — 9,170 Add: Changes in fair value of non-hedge derivative instruments — — — — 1,125 (1,125) Add: Asset impairment charges — 602 (602) — 743 (743) Add: Incentive allocations — — — — — — Add: Depreciation & amortization expense (1) 21,596 20,292 1,304 42,693 40,427 2,266 Add: Interest expense 29,690 24,182 5,508 57,283 47,432 9,851 Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2) 3,208 6,886 (3,678) 9,465 15,076 (5,611) Add: Dividends and accretion of redeemable preferred stock 17,610 15,257 2,353 34,585 29,827 4,758 Add: Interest and other costs on pension and OPEB liabilities (138) 480 (618) 462 960 (498) Add: Other non-recurring items (3) — 51 (51) — 1,339 (1,339) Less: Equity in losses (earnings) of unconsolidated entities 12,788 1,625 11,163 24,690 (2,741) 27,431 Less: Non-controlling share of Adjusted EBITDA (4) (8,305) (4,946) (3,359) (13,987) (10,167) (3,820) Adjusted EBITDA (non-GAAP) $ 34,256 $ 27,677 $ 6,579 $ 61,487 $ 49,573 $ 11,914 ________________________________________________________ (1) Includes the following items for the three months ended June 30, 2024 and 2023: (i) depreciation and amortization expense of $20,163 and $20,292 and (ii) capitalized contract costs amortization of $1,433 and $—, respectively. Includes the following items for the six months ended June 30, 2024 and 2023: (i) depreciation and amortization expense of $40,684 and $40,427 and (ii) capitalized contract costs amortization of $2,009 and $—, respectively. (2) Includes the following items for the three months ended June 30, 2024 and 2023: (i) net loss of $(12,838) and $(1,660), (ii) interest expense of $11,182 and $8,304, (iii) depreciation and amortization expense of $8,050 and $7,967, (iv) acquisition and transaction expenses of $31 and $237, (v) changes in fair value of non-hedge derivative instruments of $(3,875) and $(7,963), (vi) equity-based compensation of $1 and $1, (vii) asset impairment of $163 and $—, (viii) equity method basis adjustments of $16 and $— and (ix) other non-recurring items of $478 and $—, respectively. Includes the following items for the six months ended June 30, 2024 and 2023: (i) net (loss) income of $(24,780) and $2,658, (ii) interest expense of $22,075 and $16,336, (iii) depreciation and amortization expense of $13,180 and $13,633, (iv) acquisition and transaction expenses of $50 and $257, (v) changes in fair value of non-hedge derivative instruments of $(1,822) and $(17,810), (vi) equity-based compensation of $2 and $2, (vii) asset impairment of $250 and $—, (viii) equity method basis adjustments of $32 and $— and (ix) other non-recurring items of $478 and $—, respectively. (3) Includes the following item for the three and six months ended June 30, 2023: Railroad severance expense of $51 and $1,339, respectively. (4) Includes the following items for the three months ended June 30, 2024 and 2023: (i) equity-based compensation of $268 and $76, (ii) (benefit from) provision for income taxes of $(142) and $35, (iii) interest expense of $2,639 and $1,880, (iv) depreciation and amortization expense of $3,387 and $2,944, (v) acquisition and transaction expense of $3 and $8, (vii) interest and other costs on pension and OPEB liabilities of $— and $1, (viii) asset impairment of $— and $2 and (ix) loss on modification or extinguishment of debt of $2,150 and $—, respectively. Includes the following items for the six months ended June 30, 2024 and 2023: (i) equity-based compensation of $699 and $186, (ii) (benefit from) provision for income taxes of $(276) and $88, (iii) interest expense of $4,828 and $3,737, (iv) depreciation and amortization expense of $6,581 and $6,080, (v) changes in fair value of non-hedge derivative instruments of $— and $61, (vi) acquisition and transaction expense of $3 and $8, (vii) interest and other costs on pension and OPEB liabilities of $2 and $2, (viii) asset impairment of $— and $2, (ix) loss on modification or extinguishment of debt of $2,150 and $— and (x) other non-recurring items of $— and $3, respectively. Revenue Comparison of the three months ended June 30, 2024 and 2023 Total revenues increased $3.1 million due to higher revenues of $3.1 million in the Railroad segment and $4.1 million in the Jefferson Terminal segment, offset by lower revenues of $4.0 million in the Corporate and Other segment and $0.1 million in the Repauno segment. Roadside services revenue decreased $4.0 million due to the decline of roadside services for FYX. 46 Terminal services revenues increased $3.4 million primarily due an increase in average crude oil throughput volumes in the Jefferson Terminal segment . Rail revenues increased $3.1 million primarily due to an increase in both carloads and rates per car in the Railroad segment. Comparison of the six months ended June 30, 2024 and 2023 Total revenues increased $9.1 million primarily due to higher revenues of $8.4 million in the Railroad segment, $3.6 million in the Jefferson Terminal segment and $5.4 million in the Repauno segment, offset by lower revenues of $8.3 million in the Corporate and Other segment. Roadside services revenue decreased $8.3 million primarily due to the decline of roadside services for FYX. Terminal services revenues increased $6.1 million primarily due to the commencement of a butane throughput contract at Repauno in April 2023, as well as an increase in average crude oil throughput volumes in the Jefferson Terminal segment. Rail revenues increased $8.4 million primarily due to an increase in both carloads and rates per car in the Railroad segment. Expenses Comparison of the three months ended June 30, 2024 and 2023 Total expenses decreased $3.2 million, primarily due to a decrease in (i) operating expenses, (ii) general and administrative expenses and (iii) asset impairment. Operating expenses decreased $1.6 million which primarily reflects: • a decrease of $4.9 million due to decreased roadside services at FYX; partially offset by • an increase of $2.0 million primarily due to costs associated with stock-based compensation, as well as insurance and higher labor and other costs associated with increased terminal throughput activity in the Jefferson Terminal segment; and • an increase of $1.4 million in the Railroad segment mainly due to increased car loads. General and administrative expenses decreased $0.9 million primarily due to lower professional fees in the Corporate and Other segment. Asset impairment decreased $0.6 million primarily due to impairment for certain scrap assets in the Railroad segment in 2023. Comparison of the six months ended June 30, 2024 and 2023 Total expenses decreased $1.2 million, primarily due to decreased operating expenses, partially offset by increase in acquisition and transaction expenses. Operating expenses decreased $2.1 million which primarily reflects: • a decrease of $9.3 million due to decreased roadside services at FYX; partially offset by • an increase of $1.1 million due to costs associated with stock-based compensation, and an increase in labor costs and professional fees related to the continued development of the site in the Repauno segment; • an increase of $4.7 million primarily due to costs associated with stock-based compensation, as well as insurance and higher labor and other costs associated with increased terminal throughput activity in the Jefferson Terminal segment; and • an increase of $1.1 million in the Railroad segment mainly due to increased car loads. Acquisition and transaction expenses increased $0.9 million primarily due to professional fees for a potential acquisition at the Corporate and Other segment. Other expense Total other expense increased $21.0 million during the three months ended June 30, 2024 which primarily reflects: • an increase in loss on modification or extinguishment of debt of $9.2 million in the Jefferson Terminal segment; • an increase in interest expense of $5.5 million primarily due to an increase in the average outstanding debt of approximately $168.7 million which consists of (i) $84.3 million for the Senior Notes due 2027, (ii) $19.3 million for the DRP Revolver and (iii) $115.1 million for the 2024 Bonds as well as the Barclay’s loan, offset by the full repayment of the Transtar Revolver in July 2023 for $50.0 million; • an increase of $11.2 million in equity in losses of unconsolidated entities primarily due to a decrease in unrealized gains on power swaps at Long Ridge; and • a gain on sale of land recognized in the prior year of $0.8 million in the Jefferson Terminal segment; partially offset by 47 • an increase of $5.6 million in Other income due to interest income from increased loan balance on the loan agreement between the Company and Long Ridge Energy & Power LLC. Total other expense increased $39.4 million during the six months ended June 30, 2024 which primarily reflects: • an increase of $27.4 million in equity in losses of unconsolidated entities primarily due to a decrease in unrealized gains on power swaps at Long Ridge; • an increase in interest expense of $9.9 million primarily due to an increase in the average outstanding debt of approximately $119.8 million which consists of (i) $92.5 million for the Senior Notes due 2027, (ii) $19.3 million for the DRP Revolver and (iii) $58.1 million for the 2024 Bonds as well as the Barclay’s loan, offset by the full repayment of the Transtar Revolver in July 2023 for $50.0 million; • an increase in loss on modification or extinguishment of debt of $9.2 million in the Jefferson Terminal segment; and • a gain on sale of land recognized in the prior year of $0.7 million in the Jefferson Terminal segment; partially offset by • an increase of $7.7 million in Other income due to interest income from increased loan balance on the loan agreement between the Company and Long Ridge Energy & Power LLC. Net loss Net loss increased $14.3 million and $28.7 million during the three and six months ended June 30, 2024, respectively, primarily due to the changes noted above. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased $6.6 million and $11.9 million during the three and six months ended June 30, 2024, respectively, primarily due to the changes noted above. Railroad Segment The following table presents our results of operations: Three Months Ended June 30, Change Six Months Ended June 30, Change (in thousands) 2024 2023 2024 2023 Revenues Lease income $ 382 $ 400 $ (18) $ 793 $ 837 $ (44) Rail revenues 45,256 42,146 3,110 91,157 82,714 8,443 Total revenues 45,638 42,546 3,092 91,950 83,551 8,399 Expenses Operating expenses 23,701 22,257 1,444 48,543 47,492 1,051 Acquisition and transaction expenses 153 184 (31) 337 367 (30) Depreciation and amortization 4,860 5,125 (265) 9,872 10,226 (354) Asset impairment — 602 (602) — 743 (743) Total expenses 28,714 28,168 546 58,752 58,828 (76) Other (expense) income Loss on sale of assets, net (150) (85) (65) (163) (209) 46 Interest expense (98) (1,215) 1,117 (167) (2,170) 2,003 Other income (expense) 251 (544) 795 (352) (1,096) 744 Total other income (expense) 3 (1,844) 1,847 (682) (3,475) 2,793 Income before income taxes 16,927 12,534 4,393 32,516 21,248 11,268 Provision for income taxes 1,092 720 372 2,184 1,318 866 Net income 15,835 11,814 4,021 30,332 19,930 10,402 Less: Net income attributable to non-controlling interest in consolidated subsidiaries 47 28 19 108 46 62 Net income attributable to stockholders $ 15,788 $ 11,786 $ 4,002 $ 30,224 $ 19,884 $ 10,340 48 The following table sets forth a reconciliation of net income attributable to stockholders to Adjusted EBITDA: Three Months Ended June 30, Change Six Months Ended June 30, Change (in thousands) 2024 2023 2024 2023 Net income attributable to stockholders $ 15,788 $ 11,786 $ 4,002 $ 30,224 $ 19,884 $ 10,340 Add: Provision for income taxes 1,092 720 372 2,184 1,318 866 Add: Equity-based compensation expense 290 159 131 580 484 96 Add: Acquisition and transaction expenses 153 184 (31) 337 367 (30) 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 — 602 (602) — 743 (743) Add: Incentive allocations — — — — — — Add: Depreciation and amortization expense 4,860 5,125 (265) 9,872 10,226 (354) Add: Interest expense 98 1,215 (1,117) 167 2,170 (2,003) 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 (138) 480 (618) 462 960 (498) Add: Other non-recurring items (1) — 51 (51) — 1,339 (1,339) Less: Equity in earnings of unconsolidated entities — — — — — — Less: Non-controlling share of Adjusted EBITDA (2) (22) (18) (4) (47) (36) (11) Adjusted EBITDA $ 22,121 $ 20,304 $ 1,817 $ 43,779 $ 37,455 $ 6,324 ________________________________________________________ (1) Includes the following item for the three and six months ended June 30, 2023: Railroad severance expense of $51 and $1,339, respectively. (2) Includes the following items for the three months ended June 30, 2024 and 2023: (i) equity-based compensation of $1 and $—, (ii) provision for income taxes of $3 and $—, (iii) interest expense of $1 and $3, (iv) depreciation and amortization expense of $16 and $12, (v) acquisition and transaction expense of $1 and $—, (vi) interest and other costs on pension and OPEB liabilities of $— and $1 and (vii) asset impairment of $— and $2, respectively. Includes the following items for the six months ended June 30, 2024 and 2023: (i) equity-based compensation of $2 and $1, (ii) provision for income taxes of $7 and $1, (iii) interest expense of $1 and $5, (iv) depreciation and amortization expense of $34 and $22, (v) acquisition and transaction expense of $1 and $—, (vi) interest and other costs on pension and OPEB liabilities of $2 and $2, (vii) asset impairment of $— and $2 and (viii) other non-recurring items of $— and $3, respectively. Revenues Total revenues increased $3.1 million and $8.4 million during the three and six months ended June 30, 2024, respectively, primarily due to both an increase in carloads and rates per car. Expenses Total expenses increased $0.5 million during the three months ended June 30, 2024, which primarily reflects an increase in operating expenses of $1.4 million mainly due to increased car loads, partially offset by impairment of $0.6 million for certain scrap assets in 2023. Other income (expense) Total other income increased $1.8 million and $2.8 million during the three and six months ended June 30, 2024, respectively, which primarily reflects a decrease in interest expense related to the revolver entered into in the fourth quarter of 2022 and paid off in the third quarter of 2023, and decrease in other expense related to pension and OPEB benefits due to favorable adjustments. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased $1.8 million and $6.3 million during the three and six months ended June 30, 2024, respectively, primarily due to the activity noted above. 49 Jefferson Terminal Segment The following table presents our results of operations: Three Months Ended June 30, Change Six Months Ended June 30, Change (in thousands) 2024 2023 2024 2023 Revenues Lease income $ 802 $ 319 $ 483 $ 1,599 $ 625 $ 974 Terminal services revenues 20,372 16,785 3,587 38,191 35,571 2,620 Total revenues 21,174 17,104 4,070 39,790 36,196 3,594 Expenses Operating expenses 17,975 15,990 1,985 37,107 32,415 4,692 Acquisition and transaction expenses 8 36 (28) 10 36 (26) Depreciation and amortization 12,300 12,144 156 24,630 24,013 617 Total expenses 30,283 28,170 2,113 61,747 56,464 5,283 Other income (expense) Gain on sale of assets, net — 732 (732) — 732 (732) Loss on modification or extinguishment of debt (9,170) — (9,170) (9,170) — (9,170) Interest expense (11,190) (7,978) (3,212) (20,487) (15,862) (4,625) Other income (expense) 3,531 (349) 3,880 3,537 (1,412) 4,949 Total other income (expense) (16,829) (7,595) (9,234) (26,120) (16,542) (9,578) Loss before income taxes (25,938) (18,661) (7,277) (48,077) (36,810) (11,267) (Benefit from) provision for income taxes (612) 152 (764) (1,166) 350 (1,516) Net loss (25,326) (18,813) (6,513) (46,911) (37,160) (9,751) Less: Net loss attributable to non-controlling interest in consolidated subsidiaries (11,174) (10,048) (1,126) (21,639) (19,233) (2,406) Net income (loss) attributable to stockholders $ (14,152) $ (8,765) $ (5,387) $ (25,272) $ (17,927) $ (7,345) 50 The following table sets forth a reconciliation of net income (loss) attributable to stockholders to Adjusted EBITDA: Three Months Ended June 30, Change Six Months Ended June 30, Change (in thousands) 2024 2023 2024 2023 Net income (loss) attributable to stockholders $ (14,152) $ (8,765) $ (5,387) $ (25,272) $ (17,927) $ (7,345) Add: (Benefit from) provision for income taxes (612) 152 (764) (1,166) 350 (1,516) Add: Equity-based compensation expense 1,101 303 798 2,860 747 2,113 Add: Acquisition and transaction expenses 8 36 (28) 10 36 (26) Add: Losses on the modification or extinguishment of debt and capital lease obligations 9,170 — 9,170 9,170 — 9,170 Add: Changes in fair value of non-hedge derivative instruments — — — — — — Add: Asset impairment charges — — — — — — Add: Incentive allocations — — — — — — Add: Depreciation and amortization expense (1) 13,733 12,144 1,589 26,639 24,013 2,626 Add: Interest expense 11,190 7,978 3,212 20,487 15,862 4,625 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 earnings of unconsolidated entities — — — — — — Less: Non-controlling share of Adjusted EBITDA (2) (8,110) (4,766) (3,344) (13,599) (9,481) (4,118) Adjusted EBITDA (non-GAAP) $ 12,328 $ 7,082 $ 5,246 $ 19,129 $ 13,600 $ 5,529 ________________________________________________________ (1) Includ es the following items for the three months ended June 30, 2024 and 2023: (i) depreci ation and amortization expense of $12,300 and $12,144 and (ii) capitalized contract costs amortization of $1,433 and $—, respectively. Includes the following items for the six months ended June 30, 2024 and 2023: (i) depreciation and amortization expense of $24,630 and $24,013 and (ii) capitalized contract costs amortization of $2,009 and $—, respectively. (2) Includes the following items for the three months ended June 30, 2024 and 2023: (i) equity-based compe nsation of $259 and $71, (ii) (benefit from) provision for income taxes of $(143) and $35, (iii) interest expense of $2,623 and $1,844, (iv) depreciation and amortization expense of $3,219 and $2,808, (v) acquisition and transaction expense of $2 and $8 and (vi) loss on modification or extinguishment of debt of $2,150 and $—, respectively. Includes the following items for the six months ended June 30, 2024 and 2023: (i) equity-based compensation of $671 and $173, (ii) (benefit from) provision for income taxes of $(273) and $81, (iii) interest expense of $4,803 and $3,667, (iv) depreciation and amortization expense of $6,246 and $5,552, (v) acquisition and transaction expense of $2 and $8 and (vi) loss on modification or extinguishment of debt of $2,150 and $—, respectively. Revenues Total revenues increased $4.1 million and $3.6 million during the three and six months ended June 30, 2024, respectively, due to an increase in average crude oil throughput volumes. Expenses Total expe nses increased $2.1 million during the three months ended June 30, 2024 which primarily reflects: • an increase in operating expenses of $2.0 million primarily due to costs associated with stock-based compensation, as well as insurance and higher labor and other costs associated with increased terminal throughput activity; and • an increase in depreciation and amortization of $0.2 million due to additional assets being placed into service. Total expenses increased $5.3 million during the six months ended June 30, 2024 which primarily reflects: • an increase in operati ng expenses of $4.7 million primarily due to costs associated with stock-based compensation, as well as insurance and higher labor and other costs associated with increased terminal throughput activity; and • an increase in depreciation and amortization of $0.6 million due to additional assets being placed into service. 51 Other income (expense) Total other expense increased $9.2 million during the three months ended June 30, 2024, which primarily reflects a $9.2 million loss on modification or extinguishment of debt, an increase in interest expense of $3.2 million related to additional borrowings during the quarter and a $0.7 million gain on sale of land recognized in the prior year, partially offset by a $3.5 million gain from the grant of a pipeline easement. Total other expense increased $9.6 million during the six months ended June 30, 2024 which primarily reflects a $9.2 million loss on modification or extinguishment of debt, an increase in interest expense of $4.6 million related to additional borrowings during the quarter and a $0.7 million gain on sale of land recognized in the prior year , partially off set by a $3.5 million gain from the grant of a pipeline easemen t and a $1.1 million benefit from the decrease in prior period losses related to the termination of a pipeline contract . Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased $5.2 million and $5.5 million during the three and six months ended June 30, 2024, respectively, primarily due to the changes noted above. Repauno Segment The following table presents our results of operations: Three Months Ended June 30, Change Six Months Ended June 30, Change (in thousands) 2024 2023 2024 2023 Revenues Terminal services revenues $ 3,862 $ 4,083 $ (221) $ 7,941 $ 4,445 $ 3,496 Other revenue — (136) 136 — (1,951) 1,951 Total revenues 3,862 3,947 (85) 7,941 2,494 5,447 Expenses Operating expenses 5,598 5,776 (178) 11,769 10,705 1,064 Depreciation and amortization 2,480 2,281 199 4,924 4,526 398 Total expenses 8,078 8,057 21 16,693 15,231 1,462 Other expense Interest expense (242) (615) 373 (388) (1,203) 815 Total other expense (242) (615) 373 (388) (1,203) 815 Loss before income taxes (4,458) (4,725) 267 (9,140) (13,940) 4,800 (Benefit from) provision for income taxes (25) 40 (65) (161) 154 (315) Net loss (4,433) (4,765) 332 (8,979) (14,094) 5,115 Less: Net loss attributable to non-controlling interest in consolidated subsidiaries (273) (255) (18) (559) (753) 194 Net loss attributable to stockholders $ (4,160) $ (4,510) $ 350 $ (8,420) $ (13,341) $ 4,921 52 The following table sets forth a reconciliation of net loss attributable to stockholders to Adjusted EBITDA: Three Months Ended June 30, Change Six Months Ended June 30, Change (in thousands) 2024 2023 2024 2023 Net loss attributable to stockholders $ (4,160) $ (4,510) $ 350 $ (8,420) $ (13,341) $ 4,921 Add: (Benefit from) provision for income taxes (25) 40 (65) (161) 154 (315) Add: Equity-based compensation expense 134 100 34 425 226 199 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) Add: Asset impairment charges — — — — — — Add: Incentive allocations — — — — — — Add: Depreciation and amortization expense 2,480 2,281 199 4,924 4,526 398 Add: Interest expense 242 615 (373) 388 1,203 (815) 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 earnings of unconsolidated entities — — — — — — Less: Non-controlling share of Adjusted EBITDA (1) (173) (162) (11) (341) (390) 49 Adjusted EBITDA (non-GAAP) $ (1,502) $ (1,636) $ 134 $ (3,185) $ (6,497) $ 3,312 ________________________________________________________ (1) I ncludes the following items for the three months ended June 30, 2024 and 2023: (i) equity-based compensation of $8 and $5, (ii) (benefit from) provision for income taxes of $(2) and $—, (iii) interest expense of $15 and $33 and (iv) depreciation and amortization expense of $152 and $124, respectively. Includes the following items for the six months ended June 30, 2024 and 2023: (i) equity-bas ed compensation of $26 and $12, (ii) (benefit from) provision for income taxes of $(10) and $6, (iii) interest expense of $24 and $65, (iv) depreciation and amortization expense of $301 and $246 and (v) changes in fair value of non-hedge derivative instruments of $— and $61, respectively. Revenues Total revenue did not change significantly during the three months ended June 30, 2024. Total revenue increased $5.4 million during the six months ended June 30, 2024 primarily due to (i) the commencement of a butane throughput contract in April 2023, as well as (ii) losses in the prior year related to the sale of butane inventory as the terminal prepared for the new throughput contract. Expenses Total expenses did not change significantly during the three months ended June 30, 2024. Total expenses increased $1.5 million during the six months ended June 30, 2024 which primarily reflects higher operating expenses due to costs associated with stock-based compensation, and an increase in labor costs and professional fees related to the continued development of the site. Other expense Total other expense decreased $0.4 million and $0.8 million during the three and six months ended June 30, 2024, respectively, which reflects an increase in capitalized interest, partially offset by an increase in interest expense due to an increase in the borrowing amount on the revolver, amended in December 2023. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased $0.1 million and and $3.3 million during the three and six months ended June 30, 2024, respectively, primarily due to the changes noted above. 53 Power and Gas Segment The following table presents our results of operations: Three Months Ended June 30, Change Six Months Ended June 30, Change (in thousands) 2024 2023 2024 2023 Revenues Other revenue $ — $ — $ — $ — $ — $ — Total revenues — — — — — — Expenses Operating expenses 330 173 157 1,022 597 425 Acquisition and transaction expenses 398 49 349 398 71 327 Total expenses 728 222 506 1,420 668 752 Other (expense) income Equity in (losses) earnings of unconsolidated entities (7,336) 1,639 (8,975) (14,373) 9,400 (23,773) Interest expense — (1) 1 — (3) 3 Other income 2,891 1,643 1,248 5,193 2,872 2,321 Total other (expense) income (4,445) 3,281 (7,726) (9,180) 12,269 (21,449) Net (loss) income attributable to stockholders $ (5,173) $ 3,059 $ (8,232) $ (10,600) $ 11,601 $ (22,201) 54 The following table sets forth a reconciliation of net (loss) income attributable to stockholders to Adjusted EBITDA: Three Months Ended June 30, Change Six Months Ended June 30, Change (in thousands) 2024 2023 2024 2023 Net (loss) income attributable to stockholders $ (5,173) $ 3,059 $ (8,232) $ (10,600) $ 11,601 $ (22,201) Add: Provision for income taxes — — — — — — Add: Equity-based compensation expense — — — — — — Add: Acquisition and transaction expenses 398 49 349 398 71 327 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 — 1 (1) — 3 (3) Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (1) 6,285 8,933 (2,648) 15,067 19,442 (4,375) 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 (earnings) of unconsolidated entities 7,336 (1,639) 8,975 14,373 (9,400) 23,773 Less: Non-controlling share of Adjusted EBITDA — — — — — — Adjusted EBITDA (non-GAAP) $ 8,846 $ 10,403 $ (1,557) $ 19,238 $ 21,717 $ (2,479) ________________________________________________________ (1) Includes the following items for the three months ended June 30, 2024 and 2023: (i) net (loss) income of $(7,353) and $1,639, (ii) interest expense of $9,465 and $7,378, (iii) depreciation and amortization expense of $7,359 and $7,641, (iv) acquisition and transaction expenses of $31 and $237, (v) changes in fair value of non-hedge derivative instruments of $(3,875) and $(7,963), (vi) equity-based compensation of $1 and $1, (vii) asset impairment of $163 and $—, (viii) equity method basis adjustments of $16 and $— and (ix) other non-recurring items of $478 and $—, respectively. Includes the following items for the six months ended June 30, 2024 and 2023: (i) net (loss) income of $(14,406) and $9,400, (ii) interest expense of $18,675 and $14,612, (iii) depreciation and amortization expense of $11,808 and $12,981, (iv) acquisition and transaction expenses of $50 and $257, (v) changes in fair value of non-hedge derivative instruments of $(1,822) and $(17,810), (vi) equity-based compensation of $2 and $2, (vii) asset impairment of $250 and $—, (viii) equity method basis adjustments of $32 and $— and (ix) other non-recurring items of $478 and $—, respectively. Expenses Total expenses increased $0.5 million and $0.8 million during the three and six months ended June 30, 2024, respectively, which primarily relates to an increase in professional fees. Other (expense) income Total other expense increased $7.7 million during the three months ended June 30, 2024 which reflects: • an increase in equity in losses of unconsolidated entities of $9.0 million, primarily due to decrease in unrealized gains on power swaps at Long Ridge; partially offset by • an increase in other income of $1.2 million due to interest income from an increased loan balance under the loan agreement between the Company and Long Ridge Energy & Power LLC. Total other expense increased $21.4 million during the six months ended June 30, 2024 which reflects: • an increase in equity in losses of unconsolidated entities of $23.8 million, primarily due to decrease in unrealized gains on power swaps at Long Ridge; partially offset by • an increase in other income of $2.3 million due to interest income from an increased loan balance under the loan agreement between the Company and Long Ridge Energy & Power LLC. 55 Adjusted EBITDA (Non-GAAP) Adjusted EBITDA decreased $1.6 million and $2.5 million during the three and six months ended June 30, 2024, respectively, due to a decrease in the pro-rata share of adjusted EBITDA from unconsolidated entities of $2.6 million and $4.4 million, respectively, and the changes noted above. Sustainability and Energy Transition Segment The following table presents our results of operations: Three Months Ended June 30, Change Six Months Ended June 30, Change (in thousands) 2024 2023 2024 2023 Revenues Other revenue $ — $ — $ — $ — $ — $ — Total revenues — — — — — — Expenses Operating expenses 7 28 (21) 7 29 (22) Acquisition and transaction expenses — — — — 1 (1) Total expenses 7 28 (21) 7 30 (23) Other (expense) income Equity in losses of unconsolidated entities (5,464) (3,277) (2,187) (10,338) (6,693) (3,645) Other income 290 620 (330) 950 1,227 (277) Total other expense (5,174) (2,657) (2,517) (9,388) (5,466) (3,922) Net loss attributable to stockholders $ (5,181) $ (2,685) $ (2,496) $ (9,395) $ (5,496) $ (3,899) 56 The following table sets forth a reconciliation of net loss attributable to stockholders to Adjusted EBITDA: Three Months Ended June 30, Change Six Months Ended June 30, Change (in thousands) 2024 2023 2024 2023 Net loss attributable to stockholders $ (5,181) $ (2,685) $ (2,496) $ (9,395) $ (5,496) $ (3,899) Add: Provision for income taxes — — — — — — Add: Equity-based compensation expense — — — — — — Add: Acquisition and transaction expenses — — — — 1 (1) 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) (3,067) (2,040) (1,027) (5,586) (4,356) (1,230) 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 5,464 3,277 2,187 10,338 6,693 3,645 Less: Non-controlling share of Adjusted EBITDA — — — — — — Adjusted EBITDA (non-GAAP) $ (2,784) $ (1,448) $ (1,336) $ (4,643) $ (3,158) $ (1,485) ________________________________________________________ (1) Includes the following items for the three months ended June 30, 2024 and 2023: (i) net loss of $(5,463) and $(3,280), (ii) interest expense of $1,705 and $914 and (iii) depreciation and amortization expense of $691 and $326, respectively . Includes the following items for the six months ended June 30, 2024 and 2023: (i) net loss of $(10,337) and $(6,699), (ii) interest expense of $3,379 and $1,691 and (iii) depreciation and amortization expense of $1,372 and $652, respectively. Other expense Total other expense increased $2.5 million and $3.9 million during the three and six months ended June 30, 2024, respectively, which reflects changes in equity in losses of unconsolidated entities primarily due to higher operating losses at GM-FTAI Holdco LLC. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA decreased $1.3 million and $1.5 million during the three and six months ended June 30, 2024, respectively, primarily due to the changes noted above. 57 Corporate and Other The following table presents our results of operations: Three Months Ended June 30, Change Six Months Ended June 30, Change (in thousands) 2024 2023 2024 2023 Revenues Roadside services revenues $ 14,213 $ 18,235 $ (4,022) $ 27,741 $ 36,085 $ (8,344) Total revenues 14,213 18,235 (4,022) 27,741 36,085 (8,344) Expenses Operating expenses 13,614 18,551 (4,937) 27,352 36,699 (9,347) General and administrative 2,840 3,702 (862) 7,701 6,903 798 Acquisition and transaction expenses 362 367 (5) 1,102 430 672 Management fees and incentive allocation to affiliate 2,776 3,084 (308) 5,777 6,066 (289) Depreciation and amortization 523 742 (219) 1,258 1,662 (404) Total expenses 20,115 26,446 (6,331) 43,190 51,760 (8,570) Other income (expense) Equity in earnings of unconsolidated entities 12 13 (1) 21 34 (13) Interest expense (18,160) (14,373) (3,787) (36,241) (28,194) (8,047) Total other expense (18,148) (14,360) (3,788) (36,220) (28,160) (8,060) Loss before income taxes (24,050) (22,571) (1,479) (51,669) (43,835) (7,834) (Benefit from) provision for income taxes (188) (89) (99) 1,215 730 485 Net loss (23,862) (22,482) (1,380) (52,884) (44,565) (8,319) Less: Net loss attributable to non-controlling interest in consolidated subsidiaries — (1) 1 — (229) 229 Less: Dividends and accretion of redeemable preferred stock 17,610 15,257 2,353 34,585 29,827 4,758 Net loss attributable to stockholders $ (41,472) $ (37,738) $ (3,734) $ (87,469) $ (74,163) $ (13,306) 58 The following table sets forth a reconciliation of net loss attributable to stockholders to Adjusted EBITDA: Three Months Ended June 30, Change Six Months Ended June 30, Change (in thousands) 2024 2023 2024 2023 Net loss attributable to stockholders $ (41,472) $ (37,738) $ (3,734) $ (87,469) $ (74,163) $ (13,306) Add: (Benefit from) provision for income taxes (188) (89) (99) 1,215 730 485 Add: Equity-based compensation expense 274 80 194 274 80 194 Add: Acquisition and transaction expenses 362 367 (5) 1,102 430 672 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 523 742 (219) 1,258 1,662 (404) Add: Interest expense 18,160 14,373 3,787 36,241 28,194 8,047 Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (1) (10) (7) (3) (16) (10) (6) Add: Dividends and accretion of redeemable preferred stock 17,610 15,257 2,353 34,585 29,827 4,758 Add: Interest and other costs on pension and OPEB liabilities — — — — — — Add: Other non-recurring items — — — — — — Less: Equity in earnings of unconsolidated entities (12) (13) 1 (21) (34) 13 Less: Non-controlling share of Adjusted EBITDA (2) — — — — (260) 260 Adjusted EBITDA (non-GAAP) $ (4,753) $ (7,028) $ 2,275 $ (12,831) $ (13,544) $ 713 ________________________________________________________ (1) Includes the following items for the three months ended June 30, 2024 and 2023: (i) net loss of $(22) and $(19) and (ii) interest expense of $12 and $12, respectively. Includes the following items for the six months ended June 30, 2024 and 2023: (i) net loss of $(37) and $(43) and (ii) interest expense of $21 and $33, respectively. (2) Includes the following item for the six months ended June 30, 2023: (i) depreciation and amortization expense of $260. Revenues Total revenues decreased $4.0 million and $8.3 million during the three and six months ended June 30, 2024, respectively, primarily due to a decrease in roadside services at FYX. Expenses Total expenses decreased $6.3 million during the three months ended June 30, 2024 which primarily reflects: • a decrease in operating expenses of $4.9 million due to a decrease in roadside services at FYX; • a decrease in depreciation and amortization expense of $0.2 million due to assets that became fully depreciated; and • a decrease in general and administrative expenses of $0.9 million primarily due to lower professional fees. Total expenses decreased $8.6 million during the six months ended June 30, 2024 which primarily reflects: • a decrease in operating expenses of $9.3 million due to a decrease in roadside services at FYX; and • a decrease in depreciation and amortization expense of $0.4 million due to assets that became fully depreciated; partially offset by • an increase in general and administrative expenses of $0.8 million primarily due to higher professional fees; and • an increase in acquisition and transaction expenses of $0.7 million associated with professional fees for a potential acquisition. Other expense Total other expense increased $3.8 million and $8.1 million during the three and six months ended June 30, 2024, respectively, which primarily reflects an increase in interest expense due to the additional issuance of the Senior Notes due 2027 in July 2023. 59 Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased $2.3 million and $0.7 million during the three and six months ended June 30, 2024, respectively, primarily due to the changes noted above. Liquidity and Capital Resources We believe we have sufficient liquidity to satisfy our cash needs; however, we continue to evaluate and take action, as necessary, to preserve adequate liquidity and ensure that our business can continue to operate during these uncertain times. This includes limiting discretionary spending across the organization and re-prioritizing our capital projects. Our principal uses of liquidity have been and continue to be (i) acquisitions of and investments in infrastructure assets, (ii) expenses associated with our operating activities and (iii) debt service obligations associated with our investments. • Cash used for the purpose of making investments was $52.8 million and $95.5 million during the six months ended June 30, 2024 and 2023, 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 June 30, 2024, (ii) revenues from our infrastructure business net of operating expenses, (iii) proceeds from borrowings and (iv) proceeds from asset sales. • Cash flows used in operating activities were $21.5 million and $16.9 million during the six months ended June 30, 2024 and 2023, respectively. • During the six months ended June 30, 2024, additional borrowings were obtained in connection with the (i) Jefferson Credit Agreement of $75.0 million and (ii) Series 2024 Bond Offering of $382.3 million. In June 2024, we used a portion of the net proceeds from the Series 2024 Bonds to (i) repay the Jefferson Credit Agreement of $75.0 million, (ii) fund the $108.0 million for the Tender Offer and (iii) refinance the Taxable Series 2020B Bonds of $79.1 million during the six months ended June 30, 2024. During the six months ended June 30, 2023, additional borrowings were obtained in connection with the (i) Transtar Revolver of $40.0 million, (ii) Credit Agreement of $25.0 million and (iii) EB-5 Loan Agreement of $1.6 million. We did not make any principal repayments of debt during the six months ended June 30, 2023. • Proceeds from the sale of assets were $0.1 million and $1.1 million during the six months ended June 30, 2024 and 2023, respectively. We are currently evaluating several potential transactions and related financings, including, but not limited to, providing for increased debt capacity at certain of our subsidiaries, which could occur within the next 12 months. None of these transactions, negotiations or financings are definitive or included within our planned liquidity needs. We cannot assure if or when any such transaction will be consummated or the terms of any such transaction. Historical Cash Flow Comparison of the six months ended June 30, 2024 and 2023 The following table compares the historical cash flow for the six months ended June 30, 2024 and 2023: Six Months Ended June 30, (in thousands) 2024 2023 Cash Flow Data: Net cash used in operating activities $ (21,470) $ (16,931) Net cash used in investing activities (52,652) (94,356) Net cash provided by financing activities 173,108 59,128 Net cash used in operating activities increased $4.5 million, which primarily reflects certain adjustments to reconcile net loss to cash used in operating activities including (i) an increase in net loss of $28.7 million and (ii) changes in working capital of $16.4 million, partially offset by (i) an increase in equity in losses of unconsolidated entities of $27.4 million, (ii) an increase in equity-based compensation of $2.6 million, (iii) an increase in amortization of deferred financing costs of $1.5 million and (iv) an increase in loss on modification or extinguishment of debt of $9.2 million. Net cash used in investing activities decreased $41.7 million, primarily due to (i) a decrease in the acquisition of property, plant and equipment of $38.3 million and (ii) a decrease in the acquisition of consolidated subsidiaries of $4.4 million, partially offset by a decrease in proceeds from the sale of property, plant and equipment of $0.9 million. 60 Net cash provided by financing activities increased $114.0 million, primarily due to (i) an increase in proceeds from debt of $383.1 million, partially offset by (i) an increase in repayment of debt of $242.0 million, (ii) an increase in settlement of equity-based compensation of $3.1 million, (iii) an increase in distributions to non-controlling int erests of $15.0 million and (iv) an increase in payment of financing costs of $8.8 million. Debt Obligations Refer to Note 7 of the consolidated financial statements for additional information. Contractual Obligations Our material cash requirements include the following contractual and other obligations: Debt Obligations — As of June 30, 2024, we had outstanding principal and interest payment obligations of $1.6 billion and $0.6 billion, respectively, of which, there is no principal payment due and $106.4 million of interest payments due within the next twelve months. See Note 7 to the consolidated financial statements for additional information about our debt obligations. Lease Obligations —As of June 30, 2024, we had outstanding operating and finance lease obligations of $164.9 million, of which $8.3 million is due within the next twelve months. Redeemable Preferred Stock Obligations —We have dividend payment s of $60.9 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 Note 15 for additional information related to our preferred stock obligations. Other Cash Requirements —In addition to our contractual obligations, we intend to pay quarterly cash dividends on our common stock, which are subject to change at the discretion of our board of directors. We expect to meet our future short-term liquidity requirements through cash on hand, unused borrowing capacity or future financings and net cash provided by our current operations. We expect that our operating subsidiaries will generate sufficient cash flow to cover operating expenses and the payment of principal and interest on our indebtedness as they become due. We may elect to meet certain long-term liquidity requirements or to continue to pursue strategic opportunities through utilizing cash on hand, cash generated from our current operations and the issuance of securities in the future. Management believes adequate capital and borrowings are available from various sources to fund our commitments to the extent required. Critical Accounting Estimates and Policies Goodwill — Goodwill includes the excess of the purchase price over the fair value of the net tangible and intangible assets associated with the acquisition of Jefferson Terminal, Transtar and FYX. As of 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. 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, 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, 61 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 was no impairment of goodwill for the year ended December 31, 2023. Recent Accounting Pronouncements The Company has reviewed recently issued accounting pronouncements and concluded that such pronouncements are either not applicable to the Company or no material impact is expected in the consolidated financial statements as a result of future adoption.