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 September 30, 2024, we had total consolidated assets of $2.4 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 have been recast to reflect this 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 . We believe that net income (loss) attributable to stockholders, as defined by U.S. GAAP, is the most appropriate earnings measure with which to reconcile Adjusted EBITDA. Adjusted EBITDA should not be considered as an alternative to net income (loss) attributable to stockholders as determined in accordance with U.S. GAAP. 45 Comparison of the three and nine months ended September 30, 2024 and 2023 The following table presents our results of operations: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2024 2023 2024 2023 Revenues Lease income $ 1,313 $ 737 $ 576 $ 3,705 $ 2,199 $ 1,506 Rail revenues 44,255 41,470 2,785 135,412 124,184 11,228 Terminal services revenues 22,846 20,354 2,492 68,978 60,370 8,608 Roadside services revenues 14,897 18,145 (3,248) 42,638 54,230 (11,592) Other revenue — — — — (1,951) 1,951 Total revenues 83,311 80,706 2,605 250,733 239,032 11,701 Expenses Operating expenses 62,766 68,416 (5,650) 188,566 196,353 (7,787) General and administrative 2,989 2,485 504 10,690 9,388 1,302 Acquisition and transaction expenses 2,526 649 1,877 4,373 1,554 2,819 Management fees and incentive allocation to affiliate 2,807 3,238 (431) 8,584 9,304 (720) Depreciation and amortization 19,492 20,150 (658) 60,176 60,577 (401) Asset impairment — — — — 743 (743) Total expenses 90,580 94,938 (4,358) 272,389 277,919 (5,530) Other (expense) income Equity in losses of unconsolidated entities (14,308) (9,914) (4,394) (38,998) (7,173) (31,825) Gain (loss) on sale of assets, net 2,758 (263) 3,021 2,595 260 2,335 Gain (loss) on modification or extinguishment of debt 747 (2,020) 2,767 (8,423) (2,020) (6,403) Interest expense (31,513) (25,999) (5,514) (88,796) (73,431) (15,365) Other income 6,537 2,387 4,150 15,865 3,978 11,887 Total other expense (35,779) (35,809) 30 (117,757) (78,386) (39,371) Loss from before income taxes (43,048) (50,041) 6,993 (139,413) (117,273) (22,140) (Benefit from) provision for income taxes (92) 8 (100) 1,980 2,560 (580) Net loss (42,956) (50,049) 7,093 (141,393) (119,833) (21,560) Less: Net loss attributable to non-controlling interest in consolidated subsidiaries (9,963) (9,932) (31) (32,053) (30,101) (1,952) Less: Dividends and accretion of redeemable preferred stock 16,978 15,984 994 51,563 45,811 5,752 Net loss attributable to stockholders $ (49,971) $ (56,101) $ 6,130 $ (160,903) $ (135,543) $ (25,360) 46 The following table sets forth a reconciliation of net loss attributable to stockholders to Adjusted EBITDA: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2024 2023 2024 2023 Net loss attributable to stockholders $ (49,971) $ (56,101) $ 6,130 $ (160,903) $ (135,543) $ (25,360) Add: (Benefit from) provision for income taxes (92) 8 (100) 1,980 2,560 (580) Add: Equity-based compensation expense 2,629 4,277 (1,648) 6,768 5,814 954 Add: Acquisition and transaction expenses 2,526 649 1,877 4,373 1,554 2,819 Add: (Gains) losses on the modification or extinguishment of debt and capital lease obligations (747) 2,020 (2,767) 8,423 2,020 6,403 Add: Changes in fair value of non-hedge derivative instruments — — — — 1,125 (1,125) Add: Asset impairment charges — — — — 743 (743) Add: Incentive allocations — — — — — — Add: Depreciation and amortization expense (1) 20,725 20,150 575 63,418 60,577 2,841 Add: Interest expense 31,513 25,999 5,514 88,796 73,431 15,365 Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2) 5,625 5,554 71 15,090 20,630 (5,540) Add: Dividends and accretion of redeemable preferred stock 16,978 15,984 994 51,563 45,811 5,752 Add: Interest and other costs on pension and OPEB liabilities (248) 480 (728) 214 1,440 (1,226) Add: Other non-recurring items (3) — 1,131 (1,131) — 2,470 (2,470) Less: Equity in losses of unconsolidated entities 14,308 9,914 4,394 38,998 7,173 31,825 Less: Non-controlling share of Adjusted EBITDA (4) (6,318) (5,410) (908) (20,305) (15,577) (4,728) Adjusted EBITDA (non-GAAP) $ 36,928 $ 24,655 $ 12,273 $ 98,415 $ 74,228 $ 24,187 ________________________________________________________ (1) Includes the following items for the three months ended September 30, 2024 and 2023: (i) depreciation and amortization expense of $19,492 and $20,150 and (ii) capitalized contract costs amortization of $1,233 and $—, respectively. Includes the following items for the nine months ended September 30, 2024 and 2023: (i) depreciation and amortization expense of $60,176 and $60,577 and (ii) capitalized contract costs amortization of $3,242 and $—, respectively. (2) Includes the following items for the three months ended September 30, 2024 and 2023: (i) net loss of $(14,352) and $(9,941), (ii) interest expense of $10,826 and $8,830, (iii) depreciation and amortization expense of $6,911 and $6,965, (iv) acquisition and transaction expenses of $47 and $50, (v) changes in fair value of non-hedge derivative instruments of $(2,572) and $(352), (vi) equity-based compensation of $— and $2, (vii) asset impairment of $24 and $—, (viii) equity method basis adjustments of $17 and $— and (ix) loss on modification or extinguishment of debt of $4,724 and $—, respectively. Includes the following items for the nine months ended September 30, 2024 and 2023: (i) net loss of $(39,132) and $(7,283), (ii) interest expense of $32,901 and $25,166, (iii) depreciation and amortization expense of $20,091 and $20,598, (iv) acquisition and transaction expenses of $97 and $307, (v) changes in fair value of non-hedge derivative instruments of $(4,394) and $(18,162), (vi) equity-based compensation of $2 and $4, (vii) asset impairment of $274 and $—, (viii) equity method basis adjustments of $49 and $—, (ix) loss on modification or extinguishment of debt of $4,724 and $— and (x) other non-recurring items of $478 and $—, respectively. (3) Includes the following item for the three and nine months ended September 30, 2023: certain non-cash expenses related to the cancellation of restricted shares and Railroad severance expense of $1,131 and $2,470, respectively. (4) Includes the following items for the three months ended September 30, 2024 and 2023: (i) equity-based compensation of $240 and $718, (ii) benefit from income taxes of $(98) and $(19), (iii) interest expense of $3,078 and $1,821, (iv) depreciation and amortization expense of $3,274 and $2,870, (v) acquisition and transaction expense of $— and $19, (vi) interest and other costs on pension and OPEB liabilities of $(1) and $1 and (vii) loss on modification or extinguishment of debt of $(175) and $—, respectively. Includes the following items for the nine months ended September 30, 2024 and 2023: (i) equity-based compensation of $939 and $904, (ii) (benefit from) provision for income taxes of $(374) and $69, (iii) interest expense of $7,906 and $5,558, (iv) depreciation and amortization expense of $9,855 and $8,950, (v) changes in fair value of non-hedge derivative instruments of $— and $61, (vi) acquisition and transaction expense of $3 and $27, (vii) interest and other costs on pension and OPEB liabilities of $1 and $3, (viii) asset impairment of $— and $2, (ix) loss on modification or extinguishment of debt of $1,975 and $— and (x) other non-recurring items of $— and $3, respectively. Revenue Comparison of the three months ended September 30, 2024 and 2023 Total revenues increased $2.6 million due to higher revenues of $2.9 million in the Railroad segment and $3.1 million in the Jefferson Terminal segment, offset by lower revenues of $0.1 million in the Repauno segment and $3.2 million in the Corporate and Other segment. Roadside services revenue decreased $3.2 million due to the decline of roadside services for FYX. 47 Terminal services revenues increased $2.5 million primarily due an increase in average crude oil throughput volumes in the Jefferson Terminal segment. Rail revenues increased $2.8 million primarily due to an increase in both carloads and rates per car in the Railroad segment. Comparison of the nine months ended September 30, 2024 and 2023 Total revenues increased $11.7 million primarily due to higher revenues of $11.3 million in the Railroad segment, $6.7 million in the Jefferson Terminal segment and $5.3 million in the Repauno segment, offset by lower revenues of $11.6 million in the Corporate and Other segment. Roadside services revenue decreased $11.6 million primarily due to the decline of roadside services for FYX. Terminal services revenues increased $8.6 million primarily due to the commencement of a butane throughput contract in the Repauno segment in April 2023, as well as an increase in average crude oil throughput volumes in the Jefferson Terminal segment. Rail revenues increased $11.2 million primarily due to an increase in both carloads and rates per car in the Railroad segment. Expenses Comparison of the three months ended September 30, 2024 and 2023 Total expenses decreased $4.4 million, primarily due to decreases in (i) operating expenses and (ii) depreciation and amortization, partially offset by increases in (i) general and administrative expenses and (ii) acquisition and transaction expenses. Operating expenses decreased $5.7 million which primarily reflects: • a decrease of $4.8 million due to decreased roadside services at FYX; • a decrease of $1.4 million due to decreased legal fees in the Power and Gas Segmen t ; and • a decrease of $0.4 million primarily due to lower costs associated with stock-based compensation and insurance during the current quarter in the Jefferson Terminal segment; partially offset by • an increase of $0.4 million in the Railroad segment mainly due to increased carloads; and • an increase of $0.6 million in the Repauno segment due to higher costs associated with stock-based compensation, and an increase in labor costs and professional fees related to the continued development of the site. General and administrative expenses increased $0.5 million primarily due to higher professional fees in the Corporate and Other segment. Acquisition and transaction expenses increased $1.9 million primarily due to consulting fees in the Power and Gas segment. Depreciation and amortization decreased $0.7 million primarily due to assets that became fully depreciated at the Corporate and Other segment. Comparison of the nine months ended September 30, 2024 and 2023 Total expenses decreased $5.5 million, primarily due to decreases in (i) operating expenses, (ii) depreciation and amortization and (iii) asset impairment, partially offset by increases in (i) acquisition and transaction expenses and (ii) general and administrative expenses. Operating expenses decreased $7.8 million which primarily reflects: • a decrease of $14.2 million due to decreased roadside services at FYX; and • a decrease of $1.0 million in the Power and Gas segment due to decreased legal fees; partially offset by • an increase of $1.6 million due to higher 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 $4.3 million primarily due to costs associated with insurance, 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 carloads. General and administrative expenses increased $1.3 million primarily due to higher professional fees in the Corporate and Other segment. Acquisition and transaction expenses increased $2.8 million primarily due to professional fees for a potential acquisition in the Corporate and Other segment and an increase in consulting fees in the Power and Gas segment. 48 Depreciation and amortization decreased $0.4 million primarily due to assets that became fully depreciated in the Corporate and Other segment, partially offset by an increase in depreciation and amortization in the Repauno segment due to assets being placed into service. Asset impairment decreased $0.7 million primarily due to impairment for certain scrap assets in the Railroad segment in 2023. Other expense Total other expense did not change significantly on a consolidated basis during the three months ended September 30, 2024, but this is primarily comprised of: • an increase in gain on modification or extinguishment of debt of $2.8 million due to a gain recognized in the Jefferson Terminal segment in the current period, as well as losses recognized in the Railroad and Corporate and Other segments in 2023; • an increase in interest expense of $5.5 million primarily due to an increase in the average outstanding debt of approximately $216.2 million which consists of (i) $5.7 million for the Senior Notes due 2027, (ii) $19.3 million for the DRP Revolver and (iii) $191.2 million for the Series 2024 Bonds, offset by the full repayment of the Transtar Revolver in July 2023 for $50.0 million; • an increase of $4.4 million in equity in losses of unconsolidated entities primarily due to a loss on extinguishment of debt at Long Ridge West Virginia LLC, as well as higher operating losses at GM-FTAI Holdco LLC; and • a gain on sale of land of $3.0 million primarily due to a sales leaseback transaction in the Jefferson Terminal segment; partially offset by • an increase of $4.2 million in Other income due to interest income from an increased loan balance on the loan agreement between the Company and Long Ridge Energy & Power LLC, as well as favorable adjustments in the pension and OPEB benefits in the Railroad segment, and an increase due to the interest on the Series 2024 Bond funds at the Jefferson Terminal segment. Total other expense increased $39.4 million during the nine months ended September 30, 2024 which primarily reflects: • an increase of $31.8 million in equity in losses of unconsolidated entities primarily due to a loss on extinguishment of debt at Long Ridge West Virginia LLC, as well as higher operating losses at GM-FTAI Holdco LLC; • an increase in interest expense of $15.4 million primarily due to an increase in the average outstanding debt of approximately $151.9 million which consists of (i) $63.6 million for the Senior Notes due 2027, (ii) $19.3 million for the DRP Revolver and (iii) $102.4 million for the Series 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 $6.4 million primarily due to a gain recognized in the Jefferson Terminal segment, offset by a decrease in the Corporate and Other segment due to repayment of amounts outstanding under the Credit Agreement in July 2023, as well as a decrease in the Railroad segment related to the revolver entered into in the fourth quarter of 2022 and paid off in the third quarter of 2023; and • a gain on sale of land of $2.3 million primarily due to a sales leaseback transaction in the Jefferson Terminal segment; partially offset by • an increase of $11.9 million in Other income due to (i) interest income from an increased loan balance on the loan agreement between the Company and Long Ridge Energy & Power LLC, (ii) favorable adjustments in the pension and OPEB benefits in the Railroad segment, and (iii) a current year gain from the grant of a pipeline easement, as well as a benefit from the decrease in prior year losses related to the termination of a pipeline contract in the Jefferson Terminal segment. Net loss Net loss decreased $7.1 million and increased $21.6 million during the three and nine months ended September 30, 2024, respectively, primarily due to the changes noted above. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased $12.3 million and $24.2 million during the three and nine months ended September 30, 2024, respectively, primarily due to the changes noted above. 49 Railroad Segment The following table presents our results of operations: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2024 2023 2024 2023 Revenues Lease income $ 526 $ 394 $ 132 $ 1,319 $ 1,231 $ 88 Rail revenues 44,255 41,470 2,785 135,412 124,184 11,228 Total revenues 44,781 41,864 2,917 136,731 125,415 11,316 Expenses Operating expenses 24,723 24,332 391 73,266 71,824 1,442 Acquisition and transaction expenses 95 186 (91) 432 553 (121) Depreciation and amortization 4,936 4,362 574 14,808 14,588 220 Asset impairment — — — — 743 (743) Total expenses 29,754 28,880 874 88,506 87,708 798 Other income (expense) Gain (loss) on sale of assets, net 5 (264) 269 (158) (473) 315 Loss on extinguishment of debt — (937) 937 — (937) 937 Interest expense (78) (82) 4 (245) (2,252) 2,007 Other income (expense) 819 (520) 1,339 467 (1,616) 2,083 Total other income (expense) 746 (1,803) 2,549 64 (5,278) 5,342 Income before income taxes 15,773 11,181 4,592 48,289 32,429 15,860 Provision for income taxes 1,174 524 650 3,358 1,842 1,516 Net income 14,599 10,657 3,942 44,931 30,587 14,344 Less: Net income attributable to non-controlling interest in consolidated subsidiaries 71 37 34 179 83 96 Net income attributable to stockholders $ 14,528 $ 10,620 $ 3,908 $ 44,752 $ 30,504 $ 14,248 50 The following table sets forth a reconciliation of net income attributable to stockholders to Adjusted EBITDA: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2024 2023 2024 2023 Net income attributable to stockholders $ 14,528 $ 10,620 $ 3,908 $ 44,752 $ 30,504 $ 14,248 Add: Provision for income taxes 1,174 524 650 3,358 1,842 1,516 Add: Equity-based compensation expense 547 262 285 1,127 746 381 Add: Acquisition and transaction expenses 95 186 (91) 432 553 (121) Add: Losses on the modification or extinguishment of debt and capital lease obligations — 937 (937) — 937 (937) Add: Changes in fair value of non-hedge derivative instruments — — — — — — Add: Asset impairment charges — — — — 743 (743) Add: Incentive allocations — — — — — — Add: Depreciation and amortization expense 4,936 4,362 574 14,808 14,588 220 Add: Interest expense 78 82 (4) 245 2,252 (2,007) 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 (248) 480 (728) 214 1,440 (1,226) Add: Other non-recurring items (1) — — — — 1,339 (1,339) Less: Equity in earnings of unconsolidated entities — — — — — — Less: Non-controlling share of Adjusted EBITDA (2) (30) (19) (11) (77) (55) (22) Adjusted EBITDA $ 21,080 $ 17,434 $ 3,646 $ 64,859 $ 54,889 $ 9,970 ________________________________________________________ (1) Includes the following item for the nine months ended September 30, 2023: Railroad severance expense of $1,339, respectively. (2) Includes the following items for the three months ended September 30, 2024 and 2023: (i) equity-based compensation of $3 and $1, (ii) provision for income taxes of $6 and $3, (iii) depreciation and amortization expense of $22 and $13, (iv) acquisition and transaction expense of $— and $1 and (v) interest and other costs on pension and OPEB liabilities of $(1) and $1, respectively. Includes the following items for the nine months ended September 30, 2024 and 2023: (i) equity-based compensation of $5 and $2, (ii) provision for income taxes of $13 and $4, (iii) interest expense of $1 and $5, (iv) depreciation and amortization expense of $56 and $35, (v) acquisition and transaction expense of $1 and $1, (vi) interest and other costs on pension and OPEB liabilities of $1 and $3, (vii) asset impairment of $— and $2 and (viii) other non-recurring items of $— and $3, respectively. Revenues Total revenues increased $2.9 million and $11.3 million during the three and nine months ended September 30, 2024, respectively, primarily due to both an increase in carloads and rates per car. Expenses Total expenses increased $0.9 million during the three months ended September 30, 2024, which primarily reflects an increase in operating expenses of $0.4 million mainly due to increased carloads and an increase in depreciation and amortization of $0.6 million due to new railcars purchased during the quarter. Total expenses increased $0.8 million during the nine months ended September 30, 2024, which primarily reflects an increase in operating expenses of $1.4 million mainly due to increased carloads, partially offset by a decrease in asset impairment of $0.7 million for certain scrap assets written off in 2023. Other income (expense) Total other income increased $2.5 million and $5.3 million during the three and nine months ended September 30, 2024, respectively, which primarily reflects a decrease in interest expense and loss on extinguishment of debt related to the revolver entered into in the fourth quarter of 2022 and paid off in the third quarter of 2023, as well as an increase in other income related to pension and OPEB benefits due to favorable adjustments. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased $3.6 million and $10.0 million during the three and nine months ended September 30, 2024, respectively, primarily due to the activity noted above. 51 Jefferson Terminal Segment The following table presents our results of operations: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2024 2023 2024 2023 Revenues Lease income $ 787 $ 343 $ 444 $ 2,386 $ 968 $ 1,418 Terminal services revenues 18,895 16,267 2,628 57,086 51,838 5,248 Total revenues 19,682 16,610 3,072 59,472 52,806 6,666 Expenses Operating expenses 17,138 17,548 (410) 54,245 49,963 4,282 Acquisition and transaction expenses — 80 (80) 10 116 (106) Depreciation and amortization 11,988 12,643 (655) 36,618 36,656 (38) Total expenses 29,126 30,271 (1,145) 90,873 86,735 4,138 Other income (expense) Gain on sale of assets, net 2,753 1 2,752 2,753 733 2,020 Gain (loss) on modification or extinguishment of debt 747 — 747 (8,423) — (8,423) Interest expense (13,107) (8,280) (4,827) (33,594) (24,142) (9,452) Other income (expense) 916 109 807 4,453 (1,303) 5,756 Total other expense (8,691) (8,170) (521) (34,811) (24,712) (10,099) Loss before income taxes (18,135) (21,831) 3,696 (66,212) (58,641) (7,571) (Benefit from) provision for income taxes (426) (126) (300) (1,592) 224 (1,816) Net loss (17,709) (21,705) 3,996 (64,620) (58,865) (5,755) Less: Net loss attributable to non-controlling interest in consolidated subsidiaries (9,700) (9,688) (12) (31,339) (28,921) (2,418) Net loss attributable to stockholders $ (8,009) $ (12,017) $ 4,008 $ (33,281) $ (29,944) $ (3,337) 52 The following table sets forth a reconciliation of net income (loss) attributable to stockholders to Adjusted EBITDA: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2024 2023 2024 2023 Net income (loss) attributable to stockholders $ (8,009) $ (12,017) $ 4,008 $ (33,281) $ (29,944) $ (3,337) Add: (Benefit from) provision for income taxes (426) (126) (300) (1,592) 224 (1,816) Add: Equity-based compensation expense 673 2,932 (2,259) 3,533 3,679 (146) Add: Acquisition and transaction expenses — 80 (80) 10 116 (106) Add: (Gains) losses on the modification or extinguishment of debt and capital lease obligations (747) — (747) 8,423 — 8,423 Add: Changes in fair value of non-hedge derivative instruments — — — — — — Add: Asset impairment charges — — — — — — Add: Incentive allocations — — — — — — Add: Depreciation and amortization expense (1) 13,221 12,643 578 39,860 36,656 3,204 Add: Interest expense 13,107 8,280 4,827 33,594 24,142 9,452 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) — 1,131 (1,131) Less: Equity in earnings of unconsolidated entities — — — — — — Less: Non-controlling share of Adjusted EBITDA (3) (6,055) (5,160) (895) (19,654) (14,641) (5,013) Adjusted EBITDA (non-GAAP) $ 11,764 $ 7,763 $ 4,001 $ 30,893 $ 21,363 $ 9,530 ________________________________________________________ (1) Includes the following items for the three months ended September 30, 2024 and 2023: (i) depreciation and amortization expense of $11,988 and $12,643 and (ii) capitalized contract costs amortization of $1,233 and $—, respectively. Includes the following items for the nine months ended September 30, 2024 and 2023: (i) depreciation and amortization expense of $36,618 and $36,656 and (ii) capitalized contract costs amortization of $3,242 and $—, respectively. (2) Includes the following items for the three and nine months ended September 30, 2023: certain non-cash expenses related to the cancellation of restricted shares of $1,131 and $1,131, respectively. (3) Includes the following items for the three months ended September 30, 2024 and 2023: (i) equity-based compensation of $157 and $658, (ii) benefit from income taxes of $(100) and $(30), (iii) interest expense of $3,073 and $1,786, (iv) depreciation and amortization expense of $3,100 and $2,728, (v) acquisition and transaction expense of $— and $18 and (vi) loss on modification or extinguishment of debt of $(175) and $—, respectively. Includes the following items for the nine months ended September 30, 2024 and 2023: (i) equity-based compensation of $828 and $831, (ii) (benefit from) provision for income taxes of $(373) and $51, (iii) interest expense of $7,876 and $5,453, (iv) depreciation and amortization expense of $9,346 and $8,280, (v) acquisition and transaction expense of $2 and $26 and (vi) loss on modification or extinguishment of debt of $1,975 and $—, respectively. Revenues Total revenues increased $3.1 million and $6.7 million during the three and nine months ended September 30, 2024, respectively, due to an increase in average crude oil throughput volumes. Expenses Total expenses decreased $1.1 million during the three months ended September 30, 2024 which primarily reflects: • a decrease in operating expenses of $0.4 million primarily due to lower costs associated with stock-based compensation and insurance during the current quarter; and • a decrease in depreciation and amortization of $0.7 million due to certain assets becoming fully depreciated. 53 Total expenses increased $4.1 million during the nine months ended September 30, 2024 which primarily reflects an increase in operating expenses of $4.3 million primarily due to costs associated with insurance and higher labor and other costs associated with increased terminal throughput activity. Other expense Total other expense increased $0.5 million during the three months ended September 30, 2024, which primarily reflects an increase in interest expense of $4.8 million related to additional borrowings during the current year, offset by (i) a $0.7 million gain on modification or extinguishment of debt, (ii) an increase in other income of $0.8 million from the interest on the Series 2024 Bond funds and (iii) a $2.8 million gain primarily from a sales leaseback transaction. Total other expense increased $10.1 million during the nine months ended September 30, 2024 which primarily reflects (i) an $8.4 million loss on modification or extinguishment of debt and (ii) an increase in interest expense of $9.5 million related to additional borrowings during the current year, offset by (i) a $2.0 million gain primarily from a sales leaseback transaction and (ii) an increase in other income of $5.8 million due to a current year gain from the grant of a pipeline easement as well as a benefit from the decrease in prior year losses related to the termination of a pipeline contract. Adjusted EBITDA (Non-GAAP) Adjusted EBITD A increased $4.0 million and $9.5 million during the three and nine months ended September 30, 2024, respectively, primarily due to the changes noted above. Repauno Segment The following table presents our results of operations: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2024 2023 2024 2023 Revenues Terminal services revenues $ 3,951 $ 4,087 $ (136) $ 11,892 $ 8,532 $ 3,360 Other revenue — — — — (1,951) 1,951 Total revenues 3,951 4,087 (136) 11,892 6,581 5,311 Expenses Operating expenses 6,764 6,179 585 18,533 16,884 1,649 Depreciation and amortization 2,489 2,390 99 7,413 6,916 497 Total expenses 9,253 8,569 684 25,946 23,800 2,146 Other expense Interest expense (92) (642) 550 (480) (1,845) 1,365 Total other expense (92) (642) 550 (480) (1,845) 1,365 Loss before income taxes (5,394) (5,124) (270) (14,534) (19,064) 4,530 (Benefit from) provision for income taxes (73) 103 (176) (234) 257 (491) Net loss (5,321) (5,227) (94) (14,300) (19,321) 5,021 Less: Net loss attributable to non-controlling interest in consolidated subsidiaries (334) (281) (53) (893) (1,034) 141 Net loss attributable to stockholders $ (4,987) $ (4,946) $ (41) $ (13,407) $ (18,287) $ 4,880 54 The following table sets forth a reconciliation of net loss attributable to stockholders to Adjusted EBITDA: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2024 2023 2024 2023 Net loss attributable to stockholders $ (4,987) $ (4,946) $ (41) $ (13,407) $ (18,287) $ 4,880 Add: (Benefit from) provision for income taxes (73) 103 (176) (234) 257 (491) Add: Equity-based compensation expense 1,306 1,083 223 1,731 1,309 422 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 2,489 2,390 99 7,413 6,916 497 Add: Interest expense 92 642 (550) 480 1,845 (1,365) 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) (233) (231) (2) (574) (621) 47 Adjusted EBITDA (non-GAAP) $ (1,406) $ (959) $ (447) $ (4,591) $ (7,456) $ 2,865 ________________________________________________________ (1) Includes the following items for the three months ended September 30, 2024 and 2023: (i) equity-based compensation of $80 and $59, (ii) (benefit from) provision for income taxes of $(4) and $8, (iii) interest expense of $5 and $35 and (iv) depreciation and amortization expense of $152 and $129, respectively. Includes the following items for the nine months ended September 30, 2024 and 2023: (i) equity-based compensation of $106 and $71, (ii) (benefit from) provision for income taxes of $(14) and $14, (iii) interest expense of $29 and $100, (iv) depreciation and amortization expense of $453 and $375 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 September 30, 2024. Total revenue increased $5.3 million during the nine months ended September 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 increased $0.7 million and $2.1 million during the three and nine months ended September 30, 2024 which primarily reflects higher operating expenses due to costs associated with stock-based compensation, an increase in depreciation expense due to assets being placed into service, and an increase in labor costs and professional fees related to the continued development of the site. Other expense Total other expense decreased $0.6 million and $1.4 million during the three and nine months ended September 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 EBIT DA decreased $0.4 million and increased $2.9 million d uring the three and nine months ended September 30, 2024, respectively, primarily due to the changes noted above. 55 Power and Gas Segment The following table presents our results of operations: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2024 2023 2024 2023 Revenues Other revenue $ — $ — $ — $ — $ — $ — Total revenues — — — — — — Expenses Operating expenses 1 1,393 (1,392) 1,023 1,990 (967) Acquisition and transaction expenses 1,681 — 1,681 2,079 71 2,008 Total expenses 1,682 1,393 289 3,102 2,061 1,041 Other (expense) income Equity in (losses) earnings of unconsolidated entities (10,474) (7,057) (3,417) (24,847) 2,343 (27,190) Interest expense — — — — (3) 3 Other income 3,594 2,149 1,445 8,787 5,021 3,766 Total other (expense) income (6,880) (4,908) (1,972) (16,060) 7,361 (23,421) Net (loss) income attributable to stockholders $ (8,562) $ (6,301) $ (2,261) $ (19,162) $ 5,300 $ (24,462) 56 The following table sets forth a reconciliation of net (loss) income attributable to stockholders to Adjusted EBITDA: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2024 2023 2024 2023 Net (loss) income attributable to stockholders $ (8,562) $ (6,301) $ (2,261) $ (19,162) $ 5,300 $ (24,462) Add: Provision for income taxes — — — — — — Add: Equity-based compensation expense — — — — — — Add: Acquisition and transaction expenses 1,681 — 1,681 2,079 71 2,008 Add: Losses on the modification or extinguishment of debt and capital lease obligations — — — — — — Add: Changes in fair value of non-hedge derivative instruments — — — — — — Add: Asset impairment charges — — — — — — Add: Incentive allocations — — — — — — Add: Depreciation and amortization expense — — — — — — Add: Interest expense — — — — 3 (3) Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (1) 7,512 7,214 298 22,579 26,656 (4,077) 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 10,474 7,057 3,417 24,847 (2,343) 27,190 Less: Non-controlling share of Adjusted EBITDA — — — — — — Adjusted EBITDA (non-GAAP) $ 11,105 $ 7,970 $ 3,135 $ 30,343 $ 29,687 $ 656 ________________________________________________________ (1) Includes the following items for the three months ended September 30, 2024 and 2023: (i) net loss of $(10,489) and $(7,057), (ii) interest expense of $9,544 and $7,932, (iii) depreciation and amortization expense of $6,217 and $6,639, (iv) acquisition and transaction expenses of $47 and $50, (v) changes in fair value of non-hedge derivative instruments of $(2,572) and $(352), (vi) equity-based compensation of $— and $2, (vii) asset impairment of $24 and $—, (viii) equity method basis adjustments of $17 and $— and (ix) loss on modification or extinguishment of debt of $4,724 and $—, respectively. Includes the following items for the nine months ended September 30, 2024 and 2023: (i) net (loss) income of $(24,895) and $2,343, (ii) interest expense of $28,219 and $22,544, (iii) depreciation and amortization expense of $18,025 and $19,620, (iv) acquisition and transaction expenses of $97 and $307, (v) changes in fair value of non-hedge derivative instruments of $(4,394) and $(18,162), (vi) equity-based compensation of $2 and $4, (vii) asset impairment of $274 and $—, (viii) equity method basis adjustments of $49 and $—, (ix) loss on modification or extinguishment of debt of $4,724 and $— and (x) other non-recurring items of $478 and $—, respectively. Expenses Total expenses increased $0.3 million and $1.0 million during the three and nine months ended September 30, 2024, respectively, which primarily relates to an increase in consulting fees, partially offset by a decrease in legal fees. Other (expense) income Total other expense increased $2.0 million during the three months ended September 30, 2024 which reflects: • an increase in equity in losses of unconsolidated entities of $3.4 million, primarily due to a loss on extinguishment of debt at Long Ridge West Virginia LLC; offset by • an increase in other income of $1.4 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 $23.4 million during the nine months ended September 30, 2024 which reflects: • an increase in equity in losses of unconsolidated entities of $27.2 million, primarily due to a decrease in unrealized gains on power swaps at Long Ridge Energy & Power LLC and loss on extinguishment of debt at Long Ridge West Virginia LLC; partially offset by • an increase in other income of $3.8 million due to interest income from an increased loan balance under the loan agreement between the Company and Long Ridge Energy & Power LLC. 57 Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased $3.1 million and $0.7 million during the three and nine months ended September 30, 2024, respectively, primarily due to the changes noted above. Sustainability and Energy Transition Segment The following table presents our results of operations: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2024 2023 2024 2023 Revenues Other revenue $ — $ — $ — $ — $ — $ — Total revenues — — — — — — Expenses Operating expenses — — — 7 29 (22) Acquisition and transaction expenses — — — — 1 (1) Total expenses — — — 7 30 (23) Other (expense) income Equity in losses of unconsolidated entities (3,844) (2,867) (977) (14,182) (9,560) (4,622) Other income 1,206 649 557 2,156 1,876 280 Total other expense (2,638) (2,218) (420) (12,026) (7,684) (4,342) Net loss attributable to stockholders $ (2,638) $ (2,218) $ (420) $ (12,033) $ (7,714) $ (4,319) 58 The following table sets forth a reconciliation of net loss attributable to stockholders to Adjusted EBITDA: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2024 2023 2024 2023 Net loss attributable to stockholders $ (2,638) $ (2,218) $ (420) $ (12,033) $ (7,714) $ (4,319) 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) (1,879) (1,654) (225) (7,465) (6,010) (1,455) 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 3,844 2,867 977 14,182 9,560 4,622 Less: Non-controlling share of Adjusted EBITDA — — — — — — Adjusted EBITDA (non-GAAP) $ (673) $ (1,005) $ 332 $ (5,316) $ (4,163) $ (1,153) ________________________________________________________ (1) Includes the following items for the three months ended September 30, 2024 and 2023: (i) net loss of $(3,845) and $(2,868), (ii) interest expense of $1,272 and $888 and (iii) depreciation and amortization expense of $694 and $326, respectively . Includes the following items for the nine months ended September 30, 2024 and 2023: (i) net loss of $(14,182) and $(9,567), (ii) interest expense of $4,651 and $2,579 and (iii) depreciation and amortization expense of $2,066 and $978, respectively. Other expense Total other expense increased $0.4 million and $4.3 million during the three and nine months ended September 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 increased $0.3 million and decreased $1.2 million during the three and nine months ended September 30, 2024, respectively, primarily due to the changes noted above. 59 Corporate and Other The following table presents our results of operations: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2024 2023 2024 2023 Revenues Roadside services revenues $ 14,897 $ 18,145 $ (3,248) $ 42,638 $ 54,230 $ (11,592) Total revenues 14,897 18,145 (3,248) 42,638 54,230 (11,592) Expenses Operating expenses 14,140 18,964 (4,824) 41,492 55,663 (14,171) General and administrative 2,989 2,485 504 10,690 9,388 1,302 Acquisition and transaction expenses 750 383 367 1,852 813 1,039 Management fees and incentive allocation to affiliate 2,807 3,238 (431) 8,584 9,304 (720) Depreciation and amortization 79 755 (676) 1,337 2,417 (1,080) Total expenses 20,765 25,825 (5,060) 63,955 77,585 (13,630) Other income (expense) Equity in earnings of unconsolidated entities 10 10 — 31 44 (13) Loss on extinguishment of debt — (1,083) 1,083 — (1,083) 1,083 Interest expense (18,236) (16,995) (1,241) (54,477) (45,189) (9,288) Other income 2 — 2 2 — 2 Total other expense (18,224) (18,068) (156) (54,444) (46,228) (8,216) Loss before income taxes (24,092) (25,748) 1,656 (75,761) (69,583) (6,178) (Benefit from) provision for income taxes (767) (493) (274) 448 237 211 Net loss (23,325) (25,255) 1,930 (76,209) (69,820) (6,389) Less: Net loss attributable to non-controlling interest in consolidated subsidiaries — — — — (229) 229 Less: Dividends and accretion of redeemable preferred stock 16,978 15,984 994 51,563 45,811 5,752 Net loss attributable to stockholders $ (40,303) $ (41,239) $ 936 $ (127,772) $ (115,402) $ (12,370) 60 The following table sets forth a reconciliation of net loss attributable to stockholders to Adjusted EBITDA: Three Months Ended September 30, Change Nine Months Ended September 30, Change (in thousands) 2024 2023 2024 2023 Net loss attributable to stockholders $ (40,303) $ (41,239) $ 936 $ (127,772) $ (115,402) $ (12,370) Add: (Benefit from) provision for income taxes (767) (493) (274) 448 237 211 Add: Equity-based compensation expense 103 — 103 377 80 297 Add: Acquisition and transaction expenses 750 383 367 1,852 813 1,039 Add: Losses on the modification or extinguishment of debt and capital lease obligations — 1,083 (1,083) — 1,083 (1,083) Add: Changes in fair value of non-hedge derivative instruments — — — — — — Add: Asset impairment charges — — — — — — Add: Incentive allocations — — — — — — Add: Depreciation and amortization expense 79 755 (676) 1,337 2,417 (1,080) Add: Interest expense 18,236 16,995 1,241 54,477 45,189 9,288 Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (1) (8) (6) (2) (24) (16) (8) Add: Dividends and accretion of redeemable preferred stock 16,978 15,984 994 51,563 45,811 5,752 Add: Interest and other costs on pension and OPEB liabilities — — — — — — Add: Other non-recurring items — — — — — — Less: Equity in earnings of unconsolidated entities (10) (10) — (31) (44) 13 Less: Non-controlling share of Adjusted EBITDA (2) — — — — (260) 260 Adjusted EBITDA (non-GAAP) $ (4,942) $ (6,548) $ 1,606 $ (17,773) $ (20,092) $ 2,319 ________________________________________________________ (1) Includes the following items for the three months ended September 30, 2024 and 2023: (i) net loss of $(18) and $(16) and (ii) interest expense of $10 and $10, respectively. Includes the following items for the nine months ended September 30, 2024 and 2023: (i) net loss of $(55) and $(59) and (ii) interest expense of $31 and $43, respectively. (2) Includes the following item for the nine months ended September 30, 2023: (i) depreciation and amortization expense of $260. Revenues Total revenues decreased $3.2 million and $11.6 million during the three and nine months ended September 30, 2024, respectively, primarily due to a decrease in roadside services at FYX. Expenses Total expenses decreased $5.1 million during the three months ended September 30, 2024 which primarily reflects: • a decrease in operating expenses of $4.8 million due to a decrease in roadside services at FYX; and • a decrease in depreciation and amortization expense of $0.7 million due to assets that became fully depreciated; partially offset by • an increase in general and administrative expenses of $0.5 million primarily due to higher professional fees. Total expenses decreased $13.6 million during the nine months ended September 30, 2024 which primarily reflects: • a decrease in operating expenses of $14.2 million due to a decrease in roadside services at FYX; and • a decrease in depreciation and amortization expense of $1.1 million due to assets that became fully depreciated; partially offset by • an increase in general and administrative expenses of $1.3 million primarily due to higher professional fees; and • an increase in acquisition and transaction expenses of $1.0 million associated with professional fees for a potential acquisition. 61 Other expense Total other expense increased $0.2 million and $8.2 million during the three and nine months ended September 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, partially offset by a decrease in loss on extinguishment of debt due to repayment of amounts outstanding under the Credit Agreement in July 2023. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased $1.6 million and $2.3 million during the three and nine months ended September 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 $62.2 million and $89.2 million during the nine months ended September 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 September 30, 2024, (ii) revenues from our infrastructure business net of operating expenses, (iii) proceeds from borrowings and (iv) proceeds from asset sales and an easement. • Cash flows used in operating activities were $7.2 million and $2.2 million during the nine months ended September 30, 2024 and 2023, respectively. • During the nine months ended September 30, 2024, additional borrowings were obtained in connection with the (i) April 2024 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 April 2024 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. In August 2024, we used a portion of the net proceeds from the Series 2024 Bonds to repurchase and cancel a portion of the Tax Exempt Series 2021A Bonds of $6.0 million. During the nine months ended September 30, 2023, additional borrowings were obtained in connection with the (i) Transtar Revolver of $40.0 million, (ii) Credit Agreement of $25.0 million, (iii) EB-5 Loan Agreement of $1.6 million and (iv) 2027 Notes of $100.0 million. In July 2023, we used a portion of the net proceeds from the $100.0 million offering to repay the amounts outstanding under the Transtar Revolver and Credit Agreement in full during the nine months ended September 30, 2023. • Proceeds from asset sales and an easement were $4.1 million and $1.3 million during the nine months ended September 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. In addition, from time to time, we may seek to repay, refinance or restructure all or a portion of our debt or to repurchase or repay our outstanding debt through, as applicable, tender offers, exchange offers, open market purchases, privately negotiated transactions or otherwise. Such transactions, if any, will depend on a number of factors, including prevailing market conditions, our liquidity requirements and contractual requirements (including compliance with the terms of our debt agreements), among other factors. 62 Historical Cash Flow Comparison of the nine months ended September 30, 2024 and 2023 The following table compares the historical cash flow for the nine months ended September 30, 2024 and 2023: Nine Months Ended September 30, (in thousands) 2024 2023 Cash Flow Data: Net cash used in operating activities $ (7,223) $ (2,214) Net cash used in investing activities (89,638) (139,010) Net cash provided by financing activities 154,015 69,506 Net cash used in operating activities increased $5.0 million, which primarily reflects certain adjustments to reconcile net loss to cash used in operating activities including (i) an increase in equity in losses of unconsolidated entities of $31.8 million, (ii) an increase in loss on modification or extinguishment of debt of $6.4 million and (iii) an increase in amortization of deferred financing costs of $1.5 million, partially offset by (i) an increase in net loss of $21.6 million, (ii) changes in working capital of $14.9 million, (iii) an increase in gain on sale of easement of $3.5 million, (iv) an increase in gain on sale of assets of $2.3 million, (v) changes in fair value of non-hedge derivatives of $1.1 million and (vi) changes in provision for credit losses of $1.1 million. Net cash used in investing activities decreased $49.4 million, primarily due to (i) a decrease in the acquisition of property, plant and equipment of $25.4 million, (ii) a decrease in the investment in convertible promissory notes of $19.5 million, (iii) a decrease in the acquisition of business of $4.4 million, (iv) a decrease in the investment in unconsolidated entities of $3.8 million and (v) an increase in the proceeds from sale of easement of $3.5 million, partially offset by (i) an increase in the investment of equity instruments of $5.0 million and (ii) an increase in the acquisition of leasing equipment of $1.6 million. Net cash provided by financing activities increased $84.5 million, primarily due to (i) an increase in proceeds from debt of $287.6 million, partially offset by (i) an increase in repayment of debt of $172.5 million, (ii) an increase in settlement of equity-based compensation of $3.1 million, (iii) an increase in distributions to non-controlling interests of $13.4 million, (iv) an increase in the payment of cash dividends on preferred stock of $9.7 million and (v) an increase in payment of financing costs of $3.9 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: D ebt Obligations — As of September 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 $106.6 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 September 30, 2024, we had outstanding operating and finance lease obligations of $169.5 million, of which $9.2 million is due within the next twelve months. Redeemable Preferred Stock Obligations —We have dividend payments of $58.2 million d ue 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 eleven 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 63 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, 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.