FTAI Infrastructure (FIP) Q2 2026 Earnings Call Transcript

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DATE

Thursday, Aug. 6, 2026 at 8:00 a.m. ET

CALL PARTICIPANTS

• Investor Relations - Alan Andreini
• Chief Executive Officer - Kenneth Nicholson
• Chief Financial Officer - Buck Fletcher

TAKEAWAYS

• Total Revenues -- $186.8 million for the quarter, up from $122.3 million in the prior year period.
• Adjusted EBITDA -- $76.1 million, reflecting record performance from the rail segment and terminal growth.
• Net Loss Attributable to Common Stockholders -- $166.5 million, or $1.41 per diluted share, driven by interest expense and asset impairment charges.
• Rail Segment Revenue -- $92.2 million, a record for the quarter driven by the integration of the Wheeling & Lake Erie Railway.
• Rail Segment Adjusted EBITDA -- $42.4 million, representing a new quarterly record for the platform.
• Jefferson Terminal Revenue -- $24.3 million, supported by record volumes in refined products and ammonia export business.
• Jefferson Terminal Adjusted EBITDA -- $13.0 million, compared with $11.1 million in the second quarter of 2025.
• Power and Gas Adjusted EBITDA -- $27.4 million, representing results from the Long Ridge asset currently held for sale.
• Asset Impairment Charges -- $63.2 million, primarily associated with the Power and Gas segment and assets held for sale.
• Tidewater Logistics Acquisition -- $45 million in cash consideration, funded via an add-on to the existing parent-level term loan.
• Expected Tidewater EBITDA Contribution -- $9 million annually, representing an attractive purchase multiple for the rail-served terminal operator.
• Debt Reduction Target -- $1.4 billion, to be eliminated from the balance sheet upon the expected closing of the Long Ridge sale by the end of the third quarter.
• Parent Debt Service Savings -- $25 million annually, improving leverage metrics following the anticipated deleveraging from the Long Ridge divestiture.
• Repauno Phase 2 Potential -- $80 million in projected annual EBITDA, with a combined capacity between Phase 1 and Phase 2 of 100,000 barrels per day.
• Rail Incremental EBITDA Potential -- $50 million, identified from future revenue sources and transload facility expansions.
• Jefferson Incremental EBITDA Target -- $50 million annually, based on three expansion opportunities with existing customers requiring minimal capital investment.
• Interest Expense -- $105.5 million, up from $59.2 million in the second quarter of 2025 due to higher debt levels and financing costs.
• Common Stock Dividend -- $0.03 per share, declared by the board of directors for the quarter ended June 30, 2026.
• Long Ridge Gas Production -- 73,000 MMBTU per day, exceeding the power plant's daily requirements of 70,000 MMBTU.
• Long Ridge Capacity Factor -- 85%, impacted by a planned maintenance outage that extended for 11 days into the second quarter.
• Rail Integration Synergies -- $20 million in identified cost efficiencies, with management reporting approximately 80% completion of the integration process.

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RISKS

• Nicholson stated, "Crude volumes were impacted by volatility in the Middle East and we experienced a temporary reduction in inbound ship volumes during Q2," noting that supply chain disruptions affected terminal throughput.
• Nicholson noted that volumes at Transtar were softer in the second quarter because U.S. Steel is investing in its Gary, Indiana facility, which required idling a large blast furnace.

SUMMARY

Management focused the quarterly discussion on three primary strategic goals: the sale of Long Ridge to deleverage the balance sheet, the expansion of the freight rail portfolio, and the preparation of energy terminals for 2027 monetization. **FTAI Infrastructure Inc.** (NASDAQ:FIP) reported record rail segment performance following the integration of the Wheeling & Lake Erie Railway and the acquisition of Tidewater Logistics. While Middle East volatility and industrial upgrades at partner facilities impacted crude and steel-related volumes, the company reported growth in refined products and ammonia exports. The anticipated divestiture of Long Ridge by the end of the third quarter is expected to eliminate $1.4 billion in debt and reduce annual parent-level interest expense by $25 million.

• CEO Nicholson identified rail acquisition targets in three categories: short-line portfolios, industrial carve-outs, and regional tuck-ins, stating, "We really look for railroads we think over a three to five-year period, we can double EBITDA."
• The company reported that the integration of the Wheeling & Lake Erie Railway is entering its final stages, with critical IT consolidation expected to conclude in the third quarter.
• At Jefferson Terminal, the transition to inbound rail for crude oil provides a volume multiplier because the process requires blending 50,000 barrels of rail-delivered crude with 50,000 barrels of pipeline-originated crude.
• CEO Nicholson indicated that strategic export terminals historically trade at multiples between 12 to 15 times, stating, "We're hopeful we'll be at the high end of those multiple ranges" for Jefferson and Repauno.
• Management reported that Repauno Phase 2 construction remains on schedule for completion by the end of 2026, with revenue service expected to commence at or near full capacity in early 2027.
• CEO Nicholson noted that the Wheeling & Lake Erie Railway is outperforming internal expectations one year after the acquisition announcement, specifically citing strength in propane volumes.
• The company completed the Southern Star Pipeline bi-directional project, enabling the efficient movement of light and heavy crudes between Jefferson Terminal and nearby refineries.

INDUSTRY GLOSSARY

• Capacity Factor: A measure of the actual electricity generated by a power plant compared to its maximum possible output over a specific period.
• Cryogenic Tank: A specialized storage vessel designed to hold liquefied gases at extremely low temperatures.
• MMBTU: One million British Thermal Units, a standard unit of measurement for natural gas energy content.
• SSP (Southern Star Pipeline): A pipeline system connecting terminal infrastructure directly to refinery customers for crude and refined product movement.
• Transload: The process of transferring a shipment from one mode of transportation to another, such as from rail to truck.

Full Conference Call Transcript

Operator: Good day, and thank you for standing by. Welcome to the FTAI Infrastructure Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I'd like to hand the conference over to your first speaker today, Alan Andreini, Investor Relations. Please go ahead.

Alan Andreini: Thank you, Marvin. I would like to welcome you all to the FTAI Infrastructure earnings call for the second quarter of 2026. Joining me here today are Ken Nicholson, the CEO of FTAI Infrastructure, and Buck Fletcher, the company's CFO. We have posted an investor presentation and our press release on our website, which we encourage you to download if you have not already done so. Also, please note that this call is open to the public in listen-only mode and is being webcast. In addition, we will be discussing some non-GAAP financial measures during the call today, including adjusted EBITDA. The reconciliations of those measures to the most directly comparable GAAP measures can be found in the earnings supplement.

Before I turn the call over to Ken, I would like to point out that certain statements made today will be forward-looking statements, including regarding future earnings. These statements, by their nature, are uncertain and may differ materially from actual results. We encourage you to review the disclaimers in our press release and investor presentation regarding non-GAAP financial measures and forward-looking statements, and to review the risk factors contained in our quarterly report filed with the SEC. Now, I would like to turn the call over to Ken.

Kenneth Nicholson: Okay, thank you very much, Alan, and good morning, everyone. Welcome to this morning's call. The second quarter was a very active one for us, and today we will walk through our various accomplishments for the quarter, our financial results, and we'll talk a little bit about our goals and expectations for the remainder of this year. Suffice to say, we're pleased with our overall results and excited about the momentum we're carrying into the months ahead. We'll kick things off on Slide 3 of the supplement. As we stated before, our goals for this year have 3 primary components.

Sell Long Ridge and deleverage our balance sheet, continue to grow our railroad portfolio, and position our terminals for monetization next year at attractive values. And I'm pleased to report that we made good progress on each of these goals during Q2. First, we announced the sale of Long Ridge at the end of April, and while timing is not necessarily an exact science, we currently expect to be in position to close the transaction by the end of Q3. The sale will result in substantial deleveraging and a material reduction in our interest expense at our parent level. Second, our rail business posted another record quarter in both revenues and adjusted EBITDA.

We made a small acquisition at the end of Q2 and are expecting several additional acquisition opportunities in the months ahead as the M&A market in the rail sector continues to heat up. We have an exceptional platform to continue to integrate acquisitions in the rail space, and I'm confident we'll be successful adding to our portfolio. Finally, our terminals made good progress on important projects that will create value and position each of Jefferson and Repauno for monetization next year. All in, we have momentum carrying us into what we expect to be a very productive second half of 2026. Moving to Slide 4, we'll review the financial results for the quarter.

Adjusted EBITDA for Q2 came in at $76.1 million, up materially from $45.9 million for the first quarter -- for the second quarter of 2025. On the right side of the Slide, we illustrate adjusted EBITDA for each of our last 4 quarters, including the results of Long Ridge, which we now account for -- excluding the results of Long Ridge, which we now account for as an asset held for sale. Excluding Long Ridge, adjusted EBITDA was $48.7 million for Q2, which represents a new quarterly record and equates to just under $200 million on an annualized basis.

In the quarters ahead, we expect revenues and adjusted EBITDA from our rail and terminal segments to continue to grow, driven by the contribution from our recently acquired Tidewater Logistics acquisition and developments at our terminals, including most notably Repauno's Phase 2 project. Flipping to page 5, we'll talk about our balance sheet and deleveraging. As you may recall, our existing corporate debt contains terms allowing for repayment with proceeds from the Long Ridge sale to be made at a lower premium than would otherwise be due if funded with other sources of cash. So with less premium required, we're able to repay more principal.

In total, we expect to eliminate approximately $1.4 billion of total debt from our balance sheet, of which a little over $1.1 billion is at the Long Ridge level, and approximately $300 million is other debt in addition to the $1.1 billion at Long Ridge. Debt service at our parent level will decline by about $25 million annually, meaningfully improving our leverage metrics, and we expect our leverage metrics to continue to improve over the next several quarters as we bring online new business at our terminals, especially at Repauno. Altogether, with a deleveraged balance sheet and higher free cash flow generation, we expect to be well-positioned to act on new investment opportunities, especially in the freight rail space.

Moving to Slide 7, we'll get into the details at each of our segments, starting with our railroad. We posted new quarterly records for both revenue and EBITDA in Q2. Revenue came in at $92.2 million and adjusted EBITDA was $42.4 million for the quarter, compared with pro forma Q2 '25 revenue of $81.2 million and adjusted EBITDA of $37.6 million. Remember our reported results for last year exclude the results of the Wheeling. So we're showing pro forma figures to demonstrate what revenues and EBITDA would have been if we included the Wheeling standalone results last year. Overall volumes for the quarter continue to be steady with higher carloads at Wheeling offsetting slightly lower volumes at Transtar as U.S.

Steel continues to undertake a substantial overhaul and upgrade of the largest blast furnace at Gary Works, which, while dormant now for the upgrade, will ultimately be a meaningful plus for us. Since carloads at the Wheeling are generally at a higher average rate than at Transtar, on a blended basis we report higher average pricing for the quarter. Integration of the Wheeling & Lake Erie Railway is going smoothly with anticipated synergies accumulating as expected and critical IT consolidation wrapping up here in Q3. On the revenue side, we continue to grow the list of opportunities as the 2 railroads are operating as 1. Additional propane carloads are planned to start early next year when Repauno's Phase 2 commences.

The pipeline of additional opportunities is substantial. In total, we continue to estimate in excess of $50 million of incremental annual EBITDA potential from the various new revenue sources manifesting in the future. On Slide 8, we'll talk a little bit about our acquisition of Tidewater Logistics. At the end of Q2, we acquired Tidewater for $45 million of cash consideration, funded with an add-on to our existing parent-level term loan. Tidewater operates a total of 4 rail-served terminals, the largest of which is directly served by the Wheeling, making the acquisition a particularly accretive one.

Handling and transloading over 20,000 carloads annually of a variety of commodities, Tidewater's terminals play an important role in customer supply chains, enabling the transition of freight between rail and truck efficiently and flexibly. We expect Tidewater to contribute approximately $9 million of annual EBITDA, implying an attractive purchase multiple. But more importantly, we plan to leverage Tidewater's management expertise and relationships to expand the rail terminals business and drive additional growth going forward. As I mentioned, we expect the remainder of the year to be an active one on the rail M&A front, and on Slide 9, we describe the types of situations that we're currently evaluating. Opportunities fall into 3 primary buckets.

The first is portfolios of short-line and regional railroads, which are larger, needle-moving investment opportunities that can convey substantial combination efficiency. Second set of opportunities involve sales by corporate and industrial parties that today directly own the railroad that connects their facilities to the National Freight Network. Our acquisition of Transtar from U.S. Steel a number of years ago is a good example of that type of opportunity. And the third is more regional in nature involving tuck-ins of smaller single railroads or terminals, much like our recent acquisition of Tidewater. We are actively pursuing opportunities in each of these 3 categories, so I'm optimistic that we'll be able to continue to grow our existing platform here in the future.

Now on to Jefferson. At Jefferson, we reported $24.3 million of revenue and $13 million of adjusted EBITDA in Q2 versus $21.6 million of revenue and $11.1 million of EBITDA in Q2 of last year. Refined products and ammonia came in at new quarterly records in terms of both volumes and revenues as our export business with customers for those products continues to grow. Crude volumes were impacted by volatility in the Middle East and we experienced a temporary reduction in inbound ship volumes during Q2.

We've been informed that we should expect ship volumes to return here in Q3 and to be further supplemented by inbound volumes of crude by rail, so we forecast the remainder of the year to be strong on the crude front. We continue to negotiate new contracts to expand our business at Jefferson, and we lay out those opportunities on Slide 11. The largest opportunities we're pursuing are with existing customers and involve expansions of the services we currently provide. Our customers have been investing heavily in their nearby facilities to increase production and market reach, which would require more products to flow through Jefferson.

Our goal is to execute on all 3 opportunities during this year and commence revenue planning shortly thereafter. In total, 3 opportunities represent in excess of $50 million of annual incremental EBITDA and utilize existing assets requiring little to no incremental investment or CapEx. Now shifting to Repauno, our focus continues on Phase 2 where construction proceeds as planned toward our goal of completion by the end of this year with revenue commencing shortly thereafter. We have long-term contracts in place for a portion of our capacity and are seeing high demand for the remaining available space.

With the disruption in the Middle East, spreads for propane exports continue to be attractive and based on the conversations we're having, we expect to commence revenue service in early 2027 near or at full capacity. In the aggregate, we can handle close to 100,000 barrels per day for the combined assets of Phase 1 and Phase 2, representing approximately $80 million of annual EBITDA. Construction of Phase 2 is progressing well and we're excited to start the commissioning process later this year.

On Slide 13, we show some images of the progress the team has been making with a large cryogenic tank now fully above ground and readying for completion, as well as the pipes and manifolds connected to tanks to our rail racks and ship docks. The majority of expenditures of Phase 2 have been financed with long-term, low-cost tax-exempt debt, which is an ideal match for a project of this type, and we've had a great partnership with the State of New Jersey's Economic Development Authority, which we hope to continue to expand for future growth projects at Repauno. Finally, on Slide 14, we'll briefly close out with Long Ridge.

Given the pending nature of the sale, I'll only hit the highlights for the quarter. Adjusted EBITDA came in at $27.4 million in Q2 versus $23 million in Q2 of last year. Power plant capacity factor of 85% was impacted by the planned outage we commenced in Q1 and continued for a total of 11 days into Q2. Away from that outage, the fundamentals continue to be strong with power prices and capacity revenue continuing at historically high levels.

We averaged a little more than 73,000 MMBTU per day of gas production versus 70,000 MMBTU per day required at the plant, and we expect to maintain production well in excess of plant requirements and generate continued revenues from excess gas sales in the quarters ahead. So far in Q3, Long Ridge is off to a great start with capacity factor at nearly 100% currently and gas production continuing in excess of our plant's needs. I'm going to conclude our remarks there, and now I will turn it back over to Alan.

Alan Andreini: Thank you, Ken. Marvin, you may now open the call to Q&A.

Operator: Thank you. [Operator Instructions] Our first question comes from the line of Giuliano Bologna of Compass Point. Your line is now open.

Giuliano Anderes-Bologna: Congrats on the continued solid results and execution. Maybe, as a first question, it's been about a year since you made the acquisition of the Wheeling. Can you expand on how you feel now about that acquisition and how the progress has evolved since the acquisition?

Kenneth Nicholson: Yes, definitely. Good morning, Giuliano. Yes, we actually announced the acquisition on August 6th of last year, so it's been exactly 1 year since we announced the Wheeling acquisition. So it's a timely question. I would say we are thrilled. The acquisition has been a game changer for our rail platform. Of course, the Wheeling itself is exceeding our original expectations. We're excited about the next 6 months ahead. Very excited about propane volumes continuing to grow. We've seen particular activity and strength in propane volumes on the Wheeling. Everything's working out super. The integration has worked out great. Very few issues.

I would say, you know, Transtar, as I mentioned in some of my remarks, it was a little bit softer in Q2 for a good reason. U.S. Steel is investing in their Gary, Indiana facility, upgrading their large blast furnace. But what that's meant is in Q2, things were a little softer in volumes. And by virtue of owning the Wheeling, we posted in the aggregate the great results, record results. So the impact on diversity, incremental growth opportunities, everything's checking out great, and I'm really thrilled that we were able to accomplish that acquisition and the management team has been doing a superb job integrating the 2 companies together.

Giuliano Anderes-Bologna: Yes, that's very helpful. And as next question, you know, with respect to the third category of potential rail acquisitions, what is it about corporate systems and, you know, what is it about that category specifically?

Kenneth Nicholson: Yes, it's interesting. The industrial carve-outs, you see those slightly less frequently. Obviously, Transtar was a great example of an industrial carve-out, but there are a number of corporate entities, very large corporate entities in the agricultural space, and the metals and mining space, and in other sectors that today own their own track systems. Most of them are shorter switching lines. Those create unique opportunities for those corporate parents to generate liquidity and, frankly, focus on their core business and divest a non-core asset. The beauty of those opportunities in particular is, just like Transtar, most of those businesses have historically been operated solely for their parent owner.

And just like with Transtar, they have not pursued third-party growth opportunities. And that's really fundamentally what makes them unique and particularly accretive. We're seeing a pickup in activity and there are a few industrial parents that are beginning the process to divest their in-house short lines, connecting lines, and so we're going to be pretty aggressive on those situations. I think those are among the best situations out there.

Giuliano Anderes-Bologna: I appreciate it, and I'll jump back in queue.

Operator: We'll move on to our next question. Our next question comes from Jeff Kauffman of Citizens JMP.

Jeffrey Kauffman: Congratulations on the quarterly results. I want to follow up on the Wheeling question. You'd identified a synergy target on the integration of Wheeling. I was just kind of curious, did you achieve all of the synergies you were looking for? How far along that process are you? And have you discovered any other opportunities as you've kind of worked through that process?

Kenneth Nicholson: Yes, hi, Jeff. Good morning. I would say we're about 80% through the integration process. There's still a little bit more to do, particularly on the IT front, which we'll be wrapping up here in the third quarter. And it's going almost exactly as planned. I mean, we identified $20 million of cost efficiencies. We are right on that target. We're not demonstrating all of that necessarily in the second quarter results because some of those initiatives were enacted during Q2. So you'll start to see the full impact in Q3 and Q4. But on the cost efficiencies, I can't say we've necessarily identified additional opportunities to reduce costs.

I feel like we did a pretty complete job as we were assessing the Wheeling acquisition a year ago. And we've come in at the target there. Where we have, I think, done better than we originally expected is on additional revenue opportunities. There's a lot to do between the 2 companies. We are opening additional transload facilities in Pittsburgh that are stimulated by customers on the Wheeling. We would never have done that if we hadn't acquired the Wheeling. We've been able to expand the industrial footprint, if you will, the 2 railroads are now operating as 1. So on the revenue side, we're doing better than expected. You know, those opportunities take time to flow and execute.

You know, transload facilities need to be built. They're not terribly complicated, there is some time there. And so, look, we're building sustainable, permanent, you know, revenue bases with new customers at Transtar that we didn't necessarily envision we would have an opportunity to do when we made the acquisition a year ago. So, I'm excited about that.

Jeffrey Kauffman: Okay, just 1 follow-up. As you're looking for additional properties to put in the portfolio, given that there's going to be a series of choices out there, could you identify kind of what the 2 or 3 things you're looking for at the top of that list as opposed to just whatever property is available? Are you looking to diversify the revenue mix at all? Is there a particular type of situation that you feel is a better fit with the franchise?

Kenneth Nicholson: Great question, because every short line or regional railroad or rail terminal tends to be snowflakey in nature. And there are a lot of differentiating factors when we look at situations. Yes, things like diversity of commodities, diversity of customers are important, particularly where it helps us diversify our existing commodity base. Things like agricultural exposure, intermodal exposure, those are things we have less of today, so it would be nice to diversify into those commodity bases. Most importantly, there are a handful of technical things, railroads that are leased versus owned.

Obviously, you want to own property, if at all possible, railroads that have pricing freedom versus long-term restrictions on their ability to freely price freight and increase prices over time. So there are a whole bunch of smaller technical things that ideally go the right way. Fundamentally, though, it's growth. When we look at a new railroad, we try to identify the opportunities for growth, not just organically, but with additional capital. Many railroads don't focus on investing more capital to grow their revenue base, building out a new transload facility, attracting new customers to locate on their rail lines, acquiring real estate adjacent to the rail line.

Things like right-of-way income oftentimes are under-managed businesses within railroads and can be incredibly lucrative, especially with all the data center and power build-out and need for transmission lines and fiber optic cables. When you own railroads, you own those long corridors that have those rights. So fundamentally, it's mostly growth. We really look for railroads we think over a 3- to 5-year period, we can double EBITDA. That's how we target things.

Jeffrey Kauffman: All right, those are my questions. Thank you.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Sherif Elmaghrabi of BTIG. Your line is now open.

Sherif Elmaghrabi: To pivot away from rail for a second, I want to focus on the terminals businesses ahead of monetization. At Jefferson, one of the regional partners has had to deal with, call them supply chain constraints due to what's going on in the Middle East. And, you know, you've talked about the ways that they're going to revive throughput in Q3. Can you just talk about a little bit of puts and takes there, you know, how much rail crude can supplement or kind of offset uncertainty going on with the tanker trade? And where is the throughput growth coming from ahead of monetization? I think that would be very helpful.

Kenneth Nicholson: Yes, yes. Yes, it's been changes every day out in the Middle East as it relates to supply chain dynamics. And we saw the impact of that in the second quarter. What I would say is for our particular customer, we handle crude volumes through 3 modes. Inbound ships, which originate in the Middle East, trains, which largely originate in Utah, and then inbound by pipe from other pipe-connected sources. 2 of the 3 are not subject to volatility and interruption. What our customer is doing is, well, a couple things. One, we've been informed ship volumes are expected to recover in Q3. And we just heard that very recently. And so I'm optimistic about Q3 crude volumes overall.

Ships can hold, I mean, up to 500,000 barrels of crude oil on ship. A train holds about 50,000 barrels. So it gives you a sense of the scale and the importance of ship inbound volumes. We had a lot of ships come in Q1 and a lot fewer in Q2. But we are transitioning actively to inbound rail. The beauty of inbound rail is you actually get like a 2x multiplier because inbound rail volumes from Utah require blending. And so for every 50,000-barrel train we bring in, we also have to bring in 50,000 barrels of pipeline-originated crude for blending. So we're really handling 100,000 barrels for every train. That transition is actively happening.

We completed a very important infrastructure project with our Southern Star pipeline, which is one of the many pipelines we built connecting Jefferson directly to refineries. We completed that just about a month ago. And that enables for the efficient handling of light crudes and heavy crudes back and forth. And now we are unloading trains coming from Utah and that business is growing pretty rapidly. So I think at Jefferson, we'll see a return of inbound ship volumes and we'll see a material increase of inbound rail volumes during Q3 and Q4. That is a very good thing as we're thinking about monetizing the business in 2027.

Sherif Elmaghrabi: It's super helpful and obviously refining margins are very supportive at the moment to more throughput. Pivoting to Repauno, I don't want to put the horse before the cart, but is the plan to get any Phase 3 capacity under contract, or could we see a sale of at least a portion of the business before then? And if you could just remind us on timing for Phase 3, that's helpful. Okay.

Kenneth Nicholson: Yes, we'd love to do that. Phase 3 is permitted, designed, engineered, ready to go. We won't finance or start construction on Phase 3 until we have a long-term contract in place. We are still contracting the remaining capacity of Phase 2. So we want to finish that up because that is, you know, ready for operation commencement in early 2027. So the focus right now is on completing Phase 2. We'd love to have Phase 3 contracted and under construction when we look to monetize Repauno. It's not something we're necessarily planning on. I think we've already created a lot of value at Repauno in terms of obtaining the permits and having it designed and all fully scheduled.

So, that's something a new owner can look forward to and hopefully underwrite. There is definitely a tremendous opportunity. Propane volumes coming out of the Marcellus and Utica, the Appalachian Basin overall continue to grow. And we are the only export-capable facility on the East Coast that actually has room to grow. So, it's a great asset we own. I think it's valuable already in Phase 3, whether we've started construction or signed up customers by the time we monetize. It is certainly a helpful thing if we're able to do that. I don't think it's absolutely necessary. We're not going to wait for that for starting the sale process for Repauno.

Sherif Elmaghrabi: Okay, super helpful, and thanks again.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Matthew Erdner of JonesTrading. Your line is now open.

Matthew Erdner: Building off of the terminals there and the disruption in the Middle East, do you feel like now is a good environment for sales on these? And then as a follow-up to that, I'm curious if you guys have had any reverse inquiry just given where these are located and who else is around you in those spots.

Kenneth Nicholson: Yes, good morning. I think it's a good time and it can continue to be a good time for energy terminal M&A. We've definitely received some inbounds. And I would say that activity has picked up somewhat with the shifting of supply chains, largely driven by the conflict in the Middle East, people are sniffing around. And so we're engaged in a handful of very early conversations on that front. I, you know, it's interesting, the terminal market is a big one, and there are all different types of terminals. But -- and they trade at very different valuations. Generic inland terminals that just transload liquids from rail to truck or pipe to truck for regional distribution.

Those tend to trade at high single-digit multiples, typically to MLPs and structured vehicles. The strategic export terminals are much more valuable on a multiple basis and historically have traded at multiples between 12 and 15 times. That's what we own at Jefferson and Repauno. And so, fingers crossed, we're hopeful we'll be at the high end of those multiple ranges. I mean, fundamentally, Jefferson and Repauno serve a highly strategic role. At Jefferson, we're connected to the 2 largest refineries in the Western Hemisphere, directly pipeline-connected. We are part of the supply chain and integrated part of the supply chain to those 2 refineries.

And Repauno, as I said, really the only available gateway on the East Coast that has meaningful room for expansion. So with those differentiating characteristics, yes, I'm pretty optimistic about how things will play out next year.

Matthew Erdner: Awesome, that's very helpful. I appreciate the color there. And then, you know, going back to the rail, I've got just kind of 1 question there. You guys touched on the Nippon investment. Do you guys have any line of sight as to when, you know, those, I guess, construction of that is going to be done and when rail will kind of start to increase from that facility?

Kenneth Nicholson: Probably at some point over the next 6 months. Feeling -- everything's on time, on budget, on plan, but probably about a 6-month time.

Matthew Erdner: Got it. That's helpful. Thank you, guys.

Operator: Thank you. I'm showing no further questions at this time. I'll now turn it back to Alan Andreini for closing remarks.

Alan Andreini: Thank you, Marvin, and thank you all for participating on today's call. We look forward to updating you after Q3.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

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