Fortress Infrastructure – Analysis

Fortress Infrastructure ($FIP) is an energy infrastructure company born from the spin-off of its parent company, FTAI, in the summer of 2022, separating the Transport & Aviation Parts business from the Infrastructure business.

FIP’s business focuses on acquiring, developing, and operating critical energy infrastructure assets in the United States. Specifically, FIP owns four assets and has several minority investments.

Except for Transtar (a railroad business with stable annual growth of 10-15%, acquired in July 2021, and the company’s main driver with nearly $100MM in EBITDA), since going public, FIP has been completing the construction and ramp-up of its other assets, securing long-term stable contracts.

In February of this year, FIP executed a major corporate move by acquiring the remaining 50% of Long Ridge (Power & Gas terminal) and eliminating low-price electricity swaps, raising them from $28 to $43/MWh. These actions, along with the results of an auction, project a run-rate EBITDA of $160MM (vs. $40MM in 2024).

Meanwhile, Jefferson is building a second hub and ramping up its main terminal (new contracts increasing EBITDA by 50% vs. 2024). Lastly, Repauno Phase II is scheduled for COD by late 2026, and with already signed contracts, it is expected to see a significant jump of $50MM EBITDA from its currently slightly negative EBITDA.

Overall, FIP’s EBITDA is expected to triple within the next 18 months (to over $350MM) while carrying out multiple financing cost reduction operations (its current financing ranges from non-tax bonds at 1.99% to preferreds at 14%, which it is trying to eliminate).

Despite this, FIP has dropped over 50% in the past 9 months, mainly due to delays in key initiatives and debt refinancing. As we will analyze in great detail, debt refinancing is the critical point to fully understand in this potential investment opportunity. Currently, FIP trades at a $530MM market cap and an EV of $3.7B.

Today, we take an in-depth look at Fortress Infrastructure, focusing on its complex capital structure to determine whether this presents a massive investment opportunity (analyst estimates suggest nearly 200% upside from current prices) or whether delays in contract announcements and refinancing are killing the equity story, considering the company’s balance sheet.

A company in our niche, which we have followed since its IPO, where we aim to go one step beyond the standard market and consensus analysis.