So FTAI uses an adjusted EBITDA formula (common practice) to reflect spending activity ongoing in any given year that explains why an end result is negative. For example, last year (and subsequent years before) they invested a lot in equipment and infrastructure, being the Maine Regional Railways TIGER program, roughly $4M in track outside of that (Canada mostly), Derby shops and in locomotives/railcar leases.
That is if you say, 'well yeah they finished in the red' unadjusted, they actually made investments that if they otherwise hadn't made they would be in the black. The result of the investments is expected of course to contribute to revenue and cost savings (think AC44 fuel efficiency, locos with hot starts, less maintenance on track ect) at a later date. So for this, you have to use the adjusted formula to get a sense of the overall health of the company.
Last year adjusted EBITDA was $2.9M for all of 2017.... as of now three Quarters in adjusted EBITDA is $5M. So in three quarters, they've already exceed all of last year... but they did have some help from SLR detours back early this year, which is an anomaly.
CMQ capital plan through 2020 is $4M per year on track (which is a plan, so subject to change) while recognizing 45G tax credits. Also likely some more locos and railcar deals to come.
Also factor into your previous analysis, you were assuming a 7 day work week, which is not the case. For the most part CMQ is a 5 and a half day outfit (some jobs work 5 days some 6), so you have to adjust your calendar year for that. So we can use 290 working days in a year (thereabout) or 72.5 days per quarter, meaning they are moving about 90 carloads per day. If you want to go deeper down the worm hole, you can segment out divisions based on job frequency (IE, they go to Millinocket 3 days a week, Searsport 3 days a week, Moosehead 5 days a week, ect) based on 'best guess' observed volumes and you can likely extrapolate pretty closely so stronger figures. Also, run some scenario analysis for upper and lower deviations, plot a few different paths to get an overall sense of what their growth trajectory is going into 2019 assuming all things equal (is growth expediting or is it cooling?). You can likewise do the same based on carload tonnages (assuming things carloads are mostly utilized when loaded, say 90%) and determine you cost per ton mile on routes also based on their tonnages.
Hopefully if someone buys CMQ, they do at least the above and likely more to determine if they are to buy. Don't forget, a scenario exists with no buyers and Fortress keeps running it.
To summarize-- if you don't actually read any of the above, to answer your question why they finished in the red (unadjusted) last year and last quarter, its because they've been investing in the railroad (what a concept). Also, seasonally speaking they do better in Q4 and Q1 (which they acknowledge) due to the LPG traffic, but overall things are growing.
Last edited by MEC407
on Tue Jan 01, 2019 5:52 pm, edited 1 time in total.
Reason: unnecessary quoting