FTAI Infrastructure (FIP) 2026年第三季度业绩电话会：铁路业务业绩创纪录与去杠杆

核心要点

• FTAI Infrastructure（FIP）公布2026年第三季度调整后EBITDA创历史新高，达9530万美元，较2025年第三季度的7090万美元增长34.4%。若剔除Long Ridge，调整后EBITDA达到5440万美元，创下单季度新高。
• 铁路业务板块在货运车次、单车平均费率、营收和EBITDA方面均创下历史纪录。其中，营收同比增长68.9%至1.042亿美元，调整后EBITDA同比增长62.9%至4740万美元。
• 管理层预计Long Ridge出售交易将于11月底前完成。超过15亿美元的总收益预计将偿还约14亿美元的债务，并使母公司层面的年偿债支出减少约2500万美元。
• 在合同约定的最低运量下，USD Group资产预计每年将贡献约5000万美元的EBITDA。管理层预计，在计入进一步的产能利用率提升和整合协同效应之前，合并后的杰斐逊（Jefferson）业务年EBITDA将突破1亿美元。
• 管理层预计，在运量增长、定价提高以及Wheeling整合协同效应的支撑下，2027年铁路营收将继续保持两位数增长，EBITDA增速预计将略快于营收增速。
• Repauno二期工程已接近完工。根据目前的客户洽谈情况，管理层预计将于2027年投入商业运营，届时产能利用率将接近或达到满产状态。

关键财务数据

业务与经营表现

铁路业务

强劲的运量和定价支撑了铁路业务的表现。加里铁路（Gary Railway）的运量此前因加里钢铁厂（Gary Works）最大高炉检修而受到暂时影响，但该工程已于9月完工，高炉已恢复满负荷运转。

管理层表示，丙烷运量处于或接近历史新高，行业定价依然有利。公司预计2027年定价增幅至少达中个位数，部分合同增幅可达高个位数。

Wheeling的整合工作已基本完成。管理层预计每年可节省约1900万美元的成本，主要来自于人员精简、集中采购和管理费用下降，全部效益预计将从1月1日起全面显现。

日本制铁已承诺对加里及莫恩谷（Mon Valley）工业综合体投资约110亿美元。其中在莫恩谷投资约30亿美元，旨在将年产能从约220万吨提升至350万吨。管理层估计，这最终可能带来3万至5万节铁路车皮增量，以及约2000万美元的额外EBITDA，但相关效益预计将在数年内逐步体现。

杰斐逊码头

杰斐逊的成品油业务在运量和营收上均创下单季度新高。受中东局势动荡导致进港货运量减少影响，第二和第三季度的原油业务表现疲软，但10月运量已从第三季度的日均4.1万桶恢复至8.5万桶/日。

公司已与两家新的原油客户敲定商业条款。合同定于1月1日生效，管理层预计每年将产生约800万美元的额外EBITDA。

FTAI Infrastructure预计将在11月16日当周完成对USD Group资产的收购。该资产在与某投资级客户签署的长期照付不议合同下，每日处理约5万桶加拿大原油，在合同最低运量下每年可产生约5000万美元的EBITDA。

管理层计划将这些资产与杰斐逊业务整合，以进一步削减成本，并为合并后的码头业务在2027年的潜在出售做好准备。

Repauno

二期工程正稳步推进并接近完工，其中包括新建一座低温储罐以及连接铁路装卸栈桥与船舶码头的配套设施。公司还在将一个现有的丁烷储气洞改建用于丙烷储存，以便在二期工程全面投产前开始处理丙烷业务。

长期合同已锁定了部分可用产能。管理层表示，剩余库容的市场需求十分旺盛，预计该设施将于2027年投入商业运营，届时产能利用率将接近或达到满产。待现金流明朗后，公司可能会寻求资产变现机会。

管理层业绩指引

• 管理层预计，2027年铁路营收将继续实现两位数的同比增长，且EBITDA增速将略高于此。
• 铁路定价预计至少上涨中个位数，部分合同涨幅可达高个位数。
• 在监管批准后完成交易的前提下，Long Ridge出售预计将于11月底前交割。
• 在完成收购USD资产后，即使不考虑主码头产能利用率的提升和潜在的整合协同效益，杰斐逊合并后的年EBITDA预计也将超过1亿美元。
• 杰斐逊的两项新原油合同预计自1月1日起每年将贡献约800万美元的EBITDA。
• 根据目前的商业洽谈情况，Repauno二期项目预计将于2027年开始贡献营收，届时产能利用率可能接近或达到满产。

风险与关注重点

• 杰斐逊的原油进港业务仍面临中东供应流波动的风险。管理层表示复苏态势并不均衡，且抵港船只的能见度依然有限。
• 收购USD资产的预期效益取决于交易能否顺利完成、整合是否成功、新合同的执行情况以及成本节约效果。
• Repauno的前景取决于二期工程的完工与调试投产，以及剩余产能的签约进展。
• 日本制铁投资带来的铁路运量增量在时间和规模上仍存在不确定性，因为相关项目将在数年内分阶段实施。
• 杰斐逊和Repauno的潜在出售仍属于战略目标，而非已完成的交易。

分析师问答环节要点

管理层将铁路EBITDA加速增长归因于车皮运量增加、丙烷需求强劲、加里钢铁厂产能恢复以及有利定价等多重因素的综合推动，而非单一驱动力，并表示这一增长态势在2027年具有可持续性。

在铁路并购方面，管理层认为当前市场是近10至20年来最活跃的时期之一。FTAI Infrastructure正优先考虑大型战略资产，包括企业剥离资产以及临近到期的私募股权基金所持资产。

针对杰斐逊业务，管理层表示收购USD资产将显著改善盈余现金流，并拓展码头的客户群体与产品线。公司认为，合并后的平台将为2027年的潜在出售占据更有利的战略地位。

管理层指出，铁路运营比率最终有望从70%中段向60%左右靠拢，但这一过程需要时间。管理层强调现金转化率比运营比率更重要，并指出铁路资本支出约占EBITDA的15%，剩余约85%可用于再投资或股东分配。

财报电话会议完整实录

完整财报电话会议逐字稿

管理层陈述

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Third Quarter 2026 FTAI Infrastructure Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would like now to turn the conference over to Alan Andreini, Investor Relations. Please go ahead.

Alan Andreini

Thank you, Michelle. I would like to welcome you all to the FTAI Infrastructure Earnings Call for the third quarter of '26 joining me here today are Ken Nicholson, the CEO of FDI Infrastructure; Buck Fletcher, the company's CFO, and John Carnes, CEO of New Wheeling, our freight rail business. 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. Good morning, everyone, and welcome to the call. It's been a very active past few months at FTAI, and we are excited to provide updates on a number of important developments. We had a great quarter financially posting new records for revenue and EBITDA, led by continued growth at our railroad and walk you through the building blocks of all of that in just a bit here. But equally important, we advanced a handful of strategic priorities away from the railroad that should contribute to meaningful value creation in the quarters to come.

I'm going to kick things off on Slide 3 of the supplement. Our core business is the freight railroad and in Q3, we again posted record financial results. We're seeing a strong environment, both in terms of volumes and pricing and are optimistic about continued organic growth. Nippon Steel recently announced some additional investments at the Mon Valley facilities in Pittsburgh, and we'll see meaningful incremental volumes of propane shipments commencing next year. All in, we're forecasting continued double-digit growth in revenue and EBITDA in the year ahead.

In addition, we're experiencing a high level of M&A activity in the market, and we're actively evaluating several potential acquisition opportunities. I firmly believe that our business is one of the best positioned buyers in the market, especially as it relates to larger more strategic rail assets, and I'm excited about a number of near-term opportunities.

At our Long Ridge power and gas business, I'm thrilled to report that just this week, we finally received the regulatory approvals for the sale of the company. With approval in hand, we expect to close the sale by the end of this month. Gross proceeds of just over $1.5 billion will be used almost entirely to repay debt resulting in a material reduction in leverage and more importantly, lower interest expense at our parent level. With a lighter balance sheet, we plan to continue our focus on growing our core rail business.

And finally, we continue to position our terminals for monetization next year. Last month, we announced the acquisition of logistics assets from USD Group, which we plan to combine with Jefferson to transform the value proposition of that combined business. And at Repauno, our Phase II buildout is approaching completion and setting us up for an exciting 2027.

As we look ahead, our strategy is straightforward: continue to reduce leverage, grow the value of our rail platform materially increased EBITDA at Jefferson Repauno and ultimately monetize those terminal assets as we are doing with Longbridge.

I'm going to move to Slide 4, and we'll dig into the consolidated financial results for the quarter. Adjusted EBITDA for Q3 came in at $95.3 million, up materially from $70.9 million in the third quarter of 2025. On the right side of the slide, we illustrate our historical quarterly adjusted EBITDA, excluding the results of Long Ridge, given the pending sale. Excluding Longbridge, adjusted EBITDA was $54.4 million for Q3, another quarterly record. And in the quarters ahead, we expect EBITDA to continue to grow, driven by a handful of high confidence events.

First, organic growth at our railroad; second, the USD acquisition and the inclusion of USD's financial results with Jefferson going forward, and third, the commencement of Phase II operations at Ripon next year.

Flipping to Page 5. I'll talk briefly about our balance sheet and our deleveraging trajectory. With the long reach sale, 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 a little under $300 million is at other parent entities. Debt service at our parent level will decline by approximately $25 million per year, meaningfully improving our leverage metrics. And we expect our leverage profile to continue to improve over the next several quarters as we integrate the USD assets and bring online Phase II at Ripon.

I'm now going to walk through the more detailed financial performance at each of our segments, and we'll also talk about some recent developments and our priorities in the quarters ahead. We're going to start with our railroad on Slide 7. We posted new quarterly records across the board. Carloads, average rates per car, revenue and EBITDA all came in at all-time highs. Revenue was $104.2 million, and adjusted EBITDA was $47.4 million for the quarter, compared with Q3 2025 revenue of $61.7 million and adjusted EBITDA of $29.1 million.

We closed the acquisition of the Wheeling and Lake Gary railed in August of last year, so year-over-year comparisons are not entirely comparable. But even if we assumed we had owned the wheeling for the entirety of Q3 last year, all key metrics would be higher year-over-year. Volumes for the quarter were strong in all categories with the exception of slightly lower volumes at our Gary Railway as U.S. Steel continue to undertake a substantial overhaul and upgrade of the largest blast furnace at Gary Works, which was completed in September and is once again operating at full capacity.

Average rate per car reflected a strong pricing environment as well as higher fuel surcharges, which we pass along to our customers. Integration of the Wheeling and Lake area is largely complete with the final systems integration taking place here in November, so we should continue to see cost savings opportunities continuing into this fourth quarter.

We expect strong growth in our rail business continuing to 2027, and we highlight some of the drivers of that on Slide 8. Organically, the outlook for both volumes and rates is favorable, with shipments of energy products steel products and other raw materials, all strong and pricing also trending higher again next year. Nippon continues to roll out committed investments at U.S. Steel's Pittsburgh and Gary facilities that should drive incremental volumes in the years to come. And propane shipments originating in Ohio destined for our Repauno terminal will commence next year.

While the outlook for organic growth is favorable, we are equally excited about the M&A market and opportunities that we are evaluating. Our objective is not simply to add EBITDA. It is to build scale in a highly strategic portfolio of assets where we believe our operating capabilities and existing networks should make those assets more valuable under our ownership.

Now on to our Jefferson terminal. At Jefferson, we reported $24.9 million of revenue and $14.2 million of adjusted EBITDA in Q3 versus $21.1 million of revenue and $11 million of EBITDA in Q3 of last year. Refined products came in at a new quarterly record in terms of both volumes and revenues as our export business continues to grow. Fruit volumes continued to be impacted by volatility in the Middle East and the temporary reduction in inbound ship volumes. But we're encouraged to see inbound crude volumes recovering materially so far in Q4 with October crude volumes averaging 85,000 barrels per day, more than double the 41,000 barrels per day we averaged during Q3.

Based on our most current interactions with the refineries we serve, we forecast the remainder of Q4 to be strong on the crude front. We continue to negotiate new contracts to expand our business at Jefferson and have recently finalized commercial terms with two new customers for crude oil exports. The new business will commence on January 1, next year and should represent approximately $8 million of incremental annual EBITDA.

We also continue to discuss larger opportunities with existing customers that involve expansions of the services we currently provide with little to no CapEx. Our goal is to execute on all of these larger opportunities in the coming months. But as I mentioned, the majority of growth at Jefferson will be driven by the acquisition of the USD assets which we expect to be reflected in our Jefferson financials upon closing of that transaction in the middle of this month of November.

On Slide 10, we walk through the USD acquisition in more detail. The assets we're acquiring include a rail connected fruit terminal in the Bolon Port Arthur energy complex and a 50% joint venture interest in a diluent recovery unit in Alberta, Canada. Two assets formed the bookends of a supply chain that handles approximately 50,000 barrels per day of Canadian crude oil under a take-or-pay long-term contract with an investment-grade customer.

Crude oil originates in Canada, where low-value diluent, which is used in the initial recovery process is removed from the product to concentrate the oil into higher-value pure crude which is then shipped by rail to Beaumont and piped to the P66 crude oil hub. Altogether, at the contracted minimum volumes, the USD assets generate approximately $50 million of annual EBITDA. What is particularly attractive to us is both the quality and visibility of that EBITDA.

More importantly, the addition of the USD assets transforms our Jefferson business, and we talk through some of the highlights on Slide 11. We Jefferson's growth trajectory takes another leap forward with the addition of USD volumes and ultimately has the potential to drive meaningful value creation in advance of our plans to monetize Jefferson next year. The combined business will provide critical energy logistics services to a total of seven high-quality customers under long-term contracts. The resulting combined EBITDA is expected to exceed $100 million annually before including the impact of increased capacity utilization at Jefferson's main terminal.

We expect to execute these additional contracts in the near term, and we see opportunities also to realize cost savings from integrating the USD assets with Jefferson. Together, those initiatives provide meaningful upside to EBITDA in 2027 and importantly, should enhance the value of Jefferson as we position the business for sale next year.

And finally, turning to Repauno. Our focus continues on Phase II where construction proceeds as planned toward our goal of completing in the coming months and 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. Spreads for propane exports continue to be attractive. And based on the conversations we are having, we expect to commence revenue service in 2027 near or at full capacity.

Construction of Phase II is progressing well with the new progenic tank readying for completion as well as the pipes and manifolds, connecting the tank to our rail racks and ship dock. Here in Q4, we are converting our existing cavern previously utilized for butane handling to propane in order to start handling propane in advance of completion and commissioning of Phase II. Repauno is approaching an important inflection point. We have invested the capital, construction is nearing completion, and the focus is now shifting from development to cash flow generation. As that cash flow becomes visible in 2027, we believe the value of Repauno should be increasingly apparent and position us well for a potential monetization.

I will conclude our remarks there, and now let me turn the call back over to Alan.

Alan Andreini

Thank you, Ken. Michelle, you may now open the call to Q&A.

Operator

[Operator Instructions] First come from Julian Bologna with Compass Point.

分析师问答

Giuliano Anderes-Bologna

Congrats on successful great quarter. coming over to the rail side. It looks like the growth in EBITDA in the Rail segment is accelerating. Can you expand on that and what's driving that acceleration and how durable it is?

Kenneth Nicholson

Julian, thanks for the question. Yes, we're very happy with Q3 and the results, we certainly are seeing a very good start to Q4. So everything I mentioned, double-digit year-over-year growth in revenue and a little more than that in EBITDA is what we continue to expect. It really is not one specific thing. Which is great. It's a combination of many things. Carloads and the overall volume environment just continues to be strong. We're seeing propane volumes as high as I think we've ever seen them or certainly the wheeling has ever seen them. And it's great to have the business at Gary now back online for the entirety of Q4.

The largest blast furnace in Garidana was out of out of service for the bulk of Q3. So we're excited about that. Pricing in the rail industry continues to be attractive. We continue to see at least mid-single-digit pricing growth going forward. In some cases, pricing will be higher than that into the higher single digits next year. That's not in all cases, but in some cases. And so really, the growth is driven by revenue gains, and we're really happy with what we're seeing. And yes, I think it's very sustainable into 2027.

Giuliano Anderes-Bologna

That's very helpful. And then you mentioned the rail M&A environment is robust. Can you give us a little more color on what you're seeing and the types of opportunities you're looking at?

Kenneth Nicholson

Yes, definitely. I mean I do have to say, we've been invested in the rail sector here for quite some time, and we've seen the waves of M&A and consolidation. This is certainly one of the most active, if not the most active environments we've seen in -- I mean, at least 10 years, maybe 20 years. there's a lot going on, and it's driven by a number of various dynamics, big companies, smaller companies, all looking to sell -- you have -- the rail industry is a dynamic one.

You have lots of different types of companies with different ownership profiles. There are over 500 short line and regional railroads, in North America. So there's a big base of potential candidates for consolidation in a fragmented market. But you've got either individual owners who have owned their rail assets for significant periods of time, and they're just getting to a point where they're ready to sell and move on to their next challenge.

There was a big wave of M&A over the past five or 10 years, and a lot of private equity firms came into the sector and their funds, which typically have 10-year terms are coming up on maturities, and so they need to sell. And then we continue to look at some corporate carve-outs kind of like our acquisition of Transtar from USL particularly fondo those types of situations because I think we can be a very differentiated buyer given our experience U.S. Steel.

So it's super active looking at all different types of things. I do think our focus is going to be on the bigger opportunities. There are a handful of smaller things out there that don't quite move the needle for us. And I think our time and energy is probably better spent on some of the bigger, more strategic situations.

Operator

And the next question will come from Greg Lewis with BTIG.

Gregory Lewis

I was hoping to talk a little bit about Jefferson just following the acquisition. Could you talk about that impact on the acquisition and what that does for Jefferson, not only in terms of how you're thinking about integrating that and organically growing EBITDA. But maybe does this lead to a potential I don't know, strategic alternatives opportunity where this could be sold at some point in the future?

Kenneth Nicholson

Yes. Greg, thanks for the question. The answer is yes. I think the acquisition does a lot or Jefferson. First, outside of any strategic opportunities, it materially changes the cash flow profile of the business. Jefferson is an asset that's been bought over years and years, and the team down in Beaumont has done an exceptional job building out the infrastructure. I mean that is a gold-plated terminal and I really believe all of our customers are very happy with the performance down there.

But it has taken time, of course. There have been some frustrations in the amount of time that it has taken to ramp up. I really think we've done a phenomenal job, again, led by the core team down in Beaumont. Finally, getting to a point where cash flows exceed interest expense on the debt that was incurred to build out all that infrastructure. That infrastructure will live for the next 50 to 100 years, but it took a lot of capital, and we were able to borrow a fair amount of that capital to build out those infrastructure.

But it has left Jefferson relatively tight on a cash flow basis. This acquisition of USD completely transforms and changes the cash flow profile of the business. Jefferson will now be generating ample excess cash flow, and that just in and of itself is very important.

On the strategic front, I do think there is the 1 plus 1 equals 3 dynamic here. We added new high-quality pure investment-grade customer. We get access to new products, kind of akin to renovating your house before you sell it. And I'm looking forward to preparing the company for sale next year. Obviously, we're still going to execute somewhat. But look, I think the combined capital we have at the Jefferson and the purchase price of will certainly be less than the total proceeds we'll get from a sale and it's a very accretive transaction as we look to a potential monetization next year.

Operator

Our next question will come from Matthew Ortner with Jones.

Matthew Erdner

Congrats on a solid quarter. What impact at Jefferson has the crisis in the Middle East presented to you guys in terms of customers or potential contracts?

Kenneth Nicholson

Yes. As I mentioned in some of my comments, seems like that is recovering. But Q2 and Q3 at Jefferson were I would say, meaningfully impacted by the activity in the Middle East. The significant amount of volume historically, fruit oil volume that has come in to Jefferson has originated in Saudi Arabia. And crude oil coming in by ship is particularly, frankly, tight margin obviously, high volume and its big ships, and there's a lot of volume and a lot of margin. And so that historically has been good business for us at Jefferson and things really slowed down in the second quarter.

I think the month of July saw no barrels imported from Saudi Arabia into the U.S. at all anywhere. I think that was the first month some period in the 1980s that the United States did not import one drop of crude oil from Saudi Arabia. So it has certainly been a tough fall luckily, refined products, our ammonia business. Is holding strong and frankly, running at record levels as it relates to refined products. So we've been able to offset some of that softness. I would tell you we are definitely seeing a recovery. It's a little choppy. We don't have incredible visibility into a flow of ships back into Jefferson.

What we're really focused on is helping customers access crude from other production regions. I mentioned in my remarks, we're going to be commencing some new crude business here starting January 1 with actually two new customers, which is great. And a good chunk of that crude is actually coming from the Ueno Basin. And so we're looking at sources outside of Saudi and starting to really grow that into basin crude import. There's actually going to be crude barrels that will likely be exported. But as long as we handle it, we're somewhat indifferent as to where it goes.

So Look, I think the inbound ships are returning. We've certainly seen that in October. But the way to minimize any risk of uncertainty there is to really help our customers find barrels from other destination points so we can replace some of that volume.

Matthew Erdner

Got it. That's helpful. And then just to clarify on the USD assets. Do you expect that to close mid-November.

Kenneth Nicholson

Yes, we're hoping the week of November 16.

Operator

And the next question will come from Jeff Kauffman with Citizens Bank.

Jeffrey Kauffman

Congratulations. Just a terrific quarter all the way around. A question for Ken and bear with me in to be a little convoluted. But I want to hit two items you discussed for the wheeling. Number one, you've got this very large investment by Nippon Steel, and it's going to affect both Gary and Pittsburgh. And I wanted to understand what that could mean over the three-year period in terms of whether it's incremental carloads, incremental revenues and how that plays out.

And then the second is on the cost side. You still have these savings programs and integration plans with the wheeling. How far along are you on the cost synergies? And maybe an easier way to think about it is the railroad did a 76.6% operating ratio, this quarter, and that's how rail people think about things operating ratio. Where can that OR go when these synergies and cost savings are fully implemented? So I guess a question on revenue potential and a question on cost.

Kenneth Nicholson

Great. We will certainly comment on both of those. I'm joined here by John Kerns, who runs our railroad. So I might lean on John for some commentary as it relates to the integration, but let's take the Nippon question first. Nippon committed to about $11 billion of total investment at Gary, Indiana and in the Mon Valley complex. And -- the first piece of that, that we saw was up at the blast furnace, the relining of the blast furnace in Gary and that took the bulk of the summer.

I think we're seeing more volumes going through Gary then frankly, we've seen in a very long time. It's because that's right now, and it's because that blast furnace is back online. So we're really encouraged by that. But the bigger news was just a couple of weeks ago, I don't know if you saw it, but Nippon announced about $3 billion of investment in the Mon Valley complex, primarily focused on U.S. Steel's, EDGAR Thompson integrated mill. They expect the investment to grow production volume for about 2.2 million tons per year to 3.5 million tons per year.

What that means for us is a significant increase in carloads and ultimately, revenue. Hard to say with precision, but I mean it's is well into the tens of thousands of incremental carloads, could be 30,000, 40,000, 50,000 incremental car loads for our Union Railway, which is what serves the Mon Valley complex for U.S. Steel. Now it's going to take a few years for those investments to be made. So we'll start seeing that probably in two years or three years. But it's the kind of activity and volume that will be with us for a very long time thereafter.

And so I'm super excited about what that means. Obviously, there's still more investment to come and we don't have a crystal ball on precisely what that's going to mean, but I'm sure Nippon will continue to make announcements as they commit their $11 billion investment. So probably over the next few years, a good tens of thousands of carloads of incremental volume and that's probably $20 million of incremental EBITDA. So that's the kind of thing we're looking at.

As it relates to cost savings and integration, I'm going to let John talk briefly, and then I'll come back and talk about some of the margins.

Jonathan Carnes

Sure. Thanks, Ken. We're on track for about $19 million of annual cost savings, excluding onetime costs. Most of that is personnel reduction. There's some procurement, purchasing power, if you think about the consolidation of what we bought it just the things we buy, which just don't lower overhead, things like insurance. The full benefit of that will really feel effective January 1 is when kind of the existing agreements come to an end.

And of course, the cost savings also tied closely with our integration. Last Sunday, we cut over the Wheeling and Lake are railroad operating systems, the financial systems were already cut over earlier in the year. It's gone about as smoothly as we could have hoped. Most of it is behind us. There were no meaningful disruptions or service to impact service to customers, really looking forward to the common platform.

There's major benefits there. The operating team immediately was very excited about the visibility and the tools to better manage the railroad, think about speeding up your asset utilization. We just got a whole new toolbox. And we're looking forward to implementing that on the wheeling.

So Overall, the integration is, I said going about as well as we could have expected.

Kenneth Nicholson

Yes. And I would just say on the margins, yes, OR is the industry standard, and we're in the mid-70s. I think these cost savings take us down the Ultimately, we'd love to ultimately get to a six handle, but that's going to take some time.

OR is something we look at. It's not at the top of our list. What is unique about our rail business is cash flow and cash flow conversion. These assets are particularly low capital expenditures. The cash flow generation, about 15% of our EBITDA goes into capital expenditures and 85% is available for reinvestment distribution up to FIP our parent, whatever it may be. Your typical railroad consumes 30%, 40%, sometimes 50% of EBITDA just upon CapEx every year. These railers are shorter, they're more dense. And so we really benefit from a very low CapEx profile.

That's not captured in the OR statistic. And so it's a big differentiator for our business. And when John and I talk about how did the month go, how did the quarter go. We look at margins, of course, and the various cost line items, but we're particularly focused on cash flow for those periods of time.

Operator

And I'm showing no further questions in the queue. I would now like to turn the call back over to Alan for closing remarks.

Alan Andreini

Thank you, Michelle, and thank you all for participating in today's call. We look forward to updating you after Q4.

Operator

This concludes today's conference call. Thank you for participating.