(New Fortress, 9.Aug.2024) — New Fortress Energy Inc. reported its financial results for the second quarter of 2024.
Summary Highlights
— Adjusted EBITDA(1) of $120mn in the second quarter of 2024
— Second quarter results do not include $107mn of contracted LNG sales during the quarter, which will be included in Adjusted EBITDA and earnings in the second half of 2024
— Net loss of $87mn in the second quarter of 2024
— Adjusted EPS(2) of $(0.41) on a fully diluted basis in the second quarter of 2024
— EPS of $(0.44) on a fully diluted basis in the second quarter of 2024
— Funds from Operations per share(3) of $(0.23) on a fully diluted basis in the second quarter of 2024
— Illustrative Adjusted EBITDA Goal(4) of $1.4bn-1.5bn in the full year 2024 and $1.3bn in the full year 2025
— FLNG 1 project complete with First Cargo(5) expected in Aug. 2024
“Our Adjusted EBITDA in the second quarter of $120mn was well below our expectation of $275mn. This was largely the result of delays in placing our FLNG 1 project into service, which was originally expected to occur at the beginning of the second quarter. As detailed in our earnings presentation, the cost of this delay is approximately $150mn per quarter in lost operating margin, which represents the vast majority of the Adjusted EBITDA shortfall for the quarter.
“We are very pleased to report that FLNG 1 is now in service as of July 19 and performing as expected. While we are disappointed in the delay, we believe this project is by far the fastest LNG facility ever built and positions the company well to take advantage of the current market for LNG.
“Our Adjusted EBITDA in the second quarter does not include $107mn of contracted LNG sales completed during the quarter, of which $90mn has been received to date. These sales will be reflected in Adjusted EBITDA and earnings in the second half of this year. For the full calendar year 2024 and 2025, we are forecasting Adjusted EBITDA of $1.4bn-1.5bn, inclusive of the expected resolution of our outstanding early termination claims on our FEMA contracts, and $1.3bn, respectively.
“We have a large and expanding business, with a broad and robust portfolio and customers. While we are disappointed in the delay in placing FLNG 1 into service, it is now operational and we are very excited about the future of our business,” said Wes Edens, Chairman and CEO of New Fortress Energy.
Financial Highlights
We generated Adjusted EBITDA(1) of $120mn in the second quarter of 2024, the majority of which was generated by contracted downstream assets. Adjusted EBITDA(1) in the second quarter of 2024 reflects the completed sale of the power plants that we developed for FEMA in Puerto Rico and concurrent 80 TBtu island-wide gas contract awarded in March 2024. These transformative transactions pave the way for significant expansion of our business in Puerto Rico, supporting expected growth in Adjusted EBITDA(1). Growth is expected to further accelerate upon the completion of our Nicaragua terminal and power asset in the fourth quarter of 2024 and our 2.2 GW power asset in Barcarena in 2025 and 2026.
We completed our initial Fast LNG asset located offshore Altamira, Mexico, following the achievement of First LNG in July 2024. With a production capacity of 1.4 MTPA, or approximately 70 TBtus per annum, FLNG 1 completes the vertical integration of NFE’s LNG portfolio and will play a pivotal role in supplying low-cost, clean LNG to the company’s downstream terminal customers with First Cargo(5) expected in Aug. 2024. The completion of FLNG 1 marks a significant milestone for the company, establishing itself as the fastest large-scale LNG project ever developed and enabling significant reductions in future capital expenditures.
On 8 Aug. 2024, NFE’s Board of Directors approved a dividend of $0.10 per share, with a record date of 13 Sep. 2024 and a payment date of 27 Sep. 2024.
Financial Detail
Table….
The company intends to refinance all its 6.75% senior secured notes due Sep. 2025 in the near term.
Please refer to our Q2 2024 Investor Presentation (the “Presentation”) for further information about the following terms:
1)“Adjusted EBITDA,” see definition and reconciliation of this non-GAAP measure in the exhibits to this press release.
2) “Adjusted EPS” is not a measurement of financial performance under GAAP and should not be considered in isolation or as an alternative to any measure of performance or liquidity derived in accordance with GAAP. We calculate Adjusted EPS as Adjusted Net Income (Note 7 below) divided by the weighted average shares outstanding on a fully diluted basis for the period indicated. We believe this non-GAAP measure, as we have defined it, offers a useful supplemental view of the overall evaluation of the company in a manner that is consistent with metrics used for management’s evaluation of the company’s overall performance. Adjusted EPS does not have a standardized meaning, and different companies may use different definitions. Therefore, this term may not be necessarily comparable to similarly titled measures reported by other companies.
3) “Funds From Operations per share” means net income attributable to stockholders, computed in accordance with GAAP, excluding gains or losses from sales of assets, depreciation and amortization and impairment charges divided by the weighted average shares outstanding on a fully diluted basis. We compute FFO in accordance with our interpretation of standards established by the National Association of Real Estate Investment Trusts (“NAREIT”), which may not be comparable to FFO reported by REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than we do. We believe that FFO is helpful to investors as supplemental measures of the performance of our infrastructure investments. We believe that FFO can facilitate comparisons of operating performance between periods by excluding the effect of depreciation and amortization related to our infrastructure investments and impairment charges, which are based on historical costs and may be of limited relevance in evaluating current performance. Our definitions and calculations of these Non-GAAP financial and operating measures and other terms may differ from the definitions and methodologies used by other registrants and accordingly, may not be comparable. These Non-GAAP financial and operating measures do not represent cash generated from operating activities in accordance with GAAP, nor do they represent cash available to pay distributions and they should not be considered as an alternative to net income attributable to stockholders, determined in accordance with GAAP, as an indication of our financial performance, or to cash flows from operating activities, determined in accordance with GAAP, as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make cash distributions.
4) “Illustrative Adjusted EBITDA Goal” for the second half of 2024 and full year 2024 and 2025 means our forward-looking goal for Adjusted EBITDA for the relevant period and is based on the “Illustrative Total Segment Operating Margin Goal” less illustrative Core SG&A assumed to be at approximately $66mn for the second half of 2024 and $100mn for 2025, including the pro rata share of Core SG&A from unconsolidated entities. Management is pursuing a $659mn request for equitable adjustment related to the early termination of our contracts to provide emergency power services in Puerto Rico. The actual amount of any such adjustment and the timing of any related payments may be materially different than management’s current estimate. As a result, the company cannot offer any assurance as to the actual amount that may be recovered pursuant to such request or subsequent claim, if any.
For the purpose of this presentation, we have assumed an average Total Segment Operating Margin between $5.96 and $28.82 per MMBtu for all downstream terminal economics in the second half of 2024 and between $5.96 and $9.10 per MMBtu in 2025 because we assume that (i) we purchase delivered gas at a weighted average of $6.69 in 2024 and $6.81 in 2025 (ii) our volumes increase over time, and (iii) we will have costs related to shipping, logistics and regasification similar to our current operations which will be reduced when our First FLNG facility is in full production, and those costs will be distributed over the larger volumes. We assume all Brazil terminals and power plants are Operational and earning revenue through fuel sales and capacity charges or other fixed fees. For Vessels chartered to third parties, this measure reflects the revenue from those charters, capacity and tolling arrangements, and other fixed fees, less the cost to operate and maintain each ship, in each case based on contracted amounts for ship charters, capacity and tolling fees, and industry standard costs for operation and maintenance. We assume an average Total Segment Operating Margin of up to $147k per day per vessel. For Fast LNG, this measure reflects the difference between the delivered cost of open LNG and the delivered cost of open market LNG less Fast LNG production cost. These costs do not include expenses and income that are required by GAAP to be recorded on our financial statements, including the return of or return on capital expenditures for the relevant project, and selling, general and administrative costs. Our current cost of natural gas per MMBtu is higher than the cost we would need to achieve Illustrative Total Segment Operating Margin Goal, and the primary drivers for reducing these costs are the reduced costs of purchasing gas and the increased sales volumes, which result in lower fixed costs being spread over a larger number of MMBtus sold. References to volumes, percentages of such volumes and the Illustrative Total Segment Operating Margin Goal related to such volumes (i) are not based on the Company’s historical operating results, which are limited, and (ii) do not purport to be an actual representation of our future economics. Actual circumstances could differ materially from the assumptions, and actual performance and results could differ materially from, and there can be no assurance that they will reflect, our corporate goal.
5) “First Cargo” refers to management’s current estimate of the date on which LNG cargo sales are expected for a project. Full commercial operation of such project will occur later than, and may occur substantially later than, the date of First Cargo. We cannot assure you if or when such projects will reach the date of delivery of First Cargo, or full commercial operations.
6) Reserved.
7) “Adjusted Net Income” means Net Income attributable to stockholders as presented in the relevant Form 10-K or Form 10-Q for the relevant financial period as adjusted by non-cash impairment charges and gains or losses on disposal of our assets.
8) “Total Segment Operating Margin” is the total of our Terminals and Infrastructure Segment Operating Margin and Ships Segment Operating Margin. Our segment measure also excludes unrealized mark-to-market gains or losses on derivative instruments and certain contract acquisition costs.
Earnings Conference Call
Management will host a conference call on Friday, 9 Aug. 2024 at 8:00 A.M. Eastern Time. The conference call may be accessed by dialing (888) 224-1005 (toll-free from within the U.S.) or +1-323-794-2575 (from outside of the U.S.) fifteen minutes prior to the scheduled start of the call; please reference “NFE Second Quarter 2024 Earnings Call” or conference code 3695554.
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