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New Fortress Energy Announces Second Quarter 2022 Results

New Fortress Energy Inc. (Nasdaq: NFE) (“NFE” or the “Company”) today reported its financial results for the second quarter of 2022.

Summary Highlights

  • Pleased to report Q2 2022 Adjusted EBITDA(1) of $283 million and $1.05 billion over the trailing twelve months ended June 30, 2022. NFE's net (loss) income for Q2 2022 and trailing twelve months was $(178) million and $197 million, respectively.
  • Adjusted EPS for the period was $0.69 per share on a fully diluted basis, or EPS of $(0.81) per share when including a non-cash impairment charge of $315 million resulting from an asset sale(2) announced in Q2.
  • On track to achieve Illustrative Adjusted EBITDA Goal(3) of $1.0+ billion for 2022 and $1.5+ billion for 2023 before taking into account the contribution expected from Fast LNG (FLNG) during the year.
    • Our FLNG commercial and project and teams had a very busy and productive quarter, which we look forward to discussing on our Q2 earnings call.
      • Increased FLNG deployment opportunities from one Gulf of Mexico location to three (offshore Louisiana, Altamira, and Lakach(5)) representing approximately 8 MTPA of capacity ramping from 1H23 through 2H24(7).
  • Our commitment to our customers and commercial activities at our downstream terminals remains robust.
    • In Brazil - nearing completion of our Barcarena and Santa Catarina terminals and began construction on the 605 MW Barcarena power plant.
    • In Mexico – signed an LOI to expand existing gas supply contract with CFE(5) and extend term to 10 years.
    • In Europe – made significant progress on permits in Ireland and leased one of our FSRUs to a new terminal in the Netherlands(8) expected to start up Q3 2022(7).
  • Achieved key balance sheet and liquidity objectives, securing over $2.0 billion of internally generated liquidity based on announcements and other activities to date(2)(4) and upsized our LoC facility to $250 million.
    • Fully-funded on committed capital needs for Fast LNG, with additional developments capable of being funded through operating cash flow(9).
  • Continued to position Zero Parks hydrogen business favorably amid increasingly positive policy environment; expect to progress multiple industrial-scale green and blue hydrogen projects in the near future.
  • NFE’s Board of Directors approved a dividend of $0.10 per share, with a record date of September 7, 2022 and a payment date of September 21, 2022.

Financial Highlights

 

Three Months Ended

(in millions, except Average Volumes)

March 31, 2022

 

June 30, 2022

Revenues

$

505.1

 

$

584.9

 

Net income (loss)

$

241.2

 

$

(178.4

)

Adjusted net income

$

241.2

 

$

145.7

 

Terminals and Infrastructure Segment Operating Margin(6)

$

211.1

 

$

237.7

 

Ships Segment Operating Margin(6)

$

89.0

 

$

89.7

 

Total Segment Operating Margin(6)

$

300.1

 

$

327.4

 

Adjusted EBITDA(1)

$

257.7

 

$

283.5

 

Please refer to our Q2 2022 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. Refers to the sale by NFE and Ebrasil Energia Ltda. and its shareholders (“Ebrasil”) to Eneva S.A. (“Eneva”) of 100% of the equity interests of the Porto de Sergipe Power Plant, including 100% of the shares of Centrais Elétricas de Sergipe Participações S.A. (“CELSEPAR”), which owns 100% of the equity interests of the Sergipe Power Plant, and Centrais Elétricas Barra dos Coqueiros S.A. (“CEBARRA”), which owns 1.7 GW of expansion rights adjacent to the Sergipe Power Plant. Closing of this transaction is subject to certain conditions precedent some of which are outside of our control. There can be no assurance that closing will be attained within the timeline that we expect or at all.
  3. “Illustrative Adjusted EBITDA Goal” is based on the "Illustrative Total Segment Operating Margin Goal" less illustrative Core SGA assumed to be at $172mm in 2022 and $145mm for all periods 2023 onward including the pro rata share of Core SG&A from unconsolidated entities. “Illustrative Total Segment Operating Margin Goal,” or “Illustrative Future Goal” means our goal for Total Segment Operating Margin under certain illustrative conditions. Please refer to this explanation for all uses of this term. This goal reflects the volumes of LNG that it is our goal to sell under binding contracts multiplied by the average price per unit at which we expect to price LNG deliveries, including both fuel sales and capacity charges or other fixed fees, less the cost per unit at which we expect to purchase or produce and deliver such LNG or natural gas, including the cost to (i) purchase natural gas, liquefy it, and transport it to one of our terminals or purchase LNG in strip cargos or on the spot market, (ii) transfer the LNG into an appropriate ship and transport it to our terminals or facilities, (iii) deliver the LNG, regasify it to natural gas and deliver it to our customers or our power plants and (iv) maintain and operate our terminals, facilities and power plants. For vessels chartered to third parties, this illustration reflects the revenue from ships chartered to third parties, 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. There can be no assurance that the costs of purchasing or producing LNG, transporting the LNG and maintaining and operating our terminals and facilities will result in the Illustrative Total Segment Operating Margin Goal reflected. For the purpose of this presentation, we have assumed an average Total Segment Operating Margin between $7.42 and $19.75 per MMBtu for all downstream terminal economics, because we assume that (i) we purchase delivered gas at a weighted average of $17.30 in Q3-22, $12.74 in 2022, and $10.44 in 2023, (ii) our volumes increase over time, and (iii) we will have costs related to shipping, logistics and regasification similar to our current operations because the liquefaction facility and related infrastructure and supply chain to deliver LNG from Pennsylvania or Fast LNG (“FLNG”) does not exist, and those costs will be distributed over the larger volumes. For Hygo + Suape assets we assume an average delivered cost of gas of $17.61 in 2022, and $16.21 in 2023 based on industry averages in the region and the existing LNG contract at Sergipe. Hygo + Sergipe incremental assets include every terminal and power plant other than Sergipe, and we assume all are Operational and earning revenue through fuel sales and capacity charges or other fixed fees. This illustration reflects our effective share of operating margin from Sergipe Power Plant. For Vessels chartered to third parties, this illustration reflects the revenue from ships chartered to third parties, 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 $211k per day per vessel and our effective share of revenue and operating expense related to the existing tolling agreement for the Hilli FLNG going forward. For Fast LNG, this illustration reflects the difference between the delivered cost of open LNG and the delivered cost of open market LNG less Fast LNG production cost. Management is currently in multiple discussions with counterparties to supply feedstock gas at pricing between $4.31 per MMBtu to $6.17 per MMBtu, multiplied by the volumes for Fast LNG installation of 1.4 MTPA each per year. 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 are higher than the costs 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. We cannot assure you if or when we will enter into contracts for sales of additional LNG, the price at which we will be able to sell such LNG, or our costs to produce and sell such LNG. Actual results could differ materially from the illustration and there can be no assurance we will achieve our goal.
  4. Refers to sale of 11 LNG infrastructure vessels owned by NFE to a newly formed joint venture between funds managed by Apollo and NFE. Closing of this transaction is subject to certain conditions precedent some of which are outside of our control. There can be no assurance that closing will be attained within the timeline that we expect or at all.
  5. In discussions with Petróleos Mexicanos (“Pemex”) to form a long-term strategic partnership for the joint development of the Lakach deepwater natural gas field and with Comisión Federal de Electricidad (“CFE”) to form a strategic alliance supported in connection with a new LNG hub off the coast of Altamira, Tamaulipas, with CFE. Represent letters of intent, whether signed or under discussions. There can be no assurance that binding definitive agreements will be entered into related to such discussions or projects or the terms of any such agreements.
  6. “Total Segment Operating Margin” is the total of our Terminals and Infrastructure Segment Operating Margin and Ships Segment Operating Margin. Terminals and Infrastructure Segment Operating Margin includes our effective share of revenue, expenses and operating margin attributable to our 50% ownership of Centrais Elétricas de Sergipe Participações S.A. (“CELSEPAR”). Ships Segment Operating Margin includes our effective share of revenue, expenses and operating margin attributable to our ownership of 50% of the common units of Hilli LLC. Hilli LLC owns Golar Hilli Corporation (“Hilli Corp”), the disponent owner of the Hilli.
  7. Lead times and expected development times used herein indicate our internal evaluations of a project’s expected timeline. They refer to us completing certain stages of projects within a timeframe and within a spectrum of budget parameters that, when taken as a whole, are substantially consistent with our business model. These timeframes include assumptions regarding items that are outside our control, including permitting, weather, and other potential sources of delay. To the extent that projects have not yet started or are currently under development, we can make no assurance that such projects are on track within the timeline parameters we establish. Additionally, the construction of facilities is inherently subject to the risks of cost overruns and delays. If we are unable to construct, commission and operate all of our facilities as expected, or, when and if constructed, they do not accomplish our goals, or if we experience delays or cost overruns in construction, estimates regarding timelines, budget and savings could be materially and adversely affected.
  8. Refers to binding agreement executed with N.V. Nederlandse Gasunie (“Gasunie”) for a five-year FSRU charter agreement will begin in Q3 2022 and provide storage and regasification capacity for Gasunie’s new LNG import terminal in the port Eemshaven, the Netherlands. The binding FSRU charter agreement is subject to the execution of definitive documentation. We cannot assure you if or when we will enter into binding definitive agreements, on time or on acceptable terms to us.
  9. Represents management’s expectations regarding the funding of the committed expenditures reflected and the estimated expenditures. It assumes the Sergipe and Apollo transaction have closed and we have received the anticipated proceeds. There can be no assurance that closing will be attained within the timeline that we expect or at all. The estimated expenditures, including those related to project costs, are not based on generally accepted accounting principles and should not be relied upon for any reason. There is no guarantee that we will reach our goals for funding the estimated expenditures and actual results may differ from our expectations.

Additional Information

For additional information that management believes to be useful for investors, please refer to the presentation posted on the Investors section of New Fortress Energy’s website, www.newfortressenergy.com, and the Company’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, which is available on the Company’s website. Nothing on our website is included or incorporated by reference herein.

Earnings Conference Call

Management will host a conference call on Thursday, August 4, 2022 at 8:00 A.M. Eastern Time. The conference call may be accessed by dialing (888) 394-8218 (toll free from within the U.S.) or (323) 794-2588 (from outside of the U.S.) fifteen minutes prior to the scheduled start of the call; please reference “NFE Second-Quarter 2022 Earnings Call.”

A simultaneous webcast of the conference call will be available to the public on a listen-only basis at https://event.webcasts.com/starthere.jsp?ei=1558536&tp_key=f1cc0198ce and will be located on our company website at www.newfortressenergy.com within the "Investors" tab under “Events & Presentations”. Please allow extra time prior to the call to visit the website and download any necessary software required to listen to the internet broadcast. A replay of the conference call will be available at the same website location shortly after the conclusion of the live call.

About New Fortress Energy Inc.

New Fortress Energy Inc. (NASDAQ: NFE) is a global energy infrastructure company founded to help address energy poverty and accelerate the world’s transition to reliable, affordable, and clean energy. The company owns and operates natural gas and liquefied natural gas (LNG) infrastructure and an integrated fleet of ships and logistics assets to rapidly deliver turnkey energy solutions to global markets. Collectively, the company’s assets and operations reinforce global energy security, enable economic growth, enhance environmental stewardship and transform local industries and communities around the world.

Cautionary Statement Concerning Forward-Looking Statements

Certain statements contained in this press release constitute “forward-looking statements” including: our ability to close the transactions and receive funds within the expected timeline, in the amounts anticipated or at all; ability to maintain our expected development timelines; expectations regarding ability to construct, complete and commission our projects on time and within budget to derive expected goals and benefits; execution of definitive documentation; expected or illustrative financial metrics or goals; successful positioning of Zero Parks hydrogen in policy environment and development of green and blue hydrogen projects in the near future; and the implementation and success of our financing alternatives, including any asset sales. You can identify these forward-looking statements by the use of forward-looking words such as “expects,” “may,” “will,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” or the negative version of those words or other comparable words. These forward-looking statements represent the Company’s expectations or beliefs concerning future events, and it is possible that the results described in this press release will not be achieved. These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of the Company’s control, that could cause actual results to differ materially from the results discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: illustrative financial metrics and other similar metrics, including goals and expected financial growth; our ability to execute definitive documentation in connection with letters of intent or similar instruments; expectations for taking FID on our projects; the development, construction, completion and operation of the facilities on time, within budget and within the expected specifications and design; ability to maintain our expected development timelines; our ability to close our Sergipe and Apollo transactions and receive funds within the expected timeline and in the amounts anticipated; funding of our projects using cash from the Sergipe and Apollo transactions and self-generated cash flows; development of hydrogen business and ability to implement conversion of natural gas into clean blue hydrogen; the risk that we fail to meet internal financial metrics or financial metrics posed by the market on us; the risk that the foregoing or other factors negatively impact our liquidity and our ability to capitalize our projects; and the risk that we may be unable to implement our financing strategy or to effectively leverage our assets. Accordingly, readers should not place undue reliance on forward-looking statements as a prediction of actual results. Any forward-looking statement speaks only as of the date on which it is made, and, except as required by law, the Company does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. New factors emerge from time to time, and it is not possible for the Company to predict all such factors. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements included in the Company’s annual and quarterly reports filed with the SEC, which could cause its actual results to differ materially from those contained in any forward-looking statement.

Exhibits – Financial Statements

Condensed Consolidated Statements of Operations

For the three months ended March 31, 2022 and June 30, 2022

(Unaudited, in thousands of U.S. dollars, except share and per share amounts)

 

 

For the Three Months Ended

 

March 31,

2022

 

June 30, 2022

Revenues

 

 

 

Operating revenue

$

400,075

 

 

$

497,240

 

Vessel charter revenue

 

92,420

 

 

 

75,134

 

Other revenue

 

12,623

 

 

 

12,481

 

Total revenues

 

505,118

 

 

 

584,855

 

 

 

 

 

Operating expenses

 

 

 

Cost of sales

 

208,298

 

 

 

272,401

 

Vessel operating expenses

 

22,964

 

 

 

18,628

 

Operations and maintenance

 

23,168

 

 

 

20,490

 

Selling, general and administrative

 

48,041

 

 

 

50,310

 

Transaction and integration costs

 

1,901

 

 

 

4,866

 

Depreciation and amortization

 

34,290

 

 

 

36,356

 

Asset impairment expense

 

 

 

 

48,109

 

Total operating expenses

 

338,662

 

 

 

451,160

 

Operating income

 

166,456

 

 

 

133,695

 

Interest expense

 

44,916

 

 

 

47,840

 

Other (income), net

 

(19,725

)

 

 

(22,102

)

Net income before income (loss) from equity method investments and income taxes

 

141,265

 

 

 

107,957

 

Income (loss) from equity method investments

 

50,235

 

 

 

(372,927

)

Tax benefit

 

(49,681

)

 

 

(86,539

)

Net income (loss)

 

241,181

 

 

 

(178,431

)

Net income attributable to non-controlling interest

 

(2,912

)

 

 

8,666

 

Net income (loss) attributable to stockholders

$

238,269

 

 

$

(169,765

)

 

 

 

 

Net income (loss) per share – basic

$

1.14

 

 

$

(0.81

)

Net income (loss) per share – diluted

$

1.13

 

 

$

(0.81

)

 

 

 

 

Weighted average number of shares outstanding – basic

 

209,928,070

 

 

 

209,669,188

 

Weighted average number of shares outstanding – diluted

 

210,082,295

 

 

 

209,669,188

 

Adjusted EBITDA

For the three months ended June 30, 2022

(Unaudited, in thousands of U.S. dollars)

Adjusted EBITDA is not a measurement of financial performance under GAAP and should not be considered in isolation or as an alternative to income/(loss) from operations, net income/(loss), cash flow from operating activities or any other measure of performance or liquidity derived in accordance with GAAP. We believe this non-GAAP measure, as we have defined it, offers a useful supplemental view of the overall operation of our business in evaluating the effectiveness of our ongoing operating performance in a manner that is consistent with metrics used for management’s evaluation of the Company’s overall performance and to compensate employees. We believe that Adjusted EBITDA is widely used by investors to measure a company’s operating performance without regard to items such as interest expense, taxes, depreciation, and amortization which vary substantially from company to company depending on capital structure, the method by which assets were acquired and depreciation policies. Further, we exclude certain items from our SG&A not otherwise indicative of ongoing operating performance.

We calculate Adjusted EBITDA as net income, plus transaction and integration costs, contract termination charges and loss on mitigations sales, depreciation and amortization, asset impairment expense, interest expense, net, other (income), net, loss on extinguishment of debt, changes in fair value of non-hedge derivative instruments and contingent consideration, tax expense, and adjusting for certain items from our SG&A not otherwise indicative of ongoing operating performance, including non-cash share-based compensation and severance expense, non-capitalizable development expenses, cost to pursue new business opportunities and expenses associated with changes to our corporate structure, plus our pro rata share of Adjusted EBITDA from unconsolidated entities, less the impact of equity in earnings (losses) of unconsolidated entities.

Adjusted EBITDA is mathematically equivalent to our Total Segment Operating Margin, as reported in the segment disclosures within our financial statements, minus Core SG&A, including our pro rata share of such expenses of unconsolidated entities. Core SG&A is defined as total SG&A adjusted for non-cash share-based compensation and severance expense, non-capitalizable development expenses, cost of exploring new business opportunities and expenses associated with changes to our corporate structure. Core SG&A excludes certain items from our SG&A not otherwise indicative of ongoing operating performance.

The principal limitation of this non-GAAP measure is that it excludes significant expenses and income that are required by GAAP to be recorded in our financial statements. Investors are encouraged to review the related GAAP financial measures and the reconciliation of the non-GAAP financial measure to our GAAP net income/(loss), and not to rely on any single financial measure to evaluate our business. Adjusted EBITDA does not have a standardized meaning, and different companies may use different Adjusted EBITDA definitions. Therefore, Adjusted EBITDA may not be necessarily comparable to similarly titled measures reported by other companies. Moreover, our definition of Adjusted EBITDA may not necessarily be the same as those we use for purposes of establishing covenant compliance under our financing agreements or for other purposes. Adjusted EBITDA should not be construed as alternatives to net income (loss) and diluted earnings (loss) per share attributable to New Fortress Energy, which are determined in accordance with GAAP.

The following table sets forth a reconciliation of net (loss) income to Adjusted EBITDA for the three months ended September 30, 2021, December 31, 2021, March 31, 2022 and June 30, 2022 and the twelve months ended June 30, 2022:

(in thousands)

 

Three Months

Ended

September 30, 2021

 

Three Months

Ended

December 31, 2021

 

Three Months

Ended

March 31, 2022

 

Three Months

Ended

June 30, 2022

 

Twelve Months

Ended

June 30, 2022

Total Segment Operating Margin

 

$

210,478

 

 

$

373,150

 

 

$

300,083

 

 

$

327,448

 

 

$

1,211,159

 

Less: Core SG&A (see definition above)

 

 

38,496

 

 

 

38,033

 

 

 

40,960

 

 

 

42,040

 

 

 

159,529

 

Less: Pro rata share Core SG&A from unconsolidated entities

 

 

2,047

 

 

 

1,110

 

 

 

1,390

 

 

 

1,914

 

 

 

6,461

 

Adjusted EBITDA

 

$

169,935

 

 

$

334,007

 

 

$

257,733

 

 

$

283,494

 

 

$

1,045,169

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(17,769

)

 

$

151,723

 

 

$

241,181

 

 

$

(178,431

)

 

$

196,704

 

Add: Interest expense, net

 

 

57,595

 

 

 

46,567

 

 

 

44,916

 

 

 

47,840

 

 

 

196,918

 

Add: Tax provision (benefit)

 

 

3,526

 

 

 

5,403

 

 

 

(49,681

)

 

 

(86,539

)

 

 

(127,291

)

Add: Depreciation and amortization

 

 

31,194

 

 

 

30,297

 

 

 

34,290

 

 

 

36,356

 

 

 

132,137

 

Add: Asset impairment expense

 

 

 

 

 

 

 

 

 

 

 

48,109

 

 

 

48,109

 

Add: SG&A items excluded from Core SG&A (see definition above)

 

 

8,306

 

 

 

36,894

 

 

 

7,081

 

 

 

8,270

 

 

 

60,551

 

Add: Transaction and integration costs

 

 

1,848

 

 

 

2,107

 

 

 

1,901

 

 

 

4,866

 

 

 

10,722

 

Add: Other (income), net

 

 

(5,400

)

 

 

(3,692

)

 

 

(19,725

)

 

 

(22,102

)

 

 

(50,919

)

Add: Changes in fair value of non-hedge derivative instruments and contingent consideration

 

 

2,316

 

 

 

472

 

 

 

(2,492

)

 

 

2,247

 

 

 

2,543

 

Add: Loss on extinguishment of debt, net

 

 

 

 

 

10,975

 

 

 

 

 

 

 

 

 

10,975

 

Add: Pro rata share of Adjusted EBITDA from unconsolidated entities(1)

 

 

72,336

 

 

 

44,746

 

 

 

50,497

 

 

 

49,951

 

 

 

217,530

 

Less: Loss (income) from equity method investments

 

 

15,983

 

 

 

8,515

 

 

 

(50,235

)

 

 

372,927

 

 

 

347,190

 

Adjusted EBITDA

 

$

169,935

 

 

$

334,007

 

 

$

257,733

 

 

$

283,494

 

 

$

1,045,169

 

(1)

Includes the Company’s effective share of Adjusted EBITDA of CELSEPAR of $52,179, $24,173, $30,207 and $30,813 for the three months ended September 30, 2021, December 31, 2021, March 31, 2022 and June 30, 2022 respectively, and the Company’s effective share of the Adjusted EBITDA of Hilli LLC of $20,157, $20,573, $20,291 and $19,138 for the three months ended September 30, 2021, December 31, 2021, March 31, 2022 and June 30, 2022, respectively.

Segment Operating Margin

(Unaudited, in thousands of U.S. dollars)

Performance of our two segments, Terminals and Infrastructure and Ships, is evaluated based on Segment Operating Margin. Segment Operating Margin reconciles to Consolidated Segment Operating Margin as reflected below, which is a non-GAAP measure. We define Consolidated Segment Operating Margin as GAAP net income (loss), adjusted for selling, general and administrative expense, transaction and integration costs, contract termination charges and loss on mitigation sales, depreciation and amortization, asset impairment expense, interest expense, other (income) expense, loss on extinguishment of debt, net, (loss) income from equity method investments and tax (benefit) expense. Consolidated Segment Operating Margin is mathematically equivalent to Revenue minus Cost of sales minus Operations and maintenance minus Vessel operating expenses, each as reported in our financial statements.

Three Months Ended June 30, 2022

(in thousands of $)

Terminals and

Infrastructure ⁽¹⁾

 

Ships ⁽²⁾

 

Total

Segment

 

Consolidation

and

Other ⁽³⁾

 

Consolidated

Segment Operating Margin

$

237,712

 

$

89,736

 

$

327,448

 

$

(54,112

)

 

$

273,336

 

Less:

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

 

 

 

 

 

 

 

50,310

 

Transaction and integration costs

 

 

 

 

 

 

 

 

 

4,866

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

36,356

 

Asset impairment expense

 

 

 

 

 

 

 

 

 

48,109

 

Interest expense

 

 

 

 

 

 

 

 

 

47,840

 

Other (income) expense, net

 

 

 

 

 

 

 

 

 

(22,102

)

Loss from equity method investments

 

 

 

 

 

 

 

 

 

372,927

 

Tax (benefit) provision

 

 

 

 

 

 

 

 

 

(86,539

)

Net loss

 

 

 

 

 

 

 

 

 

(178,431

)

(1)

Terminals and Infrastructure includes the Company's effective share of revenues, expenses and operating margin attributable to 50% ownership of CELSEPAR. The losses attributable to the investment of $389,996 for the three months ended June 30, 2022 are reported in (loss) income from equity method investments in the consolidated statements of operations and comprehensive income (loss).

(2)

Ships includes the Company's effective share of revenues, expenses and operating margin attributable to 50% ownership of the Hilli Common Units. The earnings attributable to the investment of $17,069 for the three months ended June 30, 2022 are reported in (loss) income from equity method investments in the condensed consolidated statements of operations and comprehensive income (loss).

(3)

Consolidation and Other adjusts for the inclusion of the effective share of revenues, expenses and operating margin attributable to 50% ownership of CELSEPAR and Hilli Common Units in our segment measure and exclusion of the unrealized mark-to-market gain or loss on derivative instruments.

Three Months Ended March 31, 2022

(in thousands of $)

Terminals and

Infrastructure ⁽¹⁾

 

Ships ⁽²⁾

 

Total

Segment

 

Consolidation

and

Other ⁽³⁾

 

Consolidated

Segment Operating Margin

$

211,083

 

$

89,000

 

$

300,083

 

$

(49,395

)

 

$

250,688

 

Less:

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

 

 

 

 

 

 

 

48,041

 

Transaction and integration costs

 

 

 

 

 

 

 

 

 

1,901

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

34,290

 

Interest expense

 

 

 

 

 

 

 

 

 

44,916

 

Other (income) expense, net

 

 

 

 

 

 

 

 

 

(19,725

)

(Income) Loss from equity method investments

 

 

 

 

 

 

 

 

 

(50,235

)

Tax (benefit) provision

 

 

 

 

 

 

 

 

 

(49,681

)

Net income

 

 

 

 

 

 

 

 

$

241,181

 

(1)

Terminals and Infrastructure includes the Company's effective share of revenues, expenses and operating margin attributable to 50% ownership of CELSEPAR. The losses attributable to the investment of $36,680 for the three months ended March 31, 2022 are reported in (loss) income from equity method investments on the condensed consolidated statements of operations and comprehensive income (loss).

(2)

Ships includes the Company's effective share of revenues, expenses and operating margin attributable to 50% ownership of the Hilli Common Units. The earnings attributable to the investment of $13,555 for the three months ended March 31, 2022 are reported in (loss) income from equity method investments on the condensed consolidated statements of operations and comprehensive income (loss).

(3)

Consolidation and Other adjusts for the inclusion of the effective share of revenues, expenses and operating margin attributable to 50% ownership of CELSEPAR and Hilli Common Units in our segment measure and exclusion of the unrealized mark-to-market gain or loss on derivative instruments.

Three Months Ended December 31, 2021

(in thousands of $)

Terminals and

Infrastructure ⁽¹⁾

 

Ships ⁽²⁾

 

Total

Segment

 

Consolidation

and

Other ⁽³⁾

 

Consolidated

Segment Operating Margin

$

278,354

 

$

94,796

 

$

373,150

 

$

(46,328

)

 

$

326,822

 

Less:

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

 

 

 

 

 

 

 

74,927

 

Transaction and integration costs

 

 

 

 

 

 

 

 

 

2,107

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

30,297

 

Interest expense

 

 

 

 

 

 

 

 

 

46,567

 

Other (income) expense, net

 

 

 

 

 

 

 

 

 

(3,692

)

Loss from extinguishment of debt

 

 

 

 

 

 

 

 

 

10,975

 

(Income) Loss from equity method investments

 

 

 

 

 

 

 

 

 

8,515

 

Tax (benefit) provision

 

 

 

 

 

 

 

 

 

5,403

 

Net income

 

 

 

 

 

 

 

 

 

151,723

 

(1)

Terminals and Infrastructure includes the Company's effective share of revenues, expenses and operating margin attributable to 50% ownership of CELSEPAR. The losses attributable to the investment of $18,580 for the three months ended December 31, 2021 are reported in (loss) income from equity method investments on the condensed consolidated statements of operations and comprehensive income (loss).

(2)

Ships includes the Company's effective share of revenues, expenses and operating margin attributable to 50% ownership of the Hilli Common Units. The earnings attributable to the investment of $10,065 for the three months ended December 31, 2021 are reported in (loss) income from equity method investments on the condensed consolidated statements of operations and comprehensive income (loss).

(3)

Consolidation and Other adjusts for the inclusion of the effective share of revenues, expenses and operating margin attributable to 50% ownership of CELSEPAR and Hilli Common Units in our segment measure and exclusion of the unrealized mark-to-market gain or loss on derivative instruments.

Three Months Ended September 30, 2021

(in thousands of $)

Terminals and

Infrastructure ⁽¹⁾

 

Ships ⁽²⁾

 

Total

Segment

 

Consolidation

and

Other ⁽³⁾

 

Consolidated

Segment Operating Margin

$

115,638

 

$

94,840

 

$

210,478

 

$

(76,699

)

 

$

133,779

 

Less:

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

 

 

 

 

 

 

 

46,802

 

Transaction and integration costs

 

 

 

 

 

 

 

 

 

1,848

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

31,194

 

Interest expense

 

 

 

 

 

 

 

 

 

57,595

 

Other (income) expense, net

 

 

 

 

 

 

 

 

 

(5,400

)

(Income) Loss from equity method investments

 

 

 

 

 

 

 

 

 

15,983

 

Tax (benefit) provision

 

 

 

 

 

 

 

 

 

3,526

 

Net loss

 

 

 

 

 

 

 

 

 

(17,769

)

(1)

Terminals and Infrastructure includes the Company's effective share of revenues, expenses and operating margin attributable to 50% ownership of CELSEPAR. The losses attributable to the investment of $27,792 for the three months ended September 30, 2021 are reported in (loss) income from equity method investments on the condensed consolidated statements of operations and comprehensive income (loss).

(2)

Ships includes the Company's effective share of revenues, expenses and operating margin attributable to 50% ownership of the Hilli Common Units. The earnings attributable to the investment of $11,809 for the three months ended September 30, 2021 are reported in (loss) income from equity method investments on the condensed consolidated statements of operations and comprehensive income (loss).

(3)

Consolidation and Other adjusts for the inclusion of the effective share of revenues, expenses and operating margin attributable to 50% ownership of CELSEPAR and Hilli Common Units in our segment measure and exclusion of the unrealized mark-to-market gain or loss on derivative instruments.

Adjusted Net Income and Adjusted Earnings per Share

(Unaudited, in thousands of U.S. dollars)

The following table sets forth a reconciliation between net loss attributable to stockholders and earnings per share adjusted for non-cash impairment charges.

 

Three months ended

June 30, 2022

Net loss attributable to stockholders

$

(169,765

)

Non-cash impairment charges, net of tax

 

315,444

Adjusted net income

 

145,679

 

 

 

Weighted-average shares outstanding - diluted (QTD)

 

209,669,188

 

 

 

Adjusted earnings per share

$

0.69

 

 

Condensed Consolidated Balance Sheets

As of June 30, 2022 and December 31, 2021

(Unaudited, in thousands of U.S. dollars, except share amounts)

 

 

June 30, 2022

 

December 31, 2021

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

138,329

 

 

$

187,509

 

Restricted cash

 

71,602

 

 

 

68,561

 

Receivables, net of allowances of $164 and $164 respectively

 

313,457

 

 

 

208,499

 

Inventory

 

72,152

 

 

 

37,182

 

Prepaid expenses and other current assets, net

 

141,092

 

 

 

83,115

 

Total current assets

 

736,632

 

 

 

584,866

 

 

 

 

 

Restricted cash

 

7,960

 

 

 

7,960

 

Construction in progress

 

1,401,468

 

 

 

1,043,883

 

Property, plant and equipment, net

 

2,156,431

 

 

 

2,137,936

 

Equity method investments

 

939,738

 

 

 

1,182,013

 

Right-of-use assets

 

407,689

 

 

 

309,663

 

Intangible assets, net

 

121,088

 

 

 

142,944

 

Finance leases, net

 

600,885

 

 

 

602,675

 

Goodwill

 

778,488

 

 

 

760,135

 

Deferred tax assets, net

 

5,628

 

 

 

5,999

 

Other non-current assets, net

 

95,369

 

 

 

98,418

 

Total assets

$

7,251,376

 

 

$

6,876,492

 

 

 

 

 

Liabilities

 

 

 

Current liabilities

 

 

 

Current portion of long-term debt

$

99,756

 

 

$

97,251

 

Accounts payable

 

111,436

 

 

 

68,085

 

Accrued liabilities

 

236,535

 

 

 

244,025

 

Current lease liabilities

 

53,983

 

 

 

47,114

 

Other current liabilities

 

94,286

 

 

 

106,036

 

Total current liabilities

 

595,996

 

 

 

562,511

 

 

 

 

 

Long-term debt

 

4,051,756

 

 

 

3,757,879

 

Non-current lease liabilities

 

329,972

 

 

 

234,060

 

Deferred tax liabilities, net

 

140,289

 

 

 

269,513

 

Other long-term liabilities

 

60,835

 

 

 

58,475

 

Total liabilities

 

5,178,848

 

 

 

4,882,438

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

Class A common stock, $0.01 par value, 750.0 million shares authorized, 207.6 million issued and outstanding as of June 30, 2022; 206.9 million issued and outstanding as of December 31, 2021

 

2,076

 

 

 

2,069

 

Additional paid-in capital

 

1,868,618

 

 

 

1,923,990

 

Accumulated deficit

 

(63,895

)

 

 

(132,399

)

Accumulated other comprehensive income (loss)

 

78,232

 

 

 

(2,085

)

Total stockholders' equity attributable to NFE

 

1,885,031

 

 

 

1,791,575

 

Non-controlling interest

 

187,497

 

 

 

202,479

 

Total stockholders' equity

 

2,072,528

 

 

 

1,994,054

 

Total liabilities and stockholders' equity

$

7,251,376

 

 

$

6,876,492

 

Condensed Consolidated Statements of Operations

For the three and six months ended June 30, 2022 and 2021

(Unaudited, in thousands of U.S. dollars, except share and per share amounts)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Revenues

 

 

 

 

 

 

 

Operating revenue

$

497,240

 

 

$

102,836

 

 

$

897,315

 

 

$

194,032

 

Vessel charter revenue

 

75,134

 

 

 

64,561

 

 

 

167,554

 

 

 

64,561

 

Other revenue

 

12,481

 

 

 

56,442

 

 

 

25,104

 

 

 

110,930

 

Total revenues

 

584,855

 

 

 

223,839

 

 

 

1,089,973

 

 

 

369,523

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

Cost of sales

 

272,401

 

 

 

101,430

 

 

 

480,699

 

 

 

198,101

 

Vessel operating expenses

 

18,628

 

 

 

15,400

 

 

 

41,592

 

 

 

15,400

 

Operations and maintenance

 

20,490

 

 

 

18,565

 

 

 

43,658

 

 

 

34,816

 

Selling, general and administrative

 

50,310

 

 

 

44,536

 

 

 

98,351

 

 

 

78,152

 

Transaction and integration costs

 

4,866

 

 

 

29,152

 

 

 

6,767

 

 

 

40,716

 

Depreciation and amortization

 

36,356

 

 

 

26,997

 

 

 

70,646

 

 

 

36,886

 

Asset impairment expense

 

48,109

 

 

 

 

 

 

48,109

 

 

 

 

Total operating expenses

 

451,160

 

 

 

236,080

 

 

 

789,822

 

 

 

404,071

 

Operating income (loss)

 

133,695

 

 

 

(12,241

)

 

 

300,151

 

 

 

(34,548

)

Interest expense

 

47,840

 

 

 

31,482

 

 

 

92,756

 

 

 

50,162

 

Other (income), net

 

(22,102

)

 

 

(7,457

)

 

 

(41,827

)

 

 

(8,058

)

Net income (loss) before (loss) income from equity method investments and income taxes

 

107,957

 

 

 

(36,266

)

 

 

249,222

 

 

 

(76,652

)

(Loss) income from equity method investments

 

(372,927

)

 

 

38,941

 

 

 

(322,692

)

 

 

38,941

 

Tax (benefit) provision

 

(86,539

)

 

 

4,409

 

 

 

(136,220

)

 

 

3,532

 

Net (loss) income

 

(178,431

)

 

 

(1,734

)

 

 

62,750

 

 

 

(41,243

)

Net income attributable to non-controlling interest

 

8,666

 

 

 

(4,310

)

 

 

5,754

 

 

 

(2,704

)

Net (loss) income attributable to stockholders

$

(169,765

)

 

$

(6,044

)

 

$

68,504

 

 

$

(43,947

)

 

 

 

 

 

 

 

 

Net (loss) income per share – basic

$

(0.81

)

 

$

(0.03

)

 

$

0.33

 

 

$

(0.23

)

Net (loss) income per share – diluted

$

(0.81

)

 

$

(0.03

)

 

$

0.33

 

 

$

(0.23

)

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding – basic

 

209,669,188

 

 

 

202,331,304

 

 

 

209,797,133

 

 

 

189,885,473

 

Weighted average number of shares outstanding – diluted

 

209,669,188

 

 

 

202,331,304

 

 

 

209,810,647

 

 

 

189,885,473

 

Condensed Consolidated Statements of Cash Flows

For the six months ended June 30, 2022 and 2021

(Unaudited, in thousands of U.S. dollars)

 

 

Six Months Ended June 30,

 

 

2022

 

 

 

2021

 

Cash flows from operating activities

 

 

 

Net income (loss)

$

62,750

 

 

$

(41,243

)

Adjustments for:

 

 

 

Amortization of deferred financing costs and debt guarantee, net

 

2,383

 

 

 

(6,290

)

Depreciation and amortization

 

71,172

 

 

 

37,462

 

Loss (earnings) of equity method investees

 

322,692

 

 

 

(38,941

)

Drydocking expenditure

 

(12,439

)

 

 

 

Dividends received from equity method investees

 

14,859

 

 

 

7,386

 

Sales-type lease payments received in excess of interest income

 

1,426

 

 

 

2,388

 

Change in market value of derivatives

 

(9,798

)

 

 

(7,073

)

Deferred taxes

 

(178,109

)

 

 

2,447

 

Change in value of investment of equity securities

 

1,090

 

 

 

(88

)

Share-based compensation

 

1,238

 

 

 

3,383

 

Asset impairment expense

 

48,109

 

 

 

 

Other

 

671

 

 

 

275

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

(Increase) in receivables

 

(123,843

)

 

 

(38,018

)

(Increase) in inventories

 

(35,167

)

 

 

(35,458

)

(Increase) Decrease in other assets

 

(58,949

)

 

 

3,679

 

Decrease in right-of-use assets

 

35,265

 

 

 

2,072

 

Increase in accounts payable/accrued liabilities

 

71,603

 

 

 

24,732

 

Increase (Decrease) in amounts due to affiliates

 

1,238

 

 

 

(2,919

)

(Decrease) Increase in lease liabilities

 

(31,352

)

 

 

133

 

Decrease in other liabilities

 

(13,906

)

 

 

(25,279

)

Net cash provided by (used in) operating activities

 

170,933

 

 

 

(111,352

)

 

 

 

 

Cash flows from investing activities

 

 

 

Capital expenditures

 

(441,708

)

 

 

(235,324

)

Cash paid for business combinations, net of cash acquired

 

 

 

 

(1,586,042

)

Entities acquired in asset acquisitions, net of cash acquired

 

 

 

 

(8,817

)

Other investing activities

 

 

 

 

(750

)

Net cash (used in) investing activities

 

(441,708

)

 

 

(1,830,933

)

 

 

 

 

Cash flows from financing activities

 

 

 

Proceeds from borrowings of debt

 

437,917

 

 

 

1,652,500

 

Payment of deferred financing costs

 

(4,805

)

 

 

(20,989

)

Repayment of debt

 

(146,030

)

 

 

(15,864

)

Payments related to tax withholdings for share-based compensation

 

(13,054

)

 

 

(29,717

)

Payment of dividends

 

(47,374

)

 

 

(41,346

)

Net cash provided by financing activities

 

226,654

 

 

 

1,544,584

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

(2,018

)

 

 

(1,317

)

Net (decrease) in cash, cash equivalents and restricted cash

 

(46,139

)

 

 

(399,018

)

Cash, cash equivalents and restricted cash – beginning of period

 

264,030

 

 

 

629,336

 

Cash, cash equivalents and restricted cash – end of period

$

217,891

 

 

$

230,318

 

 

 

 

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

Changes in accounts payable and accrued liabilities associated with construction in progress and property, plant and equipment additions

$

5,302

 

 

$

85,513

 

Liabilities associated with consideration paid for entities acquired in asset acquisitions

 

 

 

 

9,959

 

Consideration paid in shares for business combinations

 

 

 

 

1,400,784

 

Contacts

IR:

Brett Magill

bmagill@newfortressenergy.com



Media:

jsuski@newfortressenergy.com

(516) 268-7403

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