New Fortress Energy Inc. · NASDAQ:NFE
New Fortress Energy — Q3 2022 Earnings Presentation
48 slides from New Fortress Energy's earnings presentation, November 2022
Slide 1: Q3 2022 Investor Presentation
November 2022 Q3 2022 Investor Presentation
Slide 2: Delivering Positive Energy Worldwide
Delivering Positive Energy Worldwide Our Vision We want to light the world. Billions of people around the planet lack access to affordable power. Electricity should not be a luxury good. Our Mission Our mission is to provide capital, expertise and vision to address this problem while also making pos
Slide 3: Agenda
1. Executive Summary 2. Supply 3. Commercial Update 4. Hydrogen 5. Financial Results 6. Appendix 3
Slide 4: Q3 2022 was another great quarter for the company
Executive Summary Q3 2022 was another great quarter for the company We are on track to achieve our Illustrative Adjusted EBITDA Goal(1) of ~$1.1bn for the year FY'19 FY'20 FY'21 Q1-22 Q2-22 Q3-22 FY'22 FY'23 Q3 2022 Adj. EBITDA(2) Total Segment Operating Margin(3) ($21) $125 $746 $300 $327 $339 Illu
Slide 5: Historical and projected volumes and margins
Executive Summary Historical and projected volumes and margins Illustrative Illustrative Long-term economics 2021 2022(5) 2023 2024 2025 Volume(29) (TBtu) 74 88 161 Volume (TBtu) 336 464 Margin Illustrative margin Illustrative Adj. EBITDA Goals(1) ($/MMBtu) $8.14 $12.50 $15.53 ($/MMBtu) $10.00 $3,36
Slide 6: We expect to be able to return significant capital to shareholders
Executive Summary We expect to be able to return significant capital to shareholders Cash on hand/ We expect to generate $5bn+ of liquidity(8) lines available(6) over the next 3 years $1.4bn Available liquidity may be used for: Targeted operating cash flows next 3 years(7) ~$10bn Additional investme
Slide 7: The global LNG market remains significantly undersupplied
Executive Summary The global LNG market remains significantly undersupplied Significant & ongoing dislocation between US & global gas prices(i) Security of supply issues expected to JKM TTF HH continue through 2023 and beyond, 60 especially as Asian LNG demand recovers 50 At current supply levels, o
Slide 8: Agenda
1. Executive Summary 2. Supply 3. Commercial Update 4. Hydrogen 5. Financial Results 6. Appendix 8
Slide 9: Fast LNG: creating supply
Supply Fast LNG: creating supply NFE expected to add ~ 350 TBtu to our supply portfolio by 2025 NFE LNG supply projections TBtu 2021 2022(5) 2023 2024 2025 Current Supply Contracts(29) 74 88 114 114 114 (+) FLNG Volumes(21) - - 47 222 350 Total 74 88 161 336 464 9
Slide 10: Construction of our first unit is well underway
Supply Construction of our first unit is well underway 4.3 million total man hours; 3 million man hours completed with 2,500 people on site rendering Module fabrication Our standardized, modular design accelerates fabrication timelines & allows scalability Current Final rendering Platform readiness
Slide 11: We expect to deploy our first Fast LNG unit to Altamira in mid-2023
Supply We expect to deploy(4) our first Fast LNG unit to Altamira in mid-2023 Definitive agreements for Altamira(13) signed in Mexico City on November 3 5 units under development(10) Altamira Louisiana Lakach New Orleans 15-year gas supply Progressing 7-well development agreement with permitting wit
Slide 12: Expect to complete construction on first 5 units by mid-2024
Supply Expect to complete(4) construction on first 5 units by mid-2024 Unit Design Construction Mechanical yard completion(15) Kiewit Offshore FLNG 1 Jack up rigs March ‘23 Shipyard Kiewit Offshore FLNG 2 Fixed platform November ‘23 Shipyard Kiewit Offshore FLNG 3 Fixed platform January ‘24 Shipyard
Slide 13: Agenda
1. Executive Summary 2. Supply 3. Commercial Update 4. Hydrogen 5. Financial Results 6. Appendix 13
Slide 14: Our core mission is to expand access to energy in the places that need it most
Commercial Update Our core mission is to expand access to energy in the places that need it most Today, over 70% of the world’s electricity is …while the number of people without access to consumed by just 10 countries(i)… electricity is simultaneously set to increase(ii) Million people 1400 1200 10
Slide 15: Our primary customers are electricity producers
Commercial Update Our primary customers are electricity producers We have acquired, developed, and supplied over 3,000 MW of power capacity since 2016 Asset MW Term NFE Role Acquired/ 1 Jamalco 100 20 Built / Own developed(10) 2 Mexico 135 10 Built / Sold 3 Nicaragua 300 25 Built / Own 4 Sergipe 1,6
Slide 16: Long term, FLNG volumes will fuel new power assets
Commercial Update Long term, FLNG volumes will fuel new power assets Rule of thumb: 100 MW ≈ 10 TBtu New supply(i) to fuel long-term power demand Development & in-construction assets Location Term MW Barcarena 25 600 500 464 Ireland 10 600 South Africa TBD 300 400 Jamaica 20 200 equivalent to ~3,300
Slide 17: Margin example: integrated LNG-to-power
Commercial Update Margin example: integrated LNG-to-power 100 MW power plant example(16) 12.5¢ + 2.5¢ = 15¢ = $17/MMBtu - $7/MMBtu = $10/MMBtu Long-term Return on Total power Gas sales FLNG supply Gas margin(20) power price(17) Capex(17) price(17) price(18) cost(19) Our historical & expected margins
Slide 18: Unprecedented LNG market opportunity in the near term
Commercial Update Unprecedented LNG market opportunity in the near term Russian gas previously supplied to Europe …& global LNG prices have reacted accordingly has now created a massive supply shortfall… JKM TTF HH Russian-supplied pipeline gas to Europe 60 150 50 Replacing 100+ MTPA requires: 120 •
Slide 19: We will connect Fast LNG with re-gas capacity in Europe
Commercial Update We will connect Fast LNG with re-gas capacity in Europe European Regas Terminals Substantial regas infrastructure 30 terminals ~3,000 LNG cargo slots Eemshaven Planned Under construction FID Operational Gas priced on a central exchange “TTF” benchmark pricing index No need to find
Slide 20: Agenda
1. Executive Summary 2. Supply 3. Commercial Update 4. Hydrogen 5. Financial Results 6. Appendix 20
Slide 21: We have started construction on our first hydrogen plant in Beaumont, TX
Hydrogen We have started construction(10) on our first hydrogen plant in Beaumont, TX 120 MW green hydrogen plant is expected to be the largest-of-its-kind in the U.S. During the quarter Secured electrolyzers and other long-lead items Executed Entergy MOU(23): Cost effective, reliable renewable powe
Slide 22: Inflation Reduction Act 2022 is the largest climate investment in U.S. history
Hydrogen Inflation Reduction Act 2022(22) is the largest climate investment in U.S. history Expected $4+ trillion in capital investment in new U.S. energy supply infrastructure over next 10 years(i) Annual investment levels expected to significantly increase by 2030(i) What does the legislation offe
Slide 23: ZERO is building a pure-play clean hydrogen infrastructure business
Hydrogen ZERO is building a pure-play clean hydrogen infrastructure business We have a clear path for expansion throughout the U.S. & plan to separately capitalize ZERO in the near-future Our plan 5 90k 2024-2026 Production TPA Expected hubs production online(4) date Infrastructure anchored Our clea
Slide 24: Agenda
1. Executive Summary 2. Supply 3. Commercial Update 4. Hydrogen 5. Financial Results 6. Appendix 24
Slide 25: $291m of Adjusted EBITDA in Q3 2022
Financial Results $291m of Adjusted EBITDA(2) in Q3 2022 On track for FY’22 Illustrative Adj. EBITDA Goal(1) of ~$1.1bn+ Q3 2021 Q3 2022 YoY Change Total Seg. Revenue ($mm) $465 $799 $322 Total Seg. Op. Margin(3) ($mm) $210 $339 $129 • $291mm of Adj. EBITDA(2) for Q3 2022; on track for Illustrative
Slide 26: Simplified balance sheet with ample liquidity to fund Fast LNG
Financial Results Simplified balance sheet with ample liquidity to fund(8) Fast LNG CELSE and ship asset sales successfully closed(25)(26), simplifying NFE’s capital structure and improving liquidity position Q2 2022 Now Transactions removed $mm $mm asset level debt NFE corporate debt $3,165 $2,750
Slide 27: Our long-term goal: path to investment grade
Financial Results Our long-term goal: path to investment grade Today 2024 run-rate(27) What does our 7 Terminals 9 Terminals + 5x FLNG units leverage look like $1.1bn Illustrative Adj. EBITDA Goal(1) ~$5bn Illustrative Adj. EBITDA Goal(1) status quo? $3bn Debt(i) $3bn Debt(i) <3x Leverage <1x Target
Slide 28: Q3 2022 Operational highlights
Financial Results Q3 2022 Operational highlights Key operational highlights • Met 100% of nominated quantity from our customers • Optimized customer underconsumption to deliver excess volumes to market Operational scorecard Volumes after meeting the required nominations delivered • Miami liquefier a
Slide 29: Agenda
1. Executive Summary 2. Supply 3. Commercial Update 4. Hydrogen 5. Financial Results 6. Appendix 29
Slide 30: We continue to execute on our commercial plan
Appendix We continue to execute on our commercial plan Key highlights • Ireland terminal and 600 MW power – permit expected by YE2022(10) Commercial scorecard Terminals • • Barcarena terminal complete(4); ready for 2023 operations(4) Santa Catarina terminal expected completion Q4 2022(4) 2023 Run-ra
Slide 31: Segment operating margin reconciliation
Appendix Segment operating margin reconciliation Three Months Ended September 30, 2022 Consolidation (in thousands of $) Terminals and Infrastructure (1) Ships (2) Total Segment Consolidated and Other (3) Total revenues 687,437 111,660 799,097 (67,167) 731,930 Cost of sales 402,458 - 402,458 (8,628)
Slide 32: Segment operating margin reconciliation
Appendix Segment operating margin reconciliation Three Months Ended June 30, 2022 Consolidation (in thousands of $) Terminals and Infrastructure (1) Ships (2) Total Segment Consolidated and Other (3) Total revenues 543,455 111,024 654,479 (69,624) 584,855 Cost of sales 271,948 - 271,948 453 272,401
Slide 33: Segment operating margin reconciliation
Appendix Segment operating margin reconciliation Three Months Ended March 31, 2022 Terminals and Consolidation (in thousands of $) Ships (2) Total Segment Consolidated Infrastructure (1) and Other (3) Total revenues 480,349 114,942 595,291 (90,173) 505,118 Cost of sales 235,532 - 235,532 (27,234) 20
Slide 34: Segment operating margin reconciliation
Appendix Segment operating margin reconciliation Three Months Ended December 31, 2021 Terminals and Consolidation (in thousands of $) Ships (2) Total Segment Consolidated Infrastructure (1) and Other (3) Total revenues 689,770 117,796 807,566 (158,935) 648,631 Cost of sales 382,816 - 382,816 (100,33
Slide 35: Segment operating margin reconciliation
Appendix Segment operating margin reconciliation Year Ended December 31, 2021 Terminals and Consolidation (in thousands of $) Ships (2) Total Segment Consolidated Infrastructure (1) and Other (3) Total revenues 1,366,142 329,608 1,695,750 (372,940) 1,322,810 Cost of sales 789,069 - 789,069 (173,059)
Slide 36: Segment operating margin reconciliation
Appendix Segment operating margin reconciliation Year Ended December 31, 2020 Terminals and Consolidation (in thousands of $) Ships (2) Total Segment Consolidated Infrastructure (1) and Other (3) Total revenues 451,650 - 451,650 - 451,650 Cost of sales 278,767 - 278,767 - 278,767 Vessel operating ex
Slide 37: Segment operating margin reconciliation
Appendix Segment operating margin reconciliation Year Ended December 31, 2019 Terminals and Consolidation (in thousands of $) Ships (2) Total Segment Consolidated Infrastructure (1) and Other (3) Total revenues 189,125 - 189,125 - 189,125 Cost of sales 183,359 - 183,359 - 183,359 Vessel operating ex
Slide 38: Adjusted EBITDA
Adjusted EBITDA (in thousands of U.S. dollars) Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q3 2022 LTM Total Segment Operating Margin $373,150 $300,083 $327,448 $339,330 $1,340,011 Less: Core SG&A 38,033 40,960 42,040 47,290 168,323 Add: Pro rata share Core SG&A from unconsolidated entities 1,110 1,390 1,914 1,
Slide 39: Adjusted EBITDA
Adjusted EBITDA (in thousands of U.S. dollars) FY’19 FY’20 FY’21 Total Segment Operating Margin ($21,133) $125,302 $746,430 Less: Core SG&A 94,133 91,980 137,144 Less: Pro rata share of Core SG&A from unconsolidated entities - - 4,726 Adjusted EBITDA (non-GAAP) ($115,266) $33,322 $604,560 39
Slide 40: Adjusted EBITDA
Adjusted EBITDA (in thousands of U.S. dollars) Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q3 2022 LTM Net income (loss) $151,723 $241,181 ($178,431) $56,231 $270,704 Add: Interest expense (net of interest income) 46,567 44,916 47,840 63,588 202,911 Add: Tax (benefit) provision 5,403 (49,681) (86,539) 9,971 (12
Slide 41: Adjusted EBITDA
Adjusted EBITDA (in thousands of U.S. dollars) FY’19 FY’20 FY’21 Net (loss) income ($204,319) ($263,965) $92,711 Add: Transaction and integration costs - 4,028 44,671 Add: Contract termination charges and loss on mitigation sales 5,280 124,114 - Add: Depreciation and amortization 7,940 32,376 98,377
Slide 42: Adjusted Net Income and Adjusted Earnings per Share
Adjusted Net Income and Adjusted Earnings per Share (in thousands of U.S. dollars) Q3 2021 Q3 2022 Net (loss) income attributable to stockholders (9,806) 61,848 Non-cash impairment charges - 23,760 Adjusted net (loss) income (9,806) 85,608 Weighted-average shares outstanding – diluted (QTD) 207,497,
Slide 43: Disclaimers
Disclaimers IN GENERAL. This disclaimer applies to this document and the verbal or written comments of any person presenting it. This document, taken together with any such verbal or written comments, is referred to herein as the “Presentation.” FORWARD-LOOKING STATEMENTS: All statements contained i
Slide 44: Endnotes
Endnotes 1. “Illustrative Adjusted EBITDA Goal” is based on the "Illustrative Total Segment Operating Margin Goal" less illustrative Core SGA assumed to be at $180mm in 2022 and $192mm for all periods 2023 onward including the pro rata share of Core SG&A from unconsolidated entities. “Illustrative T
Slide 45: Endnotes
Endnotes 2. “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 a
Slide 46: Endnotes
Endnotes 3. “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
Slide 47: Endnotes
Endnotes 11. Reserved. 12. Refers to the concurrent applications filed by an affiliate of NFE with the U.S. Maritime Administration (“MARAD”), the U.S. Coast Guard and U.S. Department of Energy to request all necessary permits and regulatory approvals to site, construct and operate a new offshore LN
Slide 48: Endnotes
Endnotes 21. Represents LNG volumes we expect to derive from our Fast LNG projects currently under development, assuming completion and operation of such projects in line with current design and engineering specifications, expected timelines and capacity levels. There can be no assurance that we wil