New Fortress Energy Inc. · NASDAQ:NFE
New Fortress Energy — Q1 2023 Earnings Presentation
40 slides from New Fortress Energy's earnings presentation, May 2023
Slide 1: Q1 2023 Investor Presentation
May 2023 Q1 2023 Investor Presentation
Slide 2: Agenda
1. Operating Results 2. Terminals 3. FLNG 4. LNG Market & Supply 5. Financial Results 6. Appendix 2
Slide 3: Quarterly financial results & 2023/2024 Guidance
Operating Results Quarterly financial results & 2023/2024 Guidance(1) FY Segment Revenue Achieved Adj. EBITDA(2) of Guidance(6) of $3.5bn in 2023 $440mm for Q1 2023 Confirming Guidance(1) of $2.0bn in 2023 vs. $2.6bn in 2022 = ~$16.50/share(10) Q1-23 Guidance(1) Segment Revenue(3) $601 2021 2022 202
Slide 4: Our earnings are easy to calculate
Operating Results Our earnings are easy to calculate How to calculate our earnings: As operations have normalized, there are several Terminals (gas & power) Terminal clear patterns of financial expectations(12) operating (+) Cargo Sales margin (+) Ships (-) Core SG&A(14) Adj. EBITDA Guidance(7) = ~5
Slide 5: Agenda
1. Operating Results 2. Terminals 3. FLNG 4. LNG Market & Supply 5. Financial Results 6. Appendix 5
Slide 6: Expected earnings growth supported by continued expansion of terminals business
Terminals Expected earnings growth supported by continued expansion of terminals business Organic growth has been a catalyst for adding additional customers & duration to our portfolio Jamalco CHP Jamaica Shannon Ireland Miami Liquefier USA Montego Bay Jamaica San Juan Puerto Rico La Paz Mexico Old
Slide 7: Terminal earnings have increased substantially
Terminals Terminal earnings have increased substantially Historical ($mm) Guidance(1) ($mm) Formula 2021 2022 2023 2024 Terminal Terminals (gas & power) $236 $221 $1,300 $1,900 operating margin (+) Cargo Sales $246 $676 $700 $400 (+) Ships $264 $354 $200 $200 (-) Core SG&A(14) ($142) ($179) ($200) (
Slide 8: Organic growth case study: our San Juan, Puerto Rico terminal
Terminals Organic growth case study: our San Juan, Puerto Rico terminal Our terminal supplies fuel to on-island power, industrial, commercial & transportation customers Our terminal infrastructure provides Puerto Rico with access to affordable gas & power Truck LNG Regasification loading bays supply
Slide 9: Puerto Rico calls for additional supplemental power solutions
Terminals Puerto Rico calls for additional supplemental power solutions Puerto Rico is a great example of how our established terminals position us to react quickly to critical power needs Puerto Rico suffers from critical power shortages(i)… Government requested quick additional generation capacity
Slide 10: A timeline of our supplemental power solution in Puerto Rico
Terminals A timeline of our supplemental power solution in Puerto Rico Existing infrastructure allowed us to install generation units within just 60 days of contract award Palo Seco site 3 Mar. 3 Apr. 19 May 3 May 15(15) June 10(15) June 15(15) Only ~4 miles NFE signed NFE signed First Gas(16) Palo
Slide 11: Agenda
1. Operating Results 2. Terminals 3. FLNG 4. LNG Market & Supply 5. Financial Results 6. Appendix 11
Slide 12: We launched our FLNG solution in Jan. 2021 to control our own gas supply
FLNG We launched our FLNG solution in Jan. 2021 to control our own gas supply Securing access to reliable gas supply is critical to our downstream business Modular construction is key Resulting in Liquefaction module Gas treatment module better construction • Manufactured • Faster in shipyard (2 yea
Slide 13: FLNG 1 is 90%+ complete, expect First Gas in July
FLNG FLNG 1 is 90%+ complete(17), expect First Gas(16) in July(15) & COD(17) in August(15) Cost(19) Volume First Gas(16) COD(17) ~$1 1.4 July August We have begun billion MTPA 2023 2023 commissioning(18) FLNG 1 United States & expect to be fully Mexico deployed(17) Altamira Fast LNG Location in Augu
Slide 14: Expect FLNG units 2 & 3 to be ready for installation 2H of 2024
FLNG Expect FLNG units 2 & 3 to be ready for installation 2H of 2024(15) FLNG units 2 & 3 follow the same blueprint as FLNG 1 FLNG 2 & 3 are already under construction(18), & all long-lead items have been procured FLNG 2 FLNG 3 Cost(19) ~$0.9bn ~$0.9bn Volume 1.4 MTPA 1.4 MTPA First Gas(16) August 2
Slide 15: FLNG units 2 & 3 expected to be deployed onshore Altamira
FLNG FLNG units 2 & 3 expected to be deployed(17) onshore Altamira World-class import terminal with nearly 100% expected reliability has everything needed to quickly convert into an export facility Signed LOI(20) with CFE to Area map 2 GW+ from 3 power plants develop onshore Altamira site Terminal b
Slide 16: Agenda
1. Operating Results 2. Terminals 3. FLNG 4. LNG Market & Supply 5. Financial Results 6. Appendix 16
Slide 17: Significant & widening spread between U.S. gas & LNG
LNG Market & Supply Significant & widening spread between U.S. gas & LNG HH-TTF spread remains elevated amidst declines in both price levels TTF(i) HH(ii) HH forecast Reduced supply concerns in Europe $10 remains flat as U.S. $80 $8.19 led to lower prices, associated gas $8 lower volatility $60 $29.
Slide 18: Price environment remains supportive for increased growth in terminal sales
LNG Market & Supply Price environment remains supportive for increased growth in terminal sales NFE’s integrated business directly connects U.S. gas to growth markets $/MMBtu $30.00 Price forecast Energy cost in NFE $25.00 La Paz Diesel(i) $20 – 25 geographies Q1 Avg.(i) Jamaica Diesel(i) /MMBtu Pue
Slide 19: LNG portfolio update
LNG Market & Supply LNG portfolio update LNG supply expected to increase ~150% from 2022 to 2024; contracted sales(22) currently ~80% of total supply in ‘23 and ‘24 2023 2024 FLNG Run Rate(24) LNG Supply Contracts(27) TBtu 123 135 2024 volumes reflect partial (+) FLNG 1-3(21) TBtu 29 82 year for FLN
Slide 20: Agenda
1. Operating Results 2. Terminals 3. FLNG 4. LNG Market & Supply 5. Financial Results 6. Appendix 20
Slide 21: Record $440m of Adj. EBITDA for Q1-23
Financial Results Record $440m of Adj. EBITDA(2) for Q1-23 Q1 2022 Q4 2022 Q1 2023 QoQ Δ YoY Δ Total Seg. Revenue(3) ($mm) $595 $564 $601 $37 $6 • $440m of Adj. Total Seg. Op. Margin(25) ($mm) $300 $283 $481 $198 $181 EBITDA(2) for Q1 2023 (-) Core SG&A(14) ($mm) ($42) ($44) ($41) $3 $1 • Q1 2023 di
Slide 22: Liquidity & capital structure
Financial Results Liquidity & capital structure We believe we have sufficient liquidity to complete our capital projects without the need for external financing Historically, we have funded our growth through a Remaining capital requirements are expected combination of asset sales + internally gener
Slide 23: Our strong balance sheet is well positioned for credit rating upgrades
Financial Results Our strong balance sheet is well positioned for credit rating upgrades Solid financial foundation Our goal is to be upgraded to BB+ Targeting <2x leverage by year end 2023 Plan to refinance or pay down corporate debt Today $mm Earnings predictability & duration Revolving Credit Fac
Slide 24: Credit ratings metrics over time
Financial Results Credit ratings metrics over time We are in constant dialogue with our credit rating agencies IPO (2019) 2020 2021 2022A 2023E Guidance(1) Rating (Moody’s / SP/ Fitch) B2 / B B1 / B+ B1 / B+ / BB- B1 / BB- / BB- Ba1 / BB+ / BB+ Target (7) Adj. EBITDA(2) ($115mm) $33mm $605mm $1,071m
Slide 25: Q1 2023 operational highlights
Financial Results Q1 2023 operational highlights Key operational highlights Operational scorecard • Delivered 25 TBtu to our customers Volumes • Continued to meet 100% of nominated quantity from our delivered customers Delivered Volumes 3.4mm GPD (Terminals + Cargo Sales) (25 TBtu) Asset • 99% relia
Slide 26: Agenda
1. Operating Results 2. Terminals 3. FLNG 4. LNG Market & Supply 5. Financial Results 6. Appendix 26
Slide 27: Adj. EBITDA
Appendix Adj. EBITDA (in thousands of U.S. dollars) FY 2021 FY 2022 Q1 2022 Q4 2022 Q1 2023 Net income $92,711 $184,786 $241,181 $65,805 $151,566 Add: Interest expense (net of interest income) 154,324 236,861 44,916 80,517 71,673 Add: Tax provision (benefit) 12,461 (123,439) (49,681) 2,810 28,960 Ad
Slide 28: Adj. EBITDA
Appendix Adj. EBITDA (in thousands of U.S. dollars) FY 2021 FY 2022 Q1 2022 Q4 2022 Q1 2023 Total Segment Operating Margin $746,430 $1,250,293 $300,083 $283,432 $480,817 Less: Core SG&A 137,144 174,410 40,960 44,120 41,067 Less: Pro rata share of Core SG&A from unconsolidated entities 4,726 4,574 1,
Slide 29: Adj. EBITDA
Appendix Adj. EBITDA (in thousands of U.S. dollars) FY 2021 FY 2022 Q1 2022 Q4 2022 Q1 2023 Total Selling, general and administrative $199,881 $236,050 $48,041 $70,099 $52,138 Core SG&A 137,144 174,410 40,960 44,120 41,067 SG&A items excluded from Core SG&A 62,737 61,640 7,081 25,979 11,071 29
Slide 30: Segment operating margin reconciliation
Appendix Segment operating margin reconciliation Three Months Ended March 31, 2023 Terminals and Consolidation (in thousands of $) Ships Total Segment Consolidated Infrastructure and Other (2) Total revenues 502,608 97,917 600,525 (21,394) 579,131 Cost of sales (1) 73,798 — 73,798 111,140 184,938 Ve
Slide 31: Segment operating margin reconciliation
Appendix Segment operating margin reconciliation Three Months Ended December 31, 2022 Terminals and Consolidation (in thousands of $) Ships (1) Total Segment Consolidated Infrastructure and Other (2) Total revenues 457,324 106,990 564,314 (17,945) 546,369 Cost of sales 232,436 — 232,436 (96,537) 135
Slide 32: Segment operating margin reconciliation
Appendix Segment operating margin reconciliation Three Months Ended March 31, 2022 (in thousands of $) Terminals and Total Segment Consolidation Consolidated Ships (2) 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 33: Free cash flow reconciliation
Appendix Free cash flow reconciliation (in thousands of U.S. dollars) FY 2021 FY 2022 Q1 2022 Q4 2022 Q1 2023 Net (loss) income attributable to stockholders 97,104 194,479 238,269 64,127 150,206 Depreciation and amortization 98,377 142,640 34,290 36,201 34,375 Free cash flow (Non-GAAP) 195,481 337,1
Slide 34: Adjusted Net Income and Adjusted EPS
Appendix Adjusted Net Income and Adjusted EPS (in thousands of U.S. dollars except for share amounts) FY 2021 FY 2022 Q1 2022 Q4 2022 Q1 2023 Net income attributable to stockholders (GAAP) 97,104 194,479 238,269 64,127 150,206 Non-cash impairment charges, net of tax — 381,302 (76,460) 118,558 — Loss
Slide 35: 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 36: Endnotes
Endnotes 1. “Guidance” means our forward-looking view for the relevant metric. The guidance is based on certain management assumptions applicable to the relevant metric, which assumptions may or may not occur, in whole or in part. The guidance is not based on the Company’s historical operating resul
Slide 37: Endnotes
Endnotes 6. “Illustrative Adjusted Segment Revenue Guidance” means our forward-looking goal for Segment Revenue for the relevant period where Segment Revenue reflects the volumes of LNG we hope or expect to sell under binding contracts multiplied by the average price per unit at which we expect to p
Slide 38: Endnotes
Endnotes 11. “Other” means other adjustments that are removed in the calculation of Adjusted EBITDA, including but not limited to, transaction and integration costs, contract termination charges and loss on mitigations sales, asset impairment expense, interest expense (net of interest income), other
Slide 39: Endnotes
Endnotes 19. Represents management’s expectations regarding the funding of the committed expenditures reflected and the estimated expenditures. The estimated expenditures, including those related to project costs, are not based on generally accepted accounting principles and should not be relied upo
Slide 40: Endnotes
Endnotes 28. Represents the mathematical calculation of LNG Volumes – To Be Sold minus Contracted Sales – In Discussion. 29. “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 liquidi