New Fortress Energy Inc. · NASDAQ:NFE
New Fortress Energy — Q2 2021 Earnings Presentation
45 slides from New Fortress Energy's earnings presentation, August 2021
Slide 1: Q2 2021 Investor Presentation
August 2021 Q2 2021 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. Gas 3. Fast LNG 4. Brazil 5. Financial Results 6. Valuation 7. Appendix 3
Slide 4: We have several significant highlights to report this quarter
Executive Summary We have several significant highlights to report this quarter • Significant increase in Q2 2021 Total Segment Op. Margin(1) with further increase expected in Q3 2021 Earnings • Jamaica, Puerto Rico, Mexico, Sergipe & Nicaragua operational(2) or substantially complete • Additional B
Slide 5: Significant quarterly increase in Total Segment Op. Margin
Executive Summary Significant quarterly increase in Total Segment Op. Margin(1) Q2 Total Segment Op. Margin of $130mm, goal to reach ~$550mm for FY21 Total Segment Operating Margin ($mm) Q2’21 Total Segment Op. Margin is 2020 2021 $130mm vs. $15mm Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY one year ago ($2) $15
Slide 6: How we got to where we are today
Executive Summary How we got to where we are today Transitioning from a development company to an operating company with significant organic growth Since we signed our first contract in 2015, Over the last 6 years, we have grown significantly we have largely been focused on development 2016 2021 202
Slide 7: Our portfolio now extends from Central & South America to Europe & Southeast Asia
Executive Summary Our portfolio now extends from Central & South America to Europe & Southeast Asia(5) Jamalco CHP, Jamaica Shannon, Miami Liquefier, USA Ireland Montego Bay, Jamaica San Juan, Puerto Rico La Paz, Mexico Old Harbour, Jamaica Barcarena, Brazil Colombo, Sri Lanka Puerto Sandino, Suape,
Slide 8: Our path ahead is clear
Executive Summary Our path ahead is clear Our goal is to address energy poverty while moving toward a zero-carbon future Energy poverty is real Sustainability is a must Electricity consumed per capita (kWh)(i) United 11,515 States Puerto Rico Ireland 6,493 5,712 51 We are focusing on clean, Large di
Slide 9: Agenda
1. Executive Summary 2. Gas 3. Fast LNG 4. Brazil 5. Financial Results 6. Valuation 7. Appendix 9
Slide 10: Since last quarter, gas prices have increased markedly
Gas Since last quarter, gas prices have increased markedly Increasing Chinese demand and weather-driven consumption are driving prices higher Increasing LNG demand from China(i) + Weather-driven, record levels of gas consumption(i) = Strong global gas & oil pricing(ii) Chinese LNG imports are up 26%
Slide 11: What have we done since last quarter?
Gas What have we done since last quarter? We have purchased cargoes to secure our gas supply and minimize exposure to LNG price volatility Purchased ~50 cargoes to fulfill committed (25) demand for next 6 years Average cost of LNG Portfolio 2022 2023 2024 2025-7 portfolio is protected Committed Dema
Slide 12: Agenda
1. Executive Summary 2. Gas 3. Fast LNG 4. Brazil 5. Financial Results 6. Valuation 7. Appendix 12
Slide 13: How does Fast LNG work?
Fast LNG How does Fast LNG work? Fast LNG is less expensive and faster than traditional FLNG Fast LNG is a mobile, floating natural gas liquefaction platform Floating LNG (FLNG) cryogenic flexible ship to ship transfer (5 years ago) hose system liquefier storage vessel jackup rig LNGC FSRU converted
Slide 14: How big is the opportunity?
Fast LNG How big is the opportunity? Currently only a few FLNGs servicing significant amount of stranded gas 47 85 There 14 141 Europe 133 are only 13 7 North America FLNGs 673 101 in the 508 63 138 world 159 84 Africa 26 46 (operational Latin America Asia Pacific or under Reserves over production r
Slide 15: Our modular production process is cheaper & faster
Fast LNG Our modular production process is cheaper & faster(9) Like home manufacturing, we are reducing liquefaction costs & production timelines through modularization Liquefaction modularization potential benefits Home modularization ~30-40%+ potential savings Traditional NFE modular liquefaction
Slide 16: What is the next step?
Fast LNG What is the next step?(10) We expect to commence operations on our first Fast LNG facility in Q4 2022 (i) Timeline March 2021 June 2021 September 2021 July 2022 Q4 2022 LNTP-FNTP Engineering & Assembly Installation First Gas(20) at well procurement (i) This image is a rendering of a project
Slide 17: Agenda
1. Executive Summary 2. Gas 3. Fast LNG 4. Brazil 5. Financial Results 6. Valuation 7. Appendix 17
Slide 18: Acute energy shortage in Brazil leading to opportunities across LNG, power, & off-grid solutions
Brazil Acute energy shortage in Brazil leading to opportunities across LNG, power, & off-grid solutions 1 2 3 Hydro shortages Power shortages Strong power & gas lead to lead to demand with supply power shortages gas shortages shortfall lead to significant opportunities 18
Slide 19: Hydro shortages lead to power shortages
Brazil Hydro shortages lead to power shortages Lower hydro power production leading to full dispatch of natural gas plants and high power prices 2021 hydro reservoir inflows (50%) below 20-yr avg. & declining for last 7 years Current spot power prices are 10x the 20-yr avg. $/MWh 20-Year Average $50
Slide 20: Power shortages in Brazil lead to gas shortages
Brazil Power shortages in Brazil lead to gas shortages Hydro power shortfall Increased utilization of gas plants Gas supply shortfall When gas power plants are dispatched in Brazil, total Current power shortage is resulting in supply gas demand can increase by up to ~65%(i) shortages for industrial
Slide 21: Current energy shortage accelerating opportunity for NFE
Brazil Current energy shortage accelerating opportunity for NFE Shortages of gas and power in Brazil are leading to high growth, high margin opportunities for NFE Power Gas Off-Grid Total • Sergipe receiving • Barcarena LNG • SCGas 66k GPD (Santa capacity payments and Terminal EPC contract Catarina)
Slide 22: 120 days after closing acquisition of Hygo energy transition
Brazil 120 days after closing acquisition of Hygo energy transition 1 2 3 Terminals in advanced High volume gas supply Significant small scale and development stage opportunity with strong off-grid opportunities; great facilitating start dates in 1H margins momentum with customers 2022 22
Slide 23: Agenda
1. Executive Summary 2. Gas 3. Fast LNG 4. Brazil 5. Financial Results 6. Valuation 7. Appendix 23
Slide 24: Financial performance
Financial Results Financial performance $130mm Total Segment Operating Margin(1) in Q2 2021 versus $15mm in Q2 2020 QoQ Financial Metrics Q2 2020 Q1 2021 Q2 2021 Change Operating Results Volumes Sold, Average 978 1,440 1,513 56 (k GPD) 1. Significant increase in Total Segment Op. Margin(1), up $97mm
Slide 25: Low overhead costs anticipated at full Run-Rate
Financial Results Low overhead costs anticipated at full Run-Rate ~50% of SG&A associated with growing business Intensely focused on SG&A; three distinct components: Run-Rate $mm Q1 ‘21A Q2 ‘21A Q3 ‘21PF(13) Annual(14) 1 $48mm Non capitalizable Non capitalizable development and ($20) ($36) ($12) ($4
Slide 26: Capital plan
Financial Results Capital plan Capital for development projects expected to be self-funded through: Cash from operations Ship financing Asset sales Funding Needs Potential Sources(15) Mexico + Nicaragua $250 New LC facility (80% of $75 available) - closed $60 1 Fast LNG (remaining) $475 Jamalco sale
Slide 27: Agenda
1. Executive Summary 2. Gas 3. Fast LNG 4. Brazil 5. Financial Results 6. Valuation 7. Appendix 27
Slide 28: FY22 financial goals support ~$50-75/share; FY 2023 financial goals support ~$60-$90/share
Valuation(17) FY22 financial goals support ~$50-75/share; FY 2023 financial goals support ~$60-$90/share 1 Core margin expected 2 Significant new terminals 3 Potential material 4 Blue hydrogen could add to be very stable expected online in next organic growth from windfall upside potential 6-12 mont
Slide 29: Agenda
1. Executive Summary 2. Gas 3. Fast LNG 4. Brazil 5. Financial Results 6. Valuation 7. Appendix 29
Slide 30: Barcarena terminal update
Appendix(27) - Brazil Barcarena terminal update Construction permits secured, EPC contract executed and construction started, YE ‘22 volumes forecast of 1.3mm GPD Key development milestones: Key commercial milestones: Signed EPC Contract with Andrade Gutierrez Norsk Hydro MOU 1 Fixed-price, turnkey
Slide 31: Santa Catarina terminal update
Appendix - Brazil Santa Catarina terminal update Key permits secured, EPC contract executed and construction started, YE ‘22 volumes forecast of 2.4mm GPD Key development milestones: Key commercial milestones: Signed EPC Contract with Tenenge Signed LNG supply with SCGas 1 Fixed-price, turnkey agree
Slide 32: Suape update
Appendix - Brazil Suape update Anchor customer signed up at 1.4mm GPD, YE ‘22 Volumes Forecast of 2.8mm GPD Key development milestones: Key commercial milestones: Agreement executed to access FSRU berth and 1 Executed gas supply agreements for up allow for land lease for power plant according 1 to 1
Slide 33: Our next goal is transitioning to clean energy
Appendix – Clean Fuels Our next goal is transitioning to clean energy We want to lead the energy transition by supplying customers with clean, hydrogen-based fuels The carbon emissions situation Carbon dioxide emissions have risen exponentially We are focused on Fossil fuels like coal, oil and gas a
Slide 34: Hydrogen as a clean fuel solution
Appendix – Clean Fuels Hydrogen as a clean fuel solution Most of today’s hydrogen is produced with significant carbon dioxide emissions Where is hydrogen Hydrogen Hydrogen production commonly found today? H H H H C H Steam Methane Reforming • Most abundant element in H • Vast majority of hydrogen co
Slide 35: Blue ammonia is an ideal carrier molecule for hydrogen
Appendix – Clean Fuels Blue ammonia is an ideal carrier molecule for hydrogen Make hydrogen Remove and Add nitrogen Produce blue via SMR sequester all CO2 from air ammonia Why blue ammonia? • Efficient hydrogen carrier • Clean, carbon-free fuel • Easily transported in liquid form • Compatible with e
Slide 36: We are building a clean fuels company
Appendix – Clean Fuels We are building a clean fuels company We will sell blue ammonia as a carbon-free fuel to power, transport and industry Our solution Our strategy Our progress Evaluated over Buy or build an 40 ammonia 1 N ammonia plant plants H H H Identified CO2 Make it blue by CO2 2 capture p
Slide 37: Carbon pricing will accelerate the transition to carbon-free fuels
Appendix – Clean Fuels Carbon pricing will accelerate the transition to carbon-free fuels Real economic implications for carbon emitters will accelerate adoption of clean fuels like blue ammonia Countries and companies are increasingly placing a price on carbon (i) • Assumes a gas feedstock 2000 202
Slide 38: Operating margin reconciliation
Appendix – Op. Margin Reconciliation Operating margin reconciliation Three months ended June 30, 2021 Terminals and Consolidated (in thousands of $) Ships(2) Total Segment Eliminations(3) Infrastructure(1) Reporting Operating Margin 54,453 75,587 130,040 (41,596) 88,444 Less: Selling, general and ad
Slide 39: Operating margin reconciliation
Appendix – Op. Margin Reconciliation Operating margin reconciliation Terminals and Infrastructure (in thousands of $) Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Operating Margin (2,169) 15,167 51,391 60,913 32,761 Less: Selling, general and administrative 28,370 31,846 30,849 32,869 45,181 Contract ter
Slide 40: Operational asset performance
Appendix – Operational Performance Operational asset performance Achieved “three zeros” for HSE incidents for operating assets(21) Health, Safety, & Zero (0) Lost Time Injuries Environment (“HSE”) 0 Zero (0) Recordable Health and Safety Incidents Zero (0) Spills, Uncontrolled Releases, or Loss
Slide 41: Key modeling assumptions
Appendix – Key Assumptions Key modeling assumptions 1) Volumes • Committed Run-Rate volumes(25) of 5.8mm gpd including 1.1mm Jamaica, 0.8mm PR, 0.6mm Mexico, 0.7mm Nicaragua, 1.2mm Sri Lanka, 1.5mm Brazil • Committed volumes reflect executed agreements • Additional likely volumes (26) of 12.9mm gpd
Slide 42: 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. Certain statements regardi
Slide 43: Endnotes
1. Endnotes “Total Segment Operating Margin” means the sum of (i) Net income / (loss), (ii) Selling, general and administrative, (iii) Depreciation and amortization, (iv) Interest expense, (v) Other (income) expense, net (vi) Contract termination charges and Loss on Mitigation Sales, (vii) Loss on e
Slide 44: Endnotes
5. Endnotes In Sri Lanka we have signed a Framework Agreement with the Government of Sri Lanka. We are finalizing terms and there can be no assurance that we will reach a definitive agreement on terms that are acceptable to us or at all. In Ireland we are in the process of filling for and obtaining
Slide 45: Endnotes
Endnotes 19. $5.4 billion consolidated debt is the company’s total consolidated debt as of June 30, 2021, plus the attributable portions of the Hilli Sale Leaseback debt and CELSE level debt, plus $885 million of anticipated funding sources from the Jamalco Sale Leaseback and Ship Financing. 20. “Fi