New Fortress Energy Inc. · NASDAQ:NFE
New Fortress Energy — Q4 2021 Earnings Presentation
46 slides from New Fortress Energy's earnings presentation, March 2022
Slide 1: Q4 2021 Investor Presentation
March 2022 Q4 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. Downstream Update 3. Gas Update 4. Hydrogen Update 5. Financial Update 6. Appendix 3
Slide 4: Our business has grown & matured dramatically
Executive Summary Our business has grown & matured dramatically Q4 2021 Adj. EBITDA(1) of $334mm with FY 2021 Adj. EBITDA(1) of $605mm Record quarterly Q4 was a record quarter, closing out a record year Adj. EBITDA(1) of $334mm Illustrative(4) FY'19 FY'20 Q4’21 FY'21 FY'22 FY'23 Record annual Total
Slide 5: Architecture of our business is now very clear
Executive Summary Architecture of our business is now very clear We deliver low-carbon gas & power at attractive prices to some of the fastest growing markets in the world 1 2 3 Build downstream terminals Buy ships & logistics assets Create gas portfolio to and power assets to supply downstream matc
Slide 6: Fast LNG is the natural next step for our business
Executive Summary Fast LNG is the natural next step for our business Expect Fast LNG to add marketing volumes to our portfolio & long-term lease cash flows Eni(6) Offshore Congo Two applications: 1.4 MTPA NFE owns & 20-year term operates Tolling Tolling + right to purchase infrastructure 50% of prod
Slide 7: We've created a stable portfolio with potential for windfall opportunities
Executive Summary We’ve created a stable portfolio with potential for windfall opportunities This allows us to have a “protected” long natural gas bias Adding marketing volumes implies market risk, but our business model has 2 natural risk mitigants 1 2 Large downstream LNG created at portfolio allo
Slide 8: Agenda
1. Executive Summary 2. Downstream Update 3. Gas Update 4. Hydrogen Update 5. Financial Update 6. Appendix 8
Slide 9: NFE downstream commercial business YE 2021
Downstream Update NFE downstream commercial business YE 2021 Key investment highlights Commercial scorecard 1 Acquired Hygo for $3.1bn & GMLP for $1.9bn Q4’21 Volumes(i) Contracts(ii) 2 Mexico terminal online(7) 2.9mm GPD 65 (1.7 MTPA) Sergipe Power Plant fully operational(7) 3 4,000+ hours run cons
Slide 10: Material expansion of downstream addressable market
Downstream Update Material expansion of downstream addressable market YE 2020 YE 2021 9 MTPA addressable market 5 terminals 42 MTPA addressable market 11 terminals Sri Lanka Operational(7) In development (9) 10
Slide 11: 2022 commercial growth targets
Downstream Update 2022 commercial growth targets Growing and diversifying pipeline of opportunities in the near and medium term Organic growth from existing terminals Market volatility incentivizing long-term contract procurement with no additional capital Complete construction on 2 terminals in Bra
Slide 12: LNG marine infrastructure essential to NFE's operations
Downstream Update LNG marine infrastructure essential to NFE’s operations Long-term control of LNG infrastructure critical for our operations and growth 2020 YE Today Today Floating Storage and 1 FSRU 9 FSRUs Regasification Units (“FSRU”) 2 FSUs 5 FSUs Floating Storage Units (“FSU”) 2 LNGCs 6 LNGCs
Slide 13: Expanding commercial footprint leading to portfolio optimization
Downstream Update Expanding commercial footprint leading to portfolio optimization 2020 2021 Our downstream portfolio is expanding the nature Firm Flexible Firm Flexible of NFE’s customers and Long-term Long-term demand power power Merchant Small scale power Before Industrial Only long-term demand d
Slide 14: Agenda
1. Executive Summary 2. Downstream Update 3. Gas Update 4. Hydrogen Update 5. Financial Update 6. Appendix 14
Slide 15: Natural gas is central to our business & critical to global energy transition
Gas Update Natural gas is central to our business & critical to global energy transition We are focused on providing secure & reliable, low-carbon energy supply to customers However, we believe the world is structurally short natural gas Drivers of current situation Existing & planned infrastructure
Slide 16: LNG markets have been severely disrupted
Gas Update LNG markets have been severely disrupted Prices are expected to remain elevated for the foreseeable future LNG Prices(i) 40.00 35.00 30.00 25.00 $/MMBtu 20.00 15.00 10.00 severe market 5.00 dislocation 0.00 Apr-12 Jul-13 Apr-17 Jul-18 Apr-22 Jul-23 Jan-11 Oct-14 Jan-16 Oct-19 Jan-21 May-1
Slide 17: We have been very focused on expanding & diversifying our gas portfolio
Gas Update We have been very focused on expanding & diversifying our gas portfolio Gas is the key to our business, and we spent last year securing our supply Gas portfolio is expected to consist of 2 main sources: Now focused on Fast LNG 2 & other long-term supply contracts for additional 2-3 MTPA 6
Slide 18: Two primary uses for our Fast LNG solution
Gas Update We believe there are two primary uses for our Fast LNG solution 1 2 Tolling for producers NFE portfolio (13) right to purchase tolling arrangement + % of production at market price produce gas for gas to power + produce gas for NFE portfolio 18
Slide 19: Significant progress on our first Fast LNG installation
Gas Update We've made significant progress on our first Fast LNG installation Recently announced first deal with Eni(6) Tolling fee We expect to for 20 years provide offshore Right to purchase liquefaction at 50% of LNG Eni’s(6) Marine 12 produced (1.4 MTPA total development in volume) Republic of C
Slide 20: Flexibility to sell into the market allows significant upside
Gas Update Flexibility to sell into the market allows significant upside during market imbalances Fast LNG may generate $1bn incremental revenue per installation in today’s gas market 40.00 LNG Prices ($/MMBtu)(i) 35.00 30.00 $/MMBtu 25.00 20.00 15.00 ~$15/MMBtu+ 10.00 price differential 5.00 in cur
Slide 21: Agenda
1. Executive Summary 2. Downstream Update 3. Gas Update 4. Hydrogen Update 5. Financial Update 6. Appendix 21
Slide 22: The opportunity
Hydrogen Update The opportunity We are capitalizing on a massive opportunity to become a leading energy transition company 51bn tons of global CO2 emissions Clean hydrogen represents a significant market ~75% come from 3 main sectors(i) opportunity to decarbonize these sectors 7% 19% 31% Industry Po
Slide 23: Our path to accessing that opportunity
Hydrogen Update Our path to accessing that opportunity We’ve laid out a simple and effective business model to develop a leading clean hydrogen business in the U.S. Our business model 1. Identify & secure 2. Act on major 3. Develop portfolio best sites in the U.S. decarbonization of hydrogen hubs op
Slide 24: Significant progress on our first 100MW green hydrogen facility
Hydrogen Update We’ve made significant progress on our first 100MW green hydrogen facility We are focused on producing clean hydrogen close to end-users in the power generation, petrochemical, refining & steel sectors Located in global energy hub with Positions Zero Parks as an early mover proximity
Slide 25: Highly compelling business model with significant upside potential
Hydrogen Update Highly compelling business model with significant upside potential Key drivers to reduce clean hydrogen production costs toward $1/kg Today Significant upside Future potential from: declining renewable costs $3/kg $1/kg cost to produce clean hydrogen + increasing electrolyzer efficie
Slide 26: Positioning Zero Parks as an early mover
Hydrogen Update We are positioning Zero Parks as an early mover in a vast & rapidly evolving market We intend to be an industry leader in the clean hydrogen space – and we have made significant advancements towards this goal Next Next 60-90 days 6-9 months 2023+ • Achieve FID(8) and break ground • I
Slide 27: Agenda
1. Executive Summary 2. Downstream Update 3. Gas Update 4. Hydrogen Update 5. Financial Update 6. Appendix 27
Slide 28: Financial performance & highlights
Financial Update Financial performance & highlights In order to better reflect our financial results, we’re moving to an Adj. EBITDA(1) performance metric In Q4, we were 1 Highest volume 2 Adj. EBITDA(1) of quarter on record $334mm for Q4, upgraded to BB- Results in by S&P $605mm for FY 2021 Improvi
Slide 29: Financial results
Financial Update Financial results Transformation from development company to operating company is complete Q3 Q4 QoQ YoY FY’20 FY’21 2021 2021 Change Change Total Seg. Revenue ($mm) $465 $808 $343 $452 $1,696 $1,244 • Record revenues and income for both Q4 2021 and FY 2021 Total Seg. Op. Margin(2)
Slide 30: Our financial goals
Financial Update Our financial goals We have a straightforward plan to strengthen NFE’s balance sheet and fund our future developments 1 Improve credit profile: we intend to pursue ratings upgrades at all agencies with the goal to reach BB by Q3 2022 and BBB in 2023 Enhance liquidity: increasing rev
Slide 31: Fund all of our growth plans
Financial Update We expect to fund our growth through 100% internally-generated capital We are able to generate significant liquidity through asset sales & financing Asset sales Fund Generate + ~$2-2.5bn all of our in liquidity within = Financings the next few growth plans months Assets have appreci
Slide 32: Continuing to optimize existing assets
Financial Update Continuing to optimize existing assets United States Puerto Rico Jamaica Mexico Brazil • Optimized Miami • Customer-requested • Hose tower in Montego • Commissioned second • Sergipe gas & steam Liquefier to run above dock line replacement Bay relocated to power plant (CFE- turbine t
Slide 33: Agenda
1. Executive Summary 2. Downstream Update 3. Gas Update 4. Hydrogen Update 5. Financial Update 6. Appendix 33
Slide 34: Adjusted EBITDA
Appendix Adjusted EBITDA (in thousands of U.S. dollars) FY’19 FY’20 FY’21 Q3 2021 Q4 2021 Net (loss) income ($204,319) ($263,965) $92,711 ($17,769) $151,723 Add: Transaction and integration costs - 4,028 44,671 1,848 2,107 Add: Contract termination charges and loss on mitigation 5,280 124,114 - - sa
Slide 35: Adjusted EBITDA
Appendix Adjusted EBITDA (in thousands of U.S. dollars) FY’19 FY’20 FY’21 Q3 2021 Q4 2021 Total Segment Operating Margin per Form 10-K ($21,133) $125,302 $746,430 $210,478 $373,150 Less: Core SG&A (see below definition) 94,133 91,980 137,144 38,496 38,033 Less: Pro rata share of Core SG&A from uncon
Slide 36: 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 37: 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 38: 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 39: 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 40: Segment operating margin reconciliation
Appendix Segment operating margin reconciliation Three Months Ended September 30, 2021 Terminals and Consolidation (in thousands of $) Ships (2) Total Segment Consolidated Infrastructure (1) and Other (3) Total revenues 349,140 116,050 465,190 (160,534) 304,656 Cost of sales 206,131 - 206,131 (70,69
Slide 41: Operational asset performance
Appendix – Operational Performance Operational asset performance Achieved “three zeros” for HSE incidents for operating assets(14) 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 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: Forward-looking statements
Slide 43: Endnotes
1. Endnotes 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 acc
Slide 44: Endnotes
4. Endnotes “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 in this presentation. This goal reflects the volumes of LN
Slide 45: Endnotes
Endnotes 8. “FID” means management has made an internal commitment to commit resources (including capital) to a particular project. Our management has not made an FID decision on certain projects as of the date of this press release, and there can be no assurance that we will be willing or able to m
Slide 46: Endnotes
Endnotes 14. Our Operating assets as of December 31, 2021, were the Miami Liquefier, Montego Bay Facility, Old Harbour Facility, Jamalco CHP, San Juan Facility, La Paz Terminal and Sergipe Facility. These metrics are tracked by management through formal reporting systems and informal escalation path