New Fortress Energy Inc. · NASDAQ:NFE
New Fortress Energy — Q2 2020 Earnings Presentation
39 slides from New Fortress Energy's earnings presentation, August 2020
Slide 1: Q2 2020 Investor Presentation
August 2020 Q2 2020 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. Operational Update 3. Development Update 4. New Business 5. Focus on Gas 6. Hydrogen Update 7. Financial Performance 8. Appendix 3
Slide 4: Highlights
Executive Summary Highlights 1 San Juan reached run-rate volumes(1) on July 10 2 Record volumes sold in July: • July 10 forward 1.6-1.7mm GPD • Jamalco boilers expected to add 100k GPD within next month • Goal of 1.7-2.0mm GPD for remainder of 2020 3 Five major corporate actions since last quarter,
Slide 5: Record Volumes: Daily Breakdown
Executive Summary Record Volumes: Daily Breakdown(4) A B C D E F G H Total Annualized GPD GPD GPD GPD GPD GPD GPD GPD GPD Op. Margin(5) Jul-1 129,336 326,090 281,510 - 398,095 73,119 - - 1,208,151 $151mm Jul-2 122,648 292,025 279,857 - 433,860 102,527 - - 1,230,917 $154mm Jul-3 126,866 325,161 277,7
Slide 6: Five Major Corporate Actions Since Last Quarter
Executive Summary Five Major Corporate Actions Since Last Quarter 1 2 3 4 5 Converted all Converting Cancelled 2020 Received Considering Class B shares to From LLC to LNG supply debt rating dividend Class A shares C Corporation contracts 6
Slide 7: Corporate Actions: Converting Shares & Corporate Structure
Executive Summary Corporate Actions: Converting Shares & Corporate Structure 1 2 Converted all Converting from Class B shares to Class A shares LLC to C Corporation • Allowed substantial increase in investment • Can now be included in major indices such as by current shareholders: S&P, FTSE Russell
Slide 8: Corporate Actions: Gas Supply & Debt Rating
Executive Summary Corporate Actions: Gas Supply & Debt Rating 3 4 Cancelled 2020 LNG supply contracts Received debt rating • Paid $105mm to cancel remaining 2020 • Received rating of B+/B1 on existing facility cargoes – can now purchase cheaper supply • Begins process to Investment Grade rating(13)
Slide 9: Corporate Actions: Considering Dividend
Executive Summary Corporate Actions: Considering Dividend Our long-term capital structure is expected to be highly cash flow generative with low leverage; by 2022, it is our goal to have more cash than we can invest 5 After refinancing our debt at lower interest rates, we will 20-25% Adjustments con
Slide 10: Corporate Actions + Units 5/6 Complete Our Transition to Operating Company
Executive Summary Corporate Actions + Units 5/6 Turning On Complete Our Transition From Start-Up to Operating Company Illustrative Annualized Operating Margin Goal from existing facilities is ~$400mm+; Mexico & Nicaragua (Operational(18) by end of year) add ~$150mm 1.9mm GPD at YE 2020; 3.4mm GPD wi
Slide 11: Agenda
1. Executive Summary 2. Operational Update 3. Development Update 4. New Business 5. Focus on Gas 6. Hydrogen Update 7. Financial Performance 8. Appendix 11
Slide 12: Committed Volumes at Run-Rate Across Operational Facilities
Operational Update Committed Volumes(21) at Run-Rate Across Operational Facilities Montego Bay Old Harbour Jamalco CHP San Juan Facility Jamaica Jamaica Jamaica Puerto Rico Run-Rate Volume (GPD) 400k 760k* 265k 863k Available Capacity (GPD)(22) 340k 5.2mm 265k 1.8mm Customers Served 16 3 2 5 *includ
Slide 13: Operational Asset Performance
Operational Update Operational Asset Performance Achieved “three zeros” for HSE incidents for operating assets(23) Health, Safety, & Zero (0) days away from work incidents Environment (“HSE”) 0 Zero (0) recordables for health or process safety Zero (0) spills or environmental containment loss
Slide 14: Agenda
1. Executive Summary 2. Operational Update 3. Development Update 4. New Business 5. Focus on Gas 6. Hydrogen Update 7. Financial Performance 8. Appendix 14
Slide 15: How Our Business Operates Today
Development Update How Our Business Operates Today Our business requires a seamless marriage of: gas supply, logistics, infrastructure, transportation & power Type of Port Onshore (Montego Bay, San Juan) Our First Innovation Prior to NFE (5 years ago) large offshore storage vessel small shuttle vess
Slide 16: Our Next Phase: Delivery in 3-6 Months vs. 24 Months
Development Update Our Next Phase: Delivery in 3-6 Months vs. 24 Months Our latest infrastructure solution dramatically reduces project timelines and costs by 50%+ (27) Our Proprietary ISO Flex System ISO containers • Big ship directly to ISO storage containers on small offshore support vessels (“OS
Slide 17: La Paz Terminal, Baja California Sur, Mexico
Development Update La Paz Terminal, Baja California Sur, Mexico NFE’s power plant will capture the highest power prices in Mexico(30) Status Update Site Works Construction works have commenced at the terminal Dredging Dredging works on the site have been completed Power First Gas(31) Run-Rate Volume
Slide 18: Nicaragua Terminal, Puerto Sandino, Nicaragua
Development Update Nicaragua Terminal, Puerto Sandino, Nicaragua Will supply our 300 MW power plant underpinned by a 25-year PPA Status Update Permits Materially advanced the permitting process; expect to be fully permitted to construct by end of Q3(32) Design Full conceptual design completed on ent
Slide 19: Agenda
1. Executive Summary 2. Operational Update 3. Development Update 4. New Business 5. Focus on Gas 6. Hydrogen Update 7. Financial Performance 8. Appendix 19
Slide 20: Our Growth Prospects Are Compelling
New Business Our Growth Prospects Are Compelling We have over ten projects in our pipeline across the globe 10+ projects in pipeline NFE project pipeline regions 20
Slide 21: New Business Economics
New Business New Business Economics $250-$300mm project costs yield ~$100-$200mm Illustrative Annualized Operating Margin Goal Average annualized operating margin goal 1,200 Illustrative Economics 1,050 300 MW (average solution) 900 ($ in mm’s) $250 – $300mm project 750 costs(34) $100 – $200mm Illus
Slide 22: Agenda
1. Executive Summary 2. Operational Update 3. Development Update 4. New Business 5. Focus on Gas 6. Hydrogen Update 7. Financial Performance 8. Appendix 22
Slide 23: Gas Prices are Both the Biggest Threat and Biggest Opportunity
Focus on Gas Gas Prices are Both the Biggest Threat and Biggest Opportunity for Our Business Gas and Diesel prices impacted by oversupply and COVID-19 demand hit(37) Gas market is oversupplied with US gas inventories 15% higher than the $30 5-year average $25 But gas rig activity has declined $20 60
Slide 24: Current Supply Situation for Projected Committed Volumes
Focus on Gas Current Supply Situation for Projected Committed Volumes(38) 2020 2021 2022-2025 Purchased 12 Cargoes 36 Cargoes 2 Cargoes Cargoes Short 6 Cargoes 21 Cargoes 100 Cargoes Cargoes (67% open) (64% open) (73% open) On average, we are short 71% of projected committed volumes from existing &
Slide 25: Agenda
1. Executive Summary 2. Operational Update 3. Development Update 4. New Business 5. Focus on Gas 6. Hydrogen Update 7. Financial Performance 8. Appendix 25
Slide 26: Hydrogen Update
Hydrogen Update Update on our mission to We want to participate in bringing the cost of green hydrogen down to $1/kg, which is equivalent to ~$7.50/MMBtu natural gas $1/kg 90+ ~5 ~3 Green hydrogen Proposals Viable proof Potential evaluated of concept breakthrough projects technology Potential to sig
Slide 27: Agenda
1. Executive Summary 2. Operational Update 3. Development Update 4. New Business 5. Focus on Gas 6. Hydrogen Update 7. Financial Performance 8. Appendix 27
Slide 28: Financial Performance
Financial Performance Financial Performance Operating Results Financial Metrics Volumes: Increased 223k GPD largely due to PR QoQ Q1 2020 Q2 2020 commissioning gas and full quarter volumes in Jamalco CHP Change Volumes Sold, Average (k GPD) 755 978 223 Revenue: Increase of $20mm on higher volumes at
Slide 29: Illustrative Operating Margin Goal from Committed Volumes
Financial Performance Illustrative Operating Margin Goal from Committed Volumes (42) As Committed Volumes become Operational, revenue & Illustrative Operating Margin Goal are expected to increase substantially Illustrative Annualized Operating Margin Goal $569 $568 $600 $542 $500 $500 $439 $400 $321
Slide 30: Capital Plan
Financial Performance Capital Plan Capital plan fully funds committed projects, provides additional liquidity for pipeline projects, and returns capital to shareholders Received B+/B1 Issue 5-year Considering credit rating for debt at lower quarterly existing facility interest rate dividend than cur
Slide 31: Agenda
1. Executive Summary 2. Operational Update 3. Development Update 4. New Business 5. Focus on Gas 6. Hydrogen Update 7. Financial Performance 8. Appendix 31
Slide 32: Operating Margin Reconciliation
Appendix Operating Margin Reconciliation (in thousands) Q2-19 Q1-20 Q2-20 Net income/(loss) $ (51,233) $ (60,055) $ (166,519) Add: Contract termination charges and loss on mitigation sale - 208 123,906 Selling, general and administrative 32,169 28,370 31,846 Depreciation and amortization 2,110 5,254
Slide 33: 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 reg
Slide 34: Endnotes
Endnotes Certain of the below Endnotes include forward-looking statements. Please see our note regarding “Forward-Looking Statements” on the slide titled “Disclaimers” of this Investor Update (the “Presentation”). Please evaluate this Presentation in connection with the risk factors in our public re
Slide 35: Endnotes
Endnotes – (3) “pipeline” or “In Discussion” refers to potential customers (i) with whom we are in active negotiations, (ii) for whom there is a request for proposals or competitive bid process, or (iii) for whom we anticipate a request for proposals or competitive bid process will soon be announced
Slide 36: Endnotes
Endnotes – (13) Refers to the corporate family credit rating that NFE received from Moody’s and S&P. There can be no assurance that NFE will become an investment grade company on the timeline that we expect or at all. There are many factors that impact borrowing costs and our ability to refinance ou
Slide 37: Endnotes
Endnotes – (19) “Illustrative Adj. EBITDA Goal” means our goal for Adj. EBITDA under certain illustrative conditions, presented on a run rate basis by multiplying the Illustrative Adj. EBITDA Goal average volume we expect to sell in the last quarter of the relevant period by four. – “Adj. EBITDA” is
Slide 38: Endnotes
Endnotes – (24) “Availability” means the percentage of time the NFE facility is operable less NFE planned downtime for our Montego Bay Facility, Miami Facility, Old Harbour Facility and San Juan Facility year to date through July 29, 2020. There can be no assurance that other facilities, future faci
Slide 39: Endnotes
Endnotes – (34) These illustrative project costs are management’s internal estimates of construction and development costs related to our total projects, including the ISO Flex System along with the development or conversion of a natural gas power plant. These costs do not include all costs included