New Fortress Energy Inc. · NASDAQ:NFE
New Fortress Energy — Q2 2023 Earnings Presentation
42 slides from New Fortress Energy's earnings presentation, August 2023
Slide 1: Q2 2023 Investor Presentation
August 2023 Q2 2023 Investor Presentation
Slide 2: Agenda
1. Executive Summary 2. Construction Update 3. Capacity & Customers 4. Customers & Terminals Update 5. Financial Results 6. Appendix 2
Slide 3: Quarterly financial results & Guidance
Executive Summary Quarterly financial results & Guidance(1) Achieved strong earnings for 1H 2023 1H23 Adj. EBITDA(2) is $145mm higher than 1H22 Adj. EBITDA(2) 1H 2022 Adj. EBITDA(2) 1H 2023 Q1 2022 $258mm Q1 2023 $440mm Q2 2023 earnings down from Q2 2022 $283mm Q2 2023 $246mm Q1 primarily due to low
Slide 4: Capital invested to date translates to strong earnings
Executive Summary Capital(8) invested to date translates to strong earnings Adj. EBITDA(2)(6) expected to significantly increase as projects enter service(10) & capex(8) declines Adj. EBITDA(2)(6) growth and capex(8) decline expected ~$7bn invested(8) as $3.2bn(8) of projects enter service(10) in 2H
Slide 5: We are at an inflection point as $3.2bn of infrastructure comes online
Executive Summary We are at an inflection point as $3.2bn of infrastructure(8) comes online(10) in the next ~90 days(11) Significant number of projects expected to come online(10) in next few months(11) $3.2bn of Project Description Investment(8) Expected(11) COD(10) infrastructure(8) FLNG 1 1.4 MTP
Slide 6: Increasing infrastructure capacity drives growth in volumes & earnings
Executive Summary Increasing infrastructure capacity drives growth in volumes & earnings Our investments(8) in LNG & power …which in turn creates …and leads to significant infrastructure create massive capacity at our terminals growth in volumes & Adj. downstream opportunities… around the world… EBI
Slide 7: Agenda
1. Executive Summary 2. Construction Update 3. Capacity & Customers 4. Customers & Terminals Update 5. Financial Results 6. Appendix 7
Slide 8: FLNG 1 is mechanically complete, being installed & expect COD in 60 days
Construction Update FLNG 1 is mechanically complete(15), being installed & expect COD(10) in 60 days(11) FLNG 1 consists of 3 platforms Platform I Platform II Platform III Function: Gas treatment Function: Liquefaction Function: Power & people Ready September 1st(11) Ready September 10th (11) Onsite
Slide 9: Fast LNG's rapid development & deployment generates significant value
Construction Update Fast LNG’s rapid development & deployment(10) generates significant value Deploying(10) FLNG now creates significant value vs. the market (~$1.5bn (16) over 3 years) $18.00 Forward TTF Curve $16.00 $14.00 FLNG produces LNG at significant cost savings to $12.00 market over the nex
Slide 10: Agenda
1. Executive Summary 2. Construction Update 3. Capacity & Customers 4. Customers & Terminals Update 5. Financial Results 6. Appendix 10
Slide 11: Calculating the capacity of NFE's LNG terminals
Capacity & Customers Calculating the capacity of NFE’s LNG terminals Calculating the annual capacity of NFE’s MoBay terminal Montego Bay, Jamaica Storage Capacity m³ 8,000 First gas(17): Q4 2016 (x) Weekly Reloads Reloads/week 2 Capacity: 8,000m³ of onshore storage (=) Weekly Capacity m³ 16,000 • LN
Slide 12: Terminal capacity increasing >100% by YE 2024
Capacity & Customers Terminal capacity increasing >100% by YE 2024(13) ~18 MTPA of LNG terminal capacity by YE 2024(13) Rule of thumb: ~50 TBtu = 1 tonne Capacity TBtu MTPA Mobay 20 0 Old Harbour 150 3 Utilization Puerto Rico (Current) 65 1 2020 2021 2022 2023(13) 2024(13) Mexico 150 3 Puerto Rico (
Slide 13: Continued growth in utilization & capacity drive earnings growth & quality
Capacity & Customers Continued growth in utilization & capacity drive earnings growth & quality Two pathways to accelerate growth: 1. increasing utilization & 2. entering new markets Additional terminal infrastructure Increased utilization & organic growth Continue to develop LNG terminals to meet e
Slide 14: Agenda
1. Executive Summary 2. Construction Update 3. Capacity & Customers 4. Customers & Terminals Update 5. Financial Results 6. Appendix 14
Slide 15: We have been investing in Puerto Rico since 2017
Customers & Terminals Update We have been investing in Puerto Rico since 2017 Our goal has always been to partner with Puerto Rico to deliver critical energy infrastructure solutions 2017 New Fortress Energy first came to Puerto Rico after Hurricane Maria devastated the island & began developing our
Slide 16: In 2021, PREPA, Puerto Rico's utility, began privatization
Customers & Terminals Update In 2021, PREPA, Puerto Rico’s utility, began privatization In 2021, PREPA issued an RFP to take over operations of its assets(i) We won the RFP & GeneraPR, our subsidiary, Viaducto took over from PREPA on July 1(19) Isla Grande G.I.S. Vega Baja Hato Rey Victoria Barcelon
Slide 17: U.S. government is very focused on creating a clean, resilient power grid in Puerto Rico
Customers & Terminals Update U.S. government is very focused on creating a clean, resilient power grid in Puerto Rico Cooperation between Focus of funds in 3 primary areas DOE, FEMA & Army Corps 1 Grid resilience Have allocated $30bn federal funds(i) 2 Short & long-term gas & power for the Recovery
Slide 18: In late 2022, in the wake of Hurricane Fiona, FEMA called for 350 MW
Customers & Terminals Update In late 2022, in the wake of Hurricane Fiona, FEMA called for 350 MW(20) of emergency power to help stabilize the grid We won the RFP to supply all of the turbines and gas for 350 MW(20) FEMA stepped in & issued an RFP for two emergency power installations(20) 1 Palo Sec
Slide 19: Several ways NFE can help the U.S. government reach their goals
Customers & Terminals Update There are several ways NFE can help the U.S. government reach their goals 1. Help provide the island 2. Help supply any conversions 3. Participate in any with short-term power(20) of existing oil/diesel power long-term power solution plants(i) 150 MW in Palo Seco ~ 5 mil
Slide 20: Agenda
1. Executive Summary 2. Construction Update 3. Capacity & Customers 4. Customers & Terminals Update 5. Financial Results 6. Appendix 20
Slide 21: Realized $246mm of Adj. EBITDA for Q2-23
Financial Results Realized $246mm of Adj. EBITDA(2) for Q2-23 Q1 2023 Q2 2023 QoQ Δ NFE completed 2 Total Seg. Revenue ($mm) $601 $561 ($40) financings in the past 60 days, thus strengthening Total Seg. Op. Margin(21) ($mm) $481 $294 ($187) our balance sheet (-) Core SG&A(2) ($mm) ($41) ($47) ($6) A
Slide 22: Agenda
1. Executive Summary 2. Construction Update 3. Capacity & Customers 4. Customers & Terminals Update 5. Financial Results 6. Appendix 22
Slide 23: Several additional construction projects in progress
Appendix – Construction Update Several additional construction projects in progress(24) Project Description Expected(11) COD(10) Ireland 400 MW power plant October 2026 Barcarena power 605 MW power plant July 2025 FLNG 2 & 3 1.4 MTPA liquefier March 2025 23
Slide 24: ZeroParks: A pure-play, green hydrogen infrastructure company
Appendix - Hydrogen Update ZeroParks: A pure-play, green hydrogen infrastructure company We’ve laid out a simple and effective business model to develop a leading green 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. d
Slide 25: Beaumont (ZeroPark 1) operational updates are gaining momentum
Appendix - Hydrogen Update Beaumont (ZeroPark 1) operational updates are gaining momentum Advancing one of the largest green hydrogen projects in North America In Q2 2H23 & beyond ~$55mm of run-rate, annualized EBITDA(6) by 2025(11) Technology Funding Agile development signed agreement for $100mm, a
Slide 26: Update: Inflation Reduction Act of 2022
Appendix - Hydrogen Update Update: Inflation Reduction Act of 2022(25) US Treasury is due to publish its full guidance for 45V tax credit eligibility Major items to be defined by U.S. Treasury… Our expectations Treasury ruling expected next week, however the full Additionality guidance could slip in
Slide 27: What ZeroParks means for NFE shareholders
Appendix - Hydrogen Update What ZeroParks means for NFE shareholders The first independent hydrogen producer When our current pipeline of 5 projects is up & running(10) ZeroParks spin considerations Started ~3.5 years Market Production Economics Development ago; working towards tax-free ‘Megatrend’
Slide 28: Adjusted EBITDA
Appendix Adjusted EBITDA (in thousands of U.S. dollars) Q1 2022 Q2 2022 Q1 2023 Q2 2023 Net income $241,181 $(178,431) $151,566 $120,100 Add: Interest expense 44,916 47,840 71,673 64,396 Add: Tax provision (benefit) (49,681) (86,539) 28,960 15,322 Add: Contract termination charges and loss on mitiga
Slide 29: Adjusted EBITDA
Appendix Adjusted EBITDA (in thousands of U.S. dollars) FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 Net income $(32,926) $(31,671) $(78,076) $(204,319) $(263,965) $92,711 $184,786 Add: Interest expense 5,105 6,456 11,248 19,412 65,723 154,324 236,861 Add: Tax provision (benefit) (361) 52
Slide 30: Adjusted EBITDA
Appendix Adjusted EBITDA (in thousands of U.S. dollars) FY 2020 FY 2021 FY 2022 Q1 2022 Q2 2022 Q1 2023 Q2 2023 Total Segment Operating Margin $125,302 $746,430 $1,250,293 $300,083 $327,448 $480,817 $293,834 Less: Core SG&A 91,980 137,144 174,410 40,960 42,040 41,067 47,381 Less: Pro rata share of C
Slide 31: Adjusted EBITDA
Appendix Adjusted EBITDA (in thousands of U.S. dollars) FY 2020 FY 2021 FY 2022 Q1 2022 Q2 2022 Q1 2023 Q2 2023 Total Selling, general and administrative $120,142 $199,881 $236,050 $48,041 $50,310 $52,138 $55,803 Core SG&A 91,980 137,144 174,410 40,960 42,040 41,067 47,381 SG&A items excluded from C
Slide 32: Segment operating margin reconciliation
Appendix Segment operating margin reconciliation Three Months Ended June 30, 2023 (in thousands of $) Terminals and Total Segment Consolidation Consolidated Ships Infrastructure and Other (2) Total revenues 495,504 65,841 561,345 — 561,345 Cost of sales (1) 222,371 — 222,371 3,397 225,768 Vessel ope
Slide 33: Segment operating margin reconciliation
Appendix Segment operating margin reconciliation Three Months Ended March 31, 2023 (in thousands of $) Terminals and Total Segment Consolidation Consolidated Ships 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 34: Segment operating margin reconciliation
Appendix Segment operating margin reconciliation Three Months Ended June 30, 2022 (in thousands of $) Terminals and Total Segment Consolidation and Consolidated Ships (2) Infrastructure (1) 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 35: Segment operating margin reconciliation
Appendix Segment operating margin reconciliation Year Ended December 31, 2022 (in thousands of $) Terminals and Total Segment Consolidation and Consolidated Ships (2) Infrastructure (1) Other (3) Total revenues 2,168,565 444,616 2,613,181 (244,909) 2,368,272 Cost of sales 1,142,374 — 1,142,374 (131,
Slide 36: Segment operating margin reconciliation
Appendix Segment operating margin reconciliation Year Ended December 31, 2021 (in thousands of $) Terminals and Total Segment Consolidation and Consolidated Ships (2) Infrastructure (1) 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: Adjusted Net Income and EPS
Appendix Adjusted Net Income and EPS (in thousands of U.S. dollars except for share amounts) Q1 2023 Q2 2023 Net income (loss) attributable to stockholders (GAAP) 150,206 119,248 Non-cash impairment charges, net of tax — — Loss on disposal of investment in Hilli LLC 37,401 — Adjusted net income (Non
Slide 38: 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 39: 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. The guidance is not based on the Company’s historical operating results, which are limited, and is provided for illustrative purpo
Slide 40: Endnotes
Endnotes 7. “Illustrative Adjusted Net Income Guidance” reflects our Illustrative Total Segment Operating Margin, excluding interest expenses from our debt facilities assuming a weighted average interest rate of 9.39% on $6.2bn pro forma outstanding debt offset by capitalized income of approximately
Slide 41: Endnotes
Endnotes 13. Based on management’s expectations on completion and start of commercial operations of the Company’s terminals consistent with designed storage capacity and the number of loadings per year for any one terminal. Actual results could differ materially from the illustration and there can b
Slide 42: Endnotes
Endnotes 24. “Under Construction”, “Development,” “In Development” or similar statuses means that we have taken steps and invested money to develop a facility, including execution of agreements for the development of the project (subject, in certain cases, to satisfaction of conditions precedent), p