New Fortress Energy Inc. (Nasdaq: NFE) (“NFE” or the “Company”)
today reported its financial results for the third quarter of
2023.
Summary Highlights
- Adjusted EBITDA(1) of $208 million in the third quarter of 2023
and $895 million in the first nine months of 2023
- Net income of $62 million in the third quarter of 2023 and $334
million in the first nine months of 2023
- Adjusted EPS(2) of $0.30 on a fully diluted basis in the third
quarter of 2023 and $1.78(2) in the first nine months of 2023
- Achieved several milestones since the second quarter of
2023
- transitioned earnings from predominantly open cargos to nearly
100% contracted downstream assets(3);
- operated 150 MW in Palo Seco, Puerto Rico at 98% utilization,
and placed another 200+ MW into service in San Juan, Puerto Rico in
September at near full utilization(4);
- completed sailaway, installation, and First Gas(5) for our
first FLNG asset located offshore Altamira, Mexico;
- signed FSRU charter to start operations in Santa Catarina in
January 2024(6);
- achieved COD(4) at our 135 MW power plant in La Paz;
- signed definitive documents for up to $575 million in
asset-based financing to fully fund remaining construction(7) for
our 630 MW Barcarena power plant, which is currently 37% completed
and on-schedule for COD(4) in the third quarter of 2025(6);
- Expecting an increase in earnings and decrease in capex
beginning in the fourth quarter of 2023 as we place approximately
$3.0 billion of invested capital(8) projects online(4)
- Identified approximately $1 billion of non-core asset sales(9)
to support deleveraging
- Illustrative Adjusted EBITDA Goals(10) for 2023 and 2024
reiterated at $1.6 billion and $2.4 billion, respectively(10), with
more than 85% of 2024 Illustrative Adjusted EBITDA Goals(10)
generated from core downstream infrastructure(3)
- Corporate strategy continues to focus on operations, cash
generation, and deleveraging
"Our transition to core infrastructure has begun as nearly 100%
of third quarter earnings came from contracted downstream assets.
We have visibility into downstream earnings growth given the recent
commencement of operations at our second power plant in Puerto Rico
combined with the start-up of our first FLNG unit and Brazilian
terminal and power plant. With lower capital expenditures and an
estimated $1 billion in non-core asset sales, we are in an
incredible position to deleverage and focus on high return organic
growth opportunities," said Wes Edens, NFE president and chief
executive officer.
Earnings Composition
- Composition of earnings is transitioning as nearly 100% of
third quarter Adjusted EBITDA was generated by contracted
downstream assets; we expect more than 85% of 2024 Illustrative
Adjusted EBITDA Goals(10) will be generated from core
infrastructure(3)
Puerto Rico
- Operated(4) 150 MW of power at our Palo Seco, Puerto Rico
location at approximately 98% utilization since May 2023 COD, and
placed another 200+ MW into service in San Juan, Puerto Rico in
September at near full utilization within first week of COD(6)
Fast LNG
- Completed sailaway, installation, and First Gas(5) for our
first FLNG asset in offshore Altamira, Mexico; First LNG(5) and
COD(4) expected by the end of the fourth quarter 2023
Terminals and Power
- Signed FSRU charter with Petrobras to start operations in Santa
Catarina in January 2024(6); Santa Catarina is expected to serve a
significantly undersupplied gas power market in southern
Brazil
- La Paz power plant achieved COD(4) in the third quarter of
2023(6)
- Barcarena terminal is complete with First Gas(5) to Norsk
Hydro(12) on schedule for end of year 2023(6) upon the arrival of
our FSRU, which is currently being converted from an LNG
carrier
- Construction(7) of our 630 MW power plant at Barcarena is 37%
completed(4) pursuant to a fixed-price, date-certain EPC contract
with Mitsubishi and Toyo Setal; Operations(4) are expected to
commence in the third quarter of 2025(6) pursuant to 25-year PPAs
with Brazilian distribution companies
Hydrogen (ZeroParks)
- Entered into a definitive hydrogen supply agreement with OCI
Global in September for 100% of our first project's output; this
agreement allows us to expand the scope of our first project from
100 MW to 200 MW, with first bubbles(4) expected in the fourth
quarter of 2024(6), phase 1 COD(4) of 100 MW in the first quarter
of 2025(6), and phase 2 COD(4) of another 100 MW by year end
2025(6)
- Signed a definitive agreement with Electric Hydrogen Co. (EH2)
for the supply of EH2’s flagship PEM electrolysis technology
- We have several other U.S. green hydrogen projects in various
stages of Development(7) with a focus on sites with strategic
logistics, low-cost power, and strong regional hydrogen demand
Financing
- In October, we closed a $856 million term loan at an interest
rate of SOFR + 5.00%, which was used to repay the $400 million term
loan with Morgan Stanley and for general corporate purposes
- In November, we closed $575 million of asset level debt for the
construction of our Barcarena power plant
Dividend
- Common dividend(14) of $0.10 per share expected to be
maintained
- On November 7, 2023, NFE’s Board of Directors approved a
dividend of $0.10 per share, with a record date of December 13,
2023 and a payment date of December 27, 2023
Financial Highlights
Three Months Ended
(in millions)
June 30, 2023
September 30, 2023
Revenues
$
561.3
$
514.5
Net income
$
120.1
$
62.3
Diluted EPS
$
0.58
$
0.30
Adjusted net income(15)
$
119.2
$
61.2
Adjusted EPS(2)
$
0.58
$
0.30
Terminals and Infrastructure Segment
Operating Margin(16)
$
239.4
$
194.7
Ships Segment Operating Margin(16)
$
54.4
$
54.9
Total Segment Operating Margin(16)
$
293.8
$
249.7
Adjusted EBITDA(1)
$
246.5
$
208.4
Please refer to our Q3 2023 Investor Presentation (the
“Presentation”) for further information about the following
terms:
1)“Adjusted EBITDA,” see definition and reconciliation of this
non-GAAP measure in the exhibits to this press release.
2) “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 liquidity derived in
accordance with GAAP. We calculate Adjusted EPS as Adjusted Net
Income (Note 16 below) divided by the weighted average shares
outstanding on a fully diluted basis for the period indicated. We
believe this non-GAAP measure, as we have defined it, offers a
useful supplemental view of the overall evaluation of the Company
in a manner that is consistent with metrics used for management’s
evaluation of the Company’s overall performance. Adjusted EPS does
not have a standardized meaning, and different companies may use
different definitions. Therefore, this term may not be necessarily
comparable to similarly titled measures reported by other
companies.
3) “Downstream assets” or “contracted downstream assets” or
“contracted terminals” represents all our earnings, revenues and
all other financial metrics related to our Ships Segment and
Terminals and Infrastructure Segment, excluding cargo sales and
certain derivative transactions that we believe are associated with
cargo sales.
4) “Online”, “Operational”, "Operating", "Completion",
"Completed", “COD” or “commercial operation date”, “Deployment” or
similar statuses (either capitalized or lower case) with respect to
a particular project means we expect gas to be made available in
the near future, gas has been made available to the relevant
project, or that the relevant project is in full commercial
operations. Where gas is going to be made available or has been
made available but full commercial operations have not yet begun,
full commercial operations will occur later than, and may occur
substantially later than, our reported Operational, Completion or
Deployment date, and we may not generate any revenue until full
commercial operations have begun. We cannot assure you if or when
such projects will reach full commercial operation. Our ability to
export liquefied natural gas depends on our ability to obtain
export and other permits from governmental and regulatory agencies.
No assurance can be given that we will receive required permits,
approvals and authorizations from governmental and regulatory
agencies in connection with the exportation of liquefied natural
gas on a timely basis or at all or that, once received, we will be
able to maintain in full force and effect, renew or replace such
permits, approvals and authorizations.
5) “First Gas” or “First LNG” refers to the date on which (or,
for future dates, management's current estimate of the date on
which) natural gas and/or LNG is expected for a project, including
a facility in development. Full commercial operation of such
project will occur later than, and may occur substantially later
than, the date of first gas or first LNG. We cannot assure you if
or when such projects will reach the date of delivery of first gas
or LNG, or full commercial operations.
6) Lead times and expected development times used in this
Presentation indicate our internal evaluations of a project’s
expected timeline. They refer to us completing certain stages of
projects within a timeframe and within a spectrum of budget
parameters that, when taken as a whole, are substantially
consistent with our business model. These timeframes include
assumptions regarding items that are outside our control, including
permitting, weather, supply of equipment and materials, and other
potential sources of delay. To the extent that projects have not
yet started or are currently under development, we can make no
assurance that such projects are on track within the timeline
parameters we establish. Additionally, the construction of
facilities is inherently subject to the risks of cost overruns and
delays. If we are unable to construct, commission, complete and
operate any of our facilities as expected, or, when and if
constructed, any of them do not accomplish our goals, estimates
regarding timelines, budget and savings could be materially and
adversely affected.
7) “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), procuring land rights and
entitlements, negotiating or signing construction contracts, and
undertaking active engineering, procurement and construction work.
Our development projects are in various phases of progress, and
there can be no assurance that we will continue progress on each
development as we expect or that each development will be Completed
or enter full commercial operations. There can be no assurance that
we will be able to enter into the contracts required for the
development of these facilities on commercially favorable terms or
at all. If we are unable to enter into favorable contracts or to
obtain the necessary regulatory and land use approvals on favorable
terms, we may not be able to construct these assets as expected, or
at all. Additionally, the construction of facilities is inherently
subject to the risks of cost overruns and delays.
8) For future periods, Capex or net Capex reflects management’s
estimate of total expected cash payments in such period less cash
proceeds received by the Company for related asset sales or direct
asset financings. Investors are encouraged to review the related
GAAP financial measures, and not to rely on any single financial
measure to evaluate our business. “Gross capex” includes all
expected cash payments in such period without deducting related
asset sales or direct asset financings.
9) Represents management's current assumptions related to the
ability to complete non-core asset sales of approximately $1.0
billion in the next 12 months. Actual circumstances could differ
materially from the assumptions, and actual performance and results
could differ materially from, and there can be no assurance that
they will reflect, our corporate goal.
10) “Illustrative Adjusted EBITDA Goal” means our
forward-looking goal for Adjusted EBITDA for the relevant period
and is based on the "Illustrative Total Segment Operating Margin
Goal" less illustrative Core SGA assumed to be at $160mm for all
periods 2024 onward including the pro rata share of Core SG&A
from unconsolidated entities. For the purpose of this presentation,
we have assumed an average Total Segment Operating Margin between
$8.79 and $12.58 per MMBtu for all downstream terminal economics,
because we assume that (i) we purchase delivered gas at a weighted
average of $7.41 in 2023 and $7.03 in 2024, (ii) our volumes
increase over time, and (iii) we will have costs related to
shipping, logistics and regasification similar to our current
operations because the liquefaction facility and related
infrastructure and supply chain to deliver LNG from Pennsylvania or
Fast LNG (“FLNG”) does not exist, and those costs will be
distributed over the larger volumes. For our Brazil assets we
assume an average delivered cost of gas of $14.66 in 2023 based on
industry averages in the region. Illustrative Adjusted EBITDA
figures for the fiscal year ended 2023 assume that we generate at
least $200 million on gain from Asset Sales in the fiscal year
ended 2023 and Illustrative Adjusted EBITDA figures for the fiscal
year ended 2024 assume that we generate at least $100 million on
gain from Asset Sales in the fiscal year ended 2024. We cannot
provide assurance that we will be able to achieve this result. We
assume all Brazil terminals and power plants are Operational and
earning revenue through fuel sales and capacity charges or other
fixed fees. For Vessels chartered to third parties, this measure
reflects the revenue from those charters, capacity and tolling
arrangements, and other fixed fees, less the cost to operate and
maintain each ship, in each case based on contracted amounts for
ship charters, capacity and tolling fees, and industry standard
costs for operation and maintenance. We assume an average Total
Segment Operating Margin of up to $164k per day per vessel. For
Fast LNG, this measure reflects the difference between the
delivered cost of open LNG and the delivered cost of open market
LNG less Fast LNG production cost. These costs do not include
expenses and income that are required by GAAP to be recorded on our
financial statements, including the return of or return on capital
expenditures for the relevant project, and selling, general and
administrative costs. Our current cost of natural gas per MMBtu is
higher than the cost we would need to achieve Illustrative Total
Segment Operating Margin Goal, and the primary drivers for reducing
these costs are the reduced costs of purchasing gas and the
increased sales volumes, which result in lower fixed costs being
spread over a larger number of MMBtus sold. References to volumes,
percentages of such volumes and the Illustrative Total Segment
Operating Margin Goal related to such volumes (i) are not based on
the Company’s historical operating results, which are limited, and
(ii) do not purport to be an actual representation of our future
economics. Actual circumstances could differ materially from the
assumptions, and actual performance and results could differ
materially from, and there can be no assurance that they will
reflect, our corporate goal.
11) Reserved
12) The contract is with a subsidiary of Norsk Hydro.
13) Reserved
14) The payment of dividends under the dividend policy will be
made at the discretion of the Board and will be subject to the
Board's final determination based on a number of factors,
including, but not limited to, the Company's financial performance,
its available cash resources, the terms of its indebtedness, its
cash requirements, credit rating impacts, alternative uses of cash
that the Board may conclude would represent an opportunity to
generate a greater return on investment for the Company, and
restrictions and other factors the Board deems relevant at the time
it determines to declare such dividends. The dividend policy may be
revised, suspended, or cancelled at the discretion of the Board at
any time.
15) “Adjusted Net Income” means Net Income attributable to
stockholders as presented in the relevant Form 10-K or Form 10-Q
for the relevant financial period as adjusted by non-cash
impairment charges or losses on disposal of our assets.
16) “Total Segment Operating Margin” is the total of our
Terminals and Infrastructure Segment Operating Margin and Ships
Segment Operating Margin. "Terminals and Infrastructure Segment
Operating Margin" included our effective share of revenue, expenses
and operating margin attributable to our 50% ownership of Centrais
Elétricas de Sergipe Participações S.A. (“CELSEPAR”) prior to the
Sergipe Sale. "Ships Segment Operating Margin" included our
effective share of revenue, expenses and operating margin
attributable to our ownership of 50% of the common units of Hilli
LLC prior to the completion of the Hilli Exchange. Hilli LLC owns
Golar Hilli Corporation (“Hilli Corp”), the disponent owner of the
Hilli.
Additional Information
For additional information that management believes to be useful
for investors, please refer to the presentation posted on the
Investors section of New Fortress Energy’s website,
www.newfortressenergy.com, and the Company’s most recent Annual
Report on Form 10-K, which is available on the Company’s website.
Nothing on our website is included or incorporated by reference
herein.
Earnings Conference Call
Management will host a conference call on Wednesday, November 8,
2023 at 8:00 A.M. Eastern Time. The conference call may be accessed
by dialing (888) 204-4368 (toll free from within the U.S.) or
+1-323-994-2093 (from outside of the U.S.) fifteen minutes prior to
the scheduled start of the call; please reference “NFE Third
Quarter 2023 Earnings Call” or conference code 2259665.
A simultaneous webcast of the conference call will be available
to the public on a listen-only basis at www.newfortressenergy.com
within the "Investors" tab under “Events & Presentations.”
Please allow extra time prior to the call to visit the website and
download any necessary software required to listen to the internet
broadcast. A replay of the conference call will be available at the
same website location shortly after the conclusion of the live
call.
About New Fortress Energy
Inc.
New Fortress Energy Inc. (Nasdaq: NFE) is a global energy
infrastructure company founded to help address energy poverty and
accelerate the world’s transition to reliable, affordable, and
clean energy. The company owns and operates natural gas and
liquefied natural gas (LNG) infrastructure and an integrated fleet
of ships and logistics assets to rapidly deliver turnkey energy
solutions to global markets. Collectively, the company’s assets and
operations reinforce global energy security, enable economic
growth, enhance environmental stewardship and transform local
industries and communities around the world.
Cautionary Statement Concerning
Forward-Looking Statements
This press release contains certain statements and information
that may constitute “forward-looking statements” within the meaning
of the Private Securities Litigation Reform Act of 1995. All
statements contained in this press release other than historical
information are forward-looking statements that involve known and
unknown risks and relate to future events, our future financial
performance or our projected business results. You can identify
these forward-looking statements by the use of forward-looking
words such as “expects,” “may,” “will,” “can,” “could,” “should,”
“predicts,” “intends,” “plans,” “estimates,” “anticipates,”
“believes,” “schedules,” “progress,” “targets,” “budgets,”
“outlook,” “trends,” “forecasts,” “projects,” “guidance,” “focus,”
“on track,” “goals,” “objectives,” “strategies,” “opportunities,”
“poised,” or the negative version of those words or other
comparable words. Forward looking statements include: our
expectation regarding raising external capital; our earnings
transition from predominantly open cargos to nearly 100% contracted
downstream; the successful development, construction, completion,
operation and/or deployment of facilities and the timing of first
gas or first LNG, including our FLNG, Brazil, Nicaragua and Puerto
Rico projects, on time, within budget and within the expected
specifications, capacity and design; our expectation regarding
increases in earnings and decreases in capital expenditures
beginning in the fourth quarter of 2023 and through 2024, our
ability to sell more than $1 billion of non-core assets; our
ability to achieve our Illustrative Adjusted EBITDA Goal including
the percentage from core downstream infrastructure as well as our
expectation regarding cargo sales; our ability to enter into an
agreement to increase volumes at our San Juan terminal as well as
complete the scheduled expansion; the status of construction of our
Barcarena power plant as well as the timing of its expected
completion; the status and timing for our expected sale of the La
Paz power plant; the status of our hydrogen projects, including the
construction of our first plant; our expectation regarding the
common dividend; and future strategic plans.; and all the
information in the exhibits to this press release. These
forward-looking statements are necessarily estimates based upon
current information and involve a number of risks, uncertainties
and other factors, many of which are outside of the Company’s
control. Actual results or events may differ materially from the
results anticipated in these forward-looking statements. Specific
factors that could cause actual results to differ from those in the
forward-looking statements include, but are not limited to: risks
related to the development, construction, completion or
commissioning schedule for the facilities; risks related to the
operation and maintenance of our facilities and assets; failure of
our third-party contractors, equipment manufacturers, suppliers and
operators to perform their obligations for the development,
construction and operation of our projects, vessels and assets; our
ability to implement our business strategy; the risk that proposed
transactions may not be completed in a timely manner or at all,
including related to the Company’s proposed Asset Sales, including
whether a market will develop for such assets and whether the
Company will be able to agree to acceptable pricing and other terms
offered by potential buyers; inability to successfully develop and
implement our technological solutions, including our Fast LNG
technology, or that we do not receive the benefits we expect from
the Fast LNG technology; cyclical or other changes in the LNG and
natural gas industries; competition in the energy industry; the
receipt of permits, approvals and authorizations from governmental
and regulatory agencies on a timely basis or at all; new or changes
to existing governmental policies, laws, rules or regulations, or
the administration thereof; failure to maintain sufficient working
capital and to generate revenues, which could adversely affect our
ability to fund our projects; adverse regional, national, or
international economic conditions, adverse capital market
conditions and adverse political developments; and the impact of
public health crises, such as pandemics (including coronavirus
(COVID-19)) and epidemics and any related company or government
policies and actions to protect the health and safety of
individuals or government policies or actions to maintain the
functioning of national or global economies and markets]. These
factors are not necessarily all of the important factors that could
cause actual results to differ materially from those expressed in
any of the Company’s forward-looking statements. Other known or
unpredictable factors could also have material adverse effects on
future results. Any forward-looking statement speaks only as of the
date on which it is made, and we undertake no duty to update or
revise any forward-looking statements, even though our situation
may change in the future or we may become aware of new or updated
information relating to such forward-looking statements. New
factors emerge from time to time, and it is not possible for the
Company to predict all such factors. When considering these
forward-looking statements, you should keep in mind the risk
factors and other cautionary statements included in New Fortress
Energy Inc.’s annual and quarterly reports filed with the
Securities and Exchange Commission, which could cause its actual
results to differ materially from those contained in any
forward-looking statement.
Exhibits – Financial Statements
Condensed Consolidated
Statements of Operations
For the three months ended
June 30, 2023 and September 30, 2023
(Unaudited, in thousands of
U.S. dollars, except share and per share amounts)
For the Three Months
Ended
June 30, 2023
September 30, 2023
Revenues
Operating revenue
$
494,619
$
420,868
Vessel charter revenue
65,840
67,287
Other revenue
886
26,307
Total revenues
561,345
514,462
Operating expenses
Cost of sales (exclusive of depreciation
and amortization shown separately below)
225,768
191,920
Vessel operating expenses
11,443
11,613
Operations and maintenance
33,697
60,819
Selling, general and administrative
55,803
49,107
Transaction and integration costs
1,554
2,739
Depreciation and amortization
42,115
48,670
Total operating expenses
370,380
364,868
Operating income
190,965
149,594
Interest expense
64,396
64,822
Other (income) expense, net
(6,584
)
(2,271
)
Income before income from equity method
investments and income taxes
133,153
87,043
Income from equity method investments
2,269
489
Tax provision
15,322
25,194
Net income
120,100
62,338
Net income attributable to non-controlling
interest
(852
)
(1,117
)
Net income attributable to
stockholders
$
119,248
$
61,221
Net income per share – basic
$
0.58
$
0.30
Net income per share – diluted
$
0.58
$
0.30
Weighted average number of shares
outstanding – basic
205,045,121
205,032,928
Weighted average number of shares
outstanding – diluted
205,711,467
205,032,928
Adjusted EBITDA
For the three months ended September 30, 2023
(Unaudited, in thousands of U.S. dollars)
Adjusted EBITDA is not a measurement of financial performance
under GAAP and should not be considered in isolation or as an
alternative to income from operations, net income, cash flow from
operating activities or any other measure of performance or
liquidity derived in accordance with GAAP. We believe this non-GAAP
measure, as we have defined it, offers a useful supplemental view
of the overall operation of our business in evaluating the
effectiveness of our ongoing operating performance in a manner that
is consistent with metrics used for management’s evaluation of the
Company’s overall performance and to compensate employees. We
believe that Adjusted EBITDA is widely used by investors to measure
a company’s operating performance without regard to items such as
interest expense, taxes, depreciation, and amortization which vary
substantially from company to company depending on capital
structure, the method by which assets were acquired and
depreciation policies. Further, we exclude certain items from our
SG&A not otherwise indicative of ongoing operating
performance.
We calculate Adjusted EBITDA as net income, plus transaction and
integration costs, contract termination charges and loss on
mitigations sales, depreciation and amortization, asset impairment
expense, interest expense, net, other (income) expense, net, loss
on extinguishment of debt, changes in fair value of non-hedge
derivative instruments and contingent consideration, tax expense,
and adjusting for certain items from our SG&A not otherwise
indicative of ongoing operating performance, including non-cash
share-based compensation and severance expense, non-capitalizable
development expenses, cost to pursue new business opportunities and
expenses associated with changes to our corporate structure, plus
our pro rata share of Adjusted EBITDA from certain unconsolidated
entities, less the impact of equity in earnings (losses) of certain
unconsolidated entities plus certain non-capitalizable contract
acquisition costs.
Adjusted EBITDA is mathematically equivalent to our Total
Segment Operating Margin, as reported in the segment disclosures
within our financial statements, minus Core SG&A, including our
pro rata share of such expenses of certain unconsolidated entities.
Core SG&A is defined as total SG&A adjusted for non-cash
share-based compensation and severance expense, non-capitalizable
development expenses, cost of exploring new business opportunities
and expenses associated with changes to our corporate structure.
Core SG&A excludes certain items from our SG&A not
otherwise indicative of ongoing operating performance.
The principal limitation of this non-GAAP measure is that it
excludes significant expenses and income that are required by GAAP
to be recorded in our financial statements. Investors are
encouraged to review the related GAAP financial measures and the
reconciliation of the non-GAAP financial measure to our GAAP net
income, and not to rely on any single financial measure to evaluate
our business. Adjusted EBITDA does not have a standardized meaning,
and different companies may use different Adjusted EBITDA
definitions. Therefore, Adjusted EBITDA may not be necessarily
comparable to similarly titled measures reported by other
companies. Moreover, our definition of Adjusted EBITDA may not
necessarily be the same as those we use for purposes of
establishing covenant compliance under our financing agreements or
for other purposes. Adjusted EBITDA should not be construed as
alternatives to net income and diluted earnings per share
attributable to New Fortress Energy, which are determined in
accordance with GAAP.
The following table sets forth a reconciliation of net income to
Adjusted EBITDA for the three months ended September 30, 2022,
March 31, 2023, June 30, 2023, and September 30, 2023:
(in thousands)
Three Months
Ended
September 30,
2022
Three Months
Ended
March 31, 2023
Three Months
Ended
June 30, 2023
Three Months
Ended
September 30,
2023
Total Segment Operating Margin
$
339,330
$
480,817
$
293,834
$
249,687
Less: Core SG&A (see definition
above)
47,290
41,067
47,381
41,289
Less: Pro rata share Core SG&A from
unconsolidated entities
1,293
14
—
—
Adjusted EBITDA (Non-GAAP)
$
290,747
$
439,736
$
246,453
$
208,398
Net income
$
56,231
$
151,566
$
120,100
$
62,338
Add: Interest expense
63,588
71,673
64,396
64,822
Add: Tax provision
9,971
28,960
15,322
25,194
Add: Depreciation and amortization
35,793
34,375
42,115
48,670
Add: SG&A items excluded from Core
SG&A
20,311
11,071
8,422
7,818
Add: Transaction and integration costs
5,620
494
1,554
2,739
Add: Other (income) expense, net
10,214
25,005
(6,584
)
(2,271
)
Add: Changes in fair value of non-hedge
derivative instruments and contingent consideration
(6,868
)
111,140
(2,835
)
(423
)
Add: Loss on extinguishment of debt,
net
14,997
—
—
—
Add: Pro rata share of Adjusted EBITDA
from unconsolidated entities
49,156
15,432
—
—
Add: Loss (income) from equity method
investments
31,734
(9,980
)
(2,269
)
(489
)
Add: Contract acquisition cost
—
—
6,232
—
Adjusted EBITDA
$
290,747
$
439,736
$
246,453
$
208,398
Segment Operating Margin
(Unaudited, in thousands of U.S. dollars)
Performance of our two segments, Terminals and Infrastructure
and Ships, is evaluated based on Segment Operating Margin. Segment
Operating Margin reconciles to Consolidated Segment Operating
Margin as reflected below, which is a non-GAAP measure. We define
Consolidated Segment Operating Margin as GAAP net income, adjusted
for selling, general and administrative expense, transaction and
integration costs, contract termination charges and loss on
mitigation sales, depreciation and amortization, asset impairment
expense, interest expense, other (income) expense, loss on
extinguishment of debt, net, (income) loss from equity method
investments and tax (benefit) expense. Consolidated Segment
Operating Margin is mathematically equivalent to Revenue minus Cost
of sales minus Operations and maintenance minus Vessel operating
expenses, each as reported in our financial statements.
Three Months Ended September
30, 2023
(in thousands of $)
Terminals and
Infrastructure (1)
Ships
Total
Segment
Consolidation
and
Other (1)
Consolidated
Segment Operating Margin
$
194,743
$
54,944
$
249,687
$
423
$
250,110
Less:
Selling, general and administrative
49,107
Transaction and integration costs
2,739
Depreciation and amortization
48,670
Interest expense
64,822
Other (income) expense, net
(2,271
)
(Income) from equity method
investments
(489
)
Tax provision
25,194
Net income
$
62,338
(1)
Consolidation and Other also
adjusts for the exclusion of the unrealized mark-to-market gain or
loss on derivative instruments in our segment measure.
Three Months Ended June 30,
2023
(in thousands of $)
Terminals and
Infrastructure (1)
Ships
Total
Segment
Consolidation
and
Other (1)
Consolidated
Segment Operating Margin
$
239,436
$
54,398
$
293,834
$
(3,397
)
$
290,437
Less:
Selling, general and administrative
55,803
Transaction and integration costs
1,554
Depreciation and amortization
42,115
Interest expense
64,396
Other (income) expense, net
(6,584
)
(Income) from equity method
investments
(2,269
)
Tax provision
15,322
Net income
$
120,100
(1)
The Company has excluded contract
acquisition costs that do not meet the criteria for capitalization
from the segment measure. Contract acquisition costs of $6,232 for
the three months ended June 30, 2023 reconcile Cost of sales in the
segment measure to Cost of sales in the condensed consolidated
statements of operations and comprehensive income (loss).
Consolidation and Other also adjusts for the exclusion of the
unrealized mark-to-market gain or loss on derivative instruments in
our segment measure.
Three Months Ended March 31,
2023
(in thousands of $)
Terminals and
Infrastructure
Ships (1)
Total
Segment
Consolidation
and
Other (2)
Consolidated
Segment Operating Margin
$
402,139
$
78,678
$
480,817
$
(126,586
)
$
354,231
Less:
Selling, general and administrative
52,138
Transaction and integration costs
494
Depreciation and amortization
34,375
Interest expense
71,673
Other (income) expense, net
25,005
(Income) from equity method
investments
(9,980
)
Tax provision
28,960
Net income
$
151,566
(1)
Ships includes our effective
share of revenues, expenses and operating margin attributable to
our 50% ownership of Hilli LLC, prior to the disposition of this
investment. The earnings attributable to the investment of $5,986
for the three months ended March 31, 2023 are reported in income
from equity method investments in the condensed consolidated
statements of operations and comprehensive income.
(2)
Consolidation and Other adjusts
for the inclusion of the effective share of revenues, expenses and
operating margin attributable to 50% ownership of Hilli LLC in our
segment measure and exclusion of the unrealized mark-to-market gain
or loss on derivative instruments.
Three Months Ended September
30, 2022
(in thousands of $)
Terminals and
Infrastructure (1)
Ships (2)
Total
Segment
Consolidation
and
Other (3)
Consolidated
Segment Operating Margin
$
251,469
$
87,861
$
339,330
$
(43,581
)
$
295,749
Less:
Selling, general and administrative
67,601
Transaction and integration costs
5,620
Depreciation and amortization
35,793
Interest expense
63,588
Other (income) expense, net
10,214
Loss from extinguishment of debt
14,997
(Income) from equity method
investments
31,734
Tax provision
9,971
Net Income
$
56,231
(1)
Terminals and Infrastructure
includes the Company's effective share of revenues, expenses and
operating margin attributable to 50% ownership of CELSEPAR. The
losses attributable to the investment of $44,559 for the three
months ended September 30, 2022 are reported in (loss) income from
equity method investments in the consolidated statements of
operations and comprehensive income (loss).
(2)
Ships includes the Company's
effective share of revenues, expenses and operating margin
attributable to 50% ownership of the Hilli Common Units. The
earnings attributable to the investment of $12,825 for the three
months ended September 30, 2022 are reported in (loss) income from
equity method investments in the condensed consolidated statements
of operations and comprehensive income (loss).
(3)
Consolidation and Other adjusts
for the inclusion of the effective share of revenues, expenses and
operating margin attributable to 50% ownership of CELSEPAR and
Hilli Common Units in our segment measure and exclusion of the
unrealized mark-to-market gain or loss on derivative
instruments.
Adjusted Net Income and Adjusted Earnings per Share
(Unaudited, in thousands of U.S. dollars)
The following table sets forth a reconciliation between net
income attributable to stockholders and earnings per share adjusted
for non-cash impairment charges and losses on disposals of
assets.
Three months ended
March 31, 2023
Three months ended
June 30, 2023
Three months ended
September 30, 2023
Nine months ended
September 30, 2023
Net income attributable to
stockholders
$
150,206
$
119,248
$
61,221
$
330,675
Non-cash impairment charges, net of
tax
—
—
—
—
Loss on disposal of investment in Hilli
LLC
37,401
—
—
37,401
Adjusted net income
$
187,607
$
119,248
$
61,221
$
368,076
Weighted-average shares outstanding -
diluted
209,325,619
205,711,467
205,032,928
206,804,833
Adjusted earnings per share
$
0.90
$
0.58
$
0.30
$
1.78
Condensed Consolidated Balance
Sheets
As of September 30, 2023 and
December 31, 2022
(Unaudited, in thousands of
U.S. dollars, except share amounts)
September 30,
2023
December 31,
2022
Assets
Current assets
Cash and cash equivalents
$
171,329
$
675,492
Restricted cash
66,162
165,396
Receivables, net of allowances of $1,133
and $884, respectively
360,820
280,313
Inventory
103,331
39,070
Prepaid expenses and other current assets,
net
164,559
226,883
Total current assets
866,201
1,387,154
Construction in progress
4,789,799
2,418,608
Property, plant and equipment, net
2,563,871
2,116,727
Equity method investments
139,058
392,306
Right-of-use assets
474,483
377,877
Intangible assets, net
67,443
85,897
Goodwill
776,760
776,760
Deferred tax assets, net
8,074
8,074
Other non-current assets, net
110,681
141,679
Total assets
$
9,796,370
$
7,705,082
Liabilities
Current liabilities
Current portion of long-term debt and
short-term borrowings
$
270,547
$
64,820
Accounts payable
892,924
80,387
Accrued liabilities
435,692
1,162,412
Current lease liabilities
142,296
48,741
Other current liabilities
169,744
52,878
Total current liabilities
1,911,203
1,409,238
Long-term debt
5,897,528
4,476,865
Non-current lease liabilities
318,082
302,121
Deferred tax liabilities, net
27,206
25,989
Other long-term liabilities
63,789
49,010
Total liabilities
8,217,808
6,263,223
Commitments and contingencies
Stockholders’ equity
Class A common stock, $0.01 par value, 750
million shares authorized, 205.0 million issued and outstanding as
of September 30, 2023; 208.8 million issued and outstanding as of
December 31, 2022
2,050
2,088
Additional paid-in capital
1,039,428
1,170,254
Retained earnings
331,282
62,080
Accumulated other comprehensive income
63,312
55,398
Total stockholders’ equity attributable
to NFE
1,436,072
1,289,820
Non-controlling interest
142,490
152,039
Total stockholders’ equity
1,578,562
1,441,859
Total liabilities and stockholders’
equity
$
9,796,370
$
7,705,082
Condensed Consolidated
Statements of Operations
For the three and nine months
ended September 30, 2023 and 2022
(Unaudited, in thousands of
U.S. dollars, except share and per share amounts)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Revenues
Operating revenue
$
420,868
$
632,684
$
1,417,175
$
1,529,999
Vessel charter revenue
67,287
92,860
209,651
260,414
Other revenue
26,307
6,386
28,112
31,490
Total revenues
514,462
731,930
1,654,938
1,821,903
Operating expenses
Cost of sales (exclusive of depreciation
and amortization shown separately below)
191,920
393,830
602,626
874,529
Vessel operating expenses
11,613
20,318
36,347
61,910
Operations and maintenance
60,819
22,033
121,187
65,691
Selling, general and administrative
49,107
67,601
157,048
165,952
Transaction and integration costs
2,739
5,620
4,787
12,387
Depreciation and amortization
48,670
35,793
125,160
106,439
Asset impairment expense
—
—
—
48,109
Total operating expenses
364,868
545,195
1,047,155
1,335,017
Operating income
149,594
186,735
607,783
486,886
Interest expense
64,822
63,588
200,891
156,344
Other (income) expense, net
(2,271
)
10,214
16,150
(31,613
)
Loss on extinguishment of debt
—
14,997
—
14,997
Income before income from equity method
investments and income taxes
87,043
97,936
390,742
347,158
Income (loss) from equity method
investments
489
(31,734
)
12,738
(354,426
)
Tax provision (benefit)
25,194
9,971
69,476
(126,249
)
Net income
62,338
56,231
334,004
118,981
Net (income) loss attributable to
non-controlling interest
(1,117
)
5,617
(3,329
)
11,371
Net income attributable to
stockholders
$
61,221
$
61,848
$
330,675
$
130,352
Net income per share – basic
$
0.30
$
0.30
$
1.60
$
0.62
Net income per share – diluted
$
0.30
$
0.29
$
1.59
$
0.62
Weighted average number of shares
outstanding – basic
205,032,928
209,629,936
206,249,474
209,749,139
Weighted average number of shares
outstanding – diluted
205,032,928
209,800,427
206,804,833
209,869,058
Condensed Consolidated
Statements of Cash Flows
For the nine months ended
September 30, 2023 and 2022
(Unaudited, in thousands of
U.S. dollars)
Nine Months Ended September
30,
2023
2022
Cash flows from operating
activities
Net income
$
334,004
$
118,981
Adjustments for:
Depreciation and amortization
125,853
107,185
(Earnings) losses of equity method
investees
(12,738
)
354,426
Dividends received from equity method
investees
5,830
23,195
Change in market value of derivatives
(2,672
)
(6,700
)
Deferred taxes
1,217
(203,026
)
Asset impairment expense
—
48,109
Earnings recognized from vessels chartered
to third parties transferred to Energos
(112,608
)
(14,341
)
Loss on the disposal of equity method
investment
37,401
—
Loss on extinguishment of debt
—
14,997
Loss on sale of net investment in
lease
—
11,592
Other
2,211
15,464
Changes in operating assets and
liabilities:
(Increase) in receivables
(86,743
)
(287,748
)
(Increase) in inventories
(29,238
)
(28,078
)
Decrease (Increase) in other assets
56,512
(93,329
)
Decrease in right-of-use assets
68,360
51,265
Increase (decrease) in accounts
payable/accrued liabilities
73,211
(10,487
)
Increase (decrease) in amounts due to
affiliates
1,613
(3,220
)
(Decrease) in lease liabilities
(56,908
)
(47,237
)
Increase in other liabilities
131,879
40,057
Net cash provided by operating
activities
537,184
91,105
Cash flows from investing
activities
Capital expenditures
(2,191,605
)
(787,166
)
Sale of equity method investment
100,000
—
Proceeds from sale of net investment in
lease
—
593,000
Other investing activities
26,043
(1,794
)
Net cash used in investing
activities
(2,065,562
)
(195,960
)
Cash flows from financing
activities
Proceeds from borrowings of debt
1,768,715
1,932,020
Payment of deferred financing costs
(18,064
)
(16,093
)
Repayment of debt
(104,530
)
(1,518,471
)
Payments related to tax withholdings for
share-based compensation
(9,519
)
(72,597
)
Payment of dividends
(700,440
)
(75,149
)
Other financing activities
(12,090
)
—
Net cash provided by financing
activities
924,072
249,710
Impact of changes in foreign exchange
rates on cash and cash equivalents
923
(4,896
)
Net (decrease) increase in cash, cash
equivalents and restricted cash
(603,383
)
139,959
Cash, cash equivalents and restricted
cash – beginning of period
855,083
264,030
Cash, cash equivalents and restricted
cash – end of period1
$
251,700
$
403,989
______________________________
1 Cash and cash equivalents includes
$14,209, which has been classified as assets held for sale and
included in the Other non-current assets on the condensed
consolidated balance sheets.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231108871619/en/
Investor Relations: Chance
Pipitone ir@newfortressenergy.com
Media Relations: Ben Porritt
press@newfortressenergy.com
(516) 268-7403
New Fortress Energy (NASDAQ:NFE)
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