New Fortress Energy Announces First Quarter 2019 Results

NEW YORK–(BUSINESS WIRE)–New Fortress Energy LLC (NASDAQ: NFE) (“New Fortress Energy” or the
“Company”) today reported its financial results for the first quarter
ending March 31, 2019.

Business Highlights

  • Commercial

    • Total Committed volumes of 2.5mm gallons per day (“GPD”) as of Q1
      2019, an increase from 960k GPD in Q1 2018(1)
    • Total In Discussion volumes of 14.4mm GPD as of Q1 2019, an
      increase from 950k GPD in Q1 2018(2)
  • Development

    • NFE had 14 projects under development with total remaining project
      cost of ~$356mm, as of Q1 2019(3),(4)
    • Construction of the Old Harbour terminal in Jamaica is complete
      and first gas was delivered in March, with full ramp expected
      during Q2 2019(5)
    • NFE held a groundbreaking ceremony for the micro fuel handling
      facility in San Juan, Puerto Rico in March
  • Financial

    • Cash on hand, including restricted cash, as of March 31, 2019 was
      $417mm which, combined with expected cash flows from operations,
      is expected to fully fund all downstream Committed project costs(6)
    • During Q1 2019, NFE drew down the remaining available balance of
      our credit facility resulting in total debt outstanding at the end
      of the quarter of $499mm, excluding deferred financing costs

Financial Overview

  • Revenue for Q1 2019 increased vs. Q1 2018 due to added volumes sold
    through our Montego Bay facility to the Bogue power plant, as well as
    new commercial and industrial consumer contracts coming online(7)
  • Cost of goods sold was higher due to LNG costs associated with a spot
    market cargo purchase that was largely consumed during Q1 2019
  • Operation and Maintenance cost was higher during Q1 2019 due to a
    non-cash charge incurred associated with straight-lining our FSRU
    bareboat charter
  • SG&A for Q1 2019 was higher than Q1 2018 largely due to increased
    costs associated with headcount, new customer screening, transaction
    costs, and professional fees, as well as non-cash compensation expense
       
(in millions, except Average Volumes) Q1 2018 Q1 2019
Revenues $25.7 $30.0
Net Income/(Loss) ($10.9) ($60.3)
Operating Margin* $3.1 ($7.9)
Average Volumes (k GPD) 282 320

 

*Operating Margin is a Non-GAAP financial measure. For definitions
and reconciliations of Non-GAAP Results, please refer to the exhibit to
this press release.

Please refer to our Q1 2019 Investor Presentation for further
information about the following terms:

1)“Committed Volumes” means our expected
volumes to be sold to customers under binding contracts, non-binding
letters of intent, non-binding memorandums of understanding, binding or
non-binding term sheets or have been officially selected as the winning
provider in a request for proposals or competitive bid process. We
cannot assure you if or when we will enter into binding definitive
agreements for the sales of volumes under non-binding letters of intent,
non-binding memorandums of understanding, non-binding term sheets or
based on our selection as the winning provider under a request for
proposals or competitive bid process. Some but not all of our contracts
contain minimum volume commitments, and our expected volumes to be sold
to customers reflected in our “committed volumes” is substantially in
excess of such minimum volume commitments.

2) “In Discussion Volumes” or similar words refer to expected
volumes to be sold to customers for which (i) we are in active
negotiations, (ii) there is a request for proposals or competitive bid
process, or (iii) we anticipate a request for proposals or competitive
bid process will soon be announced based on our discussions with the
potential customer. We cannot assure you if or when we will enter into
contracts for sales of additional volumes, the price at which we will be
able to sell such volumes, or our costs to purchase, liquefy, deliver
and sell such volumes. Some but not all of our contracts contain minimum
volume commitments, and our expected sales to customers reflected in our
“in discussion volumes” is substantially in excess of potential minimum
volume commitments.

3)“In Development” or similar statuses means
that we have taken steps and invested money to develop a facility,
including 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. 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 and
operate these assets as expected, or at all. Additionally, the
construction of facilities is inherently subject to the risks of cost
overruns and delays

4) “Remaining project cost” and similar terms means the
remaining project budget that we estimate the referenced development
project or projects will
require in order to reach
“operational” status or full commercial operations, as of a particular
date. References to a particular quarter mean the last day of that
quarter and references to a particular date mean that date. Such project
cost is an estimate based on our contracts for each development project,
negotiations in progress for the work related to such development
project, and our experience developing other similar projects.

5)”First gas” or “operational” means illustrative date on which
gas may first be made available to our projects, including our
facilities in development. Full commercial operations of such projects
will occur later than, and may occur substantially later than, the First
LNG or First Gas date. We cannot assure you if or when such projects
will reach the date of delivery of the First LNG, delivery of First Gas,
or full commercial operations. Actual results could differ materially
from the illustration and there can be no assurance we will achieve our
goal.

6) Our expected cash flows from operations are based on (i) the
volumes of LNG that we aspire to produce, deliver and sell, based on
management’s internal estimates of committed and in discussion volume,
(ii) an assumed margin on the sale of LNG and (iii) our assumed costs
related to shipping, logistics and regasification. Downstream committed
project costs include the terminals and facilities we have contractually
committed to build downstream of our LNG shipping supply chain, so does
not include upstream facilities such as liquefiers.

7) Please note that commercial and industrial customer contracts
are the same as the “small scale” customers we refer to in our periodic
filings, including our forthcoming report on Form 10-Q.

Additional Information

For additional information that management believes to be useful for
investors, please refer to the presentation posted on the Investor
Relations section of New Fortress Energy’s website, www.newfortressenergy.com,
and the Company’s most recent Quarterly Report on Form 10-Q or Annual
Report on Form 10-K, which will be available on the Company’s website.
Nothing on our website is included or incorporated by reference herein.

Earnings Conference Call

New Fortress Energy’s management will host a conference call on
Wednesday, May 15, 2019 at 8:30 A.M. Eastern Time. A copy of the
earnings release will be posted to the Investor Relations section of New
Fortress Energy’s website, www.newfortressenergy.com.

All interested parties are welcome to participate on the live call. The
conference call may be accessed by dialing (866) 953-0778 (from within
the U.S.) or (630) 652-5853 (from outside of the U.S.) ten minutes prior
to the scheduled start of the call; please reference access code “New
Fortress Energy First Quarter Earnings Call”.

A simultaneous webcast of the conference call will be available to the
public on a listen-only basis at www.newfortressenergy.com.
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 telephonic replay of the conference call will also be available from
11:30 A.M. Eastern Time on Wednesday, May 15, 2019 through 11:30 A.M.
Eastern Time on Wednesday, May 22, 2019 by dialing (855) 859-2056 (from
within the U.S.) or (404) 537-3406 (from outside of the U.S.); please
reference access code “7179717”.

About New Fortress Energy LLC

New Fortress Energy (NASDAQ: NFE) is a global energy infrastructure
company founded to help accelerate the world’s transition to clean
energy. The company funds, builds and operates natural gas
infrastructure and logistics to rapidly deliver fully integrated,
turnkey energy solutions that enable economic growth, enhance
environmental stewardship and transform local industries and
communities. New Fortress Energy is majority-owned by a fund managed by
an affiliate of Fortress Investment Group.

Non-GAAP Financial Measure

Operating margin is not a measurement of financial performance under
GAAP and should not be considered in isolation or as an alternative to
(loss) income from operations, net income/(loss), cash flow from
continuing 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, provides a supplemental measure of
financial performance of our current liquefaction and regasification
operations. This measure excludes items that have little or no
significance on day-to-day performance of our current liquefaction and
regasification operations, including our corporate SG&A and other
(income) expense.

As operating margin measures our financial performance based on
operational factors that management can impact in the short-term and
provides an assessment of controllable expenses, items associated with
our capital structure and beyond the control of management in the
short-term, such as depreciation and amortization, taxation, and
interest expense are excluded. As a result, this supplemental metric
affords management the ability to make decisions to facilitate meeting
current financial goals as well as achieve optimal financial performance
of our current liquefaction and regasification operations.

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. A reconciliation is provided for the
non-GAAP financial measure to our GAAP net income/(loss). Investors are
encouraged to review the related GAAP financial measures and the
reconciliation of the non-GAAP financial measure to our GAAP net
income/(loss), and not to rely on any single financial measure to
evaluate our business.

Cautionary Statement Concerning Forward-Looking
Statements

Certain statements contained in this press release constitute
“forward-looking statements” including the expected ramp of volumes in
our Old Harbour terminal, our expected cash flows (and the underlying
committed volumes), our expected funding of downstream committed project
costs, and our expectations about downstream committed project costs.
You can identify these forward-looking statements by the use of
forward-looking words such as “expects,” “may,” “will,” “approximately,”
“predicts,” “intends,” “plans,” “estimates,” “anticipates,” or the
negative version of those words or other comparable words. These
forward-looking statements represent the Company’s expectations or
beliefs concerning future events, and it is possible that the results
described in this press release will not be achieved. These
forward-looking statements are subject to risks, uncertainties and other
factors, many of which are outside of the Company’s control, that could
cause actual results to differ materially from the results discussed in
the forward-looking statements. Factors that could cause or contribute
to such differences include, but are not limited to, the risk that our
construction or commissioning schedules will take longer than we expect,
the risk that our expectations about the price at which we sell LNG, the
cost at which we produce, ship and deliver LNG, and the margin that we
receive for the LNG that we sell are not in line with our expectations,
risks that our operating or other costs will increase and our expected
funding of projects may not be possible, and risks that our downstream
committed projects costs are greater than we expect so the expected
funding of such projects may not be possible. Accordingly, readers
should not place undue reliance on forward-looking statements as a
prediction of actual results.

Any forward-looking statement speaks only as of the date on which it is
made, and, except as required by law, the Company does not undertake any
obligation to update or revise any forward-looking statement, whether as
a result of new information, future events or otherwise. 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 in the prospectus included in the registration
statement filed with the SEC in connection with the Company’s initial
public offering, which could cause its actual results to differ
materially from those contained in any forward-looking statement.

Exhibits – Financial Statements

             
New Fortress Energy LLC
Condensed Consolidated Balance Sheets
As of March 31, 2019 and December 31, 2018
(Unaudited, in thousands of U.S. dollars, except share amounts)
March 31, December 31,
2019 2018
Assets
Current assets
Cash and cash equivalents $ 359,450 $ 78,301
Restricted cash 30 30
Receivables, net of allowances of $727 and $257, respectively 31,647 28,530
Finance leases, net 993 943
Inventory 27,002 15,959
Prepaid expenses and other current assets 12,380 30,017
 
Total current assets 431,502 153,780
 
Investment in equity securities 4,552 3,656
Restricted cash 57,521 22,522
Construction in progress 343,963 254,700
Property, plant and equipment, net 102,012 94,040
Finance leases, net 91,910 92,207
Deferred tax asset, net 78 185
Intangibles, net 42,297 43,057
Other non-current assets 42,784 35,255
 
Total assets $ 1,116,619 $ 699,402
 
Liabilities
Current liabilities
Term loan facility $ 488,331 $ 272,192
Accounts payable 28,223 43,177
Accrued liabilities 53,921 67,512
Due to affiliates 7,598 4,481
Other current liabilities 16,672 17,393
 
Total current liabilities 594,745 404,755
 
Deferred tax liability, net 94
Other long-term liabilities 12,378 12,000
 
Total liabilities 607,217 416,755
 
Commitments and contingences
 
Stockholders’ equity
Members’ capital, no par value, 500,000,000 shares authorized,
67,983,095
shares issued and outstanding as of December 31, 2018 426,741
Class A shares, 20,837,272 shares, issued and outstanding as of
March 31, 2019;
0 shares issued and outstanding as of December 31, 2018 102,265
Class B shares, 147,058,824 shares, issued and outstanding as of
March 31, 2019;
0 shares issued and outstanding as of December 31, 2018
Accumulated deficit (25,571) (158,423)
Accumulated other comprehensive (loss) (11)
Total stockholders’ equity attributable to NFE 76,694 268,307
Non-controlling interest 432,708 14,340
Total stockholders’ equity 509,402 282,647
Total liabilities and stockholders’ equity $ 1,116,619 $ 699,402
 
         
New Fortress Energy LLC
Condensed Consolidated Statements of Operations and Comprehensive
Loss
For the three months ended March 31, 2019 and 2018
(Unaudited, in thousands of U.S. dollars, except share and per
share amounts)
      Three Months Ended March 31,
2019 2018
Revenues
Operating revenue $ 26,138 $ 22,263
Other revenue 3,813 3,446
 
Total revenues 29,951 25,709
 
Operating expenses
Cost of sales 33,349 20,765
Operations and maintenance 4,499 1,844
Selling, general and administrative 49,749 11,869
Depreciation and amortization 1,691 696
 

Total operating
expenses……………………………………………………………………………………………………………

89,288 35,174
 
Operating loss (59,337) (9,465)
 
Interest expense 3,284 1,603
Other (income) expense, net (2,575) 32
 
Loss before taxes (60,046) (11,100)
Tax expense (benefit) 246 (187)
Net loss (60,292) (10,913)
Net loss attributable to non-controlling interest 46,735
Net loss attributable to stockholders $ (13,557) $ (10,913)
 
Net loss per share – basic and diluted $ (0.96)
 
Weighted average number of shares outstanding – basic and diluted 14,094,534
 
Other comprehensive loss:
Net loss $ (60,292) $ (10,913)
Unrealized (gain) on available-for-sale investment (929)
Comprehensive loss (60,292) (9,984)
Comprehensive loss attributable to non-controlling interest 46,735
Comprehensive loss attributable to stockholders $ (13,557) $ (9,984)
 
             

New Fortress Energy LLC

Condensed Consolidated Statements of Cash Flows

For the three months ended March 31, 2019 and 2018

(Unaudited, in thousands of U.S. dollars)

Three Months Ended March 31,
2019 2018
 
Net loss $ (60,292) $ (10,913)
Adjustments for:
Amortization of deferred financing costs 981 174
Depreciation and amortization 1,849 857
Deferred taxes 201 (193)
Change in value of Investment in equity securities (896)
Equity-based compensation 19,037
Other 204 168
(Increase) in receivables (3,102) (1,826)
(Increase) in inventories (11,043) (5,180)
Decrease (Increase) in other assets 15,684 (7,433)
Increase in accounts payable/accrued liabilities 3,567 5,668
Increase in amounts due to affiliates 3,117 457
(Decrease) Increase in other liabilities (355) 255
Net cash used in operating activities (31,048) (17,966)
 
 
Capital expenditures (136,281) (41,208)
Principal payments received on finance lease, net 284 238
Net cash used in investing activities (135,997) (40,970)
 
 
Proceeds from borrowings of debt 220,000
Payment of deferred financing costs (4,400)
Repayment of debt (1,250) (1,457)
Proceeds from IPO 274,948
Payment of offering costs (6,105)
Capital contributed from Members 20,150
Collection of subscription receivable 50,000
Net cash provided by financing activities 483,193 68,693
 
316,148 9,757
100,853 118,331
$ 417,001 $ 128,088
 
 
 
plant and equipment $ (32,946) $ 5,574
 
 
Non-GAAP Measure
(Unaudited, in thousands of U.S. dollars)
   
We define Non-GAAP operating margin as GAAP Net income/(loss),
adjusted for selling, general and administrative expense,
depreciation and amortization, interest expense, other (income)
expense and tax expnse (benefit).
Three Months Ended March 31,
2019 2018
Net income/(loss) $ (60,292) $ (10,913)
Add:
Selling, general and administrative 49,749 11,869
Depreciation and amortization 1,691 696
Interest expense 3,284 1,603
Other (income) expense, net (2,575) 32
Tax expense (benefit) 246 (187)
Non-GAAP operating margin $ (7,897) $ 3,100
 

Contacts

Contact IR:
Sara Yakin
[email protected]

Contact
Media:

Jake Suski
[email protected]

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