EPS Forecast
Revenue Forecast
EX-99.1
2
nfe-06302022x8xkex991.htm
EX-99.1
Document
Exhibit 99.1
 | 111 W 19th Street, 8th Floor New York, NY 10011 | ||||
New Fortress Energy Announces Second Quarter 2022 Results
August 3, 2022
NEW YORK -- New Fortress Energy Inc. (Nasdaq: NFE) (“NFE” or the “Company”) today reported its financial results for the second quarter of 2022.
Summary Highlights
•Pleased to report Q2 2022 Adjusted EBITDA(1) of $283 million and $1.05 billion over the trailing twelve months ended June 30, 2022. NFE's net (loss) income for Q2 2022 and trailing twelve months was $(178) million and $197 million, respectively.
•Adjusted EPS for the period was $0.69 per share on a fully diluted basis, or EPS of $(0.81) per share when including a non-cash impairment charge of $315 million resulting from an asset sale(2) announced in Q2.
•On track to achieve Illustrative Adjusted EBITDA Goal(3) of $1.0+ billion for 2022 and $1.5+ billion for 2023 before taking into account the contribution expected from Fast LNG (FLNG) during the year.
◦Our FLNG commercial and project and teams had a very busy and productive quarter, which we look forward to discussing on our Q2 earnings call.
▪Increased FLNG deployment opportunities from one Gulf of Mexico location to three (offshore Louisiana, Altamira, and Lakach(5)) representing approximately 8 MTPA of capacity ramping from 1H23 through 2H24(7).
•Our commitment to our customers and commercial activities at our downstream terminals remains robust.
◦In Brazil - nearing completion of our Barcarena and Santa Catarina terminals and began construction on the 605 MW Barcarena power plant.
◦In Mexico – signed an LOI to expand existing gas supply contract with CFE(5) and extend term to 10 years.
◦In Europe – made significant progress on permits in Ireland and leased one of our FSRUs to a new terminal in the Netherlands(8) expected to start up Q3 2022(7).
•Achieved key balance sheet and liquidity objectives, securing over $2.0 billion of internally generated liquidity based on announcements and other activities to date(2)(4) and upsized our LoC facility to $250 million.
◦Fully-funded on committed capital needs for Fast LNG, with additional developments capable of being funded through operating cash flow(9).
•Continued to position Zero Parks hydrogen business favorably amid increasingly positive policy environment; expect to progress multiple industrial-scale green and blue hydrogen projects in the near future.
•NFE’s Board of Directors approved a dividend of $0.10 per share, with a record date of September 7, 2022 and a payment date of September 21, 2022.
Financial Highlights
| Three Months Ended | |||||||||||||||||||||||
| (in millions, except Average Volumes) | March 31, 2022 | June 30, 2022 | |||||||||||||||||||||
| Revenues | $ | 505.1 | $ | 584.9 | |||||||||||||||||||
| Net income (loss) | $ | 241.2 | $ | (178.4) | |||||||||||||||||||
| Adjusted net income | $ | 241.2 | $ | 145.7 | |||||||||||||||||||
Terminals and Infrastructure Segment Operating Margin(6) | $ | 211.1 | $ | 237.7 | |||||||||||||||||||
Ships Segment Operating Margin(6) | $ | 89.0 | $ | 89.7 | |||||||||||||||||||
Total Segment Operating Margin(6) | $ | 300.1 | $ | 327.4 | |||||||||||||||||||
Adjusted EBITDA(1) | $ | 257.7 | $ | 283.5 | |||||||||||||||||||
Please refer to our Q2 2022 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) Refers to the sale by NFE and Ebrasil Energia Ltda. and its shareholders (“Ebrasil”) to Eneva S.A. (“Eneva”) of 100% of the equity interests of the Porto de Sergipe Power Plant, including 100% of the shares of Centrais Elétricas de Sergipe Participações S.A. (“CELSEPAR”), which owns 100% of the equity interests of the Sergipe Power Plant, and Centrais Elétricas Barra dos Coqueiros S.A. (“CEBARRA”), which owns 1.7 GW of expansion rights adjacent to the Sergipe Power Plant. Closing of this transaction is subject to certain conditions precedent some of which are outside of our control. There can be no assurance that closing will be attained within the timeline that we expect or at all.
3)“Illustrative Adjusted EBITDA Goal” is based on the "Illustrative Total Segment Operating Margin Goal" less illustrative Core SGA assumed to be at $172mm in 2022 and $145mm for all periods 2023 onward including the pro rata share of Core SG&A from unconsolidated entities. “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. This goal reflects the volumes of LNG that it is our goal to sell under binding contracts multiplied by the average price per unit at which we expect to price LNG deliveries, including both fuel sales and capacity charges or other fixed fees, less the cost per unit at which we expect to purchase or produce and deliver such LNG or natural gas, including the cost to (i) purchase natural gas, liquefy it, and transport it to one of our terminals or purchase LNG in strip cargos or on the spot market, (ii) transfer the LNG into an appropriate ship and transport it to our terminals or facilities, (iii) deliver the LNG, regasify it to natural gas and deliver it to our customers or our power plants and (iv) maintain and operate our terminals, facilities and power plants. For vessels chartered to third parties, this illustration reflects the revenue from ships chartered to third parties, 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. There can be no assurance that the costs of purchasing or producing LNG, transporting the LNG and maintaining and operating our terminals and facilities will result in the Illustrative Total Segment Operating Margin Goal reflected. For the purpose of this presentation, we have assumed an average Total Segment Operating Margin between $7.42 and $19.75 per MMBtu for all downstream terminal economics, because we assume that (i) we purchase delivered gas at a weighted average of $17.30 in Q3-22, $12.74 in 2022, and $10.44 in 2023, (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 Hygo + Suape assets we assume an average delivered cost of gas of $17.61 in 2022, and $16.21 in 2023 based on industry averages in the region and the existing LNG contract at Sergipe. Hygo + Sergipe incremental assets include every terminal and power plant other than Sergipe, and we assume all are Operational and earning revenue through fuel sales and capacity charges or other fixed fees. This illustration reflects our effective share of operating margin from Sergipe Power Plant. For Vessels chartered to third parties, this illustration reflects the revenue from ships chartered to third parties, 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 $211k per day per vessel and our effective share of revenue and operating expense related to the existing tolling agreement for the Hilli FLNG going forward. For Fast LNG, this illustration reflects the difference between the delivered cost of open LNG and the delivered cost of open market LNG less Fast LNG production cost. Management is currently in multiple discussions with counterparties to supply feedstock gas at pricing between $4.31 per MMBtu to $6.17 per MMBtu, multiplied by the volumes for Fast LNG installation of 1.4 MTPA each per year. 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 are higher than the costs 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. We cannot assure you if or when we will enter into contracts for sales of additional LNG, the price at which we will be able to sell such LNG, or our costs to produce and sell such LNG. Actual results could differ materially from the illustration and there can be no assurance we will achieve our goal.
4) Refers to sale of 11 LNG infrastructure vessels owned by NFE to a newly formed joint venture between funds managed by Apollo and NFE. Closing of this transaction is subject to certain conditions precedent some of which are outside of our control. There can be no assurance that closing will be attained within the timeline that we expect or at all.
5) In discussions with Petróleos Mexicanos (“Pemex”) to form a long-term strategic partnership for the joint development of the Lakach deepwater natural gas field and with Comisión Federal de Electricidad (“CFE”) to form a strategic alliance supported in connection with a new LNG hub off the coast of Altamira, Tamaulipas, with CFE. Represent letters
of intent, whether signed or under discussions. There can be no assurance that binding definitive agreements will be entered into related to such discussions or projects or the terms of any such agreements.
6) “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 includes our effective share of revenue, expenses and operating margin attributable to our 50% ownership of Centrais Elétricas de Sergipe Participações S.A. (“CELSEPAR”). Ships Segment Operating Margin includes our effective share of revenue, expenses and operating margin attributable to our ownership of 50% of the common units of Hilli LLC. Hilli LLC owns Golar Hilli Corporation (“Hilli Corp”), the disponent owner of the Hilli.
7) Lead times and expected development times used herein 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, 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 and operate all of our facilities as expected, or, when and if constructed, they do not accomplish our goals, or if we experience delays or cost overruns in construction, estimates regarding timelines, budget and savings could be materially and adversely affected.
8) Refers to binding agreement executed with N.V. Nederlandse Gasunie (“Gasunie”) for a five-year FSRU charter agreement will begin in Q3 2022 and provide storage and regasification capacity for Gasunie’s new LNG import terminal in the port Eemshaven, the Netherlands. The binding FSRU charter agreement is subject to the execution of definitive documentation. We cannot assure you if or when we will enter into binding definitive agreements, on time or on acceptable terms to us.
9) Represents management’s expectations regarding the funding of the committed expenditures reflected and the estimated expenditures. It assumes the Sergipe and Apollo transaction have closed and we have received the anticipated proceeds. There can be no assurance that closing will be attained within the timeline that we expect or at all. The estimated expenditures, including those related to project costs, are not based on generally accepted accounting principles and should not be relied upon for any reason. There is no guarantee that we will reach our goals for funding the estimated expenditures and actual results may differ from our expectations.
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 and Quarterly Report on Form 10-Q, 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 Thursday, August 4, 2022 at 8:00 A.M. Eastern Time. The conference call may be accessed by dialing (888) 394-8218 (toll free from within the U.S.) or (323) 794-2588 (from outside of the U.S.) fifteen minutes prior to the scheduled start of the call; please reference “NFE Second-Quarter 2022 Earnings Call.”
A simultaneous webcast of the conference call will be available to the public on a listen-only basis at https://event.webcasts.com/starthere.jsp?ei=1558536&tp_key=f1cc0198ce and will be located on our company website 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
Certain statements contained in this press release constitute “forward-looking statements” including: our ability to close the transactions and receive funds within the expected timeline, in the amounts anticipated or at all; ability to maintain our expected development timelines; expectations regarding ability to construct, complete and commission our projects on time and within budget to derive expected goals and benefits; execution of definitive documentation; expected or illustrative financial metrics or goals; successful positioning of Zero Parks hydrogen in policy environment and development of green
and blue hydrogen projects in the near future; and the implementation and success of our financing alternatives, including any asset sales. 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: illustrative financial metrics and other similar metrics, including goals and expected financial growth; our ability to execute definitive documentation in connection with letters of intent or similar instruments; expectations for taking FID on our projects; the development, construction, completion and operation of the facilities on time, within budget and within the expected specifications and design; ability to maintain our expected development timelines; our ability to close our Sergipe and Apollo transactions and receive funds within the expected timeline and in the amounts anticipated; funding of our projects using cash from the Sergipe and Apollo transactions and self-generated cash flows; development of hydrogen business and ability to implement conversion of natural gas into clean blue hydrogen; the risk that we fail to meet internal financial metrics or financial metrics posed by the market on us; the risk that the foregoing or other factors negatively impact our liquidity and our ability to capitalize our projects; and the risk that we may be unable to implement our financing strategy or to effectively leverage our assets. 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 included in the Company’s annual and quarterly reports filed with the SEC, which could cause its actual results to differ materially from those contained in any forward-looking statement.
IR:
Brett Magill
bmagill@newfortressenergy.com
Media:
jsuski@newfortressenergy.com
(516) 268-7403
Source: New Fortress Energy Inc.
Exhibits – Financial Statements
Condensed Consolidated Statements of Operations
For the three months ended March 31, 2022 and June 30, 2022
(Unaudited, in thousands of U.S. dollars, except share and per share amounts)
For the Three Months Ended | |||||||||||
March 31, 2022 | June 30, 2022 | ||||||||||
| Revenues | |||||||||||
| Operating revenue | $ | 400,075 | $ | 497,240 | |||||||
| Vessel charter revenue | 92,420 | 75,134 | |||||||||
| Other revenue | 12,623 | 12,481 | |||||||||
| Total revenues | 505,118 | 584,855 | |||||||||
| Operating expenses | |||||||||||
| Cost of sales | 208,298 | 272,401 | |||||||||
| Vessel operating expenses | 22,964 | 18,628 | |||||||||
| Operations and maintenance | 23,168 | 20,490 | |||||||||
| Selling, general and administrative | 48,041 | 50,310 | |||||||||
| Transaction and integration costs | 1,901 | 4,866 | |||||||||
| Depreciation and amortization | 34,290 | 36,356 | |||||||||
| Asset impairment expense | — | 48,109 | |||||||||
| Total operating expenses | 338,662 | 451,160 | |||||||||
| Operating income | 166,456 | 133,695 | |||||||||
| Interest expense | 44,916 | 47,840 | |||||||||
| Other (income), net | (19,725) | (22,102) | |||||||||
| Net income before income (loss) from equity method investments and income taxes | 141,265 | 107,957 | |||||||||
| Income (loss) from equity method investments | 50,235 | (372,927) | |||||||||
| Tax benefit | (49,681) | (86,539) | |||||||||
| Net income (loss) | 241,181 | (178,431) | |||||||||
| Net (loss) income attributable to non-controlling interest | (2,912) | 8,666 | |||||||||
| Net income (loss) attributable to stockholders | $ | 238,269 | $ | (169,765) | |||||||
| Net income (loss) per share – basic | $ | 1.14 | $ | (0.81) | |||||||
| Net income (loss) per share – diluted | $ | 1.13 | $ | (0.81) | |||||||
| Weighted average number of shares outstanding – basic | 209,928,070 | 209,669,188 | |||||||||
| Weighted average number of shares outstanding – diluted | 210,082,295 | 209,669,188 | |||||||||
Adjusted EBITDA
For the three months ended June 30, 2022
(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/(loss) from operations, net income/(loss), 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), 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 unconsolidated entities, less the impact of equity in earnings (losses) of unconsolidated entities.
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 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/(loss), 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 (loss) and diluted earnings (loss) per share attributable to New Fortress Energy, which are determined in accordance with GAAP.
The following table sets forth a reconciliation of net (loss) income to Adjusted EBITDA for the three months ended September 30, 2021, December 31, 2021, March 31, 2022 and June 30, 2022 and the twelve months ended June 30, 2022:
| (in thousands) | Three Months Ended September 30, 2021 | Three Months Ended December 31, 2021 | Three Months Ended March 31, 2022 | Three Months Ended June 30, 2022 | Twelve Months Ended June 30, 2022 | |||||||||||||||||||||||||||||||||
| Total Segment Operating Margin | $ | 210,478 | $ | 373,150 | $ | 300,083 | $ | 327,448 | $ | 1,211,159 | ||||||||||||||||||||||||||||
| Less: Core SG&A (see definition above) | 38,496 | 38,033 | 40,960 | 42,040 | 159,529 | |||||||||||||||||||||||||||||||||
| Less: Pro rata share Core SG&A from unconsolidated entities | 2,047 | 1,110 | 1,390 | 1,914 | 6,461 | |||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 169,935 | $ | 334,007 | $ | 257,733 | $ | 283,494 | $ | 1,045,169 | ||||||||||||||||||||||||||||
| Net (loss) income | $ | (17,769) | $ | 151,723 | $ | 241,181 | $ | (178,431) | $ | 196,704 | ||||||||||||||||||||||||||||
| Add: Interest expense, net | 57,595 | 46,567 | 44,916 | 47,840 | 196,918 | |||||||||||||||||||||||||||||||||
| Add: Tax provision (benefit) | 3,526 | 5,403 | (49,681) | (86,539) | (127,291) | |||||||||||||||||||||||||||||||||
| Add: Depreciation and amortization | 31,194 | 30,297 | 34,290 | 36,356 | 132,137 | |||||||||||||||||||||||||||||||||
| Add: Asset impairment expense | — | — | — | 48,109 | 48,109 | |||||||||||||||||||||||||||||||||
| Add: SG&A items excluded from Core SG&A (see definition above) | 8,306 | 36,894 | 7,081 | 8,270 | 60,551 | |||||||||||||||||||||||||||||||||
| Add: Transaction and integration costs | 1,848 | 2,107 | 1,901 | 4,866 | 10,722 | |||||||||||||||||||||||||||||||||
| Add: Other (income), net | (5,400) | (3,692) | (19,725) | (22,102) | (50,919) | |||||||||||||||||||||||||||||||||
| Add: Changes in fair value of non-hedge derivative instruments and contingent consideration | 2,316 | 472 | (2,492) | 2,247 | 2,543 | |||||||||||||||||||||||||||||||||
| Add: Loss on extinguishment of debt, net | — | 10,975 | — | — | 10,975 | |||||||||||||||||||||||||||||||||
Add: Pro rata share of Adjusted EBITDA from unconsolidated entities(1) | 72,336 | 44,746 | 50,497 | 49,951 | 217,530 | |||||||||||||||||||||||||||||||||
| Less: Loss (income) from equity method investments | 15,983 | 8,515 | (50,235) | 372,927 | 347,190 | |||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 169,935 | $ | 334,007 | $ | 257,733 | $ | 283,494 | $ | 1,045,169 | ||||||||||||||||||||||||||||
(1)Includes the Company’s effective share of Adjusted EBITDA of CELSEPAR of $52,179, $24,173, $30,207 and $30,813 for the three months ended September 30, 2021, December 31, 2021, March 31, 2022 and June 30, 2022, respectively, and the Company’s effective share of the Adjusted EBITDA of Hilli LLC of $20,157, $20,573, $20,291 and $19,138 for the three months ended September 30, 2021, December 31, 2021, March 31, 2022 and June 30, 2022, respectively.
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 (loss), 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, (loss) income 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 June 30, 2022 | |||||||||||||||||||||||||||||
| (in thousands of $) | Terminals and Infrastructure ⁽¹⁾ | Ships ⁽²⁾ | Total Segment | Consolidation and Other ⁽³⁾ | Consolidated | ||||||||||||||||||||||||
| Segment Operating Margin | $ | 237,712 | $ | 89,736 | $ | 327,448 | $ | (54,112) | $ | 273,336 | |||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||
| Selling, general and administrative | 50,310 | ||||||||||||||||||||||||||||
| Transaction and integration costs | 4,866 | ||||||||||||||||||||||||||||
| Depreciation and amortization | 36,356 | ||||||||||||||||||||||||||||
| Asset impairment expense | 48,109 | ||||||||||||||||||||||||||||
| Interest expense | 47,840 | ||||||||||||||||||||||||||||
| Other (income) expense, net | (22,102) | ||||||||||||||||||||||||||||
| Loss from equity method investments | 372,927 | ||||||||||||||||||||||||||||
| Tax (benefit) provision | (86,539) | ||||||||||||||||||||||||||||
| Net loss | (178,431) | ||||||||||||||||||||||||||||
(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 $389,996 for the three months ended June 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 $17,069 for the three months ended June 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.
| Three Months Ended March 31, 2022 | |||||||||||||||||||||||||||||
| (in thousands of $) | Terminals and Infrastructure ⁽¹⁾ | Ships ⁽²⁾ | Total Segment | Consolidation and Other ⁽³⁾ | Consolidated | ||||||||||||||||||||||||
| Segment Operating Margin | $ | 211,083 | $ | 89,000 | $ | 300,083 | $ | (49,395) | $ | 250,688 | |||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||
| Selling, general and administrative | 48,041 | ||||||||||||||||||||||||||||
| Transaction and integration costs | 1,901 | ||||||||||||||||||||||||||||
| Depreciation and amortization | 34,290 | ||||||||||||||||||||||||||||
| Interest expense | 44,916 | ||||||||||||||||||||||||||||
| Other (income) expense, net | (19,725) | ||||||||||||||||||||||||||||
| (Income) Loss from equity method investments | (50,235) | ||||||||||||||||||||||||||||
| Tax (benefit) provision | (49,681) | ||||||||||||||||||||||||||||
| Net income | $ | 241,181 | |||||||||||||||||||||||||||
(1)Terminals and Infrastructure includes the Company's effective share of revenues, expenses and operating margin attributable to 50% ownership of CELSEPAR. The earnings attributable to the investment of $36,680 for the three months ended March 31, 2022 are reported in (loss) income from equity method investments on the condensed 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 $13,555 for the three months ended March 31, 2022 are reported in (loss) income from equity method investments on 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.
| Three Months Ended December 31, 2021 | |||||||||||||||||||||||||||||
| (in thousands of $) | Terminals and Infrastructure ⁽¹⁾ | Ships ⁽²⁾ | Total Segment | Consolidation and Other ⁽³⁾ | Consolidated | ||||||||||||||||||||||||
| Segment Operating Margin | $ | 278,354 | $ | 94,796 | $ | 373,150 | $ | (46,328) | $ | 326,822 | |||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||
| Selling, general and administrative | 74,927 | ||||||||||||||||||||||||||||
| Transaction and integration costs | 2,107 | ||||||||||||||||||||||||||||
| Depreciation and amortization | 30,297 | ||||||||||||||||||||||||||||
| Interest expense | 46,567 | ||||||||||||||||||||||||||||
| Other (income) expense, net | (3,692) | ||||||||||||||||||||||||||||
| Loss from extinguishment of debt | 10,975 | ||||||||||||||||||||||||||||
| (Income) Loss from equity method investments | 8,515 | ||||||||||||||||||||||||||||
| Tax (benefit) provision | 5,403 | ||||||||||||||||||||||||||||
| Net income | 151,723 | ||||||||||||||||||||||||||||
(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 $18,580 for the three months ended December 31, 2021 are reported in (loss) income from equity method investments on the condensed 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 $10,065 for the three months ended December 31, 2021 are reported in (loss) income from equity method investments on 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.
| Three Months Ended September 30, 2021 | |||||||||||||||||||||||||||||
| (in thousands of $) | Terminals and Infrastructure ⁽¹⁾ | Ships ⁽²⁾ | Total Segment | Consolidation and Other ⁽³⁾ | Consolidated | ||||||||||||||||||||||||
| Segment Operating Margin | $ | 115,638 | $ | 94,840 | $ | 210,478 | $ | (76,699) | $ | 133,779 | |||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||
| Selling, general and administrative | 46,802 | ||||||||||||||||||||||||||||
| Transaction and integration costs | 1,848 | ||||||||||||||||||||||||||||
| Depreciation and amortization | 31,194 | ||||||||||||||||||||||||||||
| Interest expense | 57,595 | ||||||||||||||||||||||||||||
| Other (income) expense, net | (5,400) | ||||||||||||||||||||||||||||
| (Income) Loss from equity method investments | 15,983 | ||||||||||||||||||||||||||||
| Tax (benefit) provision | 3,526 | ||||||||||||||||||||||||||||
| Net loss | (17,769) | ||||||||||||||||||||||||||||
(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 $27,792 for the three months ended September 30, 2021 are reported in (loss) income from equity method investments on the condensed 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 $11,809 for the three months ended September 30, 2021 are reported in (loss) income from equity method investments on 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 loss attributable to stockholders and earnings per share adjusted for non-cash impairment charges.
| Three months ended June 30, 2022 | |||||
| Net loss attributable to stockholders | $ | (169,765) | |||
| Non-cash impairment charges, net of tax | 315,444 | ||||
| Adjusted net income | 145,679 | ||||
| Weighted-average shares outstanding - diluted (QTD) | 209,669,188 | ||||
| Adjusted earnings per share | $ | 0.69 | |||
Condensed Consolidated Balance Sheets
As of June 30, 2022 and December 31, 2021
(Unaudited, in thousands of U.S. dollars, except share amounts)
| June 30, 2022 | December 31, 2021 | ||||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 138,329 | $ | 187,509 | |||||||
| Restricted cash | 71,602 | 68,561 | |||||||||
Receivables, net of allowances of $164 and $164 respectively | 313,457 | 208,499 | |||||||||
| Inventory | 72,152 | 37,182 | |||||||||
| Prepaid expenses and other current assets, net | 141,092 | 83,115 | |||||||||
| Total current assets | 736,632 | 584,866 | |||||||||
| Restricted cash | 7,960 | 7,960 | |||||||||
| Construction in progress | 1,401,468 | 1,043,883 | |||||||||
| Property, plant and equipment, net | 2,156,431 | 2,137,936 | |||||||||
| Equity method investments | 939,738 | 1,182,013 | |||||||||
| Right-of-use assets | 407,689 | 309,663 | |||||||||
| Intangible assets, net | 121,088 | 142,944 | |||||||||
| Finance leases, net | 600,885 | 602,675 | |||||||||
| Goodwill | 778,488 | 760,135 | |||||||||
| Deferred tax assets, net | 5,628 | 5,999 | |||||||||
| Other non-current assets, net | 95,369 | 98,418 | |||||||||
| Total assets | $ | 7,251,376 | $ | 6,876,492 | |||||||
| Liabilities | |||||||||||
| Current liabilities | |||||||||||
| Current portion of long-term debt | $ | 99,756 | $ | 97,251 | |||||||
| Accounts payable | 111,436 | 68,085 | |||||||||
| Accrued liabilities | 236,535 | 244,025 | |||||||||
| Current lease liabilities | 53,983 | 47,114 | |||||||||
| Other current liabilities | 94,286 | 106,036 | |||||||||
| Total current liabilities | 595,996 | 562,511 | |||||||||
| Long-term debt | 4,051,756 | 3,757,879 | |||||||||
| Non-current lease liabilities | 329,972 | 234,060 | |||||||||
| Deferred tax liabilities, net | 140,289 | 269,513 | |||||||||
| Other long-term liabilities | 60,835 | 58,475 | |||||||||
| Total liabilities | 5,178,848 | 4,882,438 | |||||||||
| Commitments and contingencies | |||||||||||
| Stockholders’ equity | |||||||||||
Class A common stock, $0.01 par value, 750.0 million shares authorized, 207.6 million issued and outstanding as of June 30, 2022; 206.9 million issued and outstanding as of December 31, 2021 | 2,076 | 2,069 | |||||||||
| Additional paid-in capital | 1,868,618 | 1,923,990 | |||||||||
| Accumulated deficit | (63,895) | (132,399) | |||||||||
| Accumulated other comprehensive income (loss) | 78,232 | (2,085) | |||||||||
| Total stockholders' equity attributable to NFE | 1,885,031 | 1,791,575 | |||||||||
| Non-controlling interest | 187,497 | 202,479 | |||||||||
| Total stockholders' equity | 2,072,528 | 1,994,054 | |||||||||
| Total liabilities and stockholders' equity | $ | 7,251,376 | $ | 6,876,492 | |||||||
Condensed Consolidated Statements of Operations
For the three and six months ended June 30, 2022 and 2021
(Unaudited, in thousands of U.S. dollars, except share and per share amounts)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Operating revenue | $ | 497,240 | $ | 102,836 | $ | 897,315 | $ | 194,032 | |||||||||||||||
| Vessel charter revenue | 75,134 | 64,561 | 167,554 | 64,561 | |||||||||||||||||||
| Other revenue | 12,481 | 56,442 | 25,104 | 110,930 | |||||||||||||||||||
| Total revenues | 584,855 | 223,839 | 1,089,973 | 369,523 | |||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Cost of sales | 272,401 | 101,430 | 480,699 | 198,101 | |||||||||||||||||||
| Vessel operating expenses | 18,628 | 15,400 | 41,592 | 15,400 | |||||||||||||||||||
| Operations and maintenance | 20,490 | 18,565 | 43,658 | 34,816 | |||||||||||||||||||
| Selling, general and administrative | 50,310 | 44,536 | 98,351 | 78,152 | |||||||||||||||||||
| Transaction and integration costs | 4,866 | 29,152 | 6,767 | 40,716 | |||||||||||||||||||
| Depreciation and amortization | 36,356 | 26,997 | 70,646 | 36,886 | |||||||||||||||||||
| Asset impairment expense | 48,109 | — | 48,109 | — | |||||||||||||||||||
| Total operating expenses | 451,160 | 236,080 | 789,822 | 404,071 | |||||||||||||||||||
| Operating income (loss) | 133,695 | (12,241) | 300,151 | (34,548) | |||||||||||||||||||
| Interest expense | 47,840 | 31,482 | 92,756 | 50,162 | |||||||||||||||||||
| Other (income), net | (22,102) | (7,457) | (41,827) | (8,058) | |||||||||||||||||||
| Net income (loss) before (loss) income from equity method investments and income taxes | 107,957 | (36,266) | 249,222 | (76,652) | |||||||||||||||||||
| (Loss) income from equity method investments | (372,927) | 38,941 | (322,692) | 38,941 | |||||||||||||||||||
| Tax (benefit) provision | (86,539) | 4,409 | (136,220) | 3,532 | |||||||||||||||||||
| Net (loss) income | (178,431) | (1,734) | 62,750 | (41,243) | |||||||||||||||||||
| Net income (loss) attributable to non-controlling interest | 8,666 | (4,310) | 5,754 | (2,704) | |||||||||||||||||||
| Net (loss) income attributable to stockholders | $ | (169,765) | $ | (6,044) | $ | 68,504 | $ | (43,947) | |||||||||||||||
| Net (loss) income per share – basic | $ | (0.81) | $ | (0.03) | $ | 0.33 | $ | (0.23) | |||||||||||||||
| Net (loss) income per share – diluted | $ | (0.81) | $ | (0.03) | $ | 0.33 | $ | (0.23) | |||||||||||||||
| Weighted average number of shares outstanding – basic | 209,669,188 | 202,331,304 | 209,797,133 | 189,885,473 | |||||||||||||||||||
| Weighted average number of shares outstanding – diluted | 209,669,188 | 202,331,304 | 209,810,647 | 189,885,473 | |||||||||||||||||||
Condensed Consolidated Statements of Cash Flows
For the six months ended June 30, 2022 and 2021
(Unaudited, in thousands of U.S. dollars)
Six Months Ended June 30, | |||||||||||||||||
| 2022 | 2021 | ||||||||||||||||
| Cash flows from operating activities | |||||||||||||||||
| Net income (loss) | $ | 62,750 | $ | (41,243) | |||||||||||||
| Adjustments for: | |||||||||||||||||
| Amortization of deferred financing costs and debt guarantee, net | 2,383 | (6,290) | |||||||||||||||
| Depreciation and amortization | 71,172 | 37,462 | |||||||||||||||
| Loss (earnings) of equity method investees | 322,692 | (38,941) | |||||||||||||||
| Drydocking expenditure | (12,439) | — | |||||||||||||||
| Dividends received from equity method investees | 14,859 | 7,386 | |||||||||||||||
| Sales-type lease payments received in excess of interest income | 1,426 | 2,388 | |||||||||||||||
| Change in market value of derivatives | (9,798) | (7,073) | |||||||||||||||
| Deferred taxes | (178,109) | 2,447 | |||||||||||||||
| Change in value of investment of equity securities | 1,090 | (88) | |||||||||||||||
| Share-based compensation | 1,238 | 3,383 | |||||||||||||||
| Asset impairment expense | 48,109 | — | |||||||||||||||
| Other | 671 | 275 | |||||||||||||||
| Changes in operating assets and liabilities, net of acquisitions: | |||||||||||||||||
| (Increase) in receivables | (123,843) | (38,018) | |||||||||||||||
| (Increase) in inventories | (35,167) | (35,458) | |||||||||||||||
| (Increase) Decrease in other assets | (58,949) | 3,679 | |||||||||||||||
| Decrease in right-of-use assets | 35,265 | 2,072 | |||||||||||||||
| Increase in accounts payable/accrued liabilities | 71,603 | 24,732 | |||||||||||||||
| Increase (Decrease) in amounts due to affiliates | 1,238 | (2,919) | |||||||||||||||
| (Decrease) Increase in lease liabilities | (31,352) | 133 | |||||||||||||||
| Decrease in other liabilities | (13,906) | (25,279) | |||||||||||||||
| Net cash provided by (used in) operating activities | 170,933 | (111,352) | |||||||||||||||
| Cash flows from investing activities | |||||||||||||||||
| Capital expenditures | (441,708) | (235,324) | |||||||||||||||
| Cash paid for business combinations, net of cash acquired | — | (1,586,042) | |||||||||||||||
| Entities acquired in asset acquisitions, net of cash acquired | — | (8,817) | |||||||||||||||
| Other investing activities | — | (750) | |||||||||||||||
| Net cash (used in) investing activities | (441,708) | (1,830,933) | |||||||||||||||
| Cash flows from financing activities | |||||||||||||||||
| Proceeds from borrowings of debt | 437,917 | 1,652,500 | |||||||||||||||
| Payment of deferred financing costs | (4,805) | (20,989) | |||||||||||||||
| Repayment of debt | (146,030) | (15,864) | |||||||||||||||
| Payments related to tax withholdings for share-based compensation | (13,054) | (29,717) | |||||||||||||||
| Payment of dividends | (47,374) | (41,346) | |||||||||||||||
| Net cash provided by financing activities | 226,654 | 1,544,584 | |||||||||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (2,018) | (1,317) | |||||||||||||||
| Net (decrease) in cash, cash equivalents and restricted cash | (46,139) | (399,018) | |||||||||||||||
| Cash, cash equivalents and restricted cash – beginning of period | 264,030 | 629,336 | |||||||||||||||
| Cash, cash equivalents and restricted cash – end of period | $ | 217,891 | $ | 230,318 | |||||||||||||
| Supplemental disclosure of non-cash investing and financing activities: | |||||||||||||||||
| Changes in accounts payable and accrued liabilities associated with construction in progress and property, plant and equipment additions | $ | 5,302 | $ | 85,513 | |||||||||||||
| Liabilities associated with consideration paid for entities acquired in asset acquisitions | — | 9,959 | |||||||||||||||
| Consideration paid in shares for business combinations | — | 1,400,784 | |||||||||||||||