NFE Reports Q2 Results, Focuses on Data Centers and LNG

New Fortress Energy Inc. Reports Second-Quarter 2024 Earnings

New Fortress Energy Inc., a global energy infrastructure company, has announced its second-quarter 2024 earnings, reporting an EBITDA of $120 million. This result fell significantly short of its target of $275 million. The decline was primarily attributed to delays in the deployment of the company’s first Floating Liquefied Natural Gas (FLNG) asset. However, now operational, the FLNG 1 asset is anticipated to generate approximately $500 million in annual free cash flow. Despite this setback, New Fortress Energy retains a positive outlook, aiming to reach its $275 million quarterly target for the remainder of the fiscal year and projecting annual EBITDA between $1.4 billion and $1.5 billion. Guidance for the upcoming year is set at $1.3 billion.

Key Highlights:

• Q2 EBITDA of $120 million fell short of the $275 million goal due to FLNG 1 asset deployment issues.
• The operational FLNG 1 asset is expected to contribute $500 million in free cash flow annually.
• The company aims for quarterly EBITDA of $275 million moving forward.
• Annual EBITDA guidance is from $1.4 billion to $1.5 billion for the current year, and $1.3 billion for the next.
• Over 90% of expected revenues are contracted, simplifying financial forecasting.
• Plans for organic growth include minimal additional capital expenditure.
• Efforts are underway to refinance 2025 notes and target a debt-to-EBITDA ratio below four times by 2026.
• Anticipation of securing 2.5 gigawatts of power in a Brazilian auction, potentially increasing EBITDA by $400 million.
• Expansion into the data center industry continues with developments in power systems.

Company Outlook:

• New Fortress Energy expects to maintain or exceed a quarterly EBITDA of $275 million going forward.
• Projections for an EBITDA range of $1.4 billion to $1.5 billion for this year, and $1.3 billion for the next year.
• The focus remains on reducing capital expenditure to boost cash generation and free cash flow.

Challenges:

• Q2 results were impacted by the delay in the FLNG 1 asset deployment.
• Current LNG supply shortages are contributing to elevated prices.

Opportunities:

• The operational FLNG 1 asset stands to create considerable annual free cash flow.
• With over 90% of revenues contracted, revenue forecasting has become more predictable.
• Successful completion of a power plant in Nicaragua and ongoing projects in Brazil show progress.

Summary of Misses:

• Q2 EBITDA of $120 million fell significantly short of the $275 million target.

Q&A Overview:

• Discussions included strategies for becoming a significant power supplier for data centers.
• Plans to address 2025 and 2026 senior notes have been initiated.
• Confidence in financial positioning and prospects for organic growth was emphasized.

In conclusion, New Fortress Energy Inc. is navigating through a challenging quarter while pursuing strategic initiatives for long-term growth. The company’s focus on power systems development positions it to tap into emerging markets, particularly within the expanding data center industry, aiming to achieve its future EBITDA targets and boost shareholder value.