New Fortress Energy Inc. Q2 FY2024 earnings call

FLNG 1 Project

• The FLNG 1 asset was delayed in deployment, causing an EBITDA miss in Q2. It was finally brought online on July 19th and has been performing well. A partial cargo transfer was done, and it will undergo planned maintenance for about a week before resuming full production.

Regional Projects

• Nicaragua: The 300-megawatt power plant is complete. The jetty is 95% complete, and pipeline installation is expected to be completed in September. It's seen as a potential Central American terminal.
• Brazil: The CELBA 2 power plant (630-megawatt) is 70% complete with a COD in July 2025 and is adjacent to the operational Barcarena terminal. The Port of San project is fully permitted with foundation pouring underway and has a COD in the second half of 2026.

Capital Structure and CapEx

• Plan to refinance existing 2025 notes and target less than four times debt to EBITDA by 2026. CapEx is set to drop significantly in the remaining part of 2024 and 2025.

FEMA Contract

• Submitted a $659 million claim related to power plants built for FEMA. It's going through a claim settlement process with Weston and the Army Corps.

Klondike Business

• Focused on providing power solutions to data centers. Identifying sites in Pennsylvania and Ohio, preparing to file permits, and expecting to turn on power next year.

Total segment operating margin was $248 million in the second quarter. This included $202 million from sales to customers through downstream terminals, $12 million from LNG sales, and $34 million from the Ships segment. In contrast, the total segment operating margin in Q1 was $384 million. The second quarter's adjusted EBITDA was $120 million, down from the first quarter's figures due to the FLNG 1 deployment delay.

2024 EBITDA

• Forecasted to be between $1.4 billion to $1.5 billion with the FEMA claim. Q3 will be impacted by the FLNG 1 delay, while Q4 is expected to be around $275 million.

2025 Guidance

• $1.3 billion EBITDA, based on approximately 170 TBtus of supply with weighted net margins and ship operating margin.

Brazil Growth

• Contracted EBITDA from Brazil is planned to be about $470 million by 2026, and a power auction in Santa Catarina could increase EBITDA by another $400 million.

The delay in the deployment of the FLNG 1 asset led to an EBITDA miss in Q2. The few months of delay had a material impact on the quarter's results.

Q: About the $500 million EBITDA in the back half of the year and flexibility on timing of the FEMA claim.

A: Brannen explained the claim process, totaling around $659 million, with dialogue ongoing with Weston and expected to settle in Q3.

Q: About Puerto Rico's 80 TBtu island-wide contract and obstacles.

A: Brannen and Wesley discussed Puerto Rico's power needs, focus on converting MegaGens to gas, and the business's model with high contracted volumes.

Q: About hedging natural gas and power exposure.

A: Wesley stated the business is a spread business with long-term contracts and no significant exposure.

Q: About opportunity in Pennsylvania and Ohio.

A: Wesley explained the area's attractiveness for data centers due to plentiful land, nearby population centers, and inexpensive gas, and the fast power solution's advantage.

Q: About capital intensity of Klondike business and refinancing of '25 notes.

A: Wesley said Klondike is capital-light with long-term contracts, and Andrew mentioned planning to refinance 2025 notes in the near-term.