New Fortress Energy Inc. Q4 FY2024 earnings call

Bullet points:

• FLNG one asset performed above nameplate capacity, with proactive process optimizations, reaching ~120% of nameplate capacity in January and shipping twelve cargoes totaling ~24 TBtu.
• Brazil operations: Operate two LNG terminals with ~200 terabytes used per year each, with Barcarena terminal serving Norsk Hydro Aluminum Refinery and soon to serve own power plants. Santa Catarina terminal ready for 2025 capacity auction. Secured equity and debt funding for projects.
• Puerto Rico: Significant opportunities in power plant conversions (could double portfolio size), new power builds, and extensions of contracts. Extended the ATBTU contract by one year, and changed O&M agreement with PREPA plants for a $110 million payment.
• Capital markets: Completed refinancing transactions, raised $409 million in new equity, extended revolver to October 2027, issued $2.7 billion bond, and closed $425 million term loan B upsized, strengthening balance sheet and liquidity.
• Deleveraging and asset sales: Focused on deleveraging, simplifying capital structure, and reducing debt cost. Asset sales process underway, expecting $2 billion net proceeds to further pay down corporate debt.

In the fourth quarter, New Fortress Energy had $313 million in EBITDA, a 50% increase over previous guidance. For the full year 2024, EBITDA was nearly $950 million. The FLNG asset was a key contributor, with the FLNG one asset performing above nameplate capacity, shipping twelve cargoes totaling ~24 TBtu. Segment operating margin for Q4 was $240 million, and ~$1.1 billion for the full year 2024. Sales to customers through downstream terminals and cargoes sold to the market contributed ~85% of Q4 revenue, and ~88% for the full year 2024. Operating margin from ships was $34 million in Q4 and $137 million for the full year 2024.

Bullet points:

• Confirmed 2025 guidance for $1 billion in total EBITDA.
• Expect to grow EBITDA by 50% or more in the next two years with little CapEx.
• Guidance is based on focusing on current markets and executing on opportunities in Brazil, Puerto Rico, and other core markets.

Bullet points:

• Geopolitical factors, such as prospects of a resolution in the Ukraine-Russia war, could impact gas prices and market dynamics.
• Market volatility in gas prices could affect earnings and cash flow if not managed properly.
• Uncertainties related to asset sales processes and their timing could impact deleveraging plans.

Q: Can you quantify the effective open position and the hedging decision?

A: The majority of the portfolio is either sold, destined for downstream customers, or hedged. The decision to derisk was made to avoid exposing the portfolio to price volatility, with the goal of being neutral to price moves while retaining optionality.

Q: Update on cost saving initiatives in Puerto Rico and others?

A: Cost savings initiatives include reducing the number of supply ships, refurbishing and upgrading berths, and leveraging learned efficiencies from the capital-intensive business to reduce costs in shipping and operations.

Q: Details on Brazil power projects' turbines and CapEx?

A: Secured turbines from partners, with CapEx per kilowatt installed around 600 Brazilian reals. Projects spread over two sites, with discussions ongoing for partnering with existing assets to share fixed capacity payments and gas call options.

Q: How quickly can older plants in Puerto Rico switch to gas?

A: Older plants can switch fairly quickly if regas is in place. Mega gens are gas ready, and efforts are focused on converting more plants to save money and reduce emissions, opening up more gas sales opportunities.

Q: Guidance on third-party supply book in out years?

A: Further out, there's significant gas availability due to construction activity and market dynamics. Longer term, there's a lot of gas available for projects with creditworthy downstream customers, and the portfolio is well-matched to derisk and take advantage of price elevations.