New Fortress Energy Inc. Q3 FY2023 earnings call

• First FLNG unit is mechanically completed, in the field, connected to the pipeline, and in final commissioning stages. 5.4 million man hours and 2.5 years to complete. • In Puerto Rico, completed two power plants with the second COD in September 2023; these are the cheapest and most reliable power in the island, avoiding $600 million in economic loss. • In Brazil, two terminals are mechanically complete, FSRUs are heading to Brazil, with long-term contracts in place (e.g., Norsk Hydro 30 TBtu 15-year contract starting in Jan 2024). • Fully financed balance sheet with term loan B closed, allowing focus on deleveraging towards investment-grade rating. • Record core operating earnings: Q1 $15M, Q2 $49M, Q3 $195M, with Q4 expected to be double or more of Q3. • Hydrogen business: ZeroPark's making progress, with expansion plans for hydrogen production facilities, including a site in Beaumont, TX expanding to 200 MW/100 tons per day of hydrogen production with a 100% offtake deal with OCI.

Total segment revenue for the third quarter was $514 million. Downstream operating margin was $195 million, which is an astounding 4x what it was in Q2 and 13x what it was in Q1. The Ship segment produced another $50 million in operating margin for each of the past two quarters. Downstream operating margin contributed approximately 37.9% of total segment revenue ($195 million / $514 million), and the Ship segment contributed approximately 9.7% ($50 million / $514 million).

• Expect $1.6 billion in adjusted EBITDA for 2023, $2.4 billion for 2024. • Q4 adjusted EBITDA expected to be double or more of Q3. • EPS estimate for 2023: $2.50 to $3, for 2024: $6.50 to $7. • Over 85% of 2024 adjusted EBITDA expected from downstream customer volumes, with close to 90% of volumes already contracted. • Forecast $1.2 billion of cash flow in 2024 to be used for deleveraging.

Q: Can you clarify if there are contributions from non-contracted downstream assets in Q4 EBITDA?

A: There is one cargo expected to sell in Q4, otherwise earnings come from contracts to downstream customers through infrastructure.

Q: Talk about terms and structure of Bahrain and Power project financing?

A: Will fully repay existing term loan with first drop, and can draw over time as project progresses, with long tenure and advantageous rate below 8%.

Q: About CapEx deployed in Q3 and guide for remainder through 2024?

A: Mostly work on FLNG1, some procurement for FLNG2 and CapEx for San Juan power plant turbines; lumpy in Q3 with more details to come.

Q: Status on FLNG unit with respect to DOE?

A: Nomenclature issue resolved, DOE agreed it's a nonevent; FLNG2 units can be placed in either offshore or onshore locations as decided.

Q: $1 billion of asset sales, granularity?

A: About $1.5 billion in noncore assets on balance sheet, these assets produce little free cash flow/EBITDA, belong in others' hands, cleaning up balance sheet and providing incremental cash flow.

Q: Downstream growth outlook, fuel switching markets?

A: Markets like Puerto Rico and Brazil where switching from diesel to natural gas is a massive savings opportunity with steady incremental volumes; Henry Hub vs diesel price delta drives behavior.

Q: FLNG2 capacity and invested capital?

A: Each train 1.4 tons, total invested capital around $2.5 billion, can put multiple units offshore/onshore.

Q: Need for further downstream project origination?

A: Existing markets (Brazil, Puerto Rico) have massive organic growth potential; considering markets like Ireland but focus on executing existing projects.

Q: Sticking points in Pemex negotiations for stranded gas?

A: Fast LNG deployment is possible, but current focus is on FLNG1 and 2; stranded gas fields can use this technology, but no immediate plans for more beyond current projects.

Q: FLNG permitting for onshore BOE application?

A: Separate application for onshore facility if pursued, DOE clarified it's a separate process not affecting offshore permits.

Q: Bridge Q3 EBITDA and CapEx to full-year guidance?

A: EBITDA expected $1.6 billion for year, including gains on asset sales, with Q4 filling the remainder, driven by full quarter utilization of San Juan power plant.

Q: Puerto Rico $5 billion program scope?

A: Army Corps program $5 billion, NFE selected in groups to participate in power generation or similar infrastructure builds, similar to completed projects in Palo Seco and San Juan.