New Fortress Energy Inc. Q4 FY2023 earnings call

Brazil

• Barcarena and Santa Catarina terminals operational. $500 million+ EBITDA from existing business, with future power auctions offering growth potential. $2.2 GW portfolio in Brazil expected to grow to 4-5 GW, financed with support from Brazil Development Bank (BNDS).

Puerto Rico

• Developed FEMA power plants, which are essential to the island's energy security. Privatization of PREPA’s thermal generation fleet with Genera, managing 5 GW of power across 17 sites, 700 employees, and 1.5 million customers. Ongoing initiatives include adding battery storage, peakers, and fuel switching.

Fast LNG

• First FLNG expected in March 2024, first cargo in April 2024. FLNG 2 fully financed, construction begins in April 2024, expected to turn on in Q1 2026. LNG production from FLNG units will supply downstream terminals, with volumes in FTA countries exceeding supply.

Financials

• 2023 EBITDA $1.3 billion, Q4 EBITDA $388 million. FFO $3.56 per share in 2023, guidance for $6+ in 2024 and $8+ in 2 years. Net CapEx expected to decrease significantly in 2024.

The company has multiple segments. In power, it owns, manages, and supplies fuel to 8.689 gigawatts of power. Gas is not exposed to market price changes, as evidenced by stable earnings despite LNG price declines. Terminals have varying utilization rates: Jamaica 10%, Puerto Rico 25%, Mexico 10%, Nicaragua 20%, Brazil 40%, with significant upside potential as they require little CapEx for increased throughput. Revenue contributions: Terminals provide a sustainable competitive advantage, power is a large component with 8.689 GW, and gas is managed to avoid market price exposure.

Forward-Looking

• FFO expected to be around $1.25 billion in 2024, with net CapEx decreasing. Expect to double earnings from 2023 to 2024 and roughly double again in 2024. FLNG 1 to produce first LNG in March 2024, FLNG 2 construction starts in April 2024, expected to turn on in Q1 2026. Brazil operations to generate $500 million run rate EBITDA by mid-2026.

Risks

• Regulatory uncertainties in Brazil and Puerto Rico. Potential issues with the liquefaction pause in certain regions. Market price fluctuations, though the company is insulated from LNG market prices due to its integrated model.

Q: About FEMA power plants in Puerto Rico and their future A: Brannen McElmurray discussed the transfer of plants to Puerto Rican government, criticality of infrastructure, and future conversion opportunities Q: About competitive landscape in Brazil and maintaining market share A: Wes Edens and Andrew Dete talked about Brazil's capacity auctions, internal capital markets, and terminal advantages as barriers to entry Q: About FLNG 2 and Mexican contracting A: Brannen McElmurray mentioned everything is in place for FLNG 2 with CFE as partner and no expected challenges Q: About LNG price arbitrage and integrated model A: Wes Edens stated the company focuses on integrated model and is insulated from LNG price swings Q: About Brazil power auctions and timeline A: Andrew Dete explained the auction process in Brazil, likely to happen in summer, with potential for existing or new generation Q: About Puerto Rican power plant monetization and ratepayer impact A: Brannen McElmurray discussed rate impact and headroom for ratepayer savings Q: About gross CapEx composition and capitalized interest A: Chris Guinta talked about breakdown of $1.5 billion gross CapEx, including FLNG spend, Brazil power plant works, and fuel switching in Puerto Rico