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Jun 30, 2020
New Fortress Energy Q2 2020 Earnings Report
New Fortress Energy reported financial results, marked by increased revenue and positive operating margin, offset by a net loss due to contract termination charges.
Key Takeaways
New Fortress Energy reported an increase in revenue driven by higher volumes and a positive operating margin for Q2 2020. However, the company experienced a significant net loss due to contract termination charges related to the termination of 2020 cargos.
Operating Margin increased by $17.4 million since the first quarter to $15.2 million.
Record volumes were achieved, with average daily volumes sold at approximately 978,000 gallons per day.
Completed termination of 8 remaining 2020 cargos for $105 million, resulting in a one-time charge.
Converted all Class B shares to Class A shares to enhance liquidity and improve credit profile.
New Fortress Energy
New Fortress Energy
Forward Guidance
New Fortress Energy anticipates increased volumes and continued focus on key markets.
Positive Outlook
- Gallons per day volumes are expected to be between 1,700,000 and 2,000,000 on average for the remainder of 2020
- The company expects to take advantage of historically low prices of LNG on the open market.
- Conversion to a C Corporation will make NFE shares eligible to be included in benchmark stock indices.
- The company is progressing with financing and capital plan, targeting savings of $25mm per year through refinancing
- Once refinancing is complete, the company aims to return capital to shareholders by considering a quarterly dividend.
Challenges Ahead
- Construction or commissioning schedules may take longer than expected.
- Volumes sold may be less than expected due to decreased customer demand or supply issues.
- Expectations about LNG purchase price, sales price, production cost, and margin may not align.
- Conversion from LLC to C Corporation may not be effective on the expected timeline or result in stock index inclusion.
- The downstream committed projects costs could be greater than expected.