New Fortress Energy Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
May 14, 2025
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Operator

Good day, and welcome to the NFE First Quarter twenty twenty five Earnings Call. Today's conference is being recorded. At this time, I will be handing the call over to Matt Reinhardt, Managing Director, for introductory remarks.

Matthew Reinhardt
Matthew Reinhardt
Co-General Counsel & Chief Compliance Officer at New Fortress Energy

Good afternoon, everyone. Thank you for joining today's conference call, where we will be discussing our first quarter twenty twenty five results. The call is being recorded and will be available by replay on the Investors section of our website under the subheading Events and Presentations. At the same location, you'll find a presentation that we

Matthew Reinhardt
Matthew Reinhardt
Co-General Counsel & Chief Compliance Officer at New Fortress Energy

will walk through on today's call. Please review this as it includes important information on forward looking statements and non GAAP measures. With that, let me hand the call over to our Chairman and CEO, Wes Edens. Wes?

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

Great.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

Thanks, Matt. Welcome, everyone. So lots to go through here this afternoon, and I'll try make my own statements brief. Start with the the core earnings for the quarter. We're very much in line with expectation.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

If you look at the the yellow boxes on the on the piece of paper, you can see that post the first quarter of twenty four, which is the last quarter that we had the FEMA plants online in Puerto Rico, We've had basically extremely consistent core earnings, 10, one 70 seven, but then one zero nine, one 16, so very much in line with that. Our forecast for the core earnings for the remainder of the year are basically very much in line with what this is for the first half and then accelerating in the second half as we start to bring assets online, in particular those assets in Brazil. That said, the EBITDA that we had forecast for the quarter were less than that simply because we did not have any one off results to add to it. Again, if you look at our numbers historically, we've had a combination of core results plus one off results, and we simply didn't have any one off results this quarter. That said, we expect EBITDA plus gains to be 1.25 to $1,500,000,000 for the year, which is higher than our previous estimate.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

We're actually off to quite a good start in that regard, in particular when you consider the events of just today. We already had meaningful gains with our Jamaica sale, which I'll talk about in a second, and there's a handful of other things that are gonna be significant events for us to add to our core events. But but our goal is the quality versus quantity of the earnings, In particular, what we are looking to generate for shareholders and for our constituents is repeatable, easy to understand, and very long duration cash flows. And I'll explain kinda what the portfolio looks like because we have a lot of those to to offer. So let's flip flip the page to page number four.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

Material events, you know, that are in front of us. First and foremost is the Jamaica Sale. One Point O Five Five Billion Dollars closed today just a few hours ago. That translates into about $800,000,000 in net proceeds, a $430,000,000 gain. So, again, a good start at whacking at the, the one off gains that we expect to generate for the course of the year.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

The FEMA claim, is is, as we originally had filed it with FEMA, six hundred and fifty nine million dollars. There's a very high degree of reengagement with the army corps, which is our and and our prime contractor, Weston, that is making a lot of progress. And we expect resolution of this claim at some point in the near term. As with any, proceeding with the government, it's impossible to to really forecast accurately either the time or the amount of that, but we remain optimistic about what our position is as we know what we are owed. So the and the 659,000,000 reflects that.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

On the, on on the FSRUs subcharters, we basically had a handful of, FSRUs that were surplus to our needs in our portfolio that we basically took back and then relet them at a higher rate to third parties. The estimate of the freeze, and then there's there's two others that are in there. The, the total nominal dollars are shown, in the line below. So a hundred and $43,000,000 in profit, $59,000,000, a hundred and 10 at 312. They range in in periods from anywhere from three to ten years.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

The present value at a 10% discount rate, just to give context to it, is $236,000,000. So these are assets we can either collect, you know, month by month over the next, you know, three, five, ten years, or we can look to to sell them and generate a onetime gain, something we're evaluating. Lastly, the excess cargo sale that we conducted at the end of last year and reported the the result in the fourth quarter, which, again, if you look at the previous page, the excess cargo was $296,000,000. These were ex excess cargoes that we had. We were concerned that actually the market might decline for value.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

That turned out to be prophetic because that's exactly what happened. We sold them. So that really the the gain from them was the onetime gain from last year. There's another hundred and $25,000,000 to be collected primarily in the periods of '26 and '27 and stub in '28. So those are the big events, for us.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

There's others as well. But, hopefully, this gives you some useful context in evaluating the 1.25 to $1,500,000,000 EBITDA or gain on estimates we're providing for the year. Page number five. So our near term focus has been on asset sales, on debt reduction, and deleveraging. And the case study is the sale that we just concluded in Jamaica.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

If you look at the time line below, you can see we listed the the the property for sale in the February. We conducted our second round bid and and went into down to five bidders in the in the first quarter. We chose to work with Accelerate exclusively in March, and we conclude the sale now. Basically, both the timing and the amount that we had forecast that we've exceeded. So, we did it in a shorter period of time and in a higher price than what we had originally forecasted.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

So we feel great about that. A little bit on on Jamaica, Bubba. This is the first market that we had started to conduct business in, and it is a great market. We ended up generating a hundred and $25,000,000 in EBITDA, stable, mature market with long term contracts with a twenty year duration. So, a significant portion of them were supplying Jamaica's gas and power needs, so roughly 60% of the ons gas or power we supply.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

They still think there are significant, remaining growth opportunities in Jamaica for bunkering expansion. So we feel great about the asset that we sold on to Accelerate. From our standpoint, this is a meaningful deleveraging event for us. So sale price, a billion $0.55, $227,000,000 in debt repayment from the on the direct Jamalco asset in the power plant. They estimated $50,000,000 in fees.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

Net proceeds is $778,000,000. Chris will talk about that later. Page number six. You know, following the Jamaica sale, our goals are very, very clear. Number one, first and foremost, is to simplify the balance sheet and do so by extending the duration to match underlying assets and lower our debt costs.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

To do so, we are focused on moving from a corporate debt structure to one which is more asset level financing, and we'll describe that in some detail. This is something we've had a lot of experience about before. And I think in many cases, when you have a capital structure that becomes too complex or too difficult for people to interpret, the underlying asset value can become obscured by it, and you get kind of the worst of all worlds. And so what we're very focused on is isolating those assets that have the long duration, the credit quality, the the repeatability that we know to be the most make them the most valuable, expose those in a financing context, and generate, you know, the the the the right result for that. So you look at page number seven.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

This is a good example of what I mean. Basically, what we have done is matched our long term supply in our portfolio with our our FLNG unit, which is performing terrifically, and then two long term contracts with Venture Global, and match them up side by side with those contracts that are our long term demand. So I've listed the five that are the most notable. There are smaller ones as well, but these are the ones that that are they're the most meaningful. And, basically, you can see on the supply side, we have 215 TBTUs of supply for a term of twenty years.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

On the demand side, this handful of the large contracts is for twenty years as well on average, and it ranges from triple b, double b plus, double triple b minus, single b plus in in the one case. But they're they're generally high credit quality assets, very long term, you know, duration, and these are their stated contract terms. And simply subtracting the cost of supply from the the value of the demand, you'll see these assets alone generate $500,000,000 in annual margin. These are not assets that we are aspirational about building or assets that we are talking about pursuing or whatever. This really represents the core of the portfolio.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

And the way I think of it is we're utilizing about 50% of our total supply portfolio. So of the 215, this is committed on a hundred and nine TBTUs of it. And if we're able to replicate our activities on the second half of this at terms similar to the first half, we can generate 500,000,000 that grows to a billion dollars annual margin with very, very long duration. And with that, that presents tremendous financing opportunities. It also presents great value, you know, to shareholders, and that's that's what our focus is.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

Page number eight is that in order to close the loop and finance this efficiently, you need to control every aspect of the logistics chain, supply, demand, terminal ships, overall logistics. Fortunately, we control all of that. So the four terminals that are relevant in this in this discussion is the La Paz Terminal in Mexico, Puerto Sandino in Nicaragua, the Bacarena Terminal in Brazil, and the San Juan Terminal in in San Juan, Puerto Rico. We have these terminals that we own and control essentially and have developed. In addition, we have a dedicated fleet of terminal ships and transport ships to basically both supply to the locations, but then also supply then onto the land.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

So, basically, you've connected the dots between every aspect of it. And so the combination of the long term cash flows, credit quality, duration, in in particular of this, the twenty year duration, is what actually gives us so much optimism that there's there's meaningful things to do here. There's a reason why Charlie Munger used to carry around the compounding tables in his in his back pocket. You know, twenty years of repeatable cash flows is an incredibly powerful combination, and that's what we have already in hand, we think the prospects for adding to it are are terrific. So on the on the growth side, two elements that we're focused on is Brazil and in Puerto Rico.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

And I'm joined here in New York by Leandro and Jeremy from our Brazil team who run run Brazil for us, and They can give some context both on what we have accomplished and what we're focused on. Carlos?

Leandro Cunha
Leandro Cunha
Managing Director NFE Brazil at New Fortress Energy

Thanks a lot Wes. Good afternoon everyone. I'm pleased to be discussing our progress and outlook in Brazil. Over the past few years, we've made significant and strategic investments in the country, laying the foundation for a high value and resilient business. After years of, dedicated work and over billions of investment, we are finally approaching the full commercial operation dates of our key assets.

Leandro Cunha
Leandro Cunha
Managing Director NFE Brazil at New Fortress Energy

One of our projects, a 624 megawatt combined cycle power plant, is expected to reach COD in the second half of this year, while the second power plant, a 1.6 gigawatts open cycle plant, is on track for COD by mid mid next year. This is a key moment for us. These investments are covering converting into a long term contracted assets, and we are very excited to be part of this transformation at NFE Brazil. In this slide number 10, I wanted to highlight the Bacarena complex and its associated long term contracts. These contracts, all of them are inflation linked.

Leandro Cunha
Leandro Cunha
Managing Director NFE Brazil at New Fortress Energy

They are protected from gas price volatility and backed by strong credit ratings, providing stable and predictable predictable cash flows for our business. Starting with the NOx hydro contract, we began deliveries in March 2024 under a fifteen year gas supply agreement, which is indexed to Henry Hub plus 6 and $04 per million BTU adder with part of the other adjusted by US CPI on a yearly basis as shown in the slides. The contract covers approximately 30 tera BTUs a year with a 90% take or pay. For Selbatu, our 624 megawatt plant, we have a twenty five year PPA with a % take or pay during the second semester of each year starting from COD, expected to occur in the second semester of the year. The gas volumes here is approximately 18 tera BTUs a year considering only the take or pay with price index to 91% of JKM plus another of, 3.36 per million BTU, which is also adjusted by US CPI on a yearly basis.

Leandro Cunha
Leandro Cunha
Managing Director NFE Brazil at New Fortress Energy

Finally, at Porto San, our 1.6 gigawatt plant, we secured this fifteen year capacity contract with the National Grid, which pays approximately $280,000,000 for the availability of the plant, plus a dispatch component whenever the plant produces power. Assuming a 10% dispatch rate, it would translate into an approximately 12 terabytes use year of additional gas demand at a premium, gas prices. These projects are secured by strong counterparties, as mentioned by Wes, which demonstrates how robust our commercial foundation is. I will hand it over to Jeremy to walk you through the construction update. Good afternoon, everybody.

Jeremy Dawson
Jeremy Dawson
VP - Business Development at New Fortress Energy

It's my pleasure to give you a very positive construction update, this quarter. Since we last spoke on our Selba power plant, as Leandro just mentioned, the six twenty four megawatt combined cycle plant, since our last update, we've increased general progress by over 7%. On Porto Cem, we've increased the progress by over 15%. That brings both of our plants now to a 95% completion for Selva and a over 54% completion for Porto Cem. Those those major milestones that we've achieved are actually in spite of the fact that in this previous quarter, we had a very intense rainy season to work through.

Jeremy Dawson
Jeremy Dawson
VP - Business Development at New Fortress Energy

In a couple of the months of the quarter, we had near thirty year historical levels of precipitation. And in the case of Porto San, which is in a largely civil construction phase, that was a significant achievement for the project team to not only maintain the, the float and the, the schedule improvement that we have, but also actually increase it a little bit. Back to Selba 2 on the combined cycle plants, at 95%, we're nearing a very important milestone of mechanical completion. We're in a phase right now, very critical phase of the high pressure hydro testing. We've tested the steam system up to 96 bar on our way to 300 bar eventually.

Jeremy Dawson
Jeremy Dawson
VP - Business Development at New Fortress Energy

Another important milestone of the 95% is that it it means a different level of effort at our site. The 95% mechanical completion milestone effectively means that we can transfer the main level of effort from our construction contractor over to our power core provider, Mitsubishi, and allow them to, after first fire, which we expect at first fire of the gas turbine, which we expect at the August, to take over the level of effort at site and to start generating commissioning power. On Porto Cem, although we are in a civil construction phase, we we did advance it significantly during this this last quarter. We one interesting note is if you recall the last update, we showed you photos of gas turbines in transit to the site. As you see here in our update on slide 11, we're showing you photos of gas turbines installed at site.

Jeremy Dawson
Jeremy Dawson
VP - Business Development at New Fortress Energy

We actually have two out of the three turbines that are already manufactured. We have them installed at the site. The third gas turbine will be arriving at the end of the month, and we're also in the process of installing two of the three electric generators. We have the primary ability that we've leveraged in our schedule being more than 10% ahead of the the planned completion percentage at this point, is that our main equipment has arrived well ahead of the planned delivery dates. This derisks our schedule completely and helps us to maintain a 10% float in our completion plan at this point.

Jeremy Dawson
Jeremy Dawson
VP - Business Development at New Fortress Energy

Importantly, in this past quarter since we last spoke, we've also commenced work on our 500 kV transmission line and the substation where our GIS will arrive later this year to be installed. Just before I hand back to Leandro for the power auctions, one interesting note on Porto San. As you recall, this project is one that we we procured from another site and transferred it to our Barcarena facility with some milestones that were delayed from the original project developer. We've actually transitioned to the schedule advancement to such a point that we're now accomplishing some of the original developer's milestones that were promised to the regulators in Brazil, although it was they were more than a year into development when we when we procured this project. So we'll look forward to another successful quarter, and I'll get back to you at that time.

Jeremy Dawson
Jeremy Dawson
VP - Business Development at New Fortress Energy

Thanks, Fernando.

Leandro Cunha
Leandro Cunha
Managing Director NFE Brazil at New Fortress Energy

Thank you, Jeremy. Turning to Slide number 12, I want to discuss the market's outlook and the upcoming opportunities with a focus on the capacity auction expected later this year. First of all, I mean, probably most of you heard about it, the auction that was originally scheduled to happen in June was canceled, and we believe this is a temporary delay, actually. The Ministry of Mines and Energy has stated publicly that he expects the auction to take place in 02/2025, and we expect rules to provide more clarity and fairness to the competition. Just to make it clear, the fundamentals haven't changed yet.

Leandro Cunha
Leandro Cunha
Managing Director NFE Brazil at New Fortress Energy

Brazil still needs to contract in our estimate 10 to 15 gigawatts of capacity. The PPAs are expected to have CODs between 02/1926 and 02/1930, for both brownfields and greenfield assets. And we and we will offer capacity payments similar to Porto San with fifteen year terms for greenfield projects and guy gas index to JKM and TTF. While the postponement of the auction created some short term noise in the country, we are confident in the structural needs for the auction. There is no question that Brazil needs the power.

Leandro Cunha
Leandro Cunha
Managing Director NFE Brazil at New Fortress Energy

And if this auction doesn't happen, the system could face real operational challenges. We're fully prepared as NFE Brazil. We are positioned to register over two gigawatts of projects in the upcoming auction. Additionally, more than three gigawatts of third parties projects have requested gas proposals from us, showing clear market confidence, and the competitiveness of our platform in Brazil. In short, we see a path for meaningful expansion of our business in Brazil with strong counterparties, solid regulatory support, and rising demand for our integrated LNG to power model.

Leandro Cunha
Leandro Cunha
Managing Director NFE Brazil at New Fortress Energy

Thank you very much, and I wanna hand it over to Wes.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

Alright. Thanks, Leandro. Let me briefly talk about Puerto Rico because it's another big market for us with a lot of activity. Just a bit of a situational overview of of what the energy system in Puerto Rico looks like. It's a very underinvested, very antiquated system that is in great need of repair and great need of new investment, in particular, on the new generation side.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

There's been no power plants built that are material in the last thirty years, so the average power plant is quite old, which rotating equipment is really not to operate efficiently for forty, fifty, sixty years. And so there's there's a lot of challenges in terms of the fleet that exists. Over 50% of it runs on some combination of oil and diesel. Contrast that to the Mainland United States where less than 1% of our electricity is is operated on diesel. You can see there's a huge difference between utilities that we find in the Mainland and what we see there.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

What that means is is that the the the plan and the needs in the business in Puerto Rico on the energy side, we think are extremely clear. Number one, there's a lack of sufficient reserve, which hence means that they need temporary power, which is exactly what they've done in terms of going out for a bid for temporary power. You know, especially with the upcoming summer and the demands on the system that happen when it gets hotter down there and, of course, hurricane season is around around the corner, there's a concern that they lack adequate reserve from some of the plants being offline instead of trying to to buttress that by holding an RFP for temporary power. Number two is there is a total of about 925 megawatts of power today that runs on diesel that can be readily converted to natural gas. That represents roughly a $300,000,000 difference in fuel cost between the burning the diesel and burning the natural gas for no benefit whatsoever.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

And so our view is is that that in the context of the RFP that has been talked about for gas supply, it should include a provision to also convert those to other assets. We list the four that are on here. There's the Mayaguez Two Hundred megawatt plant, Campellantia Two Hundred And Forty megawatts, the the three Pratt and Whitney mega gens that are in Palaseko, and the Aguirre One And Two, which is a combined cycle plant in the South. All those can be readily converted, and simply doing so is relatively low cost to the system and can generate, you know, very, very meaningful decreases in fuel cost to them, upwards of $300,000,000 a year. Lastly is there's been no new power generation built in the last thirty years.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

There was a plant that was agreed by the government in early January. It was the first new PPA that's been signed in some time. We are the gas provider for that in the long term. And so we think that, you know, basically building new generation is really what will cure what ails the system for the most part because the lack of reliability the inefficiency of the system is really, really a function of these old power plants. So and right now, there are plans underway by PREPA to address these issues by running the RFPs for temporary power, running RFP for gas supply, and running RFP for new generation, all of which we think are interesting opportunities and and situations which we will certainly take a hard look at.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

Our infrastructure in San Juan has had a very good quarter. This is the the first time that we got a large ship. So, basically, we're able to replace the flotilla of kind of smaller logistical ships with a larger ship with the the channel widening that the Army Corps had engaged in. That actually allows us to be more efficient in bringing in more supply. So, basically, cuts our expenses, but it also greatly increases the, capacity of that of that, terminal, which is a good thing.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

So with that, let me turn it over to Chris. Great.

Christopher Guinta
Christopher Guinta
Chief Financial Officer at New Fortress Energy

Thanks, Wes. Appreciate the opportunity to talk to everybody today. First, let me start with giving a little bit more color regarding the two recent SEC filings that we submitted earlier this week. On Monday, we filed an eight k outlining an update to the use of proceeds of the Jamaica sale, which I'll walk through shortly. And yesterday, we filed a notification of late filing under rule 12 b 25, which allows the company to file our full full form 10 q no later than Monday, the nineteenth.

Christopher Guinta
Christopher Guinta
Chief Financial Officer at New Fortress Energy

The reason for the late filing is twofold. First, we wanted to be able to announce the consummation of the sale of the Jamaica business, including describing for investors the use of proceeds. And second, with the Jamaica asset sale proceeds in hand, we can report an improved liquidity prediction and reduction of the going concern risk that was included in the 10 ks. So now turning to slide 15, we've outlined both the cash and the accounting treatment of the Jamaica transaction. On the left side of the page, we show the proceeds waterfall and on the right side, the gain we will recognize in the second quarter.

Christopher Guinta
Christopher Guinta
Chief Financial Officer at New Fortress Energy

Now prior to the most recent amendment of the credit agreement, there was a requirement to use 75% of the proceeds of material asset sales to pay down super priority debt, which included the revolving credit facility, the term loans a and b, and the new 2029 notes. However, we were able to negotiate an agreement with the revolving credit facility lenders to waive this asset sale proceeds waterfall in exchange for the early paydown of the September amortization payment of $270,000,000. In addition, we also amended the term loan a where we agreed to a modest paydown of $55,000,000, which is in line with what they would have received under the waterfall anyway. Further, we eliminated the debt to capitalization covenant in this facility, and we matched the financial covenants of that loan to those in the in the revolving credit facility, none of which will be tested until September thirtieth of this year. As a result of these amendments, we were able to retain almost $400,000,000 of proceeds after tax that can be used to solve in part nearer term maturities, including the 2026 notes and non extended revolver tranche, thus eliminating debt maturities until the second half of twenty seven.

Christopher Guinta
Christopher Guinta
Chief Financial Officer at New Fortress Energy

On the right side of the page, we show the expected accounting gain on this transaction. Gross proceeds of $1,055,000,000 less the asset level debt and fees and expenses gets to net proceeds of $778,000,000 then reduced by our basis, which is $177,000,000 and reduced by goodwill allocation of 172,000,000 will result in a book gain of $430,000,000. A big thank you to our full team that tirelessly worked to get the Jamaica deal closed. This includes our internal employees, our external advisers, and our partners at Accelerate, and we send best wishes for their success with an incredible asset. Go ahead and turn now to slide number 16, and let's talk for a bit of minute more about the two FSRU contracts that we signed over the last couple of months.

Christopher Guinta
Christopher Guinta
Chief Financial Officer at New Fortress Energy

In December, we announced that we chartered the Eskimo to eGas, and this week we announced that we chartered the Freeze to Energia two thousand. These two projects alone equate to approximately $200,000,000 of future earnings. Additionally, we are in advanced discussions with counterparties on two additional FSRU opportunities which contribute an incremental hundred million dollar to the total value of the portfolio. On an annual basis, these relets can increase our cash flow up to about $50,000,000 in added EBITDA per year. Further, with the high demand for these contracts, we have the opportunity to novate or sell them to other companies, which would provide us with upfront payments that we think are around $200,000,000 And when that occurs, it would be included in EBITDA and, of course, earnings.

Christopher Guinta
Christopher Guinta
Chief Financial Officer at New Fortress Energy

Turn please now to Slide 17, and we have financial results. Total segment operating margin was $106,000,000 for Q1 compared to $240,000,000 for Q4 of twenty twenty four. Core SG and A for the first quarter was $34,000,000 which is equal to what we had for Q4 of twenty twenty four. And for the balance of 2025, we're forecasting $30,000,000 a quarter. As Wes stated earlier, adjusted EBITDA for the first quarter was $82,000,000 Moving to Slide 18.

Christopher Guinta
Christopher Guinta
Chief Financial Officer at New Fortress Energy

For Q1, we had $200,000,000 net loss for GAAP or a loss of $0.73 a share. We had no material onetime items leading to the adjusted EPS to be the same as GAAP. As Wes said already, the quality of our earnings this quarter was high, but the quantity was lower than we were initially forecasting. Two differences that we were initially expecting in the first quarter versus what we are reporting is one, the recognition of the PR incentive payment, which is about $110,000,000 This is still something we expect to receive in 2025 but was not agreed to before the end of the before the closing of the first quarter. And two, a sale of the Eskimo vessel charter.

Christopher Guinta
Christopher Guinta
Chief Financial Officer at New Fortress Energy

Again, this is still something that we expect to complete in 2025, but we think that combining this with the other charters that have been signed as well as ones in process makes this a more attractive as a package of contracts than one off. In spite of lower than expected earnings, we still have a strong liquidity position. We ended Q1 with $448,000,000 of cash on hand and $275,000,000 available under our revolving credit facility. Add to that the $393,000,000 of cash proceeds after debt paydown, and you have over $1,100,000,000 of pro form a liquidity at the end of Q1. With that, thanks everybody for your time.

Christopher Guinta
Christopher Guinta
Chief Financial Officer at New Fortress Energy

I'll turn the call back over to the operator for Q and A.

Operator

Thank And our first question is gonna come from Gregory Lewis from BTIG.

Gregory Lewis
Managing Director at BTIG

Yeah. Hi. Thank you, and good afternoon, and thanks for taking my questions, everybody. Know, Chris, I I I was hoping you know, thanks for laying out the liquidity and the cash and and the injection, injection, you know, post the Jamaica Sale. You know, I I was hoping you could walk us through, I mean, clearly, you have, know, a lot of restricted cash on the balance sheet.

Gregory Lewis
Managing Director at BTIG

Could could you maybe kind of point to, you know, is that restricted against specific projects? And and and and what kind of hurdles are there that could could free up that cash to make it unrestricted?

Christopher Guinta
Christopher Guinta
Chief Financial Officer at New Fortress Energy

Hey, Greg. Short answer is it's almost all related to the CapEx in Brazil. So that is restricted cash, meaning it can only be spent on the two projects that are still under construction, the Selva Power Plant and the Porto Sim Power Plant. The remainder, which is probably in the magnitude of 40 to $50,000,000, is restricted around kind of other credit instruments that we have inside the business, some of which will be freed up as a result of this Jamaica transaction, about 30,000,000 of it. And the remainder would stay restricted just because, again, it's collateral for other kind of credit support enhancement credit enhancement on other instruments around the business.

Gregory Lewis
Managing Director at BTIG

Okay. Super helpful. And then just as as we look as we kinda look across the cap structure structure at some of the debt is, you know, trading at a discount. You know, you kind of alluded to maybe looking to to to kind of refinance that post the Jamaica transaction. You know, but just given some of the cash on the balance sheet and and kind of running the numbers, is the company looking at potentially doing open market repurchases of some of that debt just to try to maybe be a little bit opportunistic?

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

We certainly look at the capital structure. We think that there's some significant opportunities as a result of it. I think the you know, I talked about the asset level debt, and maybe I should amplify that just in the first second because it'll help this. The the capital structure is used for liquefaction generally as people, you know, build a liquefier. They enter into a series of SPAs.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

It's it's for the most part kind of a wholesaling strategy of selling gas onto others. The margin in that business is relatively low, but then the the credit quality and the duration is very, very long and very, very high, and so they're able to generate, you know, significant amounts of financeability when they do so. In our case, we also have a portfolio of gas, both from our own liquefier as well as from other other sources. Our overall cost of that gas is roughly Henry Hub plus $2.50. Our margin across the the assets that I've list is about 4 and a half $4.50.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

So it's $500,000,000 of financeable cash flow that's buried in our capital structure right now, but we expose that into a twenty year duration transaction and just run the numbers on it. It has got the ability to refinance, you know, a significant portion of the balance sheet, if not all of it. And so from a standing start on where we are right now, we think it's now the appropriate time to really focus on this. Obviously, there was a lot of focus on the company's part in this Jamaica sale, but that's that's over with. And this will be the next step of it.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

And I think in the context of that, the goal would be to refinance the corporate balance sheet in its entirety, you know, over the course of the next twelve months or so. And and as part of of doing so, if we're successful in that, we'll obviously repay all the debt. As we start to repay it, you'll look at opportunities perhaps to retire at a discount if there still are are bonds that are available at a discount. So that that's that's the the process for it. We think that, you know, deleveraging through the asset sale we just had, having meaningful liquidity and addressing liquidity issues, which now with a billion dollars plus in liquidity, we feel great about what what the transaction has has realized for us.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

We're near completion on, the power plant in Brazil and so we have assets in hand that are extremely financeable with very, very high quality and very long term cash flows. Now is the time to refinance, lower cost dramatically, extend the terms so they're consistent with the the duration of the underlying cash flows. And then we think we can actually, with the improvement in our in our capital structure, that the loan will actually be be a substantial benefit to us. And we still have a lot of dry powder. So we've only utilized about half of the volumes that we own in our portfolio.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

And so if we're successful in re recapitalizing the balance sheet and lowering costs and extending, and then we also then grow as we expect to in Brazil and Puerto Rico and other places, all that growth would then accrue to the benefit of the shareholders. And so that's the next two steps that we really see. So first was an asset sale, and now it's a recapitalization refinance, and then it'll be growth. And those are the those are the the primary components of what we think it takes to be to be really successful. So sorry to give you a long answer to or to a short question, but that that's the context that hopefully will make it make sense a little bit better.

Gregory Lewis
Managing Director at BTIG

No. That was super helpful. Thank you very much.

Operator

Our next question comes from Chris Robertson from Deutsche Bank.

Christopher Robertson
Christopher Robertson
Equity Research Analyst - Vice President at Deutsche Bank

Wes, I was wondering if you could talk a

Christopher Robertson
Christopher Robertson
Equity Research Analyst - Vice President at Deutsche Bank

little bit about the short term power opportunity in Puerto Rico here. When people are bidding into the process, is it for equipment or equipment plus fuel? And what strategy is NFE taking here in terms of are you bidding in to provide equipment or just fuel supply, or or how does that process process work?

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

You know, I can only relate to what I've what I read through the portal because it's a it's a government run process, so they're actually quite disciplined about how they respond to information and provide information. The rules were were quite clear in that they were asking for a unitary cost of power kind of period. So you're not actually able to just simply bid in turbines. We actually asked that question specifically in the in the RFP questionnaire in the portal. And the two questions we asked are, were were you allowed to bid in equipment, versus, say, an aggregate power price?

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

Number one. And number two, was there any minimum dispatch that we could assume that would be guaranteed to know how much power would be generated and therefore can can run the numbers on it a little bit easier? And the answer to that was no. There was no minimum. So the requirements in the in the RFP were were quite stringent.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

From our standpoint, you know, we're blessed to have a big operation on the island and so can take advantage of the of the infrastructure that we have in place, but that's basically what it is. And, you know, I'd say of the of the three opportunities that I outlined, the the emergency power and the gas contract and the long term generation, they all could be interesting under the right circumstances. But the that's the emergency power is probably the least interesting just economically given the the relatively short duration and the lack of any kind of a commitment in terms of the utility of them. So

Christopher Robertson
Christopher Robertson
Equity Research Analyst - Vice President at Deutsche Bank

Okay. Gotcha. As my follow-up question, maybe one for Leandro here. As it relates to Selva, on the 18 TBtu per year, should we think about that as being more seasonally weighted in the back half of the year, or is it kind of split across all four quarters? And then just to confirm on on slide 10 here, there's no fixed capacity payment related to that.

Christopher Robertson
Christopher Robertson
Equity Research Analyst - Vice President at Deutsche Bank

It's just the the % take or pay on the volumes?

Leandro Cunha
Leandro Cunha
Managing Director NFE Brazil at New Fortress Energy

Yeah. So, Chris, the the power plants do have a capacity payment. It's around $25,000,000 per year. But the the the biggest payment that we get is the second semester of the year, which is linkage to the production of power and linkage to the 18 tera BTUs, of gas mentioned in the slide. So we get some payments throughout the year, but most of the payments of the plants, they are due on the second semester where we need to produce power.

Christopher Robertson
Christopher Robertson
Equity Research Analyst - Vice President at Deutsche Bank

Okay. That's a lot more clear. Thank you for clarifying that. I'll turn it over.

Leandro Cunha
Leandro Cunha
Managing Director NFE Brazil at New Fortress Energy

Welcome.

Operator

And our next question is gonna come from Wade Sukey from Capital One.

Wade Suki
Wade Suki
Equity Analyst at Capital One Financial

Good afternoon, everyone. Appreciate y'all taking my questions. Just a follow-up. I think it was on Greg's question, make sure I heard heard y'all correctly on on asset sales. I think you all originally had a a goal of, like, 2,000,000,000 if memory serves.

Wade Suki
Wade Suki
Equity Analyst at Capital One Financial

Oftentimes fails me. But, you know, clearly, Jamaica derisks substantially substantial portion of that. Anything left out here you could discuss?

Christopher Guinta
Christopher Guinta
Chief Financial Officer at New Fortress Energy

You asked about other asset sales. I mean, I think, like, the business, we have an amazing business in Brazil, these guys have talked about, which poses a lot of opportunities for us. You have those Pacific Theater, which is another kind of business in and of itself in Nicaragua and in in in Mexico. But I think, like, absent asset sales, Wes' point of being able to do large kinda securitization type transactions would allow us to refinance our debt at a significantly cheaper rate. That's our real goal, to be honest with you, Wade.

Wade Suki
Wade Suki
Equity Analyst at Capital One Financial

Understood. Appreciate that. I just switching gears here a little bit. I did notice, FLNG two not on the not in the Prestige. Can you give us a status update there?

Christopher Guinta
Christopher Guinta
Chief Financial Officer at New Fortress Energy

And there hasn't been much if you don't mind. Sure. Yeah. There hasn't been much development over the last kinda sixty days on on FLNG number two. I mean, still done reconstruction in the Kewit Yard.

Christopher Guinta
Christopher Guinta
Chief Financial Officer at New Fortress Energy

We have been focused obviously on the closing of the Jamaica transaction and on the refinancing of the business in order to ensure that we have ample liquidity and and altitude, so to speak, in the day to day operations. We love the project. We're still engaged on it with, you know, the the people in Corpus and in Mexico, and we'll be writing additional updates as we make more material construction progress.

Wade Suki
Wade Suki
Equity Analyst at Capital One Financial

Great. In Nicaragua?

Christopher Guinta
Christopher Guinta
Chief Financial Officer at New Fortress Energy

I'm sorry?

Wade Suki
Wade Suki
Equity Analyst at Capital One Financial

Nicaragua. Just hoping to get an update there. Thank you.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

Yeah. Nicaragua, we are in the final stages of, of restructuring our, PPA with, the government. We had a lot of thoughts about that. And, basically, what we're trying to do is to create a structure that looks most similar to the Selva and in in Puerto Rico long term gas contracts. So there's basically a a capacity payment that is designed to cover expenses and then a marginal gas cost that we think reflects kind of the the the the value of the credit.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

So if you think about it, Norris Hydro, which is an investment grade credit, is Henry Hub plus six. The CFE, which is a triple b minus credit, is Henry Hub plus seven forty five. And so we wanna be at a modest premium to that to reflect the the lower credit quality for Nicaragua. So I think once we get the the final agreement on the contract, then we'll finish up, you know, what remaining work we've got. The power plant itself is virtually a % built.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

The the terminal, you know, needs a little bit more time and effort, but, we're very, very close to the end. So we just need to finalize our agreement to to move ahead on that.

Wade Suki
Wade Suki
Equity Analyst at Capital One Financial

Great. Thank you so much. I'll go back into the queue.

Operator

And our next question is going to come from Craig Shear from Tuohy Brothers.

Craig Shere
Director of Research at Tuohy Brothers Investment Research Inc

Hi. Thanks for taking the questions. On Slide seven, mean, obviously, we're not getting the Plaquemines and especially CP two volumes anytime soon. What are your thoughts about bridging l n LNG supply needs between now and commencement of the, Venture Global SPAs?

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

We're actually very well positioned right now because we've got, the the volumes from, FLNG. Right now, the, the asset is producing basically right at nameplate capacity at the coal box. We are planning an outage here in a couple of weeks that we think is going to significantly improve from that level. So it's already performing very consistently and reliably and at a good level, and we think there's a significant amount of upside with the planned outage and debottlenecking activity of it. So that's 90 TBTUs is our estimate of where that will end up with.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

With the the volumes that we have in place that are needed in in Brazil is really just the Norse Hydro this year. In the second half of next year, then it becomes the the Selva plant. You know, Puerto Rico, the the large gas contract we signed earlier this year is slated to come on in 02/1928. So as we look across the portfolio, it's actually quite balanced overall in terms of the needs, you know, kind of step by step. And, you know, if we add to those those those volumes because we're successful in in in either Brazil or Puerto Rico or elsewhere, we can always then, you know, add in volumes to address that.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

But we've got a net position that is $2.15 versus the long term of $1.00 9. Obviously, there's some short term volumes in there that that could be displaced if we if we're successful in some of these longer term things, but we're we're in a very good position in terms of our gas needs and our gas use at the time. So it's, it it actually works well for the timing of these future developments.

Craig Shere
Director of Research at Tuohy Brothers Investment Research Inc

Gotcha. And, you you've been talking for a number of, months or quarters about the significant opportunities, with both the Puerto Rico RFP and Brazil capacity auction, into June year. You know, obviously, you have some competitive infrastructure advantages. Do do you do you believe some of the noise around, you know, liquidity and and and and and and balance sheet could impact any of the decision making there by regulators? Or do you think that given your entrenched position and the obvious virtual cycle of favorable awards on the whole business just kind of makes that a moot point?

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

Well, I think that, you know, we have a very viable business. We have a billion dollars in balance sheet. We've got, you know, significant assets that are not only very, very expensive to build, but are also very, you know, take very time consuming to build. So we feel like we've kind of earned our competitive position in these countries the hard way. We actually have, you know, set out years ago to build the essential infrastructure to get it into there.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

I mean, that said, in no case are we a monopoly. We don't wanna be a monopoly. We're not regulated like monopoly. That's not what we aspire to be. In Puerto Rico itself, I think today, we actually provide less than 50% of the fuel that's provided on the island.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

So Eco Electric in the South has significant gas abilities. You know, we've got a very, very good position in San Juan that's by design, and, you know, we've spent hundreds of millions of dollars developing our our our product there like anybody else could could do or could have done to give ourselves that position. But in no respect are we monopolistic about this. We think we're well positioned. And, you know, what we have predicted to happen in these countries, we think, is largely coming true.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

I mean, they're like, we're certainly disappointed that the the auctions in Brazil were delayed, but there was reasons for that that are out of our control. And as Leandro said, the needs of the country haven't gotten less. They've gotten greater during that period, we feel great about those auctions. And we've got great, great asset in the South that we think is gonna play a central role in in those auctions when they do come. And in Puerto Rico, with the both the the short term and long term generation needed, we think that having gas in San Juan is gonna prove to be very, very helpful.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

And so we'll we'll obviously need need to find if we can do that economically attractive levels and and and and go from there. But we feel like the competitive situation is actually really good. I mean, I think most importantly, when you disaggregate and you look behind the numbers, you look at the assets that we've got, you're generating half a billion dollars in cash flow on a twenty year duration assets that are largely, you know, right around investment grade. So that though, that is a that is a laudable place to be. We feel like that our valuation in no way reflects that.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

And so we'll go finance ourselves on a long term basis, and we'll, you know, fix the the capital structure and and align it with the the same duration of what we're we've got on the asset side and and kinda go from there. And if we're fortunate and through the hard work of us and our people in the field, we can add to our with more long term off take and use up some of the excess capacity we've got on the supply side. We think that, you know, there's a tremendous amount of upside in both the the debt and the equity side. So that's that's the plan. The one thing I'd say is that on on this the last thing I'll say is that on the securitization front, you know, we've securitized or have created structured financings for many, many different products over our our careers.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

And I think in the scale of degree of difficulty, if you just take the Brazilian assets, you've got two assets that have got, you know, direct obligations by the Brazilian government in one case, Norskider in the other. So double b plus and triple b rated counterparties, discrete cash flows with no variability that run out for fifteen to twenty five years. That doesn't sound like the hardest thing in the world to kinda realize. They're US dollar based contracts. That's what we're gonna be very focused on.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

And I think if we're successful there, it it gives us a real opportunity then to attack our capital structure and and do some good work there. So that's that's the plan for the summer, and we'll see how it how it plays out.

Craig Shere
Director of Research at Tuohy Brothers Investment Research Inc

Great. Thank you.

Operator

And our last question will come from Tariq Amin from JPMorgan.

Tarek Hamid
Tarek Hamid
Managing Director at JP Morgan

Hey. Good afternoon. Could you guys maybe help us bridge through the liquidity picture a little bit, particularly sort of how you're thinking about gross CapEx needs for the remainder of the year. Obviously, you have a bunch of restricted cash as well as liquidity outlined, but just would love to understand sort of how much is yet to go out the door.

Christopher Guinta
Christopher Guinta
Chief Financial Officer at New Fortress Energy

Yeah. So let's say, let's start in Brazil. So the remainder of the CapEx for Selva and Porto Sem is fully funded with cash on the balance sheet on that restricted cash line. So so that's paid for, and that will be paced this year and through the first kind of six ish, maybe nine months in total because you'll have some lag in the payments beyond COD in 2026 for Porto Beyond Porto SIM, you have very little remaining Obviously, FLNG one has been placed into service.

Christopher Guinta
Christopher Guinta
Chief Financial Officer at New Fortress Energy

You have no more spend in Mexico or in, really in Puerto Rico until you get conversions. And those conversions, whatever CapEx is needed for those conversions we envision would be paid for by PREPA. That really then leaves you in Nicaragua, and we've disclosed this before. It's about, remaining to spend in Nicaragua is about 50 to $60,000,000, and then the rest is FLNG two. I would say that FLNG two, the pacing, we have the control on that, on how that goes out.

Christopher Guinta
Christopher Guinta
Chief Financial Officer at New Fortress Energy

And as I mentioned a moment ago, our intention is to be very disciplined with cash at the moment, so that we can ensure that we are solving all near term maturities. And as we have those in hand or we do refinancings, as Wes just discussed, we would then re we would move forward in greater pace on the FLNG two CapEx development.

Tarek Hamid
Tarek Hamid
Managing Director at JP Morgan

Thank you. And then you you was very helpful. You guys walked through the covenant amendments on the revolver and the term loan a. But is it fair to assume that through the asset to language on the 12 and the term loan b likely don't apply given the amount of capital you're spending?

Christopher Guinta
Christopher Guinta
Chief Financial Officer at New Fortress Energy

Not sure I understood the question. You're talking about, like, the reinvestment rights?

Tarek Hamid
Tarek Hamid
Managing Director at JP Morgan

Yeah. But, well, in terms of your your you're having to prepay those without sale proceeds.

Christopher Guinta
Christopher Guinta
Chief Financial Officer at New Fortress Energy

Well, we aren't using asset sale proceeds to repay those. We have cash on the balance sheet and cash flows from our operations that we can use to refinance if we want the or, you know, to to pay off any of the other instruments.

Tarek Hamid
Tarek Hamid
Managing Director at JP Morgan

Okay. Fair enough. Thank you very much.

Operator

There are no further questions in the queue.

Wesley Edens
Wesley Edens
Chairman & CEO at New Fortress Energy

Great. Okay. Thank you very much, everyone. Look forward to talking to you next quarter. Thank you.

Christopher Guinta
Christopher Guinta
Chief Financial Officer at New Fortress Energy

Thank you.

Operator

And this concludes today's call. Thank you for your participation. You may now disconnect.

Executives
    • Matthew Reinhardt
      Matthew Reinhardt
      Co-General Counsel & Chief Compliance Officer
    • Wesley Edens
      Wesley Edens
      Chairman & CEO
    • Leandro Cunha
      Leandro Cunha
      Managing Director NFE Brazil
    • Jeremy Dawson
      Jeremy Dawson
      VP - Business Development
    • Christopher Guinta
      Christopher Guinta
      Chief Financial Officer
Analysts
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Key Takeaways

  • First‐quarter core earnings remained consistent with guidance, adjusted EBITDA was $82 million with no one‐off items, and full‐year EBITDA plus gains guidance was increased to $1.25–$1.5 billion.
  • Closed the $1.055 billion Jamaica sale generating about $800 million net proceeds and a $430 million gain, while advancing a $659 million FEMA claim and unlocking $236 million PV in FSRU subcharters and $125 million in excess cargo receipts.
  • Amended credit facilities to retain roughly $400 million of Jamaica proceeds for near‐term debt refinancing, eliminated maturities until 2H 2027, and removed the debt‐to‐capital covenant to simplify the balance sheet and bolster pro forma liquidity to over $1.1 billion.
  • Shifting to asset‐level financing around a 20-year portfolio of long‐duration, investment‐grade LNG-to-power contracts delivering $500 million of annual margin, aiming to lower funding costs and align debt maturities with underlying cash flows.
  • Accelerating growth projects: Brazil’s 624 MW combined‐cycle plant is ~95% complete for H2 2025 COD and a 1.6 GW open‐cycle plant for mid-2026 COD under inflation-linked PPAs, plus pursuing Puerto Rico RFPs for temporary power, gas conversions, and new generation.
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Earnings Conference Call
New Fortress Energy Q1 2025
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