New Fortress Energy Inc. [NFE] Filings

10-Q 1 brhc10030281_10q.htm 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to__________

Commission File Number: 001-38790

New Fortress Energy Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware		83-1482060
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

111 W. 19th Street, 8th Floor New York, NY		10011
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (516) 268-7400

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐		Accelerated filer ☒
Non-accelerated filer ☐		Smaller reporting company ☐
		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock	“NFE”	Nasdaq Global Select Market

As of October 29, 2021, the registrant had 206,863,242 shares of Class A common stock outstanding.

TABLE OF CONTENTS

GLOSSARY OF TERMS		ii

CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS		iii

PART I FINANCIAL INFORMATION		1

Item 1.	Financial Statements.	1

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	39

Item 3.	Quantitative and Qualitative Disclosures About Market Risks.	63

Item 4.	Controls and Procedures.	64

PART II OTHER INFORMATION		65

Item 1.	Legal Proceedings.	65

Item 1A.	Risk Factors.	65

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	113

Item 3.	Defaults upon Senior Securities.	113

Item 4.	Mine Safety Disclosures.	113

Item 5.	Other Information.	113

Item 6.	Exhibits.	113

SIGNATURES		119

Table of Contents

GLOSSARY OF TERMS

As commonly used in the liquefied natural gas industry, to the extent applicable and as used in this Quarterly Report on Form 10-Q (“Quarterly Report”), the terms listed below have the following meanings:

Btu	the amount of heat required to raise the temperature of one avoirdupois pound of pure water from 59 degrees Fahrenheit to 60 degrees Fahrenheit at an absolute pressure of 14.696 pounds per square inch gage

CAA	Clean Air Act

CERCLA	Comprehensive Environmental Response, Compensation and Liability Act

CWA	Clean Water Act

DOE	U.S. Department of Energy

FERC	Federal Energy Regulatory Commission

GAAP	generally accepted accounting principles in the United States

GHG	greenhouse gases

GSA	gas sales agreement

Henry Hub	a natural gas pipeline located in Erath, Louisiana that serves as the official delivery location for futures contracts on the New York Mercantile Exchange

ISO container	International Organization of Standardization, an intermodal container

LNG	natural gas in its liquid state at or below its boiling point at or near atmospheric pressure

MMBtu	one million Btus, which corresponds to approximately 12.1 gallons of LNG

MW	megawatt. We estimate 2,500 LNG gallons would be required to produce one megawatt

NGA	Natural Gas Act of 1938, as amended

non-FTA countries	countries without a free trade agreement with the United States providing for national treatment for trade in natural gas and with which trade is permitted

OPA	Oil Pollution Act

OUR	Office of Utilities Regulation (Jamaica)

PHMSA	Pipeline and Hazardous Materials Safety Administration

PPA	power purchase agreement

SSA	steam supply agreement

TBtu	one trillion Btus, which corresponds to approximately 12,100,000 gallons of LNG

Table of Contents

CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS

This Quarterly Report contains forward-looking statements regarding, among other things, our plans, strategies, prospects and projections, both business and financial. All statements contained in this Quarterly Report other than historical information are forward-looking statements that involve known and unknown risks and relate to future events, our future financial performance or our projected business results. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “projects,” “targets,” “potential” or “continue” or the negative of these terms or other comparable terminology. Such forward-looking statements are necessarily estimates based upon current information and involve a number of risks and uncertainties. Actual events or results may differ materially from the results anticipated in these forward-looking statements as a result of a variety of factors. While it is impossible to identify all such factors, factors that could cause actual results to differ materially from those estimated by us include:

•

our limited operating history;

•

loss of one or more of our customers;

•

inability to procure LNG on a fixed-price basis, or otherwise to manage LNG price risks, including hedging arrangements;

•

the completion of construction on our LNG terminals, facilities, power plants or Liquefaction Facilities (as defined herein) and the terms of our construction contracts for the completion of these assets;

•

cost overruns and delays in the completion of one or more of our LNG terminals, facilities, power plants or Liquefaction Facilities, as well as difficulties in obtaining sufficient financing to pay for such costs and delays;

•

our ability to obtain additional financing to effect our strategy;

•

We may be unable to successfully integrate the businesses and realize the anticipated benefits of the Mergers;

•

failure to produce or purchase sufficient amounts of LNG or natural gas at favorable prices to meet customer demand;

•

hurricanes or other natural or manmade disasters;

•

failure to obtain and maintain approvals and permits from governmental and regulatory agencies;

•

operational, regulatory, environmental, political, legal and economic risks pertaining to the construction and operation of our facilities;

•

inability to contract with suppliers and tankers to facilitate the delivery of LNG on their chartered LNG tankers;

•

cyclical or other changes in the demand for and price of LNG and natural gas;

•

failure of natural gas to be a competitive source of energy in the markets in which we operate, and seek to operate;

•

competition from third parties in our business;

•

inability to re-finance our outstanding indebtedness;

•

changes to environmental and similar laws and governmental regulations that are adverse to our operations;

•

inability to enter into favorable agreements and obtain necessary regulatory approvals;

•

the tax treatment of us or of an investment in our Class A shares;

•

the completion of the Exchange Transactions (as defined below);

•

a major health and safety incident relating to our business;

•

increased labor costs, and the unavailability of skilled workers or our failure to attract and retain qualified personnel;

•

risks related to the jurisdictions in which we do, or seek to do, business, particularly Florida, Jamaica, Brazil and the Caribbean; and

•

other risks described in the “Risk Factors” section of this Quarterly Report.

All forward-looking statements speak only as of the date of this Quarterly Report. When considering forward-looking statements, you should keep in mind the risks set forth under “Item 1A. Risk Factors” and other cautionary statements included in our Annual Report on Form 10-K for the year ended December 31, 2020 (our “Annual Report”), this Quarterly Report and in our other filings with the Securities and Exchange Commission (the “SEC”). The cautionary statements referred to in this section also should be considered in connection with any subsequent written or oral forward-looking statements that may be issued by us or persons acting on our behalf. We undertake no duty to update these forward-looking statements, even though our situation may change in the future. Furthermore, we cannot guarantee future results, events, levels of activity, performance, projections or achievements.

iii

Table of Contents

PART I

FINANCIAL INFORMATION

Item 1.

Financial Statements.

New Fortress Energy Inc.

Condensed Consolidated Balance Sheets

As of September 30, 2021 and December 31, 2020

(Unaudited, in thousands of U.S. dollars, except share amounts)

	September 30, 2021			December 31, 2020
Assets
Current assets
Cash and cash equivalents	$	224,383		$	601,522
Restricted cash		72,338			12,814
Receivables, net of allowances of $130 and $98, respectively		161,008			76,544
Inventory		82,390			22,860
Prepaid expenses and other current assets, net		75,602			48,270
Total current assets		615,721			762,010

Restricted cash		37,879			15,000
Construction in progress		973,880			234,037
Property, plant and equipment, net		2,025,688			614,206
Equity method investments		1,227,991			-
Right-of-use assets		145,941			141,347
Intangible assets, net		166,964			46,102
Finance leases, net		603,662			7,044
Goodwill		740,132			-
Deferred tax assets, net		6,087			2,315
Other non-current assets, net		121,142			86,030
Total assets	$	6,665,087		$	1,908,091

Liabilities
Current liabilities
Current portion of long-term debt	$	249,752		$	-
Accounts payable		210,259			21,331
Accrued liabilities		159,304			90,352
Current lease liabilities		32,009			35,481
Due to affiliates		6,910			8,980
Other current liabilities		109,662			35,006
Total current liabilities		767,896			191,150

Long-term debt		3,597,659			1,239,561
Non-current lease liabilities		93,321			84,323
Deferred tax liabilities, net		284,176			2,330
Other long-term liabilities		37,885			15,641
Total liabilities		4,780,937			1,533,005

Commitments and contingencies (Note 20)

Stockholders’ equity
Class A common stock, $0.01 par value, 750.0 million shares authorized, 206.9 million issued and outstanding as of September 30, 2021; 174.6 million issued and outstanding as of December 31, 2020		2,069			1,746
Additional paid-in capital		1,912,643			594,534
Accumulated deficit		(283,256	)		(229,503	)
Accumulated other comprehensive income		24,625			182
Total stockholders’ equity attributable to NFE		1,656,081			366,959
Non-controlling interest		228,069			8,127
Total stockholders’ equity		1,884,150			375,086
Total liabilities and stockholders’ equity	$	6,665,087		$	1,908,091

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

New Fortress Energy Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

For the three and nine months ended September 30, 2021 and 2020

(Unaudited, in thousands of U.S. dollars, except share and per share amounts)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Revenues
Operating revenue	$	188,389		$	83,863		$	382,421		$	223,542
Vessel charter revenue		78,656			-			143,217			-
Other revenue		37,611			52,995			148,541			82,412
Total revenues		304,656			136,858			674,179			305,954

Operating expenses
Cost of sales		135,432			71,665			333,533			209,780
Vessel operating expenses		15,301			-			30,701			-
Operations and maintenance		20,144			13,802			54,960			31,785
Selling, general and administrative		46,802			26,821			124,954			87,273
Transaction and integration costs		1,848			4,028			42,564			4,028
Contract termination charges and loss on mitigation sales		-			-			-			124,114
Depreciation and amortization		31,194			9,489			68,080			22,363
Total operating expenses		250,721			125,805			654,792			479,343
Operating income (loss)		53,935			11,053			19,387			(173,389	)
Interest expense		57,595			19,813			107,757			50,901
Other (income) expense, net		(5,400	)		2,569			(13,458	)		4,179
Loss on extinguishment of debt, net		-			23,505			-			33,062
Net income (loss) before income from equity method investments and income taxes		1,740			(34,834	)		(74,912	)		(261,531	)
(Loss) income from equity method investments		(15,983	)		-			22,958			-
Tax provision		3,526			1,836			7,058			1,949
Net loss		(17,769	)		(36,670	)		(59,012	)		(263,480	)
Net loss attributable to non-controlling interest		7,963			312			5,259			81,163
Net loss attributable to stockholders	$	(9,806	)	$	(36,358	)	$	(53,753	)	$	(182,317	)

Net income (loss) per share – basic and diluted	$	(0.05	)	$	(0.21	)	$	(0.27	)	$	(2.14	)

Weighted average number of shares outstanding – basic and diluted		207,497,013			170,074,532			195,626,564			85,009,385

Other comprehensive loss:
Net loss	$	(17,769	)	$	(36,670	)	$	(59,012	)	$	(263,480	)
Currency translation adjustment		76,996			(971	)		(23,697	)		(1,122	)
Comprehensive loss		(94,765	)		(35,699	)		(35,315	)		(262,358	)
Comprehensive loss (income) attributable to non-controlling interest		8,162			(926	)		6,005			80,156
Comprehensive loss attributable to stockholders	$	(86,603	)	$	(36,625	)	$	(29,310	)	$	(182,202	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

New Fortress Energy Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the three and nine months ended September 30, 2021 and 2020

(Unaudited, in thousands of U.S. dollars, except share amounts)

	Class A shares				Class B shares				Class A common stock					Additional paid-in			Accumulated			Accumulated other comprehensive			Non- controlling			Total stockholders’
	Shares		Amount		Shares		Amount		Shares			Amount		capital			Deficit			(loss) income			interest			equity
Balance as of December 31, 2020		-	$	-		-	$	-		174,622,862		$	1,746	$	594,534		$	(229,503	)	$	182		$	8,127		$	375,086
Net loss		-		-		-		-		-			-		-			(37,903	)		-			(1,606	)		(39,509	)
Other comprehensive loss		-		-		-		-		-			-		-			-			(123	)		(874	)		(997	)
Share-based compensation expense		-		-		-		-		-			-		1,770			-			-			-			1,770
Issuance of shares for vested RSUs		-		-		-		-		1,335,787			-		-			-			-			-			-
Shares withheld from employees related to share-based compensation, at cost		-		-		-		-		(638,235	)		-		(27,571	)		-			-			-			(27,571	)
Dividends		-		-		-		-		-			-		(17,598	)		-			-			-			(17,598	)
Balance as of March 31, 2021		-	$	-		-	$	-		175,320,414		$	1,746	$	551,135		$	(267,406	)	$	59		$	5,647		$	291,181
Net (loss) income		-		-		-		-		-			-		-			(6,044	)		-			4,310			(1,734	)
Other comprehensive income		-		-		-		-		-			-		-			-			101,363			327			101,690
Share-based compensation expense		-		-		-		-		-			-		1,613			-			-			-			1,613
Shares issued as consideration in business combinations		-		-		-		-		31,372,549			314		1,400,470			-			-			-			1,400,784
Issuance of shares for vested RSUs		-		-		-		-		8,930			-		-			-			-			-			-
Shares withheld from employees related to share-based compensation, at cost		-		-		-		-		(3,329	)		-		(164	)		-			-			-			(164	)
Non-controlling interest acquired in business combinations		-		-		-		-		-			-		-			-			-			229,285			229,285
Dividends		-		-		-		-		-			-		(20,736	)		-			-			-			(20,736	)
Balance as of June 30, 2021		-	$	-		-	$	-		206,698,564		$	2,060	$	1,932,318		$	(273,450	)	$	101,422		$	239,569		$	2,001,919
Net loss		-		-		-		-		-			-		-			(9,806	)		-			(7,963	)		(17,769	)
Other comprehensive loss		-		-		-		-		-			-		-			-			(76,797	)		(199	)		(76,996	)
Share-based compensation expense		-		-		-		-		-			-		1,562			-			-			-			1,562
Adjustments related to business combinations		-		-		-		-		-			-		-			-			-			(319	)		(319	)
Issuance of shares for vested RSUs		-		-		-		-		193,193			9		(9	)		-			-			-			-
Shares withheld from employees related to share-based compensation, at cost		-		-		-		-		(28,515	)		-		(478	)		-			-			-			(478	)
Dividends		-		-		-		-		-			-		(20,750	)		-			-			(3,019	)		(23,769	)
Balance as of September 30, 2021		-	$	-		-	$	-		206,863,242		$	2,069	$	1,912,643		$	(283,256	)	$	24,625		$	228,069		$	1,884,150

	Class A shares						Class B shares				Class A common stock				Additional paid-in		Accumulated			Accumulated other comprehensive			Non- controlling			Total stockholders’
	Shares			Amount			Shares		Amount		Shares		Amount		capital		Deficit			(loss) income			interest			equity
Balance as of December 31, 2019		23,607,096		$	130,658			144,342,572	$	-		-	$	-	$	-	$	(45,823	)	$	(30	)	$	302,519		$	387,324
Cumulative effect of accounting changes		-			-			-		-		-		-		-		(1,533	)		-			(7,780	)		(9,313	)
Net loss		-			-			-		-		-		-		-		(8,466	)		-			(51,757	)		(60,223	)
Other comprehensive loss		-			-			-		-		-		-		-		-			(53	)		(316	)		(369	)
Share-based compensation expense		-			2,508			-		-		-		-		-		-			-			-			2,508
Issuance of shares for vested RSUs		1,212,907			-			-		-		-		-		-		-			-			-			-
Shares withheld from employees related to share-based compensation, at cost		(583,508	)		(6,132	)		-		-		-		-		-		-			-			-			(6,132	)
Balance as of March 31, 2020		24,236,495		$	127,034			144,342,572	$	-		-	$	-	$	-	$	(55,822	)	$	(83	)	$	242,666		$	313,795
Net loss		-			-			-		-		-		-		-		(137,493	)		-			(29,094	)

New Fortress Energy Inc. [NFE] Filings
10-Q	[2021-11-03]
10-Q	[2021-08-06]
10-Q	[2021-05-07]
10-K	[2021-03-16]
10-Q	[2020-10-29]
10-Q	[2020-08-04]
10-Q	[2020-05-06]
10-K	[2020-03-04]
10-Q	[2019-11-12]
10-Q	[2019-08-13]
10-Q	[2019-05-15]
10-K	[2019-03-26]
S-1	[2018-11-09]