New Fortress Energy Inc. [NFE] Filings

10-Q 1 nfe-20240630.htm 10-Q nfe-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q


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

For the quarterly period ended June 30, 2024


¨			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 x 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 x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 x			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 x

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 August 6, 2024, the registrant had 205,067,047 shares of Class A common stock outstanding.

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TABLE OF CONTENTS


GLOSSARY OF TERMS		ii

CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS		iv

PART I FINANCIAL INFORMATION		1

Item 1.	Financial Statements.	1

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	34

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	55

Item 4.	Controls and Procedures.	55

PART II OTHER INFORMATION		57

Item 1.	Legal Proceedings.	57

Item 1A.	Risk Factors.	57

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	93

Item 3.	Defaults Upon Senior Securities.	94

Item 4.	Mine Safety Disclosures.	94

Item 5.	Other Information.	94

Item 6.	Exhibits.	94

SIGNATURES		100

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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:


ADO			automotive diesel oil

Bcf/yr			billion cubic feet per year

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

EPA			U.S. Environmental Protection Agency

FTA countries			countries with which the United States has a free trade agreement providing for national treatment for trade in natural gas

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

mtpa			metric tons per year

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)

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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

iii

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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:

•the results of our subsidiaries, affiliates, joint ventures and special purpose entities in which we invest and their ability to make dividends or distributions to us;

•construction and operational risks related to our facilities and assets, including cost overruns and delays;

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

•complex regulatory and legal environments related to our business, assets and operations, including actions by governmental entities or changes to regulation or legislation, in particular related to our permits, approvals and authorizations for the construction and operation of our facilities;

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

•failure to obtain a return on our investments for the development of our projects and assets and the implementation of our business strategy;

•failure to maintain sufficient working capital for the development and operation of our business and assets;

•failure to convert our customer pipeline into actual sales;

•lack of asset, geographic or customer diversification, including loss of one or more of our customers;

•competition from third parties in our business;

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

•inability to procure LNG at necessary quantities or at favorable prices to meet customer demand, or otherwise to manage LNG supply and price risks, including hedging arrangements;

•inability to successfully develop and implement our technological solutions;

•inability to service our debt and comply with our covenant restrictions;

•inability to obtain additional financing to effect our strategy;

•inability to successfully complete mergers, sales, divestments or similar transactions related to our businesses or assets or to integrate such businesses or assets and realize the anticipated benefits;

•economic, political, social and other risks related to the jurisdictions in which we do, or seek to do, business;

•weather events or other natural or manmade disasters or phenomena;

•any future pandemic or any other major health and safety incident;

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

•the tax treatment of, or changes in tax laws applicable to, us or our business or of an investment in our Class A common stock; 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, 2023 (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.

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PART I

FINANCIAL INFORMATION

Item 1. Financial Statements.

New Fortress Energy Inc.

Condensed Consolidated Balance Sheets

As of June 30, 2024 and December 31, 2023

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


	June 30, 2024		December 31, 2023
Assets
Current assets
Cash and cash equivalents	$	132,960	$	155,414
Restricted cash	164,888		155,400
Receivables, net of allowances of $10,025 and $1,158, respectively	406,779		342,371
Inventory	141,723		113,684
Prepaid expenses and other current assets, net	277,983		213,104
Total current assets	1,124,333		979,973


Construction in progress	6,301,162		5,348,294
Property, plant and equipment, net	2,144,838		2,481,415
Equity method investments	—		137,793
Right-of-use assets	673,424		588,385
Intangible assets, net	207,731		51,815

Goodwill	776,760		776,760
Deferred tax assets, net	43,023		9,907
Other non-current assets, net	137,106		126,903
Total assets	$	11,408,377	$	10,501,245

Liabilities
Current liabilities
Current portion of long-term debt and short-term borrowings	$	236,147	$	292,625
Accounts payable	572,746		549,489
Accrued liabilities	384,476		471,675
Current lease liabilities	120,873		164,548
Other current liabilities	250,558		227,951
Total current liabilities	1,564,800		1,706,288

Long-term debt	7,392,811		6,510,523
Non-current lease liabilities	521,225		406,494
Deferred tax liabilities, net	97,936		44,444
Other long-term liabilities	46,492		55,627
Total liabilities	9,623,264		8,723,376

Commitments and contingencies (Note 21)

Series A convertible preferred stock, $0.01 par value, 96,746 shares authorized, issued and outstanding as of June 30, 2024 (0 as of December 31, 2023); aggregate liquidation preference of $96,746 and $0 at June 30, 2024 and December 31, 2023	97,845		—

Stockholders’ equity
Class A common stock, $0.01 par value, 750 million shares authorized, 205.1 million issued and outstanding as of June 30, 2024; 205.0 million issued and outstanding as of December 31, 2023	2,050		2,050
Additional paid-in capital	1,063,426		1,038,530
Retained earnings	450,871		527,986
Accumulated other comprehensive income	43,653		71,528
Total stockholders’ equity attributable to NFE	1,560,000		1,640,094
Non-controlling interest	127,268		137,775
Total stockholders’ equity	1,687,268		1,777,869
Total liabilities, convertible preferred stock and stockholders’ equity	$	11,408,377	$	10,501,245

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

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New Fortress Energy Inc.

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

For the three and six months ended June 30, 2024 and 2023

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenues
Operating revenue	$	291,222	$	494,619	$	900,726	$	996,307
Vessel charter revenue	52,416		65,840		99,071		142,364
Other revenue	84,368		886		118,530		1,805
Total revenues	428,006		561,345		1,118,327		1,140,476

Operating expenses
Cost of sales (exclusive of depreciation and amortization shown separately below)	221,860		225,768		450,977		410,706
Vessel operating expenses	8,503		11,443		16,899		24,734
Operations and maintenance	39,292		33,697		107,840		60,368
Selling, general and administrative	70,578		55,803		141,332		107,941
Transaction and integration costs	1,760		1,554		3,131		2,048
Depreciation and amortization	37,413		42,115		87,904		76,490
Asset impairment expense	4,272		—		4,272		—
Loss on sale of assets, net	—		—		77,140		—
Total operating expenses	383,678		370,380		889,495		682,287
Operating income	44,328		190,965		228,832		458,189
Interest expense	80,399		64,396		157,743		136,069
Other expense (income), net	47,354		(6,584)		66,466		18,421
Loss on extinguishment of debt, net	—		—		9,754		—
Income (loss) before income from equity method investments and income taxes	(83,425)		133,153		(5,131)		303,699
Income from equity method investments	—		2,269		—		12,249
Tax provision	3,435		15,322		25,059		44,282
Net income (loss)	(86,860)		120,100		(30,190)		271,666
Net (income) loss attributable to non-controlling interest	(1,994)		(852)		(4,583)		(2,212)
Net income (loss) attributable to stockholders	$	(88,854)	$	119,248	$	(34,773)	$	269,454

Net income (loss) per share – basic	$	(0.44)	$	0.58	$	(0.18)	$	1.30
Net income (loss) per share – diluted	$	(0.44)	$	0.58	$	(0.18)	$	1.29

Weighted average number of shares outstanding – basic	205,070,756		205,045,121		205,066,362		206,867,828
Weighted average number of shares outstanding – diluted	205,851,364		205,711,467		205,846,970		207,534,174

Other comprehensive income (loss):
Currency translation adjustment	(20,557)		16,908		(28,265)		19,049
Comprehensive income (loss)	(107,417)		137,008		(58,455)		290,715
Comprehensive (income) loss attributable to non-controlling interest	(1,963)		(758)		(4,193)		(2,313)
Comprehensive income (loss) attributable to stockholders	$	(109,380)	$	136,250	$	(62,648)	$	288,402

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

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New Fortress Energy Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the three and six months ended June 30, 2024 and 2023

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


	Series A convertible preferred stock		Class A common stock			Additional paid-in capital		Retained earnings		Accumulated other comprehensive income		Non- controlling interest		Total stockholders’ equity
		Shares	Amount		Shares											Amount
Balance as of December 31, 2023		—	$	—	205,031,406	$	2,050	$	1,038,530	$	527,986	$	71,528	$	137,775	$	1,777,869
Net income		—	—		—	—		—		54,081		—		2,589		56,670
Other comprehensive income		—	—		—	—		—		—		(7,349)		(359)		(7,708)
Share-based compensation expense		—	—		—	—		5,248		—		—		—		5,248
Issuance of shares for vested share-based compensation awards		—	—		14,126	—		—		—		—		—		—
Shares withheld from employees related to share-based compensation, at cost		—	—		(3,708)	—		(126)		—		—		—		(126)
Issuance of Series A convertible preferred stock, net		96,746	96,513		—	—		—		—		—		—		—
Dividends		—	142		—	—		—		(20,645)		—		(11,681)		(32,326)
Balance as of March 31, 2024		96,746	$	96,655	205,041,824	$	2,050	$	1,043,652	$	561,422	$	64,179	$	128,324	$	1,799,627
Net income		—	—		—	—		—		(88,854)		—		1,994		(86,860)
Other comprehensive income		—	—		—	—		—		—		(20,526)		(31)		(20,557)
Share-based compensation expense		—	—		—	—		20,064		—		—		—		20,064
Issuance of shares for vested share-based compensation awards		—	—		34,578	—		—		—		—		—		—
Shares withheld from employees related to share-based compensation, at cost		—	—		(11,074)	—		(290)		—		—		—		(290)
Dividends		—	1,190		—	—		—		(21,697)		—		(3,019)		(24,716)
Balance as of June 30, 2024		96,746	$	97,845	205,065,328	$	2,050	$	1,063,426	$	450,871	$	43,653	$	127,268	$	1,687,268

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	Class A common stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive income		Non- controlling interest		Total stockholders’ equity
		Shares											Amount
Balance as of December 31, 2022		208,770,088	$	2,088	$	1,170,254	$	62,080	$	55,398	$	152,039	$	1,441,859
Net income		—	—		—		150,206		—		1,360		151,566
Other comprehensive income		—	—		—		—		1,946		195		2,141
Cancellation of shares		(4,100,000)	(41)		(122,713)		—		—		—		(122,754)
Dividends		—	—		—		(20,467)		—		(3,019)		(23,486)
Balance as of March 31, 2023		204,670,088	$	2,047	$	1,047,541	$	191,819	$	57,344	$	150,575	$	1,449,326
Net income		—	—		—		119,248		—		852		120,100
Other comprehensive income (loss)		—	—		—		—		17,002		(94)		16,908
Share-based compensation expense		—	—		1,179		—		—		—		1,179
Issuance of shares for vested share-based compensation awards		689,401	3		—								3
Shares withheld from employees related to share-based compensation, at cost		(328,083)	—		(9,519)		—		—		—		(9,519)
Dividends		—	—		—		(20,503)		—		(6,619)		(27,122)
Balance as of June 30, 2023		205,031,406	$	2,050	$	1,039,201	$	290,564	$	74,346	$	144,714	$	1,550,875

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

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New Fortress Energy Inc.

Condensed Consolidated Statements of Cash Flows

For the six months ended June 30, 2024 and 2023

(Unaudited, in thousands of U.S. dollars)


	Six Months Ended June 30,
	2024		2023
Cash flows from operating activities
Net (loss) income	$	(30,190)	$	271,666
Adjustments for:
Depreciation and amortization	88,400		76,949



Deferred taxes	(13,860)		—
Share-based compensation	25,312		1,179
Movement in credit loss allowances	8,827		(146)
Loss on asset sales	77,140		—
Loss on extinguishment of debt	9,754		—
(Earnings) recognized from vessels chartered to third parties transferred to Energos	(51,674)		(71,536)
Loss on the disposal of equity method investment	7,222		37,401
Asset impairment expense	4,272		—
Other	20,716		5,555
Changes in operating assets and liabilities:
(Increase) in receivables	(114,030)		(14,532)
(Increase) in inventories	(62,815)		(60,710)
(Increase) decrease in other assets	(91,251)		63,576
Decrease in right-of-use assets	111,561		40,655
Increase in accounts payable/accrued liabilities	255,337		75,746

(Decrease) in lease liabilities	(126,311)		(38,885)
Increase in other liabilities	44,558		116,959
Net cash provided by operating activities	162,968		503,877

Cash flows from investing activities
Capital expenditures	(1,346,385)		(1,465,642)
Sale of equity method investment	136,365		100,000
Asset sales	328,999		—
Other investing activities	(1,694)		(1,450)
Net cash used in investing activities	(882,715)		(1,367,092)

Cash flows from financing activities
Proceeds from borrowings of debt	3,037,127		919,625
Payment of deferred financing costs	(37,983)		(6,659)
Repayment of debt	(2,202,722)		—

Payment of dividends	(55,710)		(676,918)
Other financing activities	(5,033)		(13,465)
Net cash provided by financing activities	735,679		222,583
Impact of changes in foreign exchange rates on cash and cash equivalents	(28,898)		1,608
Net (decrease) in cash, cash equivalents and restricted cash	(12,966)		(639,024)
Cash, cash equivalents and restricted cash – beginning of period	310,814		855,083
Cash, cash equivalents and restricted cash – end of period	$	297,848	$	216,059

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Supplemental disclosure of non-cash investing and financing activities:
Changes in accounts payable and accrued liabilities associated with construction in progress and property, plant and equipment additions	$	(162,056)	$	732,858
Accounts payable and accrued liabilities associated with construction in progress and property, plant and equipment additions	609,009		1,159,441
Principal payments on financing obligation to Energos by third party charters	(6,445)		(32,836)
Shares received in Hilli Exchange	—		(122,754)
Class A convertible preferred stock issued and debt assumed in the PortoCem Acquisition	(125,195)		—
Repurchase obligation	—		24,320

The following table identifies the balance sheet line-items included in Cash and cash equivalents and Restricted cash presented in the Condensed Consolidated Statements of Cash Flows:


	June 30,
	2024		2023
Cash and cash equivalents	$	132,960	$	104,342
Restricted cash	164,888		100,513
Cash and cash equivalents classified as held for sale	—		11,204
Cash, cash equivalents and restricted cash – end of period	$	297,848	$	216,059

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

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1. Organization

New Fortress Energy Inc. (“NFE,” together with its subsidiaries, the “Company”), a Delaware corporation, is a global energy infrastructure company founded to help address energy poverty and accelerate the world’s transition to reliable, affordable and clean energy. The Company owns and operates natural gas and liquefied natural gas ("LNG") infrastructure, ships and logistics assets to rapidly deliver turnkey energy solutions to global markets. The Company has liquefaction, regasification and power generation operations in the United States, Jamaica, Brazil and Mexico. The Company has marine operations with vessels operating under time charters and in the spot market globally.

The Company currently conducts its business through two operating segments, Terminals and Infrastructure and Ships. The business and reportable segment information reflect how the Chief Operating Decision Maker (“CODM”) regularly reviews and manages the business.

2. Basis of presentation

The accompanying unaudited interim condensed consolidated financial statements contained herein were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and reflect all normal and recurring adjustments which are, in the opinion of management, necessary to provide a fair statement of the financial position, results of operations and cash flows of the Company for the interim periods presented. These condensed consolidated financial statements and accompanying notes should be read in conjunction with the Company’s annual audited consolidated financial statements and accompanying notes included in its Annual Report on Form 10-K for the year ended December 31, 2023 (the "Annual Report"). Certain prior year amounts have been reclassified to conform to current year presentation.

The preparation of condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions, impacting the reported amounts of assets and liabilities, net earnings and disclosures of contingent assets and liabilities as of the date of the condensed consolidated financial statements. Actual results could be different from these estimates.

3. Adoption of new and revised standards

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 requires disclosure of significant segment expenses and other segment items that are regularly provided to the CODM and included within each reported measure of segment profit or loss, and the title and position of the entity’s CODM. The amendments in this update also require entities to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. ASU 2023-07 will be effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is allowed, and the amendments in this update must be applied retrospectively to all periods presented in the financial statements, unless it is not feasible. The Company is currently reviewing the impact that the adoption of ASU 2023-07 may have on the Company's consolidated financial statements and disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, requiring companies to annually present specific categories in the effective tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. Further, the ASU requires disclosure of income taxes paid (net of refunds received) disaggregated by federal, state and foreign taxes and to disaggregate the information by jurisdiction based on a quantitative threshold. The amendments in this ASU are effective for annual periods beginning after December 15, 2024, and early adoption is allowed. The amendments should be applied on a prospective basis, but retrospective application is allowed. The Company is currently reviewing the impact that the adoption of ASU 2023-09 may have on the Company's consolidated financial statements and disclosures.

In March 2024, the FASB issued ASU 2024-01, Compensation—Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards, providing illustrative guidance to help entities determine whether profits interest and similar awards should be accounted for as share-based payment arrangements within the scope of Topic 718. The amendments in this ASU are effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods. Early adoption is allowed, and the amendments can be applied on a prospective or retrospective basis. The Company is currently reviewing the impact that the adoption of ASU 2024-01 may have on the Company's consolidated financial statements and disclosures.

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The Company has reviewed all other recently issued accounting pronouncements and concluded that such pronouncements are either not applicable to the Company or no material impact is expected in the consolidated financial statements as a result of future adoption.

4. Asset acquisition and redeemable preferred stock

On March 20, 2024, the Company completed transactions pursuant to an agreement among the Company, Ceiba Energy Fundo de Investimento em Participações Multiestratégia - Investimento no Exterior (“Ceiba Energy”) and PortoCem Geração de Energia S.A., a wholly-owned subsidiary of Ceiba Energy (“PortoCem”), pursuant to which the Company issued to Ceiba Energy 96,746 shares of 4.8% Series A Convertible Preferred Stock of the Company (the “Series A Convertible Preferred Stock”), and assumed certain of PortoCem’s existing indebtedness in exchange for all outstanding equity interests in PortoCem, the owner of a 15-year 1.6GW capacity reserve contract in Brazil (the “PortoCem Acquisition”).

The PortoCem Acquisition was accounted for as an asset acquisition. As a result, no goodwill was recorded, and the Company’s acquisition-related costs of $592 were included in the purchase consideration. The total purchase consideration of $162,860, which was comprised of the value of the Series A Convertible Preferred Stock issued, PortoCem BTG Loan assumed (defined in Note 19) and deferred tax liability of $37,662 recognized as a result of the acquisition, was allocated to acquired capacity reserve contract within Intangible assets, net.

Series A Convertible Preferred Stock

The Series A Convertible Preferred Stock has a liquidation preference of $1,000 per share and is not subject to any sinking fund. The Series A Convertible Preferred Stock has no stated maturity and will remain outstanding indefinitely unless redeemed or repurchased by the Company or converted into shares of Class A common stock.

Dividend rights

The Series A Convertible Preferred Stock ranks senior to the shares of the Company’s common stock, in terms of dividend rights and rights upon any voluntary or involuntary liquidation, dissolution or winding up of the Company. Holders of Series A Convertible Preferred Stock are entitled to a cumulative dividend at the rate of 4.8% per annum, which is payable quarterly in arrears. If the Company does not declare and pay a dividend, the dividend rate will increase to 6.8% per annum until all accrued but unpaid dividends have been paid in full.

Conversion features

The Series A Convertible Preferred Stock may be converted by each holder, in whole or in minimum increments of 5,000 shares, at any time into a number of shares of Class A common stock per share of Series A Convertible Preferred Stock equal to the quotient of $1,000 per share plus any accumulated and unpaid dividends thereon and the then applicable conversion price. The initial conversion price is $47.43 per share of Class A common stock, subject to customary anti-dilution adjustments.

Redemption rights

Upon the occurrence of certain events, the holders constituting at least a majority of the outstanding voting power of the Series A Convertible Preferred Stock may require the Company to repurchase the Series A Convertible Preferred Stock, in whole but not in part, for cash or shares of Class A common stock (or any combination thereof) at a repurchase price of $1,000 per share plus any accumulated and unpaid dividends thereon. Contingent events that would allow the holders to require repurchase by the Company include:

•change in control, downgrade in the credit rating of certain of the Company's debt or if certain financial leverage ratios aren't achieved ("Change Event");

•as of the 30th trading day following March 20, 2027, if the arithmetic average of the daily volume-weighted average price of the Company's common stock for the thirty consecutive trading day period beginning on first trading day following March 20, 2027 is less than the then-applicable conversion price ("Share Price Condition").

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If the Series A Convertible Preferred Stock is to be repurchased by the Company, the majority of the holders of the Series A Convertible Preferred Stock may require the Company to repurchase the Series A Convertible Preferred Stock for shares of Class A common stock.

The Series A Convertible Preferred Stock may be redeemed by the Company, in whole but not in part, at its option upon 45 days’ written notice as follows:

•on or before March 20, 2027 at a redemption price equal to the greater of (i) $1,000 per share plus any accumulated and unpaid dividends and (ii) the cash amount necessary per share for a holder to achieve a Return on Investment (as defined in the Certificate of Designations) as of the redemption date equal to 1.4;

•after the 30th trading day following March 20, 2027 if the Share Price Condition is not met or (y) 30 calendar days after the delivery of the required notice if the Share Price Condition is met, in each case, at a redemption price equal to $1,000 per share plus any accumulated and unpaid dividends;

•occurrence of a Change Event at a redemption price equal to $1,000 per share plus any accumulated and unpaid dividends.

The Company may redeem the Series A Convertible Preferred Stock for cash or shares of Class A common stock (or any combination thereof); provided that for a redemption prior to March 20, 2027 due to a Change Event, a majority of the holders of the Series A Convertible Preferred Stock may require the Company to redeem for cash or shares of Class A common stock.

Since the redemption of the Series A Convertible Preferred Stock is contingently redeemable and therefore not certain to occur, the Series A Convertible Preferred Stock is not required to be classified as a liability. The Series A Convertible Preferred Stock is redeemable at the option of the holder in certain circumstances upon the occurrence of an event that is not solely within the Company's control, and as such, the Series A Convertible Preferred Stock is classified as mezzanine equity on the Condensed Consolidated Balance Sheets.

Voting rights

Holders of Series A Convertible Preferred Stock are generally entitled to vote with the holders of common stock on an as-converted basis. Holders of Series A Convertible Preferred Stock are entitled to a separate class vote with respect to amendments to the Company’s organizational documents that adversely affect the rights, preferences or voting powers of the Series A Convertible Preferred Stock.

5. Asset sale

In March 2024, the Company completed a series of transactions that included the sale of turbines and related equipment to the Puerto Rico Electric Power Authority ("PREPA") under an Asset Purchase Agreement ("APA"). The Company deployed this equipment in 2023 in response to a request to provide emergency power to stabilize the power grid in Puerto Rico. The purchase price was $306,599. Additionally, the APA includes a requirement that the Company provide major maintenance services on certain of the sold turbines within 12 months of the sale date; the standalone selling price of these maintenance services of $15,330 will be recognized when these services are performed, and the transaction price allocated to the sale of turbines was reduced by this amount. The Company recognized $3,830 of the maintenance services revenue during the quarter. The book value of the turbines and equipment at the time of sale was $368,799, and the Company recognized a loss of $77,530 in Loss on sale of assets, net in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

A portion of the assets sold to PREPA were previously leased by the Company. To facilitate the sale of these leased turbines, the Company terminated leases, acquiring turbines and equipment immediately prior to the sale of such turbines and equipment to PREPA. The cost to acquire the leased turbines, including the write-off of the right-of-use asset and lease liability were included in the book value of the turbines and the related loss upon sale.

As part of these transactions, the Company repaid the Equipment Notes (See Note 19) that were collateralized by the sold turbines, recognizing a loss on extinguishment of debt of $7,879, which was comprised of fees due upon prepayment as well as the unamortized portion of financing costs incurred at the inception of the loan.

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The Company's contract to provide emergency power services to support the grid stabilization project was also terminated. All unrecognized contract liabilities and cost to fulfil at the time of termination were recognized in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (See Note 6). The Company believes that there are remedies available under the customer contract, and is currently pursuing these remedies. As the outcome of this process is uncertain, any transaction price associated with closing this contract has been fully constrained. The Company has been awarded a new gas sale agreement with PREPA under which the Company is providing gas supply to the sold turbines.

6. Revenue recognition

Operating revenue in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) includes revenue from sales of LNG and natural gas as well as outputs from the Company’s natural gas-fueled power generation facilities, including power and steam, and the sale of LNG cargos. LNG cargo sales for the three and six months ended June 30, 2024 were $24,502 and $24,502, respectively. LNG cargo sales for the three and six months ended June 30, 2023 were $267,777 and $617,138, respectively, which included $162,500 and $332,000 of contract settlements, respectively.

The table below summarizes the balances in Other revenue:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Interest income and other revenue	$	4,746	$	886	$	9,677	$	1,805
Operation and maintenance revenue	79,622		—		108,853		—
Total other revenue	$	84,368	$	886	$	118,530	$	1,805

Operation and maintenance revenue is recognized by the Company's subsidiary, Genera PR LLC ("Genera"), under its contract for the operation and maintenance of PREPA's thermal generation assets. Under this agreement, Genera is paid a fixed annual fee and reimbursed for pass-through expenses, including payroll expenses of Genera employees, beginning when the contract commenced on July 1, 2023. Amounts recognized in the first half of 2024 include fixed fees, reimbursement of pass-through expenditures and an estimate of variable consideration for incentive fees to be received. Variable consideration has been estimated based on the most likely amount method, and the Company includes estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. The determination of estimated amounts included in the transaction price is based largely upon an assessment of the uncertainties associated with the variable consideration, including the susceptibility of payment to factors outside of the Company’s control. The Company considers all information that is reasonably available, including historical, current and estimates of future performance.

Under most customer contracts, invoicing occurs once the Company’s performance obligations have been satisfied, at which point payment is unconditional. As of June 30, 2024 and December 31, 2023, receivables related to revenue from contracts with customers totaled $405,196 and $331,108, respectively, and were included in Receivables, net on the Condensed Consolidated Balance Sheets, net of current expected credit losses of $10,025 and $1,158, respectively. During the first quarter of 2024, the Company recorded an additional allowance for uncollectible receivables of $11,595. The allowance reduces outstanding receivables for certain customers to reflect the amount that the Company expects to receive. Other items included in Receivables, net not related to revenue from contracts with customers represent leases, which are accounted for outside the scope of ASC 606, and receivables associated with reimbursable costs.

Contract assets are comprised of the transaction price allocated to completed performance obligations that will be billed to customers in subsequent periods. The Company has recognized contract liabilities, comprised of unconditional payments due or paid under the contracts with customers prior to the Company’s satisfaction of the related performance obligations. The contract assets and contract liabilities balances as of June 30, 2024 and December 31, 2023 are detailed below:

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	June 30, 2024		December 31, 2023
Contract assets, net - current	$	9,019	$	8,714
Contract assets, net - non-current	15,751		19,901
Total contract assets, net	$	24,770	$	28,615

Contract liabilities, net - current	$	96,331	$	65,287
Contract liabilities, net - non-current	12,375		31,698
Total contract liabilities, net	$	108,706	$	96,985

Revenue recognized in the year from:
Amounts included in contract liabilities at the beginning of the year	$	81,591	$	12,748

Contract assets are presented net of expected credit losses of $248 and $326 as of June 30, 2024 and December 31, 2023, respectively. As of June 30, 2024 and December 31, 2023, contract assets was comprised of $24,351 and $28,536 of unbilled receivables, respectively, which represent unconditional rights to payment only subject to the passage of time.

In the second quarter of 2024, the Company received a prepayment of $90,000 for future contracted sales that is included in the contract liability balance as of June 30, 2024; deliveries under this contract will occur in the third and fourth quarters of 2024. Contract liabilities decreased in the first quarter of 2024 due to the termination of the Company's contract to support the grid stabilization project in Puerto Rico (Refer to Note 5 - Asset sale). Deferred revenue at the time of termination of $43,577 was recognized as Operating revenue in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

The Company has recognized costs to fulfill contracts with customers, which primarily consist of expenses required to enhance resources to deliver under agreements with these customers. These costs can include set-up and mobilization costs incurred ahead of the service period, and such costs will be recognized on a straight-line basis over the expected terms of the agreements. As of June 30, 2024, the Company has capitalized $23,270 of which $2,199 of these costs is presented within Prepaid expenses and other current assets, net and $21,071 is presented within Other non-current assets, net on the Condensed Consolidated Balance Sheets. As of December 31, 2023, the Company had capitalized $25,282, of which $2,864 of these costs was presented within Prepaid expenses and other current assets, net and $22,418 was presented within Other non-current assets, net on the Condensed Consolidated Balance Sheets.

Transaction price allocated to remaining performance obligations

Some of the Company’s contracts are short-term in nature with a contract term of less than a year. The Company applied the optional exemption not to report any unfulfilled performance obligations related to these contracts.

The Company has arrangements in which LNG, natural gas or outputs from the Company’s power generation facilities are sold on a “take-or-pay” basis whereby the customer is obligated to pay for the minimum guaranteed volumes even if it does not take delivery. The price under these agreements is typically based on a market index plus a fixed margin. The fixed transaction price allocated to the remaining performance obligations under these arrangements represents the fixed margin

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multiplied by the outstanding minimum guaranteed volumes. The Company expects to recognize this revenue over the following time periods. The pattern of recognition reflects the minimum guaranteed volumes in each period:


Period	Revenue
Remainder of 2024	$	146,803
2025	689,179
2026	687,236
2027	683,546
2028	668,315
Thereafter	9,399,156
Total	$	12,274,235

For all other sales contracts that have a term exceeding one year, the Company has elected the practical expedient in ASC 606. Under this expedient, the Company does not disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to a wholly unsatisfied performance obligation. For these excluded contracts, the sources of variability are (a) the market index prices of natural gas used to price the contracts, and (b) the variation in volumes that may be delivered to the customer. Both sources of variability are expected to be resolved at or shortly before delivery of each unit of LNG, natural gas, power or steam. As each unit of LNG, natural gas, power or steam represents a separate performance obligation, future volumes are wholly unsatisfied.

Lessor arrangements

Property, plant and equipment subject to vessel charters accounted for as operating leases is included within Vessels in Note 14. Vessels included in the Energos Formation Transaction (defined below in Note 12), including those vessels chartered to third parties, continue to be recognized on the Condensed Consolidated Balance Sheets. The carrying amount of these vessels that are leased to third parties under operating leases is as follows:


	June 30, 2024		December 31, 2023
Property, plant and equipment	$	686,683	$	686,683
Accumulated depreciation	(83,160)		(69,977)
Property, plant and equipment, net	$	603,523	$	616,706

The components of lease income from vessel operating leases for the three and six months ended June 30, 2024 and 2023 are shown below. As the Company has not recognized the sale of all of the vessels included in the Energos Formation Transaction (defined below), the operating lease income shown below for the three and six months ended June 30, 2024 includes revenue of $42,578 and $85,162 from third-party charters of vessels included in the Energos Formation Transaction. The operating lease income shown below for the three and six months ended June 30, 2023 includes revenue of $65,840 and $142,364, respectively, from third-party charters of vessels included in the Energos Formation Transaction.


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Operating lease income	$	49,944	$	65,840	$	93,303	$	142,364
Variable lease income	2,472		—		5,768		—
Total operating lease income	$	52,416	$	65,840	$	99,071	$	142,364

Subsequent to the Energos Formation Transaction, all cash receipts on long-term vessel charters will be received by Energos. As such, future cash receipts from both operating and finance leases were not significant as of June 30, 2024.

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7. Leases, as lessee

The Company has operating leases primarily for the use of LNG vessels, marine port space, office space, land and equipment under non-cancellable lease agreements. The Company’s leases may include multiple optional renewal periods that are exercisable solely at the Company’s discretion. Renewal periods are included in the lease term when the Company is reasonably certain that the renewal options would be exercised, and the associated lease payments for such periods are reflected in the ROU asset and lease liability.

The Company’s leases include fixed lease payments which may include escalation terms based on a fixed percentage or may vary based on an inflation index or other market adjustments. Escalations resulting from changes in inflation indices and market adjustments, as well as other lease costs that depend on the use of the underlying asset, are not considered lease payments when calculating the lease liability or ROU asset. Instead, such payments are accounted for as variable lease cost when the condition that triggers the variable payment becomes probable. Variable lease cost includes contingent rent payments for office space based on the percentage occupied by the Company in addition to common area charges and other charges that are variable in nature. The Company also has a component of lease payments that are variable related to the LNG vessels, in which the Company may receive credits based on the performance of the LNG vessels during the period.

As of June 30, 2024 and December 31, 2023, ROU assets, current lease liabilities and non-current lease liabilities consisted of the following:


	June 30, 2024		December 31, 2023
Operating right-of-use-assets	$	653,819	$	538,055
Finance right-of-use-assets (1)	19,605		50,330
Total right-of-use assets	$	673,424	$	588,385

Current lease liabilities:
Operating lease liabilities	$	117,114	$	135,867
Finance lease liabilities	3,759		28,681
Total current lease liabilities	$	120,873	$	164,548
Non-current lease liabilities:
Operating lease liabilities	$	515,859	$	390,519
Finance lease liabilities	5,366		15,975
Total non-current lease liabilities	$	521,225	$	406,494

(1) Finance lease ROU assets are recorded net of accumulated amortization of $5,575 and $21,470 as of June 30, 2024 and December 31, 2023, respectively.

During the first quarter of 2024, the Company terminated the finance lease of certain turbines and purchased the turbines from the lessor. Immediately subsequent to the purchase of the turbines, the assets were sold as part of the sale of assets to PREPA (Refer to Note 5). The termination of the lease resulted in the write-off of the right-of-use asset and lease liability of $24,339 and $29,443, respectively, which was included in the book value of the turbines and the related loss upon sale.

During the three months ended June 30, 2024, the Company terminated the operating lease of three turbines. The termination of the lease resulted in the write-off of the right-of-use asset and lease liability of $23,018 and $25,762 respectively, and a loss on lease termination of $4,789 recognized within Other expense (income), net in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

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For the three and six months ended June 30, 2024 and 2023, the Company’s operating lease cost recorded within the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) was as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Fixed lease cost	$	43,154	$	22,858	$	76,248	$	39,226
Variable lease cost	1,073		1,004		2,709		1,601
Short-term lease cost	3,564		2,370		6,590		5,919

Lease cost - Cost of sales	$	40,006	$	15,137	$	66,008	$	30,891
Lease cost - Operations and maintenance	5,573		9,207		15,146		12,048
Lease cost - Selling, general and administrative	2,212		1,888		4,393		3,807

For the three months ended June 30, 2024 and 2023, the Company has capitalized $22,208 and $14,449 of lease costs, respectively. For the six months ended June 30, 2024 and 2023, the Company has capitalized $37,137 and $18,705 of lease costs, respectively. Capitalized costs include vessels and port space used during the commissioning of development projects. Short-term lease costs for vessels chartered by the Company to transport inventory from a supplier’s facilities to the Company’s storage locations are capitalized to inventory.

The Company has leases of ISO tanks and a parcel of land that are recognized as finance leases. For the three and six months ended June 30, 2024 and 2023, the Company’s finance interest expense and amortization recorded in Interest expense and Depreciation and amortization, respectively, within the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) were as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Interest expense related to finance leases	$	124	$	1,218	$	722	$	1,686
Amortization of right-of-use asset related to finance leases	353		5,771		5,324		7,560

Cash paid for operating leases is reported in operating activities in the Condensed Consolidated Statements of Cash Flows. Supplemental cash flow information related to leases was as follows for the six months ended June 30, 2024 and 2023:


	Six Months Ended June 30,
	2024		2023
Operating cash outflows for operating lease liabilities	$	100,246	$	61,506
Financing cash outflows for finance lease liabilities	5,332		5,589
Right-of-use assets obtained in exchange for new operating lease liabilities	206,344		126,863
Right-of-use assets obtained in exchange for new finance lease liabilities	—		47,672

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The future payments due under operating and finance leases as of June 30, 2024 are as follows:


	Operating Leases		Financing Leases
Due remainder of 2024	$	90,964	$	2,853
2025	150,729		4,344
2026	111,613		2,592
2027	111,185		89
2028	109,378		89
Thereafter	327,883		851
Total lease payments	$	901,752	$	10,818
Less: effects of discounting	268,779		1,693
Present value of lease liabilities	$	632,973	$	9,125

Current lease liability	$	117,114	$	3,759
Non-current lease liability	515,859		5,366

As of June 30, 2024, the weighted average remaining lease term for operating leases was 7.1 years and finance leases was 3.1 years. Because the Company generally does not have access to the rate implicit in the lease, the incremental borrowing rate is utilized as the discount rate. The weighted average discount rate associated with operating leases as of June 30, 2024 was 10.3% and as of December 31, 2023 was 10.1%. The weighted average discount rate associated with finance leases as of June 30, 2024 was 5.2% and as of December 31, 2023 was 8.2%.

8. Financial instruments

During the first and second quarters of 2024, the Company entered into a series of foreign exchange forward contracts and zero-cost collar options to reduce exchange rate risk associated with U.S. dollar borrowings and expected capital expenditures. As of June 30, 2024, the notional amount of outstanding foreign exchange contracts was approximately $359,135. The Company recognized unrealized losses on a portion of these instruments of $6,205 and $7,027 for the three and six months ended June 30, 2024 respectively. For certain instruments, the Company recognized an unrealized gain of $17,121 for both the three and six months ended June 30, 2024. These instruments are expected to settle starting in 2024 through the third quarter of 2026.

The mark-to-market gain or loss on the foreign exchange contracts and other derivative instruments that are not intended to mitigate commodity risk are reported in Other expense (income), net in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

The Company does not hold or issue instruments for speculative purposes, and the counterparties to such contracts are major banking and financial institutions. Credit risk exists to the extent that the counterparties may not meet their contractual responsibilities; however, the Company does not anticipate any inability to perform by any counterparties.

Fair value

Fair value measurements and disclosures require the use of valuation techniques to measure fair value that maximize the use of observable inputs and minimize use of unobservable inputs. These inputs are prioritized as follows:

•Level 1 – observable inputs such as quoted prices in active markets for identical assets or liabilities.

•Level 2 – inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities or market corroborated inputs.

•Level 3 – unobservable inputs for which there is little or no market data and for which the Company needs to develop its own assumptions about how market participants price the asset or liability.

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The valuation techniques that may be used to measure fair value are as follows:

•Market approach – uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

•Income approach – uses valuation techniques, such as the discounted cash flow technique, to convert future amounts to a single present amount based on current market expectations about those future amounts.

•Cost approach – based on the amount that currently would be necessary to replace the service capacity of an asset (replacement cost).

The Company uses the market approach when valuing investment in equity securities and foreign exchange forward contracts which are recorded in Other non-current assets and Other current liabilities on the Condensed Consolidated Balance Sheets, respectively.

The Company uses the income approach for valuing the contingent consideration derivative liabilities. The liabilities represent consideration due to the sellers in asset acquisitions when certain contingent events occur and are recorded within Other current liabilities and Other long-term liabilities based on the timing of expected settlement.

The fair value of derivative instruments is estimated considering current interest rates, foreign exchange rates, closing quoted market prices and the creditworthiness of counterparties. The Company estimates fair value of the contingent consideration derivative liabilities using a discounted cash flows method with discount rates based on the average yield curve for bonds with similar credit ratings and matching terms to the discount periods as well as a probability of the contingent events occurring.

The following table presents the Company’s financial assets and financial liabilities, including those that are measured at fair value, as of June 30, 2024 and December 31, 2023:


	Level 1		Level 2		Level 3		Total
June 30, 2024
Assets
Investment in equity securities	$	—	$	—	$	8,678	$	8,678



Foreign exchange contracts	—		17,121		—		—

Liabilities
Foreign exchange contracts	$	—	$	7,027	$	—	$	7,027
Contingent consideration derivative liabilities	—		—		34,703		34,703

December 31, 2023
Assets
Investment in equity securities	$	—	$	—	$	7,678	$	7,678

Liabilities
Contingent consideration derivative liabilities	$	—	$	—	$	37,832	$	37,832

The Company believes the carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximated their fair value as of June 30, 2024 and December 31, 2023 and are classified as Level 1 within the fair value hierarchy.

The table below summarizes the fair value adjustment to instruments measured at Level 3 in the fair value hierarchy. These adjustments have been recorded within Other expense (income), net in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and six months ended June 30, 2024 and 2023:

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	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Contingent consideration derivative liabilities - Fair value adjustment - (gain)	$	(1,668)	$	(22)	$	(2,304)	$	(3,035)

During the three and six months ended June 30, 2024 and 2023, the Company had no transfers in or out of Level 3 in the fair value hierarchy. During the first quarter of 2024, the Company sold substantially all of its investment in Energos; this investment had been accounted for as an equity method investment (refer to Note 12). The Company retained an investment in Energos valued at $1,000, which is shown as a Level 3 investment in equity securities in the table above.

9. Restricted cash

As of June 30, 2024 and December 31, 2023, restricted cash consisted of the following:


	June 30, 2024		December 31, 2023
Cash restricted under the terms of loan agreements	$	118,176	$	102,079
Collateral for letters of credit and performance bonds	46,712		53,321

Total restricted cash	$	164,888	$	155,400

Uses of cash proceeds under the BNDES Term Loan, Barcarena Debentures and PortoCem Bridge Loan (see Note 19) are restricted to certain payments to construct the Barcarena Power Plant.

10. Inventory

As of June 30, 2024 and December 31, 2023, inventory consisted of the following:


	June 30, 2024		December 31, 2023
LNG and natural gas inventory	$	98,507	$	75,417
Automotive diesel oil inventory	10,696		10,121
Bunker fuel, materials, supplies and other	32,520		28,146
Total inventory	$	141,723	$	113,684

Inventory is adjusted to the lower of cost or net realizable value each quarter. Changes in the value of inventory are recorded within Cost of sales in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). No adjustments were recorded during the six months ended June 30, 2024. The Company recognized an adjustment to inventory of $6,232 during the six months ended June 20, 2023. In the second quarter of 2023, the Company acquired a spot cargo at a higher cost to obtain a new customer contract, and the net realizable value of this cargo was below the cost.

11. Prepaid expenses and other current assets

As of June 30, 2024 and December 31, 2023, prepaid expenses and other current assets consisted of the following:


	June 30, 2024		December 31, 2023
Prepaid expenses	$	20,006	$	31,490
Recoverable taxes	123,879		80,630
Due from affiliates	2,019		1,566
Assets held for sale	68,936		21,265
Other current assets	63,143		78,153
Total prepaid expenses and other current assets, net	$	277,983	$	213,104

During the fourth quarter of 2023, the Company began to sub-charter the Winter, a vessel included in the Energos Formation Transaction, and an asset was recorded representing the existing charterer's remaining payments to Energos,

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which was $59,074 as of December 31, 2023. The Company also recognized a liability of $49,400 (see Note 18) as of December 31, 2023 representing the Company's obligation to pay sub-charter payments until the vessel is chartered directly from Energos. The balance of the asset and liability as of June 30, 2024 was $29,537 and $20,319, respectively.

The remaining balance of other current assets as of June 30, 2024 and December 31, 2023 primarily consists of deposits and the current portion of contract assets (Note 6).

Assets held for sale

On June 30, 2024, the Company entered into a definitive agreement to sell its Miami Facility for $62,000, subject to certain purchase price adjustments at close. The transaction is expected to close in the third quarter of 2024 subject to customary terms and conditions. The assets related to the Miami Facility have been classified as held for sale as of June 30, 2024. In conjunction with the classification to held for sale, the Company recognized an impairment of $4,272 within Asset impairment expense in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). Nonrecurring, Level 2 inputs using a market approach were used to estimate the fair value of the investment for the purpose of recognizing the impairment.

In December 2023, the Company entered into an agreement to sell the vessel, Mazo, for $22,400; the sale closed in the first quarter of 2024, and the vessel was classified as held for sale as of December 31, 2023.

12. Equity method investments

In August 2022, the Company completed a transaction with an affiliate of Apollo Global Management, Inc., pursuant to which the Company transferred ownership of 11 vessels to Energos Infrastructure ("Energos") in exchange for approximately $1.85 billion in cash and a 20% equity interest in Energos (the “Energos Formation Transaction”). The Company's equity investment provided certain rights, including representation on the Energos board of directors, that gave the Company significant influence over the operations of Energos, and as such, the investment was accounted for under the equity method. Energos was also an affiliate, and all transactions with Energos were transactions with an affiliate.

Changes in the balance of the Company’s equity method investment in Energos is as follows:


	June 30, 2024
Equity method investments as of December 31, 2023	$	137,793

Capital contribution	6,794

Sale of equity method investment	(144,587)

Equity method investments as of June 30, 2024	$	—

In February 2024, the Company sold substantially all of its stake in Energos. As a result of the transaction, the Company recognized an other than temporary impairment ("OTTI") of the investment in Energos totaling $5,277. This loss was recognized in Income (loss) from equity method investments in the Consolidated Statement of Operations and Comprehensive Income (Loss) for the year-ended December 31, 2023. The sale was completed on February 14, 2024 and the Company received proceeds of $136,365, resulting in a loss of $7,222 presented within Other expense (income), net in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The Company retained an investment in Energos valued at $1,000, which has been recognized within Other non-current assets. Following the disposition of substantially all of the stake in Energos, the Company no longer has significant influence over Energos.

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13. Construction in progress

The Company’s construction in progress activity during the six months ended June 30, 2024 is detailed below:


	June 30, 2024
Construction in progress as of December 31, 2023	$	5,348,294

Additions	1,127,077

Impact of currency translation adjustment	(93,768)
Assets placed in service	(80,441)
Construction in progress as of June 30, 2024	$	6,301,162

Interest expense of $215,039 and $118,573, inclusive of amortized debt issuance costs, was capitalized for the six months ended June 30, 2024 and 2023, respectively.

The Company has significant development activities in Latin America as well as the development of the Company's Fast LNG liquefaction solution. The successful completion of these development projects is subject to various risks, such as obtaining government approvals, identifying suitable sites, securing financing and permitting, and ensuring contract compliance. The Company's development activities for the six months ended June 30, 2024 were primarily focused on Fast LNG and development of power projects in Brazil; additions to construction in progress in the first six months of 2024 of $938,448 were to develop Fast LNG and for our developments in Brazil including the Barcarena Power Plant and PortoCem Power Plant.

14. Property, plant and equipment, net

As of June 30, 2024 and December 31, 2023, the Company’s property, plant and equipment, net consisted of the following:


	June 30, 2024		December 31, 2023
Vessels	$	1,556,455	$	1,494,433
Terminal and power plant equipment	476,027		668,927
Power facilities	271,698		273,978

ISO containers and other equipment	64,280		97,984
LNG liquefaction facilities	1,561		63,316
Gas pipelines	66,319		66,319
Land	53,345		54,324
Leasehold improvements	45,341		139,967
Accumulated depreciation	(390,188)		(377,833)
Total property, plant and equipment, net	$	2,144,838	$	2,481,415

The book value of the vessels that was recognized due to the failed sale leaseback in the Energos Formation Transaction as of June 30, 2024 and December 31, 2023 was $1,284,400 and $1,293,384, respectively. The reduction to terminal and power plant equipment and leasehold improvements reflects the sale of turbines to PREPA (Note 5).

Depreciation expense for the three months ended June 30, 2024 and 2023 totaled $33,626 and $30,275, respectively, of which $235 and $232, respectively, is included within Cost of sales in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). Depreciation expense for the six months ended June 30, 2024 and 2023 totaled $78,151 and $56,275, respectively, of which $495 and $463, respectively, is included within Cost of sales in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

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15. Goodwill and intangible assets

Goodwill

The carrying amount of goodwill was $776,760 as of both June 30, 2024 and December 31, 2023.

Intangible assets

The following tables summarize the composition of intangible assets as of June 30, 2024 and December 31, 2023:


	June 30, 2024
	Gross Carrying Amount		Accumulated Amortization		Currency Translation Adjustment		Net Carrying Amount		Weighted Average Life
Definite-lived intangible assets
Acquired capacity reserve contract	162,045		(2,383)		—		159,662		17
Favorable vessel charter contracts	17,700		(12,069)		—		5,631		4
Permits and development rights	48,217		(5,928)		(2,160)		40,129		38

Easements	1,555		(356)		—		1,199		30
Indefinite-lived intangible assets
Easements	1,191		—		(81)		1,110
Total intangible assets	$	230,708	$	(20,736)	$	(2,241)	$	207,731


	December 31, 2023
	Gross Carrying Amount		Accumulated Amortization		Currency Translation Adjustment		Net Carrying Amount		Weighted Average Life
Definite-lived intangible assets
Favorable vessel charter contracts	$	17,700	$	(10,615)	$	—	$	7,085	4
Permits and development rights	48,217		(5,557)		(291)		42,369		38
Easements	1,555		(341)		—		1,214		30

Indefinite-lived intangible assets
Easements	1,191		—		(44)		1,147		n/a
Total intangible assets	$	68,663	$	(16,513)	$	(335)	$	51,815

Amortization expense for the three months ended June 30, 2024 and 2023 was $3,435 and $6,285, respectively. Amortization expense for the six months ended June 30, 2024 and 2023 was $4,430 and $13,081, respectively. Amortization expense is inclusive of reductions in expense for the amortization of unfavorable contract liabilities.

In the third quarter of 2023, An Bord Pleanála, Ireland's planning commission, denied the Company's application for the development of an LNG terminal and power plant in Shannon, Ireland. The Company is challenging this decision. Capitalized permits and development rights are primarily comprised of capitalized costs related to this project. The continued development of this project is uncertain and there are multiple risks, including regulatory risks, that could preclude the development of this project, and the results of these risks could have a material effect to the Company's results of operations.

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16. Other non-current assets, net

As of June 30, 2024 and December 31, 2023, Other non-current assets consisted of the following:


	June 30, 2024		December 31, 2023
Cost to fulfill (Note 6)	$	21,071	$	22,418
Contract assets, net (Note 6)	15,751		19,901
Investments in equity securities	8,678		7,678

New Fortress Energy Inc. [NFE] Filings
10-Q	[2024-08-09]
10-Q	[2024-05-09]
10-K	[2024-02-29]
10-Q	[2023-11-09]
10-Q	[2023-08-08]
10-Q	[2023-05-04]
10-K	[2023-03-01]
10-Q	[2022-11-08]
10-Q	[2022-08-05]
10-Q	[2022-05-06]
10-K	[2022-03-01]
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]