New Fortress Energy Inc. — 2019 Form 10-K Summary
Reporting period: Year ended December 31, 2019; the filing was signed March 4, 2020. The company is an integrated LNG and gas-to-power infrastructure business. It operates terminals in Jamaica and a liquefaction facility in Miami, while developing projects in Puerto Rico, Mexico, Ireland, Nicaragua, and Angola.
Financial performance
| Metric | 2019 | 2018 |
|---|---|---|
| Total revenue | $189.1 million | $112.3 million |
| Operating loss | $187.3 million | $58.5 million |
| Net loss | $204.3 million | $78.2 million |
| Net loss attributable to Class A stockholders | $33.8 million; $1.62 per share | $78.1 million |
| Cash used in operating activities | $234.3 million | $93.2 million |
| Cash used in investing activities | $376.2 million | $184.5 million |
| Cash provided by financing activities | $602.6 million | $260.2 million |
Revenue increased 68% year over year, led by Old Harbour Terminal sales and industrial customer volumes in Jamaica, plus $27.3 million of development-services revenue. Cost of sales was $183.4 million; total operating expenses were $376.4 million. Calculated revenue less cost of sales was $5.8 million, about 3% of revenue; the company reported no EBITDA figure in the supplied filing text.
2019 fourth quarter: Revenue was $69.8 million, operating loss $36.3 million, and net loss $38.4 million. These unaudited quarterly results compare with Q4 2018 revenue of $31.4 million and net loss of $34.8 million.
At December 31, 2019, cash and cash equivalents were $27.1 million, with restricted cash of $65.9 million. Current assets were $211.1 million and current liabilities $102.3 million; restricted cash is not necessarily available for general use. Total assets were $1.124 billion, total liabilities $736.5 million, and total equity $387.3 million. Book debt was $619.1 million: $495.0 million under the Term Loan Facility and approximately $124.1 million of secured and unsecured bonds. No cash dividends had been paid, and the company said it did not plan regular dividends in the foreseeable future.
Changes, outlook, and key risks
- Revenue growth came with sharply higher expenses and losses: operating loss widened by $128.8 million and net loss by $126.1 million. SG&A rose to $152.9 million, including $40.6 million of share-based compensation and approximately $19.5 million of Pennsylvania project development costs expensed.
- Operating cash outflow increased by $141.0 million, affected by higher inventory and receivables. Capital expenditures were $377.1 million. Inventory rose to $63.4 million from $16.0 million.
- Old Harbour began commercial operations in June 2019. Management expected the CHP Plant and San Juan Facility to begin operations in early 2020; the Jamalco CHP Plant in fact commenced commercial operations March 3, 2020, after year-end. The La Paz Terminal was expected in Q4 2020. These timelines are expectations, not guarantees.
- Management stated it expected sufficient liquidity, operating cash flow, and access to capital for the next 12 months. It estimated about $858 million of spending to complete committed projects, of which approximately $618 million had been spent by year-end. The filing warns that additional funding may be needed and may not be available on acceptable terms.
- After year-end, the company borrowed $800 million under a Credit Agreement in January 2020 and used proceeds to repay the $495 million Term Loan Facility. The new facility matures January 2023, has quarterly interest payments, and a floating LIBOR-based rate with a 6.25% initial margin that increases by 1.50% annually. The company also signed a February 2020 LNG supply agreement for 27.5 TBtu annually from 2022 through 2030, indexed to Henry Hub.
- Major risks include project delays and cost overruns, ongoing losses and negative operating cash flow, dependence on a small number of customers and Caribbean markets, LNG supply and price exposure, debt refinancing and covenant constraints, permitting and political risks, and severe weather. The company had no commodity or interest-rate hedges at year-end. It also cited the early-2020 coronavirus outbreak as a potential risk.
- The filing reports no material legal proceedings and no off-balance-sheet arrangements. Management assessed disclosure controls and internal control over financial reporting as effective; the auditor did not provide an internal-control attestation because the company was an emerging growth company.
Important facts for investors to verify
- Customer concentration is inconsistent within the filing: the business discussion says two customers represented 86% of 2019 revenue, while the financial-statement note says two customers represented 74%. Confirm the correct figure and its basis.
- Track actual commissioning, utilization, costs, and customer volumes for the CHP Plant, San Juan, La Paz, and other development projects against stated schedules and budgets.
- Assess liquidity after the January 2020 refinancing, including restricted-cash availability, construction spending, operating cash burn, and the 2023 Credit Agreement maturity and rate escalation.
- Evaluate LNG sourcing commitments and realized margins, including the 2020–2021 firm cargo obligations and the Henry Hub-indexed 2022–2030 supply agreement.
- Monitor customer credit and contract performance, especially Jamaica counterparties and PREPA, as well as regulatory and permitting progress in planned markets.