NextDecade Corporation — Q3 2022 Form 10-Q
Reporting period: Three and nine months ended September 30, 2022. NextDecade is developing the Rio Grande LNG export terminal and LNG-related carbon capture and storage projects; it had not begun generating operating revenue.
Financial results and liquidity
| Metric | Q3 2022 | Nine months 2022 | Comparable 2021 |
|---|---|---|---|
| Revenue | $0 | $0 | $0 |
| Operating loss | $16.1 million | $34.0 million | $3.2 million and $11.7 million, respectively |
| Net loss attributable to company | $18.8 million | $41.1 million | 2021 Q3 had $1.2 million net income; nine-month loss was $14.0 million |
| Net loss attributable to common stockholders | $25.0 million; $0.19 per share | $58.9 million; $0.47 per share | $4.1 million and $27.1 million; $0.03 and $0.23 per share |
| Operating cash flow | Not separately presented in the provided filing text | $(28.0) million | $(12.3) million |
| Investing cash flow | Not separately presented in the provided filing text | $(11.0) million | $(13.1) million |
| Financing cash flow | Not separately presented in the provided filing text | $122.6 million | $39.4 million |
At September 30, cash and cash equivalents were $109.2 million, versus $25.6 million at year-end 2021. Current assets were $110.5 million and current liabilities $17.0 million. Total liabilities were $48.4 million; the balance sheet does not show a conventional borrowing balance. Convertible preferred stock had a $196.0 million carrying value and bears cumulative 12% annual dividends, which may be paid in kind. No meaningful operating margin can be calculated because revenue was zero.
Changes and business developments
- Nine-month general and administrative expense rose to $29.2 million from $10.8 million, reflecting higher share-based compensation, staffing, professional fees, travel, and IT costs. Development expense was $3.9 million, mainly for third-party carbon-capture FEED studies.
- Common-stock warrant remeasurement generated a $7.2 million loss for the nine months, versus a $2.4 million loss in 2021; these noncash fair-value changes contributed to earnings volatility.
- The company raised approximately $30 million through an April common-stock placement, $85 million through a September common-stock placement, and $10.5 million from Series C preferred stock in March. Common shares outstanding increased to 143.2 million from 120.8 million at December 31, 2021.
- During 2022, NextDecade signed five LNG sale agreements totaling 6.25 mtpa, with ENN LNG, ENGIE, China Gas, Guangdong Energy, and ExxonMobil affiliate EMLAP. Each is subject to conditions including a positive FID for the initial project phase.
Outlook, risks, and contingencies
Management stated that cash may not fund planned operations through one year after issuance of the financial statements and disclosed substantial doubt about the company’s ability to continue as a going concern. It expects operating losses and negative cash flows to continue and plans to seek additional equity, equity-linked, or debt funding while managing costs; success and acceptable financing terms are not assured. Development spending was approximately $42 million in the first nine months, and management expected it to increase in Q4 as staffing and contractor activity ramped up.
The company estimated lump-sum EPC costs of approximately $11.4 billion for Trains 1–3, with final pricing to be set before FID. It issued Bechtel a limited notice to proceed for ramp-up and site preparation; the filing does not report that FID had occurred. The terminal was expected to be at least four years from operation and requires substantial project financing. The Rio Grande site lease effective date was extended to May 6, 2023; payments of approximately $1.5 million per quarter are due through the earlier of that date and lease commencement. Management reported no known legal proceedings likely to materially harm the company, while noting that it cannot guarantee no adverse outcome.
Investor facts to verify
- Whether and when the company reaches FID, secures project financing, and finalizes EPC pricing for the initial trains.
- Whether cash and new financing are sufficient to meet the going-concern funding need, and the potential cost and dilution of additional capital.
- Conditions and enforceability of the announced LNG SPAs, including their dependence on FID.
- The preferred stock’s 12% cumulative dividends, conversion terms, and potential dilution alongside common-stock issuance and warrants.
- The Q3 per-share loss discrepancy: the financial statements report $0.19, while the MD&A text states $0.20.