New Fortress Energy(NFE) - 2025 Q2 - Quarterly Report

GLOSSARY OF TERMS This section defines key terms used throughout the report CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS This statement advises readers about the inherent uncertainties and risks associated with forward-looking information PART I FINANCIAL INFORMATION This part presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis Item 1. Financial Statements. This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, equity changes, and cash flows, with detailed explanatory notes Condensed Consolidated Balance Sheets This table provides a snapshot of the company's assets, liabilities, and equity at specific reporting dates Condensed Consolidated Balance Sheets (in thousands of U.S. dollars) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $11,957,330 | $12,867,496 | | Total Liabilities | $10,563,982 | $10,777,838 | | Total Stockholders' Equity | $1,352,194 | $1,999,088 | Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income This table details the company's revenues, operating results, and net loss or income over specified periods Condensed Consolidated Statements of Operations (Six Months Ended June 30, in thousands of U.S. dollars) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Total Revenues | $772,228 | $1,118,327 | | Operating (Loss) Income | $(405,807) | $228,832 | | Goodwill Impairment Expense | $582,172 | — | | Asset Impairment Expense | $117,558 | $4,272 | | (Gain) Loss on Sale | $(472,699) | $77,140 | | Net Loss | $(754,200) | $(30,190) | Condensed Consolidated Statements of Changes in Stockholders' Equity This table outlines the changes in the company's total stockholders' equity and retained earnings over time Changes in Stockholders' Equity (in thousands of U.S. dollars) | Metric | December 31, 2024 | June 30, 2025 | | :--- | :--- | :--- | | Total Stockholders' Equity | $1,999,088 | $1,352,194 | | Retained Earnings (Accumulated Deficit) | $196,363 | $(558,397) | Condensed Consolidated Statements of Cash Flows This table summarizes the cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30, in thousands of U.S. dollars) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(384,156) | $162,968 | | Net cash provided by (used in) investing activities | $301,449 | $(882,715) | | Net cash (used in) provided by financing activities | $(110,428) | $735,679 | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(144,170) | $(12,966) | Notes to Condensed Consolidated Financial Statements These notes provide detailed explanations and disclosures supporting the condensed consolidated financial statements 1. Organization This note describes the company's business, operational focus, and global energy infrastructure activities - New Fortress Energy Inc. is a global energy infrastructure company focused on natural gas and LNG, operating in Terminals and Infrastructure and Ships segments[24][25] - The company has liquefaction, regasification, and power generation operations in the United States, Brazil, and Mexico, with marine operations globally[24] 2. Basis of presentation This note outlines the accounting principles used and addresses the company's going concern assessment - Management concluded there is substantial doubt about the Company's ability to continue as a going concern due to operating losses, negative operating cash flows, increased interest expense, and potential covenant non-compliance[27][29][335] - The Company is in discussions with debenture holders for waivers and is evaluating strategic alternatives including asset sales, capital raising, and debt refinancing to address liquidity issues[30][272] 3. Adoption of new and revised standards This note details the adoption of new accounting standards and their prospective impact on financial reporting - The Company adopted ASU 2024-01 (Compensation—Stock Compensation) on January 1, 2025, prospectively, with no new agreements requiring its application[34] - ASU 2023-09 (Income Taxes) and ASU 2024-03 (Expense Disaggregation Disclosures) are effective for annual periods beginning after December 15, 2024, and December 15, 2026, respectively, with the Company reviewing their impact[33][35][36] 4. Dispositions This note describes significant asset sales, including the Jamaica Business, and their financial impact - In May 2025, the Company completed the sale of its Jamaica Business for $1,055,000 thousand cash consideration, recognizing a gain of $472,699 thousand[38][40] - Net proceeds from the Jamaica Business sale were approximately $678,480 thousand after debt repayment and transaction costs, with an additional $98,635 thousand held in escrow[39] - In March 2024, the Company sold turbines and related equipment to PREPA, recognizing a loss of $77,530 thousand[43][44] 5. Revenue recognition This note explains the company's revenue recognition policies and details revenue streams from contracts Total Revenues (in thousands of U.S. dollars) | Period | 2025 | 2024 | | :--- | :--- | :--- | | Three Months Ended June 30 | $301,692 | $428,006 | | Six Months Ended June 30 | $772,228 | $1,118,327 | - LNG cargo sales for the six months ended June 30, 2025, were $207,035 thousand, significantly higher than $24,502 thousand in the same period of 2024[46] Future Revenue from Take-or-Pay Contracts (as of June 30, 2025, in thousands of U.S. dollars) | Period | Revenue | | :--- | :--- | | Remainder of 2025 | $64,928 | | 2026 | $451,458 | | 2027 | $451,368 | | 2028 | $440,735 | | 2029 | $430,440 | | Thereafter | $6,709,479 | | Total | $8,548,408 | 6. Leases, as lessee This note provides information on the company's lease arrangements, including right-of-use assets and lease liabilities Total Right-of-Use Assets and Lease Liabilities (in thousands of U.S. dollars) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Right-of-Use Assets | $437,548 | $618,733 | | Total Current Lease Liabilities | $79,060 | $128,362 | | Total Non-Current Lease Liabilities | $341,509 | $475,161 | - Operating lease cost for the six months ended June 30, 2025, was $76,929 thousand (fixed) and $(227) thousand (variable), compared to $76,248 thousand (fixed) and $2,709 thousand (variable) in 2024[60] - Weighted average remaining lease term for operating leases was 7.2 years and for finance leases was 3.0 years as of June 30, 2025[62] 7. Financial instruments This note details the company's financial instruments, including derivatives, and their fair value measurements - As of June 30, 2025, the notional amount of outstanding foreign exchange contracts was approximately $61,920 thousand, settling through Q3 2026[63] Loss (Gain) from Foreign Exchange Contracts (in thousands of U.S. dollars) | Financial Instrument | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | Foreign exchange forward contracts | $257 | $13,993 | | Zero-cost collar options | $3,638 | $4,265 | | Total | $3,895 | $18,258 | - The Company uses Level 2 inputs for foreign exchange contracts and Level 3 inputs for contingent consideration and embedded contingent interest derivatives for fair value measurements[70] 8. Restricted cash This note outlines the nature and purpose of cash balances restricted under loan agreements and collateral requirements Restricted Cash Balances (in thousands of U.S. dollars) | Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash restricted under the terms of loan agreements | $230,916 | $422,098 | | Collateral for letters of credit and performance bonds | $39,382 | $50,598 | | Total restricted cash | $270,298 | $472,696 | - Restricted cash is primarily for payments to construct power plants in Brazil under BNDES Term Loan, Brazil Financing Notes, and PortoCem Debentures[72] 9. Inventory This note details the composition of the company's inventory, including LNG, natural gas, and other supplies Inventory Composition (in thousands of U.S. dollars) | Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | LNG and natural gas inventory | $51,152 | $67,232 | | Automotive diesel oil inventory | $844 | $7,934 | | Bunker fuel, materials, supplies and other | $22,004 | $28,058 | | Total inventory | $74,000 | $103,224 | - No inventory adjustments were recorded for the three and six months ended June 30, 2025 and 2024[73] 10. Prepaid expenses and other current assets This note provides a breakdown of prepaid expenses, recoverable taxes, and other short-term assets Prepaid Expenses and Other Current Assets (in thousands of U.S. dollars) | Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Prepaid expenses | $24,425 | $28,667 | | Recoverable taxes | $123,298 | $98,101 | | Contract assets (Note 5) | $31,662 | $44,902 | | Due from affiliates | $3,349 | $2,627 | | Proceeds held in escrow (Note 4) | $79,192 | — | | Derivative asset | $515 | $19,807 | | Other current assets | $55,246 | $11,392 | | Total | $317,687 | $205,496 | 11. Construction in progress This note details the capital expenditures and adjustments related to ongoing construction projects Construction in Progress Activity (Six Months Ended June 30, 2025, in thousands of U.S. dollars) | Activity | Amount | | :--- | :--- | | Balance as of December 31, 2024 | $3,574,389 | | Additions | $519,618 | | Asset impairment expense (Note 13) | $(111,640) | | Impact of currency translation adjustment | $158,812 | | Assets placed in service | $(66,954) | | Dispositions (Note 4) | $(1,934) | | Balance as of June 30, 2025 | $4,072,291 | - Interest expense capitalized for the six months ended June 30, 2025, was $136,641 thousand, down from $215,039 thousand in 2024[75] 12. Property, plant and equipment, net This note presents the breakdown of the company's property, plant, and equipment, net of accumulated depreciation Property, Plant and Equipment, Net (in thousands of U.S. dollars) | Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | LNG liquefaction facilities | $3,269,659 | $3,316,504 | | Vessels | $1,677,735 | $1,575,299 | | Terminal and power plant equipment | $419,744 | $630,822 | | Gas pipelines | $291,355 | $323,196 | | Power facilities | $157,219 | $283,470 | | ISO containers and other equipment | $46,596 | $66,766 | | Land | $56,971 | $51,897 | | Leasehold improvements | $48,861 | $49,862 | | Accumulated depreciation | $(428,239) | $(455,009) | | Total | $5,539,901 | $5,842,807 | - Depreciation expense for the six months ended June 30, 2025, totaled $116,046 thousand, up from $78,151 thousand in 2024[79] 13. Impairment of long-lived assets This note details the asset impairment charges recognized, primarily for development projects - The Company recorded an asset impairment charge of $117,311 thousand for the three months ended June 30, 2025, primarily related to the Lakach deepwater project ($47,294 thousand) and a development project in Pennsylvania ($48,155 thousand)[81] - The Lakach deepwater project costs were fully impaired as development was deemed not probable[81] 14. Goodwill and intangible assets This note discusses goodwill impairment and amortization expense for intangible assets by segment - A goodwill impairment charge of $582,172 thousand was recognized in the Terminals and Infrastructure segment for the three months ended June 30, 2025, due to a significant decline in stock price, increased WACC, and reduced forecasted cash flows[84][86] Goodwill by Reportable Segment (Six Months Ended June 30, 2025, in thousands of U.S. dollars) | Segment | Balance as of Dec 31, 2024 | Impairment Losses | Balance as of June 30, 2025 | | :--- | :--- | :--- | :--- | | Terminals and Infrastructure | $750,412 | $(582,172) | — | | Ships | $15,938 | — | $15,938 | | Total | $766,350 | $(582,172) | $15,938 | - Amortization expense for intangible assets for the six months ended June 30, 2025, was $7,741 thousand, up from $4,430 thousand in 2024[88] - ABP granted the Company's application to construct a 600 MW power plant and a 220 kV electricity interconnect in Ireland in March 2025, with the LNG terminal application still under reconsideration[89] 15. Other non-current assets, net This note provides a breakdown of long-term receivables, contract assets, and other non-current assets Other Non-Current Assets, Net (in thousands of U.S. dollars) | Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Long term receivables | $118,798 | $114,677 | | Cost to fulfill (Note 5) | $11,226 | $20,592 | | Contract asset, net (Note 5) | $11,236 | $20,270 | | Financing costs | $24,002 | $57,568 | | Other | $48,984 | $59,792 | | Total | $214,246 | $272,899 | - Long-term receivables include $118,798 thousand from a novated LNG supply contract, to be received between Q3 2026 and Q1 2028[90] 16. Accrued liabilities This note details the company's accrued development costs, interest, bonuses, and other short-term liabilities Accrued Liabilities (in thousands of U.S. dollars) | Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Accrued development costs | $48,626 | $113,193 | | Accrued interest | $121,601 | $84,566 | | Accrued bonuses | $25,915 | $37,415 | | Accrued inventory | $846 | $93,319 | | Other accrued expenses | $56,055 | $62,866 | | Total | $253,043 | $391,359 | 17. Other current liabilities This note presents derivative liabilities, contract liabilities, income tax payable, and other short-term obligations Other Current Liabilities (in thousands of U.S. dollars) | Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Derivative liabilities | $38,555 | $29,417 | | Contract liabilities (Note 5) | $12,536 | $14,415 | | Income tax payable | $19,300 | $88,607 | | Due to affiliates | $4,168 | $11,530 | | Other current liabilities | $34,248 | $30,860 | | Total | $108,807 | $174,829 | 18. Debt This note provides a comprehensive overview of the company's debt obligations, including corporate and asset-level financing Total Debt (in thousands of U.S. dollars) | Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Corporate debt | $5,560,998 | $5,069,406 | | Sale leaseback financing | $1,412,030 | $1,412,517 | | Asset level financing | $2,804,324 | $1,763,871 | | Total debt | $8,986,819 | $8,894,835 | - The Company does not expect to comply with consolidated first lien ratio or fixed charge coverage ratio for Q3 2025, potentially leading to debt acceleration[99][101][108] - $510,879 thousand of 2026 Notes outstanding could trigger early maturity of $2,730,127 thousand New 2029 Notes and Revolving Facility if not addressed 91 days prior to maturity[27][28] - PortoCem Debenture holders waived early maturity events due to credit rating downgrades but the Company failed to provide a $79,100 thousand bank guarantee by August 17, 2025, giving holders the right to declare early maturity[113][114][115] - The Company repaid $270,000 thousand of the Revolving Facility, reducing capacity to $730,000 thousand, and repurchased $227,157 thousand of South Power Bonds upon Jamaica Business sale[97][116] - Term Loan B increased by $425,000 thousand to $1,272,440 thousand, with proceeds funding FLNG project capital expenditures[102] - Interest expense for the six months ended June 30, 2025, was $420,102 thousand, up from $157,743 thousand in 2024, partly due to increased principal balance and reduced capitalized interest[118][260] 19. Other Long-Term Liabilities This note details long-term guarantee liabilities, derivative liabilities, and other non-current obligations Other Long-Term Liabilities (in thousands of U.S. dollars) | Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Guarantee liability | $118,798 | $115,359 | | Derivative liabilities | $5,267 | $24,364 | | Contract liability (Note 5) | $10,500 | $11,750 | | Accrued interest | $5,770 | $9,398 | | Other | $13,804 | $5,487 | | Total | $154,139 | $166,358 | - Guarantee liability of $118,798 thousand relates to an LNG supply contract novation, with payments expected from Q3 2026 to Q1 2028[119] 20. Income Taxes This note explains the company's income tax provision, valuation allowances, and the impact of new tax legislation Tax (Benefit) Provision (in thousands of U.S. dollars) | Period | 2025 | 2024 | | :--- | :--- | :--- | | Three Months Ended June 30 | $(967) | $3,435 | | Six Months Ended June 30 | $27,703 | $25,059 | - The tax provision for H1 2025 was driven by estimated taxes on the Jamaica Business sale gain, foreign earnings, and a $11,000 thousand valuation allowance[120] - The Company is assessing the impact of the newly enacted OBBBA (One Big Beautiful Bill Act) in the U.S. and expects to be subject to Pillar Two tax obligations in fiscal year 2025, increasing tax expense[121][123] 21. Commitments and contingencies This note outlines the company's contractual commitments and potential liabilities from legal claims - Alunorte initiated arbitration proceedings claiming BRL 375.7 million ($68.9 million) in damages for alleged gas supply delays; the Company believes claims are without merit[125] 22. Earnings per share This note presents the basic and diluted net loss per share calculations and weighted average shares outstanding Net Loss Per Share - Basic and Diluted (in U.S. dollars) | Period | 2025 | 2024 | | :--- | :--- | :--- | | Three Months Ended June 30 (Basic) | $(2.02) | $(0.44) | | Three Months Ended June 30 (Diluted) | $(2.02) | $(0.44) | | Six Months Ended June 30 (Basic) | $(2.76) | $(0.18) | | Six Months Ended June 30 (Diluted) | $(2.76) | $(0.18) | - Weighted average shares outstanding (basic) for the six months ended June 30, 2025, increased to 273,996,219 from 205,066,362 in 2024[126] 23. Redeemable preferred stock and stockholder's equity This note details transactions involving preferred stock conversions and dividend policies affecting stockholders' equity - In Q1 2025, holders converted 45,000 Series B Convertible Preferred Stock shares into 4,977,837 Class A common shares[130] - The Company did not declare dividends on Class A common stock for the three and six months ended June 30, 2025, due to intercompany agreements[134] - Series B Convertible Preferred Stock holders can require repurchase upon certain events (e.g., change in control, credit rating downgrade, share price condition)[131][132] 24. Share-based compensation This note describes the company's share-based compensation plans and related expense recognition Share-Based Compensation Expense (in thousands of U.S. dollars) | Period | 2025 | 2024 | | :--- | :--- | :--- | | Three Months Ended June 30 | $5,250 | $20,064 | | Six Months Ended June 30 | $5,021 | $25,312 | - Unrecognized compensation costs from non-vested RSUs were $2,734 thousand as of June 30, 2025, with a weighted-average remaining vesting period of 0.51 years[136][140] 25. Related party transactions This note discloses transactions and expenses incurred with affiliated entities and related parties - Administrative services expenses from Fortress affiliated entities were $500 thousand for the six months ended June 30, 2025, down from $1,808 thousand in 2024[141] - The Company incurred $1,098 thousand in aircraft charter costs from an affiliate for the six months ended June 30, 2025[142] - In March 2025, the Company acquired DevTech's 10% non-controlling interest for $950 thousand cash, terminating a consulting arrangement[148] 26. Segments This note provides financial information and operating margins for the company's Terminals and Infrastructure and Ships segments - The Company operates in two segments: Terminals and Infrastructure (integrated gas to power solutions, logistics, shipping) and Ships (vessels chartered to third parties)[151] Segment Operating Margin (Six Months Ended June 30, in thousands of U.S. dollars) | Segment | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Terminals and Infrastructure | $67,395 | $564,348 | $(496,953) | | Ships | $63,598 | $68,263 | $(4,665) | | Total Segment Operating Margin | $130,993 | $632,611 | $(501,618) | - Consolidated Segment Operating Margin for the six months ended June 30, 2025, was $130,993 thousand, a significant decrease from $542,611 thousand in 2024[155] 27. Subsequent events This note describes significant events occurring after the reporting period, including stock redemptions and debt agreement changes - On August 1, 2025, the Company redeemed 36,746 Series B Convertible Preferred Stock shares for 10,351,360 Class A common shares due to a Change Event (credit rating downgrades)[156] - The Letter of Credit Agreement maturity date was extended to November 14, 2025, with commitments reduced to $195,000 thousand, further reducing to $155,000 thousand on October 5, 2025[159] - The Company expects non-compliance with Letter of Credit Facility covenants for Q3 2025, risking 102% cash collateralization of outstanding letters of credit[160] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. This section provides management's analysis of the company's financial condition, operational results, development projects, liquidity, and capital resources, including going concern risks Overview This overview introduces the company's mission, operational segments, and recent significant business developments - NFE is a global energy infrastructure company focused on natural gas and LNG, with a mission to provide clean, reliable energy and transition to carbon-free power[166] - The Company operates in two segments: Terminals and Infrastructure (integrated gas to power solutions) and Ships (vessels chartered to third parties)[167][168] - The sale of the Jamaica Business was completed on May 14, 2025, generating net cash proceeds of approximately $678 million[169] Our Current Operations – Terminals and Infrastructure This section details the operational status and strategic initiatives within the company's Terminals and Infrastructure segment - The San Juan Facility is a micro-fuel handling facility in Puerto Rico, serving the PREPA San Juan Power Plant and industrial users[171] - The gas sale agreement with PREPA, initially expired in March 2025, has been extended short-term and is set to expire on September 12, 2025, with long-term solution uncertain[173] - The La Paz Facility in Mexico began commercial operations in Q4 2021, supplying the La Paz Power Plant (135MW capacity) and CFE power generation facilities under a 10-year take-or-pay agreement[176] - The Santa Catarina Facility in Brazil, placed in service in Q4 2024, has a processing capacity of 500,000 MMBtu/day and connects to the TBG pipeline[177] - NFE plans to meet LNG supply needs through current contractual commitments, its own FLNG production (first unit began producing in July 2024, expected 70 TBtu annually), and additional LNG supply contracts starting in 2027[180] Our Current Operations – Ships This section describes the company's Ships segment, including vessel charters and their planned integration into terminal operations - The Ships segment includes FSRUs, FSUs, and LNG carriers chartered to third parties under long-term arrangements, with plans to utilize these vessels for NFE's own terminal operations as charters expire[182] - The Energos Formation Transaction involved transferring 11 vessels to Energos for $1.85 billion cash and a 20% equity interest, with 10 vessels treated as a failed sale leaseback and remaining on NFE's balance sheet[183] Our Development Projects This section outlines the company's ongoing and planned development projects, including Fast LNG and new power plants - NFE is developing modular liquefaction facilities (Fast LNG) for low-cost LNG supply, with the first 1.4 MTPA unit deployed off Altamira, Mexico, placed in service in Q4 2024[188][191] - The Lakach deepwater offshore project development was deemed improbable in Q2 2025, resulting in a $47.3 million impairment[194] - The Barcarena Facility in Brazil will supply a 630MW power plant (expected completion 2025) and the 1.6 GW PortoCem Power Plant (expected completion 2026)[197][198] - In March 2025, ABP granted NFE's application to construct a 600 MW power plant and a 220 kV electricity interconnect in Ireland, with the LNG terminal application still under reconsideration[201][202] - NFE launched Klondike in 2024, a power and data center development business, with over 1,000 acres of land in Brazil, Ireland, and the US for data center sites[206][208] Recent Developments This section highlights key recent events impacting the company's financial agreements and operational outlook - The Letter of Credit Agreement maturity date was extended to November 14, 2025, with commitments reduced to $195,000 thousand, further reducing to $155,000 thousand on October 5, 2025[211] - The Company expects non-compliance with Letter of Credit Facility covenants for Q3 2025, risking 102% cash collateralization of outstanding letters of credit[212] Other Matters This section addresses regulatory determinations and ongoing discussions regarding operational permits and plans - FERC determined the San Juan Facility is subject to its jurisdiction, and NFE's application to operate remains pending since September 2021[213] - The USCG issued a Letter of Warning regarding ongoing ship-to-ship LNG transfers in San Juan port limits and recommended against proposed operations with alternative vessels; NFE is collaborating with USCG on new operational plans[215] Results of Operations – Three Months Ended June 30, 2025 compared to Three Months Ended March 31, 2025 and Six Months Ended June 30, 2025 compared to Six Months Ended June 30, 2024 This section analyzes the company's consolidated financial performance across various periods, highlighting key operational drivers Consolidated Segment Operating Margin (in thousands of U.S. dollars) | Period | June 30, 2025 | March 31, 2025 | Change | | :--- | :--- | :--- | :--- | | Consolidated Segment Operating Margin | $24,967 | $106,026 | $(81,059) | Consolidated Segment Operating Margin (in thousands of U.S. dollars) | Period | June 30, 2025 | June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Consolidated Segment Operating Margin | $130,993 | $542,611 | $(411,618) | Terminals and Infrastructure Segment This section details the financial results and operational performance of the Terminals and Infrastructure segment Terminals and Infrastructure Segment Operating Margin (in thousands of U.S. dollars) | Period | June 30, 2025 | March 31, 2025 | Change | | :--- | :--- | :--- | :--- | | Total revenues | $263,236 | $431,927 | $(168,691) | | Cost of sales | $208,852 | $302,377 | $(93,525) | | Vessel operating expenses | $1,765 | — | $1,765 | | Operations and maintenance | $59,817 | $54,957 | $4,860 | | Segment Operating Margin | $(7,198) | $74,593 | $(81,791) | Terminals and Infrastructure Segment Operating Margin (in thousands of U.S. dollars) | Period | June 30, 2025 | June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Total revenues | $695,163 | $1,033,165 | $(338,002) | | Cost of sales | $511,229 | $450,977 | $60,252 | | Vessel operating expenses | $1,765 | — | $1,765 | | Operations and maintenance | $114,774 | $107,840 | $6,934 | | Deferred earnings from contracted sales | — | $90,000 | $(90,000) | | Segment Operating Margin | $67,395 | $564,348 | $(496,953) | - Revenue decreased by $168.7 million QoQ and $338.0 million YoY, primarily due to lower cargo sales, termination of the grid stabilization project, and the sale of the Jamaica Business[224][225][226] - Cost of sales decreased by $93.5 million QoQ due to lower cargo sales costs, but increased by $60.3 million YoY due to higher cargo sales costs, partially offset by lower volumes and O&M costs[230][231] Ships Segment This section presents the financial performance and operational changes within the company's Ships segment Ships Segment Operating Margin (in thousands of U.S. dollars) | Period | June 30, 2025 | March 31, 2025 | Change | | :--- | :--- | :--- | :--- | | Total revenues | $38,456 | $38,609 | $(153) | | Vessel operating expenses | $6,291 | $7,176 | $(885) | | Segment Operating Margin | $32,165 | $31,433 | $732 | Ships Segment Operating Margin (in thousands of U.S. dollars) | Period | June 30, 2025 | June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Total revenues | $77,065 | $85,162 | $(8,097) | | Vessel operating expenses | $13,467 | $16,899 | $(3,432) | | Segment Operating Margin | $63,598 | $68,263 | $(4,665) | - Revenue decreased by $8.1 million YoY, primarily because the vessels Energos Winter and Energos Maria are now used for terminal operations instead of third-party charters[240] Other operating results This section discusses various operating expenses, non-operating income/loss, and their impact on net loss Key Operating Expenses and (Income) Loss (in thousands of U.S. dollars) | Category | 3 Months Ended June 30, 2025 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | | Selling, general and administrative | $57,256 | $116,527 | $141,332 | | Transaction and integration costs | $75,384 | $87,315 | $3,131 | | Depreciation and amortization | $52,870 | $105,927 | $87,904 | | Asset impairment expense | $117,312 | $117,558 | $4,272 | | Goodwill impairment expense | $582,172 | $582,172 | — | | (Gain) loss on sale | $(472,699) | $(472,699) | $77,140 | | Interest expense | $206,408 | $420,102 | $157,743 | | Other (income) expense, net | $(56,262) | $(120,199) | $66,466 | | Loss on extinguishment of debt, net | $20,320 | $20,787 | $9,754 | | Tax (benefit) provision | $(967) | $27,703 | $25,059 | | Net loss | $(556,827) | $(754,200) | $(30,190) | - Transaction and integration costs significantly increased to $75.4 million in Q2 2025, primarily due to the Jamaica Business sale[248] - Goodwill impairment expense of $582.2 million was recognized in Q2 2025 due to stock price decline, increased WACC, and reduced cash flow forecasts[255] - A gain of $472.7 million was recognized on the sale of the Jamaica Business in May 2025[256] - Interest expense increased by $262.4 million YoY for H1 2025, driven by higher principal balance and reduced capitalized interest as projects came online[260] - Other (income) expense, net, shifted from an expense of $66.5 million in H1 2024 to an income of $(120.2) million in H1 2025, mainly due to foreign currency remeasurement gains[261][263] Factors Impacting Comparability of Our Financial Results This section explains the key events and operational changes that affect the comparability of the company's financial results - Historical results are not indicative of future performance due to the recent completion or near completion of significant projects (e.g., Santa Catarina Facility, Barcarena Facility) and the sale of the Jamaica Business[268][269] - Future results will include operating costs and increased depreciation from the Fast LNG solution, which was placed into service in Q4 2024, and reduced capitalized interest[269] Liquidity and Capital Resources This section assesses the company's liquidity position, capital expenditure needs, and strategies to address going concern risks - Management concluded there is substantial doubt about the Company's ability to continue as a going concern due to operating losses, negative operating cash flows, increased interest expense, and potential covenant non-compliance[270][271] - The Company is evaluating strategic alternatives, including asset sales, capital raising, debt amendments, and refinancing, to address liquidity and avoid debt acceleration[272] - Remaining committed capital expenditures are approximately $467 million, primarily for Fast LNG, Altamira onshore liquefaction, Puerto Sandino Facility, Barcarena, and PortoCem Power Plants[275] - The Company is pursuing claims from the termination of the Puerto Rico emergency power services contract ($659 million request), modification of Genera's O&M Agreement (up to $110 million), and escrowed proceeds from the Jamaica Business sale ($98.6 million) to obtain additional funding[274] Contractual Obligations This section summarizes the company's long-term debt, purchase, and lease obligations, categorized by maturity Summary of Contractual Obligations (as of June 30, 2025, in thousands of U.S. dollars) | Obligation | Total | Less than 1 Year | Years 2 to 3 | Year 4 to 5 | More than 5 years | | :--- | :--- | :--- | :--- | :--- | :--- | | Long-term debt obligations | $14,134,152 | $560,089 | $3,584,894 | $6,267,052 | $3,722,117 | | Purchase obligations | $16,938,768 | $351,093 | $505,202 | $1,143,193 | $14,939,280 | | Lease obligations | $597,586 | $71,906 | $179,134 | $149,690 | $196,856 | | Total | $31,670,506 | $983,088 | $4,269,230 | $7,559,935 | $18,858,253 | - Purchase obligations include take-or-pay contracts for LNG/natural gas and EPC agreements for development projects, with amounts based on spot prices for index-linked contracts[281][282] Cash Flows This section analyzes the changes in cash flows from operating, investing, and financing activities over specified periods Changes in Cash Flows (Six Months Ended June 30, in thousands of U.S. dollars) | Activity | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Operating activities | $(384,156) | $162,968 | $(547,124) | | Investing activities | $301,449 | $(882,715) | $1,184,164 | | Financing activities | $(110,428) | $735,679 | $(846,107) | | Net (decrease) increase in cash, cash equivalents, and restricted cash | $(193,135) | $15,932 | $(209,067) | - Operating cash flow decreased by $547.1 million YoY, driven by increased net loss adjusted for non-cash items like goodwill impairment and asset impairment, partially offset by the gain on sale of Jamaica Business[285] - Investing cash flow increased by $1,184.2 million YoY, primarily due to $949.5 million proceeds from the Jamaica Business sale, offsetting capital expenditures[286] - Financing cash flow decreased by $846.1 million YoY, reflecting debt repayments (Revolving Facility, South Power Bonds) and short-term borrowings, compared to significant borrowings in 2024[288] Long-Term Debt This section provides detailed information on the company's long-term debt, including covenant compliance and repayment events - The Revolving Facility capacity was reduced to $730,000 thousand after a $270,000 thousand repayment in May 2025, and is fully utilized as of June 30, 2025[292] - The Company expects non-compliance with Revolving Facility and Term Loan A covenants for Q3 2025, risking acceleration of substantially all outstanding indebtedness[294][300] - Term Loan B increased by $425,000 thousand to $1,272,440 thousand in March 2025, with proceeds for onshore FLNG project capital expenditures[295] - PortoCem Debenture holders waived early maturity events due to credit rating downgrades, but the Company's failure to provide a $79,100 thousand bank guarantee by August 17, 2025, gives holders the right to declare early maturity[305][306][307] - South Power Bonds were repurchased for $227,200 thousand in May 2025, in conjunction with the Jamaica Business sale[309] Critical Accounting Policies and Estimates This section highlights the accounting policies and estimates that require significant management judgment - No significant changes to critical accounting estimates since the Annual Report[310] Recent Accounting Standards This section refers to disclosures regarding recently issued accounting standards and their potential impact - Refer to Note 3 for descriptions of recently issued accounting standards[311] Item 3. Quantitative and Qualitative Disclosures About Market Risk. This section discusses the company's exposure to market risks, including commodity price, interest rate, and foreign currency fluctuations - The Company's exposure to LNG price fluctuations is limited as customer pricing is largely based on the Henry Hub index plus a fixed fee[313] - A 100-basis point change in market interest rates would impact the fair value of fixed-rate debt by approximately $51.4 million and annual interest expense on variable-rate debt by approximately $20.0 million[315][316] - The Company uses foreign exchange forward contracts and zero-cost collar options (notional amount ~$62 million as of June 30, 2025) to reduce exchange rate risk, especially for U.S. dollar borrowings and capital expenditures in Brazil[317] Item 4. Controls and Procedures. This section reports on the effectiveness of the company's disclosure controls and internal control over financial reporting - Management concluded that disclosure controls and procedures were not effective as of June 30, 2025, due to material weaknesses in internal control over financial reporting[319][341] - Previously identified material weaknesses relate to assessing and disclosing debt repayment events and insufficient personnel with U.S. GAAP knowledge for income taxes, legal contingencies, cash flow statements, and non-routine transactions[320][321] - Remediation efforts include enhancing monitoring controls, targeted training, improving documentation, hiring additional U.S. GAAP-experienced personnel, and engaging consultants[320][321] PART II OTHER INFORMATION This part provides additional information beyond the financial statements, including legal proceedings, risk factors, and other disclosures Item 1. Legal Proceedings. This section states that the company is not currently a party to any material legal proceedings - The Company is not currently involved in any material legal proceedings[325] - Future legal and regulatory claims may arise in the ordinary course of business, with uncertain outcomes[325] Item 1A. Risk Factors. This section details significant risks that could materially and adversely affect the company's business, financial condition, or results of operations Summary Risk Factors This summary outlines the primary risks related to the company's operations, financial health, and market environment - Key risks include going concern ability, material weaknesses in internal controls, construction and operational risks, dependence on third-party contractors/suppliers, and failure of LNG to be a competitive energy source[327] - Other risks involve complex regulatory environments, inability to obtain/maintain permits, investment recovery, customer dependence, lack of diversification, competition, market volatility, and debt servicing[327] - Risks also cover unproven technologies (Fast LNG, data centers), geopolitical conditions, environmental regulations, and potential impairments to long-lived assets[327] Risks Related to Our Business This section details specific risks inherent to the company's business model, operations, and financial management - Substantial doubt exists about the Company's ability to continue as a going concern due to operating losses, negative cash flows, increased interest expense, and potential debt covenant breaches[331][335] - Failure to provide a $79,100 thousand bank guarantee for PortoCem Debentures by August 17, 2025, gives debenture holders the right to declare early maturity, potentially accelerating all outstanding debt[332][334] - Non-compliance with Revolving Facility, Letter of Credit Facility, and Term Loan A covenants for Q3 2025 could lead to debt acceleration and cash collateralization requirements[333][334] - Material weaknesses in internal control over financial reporting and ineffective disclosure controls as of June 30, 2025, pose risks of misstatements and investor confidence loss[339][341] - The Company faces significant construction risks for complex projects, including cost overruns, delays, and reliance on third-party contractors, especially in foreign jurisdictions[346][347][350] - Operation of infrastructure, facilities, and vessels involves significant risks such as equipment failures, accidents, and environmental damage, which could increase costs or lower revenues[351][353] - Dependence on third-party contractors and suppliers for development and operations exposes the Company to performance risks and potential delays or cost increases[355] - The success of operations depends on LNG being a competitive energy source, facing competition from other fuels and market volatility, which could adversely affect expansion strategy and profitability[356][358] - The Company operates in a highly regulated environment, with complex and changing laws, rules, and permits, which can lead to increased expenditures, restrictions, and delays[359][362] - Investing significant capital in projects carries the risk of not recovering invested capital if projects are unsuccessful or customers fail to meet payment obligations, especially with government counterparties[365] - Lack of asset and geographic diversification (e.g., Mexico, Puerto Rico) makes the Company vulnerable to adverse developments in specific regions, including economic volatility, natural disasters, and trade restrictions[369][371] - Dependence on a limited number of customers (CFE, PREPA) means the loss or early termination of contracts could significantly impact revenues and operating results[372] - The Company's ability to convert anticipated customer pipeline into binding long-term contracts is uncertain, risking failure to generate anticipated revenues and profits[373] - Intense competition in the LNG industry from companies with greater resources, coupled with fluctuations in demand and price for LNG and natural gas, could adversely affect the business[376][380][383] - Risk management strategies cannot eliminate all LNG price and supply risks, and hedging arrangements may expose the Company to financial losses[384][385] - Dependence on third-party LNG suppliers and the development of its own portfolio are subject to risks, including inability to purchase sufficient quantities or price fluctuations[386][388] - The Fast LNG technology is unproven, carrying risks of failure to meet specifications, delays, high costs, and regulatory challenges, potentially impacting profitability[405][406] - The new Klondike data center infrastructure business has no operating history, faces inherent risks of a new venture, and may not be profitable, requiring additional funding[407][408] - The Company has incurred significant debt ($9.1 billion as of June 30, 2025), with restrictive covenants that limit operational and financing flexibility and create default risks[413][414] - Substantial additional funding is required, but availability on favorable terms is uncertain, posing risks to business plan execution and debt repayment[416] - Joint ventures may restrict operational flexibility, require credit support, and expose the Company to financial obligations if partners default[417][418] - Swaps regulatory provisions (Dodd-Frank, EMIR, REMIT) could increase hedging costs, reduce availability, and impact operating results and cash flows[419] - Impairments to long-lived assets may occur due to negative industry trends, market capitalization decline, or business disruptions, impacting earnings[420] - Weather events, natural disasters, and climate change impacts pose risks to operations, infrastructure, and supply chains, potentially leading to damage, interruptions, and increased costs[421] - Environmental, social, health, and safety laws and regulations are extensive and evolving, potentially leading to increased compliance costs, liabilities, and reputational damage[422][424] - The Company is subject to numerous governmental export laws, trade and economic sanctions, and anti-corruption laws (FCPA, U.K. Bribery Act), with violations risking investigations, fines, and reputational harm[441][442][443] - Increasing transportation regulations, including trucking safety and cabotage laws (Jones Act), may increase costs and negatively impact operations[446][448] - Reliance on leases, rights-of-way, and easements for land where projects are located exposes the Company to risks of increased costs or inability to operate if rights are lost[449] - ESG and sustainability-related matters pose operational, regulatory, reputational, financial, and legal risks due to evolving expectations and reporting standards[450][452] - Information technology failures and cyberattacks could significantly affect operations, leading to losses of sensitive information or critical capabilities[453][454] - Insurance may be insufficient to cover all losses from operational risks, natural disasters, or political disruptions, potentially leading to significant liabilities[455] - Dependence on key management members means the loss of any could disrupt business operations[456] - Increased labor costs, regulation, unavailability of skilled workers, and labor disputes could adversely affect operations and financial condition[458][459] Risks Related to the Jurisdictions in Which We Operate This section addresses risks stemming from economic, political, and regulatory conditions in the company's operating regions - Operations in the United States (including Puerto Rico), Caribbean, Brazil, Mexico, Ireland, and Nicaragua are exposed to economic, political, and social instability, including changes in energy policies, expropriation, and currency fluctuations[460][462] - Foreign exchange fluctuations in local currencies (e.g., Brazilian real, Mexican peso) can adversely affect financial condition and operating results, as the Company generates revenues and incurs expenses in these currencies[463] Risks Related to Ownership of Our Class A Common Stock This section discusses risks associated with the market price, trading volume, and ownership structure of the company's common stock - The market price and trading volume of Class A common stock have been and may continue to be volatile, leading to potential rapid and substantial losses for stockholders[465] - A small number of original investors (Founder Entities and Energy Transition Holdings LLC) collectively own almost 50% of voting stock, giving them significant influence over corporate matters and potentially conflicting interests with other stockholders[468][470] - Future sales and issuances of Class A common stock or convertible securities (like Series B Convertible Preferred Stock) could dilute existing shareholders' ownership and cause share price to fall[472] - The Certificate of Incorporation and By-Laws contain provisions that could discourage acquisition bids or merger proposals, potentially depriving stockholders of a premium[473] - The Company does not expect to pay dividends on Class A common stock for the foreseeable future due to board discretion and significant restrictions from debt agreements[476] - Incurrence of senior debt or issuance of preferred stock (like Series B Convertible Preferred Stock with a $1,000 liquidation preference) would rank senior to Class A common stock upon liquidation, negatively affecting its market price[477][480] General Risks This section covers broad risks impacting the company, including holding company structure, M&A, and tax law changes - As a holding company, operational and consolidated financial results depend on subsidiaries, affiliates, and joint ventures, whose ability to distribute earnings may be limited by restrictive covenants[483] - Mergers, sales, acquisitions, and divestments carry significant risks (integration, valuation, implementation) and may not realize expected value, potentially disrupting business and distracting management[485] - The disposition of the Jamaica Business is expected to materially adversely affect consolidated results and financial condition, and there's no guarantee that new projects will offset the lost revenue[486][487] - Changes in tax laws, regulations, or interpretations in any country of operation could result in materially higher tax expenses or effective tax rates[488][489] - Involvement in legal proceedings carries risks of substantial claims, costly defense, management distraction, adverse publicity, and unfavorable outcomes[490] - Global pandemics and health crises can cause economic disruptions, supply chain issues, and volatility, negatively affecting operations, financial performance, and strategic objectives[492][493] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. This section notes that certain subsidiaries are subject to restrictive covenants limiting dividend distributions - Operating subsidiaries, joint ventures, and special purpose entities are subject to restrictive covenants on indebtedness, including dividend distribution limitations[494] Item 3. Defaults Upon Senior Securities. This section confirms that there are no defaults upon senior securities - No defaults upon senior securities[495] Item 4. Mine Safety Disclosures. This section states that this item is not applicable to the company's operations - Not applicable[496] Item 5. Other Information. This section reports on the amendment of the Letter of Credit Agreement, including maturity extension and commitment reductions - The Letter of Credit Agreement was amended on August 8, 2025, changing it to a committed facility, extending maturity to November 14, 2025, adding an asset sale sweep, and reducing commitments to $195,000 thousand (further to $155,000 thousand by Oct 5, 2025)[497] Item 6. Exhibits. This section lists all exhibits filed with the Quarterly Report, including organizational documents and various agreements - The section lists various exhibits, including organizational documents, equity agreements, debt agreements, and certifications[498][500][501][505][506][507] SIGNATURES This section contains the required signatures for the quarterly report filing