New Fortress Energy(US:NFE)2023-11-08 19:43Financial Data and Key Metrics Changes - The company reported $208 million of adjusted EBITDA for Q3 2023, with expectations of $1.6 billion for the full year and $2.4 billion for 2024, including about $200 million from asset sales in Q4 [2][34] - Net income for Q3 was $62 million, or $0.30 per share, with forecasts of $600 million for 2023 and $1.4 billion for 2024 [32][34] - The company expects a significant increase in free cash flow, estimating $775 million for 2023 and $1.65 billion for 2024, with a notable decrease in CapEx from $1.2 billion in 2023 to $400 million in 2024 [34][60] Business Line Data and Key Metrics Changes - Downstream operating margin reached $195 million in Q3, a 4x increase from Q2 and 13x from Q1, with expectations to nearly double in Q4 [58] - Over 85% of cash flows in 2024 are expected to come from volumes sold to downstream customers, with nearly 90% of these volumes already contracted [5][20] Market Data and Key Metrics Changes - The company highlighted significant opportunities in Brazil and Puerto Rico, with Brazil being described as a massive market with potential for commercial activity [44][26] - In Puerto Rico, the company operates power plants that provide about 15% of the island's power, representing the cheapest and most reliable energy source available [27][54] Company Strategy and Development Direction - The company aims to achieve an investment-grade rating within the next 12 to 24 months, focusing on deleveraging its balance sheet through operating cash flows and asset sales [19][33] - The company is expanding its hydrogen business, with plans for multiple hydrogen production facilities in North America, targeting significant growth in the sector [63][71] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operational performance, noting that Q3 was the best operational quarter in the company's history, with a significant increase in cash flows from core business activities [43][45] - The company sees substantial growth potential in existing markets, particularly in Brazil and Puerto Rico, where there is a strong demand for cleaner energy solutions [97][110] Other Important Information - The company has completed significant construction milestones, including the commissioning of its first FLNG unit and the completion of two power plants in Puerto Rico [11][18] - The company is actively pursuing asset sales to streamline operations and improve cash flow, with a focus on non-core assets that do not significantly contribute to EBITDA [106][88] Q&A Session Summary Question: Expected EBITDA for Q4 and contribution from non-contracted assets - Management clarified that they expect one cargo sale in Q4, with the remainder of earnings coming from contracts with downstream customers [66] Question: CapEx deployment during Q3 and guidance for 2024 - Management indicated that the lumpiness in CapEx during Q3 was related to the development of FLNG2 and completion of FLNG1 [68][84] Question: Status of FLNG unit with respect to DOE and deployment of FLNG2 - Management confirmed that they resolved a nomenclature issue with the DOE and are looking to deploy FLNG units both offshore and onshore [104][100] Question: Drivers for asset sales despite increased free cash flow - Management explained that the assets being sold are non-core and do not significantly impact cash flow, allowing for a cleaner balance sheet and additional cash flow [78][106] Question: Growth outlook in fuel switching markets - Management highlighted the significant savings potential in markets switching from diesel to natural gas, particularly in Puerto Rico and Brazil [109][110]