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TICKERS: NFE

New Fortress Energy Shares Power 18% Higher on Q2 Earnings

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Shares of New Fortress Energy established a new 52-week high after the company reported Q2/20 financial results that included a 27% increase in revenue compared to Q1/20.

Integrated gas-to-power company New Fortress Energy LLC (NFE:NASDAQ) yesterday announced financial results for its second quarter ended June 30, 2020.

The company reported that revenue in Q2/20 grew to 94.6 million, a 26.98% increase compared to $74.5 million in Q1/20. The firm advised that the increase was primarily due to "an increase in volumes due to a full quarter of operation of CHP Plant and revenue recognized from gas supplied as part of commissioning PREPA's Power Plant in Puerto Rico." The company highlighted that in Q2/20, its operating margin was $15.2 million, a $17.4 million increase versus Q1/20.

The firm additionally stated that it achieved record volumes in Q2/20. The company listed that average daily volumes sold in Q2/20 were approximately 978,000 gallons per day (gpd), which is a 223,000 gpd increase from Q1/20. The firm advised that it expects average daily volumes to be between 1,700,000 -2,000,000 gpd for the rest of 2020.

The firm stated it is experiencing a very robust new business pipeline, and noted that it remains focused on 10 key markets that have committed and are in discussion covering potential volumes of over 21 million gpd.

New Fortress stated that "its goal is that each new terminal in our target markets produce between $100mm to $200mm in Illustrative Annualized Operating Margin Goal."

The company posted a net loss of $166.5 million in Q2/20, representing an increase of $106.4 million versus a net loss of $60.1 million in Q1/20. The firm indicated that this was mostly driven by the contract cancellation charge for the termination of 2020 cargos. The company explained that it completed termination of eight remaining 2020 cargos in exchange for a one-time charge payment of $105 million and executed a mitigation sale of one cargo, which it said allows it to take advantage of historically low open market LNG prices.

The company additionally reported that it is in the process of making several changes to its corporate structure. Effective August 7, 2020, it will change its public entity from a LLC to a C Corporation, noting that this will make NFE shares eligible to be included in benchmark industry stock indices, which presently include over $8 trillion in worldwide industry assets. The firm added that as part of its corporate structure simplification plan, it has converted all Class B shares to Class A shares in order to enhance liquidity, improve its credit profile and lower its overall cost of capital.

The firm pointed out that it is progressing with it capital and financing plan and advised that it has received a B+/B1 corporate family rating from Moodys and S&P. The firm believes these ratings will provide a solid basis to refinance debt with a targeted savings of $25 million per year. Once the refinancing is complete, the company stated that its goal will be to consider issuing a quarterly stock dividend, subject to the approval of its Board of Directors.

New Fortress Energy is based in New York and stated that it is a global energy infrastructure company dedicated to accelerating global transition to clean energy. The company builds, operates and funds fully integrated turnkey natural gas infrastructure and logistics energy solutions that facilitate economic growth and enhance environmental changes.

New Fortress Energy started the day with a market capitalization of around $3.5 billion with approximately 168.6 million shares outstanding. NFE shares opened relatively unchanged today at 20.53 (-0.13, -0.63%) compared to yesterday's $20.66 closing price, but later reached a new 52-week high price this morning of $24.52. The stock has traded today between $20.53 and $24.60 per share and is currently trading at $24.37 (+$3.71, +17.96%).

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