UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to__________

Commission File Number: 001-38790

New Fortress Energy Inc.
(Exact Name of Registrant as Specified in its Charter)

Delaware
 
83-1482060
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)

111 W. 19th Street, 8th Floor
New York, NY
 
10011
(Address of principal executive offices)
 
(Zip Code)

Registrant’s telephone number, including area code: (516) 268-7400

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer
 
Accelerated filer 
Non-accelerated filer
 
Smaller reporting company
   
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Class A common stock
NFE
Nasdaq Global Select Market

As of August 3, 2021, the registrant had 206,698,564 shares of Class A common stock outstanding.






TABLE OF CONTENTS

ii
 
 
iii
 
 
1
 
 
Item 1.
1
 
 
 
Item 2.
40
 
 
 
Item 3.
62
 
 
 
Item 4.
63
 
 
 
64
 
 
Item 1.
64
 
 
 
Item 1A.
64
 
 
 
Item 2.
113
 
 
 
Item 3.
113
 
 
 
Item 4.
113
 
 
 
Item 5.
113
 
 
 
Item 6.
113
 
 
 
116


i

GLOSSARY OF TERMS

As commonly used in the liquefied natural gas industry, to the extent applicable and as used in this Quarterly Report on Form 10-Q (“Quarterly Report”), the terms listed below have the following meanings:

Btu
the amount of heat required to raise the temperature of one avoirdupois pound of pure water from 59 degrees Fahrenheit to 60 degrees Fahrenheit at an absolute pressure of 14.696 pounds per square inch gage
   
CAA
Clean Air Act
   
CERCLA
Comprehensive Environmental Response, Compensation and Liability Act
   
CWA
Clean Water Act
   
DOE
U.S. Department of Energy
   
FERC
Federal Energy Regulatory Commission
   
GAAP
generally accepted accounting principles in the United States
   
GHG
greenhouse gases
   
GSA
gas sales agreement
   
Henry Hub
a natural gas pipeline located in Erath, Louisiana that serves as the official delivery location for futures contracts on the New York Mercantile Exchange
   
ISO container
International Organization of Standardization, an intermodal container
   
LNG
natural gas in its liquid state at or below its boiling point at or near atmospheric pressure
   
MMBtu
one million Btus, which corresponds to approximately 12.1 gallons of LNG
   
MW
megawatt. We estimate 2,500 LNG gallons would be required to produce one megawatt
   
NGA
Natural Gas Act of 1938, as amended
   
non-FTA countries
countries without a free trade agreement with the United States providing for national treatment for trade in natural gas and with which trade is permitted
   
OPA
Oil Pollution Act
   
OUR
Office of Utilities Regulation (Jamaica)
   
PHMSA
Pipeline and Hazardous Materials Safety Administration
   
PPA
power purchase agreement
   
SSA
steam supply agreement
   
TBtu
one trillion Btus, which corresponds to approximately 12,100,000 gallons of LNG

ii


CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS

This Quarterly Report contains forward-looking statements regarding, among other things, our plans, strategies, prospects and projections, both business and financial. All statements contained in this Quarterly Report other than historical information are forward-looking statements that involve known and unknown risks and relate to future events, our future financial performance or our projected business results. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “projects,” “targets,” “potential” or “continue” or the negative of these terms or other comparable terminology. Such forward-looking statements are necessarily estimates based upon current information and involve a number of risks and uncertainties. Actual events or results may differ materially from the results anticipated in these forward-looking statements as a result of a variety of factors. While it is impossible to identify all such factors, factors that could cause actual results to differ materially from those estimated by us include:

our limited operating history;
loss of one or more of our customers;
inability to procure LNG on a fixed-price basis, or otherwise to manage LNG price risks, including hedging arrangements;
the completion of construction on our LNG terminals, facilities, power plants or Liquefaction Facilities (as defined herein) and the terms of our construction contracts for the completion of these assets;
cost overruns and delays in the completion of one or more of our LNG terminals, facilities, power plants or Liquefaction Facilities, as well as difficulties in obtaining sufficient financing to pay for such costs and delays;
our ability to obtain additional financing to effect our strategy;
We may be unable to successfully integrate the businesses and realize the anticipated benefits of the Mergers;
failure to produce or purchase sufficient amounts of LNG or natural gas at favorable prices to meet customer demand;
hurricanes or other natural or manmade disasters;
failure to obtain and maintain approvals and permits from governmental and regulatory agencies;
operational, regulatory, environmental, political, legal and economic risks pertaining to the construction and operation of our facilities;
inability to contract with suppliers and tankers to facilitate the delivery of LNG on their chartered LNG tankers;
cyclical or other changes in the demand for and price of LNG and natural gas;
failure of natural gas to be a competitive source of energy in the markets in which we operate, and seek to operate;
competition from third parties in our business;
inability to re-finance our outstanding indebtedness;
changes to environmental and similar laws and governmental regulations that are adverse to our operations;
inability to enter into favorable agreements and obtain necessary regulatory approvals;
the tax treatment of us or of an investment in our Class A shares;
the completion of the Exchange Transactions (as defined below);
a major health and safety incident relating to our business;
increased labor costs, and the unavailability of skilled workers or our failure to attract and retain qualified personnel;
risks related to the jurisdictions in which we do, or seek to do, business, particularly Florida, Jamaica, Brazil and the Caribbean; and
other risks described in the “Risk Factors” section of this Quarterly Report.

All forward-looking statements speak only as of the date of this Quarterly Report. When considering forward-looking statements, you should keep in mind the risks set forth under “Item 1A. Risk Factors” and other cautionary statements included in our Annual Report on Form 10-K for the year ended December 31, 2020 (our “Annual Report”), this Quarterly Report and in our other filings with the Securities and Exchange Commission (the “SEC”). The cautionary statements referred to in this section also should be considered in connection with any subsequent written or oral forward-looking statements that may be issued by us or persons acting on our behalf. We undertake no duty to update these forward-looking statements, even though our situation may change in the future. Furthermore, we cannot guarantee future results, events, levels of activity, performance, projections or achievements.


iii


PART I
FINANCIAL INFORMATION

Item 1.
Financial Statements.

New Fortress Energy Inc.
Condensed Consolidated Balance Sheets
As of June 30, 2021 and December 31, 2020
(Unaudited, in thousands of U.S. dollars, except share amounts)

 
June 30, 2021
   
December 31, 2020
 
Assets
           
Current assets
           
Cash and cash equivalents
 
$
143,138
   
$
601,522
 
Restricted cash
   
57,353
     
12,814
 
Receivables, net of allowances of $90 and $98, respectively
   
121,962
     
76,544
 
Inventory
   
61,491
     
22,860
 
Prepaid expenses and other current assets, net
   
92,010
     
48,270
 
Total current assets
   
475,954
     
762,010
 
                 
Restricted cash
   
29,827
     
15,000
 
Construction in progress
   
692,745
     
234,037
 
Property, plant and equipment, net
   
2,038,738
     
614,206
 
Equity method investments
   
1,312,072
     
-
 
Right-of-use assets
   
139,136
     
141,347
 
Intangible assets, net
   
225,668
     
46,102
 
Finance leases, net
   
606,108
     
7,044
 
Goodwill
   
748,602
     
-
 
Deferred tax assets, net
   
6,221
     
2,315
 
Other non-current assets, net
   
117,004
     
86,030
 
Total assets
 
$
6,392,075
   
$
1,908,091
 
                 
Liabilities
               
Current liabilities
               
Current portion of long-term debt
 
$
204,551
   
$
-
 
Accounts payable
   
97,455
     
21,331
 
Accrued liabilities
   
192,723
     
90,352
 
Current lease liabilities
   
30,077
     
35,481
 
Due to affiliates
   
6,060
     
8,980
 
Other current liabilities
   
104,598
     
35,006
 
Total current liabilities
   
635,464
     
191,150
 
                 
Long-term debt
   
3,326,303
     
1,239,561
 
Non-current lease liabilities
   
89,673
     
84,323
 
Deferred tax liabilities, net
   
293,073
     
2,330
 
Other long-term liabilities
   
45,643
     
15,641
 
Total liabilities
   
4,390,156
     
1,533,005
 
                 
Commitments and contingencies (Note 20)
   
     
 
                 
Stockholders’ equity
               
Class A common stock, $0.01 par value, 750.0 million shares authorized, 206.7 million issued and outstanding as of June 30, 2021; 174.6 million issued and outstanding as of December 31, 2020
   
2,060
     
1,746
 
Additional paid-in capital
   
1,932,318
     
594,534
 
Accumulated deficit
   
(273,450
)
   
(229,503
)
Accumulated other comprehensive income
   
101,422
     
182
 
Total stockholders' equity attributable to NFE
   
1,762,350
     
366,959
 
Non-controlling interest
   
239,569
     
8,127
 
Total stockholders' equity
   
2,001,919
     
375,086
 
Total liabilities and stockholders' equity
 
$
6,392,075
   
$
1,908,091
 

The accompanying notes are an integral part of these condensed consolidated financial statements.

1


New Fortress Energy Inc.
Condensed Consolidated Statements of Operations and Comprehensive (Loss)
For the three and six months ended June 30, 2021 and 2020
(Unaudited, in thousands of U.S. dollars, except share and per share amounts)
 
 
Three Months Ended June 30,
   
Six Months Ended June 30,
 
   
2021
   
2020
   
2021
   
2020
 
Revenues
                       
Operating revenue
 
$
102,836
   
$
76,177
   
$
194,032
   
$
139,679
 
Vessel charter revenue
   
64,561
     
-
     
64,561
     
-
 
Other revenue
   
56,442
     
18,389
     
110,930
     
29,417
 
Total revenues
   
223,839
     
94,566
     
369,523
     
169,096
 
                                 
Operating expenses
                               
Cost of sales
   
101,430
     
69,899
     
198,101
     
138,115
 
Vessel operating expenses
   
15,400
     
-
     
15,400
     
-
 
Operations and maintenance
   
18,565
     
9,500
     
34,816
     
17,983
 
Selling, general and administrative
   
44,536
     
31,846
     
78,152
     
60,216
 
Transaction and integration costs
   
29,152
     
-
     
40,716
     
-
 
Contract termination charges and loss on mitigation sales
   
-
     
123,906
     
-
     
124,114
 
Depreciation and amortization
   
26,997
     
7,620
     
36,886
     
12,874
 
Total operating expenses
   
236,080
     
242,771
     
404,071
     
353,302
 
Operating loss
   
(12,241
)
   
(148,205
)
   
(34,548
)
   
(184,206
)
Interest expense
   
31,482
     
17,198
     
50,162
     
31,088
 
Other (income) expense, net
   
(7,457
)
   
999
     
(8,058
)
   
1,610
 
Loss on extinguishment of debt, net
   
-
     
-
     
-
     
9,557
 
Net loss before income from equity method investments and income taxes
   
(36,266
)
   
(166,402
)
   
(76,652
)
   
(226,461
)
Income from equity method investments
   
38,941
     
-
     
38,941
     
-
 
Tax provision
   
4,409
     
117
     
3,532
     
113
 
Net loss
   
(1,734
)
   
(166,519
)
   
(41,243
)
   
(226,574
)
Net (income) loss attributable to non-controlling interest
   
(4,310
)
   
29,094
     
(2,704
)
   
80,851
 
Net loss attributable to stockholders
 
$
(6,044
)
 
$
(137,425
)
 
$
(43,947
)
 
$
(145,723
)
                                 
Net loss per share – basic and diluted
 
$
(0.03
)
 
$
(2.40
)
 
$
(0.23
)
 
$
(3.49
)
                                 
Weighted average number of shares outstanding – basic and diluted
   
202,331,304
     
57,341,215
     
189,885,473
     
41,771,849
 
                                 
Other comprehensive loss:
                               
Net loss
 
$
(1,734
)
 
$
(166,519
)
 
$
(41,243
)
 
$
(226,574
)
Currency translation adjustment
   
(101,690
)
   
(520
)
   
(100,693
)
   
(151
)
Comprehensive income (loss)
   
99,956
     
(165,999
)
   
59,450
     
(226,423
)
Comprehensive (income) loss attributable to non-controlling interest
   
(4,637
)
   
29,009
     
(2,157
)
   
81,082
 
Comprehensive income (loss) attributable to stockholders
 
$
95,319
   
$
(136,990
)
 
$
57,293
   
$
(145,341
)

The accompanying notes are an integral part of these condensed consolidated financial statements.

2


New Fortress Energy Inc.
Condensed Consolidated Statements of Changes in Stockholders’ Equity
For the three and six months ended June 30, 2021 and 2020
(Unaudited, in thousands of U.S. dollars, except share amounts)

 
Class A shares
   
Class B shares
   
Class A common stock
   
Additional
paid-in
   
Accumulated
   
Accumulated other
comprehensive
   
Non-
controlling
   
Total
stockholders'
 
   
Shares
   
Amount
   
Shares
   
Amount
   
Shares
   
Amount
   
capital
   
deficit
   
(loss) income
   
interest
   
equity
 
Balance as of December 31, 2020
   
-
   
$
-
     
-
   
$
-
     
174,622,862
   
$
1,746
   
$
594,534
   
$
(229,503
)
 
$
182
   
$
8,127
   
$
375,086
 
Net loss
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(37,903
)
   
-
     
(1,606
)
   
(39,509
)
Other comprehensive loss
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(123
)
   
(874
)
   
(997
)
Share-based compensation expense
   
-
     
-
     
-
     
-
     
-
     
-
     
1,770
     
-
     
-
     
-
     
1,770
 
Issuance of shares for vested RSUs
   
-
     
-
     
-
     
-
     
1,335,787
     
-
     
-
                             
-
 
Shares withheld from employees related to share-based compensation, at cost
   
-
     
-
     
-
     
-
     
(638,235
)
   
-
     
(27,571
)
   
-
     
-
     
-
     
(27,571
)
Dividends
   
-
     
-
     
-
     
-
     
-
     
-
     
(17,598
)
   
-
     
-
     
-
     
(17,598
)
Balance as of March 31, 2021
   
-
   
$
-
     
-
   
$
-
     
175,320,414
   
$
1,746
   
$
551,135
   
$
(267,406
)
 
$
59
   
$
5,647
   
$
291,181
 
Net (loss) income
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(6,044
)
   
-
     
4,310
     
(1,734
)
Other comprehensive income
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
101,363
     
327
     
101,690
 
Share-based compensation expense
   
-
     
-
     
-
     
-
     
-
     
-
     
1,613
     
-
     
-
     
-
     
1,613
 
Shares issued as consideration in business combinations
   
-
     
-
     
-
     
-
     
31,372,549
     
314
     
1,400,470
     
-
     
-
     
-
     
1,400,784
 
Issuance of shares for vested RSUs
   
-
     
-
     
-
     
-
     
8,930
     
-
     
-
     
-
     
-
     
-
     
-
 
Shares withheld from employees related to share-based compensation, at cost
   
-
     
-
     
-
     
-
     
(3,329
)
   
-
     
(164
)
   
-
     
-
     
-
     
(164
)
Non-controlling interest acquired in business combinations
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
229,285
     
229,285
 
Dividends
   
-
     
-
     
-
     
-
     
-
     
-
     
(20,736
)
   
-
     
-
     
-
     
(20,736
)
Balance as of June 30, 2021
   
-
   
$
-
     
-
   
$
-
     
206,698,564
   
$
2,060
   
$
1,932,318
   
$
(273,450
)
 
$
101,422
   
$
239,569
   
$
2,001,919
 

 
Class A shares
   
Class B shares
   
Class A common stock
   
Additional
paid-in
   
Accumulated
   
Accumulated other
comprehensive
   
Non-
controlling
   
Total
stockholders'
 
   
Shares
   
Amount
   
Shares
   
Amount
   
Shares
   
Amount
   
capital
   
deficit
   
(loss) income
   
interest
   
equity
 
Balance as of December 31, 2019
   
23,607,096
   
$
130,658
     
144,342,572
   
$
-
     
-
   
$
-
   
$
-
   
$
(45,823
)
 
$
(30
)
 
$
302,519
   
$
387,324
 
Cumulative effect of accounting
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(1,533
)
   
-
     
(7,780
)
   
(9,313
)
Net loss
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(8,466
)
   
-
     
(51,757
)
   
(60,223
)
Other comprehensive loss
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(53
)
   
(316
)
   
(369
)
Share-based compensation expense
   
-
     
2,508
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
2,508
 
Issuance of shares for vested RSUs
   
1,212,907
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
 
Shares withheld from employees related to share-based compensation, at cost
   
(583,508
)
   
(6,132
)
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(6,132
)
Balance as of March 31, 2020
   
24,236,495
   
$
127,034
     
144,342,572
   
$
-
     
-
   
$
-
   
$
-
   
$
(55,822
)
 
$
(83
)
 
$
242,666
   
$
313,795
 
Net loss
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(137,425
)
   
-
     
(29,094
)
   
(166,519
)
Other comprehensive loss
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
435
     
85
     
520
 
Share-based compensation expense
   
-
     
1,922
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
1,922
 
Issuance of shares for vested RSUs
   
11,529
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
 
Shares withheld from employees related to share-based compensation, at cost
   
(3,250
)
   
(40
)
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(40
)
Exchange of NFI units
   
144,342,572
     
206,587
     
(144,342,572
)
   
-
     
-
     
-
     
-
     
-
     
-
     
(206,587
)
   
-
 
Balance as of June 30, 2020
   
168,587,346
   
$
335,503
     
-
   
$
-
     
-
   
$
-
   
$
-
   
$
(193,247
)
 
$
352
   
$
7,070
   
$
(149,678
)

The accompanying notes are an integral part of these condensed consolidated financial statements.

3


New Fortress Energy Inc.
Condensed Consolidated Statements of Cash Flows
For the six months ended June 30, 2021 and 2020
(Unaudited, in thousands of U.S. dollars)

 
Six Months Ended June 30,
 
   
2021
   
2020
 
Cash flows from operating activities
           
Net loss
 
$
(41,243
)
 
$
(226,574
)
Adjustments for:
               
Amortization of deferred financing costs and debt guarantee, net
   
(6,290
)
   
6,965
 
Depreciation and amortization
   
37,462
     
13,324
 
Earnings of equity method investees
   
(38,941
)
   
-
 
Dividends received from equity method investees
   
7,386
     
-
 
Sales-type lease payments received in excess of interest income
   
2,388
     
-
 
Change in market value of derivatives
   
(7,073
)
   
(294
)
Contract termination charges and loss on mitigation sales
   
-
     
124,114
 
Loss on extinguishment and financing expenses
   
-
     
9,557
 
Deferred taxes
   
2,447
     
15
 
Change in value of Investment of equity securities
   
(88
)
   
2,217
 
Share-based compensation
   
3,383
     
4,430
 
Other
   
275
     
1,201
 
Changes in operating assets and liabilities, net of acquisitions:
               
(Increase) in receivables
   
(38,018
)
   
(9,214
)
(Increase) in inventories
   
(35,458
)
   
(4,794
)
Decrease (Increase) in other assets
   
3,679
     
(9,446
)
Decrease in right-of-use assets
   
2,072
     
17,781
 
Increase in accounts payable/accrued liabilities
   
24,732
     
13,655
 
(Decrease) in amounts due to affiliates
   
(2,919
)
   
(3,666
)
Increase (Decrease) in lease liabilities
   
133
     
(19,873
)
(Decrease) Increase in other liabilities
   
(25,279
)
   
279
 
Net cash used in operating activities
   
(111,352
)
   
(80,323
)
                 
Cash flows from investing activities
               
Capital expenditures
   
(235,324
)
   
(95,422
)
Cash paid for business combinations, net of cash acquired
   
(1,586,042
)
   
-
 
Entities acquired in asset acquisitions, net of cash acquired
   
(8,817
)
   
-
 
Other investing activities
   
(750
)
   
78
 
Net cash used in investing activities
   
(1,830,933
)
   
(95,344
)
                 
Cash flows from financing activities
               
Proceeds from borrowings of debt
   
1,652,500
     
832,144
 
Payment of deferred financing costs
   
(20,989
)
   
(13,600
)
Repayment of debt
   
(15,864
)
   
(506,402
)
Payments related to tax withholdings for share-based compensation
   
(29,717
)
   
(6,117
)
Payment of dividends
   
(41,346
)