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 September 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 October 29, 2021, the registrant had 206,863,242 shares of Class A common stock outstanding.





TABLE OF CONTENTS
ii
 
 
iii
 
 
1
 
 
Item 1.
1
 
 
 
Item 2.
39
 
 
 
Item 3.
63
 
 
 
Item 4.
64
 
 
 
65
 
 
Item 1.
65
 
 
 
Item 1A.
65
 
 
 
Item 2.
113
 
 
 
Item 3.
113
 
 
 
Item 4.
113
 
 
 
Item 5.
113
 
 
 
Item 6.
113
 
 
 
119

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


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.


PART I
FINANCIAL INFORMATION

Item 1.
Financial Statements.

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

 
September 30, 2021
   
December 31, 2020
 
Assets
           
Current assets
           
Cash and cash equivalents
 
$
224,383
   
$
601,522
 
Restricted cash
   
72,338
     
12,814
 
Receivables, net of allowances of $130 and $98, respectively
   
161,008
     
76,544
 
Inventory
   
82,390
     
22,860
 
Prepaid expenses and other current assets, net
   
75,602
     
48,270
 
Total current assets
   
615,721
     
762,010
 
                 
Restricted cash
   
37,879
     
15,000
 
Construction in progress
   
973,880
     
234,037
 
Property, plant and equipment, net
   
2,025,688
     
614,206
 
Equity method investments
   
1,227,991
     
-
 
Right-of-use assets
   
145,941
     
141,347
 
Intangible assets, net
   
166,964
     
46,102
 
Finance leases, net
   
603,662
     
7,044
 
Goodwill
   
740,132
     
-
 
Deferred tax assets, net
   
6,087
     
2,315
 
Other non-current assets, net
   
121,142
     
86,030
 
Total assets
 
$
6,665,087
   
$
1,908,091
 
                 
Liabilities
               
Current liabilities
               
Current portion of long-term debt
 
$
249,752
   
$
-
 
Accounts payable
   
210,259
     
21,331
 
Accrued liabilities
   
159,304
     
90,352
 
Current lease liabilities
   
32,009
     
35,481
 
Due to affiliates
   
6,910
     
8,980
 
Other current liabilities
   
109,662
     
35,006
 
Total current liabilities
   
767,896
     
191,150
 
                 
Long-term debt
   
3,597,659
     
1,239,561
 
Non-current lease liabilities
   
93,321
     
84,323
 
Deferred tax liabilities, net
   
284,176
     
2,330
 
Other long-term liabilities
   
37,885
     
15,641
 
Total liabilities
   
4,780,937
     
1,533,005
 
                 
Commitments and contingencies (Note 20)
   
     
 
                 
Stockholders’ equity
               
Class A common stock, $0.01 par value, 750.0 million shares authorized, 206.9 million issued and outstanding as of September 30, 2021; 174.6 million issued and outstanding as of December 31, 2020
   
2,069
     
1,746
 
Additional paid-in capital
   
1,912,643
     
594,534
 
Accumulated deficit
   
(283,256
)
   
(229,503
)
Accumulated other comprehensive income
   
24,625
     
182
 
Total stockholders’ equity attributable to NFE
   
1,656,081
     
366,959
 
Non-controlling interest
   
228,069
     
8,127
 
Total stockholders’ equity
   
1,884,150
     
375,086
 
Total liabilities and stockholders’ equity
 
$
6,665,087
   
$
1,908,091
 

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


New Fortress Energy Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
For the three and nine months ended September 30, 2021 and 2020
(Unaudited, in thousands of U.S. dollars, except share and per share amounts)
 
 
Three Months Ended September 30,
   
Nine Months Ended September 30,
 
   
2021
   
2020
   
2021
   
2020
 
Revenues
                       
Operating revenue
 
$
188,389
   
$
83,863
   
$
382,421
   
$
223,542
 
Vessel charter revenue
   
78,656
     
-
     
143,217
     
-
 
Other revenue
   
37,611
     
52,995
     
148,541
     
82,412
 
Total revenues
   
304,656
     
136,858
     
674,179
     
305,954
 
                                 
Operating expenses
                               
Cost of sales
   
135,432
     
71,665
     
333,533
     
209,780
 
Vessel operating expenses
   
15,301
     
-
     
30,701
     
-
 
Operations and maintenance
   
20,144
     
13,802
     
54,960
     
31,785
 
Selling, general and administrative
   
46,802
     
26,821
     
124,954
     
87,273
 
Transaction and integration costs
   
1,848
     
4,028
     
42,564
     
4,028
 
Contract termination charges and loss on mitigation sales
   
-
     
-
     
-
     
124,114
 
Depreciation and amortization
   
31,194
     
9,489
     
68,080
     
22,363
 
Total operating expenses
   
250,721
     
125,805
     
654,792
     
479,343
 
Operating income (loss)
   
53,935
     
11,053
     
19,387
     
(173,389
)
Interest expense
   
57,595
     
19,813
     
107,757
     
50,901
 
Other (income) expense, net
   
(5,400
)
   
2,569
     
(13,458
)
   
4,179
 
Loss on extinguishment of debt, net
   
-
     
23,505
     
-
     
33,062
 
Net income (loss) before income from equity method investments and income taxes
   
1,740
     
(34,834
)
   
(74,912
)
   
(261,531
)
(Loss) income from equity method investments
   
(15,983
)
   
-
     
22,958
     
-
 
Tax provision
   
3,526
     
1,836
     
7,058
     
1,949
 
Net loss
   
(17,769
)
   
(36,670
)
   
(59,012
)
   
(263,480
)
Net loss attributable to non-controlling interest
   
7,963
     
312
     
5,259
     
81,163
 
Net loss attributable to stockholders
 
$
(9,806
)
 
$
(36,358
)
 
$
(53,753
)
 
$
(182,317
)
                                 
Net income (loss) per share – basic and diluted
 
$
(0.05
)
 
$
(0.21
)
 
$
(0.27
)
 
$
(2.14
)
                                 
Weighted average number of shares outstanding – basic and diluted
   
207,497,013
     
170,074,532
     
195,626,564
     
85,009,385
 
                                 
Other comprehensive loss:
                               
Net loss
 
$
(17,769
)
 
$
(36,670
)
 
$
(59,012
)
 
$
(263,480
)
Currency translation adjustment
   
76,996
     
(971
)
   
(23,697
)
   
(1,122
)
Comprehensive loss
   
(94,765
)
   
(35,699
)
   
(35,315
)
   
(262,358
)
Comprehensive loss (income) attributable to non-controlling interest
   
8,162
     
(926
)
   
6,005
     
80,156
 
Comprehensive loss attributable to stockholders
 
$
(86,603
)
 
$
(36,625
)
 
$
(29,310
)
 
$
(182,202
)

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


New Fortress Energy Inc.
Condensed Consolidated Statements of Changes in Stockholders’ Equity
For the three and nine months ended September 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
 
Net loss
    -
      -
      -
      -
      -
      -
      -
      (9,806 )     -
      (7,963 )     (17,769 )
Other comprehensive loss
    -
      -
      -
      -
      -
      -
      -
      -
      (76,797 )     (199 )     (76,996 )
Share-based compensation expense
   
-
      -
      -
      -
      -
      -
      1,562
      -
      -
      -
      1,562
 
Adjustments related to business combinations
    -       -       -       -       -       -       -       -       -       (319 )     (319 )
Issuance of shares for vested RSUs
    -
      -
      -
      -
      193,193
      9
      (9 )     -
      -
      -
      -
 
Shares withheld from employees related to share-based compensation, at cost
    -
      -
      -
      -
      (28,515 )     -
      (478 )     -
      -
      -
      (478 )
Dividends
    -
      -
      -
      -
      -
      -
      (20,750 )     -
      -
      (3,019 )     (23,769 )
Balance as of September 30, 2021
    -
    $ -       -
    $ -       206,863,242
    $ 2,069     $ 1,912,643     $ (283,256 )   $ 24,625     $ 228,069     $ 1,884,150  


 
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 changes
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(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
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(137,493
)
   
-