UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended September 30, 2021
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from __________ to__________
Commission File Number: 001-38790
(Exact Name of Registrant as Specified in its Charter)
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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(Address of principal executive offices)
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(Zip Code)
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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.
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Large accelerated filer ☐
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Non-accelerated filer ☐
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Smaller reporting company
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Emerging growth company
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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:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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“
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As of October 29, 2021, the registrant had 206,863,242 shares of Class A common stock outstanding.
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ii
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iii
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1
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Item 1.
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1
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Item 2.
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39 | |
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Item 3.
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63
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Item 4.
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64
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65
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Item 1.
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65
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Item 1A.
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65
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Item 2.
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113
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Item 3.
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113
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Item 4.
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113
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Item 5.
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113
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Item 6.
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113
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119
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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:
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Btu
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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
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CAA
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Clean Air Act
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CERCLA
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Comprehensive Environmental Response, Compensation and Liability Act
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CWA
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Clean Water Act
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DOE
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U.S. Department of Energy
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FERC
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Federal Energy Regulatory Commission
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GAAP
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generally accepted accounting principles in the United States
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GHG
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greenhouse gases
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GSA
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gas sales agreement
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Henry Hub
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a natural gas pipeline located in Erath, Louisiana that serves as the official delivery location for futures contracts on the New York
Mercantile Exchange
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ISO container
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International Organization of Standardization, an intermodal container
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LNG
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natural gas in its liquid state at or below its boiling point at or near atmospheric pressure
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MMBtu
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one million Btus, which corresponds to approximately 12.1 gallons of LNG
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MW
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megawatt. We estimate 2,500 LNG gallons would be required to produce one megawatt
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NGA
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Natural Gas Act of 1938, as amended
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non-FTA countries
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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
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OPA
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Oil Pollution Act
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OUR
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Office of Utilities Regulation (Jamaica)
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PHMSA
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Pipeline and Hazardous Materials Safety Administration
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PPA
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power purchase agreement
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SSA
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steam supply agreement
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TBtu
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one trillion Btus, which corresponds to approximately 12,100,000 gallons of LNG
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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:
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our limited operating history;
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| • |
loss of one or more of our customers;
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| • |
inability to procure LNG on a fixed-price basis, or otherwise to manage LNG price risks, including hedging arrangements;
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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;
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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;
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our ability to obtain additional financing to effect our strategy;
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| • |
We may be unable to successfully integrate the businesses and realize the anticipated benefits of the Mergers;
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failure to produce or purchase sufficient amounts of LNG or natural gas at favorable prices to meet customer demand;
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hurricanes or other natural or manmade disasters;
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failure to obtain and maintain approvals and permits from governmental and regulatory agencies;
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operational, regulatory, environmental, political, legal and economic risks pertaining to the construction and operation of our facilities;
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inability to contract with suppliers and tankers to facilitate the delivery of LNG on their chartered LNG tankers;
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cyclical or other changes in the demand for and price of LNG and natural gas;
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failure of natural gas to be a competitive source of energy in the markets in which we operate, and seek to operate;
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competition from third parties in our business;
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inability to re-finance our outstanding indebtedness;
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changes to environmental and similar laws and governmental regulations that are adverse to our operations;
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inability to enter into favorable agreements and obtain necessary regulatory approvals;
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the tax treatment of us or of an investment in our Class A shares;
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the completion of the Exchange Transactions (as defined below);
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a major health and safety incident relating to our business;
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increased labor costs, and the unavailability of skilled workers or our failure to attract and retain qualified personnel;
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risks related to the jurisdictions in which we do, or seek to do, business, particularly Florida, Jamaica, Brazil and the Caribbean; and
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other risks described in the “Risk Factors” section of this Quarterly Report.
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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
| Item 1. |
Financial Statements.
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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)
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September 30,
2021
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December 31, 2020
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|||||||
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Assets
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Current assets
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Cash and cash equivalents
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$
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$
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Restricted cash
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Receivables, net of allowances of $
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Inventory
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Prepaid expenses and other current assets, net
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Total current assets
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Restricted cash
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Construction in progress
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Property, plant and equipment, net
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Equity method investments
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Right-of-use assets
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Intangible assets, net
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Finance leases, net
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Goodwill
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Deferred tax assets, net
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Other non-current assets, net
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Total assets
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$
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$
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Liabilities
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Current liabilities
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Current portion of long-term debt
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$
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$
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Accounts payable
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Accrued liabilities
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Current lease liabilities
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Due to affiliates
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Other current liabilities
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Total current liabilities
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Long-term debt
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Non-current lease liabilities
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Deferred tax liabilities, net
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Other long-term liabilities
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Total liabilities
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Commitments and contingencies (Note 20)
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Stockholders’ equity
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Class A common stock, $
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Additional paid-in capital
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Accumulated deficit
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(
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)
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(
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Accumulated other comprehensive income
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Total stockholders’ equity attributable to NFE
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Non-controlling interest
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Total stockholders’ equity
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Total liabilities and stockholders’ equity
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$
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$
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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)
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Three Months Ended September 30,
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Nine
Months Ended September 30,
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|||||||||||||||
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2021
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2020
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2021
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2020
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|||||||||||||
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Revenues
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||||||||||||||||
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Operating revenue
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$
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$
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$
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$
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Vessel charter revenue
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Other revenue
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Total revenues
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Operating expenses
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Cost of sales
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Vessel operating expenses
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Operations and maintenance
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Selling, general and administrative
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Transaction and integration costs
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Contract termination charges and loss on mitigation sales
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Depreciation and amortization
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Total operating expenses
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||||||||||||
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Operating income (loss)
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(
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|||||||||||
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Interest expense
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||||||||||||
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Other (income) expense, net
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(
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)
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(
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)
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||||||||||
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Loss on extinguishment of debt, net
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Net income (loss) before income from equity method investments and income
taxes
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(
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)
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(
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(
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)
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|||||||||
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(Loss) income from equity method investments
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(
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)
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|||||||||||
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Tax provision
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||||||||||||
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Net loss
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(
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(
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)
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(
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(
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||||||||
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Net loss attributable to non-controlling interest
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||||||||||||
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Net loss attributable to stockholders
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$
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(
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)
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$
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(
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)
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$
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(
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)
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$
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(
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)
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||||
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Net income (loss) per share – basic and diluted
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$
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(
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)
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$
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(
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)
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$
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(
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$
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(
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)
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||||
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Weighted average number of shares outstanding – basic and diluted
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||||||||||||
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Other comprehensive loss:
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||||||||||||||||
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Net loss
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$
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(
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)
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$
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(
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)
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$
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(
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)
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$
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(
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)
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||||
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Currency translation adjustment
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|
(
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)
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(
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)
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(
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)
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|||||||||
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Comprehensive loss
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(
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)
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(
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)
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(
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)
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(
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)
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||||||||
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Comprehensive loss (income) attributable to non-controlling interest
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(
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)
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|||||||||||
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Comprehensive loss attributable to stockholders
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$
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(
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)
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$
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(
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)
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$
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(
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)
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$
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(
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)
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||||
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
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Class B shares
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Class A common stock
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Additional
paid-in
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Accumulated
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Accumulated other
comprehensive
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Non-
controlling
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Total
stockholders’
|
|||||||||||||||||||||||||||||||||||||
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Shares
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Amount
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Shares
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Amount
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Shares
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Amount
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capital
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Deficit
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(loss) income
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interest
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equity
|
||||||||||||||||||||||||||||||||||
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Balance as of December 31, 2020
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|
$
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$
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$
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$
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$
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(
|
)
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$
|
|
$
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$
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||||||||||||||||||||||||
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Net loss
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-
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-
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-
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(
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)
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(
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)
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(
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)
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||||||||||||||||||||||||||||||
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Other comprehensive loss
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-
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-
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-
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-
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-
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|
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(
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)
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(
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)
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(
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)
|
||||||||||||||||||||||||||||||
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Share-based compensation expense
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-
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-
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-
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-
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-
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|||||||||||||||||||||||||||||||||
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Issuance of shares for vested RSUs
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- |
- |
- |
|
|||||||||||||||||||||||||||||||||
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Shares withheld from employees related to share-based compensation, at cost
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|
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(
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)
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(
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)
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(
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)
|
|||||||||||||||||||||||||||||||
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Dividends
|
-
|
|
-
|
|
-
|
|
(
|
)
|
|
|
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(
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)
|
|||||||||||||||||||||||||||||||
|
Balance as of March 31, 2021
|
|
$
|
|
|
$
|
|
|
$
|
|
$
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|
$
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(
|
)
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||||||||
|
Net (loss) income
|
-
|
|
-
|
|
-
|
|
|
(
|
)
|
|
|
(
|
)
|
|||||||||||||||||||||||||||||||
|
Other comprehensive income
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
Share-based compensation expense
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
Shares issued as consideration in business combinations
|
|
|
|
|
|
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|
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|
|||||||||||||||||||||||||||||||||
|
Issuance of shares for vested RSUs
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
Shares withheld from employees related to share-based compensation, at cost
|
|
|
|
|
(
|
)
|
|
(
|
)
|
|
|
|
(
|
)
|
||||||||||||||||||||||||||||||
|
Non-controlling interest acquired in business combinations
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
|||||||||||||||||||||||||||||||||
|
Dividends
|
-
|
|
-
|
|
-
|
|
(
|
)
|
|
|
|
(
|
)
|
|||||||||||||||||||||||||||||||
|
Balance as of June 30, 2021
|
|
$
|
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||||||||
|
Net loss
|
- |
- |
- |
( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||
|
Other comprehensive loss
|
- |
- |
- |
( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||
|
Share-based compensation expense
|
- |
- |
- |
|||||||||||||||||||||||||||||||||||||||||
|
Adjustments related to business combinations
|
- | - | - | - | - | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||
|
Issuance of shares for vested RSUs
|
( |
) | ||||||||||||||||||||||||||||||||||||||||||
|
Shares withheld from employees related to share-based compensation, at cost
|
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||
|
Dividends
|
- |
- |
- |
( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||
|
Balance as of September 30, 2021
|
$ | $ | $ | $ | $ | ( |
) | $ | $ | $ | ||||||||||||||||||||||||||||||||||
|
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
|
|
$
|
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||||||||||||||||||||
|
Cumulative effect of accounting changes
|
|
|
|
|
|
|
|
(
|
)
|
|
(
|
)
|
(
|
)
|
||||||||||||||||||||||||||||||
|
Net loss
|
-
|
|
-
|
|
-
|
|
|
(
|
)
|
|
(
|
)
|
(
|
)
|
||||||||||||||||||||||||||||||
|
Other comprehensive loss
|
-
|
|
-
|
|
-
|
|
|
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||||||||||||||||||||||
|
Share-based compensation expense
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
Issuance of shares for vested RSUs
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||
|
Shares withheld from employees related to share-based compensation, at cost
|
(
|
)
|
(
|
)
|
|
|
|
|
|
|
|
|
(
|
)
|
||||||||||||||||||||||||||||||
|
Balance as of March 31, 2020
|
|
$
|
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||||||||||||||||||||
|
Net loss
|
-
|
|
-
|
|
-
|
|
|
(
|
)
|
|
(
|
)
|
(
|
)
|
||||||||||||||||||||||||||||||
|
Other comprehensive income
|
-
|
|
-
|
|
-
|
|
|
|
|
|||||||||||||||||||||||||||||||||||