Mon, Jun 30, 10:03 AM (19 days ago)
New Fortress Energy Inc. (NFE) reported a significant decline in revenue for the first quarter of 2025, with total revenue dropping to $470.5 million from $690.3 million in the same period of 2024. This decline was primarily driven by a $235.6 million contract novation income recognized in the fourth quarter of 2024, which was not repeated in the first quarter of 2025. Additionally, volumes delivered to downstream customers decreased due to maintenance at the Old Harbour and San Juan facilities. Despite these challenges, NFE recognized $182.7 million in revenue from cargo sales for the first quarter of 2025, compared to $91.9 million in the fourth quarter of 2024. The average Henry Hub index pricing used to invoice downstream customers increased by 31% for the first quarter of 2025 compared to the fourth quarter of 2024. Cost of sales increased by $14.0 million for the first quarter of 2025 compared to the fourth quarter of 2024, driven by higher cargo sales costs and lower volumes delivered to customers. The weighted average cost of gas purchased increased from $8.75 per MMBtu to $9.57 per MMBtu. Operations and maintenance expenses increased by $20.5 million for the first quarter of 2025 compared to the fourth quarter of 2024, primarily due to payroll, maintenance, logistics, and other costs incurred for operating new facilities placed into service in 2024. Depreciation and amortization increased by $14.3 million for the first quarter of 2025 compared to the fourth quarter of 2024, mainly due to depreciation expense on the Fast LNG project and the Santa Catarina Facility. Interest expense increased by $114.2 million for the first quarter of 2025 compared to the fourth quarter of 2024, driven by lower interest capitalized and increased borrowing costs under the New 2029 Notes and the Brazil Financing Notes. Other expense (income), net was $(63.9) million for the first quarter of 2025, $52.4 million for the fourth quarter of 2024, and $19.1 million for the first quarter of 2024. The first quarter of 2025 saw unrealized losses on foreign currency remeasurement gains, while the fourth quarter of 2024 and the first quarter of 2024 saw foreign currency loss due to remeasurement of U.S. dollar denominated debt in Brazil subsidiaries. The loss on extinguishment of debt for the first quarter of 2025 was $0.5 million, compared to $235.4 million in the fourth quarter of 2024 and $7.9 million in the first quarter of 2024. The tax provision for the first quarter of 2025 was $28.7 million, compared to $41.5 million for the fourth quarter of 2024 and $21.6 million for the first quarter of 2024. The decline in revenue and increased expenses resulted in a net loss of $197.4 million for the first quarter of 2025, compared to a net income of $56.7 million in the same period of 2024. NFE's liquidity and capital resources are under significant pressure, with management concluding that the company's current liquidity and forecasted cash flows from operations may not be sufficient to support obligations as they become due. This conclusion is based on reduced earnings following the sale of the Jamaica Business, increased interest expense, and recent declines in commodity prices. NFE is evaluating strategies to obtain additional funding, including asset sales, capital raising, debt amendments, and refinancing transactions. The company also plans to delay certain discretionary payments and continuously renew the LNG cargo financing facility. Despite these efforts, there is substantial doubt as to NFE's ability to continue as a going concern. NFE's financial health is precarious, with significant declines in revenue and increased expenses leading to a substantial net loss. The company is actively seeking strategies to improve its liquidity and capital resources, but the outlook remains uncertain.