Good day, and welcome to the First Quarter 2025 Cheniere Energy Earnings Call and Webcast. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Randy Bhatia, Vice President of Investor Relations. Please go ahead.

Thanks, operator. Good morning, everyone, and welcome to Cheniere's first quarter 2025 earnings conference call. The slide presentation and access to the webcast for today's call are available at cheniere.com. Joining me this morning are Jack Fusco, Cheniere's President and CEO; Anatol Feygin, Executive Vice President and Chief Commercial Officer; and Zach Davis, Executive Vice President and CFO. Before we begin, I would like to remind all listeners that our remarks, including answers to your questions, may contain forward-looking statements, and actual results could differ materially from what is described in these statements. Slide 2 of our presentation contains a discussion of those forward-looking statements and associated risks. In addition, we may include references to certain non-GAAP financial measures, such as consolidated adjusted EBITDA and distributable cash flow. A reconciliation of these measures to the most comparable GAAP measure can be found in the appendix of the slide presentation. As part of our discussion of Cheniere's results, today's call may also include selected financial information and results for Cheniere Energy Partners LP, or CQP. We do not intend to cover CQP's results separately from those of Cheniere Energy, Inc. The call agenda is shown on Slide 3. Jack will begin with operating and financial highlights. Anatol will then provide an update on the LNG market, and Zach will review our financial results and 2025 guidance. After prepared remarks, we will open the call for Q&A. I'll now turn the call over to Jack Fusco, Cheniere's President and CEO.

Thank you, Randy. Good morning, everyone. Thanks for joining us today as we review our results from the first quarter of 2025. The year is off to an excellent start, evidenced by the strong financial results and operational execution and capital allocation milestones that we achieved during the quarter. We have much to be proud of from the first quarter, and our results and operations only further validate to the market that Cheniere is the reliable and disciplined LNG provider of choice in America. Our LNG platform and expansion plans are designed to develop new production capacity in pursuit of enabling customers around the world to realize the material benefits of a secure, affordable and reliable energy supply, like we enjoy here in America. That said, we find ourselves in an evolving market landscape characterized by heightened volatility and increasing uncertainty as geopolitical risks, shifting global trade dynamics and the competitive landscape continue to dominate the narrative. Despite the volatility, headlines, reciprocal headlines and the other dynamics throughout the quarter, we remain steadfast in our commitment to operational excellence and delivering on our promises to our customers and broader stakeholder base. We recognized an income, an all time quarterly record amount of LNG for the first quarter and made significant achievements and advancements in both our construction efforts at Stage 3 as well as our development efforts on midscale trains 8 and 9, leveraging our brownfield platform and solidifying Cheniere's next phase of accretive growth. Please turn to Slide 5, where I'll highlight our key results and accomplishments for the first quarter of 2025. In the first quarter, we generated consolidated adjusted EBITDA of approximately $1.9 billion distributable cash flow of approximately $1.3 billion and net income of approximately $350 million. Today, we are reconfirming the full year 2025 guidance…

Thanks, Jack, and good morning, everyone. Please turn to Slide 9. The first quarter saw another relatively tight LNG market on the back of a largely normal winter weather season and no meaningful LNG supply growth. However, after reaching 15 month highs in early February, we saw spot prices drop sharply thereafter, albeit still above the levels we saw this time last year. Following several years of tepid growth, we're now seeing gas supply into U.S. LNG facilities ramping up. Feed gas for U.S. exports is averaging approximately 16 Bcf a day lately, and we expect this to continue to grow as new projects currently under construction commence service. U.S. projects, including, of course, Cheniere's, are expected to contribute over 80 million tons of incremental liquefaction capacity to the market by 2029. In this upcoming supply cycle, which we've been highlighting for a while now, the growth increments are expected to be significant in absolute terms, but as we've detailed before, the market they will enter is markedly different than that of a decade ago with respect to depth, liquidity and sophistication. We expect this growth to serve as a relief valve to help to rebalance the global market, enabling some of the price-elastic demand to reenter the market and reinforce the affordability of LNG, as a key rationale to drive further long life gas infrastructure investments globally. While we see 2025 and 2026 as pivotal years for supply growth, there are multitude of factors that continue to inject uncertainty into the market affecting overall sentiment. The geopolitical and trade issues and their related news coverage plus sharp movements in prices throughout the first quarter and continue to present risks to both the upside and the downside going forward, particularly in the short end of the curve. Cold weather and…

Thanks, Anatol, and good morning, everyone. I'm pleased to be here today to review our first quarter 2025 results and key financial accomplishments and to discuss our financial guidance for 2025. Turn to Slide 13. For the first quarter 2025, we generated net income of approximately $350 million, consolidated adjusted EBITDA of approximately $1.9 billion and distributable cash flow of approximately $1.3 billion. Compared to the first quarter of 2024, our 2025 results reflect higher total margins as a result of higher international gas prices, optimization downstream of our facilities that freed up incremental SPL and CCL sourced cargoes for CMI to sell in the spot market, and the timing of certain cargoes during the quarter leading to a lower proportion of our LNG being sold under long-term contracts. During the first quarter, we've recognized in income 616 TBtu of physical LNG, which included 690 nine TBtu from our projects and 7 TBtu sourced from third parties, respectively. Approximately 90% of our LNG volumes recognized were sold in relation to term SBA or IPM agreements. During the quarter, we also produced and sold approximately 6 TBtu of LNG attributable to the commissioning of Train 1 of the Stage 3 project, the net margin of which, in adherence to GAAP, is not recognized in income nor our EBITDA and DCF results, but rather as an offset to our overall CapEx spend on the project. Our team continued to execute on our updated 2020 vision capital allocation plan throughout the first quarter, deploying over $1.3 billion towards shareholder returns, balance sheet management and disciplined growth. We have now allocated approximately $15 billion of our initial target of $20 billion by 2026, as we continue to reduce our share count and enhance our capital returns, while retaining financial strength and flexibility to self…

Thank you. [Operator Instructions] We'll go to our first question from Jeremy Tonet with JPMorgan.

Good morning. Thanks for all the details in the prepared remarks here. I wanted to maybe expand a bit on the current contracting market out there. A lot of talk about trade agreements between The U.S. and others and LNG seems to be a prime vehicle to participate in balancing trade. Just wondering, if you could expand a bit more how that's impacted I guess the contracting discussion out there, how you see your opportunity set at this current point?

Go ahead, Anatol.

Jeremy, thanks for the question. Yes, it's an enviable position to be in. We have obviously the reputation, the business model, the track record and the fortuitous position of LNG being, I believe, the second largest contributor to the trade balance. So, we're dealt a very good hand. We have very robust commercial engagements and those commercial engagements have the luxury of being very selective of with whom we partner to capture the premium that we expect in the market, work with customers that value our proposition, and as you know have a very high percentage of repeat customers as a result. So it is a tailwind. It's a tailwind that contributes to the position that we have been in for years now given our track record and our performance.

I'll just add Jeremy, our conviction on long term contracting being 90% plus contracted on the infrastructure as we underwrite future FIDs. That conviction is stronger than ever. And do we just have a great position with $50 billion of infrastructure in the ground, do this on a brownfield basis, be at a contracted level and get those six to seven times CapEx to EBITDA levels. So really promising what Anatol is working on and optimistic not just for midscale 8 and 9, but we'll have economic first phases of Sabine and Corpus beyond that later this decade.

Got it. That's very helpful. Thanks. And maybe Anatol just picking up on a point you put out there. There's a lot of competitors going after the same business that's in focus right now. And just wonder if you could expand a bit more I guess how Cheniere is viewed in the marketplace and what type of competitive advantages that you believe you present and how that is resonating with customers?

Yes. Thanks, Jeremy. We've said to you and everyone else that, we don't compete with a very credible supplier like Qatar, for example. It's a different product. It's a different product in the market and while very well respected and regarded, it's not something that we view as competition. We think of other Gulf of America projects in kind of a similar vein. We're not in the commoditized kind of FOB business that we pioneered a decade plus ago. We look for differentiated opportunities and those are again customer relationships, counterparties that value our commitment to performance, safety and reliability and engagements, where again we have this symbiotic relationship of creditworthy long-term buyers that we will support in their endeavors and not participate in what you can describe as a race to the bottom for the commoditized Gulf of America product.

Got it. That's helpful. I'll leave it there.

We'll go next to Theresa Chen with Barclays.

Good morning. Wanted to touch on the permitting side to an earlier discussion about the durability of permits long-term. What are some key learnings so far either from your ongoing permitting process for midscale 8 and 9 or your conversations with the current administration that should translate well to permitting for future projects?

Theresa, this is Zach. After spending most of last week in Washington DC, I can tell you that, permitting reform is front and center on anything the administration is trying to do. They understand that, because of the pause and some other things that, there are quite a few projects here in America that have been sitting in the queue for years. And our first round of permits at Cheniere, we achieved in a little under two years, that went to four years, and then in some cases, never. So it is a major focus for the administration to get permitting under control. That's a long process. So the DOE needs to complete its study on the need for LNG exports. We think that will get done relatively soon. We need Circa to put out some policy reforms and changes on how the FERC will review those permits. But, I think all of that stuff is in the works. Specifically on 8 and 9, we received our FERC permit. We had no request for rehearing, which was really positive in our first. So, I feel good that, we are moving ahead forward, but there is a lot of work in America, so we can get things built.

Thank you for that detailed answer, Zach. In taking a step back, looking at the supply-and-demand picture for this year, how vulnerable do you think 2025 is to LNG supply shocks, given where European inventories are currently and still a relatively limited amount of incremental supply coming online globally this year?

Yes. Thanks, Theresa. Maybe I'll chime in. This is Anatol. I agree with you and your premise that, Europe is vulnerable. It really is, at this point, a country-by-country issue. But Germany, for example, in the first quarter imported less than 1 million tons. As you well know, inventories are well below recent years. They're about 10 percentage points below the historical average. They're over 20 percentage points below, where they were in 2023 and 2024. So quite a vulnerable position. This idea that targets will be reduced, we think is actually counterproductive. It's leading to a very flat curve for European gas, which does not incentivize inventories. And I think what people also forget is that, without the flow through Ukraine of about 15 Bcm, that's another almost 20 percentage points equivalent of storage. And for rough math, 8% is 10 cargoes. Europe is once again putting itself, especially certain countries are putting themselves into a difficult position and we may find ourselves in a position to help out once again. In first quarter Cheniere sent the most cargoes to Europe, since 2023 and if things work out the way we hope the fourth quarter may very much rhyme with that.

Thank you.

We'll go next to Spiro Dounis with Citi.

Thanks, operator. Good morning, team. First question on the 2020 vision. Zach, I think you've got over $15 billion deployed now. So, we're just sort of hoping you'd level set us on how it's tracking against the allocation buckets. And I hate to say it, but how much time you think you've got until maybe we need another capital allocation update?

Oh man, already. The 2020 Vision, we still got some work to do, but we're getting there. Basically the next big step is FID of midscale eight and nine ideally in the coming months and that'll kind of lock in the EBITDA and the DCF and then we'll keep on working down the share count and paying down a bit more debt. But at this point having done basically $5 billion of debt pay down, $5 billion of buybacks and $5 plus billion of CapEx, we're tracking well ahead of completing that $20 billion before 2026. So give us a little more time, but for sure before the end of 2026, we'll have surpassed easily the $20 billion mark of deployment and we'll come up with something new for you.

Got it. That's great to hear. Second one, Zach, maybe sticking with you just around the guidance. Just pulling together some of the things you said, it sounds like potential for a Train 4 to sneak into 2025. I suspect that's not a huge contributor to EBITDA per se, but I think would imply that, Train 3 maybe becomes a bigger contributor. I think you heard you say optimization still pretty strong, another $100 million in the hopper. So I think last quarter you said you were comfortable with the midpoint of the range. Where are you kind of leaning right now with that backdrop?

I think it's a testament to our execution, not just operationally, which is like second to none, but commercially that margins basically came off since the last call from over $8 to under $6 today. And if the team wasn't as proactive as it had been, locking in cargos like honestly in the $9 plus range in the middle of the quarter. We might not be as convinced that, we are rock solid in the middle of the range if not better. And we just in terms of our cadence annually, it's just too soon in the year to start tightening or raising that guidance materially. But things are progressing in the right direction there. But, thanks to locking in those cargos, thanks to optimization coming through mainly downstream third-party sourcing allowed us to produce a few more cargoes at the sites that were sold into the spot market, as well as we actually did some sub-chartering and made some extra money on the lifting margin through basis differentials. Those things altogether basically offset if not more like the margin compression. And when you think about 47 million, 48 million tons and 50 MMBtu still open, it's minimal. Train 4 coming into this year, that's basically at this point forecast to be commissioning, so it won't really move the needle. But, yes, we're optimistic Train 3 and 3 are progressing well, both for first LNG in the next month or so on Train 2 and then for Train 3 to come in the fall. But really we have to focus on the 45 million tons of existing nine trains, get through the major maintenance this summer, get through hurricane season and then we'll feel better about if we got to the higher end of that range or not.

Great. I'll leave it there. Thanks everyone.

We'll go next to Michael Blum with Wells Fargo.

Thanks, good morning everyone. I appreciate the comments on the China market and the market flexibility, but you've always told us that, China is really a key market for U.S. LNG. So I'm just wondering how you're thinking of that in light of the potential for a broader -- potentially more permanent realignment of global trade and how this impacts your future contracting strategy.

Hi, Michael, thanks. So a nuanced answer. So China is very important for the LNG market and China is very important for Cheniere. Chinese counterparties are very important for Cheniere. We've told you over the years that, we expect it to be about 10% of our contracted portfolio. That is a very substantial number. We've also told you that, if we chose to release that constraint, that percentage could go much higher. But those Chinese counterparties that we're proud to have four of them in our portfolio are very capable market participants. The larger ones have hundreds of people that are involved in the same LNG optimization business that we are in. And as you know, we are agnostic what they do with their cargoes. So when the ARP from The Atlantic is closed to China, why would a cargo bypass a lot of other premium markets even though it is controlled by a Chinese counterparty? So China very important to the LNG market, a critical partner of Cheniere's as we continue to grow and fortify our business. But U.S. volumes, Cheniere volumes going to China is not important to us in the slightest.

Great. Thanks for that. That's all I had today.

We'll go next to Bob Brackett with Bernstein Research.

Good morning. If I look at your 1Q consolidated adjusted EBITDA and just annualize that, foolishly, I get to $7.5 billion or so and clearly the full year guide $6.5 billion to $7 billion. And then if I kind of look at the key drivers that you allude to and I'm looking for things that could cause the deceleration, the two that sort of pop up are the turnaround obviously and then a bit on the potential tax reform. Could you give a little more color on those two issues and some of the milestones to watch for?

Sure. Thanks for that question. First off on the tax reform that may affect DCF, but that's not going to affect EBITDA at all. But in terms of EBITDA, we clearly noticed that, we beat consensus by $200 million for the quarter even though we didn't move guidance. And this is literally the third year in a row this has happened, where we believe people are still dividing our annual guidance by four, instead of noticing that there is truly seasonal production differences between the colder quarters versus the warmer quarters. So we produced the most in Q1 and Q4. So you would expect those two quarters to have higher EBITDA than the middle of the year, which has the shoulder months and the warmest quarters of the year. In addition, margins were over $8 in Q1, and now for the rest of the year we see them closer to $5 to $6. Add on to that, the major maintenance will start later this quarter at trains 3 and 4. That will be over three weeks of those trains being down. So you have that in addition. Stage 3 only has one train up and running at this point. So we expect more trains to be online by second half of the year versus Q2. So I'd expect our lowest production quarter to be Q2, and there to be some variability quarter-to-quarter on EBITDA. So, yes, don't multiply Q1 by four, because that's clearly not what we're seeing in the forecast.

Very clear. Thanks for that.

We'll go next to Jean Ann Salisbury with Bank of America.

Hi, good morning. Zach, as you referenced, there has been a burst of activity on The U.S. LNG front since Liberation Day. I guess my question is, if you view most of this activity as related to tariffs and countries wanting to reduce trade deficits, which would likely continue, or if it was more just like built up activity, I guess, waiting for the LNG band to be lifted and more of a one off?

Jean Ann, I think there's just so much activity. And as you know, it was the President's first executive order was energy dominance during the Trump 1.0 administration. They were some of our best salesman for U.S. LNG and that's continued during the President's current administration. So there's a big push by the administration to get to energy dominance and to get our exports in line. I think you're seeing the byproduct of that excitement.

Okay. That makes sense. And then, I think my follow-up is probably for Anatol, but it seems like recently more U.S. projects that have FID just very recently or close to FID have much less firm third party contracts than in the past. Is that your view as well? And does it kind of long-term change your view of mid cycle margin?

I guess, first, I will just reiterate my boss's tagline of we're not in the FID business and my CFO partner's tagline of he is the biggest impediment to moving forward with the discipline that we apply to deploying capital. So, don't expect us to change our stripes. As we said that we still plan our business. We don't FID anything, but we plan our business on a mid $2 margin. As we said to you before, we see that for certainly for the Cheniere product as something that today is the bottom of the range where we would expect to transact. So we'll stay just as disciplined. The market will remain volatile. This is a long cycle business. Your question to Zach earlier, we saw the first FID in two years here and very little commercial activity underpinned that to your point. So we're not changing our stripes. We'll stay disciplined. We'll move forward with 90% plus contracted projects that meet our hurdles and the market will remain volatile in terms of margins, destinations and we will support it with our reliability and continue to deliver to our customers without fail.

Great. Thanks Anatol.

We'll go next to John Mackay with Goldman Sachs.

Hi. Thanks for the time. This is probably both for Anatol. Just on that last point, we are seeing a lot of this capacity coming online out of The U.S. anyway. I guess, would you expect U.S. export utilization to kind of fall over the next couple of years as the market absorbs this incremental capacity?

Hi, John. Thanks. The market will see a lot of volume entering the market. But as you can see in our slides, we kind of made the same point we've made a number of times, like, this is not unusual for the LNG market in terms of percentage. So it's in that 7%, 8% per annum range. The market has absorbed percentages north of 10% and I put to you that, the market is much more sophisticated, that the players are much more capable and as we've harped on over the years, the amount of infrastructure that can accept these volumes has grown much faster than liquefaction. So what we're haggling about is the clearing price and how quickly the price-elastic markets will absorb these volumes, which Cheniere as you know is largely agnostic to with 95% plus contracted levels for the next decade plus. So, we will see the market work to absorb these volumes. I personally, and we've discussed this before, I don't see the mechanism of U.S. cancellations as being a very effective one. We have to be notified two months in advance and the curves have only priced in such a decision only during COVID. So I think it's going to be much more a price-elastic demand question than a price-elastic supply question.

I appreciate that. Thank you. And then just second quick one for you. Asian imports have been pretty weak so far to start the year. Would you say most of that's just the fact we're coming out of a kind of warmer winter and relatively higher stocks going in, or are you guys seeing any signs of kind of underlying demand weakness tied to industrial or economic activity?

So, it is mostly overwhelmingly China. The rest of the JKT market has been fairly reasonable to a little bit stronger. Part of it is weather, part of it is healthy domestic production growth in China and the ramp up Power Siberia 1. So ebbs and flows structurally, we do continue to see very healthy growth, as I mentioned, even Taiwan, Korea, these mature markets, large mature markets, we expect to continue to grow. Quarter-over-quarter, there is a farming aspect to it as Zach always says and that is part of what we saw in certainly Northeast Asia.

Appreciate that. Thank you.

We'll go next to Brandon Bingham with Scotiabank.

Hi. Thanks for taking the questions. Just wanted to go back to the topic of European vulnerability and maybe kind of loop that into the discussions around possible resumption of flows from Russia to Europe, and just if you have any thoughts on potential impacts there or probability of that happening now in light of everything happening and just kind of maybe the knock on impacts of Russian flows to other countries now that might be directed back should those flows resume to Europe?

Yes. Thanks, Brent. So in the immediate future, what we think we'll see is Brussels moving forward with its proposal to ban Russian gas into Europe, which actually grew in 2024 over 2023, obviously, driven by LNG and obviously will be down this year, because of the cessation of flows through the Ukraine. We have an assumption over the years of some resumption of pipeline flows. We think it will be part of a grand bargain. When that happens is anyone's guess. We can spend a lot of time on what is feasible from an infrastructure standpoint. And then, there are legal challenges and all kinds of arbitrations and regulatory issues that would have to play out. But we don't expect that Gazprom will never flow into Continental Europe again via pipeline. When that happens is anyone's guess and the best solution for that is having the infrastructure to address these issues and having the diversity of supply that a lot of our European counterparties have to deal with these uncertainties. When it happens, what quantum, again happy to give you our guess, but that's not of great consequence to the Cheniere model and we think the market will absorb that fairly easily.

Great. Thanks. And then maybe just, I know it's early days here, but based on the current forward pricing and the moves you've discussed already, how are you guys thinking about the uncontracted capacity for next year, if you've maybe locked-in some of that with forward sales agreements already or just kind of how we should think about that moving forward?

So, we're already thinking about that a bit especially next winter as it's less than a year away. Next year, we'll have a step-up again in our long-term contracting from around 43 million tons that we've had this year and last year to closer to like 46 million tons to 47 million tons. However, with the trains coming online at Stage three, we'll be over 50 million tons of production most likely. So we'll still have a healthy amount of open capacity. Margins next year are still around $5, but you'll see us steadily this year put some of that away opportunistically. And by the time we give production guidance likely in November, we'll derisk that a bit. So we're already thinking about that especially with the progress we're making on Stage 3.

Great. Thanks.

We'll take our last question from Jason Gabelman with TD Cowen.

Good morning, good afternoon. Thanks for taking my questions. I wanted to touch on the expansion projects. You mentioned it sounds like the main item left to FID, the midscale trains is Bechtel EPC, but you did note other items. So wondering, if any of those other items, one, what they are? And two, if they're significant, and then, also, the outlook for a timeline on FID in the Sabine expansion, if that's changed at all in the past few months?

Hi, Jason. This is Zach. First, I'll talk about trains 8 and 9. We have a -- you're right. Probably the biggest thing is waiting for our final permits to actually get papered and posted. That's the FERC permit. That's the DOE permits for FTA, non-FTA and it's also the air permit, the Title V air permit. And then, after that, I would say, the Bechtel EPC contracts. But we're moving right along. I don't see any issues with any of those. And I think, like I said in my prepared remarks that, over the next coming months, we'll be FID that expansion project. And then on the Sabine expansion, we're in the process of optimizing that project. We're going to take advantage of this permitting window as best we can at both sites, and get permits for large expansions at both Sabine and Corpus. But in particular at Sabine, there's likely a train plus some debottlenecking and boil off gas re-liquefaction that can get us a 5 million to 6 million plus ton project and we'd hope to be able to FID that in late 2026 or early 2027. Really the goal right now is permit what we can, but we're going to stay true to how measured we've been and stick to the parameters that, if it doesn't fit that six to seven times CapEx-to-EBITDA, we're just going to buy back the stock. But we have a lot of optimism right now. The permitting process will go rather smoothly. The cost will come in for this attractive brownfield Phase 1 and Anatol will show up with pushing the market on long-term SBAs.

Great. Thanks. And my follow-up is just the funding outlook for this year. It sounded like last call your growth capital funding would all be from equity. And now, I don't know if it was intentional, but it sounded like a bit of a shift where you may actually tap some of that credit facility. So I'm wondering if there was a shift in thinking on funding sources for this year and if so what drove that? Thanks.

No shift in thinking. If anything, we're going to be drawing on that term loan a little later than we even forecasted. It all comes down to the fact that, quarter in quarter out we show up with almost $3 billion of cash, thanks to the success of the operating business. But when I think about the capital that still needed to be deployed, I'd say, it's probably a little over $2 billion at this point of CapEx still to fund this year, and that's over $1 billion for Stage 3, but also almost $1 billion for midscale 8 and 9, as we get that thing going. But we're in such a good liquidity position, considering if you add up say the $2 billion plus left for Stage 3, add up a little less than $3 billion now for midscale 8 and 9, considering we're already spending some money on locking in long lead items, that's $5 billion and we still have that $3.3 billion term loan available to us for both projects. So, yes, that's not going to eat into too much of the cash flow and why I mentioned before to Espial, we're going to easily surpass the $20 billion plus of deployment by 2026.

Yes. Understood. That's very clear. Thanks for the time.

I want to thank you all for your support of Cheniere and please be safe.

This does conclude today's conference. We thank you for your participation.