Good day, and welcome to the New Fortress Energy Inc. Fourth Quarter 2024 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Matthew Reinhard, Managing Director, for introductory remarks. Please go ahead.

Thank you, and good afternoon, everyone. Thank you for joining today's conference call where we will discuss our fourth quarter and full year 2024 results. This call is being recorded and will be available by replay on the investors section of our website under the subheading Events and Presentations. In the same location, you will find a presentation that we will walk through on today's call. Please review this as it includes important information on forward-looking statements and non-GAAP measures. With that, I'll turn it over to our Chairman and CEO, Wesley Edens.

Alright. Great, Matthew. Thanks, everyone, for dialing in. So let's just jump into it here and start with the presentation that we sent out. Starting on page number three, quarterly financial results and annual financial results. So very, very good quarter, concluding a very, very good year. $313 million in EBITDA for the quarter. That's roughly a 50% increase over the guidance that we had previously provided, so it was a big beat for that. Very positive outlook for 2025 and beyond. We are confirming our guidance for $1 billion for this year in total. So by the numbers, a very, very good report. The profile of the business that we run is tremendous. You know, we're an integrated gas-to-power company. We have five countries, seven terminals, manage or own nearly ten gigawatts of power. So a very, very significant portfolio. It's a capital-intensive business to build, which is the bad news. But once it is created, as it largely is now, it has massive competitive barriers to entry. So sustainable competitive advantage is the term that we use. And, basically, where we are right now is that we think by just focusing on our current markets, we feel that we have an opportunity in the next two years to grow EBITDA by 50% or more. So huge numbers, I know, but that's how big these markets are and how big the opportunities are if we execute on them. Growth with very little in the way of CapEx, and reduce then the debt of our the amount of our debt outstanding and the cost of it dramatically. Those are the goals that we have. There's tremendous work by our people this last year and over the first couple months of this year. Tremendous work, actually. And I want to give…

Hey. Thanks, Wes. Really appreciate it. So as Wes mentioned, we're pleased to report that our FLNG one asset is performing above nameplate capacity, demonstrating the exceptional dedication expertise of our operators. Since achieving first gas in late July, we successfully navigated several planned outages taking advantage of these windows to implement key process optimizations. These proactive measures have allowed us to maximize uptime enhance production efficiency, and ensure the asset is operating in optimal conditions. Notably, our highest production milestone was achieved in January, we reached approximately 120% of nameplate capacity at testament to the team's commitment to operational excellence. To date, we shipped twelve cargoes totaling approximately 24 TBtu. In parallel, we've taken significant steps to lower other operating costs including improving procurement strategies, renegotiating service contracts, and consolidating third-party vendor support. Additionally, we've made tremendous progress in our commitment to the local community by increasing the proportion of local operators to approximately 50%. We anticipate this figure will rise to 80% Mexican workforce over the course of 2025, reinforcing our long-term investment in the region. Another key initiative underway is the direct sourcing of molecules from the Agua Dulce hub. Which is expected to yield annual savings of $15 million to $30 million in to further optimize our supply chain. On the accounting front, due to the asset's exceptional performance, and its ability to consistently produce, we officially placed the asset into service as of December 31, 2024. This milestone marks a significant step in the life cycle of FLNG one and positioned us for continued success in the year ahead. Flipping to slide number ten. Investors have heard us talk about the incredible facility onshore at Altamira before. As a quick reminder, it was built in the mid-2000s by Shell and is an ideal facility to…

Great. Thanks, Chris. So let's flip to the following page, page number thirteen. Here's a map of Puerto Rico with a bunch of dots on it. The dots represent power plants in different facilities. There's the NFP facilities. There are current power plants. There are power plants that are targets for fuel switch. There's new builds and peakers and other narrow sites, so lots of dots on the map. Just a little bit of context to where we are. So today, we have two contracts. One where we provide gas to the yellow dot, which is our San Juan, LNG facility, where we provide gas to the San Juan five and six power plant that runs through March of 2026. Two is we we have a a gas contract on the two plants we built for the Army Corps that are adjacent, one right there in the yard, the other five miles down the road. The two of those together total about fifty TBtu's of production, so about one ton of LNG. The conversions, which I'll talk about in just a second, represent a massive massive opportunity for us. To basically take fuel ready assets that currently burn diesel, switch them to natural gas, save hundreds of millions, billions of dollars over the years in time, for the Puerto Ricans and actually generate a significant amount of business for us. That is between fifty and a hundred TBTUs in total demand. Lastly, the new build business is also very significant. They announced their first new build power plant in twenty five years in January, are gonna be providing the the gas for that when it comes online in 2028. We estimate that the total need for new power will generate between a hundred and fifty and two hundred TBTUs in…

Thank you very much, Wes. Good afternoon, everyone. My name is Leandro Acuna, and I'm pleased to be presenting the New Fortress Energy Inc. Brazil session alongside my partner in Brazil, Jeremy Dawson. Starting on slide number twenty, I want to take this opportunity to highlight the incredible achievements New Fortress Energy Inc. has made in Brazil over the past almost four years now since the acquisition of Hygo. During this time, we have made significant investments laying the groundwork for a successful business prepared to deliver substantial and sustainable value to our shareholders. This slide showcases the impressive assets that we built in Brazil. We now operate two LNG terminals with a supply capacity of approximately two hundred terabytes used per year each terminal. Our Barcarena terminal the one you can see in the north of Brazil in a region with no access to pipelines is already operating to serve one key customer the Norsk Hydro Aluminum Refinery. Soon, the terminal will also serve two of our own power plants under construction in that region. Totally an impressive two point two gigawatts of installed capacity. Furthermore, our Santa Catarina terminal, South Brazil, a terminal that is connected to the same pipeline, use it by Brazil to import gas from Bolivia. Is fully commissioned and ready to play a major role in the upcoming 2025 capacity auction in Brazil. Which is scheduled, by the way, to happen in June 2025. The auction is an amazing opportunity for New Fortress Energy Inc. And with our terminal, we could not only secure long-term power purchase agreements, for our own projects, but also provide gas in internal services for two existing power plants in the region. We believe most of the south terminal capacity will be contracted after the auction, reinforcing our position…

Thank you, Leandro, and good afternoon, everybody. My name is Jeremy Dawson. I'm responsible for building and operating the Brazilian assets. I'd like to start. I just have a couple of slides. I'm on slide twenty-four. But I would like to start just with the bottom line upfront. The good news, we're on schedule. In one case, we're ahead of schedule with construction. We're also on budget. So this is an excellent outcome for the company. And we've done a good job in terms of contracting and and being able to eliminate any CapEx leakage and also been able to back to back any regulatory or delay risk we have to the parties most capable of managing that risk, which is the construction consortiums themselves. If I could have you and draw your attention to the map on the right side of the slide, I'd like to point out this nice geographical cluster of assets that we have coming together. You can see the Alunorte, Norsk Hydro Aluminum Refinery right in the middle of the photo. And then just down into the left, both of our power plant locations I'll talk about those in just a second. But this is a profitable cluster of assets that will be delivered in into next summer. And we will then be able to conclude our CapEx cycle in the Barcarena cluster. This cluster of assets is going to is going to have a a demand of approximately sixty TBTUs per year. With potential for upsizing that as the power plants dispatch increases. In years of poor hydrology in Brazil, which are becoming more frequent. I'd like to start with the Norsk Hydro contract. This is a thirty TBtu per annum contract, which we started servicing in March of 2024. It's got a fifteen…

Super. Thanks, Jeremy. Let's turn to the next section. I'll walk through a little more detail on both the financial results for the quarter and year 2024 as well as an update on cash flow and liquidity. So turning to slide twenty-seven, we've included some comments on financing activities both past and present. As you're all familiar, in Q4 2024, the company completed a series of refinancing transactions where we exchanged $875 million of 2025 notes, $1 billion of 2026 notes, $500 million of 2029 notes into a new $2.7 billion 2029 tranche that included about $300 million of new cash proceeds to the balance sheet. As part of that transaction, we agreed to an amendment with our revolving credit facility lenders to extend $900 million of the $1 billion revolver into October 2027. In addition, we issued $400 million of primary equity equity anchored by an additional personal investment from our CEO. And Friday, we priced, and today we're closing the upsize of our term loan B facility where we raised $425 million associated with this, we terminated commitments under the term loan A facility in the amount of $350 million. This transaction puts incremental cash on balance sheet, which we used to fund the FLNG two CapEx program. This refinancing was a natural progression of terming out replacing relationship capital from select members of our supportive bank group within institutional investors that are better situated to have long-term funded loans in place. The 2025 asset sales processes are well underway, and it's best talked about earlier, we expect to generate $2 billion net proceeds after fees and any asset level debt payoffs can be used to further pay down corporate debt. Specifically, we will be using eligible proceeds from asset sales to retire the 2026 notes or we…

Great. Just a couple brief updates, and then we'll and we'll go to questions. So the three most frequently asked questions, I thought I would actually say it to the end. So questions about the asset sales, we've said this This is all public information. You know, we are very focused on deleveraging the Deleveraging can happen from one of two ways. It can happen the old-fashioned way by making more money than you spend and using that to pay down debt. Which, of course, we intend to do, and that'll become a bigger and bigger factor for us as we move forward. Number two, though, you can sell assets at accretive values and use those proceeds to pay down debt. The first asset that we are focused on is Jamaica. So Jamaica is a the country where we went first, so it's our oldest and most developed market. Just to buy, by review, it's about a thirty TBtu downstream market. We generate about $125 million in EBITDA. Virtually, all of that is cash flow because that's what happens in these businesses over time is that once they're up and running, there's very little CapEx to run them. It's an extremely attractive profile of assets. It's got you know, twenty plus years of downstream demand contractually. Got twenty plus years of gas supply. A hundred percent of the of the assets are US dollar based. It's never suffered a dollar of credit loss in its entire history. So it is a phenomenal asset. It had it's in a very, very good market. And we have phenomenal people that actually we're lucky to work with down there. So not surprisingly, it's been a very sought after asset. We had started this process back in the fourth quarter, whereas we're now in…

Thank you. And if you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. And we'll take our first question from Benjamin Nolan with Stifel.

Yeah. Thanks. I appreciate you taking my questions. So I the first I wanted to start if we could, on slide number six where you talked about your effective open position Can you maybe help me quantify that a little bit? You've just between what you're buying and producing a hundred and seventy TBTUs of annual supply, how much of that is available? And and then you talk about a portion of it has been fixed. Can you maybe put a little context on the the spread that you have locked in for? Yeah.

Yeah. The majority of our position, the vast majority of it is either sold or destined for a downstream customer or hedged. So our actual long position would show up as something slightly more than that then. But, basically, the decision that we made, as I said, was to derisk the portfolio you know, with really the, you know, the caveat being that we think that there is a lot of volatility potentially ahead, and to the extent that there was, we didn't want to let the yellow box about evaporate. And so our goal is not to be exposed to, at this point, either increases in TTF that actually then somehow hurt us because we're Sure. Or decrease in the TTF and somehow erode it as the profits that we already had in the balance sheet. And so we thought that actually the conservative approach was the right one, and that's why we hedged it up. Obviously, when the FLNG two comes into the portfolio here in, the first part of 2027, will be incremental volumes. Those are those are volumes that we are already talking to people that are interested in in buying them, so it's a good position to be in. So that would be a technically, a long position, but it's not yet something that is deliverable about it. But the on on the balance sheet deliverable positions, we are essentially neutral. So we have either as I said, we've either sold committed discreetly, or we have hedged them to to so that we are actually insulated from price moves.

Okay. And then and then I for my next question, I know in in conversation that we've had in the past, there were a number of cost saving initiatives that you guys were looking to undertake and do that in in Puerto Rico or in Virgin Islands or in Jamaica. Could you maybe give any update on first of all, what those look like? How how how meaningful they would be and and where you are in that process?

Yeah. The the I'd say the majority of the cost savings are from the ships and FSRU side of the balance sheet. So we've got some FSRUs that have come back to us that are under market we've talked about initiatives to try to realize the gap between market and where they're priced. Those are those are more opportunities on the profit side. On the other side, we've got an abundance of shifts. When we started the we increased the portfolio of gas we provided in Puerto Rico. We increased the number of supply ships from two to five. Kinda we're trying to reduce that from five to two. So and that is well well underway. We spent tremendous amount of time and effort, basically refurbishing and upgrading the berth in Puerto Rico to to be able to take in a bigger ship. That'll then simplify that supply chain. That's what we're focused on right now. We have a handful of other initiatives that we think are also useful. You know, one of the things that has been really interesting is that as we have, basically built some version of just about every terminal you can imagine, we've learned a lot of things. As part of that, we think that there are there are significant opportunities. And pretty much in the shipping business, everything you touch is worth millions of dollars. So if you can reduce or ship or two, or or just use it more efficiently, you can save meaningful amounts of money, and that really is Focus. On the on the people side, obviously, we think There's always opportunities to continue to grow the business and and whatnot, but we've got a great core of people that have worked you know, extremely hard and really effectively. And so we think there's less on the labor side but on the ship side of it, we think that there's definitely meaningful opportunities to do. Some good work.

Alright. I appreciate it. Thanks, Wes.

And we'll take our next question from Christopher Robertson with Deutsche Bank.

Hi. Good afternoon. Thank you for taking my questions. I was gonna ask a bit About the Brazil power option, But, Leandro did a a pretty good job of laying the overview there. So I wanted to ask him a bit more of a specific question about the the two gigawatts that you register of your own power projects Just in terms of where would you source the turbines, how are you thinking about the number of different projects that makes up that two gigawatts and what estimated CapEx might look like for something like that.

Hi, Chris. Thanks for your question. So we we as I said, we brushed straight two gigawatts in projects, and you went straight to the point I mean, the most difficult thing for this auction will be to see turbines availability. And we did it So we have a secured turbines from one of the ONMs that are our partners. So we're confident that we have terminals available not only for the 2028 COD date, but also for twenty-nine and thirty. The CapEx for those plants and I'm mirroring here what we just did at the Porto de Sergipe, which we hired the full PPC Lamps and turnkey last year. Is around six hundred Bres dollars. I'm sorry. Per kilowatts installed. And those projects, they're gonna be spread over two different sites. Initially. Nevertheless, we have many other projects that's qualified for the auction connected to the same pipeline that we do provide gas, that would also be interested to somehow partner with us So that number until the auction in June could increase a bit.

Okay. Thanks for that, Leandro. I guess as a follow-up, when you guys are talking to potential partners here, that have existing assets and you're coming in as a potential gas supply, partner. How are those conversations going with the the potential for sharing in some part of fixed capacity payment in addition to you know, the variable dispatch and and the spread on that. Is that part of the conversation, or or what does that Look like.

Yeah. Absolutely, Chris. I mean, we are discussing with about potentially supplying gas to brownfield assets And in the end of the day, what those projects need is a kind of a gas call option. Right? Because their power plants is available to produce power whenever the system needs. So they need to buy gas whenever they're required to produce power. So it's a gas call option. And, yes, I mean, in order to buy that gas call option for us, they will need to a premium? For the the the call option, which is our terminal fee. Plus a strike price that it's gonna be a premium over the the JKM. So, yes, I I would say is that all the players in the country they are already expecting that because we have done contracts before. Charging capacity fees or terminal fees. In a a a high strike price whenever they buy the gas, So all the discussions that we are having there having right now, they are boarding on that direction.

Great. Yeah. That was really helpful, Leandro. Thank you. I'll I'll turn it over. Thank you.

And we'll take our next question from Sherif Elmaghrabi with BTIG.

Hey. Thanks for taking my questions. A couple on Puerto Rico. First, as we think about building to that billion dollars of EBITDA guidance, seems like there's a lot of upside to volumes under the island wide contract. How quickly can some of these older plants switch over to gas?

Really, as quickly as they can get regas and And so if you have the regas in stock, which we do, you can actually convert them fairly quickly. The mega gens are actually connected to a regas system now, so they could actually convert at the drop of a hat. The Maguas plant is entirely gas ready. They just simply needs regas that is put in place. It's basically a regas unit and a buffer tank is is what kinda sits between it. The Campilachi plant same thing. It's actually a gas ready plant, and a hundred and sixty of the two hundred and forty megawatts, the other asset needs some some technical work. And the Aguirre plant is actually ready today. So the the the the short term opportunity on the conversions is significant. It really became one of the factors in the discussions we had them. As I said, they were just uncomfortable. Notwithstanding the contract, they were uncomfortable with the notion that we would be selling gas and generating revenues and still uncertain earning an incentive. Even though that's what the contract called for. And it was an easy decision to sit down with them and say, look. We share objectives, and our objectives are we want us to provide more gas and power to the island, and we wanna save you a lot of money They wanna save money on a go forward basis, and they wanna save on the incentives. And so it's a very, very simple and easy transaction. There there are few things in life that are truly win wins. This is one of them. So happy to to do our part on that, and we think that the benefits will become manifest quickly because we think that there's gonna be a significant amount of activity on these initiatives on the on the on the the conversion side.

That's that's helpful color. And then, you know, kinda longer term, how does contract renewal work for the island wide contract? It there a fixed number of extension options or, like, you know, does it does it just roll every March?

There there there's a couple of different extension options, but for the first time, the government really came to us came to me a couple of months ago and said, we would like to run an RFP for a new contract that would have a significantly more duration. Obviously, the the year by year, you know, tenure of it creates know, instability in terms of their energy security, They recognize what a a critical part of the energy sector of the gas is today, only to get more critical as they add more volume into it. And so this is something we talked about having a duration of ten years or fifteen years or even longer. So we know what the the tenure looks like on the new contract that we signed. On the new power plant. That's a twenty year. So but I I would expect that there will be something that happens in the not too distant future with no no specific time associated with it right now. And I would expect it would end up being a significantly longer duration, at least on a portion of it, what they have right now.

Wes, thanks very much for taking my question.

Great. Thank you very much.

Take our next question from Craig Shere with Tuohy Brothers.

Hi. Thanks for taking the question. On, just continuing on the question about renewing or or extending a longer term, the ADT Btu contract with Islandwide with PREPA. So your initial sales on the island We're we're just, like, gas sales, gas margin sales. But but that eighty TBTU is diesel linked. But it won't be useful in forever. Right? I mean, you may still apply this for twenty years, but go ahead.

You know, it it definitely won't be the the diesel length, ironically, is was our initiative because it was linked to our savings initiative. We wanted to make it crystal clear there was savings, so we linked it to diesel. So you'd say, at seventy-three percent of diesel, you save twenty percent of the money. It's not that hard. And but it it wasn't the pricing that they objected to at the end of the day. It was really just this notion of you're selling us gas. Why are you also being charged as an incentive for it? And that became you know, the heart of the discussion. I think the the new contract that we signed on the new new power plant is Henry Hub based. I think this certainly will be Henry Hub based. When they go to redo it. It's not a natural fit. To the the diesel savings that was an artifact from. A different part of a transaction that we were we were trying to do. But, you know, I mean, the the just to put it in perspective, you have again, nine hundred and twenty five megawatts of gas or diesel burning plants today. You probably have, you know, one and a half to two gigawatts of new power needed. Have the peaker plants that are being built right now that are another two hundred and eighty or sixty megawatts or whatever. So there's a there's a tremendous amount of of room for this. I mean, we can talk know, with them about converting some of their old steamer plants to burn those boilers to running on gas. So I think that now that we've, you know, kind of gotten past this point on the on the incentive part of it, I think it's kind of a logjam that then opens up. That's our bet. It's a bet based on the fact that I I assume that it people will want to save money and have less emissions. Right? That seems like a very logical outcome. And if they do that, we'll sell more gas. It'll be more profitable for us. And so seems like a given in the short run is actually a great opportunity for both of us. That's the that's that that's the win win aspect of it.

And and and with a conversion from diesel to Henry Hub Plus, you're confident you still have sufficient LNG availability respectable margins, given selling at the Henry Hub Plus.

We we do. We think that the margins are are appropriate and consistent with what they are across the rest of the portfolio. So think it's a it's a good good situation. Obviously, the more that you sell, probably the may affect your margin at some level, but you're on on a total volume basis. As I said, when you add it all up, the gas need quite likely could be two hundred and or three hundred or three hundred and fifty TBtu. So many, many times the size of the fifty TBTUs you currently have. So there's just there's a lot of efficiencies in in deploying that much cash. We think there's a lot of savings for them, billions and billions of dollars of savings, frankly. And for us, it's obviously could be a huge market.

Gotcha. And I just wanna confirm real quick. The hundred ten million Panera parent payment is a part of the one billion guided 2025 EBITDA?

It is. Great. Thank you. You bet.

We'll take our next question from Wade Suki with Capital One.

Afternoon, everyone. Thank you for taking my question. Just one on guidance, if I could. I I might have missed an interim step somewhere, but I wonder if you could kinda speak to the moving parts from paraglabs. I thought it was around one point three to the one. And if there's anything embedded in guidance, the thing like that. Sales or, you know, sort of nonaccrucations,

K. Anyways, it's Chris. No. It's simple as changes we're not including FEMA claim in the guidance for for 2025. The one billion dollars be exclusive of the claim. That's a simple answer.

Gotcha. That's what I thought. Thank you. And just just to switch gears a little bit dovetail on I think, Osten's question earlier, talking about the supply book open. Cargos and whatnot. I'm not so thinking about longer term after these projects, up and running. And so so just wondering if you might be able to give us us color on the third party supply book, kinda what the supply situation is and the out years, you know, excluding FLNG one and two, you know, maybe twenty-six, twenty-seven time frame. Any color you could give us on party supply book would be great. Thank you.

Yeah. I mean, obviously, the further out that you go, the more supplies available. The the tightness in the market is really a function of the shortness of gas, in particular in Europe, but the the restrictions on the the Russian gas. That's why Russian gas coming back into the European markets, if that was the pass, would have a profound impact, I think, on, certainly, on prices in Europe and and thus thus worldwide. As you go further out, there's obviously a tremendous amount of activity on the construction side. The prices go out. And so if you especially if you're looking for longer term tenure, there's a lot of of, you know, gas that is available. So you know, with respect to our portfolio, we do have a couple million tons. In long term con contracts. We have our own FLNG. So we have very long dated I think that know, as you extend duration in some of these portfolios, you're also then likely to then look to know, maybe layer in other amounts of supply. So it's a it's a large portfolio. As I said, it is on a current basis. We feel like it's as well matched as we can make it. So it's like you're you're predicting, you know, the usage levels with all the different customers, and there's always different factors into it. But to the best of our abilities, that's what we try to do to derisk the portfolio, take advantage of the elevation in price, generate some earnings, but still maintain some significant amount that's the That's the that's the goal. But longer term, there's lots of gas, I think, that is readily available for longer term projects, especially with creditworthy know, downstream.

Perfect. Thank you so much. Appreciate it. Could I could I squeeze one more in?

Sure. I think you're the last questions. Okay.

Thank you. I'm just wondering if there's anything sort of maybe more creative that you can do in Brazil with the auction coming up, and I'm thinking about the existing Porto de Sergipe and, Selva plants. Is there anything, whether it's adding capacity or expanding the plants, anything like that Again, because they can creatively to participate more so in that in that option. Any any anything there would be great. Thank you.

I I can't even answer for the Leandro on that. The the Porto de Sergipe and the Selva plants are committed. Right? So unfortunately, we can only commit them once. In fact, they're they are they are tender they're tied to very long-term contracts. That said, We think that there is incremental capacity at the terminal. And so, obviously, that's something that, you know, Leandro and Jeremy and the other guys down there are in the thick of. And the the power auctions are an unbelievable opportunity in our judgment in terms of the, you know, the array of options that they have both on the brownfield and the greenfield sites. And both in the gas terminal cash flows, etcetera. The one point that I would just reinforce is that where in the past, we we either bought or acquired these PTAs and then built the plants, we think now that there's lots of different opportunities to partner in different ways, We're very focused on our terminal cash flows, but the overall, you know, impetus for business is to minimize CapEx, maximize free cash flow, grow, you know, without actually building a tremendous amount of stuff on balance sheet. So while you could put capital into it, we think that that's actually something that we're very, very focused on. And we think there's gonna be lots of opportunity to do so in this house.

Great. Thank you so much. Appreciate it.

And at this time, I'll turn the conference back for any additional or closing remarks.

Great. Well, thank you everyone for your time on a on a Monday night. We appreciate it and look forward to to talking to you again soon. Thank you.

And that's connected to today's call. Thank you for your time.