NFE - Earnings call transcript Q3 2019 | New Fortress Energy Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the NFE Third Quarter Earnings Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

to Head conference of like speaker, to now Andreini, Alan Investor would hand over the your I Relations. Please go ahead, sir.

Alan Andreini

I New Quarter Thank you operator. would welcome to you, all to the Earnings Fortress XXXX Third Energy Call. like of

Edens, Officer. Joining CEO of our Financial and Guinta, McElmurray, Brannen our Officer; me Chris are and Board; our Chairman today Chief here Wes the Chief Development

posted website going call, reference the was we today. that Energy Fortress are to to the New Throughout supplement the earnings

so, I done you If download you already have now. suggest it not

will addition, measures directly supplement. found In to of some during be the be earnings most we discussing those non-GAAP call comparable the reconciliation can the financial GAAP measures today. The in measures

certain you call to be like press and turn presentation will the I in results. and review future I forward-looking disclaimers filed We actual statements, the before including materially our statements differ Now quarterly uncertain These and our nature, over forward-looking are made non-GAAP encourage regarding their statements risk statements, regarding may to SEC. by review today out Wes, report that in factors from the earnings. the investor would contained to to point financial and with release measures

Wes. like the would to Now I call over turn to

Wes Edens

a just for of We'd in Great. bit Thanks, Alan, and thanks a give that presentation. lot the little dialing in. a of summary

quarter very good QX. a in had we So

development good basically to will get regards, find that a turned have but in as focus quarter. very assets new and both explore. we develop about Our few our to is minutes talk to we focus In continue is to and Brannen have specific. our a business continue markets projects, operating the very, we the on very continue and to build

the expect in complete to finalize the come will Brannen completion. operational power has Simultaneous conversion the X volumes next on year. the board X is give the of the building, units of that. very plants that need terminal on Again, constitute In close with bulk itself Puerto X. our construction that to working the Jamaica an on we We and Rico, PREPA to terminal update readiness during and been

to of I'm have about continue investors that at been on many it. told will do all accurate pace. our is asking that We look

see a really at it. done the have efficiency chance have sense You have to you appreciate there. look when love scale the people get of get to you'll to new we it We'd because a facilities, these both take a that and

many of operating to literally in markets those had of next and our addition our actionable other and an of days to and XX the XXX-plus infrastructure from managed company in as that grow Having part business completion. an to in identified focuses, likely us. X that we've days different markets the new for here. around think company from products. infrastructure And we terminals transformation subjective development to world company the and XX in Second all, and continue progress locations convert very discussions away to good are being develop the is the on for interesting very, The to new we've very discussions specific terminals

with supplements night. this So the last I'll turn of to run out X please sent briefly. that, through Page

specifically. Again, their in complete. gas nearly process. said, Old in talk building be plant As distribution [indiscernible] will been Brannen I The developments are [indiscernible] Jamalco. that has using intermittently will Harbour about

nearly really XX, complete. which the managed birthday I on is fire gas Rico appreciate. do with They sync been to system. First in going up great. Puerto actually terminal October That's through The that that, readiness my the is

The to that of expected is to MOUs in robust. to we terminal substantial. We've days. America to X to lot the by Sunday The trip operational week, a XX back met million XX X.X to XXXX. from turn be combined and America, of new August I got a Africa. returned volumes, and those to South is backlog next on a very trip initial large-scale next commitments Mexico on Asia, Central a gallons. the The their people scale pipeline of binding do this site construction expect week full is

markets It's our different So do around business very, there's in these major well around a and the optimistic trying places. running lot of we're is that we're so, positioned to world. that very

little demand Third those to a build tremendous thing promise, but the a terminals. a lifeblood simple transportation aggregate return through enter can then think put, small-scale a other commercial power that the and few a an think go you to we where reasonable then detail, is terms, demand more a built, market simply area what And in to very particularly it aggregation. lastly, Demand I in has side, is use a minutes I'll and it terminal aggregation, from the users is of want identify place get spend bit that on I shipping business. beachhead, the in users, get sector, is

you purpose it. before, boost money, don't business build all and your want As infrastructure use is said infrastructure I the to for one

want substantial X, returns, it make into use build very to one for and X, X you more. or If purpose

I'll how in in works And that really second. seen this in through a and so walk we've ample evidence practice,

at very allow goal raise for become the more talk continues on as projects equity. board that assets go will they without having of Chris as pace. we We capital these Lastly, very on our are continue later. internally that a quantities to to to market that to We got is one. its about cash to all do develop simple and our flow progress that. Basically, so intend the good to to do against financing start operational us and and business sufficient some through in yields part the

ever front affordable, clean, develop. our demand the for confident is So in the sheet, fast say some I'm equitize based hand that's the a we for that balance everything of we're very power and that market it's not need in was finance opportunity, company. internally business there of finance-ability But gigantic to business than to on circumstance, have more will the extraordinary if we the we us. to and happy

So number earlier. is illustration let's it's to Page I about This point Jamaica, of was and X. talking the great of a a flip map aggregation

point So was our first or power the service be in XXXX. at to that Bay At the entry to Jamaica of plant. terminal top middle first XXX-megawatt of, Montego the

the shipping to down sector, [indiscernible] we'll industrially and we and since company, industrial expand sector, development there [indiscernible] in in power continue a The island handful transportation to both of time, soon customers our revenue lastly, the and side. on the that

you see kind graphically how X, Page to actually added this of has flip can you If up.

the at gallons at the pre-NFE, per that market. we bottom So show there zero was day

we Jamaica in one So there's gas that's no have the for up started first these in didn't We on there. Montego is used natural which the map, dot Bay. purposes when beachhead, this

grown and have assets those multiplied. Today,

per from gone day to gallons you've per day. a the gallons XXX,XXX million that gallon So day mark. million a think We is X.X X-plus future

Page If X [indiscernible] in are X, number places at the we of we you in the Mexico. looked look at case the business

Jamaica, for gallons, million gallons volume across X.X X.X million total Rico gallons a was So and gallons Committed of XXX,XXX and those. XXX,XXX Puerto Mexico.

core assuming of growth, financial our to no the the not going we've case. is which, next course, projections additional that's be basis So got of for year

X million. we adds over with gallons another discussion our had specific gallons day, X of accounts In Those volumes, those that conversations specific X.X to in to compares that that these per just million markets. XX added are million addressability and

So potential is only X/X what there. X/X about of or we think

operations, local and position in are significant. be the you else provide ability your your everything and marketing infrastructure up outperform to when your competition logistics back building to support and And to is to

X to flow chart This basically quarter. these assets. that Page last is you we the the on is path cash showed

half modest [indiscernible] then we're of QX, getting see, flow QX amounts can that QX, cash basically, the And at you're the you year. at point fully of As and ramped now. second

we I in away the earnings fun the earnings, but case. have said call that we have literally days we than that being before are from more

expected we're These these actually significantly we're and numbers. a new not year. on. are particularly do base and turned from this then what we'll think the the stuff half forecasting identifying numbers. There's of what built turn we between investments are second are than see getting this, can in on. will These so better You happen, think not We actually then the numbers gap

issue, So point starting think this XXXX is the a we've of backlog but good the this got, year the we and second half a that just for is us.

the So and on lastly, the provide just business. we X for overall context think just terminals to what seconds

into interest. or approximately we've worldwide. fast is done So the that roughly under think in below. and world XX that we and XX are of map What Those completed affordable X construction. terminal clean power, the translates represent XXX of a potential areas terminals highlighted countries sites need of There's

of terms, terminals. be committed next in year is end XX goal, by operating Our simple very building to fully and/or the and/or

are have we on which X including is turning Mexico; Rico, currently, X. here days; in in under one So discussion, construction in we that Puerto operating,

we're So our availability is. on the There's a what stretch seeing goal significant based XX. market is not

X of that of means range for And just per use million, to what to if million. flip we terminal very volumes of a We million, Page make simple a target arithmetic the us, X X X.

right margins is million, previous whole [Indiscernible] now, talking you're to we billion. what for XX most part about $X consistent page. EBITDA X the they think you if So And with X consistent between and which the and are time at billion that $X at operating look million is generating of company terminals

are the fully EBITDA XXXX, able XX company very actual year, by $X launch terms, and simple a is again, So have these in that if committed to generate by and complete billion. the rate EBITDA terminals billion A, development run to of to end of the of next $X -- end [have] operational able we

is market greater So the terminals. this just that illustration. think the Obviously, than we is -- the XX mentioning substantially

it's very of and a is it short-term focus, the So company. perspective our

I'll So to it with turn Brannen. that,

Brannen McElmurray

Thank to Wes. I'm Good joining us. Yes, great. refer Page you to all -- morning. X XX. Page going Thanks,

that plant XX operational days developments Old Wes as facility. kind will of in and Puerto the CHP have Harbour, are the the So Rico earlier, be key indicated we Jamalco

the we the expect run rate by Harbour, of end this Old to For year. hit

Jamalco And end we Puerto end Rico of rate For QX rate expected by run XXXX. expected of run it CHP, the the facility, XXXX. to San the we QX Juan,

productive on more from quarter had projects our projects. Page our very We to XX committed to with of terminal of detail About X expected. progressing XX% that. you flip deliver volumes pace a to as on give I'll come kind

Bay First, the by is served Terminal plant, which operational today. Montego which is power our Bogue

gallons volumes per committed XXX,XXX day. day per have volumes expected We of north of and XXX,XXX gallons

in The that of kind place. will growing as behave XXX megawatts time terminal it's after baseload demand demand XXX-megawatt actually initial think with we've the grown generally the started we base terminals how operating put indicative since has to we of the the

volumes we asset committed that is is XXX-megawatt second month. power the operational The owned expect its we gallons plant partner, in to day XXX,XXX Marubeni and today, plant hit Harbour. with Old north by which power Old expected of Harbour expected to by its XXX,XXX volumes run this served be The XXX per day, is is gallons rate and facility have to and that That the by facility per plant, and -- offshore facility closer of volumes we megawatts. underwritten power

So again, initial expectations, by outperforming case. the case

providing own grid. And third it's The our that we earlier, and commissioning power plant, we October Harbour. process. XX, the as the mentioned offshore have That's and the fired Old in Wes terminal power we in Jamalco served asset first by of is today, to as which

So XX volumes of over hit we about day. run that rate its to gallons expect ramp and per XXX,XXX next the days up

we conversion is and Juan PREPA X power being the Terminal, The progressing serves plants, X by The which very is is which Juan San asset have, in and process fourth San converted. the owned well.

XXX be month. megawatts, we completed first to expect next The

volumes The we in our be X expect January, expect which than is megawatts, we we hit second rate we QX, there in to to spoke. talked full last quarter about XXX and completed run time what

Paz The Paz. served in La owned fifth It's by progress. asset is XXX-megawatt Terminal. plant us by La Construction our in power

has turbine ready it's site. ship first completed, The to and been to

think we about It's megawatts. output. turbine and facility the complete, add overall to a almost third and increase is we'll turbine second The that XXX

First gas QX next is expected in of year.

on large and projects And behind here to a growing expect we mentioned have We focused as pipeline that. large-scale highly shortly. to we're Wes that several earlier, commit

to Page XX. flip I'll

demand key and the one earlier, is the a mentioned of Wes our huge aspects driver As business growth aggregation strategy. of

power, should aggregate So industrial terminals from as transportation which beachheads, thought we sectors. across be the our of demand and

the driver distributed overall. our So the business for small-scale power business key is

So XX QX new and today, we that turned operational have has the projects on are customers XXXX. teams of since X

next the development, in days. projects XXX are under completed that be discussion. XX to all are projects expected There There in are are XXX

commitments those X/X the We end in of over expect Rico. of year with volumes Puerto that XX by the

a X means of an committed is million-plus will So gallons in-discussion increase which XX% total volumes, be there is volumes year-over-year. day what that per of plus of

Now I'll performance for our things this a operational and few say financial about quarter.

business, operating health, the environment stakeholders as is safety people, and has always the it been. an and a welfare As of top our priority

we operational health X the record away safety For spills quarter, and or X reportable of days process our HSE continued X incidents, work, include which events payment losses. no from or environmental and

On the side, we operating XX% the the assets. asset operating across across availability had across, the XX%-plus reliability assets, availability

transfers What we strong without So we and the have over from extremely performance proud X,XXX truck to better incident. probably continue of team, almost LNG overall, get ship just rail is time. operating that to we're most

is the Western and plus all event our huge for of vote brand for a us without which confidence big We ship-to-shore for in incident, transfers Hemisphere, have the the our company any team a of counterparty. most

for turn I'll to back and it Now Wes shipping. gas

Wes Edens

the asked a numbers modest Great. the side, over actually I look Thanks. when amount lot of handful the of been at on you aggregate think Been course increase. a supply markets. of the the And supply questions only gas months there's about of last

this So as stage, rising million see million from tons. you can to XXX tons XXX

that's up is a very But is commodity only to capacity about store. So this XX%. hard

make put need not it. a lot it. So LNG, for you when place storage of you a There's to find

exactly change a even happened. a increase dramatic that's so and in cause price, And what's supply modest can fairly in

XX% prices of spot the the down course roughly over prices, gas year. So

When capacity [indiscernible] you what bring add it it is a technicals, fairly the fairly of easy online. it's is at supply-demand think easy to look that to trains we in and add

to So turbine it's supply X that million-ton at in X time. and a add sold tend increments is basically demand they side

to is reverse business, overall the that because all do now our is very, fuel low-sulfur said, prospects going the worldwide it about days when And demand we trends at that think both catch and those XX with in themselves we look comes and XXXX substantial think we And are will I businesses. think as the very I so guidance. And markets, for X up that be power away. overall the XXXX,

is new different or extended And what's increase us very this is to some That's the when to opportunity people tendered that short substantial impact, we can think, but have has in very in think running the see you the we price. it for change And over leads lock starts we go had for. for I supply of not in shipping industry, an the the that immediately been substantial XX on XX to prices. We've so. handful tender happened period what a have, now are last a years. modest days that that's in term next good what caused volumes which for have and think We've very

want And what the year. the of complete to to of look might finalizing we who like. that a have we competitive with by of that expect selection the terms go suppliers. We end just of We're number very Chris? the and

Chris Guinta

Thanks, Yes. Good Wes. morning, Great. everybody.

XX. Page to Turning

performance Let the me you a business take QX. the quick walk just through for to minute for financial

quarter. QX a Compared that the fourth plant. down was at rebound, to gallons the were day power to around QX, expect and volumes we planned the due XXX,XXX and Bogue for maintenance This slightly, will outage

increase construction come our This volumes, $XX lower $X is revenue improvements and normalize the million higher to the in will online. expense quarter. Despite construction corresponding and due however, and related cost for of customer concludes terminals both about sales a were as facilities. of the revenue at million The to

comp that Pennsylvania noncash associated projects of in not the net loss approximately costs and was development Rico Contributing with quarter Puerto stock the for in million and about $XX $X to million capitalizable. were

on quick SG&A. A comment

after expect $XX working onetime level at quarter these about events. to We this million through per

our million On Jamalco from facility period the $XXX with prior balance debt on of $XXX went of the the up million plant. sheet, CHP funding associated the

is flat committed repeat said million about the on from fully we cash the expenditures spent quarter. that plus projects. loan NCV QX, funds $XX something of I'll we all QX, spent, on project-related during the which amount balance Cash we from that the undrawn our in as was And sheet but

XX. accomplishing This to cash finance steps are the flows use to: one, Page business. key from outlines plan to operating assets; low-cost this And the Turning our to the on source leverage to two, turn LNG. and

As our assets operational, go path being to substantially. financing the changes

development turn, assets in projects. they're the Our once goal borrow operating against funds to which, is the online,

proves As at we cost our capital. lower be borrow more out, an expect able of to performance even to funds

holding debt business to the we'll this, expect debt while accomplish the be the order we we Further, from amount to of of overall that the on In IPO, cost expect flat. able term $XXX locally the total million, $X in loan our to debt. about with million increase of in the to size borrowed combined from which cash is Jamaica, a of $XXX billion double

page, of On operating million on next turns $XXX X run this the to X operating implies the rate X at billion of $XXX from the leverage margin a margin million quarters. in applying $X.X the bottom over you the capacity graph, billion. to goes and debt if look to $X.X of goal Using

to direction. at So we we starting million feel number XX facility putting do and in in this reasonable a a confident think step of in that We've the place, next that in discussions had is so days. our $XXX over ability

have the we will to our than XX intend we'll hit more operations flow once goal use of cash growth. fund that to I note, conclusion, enough accomplish leverage however, to goals. In terminals, we from

to turn I'll over Alan. back that, it With

Alan Andreini

to Operator, may now the open questions. you call

Operator

Instructions] Ryan comes JMP line from question first the Our Devin Securities. with [Operator of

Devin Ryan

here. on going lot a Obviously,

other of for development is the at good a Jamaica, your going that look always time to And I in I case quarter it fall we appreciate in of not a seems geographies. line the But Slide was development like or X the some had kind the When question. the first maybe be business study of guess something's progression I and slower faster it to going slower. in development to into than So bit occur smooth modeled. feels a on

of view building here. just and in. you're long-term there rest saw there of you're here, want time you your And the I experience the for So maybe X it's to that affects the there? whether study as and really again, Jamaica business kind line about developments a Jamaica of But not some just appreciate just development similar kind how geographies think strategy the quarter, case of in and today overall the the the

Wes Edens

Great. X, Well, at geographies. if market the actually where you we Page the detailed for look each X size of

could granular for Jamaica, very our of our business, market include estimate, not million is of development launchfor day. So X significant That per in elements does the a and I of given is gallons X think transportation of geography Jamaica. in kind how be the a estimate this the small-scale which shipping significant size

I touched it stuff I would a us. thing for I big that when earlier on So thought be be shipping -- said will the

that or it. day To day. of use essentially of context ship a of that every tanker a gallons is or something use between XXX in, LNG it's ship day ship an going out per a power And XX,XXX [Indiscernible] container is that to give some XX,XXX LNG to that, ship is

the is in centralized we're some to research articles LNG the take But one -- of got fuel, that been team, There's yes, increasingly an my course with this, the teams. data customers at these, of years. forms We've significant each if is tons viability couple play before next of and role they of no versus the say I'll this. development have numbers, doubt looking the going this utilize. all there is global other And about can volumes. in of simply mind that small-scale one our of you -- locations currently discussion of of our form the over these domestic XXX-plus between recently we that They over

to for we is time this to turned it we on, capitalize our and them all it capability helpful do can, us to from us is the And get that all basically for And complete step till to because the we step in our while development as also up get have and then customers. extent provide what some the capabilities. to here provide help projects we with we somebody actually capital agreeing not take as actually does done the it operational having

our business. we've X is and small-scale perspective this the So market to these markets very paid I the a that It's business customers XXX-plus the on for high-margin with side of would say infrastructure. addition part material the that already be is between going on

good me a in current our to CHP with of big owner business told about X electrical a ago, So a savings in very markets and with for positive over on convert environment bill resort about one very, and I we'll the it. them, by And their impact us, $XXX,XXX their plans a Still $X very resort operation reduce those million still for was significant is both to year. our example, for $XXX,XXX very a month. weeks margin that growth for their prices, and

So of small-scale part demand is this business, -- really think, aggregation. is the the I

it's after going think these big feel of day-by-day be going like our business. is war, definitely companies, secret to to it's forward. each a big, we numbers to a of the I that but it's ground the one and contributor It go a business weapon

Devin Ryan

Great. Thanks very much.

at Wes, are on, the How that kind quick on And pricing I can secure expectations much respect of based demand a price? you comments LNG you here, and guess, at you longer-term the on Just with guys will to pricing and looking what there? your $X.XX. or follow-up duration supply then for

Wes Edens

now. XX% visible the, I think of thinking to about up with end that demand XX% what is the X you on day we're is right probably will

X-year, offers XX-year. at looked in X-year have and We

this the I'd think at lean XX-year more towards solution. probably point, I

new and our using financial expenses. LNG is the that's we terminals be that accomplish XX% plans, marketing look, but that to viability think fractional collectively here to prop this think this We the us. and are right other for ships up, XX%, as terminals probably to financing our securing step amount we're compared on is it. amount. We, these of both the I think it will of we to develop roughly of part gives important Gas overall [indiscernible] trying side real what an

those And puzzle. that the of said, down are significant by things we'll I this X as year. So the being parts end expect I locked complete of the

Operator

Our comes from Lewis next Greg [Operator with BTIG. question Instructions]

Greg Lewis

Yes.

on up question following the Just last $X.XX. the about

As we to LNG that cost quarter, think maybe about I the of third costs. out picked it kind called related you some in up of transient some, the guess,

that about should it few $X.XX think isn't think few the we realizing we of probably sold number, the that cost of As or going quarters about goods to how over happen overnight, down scaling next years? the

Brannen McElmurray

basis I expectations, $X.XX think run going year. number the our a we're next on to have rate

it's starting it's to I year. we $X.XX numbers whatever [indiscernible], is very it's bandwidth our the expectation tight bring think LNG that can house So think number, And rate that we'll in our realize next that the hopefully on a actually it. run in able $X.XX, be I or so

quarter, quarter, the LNG should see is you'll back our legacy then that's number, to So first which fourth go And hopefully, I the still prices. goal. this

So.

Greg Lewis

the, it like kind the Great. then Okay. shift the with IMO LNG potential comment on water. we're other to the that And of more seemed and clearly,

with [indiscernible] the more delivery just kind Fortress existing market? Like, LNG on where can fuel terminals? they something this As the Yes. where of the is fit thinking some about marine sorry. to deliver mile and we be ahead, Go that just to beachheads we last how is think into in LNG build like, value this about New chain, of should we

Wes Edens

it. No, as fuel year you as LNG on I ship-to-ship very said, we transfers a ago hemisphere, than any transfers more at have right, Yes. company mean transfer. really the ship-to-ship Brannen maybe a to in is planet, last. a providing completed if more the look ship The ship-to-ship

So and we proven other have the creating today by frankly, capability anyone, fuel terms provide ships of ships. small kind into in of unmatched

is you LNG use act map think vessels on points smaller and at map that in. the ship look the all points very this could as the world, vessels there's our When a that to be we ships that be up situation people foothold part the is the may focused in So touch of the or storage come ships that a are This number And other shuttle the different to different on strategic goal various of different partner lanes, that we between of with regard shipowners have it. use big to of with I shipping particular to kind a think a, that's in business. as ship it of terminals where very, critical are and Those of going world providing we're something it others, that across the these tall obvious information logistics. use we is the viable. individual world a a the is an big for on LNG But order basis. of volume very

is base the converted part energies a us, look during individual terms ship year. at our the the And this of Southeast. per Florida Coast as when first the container I of X,XXX said, on of one have we in railway day the can the into big in That Railway, transportation utilization when biggest million when we first course looked Total at way Florida. training, diesel impact East that back can in about the gallons shipping regional is XX pooled be asset. you

a big is it something unmodeled be developing So on our that to numbers. impact to but hard at speak market, use it's over and the a to to something business be number shipping the it's I doubt our We markets It new is want over-projections I to estimates is tangible pass put of like, you all, it. enough significant, that's because not very, little don't but this force going to feel on to very this there's completely time. a no using is superlatives really, about going is without

going company be group and important that here. really the to think most important to terminals the and the is winner one logistics the I that's access the most has points that a

Operator

the from Devin line of Stanley. comes question McDermott next from Morgan Our

Devin McDermott

great to you I a platform gas start the a actually, a just you So of of the following up operating area. is leverage wanted market. that just at you the reach remarks. of looking once scalability prepared have new that first enter Jamaica first actually the And example And opportunity certain and set in I kind on the question once of some agree

just I a being bit market more about talk Puerto wanted Mexico, here. relatively to Rico large opportunities and both

at competitive Jamaica? when that there just other you be be could that might markets And for customer in competitors or you their base the that similar If you have terminals might how benefit Rico those if landscape from contrast the address look purely might or also could Puerto your within and there. that, the industrial versus geographic different customers

Wes Edens

it's Well, Jamaica, diesel in of LPG, gas. it's no for beyond field. there's currently actually simple. the logistics There's there's really other source supply in,

I So the price. these to are easy in markets are dirty lot to tank following a handle, for easy energy expensive, oil-based they products of to easy Unfortunately, ship, development it. report, build a think for and way and in to easiest volatile

what, so big that's And picture remains and the an that's opportunity.

very a from terminal. things For island. There's else could step for They course. of the a it now, of in for good a you which the And a we're term, somebody Jamaica, to is largest do. It's natural source other our utility, But is could, right and in gas. commercial a standpoint, build big place. a tall customer only is long order we're because the of customer,

Puerto Rico, they're in situation is bring we the but they international in from think in U.S. competitive it's another in bringing similar containers and there a gas, Mainland. that difference

is shipping material them the overcome. hurdle a for cost just of so to raw And

middle shipping and around from island. They're to from customers the We're Mainland San Juan has the of U.S. ship. in the shipping containers the on terminal our

and sounds expensive. And and hard expensive, so it's because hard that it's

for cost you of get events, even asset LNG, that places, And there's for critical to customers, them. a don't it's different interrupt this can things Maybe is I them, XXX a know, not days stormy get chain. power, supply run. the must-run year for the actually, you like, but weather only

very So of think price, terms I we're certainty, logistics think I both in and well. doing

Cortez Baja, comes It There's California. from source of the is, that Peninsula. the no from market Peninsula fixed we is in essentially There's down the gas It's at at a comes the gas of [Indiscernible], Mexico Baja no across mainland. of down source island. California. that in place end an look Sea of

of terminal possibly, and So will source only Mexico the both plant our quite for and the gas, in first, our users natural Cabo. near-term be

community with are obviously, If resort It's gigantic. there the Cabo, is vacation spot. a familiar -- those terrific you're

there. to large resorts us. we significant going think, be number are Obviously, for of there's a customers very Those,

competitively, monopoly, not word. we're any by they're don't monopolies like don't we it, right? We not. a So means, So like the use of ring that

position But in from very competition. a very, competitive standpoint, a good vis-a-vis competitive we're any

is just It's access a your think, not I market. properly? you matter viability execute? can execute? competition How staff So actually question do just of to of a ability This work. you or you this really, is Can it

Devin McDermott

prepared any Great. commitments. then No, being Is deals, look there from they mentioned X location, the you what that else that's very MOUs can this over on closer you in the at additional large-scale helpful. like, second detail those remarks my on your point is And question to potential there? provide conversion anything

Wes Edens

obvious those competitive for been that benefit alternative a turned they're of of and fuel. provide hand gas months have don't and them binding of by whatnot. the situations commitments cases details negotiation, months into both of introduction They discussion, customers product where want are are reasons are will substantially in and We X -- both very on to until

high. I that they that the So likelihood convert think is

But for As that than it's with look think have geographic us. both not transaction, substantially it's are other markets new are, markets both They done any cases, we any areas at. greater in they're till done. we both

of short-term really terms So but long-term good also in not growth. beachhead kind the of for the the viability of about we feel prospects transaction initial only

as moves next event in will a couple get, be for down XX soon us. to have we'll days, a less. maybe hopeful that I of as course, binding that material said, And transactions, XX So the I'm as even of we

Devin McDermott

Great. Thank you very much.

Operator

And you. next our Ben Thank Nolan from question with comes Stifel.

Ben Nolan

morning. Good

So one maybe that now. the question, Wes, things but the beachheads was I on developing out obviously last -- good you'd importance the maybe of really and of following beachheads, the not. pointed X

than as the Angola, progressing past: yet Dominican the you to push none those you they're of Although Ireland change But into solid is elucidated line? thought the harder Or maybe you've competitive Republic. there others Or thought? X it and those landscape? turned have any in contracts. Is on across finish in

Wes Edens

harder thought. been than I hasn't It

gas their terminals in not is that of around I'll is and when is notion people [Indiscernible] process handful new China. number days, say of as power one to now we look thought them I the standard energy was largest bring gas think go-to gas but world, to I XXX is markets. only the think A into are viable kind Southeast importation the powering it's Asia week of for lot in those it the for terminals, last of a

big of a and on or These into utilities whatnot there's decisions it. countries to lot goes by countries are that and complexity by make,

time Microsoft. print they think characteristics from all context different brochure, them show so there. some And our that's here out somebody get When showing that to and are, get operational to and what a our facilities we of look in things a can very what negotiated, I we from it have takes the to and like PowerPoint with the

competitive access I standpoint, So markets. ability I from our a think feel about good to these really

want about year that has reducing the be of of thought much I the, we terminal, a want provide it's what is number build solution. want say which to scale, we business and we small a to plant, not to case, competitors power mean provide the to aspect that do build the about want we we to to gas. I'd the a want proven very ago some

I of and those aspect to and of things to And all lack wherewithal see actually think, this collectively. the for still critical notion and importantly, of You most is the demand relative ability have it. aggregation, And build that willingness that themselves. the the hold people most people pay it a

competitors is What the in a proven of will decision something, that think situations XXX% or pectacular I lot it entire be Jamaica, a in the a do the to get see demand of involved we'll willing in decision good we're their it. be back very which to the for accept are than high solution will that aggregate we're XX-year, is has end I That in for looking notion in water, that with hell less Puerto And a terminal. Rico.

I and think over over. this we'll see

a no competitive So, but there's doubt it's landscape.

we XXX locations. of these markets back is in XXX-plus think this you provided year or out the, front at the days getting other of countries, that so there, we've look XX-odd map traveling reason I'm again, I the been if

the if materially go. is do, higher goal the X, we that number get by it's year. Our at more to end lot and than to the of we're that do X, what I excellent fortunate another could X think I be a overtime. don't think

happens And to billion what been There's on where sounds oversimplified X deployed right? those gets billion math need things terminals to true. is and built of comment X out but business any the fully say, and these EBITDA. as an do generates $X So, it's associated really I we've with not staggering, like can just or $X and that that you

there but that but there's There's it doubt the no of doubt I no a in So, there demand that competition is it. lack manner. there's comprehensive a competition, is still think approaches for that

Ben Nolan

Great.

you a pretty Could Helpful. up will the thing, and all. at moment stands? update are us little the there way But the where on stay maybe attractive what's or you while. at didn't about talked think liquefier that thinking then prices obviously, another And bring we and Okay. supply. And you that for

Wes Edens

Brannen? Sure.

Brannen McElmurray

Yes.

You bet. is Brannen. This

and winter. clear satellite We side of image it the and why liquefaction it's kind level you a up of put site, the for for say, of a we'll ready on the So saw construction. kind vertical

all have in We the permits hand.

Everything for made be have forward hurdles cleared. to on So project. decision heat once those that the up go is would been

we're other the side. few kind it's project economically on I loose of a think side on is great working a a export basis. stand-alone of But belief our ends On on it, the

kind the And out, options in I liquefier, world, an of LNG think both that of side as as you decision. for independent lines take look kind side. make prices everything rightly a then are point once where by at up we'll given I we'd think

Wes Edens

I having mind, minds portfolio some right an oversupply the mean there's do. in in is our doubt to part thing the no my that long-term of

up you that about talking gas delivered if transportation, with Pennsylvania in I with LNG think and the to $X end and all-in cost about, use of the price liquefication we're of you the terminals. the numbers price

economic $X.XX. that It given substantial to over has the But that. be still the so. a in definitely do discount good overall something a time, a real Not incentive supply-demand provides of to will today, I happen think to market. just the part it incentive So that's Lesser characteristic tomorrow.

X you tons said, a build I it time. at think I

at sell You turbine it one a time.

soon, any themselves clear are a factors there. X is time summer somewhere those So but not to going reverse in

Ben Nolan

think But Chris, adding in if for Paz. there, think really lastly, La changes and you I could me. into any how turbine CapEx is maybe quickly you we should an maybe been on update the XXXX? then us there? program, about CapEx there's forward mentioned And going extra

Chris Guinta

Yes.

were So million. third adding by La turbine looked that that's which right. CapEx But over Brannen say did XXXX, we in there's we $XX into little about a a increased Paz, as flashing in we QX. that is we previous expected the what of on looking were $XX kind no except basis on as be during quarters. for QX million really exact spent to change

built from XXXX. CapEx no facility. $XX on million we from plus the be the as into really, cash look the Everything a fully with standpoint So change major will then remaining hand NCB

Operator

Tuohy next Craig from the comes Shere question And Brothers. with

Craig Shere

Two questions.

Liquefier hear Pennsylvania quick. correctly, I expensed, to Chris, very that very, be addition included had in development Did you had costs Puerto pre-FID to one, that that First that Rico?

Chris Guinta

Yes.

It's talking million Puerto you're you, of very during to $XX to related we I Pennsylvania about development which the $XX.X hear Rico. $X.X me think But I about difficult million related yes, is quarter, of million for expense. expense is to apologize. and had

are rules. able be accounting capitalized Those under are to just not costs that

That's through quarter-over-quarter. Pennsylvania, site-related costs why of you for those that QX actually SG&A higher number are kind the you improvements XXXX. in P&L running So see through make as

and look million we do expect SG&A a quarter. level to $XX QX As at we into XXXX, into out about

Craig Shere

turbine Mexico. on a some I about If plant, got maintenance for mitigating and commitments. the by little also longer fuel at question that Mexican third La offtake one, first increases the the the Paz new PPA providing happen would X upside And that I turbines understand just

portable stuff. In have addition, more versus I are turbines generation La rates understand maybe if built efficient stick that X,XXX kind Paz quicker the heat units correctly, of build,

this. on questions some got I So

having tap looking the of easier efficient more original to PPA? And seems construct for I'm duration are little of to how at How there Slide into other online? and of from X of fuel guidance indicate Peninsula? California? to with economically XX% a Gulf second the needs the quarter does stick this built? Also, California is of spare generation a expensive kind quarter of goal you're but And the on easy go modular the generation, why the coming that play to X it's the guess expecting side share. capacity did CFE more terminal versus I it is if on Baja, how all LNG modular First, long it kind delay And you capacity prospects that perhaps market store finally, market

Brannen McElmurray

Yes.

this So is Brannen.

in to me answer go order. question. just I'm bit going little me try to your -- reverse a let of Let sort

relate to So I your cycle? question essentially, question, How the that embedded your in Why market think simple is modular? of kind first of kind why does strategy?

got a market is to remember selling the Paz prices the rate you're approach to out simply may point $X.XX La pointed the lower I as as think times, has out, higher, but then be Wes in $X.XX. is in, the heat rightly in of number you CapEx. And speed, you

around. with even generator of cycle and simple rate, heat a rate, our our cheapest you're fuel So cost simple the heat still

importantly, power sort of you're XX a within and that's trend about need capitalizing months more think market I and to on immediate. a something But talking building for

markets so a than never. a more we a in worth of solution of is kind these what maybe And find kind is solution now lot

I part it. So think the that's of first

and that which exactly is price of CapEx we're because X of generator, of you're are best as the certainly is for roughly would half fuel you of of that The within is, I landed if in efficient a solution normally part looking of these the think top price strategy are, generally this kind our LNG the and not lot locations, expect. these the people And most you in market it second X. seeing the the generally, markets, given or competing speaking,

there's to think a the for market need a works a opportunity And et if also for I to it similar willingness then Mexico pay markets. capacity. the relates cetera, for And very to as capacity, other lot power, there's

itself. very asset the in particular be capacity So to we market expect this for lucrative

other And what for there you expect I the locations. plant give also blended power gas to think, an speaking, opportunity potential with will CFE sell gas generally is to we

Peninsula gasify the And you'll the asset so really that's with only around.

an So in lot a Rico. funny It's looks looks effectively Peninsula Baja the way, like Puerto island. Jamaica, a a like lot

so of person can And flag first a plant that territory. the will the kind all take

Craig Shere

Great, thank you.

Operator

with next And Spiro Credit from our the question Dounis comes Suisse. line you. Thank of

Spiro Dounis

Good morning everyone.

be And talking Just I but a to talk X. few centers country-specific, curious else? Angola are imagine next think, you assumption. power, it quick base year. of you Is something follow-ups. load I and what But realize if XX sort can't or data of part probably you we demand end then also, getting that the I could of about? Wes, remaining makes just the by mentioned And up Ireland terminals, the to what are region? probably

Wes Edens

in we also [Indiscernible] bunch a in be Jamaica parts can't a Mexico a I that be different and specifically. feel at on obviously, of prove islands. are can in smallest we you, you in we look a of significant where to away other think map, pipeline, of Mexico, and Caribbean, substantial are, got area. are significant. it other sense, [Indiscernible] very that West the can Coast terminal where the to for we the very good we've had that's we predict from Rico going both that us. when There's strength initiatives I good really Actually, and Puerto a the tell

into and we very a and Central move of interesting both prospective number South West Coast Coast, America, East once opportunities. there's America Throughout

And in the we next or in months. so I South way, America definitely end will shape up some like form XX feel in

industrial the on purposes. you power every And map virtually then to Africa, for and when excess go country gas that's the needs of an needs

to be in the I'll days. not translate how XX So logistical been so What's like is a question you this times X there of you in do weeks, demand? really question X package year. It's bear? bring I've a Africa it? it's a of there again

opportunity there. obviously, I there's that a So big think

million and they've of I country power. where roughly week Asia, X,XXX Southeast people, the there's XX last got In megawatts was operational in

the mean much I think electricity again, do. X/XX do. People Kenya use about people electricity in in States big use I of United X/XX the amount as Jamaicans people in So picture, Jamaica as about as

the feel it's tell kind But without hard I using you our numbers. superlatives explain So of can like really this. to opportunity and excessive from I list,

we a we've the or little solutions credibility But broader think on places feel is metric most across a that got are stop simply think those focus that prime these that achievable, more that current countries of see the should something not that X conservations pretty something XX engagement next that's bit we to based this, a you've the do. in X of the get and potential are because there got demand done. operating we I have we'll like we just we're get And terminals. and we likelihood is go months looking X the put for And think much with trying the a go we business. the in aspects to easier in we I for you it us. at handful out good. what space have convert I that's And think how that on the XX We're

the small-scale and on Mandela, for that side, has San done Brannen development we've set with worked his now And team us. the

are benefits kind proof-of-concept of them. what We factors to do the able and have many of difference. customers And a big examples make to we're many, that for those the

So.

Spiro Dounis

Got it. Understood.

supplier I on that. back was just the Chesapeake your can to believe go one there. if we liquefier, Second baseload

the week, thinking liquefier the basin? all change in and concern maybe just last to strategy the supplying at you're so going provided respect around does that with recent it And disclosure they the how about

Wes Edens

terrific Not pursued who in development financially. pay partner been their people Pennsylvania. for gas. we for us mean tough they've developments market to this are all. as a natural been It's Obviously, we've I a attention drilling

feel from like But and we right about something a good need we that. and lot debates the obviously, [indiscernible] that. of think it's So [indiscernible] geographically prospect there's a if we really place

Spiro Dounis

could, I the until near to mentioned of wrapping rate next respect year. the up, I in terminal later run think hitting with guess, if I one that term. higher Last it. financing. Got course, just you not you're But Chris, really that

expected I guess in guess, some just there the in about Is you sort that as earnings how liquidity? going there more pull general? ability would for leverage feature grow? I just So the we as the business to define then target on be your think appropriate should of broadly, accordion what And to

Chris Guinta

Yes.

ramp the happens quickly mean I So very over XXXX.

facility said, the like we the So expect to done, get XX I days. in next

the to have XXX lenders sheets piece do together best and business. hopefully, the the that to We fund solution trying closing. fund for evaluating time January term the frame. growth to of So we're it expect at given we'd And now the us love December,

accordion not like draw. So it's or an it's delayed

projecting. key the building future numbers the in believing developments. are the I we're going think people flow that's that be And in and to out to the cash

Spiro Dounis

kind put of it? you where And it. would of Got in just leverage terms target, the

Chris Guinta

again? that Say sorry. I'm

Spiro Dounis

terms in target, right the the how you what long-term Just leverage areas about do business? of for the think

Chris Guinta

Yes.

in So they're we've I think bit operational that past. once a modest mean about these talked assets really little the is appropriate. on we leverage

become to of is And you a think operational, We our company. balance the finance we're But fund they're investment-grade an goal I once plan with we on to development, want While that's to sheet. working think that do they're the or under really goal lot that our cash have them. toward. opportunities

Operator

with the Chappell And Evercore. line Jon our comes of question next from

Jon Chappell

for two large-scale or X being terms about of but we of gallons the growth 'XX. Just your gallons in-discussion Mexico. for you. maybe X in MOUs of, the quarter million ones. million then also If X.X Brannen, run X.X think from quick rate Puerto buckets million of for the the fourth think, I and X.X show million the Rico None those, kind with, up Jamaica, X.X

that address think of maybe could buckets the 'XX? super realistically, it and you Is online future? kind hit early those rate? of When you is into realistically run come separately? can So further that each those do Or

Brannen McElmurray

Yes.

things you year. our showing. up first all, not second half of will the up expectation I I that correct that mentioned X in those in But are we're is next think the show items So numbers the showing think, of you're

Wes Edens

a the terminals. new mean of kind to I terminals, [indiscernible] is XX-month development good XX-

So we're on be cases of the these X the doing all work pre, summer. lot in will that there particular a [indiscernible] perhaps next do of

have Brannen? we our you months a good say, guess, XX new is to terminal, XX For wouldn't

Brannen McElmurray

Yes.

Wes Edens

is the And time for of by [indiscernible] from months turn average X or we small-scale about X ourselves. the there stuff, before though, on probably on get

those small-scale volumes I in So for in volumes that first The customers second half can into year, you turn is in see terms of think be the gallons of the half year. going of bigger on the bring to year, used XXXX. next the could developments in we

Jon Chappell

That Okay. makes sense.

a the now mean So, and months 'XX, now X were higher of your quarter XX. margin, XQ just operating seems you and public back-end for for only million much ramp just we if 'XX in in for kind May, loaded think ago and by X since But months 'XX gallons then operating of fourth same either the if the margins quarter that still of rate, of XX, and the it volume you're more became about looking quarter you an as I in call. the you by much a you is kind run you're X.X I will, fourth ago think earnings X.X said looking first and the X very or operational rate looking prowess, evolution million run

a the next can range you X more reason quarters? the operational that guidance not that the is being if customers Is bit that ready? back-end little of kind about, much just over speak loaded unexpected? we for hiccups were So What's look

Wes Edens

of noise construction the projects. X month slippage just really or on It's a

difference whether we projects that decades. most that's and get building than budget of it's building, terms quarter of it's expect much point be for so a construction modest as so. amount define are, are highly industrial there, that, an office on a as actively very stuff, So We assets some get and shipped an they're But we building, these that for these that productive part, that, an slippage are of on the out, apartment different and to frankly, much we delay not in relatively doesn't we are and building. or very time,

it's of these the cash material context on of X And of or while and company periods the of really assets we're them, as in reporting movement the a just public noise. so a our month utility the flow it's quarter-to-quarter, generation

So.

Operator

now call at turn to to I any for the like not showing further further any back remarks. I'm And you. Alan Andreini would this time. Thank questions

Alan Andreini

all for you participating call. Thank on today's

If to reach you to have Josh Kane any follow-up questions, feel free Suski. me, or out Jake

information release. contact press QX on Our our is

Finally, to QX. Thank after we look you updating forward you.

Operator

concludes Ladies your today's call. and gentlemen, conference participation. you Thank for this

disconnect. You may now

New Fortress Energy (NFE) 13 Nov 192019 Q3 Earnings call transcript