New Fortress Energy 2Q24 Results
On Friday, New Fortress reported results, and they were disappointing. In recent weeks, we had noted that the stock was falling because analysts were lowering estimates due to reduced volumes from Puerto Rico, with the market expecting around $200MM EBITDA and $0.09 EPS. They reported $120MM EBITDA and losses of $0.41 EPS.
In our opinion, what has significantly impacted the stock is the reduced guidance to $1.4-1.5 billion for 2024 (dependent on the $500MM Puerto Rico compensation, which seems to be well advanced, but we find it quite risky to count on it for 2024 – they have claimed $639MM) and $1.3 billion for 2025, which is practically half (something they themselves never believed) of their previous projections.
The current 2024 number aligns fairly well with our previous estimates, and for 2025, we think they are (for the first time ever) being a bit conservative (90% of our expected revenues (2024 & 2025) are contracted, excluding the $500MM claim for Puerto Rico). The million-dollar question is why such a drastic change. We think the situation is critical (due to high debt) and that this presentation was aimed at convincing the lender of the refinancing.
Let’s break it down