New Fortress Energy Inc.

Good day, and thank you for standing by, and welcome to the NFV Fourth Quarter 2021 Earnings Card. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 on your telephone. Please be advised this call is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your host today, Brett McGill, Managing Director and Head of Investor Relations. I may begin.

Thank you, Justin. Good morning, everybody, and welcome to New Fortress Energy's fourth quarter and full year 2021 earnings call. This call is being recorded and will be available by replay until March 8th. We plan to reference our Q4 2021 investor presentation that we released this morning. The presentation is posted on our website and will remain available after today's call. The presentation includes a series of important disclosures related to forward-looking statements and non-GAAP financial measures. We encourage participants to review these important disclosures in addition to the description of risk factors contained in our SEC filings. Joining me here today are Wes Edens, CEO and Chairman of the Board, and Chris Junta, Chief Financial Officer. Also joining today's call are Managing Directors Andrew Deedy and Cassiandra Sinem. as well as Ken Nicholson and Patrick Hughes, the Chief Executive and Chief Commercial Officers of our hydrogen business, NFE Zero Parks. And with that, I'll hand the call over to Wes.

Great. Thanks very much, Brett, and welcome, everyone. As usual, we have posted to the website a deck that we'll be referring to as we flip through. We have a lot of material to go through today, and we'll try and do so quickly and get to questions here in short order. So start with page number four. So first, the results. Obviously, record quarter for us, $334 million, and EBITDA for the fourth quarter in 2021. Full year 2021, $605 million. The business has grown and matured dramatically, and this really does mark the end of the beginning of us as a company. Eight years ago, we started the company, have been a development company as we've been developing our terminals and portfolio of downstream assets. The financial results mirror that. So, full year in 2019, adjusted EBITDA at negative $115 million as we were investing in our business. full year 2020, basically break even $33 million, and then $605 million this year. And very importantly, we are poised, we believe to be very, very profitable in the future. So our forecast for 2022 is one plus billion dollars. We think there's a substantial amount of upside to that number. Roughly 85% of that result is baked essentially already, assuming that things work out as planned. So we're here on March 1st. We have 10 months left in the year. We have lots and lots and lots of opportunities in front of us. And so there's lots of growth to come. Page number five. As I said, we started the business eight years ago from a blank piece of paper. And it's interesting to see how it has really evolved. And now the architecture of the business to me, is actually quite clear. We began the business by beginning with our customers. We started building downstream terminals and power assets around the world to solve fuel issues, energy poverty issues, and that is the core of our business, and that's what remains today. That part of our business has grown dramatically. This time last year, we had five terminals. Today, we have 11 in operations or under development, eight geographies, And also a nuance, but an important one, is we have really shifted our focus from some of the smaller, more bespoke markets that are great markets and have great opportunities for us to larger markets with higher volumes that play a key part of our strategy going forward. Also, about this time last year, in January, we made a very large acquisition in two pieces. One was to buy the Hygo assets, which were terminals under development, as well as a large power plant that's under development in Sergipe, Brazil. We also then bought into large portfolio ships. The ships and logistics business is how we actually get our products to our markets, to our customers. Those markets obviously have tightened up dramatically in the last year. Both of those acquisitions today look like very well-timed. They have worked out very well, and so we've added dramatically to our midstream capabilities to match the downstream capabilities. The last part of our business and the focus for much of this presentation we'll talk about is then the gas. Gas is obviously the biggest cost that we have as a business. It has been an intensifying point of focus for us. for the last 18 months. Obviously, the results, you know, recently, the geopolitical results in Europe with Russia, with all the geopolitical issues have only intensified with that. But what we have done, when you look at our portfolio from a year ago, is we've roughly doubled the size of the portfolio, more than doubled the size of it. And Cassiandra, who runs our gas part of the business, will talk about that substantially. We are poised to roughly double it again this year. And this is the feedstock that we then provide to all of our customers. So... And those three businesses, the way we think of the business now is we built this downstream business, we then have all the capabilities to actually manage our flow of product that goes into them, and with the cheapest and most flexible form of gas, we can do the best job of servicing our customers, and that's what creates the opportunities for us. You know, page number six, Vast LNG, which we've talked about over the last year or so, is now very much in the gun sites. We announced yesterday that we had our first transaction on the tolling side. When you think of fast LNG, the way we think of it is it's just simply a way to move liquefaction to the offshore stranded gas assets and to turn that gas into something which is an exportable commodity that can then be used to supplement our portfolio. The core of our gas portfolio is these base long-term supply contracts that we've got. And so as we've added them in from the largest gas producers in the world, that's not a focus that's going to change from us. In fact, it's only going to grow. But the FLNG basically is a way for us to add either long-term high-quality cash flows by providing our equipment to lease into a situation like Congo, which we're doing with ENI, or to actually add to our own portfolio with market volumes that we can then actually in turn provide to our customers or sell into the business lines. When you look at the next page, this is the dynamic that is created. We then have a very stable portfolio of gas as we match up our long-term gas contracts with our long-term offtake from our customers. that by adding in market volumes on top of it, we create the dynamic that basically creates a long LNG basis, but the business model significantly mitigates the risk to it. So when you think of being long or short a commodity, that sounds like a scary proposition and one that is subject to market risk. The way we think of it is we created basically one that's got bond-like downside in that we have marginal volumes that we have in our portfolio that To the extent that the market is normalized, we simply deliver those to our customers and to our terminals and our power plants around the world. And then to the extent that there is a market dislocation, as we're going through one right now, we have the ability to sell those into the marketplace and realize windfall opportunities. The dimensions of this can be significant, and we'll talk about that a little bit and go through an example of it. But, you know, we've been through a period of relatively stability since we started in the business from 2014 until recently. But, of course, since last summer and then more recently in the last, you know, handful of weeks, there's been significant disruptions. our business is oriented about taking advantage of those kinds of opportunities in addition to the baseload. So bond-like downside, equity-like upside is the portfolio that we've created.