Executive Summary / Key Takeaways

• New Fortress Energy is transitioning from a heavy capital investment phase to focusing on operational execution, organic growth from completed assets, and strategic deleveraging to unlock value in its integrated gas-to-power and LNG infrastructure portfolio.
• Despite a challenging Q1 2025 marked by an operating loss and negative operating cash flow due to reduced earnings post-Jamaica sale, increased costs, and commodity price impacts, management has identified substantial doubt about the company's ability to continue as a going concern absent successful strategic actions.
• The recent $1.055 billion Jamaica business sale is a crucial first step in a broader strategic plan to simplify the balance sheet, reduce corporate debt, and pivot towards asset-level financing, aiming to extend debt maturities and lower borrowing costs.
• NFE possesses key technological differentiators, including its Fast LNG modular liquefaction units and rapid-deployment modular power systems, which offer quantifiable advantages in speed, efficiency, and cost-effectiveness compared to traditional methods, providing a competitive moat in niche and emerging markets.
• Significant growth opportunities exist in core markets like Brazil (contracted EBITDA growing to $470M by 2026, plus potential $400M from power auction) and Puerto Rico (conversions of diesel plants, new generation RFPs), alongside new ventures like Klondike (data center power), which are expected to drive future earnings and free cash flow with minimal additional CapEx.

Setting the Scene: Building an Integrated Energy Bridge

New Fortress Energy Inc. (NASDAQ: NFE) was founded with an ambitious mission: to combat energy poverty and accelerate the global shift towards reliable, affordable, and cleaner energy. The company operates as a vertically integrated energy infrastructure entity, spanning the entire value chain from natural gas procurement and liquefaction to logistics, shipping, terminals, and power generation. NFE's historical journey has been defined by significant capital investment to build this comprehensive infrastructure, establishing beachheads in markets underserved by traditional energy solutions, particularly across the Caribbean, Latin America, and more recently, expanding its footprint globally and into new energy vectors like hydrogen and data center power.

Within the broader energy landscape, NFE positions itself as a provider of rapid, turnkey energy solutions. Its strategy centers on developing and deploying infrastructure faster and often more economically than conventional large-scale projects. This approach is underpinned by key technological differentiators, most notably its Fast LNG (FLNG) modular liquefaction technology and its rapid-deployment modular power systems. The FLNG design, pairing modular liquefaction with floating marine infrastructure, is intended to offer a lower cost and significantly faster deployment schedule compared to traditional onshore liquefaction plants. For instance, the first FLNG unit off Altamira, Mexico, was placed into service in Q4 2024, demonstrating the speed potential. Similarly, NFE's modular power systems, like those deployed in Puerto Rico, showcased the ability to install hundreds of megawatts of power generation capacity in a matter of months (425 MW in 120 days in Puerto Rico), providing high reliability (99% availability in Puerto Rico). These technological capabilities are designed to provide NFE with a competitive edge, enabling quicker market entry and potentially capturing opportunities ahead of larger, more traditional players.

The energy infrastructure sector is intensely competitive, featuring a mix of large, diversified energy companies and specialized players. Direct competitors like Cheniere Energy (LNG) focus on large-scale LNG exports, benefiting from significant economies of scale but typically involving longer project timelines. Excelerate Energy (EE) specializes in FSRUs, competing directly in the floating infrastructure space with technological strengths in regasification. Sempra Energy (SRE) is a diversified player with significant infrastructure assets, including LNG terminals, particularly in North America and Mexico, often leveraging regulatory expertise and scale. While NFE's integrated model and modular technology offer advantages in speed and adaptability for specific markets, it faces competitive pressures related to scale, operating costs, and financial strength compared to these larger rivals. NFE's estimated 2-5% aggregate market share in global LNG and gas-to-power infrastructure positions it as a niche player relative to giants like Cheniere (10-15% share), highlighting the challenge of scaling its unique model against established players.

Operational Footprint and Recent Performance

NFE's operational footprint spans two reportable segments: Terminals and Infrastructure, and Ships. The Terminals and Infrastructure segment is the core of its integrated model, encompassing liquefaction, regasification, power generation, and associated logistics across key geographies including the United States (Puerto Rico), Brazil, and Mexico. The Ships segment primarily consists of vessels chartered to third parties, though these are expected to transition to supporting NFE's own operations over time.

Recent operational focus has been on bringing major development projects online. The first Fast LNG unit off Altamira, Mexico, was placed into service in Q4 2024 and has demonstrated promising performance, reaching approximately 120% of nameplate capacity in January 2025 prior to planned maintenance. Construction continues on FLNG 2, an onshore unit at the Altamira import facility, with modules over 50% complete as of February 2025 and onshore construction expected to commence in summer 2025. In Brazil, significant progress is being made on the Barcarena Power Plant (630 MW combined cycle, expected completion 2025) and the PortoCem Power Plant (1.6 GW simple cycle, expected completion 2026), which will utilize gas from the operational Barcarena Facility. The Santa Catarina Facility in Southern Brazil also became operational in Q4 2024. In Nicaragua, the Puerto Sandino Facility and power plant are substantially complete, with operations expected to begin in Q1 2025.

Financially, the first quarter of 2025 presented challenges. Total revenues were $470.5 million, a significant decrease from $690.3 million in Q1 2024. This decline was primarily driven by the termination of the grid stabilization project in Puerto Rico in early 2024, although partially offset by higher LNG cargo sales ($182.7 million in Q1 2025 vs. none in Q1 2024) and higher Henry Hub pricing. Total segment operating margin fell sharply to $106.0 million in Q1 2025 from $384.3 million in Q1 2024. The Terminals and Infrastructure segment bore the brunt of this decline, with its operating margin dropping from $350.1 million to $74.6 million, while the Ships segment saw a more modest decrease from $34.2 million to $31.4 million.

Operating expenses increased in Q1 2025 compared to Q4 2024, notably in operations and maintenance due to the new facilities placed into service. Cost of sales also rose due to higher cargo sales and an increased weighted average cost of gas purchased ($9.57/MMBtu in Q1 2025 vs. $6.96/MMBtu in Q1 2024). Interest expense saw a substantial increase in Q1 2025, reaching $213.7 million compared to $77.3 million in Q1 2024, largely due to lower capitalized interest as projects became operational, increased borrowing costs from new debt, and the recognition of fees upon debt amendments. These factors contributed to an operating loss of $18.5 million and a net loss of $197.4 million in Q1 2025, contrasting with operating income and net income in the prior year period. Cash flow from operations was negative in Q1 2025, a significant shift from positive operating cash flow in Q1 2024.

Financial Health, Liquidity, and Capital Structure

As of March 31, 2025, NFE's balance sheet reflected total assets of $13.03 billion and total liabilities of $11.12 billion, including long-term debt of $8.93 billion. The company's debt-to-equity ratio stands at a high 5.51 (TTM), indicating significant leverage. Current assets totaled $1.47 billion against current liabilities of $1.47 billion, resulting in a current ratio of 1.00 (TTM).

The Q1 2025 operating loss and negative operating cash flows, coupled with upcoming debt maturities and expected cash tax payments from the Jamaica sale, led management to conclude there is substantial doubt about the company's ability to continue as a going concern, absent successful execution of specific strategies. A critical near-term challenge is the maturity of the $510.9 million outstanding on the 2026 Notes in September 2026, which triggers springing maturities on the $2.7 billion New 2029 Notes and the Revolving Facility if more than $100 million remains outstanding 91 days prior.

In response, NFE is actively pursuing strategies to enhance liquidity and address its capital structure. The sale of the Jamaica Business, completed in May 2025 for $1.055 billion, is a cornerstone of this effort, yielding approximately $678.5 million in net proceeds (plus $98.6 million in escrow). These proceeds were strategically used to repay $270 million of Revolving Facility commitments and $55 million of Term Loan A debt, as per recent credit agreement amendments. Further actions include evaluating additional asset sales, capital raising, debt amendments, and refinancing transactions. Management also plans to delay certain discretionary payments, including capital expenditures and dividends (dividends to shareholders are currently restricted under intercompany agreements from Q4 2024 refinancing). Pro forma liquidity post-Jamaica sale is estimated at over $1.1 billion, providing some buffer.

The strategic goal is to simplify the capital structure by shifting towards asset-level financing, better matching the long-term duration of the underlying assets (like FLNG and Brazil projects) with long-term, lower-cost debt. This is intended to reduce corporate leverage and unlock value. Committed capital expenditures remain significant at approximately $881 million as of March 31, 2025, primarily for the onshore FLNG project, Puerto Sandino, and the Brazil power plants, although a portion of the Brazil CapEx ($294 million) is secured by dedicated financing.

Outlook, Guidance, and Growth Vectors

Management's outlook for 2025 anticipates a rebound from the Q1 performance, projecting EBITDA plus gains for the year to be between $1.25 billion and $1.5 billion, an increase from previous estimates. This revised guidance incorporates expected gains from strategic transactions, such as the Jamaica sale ($430 million book gain), potential settlement of the $659 million Puerto Rico emergency power services claim, and potential monetization of FSRU sub-charters (estimated $200 million upfront value from two recently signed charters). The core Adjusted EBITDA guidance for 2025 is $1 billion, based on approximately 170 TBtu of supply at an average margin of $7 per MMBtu, plus around $100 million from ship operations. Over 90% of the revenues supporting this $1 billion guidance are already contracted.

Growth is expected to accelerate in the second half of 2025 as key assets come fully online. The CELBA 2 power plant in Brazil is slated to commence cash flows in H2 2025, contributing to the projected $470 million in contracted EBITDA from Brazil by 2026 (including Barcarena terminal, power plants, and TGS terminal). The upcoming Brazil power auction in 2025 presents a significant opportunity, potentially adding another $400 million to Brazil's EBITDA through a mix of NFE-owned power plants and gas supply contracts to third parties. In Puerto Rico, the new administration's focus on converting diesel-fired power plants to natural gas and launching RFPs for new generation capacity offers substantial growth potential beyond the current island-wide gas supply contract (recently extended for 100 days as a bridge to a new RFP). Converting the 925 MW of diesel plants could save Puerto Rico billions in fuel costs and significantly increase NFE's gas sales volumes.

Beyond its core gas-to-power business, NFE is pursuing new growth vectors. The Zero division is developing the ZeroPark I green hydrogen project in Texas, with a binding offtake commitment secured. The newly launched Klondike business aims to provide rapid, reliable power solutions to hyperscale data center customers, leveraging NFE's modular power technology and existing land portfolio in strategic locations like Pennsylvania and Ohio. This venture seeks to address the significant power constraints faced by the data center industry and is viewed as a potentially high-growth, capital-light business that could eventually be spun off.

Risks and Challenges

Despite the strategic initiatives and growth prospects, NFE faces significant risks. The most immediate is the substantial doubt about its ability to continue as a going concern, contingent on successfully executing strategies like asset sales and refinancing that are not fully within management's control. Failure to address the 2026 Notes maturity and the associated springing maturities on other debt could severely impact liquidity and financial stability.

Operational and construction risks persist, particularly with completing the remaining development projects like the onshore FLNG 2 and Brazil power plants, which could face delays or cost overruns. The Alunorte arbitration claim in Brazil, seeking $65.4 million for alleged supply delays, represents a legal contingency with an uncertain outcome. Regulatory and permitting challenges continue to pose risks, as seen with the ongoing USCG/FERC discussions regarding San Juan operations and the uncertainty surrounding the Ireland facility's development despite favorable court rulings.

Customer concentration, particularly with government entities like PREPA and CFE, exposes NFE to payment risks and potential contract renegotiations or terminations. Commodity price volatility, while partially mitigated by matched supply and demand contracts, still presents exposure, especially concerning the cost of procured LNG and the value of excess cargoes. The identified material weaknesses in internal control over financial reporting, related to personnel sufficiency and debt disclosure, highlight internal control risks that need remediation to ensure accurate financial reporting and maintain investor confidence. The significant decline in market capitalization also poses a risk, potentially triggering goodwill impairment charges.

Conclusion

New Fortress Energy stands at a critical juncture, transitioning from a period of heavy capital expenditure to one focused on operationalizing its extensive infrastructure network and strategically optimizing its financial structure. The company has successfully built a diversified portfolio of integrated gas-to-power and LNG assets across key emerging markets, underpinned by technological advantages in modular liquefaction and rapid power deployment. While recent financial performance, particularly in Q1 2025, reflects the challenges of this transition and highlights significant liquidity and going concern risks, management is actively pursuing a strategic plan centered on asset sales, deleveraging, and a shift towards asset-level financing.

The successful completion of the Jamaica business sale is a vital step in this plan, providing much-needed liquidity and reducing corporate debt. The outlook for 2025 and beyond is tied to the successful ramp-up of recently completed assets like FLNG 1 and Santa Catarina, the commissioning of major projects in Brazil and Nicaragua, and the realization of value from strategic initiatives and growth vectors in Brazil, Puerto Rico, and new ventures like Klondike. The core investment thesis hinges on NFE's ability to execute this strategic pivot, unlock the inherent value in its long-term contracted assets, navigate its debt maturities, and leverage its technological edge to capture significant growth opportunities in markets demanding cleaner, more reliable, and rapidly deployable energy solutions. Investors will need to closely monitor the progress of debt restructuring, the realization of expected gains, and the operational performance of key assets as NFE seeks to stabilize its financial footing and deliver on its long-term potential.