Cheniere Energy, Inc. (NYSE American: LNG):
Summary of First Quarter 2018 Results
(in millions, except LNG data)
Three Months Ended March
31, 2018 2017 % Change Revenues $
2,242 $ 1,211
85
%
Net income1 $ 357 $ 54
561
%
Consolidated Adjusted EBITDA2 $ 907 $ 483
88
%
Weighted average number of common shares outstanding—basic 235.5
232.4 Weighted average number of common shares outstanding—diluted
238.0 232.7 LNG exported: Number of cargoes 67 43
56
%
Volumes (TBtu) 244 152
61
%
LNG volumes loaded (TBtu) 241 154
56
%
Revised 2018 Full Year Guidance (in
billions)
Previous
Revised Consolidated Adjusted EBITDA2 $ 2.0 -
$ 2.2 $ 2.3 - $ 2.5 Distributable Cash Flow2 $ 0.2 -
$ 0.4 $ 0.35 - $ 0.55 1 Net income as used herein refers to
Net income attributable to common stockholders on our Consolidated
Statements of Income. 2 Non-GAAP financial measure. See
“Reconciliation of Non-GAAP Measures” for further details.
Recent Highlights
Strategic
- In February 2018, we entered into two
LNG Sale and Purchase Agreements (“SPAs”) with PetroChina
International Company Limited, a subsidiary of China National
Petroleum Corporation, for the sale of approximately 1.2 million
tonnes per annum (“mtpa”) of LNG through 2043, with a portion of
the supply beginning in 2018 and the balance beginning in
2023.
- In January 2018, we entered into a
15-year LNG SPA with Trafigura Pte Ltd for the sale of
approximately 1 mtpa of LNG beginning in 2019.
Operational
- As of April 30, approximately 90
cargoes have been produced, loaded, and exported from the SPL
Project (defined below) in 2018. To date, approximately 350
cumulative LNG cargoes have been exported from the SPL Project,
with deliveries to 26 countries and regions worldwide.
- During the first quarter 2018, we
delivered 30 cargoes totaling over two million tonnes of LNG
exported from the SPL Project and sold by our integrated marketing
function.
Financial
- For the first quarter of 2018, we
achieved Consolidated Adjusted EBITDA of over $900 million and
Distributable Cash Flow of approximately $270 million.
- In March 2018, the date of first
commercial delivery (“DFCD”) was reached under the 20-year SPA with
GAIL (India) Limited relating to Train 4 of the SPL Project.
- In April 2018, we engaged financial
institutions to assist in the structuring and arranging of up to
$6.4 billion of credit facilities for Cheniere Corpus Christi
Holdings, LLC through an amendment and upsize of its existing
credit facilities, the proceeds of which will be used to fund a
portion of the costs of developing, constructing, and placing into
service three natural gas liquefaction trains (“Trains”) and
related facilities of the CCL Project (defined below), and the
related pipeline being developed near Corpus Christi, Texas and for
related business purposes.
- In April and May 2018, we acquired a
total of 21,453,482 common shares of Cheniere Energy Partners LP
Holdings, LLC (“Cheniere Partners Holdings”) (NYSE American: CQH)
in a series of privately negotiated transactions pursuant to share
purchase and exchange agreements, in exchange for a total of
10,278,739 unregistered shares of Cheniere. Subsequent to the
completion of these transactions, our ownership of Cheniere
Partners Holdings is approximately 91.9%.
Liquefaction Projects Update
SPL Project CCL Project
Liquefaction Train Trains 1-4
Train 5 Train 6 Trains
1-2 Train 3 Project Status Operational
UnderConstruction
Permitted
UnderConstruction
PermittedLNTP Issued (1)
Expected Substantial Completion Complete 1H 2019 —
T1 - 1H 2019T2 - 2H 2019
— Expected DFCD Window Start Complete 2H 2019 —
T1 - 1H 2019T2 - 1H 2020
— (1) Limited Notice to Proceed (“LNTP”)
Cheniere Energy, Inc. (“Cheniere”) (NYSE American: LNG) reported
net income1 of $357 million, or $1.52 per share—basic and $1.50 per
share—diluted, for the three months ended March 31, 2018, compared
to net income of $54 million, or $0.23 per share (basic and
diluted), for the comparable 2017 period. The increase in net
income was primarily due to increased income from operations as a
result of additional Trains in operation at the SPL Project,
increased derivative gain associated with our interest rate swap
position, and decreased loss on early extinguishment of debt,
partially offset by increased allocation of net income to
non-controlling interest and increased interest expense, net of
amounts capitalized.
Consolidated Adjusted EBITDA2 for the three months ended March
31, 2018 was $907 million, compared to $483 million for the
comparable 2017 period. The increase in Consolidated Adjusted
EBITDA was primarily due to increased income from operations.
During the three months ended March 31, 2018, 67 LNG cargoes
were exported from the SPL Project, none of which were
commissioning cargoes. Three cargoes exported from the SPL Project
and sold on a delivered basis were in transit as of March 31,
2018.
“Our record first quarter 2018 results are the product of a
robust LNG market and superior execution throughout the company,
and we are raising our full year 2018 guidance to reflect our year
to date performance coupled with LNG market pricing that is
stronger and more durable than we previously forecast,” said Jack
Fusco, Cheniere’s President and CEO. “Solid LNG market fundamentals
and the strategic positioning of our world-class LNG platform
reinforce my confidence in our long-term growth prospects. We
continue to progress Train 3 at Corpus Christi and expect to make a
positive Final Investment Decision on that project in the coming
weeks.”
LNG Volume Summary
The following table summarizes the volumes of operational and
commissioning LNG that were loaded from the SPL Project and for
which the financial impact was recognized on our Consolidated
Financial Statements during the three months ended March 31,
2018:
Three Months Ended March 31, 2018 (in TBtu)
Operational Commissioning Volumes loaded
during the current period 241 — Volumes loaded during the prior
period but recognized during the current period 43 — Less: volumes
loaded during the current period and in transit at the end of the
period (11 ) — Total volumes recognized in the current period 273
—
In addition, during the three months ended March 31, 2018, we
recognized the financial impact of volumes of 11 TBtu on our
Consolidated Financial Statements related to LNG cargoes sourced
from third parties.
Summary of Financial
Performance
First Quarter 2018 Results
Our financial results are reported on a consolidated basis. Our
ownership interest in Cheniere Energy Partners, L.P. (“Cheniere
Partners”) (NYSE American: CQP) as of March 31, 2018 consisted
of 100% ownership of the general partner of Cheniere Partners
and 82.7% ownership interest in Cheniere Partners
Holdings which owned a 48.6% limited partner interest in
Cheniere Partners on March 31, 2018.
Total revenues increased $1.0 billion during the three months
ended March 31, 2018 as compared to the three months ended March
31, 2017. Total operating costs and expenses increased $660 million
during the three months ended March 31, 2018, compared to the three
months ended March 31, 2017. The increases in revenues and total
operating costs and expenses for the three months ended March 31,
2018, compared to the three months ended March 31, 2017, were
primarily driven by the timing of completion of Trains at the SPL
Project and the length of each Train’s operations within the
periods being compared.
Selling, general and administrative expense included share-based
compensation expenses of $18 million for the three months ended
March 31, 2018, compared to $12 million for the comparable 2017
period.
Net income attributable to non-controlling interest increased
$124 million during the three months ended March 31, 2018 as
compared to the three months ended March 31, 2017, primarily as a
result of a higher non-controlling percentage interest due to the
conversion of Cheniere Partners’ Class B units to common units in
August 2017 and an increase in income recognized by Cheniere
Partners and Cheniere Partners Holdings, partially offset by the
impact of amortization of the beneficial conversion feature on
Cheniere Partners’ Class B units, which increased net income
attributable to non-controlling interest during the three months
ended March 31, 2017 but had no impact in the comparable 2018
period.
Capital Resources
As of March 31, 2018, we had cash and cash equivalents of
$715 million available to us. In addition, we had current and
non-current restricted cash of $1.7 billion designated for the
following purposes: $561 million for the SPL Project, $83 million
for the CCL Project, $916 million for restricted purposes under the
terms of Cheniere Partners’ credit facilities and $147 million for
other restricted purposes.
Liquefaction Projects
SPL Project
Through Cheniere Partners, we are developing up to six Trains at
the Sabine Pass LNG terminal adjacent to the existing
regasification facilities (the “SPL Project”). Each Train is
expected to have a nominal production capacity, which is prior to
adjusting for planned maintenance, production reliability, and
potential overdesign, of approximately 4.5 mtpa of LNG and an
adjusted nominal production capacity of approximately 4.3 to 4.6
mtpa of LNG. Trains 1 through 4 are operational, Train 5 is under
construction, and Train 6 is being commercialized and has all
necessary regulatory approvals in place.
CCL Project
We are developing up to three Trains near Corpus Christi, Texas
(the “CCL Project”). Each Train is expected to have a nominal
production capacity, which is prior to adjusting for planned
maintenance, production reliability, and potential overdesign, of
approximately 4.5 mtpa of LNG. Trains 1 and 2 are under
construction, and Train 3 has been commercialized, is in the
process of being financed, and has all necessary regulatory
approvals in place. We expect to make a positive Final Investment
Decision with regard to Train 3 of the CCL Project in the first
half of 2018.
Corpus Christi Expansion Project
We are developing up to seven midscale liquefaction trains
adjacent to the CCL Project (the “Corpus Christi Expansion
Project”), each with an expected nominal production capacity, which
is prior to adjusting for planned maintenance, production
reliability, and potential overdesign, of approximately 1.4 mtpa of
LNG. The total expected nominal production capacity of the seven
midscale Trains is approximately 9.5 mtpa of LNG. We have initiated
the regulatory approval process with respect to the Corpus Christi
Expansion Project.
Investor Conference Call and
Webcast
We will host a conference call to discuss our financial and
operating results for the first quarter on Friday, May 4,
2018, at 10 a.m. Eastern time / 9 a.m. Central time. A listen-only
webcast of the call and an accompanying slide presentation may be
accessed through our website at www.cheniere.com. Following the
call, an archived recording will be made available on our
website.
About Cheniere
Cheniere Energy, Inc., a Houston-based energy company primarily
engaged in LNG-related businesses, owns and operates the Sabine
Pass LNG terminal in Louisiana. Directly and through its
subsidiary, Cheniere Energy Partners, L.P., Cheniere is developing,
constructing, and operating liquefaction projects near Corpus
Christi, Texas and at the Sabine Pass LNG terminal, respectively.
Cheniere is also exploring a limited number of opportunities
directly related to its existing LNG business.
For additional information, please refer to the Cheniere website
at www.cheniere.com and Quarterly Report on Form 10-Q for the
quarter ended March 31, 2018, filed with the Securities and
Exchange Commission.
Forward-Looking Statements
This press release contains certain statements that may include
“forward-looking statements” within the meanings of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. All statements, other than statements of
historical or present facts or conditions, included herein are
“forward-looking statements.” Included among “forward-looking
statements” are, among other things, (i) statements regarding
Cheniere’s business strategy, plans and objectives, including the
development, construction and operation of liquefaction facilities,
(ii) statements regarding expectations regarding regulatory
authorizations and approvals, (iii) statements expressing beliefs
and expectations regarding the development of Cheniere’s LNG
terminal and pipeline businesses, including liquefaction
facilities, (iv) statements regarding the business operations and
prospects of third parties, (v) statements regarding potential
financing arrangements and (vi) statements regarding future
discussions and entry into contracts. Although Cheniere believes
that the expectations reflected in these forward-looking statements
are reasonable, they do involve assumptions, risks and
uncertainties, and these expectations may prove to be incorrect.
Cheniere’s actual results could differ materially from those
anticipated in these forward-looking statements as a result of a
variety of factors, including those discussed in Cheniere’s
periodic reports that are filed with and available from the
Securities and Exchange Commission. You should not place undue
reliance on these forward-looking statements, which speak only as
of the date of this press release. Other than as required under the
securities laws, Cheniere does not assume a duty to update these
forward-looking statements.
(Financial Tables Follow)
Cheniere Energy,
Inc.Consolidated Statements of Income(in millions,
except per share data)(1)(unaudited)
Three Months Ended March 31,
2018 2017 Revenues LNG revenues $ 2,166 $
1,143 Regasification revenues 65 65 Other revenues 10 3
Other—related party 1 — Total revenues 2,242 1,211
Operating costs and expenses Cost of sales (excluding
depreciation and amortization expense shown separately below) 1,178
624 Operating and maintenance expense 140 78 Development expense 1
3 Selling, general and administrative expense 67 54 Depreciation
and amortization expense 109 70 Restructuring expense — 6
Total operating costs and expenses 1,495 835
Income from operations 747 376 Other income (expense)
Interest expense, net of capitalized interest (216 ) (165 ) Loss on
early extinguishment of debt — (42 ) Derivative gain, net 77 1
Other income 7 2 Total other expense (132 ) (204 )
Income before income taxes and non-controlling interest 615
172 Income tax provision (15 ) — Net income 600 172 Less:
net income attributable to non-controlling interest 243 118
Net income attributable to common stockholders $ 357
$ 54 Net income per share attributable to common
stockholders—basic $ 1.52 $ 0.23 Net income per share
attributable to common stockholders—diluted $ 1.50 $ 0.23
Weighted average number of common shares
outstanding—basic 235.5 232.4 Weighted average number of common
shares outstanding—diluted 238.0 232.7 (1) Please refer to
the Cheniere Energy, Inc. Quarterly Report on Form 10-Q for the
quarter ended March 31, 2018, filed with the Securities and
Exchange Commission.
Cheniere Energy,
Inc.Consolidated Balance Sheets(in millions, except
share data)(1)
March 31, December 31,
2018 2017 ASSETS
(unaudited) Current assets
Cash and cash equivalents $ 715 $ 722 Restricted cash 1,696 1,880
Accounts and other receivables 606 369 Accounts receivable—related
party 2 2 Inventory 123 243 Derivative assets 23 57 Other current
assets 103 96 Total current assets 3,268 3,369
Non-current restricted cash 11 11 Property, plant and equipment,
net 24,474 23,978 Debt issuance costs, net 138 149 Non-current
derivative assets 81 34 Goodwill 77 77 Other non-current assets,
net 292 288 Total assets $ 28,341 $ 27,906
LIABILITIES AND STOCKHOLDERS’ EQUITY Current
liabilities Accounts payable $ 21 $ 25 Accrued liabilities 729
1,078 Deferred revenue 120 111 Derivative liabilities 25 37
Total current liabilities 895 1,251 Long-term debt,
net 25,656 25,336 Non-current deferred revenue — 1 Non-current
derivative liabilities 9 19 Other non-current liabilities 74 59
Commitments and contingencies Stockholders’ equity
Preferred stock, $0.0001 par value, 5.0 million shares authorized,
none issued — — Common stock, $0.003 par value Authorized: 480.0
million shares at March 31, 2018 and December 31, 2017 Issued:
250.5 million shares and 250.1 million shares at March 31, 2018 and
December 31, 2017, respectively Outstanding: 237.9 million shares
and 237.6 million shares at March 31, 2018 and December 31, 2017,
respectively 1 1 Treasury stock: 12.6 million shares and 12.5
million shares at March 31, 2018 and December 31, 2017,
respectively, at cost (392 ) (386 ) Additional paid-in-capital
3,264 3,248 Accumulated deficit (4,270 ) (4,627 ) Total
stockholders’ deficit (1,397 ) (1,764 ) Non-controlling interest
3,104 3,004 Total equity 1,707 1,240
Total liabilities and equity $ 28,341 $ 27,906 (1)
Please refer to the Cheniere Energy, Inc. Quarterly Report
on Form 10-Q for the quarter ended March 31, 2018, filed with the
Securities and Exchange Commission.
Reconciliation of Non-GAAP Measures
Regulation G Reconciliations
In addition to disclosing financial results in accordance with
U.S. GAAP, the accompanying news release contains non-GAAP
financial measures. Consolidated Adjusted EBITDA and Distributable
Cash Flow are non-GAAP financial measures that we use to facilitate
comparisons of operating performance across periods. These non-GAAP
measures should be viewed as a supplement to and not a substitute
for our U.S. GAAP measures of performance and the financial results
calculated in accordance with U.S. GAAP and reconciliations from
these results should be carefully evaluated.
Consolidated Adjusted EBITDA represents net income attributable
to Cheniere before net income attributable to the non-controlling
interest, interest, taxes, depreciation and amortization, adjusted
for certain non-cash items, other non-operating income or expense
items, and other items not otherwise predictive or indicative of
ongoing operating performance, as detailed in the following
reconciliation. Consolidated Adjusted EBITDA is not intended to
represent cash flows from operations or net income (loss) as
defined by U.S. GAAP and is not necessarily comparable to similarly
titled measures reported by other companies.
We believe Consolidated Adjusted EBITDA provides relevant and
useful information to management, investors and other users of our
financial information in evaluating the effectiveness of our
operating performance in a manner that is consistent with
management’s evaluation of business performance. We believe
Consolidated Adjusted EBITDA is widely used by investors to measure
a company’s operating performance without regard to items such as
interest expense, taxes, depreciation and amortization which vary
substantially from company to company depending on capital
structure, the method by which assets were acquired and
depreciation policies. Further, the exclusion of certain non-cash
items, other non-operating income or expense items, and items not
otherwise predictive or indicative of ongoing operating performance
enables comparability to prior period performance and trend
analysis.
Consolidated Adjusted EBITDA is calculated by taking net income
attributable to common stockholders before net income attributable
to non-controlling interest, interest expense, net of capitalized
interest, changes in the fair value and settlement of our interest
rate derivatives, taxes, depreciation and amortization, and
adjusting for the effects of certain non-cash items, other
non-operating income or expense items, and other items not
otherwise predictive or indicative of ongoing operating
performance, including the effects of modification or
extinguishment of debt, impairment expense and loss on disposal of
assets, changes in the fair value of our commodity and foreign
currency exchange (“FX”) derivatives and non-cash compensation
expense. We believe the exclusion of these items enables investors
and other users of our financial information to assess our
sequential and year-over-year performance and operating trends on a
more comparable basis and is consistent with management’s own
evaluation of performance.
Distributable Cash Flow is defined as cash received, or expected
to be received, from Cheniere’s ownership and interests in CQP, CQH
and Cheniere Corpus Christi Holdings, LLC, cash received (used) by
Cheniere’s integrated marketing function (other than cash for
capital expenditures) less interest, taxes and maintenance capital
expenditures associated with Cheniere and not the underlying
entities. Management uses this measure and believes it provides
users of our financial statements a useful measure reflective of
our business’s ability to generate cash earnings to supplement the
comparable GAAP measure.
We believe Distributable Cash Flow is a useful performance
measure for management, investors and other users of our financial
information to evaluate our performance and to measure and estimate
the ability of our assets to generate cash earnings after servicing
our debt, paying cash taxes and expending sustaining capital, that
could be used for discretionary purposes such as common stock
dividends, stock repurchases, retirement of debt, or expansion
capital expenditures. Management uses this measure and believes it
provides users of our financial statements a useful measure
reflective of our business’s ability to generate cash earnings to
supplement the comparable GAAP measure. Distributable Cash Flow is
not intended to represent cash flows from operations or net income
(loss) as defined by U.S. GAAP and is not necessarily comparable to
similarly titled measures reported by other companies.
Non-GAAP measures have limitations as an analytical tool and
should not be considered in isolation or in lieu of an analysis of
our results as reported under GAAP, and should be evaluated only on
a supplementary basis.
Consolidated Adjusted EBITDA
The following table reconciles our Consolidated Adjusted EBITDA
to U.S. GAAP results for the three months ended March 31, 2018 and
2017 (in millions):
Three Months Ended March 31,
2018 2017 Net income attributable to
common stockholders $ 357 $ 54 Net income attributable to
non-controlling interest 243 118 Income tax provision 15 — Interest
expense, net of capitalized interest 216 165 Loss on early
extinguishment of debt — 42 Derivative gain, net (77 ) (1 ) Other
income (7 ) (2 ) Income from operations $ 747 $ 376
Adjustments to reconcile income from operations to Consolidated
Adjusted EBITDA: Depreciation and amortization expense 109 70 Loss
from changes in fair value of commodity and FX derivatives, net 37
33 Total non-cash compensation expense 14 4
Consolidated Adjusted EBITDA $ 907 $ 483
Consolidated Adjusted EBITDA and Distributable Cash
Flow
The following table reconciles our actual Consolidated Adjusted
EBITDA and Distributable Cash Flow to Net income attributable to
common stockholders for first quarter 2018 and forecast amounts for
2018 (in billions):
1Q 2018 Prior 2018
Revised 2018 Net income attributable to common stockholders
$ 0.36 $ 0.1 - $ 0.1 $ 0.2 - 0.4 Net
income attributable to non-controlling interest 0.24 0.6 - 0.7 0.7
- 0.7 Income tax provision (benefit) 0.02 0.0 0.0 Interest expense,
net of capitalized interest 0.22 0.9 0.9 Loss on early
extinguishment of debt 0.00 0.0 0.0 Derivative gain, net (0.08 )
0.0 0.0 Other expense (income) (0.01 ) (0.0 ) (0.0 )
Income from operations $ 0.75 $ 1.5
- $ 1.7
$ 1.8
- $ 2.0 Adjustments to reconcile
income from operations to Consolidated Adjusted EBITDA:
Depreciation and amortization expense 0.11 0.5 0.5 Loss from
changes in fair value of commodity and FX derivatives, net 0.04 0.0
0.0 Total non-cash compensation expense 0.01 0.0 0.0 Impairment
expense and loss on disposal of assets 0.00 0.0
0.0
Consolidated Adjusted EBITDA
$ 0.91 $ 2.0 -
$ 2.2 $ 2.3 -
$ 2.5 Distributions and dividends to CQP / CQH
non-controlling interest (0.15 ) (0.6 ) (0.60 ) SPL and CQP cash
retained and interest expense (0.47 ) (1.2 ) (1.30 ) Cheniere
interest expense and income tax (0.03 ) (0.0 ) (0.05
)
Cheniere Distributable Cash Flow $ 0.27
$ 0.2 - $ 0.4
$ 0.35 - $ 0.55
Note: Totals may not sum due to rounding. CQH
non-controlling interest reflects an approximate 91.9% ownership by
Cheniere.
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version on businesswire.com: https://www.businesswire.com/news/home/20180504005142/en/
Cheniere Energy, Inc.InvestorsRandy
Bhatia, 713-375-5479Megan Light, 713-375-5492orMediaEben Burnham-Snyder, 713-375-5764
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