Cheniere Reports First Quarter 2019 Results and Reconfirms Full Year 2019 Guidance

HOUSTON–(BUSINESS WIRE)–Cheniere Energy, Inc. (NYSE American: LNG):

Summary of First Quarter 2019 Results (in millions, except LNG
data)

   
Three Months Ended March 31,
  2019       2018     % Change
Revenues $ 2,261     $ 2,242   1 %
Net income1 $ 141 $ 357 (61 )%
Consolidated Adjusted EBITDA2 $ 650 $ 907 (28 )%
LNG exported:
Number of cargoes 87 67 30 %
Volumes (TBtu) 310 244 27 %
LNG volumes loaded (TBtu) 309 241 28 %
 
 

Summary 2019 Full Year Guidance (in billions)

2019
Consolidated Adjusted EBITDA2 $ 2.9     $ 3.2
Distributable Cash Flow2 $ 0.6 $ 0.8
 

Recent Highlights

Strategic

  • In March 2019, we received a positive Environmental Assessment from
    the Federal Energy Regulatory Commission relating to our Corpus
    Christi Stage 3 project (defined below).
  • In February 2019, Midship Pipeline Company, LLC (“Midship Pipeline”),
    in which we hold an indirect equity interest, issued notice to proceed
    to construct the Midship natural gas pipeline and related compression
    and interconnect facilities (the “Midship Project”). To complete
    financing of the Midship Project, Midship Pipeline entered into senior
    secured credit facilities with total commitments of up to
    approximately $680 million.

Operational

  • As of April 30, 2019, over 650 cumulative LNG cargoes have been
    produced, loaded and exported from our liquefaction projects. LNG from
    our liquefaction projects has been delivered to 32 countries and
    regions worldwide.
  • Substantial completion of Train 5 of the SPL Project (defined below)
    was achieved in March 2019.
  • Substantial completion of Train 1 of the CCL Project (defined below)
    was achieved in February 2019.

Financial

  • For the three months ended March 31, 2019, we achieved net income1
    of $141 million, Consolidated Adjusted EBITDA2 of $650
    million, and Distributable Cash Flow2 of over $200 million.
  • In March 2019, the date of first commercial delivery was reached under
    the 20-year LNG Sale and Purchase Agreement with BG Gulf Coast LNG,
    LLC relating to Train 4 of the SPL Project.

Liquefaction Projects Update

         
SPL Project       CCL Project
Liquefaction Train     Train 6       Train 2     Train 3
Project Status LNTP(1) Issued Commissioning     Under Construction
 
Project Completion Percentage(2) 98.4%(3) 51.6%
 
Expected Substantial Completion 2H 2019 2H 2021
Note: Projects update excludes Trains in operation
(1)   Limited Notice to Proceed
(2) Project completion percentages as of March 31, 2019
(3) Completion percentage for Stage 1, includes Trains 1 and 2
 

Cheniere Energy, Inc. (“Cheniere”) (NYSE American: LNG) reported net
income1 of $141 million, or $0.55 per share—basic and $0.54
per share—diluted, for the three months ended March 31, 2019, compared
to net income of $357 million, or $1.52 per share—basic and $1.50 per
share—diluted, for the comparable 2018 period. The decrease in net
income was primarily due to increased operating costs and expenses from
additional natural gas liquefaction trains (“Trains”) operating between
each of the periods and increased service and maintenance costs at the
SPL Project, and from increased derivative loss related to interest rate
swaps and increased interest expense, net of amounts capitalized,
partially offset by decreased income attributable to non-controlling
interest.

Consolidated Adjusted EBITDA2 for the three months ended
March 31, 2019 was $650 million, compared to $907 million for the
comparable 2018 period. The decrease in Consolidated Adjusted EBITDA was
primarily due to decreased income from operations and decreased
adjustments for non-cash operating expenses primarily due to increased
net gain from changes in fair value of commodity and foreign currency
exchange (“FX”) derivatives.

During the three months ended March 31, 2019, 87 LNG cargoes were
exported from our liquefaction projects, seven of which were
commissioning cargoes. Seven cargoes exported from our liquefaction
projects and sold on a delivered basis were in transit as of March 31,
2019, none of which were commissioning cargoes.

“Our strong financial results for the first quarter 2019 are in line
with our forecasts, and we are reconfirming our full year 2019 financial
guidance. During the quarter, we placed both Sabine Pass Train 5 and
Corpus Christi Train 1 into service only days apart, with both projects
ahead of schedule and within budget – a significant achievement, and a
product of our relentless focus on excellence in execution,” said Jack
Fusco, Cheniere’s President and Chief Executive Officer. “We remain on
track to place Corpus Christi Train 2 into service in the second half of
2019, and we expect to progress Sabine Pass Train 6 to a positive Final
Investment Decision in the coming months.”

LNG Volume Summary

The following table summarizes the volumes of operational and
commissioning LNG that were loaded from our liquefaction projects and
for which the financial impact was recognized on our Consolidated
Financial Statements during the three months ended March 31, 2019:

    Three Months Ended March 31, 2019
(in TBtu)   Operational       Commissioning
Volumes loaded during the current period   284   25
Volumes loaded during the prior period but recognized during the
current period
25 3
Less: volumes loaded during the current period and in transit at the
end of the period
(27 )
Total volumes recognized in the current period 282   28

In addition, during the three months ended March 31, 2019, we recognized
the financial impact of 18 TBtu of LNG on our Consolidated Financial
Statements related to LNG cargoes sourced from third parties.

Summary of Financial Performance

First Quarter and Full Year 2019 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, 2019 consisted of
100% ownership of the general partner and a 48.6% limited partner
interest.

Income from operations decreased $141 million during the three months
ended March 31, 2019 as compared to the comparable 2018 period. The
decrease in income from operations was primarily driven by increased
total operating costs and expenses primarily as a result of additional
Trains in operation and increased service and maintenance costs from
certain maintenance and related activities at the SPL Project, increased
volume and pricing of natural gas feedstock related to our LNG sales,
and decreased pricing of LNG sales recognized in income, partially
offset by an increase in LNG volumes recognized in income due primarily
to additional Trains in operation and increased net gain from changes in
fair value of commodity and FX derivatives.

Selling, general and administrative expense included share-based
compensation expenses of $20 million for the three months ended March
31, 2019, compared to $18 million for the comparable 2018 period.

Net income attributable to non-controlling interest decreased $47
million during the three months ended March 31, 2019 as compared to the
three months ended March 31, 2018, primarily due to the decrease of
non-controlling interest as a result of our merger with Cheniere Energy
Partners LP Holdings, LLC in September 2018. This decrease was partially
offset by an increase in consolidated net income recognized by Cheniere
Partners in which the non-controlling interests are held.

Capital Resources

As of March 31, 2019, we had cash and cash equivalents of $1.1 billion
available to us. In addition, we had current restricted cash of $1.9
billion designated for the following purposes: $621 million for the SPL
Project, $218 million for the CCL Project, $676 million for restricted
purposes under the terms of Cheniere Partners’ credit facilities and
$403 million for other restricted purposes.

Liquefaction Projects

SPL Project and CCL Project

Through Cheniere Partners, we are developing six natural gas
liquefaction Trains at the Sabine Pass LNG terminal adjacent to the
existing regasification facilities (the “SPL Project”). Trains 1 through
5 are operational and early works have begun for Train 6 under limited
notices to proceed ahead of an anticipated positive Final Investment
Decision.

We are also developing three Trains near Corpus Christi, Texas (the “CCL
Project”). Train 1 is operational, Train 2 is undergoing commissioning,
and Train 3 is under construction.

Our Trains are expected to have a nominal production capacity, which is
prior to adjusting for planned maintenance, production reliability,
potential overdesign, and debottlenecking opportunities, of
approximately 4.5 mtpa of LNG per Train, and average run rate adjusted
nominal production capacity of approximately 4.4 to 4.9 mtpa of LNG per
Train.

Corpus Christi Stage 3

We are developing up to seven midscale liquefaction Trains adjacent to
the CCL Project (“Corpus Christi Stage 3”), each with an expected
nominal production capacity, which is prior to adjusting for planned
maintenance, production reliability, potential overdesign, and
debottlenecking opportunities, 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. In June 2018, we filed an application
with FERC to site, construct, and operate Corpus Christi Stage 3, and we
are in the process of obtaining all necessary regulatory approvals for
Corpus Christi Stage 3.

Investor Conference Call and Webcast

We will host a conference call to discuss our financial and operating
results for the first quarter on Thursday, May 9, 2019, at 11 a.m.
Eastern time / 10 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.

___________________________

1  

Net income as used herein refers to Net income attributable to
common stockholders on our Consolidated Statements of Operations.

2 Non-GAAP financial measure. See “Reconciliation of Non-GAAP
Measures” for further details.
 

About Cheniere

Cheniere Energy, Inc. is the leading producer and exporter of liquefied
natural gas (LNG) in the United States, reliably providing a clean,
secure, and affordable solution to the growing global need for natural
gas. Cheniere is a full-service LNG provider, with capabilities that
include gas procurement and transportation, liquefaction, vessel
chartering, and LNG delivery. Cheniere has one of the largest
liquefaction platforms in the world, consisting of the Sabine Pass and
Corpus Christi liquefaction facilities on the U.S. Gulf Coast, with
expected aggregate nominal production capacity of 36 million tonnes per
annum of LNG operating or under construction. Cheniere is also pursuing
liquefaction expansion opportunities and other projects along the LNG
value chain. Cheniere is headquartered in Houston, Texas, and has
additional offices in London, Singapore, Beijing, Tokyo, and Washington,
D.C.

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, 2019,
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 financial and operational guidance,
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 Operations

(in millions, except per share data)

(unaudited)

 
Three Months Ended
March 31, (1)
2019 2018
Revenues
LNG revenues $ 2,143 $ 2,166
Regasification revenues 66 65
Other revenues 48 10
Other—related party 4   1  
Total revenues 2,261 2,242
 
Operating costs and expenses
Cost of sales (excluding depreciation and amortization expense shown
separately below)
1,204 1,178
Cost of sales—related party 10
Operating and maintenance expense 221 140
Development expense 1 1
Selling, general and administrative expense 73 67
Depreciation and amortization expense 144 109
Impairment expense and loss on disposal of assets 2    
Total operating costs and expenses 1,655   1,495  
 
Income from operations 606 747
 
Other income (expense)
Interest expense, net of capitalized interest (247 ) (216 )
Derivative gain (loss), net (35 ) 77
Other income 16   7  
Total other expense (266 ) (132 )
 
Income before income taxes and non-controlling interest 340 615
Income tax provision (3 ) (15 )
Net income 337 600
Less: net income attributable to non-controlling interest 196   243  
Net income attributable to common stockholders $ 141   $ 357  
 
Net income per share attributable to common stockholders—basic $ 0.55   $ 1.52  
Net income per share attributable to common stockholders—diluted (2) $ 0.54   $ 1.50  
 
Weighted average number of common shares outstanding—basic 257.1 235.5
Weighted average number of common shares outstanding—diluted 258.5 238.0

________________________________

(1)

 

Please refer to the Cheniere Energy, Inc. Quarterly Report on Form
10-Q for the quarter ended March 31, 2019, filed with the
Securities and Exchange Commission.

(2)

Earnings per share in the table may not recalculate exactly due to
rounding because it is calculated based on whole numbers, not the
rounded numbers presented.

           

Cheniere Energy, Inc.

Consolidated Balance Sheets

(in millions, except share data)(1)

 
March 31,       December 31,
2019 2018
ASSETS (unaudited)
Current assets
Cash and cash equivalents $ 1,093 $ 981
Restricted cash 1,918 2,175
Accounts and other receivables 390 581
Accounts receivable—related party 3 4
Inventory 279 316
Derivative assets 107 63
Other current assets 106   114  
Total current assets 3,896 4,234
 
Property, plant and equipment, net 27,953 27,245
Operating lease assets, net 542
Debt issuance costs, net 58 72
Non-current derivative assets 42 54
Goodwill 77 77
Other non-current assets, net 317   305  
Total assets $ 32,885   $ 31,987  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable $ 66 $ 58
Accrued liabilities 1,101 1,169
Accrued liabilities—related party 5
Current debt 239
Deferred revenue 108 139
Current operating lease liabilities 325
Derivative liabilities 37 128
Other current liabilities 17   9  
Total current liabilities 1,659 1,742
 
Long-term debt, net 28,726 28,179
Non-current operating lease liabilities 207
Non-current finance lease liabilities 58 57
Non-current derivative liabilities 39 22
Other non-current liabilities 58 58
 
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, 2019 and December 31,
2018
Issued: 270.4 million shares at March 31, 2019 and 269.8 million
shares at December 31, 2018
Outstanding: 257.4 million shares at March 31, 2019 and 257.0
million shares at December 31, 2018
1 1
Treasury stock: 13.0 million shares and 12.8 million shares at March
31, 2019 and December 31, 2018, respectively, at cost
(418 ) (406 )
Additional paid-in-capital 4,063 4,035
Accumulated deficit (4,015 ) (4,156 )
Total stockholders’ deficit (369 ) (526 )
Non-controlling interest 2,507   2,455  
Total equity 2,138   1,929  
Total liabilities and equity $ 32,885   $ 31,987  

______________________________

(1)   Please refer to the Cheniere Energy, Inc. Quarterly Report on Form
10-Q for the quarter ended March 31, 2019, 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 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 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, 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 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, 2019 and 2018 (in
millions):

     
Three Months Ended
March 31,
2019       2018
Net income attributable to common stockholders $ 141 $ 357
Net income attributable to non-controlling interest 196 243
Income tax provision 3 15
Interest expense, net of capitalized interest 247 216
Derivative loss (gain), net 35 (77 )
Other income (16 ) (7 )
Income from operations $ 606   $ 747  
Adjustments to reconcile income from operations to Consolidated
Adjusted EBITDA:
Depreciation and amortization expense 144 109
Loss (gain) from changes in fair value of commodity and FX
derivatives, net
(127 ) 37
Total non-cash compensation expense 25 14
Impairment expense and loss on disposal of assets 2    
Consolidated Adjusted EBITDA $ 650   $ 907  
 

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 the three months ended March 31, 2019 and forecast
amounts for full year 2019 (in billions):

    Three Months        
Ended Full Year
March 31, 2019 2019
Net income attributable to common stockholders $ 0.14 $ 0.0 $ 0.2
Net income attributable to non-controlling interest 0.20 0.6 0.6
Income tax provision 0.00 0.0
Interest expense, net of capitalized interest 0.25 1.5
Depreciation and amortization expense 0.14 0.8
Other expense, financing costs, and certain non-cash operating
expenses
(0.08 )     0.1  
Consolidated Adjusted EBITDA $ 0.65   $ 2.9   $ 3.2  
Distributions to CQP non-controlling interest (0.15 ) (0.6 )
SPL and CQP cash retained and interest expense (0.31 ) (1.5 )
Cheniere interest expense, income tax and other 0.01       (0.3 )
Cheniere Distributable Cash Flow $ 0.20   $ 0.6   $ 0.8  

______________________________

Note: Totals may not sum due to rounding.

Contacts

Cheniere Energy, Inc.
Investors
Randy Bhatia, 713-375-5479
Megan
Light, 713-375-5492
or
Media Relations
Eben
Burnham-Snyder, 713-375-5764

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