What happened
Shares of New Fortress Energy (NASDAQ: NFE) tumbled more than 15% by 12:30 p.m. ET on Tuesday. Weighing on the liquified natural gas (LNG) stock were the company's fourth-quarter results.
So what
New Fortress Energy generated $546.4 million of revenue in the fourth quarter. Revenue was down 15.8% year over year and missed the analysts' consensus estimate by $168.1 million. That was mainly due to volatility in the LNG market.
On a more positive note, the company's adjusted earnings improved from $0.72 per share in the year-ago period to $0.87 per share in the fourth quarter. That exceeded the analyst consensus estimate by $0.33 per share. However, earnings were only $0.30 per share before adjustments, which included $119 million of noncash impairment charges related to an asset sale.
That sale is the company's ownership stake in the Hilli floating liquefaction facility to its partner Golar LNG. It's selling that asset to Golar LNG for $100 million in cash, the return of 4.1 million of New Fortress Energy shares, and the extinguishment of $323 million in related debt. The deal enables New Fortress Energy to focus on its Fast LNG initiative and repurchase stock at an attractive value. Meanwhile, it allows Golar to increase its cash flow from that asset.
New Fortress Energy generated $1.1 billion of adjusted interest, taxes, depreciation, and amortization (EBITDA) for the full year. That achieved the company's illustrative adjusted EBITDA goal for 2022. It set an even higher bar for 2023 of $2 billion in illustrative adjusted EBITDA.
Now what
LNG price volatility hurt New Fortress Energy's results in the fourth quarter. Despite that, the company has a very optimistic view of the fuel's future. That's leading it to invest heavily in building an end-to-end, fully integrated solution to capitalize on the projected growth in LNG in the coming years. If it's successful, New Fortress Energy's earnings could grow sharply in the coming years. That could potentially give it the fuel to deliver attractive total returns.
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Matthew DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
