Cheniere Energy, Inc. (“Cheniere”) (NYSE American: LNG) today
announced its financial results for the second quarter 2022.
RECENT HIGHLIGHTS
- Consolidated Adjusted EBITDA1 of approximately $2.5 billion and
$5.7 billion for the three and six months ended June 30, 2022,
respectively. Distributable Cash Flow1 of approximately $1.9
billion and $4.4 billion for the three and six months ended June
30, 2022, respectively. Net income (loss)2 of approximately $0.7
billion and $(0.1) billion for the three and six months ended June
30, 2022, respectively.
- Raising full year 2022 Consolidated Adjusted EBITDA1 guidance
to $9.8 - $10.3 billion and full year 2022 Distributable Cash Flow1
guidance to $6.9 - $7.4 billion due primarily to the expected
proceeds from the anticipated early termination of the LNG Terminal
Use Agreement (“TUA”) with Chevron described below, and sustained
higher margins on LNG throughout 2022.
- As part of our comprehensive capital allocation plan, during
the three months ended June 30, 2022, Cheniere prepaid $1.1 billion
of consolidated long-term indebtedness, repurchased an aggregate of
approximately 4.1 million shares of our common stock for
approximately $540 million, and paid a quarterly dividend on our
common stock of $0.33 per share on May 17, 2022.
- In June 2022, Cheniere made a positive final investment
decision (“FID”) with respect to the Corpus Christi Stage 3 Project
(defined below) and issued full notice to proceed (NTP) to Bechtel
Energy, Inc. (“Bechtel”). In connection with the positive FID,
Cheniere Corpus Christi Liquefaction Stage III, LLC (“CCL Stage
III”) was contributed to Cheniere Corpus Christi Holdings, LLC
(“CCH”) and subsequently merged with and into Corpus Christi
Liquefaction, LLC (“CCL”), with CCL as the surviving company of the
merger and a wholly owned subsidiary of CCH. In connection with the
merger, contracts held by CCL Stage III were transferred to
CCL.
- Since March 31, 2022, Cheniere and its subsidiaries signed new
long-term contracts representing an aggregate of approximately 140
million tonnes of LNG through 2050:
- In May 2022, CCL Stage III entered into a long-term Integrated
Production Marketing (“IPM”) agreement with ARC Resources U.S. Corp
(“ARC”), a subsidiary of ARC Resources, Ltd. (TSX: ARX), under
which ARC has agreed to sell 140,000 MMBtu per day of natural gas
to CCL Stage III for a term of 15 years, commencing with commercial
operations of Train 7 of the CCL Stage 3 Project. Cheniere will pay
ARC an LNG-linked price for its gas, based on the Platts Japan
Korea Marker (JKM), after deductions for fixed LNG shipping costs
and a fixed liquefaction fee. The LNG associated with this gas
supply, approximately 0.85 million tonnes per annum (“mtpa”), will
be marketed by Cheniere.
- In May 2022, Cheniere Marketing, LLC (“Cheniere Marketing”)
entered into a LNG sale and purchase agreement (“SPA”) with POSCO
International Corporation (“POSCO International”), under which
POSCO International has agreed to purchase approximately 0.4 mtpa
of LNG from Cheniere Marketing on a free-on-board (“FOB”) basis for
a term of 20 years beginning in late 2026 at a purchase price
indexed to the Henry Hub price, plus a fixed liquefaction fee.
- In June 2022, Cheniere Marketing entered into a LNG SPA with
Equinor ASA (“Equinor”), under which Equinor has agreed to purchase
approximately 1.75 mtpa of LNG from Cheniere Marketing on a FOB
basis for a term of approximately 15 years. Half of the volume is
subject to Cheniere making a positive FID to construct additional
liquefaction capacity at the Corpus Christi LNG Terminal beyond the
seven-train CCL Stage 3 Project.
- In June 2022, Cheniere Marketing and Sabine Pass Liquefaction,
LLC (“SPL”) entered into long-term LNG SPAs with Chevron U.S.A.
Inc. (“Chevron”), a wholly-owned subsidiary of Chevron Corporation
(NYSE: CVX). Under the first SPA, Chevron has agreed to purchase
approximately 1.0 mtpa of LNG from SPL on an FOB basis. Deliveries
under the SPA will begin in 2026, reach the full 1.0 mtpa during
2027 and continue until mid-2042. Under the second SPA, Chevron has
agreed to purchase an additional approximately 1.0 mtpa of LNG from
Cheniere Marketing on an FOB basis with deliveries beginning in
2027 and continuing for approximately 15 years, subject to Cheniere
making a positive FID to construct additional liquefaction capacity
at the Corpus Christi LNG Terminal beyond the seven-train CCL Stage
3 Project. The purchase price for LNG under the SPAs is indexed to
the Henry Hub price, plus a fixed liquefaction fee.
- In July 2022, Cheniere Marketing entered into a long-term LNG
SPA with PetroChina International Company Limited (“PCI”), a
subsidiary of PetroChina Company Limited. Under the SPA, PCI has
agreed to purchase up to approximately 1.8 mtpa of LNG from
Cheniere Marketing on a FOB basis. Deliveries under the SPA will
begin in 2026, reach the full 1.8 mtpa in 2028, and continue
through 2050. The purchase price for LNG under the SPA is indexed
to the Henry Hub price, plus a fixed liquefaction fee. Half of the
total volume, or approximately 0.9 mtpa, is subject to Cheniere
making a positive FID to construct additional liquefaction capacity
at the Corpus Christi LNG Terminal beyond the seven-train CCL Stage
3 Project.
- In July 2022, CCL entered into a long-term LNG SPA with PTT
Global LNG Company Limited (“PTTGL”), under which PTTGL has agreed
to purchase 1.0 mtpa of LNG from CCL for 20 years beginning in
2026. The SPA calls for a combination of FOB and delivered ex-ship
(“DES”) deliveries. The purchase price for LNG under the SPA is
indexed to the Henry Hub price, plus a fixed liquefaction fee.
- In June 2022, Sabine Pass LNG, L.P. (“SPLNG”) and Chevron
agreed to terms for the early termination of its TUA in return for
a lump sum payment of $765 million to be made by Chevron to SPLNG
during calendar year 2022.
- In June 2022, Cheniere published its third annual Corporate
Responsibility (“CR”) report for 2021, entitled Acting Today,
Securing Tomorrow. The report details Cheniere’s approach and
progress on environmental, social and governance (“ESG”) matters as
the company continues to support the global need for secure,
diverse energy supplies and the transition to a lower-carbon
future.
- In June 2022, Cheniere and its subsidiaries commenced providing
Cargo Emissions Tags (“CE Tags”) to its long-term LNG customers.
The CE Tags provide those customers with estimated greenhouse gas
(“GHG”) emissions data associated with each LNG cargo produced at
Cheniere’s liquefaction facilities and are provided for both FOB
and DES LNG cargoes. More information regarding the CE Tags can be
found in the CR report.
CEO COMMENT
“The second quarter was marked by many successes, including
excellent safety and operating performance at both of our
facilities, as well as seamless execution of our strategy
throughout the LNG value chain. We secured meaningful growth of our
LNG platform with the FID of Corpus Christi Stage 3, maintained
significant commercial momentum, and commenced providing our Cargo
Emission Tags - all of which demonstrate the reliability and the
durability of the Cheniere platform,” said Jack Fusco, Cheniere’s
President and Chief Executive Officer. “Our achievements across our
operations, execution, capital allocation and sustainability
efforts continue to position Cheniere as a leader in the global LNG
market for decades to come.”
“Today we are once again raising our 2022 financial guidance,
which is driven by the improved margin environment in the LNG
market - underscoring the need for additional investment in natural
gas infrastructure globally. I am proud of what our team has
accomplished to heed the call for cleaner-burning, reliable energy
supply and look forward to further expanding upon our existing
platform with future growth at both of our sites.”
2022 REVISED FULL YEAR FINANCIAL GUIDANCE
(in billions)
2022 Previous
2022 Revised
Consolidated Adjusted EBITDA1
$
8.2
-
$
8.7
$
9.8
-
$
10.3
Distributable Cash Flow1
$
5.5
-
$
6.0
$
6.9
-
$
7.4
SUMMARY AND REVIEW OF FINANCIAL RESULTS
(in millions, except LNG data)
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
% Change
2022
2021
% Change
Revenues
$
8,007
$
3,017
165
%
$
15,491
$
6,107
154
%
Net income (loss)2
$
741
$
(329
)
nm
$
(124
)
$
64
nm
Consolidated Adjusted EBITDA1
$
2,529
$
1,023
147
%
$
5,682
$
2,475
130
%
LNG exported:
Number of cargoes
156
139
12
%
316
272
16
%
Volumes (TBtu)
563
496
14
%
1,147
976
18
%
LNG volumes loaded (TBtu)
564
499
13
%
1,149
975
18
%
Consolidated Adjusted EBITDA increased $1.5 billion and $3.2
billion for the three and six months ended June 30, 2022,
respectively, as compared to the three and six months ended June
30, 2021, primarily due to increased margins per MMBtu of LNG and
to a lesser extent from increased volumes of LNG delivered.
Net income (loss) was $0.7 billion and $(0.1) billion for the
three and six months ended June 30, 2022, respectively, as compared
to $(0.3) billion and $0.1 billion in the corresponding 2021
periods. The favorable change for the three months ended June 30,
2022 was primarily due to increased margins per MMBtu of LNG and to
a lesser extent from increased volumes of LNG delivered. This
favorable change was partially offset by increased tax expense as
well as an increase in derivative losses from changes in fair value
and settlements of approximately $0.3 billion (pre-tax and
excluding the impact of non-controlling interests). The unfavorable
change for the six months ended June 30, 2022 was primarily due to
an increase in derivative losses from changes in fair value and
settlements of approximately $3.8 billion (pre-tax and excluding
the impact of non-controlling interests) and a decrease in gains
from sales of physical gas. This decrease was partially offset by
increased margins per MMBtu of LNG and increased volumes of LNG
delivered.
Substantially all derivative losses relate to the use of
commodity derivative instruments indexed to international LNG
prices, primarily related to our long-term IPM agreements. While
operationally we seek to eliminate commodity risk by utilizing
derivatives to mitigate price volatility for commodities procured
or sold over a period of time, as a result of the significant
appreciation in forward international LNG commodity curves during
the three and six months ended June 30, 2022, we recognized $1.1
billion and $4.2 billion, respectively, of non-cash unfavorable
changes in fair value attributable to such positions (pre-tax and
excluding the impact of non-controlling interest).
Our IPM agreements are structured to provide stable margins on
purchases of natural gas and sales of LNG over the life of the
agreement and have a fixed fee component, similar to that of LNG
sold under our long-term, fixed fee LNG SPAs. However, the
long-term duration and international price basis of our IPM
agreements make them particularly susceptible to fluctuations in
fair market value from period to period. In addition, accounting
requirements prescribe recognition of these long-term gas supply
agreements at fair value, but does not currently permit fair value
recognition of the associated sale of LNG, resulting in a mismatch
of accounting recognition for the purchase of natural gas and sale
of LNG.
Share-based compensation expenses included in net income (loss)
totaled $36 million and $79 million for the three and six months
ended June 30, 2022, respectively, compared to $31 million and $63
million for the three and six months ended June 30, 2021,
respectively.
Our financial results are reported on a consolidated basis. Our
ownership interest in Cheniere Partners as of June 30, 2022
consisted of 100% ownership of the general partner and a 48.6%
limited partner interest.
BALANCE SHEET MANAGEMENT
Capital Resources
As of June 30, 2022, our total consolidated liquidity position
was approximately $10.3 billion. We had cash and cash equivalents
of $2.6 billion on a consolidated basis, of which $1.1 billion was
held by Cheniere Partners. In addition, we had restricted cash and
cash equivalents of $335 million, $1.25 billion of available
commitments under the Cheniere Revolving Credit Facility, $1.2
billion of available commitments under the CCH Working Capital
Facility, $3.3 billion of available commitments under CCH’s term
loan credit facility (the “CCH Credit Facility”), $750 million of
available commitments under Cheniere Partners’ credit facilities,
and $837 million of available commitments under the SPL Working
Capital Facility.
Key Financial Transactions and Updates
During the three months ended June 30, 2022, we prepaid $1.1
billion of the outstanding borrowings under the CCH Credit
Facility.
In June 2022, CCH amended and restated the CCH Credit Facility
and the CCH Working Capital Facility to, among other things, (1)
increase the commitments to approximately $4.0 billion and $1.5
billion for the CCH Credit Facility and the CCH Working Capital
Facility, respectively, which are intended to fund a portion of the
cost of developing, constructing and operating the CCL Stage 3
Project, (2) extend the maturity of the CCH Credit Facility and the
CCH Working Capital Facility, (3) update the indexed interest rate
to the Secured Overnight Financing Rate (“SOFR”) and (4) make
certain other changes to the terms and conditions of each existing
facilities.
Liquefaction Projects Overview
SPL Project
Through Cheniere Partners, we operate six natural gas
liquefaction Trains for a total production capacity of
approximately 30 mtpa of LNG at the Sabine Pass LNG terminal in
Cameron Parish, Louisiana (the “SPL Project”).
CCL Project
We operate three natural gas liquefaction Trains for a total
production capacity of approximately 15 mtpa of LNG at the Corpus
Christi LNG terminal near Corpus Christi, Texas (the “CCL
Project”).
Corpus Christi Stage 3 Project
We are constructing an expansion adjacent to the CCL Project
consisting of seven midscale Trains with an expected total
production capacity of over 10 mtpa of LNG (the “CCL Stage 3
Project”). On June 15, 2022, our Board of Directors made a positive
FID with respect to the CCL Stage 3 Project and issued full notice
to proceed with construction to Bechtel effective June 16,
2022.
INVESTOR CONFERENCE CALL AND WEBCAST
We will host a conference call to discuss our financial and
operating results for the second quarter 2022 on Thursday, August
4, 2022, 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 Non-GAAP financial measure. See “Reconciliation of Non-GAAP
Measures” for further details.
2 Net income (loss) as used herein refers to Net income (loss)
attributable to common stockholders on our Consolidated Statements
of Operations.
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 total
production capacity of approximately 45 mtpa of LNG in operation
and an additional 10+ mtpa of expected production capacity 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 June 30, 2022, filed with the Securities and Exchange
Commission.
Use of Non-GAAP Financial Measures
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.
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.
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
regulatory authorization and approval expectations, (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, (vi) statements
regarding future discussions and entry into contracts, (vii)
statements relating to Cheniere’s capital deployment, including
intent, ability, extent, and timing of capital expenditures, debt
repayment, dividends, and share repurchases, and (viii) statements
regarding the COVID-19 pandemic and its impact on our business and
operating results. 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 and Supplementary
Information Follow)
LNG VOLUME SUMMARY
As of July 30, 2022, approximately 2,300 cumulative LNG cargoes
totaling over 155 million tonnes of LNG have been produced, loaded
and exported from our liquefaction projects.
During the three and six months ended June 30, 2022, we exported
563 and 1,147 TBtu of LNG, respectively, from our liquefaction
projects. 34 TBtu of LNG exported from our liquefaction projects
and sold on a delivered basis was in transit as of June 30, 2022,
none of which was related to commissioning activities.
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 and six months
ended June 30, 2022:
Three Months Ended June 30,
2022
Six Months Ended June 30,
2022
(in TBtu)
Operational
Commissioning
Operational
Commissioning
Volumes loaded during the current
period
564
—
1,136
13
Volumes loaded during the prior period but
recognized during the current period
40
—
49
1
Less: volumes loaded during the current
period and in transit at the end of the period
(34)
—
(34)
—
Total volumes recognized in the current
period
570
—
1,151
14
In addition, during the three and six months ended June 30,
2022, we recognized 4 TBtu and 15 TBtu of LNG on our Consolidated
Financial Statements related to LNG cargoes sourced from
third-parties.
Cheniere Energy, Inc.
Consolidated Statements of
Operations
(in millions, except per share
data)(1)
(unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2022
2021
2022
2021
Revenues
LNG revenues
$
7,873
$
2,913
$
15,213
$
5,912
Regasification revenues
68
67
136
134
Other revenues
66
37
142
61
Total revenues
8,007
3,017
15,491
6,107
Operating costs and expenses
Cost of sales (excluding items shown
separately below) (2)
5,752
2,154
13,088
3,540
Operating and maintenance expense
419
385
808
707
Development expense
3
2
8
3
Selling, general and administrative
expense
77
73
173
154
Depreciation and amortization expense
276
258
547
494
Impairment expense and loss (gain) on
disposal of assets
3
(1
)
3
(1
)
Total operating costs and expenses
6,530
2,871
14,627
4,897
Income from operations
1,477
146
864
1,210
Other expense (income)
Interest expense, net of capitalized
interest
(357
)
(368
)
(706
)
(724
)
Loss on modification or extinguishment of
debt
(28
)
(4
)
(46
)
(59
)
Derivative gain (loss), net
(1
)
(2
)
2
(1
)
Other income, net
3
4
8
10
Total other expense
(383
)
(370
)
(742
)
(774
)
Income before income taxes and
non-controlling interest
1,094
(224
)
122
436
Less: income tax provision (benefit)
181
(93
)
(10
)
(4
)
Net income
913
(131
)
132
440
Less: net income attributable to
non-controlling interest
172
198
256
376
Net income (loss) attributable to common
stockholders
$
741
$
(329
)
$
(124
)
$
64
Net income (loss) per share attributable
to common stockholders—basic (3)
$
2.92
$
(1.30
)
$
(0.49
)
$
0.25
Net income (loss) per share attributable
to common stockholders—diluted (3)
$
2.90
$
(1.30
)
$
(0.49
)
$
0.25
Weighted average number of common shares
outstanding—basic
253.6
253.5
253.8
253.2
Weighted average number of common shares
outstanding—diluted
255.9
253.5
253.8
254.7
------------------------------------------
(1)
Please refer to the Cheniere Energy, Inc.
Quarterly Report on Form 10-Q for the quarter ended June 30, 2022,
filed with the Securities and Exchange Commission.
(2)
Cost of Sales includes approximately $1.0
billion and $4.4 billion of losses from changes in the fair value
of commodity derivatives prior to contractual delivery or
termination during the three and six months ended June 30, 2022,
respectively, as compared to $0.3 billion and $0.4 billion of
losses in the corresponding 2021 periods, respectively.
(3)
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)(2)
June 30,
December 31,
2022
2021
ASSETS
(unaudited)
Current assets
Cash and cash equivalents
$
2,631
$
1,404
Restricted cash and cash equivalents
335
413
Trade and other receivables, net of
current expected credit losses
1,883
1,506
Inventory
746
706
Current derivative assets
273
55
Margin deposits
169
765
Other current assets
149
207
Total current assets
6,186
5,056
Property, plant and equipment, net of
accumulated depreciation
30,659
30,288
Operating lease assets
2,255
2,102
Derivative assets
144
69
Goodwill
77
77
Deferred tax assets
1,276
1,204
Other non-current assets, net
716
462
Total assets
$
41,313
$
39,258
LIABILITIES AND STOCKHOLDERS'
DEFICIT
Current liabilities
Accounts payable
$
141
$
155
Accrued liabilities
2,599
2,299
Current debt, net of discount and debt
issuance costs
2,270
366
Deferred revenue
141
155
Current operating lease liabilities
598
535
Current derivative liabilities
1,793
1,089
Other current liabilities
14
94
Total current liabilities
7,556
4,693
Long-term debt, net of premium, discount
and debt issuance costs
26,055
29,449
Operating lease liabilities
1,623
1,541
Finance lease liabilities
56
57
Derivative liabilities
7,133
3,501
Other non-current liabilities
85
50
Stockholders' deficit
Preferred stock: $0.0001 par value, 5.0
million shares authorized, none issued
—
—
Common stock: $0.003 par value, 480.0
million shares authorized; 276.6 million shares and 275.2 million
shares issued at June 30, 2022 and December 31, 2021,
respectively
1
1
Treasury stock: 26.2 million shares and
21.6 million shares at June 30, 2022 and December 31, 2021,
respectively, at cost
(1,529
)
(928
)
Additional paid-in-capital
4,277
4,377
Accumulated deficit
(6,311
)
(6,021
)
Total Cheniere stockholders' deficit
(3,562
)
(2,571
)
Non-controlling interest
2,367
2,538
Total stockholders' deficit
(1,195
)
(33
)
Total liabilities and stockholders'
deficit
$
41,313
$
39,258
------------------------------------------
(1)
Please refer to the Cheniere Energy, Inc.
Quarterly Report on Form 10-Q for the quarter ended June 30, 2022,
filed with the Securities and Exchange Commission.
(2)
Amounts presented include balances held by
our consolidated variable interest entity, Cheniere Partners. As of
June 30, 2022, total assets and liabilities of Cheniere Partners,
which are included in our Consolidated Balance Sheets, were $19.5
billion and $22.7 billion, respectively, including $1.1 billion of
cash and cash equivalents and $0.1 billion of restricted cash.
Reconciliation of Non-GAAP Measures
Regulation G Reconciliations
Consolidated Adjusted EBITDA
The following table reconciles our Consolidated Adjusted EBITDA
to U.S. GAAP results for the three and six months ended June 30,
2022 and 2021 (in millions):
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Net income (loss) attributable to common
stockholders
$
741
$
(329
)
$
(124
)
$
64
Net income attributable to non-controlling
interest
172
198
256
376
Income tax provision (benefit)
181
(93
)
(10
)
(4
)
Interest expense, net of capitalized
interest
357
368
706
724
Loss on modification or extinguishment of
debt
28
4
46
59
Interest rate derivative gain (loss),
net
1
2
(2
)
1
Other income (loss), net
(3
)
(4
)
(8
)
(10
)
Income from operations
$
1,477
$
146
$
864
$
1,210
Adjustments to reconcile income from
operations to Consolidated Adjusted EBITDA:
Depreciation and amortization expense
276
258
547
494
Loss from changes in fair value of
commodity and FX derivatives, net (1)
740
591
4,198
711
Total non-cash compensation expense
33
29
70
61
Impairment expense and loss (gain) on
disposal of assets
3
(1
)
3
(1
)
Consolidated Adjusted EBITDA
$
2,529
$
1,023
$
5,682
$
2,475
------------------------------------------
(1)
Change in fair value of commodity and FX
derivatives prior to contractual delivery or termination
Consolidated Adjusted EBITDA is commonly used as a supplemental
financial measure by our management and external users of our
Consolidated Financial Statements to assess the financial
performance of our assets without regard to financing methods,
capital structures, or historical cost basis. 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 financial and operating performance.
Consolidated Adjusted EBITDA is calculated by taking net income
(loss) attributable to common stockholders before net income (loss)
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 prior to contractual delivery or termination, and
non-cash compensation expense. The change in fair value of
commodity and FX derivatives is considered in determining
Consolidated Adjusted EBITDA given that the timing of recognizing
gains and losses on these derivative contracts differs from the
recognition of the related item economically hedged. 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.
Consolidated Adjusted EBITDA and Distributable Cash
Flow
The following table reconciles our actual Consolidated Adjusted
EBITDA and Distributable Cash Flow to Net income (loss)
attributable to common stockholders for the three and six months
ended June 30, 2022 and forecast amounts for full year 2022 (in
billions):
Three Months Ended June
30,
Six Months Ended June
30,
Full Year
2022
2022
2022
Net income (loss) attributable to common
stockholders
$
0.74
$
(0.12
)
$
0.8
-
$
1.3
Net income attributable to non-controlling
interest
0.17
0.26
1.2
-
1.3
Income tax provision (benefit)
0.18
(0.01
)
0.6
-
0.7
Interest expense, net of capitalized
interest
0.36
0.71
1.4
-
1.4
Depreciation and amortization expense
0.28
0.55
1.1
-
1.1
Other expense (income), financing costs,
and certain non-cash operating expenses
0.80
4.31
4.7
-
4.5
Consolidated Adjusted EBITDA
$
2.53
$
5.68
$
9.8
-
$
10.3
Interest expense (net of capitalized
interest and amortization) and realized interest rate
derivatives
(0.35
)
(0.71
)
(1.4
)
-
(1.4
)
Maintenance capital expenditures, income
tax and other expense
(0.06
)
(0.08
)
(0.3
)
-
(0.2
)
Consolidated Distributable Cash
Flow
$
2.12
$
4.89
$
8.1
-
$
8.7
CQP distributable cash flow attributable
to non-controlling interest
(0.26
)
(0.54
)
(1.2
)
-
(1.3
)
Cheniere Distributable Cash
Flow
$
1.86
$
4.35
$
6.9
-
$
7.4
Note: Totals may not sum due to
rounding.
Distributable Cash Flow is defined as cash generated from the
operations of Cheniere and its subsidiaries and adjusted for
non-controlling interest. The Distributable Cash Flow of Cheniere’s
subsidiaries is calculated by taking the subsidiaries’ EBITDA less
interest expense, net of capitalized interest, interest rate
derivatives, taxes, maintenance capital expenditures and other
non-operating income or expense items, and adjusting for the effect
of certain non-cash items and other items not otherwise predictive
or indicative of ongoing operating performance, including the
effects of modification or extinguishment of debt, amortization of
debt issue costs, premiums or discounts, changes in fair value of
interest rate derivatives, impairment of equity method investment
and deferred taxes. Cheniere’s Distributable Cash Flow includes
100% of the Distributable Cash Flow of Cheniere’s wholly-owned
subsidiaries. For subsidiaries with non-controlling investors, our
share of Distributable Cash Flow is calculated as the Distributable
Cash Flow of the subsidiary reduced by the economic interest of the
non-controlling investors as if 100% of the Distributable Cash Flow
were distributed in order to reflect our ownership interests and
our incentive distribution rights, if applicable. The Distributable
Cash Flow attributable to non-controlling interest is calculated in
the same method as Distributions to non-controlling interest as
presented on our Statements of Stockholders’ Equity in our Forms
10-Q and Forms 10-K filed with the Securities and Exchange
Commission. This amount may differ from the actual distributions
paid to non-controlling investors by the subsidiary for a
particular period.
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. 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220803005797/en/
Cheniere Energy, Inc. Investors
Randy Bhatia 713-375-5479 Frances Smith 713-375-5753
Media Relations Eben Burnham-Snyder
713-375-5764 Phil West 713-375-5586
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