01—Abstract
Summary
Summary of the 10-K filed February 26, 2019. Cited figures are marked; the original filing is the authoritative source.
Cheniere Energy, Inc.'s 2018 10-K filing reveals a company in a significant growth phase, primarily focused on the development and expansion of its Liquefied Natural Gas (LNG) export facilities in Sabine Pass, Louisiana, and Corpus Christi, Texas.
The company reported substantial increases in revenues and income from operations compared to the previous year, driven by the commissioning and full operation of multiple liquefaction "Trains" at its Sabine Pass facility. Key operational milestones include the commencement of commissioning for Train 5 at Sabine Pass and Train 1 at Corpus Christi, contributing to a significant increase in LNG cargo exports to a global customer base. Financially, Cheniere experienced a notable shift from net losses to net income attributable to common stockholders in 2018.
This improvement was bolstered by increased operational capacity, favorable derivative results, and strategic debt management, including amendments and restatements of credit facilities to increase borrowing capacity and extend maturity dates. However, the company continues to carry a substantial amount of debt, primarily related to its extensive capital expenditure program for project development. Looking ahead, Cheniere remains focused on completing its ongoing projects, securing additional long-term contracts, and evaluating further expansion opportunities, while managing its significant debt load and capital requirements.
02—Key points
Key Highlights
- Cheniere reported a significant increase in revenues to $7.99 billion in 2018 from $5.60 billion in 2017, driven by the expansion of its LNG export capacity.
- The company achieved a net income of $471 million attributable to common stockholders in 2018, a substantial turnaround from a net loss of $393 million in 2017.
- Train 5 at the Sabine Pass LNG terminal was nearing completion (99.7% complete as of December 31, 2018) and expected substantial completion in Q1 2019, with Train 6 also being commercialized.
- Corpus Christi Stage 1 (Trains 1 & 2) was 96.7% complete and expected substantial completion in Q1 and 2H 2019, respectively, while Stage 2 (Train 3) was 42.0% complete with an expected substantial completion in 2H 2021.
- The company entered into several new long-term Sale and Purchase Agreements (SPAs) for LNG with major international customers, securing future revenue streams.
- Cheniere's financial position was strengthened by significant debt transactions, including increasing commitments under credit facilities and issuing new senior notes to manage its capital structure and fund ongoing development.
- The company continued to expand its global reach, having exported over 575 cumulative LNG cargoes, with more than 270 in 2018 alone, to 32 countries and regions.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2018, Cheniere Energy, Inc. kept $0.06.
- Revenue$7.99B100.0%
- Cost of revenue−$4.60B57.6%
- Gross profit$3.39B42.4%
- Operating costs−$1.37B17.1%
- Operating income$2.02B25.3%
- Interest, other & tax−$1.55B19.4%
- Net income$471.0M5.9%
Where FY2018 revenue went
$7.99B- Cost of revenue: $4.60B, 58% of revenue
- Interest, other & tax: $1.55B, 19% of revenue
- Other operating costs: $1.07B, 13% of revenue
- Net income: $471.0M, 5.9% of revenue
- R&D: $7.0M, 0.1% of revenue
- SG&A: $289.0M, 3.6% of revenue
Kept 5.9% as net incomeNet income $471.0M · 5.9%R&D $7.0M · 0.1%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 26, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $7.99B$5.60B | +42.6% |
| Cost of Revenue | $4.60B$3.12B | +47.3% |
| Gross Profit | $3.39B$2.48B | +36.6% |
| R&D Expenses | $7.00M$10.00M | −30.0% |
| SG&A Expenses | $289.00M$256.00M | +12.9% |
| Operating Expenses | $5.96B$4.21B | +41.5% |
| Operating Income | $2.02B$1.39B | +45.8% |
| Interest Expense | $875.00M$747.00M | +17.1% |
| Net Income | $471.00M-$393.00M | +219.8% |
| EPS (Basic) | $1.92$-1.68 | +214.3% |
| EPS (Diluted) | $1.90$-1.68 | +213.1% |
| Shares Outstanding (Basic) | 245.60M233.10M | +5.4% |
| Shares Outstanding (Diluted) | 248.00M233.10M | +6.4% |
05—Questions
Frequently Asked Questions
What is Cheniere's primary business and operational focus as of December 31, 2018?
Cheniere's primary business is LNG-related, focusing on the development, construction, and operation of natural gas liquefaction and export facilities. As of December 31, 2018, their main operational focus was on the Sabine Pass LNG terminal in Louisiana, with Trains 1-4 operational, Train 5 undergoing commissioning, and Train 6 being commercialized. They were also developing the Corpus Christi LNG terminal in Texas, with Stage 1 (Trains 1 & 2) undergoing commissioning and Stage 2 (Train 3) under construction. The company was also planning further expansions, including Corpus Christi Stage 3.
What were the key financial performance indicators for Cheniere in 2018?
In 2018, Cheniere saw significant financial improvements. Revenues increased to $7.99 billion from $5.60 billion in 2017. Critically, the company moved from a net loss attributable to common stockholders of $393 million in 2017 to a net income of $471 million in 2018. This was primarily due to increased operational capacity from more "Trains" coming online, leading to higher LNG revenues.
How is Cheniere financing its extensive development and construction activities?
Cheniere finances its operations through a combination of project debt, borrowings under its credit facilities, equity contributions from its subsidiaries, and equity or debt offerings. The company actively manages its capital structure, engaging in significant debt transactions, including amending and restating credit facilities to increase commitments and extend maturity dates, and issuing senior notes. They expect to continue utilizing these methods to fund ongoing projects like Train 6 at Sabine Pass and the Corpus Christi facilities.
What are the major risks Cheniere faces according to the 10-K?
Cheniere faces several significant risks, including substantial debt levels and the potential inability to secure future financing, reliance on customer performance under long-term contracts, construction delays and cost overruns, operational hazards, regulatory changes, competition, and market volatility in natural gas and LNG prices. The company also highlights risks related to its lack of diversification and potential impacts from events like hurricanes or cyber incidents.
06—Continue