10-QPeriod: Q2 FY2016

Cheniere Energy, Inc. Quarterly Report for Q2 Ended Jun 30, 2016

Filed August 9, 2016For Securities:LNG

Summary

Cheniere Energy, Inc. (LNG) reported its financial results for the period ending June 30, 2016. The company continued its aggressive development of LNG liquefaction facilities, with significant progress made at the Sabine Pass LNG (SPL) Project, including the commencement of production and shipment of LNG commissioning cargoes from Train 1 in February 2016 and its substantial completion in May 2016. The Corpus Christi LNG (CCL) Project also saw construction progress, with Stage 1 approximately 36.6% complete. Financially, the company experienced a substantial increase in revenues, driven by the start of LNG sales from the SPL Project. However, this was accompanied by a significant increase in net loss attributable to common stockholders, primarily due to higher derivative losses, increased operating costs and expenses, and a rise in interest expenses, reflecting the ongoing capital-intensive nature of its projects and increased debt levels. Despite the losses, the company is focused on advancing its large-scale LNG export infrastructure, which is a key driver for its future growth and investor value.

Financial Highlights

51 data points
Beta

Revenue

$177.00M

52.0% Gross Margin

Net Income

-$298.00M

-168.4% Net Margin

EPS (Diluted)

$-1.31

Total Assets

$21.44B

Cash & Equivalents

$1.05B

Free Cash Flow

-$1.29B

Financial Statements
Beta
Revenue$177.00M
Cost of Revenue$85.00M
Gross Profit$92.00M
R&D Expenses$1.00M
SG&A Expenses$72.00M
Operating Expenses$253.00M
Operating Income-$76.00M
Interest Expense$106.00M
Net Income-$298.00M
EPS (Basic)$-1.31
Shares Outstanding (Basic)228.30M
Shares Outstanding (Diluted)228.30M

Key Highlights

  • 1Commenced production and shipment of LNG commissioning cargoes from Train 1 of the Sabine Pass LNG Project in February 2016, achieving substantial completion in May 2016.
  • 2Recognized significant increase in total revenues to $176.8 million for the quarter and $245.9 million for the six months, up from $68.0 million and $136.4 million in the prior year periods, largely due to LNG revenues from the SPL Project.
  • 3Reported a net loss attributable to common stockholders of $298.4 million for the quarter and $619.3 million for the six months, a substantial increase from the prior year's periods, driven by higher derivative losses, operating costs, and interest expenses.
  • 4Total assets grew to $21.4 billion, reflecting continued investment in property, plant, and equipment, primarily for the construction of LNG liquefaction trains.
  • 5Secured significant debt financing during the period, including issuing $1.5 billion in 5.875% Senior Secured Notes due 2026 and $1.25 billion in 7.000% Senior Secured Notes due 2024, alongside new credit facilities.
  • 6The company continues to advance construction on multiple liquefaction trains at both the Sabine Pass and Corpus Christi LNG terminals, positioning for future export capacity.
  • 7The balance sheet reflects a substantial increase in long-term debt, reaching $17.8 billion, as the company funds its extensive construction projects.

Frequently Asked Questions

As of June 30, 2016, Train 1 of the Sabine Pass LNG Project had commenced production and achieved substantial completion in May 2016. Train 2 was undergoing commissioning, with substantial completion anticipated in late September 2016. Trains 3 and 4 were under construction, with substantial completion expected in 2017, and Train 5 was also under construction with substantial completion expected in 2019. The terminal's regasification facilities remained operational and contracted.

Cheniere saw a significant increase in total revenues, primarily due to the start of LNG revenues from the Sabine Pass Project. However, this revenue growth was offset by a substantial increase in net loss attributable to common stockholders. This widening loss was driven by higher derivative losses, increased operating costs associated with the commencement of operations, and higher interest expenses due to increased debt levels required to fund construction.

Cheniere's total debt increased significantly, reaching $19.5 billion. During the quarter, the company issued new senior secured notes totaling $2.75 billion and entered into new credit facilities. These issuances and borrowings were used, in part, to prepay existing debt, managing the company's capital structure and financing its ongoing large-scale construction projects.

At Sabine Pass, Train 1 is operational, and Train 2 is nearing completion. Trains 3, 4, and 5 are under active construction. At Corpus Christi, Stage 1 (Trains 1 & 2) was approximately 36.6% complete, with construction of the pipeline planned to commence in 2016. The company continues to advance its significant LNG export capacity build-out.