Why did net income fall so sharply compared with Q1 2023?

The main driver was a non-cash change in the fair value of derivatives tied to international gas and LNG prices. Q1 2023 included a $4.7 billion gain, while Q1 2024 recorded a $0.3 billion loss (before tax and non-controlling interests). This swing of about $5.0 billion accounts for most of the decline. The company also benefited from a lower income tax provision and lower non-controlling interest, which partly offset the change.

Is the decline in Consolidated Adjusted EBITDA a sign of operational weakness?

Not primarily. Adjusted EBITDA excludes the derivative fair value changes. The remaining decline of about $1.8 billion reflects lower margins per MMBtu from moderating international gas prices and a larger share of volumes sold under long-term fixed-fee contracts. Export volumes were essentially flat at 602 TBtu, and management reaffirmed full-year guidance.

Is the company's full-year 2024 guidance still intact?

Yes. Cheniere reconfirmed full-year 2024 Consolidated Adjusted EBITDA guidance of $5.5 to $6.0 billion and Distributable Cash Flow guidance of $2.9 to $3.4 billion attributable to Cheniere. Q1 results were $1.77 billion of Adjusted EBITDA and $1.16 billion of Cheniere Distributable Cash Flow.

How is Cheniere allocating capital, and is the dividend secure?

In Q1 2024 Cheniere repurchased about $1.2 billion of stock, prepaid $150 million of debt, and paid a $0.435 quarterly dividend. It declared the same $0.435 dividend for Q1 2024, payable May 17, 2024. After quarter end, it refinanced the CCH 2025 notes using the new 2034 notes and cash on hand. Cash and liquidity of $12.4 billion provide substantial capacity to support these commitments.

What is the status of growth projects?

CCL Stage 3, seven midscale trains expected to exceed 10 mtpa, was 55.9% complete at March 31, 2024. Substantial completion is expected between 1H 2025 and 2H 2026, with first LNG from the first train forecast by end of 2024. The SPL Expansion Project, about 20 mtpa including debottlenecking, had its FERC and DOE applications submitted in February 2024. Those approvals remain pending as of this filing.

LNG 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed May 3, 2024. Cited figures are marked; the original filing is the authoritative source.

Cheniere Energy reported first quarter 2024 results on May 3, 2024, with revenues of $4.25 billion^a (down 42% year over year from $7.31 billion), net income attributable to Cheniere of $502 million (down 91% from $5.43 billion), and Consolidated Adjusted EBITDA of $1.77 billion (down 51% from $3.60 billion).

The steep declines are driven mainly by non-cash accounting effects and normalizing market conditions rather than operating deterioration: a roughly $0.3 billion^b unfavorable mark-to-market change on international gas-linked derivatives (versus a $4.0 to $4.7 billion gain in Q1 2023), plus moderating international gas prices and a higher share of LNG sold under long-term contracts, which lowered margins per MMBtu. Operating volumes were stable, with 166 cargoes and 602 TBtu exported, essentially flat year over year. Management reconfirmed full-year 2024 guidance of $5.5 to $6.0 billion for Consolidated Adjusted EBITDA and $2.9 to $3.4 billion for Cheniere's share of Distributable Cash Flow.

Capital returns remained active: about 7.5 million shares were repurchased for roughly $1.2 billion^c, $150 million of SPL notes were prepaid, and a $0.435 quarterly dividend was declared, payable May 17, 2024. Liquidity stood at $12.4 billion at quarter end. Subsequent to quarter end, the company used about $1.5 billion of cash, together with proceeds from $1.5 billion of new 5.650% 2034 notes, to retire the CCH 2025 senior notes.

Development progress continued on the CCL Stage 3 expansion (55.9%^d complete, with first LNG from the first train forecast by year-end 2024 and substantial completion between 1H 2025 and 2H 2026) and on the SPL Expansion Project, for which FERC and DOE applications were submitted in February 2024. Investors should weigh the large headline declines against the non-cash nature of the derivative swings and the reaffirmed guidance, while watching execution on the expansion projects and the company's ongoing buybacks and debt reduction.

02—Key points

Key Highlights

Revenues of $4.25 billion fell 42% year over year, while net income attributable to Cheniere of $502 million fell 91%, largely because of a roughly $5.0 billion swing in non-cash derivative fair value changes.
Consolidated Adjusted EBITDA of $1.77 billion declined 51% from $3.60 billion, reflecting moderating international gas prices and a higher share of LNG sold under long-term contracts.
Full-year 2024 guidance reconfirmed: Consolidated Adjusted EBITDA of $5.5 to $6.0 billion and Cheniere Distributable Cash Flow of $2.9 to $3.4 billion.
Q1 2024 capital returns included about $1.2 billion of share repurchases (roughly 7.5 million shares), $150 million of debt prepayment, and a $0.435 per share dividend, payable May 17, 2024.
Liquidity totaled $12.4 billion at March 31, 2024, including $4.4 billion of cash and $7.6 billion of available credit facility commitments.
Subsequent to quarter end, about $1.5 billion of cash was used to retire the CCH 5.875% 2025 senior notes, funded in part by new $1.5 billion 5.650% 2034 Cheniere senior notes.
CCL Stage 3 expansion is 55.9% complete with first LNG forecast by end of 2024; SPL Expansion Project applications were filed with FERC and DOE in February 2024.

03—Questions

Frequently Asked Questions

Why did net income fall so sharply compared with Q1 2023?
The main driver was a non-cash change in the fair value of derivatives tied to international gas and LNG prices. Q1 2023 included a $4.7 billion gain, while Q1 2024 recorded a $0.3 billion loss (before tax and non-controlling interests). This swing of about $5.0 billion accounts for most of the decline. The company also benefited from a lower income tax provision and lower non-controlling interest, which partly offset the change.
Is the decline in Consolidated Adjusted EBITDA a sign of operational weakness?
Not primarily. Adjusted EBITDA excludes the derivative fair value changes. The remaining decline of about $1.8 billion reflects lower margins per MMBtu from moderating international gas prices and a larger share of volumes sold under long-term fixed-fee contracts. Export volumes were essentially flat at 602 TBtu, and management reaffirmed full-year guidance.
Is the company's full-year 2024 guidance still intact?
Yes. Cheniere reconfirmed full-year 2024 Consolidated Adjusted EBITDA guidance of $5.5 to $6.0 billion and Distributable Cash Flow guidance of $2.9 to $3.4 billion attributable to Cheniere. Q1 results were $1.77 billion of Adjusted EBITDA and $1.16 billion of Cheniere Distributable Cash Flow.
How is Cheniere allocating capital, and is the dividend secure?
In Q1 2024 Cheniere repurchased about $1.2 billion of stock, prepaid $150 million of debt, and paid a $0.435 quarterly dividend. It declared the same $0.435 dividend for Q1 2024, payable May 17, 2024. After quarter end, it refinanced the CCH 2025 notes using the new 2034 notes and cash on hand. Cash and liquidity of $12.4 billion provide substantial capacity to support these commitments.
What is the status of growth projects?
CCL Stage 3, seven midscale trains expected to exceed 10 mtpa, was 55.9% complete at March 31, 2024. Substantial completion is expected between 1H 2025 and 2H 2026, with first LNG from the first train forecast by end of 2024. The SPL Expansion Project, about 20 mtpa including debottlenecking, had its FERC and DOE applications submitted in February 2024. Those approvals remain pending as of this filing.

04—Continue

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