- “20/20 Vision” projects over $20 Billion
of available cash through 20261 and over $20 per share of
run-rate Distributable Cash Flow2
- Lowering long-term leverage target to ~4x
- Increasing Share Repurchase Authorization by $4
billion
- Increasing dividend by ~20% this quarter to $1.58 per
common share annualized
- Raising 2022 financial guidance by ~$1.2 billion
- Pre-filed Corpus Christi Midscale Trains 8 & 9 with
FERC in August 2022
Cheniere Energy, Inc. (“Cheniere” or the “Company”) (NYSE
American: LNG) announced today that its Board of Directors has
approved a revised comprehensive, long-term capital allocation plan
(the “Plan”) designed to maintain investment grade credit metrics
through cycles, further return capital to shareholders over time,
and continue to invest in accretive organic growth.
Executing under the capital allocation plan announced in
September 2021, Cheniere has repaid or redeemed over $4 billion of
long-term indebtedness, repurchased more than $0.6 billion of
shares, initiated and paid $1.32 per common share in dividends as
of the second quarter of 2022, and reached a positive final
investment decision (“FID”) on the Corpus Christi Stage 3
Liquefaction Project (“CCL Stage 3”). Given the Company’s progress
on its prior capital allocation plan significantly ahead of
schedule, which is driven by the Company’s continued
outperformance, Cheniere has reached a new cash flow inflection
point and now expects to generate over $20 billion of available
cash through 20261 and construction of CCL Stage 3, enabling
further execution on its balance sheet, capital return and growth
priorities. The Plan is designed to achieve a run-rate
Distributable Cash Flow2 (“DCF”) of over $20 per share on a
run-rate basis.
Cheniere is also raising full year 2022 Consolidated Adjusted
EBITDA2 guidance to $11.0 - $11.5 billion and full year 2022 DCF2
guidance to $8.1 - $8.6 billion due primarily to a change in the
expected timing of several cargoes accelerating into 2022 which
were previously forecast for 2023 as well as sustained higher
margins on LNG throughout 2022.
“Today’s revised capital allocation plan marks another
significant milestone for Cheniere and reflects the success
achieved by the Cheniere team, particularly in terms of operational
excellence and safety. The accelerated progress on our 2021 plan
would not have been possible without the hard work and dedication
of our entire workforce,” said Jack Fusco, Cheniere’s President and
Chief Executive Officer. “As a market leading LNG operator, we are
proud of our accomplishments thus far and look forward to
continuing to reliably supply the global market with our flexible,
cleaner-burning LNG in support of our customers and end-users
abroad, while delivering on our commitment to create value for our
all of our stakeholders. Energy security has never been more
critical, and we are confident in the significant long-term role of
North American natural gas in the global energy supply mix.”
The objectives and design of the Plan include:
Long-Term Sustainable Balance Sheet
- Initial $4 billion debt paydown target achieved
- Further debt paydown with revised target run-rate, long-term
leverage of ~4x with investment grade credit metrics maintained
through CCL Stage 3 construction
- Achieve and maintain investment grade ratings across the
Cheniere complex to support cash flow sustainability through
cycles
Meaningful Shareholder Returns
- Upsize share repurchase program by $4 billion for an additional
3-year authorization with potential to repurchase ~10% or more of
Cheniere’s market capitalization with excess capital
- Cumulative debt paydown to share repurchase allocation ratio
reset from 4:1 to 1:1
- Increase annualized dividend by 20% to $1.58 per common share
from inaugural $1.32 per common share dividend initiated last
year
- Plan to increase mid-single digit future growth rate of
dividend to ~10% through CCL Stage 3 construction
Disciplined Accretive Growth
- Pre-filed Corpus Christi Midscale Trains 8 & 9 with FERC in
August 2022 with near-term goal to achieve ~60 MTPA platform
- Develop large-scale brownfield growth opportunities at both
Sabine Pass and Corpus Christi, with long-term potential to reach
~90 MTPA platform
“Thanks to Cheniere’s continued financial and operational
outperformance since we announced our capital allocation framework
last fall, we have achieved significant progress on each of the
four key pillars of that plan – in a matter of quarters, not years
– and are proud to announce our new, revised plan today,” said Zach
Davis, Cheniere’s Executive Vice President and Chief Financial
Officer. “Our new ‘20/20 vision’ is designed to return significant
capital to shareholders, while solidifying investment grade credit
metrics and pursuing accretive growth of our platform within our
disciplined capital investment parameters. We expect to generate
over $20 billion of available cash through 2026 and over $20 of
Distributable Cash Flow per share on a run-rate basis. This revised
plan supports our efforts to ensure the long-term success and
sustainability of Cheniere, while creating and delivering
substantial long-term value for our all of our stakeholders.”
2022 REVISED FULL YEAR FINANCIAL GUIDANCE
(in billions)
2022 Previous
2022 Revised
Consolidated Adjusted EBITDA2
$
9.8
-
$
10.3
$
11.0
-
$
11.5
Distributable Cash Flow2
$
6.9
-
$
7.4
$
8.1
-
$
8.6
INVESTOR CONFERENCE CALL AND WEBCAST
Cheniere will host a conference call to discuss the capital
allocation plan on Monday, September 12, 2022, at 5:00 p.m. Eastern
time / 4:00 p.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 Forecast as of September 12, 2022 and subject to change based
upon, among other things, changes in commodity prices over
time.
2 Non-GAAP financial measure. See “Reconciliation of Non-GAAP
Measures” for further details.
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 million tonnes per annum 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.
Dividends
Future amounts and payment dates of quarterly cash dividends
will be subject to the determination and approval of the Company’s
Board of Directors. The decision by the Board of Directors whether
to pay any future dividends and the amount of any such dividends
will be based on, among other things, the Company's financial
position, results of operations, cash flows, capital requirements,
restrictions under the Company's existing credit agreements and the
requirements of applicable law.
Share Repurchase Authorization
Under the share repurchase authorization, repurchases can be
made from time to time using a variety of methods, which may
include open market purchases, privately negotiated transactions or
otherwise, all in accordance with the rules of the Securities and
Exchange Commission and other applicable legal requirements. The
timing and amount of any shares of the Company’s common stock that
are repurchased under the share repurchase authorization will be
determined by the Company’s management based on market conditions
and other factors. The share repurchase authorization does not
obligate the Company to acquire any particular amount of common
stock, and may be modified, suspended or discontinued at any time
or from time to time at the Company’s discretion.
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 authorizations 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, and (vii)
statements relating to Cheniere’s capital deployment, including
intent, ability, extent, and timing of capital expenditures, debt
repayment, dividends, share repurchases and execution on the
capital allocation plan. 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.
Reconciliation of Non-GAAP Measures Regulation G
Reconciliations
The accompanying news release contains non-GAAP financial
measures. Consolidated Adjusted EBITDA, Distributable Cash Flow,
and Distributable Cash Flow per share 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.
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 forecast amounts for
full year 2022 (in billions):
Full Year
2022
Net income (loss) attributable to common
stockholders
$
1.8
-
$
2.3
Net income attributable to non-controlling
interest
1.2
-
1.3
Income tax provision (benefit)
0.9
-
1.0
Interest expense, net of capitalized
interest
1.4
-
1.4
Depreciation and amortization expense
1.1
-
1.1
Other expense (income), financing costs,
and certain non-cash operating expenses
4.6
-
4.4
Consolidated Adjusted EBITDA
$
11.0
-
$
11.5
Interest expense (net of capitalized
interest and amortization) and realized interest rate
derivatives
(1.4
)
-
(1.4
)
Maintenance capital expenditures, income
tax and other expense
(0.3
)
-
(0.2
)
Consolidated Distributable Cash
Flow
$
9.3
-
$
9.9
CQP distributable cash flow attributable
to non-controlling interest
(1.2
)
-
(1.3
)
Cheniere Distributable Cash
Flow
$
8.1
-
$
8.6
Note: Totals may not sum due to rounding.
Consolidated Adjusted EBITDA represents net income attributable
to Cheniere before net income attributable to the non-controlling
interest, interest, taxes, depreciation and amortization, adjusted
for certain non-cash items, other non-operating income or expense
items, and other items not otherwise predictive or indicative of
ongoing operating performance, as detailed in the following
reconciliation. Consolidated Adjusted EBITDA is not intended to
represent cash flows from operations or net income 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 business performance. We believe
Consolidated Adjusted EBITDA is widely used by investors to measure
a company’s operating performance without regard to items such as
interest expense, taxes, depreciation and amortization which vary
substantially from company to company depending on capital
structure, the method by which assets were acquired and
depreciation policies. Further, the exclusion of certain non-cash
items, other non-operating income or expense items, and items not
otherwise predictive or indicative of ongoing operating performance
enables comparability to prior period performance and trend
analysis.
Consolidated Adjusted EBITDA is calculated by taking net income
attributable to common stockholders before net income 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 foreign
currency exchange derivatives and non-cash compensation expense. 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.
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.
We have not made any forecast of net income on a run rate basis,
which would be the most directly comparable financial measure under
GAAP, and we are unable to reconcile differences between run rate
Distributable Cash Flow and net income.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220912005753/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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