Cheniere Energy (LNG 2.60%), the largest U.S.-based producer of liquefied natural gas (LNG), recently released its earnings for the third quarter of 2024 on October 31st. The raised its financial guidance, showcasing Cheniere's resilience in a turbulent global LNG market. Analysts had forecasted earnings of $1.873 billion, but the company outperformed this with a recorded net income of $0.9 billion, despite a drop in revenue.
| Metric | Q3 2024 Result | Q3 2023 Result | % Change YoY |
|---|---|---|---|
| Adjusted EBITDA | $1.5 billion | $1.7 billion | -11.8% |
| Net Income | $0.9 billion | $1.7 billion | -47% |
| EPS | $3.93 | $7.03- | -44 |
| Total Revenues | $3.8 billion | $4.2 billion | -10% |
Source: Analyst estimates for the quarter provided by FactSet.
Understanding Cheniere Energy's Business
Based in Houston, Cheniere Energy is a leader in liquefied natural gas production, primarily catering to the international market. It runs production facilities in Sabine Pass and Corpus Christi, ramping up production through current expansion projects. Its business thrives on selling LNG, leveraging significant contracts that secure predictable revenue streams over extended periods.
Recently, Cheniere has concentrated on increasing its production capabilities. The company is adding over 10 million tons per annum (mtpa) of capacity through the Corpus Christi Stage 3 expansion project, targeting a total production capacity of approximately 45 mtpa. These projects are crucial in maintaining Cheniere's competitive edge as the worldwide demand for LNG continues to grow.
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Key Data Points
Quarterly Performance Highlights
During Q3 2024, Cheniere saw significant milestones and challenges. Financial metrics like the Adjusted EBITDA decreased to $1.5 billion from the previous year's $1.7 billion. The decline partly results from the competitive LNG markets and reduced international spot pricing.
Notably, net income exhibited resilience with a reported $0.9 billion, defying expectations. Earnings per share (EPS) reached $3.93, indicating stable internal cost management, despite external pressures like pricing and regulatory changes. Total revenue fell from $4.2 billion last year to $3.8 billion, highlighting the impact of long-term contracted sales over spot transactions.
Cheniere maintains strong financial health, with $10.7 billion in total liquidity supported by comprehensive credit facilities. By leveraging long-term contracts that cover 95% of its anticipated production, Cheniere ensures a high level of financial stability and mitigates market volatility risks.
Looking Ahead: Future Outlook
Cheniere's revised guidance exhibits optimism, raising full-year adjusted EBITDA expectations to $6.0 billion to $6.3 billion, up from the previous $5.7 billion to $6.1 billion.
