New Fortress Earnings: Project Delays Make Near Term More Difficult, Long-Term Objectives Attainable

No-moat New Fortress reported weak earnings per share, missing FactSet consensus by 56%, driven by one-time impairments due to the early termination of its FEMA contract in Puerto Rico. Ultimately, this miss due to the contract termination is something that we are comfortable with since the lost contract is being replaced by a four-year, higher-volume contract that will provide greater value to both parties in the long run even if it means further capacity investment. Without these one-time losses, New Fortress would've outperformed estimates by 20%.