Earnings Analysis October 31, 2026

NextDecade Corp ($NEXT) Q3 2026 Earnings Analysis: Net Income Turns Profitable, First LNG Expected in Q2 2027

Earnings Report

Revenue: $0 (Q3 2026, vs. $0 in the same period last year, vs. $0 expected) · Still in the construction phase with no revenue yet ✅ In line

EPS (Earnings Per Share): $0.58 (Q3 2026, basic EPS attributable to common shares) · vs. -$0.53 expected ✅ Beat · Direct comparison with adjusted estimates is difficult as this is a GAAP figure

Guidance: Maintained · First LNG production in Q2 2027, substantial completion of Unit 1 in Q3 2027 (reconfirming previous outlook)

Stock Reaction: +11.5% (Based on BMO closing price on the same day)

Highlights

Turnaround to Net Profit: Net income attributable to common shares was $155.38 million, or $0.58 per share

Construction Progress: Total progress rate for Units 1 and 2 is 79.7%; substantial completion of Unit 1 is in Q3 2027, one quarter earlier than the contractually guaranteed date

Margin Outlook: Expected margins for non-contracted volumes are over $6 per MMBtu, exceeding the company's base assumption of $5

The profit itself was driven by derivative valuation gains and is far from cash generation. Instead, as construction progress is ahead of the contractually guaranteed schedule, the timing of first revenue has become more concrete, and strong international liquefied natural gas (LNG) prices have increased the value of non-contracted volumes.

Lowlights

Widening Operating Loss: Q3 operating loss was $82.91 million, a 15% increase from $71.96 million a year ago

Financing Costs: Interest expense was $69.26 million, 1.7 times higher than a year ago ($40.28 million), and debt redemption losses also reached $136.51 million

Revenue Gap: Q3 revenue was $0; first LNG production is expected in Q2 2027

As the company is still in the stage of building liquefaction plants, there is no revenue while development and operating costs continue to be incurred. In Q3, as borrowings were refinanced into long-term bonds, interest burdens and redemption losses were recorded on the books simultaneously.

What the Company Said

CEO Matt Schatzman stated that Q3 construction progressed safely within budget and schedule, and that confidence in the timing of Phase 1 operations has grown. The company narrowed and reconfirmed the timing of first LNG, and also set the substantial completion of Unit 1 one quarter ahead of the contractually guaranteed schedule.

Market Reaction and Future Key Points

The reason for the stock price increase lies in the cash flow outlook for 2027 and beyond, rather than this quarter's profit and loss. Due to strong international LNG prices, margin estimates for non-contracted volumes are exceeding base assumptions, and as construction is progressing ahead of the guaranteed schedule, the risk of operational delays has decreased.

It is necessary to confirm whether feedstock gas inflow by the end of 2026 and the first LNG production in Q2 2027 will occur as scheduled.

The next milestones are the commercial contract for Unit 6, the final environmental impact assessment in June 2027, and the investment decision in the second half of the year.

The timing and margins of non-contracted volume sales will determine the shareholder cash flow from 2028 onwards.

Earnings Call Key Summary

We have summarized the key points from the NextDecade earnings call.

[Bullish] First Production Schedule Confirmed: The timing for the first liquefaction production has been narrowed down and confirmed for next year. As construction completion is also expected to be ahead of the contractually guaranteed date, concerns about schedule delays have diminished. Why UST viewed this as bullish: Revenue will be pulled forward if it finishes earlier than the guaranteed date. "Today we narrowed the timing of the first liquefaction production for Unit 1 to Q2 2027, which is consistent with the early volume guidance we presented at the beginning of the year and reconfirmed today." (NextDecade CEO)

[Bullish] Margins Exceeding Base Assumptions: The margins indicated by current futures prices exceed the company's base assumptions. Since there is a large amount of non-contracted volume, this difference could translate into cash for the company. Why UST viewed this as bullish: Margins for non-contracted volumes are higher than base assumptions. "As Matt mentioned earlier, market conditions have clearly improved since eight months before the conflict in Iran began, and the LNG margins shown by current futures price trends exceed our base assumptions." (NextDecade CFO)

[Bearish] Scenario for Price Plunge: The company has a separate assumption for cases where margins drop significantly. In that case, they will adjust by selling more volume through long-term contracts to increase project debt and reduce the debt the company must repay. Why UST viewed this as bearish: Debt burden increases if margins decrease. "Finally, I want to mention that our downside stabilization guidance scenario assumes a margin of $3 per MMBtu for non-contracted volumes during the period of increasing volumes." (NextDecade CFO)

[Neutral] Deliberately Unsold Volume: The company is intentionally holding onto non-contracted volumes instead of selling them. It is profitable if prices rise further, but losses increase directly if prices fall. Why UST viewed this as neutral: The company bears the full brunt of the loss if prices fall. "We have been asked in the past if we plan to sell more non-contracted volumes in advance, but we are very comfortable holding 1,100 TBtu during this period." (NextDecade CEO)