Hello and welcome to the Excelerate Energy Third Quarter 2023 Earnings Conference Call. My name is Elliot, and I'll be coordinating your call today. I'd now like to hand over to Craig Hicks, Vice President of Investor Relations and ESG. The floor is yours. Please go ahead.

Good morning everyone. Thank you for joining Excelerate Energy's third quarter 2023 financial results call. Participating on the call today are Steven Kobos, President and Chief Executive Officer; and Dana Armstrong, Executive Vice President and Chief Financial Officer. Our third-quarter 2023 results press release and presentation were released yesterday afternoon and can be found on our website at ir.excelerateenergy.com. I would like to remind everyone that we will be making forward-looking statements on this call that involve a number of risks and uncertainties. Our actual results may differ materially from those expressed in these forward-looking statements, and we make no obligation to update or revise them. Today's remarks will also refer to certain non-GAAP financial measures. We have provided a reconciliation to the most directly comparable GAAP financial measures at the back of the presentation. Now, I'd like to turn the call over to Steven Kobos, Chief Executive Officer of Excelerate Energy.

Thanks Craig and good morning, everyone. Today, I'm going to talk about our financial and operational performance during the quarter, our recent commercial updates, and our growth strategy. Then I'll pass the call over to Dana, who will provide more detail on our financial results for the quarter. Let's just start by talking about who we are as a company. Excelerate Energy is a leading provider of flexible LNG infrastructure and integrated solutions. We enhance energy security for countries around the world and we help them to transition to a clean energy future. These fundamental tenets of who we are remain unchanged. We've got a geographically diverse and resilient business model designed to deliver predictable earnings results, which is exactly what we did. Excelerate reported very strong financial results in the third quarter. Our adjusted EBITDA came in at $107 million, and net income was close to $47 million. The results we delivered during the quarter were driven primarily by higher revenues in our core regasification business, outperformance of our gas sales contracts in Brazil, and lower-than-anticipated expenses across the fleet. Our FSRU and terminal services business, which is underpinned by stable long-term contracts, is the cornerstone of our business model. It consistently generates positive cash flow and gives us the financial flexibility to execute our growth strategy. Our strong performance year to date has given us the confidence to increase our full-year adjusted EBITDA guidance to $340 million to $350 million. And on November 7th, the Excelerate Board of Directors declared another $0.025 dividend per share to shareholders of record as of November 28th. In addition to delivering another quarter of strong earnings results, we optimized our near-term and long-term financial position by executing two new commercial agreements. On October 17th, we signed a 10-year contract with Petrobras to charter the FSRU Sequoia. This agreement demonstrates our commitment to help enhance Brazil's energy security. It is an important step in furthering our long-term sustainable growth plan in South America. Earlier this week, we signed a long-term LNG sale and purchase agreement for SPA with Petrobangla. This long-term SPA is a significant milestone for Excelerate. It represents the next phase of our plan to integrate our business in Bangladesh. On the operations front, the FSRU Excelsior completed its seasonal service at the Bahia Blanca gas port in Argentina at the end of August. Now the Excelsior is back on hire with the German government. It's currently at the Navantia shipyard in Spain for customer-requested technical upgrades. Beyond that, the construction of our newbuild FSRU, called 3407 with Hyundai Heavy Industries, is making great progress and remains on track for delivery in June 26th. Finally, in October, we released our inaugural sustainability report, which highlights our 2022 global sustainability activities and environmental performance results. Excelerate has outsized importance in the global energy landscape. Around the world, geopolitical instability, including the ongoing war in Ukraine and the conflict in the Middle East, has highlighted the importance of having flexible energy infrastructure that is capable of mitigating the effect of unforeseen events and the intermittency of renewable energy. We are an indispensable energy company in the world we live in. In Finland, the disruption of the Baltic Connector pipeline has raised serious concerns about energy security in the region. The subsea pipeline, which connects Finland and Estonia, is expected to be out through the winter. In the meantime, Finland will continue to rely primarily on our FSRU, the Exemplar, to meet its natural gas needs. Given the disorder that countries around the world are facing, the need for energy security and the essential services that Excelerate provides has never been greater. We believe this will be so for decades to come. Excelerate has a legacy of using its FSRU fleet to strengthen energy security for customers across its global footprint. As the needs of our customers change, the flexibility of our fleet allows us to offer a variety of integrated services to best meet their needs. On one hand, our FSRUs are used as cost-effective insurance for countries looking to stabilize their energy system or advance their transition to renewable energy. On the other hand, in some markets, our FSRUs operate close to maximum send-out regas capacity to deliver base-load natural gas supply to our customers. For example, this is how our FSRUs are used by our customers in Pakistan and Bangladesh, where future demand for LNG and natural gas is expected to be robust. This shouldn't be a surprise to anyone, given that the combined population of these two countries is over 400 million people. Higher utilization markets are an important part of our growth strategy. They create opportunities for long-term infrastructure uplift from LNG and gas sales through our terminals. Regardless of how our customers utilize our services, the fixed fee revenues from our FSRUs and terminals create an exceptionally strong foundation for sustainable growth. Our recently announced long-term charter agreement with Petrobras is a great example of how valuable security of supply can be for our customers. Last month, we signed a 10-year contract with Petrobras to charter the FSRU Sequoia to enhance Brazil's energy security and support its transition to renewable energy. Under the agreement, which will commence on January 1, Excelerate will deploy the Sequoia to provide regasification services in Brazil at the Bahia Re-gas Terminal. The deployment of the Sequoia, which is one of the most modern FSRUs in the global fleet, will help ensure the operational continuity of the Bahia terminal after the expiration of the current terminal lease agreement on December 31st of this year. Petrobras was one of the world's earliest adopters of FSRUs. They know the asset class extremely well. We appreciate the fact that Petrobras selected Excelerate to be their preferred partner for FSRU services in Brazil. Financially speaking, this is a great deal for Excelerate. After purchasing the Sequoia for $265 million in Q2, we secured a long-term contract for the vessel at the high end of the range of current market rates for FSRUs. We did what we said we would do. Importantly, the deal expands our core regas business, which allows for even stronger visibility to predictable near-term and long-term cash flows. Another good example of how our flexible FSRUs are utilized is our recently announced LNG SPA with Petrobangla. Under this 15-year agreement, Petrobangla has agreed to purchase from Excelerate 0.85 million tons per annum of LNG in 2026 and 2027 and 1 million tons per annum from 2028 to 2040. The SPA volumes, which we expect to be back-to-back on the supply side, will be delivered to Excelerate's two existing FSRUs, the Excellence and the Summit LNG in Bangladesh. Long-term LNG offtake agreements like this SPA are an essential part of our integrated growth strategy to lock in ratable economic uplift on our existing infrastructure. We are focused on optimizing our FSRU fleet and evaluating strategic investments in new assets and infrastructure to further our growth. The sustained tightness of the FSRU market should create new opportunities for Excelerate to connect LNG to downstream customers. To capitalize on these incremental opportunities, we plan to invest in additional FSRUs and LNG infrastructure that will position the company to expand our presence in markets with a growing demand for LNG. This includes regions such as Sub-Saharan Africa, in countries such as India, Pakistan, Vietnam, and Bangladesh. Our Pirate LNG project is a great proof point of the strategy. Pirate LNG is a critical part of Bangladesh's plan to support its ever-growing economy by providing natural gas to new and existing customers in the southern and western regions of the country. The project scope includes an offshore LNG import terminal and a 270-kilometer 1 billion cubic feet per day onshore pipeline to the country's third largest city. We recently signed a nonbinding charter sheet with Petrobangla for Pyra. The term sheet, which details the broad commercial parameters and framework for the deal, represents an important milestone in the development of the project. We are now positioned to advance several critical work streams for the project, including our ongoing discussions with potential equity partners and lenders and the negotiations of the definitive agreements. In summary, we expect this focused approach to expanding our presence in markets with growing demand for LNG will result in more near-term earnings and cash flow growth while we continue to develop our longer-term organic capital projects. With that, I'll now turn the call over to Dana.

Thanks Steven and good morning everyone. We are very pleased with Excelerate's performance in the third quarter of this year. Our third-quarter net income was $47 million, which is an increase of $9 million or up 25% as compared to the prior year third quarter. As compared to the second quarter of this year, our net income was up $17 million. Our third-quarter adjusted EBITDA was $107 million, an increase of $29 million or up 37% over the prior year third quarter and up $18 million as compared to the second quarter of this year. The year-over-year increases in net income and adjusted EBITDA were primarily driven by higher charter rates in Finland, Argentina, Brazil, and Germany and lower operating lease expenses driven by the purchase of the Sequoia in the second quarter. These year-over-year increases were partially offset by the end of our contract in Israel in the fourth quarter of last year. The increase in adjusted EBITDA versus last quarter was driven by higher margins on our gas sales contracts in Brazil, inflation index adjustments on certain contracts that were effective in early Q3, along with lower vessel operating costs. Excelerate continues to benefit financially from having a portfolio of stable long-term contracts. This portfolio has been strengthened by our recent FSRU charters, which have all been contracted at higher rates that are reflective of the increased market value for the asset class. As of September 30th, our FSRU and terminal assets had roughly $3.5 billion of remaining contracted cash flows with a weighted average remaining life of seven years. Including the new Sequoia Charter with Petrobras signed in October, our contracted FSRU and terminal services portfolio has grown to over $4 billion of remaining contracted cash flows. Total CapEx for the third quarter was $12 million, which included $4 million of maintenance CapEx, mostly related to vessel upgrades for the FSRU Excelsior. Year-to-date through the third quarter, our maintenance CapEx was $16 million. On a full-year basis, we expect to spend between $20 million and $25 million on maintenance CapEx. As previously mentioned, the FSRU Excellence is performing its planned dry dock activities this quarter. The vessel left for dry dock in early November, and we expect the vessel to return to service in Bangladesh by late December. Because the Excellence is under a build, own, operate transfer or BOOT structure, the related expenses will not be classified as maintenance CapEx, but instead, the financial impact of the dry dock will be recognized through our income statement. The full effect of the dry dock on our fourth-quarter EBITDA results is included in our full-year guidance. Based on the strong financial results we've delivered through the third quarter, we are raising our adjusted EBITDA guidance for 2023. For the full year, adjusted EBITDA is now expected to range between $340 million and $350 million. Excelerate is well positioned financially to execute on our focused growth strategy, and we look forward to advancing our plans to create value for our shareholders. With that, we'll open up the call for Q&A.

Thank you. The first question comes from Chris Robertson with Deutsche Bank. Your line is open.

Hey, good morning Steven and Dana. Thanks for taking my questions and congratulations on the really solid quarter.

Thanks, Chris. Appreciate it.

Sorry, I thought I couldn't hear you guys for a second there. Yes, I just wanted to dive down a bit further into the new Petrobras agreement. I guess, how should we think about that in terms of incremental EBITDA that the new contract brings? And how should we compare that with the prior arrangement that you had there versus this new agreement? Is there any kind of give and take with regards to gas sales upside? Is it primarily just a fixed fee arrangement here? Just a little bit more detail would be helpful.

Thanks, Chris. I appreciate your question. I'll pass it over to Dana shortly to discuss the EBITDA uplift. Once you hear from her, you'll see it's a significant opportunity for us. It represents ten years of reliable revenue, and it's more advantageous than what others are achieving in Europe. We value our partnership with Petrobras, as this is their desired deal, which is a crucial factor. As Dana mentioned, with this contribution, we now have over $4 billion in future contracted cash flows. Additionally, this agreement includes a CPI index that adjusts every two years, allowing for predictable modeling. We have had concerns about Brazil's gas sales volatility due to its reliance on hydropower, but this deal promises consistent earnings year after year, and we're very pleased with it. As I mentioned earlier, Petrobras has been collaborating with FSRUs from the beginning, and it's exciting that they are choosing us as their exclusive partner moving forward. Dana, could you provide Chris with more details?

Yes, Chris, so just to add to that, to be a little bit more specific, we're expecting our EBITDA in the mid-$60 million range over the near term. And that's going to increase over time because of the CPI escalator, so it's a very solid, profitable contract for us. In fact, it's probably our most profitable contract that we have. So again, very excited about it. In comparison to gas sales, as Steven stated, the gas sales have been lumpy over the past two years and not predictable. So even though we had great performance this year, Brazil gas sales, that's not guaranteed in the future. So, we're definitely happy with this deal. Does that answer your question?

It does. Yes, it sounds like a good deal for you guys, and I like the predictability of the cash flows here from that. I guess moving on, centered in Dubai, I was under the impression that there was an extension of one of the FSRUs there through 2030. And if you could comment on the FSRU, the Express, I'm under the impression that it's kind of on a rolling contract basis. What's the status of the Explorer in terms of the contract expansion? And then how should we think about the rolling contract nature on the Express?

Yes. Well, thanks, Chris. We can jump down into that. I was just in UAE a few weeks ago. That extension on Explorer, we announced that, gosh, if you like, back in January or so. And what's telling about Explorer kind of fits into our narrative about energy security. Because that was an extension off of a charter that was going to expire in 2025. So, you had somebody three years before an end date saying, hey, we really would like to see an extension of that through 2035. So, I took it as a clue, we took it as a clue that energy security is important. People are thinking about locking in energy security sooner than they otherwise would. And it's a critical piece of what Dubai needs for their energy mix and not just in the heat of summer. So, we're pleased that Dubai is counting on us to ensure the integrity of their energy system, and we're pleased to continue that relationship to 2030, if not well beyond. In terms of Express, Express is a different kind of poster child for energy security because the fact of the matter is ADNOC could have any asset they want in the world that has been on an evergreen for some time. I think we've highlighted that in fact a couple of years ago. And yes, they count on it. And I'm comfortable that they are not going to let go of that asset anytime soon just because of the new world we live in, and people want to ensure energy security. So, I think the need, the heightened awareness for energy security is driving some of this. And just to clarify, the Explorer extension runs through October of 2030.

Okay. Yes, that's helpful. Yes, I guess the reason I was asking on the Express was more about, from your perspective for optionality, let's say, looking into these other regions, as you've highlighted, there may be an opportunity to go into a higher utilization market. And there are not too many of the base assets left that have charters rolling off in the near term. So I didn't know how you thought about the Express potentially going into a different market if an opportunity would arise.

Yes. That is something we have and would discuss with ADNOC. I like that relationship and want to maintain that relationship for the long term. We have, in the past, borrowed the Express seasonally in winter, just like we borrowed the Excelsior from the German government over the past Northern Hemisphere summer. So, we're always looking at ways to find win-wins, whether that's bridging to a more permanent asset or not. And you can be sure that we're having those discussions with ADNOC, just as we would with every customer—

Sure. Yes. Last question for me, and I'll turn it over. Just with regards to Pyra, you saw in the term sheet. I guess, any estimates in terms of timeline around kind of the next stage part of the process and when there might be kind of a final investment decision there?

Yes, I'll let Dana provide a little more color. But if you think about the next milestones, this was a nonbinding term sheet. It certainly helped us refine a lot of aspects of this project. I mean you would be looking for some intermediate agreements that we would announce, you'd be looking for execution of definitive agreements, you would be looking for EPC contract awards. We previously announced the mandate letter we've signed with IFC that is now enforced after this term sheet was a milestone in that mandate letter. So, we'll also be moving forward under the financing arrangements with our mandated lead arranger. We're very pleased about that. But those are some of the milestones you'll be seeing come down the road.

Okay. Yes, thanks for the color Steven. We'll be on the lookout for those. I'll turn it over. Thank you for your time.

Thanks Chris.

We now turn to Jeremy Tonet with JPMorgan. Your line is open.

Hi, good morning.

Morning.

Hey Jeremy.

Hi. I would like to start by asking if you could share any additional thoughts regarding your capital allocation strategy moving forward. It appears that there is a significant amount of LNG export infrastructure being developed globally, though perhaps not as much regasification capacity. This indicates a considerable demand in that area. At the same time, some of your competitors might currently offer higher dividend yields compared to Excelerate. I am curious about how you view the balance between these competing priorities and your overall approach to capital allocation.

Jeremy, that's an excellent question, and it's something we've discussed and analyzed. As you mentioned, LNG production is increasing, but we aren’t seeing a corresponding rise in importer capacity. There is a lack of import capacity in some regions where we expect the most growth. I want to emphasize that we are dedicated to growth, and we believe that having the resources to support that growth is very important at this time. Now, I'll pass it over to our CFO.

Yes, thanks Jeremy. Our priority remains growth. At this time, we do not plan to increase our dividend. We will continue to assess that as we grow and proceed. Currently, we are concentrated on expanding the business and utilizing our capital to support that growth. We have a new build launching soon, and we will work on financing for it. We are also thinking about potentially placing an order for a second new build to facilitate more growth. This is where our priorities stand at the moment.

Got it. That's helpful there. And then just speaking with investors, I guess, in the market. The stock price has been a bit soft, and I think for holders, there's been a degree of frustration there. And I'm wondering what, I guess, steps management sees to kind of better highlight the value here or realize the value here, if there could be strategic actions that could be taken or otherwise. Just kind of curious, your thoughts on that in general.

Yes. Well, Jeremy, thank you for that. I do think it is a good opportunity for investors, there's no doubt about that. I think the best thing we can do is to continue to announce. You saw just in the lead up to this earnings cycle, some critical announcements from us on things we are progressing. And we need to keep putting wins on the board. I think it's pretty simple. We do see a lot of opportunities in front of us. And obviously, some possibility involves other uses of that dry powder out there in the M&A space, which we need to continue to evaluate. But the focus is on growth. We are committed to growth. We think we're putting wins on the board, and we hope we can get more attention to that fact.

Got it. That's helpful. Thanks. Just last one, if I could. As far as looking into 2024, be it guidance on EBITDA, CapEx or what have you, when would we expect that kind of more color on that? And any high-level thoughts that you could provide incrementally there?

I'm going to hand it over to Dana lest I skip into forward-looking statements.

Yes, I mean, Jeremy, I'll say the same thing as Steven. At this point, we can't guide on 2024. We're working on our plan. We realize the analysts are antsy to get that out, and we'll get that out to you guys as soon as we can, but our expectation is that will be early next year. We'll provide more information on 2024 guidance.

Got it. I'll leave it there. Thank you.

Thank you.

Thanks Jeremy.

We now turn to Michael Blum with Wells Fargo. Your line is open.

Thanks. Good morning everyone. So, most of my questions have been addressed. But I just had one as it relates to future markets and opportunities. You went through a bunch there, that was very helpful. You talked about investing in additional FSRU LNG. Just wanted to clarify, does that mean you're looking to acquire, to build? Just trying to understand how you would approach potential future market opportunities? Thanks.

Thank you, Michael, for the question. We are generally optimistic about the asset class and believe that those who have the energy security of FSRU currently, regardless of whether they take long-term LNG contracts, are benefiting from cost-effective insurance. Once they have this reliable insurance, they are likely to stay committed. I mentioned this during our meeting in New York last December, and my perspective has not changed. Regarding the various markets we are exploring, some may require additional FSRUs, while others may need a floating storage unit, which operates similarly to a conventional carrier requiring shore-based regasification. The markets we discussed include opportunities for LNG-to-power projects as well as import terminals that distribute volumes. The common theme across all these markets is infrastructure. We are evaluating different types of infrastructure based on the specific needs of each market, and this will differ from one market to another. However, I want to emphasize that we remain optimistic about the FSRU asset class, and we see a need for new FSRUs in every market. Some will need them, and we are dedicated to being the preferred partner for countries pursuing energy security, and we will take the necessary steps to achieve this.

Our next question comes from Zack Van Everen with Tudor, Pickering & Holt. Your line is open.

Hi all. Thanks for taking my questions. Just wanted to follow-up on an earlier question. Going into 2024, it sounds like a majority of the FSRUs are now under contract. I just wanted to get additional color on the ability to market some of those. You mentioned on the Express, whether it's seasonality within those contracts, do you guys still have the ability to take advantage or help out a situation like what happened in Finland, if that were to happen going forward? Just any flexibility on current contracts to use the ships in different markets in different seasons.

Thanks Zack. That one is pretty simple. These are critical energy security for a country, so it shouldn't be surprising we don't have a call, right, to say, hey, we'd like to leave you in a lurch. This will be a bilateral discussion, but people have this bilateral discussions. We have those discussions. We've always had those discussions. And that's how we got Germany to help out Argentina this past year. In years past, we have borrowed the Express seasonally. Now, I would say it's got to be a clear defined opportunity. And it's going to vary over time, depending upon what the near-term geopolitical risk profile is. I'm glad you mentioned Finland though, because, for example, with the disruption of the Baltic Connector pipeline between Finland and Estonia, they're not getting gas from Russia, probably never going to get gas from Russia again because they have a long memory and they can't get the pipeline from the continent. So, we are providing the overwhelming majority of Finland's natural gas needs. It's a mature economy. They have a relatively small need for natural gas, but that need they have is absolutely critical to their economy. And that's a situation where I wouldn't expect anyone to let go of it. Other folks are going to have different needs in places with extensive hydropower. You might have visibility of full year out reservoirs, what your needs will be. So, I just want to be clear, it's a very individual discussion that we have with our customers. But we are always having those discussions, and we are looking for win-wins. And I think we've done a good job of identifying win-wins in the past, and you can count us to continue to do that.

Perfect. Appreciate that. And one last quick one. Can you remind me of what other contracts have the CPI or inflation clauses in the contract?

Yes. Again, to see what we've not disclosed, but it's the vast majority of our contracts that have that. And for most of those contracts, it's effective in mid-year. So, that's why we saw a little bit of a bump in the third quarter.

Okay, perfect. That’s all I had. Thanks everyone.

Thanks Zack.

We now turn to Craig Shere with Tuohy Brothers. Your line is open.

Good morning. Thanks for taking the question and congratulations on the good quarter. Expanding on Michael's question, can you kind of express thoughts about your long-term interest in investing in and retaining ownership of power pipeline or other infrastructure assets that would support LNG imports in the various markets you had mentioned?

Thank you, Craig. The situation will differ by market. However, if you take a step back and examine the fundamentals in these markets along with the broader macroeconomic trends, we see more LNG final investment decisions being made with fewer players entering the market. As we continue to successfully open new markets, I anticipate there will be opportunities for growth there. It's important to clarify that we are exploring ways to enhance an already strong return on our infrastructure investments. This will largely depend on the specifics of each deal. For instance, we moved forward with the deal that Petrobras wanted on Sequoia. A lot of it comes down to what makes the most sense with the counterparty involved. While we regularly engage with sovereign entities, there is always someone on the other side of the table, and we need to be offering something they want to acquire, which we believe we can accomplish.

Understood. And just want to dig a little more into Jeremy's 2024 question. I know that there's no guidance, but I presume that there's some comparative obvious drivers such as the Sequoia charter versus the robust 2023 gas margins, whether you might have ongoing seasonal Argentine deployments. And obviously, the absence of the Excellence dry-docking next year. From a top level on puts and takes, do you see these things kind of netting out, being a little more positive? Any broad thoughts?

I'm going to revisit that point, Craig, because I think you're asking me for more clarity. I'm not providing guidance on it, but I would appreciate your help, Dana. I'm not entirely sure what we've discussed.

Yes, I apologize, Craig, but we still need to go through our internal processes. You're correct that all of the questions are very valid. However, until we have conducted a thorough review of these issues, we don't feel comfortable providing guidance on what 2024 will look like. We will get that information to you as soon as we can.

Yes. What we can tell you, Craig, is you're going to have a lot easier time modeling it.

This concludes our Q&A. I'll now hand back to Steven Kobos, CEO for closing remarks.

Thank you again, to everyone who joined us on today's call. As you heard this morning, we had a great quarter, and we are optimistic about our plans to maximize shareholder value. We take pride in being one of the world's premier providers of flexible LNG infrastructure and a preferred partner for countries seeking to stabilize their energy systems. We will continue to take the steps necessary to scale our business and expand our reach even further. If anyone has any questions, please feel free to reach out to Craig Hicks, our VP of Investor Relations. Thank you very much.

Ladies and gentlemen, today's call has now concluded. We'd like to thank you for your participation. You may now disconnect your lines.