Hello, and welcome to the Excelerate Energy Third Quarter 2024 Earnings Conference Call. My name is Alex, and I will be coordinating today's call. I will now hand it over to your host, Craig Hicks, Vice President of Investor Relations. Please go ahead.

Welcome to Excelerate Energy's Third Quarter 2024 Earnings Call. Participating on the call today are Steven Kobos, Chief Executive Officer, and Dana Armstrong, Chief Financial Officer. Also joining the call today are Oliver Simpson, Chief Commercial Officer, and David Liner, Chief Operating Officer. Our third quarter 2024 earnings 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. With that, it is my pleasure to pass the call over to Steven Kobos.

Thank you, Craig. And to all of you on the call, good morning. I know that many of you are familiar with the Excelerate value proposition. But for those of you who are new to our story, I want to start today's call by simply stating who we are as a company. At Excelerate Energy, we are committed to being the global leader in FSRUs and downstream LNG infrastructure. Our aim is to leverage our unrivaled experience and help customers across the globe unlock access to abundant LNG supply. Q3 was a fantastic quarter for us. I am proud that we delivered another strong quarter of solid financial and operational performance. This resulted in adjusted EBITDA of $92 million. Our ability to deliver consistent results and generate strong cash flow is driven by the high quality of our core regas business. This business is underpinned by a contract portfolio that has about $4 billion in future revenue with a weighted remaining term of seven years. This is a real foundation. Our FSRU and terminals business gives us ample flexibility to invest in growth over the near, mid and long term. It's also why we are confident in our decision to more than double our quarterly dividend to $0.06 per share. Dana is going to speak more to the dividend increase during her remarks. I want to take this opportunity to thank each and every member of the Global Excelerate team. They work hard to ensure the energy needs of our customers are met every day. Quite frankly, that's why we obsess about operational excellence. We had a stellar quarter operationally with reliability in excess of 99.8% and zero recordable safety incidents. These are impressive statistics considering our pool of over 700 seafarers who served on our vessels. During the quarter, the crew of the FSRU Excellence achieved a new milestone. They safely performed their 250th ship-to-ship LNG cargo transfer at our MLNG terminal in Bangladesh. More than 50 of those transfers occurred this year. What an amazing accomplishment for the team. On this morning's call, you are going to hear three themes. Excelerate Energy is driving near and midterm value creation. We are generating sustainable earnings, and we are executing a disciplined capital allocation plan. Now let's talk more about our strategy, which is our North Star. Over the last few quarters, we have focused on the steps we are taking to optimize our core regasification business and the strategic catalysts we are advancing to maximize value for our shareholders. Today, I want to spend some time discussing our strategy for growing our fleet and how we are leveraging our LNG supply portfolio to support our growth projects and enhance our infrastructure returns. I've said it before, and I'll say it again, our FSRU and terminals business is the cornerstone of our company. Growing our fleet responsibly as opportunities present themselves is an important part of our plan to increase our presence in both new and existing markets around the world. We've talked previously about Hull 3407. This is our newbuild FSRU that is being constructed by Hyundai Heavy Industries in South Korea. Hull 3407 is going to be best-in-class and capable of delivering one billion cubic feet per day of natural gas. This makes it well suited for deployment in markets with a need for high send-out. In October, I'm pleased to report that we reached the steel cutting milestone for the FSRU. The next milestone, keel laying, will occur in March of 2025. 3407 remains on track for expected delivery in June 2026. When you look at our fleet, it's obvious that we like new build FSRUs. At the same time, we also recognize that the projects in our pipeline have a wide range of needs. Several of these projects would require a smaller send-out vessel, making them ideal for FSRU conversions. Our team is currently evaluating LNG carrier candidates and is analyzing cost-efficient conversion options for our integrated terminal projects. We are eyeing an LNG carrier acquisition in 2025. In the near term, we're going to need an LNG carrier to support future deliveries of LNG volumes in our portfolio. So, to help you understand how this all fits together, let's dive into our molecule strategy. Excelerate's LNG supply strategy complements our core regasification business and it enhances returns on our existing infrastructure investments. We utilize our global presence and market knowledge to develop LNG demand and provide tailored LNG delivery solutions to our customers. Additionally, we're establishing a diversified supply portfolio to support our LNG sale and purchase agreements. We now have several tangible proof points of this strategy at work. As you know, through our market position in Bangladesh, we signed a 15-year deal to sell LNG to Petrobangla beginning in 2026. We increased the capacity of one of our FSRUs in Bangladesh to accomplish this. We subsequently sourced up to one million tonnes per annum of supply for the deal from Qatar Energy. The deal is expected to generate approximately $15 million to $18 million of EBITDA annually. In our portfolio, we also have Venture Global FOB volumes. Under the agreement, Excelerate will purchase 0.7 million tons per annum of LNG from Venture Global for 20 years starting in 2027. This equates to roughly 10 cargoes per year. These volumes will help support the commercial opportunities in our pipeline. Our LNG marketing team is pursuing additional deals to further optimize our supply portfolio. As an example, in Q3 2024, Excelerate signed midterm agreements for LNG purchases and sales in one of the Atlantic Basin regions in which we do business. Over the terms of these agreements, we will purchase and sell in total approximately 0.65 million tons of LNG. The pricing will be based on a major European natural gas index. And under these agreements, our first purchase will be made during the fourth quarter of 2024. This is a great deal for Excelerate because it furthers our efforts to expand our portfolio. It also helps to derisk the investment we plan to make next year in the LNG carrier that would eventually serve as our first FSRU conversion. Like other deals we've spoken about on our calls, once again, we are buying and selling on the same index and derisking margin. We are being consistent. Last quarter, we discussed our order for our first reliquefaction kit for our fleet. I'm pleased that interest from our customers is there as we expected, and we are currently in commercial discussions to install two reliq units in our fleet. Last quarter, we also shared with you our interest in entering the Vietnamese energy market. Vietnam is one of the fastest-growing economies in Southeast Asia. It is a very attractive emerging market for foreign investment. This economic growth is driving a rapid increase in demand for energy. LNG will play a pivotal role in the decades to come. This is especially true as Vietnam transitions from carbon-intensive fuels and introduces intermittent renewables. As a U.S. LNG company with a global presence, we are pursuing opportunities to develop and invest in LNG infrastructure in Vietnam. In September, Excelerate signed a strategic partnership agreement with PetroVietnam Technical Services Corporation, or PTSC. They are a subsidiary of PetroVietnam, a state-owned energy company. Through that partnership, we are studying FSRU-based LNG solutions to supplement the declining domestic gas supply and expand the use of natural gas throughout the country. We remain in confidential negotiations with our counterparties on the project. Last quarter, we also discussed the need for an FSRU-based import solution in the lower Cook Inlet region of Alaska. The South Central region of Alaska has historically relied on Cook Inlet natural gas for most local heating systems, electricity generation, and fueling the local economy. However, Cook Inlet domestic natural gas supply is expected to be fully depleted by 2035. This means that the region will need to import LNG even sooner, starting as early as 2028. An FSRU-based integrated terminal is the best solution to meeting the state's near-term needs and helping Alaskans bridge to their energy future. We continue to work with local utilities and state officials, and we are conducting technical surveys that will inform the integrated LNG terminal design and engineering. Before I turn the call over to Dana, I'd like to address our business in Bangladesh. On our last earnings call, we talked about the ongoing transition in the government. Since then, I've had an opportunity to visit the country and meet with the leader of the Bangladesh government, Nobel Laureate Chief Adviser Mohammad Yunus and several cabinet-level advisers. Bottom line, our existing contracts in SPA with Petrobangla are secured. From our discussions, we also know that there is an appetite for even more foreign investment in the country. We respect the government's deliberate approach to ensuring all energy infrastructure and supply agreements meet the current and future needs of the country. The reality is that the fundamentals that support many of these prospective projects remain the same. Bangladesh needs more natural gas. We look forward to supporting the government and the development of future energy projects when they are ready to advance those initiatives. Today, Excelerate's two FSRUs deliver approximately 34% of Bangladesh's natural gas supply. We are a long-term committed partner to Bangladesh, and we are well-positioned to support the people of Bangladesh for many years to come. With that, I will now turn the call over to Dana.

Thanks, Steven, and good morning, everyone. As Steven said, we had a great third quarter and are pleased with our financial results. Adjusted EBITDA for the third quarter was $92 million, up $3 million or up about 4% versus last quarter, primarily driven by lower operating costs across several regas projects and higher gas sales margins. Our maintenance CapEx spend this quarter was $4 million. Year-to-date through the third quarter, we spent roughly $35 million on maintenance CapEx. Most of our year-to-date maintenance CapEx spend was for upgrades for our Excelsior vessel in advance of the Germany regas project, along with various vessel equipment purchases to support the full fleet. In relation to next year's maintenance CapEx in the second half of 2025, two of our FSRUs will go into dry dock. Unlike the dry docks we incurred recently in Bangladesh, the cost for both of our 2025 dry docks will be capitalized to the balance sheet. From an income statement perspective, we'll incur an off-hire impact for the time that the vessels are in dry dock, which is expected to be between 40 to 50 days per vessel, inclusive of transit time. We'll share further information on the 2025 dry docks and other financial assumptions for 2025 when we release our financial guidance next February. At the end of the third quarter, our total debt, including finance leases, was $716 million, and we had $608 million of cash and cash equivalents on hand. Roughly all of the $350 million of revolver capacity was available for borrowings as of quarter end. With our robust free cash flow generated by our core regas business, our stellar balance sheet and the liquidity provided by our revolver, we have more than sufficient capacity to fund our near-term growth opportunities. Next, I'd like to provide a recap of our capital allocation strategy. Excelerate's capital allocation strategy is focused on investing in growth, maintaining our best-in-class fleet and returning capital through quarterly dividends and our share repurchases. We are committed to enhancing shareholder returns in the near term while we continue to advance on our strategic growth catalysts. As a reminder, we announced a two-year $50 million share repurchase program earlier this year. During the third quarter, we purchased roughly 364,000 shares or just over $7 million of our Class A common stock at a weighted average price of $20.61 per share. Year-to-date through the third quarter, we've utilized roughly $28 million of the $50 million that was previously authorized. Additionally, last week, our Board of Directors approved a quarterly cash dividend equal to $0.06 per share of Class A common stock, representing an increase of $0.035 per quarter or 2.4 times the previous level. The dividend is payable on December 5, 2024, to Class A common stockholders of record as of the close of business on November 20, 2024. This dividend increase is aligned with our capital allocation strategy and reflects the strength of our balance sheet, the stability of our core regas business and the confidence we have in our cash generation. Next, let's turn to an update on our financial guidance for 2024. Based on our performance to date, we are raising and narrowing our previously communicated adjusted EBITDA guidance for 2024. For the full year, we are now expecting adjusted EBITDA to range between $335 million and $345 million. The increase in the guidance range was primarily driven by higher margins across several regas projects, lower vessel operating costs and lower-than-anticipated business development spend. For the full year, we now expect maintenance CapEx to range between $40 million and $50 million. Committed growth capital is still expected to range between $70 million and $80 million. This range is inclusive of the $50 million milestone payment for the new build that we paid in October. As a reminder, committed growth capital is defined as capital allocated and committed to specific investments for previously approved capital projects. So to recap, we had another great quarter with our base business continuing to deliver consistent earnings results and predictable positive cash flows. We are extremely well positioned financially to invest in strategic growth opportunities while still maintaining the financial flexibility to return capital to shareholders. With that, we'll open up the call for Q&A.

Our first question for today comes from Chris Robertson of Deutsche Bank.

I would like to clarify the new supply agreement that has just been signed. Have you secured supply for that agreement? Is there a set spread or margin we should consider? Additionally, how should we view the duration of this medium-term agreement—would that be three, five, or seven years? What implications might this have for expected EBITDA generation?

Thanks, Chris. This is Steven. I'm going to turn that over to Oliver Simpson, our Chief Commercial Officer. I would just say that we're excited about this. One of the things that I like about this is, once again, as I mentioned, you're going to see us buying and selling LNG in the same index and using market knowledge, market access in places that are familiar to us. But I'd like to turn it to Oliver and see how much we're at liberty to elaborate.

Thanks, Steven. Thanks, Chris. Yes, I think echoing what Steven said, we're excited about this transaction. It's a great add to our base business. I think it's fair to say it's a locked-in margin on the purchase and sale. In terms of the length of the deal, I think we said midterm. I think that's kind of where we have to leave it. Think about it as multiyear, I would say. But building on what Steven said, I think it's a great example of our ability to leverage our base business and global footprint and deliver LNG to our customers. I think additionally, I'd also like to iterate the point that it also allows us on the shipping side to acquire an LNG carrier, which is something that we're quite excited about that's a carrier that we can use towards our pipeline and our growth opportunities. So, it's great to see the synergies between our base business and growing on that and then leaning into our project pipeline.

I guess as a follow-up question, since you brought up the carrier, do you envision that carrier kind of being needed steady state to, I guess, service that contract? Or will there be seasonal opportunities for it to trade spot? Or I guess, how consistent will it be for use in your own portfolio versus any, I guess, sub-chartering opportunities?

I believe we have demonstrated our capability to buy and sell spot cargoes in the markets we operate in, focusing on servicing our base business. If we decide to acquire an LNG carrier for this purpose, we can certainly utilize it accordingly. We will also aim to optimize our commercial business through spot charters and various other agreements as appropriate.

Our next question comes from Jeremy Tonet from JPMorgan.

This is Noah Katz on for Jeremy. First, I want to touch on what you're seeing with other growth opportunities outside of FSRUs. Are you still focused on investing additional assets and vessels and infrastructure for onshore regasification efforts with potential smaller players maybe for more near-term earnings uplift?

Noah, this is Steven again. I hope we've made our stance clear. One of the reasons we highlighted the opportunities in Vietnam is to communicate that while we believe we are the leader in FSRUs, I am confident we are. However, we want to remain open to other methods of delivering LNG to those who need it. We are committed to exploring these alternatives. We aim to advance various solutions rather than depend solely on one asset class to address the urgent global demand for affordable LNG. I believe we've conveyed this message, and I hope we will continue to make progress in this area.

Sounds good. And then as a follow-up, I see you maintained the growth CapEx guidance for the full year, but slightly lowered the maintenance CapEx guidance. You might have said already, but I guess just what went into the guidance decrease for the full year? And then if I can ask about what can you tell us about your initial thoughts into 2025 based on the trends you've seen thus far in the fourth quarter?

In response to your first question about maintenance CapEx, we haven't spent as much on it this year. Most of our spending so far has been on vessel upgrades and equipment. We report our CapEx on a cash basis, which can create some fluctuations in timing. We're slightly below our expectations and this trend may continue into 2025. Regarding your question about 2025, we're still analyzing the figures, but we will have two dry docks scheduled for next year that will be factored into our maintenance CapEx. We will provide more details about 2025 in February.

Our next question comes from Michael Scialla of Stevens.

To follow up on the last question, Dana, I know you haven't released the numbers yet, but could you indicate whether, considering the two dry docks and some of the maintenance capital expenditure billing extending into next year, we can expect maintenance capital expenditures in 2025 to be higher than in 2024?

Mike, yes, we expect it to be up. This year, we did have a dry dock, but as you probably are aware, that dry dock was not capitalized. It was not included in our maintenance CapEx because that was for our Summit vessel on a boot structure. So, next year, in the second half of the year, we do expect our maintenance CapEx will go up because of the two capitalized dry docks. And we're not sharing which vessels those are and the specific timing right now because we're still working through those details with our counterparties, but we should have more to share in February.

Very good. And you've obviously got some good visibility on growth in 2026 with the new FSRU and you've given us a look at some of the longer-term projects with Alaska and Vietnam. Anything between here and there between here and mid-2026, I guess, that you can point to that will serve as growth drivers?

Mike, this is Steven. I'm going to turn this one over to Oliver. But I would say we are certainly looking at things that could have an impact. It's obviously going to be binary if those make or don't make, but you should be aware that we aren't just looking at 2026 and beyond in terms of opportunity set. But Oliver, why don't you see if you can give Mike any more color?

Yes. Thanks, Steven. Thanks, Mike. Yes, I think we see, obviously, 2026, we'll have the new build coming on. And obviously, as we've mentioned, we're working towards the conversion. So, I think the new build and conversions will work towards the kind of organic pipeline of projects we have. But in the near term, we continue to look at inorganic opportunities for growth that we see would add near-term value. I think there's a number of ongoing discussions. I think we're in a great financial position to act on something if the right thing comes up. So, we're looking at those, and we'll come back on those when we can.

Our next question comes from Bobby Brooks of Northland Capital Markets.

I wanted to ask about the conversion of an LNG carrier to a floating storage and regasification unit. How quickly can that conversion happen? Also, could you provide more details on what types of projects this converted FSRU would be suitable for? I assume it's likely for smaller projects that serve as backup energy solutions for customers and are located in areas that experience stable environmental conditions, unlike locations with significant fluctuations like Cook Inlet.

Bobby, this is David Liner. Yes, that's a great question. We're excited about the conversion potential. It will likely be for a smaller project from our pipeline. The conversion isn't limited to those projects that would use it as an insurance policy; there could be various reasons for it. We envision this vessel being versatile and capable of operating in different locations, not just Cook Inlet or environmentally sensitive areas, but targeted at smaller send-out customers. With the asset becoming available in 2025, as Oliver mentioned, we can begin the engineering for the conversion project. The conversion requires long lead items, which in turn rely on engineering, and that requires a vessel. By acquiring this vessel, we start the timeline to bring it to market. In our last earnings call, we mentioned a new vessel taking about three to three and a half years to bring to market. The conversion process will take approximately a year less, but it depends on the specifications and the original vessel used for conversion. There are many factors that influence the timeline for conversion. So, we won't be fully comfortable until we have the asset and complete the specifications, but I hope this gives you a general idea of what to expect.

That's great information, thank you. So, it seems you mentioned that you need to complete the full engineering for the vessel before addressing the long lead time items. Is it correct to understand that you are considering acquiring an LNG carrier to realize those midterm values? Could that LNG carrier be utilized for the FSRU conversion, allowing it to deliver LNG volumes to your existing infrastructure while you work on the engineering and order the long lead time items? Am I interpreting that accurately?

Yes, that's spot on. That's the beauty of this model is we get to trade that asset while we're preparing for the conversion. And so, you don't have to absorb months or even longer of downtime on an idle vessel while you do all that engineering work. Spot on.

Okay. Wow, that's really impressive. And then I don't want to take up too much time here, but I guess on the new build, am I right that discussions are already being had on where that new build will ultimately go? If you get it delivered in June of 2026, can we assume that by August or September of that year, that ship is then generating EBITDA? And then also, would I be right to assume the EBITDA generation from the new build would likely be kind of notably above what your current fleet generates in terms of like a per vessel generation?

Bobby, it's Oliver here. I'll take that one. We're not going to delve into the specifics of the commercial discussions, but to provide some clarity, this FSRU is the only newbuild FSRU contracted without a long-term agreement attached. This makes it a unique asset in our fleet. Given its send-out capacity, it's an excellent asset for projects that require higher send-out. We're very enthusiastic about incorporating this asset into our fleet and its future prospects. We'll provide more details when we can, but we are excited to have this asset entering our fleet in 2026.

At this time, we currently have no further questions. So, I'll hand back to Steven Kobos for any further remarks.

Again, I would like to thank everyone on the call for joining us today. I really appreciate the conversation. In summary, we are doing what we said we would do. This is an incredible company that is doing big things in markets all around the globe. That is why we are the industry leader in FSRUs and downstream LNG infrastructure. What you heard today is that we are driving near and midterm value creation. We have a rock-solid base business that generates sustainable earnings, and we are executing a disciplined capital allocation strategy to maximize value for you, our valued shareholders. With that, thanks very much for your time.

Thank you for joining today's call. You may now disconnect your lines.