Hello and welcome to the Excelerate Energy Third Quarter 2023 Earnings Conference Call. My name is Elliot and I'll be coordinating you your call today. [Operator Instructions] 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 2020 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…

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, a 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…

Thank you. [Operator Instructions] 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, that 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 put and take with regards to gas sales upside? Is it primarily just fixed fee arrangement here? Just a little bit more detail would be helpful.

Thanks, Chris. I appreciate the question. I'm going to hand it over to Dana here in a second about the EBITDA uplift. And I think once you hear from her, you'll realize it's a great deal. It's really important to us. It's 10 years of predictable revenue. And the fact of the matter is it's better than anybody's getting in Europe. So, we like Petrobras. This is the deal that Petrobras wanted to do, which is always an important consideration. You heard from Dana with the addition of this contribution, we're over $4 billion of future contracted cash flows. But another thing that's interesting about this one, it has CPI index every two years. So we're really -- you can model it. We've had some concerns about the variability in Brazil in the past with the gas sales impact of reliance on hydropower and intermittency from that, but this is going to be solid earnings that you can model year in, year out, and we couldn't be happier. As I said in my remarks, Petrobras has been out FSRUs since the get-go. And the fact that they're counting on us for -- to be their exclusive moving forward, FSRU partner is fantastic. But Dana, do you want to give Chris color on what we're--

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 one of our -- probably is our most profitable TCP that we have. So, again very excited about it. In comparison to gas sales, Steven stated, the gas sales, as you can tell, 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, on the -- 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 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 Explore 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 tell, we took it as a tell 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 it's another one of those. I talked about some of our markets have maximum throughput. The asset in Pakistan pushed something like 1.25% of global LNG supply to it because they've got this huge baseline need. Abu Dhabi is just a very prudent, very sophisticated energy company knowing they need the reliability of Excelerate's insurance in case there's any kind of disruption to a mature energy system like theirs. 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's maybe an opportunity to go into a higher utilization market. And there's 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, 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 time line around kind of 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 turn to Jeremy Tonet with JPMorgan. Your line is open.

Hi, good morning.

Morning.

Hey Jeremy.

Hi. Just wanted to start off, if I could, with any incremental thoughts you might be able to provide with regards to capital allocation strategy going forward. It seems like there's a lot of LNG export being built in the world, maybe not quite as much re-gas capacity. So, it seems like there's quite the need there. At the same time, I guess, some of the other peers might be -- might have a higher dividend yield than what Excelerate offers right now. And so just wondering, how you think about balancing these, I guess, competing priorities and overall thoughts on capital allocation?

Jeremy, that's a great question, and it's something that we talked about and we analyzed. Now, I think there -- and you pointed out in your question, LNG production is coming up, you're not seeing an increase correspondingly an importer capacity. We're not seeing as much import capacity in some of the regions they're going to have the highest growth on that capacity. So, I want to be clear, we are committed to growth. And we think that dry powder to fund that growth has a significant value for this at this point, but I want to turn it over to our CFO.

Yes. Thanks Jeremy. So, as Steven said, our priority is still growth. We -- at this point in time, we're not intending to increase our dividend. We'll continue to evaluate that as we grow and as we move forward. But as of right now, we really are focused on growing the business and using that capital to fund our growth. As you know, we have a new build coming out very soon. So we'll be working on the financing around that. We are considering potentially placing an order for a second new build to fund additional growth. So that's really where our priorities are at this time.

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 use 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 look 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 realized 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.

Thanks Michael. Thanks for the question. It's not going to be specific for individual markets. You know that we are bullish on the asset class in general. We believe that folks that have the energy security of FSRU have it now, whether or not they may take long strips of LNG or not, we think it's affordable insurance. And that people -- once they have the security of that affordable insurance, that they're going to be sticky. I think I made that point with you in New York last December, and that my view hasn't changed there at all. In terms of these different markets we're looking at, though, some could use incremental FSRUs, some without getting too into jargon, some could use a floating storage unit, or FSU, which is more like a conventional carrier that with shore-based re-gas. Some of those markets we discussed are clearly an LNG to power play. And then some are focused on just import terminals, breaking the volumes up, distributing the -- the commonality they all have is its infrastructure. So we're looking at different types of infrastructure depending upon what an individual market needs, and it's just going to vary. But I would leave you that we remain bullish on the FSRU asset class and every market will require a new FSRU. Some will, and we are committed to remaining the preferred partner for countries seeking energy security. And we're going to take the necessary steps.

Okay. Thank you.

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 -- the 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 bit. Other folks are going to have different needs in places with extensive hydro power, 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 pauses in the contract?

That's one -- I got to look over to Dana again to see what we've disclosed--

Yes. gain 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 -- at midyear. 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.

[Operator Instructions] 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 investing in and retaining ownership of power pipeline or other infrastructure assets that would support LNG imports in the various markets you had mentioned?

Thanks Craig. It's all going to vary by market. But if you look -- if you take a step back, you look at fundamentals into these markets and you look at the macro fundamentals, more LNG FIDs being taken fewer people opening up the market. As we continue our success in opening up markets, I do expect there to be opportunities for uplift there. But we need to be clear. We're looking at ways to get an uplift on an already outstanding infrastructure return. We're going to keep looking at those. And it's going to depend really -- like I said, we did the deal that Petrobras wanted to do on Sequoia. A lot of this is going to be what makes the most sense with that counterparty. I know that's basic answer, but that's where these deals come down. And though we're working with sovereigns all the time. There's still somebody across the table and you need to be selling something that they want to buy, and we think they will.

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 look back today again on that, Craig, because I think you're asking me to undercut or answer. I'm not guiding to it, but -- and you're going to have to help me, Dana. I don't really know what we've--

Yes. Apologies, Craig but we -- yes, we still need to get through our internal processes. And you're right, I mean, all of the questions are very valid questions. But until we've sat down and really done a thorough review of all of these issues, we really don't feel comfortable guiding to where 2024 will lay out. But we'll get that to you as soon as we're able to.

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

Understood. That will be nice. Looking forward to it. Thank you.

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.