# Excelerate Energy, Inc.: Form 10-Q for the period ended Sep 30, 2022

- Company: [Excelerate Energy, Inc.](/companies/ee.md) (CIK 1888447)
- Form: 10-Q
- Filed: 2022-11-14
- Accepted by EDGAR: Nov 10, 2022, 18:28 ET
- Period: 2022-09-30
- Accession: 0000950170-22-024588
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1888447/000095017022024588/ee-20220930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1888447/000095017022024588/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2022-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2022-07-01 to 2022-09-30 | $803.3m | us-gaap:Revenues |
| Revenue | 9 months, 2022-01-01 to 2022-09-30 | $2.02bn | us-gaap:Revenues |
| Operating income | 3 months, 2022-07-01 to 2022-09-30 | $49.9m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2022-01-01 to 2022-09-30 | $128.3m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2022-07-01 to 2022-09-30 | $233.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2022-01-01 to 2022-09-30 | $11.8m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2022-07-01 to 2022-09-30 | $8.8m | us-gaap:NetIncomeLossAvailableToCommonStockholdersBasic |
| Net income | 6 months, 2022-04-13 to 2022-09-30 | $6.8m | us-gaap:NetIncomeLossAvailableToCommonStockholdersBasic |
| Net income | 9 months, 2022-01-01 to 2022-09-30 | $6.8m | us-gaap:NetIncomeLossAvailableToCommonStockholdersBasic |
| Diluted EPS | 3 months, 2022-07-01 to 2022-09-30 | $0.34 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2022-04-13 to 2022-09-30 | $0.26 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2022-01-01 to 2022-09-30 | $0.26 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2022-07-01 to 2022-09-30 | $0.34 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2022-04-13 to 2022-09-30 | $0.26 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2022-01-01 to 2022-09-30 | $0.26 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2022-07-01 to 2022-09-30 | 26,260,861 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2022-04-13 to 2022-09-30 | 26,260,173 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2022-01-01 to 2022-09-30 | 26,260,173 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2022-01-01 to 2022-09-30 | −$15.8m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Dividends paid | 3 months, 2022-07-01 to 2022-09-30 | $656.0k | us-gaap:PaymentsOfDividends |
| Dividends paid | 9 months, 2022-01-01 to 2022-09-30 | $656.0k | us-gaap:PaymentsOfDividends |
| Cash and equivalents | at 2022-09-30 | $345.7m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2022-09-30 | $956.0m | us-gaap:AssetsCurrent |
| Total assets | at 2022-09-30 | $2.98bn | us-gaap:Assets |
| Current liabilities | at 2022-09-30 | $536.9m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2022-09-30 | $1.33bn | us-gaap:Liabilities |
| Long-term debt | at 2022-09-30 | $199.3m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2022-09-30 | $20.7m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2022-09-30 | $1.65bn | us-gaap:StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest |

## Management's discussion and analysis

As filed, 74,293 characters.

*The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and notes thereto included in this Form 10-Q and included in our Prospectus for the year ended December 31, 2021. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” included in the Prospectus, this Form 10-Q and our other filings with the SEC. Please also see the section titled “Forward-Looking Statements.”*

### Overview

Excelerate is changing the way the world accesses cleaner, more affordable and reliable energy by delivering regasified natural gas, benefitting hundreds of millions of people around the world. From our founding, we have focused on providing flexible LNG solutions to markets in diverse environments across the globe, providing a lesser emitting form of energy to markets that often rely on coal as their primary energy source. At Excelerate, we believe that access to affordable energy such as LNG is critical to assisting emerging markets in their decarbonization efforts, while at the same time promoting economic growth and improving quality of life.

We have grown our business significantly since our first FSRU charter in 2003, and today, we are a profitable energy company with a geographically diversified business model. Our business spans the globe, with regional offices in eight countries and operations in the United States, Brazil, Argentina, Israel, United Arab Emirates, Pakistan and Bangladesh. We are the largest provider of regasified LNG in Argentina and Bangladesh and one of the largest providers of regasified LNG in Brazil and Pakistan, and we operate the largest FSRU in Brazil. We also lease an LNG terminal in Bahia, Brazil (the “Bahia Terminal”) from Petróleo Brasileiro S.A. (“Petrobras”) and in December 2021, we started importing LNG and selling regasified natural gas to Petrobras. In addition to Petrobras, we have plans to sell regasified natural gas to other downstream customers in Brazil, Europe and Bangladesh. In each of these countries, we offer a cleaner energy source from which power can be generated consistently. The high value our customers place on our services has resulted in a reliable source of revenues to us, while our global reach helps balance seasonal demand fluctuation among the geographies in which we operate. For the three months ended September 30, 2022, we generated revenues of $803.3 million, net income of $37.3 million and Adjusted EBITDAR of $86.4 million. For the three months ended September 30, 2021, we generated revenues of $192.1 million, net income of $1.4 million and Adjusted EBITDAR of $65.3 million. For more information regarding our non-GAAP measure Adjusted EBITDAR and a reconciliation to net income, the most comparable U.S. Generally Accepted Accounting Principles (“GAAP”) measure, see “How We Evaluate Our Operations.”

Our business focuses on the integration of the natural gas-to-power LNG value chain, and as part of this value chain, we operate regasification terminals in growing global economies that utilize our FSRU fleet. Our business is substantially supported by time charter contracts, which are effectively long-term, take-or-pay arrangements and provide consistent revenue and cash flow from our high-quality customer base. As of September 30, 2022, we operate a fleet of ten purpose-built FSRUs, have completed more than 2,400 ship-to-ship transfers of LNG with over 40 LNG operators since we began operations and have safely delivered more than 5,900 billion cubic feet of natural gas through 15 LNG regasification terminals. For the three months ended September 30, 2022 and 2021, we generated revenues of $115.3 million and $116.6 million, respectively, from our FSRU and terminal services businesses, representing approximately 14% and 61% of our total revenues for each of those periods.

We also procure LNG from major producers and sell regasified natural gas through our flexible LNG terminals. For the three months ended September 30, 2022 and 2021, we generated revenues of $687.9 million and $75.6 million, respectively, from LNG and natural gas sales, representing approximately 86% and 39% of our total revenues for each of those periods. The commercial momentum that we have established in recent years and the increasing need for access to LNG around the world, have resulted in a significant portfolio of new growth opportunities for us to pursue. In addition to our FSRU and terminal services businesses and natural gas sales, we plan to expand our business to provide customers with an array of products, including LNG-to-power projects. We are currently developing integrated LNG projects in Albania and Bangladesh. We are also evaluating and pursuing additional early-stage projects with opportunities in Europe, Asia Pacific, Latin America, and the Middle East.

### Recent Trends and Outlook

According to Shell’s 2022 LNG Outlook, global LNG demand is estimated to increase from 380 metric tons (“MT”) in 2021 to about 700 MT in 2040. Increased aspirations for carbon neutrality and energy transitions away from coal may cause countries to rely more on lower carbon fuels such as LNG. We believe future LNG demand will be driven by increased European consumption and southeast Asian power demand growth, underpinned by economic development and urbanization increasing demand for electricity. On the supply side, we believe there is a robust pipeline of projects with the appropriate offtake commitments that can meet this new demand. Limitations on energy import infrastructure make LNG adoption difficult, but as a pioneer in flexible LNG solutions, we believe that we are well positioned to address these limitations and support society’s transition to a lower-carbon energy future. Given the appetite for cleaner energy, we expect these industry trends to continue, and we plan to capitalize on this growing global demand and create new markets for natural gas by providing a fully integrated LNG delivery model.

Across the world, a combination of extreme weather events, the invasion of Ukraine by Russia and a slower than anticipated build-up of renewables has, in the short term, increased the cost of energy and the risk of energy supply disruptions. Uncertainty around Russian pipeline natural gas deliveries resulted in greater competition for global LNG supply, which affected markets around the world. Emerging markets in particular have been affected by deteriorating economic conditions and an inability to afford spot LNG cargoes to supplement near-term natural gas supplies. In Bangladesh for example, the country has reduced its purchases of LNG imports on the spot market as it looks to limit the effects of high spot prices on its economy. However, natural gas remains critical to the country’s future economic growth and the country is advancing plans to sign new long-term LNG sale and purchase agreements to guarantee more affordable and predictable LNG pricing.

For many countries, near-term energy decision making is being driven by the need to balance between aspirations for a transition to renewable energy with the pursuit of energy security. Because a return to a pre-Russian conflict era natural gas supply seems unlikely, we believe flexible LNG infrastructure and FSRUs will play an essential role in providing energy security and serving as a complementary backstop to balance the intermittency of renewable energy. In October 2022, Excelerate signed a binding five-year charter contract with the Government of the Federal Republic of Germany for the FSRU *Excelsior* to provide regasification services at one of Germany’s planned LNG import terminals that is being developed.

Europe and the world are bracing for tight natural gas market conditions this coming winter and into next year. China has requested its state-owned companies no longer re-sell their LNG cargoes to Europe and Japan and Korea are seeking early 2023 cargoes. The European Union governments have approved legislation to reduce natural gas demand this winter. The legislation includes voluntary reduction of natural gas demand by 15% from August 2022 through March 2023. If the voluntary natural gas demand curtailments yield insufficient savings, mandatory natural gas demand curtailment will be implemented across the European Union. The market is anticipating continued demand destruction due to higher-than-normal LNG pricing, but depending on the severity of winter temperatures, the actions being taken may not be sufficient to moderate prices. This winter is likely to serve as a catalyst for additional action by countries to re-assess how they purchase natural gas, invest in infrastructure, and contract for gas supply, particularly if there is strong competition between Asia and Europe for spot cargoes. This change in market behavior has the potential to create new opportunities for FSRU charters and integrated projects in Europe for Excelerate.

In addition to increased LNG industry activity levels, we expect to benefit from our strategy to expand into new markets and pursue opportunities for downstream gas sales. We are evaluating new commercial opportunities to sell regasified LNG to countries in Europe via our Finland terminal and the planned Vlora LNG terminal in Albania. In Bangladesh, we are in discussions to sell 1.5 million tonnes of LNG annually to the country and in Brazil, we are continuing to sell regasified LNG to customers downstream of the Bahia Terminal.

Recent Business Updates:

- In October 2022, Excelerate signed a binding five-year charter contract with the Government of the Federal Republic of Germany for the FSRU *Excelsior* to provide regasification services at one of Germany’s planned LNG import terminal that is being developed at the Port of Wilhelmshaven by Tree Energy Solutions, E.ON SE and ENGIE SA.
- In October 2022, Excelerate signed a binding Shipbuilding Contract (the “Newbuild Agreement”) with Hyundai Heavy Industries (“HHI”) for a new FSRU to be delivered in 2026. The state-of-the-art FSRU will be equipped with HHI’s proprietary LNG regasification system, dual fuel engines, selective catalytic reduction system, best-in-class boil-off gas management, and other innovative technologies that will drive improved performance and efficiency while lowering emissions. With this newbuild order, Excelerate will have 11 FSRUs in operation or under construction.
- In September 2022, after completing its charter at the Bahia Blanca GasPort, the *Exemplar* made the voyage to the port of Navantia in Spain for winterization upgrades in preparation for its deployment to Finland. Excelerate and Gasgrid Finland Oy (“Gasgrid Finland”) previously announced an executed 10-year, time charter party agreement for Excelerate to provide LNG regasification services. The vessel’s charter hire commenced on October 1, 2022.
- In July 2022, we announced the signing of a Memorandum of Understanding (MOU) with Bulgaria’s Overgas, relating to the potential sale of regasified LNG from Excelerate’s planned Vlora LNG terminal in Albania. Under this MOU, Excelerate will enter into negotiations with Overgas for the purchase of up to 1.0 billion cubic meters of regasified LNG annually for 10 years.
- In May 2022, the Payra LNG project was approved in principle by Bangladesh Oil, Gas & Mineral Corporation and Bangladesh’s Energy and Mineral Resources Division, a significant milestone in the approval process. Excelerate has commenced negotiations of the integrated deal, which includes an LNG supply agreement. The Payra LNG project is expected to represent Excelerate’s largest deployment of capital to date and has the potential to increase significantly the scale of the Company’s global operations.
- In February 2022, the Moheshkhali LNG (“MLNG”) expansion project was approved in principle by the government of Bangladesh. MLNG is one of Excelerate’s three E-FIT integrated terminals. Excelerate has commenced commercial

negotiations for the expansion of the terminal, the extension of our regasification agreement by five years to 2038, and an LNG supply agreement.

- In January 2022, Excelerate received approval from the Albanian government to proceed with the second phase of the feasibility study for the Vlora LNG terminal and power plant. Under the previously announced memorandum of understanding with Albgaz Sh.a,, Albania’s natural gas transmission system operator, and Snam S.p.A, one of the largest energy infrastructure owner and operators in the world, Excelerate is continuing to explore solutions to connect the Vlora LNG Terminal with other European natural gas infrastructure.

### Components of Our Results of Operations

#### Revenue

We generate revenue through the provision of regasification services using our fleet of FSRUs and LNG terminal assets, as well as physical sales of LNG and natural gas, that are made primarily in connection with our regasification and terminal projects. We provide regasification services through time charters and operation service contracts primarily related to our long-term charter contracts. Most of our time charter revenues are from long-term contracts that function similarly to take-or-pay arrangements in that we are paid if our assets and teams are available and ready to provide services to our customers regardless of whether our customers utilize the services. A portion of our revenue attributable to our charters for the use of our vessels is accounted for as lease revenue, and the revenues attributable to the services provided under those charters are accounted for as non-lease revenue. We generally charge fixed fees for the use of and services provided with our vessels and terminal capacity plus additional amounts for certain variable costs.

#### Expenses

The principal expenses involved in conducting our business are operating costs, direct cost of gas sales, general and administrative expenses, and depreciation and amortization. A large portion of the fixed and variable costs we incur in our business are in the operation of our fleet of FSRUs and terminals that provide regasification and gas supply to our customers. We manage the level of our fixed costs based on several factors, including industry conditions and expected demand for our services and generally pass-through certain variable costs.

We incur significant equipment costs in connection with the operation of our business, including capital equipment recorded as property and equipment, net on our balance sheets and related depreciation and amortization on our income statement. In addition, we incur repair and maintenance and leasing costs related to our property and equipment utilized both in our FSRU and terminal services and gas sales. Property and equipment includes costs incurred for our fleet of FSRUs and terminal assets including capitalized costs related to drydocking activities. Generally, we are required to drydock each of our vessels every five years, but vessels older than 15 years of age require a shorter duration drydocking or in-situ bottom survey every two and a half years.

#### Cost of revenue and vessel operating expenses

Cost of revenue and vessel operating expenses include the following major cost categories: vessel operating costs; personnel costs; repair and maintenance; and leasing costs. These operating costs are incurred for both our FSRU and terminal services revenues and Gas sales revenues.

#### Direct cost of gas sales

Direct cost of gas sales includes the cost of LNG and other fuel and direct costs incurred in selling natural gas and LNG, which are significant variable operating costs. These costs fluctuate in proportion to the amount of our natural gas and LNG sales as well as LNG prices.

#### Depreciation and amortization expenses

Depreciation expense is recognized on a straight-line basis over the estimated useful lives of our property and equipment assets, less an estimated residual value. Certain recurring repairs and maintenance expenditures required by regulators are amortized over the required maintenance period.

#### Selling, general and administrative expenses

Selling, general and administrative expenses (“SG&A”) consist primarily of compensation and other employee-related costs for personnel engaged in executive management, sales, finance, legal, tax and human resources. SG&A also consists of expenses associated with office facilities, information technology, external professional services, business development, legal costs and other administrative expenses.

#### Restructuring, transition and transaction expenses

We incurred restructuring, transition and transaction expenses related to consulting, legal, and audit costs incurred as part of and in preparation for our initial public offering (the “IPO”).

#### Other income, net

Other income, net, primarily contains interest income, gains or losses from the effect of foreign exchange rates and gains and losses on asset sales.

#### Interest expense and Interest expense – related party

Our interest expense is primarily associated with our finance leases liabilities and loan agreements with external banks and related parties.

#### Earnings from equity-method investment

Earnings from equity-method investment relate to our 45% ownership interest in the Nakilat joint venture, which we acquired in 2018.

#### Provision for income taxes

Excelerate is a corporation for U.S. federal and state income tax purposes. Excelerate’s accounting predecessor, EELP, is treated as a pass-through entity for U.S. federal income tax purposes and, as such, has generally not been subject to U.S. federal income tax at the entity level. Instead, EELP’s U.S. income is allocated to its Class A and Class B partners proportionate to their interest. Accordingly, our provision for income taxes includes U.S. taxes incurred at the Excelerate corporate level beginning in April 2022. In addition, EELP has international operations that are subject to foreign income tax and U.S. corporate subsidiaries subject to U.S. federal tax. These taxes are also included in our provision for income taxes.

#### Net income (loss) attributable to non-controlling interest

Net income (loss) attributable to non-controlling interests includes earnings allocable to our shares of Class B Common Stock as well as earnings allocable to the third-party equity ownership interests in our subsidiary, Excelerate Energy Bangladesh, LLC.

#### Net income (loss) attributable to non-controlling interest – ENE Onshore

Net income (loss) attributable to non-controlling interest – ENE Onshore includes the earnings allocable to the equity ownership interests in Excelerate New England Onshore, LLC (“ENE Onshore”). We consolidate ENE Onshore as we determined that although we have no ownership interest, we are the primary beneficiary.

### Factors Affecting the Comparability of Our Results of Operations

As a result of a number of factors, our historical results of operations may not be comparable from period to period or going forward. Set forth below is a brief discussion of the key factors impacting the comparability of our results of operations.

#### Impact of the Reorganization

Following the completion of the IPO in April 2022, we are a corporation for U.S. federal and state income tax purposes. Excelerate’s accounting predecessor, EELP, is treated as a pass-through entity for U.S. federal income tax purposes and, as such, has generally not been subject to U.S. federal income tax at the entity level. Accordingly, unless otherwise specified, our historical results of operations prior to the IPO do not include provision for U.S. federal income tax for EELP. The reorganization undertaken in connection with the IPO, as described under “Organizational Structure—The Reorganization” in the Prospectus (the “Reorganization”), was accounted for as a reorganization of entities under common control. As a result, our consolidated financial statements recognized the assets and liabilities received in the Reorganization at their historical carrying amounts, as reflected in the historical consolidated financial statements of EELP. In addition, in connection with the Reorganization and the IPO, we have entered into the Tax Receivable Agreement (the “TRA”) with Excelerate Energy Holdings, LLC (“EE Holdings”) and the George Kaiser Family Foundation (the “Foundation”) (or their affiliates) (together, the “TRA Beneficiaries”) pursuant to which we will be required to pay the TRA Beneficiaries 85% of the net cash savings, if any, that we are deemed to realize as a result of our utilization of certain tax benefits described under “Certain Relationships and Related Person Transactions—Proposed Transactions with Excelerate Energy, Inc.—Tax Receivable Agreement” in our Prospectus.

Also, included in the transactions is our acquisition of all of the issued and outstanding membership interests in Excelsior, LLC and FSRU Vessel (Excellence), LLC (f/k/a Excellence, LLC) (collectively, the “Foundation Vessels”). The acquisition of Excelsior, LLC was accounted for as an acquisition of property and equipment at the completion of the transaction. The Foundation Vessels have historically been accounted for as finance leases in our historical financial statements. In 2018, EELP entered into an agreement with a customer to lease the *Excellence* vessel with the vessel transferring ownership to the customer at the conclusion of the agreement for no additional consideration. Historically, EELP, as a lessor, has accounted for the *Excellence* vessel contract with our customer as a sales-type lease in the consolidated balance sheet in accordance with Accounting Standards Codification 842, Leases. The *Excellence* vessel will continue to be accounted for as a sales-type lease and thus did not result in an adjustment to property and equipment. The difference between the consideration given to acquire the *Excellence* and the historical finance lease liability resulted in a $21.8 million early extinguishment of lease liability loss on our consolidated statements of income.

#### Public Company Costs

We have incurred and expect to continue to incur incremental, non-recurring costs related to our transition to a publicly traded corporation, including the costs of the IPO and the costs associated with the initial implementation of our Sarbanes-Oxley Section 404 internal control reviews and testing. We also expect to incur additional significant and recurring expenses as a publicly traded corporation, including costs associated with compliance under the Exchange Act, annual and quarterly reports to common stockholders, registrar and transfer agent fees, national stock exchange fees, audit fees, incremental director and officer liability insurance costs and director and officer compensation.

#### Impact of Covid-19

In March 2020, the World Health Organization declared the Coronavirus Disease 2019 (“Covid-19”) a global pandemic. The Covid-19 outbreak has reached across the globe, resulting in the implementation of significant governmental measures, including lockdowns, closures, quarantines, and travel bans intended to control the spread of the virus. While most of these measures have been relaxed around the world, future prevention and mitigation measures reinstituted in the event of repeat waves of the virus and any variants could have an adverse impact on global economic conditions and consumer confidence and spending, which could materially adversely affect the timing of demand, or users’ ability to pay, for our products and services.

In response to the Covid-19 pandemic, we took several precautions that may adversely impact employee productivity, such as requiring many office employees to work remotely, imposing travel restrictions, and temporarily closing office locations. In addition, we instituted additional procedures and precautions related to our crews on our FSRU vessels. We incurred incremental costs during the nine months ended September 30, 2022 and 2021, of approximately $2.2 million and $4.1 million, respectively, related to these precautionary measures.

We continue to monitor the evolving situation and guidance from international and domestic authorities, including federal, state and local public health authorities, and there may be developments outside our control requiring us to adjust our operating plan. As such, given the unprecedented uncertainty around the duration and severity of the impact on market conditions and the business environment, we cannot reasonably estimate the full impact of the Covid-19 pandemic on our operating results in the future.

For additional information, see “Risk Factors—Risks Related to Our Business—Outbreaks of epidemic and pandemic diseases and governmental responses thereto could adversely affect our business.” and other risk factors included in the “Risk Factors” section of our Prospectus that describe risks to us attributable to the Covid-19 pandemic.

### How We Evaluate Our Operations

We operate in a single reportable segment. However, we use a variety of qualitative, operational and financial metrics to assess our performance and valuation. Among other measures, management considers each of the following in assessing our business:

Adjusted Gross Margin;

Adjusted EBITDA;

Adjusted EBITDAR; and

Capital Expenditures.

#### Adjusted Gross Margin

We use Adjusted Gross Margin, a non-GAAP financial measure, which we define as revenues less direct cost of sales and operating expenses, excluding depreciation and amortization, to measure our operational financial performance. Management believes Adjusted Gross Margin is useful because it provides insight on profitability and true operating performance excluding the implications of the historical cost basis of our assets. Our computation of Adjusted Gross Margin may not be comparable to other similarly titled measures of other companies, and you are cautioned not to place undue reliance on this information.

#### Adjusted EBITDA and Adjusted EBITDAR

Adjusted EBITDA is a non-GAAP financial measure included as a supplemental disclosure because we believe it is a useful indicator of our operating performance. We define Adjusted EBITDA as net income before interest, income taxes, depreciation and amortization, long-term incentive compensation expense and items such as charges and non-recurring expenses that management does not consider as part of assessing ongoing operating performance. In the second quarter of 2022, we revised the definition of Adjusted EBITDA to adjust for the impact of long-term incentive compensation expense, which we did not have prior to becoming a public company, and the early extinguishment of lease liability related to the acquisition of the Excellence vessel, as management believes such items do not directly reflect our ongoing operating performance.

Adjusted EBITDAR is a non-GAAP financial measure included as a supplemental disclosure because we believe it is a valuation measure commonly used by financial statement users to more effectively compare the results of our operations from period to period and against other companies without regard to our financing methods or capital structure. We define Adjusted EBITDAR as Adjusted EBITDA adjusted to eliminate the effects of rental expenses for vessels and other infrastructure, which are normal, recurring cash operating expenses necessary to operate our business.

We adjust net income for the items listed above to arrive at Adjusted EBITDA and Adjusted EBITDAR because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDA and Adjusted EBITDAR should not be considered as an alternative to, or more meaningful than, net income as determined in accordance with GAAP or as an indicator of our operating performance or liquidity. These measures have limitations as certain excluded items are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are components of Adjusted EBITDA and Adjusted EBITDAR. Adjusted EBITDAR should not be viewed as a measure of overall performance or considered in isolation or as an alternative to net income because it excludes rental expenses for vessels and other infrastructure, which is a normal, recurring cash operating expense that is necessary to operate our business. Our presentation of Adjusted EBITDA and Adjusted EBITDAR should not be construed as an inference that our results will be unaffected by unusual or non-recurring items. Our computations of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. For the foregoing reasons, each of Adjusted EBITDA and Adjusted EBITDAR has significant limitations that affect its use as an indicator of our profitability and valuation, and you are cautioned not to place undue reliance on this information.

#### Capital Expenditures

We incur capital expenditures as part of our regular business operations. Capital expenditures are costs incurred to expand our business operations, increase efficiency of business operations, extend the life of an existing asset, improve an asset’s capabilities, increase future service of an asset, repair existing assets in order to maintain their service capability, and provide upkeep required for regulatory compliance. Costs related to prospective projects are capitalized once it is determined to be probable that the related assets will be constructed.

The tables below reconcile the financial measures discussed above to the most directly comparable financial measure calculated and presented in accordance with GAAP:

*(In thousands)*

|  | Three months ended September 30, 2022 | 2021 | Nine months ended September 30, 2022 | 2021 |
| --- | ---: | ---: | ---: | ---: |
| FSRU and terminal services revenues | $115,346 | $116,578 | $323,010 | $352,299 |
| Gas sales revenues | 687,915 | 75,563 | 1,694,853 | 197,453 |
| Cost of revenue and vessel operating expenses | (50,258) | (44,785) | (158,994) | (132,415) |
| Direct cost of gas sales | (658,320) | (78,536) | (1,606,695) | (179,950) |
| Depreciation and amortization expense | (24,648) | (26,074) | (72,687) | (78,320) |
| **Gross Margin** | **$70,035** | **$42,746** | **$179,487** | **$159,067** |
| Depreciation and amortization expense | 24,648 | 26,074 | 72,687 | 78,320 |
| **Adjusted Gross Margin** | **$94,683** | **$68,820** | **$252,174** | **$237,387** |

### 38

*(In thousands)*

|  | Three months ended September 30, 2022 | 2021 | Nine months ended September 30, 2022 | 2021 |
| --- | ---: | ---: | ---: | ---: |
| **Net income** | **$37,272** | **$1,377** | **$46,126** | **$42,977** |
| Interest expense | 13,689 | 19,985 | 46,209 | 62,033 |
| Provision for income taxes | 233 | 5,228 | 11,752 | 14,133 |
| Depreciation and amortization expense | 24,648 | 26,074 | 72,687 | 78,320 |
| Restructuring, transition and transaction expenses | 1,345 | 5,548 | 6,680 | 8,613 |
| Long-term incentive compensation expense | 328 | — | 598 | — |
| Early extinguishment of lease liability on vessel acquisition | — | — | 21,834 | — |
| **Adjusted EBITDA** | **$77,515** | **$58,212** | **$205,886** | **$206,076** |
| Vessel and infrastructure rent expense | 8,920 | 7,098 | 27,165 | 21,293 |
| **Adjusted EBITDAR** | **$86,435** | **$65,310** | **$233,051** | **$227,369** |

### Consolidated Results of Operations

### Three and Nine Months Ended September 30, 2022 Compared to Three and Nine Months Ended September 30, 2021

*(In thousands)*

*(In thousands)*

| Revenues | Three months ended September 30, 2022 | 2021 | Change | For the nine months ended September 30, 2022 | 2021 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| FSRU and terminal services | $115,346 | $116,578 | $(1,232) | $323,010 | $352,299 | $(29,289) |
| Gas sales | 687,915 | 75,563 | 612,352 | 1,694,853 | 197,453 | 1,497,400 |
| Total revenues | 803,261 | 192,141 | 611,120 | 2,017,863 | 549,752 | 1,468,111 |
| Operating expenses |  |  |  |  |  |  |
| Cost of revenue and vessel operating expenses | 50,258 | 44,785 | 5,473 | 158,994 | 132,415 | 26,579 |
| Direct cost of gas sales | 658,320 | 78,536 | 579,784 | 1,606,695 | 179,950 | 1,426,745 |
| Depreciation and amortization | 24,648 | 26,074 | (1,426) | 72,687 | 78,320 | (5,633) |
| Selling, general and administrative | 18,778 | 11,518 | 7,260 | 44,476 | 34,113 | 10,363 |
| Restructuring, transition and transaction | 1,345 | 5,548 | (4,203) | 6,680 | 8,613 | (1,933) |
| Total operating expenses | 753,349 | 166,461 | 586,888 | 1,889,532 | 433,411 | 1,456,121 |
| Operating income | 49,912 | 25,680 | 24,232 | 128,331 | 116,341 | 11,990 |
| Other income (expense) |  |  |  |  |  |  |
| Interest expense | (9,454) | (7,595) | (1,859) | (24,308) | (24,558) | 250 |
| Interest expense – related party | (4,235) | (12,390) | 8,155 | (21,901) | (37,475) | 15,574 |
| Earnings from equity-method investment | 625 | 817 | (192) | 2,135 | 2,431 | (296) |
| Early extinguishment of lease liability on vessel acquisition | — | — | — | (21,834) | — | (21,834) |
| Other income (loss), net | 657 | 93 | 564 | (4,545) | 371 | (4,916) |
| Income before income taxes | 37,505 | 6,605 | 30,900 | 57,878 | 57,110 | 768 |
| Provision for income taxes | (233) | (5,228) | 4,995 | (11,752) | (14,133) | 2,381 |
| Net income | 37,272 | 1,377 | 35,895 | 46,126 | 42,977 | 3,149 |
| Less net income attributable to non-controlling interests | 28,571 | 891 | 27,680 | 26,924 | 2,152 | 24,772 |
| Less net loss attributable to non-controlling interests – ENE Onshore | (127) | (1,412) | 1,285 | (545) | (5,348) | 4,803 |
| Less pre-IPO net income (loss) attributable to EELP | — | 1,898 | (1,898) | 12,950 | 46,173 | (33,223) |
| Net income attributable to shareholders | $8,828 | $— | $8,828 | $6,797 | $— | $6,797 |
| **Additional financial data:** |  |  |  |  |  |  |
| Gross Margin | $70,035 | $42,746 | $27,289 | $179,487 | $159,067 | $20,420 |
| Adjusted Gross Margin | 94,683 | 68,820 | 25,863 | 252,174 | 237,387 | 14,787 |
| Adjusted EBITDA | 77,515 | 58,212 | 19,303 | 205,886 | 206,076 | (190) |
| Adjusted EBITDAR | 86,435 | 65,310 | 21,125 | 233,051 | 227,369 | 5,682 |
| Capital expenditures | 21,844 | 19,764 | 2,080 | 63,874 | 30,837 | 33,037 |

### 39

### Three and Nine Months Ended September 30, 2022 Compared to Three and Nine Months Ended September 30, 2021

#### Net income (loss)

Net income (loss) was $37.3 million for the three months ended September 30, 2022, an increase of $35.9 million, as compared to net income of $1.4 million for the three months ended September 30, 2021. Net income was higher primarily due to direct margin earned on gas sales in Brazil during the three months ended September 30, 2022 ($29.6 million), less interest expense – related party incurred in the three months ended September 30, 2022 due to the acquisition of the Foundation Vessels ($8.1 million), a decrease in provision for income taxes ($5.0 million), as discussed below, and lower restructuring, transition and transaction expenses after the completion of our IPO in April 2022 ($4.2 million), partially offset by an increase in general and administrative expenses ($7.3 million), as discussed below, and increases in cost of revenue and vessel operating expenses ($5.5 million), primarily due to the commencement of the Bahia Terminal lease in the fourth quarter of 2021.

Net income was $46.1 million for the nine months ended September 30, 2022, an increase of $3.1 million, as compared to $43.0 million for the nine months ended September 30, 2021. Net income was higher primarily due to direct margin earned on gas sales in Brazil and New England during the nine months ended September 30, 2022 ($88.2 million), which exceeded direct margin earned on LNG sales that occurred in Bangladesh and China during the nine months ended September 30, 2021 ($17.5 million), less interest expense – related party incurred in the nine months ended September 30, 2022 due to the acquisition of the Foundation Vessels ($15.6 million), less depreciation expense ($5.6 million), as discussed below, a decrease in provision for income taxes ($2.4 million), as discussed below, and lower restructuring, transition and transaction expenses after the completion of our IPO in April 2022 ($1.9 million), partially offset by fewer opportunities to sub-charter our available vessels to third parties during the nine months ended September 30, 2022 ($27.2 million), the early extinguishment of the *Excellence* vessel finance lease liability as part of the vessel acquisition ($21.8 million), increases in cost of revenue and vessel operating expenses ($26.6 million), primarily due to the commencement of the Bahia Terminal lease in the fourth quarter of 2021, an increase in general and administrative expenses ($10.4 million), as discussed below, and foreign currency exchange losses ($6.2 million).

#### Gross Margin and Adjusted Gross Margin

Gross Margin was $70.0 million for the three months ended September 30, 2022, an increase of $27.3 million, as compared to $42.7 million for the three months ended September 30, 2021. Adjusted Gross Margin was $94.7 million for the three months ended September 30, 2022, an increase of $25.9 million as compared to $68.8 million for the three months ended September 30, 2021. Gross Margin and Adjusted Gross Margin were higher primarily due to increased direct margin earned on gas sales in Brazil during the three months ended September 30, 2022 ($29.6 million), partially offset by increases in cost of revenue and vessel operating expenses ($5.5 million), primarily due to the commencement of the Bahia Terminal lease in the fourth quarter of 2021.

Gross Margin was $179.5 million for the nine months ended September 30, 2022, an increase of $20.4 million, as compared to $159.1 million for the nine months ended September 30, 2021. Adjusted Gross Margin was $252.2 million for the nine months ended September 30, 2022, an increase of $14.8 million as compared to $237.4 million for the nine months ended September 30, 2021. Gross Margin and Adjusted Gross Margin were higher primarily due to direct margin earned on gas sales in Brazil and New England during the nine months ended September 30, 2022 ($88.2 million), which exceeded direct margin earned on LNG sales that occurred in Bangladesh and China during the nine months ended September 30, 2021 ($17.5 million), partially offset by fewer opportunities to sub-charter our available vessels to third parties during the nine months ended September 30, 2022 ($27.2 million) and increases in cost of revenue and vessel operating expenses ($26.6 million), primarily due to the commencement of the Bahia Terminal lease in the fourth quarter of 2021. Gross Margin is also higher due to less depreciation expense ($5.6 million), as discussed below.

#### Adjusted EBITDA and Adjusted EBITDAR

Our Adjusted EBITDA was $77.5 million for the three months ended September 30, 2022, an increase of $19.3 million, as compared to $58.2 million for the three months ended September 30, 2021. Our Adjusted EBITDAR was $86.4 million for the three months ended September 30, 2022, an increase of $21.1 million as compared to $65.3 million for the three months ended September 30, 2021. Adjusted EBITDA and Adjusted EBITDAR were higher primarily due to increased direct margin earned on gas sales in Brazil during the three months ended September 30, 2022 ($29.6 million), partially offset by increases in cost of revenue and vessel operating expenses ($5.5 million), primarily due to the commencement of the Bahia Terminal lease in the fourth quarter of 2021, and an increase in general and administrative expenses ($7.3 million), as discussed below.

Our Adjusted EBITDA was $205.9 million for the nine months ended September 30, 2022, a decrease of $0.2 million, as compared to $206.1 million for the nine months ended September 30, 2021. Our Adjusted EBITDAR was $233.1 million for the nine months ended September 30, 2022, an increase of $5.7 million as compared to $227.4 million for the nine months ended September 30, 2021. Adjusted EBITDA and Adjusted EBITDAR were higher primarily due to direct margin earned on gas sales in Brazil and New England during the nine months ended September 30, 2022 ($88.2 million), which exceeded direct margin earned on LNG sales that occurred in Bangladesh and China during the nine months ended September 30, 2021 ($17.5 million), partially offset by fewer opportunities to sub-charter our available vessels to third parties during the nine months ended September 30, 2022 ($27.2 million), increases in cost of revenue and vessel operating expenses ($26.6 million), primarily due to the commencement of the Bahia Terminal lease in the fourth quarter of 2021, an increase in general and administrative expenses ($10.4 million), as discussed below, and foreign currency exchange losses ($6.2 million).

For more information regarding our non-GAAP measures Adjusted Gross Margin, Adjusted EBITDA and Adjusted EBITDAR, and a reconciliation to their most comparable GAAP measures, see “—How We Evaluate Our Operations.”

#### FSRU and terminal services revenues

FSRU and terminal services revenues were $115.3 million for the three months ended September 30, 2022, a decrease of $1.3 million, as compared to $116.6 million for the three months ended September 30, 2021. FSRU and terminal services revenues were essentially flat period over period.

FSRU and terminal services revenues were $323.0 million for the nine months ended September 30, 2022, a decrease of $29.3 million, as compared to $352.3 million for the nine months ended September 30, 2021. FSRU and terminal services revenues were lower primarily due to fewer opportunities to sub-charter our available vessels to third parties during the first quarter of 2022.

#### Gas sales revenues

Gas sales revenues were $687.9 million for the three months ended September 30, 2022, an increase of $612.3 million, as compared to $75.6 million for the three months ended September 30, 2021. The increase was primarily due to gas sales that occurred in the three months ended September 30, 2022 related to our terminal operations in Brazil, partially offset by LNG that was sold to a customer in Bangladesh during the three months ended September 30, 2021.

Gas sales revenues were $1,694.9 million for the nine months ended September 30, 2022, an increase of $1,497.4 million, as compared to $197.5 million for the nine months ended September 30, 2021. The gas sales that occurred in the nine months ended September 30, 2022 related to our terminal operations in Brazil and New England. The increase was primarily due to gas sales that occurred in the nine months ended September 30, 2022 related to our terminal operations in Brazil and New England, partially offset by LNG that was sold to customers in Bangladesh and China during the nine months ended September 30, 2021.

#### Cost of revenue and vessel operating expenses

Cost of revenue and vessel operating expenses was $50.3 million for the three months ended September 30, 2022, an increase of $5.5 million, as compared to $44.8 million for the three months ended September 30, 2021. The increase in cost of revenue and vessel operating expenses was primarily due to additional cost of operations in Brazil as we began operations in Bahia during the fourth quarter of 2021.

Cost of revenue and vessel operating expenses was $159.0 million for the nine months ended September 30, 2022, an increase of $26.6 million, as compared to $132.4 million for the nine months ended September 30, 2021. The increase in cost of revenue and vessel operating expenses was primarily due to additional cost of operations in Brazil as we began operations in Bahia during the fourth quarter of 2021 and higher maintenance on four of our vessels and at one of our terminal locations.

#### Direct cost of gas sales

Direct cost of gas sales was $658.3 million for the three months ended September 30, 2022, an increase of $579.8 million, as compared to $78.5 million for the three months ended September 30, 2021. The increase was primarily due to gas sales that occurred in the three months ended September 30, 2022 related to our terminal operations in Brazil, partially offset by costs related to LNG that was sold to a customer in Bangladesh during the three months ended September 30, 2021.

Direct cost of gas sales was $1,606.7 million for the nine months ended September 30, 2022, an increase of $1,426.7 million, as compared to $180.0 million for the nine months ended September 30, 2021. The increase was primarily due to gas sales that occurred in the nine months ended September 30, 2022 related to our terminal operations in Brazil and New England, partially offset by costs related to LNG that was sold to customers in Bangladesh and China during the nine months ended September 30, 2021.

#### Depreciation and amortization expenses

Depreciation and amortization expenses were $24.6 million for the three months ended September 30, 2022, a decrease of $1.5 million, as compared to $26.1 million for the three months ended September 30, 2021. Depreciation and amortization decreased primarily due to the release of our one conventional LNG carrier (“LNGC”) from short term charter operations in December 2021, partially offset by the acquisition of the *Excelsior* vessel.

Depreciation and amortization expenses were $72.7 million for the nine months ended September 30, 2022, a decrease of $5.6 million, as compared to $78.3 million for the nine months ended September 30, 2021. Depreciation and amortization decreased primarily due to the release of our one conventional LNGC from short term charter operations in December 2021, partially offset by the acquisition of the *Excelsior* vessel.

#### Selling, general and administrative expenses

Selling, general and administrative expenses were $18.8 million for the three months ended September 30, 2022, an increase of $7.3 million, as compared to $11.5 million for the three months ended September 30, 2021. The increase was primarily due to incremental costs incurred in conjunction with our transition to a publicly traded company and additional business development activities.

Selling, general and administrative expenses were $44.5 million for the nine months ended September 30, 2022, an increase of $10.4 million, as compared to $34.1 million for the nine months ended September 30, 2021. The increase was primarily due to incremental costs incurred in conjunction with our transition to a publicly traded company and additional business development activities.

#### Restructuring, transition and transaction expenses

Restructuring, transition and transaction expenses were $1.3 million for the three months ended September 30, 2022, a decrease of $4.2 million, as compared to $5.5 million for the three months ended September 30, 2021. The decrease was due to timing of consulting, legal, and audit services utilized as part of and in preparation for the IPO.

Restructuring, transition and transaction expenses were $6.7 million for the nine months ended September 30, 2022, a decrease of $1.9 million, as compared to $8.6 million for the nine months ended September 30, 2021. The decrease was due to timing of consulting, legal, and audit services utilized as part of and in preparation for the IPO.

#### Interest expense

Interest expense was $9.5 million for the three months ended September 30, 2022, an increase of $1.9 million, as compared to $7.6 million for the three months ended September 30, 2021. Interest expense increased primarily due to higher interest rates, partially offset by lower balances remaining on our finance leases and long-term debt.

Interest expense was $24.3 million for the nine months ended September 30, 2022, a decrease of $0.3 million, as compared to $24.6 million for the nine months ended September 30, 2021. Interest expense decreased primarily due to lower balances remaining on our finance leases and long-term debt.

#### Interest expense – related party

Interest expense – related party was $4.2 million for the three months ended September 30, 2022, a decrease of $8.2 million, as compared to $12.4 million for the three months ended September 30, 2021. Interest expense decreased primarily due to the acquisition of the Foundation Vessels.

Interest expense – related party was $21.9 million for the nine months ended September 30, 2022, a decrease of $15.6 million, as compared to $37.5 million for the three months ended September 30, 2021. Interest expense decreased primarily due to the acquisition of the Foundation Vessels.

#### Early extinguishment of lease liability on vessel acquisition

In the nine months ended September 30, 2022, we incurred a $21.8 million expense as a result of the difference between the consideration given to acquire the *Excellence* vessel and the historical finance lease liability.

#### Other income (expense), net

Other income (expense), net was $0.7 million for the three months ended September 30, 2022, an increase of $0.6 million, as compared to $0.1 million for the three months ended September 30, 2021. The increase was primarily due to higher interest income received on cash balances invested in money market funds, partially offset by foreign currency exchange losses related to our operations in Argentina.

Other income (expense), net was $(4.5) million for the nine months ended September 30, 2022, a decrease of $4.9 million, as compared to $0.4 million for the nine months ended September 30, 2021. The decrease was primarily due to foreign currency exchange losses related to our operations in Brazil and Argentina, partially offset by higher interest income received on cash balances invested in money market funds.

#### Provision for income taxes

The provision for income taxes for the three months ended September 30, 2022 and 2021 was $0.2 million and $5.2 million, respectively. The provision for income taxes for the nine months ended September 30, 2022 and 2021 was $11.8 million and $14.1 million, respectively. The decrease was primarily attributable to the year-over-year change in the geographical distribution of income and Brazilian foreign exchange tax impacts of $(6.3) million and $(6.8) million for the three and nine months ended September 30, 2022, respectively. This decrease was partially offset by an increase in U.S. income tax incurred at the corporate level since beginning in April 2022 of $0.1 million and $1.6 million for the three and nine months ended September 30, 2022, respectively.

The effective tax rate for the three months ended September 30, 2022 and 2021 was 0.6% and 79.2%, respectively. The effective tax rate for the nine months ended September 30, 2022 and 2021 was 20.3% and 24.7%, respectively. The decrease was primarily driven by the geographical distribution of income and the varying tax regimes of jurisdictions. Brazilian foreign exchange tax impacts decreased our effective tax rate by (16.7)% and (11.8)% for the three and nine months ended September 30, 2022, respectively. Our effective tax rate was also impacted by the reduction of income before tax due to the loss on early extinguishment of the lease liability on acquisition of the *Excellence* vessel without a corresponding tax benefit which increased our effective tax rate by 5.6% for the nine months ended September 30, 2022. Additionally, our effective tax rate was impacted by 0.3% and 2.8% for the three and nine months ended September 30, 2022, respectively, due to additional tax recorded since being subject to U.S. income taxes at the corporate level beginning in April 2022.

Excelerate is a corporate entity for U.S. federal and state income tax purposes. Excelerate’s accounting predecessor, EELP is treated as a pass-through entity for income tax purposes and has generally not been subject to U.S. federal and most state income taxes. Instead, EELP’s U.S. income is allocated to its Class A and Class B partners proportionate to their interest. As such, the Company’s provision for income tax includes U.S. taxes incurred at the corporate level beginning in April 2022.

The Company has international operations that are also subject to foreign income tax and U.S. corporate subsidiaries subject to U.S. federal tax. Therefore, our effective income tax rate is dependent on many factors, including the Company’s geographical distribution of income, a rate benefit attributable to the portion of the Company’s earnings not subject to corporate level taxes, foreign exchange impacts, and the impact of nondeductible items and foreign exchange impacts as well as varying tax regimes of jurisdictions. In one jurisdiction, the Company’s tax rate is significantly less than the applicable statutory rate as a result of a tax holiday that was granted. This tax holiday will expire in 2033 at the same time that our contract and revenue with our customer ends.

#### Net income (loss) attributable to non-controlling interest

Net income (loss) attributable to non-controlling interest was $28.6 million for the three months ended September 30, 2022, an increase of $27.7 million, as compared to $0.9 million for the three months ended September 30, 2021. The increase in net income attributable to non-controlling interest was primarily due to the addition of non-controlling interest related to owners of our Class B Common Stock after our IPO.

Net income (loss) attributable to non-controlling interest was $26.9 million for the nine months ended September 30, 2022, an increase of $24.7 million, as compared to $2.2 million for the nine months ended September 30, 2021. The increase in net income attributable to non-controlling interest was primarily due to the addition of non-controlling interest related to owners of our Class B Common Stock after our IPO, partially offset by higher maintenance costs at one of our terminal locations.

#### Net loss attributable to non-controlling interest – ENE Onshore

Net loss attributable to non-controlling interest – ENE Onshore was $(0.1) million for the three months ended September 30, 2022, a decrease of $1.3 million, as compared to $(1.4) million for the three months ended September 30, 2021. Net loss attributable to non-controlling interest – ENE Onshore decreased primarily due to additional capacity sales revenue.

Net loss attributable to non-controlling interest – ENE Onshore was $(0.5) million for the nine months ended September 30, 2022, a decrease of $4.8 million, as compared to $(5.3) million for the nine months ended September 30, 2021. Net loss attributable to non-controlling interest – ENE Onshore decreased primarily due to additional capacity sales revenue.

### Liquidity and Capital Resources

Based on our cash positions, cash flows from operating activities and borrowing capacity on our debt facilities, we believe we will have sufficient liquidity for the next 12 months for ongoing operations, planned capital expenditures, other investments, debt service obligations, payment of tax distributions and our announced and expected quarterly dividends, as described in “Dividend Policy” in the Prospectus, the first of which was paid on September 7, 2022. For more information regarding our planned dividend payments, see Note 24 – Subsequent events. As of September 30, 2022, we had $345.7 million in unrestricted cash and cash equivalents.

Our proceeds from the IPO in April 2022 were approximately $416.2 million, after deducting underwriting discounts and commissions, but before deducting estimated IPO-related expenses of $7.9 million. Approximately $50.0 million of the IPO net proceeds were used to fund in part EELP's purchase of the Foundation Vessels. The remaining proceeds are expected to be used to fund our growth strategy, working capital, and other general corporate purposes.

During the third quarter of 2021, we signed a lease on an LNG terminal in Bahia, Brazil from Petrobras, and in December 2021, we started importing LNG and selling regasified natural gas to Petrobras. In addition to Petrobras, we have plans to sell regasified natural gas to other downstream customers in Brazil, Albania and Bangladesh. We are buying additional LNG to import into Brazil and expect to continue to need working capital for LNG inventories. Some of these inventory purchases could potentially exceed cash on hand at certain times. We plan to fund any cash shortfalls with borrowings under the EE Revolver (as defined herein), which replaced the KFMC Note, a promissory note with Kaiser-Francis Management Company, L.L.C. (“KFMC”), an affiliate of Kaiser, upon consummation of the IPO. For more information regarding the EE Revolver, see Note 10 – Long-term debt to the Consolidated Financial Statements. Management believes the EE Revolver will provide sufficient liquidity to execute the purchases under the contract. In the event sufficient funds were not available under the EE Revolver, we would seek alternative funding sources.

We have historically funded our business, including meeting our day-to-day operational requirements, repaying our indebtedness and funding capital expenditures, through debt financing, capital contributions and our operating cash flows as discussed below. We expect that our future principal uses of cash will also include additional capital expenditures to fund our growth strategy, pay income taxes and make distributions from EELP to fund income taxes, fund our obligations under the TRA, and pay cash dividends. Any determination to pay dividends to holders of our common stock will be at the discretion of our board of directors and will depend upon many factors, including our financial condition, results of operations, projections, liquidity, earnings, legal requirements, covenant compliance, restrictions in our existing and any future debt and other factors that our board of directors deems relevant. In the future we may enter into arrangements to grow our business or acquire or invest in complementary businesses which could decrease our cash and cash equivalents and increase our cash requirements. As a result of these and other factors, we could use our available capital resources sooner than expected and may be required to seek additional equity or debt.

#### Cash Flow Statement Highlights

#### Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

*(In thousands)*

| Net cash provided by (used in): | Nine months ended September 30, 2022 | 2021 |
| --- | ---: | ---: |
| Operating activities | $(15,776) | $130,576 |
| Investing activities | (63,874) | (30,837) |
| Financing activities | 355,733 | (114,133) |
| **Net increase (decrease) in cash, cash equivalents, and restricted cash** | **$276,083** | **$(14,394)** |

#### Operating Activities

Cash flows used in operating activities decreased by $146.4 million for the nine months ended September 30, 2022, as compared to the nine months ended September 30, 2021, primarily due to:

- a $155.4 million increase in inventories, primarily due to LNG purchases related to Brazil natural gas sales activity in the nine months ended September 30, 2022;
- a $45.9 million increase in accounts receivable, primarily related to Brazil natural gas sales; and
- partially offset by a $25.0 million increase in net income, before the early extinguishment of lease liability on vessel acquisition in the nine months ended September 30, 2022, as described in “— Consolidated Results of Operations—Net income.”

#### Investing Activities and Capital Expenditures

Cash flows used in investing activities were composed of capital expenditures made for the purchases of property and equipment, which increased by $33.0 million for the nine months ended September 30, 2022, as compared to the same period in 2021. The increase in cash used for purchases of property and equipment was primarily due to the purchase of the Foundation Vessels and our power barge project in Albania.

#### Financing Activities

Cash flows provided by financing activities increased by $469.9 million for the nine months ended September 30, 2022, as compared to the nine months ended September 30, 2021, primarily due to $412.2 million of IPO proceeds, $88.5 million of cash outflows in the nine months ended September 30, 2021 to KFMC from EELP on a promissory note that was terminated in November 2021, a $19.4 million decrease in finance lease payments, and $6.6 million of repayments on the Kaiser Note Receivable during the nine months ended September 30, 2022, partially offset by $25.0 million in cash payments made as part of the early extinguishment of a lease liability related to the IPO transaction, $26.0 million of net payments on our other long-term debt, and $6.0 million of deferred financing costs. For more information regarding the Kaiser Note Receivable, see Note 18 – Related party transactions to the Consolidated Financial Statements.

### New Credit Facility

On April 18, 2022, EELP entered into a senior secured revolving credit agreement (“Credit Agreement”), by and among EELP, as borrower (the “Borrower”), Excelerate, as parent, the lenders party thereto, the issuing banks party thereto and JPMorgan Chase Bank, N.A., as administrative agent, pursuant to which the lenders and issuing banks thereunder have made available a revolving credit facility (the “EE Revolver”), including a letter of credit sub-facility, to EELP. The EE Revolver enables us to borrow up to $350 million over a three-year term which expires in April 2025 and is expected to be used primarily for letters of credit, working capital, and other general corporate purposes. As of September 30, 2022, the Company had issued $40.0 million in letters of credit under the EE Revolver and was in compliance with the covenants under its debt facilities. As a result of the EE Revolver’s financial ratio covenants and after taking into account the outstanding letters of credit issued under the facility, $253 million of the $310 million of undrawn capacity was available for additional borrowings as of September 30, 2022.

Borrowings under the EE Revolver will bear interest at a per annum rate equal to the term Secured Overnight Financing Rate reference rate plus 0.10% (or alternate base rate) for such period plus an applicable margin, which applicable margin will be based on the Borrower's consolidated total leverage ratio as defined and calculated under the Credit Agreement. The unused portion of the EE Revolver will be subject to an unused commitment fee calculated at a rate per annum ranging from 0.375% to 0.50% based on the Borrower's consolidated total leverage ratio.

The EE Revolver contains customary representations, warranties, covenants (affirmative and negative, including maximum consolidated total leverage ratio and minimum consolidated interest coverage ratio covenants), and events of default, the occurrence of which would permit the lenders to accelerate the maturity date of amounts borrowed under the EE Revolver.

Also, on April 18, 2022, the Company borrowed under the EE Revolver, on the closing day of such facility, and used the proceeds to repay the KFMC Note in full. The KFMC Note was terminated in connection with such repayment.

As of September 30, 2022, the Company was in compliance with the covenants under its debt facilities.

In August 2022, we entered into an amendment (“First Amendment”) to the Credit Agreement with the related lenders. As part of the Company’s time charter and regasification agreement with Gasgrid Finland, Gasgrid Finland has the option to purchase the *Exemplar* vessel should certain default or force majeure events occur and at the end of the contract. The Credit Agreement was amended to allow for such potential sale of the vessel.

### Foundation Vessels Purchase

In exchange for (i) 7,854,167 shares of Class A Common Stock with a fair market value of $188.5 million, (ii) a cash payment of $50.0 million and (iii) $21.5 million of estimated future payments under the TRA, EELP purchased from Maya Maritime LLC, a wholly owned subsidiary of the Foundation, all of the issued and outstanding membership interests in the Foundation Vessels. In 2018, EELP entered into an agreement with a customer to lease the *Excellence* vessel with the vessel transferring ownership to the customer at the conclusion of the agreement for no additional consideration. Historically, EELP, as a lessor, has accounted for the *Excellence* vessel contract with our customer as a sales-type lease in the consolidated balance sheet in accordance with Accounting Standards Codification 842, Leases. The *Excellence* vessel will continue to be accounted for as a sales-type lease and thus did not result in an adjustment to property and equipment. The difference between the consideration given to acquire the *Excellence* and the historical finance lease liability resulted in a $21.8 million early extinguishment of lease liability loss on our consolidated statements of income.

### Other Contractual Obligations

#### Operating Leases

We lease a vessel and offices in various locations under noncancelable operating leases. As of December 31, 2021, we had future minimum lease payments of $120.2 million. As of September 30, 2022, we had future minimum lease payments totaling $95.7 million and are committed to $9.0 million in year one, $65.3 million for years two and three, $19.1 million for years four and five and $2.3 million thereafter.

#### Finance Leases

Certain enforceable vessel charters and pipeline capacity agreements are classified as finance leases, and the right-of-use assets are included in property and equipment. As of December 31, 2021, we had future minimum lease payments totaling $784.8 million. As of September 30, 2022, we had future minimum lease payments totaling $316.6 million and are committed to $9.3 million in payments in year one, $66.5 million for years two and three, $66.5 million for years four and five, and $174.3 million thereafter.

#### Newbuild Agreement Commitments

As part of the Newbuild Agreement, we currently expect to pay approximately $330 million, subject to adjustment. Related payments are due in five installments with the final installment due concurrently with the delivery of the vessel, which is expected in 2026. As of September 30, 2022, our future payment commitments related to the Newbuild Agreement are expected to be approximately $30 million in 2022, $50 million in 2024, and $250 million in 2025-2026.

#### Tax Receivable Agreement

In connection with the IPO, we entered into the TRA with the TRA Beneficiaries. The TRA will provide for payment by us to the TRA Beneficiaries of 85% of the amount of the net cash tax savings, if any, that we are deemed to realize as a result of our utilization of certain tax benefits resulting from (i) certain increases in the tax basis of assets of EELP and its subsidiaries resulting from exchanges of EELP partnership interests in the future, (ii) certain tax attributes of EELP and subsidiaries of EELP (including the existing tax basis of assets owned by EELP or its subsidiaries and the tax basis of certain assets purchased from the Foundation) that exist as of the time of the IPO or may exist at the time when Class B interests of EELP are exchanged for shares of Class A Common Stock, and (iii) certain other tax benefits related to us entering into the TRA, including tax benefits attributable to payments that we make under the TRA. See “Certain Relationships and Related Person Transactions—Proposed Transactions with Excelerate Energy, Inc—Tax Receivable Agreement” in the Prospectus for more information about the TRA.

The payments that we will be required to make under the TRA, including those made if we elected to terminate the agreement early, have the potential to be substantial. Based on certain assumptions, including no material changes in the relevant tax law and that we earn sufficient taxable income to realize the full tax benefits that are the subject of the TRA, we expect that future payments to the TRA Beneficiaries (not including Excelerate) will equal $76.7 million in the aggregate, although the actual future payments to the TRA Beneficiaries will vary based on the factors discussed in “Certain Relationships and Related Person Transactions—Proposed Transactions with Excelerate Energy, Inc—Tax Receivable Agreement” in the Prospectus and estimating the amount of payments that may be made under the TRA is by its nature imprecise, insofar as the calculation of amounts payable depends on a variety of factors and future events.

### Off Balance Sheet Arrangements

Before Excelerate’s IPO, EELP, certain of its subsidiaries and other affiliates of George B. Kaiser (together with his affiliates other than the Company “Kaiser”) were guarantors to a Kaiser revolving loan facility, and EELP provided a first lien against one of EELP’s vessels to collateralize this facility. The facility was a committed line of credit of $600 million with a third-party bank that would have expired on September 30, 2022 (the “Kaiser Credit Line”). EELP utilized the Kaiser Credit Line to issue letters of credit or bank guarantees to counterparties to guarantee its performance. In connection with the IPO, the first lien against an EELP vessel and other collateral and guarantees provided by EELP and its subsidiaries was released by the lender under the Kaiser Credit Line and certain credit support previously provided to EELP by Kaiser under the Kaiser Credit Line was replaced with credit support under the EE Revolver.

### Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements in conformity with GAAP requires significant judgments from management in estimating matters for financial reporting that are inherently uncertain. For additional information about our accounting policies and estimates, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical accounting policies” in the Prospectus and the notes to the audited financial statements included therein.

There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in the Prospectus.

### Recent Accounting Pronouncements

Refer to Note 2, “Summary of significant accounting policies,” to the notes to Consolidated Financial Statements of EELP included in Part I, Item 1 of this Form 10-Q for information regarding recently issued accounting pronouncements.

### Implications of Being an Emerging Growth Company

As a company with less than $1.07 billion in revenue during our most recently completed fiscal year, Excelerate qualifies as an emerging growth company (“EGC”) as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). For so long as Excelerate remains an EGC, it is permitted, and has elected, to rely on exemptions from specified disclosure requirements that are applicable to other public companies that are not EGCs. These exemptions include:

- being permitted to provide only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure;
- not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting under the Sarbanes-Oxley Act, for up to five years or until we no longer qualify as an EGC;
- not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements;
- reduced disclosure obligations regarding executive compensation pursuant to the rules applicable to smaller reporting companies, which means we do not have to include a compensation discussion and analysis and certain other disclosures regarding our executive compensation; and
- exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and obtaining stockholder approval of any golden parachute payments not previously approved.

As Excelerate has exceeded the $1.07 billion in annual revenue threshold during the current fiscal year, we will cease to be an EGC on December 31, 2022, at the latest. As a result of ceasing EGC status, we will be required to comply with certain requirements listed above in our Form 10-K for the year ending December 31, 2022. Excelerate would cease to be an EGC earlier than December 31, 2022, if it issues more than $1 billion of non-convertible debt before that time, which we believe is not likely to occur. Excelerate may choose to take advantage of some, but not all, of the available exemptions until that time. Excelerate has taken advantage of some reduced reporting burdens in its filings. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you may hold stock.

The JOBS Act provides that an EGC may take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an EGC to delay the adoption of accounting standards until those standards would otherwise apply to private companies. Excelerate may elect to take advantage of this extended transition period and, as a result, will comply with new or revised accounting standards on the relevant dates on which adoption is required for private companies.

## Market risk

As filed, 2,640 characters.

In our normal course of business, we are exposed to certain market risks, including changes in interest rates, natural gas and LNG commodity prices and foreign currency exchange rates. In order to manage these risks, we may utilize derivative instruments. Gains or losses on those derivative instruments would typically be offset by corresponding gains or losses on the hedged item.

#### Interest Rate Risk

We have entered into long-term interest rate swap agreements in order to hedge a portion of our exposure to changes in interest rates associated with our external bank loans. We are exposed to changes in interest rates on our other debt facilities as well as the portion of our external bank loans that remain unhedged. We may enter into additional derivative instruments to manage our exposure to interest rates.

As of December 31, 2021, the fair value of our interest rate swaps was $(4.4) million. As of September 30, 2022, the fair value of our interest rate swaps was $2.4 million. Based on our hedged notional amount as of September 30, 2022, a hypothetical 10% change in the three-month and six-month London Interbank Offered Rate (LIBOR) forward curves would change the estimated fair value of our existing interest rate swaps by less than $0.1 million.

#### Commodity Price Risk

In the course of our operations, we are exposed to commodity price risk, primarily through our occasional purchases of or commitments to purchase LNG. To reduce our exposure, we may enter into derivative instruments to offset some or all of the associated price risk. We did not hold any commodity derivative instruments as of September 30, 2022 or 2021.

#### Foreign Currency Exchange Risk

Our reporting currency is the U.S. dollar and the functional currency of each of our subsidiaries is the U.S. dollar. Gains or losses due to transactions in foreign currencies are included in “Other income (expense), net” in our consolidated statements of income. Due to a portion of our expenses being incurred in currencies other than the U.S. dollar, our expenses may, from time to time, increase relative to our revenues as a result of fluctuations in exchange rates, particularly between the U.S. dollar and the Euro, Argentine Peso, Brazilian Real and the Bangladesh Taka. In the future, we may use financial derivatives to hedge some of our currency exposure. We did not hold any foreign currency derivative instruments as of September 30, 2022 or 2021. For the nine months ended September 30, 2022 and 2021, we recorded $(6.4) million and $(0.3) million, respectively, in foreign currency gains/(losses) in our consolidated statements of income.

## Controls and procedures

As filed, 7,326 characters.

#### Evaluation of Disclosure Controls and Procedures

The Company's disclosure controls and procedures are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms, and that such information is accumulated and communicated to management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

As required by Rules 13a-15 and 15d-15 under the Exchange Act, management, including our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2022. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective as of September 30, 2022, due to the material weaknesses in internal control over financial reporting described below.

#### Material Weaknesses in Internal Control over Financial Reporting

In preparation of our 2020 and 2019 financial statements to meet the requirements applicable for our IPO, we identified material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. We did not design and maintain an effective control environment commensurate with public company financial reporting requirements. Specifically, we did not maintain a sufficient complement of personnel with an appropriate degree of internal controls, accounting, tax and information technology (“IT”) knowledge, experience and training to appropriately analyze, record and disclose accounting matters commensurate with accounting and financial reporting requirements.

This material weakness contributed to the following additional material weaknesses:

- We did not design and maintain effective controls over period end financial reporting processes and procedures, controls over significant accounts and disclosures to achieve complete, accurate and timely financial accounting, reporting and disclosures, including segregation of duties and controls related to the preparation and review of journal entries. Additionally, we did not design and maintain effective controls to identify and account for the elimination of certain intercompany revenue and expenses;
- We did not design and maintain effective controls over the proper timing of revenue recognition for drydock revenue contracts;
- We did not design and maintain effective controls to analyze compliance with non-financial debt covenants and conditions; and
- We did not design and maintain effective controls to verify the completeness and accuracy of our income tax provision.

These material weaknesses resulted in adjustments to FSRU and terminal services revenue, selling, general and administrative expenses, cost of revenue and vessel operating expenses, provision for income taxes and related account balances and disclosures as of and for the years ended December 31, 2020 and 2019, and a misstatement to current and long-term debt as of December 31, 2020, which has since been corrected.

We did not design or maintain effective controls over IT general controls for information systems that are relevant to the preparation of our financial statements. Specifically, we did not design and maintain: (i) user access controls to ensure appropriate segregation of duties and that adequately restrict user and privileged access to financial applications, programs and data to appropriate company personnel; (ii) program change management controls to ensure that IT program and data changes affecting financial IT applications and underlying accounting records are identified, tested, authorized and implemented appropriately; (iii) computer operations controls to ensure that critical batch jobs are monitored and data backups are authorized and monitored financial data can be recovered from backups; and (iv) testing and approval controls for program development to ensure that new software development is aligned with business and IT requirements. This material weakness did not result in a material misstatement to the financial statements; however, the deficiencies, when aggregated, could impact maintaining effective segregation of duties, as well as the effectiveness of IT-dependent controls (such as automated controls that address the risk of material misstatement to one or more assertions, along with the IT controls and underlying data that support the effectiveness of system-generated data and reports) that could result in misstatements potentially impacting all financial statement accounts and disclosures that would not be prevented or detected.

Additionally, each of the above material weaknesses could result in a misstatement of our account balances or disclosures that would result in a material misstatement to the annual or interim financial statements that would not be prevented or detected.

#### Remediation Efforts

To address the material weaknesses, we are continuing to implement, measures designed to improve internal control over financial reporting, including expanding our accounting, tax, IT and finance teams to add additional qualified resources, which may include third-party consultants, and implementing new financial processes and controls. We have hired new experienced accounting leadership team members in the following positions: Vice President, Controller and Chief Accounting Officer; Vice President of Tax; Director of Financial Reporting; Senior Manager over International Accounting Operations; and Senior Manager over Income Tax Provision. In addition, we have hired a new Vice President over IT and a new Treasurer. We intend to continue to take steps to remediate the material weaknesses through the formalizing of documentation of policies and procedures and further evolving the accounting processes, including designing and implementing appropriate segregation of duties, period end financial review controls, including system controls over journal entry approvals, controls to identify and account for the elimination of certain intercompany revenue and expenses, controls over the timing of revenue recognition over drydocks, controls to analyze compliance with non-financial debt covenants and conditions, and controls over the completeness and accuracy of our income tax provision. We are working to remediate the material weaknesses as efficiently and effectively as possible and are continuing to design and implement the additional controls. These material weaknesses will not be remediated until we have completed the design and implementation of the additional controls and the controls have been in place and operating for a sufficient period of time and confirmed through testing to be effective.

## Risk factors

As filed, 206 characters.

There have been no material changes from the risk factors previously disclosed in “Risk Factors” included in the Prospectus or the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022.

Filed Nov 14, 2022.
Source: SEC EDGAR, the filing index for accession 0000950170-22-024588. Last ingested by Listed: Nov 5, 2026, 20:26 ET. No prices; not investment advice.