# Excelerate Energy, Inc.: Form 10-Q for the period ended Sep 30, 2023

- Company: [Excelerate Energy, Inc.](/companies/ee.md) (CIK 1888447)
- Form: 10-Q
- Filed: 2023-11-09
- Accepted by EDGAR: Nov 9, 2023, 21:56 ET
- Period: 2023-09-30
- Accession: 0000950170-23-062198
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1888447/000095017023062198/ee-20230930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1888447/000095017023062198/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-07-01 to 2023-09-30 | $275.5m | us-gaap:Revenues |
| Revenue | 9 months, 2023-01-01 to 2023-09-30 | $918.9m | us-gaap:Revenues |
| Operating income | 3 months, 2023-07-01 to 2023-09-30 | $67.5m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2023-01-01 to 2023-09-30 | $170.7m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2023-07-01 to 2023-09-30 | $8.2m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2023-01-01 to 2023-09-30 | $25.5m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-07-01 to 2023-09-30 | $13.9m | us-gaap:NetIncomeLossAvailableToCommonStockholdersBasic |
| Net income | 9 months, 2023-01-01 to 2023-09-30 | $26.7m | us-gaap:NetIncomeLossAvailableToCommonStockholdersBasic |
| Diluted EPS | 3 months, 2023-07-01 to 2023-09-30 | $0.40 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2023-01-01 to 2023-09-30 | $0.91 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-07-01 to 2023-09-30 | $0.53 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2023-01-01 to 2023-09-30 | $1.02 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-07-01 to 2023-09-30 | 108,295,819 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2023-01-01 to 2023-09-30 | 108,303,411 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2023-01-01 to 2023-09-30 | $195.3m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Dividends paid | 9 months, 2023-01-01 to 2023-09-30 | $2.0m | us-gaap:PaymentsOfDividends |
| Cash and equivalents | at 2023-09-30 | $602.9m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-09-30 | $716.7m | us-gaap:AssetsCurrent |
| Total assets | at 2023-09-30 | $2.90bn | us-gaap:Assets |
| Current liabilities | at 2023-09-30 | $172.6m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-09-30 | $1.10bn | us-gaap:Liabilities |
| Long-term debt | at 2023-09-30 | $400.2m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2023-09-30 | $40.7m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2023-09-30 | $1.80bn | us-gaap:StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest |

## Management's discussion and analysis

As filed, 64,677 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 the 2022 Annual Report. 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 2022 Annual Report, 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 and more reliable energy by delivering regasified natural gas, benefiting 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 energy sources such as LNG is critical to assisting 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 11 countries and operations in Argentina, Bangladesh, Brazil, Finland, Pakistan, the United Arab Emirates (the “UAE”) and the United States. 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”), which expires in December 2023 and will transition to a TCP in January 2024. Utilizing the Bahia Terminal, we have been importing LNG and selling natural gas to the Brazilian market since December 2021. In December 2022, we began importing and selling natural gas and LNG into Europe via the Inkoo Terminal in Finland. We intend to continue to market natural gas and LNG, which offers 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, 2023, we generated revenues of $275.5 million, net income of $46.5 million and Adjusted EBITDA of $106.9 million. For the three months ended September 30, 2022, we generated revenues of $803.3 million, net income of $37.3 million and Adjusted EBITDA of $77.9 million. For more information regarding our non-GAAP measure Adjusted EBITDA 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 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, 2023, we operate a fleet of ten purpose-built FSRUs, have completed more than 2,600 ship-to-ship transfers of LNG with over 50 LNG operators since we began operations and have safely delivered more than 6,500 billion cubic feet of natural gas through 16 LNG regasification terminals. For the three months ended September 30, 2023 and 2022, we generated revenues of $133.2 million and $115.3 million, respectively, from our FSRU and terminal services businesses, representing approximately 48% and 14% of our total revenues for each of those periods.

We also procure LNG from major producers and sell natural gas through our flexible LNG terminals. For the three months ended September 30, 2023 and 2022 we generated revenues of $142.3 million and $687.9 million, respectively, from LNG and natural gas sales, representing approximately 52% and 86% of our total revenues for each of those periods. We believe that 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 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. We are evaluating and pursuing early-stage projects with opportunities in Europe, Asia Pacific, Latin America, and the Middle East.

### Recent Trends and Outlook

Natural gas prices remained steady in the third quarter of 2023 relative to the second quarter of 2023. Dutch Title Transfer Facility (“TTF”) prices averaged $10.75/MMBtu, a slight decrease from $10.96/MMBtu in the second quarter of 2023, and a significant decrease from the third quarter of 2022’s average of $60.15/MMBtu. Steady LNG spot prices have benefitted LNG consumers, allowing emerging buyers in South and Southeast Asia to continue their spot cargo purchase programs. From January through September 2023, Bangladesh LNG cargos awarded were 69% higher than cargos purchased by the country on the spot market in all of 2022. In the nine months ended September 30, 2023, Excelerate has sold four LNG cargos into Bangladesh.

Mild weather in Europe in the third quarter of 2023 reduced European summer-cooling demand and resulted in the continued build-up of European LNG storage. European Union (“EU”) natural gas storage levels ended the third quarter of 2023 at approximately

95% full, exceeding the EU’s mandated November 1, 2023 target of 90%. Market pricing of LNG through the end of the 2023-2024 winter season is expected to be largely dependent on the magnitude of colder weather in large LNG consumer regions. According to S&P Global, European residential-commercial natural gas demand is expected to increase just 4% in the 2023-2024 winter over the prior winter. This would still result in demand at 14% below historical winter season average levels. On the supply side, recent disruptions and outages may impact the global markets. Potential supply disruptions from the now resolved Australian strikes at two LNG facilities, the outage on Finland’s Balticconnector pipeline, and the Israel-Hamas war each have the potential to impact natural gas markets adversely. Lower demand has kept natural gas prices from experiencing acute price volatility and prevented market distortions amidst recent events that could disrupt natural gas supply. A colder-than-normal northern hemisphere winter coupled with risks to supply could lead to price volatility and increase the potential for higher LNG prices. These dynamics could determine how customers in the regions in which Excelerate operates will be able to participate in the spot market throughout the remainder of 2023.

LNG supply activity has continued to make significant moves forward through the third quarter of 2023. Since the beginning of the year, 56 million tonnes per annum (“MTPA”) of incremental LNG volumes from the Gulf of Mexico have reached final investment decisions (“FID”). This increases the volume from export projects that have reached FID since 2022 to 76 MTPA. These export projects are expected to begin coming online at the end of 2024. The increase in supply is expected to create new opportunities for Excelerate to connect LNG to downstream customers, including those in South and Southeast Asia.

Recent Business Updates:

- In November 2023, Excelerate signed a long-term Sales and Purchase Agreement (“SPA”) with Bangladesh Oil, Gas & Mineral Corporation (“Petrobangla”). Under the agreement, Petrobangla has agreed to purchase 0.85 to 1.0 MTPA of LNG from Excelerate for a term of 15 years, beginning in 2026. Excelerate will deliver 0.85 MTPA of LNG in 2026 and 2027 and 1 MTPA from 2028 to 2040. The take-or-pay LNG volumes are expected to be delivered through Excelerate’s two existing FSRUs, the *Excellence* and *Summit LNG*, in Bangladesh.
- In October 2023, Excelerate executed a 10-year Time Charter Party (“TCP”) agreement with Petrobras for the *Sequoia*. The contract will commence on January 1, 2024 and the vessel will be located at the Bahia Terminal in Salvador, Bahia, Brazil.
- In September 2023, the *Excelsior* resumed its original charter with the Government of the Federal Republic of Germany (the “German government”). In February 2023, the *Excelsior* commenced its charter hire pursuant to a binding five-year charter contract signed with the German government to provide regasification services at Germany’s planned LNG import terminal that is being developed by Tree Energy Solutions, E.ON SE and ENGIE SA. From April 2023 through August 2023, the *Excelsior* was on temporary suspension from the Germany charter while it was deployed to the Bahia Blanca GasPort terminal in Argentina from May 2023 through August 2023.
- In the second and third quarters of 2023, Excelerate delivered four spot LNG cargos into Bangladesh, equating to approximately 250,000 tons of LNG.
- In April 2023, we completed the purchase of the FSRU *Sequoia* for a purchase price of $265 million from Anemoesa Marine Inc. (“Anemoesa”). Proceeds from our Term Loan Facility and cash on hand were used to purchase *Sequoia*. Prior to the purchase, we had leased *Sequoia* on a five-year bareboat charter from Anemoesa, which began in June 2020.
- In March 2023, we closed on an amended and restated $600 million senior secured credit facility, consisting of a $350 million revolving credit facility and a $250 million term loan, which we drew down in April 2023. The new facilities refinanced our existing EE Revolver.
- In February 2023, we extended our time charter party agreement with Dubai Supply Authority (DUSUP) for the *Explorer*. Under the terms of the new agreement, the time charter period has been extended by an additional five years, which will now reach completion in the first quarter of 2031.
- In February 2023, we executed a 20-year LNG sales and purchase agreement with Venture Global LNG under which we will purchase 0.7 MT per annum of LNG on an FOB basis from the Plaquemines Phase 2 LNG facility in Plaquemines Parish, Louisiana. The start of this commitment is dependent on the LNG facility becoming operational.

### 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 and other assets include 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. Accordingly, unless otherwise specified, our historical results of operations prior to the IPO do not include any provision for U.S. federal income tax for EELP. 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”). On October 17, 2022, EE Holdings, the indirect sole member of ENE Onshore, and EELP, the sole member of Excelerate New England Lateral, LLC (“ENE Lateral”), entered into a merger agreement, pursuant to which ENE Onshore was merged with and into ENE Lateral (the “ENE Onshore Merger”), effective October 31, 2022. ENE Lateral was the surviving entity and ENE Onshore ceased to exist as a separate entity. Prior to the ENE Onshore Merger, Excelerate consolidated ENE Onshore as a variable interest entity as Excelerate was determined to be the primary beneficiary of ENE Onshore. As a result of the ENE Onshore Merger, Excelerate ceased to have a non-controlling interest related to ENE Onshore.

### 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. EELP is treated as a pass-through entity for U.S. federal income tax purposes and, as such, is generally not 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 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—Related Person Transactions—Transactions in Connection with our Reorganization and Initial Public Offering—Tax Receivable Agreement” in our Proxy Statement on DEF 14A filed on April 17, 2023 (the “Proxy Statement”).

Also included in the Reorganization 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 Reorganization. The Foundation Vessels had 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 continues to be accounted for as a sales-type lease and thus did not result in an adjustment to property and equipment.

#### 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.

### 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; 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

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 expense, income taxes, depreciation and amortization, accretion, non-cash 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 first quarter of 2023, we revised the definition of Adjusted EBITDA to adjust for the impact of non-cash accretion expense, which results in a metric that is consistent with how management will review performance going forward. Management believes accretion expense does not directly reflect our ongoing operating performance.

We adjust net income for the items listed above to arrive at Adjusted EBITDA 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 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. This measure has 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. Our presentation of Adjusted EBITDA 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, Adjusted EBITDA 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, 2023 | 2022 | Nine months ended September 30, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| FSRU and terminal services revenues | $133,177 | $115,346 | $377,216 | $323,010 |
| Gas sales revenues | 142,294 | 687,915 | 541,683 | 1,694,853 |
| Cost of revenue and vessel operating expenses | (49,190) | (50,258) | (156,646) | (158,994) |
| Direct cost of gas sales | (106,109) | (658,320) | (438,987) | (1,606,695) |
| Depreciation and amortization expense | (33,161) | (24,648) | (89,126) | (72,687) |
| **Gross Margin** | **$87,011** | **$70,035** | **$234,140** | **$179,487** |
| Depreciation and amortization expense | 33,161 | 24,648 | 89,126 | 72,687 |
| **Adjusted Gross Margin** | **$120,172** | **$94,683** | **$323,266** | **$252,174** |

### 35

*(In thousands)*

|  | Three months ended September 30, 2023 | 2022 | Nine months ended September 30, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| **Net income** | **$46,505** | **$37,272** | **$106,800** | **$46,126** |
| Interest expense | 17,518 | 13,689 | 50,137 | 46,209 |
| Provision for income taxes | 8,188 | 233 | 25,503 | 11,752 |
| Depreciation and amortization expense | 33,161 | 24,648 | 89,126 | 72,687 |
| Accretion expense | 446 | 376 | 1,323 | 1,114 |
| Restructuring, transition and transaction expenses | — | 1,345 | — | 6,680 |
| Long-term incentive compensation expense | 1,129 | 328 | 2,560 | 598 |
| Early extinguishment of lease liability on vessel acquisition | — | — | — | 21,834 |
| **Adjusted EBITDA** | **$106,947** | **$77,891** | **$275,449** | **$207,000** |

### 36

### Consolidated Results of Operations

### Three and Nine Months Ended September 30, 2023 Compared to Three and Nine Months Ended September 30, 2022

*(In thousands)*

*(In thousands)*

| Revenues | Three months ended September 30, 2023 | 2022 | Change | Nine months ended September 30, 2023 | 2022 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| FSRU and terminal services | $133,177 | $115,346 | $17,831 | $377,216 | $323,010 | $54,206 |
| Gas sales | 142,294 | 687,915 | (545,621) | 541,683 | 1,694,853 | (1,153,170) |
| Total revenues | 275,471 | 803,261 | (527,790) | 918,899 | 2,017,863 | (1,098,964) |
| Operating expenses |  |  |  |  |  |  |
| Cost of revenue and vessel operating expenses (exclusive of items below) | 49,190 | 50,258 | (1,068) | 156,646 | 158,994 | (2,348) |
| Direct cost of gas sales | 106,109 | 658,320 | (552,211) | 438,987 | 1,606,695 | (1,167,708) |
| Depreciation and amortization | 33,161 | 24,648 | 8,513 | 89,126 | 72,687 | 16,439 |
| Selling, general and administrative | 19,513 | 18,778 | 735 | 63,393 | 44,476 | 18,917 |
| Restructuring, transition and transaction | — | 1,345 | (1,345) | — | 6,680 | (6,680) |
| Total operating expenses | 207,973 | 753,349 | (545,376) | 748,152 | 1,889,532 | (1,141,380) |
| Operating income | 67,498 | 49,912 | 17,586 | 170,747 | 128,331 | 42,416 |
| Other income (expense) |  |  |  |  |  |  |
| Interest expense | (13,926) | (9,454) | (4,472) | (39,360) | (24,308) | (15,052) |
| Interest expense – related party | (3,592) | (4,235) | 643 | (10,777) | (21,901) | 11,124 |
| Earnings (loss) from equity method investments | (550) | 625 | (1,175) | 258 | 2,135 | (1,877) |
| Early extinguishment of lease liability on vessel acquisition | — | — | — | — | (21,834) | 21,834 |
| Other income (loss), net | 5,263 | 657 | 4,606 | 11,435 | (4,545) | 15,980 |
| Income before income taxes | 54,693 | 37,505 | 17,188 | 132,303 | 57,878 | 74,425 |
| Provision for income taxes | (8,188) | (233) | (7,955) | (25,503) | (11,752) | (13,751) |
| Net income | 46,505 | 37,272 | 9,233 | 106,800 | 46,126 | 60,674 |
| Less net income attributable to non-controlling interests | 32,613 | 28,571 | 4,042 | 80,096 | 26,924 | 53,172 |
| Less net loss attributable to non-controlling interests – ENE Onshore | — | (127) | 127 | — | (545) | 545 |
| Less pre-IPO net income (loss) attributable to EELP | — | — | — | — | 12,950 | (12,950) |
| Net income attributable to shareholders | $13,892 | $8,828 | $5,064 | $26,704 | $6,797 | $19,907 |
| **Additional financial data:** |  |  |  |  |  |  |
| Gross Margin | $87,011 | $70,035 | $16,976 | $234,140 | $179,487 | $54,653 |
| Adjusted Gross Margin | 120,172 | 94,683 | 25,489 | 323,266 | 252,174 | 71,092 |
| Adjusted EBITDA | 106,947 | 77,891 | 29,056 | 275,449 | 207,000 | 68,449 |
| Capital expenditures | 11,638 | 21,844 | (10,206) | 304,426 | 63,874 | 240,552 |

### Three and Nine Months Ended September 30, 2023 Compared to Three and Nine Months Ended September 30, 2022

#### Net income

Net income was $46.5 million for the three months ended September 30, 2023, an increase of $9.2 million, as compared to $37.3 million for the three months ended September 30, 2022. Net income was higher primarily due to higher rates on charters in Finland, Argentina, Brazil, and Germany partially offset by the end of our contract in Israel in the fourth quarter of 2022 ($13.7 million), lower operating lease expense due to the acquisition of *Sequoia* ($7.1 million), higher direct margin earned on gas sales in Brazil and Bangladesh during the three months ended September 30, 2023 ($36.2 million), which exceeded direct margin earned on gas sales that occurred in Brazil during the three months ended September 30, 2022 ($29.6 million), and higher interest income received on cash balances invested in money market funds ($4.4 million), partially offset by an increase in the provision for income tax ($8.0 million), as discussed below, extended commissioning time for our power barge assets in Albania ($5.1 million), an increase in interest expense

($4.5 million), primarily due to the new Term Loan Facility, and an increase in depreciation and amortization expense ($3.4 million), primarily as a result of acquiring *Sequoia* and *Excelsior* in the second quarter of 2023 and 2022, respectively.

Net income was $106.8 million for the nine months ended September 30, 2023, an increase of $60.7 million, as compared to $46.1 million for the nine months ended September 30, 2022. Net income was higher primarily due to higher rates on charters in Finland, Germany, Brazil and Argentina and a contract extension in the UAE, partially offset by the end of our contract in Israel in the fourth quarter of 2022 ($36.3 million), the early extinguishment of the *Excellence* vessel finance lease liability as part of the vessel acquisition ($21.8 million), lower operating lease expense due to the acquisition of *Sequoia* ($15.3 million), higher direct margin earned on gas sales in Brazil and Bangladesh and new gas sales in Finland during the nine months ended September 30, 2023 ($102.7 million), which exceeded direct margin earned on gas sales that occurred in Brazil and New England during the nine months ended September 30, 2022 ($88.2 million), higher interest income received on cash balances invested in money market funds ($13.2 million), less interest expense – related party incurred in the nine months ended September 30, 2023 due to the acquisition of the Foundation Vessels ($7.9 million), improved utilization resulting in lower idle vessel costs in 2023 ($7.7 million), lower restructuring, transition and transaction expenses after the completion of our IPO in April 2022 ($6.7 million), one of our vessels coming off of suspension in the second quarter of 2022 ($5.6 million), and a decrease in foreign currency exchange losses ($3.2 million), partially offset by an increase in general and administrative expenses ($18.9 million), as discussed below, an increase in interest expense ($15.1 million), primarily due to the new Term Loan Facility, an increase in the provision for income tax ($13.8 million), as discussed below, an increase in depreciation and amortization expense ($10.4 million), primarily as a result of acquiring *Sequoia* and *Excelsior* in the second quarter of 2023 and 2022, respectively, and extended commissioning time for our power barge assets in Albania ($6.0 million).

#### Gross Margin and Adjusted Gross Margin

Gross Margin was $87.0 million for the three months ended September 30, 2023, an increase of $17.0 million, as compared to $70.0 million for the three months ended September 30, 2022. Adjusted Gross Margin was $120.2 million for the three months ended September 30, 2023, an increase of $25.5 million, as compared to $94.7 million for the three months ended September 30, 2022. Gross Margin and Adjusted Gross Margin were higher primarily due to higher rates on charters in Finland, Argentina, Brazil and Germany partially offset by the end of our contract in Israel in the fourth quarter of 2022 ($13.7 million), lower operating lease expense due to the acquisition of *Sequoia* ($7.1 million), and higher direct margin earned on gas sales in Brazil and Bangladesh during the three months ended September 30, 2023 ($36.2 million), which exceeded direct margin earned on gas sales that occurred in Brazil during the three months ended September 30, 2022 ($29.6 million). The increase in Gross Margin was also offset by extended commissioning time for our power barge assets in Albania ($5.1 million) and an increase in depreciation and amortization expense ($3.4 million), primarily as a result of acquiring *Sequoia* and *Excelsior* in the second quarter of 2023 and 2022, respectively.

Gross Margin was $234.1 million for the nine months ended September 30, 2023, an increase of $54.6 million, as compared to $179.5 million for the nine months ended September 30, 2022. For the nine months ended September 30, 2023, Adjusted Gross Margin was $323.3 million, an increase of $71.1 million, as compared to $252.2 million for the nine months ended September 30, 2022. Gross Margin and Adjusted Gross Margin were higher primarily due to higher rates on charters in Finland, Germany, Brazil and Argentina and a contract extension in the UAE, partially offset by the end of our contract in Israel in the fourth quarter of 2022 ($36.3 million), lower operating lease expense due to the acquisition of *Sequoia* ($15.3 million), higher direct margin earned on gas sales in Brazil and Bangladesh and new gas sales in Finland during the nine months ended September 30, 2023 ($102.7 million), which exceeded direct margin earned on gas sales that occurred in Brazil and New England during the nine months ended September 30, 2022 ($88.2 million), improved utilization resulting in lower idle vessel costs in 2023 ($7.7 million), and one of our vessels coming off of suspension in the second quarter of 2022 ($5.6 million). The increase in Gross Margin was also offset by an increase in depreciation and amortization expense ($10.4 million), primarily as a result of acquiring *Sequoia* and *Excelsior* in the second quarter of 2023 and 2022, respectively, and extended commissioning time for our power barge assets in Albania ($6.0 million).

#### Adjusted EBITDA

Our Adjusted EBITDA was $106.9 million for the three months ended September 30, 2023, an increase of $29.0 million, as compared to $77.9 million for the three months ended September 30, 2022. Adjusted EBITDA was higher primarily due to higher rates on charters in Finland, Argentina, Brazil, and Germany partially offset by the end of our contract in Israel in the fourth quarter of 2022 ($13.7 million), lower operating lease expense due to the acquisition of *Sequoia* ($7.1 million), higher direct margin earned on gas sales in Brazil and Bangladesh during the three months ended September 30, 2023 ($36.2 million), which exceeded direct margin earned on gas sales that occurred in Brazil during the three months ended September 30, 2022 ($29.6 million), and higher interest income received on cash balances invested in money market funds ($4.4 million).

Adjusted EBITDA was $275.4 million for the nine months ended September 30, 2023, an increase of $68.4 million, as compared to $207.0 million for the nine months ended September 30, 2022. Adjusted EBITDA was higher primarily due to higher rates on charters in Finland, Germany, Brazil and Argentina and a contract extension in the UAE, partially offset by the end of our contract in Israel in the fourth quarter of 2022 ($36.3 million), lower operating lease expense due to the acquisition of *Sequoia* ($15.3 million), higher direct margin earned on gas sales in Brazil and Bangladesh and new gas sales in Finland during the nine months ended September 30, 2023

($102.7 million), which exceeded direct margin earned on gas sales that occurred in Brazil and New England during the nine months ended September 30, 2022 ($88.2 million), higher interest income received on cash balances invested in money market funds ($13.2 million), improved utilization resulting in lower idle vessel costs in 2023 ($7.7 million), one of our vessels coming off of suspension in the second quarter of 2022 ($5.6 million), and a decrease in foreign currency exchange losses ($3.2 million), partially offset by an increase in general and administrative expenses ($18.9 million), as discussed below.

For more information regarding our non-GAAP measures Adjusted Gross Margin and Adjusted EBITDA, 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 $133.2 million for the three months ended September 30, 2023, an increase of $17.9 million, as compared to $115.3 million for the three months ended September 30, 2022. FSRU and terminal services revenues were higher primarily due to the *Exemplar* charter beginning in Finland in the fourth quarter of 2022, *Excelsior* providing seasonal service in Argentina before redelivery to Germany at the end of the third quarter of 2023, and higher daily rates in Brazil and Argentina, partially offset by the end of our contract with Israel in the fourth quarter of 2022.

FSRU and terminal services revenues were $377.2 million for the nine months ended September 30, 2023, an increase of $54.2 million as compared to $323.0 million for the nine months ended September 30, 2022. FSRU and terminal services revenues were higher primarily due to the *Exemplar* charter beginning in Finland in the fourth quarter of 2022, seasonal service by *Excelsior* in Argentina before redelivery to Germany at the end of the third quarter of 2023, a contract extension in the UAE, and higher daily rates in Brazil and Argentina, partially offset by the end of our contract with Israel in the fourth quarter of 2022.

#### Gas sales revenues

Gas sales revenues were $142.3 million for the three months ended September 30, 2023, a decrease of $545.6 million, as compared to $687.9 million for the three months ended September 30, 2022. The decrease was primarily due to a reduction of natural gas sales volumes related to our terminal operations in Brazil, partially offset by LNG sales in Bangladesh during the three months ended September 30, 2023.

Gas sales revenues were $541.7 million for the nine months ended September 30, 2023, a decrease of $1,153.2 million, as compared to $1,694.9 million for the nine months ended September 30, 2022. The decrease was primarily due to a reduction of natural gas sales volumes related to our terminal operations in Brazil and of LNG sales at our terminal in New England during the nine months ended September 30, 2022, partially offset by LNG sales in Bangladesh during the nine months ended September 30, 2023 and Finland gas sales activity which commenced in the fourth quarter of 2022.

#### Cost of revenue and vessel operating expenses

Cost of revenue and vessel operating expenses was $49.2 million for the three months ended September 30, 2023, a decrease of $1.1 million, as compared to $50.3 million for the three months ended September 30, 2022. The decrease in cost of revenue and vessel operating expenses was primarily due to lower operating lease expense due to the acquisition of *Sequoia*, partially offset by positioning costs associated with seasonal service in Argentina.

Cost of revenue and vessel operating expenses was $156.6 million for the nine months ended September 30, 2023, a decrease of $2.4 million, as compared to $159.0 million for the nine months ended September 30, 2022. The decrease in cost of revenue and vessel operating expenses was primarily due to lower operating lease expense due to the acquisition of *Sequoia*, and improved utilization resulting in lower idle vessel costs in 2023, partially offset by positioning costs associated with seasonal service in Argentina.

#### Direct cost of gas sales

Direct cost of gas sales was $106.1 million for the three months ended September 30, 2023, a decrease of $552.2 million, as compared to $658.3 million for the three months ended September 30, 2022. The decrease was primarily due to a reduction of natural gas sales volumes related to our terminal operations in Brazil, partially offset by LNG sales in Bangladesh during the three months ended September 30, 2023.

Direct cost of gas sales was $439.0 million for the nine months ended September 30, 2023, a decrease of $1,167.7 million, as compared to $1,606.7 million for the nine months ended September 30, 2022. The decrease was primarily due to a reduction of natural gas sales volumes related to our terminal operations in Brazil and of LNG sales at our terminal in New England during the nine months ended September 30, 2022, partially offset by LNG sales in Bangladesh during the nine months ended September 30, 2023 and Finland gas sales activity which commenced in the fourth quarter of 2022.

#### Depreciation and amortization expenses

Depreciation and amortization expenses were $33.2 million for the three months ended September 30, 2023, an increase of $8.6 million, as compared to $24.6 million for the three months ended September 30, 2022. Depreciation and amortization increased primarily due to the acquisition of *Sequoia* in the second quarter of 2023, extended commissioning time for our power barge assets in Albania, and the acquisition of *Excelsior* in the second quarter of 2022.

Depreciation and amortization expenses were $89.1 million for the nine months ended September 30, 2023, an increase of $16.4 million, as compared to $72.7 million for the nine months ended September 30, 2022. Depreciation and amortization increased primarily due to the acquisition of *Sequoia* in the second quarter of 2023, extended commissioning time for our power barge assets in Albania, accelerated depreciation recognized for assets removed from service on one of our vessels in the second quarter of 2023, and the acquisition of *Excelsior* in the second quarter of 2022.

#### Selling, general and administrative expenses

Selling, general and administrative expenses were $19.5 million for the three months ended September 30, 2023, an increase of $0.7 million, as compared to $18.8 million for the three months ended September 30, 2022. The increase was primarily due to increased compensation expense.

Selling, general and administrative expenses were $63.4 million for the nine months ended September 30, 2023, an increase of $18.9 million, as compared to $44.5 million for the nine months ended September 30, 2022. The increase was primarily due to incremental costs incurred in conjunction with our transition to a publicly traded company, expenses related to new contracts in Europe, and additional business development activities.

#### Restructuring, transition and transaction expenses

We had no restructuring, transition and transaction expenses for three and nine months ended September 30, 2023. Restructuring, transition and transaction expenses relating to the completion of our IPO in April 2022 were $1.3 million and $6.7 million for the three and nine months ended September 30, 2022, respectively.

#### Interest expense

Interest expense was $13.9 million for the three months ended September 30, 2023, an increase of $4.4 million, as compared to $9.5 million for the three months ended September 30, 2022. Interest expense increased primarily due to the new Term Loan Facility.

Interest expense was $39.4 million for the nine months ended September 30, 2023, an increase of $15.1 million, as compared to $24.3 million for the nine months ended September 30, 2022. Interest expense increased primarily due to the new Term Loan Facility, accelerated amortization of deferred issuance costs related to the Amended Credit Agreement, and increases in LIBOR and SOFR rates, partially offset by lower balances remaining on our finance leases and long-term debt.

#### Interest expense – related party

Interest expense – related party was $3.6 million for the three months ended September 30, 2023, a decrease of $0.6 million, as compared to $4.2 million for the three months ended September 30, 2022. Interest expense decreased primarily due to the acquisition of the Foundation Vessels in the second quarter of 2022.

Interest expense – related party was $10.8 million for the nine months ended September 30, 2023, a decrease of $11.1 million, as compared to $21.9 million for the nine months ended September 30, 2022. Interest expense decreased primarily due to the acquisition of the Foundation Vessels in the second quarter of 2022.

#### 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 (loss), net

Other income (loss), net was $5.3 million for the three months ended September 30, 2023, a variance of $4.6 million as compared to $0.7 million for the three months ended September 30, 2022. The variance was primarily due to higher interest income received on cash balances invested in money market funds.

Other income (loss), net was $11.4 million for the nine months ended September 30, 2023, a variance of $15.9 million as compared to $(4.5) million for the nine months ended September 30, 2022. The variance was primarily due to higher interest income received on cash balances invested in money market funds and lower foreign currency exchange losses related to our operations in Brazil.

#### Provision for income taxes

The provision for income taxes for the three months ended September 30, 2023 and 2022 was $8.2 million and $0.2 million, respectively. For the nine months ended September 30, 2023 and 2022, the provision for income taxes was $25.5 million and $11.8 million, respectively. The increase was primarily attributable to the year-over-year change in the amount and geographical distribution of income.

The effective tax rate for the three months ended September 30, 2023 and 2022 was 15.0% and 0.6%, respectively. For the nine months ended September 30, 2023 and 2022, the effective tax rate was 19.3% and 20.3%, respectively. The effective tax rate was impacted by the geographical distribution of income and the varying tax regimes of jurisdictions.

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. Accordingly, unless otherwise specified, our historical results of operations prior to the IPO do not include any provision for U.S. federal income tax for EELP.

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, 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 attributable to non-controlling interest

Net income attributable to non-controlling interest was $32.6 million for the three months ended September 30, 2023, an increase of $4.0 million, as compared to $28.6 million for the three months ended September 30, 2022. The increase in net income attributable to non-controlling interest was primarily due to higher net income.

Net income attributable to non-controlling interest was $80.1 million for the nine months ended September 30, 2023, an increase of $53.2 million, as compared to $26.9 million for the nine months ended September 30, 2022. The increase in net income attributable to non-controlling interest was primarily due to higher net income and the addition of non-controlling interest related to owners of our Class B Common Stock after our IPO.

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

Net loss attributable to non-controlling interest – ENE Onshore was $(0.1) million and $(0.5) million for the three and nine months ended September 30, 2022. In October 2022, ENE Onshore merged with and into ENE Lateral.

### 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 and distributions, as described in “Dividend and Distribution Policy” in the 2022 Annual Report. For more information regarding our planned dividend payments, see Note 12 – Equity. As of September 30, 2023, we had $602.9 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 IPO-related expenses of $7.6 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.

In December 2021, we started importing LNG and selling regasified natural gas to Petrobras through the Bahia Terminal under an agreement which expires in December 2023. We also have imported and sold natural gas and LNG into other countries in which we operate. Some of the inventory purchases which we make to fulfill these sales could potentially exceed cash on hand at certain times. We plan to fund any cash shortfalls with borrowings under the EE Revolver. 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 our contractual purchase obligations. 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 and distributions. Any determination to pay dividends to holders of our common stock and distributions to holders of EELP’s Class B interests 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, 2023 Compared to Nine Months Ended September 30, 2022

*(In thousands)*

| Net cash provided by (used in): | Nine months ended September 30, 2023 | 2022 | Change |
| --- | ---: | ---: | ---: |
| Operating activities | $195,274 | $(15,776) | $211,050 |
| Investing activities | (300,325) | (63,874) | (236,451) |
| Financing activities | 193,305 | 355,733 | (162,428) |
| Effect of exchange rate on cash, cash equivalents, and restricted cash | (43) | — | (43) |
| **Net increase in cash, cash equivalents, and restricted cash** | **$88,211** | **$276,083** | **$(187,872)** |

#### Operating Activities

Cash flows provided by operating activities increased by $211.1 million for the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022, primarily due to:

- a $294.2 million increase in inventory cash flows primarily due to Brazil inventory sales during the nine months ended September 30, 2023;
- an $87.7 million increase in cash flows from collecting accounts receivable, primarily due to higher collections of receivables in the nine months ended September 30, 2023 related to Brazil and Finland natural gas sales activity;
- a $60.7 million increase in net income; and
- a $16.4 million increase in depreciation and amortization expense, as discussed above;
- partially offset by a $125.0 million decrease in cash received related to deferred revenues, primarily related to prepayments of Brazil natural gas sales;
- a $106.6 million decrease in cash flows used in settling accounts payable and accrued liabilities, primarily due to fewer LNG cargo purchases in the nine months ended September 30, 2023 related to Brazil natural gas sales activity; and
- a $21.8 million early extinguishment of lease liability on vessel acquisition in 2022.

#### Investing Activities and Capital Expenditures

Cash flows used in investing activities were primarily comprised of capital expenditures made for the purchases of property and equipment, which increased by $236.5 million for the nine months ended September 30, 2023, as compared to the same period in 2022. The increase was primarily due to the purchase of the *Sequoia* vessel and vessel upgrades made ahead of beginning service at the Inkoo Terminal in Finland.

#### Financing Activities

Cash flows provided by financing activities decreased by $162.4 million for the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022, primarily due to proceeds of $412.2 million from the IPO sale of Class A Common Stock in 2022, $13.8 million less net borrowings on our long-term debt and Term Loan, $6.6 million of repayments on the Kaiser Note Receivable during the nine months ended September 30, 2022 and a $7.4 million increase in distributions to shareholders and joint venture partners, partially offset by $250.0 million in proceeds from the Term Loan Facility in 2023 and $25.0 million in cash payments in 2022 made as part of the early extinguishment of a lease liability related to the IPO transaction.

### Debt Facilities

#### Revolving Credit Facility and Term Loan Facility

On April 18, 2022, EELP entered into a senior secured revolving credit agreement, by and among EELP, as 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 made available the EE Revolver, including a letter of credit sub-facility, to EELP. The EE Revolver enabled us to borrow up to $350 million over a three-year term originally set to expire in April 2025.

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.

On March 17, 2023, EELP entered into an amended and restated senior secured credit agreement (“Amended Credit Agreement”), by and among EELP, as borrower, Excelerate, as parent, the lenders party thereto, the issuing banks party thereto and Wells Fargo Bank, N.A., as administrative agent. The Amended Credit Agreement provides for, among other things (i) a new $250 million term loan facility (the “Term Loan Facility” and, together with the EE Revolver, the “EE Facilities”), (ii) an extension of the maturity date of the EE Revolver, (iii) an increase in the maximum consolidated total leverage by 0.50x to 3.50x, provided that, if the aggregate value of all unsecured debt is equal to or greater than $250 million, maximum consolidated total leverage increases to 4.25x, and (iv) collateral vessel maintenance coverage to be not less than the greater of (a) $750 million and (b) 130% of the sum of the total credit exposure under the Amended Credit Agreement. The EE Facilities mature in March 2027. Proceeds from the EE Revolver are intended to be used for letters of credit, working capital, and other general corporate purposes.

In April 2023, Excelerate purchased the FSRU *Sequoia* for $265 million using $250 million borrowed through our Term Loan Facility together with cash on hand. Concurrently with the purchase, the Company entered into interest rate swaps for the same notional amount as the Term Loan Facility. The purpose of the swaps is to hedge our exposure to fluctuations in SOFR related to borrowings on the Term Loan Facility. The interest rate swaps have maturity, payment and reset dates that align with those of the Term Loan Facility.

On September 8, 2023, EELP entered into an amendment to the Amended Credit Agreement (“First Amendment”). The First Amendment provides for, among other things (i) inclusion of commodity and foreign exchange swap termination value in the collateral vessel maintenance coverage test and (ii) an update to the ordering of payment applications in the event of default.

Borrowings under the EE Revolver bear interest at a per annum rate equal to the term SOFR reference rate for such period plus an applicable margin, which applicable margin is based on EELP's consolidated total leverage ratio as defined and calculated under the Amended Credit Agreement. The unused portion of the EE Facilities is subject to an unused commitment fee calculated at a rate per annum ranging from 0.375% to 0.50% based on EELP's consolidated total leverage ratio.

The Amended Credit Agreement contains customary representations, warranties, covenants (affirmative and negative, including maximum consolidated total leverage ratio, minimum consolidated interest coverage ratio, and collateral vessel maintenance coverage covenants), and events of default, the occurrence of which would permit the lenders to accelerate the maturity date of amounts borrowed under the EE Facilities. As of September 30, 2023, the Company had issued $40.0 million in letters of credit under the EE Revolver. 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, all of the $310.0 million of undrawn capacity was available for additional borrowings as of September 30, 2023.

As of September 30, 2023, the Company was in compliance with the covenants under its debt facilities.

### Other Contractual Obligations

#### Operating Leases

We lease a terminal and offices in various locations under noncancelable operating leases. As of December 31, 2022, we had future minimum lease payments of $88.6 million. As of September 30, 2023, we had future minimum lease payments totaling $9.9 million and are committed to $2.7 million in year one, $3.9 million for years two and three, $2.0 million for years four and five and $1.3 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, 2022, we had future minimum lease payments totaling $307.3 million. As of September 30, 2023, we had future minimum lease payments totaling $282.4 million and are committed to $8.3 million in payments in year one, $66.5 million for years two and three, $66.5 million for years four and five and $141.0 million thereafter.

#### Newbuild Agreement Commitments

In October 2022, Excelerate signed a binding Shipbuilding Contract (the “Newbuild Agreement”) with Hyundai Heavy Industries for a new FSRU to be delivered in 2026. 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. During the year ended December 31, 2022, we made the first installment payment of approximately $30.0 million. Our future payment commitments related to the Newbuild Agreement are expected to be approximately $50.0 million in 2024 and $250.0 million in 2025-2026.

#### Venture Global SPA

In February 2023, we executed a 20-year LNG sales and purchase agreement with Venture Global LNG (the “Venture Global SPA”). Under the Venture Global SPA, Excelerate will purchase 0.7 MT per annum of LNG on a FOB basis from the Plaquemines LNG facility in Plaquemines Parish, Louisiana. Our purchase commitment will be based on the final settlement price of monthly Henry Hub natural gas futures contracts plus a contractual spread. Using Henry Hub natural gas futures pricing as of September 30, 2023, our average annual commitment is estimated to be approximately $255 million. The start of this commitment, however, is dependent on the LNG facility becoming operational, which is not expected in the next twelve months.

### Critical Accounting 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 2022 Annual Report 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 2022 Annual Report.

### Recent Accounting Pronouncements

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

## Market risk

As filed, 2,792 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 September 30, 2023, the fair value of our interest rate swaps was $8.0 million, compared to $2.3 million as of December 31, 2022. Based on our hedged notional amount as of September 30, 2023, a hypothetical 100 basis point increase or decrease in the three-month and six-month LIBOR and SOFR forward curves would change the estimated fair value of our existing interest rate swaps by $8.7 million.

#### Commodity Price Risk

In the course of our operations, we are exposed to commodity price risk, primarily through our 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. During the three and nine months ended September 30, 2023, we utilized an immaterial amount of financial derivatives to hedge some of our commodity price risk. We did not hold any commodity derivative instruments as of September 30, 2023 or 2022.

#### 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. During the nine months ended September 30, 2023, we utilized an immaterial amount of financial derivatives to hedge some of our currency exposure. For the nine months ended September 30, 2023 and 2022, we recorded $(3.2) million and $(6.4) million, respectively, in foreign currency gains/(losses) in our consolidated statements of income. As of September 30, 2023, we held an immaterial amount of foreign currency swaps.

## Controls and procedures

As filed, 5,246 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 Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’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, 2023. 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 effective as of September 30, 2023.

#### Remediation of Previously Identified Material Weaknesses in 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. In preparation of our 2020 and 2019 financial statements to meet the requirements applicable for our 2022 IPO, we identified the following material weaknesses in our internal control over financial reporting which were previously disclosed in our Registration Statement on Form S-1 filed on January 7, 2022, each of which has been remediated as of June 30, 2023.

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 and tax 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; 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 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.

To remediate the material weaknesses, we designed and implemented new or enhanced controls and took other actions to improve our internal control over financial reporting, including:

- Expanded our accounting, tax and finance teams to add additional qualified resources, which included third-party consultants. We have hired new experienced accounting leadership team members in the following positions: Vice President, Controller and Chief Accounting Officer; Vice President of Tax; Assistant Corporate Controller; Director over International Accounting Operations; and Senior Manager over Income Tax Provision. In addition, we hired a Treasurer;
- Established an Internal Audit function. We hired a Vice President of Internal Audit and team members experienced in audit and control design who worked with company personnel to establish and document policies and controls including providing additional training and guidance on requirements and control processes;
- Designed and implemented controls related to the period-end financial reporting processes, including controls related to business performance reviews and manual journal entries;
- Designed and implemented controls related to the completeness and accuracy of our income tax provision.

We determined that the remediated controls described above are designed effectively and have operated for a sufficient period of time to appropriately address the material weaknesses described above. Additionally, management has concluded, through testing, that these controls are operating effectively and the material weaknesses described above were remediated as of June 30, 2023.

#### Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the three months ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 132 characters.

There have been no material changes from the risk factors previously disclosed in “Risk Factors” included in the 2022 Annual Report.

Filed Nov 9, 2023.
Source: SEC EDGAR, the filing index for accession 0000950170-23-062198. Last ingested by Listed: Oct 24, 2026, 15:16 ET. No prices; not investment advice.