# Excelerate Energy, Inc.: Form 10-Q for the period ended Mar 31, 2024

- Company: [Excelerate Energy, Inc.](/companies/ee.md) (CIK 1888447)
- Form: 10-Q
- Filed: 2024-05-09
- Accepted by EDGAR: May 9, 2024, 16:36 ET
- Period: 2024-03-31
- Accession: 0000950170-24-057144
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1888447/000095017024057144/ee-20240331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1888447/000095017024057144/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-01-01 to 2024-03-31 | $200.1m | us-gaap:Revenues |
| Operating income | 3 months, 2024-01-01 to 2024-03-31 | $45.2m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2024-01-01 to 2024-03-31 | $6.9m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-01-01 to 2024-03-31 | $6.3m | us-gaap:NetIncomeLossAvailableToCommonStockholdersBasic |
| Diluted EPS | 3 months, 2024-01-01 to 2024-03-31 | $0.24 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-01-01 to 2024-03-31 | $0.24 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-01-01 to 2024-03-31 | 26,182,050 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2024-01-01 to 2024-03-31 | $64.7m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Dividends paid | 3 months, 2024-01-01 to 2024-03-31 | $652.0k | us-gaap:PaymentsOfDividends |
| Cash and equivalents | at 2024-03-31 | $578.9m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-03-31 | $693.6m | us-gaap:AssetsCurrent |
| Total assets | at 2024-03-31 | $2.86bn | us-gaap:Assets |
| Current liabilities | at 2024-03-31 | $196.9m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-03-31 | $1.03bn | us-gaap:Liabilities |
| Long-term debt | at 2024-03-31 | $322.5m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2024-03-31 | $44.4m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2024-03-31 | $1.83bn | us-gaap:StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest |

## Management's discussion and analysis

As filed, 43,393 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 2023 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 2023 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, which benefits hundreds of millions of people around the world. From our founding, we have focused on providing flexible liquefied natural gas (“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.

Our business spans the globe, with regional offices in 11 countries and an operational presence in Argentina, Bangladesh, Brazil, Finland, Germany, Pakistan, the United Arab Emirates (“UAE”), and the United States. We are the largest provider of regasified LNG capacity in Argentina, Bangladesh, Finland and the UAE, one of the largest providers of regasified LNG capacity in Brazil and Pakistan, and we operate the largest floating storage and regasification unit (“FSRU”) in Brazil. We intend to continue marketing natural gas and LNG, both of which offer a cleaner energy source from which power can be generated consistently, in the markets where we operate. The high value our customers place on our services has resulted in a reliable source of revenues to us. For the three months ended March 31, 2024, we generated revenues of $200.1 million, net income of $28.1 million and Adjusted EBITDA of $75.4 million. For the three months ended March 31, 2023, we generated revenues of $211.1 million, net income of $30.7 million and Adjusted EBITDA of $79.9 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 and terminal use 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 March 31, 2024, we operate a fleet of ten purpose-built FSRUs, have completed more than 2,700 ship-to-ship transfers of LNG with over 50 LNG operators since we began operations and have safely delivered more than 6,700 billion cubic feet of natural gas through 16 LNG regasification terminals. For the three months ended March 31, 2024 and 2023, we generated revenues of $157.0 million and $118.6 million, respectively, from our FSRU and terminal services businesses, representing approximately 78% and 56% 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 March 31, 2024 and 2023 we generated revenues of $43.1 million and $92.5 million, respectively, from LNG and natural gas sales, representing approximately 22% and 44% 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 significant portfolio of new growth opportunities for us to pursue. In addition to our FSRU and terminal services businesses and LNG and natural gas sales, we plan to expand our business through investments in organic and inorganic commercial opportunities. We are evaluating and pursuing early-stage projects with opportunities in South Asia, Asia Pacific, Latin America, Europe, and the Middle East.

### Recent Trends and Outlook

Natural gas and LNG prices decreased during the first quarter of 2024 relative to the fourth quarter of 2023. Dutch Title Transfer Facility (“TTF”) and Japan Korea Marker (“JKM”) average first quarter pricing ($8.65/million British thermal units (“MMBtu”) and $11.90/MMBtu, respectively) decreased compared to the fourth quarter of 2023 ($13.58/MMBtu and $15.75/MMBtu, respectively). Lower demand in both Europe and northern Asia prevented price escalation during the first quarter of 2024. European natural gas storage ended the 2023-2024 winter season at about 61% of capacity. Injection season is already underway with a goal to have natural gas storage levels at 90% of capacity by October 1, 2024. Geopolitical risk premiums remained high in the first quarter of 2024 due to the continuation of the Israel-Hamas war, but structurally-balanced LNG markets and warmer than normal winter months prevented prices from escalating. Most recently, energy markets have shown a muted response to the Iran-Israel conflict, despite the threat it poses to global energy balances.

Relatively low and steady LNG spot prices in 2023 and through the first quarter of 2024 have benefited LNG consumers, allowing buyers in Asia to continue purchasing spot cargoes. Unless pricing significantly increases above recent levels, we expect to see continued interest from the markets we serve, such as Bangladesh and, during their winter season, Argentina. China’s LNG imports recovered significantly in response to lowered spot market prices, increased term volumes, and increased gas-fired generation pushing up overall gas demand through 2023. This trend continued into the first quarter of 2024 as LNG imports increased by three million tonnes (“MT”) to 19 MT during first quarter of 2024 compared to 16 MT during the first quarter of 2023.

Brazil also experienced an increase in LNG imports. The effects of an intense and prolonged El Niño event prompted higher-than-normal summer temperatures, which, coupled with maintenance outages of Brazil’s offshore natural gas production, led to increased LNG imports. Our 10-year charter with Petrobras for *Sequoia* is another example of our infrastructure providing not only energy security, but also reliability.

In January 2024, the Biden Administration announced a temporary pause on pending decisions of new LNG export authorizations to non-Free Trade Agreement (“non-FTA”) countries. During the energy industry’s CERAWeek conference in March 2024, Secretary Jennifer Granholm of the Department of Energy assured attendees that by the next CERAWeek in March 2025 the pause on LNG export project approvals imposed by the Biden Administration would be lifted. There are approximately 16 liquefaction projects with approximately 156 MTPA of LNG capacity pending final investment decision (“FID”) that are facing regulatory delays. It is likely that a majority of the export projects would not reach FID until next year. Our agreement to purchase up to 0.7 MTPA of LNG from Venture Global’s Plaquemines Phase 2 LNG facility is not affected by the temporary pause. Together with our additional LNG purchase commitments from QatarEnergy, we expect that our portfolio will give us the opportunity to assist both new and existing customers in better managing the typical uncertainties of local demand, while capturing potential arbitrage opportunities ourselves.

### 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 and terminal use 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. 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-place 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 salvage 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.

#### 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 joint venture with Nakilat Excelerate LLC, 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, Excelerate Energy Limited Partnership (“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. 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 subsidiaries, Excelerate Energy Bangladesh, LLC and Excelerate Albania Holding Sh.p.k.

### 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.

#### Depreciation Expense

During the fourth quarter of 2023, we performed a review of the estimated useful lives of our FSRU vessels. As a relatively new asset class, being first built in 2005, we initially estimated a useful life of 30 years with no salvage value. As the vessels approach almost 20 years of life, there has been improved visibility into the expected term of FSRU productive capabilities, demand, and salvage potential. As a result, we changed the useful lives of our FSRU vessel assets to 40 years and added an estimated salvage value.

### 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.

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 the efficiency of business operations, extend the life of an existing asset, improve an asset’s capabilities, increase the future service of an asset, repair existing assets in order to maintain their service capability, and provide the 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 March 31, 2024 | 2023 |
| --- | ---: | ---: |
| FSRU and terminal services revenues | $156,994 | $118,577 |
| Gas sales revenues | 43,119 | 92,479 |
| Cost of revenue and vessel operating expenses | (70,613) | (58,792) |
| Direct cost of gas sales | (39,879) | (55,185) |
| Depreciation and amortization expense | (22,910) | (25,193) |
| **Gross Margin** | **$66,711** | **$71,886** |
| Depreciation and amortization expense | 22,910 | 25,193 |
| **Adjusted Gross Margin** | **$89,621** | **$97,079** |

*(In thousands)*

|  | Three months ended March 31, 2024 | 2023 |
| --- | ---: | ---: |
| **Net income** | **$28,140** | **$30,739** |
| Interest expense | 15,606 | 15,547 |
| Provision for income taxes | 6,901 | 7,603 |
| Depreciation and amortization expense | 22,910 | 25,193 |
| Accretion expense | 455 | 436 |
| Long-term incentive compensation expense | 1,377 | 357 |
| **Adjusted EBITDA** | **$75,389** | **$79,875** |

### 30

### Consolidated Results of Operations

### Three Months Ended March 31, 2024 Compared to Three Months Ended March 31, 2023

*(In thousands)*

| Revenues | For the three months ended March 31, 2024 | 2023 | Change |
| --- | ---: | ---: | ---: |
| FSRU and terminal services | $156,994 | $118,577 | $38,417 |
| Gas sales | 43,119 | 92,479 | (49,360) |
| Total revenues | 200,113 | 211,056 | (10,943) |
| Operating expenses |  |  |  |
| Cost of revenue and vessel operating expenses (exclusive of items below) | 70,613 | 58,792 | 11,821 |
| Direct cost of gas sales | 39,879 | 55,185 | (15,306) |
| Depreciation and amortization | 22,910 | 25,193 | (2,283) |
| Selling, general and administrative | 21,552 | 22,317 | (765) |
| Total operating expenses | 154,954 | 161,487 | (6,533) |
| Operating income | 45,159 | 49,569 | (4,410) |
| Other income (expense) |  |  |  |
| Interest expense | (12,146) | (11,955) | (191) |
| Interest expense – related party | (3,460) | (3,592) | 132 |
| Earnings from equity method investments | 531 | 416 | 115 |
| Other income, net | 4,957 | 3,904 | 1,053 |
| Income before income taxes | 35,041 | 38,342 | (3,301) |
| Provision for income taxes | (6,901) | (7,603) | 702 |
| Net income | 28,140 | 30,739 | (2,599) |
| Less net income attributable to non-controlling interests | 21,816 | 23,895 | (2,079) |
| Net income attributable to shareholders | $6,324 | $6,844 | $(520) |
| **Additional financial data:** |  |  |  |
| Gross Margin | $66,711 | $71,886 | $(5,175) |
| Adjusted Gross Margin | 89,621 | 97,079 | (7,458) |
| Adjusted EBITDA | 75,389 | 79,875 | (4,486) |
| Capital expenditures | 12,769 | 14,929 | (2,160) |

### Three Months Ended March 31, 2024 Compared to Three Months Ended March 31, 2023

#### Net income

Net income was $28.1 million for the three months ended March 31, 2024, a decrease of $2.6 million, as compared to $30.7 million for the three months ended March 31, 2023. Net income was lower primarily due to the drydocking of *Summit LNG* and *Excellence*, our two vessels accounted for as sales-type leases ($18.4 million), the transition of *Sequoia* to a TCP agreement in the first quarter of 2024 ($4.1 million), and a decrease in other gas sales opportunities ($3.9 million), partially offset by a full quarter of our charter with Germany ($8.1 million), a decrease in depreciation and amortization, primarily as a result of the update to our useful life assumption in the fourth quarter of 2023 ($5.9 million), various charter rate increases ($5.4 million), the benefit of the *Sequoia* acquisition ($3.6 million), and an increase in interest income ($2.3 million).

#### Gross Margin and Adjusted Gross Margin

Gross Margin was $66.7 million for the three months ended March 31, 2024, a decrease of $5.2 million, as compared to $71.9 million for the three months ended March 31, 2023. For the three months ended March 31, 2024, Adjusted Gross Margin was $89.6 million, a decrease of $7.5 million, as compared to $97.1 million for the three months ended March 31, 2023. Gross Margin and Adjusted Gross Margin were lower primarily due to the drydocking of *Summit LNG* and *Excellence*, our two vessels accounted for as sales-type leases ($18.4 million), the transition of *Sequoia* to a TCP agreement in the first quarter of 2024 ($4.4 million), and a decrease in other gas sales opportunities ($3.9 million), partially offset by a full quarter of our charter with Germany ($8.1 million), lower operating lease expense due to the acquisition of *Sequoia* ($6.0 million), and various charter rate increases ($5.4 million). Gross Margin also decreased due to higher depreciation and amortization as a result of acquiring *Sequoia* ($2.4 million), partially offset by the update to our useful life assumption in the fourth quarter of 2023 ($5.9 million).

#### Adjusted EBITDA

Adjusted EBITDA was $75.4 million for the three months ended March 31, 2024, a decrease of $4.5 million, as compared to $79.9 million for the three months ended March 31, 2023. Adjusted EBITDA was lower primarily due to the drydocking of *Summit LNG* and *Excellence*, our two vessels accounted for as sales-type leases ($18.4 million), the transition of *Sequoia* to a TCP agreement in the first quarter of 2024 ($4.1 million), and a decrease in other gas sales opportunities ($3.9 million), partially offset by a full quarter of our charter with Germany ($8.1 million), lower operating lease expense due to the acquisition of *Sequoia* ($6.0 million), various charter rate increases ($5.4 million), and an increase in interest income ($2.3 million).

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 $157.0 million for the three months ended March 31, 2024, an increase of $38.4 million as compared to $118.6 million for the three months ended March 31, 2023. FSRU and terminal services revenues were higher primarily due to beginning our TCP agreement in Brazil in the first quarter of 2024, and a full quarter of our charter with Germany.

#### Gas sales revenues

Gas sales revenues were $43.1 million for the three months ended March 31, 2024, a decrease of $49.4 million, as compared to $92.5 million for the three months ended March 31, 2023. The decrease was primarily due to higher natural gas sales volumes and prices during the three months ended March 31, 2023 related to our terminal operations in Brazil and gas sales activity in Finland, partially offset by LNG sales in Bangladesh during the three months ended March 31, 2024.

#### Cost of revenue and vessel operating expenses

Cost of revenue and vessel operating expenses was $70.6 million for the three months ended March 31, 2024, an increase of $11.8 million, as compared to $58.8 million for the three months ended March 31, 2023. The increase in cost of revenue and vessel operating expenses was primarily due to drydock costs on *Summit LNG* and increased personnel costs in Argentina, partially offset by lower operating lease expense due to the acquisition of *Sequoia*, and lower expenses in Brazil as a result of transitioning to a TCP agreement in the first quarter of 2024.

#### Direct cost of gas sales

Direct cost of gas sales was $39.9 million for the three months ended March 31, 2024, a decrease of $15.3 million, as compared to $55.2 million for the three months ended March 31, 2023. The decrease was primarily due to higher natural gas sales volumes and prices during the three months ended March 31, 2023 related to our terminal operations in Brazil and gas sales activity in Finland which commenced in the fourth quarter of 2022, partially offset by LNG sales in Bangladesh during the three months ended March 31, 2024.

#### Depreciation and amortization expenses

Depreciation and amortization expenses were $22.9 million for the three months ended March 31, 2024, a decrease of $2.3 million, as compared to $25.2 million for the three months ended March 31, 2023. Depreciation and amortization decreased primarily due to the update to our useful life assumptions, partially offset by increases from the acquisition of *Sequoia* in the second quarter of 2023.

#### Selling, general and administrative expenses

Selling, general and administrative expenses were $21.6 million for the three months ended March 31, 2024, a decrease of $0.7 million, as compared to $22.3 million for the three months ended March 31, 2023. Selling, general and administrative expenses were essentially flat for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.

#### Interest expense

Interest expense was $12.1 million for the three months ended March 31, 2024, an increase of $0.1 million, as compared to $12.0 million for the three months ended March 31, 2023. Interest expense increased due to our entering into the Term Loan (as defined herein) in the second quarter of 2023, partially offset by accelerated amortization of deferred issuance costs related to the Amended Credit Agreement (as defined herein) recognized in the three months ended March 31, 2023.

#### Interest expense – related party

Interest expense – related party was $3.5 million for the three months ended March 31, 2024, a decrease of $0.1 million, as compared to $3.6 million for the three months ended March 31, 2023. Interest expense – related party for the three months ended March 31, 2024 was essentially flat as compared to the three months ended March 31, 2023.

#### Other income, net

Other income, net was $5.0 million for the three months ended March 31, 2024, an increase of $1.1 million as compared to $3.9 million for the three months ended March 31, 2023. The increase was primarily due to higher interest income received on cash balances invested in money market funds, partially offset by higher foreign currency exchange losses related to our operations in Brazil.

#### Provision for income taxes

The provision for income taxes for the three months ended March 31, 2024 and 2023, was $6.9 million and $7.6 million, respectively. The decrease 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 March 31, 2024 and 2023, was 19.7% and 19.8%, respectively. The decrease was primarily driven 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.

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, its 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 $21.8 million for the three months ended March 31, 2024, a decrease of $2.1 million, as compared to $23.9 million for the three months ended March 31, 2023. The decrease in net income attributable to non-controlling interest was primarily due to lower net income.

### 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 our Dividend and Distribution Policy in the 2023 Annual Report. For more information regarding our planned dividend payments, see Note 11 – Equity. As of March 31, 2024, we had $578.9 million in unrestricted cash and cash equivalents.

At times, we import and sell natural gas and LNG into the countries in which we operate. Some of the inventory purchases that we make to fulfill these sales could potentially exceed cash on hand. We plan to fund any cash shortfalls with borrowings under the EE Revolver (as defined herein). 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 Tax Receivable Agreement (“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.

#### Repurchase of Equity Securities

On February 22, 2024, our board of directors approved a share repurchase program to purchase up to $50.0 million of our Class A Common Stock (the “Program”). The Program does not obligate us to acquire any specific number of shares and will expire on February 28, 2026, and the Program may be suspended, extended, modified or discontinued at any time. During the three months ended March 31, 2024, the Company repurchased 588,030 shares of its outstanding Class A Common Stock at a weighted average price of

$15.92 per share, for a total net cost of approximately $9.4 million. For more information, see Part II – Other Information – Item 2. Unregistered Sales of Equity Securities and Use of Proceeds – *Share Repurchase Program.*

#### Cash Flow Statement Highlights

#### Three Months Ended March 31, 2024 Compared to Three Months Ended March 31, 2023

*(In thousands)*

| Net cash provided by (used in): | Three months ended March 31, 2024 | 2023 | Change |
| --- | ---: | ---: | ---: |
| Operating activities | $64,661 | $46,797 | $17,864 |
| Investing activities | (12,769) | (14,929) | 2,160 |
| Financing activities | (27,733) | (16,361) | (11,372) |
| Effect of exchange rate on cash, cash equivalents, and restricted cash | 35 | (420) | 455 |
| **Net increase in cash, cash equivalents, and restricted cash** | **$24,194** | **$15,087** | **$9,107** |

#### Operating Activities

Cash flows provided by operating activities increased by $17.9 million for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, primarily due to:

- an $86.0 million decrease in cash flows used in settling accounts payable and accrued liabilities, primarily due to payments made the first quarter of 2023 for cargoes sold in the fourth quarter of 2022; and
- a $7.4 million decrease in cash flows used in settling other long-term liabilities primarily due to the acquisition of *Sequoia* partially offset by recognition of deferred revenue from the *Summit LNG* drydock;
- partially offset by a $44.1 million decrease in cash received for other current assets and other assets primarily due to gas sales in Brazil and Finland in the first quarter of 2023;
- a $23.8 million decrease in cash received related to deferred revenues, primarily related to recognition of deferred revenues related to the *Summit LNG* drydock; and
- a $7.0 million decrease in the amortization of operating lease right-of-use assets, primarily due to the acquisition of *Sequoia* and the end of the lease of the Bahia terminal in the fourth quarter of 2023.

#### 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 decreased by $2.2 million for the three months ended March 31, 2024, as compared to the same period in 2023. The decrease was primarily due to 2023 vessel upgrades made ahead of beginning service at the Inkoo Terminal in Finland and lower spending on construction of our Albanian power barges, partially offset by upgrades on *Excelsior.*

#### Financing Activities

Cash flows used in financing activities increased by $11.4 million for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, primarily due to $8.4 million in cash paid under our Class A Common Stock share repurchase program, a $5.0 million increase in repayments on long-term debt and a $2.7 million increase in distributions to shareholders, partially offset by $4.6 million in cash paid for debt issuance costs incurred in 2023.

### 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 a revolving credit facility (the “EE Revolver”), including a letter of credit sub-facility, to EELP. The EE Revolver enabled us to borrow up to $350.0 million over a three-year term originally set to expire in April 2025.

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. Under the Amended Credit Agreement, EELP obtained a new $250.0 million term loan facility (the “Term Loan Facility” and, together with the EE Revolver, as amended by the Amended Credit Agreement, the “EE Facilities”). The EE Facilities mature in March 2027. In April 2023, Excelerate purchased *Sequoia* for $265.0 million using $250.0 million borrowed through our Term Loan Facility together with cash on hand.

Borrowings under the EE Facilities 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 and can range from 2.75% to 3.50%. The unused portion of the EE Revolver commitments 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.

In December 2023, we paid off $55.2 million of the principal outstanding on our Term Loan Facility. We also terminated the same notional value of the interest rate swaps we had previously entered into to hedge the fluctuations in the SOFR rates associated with the variable interest rate on the loan.

As of March 31, 2024, 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 March 31, 2024.

As of March 31, 2024, 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, 2023, we had future minimum lease payments totaling $7.3 million. As of March 31, 2024, we had future minimum lease payments totaling $7.2 million and are committed to $1.6 million in year one, $3.2 million for years two and three, $1.9 million for years four and five and $0.4 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, 2023, we had future minimum lease payments totaling $274.1 million. As of March 31, 2024, we had future minimum lease payments totaling $265.4 million and are committed to $24.9 million in payments in year one, $66.5 million for years two and three, $60.8 million for years four and five and $113.2 million thereafter.

#### Newbuild Agreement Commitments

In October 2022, we signed a binding shipbuilding contract (“the Newbuild Agreement”) with HD Hyundai Heavy Industries for a new FSRU to be delivered in 2026. As part of the Newbuild Agreement, we currently expect to pay approximately $330.0 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.

#### Tax Receivable Agreement

In April 2022, we entered into the TRA with Excelerate Energy Holdings, LLC and the George Kaiser Family Foundation (together, 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.

#### Venture Global SPA

In February 2023, we executed a 20-year LNG sale and purchase agreement with Venture Global LNG (the “Venture Global SPA”). Under the Venture Global SPA, we will purchase 0.7 MTPA of LNG on a free-on-board basis from the Plaquemines Phase 2 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. The start of this commitment, however, is dependent on the LNG facility becoming operational, which is not expected in the next 12 months.

#### QatarEnergy SPA

In January 2024, we executed a 15-year SPA with QatarEnergy (the “QatarEnergy SPA”). Under the QatarEnergy SPA, we have agreed to purchase LNG from QatarEnergy beginning in 2026. QatarEnergy will deliver 0.85 MTPA of LNG in 2026 and 2027 and 1.0 MTPA from 2028 to 2040. Our purchase commitment will be based on a three-month average of Brent Crude prices for the months immediately preceding each delivery, times a fixed percentage. These LNG volumes are intended to be used to supply sales under the Petrobangla SPA.

### 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 and Estimates” in the 2023 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 2023 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, 2,527 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 March 31, 2024, the fair value of our interest rate swaps was $4.4 million, compared to $1.4 million as of December 31, 2023. Based on our hedged notional amount as of March 31, 2024, a hypothetical 100 basis point increase or decrease in the three-month and six-month SOFR forward curves would change the estimated fair value of our existing interest rate swaps by $6.3 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. We did not hold any commodity derivative instruments as of March 31, 2024 or 2023.

#### Foreign Currency Exchange Risk

Our reporting currency is the U.S. dollar. We have one foreign subsidiary that utilizes the euro as its functional currency. 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 three months ended March 31, 2024, we utilized an immaterial amount of financial derivatives to hedge some of our currency exposure. For the three months ended March 31, 2024 and 2023, we recorded $(1.4) million and $(0.4) million, respectively, in foreign currency gains/(losses) in our consolidated statements of income.

## Controls and procedures

As filed, 1,403 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 March 31, 2024.

#### Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the three months ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 2,606 characters.

There have been no material changes from the risk factors previously disclosed in “Risk Factors” included in the 2023 Annual Report, except as disclosed below:

**We cannot assure you that we will pay dividends on our Class A Common Stock or that we will repurchase our common stock pursuant to the Program, and our indebtedness could limit our ability to pay future dividends on our Class A Common Stock.**

We declared and paid cash dividends on our Class A Common Stock in the prior fiscal year. Any determination to pay dividends to holders of our Class A Common Stock in the future will be subject to applicable law, the terms of any applicable governing documents and agreements and 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 agreements and other factors that our board of directors deems relevant. Our financing arrangements, including the Amended Credit Agreement, place certain direct and indirect restrictions on our ability to pay cash dividends. Therefore, there can be no assurance that we will pay any dividends to holders of our Class A Common Stock or as to the amount of any such dividends, and we may cease such payments at any time in the future. In addition, our historical results of operations, including cash flow, are not indicative of future financial performance, and our actual results of operations could differ significantly from our historical results of operations. We have not adopted, and do not currently expect to adopt, a separate written dividend policy.

Furthermore, although our board of directors has authorized the Program, the timing, manner, price and amount of any common stock repurchases will be determined by management in its discretion and will depend on a variety of factors, including legal requirements, price and economic and market conditions. We are not obligated to make any purchases under the program, and we may discontinue it at any time. Additionally, our operations are conducted through our wholly owned subsidiaries and our ability to generate cash to meet our debt service obligations or to make future dividend payments or conduct share repurchases, if any, is highly dependent on the earnings of, and the receipt of funds from, our subsidiaries. In addition, Delaware law may impose requirements that may restrict our ability to pay dividends to holders of our common stock or our ability to repurchase our common stock.

Filed May 9, 2024.
Source: SEC EDGAR, the filing index for accession 0000950170-24-057144. Last ingested by Listed: Nov 5, 2026, 20:26 ET. No prices; not investment advice.