Excelerate Energy, Inc. — Q3 2023 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2023. Excelerate provides LNG supply, floating storage and regasification unit (FSRU) charters, and terminal services across multiple countries. Amounts below are in millions of U.S. dollars unless noted.
Financial performance
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | $275.5 | $803.3 | $918.9 | $2,017.9 |
| Operating income | $67.5 | $49.9 | $170.7 | $128.3 |
| Net income | $46.5 | $37.3 | $106.8 | $46.1 |
| Net income attributable to shareholders | $13.9 | $8.8 | $26.7 | $6.8 |
| Adjusted EBITDA (non-GAAP) | $106.9 | $77.9 | $275.4 | $207.0 |
| Gross margin | $87.0 | $70.0 | $234.1 | $179.5 |
| Adjusted gross margin (non-GAAP) | $120.2 | $94.7 | $323.3 | $252.2 |
| Cash flow from operations | Not separately presented for the quarter | $195.3 | $(15.8) |
Q3 diluted EPS was $0.40 versus $0.34; nine-month diluted EPS was $0.91 versus $0.26. Basic EPS was $0.53 and $1.02, respectively, in 2023. Diluted EPS includes conversion of Class B interests in its share calculation; shareholder-attributable income is materially below consolidated net income because of non-controlling interests.
Liquidity, debt and cash flow
- At September 30, 2023, cash and cash equivalents were $602.9; restricted cash was $23.3. Total current assets were $716.7 and current liabilities were $172.6.
- Reported debt, net of issuance costs, was $440.9, including $245.3 outstanding under the Term Loan Facility. Related-party debt was $182.2. Finance lease liabilities were $216.8. The filing reports $310.0 of available revolver capacity after $40.0 of letters of credit; the company was in covenant compliance.
- Nine-month operating cash flow of $195.3 was more than offset by $300.3 of investing outflows, primarily property and equipment purchases. Financing provided $193.3. Cash, cash equivalents and restricted cash increased $88.2 to $626.2.
- Capital expenditures were $304.4 for the first nine months, including the Sequoia purchase and vessel upgrades. Management said available cash, operating cash flow and borrowing capacity should cover expected needs for the next 12 months, including debt service, planned capital expenditures, taxes and dividends.
Material changes versus prior periods
- Revenue fell 65.7% in Q3 and 54.5% for the first nine months, largely because gas sales declined sharply from unusually high Brazil-related sales in 2022. Q3 gas sales were $142.3 versus $687.9; nine-month gas sales were $541.7 versus $1,694.9. Gas sales are accompanied by substantial direct costs.
- FSRU and terminal services revenue increased to $133.2 in Q3 from $115.3, and to $377.2 for nine months from $323.0, reflecting new or higher-rate charters and activity in Finland, Argentina, Brazil and Germany, partly offset by the end of the Israel contract.
- Profit and Adjusted EBITDA increased despite lower reported revenue. Management cited higher charter rates, improved gas-sales margins, lower Sequoia lease costs and higher interest income. Higher interest expense, taxes, depreciation and SG&A partly offset these gains.
- Debt rose following the $250.0 Term Loan Facility used toward the $265.0 Sequoia purchase. Nine-month SG&A increased $18.9, reflecting public-company costs, European contract costs and business development.
Outlook, developments and risks
- No formal financial guidance is provided in the supplied filing text. Management described growth opportunities across Europe, Asia Pacific, Latin America and the Middle East, and expects new Gulf of Mexico LNG supply projects to create opportunities as they come online.
- After quarter-end, Excelerate signed a 15-year Petrobangla LNG sales agreement for 0.85–1.0 million tonnes per annum beginning in 2026, with take-or-pay volumes expected to be delivered through its Bangladesh FSRUs. It also signed a 10-year Petrobras charter for Sequoia starting January 2024.
- The 20-year Venture Global LNG purchase agreement covers 0.7 million tonnes per annum. Based on September 30 futures prices, estimated average annual purchases are about $255 million; commencement depends on the facility becoming operational and is not expected within the next 12 months. A newbuild FSRU is expected in 2026, with estimated payments of approximately $330 million, subject to adjustment.
- Management noted that winter weather and possible supply disruptions could increase LNG price volatility. Key risks include customer performance or termination, vessel and project execution, LNG prices and supply, financing costs, foreign exchange, geopolitical events, and reliance on a concentrated customer base. Two customers represented 42% and 25% of nine-month 2023 revenue.
- The company reported no material change to previously disclosed risk factors and said pending legal proceedings were not expected to have a material adverse effect. Disclosure controls were deemed effective; previously identified internal-control material weaknesses were reported remediated as of June 30, 2023.
- The board declared a $0.025 per-share Class A dividend for the quarter, payable December 13, 2023. The filing also identifies a $72.9 long-term tax receivable agreement liability.
Important facts for investors to verify
- How much of earnings and cash generation depends on recurring charter and service revenue versus lower-margin, volume- and price-sensitive gas sales.
- Whether the new Petrobangla and Petrobras agreements commence on schedule and deliver their expected economics; confirm the operating status and timing of the Venture Global facility.
- Debt service, variable-rate exposure, covenant headroom and available revolver capacity, alongside the newbuild and LNG purchase commitments.
- The concentration of revenue among major customers and the impact of contract expiry, vessel deployment changes and regional demand.
- How non-controlling interests, Class B exchange rights and non-GAAP measures affect per-share results; compare Adjusted EBITDA with GAAP income and operating cash flow.