Excelerate Energy, Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This is an annual filing, not a standalone fourth-quarter report. Amounts are U.S. dollars unless stated otherwise.
Business context
Excelerate provides LNG and natural-gas services, centered on floating storage and regasification units (FSRUs), terminal services, and LNG and natural-gas sales. It operated ten FSRUs, with all vessels contracted or transitioning to their next assignment at year-end. Its charter and terminal contracts are generally long-term, fixed-fee, take-or-pay arrangements. The company consolidates Excelerate Energy Limited Partnership (EELP), in which it held approximately 24.3%; Kaiser-affiliated interests held approximately 75.7%.
Key financial results
| Metric | FY2023 | FY2022 | Change |
|---|---|---|---|
| Revenue | $1,159.0 million | $2,473.0 million | Down $1,314.0 million (53%) |
| FSRU and terminal services revenue | $506.8 million | $445.2 million | Up $61.7 million (14%) |
| Gas sales revenue | $652.2 million | $2,027.8 million | Down $1,375.7 million (68%) |
| Operating income | $210.6 million | $186.7 million | Up $23.9 million |
| Net income | $126.8 million | $80.0 million | Up $46.8 million |
| Net income attributable to shareholders | $30.4 million | $13.3 million | Up $17.1 million |
| Adjusted EBITDA (non-GAAP) | $346.8 million | $296.4 million | Up $50.5 million |
| GAAP gross margin | $298.1 million | $259.7 million | Up $38.4 million |
| Operating cash flow | $231.9 million | $225.1 million | Up $6.8 million |
| Capital expenditures | $312.7 million | $119.3 million | Up $193.5 million |
Revenue fell primarily because 2022 included substantially higher gas-sales volumes and prices, particularly in Brazil and New England. In 2023, higher charter revenue and gas-sales margins helped lift earnings despite the lower top line. Adjusted EBITDA and Adjusted Gross Margin are non-GAAP measures; the company cautions that they are not substitutes for GAAP results.
Consolidated net income is not the amount attributable to Class A shareholders: $96.4 million was attributable to non-controlling interests. FY2023 basic and diluted earnings per share were $1.16 and $1.11, respectively. The FSRU useful-life estimate change described below increased reported net income by $5.7 million, or $0.04 per share.
Liquidity, debt, and capital allocation
- Cash and cash equivalents were $555.9 million at year-end, versus $516.7 million in 2022. Total current assets were $699.6 million and current liabilities $203.8 million.
- Operating cash flow was $231.9 million; investing cash outflow was $308.6 million, principally reflecting $312.7 million of capital expenditures. Financing cash inflow was $111.4 million. Operating cash flow less reported capital expenditures was approximately negative $80.9 million.
- At December 31, 2023, reported third-party long-term debt was $376.0 million net of issuance costs; related-party debt was $180.0 million; and finance lease liabilities were $211.9 million. The $350 million revolving facility had $300.6 million of undrawn borrowing capacity available after $49.4 million of letters of credit.
- The debt facilities mature in March 2027 and include leverage, interest-coverage, collateral, and other covenants. The company said it was in compliance at year-end. Its liquidity assessment states it expects sufficient resources for the next 12 months, including operations, planned capital expenditures, debt service, tax distributions, and expected dividends.
- In 2023, Class A dividends totaled $0.10 per share. A further $0.025-per-share dividend for the quarter ended December 31, 2023 was declared in February 2024. The board also approved a discretionary share-repurchase authorization of up to $50 million, expiring February 28, 2026; no specific repurchase amount is required.
Material changes and notable items
- FSRU and terminal services revenue increased, supported by new service in Finland and Germany and higher charter rates in Brazil, Argentina, and the UAE. The Israel contract ended in late 2022.
- Gas-sales revenue declined sharply year over year, while management reported direct gas-sales margin of $133.8 million in 2023, compared with $121.0 million in 2022.
- Excelerate bought the Sequoia FSRU for $265 million in April 2023, using term-loan proceeds and cash. The vessel began a 10-year Petrobras charter on January 1, 2024.
- In November 2023, Excelerate signed a 15-year LNG sales agreement with Petrobangla, with deliveries beginning in 2026: 0.85 million tonnes per annum (MTPA) in 2026–2027 and 1.0 MTPA in 2028–2040. The company estimated approximately $7.1 billion of future sales revenue using year-end forward pricing curves. In January 2024, it signed a corresponding 15-year supply agreement with QatarEnergy.
- A 20-year Venture Global LNG purchase agreement covers 0.7 MTPA from the Plaquemines facility at Henry Hub-linked pricing plus a spread. The start depends on the facility becoming operational and was not expected within the 12 months following the filing’s reporting date.
- During Q4 2023, the company changed estimated FSRU useful lives from 30 to 40 years and added estimated salvage value. This accounting-estimate change reduced 2023 depreciation expense by $6.0 million and increased net income by $5.7 million.
- The company reported minimum contracted cash flows of approximately $4.2 billion under time-charter and terminal-use contracts, with a weighted-average remaining term of 7.4 years at December 31, 2023.
Outlook, commentary, and risks
Management described continued potential for LNG sales and portfolio optimization, but did not provide a quantified company earnings or revenue forecast in the supplied filing text. Its market commentary noted that geopolitical disruption and shipping diversions can affect LNG supply and costs; it also discussed potential supply tightness from delayed export projects and uncertainty around LNG export authorizations. The company expects to use long-term supply agreements to support contracted customer sales and pursue growth with capital discipline.
- Major exposures include LNG price, volume, basis-spread and delivery risks; long-term purchase commitments can create oversupply or commodity exposure if purchases and customer sales do not align.
- Customer concentration is significant: two customers represented 44% and 21% of FY2023 revenue, respectively. The filing identifies customer concentration, payment delays, contract termination rights, and counterparty performance as risks.
- Operations depend on specialized vessels, personnel, permits, third-party infrastructure, and stable conditions across multiple foreign jurisdictions. Vessel incidents, political disruption, war, weather, and cyber incidents could interrupt operations or increase costs.
- Debt, variable interest rates, collateral requirements, and covenant restrictions may limit financing flexibility and distributions. The 2023 term loan’s weighted-average interest rate was 8.3% before the effect of settled hedges, and the company reported using interest-rate swaps.
- European maritime emissions rules and evolving international climate requirements may increase compliance costs. The filing states current European contract terms allow EU ETS costs to be passed through to customers, but future contracts may not offer the same protection.
- Kaiser-affiliated ownership controls approximately 75.7% of combined voting power. The company is a controlled company and relies on NYSE governance exemptions, which may reduce protections available to public shareholders.
- The tax receivable agreement generally requires payment of 85% of specified tax savings to beneficiaries. The filing estimates future payments of $73.1 million under stated assumptions and reports a $3.4 million payment in December 2023.
Important facts for investors to verify
- Reconcile consolidated net income of $126.8 million with the $30.4 million attributable to shareholders, and assess the effect of non-controlling interests on per-share economics.
- Assess the sustainability and cash conversion of gas-sales margins after the substantial year-over-year decline in gas-sales revenue, including customer concentration and working-capital timing.
- Review the funding plan for the approximately $330 million new FSRU commitment, with about $50 million expected in 2024 and $250 million in 2025–2026, alongside debt service and other investment needs.
- Confirm the value and timing of future TRA obligations. The MD&A gives an approximately $166.6 million hypothetical liability if EE Holdings exchanged all EELP interests, while Note 12 gives approximately $190.8 million under its stated assumptions; the filing text does not explain this difference clearly.
- Track execution and counterparty performance under the Petrobangla and QatarEnergy agreements, including commencement in 2026, delivered volumes, pricing, and alignment of supply with sales.
- Consider the impact of the FSRU useful-life and salvage-value estimate change on reported earnings and future depreciation.
- Verify dividend and repurchase capacity against covenant limits, cash needs, and the board’s discretion; neither the repurchase authorization nor future dividends guarantees actual distributions or purchases.