Hello, everyone. My name is Drew, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Excelerate Energy Fourth Quarter and Full Year 2023 Earnings Conference Call. [Operator Instructions] I will now turn the call over to Craig Hicks, Vice President, Investor Relations. You may begin your conference.

Good morning, everyone. Thank you for joining Excelerate Energy's fourth quarter and full year 2023 earnings call. Participating on the call today are Steven Kobos, President and Chief Executive Officer; and Dana Armstrong, Executive Vice President and Chief Financial Officer. Also joining the call today is Oliver Simpson, Executive Vice President and Chief Commercial Officer. Our fourth quarter and full year 2023 earnings results press release and presentation were released yesterday afternoon and can be found on our website at ir.excelerateenergy.com. I would like to remind everyone that we will be making forward-looking statements on this call that involve a number of risks and uncertainties. Our actual results may differ materially from those expressed in these forward-looking statements, and we make no obligation to update or revise them. Today's remarks will also refer to certain non-GAAP financial measures. We have provided a reconciliation to the most directly comparable GAAP financial measures at the back of the presentation. With that, it is my pleasure to pass the call over to Steven Kobos.

Thanks, Craig. Hi, and thank you all for joining us on this call this morning. I look forward to our time together. In recent months, I've had conversations with many of you on this call, our analysts, our investors, people around the world who believe in Excelerate's unique potential, as well as some folks who are just new to the Excelerate story. I'd say there's a common thread in what we've heard from those discussions. That is, there's some questions about our plans to deploy capital to promote growth. The steps we intend to take to drive near term value creation. And I'd say, most importantly, the alignment of our capital allocation plans with our business strategy. I'd like to take our time this morning to address with all of you those questions and provide additional insight into our near-term strategy. Look, the most important thing you'll hear me say today is that in '24, Excelerate Energy is moving from strategy to action. Let's get started by talking about who we are as a company and how we plan to grow the business through our corporate strategy. I need to emphasize three things. The strength of our FSRU and Terminals business, our expected near-term growth catalysts and finally, our capital allocation strategy. Excelerate Energy is committed to providing cleaner, more affordable and more reliable energy by delivering LNG and natural gas to hundreds of millions of people around the world. It's not an exaggeration, it's who is out there depending upon Excelerate Energy for energy security or simply helping them maintain their quality of life. How do we do that? Well, we do it as a leading provider of flexible LNG infrastructure and integrated solutions. We are a trusted partner for sovereign governments and major LNG producers around the world.…

Thanks, Steven, and good morning. We are pleased with Excelerate's stellar financial performance for 2023. For the full year 2023, our net income was $127 million, which is an increase of $47 million or up 59% as compared to the prior year. Adjusted EBITDA for 2023 was $347 million, in line with the high end of our guidance range and up $50 million versus last year, an increase of 17%. Our year-over-year results were primarily driven by new charters in Finland and Germany, higher rates on charters in Brazil, Argentina and the UAE, higher direct margin on gas sales and lower operating lease expense due to the acquisition of the FSRU Sequoia early last year, partially offset by dry dock expenses for the FSRU excellence in the fourth quarter. For the fourth quarter of 2023, we delivered $20 million of net income and $71 million of adjusted EBITDA. Net income and adjusted EBITDA decreased sequentially from last quarter, primarily due to dry-docking expense related to the FSRU excellence, spot LNG cargo sales during the third quarter that did not reoccur in the fourth quarter and planned vessel repair and maintenance activities in the fourth quarter. As of year-end 2023, our total debt, including finance leases was $768 million and we have $556 million in cash and cash equivalents on hand, $49 million of letters of credit issued and no outstanding borrowings under our revolver. As part of our capital allocation strategy, we intend to use our balance sheet when appropriate to pay down debt. During the fourth quarter, the company paid down $68 million of debt, including a $55 million discretionary repayment of debt on its term loan. After this debt repayment for year-end 2023, we had roughly $212 million of net debt. Also, as of year-end, we had roughly…

[Operator Instructions] Our first question today comes from Chris Robertson from Deutsche Bank. Your line is now open. Please go ahead.

Hi, good morning. Thanks for taking our question. This is [Ben Moore] on for Chris Robertson here at Deutsche Bank. On capital returns, can you please discuss why the company decided to institute your share repurchase program as opposed to just having more cash available as dry powder to pursue growth opportunities? Will this hurt the free float?

Ben, thanks for joining us. Appreciate that. You touched on a couple of good points. First thing, quite the share repo now. I think I touched on it in the remarks, it's really driven by the share price, it's a great investment. We think it's a great opportunity. And no, we think we're sitting in such a good position in terms of do we have sufficient dry powder to after the targets in front of us? We absolutely do. If we thought we were endangering that in any way, we would not have done this, but we think we can do both and we think this is the most prudent way to return capital to shareholders right now because of the share price. Moving forward, obviously, we continue to look and evaluate our dividend. But first and foremost in our mind is the ability to pursue growth. And does that answer your question?

Great. Thanks. Yes, it does. Maybe as a follow-up, looking at the current LNG and downstream power landscape. Where do you think the global market is in terms of short-term versus longer-term infrastructure investment opportunity contracting?

I mean, obviously, we're quite bullish long stream, long term into downstream opportunities. In terms of power, we are interested in our assets, I mean it's early days for us there. I think I pointed out some of the areas that we're focused on in the near term. The near-term targets, it's a mix of LNG import terminals either existing or under developments and downstream natural gas infrastructure and also vessels, of course. So, I think probably within your question is also where we think folks are going in terms of purchasing LNG. And you can tell, we think on that, that there is continued and increasing demand for long-term folks moving for the affordability and predictability of long-term LNG, which matches nicely with their need for the downstream infrastructure. So we think the purchasing pattern in the global South and in elsewhere shows the continued viability of this downstream asset class.

Okay. Great. Thanks. I'll hop out and maybe come back for additional questions if there is room. Thank you.

Our next question comes from Bobby Brooks from Northland Capital Markets. Your line is now open. Please go ahead.

Hi, good morning, guys. Thank you for taking my question. So the QatarEnergy and Petrobangla deals were a great example of how you guys can uplift your EBITDA through existing assets. But I also understand the dynamic that you're going to procure LNG in the manner the customers want and that's not always necessarily through long-term contracts. So my question is, if your current customer base, how many of them do you feel would be interested in similar deals to the QatarEnergy or I should more so say that Petrobangla deal that you guys did? And then maybe if you could size how much demand in terms of - maybe in terms of MPTA, those customers would be looking to secure like I would assume the amount, say, Bangladesh once would vary from what Finland might want.

I think just based upon those relative populations, you're absolutely right, Bobby. I'll probably hand this over to my colleague, Oliver Simpson. I will say, first and foremost, though, the thing that's a great proof point about Bangladesh is, that's just an infrastructure contract we have. And even though we only have an infrastructure in Bangladesh, it didn't stop us from being engaged with the customer, figuring out what their need was, their need was to rapidly increase the amount of long-term priced - favorably priced LNG that they needed. We made an upgrade, enhanced the send-out capacity of our existing infrastructure. And as a consequence, we were able to secure that. So I think I would say just looking at all the markets, I'll start first with our existing markets. We're always going to be engaged and seeing what the customer needs. In past, we've talked about how some markets are far more variable in their needs. Some are seasonal, but we're always going to be a team to what they need. But Oliver, you want to speak to how we see the markets. I just focused on a particular market outside of rest of the world.

Sure. Thanks. Thanks, Steven. Thanks, Bobby. Yes, I think, first, just on the QatarEnergy, Petrobangla, I mean we're extremely proud of that relationship, as Steven mentioned. I think today, Qatar, maybe 10% of its annual production is regasified through accelerated FSRUs globally. So I think this new relationship with them showcases our ability to deliver these incremental returns on our infrastructure, but also our ability to work with these top producers. I mean I think if you look at those volumes, the 1 million tons is about 20% of the regas capacity of an FSRU in Bangladesh. So we're talking 10% to 15% of Bangladesh's demand. So I think that shows when we take that to other markets, 1 million tons is a very modest amount in any of the markets that we work. So I think we'll keep looking for opportunities of those size in some of the new markets. But as Steven mentioned, different markets will have different needs and we're focused on delivering to the customers what they want in terms of LNG supply to meet their needs and ensure they have the right products.

Got it. Thank you. And then - so I understand that on the inorganic M&A opportunities, it's - you guys - you can't really frame that until the deal is signed, but I think it might be beneficial to talk about some key lessons learned in 2023 in pursuit of that inorganic M&A. And maybe more specifically, could you give any examples of M&A opportunities you ultimately passed on and what drove that decision to step away from it?

Thank you, Bobby, for inviting us to open up a postmortem seminar here. We've got - everything is dependent upon the market we're looking at if we - what we think about the fundamental demand. We often talk about the fact that we're going to invest in projects, we like to invest in markets. We care about the fundamental demand and need for energy in a particular market, whether it's the demand for energy security or the demand for energy. We want to know that there is a solid business case driving the demand. And then we'll look at what we expect. We've said before, we're looking for mid-teens unlevered after-tax returns on a lot of those sorts of projects. So we're looking at our hurdle rates in different markets. These are big opportunities. Obviously, you're talking about CapEx. It can vary - I would say they average $200 million to $400 million in terms of opportunity size. But if you're going to pass anything and I'm not going to speak to that, but I think we have a track record of doing great due diligence out there in the world, evaluating the need for energy in a particular market that drives a successful project over many years. And then making sure that it's going to meet our hurdle rates that we're comfortable with our governance. So it's a host of things. But I do think we've got a good track record and I assure you, we have rigor in this process.

Yes, I would definitely agree with that in term - the solid track record that you guys have built. And then I guess just last question would be, I think Dana mentioned you'll use the balance sheet to pay down debt when appropriate. You guys made that extra $50 million payment towards debt in the fourth quarter. So I was just wondering maybe what triggers made it appropriate to pay down more debt in the fourth quarter of last year?

Hi, Bobby. Thanks for the question. So as we went into the fourth quarter of last year, we did quite a bit of analysis on our cash flow and our ongoing projections, and our CapEx needs, and so on. And as we looked at where we finished the year and as you can see from our balance sheet, we finished the year with very healthy amount of cash. We felt comfortable that we had enough excess cash to continue to move forward with these growth programs, as well as the share repurchase reprogram and pay down some debt. We made a decision to pay back roughly $55 million, that's about 7%. So that will save us roughly $4 million a year. We felt like that was a good use of cash based on where we are right now with our balance sheet. So we'll continue to evaluate it as we look at our growth needs going forward and make those decisions on a case-by-case basis.

Got it. That makes sense. I really appreciate the color. And I'll return to the queue. Thank you, guys.

Our next question today comes from Eli Jossen from JPMorgan. Your line is now open. Please go ahead.

Hi, good morning, everyone. Just hoping to circle back on the share repurchase program. So I know you highlighted 1Q '24 commencement. Are you able to confirm if there have been any repurchases year-to-date? And then kind of just how do you see the cadence of those playing out through the year? Thanks.

So, thanks, Eli. We actually haven't opened that, we're still in a quiet period. So obviously, as we release earnings today, we'll exit our quiet period. We intend to start those very early next week. So we have not actually started yet. As far as the cadence, we fully intend to - even though we announced that over a two-year program, we expect that to be likely will be completed ahead of that two-year program and that's because just based on where our stock is today and the fact that we're so undervalued based on the parameters that we've set with the banks, we feel very comfortable that we'll be able to get that done within the year.

Got it. That's a great color. I appreciate it. And then maybe just if we could pivot back to some of the portfolio additions you guys have referenced in the forward-looking CapEx guide. So beyond the new build coming on in 2026, what are the puts and takes for the kind of build versus buy strategy in your view? And could you just remind us how you kind of compare economics between those two strategies?

Sure. I mean, the bulk of the committed CapEx, as Dana mentioned, is for tranche on the new building with Hyundai Heavy Industries. As we mentioned on the call, we're going to continue to evaluate opportunities to expand the fleet as part of the strategy. We feel very strongly that, there is a market tightness in this asset class, we continue to see that. We think it's one of the limiting factors in projects and the ability to move forward with us. We will continue to be evaluating acquisition or new building of the fleet. In terms of the question going as to organic or inorganic development of some of the opportunities we discussed, it's just a both and obviously, we want to look to the inorganic opportunities. We like as we're interested in accelerating earnings in 2025 and 2026, no doubt about it. So that is one of the key drivers on that, plus not every market is the same. Some are better suited for organic development, some are better suited for buying something that's further along. So it's horses for courses. We're going to keep evaluating those, but we have very definite return expectations and hurdle rates that we have to meet. And whether we get there through an organic or inorganic basis, we have our expectations, which we fully tend to meet and anything we're going to execute on is going to be accretive for the company and for our shareholders.

Got it. Appreciate all that color. Thanks again.

Our next question comes from Zack Van Everen from TPH. Your line is now open. Please go ahead.

Hi, guys. Thanks for taking my question. Just to start on the EBITDA guidance, could you touch on what would get you to the low end versus high end with how contracted you are? Is there still some marketing opportunities baked in or gas sales in there as well?

Dana and I can both speak to that. I mean, in terms - well, first of all, hi, good morning, Zack.

Good morning.

Yes, good morning. In terms of what could push it down, I mean, I think that would probably be more likely than anything, an increase in development expense spend as we get further traction than we might expect on some opportunities. That would be one driver. But what would you add to?

So, Zack, what I will say is that we feel very confident about this range. There's not a lot of upside. There's not a lot of downside. The upside obviously would be if we do more Cargos, but as you know, all of our 10 vessels are on contract. So we don't expect to blow out this range. We expect to come in within this guidance. If we are successful in doing several carter deals like we did last year, then that could obviously drive it up. So there's definitely that possibility. As Steven said, there's a possibility that we invest more in our business development that could potentially drive it down, but we don't expect it to go beyond the $315 million. So we do feel very good about the $315 million to $335 million range. But to your point, with all of our vessels on long-term contracts, that does give us really good visibility into 2024, and so we feel like we're going to be within this range this year.

Got you. And then maybe just one more on the international market and obviously the news with the DOE here in the U.S. When you guys look at future SPAs, you have signed some in the U.S. and obviously international as well. Are you leaning more towards SPAs internationally as the U.S. kind of works through its regulatory environment? Or is there really a preference there?

No. I think, Zack, we are - first, I'd say we're pleased with the suppliers that we have agreements with currently Spencer Global, that's QatarEnergy, very happy with both those deals. There's definitely interest from some parties for Henry Hub indexed long-term deals. We like the U.S. At the same time, you just saw just in the past few days, QatarEnergy announced an additional 16 million tons coming up that's going to take their total up to 144. This just means, there is a continuing demand for increasing demand for LNG around the world. Other producers will step up if the U.S. doesn't. We're somewhat agnostic. We hope there will be further U.S. production. We think it's in the best interest of the U.S. and a harmonious global system that people can afford this product and access it widely. You've seen some nations increase significantly their targets for natural gas in recent weeks as part of their mix. That's usually to the disadvantage of coal. So we're in favor of and think it's great for the U.S. or any other market to increase its LNG production.

Got you. That's all I had. I appreciate the time. Thanks, guys.

Thank you.

[Operator Instructions] We now have a follow-up from Chris Robertson from Deutsche Bank. Your line is now open. Please go ahead.

Hi. Yes, thanks for taking our follow-up. This is Ben Moore again for Chris Robertson. Looking at the SPA for QatarEnergy and the sales agreement with Petrobangla for the volumes you've discussed, can you talk a bit about how these contracts are structured? Have you locked in a particular margin based on your purchase price of LNG volumes plus the cost of transport and regas?

Thanks. Thanks for that, Ben. I'm going to throw that one back over to Oliver Simpson, who will answer without going into too much detail.

Thanks, Steven. Thanks, Ben. I think on that one, I mean, I think we have - we entered into a long-term agreement with Petrobangla to sell LNG in Bangladesh and we backfilled it with a long-term DS supply agreement from Qatar. So on that, in terms of volume delivery location, it is pretty much the two contracts are aligned and we have a fixed margin in between the two. So I think there are fairly derisked contracts in that sense.

And that's in line with what we've said philosophically about commodities for some time and the fact we're looking for infrastructure uplift.

Wonderful. That's my one. Thank you so much.

Thanks, Ben.

That concludes the Q&A portion of today's call. I will now turn the session back over to Craig Hicks for final comments.

I'm going to grab the mic from Craig Hicks. This is Stephen Kobos. Thank you again to everyone who joined on today's call. As you heard this morning, we delivered strong full year results in '23 and we are optimistic about our plans to maximize shareholder value. We take pride in being one of the world's premier providers of flexible LNG infrastructure and the preferred partner for countries seeking to stabilize their energy systems. Before closing this earnings call, I would like to reinforce our commitment to our investors to be extremely transparent regarding our action-oriented growth strategy based on our highly ratable take-or-pay, FSRU-based business and the growth catalysts we've talked about and our capital allocation strategy. I look forward to providing you with additional progress updates in the coming months. Thank you all for your time this morning.

That concludes today's Excelerate Energy fourth quarter and full year 2023 earnings conference call. You may now disconnect your line.