Hello, everybody, and welcome to the Excelerate Energy First Quarter 2024 Earnings Conference Call. My name is Sam, and I will be coordinating your call today. [Operator Instructions]. I will now hand you over to your host, Craig Hicks, Vice President of Investor Relations and ESG to begin. Craig, please go ahead.

Good morning, everyone. Thank you for joining Excelerate Energy's First Quarter 2024 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 first quarter 2024 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 provide 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. Good morning, everyone. I'd like to start with saying we delivered strong financial results for the first quarter. Excelerate Energy's financial performance reflects the robust earnings power of our core regasification business. It also highlights our commitment to operating our FSRU fleet at the highest levels of reliability and to delivering natural gas safely to our customers. As a global energy company, we take great pride in using our FSRU fleet to deliver integrated LNG solutions to customers who need them most. In addition to operating our core regas business, we are focused on expanding our presence in new and existing markets across our global footprint. On today's call, I'm going to share with you some additional insights into our business development strategy to help provide a better understanding of where the opportunities are and when we expect to start deploying capital. I'll then hand the call over to Dana, who will walk through our financial results for the quarter. Since we were last together, the Excelerate team has made great progress toward our plan to grow our company and maximize value for our shareholders. To recap our strategy, we are optimizing our core regas business and are executing our comprehensive organic and inorganic growth road map with 3 key areas for value creation. First, acquiring an ownership interest in LNG regasification terminals; second, establishing a diversified LNG portfolio; and third, investing in downstream natural gas infrastructure. While many companies in our industry aspire to expand their presence in markets around the world, Excelerate already has an extensive global presence. Excelerate operates approximately 20% of the global FSRU fleet. We have regional offices in 11 countries and an operational presence in Argentina, Bangladesh, Brazil, Finland, Germany, Pakistan, the UAE, and the United States. Let's be clear. This is…

Thanks, Steven, and good morning, everyone. As stated by Steven, Excelerate delivered strong financial results for the first quarter that were in line with our expectations. We reported a net income of $28 million, which is a sequential increase of $8 million or up 40% as compared to last quarter. Adjusted EBITDA for the first quarter was $75 million, up $4 million or up about 6% versus last quarter. The sequential increase in adjusted EBITDA over the fourth quarter of last year was mostly driven by the timing of vessel operating costs and the timing of certain SG&A expenses, including business development expenses, which were lower than the first quarter of this year as compared to the last quarter of last year. Our first quarter 2024 financial results include the impact of our dry dock for the FSRU Summit LNG in Bangladesh. Summit is 1 of 2 FSRUs in our fleet that are under in build, own, operate transfer of boot structure. The other is the FSRU Excellence, which underwent dry dock services in the fourth quarter of last year. Because of the book structure, the majority of the dry dock costs for the second and first quarters and the excellence in the fourth quarter of last year were expensed to the income statement instead of classified as maintenance CapEx. The Summit and Excellence are the only 2 vessels in our fleet that are required to expense drawdown cost. For the full year 2024, the vast majority of our earnings will be driven by our FSRU and terminal services business since all 10 of our vessels are currently contracted. This is noteworthy for a few reasons. First, the shift in revenue contribution from gas sales to FSRU and terminal services is driven largely by the transition from our previous gas-held…

[Operator Instructions] Our first question comes from Chris Robertson from Deutsche Bank.

Congratulations on a strong quarter. Just going back, Dana, to the point that you made around the share repurchase program, I just wanted to clarify, is 588,000 shares. Could you clarify the average price per share paid?

Yes, sure. So it's 588,000 shares and it ended up being $9.4 million. So it was roughly just under $16 per share.

Looking at the project portfolio that's been proposed here, several different projects, obviously. So Steven, wondering if you could maybe just expand upon that further maybe by rank order or some other mechanism here. Just talking about what would make a project the most attractive in your eyes? I mean, there's a lot on the table here. But as you're going through the different variables, whether it's a return or a risk-adjusted return or the type of project and the type of counterparty, et cetera. Could you just clarify maybe how you're thinking about what's the most important factors for you?

Sure. Thanks, Chris. We are excited to provide a little more clarity because the fact of the matter is this is a prioritized list. We think it's an enormous TAM out there. So to look at this and say, this looks like a lot of projects. Actually, this is tearing down the opportunity set that we see substantially. Now as I mentioned on the call, obviously, we're going to look at everything through the hurdles that we have. We're going to look at it through the wax we have for different countries. But what we've shared for a long time is that we care about fundamentals and markets. We care about the need for the energy. So we're looking not just at the project fundamentals. Those have to be there. But we also want to know that the market itself needs the gas, has an economy that needs to fuel it, is otherwise going to shift to coal. But certainly, any of these are going to meet our hurdle expectations and our country-specific WACC. So we feel confident that we have prioritized the right subset of the TAM.

Our next question is from Wade Suki of Capital One.

Well, just to flesh out a little bit more kind of dovetailing on Chris' question on the project portfolio. Any clarity you can give on the, let's call them, 12 prioritized projects in terms of terminals, ships, new builds, maybe adjacent asset classes, and things like that would be fantastic. Maybe a little more detail to the extent you feel comfortable.

Thanks. I'm going to turn it over to Oliver Simpson here in a second. But I would just say, look, we are a global LNG company. We have a presence all over the world. Everybody knows all of this LNG needs to find a home. We are the home builders. But Oliver, you want to get into the way some of the nitty-gritty on the asset classes, et cetera, we're looking at.

Sure, yes. Thanks for the question, Wade. So I think what you see with the list of 12 projects is we have a wide range of geographical projects, covering a number of different types of projects that have a different reach across the LNG value chain. So I think we see from the asset class, obviously, a number of these projects will require new FSRUs. We have a growth strategy for our fleet. That's a core part of our strategy, and we'll be looking to add whether it's new builds or conversions as appropriate for those projects. But I think also, as you see some of these projects, a number of these projects have offered integrated solutions, which allow us to drive incremental returns, make gas sales, and deliver additional products to our customers. So I think, in general, we're excited about the broad range that these projects offer. And to Steven's earlier point, these are really projects in markets that we've targeted and like. I think that hopefully gives a little more color.

Fantastic. And I'd love to get a sense, obviously, you all are very active on the commercial side. Just get a sense of what the thinking is of the customer these days. We've got, as you mentioned, a good amount of LNG hitting the market here in the next couple of years. Gas prices have come down. Just give us a sense of what the temperature is, what are the concerns, what's on the top of mind for the customer, if you wouldn't mind.

I'll just jump in. I think what we're seeing all over the world and especially within a number of these global south markets, they're back at the table. The disruption of the war, the war in Ukraine was surprising to the Global South. They weren't prepared for it. It took them away from the LNG market for a while, but we've gone through that now. And they've recognized and accepted that LNG is a key part of their strategy. We've seen it all over the place, like India's announcements on the increased share of natural gas that they intend to have in their energy mix by 2030. All kinds of ways that they're manifesting it, the reentry into the spot market, the contracting for long-term supply, and the focus on LNG projects in general. So the sentiment out there is bullish and it is part of the energy mix for the South and we remain a credible alternative to coal in much of the world.

Our next question comes from Jeremy Tonet of JPMorgan.

This is Noah Katz on for Jeremy. First, I wanted to touch on your capital allocation priorities. I know you guys authorized up to $50 million of repurchases through February 2026. So are there any thoughts on weighing repurchases versus future dividend raises and leverage reductions? Or are you thinking about any other bolt-on opportunities? Anything you can provide there would be great.

Jeremy, thanks for the question. So we will continue to stress the importance of growth in our capital allocation strategy. I mean, as Steven just said and Holly said, there's a lot of focus out there with the Global South, and we expect to use our cash to generate growth on these projects. So as far as the share repo, as you know, we purchased $9 million through the end of the quarter. We have $50 million, the remaining $41 million to use through February 6. We'll use that optimistically where it makes sense. But our priority will remain growth. As we have excess cash on hand, we'll evaluate debt paydowns. We'll evaluate potential dividend increases as of long term. But our priority right now is obviously growth.

Can you guys speak to what you're seeing with other growth opportunities outside of FSRUs, such as with investing additional assets in vessels for onshore regasification efforts with smaller players?

That's a great point, and there's no one-size fits all for these markets. And we've said for some time now that the home for the LNG is going to be in a lot of different-sized opportunities. We've mentioned how much of an impact any single FSR you can have and the proof point for that is our FSRU and Karachi delivering something like 1.25% of global LNG into that market. So they can make a difference. But at the same time, we fully expect that many of the projects out there in the world that will come online this decade and the coming years are going to be in the -- they're not going to be that size. A lot of -- some of them will, but some will be in the 1 billion, 3 million ton range. And those are going to call from a variety of solutions. Oliver, if you want to weigh into that, there's just -- it's my way of thinking there's not one size fits all.

No, I think that's exactly the point that we're seeing a downstream demand in these markets than on gas and therefore LNG. We have a wide range of technical solutions that we can provide. And we're happy to assess all the different solutions. We're not married simply to large-scale FSRUs and will assess each project depending on the needs of that market.

And our next question comes from Robert Brooks of Northland Capital Markets.

Congrats on the solid quarter. So on Slide 5, you guys mentioned the piece on investing in the core business to protect and enhance long-term revenues and margins. Outside of maintenance CapEx, what are maybe some examples of this? And are those examples -- could that push margins even higher?

Thanks, Bobby. Yes, I think that would really build upon Oliver's comments. We are bullish on our asset class. We're going to continue to invest in these assets. We have a track record of upgrading these assets, and we will continue to do that. There are all sorts of upgrades that you can make, upgrades that have been valued by our customers. We are looking at an entire suite of those. This could be anything from reliquefaction capacity modules. Those could be minimum send-outs or compressors. There are all kinds of approvals that you could make to them. And that's really one of the drivers and why we were able to get 17 years of contract extensions in 2023. We are looking all the time for how do you deliver the product that your customer needs and that your customer has evolved into needing.

Got it. And then maybe more specifically kind of circling back on previous questions, but when looking at acquiring specifically interest in regas terminals that are either existing or developed outside of economics and then obviously, the key that you guys made was market dynamics. What are -- outside of those 2 pieces, what are maybe the other key focuses when evaluating on a project that's already operating or one that's under development?

Thanks, Bobby. I mean we find the markets that need LNG, when they get LNG, they need more LNG. So as you say, the fundamentals of the market are going to remain the critical driver. One of the other drivers is obviously our outstanding reputation for governance that we enjoy all over the globe which we take very seriously and which we believe is a value driver for Excelerate. So that's one aspect of what we need and require. And then obviously, the third part is financial, just how we think about the WACC for those projects. And does it allow us an entry point into a market that we want to be in? So that and the counterparty as well. I think those are the key pieces of the puzzle.

Got it. So it's not necessarily you kind of looking at existing projects and projects that are under development pretty much the same way. There's no kind of no preference for either.

No, I think it's all about what helps you get to where you want to go and what helps you get into the markets you want to be in and what you think is going to allow you the most upside from, as Oliver mentioned earlier, the incremental opportunities associated with certain projects.

Got it. And then just one last question for me. I want to say Slide 7, with all the prioritized projects, I think that was excellent. So thanks for providing that detail. But my question is -- and I know you kind of -- I think you said those projects range from $50 million to $400 million, I think, maybe was that. But I know all projects are going to vary in terms of the size. But in general, how should we think about maybe projects like CEG, H&K, which check all 4 boxes in terms of how much that would cost and the associated EBITDA generation potential from them? Are those sized opportunities something that you could maybe do 2 over the next 18 months? Or would it more so be one and then take some time to digest?

Bobby, we're out there doing a full-court press my friends, and we are going to vote as many [ tunes ] as we can. I'd like to give you more color, but the reality is we want to be as transparent as we can with our investors. We're committed to doing that. And I'm, of course, eager to share everything we can with you all. I hope this is a step in that direction. But events on the ground are going to drive some of this. But we are going full speed on as many of our prioritized projects as we can.

Well, I mean, I'll also comment, and this is probably obvious, but obviously, the more integrated projects, the ones that you mentioned, are the larger, more integrated projects. Those are going to cost more. They're going to be a little bit more complex. And then the smaller projects are going to be more in that $50 million to $200 million range. And so we're very pleased that we have this wide diversity of projects, and some of these will be potentially equity buy-ins that we can go to market on real quickly. Others like Pira will be more complex and take a little bit more time.

[Operator Instructions] Our next question comes from Michael Scialla of Stephens.

Steven, you talked about the new projects you're working on, you mentioned Asia Pacific, which you've talked about in the past. And you also mentioned the Americas was a little surprised there rather than, I think, in the past, you talked about Sub-Saharan Africa. Has there been any changes in market dynamics that are driving that?

No, thanks, Mike. I appreciate the question. As I said, we are a global company. We're out there. Sometimes if I speak to the Indian Ocean Basin, not writing off sub-Saharan Africa at all. But the reality is there are interesting points all over the global market. And since we have offices all over the world, we have insights into those opportunities. So I'm not meaning to denigrate any of those regions, but we clearly do like the Americas as well. And you shouldn't take that we're writing off any particular part of the world. We're just prioritizing in the way we best can what we think are the most likely near-term opportunities.

I guess from a reverse point of view or anything that's elevated the Americas recently? Anything changed there that has made that look more attractive?

Mike, nothing I want to get into right now. As soon as I can provide better color, we will.

Got you. Then I just wanted to ask on the long-term LNG sale and purchase agreements. Do you plan to continue to tie those agreements together like you did with Qatar and Bangladesh? And if so, any thoughts on where the Plaquin LNG volumes go? Or do you leave some for the spot market? That's all I have.

Yes. Thanks, Mark. I'm going to turn to Oliver in a second on it. I will say, very happy with the Qatar energy deal. It's a good fit, a good solution for an important market of ours. And frankly, we've been working with Qatar for some time. And as we've mentioned before, 10% of their existing LNG is regasified across our asset class. Really proud about that deal because it shows the high regard the Excelerate is held by major players around the globe. But Oliver, let me turn to you for Mike a little more. Obviously, we want to support integrated deals.

Yes. Thanks, Mike. I think as we mentioned in the presentation, we mentioned before, establishing a diversified energy portfolio is a key part of our strategy. I think you see today in that prioritized project portfolio that we have a number of projects where we'll lead that LNG supply. These U.S. Gulf volumes are -- there some of the most -- as FOB volumes or some of the those flexible volumes that are out there. So they're a natural fit to these projects. At the same time, we're seeing good interest for the key volumes. So we will assess the different opportunities, whether the projects or elsewhere as needed. But I think to your question, it's building that LNG supply portfolio is very much aligned with how we see the downstream demand growth. So we'll build it in parallel with that and to match that demand.

Our next question comes from Craig Shere of Tuohy Brothers.

I look forward to catching up later this afternoon. The growth opportunities are obviously exciting. You've got to walk before you run. And quite frankly, we think you're not getting credit for the speed at which you're walking today. So I've got 2 simple questions about 2024 guidance and what the business really looks like. First, excluding growth-oriented development expense and smoothing out that unusually Excellence vessel dry docking costs that I believe only occur over a few years. What would a more current recurring average run rate EBITDA look like? That's my first question.

I can -- that's actually relatively simple. So as you can see from our guidance, the midpoint is $30 million to $25 million for 2024. And as we stated previously, of that $325 million, $20 million is what we expect to spend in business development this year. And we spent roughly $20 million on our drydock, and that was in all spin. Some of that was off-hire. But we have a net P&L impact for the summit drydock of $20 million in this quarter, and we have roughly a $20 million impact last quarter for the Excellence. And you are correct, that happens every 5 years. None of our other vessels are on the boot structure, so we will capitalize all of our drydocks for the other state vessels. So you can safely assume, I think, a run rate, you could probably exclude that $20 million. However, we caution you not to exclude that business development spend from a run rate viewpoint because we are a growth company, we will continue to invest in growth and so the $20 million of business development, I would see is pretty in the range of an ongoing average run rate for a broad coming of our size. Does that make sense?

Yes. I mean I guess the point I'm trying to drive home here is if you're not being paid for growth, we probably shouldn't be docking you for expenses to pay for growth. And it sounds like smoothing out the dry docking, your run rate, if you weren't focused on these tremendous opportunities might be in the area of about $350. Does that sound about right?

That sounds about right, maybe a little bit more. But yes, I mean if you just add back to $40, you get 365. So yes, somewhere around 350 to 370 would be the range without the growth spend and the drydock.

Okay. And as to the discussion about the global south returning to spot market purchasing, can you opine about what, if any, is included in your '24 guidance on one-off upside there that you've seen in prior years? And to the degree it's not included, does that represent a prospective upside for this year?

I mean in terms of -- Craig, I want to understand the question. I think you're asking does our guidance contemplate much in the way of additional incremental cargo sales questions.

Yes. So Craig, we don't expect a huge amount of quarter. So this year, we had one in the first quarter. And from a guidance perspective, it's included in our expectations. It's not a material figure.

Okay. In prior years, you had managed to, on occasion, get some low millions of dollars of margin from unexpected kind of seasonal opportunities. You don't think that exists today, the way you're working?

I think, Craig, the words you used of unexpected and seasonal are probably the right way to think about it. But I'm not going to give the commercial team a hall pass, obviously, and they're going to be out there trying to do what they can. But I think we've got the right balance of that in our guidance.

[Operator Instructions] We have a follow-up question from Wade Suki, Capital One.

Sorry for the double tap. Just to say something, I think it was in response to Bob's question on upgrades. Did I hear you correctly say reliquefaction capability, is that right?

Thank you. With that, I don't want to dig out too much on what we can -- how we can AMG these assets. But yes, that's one option. That's a decent-sized option. You can put a skid on for efficiency. So all going to depend upon how a particular market or customer utilizes their asset. Are they sending out a maximum every day, 365 or there are periods of time because they're balancing the hydroelectric where they're looking at other factors? So each market, each project has a very specific tweak to a base asset, and we understand that well, and we are in discussions with a number of customers about those optionalities.

Okay. Great. Yes, I was trying to understand how a customer might be using that capability or maybe this would be a new type or maybe a different type of application for one of your vessels.

Yes, I think, in general, it would be somewhat with an intense seasonal demand where they're just going to sit there for part of the year and make a more robust use in other parts of the year. Anyway, we do have a good technical team. We know how these assets operate. We have a long track record at this point. And obviously, we consider all the best ways to upgrade them. As I mentioned before, upgrades are just how you keep a happy customer, how you seek to increase return on basic contracted assets, and how you increase contract length. So it's an important part of the shop.

Further optimizing the asset, I guess, would be another way to think about it. And along those lines, I guess, beyond upgrades, looking at the existing portfolio, existing set of assets, are there other sort of smallish one-off things you can be doing to kind of further optimize the existing portfolio?

Yes. I'm not going to pull the curtain back entirely wait, but yes, we're going to keep.

We can't pay me for trying here, right?

No, no, no. But I assure you, the best way of thinking about this, we value the asset class. The asset class has a long useful life, and we will do what is necessary to ensure we are driving value from those assets for their entire useful life.

And there are no further questions. I'd like to hand the call back over to Steven Kobos for any closing remarks.

Excelerate Energy is a compelling growth story. I just want to leave you all with the thought that we are essential to ensuring energy security and accelerating the energy transition. Thank you all for joining us this morning.

This concludes today's conference call. Thank you, everyone, for joining. You may now disconnect.