Excelerate Energy Third Quarter 2026 Earnings Conference Call - EXCELERATE ENERGY INC

Explicit Guidance:

• Full-Year 2026 Adjusted EBITDA: Narrowed range updated to $495 million – $515 million, reflecting strength in contracted infrastructure and commercial execution.
• Full-Year 2026 Maintenance CapEx: Reduced to $65 million – $75 million due to the deferral of certain planned maintenance activities.
• Full-Year 2026 Growth CapEx: Increased to $400 million – $410 million to reflect timing of expenditures for the FSRU conversion project (Patricia Camilla).
• Total CapEx (2026): Remains generally consistent with prior full-year guidance.
• Dividend: Quarterly cash dividend set at $0.09 per share, payable Dec 3, 2026.
• Dividend Growth: Targeting a low double-digit annual growth rate through 2028.

Business-Segment Outlook:

• Caribbean (Bahamas LNG Hub):
  • Phase 1 (Q1 2027): Initial LNG deliveries utilizing the existing Jamaica platform to serve Axto; expected to contribute $6 million EBITDA in 2027.
  • Phase 2 (H2 2028): Deployment of a dedicated Floating Storage Unit (FSU) near Grand Bahama; EBITDA run rate expected to rise to $15 million annually over the subsequent 10 years based on contracted volumes.
  • Capacity Potential: Contracted volume of 16 TBTUs/year represents less than 50% of asset capacity; long-term ambition includes potential doubling of throughput and serving marine bunkering/power generation.
  • Jamaica: Acts as an integrated hub and logistics base; no new dedicated infrastructure required for initial phases.
• Middle East (Iraq):
  • Timeline: Targeting Q2 2027 commercial startup.
  • Volumes: Five-year agreement guarantees minimum 250 MMSCF/day with optionality to increase to 500 MMSCF/day; expected EBITDA run rate at minimum take is $100 million.
  • Ramp Strategy: Conservative initial ramp with expectations of organic growth driven by electricity demand, reservoir maintenance, and enhanced E&P activities.
• Latin America (Colombia):
  • Timeline: Targeting Q1 2027 startup.
  • Returns: Maintains 35% revenue uplift on contracted volumes relative to base assumptions.
• FSRU Conversions & Extensions:
  • FSRU Patricia Camilla: Conversion project estimated at $260 million total investment (vessel + conversion); commercial deployment targeted for 2028.
  • Target Returns: Aiming for 5x–7x billed multiple on investment.
  • FSRU Sequoia: Extended contract with Petrobras through 2038 adding $400+ million in backlog revenue; reliquefaction unit installation scheduled for 2028 dry dock to improve efficiency and reduce emissions.
  • FSRU Experience: Reliquefaction unit installation planned for Q1 2027 dry dock.
• Pipeline/Backlog: Secured $400 million+ in additional contracted revenue via the Petrobras extension; Iraq agreement provides a five-year earnings foundation.

Market and Competitive Outlook:

• Supply/Demand Dynamics: Anticipating a significant wave of new LNG supply entering the market around 2028, creating demand for import infrastructure; limited FSRU capacity available at that time positions converted assets advantageously.
• Bunkering Opportunity: Projecting >1,500 LNG-capable ships globally by end of 2030; Shell forecasts 27 MTPA LNG bunkering demand by 2035.
• Strategic Positioning: Plans to expand the "hub and spoke" model beyond the Caribbean to global markets (Europe, Asia, Middle East) once the Caribbean footprint is proven; focus on last-mile distribution rather than just terminal ownership.
• Asset Strategy: Agnostic on delivery method (FSRU, small-scale vessels, ISO containers) for initial Bahamas phases; leveraging existing assets to generate immediate cash flow.

Macro / Industry Outlook:

• Interest Rates: Management maintains a disciplined approach to capital allocation but asserts that the company's low leverage (1.8x net leverage) and strong balance sheet provide a competitive advantage regardless of the interest rate environment.
• Geopolitics: Confirmed that Iraq and Colombia projects will proceed without requiring FSRU transits through the Strait of Hormuz, mitigating specific regional security risks.
• Global LNG Thirst: Belief that global LNG demand growth is widespread and robust, citing ~357 MTPA global production (2025) and expecting continued supply increases despite geopolitical friction.
• Pricing Strategy: Company strategy focuses on fixed margins and volume growth; indifferent to TTF or Henry Hub price directions as long as volumes move.

Strategic Initiatives:

• Bahamas LNG Hub: Two-phase development (Jamaica platform repurposing followed by dedicated FSU) to create a second integrated hub in the Caribbean.
• Caribbean Expansion: Plans to deploy additional capital to replicate the hub-and-spoke model globally; considering the strategic advantage of being proximate to US export capacity.
• Fleet Optimization: Evaluating potential candidates for future FSRU conversions, including the Shenandoah and Patricia Camilla, to match Atlantic Basin requirements.
• Technology Deployment: Implementing reliquefaction units on Experience (2027) and Sequoia (2028) to reduce boil-off losses and improve operational efficiency.
• M&A/Partnerships: Established joint venture with Axto Bahamas Limited (AXPO/Domicile LNG) for long-term supply off-take; awarded EPC contract to Cetrium for Patricia Camilla conversion and Nordgas for engineering/tech modules.

Risks and Headwinds to Outlook:

• Project Execution: Final conversion costs for the FSU in Bahamas remain subject to engineering completion and scope finalization (estimated range $85M–$95M for the vessel/conversion only).
• Commercial Timing: Finalization of specific asset deployment for Iraq/Colombia is pending customer arrangements; individual asset identification withheld for security reasons.
• Market Uncertainty: Actual results may differ from forward-looking statements due to risks and uncertainties; no obligation to update statements.
• Volume Ramp: Iraq volumes may ramp slower than potential depending on government annual delivery profiles and infrastructure readiness (though management is "confident" in long-term growth).

Management Tone on the Future:

• Confidence: Extremely confident in the "building blocks" strategy; Stephen Kobos describes the Bahamas announcement as a "flagship opportunity" and expresses "ecstasy" regarding Caribbean potential.
• Strategic Clarity: Emphasis on a diversified, global portfolio not dependent on single markets; management highlights "nimbleness" and the ability to adapt plans (e.g., avoiding Hormuz) as a competitive edge.
• Financial Discipline: Strong tone regarding capital allocation (invest in growth first, then dividends/buybacks); confidence in funding growth via existing cash flows and balance sheet strength without over-leveraging.
• Guidance Changes: Shift from generic outlook to specific "building blocks" providing $250M–$300M incremental EBITDA growth by 2029, indicating a transition to high-visibility accretion.

Miscellaneous:

• Asset Flexibility: Reiterated that asset switching for Iraq/Colombia does not alter the contracted return profile; net impact is "flat" to assumptions.
• Operational Milestones: Iraq construction workforce onsite; jetty reinforcement underway; mechanical completion targeted for early Q2 2027 (April) with minimal commissioning time.
• Personnel: Moving additional staff to Miami to cover Caribbean expansion and accelerate commercial development.