Q4 2024 Earnings Summary
- Excelerate Energy is actively pursuing significant growth opportunities that could materialize in 2025, providing potential upside not included in current guidance. Management mentioned pursuing opportunities that could "drive short and intermediate term" results.
- Management believes the stock is undervalued and may consider additional share repurchases, indicating strong confidence in the company's value and future prospects. They are "very pleased" with the previous repurchase program and believe they are "not getting an appropriate multiple".
- Strong demand for Excelerate's services due to ongoing geopolitical factors, with management expecting the supply-demand balance for their assets to remain tight. This supports the company's growth prospects as countries seek energy security solutions.
- The company's fleet reliability reached a record 99.9% in 2024, but management indicated that maintaining this level may not be sustainable in future years. "I'm not sure we're going to be able to hit 99.9% every single year. It was a remarkable achievement. But generally, we do achieve reliability in excess of 99%." This could imply potential decreases in operational efficiency going forward.
- Significant capital expenditures planned for 2025 and beyond could strain the company's finances. They expect maintenance CapEx of $60 million to $70 million in 2025, all of which will be capitalized. Additionally, there is a final payment of approximately $200 million due in mid-2026 for their newbuild vessel. These large outlays may impact free cash flow and limit shareholder returns.
- Growth opportunities in key markets like Alaska and Vietnam appear uncertain. In Alaska, focus has shifted towards export projects rather than the import solutions Excelerate was proposing: "Obviously, there's a focus now on the export project... We think that might still be there... we'll see how those discussions evolve." Similarly, in Vietnam, while they are optimistic, there are no definitive project commitments: "We're continuing to work on those behind the scenes... We look forward to coming back to you guys with more updates when we can on those." This uncertainty may hinder near-term growth prospects.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | Q3 2023: Decrease from $803.3M to $275.5M; Q3 2024: Decrease from $275.5M to $193.4M | In Q3 2023, total revenue fell dramatically due to a substantial decline in gas sales revenue (from $687.9M to $142.3M) despite a partial offset from a $17.9M increase in FSRU and terminal services revenue. In Q3 2024, revenue further declined as gas sales revenue dropped by $99.0M, driven by the completion of the Brazil natural gas sales agreement and reduced LNG sales in Asia Pacific. |
FSRU and Terminal Services Revenues | Q3 2023: Increase of $17.9M (from $115.3M to $133.2M); Q3 2024: Increase of $16.9M (from $133.2M to $150.1M) | The increase in Q3 2023 was driven by factors including commencing charters in Finland and seasonal services in Argentina with higher daily rates in Brazil and Argentina, partially offset by a contract end in Israel. In Q3 2024, revenues rose as a result of the start of a TCP agreement in Brazil and a new charter in Germany, despite the loss of the 2023 seasonal service in Argentina. |
Gas Sales Revenues | Q3 2023: Decrease of $545.6M (from $687.9M to $142.3M); Q3 2024: Decrease of $99.0M (from $142.3M to $43.3M) | In Q3 2023, the significant drop was mostly due to lowered natural gas sales volumes from the terminal operations in Brazil, only marginally offset by LNG sales in Bangladesh. The decline in Q3 2024 was primarily due to the completion of the Brazil natural gas sales agreement in December 2023 as well as fewer LNG sales in the Asia Pacific region. |
Operating Income | Q3 2023: Increase from $49.9M to $67.5M; Q3 2024: Decrease from $67.5M to $59.7M | The Q3 2023 improvement stemmed from higher charter rates, lower operating lease expenses (post the FSRU Sequoia acquisition), increased margins on Brazil gas contracts, and benefitted from inflation index adjustments. In Q3 2024, operating income declined due to the transition of FSRU Sequoia to a time charter party, rising business development costs, and fewer gas sales opportunities, though partially offset by increased interest income. |
Asia Pacific Revenues | Q3 2024: Decrease from $117.9M to $71.2M | The reduction in Asia Pacific revenues was mainly impacted by the drop in gas sales revenues (a $99.0M decrease), which is linked to the completion of the natural gas sales agreement in Brazil, adversely affecting the sales figures for the region. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Adjusted EBITDA | FY 2024 | $335 million to $345 million | no current guidance | no current guidance |
Maintenance CapEx | FY 2024 | $40 million to $50 million | no current guidance | no current guidance |
Committed Growth Capital | FY 2024 | $70 million to $80 million | no current guidance | no current guidance |
Share Repurchase Program | FY 2024 | $28 million of $50 million | no current guidance | no current guidance |
Quarterly Dividend | FY 2024 | $0.06 per share | no current guidance | no current guidance |
Adjusted EBITDA | FY 2025 | no prior guidance | $340 million to $360 million | no prior guidance |
Maintenance CapEx | FY 2025 | no prior guidance | $60 million to $70 million | no prior guidance |
Committed Growth Capital | FY 2025 | no prior guidance | $65 million to $75 million | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Global LNG Market Expansion and Demand Drivers | Q1–Q3: Discussed flexible FSRU use, evolving market fundamentals in the global South and Asia, and integrated LNG solutions with geopolitical influences (e.g. Ukraine impact). | Q4: Emphasized anticipated tight supply–demand for FSRUs, European market dynamics (cold snap, German elections, gas-fired power plants) and continued momentum in projects (Vietnam, Alaska). | Consistent emphasis with a heightened focus on European conditions influencing demand. |
Pursuit of Growth Opportunities and Inorganic Expansion | Q1–Q3: Outlined strategic moves including LNG carrier acquisition, FSRU conversions, and diversified growth opportunities supported by both organic and inorganic investments. | Q4: Reinforced pursuit of an LNG carrier acquisition for FSRU conversion and leveraging strong financial resources to expand the fleet and market presence. | Steady strategic focus with a clearer, integrated approach to fleet and market expansion. |
Capital Expenditure Challenges and Financial Management | Q1–Q3: Consistently discussed maintenance CapEx targets, growth capital commitments, liquidity strength, and share repurchase and dividend strategies. | Q4: Presented similar maintenance and growth CapEx guidance, highlighted record adjusted EBITDA and liquidity, while executing share repurchases and dividend distributions. | Consistent financial management with adjusted guidance to reflect ongoing investment priorities. |
Asset Upgrades, Operational Efficiency, and Fleet Reliability | Q1–Q3: Covered investments in upgrades such as re-liquefaction kits, vessel equipment enhancements, and achievement of high fleet reliability (notably 99.8–99.9%). | Q4: Focused on planned dry docks for key vessels and reported a record 99.9% reliability, underscoring continued operational excellence. | Consistent improvement with a slight reinforcement in upgrade planning and record operational performance. |
Long-Term Contracts and Strategic Agreements | Q1–Q3: Featured multiple long-term agreements (e.g. 10–15-year deals with Petrobras, Petrobangla, Venture Global, strategic partnership in Vietnam) that underpin revenue stability. | Q4: Emphasized the necessity of long-term contracts in light of European market pressures, advocating affordable, secure supply channels for regions including the global South. | Maintained focus on long-term deals with a shift toward European market risk management. |
FSRU Conversion and Newbuild Vessel Deployment Uncertainties | Q1–Q3: Discussed differences between newbuild and conversion timelines and the inherent execution risks—with Q1 being less specific and Q2–Q3 addressing timeline uncertainties. | Q4: Actively pursuing LNG carrier acquisition for conversion as well as newbuild FSRUs, while acknowledging binary project outcomes and persistent uncertainty. | Uncertainties persist, though Q4 shows more actionable pursuit even as risks remain. |
Geopolitical and External Market Influence on Demand | Q1–Q2: Addressed geopolitical factors such as the war in Ukraine and bullish demand in markets like India, though not mentioned in Q3. | Q4: Provided detailed insights on European geopolitical shifts (German elections, increased gas-fired capacity) and their macroeconomic implications. | Emerging nuance: While always a factor, Q4 introduces new emphasis on European energy security. |
Uncertainty in Project Timelines and Execution | Q2–Q3: Noted delays and risks in project execution, including uncertainties in the Alaska project timeline (Q2) and conversion schedules (Q3). | Q4: Highlighted the binary nature (success or failure) of projects under discussion, reiterating execution uncertainties in near- and intermediate-term growth projects. | Continued focus on execution uncertainty with a more explicit framing of project outcomes. |
Shift in Capital Allocation Priorities: Growth Investments vs. Shareholder Returns | Q1–Q3: Consistently balanced growth investment priorities with share repurchase programs and dividend increases, reflecting strategic use of excess liquidity. | Q4: Reiterated the primary focus on funding growth (e.g. fleet investments) alongside a fully utilized $50 million share repurchase program and ongoing dividend commitment. | Steady approach, maintaining a balanced allocation between growth and shareholder returns. |
De-emphasis of Seasonal Margins and Business Development Expense Concerns | Q1: Addressed reliance on seasonal margin opportunities as non-recurring and set a benchmark business development expense ($20 million) as part of growth spend. | Q4: This topic is no longer mentioned in the call. | Dropped from discussion, indicating a shift away from seasonal margin and expense concerns in current commentary. |
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2025 EBITDA Guidance
Q: Does 2025 EBITDA include growth opportunities?
A: No, our 2025 adjusted EBITDA guidance includes only the base business—the FSRU fleet and LNG supply optimization. Other growth opportunities are not built into our guidance, but we are proceeding with them. We expect to update our CapEx guidance once we have commitments.
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FSRU Conversion Plans
Q: Details on LNG carrier acquisition and conversion?
A: We're assessing multiple LNG carriers to fit our near-term optimization needs and aim to convert one for future FSRU projects. We've inspected several vessels and hope to proceed over the year. Acquiring an LNG carrier now allows us to reduce time to market and tailor solutions for customers.
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Project Updates: Vietnam and Alaska
Q: Any updates on Vietnam and Alaska projects?
A: In Alaska, while the focus is on export projects, we believe there's still a near-term need for gas imports, and we're ready with a solution. In Vietnam, we're positive about the fundamentals and see good momentum for LNG imports. We're working on opportunities and are confident in hitting upcoming projects with our tools.
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Stock Repurchase Plans
Q: Plans for new stock repurchase authorization?
A: We're pleased with our previous buyback, averaging purchases at around $20 per share. We believe the company is undervalued. We have liquidity and focus on the best capital allocation, prioritizing growth and funding opportunities. We'll continue to evaluate all tools to return value to shareholders.
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Capital Expenditures
Q: Maintenance CapEx: expensed or capitalized?
A: The $60–$70 million maintenance CapEx for 2025 is all capitalized. Previous dry docks in Bangladesh were expensed, but going forward, it's essentially all capital.
Q: What's the final payment for the newbuild in 2026?
A: The final payment for the newbuild in mid-2026 is roughly $200 million.
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LNG Optimization Deals
Q: Insights on Q4 gas sales and 2025 outlook?
A: In Q4, we closed two LNG optimization deals with strong margins, reflected in gas sales. For 2025, over 90% of our business is core, with the remainder from LNG optimization, including Atlantic Basin cargo. We pulled forward some Atlantic Basin deals into Q4 and will continue into 2025.
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Macro Outlook
Q: Impact of global events on demand?
A: We see the supply-demand balance for our assets remaining tight due to geopolitical factors. Europe needs more gas, and FSRUs offer cheap insurance. Demand for our services remains strong as countries focus on energy security and long-term LNG supply.
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Fleet Capacity
Q: How does newbuild capacity compare to current fleet?
A: Our current fleet has regas capacities ranging from 500 million to 1 Bcf per day. The newbuild offers higher capacity, around 1 Bcf per day. Conversions are likely at the lower end of the range.
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Fleet Reliability
Q: Previous record before 99.9% reliability?
A: We generally achieve reliability in excess of 99%, though 99.9% is a remarkable achievement. It requires tremendous effort from our operations and engineering teams, and we aim to maintain high performance.
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