The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and notes thereto included in this Form 10-Q and included in our Prospectus for the year endedDecember 31, 2021 . This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled "Risk Factors" included in the Prospectus, this Form 10-Q and our other filings with theSEC . Please also see the section titled "Forward-Looking Statements."
Overview
Excelerate is changing the way the world accesses cleaner, more affordable and reliable energy by delivering regasified natural gas, benefitting hundreds of millions of people around the world. From our founding, we have focused on providing flexible LNG solutions to markets in diverse environments across the globe, providing a lesser emitting form of energy to markets that often rely on coal as their primary energy source. AtExcelerate , we believe that access to affordable energy such as LNG is critical to assisting emerging markets in their decarbonization efforts, while at the same time promoting economic growth and improving quality of life. We have grown our business significantly since our first FSRU charter in 2003, and today, we are a profitable energy company with a geographically diversified business model. Our business spans the globe, with regional offices in eight countries and operations inthe United States ,Brazil ,Argentina ,Israel ,United Arab Emirates ,Pakistan andBangladesh . We are the largest provider of regasified LNG inArgentina andBangladesh and one of the largest providers of regasified LNG inBrazil andPakistan , and we operate the largest FSRU inBrazil . We also lease an LNG terminal inBahia, Brazil from PetróleoBrasileiro S.A. ("Petrobras") and inDecember 2021 , we started importing LNG and selling regasified natural gas to Petrobras. In addition to Petrobras, we have plans to sell regasified natural gas to other downstream customers inBrazil ,Europe ,the Philippines andBangladesh . In each of these countries, we offer a cleaner energy source from which power can be generated consistently. The high value our customers place on our services has resulted in a reliable source of revenues to us, while our global reach helps balance seasonal demand fluctuation among the geographies in which we operate. For the three months endedJune 30, 2022 , we generated revenues of$622.9 million , a net loss of$4.0 million and Adjusted EBITDAR of$75.2 million . For the three months endedJune 30, 2021 , we generated revenues of$192.8 million , net income of$3.6 million and Adjusted EBITDAR of$65.5 million . For more information regarding our non-GAAP measure Adjusted EBITDAR and a reconciliation to net income, the most comparable GAAP measure, see "How We Evaluate Our Operations." Our business focuses on the integration of the natural gas-to-power LNG value chain, and as part of this value chain, we operate regasification terminals in growing global economies that utilize our FSRU fleet. Our business is substantially supported by time charter contracts, which are effectively long-term, take-or-pay arrangements and provide consistent revenue and cash flow from our high-quality customer base. As ofJune 30, 2022 , we operate a fleet of ten purpose-built FSRUs, have completed more than 2,300 ship-to-ship transfers of LNG with over 40 LNG operators since we began operations and safely delivered more than 5,700 billion cubic feet of natural gas through 15 LNG regasification terminals. For the three months endedJune 30, 2022 andJune 30, 2021 , we generated revenues of$110.1 million and$109.9 million , respectively, from our FSRU and terminal services businesses, representing approximately 18% and 57% of our total revenues for each of those periods. We also procure LNG from major producers and sell regasified natural gas through our flexible LNG terminals. For the three months endedJune 30, 2022 andJune 30, 2021 , we generated revenues of$512.9 million and$82.9 million , respectively, from LNG and natural gas sales, representing approximately 82% and 43% of our total revenues for each of those periods. The commercial momentum that we have established in recent years and the increasing need for access to LNG around the world, have resulted in a significant portfolio of new growth opportunities for us to pursue. In addition to our FSRU and terminal services businesses and natural gas sales, we plan to expand our business to provide customers with an array of products, including LNG-to-power projects and a suite of smaller-scale natural gas distribution solutions. We are currently developing a set of integrated LNG projects inAlbania ,the Philippines andBangladesh . We consider these projects to be in advanced development and estimate that these projects together represent greater than$1 billion in future capital investment opportunities. This estimate is preliminary and we will update our estimate as these projects advance to their next stages of development. We are evaluating and pursuing additional early-stage projects with opportunities inEurope ,Asia Pacific ,Latin America , and theMiddle East .
Recent Trends and Outlook
According to Shell's 2022 LNG Outlook, global LNG demand is estimated to increase from 380 metric tons ("MT") in 2021 to about700 MT in 2040. Increased aspirations for carbon neutrality and energy transitions away from coal may cause countries to rely more on lower carbon fuels such as LNG. Shell's LNG outlook anticipates Southeast Asian power demand growth, underpinned by economic development and urbanization increasing demand for electricity. LNG will be a critical solution to bridge the supply/demand imbalance in regions likeSoutheast Asia . On the supply side, we believe there is a robust pipeline of projects that can meet this new demand. Limitations on energy import infrastructure, particularly in developing countries that need to move away from coal and oil, make LNG adoption difficult, but as a pioneer in flexible LNG solutions, we believe that we are well positioned to address these 30 -------------------------------------------------------------------------------- limitations and support society's transition to a lower-carbon energy future. Given the appetite for cleaner energy, we expect these industry trends to continue, and we plan to capitalize on this growing global demand and create new markets for natural gas by providing a fully integrated LNG delivery model. Across the world, a combination of extreme weather events, Covid-19 related energy market distortions, the invasion ofUkraine byRussia and a failure to transition to renewables has, in the short term, increased the cost of energy and the risk of energy supply disruptions. The global economic outlook has deteriorated even further since the start of theRussia /Ukraine conflict.Russia's energy and food exports have been curtailed due to sanctions, whileRussia's presence in theBlack Sea is impacting wheat exports fromUkraine , thereby reducing the global wheat supply. These events coupled with cost pressures due to COVID-related supply chain disruptions have resulted in higher than expected inflation, and governments are taking measures to address these economic concerns. According to theInternational Monetary Fund ("IMF"), major central banks are announcing continued monetary tightening policies to reduce inflation and minimize the risk of a recession.Excelerate has seen inflationary effects on certain of our costs incurred in operating our vessels. While we have escalation terms linked to inflation measures in some of our regasification agreements, there may be a mismatch between the benefit realized and timing of these contractual adjustments versus the actual increases in costs incurred. InEurope , further natural gas export disruptions fromRussia could affect many European economies and the global energy market. In response,European Union governments have agreed to legislation to reduce natural gas demand this winter to protect themselves from further Russian natural gas supply disruptions. The legislation proposes voluntary reduction of gas demand by 15% fromAugust 2022 throughMarch 2023 . If the voluntary natural gas demand curtailments yield insufficient savings, mandatory natural gas demand curtailment will be implemented across the 27-bloc members of theEuropean Union . The current energy market volatility supports LNG as a reliable bridge to the growth of renewables in the world's energy mix. We believe the past year's events underscore the value that LNG offers by providing energy supply stability for any government looking to implement a sustainable, reliable, and cost-effective energy transition plan. As a result of these recent geopolitical events, including the invasion ofUkraine byRussia , we are seeing an increase in inquiries for our FSRU and integrated terminal services. This interest is mainly coming from countries that have historically been dependent on imports of Russian natural gas. Given the increased emphasis on security of supply, we believe LNG will be an attractive solution to these customers over the near to mid-term. InMay 2022 , we announced the signing of a 10-year time charter party agreement with a subsidiary ofGasgrid Finland Oy ("Gasgrid Finland"). At this time, we do not believe any economic sanctions or other actions taken againstRussia will adversely affect our current business and operations or the potential opportunities discussed above, and we will continue to monitor new developments in this area. While we have the potential to benefit from increased LNG and natural gas opportunities due to strong demand for alternative energy sources asEurope replaces natural gas imports fromRussia in the near-to-short term, our commitment to meeting the energy needs of non-European markets remains steadfast. During this market cycle, Southeast Asian markets can be particularly vulnerable to economic fluctuations and higher LNG prices asEurope absorbs spot cargoes. The Southeast Asian markets where we are present,Bangladesh andPakistan , have not been immune to the effects of the ongoing energy crisis and high spot LNG prices. Foreign exchange reserves are declining, and the risk of debt defaults is heightening. Despite these challenges, both countries are taking strategic actions to enhance their energy security and economic stability, although their successful implementation cannot be guaranteed. According to Platts,Bangladesh's finance ministry is drafting a structured LNG policy that will provide subsidies toBangladesh Oil, Gas & Mineral Corporation (Petrobangla) on a regular basis to support LNG imports under long-term contracts and spot cargo purchases.Pakistan reached a preliminary agreement with theInternational Monetary Fund ("IMF") to revive a$6 billion bailout package originally signed in 2019. TheIMF agreed to release$1.7 billion of the bailout package after previously withholding payments due toIslamabad's failure to agree to loan conditions. Both countries are also implementing load shedding to reduce natural gas demand. These countries depend on LNG imports to support export-oriented industries such as textile and agriculture. Excessive curtailment of natural gas imports could impact their export-related GDP growth. We are optimistic that as these countries make progress to improve their financial strength while curbing near-term natural gas demand, they will be well positioned for continued reliance on long-term LNG supply contracts, which remain relatively affordable when compared to current LNG spot prices. In addition to increased LNG industry activity levels, we expect to benefit from our strategy to pursue opportunities in the downstream market, expand into new markets and increase our activity in selling natural gas downstream. In addition to continued natural gas sales into theNew England market through our NortheastGateway facility inBoston harbor during the first quarter of 2022, we also are evaluating new commercial opportunities to sell regasified LNG to countries inEurope via our planned Finland LNG and Vlora LNG terminals. 31 -------------------------------------------------------------------------------- We expect these and similar business opportunities to drive incremental revenue and profits in the near term while we continue to develop additional long-term growth opportunities, such as:
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InJuly 2022 , we announced the signing of a Memorandum of Understanding (MOU) withBulgaria's Overgas, relating to the potential sale of regasified LNG downstream atExcelerate's planned Vlora LNG terminal inAlbania . Under this MOU,Excelerate will enter negotiations for Overgas to purchase up to 1.0 billion cubic meters of regasified LNG annually for 10 years.
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InMay 2022 , the Payra LNG project was approved in principle byBangladesh Oil, Gas & Mineral Corporation andBangladesh's Energy and Mineral Resources Division, a significant milestone in the approval process.Excelerate has commenced negotiations of the integrated deal, which includes an LNG supply agreement. The Payra LNG project is expected to representExcelerate's largest deployment of capital to date and has the potential to significantly increase the scale of the Company's global operations.
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InApril 2022 , the government ofFinland announced its intention to stop purchases of Russian pipeline natural gas and instead to utilize an FSRU to meet its natural gas consumption needs by year end 2022. The government ofEstonia made a similar decision. Due to the proximity and good relations between the two countries,Estonia will participate in the Finnish project rather than pursuing a project of its own. InMay 2022 ,Excelerate and Gasgrid Finland signed a 10-year time charter party agreement forExcelerate to provide LNG regasification services starting in the fourth quarter of 2022. Gasgrid Finland has initiated the development of a new jetty inSouthern Finland , near the Balticconnector pipeline, for the FSRU Exemplar to moor.
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InFebruary 2022 , the Moheshkhali LNG ("MLNG") expansion project was approved in principle by the government ofBangladesh . MLNG is one ofExcelerate's three E-FIT integrated terminals.Excelerate has commenced commercial negotiations for the expansion of the terminal, the extension of our regasification agreement by five years to 2038, and an LNG supply agreement.
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InJanuary 2022 ,Excelerate received approval from the Albanian government to proceed with the second phase of the feasibility study for the Vlora LNG terminal and power plant. Under the previously announced memorandum of understanding with Albgaz Sh.a,,Albania's natural gas transmission system operator, and Snam S.p.A, one of the largest energy infrastructure owner and operators in the world,Excelerate is continuing to explore solutions to connect theVlora LNG Terminal with other European natural gas infrastructure.
Components of Our Results of Operations
Revenue
We generate revenue through the provision of regasification services using our fleet of FSRUs and LNG terminal assets, as well as physical sales of LNG and natural gas, that are made primarily in connection with our regasification and terminal projects. We provide regasification services through time charters and operation service contracts primarily related to our long-term charter contracts. Most of our time charter revenues are from long-term contracts that function similar to take-or-pay arrangements in that we are paid if our assets and teams are available and ready to provide services to our customers regardless of whether our customers utilize the services. A portion of our revenue attributable to our charters for the use of our vessels is accounted for as lease revenue, and the revenues attributable to the services provided under those charters are accounted for as non-lease revenue. We generally charge fixed fees for the use of and services provided with our vessels and terminal capacity plus additional amounts for certain variable costs.
Expenses
The principal expenses involved in conducting our business are operating costs, direct cost of gas sales, general and administrative expenses, and depreciation and amortization. A large portion of the fixed and variable costs we incur in our business are in the operation of our fleet of FSRUs and terminals that provide regasification and gas supply to our customers. We manage the level of our fixed costs based on several factors, including industry conditions and expected demand for our services and generally pass-through certain variable costs. We incur significant equipment costs in connection with the operation of our business, including capital equipment recorded as property and equipment, net on our balance sheets and related depreciation and amortization on our income statement. In addition, we incur repair and maintenance and leasing costs related to our property and equipment utilized both in our FSRU and terminal services and gas sales. Property and equipment includes costs incurred for our fleet of FSRUs and terminal assets including capitalized costs related to drydocking activities. Generally, we are required to drydock each of our vessels every five years, but vessels older than 15 years of age require a shorter duration drydocking or in-situ bottom survey every two and a half years.
Cost of revenue and vessel operating expenses
32 -------------------------------------------------------------------------------- Cost of revenue and vessel operating expenses include the following major cost categories: vessel operating costs; personnel costs; repair and maintenance; and leasing costs. These operating costs are incurred for both our FSRU and terminal services revenues and Gas sales revenues.
Direct cost of gas sales
Direct cost of gas sales includes the cost of LNG and other fuel and direct costs incurred in selling natural gas and LNG, which are significant variable operating costs. These costs fluctuate in proportion to the amount of our natural gas and LNG sales as well as LNG prices.
Depreciation and amortization expenses
Depreciation expense is recognized on a straight-line basis over the estimated useful lives of our property and equipment assets, less an estimated residual value. Certain recurring repairs and maintenance expenditures required by regulators are amortized over the required maintenance period.
Selling, general and administrative expenses
Selling, general and administrative expenses ("SG&A") consist primarily of compensation and other employee-related costs for personnel engaged in executive management, sales, finance, legal, tax and human resources. SG&A also consists of expenses associated with office facilities, information technology, external professional services, business development, legal costs and other administrative expenses.
Restructuring, transition and transaction expenses
We incurred restructuring, transition and transaction expenses related to consulting, legal, and audit costs incurred as part of and in preparation for our initial public offering (the "IPO").
Other income, net
Other income, net, primarily contains interest income, gains or losses from the effect of foreign exchange rates and gains and losses on asset sales.
Interest expense and Interest expense - related party
Our interest expense is primarily associated with our finance leases liabilities and loan agreements with external banks and related parties.
Earnings from equity-method investment
Earnings from equity-method investment relate to our 45% ownership interest in
the
Provision for income taxes
Following the completion of the IPO, we are a corporation forU.S. federal and state income tax purposes.Excelerate's accounting predecessor, EELP, is treated as a pass-through entity forU.S. federal income tax purposes and, as such, has generally not been subject toU.S. federal income tax at the entity level. Instead, EELP'sU.S. income is allocated to its Class A and Class B partners proportionate to their interest. Accordingly, our provision for income taxes includesU.S. taxes incurred at theExcelerate corporate level beginning inApril 2022 . In addition, EELP has international operations that are subject to foreign income tax andU.S. corporate subsidiaries subject toU.S. federal tax. These taxes are also included in our provision for income taxes.
Net income (loss) attributable to non-controlling interest
Net income (loss) attributable to non-controlling interests includes earnings allocable to our shares of Class B Common Stock as well as earnings allocable to the third-party equity ownership interests in our subsidiary,Excelerate Energy Bangladesh, LLC .
Net income (loss) attributable to non-controlling interest - ENE Onshore
Net income (loss) attributable to non-controlling interest - ENE Onshore includes the earnings allocable to the equity ownership interests inExcelerate New England Onshore, LLC ("ENE Onshore"). We consolidate ENE Onshore since we determined that although we have no ownership interest we are the primary beneficiary. 33 --------------------------------------------------------------------------------
Factors Affecting the Comparability of Our Results of Operations
As a result of a number of factors, our historical results of operations may not be comparable from period to period or going forward. Set forth below is a brief discussion of the key factors impacting the comparability of our results of operations.
Impact of the Reorganization
Following the completion of the IPO inApril 2022 , we are a corporation forU.S. federal and state income tax purposes.Excelerate's accounting predecessor, EELP, is treated as a pass-through entity forU.S. federal income tax purposes and, as such, has generally not been subject toU.S. federal income tax at the entity level. Accordingly, unless otherwise specified, our historical results of operations prior to the IPO do not include provision forU.S. federal income tax for EELP. The reorganization undertaken in connection with the IPO, as described under "Organizational Structure-The Reorganization" in the Prospectus (the "Reorganization"), was accounted for as a reorganization of entities under common control. As a result, our consolidated financial statements recognized the assets and liabilities received in the Reorganization at their historical carrying amounts, as reflected in the historical consolidated financial statements of EELP. In addition, in connection with the Reorganization and the IPO, we have entered into the Tax Receivable Agreement (the "TRA") withExcelerate Energy Holdings, LLC ("EE Holdings ") and theGeorge Kaiser Family Foundation (the "Foundation") (or their affiliates) (together, the "TRA Beneficiaries") pursuant to which we will be required to pay the TRA Beneficiaries 85% of the net cash savings, if any, that we are deemed to realize as a result of our utilization of certain tax benefits described under "Certain Relationships and Related Person Transactions-Proposed Transactions withExcelerate Energy, Inc. -Tax Receivable Agreement" in our Prospectus. Also, included in the transactions is our acquisition of all of the issued and outstanding membership interests inExcelsior, LLC andFSRU Vessel (Excellence), LLC (f/k/aExcellence, LLC ) (collectively, the "Foundation Vessels") that was accounted for as an acquisition of property and equipment at the completion of the transaction. The Foundation Vessels have historically been accounted for as finance leases in our historical financial statements.
Public Company Costs
We have incurred and expect to continue to incur incremental, non-recurring costs related to our transition to a publicly traded corporation, including the costs of the IPO and the costs associated with the initial implementation of our Sarbanes-Oxley Section 404 internal control reviews and testing. We also expect to incur additional significant and recurring expenses as a publicly traded corporation, including costs associated with compliance under the Exchange Act, annual and quarterly reports to common stockholders, registrar and transfer agent fees, national stock exchange fees, audit fees, incremental director and officer liability insurance costs and director and officer compensation.
Impact of Covid-19
InMarch 2020 , theWorld Health Organization declared the Coronavirus Disease 2019 ("Covid-19") a global pandemic. The Covid-19 outbreak has reached across the globe, resulting in the implementation of significant governmental measures, including lockdowns, closures, quarantines, and travel bans intended to control the spread of the virus. While some of these measures have been relaxed in certain parts of the world, ongoing social distancing measures, and future prevention and mitigation measures, as well as the potential for some of these measures to be reinstituted in the event of repeat waves of the virus and any variants, are likely to have an adverse impact on global economic conditions and consumer confidence and spending, and could materially adversely affect the timing of demand, or users' ability to pay, for our products and services. In response to the Covid-19 pandemic, we took several precautions that may adversely impact employee productivity, such as requiring many office employees to work remotely, imposing travel restrictions, and temporarily closing office locations. In addition, we instituted additional procedures and precautions related to our crews on our FSRU vessels. We incurred incremental costs during the six months endedJune 30, 2022 and 2021, of approximately$1.5 million and$2.9 million , respectively, related to these precautionary measures. We continue to monitor the evolving situation and guidance from international and domestic authorities, including federal, state and local public health authorities, and there may be developments outside our control requiring us to adjust our operating plan. As such, given the unprecedented uncertainty around the duration and severity of the impact on market conditions and the business environment, we cannot reasonably estimate the full impact of the Covid-19 pandemic on our operating results in the future. For additional information, see "Risk Factors-Risks Related to Our Business-Outbreaks of epidemic and pandemic diseases and governmental responses thereto could adversely affect our business." and other risk factors included in the "Risk Factors" section of our Prospectus that describe risks to us attributable to the Covid-19 pandemic. 34 --------------------------------------------------------------------------------
How We Evaluate Our Operations
We operate in a single reportable segment. However, we use a variety of qualitative, operational and financial metrics to assess our performance and valuation. Among other measures, management considers each of the following in assessing our business: Adjusted Gross Margin; Adjusted EBITDA; Adjusted EBITDAR; and Capital Expenditures. Adjusted Gross Margin We use Adjusted Gross Margin, a non-GAAP financial measure, which we define as revenues less direct cost of sales and operating expenses, excluding depreciation and amortization, to measure our operational financial performance. Management believes Adjusted Gross Margin is useful because it provides insight on profitability and true operating performance excluding the implications of the historical cost basis of our assets. Our computation of Adjusted Gross Margin may not be comparable to other similarly titled measures of other companies, and you are cautioned not to place undue reliance on this information.
Adjusted EBITDA and Adjusted EBITDAR
Adjusted EBITDA is a non-GAAP financial measure included as a supplemental disclosure because we believe it is a useful indicator of our operating performance. We define Adjusted EBITDA, a non-GAAP measure, as net income before interest, income taxes, depreciation and amortization, long-term incentive compensation expense and items such as charges and non-recurring expenses that management does not consider as part of assessing ongoing operating performance. In this quarter, we revised the definition of Adjusted EBITDA to adjust for the impact of long-term incentive compensation expense, which we did not have prior to becoming a public company, and the early extinguishment of lease liability related to the acquisition of the Excellence vessel, as management believes such items do not directly reflect our ongoing operating performance. Adjusted EBITDAR is a non-GAAP financial measure included as a supplemental disclosure because we believe it is a valuation measure commonly used by financial statement users to more effectively compare the results of our operations from period to period and against other companies without regard to our financing methods or capital structure. We define Adjusted EBITDAR, a non-GAAP measure, as Adjusted EBITDA adjusted to eliminate the effects of rental expenses for vessels and other infrastructure, which are normal, recurring cash operating expenses necessary to operate our business. We adjust net income for the items listed above to arrive at Adjusted EBITDA and Adjusted EBITDAR because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDA and Adjusted EBITDAR should not be considered as an alternative to, or more meaningful than, net income as determined in accordance with GAAP or as an indicator of our operating performance or liquidity. These measures have limitations as certain excluded items are significant components in understanding and assessing a company's financial performance, such as a company's cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are components of Adjusted EBITDA and Adjusted EBITDAR. Adjusted EBITDAR should not be viewed as a measure of overall performance or considered in isolation or as an alternative to net income because it excludes rental expenses for vessels and other infrastructure, which is a normal, recurring cash operating expense that is necessary to operate our business. Our presentation of Adjusted EBITDA and Adjusted EBITDAR should not be construed as an inference that our results will be unaffected by unusual or non-recurring items. Our computations of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. For the foregoing reasons, each of Adjusted EBITDA and Adjusted EBITDAR has significant limitations which affect its use as an indicator of our profitability and valuation, and you are cautioned not to place undue reliance on this information.
Capital Expenditures
We incur capital expenditures as part of our regular business operations. Capital expenditures are costs incurred which expand our business operations, increase efficiency of business operations, extend the life of an existing asset, improve an asset's capabilities, increase future service of an asset, repair existing assets in order to maintain their service capability, and provide upkeep required for regulatory compliance. Costs related to prospective projects are capitalized once it is determined to be probable that the related assets will be constructed. 35 -------------------------------------------------------------------------------- The tables below reconcile the financial measures discussed above to the most directly comparable financial measure calculated and presented in accordance with GAAP: Three months ended June 30, Six months ended June 30, 2022 2021 2022 2021 (In
thousands)
FSRU and terminal services revenues
$ 207,664 $ 235,721 Gas sales revenues 512,857 82,940 1,006,938 121,890 Cost of revenue and vessel operating expenses (58,673 ) (48,425 ) (108,736 ) (87,630 ) Direct cost of gas sales (485,023 ) (78,076 ) (948,375 ) (101,414 ) Depreciation and amortization expense (24,296 ) (26,137 ) (48,039 ) (52,246 ) Gross Margin$ 54,937 $ 40,160 $ 109,452 $ 116,321 Depreciation and amortization expense 24,296 26,137 48,039 52,246 Adjusted Gross Margin$ 79,233 $ 66,297 $ 157,491 $ 168,567 Three months ended June 30, Six months ended June 30, 2022 2021 2022 2021 (In thousands) Net income (loss)$ (3,990 ) $ 3,577 $ 8,854 $ 41,600 Interest expense 13,293 21,206 32,520 42,048 Provision for income taxes 7,800 4,393 11,519 8,905 Depreciation and amortization expense 24,296 26,137 48,039 52,246 Restructuring, transition and transaction expenses 2,582 3,065 5,335 3,065 Long-term incentive compensation expense 270 - 270 - Early extinguishment of lease liability on vessel acquisition 21,834 - 21,834 - Adjusted EBITDA$ 66,085 $ 58,378 $ 128,371 $ 147,864 Vessel and infrastructure rent expense 9,151 7,097 18,245 14,195 Adjusted EBITDAR$ 75,236 $ 65,475 $ 146,616 $ 162,059 36
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