Stabilis Solutions Q2 2025 Earnings Call Transcript

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August 7, 2025

Key Takeaways

  • Negative Sentiment: Revenue fell by 7% year-over-year and adjusted EBITDA declined to $1.5 M from $2.1 M, driven by the roll-off of a large short-duration contract.
  • Positive Sentiment: Revenue in the three key growth end markets (marine, aerospace and power generation) rose a combined 15% year-over-year, led by an 83% jump in aerospace sales.
  • Positive Sentiment: The company generated $4.5 M in operating cash, ending the quarter with a record liquidity position of $16.1 M and a net cash position.
  • Positive Sentiment: Management is advancing multiple long-term offtake agreements across all three end markets, aiming to underpin final investment decisions and project financing for a Gulf Coast liquefier.
  • Negative Sentiment: EBITDA was further impacted by a nonrecurring charge of approximately $200,000 related to a foreign joint venture.
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Earnings Conference Call
Stabilis Solutions Q2 2025
00:00 / 00:00

There are 2 speakers on the call.

Operator

Welcome to the Stabilis Solutions Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants have been placed in a listen only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing 2. So others can hear your questions clearly, we ask that you pick up your handset for best sound quality.

Operator

Lastly, if you should require operator assistance, please press 0. I would now like to turn the call over to Andy Puhala, Chief Financial Officer. Mr. Puhala, please go ahead. Good morning, and welcome to Stabilis Solutions second quarter twenty twenty five results conference call.

Operator

I'm Andy Poujalla, Senior Vice President and CFO of Stabilis. And joining me today is our Executive Chairman and Interim President and CEO, Casey Crenshaw. We issued a press release after the market closed yesterday detailing our second quarter operational and financial results. This release is publicly available in the Investor Relations section of our corporate website at stabilissolutions.com. Before we begin, I'd like to remind everyone that today's conference call will contain forward looking statements within the meaning of the Private Securities Reform Act of 1995 and other securities laws.

Operator

These forward looking statements are based on the company's expectations and beliefs as of today, 08/07/2025. The forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected. The company undertakes no obligation to provide updates or revisions to the forward looking statements made in today's call. Additional information concerning factors that could cause those differences is contained in our filings with the SEC and in the press release announcing our results. Investors are cautioned not to place undue reliance on any forward looking statements.

Operator

Further, please note that we may refer to certain non GAAP financial information on today's call. You can find reconciliations of the non GAAP financial measures to the most comparable GAAP measures in our earnings press release. Today's call is being recorded and will be available for replay. With that, I'll hand the call over to Casey Crenshaw for his remarks. Thank you, Andy, and good morning to everyone joining us on the call.

Operator

During the second quarter, our teams were sharply focused on operational execution and deepening our customer relationships within our marine, aerospace and power generation end markets, which as we've discussed before, are the most promising long term growth opportunities for the company. Commercial discussions with both new and long standing customers are progressing well in all three end markets. We are working to secure long term customer commitments needed to grow the business and allow us to make investment decisions on capacity expansion. During the quarter, we saw revenue and EBITDA decrease year over year, primarily due to the successful completion of a large short duration industrial project last year. However, revenue in the three key growth end markets continued to expand with marine, aerospace and power generation sector revenues up a combined 15% year over year, driven by an 83% increase in aerospace revenues.

Operator

In the first half of the year, aerospace revenues have more than doubled from the same period in 2024, and we expect growth in this sector to continue. In the marine sector, we continue to perform well on our Gulf Coast bunkering contract with Carnival Cruise Lines. Growth in the sector is dependent on securing additional long term customer contracts, including contracts that will support our final investment decision for additional liquefaction capacity on the Gulf Coast. We are pleased with our progress on several potential LNG offtake agreements in the marine sector. In our power generation end market, we're seeing increased interest in LNG as a bridge and backup fueling solution to meet the rising electric demand from the data centers and other energy intensive infrastructure.

Operator

While this opportunity remains in its early stages, the projected long term growth in electricity demand is creating a broad range of use cases for our LNG solutions. We are actively engaged with multiple customers as they explore reliable, scalable options for distributed power. In conclusion, our strategic vision is clear and Stabilis has significant long term growth opportunities ahead. We're building Stabilis into the leading provider of last mile LNG solutions with a focus on becoming the partner of choice for certain key end markets. Our team continues to execute against this vision, demonstrating operational excellence and generating strong commercial momentum along the way.

Operator

We look forward to updating you in the coming months as we finalize new contract awards. With that, I'll turn the call back over to Andy to review our financial performance in detail. Thank you, Casey. I'll start with a discussion of our second quarter performance, followed by an update on our balance sheet and liquidity. Our revenues during the second quarter decreased 7% compared to the 2024.

Operator

As Casey mentioned, the decline in revenues year over year was primarily the result of the roll off of a large contract with an industrial customer that occurred last year. This decline was partly offset by an 83% increase in aerospace revenues and a 10% increase in our power generation market. During the second quarter, approximately 77% of our revenues were derived from aerospace, marine and power generation customers compared to 62% in the second quarter of last year as we continue to focus on these growth sectors. Adjusted EBITDA was $1,500,000 during the second quarter compared to $2,100,000 in the second quarter of last year. Adjusted EBITDA margin was 8.6%, down from 11.3 in the second quarter of last year.

Operator

In addition to the roll off of the short term customer contract previously mentioned, EBITDA was negatively impacted by a nonrecurring charge of approximately $200,000 related to our foreign joint venture. Cash generated from operations during the second quarter was $4,500,000 The strong cash generation resulted in a record liquidity position of $16,100,000 at quarter end consisting of $12,200,000 of cash and approximately $4,000,000 of availability under our credit facilities. With 8,400,000 in debt and lease obligations outstanding, we ended the quarter in a net cash position with no net debt and strong balance sheet flexibility that positions us to strategically deploy capital to support the growth of our business. Our capital expenditures were $600,000 during the quarter. As discussed on previous calls, as we finalize new customer commitments and the related capacity expansion, we expect an acceleration in capital commitments.

Operator

That concludes our prepared remarks. Operator, please open the line for the Q and A session. Thank you. Thank you. Our first question is coming from Martin Malloy from Johnson Rice.

Operator

Please go ahead. Morning. Good morning, Marty. Good morning. First question, just wanted to ask about the contractual agreements, the offtake agreements that it sounds like you've got a number that are in the works, and it it could be months within the next couple months that they're announced.

Operator

And just wanted to to get a sense if that was a correct interpretation of of of your statements. And then also the magnitude and the industries involved here? And are these going to be of the size and and tenor that would allow for project financing potentially? Yeah. Marty, why don't I start?

Operator

This is Casey, and then I'll let Andy come back in and and add some additional color. The way we're we see this is really all three of those growth segments that we talk about, the marine, aerospace and power generation, distributed power generation business, all of them have contracts that we're working on with multiple customers. And we have we're always in the business of signing new customer agreements. And when we think about duration, some are six months and then some of them keep getting extended and can go for multiple years. So they're all different in duration, but we're working on them in all three segments, numerous contracts in all three segments.

Operator

If we want to then kind of shift into kind of how those are going to allow us to deploy capital, if we would if we if we want to talk about aerospace, we're working on a a number of additional contracts there that would allow us to support additional capital expenditures to fulfill those or to support those contracts, power generation the same or distributed power. And then probably the most pointed question would be more around the marine sector, where we're working on a Gulf Coast liquefier to support the marine market. And that is where we've got a number of very large offtake agreements that we're working on finalizing the contracts on. And those would be enough to support FID and project financing around a project for that. So Andy may have some additional color on that, but I want to just cover it.

Operator

All three segments have different contracting and work around those that are much longer term in duration than just kind of spot work. Yes, that's right. Just to add that, I mean, these are multiyear offtake agreements with firm commitments. Okay. And then for my follow-up question, just wanted to ask about the timing of of once these contracts are announced.

Operator

I know you've got some equipment at George West for potentially doubling of capacity there or someplace else. You've got long lead time equipment already purchased. Could you make it sounds like this you've got potential agreements that would cover LNG needs in excess of that. Can you talk about the timing of getting additional liquefaction capacity online? And in the meantime, would you source the LNG potentially from other sources?

Operator

Yeah. Let let me start it. So first of all, you know, I'll take you back to the three big end markets that we're working in, marine, aerospace, and power generation. And if you think about power generation and with distributed power, around data centers and AI, you know, all of that is happening around the whole United States. And one of the things to remember about Stabilis is we don't only make our own LNG, we have supply arrangements with, you know, 30 plus other liquefiers around The United States.

Operator

So the power distributed power generation market, you know, it it's gonna determine if we're gonna add liquefaction capacity or if we're gonna deploy what we have as a fleet of the last mile liquefaction last mile LNG equipment, which is the on-site story and the vaporization equipment, which is very valuable, which we already have in our fleet. So we already have that part of it. And if it's close to one of our liquefiers, we'll get our own LNG. If it's not, we'll use one of our third party offtake agreements. When you think about aerospace, it's a lot the same, but the quality component of the liquid really requires it to be from specific places.

Operator

So a lot of that ends up coming out of our own liquefiers. And then when you're talking about marine, that would take a larger facilities to do on the water barge work and that will take new capacity. So if you talk about deploying new capacity, the quickest new capacity would probably be in George West. We already have facility there. We've already got the long lead equipment.

Operator

We can do that quickly. We're also secondly working on our Gulf Coast liquefier. Right now, we're spending money on engineering and and pre FEED work to prepare to deploy that, but that's a little bit longer than what you could get done at our site in George West. Great. Thank you.

Operator

I'll turn it back. Thank you. Our next question is from Tate Sullivan of Maxim Group. Please go ahead. Thank you.

Operator

Good morning. Casey, thanks for the comments on the Gulf Coast liquefier. And does completing that, is that the key variable to finalize some of the contracts you mentioned in the marine sector? Are there other variables to finalize new contracts such as support infrastructure? Yeah.

Operator

First of all, Tate, thanks for being on the call today, and welcome your question. Maybe I need to clarify a little bit. I may not have communicated it very well. The contracts are kind of the front end part, and then those would anchor the project financing to then put it in. So we're already actively working on and doing marine bunkering projects, you know, every day of the week in the Gulf Coast, as we stated with one of our big cruise customers.

Operator

And we're doing that through a truck to ship process, truck to barge ship process. These contracts that we're working on will underpin putting a new facility, what we call, on the water so that we can produce the LNG needed for those contracts on the water when I say on the water, next to the water where we don't have to truck the LNG in. So really what we're waiting on is these contracts that are long enough in tenure and duration to underpin the project financing so we can make the final investment decision to move forward. Oh, okay. Thank you.

Operator

And and for for those marine contracts, can you share? Or is it still mostly with cruise ship customers or the other types of shipping customer discussions? We are having numerous discussions with multiple end markets around the marine space. So if it's okay, Tate, we prefer to not share the details of all the different customer work we're doing around there, but we're definitely deep into the cruise space as we're currently delivering into that market today. Thank you, Casey.

Operator

Have a good day. Thank you. We'll take our next question from Spencer Lehman. Your line is open.

Speaker 1

Well, hi, gentlemen, and hi, Andy. Yeah. Afternoon. There's, you know, there's a lot of the macro picture for LNG is just, you know, very attractive and and there's a a lot going on with that. And last couple weeks ago when they announced that Europe was gonna spend, what, $750,000,000,000 in purchases.

Speaker 1

And certainly, the the the the overall picture is is just great for energy and and especially LNG and a lot of of course, a lot of hype on data centers. It just seems like there's a tremendous amount of of need for energy in the country. And, I mean, with also with the administration is certainly supporting that whole area. So I I think you're sort of in a sweet spot here, but the stock sort of, you know, small companies off the radar. And I'm just curious what what you're doing now or or could do to to get in order to get the story out.

Operator

Well, Spencer, that's a this is Casey. Let me start with I'll have Andy I'll have Andy kinda come back on it and and do some do some additional color and clarification. And I appreciate your question. And as a meaningful shareholder of the company, I feel the same thoughts around that that you just shared there. When I think about me being a shareholder of Stabilis and and and being here, We've been in we started Stabilis in 02/2012.

Operator

So we've got over a decade of of just high active real work in LNG. We've delivered just a ton of real products, a ton of real customers. We've got an amazing team of operational people, amazing team of the business development, engineering and just overall staff, and we're doing it every day of the week. And we have these big growth end markets that can just take the company and have a step change in both size of revenue and earnings. And so when I think about my investment in Stabilis, I I think about a a cash flow generating, positively operating LNG platform that's actively working on growing itself in three dynamic end markets.

Operator

To me, it's a great place to be. And when I think about long term, you know, I think, Buffett or someone said, you know, the stock market is a short term, you know, people talk about it. It's a a a you know, long term is a weighing machine. So as we continue to hit some of these long term contracts and grow the company, other investors will come in and want to be part of this amazing position that Stabilis is in, a current operating cash flow generating great small business with options to grow the business extremely large in these three end markets. And I think it's a great place to be.

Operator

I'm delighted to be a shareholder personally. Proud of it. And I think over time, other people will find that out and will join us as we hit our strategic vision for the company. And I'll turn it over to Andy on, like, tactically what your question might be. Yes.

Operator

Thanks, Spencer. Just to add to that. I mean, look, we're eager to get out and talk to the market and tell people what we've got going on at Stabilis. And we think that the key thing there is to get some of these contracts so that we have an opportunity to go out and have something exciting to talk about in the marketplace. And as Casey mentioned, we think we're closed on several transformative type projects.

Operator

And then we've got the opportunity to go out and give people some specifics to really think about and understand what that means for Stabilis. Until we have some of those specifics, it's kind of hard sometimes to get people as excited as we are about the opportunity. But believe me, we are excited. We don't get too focused on the kind of the quarter to quarter minutiae because you know, we think that this is really a long term a long term growth story. And, you know, we're we're, you know, we're we're very bullish about it.

Speaker 1

Well, thank you so much. Thank you, Casey. That was very encouraging and and enlightening. And my only problem is I'm gonna be 90 here in a few months. I'm I'm running out of time, so don't don't wait

Operator

too long. Well, we're we're not we're not we're not waiting. We're actively waiting that thing and and and the in the business, in the growth sections to have that step change and transformational deal. And and, you know, when I think about where Stabilis is gonna be in next three, five, and ten years, it's really exciting. It's exciting to be in the LNG manufacturing and distribution and part of that value chain of the gas.

Operator

And Stabilis is a great platform of that. And I think, Spencer, that ninety years is young is young now, and I think we look forward to many more years with you as a shareholder.

Speaker 1

definitely a long term, but long term now is like four or five years. So yes, but it's just a great atmosphere to be in right now with LNG, and I'm excited about it. And think things are ready to really happen for you guys. So thank you.

Operator

Thanks, Spencer. Thank you. Thank you. Thank you. This does conclude the question and answer portion of today's call.

Operator

I would now like to turn the floor over to Andy Pohala for closing remarks. Thanks, Leo, and thank you for all that joined us today. We appreciate your time and continued interest and support for the company. If you have any additional questions or simply want to learn more about what building at Stabilis, please contact me at our Investor Relations number. This concludes our call, and thank you all very much.

Operator

Thank you. This concludes today's Stabilis Solutions second quarter twenty twenty five earnings conference call. Please disconnect your line at this time, and have a wonderful day.

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