Stabilis Solutions Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
May 11, 2023

There are 8 speakers on the call.

Operator

Morning, ladies and gentlemen, and welcome to Stabilis Solutions First Quarter 2023 Earnings Conference Call. Joining us today are Westy Ballard, President and CEO and Andy Puhalla, Chief Financial Officer. 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. These forward looking statements are based on the company's beliefs and expectations as of today, May 11, 2023. Forward looking statements are subject to the risks and uncertainties that may cause actual results to differ materially from those projected.

Operator

The company undertakes no obligation to release updates or revisions to the forward looking statements made in today's conference call. Call. Additional information concerning factors that could cause those differences is contained in the company's filings with the SEC and the press release announcing the company's results. Investors are cautioned not to place undue reliance on any forward looking statements. Call.

Operator

Please note that the company 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 the company's earnings press release. Today's call is being recorded. Call. At this time, I would like to turn the call over to Westy Ballard, President and CEO of Stibulus Solutions.

Operator

Please go ahead, sir. Call.

Speaker 1

Good morning, everyone, and thanks for joining us. I think we may have several new attendees on our call today. So before getting into the business results, Let's quickly take a step back and take a look at an overview of our company. We are an environmental transformation company and currently one of North America's largest providers Small scale liquefied natural gas with future aspirations of expanding our offerings into additional clean emerging fuels. We own and operate 2 strategic liquefaction plants and we also source LNG from over 30 supply points in the U.

Speaker 1

S. Call. We have a robust and highly mobile asset base and we believe we have the most comprehensive turnkey commercial, technical and engineering capabilities In the market to assist customers in the design, engineering and implementation of their fueling needs across the U. S, Canada and Mexico. Call.

Speaker 1

Our company serves 2 primary markets, industrial and marine. Our industrial business is our core legacy business and services companies across multiple industries including mining, pipelines, remote power, food and agriculture, Utilities, Oil and Gas and General Industrial. This business also includes a growing presence in the aerospace industry. Call. Sales cycles in our core industrial business tend to be shorter with minimal capital investment required.

Speaker 1

Aerospace has similar characteristics. However, as private rocket launch programs mature, we believe longer, more ratable commercial relationships are more likely. In the maritime industry as well as the exportation of LNG outside the U. S. Sales cycles in both portions of our marine business tend to last longer, involve larger, more predictable LNG volumes and will require considerable infrastructure and technical know how as vessel operators and carriers better understand their needs.

Speaker 1

Call. And turning to the quarter, we had a solid start to the year where we made progress across several of our priorities and our capabilities continued to grow. Commercial interactions across all of our business lines have steadily increased and we are excited to continue to build upon a substantial progress made in 2022. Call. In our industrial business, demand was strong across multiple sectors with oil and gas, agriculture and food and remote power leading the way.

Speaker 1

As I've said in the past, the diversity of end markets we serve is one of the great attributes of our company and the Q1 was no exception. We anticipate demand to continue in this business due to 3 primary drivers. 1st, LNG is generally less expensive than other fuel choices. Call. 2nd, many off grid and off pipeline gas customers require last mile virtual pipelines and third, the drive toward cleaner fuels.

Speaker 1

As we continue to identify ways of maximizing revenue and margin opportunities with our existing customer base and stimulating new and profitable demand in new sectors and geographies. We feel confident in our ability to execute given positioning as one of North America's largest turnkey providers of last mile delivery to the industrial sector. During the quarter, our marine business experienced solid activity too. Operationally, we safely and successfully completed a significant short term bunkering project that call for the delivery of several 1000000 gallons of LNG sourced from a large trading position spread among several supply points supported by our own sizable engineering and supply chain. Our commercial, technical and operational expertise continues to give us A tremendous advantage in the market and makes us uniquely qualified to execute bespoke bunkering solutions to vessel owners and operators designing LNG bunkering fuel in North America.

Speaker 1

Our rapid planning process and unmatched mobile asset base Afford us the ability to quickly deliver fuel across a variety of geographies, which was on display during the quarter as we Successfully executed marine operations along the East, Gulf and West Coasts and contributed roughly 28% of total revenue for the quarter compared to 4% in the Q1 of 2022. As we progress, this continues to be an exciting opportunity for scaled growth at our company driven by the International Maritime Organization's key mandate requiring that lowering the sulfur emissions in the maritime industry. Ship owners and operators have to quickly identify ways to become compliant through meaningful investments in their existing fleets and or adopt alternative fuels for propulsion. This paradigm shift spawned a massive increase of newbuild orders for the LNG fueled vessels, resulting in a number of vessels growing exponentially from roughly 285 in the world today to over 700 over the next few years. Call.

Speaker 1

In doing so, these vessels need fuel. Currently, the vast majority of LNG bunkering occurs outside the U. S. However, given the United States' favorable competitive positioning in natural gas, so supply, reliability, security and price, The U. S.

Speaker 1

Has tremendous potential to be a premier bunkering hub. This will require considerable technical, operational and infrastructure capabilities. Barriers to entry are high and for a supplier to ultimately be successful in bunkering, they must have the ability to source and deliver volumes and scale, They must have the mobility and flexibility to bunker in a variety of ports. They must have considerable technical and supply chain capabilities, and And they must have the ability to deliver fuel simultaneously with vessels loading and unloading their respective cargoes or passengers. Call.

Speaker 1

While we have had great success over the last few quarters delivering bunkering solutions to customers and we continue to materially increase the number of commercial discussions with Prospective customers, it is important to note that the U. S. LNG bunkering market, while growing, is still at an early stage. As I mentioned earlier, unlike our industrial business, marine commercial cycles have long lead times and many prospective customers are still in the process of determining Their strategies for fueling their new assets, many of which won't hit the market until next year. In the meantime, we will continue to lay operational foundation in addition to evaluating the expansion of our assets and infrastructure to capitalize on this most exciting market.

Speaker 1

The U. S. Department of Energy has granted us a very compelling as increased demand, geopolitical uncertainty and dislocation in natural gas prices continue, We are well positioned to be a valuable participant in the export business. We will work diligently to expand our scale call. And our business to be successful, additional capital and operational investments will be required.

Speaker 1

As we think about financing, we will explore a variety of prospective debt And equity sources of capital with heavy emphasis and focus on those that know our industry and our company. One of the attractive components to small scale LNG is the ability to rapidly deploy capital in a modular fashion with potentially strong and quick returns on capital. Our prospects are exciting and certainly not short term. Stabilis is very much positioned as a long term growth story and a highly asymmetrical opportunity to invest in a rapidly growing company with a proven and durable business model diversified across multiple sectors and geographies. And with that, I will turn it over to Andy to discuss the quarter results.

Speaker 2

Thanks, Westy, and good morning, everyone. Stabilis had another good quarter in Q1 building on the performance we saw last year and generating positive net income and double digit EBITDA margins for the quarter. Call. For the Q1 of 2023, Stabilis reported revenues of $26,800,000 32% higher than the year ago quarter, but down 9% from the Q4 of 2022 in part due to the completion during Q1 of a short term bunkering project that Westy referred to in his comments. Net income from continuing operations was $1,100,000 in the quarter compared to a net loss from continuing operations of $400,000 in the year ago quarter.

Speaker 2

Net income from continuing operations was $200,000 in the Q4 of 2022. Adjusted EBITDA for the quarter was $3,500,000 compared to $2,000,000 in the year ago quarter and $3,900,000 in the Q4 of 2022. We ended the quarter with $7,900,000 of total available liquidity. The reduction in cash balances from the 4th quarter relates to the purchase of liquefaction, bunkering and storage assets, which can be quickly deployed to a variety of locations to support anticipated growth. Call.

Speaker 2

We have sufficient liquidity to fund our operations and we believe we have access to a variety of capital sources to fund our growth initiatives.

Operator

Call. Call. And the first question today is coming from Martin Malloy from Johnson Rice. Martin, your line is live.

Speaker 3

Call. My first question, I just wanted to ask about something that was in the press release. The comment about results call. In the next couple of quarters, maybe uneven as individual projects are completed. Could you maybe talk a little bit more about call.

Speaker 3

Those projects and what's causing the uneven results? Is it additional expenses that are incurred when the projects come online?

Speaker 1

Call. Yes. So if you put in the 2 buckets that we talked about the industrial much shorter sales cycles, but really what we're referring to is that marine side and That's still in its nascent stage of expansion. And so there's going to be some lumpiness as these vessel owners and operators Make, I think, poignant decisions in and around how and where they want to have infrastructure to bunker. And so we were successful and have been successful and operated on 3 coasts in the Q1.

Speaker 1

And I anticipate us To continue to operate across a variety of geographies moving forward, it's just it's going to be a little lumpy until that business matures. And you also got to remember A large portion of those newly commissioned LNG ships aren't going to hit the market really to the beginning of next year. And so there's a lot of foundational work that's being built today. It doesn't mean there aren't bunkering opportunities right now, but the real scale starts Beginning next year and that's what we're laying a solid foundation for is to have infrastructure or at least site line to infrastructure, site line to backlog, Obviously marrying those up as best as possible. And so it's going to be a little choppy in that business between now and the rest of the year.

Speaker 1

But make no mistake, the lens in which we're looking through with potential in the future is considerable.

Speaker 3

Call. And could you maybe talk about how you're thinking about expanding potentially liquefaction capacity in light of that expected demand call that you see increasing?

Speaker 1

Yes. Without getting into specifics, we are looking at brown and greenfield Expansion across multiple geographies, certainly in the U. S. And that's not relegated just to the Gulf of Mexico. That's the East Coast, that's the Mid Atlantic In the East Coast, that's down in the Florida region, that's up and down the entire West Coast.

Speaker 1

There are a variety of opportunities For us to be thoughtful around the deployment of capital to service what we see is the potential for considerable demand. Again, there's a pace of play here. You don't want to get too far ahead in your supply chain until you have a little bit more affirmation in your commercial side. Call. But at the same time, you don't want to have a massive amount of commercial opportunities and not doing the preparing your infrastructure and supply chain.

Speaker 1

So we made some steps in that direction in the Q1. As Andy alluded to, we put some capital dollars to work And some mobile and modular storage, bunkering and liquefaction capabilities. One of the great things as I mentioned about this business is that, That can move to a variety of different geographies. We have some thoughts around where it's going to go. But we are we're giving ourselves a really fluid and flexible platform and spending some money in advance to be ready primed and ready to go as this commercial book of business continues to expand like we think it will.

Speaker 3

Call. That's great. Thank you for taking my questions.

Speaker 1

Yes. Thank you.

Operator

Thank you. The next question is coming from Barry Hames from Sage Asset Management. Barry, your line is live.

Speaker 4

Good morning. Good quarter, guys. Thank you. Ed, two questions. One is, is call.

Speaker 4

BunkGreen profitable yet? And if not, what sort of size does it need to get to, To get into profitability, so a little flavor for that. And secondly, you broke out the percent revenues for Mercury, but Could you do a similar thing for aerospace? What percent of revenues were aerospace during the quarter? And how might that compare to

Speaker 1

a year ago or last quarter? Thanks. Call. Yes. So bunkering is profitable today, absolutely.

Speaker 1

It's one of the benefits is that There's a lot of utilization from our core industrial business, some of the technical aspects, some of the operations, engineering, even equipment That is absolutely utilized for bunkering. The real main difference And bunkering versus our core kind of industrial business line is really the kind of the sales cycle and it's just longer lead times And around the reasons I just mentioned, there will be some additional kind of CapEx, not necessarily there'll be some OpEx, but some CapEx for infrastructure That's unique to that marine business, but absolutely it's a profitable day and it's our aspirations To have that trend continue as we kind of venture into the future and scale that business. Aerospace For the quarter, I think, Andy, was a little over 5%. And comparing that to the Q1 of last year, it was down about 300 basis points more or less. Call?

Speaker 1

That's until there's longer term ratability in that aerospace business, it's going to be very similar to the industrial kind of shorter sales cycles, Demand from our space customers, as you can see some of the trial and error that goes on in that space business, Sometimes you'll get an onslaught of needs and sometimes it'll be somewhat of a dormant sales cycle. But I think ultimately as the private sector continues to mature call. Their operations and get more consistent in their kind of pace of play, we expect there to be more ratability in space. Call? It's just not there right now, but we feel pretty good that in the intermediate and long term it will be.

Speaker 1

Call.

Speaker 4

Great. Thanks very much.

Speaker 2

Yes.

Operator

Thank you. The next question is coming from Bill Dezellem from Tieton Capital. Call. Bill, your line is live.

Speaker 5

Great. Thank you. A group of questions. First of all, relative to The growth in revenue versus the Q1, I think you referenced take or pay in the press release was a meaningful part of that. Would you discuss kind of just the commercial realities behind what led to call.

Speaker 5

The take or pay fees and presumably that's roughly 100% margin as opposed to had those customers taken the gas call. That would have been a more traditional gross margin. Yes.

Speaker 1

And so you got to understand that there's not kind of one size fits all bunkering operation. You have call. Offtake with a variety of different customer types that have different Rationale for bunkering, we will sometimes be a direct supplier to the vessel operators and owners. Sometimes we'll be a subcontractor, sometimes we're providing a complete turnkey solution with engineering product design, development, regulatory Fuel supply, sometimes it will be 3rd party. So there's not one size fits all.

Speaker 1

So you got to look at the totality. And so to the extent that you've got Take or pay, there may be instances where commodity prices shift or change and a customer That changes the perspective and their desire to take that fuel and so they'd rather pay a penalty. Other instances where call? Their offtake or their needs are high and their operational tempo is high and they want to take the fuel. You have disruptions in vessel ports of call.

Speaker 1

You have just a variety of things, Bill, That can contribute. So it's hard to really kind of pinpoint it to one thing, but looking at the totality of it is really the way to think about that.

Speaker 5

Call. That's helpful, Westy. So this the take or pay this quarter Had nothing to do with warm weather in the Northeast and the baseloading that you have been supplementing historically. Call. This is in the bunkering arena?

Speaker 1

That's correct. That's exactly right.

Speaker 5

Okay. That's quite helpful. Thank you. And And then relative to the sequential decline in revenues, what industries led To that change?

Speaker 1

That's really around the oil and gas industry. That's we love it. We love that part of our business. I'm glad it's got the weighting that it has. In our prior life, it was a much heavier weighting.

Speaker 1

But that's there's some ebbs and flows in the oil and gas world and that That was the main driver.

Speaker 5

And so I'm totally breaking the rule. The operator asked for one question only, so you can cut me off at any time you'd like. But I guess the rig count and the completion activity call. Seemed to be somewhat steady in the Q1. So did you have something just a customer making decisions To pull back or what changed there that maybe we wouldn't see with looking at the rig count call?

Speaker 5

Or completion count?

Speaker 1

Yes. I'll answer that in 2 ways. 1, this one was more specific to really centered around 1 customer. But more broadly speaking, remember that there are a variety of different off take points in the oil and gas business. And so you can have people who are under extensive maintenance or Unplanned outages or there are a variety of things that can contribute to a decremental revenue as well as an incremental.

Speaker 1

Yes. Rig count could increase, but it's not solely dependent upon just rig count. There are a lot of other kind of drivers that could enhance or reduce revenue output from our perspective in the oil and gas business.

Speaker 5

Thank you. And then Natural gas prices in the U. S. Are much lower than they have been in 2022. I guess it raises the question, does the lower natural gas price drive increased interest from call.

Speaker 5

Prospective customers, I guess the question is how much did just pure economics in terms of cost savings call. That will lead to your prospective customers making a decision to use LNG?

Speaker 1

So let's talk about a couple of venues. Call. I think it's a huge contributing factor that kind of spread between alternative fuels and LNG. Call. And you mentioned it with natural gases in that kind of 2 handle or slightly above, we feel like we are very well positioned.

Speaker 1

And especially as I mentioned the demand that's come of prospective customers wanted to potentially even talk to us about longer term positions over several years to capitalize on these lower prices, a bit of arbitrage on their part and that's been a really Strong kind of inbound for us as well as we have proactively been utilizing that as a proactive sales tool As we talk about new and incremental customers, the price has been and continues to be a driver along with obviously the demand and the ESG And cleanliness of natural gas, but make no mistake price has and we feel we'll continue to be a driver now and in the future.

Speaker 5

Call. Thank you. And then one additional question to expose my ignorance here. The ultra low sulfur The DSOIL IMO 2020 standards went into effect, I think, in 2020. And so I guess the question is, Why is this business still increasing?

Speaker 5

It seems as though, I guess thinking out loud, that call. The shipping companies should have made the transition 2 or 3 years ago. What am I missing here?

Speaker 1

Call. You're not missing anything and you're right, they should have. But oftentimes, we don't necessarily react They or one doesn't necessarily react as expeditiously as they probably should have. And I think the cold, hard reality, not only call. Of the IMO having this mandate to lower sulfur emissions, call it in the 85% range, But you kind of pair that with some of the pressure of a lot of the retail and other Shipping customers who are starting to be more vocal about their expectations for their shipping carrier providers To provide a cleaner, more sustainable solution, I think that's also been the impetus for a lot of these shipping operators and owners to Really get off the center and start doing something about this.

Speaker 1

And they have. Remember, these ships aren't built in a matter of weeks, they're built in a matter of years. And so there's a quite a bit of lead time. And so for ships that are already have been commissioned, those that were commissioned this year And those that will be commissioned thereafter, you talked about maybe 1 to 3 years in advance. And so it's an engineering marvel.

Speaker 1

It's a lot of different things that go into this. And so Some have waited, some have not. There's no real good answer to the question other than what would what your instincts would tell you.

Speaker 5

Call. So Westy, to what degree would you agree with this statement that the regulatory teeth call. Around IMO 2020 have been soft enough that it has really allowed the shipping companies to use call. The effective date of when they were supposed to be done almost as the start date On when they could go to the regulators and say, yes, gosh, so sorry, we're in progress. Look what we're doing, we've ordered a ship, we're making this transition, Etcetera, etcetera.

Speaker 5

And that really lengthens out the true economic for you. Expense for them and then the start up time for you all. Yes. I don't

Speaker 1

it's hard to really kind of Put myself into the hearts and minds of the owners and operators. I'll say that one of the things you got to remember is these are predominantly dual fuel vessels. And so it's not like they are holistically running LNG. What they're trying to do is create either arbitrage or optionality for themselves based upon availability of the lowest Price point in the highest energy density fuel in the markets in ports of call that they call on. And so it does Mean that these ships can also run diesel, low sulfur diesel, they will.

Speaker 1

And in some instances, they're going to have to because there's the torque and idle time When they docked that LNG is not as responsive. So there's other kind of engineering and technical reasons, But for me to say that they waited until there were some teeth, I don't let any answer that. I can say that this time last year, there were about 100 ships call. In and around the market that we're focused on, the subset of the bunkering and that's going to grow about 7 fold over 4 years, call. Some of which placed the order several years ago, some are placed now.

Speaker 1

So it's I think the bigger takeaway is if you look at the scale of this business Over the next 1, 2, 3 years, it's considerable. It's considerable. And 9 times out of 10, to the extent that A shipping company can bunk with LNG. We have very strong reasons to believe that they will. It's just and they want to do that in the U.

Speaker 1

S. Given the price arbitrage. It's just we organizationally and as a kind of And industry, we need to be making that availability a reality with infrastructure and supply chain and technical know how. Yes. You don't just show up in bunker shift.

Speaker 1

There's a lot that goes into it and high barriers to entry as I mentioned. And we think we are far, far, far in a way One of the leaders along that continuum in doing so.

Speaker 5

Great. Thank you for taking all my questions. Really appreciate it.

Speaker 1

Yes, of course. Thanks, Bill.

Operator

Call. Thank you. The next question is coming from Liam Burke from B. Riley. Liam, your line is live.

Speaker 6

Thank you. Good morning, Westy. Good morning, Andy.

Speaker 1

Good morning.

Speaker 7

Wessy,

Speaker 6

in terms of LNG export, What types of customers are you fielding inquiries from? And what kind of volumes are people talking about?

Speaker 1

Call. So think kind of 20,000 cubic meter vessels and smaller. Okay. So this obviously is not a world scale business for us, But if you just did simple math around the art of the possible, the Department of Energy has given us a license to export up to kind of almost just shy of 52 Bcf of natural gas equivalent annually. And call.

Speaker 1

This year was a little bit challenging just given the unseasonably warm climate certainly in the European call. Realm, but we have strong conviction that over the next 28 years or 27 years of our license that it's going to get cold again in Europe. Call. And it's a bit of a gamble, I guess. But what we want to yes, exactly.

Speaker 1

But what we want to do is, we'd be remiss if we didn't at least kind of prime the pump and have our infrastructure and ducks call. In a row, because I mean, it could happen as early as this fall as forecasters start to think about Geopolitical unrest in some of these international markets and you start thinking about some of these cold weather environments, we want to be ready to go. I don't Not anything tangible right now, but rest assured we are ready to fuel vessels and we will be ready to fuel vessels at kind of the 20,000 cubic meter and below.

Speaker 6

Okay. And you talked about servicing 3 ports, I believe, now with LNG Bunkering. Call. Obviously, this is a scale where you have to combine sourcing and then provision, but how many Additional ports do you think you'll begin to service this year?

Speaker 1

Good question. I think ultimately It's going to obviously depend upon that pace of play. But I think when the dust settles, whether it's this year or the next, we'd like to be call. 6 or 7 different geographies in around North America. I'm not trying to not answer your question, but There's a lot of different things that we are evaluating literally as we speak.

Speaker 1

And so stay tuned on that. And you're right. You've got to at this point in time source or have trading positions across a variety of different supply points. That's what we do. We are really, really good at that.

Speaker 1

And to the extent that I have other competitors out there, that's just not kind of their competency. And so We're pretty proud of our capability there. We're really good at that. We'll continue to do that. We'll continue to supplement that with kind of green and brownfield infrastructural call.

Speaker 1

Investments. So we're really excited about having a pretty broad network in that North American market over the next year, 2, 3 years.

Operator

Call. And the next question is coming from Spencer Lehman. Spencer is a Private Investor. Spencer, your line is live.

Speaker 7

Call. Hi, guys. Good report and you're in a lot of exciting interesting areas and Unfortunately, you're sort of off the radar as far as the financial community. I know you're a small company and but I'm just wondering, It's a long wait in between quarterly reports. And I'm just wondering if you could as long as you're not hurting any competitive Advantage, could you come out with some news more often as far as maybe a new contract or a new area or You know what I mean?

Speaker 1

Yes. Good point and thanks so much. I think kind of my perspective is When I joined the company, call it roughly 18 months ago, I wanted to make sure that we had an optimized business and an optimized kind of approach. Call. We, I think, have made great strides in doing so.

Speaker 1

And then in addition to that, I want to make sure that, Spencer, we had some real commercial meat on the bone and tangibility. What I don't want to do is I don't want to be a, I would say, it's just kind of a press release machine, But I think it stands to reason that over the next several quarters years that the pace And velocity and volume of interaction with investors will increase as we continue to do our job, Because we'll just have more tangible things to talk about. But over the last 18 months, we want to make sure our house is in order and I think it is. And now the real exciting stuff call is hopefully going to start bearing fruit. And so we'll be thoughtful around that and I think hopefully more vocal around that as well.

Speaker 7

That makes good sense. And I didn't mean to for you to hype the stock with the announcement as much as just out of interest. I get call. Inpatient waiting so long in between. So what is it you can do that is not expensive or as you say competitively call.

Speaker 7

Disadvantaged you.

Speaker 1

Yes, I understand it, Al. Rest assured, you're not the only one that's impatient, I promise you.

Speaker 5

Call. All right. Thanks. I

Speaker 1

am too. Thank you, Spencer.

Speaker 7

Thank you.

Operator

Call. Thank you. And next we have a follow-up from Barry Haims from Sage Asset Management. Barry, your line is live.

Speaker 4

Call. Thanks. Yes, I had 2 quick follow ups. 1, on the bunkering business, you mentioned that call. About 100 ships serve the U.

Speaker 4

S. Market or in markets where you would serve to date. So Can you give us some feel for how many of those 100 you've served to date, just a feel? And then secondly, call. Just looking at next year, 2024, how many ships new ships will be coming into the market compared The 100.

Speaker 4

And then second question, let's do that one and then I have one on the export license.

Speaker 1

Yes. So on the 100, call. I'm not going to get into the actual specifications around how many. I will say that the good news is call. The bad news is it's a small percentage, but the good news is it's a small percentage, meaning there's a tremendous amount of runway for us And go get for us to go get.

Speaker 1

And so we're really excited about that. Sorry, second question was?

Speaker 4

Call. How many new ships coming into the market next year?

Speaker 1

I'd have to circle back with you on that. I don't have that exact number. Call. And so let us get back to you on that one if we can.

Speaker 4

Okay, great. And then the one question on the export licenses. The way you described it, Westy, is it fair to say that what you really have is a call option call. Should Europe have a cold winter and need spot cargoes? Is that the right way to think about it?

Speaker 1

That is. And so there's a couple of ways to think about this. One is it's a call option, Whether it's Europe or elsewhere, remember, I'm not relegated just to Europe. I've got a license to go to all free trade and non free trade, obviously non OFAC, But all those countries outside of Europe as well are all fair game for me provided that we as Americans are allowed to export. Call.

Speaker 1

And so that's all very much in play. But also, we'll look at this through a couple of different lenses. There may be scenarios where we are Very comfortable with that counterparty and we generate maybe margin in the U. S. Market, but sharing some upside Commercially abroad as they place those molecules internationally.

Speaker 1

There may be other instances where we're not enthusiastic about that kind of commercial model. But we think we've got a tremendous amount of flexibility to do a variety of different things globally. Call. There's opportunities where maybe there's some ratability to this. Maybe somebody wants to sign on for 6, 9, 12 months of offtake.

Speaker 1

Some might be more opportunistic. I'm just excited that I'm not pigeonholed into one kind of business model. And yes, we've got to use your word optionality and And flexibility across a variety of different commercial and operational fronts that allow us to really yield results from our export business.

Speaker 4

Great. Thanks so much.

Speaker 5

Yes.

Operator

Call. Thank you. And next up, we have a follow-up from Spencer Lehman. Spencer, your line is live.

Speaker 7

Call. Yes, you guys didn't talk too much about some of the alternative fuels that you sort of have in the background in case call. There's a lot of anti fossil fuel mentality developing in the country and do away with gas stoves and etcetera. And Just wondering if that's something that you can talk about a little bit and whether it's hydrogen or whatever you have. Call.

Speaker 7

Yes.

Speaker 1

No, that's a good question and thanks for bringing that up. We very lightly touched On our aspirations to expand those offerings to additional kind of clean and emerging fuels. And I think the way to think about this It's kind of how we want to iterate into that. Said differently, our first kind of I think goal would be to have fuels that Really in partnership or great marriage to our LNG businesses. Think biofuels, think renewable RNG, I think RNG and other kind of areas that can marry into that.

Speaker 1

But also along the continuum, there's going to be, I think, a continuing Expanded demand for methanol in the shipping business. And so that's something that we're looking at. We're looking at ammonia. Hydrogen is one of those tricky ones, not that we're rolling it out and we absolutely are putting teams around that To further evaluate that, I don't think hydrogen is kind of the here and now for us today. I think there are other bespoke kind of clean emerging fuels That act is real companion to our LNG business.

Speaker 1

So I don't know if that answers your question.

Speaker 7

Yes, that's good. The more you can talk about that, I think it for certain parts of the investment community that might be really interesting.

Speaker 1

Call. I'll tell you one last kind of anecdote here is I don't want to in 2 years Have our head in the sand and not being, I think, thoughtful and open about the art of the possible and realities around call. The introduction of other clean fuels into our offering. And so we aren't waiting. We are building Capabilities around that today realizing it might be tomorrow, but today we want to start getting smart and thoughtful around how we're going to attack this.

Speaker 7

Call. Sounds good. Thank you.

Speaker 1

Thanks, Spencer.

Operator

Thank you. This does conclude Call. There are no more questions in queue. I would now like to hand the call back to Westy Ballard for closing remarks.

Speaker 1

Call. Great. Thanks again for joining us and we look forward to seeing you out on the road in the market very soon. Take care.

Powered by Quartr
Earnings Conference Call
Stabilis Solutions Q1 2023
00:00 / 00:00