Stabilis Solutions Q1 2025 Earnings Call Transcript

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May 8, 2025

Key Takeaways

  • First quarter revenue declined 12% year-over-year, and GAAP net loss was $1.6 million, primarily due to planned marine bunkering downtime and completion of a major short-duration industrial project.
  • Marine and aerospace revenues grew over 13% year-over-year, driven by increased activity with a major aerospace customer, boosting the company’s positioning in high-growth end markets.
  • Operating cash flow reached $1.0 million (50% conversion of adjusted EBITDA), and the company exited the quarter with $12.5 million in liquidity and essentially no net debt.
  • Management is evaluating potential expansions of liquefaction capacity in South Texas and along the Gulf Coast, with final investment decisions contingent on securing new commercial contracts expected by Q3.
  • Stabilis continues to target “distributed power” opportunities—spanning AI data centers to digital mining and microgrids—alongside its core marine bunkering and aerospace segments.
AI Generated. May Contain Errors.
Earnings Conference Call
Stabilis Solutions Q1 2025
00:00 / 00:00

Transcript Sections

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Operator

Welcome to the Stabilis Solutions First 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 opened for your questions following the presentation. It is now my pleasure to turn today's call over to Andy Chief Financial Officer. Sir, you may begin.

Andy Puhala
Andy Puhala
SVP, CFO & Secretary at Stabilis Solutions

Good morning, and welcome to Stabilis Solutions first quarter twenty twenty five results conference call. I'm Andy Puhala, 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 first quarter operational and financial results. This release is publicly available in the Investor Relations section of our corporate website at stabilis solutions dot 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.

Andy Puhala
Andy Puhala
SVP, CFO & Secretary at Stabilis Solutions

These forward looking statements are based on the company's expectations and beliefs as of today, 05/08/2025. 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.

Andy Puhala
Andy Puhala
SVP, CFO & Secretary at Stabilis Solutions

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.

Casey Crenshaw
Casey Crenshaw
Executive Chairman, Interim President & CEO at Stabilis Solutions

Thank you, Andy, and good morning to everyone joining us on the call. Our first quarter results reflect the continued execution of our strategy to pursue long term growth across our core end markets, including marine bunkering, aerospace, power generation. These markets are supported by significant multiyear demand ranging from rising remote power needs and marine fuel transitions to the growth of commercial space industry. Revenue and adjusted EBITDA declined this quarter, primarily due to planned downtime with a key marine bunkering customer and the successful completion of a major short duration industrial project in the third quarter of last year. While these factors affected our near term results, they do not reflect the underlying momentum in our business.

Casey Crenshaw
Casey Crenshaw
Executive Chairman, Interim President & CEO at Stabilis Solutions

Revenue in our marine and aerospace markets grew by more than 13% year over year, driven primarily by increased activity with a major aerospace customer. We continue to advance commercial discussions across all of our end markets, both with new customers and longstanding partners. Our strategy remains focused on expanding our position as the leading small scale LNG supplier within these high growth sectors, where access to traditional LNG supply infrastructure is limited. Looking ahead, we're actively positioning the business to scale alongside our customers by making targeted operating expense investments in our commercial, technical and operations teams to support future growth. These growth focused costs are fully reflected in our results, yet we continue to generate consistent positive operating cash flow.

Casey Crenshaw
Casey Crenshaw
Executive Chairman, Interim President & CEO at Stabilis Solutions

As we secure additional contracts, we plan to expand our footprint to meet growing demand. We continue to evaluate the potential expansion of our liquefaction capacity in South Texas and along the Gulf Coast. While no final investment decision has been made, this remains a key first part of our long term growth strategy. In the near term, we expect steady utilization and demand under existing contracts with upside potential as we convert new opportunities into signed agreements. Changes in U.

Casey Crenshaw
Casey Crenshaw
Executive Chairman, Interim President & CEO at Stabilis Solutions

S. Trade policy and tariff regimes are not expected to directly impact our business. Approximately 95% of our revenue comes from U. S.-based customers utilizing domestically sourced natural gas. From a capital allocation standpoint, we remain focused on maintaining a strong balance sheet and liquidity position.

Casey Crenshaw
Casey Crenshaw
Executive Chairman, Interim President & CEO at Stabilis Solutions

This approach ensures we are well prepared to fund future growth and capitalize on long term demand we see ahead. With that, I'll turn the call back over to Andy to review our financial performance in more detail.

Andy Puhala
Andy Puhala
SVP, CFO & Secretary at Stabilis Solutions

Thank you, Casey.

Andy Puhala
Andy Puhala
SVP, CFO & Secretary at Stabilis Solutions

I'll start with a discussion of our first quarter performance followed by an update on our balance sheet and liquidity exiting the quarter. Our revenues during the first quarter decreased 12% compared to the first quarter of twenty twenty four, but were modestly higher when compared to the fourth quarter of twenty twenty four. The decline in revenues on a year over year was primarily the result of the roll off of a large contract with an industrial customer, the temporary impact from a week of planned downtime with a major marine customer, partly offset by 147% increase in revenues from aerospace customers as we continue to grow our presence in that market. Power generation revenues remain consistent with Q1 of twenty twenty four. During the first quarter, approximately 51% of our revenues were derived from marine and aerospace customers compared to 39% in the first quarter of last year.

Andy Puhala
Andy Puhala
SVP, CFO & Secretary at Stabilis Solutions

First quarter GAAP net loss was $1,600,000 or $09 per diluted share compared to net income of $1,500,000 or $08 per diluted share in the first quarter of twenty twenty four. Our GAAP net loss during the quarter reflects a nonrecurring impact of approximately $2,100,000 relating to executive transition costs during the quarter. Adjusted EBITDA was $2,100,000 during the first quarter compared to 3,100,000 in the first quarter of last year. Adjusted EBITDA margin was 11.9%, down from 15.7% in the first quarter of last year. The decrease in our adjusted EBITDA was primarily the result of lower revenues, while our adjusted EBITDA percentage declined due to lower equipment and labor revenues associated with the completion of a customer contract.

Andy Puhala
Andy Puhala
SVP, CFO & Secretary at Stabilis Solutions

Cash generated from operations during the first quarter was $1,000,000 representing a conversion rate of 50% of our adjusted EBITDA. This cash generation continued to support a strong liquidity position of $12,500,000 at the end of the first quarter. Capital expenditures declined in the first quarter on a sequential basis due to the timing of capital needs involved in our ongoing efforts to invest in our infrastructure along the Gulf Coast. During the quarter, our CapEx was $05,000,000 with about 70% of those expenditures going towards growth initiatives. Our growth investments during the quarter primarily focused on front end engineering and design studies for our potential Gulf Coast expansion.

Andy Puhala
Andy Puhala
SVP, CFO & Secretary at Stabilis Solutions

As Casey noted, the success of our ongoing commercial initiatives will be a critical stepping stone for continued growth investment, which will require incremental capital as we make final investment decisions on these key investments. As of 03/31/2025, Stabilis had total cash and equivalents of $9,000,000 together with $3,500,000 of availability under our credit facilities. With $9,100,000 of total debt outstanding, we ended the quarter with essentially no net debt and strong balance sheet flexibility. That concludes our prepared remarks. Operator, please open the line for the Q and A session.

Operator

Absolutely. The floor is now open Our first question comes from Martin Malloy with Johnson Rice. Please go ahead. Your line is open.

Marty W. Malloy
Director of Research at Johnson Rice & Company L.L.C.

Good morning. Thank you for taking my questions.

Andy Puhala
Andy Puhala
SVP, CFO & Secretary at Stabilis Solutions

Good morning, Marty.

Marty W. Malloy
Director of Research at Johnson Rice & Company L.L.C.

First question I just wanted to ask about is on the contracting side. And the last call you mentioned that you had moved that additional liquefaction train down to George West area, I believe. Just if you could give any more color in terms of where you are in terms of timing of being able to get commercial contracts that would support the deployment of that additional train?

Casey Crenshaw
Casey Crenshaw
Executive Chairman, Interim President & CEO at Stabilis Solutions

You bet, Marty. This is Casey. Thanks for joining this morning. Thank you for your question. And we are super actively working on a couple of different commercial contracts.

Casey Crenshaw
Casey Crenshaw
Executive Chairman, Interim President & CEO at Stabilis Solutions

And when they are finalized and papered, we think that's plenty of increased committed contracted demand to go for FID on the project. And so we're hoping to be able to come back with clarity on that. Second, third quarter of this year is our expected time frame to have that kind of at that point. So we were hoping to be able to be there this quarter right now. But it's just with timing and pushing and some of the other things going on, it's just pushed just a little bit. No change in our expectation.

Marty W. Malloy
Director of Research at Johnson Rice & Company L.L.C.

Okay, great. And just in terms of power generation that's been an area that's garnered some more time on your earnings calls in recent quarters. Can you maybe talk about the types of customer inquiries are you seeing? Is this for data center, reshoring a manufacturing, standby emergency type power or baseload power?

Casey Crenshaw
Casey Crenshaw
Executive Chairman, Interim President & CEO at Stabilis Solutions

Marty, this is Casey. I'll take this one and start and then let Andy follow-up. But it's really all of the above. So we define this category as distributed power, so kind of behind the meter power. And we are working on half a dozen AI opportunities.

Casey Crenshaw
Casey Crenshaw
Executive Chairman, Interim President & CEO at Stabilis Solutions

There's digital mining opportunities. They're just behind the meter microgrid opportunities in oil and gas sector and other sectors. And it's a couple of different things. It's increased need of power and then it's the lack of access to the last mile pipe into the facilities or area or it's the just inability to get power and enough power brought in quickly. So some of these projects range from six months up to five years depending on short term versus bridge versus how long the bridge is.

Casey Crenshaw
Casey Crenshaw
Executive Chairman, Interim President & CEO at Stabilis Solutions

And some of them could get converted to backup after that point. But we're working on lots of different opportunities around the space. We don't want to call it just AI or just this. It's just kind of fully remote power opportunities.

Marty W. Malloy
Director of Research at Johnson Rice & Company L.L.C.

Great. Thank you very much.

Operator

We'll take our next question from Tate Sullivan with Maxim Group. Please go ahead. Your line is open.

Tate Sullivan
Senior Research Analyst at Maxim Group

Thank you. Good morning. Can you talk about the your bunker ship bunkering operation in terms of mentioning the downtime? Is it when cruise ships themselves are down for operation or the bunkering the fueling infrastructure? If you can provide more detail on that, please.

Casey Crenshaw
Casey Crenshaw
Executive Chairman, Interim President & CEO at Stabilis Solutions

Yes, Tate. Hey, good morning. Welcome to the call. Thank you for your question. So we the way I would try to explain this to you all for you all to think about kind of how to plan for this in your own internal kind of thoughts is it's really one week out of 52 where crews operators are doing maintenance on all of their operations on the vessel, maybe light boat, just a whole set of operations.

Casey Crenshaw
Casey Crenshaw
Executive Chairman, Interim President & CEO at Stabilis Solutions

And so this was just a planned nonsailing week, which created a reduction in a bunkering event during the quarter. So that's the way we think about it. So out of 52 a year, we would expect to at least have one week worth planned maintenance outage. Does that answer your question, Tate?

Tate Sullivan
Senior Research Analyst at Maxim Group

Yes. And then I also had a I mean there's a lot of, I mean, considerations for indications of demand I imagine for small scale LNG services. Is there anything that you'd point to, I mean is it permit applications, any pipeline hookups or anything that you at in terms of indications of more demand for your services in The U. S?

Casey Crenshaw
Casey Crenshaw
Executive Chairman, Interim President & CEO at Stabilis Solutions

Well, we're really looking at instead of looking at a whole U. S, there's a lot of indicators of increased overall U. S. Activity. We're a little bit more focused on kind of those three areas that we talk about, the aerospace, the marine bunkering and the distributed power markets.

Casey Crenshaw
Casey Crenshaw
Executive Chairman, Interim President & CEO at Stabilis Solutions

That's where we're working. And we're primarily focused on the indicators around the areas and the scope, areas that we're working on adding additional infrastructure and investment. And so what we can say is that what I can speak to is the areas that we're working on in those three sectors are all seeing increased bidding, inbound customer need and opportunities. So all three sectors in the areas that we are looking to deploy capital right now are seeing increased commercial activity.

Tate Sullivan
Senior Research Analyst at Maxim Group

Okay. And then specifically for the space industry, and I know you might limited what you can say, I mean, SpaceX has announced more plans, more launches of its larger rockets or applications to do so in Texas. I mean, is that a good example of an indication of rising demand for yourself Or is that more pertinent for other larger scale?

Casey Crenshaw
Casey Crenshaw
Executive Chairman, Interim President & CEO at Stabilis Solutions

Yes. I think just the normalization and the fact that commercial aerospace activity is increasing Lots of different people in this space working on doing more launches and the fact that the LNG as the primary propellant for those rockets is the choice that they're going with, is the probably primary drivers that we're excited about. So we also have a facility that has a multiple facility we have two facilities. Both of them are participating in the industry right now in different ways.

Casey Crenshaw
Casey Crenshaw
Executive Chairman, Interim President & CEO at Stabilis Solutions

So we work with both launches and the testing around the engines and the units there. So we're pretty again, it's a growing industry, and we expect to see a lot of growth. Now the total size of it versus distributed power and marine bunkering may never reach the size of those total opportunity, but as a really strong end market that we're good at and participating in, we're super excited about it.

Andy Puhala
Andy Puhala
SVP, CFO & Secretary at Stabilis Solutions

Tate, this is Andy. Let me just add a little bit to that. I mean in terms of the indicators, you're exactly right. We look at launch schedules and testing schedules and what we're hearing from both hearing from our customers and seeing in the media like everyone else. On the marine side, we're looking at the deliveries of dual fuel or LNG powered vessels coming into the market.

Andy Puhala
Andy Puhala
SVP, CFO & Secretary at Stabilis Solutions

We're looking at what our customers are telling us in terms of their plans, for example, for Galveston and LNG vessels and things like that. So it's those types of things that we look at to get our indications of coming demand and growing demand.

Tate Sullivan
Senior Research Analyst at Maxim Group

Great. Thank you for all the background and have a great rest of the day. Thank you. Thanks, Tate.

Operator

And this does conclude the Q and A portion of today's call. I would now like to turn the floor back to Andy Puhala for any closing remarks.

Andy Puhala
Andy Puhala
SVP, CFO & Secretary at Stabilis Solutions

Thank you, David. For all who joined us today, thanks for your time and continued interest in the company. If you want to talk more or have questions, please contact me at our Investor Relations number. And thanks for joining. We look forward to speaking with you guys next quarter. This concludes our call. You can now disconnect.

Casey Crenshaw
Casey Crenshaw
Executive Chairman, Interim President & CEO at Stabilis Solutions

Thank you, guys.

Operator

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

Executives
    • Andy Puhala
      Andy Puhala
      SVP, CFO & Secretary
    • Casey Crenshaw
      Casey Crenshaw
      Executive Chairman, Interim President & CEO
Analysts
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