Stabilis Solutions, Inc. Q2 FY2025 earnings call

• Teams were sharply focused on operational execution and deepening customer relationships within marine, aerospace and power generation end markets, which are promising long - term growth opportunities.
• Commercial discussions with new and long - standing customers in all 3 end markets are progressing well.
• Revenue in key growth end markets continued to expand, with aerospace revenues up 83% year - over - year, and aerospace revenues in the first half of the year more than doubling from the same period in 2024.
• Marine sector is performing well on the Gulf Coast bunkering contract with Carnival Cruise Lines, but growth depends on securing additional long - term customer contracts.
• Power generation end market is seeing increased interest in LNG as a bridge and backup fueling solution for rising electric demand from data centers and other energy - intensive infrastructure.
• Strategic vision is clear to be the leading provider of last mile LNG solutions and the partner of choice for key end markets, with the team executing against this vision and generating commercial momentum.

During the second quarter, revenues decreased 7% compared to the second quarter of 2024. The decline was primarily due to the roll - off of a large short - duration industrial project from the previous year. Aerospace revenues increased by 83% and power generation market revenues increased by 10%. Approximately 77% of revenues were derived from aerospace, marine and power generation customers in the second quarter compared to 62% in the second quarter of last year. Adjusted EBITDA was $1.5 million in the second quarter compared to $2.1 million in the second quarter of last year. Adjusted EBITDA margin was 8.6%, down from 11.3% in the second quarter of last year. Cash generated from operations during the second quarter was $4.5 million. Cash position at quarter end was a record $16.1 million, consisting of $12.2 million of cash and approximately $4 million of availability under credit facilities. Debt and lease obligations were $8.4 million, ending the quarter in a net cash position with no net debt.

• As new customer commitments and related capacity expansion are finalized, an acceleration in capital commitments is expected.

• Forward - looking statements are subject to risks and uncertainties that may cause actual results to differ materially from projected ones, with additional information in SEC filings and press releases.
• Adjusted EBITDA was negatively impacted by the roll - off of a short - term customer contract and a nonrecurring charge related to a foreign joint venture.

Q: 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 could be months -- within the next couple of months if they're announced. Just wanted to get a sense if that was a correct interpretation of your statements. And then also the magnitude and the industries involved here? And are these going to be of the size and tenor that would allow for project financing potentially?

A: Yes, all 3 growth segments (marine, aerospace and power generation, distributed power generation) have contracts in the works with multiple customers. Durations vary, some are short - term and some are long - term. In aerospace and power generation, contracts would allow for capital expenditures. In the marine sector, there are large offtake agreements that could underpin project financing for a Gulf Coast liquefier project.

Q: 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? Or are there other variables to finalize in those contracts such as port infrastructure?

A: The contracts are needed to underpin project financing for the Gulf Coast liquefier. We are waiting on contracts long enough in tenure and duration to underpin project financing so we can make the final investment decision. The contracts are for on - water LNG production to avoid trucking LNG in.

Q: There's a lot of -- the macro picture for LNG is very attractive, and there's a lot going on with that a couple of weeks ago when they announced that Europe was going to spend, what, $750 billion in purchases. And certainly, the overall picture is just great for energy and especially LNG and a lot of -- of course, a lot of hype on data centers. It just seems like just a tremendous amount of need for energy in the country. And then also with the administration is certainly supporting that whole area. So I think you're sort of in a sweet spot here, but the stock sort of small companies off the radar. And I'm just curious what you're doing now or could do to get -- really get the story out.

A: We're eager to talk to the market and tell people about our activities at Stabilis. We think getting some of these contracts will give us something exciting to talk about in the marketplace. We're close on several transformative projects and are bullish on the long - term growth story, but until we have specifics, it's hard to get people as excited as we are.