Stabilis Solutions, Inc. Q3 FY2024 earnings call

• Strategic objectives: Stabilize/optimize equipment and pursue key growth initiatives for long-term shareholder value.
• Revenue mix shift: 68% of Q3 revenue under ratable contracts, up from 43% y-o-y, contributing to improved margin realization.
• Marine growth: LNG bunkering operations in Port Canaveral, Long Beach, and award of contract with Carnival Corporation; progress on Gulf Coast project with purchase of components and proposed site.
• Data center opportunity: Incremental power demand from data centers, onshoring, and vehicle electrification; opportunities for LNG-based power generation, storage, and emission monitoring.
• Aerospace market: Growth in revenues, contractual coverage, and maintaining market leader position as the market evolves.
• Cash position: Ended Q3 with $15.6 million of available cash and liquidity, up from $8.6 million in the year-ago period.

In the third quarter, Stabilis Solutions achieved over 15% revenue growth. 68% of third quarter revenue was under ratable contractual agreements, up from 43% in the previous year. Marine and aerospace growth markets revenues tripled year-over-year, now comprising approximately 40% of total revenues compared to 11% in the third quarter of last year. The company's owned LNG production facilities, including George West (100,000 gallons/day) and Port Allen (25,000 gallons/day), had strong utilization with George West at close to 90% and Port Allen in the high seventies. Third-quarter net income was $1 million or $0.05 per diluted share on revenues of $17.6 million, with adjusted EBITDA of $2.6 million, a record for the quarter, and an adjusted EBITDA margin of 14.6%.

• For 2024, CapEx is anticipated to total between $8 million and $10 million, subject to project timing.
• Actively evaluating various prospective sources of capital to fund growth initiatives, focusing on partners familiar with the industry and recognizing upside potential.

Q: Could you talk about milestones for the Gulf Coast marine bunkering project, including FID and permitting, and time from FID to operational?

A: Milestones include firming up commercial and financing aspects. Timeline from FID to operational is estimated at 18 to 24 months due to modular aspects and existing vendor relationships.

Q: How many gallons produced in the quarter and annual capacity? Follow-up on data center sweet spot.

A: Publicly not disclosing gallons sold. Utilization was close to 90% at George West and high seventies at Port Allen. Annual capacity: George West 100,000 gallons/day, Port Allen 25,000 gallons/day; ~45 million gallons from own production. Sweet spot for data centers includes locations without natural gas pipelines and those needing backup/peaking power generation where LNG can provide redundancy.

Q: Aerospace market development relative to expectations and role of long-term contracts?

A: Aerospace market development is playing out as expected with some lumpiness. There is ratability and contractual coverage in the aerospace business, and the market is expected to evolve with other participants, providing opportunities for Stabilis to maintain its market position.