Q1 2025 Stabilis Solutions Inc Earnings Call
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Thank you for watching!
Speaker Change: Welcome to the Stabilis Solutions first quarter 2025 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.
Speaker Change: If you would like to ask a question at that time, please press the star and one on your telephone keypad. If at any point your question has been answered, you may remove yourself from the cube by pressing star and two.
Speaker Change: So that others can hear your questions clearly, we ask that you please pick up your handset to provide best sound quality. Lastly, if you should require any operator assistance, please press star and zero.
Speaker Change: It is now my pleasure to adjourn today's call over to Andy Puhala, Chief Financial Officer. Sir, he may begin.
Speaker Change: Good morning and welcome to Stabilis Solutions first quarter 2025 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.
Speaker Change: 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.com.
Speaker Change: Forward 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.
Speaker Change: These forward-looking statements are based on the company's expectations and beliefs as of today May 8th 2025.
Speaker Change: Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected.
Speaker Change: The company undertakes no obligation to provide updates or revisions to the forward-looking statements made in today's call.
Speaker Change: Additional information concerning factors that could cause those differences is contained in our fileings with the SEC and in the press release announcing our results.
Speaker Change: Investors are cautioned not to place undue reliance on any forward-looking statements.
Speaker Change: 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.
Speaker Change: 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: Thank you Andy and good morning to everyone joining us on the call.
Casey Crenshaw: 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.
Casey Crenshaw: These markets are supported by significant multi-year demand ranging from rising remote power needs and marine fuel transitions to the growth of commercial space industry.
Casey Crenshaw: Revenue and Adjusted Evidia to climb this quarter primarily due to planned downtime with a key marine bunkering customer and this successful completion of a major short duration industrial project in the third quarter of last year.
while these factors affect...
Casey Crenshaw: Infected our near-term results, they do not reflect the underlying momentum in our business. 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.
Casey Crenshaw: We continue to advance commercial discussions across all of our end markets, both with new customers and longstanding partners.
Casey Crenshaw: Our strategy remains focused on expanding our position as the leading small-scale LNG supplier within these high-grows sectors, where access to traditional LNG supply infrastructure is limited.
Casey Crenshaw: 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.
Casey Crenshaw: These growth-focused costs are fully reflected in our results, yet we continue to generate consistent positive operating cash flow. As we secure additional contracts we plan to expand our footprint to meet growing demand.
Casey Crenshaw: We continue to evaluate the potential expansion of our liquefocation 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.
Casey Crenshaw: Change is in US trade policy and tariff regimes are not expected to directly impact our business.
Casey Crenshaw: Approximately 95% of our revenue comes from US-based customers utilizing domestically sourced natural gas.
Casey Crenshaw: From a capital allocation standpoint, we remain focused on maintaining a strong balance sheet and liquidity position.
Casey Crenshaw: that this approach ensures we are well prepared to fund future growth and capitalize on long-term demand we see ahead.
Casey Crenshaw: With that, I'll turn the call back over to Andy to review our financial performance in more detail.
Andy Puhala: Thank you, Casey. I'll start with a discussion of our first quarter performance followed by an update on our balance sheet and liquidity exiting the quarter.
Andy Puhala: Our revenues during the first quarter decreased 12% compared to the first quarter of 2024, but were modestly higher when compared to the fourth quarter of 24.
The decline in revenues on a year-over-year
Andy Puhala: 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 percent increase in revenues from aerospace customers, as we continue to grow our presence in that market.
Power generation revenues remain consistent with Q1 of 2024.
Andy Puhala: 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: First quarter gap net loss was 1.6 million dollars or 9 cents per diluted share, compared to net income of 1.5 million dollars or 8 cents per diluted share in the first quarter of 2024.
Andy Puhala: Our gap net loss during the quarter reflects a non-recurring impact of approximately $2.1 million relating to executive transition costs during the quarter.
Andy Puhala: Adjusted EBITDAI was $2.1 million during the first quarter compared to $3.1 million in the first quarter of last year.
Andy Puhala: Justice David Dahmargin was 11.9% down from 15.7% in the first quarter of last year.
Andy Puhala: 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: Cash generated from operations during the first quarter was 1 million dollars, representing a conversion rate of 50% of our adjusted EBITDA.
Andy Puhala: Discast generation continue to support a strong liquidity position of $12.5 million at the end of the first quarter.
Andy Puhala: Capital expenditures declined in the first quarter on a sequential basis due to this timing of capital needs involved in our ongoing efforts to invest in our infrastructure along the Gulf Coast.
Andy Puhala: During the quarter, our CAPEX was half a million dollars, 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.
Casey Crenshaw: 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.
Casey Crenshaw: As of March 31, 2025, Stabilis had total cash and equivalence of $9 million, together with $3.5 million of availability under our credit facilities.
Casey Crenshaw: With 9.1 million dollars of total debt outstanding, we ended the quarter with essentially no net debt and strong balance sheet flexibility.
Casey Crenshaw: That concludes our prepared remarks. Operator, please open the line for the Q&A session.
Casey Crenshaw: Absolutely, the floor is now open for questions. At this time, if you have a question or comment, please press the star and one keys on your telephone keypad. If at any point your question has been answered, you may remove yourself from the cube by pressing star and two. Again, we ask that you pick up your handset when providing your question to provide for optimal sound quality. Our first question comes from Martin Malloy with John's Rise. Please go ahead, your line is open.
Good morning. Thank you for taking my questions.
Morning, Marty.
Speaker Change: I, 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.
Casey Crenshaw: to get commercial contracts that would support the deployment of that additional train.
Casey Crenshaw: You bet, Marty. This is Casey. Thanks for joining us this morning. Thank you for your question and we are super actively working on.
Speaker Change: a couple different commercial contracts and when they are finalized and papered we think that's plenty of increased committed contracted demand to, you know.
Speaker Change: 2nd, 3rd quarter of this year is our expected time frame to have that kind of...
Speaker Change: at that point. So, we were open to be able to be there this quarter right now, but it's just, you know, 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.
Okay.
Speaker Change: Great. And just in terms of power generation, that's been an area that's garnered some more time on year earnings calls in recent quarters.
Speaker Change: Can you maybe talk about the types of customer inquiries you're seeing? Is this for data center, reshoring a manufacturing, standby emergency type power, or base load power?
Casey Crenshaw: Yeah, Marty, this is Casey, I'll take this one and start and let Andy follow up but it's really all of the above so we define this category is distributed power so kind of behind the meter power and we are working on half a dozen AI opportunities.
Andy Puhala: Digital Mining Opportunities, they're just behind the meter micro-grade opportunities and holding gas sector in other sectors.
Speaker Change: Facilities are area or it's the just inability to get power and enough power brought in quickly.
Speaker Change: 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 our opportunities.
Great. Thank you very much.
Speaker Change: And once again, if you do have a question, you may press the star and one on your telephone keypad at this time. We'll take our next question from Tate Sullivan with Maxim Group. Please go ahead, your line is open.
Tate Sullivan: and fuel the fueling infrastructure if we can't provide more detail on how to do it.
Speaker Change: 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 Europe.
Speaker Change: And your own internal kind of thoughts as it's really one week out of 52, where cruise operators are doing maintenance on all of their operations on the vessel might be lifeboat, just a whole set of operations and so this was just a planned.
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Speaker Change: A reduction in Bunkering.
Speaker Change: Bunkering event during the quarter. So that's the way we think about it so out of 52 weeks a year, we would expect to at least have one week planned maintenance outage does that answer your question Dave.
Speaker Change: Yes.
Speaker Change: Yes. Thank you.
Speaker Change: And then I also had a quite I mean, theres a lot of different considerations for indication globally.
Speaker Change: And I imagine for small scale LNG.
Speaker Change: Services is there anything that you'd point to but I mean is it permit applications.
Speaker Change: Any pipeline hookups or anything that you look at in terms of indications of more demand for your services in the U S.
Speaker Change: Well, we're really looking at instead of looking at a whole U S. There is 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.
Speaker Change: Distributed power market, that's where we're working and we're primarily focused on the indicators around the areas and the scope of areas that we're working on adding additional infrastructure 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.
Speaker Change: Are all seeing increased bidding and bound customer need and affleck.
Speaker Change: And opportunities so all three sectors in the areas that we are looking to deploy capital right now are seeing increased commercial activity.
Speaker Change: Thank you for that and then and then specifically for the space industry and I know you might be limited what you can say, Amit Spacex has announced more plan more launches of its larger rockets or applications to do so in Texas.
Speaker Change: I mean.
Speaker Change: Is that a good example of an indication of rising demand for yourself for that or is that more.
Speaker Change: For other larger scale.
Speaker Change: Yes, I think just the normalization in the fact that commercial aerospace activity is increasing on a macro basis.
Speaker Change: Lots of different people in the space working on doing more launches and the fact that the LNG as the primary propellant for those rockets is the choice that theyre going with is the probably primary drivers that we're excited about so we also.
Speaker Change: Facility. It has a multiple facility or two facilities both of them are participating in the industry right now in different ways. So we work with both launches and the testing around.
Speaker Change: The engines and the <unk>.
Speaker Change: The units there so we're pretty.
Speaker Change: Again, it's a growing industry and.
Speaker Change: 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.
Speaker Change: Really strong end market that we're good at and participating in we're super excited about it.
Speaker Change: Hey, This is Andy let me just add a little bit to that I mean in terms of the indicators youre 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.
Speaker Change: We're looking at the deliveries of dual fuel or LNG powered vessels coming into the market. We're looking at what are 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.
Speaker Change: Great well. Thank you for all the background and have a great. Thank you.
Speaker Change: Thanks, Dave.
Speaker Change: And this does conclude the Q&A portion of today's call I would now like to turn the floor back to Andy <unk> for any closing remarks.
Speaker Change: Well. Thank you David for all who joined US today. Thanks for your time and continued interest in the company.
Speaker Change: If you want to talk more have questions. Please contact me at our Investor Relations number.
Speaker Change: And thanks for joining and we look forward to.
Speaker Change: Speaking with you guys next quarter. This concludes our call you can now disconnect. Thank you guys.
Speaker Change: Thank you.
Speaker Change: It does conclude todays stability solutions first quarter 2025 earnings conference call. Please disconnect. Your line at this time and have a wonderful day.
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