Stabilis Solutions, Inc.

Ladies and gentlemen, before we begin today's call 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 August 5 2021. forward looking statements are subject to the risks and uncertainties that may cause actual results to differ materially from those projected. The company undertakes no obligation to release updates or revisions to the forward-looking statements made in today's conference call. Additional information concerning factors that could cause those differences is contained in the company's filings with the SEC and press releases announcing the company's results. Investors are cautioned not to place any undue reliance on any forward-looking statement. I would now like to welcome you all to the Stabilis Solutions Q2 2021 Earnings Conference Call. Today's call is being recorded. At this time, I'd like to turn the call over to Jim Redinger, President and CEO of Stabilis Solutions. Please go ahead, sir.

Thank you. Good morning, everyone. Thanks for joining us today. Again, this is Jim Redinger, the President and CEO of Stabilis, and joining me on the call is Andy Pujala, our Senior Vice President and Chief Financial Officer. We're here to report a lot of great things today, including our best second quarter ever and a number of exciting growth initiatives that took shape in the quarter. After I review some of the highlights of the quarter, Andy will jump in and discuss our financial results and then we'll follow up with a Q&A session. I'm pleased to report that Stabilis has continued its strong momentum from the first quarter of this year to produce yet another record performance in the second quarter. The company achieved its highest ever revenue for second quarter of $16.1 million, representing a year-over-year increase of 221% from the second quarter of 2020. This was the fourth quarter out of the past six that we have set a record revenue, either overall or for the comparable quarter. We also set a record for LNG gallons delivered in the quarter, with 13.7 million LNG gallons delivered in the second quarter. This record performance demonstrates the increased interest in LNG we're seeing from our customers every day across a lot of sectors. LNG provides our customers with a cleaner, reliable, and cost-effective fuel alternative if they navigate their business through the energy transition. And the marine fueling industry provides a great example of some of the tremendous growth opportunities ahead of us. Several industry sources project that the use of LNG as a marine fuel will grow at a 30% per year rate over the next five-year period, as more and more ship owners and operators use LNG to meet their emissions targets. As such, we expect the marine bunkering market to be a significant growth driver for Stabilis over the coming years. In addition to the LNG and hydrogen marine bunkering activities on the West Coast that we have discussed on previous calls, Stabilis is building a network of marine bunkering hubs that will allow us to provide LNG marine bunkering services throughout the Gulf Coast. On May 4th, we announced an MOU with the Port of Corpus Christi to develop and market LNG marine bunkering services. And just this week, we announced a second LNG marine bunkering memorandum of understanding with the Galveston Wharves, also known as the Port of Galveston, giving us two major LNG fueling locations on the Gulf Coast. At these locations, Stabilis will use our existing cryogenic equipment fleet and LNG supply network to provide shore-to-ship LNG bunkering services to marine vessels today. We are currently in discussions with several major marine LNG customers and plan to have our first LNG fueling events completed in 2021. As these fueling events increase in size and frequency, we plan to work with our port partners and our industry partners to install custom-built LNG marine bunkering solutions, such as bunkering barges in various ports across the country. In addition to the significant progress we made in the LNG marine bunkering market, Stabilis also recently completed the acquisition of its second LNG production facility in Port Allen, Louisiana, which is right across the river from Baton Rouge. The Port Allen facility is strategically located in the Gulf Coast region and will support some of our largest industrial customers. In addition, Port Allen currently supports marine bunkering for the largest LNG-powered offshore supply vessel fleet in the Gulf Coast. The facility has a production capacity of 30,000 LNG gallons per day, which increases our total production capacity by approximately 30%, and provides us further runway for organic growth. It also provides production diversification and flexibility between the Port Allen facility and our George West facility to better serve our customers. This state-of-the-art plant was acquired at a cost per LNG gallon of production that is significantly less than it would have cost us to build a new facility. and the site layout and pipeline access provide us future opportunities for expansion on that site. The Port Allen acquisition is expected to be accretive in 2021, and we project the incremental annual EBITDA to be between $2.5 and $3 million, due to both increased operating leverage across the business and incremental revenues. We believe there are other LNG production facility opportunities, acquisition opportunities available that will allow us to expand our production capacity further. And we will continue to take advantage of these opportunities when the value and strategic fit is compelling. To complete my review of the second quarter, we also secured a $10 million credit facility that will provide working capital to fund our growth. And of course, we were listed on NASDAQ and began trading in April. Overall, we feel like we're up to a great start this year, not only by improving the performance of our base business significantly, but also by investing in key growth markets and key growth opportunities. And as always, I'd like to acknowledge and thank everyone on our outstanding Stabilis team for their continued dedication and hard work. Every great business starts and ends with a tremendous team and a tremendous team effort, and at Stabilis, we're blessed with both. Later on in the call, I'll discuss our growth outlook, but first I'll turn it over to Andy to review our financial results. Andy?

Thank you, Jim. As Jim mentioned in his opening remarks, for the second quarter ended June 30th, 2021, Stabilis reported its highest ever second quarter revenues of $16.1 million, an expected decrease sequentially from the $17.7 million in the first quarter, but a substantial year-over-year increase of 221% from the second quarter of 2020. As a reminder, our business is seasonal, with the first quarter normally being one of the strongest quarters of the year. due to winter peaking activity, primarily in the Northeast. Our year-on-year growth was largely driven by increased economic activity, including growth in power generation projects, continued expansion of the company's Mexico operations, and increased activity with aerospace and oil and gas related customers. Revenues from Stabilis LNG segment totaled $14.4 million this quarter, an increase of $10.4 million from the second quarter of 2020. but 1.4 million below our record Q1 due to the seasonality of our business I mentioned earlier. Our company delivered a record 13.7 million gallons of LNG to customers during the quarter, a 197% increase compared to the second quarter of 2020 and 2% higher than our previous record achieved in Q1 of this year. Revenues from our power delivery segment increased 70% compared to Q2 of last year to 1.7 million as a result of new projects. Sequentially, the power delivery segment was up approximately 8%. The company is making investments in both its sales and marketing and field service and logistics teams to meet increasing activity levels anticipated later in the year. Operating expenses and SG&A have increased during the quarter as a result. Earnings before interest, taxes, depreciation, and amortization, or EBITDA, was $1.6 million in the quarter. The company qualified for full forgiveness of its payroll protection program loan of approximately $1.1 million that was received in the early stages of the pandemic. Adjusted EBITDA after removal of the loan forgiveness was $0.5 million compared to an adjusted EBITDA loss of $0.8 million during Q2 of 2020. Net loss for the second quarter of 2021 was $1 million compared to a loss of $3.5 million in the year-ago quarter. Cash and cash equivalents as of June 30th were $3.3 million as compared to $3.1 million at the end of the first quarter. The company also had $3 million available under its credit facility with AmeriState Bank. With that, I'll turn the call back over to Jim to discuss our outlook.