Stabilis Solutions, Inc.

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. If you would like to ask a question at that time, please press star and 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star and 2. 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 0. It is now my pleasure to turn today's call over to Andy Pujalla, Chief Financial Officer. Sir, you may begin.

Good morning and welcome to Stabilis Solutions First Quarter 2025 results conference call. I'm Andy Pujalla, 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 -Solutions.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. These forward-looking statements are based on the company's expectations and beliefs as of today, May 8, 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. 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. 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 multi-year 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. In the last quarter, 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 long-standing 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. 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.S. trade policy and tariff regimes are not expected to directly impact our business. Approximately 95 percent 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. 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. 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. Our revenues during the first quarter decreased 12 percent compared to the first quarter of 2024, but were modestly higher when compared to the fourth quarter of 2024. 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 a 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. During the first quarter, approximately 51 percent of our revenues were derived from marine and aerospace customers compared to 39 percent in the first quarter of last year. First quarter gap net loss was $1.6 million, or nine cents per diluted share, compared to net income of $1.5 million, or eight cents per diluted share in the first quarter of 2024. 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. Adjusted EVA dial was $2.1 million during the first quarter compared to $3.1 million in the first quarter of last year. Adjusted EVA dial margin was 11.9 percent, down from 15.7 percent in the first quarter of last year. The decrease in our adjusted EVA dial was primarily the result of lower revenues, while our adjusted EVA dial percentage declined due to lower equipment and labor revenues associated with the completion of a customer contract. Cash generated from operations during the first quarter was $1 million, representing a conversion rate of 50 percent of our adjusted EVA dial. This cash generation continued to support a strong liquidity position of $12.5 million 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 half a million dollars, with about 70 percent 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. 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 March 31, 2025, Stabilis had total cash and equivalents of $9 million, together with $3.5 million of availability under our credit facilities. With $9.1 million 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&A session.

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 queue 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 Johnson Rise. Please go ahead. Your line is open.