Stabilis Solutions, Inc.

Welcome to the Sibyllous Solutions second 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 one on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star two. So others can hear your questions clearly, we ask that you pick up your handsets for best sound quality. Lastly, if you should require operator assistance, please press star zero. I would now like to turn the call over to Andy Pujala, Chief Financial Officer. Mr. Pujala, please go ahead.

Good morning, and welcome to Sibyllous Solutions second quarter 2025 results conference call. I'm Andy Pujala, Senior Vice President and CFO of Sibyllous, and joining me today is our Executive Chairman and interim President and CEO, Casey Crenshaw. We used to do press release after the market closed yesterday, detailing our second 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, August 7, 2025. The 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 to 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. During the second quarter, our teams were sharply focused on operational execution and deepening our customer relationships within our marine, aerospace, and power generation end markets, which, as we discussed before, are the most promising long-term growth opportunities for the company. Commercial discussions with both new and long-standing customers are progressing well in all three end markets. We are working to secure long-term customer commitments needed to grow the business and allow us to make investment decisions on capacity expansion. During the quarter, we saw revenue and FTA decrease year over year, primarily due to the successful completion of a large short-duration industrial project last

year.

However, revenue in the three key growth end markets continues to expand with marine, aerospace, and power generation sector revenues up a combined 15% year over year, driven by an 83% increase in aerospace revenues. In the first half of the year, aerospace revenues have more than doubled from the same period in 2024, and we expect growth in this sector to continue. In the marine sector, we continue to perform well on our Gulf Coast bunkering contract with Carnival Cruise Lines. Growth in this sector is dependent on securing additional long-term customer contracts, including contracts that will support our final investment decision for additional liquefaction capacity on the Gulf Coast. We are pleased with our progress on several potential LNG off-sake agreements in the marine sector. In our power generation end market, we're seeing increased interest in LNG as a bridge and backup fueling solution to meet the rising electric demand from the data centers and other energy infrastructure. While this opportunity remains in its early stages, the projected long-term growth in electricity demand is creating a broad range of use cases for our LNG solutions. We're actively engaged with multiple customers as they explore reliable, scalable options for distributed power. In conclusion, our strategic vision is clear, and Stabilis has significant long-term growth opportunities ahead. We're building Stabilis into the leading provider of last mile LNG solutions, with a focus on becoming the partner of choice for certain TN markets. Our team continues to execute against this vision, demonstrating operational excellence and generating strong commercial momentum along the way. We look forward to updating you in the coming months as we finalize new contract awards. With that, I'll turn the call back over to Andy to review our financial performance in detail. Thank you, Casey. I'll start with a discussion of our second quarter performance while I update on our balance sheet and liquidity. Our revenues during the second quarter decreased 7% compared to the second quarter of 2024. As Casey mentioned, the decline in revenues year over year was primarily the result of the roll-off of a large contract with an industrial customer that occurred last year. This decline was partly offset by an 83% increase in aerospace revenues and a 10% increase in our power generation market. During the second quarter, approximately 77% of our revenues were derived from aerospace, marine and power generation customers compared to 62% in the second quarter of last year as we continue to focus on these growth sectors. Adjusted EVA dollar was $1.5 million during the second quarter compared to $2.1 million in the second quarter of last year. Adjusted EVA dollar margin was 8.6%, down from .3% in the second quarter of last year. In addition to the roll-off of the short-term customer contract previously mentioned, EVA dollar was negatively impacted by non-recurring jobs of approximately $0.2 million related to our foreign joint venture. Cash generated from operations during the second quarter was $4.5 million. The strong cash generation resulted in a record liquidity position of $16.1 million at quarter end consisting of $12.2 million of cash and approximately $4 million of availability under our credit facilities. With $8.4 million in debt and lease obligations outstanding, we ended the quarter in a net cash position with no net debt and strong balance sheet flexibility that positions us to strategically deploy capital to support the Growth Club business. Our capital expenditures were $0.6 million during the quarter. As discussed on previous calls, as we finalize new customer commitments and the related capacity expansion, we expect an acceleration in capital commitments. That concludes our prepared remarks. Operator, please open the line for the Q&A session.

Thank you. At this time, if you would like to ask a question, press star 1 now on your telephone keypad. We're open for questions. Again, we ask that you pick up your handsets when posing your questions to provide optimal sound quality. Thank you. Our first question is coming from Martin Malloy from Johnson Rice. Please go ahead.

Good morning.

Good morning, Marty. Good morning.

First question, just wanted to ask about the contractual agreements, the offtake agreements. It sounds like you've got a number that are in the works, and it could be months, within the next couple months that they're announced. I just wanted to get a sense that 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 private financing potential?

Yeah, Marty, why don't I start? This is KT, and then I'll let Andy come back in and add some additional color. The way we see this is really all three of those growth segments that we talk about, both the marine, aerospace, and power generation, distributed power generation business, all of them have contracts that we're working on with multiple customers. And we have, you know, we're always in the business of signing new customer agreements. And when we think about, you know, duration, some are six months, and then some of them keep getting extended and can go for multiple years. So, you know, they're all different in duration, but we're working on them in all three segments, numerous contracts in all three segments. If we want to then kind of shift into kind of how those are going to allow us to deploy capital, if we want to talk about aerospace, we're working on a number of additional contracts there that would allow us to support additional capital expenditures to fulfill those or to support those contracts. Power generation, the same, or distributed power. And then, you know, probably the most pointed question would be more around the marine sector, where we're working on a Gulf Coast liquefier to support the marine market. And that is where we've got a number of very large off-take agreements that we're working on finalizing the contracts on. And those would be enough to support FID and project financing around a project for that. So aiming to have some additional color on that, but I want to just cover all three segments have different contracting and work around those that are taking much longer term and duration than your kind of spot work. Yeah, that's right. Just to add to that, I mean, these are multi-year off-take agreements with, you know, with firm commitments.

Okay. Thank you for that. And then for my follow-up question, just wanted to ask about the timing of once these contracts are announced. I know you've got some equipment at George West for potentially doubling of capacity there or someplace else. You've got long lead time equipment already purchased. Could you make it sounds like you've got potential agreements that would cover LNG needs in excess of that. Can you talk about the timing of getting additional liquefaction capacity online? And in the meantime, would you source the LNG potentially from other sources?

Yeah. Let me start it. So first of all, you know, I'll take you back to the three big end markets that we're working in, rain, aerospace, and power generation. And if you think about power generation and distributed power specifically around data centers and AI, you know, all of that is happening around the whole United States. And one of the things to remember about Stabilis is we don't only make our own LNG. We have supply arrangements with, you know, 30 plus other liquefiers around the United States. So the power, distributed power generation market, you know, it's going to determine if we're going to add liquefaction capacity or if we're going to deploy what we have as a fleet of the last mile LNG equipment, which is the on-site story and the vaporization equipment, which is very valuable, which we already have in our fleet. So we already have that part of it. And if it's close to one of our liquefiers, we'll get our own LNG. If it's not, we'll use one of our third-party off-site agreements. When you're thinking about aerospace, it's a lot the same, but the quality component of the liquid really requires it to be from specific places. So a lot of that ends up coming out of our own liquefiers. And then when you're talking about marines, that would take larger facilities to do -the-water barge work, and that will take new capacity. So if you talk about deploying new capacity, the quickest new capacity would probably be in George West. We already have the facility there. We've already got the long-need equipment. We can do that quickly. We're also, secondly, working on our Gulf Coast liquefier. Right now, we're spending money on engineering and pre-feed work to prepare to deploy that, but that's a little bit longer than what you could get done at our site in George West.

Great. Thank you. I'll send it back. Thank you. And once again, to ask a question that is star one on your telephone keypad. Our next question is from Tate Sullivan of MaxamVeak. Please go ahead.

Hi. Thank you. Good morning. John, Stacy, thanks for the comments on the Gulf Coast liquefier. And 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 with our special support infrastructure?

Yeah. First of all, Tate, thanks for being on the call today. We welcome your question. Maybe I need to clarify a little bit. I may not have communicated it very well. The contracts are kind of the front end part, and then those would anchor the project financing to then put it in. So we're already actively working on and doing marine bunkering projects, you know, every day of the week in the Gulf Coast, as we stated with one of our good cruise customers. And we're doing that through a truck to ship process, truck to barge ship process. These contracts that we're working on will underpin putting a new facility, what we call on the water, so that we can produce the LNG needed for those contracts, you know, on the water, when I say on the water, next to the water, where we don't have to truck the LNG in. So really what we're waiting on is these contracts that are long enough in tenure and duration to underpin the project financing so we can make the final investment decision to move forward.

Okay, thank you. And for those marine contracts, can you ship, or is it still mostly with cruise ship customers or other types of shipping customers? We are

having numerous discussions with multiple end markets around the marine space. So if it's okay, we prefer to not share the details of all the different customer work we're doing around there. But we're definitely deep into the cruise space as we're currently delivering into that market today. Thank you, Casey. Have a good day.

Thank you. And once again to ask a question, that is star 1 on your telephone keypad. We'll take our next question from Spencer Layman. Your line is open.

Oh, hi gentlemen, and hi Andy. You're not attracted. There's a lot of, the macro picture for LNG is very frantic, and there's a lot going on with that. And certainly the overall picture is great for energy and especially LNG, and a lot of course, a lot of hype on data centers. It just seems like it's a tremendous amount of need for energy in the country. And also with the administration is certainly supporting that whole area. So I think we're sort of in a sweet spot here, but the stock sort of, you know, small companies off the radar. And I'm just curious what you're doing now or could do to get, to really get the story out.

Well Spencer, that's Casey. Hi Andy. I'll have Andy kind of come back on it and do some additional color and clarification. And I appreciate your question. And as a meaningful shareholder of the company, I feel the same thoughts around it that you just shared there. Like when I think about me being a shareholder of Stabilis and being here, you know, we started Stabilis in 2012. So we've got over a decade of just high, active, real work in LNG. We've delivered just a ton of real products, a ton of real customers. We've got an amazing team of operational people, amazing team of the business development, engineering, and just overall staff. And we're doing it every day of the week. And we have these big growth in markets that can take the company and have a step change in both size of revenue and earnings. And so when I think about my investment in Stabilis, I think about a cash flow generating, positively operating LNG platform that's actively working on growing itself in three dynamic end markets. To me it's a great place to be. And when I think about long-term, you know, I think Buffett or someone said the stock market is a short-term, you know, people talk about it as a, you know, long-term it's a weighing machine. So as we continue to hit some of these long-term contracts and grow the company, other investors will come in and want to be part of this amazing position that Stabilis is in, a current operating cash flow generating great small business with options to grow the business extremely large in these three end markets. And I think it's a great place to be. I'm delighted to be a shareholder personally. I'm proud of it. And I think over time other people will find that out and will join up as we hit our strategic decisions for the company. And I'll turn it over to Andy on like tactically what your question might be. Yeah, thanks, Spencer. I think just to add to that, I mean, look, you know, we're eager to get out and talk to the market and tell people what we've got going on at Stabilis. And we think that, you know, the key thing there is to get some of these contracts so that we have an opportunity to go out and have something exciting to talk about in the marketplace. And we, you know, as Ken can mention, we think we're close on several, you know, transformative type projects. And then we've got the opportunity to go out and give people some specifics to really think about and understand what that means for Stabilis. You know, until we have some of those specifics, it's kind of hard sometimes to get people as excited as we are about the opportunity. But believe me, we're excited. You know, we don't get too focused on the kind of the quarter to quarter minutiae because, you know, we think that this is really a long term, a long term growth story. And, you know, we're very bullish about it.

Well, thank you, Stabilis. Thank you, Casey. That was very encouraging and enlightening. And my only problem is I'm going to be nighty here in a few months. I'm running out of time. So don't wait too long. Well,

we're not waiting. We're actively waiting. That scene in the business and the growth sections to have that set change and transformational deal. And, you know, when I think about where Stabilis is going to be in the next three, five and 10 years, it's really exciting. It's exciting to be in the LNG manufacturing and distribution and part of that value chain of the gas. And Stabilis is a great platform of that. And I think, Spencer, that 90 years is young, as young as it is now. And I think we look forward to many more years with you as a shareholder. Well,

I'm short time. I'm definitely a long term. But long term now is like, you know, four or five years. So,

yeah,

but it's just a great atmosphere to be in right now with LNG. And I'm excited about that. And I think things are ready to really happen for you guys. So thank you.

Thanks, Spencer. Thank you.

Thank you. Thank you. This does conclude the question and answer portion of today's call. I would now like to turn the floor over to Andy Pahala for closing remarks.

Thanks, Leo. And thank you for all that joined us today. We appreciate your time and continued interest and support for the company. If you have any additional questions or simply want to learn more about what we're building at Stabilis, please contact me at our investor relations number. This concludes our call. Thank you all very much.

Thank you. This concludes today's Stabilis Solutions second quarter 2025 earnings conference call. Please disconnect your line at this time and have a wonderful day.