Stabilis Solutions, Inc.

support equipment purchases and other preparations for that project quarter ends total liquidity was 17.2 million consisting of total cash of 13.7 million of which 10.6 million is restricted and 3.5 million of availability under our credit agreements Capital expenditures totaled $5.3 million during the quarter. These expenditures were primarily related to equipment purchases associated with our upcoming large data center project. Looking ahead, we expect to invest an additional $10 to $12 million in capital for equipment and securing guaranteed supply for this project. We expect these investments to be funded through the advance payments received during the first quarter as well as additional advance payments we expect to receive over the course of the year. That concludes our prepared remarks. Operator, please open the line for the Q&A session.

At this time, if you have a question or comment, you can press star 1 on your telephone keypad. If at any point your question is answered, you may remove yourself from the queue by pressing star 2. Once again, we ask that you pick up your handset when posing your question to provide optimal sound quality. We'll take our first question from Martin Mallory Johnson-Rice.

Good morning.

Good morning, Marty.

The first question I had, I just wanted to talk a little bit about the contracts that you're finalizing here, and it could start up in too few, but it sounds like they'll definitely impact second half of this year from behind the meter power. Could you maybe talk about the size of those contracts? Will those make up for the two contracts that were canceled fourth quarter last year? And also, with the behind-the-meter power, is this going to be a bridge-type arrangement until a pipeline is hooked up to these facilities? And then is there the opportunity for backup-related contracts later on, backup power?

Mark, let me... Good morning, and thank you for joining today. And let me try to take on, I think, two questions. I mean, one, the first is being what type of contract is that on the distributed power? And we really talk about that being kind of either commissioning power, bridge power, or more permanent backup related to behind-the-meter applications and distributed power. This is more of a commissioning project, which is normally a six to 12 month that we anticipate starting up in the end of the second quarter of this year and running through the end of the year. And we do anticipate with the work we've had commitments around being able to replace the the contracts that were ended at the end of last year during the back half of the year. So without giving too much forward statements, we anticipate being able to replace that on the P&L. And that's before we get into the contracted demand starting in Q1 of next year, which is meaningful in size as well.

Great. Thank you. And then just on the Galveston LNG project, you know, it sounds like you're active with discussions with off-takers to replace the canceled contract. In terms of the opportunity there, is there the possibility that that previous off-taker would return to sign up for off-take? And also, are you... satisfied with the provisions of the other off-take agreement contracts you have that they won't need to be modified for project financing purposes?

It's a great question. I think I'll take the last one first. And so, yes, the current off-take agreement we have works well with the project construction timeline, et cetera, and doesn't create risk on when construction would finish and when startup would happen. So that contract's in good position. And Going back to the first question, we highly anticipate this customer that we were required to cancel that contract with to come back and do business with us in Galveston once we get further down the road or complete the plant. You know, whether or not they'll be part of the offtake that helps, you know, create the financing or they become a spot market client post-construction is complete, we don't know yet. but we're actively working with that client. And, you know, timelines and, you know, with the Iran war and different things happening, you know, just delays and some of the issues around dates and how that would affect financing just created us a need to exit that contract.

Great. Thank you. I'll get back in queue. Thank you.

Our next question comes from Bill DeZellum from Titan Capital.

Good morning, Bill. Good morning. I actually would like to talk a little bit more about the new data center contract. So if we understood correctly, you said that was a commissioning contract, so that will begin in Q2, basically last through to Q4. Did we hear all of that correctly? And if so, was this a contract that you went direct to the data center, or did you have an intermediary that basically is taking care of all the power and they've hired you?

Yeah, so this particular project you're asking about is more of a construction commissioning project. And on all of these projects, we work with both the end user and the power provider on both. And so we're normally engaged with both. And there's numerous ones of these projects that are active and engaging on these projects. I call it construction commissioning. And those are normally the way we view it, a six to 12 month contract, depending on, you know, are you just going to commission phase one or which systems are you going to work on on commissioning? But that's what this project anticipated to be. Different than the one that's starting up next year, which is more of a bridge power solution, longer in duration. And all of these have the, you know, minimum period of time with potential extensions related to what's happening on their time schedule, et cetera.

And is the monthly, is the magnitude of this contract, and that original commissioning is the monthly revenue similar to what you will have for the monthly revenue from the bridge? It's simply a shorter period of time because it's just part of the commissioning rather than a long-term bridge, or is there a difference in the size of these two plants that makes the data centers that makes this very different?

Yeah, it's a little different. So I would say, you know, when you think about the bridge, it's defined on how many megawatts we're providing, and it's consistently provided in consistent load. The commissioning project that we're speaking about that's starting, you know, this quarter and going in the back, you know, the back half of this year is a smaller and total megawatt project, and it's lower in gallons related to that, but still meaningful in size. And again, I mean, what we wanted to present is kind of expectation of the recovery, kind of the trough in the first quarter and second quarter, and then how the recovery of the business goes into 2026. And that's really what we're trying to highlight for our shareholders and stakeholders.

That's appreciated, Casey. And let me take that comment that you made that there are many other contracts like this. I mean, we all hear of all the data centers ramping up. There's lots of commissioning taking place. Talk to us about the pipeline of opportunities in the data center arena that you have because we're basically just over the last few months you've announced two

Yeah, Bill, let me see if I can get it. I mean, we're certainly super excited about it. So I don't want to like, you know, we're optimistic. You know, the demand is the pipeline is pretty exciting. You know, I think when you look back about 18 months, you know, everybody was like, well, all the power is going to come in right on time or early. Pipelines are going to get put in on time or early. And then what's happened is just natural delays and construction delays and different things have creeped into this giant infrastructure build-out that you all know about and it's all going on. And you think about how that kind of rolls downhill, that first, you know, the power generation and those type of backup power and solutions. And then now we're getting to how do you provide the natural gas needed to do the either commissioning startup or bridges. And so what we're really excited about is this commissioning activity because, you know, this is where we go in and support the data center and you know, commissioning their project, testing all their cooling and all their different things while they're waiting on either the final gas pipeline or the connection to the grid. And, you know, the perfect world is connection to the grid with cheap power that's, you know, never, never, never stops. And then secondly, you know, they're going behind the meter with pipeline. So both of those, Stabilis can participate in providing either commissioning or bridge, and that's what we're working around. Obviously, right now, we're seeing more commissioning activity in the first quarter of this year. That's where the activity is at with our customers. With some people, longer-term bridge is not the perfect solution for the client. So, you know, that's a much different cost structure. and they would prefer to get either connected to the grid or their gas pipeline put in. So commissioning is where we really, really provide a lot of value and speed up their to-market strategy. So lots of activity around that. I'd say lots of activity around a six-month, a 12-month, type activity, a little bit less activity when we're talking about the longer-term big bridge projects, but we have a number of those we're working on.

We really appreciate that perspective, Casey. We've come to this point because there have been all the delays, so essentially one way we could think about these commissioning opportunities is they may be ready to go live. They're done with their testing and using this one contract as an example in the fourth quarter. But if the grid or the pipeline is not ready, then your commissioning contract essentially converts to a breach contract is how it likely would continue.

Yeah. Yeah.

That's a good way to think about it, or the other way to think about it is, let's say their commissioning is in modular formats, and they may get power connected to one of the modular concepts, and then you would move into the next phase of commissioning, the next center nearby because it's normally in groups or hubs. So that may be another way to think about it. But we don't think about it, you know, we're going to talk to you guys about what we know, but we don't expect it to be just a short-term situation where it's just temporary for just now. And then secondly, you're going to have outages and other backup needs to continue with the reliability that they're committing to, and that will provide additional work for LNG long beyond the construction phase and bridge phase.

For those of us who have never brought a data center online, thank you for that additional perspective. It is helpful.

Yeah, so just think about them as, like, modular. They're, like, done in, like, you know, 80 megawatt, 50 megawatt, 100 megawatt building modular, and then they've just got them stacked up around each other. And so, you know, we're providing, you know, unit work for units in the system.

Great. Thank you. And then one question relative to the subchartering of the vessel. What's the timeline that you would anticipate that to – Yes.

Good question. Thank you for bringing it up. We wanted to take care of covering that. So, again, we initially chartered that to support our client in Galveston. We ended up coming up for a number of different reasons with them going on a different solution. We anticipated a very quick subcharter capability with that vestibule. That's all, but the Iran war disrupted rechartering activity and put a delay on it. We anticipate it happening in this quarter. So we're working on numerous subcharter agreements right now, and we anticipate it happening in Q2 for effective date in Q3. We don't expect that, and we don't expect a subcharter to be at a big profit So we expect it to be net neutral is what we want to guide you all to.

Thank you again.

Once again, if you have a question, you may press star 1 on your telephone keypad. We'll go next to Spencer Lemmon, a private investor.

Well, good morning, guys. Good morning. How are you doing, Spencer? Pretty good. Still alive. Just a couple, two questions if I may. First, you know, with this straits of foremost situation and oil and LNG getting all backed up, there's a lot of talk about some of these countries coming into the Gulf of America and picking up their oil and LNG. Are you currently in a position to capitalize on that development?

Yeah, I mean, Spencer, I appreciate the question. It's such a positive, leading question. Thank you for it. We have never seen the max... ...Alveston LNG bunkering might have reliable, consistent supply there for the marine bunkering activity. And though the war and the disruption or war or the conflict or security conflict, whatever it was, we're calling it, has caused some confusion and disruption on the timing of our subcharter of the vessel and, you know, the potential short delays on what the construction would take and how that would work. The macro around it is amazingly strong. And so we're super, it validates why we need more LNG fit-for-purpose bunkering capacity to on the water in the Gulf Coast. And so it just validates what we're doing. And our customers know that. Our commercial team is working heavy and hard on it. I think, you know, duration of contract that we need, credit quality of contract, how that matches up with the project financing are the things we're working on right now. validation of they need the project with a Jones Act vessel in the Houston ship channel is not of confusion. And I also think the conflict in the price of LNG also does a couple different things. It furthers our fit-for-purpose supply that we're doing for aerospace and the value of what all these aerospace customers are doing with the technology of LNG. telecommunications and how important all that is and the global conflicts and everything, it's just all kind of plays together. And so this conflict further reinforces the need for our space, aerospace, U.S. presence to be successful. And then lastly, it further reiterates that the price of U.S. natural gas and LNG for behind-the-meter power for AI data center activity is advantaged versus global-priced data centers. So we have an advantage now. And now, based on the price of oil globally and LNG globally on the TTF or JMK basis, it further makes U.S. data centers more competitive when they're either on grid power, pipeline, or LNG. So it just reiterates the thesis of all three of our growth legs of the company. And obviously, you know, we're not reporting a great quarter. I don't want to gloss over that. But if we look at the future of where Stabilis is, three growth platforms are, the customers we have and what we're doing. We're super excited about it and disappointed in our financial performance that we've presented just due to the expected trough that we kind of hopefully communicated with the two contracts falling off, but are excited about the back half of the year and really excited about next year. We anticipate getting We are working very hard on our Galveston LNG bunkering project, but we're equally excited about the aerospace and the behind-the-meter work power.

Well, that sounds great. Thank you. That sort of segues into my second, still in charge of IR. With all that's happening now, and just coincidentally, by the way, the data center stuff was all over Fox Business this morning. And it's just such a hot item. And just wondering whether this is time when maybe we get on the radar a little bit with your story. Any plans for it? I mean, you've really become an AI company, and not that I want you to hype it, overhype it, but any plans for maybe getting the story out?

Well, we're starting this morning. I'll let Andy clean up the call. We're starting this morning by talking about what's contracted and what we're doing on the commissioning bridge and different versions of the behind-the-meter power story. But, you know, we've got really three growth stories. We've got the marine, which is really exciting. You've got the aerospace, and you've got this behind-the-meter. And we think... It is important what you bring up is that it is three exciting growth platforms where we're delivering LNG and disadvantaged U.S. LNG into the market. So I'll stop there and then let Andy answer the question directly, Spencer. But, you know, we are communicating what we're doing, and we're hopeful that over time as we see the growth that we're anticipating for next year already. And then we see, and we've announced, and then we see the marine project come online, which we anticipate to be able to get that to a point. And again, that'll take a while to get construction done, barge build, but get it to a FID position. then we believe people will be able to do math around what that means and understand the value like we see the future value of our platform. But we can't force people to believe in it to the same level that we do. We can only communicate kind of what we're up to. So I'll stop there. Andy, I'm sure, is working on the IR stuff. Yeah, well, thanks for the question, Spencer. I mean, you know, kind of to... add to what Casey said, you know, philosophically, we believe that, you know, our number one priority is to demonstrate this in the results of the business and grow the business, grow the top line, grow the profitability, and then the stock price, you know, starts to take care of itself. And so that's number one. And number two is we do, you know, intend to get out there and do more in terms of telling the story as we get more things, more exciting things to start talking about.

So... You know, appreciate the comment, and we do think it's important both to deliver the results and also to make sure we're doing a good job of communicating it.

Yeah, and just corporate governance, you know, we file some stuff and have the company in a position to do things around that, so we're still doing all the normal work around that special. Okay, thank you.

We'll take our next question from Bill Lavelle on the Peckin Capital.

Thank you. I'd actually like to follow up on the data center commissioning. Is this the same data center as the one that you were doing the bridge with?

No, completely different project, different region, different project.

And will this commissioning use George West's capacity or third parties?

You know, we can always do both. So it's always kind of the benefit of having, you know, your own supply for backup and reliability to make sure you can do it. This project is not anticipating using that offtake as the primary source. Neither of these are. And a lot of our own offtake projects, which is being drawn into both industrial projects and aerospace. So I'd say that's how we think about the mix right now. I think the great thing about both of these data center projects, Bill, is that they're not using George West molecules, so it doesn't absorb all our capacity. So really it allows us to grow the top line and continue to grow the business without having to wait on – you know, internal production expansion of internal production capacity. So it's great, you know, it's great for that reason.

Right. And will the same third-party power provider, is it the same one that has contracted you for the commissioning, has contracted you for the bridge power with the other data center?

You know, we work with numerous companies. for the power providers and numerous data centers, in-user owners. And so I think it's due to confidentiality and competitive information, we'd like to not share that level of detail.

I'll switch to an entirely different question. You've mentioned the aerospace and industrial activity and the strength there. With that in mind, What is your current guesstimate on when George West volumes will be completely used again?

You know, we're going to have some room on George West. We're anticipating getting closer to a not 100% utilization, but a consistent kind of offtake that we were anticipating in the third and fourth quarter of this year, being back to those kind of reasonable utilization numbers. We just were significantly off as those two projects ended. There were heavy off-takers of both of our production facilities. We're seeing a steady increase on those pull-throughs and that usage, and we expect that to happen the third and fourth quarter of this year. Not fully utilized, but at a number that's consistent with what we've seen in the past. We look at kind of the revenue and earnings profile of the current operation. And that is pre the addition of the new contract for next year.

And that contract will or will not be using George West molecules? Right now it does not need to. It will be addition. Great. Thank you. Thank you both again for taking the extra questions. Delighted to do it. Thanks for joining the call.

This concludes the Q&A portion of today's call. I would now like to turn the floor over to Andy Papala for closing remarks.

Thank you, everyone, for joining the call today. We appreciate the interest in the company and the continued support, and we look forward to updating you on our developments, you know, as we have them, and talking to you guys again next quarter. So thank you all very much.

Thank you. This concludes today's Stabilized Solutions first quarter 2026 earnings conference call. Please disconnect your line at this time and have a wonderful day.