Stabilis Solutions, Inc. (NASDAQ:SLNG) Q3 2023 Earnings Conference Call November 9, 2023 9:00 AM ET Company Participants Andrew Puhala - Senior Vice President and Chief Financial Officer Westervelt Ballard - President and Chief Executive Officer Conference Call Participants Martin Malloy - Johnson Rice Jeffrey Grampp - Alliance Global Partners Barry Haimes - Sage Asset Management Operator Welcome to the Stabilis Solutions Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please be advised ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 2023 ☐ TRANSITION REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number. 001-40364 STABILIS SOLUTIONS, INC. (Exact name of registrant as specified in its charter) Florida 59-3410234 (State or other ju ...

Stabilis Solutions, Inc. (NASDAQ:SLNG) Q2 2023 Earnings Conference Call August 10, 2023 9:00 AM ET Company Participants Andy Puhala – Senior Vice President and Chief Financial Officer Westy Ballard – President and Chief Executive Officer Conference Call Participants Martin Malloy – Johnson Rice Jeff Grampp – Alliance Global Partners Barry Haimes – Sage Asset Management Operator Welcome to Stabilis Solutions Second Quarter 2023 Earnings Conference Call. At this time all participants have been placed on a li ...

"Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 2023 ☐ TRANSITION REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number. 001-40364 STABILIS SOLUTIONS, INC. (Exact name of registrant as specified in its charter) Florida 59-3410234 (State or other jurisdic ...

Financial Data and Key Metrics Changes - The company reported revenues of $26.8 million for Q1 2023, which is 32% higher than the same quarter last year but down 9% from Q4 2022 [119] - Net income from continuing operations was $1.1 million in the quarter compared to a net loss of $0.4 million in the year-ago quarter [26] - Adjusted EBITDA for the quarter was $3.5 million, up from $2 million in the year-ago quarter but down from $3.9 million in Q4 2022 [26] Business Line Data and Key Metrics Changes - The marine business contributed approximately 28% of total revenue for the quarter, a significant increase from 4% in Q1 2022 [22] - The industrial business showed strong demand across multiple sectors, particularly in oil and gas, agriculture, and remote power [108] - Aerospace revenue accounted for a little over 5% of total revenue, down about 300 basis points compared to the first quarter of last year [129] Market Data and Key Metrics Changes - The U.S. LNG bunkering market is still in its early stages but is expected to grow significantly due to the International Maritime Organization's mandate to lower sulfur emissions [110] - The company is positioned to capitalize on the increasing demand for LNG as a cleaner fuel alternative, especially in the maritime industry [109] Company Strategy and Development Direction - The company is exploring brown and greenfield expansion opportunities across various U.S. geographies, not limited to the Gulf of Mexico [15] - There is a focus on expanding liquefaction capacity and infrastructure to meet anticipated demand while ensuring capital is deployed thoughtfully [124] - The company aims to expand its offerings into additional clean emerging fuels, indicating a long-term growth strategy [113] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to execute growth initiatives, citing sufficient liquidity and access to various capital sources [11] - The management acknowledged that the marine business may experience uneven results in the near term as vessel operators finalize their fueling strategies [122] - There is optimism regarding the export business, with the potential for significant volumes as geopolitical factors and natural gas prices evolve [24] Other Important Information - The company has made considerable investments in liquefaction, bunkering, and storage assets to support anticipated growth [11] - The company is well-positioned to be a premier bunkering hub in the U.S. due to favorable competitive positioning in natural gas [116] Q&A Session Summary Question: What caused the uneven results in projects? - Management indicated that the uneven results are due to additional expenses incurred as projects come online and the foundational work being laid for future growth [28] Question: Is bunkering profitable yet? - Management confirmed that bunkering is profitable today and aims to continue this trend as the business scales [16] Question: What percentage of revenues came from aerospace during the quarter? - Aerospace accounted for a little over 5% of total revenues, down about 300 basis points from the previous year [129] Question: How many new ships are expected in the market next year? - Management noted that the number of LNG-fueled vessels is expected to grow significantly, with a sevenfold increase anticipated over the next four years [63] Question: How does the company view the regulatory environment around IMO 2020? - Management acknowledged that while shipping companies should have reacted sooner to the regulations, the reality is that many are now beginning to make the necessary transitions [40]

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=Part%20I.%20Financial%20Information) This part provides the unaudited financial statements and management's discussion and analysis for Q1 2023 [ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)](index=4&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents Stabilis Solutions, Inc.'s unaudited condensed consolidated financial statements and detailed notes for Q1 2023 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position at March 31, 2023, and December 31, 2022 Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2023 | December 31, 2022 | | :-------------------------------- | :------------- | :---------------- | | Cash and cash equivalents | $6,861 | $11,451 | | Total current assets | $18,029 | $32,217 | | Property, plant and equipment, net| $51,929 | $47,669 | | Total assets | $86,927 | $96,580 | | Total current liabilities | $16,338 | $27,532 | | Total liabilities | $25,200 | $36,713 | | Total stockholders' equity | $61,727 | $59,867 | - Total assets decreased by approximately **$9.65 million** from December 31, 2022, to March 31, 2023, primarily driven by a decrease in current assets, including cash and accounts receivable[12](index=12&type=chunk) - Total liabilities decreased by approximately **$11.51 million**, mainly due to a reduction in current liabilities such as accounts payable and accrued liabilities[12](index=12&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section details the company's financial performance, including revenues, expenses, and net income (loss) for Q1 2023 and 2022 Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Revenues | $26,842 | $20,267 | | Total operating expenses | $25,829 | $20,632 | | Income (loss) from operations | $1,358 | $(278) | | Net income (loss) from continuing operations| $1,084 | $(359) | | Net income (loss) | $1,084 | $(406) | | Basic net income (loss) per common share | $0.06 | $(0.02) | | Diluted net income (loss) per common share | $0.06 | $(0.02) | - Revenues increased by **$6.575 million (32.4%)** year-over-year[15](index=15&type=chunk) - The company reported a net income of **$1.084 million** for the current quarter, a significant improvement from a net loss of **$0.406 million** in the prior year quarter[15](index=15&type=chunk) [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) This section presents total comprehensive income (loss), including net income and other comprehensive income items, for Q1 2023 and 2022 Condensed Consolidated Statements of Comprehensive Income (Loss) Highlights (in thousands) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net income (loss) | $1,084 | $(406) | | Foreign currency translation adjustment, net of tax | $187 | $377 | | Total comprehensive income (loss) | $1,271 | $(29) | - Total comprehensive income for the three months ended March 31, 2023, was **$1.271 million**, a substantial increase from a comprehensive loss of **$0.029 million** in the prior year quarter[17](index=17&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%27%20Equity) This section outlines changes in stockholders' equity, including common stock, additional paid-in capital, and accumulated deficit, for the period ended March 31, 2023 Condensed Consolidated Statements of Stockholders' Equity Highlights (in thousands, except share data) | Metric | Balance at Dec 31, 2022 | Balance at Mar 31, 2023 | | :-------------------------------- | :---------------------- | :---------------------- | | Common Stock (Shares) | 18,420,067 | 18,433,654 | | Common Stock (Amount) | $19 | $19 | | Additional Paid-in Capital | $100,137 | $100,726 | | Accumulated Other Comprehensive Income | $82 | $269 | | Accumulated Deficit | $(40,371) | $(39,287) | | Total Stockholders' Equity | $59,867 | $61,727 | - Total stockholders' equity increased by **$1.86 million** from December 31, 2022, to March 31, 2023, primarily due to net income and other comprehensive income[20](index=20&type=chunk) - **13,587 shares** of common stock were issued from the vesting of stock-based awards during the three months ended March 31, 2023[20](index=20&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details cash inflows and outflows from operating, investing, and financing activities for Q1 2023 and 2022 Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net cash provided by operating activities | $93 | $3,155 | | Net cash used in investing activities | $(3,727) | $(818) | | Net cash used in financing activities | $(961) | $(1,132) | | Net increase (decrease) in cash and cash equivalents | $(4,590) | $1,202 | | Cash and cash equivalents, end of period | $6,861 | $2,112 | - Net cash provided by operating activities significantly decreased to **$0.093 million** in Q1 2023 from **$3.155 million** in Q1 2022, primarily due to higher net working capital requirements[23](index=23&type=chunk)[100](index=100&type=chunk) - Net cash used in investing activities increased to **$3.727 million** in Q1 2023 from **$0.818 million** in Q1 2022, mainly due to increased acquisition of fixed assets[23](index=23&type=chunk)[101](index=101&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements, covering business operations, accounting policies, and specific financial line items [Note 1. Description of Business and Basis of Presentation](index=9&type=section&id=1.%20DESCRIPTION%20OF%20BUSINESS%20AND%20BASIS%20OF%20PRESENTATION) This note describes Stabilis Solutions, Inc.'s core business as an energy transition company and the basis for presenting its financial statements - Stabilis Solutions, Inc. is an energy transition company providing turnkey clean energy production, storage, transportation, and fueling solutions primarily using liquefied natural gas (LNG) to diverse end markets[24](index=24&type=chunk)[25](index=25&type=chunk) - The company also holds a **40% equity investment** in BOMAY Electric Industries, Inc., a Chinese joint venture building power and control systems for the energy industry[26](index=26&type=chunk) - The Brazil Operations were sold on October 31, 2022, and are classified as discontinued operations, with retrospective application to prior periods[29](index=29&type=chunk) [Note 2. Discontinued Operations](index=10&type=section&id=2.%20DISCONTINUED%20OPERATIONS) This note details the financial impact and classification of the Brazil Operations as discontinued following their sale in October 2022 - The sale of Brazil Operations on October 31, 2022, met the criteria for discontinued operations, representing a strategic shift[33](index=33&type=chunk) Loss from Discontinued Operations (in thousands) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Revenue | $— | $2,766 | | Loss from discontinued operations, net of income taxes | $— | $(47) | - There were no assets, liabilities, results of operations, or cash flows from discontinued operations for the three months ended March 31, 2023[34](index=34&type=chunk) [Note 3. Revenue Recognition](index=11&type=section&id=3.%20REVENUE%20RECOGNITION) This note explains the company's policies for recognizing revenue from various sources, including LNG product, rental, and service activities - Revenues are recognized when promised goods or services are delivered, measured as consideration specified in the contract[37](index=37&type=chunk) - Revenue sources include LNG product, rental, service, and other, with specific recognition criteria for each[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk) Disaggregated Revenues by Source (in thousands) | Revenue Source | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--------------- | :-------------------------------- | :-------------------------------- | | LNG Product | $21,905 | $16,785 | | Rental | $2,247 | $1,986 | | Service | $2,066 | $1,395 | | Other | $624 | $101 | | Total revenues | $26,842 | $20,267 | Disaggregated Revenues by Geographic Location (in thousands) | Geographic Location | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------ | :-------------------------------- | :-------------------------------- | | Mexico | $2,819 | $3,766 | | United States | $24,023 | $16,501 | | Total revenues | $26,842 | $20,267 | [Note 4. Derivative Instruments](index=12&type=section&id=4.%20DERIVATIVE%20INSTRUMENTS) This note describes the company's use of natural gas call options to manage price risk and their fair value on the balance sheet - The Company held natural gas call options totaling **1.1 million MMBtu** as of March 31, 2023, to manage the risk of increasing natural gas prices[44](index=44&type=chunk) Fair Value of Natural Gas Derivatives (in thousands) | Location on Balance Sheet | March 31, 2023 | December 31, 2022 | | :------------------------ | :------------- | :---------------- | | Prepaid expenses and other current assets | $138 | $347 | | Right-of-use assets and other noncurrent assets | $13 | $225 | | Total | $151 | $572 | - An unrealized loss of **$0.169 million** on natural gas derivatives was incurred in Q1 2023 due to lower future natural gas prices, compared to no derivatives in Q1 2022[46](index=46&type=chunk)[47](index=47&type=chunk) [Note 5. Prepaid Expenses and Other Current Assets](index=13&type=section&id=5.%20PREPAID%20EXPENSES%20AND%20OTHER%20CURRENT%20ASSETS) This note details the composition and changes in prepaid expenses and other current assets, including natural gas derivatives Prepaid Expenses and Other Current Assets (in thousands) | Item | March 31, 2023 | December 31, 2022 | | :-------------------------------- | :------------- | :---------------- | | Prepaid insurance | $712 | $990 | | Prepaid supplier expenses | $232 | $286 | | Other receivables | $103 | $254 | | Natural gas derivatives at fair value, current | $138 | $347 | | Deposits | $203 | $236 | | Other | $14 | $73 | | Total prepaid expenses and other current assets | $1,402 | $2,186 | - Total prepaid expenses and other current assets decreased from **$2.186 million** at December 31, 2022, to **$1.402 million** at March 31, 2023[49](index=49&type=chunk) [Note 6. Property, Plant and Equipment](index=13&type=section&id=6.%20PROPERTY%2C%20PLANT%20AND%20EQUIPMENT) This note provides a breakdown of property, plant, and equipment, including liquefaction plants, vehicles, and construction in progress Property, Plant and Equipment, Net (in thousands) | Item | March 31, 2023 | December 31, 2022 | | :-------------------------------- | :------------- | :---------------- | | Liquefaction plants and systems | $47,645 | $47,636 | | Vehicles and tanker trailers and equipment | $52,936 | $52,647 | | Construction in progress | $6,516 | $527 | | Total cost | $109,651 | $103,368 | | Less: accumulated depreciation | $(57,722) | $(55,699) | | Net property, plant and equipment | $51,929 | $47,669 | - Net property, plant and equipment increased by **$4.26 million** from December 31, 2022, to March 31, 2023, primarily due to an increase in construction in progress[50](index=50&type=chunk) - Depreciation expense was **$2.0 million** for Q1 2023, down from **$2.3 million** in Q1 2022[50](index=50&type=chunk) [Note 7. Investment in Foreign Joint Venture](index=13&type=section&id=7.%20INVESTMENT%20IN%20FOREIGN%20JOINT%20VENTURE) This note details the company's **40% equity investment** in BOMAY Electric Industries, Inc., a Chinese joint venture, and its operational results - The Company holds a **40% interest** in BOMAY Electric Industries, Inc., a Chinese joint venture that builds electrical systems[51](index=51&type=chunk) BOMAY's Operational Results (in thousands) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------- | :-------------------------------- | :-------------------------------- | | Revenue | $21,214 | $10,079 | | Earnings | $901 | $323 | - The Company's equity in earnings from the foreign joint venture was **$0.393 million** in Q1 2023, up from **$0.161 million** in Q1 2022[15](index=15&type=chunk)[54](index=54&type=chunk) [Note 8. Accrued Liabilities](index=15&type=section&id=8.%20ACCRUED%20LIABILITIES) This note provides a breakdown of accrued liabilities, including compensation, LNG fuel, and customer deposits, and their changes Accrued Liabilities (in thousands) | Item | March 31, 2023 | December 31, 2022 | | :-------------------------------- | :------------- | :---------------- | | Compensation and benefits | $1,709 | $3,111 | | LNG fuel and transportation | $3,387 | $6,549 | | Customer deposits and prepayments | $1,406 | $8,456 | | Other accrued liabilities | $3,173 | $338 | | Total accrued liabilities | $10,681 | $19,642 | - Total accrued liabilities decreased by **$8.961 million** from December 31, 2022, to March 31, 2023, primarily due to reductions in customer deposits and prepayments, and LNG fuel and transportation accruals[56](index=56&type=chunk) [Note 9. Debt](index=15&type=section&id=9.%20DEBT) This note details the company's debt obligations, including secured term notes and promissory notes, and their carrying values Carrying Value of Debt (in thousands) | Item | March 31, 2023 | December 31, 2022 | | :-------------------------------- | :------------- | :---------------- | | Secured term note, net of debt issuance costs | $8,661 | $8,650 | | Secured promissory note - related party | $1,839 | $2,435 | | Insurance and other notes payable | $489 | $848 | | Less: amounts due within one year | $(2,328) | $(3,283) | | Total long-term debt | $8,661 | $8,650 | - The Company has a secured term note (AmeriState Loan) with **$9.0 million** outstanding as of March 31, 2023, maturing in April 2031 and bearing interest at **5.75%** per annum through April 2026[58](index=58&type=chunk) - A secured promissory note to a related party (MG Finance Co., Ltd.) had an outstanding balance of **$1.8 million** as of March 31, 2023, with repayments in equal monthly installments through December 2023[61](index=61&type=chunk) [Note 10. Related Party Transactions](index=16&type=section&id=10.%20RELATED%20PARTY%20TRANSACTIONS) This note discloses transactions and agreements with related parties, including debt obligations and purchases of supplies and services - The Company has a secured promissory note payable with MG Finance Co., Ltd., a subsidiary of The Modern Group, which is a related party[63](index=63&type=chunk) - Purchases of supplies and services from subsidiaries of The Modern Group totaled **$0.1 million** in Q1 2023, up from **$48 thousand** in Q1 2022[64](index=64&type=chunk) - The Company has a commitment for future equipment delivery during 2023 totaling **$0.6 million** with Chart E&C, which beneficially owns **8.0%** of the Company's common stock[65](index=65&type=chunk) [Note 11. Commitments and Contingencies](index=16&type=section&id=11.%20COMMITMENTS%20AND%20CONTINGENCIES) This note addresses potential future obligations and legal matters, including environmental compliance and ongoing legal actions - The Company does not anticipate any expenditures to comply with environmental laws and regulations that would materially impact its financial position, results of operations, or liquidity[66](index=66&type=chunk) - Management believes the ultimate resolution of various legal actions, claims, and audits will not have a material adverse effect on the Company's consolidated financial position, results of operations, or liquidity[68](index=68&type=chunk) [Note 12. Stockholders' Equity and Stock-Based Compensation](index=18&type=section&id=12.%20STOCKHOLDERS%27%20EQUITY%20AND%20STOCK-BASED%20COMPENSATION) This note details changes in stockholders' equity and the expense related to stock-based compensation plans Stock Compensation Expense (in thousands) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------ | :-------------------------------- | :-------------------------------- | | Stock compensation expense| $600 | $500 | - The Company's long-term incentive plan provides for a maximum of **4,000,000 shares** of common stock available for issuance[70](index=70&type=chunk) - **13,587 shares** of common stock were issued upon vesting of restricted stock units during Q1 2023, compared to **501,334 shares** in Q1 2022[71](index=71&type=chunk) [Note 13. Net Income (Loss) Per Share](index=19&type=section&id=13.%20NET%20INCOME%20%28LOSS%29%20PER%20SHARE) This note presents the calculation of basic and diluted net income (loss) per common share, considering potential dilutive securities Net Income (Loss) Per Common Share (in thousands, except share and per share data) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Basic weighted average number of common shares outstanding | 18,426,408 | 18,191,446 | | Diluted net income (loss) per common share | $0.06 | $(0.02) | - Dilutive securities, including RSUs and stock options, were **91,509** for Q1 2023, but none for Q1 2022 due to net losses making them anti-dilutive[73](index=73&type=chunk)[74](index=74&type=chunk) [Note 14. Supplemental Cash Flow Information](index=19&type=section&id=14.%20SUPPLEMENTAL%20CASH%20FLOW%20INFORMATION) This note provides additional details on cash flow items not directly presented in the main cash flow statement, such as interest and taxes paid Supplemental Cash Flow Information (in thousands) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Interest paid | $182 | $181 | | Income taxes paid | $— | $(14) | | Acquisition of fixed assets included within accounts payable and accrued expenses | $3,000 | $170 | [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=20&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Stabilis Solutions, Inc.'s financial condition, operational results, liquidity, and capital resources for Q1 2023 versus Q1 2022 [Overview](index=20&type=section&id=Overview) This section provides a general description of Stabilis Solutions, Inc.'s business model, revenue generation, and operational assets - Stabilis Solutions, Inc. is an energy transition company providing turnkey clean energy solutions, primarily using LNG, to diverse end markets in North America[77](index=77&type=chunk) - The company generates revenue through LNG production and delivery, cryogenic equipment rental, and engineering and field support services[79](index=79&type=chunk) - Stabilis operates two liquefiers in Texas and Louisiana, with capacities of **100,000** and **30,000 LNG gallons per day**, respectively, and also sources LNG from third parties[80](index=80&type=chunk) [Results of Operations](index=21&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, including revenues, operating expenses, and net income, for Q1 2023 and 2022 Consolidated Operating Results (in thousands, except percentages) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | $ Change | % Change | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | :------- | :------- | | Revenues | $26,842 | $20,267 | $6,575 | 32.4% | | Total operating expenses | $25,829 | $20,632 | $5,197 | 25.2% | | Income (loss) from operations | $1,358 | $(278) | $1,636 | 588.5% | | Net income (loss) from continuing operations| $1,084 | $(359) | $1,443 | 401.9% | | Net income (loss) | $1,084 | $(406) | $1,490 | 367.0% | - The company achieved a significant turnaround, moving from a net loss of **$0.406 million** in Q1 2022 to a net income of **$1.084 million** in Q1 2023[86](index=86&type=chunk) [Revenues](index=22&type=section&id=Revenues_MD%26A) This section discusses the factors contributing to the **32% increase** in revenues for Q1 2023 compared to Q1 2022 - Revenues increased by **$6.6 million (32%)** in Q1 2023 compared to Q1 2022[87](index=87&type=chunk) - The increase was primarily driven by higher natural gas prices, increased pricing charged to customers, increased revenues from minimum purchase contracts, and growth in rental, service, and other revenue from additional projects[93](index=93&type=chunk) - The revenue increase was partially offset by fewer gallons of LNG delivered in Q1 2023[87](index=87&type=chunk) [Operating Expenses](index=22&type=section&id=Operating%20Expenses_MD%26A) This section analyzes changes in cost of revenues, selling, general and administrative expenses, and depreciation for Q1 2023 - Cost of revenues increased by **$4.8 million (31%)** in Q1 2023, maintaining **76% of revenue**, driven by higher natural gas prices, inflationary pressures, increased take-or-pay fees, and higher labor/equipment costs for marine bunkering projects[88](index=88&type=chunk)[94](index=94&type=chunk) - Selling, general and administrative expenses increased by **$0.4 million**, mainly due to increased compensation, headcount, and professional services[89](index=89&type=chunk) - Depreciation expense decreased by **12%** due to assets reaching the end of their depreciable lives[90](index=90&type=chunk) - Net equity income from foreign joint venture operations increased by **$0.3 million** due to increased operating activity in China[90](index=90&type=chunk) [Discontinued Operations](index=23&type=section&id=Discontinued%20Operations_MD%26A) This section reports on the operating loss from discontinued Brazil Operations in Q1 2022, with no activity in Q1 2023 - The operating loss from discontinued operations (Brazil Operations) was **$47 thousand** for Q1 2022, with no activity in Q1 2023 following the sale on October 31, 2022[95](index=95&type=chunk) [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to meet its financial obligations, including cash balances, debt, and future capital requirements - As of March 31, 2023, the Company had **$6.9 million** in cash and cash equivalents and **$11.3 million** in outstanding debt and lease obligations[97](index=97&type=chunk) - The Company has a **$10.0 million** loan facility with **$1.0 million** available for future draws[97](index=97&type=chunk) - Management believes existing cash balances and the loan facility are sufficient to fund operations for the next twelve months, while also evaluating additional financing alternatives[98](index=98&type=chunk) [Cash Flows](index=23&type=section&id=Cash%20Flows_MD%26A) This section summarizes cash flows from operating, investing, and financing activities for Q1 2023 and 2022 Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------ | :-------------------------------- | :-------------------------------- | | Operating activities | $93 | $3,155 | | Investing activities | $(3,727) | $(818) | | Financing activities | $(961) | $(1,132) | | Net increase (decrease) in cash and cash equivalents | $(4,590) | $1,202 | - Net cash provided by operating activities decreased by **$3.1 million** year-over-year, primarily due to higher net working capital requirements[100](index=100&type=chunk) - Net cash used in investing activities increased to **$3.7 million**, mainly due to cash paid for additional asset purchases[101](index=101&type=chunk) [Future Cash Requirements](index=24&type=section&id=Future%20Cash%20Requirements) This section outlines anticipated capital expenditures and their funding, dependent on investment opportunities and capital availability - Capital expenditures for Q1 2023 were **$3.7 million**, primarily for liquefaction assets and rolling stock[104](index=104&type=chunk) - The Company had open purchase orders of approximately **$4.0 million** for capital expenditures at March 31, 2023[104](index=104&type=chunk) - Future capital expenditures depend on investment opportunities and the availability of additional capital at favorable terms[104](index=104&type=chunk) [Shelf Registration Statement](index=24&type=section&id=Shelf%20Registration%20Statement) This section describes the **$100.0 million** shelf registration statement for issuing various securities to fund operations or transactions - A shelf registration statement (Form S-3) allows the Company to issue up to **$100.0 million** in common stock, preferred stock, or warrants to fund working capital, repay debt, or finance future transactions[105](index=105&type=chunk) - As a smaller reporting company, sales under the Shelf Registration are limited to **one-third of public float** in any twelve-month period[105](index=105&type=chunk) - No issuances were made under the Shelf Registration during the three months ended March 31, 2023[105](index=105&type=chunk) [Off-Balance Sheet Arrangements](index=24&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of material off-balance sheet arrangements that could impact the company's financial position - As of March 31, 2023, the Company had no transactions meeting the definition of off-balance sheet arrangements that could materially affect its financial position or operating results[106](index=106&type=chunk) [Critical Accounting Policies and Estimates](index=24&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section states that there were no significant changes to the company's critical accounting policies and estimates in Q1 2023 - There have been no significant changes in the Company's critical accounting policies and estimates during Q1 2023 from those disclosed in the 2022 Annual Report on Form 10-K[108](index=108&type=chunk) [New Accounting Standards](index=24&type=section&id=New%20Accounting%20Standards) This section reports that the adoption of ASU 2016-13 had no material impact on the company's financial statements in Q1 2023 - The adoption of ASU 2016-13, 'Financial Instruments - Credit Losses,' in Q1 2023 had no material impact on the Company's Condensed Consolidated Financial Statements[32](index=32&type=chunk)[109](index=109&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Stabilis Solutions, Inc. is not required to provide quantitative and qualitative disclosures about market risk - The Company is exempt from providing quantitative and qualitative disclosures about market risk as it qualifies as a 'smaller reporting company'[110](index=110&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=25&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of the Company's disclosure controls and procedures and reports on any changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=25&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as of March 31, 2023 - The Company's management, including the principal executive and financial officers, concluded that disclosure controls and procedures were effective as of March 31, 2023[111](index=111&type=chunk) [Changes in Internal Control over Financial Reporting](index=25&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section reports no material changes in internal control over financial reporting during the last fiscal quarter - There were no changes in internal control over financial reporting during the last fiscal quarter that materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting[112](index=112&type=chunk) [PART II. OTHER INFORMATION](index=25&type=section&id=Part%20II.%20Other%20Information) This part includes disclosures on legal proceedings, risk factors, other information, exhibits, and required signatures [ITEM 1. LEGAL PROCEEDINGS](index=25&type=section&id=Item%201.%20Legal%20Proceedings) This section addresses the Company's involvement in legal proceedings and management's assessment of their potential financial impact - Management believes the ultimate resolution of various legal proceedings and claims arising in the ordinary course of business will not have a material effect on the Company's financial position or results of operations[114](index=114&type=chunk) [ITEM 1A. RISK FACTORS](index=25&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the risk factors previously disclosed in the Company's Annual Report on Form 10-K and confirms no material changes for the current period - There have been no material changes in the Company's risk factors disclosed in its Annual Report on Form 10-K for the year ended December 31, 2022, during the three months ended March 31, 2023[115](index=115&type=chunk) [ITEM 5. OTHER INFORMATION](index=25&type=section&id=Item%205.%20Other%20Information) This section indicates that there is no other information to report for the period - No other information is reported under this item[116](index=116&type=chunk) [ITEM 6. EXHIBITS](index=26&type=section&id=Item%206.%20Exhibits) This section provides an index of exhibits filed as part of the Form 10-Q, including organizational documents, registration rights agreements, certifications, and XBRL data - The report includes various exhibits such as Amended and Restated Articles of Incorporation, Bylaws, Registration Rights Agreements, and certifications (Rule 13a-14(a) / 15d-14(a) and Section 1350)[121](index=121&type=chunk) [SIGNATURES](index=27&type=section&id=Signatures) This section contains the required signatures of the Company's principal executive officer and principal financial officer, certifying the filing of the report - The report is signed by Westervelt T. Ballard, Jr., President and Chief Executive Officer, and Andrew L. Puhala, Chief Financial Officer, on May 10, 2023[123](index=123&type=chunk)

[Cautionary Statement Regarding Forward-Looking Statements](index=3&type=section&id=Cautionary%20Statement%20Regarding%20Forward-Looking%20Statements) Forward-looking statements represent intentions and expectations about future events, subject to risks and uncertainties that could cause actual results to differ materially - Forward-looking statements represent intentions, plans, expectations, assumptions, and beliefs about future events, subject to risks and uncertainties that could cause actual results to differ materially[7](index=7&type=chunk) - The company undertakes no obligation to update or revise any forward-looking statements, except as required under applicable securities laws[8](index=8&type=chunk) - Information from market research and analyst reports is relied upon but not independently verified for accuracy and completeness[9](index=9&type=chunk) Part I. [Item 1. Business](index=4&type=section&id=Item%201.%20Business) Stabilis provides turnkey LNG solutions across North America, generating revenue from sales, equipment rental, and services, and holds a 40% equity in BOMAY Electric Industries, Inc [Overview](index=4&type=section&id=OVERVIEW) Stabilis Solutions, Inc. is an energy transition company providing turnkey clean energy solutions, primarily LNG, across diverse North American markets - Stabilis Solutions, Inc. is an energy transition company providing turnkey clean energy production, storage, transportation, and fueling solutions primarily using LNG[12](index=12&type=chunk) - The company has safely delivered over **420 million gallons of LNG** through more than **43,000 truck deliveries** over **18 years**, positioning it as one of the largest and most experienced small-scale LNG providers in North America[12](index=12&type=chunk) - Stabilis provides LNG solutions to customers in diverse end markets, including aerospace, agriculture, energy, industrial, marine bunkering, mining, pipeline, remote power, and utility markets[12](index=12&type=chunk) - The company also builds power and control systems for the energy industry in China through its **40% owned Chinese joint venture**, BOMAY Electric Industries, Inc[13](index=13&type=chunk) [Our Business](index=4&type=section&id=OUR%20BUSINESS) Stabilis produces LNG from owned and third-party sources, provides 'virtual natural gas pipeline' transportation, rents cryogenic equipment, and offers engineering and field support - Stabilis owns and operates two liquefiers in George West, Texas (up to **100,000 LNG gallons/day**) and Port Allen, Louisiana (up to **30,000 LNG gallons/day**), and purchases LNG from approximately **30 third-party production sources**[18](index=18&type=chunk) - The company offers turnkey LNG transportation and logistics services in North America, providing a 'virtual natural gas pipeline' using its own fleet of cryogenic trailers and outsourced services[19](index=19&type=chunk) - Stabilis operates a fleet of approximately **205 mobile LNG storage and vaporization assets**, one of the largest small-scale LNG equipment fleets in North America[20](index=20&type=chunk) - The company provides engineering and field support services to help customers design, integrate, mobilize, commission, and reliably operate LNG in their fueling operations[21](index=21&type=chunk) [Market for Small-Scale LNG in North America](index=5&type=section&id=Market%20for%20Small-Scale%20LNG%20in%20North%20America) The North American small-scale LNG market is poised for significant growth, driven by its clean energy benefits, ability to serve remote locations, and economic advantages - LNG is believed to provide an important balance between environmental sustainability, security, accessibility, and economic viability, playing a key role in the energy transition[15](index=15&type=chunk)[23](index=23&type=chunk) - New and expanding markets for LNG include marine bunkering (driven by IMO sulfur caps) and rocket propulsion (due to higher energy density, reduced explosion risk, and ease of production)[24](index=24&type=chunk) - Natural gas produces significantly lower carbon dioxide, particulate matter, and sulfur emissions compared to other fossil fuels like coal, gasoline, and diesel[25](index=25&type=chunk) - LNG is generally less expensive than competing fuel sources (e.g., crude oil, distillate fuels, propane) and exhibits less price sensitivity due to the smaller commodity cost portion[26](index=26&type=chunk) - LNG offers better safety characteristics than diesel and propane, as it boils and dissipates rapidly when spilled and has a higher ignition temperature and narrower flammability range[29](index=29&type=chunk) - Established small-scale LNG production and distribution technologies are widely available, reducing technology risk but placing a premium on owner/operator capabilities[30](index=30&type=chunk) [Our Customers](index=6&type=section&id=Our%20Customers) Stabilis serves approximately 50 customers across diverse North American markets, including aerospace and mining, with two customers each contributing over 10% of 2022 revenues - Stabilis serves approximately **50 customers** in North America across diverse end markets, including aerospace, agriculture, energy, industrial, marine bunkering, mining, pipeline, remote power, and utility markets[31](index=31&type=chunk) - Target customers typically consume high volumes of fuel, operate in mobile, temporary, or off-pipeline locations, have limited access to alternative fuel sources, and/or face increasingly stringent emissions requirements[31](index=31&type=chunk) Key Customers by Revenue Contribution (2022) | Customer | % of 2022 Revenue | | :------------- | :---------------- | | Aggreko Plc | >10% | | Minera Penmont | >10% | - Through its **40% interest in BOMAY**, Stabilis provides power and control systems for the land drilling and production market in China[39](index=39&type=chunk) [Competitive Strengths](index=7&type=section&id=Competitive%20Strengths) Stabilis's strengths include attractive LNG, proven project execution, comprehensive 'virtual natural gas pipeline' solutions, and leveraging capabilities for market expansion - LNG is an economically and environmentally attractive product, reducing harmful emissions and offering lower, more stable prices than distillate fuels or propane[40](index=40&type=chunk)[41](index=41&type=chunk) - Stabilis has produced and delivered over **420 million gallons of LNG** over **18 years**, demonstrating proven execution experience in building/operating facilities and providing turnkey fueling solutions[42](index=42&type=chunk) - The company offers comprehensive 'one-stop shop' off-pipeline natural gas solutions, including supply infrastructure, transportation, logistics, and field service support, with one of North America's largest cryogenic equipment fleets[43](index=43&type=chunk) - Stabilis can leverage its LNG production and distribution expertise, combined with cryogenic engineering and project development capabilities, to expand into new geographic and service end markets[44](index=44&type=chunk) [Competition](index=8&type=section&id=Competition) Stabilis competes in a highly competitive natural gas market against distillate fuels, propane, and CNG, facing rivals with greater resources, but not mid-scale or world-scale LNG liquefiers - The primary competition for LNG comes from distillate fuels (diesel, fuel oil) and propane, which power the majority of engines and generators in target markets, as well as pipeline natural gas and compressed natural gas (CNG)[45](index=45&type=chunk) - Competition factors include cost, supply, availability, quality, emissions, and safety of the fuel, with location often being a primary competitive factor due to transportation costs[46](index=46&type=chunk) - Some competitors have longer operating histories, greater market experience, larger customer bases, more expansive brand recognition, deeper market penetration, and substantially greater financial, marketing, and other resources[46](index=46&type=chunk) - Stabilis does not compete with mid-scale and world-scale LNG liquefiers (producing >**1,000,000 LNG gallons/day**) designed for large marine vessels and foreign markets[47](index=47&type=chunk) [Sales and Marketing](index=9&type=section&id=Sales%20and%20Marketing) Stabilis markets products and services through a direct sales force, participates in trade shows, and collaborates with government agencies on natural gas education and regulations - Stabilis markets its products and services primarily through a direct sales force covering all major geographic and customer markets[48](index=48&type=chunk) - The company also attends trade shows, participates in industry conferences, and works with federal, state, and local government agencies to educate about natural gas and stay abreast of regulations[48](index=48&type=chunk) [Seasonality](index=9&type=section&id=Seasonality) Stabilis saw no significant seasonal LNG volume variations in 2022, but revenues are sensitive to natural gas price fluctuations, which are higher in peak winter and summer months - The company did not experience significant seasonal variations in LNG delivery volumes during 2022 and does not expect future volumes to be significantly impacted by seasonal variations[49](index=49&type=chunk) - Revenues are susceptible to variations due to changes in the price of natural gas, which tends to be higher in peak winter and summer months when heating and cooling demand is seasonally higher[49](index=49&type=chunk) [Government Regulation and Environmental Matters](index=9&type=section&id=Government%20Regulation%20and%20Environmental%20Matters) Stabilis is subject to extensive environmental, health, safety, and operational regulations; compliance costs are not yet material, but future changes or non-compliance could significantly impact the business - Stabilis is subject to a variety of federal, international, state, provincial, and local laws and regulations relating to the environment, health and safety, labor and employment, building codes, zoning, public reporting, and taxation[50](index=50&type=chunk) - Compliance with existing regulations has not had a material effect on capital expenditures, earnings, or competitive position to date, but new or more stringent laws could have such an effect in the future[50](index=50&type=chunk) - Regulations govern the construction and operation of LNG liquefaction plants, requiring facility permits or licenses for storm water, wastewater, waste handling, and air emissions[51](index=51&type=chunk) - Transportation of LNG requires compliance with federal (USDOT, FMCSA, Hazardous Materials Regulations) and state safety standards for qualified drivers and cryogenic containers[52](index=52&type=chunk) - Transfer of LNG between facilities and vessels must adhere to international, federal, state, and local safety standards and operational regulations, requiring trained personnel and safety signage[53](index=53&type=chunk) - Storage and vaporization of LNG at customer sites may require permits or approvals from local planning boards and fire departments, addressing waste handling and air emissions[54](index=54&type=chunk) - Stabilis holds DOE export licenses for Mexico and Canada, and in Q3 2022, received authorization to export up to **51.75 billion cubic feet per year** to all free trade and non-free trade countries for **28 years**[55](index=55&type=chunk)[56](index=56&type=chunk) [Human Capital Resources](index=10&type=section&id=Human%20Capital%20Resources) As of December 31, 2022, Stabilis had 100 employees, valuing their expertise and retaining them through competitive compensation, advancement opportunities, and a strong safety culture Human Capital Resources (as of Dec 31, 2022) | Metric | Value | | :---------------- | :---- | | Total Employees | 100 | | Full-time Employees | 99 | - The company attracts and retains employees by offering competitive compensation packages (base, incentive, benefits like medical, dental, vision, disability, 401(k)) and opportunities for advancement[58](index=58&type=chunk) - Employee safety is paramount, supported by various training, educational, and safety programs with detailed procedures[59](index=59&type=chunk) [Intellectual Property](index=10&type=section&id=Intellectual%20Property) Stabilis holds US and Canadian patents for natural gas applications and processing systems, with the latest expiring in 2038, and ten US and one Canadian trademark registrations - Stabilis holds patents in the US and Canada for the use of natural gas for well enhancement, two patents for rotary fluid processing systems, and a US patent for a gas processing system[60](index=60&type=chunk) - The last patent to expire in the U.S. will expire in **July 2038**[60](index=60&type=chunk) - The company has **ten U.S. trademark registrations** and **one foreign trademark registration** (Canada)[60](index=60&type=chunk) [Available Information](index=10&type=section&id=Available%20Information) Stabilis's Houston office and website provide free access to SEC filings (10-K, 10-Q, 8-K), which are also available on the SEC's website - Stabilis's principal executive office is located at 11750 Katy Freeway, Suite 900, Houston, Texas 77079[61](index=61&type=chunk) - Annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K are available free of charge on the company's website (www.stabilis-solutions.com) and the SEC's website (www.sec.gov)[61](index=61&type=chunk) [Item 1A. Risk Factors](index=10&type=section&id=Item%201A.%20Risk%20Factors) Investing in Stabilis common stock carries high risks, encompassing operational, market, regulatory, and financial uncertainties, including strategy execution, price volatility, and funding needs [Risks Related to Our Business](index=11&type=section&id=Risks%20Related%20to%20Our%20Business) Business risks include strategy execution failures, counterparty performance, LNG/natural gas price volatility, operational and construction risks, environmental non-compliance, and challenges in sourcing and personnel - The company's ability to implement its business strategy is uncertain and can be adversely affected by factors such as failure to win new bids, manage expanding operations, attract/retain personnel, or adapt to new energy sector trends[64](index=64&type=chunk)[65](index=65&type=chunk) - Exposure to performance and credit risks of counterparties, especially during commodity price volatility, may adversely affect operating results, liquidity, and access to financing[66](index=66&type=chunk) - Cyclical or other changes in the demand for and price of LNG and natural gas, influenced by alternative energy sources, weather, and regulatory policies, could materially and adversely affect the business[67](index=67&type=chunk)[68](index=68&type=chunk) - Operation and/or construction of LNG infrastructure and facilities involve significant risks, including equipment failures, operational errors, industrial accidents, natural disasters, and non-compliance with health and safety regulations[69](index=69&type=chunk)[70](index=70&type=chunk) - Insurance may be insufficient to cover losses from inherent operational risks (e.g., explosions, pollution, natural disasters), potentially leading to significant liabilities and adverse effects on the business[71](index=71&type=chunk)[72](index=72&type=chunk) - The design, construction, and operation of energy-related infrastructure, including LNG facilities, are highly regulated activities, posing risks related to obtaining and maintaining permits, approvals, and authorizations[73](index=73&type=chunk)[75](index=75&type=chunk) - Existing and future environmental, health, and safety laws and regulations (e.g., CAA, CWA, RCRA, OSHA, GHG emissions) could result in increased compliance costs, additional operating/construction costs, and restrictions[76](index=76&type=chunk)[81](index=81&type=chunk)[83](index=83&type=chunk) - Dependence on contractors for successful completion of energy-related infrastructure projects introduces risks related to their performance, schedule adherence, cost overruns, and potential disagreements[87](index=87&type=chunk)[88](index=88&type=chunk) - Inability to purchase or receive physical delivery of natural gas in sufficient quantities and/or quality or at economically attractive prices could adversely affect delivery obligations and revenues[89](index=89&type=chunk) - Competition based on market price for LNG or natural gas, including from alternative fuels and energy sources, may prevent new contracts or decrease prices, adversely affecting results of operations[90](index=90&type=chunk)[92](index=92&type=chunk) - Technological innovation may render current processes obsolete, requiring continuous adaptation to maintain a competitive position and realize benefits from future projects[93](index=93&type=chunk) - Increased labor costs, unavailability of skilled workers (e.g., truck drivers), or failure to attract and retain qualified personnel could adversely affect operations and increase operating costs[100](index=100&type=chunk)[101](index=101&type=chunk) - Impairments to goodwill or long-lived assets may occur due to negative industry/economic trends, market capitalization decline, or reduced future cash flow estimates, negatively impacting operating results[102](index=102&type=chunk) - Increasing investor focus on Environmental, Social, and Governance (ESG) goals may limit access to capital for companies not prioritizing ESG, and mandatory ESG reporting could increase costs[103](index=103&type=chunk) - Operations and investments in foreign countries (Mexico, China, Canada) expose the company to losses from weakening foreign economies, unforeseen operating/financial/political/cultural factors, and strained diplomatic relations[104](index=104&type=chunk) [Risks Inherent in an Investment in Us](index=19&type=section&id=Risks%20Inherent%20in%20an%20Investment%20in%20Us) Investment in Stabilis is speculative due to high capital needs, uncertain profitability, potential funding challenges and dilution, thinly traded and volatile stock, and concentrated ownership - Investment in the company is speculative due to significant capital and operating expenditures for infrastructure development and market expansion, with no assurance of achieving or maintaining profitability[105](index=105&type=chunk)[106](index=106&type=chunk)[111](index=111&type=chunk) - The company may require additional funding (debt or equity) which may not be available on acceptable terms, potentially delaying or limiting business development efforts and adversely affecting financial condition[107](index=107&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk) - Dependence on a limited number of customers (Aggreko Plc and Minera Penmont each accounted for >**10% of 2022 revenues**) means the loss or non-performance by a significant customer could materially and adversely affect operating results and cash flows[112](index=112&type=chunk) - Customer contracts contain various termination rights (e.g., for no cause, force majeure, failure to deliver, payment defaults, insolvency, material breaches, failure to commence operations), which could materially adversely affect the business if exercised[114](index=114&type=chunk) - Raising additional capital through equity or convertible debt securities will dilute the ownership interest of common stock holders and may include liquidation or other preferences[115](index=115&type=chunk) - The common stock is thinly traded with a limited public market and is volatile, making it difficult for holders to sell shares and potentially leading to disproportionately large price changes[116](index=116&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk) - Casey Crenshaw's beneficial ownership of **71.9% of outstanding common stock** gives him voting control over matters requiring stockholder approval, potentially conflicting with other stockholders' interests[121](index=121&type=chunk) - Provisions in corporate charter documents and Florida law (Sections 607.0901 and 607.0902) could make an acquisition of the company more difficult and prevent attempts to replace or remove current management[123](index=123&type=chunk)[125](index=125&type=chunk)[126](index=126&type=chunk) - The company does not anticipate paying any cash dividends in the foreseeable future, making capital appreciation the sole source of gain for stockholders[127](index=127&type=chunk) - The **40% interest** in the Chinese joint venture, BOMAY, has a limited life (terminates in **2028**) and is subject to renewal risk, especially given strained U.S. and Chinese political relations[128](index=128&type=chunk) [General Risk Factors](index=24&type=section&id=General%20Risk%20Factors) General risks include adverse macroeconomic and geopolitical conditions, inflationary pressures, contagious illnesses, cyber incidents, unfavorable legal outcomes, and public company compliance costs - Weakened global macroeconomic and geopolitical conditions (e.g., trade wars, pandemics) can reduce demand for products, restrict credit, and increase market volatility, adversely affecting the business[129](index=129&type=chunk) - Higher than normal inflationary pressure during 2022 (expected to continue into 2023) on costs like fuel, repairs, maintenance, electricity, wages, and insurance has resulted in margin pressure, as not all costs can be passed to customers[130](index=130&type=chunk) - The spread of a new contagious illness (like COVID-19) or resurgence of a variant may adversely affect business, operations, and financial condition through reduced economic activity, operational disruptions, and liquidity constraints[131](index=131&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk) - A cyber incident could result in information theft, data corruption, operational disruption, operational delays, and/or financial loss, requiring significant resources for protective measures[134](index=134&type=chunk) - Involvement in material legal proceedings (contract disputes, business practices, intellectual property) and unfavorable outcomes could have a material adverse effect on financial position and results of operations[135](index=135&type=chunk) - The company incurs ongoing costs and demands upon management due to complying with laws and regulations affecting public companies (e.g., Sarbanes-Oxley, SEC rules), which can increase compliance costs and make attracting/retaining qualified personnel difficult[136](index=136&type=chunk) - Failure to maintain proper and effective internal control over financial reporting could harm operating results and business operations, and negatively impact the stock price[137](index=137&type=chunk)[138](index=138&type=chunk) [Item 1B. Unresolved Staff Comments](index=26&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments - No unresolved staff comments[139](index=139&type=chunk) [Item 2. Properties](index=26&type=section&id=Item%202.%20Properties) Stabilis leases Houston headquarters, owns LNG plants in Texas and Louisiana, and leases offices in Mexico and storage sites, with existing facilities deemed adequate for current operations Principal Properties (as of Dec 31, 2022) | Facility Location | Use | Size | Leased or Owned | | :---------------- | :----- | :------------------------- | :-------------- | | Houston, TX | Office | 13,000 sq. ft. | Leased | | Monterrey, Mexico | Office | 1,888 sq. ft. | Leased | | George West, TX | LNG Plant | 3,400 sq. ft. on 31.04 acres | Owned | | Port Allen, LA | LNG Plant | 2,400 sq. ft. on 18.98 acres | Owned | - The company also leases various short-term trailer storage sites in California, Colorado, and Florida to support operations[141](index=141&type=chunk) - Existing facilities are believed to be adequate for operations and allow for efficient customer service[141](index=141&type=chunk) [Item 3. Legal Proceedings](index=26&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various legal proceedings and claims in the normal course of business, but management believes their ultimate resolution will not materially affect its financial position or results of operations - The company becomes involved in various legal proceedings and claims in the normal course of business[142](index=142&type=chunk) - Management's opinion is that the ultimate resolution of these matters will not have a material effect on the company's financial position or results of operations[142](index=142&type=chunk) [Item 4. Mine Safety Disclosures](index=26&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) No mine safety disclosures are required - No mine safety disclosures[143](index=143&type=chunk) Part II. [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=27&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Stabilis common stock trades on Nasdaq under 'SLNG,' with 18.4 million shares outstanding; no cash dividends were paid in 2021-2022, with earnings retained for business development - The company's common stock trades under the symbol 'SLNG' on The Nasdaq Stock Market LLC[146](index=146&type=chunk) Common Stock Information (as of March 9, 2023) | Metric | Value | | :---------------- | :---------- | | Holders of Record | 23 | | Shares Outstanding | 18,433,655 | - The company did not declare or pay cash dividends on common shares in either fiscal year 2022 or 2021 and anticipates retaining any earnings for use in business operations for the foreseeable future[146](index=146&type=chunk) [Item 6. Reserved](index=27&type=section&id=Item%206.%20Reserved) This item is reserved and not applicable - Item 6 is reserved and not applicable[149](index=149&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes Stabilis's financial condition and results for 2022 vs. 2021, covering business overview, revenues, expenses, liquidity, capital resources, and critical accounting policies [Overview](index=28&type=section&id=OVERVIEW) Stabilis provides turnkey LNG solutions across North America, generating revenue from sales, rentals, and services, with recent developments including DOE export approval and Brazil Operations sale - Stabilis Solutions, Inc. is an energy transition company providing turnkey clean energy production, storage, transportation, and fueling solutions primarily using LNG to multiple end markets across North America[153](index=153&type=chunk) - The company generates revenue by selling and delivering LNG, renting cryogenic equipment, and providing engineering and field support services[155](index=155&type=chunk) - During Q3 2022, Stabilis received U.S. Department of Energy (DOE) authorization to export domestically produced LNG to all free trade and non-free trade countries for up to **51.75 billion cubic feet per year** for a term of **28 years**[160](index=160&type=chunk) - On October 31, 2022, the company sold its Brazil Operations for approximately **$0.9 million**, resulting in the presentation of these operations as discontinued and an impairment charge of **$1.4 million**[161](index=161&type=chunk) [Results of Operations](index=30&type=section&id=RESULTS%20OF%20OPERATIONS) In 2022, Stabilis reported a **$3.2 million net loss**, an improvement from 2021, with revenues up **42.9% to $98.8 million** due to higher LNG volumes and pricing Consolidated Results (in thousands, except percentages) | Metric | Year Ended Dec 31, 2022 | Year Ended Dec 31, 2021 | Change | % Change | | :---------------------------------------------- | :---------------------- | :---------------------- | :------- | :------- | | Revenues | $98,823 | $69,171 | $29,652 | 42.9 | | Costs of revenues | $77,694 | $55,216 | $22,478 | 40.7 | | Selling, general and administrative | $13,191 | $13,792 | $(601) | (4.4) | | Total operating expenses | $100,393 | $78,254 | $22,139 | 28.3 | | Income (loss) from operations | $28 | $(7,300) | $7,328 | 100.4 | | Net loss from continuing operations | $(1,192) | $(7,630) | $6,438 | 84.4 | | Loss from discontinued operations, net of income taxes | $(1,994) | $(168) | $(1,826) | n/a | | Net loss | $(3,186) | $(7,798) | $4,612 | 59.1 % | - Revenues increased by **$29.7 million (43%)** in 2022, primarily due to additional LNG gallons delivered, increased natural gas prices, higher pricing charged to customers in response to inflation, and increased rental, service, and other revenue[167](index=167&type=chunk) - Costs of revenues increased by **$22.5 million (41%)** in 2022, driven by additional LNG gallons delivered, increased natural gas prices, inflationary pressures (transportation, liquefaction, personnel, electricity), and increased costs for rental, service, and other revenue[167](index=167&type=chunk) - Selling, general and administrative expense decreased by **$0.6 million (4%)** in 2022, mainly due to prior year's immediate vesting of restricted stock and executive transition costs, partially offset by current year increases in stock-based compensation, incentive compensation, headcount, and legal/accounting fees[169](index=169&type=chunk) - Net equity income from foreign joint ventures' operations decreased by **$0.2 million (10%)** in 2022, primarily due to business contraction in China[173](index=173&type=chunk) - Loss from discontinued operations, net of tax, was **$2.0 million** in 2022, including a **$1.4 million impairment** from the Brazil Operations sale and reclassification of **$0.6 million** of cumulative foreign exchange losses[177](index=177&type=chunk) [Seasonality and Inflation](index=32&type=section&id=SEASONALITY%20AND%20INFLATION) Stabilis saw no significant seasonal LNG volume variations in 2022, but revenues are sensitive to natural gas price fluctuations and faced inflationary pressures on costs, impacting margins - No significant seasonal variations in LNG delivery volumes were experienced in 2022, and none are expected to materially impact future volumes[179](index=179&type=chunk) - Revenues are susceptible to natural gas price variations, which are typically higher in peak winter and summer months due to heating and cooling demand[179](index=179&type=chunk) - Higher than normal inflationary pressure during 2022 (expected to continue into 2023) on costs like fuel, repairs, maintenance, electricity, wages, and insurance has resulted in margin pressure, as not all costs can be passed to customers[180](index=180&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Stabilis's 2022 liquidity sources included cash from operations and a loan facility, with **$11.5 million cash** and **$12.3 million debt** at year-end, deemed sufficient for 12 months, while exploring additional financing [Cash Flows](index=33&type=section&id=Cash%20Flows) In 2022, net cash from operations significantly increased to **$14.7 million**, investing activities used **$1.9 million**, and financing activities used **$2.3 million** due to debt paydowns Cash Flows Summary (in thousands) | Cash flows from operating activities | Year Ended Dec 31, 2022 | Year Ended Dec 31, 2021 | | :------------------------------------- | :---------------------- | :---------------------- | | Net cash provided by operating activities | $14,697 | $4,297 | | Net cash used in investing activities | $(1,917) | $(7,520) | | Net cash provided by (used in) financing activities | $(2,253) | $3,012 | | Net increase (decrease) in cash and cash equivalents | $10,541 | $(330) | | Cash and cash equivalents, end of period | $11,451 | $910 | - Net cash provided by operating activities increased by **$10.4 million** in 2022, primarily due to increased revenues and improved profitability (excluding noncash items)[187](index=187&type=chunk) - Net cash used in investing activities decreased in 2022 due to lower fixed asset acquisitions (e.g., Port Allen LNG plant in 2021) and proceeds from the sale of CNG assets in Mexico (**$2.0 million**) and Brazil Operations (**$0.2 million**)[188](index=188&type=chunk) - Net cash used in financing activities in 2022 was primarily attributable to debt paydown, contrasting with 2021's cash provided by AmeriState Bank loan proceeds[189](index=189&type=chunk) [Future Cash Requirements](index=34&type=section&id=Future%20Cash%20Requirements) Stabilis requires cash for operations, capital expenditures, and debt, and may seek additional financing, with future capex dependent on investment opportunities and capital availability, and **$1.0 million** in open purchase orders - Cash is required to fund operating expenses, working capital, capital expenditures, debt repayments, equipment purchases, facility maintenance, mergers and acquisitions, market expansion, and sales and marketing activities[191](index=191&type=chunk) - The company may pursue additional financing activities (refinancing, new debt, or debt/equity offerings) to provide flexibility, but there is no assurance such alternatives will be available on acceptable terms[191](index=191&type=chunk) - Future capital expenditures are dependent upon accretive investment opportunities and the availability of additional capital at favorable terms; **$1.0 million** in open purchase orders for capital expenditures remained at December 31, 2022[192](index=192&type=chunk) [Debt Level and Debt Compliance](index=34&type=section&id=Debt%20Level%20and%20Debt%20Compliance) As of December 31, 2022, Stabilis had **$12.3 million** in total indebtedness, with **$3.3 million** due in 2023, and expected **$0.6 million** in interest payments for 2023, and was in compliance with all financial covenants Expected Debt Maturities (in thousands) as of Dec 31, 2022 | Year | Amount | | :--------- | :----- | | 2023 | $3,283 | | 2024 | $857 | | 2025 | $1,285 | | 2026 | $1,285 | | 2027 | $1,285 | | Thereafter | $4,285 | | **Total** | **$12,280** | - Total indebtedness (net of debt issuance costs) was **$12.0 million** as of December 31, 2022[193](index=193&type=chunk) - Expected total interest payment obligations for the year ending December 31, 2023, are approximately **$0.6 million**[194](index=194&type=chunk) - As of December 31, 2022, the company was in compliance with all financial covenants, including a debt-to-net-worth ratio of not more than **9.1 to 1.0** and a debt service coverage ratio of not less than **1.2 to 1.0**[194](index=194&type=chunk) [Contractual Obligations](index=35&type=section&id=CONTRACTUAL%20OBLIGATIONS) As of December 31, 2022, Stabilis had total contractual obligations of **$15.2 million**, with **$4.0 million** due in 2023, including a **$9.0 million** term loan and a **$2.4 million** related-party note Contractual Obligations (in thousands) as of Dec 31, 2022 | Obligation | Total | 2023 | 2024 | 2025 | 2026 | 2027 | Thereafter | | :---------------------------------------- | :------- | :----- | :----- | :----- | :----- | :----- | :--------- | | Term Loan to AmeriState Bank | $8,998 | $— | $857 | $1,285 | $1,285 | $1,285 | $4,286 | | Interest - AmeriState Bank | $2,558 | $525 | $511 | $440 | $365 | $290 | $427 | | MG Finance note payable - related party | $2,435 | $2,435 | $— | $— | $— | $— | $— | | Interest - MG Finance note payable | $78 | $78 | $— | $— | $— | $— | $— | | Finance Lease Obligations | $61 | $19 | $42 | $— | $— | $— | $— | | Interest - Finance lease obligations | $6 | $6 | $— | $— | $— | $— | $— | | Operating Lease Obligations | $255 | $114 | $120 | $21 | $— | $— | $— | | Insurance and other notes payable | $848 | $848 | $— | $— | $— | $— | $— | | **Total** | **$15,239** | **$4,025** | **$1,530** | **$1,746** | **$1,650** | **$1,575** | **$4,713** | [Contingencies](index=35&type=section&id=Contingencies) Stabilis is involved in various litigation and tax disputes, with management believing ultimate resolutions will not materially affect financial position or results of operations - The company is involved in various litigation matters and tax disputes with government agencies in the normal course of business[200](index=200&type=chunk) - Management believes the ultimate resolution of these matters will not have a material effect on the company's financial position or results of operations[200](index=200&type=chunk) [Off-Balance Sheet Arrangements](index=35&type=section&id=Off-Balance%20Sheet%20Arrangements) As of December 31, 2022, Stabilis had no material off-balance sheet arrangements affecting its financial condition or operations - As of December 31, 2022, the company had no transactions that met the definition of off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on its financial condition, revenues, expenses, results of operations, liquidity, cash requirements, or capital resources[201](index=201&type=chunk) [New Accounting Standards](index=35&type=section&id=NEW%20ACCOUNTING%20STANDARDS) The company refers to Note 1 for new accounting standards, with ASU 2020-04 having an immaterial impact and ASU 2016-13 effective Q1 2023 with expected immaterial impact - Adoption of ASU No. 2020-04, 'Reference Rate Reform,' did not have a material impact on the company's Consolidated Financial Statements[286](index=286&type=chunk) - ASU No. 2016-13, 'Financial Instruments - Credit Losses,' will be effective for the company in Q1 2023, with an expected immaterial impact on consolidated financial statements[287](index=287&type=chunk) [Critical Accounting Policies and Estimates](index=35&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) Preparation of Stabilis's financial statements requires significant management judgment and estimates, particularly for revenue recognition, impairment, income taxes, and fair value measurements [Revenue Recognition](index=36&type=section&id=Revenue%20Recognition) Stabilis recognizes revenue from LNG product sales when customers obtain control, and from rental/service activities as performed or completed, allocating variable fees to distinct LNG molecules - The company recognizes revenue from contracts with customers in accordance with Topic 606, disaggregated into LNG product, rental, service, and other[207](index=207&type=chunk)[272](index=272&type=chunk) - Revenue associated with the sale of LNG is recognized at the point in time when the customer obtains control of the asset, considering transfer of legal title, physical delivery, risks/rewards, and right of payment[208](index=208&type=chunk)[273](index=273&type=chunk) - Revenues from providing services, transportation, and equipment rentals are recognized as the service is performed or the rental period is completed[208](index=208&type=chunk)[273](index=273&type=chunk)[298](index=298&type=chunk)[299](index=299&type=chunk) - Variable LNG fees in product sales agreements are allocated to each distinct molecule of LNG and recognized when that molecule is delivered to the customer[212](index=212&type=chunk)[300](index=300&type=chunk) [Impairment of Long-Lived Assets and Goodwill](index=37&type=section&id=Impairment%20of%20Long-Lived%20Assets%20and%20Goodwill) Long-lived assets are reviewed for impairment when carrying value may not be recoverable, and goodwill is tested annually; **$0.1 million** goodwill impairment was recorded in 2022 related to Brazil Operations - Long-lived assets are reviewed periodically for potential impairment whenever events or changes in circumstances indicate that a particular asset's carrying value may not be recoverable, comparing it to expected undiscounted future cash flows[215](index=215&type=chunk)[269](index=269&type=chunk) - Goodwill is tested for impairment annually (in the third quarter) or more frequently if triggering events occur[216](index=216&type=chunk)[270](index=270&type=chunk) - During 2022, **$0.1 million** of goodwill impairment was recorded related to the sale of the Brazil Operations, included within loss from discontinued operations[216](index=216&type=chunk)[270](index=270&type=chunk) - No additional impairment of goodwill or long-lived assets was identified during the annual assessment in 2022 or 2021[216](index=216&type=chunk)[269](index=269&type=chunk)[270](index=270&type=chunk) [Income Taxes](index=37&type=section&id=Income%20Taxes) Income taxes are accounted for using the asset-and-liability method, recognizing deferred tax assets and liabilities for temporary differences and carryforwards, with a valuation allowance applied if realization is unlikely - Income taxes are accounted for under the asset-and-liability method, recognizing deferred tax assets and liabilities for future tax consequences attributable to temporary differences and carryforwards[217](index=217&type=chunk)[274](index=274&type=chunk) - A valuation allowance is recorded when it is more likely than not that the deferred tax asset will not be realized[217](index=217&type=chunk)[274](index=274&type=chunk) - The company recognizes the effect of income tax positions only if those positions are more likely than not to be sustained, measured at the largest amount greater than **50%** likely of being realized[218](index=218&type=chunk)[275](index=275&type=chunk) - As of December 31, 2022, the company had net operating loss carryforwards of approximately **$57.3 million**, fully reserved by a valuation allowance due to not yet generating significant taxable income[348](index=348&type=chunk) - No uncertain tax positions required recognition as of December 31, 2022 and 2021[275](index=275&type=chunk)[349](index=349&type=chunk) [Fair Value Measurements](index=37&type=section&id=Fair%20Value%20Measurements) Fair value determinations maximize observable inputs (Level 1, 2, 3); fixed and variable rate debt fair value was estimated at **$11.3 million** (carrying value **$12.0 million**) at December 31, 2022, using Level 2 inputs - Fair value measurements maximize the use of observable inputs and minimize unobservable inputs, categorized into Level 1, Level 2, and Level 3[219](index=219&type=chunk)[220](index=220&type=chunk)[221](index=221&type=chunk)[279](index=279&type=chunk)[280](index=280&type=chunk)[281](index=281&type=chunk) - The fair value of fixed and variable rate debt was estimated at **$11.3 million** (compared to a carrying value of **$12.0 million**) at December 31, 2022, using Level 2 fair value measurements (discounting future cash flows with the company's incremental borrowing rate)[282](index=282&type=chunk) [Derivatives](index=38&type=section&id=Derivatives) As of December 31, 2022, Stabilis held natural gas call options (1.3 million MMBtu) to manage price risk, recorded at fair value with changes recognized in operations, and does not engage in speculative derivative transactions - As of December 31, 2022, the company held natural gas call options for **1.3 million MMBtu**, extending into Q2 2024, to manage the risk of increasing natural gas prices[305](index=305&type=chunk) - Derivative instruments are recognized at fair value on the Consolidated Balance Sheet; changes in fair value are included in the Consolidated Statements of Operations as they are not designated as hedges[222](index=222&type=chunk)[266](index=266&type=chunk)[307](index=307&type=chunk) - The fair value of the Call Options is predominantly determined from broker quotes and is considered a Level 2 fair value measurement[305](index=305&type=chunk) - The company incurred an unrealized loss of **$0.9 million** in 2022 on its natural gas derivatives due to lower future natural gas prices[168](index=168&type=chunk) - The company does not enter into derivative transactions for speculative purposes[222](index=222&type=chunk)[266](index=266&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures about Market Risk](index=38&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Stabilis faces market risks from commodity price fluctuations and foreign currency exchange rates, managing LNG price risk through contracts and derivatives, but not hedging foreign currency risk despite **$0.8 million** non-U.S. dollar working capital - The company encounters significant market risks, including commodity and interest rate risks[224](index=224&type=chunk) - Commodity price risk for LNG is managed by structuring customer contract pricing to mirror supply cost volatility with vendors and through natural gas derivative instruments[226](index=226&type=chunk) - Foreign currency exchange rate risk arises from operations in Mexico (Mexican Peso functional currency) and an equity method investment in China (Chinese Yuan functional currency)[227](index=227&type=chunk) - As of December 31, 2022, the non-U.S. dollar denominated working capital balance was approximately **$0.8 million**; a **10% adverse change** would reduce it by approximately **$0.1 million**[228](index=228&type=chunk) - The company does not currently have or intend to enter into any derivative arrangements to protect against foreign currency fluctuations[229](index=229&type=chunk) - Volatility in customer demand is greatly driven by changes in oil and gas prices, influencing new capital projects and project schedules[230](index=230&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=40&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This item presents the audited consolidated financial statements of Stabilis Solutions, Inc. for 2022 and 2021, including the Independent Registered Public Accounting Firm's Report, Balance Sheets, Statements of Operations, Comprehensive Loss, Stockholders' Equity, Cash Flows, and Notes - The section includes the Report of Independent Registered Public Accounting Firm by Ham, Langston & Brezina, L.L.P. (Auditor ID: **298**)[232](index=232&type=chunk)[234](index=234&type=chunk) - The consolidated financial statements presented are: Consolidated Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Comprehensive Loss, Consolidated Statements of Stockholders' Equity, and Consolidated Statements of Cash Flows[232](index=232&type=chunk) - The financial statements are for the fiscal years ended December 31, 2022 and 2021, and are prepared in conformity with U.S. GAAP[235](index=235&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=70&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There have been no changes in or disagreements with accountants on accounting and financial disclosure - No changes in and disagreements with accountants on accounting and financial disclosure[379](index=379&type=chunk) [Item 9A. Controls and Procedures](index=70&type=section&id=Item%209A.%20Controls%20and%20Procedures) As of December 31, 2022, management concluded that disclosure controls and internal control over financial reporting were effective, with the company exempt from external attestation as a smaller reporting company - As of December 31, 2022, the company's disclosure controls and procedures were effective at the reasonable assurance level[380](index=380&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2022, based on the COSO framework[381](index=381&type=chunk) - As a smaller reporting company, Stabilis is exempt from the independent registered public accounting firm's attestation report on the effectiveness of internal control over financial reporting[381](index=381&type=chunk) - There have been no changes in internal control over financial reporting during the last fiscal quarter that have materially affected or are reasonably likely to materially affect it[383](index=383&type=chunk) [Item 9B. Other Information](index=70&type=section&id=Item%209B.%20Other%20Information) No other information is reported under this item - No other information is reported under this item[384](index=384&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=70&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) No disclosures are required regarding foreign jurisdictions that prevent inspections - No disclosures regarding foreign jurisdictions that prevent inspections[385](index=385&type=chunk) Part III. [Item 10. Directors, Executive Officers and Corporate Governance](index=71&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This section lists Stabilis's executive officers and directors, including J. Casey Crenshaw (Chairman) and Westervelt T. Ballard, Jr. (CEO), with independent directors overseeing governance and compensation Directors and Executive Officers (as of March 9, 2023) | Name | Age | Position | | :----------------------- | :-- | :------------------------------------------ | | J. Casey Crenshaw | 48 | Chairman of the Board of Directors | | Westervelt T. Ballard, Jr. | 51 | President, Chief Executive Officer and Director | | Andrew L. Puhala | 53 | Chief Financial Officer | | Benjamin J. Broussard | 43 | Director | | Stacey B. Crenshaw | 46 | Director | | Edward L. Kuntz | 78 | Director | | Peter C. Mitchell | 67 | Director | | Matthew W. Morris | 51 | Director | - Messrs. Peter C. Mitchell, Edward L. Kuntz, and Matthew W. Morris are currently the company's independent directors as defined by NASDAQ and SEC rules[398](index=398&type=chunk) - The Audit Committee consists of Messrs. Peter C. Mitchell (Chair), Edward L. Kuntz, and Matthew W. Morris, with Mr. Mitchell satisfying the definition of 'audit committee financial expert'[401](index=401&type=chunk) - The Compensation Committee consists of Messrs. J. Casey Crenshaw (Chair), Peter C. Mitchell, Edward L. Kuntz, and Matthew W. Morris, responsible for developing and maintaining executive compensation policy[402](index=402&type=chunk)[403](index=403&type=chunk) - The company has adopted a Code of Business Ethics and Conduct applicable to all employees, officers, and Board members, available on its website[404](index=404&type=chunk) [Item 11. Executive Compensation](index=74&type=section&id=Item%2011.%20Executive%20Compensation) Stabilis's executive compensation program aims to attract and retain key employees by aligning interests with shareholders through performance goals and equity-based compensation, with independent directors receiving **$100,000** annually - The executive compensation program is designed to attract, motivate, and retain key employees by aligning their interests with shareholders through operational and financial performance goals and equity-based compensation[406](index=406&type=chunk) Named Executive Officers | Name | Principal Position | | :----------------------- | :------------------------- | | Westervelt T. Ballard, Jr. | Chief Executive Officer, President | | Andrew L. Puhala | Chief Financial Officer | | Koby Knight | SVP EPC & Special Projects | Summary Compensation Table (in $) | Name and Principal Position | Year | Salary | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | Total | | :-------------------------- | :--- | :-------- | :----------- | :------------ | :------------------------------------- | :---------- | | Westervelt T. Ballard, Jr. | 2022 | 500,000 | 95,734 | 869,019 | 750,000 | 2,214,753 | | | 2021 | 175,547 | 3,390,000 | 2,879,000 | 125,000 | 6,569,547 | | Andrew Puhala | 2022 | 315,000 | 19,148 | 178,604 | 189,000 | 701,752 | | | 2021 | 315,000 | — | — | 103,150 | 418,150 | | Koby Knight | 2022 | 325,000 | 19,148 | 178,604 | 195,000 | 729,752 | | | 2021 | 325,000 | — | — | 125,000 | 462,000 | - Mr. Ballard's employment agreement (effective August 23, 2021) includes an annualized base salary of **$500,000**, participation in an annual bonus plan, **500,000 RSUs** (**250,000 vested immediately**, **125,000 vested Aug 2022**, **125,000 vest Aug 2023**), and **1,300,000 stock options** (**442,000 vested Aug 2022**, **429,000 vest Aug 2023**, **429,000 vest Aug 2024**)[419](index=419&type=chunk)[420](index=420&type=chunk) - Independent directors receive an annual fee of **$100,000**, payable **100% in cash**[435](index=435&type=chunk) Independent Director Compensation (2022) | Name | Fees Earned or Paid in Cash ($) | Total ($) | | :-------------- | :------------------------------ | :-------- | | Edward L. Kuntz | 100,000 | 100,000 | | Peter C. Mitchell | 100,000 | 100,000 | | Matthew W. Morris | 100,000 | 100,000 | | **Total** | **300,000** | **300,000** | - The Amended and Restated 2019 Long Term Incentive Plan increased the maximum number of shares of common stock available for issuance from **1,675,000 to 4,000,000**[433](index=433&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=79&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) As of March 9, 2023, J. Casey Crenshaw beneficially owned **71.9%** of Stabilis's common stock, giving him voting control, with LNG Investment Company, LLC owning **68.2%** and Chart Energy & Chemicals, Inc. **8.0%** Beneficial Ownership of Common Stock (as of March 9, 2023) | Name | Number of Shares | Percent of Class | | :---------------------------- | :--------------- | :--------------- | | J. Casey Crenshaw | 13,249,730 | 71.9 % | | Stacey B. Crenshaw | 13,249,730 | 71.9 % | | LNG Investment Company, LLC | 12,580,808 | 68.2 % | | Chart Energy & Chemicals, Inc. | 1,470,807 | 8.0 % | | All directors and officers as a group (9 persons) | 13,646,514 | 74.0 % | - J. Casey Crenshaw's beneficial ownership of **71.9%** of the outstanding common stock gives him voting and dispositive power over a significant portion of the company's stock[440](index=440&type=chunk) Equity Compensation Plan Information (as of Dec 31, 2022) | Plan Category | Number of securities to be issued upon exercise of outstanding rights (1) | Weighted-average exercise price of outstanding options (2) | Number of securities remaining available under equity compensation plans (3)(a) | | :---------------------------------------------- | :------------------------------------------------------- | :------------------------------------------------------- | :-------------------------------------------------------------------------------- | | Equity compensation plans approved by security holders | 2,285,444 | $8.20 | 595,101 | - The Amended and Restated 2019 Long Term Incentive Plan has **595,101 shares** remaining available for future issuance[441](index=441&type=chunk)[443](index=443&type=chunk) [Item 13. Certain Relationships and Related Transactions and Director Independence](index=80&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%20and%20Director%20Independence) Stabilis engages in transactions with related parties, including Chart Energy & Chemicals, Inc. and entities associated with J. Casey Crenshaw, with all such transactions reviewed and approved by the Audit Committee and Board - Related parties include Chart Energy & Chemicals, Inc. (**8.0% beneficial owner**) and entities associated with J. Casey Crenshaw (Chairman) and Ben Broussard (Director), such as The Modern Group and MG Finance Co., Ltd[447](index=447&type=chunk)[448](index=448&type=chunk) - A secured promissory note to MG Finance Co., Ltd. (related party) had a principal amount of **$2.4 million** outstanding at December 31, 2022, maturing in December 2023, with an amended interest rate of **6.0%**[328](index=328&type=chunk)[449](index=449&type=chunk)[450](index=450&type=chunk) Related Party Purchases and Sales (in millions) | Related Party | 2022 Purchases | 2021 Purchases | 2022 Sales | 2021 Sales | | :--------------- | :------------- | :------------- | :--------- | :--------- | | The Modern Group | $0.3 | $1.0 | $0 | $0.013 | | Chart E&C | $1.1 | $0.3 | N/A | N/A | - The Audit Committee reviews and the Board approves all related party transactions[455](index=455&type=chunk) - Peter C. Mitchell, Matthew W. Morris, and Edward L. Kuntz are the independent directors[456](index=456&type=chunk) [Item 14. Principal Accountant Fees and Services](index=81&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) For 2022, Stabilis was billed **$270,500** in audit fees by Ham, Langston & Brezina, L.L.P., an increase from 2021, with all audit and permitted non-audit services pre-approved by the Audit Committee Principal Accountant Fees (in $) | Types of Fees | Year Ended Dec 31, 2022 | Year Ended Dec 31, 2021 | | :--------------- | :---------------------- | :---------------------- | | Audit Fees | 270,500 | 232,500 | | Audit-Related Fees | — | — | | Tax Fees | — | — | | Other Fees | — | — | | **Total Fees** | **270,500** | **232,500** | - Audit fees increased from **$232,500** in 2021 to **$270,500** in 2022[459](index=459&type=chunk) - The Audit Committee's policy is to pre-approve all audit services and all permitted non-audit services (including fees and terms) provided by the independent registered public accounting firm[460](index=460&type=chunk) Part IV. [Item 15. Exhibits and Financial Statement Schedules](index=83&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This item lists the consolidated financial statements and an index to exhibits filed as part of the report, with financial statement schedules omitted as not applicable or included in the notes - The following documents are filed as part of this report: Consolidated Financial Statements (Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Comprehensive Loss, Consolidated Statements of Stockholders' Equity, Consolidated Statements of Cash Flows, and Notes to Consolidated Financial Statements)[464](index=464&type=chunk) - All financial statement schedules have been omitted as the required information is not applicable or is included in the Consolidated Financial Statements and Notes thereto[464](index=464&type=chunk) - An index to exhibits is provided, which immediately precedes the signature page and is incorporated herein by reference[465](index=465&type=chunk) [Item 16. Form 10-K Summary](index=83&type=section&id=Item%2016.%20Form%2010-K%20Summary) The registrant has elected not to provide summary information for Form 10-K - The registrant has elected not to provide summary information[466](index=466&type=chunk) [Signatures](index=86&type=section&id=Signatures) The report is signed by Westervelt T. Ballard, Jr. (President and CEO) and Andrew L. Puhala (CFO) on behalf of Stabilis Solutions, Inc., and by the Board of Directors - The report is signed by Westervelt T. Ballard, Jr., President and Chief Executive Officer (Principal Executive Officer), and Andrew L. Puhala, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)[474](index=474&type=chunk) - The report has also been signed by the Chairman of the Board and other Directors[475](index=475&type=chunk)

Stabilis Solutions, Inc. (NASDAQ:SLNG) Q4 2022 Results Conference Call March 9, 2023 10:00 AM ET Company Participants Westy Ballard - President and CEO Andy Puhala - CFO Conference Call Participants Martin Malloy - Johnson Rice Liam Burke - B. Riley Barry Haimes - Sage Asset Management Bill Dezellem - Tieton Capital Operator Good morning, ladies and gentlemen, and welcome to the Stabilis Solutions Fourth Quarter and Full Year 2022 Earnings Conference Call. Joining us today are Westy Ballard, President and C ...

Stabilis Solutions, Inc. (NASDAQ:SLNG) Q3 2022 Earnings Conference Call November 3, 2022 10:00 AM ET Company Participants Westervelt Ballard - President, CEO & Director Andrew Puhala - SVP, CFO & Secretary Conference Call Participants Martin Malloy - Johnson Rice & Company Liam Burke - B. Riley Securities William Dezellem - Tieton Capital Management Barry Haimes - Sage Asset Management Operator Good morning, ladies and gentlemen, and welcome to Stabilis Solutions Third Quarter 2022 Earnings Conference Call. ...

Financial Data and Key Metrics Changes - For Q2 2022, Stabilis reported revenues of $25.8 million, a 12% increase from $23 million in Q1 2022 and a 61% increase year-over-year [14] - The net loss for the quarter was $2.2 million, compared to a loss of $400,000 in Q1 2022 and $1 million in the year-ago quarter [15] - Adjusted EBITDA for the quarter was $1.6 million, down from $2 million in Q1 2022 but up from $500,000 in the year-ago quarter [18] Business Line Data and Key Metrics Changes - Revenues from the LNG segment were $23.2 million, up 14% from Q1 2022 and also up 61% year-over-year [14] - Revenues from the Power Delivery segment were $2.6 million, down 5% from Q1 2022 but 59% higher than the year-ago quarter [15] - Aerospace volumes in Q2 were 56% higher than Q1 and year-to-date volumes were almost double all of 2021 volumes, now accounting for approximately 10% of total revenue [6] Market Data and Key Metrics Changes - Increased volumes and higher natural gas prices were the main factors contributing to revenue strength [6] - Year-over-year, gallons of LNG delivered were up 14%, with higher commodity prices accounting for approximately $5.4 million of the revenue increase [14] Company Strategy and Development Direction - The company aims to be a leading catalyst for environmental transformation, leveraging LNG as a bridge fuel while expanding into alternative fuels like bio-fuels and hydrogen [4][5] - Stabilis is focused on quality growth catalysts such as aerospace, marine bunkering, and alternative fuels, aiming to capitalize on significant demand for cleaner solutions [8] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the need for continuous optimization of the core LNG business to improve profitability and manage costs effectively [23] - There is optimism regarding the expansion of marine LNG bunkering operations and the potential for incremental cash flow growth from new initiatives [11][22] Other Important Information - The company finished the quarter with total liquidity of $5.1 million, including cash and available capacity under its bank facility [18] - Management is committed to disciplined growth financing methods to maximize shareholder value [12] Q&A Session Summary Question: Thoughts on improving profitability in the LNG sector - Management believes there are many levers to pull for better consistency in takeaway capacity and managing large input costs [23] Question: Were new initiatives like aerospace and bunkering EBITDA positive in the quarter? - Management confirmed that these initiatives were EBITDA positive and expect continued growth as they scale [22]