Stabilis Energy, Inc. (NASDAQ:SLNG) Q1 2020 Earnings Conference Call August 6, 2020 11:00 AM ET Company Participants Jim Reddinger - President & Chief Executive Officer Andy Puhala - Senior Vice President & Chief Financial Officer Conference Call Participants Bill Dezellem - Tieton Capital Operator Greetings and welcome to the Stabilis Energy Second Quarter 2020 Earnings Conference Call. [Operator Instructions] Please note that today's conference is being recorded. Before we begin today's call, I'd like to ...

Financial Data and Key Metrics Changes - Stabilis reported revenues of $13.8 million for Q1, an 11% sequential increase from $12.5 million in Q4 2019 [11] - Adjusted EBITDA for the quarter was $1.5 million, down from $2.2 million in the prior quarter [15] - Net loss for the quarter increased to $1.1 million compared to a net loss of $0.6 million in the preceding quarter [15] Business Line Data and Key Metrics Changes - LNG segment revenues were $12.5 million, up from $10.4 million in Q4, driven by a 27% increase in LNG gallons delivered [11] - Utilization of the George West facility increased to 74% in Q1, up from 64% in Q4 [12] - The power delivery business reported a net equity income loss of $0.2 million compared to income of $1.1 million in the previous quarter [12] Market Data and Key Metrics Changes - Revenues from Brazil decreased to $1.3 million from $2.1 million in the previous quarter due to the pandemic and unfavorable exchange rates [14] - The Chinese joint venture's manufacturing facility was closed for approximately four weeks during the quarter, impacting production and orders [13] Company Strategy and Development Direction - The company aims to become the leading small-scale LNG provider in North America, focusing on increasing and diversifying sales while controlling costs [24] - Recent sales activity in Mexico has been encouraging, with a new customer taking delivery of approximately 90,000 gallons in April [20] Management's Comments on Operating Environment and Future Outlook - The company experienced a slowdown in business activity due to the global pandemic, particularly affecting the power delivery segment [7] - Management is cautious about the outlook for the current quarter, noting reduced customer activity in April [9] - The company is focused on preserving cash and maintaining a strong balance sheet during the downturn [17] Other Important Information - The company has implemented cost-cutting measures, including a 15% reduction in headcount and a 20% reduction in employee compensation [23] - Full production at the Chinese joint venture has resumed, but the impact of the economic downturn on future orders is uncertain [13] Q&A Session Summary Question: How does the virus impact your Mexico permitting activity or plans? - Management indicated that while sales efforts in Mexico continue, permitting activities may be delayed due to government office closures [27][28] Question: What percent of your business did the oilfield represent in the first quarter of this year? - Management did not provide specific figures during the call but promised to gather the data and follow up [31][32] Question: Was the increase in volumes at George West intentional? - Management clarified that the increase was not intentional but resulted from strong business performance and other factors such as warmer weather affecting third-party volumes [33][34]

Financial Data and Key Metrics Changes - Stabilis Energy reported LNG revenues of $11.1 million for Q2 2019, a 28% increase from $8.7 million in Q2 2018, primarily due to improved utilization of the George West liquefaction plant, which increased to 76% from 42% a year ago [5][6] - EBITDA for Q2 2019 was $1.6 million, compared to an EBITDA loss of $0.1 million in the same quarter last year, reflecting a significant improvement driven by increased plant utilization and a favorable customer mix [6][8] - For the first six months of 2019, revenues were $24.1 million, a 30% increase compared to the same period in 2018, with EBITDA improving by 109% to $3.6 million [7][8] Business Line Data and Key Metrics Changes - The increase in revenues was driven by both LNG production and distribution sides of the business, indicating strong performance across all business lines [7] - The utilization of the George West liquefaction plant was a key factor in revenue growth, highlighting the importance of operational efficiency in the LNG business [5] Market Data and Key Metrics Changes - The company is experiencing increasing demand from various customer segments, including industrial, pipelines, utilities, energy, mining, and remote power applications, particularly in Mexico [9][10] - The LNG market in North America is expected to grow significantly, with Stabilis actively seeking opportunities to build new production and distribution assets [10] Company Strategy and Development Direction - Stabilis Energy aims to convert customers from diesel, propane, and fuel oil to LNG, emphasizing LNG's cost advantages and lower environmental emissions [9] - The company sees tremendous growth potential in the North American LNG market, particularly in areas with limited pipeline infrastructure, such as Mexico and remote parts of Canada [10] - Stabilis plans to build, own, and operate production and distribution assets rather than selling plants to others, focusing on markets that require distributed natural gas solutions [29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong growth trajectory of the small-scale LNG market and the company's role in driving that growth [3] - The current quoting activity and opportunity pipeline are reported to be stronger than ever, with a growing acceptance of LNG as a fuel source across various industries [46][47] - Management highlighted the importance of LNG in helping customers meet their environmental commitments and obligations [10] Other Important Information - The company completed a strategic investment from Chart Industries, which helped to deleverage its balance sheet and position for future growth [3] - The share exchange transaction with American Electric Technologies was completed, but the results of the Stabilis LNG business will be included in future filings [4] Q&A Session Summary Question: Can you specify what exactly you issued in the share exchange with Chart Industries? - The transaction involves an exchange of up to $7 million of Chart's debt for a maximum of 9% of Stabilis shares, depending on the closing stock price [16] Question: What is the opportunity for oil producers dealing with excess natural gas? - Stabilis can liquefy natural gas and distribute it to producers, allowing them to use it as an alternative to more expensive and environmentally harmful fuels [26] Question: What are the plans for the joint venture in China and operations in Brazil? - The company plans to continue owning and operating those assets, viewing them as attractive [32] Question: What kind of investment costs are associated with building a plant from the ground up? - The investment for a plant in South Texas was approximately $45 million, with costs potentially lower now due to market conditions [37] Question: How active is the company in mergers and acquisitions? - Stabilis has been active in discussions with producers and distributors of LNG, looking for opportunities to consolidate businesses and generate operating scale [48]