Stabilis Solutions(SLNG) - 2025 Q1 - Quarterly Report

Part I. Financial Information This section covers the company's unaudited Q1 2025 financial statements and management's discussion and analysis Item 1. Financial Statements (Unaudited) This section presents Stabilis Solutions, Inc.'s unaudited Q1 2025 condensed consolidated financial statements and related notes Condensed Consolidated Balance Sheets This section details the company's financial position, including assets, liabilities, and equity at specific dates Condensed Consolidated Balance Sheets (in millions) | Metric | March 31, 2025 (in millions) | December 31, 2024 (in millions) | | :--------------------------------- | :----------------------------- | :----------------------------- | | Total current assets | $15.433 | $17.473 | | Property, plant and equipment, net | $50.289 | $51.728 | | Total assets | $83.060 | $85.584 | | Total current liabilities | $10.356 | $11.627 | | Total liabilities | $17.149 | $18.576 | | Total stockholders' equity | $65.911 | $67.008 | - Total assets decreased from $85.584 million at December 31, 2024, to $83.060 million at March 31, 2025. Total current assets decreased by $2.04 million, primarily due to decreases in accounts receivable, inventories, and prepaid expenses[13] - Total liabilities decreased from $18.576 million at December 31, 2024, to $17.149 million at March 31, 2025, driven by a reduction in accounts payable, accrued liabilities, and the current portion of long-term notes payable[13] Condensed Consolidated Statements of Operations This section outlines the company's Q1 2025 financial performance, including revenues, expenses, and net income or loss Condensed Consolidated Statements of Operations (in millions) | Metric | Three Months Ended March 31, 2025 (in millions) | Three Months Ended March 31, 2024 (in millions) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Revenues | $17.338 | $19.770 | | Cost of revenues | $12.788 | $13.514 | | Selling, general and administrative expenses | $4.933 | $3.456 | | Net income (loss) | $(1.598) | $1.469 | | Basic and diluted per common share | $(0.09) | $0.08 | - The company reported a net loss of $1.598 million for the three months ended March 31, 2025, a significant decline from a net income of $1.469 million in the prior year quarter[16] - Revenues decreased by 12.3% from $19.770 million in Q1 2024 to $17.338 million in Q1 2025[16] - Selling, general and administrative expenses increased by $1.477 million, or 42.7%, primarily due to $2.1 million in severance-related expenses for the former CEO[16][94] Condensed Consolidated Statements of Comprehensive Income (Loss) This section details the company's total comprehensive income or loss, including net income and other comprehensive items Condensed Consolidated Statements of Comprehensive Income (Loss) (in millions) | Metric | Three Months Ended March 31, 2025 (in millions) | Three Months Ended March 31, 2024 (in millions) | | :--------------------------------- | :--------------------------------------- | :--------------------------------------- | | Net income (loss) | $(1.598) | $1.469 | | Foreign currency translation adjustment, net of tax | $0.071 | $(0.466) | | Total comprehensive income (loss) | $(1.527) | $1.003 | - Total comprehensive loss for Q1 2025 was $1.527 million, a decrease from a comprehensive income of $1.003 million in Q1 2024, primarily driven by the net loss[19] Condensed Consolidated Statements of Stockholders' Equity This section tracks changes in the company's equity, including common stock, additional paid-in capital, and accumulated deficit Condensed Consolidated Statements of Stockholders' Equity (in millions) | Metric | Balance at Dec 31, 2024 (in millions) | Balance at Mar 31, 2025 (in millions) | | :------------------------- | :----------------------------------- | :----------------------------------- | | Common Stock (Amount) | $0.019 | $0.019 | | Additional Paid-in Capital | $103.214 | $103.644 | | Accumulated Deficit | $(35.647) | $(37.245) | | Total Stockholders' Equity | $67.008 | $65.911 | - Total stockholders' equity decreased from $67.008 million at December 31, 2024, to $65.911 million at March 31, 2025, mainly due to the net loss incurred during the quarter[21] - Additional paid-in capital increased by $430 thousand, reflecting stock-based compensation of $447 thousand, partially offset by employee tax payments from stock-based withholdings[21] Condensed Consolidated Statements of Cash Flows This section summarizes the company's cash flows from operating, investing, and financing activities for Q1 2025 Condensed Consolidated Statements of Cash Flows (in millions) | Cash Flow Activity | Three Months Ended March 31, 2025 (in millions) | Three Months Ended March 31, 2024 (in millions) | | :----------------------- | :--------------------------------------- | :--------------------------------------- | | Operating activities | $1.025 | $3.929 | | Investing activities | $(0.276) | $(0.666) | | Financing activities | $(0.730) | $(0.355) | | Net increase in cash | $0.016 | $2.912 | | Cash and cash equivalents, end of period | $9.003 | $8.286 | - Net cash provided by operating activities decreased significantly to $1.025 million in Q1 2025 from $3.929 million in Q1 2024, primarily due to lower income from operations[24][106] - Net cash used in investing activities decreased to $0.276 million in Q1 2025 from $0.666 million in Q1 2024, mainly due to reduced purchases of liquefaction assets[24][107] - Net cash used in financing activities increased to $0.730 million in Q1 2025 from $0.355 million in Q1 2024, driven by additional debt payments on the AmeriState Loan[24][108] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements Note 1. Description of Business and Basis of Presentation This note describes the company's energy transition business and the accounting principles used in financial reporting - Stabilis Solutions, Inc. is an energy transition company providing turnkey clean energy solutions using liquefied natural gas (LNG) to diverse end markets including aerospace, agriculture, energy, industrial, marine bunkering, mining, pipeline, remote power, and utility markets[25][26] - The Company also holds a 40% interest in BOMAY Electric Industries, Inc., a Chinese joint venture that builds power and control systems for the energy industry, accounted for under the equity method[27] - The Company operates as a single operating and reporting segment, with the CEO and CFO assessing performance on a consolidated basis[31] - The Company has not designated its natural gas derivative instruments as hedges under U.S. GAAP and does not enter into derivative transactions for speculative purposes[32][33] Note 2. Revenue Recognition This note details the company's policies for recognizing revenue from LNG product sales, rentals, and services - Revenues are recognized upon delivery of goods or services, measured as consideration specified in the contract, and disaggregated into LNG Product, rental, service, and other categories[37] Revenue Source (in millions) | Revenue Source | Three Months Ended March 31, 2025 (in millions) | Three Months Ended March 31, 2024 (in millions) | | :--------------- | :--------------------------------------- | :--------------------------------------- | | LNG Product | $13.946 | $15.413 | | Rental | $1.550 | $2.173 | | Service | $1.705 | $1.924 | | Other | $0.137 | $0.260 | | Total revenues | $17.338 | $19.770 | Geographic Location (in millions) | Geographic Location | Three Months Ended March 31, 2025 (in millions) | Three Months Ended March 31, 2024 (in millions) | | :-------------------- | :--------------------------------------- | :--------------------------------------- | | United States | $16.523 | $18.507 | | Mexico | $0.815 | $1.263 | | Total revenues | $17.338 | $19.770 | - LNG Product revenues decreased by $1.467 million (9.5%) year-over-year, while Rental revenues decreased by $623 thousand (28.7%) and Service revenues decreased by $219 thousand (11.4%)[42][43][89] Note 3. Prepaid Expenses and Other Current Assets This note provides a breakdown of the company's prepaid expenses and other current assets, including insurance and derivatives Prepaid Expenses and Other Current Assets (in millions) | Item | March 31, 2025 (in millions) | December 31, 2024 (in millions) | | :---------------------------------- | :----------------------------- | :----------------------------- | | Prepaid insurance | $0.670 | $1.044 | | Prepaid supplier expenses | $0.170 | $0.167 | | Other receivables | $0.262 | $0.204 | | Natural gas derivatives at fair value, current | $0.141 | $0.207 | | Deposits | $0.099 | $0.129 | | Other | $0.168 | $0.151 | | Total prepaid expenses and other current assets | $1.510 | $1.902 | - Total prepaid expenses and other current assets decreased from $1.902 million at December 31, 2024, to $1.510 million at March 31, 2025, primarily due to a reduction in prepaid insurance[47] Note 4. Property, Plant and Equipment This note details the company's fixed assets, including liquefaction plants, vehicles, and construction in progress Property, Plant and Equipment (in millions) | Item | March 31, 2025 (in millions) | December 31, 2024 (in millions) | | :--------------------------------- | :----------------------------- | :----------------------------- | | Liquefaction plants and systems | $56.752 | $56.752 | | Vehicles and tanker trailers and equipment | $49.435 | $49.754 | | Construction in progress | $8.532 | $8.082 | | Total cost | $117.456 | $117.246 | | Less: accumulated depreciation | $(67.167) | $(65.518) | | Net property, plant and equipment | $50.289 | $51.728 | - Net property, plant and equipment decreased from $51.728 million at December 31, 2024, to $50.289 million at March 31, 2025, despite an increase in construction in progress[48] - Depreciation expense increased slightly to $1.9 million for Q1 2025 from $1.8 million for Q1 2024, mainly due to new mobile assets[48][95] Note 5. Investment in Foreign Joint Venture This note describes the company's equity method investment in BOMAY Electric Industries, Inc., a Chinese joint venture - The Company holds a 40% interest in BOMAY Electric Industries, Inc., which builds electrical systems in China, accounted for using the equity method[49][50] BOMAY Financials (in millions) | BOMAY Financials | March 31, 2025 (in millions) | December 31, 2024 (in millions) | | :----------------- | :----------------------------- | :----------------------------- | | Total assets | $125.235 | $133.749 | | Total liabilities | $91.943 | $101.562 | | Total equity | $33.292 | $32.187 | BOMAY Operations (in millions) | BOMAY Operations | Three Months Ended March 31, 2025 (in millions) | Three Months Ended March 31, 2024 (in millions) | | :----------------- | :--------------------------------------- | :--------------------------------------- | | Revenue | $21.710 | $17.239 | | Net income | $0.961 | $0.537 | - Net equity income from BOMAY increased by $0.2 million to $0.417 million in Q1 2025 from $0.247 million in Q1 2024, driven by increased net profits from the joint venture[51][97] Note 6. Accrued Liabilities This note outlines the company's accrued liabilities, including compensation, taxes, and other short-term obligations Accrued Liabilities (in millions) | Item | March 31, 2025 (in millions) | December 31, 2024 (in millions) | | :------------------------ | :----------------------------- | :----------------------------- | | Compensation and benefits | $2.605 | $2.408 | | Other taxes payable | $0.272 | $0.268 | | Other accrued liabilities | $0.422 | $0.890 | | Total accrued liabilities | $3.299 | $3.566 | - Total accrued liabilities decreased from $3.566 million at December 31, 2024, to $3.299 million at March 31, 2025, primarily due to a decrease in other accrued liabilities[53] - The Company recorded $1.7 million in expenses related to the separation of former CEO Westervelt T. Ballard, Jr., including $1.6 million for separation, additional, and consulting pay, and $0.1 million for other related expenses. As of March 31, 2025, $1.5 million of this amount remains unpaid and is included in current liabilities[54] Note 7. Debt This note details the company's debt obligations, including secured term notes, revolving credit facilities, and covenant compliance Debt (in millions) | Debt Type | March 31, 2025 (in millions) | December 31, 2024 (in millions) | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Secured term note, net | $7.765 | $7.975 | | Insurance and other notes payable | $0.510 | $0.883 | | Total debt | $8.275 | $8.858 | | Less: amounts due within one year | $(1.655) | $(2.010) | | Total long-term debt | $6.620 | $6.848 | - Total debt, net of debt issuance costs, decreased from $8.858 million at December 31, 2024, to $8.275 million at March 31, 2025[56] - The $10.0 million Revolving Credit Facility with Cadence Bank was extended to June 9, 2028, and the Fixed Charge Coverage Ratio terms were amended. As of March 31, 2025, no amounts have been drawn, and the Company has $2.5 million availability[57][58] - The AmeriState Loan, a secured term loan facility, had $8.0 million outstanding at March 31, 2025, with $1.0 million remaining availability. The Company was in compliance with all debt covenants as of March 31, 2025[60][61] Note 8. Related Party Transactions This note discloses transactions with related parties, including lease agreements and purchases from entities with common ownership - The Company entered into a lease agreement for office space with The Modern Group, beneficially owned by Executive Chairman J. Casey Crenshaw, at a market rate of $28 thousand per month, resulting in a $0.4 million right-of-use asset and operating lease liability[63] - Purchases and lease payments from subsidiaries of The Modern Group totaled $40 thousand for Q1 2025, a decrease from $0.1 million in Q1 2024[64] - The Company made purchases of $0.1 million from Chart Energy and Chemicals, Inc., which beneficially owns 7.9% of the Company's common stock, for both Q1 2025 and Q1 2024[65] Note 9. Commitments and Contingencies This note describes the company's commitments and potential liabilities, including environmental regulations and legal proceedings - The Company is subject to federal, state, and local environmental laws and regulations and does not anticipate material expenditures for compliance[66] - Management believes the ultimate resolution of any legal actions, claims, or audits will not have a material adverse effect on the Company's financial position, results of operations, or liquidity[67] Note 10. Stockholders' Equity and Stock-Based Compensation This note provides information on changes in stockholders' equity and the company's stock-based compensation plans and expenses - Stock compensation expense was $0.4 million for both Q1 2025 and Q1 2024[68] - The Company's Amended and Restated Long-Term Incentive Plan has a maximum of 5,500,000 shares available for issuance, with no new stock-based awards granted in Q1 2025[69][70] - Upon Mr. Ballard's separation, 7,765 unvested restricted stock units and 147,525 unvested stock options vested, and the exercise period for these and 1.6 million previously vested options was amended to expire December 31, 2025. This modification resulted in an additional $0.4 million in non-cash stock compensation expense[72] Note 11. Net Income Per Share This note details the calculation of basic and diluted net income or loss per common share for the reporting periods Net Income Per Share (in millions, except per share data) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Basic weighted average number of common shares outstanding | 18,591,374 | 18,578,815 | | Dilutive securities | — | 1,996 | | Net income (loss) | $(1.598) | $1.469 | | Basic net income (loss) per common share | $(0.09) | $0.08 | | Diluted net income (loss) per common share | $(0.09) | $0.08 | - Basic and diluted net loss per common share was $(0.09) for Q1 2025, compared to basic and diluted net income per common share of $0.08 for Q1 2024[75] - No dilutive securities were included in the Q1 2025 calculation due to the net loss and out-of-the-money stock options[74] Note 12. Supplemental Cash Flow Information This note provides additional details on cash flow activities, including interest paid and non-cash investing and financing transactions Supplemental Cash Flow Information (in thousands) | Item | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :------------------------------------------ | :--------------------------------------- | :--------------------------------------- | | Interest paid | $144 | $157 | | Income taxes paid | — | — | | ROU assets from leases | $425 | — | - Interest paid decreased slightly to $144 thousand in Q1 2025 from $157 thousand in Q1 2024. No income taxes were paid in either period[76] - Significant non-cash investing and financing activities for Q1 2025 included $425 thousand in Right-of-Use (ROU) assets from leases[76] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's Q1 2025 financial condition, operations, liquidity, and capital resources Overview This section provides an overview of Stabilis Solutions, Inc.'s clean energy solutions and LNG operations - Stabilis Solutions, Inc. is an energy transition company providing turnkey clean energy production, storage, transportation, and fueling solutions using LNG to diverse end markets across North America[78] - The Company generates revenue through LNG sales and delivery, cryogenic equipment rental, and engineering and field support services, offering both separate and bundled solutions[79] - Stabilis owns and operates two liquefiers in George West, Texas (100,000 LNG gallons/day) and Port Allen, Louisiana (30,000 LNG gallons/day), and supplements supply with third-party sources[80] - The Company received DOE authorization in Q3 2022 to export LNG to FTA and non-FTA countries (up to 51.75 billion cubic feet per year) and has initiated exports to Europe and Mexico under these authorizations[84][86] Results of Operations This section analyzes the company's Q1 2025 financial performance, detailing revenues, cost of revenues, and operating expenses Results of Operations (in millions) | Metric | Q1 2025 (in millions) | Q1 2024 (in millions) | $ Change | % Change | | :--------------------------------------- | :--------------------- | :--------------------- | :------- | :------- | | Revenues | $17.338 | $19.770 | $(2.432) | (12.3)% | | Cost of revenues | $12.788 | $13.514 | $(0.726) | (5.4)% | | Selling, general and administrative expenses | $4.933 | $3.456 | $1.477 | 42.7% | | Income (loss) from operations | $(1.695) | $1.576 | $(3.271) | n/a | | Net income (loss) | $(1.598) | $1.469 | $(3.067) | n/a | - Total revenues decreased by $2.4 million (12.3%) year-over-year, primarily due to decreased LNG gallons delivered ($2.1 million decrease), lower rental, service, and other revenues ($1.0 million decrease), and decreased take-or-pay contracts ($0.2 million decrease). These declines were partially offset by a $1.0 million increase from higher natural gas prices passed to customers[89][90][91] - Cost of revenues decreased by $0.7 million (5.4%), mainly due to decreased gallons delivered ($1.4 million decrease) and lower rental/service costs ($0.5 million decrease), partially offset by higher natural gas pricing and liquefaction costs ($1.2 million increase)[89][90][92] - Selling, general and administrative expenses increased by $1.5 million (42.7%), largely driven by $2.1 million in severance-related expenses for the former CEO, partially offset by lower compensation[89][94] - The Company shifted from an income from operations of $1.576 million in Q1 2024 to a loss from operations of $1.695 million in Q1 2025[89] Liquidity and Capital Resources This section discusses the company's Q1 2025 liquidity sources, cash flows, debt obligations, and capital expenditures - Principal sources of liquidity include cash from operations, cash on hand, and distributions from the BOMAY joint venture. For Q1 2025, liquidity primarily came from operations and existing cash balances[101] - As of March 31, 2025, the Company had $9.0 million in cash and cash equivalents, $9.1 million in outstanding debt and lease obligations ($2.3 million due in next 12 months), and $3.5 million total availability under its Revolving Credit Facility and AmeriState Secured Term Loan Facility[103] - Net cash provided by operating activities decreased by $2.9 million to $1.0 million in Q1 2025, primarily due to decreased profit from lower income from operations[105][106] - Capital expenditures for Q1 2025 were $0.5 million, mainly for additional liquefaction assets, refurbishments, and upgrades[110] - The Company's $100.0 million Shelf Registration Statement and related ATM prospectus supplement expired unused on April 25, 2025[111] Item 4. Controls and Procedures Management evaluated the effectiveness of the company's disclosure controls and procedures as of March 31, 2025 - The Company's disclosure controls and procedures were deemed effective as of March 31, 2025, providing reasonable assurance that required information is accumulated, communicated, and reported timely[115] - There were no material changes in internal control over financial reporting during the quarter ended March 31, 2025[116] Part II. Other Information This section includes disclosures on legal proceedings, risk factors, other information, and exhibits Item 1. Legal Proceedings The company is involved in legal proceedings, but their resolution is not expected to materially affect financial position - Management does not anticipate that the ultimate resolution of legal proceedings and claims will have a material effect on the Company's financial position or results of operations[118] Item 1A. Risk Factors No material changes to risk factors from the 2024 Form 10-K, except for a new risk factor concerning changes in U.S. trade policy and tariffs - No material changes to risk factors from the 2024 Form 10-K, except for a new risk factor regarding changes in U.S. trade policy, including tariffs[119] - New risk factor: Escalating tariffs and potential trade restrictions could lead to economic uncertainty, reduced demand for LNG, or increased operating costs, despite the majority of sales being domestic and current LNG trade with Mexico not being subject to tariffs[120] Item 5. Other Information No officers or directors adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2025 - No officers or directors engaged in Rule 10b5-1 or non-Rule 10b5-1 trading arrangement adoptions, modifications, or terminations during Q1 2025[121] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate governance documents and recent agreements - Key exhibits include Amended and Restated Articles of Incorporation and Bylaws, various Registration Rights Agreements, and recent agreements such as the Release and Consulting Agreement (Exhibit 10.1) and the Loan Modification Agreement (Exhibit 10.2)[123] Signatures This section contains the official signatures of the company's principal executive and financial officers, certifying the report - The report was signed on May 7, 2025, by J. Casey Crenshaw, Interim President, Chief Executive Officer and Director, and Andrew L. Puhala, Chief Financial Officer[126]