Stabilis Solutions(SLNG) - 2025 Q2 - Quarterly Report

Part I. Financial Information This section presents the unaudited condensed consolidated financial statements and related disclosures for Stabilis Solutions, Inc. and its subsidiaries Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for Stabilis Solutions, Inc. and its subsidiaries, including the balance sheets, statements of operations, comprehensive income (loss), stockholders' equity, and cash flows, along with detailed notes providing context on business operations, accounting policies, and specific financial line items Condensed Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific points in time Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :------------------ | | Total Assets | $83,244 | $85,584 | | Total Liabilities | $17,762 | $18,576 | | Total Stockholders' Equity | $65,482 | $67,008 | Condensed Consolidated Statements of Operations This section outlines the company's financial performance over specific periods, presenting revenues, expenses, and net income or loss Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $17,309 | $18,598 | $34,647 | $38,368 | | Net Income (Loss) | $(613) | $27 | $(2,211) | $1,496 | | Basic and Diluted EPS | $(0.03) | $0.00 | $(0.12) | $0.08 | Condensed Consolidated Statements of Comprehensive Income (Loss) This section details the company's total comprehensive income or loss, including net income and other comprehensive income items Condensed Consolidated Statements of Comprehensive Income (Loss) Highlights (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Income (Loss) | $(613) | $27 | $(2,211) | $1,496 | | Foreign currency translation adjustment, net of tax | $184 | $52 | $255 | $(414) | | Total Comprehensive Income (Loss) | $(429) | $79 | $(1,956) | $1,082 | Condensed Consolidated Statements of Stockholders' Equity This section tracks changes in the company's equity over time, reflecting net income, dividends, and other equity transactions Condensed Consolidated Statements of Stockholders' Equity Highlights (in thousands) | Metric | December 31, 2024 | June 30, 2025 | | :-------------------------- | :---------------- | :-------------- | | Total Stockholders' Equity | $67,008 | $65,482 | | Accumulated Deficit | $(35,647) | $(37,858) | | Net Loss (Six Months Ended June 30, 2025) | N/A | $(2,211) | | Stock-based compensation (Six Months Ended June 30, 2025) | N/A | $447 | Condensed Consolidated Statements of Cash Flows This section summarizes the cash inflows and outflows from operating, investing, and financing activities over a period Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $5,540 | $8,967 | | Net cash used in investing activities | $(911) | $(1,970) | | Net cash used in financing activities | $(1,410) | $(884) | | Net increase in cash and cash equivalents | $3,233 | $6,109 | | Cash and cash equivalents, end of period | $12,220 | $11,483 | Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and additional information supporting the condensed consolidated financial statements - The Company operates as an energy transition company providing turnkey clean energy solutions using liquefied natural gas (LNG) to multiple end markets[23] - The Company holds a 40% interest in BOMAY Electric Industries, Inc., a Chinese joint venture, which builds power and control systems for the energy industry in China and is accounted for under the equity method[25] - Management makes estimates and assumptions in preparing the financial statements, including the fair value of equity-based awards, natural gas derivatives, and carrying amount of contingencies[28] Note 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION This note describes the company's core business, its operational structure, and the accounting principles underlying the financial statements - Stabilis Solutions, Inc. is an energy transition company providing turnkey clean energy production, storage, transportation, and fueling solutions using LNG to diverse end markets[23][24] - The Company's 40% owned Chinese joint venture, BOMAY Electric Industries, Inc., builds power and control systems for the energy industry in China[25] - The Company has determined it has a single operating and reporting segment, with the CEO as the Chief Operating Decision Maker[29] - The Company does not expect the adoption of ASU 2024-03 (effective January 1, 2027) and ASU 2023-09 (effective January 1, 2025) to have a significant impact on its consolidated financial statements[32][33] Note 2. REVENUE RECOGNITION This note details the company's policies for recognizing revenue from various sources, including LNG product sales, rentals, and services - Revenues are recognized when promised goods or services are delivered and are disaggregated into LNG Product, rental, service, and other categories[35] Revenue Disaggregated by Source (in thousands) | Revenue Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | LNG Product | $14,628 | $14,626 | $28,574 | $30,039 | | Rental | $1,296 | $1,682 | $2,846 | $3,855 | | Service | $1,169 | $1,693 | $2,874 | $3,617 | | Other | $216 | $597 | $353 | $857 | | Total Revenues | $17,309 | $18,598 | $34,647 | $38,368 | Revenue Disaggregated by Geographic Location (in thousands) | Location | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------- | :----------------------------- | :----------------------------- | | United States | $32,958 | $35,880 | | Mexico | $1,689 | $2,488 | | Total Revenues | $34,647 | $38,368 | 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, supplier expenses, and other receivables Prepaid Expenses and Other Current Assets (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :---------------------------------- | :-------------- | :------------------ | | Prepaid insurance | $294 | $1,044 | | Prepaid supplier expenses | $289 | $167 | | Other receivables | $217 | $204 | | Natural gas derivatives at fair value, current | $0 | $207 | | Deposits | $99 | $129 | | Other | $140 | $151 | | Total prepaid expenses and other current assets | $1,039 | $1,902 | Note 4. PROPERTY, PLANT AND EQUIPMENT This note details the company's property, plant, and equipment, including cost, accumulated depreciation, and depreciation expense Property, Plant and Equipment (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :------------------ | | Cost | $118,596 | $117,246 | | Less: accumulated depreciation | $(69,048) | $(65,518) | | Property, plant and equipment, net | $49,548 | $51,728 | - Depreciation expense totaled $3.7 million for the six months ended June 30, 2025, an increase from $3.6 million in the prior year period[46] Note 5. INVESTMENT IN FOREIGN JOINT VENTURE This note describes the company's equity investment in BOMAY Electric Industries, Inc., including its operational results and investment activity - The Company holds a 40% interest in BOMAY Electric Industries, Inc., accounted for using the equity method[47][48] BOMAY's Operational Results (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $29,488 | $22,062 | $51,198 | $39,301 | | Net income | $219 | $770 | $1,180 | $1,307 | Investment in BOMAY Activity (Six Months Ended June 30, 2025, in thousands) | Item | Amount | | :-------------------------------- | :----- | | Balance at December 31, 2024 | $11,659 | | Income from Equity Investment | $537 | | Less: dividend distributions | $(1,637) | | Foreign currency translation gain (loss) | $201 | | Balance at June 30, 2025 | $10,760 | - The Company does not believe an impairment of its investment in BOMAY is necessary for the period ending June 30, 2025[50] Note 6. ACCRUED LIABILITIES This note provides a breakdown of the company's accrued liabilities, including compensation, taxes, and other accrued expenses Accrued Liabilities (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :------------------ | | Compensation and benefits | $2,902 | $2,408 | | Other taxes payable | $286 | $268 | | Other accrued liabilities | $268 | $890 | | Total accrued liabilities | $3,456 | $3,566 | - The Company recorded $1.7 million in separation-related expenses for the former President and CEO, Mr. Ballard, in the first quarter of 2025, with $1.0 million remaining unpaid as of June 30, 2025[52] Note 7. DEBT This note details the company's debt obligations, including secured term notes, other notes payable, and compliance with debt covenants Debt, Net of Debt Issuance Costs (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :------------------------------------------------- | :-------------- | :------------------ | | Secured term note, net of debt issuance costs | $7,502 | $7,975 | | Insurance and other notes payable | $129 | $883 | | Total | $7,631 | $8,858 | | Less: amounts due within one year | $(1,295) | $(2,010) | | Total long-term debt | $6,336 | $6,848 | - The $10.0 million Revolving Credit Facility maturity date was extended to June 9, 2028, with $2.9 million availability as of June 30, 2025, and no amounts drawn[55][56] - The Company was in compliance with all its debt covenants related to the Revolving Credit Facility and the AmeriState Loan as of June 30, 2025[58][61] Note 8. RELATED PARTY TRANSACTIONS This note discloses transactions with related parties, including lease agreements and purchases from entities controlled by company executives - The Company entered into a lease agreement for office space from The Modern Group, controlled by the Executive Chairman, at a market rate of $28 thousand per month[64] Related Party Purchases and Lease Payments (in thousands) | Related Party | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | The Modern Group | $0.1 million | $37 | $0.1 million | $0.1 million | | Chart E&C | $13 | $0.1 million | $0.1 million | $0.3 million | Note 9. COMMITMENTS AND CONTINGENCIES This note outlines the company's environmental compliance, legal proceedings, and other commitments and contingencies - The Company is subject to federal, state, and local environmental laws and regulations, and believes its operations comply in all material respects[67] - Management believes the ultimate resolution of various legal actions, claims, and audits will not have a material adverse effect on the Company's financial position, results of operations, or liquidity[68] Note 10. STOCKHOLDERS' EQUITY AND STOCK-BASED COMPENSATION This note details changes in stockholders' equity and the accounting for stock-based compensation, including expense recognition and award grants Stock Compensation Expense (in thousands) | Period | 2025 | 2024 | | :------------------------------- | :--- | :--- | | Three Months Ended June 30 | $0.0 | $0.4 | | Six Months Ended June 30 | $0.4 | $0.8 | - The Company recognized $0.4 million in additional non-cash stock compensation expense due to accelerated vesting and amended option exercise terms for the former CEO's equity awards[73] - No stock-based awards were granted during the six months ended June 30, 2025[71] Note 11. NET INCOME PER SHARE This note presents the calculation of basic and diluted net income per common share, including the impact of dilutive securities Net Income (Loss) Per Common Share | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic and diluted per common share | $(0.03) | $0.00 | $(0.12) | $0.08 | - No dilutive securities were included in the calculation for the six months ended June 30, 2025, as all RSUs had vested and stock options had exercise prices exceeding the market price, making their inclusion anti-dilutive due to the net loss[75] Note 12. SUPPLEMENTAL CASH FLOW INFORMATION This note provides additional details on cash flow activities, including interest and income taxes paid, and non-cash investing activities Supplemental Disclosure of Cash Flow Information (Six Months Ended June 30, in thousands) | Item | 2025 | 2024 | | :------------------------------------------------- | :--- | :--- | | Interest paid | $285 | $309 | | Income taxes paid | $191 | $403 | | Acquisition of fixed assets included within accounts payable and accrued expenses | $675 | $486 | | ROU assets acquired under operating leases | $425 | $0 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides an overview of Stabilis Solutions' business as an energy transition company, detailing its LNG production, transportation, equipment rental, and engineering services. It analyzes the financial performance for the three and six months ended June 30, 2025, compared to the prior year, highlighting revenue declines, changes in operating expenses, and the company's liquidity position - Stabilis Solutions, Inc. is an energy transition company that provides turnkey clean energy production, storage, transportation and fueling solutions using liquefied natural gas (LNG) to multiple end markets[80] - The Company generates revenue by selling and delivering LNG, renting cryogenic equipment, and providing engineering and field support services[81] - The Company received authorization from the DOE in Q3 2022 to export domestically produced LNG to all free trade and non-free trade countries, with initial exports to Europe by June 30, 2025[86] Overview This section provides a general description of Stabilis Solutions' business model, including its LNG solutions, liquefaction facilities, and equipment fleet - Stabilis Solutions provides LNG solutions to customers in diverse end markets, including aerospace, agriculture, energy, industrial, marine bunkering, mining, pipeline, remote power and utility markets[80] - The Company owns and operates two liquefiers in George West, Texas (100,000 LNG gallons/day) and Port Allen, Louisiana (30,000 LNG gallons/day), and also purchases LNG from third-party sources[82] - Stabilis operates one of the largest fleets of small-scale LNG equipment in North America, including transportation trailers, vaporizers, storage tanks, and mobile vehicle fuelers[84] - The Company initiated LNG exports to Europe under its DOE authorization by June 30, 2025[86] Results of Operations This section analyzes the company's financial performance, detailing changes in revenues, cost of revenues, and operating expenses over comparative periods Consolidated Operating Results (Three Months Ended June 30, in thousands) | Metric | 2025 | 2024 | $ Change | % Change | | :------------------------------------------ | :----- | :----- | :------- | :------- | | Total Revenues | $17,309 | $18,598 | $(1,289) | (6.9)% | | Cost of revenues | $12,724 | $13,550 | $(826) | (6.1)% | | Selling, general and administrative expenses | $3,131 | $3,331 | $(200) | (6.0)% | | Net income (loss) | $(613) | $27 | $(640) | n/a | Consolidated Operating Results (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | $ Change | % Change | | :------------------------------------------ | :----- | :----- | :------- | :------- | | Total Revenues | $34,647 | $38,368 | $(3,721) | (9.7)% | | Cost of revenues | $25,512 | $27,064 | $(1,552) | (5.7)% | | Selling, general and administrative expenses | $8,064 | $6,787 | $1,277 | 18.8% | | Net income (loss) | $(2,211) | $1,496 | $(3,707) | n/a | - The increase in selling, general and administrative expenses for the six months ended June 30, 2025, was primarily due to $2.1 million in severance-related expenses for the former CEO[107] Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024 This section compares the company's financial performance for the three months ended June 30, 2025, against the same period in the prior year - Revenues decreased by $1.3 million (7%) due to decreased LNG gallons delivered ($1.5 million decrease) and lower rental, service, and other revenues ($1.3 million decrease), partially offset by increased revenues from higher natural gas prices ($1.5 million increase)[92] - Cost of revenues decreased by $0.8 million (6%), primarily due to decreased LNG gallons delivered ($1.0 million decrease) and lower rental, service, and other costs ($0.5 million decrease), partially offset by higher natural gas pricing ($1.5 million increase)[92][93] - Net equity income from foreign joint venture operations decreased by $0.2 million (83.1%) due to decreased net profits by the joint venture[98] Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024 This section compares the company's financial performance for the six months ended June 30, 2025, against the same period in the prior year - Revenues decreased by $3.7 million (10%) due to decreased LNG gallons delivered ($3.6 million decrease), lower rental, service, and other revenues ($2.3 million decrease), and unfavorable customer pricing mix/lower take-or-pay revenues ($0.3 million decrease), partially offset by increased revenues from higher natural gas prices ($2.5 million increase)[104] - Cost of revenues decreased by $1.6 million (6%), primarily due to decreased LNG gallons delivered ($2.4 million decrease) and lower rental, service, and other costs ($1.0 million decrease), partially offset by higher natural gas pricing ($2.5 million increase)[104][105] - Selling, general and administrative expenses increased by $1.3 million (18.8%), with $2.1 million attributed to severance-related expenses for the former CEO, partially offset by lower other compensation expense[107] Liquidity and Capital Resources This section assesses the company's ability to meet its short-term and long-term financial obligations, including cash flows, debt, and capital requirements - The Company's principal sources of liquidity are cash from operations, cash on hand, and distributions from its BOMAY joint venture[113] - As of June 30, 2025, the Company had $12.2 million in cash and cash equivalents, $8.4 million in outstanding debt and lease obligations, and $3.9 million in total availability under its debt agreements[115] - The Revolving Credit Facility maturity date was extended to June 9, 2028, with $2.9 million availability at June 30, 2025, and no amounts drawn[114][115] - Management believes current liquidity is sufficient for the next twelve months but continues to evaluate additional financing for future growth or expansion[116] Cash Flows This section summarizes the cash generated from or used in operating, investing, and financing activities for comparative periods Cash Flows Summary (Six Months Ended June 30, in thousands) | Activity | 2025 | 2024 | Change ($k) | | :-------------------------------- | :----- | :----- | :---------- | | Net cash provided by operating activities | $5,540 | $8,967 | $(3,427) | | Net cash used in investing activities | $(911) | $(1,970) | $1,059 | | Net cash used in financing activities | $(1,410) | $(884) | $(526) | Future Cash Requirements This section outlines the company's anticipated cash needs for operations, capital expenditures, debt, and potential strategic initiatives - Cash is required to fund operating expenses, working capital, capital expenditures, debt repayments, equipment maintenance, and potential mergers and acquisitions or market expansion[121] - Capital expenditures for the six months ended June 30, 2025, were $1.1 million, primarily for liquefaction assets, refurbishments, upgrades, and rolling stock[122] - The Company may pursue additional financing activities, such as refinancing existing debt, obtaining new debt, or debt/equity offerings, but there is no assurance of availability on acceptable terms[121] Off-Balance Sheet Arrangements This section confirms the absence of material off-balance sheet arrangements that could significantly impact the company's financial position - As of June 30, 2025, the Company had no transactions that met the definition of off-balance sheet arrangements that would have a current or future material effect on its financial position, operating results, liquidity, cash requirements, or capital resources[123] Critical Accounting Policies and Estimates This section discusses the significant accounting policies and estimates that require management's judgment and can materially affect financial reporting - The Company's financial statements are prepared in accordance with U.S. GAAP, requiring management to make estimates and assumptions that affect reported amounts[124] - There have been no significant changes in the Company's critical accounting policies and estimates during the three and six months ended June 30, 2025, from those disclosed in the 2024 Annual Report on Form 10-K[124] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a 'smaller reporting company,' Stabilis Solutions, Inc. is not required to provide quantitative and qualitative disclosures about market risk in this report - The Company is exempt from providing quantitative and qualitative disclosures about market risk as it qualifies as a 'smaller reporting company'[125] Item 4. Controls and Procedures Management, including the principal executive and financial officers, concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025. There have been no material changes in internal control over financial reporting during the last fiscal quarter - The principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[126] - There have been no changes in internal control over financial reporting that materially affected or are reasonably likely to materially affect internal control over financial reporting during the last fiscal quarter[127] Part II. Other Information This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and exhibits Item 1. Legal Proceedings The Company is involved in various legal proceedings and claims in the normal course of business. Management believes that the ultimate resolution of these matters will not have a material effect on the Company's financial position or results of operations - The Company may become party to various legal actions that arise in the ordinary course of its business[129] - 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[129] Item 1A. Risk Factors There have been no material changes to the risk factors disclosed in the 2024 Form 10-K, except for the addition of a new risk factor concerning the potential adverse effects of changes in U.S. trade policy, including tariffs, on the Company's business and results of operations - No material changes in risk factors from the Company's Annual Report on Form 10-K for the year ended December 31, 2024, except for one addition[130] - A new risk factor highlights that changes in U.S. trade policy, including tariffs, may have a material adverse effect on the Company's business and results of operations by potentially reducing demand for LNG or increasing operating costs[131] Item 5. Other Information No officers or directors adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the fiscal quarter ended June 30, 2025 - None of the Company's officers or directors adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the fiscal quarter ended June 30, 2025[132] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including organizational documents, registration rights agreements, and certifications from the principal executive and financial officers, along with XBRL-related documents - Exhibits include Amended and Restated Articles of Incorporation and Bylaws, Registration Rights Agreements, and Description of Securities[133] - Certifications from the Principal Executive Officer and Principal Financial Officer (Rule 13a-14(a) / 15d-14(a) and Section 1350) are filed[133] - Interactive XBRL Instance Document and Taxonomy Extension documents are included[133] Signatures The report is officially signed by J. Casey Crenshaw, Interim President, Chief Executive Officer and Director, and Andrew L. Puhala, Chief Financial Officer, on behalf of Stabilis Solutions, Inc. on August 6, 2025 - The report was signed by J. Casey Crenshaw, Interim President, Chief Executive Officer and Director (Principal Executive Officer)[136] - The report was signed by Andrew L. Puhala, Chief Financial Officer (Principal Financial Officer)[136] - The signing date for the report was August 6, 2025[136]