• Revenue: $18.6 million, up 44.1% year over year.

• Net Income: Slightly above breakeven, compared to a net loss of $2.2 million in the prior year.

• Adjusted EBITDA: $2.1 million, an improvement of $2.2 million from the prior year period.

• Adjusted EBITDA Margin: 11.3%.

• Operating Cash Flow: Generated $5 million in the second quarter.

• Total Cash and Equivalents: $11.5 million as of June 30, 2024.

• Credit Facility Availability: $4.4 million as of June 30, 2024.

• Total Debt Outstanding: $8.6 million as of June 30, 2024.

• Net Cash Position: Positive.

• Warning! GuruFocus has detected 3 Warning Signs with SLNG.

Release Date: August 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Stabilis Solutions Inc (NASDAQ:SLNG) reported a 44% year-over-year increase in revenue for the second quarter, driven by strong demand and improved utilization of their Texas liquefaction facility.

• The company achieved its first-ever second-quarter profit and highest-ever second-quarter adjusted EBITDA, demonstrating significant progress.

• Stabilis Solutions Inc (NASDAQ:SLNG) has a strong liquidity position with nearly $16 million in cash and availability under credit agreements, providing flexibility for future investments.

• The company is expanding its storage capacity at the George West, Texas facility, which will more than double its current capacity, enhancing its supply and logistics network.

• Stabilis Solutions Inc (NASDAQ:SLNG) is strategically positioned to capitalize on growing demand in the marine, power generation, and aerospace sectors, with plans for further expansion and investment in these areas.

Negative Points

• Despite the revenue growth, net income for the quarter was only slightly above breakeven, indicating challenges in achieving substantial profitability.

• The company faces risks and uncertainties related to forward-looking statements, which could impact future performance.

• Stabilis Solutions Inc (NASDAQ:SLNG) is exposed to merchant risk in its expansion plans, particularly in the marine bunkering market, which could affect financial stability.

• The company is reliant on securing anchor customers for its dedicated waterfront LNG bunkering facility, which may delay project timelines.

• There is significant competition in the marine bunkering market, with various players having different capabilities, which could impact Stabilis Solutions Inc (NASDAQ:SLNG)'s market share.

Q & A Highlights

Q: Can you provide more details about the dedicated waterfront bunkering facility and its financing? Are additional contracts needed to finalize this project? A: Westervelt Ballard, President and CEO, explained that they are in advanced discussions with potential partners to anchor the expansion in Galveston. They aim to have some commercial activity on the books before reaching a final investment decision (FID), but not 100% merchant risk. They are also exploring opportunities in other US ports.

Q: How does Stabilis plan to participate in the commercial and industrial market, particularly in backup power generation for data centers? A: Westervelt Ballard highlighted the significant opportunity in emergency and primary power generation for data centers. Stabilis aims to provide primary power generation where grid connection is delayed and serve as backup power, displacing diesel. They are in discussions with data center developers and see this as a natural extension of their existing capabilities.

Q: Why use LNG for data centers instead of natural gas, and when will the new George West capacity come online? A: Westervelt Ballard noted that LNG is used when data centers lack pipeline access, which can take years to establish. The George West facility has already started expanding storage capacity, with half operational as of the weekend. The remaining capacity is expected online by year-end or early next year.

Q: What opportunities exist in the aerospace sector, and what kind of contracts might Stabilis pursue? A: Westervelt Ballard mentioned that while specific details are confidential, Stabilis is a market leader in aerospace LNG supply. They see growth potential as a fuel supplier and possibly as a partner for vertically integrated supply chains, with more launches anticipated.

Q: Can you discuss the competitive environment in the marine bunkering market? A: Westervelt Ballard explained that competition varies by geography. Stabilis is one of the largest turnkey suppliers for LNG distribution and is expanding its presence on the waterfront. Competitors may focus on different aspects, such as liquefaction or last-mile delivery, but Stabilis offers a comprehensive supply chain solution.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.