Stabilis Solutions Inc
For the period ended Jun 30, 2024. Filed Aug 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 7, 2024
SLNG$3.58-4.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-07.
0001437749-24-015119
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-07.
0001437749-24-025209
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 53 previous paragraphs and 65 current paragraphs.
30 unchanged; 20 reworded; 4 added; 3 removed; 0 previous and 11 current paragraphs rearranged.
Tables are not compared: 10 previous and 17 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (4)
Current report
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023** **
Current report
Revenue
Current report
During the Current Year, revenues decreased $1.4 million, or 4%, compared to the Prior Year. The change in revenue primarily related to:
Current report
Operating Expenses
Removed paragraphs (3)
Previous report
Customer Contracts within our New and Expanding Markets for LNG
Previous report
During the quarter, the Company entered into a multi-year contract to supply high-purity rocket propellant within the commercial space industry. The Company estimates it is currently supplying a significant portion of the U.S. market of high-purity LNG for use as rocket propellant. The U.S. is rapidly becoming the global leader in commercial launch activity, and the Company anticipates its aerospace market-related volumes will increase as the Company continues to position itself as a major supplier of high-purity LNG to space launch providers in the U.S.
Previous report
During the fourth quarter of 2023, the Company entered into a two-year marine bunkering contract with a cruise industry customer to deliver an estimated 22 million gallons of LNG per year. The Company expects that LNG demand for marine fuel will increase as additional marine vessels that use LNG as the primary fuel of choice are delivered to vessel fleets and commence routine operations.
Reworded paragraphs (20)
Previous wording
During the third quarter of 2022, Stabilis received authorization from the DOE to export domestically produced LNG to all free trade ("FTA") and non-free trade ("non-FTA") countries, for up to 51.75 billion cubic feet per year (or approximately 1.0 MTPA) of natural gas equivalent. The authorization is for a term of 28 years, provided certain milestones of utilization are achieved. As of March 31, 2024, the Company has not made any exports under this approval and has not expended material funds nor entered into any sales commitments. For exports to non-FTA countries, the Company has two years from the date it received authorization with which to initiate exportation of LNG. For exports to FTA countries, the Company has five years from the date it received the authorization with which to initiate exportation of LNG.
Current wording
During the third quarter of 2022, Stabilis received authorization from the DOE to export domestically produced LNG to all free trade ("FTA") and non-free trade ("non-FTA") countries, for up to 51.75 billion cubic feet per year (or approximately 1.0 MTPA) of natural gas equivalent. The authorization is for a term of 28 years, provided certain milestones of utilization are achieved. As of June 30, 2024, the Company has not made any exports under this approval and has not expended material funds nor entered into any sales commitments. For exports to non-FTA countries, the Company has two years from the date it received authorization with which to initiate exportation of LNG. For exports to FTA countries, the Company has five years from the date it received the authorization with which to initiate exportation of LNG. The Company anticipates it will meet the initial time requirement for exports to non-FTA and FTA countries.
Previous wording
The DOE authorization received during the third quarter of 2022 supplements the Company's existing other export license from the DOE, which authorize the Company to import and export LNG from and to Canada and Mexico, via truck. In the quarter ended March 31, 2024, we delivered LNG to Mexico.
Current wording
The DOE authorization received during the third quarter of 2022 supplements the Company's existing other export license from the DOE, which authorizes the Company to import and export LNG from and to Canada and Mexico, via truck. In the six months ended June 30, 2024, we delivered LNG to Mexico.
Previous wording
During the Current Quarter, revenues decreased $7.1 million, or 26%, compared to the Prior Year Quarter. The change in revenue primarily related to:
Current wording
During the Current Quarter, revenues increased $5.7 million, or 44%, compared to the Prior Year Quarter. The change in revenue primarily related to:
Previous wording
*Costs of revenues.*Cost of revenues decreased $6.8 million, or 33%, compared to the Prior Year Quarter. As a percentage of revenue, these costs were 68% and 76% in the Current Quarter and the Prior Year Quarter, respectively. The change in cost of revenues was primarily attributable to:
Current wording
*Costs of revenues.*Cost of revenues increased $3.0 million, or 28%, compared to the Prior Year Quarter. As a percentage of revenue, these costs were 73% and 82% in the Current Quarter and the Prior Year Quarter, respectively. The change in cost of revenues was primarily attributable to:
Previous wording
Change in unrealized gain/loss on natural gas derivatives. The Company recognized a gain of $0.3 million on the reduction of unrealized gains associated with the Company's natural gas derivatives in the Current Quarter compared to a loss of $0.2 million in the Prior Year Quarter. The gain in the Current Quarter was due to offsetting amortization of realized losses as call option volumes expired unexercised during the Current Quarter.
Current wording
Change in unrealized gain/loss on natural gas derivatives. The Company recognized a gain of $0.1 million from the change in unrealized (gain) loss on natural gas derivatives in the Current Quarter compared to a gain of $0.2 million in the Prior Year Quarter. The gains in both periods were due to offsetting amortization of realized losses as call option volumes expired.
Previous wording
Selling, general and administrative expenses. Selling, general and administrative expense increased $0.1 million primarily due to bad debt expense from a former customer in the Current Quarter.
Current wording
Selling, general and administrative expenses. Selling, general and administrative expense increased $0.3 million in the Current Quarter compared to the Prior Year Quarter primarily due to increased compensation costs.
Previous wording
Depreciation. Depreciation expense decreased $0.2 during the Current Quarter as compared to the Prior Year Quarter due to assets reaching the end of their depreciable lives.
Current wording
Depreciation. Depreciation expense decreased $0.2 million during the Current Quarter as compared to the Prior Year Quarter due to assets reaching the end of their depreciable lives.
Previous wording
*Net equity income from foreign joint venture operations.*Equity Income from the Company's foreign joint venture decreased by $0.1 million in Current Quarter compared to the Prior Year Quarter due to decreased net profits by the joint venture.
Current wording
*Net equity income from foreign joint venture operations.*Equity Income from the Company's foreign joint venture decreased by $0.4 million in Current Quarter compared to the Prior Year Quarter due to decreased net profits by the joint venture.
Previous wording
Interest (expense) income. Interest expense, net was $4 thousand for the Current Quarter compared to $0.2 million in the Prior Year Quarter. The decrease in interest expense, net compared to the Prior Year Quarter is due to capitalized interest on capital projects and interest income earned on the Company's cash balances during the Current Quarter.
Current wording
Interest (expense) income. Interest income, net was $28 thousand for the Current Quarter compared to interest expense of $0.1 million in the Prior Year Quarter. The decrease in interest expense, net compared to the Prior Year Quarter is due to capitalized interest on capital projects and interest income earned on the Company's cash balances during the Current Quarter.
Previous wording
Interest expense, net - related parties. There was no related party interest expense in the Current Quarter, as the related party debt financing was paid in full at the end of fiscal year 2023, as compared to interest expense of $32 thousand in the Prior Year Quarter.
Current wording
Interest expense, net - related parties. There was no related party interest expense in the Current Quarter, as the related party debt financing was paid in full at the end of fiscal year 2023, as compared to related party interest expense of $24 thousand in the Prior Year Quarter.
Previous wording
Income tax expense. The Company incurred a state and foreign income tax expense of $0.1 million during the Current Quarter compared to $8 thousand during the Prior Year Quarter. No U.S. federal income tax benefit was recorded for the Current Quarter or Prior Year Quarter as any net U.S. deferred tax assets generated from operating losses were offset by a change in the Company's valuation allowance on net deferred tax assets.* *
Current wording
Income tax expense. The Company incurred state and foreign income tax expense of $0.4 million during the Current Quarter compared to $0.2 million during the Prior Year Quarter due to improved operating results. No U.S. federal income taxes were recorded for the Current Quarter or Prior Year Quarter as any net U.S. deferred tax assets generated from operating losses or used from operating income were offset by a change in the Company's valuation allowance on net deferred tax assets.* *
Previous wording
*Gain on disposal of assets.*The Company recorded a gain on disposal of assets of $0.1 million in the Current Quarter related to the sale of certain assets to a customer in which proceeds of $0.2 million were received.
Current wording
*Gain on disposal of assets.*The Company recorded a gain on disposal of assets of $0.2 million in the Current Year related to the sale of certain assets in which proceeds of $0.3 million were received.
Previous wording
Other income (expense). Other expense was $20 thousand during the Current Quarter compared to $0.1 million in the Prior Year Quarter related to transactional foreign exchange losses.
Current wording
Other income (expense). Other income was $5 thousand during the Current Year compared to expense of $0.1 million in the Prior Year related to transactional foreign exchange losses.
Previous wording
Historically, our principal sources of liquidity have consisted of cash provided by our operations, cash on hand, proceeds received from borrowings under debt agreements and distributions received from our BOMAY joint venture. During the Current Quarter, our principal sources of liquidity were cash provided from our operations and our existing cash balances. The Company used cash flows generated from operations to invest in fixed assets to support growth, as well as to pay interest and principal outstanding under its debt agreements.
Current wording
Historically, our principal sources of liquidity have consisted of cash provided by our operations, cash on hand, proceeds received from borrowings under debt agreements and distributions received from our BOMAY joint venture. During the Current Year, our principal sources of liquidity were cash provided from our operations, our existing cash balances and distributions received from our BOMAY joint venture. The Company used cash flows generated from operations to invest in fixed assets to support growth, as well as to pay interest and principal outstanding under its debt agreements.
Previous wording
As of March 31, 2024, we had $8.3 million in cash and cash equivalents on hand and $9.2 million in outstanding debt (net of debt issuance costs), and lease obligations (of which $1.8 million is due in the next twelve months). The Company has total availability under the Revolving Credit Facility and the Ameristate Secured Term Loan Facility of $4.3 million at March 31, 2024. During the three months ended March 31, 2024, the Company made no draws on either the Revolving Credit Facility or the Ameristate Secured Term Loan Facility. The Company has also filed a shelf registration statement (described below) which provides the Company the flexibility to raise capital to fund working capital requirements, repay debt and/or fund future transactions.
Current wording
As of June 30, 2024, we had $11.5 million in cash and cash equivalents on hand and $8.7 million in outstanding debt (net of debt issuance costs), and lease obligations (of which $1.2 million is due in the next twelve months). The Company has total availability under the Revolving Credit Facility and the Ameristate Secured Term Loan Facility of $4.4 million at June 30, 2024. During the six months ended June 30, 2024, the Company made no draws on either the Revolving Credit Facility or the Ameristate Secured Term Loan Facility. The Company has also filed a shelf registration statement (described below) which provides the Company the flexibility to raise capital to fund working capital requirements, repay debt and/or fund future transactions.
Previous wording
Net cash provided by operating activities totaled $3.9 million for the three months ended March 31, 2024 compared to $0.1 million for the same period in 2023. The increase in net cash provided by operating activities of $3.8 million as compared to the Prior Year Quarter was primarily attributable to higher net income and changes in working capital.
Current wording
Net cash provided by operating activities totaled $9.0 million for the six months ended June 30, 2024 compared to $3.9 million for the same period in 2023. The increase in net cash provided by operating activities of $5.1 million as compared to the Prior Year was primarily attributable to higher net income, higher distributions received from the Company's equity investment in BOMAY and changes in working capital.
Previous wording
Net cash used in investing activities totaled $0.7 million for the three months ended March 31, 2024 compared to $3.7 million for the three months ended March 31, 2023. The decrease in net cash used in investing activities in the Current Quarter of $3.1 million was primarily due to cash paid to purchase additional liquefaction assets, to support growth, in the Prior Year Quarter and proceeds on the sale of assets in the Current Quarter.
Current wording
Net cash used in investing activities totaled $2.0 million for the six months ended June 30, 2024 compared to $5.2 million for the six months ended June 30, 2023. The decrease in net cash used in investing activities in the Current Year of $3.2 million was primarily due to cash paid to purchase additional liquefaction assets to support growth in the Prior Year and proceeds received from the sale of assets in the Current Year.
Previous wording
Net cash used in financing activities totaled $0.4 million for the three months ended March 31, 2024, compared to $1.0 million for the three months ended March 31, 2023. The decrease in cash used in financing activities in the Current Quarter compared to the Prior Year Quarter is due to lower debt payments as a result of having lower debt balances in the Current Quarter; the related party debt was paid in full as of December 31, 2023.
Current wording
Net cash used in financing activities totaled $0.9 million for the six months ended June 30, 2024, compared to $2.0 million for the six months ended June 30, 2023. The decrease in cash used in financing activities in the Current Year compared to the Prior Year is due to lower debt payments as a result of having fully repaid related party debt as of December 31, 2023.
Previous wording
Capital expenditures for the three months ended March 31, 2024 were $0.9 million and primarily related to the purchase of additional liquefaction assets and rolling stock. Future capital expenditures over the next twelve months will be dependent upon business needs as well as the availability of additional capital at favorable terms which is difficult to predict. At March 31, 2024, the Company had purchase orders open of approximately $2.3 million related to capital expenditures.
Current wording
Capital expenditures for the six months ended June 30, 2024 were $2.2 million and primarily related to the purchase of additional liquefaction assets, refurbishments and upgrades to existing assets and rolling stock. Future capital expenditures over the next twelve months will be dependent upon business needs as well as the availability of additional capital at favorable terms which is difficult to predict. At June 30, 2024, the Company had purchase orders open of approximately $5.3 million related to capital expenditures.
Previous wording
The discussion and analysis of our financial condition and results of operations are based on our Condensed Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities known to exist at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. We evaluate our estimates on an ongoing basis, based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. There can be no assurance that actual results will not differ from those estimates. There have been no significant changes in the Company's “Critical Accounting Policies and Estimates” during the three months ended March 31, 2024 from those disclosed within the Company's Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC on March 7, 2024.
Current wording
The discussion and analysis of our financial condition and results of operations are based on our Condensed Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities known to exist at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. We evaluate our estimates on an ongoing basis, based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. There can be no assurance that actual results will not differ from those estimates. There have been no significant changes in the Company's “Critical Accounting Policies and Estimates” during the three and six months ended June 30, 2024 from those disclosed within the Company's Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC on March 7, 2024.
Rearranged current paragraphs (11)
Current report — wording carried from elsewhere
*Gain on disposal of assets.*The Company recorded a gain on disposal of assets of $0.1 million in the Current Quarter related to the sale of certain trucks during the Current Quarter.
Current report — wording carried from elsewhere
Other income (expense). Other income was $26 thousand during the Current Quarter compared to other expense of $40 thousand in the Prior Year Quarter related to transactional foreign exchange losses.
Current report — wording carried from elsewhere
The comparative tables below reflect our consolidated operating results for the six months ended June 30, 2024 (the “Current Year”) as compared to the six months ended June 30, 2023 (the “Prior Year”) (unaudited, amounts in thousands, except for percentages).
Current report — wording carried from elsewhere
*Costs of revenues.*Cost of revenues during the Current Year decreased $3.8 million, or 12%, compared to the Prior Year. As a percentage of revenue, these costs were 71% and 78% in the Current Year and the Prior Year, respectively. The change in cost of revenues was primarily attributable to:
Current report — wording carried from elsewhere
Change in unrealized gain/loss on natural gas derivatives. The Company recognized a gain of $0.3 million in the change in unrealized (gain) loss on natural gas derivatives for the Current Year compared to $0.1 million in the Prior Year. The gains in both periods were due to offsetting amortization of realized losses as call option volumes expired.
Current report — wording carried from elsewhere
Selling, general and administrative expenses. Selling, general and administrative expense increased $0.4 million in the Current Year compared to the Prior Year primarily due to increased compensation costs.
Current report — wording carried from elsewhere
Depreciation. Depreciation expense decreased $0.4 during the Current Year as compared to the Prior Year due to assets reaching the end of their depreciable lives.
Current report — wording carried from elsewhere
*Net equity income from foreign joint venture operations.*Equity Income from the Company's foreign joint venture decreased by $0.5 million in Current Year compared to the Prior Year due to decreased net profits by the joint venture.
Current report — wording carried from elsewhere
Interest (expense) income. Interest income, net was $24 thousand for the Current Year compared to interest expense of $0.3 million in the Prior Year. The decrease in interest expense, net compared to the Prior Year is due to capitalized interest on capital projects and interest income earned on the Company's cash balances during the Current Year.
Current report — wording carried from elsewhere
Interest expense, net - related parties. There was no related party interest expense in the Current Year, as the related party debt financing was paid in full at the end of fiscal year 2023, as compared to related party interest expense of $0.1 million in the Prior Year.
Current report — wording carried from elsewhere
Income tax expense. The Company incurred a state and foreign income tax expense of $0.5 million during the Current Year compared to $0.2 million the Prior Year due to improved operating results. No U.S. federal income taxes were recorded for the Current Year or Prior Year as any net U.S. deferred tax assets generated from operating losses or used from operating income were offset by a change in the Company's valuation allowance on net deferred tax assets.* *