Stabilis Solutions Inc

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 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.

Current wording

In 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 shipments of LNG and is for a term of 28 years. As of September 30, 2024, the Company has met the initial time requirement to initiate exports to non-FTA countries. For exports to FTA countries, the Company has five years from the date it received the authorization with which to initiate exportation of LNG.

Previous 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.

Current wording

The DOE authorization received during the third quarter of 2022 supplements the Company's other existing export license from the DOE, which authorizes the Company to import and export LNG from and to Canada and Mexico, via truck. In the nine months ended September 30, 2024, we delivered LNG to Mexico and Belgium.

Previous 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:

Current wording

During the Current Quarter, revenues increased $2.3 million, or 15%, compared to the Prior Year Quarter. The change in revenue primarily related to:

Previous 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:

Current wording

*Cost of revenues.*Cost of revenues increased $0.6 million, or 5%, compared to the Prior Year Quarter. As a percentage of revenue, these costs were 72% and 79% 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 $0.1 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.

Current wording

Change in unrealized gain/loss on natural gas derivatives. The Company recognized a loss of $13 thousand from the change in unrealized (gain) loss on natural gas derivatives in the Current Quarter compared to a gain of $0.3 million in the Prior Year Quarter. The loss was due to low natural gas prices.

Previous 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.

Current wording

Selling, general and administrative expenses. Selling, general and administrative expense increased $33 thousand in the Current Quarter compared to the Prior Year Quarter primarily due to increased compensation costs related to hiring, partially offset by decreased professional services costs.

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 trucks during the Current Quarter.

Current 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 fixed assets during the Current Quarter in which proceeds of $0.1 million were received. In the Prior Year Quarter, a gain on the disposal of assets was recorded related to insurance proceeds received for assets damaged in a fire.

Previous 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.

Current wording

*Net equity income from foreign joint venture operations.*Equity income from the Company's foreign joint venture increased by $0.2 million in Current Quarter compared to the Prior Year Quarter due to increased net profits by the joint venture.

Previous 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.

Current wording

Interest (expense) income. Interest income, net was $0.1 million for both the Current Quarter and the Prior Year Quarter, related to interest income earned on the Company's cash balances during the both periods.

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 related party interest expense of $24 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 $15 thousand in the Prior Year Quarter.

Previous wording

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 wording

Other income (expense). Other income was $10 thousand during the Current Quarter compared to other expense of $3 thousand in the Prior Year Quarter related to transactional foreign exchange gains (losses).

Previous 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.* *

Current wording

Income tax expense. The Company incurred state and foreign income tax benefit of $0.1 million during the Current Quarter compared to income tax expense of $0.1 million during the Prior Year Quarter due to revisions to estimated state taxes in the Current Quarter. 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

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 wording

The comparative tables below reflect our consolidated operating results for the nine months ended September 30, 2024 (the “Current Year”) as compared to the nine months ended September 30, 2023 (the “Prior Year”) (unaudited, amounts in thousands, except for percentages).

Previous wording

During the Current Year, revenues decreased $1.4 million, or 4%, compared to the Prior Year. The change in revenue primarily related to:

Current wording

During the Current Year, revenues increased $0.9 million, or 2%, compared to the Prior Year. The change in revenue primarily related to:

Previous wording

*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 wording

*Cost of revenues.*Cost of revenues during the Current Year decreased $3.2 million, or 8%, 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:

Previous wording

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 wording

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 both the Current Year and the Prior Year. 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 $0.4 million in the Current Year compared to the Prior Year primarily due to increased compensation costs.

Current wording

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 partially offset by decreased professional services costs.

Previous wording

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 wording

Depreciation. Depreciation expense decreased $0.7 million during the Current Year as compared to the Prior Year due to assets reaching the end of their depreciable lives.

Previous 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.

Current wording

*Gain on disposal of assets.*The Company recorded a gain on disposal of assets of $0.3 million in the Current Year related to the sale of certain assets in which proceeds of $0.3 million were received. In the Prior Year, a gain on the disposal of assets was recorded related to insurance proceeds received for assets damaged in a fire.

Previous wording

*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 wording

*Net equity income from foreign joint venture operations.*Equity income from the Company's foreign joint venture decreased by $0.3 million in Current Year compared to the Prior Year due to decreased net profits by the joint venture.

Previous wording

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 wording

Interest (expense) income. Interest income, net was $0.1 million for the Current Year compared to interest expense of $0.2 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.

Previous 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.

Current wording

Other income (expense). Other income was $15 thousand during the Current Year compared to expense of $0.1 million in the Prior Year related to transactional foreign exchange gains (losses).

Previous wording

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.* *

Current wording

Income tax expense. The Company incurred a state and foreign income tax expense of $0.4 million during the Current Year compared to $0.2 million during 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.* *

Previous 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.

Current wording

As of September 30, 2024, we had $12.4 million in cash and cash equivalents on hand and $9.8 million in outstanding debt (net of debt issuance costs), and lease obligations (of which $2.4 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 $3.2 million at September 30, 2024. During the nine months ended September 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 $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.

Current wording

Net cash provided by operating activities totaled $11.5 million for the nine months ended September 30, 2024 compared to $5.4 million for the same period in 2023. The increase in net cash provided by operating activities of $6.1 million as compared to the Prior Year was primarily attributable to higher net income, changes in working capital and higher distributions received from the Company's equity investment in BOMAY.

Previous 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.

Current wording

Net cash used in investing activities totaled $3.2 million for the nine months ended September 30, 2024 compared to $9.0 million for the nine months ended September 30, 2023. The decrease in net cash used in investing activities in the Current Year of $5.8 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 $0.9 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.

Current wording

Net cash used in financing activities totaled $1.3 million for the nine months ended September 30, 2024, compared to $2.9 million for the nine months ended September 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 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.

Current wording

Capital expenditures for the nine months ended September 30, 2024 were $3.6 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 September 30, 2024, the Company had purchase orders and payables open related to capital expenditures of approximately $6.0 million.

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 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.

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 nine months ended September 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.