Stabilis Solutions, Inc.

Previous wording

Stabilis Solutions, Inc. and its subsidiaries is an energy transition company that provides turnkey clean energy production, storage, transportation and fueling solutions, primarily using liquefied natural gas (“LNG”), to multiple end markets. We provide LNG solutions to customers in diverse end markets, including aerospace, agriculture, energy, industrial, marine bunkering, mining, pipeline, remote power and utility markets. LNG can be used to deliver natural gas to locations where pipeline service is unavailable, has been interrupted, or needs to be supplemented. LNG can also be used to replace a variety of alternative fuels, including distillate fuel oil and propane, among others, to provide environmental and economic benefits. Increasingly, LNG is being utilized as a transportation fuel in the marine industry and as a propellant in the private rocket launch sector. We believe that these fuel markets are large and provide significant opportunities for LNG usage.

Current wording

Stabilis Solutions, Inc. and its subsidiaries 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. We provide LNG solutions to customers in diverse end markets, including aerospace, agriculture, energy, industrial, marine bunkering, mining, pipeline, remote power and utility markets. LNG can be used to deliver natural gas to locations where pipeline service is unavailable, has been interrupted, or needs to be supplemented. LNG can also be used to replace a variety of fuels, including distillate fuel oil, such as diesel and marine gas oil, and propane, among others, to provide environmental and economic benefits. Increasingly, LNG is being utilized as a transportation fuel in the marine industry and as a propellant in the private rocket launch sector. We believe that these fuel markets are large and provide significant opportunities for LNG usage.

Previous wording

LNG Production and Sales—Stabilis builds and operates cryogenic natural gas processing facilities, called “liquefiers,” which convert natural gas into LNG through a purification and multiple stage cooling process. We currently own and operate a liquefier that can produce up to 100,000 LNG gallons per day in George West, Texas and a liquefier that can produce up to 30,000 LNG gallons per day in Port Allen, Louisiana. We also purchase LNG from third-party production sources which allows us to support customers in markets where we do not own liquefiers. We make the determination of LNG and transportation supply sources based on the cost of LNG, the transportation cost to deliver to regional customer locations, and the reliability of the supply source. Revenues earned from the production and sales of LNG are included within LNG Product revenue.

Current wording

LNG Production and Sales—Stabilis builds and operates cryogenic natural gas processing facilities, called “liquefiers,” which convert natural gas into LNG through a purification and multiple stage cooling process. We currently own and operate a liquefier that can produce up to 100,000 LNG gallons per day in George West, Texas and a liquefier that can produce up to 30,000 LNG gallons per day in Port Allen, Louisiana. We also purchase LNG from third-party production sources which allows us to support customers in markets where we do not own liquefiers. We make the determination of LNG supply sources based on the cost of LNG, the transportation cost to deliver to regional customer locations, and the reliability of the supply source. Revenues earned from the production and sales of LNG are included within LNG Product revenue.

Previous 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.

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 with a remaining term of approximately 25 years under this authorization. In the third quarter of 2024, the Company met the initial time requirement to initiate exports to non-FTA countries. As of March 31, 2025, we have delivered LNG to Europe under this authorization. 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 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.

Current wording

The DOE authorization received during the third quarter of 2022 supplements the Company's other existing import and export license from the DOE. Under this license, the Company is authorized to import and export LNG from and to Canada and Mexico, via truck. Additionally, effective September 2024, the Company can import LNG, by vessel, from various international sources to any LNG import terminal in the United States. In the three months ended March 31, 2025, we delivered LNG to Mexico under this authorization.

Previous 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:

Current wording

During the Current Quarter, revenues decreased $2.4 million, or 12%, compared to the Prior Year Quarter. The change in revenue primarily related to:

Previous 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:

Current wording

*Cost of revenues.*Cost of revenues decreased $0.7 million, or 5%, compared to the Prior Year Quarter. As a percentage of revenue, these costs were 74% and 68% 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 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.

Current wording

Change in unrealized gain/loss on natural gas derivatives. The Company had a gain of $0.1 million on 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 decrease in the gain in the Current Quarter is due to fewer natural gas derivatives.

Previous 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.

Current wording

Selling, general and administrative expenses. Selling, general and administrative expenses increased $1.5 million in the Current Quarter compared to the Prior Year Quarter. Mr. Ballard's severance related expenses accounted for $2.1 million in the Current Quarter and were partially offset by lower compensation expense.

Previous 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.

Current wording

Depreciation. Depreciation expense increased $0.1 million during the Current Quarter as compared to the Prior Year Quarter primarily due to new mobile assets in the Current Quarter compared to the Prior Year Quarter. The increase was partially offset by other 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 $0.1 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.

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 an insurance settlement for an asset that was damaged in transit in which proceeds of $0.2 million were received. In the Prior Year Quarter, a gain of $0.1 million on the disposal of assets was recorded related to the sale of certain assets in which proceeds of $0.2 million were received.

Previous 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.

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 the 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 $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.

Current wording

Interest (expense) income. Interest income, net was $21 thousand in the Current Quarter compared to interest expense, net of $4 thousand in the Prior Year Quarter. The increase in interest income, net related to interest earned on the Company's cash balances during the Current Quarter.

Previous 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).

Current wording

Other income (expense). Other expense was $12 thousand during the Current Quarter compared to other expense of $21 thousand in the Prior Year Quarter related to transactional foreign exchange gains (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 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.

Current wording

The Company's principal sources of liquidity have consisted of cash provided by our operations, cash on hand, and distributions 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 amounts outstanding under our debt agreements.

Previous wording

The Company has a three-year Revolving Credit Facility with Cadence Bank which provides for a maximum aggregate amount of $10.0 million, subject to a borrowing base of 80% of eligible accounts receivable. The Company may request an increase in the maximum aggregate amount under the Revolving Credit Facility by up to $5.0 million, subject to the approval of Cadence Bank. All borrowings under the Revolving Credit Facility are secured by the Borrowers’ accounts receivable and deposit accounts. Borrowings under the Revolving Credit Facility incur interest at the Prime Rate published by the Wall Street Journal. Any unused portion is subject to a quarterly unused commitment fee of 0.5% per annum. As of September 30, 2024, no amounts have been drawn under the Revolving Credit Facility. The Revolving Credit Facility matures on June 9, 2026. The Revolving Credit Facility contains various restrictions and covenants. The Company also has $1.0 million in remaining availability under its Secured Term Note with Ameristate Bank. As of September 30, 2024, the Company was in compliance with all its covenants related to its debt.

Current wording

On March 27, 2025 the Company, entered into a Modification Agreement to the existing Loan Agreement with Cadence Bank. Under the Agreement the $10.0 million Revolving Credit Facility maturity date was extended to June 9, 2028. Additionally, the Agreement amended the Fixed Charge Coverage Ratio terms primarily related to the inclusion of excess cash. The three-year Revolving Credit Facility, as amended, contains a maximum aggregate amount of $10.0 million, subject to a borrowing base of 80% of eligible accounts receivable. The Company may request an increase in the maximum aggregate amount under the Revolving Credit Facility by up to $5.0 million, subject to the approval of Cadence Bank. All borrowings under the Revolving Credit Facility are secured by the Borrowers’ accounts receivable and deposit accounts. Borrowings under the Revolving Credit Facility incur interest at the Prime Rate published by the Wall Street Journal. Any unused portion is subject to a quarterly unused commitment fee of 0.5% per annum. As of March 31, 2025, no amounts have been drawn under the Revolving Credit Facility. The Revolving Credit Facility contains various restrictions and covenants. As of March 31, 2025, the Company was in compliance with all its covenants related to the Revolving Credit Facility.

Previous 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.

Current wording

As of March 31, 2025, we had $9.0 million in cash and cash equivalents on hand, $9.1 million in outstanding debt (net of debt issuance costs) and lease obligations (of which $2.3 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 $3.5 million at March 31, 2025. During the three months ended March 31, 2025, the Company made no draw downs on either the Revolving Credit Facility or the AmeriState Secured Term Loan Facility.

Previous wording

The Company is subject to substantial business risks and uncertainties inherent in the LNG industry and there is no assurance that the Company will be able to generate sufficient cash flows in the future to sustain itself or to support future growth. Management believes the business will generate sufficient cash flows from its operations along with availability under the Company's debt agreements to fund the business for the next twelve months. As we continue to grow, management continues to evaluate additional financing alternatives, however, there is no guarantee that additional debt or equity financing or other opportunities to raise capital will be available or available at terms that would be beneficial to shareholders.

Current wording

Management believes the business will generate sufficient cash flows from its operations along with availability under the Company's debt agreements to fund the business for the next twelve months. The Company is subject to substantial business risks and uncertainties inherent in the LNG industry and there is no assurance that the Company will be able to generate sufficient cash flows in the future to sustain itself or to support future growth. As we continue to grow, management continues to evaluate additional financing alternatives, however, there is no guarantee that additional financing will be available or available at terms that would be beneficial to shareholders.

Previous 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.

Current wording

Net cash provided by operating activities totaled $1.0 million for the three months ended March 31, 2025 compared to $3.9 million for the same period in 2024. The decrease in net cash provided by operating activities of $2.9 million as compared to the Prior Year Quarter was primarily attributable to decreased profit as a result of lower income from operations in the Current Quarter.

Previous 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.

Current wording

Net cash used in investing activities totaled $0.3 million for the three months ended March 31, 2025 compared to $0.7 million for the three months ended March 31, 2024. The decrease in net cash used in investing activities in the Current Quarter of $0.4 million was primarily due to cash paid to purchase additional liquefaction assets to support growth in the Prior Year Quarter.

Previous 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.

Current wording

Net cash used in financing activities totaled $0.7 million for the three months ended March 31, 2025, compared to $0.4 million for the three months ended March 31, 2024. The increase in cash used in financing activities in the Current Quarter compared to the Prior Year Quarter is due to additional debt payments on the AmeriState Loan.

Previous wording

We require cash to fund our operating expenses and working capital requirements, including costs associated with fuel sales, debt repayments, purchases of equipment and other capital expenditures, maintenance of LNG production facilities, mergers and acquisitions (if any), pursuing market expansion, supporting sales and marketing activities and other general corporate purposes. While we believe we have sufficient liquidity and capital resources to fund our operations and repay our debt, we may elect to pursue additional financing activities such as refinancing existing debt, obtaining new debt, or debt or equity offerings to provide flexibility with our cash management. Certain of these alternatives may require the consent of current lenders or stockholders, and there is no assurance that we will be able to execute any of these alternatives on acceptable terms or at all. Additionally, the Company may pursue expansion activities to increase liquefaction capabilities. In the event the Company pursues expansion, there is no assurance the Company will be able to secure additional liquidity.

Current wording

We require cash to fund our operating expenses and working capital requirements, including costs associated with fuel sales, capital expenditures, debt repayments, equipment maintenance of LNG production facilities, mergers and acquisitions (if any), pursuing market expansion, supporting sales and marketing activities and other general corporate purposes. While we believe we have sufficient liquidity and capital resources to fund our operations and repay our debt, we may elect to pursue additional financing activities such as refinancing existing debt, obtaining new debt, or debt or equity offerings to provide flexibility with our cash management. Certain of these alternatives may require the consent of current lenders or stockholders, and there is no assurance that we will be able to execute any of these alternatives on acceptable terms or at all. Additionally, the Company may pursue additional expansion activities to increase its liquefaction capabilities. Such an effort, if pursued, would require additional liquidity from other sources either from the sale of debt or equity securities, additional capital investment from new owners or joint venture partners, or any combination of the above. The Company has made no such expansion commitments to date. In the event, the Company pursues such expansion in the near term, there is no assurance that the Company will be able to secure additional liquidity on favorable terms or at all.

Previous 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.

Current wording

Capital expenditures for the three months ended March 31, 2025 were $0.5 million and primarily related to the purchase of additional liquefaction assets, refurbishments and upgrades to existing assets and rolling stock. Future capital expenditures will be dependent upon business needs and value-adding investment opportunities as well as the availability of additional capital at favorable terms which is difficult to predict. At March 31, 2025, the Company had open purchase orders and payables related to capital expenditures of approximately $0.2 million.

Previous wording

On April 11, 2022, the Company filed a registration statement on Form S-3 (the “Shelf Registration”) which was declared effective on April 26, 2022 and will permit the Company to issue up to $100.0 million in either common stock, preferred stock, warrants or a combination of the above, and gives the Company the flexibility to raise capital to fund working capital requirements, repay debt and/or fund future transactions. On December 16, 2022, the Company filed a prospectus supplement to the Shelf Registration that allows the Company to sell and issue shares of common stock directly to the public “at the market” as permitted in Rule 415 under the Securities Act. As a smaller reporting company, we are subject to General Instruction I.B.6 of Form S-3, which limits the amounts that we may sell under the Shelf Registration to no more than one-third of our public float in any twelve month period as measured in accordance with such instruction. There is no assurance that we will be able to raise capital pursuant to the Shelf Registration on acceptable terms or at all. At September 30, 2024 we have made no issuances under the Shelf Registration.

Current wording

The Company filed a registration statement on Form S-3 (the "Shelf Registration"), which was declared effective on April 26, 2022. The Shelf Registration was for a period of three years, expiring on April 25, 2025, and permitted the Company to issue up to $100.0 million in either common stock, preferred stock, warrants or a combination of the above. On December 16, 2022, the Company filed a prospectus supplement to the Shelf Registration that allowed the Company to sell and issue shares of common stock directly to the public “at the market” (the "ATM") as permitted in Rule 415 under the Securities Act. The Company made no issuances under the Shelf Registration and related ATM. On April 25, 2025, the Shelf Registration and related ATM prospectus supplement expired unused.

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 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.

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 months ended March 31, 2025 from those disclosed within the Company's Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the SEC on February 25, 2025.