Stabilis Solutions, Inc.

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. The Company continues to seek expansion of its own liquefaction capacity as described in "Expanding Markets and Expansion Efforts" below. 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.

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. The Company continues to seek expansion of its own liquefaction capacity as described in "Expanding Markets and Expansion Efforts" below. 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 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 February 2026, the Company executed a multi-year take-or-pay contract to supply LNG for behind-the-meter power generation for a world-leading provider of remote and temporary power generation at a data center. LNG deliveries are expected to commence during the first quarter of 2027 and continue through the first quarter of 2029. Total revenue under the initial multi-year term of the contract is estimated to be approximately $200 million. This contract represents the Company’s first contract in support of data center behind-the-meter power generation, consistent with the Company's strategic focus on growing, high-value vertical markets. The Company will receive $25.0 million in advance payments from the customer; of which, $15.0 million has been received to date. Advance payments will offset a percentage of each future invoice over the term of the contract, until fully offset, at which time the credit will cease. The Company may utilize the advance payments for the purchase of equipment, securing LNG supply and commissioning expenses incurred by the Company specific to the customer project. The portion of the $15.0 million that has not been utilized related to the customer project has been classified as restricted cash and cash equivalents. The full amount of the advance payment has been presented as deferred revenue on the Company's Condensed Consolidated Balance Sheet at March 31, 2026. See additional discussion in Note 1 and Note 6 of the Company’s Condensed Consolidated Financial Statements.

Current wording

In February 2026, the Company was awarded a multi-year take-or-pay contract to supply LNG for behind-the-meter power generation for a world-leading provider of remote and temporary power generation at a data center. LNG deliveries are expected to commence during the first quarter of 2027 and continue through the first quarter of 2029. Total revenue under the initial multi-year term of the contract is estimated to be approximately $200 million. This contract represents the Company’s first contract in support of data center behind-the-meter power generation, consistent with the Company's strategic focus on growing, high-value vertical markets. The Company will receive $25.0 million in advance payments from the customer; of which, $20.0 million has been received at June 30, 2026 and an additional $5.0 million advance payment was received in the third quarter of 2026. Advance payments will offset a percentage of each future invoice over the term of the contract, until fully offset, at which time the credit will cease. The Company may utilize the advance payments for the purchase of equipment, securing LNG supply and commissioning expenses incurred by the Company specific to the customer project. The portion of the $20.0 million that has not been utilized related to the customer project has been classified as restricted cash and cash equivalents. The full amount of the advance payment has been presented as deferred revenue on the Company's Condensed Consolidated Balance Sheet at June 30, 2026. See additional discussion in Note 1 and Note 6 of the Notes to Condensed Consolidated Financial Statements.

Previous wording

Recent geopolitical developments in the Middle East, including the U.S. conflict with Iran, may contribute to an increase in energy related costs and related market uncertainties. The Company's customer pricing structure for natural gas is primarily based off a monthly index and may absorb most, if not all, of potential volatilities associated with the price of natural gas; however, there can be no assurance that the Company will not be adversely impacted by resulting energy cost and market uncertainties resulting from the Iran conflict. The Company continues to monitor the developments.

Current wording

Recent geopolitical developments in the Middle East, including the U.S. conflict with Iran, may contribute to an increase in energy related costs and related market uncertainties. The Company's customer pricing structure for natural gas is primarily based off a monthly index and may absorb most, if not all, volatility associated with the price of natural gas; however, there can be no assurance that the Company will not be adversely impacted by resulting energy cost and market uncertainties resulting from the Iran conflict. The Company continues to monitor the developments.

Previous wording

During the fourth quarter of 2025, two multi-year customer contracts concluded in accordance with their terms. The completed contracts were for temporary remote power in Louisiana, and the Company’s truck-to-vessel LNG marine bunkering services in Galveston, Texas. The two contracts accounted for approximately 19% and 32% of 2025 revenues, respectively. As a result, the first quarter of 2026 results were lower for the period. The comparative tables below reflect our consolidated operating results for the three months ended March 31, 2026 (the “Current Quarter”) as compared to the three months ended March 31, 2025 (the “Prior Year Quarter”) (unaudited, amounts in thousands, except for percentages).

Current wording

During the fourth quarter of 2025, two multi-year customer contracts concluded in accordance with their terms. The completed contracts were for temporary remote power in Louisiana, and the Company’s truck-to-vessel LNG marine bunkering services in Galveston, Texas. The two contracts accounted for approximately 19% and 32% of 2025 revenues, respectively. As a result, the second quarter of 2026 results were lower for the period. The comparative tables below reflect our consolidated operating results for the three months ended June 30, 2026 (the “Current Quarter”) as compared to the three months ended June 30, 2025 (the “Prior Year Quarter”) (unaudited, amounts in thousands, except for percentages).

Previous wording

During the Current Quarter, revenues decreased $7.0 million, or 40%, compared to the Prior Year Quarter. The change in revenue primarily related to:

Current wording

During the Current Quarter, revenues decreased $5.4 million, or 31%, compared to the Prior Year Quarter. The change in revenue primarily related to:

Previous wording

*Cost of revenues.*Cost of revenues decreased $2.8 million, or 22%, compared to the Prior Year Quarter. As a percentage of revenue, these costs were 96% and 74% 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 $3.2 million, or 25%, compared to the Prior Year Quarter. As a percentage of revenue, these costs were 80% and 74% 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 loss on natural gas derivatives. In the Prior Year Quarter, the Company had an unrealized gain of $0.1 million on change in unrealized gain on natural gas derivatives. The Company had no unrealized gain or loss in the Current Quarter, and did not hold any natural gas derivatives during the Current Quarter.

Current wording

Change in unrealized loss on natural gas derivatives. In the Prior Year Quarter, the Company had an unrealized loss of $0.1 million on change in unrealized loss on natural gas derivatives. The Company had no unrealized gain or loss in the Current Quarter, and did not hold any natural gas derivatives during the Current Quarter.

Previous wording

Depreciation. Depreciation expense decreased $0.1 million during the Current Quarter as compared to the Prior Year Quarter primarily due to assets reaching the end of their depreciable lives.

Current wording

Depreciation. Depreciation expense decreased $0.1 million during the Current Quarter as compared to the Prior Year Quarter primarily due to assets reaching the end of their depreciable lives partially offset by recent acquisitions of fixed assets.

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 the 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 the Current Quarter compared to the Prior Year Quarter due to increased net profits by the joint venture.

Previous wording

Interest income. Interest income, net was $25 thousand in the Current Quarter compared to $21 thousand in the Prior Year Quarter. In both periods, interest income, net related to interest earned on the Company's cash balances during the quarter.

Current wording

Interest income. Interest income, net was $0.1 million in the Current Quarter compared to $24 thousand in the Prior Year Quarter. In both periods, interest income, net related to interest earned on the Company's cash balances.

Previous wording

Other income (expense). Other expense was $37 thousand during the Current Quarter compared to other income of $12 thousand in the Prior Year Quarter related to, in both periods, transactional foreign exchange gains (losses).

Current wording

Other income (expense). Other expense was $37 thousand during the Current Quarter compared to $24 thousand in the Prior Year Quarter related to, in both periods, transactional foreign exchange gains (losses).

Previous wording

Income tax expense (benefit). The Company incurred state and foreign income tax expense of $6 thousand during the Current Quarter compared to income tax benefit of $0.1 million during the Prior Year Quarter. Income tax expense (benefit) for the Current Quarter and Prior Year Quarter primarily related to state income taxes. 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 expense of $0.1 million during the Current Quarter compared to $0.2 million during the Prior Year Quarter. Income tax expense for the Current Quarter and Prior Year Quarter primarily related to foreign taxes incurred on dividends received from the Company's joint venture. 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

These decreases were partially offset by increased revenues of $0.4 million related to:

Current wording

These decreases were partially offset by increased revenues of $0.4 million related to higher average pricing from a favorable customer mix in the Current Year compared to the Prior Year.

Previous wording

The decrease was partially offset by increased cost of revenues of $1.2 million related to:

Current wording

The decrease was partially offset by increased cost of revenues of $0.7 million related to an increase in net transportation and liquefaction costs in the Current Year compared to the Prior Year.

Previous wording

Selling, general and administrative expenses. Selling, general and administrative expenses decreased $2.1 million in the Current Quarter compared to the Prior Year Quarter. Mr. Ballard's severance related expenses accounted for $2.1 million in the Prior Year Quarter as well as higher compensation expense in the Prior Year Quarter related to incentive compensations and bonus.

Current wording

Selling, general and administrative expenses. Selling, general and administrative expenses decreased $2.8 million in the Current Year compared to the Prior Year. Mr. Ballard's severance related expenses were $2.1 million in the Prior Year in addition to higher compensation expense incurred in the Prior Year related to incentive compensations and bonus.

Previous wording

*Gain on disposal of assets.*The Company recognized a gain on disposal of assets of $0.1 million in the Prior Year Quarter related to the sale of certain assets in which proceeds of $0.1 million were received. The Company did not have a gain or loss in the Current Year Quarter.

Current wording

*Gain on disposal of assets.*The Company recognized a gain on disposal of assets of $0.1 million in the Prior Year related to the sale of certain assets in which proceeds of $0.1 million were received. The Company did not have a gain or loss in the Current Year.

Previous wording

*Impairment.*The Company recognized impairment charges of $0.1 million in the Current Quarter related to contract costs from a cancelled contract.

Current wording

*Impairment.*The Company recognized impairment charges of $0.1 million in the Current Year which related to capitalized costs from a cancelled contract. The Company did not incur any impairment charges in the Prior Year.

Previous wording

The Company's principal sources of liquidity in the Current Quarter consisted of cash provided by our operations, cash on hand, and customer advance payments. The Company used its liquidity to invest in fixed assets to support growth, as well as to pay interest and principal amounts outstanding under our debt agreements.

Current wording

The Company's principal sources of liquidity in the Current Quarter consisted of cash provided by our operations, dividends received from its joint venture, borrowings under its AmeriState loan, cash on hand, and customer advance payments. The Company used its liquidity to invest in fixed assets to support growth, as well as to pay interest and principal amounts outstanding under our debt agreements.

Previous wording

As of March 31, 2026, we had $3.1 million in cash and cash equivalents on hand and $10.6 million in restricted cash, $29.3 million in outstanding debt (net of debt issuance costs) and operating lease obligations (of which $12.8 million is due in the next twelve months). The Company has availability under its debt agreements $3.5 million. The Company had no draw downs on its Revolving Credit Facility or its Secured Term Loan Facility during the three months ended March 31, 2026.

Current wording

As of June 30, 2026, we had $4.5 million in unrestricted cash and cash equivalents on hand and $14.3 million in restricted cash, $8.2 million in outstanding debt (net of debt issuance costs) and operating lease obligations (of which $1.6 million is due in the next twelve months). The Company has availability under its debt agreements of $5.0 million. Additionally, the Company has successfully exited from its time charter of the Garibaldi significantly alleviating future cash requirements associated with the time charter.

Previous wording

As of March 31, 2026, the Company was in compliance with all financial covenants under its debt agreements. The Company’s efforts to expand its business include anticipated significant capital expenditures, the successful deployment of a marine bunkering vessel with a time charter, and a successful financing transaction associated with the proposed Galveston LNG liquefaction facility, all of which are yet to occur. The Company believes it is probable that it will continue to maintain compliance with its covenants, however, in the event the Company is unable to maintain minimum profitability in accordance with its forecast and historical trends, it is reasonably possible that the Company could fail to maintain compliance with its consolidated debt service ratio which, if not cured or waived, would give AmeriState Bank the right to accelerate repayment of outstanding borrowings under the AmeriState Secured Term Loan Facility, which totaled $6.9 million as of March 31, 2026. Such acceleration could adversely affect our liquidity, our ability to continue expansion efforts and continue normal operations.

Current wording

As of June 30, 2026, the Company was in compliance with all financial covenants under its debt agreements. The Company’s efforts to expand its business include anticipated significant capital expenditures and a successful financing transaction associated with the proposed Galveston LNG liquefaction facility, all of which are yet to occur. The Company believes it is probable that it will continue to maintain compliance with its covenants, however, in the event the Company is unable to maintain minimum profitability in accordance with its forecast and historical trends, it is reasonably possible that the Company could fail to maintain compliance with its consolidated debt service ratio which, if not cured or waived, would give AmeriState Bank the right to accelerate repayment of outstanding borrowings under the AmeriState Secured Term Loan Facility, which totaled $7.6 million as of June 30, 2026. Such acceleration could adversely affect our liquidity, our ability to continue expansion efforts and continue normal operations.

Previous wording

Net cash provided by operating activities totaled $12.4 million for the three months ended March 31, 2026 compared to $1.0 million for the same period in 2025. The increase in net cash provided by operating activities of $11.4 million as compared to the Prior Year Quarter was attributable to a $15.0 million advance payment received on the multi-year data center power generation contract to begin in the first quarter of 2027. The prepayment represents deferred revenue and is classified in restricted cash. The $15.0 million cash prepayment was partially offset by the higher net loss for the three months ended March 31, 2026 compared to the same period in 2025.

Current wording

Net cash provided by operating activities totaled $19.5 million for the six months ended June 30, 2026 compared to $5.5 million for the same period in 2025. The increase in net cash provided by operating activities of $13.9 million as compared to the Prior Year was attributable to $20.0 million of advance payments received on the multi-year data center power generation contract to begin in the first quarter of 2027. The advance payments represent deferred revenue and is classified in restricted cash. These amounts were partially offset by the higher net loss incurred for the six months ended June 30, 2026 compared to the same period in 2025.

Previous wording

Net cash used in investing activities totaled $5.3 million for the three months ended March 31, 2026 compared to $0.3 million for the three months ended March 31, 2025. The increase in net cash used in investing activities in the Current Quarter of $5.0 million was primarily due to cash paid for capital expenditures to support growth.

Current wording

Net cash used in investing activities totaled $7.6 million for the six months ended June 30, 2026 compared to $0.9 million for the six months ended June 30, 2025. The increase in net cash used in investing activities in the Current Year of $6.7 million was primarily due to cash paid for capital expenditures to support growth including the multi-year data center power generation contract to begin in the first quarter of 2027.

Previous wording

Net cash used in financing activities totaled $0.9 million for the three months ended March 31, 2026, compared to $0.7 million for the three months ended March 31, 2025. 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, payment of a lease purchase option related to asset finance leases, and payment of additional debt issuance cost.

Current wording

Net cash used in financing activities totaled $0.5 million for the six months ended June 30, 2026, compared to $1.4 million for the six months ended June 30, 2025. The decrease in cash used in financing activities in the Current Year compared to the Prior Year is due to proceeds received under the AmeriState Loan of $1.0 million partially offset by increased loan payments in the Current Year under the AmeriState Loan.

Previous wording

We require cash to fund our operating expenses and working capital requirements, including costs associated with gas purchases, capital expenditures, debt repayments, equipment purchases, maintenance of LNG production facilities, mergers and acquisitions (if any), pursuing market expansion, supporting sales and marketing activities and other general corporate purposes. We believe we have sufficient liquidity and capital resources to fund our operations and repay our debt.

Current wording

We require cash to fund our operating expenses and working capital requirements, including costs associated with gas purchases, capital expenditures, debt repayments, equipment purchases, maintenance of LNG production facilities, mergers and acquisitions (if any), pursuing market expansion, supporting sales and marketing activities and other general corporate purposes. During the six months ended, the Company incurred a net loss of $8.7 million as a result of vessel charter costs and loss of customer volume as compared to prior periods. However, the Company anticipates its future profitability and operating cash flow to improve due to the following:

Previous wording

Capital expenditures for the three months ended March 31, 2026 were $5.3 million and primarily related to the preliminary work and ordering long lead time items, related to the Company's proposed new Galveston LNG liquefaction facility and Jones Act-compliant marine bunkering vessel, and its multi-year data center power generation contract. Capital expenditures also related to refurbishments and upgrades to existing assets and rolling stock. Other future capital expenditures will be dependent upon business needs, value-adding investment opportunities, as well as the availability of additional capital at favorable terms which is difficult to predict. At March 31, 2026, the Company had open purchase orders and commitments related to capital expenditures of approximately $3.7 million and the Company continues to advance the proposed new Galveston LNG liquefaction facility and Jones Act-compliant marine bunkering vessel, and scale for its multi-year data center power generation contract. See additional discussion regarding the Company's potential expansion efforts below.

Current wording

Capital expenditures for the six months ended June 30, 2026 were $7.6 million and primarily related to preliminary work and ordering of long lead time items, related to the Company's proposed new Galveston LNG liquefaction facility and Jones Act-compliant marine bunkering vessel, and its multi-year data center power generation contract. Capital expenditures also related to refurbishments and upgrades to existing assets and rolling stock. Other future capital expenditures 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, 2026, the Company had open purchase orders and commitments related to capital expenditures of approximately $7.0 million and the Company continues to advance the proposed new Galveston LNG liquefaction facility and Jones Act-compliant marine bunkering vessel, and scale for its multi-year data center power generation contract. See additional discussion regarding the Company's potential expansion efforts below.

Previous wording

In February 2026, the Company executed a multi-year take-or-pay data center power generation contract. LNG deliveries are expected to commence during the first quarter of 2027 and continue through the first quarter of 2029. The supply agreement will require investment of approximately $25.0 million in capital additions and working capital needed to secure LNG supply and fund the commissioning of the project. The Company received an advance payment of $15.0 million during February 2026, and expects an additional $10.0 million during the next six months.

Current wording

In February 2026, the Company was awarded a multi-year contract to supply LNG for power generation at a data center. LNG deliveries are expected to commence during the first quarter of 2027 and continue through the first quarter of 2029. The supply agreement will require investment of approximately $25.0 million in capital additions and working capital needed to secure LNG supply and fund the commissioning of the project. The Company received advance payments totaling $20.0 million during the six months ended June 30, 2026, and received an additional $5.0 million during the third quarter of 2026.

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, 2026 from those disclosed within the Company's Annual Report on Form 10-K for the year ended December 31, 2025 as filed with the SEC on March 5, 2026.

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, 2026 from those disclosed within the Company's Annual Report on Form 10-K for the year ended December 31, 2025 as filed with the SEC on March 5, 2026.