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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended
| | TRANSITION REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number.
STABILIS SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
| | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices, including zip code)
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered |
| | | The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Act:
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| | ☒ | Smaller reporting company | | |
| Emerging growth company | | |||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of May 6, 2025, there were
STABILIS SOLUTIONS, INC. AND SUBSIDIARIES
For the Quarterly Period Ended March 31, 2025
| Page |
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| Item 1. |
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| Condensed Consolidated Statements of Comprehensive Income (Loss) |
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| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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| Item 4. |
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| Item 1. |
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| Item 1A. |
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| Item 5. |
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| Item 6. |
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (“this Report”) includes statements that constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements represent intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks and uncertainties and other factors. These statements may relate to, but are not limited to, information or assumptions about us, our capital and other expenditures, dividends, financing plans, capital structure, cash flow, pending legal and regulatory proceedings and claims, including environmental matters, future economic performance, operating income, cost savings, and management’s plans, strategies, goals and objectives for future operations and growth. These forward-looking statements generally are accompanied by words such as “intend,” “anticipate,” “believe,” “estimate,” “expect,” “should,” “seek,” “project,” “plan” or similar expressions. Any statement that is not a historical fact is a forward-looking statement. It should be understood that these forward-looking statements are necessary estimates reflecting the best judgment of senior management, not guarantees of future performance. Many of the factors that impact forward-looking statements are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements as described in Part I. “Item 1A. Risk Factors” of the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission ("the SEC") on February 25, 2025, as well as any additional risk factors identified and described in Part II. “Item 1A. Risk Factors” of this Report.
We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. All forward-looking statements included in this document are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue.
In this Report, we may rely on and refer to information from market research reports, analyst reports and other publicly available information. Although we believe that this information is reliable, we cannot guarantee the accuracy and completeness of this information, and we have not independently verified it.
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS. (Unaudited)
Stabilis Solutions, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited, in thousands, except share and per share data)
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventories, net | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property, plant and equipment: | ||||||||
| Cost | ||||||||
| Less accumulated depreciation | ( | ) | ( | ) | ||||
| Property, plant and equipment, net | ||||||||
| Goodwill | ||||||||
| Investments in foreign joint ventures | ||||||||
| Right-of-use assets and other noncurrent assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued liabilities | ||||||||
| Current portion of long-term notes payable | ||||||||
| Current portion of finance and operating lease obligations | ||||||||
| Total current liabilities | ||||||||
| Long-term notes payable, net of current portion and debt issuance costs | ||||||||
| Long-term portion of operating lease obligations | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 9) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock; $ par value, shares authorized, shares issued and outstanding at March 31, 2025 and December 31, 2024 | ||||||||
| Common stock; $ par value, shares authorized, and shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
Stabilis Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except share and per share data)
| Three Months Ended |
||||||||
| March 31, |
||||||||
| 2025 |
2024 |
|||||||
| Revenues: |
||||||||
| Revenues |
$ | $ | ||||||
| Operating expenses: |
||||||||
| Cost of revenues |
||||||||
| Change in unrealized (gain) loss on natural gas derivatives |
( |
) | ( |
) | ||||
| Selling, general and administrative expenses |
||||||||
| Gain from disposal of fixed assets |
( |
) | ( |
) | ||||
| Depreciation expense |
||||||||
| Total operating expenses |
||||||||
| Income (loss) from operations before equity income |
( |
) | ||||||
| Net equity income from foreign joint venture operations: |
||||||||
| Income from equity investment in foreign joint venture |
||||||||
| Foreign joint venture operating related expenses |
( |
) | ( |
) | ||||
| Net equity income from foreign joint venture operations |
||||||||
| Income (loss) from operations |
( |
) | ||||||
| Other income (expense): |
||||||||
| Interest income (expense), net |
( |
) | ||||||
| Other income (expense), net |
( |
) | ( |
) | ||||
| Total other income (expense) |
( |
) | ||||||
| Net income (loss) before income tax (benefit) expense |
( |
) | ||||||
| Income tax (benefit) expense |
( |
) | ||||||
| Net income (loss) |
$ | ( |
) | $ | ||||
| Net income (loss) per common share (Note 11): |
||||||||
| Basic and diluted per common share |
$ | ( |
) | $ | ||||
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
Stabilis Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited, in thousands)
| Three Months Ended |
||||||||
| March 31, |
||||||||
| 2025 |
2024 |
|||||||
| Net income (loss) |
$ | ( |
) | $ | ||||
| Foreign currency translation adjustment, net of tax |
( |
) | ||||||
| Total comprehensive income (loss) |
$ | ( |
) | $ | ||||
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
Stabilis Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited, in thousands, except share data)
| Accumulated |
||||||||||||||||||||||||
| Other |
||||||||||||||||||||||||
| Common Stock |
Additional |
Comprehensive |
Accumulated |
|||||||||||||||||||||
| Shares |
Amount |
Paid-in Capital |
Loss |
Deficit |
Total |
|||||||||||||||||||
| Balance at December 31, 2023 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||
| Common stock issued from vesting of stock-based awards |
||||||||||||||||||||||||
| Stock-based compensation |
— | |||||||||||||||||||||||
| Employee tax payments from stock-based withholding |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
| Net income |
— | |||||||||||||||||||||||
| Other comprehensive loss, net of tax |
— | ( |
) | ( |
) | |||||||||||||||||||
| Balance at March 31, 2024 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||
| Accumulated |
||||||||||||||||||||||||
| Other |
||||||||||||||||||||||||
| Common Stock |
Additional |
Comprehensive |
Accumulated |
|||||||||||||||||||||
| Shares |
Amount |
Paid-in Capital |
Income (Loss) |
Deficit |
Total |
|||||||||||||||||||
| Balance at December 31, 2024 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||
| Common stock issued from vesting of stock-based awards |
||||||||||||||||||||||||
| Stock-based compensation |
— | |||||||||||||||||||||||
| Employee tax payments from stock-based withholding |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
| Net loss |
— | ( |
) | ( |
) | |||||||||||||||||||
| Other comprehensive income, net of tax |
— | |||||||||||||||||||||||
| Balance at March 31, 2025 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
Stabilis Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
| Three Months Ended |
||||||||
| March 31, |
||||||||
| 2025 |
2024 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income (loss) |
$ | ( |
) | $ | ||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
||||||||
| Depreciation |
||||||||
| Stock-based compensation expense |
||||||||
| Bad debt expense |
||||||||
| Gain on disposal of assets |
( |
) | ( |
) | ||||
| Income from equity investment in joint venture |
( |
) | ( |
) | ||||
| Cash settlements from natural gas derivatives, net |
||||||||
| Realized and unrealized (gains) losses on natural gas derivatives, net |
( |
) | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable |
||||||||
| Prepaid expenses and other current assets |
||||||||
| Accounts payable and accrued liabilities |
( |
) | ( |
) | ||||
| Other |
||||||||
| Net cash provided by operating activities |
||||||||
| Cash flows from investing activities: |
||||||||
| Acquisition of fixed assets |
( |
) | ( |
) | ||||
| Proceeds from sale of fixed assets |
||||||||
| Net cash used in investing activities |
( |
) | ( |
) | ||||
| Cash flows from financing activities: |
||||||||
| Payments on short- and long-term notes payable and finance leases |
( |
) | ( |
) | ||||
| Payment of debt issuance costs |
( |
) | ||||||
| Employee tax payments from restricted stock withholdings |
( |
) | ( |
) | ||||
| Net cash used in financing activities |
( |
) | ( |
) | ||||
| Effect of exchange rate changes on cash |
( |
) | ||||||
| Net increase in cash and cash equivalents |
||||||||
| Cash and cash equivalents, beginning of period |
||||||||
| Cash and cash equivalents, end of period |
$ | $ | ||||||
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements
STABILIS SOLUTIONS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Description of Business
Stabilis Solutions, Inc. and its subsidiaries (the “Company”, “Stabilis”, “our”, “us” or “we”) 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.
The Company serves 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. Additionally, LNG can be used as a partner fuel for renewable energy, and as an alternative to traditional fuel sources, such as distillate fuel oil (including diesel fuel and other fuel oils) and propane, among others, to provide both environmental and economic benefits.
The Company also builds power and control systems for the energy industry in China through its
Basis of Presentation and Consolidation
The accompanying unaudited, interim condensed consolidated financial statements (“Condensed Consolidated Financial Statements”) include our accounts and those of our subsidiaries and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and disclosures normally included in the notes to consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted. We believe that the presentation and disclosures within this report are adequate to prevent the information presented herein from being misleading. The Condensed Consolidated Financial Statements reflect all adjustments (consisting of normal recurring adjustments) for a fair presentation of the interim periods. The results of operations for the interim periods presented are not necessarily indicative of the results of operations to be expected for the full year. The accompanying Condensed Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2024 included in the Company's Annual Report on Form 10-K, as filed on February 25, 2025.
All intercompany accounts and transactions have been eliminated in consolidation. In the Notes to Condensed Consolidated Financial Statements, all dollar amounts in tabulations are in thousands, unless otherwise indicated.
Use of Estimates in the Preparation of the Consolidated Financial Statements
The preparation of the Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates include the determination of fair value of equity-based awards, fair value of natural gas derivatives, carrying amount of contingencies, valuation allowances for receivables, inventories, and deferred income tax assets, valuations assigned to assets and liabilities in business combinations, and impairments of long-lived assets. Actual results could differ from those estimates, and these differences could be material to the Condensed Consolidated Financial Statements.
Segment Reporting
In accordance with ASC Topic 280 - "Segment Reporting (ASC 280)" the Company has determined that it has a single operating and reporting segment. As a result, the Company's segment accounting policies are the same as described herein and the Company does not have any material intra-segment sales and transfers of assets. The Company's Chief Operating Decision Maker ("CODM") is the Chief Executive Officer (the "CEO"). The CEO, with the Chief Financial Officer assesses the performance and makes operating decisions of the Company on a consolidated basis, based on the Company's net increase in shareholder's equity resulting from operations ("net income"). Company assets are not reviewed by the CODM at a different asset level or category, but at the consolidated level. As the Company's operations are comprised of a single operating segment, the segment assets are reflected on the accompanying Consolidated Balance Sheets as "total assets" and the significant segment expenses are listed on the accompanying Consolidated Statement of Operations.
Derivative Instruments
The Company had certain natural gas derivative instruments as of March 31, 2025 and December 31, 2024. At March 31, 2025 and December 31, 2024, the fair value of the Company's derivatives was $
Recent Accounting Pronouncements
In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses" which requires companies to disclose disaggregated information about certain costs and expenses in the notes to the financial statements. ASU 2024-03 is effective for companies for annual reporting periods beginning after December 15, 2026. The requirements can be applied either prospectively or retrospectively. Although early adoption is permitted, the Company will adopt the pronouncement when the pronouncement becomes effective on January 1, 2027. The Company does not expect the adoption of ASU 2024-03 to have a significant impact on its consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures", which establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements. Under ASU 2023-09, companies must consistently categorize and provide greater disaggregation of information in the rate reconciliation and further disaggregate income taxes paid. ASU 2023-09 is effective for companies for annual reporting periods beginning after January 1, 2025. The Company does not expect the adoption of ASU 2023-09 to have a significant impact on its consolidated financial statements.
2. REVENUE RECOGNITION
We recognize revenues when the transfer of promised goods or services are delivered to our customers in accordance with the applicable customer contract and we are entitled to be paid by the customer. Revenues are measured as consideration specified in the contract and exclude any sales incentives and amounts collected on behalf of third parties. Revenues from contracts with customers are disaggregated into (1) LNG Product (2) rental (3) service and (4) other. Certain contracts may include multiple goods or services such as the usage of equipment and delivery of field support services that are bundled into an all-in price to the customer for each gallon of LNG delivered. Revenue recognition under these contracts requires significant judgment by the Company in order to determine the appropriate accounting for these transactions, including whether performance obligations should be accounted for separately versus together, how the price should be allocated among the performance obligations, and when to recognize revenue for each performance obligation. The Company has determined that these contracts have multiple performance obligations and the Company allocates the contract price to each performance obligation using its best estimates of the respective standalone selling price of each distinct good or service at the time the contract was negotiated.
LNG Product revenues
LNG Product revenues represent the sale of LNG from both produced and purchased sources as well as the transportation performed to deliver the LNG to our customer location. LNG Product revenues are recognized upon delivery of the LNG to the customer, at which point the customer controls the product and the Company has an unconditional right to payment. The Company acts as a principal when using third party transportation companies and therefore recognizes the gross revenue for the supply of LNG. The Company does not differentiate between the revenue from the sale of LNG production and purchased LNG as the criteria for revenue recognition are identical. Some of our contracts contain minimum take-or-pay amounts where a customer has agreed to source a minimum volume of LNG under the contract. Take or pay revenues are only recognized when the customer has failed to take the minimum contracted volumes upon completion of the time period specified within the contract and the Company has the unconditional right to receive payment for the take or pay amount. Certain of our sales contracts contain provisions that may meet the criteria of a derivative in the event delivery is not made. These contracts are accounted for under the normal purchase normal sales exclusion under U.S. GAAP and are not measured at fair value each reporting period. Our LNG contracts are generally one to 24 months in duration.
Rental revenues
Rental revenues are generated from the rental of cryogenic equipment to our customers. Rental revenues are not dependent upon the gallons delivered but based upon day rates or monthly rates for the use of equipment as specifically established within the contract and are disaggregated from LNG Product revenues. Revenues related to rental of equipment are recognized under Topic 606 and not ASC 842: Leases, as the Company maintains control of the equipment that the customer uses and can replace the rented equipment with similar equipment should the rented equipment become inoperable or the Company chooses to replace the equipment for maintenance purposes. Revenue is recognized as the rental period is completed and for periods that cross month end, revenue is recognized for the portion of the rental period that has been completed to date. Performance obligations for rental revenue are considered to be satisfied as the rental period is completed based upon the terms of the related contract. The stated rental rates within each contract are representative of the stand-alone rental rates at the time the contract was negotiated.
Service revenues
Service revenues are generated from engineering and field support services and represent the human resources provided to the customer to support the use of LNG at the customer’s job site. These include support and costs for mobilization and demobilization of equipment at customer sites as well as onsite technical support while customers are consuming LNG. Service revenues are not dependent upon the gallons delivered or rental period but based upon the specific contractual terms and can be based on an event (i.e. mobilization or demobilization) or an hourly rate as specifically established within the contract and are disaggregated from LNG Product revenues and Rental revenues. Service revenue is recognized as the event is completed or work is done. The stated hourly labor rates in each contract are representative of the stand-alone hourly rates at the time the contract was negotiated.
Other revenues
Other revenues are items that, due to their nature, are disaggregated from the categories mentioned above such as expenses incurred by the Company on behalf of the customer that we contractually rebill to our customers on a cost-plus basis.
Disaggregated revenues
The table below presents revenue disaggregated by source, for the three months ended March 31, 2025 and 2024 (in thousands):
| Three Months Ended | ||||||||
| March 31, | ||||||||
| Revenues: | 2025 | 2024 | ||||||
| LNG Product | $ | $ | ||||||
| Rental | ||||||||
| Service | ||||||||
| Other | ||||||||
| Total revenues | $ | $ | ||||||
The table below presents revenue disaggregated by geographic location, for the three months ended March 31, 2025 and 2024 (in thousands):
| Three Months Ended | ||||||||
| March 31, | ||||||||
| Revenues: | 2025 | 2024 | ||||||
| United States | $ | $ | ||||||
| Mexico | ||||||||
| Total revenues | $ | $ | ||||||
Variable and other Revenue Components
Certain of our contracts may include rental or services that may vary upon the customer demands at stated rates within the contract and are satisfied as the work is authorized by the customer and performed by the Company. LNG product sales agreements may include both fixed and variable fees per gallon of LNG but is representative of the stand-alone selling price for LNG at the time the contract is negotiated. We have concluded that the variable LNG fees meet the exception for allocating variable consideration to specific parts of the contract. As such, the variable consideration for these contracts is allocated to each distinct gallon of LNG and recognized when that distinct gallon of LNG is delivered to the customer.
Taxes assessed by a governmental authority that are directly imposed on revenue-producing transactions between the Company and its customers, such as sales, use and value-added taxes, are excluded from revenue.
3. PREPAID EXPENSES AND OTHER CURRENT ASSETS
The Company’s prepaid expenses and other current assets at March 31, 2025 and December 31, 2024 consisted of the following (in thousands):
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Prepaid insurance | $ | $ | ||||||
| Prepaid supplier expenses | ||||||||
| Other receivables | ||||||||
| Natural gas derivatives at fair value, current | ||||||||
| Deposits | ||||||||
| Other | ||||||||
| Total prepaid expenses and other current assets | $ | $ | ||||||
4. PROPERTY, PLANT AND EQUIPMENT
The Company’s property, plant and equipment at March 31, 2025 and December 31, 2024 consisted of the following (in thousands):
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Liquefaction plants and systems | $ | $ | ||||||
| Real property and buildings | ||||||||
| Vehicles and tanker trailers and equipment | ||||||||
| Computer and office equipment | ||||||||
| Construction in progress | ||||||||
| Leasehold improvements | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| $ | $ | |||||||
Depreciation expense totaled $
5. INVESTMENT IN FOREIGN JOINT VENTURE
The Company holds a
We account for our investment in BOMAY using the equity method of accounting. Under the equity method, the Company’s share of the joint venture operations earnings or losses is recognized in the Condensed Consolidated Statements of Operations as equity income (loss) from foreign joint venture operations. Joint venture income increases the carrying value of the joint venture and joint venture losses reduce the carrying value. Dividends received from the joint venture reduce the carrying value. The Company considers dividend distributions received from its equity method investments which do not exceed cumulative equity in earnings subsequent to the date of investment to be a return on investment and classifies these distributions as operating activities in the accompanying Condensed Consolidated Statements of Cash Flows.
The tables below present a summary of BOMAY's assets, liabilities and equity at March 31, 2025 and December 31, 2024, and its operational results for the three months ended March 31, 2025 and 2024 in U.S. dollars (in thousands):
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Assets: | ||||||||
| Total current assets | $ | $ | ||||||
| Total non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and equity: | ||||||||
| Total liabilities | $ | $ | ||||||
| Total joint ventures’ equity | ||||||||
| Total liabilities and equity | $ | $ | ||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenue | $ | $ | ||||||
| Gross profit | $ | $ | ||||||
| Net income | $ | $ | ||||||
The table below presents the components of our investment in BOMAY and a summary of the activity within those components for the three months ended March 31, 2025 in U.S. dollars (in thousands):
| Initial Investment at Merger (1), (2) | Undistributed Earnings | Cumulative Foreign Exchange Translation Adj | Investment in BOMAY | |||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | ( | ) | $ | ||||||||||
| Equity in earnings | — | — | ||||||||||||||
| Foreign currency translation gain (loss) | — | — | ||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||
| (1) | Accumulated statutory reserves in equity method investments of $ |
| (2) | The Company’s initial investment in BOMAY differed from the Company’s |
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Original basis difference | $ | $ | ||||||
| Less accumulated accretion | ( | ) | ( | ) | ||||
| Net remaining basis difference at end of period | $ | $ | ||||||
In accordance with our long-lived asset policy, when events or circumstances indicate the carrying amount of an asset may not be recoverable, management tests long-lived assets for impairment. If the estimated future cash flows are projected to be less than the carrying amount, an impairment write-down (representing the carrying amount of the long-lived asset which exceeds the present value of estimated expected future cash flows) would be recorded as a period expense. In making this evaluation, a variety of quantitative and qualitative factors are considered including national and local economic, political and market conditions, industry trends and prospects, liquidity and capital resources and other pertinent factors. Based on this evaluation for this reporting period, the Company does not believe an impairment of our investment in BOMAY is necessary for the period ending March 31, 2025.
6. ACCRUED LIABILITIES
The Company’s accrued liabilities at March 31, 2025 and December 31, 2024 consisted of the following (in thousands):
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Compensation and benefits | $ | $ | ||||||
| Other taxes payable | ||||||||
| Other accrued liabilities | ||||||||
| Total accrued liabilities | $ | $ | ||||||
Management Transition
Effective January 31, 2025, the Company appointed the Company’s Chairman of the Board, J. Casey Crenshaw, as its Executive Chairman, and interim President and Chief Executive Officer. Mr. Crenshaw replaced Westervelt T. Ballard, Jr., who mutually agreed with the Company to terminate his employment as the Company’s President and Chief Executive Officer and voluntarily resigned his position as a director. As part of Mr. Ballard’s separation, the Company entered into a release and consulting agreement with Mr. Ballard whereby the Company will pay Mr. Ballard separation pay of $
As part of Mr. Ballard’s release and consulting agreement the Company also accelerated vesting and amended option exercise terms for certain equity awards. See additional discussion in Note 10.
7. DEBT
The Company’s carrying value of debt, net of debt issuance costs at March 31, 2025 and December 31, 2024 consisted of the following (in thousands):
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Secured term note, net of debt issuance costs | $ | $ | ||||||
| Insurance and other notes payable | ||||||||
| Total | ||||||||
| Less: amounts due within one year | ( | ) | ( | ) | ||||
| Total long-term debt | $ | $ | ||||||
Total interest expense was $
Revolving Credit Facility
On March 27, 2025 the Company, along with its subsidiaries, Stabilis LNG Eagle Ford LLC, Stabilis GDS, Inc. and Stabilis LNG Port Allen, LLC (collectively, the “Borrowers”) entered into a Modification Agreement (the "Agreement") to the existing Loan Agreement (the "Loan Agreement") with Cadence Bank. Under the Agreement, the $
The Revolving Credit Facility, as amended, contains a maximum aggregate borrowing amount of $
The Revolving Credit Facility contains various restrictions and covenants. Among other requirements, the Borrowers must maintain a consolidated net worth of at least $
Secured Term Note
On April 8, 2021, the Company entered into a loan agreement (the “AmeriState Loan Agreement”) with AmeriState Bank (“Lender”), to provide for an advancing loan facility in the aggregate principal amount of up to $
The AmeriState Loan Agreement requires the Company to meet certain financial covenants which include a debt-to-net-worth ratio of not more than
Insurance Notes Payable
The Company finances its annual commercial insurance premiums for its business and operations. For the 2024-2025 policies, the amount financed was $
8. RELATED PARTY TRANSACTIONS
Casey Crenshaw (our Executive Chairman of the Board and interim President and Chief Executive Officer) is the beneficial owner of
In addition, the Company also purchases supplies and services from subsidiaries of The Modern Group. The Company had total purchases and lease payments of $
Chart Energy and Chemicals, Inc. ("Chart E&C") beneficially owns
9. COMMITMENTS AND CONTINGENCIES
Environmental Matters
The Company is subject to federal, state and local environmental laws and regulations. The Company does not anticipate any expenditures to comply with such laws and regulations that would have a material impact on the Company’s condensed consolidated financial position, results of operations or liquidity. The Company believes that its operations comply, in all material respects, with applicable federal, state and local environmental laws and regulations.
Litigation, Claims and Contingencies
The Company may become party to various legal actions that arise in the ordinary course of its business. The Company is also subject to audit by tax and other authorities for varying periods in various federal, state and local jurisdictions, and disputes may arise during the course of these audits. It is impossible to determine the ultimate liabilities that the Company may incur resulting from any of these lawsuits, claims, proceedings, audits, commitments, contingencies and related matters or the timing of these liabilities, if any. If these matters were to ultimately be resolved unfavorably, it is possible that such an outcome could have a material adverse effect upon the Company’s condensed consolidated financial position, results of operations, or liquidity. The Company does not, however, anticipate such an outcome and it believes the ultimate resolution of these matters will not have a material adverse effect on the Company’s condensed consolidated financial position, results of operations, or liquidity.
10. STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION
Stock-based Compensation
The Company includes stock compensation expense within general and administrative expenses in the Condensed Consolidated Statements of Operations. During the three months ended March 31, 2025 and March 31, 2024, the Company recognized $
Issuance of Stock-based Awards
The Company has a long-term incentive plan (the “Amended and Restated Plan”) which provides for a maximum number of shares of common stock available for issuance of
The Company made no stock-based awards during the three months ended March 31, 2025.
Issuances of Common Stock
During the three months ended March 31, 2025, and 2024, shares of common stock were issued upon vesting of restricted stock units, net of withholding shares for tax payments, totaling
Management Transition
Effective January 31, 2025, the Company and Mr. Ballard agreed that
| • | The risk-free rate assumed the average return of a U.S. Treasury bill for |
| • | $ |
| • | An expected option term of |
| • | Volatility of |
11. NET INCOME PER SHARE
The calculation of net income per common share for the three months ended March 31, 2025 and 2024 are presented below. Dilutive securities consist of unvested restricted stock units ("RSUs") deemed outstanding using the treasury method. There were no dilutive securities at March 31, 2025, as all RSUs had vested and
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| Weighted average shares: | ||||||||
| Basic weighted average number of common shares outstanding | ||||||||
| Dilutive securities | ||||||||
| Total shares including dilutive securities | ||||||||
| Net income (loss) | $ | ( | ) | $ | ||||
| Net income (loss) per common share: | ||||||||
| Basic net income (loss) per common share | $ | ( | ) | $ | ||||
| Diluted net income (loss) per common share | $ | ( | ) | $ | ||||
12. SUPPLEMENTAL CASH FLOW INFORMATION
The Company's supplemental disclosure of cash flow information for the three months ended March 31, 2025 and 2024 is as follows (in thousands):
| Three Months Ended | ||||||||
| March 31, | ||||||||
| Supplemental Disclosure of Cash Flow Information: | 2025 | 2024 | ||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | ||||||||
| Significant non-cash investing and financing activities: | ||||||||
| Acquisition of fixed assets included within accounts payable and accrued expenses | $ | $ | ||||||
| ROU assets from leases | ||||||||
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements and notes thereto included elsewhere in this Form 10-Q (“this Report”) and the consolidated financial statements included in the 2024 Annual Report on Form 10-K filed on February 25, 2025 with the U.S. Securities and Exchange Commission (the “SEC”). Historical results and percentage relationships set forth in the Condensed Consolidated Statements of Operations and Cash Flows, including trends that might appear, are not necessarily indicative of future operations or cash flows.
Overview
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.
The Company generates revenue by selling and delivering LNG to our customers, renting cryogenic equipment and providing engineering and field support services. We sell our products and services separately or as a bundle depending on the customer’s needs. Pricing depends on market pricing for natural gas and competing fuel sources (such as diesel, fuel oil, and propane among others), as well as the customer’s purchased volume, contract duration and credit profile.
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.
Transportation and Logistics Services—Stabilis offers our customers a “virtual natural gas pipeline” by providing turnkey LNG transportation and logistics services in North America. We deliver LNG to our customers’ work sites from both our own production facilities and our network of third-party production sources located throughout North America. We own a fleet of cryogenic trailers to transport and deliver LNG. We also outsource similar equipment and transportation services from qualified third-party providers as required to support our customer base. Revenues earned from the transportation and logistical services of LNG to our customers are included within LNG Product revenue.
Cryogenic Equipment Rental—Stabilis operates a fleet of mobile LNG storage and vaporization assets, including: transportation trailers, electric and gas-fired vaporizers, ambient vaporizers, storage tanks, and mobile vehicle fuelers. We also own several stationary storage and regasification assets. We believe this is one of the largest fleets of small-scale LNG equipment in North America. Our fleet consists primarily of trailer-mounted mobile assets, making delivery to and between customer locations more efficient. We deploy these assets on job sites to provide our customers with the equipment required to transport, store, and consume LNG in their operations. Revenues earned from cryogenic equipment rental are included within Rental revenue.
Engineering and Field Support Services—Stabilis has experience in the safe, cost effective, and reliable use of LNG in multiple customer applications. We have also developed many processes and procedures that we believe improve our customers’ use of LNG in their operations. Our engineers help our customers design and integrate LNG into their operations and our field service technicians help our customers mobilize, commission and reliably operate on the job site. Revenues earned from engineering and field support services are included within Service revenue.
U.S. Department of Energy ("DOE") Approval to Export LNG
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.
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.
Results of Operations
Stabilis supplies LNG to multiple end markets in North America and provides turnkey fuel solutions to help users of propane, diesel and other crude-based fuel products convert to LNG.
Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024
The comparative tables below reflect our consolidated operating results for the three months ended March 31, 2025 (the “Current Quarter”) as compared to the three months ended March 31, 2024 (the “Prior Year Quarter”) (unaudited, amounts in thousands, except for percentages).
| Three Months Ended |
||||||||||||||||
| March 31, |
||||||||||||||||
| 2025 |
2024 |
$ Change |
% Change |
|||||||||||||
| Revenues: |
||||||||||||||||
| LNG Product |
$ | 13,946 | $ | 15,413 | $ | (1,467 | ) | (9.5 | )% | |||||||
| Increase / (decrease) in gallons delivered |
(2,196 | ) | n/a | |||||||||||||
| Rental |
1,550 | 2,173 | (623 | ) | (28.7 | ) | ||||||||||
| Service |
1,705 | 1,924 | (219 | ) | (11.4 | ) | ||||||||||
| Other |
137 | 260 | (123 | ) | (47.3 | ) | ||||||||||
| Total revenues |
17,338 | 19,770 | (2,432 | ) | (12.3 | ) | ||||||||||
| Operating expenses: |
||||||||||||||||
| Cost of revenues |
12,788 | 13,514 | (726 | ) | (5.4 | ) | ||||||||||
| Change in unrealized (gain) loss on natural gas derivatives |
(84 | ) | (252 | ) | 168 | (66.7 | ) | |||||||||
| Selling, general and administrative expenses |
4,933 | 3,456 | 1,477 | 42.7 | ||||||||||||
| Gain from disposal of fixed assets |
(103 | ) | (127 | ) | 24 | (18.9 | ) | |||||||||
| Depreciation expense |
1,867 | 1,800 | 67 | 3.7 | ||||||||||||
| Total operating expenses |
19,401 | 18,391 | 1,010 | 5.5 | ||||||||||||
| Income (loss) from operations before equity income |
(2,063 | ) | 1,379 | (3,442 | ) | n/a | ||||||||||
| Net equity income from foreign joint venture operations |
368 | 197 | 171 | 86.8 | ||||||||||||
| Income (loss) from operations |
(1,695 | ) | 1,576 | (3,271 | ) | n/a | ||||||||||
| Other income (expense): |
||||||||||||||||
| Interest income (expense), net |
21 | (4 | ) | 25 | n/a | |||||||||||
| Other income (expense), net |
(12 | ) | (21 | ) | 9 | (42.9 | ) | |||||||||
| Total other income (expense) |
9 | (25 | ) | 34 | n/a | |||||||||||
| Net income (loss) before income tax (benefit) expense |
(1,686 | ) | 1,551 | (3,237 | ) | n/a | ||||||||||
| Income tax (benefit) expense |
(88 | ) | 82 | (170 | ) | n/a | ||||||||||
| Net income (loss) |
$ | (1,598 | ) | $ | 1,469 | $ | (3,067 | ) | n/a | |||||||
Revenue
During the Current Quarter, revenues decreased $2.4 million, or 12%, compared to the Prior Year Quarter. The change in revenue primarily related to:
| ● |
Decreased gallons of LNG delivered in the Current Quarter compared to the Prior Year Quarter resulting in a decrease in revenues of $2.1 million; |
| ● |
Decreased rental, service and other revenues in the Current Quarter compared to the Prior Year Quarter, resulting in decreased revenues of $1.0 million; |
| ● |
Decreased take-or-pay contracts in the Current Quarter compared to the Prior Year Quarter, resulting in decreased revenues of $0.2 million; |
| ● |
Decreased customer pricing mix in the Current Quarter compared to the Prior Year Quarter, resulting in decreased revenues of $0.1 million; and |
| ● |
These decreases were partially offset by increased revenues of $1.0 million related to higher natural gas prices, which are passed on to our customers, in the Current Quarter compared to the Prior Year Quarter. |
Operating Expenses
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:
| ● |
Decreased gallons of LNG delivered in the Current Quarter compared to the Prior Year Quarter resulting in a decrease in cost of revenues of $1.4 million; and |
| ● |
Decreased rental, service and other costs in the Current Quarter compared to the Prior Year Quarter resulting in a decrease in cost of revenues of $0.5 million; |
| ● |
These decreases were partially offset by net higher natural gas pricing and liquefaction costs and lower transportation costs in the Current Quarter compared to the Prior Year Quarter resulting in increased cost of revenues of $1.2 million. |
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.
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.
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.
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.
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.
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.
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).
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.
Liquidity and Capital Resources
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.
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.
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.
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.
Cash Flows
Cash flows provided by (used in) our operating, investing and financing activities are summarized below (unaudited, in thousands):
| Three Months Ended March 31, |
||||||||
| 2025 |
2024 |
|||||||
| Net cash provided by (used in): |
||||||||
| Operating activities |
$ | 1,025 | $ | 3,929 | ||||
| Investing activities |
(276 | ) | (666 | ) | ||||
| Financing activities |
(730 | ) | (355 | ) | ||||
| Effect of exchange rate changes on cash |
(3 | ) | 4 | |||||
| Net increase (decrease) in cash and cash equivalents |
16 | 2,912 | ||||||
| Cash and cash equivalents, beginning of period |
8,987 | 5,374 | ||||||
| Cash and cash equivalents, end of period |
$ | 9,003 | $ | 8,286 | ||||
Operating Activities
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.
Investing Activities
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.
Financing Activities
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.
Future Cash Requirements
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.
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.
Shelf Registration Statement
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.
Off-Balance Sheet Arrangements
As of March 31, 2025, we had no transactions that met the definition of off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our consolidated financial position, operating results, liquidity, cash requirements or capital resources.
Critical Accounting Policies and Estimates
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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a “smaller reporting company,” the Company is not required to provide this information.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15(b) of the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Report. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon the evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective at March 31, 2025.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during our last fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
The Company becomes involved in various legal proceedings and claims in the normal course of business. In management’s opinion, the ultimate resolution of these matters will not have a material effect on our financial position or results of operations.
Our operations and financial results are subject to various risks and uncertainties, including those described in the Part I. “Item 1A. Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 25, 2025 (“Form 10-K”), which could adversely affect our business, financial condition, results of operations, cash flows, and the trading price of our common stock. During the three months ended March 31, 2025, there have been no material changes in our risk factors disclosed in our 2024 Form 10-K; except for the addition of the following risk factor for the current quarter.
Changes in U.S. trade policy including tariffs may have a material adverse effect on our business and results of operations
Escalating tariffs and the potential for additional trade restrictions by the United States have increased uncertainty regarding future economic conditions and financial markets and have, in some cases, resulted in the imposition of retaliatory tariffs by foreign governments. The ultimate impact of U.S. tariffs and retaliatory trade measures on economic conditions remains uncertain. While the majority of our sales are domestic, and LNG trade between the U.S. and Mexico is not currently subject to tariffs; such tariffs or other trade restrictions may lead to continuing uncertainty and volatility in U.S. and global economies which could reduce demand for LNG and our services or increase our operating costs. Although the extent of any such impact is uncertain, it could have a material adverse effect on our business, financial condition and results of operations.
of the Company's officers or directors adopted, modified or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the Company's fiscal quarter ended March 31, 2025, as such terms are defined under Item 408(a) of Regulation S-K.
(a) Index to Exhibits
* Filed herewith
† Indicates management contract or compensatory plan, contract or arrangement.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Date: May 7, 2025 |
||
| STABILIS SOLUTIONS, INC. |
||
| By: |
/s/ J. Casey Crenshaw |
|
| J. Casey Crenshaw |
||
| Interim President, Chief Executive Officer and Director (Principal Executive Officer) |
||
| By: |
/s/ Andrew L. Puhala |
|
| Andrew L. Puhala |
||
| Chief Financial Officer (Principal Financial Officer) |
||
