Stabilis Solutions Reports Strong Q3 Growth and New Contracts

Stabilis Solutions, Inc. ((SLNG)) has held its Q3 earnings call. Read on for the main highlights of the call.

Stabilis Solutions, Inc. recently held its earnings call, revealing a positive sentiment driven by substantial growth in LNG volume and revenue, alongside robust performances in aerospace and marine markets. The company also celebrated the acquisition of a significant long-term contract. Despite a slight dip in EBITDA margin and reduced rental revenues, Stabilis’s diverse revenue streams and healthy cash position contribute to a promising outlook.

Significant Increase in LNG Volume and Revenue

The third quarter saw a remarkable increase in LNG volume, which surged by over 20% year-over-year. This growth was fueled by strong demand from marine, aerospace, and power generation customers, leading to a 15% rise in revenue compared to the previous year.

Largest Customer Contract in History

Stabilis secured its largest customer contract to date, a 10-year marine bunkering agreement for LNG at the proposed Galveston facility. This contract marks a significant milestone for the company, promising steady revenue streams in the future.

Strong Growth in Target Markets

The aerospace sector experienced an impressive revenue increase of over 88%, while power generation and marine revenues grew by 31% and 32%, respectively. These figures underscore Stabilis’s successful penetration into key markets.

Diverse Revenue Streams

The company’s revenue diversification strategy is evident, with 73% of total revenue now coming from aerospace, marine, and power generation customers, up from 60% in the previous year. This diversification helps mitigate risks associated with market fluctuations.

Positive Cash Position

Stabilis ended the quarter with a net positive cash position, having $9.5 million in total debt and lease obligations. This financial stability provides a solid foundation for future investments and growth.

Decrease in Adjusted EBITDA Margin

The adjusted EBITDA margin slightly decreased to 14.3% from 14.6% the previous year. This decline was mainly due to the completion of a high-margin industrial project, impacting overall profitability.

Lower Rental and Service Revenues

While revenue growth was strong, it was partially offset by a less favorable customer mix and a decrease in rental and service revenues, indicating areas for potential improvement.

Forward-Looking Guidance

Looking ahead, Stabilis Solutions anticipates continued growth, with plans to sell approximately 75% of the Galveston facility’s capacity under long-term contracts by early 2026. The company maintains a solid liquidity position with $15.5 million at quarter-end, and capital expenditures are expected to rise as they progress with the Galveston project, aiming for a final investment decision in early 2026.

In summary, Stabilis Solutions, Inc.’s earnings call conveyed a positive outlook, highlighted by significant growth in LNG volume and revenue, strategic contract acquisitions, and strong market performances. Despite minor setbacks in EBITDA margin and rental revenues, the company’s diverse revenue streams and robust cash position lay a strong foundation for future success.