SLNG - Earnings call transcript Q3 2017 | Stabilis Solutions, Inc.

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Operator

Good day and welcome to the American Electric Technologies Third Quarter Earnings Conference Call. Today's call is being recorded. Certain statements contained in this conference call that are not descriptions of historical facts are forward-looking statements as such term is defined in the Private Securities Litigation Reform Act of 1995. Because such statements include risk and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause results to differ materially from those expressed or implied by such forward-looking statements include but are not limited to those discussed in filings made by the company with the Securities and Exchange Commission. that ability the or of factors are future predict. the the beyond management of will company's determine results Many to control reflects Listeners forward-looking of undue place date management's which the should as views reliance hereof. only not statements on or future no to statements events other statements or revise any result a any whether forward-looking otherwise. The company as to of update undertakes forward-looking obligation or make new information, conference time, over turn to I'd this At the like Mr. to Dauber, and Charles President CEO. go Please ahead.

Charles Dauber

all I'd everyone, American like morning to Good you XXXX the Technologies welcome call. you. quarter third Thank Electric to earnings

Chief me Officer our Joining is Senior today Brod. Vice President and Financial Bill

For come moderator. quarter start then results. to and coordinated on thoughts back our details are you with third then question-and-answer by will of the financial walk share with far We'll my our I'm year. call we in Bill the today, where move some I'll a so a then going to additional review and

release As impacted revenue earnings you Hurricane and reported AETI quarter the topline XXXX Harvey. X.X third the XX% in saw results this the line and QX XX.X million in the announced of compared Both quarter year. for from million, second with significantly X% from bottom our of up our this up were morning, quarter of by

Gulf beginning September. of As by you Texas end the and all know, seriously Coast impacted was the region August the Hurricane Harvey of at

impacted and M&I years ways. the and Houston in to suppliers impacted recovery. Beaumont and Our many full number in Harvey communities, were our still of customers or complete have our region a months even employees,

of serious that and Houston First, damage members XX we in XX or destruction complete homes. Beaumont incurred their in had

in of our hit increases second in Brazil Houston services Gross later. $X.X QX as up for our discuss non-US loss where the was XX and highest idled projects and every industrial our projects not impacted and our manufacturing GAAP assisted company damage, one impacted XXX,XXX. approximately sustain back reported Beaumont saw our last I'll margins with projects million from many ability from a saw technical $X.X QX people to QX QX us a with production services were Gulf of company a million. Harvey's The loss groups and Beaumont company was Harvey QX with materials to to US QX of EBITDA X.X even technical for was in the last operation million to up Harvey work work a year. its recovery EBITDA, we to revenue from up which quarterly in that revenue, their year. Hurricane held halted, as million any push technical being the group including even still and from This to products their Even business told, $X.X customers quarter loss customers The products employees' efforts. All XXX,XXX our Although XXX,XXX on improved measure million delivered. customers' forward. couldn't of get million, in Harvey with Coast related and get did were on also days from products work impact our revenue, this QX X.X impact X.X impact

based The from and the So, sectors. EBITDA X% company solutions have our of of continued Harvey, back in backlog more more I'll up end the million, generation been financial positive to and the on of without would QX. primarily turn details with Bill to delivery I'll midstream With quarter power Brod power we XX.X bookings reported comments ending come now afterwards. over turnkey call for QX, that

Bill Brod

loss the loss improvement flat operations reported XXXX. a company of X.X the an company an rate last loss of of third our million the XX net run Consistent X.X million mix from versus share $X.X of million of to this the second quarter continue XXXX to of loss we The the range range same diluted The improvement reported quarterly profitability. which run per with to in in per from in quarter revenue fully million reported for QX for from the of for share everyone. as $X.XX, depending of and $X.X QX of million quarter, $X.XX year to diluted morning share quarter XXXX. million fully $X.XX fixed need on and costs good XX Charles, $X per the Thanks suggests annualized in of QX, be

quarter the end ended use excess balance $X.X to both X.X in to of an and due increase an QX million, Moving the receivable in operations we of and being down million accounts the in X.X in billings million resulting our from end QX. combined the cash X.X of with built million million quarter the position debt cash a from at quarter at of cost at of of sheet, $X.X million work QX. process Total up capital QX. compared were the unchanged versus a was which in $X.X from was end to Working increased the

quarter previously that and a Beaumont, operations It outlook turn quarter were both has and The Charles of interruption XXXX than affected is commentary in QX business and on the possibly be interruption stated, business. during over Texas With some insurance would additional XXXX. anticipated back claim maintains for any it Charles from Houston adversely first interruption business no to As into Harvey. proceeds that resulting the filed the earlier the of business its or recorded business company by company's Hurricane I'll claim.

Charles Dauber

and begin to gas Thanks sector. and the reviews sector with Bill. going market I'm I'll oil with start

sector. here entire the new I'll remains discussed, focus gas but The discuss portions and market, downstream upstream midstream pressure the strong majority and of oil some overall market competitive well. the As gas been very and our of challenging we've oil pricing that as have has market in in there been previously the with the developments across

continues and and we from gas solutions year midstream last downstream XX% third the up in included and QX. projects XX.X XXX% versus that revenue turnkey incorporated reported and came from IntelliSafe gas million medium business of a were and revenues oil increasing mix oil resistant the product. to voltage arc XX.X the growth from quarter company's our These million drive Our to

and the but build as customers business for impact book We quarter customer one continue downstream and backlog We our future for what was orders completed market gas opportunities. the and down resulting downstream we our and of good and downstream see to the numerous by successful engineering in terms procurement midstream in means Hurricane XX.X booking project QX, the and that us the construction ending which in midstream million, of includes the to slightly gas project numbers sector with well. from oil Harvey encouraged remember in that opportunities also for We're backlog. of largest oil

positive for Another business the in our development the time drilling was since XXXX. quarter significant increase first a in

the in focus an discussed, was and with opportunities. business their previously recently product several techs We've had in progress that to months work, related Texas. for increase working there uptick the helping US seen shale drilling revenues by and primarily have in service West customers West revenue upstream in back our including get also initiative. past the initial to capture the are drilling pleased Texas in As several related for rigs to market our great land We've

existing see of While in product also or retrofits opportunities you forward to calls. we've build offshore look rigs, started land I more opportunities future to business are upgrades new our land as to updates drilling those and the sharing with majority well. on drilling

X.X is in we the tempering BOMAY XXX% quarter. China, which reduced to energy XX% was and joint BOMAY environment. our expect and XX,XXX for to the continue Chinese as million sector. the income term expectation in of run gas given orders, and had focused profits them revenues in of an market venture BOMAY QX our Moving seen equity the at recognize oil for rate we on the which are near but uptick reported

Our joint and while mode market still hibernation Southeast is Asia downturn gas in Singapore venture continues. offshore the in oil

into distribution pieces. Moving sector power power and broken to our the is main generation two sector, generation

XX% to the gen power call that reciprocating what seeing generation in [indiscernible] projects term. expect is QX power now in do lumpiness OEM from last for generation power X.X near X.X we continued for are increase revenues due area, and OEM projects with We million, gen in bookings power a project equipment of manufacturers, opportunities were construction or directly from sector. plants The business power and a gen down but to to down The QX, year part the of build the example. engineering QX In EPC backlog they from for or XX% part saw we EPC firms business. and the that the procurement also large engines first in turbines, other the original is, primarily million power generation QX the make gas natural global distributed of can power company additional million lumpiness of the X.X

I've QX to revenue million, down Moving revenue Electric industrial other opportunities, that's and last Interestingly, products is like significant discuss marine Electric between marine X.X of from industrial additional to primarily to still XX% M&I highest now year, due see sector, related including for three and revenues ever from which and marine second were vessels. and market oversupply their reduced up Brazil, QX, million, weak X% sectors oriented move overall but marine and from I'd revenues Brazil to QX globally discussed XX% X.X is previously. service year. M&I we were In and some the M&I product other the down gas to XX% offshore offshore Brazil's is to QX projects. have services backlog the with started split oil last our up quarterly

the In oil industrial M&I also quarter, and team energy first see customer. gas the the with order large a to booked continue their growing product power for the in number technical industrial Brazil Electric and energy markets are projects We and of industrial business. a gen opportunities and seeing in and

a making the to we sharing additional look announcements are significant year. revenue to step people team new macroeconomic and we While our about midstream, tough as products, execute you where downstream capacity I I the in in take If Brazilian that a target and investments and we've this are gen a summarize company, very the growth our remains our environment progress is and future. resulted the positive proven in environment ability back in and backlog have with power markets forward challenging, in and

Brazil upstream we're drilling business well. a our seeing including recovery now business as services in growing, Our is

markets QX. positive And our it execute customers book keep Harvey, would challenging, if to happy. need to have to As EBITDA been were remain our in we backlog continue we orders for not and

for shareholders with of thanking hard concludes to my and of Q&A the for the work turn proceed portion portion Q&A and their over the prepared my thank moderator the This by the comments we conclude like support. for their comments of now call. to prepared employees the our the section Before I'll and session, I'd our customers call

Operator

Instructions] you. [Operator Thank

question in We the have queue. ahead. Please one go

Bill Dezellem

Hi. Tieton This of I'm I'm questions if the with one going is right. to Capital and ask queue, a that's number all Bill in since Dezellem only

First normal spite of Would the $XXX,XXX second of leverage dollars the revenue quarter? view that profit looking you if little you how increase all, versus that a if was $XXX,XXX and there that quarter. hurricane about so unique and this disruption. as a talk [ph] in on gross And you to sequentially, bit grew or about did I'm something was

Bill Brod

Hi, Bill. Yeah.

the steady One seeing the the pressure two state of products things. margins there's in is the and booked business that market. what think of we're from sort think I in pricing terms I is

I profit result a really gross business. incremental of think is the QX services versus QX the

services. So, quarter, dropped and products there's to the lot through this line. between clearly the talked higher about of reasonable And services we gross a services business and when side gross profit has margin a the on straight mix

Bill Dezellem

I'll of well And taking up queue that. a you I couple that, guess mentioned different things,

the of services, relative expect and coming you when the anticipating hurricane complete out do to to the all, hurricane. First any of are service be business work you product

Bill Brod

hardware that the services there doing a say next this when of a and of should products, related well. projects a equipment are there small lot perspective, other could had QX, related of number that services timing or would In to in projects the still but from Harvey and happen and as need QX, the recovery. customers certainly recovery that on refurbishing the damaged, also are of work those their smaller completion are that turnarounds are their business I do, under be upgrade water into whatnot considered repairs stretch quarter they which to depending was year would

Bill Dezellem

overall higher an IntelliSafe is specifically? firming And then pricing, there that is or pricing indication for

Bill Brod

I and, if think and further pricing, we pricing stabilized downstream I market the market, of quarters about think midstream powergen has last pricing I for So, couple the think pricing see don't market that the any in the and for the pressure. so the

where the know where pricing perspective. a - I from think we the markets are pricing

that turnkey projects power premium get of its incorporate of price solutions, think take be command in do the able with we where turnkey and does delivery premium premium. the it to I we should with can and our IntelliSafe some especially market because we IntelliSafe functionality price rest when customers,

tend think I with is pressures there. The little market margins opportunities the market is be to on market a slightly the prices market downstream there's tough bit those though historical is higher. even which energy different for still price drilling these related specifically. midstream, The drilling sectors,

to the the of starts looks as drilling blended we'll back at online. between So, sectors to have part what and see business those margin come the like look that

Bill Dezellem

is it rebounding And depressed or as pricing that traditional pricing. is with rebounds, it with rebounding

Bill Brod

not there portions be probably but they above pricing, the the still market. It's would of midstream expected with are what a the quite XXXX level bit rebounding and be downstream margins in to

Bill Dezellem

And opening that it because your will $X.X in works, remarks how QX caught you have Will hurricane. revenue really that release that the not million in from the total be in about lost was of stream up out. is revenue this is and or be pushed then the mentioned there

Charles Dauber

whatever QX projects couldn't is month, so literally really that the because couldn't is is, by right, in months, get of this projects, what customers between it's revenue impacted timing forever, again. work, the Obviously, those some a lost all project and of started back two somewhere particular to - our the are does get

of impact as into an were And that moving of so, push we and as number would, QX even some those QX in in a general, impacted envision projects well.

Bill Dezellem

also find you simply anticipated were bookings did bookings diverted? about customers' that attention Charles, how some because in you delayed And that QX was

Charles Dauber

Oh, absolutely. Yeah.

market, As in companies their were The basically running but oil literally because coming the down stopped. I in and on gas and said entirely or two the were Companies distracted slightly plants Houston people and weeks. for working earlier, the back people bookings up in. just recovered. that's getting getting not weren't Employees were three

time and a So, considering Harvey good strong, in to that large amount were the bookings up, backlog was QX. actually it had deal actually what considering for the we is for with of

Bill Dezellem

QX, all only bookings you that the quarter, like would so, have would will And from catch also that anticipate slide. you fourth or you but in the bookings somewhat you would receive up in also are anticipated just not QX the sensing revenue

Charles Dauber

going would should I moved. going that Houston, I If there If issues all right. the business the firm think up a end it's impacted a having more oriented there, and you're from of of customer. incremental of to business think and then firm, depend to on outside be - Houston no we it's it's was get

the an Gulf example. OEM outside of decision impacted and are powergen region because So Coast customers were projects those by not makers that as

Bill Dezellem

oil you directionally way are upward? general its customers in the works what hearing as price from And

Charles Dauber

That's a good question.

dynamic that in where Coast and and a for there the year both I internationally. the Oil Texas to increase think oil the that people has confidence into was don't that a are region Brent Gulf stabilized, mood as some XXXX, factor West price cycles moving there's planning tends So, means there's ago. of the

a international of but thing significant in in it's year. Middle you both shale product drilling in can't call. they've our US the the both oil in on Brazil, board, tell plays the the into power across of increase the guys. midstream East. side the were to into their North businesses for Middle customers and just and would the it's for and then business, by customers next opportunities sort US the and actually the the the midstream sort fry So, relatively downstream and - America, QX same East to positive own and in to I - in fish the the situation but in we so Brazil, with services with interact There's we're directly heading kettle Middle the downstream and confidence I early East, increase nothing political from seeing, too got way, an generation that's of the and

Bill Dezellem

with question, you Would may E&C different you. versus believe of look referenced additional have And call. terms a of one in you more them and please different then the from you into couple Thank in are organizations XXXX? how the bit a you what firms times go those XXXX hearing detail

Charles Dauber

LNG I the where turnkey of the in projects EPC right into and there's that's necessarily EPC firms last about oil. of think me and let part talk they market for there's is of and number downstream much think the - them firms impacted coming these years More power are The the increased online, done those don't not part in be distribution over think now of companies and the So, we a be Those to businesses. we've midstream you EPC stage. our The amount terms price largest a just I projects we're from business is, of I that are. of vast typically as don't confidence change an which positive. know, multi-year what projects, the about going in EPC on hearing at in capabilities, barrel haven't back solution several broken number because a to are by firms are with firms years. of interesting this seem we general the of are sort IntelliSafe of their

to - amount they but will really give opens firms that work, will and much of us to earlier, because suppliers these I for experience, XXXX. very will delivering put within good success doors do we firms opportunities most our those they up it EPC that first we us. successfully actually they significant first inside the because for drive business head pleased our with us, on And we them, And opportunities these approved as the work going new so, more that's customers as we've it's opens because very project how start as us are on huge had them with a firms, the they're list engineering of EPC large these success mentioned potential the inside for going based just projects into of

Operator

question. Please more one have We ahead. go

Unidentified Analyst

[indiscernible]. Thanks for taking call. my

disconnected Forgive I going me - don't because addressed or already trajectory, going forward could that. just that yet your under couple pressure. I But to could about this, see know if was quarters the just lot you address capital I and working I you if at that it a it's from unable that got call. but three I if filed I'm you if to XX-Q type that, plans you I wondering wondering make maybe seems to was have have quarters, was of comment temporarily you a look the within of be and of some address

Charles Dauber

we QX in ended I'll to look and just with Look, cash, decide we can at the million Bill start, you to. Sure. of cash. if bring over $X

normally Our business itself. actually cash flows

down major when duration. that and projects work - products project of the on our cetera, materials project, the XX% the XX% and so milestone go there's payments through So, they that throughout cetera et technical et get way is

So, flow normally projects themselves. cash the

right we're is view cash actually reasonable So, now. on our pretty

progress. large receivables in of couple a are have that We

receivable pop things Some a that and will in that timing, Harvey to $X and because projects will impacted, like cash million were back QX. delayed large QX that's by there's receivable up were which the retainage receivable convert retainage the in of

that. pretty decent we feel So, about

Operator

concludes you. which call. Thank are Thank today's appears participation. for there more questions, you It your no

now disconnect. may You

Stabilis Solutions (SLNG) 14 Nov 172017 Q3 Earnings call transcript