Earnings call transcript Q3 2022

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Operator

Good morning, ladies and gentlemen, and welcome to Stabilis Solutions Third Quarter 2022 Earnings Conference Call.

Joining us today are Westy Ballard President and CEO; and Andy Puhala, Chief Financial Officer.

Before we begin, I'd like to remind everyone, that today's conference call will contain forward-looking statements within the meaning of the Private Securities Reform Act of 1995 and other securities laws. These forward-looking statements are based on the company's beliefs and expectations as of today, November 3, 2022.

Forward-looking statements are subject to the risks and uncertainties that may cause actual results to differ materially from those projected. obligation made updates in no the revisions undertakes statements forward-looking today's company to or release to The conference call.

factors company's SEC undue reliance concerning contained Investors are announcing information that any to those results. cause Additional place not differences the in company's the the forward-looking filings and the on cautioned with press release could is statements.

may financial information Please non-GAAP also certain note refer that to the today's call. company on

company's GAAP earnings non-GAAP the release. financial to measures of in being reconciliations comparable the is find can call You press the Today's measures most recorded.

Ballard, the At and this to Please like Stabilis time, go of I'd call turn over ahead, sir. to Westy CEO Solutions. President

Westervelt Ballard

appears everyone. the Mike, continue momentum to good morning, first it starting strong significant year, people take to After that Thanks, are notice. we of half build and and a here,

really crisis, the quarter difficulties like persist our fuels. infrastructure in the highlight several to transitioning the the natural pipeline to of increasing and initiatives clean begins gas and success U.S., strategic rapid energy third shift of new catalysts industries of greenfield expanding Our European

our commercial, challenges operational and our we think address in technical puts position now to our us Given capabilities, strategy these a beyond. and fantastic leverage ability to

cleaner, the frontier wheel growth said business opportunities in are new past, secure not I've world reinvent competencies reliable are safer, to for the and and model in As our proven to from demand here. and existing trying we instead, fuels. durable But we leveraging and address eager significant a

think aerospace, and call and our sectors across contributors. And lump and when variety group, were And turning oil results, I of I'll third quarter as revenue to quarter, a the industries remained utilities, strong solid the gas we than delivered together healthy mining other industrial industries.

of more in face industries prior believe XXXX, sanctioning natural gas having than of and In pipeline built continue gas. with considerably aged infrastructure pipeline to expansion, challenges as will the to a even and this limited to more it greenfield infrastructure we was natural aging has the access U.S., half

of existing drivers incremental our and pans of few [indiscernible] the key lack are a aging of of America. This infrastructure pipeline capacity across

tremendous participant Our optionality has platform remain its a in growth. to meaningful

existing technical operating our us so modest infrastructure allow the greenfield to new considerable and quickly leverage U.S., across expanding increases liquefaction investing our capabilities and [indiscernible] do Whether overhead. infrastructure in in with points

also than and You addressable we geographies. really of These really opportunity to are [indiscernible] our its aerospace in excited globally, marine bunkering. prospects say, estimated about industries like like $XX also and billion in progress rapidly. portion I'm markets this our growth are for and more growth they markets and combined important business expanding

are time that as the they of momentum year, we of and marine put to markets year, total And all to we revenue in the Over the during we've in on enter and bunkering these of total a off, X% considerable combined XXXX. of Throughout our healthy past will we the as the for quarter, to context, efforts beginning revenue. developing build look created. for that XXXX, spent XX% aerospace organically combined pay rest

to actively short U.S. capital. growth how is small-scale exciting reach are of can a we market, and several evaluating in infrastructure capital we discussions, active in are invested module deploy investments the in times market return expand One projects capabilities. across regions of attribute New [indiscernible] resulting to variety great and our lead on

but cubic During facilitate natural annually tool as feet the The the sources addition approval to for well. LNG, license XX-year us of over produced Energy the the domestically is of another globe. the equivalent long-term to provides in not to us us energy of [indiscernible], DOEs only to assist world's roughly a the U.S. XX ability the with granted cleaner we world's Department yet billion gas also a export volume that across quarter, and announced

do Exportation in our feel we and requires advantaged we our of has to technical considerable the barriers it unmatched supply, vessels, to entry mile approved are ability to are sophisticated team own, export capabilities. We LNG given and highly operational aggregate this to the which significant suitability, and robust permits and bring execution. and our last asset to third-party license, base to LNG ensure and

as to expect time, excited instances starting stay a current additional them our is fuel prospects anticipate to and and often point, here state, I'm they please as not clean stand-alone LNG in LNG leverage customers. we I've that fuels are introduce so We our sources about our competency, solutions. our blend core while the our heading to direction core end tuned. said our potential complementary other platform with over

others are Some efforts like prospective the and and thoughtful external may along assured; be rest with [indiscernible] that careful to understanding our markets be assist will expected U.S. and of adopters markets a earlier legislation. in factors applications climate we end recent

a mile adjusted operation, by virtual given solid market to While in and through growth net prospects, and this as provider leading growth feel further in for the the U.S. gas good [indiscernible] from which group's quarter, our a last the solidify through I'm across resulting demand will efforts clean natural profitability incredibly position energy Much the we of our we industrial the very are core having relentless income continuing sources, about our year, operations. pleased pipelines optimize enthusiastic I'm positive EBITDA also of our is

sectors, all growing to Our ability expansionary additional in efforts to fuels value. order introduce LNG in to clean new us efforts numerous base tremendous abroad, our customer to export levers and drive our afford and our exciting franchise

over it Now let me hand Andy. to

Andrew Puhala

and good Westy Thank morning, everyone. you,

record reported and the quarter we quarter continuing quarter a million the same of Net the year. quarter, operations in last was $X XX% a the to second in million the $X.X in last above of $X.X XX% income loss quarter, revenues sequentially increase and third from an million compared year. loss million, of of $XX.X For

QX are marine provides businesses aerospace year-over-year gallons improvements associated the [indiscernible] and winter more and LNG our that generally quarter higher particularly expansion in related These notable rental strongest peaking Westy in of mentioned quarter The third and traditionally with results it of and is are revenues delivered, and QX. bunkering results service both strongest his of as the remarks. to not the result our our

seeing initiatives we we our Additionally, the reduction few have discussing results are that the been past over cost and of pricing quarters.

to Net the compared loss, in including measure, results of the from last in was year. year. Adjusted discontinued quarter to second second third million quarter XX% compared EBITDA, a loss and compared non-GAAP [indiscernible] to $X.X quarter million the last quarter, increase loss the increase $X.X a the a of XX% the of a and the in quarter a million $X.X same quarter

$XX including Ameristate a $X.X the line of deposit $XX.X with Bank. [indiscernible] a of by marine credit cash liquidity customer million of of new million, quarter ended aided $X Operating the bunkering, position strong our in million, quarter. over and million remaining with We availability advancing historically on

in attributes our we lines, business of continue with a after products fit thing to strategic primarily those forward. establish this market a earlier vision with and to One business. provides systems our to add the facility, gas also and this week. review, are liquidity credit the high-quality business with moving history as Along careful hard closed note determined discussions and oil at a to lenders we conventional we delivering of Brazilian that our The more services. business is will divestiture final we no and We expand prospective additional longer that which looked Brazilian the electrical services, was

tax been financial have results impact result as periods and shown a of operations line under our as in of and big single comparative and to exit, Not quarter press company, our release. on discontinued item year-to-date in Brazilian net our the third our of a the operations decision results a

positive. of the the While outlook is we earnings don't XXXX formal give guidance, for remainder

concludes and Mike prepared Thank the call back I'll With line our for that remarks, that, the you. to open questions. turn to

Operator

Johnson Martin & first question Instructions]. Rice. from [Operator comes And from Malloy

Martin Malloy

to LNG the on are generation the for strong the and particularly milestones projects or great expand to capacity? should question the undertaking we cash a of first strong flow -- was Congratulations the on quarter. It's project what liquefaction in operating see. the just My look during terms quarter

demand that -- strong. painted is you the Obviously, very the picture

You've expanding of look in got are International the elevated. for export What towards prices terms in capacity? hand. LNG licenses liquefaction progress should we

Westervelt Ballard

Thanks, Martin.

things. couple a of think I

all, of with capacity our liquefaction a of at today. level we plants pretty are high X First

So is I the But this vocal is I And to consideration. want in one got more bone. been I've meat that think to on this about commercial certainly pretty the as I've doing de-risk to other I continue and can. put some so, as much

expansion in will ground think progress start more in putting with we that West our broadly tenure, revenue combined we but some facilities, inspire of in And varying Port X% [indiscernible] of growth George aspirations drivers. continue the only made of to as of Allen as great have and money the by we also, evidenced variety quarter a those And in not our [indiscernible] degrees into I of costs. have geographically us further third

greenfield so well. And as

I we're but those So an work. I there think to [indiscernible] for us think putting to a start of appetite types couple now, be more capital

Martin Malloy

and that question, Great. seeing on wanted kind -- to what know, ask bunkering to And involved on of talk industry down? you is Kind that customer I that, a provide maybe I kind -- there? that can mentioned And seeing you are opportunities is marine marine deposits. of you're just you the what put side next the deposit what if that of about bunkering -- with about the don't

Westervelt Ballard

and Well, a business both Coast, And East along marine just again, the but West whole. obviously, not on as incredibly bullish Coast. Gulf we're the bunkering the on in

world so as it you bunkering applications. the means of really X us, think kind And of to when marine about there's

and [indiscernible] carriers, The stickier call the those RoRo predictability much are I'll bunkering much first roll-on lines; of ships; in in the U.S. more second base, roll-off and the are consistency third their in car those, activities, more container interested kind much revenue is a cruise

this a client little that have a of contributing had that project factor us working third ours of And to which -- sure to prepay, to properly. weighting obviously funded agreed capital the to revenue some allowed that was so was a that to bit this quarter happened be make

And to balance. obviously contributed so cash our that's [indiscernible]

Martin Malloy

on Congratulations quarter. turn it the I'll Great. back.

Operator

from Our next Riley. Liam Burke from B. comes question

Liam Burke

the you -- multiple you the opportunities, how projects? you've are it very to it looking environment? prioritization? at There projects market? Is Or like are there prioritizing how that how got look the would are very, speed competitive Is nice

Westervelt Ballard

marine look in I'll group. an strategies. you when we've themselves got We've our a certainly, aerospace, of -- We've present buckets. different manner. those And at our call very and of growth got the one X kind it Well, our of got each kind industrial X

addressable $X kind $X in billion group market the industrial U.S. so or of in is billion probably that And the

kind think the you the $XX lines, along marine billion, and globally. along aerospace billion $XX think you market If a that's addressable of

think about rapidly generate we we prioritization, when about so where can And invested capital. we think returns on most

a We'll infrastructure can will we'll support so of so We'll lenses, to speed look build And lot look quickly look to through those market, endeavors. out different about lens we be tenor at of contracts. how pricing.

short-term of underpinned long-term kind they with these contracts all of midterm by on ultimately palatable that. are But or return is capital. So [indiscernible] they a and this or what generating

so we'll to kind returns me how move in it's to we makes hard front to That's the on deploy what the rapidly going for to resulting is and project generate capital. ultimately about pinpoint that are can But on And incremental of margins that. sufficient extent line. capital, think that sense of

better last the longer I -- obviously the is think thing sustainability. for We us. the

little little us right? a bit can And we but kind they're in trade-offs, of so of contracts, impactful, of financially certainty bit shorter backlog which and tenured it [indiscernible] a these be and because and like versus very consistency gives earnings obviously

Liam Burke

I that's were what you was was -- and a No, specific perfect. in looking I project, looking at projects. that's looking Sure. the for for

fuels above The the other is alternative you what had see over most promise question LNG, do longer I term? having and

Westervelt Ballard

Yes.

their about what's that talk theories it prevail got about about addition, me has addition. transition, it some call to think going Let as own this because we energy the -- call everybody I'll

all, we fuels, those think of with what fuels compatible And fuels, companion are about so about think first we LNG. most when

our that note commercial our inquiring from aggregate a we're ability is biofuels from I with hydrogen to doing inbounds vacuum. this and methanol think in really and and coming And that RNG and not LNG. to important and it's This ammonia, other about relationships,

RNG different or And us biofuels, hydrogen so a could areas be to to maybe complementary, those but also a are [indiscernible] complement for there areas or offerings, in lot other not we're that kind a we're time and our in stand-alone a and of evaluating partnership methanol and and as kind expand opportunities, that. as of ammonia X spending X other how and and of

those think or X that key I we're are X the early So suspects entertaining. kind of

Operator

Tieton hear from We Capital. Dezellem now from Bill

William Dezellem

X what of was utilization the quarter? the the all, of plants in First

Westervelt Ballard

had little it's Allen, mechanical kind was facility unexpected XX%, have and that range. in the challenges XX% our of bit a rectified. Port in Allen So Port been it [indiscernible] some we And lower, at

so utilization down the And that that in brought quarter.

William Dezellem

Westy you And George West gave out the your number. line was when that? cut What

Westervelt Ballard

in utilization XX% was the It quarter.

William Dezellem

was to off of run or where And able you off XXX,XXX been that based historically have based gallons it up? of

Westervelt Ballard

Off XXX,XXX. of

William Dezellem

of seems you. but and now. oilfield of frac fracking, the And the there's it know you that kind today? the frac pickup than emphasis had relative to Thank What seeing maybe has an you Great. sand the opportunity. And in in electric past, have less a are market company I like in

Westervelt Ballard

Yes.

call in South a we've very margins in, and it, Mid-Con really strong. business. It's we're gallons, in X in basis so volumetric really, incredibly really other Still strong strong, Rockies. participating up not market. areas only actually also, the obviously And in or is from but is Texas the that that got One in

really to of those hard strong second had in half and in first also to year line quarter. the [indiscernible] still the We've of was work those headwinds is strong offset in the inflationary to business was margins that some back -- third get

William Dezellem

see you it do is rate? think a Or steady from reached And you that here? building nice has what

Westervelt Ballard

to are have that I then that I'm market, because not to overly also to I'll weighting dedicated I've other inspired get to which And that CapEx I and got to nervous. expand have I'll in have is start like a I'm we do. because then to some where regions, if say something heavier probably going

positioning like South of where our have third-party don't deliver that I ability infrastructure. George liquefaction of Texas but also So having and to in our other the source West some market, I molecules molecules regions

are balance LNG and where by Now sheet caveat put my don't opportunities take need hard efforts source can too. sheet market, we'll I through in look parties at commercial third if balance assets there any without saying just just that in to play, I that effectively then involvement, that, from a

William Dezellem

Great. And export about detail then license you talk some new the opportunity? in

Westervelt Ballard

thought together winded way of of yes, in to to looked this short-term capability our and is in like have. of utilize actually, at certainly there the commonality we of to so kind and and but could heads and think challenges and the they're a also capabilities but Europe, put to not? lot we take is that so. there's I'd the we that And spring in Yes, liquefaction we different going [indiscernible] our thought, a dilemma kind a energy resources, thought, we do also why longer own technical expertise And U.S.,

to get Department which long of have pretty And to so because have we lot as entry spent not only working a and -- But Energy and barriers commercial the enough of you that wanted we to emphasize September. time of challenges period were source in do we a that over granted announced a with the to to energy capability need molecules. of capability, just exportation licensed time do an don't to do we [indiscernible] understand the you kind that

have You've have own your got liquefaction to to LNG capabilities to export. also

But then it's you've wherewithal take But to chain of one last to the that all flange have from mile also the do to there, the and flange then the that. the got ship. it of logistics way supply thing to

think, [indiscernible] time capability I then Coast there's Fire a waterway permits, to and feasibility robust this. Marshals, got very mean cost permitting with and energy I goes and into amount You've get licensing to of have, that licensing a and Guard, technical studies.

by platform, had already virtue that just years, kind place. of the of in over we've, our And

going us way to this was stuff. for thought to to export elegant already what we a leverage pretty be we so, this had And

announcement. working And so of with XX to prospective who our cubic we result a clients, billion to very were as of shy feet authorized out export have we're a of just which a hard us year, variety very, reached

nothing stay so And tuned. report now, to but right

William Dezellem

anticipate When do you shipments? first

Westervelt Ballard

and long-term, some they're cold winter more the thinking think to got we of Europe. about gas European of in say, so inbounds volatility, are and a or in hard you've necessarily [indiscernible], sort thinking some but not obviously, lot this have late It's I the snap

what the going face over the to looking think that market haul. the I of at is European they're challenges are gas long kind

is first to to or express And all been the kind pretty say market people partnering offtake to we'll inbounds over and so Europe. [indiscernible] I'd you appetite on us to year, our voracious to will, meat first of like the about quarter think of half gas a and the have you bone, considerable if with there's of inquiring commercially of talk

William Dezellem

be And that other those customers. correct? Or end coming would calls Is from European intermediaries? market inbound some

Westervelt Ballard

End customers as market Both. well intermediaries. as

capacity or that ship some over of some entertaining in to capacity. tied they're European having got port, have You've Rotterdam And notion than up in a vessels it somewhere and us. excess rather the bring

And isn't quite vessels. cubic also is you're of of kind X,XXX XX,XXX meter bit it, world market this anywhere call there's end talking and offtake, a between in interest But scale, intermediaries. type but -- this

So both. I'd say

Operator

is question Haimes with next Sage. Barry Our

Barry Haimes

couple bit all? is you Act, I could if at talk a questions. where if the possibly impact at One it, that of you, you've Inflation wonder had I Reduction looked little about a could as

to year unencumbered production how much export discussion follow-up and export versus own just your that over on the next to which had question your or committed might change see do one how we effect, in to you license. of is on the is LNG, Second, Where your X? ability say, customers

I about you about little we to a quarter bit ought how of terms it. talk just finally, then could if the in fourth And think wonder

capacity be the in any And better I other given about? problem should to little on tends seasonally mechanical liquefier presume be you parts moving we bit the a thinking fourth I bit just quarter think that should be had. you a mentioned utilization little it stronger.

Westervelt Ballard

Yes. of we IRA, production credit, to hydrogen buckets think as tax about. I'll kind as be that to kind can. No, which about the thank you. going X is of when clean I think not is the on tackle sequentially you us this that's there's the But XXV, One relevant today.

But we're stand-alone. hydrogen of as to capabilities companion to of those. going certainly, clean as kind one offering, a fuel our alternative to mentioned, a is or continue And broader either have expand I

is per is think I of so certainly area think which the is sort gallon some time is And other $X production, And emission which one factor. basically the we'll clean XXV that XXZ, fuel the about. the

large you million $XXX billion when But think of certainly legislation, of the a lot $XXX there's asset, think to we opportunity. there's

We when the of and think initiatives around. you our that also Texas of around also think Senate, of there's politicians narrowed Congress the some it think we in right narrative some interesting they've

those X, start think I how we we'll us. be that XXZ have for and look So to areas potentially at could closely XXV those meaningful and

give sorry, as the me think to I I'm the relates -- remind me it on DOE, DOE?

Barry Haimes

Yes.

the sell that in then was be customers? On the available your unencumbered and change you that much two? to some or for own -- And could export fact, export how would question over committed versus might next license, of So how and volumes? year of the

Westervelt Ballard

Yes.

our we'd only volumes, offtake expand longer the certainly and change got been winded So of preexisting not a things certainly our is we've calculation, customer that contracts. lot that current not I the but of relationships if answer facilities of that is to tell and agreements, long-term have the we been one and a want of effectively They've spot. I'll our volumes, you X infrastructure. lot in part is the one had our of challenges some

and so and And consistency Allen to we're facilities. longer-term of some kind is offtake also with there that. spot. pretty internationally, around George organizationally get the to to extent Now our pre-existing longer-winded of contract West given that that a do facilities, But wanted agreements export more Port easily we our our trying with how the nature contracts, those somebody could take they're

little in expand in facilities And modular very myself, can those a to fashion to a year. over repeat deploy then mentioned as West capital we [indiscernible] quickly also in a George I've

own third-party. there's [indiscernible] molecules can own of aside with our from lot to levers with export internationally -- the a we So pull our

peak the note lastly, then pretty kind right, about couple good millions revenue we what's different in world get they're is activity annually sending in love We fourth also quarter you metric I our in the shaving markets. revenue, large year. a that the the X in capability guys, of of things you're buckets, when business of whereas contracts utilize throughout a kind fourth quarter, it's is And of lot to only kind and tons out us. quarter is, to some can [indiscernible] one the traditionally but in the a we it not important of -- of compare generate capital just across quarter But fourth general, of market, for streams scale and XX-year to have

about kind ag [indiscernible] And group this peak but to that industries, and servicing different in oil marine industrial. bunkering, the which shaving group have gas industrial also -- so of food and ours marine and dynamics and and dynamic that's a industrial levers and and few, of think other mining a name very

mean mean don't. technology, field When the only commercial but wanted some some not I equipment, approach, revaporized dynamic, the I technicians, our different

want Some liquid the don't. some form in

are well. fourth as a there [indiscernible] solid pretty a different for lot So of quarter

don't guidance. that of in XXXX. give as what's we out we're XXXX. about We And beyond into process kind the But project hopefully, same thinking of

that question. So don't I your if answers know

Barry Haimes

And If you you your based let's maybe quarter? just quarters? Yes. That the I was say, that in do Could on one follow-up talk then bunkering. X had how conversations, change bunkering on the about in how great. quick might customers could many next,

Westervelt Ballard

to increase Yes. don't the points I -- forward, firmly had, really expect a customer. touch got because we've think I it's know, considerably you've X we But customers move I of mean with a handful I quarter. that in as

the got You've themselves. lines shipping certainly

themselves. have You've trading large who got the large desks IOCs,

large on also daily got molecules you've who the basis, are houses trading and world, moving the You've of got the a brokers. ship

which staggering. the internationally of out look kind just is at customers [indiscernible] U.S. if and raw ship, of it, there the financial bunkering that who the markets container carrier. got so kind cruise data Moreover, arbitrage at really And in in X are we're you you've bunkering, looking in call versus and line/car

those There vessels. I'm XX years, that [indiscernible] Asian And and are not shipyards. or XXXX. of Xx X ending vessels they're going to be number in the yards In of XX next about about

the rapidly And business revenue contribution evidenced from in of by the as so we quarter are percentage growing that bunkering.

we be trending not some think linear. And right that in should [indiscernible] be be but bumpiness, certainly will and There direction. going it's heading absolutely to the

Operator

further Do Sir, questions there with? would be have appears to you in the no to like queue. any closing comments finish you

Westervelt Ballard

No. Thanks, exciting what soon. everybody, We many to for you today. call progress, the forward the say we'll quarter look participating throughout in our updating on I'll and [indiscernible] initiatives talk

Operator

and does conference Thank conclude today's you, This ladies call. gentlemen.

phone lines You your a Thank you for wonderful time, this may and your day. participation. have disconnect at

Stabilis Solutions (SLNG) 3 Nov 222022 Q3 Earnings call transcript