Filing summary
Entity and period: This is American Electric Technologies, Inc. and subsidiaries’ unaudited Form 10-Q for the quarter ended March 31, 2015—not a filing under the name Stabilis Solutions, Inc. Investors should verify the issuer and filing match their intended company.
Business context and reporting period
The company provides power-delivery products, services, and electrical and instrumentation construction for energy and other markets. It reorganized continuing operations under its Chief Operating Officer and now reports one operating segment. Its former American Access Technologies (AAT) operations were sold in August 2014; remaining real estate is held for sale and AAT is reported as discontinued operations.
Financial performance and position
Amounts below are in millions of dollars except per-share data; periods are first-quarter 2015 versus first-quarter 2014 unless stated otherwise.
| Metric | Q1 2015 | Q1 2014 / comparison |
|---|---|---|
| Revenue | $15.311 | $15.848; down 3.4% |
| Gross profit / margin | $2.283 / 14.9% | $2.435 / 15.4% |
| Operating income from consolidated continuing operations | $0.275 | $0.498 |
| Net equity income from foreign joint ventures | $0.018 | $0.362 |
| Continuing-operations net income | $0.274 | $0.848 |
| Net income attributable to common stockholders | $0.187; $0.02 per share | $0.494; $0.06 per share |
| Operating cash flow | $(0.465) | $(2.096) |
| Cash and cash equivalents at quarter-end | $2.619 | $3.550 at Dec. 31, 2014 |
At March 31, 2015, working capital was $11.209 million and the current ratio was 2.0:1. Total debt was approximately $3.978 million, with debt at 13% of total capitalization. The company reported covenant compliance. The revolving credit balance was zero at quarter-end; in April, it drew $1.5 million. The new $4 million term loan refinanced the prior revolver, bears interest at adjusted LIBOR plus 3.50%, is secured by the Beaumont facility, and matures March 31, 2020. The filing describes quarterly principal payments totaling $267,000 over the next twelve months.
Material changes and operating trends
- Management attributed lower revenue to falling oil prices and related project cancellations and postponements, partly offset by $0.6 million of revenue from the Brazil subsidiary.
- Oil and gas revenue fell to $11.522 million from $13.635 million. Power generation and distribution revenue rose to $2.580 million from $0.658 million; marine and other industrial revenue declined to $1.209 million from $1.555 million.
- Backlog fell to $18.6 million at March 31, 2015 from $26.5 million at December 31, 2014. About 80% was expected to be recognized as revenue during the remainder of fiscal 2015.
- Net equity income from joint ventures declined, reflecting lower BOMAY activity, a MIEFE loss, and the prior-year contribution from the Brazilian AAG joint venture, from which the company withdrew in April 2014.
- Operating cash use improved year over year, but working-capital investment remained a cash drain. Investing activities used $0.307 million; financing activities used $0.159 million.
Outlook, risks, and other notable items
The company provided no specific earnings or revenue guidance. Management said existing cash, working capital, unused credit availability, and operating earnings were expected to meet working-capital needs for the next twelve months, while noting it may raise debt or equity to pursue business needs or growth opportunities. The filing warns that results may be affected by cyclical energy-market demand, continued oil-price weakness, project delays or cancellations, foreign-joint-venture performance, currency movements, and copper, steel, and aluminum costs. Management said it sought to recover material-cost increases through contract pricing; it did not report commodity hedges.
The AAT discontinued operation had no income or loss in Q1 2015, compared with a $0.268 million loss in Q1 2014. AAT’s remaining held-for-sale real estate was carried at $0.650 million. Foreign-currency translation reduced accumulated other comprehensive income by $0.147 million in Q1 2015. The company reported no material change in risk factors, no material legal-proceeding impact expected, effective disclosure controls, and no defaults on senior securities.
Important facts for investors to verify
- Confirm that this American Electric Technologies filing is the intended issuer; the request identifies Stabilis Solutions, Inc.
- Assess backlog composition, cancellation and postponement exposure, and the expected timing of the approximately 80% scheduled for 2015 revenue.
- Review liquidity after the April $1.5 million revolver draw, borrowing-base availability, debt covenants, and term-loan amortization and interest terms.
- Evaluate the carrying value and potential sale timing of the remaining AAT real estate, and the performance and cash-distribution capacity of the foreign joint ventures.
- Consider that quarterly results are unaudited and may not indicate full-year performance; the company also identified the forthcoming revenue-recognition standard as under evaluation.