Stabilis Solutions, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022; unaudited. Stabilis provides LNG production, transportation, equipment rental and fueling solutions, alongside power-delivery equipment and services in Brazil and through its Chinese joint venture, BOMAY.
Financial performance
| Metric | Q1 2022 | Q1 2021 |
|---|---|---|
| Revenue | $23.0 million | $17.7 million |
| Operating income (loss) | $(0.3) million | $0.4 million |
| Net income (loss) | $(0.4) million | $0.2 million |
| Operating cash flow | $2.2 million | $2.6 million |
| Capital expenditures | $0.9 million | $0.3 million |
Revenue increased 30.4%. LNG product revenue rose 43.5% to $16.8 million, reflecting more gallons delivered and higher natural gas prices. Power Delivery revenue grew 79.1% to $2.8 million, attributed to post-COVID demand recovery and new contracts. Rental, service and other revenue fell 21.3% to $3.5 million.
Higher costs outpaced revenue growth: total operating expenses increased 32.6%. LNG product costs were 76% of LNG product revenue, compared with 75% a year earlier. The LNG segment posted a $0.3 million operating loss versus $0.3 million operating income; Power Delivery had a $0.1 million operating loss before equity income. BOMAY equity income fell to $0.1 million from $0.4 million. SG&A rose 31%, principally due to compensation, headcount and stock-based compensation. Basic and diluted loss per share was $0.02, versus earnings per share of $0.01.
Cash and cash equivalents were $2.5 million at March 31, up from $2.1 million at year-end. Net cash increased $0.5 million during the quarter. Current assets were $15.4 million and current liabilities $14.9 million. Debt carrying value was $11.6 million, including current maturities; debt and finance lease obligations together were reported as $12.3 million, of which $2.3 million was due within 12 months. The company was in compliance with debt covenants.
Changes, outlook and risks
- Operating cash flow declined $0.3 million year over year, while investing cash outflow rose to $0.8 million, mainly for rolling stock and gas-distribution equipment. Financing cash outflow was $1.1 million, primarily debt repayment.
- Management cited inflation and higher natural gas, liquefaction and transportation costs as near-term pressures; not all cost increases can be passed to customers. Russia’s invasion of Ukraine may further constrain supply and raise global gas prices. COVID-related restrictions in China adversely affected BOMAY and may disrupt supply chains.
- Management expects positive operating cash flow and available borrowing capacity to fund operations for the next 12 months, while acknowledging there is no assurance. At quarter-end, $2.0 million remained available under the $10 million AmeriState facility; Stabilis drew another $1.0 million in April, leaving $1.0 million available as of the report date.
- Capital expenditures for the remainder of 2022 were estimated at $3.0–$5.0 million, primarily for rolling stock and replacement assets. No earnings or revenue guidance was provided.
- A Form S-3 shelf registration effective April 26 allows issuance of up to $100 million in securities, subject to a public-float limit; management estimated approximately $8–$10 million could be issued over the next 12 months. Issuance could dilute shareholders, and financing is not assured. A separate effective Form S-1 permits resale of 13.4 million existing shares, which could pressure the stock if substantial sales occur.
- Other notable items: 501,334 shares were issued in the quarter, including 500,000 to the former CEO under a separation agreement. The filing reports no material expected environmental compliance expenditure and no legal matters management expects to have a material adverse effect. Disclosure controls were assessed as effective.
Important facts for investors to verify
- Whether LNG pricing and cost controls can restore margins as gas, transportation and liquefaction costs rise.
- Actual cash generation, borrowing availability and debt repayment needs, including the effect of the April draw.
- Whether the $3–$5 million remaining-2022 capital expenditure estimate changes or strains liquidity.
- Potential dilution from future shelf issuance, outstanding equity awards, and selling pressure from registered resale shares.
- Whether China operating restrictions, global supply-chain disruption and BOMAY’s lower earnings persist.
Amounts are rounded; financial-statement figures are in thousands unless otherwise indicated. The filing reclassified $0.5 million of prior-year expenses between SG&A and rental, service and other costs, with no effect on reported income or cash flows.