Stabilis Solutions, Inc. (SLNG) is a prominent player in the energy transition industry, offering a comprehensive suite of clean energy production, storage, transportation, and fueling solutions to diverse end-markets. With over two decades of operational experience, the company has established itself as a trusted partner for clients seeking reliable and environmentally-friendly energy alternatives.
Business Overview and History
Stabilis Solutions was founded in 2013 with a clear vision - to provide turnkey clean energy solutions using liquefied natural gas (LNG) to a wide range of industries. Over the past 21 years, the company has safely delivered over 530 million gallons of LNG through more than 55,000 truck deliveries, making it one of the largest and most experienced small-scale LNG providers in North America.
In its early years, Stabilis focused on building and operating cryogenic natural gas processing facilities, or liquefiers, to convert natural gas into LNG. The company also developed transportation and logistics services to deliver LNG to customer locations. As part of its growth strategy, Stabilis expanded its operations across the United States, as well as into northern Mexico and western Canada, leveraging its LNG production and distribution expertise.
Over time, Stabilis diversified its customer base and end markets beyond its initial focus. The company now serves customers in aerospace, agriculture, energy, industrial, marine bunkering, mining, pipeline, remote power, and utility industries. This diversification has helped the company navigate challenges in specific end markets. For instance, in 2020 and 2021, Stabilis faced headwinds in the oil and gas industry, which impacted some of its customers, but was able to offset this with growth in other sectors.
Throughout its 21-year operating history, Stabilis has successfully overcome various challenges, including building and operating LNG infrastructure, developing relationships with a diverse customer base, and managing commodity price risk. The company's ability to adapt and execute on its strategy has allowed it to become a leading provider of small-scale LNG solutions in North America.
Stabilis' core business revolves around the production, transportation, and supply of LNG to customers in various sectors. The company operates two liquefaction facilities - one in George West, Texas with a capacity of 100,000 LNG gallons per day, and another in Port Allen, Louisiana with a capacity of 30,000 LNG gallons per day. In addition, Stabilis owns and operates a fleet of over 160 mobile LNG storage and vaporization assets, making it one of the largest small-scale LNG equipment fleets in North America.
Product Segments
Stabilis Solutions operates through four main product segments:
1. LNG Product Revenues: This segment represents the sale of LNG from both produced and purchased sources, as well as the transportation performed to deliver the LNG to customers' locations. LNG Product revenues are recognized upon delivery of the LNG to the customer. In fiscal year 2024, this segment accounted for $57.35 million or 78.3% of total revenues.
2. Rental Revenues: This segment generates revenue from the rental of cryogenic equipment to customers. Rental revenues are based on day rates or monthly rates for the use of equipment. In 2024, Rental revenues were $7.27 million, representing 9.9% of total revenues.
3. Service Revenues: This segment provides engineering and field support services, including support for mobilization and demobilization of equipment at customer sites and onsite technical support. Service revenues totaled $7.44 million in 2024, accounting for 10.1% of total revenues.
4. Other Revenues: This category includes items that are disaggregated from the main product segments, such as expenses incurred by the company on behalf of the customer that are contractually rebilled on a cost-plus basis. Other revenues contributed $1.23 million or 1.7% of total revenues in 2024.
Financial Performance and Ratios
Stabilis Solutions has demonstrated strong financial performance in recent years. For the full year 2024, the company reported total revenues of $73.3 million, a slight increase of 0.2% compared to 2023. Importantly, the company saw an 8 million gallon increase in LNG gallons delivered to customers in 2024. This volume growth was partially offset by lower natural gas commodity prices, which the company passed through to customers.
The company's profitability has also improved, with full-year 2024 net income reaching $4.6 million, compared to $125,000 in 2023. Adjusted EBITDA, a key metric for the company, grew significantly to $11.8 million in 2024, up from $6.8 million in the prior year. The Adjusted EBITDA margin also expanded to 16.1% in 2024, compared to 9.3% in 2023.
Financials
Key Financial Metrics:
- Revenue (2024): $73.3 million
- Net Income (2024): $4.6 million
- Adjusted EBITDA (2024): $11.8 million
- Adjusted EBITDA Margin (2024): 16.1%
- Operating Cash Flow (2024): $13.69 million
- Free Cash Flow (2024): $4.55 million
In the most recent quarter (Q4 2024), Stabilis reported revenue of $17.29 million and net income of $2.10 million. The company saw significant growth in key segments, with aerospace revenues increasing 35% year-over-year, power generation revenues growing 23%, and marine bunkering revenues surging over 500% compared to the previous year.
Liquidity
Stabilis' balance sheet remains strong, with $9.0 million in cash and cash equivalents and $4.3 million of available liquidity under its credit facilities as of December 31, 2024. The company's net debt to trailing twelve-month adjusted EBITDA ratio stood at just 0.03x, indicating a very low leverage position.
Key Liquidity Metrics:
- Cash and Cash Equivalents (December 31, 2024): $9.0 million
- Available Liquidity (December 31, 2024): $4.3 million
- Net Debt to Adjusted EBITDA (December 31, 2024): 0.03x
- Debt/Equity Ratio: 0.14
- Current Ratio: 1.50
- Quick Ratio: 1.47
Geographic Performance
Stabilis Solutions operates primarily in the United States, which accounted for 94% of 2024 revenue. The company also has operations in Mexico, contributing 6% of 2024 revenue.
Growth Initiatives and Outlook
Stabilis Solutions is focused on expanding its presence in several high-potential markets, including marine bunkering, aerospace, and distributed power solutions. In 2024, the company invested the majority of its capital expenditures, totaling $9.2 million, to support growth initiatives, with a particular focus on expanding its infrastructure and capabilities along the U.S. Gulf Coast.
The company's marine bunkering business has been a standout performer, with revenues growing by over 500% year-over-year in the fourth quarter of 2024. Stabilis attributes this growth to a large contract it secured in late 2023 to deliver an estimated 22 million gallons of LNG per year to a major cruise industry customer. The company believes the marine bunkering market represents a significant growth opportunity as more vessels adopt LNG as a primary fuel source.
In the aerospace sector, Stabilis has contracts to supply high-purity LNG propellant to two leading commercial space exploration companies. The company sees ongoing demand from this industry as the private rocket launch sector continues to expand.
Stabilis' distributed power solutions, which provide LNG-based power generation for various applications, including data centers, microgrids, and remote power, also represent a key focus area for the company's future growth.
The company remains committed to a strategy that prioritizes operational efficiency and disciplined capital allocation. Stabilis estimates that it would take between $20 million and $25 million to finish construction on an additional liquefaction train it purchased in 2023 and relocated to its George West facility. If deployed, this expansion could create between $10 million and $15 million of additional gross margin.
Industry Trends
The small-scale LNG industry is expected to grow at a compound annual growth rate (CAGR) of around 10-15% over the next 5 years. This growth is driven by increasing adoption of LNG as a cleaner fuel source across various end-markets such as marine, aerospace, and distributed power.
Risks and Challenges
As with any energy-related business, Stabilis Solutions faces various risks and challenges, including commodity price volatility, regulatory changes, and competition from alternative fuel sources. The company's success is also dependent on its ability to secure and execute on new customer contracts, as well as its capacity to efficiently operate its liquefaction facilities and logistics infrastructure.
Furthermore, Stabilis' business is subject to various environmental, health, and safety regulations, which could result in increased compliance costs or operational restrictions if not properly managed.
Management Transition
In January 2025, Stabilis announced a transition in its leadership team. Westervelt T. "Westy" Ballard, Jr. stepped down as President and CEO, and J. Casey Crenshaw, the company's Executive Chairman and a majority shareholder, assumed the role of interim President and CEO. This management change was described as a mutual decision between Mr. Ballard and the Board of Directors as Stabilis embarks on its next phase of strategic growth.
Mr. Crenshaw, who co-founded Stabilis in 2013, has a deep understanding of the company's operations and growth opportunities. The Board of Directors has initiated a search for a permanent CEO to lead the company forward.
Conclusion
Stabilis Solutions, Inc. (SLNG) has established itself as a leading provider of clean energy solutions, leveraging its expertise in LNG production, transportation, and distribution to serve a diverse array of industries. The company's strong financial performance, low-leverage balance sheet, and focus on high-growth markets, such as marine bunkering and aerospace, position it well to capitalize on the ongoing energy transition. While risks and challenges remain, Stabilis' proven operational capabilities and experienced management team suggest the company is well-equipped to navigate the evolving energy landscape and deliver long-term value for its shareholders.