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DATE
Thursday, May 7, 2026 at 9 a.m. ET
CALL PARTICIPANTS
- Executive Chairman, Interim President, and CEO — J. Casey Crenshaw
- Senior Vice President and CFO — Andrew Lewis Puhala
TAKEAWAYS
- Revenue -- $10.4 million, representing approximately a 40% decline due to completed large multiyear contracts in marine and behind-the-meter power generation segments.
- LNG Gallons Sold -- Decreased by 41%, primarily reflecting loss of volume from the completed contracts.
- Adjusted EBITDA -- Negative $700 thousand, versus positive $2.1 million in the prior-year period; decrease attributed to the contract completions.
- Vessel Charter Costs -- Adjusted EBITDA excludes $1.5 million of vessel lease costs linked to a non-Jones Act vessel; these continued to impact cost of revenue and are expected to be excluded as extraordinary once subcharter is finalized.
- Cash Flow from Operations -- $12.4 million, including $15 million in customer advance payments restricted for the upcoming large data center contract.
- Total Liquidity -- $17.2 million at quarter end, composed of $13.7 million in cash ($10.6 million restricted) and $3.5 million in credit availability.
- Capital Expenditures -- $5.3 million, primarily for equipment and preparation relating to the data center project set to begin in 2027.
- Additional Capital Commitment -- Management expects $10 million to $12 million in further equipment-related investments tied to the same project, funded by advance customer payments.
- Galveston LNG Project -- The company terminated an offtake agreement after a customer declined to modify terms during financing negotiations, delaying progress but leaving the broader project intact and ongoing.
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RISKS
- The 40% year-over-year revenue decline and negative adjusted EBITDA were explicitly attributed to the loss of two large multiyear contracts, which management described as a “near-term revenue and earnings headwind.”
- Management confirmed that the failure to secure financing-related amendments resulted in the termination of a key offtake agreement for the Galveston LNG facility, further delaying the project timeline.
- $1.5 million in vessel charter costs, linked to a marine contract now completed, will continue to affect cost of revenue until a subcharter agreement is finalized, expected in the second quarter.
SUMMARY
Stabilis Solutions (SLNG 7.66%) reported a sharp year-over-year contraction in both revenue and LNG volumes, primarily driven by the conclusion of two large contracts in marine and power generation sectors. Management highlighted that new contract awards and an active commercial pipeline provide visibility to a performance rebound in the second half of the year, with material contribution from commissioning projects and a significant $200 million data center contract commencing in 2027. The Galveston LNG project remains a strategic priority despite a terminated offtake agreement and a delayed timeline. Advancing aerospace market penetration and distributed power applications were cited as additional growth levers supporting long-term recovery and expansion.
- The commissioning contract set to launch at the end of the second quarter is described as “This is more of a commissioning project, which is normally a six- to twelve-month effort that we anticipate starting up at the end of the second quarter of this year and running through the end of the year,” focused on behind-the-meter power for a U.S. data center.
- Management stated, “we anticipate being able to replace that on the P&L, and that is before we get into the contracted demand starting in Q1 of next year, which is meaningful in size as well,” framing the current period as a temporary low.
- Crenshaw clarified that current and upcoming data center projects do not utilize in-house George West production capacity, allowing for top-line growth without internal bottlenecks.
- The company reported ongoing progress toward subchartering its non-Jones Act vessel, with the CEO noting the Iran war caused “disruption in the timing of our subcharter of the vessel and potential short delays for construction.”
- Third- and fourth-quarter expectations include increased utilization at internal LNG production facilities, approaching previous volume levels but stopping short of full utilization.
INDUSTRY GLOSSARY
- Behind-the-Meter Power: On-site generation or backup power systems serving industrial or data center loads, bypassing the traditional utility grid.
- LNG Bunkering: Supplying liquefied natural gas as marine fuel to ships, typically via special port-side facilities or vessels.
- Jones Act Vessel: A ship meeting specific U.S. ownership, construction, and documentation criteria required to engage in domestic marine trade.
- Commissioning Power: Temporary energy supply—often natural gas or LNG—used during the testing and startup phases of large-scale industrial or infrastructure projects.
- Bridge Power: Interim power generation solution used until permanent grid connection or fuel supply is available.
Full Conference Call Transcript
Andrew Lewis Puhala: Good morning, and welcome to the Stabilis Solutions, Inc. first quarter 2026 results conference call. I am Andrew Lewis Puhala, Senior Vice President and CFO of Stabilis Solutions, Inc., and joining me today is our Executive Chairman, and Interim President and CEO, J. Casey Crenshaw. We issued a press release after the market closed yesterday detailing our first quarter operational and financial results. This release is publicly available in the Investor Relations section of our corporate website at stabilissolutions.com. Before we begin, I would like to remind everyone that today’s 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 expectations and beliefs as of today, 05/07/2026. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected. The company undertakes no obligation to provide updates or revisions to the forward-looking statements made in today’s call. Additional information concerning factors that could cause those differences is contained in our filings with the SEC and in the press release announcing our results. Investors are cautioned not to place undue reliance on any forward-looking statements. Further, please note that we may refer to certain non-GAAP financial information on today’s call.
You can find reconciliations of the non-GAAP financial measures to the most comparable GAAP measures in our earnings press release. Today’s call is being recorded and will be available for replay. With that, I will hand the call over to J. Casey Crenshaw for his remarks.
J. Casey Crenshaw: Thank you, Andy, and good morning to everyone joining us today. Our first quarter results reflect the expected transition following the completion of two large multiyear contracts at the end of 2025 that were in our marine and behind-the-meter power generation markets. As anticipated, that created a near-term revenue and earnings headwind in the quarter. At the same time, we continue to see strong demand in the quarter for aerospace and emerging power generation opportunities for additional data center work. While our financial results were soft during the transition period, our commercial activity remains very encouraging.
Demand for small-scale LNG and integrated last-mile delivery solutions continued to grow, and our commercial teams are actively engaged with both existing and prospective customers across multiple end markets. Importantly, the contracts already awarded to us combined with our active pipeline of opportunities provide us with increasing visibility into improved performance as we move through the balance of 2026. Based on expected contract startups later this year and advanced commercial discussions underway, we expect results to improve meaningfully in the second half of 2026, even before the expected 2027 startup of the large data center contract we announced earlier this year.
As a reminder, the data center award is an estimated $200 million minimum two-year contract to support behind-the-meter power generation for a U.S. data center. While delivery is expected to begin in 2027 and continue through 2029, we view this award as a strong validation of Stabilis Solutions, Inc.’s platform and a meaningful step forward in our participation in the rapidly growing distributed power market. The accelerating demand for behind-the-meter power, bridge power, commissioning support, and durable energy infrastructure is creating a clear need for flexible, reliable LNG solutions. This is where Stabilis Solutions, Inc. is especially well-positioned.
Our value proposition is not simply LNG supply; it is the ability to deliver a complete solution, including sourcing, logistics, storage, regasification, and last-mile reliability in environments where customers need dependable energy infrastructure quickly. A key advantage of our model is that we are not limited solely by the capacity of our own liquefaction facilities. Our multi-source LNG supply model allows us to serve customers across regions of the United States by combining our own production assets with third-party supply arrangements, logistics capabilities, and mobile infrastructure. This scalability is critical as we pursue larger opportunities in data center, aerospace, marine markets, and industrial applications. Within the aerospace market, demand remained strong.
Activity among commercial space customers continues to grow, and we are seeing increased engagement with current customers as launch activity and LNG requirements expand. We continue to believe aerospace represents a long-term growth opportunity for Stabilis Solutions, Inc., supported by our ability to provide high-purity LNG, reliable delivery, and fit-for-purpose solutions for customers with demanding technical requirements. Turning to our Galveston LNG project, as we announced last month, we elected to terminate an offtake agreement for our proposed Galveston LNG facility. During negotiations with prospective financing partners, we were asked to amend the offtake agreement to facilitate the financing. The customer did not agree to the requested modification and we elected to terminate the agreement.
While this development has delayed the project timeline, I want to be clear that we remain committed to pursuing the Galveston LNG project. We are in active discussions with other potential customers to sell the available capacity. We also continue to express support for the project. Galveston LNG remains an important component of our long-term value creation strategy, particularly as we look to serve durable multiyear demand in the Port of Galveston and the broader Gulf Coast marine market. At the same time, it is important to emphasize that the Galveston project is only one part of our growth strategy.
We continue to see significant organic growth opportunities across our existing platform, including distributed power for data centers, fuel for aerospace, and LNG for industrial applications. As we look ahead, we believe that 2026 is a temporary low for the business as we move through this transition period and prepare for the ramp-up of new contracts and opportunities beginning in 2026. The demand environment remains strong, our customer engagement is active, and our awarded contracts provide a foundation for recovery in 2026 and substantial growth in 2027. We remain focused on converting current and future demand into sustainable, profitable growth while maintaining financial discipline and creating long-term value for our shareholders.
We believe Stabilis Solutions, Inc. is well-positioned across multiple high-growth end markets, and we look forward to updating you on our progress in the quarters ahead. With that, I will turn the call over to Andy for a detailed review of our financial performance.
Andrew Lewis Puhala: Thank you, Casey. I will begin with a discussion of our first quarter performance, followed by an update on our balance sheet, cash flow, liquidity, and capital spending. First quarter revenue was $10.4 million, a decrease of approximately 40% compared to 2025. The year-over-year decline was driven primarily by a 41% decrease in LNG gallons sold and lower rental and service revenue, partially offset by a slight increase in the underlying commodity price. At an end-market level, there were no revenues from marine customers during the quarter, and revenues from behind-the-meter power generation were not material due to the completion of the large multiyear contracts late last year.
This was partially offset by continued growth in our aerospace and other legacy markets, where revenues increased [inaudible], respectively, compared to 2025. Adjusted EBITDA was negative $700 thousand in the first quarter compared to a positive $2.1 million in the prior-year period. The decrease was primarily attributable to the completion of the two large multiyear contracts. I would also note that our adjusted EBITDA for the first quarter excludes approximately $1.5 million of vessel charter costs incurred during the period. These costs relate to the lease of a non-Jones Act vessel that we entered into in 2025 in anticipation of supporting logistics requirements of our previously completed marine bunkering contract. We are currently working to fully subcharter this vessel.
In the interim, we are leasing it back to the lessor at a reduced cost. Until a subcharter agreement is finalized, which we expect during the second quarter, our cost of revenue will continue to reflect these lease expenses, which we expect to exclude from adjusted EBITDA as an extraordinary item. Turning to cash flow and liquidity, cash flow from operations was $12.4 million for the quarter. This included $15 million of advance payments from a customer associated with our behind-the-meter data center contract scheduled to begin in 2027. These payments are restricted to support equipment and other preparations for that project.
At quarter end, total liquidity was $17.2 million, consisting of total cash of $13.7 million, of which $10.6 million is restricted, and $3.5 million of availability under our credit agreements. Capital expenditures totaled $5.3 million during the quarter. These expenditures were primarily related to equipment purchases associated with our upcoming large data center project. Looking ahead, we expect to invest an additional $10 million to $12 million in capital for equipment and securing guaranteed supply for this project. We expect these investments to be funded through the advance payments received during the first quarter as well as additional advance payments we expect to receive over the course of the year. That concludes our prepared remarks.
We will now open the call for questions.
Operator: We will take our first question from an Analyst with Johnson Rice.
Analyst: Good morning. The first question I had, I wanted to talk a little bit about the contracts that you are finalizing here that could start up in 2Q, but it sounds like they will definitely impact the second half of this year from behind-the-meter power. Could you talk about the size of those, for the two contracts that were canceled in the fourth quarter last year? And also, with behind-the-meter power, is this going to be a bridge-type arrangement until pipeline is hooked up to these facilities, and then is there the opportunity for backup-related contracts later on?
J. Casey Crenshaw: Good morning, and thank you for joining today. Let me try to take on what are really two questions. First, on the type of contract for distributed power, we really talk about that being either commissioning power, bridge power, or more permanent backup related to behind-the-meter applications and distributed power. This is more of a commissioning project, which is normally a six- to twelve-month effort that we anticipate starting up at the end of the second quarter of this year and running through the end of the year. We do anticipate, with the work we have commitments around, being able to replace the contracts that ended at the end of last year during the back half of the year.
Without giving too much in the way of forward-looking statements, we anticipate being able to replace that on the P&L, and that is before we get into the contracted demand starting in Q1 of next year, which is meaningful in size as well.
Analyst: Great. Thank you. And then just on the Galveston LNG project, it sounds like you are active with discussions with offtakers to replace the canceled contract. Is there the possibility that the previous offtaker would return to sign up for offtake, and also are you satisfied with the provisions of the other offtake agreement contracts you have that they will not need to be modified for project financing purposes?
J. Casey Crenshaw: Yes, that is a great question. I will take the last one first. The current offtake agreement we have works well with the project construction timeline and does not create risk on when construction would finish and when startup would happen, so that contract is in good position. Going back to the first question, we highly anticipate this customer that we were required to cancel that contract with coming back and doing business with us in Galveston once we get further down the road or complete the plant.
Whether or not they will be part of the offtake that helps create the financing, or they become a spot market client post construction, we do not know yet, but we are actively working with that client. Timelines and the Iran war and different things happening caused delays and issues around dates and how that would affect financing, which created the need to exit that contract. Thank you.
Operator: Our next question comes from William Dezellem with Tieton Capital.
J. Casey Crenshaw: Good morning, Bill.
William Dezellem: Good morning. I would like to talk a little bit more about the new data center contract. If we understood correctly, you said that was a commissioning contract that will begin in Q2 and basically last through Q4. Did we hear that correctly? And if so, was this a contract that you went direct to the data center, or did you have an intermediary that is taking care of all the power and they have hired you?
J. Casey Crenshaw: Yes. This particular project you are asking about is more of a construction commissioning project. On all of these projects, we work with both the end user and the provider, and we are normally engaged with both. There are numerous projects like this that I would call construction commissioning, and those are normally, the way we view it, six- to twelve-month contracts depending on whether you are just going to commission Phase One or which systems you are going to work on commissioning. That is what this project is anticipated to be. It is different than the one that is starting up next year, which is more of a bridge power solution, longer in duration.
All of these have minimum periods of time with potential extensions related to what is happening on their time schedule, etc.
William Dezellem: Is the magnitude of the original commissioning contract’s monthly revenue similar to what you will have for the monthly revenue from the bridge, and it is simply a shorter period of time? Or is there a difference in the size of these two data centers that makes this very different?
J. Casey Crenshaw: I would say, when you think about the bridge, it is defined by how many megawatts we are providing, and it is consistently provided in a consistent flow. The commissioning project that is starting this quarter and going into the back half of this year is smaller in total megawatt terms and is lower in gallons related to that, but still meaningful in size. What we wanted to present is the expectation of the recovery: kind of the trough in the first and second quarters and then how the recovery of the business goes into 2026. That is what we are trying to highlight for our shareholders and stakeholders.
William Dezellem: That is appreciated, Casey. You mentioned there are many other contracts like this. We all hear of data centers ramping; there is lots of commissioning taking place. Talk to us about the pipeline of opportunities in the data center arena, because over the last few months you have announced two.
J. Casey Crenshaw: Yes, Bill. We are certainly excited about it, and we are optimistic. If you look back about eighteen months, the expectation was that all the power was going to come in on time or early, pipelines would be put in on time or early; and then what has happened are natural delays—construction delays and other factors—creeping into this giant infrastructure buildout that you all know about. As that rolls downhill, first you have the power generation and backup power solutions, and now we are getting to how you provide the natural gas needed to do either commissioning, startup, or bridges.
We are really excited about this commissioning activity because this is where we go in and support the data center commissioning their project—testing all their cooling and other systems—while they are waiting on either the final gas pipeline or the connection to the grid. In a perfect world it is connection to the grid with cheap power that never stops; secondly, behind-the-meter with pipeline. Stabilis Solutions, Inc. can participate in providing either commissioning, backup, or bridge, and that is what we are working around. We are seeing more commissioning activity in the first quarter of this year. That is where the activity is with our customers, with some people talking about the longer-term bridge.
But the longer-term bridge is not the perfect solution for the client, so there is less activity there relative to six- to twelve-month commissioning activity. We have a number of those we are working on.
William Dezellem: Essentially, we have come to this point because of delays. One way to think about these commissioning opportunities is that they may be ready to go live after testing, say in the fourth quarter, but if the grid or the pipeline is not ready, then your commissioning contract converts to a bridge contract. Is that likely?
J. Casey Crenshaw: That is a good way to think about it. Another way to think about it is that their commissioning may be in modular formats; they may get power connected to one of the modular concepts and then move into the next phase of commissioning the next center nearby, because it is normally in groups or hubs. We do not expect it to be just a short-term situation. Secondly, you are going to have outages and other backup needs to continue with the reliability that they are committing to, and that will provide additional work for LNG long beyond the construction and bridge phases.
Think of them as modular—80 megawatts, 50 megawatts, 100 megawatts—building modular, stacked up around each other, and we are providing unit work for units in the system.
William Dezellem: One question relative to the subchartering of the vessel. What is the timeline you expect that to happen?
J. Casey Crenshaw: Good question. We initially chartered that to support our client in Galveston. We ended up, for a number of reasons, with them going to a different solution. We anticipated a very quick subcharter capability with that vessel, but the Iran war disrupted rechartering activity and put a delay on it. We anticipate it happening in the second quarter for an effective date in the third quarter. We do not expect the subcharter to be at a big profit, so we expect it to be net neutral.
Operator: We will go next to an Unknown Speaker, a private investor.
Unknown Speaker: Good morning, guys.
J. Casey Crenshaw: Good morning. How are you doing?
Unknown Speaker: Pretty good. Just a couple of questions, if I may. First, with oil and LNG getting backed up, there is a lot of talk about some of these countries coming into the Gulf of America and picking up their oil and LNG. Are you currently in a position to capitalize on that development?
J. Casey Crenshaw: Yes. We appreciate the question. We have never seen a macro for our Galveston LNG bunkering—reliable, consistent supply there for marine bunkering activity—being better than it is today. Though the conflict has caused some disruption in the timing of our subcharter of the vessel and potential short delays for construction, the macro around it is amazingly strong. It validates why we need more LNG, fit-for-purpose bunkering capacity on the water in the Gulf Coast. Our customers know that, and our commercial team is working hard on it. The duration of contract, credit quality, and how that matches with project financing are the things we are working on right now.
Validation of the need for the project with a Jones Act vessel in the Houston Ship Channel is not in question. The conflict and the price of LNG also further our fit-for-purpose supply for aerospace and the value of what these aerospace customers are doing with telecommunications and other technologies. This further reinforces the need for U.S. presence to be successful in aerospace. Lastly, it reiterates that the price of U.S. natural gas and LNG for behind-the-meter power for AI data center activity is advantaged versus globally priced data centers.
We have an advantage now, and given oil and LNG prices globally on a TTF or JKM basis, it further makes U.S. data centers more competitive when they are either on-grid power, pipeline, or LNG. It reiterates the thesis of all three of our growth legs. We are not reporting a great quarter—we do not want to gloss over that—but we are excited about the back half of the year and next year, and about marine, aerospace, and behind-the-meter power. We are working very hard on our Galveston LNG bunkering project, and we are equally excited about aerospace and behind-the-meter power.
Unknown Speaker: That segues into my second question. Andy, I think you are still in charge of IR. With all that is happening now—and the data center stuff was all over Fox Business this morning—it is such a hot item. Is this a time to get on the radar a little bit with your story? Any plans for it? You are really becoming an AI company—without overhyping it—any plans to get the story out?
J. Casey Crenshaw: We are starting this morning by talking about what is contracted and what we are doing on commissioning and bridge—different versions of the behind-the-meter power story. We have three growth stories: marine, which is really exciting; aerospace; and behind-the-meter. It is important, as you bring up, that these are three exciting growth platforms where we are delivering advantaged U.S. LNG into the market.
We are communicating what we are doing, and we are hopeful that over time, as we see the growth we are anticipating for next year, and we see the Galveston project come online—moving it to FID, then through construction—we believe people will be able to do the math around what that means and understand the value like we see it. We cannot force people to believe in it to the same level that we do; we can only communicate what we are up to. I will now turn it over to Andy for additional comments on investor relations.
Andrew Lewis Puhala: Thanks for the question. Philosophically, our number one priority is to demonstrate this in the results of the business—grow the top line, grow profitability—and then the stock price takes care of itself. That is number one. Number two, we do intend to get out there and do more in terms of telling the story as we get more exciting things to talk about. We think it is important both to deliver the results and to make sure we are communicating them. From a corporate governance perspective, we continue to file and keep the company positioned appropriately around that.
Operator: We will take our next question from an Analyst with ID Capital.
Analyst: I would like to follow up on the data center commissioning. Is this the same data center as the one where you are doing the bridge?
J. Casey Crenshaw: No. It is a completely different project, different region, and different customer.
Analyst: Will this commissioning use George West capacity or third parties?
J. Casey Crenshaw: We can always do both. It is the benefit of having your own supply for backup and reliability to make sure you can deliver. This project is not an offtake as the primary source. Neither of these are. A lot of our own offtake is being drawn into both industrial projects and aerospace. That is how we think about the mix right now.
Andrew Lewis Puhala: The great thing about both of these data center projects is that they are not using George West molecules, so it does not absorb all our capacity. It allows us to grow the top line and continue to grow the business without having to wait on expansion of internal production capacity. It is great for that reason as well.
Analyst: Will the same third-party power provider be the one that contracted you for the bridge power with the other data center?
J. Casey Crenshaw: We work with numerous power providers and numerous data center end users. Due to confidentiality and competitive information, we would prefer not to share that level of detail.
Analyst: You mentioned aerospace activity and strength there. What is your current estimate on when George West volumes will be completely used again?
J. Casey Crenshaw: We will have some room at George West. We are anticipating getting closer to a consistent offtake—we are not expecting 100% utilization—but moving toward reasonable utilization in the third and fourth quarters of this year. We were significantly off as those two projects ended; they were heavy offtakers of both of our production facilities. We are seeing a steady increase in pull-through and usage and expect that to happen in the third and fourth quarters—not fully utilized, but at levels consistent with what we have seen in the past.
Analyst: When we look at the revenue and earnings profile of current operations, and that is prior to the addition of the new contract for next year, will that contract use George West molecules?
J. Casey Crenshaw: Right now, it does not need to. It will be additional.
Analyst: Thank you both again for taking the extra questions.
J. Casey Crenshaw: We are delighted to do it. Thanks for joining the call.
Operator: This concludes the Q&A portion of today’s call. I would now like to turn the floor over to Andrew Lewis Puhala for closing remarks.
Andrew Lewis Puhala: Thank you, everyone, for joining the call today. We appreciate the interest in the company and the continued support, and we look forward to updating you on our developments as we have them and talking to you again next quarter. Thank you all very much.
Operator: Thank you. This concludes today’s Stabilis Solutions, Inc. first quarter 2026 earnings conference call. Please disconnect your line at this time, and have a wonderful day.
