Executive Summary / Key Takeaways

• Strategic Pivot to High-Growth End Markets: Stabilis Solutions is strategically focused on marine bunkering, aerospace, and distributed power generation (including data centers and AI), which are poised for significant multi-year demand and represent the company's most promising long-term growth opportunities.
• Integrated Last-Mile LNG Solutions as a Core Differentiator: The company's unique value proposition lies in its turnkey clean energy production, storage, transportation, and fueling solutions using LNG, supported by its owned liquefaction plants, extensive mobile cryogenic equipment fleet, and engineering expertise, enabling flexible and reliable supply where traditional infrastructure is lacking.
• Strong Financial Foundation and Liquidity for Expansion: Stabilis reported a record liquidity position of \$16.1 million and a net cash position as of Q2 2025, providing significant balance sheet flexibility to fund future growth initiatives and planned capacity expansions.
• Capacity Expansion Underway, Tied to Long-Term Contracts: The company is actively pursuing long-term offtake agreements to underpin final investment decisions for additional liquefaction capacity, including a quicker deployment at its George West facility and a larger Gulf Coast liquefier, signaling an acceleration in capital commitments.
• Competitive Edge in Niche, Specialized Markets: Stabilis leverages its operational agility and integrated service model to compete effectively against larger, more diversified energy infrastructure players and specialized fuel providers, aiming for a first-mover advantage in key regional growth areas like Gulf Coast marine bunkering.

The Energy Transition's Last Mile: Stabilis Solutions' Strategic Blueprint

Stabilis Solutions, Inc. (NASDAQ:SLNG) stands at a pivotal juncture in the global energy transition, carving out a specialized niche as a provider of "last-mile" liquefied natural gas (LNG) solutions. Founded in 2013, the company recognized a fundamental market gap: industries eager to adopt LNG as a cleaner, more cost-effective fuel often lacked reliable local supply. Over a decade, Stabilis has evolved into a comprehensive platform, offering turnkey production, storage, transportation, and fueling services that bridge this critical infrastructure gap. This strategic focus positions Stabilis at the forefront of supplying energy to dynamic, high-growth sectors where traditional pipeline access is either unavailable, interrupted, or insufficient.

The broader energy landscape is undergoing profound shifts, driven by escalating demand for reliable power and cleaner fuels. The surge in artificial intelligence (AI) and data centers, for instance, is creating an unprecedented need for electricity, often in locations where grid infrastructure struggles to keep pace. Simultaneously, the marine industry is increasingly adopting LNG as a cleaner bunker fuel, while the commercial aerospace sector relies on it as a primary rocket propellant. These macro trends create a fertile ground for Stabilis, whose core business model is designed to address precisely these distributed, high-demand energy requirements.

In this competitive arena, Stabilis faces a diverse set of players. Larger energy infrastructure companies like Kinder Morgan, Inc. (KMI) dominate pipeline networks, while specialized alternative fuel providers such as Clean Energy Fuels Corp. (CLNE) focus on transportation. New Fortress Energy (NFE) and Excelerate Energy (EE) operate on a larger, often international, scale with significant infrastructure development. Stabilis differentiates itself through its operational agility and integrated service model, which combines LNG supply with essential logistical and technical support. This allows the company to offer tailored, comprehensive solutions that larger, more rigid competitors may struggle to provide efficiently for localized or specialized projects. For instance, in the nascent Gulf Coast marine bunkering market, Stabilis aims to secure a first-mover advantage, leveraging its regional expertise and flexible asset deployment.

Technological Edge and Operational Prowess

Stabilis's competitive moat is built not on a single patented material, but on its integrated technological infrastructure and operational expertise. The company owns and operates two liquefaction plants: one in George West, Texas, capable of producing up to 100,000 LNG gallons per day, and another in Port Allen, Louisiana, with a capacity of 30,000 LNG gallons per day. This owned capacity is complemented by strategic supply arrangements with over 30 third-party liquefiers across North America, providing significant supply flexibility and scalability.

Crucially, Stabilis operates one of North America's largest fleets of small-scale LNG equipment. This includes mobile LNG storage and vaporization assets such as transportation trailers, electric and gas-fired vaporizers, ambient vaporizers, storage tanks, and mobile vehicle fuelers. This mobile fleet is a cornerstone of its "last-mile" strategy, enabling efficient and rapid delivery and deployment to diverse customer locations, a tangible benefit over fixed infrastructure alternatives. For investors, this means the company can quickly respond to demand spikes and serve remote sites, translating into higher asset utilization and potentially stronger margins on bundled services. The company's engineering and field support services further enhance this offering, providing the human capital and technical know-how to optimize LNG use at customer sites. For specialized applications like aerospace, the company's ability to meet stringent quality requirements for rocket propellants further underscores its technical capabilities.

In a significant strategic move, Stabilis received authorization from the U.S. Department of Energy (DOE) in Q3 2022 to export domestically produced LNG to both free trade and non-free trade countries. This authorization, for up to 51.75 billion cubic feet per year (approximately 1 MTPA) over a 28-year term (with 25 years remaining), has already seen initial deliveries to Europe in Q3 2024. This international reach expands Stabilis's addressable market significantly, allowing it to capitalize on global demand for U.S.-sourced natural gas, which customers value for its relative price stability compared to volatile world markets.

Financial Performance and Strategic Momentum

Stabilis's recent financial performance reflects a strategic shift towards its high-growth end markets, even as overall revenues experienced some near-term fluctuations. For the second quarter of 2025, revenues decreased 7% year-over-year to \$17.3 million, primarily due to the successful completion of a large, short-duration industrial project in the prior year. However, this decline was partially offset by robust growth in the company's key focus sectors: marine, aerospace, and power generation revenues collectively increased by 15% year-over-year. Aerospace revenues alone surged by 83% in Q2 2025, and more than doubled in the first half of 2025 compared to the same period in 2024, signaling strong momentum in this specialized market.

Adjusted EBITDA for Q2 2025 was \$1.5 million, down from \$2.1 million in Q2 2024, with the margin at 8.6%. This was impacted by the roll-off of the aforementioned short-term contract and a nonrecurring charge of approximately \$0.2 million related to its 40%-owned Chinese joint venture, BOMAY Electric Industries, Inc. Despite these factors, Stabilis generated strong cash flow from operations of \$4.5 million in Q2 2025, contributing to a record liquidity position of \$16.1 million at quarter-end, comprising \$12.2 million in cash and \$3.9 million in credit facility availability. With total debt and lease obligations of \$8.4 million, Stabilis ended the quarter in a net cash position, providing substantial flexibility for future capital deployment.

Looking at the six months ended June 30, 2025, total revenues decreased 10% to \$34.6 million compared to the prior year. This was largely driven by a \$3.6 million decrease in LNG product revenues due to fewer gallons delivered, and a \$2.3 million decrease across rental, service, and other revenues. These declines were partially mitigated by a \$2.5 million increase in revenues from higher natural gas prices, which are passed through to customers. Selling, general, and administrative expenses increased by \$1.3 million, primarily due to \$2.1 million in nonrecurring executive transition costs related to the mutual separation of the former CEO, Westervelt T. Ballard, Jr., and the appointment of J. Casey Crenshaw as Executive Chairman and interim President and CEO effective January 31, 2025.

For the full year 2024, Stabilis demonstrated operational strength, with revenues of \$73.3 million, a slight increase from 2023. Critically, gallons delivered to customers increased by over 8 million gallons, though this volume growth was offset by lower natural gas commodity prices passed through to customers. Full-year Adjusted EBITDA reached \$11.8 million, up significantly from \$6.8 million in 2023, reflecting improved operational efficiency. The company generated \$13.7 million in cash from operations in 2024, converting over 100% of its EBITDA into cash. This robust cash generation allowed Stabilis to invest over \$7 million of its \$9.2 million in capital expenditures towards growth initiatives, including the relocation of an LNG train to its George West facility and expanded storage capacity in Q4 2024, in anticipation of future demand.

Outlook, Growth Initiatives, and Risks

Stabilis's outlook is firmly anchored in its commitment to scaling alongside its customers in the marine, aerospace, and distributed power markets. Management is actively engaged in commercial discussions to secure long-term customer commitments, which are crucial for underpinning final investment decisions on capacity expansion. The company expects an acceleration in capital commitments as these new customer contracts materialize.

A key growth initiative involves the deployment of an additional liquefaction train. If installed at the George West facility, this expansion is estimated to cost between \$20 million and \$25 million and could be completed within nine to twelve months, making it the quickest path to bringing new capacity online. This additional capacity could generate an estimated \$10 million to \$15 million in additional gross margin. Beyond George West, Stabilis is also undertaking front-end engineering and design studies for a larger, "on-the-water" liquefaction facility on the Gulf Coast. This project, specifically aimed at supporting the burgeoning marine bunkering market, would require substantial multi-year offtake agreements to secure project financing.

In the distributed power generation market, Stabilis is seeing increased interest in LNG as a bridge and backup fueling solution for data centers and other energy-intensive infrastructure. While this opportunity is in its early stages, the projected long-term growth in electricity demand creates a broad range of use cases for Stabilis's flexible LNG solutions. The company can leverage its existing mobile equipment fleet and third-party supply network to address these needs across the United States.

However, investors should be mindful of certain risks. Changes in U.S. trade policy, including tariffs, pose a potential threat, although the majority of Stabilis's sales are domestic, and U.S.-Mexico LNG trade is not currently subject to tariffs. The company's growth trajectory is also dependent on finalizing long-term contracts, and there is no assurance that additional financing for large-scale expansions will be available on favorable terms. Furthermore, while Stabilis aims for a first-mover advantage in certain markets, larger competitors with extensive capital resources could intensify competition.

Conclusion

Stabilis Solutions is strategically positioned to capitalize on the accelerating demand for clean, reliable energy in specialized, high-growth sectors. Its core investment thesis revolves around its unique "last-mile" LNG solutions, leveraging an integrated platform of owned liquefaction assets, a flexible mobile cryogenic equipment fleet, and deep operational expertise. This technological and operational differentiation allows Stabilis to serve critical needs in marine bunkering, aerospace, and distributed power generation, markets characterized by significant long-term tailwinds.

Despite some near-term revenue fluctuations tied to the completion of past projects, the company's consistent cash flow generation, strong liquidity, and net cash position provide a robust financial foundation for its ambitious growth plans. As Stabilis works to finalize transformative long-term contracts, particularly in the marine sector, and brings additional liquefaction capacity online, it stands to unlock substantial value. The company's ability to convert its strategic vision into concrete project awards and capacity expansions will be the critical determinant of its success in becoming the partner of choice in these dynamic energy transition markets, offering investors a compelling opportunity in a specialized segment of the energy sector.