Stabilis Energy Inc - Registered Shares Stock

Welcome to the Stabilis Solutions Second Quarter 2026 Earnings Call.

[Operator Instructions]

I would now like to turn our call over to Andy Puhala, Chief Financial Officer. Mr. Puhala, please go ahead.

Good morning, and welcome to Stabilis Solutions Second Quarter 2026 Results Conference Call. I'm Andy Puhala, Senior Vice President and CFO of Stabilis. And joining me today is our Executive Chairman and Interim President and CEO, Casey Crenshaw.

We issued a press release after the market closed yesterday detailing our second quarter operational and financial results. This release is publicly available in the Investor Relations section of our corporate website at stabilis-solutions.com.

Before we begin, I'd like to remind everyone that today's conference call will contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. These forward-looking statements are based on the company's expectations and beliefs as of today, August 12, 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'll hand the call over to Casey Crenshaw for his remarks.

Thank you, Andy, and good morning to everyone joining us today. Our second quarter results reflect the building momentum we are seeing across the business. As we discussed on our first quarter call, the first quarter was the low point for the year coming immediately after two of our largest multiyear contracts concluded at the end of 2025. Since then, activity has strengthened meaningfully. Aerospace was particularly strong with LNG volumes sold up 79% year-over-year and 87% sequentially. And our non-power generation-related industrial business volumes grew more than 67% year-over-year as well.

Turning to the balance of the year. We expect results to build steadily from here. As newly awarded contracts come online and we backfill the demand left by those completed agreements, we anticipate incremental improvements in both the third and fourth quarters. A key contributor is a contract we secured during the quarter to supply behind-the-meter LNG to generate power for the commissioning of an additional U.S. data center. Service is expected to begin in the third quarter. And while we currently estimate a six-month term, it could well extend beyond that. Contracts like this underpin our confidence in a stronger second half with revenue and profitability building through the third and fourth quarters and second half revenues expected to increase by more than 50% compared to the first half of 2026.

As of the end of Q2, we have been awarded contracts in two different phases of data center development. First, data center commissioning; and second, providing bridge power during data center operations. Each type of opportunity brings a different profile in terms of length of project and volumes of LNG. We believe there will be significant additional opportunities to participate in these phases as well as opportunities to provide LNG during construction and for use in long-term backup power generation once these data centers are running and connected to a grid or gas pipeline.

As important as the second half of the year is, our sites are increasingly set on 2027. Early next year, we expect to begin deliveries under what will be the largest contract our company has ever secured, a behind-the-meter power generation project to provide bridge power for a U.S. data center that extends into early 2029 and is expected to generate approximately $100 million of revenue annually over its two-year term. Preparations are well advanced. As of the end of Q2, we have received $20 million in customer prepayments to fund equipment, mobilization and readiness. The project remains on schedule, and our team is actively investing in equipment and securing LNG supply to ensure a successful launch.

Our commercial team also continues to bid on additional data center opportunities beyond this award, driven primarily by this contract, we expect company revenues in 2027 to exceed $100 million. Taken together with the balance of our contracted portfolio, we expect 2027 to be a record year for Stabilis in both revenue and profitability.

Let me spend a moment on how we are able to take on projects of this scale. Currently, our power generation contracts are being served largely with third-party provided LNG, which speaks to the core strength of our model. Rather than being constrained by the output of our own liquefaction plant, we can combine our own production, purchase supply, logistics, mobile equipment and our engineering and field service expertise to meet the demand almost anywhere in the country. That flexibility allows us to pursue the largest opportunities without building capacity ahead of them, and it reinforces our position as a leading small-scale LNG provider in the U.S. at a time when data center growth is reshaping domestic energy demand.

Our aerospace business is another area where the momentum is unmistakable. Launch activity among our commercial space customers continues to climb and with it, their demand for LNG, which is driving the volume growth I referenced a moment ago. This is a market where our ability to deliver high-purity product reliability and to engineer solutions around each customer's specific technical requirements truly differentiates us. We continue to view aerospace as one of the most durable long-term growth avenues in our portfolio. So far in 2026, we've provided LNG to three leading rocket launch customers and are in discussions to add a fourth later this year.

Stepping back, let me be direct about where our growth is coming from. Power generation for data centers and aerospace are the two end markets driving the business today. That is where demand is the strongest and where we are winning new business and where we expect the majority of our growth over the next several years. Our asset-light model and flexible balance sheet allow us to scale into demand without overextending ourselves financially.

Let me turn briefly to our Galveston LNG project. We believe our proposed Galveston project is the most shovel-ready, fastest to market, lowest capital cost per gallon small-scale LNG bunkering project anywhere on the Gulf Coast. As we discussed last quarter, the project's time line has been extended, and I want to be candid we are not yet in a position to provide a firm date for a final investment decision. The path forward depends on securing the right commercial offtake and financing structure, and that work remains ongoing. That said, we continue to make meaningful operational progress. In July, the U.S. Coast Guard issued a letter of recommendation on the waterway suitability assessment covering our facility and its associated barge transit routes. This is a meaningful regulatory milestone that validates the safety and navigability of our proposed operations and strengthens our standing as the preferred LNG bunkering option in the Port of Galveston along the Gulf Coast.

In parallel, we continue to engage prospective customers and financing partners as we work toward a final investment decision. Marine bunkering remains an important part of our long-term story, particularly for servicing durable multiyear marine demand in the Port of Galveston and the broader Gulf Coast. At the same time, it is only one part of our much larger growth story, and I would not want its time line to overshadow the momentum building elsewhere. Our existing platform is already delivering meaningful organic growth across power generation for data centers, aerospace and other industrial business, and that is where the bulk of our near-term value creation is coming from.

In summary, we view 2026 as a pivotal year, one in which the business troughed early, recovers through the second half and sets the stage for what we expect to be a record 2027. We are staying disciplined with our capital, focused on execution and squarely committed to converting today's demand into durable profitable growth for our shareholders. We look forward to keeping you updated in the quarters ahead.

With that, I'll turn the call over to Andy for a detailed review of our financial performance.

Thank you, Casey. I'll begin with a discussion of our second quarter performance, followed by an update on our balance sheet, cash flow, liquidity and capital spending.

Second quarter revenue was $11.9 million, a decrease of approximately 31% compared to the second quarter of 2025. As we mentioned in last quarter's call, the year-over-year decline was driven primarily by the completion of large marine and power generation contracts in the fourth quarter of 2025. This was partially offset by continued growth in our aerospace market, where revenue increased 71% compared to the second quarter of 2025, along with continued growth in our other industrial revenues.

Adjusted EBITDA was $0.1 million in the second quarter compared to $1.5 million in the prior year period. I would also note that our adjusted EBITDA for the second quarter excludes approximately $2.9 million of vessel charter costs incurred during the period. These costs relate to the lease of an LNG bunkering vessel that we entered into in the fourth quarter of 2025 in anticipation of supporting the logistics requirements of a marine bunkering customer. This charter was terminated late in the second quarter, and we have excluded these costs from adjusted EBITDA as an extraordinary item as this cost is not reflective of the earnings of the underlying go-forward business. With the charter now terminated, we do not expect any further P&L impact from this vessel beyond what we've reported in the second quarter.

Turning to cash flow and liquidity. Cash flow from operations was $7.1 million for the quarter. This included $5 million of advanced payments for our behind-the-meter data center contract scheduled to begin in Q1 of '27. These payments are restricted to support equipment purchases and other preparations for that project. At quarter end, total liquidity was $18.9 million, including unrestricted cash of $4.5 million and $5 million of borrowing capacity under our revolving credit agreement. Capital expenditures totaled $2.3 million during the quarter. These expenditures were primarily related to equipment and infrastructure purchases associated with the upcoming data center contract as well as engineering and design work for the proposed Galveston LNG facility. Looking ahead, we expect to continue investing capital to secure equipment and guaranteed supply for our data center projects. We expect these investments to be funded through the advanced payments received from customers.

Before we close, let me offer some context on the earnings profile that accompanies the 2027 revenue picture Casey described. We're not providing 2027 guidance today as you think about the business at that scale. First, our corporate infrastructure and fixed cost base are largely in place, and we do not expect them to grow proportionately with revenue as these contracts come online. Second, our asset-light approach allows us to serve this growth largely with third-party LNG, which limits the incremental capital required to support it. The third, our contracts are designed to pass through commodity price risk. Taken together, we would expect a materially larger revenue base in 2027 to translate into meaningful growth in adjusted EBITDA dollars and expansion in our adjusted EBITDA margin to the high teens as project execution accelerates.

That concludes our prepared remarks. Operator, please open the line for the Q&A session.

[Operator Instructions] Our first question is from Martin Malloy, Johnson Rice.

Congratulations on another data center contract. My first question, I wanted to ask about the data center contracts. Could you maybe talk about the revenue and profitability profile and any differences between the contracts for different phases with the data center, whether it be commissioning, bridge and then backup? And I guess, specifically on backup, how would a potential backup contract be structured? Would it be a reoccurring type revenue stream for making equipment and capacity available? Or any commentary you have there would be helpful.

Yes. Well, Marty, thank you for joining today. Thank you for your call and your question. Let me start with the kind of way we view the data center projects. We really see it as a construction as being one type of revenue profile, commissioning, bridge and then the last would be that long-term backup that you asked details on. Right now that we mentioned commissioning and bridge, we also have booked a construction project during the first part of Q3. And each of those three that we're actively working on, again, construction, commissioning or bridge have much different revenue profiles and duration of term associated with them. The construction projects often can be 24 months in duration. They are much lower in total and use a similar equipment that we would use on smaller behind-the-meter power applications.

Commissioning is normally 50 to 75 megawatts. Power is normally a six-month kind of phase where they're commissioning the operations before they either get their pipe connection or their grid connection. So normally six months, but they may have different blocks after that they need commissioning on. And then Bridge power is really when they want to be first mover and in a market and could be anywhere from a year to four years or five years, depending on what they're connecting are. The Bridge Power project we're working on is a two-year committed project.

Long-term backup is where they would provide equipment and infrastructure and a supply contract to provide like almost like a peaker plant where you would provide LNG on site, if there was issues related to the pipeline outages or connection to the grid outages, it would turn on just like your diesel backup or something like that would be in a different application. So we do not have a long-term backup contract to date. We are having discussions around how to do that and how to work on that with different operators, but we do not have one yet to explain the exact economics of how that would work. The other three, we are active on.

Great. And for a follow-up question, I just wanted to ask about the aerospace. Obviously, very strong growth there. and great to hear you're going to get a fourth customer. We haven't really seen any longer-term contracts in that area. Could you maybe talk about the opportunities, if there are any, to perhaps go after or sign some longer-term contracts with the activity picking up like it is?

Yes, it's a great question, and we're really excited about this end market. One of our larger customers kind of has a long-term strategy where they like to do all things themselves. They've stated that. But the need and the demand is just a lot and the duration to have their own capacity is years out. So we're really excited about all the clients, all the different rocket customers are at different stages of development. So some are much further behind the leader, but all of them are making great progress and all of them intend to use LNG. So it's a great kind of end market that we feel like we're a leader in. And we're hopeful over the next year or so to get some more duration term and visibility. We've been working on it consistently trying to get it, trying to do fit-for-purpose facilities and infrastructure. We've been not able to get that yet, but have really close relationships with the clients and have visibility for the next 18 months of demand, but don't have a whole lot beyond kind of 18 months.

Marty, this is Andy. Let me just add a little bit to what Casey said. I mean we have long-term relationships with multiple rocket launch companies, as we mentioned. There has been a tendency for them not to commit to long-term fixed volumes historically, and that's probably had a lot to do with the fact that there has been ample supply in the small-scale domestic LNG market. But as these data centers come online and that existing supply tightens, we may be able to see some change in some of the behavior there to where they're willing to lock up some longer term -- make some longer-term commitments to guarantee that they actually have access to that supply.

Yes. And just to further add to that, not only has it been easy for them -- for us to provide it, they've had inconsistent cadence in launches. There's a lot of engineering happening. If you're watching the space -- sorry, the market around the space launch business, you have a lot of R&D still happening. So you don't have a consistent launch cadence by any of the space operators fully yet on the big LNG methane using rockets. That is improving each month. And so we think over time, they'll be able to know what their launch cadence is going to be and want to be more thoughtful about how to lock in supply.

[Operator Instructions] Our next question comes from Matt Dhane, Tieton Capital.

I did want to ask the six-month LNG commissioning agreement for the data center customer that's beginning here. Has that already begun here in the third quarter? Or would you expect it to begin -- when would you expect that to begin?

Yes. So we've executed the contract, as we discussed, and the equipment is being readied and being deployed like right now with anticipated liquids being delivered, I believe, next month. So this month, August. So it's happening right now.

Okay. Perfect. Great. Good to know. And then the behind-the-meter data center contract that's going to be starting here next year, will you be receiving further cash in advance of that? Or are those cash advances done at this point in time?

Yes, Matt, this is Andy. We had received $20 million of cash payments through the end of Q2, and we received an additional $5 million early in Q3, and that's the full amount under that contract. So we won't be receiving any additional payments from today forward.

Okay. Good to know. And then finally, I did want to spend some time talking about the data center opportunity pipeline. I know that it was great to hear you lay out the bridge commissioning and construction of the three different areas that they fall into. I was curious, when you look at the pipeline as it exists today, where would you say a lot of those opportunities are falling? Just give us a little bit more color around the pipeline of opportunities that you're seeing, how significant it is? And just whatever more color you can give us would be great.

Well, let me start. So I mean, we are super excited about all four of those areas that we've discussed. I mean the -- and they're just different profiles and different intensity. We find the commissioning to be very interesting right now because a lot of people in the space need those facilities to get commissioned, and they've got a lot of stuff waiting on that to happen. We really like that area, and I really like the power side of it. Those two, the construction side and the commissioning. I say power construction side and commissioning. That's the biggest area that we've had more recent like touch points on a lot more jobs to work on.

When you're talking about a bridge job, I mean, they're just really big, there's a lot of planning in place and the operator has to choose that they're going to pay a higher price in the very beginning for their site to be more of a first mover while they wait or they have some other reason where the connection point or the pipeline didn't make it and they want to start sooner. They're making a definite choice to pay a higher price than normally pipeline gas or the grid connection would be. So that's more of a strategic decision for the clients. And then we believe the long-term backup is a really exciting space, and we don't believe the market has fully appreciated that, and that's going to be something that we hear more and more about over the next year to three years where people are starting to put in facilities and infrastructure to make that reliability consistent.

I think a lot of people just all over the place, it's easy to get electrical hookups with big needs, and it's easy to get pipelines put in. And the reality is this stuff just takes a lot of time. And our business is supporting them on just the sloppiness of time on that. But obviously, the construction commissioning bridge long term, when we look out 5 and 10 years from now, we'll still be doing construction. We'll still be doing different commissioning projects, but the long-term backup could be a really big long-term business for us where we put infrastructure in and support the clients around that. So all of them are exciting. I'd say the biggest number of jobs are the construction and the commissioning. The biggest revenue opportunities in this commercial funnel are the bridge power opportunities.

Great. Appreciate those insights, Casey. And when you talk about the long-term backup, and that could be a very substantial opportunity with time. Just curious, do you currently do any of that? There's obviously a lot of data centers are already on the grid out there. Do you currently have any long-term backup of data centers that you do do? Or is this really a developing opportunity for you folks?

It's developing opportunity. Most of the data centers have their backup with diesel power generation today.

Do you see opportunity -- I'm sorry.

Yes, Matt, just to add to that, I mean, although we don't have any long-term backup for data centers today, that business is very similar to kind of the winter peaking business that we do in the Northeast, where we provide a lot of rental equipment during the winter months, and we're kind of on standby to provide LNG. So although we're not doing any of that for data centers yet, it's very similar to a business that we've done for many, many years for the utilities in the Northeast. Yes. So Northeast winter peaking and/or pipeline outages projects are the same as data center backup.

And going forward, since it's historically been a diesel generators used for backup power, what is leading to the data centers converting or changing going forward to using LNG? Is that -- it seems to be a preference going forward? Do they seem to be agnostic? What's going to really facilitate that change to where LNG may be a more widely used and emphasized fuel going forward?

Well, a lot of the data center or hyperscalers are starting to use natural gas as either prime power or their secondary power to be able to toggle depending on grid connectivity and grid pricing. So what's happened is the natural gas infrastructure to create the power is being loaded into the facilities. So we're just providing the bridge fueling solution when that's an issue. In the past, most of the data centers were connected to the grid and then they add some diesel back up. Now we're seeing them connected to the grid or primary -- is primary self-generated power off of natural gas. So you're not going to be able to generate prime power with diesel. The cost is going to be probably too expensive for the hyperscaler. But they can do it behind the meter with natural gas and do it effectively and compete with grid power.

This concludes the Q&A portion of today's call. I would now like to turn the floor over to Andy Puhala for closing remarks.

Well, thank you all for joining us today, and we appreciate the continued interest in Stabilis and look forward to keeping you updated as we progress through the quarters ahead. Thank you.

Thank you. This concludes today's Stabilis Solutions Second Quarter 2026 Earnings Conference Call. Please disconnect your line at this time, and have a wonderful day.

Welcome to the Stabilis Solutions First Quarter 2026 Earnings Conference Call. [Operator Instructions]

I would now like to turn the call over to Andy Puhala, Chief Financial Officer. Mr. Puhala, please go ahead.

Good morning, and welcome to Stabilis Solutions' First Quarter 2026 Results Conference Call. I'm Andy Puhala, Senior Vice President and CFO of Stabilis, and joining me today is our Executive Chairman and Interim President and CEO, 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 stabilis-solutions.com.

Before we begin, I'd like to remind everyone that today's conference 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, May 7, 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'll hand the call over to Casey Crenshaw for his remarks.

Thank you, Andy, and good morning to everyone joining us today. Our first quarter results reflect the expected transition following the completion of 2 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 continue 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 2-year contract to support behind-the-meter power generation for a U.S. data center. While delivery is expected to begin in the first quarter of 2027 and continue through the first quarter of 2029, we view this award as a strong validation of Stabilis' 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 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 capacity of our own liquefaction facilities. Our multisource 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 remains 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, 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 time line, 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 engage with financial partners who have expressed 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's important to emphasize that 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 the first half of 2026 represents a temporary lull for the business as we move through this transition period and prepare for the ramp-up of new contracts and opportunities beginning in the second half of 2026. The demand environment remains strong, our customer engagement is active, and our awarded contracts provide a foundation for a recovery in the second half of 2026 and substantial growth in 2027.

In summary, 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 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'll turn the call over to Andy for a detailed review of our financial performance.

Thank you, Casey. I'll 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 the first quarter of 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 31% and 26%, respectively, compared to the first quarter of 2025.

Adjusted EBITDA was negative $0.7 million 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 2 large multiyear contracts in our marine and power generation end markets. 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 the fourth quarter of 2025 in anticipation of supporting the logistics requirements of our previously completed marine bunkering contract. We're 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 Q1 of 2027. These payments are restricted to support equipment purchases and other preparations for that project. Quarter end's 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. Operator, please open the line for the Q&A session.

[Operator Instructions] We'll take our first question from Martin Malloy with Johnson Rice.

The first question I had, I just wanted to talk a little bit about the contracts that you're finalizing here, and that could start up in 2Q, but it sounds like they'll definitely impact second half of this year for behind-the-meter power. Could you maybe talk about the size of those contracts? Will those make up for the 2 contracts that were canceled in the fourth quarter last year? And also, with the behind-the-meter power, is this going to be a bridge-type arrangement until a pipeline is hooked up to these facilities? And then is there the opportunity for backup-related contracts later on, backup power?

Marty, good morning and thank you for joining today. And let me try to take on, I think, really 2 questions. I mean, one -- the first being what type of contract is that on the distributed power. And 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 6 to 12 month that we anticipate starting up at the end of the second quarter of this year and running through the end of the year. And we do anticipate with the work we have commitments around being able to replace the contracts that were ended at the end of last year during the back half of the year. So without giving too much forward statements, we anticipate being able to replace that on the P&L. And that's before we get into the contracted demand starting in Q1 of next year, which is meaningful in size as well.

And then just on the Galveston LNG project, it sounds like there's -- you're active with discussions with offtakers to replace the canceled contract. In terms of the opportunity there, is there the possibility that, that 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 won't need to be modified for project financing purposes?

That's a great question. I think I'll take the last one first. And so yes, the current offtake agreement we have works well with the project construction time line, et cetera, and doesn't create risk on when construction would finish and when startup would happen. So that contract is in a good position. And going back to the first question, we highly anticipate this customer that we were required to cancel that contract with to come back and do business with us in Galveston once we get further down the road or complete the plant, whether or not they'll be part of the offtake that helps create the financing or they become a spot market client post construction is complete, we don't know yet, but we're actively working with that client. And time lines and with the Iran war and different things happening, just delays and some of the issues around dates and how that would affect financing just created us a need to exit that contract.

Our next question comes from Bill Dezellem with Tieton Capital.

I actually would like to talk a little bit more about the new data center contract. So if we understood correctly, you said that was a commissioning contract. So that will begin in Q2, basically last through to Q4. Did we hear all of that correctly? And if so, was this a contract that you went direct to the data center? Or did you have an intermediary that you -- that basically is taking care of all the power and they've hired you?

Yes. So this particular project you're asking about is more of a construction commissioning project. And on all of these projects, we work with both the end user and the power provider on both. And so we're normally engaged with both. And there's numerous ones of these projects that are active and engaging on these, I call it, construction commissioning. And those are normally the way we view it, a 6- to 12-month contract, depending on are you just going to commission Phase 1 or which systems are you going to work upon commissioning. But that's what this project is anticipated to be. Different than the one that's starting up in next year, which is more of a bridge power solution, longer in duration. And all of these have the minimum period of time with potential extensions related to what's happening on their time schedule, et cetera.

And is the monthly -- is the magnitude of this contract and that original commissioning, is the monthly revenue similar to what you will have for the monthly revenue from the bridge? Is it simply a shorter period of time because it's just part of the commissioning rather than the long-term bridge? Or is there a difference in the size of these 2 plants that makes the -- or data centers that makes this very different?

Yes. It's a little different. So I would say when you think about the bridge, it's defined on how many megawatts we're providing, and it's consistently provided in consistent load. The commissioning project that we're speaking about that's starting this quarter and going in the back half of this year is a smaller in total megawatt project, and it's lower in gallons related to that, but still meaningful in size. And again, I mean, what we wanted to present is expectation of the recovery, the trough in the first quarter and second quarter, and then how the recovery of the business goes into 2026. And that's really what we're trying to highlight for our shareholders and stakeholders.

That's appreciated, Casey. And let me take the comment that you made that there are many other contracts like this. We all hear of all the data centers ramping up. So there's lots of commissioning taking place. Talk to us about the pipeline of opportunities in the data center arena that you have because we're basically just over the last few months, you've announced 2...

Yes, Bill, let me see if I can give -- I mean, we're certainly super excited about it. So I don't want to like we're optimistic. The demand is -- the pipeline is pretty exciting. I think when you look back about 18 months, everybody was like, well, all the power is going to come in right on time or early, pipelines are going to get put in on time or early. And then what's happened is just natural delays and construction delays and different things have creeped into this giant infrastructure buildout that you all know about and that's all going on.

And you think about how that rolls downhill, that first, the power generation and those type of backup power and solutions, and then now we're getting to how do you provide the natural gas needed to do either the commissioning, startup, or bridges. And so what we're really excited about is this commissioning activity because this is where we go in and support the data center commissioning their project, testing all their cooling and all their different things while they're waiting on either the final gas pipeline or the connection to the grid. And the perfect world is connection to the grid with cheap power that never stops. And then secondly, they're going behind the meter with pipeline. So both of those, Stabilis can participate in providing either commissioning or backup or bridge, and that's what we're working around.

Obviously, right now, we're seeing more commissioning activity in the first quarter of this year. That's where the activity is at 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 that's a much different cost structure, and they would prefer to get either connected to the grid or their gas pipeline put in. So commissioning is where we really, really provide a lot of value and speed up their to-market strategy. So lots of activity around that. I'd say lots of activity around the 6-month to 12-month type activity. A little bit less activity when we're talking about the longer-term big bridge projects, but we have a number of those we're working on.

Really appreciate that perspective, Casey. And essentially, we've come to this point because there's been all the delays. So essentially one way we could think about these commissioning opportunities is they may be ready to go live, they're done with their testing, and using this one contract as an example, in the fourth quarter. But if the grid or the pipeline is not ready, then your commissioning contract essentially converts to a bridge contract is how it likely would continue. Is that a fair way to think about this?

That's a good way to think about it. Or the other way to think about it is, let's say, their commissioning is in modular formats, and they may get power connected to one of the modular concepts, and then you would move into the next phase of commissioning, the next center nearby, because it's normally in groups or hubs. So that may be another way to think about it. But we don't think about it -- we're going to talk to you guys about what we know, but we don't expect it to be just a short-term situation where it's just temporary for just now. And then secondly, you're going to have outages and other backup needs to continue with the reliability that they're committing to, and that will provide additional work for LNG long beyond the construction phase and bridge phase.

For those of us who have never brought a data center online, thank you for that additional perspective. It is helpful.

Yes. So just think about them as like modular. They're done in 80 megawatt, 50 megawatt, 100 megawatt building modular, and then they've just got them stacked up around each other. And so we're providing work for units in the system.

And then one question relative to the subchartering of the vessel. What's the time line that you would anticipate that to happen?

Yes. Good question. Thank you for bringing it up. We wanted to take care of covering that. So again, we initially chartered that to support our client in Galveston. We ended up coming up for a number of different reasons with them going on a different solution. We anticipated a very quick subcharter capability with that vessel. That's all -- but the Iran war disrupted rechartering activity and put a delay on it. We anticipate it happening in this quarter. So we're working on numerous subcharter agreements right now, and we anticipate it happening in Q2 for effective date in Q3. And we don't expect the subcharter to be at a big profit. So we expect it to be net neutral is what we want to guide you all to.

[Operator Instructions] We'll go next to Spencer Lehman, a private investor.

Just a couple -- 2 questions, if I may. First, was this Strait of Hormuz situation and oil and LNG getting all backed up. There's 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?

Yes. Spencer, I appreciate the question. It's such a positive, leading question. Thank you for it. We have never seen the macro for our Galveston LNG bunkering to have reliable, consistent supply there for the marine bunkering activity, as being better than it is today. And though the war and the disruption or war or the conflict, or security conflict, whatever we're calling it, has caused some confusion and disruption on the timing of our subcharter of the vessel, and the potential short delays on what the construction would take and how that would work, the macro around it is amazingly strong. And so we're super -- it validates why we need more LNG fit-for-purpose bunkering capacity on the water in the Gulf Coast. And so it just validates what we're doing.

And our customers know that. Our commercial team is working heavy and hard on it. I think duration of contract that we need, credit quality of contract, how that matches up with the project financing are the things we're working on right now. Validation that they need the project with the Jones Act vessel in the Houston Ship Channel is not of confusion. And I also think the conflict and the price of LNG also does a couple of different things. It furthers our fit-for-purpose supply that we're doing for aerospace and the value of what all these aerospace customers are doing with the technology of telecommunications and how important all that is in the global conflicts and everything, it just all plays together. And so this conflict further reinforces the need for our aerospace, U.S. presence to be successful.

And then lastly, it further reiterates that the price of U.S. natural gas and LNG for behind-the-meter power for AI data center activity is advantaged versus global-priced data centers. So we have an advantage now. And now based on the price of oil globally and LNG globally on a TTF or JMK (sic) [ JKM ] basis, it further makes U.S. data centers more competitive when they're either on grid power, pipeline, or LNG. So it just reiterates the thesis of all 3 of our growth legs of the company. And obviously, we're not reporting a great quarter.

I don't want to gloss over that. But if we look at the future of where Stabilis' three growth platforms are, the customers we have, and what we're doing, we're super excited about it and disappointed in our financial performance that we've presented just due to the expected trough that we hopefully communicated with the 2 contracts falling off, but are excited about the back half of the year and really excited about next year and excited about all 3 markets. We anticipate getting -- we are working very hard on our Galveston LNG bunkering project, but we're equally excited about the aerospace and the behind-the-meter work power.

That sort of segues into my second question to Andy. I think you're still in charge of IR. And with all that's happening now, and just coincidentally, by the way, the data center stuff was all over Fox Business this morning, and it's just such a hot item. And just wondering whether this is time when maybe we get on the radar a little bit with your story. Any plans for it? I mean, you've really become an AI company, and not that I want you to overhype it, but any plans for maybe getting the story out?

Well, we're starting this morning. I'll let Andy clean up the call. We're starting this morning by talking about what's contracted and what we're doing on the commissioning bridge and different versions of the behind-the-meter power story. But we've got really 3 growth stories. We've got the marine, which is really exciting. You've got the aerospace, and you've got this behind-the-meter. And we think it is important what you bring up is that it is 3 exciting growth platforms where we're delivering LNG and has advantaged U.S. LNG into the market.

So I'll stop there and let Andy answer the question directly, Spencer. But we are communicating what we're doing, and we're hopeful that over time, as we see the growth that we're anticipating for next year already and we've announced, and then we see the marine project come online, which we anticipate to be able to get that to a point -- and again, that will take a while to get construction done, the barge built, but get it to an FID position, then we believe people will be able to do math around what that means and understand the value like we see the future value of our platform. But we can't force people to believe in it to the same level that we do. We can only communicate what we're up to. So I'll stop there. Andy, I'm sure, is working on the IR stuff.

Yes. Well, thanks for the question, Spencer. To add to what Casey said, philosophically, we believe that our #1 priority is to is to demonstrate this in the results of the business and grow the business, grow the top line, grow the profitability, and then the stock price starts to take care of itself. And so that's number one. And number two is we do intend to get out there and do more in terms of telling the story as we get more things -- more exciting things to start talking about. So I appreciate the comment, and we do think it's important both to deliver the results and also to make sure we're doing a good job of communicating it.

And just corporate governance, we file some stuff and have the company in a position to do things around that. So we're still doing all the normal work around that, Spencer.

We'll take our next question from Bill Dezellem from Tieton Capital.

I'd actually like to follow up on the data center commissioning. Is this the same data center as the one that you were doing the bridge with?

No. It's a completely different project, different region and different project.

And will this commissioning use George West's capacity or third parties?

We can always do both. So it's always the benefit of having your own supply for backup and reliability to make sure you can do it. This project is not anticipating using that offtake as the primary source, neither of these are. And a lot of our own offtake is being drawn into both industrial projects and aerospace. So I'd say that's how we think about the mix right now.

I think the great thing about both of these data center projects, Bill, is that they're not using George West molecules, so it doesn't absorb all our capacity. So really, it allows us to grow the top line and continue to grow the business without having to wait on internal production -- expansion of internal production capacity. So it's great for that reason as well.

And will the same third-party power provider, is it the same one that has contracted you for the commissioning as contracted you for the bridge power with the other data center?

We work with numerous power providers and numerous data centers, end-user owners. And so I think due to confidentiality and competitive information, we'd like to not share that level of detail.

I'll switch to an entirely different question. You've mentioned the aerospace and industrial activity and the strength there. With that in mind, what is your current guesstimate on when George West volumes will be completely used again?

We're going to have some room on George West. We're anticipating getting closer to not 100% utilization, but a consistent offtake that we were anticipating in the third and fourth quarter of this year, being back to those reasonable utilization numbers. We just were significantly off as those 2 projects ended. There were heavy offtakers of both of our production facilities. We're seeing a steady increase on those pull-throughs and that usage, and we expect that to happen in the third and fourth quarter of this year. Not fully utilized, but at a number that's seen in the past. We look at the revenue and earnings profile of the current operation, and that is pre the addition of the new contract for next year.

And that contract will or will not be using George West molecules?

Right now, it does not need to. It will be addition.

This concludes the Q&A portion of today's call. I would now like to turn the floor over to Andy Puhala for closing remarks.

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 guys again next quarter. So thank you all very much.

Thank you. This concludes today's Stabilis Solutions First Quarter 2026 Earnings Conference Call. Please disconnect your line at this time, and have a wonderful day.

Welcome to the Stabilis Solutions Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions]

I would now like to turn the call over to Andy Puhala, Chief Financial Officer. Mr. Puhala, please go ahead.

Good morning, and welcome to Stabilis Solutions Fourth Quarter 2025 Results Conference Call. I'm Andy Puhala, Senior Vice President and CFO of Stabilis. And joining me today is our Executive Chairman and Interim President and CEO, Casey Crenshaw.

We issued a press release after the market closed yesterday detailing our fourth quarter and full year operational and financial results. This release is publicly available in the Investor Relations section of our corporate website at stabilis-solutions.com.

Before we begin, I'd like to remind everyone that today's conference 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, March 5, 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'll hand the call over to Casey Crenshaw for his remarks.

Thank you, Andy, and good morning to everyone joining us on the call. We closed out 2025 with strong execution as we successfully wound down operations on 2 major multiyear contracts, our truck-to-ship marine bunkering contract with Carnival Corporation and our contract with a leading global provider of mobile power generation servicing an electrical cooperative in Louisiana.

The completion of these agreements resulted in a year-over-year decline in revenue and adjusted EBITDA for the fourth quarter. The conclusion of the contracts during the quarter reduced fourth quarter revenues by approximately 28%. In both cases, we remain in a strong position to continue supporting these clients as they assess their future needs for our integrated last mile LNG solutions. Their ongoing engagement is a testament to our platform and the strength of our team and our people.

As we move into 2026, we continue to see significant and growing demand across our key markets. That said, we expect lower revenues and profitability in the first half of the year as we bridge towards the start-up of several new customer contracts that are expected to begin in mid-2026 and early 2027. As we announced on February 17, we were awarded an estimated $200 million 2-year contract to support behind the meter power generation for a U.S. data center. Upon commencement, it will represent the company's largest ever contract in operation. Deliveries will begin in the first quarter of 2027 and are expected through the first quarter of 2029. As the United States continues its historic investment in data center infrastructure, the rapidly expanded power needs of these facilities create a substantial opportunity for behind-the-meter LNG-based power generation.

Over the past several months, we have seen a notable increase in customer interest in our LNG for both commissioning and bridge power for U.S. data centers where pipeline delivered gas or electrical power is not available. Our last mile LNG solutions network is a highly reliable solution in these environments. We are also seeing strong demand in our aerospace market, where commercial launch activity remains robust. Our commercial team continues to pursue opportunities, both new and existing customers in this sector. At the same time, we work toward FID on our Galveston liquefaction project. We're also seeing strong long-term demand trends for the marine bunkering offtake.

We continue working toward a final investment decision on the Galveston facility. We are in active discussions and negotiations with potential project equity sponsors and lenders on the financing structure. In parallel, we have secured customer offtake commitments for 56% of the facility's planned capacity and are working to sell the remaining available capacity. We continue to work with our advisers on a special purpose vehicle structure funded with project level debt and equity from third-party investors. This structure is expected to create long-term value for all stakeholders while enabling Stabilis to further expand our core operations amid accelerating end market demand for flexible LNG fuel solutions.

As we work toward FID, we're actively engaged in engineering, design and ordering long lead time items to maintain the project schedule. We remain committed to providing periodic updates to our shareholders as key project milestones are achieved. In summary, 2026 represents an important transitional year for Stabilis. Achieving FID on our Galveston liquefaction facility will mark a foundational milestone, positioning the company for meaningful change in long-term value creation. At the same time, our commercial and operational teams remain intensely focused on delivering best-in-class service, reliability and quality across our other growth markets.

Contracts we have in hand provide strong visibility into sustainable multiyear growth beginning in 2027 with momentum building as we progress through late 2026. As always, we remain committed to creating sustainable long-term value for our shareholders and look forward to keeping you updated in the quarters ahead.

With that, I'll turn the call over to Andy for a detailed review of our financial performance.

Thank you, Casey. I'll begin with a discussion of our fourth quarter performance, followed by an update on our balance sheet and liquidity. Fourth quarter revenue decreased 23% year-over-year, driven by a 22% decrease in LNG gallons sold and lower rental and service revenue.

At an end market level, marine bunkering revenues fell 42% year-over-year, while power generation revenues decreased 56% due to the conclusion of the large multiyear contracts in both markets. This was partly offset by a 17% increase in aerospace revenues and a 12% increase in industrial revenues compared to the same quarter last year.

Adjusted EBITDA was $1.5 million during the fourth quarter compared to $4 million last year. Adjusted EBITDA margin was 11.5%, down from 23.2% in the fourth quarter of last year. The decrease in our adjusted EBITDA margin primarily relates to the conclusion of the 2 large contracts, a nonrecurring favorable SG&A adjustment and a gain on asset sale, both occurring in the prior year quarter.

Cash from operations totaled approximately $670,000 for the quarter. Liquidity at quarter end was $10.2 million, consisting of $7.5 million of cash and approximately $2.7 million of availability under our credit facilities. Capital expenditures totaled $3.1 million during the quarter, primarily related to early engineering and design work and long lead items for the proposed Galveston LNG liquefaction facility and related Jones Act LNG bunker barge. Once project financing is in place and the company has FID-ed the project, we anticipate future project funding requirements to be met through project level financing. In the first quarter of 2026, we anticipate investing $1 million to $2 million of additional capital in the project and for routine maintenance CapEx.

Additionally, we expect to invest additional capital into mobile equipment and related assets required for the significant data center contracts set to begin in early 2027. This capital investment will be funded by prepayments made by the customer.

That concludes our prepared remarks. Operator, please open the line for the Q&A session.

[Operator Instructions] Our first question comes from Martin Malloy with Johnson Rice.

Congratulations on all the progress you've made on the data center front and Galveston LNG and aerospace. A lot of moving parts here and a lot of positive news.

First question is about the -- first question I have is about data centers. And I think there's a growing recognition that behind-the-meter power for these data centers might be utilized over a longer period of time, and then you've got some temporary backup power needs.

Can you maybe talk about what you're seeing in terms of customer demand in the data center market. And I know this contract that you've talked about is for 2 years in initial length. Can you talk about opportunities to extend that?

Yes, sure. Happy to. And by the way, thanks for joining today, and I appreciate your feedback and covering the company.

So when we think about the last mile LNG solution for the behind the meter data center, high-speed computing area, there's really a couple of different areas that Stabilis can participate really well in. And I'm going to take it kind of the shortest to longest duration. The first is around the commissioning of these facilities where it could be 50 to 100-megawatt volume and could last anywhere from 3 to 9 months where they are working to commissioning blocks of these data centers.

And these are one range of activity, and they may be waiting on different gas pipeline or different power electrical hookup during that period of time, but they're trying to commission the facilities in advance to that, whether it be the water or the cooling and all the different things they're commissioning.

The second, which is similar to this other project is what we call a bridge solution, where we're providing last mile LNG solution to a power generation company, and they're providing either a 2- to 5-year bridging solution while they're waiting on the natural gas line pipeline or the power lines to be brought into the facility. And so there is a chance that things don't work out on perfect scheduling and there is extensions to those contracts.

And the last is there's a growing volume of permanent natural gas power generation for data centers and LNG becomes a backup solution on those. So they have a pipeline connected in, have natural gas there, have natural generators that are running off natural gas, but they bring in LNG as a backup solution in case there is any outage or issues with the pipeline.

So I hope that explains the kind of 3 different sectors and kind of where we participate in the space of behind the meter for specifically data centers. And I want to add, Stabilis is actively providing distributed power activities around all different types of applications, not just data centers, but data centers are definitely a growing area right now for the company.

Okay. And I was wondering if you might be able to -- this contract is much larger than what we've seen previously. Could you talk about any factors that we should consider in thinking about EBITDA margins on this kind of contract that would cause it to be above or below or on average with historical averages or maybe not the specific contract, but just in general, these larger contracts that you might be looking at?

Well, there's a couple of different things we've worked on this one. And one is to have the client support us on the additional CapEx that's related to execute on the project and to be able to perform around contracting third-party supply, et cetera. So we've structured the contract to give the most solution around very strong results for the client and protecting the downside for Stabilis if there's any delay or gap in service.

And so we've done that through the customer supporting us with credit enhancing features to support us on the CapEx and the OpEx related to locking down the supply to support them. So that's one thing we've done kind of as a risk mitigator. When I think about EBITDA margins and some of that stuff, I feel it's consistent with historical business. And we don't prefer to give any project-based specific details around that out other than to acknowledge that it's not fair for the clients and stakeholders, and it's not anything different than historically would be provided other than they provide a lot of credit enhancement to protect us in case there's any scheduling delays.

Our next question comes from Tate Sullivan with Maxim Group.

A follow-up to that -- to your last comments, too, on the 2-year contract estimated revenue of $200 million. Do you base that on forward prices for your LNG supply? Or can you go a little bit into how you generate that $200 million?

Yes. So that's based on -- thank you for the question, and thank you for being on the call today. And that's a good question.

That's based on expectation of the cost of the LNG and all the additional costs associated with delivering it, and that's based on their expected demand that they've given us over that 2-year period, not any extensions or any of that. There's -- so maybe -- I hope that answered the question.

Okay. And then when you talk to customers such as the data center owner or operator, what is the pricing discussion like when they're talking about diesel generators versus backup energy storage systems? Or how do you address any pricing concerns from the customers? With LNG...

Yes, I think that's a great question. And I think when we really think about where -- and I hope we're being clear about this to you guys, these 3 different areas where LNG really can participate.

One is the shorter term 3 months to 1 year where we're doing the commissioning and -- sorry, supporting them on the power generation for the commissioning. That's probably the least price-sensitive area. Bridging is more price sensitive. And then that final area is the most price sensitive if you're permanent installed power base, these are competitive projects and they're looking at what their kilowatt per hour and everything is. And so we're always comfortable competing with diesel. But if you look at kind of grid cost power or you're looking at pipeline costs, those are normally cheaper than an LNG turnkey solution.

Our next question comes from Bill Dezellem with Tieton Capital.

I have a group of questions. First of all, discuss with this large contract, how you are going to fulfill a couple of hundred million in revenues. I mean clearly, that's not -- presumably, that's not coming from George West. So walk us through practically how this will unfold, if you would, please?

Bill, thanks for the question. I appreciate that because I think that will add some clarity.

This project is not in the region that is going to be supported by our own liquefaction facilities. So we are using our third-party network. We speak a lot about this third-party network of Stabilis through our acquisitions and the buildup of who Stabilis is today through a number of companies that did not have their own liquefaction capacity and always use third parties.

So we're using third-party liquefaction offtake agreements, and we're providing the turnkey LNG solution providing the logistics and then the on-site storage and regasification of the molecule back to the gas estate to hit the generator. So that's the way we're doing it, and there is LNG available in these regions in these markets and really provides easy data point of why Stabilis is unique and special on the fact that we do have our own liquefiers and then we have the ability to provide this kind of turnkey solution even if we're not making the LNG ourselves.

So I hope that answers it. Yes, it's not in the Gulf Coast region. And -- but due to some confidentiality protections, we don't talk about where it is in the United States or in North America.

So Casey, with that in mind, is there any reason that you couldn't do I mean, hundreds of these type of contracts, and I recognize there's not hundreds out there, but it's really an unlimited number since it's not -- this is not your molecule that is being consumed.

Well, eventually, yes, Bill, that's a great question. So let's break it back down to those 3 kind of options. One is the commissioning. We can do a lot of those. Those are really good 6 months to 1 year projects, really good, lots of that's available working on lots of conversations around that.

And then this bridging project is really good as well. Yes, we can do a lot more. It's not limited by our liquefiers, but there is some limit to the total available LNG out in the different regions and how far we can move it via truck. So what happens is it becomes more price sensitive. And then when you then look at the backup solution at longer term, that's where the economics of these facilities, how long they're bridging, what their time line is, all plays into the price that they're willing to pay and how far we have to move it to provide that.

So first phase, the commissioning testing, lots of opportunity, lots of availability, just really strong bridging a little bit less 2 to 5 years. There's some projects that will absolutely do that. We do believe we can scale that as well. And then the backup is a really strong longer-term opportunity where they really don't want to do the backup with diesel if they could help it. They want to continue to do their backup with natural gas, and they want to be toggling between grid prices and their own behind the meter power generation is kind of the perfect world for these data centers.

And there's still -- to be honest with you, we're still early stages in the development of how to optimize the power for all of these, and they're just trying to get them in. So what we are excited about Stabilis is that we are an active participant in the distributed power market. This is the data center part of it. We're excited that we're working on. We've been talking to you guys about it.

We're equally excited about the aerospace business. We're equally excited about the marine bunkering activity and what we're seeing there. But this is an area that we are recently seeing contracting activity, and we're delighted to be able to share with you guys some tangible contracted success around the space. In the data center, distributed power, we've been in and doing and continuing to do.

One additional data center question before we jump to marine bunkering. So is rolling stock a limitation at some point because of production capacity? Or is that really not an issue? I guess I'm trying to understand what other limitations are there besides the ones that you aptly laid out in your response to my question?

Well, I'll go over all 3 of them. One is third-party supply or self-generated supply. And some of these projects are long enough, they may want us to build liquefactation nearer to the facility. So some of them are that bridging where they say, hey, could you consider putting a plant up nearer the facility and truck it in? So it's -- the molecule availability, then it's the logistics equipment and then it's the on-site storage and regasification equipment. All 3 of those are gating items and determine -- and are really determined by the volume needed at the site and the distance.

So we go into this process with the largest logistics fleet and regasification fleet in the country due to the fact that Stabilis had consolidated and been in this space in a number of end markets for years. And so we have the largest cryogenic fleet and regasification storage fleet in the United States. So that's an inherent benefit.

As we continue to have growth in this space beyond what our logistics and on-site storage equipment and even liquefactation is, these customers are working with us to support and enhance the credit of the contracts to allow this solution, which we saw in this project where they were supportive of that on how they handled the contracting.

So in this contract that we've discussed, we're adding logistics equipment. We're adding N+3 kind of protection around on-site storage and regasification. So they're super supportive on making sure they have everything in place that performs for their -- the data center needs.

All right. And then moving to the Galveston facility. Since we're talking about FID by the end of the month, I mean that looks like it's fully on track. But I'll take the negative side of the question is what could derail it at this point since we are 25 or 6 days away from the end of the quarter?

Yes. Well, hopefully, we've laid it out. There's a couple of different things that we're in conjunction working on. One is the additional offtake. So we said we have 56% of the offtake contracted. We're in active discussions with the -- with customers around contracting the balance of the facility. The balance of the facility offtake agreed to optimizes the capital structure in the project.

Secondly, the capital structure, we're still in active negotiations and working with our capital partners, both their -- the debt -- term debt part and then the preferred equity kind of sponsor in the SPV. So kind of those work in conjunction with the offtake. And so we're working all that as one group. And then we're working to have the time line be consistent with what our clients that have already contracted need that to be.

So long lead items, engineering. So we continue to work on it while we're trying to get that locked up and finalized. One derailer of time line might be a global war, which we happened to start this past weekend or started this past weekend. So that kind of changes the dialogue. We think it enhances the need for stable, low-price, consistent fuel in the United States, specifically in the Houston Ship Channel. We think this enhances the project long term and shows why Stabilis, which means Greek for stable means having a capacity and supply in the Houston Ship Channel, Galveston area is positive for the United States and the customers that call on these ports.

So we think it's an enhancer, but it definitely is a new variable that got inserted in the process this week. So I hope I've laid it out, there's commercial side. There's the financing matching with that. And then there's just kind of the lead time and execution for the current clients that have the 56% of the offtake. And then there's kind of third-party things that are in play like the conflict in the Middle East, which is driving up the global cost of LNG, which is making the LNG that we can produce more optimal for our clients to contract.

That is helpful. And let me ask relative to the Carnival contract not being renewed as it was shore to -- or truck to ship.

Would you please walk us through the dynamics of why they're not renewing and then what they're going to do for fuel in the intermediate time period before the Galveston plant is up and running?

Sure. I'll give you a little bit of color. I can't always -- we can't speak for our client, but I'll speak to what we understand. And what we are pretty comfortable telling you guys is that they would have liked to have extended that contract. The Jones Act vessel that they had contracted separately to that we delivered to that delivered the fuel to them had -- was no longer going to be -- they made it unavailable starting in 2026.

And that availability of a Jones Act bunkering vessel for this project is what made the extension not happen. So they had verbally and letter agreements told us they wanted to extend it, but it was based on them having that availability vessel when that vessel was not available, that changed their ability to extend.

In the medium term, short term, they'll have to either have their vessel either rerouted to an area where they make can get LNG, whether that be the Bahamas or do some routing difference or they'll have to use marine gas oil, which is called MGO, which we refer to as MGO, which is their alternative fuel source. Does that answer your question? Or is there any follow-up to that?

Yes. It answers the question, but maybe this is highlighting the lack of equipment for bunkering that maybe that I certainly didn't appreciate or understand.

So maybe just as my final question, would you lay out the supply-demand dynamics of the bunkering vessels that exist and how rare or prevalent they are and why this particular bunkering vessel was no longer available to continue the contract.

Absolutely. I think the best way to think about is kind of the maturity of the different bunkering markets. And I would say the most mature bunkering market with Jones Act bunkering vessels is in the Florida or the southern part of the United States in the Florida area.

It was the first to start adopting and became the earliest. And I believe my number may be off by one, but I think there's about 5 Jones Act vessels that are bunkering LNG in the United States, and they're all in Savannah or in Georgia down to through Florida. And so that's the availability of Jones Act LNG bunkering vessels in the United States.

There's 5, and those are 5 or 6, and those are all in that area. And so that area was developed first. And so one of the reasons we're excited to bring this to the Gulf Coast and over time in other areas is because it's not a new technology. This is adopted, has adopted, is working. It's just a shortage of vessels. And so that vessel was able to be moved back and have plenty of work over in that region.

We will move next to [ Ed Prescovich ] with WP Capital.

I've been involved in Stabilis for some years, probably going back to GTLS Chart Industries initial investment.

I have just a quick question, a good follow-up question. I see you have leased or chartered a vessel from Seaspan, the Garibaldi. I'm wondering how that fits into the SLNG picture since it can't bunker the United States, but it could bunker places in the Caribbean or Panama Canal. Hello?

Just a moment.

[Technical Difficulty]

Speakers are back in conference.

I've been a holder since the GTLS days. I really like the company. Everything is super. I have one question that feeds in well to the previous question. What -- I see we leased a bunkering vessel granted not Jones Act approved. Is there -- can we get any updates on that? What it's going to be used for? Are we not going to use it or...

Well, we're still in process on that. We'd like to circle back with you on the next call. That was a plan to work toward trying to support our clients and customers. But let us circle back with you on the details on that, but we're not prepared to go over that just yet.

Thanks for joining, and we appreciate you being a shareholder and being active on the call today.

We do have a follow-up from Martin Malloy with Johnson Price.

Just wanted to ask kind of a bigger picture question relating to aerospace. I guess the potential has been out there for years that we might see something more on the contracting side there with respect to aerospace. Now with more demand for LNG for data centers, manufacturing, bunkering, is there any change in the way that the aerospace companies, space companies are viewing their LNG supply and maybe trying to secure it with a contract, have more visibility on the security of the supply there?

Well, I'll start, and I'll let Andy kind of come back on this.

Like we do have contracted work we do with them, and it's done on 1-year and re-extended contracts, et cetera. And we have a number of contracts inside the space. But when we think about contracting, we're talking about multiyear take-or-pay type discussions. And so we are contracted. They're just not multiyear take-or-pay contracts.

And it is an exciting time for them. Their commercial consistency on really making money and sending stuff up and how that works with satellites and what their total business is and how that interlocks with the data center AI kind of growth and macro, they're really together. They're actually coming together on activity, not separating.

And we do think there's going to be a lot of need for closer supply, both in Florida and in the other areas where they launch and how they go about that. And then there's still quality differences on what their rockets need and how they need it. We continue to work with all of our clients in that area about how we can put specific purpose liquefiers in for them, how we can contract longer term. They are -- as they're continuing to grow their needs and develop more consistent flights, I think that's becoming more and more of a question and an issue.

Obviously, some of them like to self-perform everything. Some of them want to do more outsourcing. So I think there's just a blend there. So not trying to not answer it real directly, but I do want to say we are contracted with these. good companies. We do expect to see meaningful growth in overall revenue in '26 versus '25, north of 30-plus percent growth, maybe more than -- more like 40% growth in that space.

That's our expectation, and we are seeing it grow. But we haven't -- don't have today as line of sight on putting an asset in for one of them yet as an liquefier fit for purpose, and we are actively having discussions with that being available. We just have not got that contracted yet.

We will move next with Spencer Lehman, a private investor.

I'm very excited about what you guys are doing and what you got lined up, sort of my dream come true after many years. And I just turned 90. So I think maybe I'm going to get a chance to watch all this developed.

I wonder if you had considered the possibility of instead of going alone, maybe merging with a larger company with all the financing could be done by their balance sheet. But it looks like the train sort of left the station, right? And is that still a consideration? Or do you think you can handle this whole thing? It seems like it's pretty ambitious for such a small company, but you feel pretty confident?

Yes. Spencer, we do. And first of all, just thanks for being a long-term shareholder, and we're more excited than you because we are just big believers in how this turnkey LNG solutions is just a game changer in all 3 of these growth markets, aerospace and the distributed power and the marine bunkering, and we're just wildly excited about it.

I think we laid it out that in the marine bunkering project, where we're doing a lot of infrastructure right now, we're talking about how to finance that through a project financing special purpose vehicle. And we think that's the most optimized capital structure allows us to retain our equity while we believe the equity is not fully priced into the opportunities and growth of Stabilis. And so it allows us to have growth without meaningful dilution.

And so we still believe that's the right path. And when we look at distributed power, customers are supportive and credit enhancing to help us meet that growth with them. And when we look at space, we're absolutely -- or aerospace available to put in some assets and do some stuff if they contractually would like us to do that. So we're not against putting debt, enhancing the capital structure or really doing anything that unlocks value for the shareholders.

And furthermore, we have a duty to unlock that value for the shareholders. And so you're not going to hear us in the management team say never say never on anything. Our goal is to grow the company profitably with these 3 big end markets that we're discussing and for you, shareholders, to know that we want to grow the company -- and we believe this is a growth space where both infrastructure, just all kinds of growth.

And as we need to tap different financial markets to accomplish that, we have a duty to go do that, and we intend to. And so we appreciate the question. Right now, we feel like we've got adequate support with the clients and the contracts right now, but we don't want to pretend there's a negative bent on anything other than profitable growth for our shareholders and for our stakeholders.

I think that's a great answer, and I'm very pleased that you try to keep the dilution at a minimum. So...

We're in alignment there. Thank you, Spencer. Appreciate you joining this morning. Sorry, our phone got disconnected.

[Operator Instructions] We will move next to [ George Berman ] with Cabot Lodge Securities.

I also want to join the previous callers congratulating you to a very, very good job. I think things are looking definitely up, up in a way for us.

One particular question I have, I discussed this with your CFO a few times, we are owners of an ownership stake valued at about $10 million on your balance sheet that is thrown off about $1 million a year with a China joint venture. Is there any chance of maybe monetizing that? Because I think that would add some nice firepower for your current projects.

Well, I appreciate the question, and we're really proud of that stake with that partnership with [ BOMCO ] and with our joint venture in China. We're proud of the company. We're proud of the management team, and we're delighted to be partners with [ BOMCO ] in that business.

Because we're not the majority shareholder and we're a partner and heavily represented on the Board, we don't control all the perfect timing of how that strategic asset would be monetized. There are specific things in the joint venture agreement that allow to be monetized at certain time periods. And those are specific. But it is a wonderful company. I think it could be -- there's a lot of value. But I think the negative with that is the geopolitical challenges associated with China right now make that a bit of a -- is this the most optimized time to do something there or not? Should we wait until things normalize better? Is that a better step-up value?

But it's a great company. BOMAY is a wonderful group over there. And if you know that was part of the existing company that Stabilis reverse merged into and was one of the only assets inside the company as we were first merged into it. But we're delighted to have that. We participate as Board members, both me and Andy, and are actively in that and have an executive that watches it and is in China working on it for us.

And the $1 million-plus a year that you received is nothing to shake a stick at either?

We're proud of their performance and their consistency on providing the shareholders' dividends and cash dividends as it relates to that business.

Right. You are currently -- you have the one big plant in, I believe it's George, Texas, produce the LNG, but you also mentioned last year on the conference call that you had already acquired the necessary equipment to build a second one.

Has that gone any further? Is that part of the overall picture right now where to put it?

Yes, that is. We have 2 liquefiers, one in Port Allen, which is run near Baton Rouge, Louisiana; and one in George West, Texas. And then we acquired a complete additional plant to -- we call it a train or a plant or a liquefier to install.

The best place to install that is George West. That is where we would like to install it because of the construction cost is lower and we get the benefits of having all the infrastructure already there. However, we have both marine clients and distributed power clients and space clients all looking at maybe they would like it near their offtake agreement.

And so we've left it as an uninstalled asset to try to come up with where the most interested customer and client might want it with the longest-term opportunity and offtake being. So it's available to deploy and has not been finalized on where that deployment is because we haven't had the customer finalization of where to put it.

Right. So you would say -- or we could say that you basically right now in the driver seat, fielding offers and whatever is most appropriate for the company, you can take it and proceed?

Yes. I appreciate the comment. We believe our customers are in the driver seat. We're just waiting on which one would like to have that availability and that surety of supply. So we're kind of under their direction, but it is a valuable strategic asset to have and have the ability to deploy it quickly relative to a greenfield application.

Right, right. Well, Mr. Crenshaw, also want to thank you for taking over the leadership there. I think we are definitely going in the right direction, and I'll be looking forward to much higher equity prices once we get the financing for these big opportunities on the ground.

Well, I agree that we have a great team here. I'm looking forward to higher equity pricing for all of us as well. We have an amazing management team here. Andy, you'll get to speak to a lot as CFO, our balance of team here with Matt and Stage and Koby and just I can go on and on with our team here. I mean, it's hard for me to throw out names because we'd have to throw them all out. We have an incredible team, the most skilled turnkey LNG solutions team in the world. And these 3 core markets that we talk about with the best team in the world, period.

Now applying that to the most profitable growth and the most profitable projects is something that we need to keep working on and optimizing for the shareholders, but we have a great team, a great set of assets, great set of logistics, plants and customers and end markets, and we're just so lucky to have all of our good clients, and we're working hard to keep them. And even though we had these 2 contracts roll off, the fact that we're still working with both clients and active with both clients is a testament, as we stated earlier, to our company and our team and people. So thank you for calling...

This concludes the Q&A portion of today's call. I would now like to turn the floor over to Andy Puhala for closing remarks.

Well, thank you all for joining the call today and your support of the company, and we look forward to keeping you updated as we have things to share and look forward to speaking with you on next quarter's call as well. Thank you.

Thank you. This concludes today's Stabilis Solutions Fourth Quarter 2025 Earnings Conference Call. Please disconnect your line at this time, and have a wonderful day.

Good morning, everyone, and welcome to the Stabilis Solutions' Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Now at this time, I would like to turn the conference over to Mr. Andy Puhala, Chief Financial Officer. Mr. Puhala, please go ahead, sir.

Good morning, and welcome to Stabilis Solutions' Third Quarter 2025 Results Conference Call.

I'm Andy Puhala, Senior Vice President and CFO of Stabilis, and joining me today is our Executive Chairman and Interim President and CEO, Casey Crenshaw.

We issued a press release after the market closed yesterday detailing our third quarter operational and financial results. This release is publicly available in the Investor Relations section of our corporate website at stabilis-solutions.com.

Before we begin, I'd like to remind everyone that today's conference 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, November 6, 2025. 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'll hand the call over to Casey Crenshaw for his remarks.

Thank you, Andy, and good morning to everyone joining us on the call.

We executed according to plan in the third quarter, capitalizing on continued demand for our integrated last-mile LNG solutions across our markets. Third quarter volume increased by more than 20% year-over-year, driven by strong demand across our growing base of marine, aerospace and power generation customers. We continue to see healthy demand trends across these sectors, supported by increased commercial space flight activity, seasonally strong demand for distributed power and robust throughput from cruise activity in the late summer months.

Commercially, our team remains highly engaged with both new and existing customers, particularly in the aerospace and marine markets. We also see growing opportunity in the power generation as domestic investment in new data center capacity increases the need for on-demand distributed power solutions.

As announced in October, we secured the largest customer contract in the company's history, a 10-year marine bunkering contract for LNG, produced at our proposed 350,000 gallon per day LNG facility in Galveston, Texas. Subject to the finalization of project financing, we expect to break ground on the Galveston facility in the first quarter of 2026 and are targeting the facility to come on stream in late 2027.

In parallel, we plan to construct a Jones Act compliant LNG bunkering vessel to serve customers in the Port of Galveston, Houston Ship Channel, and surrounding areas, consistent with a focus on building a vertically integrated marine bunkering solution in the local market, and this will serve as a template for what we seek to replicate in additional markets over time.

Beyond this initial bunkering customer, who will represent approximately 40% of the planned offtake capacity at the Galveston facility, we're in late-stage negotiations with another marine bunkering customer for an additional 20% of our planned production capacity. We expect to have approximately 75% of the total capacity sold under long-term customer contracts by the time we reach final investment in early -- final investment decision in early 2026.

In recent months, we've worked closely with our engineering and design partners to secure long lead time items and develop detailed engineering designs for the LNG facility and the related bunkering vessel. Additionally, we are finalizing contracts for equipment, plant and vessel construction and related items such as pipeline access, putting us on track for the final investment decision in early 2026.

Stabilis has engaged a leading investment bank to arrange the financing for this project. We have evaluated a variety of potential financing options and intend to prioritize a structure that maximizes value creation for all shareholders. At this time, we intend to pursue a joint-venture structure, supported project level debt and equity from third-party investors. Through this structure, we intend to retain operational control of the project, positioning us to realize meaningful economic upside and long-term returns on our investment.

We intend to share periodic updates with our shareholders as key project development milestones are key. This is a transformational moment in the history of our organization, and we're excited to take this next important step and in our company's growth. In the meantime, we'll stay focused on day-to-day execution required to deliver profitable growth. This means continuing to expand commercial contracts across our vertical markets, continuing to improve operational excellence and staying disciplined around how and where we deploy capital as we seek to maximize value for our shareholders.

With that, I'll turn the call over to Andy to review our financial performance in detail.

Thank you, Casey. As customary, I'll begin with a discussion of our third quarter performance, followed by an update on our balance sheet and liquidity.

Third quarter revenue increased 15% year-over-year, driven by a 21% increase in LNG gallons sold and higher average commodity prices, partially offset by less favorable customer mix and lower rental and service revenues. At an end market level, revenues increased in our three target growth markets with aerospace revenues increasing by more than 88% compared to the same quarter last year, and power generation and marine revenues increasing by 31% and 32%, respectively. This strong performance was partially offset by the scheduled end of an industrial customer contract that concluded late last year.

During the quarter, approximately 73% of total revenue was derived from aerospace, marine and power generation customers, up from 60% in the prior year quarter, reflecting the continued strength and diversification of demand across these high-growth markets. Adjusted EBITDA was $2.9 million during the quarter compared to $2.6 million last year. Adjusted EBITDA margin was 14.3%, down from 14.6% in the third quarter of last year. The decrease in our adjusted EBITDA margin primarily relates to the roll-off of the high-margin industrial project previously mentioned.

Cash from operations totaled $2.4 million for the quarter. Liquidity at quarter end was $15.5 million, consisting of $10.3 million of cash and approximately $5.2 million of availability under our credit facilities. We ended the quarter with $9.5 million of total debt and lease obligations, resulting in a net positive cash position. Overall, our balance sheet remains strong and provides ample flexibility to support our ongoing operations.

Capital expenditures totaled $3.9 million, primarily related to early engineering and design work for the Galveston LNG facility and related bunkering vessel. We expect investment to accelerate over the coming quarters as we progress toward construction and a final investment decision in early 2026. Once project FID is made, we expect all project funding requirements to be met through project-level financing. In the interim, we anticipate investing an additional $3 million to $5 million in CapEx on the project.

This concludes our prepared remarks. Operator, please open the line for the Q&A session.

[Operator Instructions] We'll go first this morning to Martin Malloy of Johnson Rice.

Great to see all the progress you're making on the Galveston LNG project. My first question, just on the permitting side here. Are there any key permits that we should be watching for, for you all to receive regarding this project?

Well, first of all, thanks for joining, Martin. We appreciate you being on this morning. And yes, it's a good question on the Galveston project. There's a number of different permits that we track and work through. We already have the export license, it is already in our position for any gallons that need to be exported. So that's kind of an already a benefit. And -- but all the normal permits are being worked, and they're already being in process and being worked in our project today. So they're being progressed.

Marty, just to add a little bit to what Casey said, I mean there's a number of permits, as you could imagine, for a facility like this. We've got a detailed list of them all and we're tracking them and know what we need to do there. The main one is probably our Texas Railroad Commission for the facility and then the Coast Guard for the bunkering operation.

And we're tracking them all and we don't think that, that changes our timeline.

Okay. Terrific. Just for my follow-up question, it's great to see the growth also in the aerospace and the power side. And I was wondering if you could maybe talk about what you're seeing there in terms of end market demand and potential capacity expansion to meet that demand. I think you all have a second LNG train to double capacity George West, some of the long lead time equipment that's there. Any plans for that? That would be great if you could talk about that.

Why don't I start, and I'll let Andy come in with any color or detail around it. I mean I think I really agree with what you're saying is that not only is the marine super exciting as one of our big verticals, but the aerospace and the power generation is just really exciting right now. And you're just seeing additional -- on the space activity, you're seeing additional launches and the primary fuel being used is now LNG as it relates to how they're operating those vehicles.

Our demand there is expected to be up. We expect it to be up for 2026 from what we've seen in the past. And how that offtake happens there versus the need for power generation fuel versus what the timing of the plant in Galveston comes online are all things that we're working on in conjunction right now. So lots of demand for both space, lots of the -- when I say aerospace for rocket launches, lots of demand power generation as it relates to distributed power needs for data centers or grid redundancy, et cetera.

And most of those jobs are bridge or backup, but some of the bridge and backup is 5-plus year type conversation. So they're even talking about potentially needing that asset deployed in different spots. So we're basically waiting to see what the most customer-centric locations for that additional train is and just waiting on that demand to firm on who's going to contract it to make sure that capital has contracted offtake against it. But we're still working on it, both in George West and in other locations.

[Operator Instructions] We'll go next now to Bill Dezellem at Tieton Capital.

A couple of questions here to begin with relative to the new marine facility. You referenced here in late-stage discussions with a prospective customer that will represent 20% of the capacity. What industry is that customer in?

With the marine bunkering client, and so they're in the -- this is a cruise customer.

And then that leaves an additional 15%, if our math is correct, to reach your 70% capacity being committed prior to or at FID with -- so with that remaining 15%, how do you -- how does that look like that will develop? Is it a single customer, it represents 15% or is it multiple? And what industries would you expect them to be in?

Yes, Bill. So let me just touch on it from a macro. I mean those are plus or minus goals of us having 75% of that offtake firm, 10-year, good credit quality customers because that generates the best structure for Stabilis in the project. We hope to have an even higher utilization at that time, but that's our goal by the first quarter to go FID. And so that customer could be anywhere from more clients related to cruise. It could be clients related to container ships. It could also be a third-party trader that's in the bunkering space. So those are all three options on that. We expect it to be one or two, and it could be north of the projected volume that we put out there in that target of 75%. That's just what we wanted to kind of give you on what our goals was at the timing for FID.

So essentially, that last 20% is a bit more fluid at this point and -- but you have options that you're working on.

Yes. Look, we're under discussions with multiple customers, and I think with what we have, the first contract and the second one that we're really close on, I think we can on the project. I think it makes it a better project to have the balance of it taking off and then offtake there. And we're talking to a number of people. We've got advantage. Remember, we've got advantage of natural gas. We're going to have advantaged product on the water with a really well-developed facility and Jones Act vessel, so we've got a cost advantage. And I think when you have a cost advantage and an advantage like that, I think, makes the selling part of it easier.

That's helpful, Casey. And then did you -- changing gears here, did you all win additional marine business here this quarter to have that up 30-some percent and space up 88% and power gen at 30%?

Look, we're doing numerous marine clients, not just cruise, but we've got some other areas that we're servicing, offshore supply vessels, et cetera. There was a lot more throughput due it to being the late summer months through some of our existing clients. And so kind of a combination of both is to answer your question.

Great. And that's helpful relative to the marine. And how about in space and power generation, those strong growth rates. Were those a function of new contracts?

Power generation was a function of temperature and the existing contracts we had. Those are always -- we have some new ones and some falling off, and we have a number of them coming off in the fourth quarter. But the -- in the space, we did pick up another strong aerospace client, which increased volumes and opportunity in the third quarter.

And does that client -- was that a one-off or a temporary? Or is that now repeatable for many quarters going forward?

It's repeatable for many quarters going forward. And it's one thing. We work extremely hard with those customers. And I would say, all three of these customer groups, marine, aerospace and distributed power, they're all super sensitive to what they need and how they need it. The space people are specifically, because it's propellent fuel, they're specifically intense around that. So we expect it to be a long-term additional new clients that we look forward to doing a lot of work with over a long period of time.

Great. And kind of trying to tie that altogether, was there any sort of a strategy change to use more third-party gas or is the growth that we saw this quarter in third-party gas really a function of having won these contracts, and longer term, you'll figure out how the most optimal way to serve those clients?

Well, I'm going to start and then let Andy kind of finish it up. I mean we ran high utilization on both of the company-owned facilities this quarter. And I think the answer is yes to all of that. We try to optimize ours first, but it also depends on logistics and some of the spec of quality depending on what type of client and where, but we like and have always, Stabilis has been in business for -- since 2012 required [indiscernible] share ventures. They've been in business for over 20 years. So in the whole history of our company, requiring Canada's gas [indiscernible], we use third-party supply. That's all as a way to build demand and then figure out if we can drop a facility in there to do it ourselves.

So consistent with what we've done, what's not -- I think our operations team worked really hard to optimize our current manufacturer supply and then third-party supply this quarter. And I think we're pretty proud of that. It's an ongoing process, and they did a nice job this quarter, and Andy, anything to add to that?

No, I think you covered it. I mean we -- as you mentioned, we try to prioritize our own molecules, our utilization was good this quarter. We use third-party molecules to flex up and down depending on customer demand and location. So that's pretty much it.

[Operator Instructions] We'll go next now to Spencer Lehman, private investor.

Great news here in the last few weeks. And a couple of questions, just maybe on the stock share structure. I've been with you for many years, and it's always been an interesting little company because there's 80% inside control and it's very thin. And that's been -- there's an advantage and a disadvantage to that. And I've always sort of -- when that subject has come up in the past, there's always been a suggestion that some day, of course, you'd come out with some full-blown, not an IPO, but like a secondary and raise some money.

And I'm just wondering this new project in Galveston, is this the project that might initiate that kind of development because, of course, that would be a great way to also to raise the financing for the project?

Spencer, thank you for being on the call. We appreciate your long-term engagement with the company and holding of your positions. So first of all, thank you for that and your supportive questions and intellectual thoughts and challenges on different things that we're working on. So we appreciate that, first of all.

Certainly, yes. I mean we need -- we're a public company because we're hoping to have growth and either be distributing capital to -- distributing dividends to shareholders or needing to grow and raise additional capital to do that growth. In the current structure that we've got proposed here, we believe we can do this project without a large dilution or any adjustment to the current shareholder base in the parent company, Stabilis.

However, this is an opportunity once the project is FID'd to go communicate with the market and shareholders about our different growth plans, what our activity is and some of the next stages of growth and what we're doing there. At that point in time, I think we have the company available to use all tools at our disposal to grow the company and meet our mission of providing clean LNG solutions to our clients. And we've got three markets that are dynamic and growing right now. And we've been working on this company for the past 13 to 20 years, this is not an overnight success, but our markets are coming on really strong right now, which may give an opportunity to do something around the capital structure there.

But we don't want to commit or make any guarantees or anything of that nature. We're really focused right now, Spencer, on the customers and on the revenue and earnings and on the current projects. And once that has clarity, then we've got, with Andy and our team will absolutely bring in people and advisers to make sure that we're optimizing this for all the shareholders to create the right return for the shareholders. It's long answer to the question, but I wanted to touch on it for you.

Yes. And I certainly like the idea of dilution of no dilution or very little dilution except at much higher prices, of course. And it would be a way of raising money, but not here. The -- just a small question though, when you came out with the announcement, I don't know if you noticed it, Andy, you might have noticed a few days afterwards, there was a 100,000 share block at $5 that came on. And I've never seen that. I'd been watching, been involved with the stock. I was just curious if you knew what that's all about and has been there. It stays there every day. And it's been nibble out a little bit, so it's down -- it's down to 94,000 now. But any idea what that's all about?

Spencer, we don't know who that block is, who's offering that.

Yes. because there could be an institution or a fund or something. But is this -- it's a little bit of a cap right now on the price, but just curious. Well, anyway, great, hope everything works out, and thanks for keeping us informed.

Well, Spencer, we appreciate you being a long-term holder. We're a long-term holder. We believe that the company will over time rerate what the future value is seen with the company, and we'll have some turnover of some of the shareholders during that period of time. And everybody has different bases for different reasons. But we're believers in the long-term value of the company, we're holders right now. As Andy stated, I can't help to be really positive on the company, the future of the company, the outlook for the value. And so I'm always -- I'm super long, super believer in it. And -- but have a long view and believe that these projects and growth and customers will drive that value over time. And that's what we're super focused on here is those.

And just a quick second part of that is you don't mention data centers too much, but is that included when you say power generation? Is that what you're...

Absolutely. We call about distributed power, what we're talking about is the increased demand on the grid and on how power is distributed to projects. and where the LNG is really working is when they want the power closer to the project or they can't get grid, they can't get pipe and LNG comes into bridge that natural gas power solution. So data centers for computing demand on power are driving a lot of the increased needs.

And secondly, I just think the reshoring and the increased manufacturing in the United States is also adding some increased demand and draw on the grid. The grid has been really stable for a long time. It's not shown a ton of increase, but we think it is coming. And from what we're seeing, distributed power is a good solution on both timing and cost for these projects.

Okay. Yes, I think energy is a great place to be right now, so good.

We like it.

[Operator Instructions] And gentlemen, it appears we have no further questions this morning, Mr. Puhala. I'd like to turn the conference back to you, sir, for any closing comments.

Well, thanks, Boe, for everyone who joined us today. I appreciate your time and your support of the company. We look forward to giving you updates on some of these exciting projects in the future. If you have any questions in the interim, please feel free to reach out to me or our Investor Relations contact number, and we'll be happy to talk to you. Thanks a lot, everybody. This concludes our call. You can now disconnect.

Thank you.

Thank you, Mr. Puhala. Thank you, Mr. Crenshaw. Again, ladies and gentlemen, this will conclude the Stabilis Solutions' third quarter earnings conference. Again, thanks so much for joining us, everyone, and we wish you all a great day. Bye.