Stabilis Solutions Inc (SLNG) 2019 Q4 法說會逐字稿

Ladies and gentlemen, before we begin today's call, 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 beliefs and expectations as of today, March 12, 2020. Forward-looking statements are subject to the risks and uncertainties that may cause actual results to differ materially from those projected. The company undertakes no obligation to release the updates or revisions to the forward-looking statements made in today's conference call. Additional information concerning factors that could cause those differences is contained in the company's filings with the SEC and press release announcing this conference call. Investors are cautioned not to place undue reliance on any forward-looking statement.

I'd now like to welcome you all to the Stabilis Energy Q4 and Full Year 2019 Earnings Conference Call. Today's meeting is being recorded. And at this time, I am pleased to turn the call over to Jim Reddinger, President and CEO of Stabilis Energy. Please go ahead, sir.

Thanks much. This is Jim Reddinger, the President and CEO of Stabilis Energy. And with me is Andy Puhala, our Senior Vice President and Chief Financial Officer. Thank you for joining the call today.

We have a great fourth quarter and full year earnings to report today. LNG volumes delivered, revenue, earnings and cash flows all showed significant improvements for both periods, and this momentum is carried into the first quarter of 2020. Full year revenue year-over-year was up 26%, nearly $10 million. And EBITDA was up over 100%, which is an increase of nearly $3.5 million driven by improved performance in all aspects of the business, including increased LNG volumes, improved LNG pricing and higher rental and service fees.

Andy will start the call with a review of our financial results, and then I'll wrap up the call and take questions. Andy?

Thanks, Jim.

For the fourth quarter, Stabilis reported revenues of $12.5 million, an increase of 19% versus the $10.5 million reported in Q3. The sequential increase is primarily due to additional equipment rental revenue resulting from our normal seasonal winter peaking activities.

Total LNG volumes delivered were down 12% sequentially due to a temporary suspension of purchases by a customer and another customer gaining permanent access to a natural gas pipeline, which tempered our growth during the quarter. As a result of the above, utilization of our George West facility decreased to 64% in the quarter, down from 83% in Q3.

Adjusted EBITDA for the quarter was $2.2 million, and there were no material adjustments in the quarter as our transaction costs related to our merger with American Electric Technologies and other recent transactions are now behind us. This was a significant improvement of $1.8 million compared to the adjusted EBITDA we reported in Q3. Net loss for the quarter narrowed substantially to $0.6 million compared to a net loss of $3.4 million in the preceding quarter.

Looking at the Q4 year-over-year results, the company grew revenues 16% in the fourth quarter compared to Q4 of 2018. LNG revenues decreased by $0.3 million in Q4 due to fewer third-party gallons delivered as a result of a warmer and less active winter peaking season. As mentioned previously, the utilization of our George West plant was 64% in Q4, up from 55% in the year-ago quarter. Adjusted EBITDA of $2.2 million was 63% above the $1.3 million reported in the prior year quarter. Net loss narrowed substantially to $0.6 million from $3 million in the year-ago quarter.

For the full year 2019, revenues increased by $9.7 million or 26% due to significantly higher volumes of LNG delivered, increased equipment rental and the impact of the reverse merger. Revenues in our LNG segment were up 17% or $6.3 million on higher volumes despite lower average natural gas prices. LNG gallons delivered increased by 17% and utilization of our George West liquefaction facility was 70% for the full year compared to 49% in the prior year. Adjusted EBITDA improved by $3.4 million to $6.6 million, an improvement of over 100% in the current year. Net loss for the full year narrowed to $5.7 million, cutting 2018's loss by almost half.

When we originally discussed the merger with American Electric Technologies in December of 2018, we publicly stated we could expect to do $40 million to $50 million of revenue and $5 million to $9 million of EBITDA adjusted for deal costs in 2019, and we were able to deliver that range despite lower average gas prices, a weaker-than-normal winter peaking season and several customer-specific issues. We finished the year with a stronger balance sheet with more than 3x the cash on hand than at the end of the last year and improved financial ratios.

We expect 2020 to be another growth year for our core LNG business and have seen strong plant utilization in the first few months of 2020. However, our Brazilian operations and Chinese joint venture are likely to be challenged in the early part of 2020 due to the current uncertainty around oil prices and the likely impact of the COVID-19 virus.

I'll now turn the call back to Jim for some additional remarks.

Thanks, Andy. I'll make some quick comments on recent growth initiatives, and then we'll open the call for questions.

We recently announced that we have filed permits for an LNG production facility in Monterrey, Mexico. And this is consistent with plans that we've announced over the past several months. The permit includes plans to install a 20,000 LNG gallon per day facility that we already own, plus an additional 100,000 LNG gallon per day predict facility that would be very similar to our existing plant in George West, Texas. The plans also include the related LNG storage and truck loading facilities. We believe that the facility -- it would be possible to get the smaller facility installed and commissioned by the end of 2020. This is all being done in conjunction with our Mexican joint venture partner, CryoMex.

Recent sales activity in Mexico has been encouraging. We recently signed a multiyear LNG supply contract with the new industrial customer that could require up to 25,000 LNG gallons per day once fully operational. We're also in the process of bidding and negotiating other similar LNG supply agreements with customers in Mexico that we expect to have news on soon. We're pleased with the opportunities in front of us in Mexico but also in the domestic markets in the U.S. as well, and we plan to make announcements as final investment decisions are made on the Monterrey facility and potentially other facilities in Mexico.

As Andy mentioned, we've had a great start to 2020 and volumes, revenues and earnings are up substantially in the period to date. I want to emphasize for the call that our cash position is very strong, and our debt service obligations in 2020 are limited, and we're highly confident that the business will be in a strong financial position regardless of how the economy unfolds for the remainder of the year.

With that, I'll open the call up to questions.

(Operator Instructions) And we'll take our first question, and I do apologize if I mispronounce your last name, from Judson Tuohy with Tuohy Brothers.

Jim, Andy, this is Judson pitching in for Craig. Congrats on the results for the quarter and another good year for you guys. It sounds like the momentum is pretty good heading into the year, which you've highlighted. It's pretty recent that we've had this big falloff in liquids pricing. Do you see any concerns that, that could disincentivize LNG fuel switching as you're talking to potential customers, either domestically or in Mexico?

Thanks for joining on. We're obviously keeping our eyes open. I think from the bigger picture perspective, we remain highly optimistic that LNG, for a variety of reasons including costs but also including environmental and other operating efficiency, it's used as a fuel that people are going to continue to transition to. Good examples are there's a number of projects we're bidding on now in areas where it's very difficult, if not impossible, to permit things like diesel generators for remote power generation. So we think there's lots of strong underlying tailwinds on the LNG product and the features it brings to our customers. In the short term, we're certainly keeping our eyes open for whatever disruptions come. I know they could come in a number of forms. So it's hard to really predict that right now, Judson, but we haven't really changed our long-term view on how LNG is going to be a positive thing for our customers.

Got you. And just on the temporary suspension of a customer's purchases in the last quarter, do you see that is kind of a one-off? Can you share any backdrop on that?

Our customers come in a lot of shapes and sizes. Some of them have great visibility on the term they're going to use the LNG and some of them don't based on what their -- our customers' customers' needs are. So it really varies by customer and by period, so it's hard to predict. But that, Judson, it just happened to be in the fourth quarter. That was one event that we've talked about on previous calls that had some impact on the volumes we are sending out that quarter, but nothing to -- nothing we've got visibility on now to report on.

(Operator Instructions) Next, we'll hear from Matt Dhane at Tieton Capital Management.

Great. I was curious, if you look at your pipeline of opportunities for potential LNG customers in Mexico, to date, how would you compare it relative to what you were seeing 3 months ago? Do you continue to see a lot more new customers coming to you or potential new customers? Just talk to me about what you're seeing in the reception that you are getting down there.

Sure. Matt, thanks for the question. I'd say that our opportunities over the last quarter have increased substantially for a few reasons. One, as you've seen us announce to the public, the availability of a transportation hub in Mexico and the announcement of permitting progress in Monterrey have given us -- given our customers more visibility on our longer-term activities in the market. And I think that's helped. Two, we've, over the past 4, 5 months, significantly increased our headcount in sales. So we've got a couple of full-time people down there now solely focused on the market, and that's paid a lot of dividends. So I'd say the answer to your question directly is the amount of activity -- quoting activity has increased substantially, and the amount of general customer inbound interest has also increased substantially. So we're very optimistic on the market right now.

And next we'll take a question from [Mr. Billers] at [Needham-Dedham].

Yes, I just wanted to -- well, I just wanted an update as far as listing the company in the major exchanges regard. I think despite the acquisitions and achievement and progress you've made, I just think that listing the company in the major exchanges will give the company more exposure, you'll make it more attractive and enhance the value of the company's shareholders. So I just wanted an update as far as listing the company in the major exchanges.

Yes, thanks for the question. We continue to actively pursue a listing on a major exchange. Obviously, in the past month and over the period of time, we've been dealing with some external factors that are impacting that situation. So we'll continue to keep the public and our investors informed on our progress there. Right now, we don't have anything to announce, but we are continuing to take all measures we can to achieve a major exchange listing as soon as possible.

I have a follow-up question. Is there anything we as shareholders can help as far as listing the company in the exchanges, as far as we can help as shareholders?

It's a good question that I -- one I hadn't thought of. It's always great when our shareholders let the -- let their fellow investors and let public investors know about the great performance and opportunities of the company. So as much as you're able to let your counterparts know what we're doing, that's fantastic. I think that helps our visibility and then helps build our investor base. So aside from continuing to support the stock and participate on these calls, that's the best I can think of right now. But any attention that you can bring to the company, new investors you can bring to the company is always welcome.

And gentlemen, at this time, we have no signals from the audience. (Operator Instructions) And we have no signals over the phones. Mr. Reddinger, I'll turn it back to you for any additional or closing remarks, sir.

Great. Thanks, everyone, for joining. We're happy to announce a very positive fourth quarter in 2019. I want to take a chance to thank our team internally for all the great accomplishments last year and all the great work this year. So I appreciate everybody getting on the call today, and we'll be available for follow-up questions, if anyone has them, off-line. Thank you very much.

Ladies and gentlemen, this does conclude today's earnings release, and we do thank you all for your participation. You may now disconnect your lines, and we hope that you enjoy your weekend.