Stabilis Solutions (SLNG) Q3 2026 earnings review
Stabilis data center sales jump, but free cash runs low
Stabilis Solutions, a supplier of liquefied natural gas for mobile power and rockets, returned to a small profit as new data center work replaced expired contracts. Revenue rose 25% from last quarter to $15 million, while aerospace sales grew 49% from a year ago. Interim chief executive Casey Crenshaw kept the two-year data center contract on track for early 2027, though third-quarter sales fell short of the quarterly pace implied by our math from last quarter's second-half outlook.
| Revenue | $14.8M +25% from last quarter; -27% from a year ago |
|---|---|
| Data center share of revenue | 17% up from <1% last quarter |
| Unrestricted cash | $1.5M down from $4.5M last quarter ($16.8M is restricted) |
| 2027 outlook | Unchanged 2027 data center contract on track for Q1 start |
⚖️ Verdict: ⚪ Neutral
The story is unchanged because operational progress on the data center pivot was offset by a tighter unrestricted cash cushion. Ending a costly marine ship lease and starting a short-term data center job swung net income back into the black. One caution: excluding the final $5 million customer prepayment, operating cash flow was negative by our math, leaving $1.5 million of unrestricted cash.
The question now is whether the 2027 data center contract builds a repeatable business or merely creates another two-year revenue cliff when it expires in 2029. Bulls see the first of several power awards, while sceptics see one temporary bridge deal and a tight balance sheet. New multi-year contract wins and first-quarter 2027 cash collections will settle it.
🐂 Bull Case
Data Center Work Lifted Revenue From Last Quarter
Stabilis supplies liquefied natural gas (LNG), natural gas cooled into a liquid for transport, to sites that need temporary power. After two major marine and power contracts ended late last year, interim chief executive Casey Crenshaw pivoted the Texas-based group toward data centers that need power before grid connections arrive. The company also uses fuel produced by third-party plants so it can scale deliveries beyond its own factory capacity.
In the third quarter, data center sales jumped to 17% of revenue from under 1% in the second quarter. By our math, that short-term commissioning job brought in about $2.5 million and drove nearly all of the $2.9 million quarterly revenue increase. The customer on the larger deal — "a multi-year agreement to supply LNG for behind-the-meter power generation at a U.S. data center" starting in early 2027 — paid its final $5.0 million advance, bringing total prepayments to $25.0 million.
This matters because the short-term job proves Stabilis can execute on-site data center fueling while preparing its two-year contract. What to watch: first fuel deliveries and falling deferred revenue in the first quarter of 2027. A timely start will turn those prepayments into recognized sales.
Rocket Launches Keep Driving Aerospace Sales
Commercial space companies buy high-purity LNG from Stabilis to fuel rocket tests and orbital launches. Crenshaw said demand in this market stays strong "as launch and testing activity among our commercial space customers continues to drive LNG volumes". Aerospace revenue rose 49% from a year ago in the third quarter.
That growth came on top of an 88% jump in the third quarter of last year, when the fuel supplier added a new space customer. Because aerospace kept expanding against its toughest comparison of the year, it helped cushion the loss of last year's marine and power deals. What to watch: whether Stabilis discloses aerospace's exact dollar share of revenue in the quarterly filing. A growing share reduces reliance on single power projects.
Ending the Ship Charter Restored Profit
During the first half of 2026, Stabilis paid $4.3 million to lease a marine bunkering ship for a customer contract that never happened. Management terminated that ship charter late in the second quarter and said it would not hurt earnings after June. The third quarter confirmed the clean break, with vessel time charter expense dropping from $2.9 million (23.9% of revenue) in the second quarter to zero.
At the same time, higher sales volumes helped cost of revenues — the direct cost of fuel and delivery — fall by 9.5 percentage points from last quarter to 70.8% of revenue. Overhead expenses stayed flat at $2.5 million, so the company swung from a $4.6 million net loss in the second quarter to a $0.2 million profit. What to watch: cost of revenues as a share of sales in the fourth quarter. Holding near 71% will keep the business profitable before the 2027 contract starts.
🐻 Bear Case
Unrestricted Cash Fell to $1.5 Million
Stabilis highlighted $18.4 million of total cash and $3.9 million of operating cash flow in the third quarter. However, the balance sheet shows that $16.8 million of that cash is restricted for building out the 2027 data center project. Cash the company can freely spend dropped from $4.5 million in June to $1.5 million in September.
- Unrestricted cash: $1.5 million, down 66% from $4.5 million last quarter
- Restricted cash: $16.8 million, up from $14.3 million last quarter
- Operating cash flow excluding the $5.0 million customer prepayment: -$1.1 million by our math
- Current debt due within a year: $2.4 million, up from $1.4 million in June
This matters because the final $5.0 million customer advance arrived this quarter, so prepayments will not boost operating cash flow in the fourth quarter. Meanwhile, unpaid customer bills jumped by $2.8 million and equipment spending reached $4.0 million. What to watch: borrowing availability and loan covenant details in the third-quarter filing. With $1.5 million of free cash against $2.4 million of near-term debt, collecting receivables quickly is vital to avoid issuing shares.
One Contract Still Carries the 2027 Plan
When two contracts worth 51% of 2025 sales ended last winter, revenue fell 27% from a year ago in the third quarter. Crenshaw said the team is chasing more data center deals that would "extend our growth beyond the contracts already in hand". Yet Stabilis announced no new long-term contracts this quarter, leaving its 2027 growth dependent on a single two-year data center agreement.
Meanwhile, Crenshaw said the group is still "engaging with prospective customers and financing partners as we work toward a final investment decision" on its proposed Galveston liquefaction plant, again giving no start date. In addition, third-quarter revenue of $14.8 million fell short of the $16.7 million quarterly average implied by our math from last quarter's second-half outlook. What to watch: a signed multi-year data center or Galveston customer contract. Without a second big award, revenue faces another drop when the two-year contract ends in 2029.
Risks this quarter didn't answer
Four standing concerns around profitability, contracts and leadership received no new disclosure in the earnings release.
- 2027 contract profit margin: the release gave no update on third-party LNG supply costs or whether the company still targets a high-teens operating cash profit margin next year.
- Aerospace customer commitments: sales grew 49%, but management gave no sign that space customers have signed multi-year volume guarantees.
- Executive leadership: Crenshaw remains interim chief executive for an eighth straight quarter with no timeline for a permanent replacement.
- Related-party spending and share sales: the release does not show equipment purchases from major shareholder Chart E&C or whether Stabilis sold shares under its equity program; the quarterly filing will show both.
💲 Other KPIs
Unpaid customer bills jumped 82% from $3.4 million in the second quarter, rising more than three times as fast as the 25% sequential increase in revenue. Because the short-term data center contract ramped up during the quarter, that $2.8 million working-capital build absorbed cash before customers paid their invoices.
Spending on property and equipment rose from $2.3 million in the second quarter to $4.0 million, or 26.7% of revenue by our math. Over the first nine months of 2026, the LNG supplier spent $11.5 million on equipment — more than double the $5.0 million spent a year ago — to prepare for the 2027 data center contract.
Combined current and long-term notes payable rose 9.2% from $7.5 million in June to $8.2 million in September by our math, despite $0.4 million of principal payments on debt and leases during the quarter. Meanwhile, the current portion due within 12 months climbed from $1.4 million at June 30 to $2.4 million.
🔮 Guidance
Unchanged in direction, though less specific in the release. Crenshaw said Stabilis is positioned "to deliver profitable growth for 2027" as the two-year data center contract begins in the first quarter. Last quarter, management forecast 2027 sales well over $100 million and an operating cash profit margin in the high teens; the conference call will show if those exact targets still stand.
❓ Key Questions
Does the $100 million 2027 revenue plan still hold?
Last quarter management forecast 2027 revenue well over $100 million and a second-half 2026 revenue jump of over 50%. The third-quarter release mentions neither figure, and hitting the second-half floor now requires $18.6 million in the fourth quarter by our math.
Why did unrestricted cash fall to $1.5 million?
Unrestricted cash dropped by $3.0 million in the third quarter while current debt rose to $2.4 million. Now that the $25.0 million customer prepayment schedule is complete, how will Stabilis fund fourth-quarter working capital without tapping its share-sale program?
What profit margin does the 2027 contract carry?
The two-year data center contract relies heavily on buying LNG from third-party plants. Management has not disclosed the gross margin on those deliveries or how minimum take-or-pay volumes protect profit if the customer's power needs shift.
When will Galveston reach a final investment decision?
Management originally targeted a final investment decision on the $350–400 million Galveston liquefaction project in early 2026. After losing an anchor customer earlier this year, how much more engineering cash will Stabilis spend before securing financing?