Stabilis Solutions, a small-scale LNG provider, just held its first-quarter 2024 earnings call. While the headlines focused on the company's impressive profitability and the continued strength of its marine bunkering contract with Carnival Corporation, a deeper dive into the transcript reveals a hidden signal that could point to an explosive growth trajectory for this under-the-radar energy player.

The key lies in a seemingly innocuous statement by CEO Westy Ballard: "Entering 2024, we are seeing a significant increase in quoting activity that points to a positive demand inflection within both our marine and aerospace markets." This statement, combined with Ballard's assertion that the company's owned liquefaction plants will be effectively sold out by mid-2024, suggests a potential tsunami of new contracts on the horizon.

But here's the twist that no other analysts seem to be picking up on: the potential magnitude of this demand wave. Ballard reveals that the addressable market for marine bunkering alone has ballooned to over 500 ships, a doubling from just three years ago and a staggering fifteenfold increase from six years ago. This explosive growth in LNG-fueled vessels creates an unprecedented opportunity for Stabilis, a company uniquely positioned to capitalize on this burgeoning demand.

""Today, Stabilis is one of only a handful of profitable, well-capitalized, proven operators in the energy transition market as demonstrated by our actions over the last 24 months and more recently, as demonstrated by our strong first quarter results, which included a significant increase in available liquidity and a net leverage ratio around zero." - Westy Ballard, CEO of Stabilis Solutions"

Unlike its larger, world-scale LNG competitors, Stabilis focuses on small-scale, modular LNG production, a strategy that provides remarkable flexibility and agility. The company can swiftly deploy new production trains in 12 to 18 months, a fraction of the time required for massive, world-scale facilities. This nimbleness allows Stabilis to respond quickly to emerging demand hotspots, a critical advantage in the rapidly evolving marine bunkering market.

Furthermore, Stabilis has a unique competitive edge: its extensive third-party LNG supply network. While its owned plants are nearing capacity, this network allows the company to seamlessly meet incremental demand while new infrastructure is being built. This dual-pronged approach, combining owned production with third-party sourcing, gives Stabilis an unparalleled ability to scale its operations in sync with market growth.

Growth in Addressable Market for Marine Bunkering

The chart below illustrates the rapid growth in Stabilis Solution's addressable market for marine bunkering over the past six years, based on data provided by CEO Westy Ballard during the Q1 2024 earnings call.

The aerospace market, a smaller but highly profitable segment for Stabilis, is also exhibiting signs of significant expansion. Ballard reports a substantial increase in quoting activity, hinting at a potential surge in demand for the company's high-purity methane, the preferred fuel for space rockets. While the specifics of these potential contracts remain undisclosed, the trend points towards another avenue of rapid growth for the company.

To quantify the potential impact of these demand inflections, consider this: marine revenue currently accounts for roughly one-third of Stabilis' total revenue. With the addressable market for LNG-fueled vessels doubling in the last three years, it's not unreasonable to hypothesize a similar, if not greater, increase in marine revenue over the next three years. This explosive growth, coupled with the anticipated expansion in the aerospace sector, could propel Stabilis into a completely different revenue league.

Adding fuel to the fire, Stabilis is actively exploring avenues for capacity growth. The company is flush with cash, boasting a net leverage ratio of just 0.1 times EBITDA, providing a solid foundation for organic investments. Furthermore, Stabilis is courting strategic partners who understand the immense upside potential of the small-scale LNG market, hinting at the possibility of transformative capital infusions that could further accelerate the company's growth trajectory.

What does this all mean for investors? Stabilis Solutions, a company flying under the radar of many analysts, could be on the verge of an explosive growth phase. The confluence of a burgeoning market for LNG-fueled vessels, a rapidly expanding aerospace sector, and the company's unique operational flexibility and financial strength creates a compelling investment narrative. Stabilis is not simply riding the energy transition wave, it's shaping it, establishing itself as the go-to provider for small-scale, last-mile clean fueling solutions. The hidden signal in the earnings call is clear: this tiny LNG player is poised to become a giant.

"Fun Fact LNG is natural gas that has been cooled to a liquid state, reducing its volume by about 600 times. This makes it much easier and safer to transport and store, opening up a world of possibilities for clean energy solutions in remote locations and emerging markets."