Matthew Dhane

Matt Dhane of Tieton Capital Management inquired about the size and ramp-up schedule for recent program wins, the strategy behind the new Vietnam medical device manufacturing capability, and the drivers for the recent increase in new program bids.

Answer

President & CEO Brett Larsen explained that the new wins are predominantly around the $5 million program size, with a significant data processing contract potentially exceeding $20 million in service revenue. He noted that the Vietnam facility is now certified for medical products, with a program slated for FY26, which is expected to attract more opportunities. Larsen attributed the increased bidding activity to improved cost competitiveness from recent cost reductions and the company's enhanced global footprint, particularly the new Arkansas facility, which offers customers better tariff mitigation options.

Matthew Dhane of Tieton Capital Management asked for more details on R&D projects for specific clients and sought color on the momentum in the Smart Water segment, specifically for the Aquana and Hydroconn products.

Answer

CEO and President Richard Kelley explained that some large-scale projects require significant upfront R&D investment and that the company is investing in future revenue streams across its new segments, but could not provide specific project details. On the Smart Water segment, he noted Hydroconn saw an unexpected year-over-year uptake due to municipalities adopting automated meter technology. For Aquana, he highlighted positive feedback from its first commercial deliveries, growing orders, and early-stage discussions for additional international projects.

Matthew Dhane of Tieton Capital Management questioned how the aerospace market has developed relative to Stabilis's expectations and whether it is an industry where long-term contracts are expected to play a role.

Answer

President and CEO Westervelt Ballard responded that the aerospace market is developing as anticipated, acknowledging its inherent lumpiness. He confirmed that Stabilis recently secured a contract with some ratability, a new and positive development. Ballard expects to maintain market leadership as demand grows from both existing and new participants in the space industry.