Solaris Energy Infrastructure (SEI) 9 Aug 242024 Q2 Earnings call transcript

Good day, and welcome to the Solaris Second Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note today's event is being recorded.

I would now like to turn the conference over to Yvonne Fletcher, Senior Vice President, Finance and Investor Relations. Please go ahead.

operator. you, Thank welcome Conference and Solaris Quarter Second Good to Earnings Call. XXXX morning, the

today and Joining and our are us Chairman and Kyle our CEO, CFO, Ramachandran. President Zartler; Bill

of Please I'd comments not previously with to the begin, regarding nature substitute out be of make available conference the known refer financial future results our earnings considered we in and earnings reflect and posted LLC, some prepared issued release announced unknown of non-GAAP The of point along that this outline measures statements of public risks. cautionary statements today. Exchange we our Before Such forward-looking Rentals section our other be which remind you forward-looking discussion Energy Reconciliations remarks Mobile believe that in in of website. our performance. information risks. I comparable GAAP. in are yesterday, our call measures, to contain in our a on should like would is and today's release regarding Securities press recent that which will a GAAP number of the acquisition we Commission useful standard those results presentation may additional for news to financial can the with include like release will isolation filings or our as also evaluating and to accordance with

In to to materials are solicitation subject guidelines. rules proxy special addition, approval other because and transaction communication meeting, this is subject this a shareholder certain at and

Bill Zartler. to over call Chairman the CEO, and turn now I'll our

joining you, and for us morning. this you, Thank Yvonne, thank everyone,

dividends million deliver to continued $X $XX EBITDA million flow. strong $XXX customers. To million per million announced oilfield. quarter, acquisition flow, and adjusted free XXXX. After both second returned third second dividends that free $X.XX in returned $XX into in the quarter recently to incremental line Solaris generated quarter with shareholders announced dividend cash to markets accretive and a Rentals, mobile share and cash distributed a $XX to We revenue, a in share, we shareholders repurchases an new our recap we ended, which through of During with million of Energy Mobile Solaris shareholders our results, to produced to MER, and value cash result or of returned approximately exposure provides entry the multiple within in power since product and outside transformative will quarter end the

and invest points. inflection MER are also a of the provides to and but for opportunity acquisition market meet power. with demand Our Both not Solaris mobile current adds great team currently at distributed MER contracted a us business, to only primary capital visible exciting

is per is product new that we dollars coming off growth crew capital introduced a offering Solaris us program more complementary follow. frac earn we a where successful helping

Now with flow a are seeing significant complete, inflection the cash build-out of this free we product generation. line in is

significant generate trajectory. is expect to in quarters its in new its flow power Our free cash cash Solaris $XX and second we of seen quarterly cash we've flow core will free business million the X the quarter highest flow future years, growth that markets MER assets. in mobile in inflection generation as end underpins investments demand is point multiple seeing across growth growth well. MER's is continue

To MER provide. plan, which XXX from next more XXX year. roughly execute As size growth this needs megawatts a access capital, to can service and triple fleet late to today Solaris result, MER by plans its corporate approximately megawatts field than infrastructure, to

gas with combined opportunities. commercial midstream oil cross-selling with manufacturing long-standing U.S. capability potential engineering attractive operational the and Solaris' operators on presence our synergies. and completion provides sites in further And X/X companies the relationship and Additionally, of present U.S.,

happen at time, in in the points So share closing businesses our trajectory and couldn't anticipated excited and progress our XXXX. with third combination we're cash of about combined and this a after you the inflection our better respective quarter of growth timing to flow

Turning of back to levels. overview Solaris' wellsite equipment rental give a business. activity I'll industry brief

the gas completions a last saw earnings we strength activity Permian. result decline in choppiness we quarter, of in in second gas-exposed due continued drilling our in to as the of basins be appears stabilization gas-exposed referenced low and basins anticipated we U.S. and now call, prices. this Most us a oil to continued in the saw such as and natural decline During behind activity activity mostly

For expect the to we be flat second quarter activity levels third of relatively the quarter. XXXX, with

quarter commitment our to share, $X.XX the to earlier, returns. shareholder I'd third As Solaris recently mentioned per like Board and of I dividend our approved reiterate

diversification resilience compared attractive product the longer-term established a growing returning Solaris combined cash to cash the new invest investments another recent our with return prior the should MER of nature flow shareholders distributed record capital cycles. an enabled and growth. flow longer strengthen to earnings that returns of our shareholders. and of increased has meaningful growth and strategic forma capital in power grow to growth have moving pro ability investments and opportunity organic free drive introduces in We term. The an And our provide both. These the believe and earnings cash track power forward to stream, throughout continue to we cash acquisition to Solaris most do making continued our contracts as to support flow line, program, earnings

capital. growing liquidity, executing We and programs, shareholder strengthening sustaining and organic balance our will continue increasing on focus and sheet inorganic enhance return that opportunities the to right return our on our on our

a over it that, for to review. Kyle With turn financial I more detailed will

on $XX financial good operational net million. with we of revolving morning, $X from also $XX paid revolving second flow capital second and a and shareholders by debt and million our recapping will cash the $XX $X provide in million $XX was facility generated the returned quarter of free start flow, in million. update. Operating transaction million down total our our of cash I'll everyone. at credit results, After $XX and Bill, which and of debt expenditures, million we to credit facility end quarter million Thanks,

$XX approximately liquidity. available of We quarter million ended with the

quarter, activity as frac the and fully down first the an the of utilized of XXXX approximately was which in We of XXXX. frac XX XX, was XX% systems average Our of line from from followed second by in was crews with first in quarter crews, measured guidance. down XX quarter

that Ancillary services' per tonnes services contribution increase fleets improved day. last-mile to due delivered trucking an an in in in the quarter sequentially second increase and utilize

a $X followed contribution basis, per was second $X.X system fully was from X% improved nearly Excluding frac noncash were total approximately included multiple a tax as contribution million compensation settlement benefit and margin total wellsites margin equipment. SG&A $X.X favorable $X.X $X roughly per quarter property serviced to annualized by Solaris crew sequentially a of million. million of larger annualized cost utilized of sequentially stock-based at million million. On service, a in the of pieces in percentage flat

the the working Excluding capital settlement, of property impact neutral. tax use was

mentioned, quarter second million. capital As approximately the were in expenditures $X

our third quarter. guidance the for Turning to

to As such and to as average weakness completion in be natural activity support expect U.S. bottomed, prices as land Bill quarter from mentioned, we in stable appears continue gas to second basins third levels relatively activity Permian. have the oil the quarter flat

flat at to be We $X quarter relatively million. the approximately third expect sequentially SG&A in

flat pre-transaction expect pro closed and at count We rate to shares. be million tax forma pro be to dilutive XX.X the forma approximately the share XX%

to to transaction. I adjusted the we sequentially $XX flat the any to the brief impact expect For has and $XX Solaris' million, on quarter, filed the timeline. roughly now XXXX. stockholders mailing provide relating proxy commenced, definitive million third our EBITDA MER for a be meeting week excluding at from to materials, scheduled We this will acquisition August update transaction Special the is our stockholders. of our XX, proxy

third subject and to the to stockholder expect close of in We the and customary completion approval quarter closing continue conditions. the to transaction other HSR

the We are the and bringing acquisition on excited team closing MER about board.

to happy your be take we'd that, questions. With

comes from [Operator with Instructions] Sandler. first Lemoine Piper Today's Luke question

and Bill the just talked XQ and market. interplay frac both of you kind in Kyle, the about

see Wondering out 'XX, and really any the if in what's think just bit XQ a you point? a talk pragmatic Bill, at of you completion unfolding you have could stretch also have it always I you this you said see maybe then visibility how maybe basically little if market. and view, stabilizing. about happening beginning the you

that feels Well, of are set. budgets now, think sort like I right it

you market has sector. be this had feels netting consolidation to And been one do likely, may spending down where the You've here It upstream think pretty from like just the the with, more stable. it's I have up capital there. something one about but may election

one I year. first don't change going quarter of see the into a way or radical So next another

the up not gas the see early quarter probably may year, You activity fourth a next little in yet. bit pick

another. me we're So that at I radical a this really have or anything see shift to one going point way tells don't

comes next Our Stephen Instructions] [Operator question with today Gengaro from Stifel.

maybe two me. for guess I

And markets likely results the the about wellsite you -- markets obviously top seen that are past most of maybe jump I relative, and key think, that would the were see very speak Have rollouts the you've the the first good on sort of The that? gains the market. any you of out? the flexibility that? know new potential of was I about is, for what the I talked in on share market kind given curious some side, storage technology you are if Can systems. And there that of of to what kind that, to

system, is the probably which launched us business the us as to we're to trucks larger and what the in bringing especially on to eliminate onto rural deliver take up areas fill think narrow to the Well, additional those well XX and allowed where that's doing that. it's roads loads Rockies. the I And bigger Northeast now a less work top loading some and another you're pneumatic we really see to these positioned loads, in benefits referring tough the are in do means of Northeast trucks wellsite, sand in

loses take actually with positioned see So a that we've seen be sand as I technology and us And some momentum that our on and been of has continuing to proximity the places continues where wins well. see on wet that, to mine. to There do still works.

look, see So quarters. where stable. I in doing going with we I can I percentage we so win double-digit like technology, think, of think to but edges, see next this don't changes around I it's and mean, the is, -- are the said, some fairly market business, for the you're business couple it's not our

you get gas you an activity? that. or the start kind the to around a, exposure pickup in gas to far b, if I'm where a thinking export, side when Have maybe seen we were an look, kind and of generally see see as you to guys around Haynesville Haynesville little of stand and completion basins. gas would uptick sort I do gas, the and of earlier think, start on of expect as you a source prepping bit for And to to

I make I'll think I and we line of Haynesville. a have know of points. into a that clear the -- sight couple pickup don't say

the to ready has think with that think assets be around I But here. torque. that very is undeployed a bucket well have the well is are I Bill got highlight balance been or upgraded flatness spoken sheet short elevator compatibility. prepared We've of the in is for lot what term assets deployed important just to the

to got so a an lot inside company in anywhere or activity, for be ready in we've increase torque And of it the be Haynesville of whether else. the

assets assets depending our stronger. highly been where over on been we've those has able redeploy of are years, activity the XX mobile last market to All and

base over quite in is of what's late As significantly quarters that business untapped last is a we expanded could turned quarter, flow And multiple Bill compelling the our sits activity. in and is still second the be starting this the wellsite But quickly. earnings continue of as over Permian we rental The to I that of in think build and here cash really core alluded within is free see couple of Rockies business. lot to saw we've on largest years. our to, really

for MER And so of we strong our what the acquisition. that we're as a with be see company in to driver continuing doing optionality highlighted

to team that's or We've capacity, Haynesville we've ready we're to got to continue with a So I customers. grow ready anywhere it's motivated and go. whether think else, got

any U.S. just And on Great. the that this more. throw sandbox Do Silica question, one think then has and really you a could their know but in when of acquisition product. is look of I early you at sort guys? you acquisition if And impact I the

the it's the taking I going think private, position No. I don't in change it same it's mean that to business. their market.

Okay. Great.

Now your that your I and I but figured I'd ask, thought answer, just curious, I time. I was be would appreciate

And our comes today John Energy of next question from Partners. Daniel Daniel

step bit to gas? just and think X premature, back of term, outside long kind be and a years portion stuff little like you of Kyle MER oil of international. now, that but to would this the you Bill, opportunity, see there's tied if Yvonne, business from you think to do And might X an to what and take

any your there? done thoughts, Just you've work

think -- tend It is installations. view may I Those to heavily data chunks think forecast weighted out and horizon going that center say it's our a we larger I be larger is to little our XX-XX. the be be time world. a year, to

on So be works heavier it there. compatibility fuels handle places. a depending wide very globally you where got different it's of need of to power. stay. range with This of could lots can relatively little the a is growth Absolutely, It's weighted here, the well equipment composition power in here gas and

solely most where in that a go equipment good pretty makes if to point, So we, where North have U.S., not be visibility and talking we'll the about America we're to will this outside to backlog in focused work, which coming... afraid the the at go sense, of

enough. Fair

curious. had. Just I all That's

John. add team just I pretty experience extensive that various would power globally. in projects the has developing a MER

deal that's bring as well. asset to a So that critical they the

to know. Great. Good Okay.

our with Don from And Johnson comes Rice. today next Crist question

kind Since on one any on you have may Solaris' announcement or of MER. acquisition, the amongst the me the existing that of been Just have increased interest for side. customers demand seen

demand? Just announced up it any around the deal? kind thoughts since of you've Has picked

continue installations our work. on especially clearly Texas needs. and to the are I going and a to contact we've power how dialogue of trust lot to with in utilities Certainly. those acquisition had New and since struggle, and get much that West about of mean to Mexico are and ability in The we our customers we're lot going a get the current it to folks,

think just has there is up their it's I And that that been point, really we talked synergy so in as I -- about, inflection bring And real. we MER said.

both lead benefit So our operationally, is Solaris real and new overall forward. team to commercially going for reach, and our the a to going

hear through still one appreciate milestones kind that. and correctly can that that Did to you looking maybe need before Kyle, And I close? approval you any I for you. for HSR of you're get

regarding weeks from HSR did away back we proxy. we're definitive of Yes, couple a and FTC file hearing from the the

So We've the that's vote shareholder on set. file. got

to couple closing. of things more just to So and are progressing milestones well here a get

I back. turn it appreciate it. I'll

over turn our to to And for any question-and-answer this like concludes session. I'd the company the conference remarks. closing back

Rocco. Thanks,

the leg we've last quarter's Solaris' out. this in that at marks decade, since call, When the goals original mentioned We've as next as I'm I XX-year what and anniversary far we I the success the our founding. tool Solaris As decade. help year last a all our suppliers look have of last accomplished the with exceeded far continued team our back amazed and for can employees, identified laid believe the the making over that partnership people to right over business customers for right years. I'd in thank business next we MER Solaris position a like their XX with and of we

about providing about think excited delivering business highly we for you both and next a years, and look XX that our will new few line current building solutions the with new progress all, months. we customers our you value. our As forward solutions sharing Thank to relationships innovative in customers and we're

attending sir. thank all you, call. We you presentation. today's This for Thank today's concludes conference

have and a lines, your disconnect now may You wonderful day.