Solaris Energy Infrastructure, Inc.(SEI) - 2025 Q2 - Quarterly Results

Executive Summary & Key Updates Second Quarter 2025 Highlights Solaris Energy Infrastructure announced strong Q2 2025 results, updated guidance, and continued shareholder returns - Solaris delivered strong Q2 2025 financial and operational results[1] - The company updated its earnings guidance and announced continued shareholder returns[1] CEO Commentary The CEO highlighted strong Q2 performance driven by strategic growth in Power Solutions and free cash flow from Logistics Solutions - Solaris executed its strategy of growing the Power Solutions segment and generating substantial free cash flow in Logistics Solutions[3] - Operational achievements include expanding the power fleet, accelerating power delivery on a data center project, and securing multi-year contracts[4] - Prospects for continued growth in the Power Solutions segment are strong[4] Segment Performance Overview (Q2 2025) Solaris Power Solutions Segment The Power Solutions segment saw significant sequential growth in revenue and profitability, leading to updated guidance and new financing Revenue and Profitability Q2 2025 Financial Metrics | Metric | Q2 2025 | Sequential Change (QoQ) | | :----- | :------ | :----------------------- | | Revenue | $149 million | +18% | | Net Income | $24 million | N/A | | Diluted Class A EPS | $0.30 | N/A | | Adjusted Pro Forma Net Income | $25 million | N/A | | Adjusted Pro Forma Diluted EPS | $0.34 | N/A | | Total Adjusted EBITDA | $61 million | +29% | | Adjusted EBITDA attributable to Solaris | ~$62 million | N/A | Guidance - Increased third quarter 2025 Adjusted EBITDA guidance to $58-63 million from previous guidance of $55-60 million[6] - Established fourth quarter 2025 Adjusted EBITDA guidance in-line with third quarter 2025 at $58-63 million[6] Financing and Balance Sheet - Closed $155 million of 4.75% senior convertible notes during Q2 2025[6] - Stateline JV closed a $550 million senior secured loan facility, with an initial draw of $72 million[6] Balance Sheet Summary (as of June 30, 2025) | Metric | Consolidated | Attributable to Solaris | | :--------------------------- | :----------- | :---------------------- | | Total Debt | $535 million | $500 million | | Total Cash | $139 million | $119 million | Shareholder Returns - Approved third quarter 2025 dividend of $0.12 per share, marking Solaris' 28th consecutive dividend[6] Operational Activity Capacity Earning Revenue | Metric | Q2 2025 | Q1 2025 | Sequential Change (QoQ) | | :----- | :------ | :------ | :----------------------- | | Average Capacity Earning Revenue | ~600 MW | ~390 MW | +53% | Solaris Logistics Solutions Segment The Logistics Solutions segment experienced a sequential decline in revenue and profitability due to fewer fully utilized systems Revenue and Profitability Q2 2025 Financial Metrics | Metric | Q2 2025 | Sequential Change (QoQ) | | :----- | :------ | :----------------------- | | Revenue | $74 million | -4% | | Segment Adjusted EBITDA | $23 million | -13% | - Profitability decreased primarily due to the decrease in fully-utilized system count and higher fixed cost absorption[9] Operational Activity System Utilization | Metric | Q2 2025 | Sequential Change (QoQ) | | :----- | :------ | :----------------------- | | Fully Utilized Systems | 94 | -4% | - The decline in fully utilized systems occurred amidst lower commodity prices[9] Consolidated Financial Statements Consolidated Statements of Operations Solaris reported substantial year-over-year growth in revenue, operating income, and net income for Q2 and the first half of 2025 Financial Performance Summary | Metric (in thousands) | Q2 2025 | Q2 2024 | YoY Change | 6 Months 2025 | 6 Months 2024 | YoY Change | | :-------------------- | :------ | :------ | :--------- | :------------ | :------------ | :--------- | | Total Revenue | $149,328 | $73,886 | +102.1% | $275,660 | $141,776 | +94.4% | | Operating Income | $35,569 | $11,854 | +200.0% | $57,624 | $21,810 | +164.2% | | Net Income | $24,129 | $9,824 | +145.6% | $37,097 | $17,124 | +116.6% | | Net Income attributable to Solaris | $11,955 | $6,208 | +92.6% | $17,275 | $10,525 | +64.1% | | Earnings per share - diluted | $0.30 | $0.20 | +50.0% | $0.44 | $0.35 | +25.7% | Detailed Segment Reporting Segment Descriptions and Financial Performance Solaris operates two segments: Power Solutions, which showed significant growth, and Logistics Solutions, which saw a slight decline - Solaris Power Solutions provides configurable natural gas-powered mobile turbines, primarily leasing to data center and energy customers[22] - Solaris Logistics Solutions designs and manufactures specialized equipment for managing raw materials in oil and natural gas wells[22] Segment Financial Summary | Metric (in thousands) | Segment | Q2 2025 | Q2 2024 | YoY Change | 6 Months 2025 | 6 Months 2024 | YoY Change | | :-------------------- | :------ | :------ | :--------- | :------------ | :------------ | :--------- | | Revenue | | | | | | | | | Solaris Power Solutions | | $75,625 | $0 | N/A | $125,000 | $0 | N/A | | Solaris Logistics Solutions | | $73,703 | $73,886 | -0.2% | $150,660 | $141,776 | +6.3% | | Adjusted EBITDA | | | | | | | | | Solaris Power Solutions | | $45,657 | $0 | N/A | $77,562 | $0 | N/A | | Solaris Logistics Solutions | | $22,714 | $28,181 | -19.4% | $48,688 | $54,041 | -9.9% | | Total Adjusted EBITDA | | $60,607 | $20,797 | +191.4% | $107,488 | $43,484 | +147.2% | | Capital Expenditures | | | | | | | | | Solaris Power Solutions | | $183,510 | $0 | N/A | $325,588 | $0 | N/A | | Solaris Logistics Solutions | | $1,491 | $624 | +138.9% | $3,693 | $3,748 | -1.5% | | Total Capital Expenditures | | $185,124 | $663 | +27820.7% | $329,454 | $4,021 | +8090.8% | Non-GAAP Financial Measures and Reconciliations About Non-GAAP Measures Solaris uses non-GAAP measures like Adjusted EBITDA and Adjusted pro forma net income to supplement GAAP results for better comparability - Non-GAAP financial measures are used to provide useful information on core operating results and facilitate comparisons[12] - These non-GAAP measures are considered supplemental and should not be used as a substitute for or superior to GAAP measures[12] EBITDA and Adjusted EBITDA Reconciliation The company provides reconciliations from GAAP net income to EBITDA and Adjusted EBITDA to enhance comparability - EBITDA is defined as net income plus depreciation and amortization expense, interest expense, and income tax expense[26] - Adjusted EBITDA further includes stock-based compensation expense and certain non-cash or non-recurring items[26] Reconciliation of Net Income to Adjusted EBITDA | Metric (in thousands) | Q2 2025 | Q2 2024 | YoY Change | 6 Months 2025 | 6 Months 2024 | YoY Change | | :-------------------- | :------ | :------ | :--------- | :------------ | :------------ | :--------- | | Net Income | $24,129 | $9,824 | +145.6% | $37,097 | $17,124 | +116.6% | | EBITDA | $53,946 | $21,419 | +151.9% | $96,065 | $41,309 | +132.5% | | Total Adjusted EBITDA | $60,607 | $20,797 | +191.4% | $107,488 | $43,484 | +147.2% | | Adjusted EBITDA attributable to Solaris | $62,237 | $20,797 | +199.3% | $109,118 | $43,484 | +150.9% | Cash and Debt Attributable to Solaris The company details its consolidated cash and debt positions and the amounts attributable to Solaris after accounting for non-controlling interests Cash and Debt Summary (as of June 30, 2025) | Metric (in thousands) | Consolidated | Attributable to Solaris | | :--------------------------------------- | :----------- | :---------------------- | | Cash and cash equivalents | $99,626 | N/A | | Restricted cash | $39,416 | N/A | | Consolidated cash | $139,042 | $118,711 | | Long-term debt, current portion | $16,714 | N/A | | Long-term debt, net of current portion | $369,518 | N/A | | Convertible notes | $149,267 | N/A | | Consolidated debt and convertible notes | $535,499 | $499,978 | Adjusted Pro Forma Net Income and EPS Reconciliation Adjusted pro forma metrics are presented to provide a comparable view of operating performance assuming full LLC membership exchange - Adjusted pro forma net income assumes the full exchange of all outstanding Solaris LLC membership interests and adjusts for certain non-recurring items[32] - These measures facilitate comparisons by eliminating the effect of changes in net income attributable to Solaris from ownership increases[33] Reconciliation to Adjusted Pro Forma Net Income and EPS | Metric (in thousands, except per share data) | Q2 2025 | Q2 2024 | YoY Change | 6 Months 2025 | 6 Months 2024 | YoY Change | | :----------------------------------------- | :------ | :------ | :--------- | :------------ | :------------ | :--------- | | Net income attributable to Solaris | $11,955 | $6,208 | +92.6% | $17,275 | $10,525 | +64.1% | | Adjusted pro forma net income | $24,634 | $5,965 | +312.9% | $38,476 | $13,219 | +191.1% | | Adjusted pro forma earnings per share - diluted | $0.34 | $0.13 | +161.5% | $0.55 | $0.30 | +83.3% | Corporate Information and Disclosures Conference Call Information Solaris will host a conference call on July 24, 2025, to discuss its second quarter 2025 results - A conference call to discuss Q2 2025 results is scheduled for Thursday, July 24, 2025, at 8:00 a.m. Central Time[10] - Participants can join via dial-in or live webcast, with an audio replay available for approximately seven days[10][11] Company Profile Solaris provides mobile equipment-based solutions for distributed power generation and raw material management for oil and gas wells - Solaris Energy Infrastructure provides mobile and scalable equipment-based solutions for distributed power generation[13] - The company also manages raw materials used in the completion of oil and natural gas wells[13] - Solaris serves multiple U.S. end markets, including energy, data centers, and other commercial and industrial sectors[13] Forward-Looking Statements This report contains forward-looking statements, and readers are cautioned that actual results may differ due to inherent risks - The press release contains forward-looking statements concerning business strategy, future profitability, and industry conditions[14] - Actual results may differ materially from forward-looking statements due to inherent uncertainties, risks, and changes in circumstances[14] - Readers are advised to refer to the 'Risk Factors' sections in the company's SEC filings for detailed risks[14]