Solaris Oilfield Infrastructure(SOI)2024-08-10 06:40Financial Data and Key Metrics Changes - Solaris generated 21 million in adjusted EBITDA, and 5 million to shareholders in dividends [4][10] - Operating cash flow was 1 million in capital expenditures, resulting in 16 million and net debt of 53 million of available liquidity [10] Business Line Data and Key Metrics Changes - The well site equipment rental business experienced a 10% decrease in fully utilized systems from Q1 2024, averaging 56 frac crews, down from 64 [10] - Ancillary services contribution improved due to increased fleets utilizing last-mile trucking services, with total annualized contribution margin per fully utilized system remaining roughly flat at 1.9 million [11] Market Data and Key Metrics Changes - U.S. drilling and completions activity showed anticipated choppiness, particularly in natural gas-exposed basins due to low gas prices, but stabilization was noted in gas-exposed activity and continued strength in oil basins like the Permian [7] - For Q3 2024, activity levels are expected to be relatively flat compared to Q2 [7][12] Company Strategy and Development Direction - The acquisition of Mobile Energy Rentals (MER) is seen as transformative, providing Solaris with entry into a new mobile distributed power product line and exposure to multiple end markets [4][5] - The company aims to sustain and grow shareholder return programs while increasing liquidity and strengthening the balance sheet [9] - Solaris plans to leverage operational synergies and cross-selling opportunities due to its presence on one-third of U.S. completion sites [6] Management's Comments on Operating Environment and Future Outlook - Management expressed a stable outlook for the completion market, with no radical changes expected in the near term [14][15] - The company is prepared for potential increases in activity, with a well-prepared balance sheet and mobile assets ready for deployment [20] - The management highlighted the importance of the MER acquisition in driving future growth and enhancing cash flow resilience [8][31] Other Important Information - The company announced a third quarter dividend of $0.12 per share, continuing its commitment to shareholder returns [8] - The definitive proxy for the MER acquisition has been filed, with a special meeting scheduled for August 30, 2024, to seek shareholder approval [13][29] Q&A Session Summary Question: Outlook for the completion market in Q4 and early 2025 - Management indicated that the market feels stable, with no significant changes expected going into early 2025 [14][15] Question: Market share gains from new technology rollouts - Management noted that the new top fill loading system has positioned the company well for business in the Rockies and Northeast [17][18] Question: Exposure to gas basins and potential activity uptick - Management stated that while there is no clear visibility into a pickup in the Haynesville, the company is prepared for increased activity with available assets [19][20] Question: Impact of U.S. Silica acquisition on Solaris - Management believes that the acquisition of U.S. Silica will not change their market position [21] Question: Long-term vision for MER business outside oil and gas - Management forecasts a 50:50 split between oil and gas and other markets within a year, with potential for international expansion [23][24] Question: Increased demand post-MER acquisition announcement - Management confirmed increased customer interest and synergy discussions since the acquisition announcement [28]