Financial Data and Key Metrics Changes - Solaris generated total revenue of 37 million, representing a 68% increase from the prior quarter [39] - The company expects adjusted EBITDA to range between 48 million in Q1 2025 and between 55 million for Q2 2025 [43][44] Business Line Data and Key Metrics Changes - Solaris Power Solutions contributed more than 50% of the adjusted EBITDA mix in Q4 2024 and is projected to contribute nearly 80% of earnings after the on-order fleet is deployed [40] - The average megawatts earning revenue in Solaris Power Solutions is expected to increase by 20% to 360 megawatts in Q1 2025 and by 17% to approximately 420 megawatts in Q2 2025 [40][41] - Solaris Logistics expects a 15% sequential increase in fully utilized systems, driven by technology adoption and market share gains [24] Market Data and Key Metrics Changes - The demand for power is being driven by the electrification of everything, domestic reshoring of manufacturing, and the growing number of data centers [13] - The company is well-positioned to supply behind-the-meter long-term power solutions due to extended grid interconnection wait times [14] - The average contract tenor has extended from approximately six months to four to five years, indicating a shift towards more permanent power solutions [34] Company Strategy and Development Direction - Solaris is focused on building a premier behind-the-meter power as a service company, with plans to grow its power solutions fleet from 150 megawatts to approximately 1,400 megawatts by early 2027 [9][10] - The company is forming a strategic long-term partnership with a customer for a minimum of 500 megawatts for a new data center, indicating a commitment to long-term power solutions [11][32] - Solaris aims to maximize shareholder value through growth while maintaining its dividend and strong financial profile [26][44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth opportunities within the market, balancing execution capabilities with equipment supply and team growth [49] - The company is optimistic about the potential for its fleet to continue to grow and expand into adjacencies such as distribution and emissions control equipment [37] - Management highlighted the importance of delivering reliable power as a service, emphasizing the need for a culture of collaboration and problem-solving [15][93] Other Important Information - Solaris announced its 26th consecutive dividend of 198 million to shareholders since initiating its shareholder returns program in 2018 [44] Q&A Session Summary Question: What is the vision for the new relationship and opportunities in the next few years? - Management acknowledged the rapid growth and emphasized the importance of executing flawlessly while balancing team growth and equipment supply [48] Question: Has there been any material change in the price per megawatt given demand and supply chain constraints? - Management noted a gradual increase in costs but indicated that it has not been material yet [52] Question: Can you provide context on the complexity required to power generative AI data centers? - Management stated that their solution is competitive with grid power and offers customers a clearer view of long-term costs [62] Question: Are there ongoing conversations with other hyperscalers for new data center contracts? - Management confirmed numerous ongoing discussions with hyperscalers and heavy industrial activities needing power [68] Question: How aggressively will you market the 450 megawatts of uncontracted capacity? - Management indicated they are in active discussions and do not feel the need to rush, expecting similar contract tenors [73] Question: How important are lower emission solutions to your data center customers? - Management highlighted a mixed response but noted that they are adding emissions control technology to meet customer needs [78] Question: What is the expected timeline for contracting the 32% uncontracted capacity? - Management expects this to happen well within six to nine months [125]
Solaris Energy Infrastructure, Inc.(SEI) - 2024 Q4 - Earnings Call Transcript