Financial Data and Key Metrics Changes - Solaris generated total revenue of $126 million in Q1 2025, reflecting a 31% increase from the prior quarter [25] - Adjusted EBITDA for the quarter was $47 million, representing a 25% increase from the prior quarter [25] - The average contract tenor for Power Solutions increased to approximately 5.5 years, compared to about 4 years last quarter and approximately 6 months when the MER transaction was closed [21][25] Business Line Data and Key Metrics Changes - Power Solutions contributed 55% of total segment adjusted EBITDA and is expected to contribute more than 80% of consolidated adjusted EBITDA after the on-order fleet is deployed [25] - Solaris Power Solutions generated revenue from approximately 390 megawatts of capacity during the first quarter [25] - Logistics Solutions saw system activity up over 25% sequentially, benefiting from seasonal rebound and new customer wins [14] Market Data and Key Metrics Changes - The company expects average megawatts earning revenue to increase by 13% sequentially to 440 megawatts in Q2 2025 and by 18% to approximately 520 megawatts in Q3 2025 [25] - Approximately 70% of the new pro forma delivered total fleet of 1,700 megawatts is contracted, with around 500 megawatts of open capacity available for bidding [10] Company Strategy and Development Direction - Solaris is focused on generating strong free cash flow from its logistics business and reinvesting that cash into its growing Power Solutions business [6] - The company aims to maximize shareholder value through growth while maintaining a strong financial profile [18] - Solaris is working on diversifying its customer base while securing extended contract tenors [80] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand for power solutions, citing ongoing discussions for additional oilfield applications and data center projects [33] - The company anticipates a slowdown in oil-directed activity if commodity prices remain low, which could impact the logistics segment [26][70] - Management highlighted the importance of regulatory challenges for data centers, which support the Power as a Service model [13] Other Important Information - Solaris has secured a senior secured term loan facility of up to $550 million to support approximately 80% of the forecasted CapEx requirements of the joint venture [21] - The company is planning to manufacture certain capital items in-house to reduce costs and enhance returns [29] Q&A Session Summary Question: What is the demand outlook for uncontracted assets? - Management indicated strong demand for uncontracted assets, with ongoing discussions for various applications [33] Question: What is the expected EBITDA per megawatt? - Management noted that the dollar per megawatt economics are in line with expectations, with some lumpiness due to ramping up costs [35][36] Question: Will clients be able to attain air permits in a reasonable time? - Management confirmed that the customer is following EPA guidelines and expects to obtain the necessary permits [43] Question: What is the ideal mix of contracted versus spot assets? - Management stated that most of the fleet will be used for medium to long-term contracts, with a small percentage available for emergency situations [56] Question: How are industrial opportunities evolving? - Management highlighted various industrial applications needing large power loads, including metals manufacturing and LNG export facilities [99]
Solaris Energy Infrastructure, Inc.(SEI) - 2025 Q1 - Earnings Call Transcript