SOI - Earnings call transcript Q4 2018 | Solaris Energy Infrastructure Inc.

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Operator

Good morning and welcome to the Solaris Fourth Quarter and Full-Year 2018 Earnings Conference Call. [Operator Instructions] Please note this 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.

Yvonne Fletcher

Good morning and welcome to the Solaris Fourth Quarter and Full-Year 2018 Earnings Conference Call. by CFO, and Chief Kyle Kelly today our Bill Operating joined Price. and President Ramachandran; am our CEO, Chairman Zartler; Officer, I and our

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

Bill Zartler

year a Yvonne, Solaris you, Thank transformative a for number welcome, was XXXX fronts. everyone. across of and

about represented Proppant Management presence on in next XXXX only Proppant with our market Systems with First, began competitor. our we which XX fleet, significantly Management System par Mobile We offering. largest expanded the Mobile a

reliably Solaris' efficiency and outgrew that customers increase safety. enhance the competition wellsite the solutions we demonstrated During completion to and year, can

in a As a Systems year and Mobile a of the XXX ended a of Proppant around with Management fleet. result, the total share the third market leading we

commenced our Second, Oklahoma facility XXXX, we of construction completed we and in transloading In diversified activity. offering. Kingfisher, the our product

In Management patent and our market. introduced silo-based addition, manufactured, new Mobile pending we the Chemical to designed, Systems

product the is both we System the represents Chemical and company for line additional a Solaris XXXX. Mobile to and Our look new growth potential as for industry,

XXXX, in grow we XXXX. offering mile which introduced service management proppant to Finally, in we expect last our

our XXXX. for rent segment our our in XXXX systems that in financial fully drove results. of in their solution prefer at to the supply the a customers The the many that delivered business benefits While market continue evident for transformational we to own looking is simply we service also chain, of in to expect is wellsite

over was XXX% XXXX, was adjusted million for over year. EBITDA of XXX% adjusted EBITDA Solaris' increase up previous $XX.X an And year-over-year. $XXX a million fourth of versus our the quarter

upstream During decline in volatility seasonal about versus fourth to over the decline activity EBITDA quarter, quarter declines XX% commodity manifested our adjusted spending be quarter fourth industry of declining budget in to days X%. resulted This X% third a of price from and prior reaction the to quarter. revenue a and volatility combination estimated market

our every so Proppant that These our wellsite customers. our step that improved safety that efficiency and offerings not rental differentiation continued to investments system will and years. Systems made several continue investments the we will our Mobile will be gains the These also not that include set During and fleet ahead competition drive in XXXX, for equipment will believe we new up that to us only change growth from customer us furthers keep also fleets new believe several included technology enhance chemical company the continued rents help our made benefit. but well management our improvements in improvements we only of across for company but

with manual technology, was that we The we the frac the our blender's AutoHopper operated operates. operators' for system historically the to need systems new person how controls eliminate our made With system control our delivered automate are to improvement the and need have additional automating first integrated frac and the eliminating in site, wellsite. over company's for our we system sand our on system now eliminate system. the the person able our hopper By for transition to point enclose

We a have XX deployed all our over And across XX% our of AutoHopper of our today. systems the fleet technology next we AutoHopper approximately expect months. retrofit with

latest Lens. begun Solaris have software we Additionally, to rollout offerings our

just Solaris at Lens and insight provides PropView offering historical wellsite. proppant beyond replaces our the

third-party several complete head, have We well tracking Solaris inventory deliver mine tool. true Railtronix Lens now a with vendor-to-blender to integrated from trucking chain to management and applications supply

other not related currently equipment. This chemical also visibility levels in available provide will chemical inventory metrics Solaris systems. most real-time to will our track traditional handling and is Lens that chemical

we able With with were customers upgrades, increase and receive these inventory our value for the relatively XXXX. to flat monitoring pricing automation

also We of the bar the for on can work reliability and in performance that to systems industry. the so continue improving setting continue our we reliability highest

XXX,XXX the a was wellsite downtime in During of of hours. hours the of our operating in Solaris over time percentage out XX caused fourth total resulting X.XX% a quarter, nonproductive

reliability consistent continued our is Our to and driver success. key uptime

achieve been and extensive footprint and culture our to service design our performance continuous of field due system this able training have to We improvement. reliable uptime with combined

Chemical new Systems Our most fourth exciting delivery the quarter of the product in our Mobile was Management development new line.

to our for develop frac hydraulic to customers have and apply way today's manufacturing chemicals ask better operations. fracing to handle years, several knowhow For engineering us

systems. the quarter, in field. of great pleased finalized it to fourth our that working built three we first report we XXXX, chemical system. And the is During I the our am design in

we customer a receiving, quarter which are with success on had initial combined first customer in systems our to planned, first used our the trials XX systems bring fleet the March. system chemical of seven end And additional interest chemical based building are early we level to field design. we make by of will of to tweaks As our the system

continue at Mobile the business, same our continue we revenue most of to a Management revenue of launch for full to we expect you In out quarterly winning generating manufacturing are use type for go laid customers see opportunities initial last on growth switching our company call. completion initially, opportunities include pervasive local customers. demand numerous trial industry we systems specific now there we to new and Solaris While with sand these out basis trends share our in customers existing rate. regional both developments to and And are the from for that The support solutions. broader growing of Proppant to

in Initial in Solaris upstream XXXX and size is the of the Some to and approximately never pointing slow industry towards budgets, of price there ultimate our recent uncertainty than the QX Due are them tried less delay off in spending setting around and to volatility trajectory budgets start have a some commodity is operator XX% saw XXXX. completions the market system. XXXX.

overall budget imply we completions gains to savings due within up better hold However, and cost activity development plans. operator would efficiency than to expect

again visibility for we with our While systems limit incremental grow it until customers visibility we we quickly continue return to better capital. build place manufacturing, fairly product begin and on capital earnings a and our will new we new consistent our own Because to a both also and to that have on respond returns. when systems the spend existing can proppant see new new market proppant we opportunities to lines, on

foothold, depending for flow market will spend the be outlook meaningful transformative As several out The Solaris the product reduced year XXXX a company. where flexible capital year, combination result, for conditions. and range free our this new on of significant sets one becomes spending entering year cash of capital a introductions, another market generative with

December over share quarterly opportunity product Given in believe but of a a is continue other initiated our capital. of XXXX. mean free return invest we not Solaris, growth new does can business, for earn regular cash new this $X.XX commercialize dividend that high the on works confidence in growth per the generation, This that we in dividend we to in in capital XXXX where our to and products will the

reached now call has can However, that will and given I over are grow Kyle. turn the return shareholders. continue we to to confident both mass, With we our that, business enough critical the to capital business

Kyle Ramachandran

and Thank welcome you, Bill, everyone.

results by EBIDTA over in adjusted year by up was compared our $XXX financial revenue to the Bill's were million of significant XX,XXX policy. EBIDTA and an and As adjusted XXXX highlighted growth up We days remarks, revenue revenue Solaris. $XXX XXX% and million. for exciting of was XXX% days, highlighted all generated Revenue

the results fourth by in well market in share overall handling quarter, slowdown market one-third the were with financial impacted are our wellsite activity During not activity. documented we changes in profit in industry to immune

adjusted million, generated lower to of technicians services transloading X% our was backdrop EBIDTA amortization higher cross-train and less profit and software our as staffing expense, was of sequentially total to system that Gross services, completions against However, cost of Adjusted approximately revenue we systems. $XX decreased levels revenue inventory new excluding defined and the to revenue as X% system revenues in services, Revenue the chemical XX%. million days activity of slightly our revenue outperformed to revenue primarily contribution payroll EBIDTA and sequentially to declined proppant fewer depreciation rental on kingfisher revenue of maintained the declined sequentially fourth down up the in slightly at and quarter benefits $X.X we estimate approximately administrative and service $XX market combined and $XX higher days, costs. quarter a and compared with service taxes XX,XXX due to million. operating market facility. X% due service the days increased costs to general X% million Selling, the over full operations from costs salaries, third lower $XX we and quarter, transload due million

XXX% net per and share $XX.X X% million, full $X.XX the $XX million net per quarter. third the million per closer year million the $X.XX forma for Going quarter for quarter income the SG&A the forward, expect $XX share Net third quarter. fourth or Adjusted for we per year. of prior $X in in or was income an Net of to Adjusted $XX.X forma of the [indiscernible] million million for $X.XX XXXX. million, was share $XX.X $X.XX a income pro the increase was year $XX.X full or rate quarter. share was versus versus total to pro versus decrease run income per versus approximately

is other we've companies new the slowing of full adjusted forma Class Class of and of the non-recurring LLC was B income approximately due rate earnings and presentation By manufacturing for organizational Solaris net $XX outstanding quarter that from proppant per with adjusts we our units Our outstanding LLC B of units, quarter shares capital A items expenditures Total assumes structures. third comparative which the different are held believe net income tax to certain Solaris have pro down share all exchange shares and shares. by also Class presented all not full assuming million, for the for that and that Inc. more exchange and as expected were systems.

XXXX. in activity in quarter uncertainty QX three XX the three and year systems capital our for with in fourth $XXX to outlook systems our pause and chemical to to proppant until pace elected fleet, we've year guidance. systems prior in start the full for completing our added spending the proppant additional is deployed with Due there we not three systems and During the XX systems of and into business We kingfisher in will fleet fleet, clarity building demand. the transloading to currently proppant operator construction ended completions the our systems XXX slow adding facility turn we around and and line to approximately for I now addition in spending chemical queue Oklahoma. our million XXXX, to the chemical better and proppant

We efforts takes they are will stop general, the us about few are building and or quarters. In completed reduced out resources chemical start that reallocating our a building, instances of progress prior to internal and in our quarter manufacturing fleet. system so outsourcing it next have couple significantly our be to

in to more success Given chemical decided our we our with early QX. have systems, initial build seven

We end chemical and quarter sand XXX first expect with the systems. to XX systems

the most into chemical commercial As Bill opportunity transitioned a which line. field first go revenue of also confidence to unit our product its we but chemical to adds new full mentioned, to these customers of trial our expect in rate has as systems initially

continue drawn XXXX our rollout given million building approximately million, the of million flow If at other year-end needs facility the million as current we we to smaller down would our of activity well we approximately in ability slower as be on was XXXX systems we queue, capital uncertainties. or end number non-pneumatic our Kingfisher to to chemical down approximately million Management subsequent of this and with out bottom to today and spending range think year technology consisted our Proppant as a facility. our in credit then a spent which expect The relatively number and of way is of facility. upper capital our and harbor under XXXX we of Mobile forecast $XX demand non-pneumatic cash of of chemical and We the to systems XXXX of XXXX, we in control of fund any we under the $XX proppant, XXXX range $XXX an repaid proppant the XXXX million currently of from Because market market own we beyond borrowings manufacturing, this turns built. represent an and nothing built to kits a increase the $XX represents operating out capital $XX expenditures. appropriate our credit the range so $XX additional current $XX facility, cash to react considerably stronger and deployed fleet drawn to to think the corporate year-end use ended is and flex We quickly, about up $XXX market completions range in our not that million the CapEx can have liquidity other

got to have companies off outlook QX Turning discussed. QX services as already for our many as a start mentioned slow Bill other to

like breakeven for of we appropriate flow from and the December to with flow, we a capital, another to we will amendment CapEx $XX relates inflection working in the part modeling cash fourth flow cash words, about roughly approximately first and in the cash the talking approximately treatment million meaningful we changes we December, We on free the activity before we expect were other by in in step believe pick-up which of the I of recognized generation received million in closer EBIDTA occur will adjusted rented life amended the remarks of January in positive XXXX. payment quarter of to over $XX systems activity be free flow deferred and to like decline pick-up the free as forecast quarter result you deferred recognized at a would cash in In quarterly our $XX XXXX, up we $XX that recognize a net the our we happy shareholders. contract XXXX accounting the generate that In make we and debt cash fourth expect of sheet. we seen should cash X% another We be take will my to in uses expect CapEx dictates One have through which which of initiated wrap remain to of revenue average March, deploying and to starting would contract. where quarter Kingfisher, million XXXX. questions. excess million with remaining balance levels revenue XXXX proppant committed note can rates in with as of relative the cash, we of for would QX. your think the to return our number of any approximately be QX first on quarter be of that, highest we approximately regular the $X each expect the quarter will I given in primary no dividend million plans $X.XX share combined per have With basis

Operator

Malloy Martin [Operator We come with session will question Instructions] will first begin now question-and-answer The the Rice. Johnson

Martin Malloy

morning. Good

Bill Zartler

morning. Good

Kyle Ramachandran

Good morning, Marty.

Martin Malloy

how be the for wondering of implied we 'XX. free I idea you help flow take the cash midpoint us you was cash some your you just us If give generating? can if CapEx, range much might of free might with just flow

Kyle Ramachandran

Marty. Hey,

guidance, the gone looks we've at quarter system haven't you if we a what around we think baseline. indicator of EBIDTA If good I far describing the this the given a deployment; the of from we've back it's our will. capital, as cash from end guidance or year last point as given at flow look operations

look also versus, fleet at I but increased added quarter significantly. if we think we our quarter say, you the and pretty wedge that we've of chemicals in, coming first the fourth got

generate quarter will a if the prescriptive moving operating range for but got about going point around are think year, to flow So coming at we will this more two and cash not there, be free which been obviously think being out too this down capital deploy critical very we fourth cash are opportunities additional but systems, to get significantly from it last has what's we from forward, is I year we the spending clear years. where flow, in

Martin Malloy

recently call one about are share, you could spend competitors that gaining but there your all doesn't appear if talking proppant losing a has side? who some storage out their market offering the on then done Okay. about talked you maybe the on out And share. dynamics came a and of competitive of moment market It proppant

Bill Zartler

it's I the Marty. and thanks years, we operators various share, a solution grow and mean we whole different continue that market competitors for we Yes, competitive have and continues and been market customers trying see share. a even and to win believe systems, to other customers, market our

a litigation there's system gives build to our and the is going what and on, of fray highly out lots lot other competitors that want. of reliable infighting they trying customers we're and of a So the and staying among

Martin Malloy

you. get queue. back I'll in Great, thank

Operator

question of come Bailey from will Wells next Jud The Fargo.

Jud Bailey

thoughts with how could more you kind curious XXXX? of for I on morning. perspective. rates kind wonder competitors, what on Good if pricing rental out have pricing Thanks. of could from renegotiated your played if as be I I'd a you're share your get seeing thoughts you Obviously,

Kyle Ramachandran

Sure.

more XXXX, been at effectively being a out in capital quarter-over-quarter, is relative we competitors, out. but sure quarter there we are really to the around rolling we indicated we When in think expected XXXX customers. people for the There's I'm understood. And other at have improve competitors at the wellsite looked by while. The AutoHopper not those more across we're there's of our well come being from you going QX, notable we maybe can more. system pretty out customers. deployed may which look our merits how competitors. looked I XXXX flat do come we to for there's we This actually things to are fleet. done, what eliminate offerings we've multiple to most our several the When pricing, our offering different is

while customers that to So value flat. pricing that's we real our ascribe can keeping

in we've our mentioned Bill most is with up. for pricing the value XXXX look had think proposition negotiations flat, going customers, the I part, remarks, and his pricing prepared we at is but

So could it's [indiscernible] all I in as really hasn't yet. devices but visibility, are call have put [indiscernible] their with comes different together, well. been think one one that this to chain in that, hopper. manner a customers we And our done but mobile made the on, at also we then to and on touched can encapsulating now There's been rates, is all now that components the There's which rental supply flat more it that And visibility. full year-over-year. app their see piecemeal look that which

not not cost our pricing and our us, headline blender of pricing, flat how delivered of completion. it's the it's do way saying cost the equipment, one out the see about to of sure on sale necessarily their full their into the total is total the when math, compete about customers rate So, of we do for competitors there, trying them are BUT

they that they're out a nets have or much challenges down all-in other that actually cost. any So to higher for if equipment NPT other

Jud Bailey

silos? all that do the from end first you'll right, XX bit And me, for of more are accounted to excuse Could revenue I the a talk much customers color do have or of maybe incremental by all quarter? Kyle. silos the to you little chemical more for Okay, quarter, about the trials, you appreciate take you expect this out or chemical the or by how them sand, those building answer,

Kyle Ramachandran

valves going seeing we we've reducer, of how we so chemicals tanks, been dosing on much robust. got much completely data completely uncharted has folks in the depending you've the changing uncharted hall. band much opening people asset, When to and is We're got precisely on at around, down how territory dozens different biocide today, people running do Yes. have different up been incredibly we walkie-talkies, what far friction down whole, transformed industry. able and for what is but us, managing are It's historically, the This are look certainly now you've so site. territory that way feedback somebody for And how concept. the

are so, this. going a get today large but going from innovation, a to into And very This building with to has of us adopting been has out an allowed certain the compelling is not group it's feedback additional be very comfortable pace that seven people to jump has of that systems. industry folks overnight that in

necessarily, manner? the exactly than in to one that they building, guess the is I it. are we're is So, precise spoken Not for longer way a frame seven but queue

Jud Bailey

turn Okay, you. it all back. I'll Thank right.

Operator

question next be & will The from with John Company. Simmons Watson

John Watson

Thank you. Good morning.

Bill Zartler

morning Good John.

Kyle Ramachandran

Good John. morning

John Watson

the I sounds you guidance improve on right what your than number expected is number it five quarter? but being Kyle, picture about throughout down looks that to March higher we quarter-over-quarter, for on trying for average I for like Should the activity systems just full to get think number quarter. a systems of January, completions the deployed heard like think deployed profit

Kyle Ramachandran

Yes, that's right.

February I February. looks was and to be it think way described we ahead ahead March is the of of January

up build queue. to into the we're So starting momentum back

had As we drop keep add We quite been added. into those fourth quarter, crews, all have the as have to systems didn't we crews online of folks saw off end a others. of necessarily expecting the not frac big frac as

And so, reacted our that have manner. customers in

John Watson

and versus quarter should about percentage any that profitability Bill systems And change a can might delivered the thinking mentioned is be be within speak And those offering? your then, system, of what those perfect. you delivered fully how systems in to the legacy fully be for then many proppant? might we deployed in of your Okay, first offering there

Bill Zartler

revenues do well. down drive and And but to will more costs our lot secondly, I lot be will off ways truckloads think in drive inherent can can then, our sleds allows the at margin business per efficiencies parallel. wellsite growing on trucking we system differentiate the look a that on providing spot for think on those percentage When having proposals flexibility small RQs then percentage growing different of an relative the percentage. we the percentage, that a new moving our most opportunity, pretty able percentage nascent, from in be and we still it's we more we're multiple we RQ, is analyzing, we of ways where unloading that couple at when really as a to and we're trucks or together it's can we think provides but a basis, But seeing of putting those of higher, we're us I a would fleet, overall then to expect likely a percentage a we're perspective. you're to increase a quickly importantly, procuring that, that talking than in higher. margin our moving by XXX our profile, by dollars to margins manner margin to the incremental a way points that margin in costs structured and them contribution lens see for contribution the nominal basis, service. volatility the And net XXX reason that unloading And going on is done one would the being passing see we comedown. believe look expect manage last trucking from our it's But on, we a be otherwise mile to customers of and about

John Watson

right. All

companies? makes exact pressure for about then sense. typical systems can breakdown the you speak have you chemical I EMPs Okay, broadly lastly, pumpers renting don't the customers as to And an know versus are, who versus but

Bill Zartler

all your going I'll point work. say to is into I terms really the help who be are actually need is numbers how a around operators of in this some bigger think going is it, lot in around the some exact the excited explanation what them component, tenant be but of about three it'll to

for be companies to build chemical with to integration us the to going out. continue paramount So this is

John Watson

Thanks, perfect. turn Okay, back. I'll guys. it

Operator

Company. The next Pickering, George O'Leary will Tudor, question of & be from Holt

George O'Leary

Bill. morning, Kyle. Good Good morning,

Bill Zartler

George. morning, Good

George O'Leary

could around bringing two you for I maybe as help get AutoHopper making about one that I service bridge the person. adjust further? interesting, even that don't that guys ratio as there have systems - or person you and that person and ratio to have remember service you IPO well one-to-one down talked those from back Do system the guys gap

Bill Zartler

a the bit, little ones customer's frac personnel it's recall, but or runs the you our AutoHopper operating our that it operator aren't our on if actually it. customers wellsites operator

we've system, was running done eliminating can given combine by proposition that to the person our So what additional customers another the value the with you sand running is now blender. one that the

independent blender So the system control the for eliminated individual the the handling silos with the integrated an you've for to need sand controls, on wellsite.

kept silo. higher anticipated the on more We person than same We've systems. to two of little little really the the So needing have need It's kept for get we and proposition every that's have sort in may personnel chemical trained silo. relative one it a really clearly a like. little the recognized complicated we on fourth a than higher a and value quarter more one-to-one for people as additional our see the customers to

different of containers five got it. You've

needs a You've of troubleshooting got the service the the the that got of you've it's we system. pumps expense individuals little all and level high that to spent complex you're we've for want and running, have bit all - provide a so to that with we've at trained sure make customers got that that we more the operating a little

George O'Leary

of speak it how you just cost in the the lower you cost your XX That's helpful, to the today as ago? months to can system then did percentage it you than terms less - did the it super cost guys much in-house, and have taken than maybe more manufacturing ability to system you or build of

Bill Zartler

XXX we've The made learning of two real. made I last of sets X that so curve we've is years. lot silos, the mean over a kit

component as acknowledge we're we Steel when I have we've The think lower we been but minor grown we prices probably XX% outsourcing so to than pieces it. up started. was a And XX% started, that's more of from slow brought self-assemble back for expensive the in-house perspective. some have now is manufacturing other much out That everything pace manufacturing today pretty we system us. to and as the people down

the our a system with components built that approximately So sand system third-party opposed of as cost into it. of to of cost be half a and will chemical

George O'Leary

what One think quarter-over-quarter? a revenue maybe QX to said or from translates systems active I'm just to do sure more perspective, just right. make I curious could, system, I understood in I that less Kyle, five days but if you you just think

Kyle Ramachandran

we're of other what actual days being amount just their revenue we our our of days in own different quarter-over-quarter. challenges is seeing by Well, reporting volatility create

So to migrate concept have towards course talk we sand pack different. together of about sort coming days and each in, of is other equivalent the challenges we chem the revenue revenue chem six is is for where because can we're silo trying silo with but revenue those base challenge of of system more the

I as we towards are six probably think pack migrating talking So, look those about equivalents. to forward going be

I was of number of the six in deployed. of sort notion the So the X% think around that pack

Operator

be will David Heikkinen of from question Smith next The Energy Advisors.

David Smith

the system first December? to chemical that I think field, in your was went

Bill Zartler

yes. Correct,

David Smith

low and range it's too I specifically of early a many if if at represents how to systems guidance. rest for talk you if sand or to should CapEx Wanted chem. year have of systems might Maybe the you to high more the say? looking about the be QX reasonable you're versus ask cadence end now March? the of And ask contemplated think can

Bill Zartler

the many start going haven't me We're make. that built market we we're to really how determined in. with - have flexibility closely and really watching Let

those of effectively the increment see $X and internal our until first cost is $XXX,XXX, sort and we incremental, we flexibility. number on on mentioned for Kyle it capital systems infinite levels demand that or quarter, The we've under it. range the manufacturing up maintaining that end that The so, based manufacturing will clearly maintaining the think more, like of $XX down the the need at we goes in before, that low in - As be I the ends and if so profit adoption got end of chemical of the could, so can range we've systems level call said that systems average at lower system up have million the so of band. and has just higher that as to chemical the million and end $XXX,XXX will turning make it to end the shutting is XXX

David Smith

And QX? just got wanted revenue and days. guidance equivalent heard hearing the wanted the also to X% just that double-check something; sure down double-check in I thought with right. QX systems. been - But I I've down X it I let's make I regard pack call to six to of

Kyle Ramachandran

utilization varying systems points look the right. We loosely is the we're space, this number about mean XXX this. systems But going use kind just many number in to generating most as working. some context we provide It defined term. are X%. at to of have days, When of at look at revenue. in the the which most is companies that period when actual and XXX we way utilized we method the QX at conservative implied is back It's as conservative systems here, of I very a is different utilized look

think I than the order service the need fleet. to to so XXX, in going And we're XXX in more

going more utilization that's continues not So, as just to as the business XXX% be I we function to get evolve, more being the of of a think and market.

Operator

Gengaro come from of Stephen ahead. will Please question Stifel. go next The

Stephen Gengaro

morning. good Thanks,

Bill Zartler

morning. Good

Stephen Gengaro

what's XX been over sand, first that obvious in dynamic mind; questions quarter you So, if two rise is, don't in the like two? change have with or enormous the any you packs the dynamics last basin seen the around

Bill Zartler

we've still It's at we've three. had when seen It - two and up really where being fluid. it times four, We've ends we've fluid. very, and four, time And six six, five. cases or five one or had seen very

to I of Western a a lot think especially in-basin there. Eastern and the basin mines sand the sand at Delaware that's trucking there's move notional local if look side pretty of you on Delaware the from the volatility the basin the of across volatility basin, long-haul,

I and much think pack, do XX a solution storage than toward geared it's intermediate better to markets trying those at seen locations. we've So

wellsites, out into the as sand you flowing and If the regular can you've of as wellsite. wellsites at got enough enough mines keep possible

system keep toward can X with and So it's a so our a the some few on but regular at capacity haven't see efficient to XX inventory on we a and time really most do enough the still we hold a we that that unload seen massive like packs still item, additional is XX still frac because supplied basis fluid nearly we a see trucks but switch storage wellsite.

Kyle Ramachandran

a And side longer around for distances trucking mines created, is challenges I truck. in the think local the them on the being [indiscernible] the other point there may just be and

the So tend them typically longer you can with the those to your to points be to a pole. mines get wellsite closer transload

pound in a And don't of have doesn't so payload, do that higher create you that challenges solution wellsite. at sand every the you carry, for it's

are to we're systems belly industry trucks, to of some per as sand able the dump So truckload as maybe container standard because than solutions. our pneumatics more use well able

think that the local solutions. so, we the is for other And of the one sand I see of the as impacts challenges that far as

Stephen Gengaro

talk replaced solutions and really been been utilization? you And have other just by this dynamics the any just you obviously in now bit? lower speak general. meaningful to activity offerings any - near those lost But Can as to vertical a second out issue you a question, competitive there's when to customers I term site or is that's your there know causing a on knowledge

Kyle Ramachandran

race, economic think different smart that the get versus very offering solution other different fully solutions have are or delivered reality on I whether customer different of called be Well, we rental customers model. and it a they by lots propositions, is competing

customers our and going savvy they're are try everything. And so, to

as our a earlier work. they to value and That's Our largest job. year job innovate winning fair give to happy. And customer at are it's also everyone typically a drive go will our ensure to continue customers our every referred that to additional to they shot process where through

Bill Zartler

Yes, here a won are and temporary. I we see customer we we spaces the can think meaningful. know lost around, say there and There're where may have there we've lost places we we of temporarily think any where customer I is lots movement don't

growing think I market with with we continue evolution keep to our believe and share the the that our we offering equipment. of can

Kyle Ramachandran

the saying per on there, see The we're have at on the speed the controlled extended fuel blender. pad, gone to tons by we just running multifaceted, really as no locations. today they're blender go who other beauty coming we of operators already up with is out challenges solutions pulling associating it's available can't the wells sand more keep the to wells pounds us to with the of remove X.X hopper. customers, see do even into just us controlled solutions. foot, blender blender, delivering longer hand up, so We more per by And its million coming with laterals, it's longer saying blender us consuming of intensity it's and to the and if completely the deliver directly The other

Stephen Gengaro

Thank for great. Okay, thanks you, color. the

Operator

with The next question is from Cowen. John Hunter

John Hunter

Thank Good morning. you.

to on had XQ So margin wanted ask dollars I we from XQ. gross to as

that's slightly You go that fourth were that see mentioned quarter activity wondering first costs could obviously the that quarter so in costs we some down first the and elevated if the away those will profit quarter X%? of in up the the I'm understanding to be in gross with

Kyle Ramachandran

break down that to a going couple I'm ways.

XXX talk success face structure personal. about there are cost we've in then direct important country our to of a people say the to those plus is technicians Our on are guys throughout wellsites, of really our and basis field the We got business. so and customers the our this importance frontline important costs most scattered and

We piece were move that's activity in well the not quarter don't to into activity product count in growth we've that visibility and a same it we got around that cross do as as product. new fourth really that launched biggest the the growing, in despite drop off expect quarter. we being a in So first head got the new did of trading

piece we that did mile of last about of will more talked those is mile. there's also The dollars the associated little bit with and touch last a fourth a more I in pretty created quarter material We revenue dollars on other costs have that but that.

John Hunter

Got it.

their about about your proppant what the think margin then on can offering one earn time, earn. And margin system about we've being legacy the of just the could on in Okay. that chemical systems I past talked those half you over thinking

So that is as converted you've kind to full that of of at forward changed these some revenue of going same or range is customers you're expecting margin the initial all?

Kyle Ramachandran

any were more there's days update personnel think require don't some there, onsite of this early from the I perspective. our

comfortable? relative margins drive over expected now some likely I lower very but long that think be the So run to

John Hunter

Got it.

you seen is you. in types I at is currently part these process systems update of last customers any dump on suite demand more reconfigure belly giving the me question from just way think four have increased how you and the was last how you unload the could last works And there for systems then than so two one at many have around times. for of you can Okay, Thank the the upload is wellsite a one and dump time? do faster that or

Kyle Ramachandran

ensure want wellsite. continue we and couple fleet couple as additional the the the run added to sand to cost non-pneumatics The to they always There's the lowest want operators things. that. try blunder They and ensure of remainder We've Sure. of want all is of quarter concept will to there's the or get [Indiscernible] at a build available those of a well. to to the don't out fundamental and delivered want they couple

opinion Solution or or get what at that you'd allow whether as the what's So got costs all And that can lever, similar so or key mechanisms this And on lowest fair failure. very driving when whole to Belly do of Dump. box us see The doesn't unloading I the side, pull here belly of in driving reliability, the cost more solution, it's you economics spreadsheet pneumatic these is create pneumatic Dump is? our to concept initiative the trucking the is the but faster a multiple on to Belly story. around around it is tell the amount start in truck it through Dump may solution dumps Belly single points of down you option? we've the What's able be truck unload success interesting introducing sand

pneumatic. like just solutions single what belly point parallel solution in all other unload deployment hands added there, our it if from can a We the We and The our typically trucks belly gives flexibility we is the completely done run insurance, you dump raise used with belly conjunction but the pneumatic we has you but out dump can just say of benefit belly we've with in will as in and dump dump dump that will. pneumatic solution. belly the our

Bill Zartler

That's right. cover. right All

Kyle Ramachandran

It's all it that, I John. all, covered

John Hunter

a that lot Kyle, the of makes sense, know answering thanks Yes, I questions. and for

Operator

Imperial with The next Capital. Jason Wangler from comes question

Jason Wangler

in as curious up looks. do to of I systems what sand, was would what think as quarter I be you in and about of what you're you guys kind general the you the morning. manufacturing think you your ramp Good the capacity just guess started to and how the Is or different chemicals. kind the up? chemical do Kind of full ship doing could first capacity or two in

Bill Zartler

silos And five, Well, chemical without half of there's six on you components additional that. monthly we maybe noticed significant of fixed packs the at of our and plant some look XX% at capacity basis. because of to that outsourcing four work at about consider that a or

of issue kind an house us manufacturing. was reasonable not for pace in our the and So capacity any at

Jason Wangler

mean I'm curious that even the think I be then look pretty CapEx high budget generating the or you other should obviously as grow think hit significant just of the and flow. cash guys think cash about things kind How any range flows deploying you free you Okay. look do you they're forward? of dividend still some the will be at I end you s about

Bill Zartler

what we're maintain We've to share possible. to sense. opportunistic tried behalf flexibility M&A have this continually point dividend in evaluated of the cash the have we with right whether instituted around and are do on and shareholders decision activity focused said and at quarter we As we on we repeatedly the we've fourth the shareholders making much looked an we we our as makes as buybacks

Jason Wangler

it. appreciate you. I Thank

Operator

from The next Oppenheimer. question Please be go ahead. will Schneeberger Scott of

Scott Schneeberger

term you Kyle a as retro thinking over a impact some that margins kind that you term if talked there's maintenance curious follow-on. we with morning, into OpEx discussion of I How and about on as far so that's think impact baked up? assume but longer about just longer fitting a then repair how I'm with number good Thanks, that mentioned about of and should that CapEx margin activity

Kyle Ramachandran

them our the is to any of field a shouldn't our supervision great I That's systems, people them done a in work you're think think a volume great place piece career job being margins cost have back afraid around for making impact have in AutoHopper training a right. you're yes, retrofitting really so and rest I capital of today opportunity. installed we them biggest on that really potentially great keeping good and a of giving I'll

manage able field the I we've to been thing perspective. costs from So that

don't fleet, As we far got we're cycle with to for be clear to it's probably time cautious I to major to capital overhaul. the system our been come to field in as flow of without it's over maintenance a deploy the do will back young maintenance five few the of refurbed but It's deploy We get the a in bring but six some think they'll we sort profile. years until want oldest overall relatively as on in any to things look spent is system running that. those the that we words material cash where other out years next field notionally ready be the

Scott Schneeberger

just the Thanks systems. follow-up and then a on management as chemical

of and on incremental full a should in Thank XX about fleet can the and rate year would run run in at rate provide revenue Any then full the of end at we the incremental that? at up first that one a how think revenue the like quarter. you. those Sounded speed three anticipating the color end on you out

Bill Zartler

Sure, Scott.

as we of the as through would of I resulted yes do trying many they that is, how market many larger think here. first incremental the piece a trying manage we as were as filling pie capturing that customers gone trial different with systems have the We're for that of couple a customer long there's visibility want. revenue of period, their and a things opportunity But our possible. an taking what's incremental these to term as to into many and quickly out get us these can get And systems gate. than outlook customers rather also

Scott Schneeberger

thanks All very much. I appreciate it. right,

Bill Zartler

Thanks.

Operator

question Mike will Urban be The next from Seaport Global. of

Mike Urban

good Thanks, morning.

Bill Zartler

Good morning.

Mike Urban

some would ahead So, I disciplined competitors right it kind to systems like you with going the full CapEx with not? front clarity. deployment. question the your have the guess are they're better aren't if I fact, completely they what be on be now agree seems so view and speed of In

ability I between to you there and balance to a do cost of clearly some customers. react you laid strong that guess start slipping, the your kind share that of see react rather you market to bottom front? always how lower share focus achieving But the of out just is So position if deliver and has your that of the have kind value kind line kind growing or to do there competitors prop been share you on returns is position? for And get more as your maintaining to of guys aggressive

Bill Zartler

the in overcapacity market been There's this for three years. last

not phenomenon. is a new this So,

cut there's there light cost to after folks our relative current pricing. much. and which our held a because profile, they're about operating really going return money losing And are think talking they then we've - on if pretty operating I of there's cost point firm higher at

system policy free. within of full is full and and really cost reliability the that We and one embedded the our comes including along have look numbers at customers a set - is an that that it insurance of is package the the downtime

to bringing were basis the I them systems that tweaks more we're out long-term think haven't to it continue it so new on for much customers asked people with and that for them to reliable, we're we and a new be relationship helping ask with yet. focus And our they tools rolling

have. of and customers picture. think going are set focused to that I And a a So not competitive customers is that knife that we're some lose getting do. and a there true our to being I edge with having somebody is the we're into on see value edge proposition money that and our whole means going fight something something think as delivering that's there who won't actually And

last to that beyond if have to customers look still - today that of at market the of whole mile. addition the of delivery still the with there picture. is gain we whole that the you mentioned will continue sort think I is actually We re-bundling the share

then bit go that helpful market is things, for is more do is and a next between and on and the course there's then see of there of little in there's their thing. few which think re-bundle delivery package few and put a that also to be that do trend think and together wellsite I comparison continue the over asking apples-to-apples to what a is growth allows will for for we're some doing as own the a customers are I of very us piece, to that that year. unbundled and I an a piece them the actually never which in the it that the And

Mike Urban

rest kind guess it's this where a you model I but interest the the of you And bundling up of in point, to rollout itself, with prove commercial the kind chemical speaking the that have have as - point you guess the trying just bundling, systems; I a any you're at of system system is really a at still offerings? not of the chemical seen bait

Bill Zartler

As it as chemicals? with bundling far addition -

Mike Urban

bundling offerings. systems of with in your chemical rest the Yes, the

Bill Zartler

this seeing to think to improve reduce No, automate HSC their are to way the down I with frac drive costs. to people offers, is yes, personal absolutely. footprint No, and

is are idea having think right. of I synergies. no, location the X,XXX So, exactly There

So you've footprint. traditionally more a you going significantly likely you've deliver allow associated by trucks actually putting out reduce you got because bigger And that's our footprint chem sand the system, to - got with more chemicals. to

So I complements think it. there're with

Kyle Ramachandran

efficient integration the very as benefit for ultimately And game significant gas. I and Solaris is package operator, plan for of is or and the more Lens the I is effectively and customer, that supply chemical supply. to that of addition very, supply sand as this technology. they at is better the manage to and to get chain to The do get at the supply gets use a them chain tremendous together really operator And And the one company it efficient allow operations oil fractioning with way, think their better the software tool very the a in the well. that frac full at think our making ultimate individual

Mike Urban

thank Great, you. from me, that's all

Operator

The of comes from next James. question Raymond Praveen Narra

Praveen Narra

March, in follow-up we the morning, XQ to January is on much just Good just question sand clarify, John's the guys. higher if earlier Hi. to I average guess wanted just terms systems I out? of for than March could

Kyle Ramachandran

pretty close inline. probably to it's say I'd

Praveen Narra

different think or dynamic XXXX guys was how And signing you likely it? going about XXXX, going so a little year. but this that that understanding for to it's than year it into how talk when a of talked do is a the going lot a year spot into bit contracts about has we of or XXXX, about Can progressed more we're we

Kyle Ramachandran

but the delivering beginning believe talked with for for We went the year. in their probably the fourth quarter, talked the we customers one proposition year. we quarter mention sat of to last our That's plans this great first took through value did kind year, we're of granted of point. internally, to we process - we didn't We the we down we it same

agreeing of to customers. in so And minimum was of majority the systems some an to by number our sort agreement placing, of there vast

So year. had last dynamic the we that same it's

today. we a people inherent there in But said we where are volumes are last is As the what have. set minimum base load year, below

Praveen Narra

assume is And just for I about guess the viewpoint? guys than pricing talked is generally contracts number those what flat given your earlier point, I to your you

Kyle Ramachandran

Correct.

the year. be expect this flat price will We

Praveen Narra

far? from through customers chemical actually have to one have mentioned you on how Can gone took customers phase up. silos, some trial trial of the it, it the we length thus revenue about when time sort for last one getting then and about think test that if from And to through you the get of gone could many you me talk the

Bill Zartler

multiple indicative, the in to commercial I that using that the are get there're want and of the around trial. there's customers of terms good but we multiple our that, feel think I are don't about visibility. specifics agreement very into them

Operator

Please will question go from Hoh ahead. come next The Evercore. of Samantha

Samantha Hoh

for call. my taking thanks Hey,

with to on but chem So any potentially the is your all think overall trials quick doing And the place the proppant discussions and any be customers then just would longer systems? to question in systems, reasons Permian, trials of why have similar is term stay taken there outside the about Permian? of adoption the there rollout and I

Bill Zartler

multiple reality We the is been in basins We for actually in basins. interest got we've a lot big the a footprint in in challenge. first will side part, I the and actually Northeast different we've take chemical of as reasons. look mentioned

cleans the footprint sand to of this moving have a the then up Northeast had a DJ one chem our basin DJ we're into in of are actually so expect these And our very systems portion And and basin. pads of We've lot system in basin significant in never the DJ shortly. but the tight. we

in new it's market So Rockies pretty actually a significantly for us, we the while have grown broadly.

side, DJ not in actually been the sand the basin. On we've

basin there's opportunity. our opportunity versus that within perspective an from any nothing the was Permian think I inherent to other So,

Kyle Ramachandran

I chemical so one much for of wait to fluids had polar move until at vortex into one an the we to better a and and asked more early the new point, Northeast and it little it. weather where the things were warms up we look you systems with the bit area the saw

see next there things we fall out. couple of will So more out as movement months over the

Bill Zartler

to cold as and create didn't launching sure highest will challenge you there, with couple no inherent for we give early far doubt be As getting addressing ourselves. as to the make we yourself you chance we challenges products, want want first success weather, new to out the about think another the on but

Operator

Martin from Rice. Malloy is a Johnson next follow-up The question of

Martin Malloy

integrators or those five- maybe spending out Just I plus one about of some years. next arrangements the two? that some pretty recently have going some you over to rolling of with you've remember follow-up, Permian them about maybe talked Could programs that might some some integrators? robust with talk the seem inroads And in made the of the had that year of off your some competitors be

Bill Zartler

that, our integrators big work closing of customers, There of the many some with friends some we're who Midland. through and good there're those of is our so, other on wellsites in

and out blocky them for I a see as so, as we And acres they solution great heavy really think manufacturing roll this mode heavy [indiscernible]. activity and some

got of three Carlsbad different a drone of ago I picture that feet from couldn't a silos been in think couple East more I that a days of had sets XXX than from one high. picture have

believe activity busy continue. with busy and that that and there them we're So will out is

Martin Malloy

Thank you.

Operator

Your next Stephen question a Stifel. from follow-up Gengaro is of

Stephen Gengaro

Thanks.

margin deferred revenue is realized for that over be the a I eight to quarters? quick the one XXX% Just Kyle, think effectively Kingfisher with Kyle. terminal, going next the from

Kyle Ramachandran

way Yes. think over remaining to term recognized the the Stephen, of it's about contract. the is

think So you over the next two it be ratably recognized about years. can

that month, about $X that related describe $XX cash the is and delivering with into we about, to So is current revenue but customer we revenue term talked associated The any there facility. it payments. deferred that. our It non-cash cost million than million as volumes per is as including there's customers

that be and deferred revenue, offline. that So follow-up beyond generated can that sense, revenue there's if there just makes we will additional

Stephen Gengaro

That Okay. Thank sense. does make you.

Operator

Bill call any of back the question-and-answer turn reached remarks. over have We to the for the to like final I'd end now Zartler, Mr. session.

Bill Zartler

[ph]. Kelly Thanks,

Before with the takeaways. final all you few I'd leave a out we to like close call,

with with to our where new can continues and we both legacy existing in products. Solaris new be customers and grow position a unique

well new as conjunction working have that talked customers. projects with we enough our about products of some the we've and them. both of We - large robust we're complementary to to we're that in on to of innovative to improve but culture as pipeline overall on continue conditions We and are deploy our completely subject market for several ways ideas continue reliant and additional line built an be product looks our and

sheet. next return. you to on with to Our up flexible that free Thank recent return continue will with shareholder us close demonstrated you consider our of a our all cash we all and we initiation lot forward with capital Kelly, for the to will look balance call. top dividend again options maximize of can We robust flow generation and us quarter. profile in XXXX you joining updating provides capital options and shareholders already budget our willingness

Operator

conference Thank for now presentation. today's Thank is concluded. you. you attending The

may disconnect You day. your Have lines. great a

Solaris Energy Infrastructure (SEI) 28 Feb 192018 Q4 Earnings call transcript