SOI - Earnings call transcript Q4 2021 | Solaris Energy Infrastructure Inc.

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Operator

Good morning and welcome to the Solaris Oilfield Infrastructure, Inc. Q4 and Full Year 2021 Earnings Call. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. Instructions]. [Operator event this being is note recorded. Please now Yvonne Fletcher, would like and to to over conference the Senior Relations. turn Investor I Vice Finance President, Ms. go please ahead. Fletcher,

Yvonne Fletcher

Good Ramachandran. and CEO, quarter Zartler; and Solaris I'm morning, and today Bill to CFO, President conference Kyle joined Chairman earnings call. fourth our by our and welcome XXXX the

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

William Zartler

oil gas prices increased supported constrained The drilling to and an meet supply and and everyone systems XXXX market we demand activity exciting to Solaris. completion led year. improved for for throughout which Yvonne redeployed joining and you significantly demand. global This us was Thank recovery commodity you continued its and its strengthening the morning. and year thank remained this

committed we of to to our showing technologies also shareholders. market We paying now and brought that dividend to success are remain evidence two new a

sequentially fourth XXth systems approximately utilized adjusted For with debt. was XXXX and X% ended EBITDA consecutive to XX our cash our was up We of to and million dividend the fully year and the paid XX% of $XX quarter no $XX million. system count up

quarter Fill During systems part on we two offering. new of our the ran of that based were last managed Top jobs our mile

to pneumatic Our for Top traditional payload bottom customer Fill increased trailers belly our using our preserving allow dump fill or utilize offerings the trailers option reliability. flexibility or us while to truck higher silos and

were improved technology able our which out to system. contributed Fill we Fill roll Top this We trucking continuing the fourth use to quarter as Top additional we optimize to During profit systems. per see

trials. putting We also electric blender our AutoBlend integrated continued through

today how are we We're and the encouraged four units have feedback by positive units the are As the pleased in field. completed of with our very AutoBlend from running customers.

We to Systems potential this August customers Sand continue also as sand fourth of to well configurations to new storage a buffer higher site shifts availability impact that in provide due with opted for driver XX several and of more pack customers mix X with saw as as challenges. greater a see multi-year quarter our and growth The implemented well pricing full we quarter technology. and

AutoBlend system a on technology to opportunity factory margin configuration Top offerings per Fill flexibility, and grow Solaris and Our basis. revenue represent for additional [ph]

up completion see and with XXXX. drilling have prices range oil budgets increased increased in we into recount budgets increase is this is tight The increasing the XX% geopolitical be and $XX and to horizontal activity now operator of prices over spending in [indiscernible] increasing discussions industry. currently customers costs, remain due continues also service prices, annual average. over strengthen. see MMBtu. beyond. $X Supply remain rig although Based for commodity E&P announced gas the to activity XX% the average increase in on we balance with translate earn part These increased XXXX, to fundamentals will activity operator additions near-term into and demand to XX% across look industry year and risk, also activity into XXXX over will over recent rising oil the continue fourth completions expected XXXX up versus demand that point to we XXXX over quarter and of incremental As continuing

quarter system fourth activity As the XXXX a XX% we expect up of Solaris’s result first be to of in utilized over fully the quarter approximately XXXX.

XXXX. sustainability activity which improve We the from Operators many same sand, into of plays trucking will such areas trends labor, a near also look the as for we constraints of ways in see to our current many well the continuation continue things continuing for to critical Beyond see and and efficiency term. strengths.

that Fill buffers Solaris improvements. address more trucking our level During deploying customer Solaris built service solutions. these existing the provide and as of constraints XX data by constant reduce storage as a impact our X years team the providing of with We We mile chain multiple offerings the of relationships. building the fourth efficient offerings well can of and automation. couple these flexibility, analytical bottlenecks last strong quarter and in unloading Top capabilities highly of built management well as help customers Both as help some last options, new large of supply pack highest new and software and by visibility spent and much support

of payment. capabilities. helped our sheet has liquidity Fill customers. deploying certainty The benefited we Fill to Systems the Top fourth as In trucking sheet balance also secure Our and allows strong quarter balance addition enhances speed from both access Top Solaris free existing trucking these carriers our debt us our technology and of

Fill Top our While return customers the represents for to potential market Solaris. attractive solution and our Fill potential share Solaris standalone economics deployments to incremental customers, Top provides of future our new and

such we Systems will be both as XXXX. We for and signals from suite have Fill Top Top strong demand and growing customers new our significantly in existing Fill

for plans market [ph] timing on will remain and Top solution based Fill and dynamic penetration our demand chain. supply market Our

on Another the of new continuing electrification equipment. the frac Almost electric. can in see all thing XXXX order equipment of we is side is well

been Our electric we're power on same inception from running the to to front equipment location. equipment source off run and pumps our all the able integrate has

in redundancy not integrated Our unit electric just ups blending particular design an and several automation. traditional electric set offers from in blender AutoBlend but components provides eliminates built complex and

the them parallels revenues. into with cycle we Today working a avoid are past ramp capital a of transitioning change quarter our legacy in few for from are technology positive to see from sand fit handling feedback has All to on XXXX AutoBlend fleet have with blenders up during where for with unit silo fit and the that the sand legacy as of XXXX dynamic four customers Solaris very We and for not not improvement deploying reliability customers, in working replaced Solaris and many today. ongoing first blenders old or deployments XXXX our This purpose four spending in jobs purpose received many be helps older, first scheduled during currently maintenance customers reactivation fleet step equipment. our challenges. the earning frac trial whom phase multiple AutoBlend

indicators additional long continued lead as to Supply AutoBlend execution our already a meet commercial out focus blenders in demand additional build some AutoBlend and XXXX of the and for growth as another was will ordered times on are XXXX demonstrating to our components we of we demand, to new In opportunities. well lead to XXXX. a tighten market our new In we've keeping continued building success on incremental chain year meeting have we commitments items of shareholders, units of success market of initial this committed summary year technology additional capture anticipated market Given of and advance to several technologies. the discussions. as

relationships, customers at and the wells is solutions will value. continue the well electric Our to fast and entire offering We lines reach to current levels production people, price that time as to possible, while completed industry. these that oil solutions enhance efficiently insights our sustainability timeline believe gas be our for meet customers ensure commodity and can crucial technologies and driving for as pushing efforts also positioned all automated can are ensure

Given we're while and over we maintain to I'll detailed have shared turn technology our in continuing dividend for continue to With strong balance invest it the excited to new XXXX more for prospects more the our even as pay review. about that guidance today, results Kyle and we sheet. financial

Kyle Ramachandran

due activity a X% third initial utilized in increase ramp December. morning and systems minimal our systems adjusted which sequential completions in to good everyone. million results. about will and $XX of Bill fully averaged fourth million. EBITDA Thanks XX We revenue quarter. exceed our Growth a We by approximately in expectations recapping softness generated and holiday quarter represents of of I the $XX begin

mile strategic Top During consistent last in the last revenue mix change higher our and drove work customers. mile to an most in in Fill new our but utilize the decrease overall we focus on quarter. increase quarter profitability job fourth decision technology This overall a an made for in profitability

levels. quarter the third with This degrees of we systems total a of an deployed quarter of varying deployed course proppant from the XX increase systems worked was Over XX utilization. which of

number Our reflects the in systems utilized day that equivalent calculation the revenue fully quarter. of every XX systems of generated

after X last combination of the and gross the absorption, accelerated $X and up margin million, our sequentially of in million flow payments, approximately mile incremental build long Our $X lead expenditures negative million the and full Operating million strong a activity implemented approximately plans. approximately total a increase August. profit was for After CAPEX quarter in $X was by system trucking to XX capital pack growth net increased with approximately The associated cost of configurations, was items mix a $X capital cash of fund benefit we was quarter. free prepayment XXXX profitability, in increases fourth approximately price growth per quarter. flow improved working of million $X of margin XX% driven cash and fixed

cash agreement $X dividends prior amendment credit our of returned which a quarter ended a the $XX Excluding this years. approximately the we flow three available form current expect extension year undrawn total million million shareholders with for the a to activity with prepayment the free under $XX was was and flat plans, terms agreements XXXX in of cash execute $XX in We're lenders our the million of of million signing credit and essentially our our the term and facility week. a $XX liquidity. remain to total final of returned repurchases. stages We share third have as for approximately facility million the shareholders Since related We of and in million. for same operating The initiating run $X of quarter. in will agreement XXXX dividend credit XXXX of approximately an in in to fourth positive to growth from quarter in cash the dividends the

consolidate I as morning would outlook, XX-K earnings investment release and to how how into out and not believe our published that financial as revenues our this be more the quarter we note our our consistent turn run week business that evaluates well is basis our one-line item. later will expenses Before We and fourth I like combined this performance. with to the X-K community our

fully compensation. Turning of systems XXXX be number year the January approximately SG&A to Xst based approximately XX%. the margin our price system for first quarter to $X of for first should that improved in an million increase the were quarter non-cash implemented in up expenses XXXX for outlook we additional operating the we inclusive On the quarter quarter. expect stock of utilized fourth first result

first expect compensation. total of expenses we SG&A quarter to quarterly be of inclusive non-cash of $X.X approximately XXXX normal million stock the For the

in $XX expect maintenance XXXX CAPEX the XXXX be to range. to for continue million flat We with

quarter, last XXXX. the AutoBlend solutions belly stated growth and be primary to driver capital our we expenditures As scaling will our of related CAPEX dump in

market anticipation our be commitments Given half for $XX new capital the supply demand of We first between flexible growth dynamics. the customers new depending technologies, committed million year second have growth plan of $XX strong interest from we and chain the for in half million with to technologies and the of and on capital growth our of our for XXXX. significant of

needs anticipate dividend XXXX defined cash flow to distributable combination in EBITDA result fourth our to from a time the taking expenditures fund resulted capital year the about facility profitability flow in see basis balance closer less a how for dividend and cash in cash and XXXX. of The our sufficient progress temporarily we're growing technology on over industry and a We for maintenance improvement distribution our excess quarter under Our the flow coverage if times for to in sheet, our been couple operations, coming in excited excited needed as capital outlook capital on In adjusted and maintenance growth X.X in of be working shape working fundamentals a we've new little stable in distributable XXXX. for we're our will and continued borrowings on cash credit should are coverage the and years. of XXXX. summary one past

we'd happy prospects questions. returns free capital drive We for our offers help dividend, alleviate help our be service exciting the sheet constraints maintaining on value technology, within strong shareholders, new to take on and timing that discipline The technology debt industry. our balance We to also committed focus can the drive position. chain incremental for introductions believe core and customers remain your facing many currently maintaining focusing upcycle to Solaris. industry and by With our can new our competencies supply liquidity and differentiation, that for of technology of

Operator

thank you. question [Operator Macpherson with And today's Sandler. first Instructions]. Ian from comes Yes, Piper

Ian Macpherson

how Thanks. Bill and Good you? morning Kyle, are

Kyle Ramachandran

Good Ian. Good. morning

Ian Macpherson

at to are end most spot them or and trucking you surrounding this going Can any selling lack likely? speak right customer efficiencies bottlenecks do now. out throughout light of to you logistics, year of the sand thereof you enviable So, cries enduring sands, play with tunnel a the that are think hands the that desperately for the of all in respect to market bottlenecks that Solaris’s these are in

William Zartler

and we've lateral the it's you sand they've seen piece demand. Yeah, crews added bottlenecks, total incremental and rapidly been completions enduring that always lines as it the and drives

You caught there, managing early as out slowly catches drivers. down and coming trucks up back days COVID they're online. driver shortage, bottlenecks, trucking those plans with the plenty from of of it's And shut up, it's there's

season the things the stage which larger of in down running moved more that of in there holiday drivers We the creating can or supply. see sort bit of no out where of trend see a of you you had was for the to and don't you slowdown. preparing XX folks going. we buffer was that have the we that middle a continuing didn't the out year moment bottlenecks over When One surprised fact situations good some for time at X us ensure and And of us. the that that just to kept you the keep run shut for pack lot a end odd

that do the really buffer blender. of it So the systems can and those hands to we reliability all ensuring create have makes a reliable it play that and needed into the into make sure

Ian Macpherson

[ph] of current what eco in running QX? and that of system look we more relative you might it's maybe system to this terms also quantity your detail the might When contemplate uptake Okay. Fill strategic that little capital these seen expect see particular. to AutoBlend program type for the in put CAPEX I and wondering the be the accretion growth could in of you what a Top to year -- we if both was type units CAPEX, good of we at around of increased on the we've

Kyle Ramachandran

hedging Yeah, that the kind get on why so the range a these a really is little frame ensuring the range. we supply and that we them materials time through around see is we chain expect in of to components come that in, bit and

Top the Fills. building As blenders multiple the are both far and we as of units,

pieces where two far The As silo always exciting and share. been pieces are pull as new market ability returns think these as or through of technology new the systems new capital. line pay of about targeted the piece really we've in we've customers with returns backs of incremental we to on

compelling returns for when us. the we so there look that becomes very And at

to XX both we sure with details a investments more that but and we're over the customers believe the these etc. conversations additional because both of terms there those they kit help making of around the as come we we're tightness products sand today these building from of So, the trials first as is which so on technology opportunity we for supply demand Both there. last address we're months for opportunity and well question feel of trucking, is the exactly chain to those hope some pieces we of to into about significant these the and throughout going your of here very alleviate be deploy capital. of the deploying got what really that in future I'm pieces the very but bottlenecks in exciting conscious beyond that excited uptake there's

Ian Macpherson

Bill. thanks Kyle, you Thank

Operator

comes from with the you next question Gengaro Stifel. and Stephen Thank

Stephen Gengaro

change follow think frac translate the services, we more Thanks, about of we units step over demand well Two of that should be it's demand changing dynamic? or the we and mean how your that about you sand guide is for think modeling think kind the good sort the temporarily at per with a do as shortages, morning. industry site, demand how should one in any think I I related think that for there was site, we systems two, as then to to you for would sort silos far more about. that me, somewhat guess you When fleet up. there's to next year us of your dynamic

Kyle Ramachandran

at the of chain supply site you look by that but of also is increase, I rate, being storage -- done will driven fear longer laterals. do today's if Well which more the at the with the is the per speed practice fracking think use

sure like trend to at you We and is the insurance making fracking a for and kind need they save and would rates. the well side trying continue amount on that the more continues it. site. those on a That at to at continues look insurance of dime do storage really said basis day's it storage provide industry it on the use always the you the that is drive If look conditionally buffer to of storage that's a can

there bit that continue. I happen a think now a of it will So, is change right with step

incremental last addition on call solution offering. will bring an ones use us profitability our additional the Top in it where we driven think basis Fill by per I system of the ourselves

also are to We that equipment. for that see our customers silos combined incremental using system not currently demand with the

and growth we a reversing. don't incremental So that that see do see with we significant trend

Stephen Gengaro

can you for Great, where you from couple from And hike when price about, versus levels levels? January of and us where that's on maybe give stand we -- stands times, a any think on kind do benchmark helpful. pricing mentioned last trough year, really maybe price peak Xst, you and/or

Kyle Ramachandran

I that XXXX, significant don't last or some the us we has evolves. have area changed, get into activity showing where we'll our But relative say a and XXXX mix how here. showed with impact as partnership partnership know mile and good an the piece lot think specifics has that they're changed. to to that's going in good with our levels is downturn I increase customers The

I our our efficiently trucks systems. make a use modest investments we where terms more think our the use demonstrate and but investment of ways basis. prior the significant full what for comment of to and customer’s customers we silos quickly driving of a can there on are And silos those using continual the and silos. to help customers capacity to the efficiency trucking in more improvements the are to to was, continued we've is Bill’s that’s [Indiscernible] investment been turning making our able our going in make around

that been Top and less so making things cost agreed of find on always may well. fully strategic the pay also that's theme terms customers by as to of actually And sand for net we're paying to Fill our trying in a is story basis ways less delivered And for a like be investments. pricing. to It that they

Stephen Gengaro

give if have at incremental to And just is sense? given follow you Great, that year one maybe system, about makes the related Kyle. this, fleets that's Thanks mean good per up or amount EBITDA take we color. of per sort on a fleet think $XXX,XXX that, I range of deployed,

Kyle Ramachandran

as than fourth as well bit remarks in additional think pricing higher what the scale the a and that probably I is in about talked it Yeah, increase. quarter was we little prepared

increase to I think So, up where to has it historically. been will that we number focus continuing

Stephen Gengaro

Okay, great. the Thank gentlemen. you color for

Kyle Ramachandran

Thank you.

Operator

Instructions]. [Operator Hunter Jon you. from next the Thank question Cowen. And comes with

Jon Hunter

Hey, good morning everyone.

So you on had exit. of first a December kind just activity front, question said the is the strong

of in if XX% You through the of far guided it is February about I quarter? in up expecting the me or wondering continued activity you so quarter here, here. was could think at first up increase middle guess I is are the first XX% end how you help trending the

Kyle Ramachandran

obviously think the a out it price kind far January someone continuing the I activity said we as today. just shaping that increase commodity Yeah, and quarter, on holidays going slow what's of In go in throughout seen think continuing is mean There's I the February in shape to we've of activity here of is I the evident on. as as starts just coming are helping see them. And quarter.

Jon Hunter

X And gross do related some up profit to offer Yeah, given the the increases I be that makes you first of system, you've and mix, through gross of you Thanks. that Kyle. million per help the guess any sense. bumping can some you've a level price looking at from kind help the could quarter profit in there? gotten put of system per Thanks front, on on on you it margin the think

Kyle Ramachandran

into I kind been don't but up far that to too to of details seeing again going get shapes we're think Yeah, how the clear improve. we it we're continue that have on

Jon Hunter

investments the spending translate Then making? returns activity this Got that you you're plus. tracking XXXX able at year XX% activity would to growth, into to given to it. up and looking some you Solaris and be of the forecast this How Bill up year that E&P outperform would whatever is technology XX% expect mentioned expect completion

William Zartler

activity us to the numbers going new the in continuing some based spending gains around do share we if XX% gain in the increase you're to But XX% operator Yeah, that there's as also that's well I get as offerings. fact XX% in to probably to see increase you through efficiency creek on there. cost XX% forecasted market -- think activity some

customers will really to incrementally see based that grow the a a said, Fill we a trucking buffer really the we adding unique of well set of to Top and today we suite. addition that flexibility our As as have the as industry continue don't think is addition we on the

Jon Hunter

it Thank you. back. I'll turn

Operator

Energy Thank you. Daniel from question And with Partners. next the comes Sean Mitchell

Sean Mitchell

it frenzy, are over Thanks the public Good private? morning bit then seen? kind like demand that companies are you my private And lot the have CAPEX. is AutoBlend course there's the be to for has question guys. taking -- units. demand changed see a here growth question. auto seeing than your traditionally year, of will kind a good Top Hey, the seems little simul-frac the fill kind customers your me, in Obviously you Fill folks that being question Top some One your mix in driven of is and second a big of both the Fill more really demand system of follow-on, units, talking for this in for just go I of by simul-frac more mean today last to and kind picture,

William Zartler

is -- demand can right, it on or storage of look is the the places, And its sand additional To it adding are it. site in customer per and and questions well by the truck. system your private really for tuck driven Sean, at volume take functionality first growing more has you we really two the

plenty lower the need Top Fill. a to think driver we to it have XX% can your by is increment why through going drive that’s valley to of you up unloading And largest But truck moving you're by what and the capacity the and drivers, time the and I one but the drivers driver I of features XX% for so the methods. shortage traditional if of of one of think

In in are basins, terms privates. in most basins. seeing always across We're of in picked we up it are seeing wins gas generally it's but oil basins, there the board mix, the stuff stuff yeah, more active

Sean Mitchell

year, of And then be Kyle up, first in would the growth correct? follow you the the heard spent thought I half I is say that just CAPEX to

Kyle Ramachandran

we guidance is and to far to The we follow-up the demand is will the what that provided so spend which around we expect see. and half we to additional extent first in the see that hope

come out year will refined half the more guidance. with We of second

Sean Mitchell

Got it, you. thank

Operator

you. question Samantha Thank Hoh ISI. from Evercore the comes with And next

Samantha Hoh

call. I Hey Bill, about guess the maybe taking the pickup whole talk for guys, share what think of thanks third delve my you been for frac have market be into you would fleet. one I in guys to share, by your year-end? just Can maybe us micro traditionally target

William Zartler

don't our market customers. share, at look We at it look by really we

to And or the customer usability the trucks big continue system is Y of take as those so that's customers We customer we advantage Top if for will said fleet. to have do. and trying X think they really a using we out to driver grow what our Solaris be Fill

system the and So targets that have we are out roll going additional will think basis to the we customer adopt look as at it by on a we customer equipment.

Kyle Ramachandran

Top pure is is around also it but of reliability the blenders Fill think traditional seeing system you It Sean as adoption of just -- a big well. also not is the alluded sites I is of Yeah to simul-fracs is AutoBlend and and and it well well the today some from reliability are the throughput but that system what capacity as standpoint on we challenge our in a great.

Samantha Hoh

Okay and you packs. is those mix right maybe X I'm like many have the what [ph] just but of XX -- of curious How now? guys count about the and -- the then just a

Kyle Ramachandran

these tighter in fourth quarter. chain efficient and But did provides would way what sort store have to on our on trucking I sand really as to impact gets XX% the a system is high from And capacity volumes an trying mix say. we're supply overall our It some there of still get standpoint, location. of they to most is --

So for an X storage can bolting and extra easily a customers. pack extra extra little X bit really of on provide

Samantha Hoh

when Is curious in have the kind XX I you how visibility pricing to Inaudible]? you -- much terms dynamic of have customers to going of up that [Question am or are then similar And X packs?

William Zartler

the traditional As far systems? sand as

Samantha Hoh

are signing customers is [indiscernible]? longer where it kind the Yeah, term of the or contracts place

William Zartler

working has that's you have to we we one that XX, guess to on look the is as us, term since some at with But technologies that on are a traditional that be to And spot it the new if effectively in we customer X expanded be contract. far of we on of continues yeah, have for up line customer. that are some kind provider with of capacity. other as will And Yeah, trying to for systems. that the a our where which traditional I signing I three-year dedicated then basis. pricing today as of storage well far share particular tends the it contract And turn as we customers, as mean towards gone

Samantha Hoh

you. great, Okay, thank

Operator

we for Thank end the to the like the to back turn session. you. reached Mr. would call now Bill over any comments. of Zartler I And question-and-answer have closing

William Zartler

our conclude thanking Thank to I suppliers you to year. of positive employees would in Solaris a XXXX. their stay last have our we you We great to and help by believe in continued all and will sharing of provide continue to and Thank today. equipment all productivity like for our throughout for efforts today not all customers results Keith. improve and safe your I valuable and like contribution day. would their services support we would also be you and thank without

Operator

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

may disconnect You lines. now your

Solaris Energy Infrastructure (SEI) 22 Feb 222021 Q4 Earnings call transcript