SOI - Earnings call transcript Q1 2024 | Solaris Energy Infrastructure Inc.

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Operator

Good day, and welcome to the Solaris Oilfield Infrastructure First Quarter 2024 Earnings Teleconference and Webcast. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Yvonne Fletcher, Senior Vice President of Finance and Investor Relations. Please go ahead.

Yvonne Fletcher

Good morning, and welcome to the Solaris First Quarter 2024 Earnings Conference Call.

our CFO, CEO, Kyle are our Zartler; today and President Ramachandran. us Chairman Bill and and Joining

Before and we of begin, Such our statements standard I'd we forward-looking like to remarks that comments the remind our outline public statements regarding may forward-looking reflect yesterday, along issued risks. a and and filings regarding results release make nature will the of known some that include the unknown other press recent Exchange risks. financial number cautionary Please those of with today. you Securities refer future of Commission to with

considered also news on should performance. point contain release comparable discussion would presentation Reconciliations information GAAP. additional The or earnings useful we release, that posted will isolation and accordance financial non-GAAP substitute our be which available measures, our as which to of in this I prepared earnings like to for in of believe section call in our today's is evaluating not our conference the be can website. out in results with GAAP are measures a in

now the I'll our over Chairman turn to Bill CEO, and call Zartler.

William Zartler

Yvonne, and this for everyone thank for morning. joining us you you, Thank

produced off shareholders returned great in is customers. another deliver our cash continued start Solaris service free quarter to incremental XXXX. a strong and We of to to flow, cash quality to

dividends. cash million million free generated $X $X in $XX of $XX revenue, including of of adjusted We total million and results, $XX repurchases recap million our first $XX we and shareholders, quarter To million in returned million to EBITDA share of flow. a

over have long cash return above at minimum returned flow commitment. term. framework To we year, to XX% least to we Last of an far that date, enhanced free the shareholders announced

over quarter, we for million shares just $X X distributed dividends During back the million. $X opportunistically about in bought and million first

will have the approved market quarter nearly returns we and returned represent XXXX repurchases our dividends These Yesterday, our to shareholders half $X.XX returns these scheduled in that capitalization. dividend we million share. second of Including in of of second announced share the XXXX. quarter, Board per since $XXX current

As remain we committed return of dividends our share that a paid per by growing of dividend track dividends. we forward, our remaining and framework think cash dividend brought cut, We going strategy. XX% shareholder XX to We've stable consecutive paramount uses record our about we built since without of to and with inception. a now quarters

also per helped on the those basis, well allowed Opportunistic by investments. our dividend. help have share reduce borrowed the as X% on outlay share repurchases net us share for share without us a grow meaningfully dividend repurchases We has the fund fleet organic revolver turn to in since count cash growing XXXX to as which total

the flow down to We over also debt cash free pay expect quarters. with that coming

Our this also provides opportunity strong future participating free for reducing attractive year flexibility generation provides in cash, us which borrowings, for opportunities. and remaining for an consolidation flow organic growth potential ready cash to build revolver

committed returns. to Additionally, we remain shareholder

the continuing reiterate U.S. industry. of to at positioned each of electrification likely in the role is we and and continue from a efficiency industry, these play to themes been Consolidation, to benefit have key to be expect for these. themes. and relates and Turning few to maturation I'd how that as a see we it like the materialize look themes to industry the Solaris the to broad a shale

development powered of grids oilfield in other We've and remotely Electrification economy. of to and frac support production the related fleets be our of growing adoption a the activity. dominant independent and equipment U.S. parts continues to theme seen electric

generators natural power adoption our gas available distributed experienced equipment equipment, location, ] customers Solaris' provide and on using increased and start. systems grid power have we the and we've demand power. our rectificating to been turbines all Traditionally, electric our including to from from operate powered but [ generators

easily on money emissions. fuel Our and reducing off power equipment overall customers' is these our saving sources, run

providers to and the among consolidation. is years coming likely for service continue operators a as over Consolidation key inefficiency catalyst remains

for development. through anchorage the in For revenue And synergies. operational oil blocks providers, operators, multiple can and diversifying opportunity gas drive service significant financial allow for combination lines efficiencies product and and larger operational contiguous grow of

While fit culture and not will we profile, innovation. returns yet, our in continue of balance been cash have that our enhance to the and for participant shareholder flow mergers sheet complement healthy we direct our a consolidation and keep look right

and continue resources efficiently. North at driven crews Despite continues the longer also laterals, These hours, today, frac which all record ways active daily day in per flow operational by pumping driven gains. sand gains efficiency efficiency American the more and market significant resulted oil number to production usage, levels Operators more daily count in rigs to of savings. unprecedented find completion drilling pumped have reduced to and cost stages have of record

the cost delivered benefited well lower operators optimization total a While greater have raw tonne chain. the our a offer supply just of fraction material of per Solaris cost, from solutions systems of represent sand as small

the made all dump belly equipment of silo to offloading our example, enabling systems upgrades trucking industry-leading drive rates. an for As fill reliability and we and top sand

unloading over truck as Some software better include of inventory tools upgrades increased and these that well visibility customer-focused trucking rates. control allow and as

delivered higher the we present frac service through crews top of the helped turns. on required sand fill of of which payloads number more total and increasing are produce than truckloads truck by the cost Our systems, today half reducing

high sand become our total throughput grows, efficiencies capital solutions believe for As material handling crucial maximizing we operational and logistics. usage in

returns. flow capital to is our our products, to customers our completions reliability a activity. near-term levels maintenance continue generate and innovation, expect that as of Solaris with drilling continues at support highlighting safety backdrop The spending old, to both to highest new and generation of like I'd choppy somewhat team level by strong cash continue the meaningful summarize XXXX against in and we and

customers and our right through opportunities shareholders organic our add cash inorganic to growing through liquidity, confident and healthy balance returns, increasing are maintaining a remaining position. a ready addressing potential for growing intensity substantial and the in completions growth future We of value strong the for solutions to sheet cash nature with our with ability

that, it Kyle I review. will turn to detailed more financial over for With a

Kyle Ramachandran

Thanks, operational good flow morning, which per our repurchase $XX generated start in shareholders, cash results. Operating recapping everyone. Bill, up financial returned free and quarterly dividend share the million made of We with I'll of quarter million expenditures, $XX of million. first $X.XX $XX cash capital we our and was and $X shares. million was $X to in After million about flow.

in the end credit debt $XX at $XX of at revolving $XX quarter our remained $X quarter, million. available net million. approximately the on debt of Total facility liquidity. million ended was million the Together We with cash with

systems frac fully was the by flat with Our the first activity crews, of the essentially quarter also XXXX. of average flat quarter, of was with as fourth systems, which XXX an in XX We fourth measured utilized quarter. followed

quarter mix. and efficiency. services, reset in Ancillary as trucking ancillary pricing first sequentially quarter January. to stronger we prior the for basins and and cost quarter, Throughout utilized for fully a from was expectations weakened throughout expected in continually a the excluding as improved than system January industry Annualized February services Our growing job modestly we March, the some sequentially, margin favorable per the improved to saw pushed contribution contribution starts job due improved gas-exposed benefited activity X% were right. in system, count, more which and

result, per systems, trucking to a million. X% As ancillary including contribution services, annualized total sequentially margin utilized $X.X improved fully

Net first was a $X.X On contribution expense interest total quarter million. margin in compensation SG&A followed million. basis, sequentially approximately to per the including frac stock-based million, nearly crew annualized noncash $XXX,XXX. improved $X.X was X% of $X

was overhead than of payment cash or per line million annual guidance expenses. the less year XXXX. capital Capital than annual expenditures quarter for at higher $X $X a were included cash and in of Working of and our million million million bonuses use resetting the seasonally $XX with less of prior $X of the

Turning to the second our quarter. for guidance

We basins prices expect current such gassier Permian. as the levels gas quarter land weakness oil relatively impacts while the American from second to strong activity support activity in stable completions as basins natural in activity in North be flat

and our we fill average. number on system systems that seeing some on outlook, for system utilized top second noted fully deployments in of our our trended thus, XX% our and the and As quarter, units. as quarter of quarter system to progressed. current the the count half quarter earlier, down first towards sand second Exiting quarter in increases the expect we're heading the follow deployments X% down both April frac Based first in be the the crews average we could from

basins While to such back the Eagle see towards also gassier weighted and Ford. additions see as quarter, even delays in program we the some activity half combination continue we of do second oil-directed the

be lower to expect the $X.X SG&A and in quarter million. second We sequentially approximately

XX% XX.X million forma and at expect roughly rate We dilutive to flat be pro the at forma pro count share the tax total to flat be shares.

maintaining our expenditure of are year largely $XX of XXXX spending for some less We capital million, upgrades. continued the with levels of maintenance which reflects than system rollout guidance

takes puts to $XX $XX sequential to free a into million in translate and between We in expect QX. flow million these increase and cash

evaluate We expect and debt. to use pay share fund to down quarterly continue repurchases dividend, our to opportunistically this cash

points job profitability. expect absorption We steady, couple be as mix down to lower cost pricing adjusted activity and than of percentage softness, but EBITDA a activity sequentially remains impact

making we strategic have to spent call investments organic that and for earnings the cash are Before years the reiterate the last and we open flow and returns service like to of enabled quarter of have questions, growth offering. driving showcasing already believe couple to that generating our the cash strengthened XXXX of meaningful expanded provide flow grow capability is cash flow free first cash We us shareholders. I'd

to to power investments else forward cycles. our will resilience believe earnings we All and as deliver stronger cash moving compared flow us enable prior equal,

to and and strengthening growing organic our balance opportunities right increasing continue capital. liquidity, our that and will executing shareholder return on on returns We program, our enhance on inorganic our the focus sheet sustaining

your happy to With that, we'd questions. take be

Operator

first We question session. the question-and-answer begin will comes [Operator The Piper Luke Sandler. Instructions] with Lemoine from now

Luke Lemoine

Kyle, market just back outlook. to your

market the you a Kind the March exit talk was which about makes February, overall the levels, visibility about any sense. industry half shape, was second into January given talked freight But heading from year? in the better, XQ XQ of could You down. flat of

Kyle Ramachandran

support just additional oil prices are gas activity. prices very mean we when activity, term. outlook, necessarily but term, at obviously, short here commodity medium will the to look supportive in I in think not We the Yes. the think continued I

guidance somewhat overall our of that fact roughly the market. driven is we're X/X the So by

So exposure. have broad do we pretty

is see We customer quarter end within we high-quality sort of in out, the to activity look for of the And we the do the terms some we of evolve as portfolio first did see bottom basins. as across continue in adds the the business mix relative quarter. the of multiple

the see as do a So I feeling a at. low little look here, we in we're the of adds calendar think bit but we

Luke Lemoine

Then in good you adoption. 'XX, really technology had Okay.

If you you of systems year developing this the how kind and at you systems Could just blend all those? about fill with talk a look this the for top and bit follows. frac, fleet penetration per see little

Kyle Ramachandran

Yes.

have the we think system with I and we the of sand as coming elevators. preponderance so that at out adds, both systems are look bucket adds the deployments, X

So the continues adoption increase. to

of We've to capacity giving adders in additional the throughput even is months that customers some our offloading included system. couple rates of within the system the higher last

amount So truck able the reduce next. to of we're effectively X downtime the to between

continuing value that. the we're just adoption offering overall the to with And customer, to seeing so enhance tweak we're and that to

we've sand per our to more of more years, per team over day. game the continuing internally. done name be last to are continues the challenge the pumping So as XX day, And we hours

really challenging rates, are stay high the to at of high up challenge completion the kind which edge is continued provide continued and throughput rising customers of allowing Our reliability and to us we're trends. us, cutting to

Operator

with Our Instructions] [Operator Stephen Gengaro comes next Stifel. from question

Stephen Gengaro

be So this know, in competitive me. any probably deal private, think that you landscape -- well site X But pretty the to has any do impact it's one, taken the things soon. silica business? the for on I morning logistics

William Zartler

in have not their home. our equipment found I really. boxes mean, No, the

the might facility we to rate the of running the high much turn things and addition perspective, The electrification fill think because at movements the has things debottlenecked use around. the like on trucking our of they with I more move side, which of a see happening side with our the boxes. do on allows throughput I and trucks think our continue versus diesel well volumes direction fuel that us faster are to the top just well from

So on I has it any us. think don't necessarily impact

Stephen Gengaro

how markets for are Luke U.S. kind you your privates And then and not to customers 'XX, it export year little the I in think of activity, larger plan as may next and about the get how the several step then you Great. we as may more the or gas overall closer? the quarters, bit. then touched know been when of on way just starts have sort But thinking a when about disciplined, capacity evolve

William Zartler

I evaluate it. the Well, tells think constantly And something. we curve us

price market and forward at of and curve where has their a the we and private year. it this the in upstream I to they've think the relative today If that, you over the lot reconsolidated, gas to PE businesses of sold look last versus out guys are been have consolidation sector

reloading I think [indiscernible] they're capital. and all out

And on to 'XX price we'll is supported, to maybe late in of the that resurgence see money go a I think industry. new 'XX that think so if work bit I the into for

Stephen Gengaro

E&P gaining the pumping on we've we far both affected how with fronts? curious And seen potentially of sort we the you, your When look side data that word, And data as both seen as involved. much little that supports technologies side, impact seen on then that? there but then maybe consolidation start and new you the more share it's final one. view just those get as any also pressure about strong your have you you on Have is -- expectations on at maybe a the one consolidation expectations whether a

William Zartler

Yes.

I the There There's shifting customer of base, are in that other folks that folks prefer the solutions have seen think that. see our. that. mix we

of consolidated, as I have have folks net the of frac some that their grown through adds, think, use consolidation as so seen And fleet. actually guys upstream we've

the very interesting frac I consolidation, think of trend. customer been terms in it's a

think think out much don't that the necessarily don't I it's way. think much. neutral been pretty they've gained along consolidated. I of we've I we've as lost

and low. I versus of -- relatively the think utilization is is was available used frac the brill fleets today number note the

electric on -- fleets and So the higher much the than fleet. utilization frac on traditional I that think is the

bit we I the in of bifurcation the support otherwise. electric little think a see as more So that fleets than we market,

that. think And we'll of out so I adds see net

Operator

Crist question Our comes next with from Don Rice. Johnson

Donald Crist

Given free more flow. the you lot where of you was, your pullback But talk back And quarter, about the spin can in the to you're given use lot obviously, going just cash a first CapEx, stock stock. in off of bought a weighted through and little to going repayment this Or as cash we some bit of of that left think towards assume going do balance dividends forward? buybacks a on kind debt Should you we debt year? it's move sheet? with be more the

Kyle Ramachandran

Yes.

a think So had dividend Don, we share per X last on increases year, I the basis. to

good So today. of feel $X.XX the a share very sort about run rate

back the would quarter, market which little in first in and We Our on more the to. the opportunistic, first bit a think have delayed to is in I quarter reloading I some shares. sheet And the revolver last we debt repurchase again balance buying you buybacks opportunistically as pay-down been not think of some we for pay-down, priority the alluded had seen shares bit. borrowed are year a us the

expect on added to So paying the down via we see to balance some balance, liquidity debt. sheet I some think

Since fourth paid. of So think seeing that's XXXX, of how I the allocation. sort dividend we're been the has quarter the capital

We it cut multiple it. have not increased We've times.

that absolute priority, is important it's So us. and to very

dividend, the we've look I to the lot here it. we're reloading as of that organic and mentioned, buybacks, we look opportunities as evaluating sheet, as at as And at growth flexibility balance inorganic forward got look constantly a well

lots in business. options given to good a coming the position are flow off cash We really evaluate of the

Operator

Daniel comes from Sean Partners. Energy question with next Our Mitchell

Sean Mitchell

larger seen of in Obviously, bit EV in the little M&A a service space. lot more the We've seeing a space.

M&A deals It a ago. M&A expectations better? out guys to today kind the get on service M&A months just done. while, Or feels of probably getting are give us a have in opportunities you cap what Is like X Just smaller front? if maybe of color little space around were versus for or thoughts any, you maybe whack on that XX to seeing the

William Zartler

massive I the the stick. though everyone Even for market a in the bite. people enough There's get are stick have cycle in get down doesn't a valuations private -- think hockey not their expectations, forecast, to long where hockey guys been picture. no has we've the this

out a And makes there's so we offerings generally that with technologies, markets think with there. there as protected we and look or lot for unique opportunities closer sense, out

I to those to think privates especially legacy, PE time evaluate, beginning these getting are longer-term of the sort to it's by held be things. begin market some holders, to

ready balance sheet And so to us. the having important is

Operator

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

William Zartler

that success company. exceeded of our over its marks laid amazed When since you, suppliers back customers making we decade, founding a far decade. out. like we've This all for team anniversary continued at accomplished we're over and Thank Megan. original our a as we what as partnership XX-year year, we last employees, and Solaris' the thank I'd and our to goals a the Solaris look

deliver think years, about excited look and executing us XX about very to we're efficiency continue you solutions our site continuing with that returns Thank new well progress to and months. all, innovative customers forward few next in you improvements we program. driving our help our for in on a continue and we sharing the shareholder As

Operator

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

disconnect. now may You

Solaris Energy Infrastructure (SEI) 26 Apr 242024 Q1 Earnings call transcript