Solaris Energy Infrastructure, Inc. Q2 FY2025 earnings call

• Solaris delivered strong second quarter results across both business segments. The second quarter marks the third full quarter since introducing the Power Solutions business, which continues to grow while the Logistics Solutions business generates significant cash flow.
• Power Solutions segment added capacity with current and new customers. Since acquiring Mobile Energy Rentals 10 months ago, capacity has grown from ~150 MW to over 600 MW serving 6 customers. Servicing diverse end markets including microgrids, gas processing plants, utility grid resiliency, and data centers.
• Regulatory clarity in Texas (Senate Bill 6) is creating commercial opportunities. Power Solutions' equipment offers reduced time to power, low emissions, high power density, and operational reliability. Evaluating adjacent opportunities like modifying SCRs for mobility and developing Solaris Pulse app for remote monitoring.
• Logistics Solutions segment has invested in systems to drive frac efficiencies for customers, enhancing earnings and cash flow. Silo systems combined with top fill help process large volumes of sand for completions.

Solaris delivered strong second quarter results across two segments. The Power Solutions segment generated revenue from approximately 600 megawatts of capacity, an increase of greater than 50% from the prior quarter. Segment adjusted EBITDA for Solaris Power Solutions was $46 million, a 43% increase from the first quarter. Power Solutions contributed 67% of total segment adjusted EBITDA. The Logistics Solutions segment averaged 94 fully utilized systems, a decline of 4% from the first quarter. Expected oil price softness is forecasted to drive a decline in fully utilized system count by approximately 10% to 15% in the third quarter with a lower segment adjusted EBITDA due to fixed cost absorption.

• Total company adjusted EBITDA guidance for the third and fourth quarters of 2025 is $58 million to $63 million, relatively flat from the second quarter. This is driven by some continued growth in Power Solutions, limited benefit from start-up and commissioning activities, and a lower Logistics Solutions outlook.
• For the third quarter of 2025, activity as measured by average megawatts earning revenue is expected to be at least 600 megawatts. Segment adjusted EBITDA contribution for Power Solutions over the next two quarters is expected to be modestly higher due to the order delivery schedule.

• Forward-looking statements made during the call reflect known and unknown risks. Refer to the press release issued yesterday and other recent public filings with the Securities and Exchange Commission for a detailed outline of risks.
• The presentation of non-GAAP financial measures should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. Reconciliations to comparable GAAP measures are available in the earnings release.

Q: Stephen Gengaro asked about 600 megawatts averaged operating in the quarter, owned capacity, and evolution of EBITDA.

A: Kyle Ramachandran responded that they sourced third-party capacity in Q2 to meet demand, with owned assets having higher EBITDA per asset, and EBITDA profile per megawatt expected to expand as owned deliveries come in.

Q: John Anderson asked about plans beyond 1.7 gigawatts, queue for additional orders, and M&A.

A: William Zartler said they constantly evaluate buy vs build, order book is being evaluated, and power generation equipment quality, maintenance, and emissions are key in build vs buy decisions.

Q: Scott Gruber asked about 4Q EBITDA being broadly flat and logistics decline.

A: Kyle Ramachandran said there are activity challenges in the second half, but Logistics has the ability to continue gaining share with intense job designs.

Q: Scott Gruber also asked about oil and gas microgrids.

A: William Zartler said oil and gas customers have good credit, pricing and tenure similar to data centers, and they are customer agnostic based on location and service ability.

Q: Derek Podhaizer asked about 70 MW added to energy market, terms, payback, and kit.

A: Kyle Ramachandran said it went to a high-quality midstream operator, attractive pricing, and they have advanced dialogues with parties for data center build-outs.

Q: J.R. Weston asked about longer-term value proposition and free cash generation.

A: William Zartler said they consider build vs buy and returns, and will make decisions on free cash flow deployment when the time comes.

Q: Jeffrey LeBlanc asked about Q2 capacity acceleration not repeating and challenges with generation-agnostic approach.

A: Kyle Ramachandran said it's a combination of customer plans, equipment delivery, and third-party capacity, and William Zartler talked about engineers' ability to mix different technologies.

Q: Nate Pendleton asked about data center fleet permits and Logistics efficiency initiatives.

A: Kyle Ramachandran said data centers have Title V air permit and another in process, and William Zartler said they manage fixed costs without jeopardizing quality.

Q: Michael Dudas asked about Texas legislation and PJM news.

A: William Zartler said power markets are getting pricing signals, and the country is opening to environmentally friendly power development.

Q: Bobby Brooks asked about data center contracts and open megawatts.

A: William Zartler said planning horizon matches power needs, and open capacity is filling up with positive reaction to availability by mid-2026 and beyond.

Q: Thomas Meric asked about longer-term strategy partnerships.

A: William Zartler said partnerships bring complementary skill sets, including with gas producers, pipeline companies, and customers for financing and operations.

Q: Blake McLean asked about balance of plant strategy and partnerships.

A: William Zartler said it's complementary to their wellsite strategy, and Kyle Ramachandran added it opens a wider addressable market.