Solaris Energy Infrastructure, Inc. Q3 FY2025 earnings call

Bill Zartler's Remarks - Solaris had a great third quarter with record revenue and profit. Achieved strategic milestones like operating 760 MW (up from 150 MW a year ago), securing additional capacity (expecting pro forma generation capacity of ~2,200 MW by early 2028), raising capital via convertible notes, expanding commercial pipeline, and acquiring HVMVLV. - Highlighted Logistics Solutions as the engine that could, providing stable cash flow and being a critical part of the natural gas value chain for Power Solutions.### Kyle Ramachandran's Remarks - Third quarter demonstrated growth in Power Solutions and continued free cash flow generation in Logistics Solutions. Power Solutions contributed over 60% of revenue. Adjusted EBITDA grew 12% from prior quarter and over 3x from same quarter last year. Outlook for Power Solutions segment adjusted EBITDA next quarter is relatively flat due to mix impact, while Logistics Solutions expected to continue generating significant free cash flow.

Solaris has two main segments. The Power Solutions segment contributed more than 60% of total revenue and over 3/4 of segment-level adjusted EBITDA during the third quarter. In the third quarter, Power Solutions operated approximately 760 megawatts, up from 150 megawatts a year ago. The Logistics Solutions segment is less than 1/3 of the business but provides stable cash flow. Year-to-date, Solaris has deployed multiple Solaris systems on 90% of customers' locations, compared to approximately 60% a year ago and 40% the year before that.

- Power Solutions segment adjusted EBITDA expected to be relatively flat next quarter as full quarter benefit from ramp in operated megawatts and HVMVLV acquisition is offset by mix impact from lower spot utilization and commissioning work. - Fourth quarter total adjusted EBITDA guidance $65M to $70M, up from prior guidance $58M to $63M. - First quarter 2026 total adjusted EBITDA guidance $70M to $75M. - Pro forma earnings of the company could be over $600M before considering additional scope or growth with existing customers or new opportunities.

- Supply chain challenges affecting equipment delivery and deployment. - Competitive landscape and market dynamics impacting ability to place power generation capacity. - Grid delays, regulatory mandates, and surging demand posing challenges for data center projects and power solution deployment.

Q: Could you talk about the supply chain today and challenges in building out the power business?

A: William Zartler and Kyle Ramachandran discussed supply chain growing out, exploring other avenues for power, and the team's experience in finding unique ways to get capacity.

Q: How to think about revenue per megawatt increase and modeling going forward?

A: Kyle Ramachandran said there are puts and takes, with third quarter benefiting from additional generation deployment and commissioning efforts, but fundamental returns on equipment are in line with past indications.

Q: To what degree did recent announcements from Halliburton and Liberty change your view on the growth opportunity?

A: William Zartler and Kyle Ramachandran stated these announcements didn't change their outlook as the market is very large and multiple companies are needed.

Q: Discuss the co-CEO role and initial impressions?

A: Amanda Brock talked about the fast-moving market, huge tailwinds, and Solaris's advantage of demonstrated delivery ability.

Q: How does HVMVLV give an advantage in bidding on large data center projects?

A: William Zartler explained the importance of balance of plant, including distribution equipment, switchgears, and breakers, which Solaris benefits from with HVMVLV's capabilities.

Q: Talk about the all-of-the-above power approach and the 400 megawatts order?

A: William Zartler and Kyle Ramachandran discussed turbines as the workhorse, complementing with other generation sources like reciprocating engines, batteries, etc., and the 400 megawatts order including a mix of different assets.

Q: Thoughts on the Stateline JV and cash flow?

A: Kyle Ramachandran said there is flexibility in the JV debt structure to send cash back to Solaris or reinvest.

Q: Frame the size of the customer pipeline and future operating fleet?

A: William Zartler stated the pipeline is enormous and it's likely the operating fleet will be larger than 2.2 gigawatts by the end of the decade.

Q: Circumstances surrounding the second data center order and contract tenor?

A: William Zartler and Kyle Ramachandran discussed the second data center being rolled into the Stateline JV and contract tenors morphing to longer term due to grid delays and market factors.

Q: How adding new power generation extends core turbine power in contract negotiations?

A: Kyle Ramachandran said it's a mix of all, with Solaris having an order book and optionality to use different generation sources to meet customer needs.