Solaris Oilfield Infrastructure’s Earnings Call Highlights Growth and Challenges

Solaris Oilfield Infrastructure ((SEI)) has held its Q2 earnings call. Read on for the main highlights of the call.

Solaris Oilfield Infrastructure’s recent earnings call painted a picture of robust growth tempered by some challenges. The company showcased strong performance in its Power Solutions segment, marked by significant revenue and EBITDA growth. However, this positive momentum was somewhat offset by a decline in the Logistics Solutions segment and expectations of flattening EBITDA growth in the upcoming quarters.

Significant Growth in Power Solutions

Solaris’ Power Solutions segment experienced impressive growth, with revenue surging by more than 50%, reaching approximately 600 megawatts of capacity. This growth translated into a 43% increase in segment adjusted EBITDA compared to the first quarter, underscoring the segment’s pivotal role in the company’s overall performance.

Joint Venture Success

The formation of Stateline Power, LLC, a joint venture in which Solaris holds a 50.1% stake, marks a strategic move for the company. This venture will co-own and operate around 900 megawatts at a single site, positioning Solaris to capitalize on synergies and expand its operational footprint.

Revenue and EBITDA Growth

Solaris reported a total revenue of $149 million, representing an 18% increase from the previous quarter. The company’s adjusted EBITDA also saw a notable rise, reaching $61 million, a 29% increase. These figures highlight Solaris’ ability to drive financial growth despite sector-specific challenges.

Advancements in Technology and Operations

Solaris has made significant strides in enhancing its technological capabilities. Engineering modifications to Selective Catalytic Reduction systems have improved mobility and reduced downtime. Additionally, the development of the ‘Solaris Pulse’ app for remote monitoring of power generation demonstrates the company’s commitment to operational efficiency and innovation.

Strong Financial Position

The company has bolstered its financial position by raising $155 million through 4.75% senior convertible notes and securing a $550 million senior secured loan facility for its joint venture. These financial maneuvers provide Solaris with the capital needed to support its growth initiatives and strategic ventures.

Logistics Solutions Decline

The Logistics Solutions segment faced a 4% decline in fully utilized systems from the first quarter. This downturn is attributed to lower oil prices and reduced drilling activity, and the company anticipates continued softness in this segment.

Anticipated Flat EBITDA Growth

Looking ahead, Solaris has provided guidance indicating flat adjusted EBITDA growth for the third and fourth quarters. While the Power Solutions segment is expected to show minor growth, the outlook for Logistics Solutions remains weak, reflecting the broader challenges in the oilfield services market.

Forward-Looking Guidance

Solaris’ forward-looking guidance suggests a stable yet cautious outlook. The company expects adjusted EBITDA to range between $58 million and $63 million in the coming quarters, driven by continued strength in the Power Solutions segment. However, the anticipated decline in Logistics Solutions due to oil price softness remains a concern.

In summary, Solaris Oilfield Infrastructure’s earnings call highlighted a company navigating both growth opportunities and sector-specific challenges. While the Power Solutions segment shines with significant revenue and EBITDA gains, the Logistics Solutions segment faces headwinds. Investors will be keenly watching how Solaris balances these dynamics in the quarters to come.