Solaris Energy Infrastructure, Inc. Q2 FY2021 Earnings Call

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Solaris Q2 2021 Earnings Summary

  • Revenue: $35 million, +23% sequentially vs. Q1 2021, driven by last-mile services growth and modest system activity increase.
  • Adjusted EBITDA: $6.5 million, +6% sequentially vs. Q1 2021.
  • Systems Deployed: Averaged 53 fully utilized systems (+ modest increase vs. Q1 2021; +25% vs. Q4 2020 average). Deployed 87 proppant systems total, with gap to fully utilized systems at historic high due to private operator inconsistency.
  • Balance Sheet: $46 million cash, zero debt; paid 11th consecutive quarterly dividend.

Market & Operational Context

  • Oil prices rose from >$60 to >$70/bbl; U.S. natural gas from ~$2 to >$4. Operators showing measured response vs. prior cycles, with public E&Ps holding frac programs steady and privates (now ~2/3 of drilling activity) slower to react.
  • U.S. horizontal rig count +30% vs. Q2 2021 average, but completions ramp lagging; operators shifting 2021 budgets toward drilling, setting up potential completions uplift in late 2021 and 2022.
  • Blender technology: Field trials successful; 1 unit working, 2 more expected by year-end. Early customer discussions positive but require commitments for further builds (similar to 2017-2018 6-pack queue dynamics). Focus shifting to efficient hydrated proppant delivery.

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Operator: Good day, and welcome to the Solaris Second Quarter 2021 Earnings Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. 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 second quarter 2021 earnings conference call. I'm joined today by our Chairman and CEO, Bill Zartler; and our President and CFO, Kyle Ramachandran. Bill Zartler: Thank you, Yvonne, and thank you, everyone, for joining us today. The second quarter of 2021 was another strong quarter for Solaris. We generated a 23% sequential increase in revenue to over $35 million. Adjusted EBITDA increased 6% sequentially to $6.5 million, and we paid our 11th consecutive quarterly dividend. We ended the quarter with $46 million of cash and no debt on the balance sheet. During the second quarter of 2021, oil prices climbed from over $60 to over $70 as operators remained disciplined with supply conditions and global oil demand continued to improve. U.S. natural gas prices also improved from the $2 range to over $4. Historically, U.S. operators have been quick to ramp completions activity in reaction to similar commodity price increases. This cycle, however, we are seeing a measured industry reaction, which we believe bodes well for sustained reco

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