Solaris Energy (SEI) Q1 2025 Earnings Transcript | The Motley Fool

Image source: The Motley Fool. Date Tuesday, April 29, 2025 at 9 a.m. ET Call participants Chairman & Chief Executive Officer - William Zartler President & Chief Financial Officer - Kyle Ramachandran Takeaways Power Solutions Contract Expansion -- A key commercial contract with a major customer was upsized from 500 megawatts to 900 megawatts, with tenor extended from 6 years to 7 years, enhancing earnings visibility into 2033. Joint Venture Structure -- Solaris Energy Infrastructure (NYSE:SEI) holds a 50.1% interest and acts as manager and power operator; the customer retains 49.1%, and the JV is fully financed with a $550 million senior secured term loan facility covering roughly 80% of forecasted JV CapEx. Power Fleet Capacity -- Total expected operating fleet will reach approximately 1,700 megawatts after new orders, with Solaris owning about 1,250 megawatts net after accounting for its JV interest. Contracted vs. Open Capacity -- Of 1,700 megawatts operated, about 70% is contracted, leaving approximately 500 megawatts available for new bids. Average Contract Tenor -- Power solutions contract book tenor exceeds 5 years, up from 6 months less than a year ago, driven by new contract signings and the acquisition of MER. Sequential Revenue Growth -- Total revenue for the quarter was $126 million, marking a 31% increase from the prior quarter, driven by growth in both power solutions and logistics segments. Adjusted EBITDA -- Adjusted EBITDA for the quarter reached $47 million, a 25% increase from the prior quarter; Q2 projected at $50 million-$55 million, and Q3 at $55 million-$60 million. Segment Contribution -- Power solutions contributed 55% of total segment adjusted EBITDA, and is expected to surpass 80% of consolidated adjusted EBITDA once the on-order fleet is fully deployed. Power Solutions Utilization -- Q1 saw revenue from 390 megawatts of power; guidance is for 440 megawatts in Q2 (up 13% sequentially) and 520 megawatts in Q3 (up 18% from Q2). Logistics System Activity -- Solaris Logistics system activity rose over 25% sequentially; top-fill system was effectively sold out; about 75% of locations use both the legacy SAN silo and top-fill systems. Guidance-Logistics Systems -- Q2 guidance holds at 90-95 fully utilized logistics systems, with profit per system projected flat compared to Q1. Long-Term Adjusted EBITDA Outlook -- At full deployment, management projects consolidated annual run-rate adjusted EBITDA of $575 million-$600 million; net to Solaris after JV economics, $440 million-$465 million. Capital Expenditures -- First quarter capital expenditures reached $144 million, below the prior $165 million guidance due to invoice timing, not reduced aggregate spend. Free Cash Flow Generation -- Management highlighted "significant free cash flow generation" from prior fleet investments, supporting reinvestment in power solutions. Supply Chain & Turbine Procurement -- The company secured 330 megawatts of 16.5-megawatt turbines for delivery mainly in the second half of 2026; larger 38-megawatt units are "effectively sold out," reflecting a tightening OEM supply chain. Tariff Exposure -- Pricing is fixed on most current turbine orders, with maximum potential tariff impact on recent orders capped at 5% and likely subject...

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