Solaris Energy Infrastructure, Inc. Class A

Good morning, everyone, and welcome to the Solaris Oilfield Infrastructure 2020 Second Quarter Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to Yvonne Fletcher, Senior Vice President of Finance and Investor Relations. Ma'am, please go ahead.

Good morning and welcome to the Solaris Second Quarter 2020 Earnings Conference Call. I am joined today by our Chairman and CEO, Bill Zartler, and our President and CFO, Kyle Ramachandran. Before we begin, I'd like to remind you of our standard cautionary remarks regarding the forward-looking nature of some of the statements that we will make today. Such forward-looking statements may include comments regarding future financial results and reflect a number of known and unknown risks. Please refer to our press release issued yesterday, along with other recent public filings with the Securities and Exchange Commission that outline those risks. I would also like to point out that our earnings release and today's conference call will contain discussion of non-GAAP financial measures, which we believe can be useful in evaluating our performance. The presentation of this additional information 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 our earnings release. I'll now turn the call over to our Chairman and CEO, Bill Zartler.

Thank you, Yvonne, and thank you everyone for joining us today. We hope that everyone continues to remain healthy and safe as the global COVID-19 pandemic persists. The second quarter was the most challenging yet in the company's history as a public company. We experienced a 76% sequential reduction in the number of our systems deployed to customers. The global COVID pandemic drove a severe fall-off in both commodity demand and prices, resulting in swift and extraordinary reduction in activity by the oil and gas industry. The industry's response was particularly felt by those of us exposed to the completions part of the value chain. as operators began curtailing production and significantly slowing or halting fracking operations. Despite these extreme circumstances, I'm very proud that our team took immediate action that enabled the company to produce a break-even adjusted EBITDA and another quarter of positive free cash flow at what we believe was the bottom of the cycle. During the second quarter, Solaris generated $9 million in revenue, adjusted EBITDA of negative $400,000, are six consecutive quarter of positive free cash flow and paid our seventh consecutive quarterly dividend despite the very challenging market. The Solaris team achieved all of this while learning to work remotely, adapting to the organizational change and continuing to service our customers, innovate and operate safely. I mentioned on our last call that we are in uncharted territory and that continues to be true today. The ultimate pace and level of recovery are still unknown as we expect the bulk of oil and gas operators will remain Disciplined and stick to the development budgets they laid out at the onset of the pandemic. However, we are encouraged to see many of our customers resume a modest level of completions activity in recent weeks and expect activity in the third quarter to be up 35% to 45% over the second quarters if these levels hold.