Solaris Energy Infrastructure, Inc. Class A

Good day and welcome to the Solaris First Quarter 2021 Earnings Teleconference and Webcast. 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. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would like to turn the conference over to Yvonne Fletcher, Senior Vice President of Finance and Investor Relations. Please go ahead.

Good morning and welcome to the Solaris First Quarter 2021 Earnings Conference Call. I'm 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 the results prepared in accordance with GAAP. Reconciliations to comparable GAAP measures are available in our earnings release, which is posted on our website at solarisoilfield.com under the news section. 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. I'm pleased to share another quarter of strong Solaris results with you today. During the first quarter of 2021, Solaris generated a 13% sequential increase in revenue to nearly $29 million, generated an adjusted EBITDA that increased 26% sequentially to over $6 million. We paid our 10th consecutive quarterly dividend. We ended the quarter with $55 million of cash and no debt on the balance sheet. showed continued economic and industry progress as oil demand continued to recover against a backdrop of disciplined U.S. and global supply. This improving outlook steadily drove oil prices back to the $60 barrel range during the first quarter, and prices have remained relatively stable in the $60 range so far this second quarter. Natural gas prices have also remained steady in the $250 to $3 range. As a result, we saw a continued increase in both completions and rig count activity in that drove an increase in activity for Solaris as well. Our system count was up 24% sequentially in the first quarter, which reflected a stronger and quicker recovery than we anticipated. Many operators ramped up activity early in the quarter and have remained disciplined and steady. Looking into the second quarter, given the early surge we saw in activity during the first quarter, we expect a flattish activity level for Solaris in the second quarter. Our customers continue to focus on finding efficiency gains. We spoke about simulfracs on last quarter's call, and that continues to be a technique most operators with sizable programs are trying. Because simulfracs drive increased completion rates, the delivery and management of raw materials on location require technologies that can meet the demand for logistics and footprint requirements to ensure that cost savings from these simulfrac operations are actually realized. We introduce our latest disruptive innovation, which is a patent-pending technology that extends our traditional equipment from a storage solution to a high-grade delivery system and replaces a traditional blender. Our automated, all-electric design eliminates many of the traditional blender points of failure and frees up both headcount and space on location to continue driving costs down for our customers. When used in conjunction with our automated sand, water, and chemical systems, we eliminate multiple steps from the traditional process We believe we can reduce track personnel on location by up to 80%, providing significant savings and safety improvements. In addition to our new blending system development, we spent the last few years developing and testing new safety and dust control enhancements for our equipment. These improvements include auto hopper, belt scales, dust collection, and equipment enclosures. Ultimately, we believe automation and remote operation are two of the best ways to improve well site safety and efficiencies. as the elimination of personnel saves labor costs, reduces the potential for silica exposure, and lowers the risk of other safety incidents. In March, we hosted a technology open house where we demonstrated our full equipment offering and ran simulated operations, including on our new blending technology, water silos, and chemical systems. The response was overwhelmingly positive, and we received interest from multiple parties on trialing the full offering. Seeing Solaris' storage capabilities in person provided the visual context for the benefits of vertical fluid storage. This has led to several requests from customers, and we've already completed conversions of the older idle sand silo systems, resulting in five water systems currently in our fleet and deployed with customers. We see incremental growth beyond this and are in the process of converting additional sand silo systems into water systems, and we expect to be on our first well site trial of our blending technology in the second quarter. It's still too early to know what the ultimate market will be for these new offerings, as we are just beginning our first jobs, but we are excited about the opportunity to continue the efficiency push for our customers by creating built-for-purpose, innovative solutions. On the sustainability front, we recently provided support for a wind energy company at our Kingfisher Transload Facility for the transport and staging of wind power installations in Oklahoma. While the opportunity is small today, wind projects currently account for over a third of the Power Under Construction in Oklahoma, and we're pleased to be able to support the effort with our state-of-the-art facility. Our primary ESG goals will continue to focus on lowering the cost and carbon footprint for the benefit of our customers and the communities we operate in, but we will always consider ways to support the energy transition if it also allows us to put our capital to work at attractive incremental returns. I will now turn it over to Kyle for a more detailed financial review.