Solaris Energy Infrastructure, Inc. Class A

Good morning and welcome to the Solaris First Quarter 2022 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Yvonne Fletcher, Senior Vice President, Finance and Investor Relations. Please go ahead. Yvonne Fletcher, Senior Vice President, Finance and Investor Relations. Please go ahead. Yvonne Fletcher, Senior Vice President, Finance and Investor Relations. Please go ahead.

Yvonne Fletcher, Senior Vice President, Finance and Investor Relations. Please go ahead. Yvonne Fletcher, Senior Vice President, Finance and Investor Relations. Please go ahead. Yvonne Fletcher, Senior Vice President, Finance and Investor Relations. Please go ahead. Yvonne Fletcher, Senior Vice President, Finance and Investor Relations. Please go ahead. Yvonne Fletcher, Senior Vice President, Finance and Investor Relations. Please go ahead. Yvonne Fletcher, Senior Vice President, Finance and Investor Relations. Please go ahead. Yvonne Fletcher 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 Commissions that outline those risks. I would also like to point out that our earnings release in 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, which is posted on our website at SolarisOilFuels.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 this morning. I'm proud of the results the Solaris team delivered this quarter at the start of what is shaping up to be a key year for both the company, our industry, and global commodity fundamentals. During the first quarter, our fully utilized system count increased roughly 20% sequentially to 75 systems and adjusted EBITDA growth 60% to nearly $16 million. We paid our 14th consecutive dividend and ended the quarter with $25 million of cash and no debt. During the quarter, we grew activity with both existing and new customers and believe that our growth outpaced the overall completions market. We saw increased demand for 9- and 12-pack configurations, which helped our customers navigate through sand supply shortages and delays that became prevalent during the first quarter. We also worked for 10% more oil and gas operators than we worked for in the fourth quarter. Some of this new customer growth was a direct result of demand from our new technology offerings such as our top fill system. In the first quarter, we ran multiple jobs with our top fill based systems as part of our integrated last mile services offering, which allowed us and our customers to optimize trucking. Our top fill design offers flexibility and reliability in sand transportation and delivery by using either higher payload belly dump truck trailers or traditional pneumatic trailers. With this increased flexibility, our customers benefit from nearly 10-15% higher payload capacity per truckload while preserving the ability to dispatch pneumatic trucks as additional capacity to ensure that sand is always available. This added value helped drive our first quarter results where we had higher profitability per ton and per frac crew under our last mile model despite a slight decrease in total tons delivered due to the industry-wide sand shortages. The improved last mile profitability in the first quarter was driven by a higher number of tons delivered by bellied up trucks and an improved job mix, which we secured due to our investment in our top fill solutions. The addition of our new technologies, combined with the price increase implemented at the beginning of the year, helped drive our overall profit per frac crew back to pre-pandemic levels. Demand for our top fill solution continues to exceed current availability, which combined with the improved recent results gives us increased confidence in continuing our investment in additional top fill equipment. We expect this continued investment to create a much higher revenue opportunity per well site than we've seen in the prior periods, while also allowing us to win work with new customers. During the first quarter, we also ran an increased number of jobs with our auto blend integrated electric blenders, with several units now deployed in our fleet today. While AutoBlend is earlier in its commercial adoption phase than our top-field technology, it was also an incremental source of profitability in the first quarter. We also continue to see an increase in demand for this equipment from customers who have now experienced significant use of AutoBlend as well as interest from new customers. We are continuing discussions on potential contracts with multiple customers. We are encouraged by these demand signals and believe our new offering provides an attractive alternative to operators investing capital in older, not fit for purpose blenders. In the multiple jobs we have run with our auto blend system, our customers have seen a reduction in non-productive time, increased reliability, minimized well site footprint and enhanced safety through increased automation of processes that traditionally require more personnel in potentially high risk areas. The additional equipment we are adding on completion sites is focused on helping our customers gain a significant net economic benefit. We believe Solaris can provide our customers with this benefit while also earning attractive returns on the investments we are making. We like to frame our investment opportunity around the return potential relative to each frac crew we work with today using our sand systems. With a top fill system and or an auto blend unit on every location where we have our sand system deployed, We would have approximately two to three times the investment deployed per frac crew and we would expect two to three times the contribution margin over a single six pack sand system on a frac crew. Additionally, we believe both auto blend and top fill equipment can drive meaningful pull through sand system revenue when deployed with customers who may not be currently using our sand system. We believe that adding additional kit to current customers and the benefits of the top fill and auto blend combined with SAN equipment for new customers will deliver increases in reliability, direct cost savings, increased speed, and superior safety to our customers. As we look to the second quarter, oil and natural gas prices have been volatile recently but remain well above levels that continue to incentivize operators to bring production to market. We expect growth and completions activity combined with new technology deployments to drive incremental work with both current and new operators. As a result, we expect Solaris' system activity in the second quarter of 2022 to be up approximately 10% to 15% sequentially. With a strong start to 2022 under our belt, we are excited for the months ahead as we focus on providing the highest level of customer service to drive consistent execution, meeting our customers' anticipated growth plans, and continuing investment in building and deploying our new technologies to grow our revenue and margin opportunities. We expect our growing offering to drive incremental market opportunities and competitive shareholder returns and look forward to sharing our progress in the quarters ahead. Given the excitement around the growth we're seeing so far in 2022, I'd like to extend an invitation to our customers and partners for our second technology open house in late May at the Petroleum Museum in Midland. We plan to showcase our suite of equipment, including auto blend and our top fill solution, and look forward to demonstrating the benefits of our full offering running simulated operations interacting with all of you. The response from last year's event was overwhelmingly positive, and we look forward to seeing everyone again this year. Please reach out to us if you're interested in attending. We'd also like to take a moment to welcome Laurie Argo, who joined our board of directors in the first quarter. Laurie comes to us with over 25 years of experience and leadership in the energy industry. We look forward to the valuable insights you will bring to Solaris as we continue to grow and develop innovative solutions that drive value for our customers and shareholders. With that, I will turn it over to Kyle for a detailed review of our financial results and guidance.