Solaris Energy Infrastructure, Inc. Class A

And welcome to the Solaris Energy Infrastructure, Inc. Second Quarter 2025 Earnings Conference Call. All participants will be in 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 your telephone keypad. To withdraw your question, please press star then two. 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.

Thank you, Operator. Good morning and welcome to the Solaris Second Quarter 2025 Earnings Conference Call. Joining us today are our Chairman and CEO, Bill Dartler, 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 outlined those risks. We also encourage you to refer to our earnings supplement slide deck, which was published last night on the investor relations section of our website under events and presentations. I would 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 gap measures are available in our earnings release, which is posted on the news section on our website. 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. Solaris delivered strong second quarter results across both business segments. The second quarter marks the third full quarter since introducing our power solutions business. We continue to grow our power solutions business and generate significant cash flow from our legacy logistics solutions business. The continued integration of the business lines demonstrates the complementary strengths of both our people and our businesses. I'll begin with an update on our power solutions segment. During the quarter, we added capacity with current customers and introduced new customers to our offering. If we look back to 10 months ago when we acquired Mobile Energy Rentals, They were operating approximately 150 megawatts. Today, we have over 600 megawatts working for six different customers. Additionally, we have contracts in place with many of these customers and others to further accelerate our activity over the course of the next several quarters as we take delivery of previously ordered new generation capacity. As a result of this commercial momentum, we are servicing an increasingly diverse set of end markets. These include microgrids focused on energy production, gas processing plants, shorter-term utility grid resiliency efforts, including synchronization with the grid to provide additional power to a customer, and data centers supporting artificial intelligence applications. Our commercial opportunities span various industries with multiple customers for projects totaling several gigawatts of opportunity. Customer feedback thus far indicates that our modular and reliable power generation equipment coupled with its favorable emissions profile and other unique operational benefits provide us with a competitive edge in these opportunities. Market demand for power generation continues to accelerate as the confluence of electrification of everything theme, artificial intelligence power needs, and the reshoring of manufacturing unfolds, which in our view is likely still in its early innings. The grid continues to be challenged to address these needs, considering both time to power as well as the complex nature of the size and in the case of artificial intelligence applications, variability of the load demand that is being introduced. Reliability is critical to our customers. We consider modular, power-dense generation uniquely capable of addressing this requirement as operational risk is distributed across multiple appropriately sized nodes, creating layers of redundancy. For instance, a robust microgrid may integrate multiple small or mid-sized turbines with grid power or large frame turbines, potentially supplemented with energy storage solutions like batteries. We believe this hybrid structure delivers optimal redundancy with greater inertia and spinning reserve capacity, enabling high reliabilities. Modular generation also allows customers to scale their power capacity in increments as needed. Large-scale microgrids, particularly for artificial intelligence computing applications, rarely require full peak power from the outset. Modular power solutions offer an effective strategy to synchronize the growth of the power supply data deployment, while continuing to provide additional layers of redundancy via spending reserve capacity at scale. The regulatory backdrop has offered recent clarity in support of our distributed generation solutions. For example, Senate Bill 6 in Texas, which was recently signed into law. The new law requires enough co-located generation for large demand loads so that they can be self-sufficient off the grid. We have observed that this regulatory clarity is creating numerous potential commercial opportunities participants continue to acknowledge the reliability that our solutions can provide, both directly to the customer, but also to the broader power supply, transmission, and regulatory ecosystem. Our current power solutions, which include both turbine and reciprocating generation, deliver benefits such as reduced time to power, low emissions, high power density, and operational reliability. By maintaining a generation agnostic approach, we can tailor combinations of power We're also focused on strengthening our business by evaluating adjacent opportunities that complement our core offerings. As a recent example, our engineering, manufacturing, and operations teams collaborated to design and implement modifications to the Selective Catalytic Reduction Systems, or SCRs, to make those systems more mobile. This enhanced mobility enables more efficient assembly, and equipment placed onsite is expected to reduce operational downtime on location. The installation of these modified SCRs began two months ago on our initial data center project and implementation is going quite well. These proprietary modifications also enabled us to significantly accelerate the commissioning of the SCR units, highlighting another benefit of the leveraging of our organizational agility that is core to Solaris' DNA. When paired with our already low emissions turbines, these enhanced SCRs will support customers in achieving an attractive emissions profile at the site. Another example is that we have recently utilized our in-house software and technology expertise to develop an in-house app called Solaris Pulse to enable the centralized fingertip remote monitoring of our power generation, enabling efficient operation and maintenance of our equipment. We're also focused on other balance and plan equipment as systems that are critical to providing power to our customers in the form they require. This can include transformers, switchgears, breakers, and wiring. We've collaborated with several partners to offer customized balance of plant solutions to manage our customers' complex loads and are exploring ways to further integrate this capability in-house. We believe this turnkey approach, providing both an optimal source of generation as well as bespoke balance of plant solutions, is an opportunity for us to further differentiate our power as a service offering. We believe we are well positioned to add value to our customers and grow both organically and inorganically. Turning to our logistics solution segment. The investments we've made in our systems have helped us drive further frac efficiencies for our customers and end users, which in turn has enhanced earnings and cash flow for Solaris. Our silo systems, when combined with a top fill, can help our customers process large volumes of sand in support of simulfrac and trimulfrac completions. As an example, we are currently working on a pad for a major E&P operator where we have 12 silos, two top fills on a leading-edge completion design job using trimulfracs. Financially, this has had a meaningful impact on Solaris. When our logistics solutions business started, we offered one piece of kit, and we earned about $1 million of profit per frat crew on an annual basis. Now our leading-edge job has four different equipment systems earning closer to $4 million of profit per frat crew annually. Structurally, we see a continued reduction in the number of active frat crews required to keep oil and gas production flat. To achieve these efficiencies, each crew will be asked to do more, and we believe our equipment is designed and built to help deliver those efficiencies. While activity during the second half of the year is likely to slow down further due to the recent softness in oil prices, we believe that we remain well-positioned to maintain or grow share as completion intensity continues to rise. With this business in cash generation and harvest mode, we believe the segment will continue to generate significant free cash flows. In summary, we are pleased with both the operational and commercial advancements achieved during the quarter. We are confident that we are establishing a robust and distinctive business position for continued growth and future opportunities. With that, I'll turn it over to Kyle. Thanks, Bill, and good morning, everyone.