Solaris Energy Infrastructure (SEI) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $74 million, up 9% sequentially but down 4% year-over-year, with net income of $10 million and adjusted EBITDA of $21 million.

• Generated $18 million in free cash flow, the highest in four years, and $19 million in operating cash flow.

• Returned $5 million to shareholders in dividends and announced a Q3 dividend of $0.12 per share.

• Announced the acquisition of Mobile Energy Rentals (MER), with transaction value reported between $60 million and $200 million, expected to close in Q3 2024.

• MER plans to triple its fleet size from 150 MW to 500 MW by late 2025, leveraging new capital and infrastructure.

Financial highlights

• Q2 2024 net income was $10 million ($0.20 per share), with adjusted EBITDA of $21 million and free cash flow of $18 million.

• Revenue was $74 million, down from $77.2 million in Q2 2023, driven by lower system utilization and logistics revenue.

• Operating cash flow was $19 million; capital expenditures were $1 million.

• Paid down $14 million of revolving credit facility; ended Q2 with $16 million in total debt and $53 million in available liquidity.

• Share repurchase program: 1.1 million shares repurchased in H1 2024 for $8.1 million; $15 million remains authorized.

Outlook and guidance

• Q3 2024 U.S. land completion activity expected to be flat with Q2; oil basins remain strong, natural gas has bottomed.

• Q3 Adjusted EBITDA expected to be $20–$21 million, excluding transaction impact.

• Q3 SG&A expected to be flat at $8 million; pro forma tax rate at 26%; diluted share count flat at 44.3 million.

• No major growth capital planned for the remainder of 2024; capital expenditures for H1 2024 were $4 million, down 90% year-over-year.

• MER acquisition expected to diversify revenue streams and provide access to new end markets, with closing targeted for Q3 2024.