Solaris Energy Infrastructure, Inc. 2026 Q2 Earnings Call

Good morning. Welcome to the Solaris second quarter 2026 earnings conference call. Joining us today are our Chairman and Co-Chief Executive Officer, Bill Zartler, our Co-Chief Executive Officer and Director, Amanda Brock, our President, Kyle Ramachandran, and our Chief Financial Officer, Stephan Tompsett. Before we begin, I'd like to remind you that some of the statements we will make today are forward-looking 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 like to point out that our earnings release and today's conference call will contain discussions of non-GAAP financial measures. The presentation of this additional information should not be considered in isolation or a substitute for results prepared in accordance with GAAP.

Reconciliations to comparable GAAP measures are available in our earnings release, which is posted in the news section on our website. Additionally, we 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'll now turn the call over to our Chairman and Co-Chief Executive Officer, Bill Zartler.

Thank you, Yvonne. Thank you everyone for joining us this morning. The second quarter was a record-setting quarter for Solaris and a further step along the significant growth path that is ahead of us. We are executing our strategy at all levels, including operationally, commercially, and strategically. We continue to provide dedicated power at scale to two data centers consistently achieving high reliability. We are under construction at two other data center locations, one of which will energize in September. This track record of performance has resulted in the execution of long-term contracts with three leading investment-grade technology companies. Two of those contracts were executed in the last six months. This quarter, we've already expanded the scope of both, in addition to a third expansion of a contract with one of our large energy customers.

These additions and increased contract scope translate directly into improved earnings and cash flow visibility, which is why we believe there is a significant disconnect between current public market valuations and the fundamentals, performance, and positive outlook for our company. We expect the cash flow generated from our current contracts well exceeds our enterprise value today, before including any additional cash flow from assets on order that are not yet contracted. We have transformed Solaris into a unique and sustainable power and infrastructure solutions company built for the long term. We are collaborating with our customers to identify and work through bottlenecks in the market. We are also pursuing M&A partnerships that strengthen our ability to deliver on these goals.

Our most recent acquisition, Global Energy Services Alliance, extends our capabilities to full cycle power services, which follows our earlier investment in a selective catalytic reduction, or SCR, manufacturer, and the acquisition of the electrical distribution business that is now Solaris Power Distribution Services. All of these acquisitions enhance our execution capabilities and also create additional earning streams on top of our existing long-term power projects. Looking into the future, we've recently made an equity investment in Deployable Energy, an early-stage nuclear small modular reactor company, or SMR. We are excited to highlight that since we've made this investment, Deployable Energy has now achieved criticality working under a program with the Department of Energy. Reaching criticality, the point at which a reactor first achieves a controlled self-sustaining fission reaction, is a foundational milestone that validates the core design and marks a step change from development toward commercial readiness.

It also meaningfully de-risks the technology. We will be working with Deployable to help commercialize their technology, which we believe can one day complement our existing power generation capabilities. Within the power infrastructure and solutions market, the demand for islanded behind-the-meter power in conjunction with some level of grid connectivity continues to be exceptionally strong. Today, we are in active negotiations for multiple gigawatts of additional demand with multiple hyperscalers and AI compute companies. The tailwinds we've described over the past several quarters, grid interconnection delays, the market's focus on speed to compute, and enhanced regulatory focus on protecting consumer prices all continue to reinforce the significant demand for the bring-your-own-power solutions that Solaris delivers.

Our Solaris logistics segment also continues to perform well, consistently producing over $20 million per quarter of free cash flow that we are investing in our power and infrastructure services business at attractive rates of return. We are effectively sold out of our top-fill equipment, and we see robust fundamentals for the business. We are excited about the large and growing opportunities for Solaris. Our execution history, culture, and team, combined with the integration of additional services and capabilities, will continue to enable our success today and in the future. With our premier customer base, some of the best contracts in the industry, and a demonstrated ability to deliver, we are well-positioned to continue to execute on the growth opportunities ahead of us. With that, I'll turn it over to Amanda.

Thank you, Bill. Good morning, everyone. As Bill noted, the most compelling evidence of our strategy's success is that our existing customers are choosing to grow with us and expand relationships and our contracts In July, we finalized an amendment to our Hatchbo agreement to convert the original power capacity agreement into a comprehensive capacity and operating agreement, which includes additional balance of plant and batteries, as well as full operation and maintenance services for the turnkey 660 MW power plant.

In addition, we've extended the term from up to 15 years to up to 18 years, a 10-year base term with an eight-year extension option. This extension aligns the power contract with other agreements our customer has on this site. We are making rapid progress under this contract. We commenced civil construction in July. We have more than 70% of the equipment required to service this contract already available to deploy on time. We will begin earning revenue in January 2027.

Our second contract expansion with our third investment-grade global technology customer relates to the contract we executed in April of this year. We've already expanded the scope from the original 640 MW of generation to include incremental balance of plant and energy storage, as well as the procurement, delivery, and management of natural gas on a cost-plus basis with no commodity price risk. The first deployment under this contract is on time, under construction, with energization expected next month. Power shortages, grid infrastructure, and regulatory related delays continue to be widespread. In July, we expanded and extended our contract with one of our large energy customers who has been informed that the grid interconnect time is now seven to eight years away. They increased power capacity from 60 MW to approximately 80 MW and extended the term of the contract from four to six years.

These delays are indicative of what medium to large load businesses are experiencing nationwide. We have a diverse and high-quality customer base. Our proven performance to date gives us confidence that these relationships will continue to strengthen and grow. Our long-term customers have come back to expand their contracts, seeking more capacity and scope and longer tenure. While our commercial team develops deep relationships resulting in the initial execution of our contracts, it is also our operation performance, engineering, and service capabilities that we believe result in the expansions of our contracts, as well as opportunities to evaluate new sites. Looking forward, we have approximately 800 MW of open capacity, with attractive nearer term delivery timelines and a line of sight to additional capacity, both through the traditional OEM channels as well as the secondary market.

We continue to make positive progress and are in advanced detailed discussions with numerous customers related to the deployment of this equipment under long-term contracts. In summary, as a result of the credibility we have earned through two years of at-scale operations, the recent additions to our team who have decades of power and infrastructure experience, and the strategic acquisitions we have made, we continue to perform as a leader in the distributed power sector. We are well-positioned and pleased with our performance to date, our positive momentum in the market, and our overall growth. I'll now turn it over to Kyle to discuss our M&A and vertical integration strategy.

Thank you, Amanda, and good morning, everyone. At Solaris, we are building a diversified, integrated power and infrastructure service company, organically and through acquisitions, that we can deliver the solutions our customers are looking for. Today, we deliver infrastructure and services across the full power asset lifecycle of design, deployment, operations, and maintenance for our own generation and for generation owned by others. We're targeting growth initiatives that, one, de-risk our ability to deliver for customers, two, add recurring revenue, and three, create a competitive edge. We focus on opportunities that bring us capabilities or scarce resource that enhances our ability to execute for our customers. Skilled labor, engineering depth, access to equipment, which enhances the value proposition for our customers and widens the moat both around the contracts we already have and the new ones we are working on.