Solaris Energy Infrastructure, Inc. (SEI)·Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 marked SEI’s first full quarter with Solaris Power Solutions (SPS), driving 28% sequential revenue growth to $96.3M and a return to positive GAAP EPS ($0.19) as Adjusted EBITDA rose 68% q/q to $37.4M .
• Management announced a step-change in growth: new orders for 700 MW of turbines, taking the operated fleet to ~1.4 GW by 1H27, and a 6‑year, minimum 500 MW data center contract via a 50.1%/49.9% JV; SPS is expected to contribute ~80% of earnings once the fleet is deployed .
• Near-term guide: Adjusted EBITDA of $44–48M in Q1’25 and $50–55M in Q2’25; SPS average MW on revenue guided to 360 in Q1 and 420 in Q2; logistics systems guided to ~90–95 in H1’25, signaling momentum into 1H’25 .
• Liquidity and funding strengthened with $160M year-end cash (including $46M restricted) and an underwritten equity offering netting $156M in December; debt stood at $325M; capital needs for new orders ($600M) are partially mitigated by the JV ($215M reduction for SEI) .
• Street consensus from S&P Global was unavailable at time of analysis due to access limits; as a result, we cannot quantify beats/misses, but catalysts for stock reaction include the scale/tenor of the hyperscaler JV, MW deployment trajectory, and visibility embedded in the 1H’25 outlook *.

What Went Well and What Went Wrong

• What Went Well

  • Power Solutions scaled quickly: Q4 SPS averaged ~260 MW earning revenue; segment revenue was $33.9M and Segment Adjusted EBITDA was $23.7M, becoming more than half of consolidated Adjusted EBITDA .
  • Structural growth secured: orders for an additional 700 MW (to ~1.4 GW operated by 1H27) and a 6-year, 500 MW data center contract via a 50.1%/49.9% JV with consolidation at SEI; CFO sees consolidated Adjusted EBITDA potential at $475–500M at full deployment (net to SEI ~$400–425M) .
  • Management tone confident on “power-as-a-service” economics versus the grid and on execution capacity; CEO: “we…secured approximately 700 megawatts…which will effectively double our operated fleet over the next two years” and emphasized reliability, emissions controls, and longer-term contracts .

• What Went Wrong

  • Seasonal softness in Logistics: fully utilized systems fell 15% q/q to 78; segment revenue declined 11% q/q to $62.4M and Segment Adjusted EBITDA fell 22% q/q to $19.1M due to negative cost absorption .
  • Higher interest burden post-acquisition: Q4 net interest expense was $7.4M (vs. $2.9M in Q3) tied to MER financing, weighing on profitability despite stronger operating results .
  • Non-GAAP/one-time noise in GAAP: Q4 included a $7.5M gain on Kingfisher facility sale; adjustments were required to present underlying performance in Adjusted EBITDA and adjusted pro forma metrics .

Financial Results

Actual vs. Wall Street (S&P Global) Estimates

• S&P Global consensus data could not be retrieved due to access limits at the time of analysis; consequently, beats/misses cannot be quantified.*

Segment Performance

KPIs and Cash Metrics

Notes on non-GAAP adjustments and items:

• Q4 included a $7.5M gain on the Kingfisher facility sale; Adjusted EBITDA backs this out to reflect core performance .
• Interest expense rose with financing for the MER acquisition; loss on debt extinguishment occurred in Q3 tied to bridge facility write-off .

Guidance Changes

Additional growth update (not formal guidance): incremental 700 MW orders with expected operated fleet ~1.4 GW by 1H27; total expected capex for these orders ~$600M, offset by ~$(215)M for SEI from JV structure .

Earnings Call Themes & Trends

Management Commentary

• CEO (on growth and strategy): “we have secured approximately 700 megawatts of new power generation capacity, which will effectively double our operated fleet over the next two years.” He highlighted accelerating demand for behind‑the‑meter projects and logistics system adoption into early 2025 .
• CFO (on earnings power): “At full deployment, we expect the total company to generate $475–$500 million of adjusted EBITDA… Accounting for the contemplated joint venture structure, we expect adjusted EBITDA net to Solaris of approximately $400–$425 million” .
• CEO/CFO (on economics vs grid): emphasized “power-as-a-service” cost competitiveness, fewer inflationary pressures versus grid buildout, and embedded reliability benefits for data centers .
• CEO (on logistics): “we expect at least 15% sequential increase in fully utilized systems” in Q1 driven by adoption of new tech and market share gains; top-fill systems boost per-location earnings potential .

Q&A Highlights

• Demand/bookings trajectory: Management is engaged in “numerous ongoing conversations” with hyperscalers and industrials; remaining ~450 MW of uncontracted capacity is expected to be placed on similar or longer tenors “well within six to nine months” .
• Supply chain and cost dynamics: Tariff impacts being monitored; modular, on-site assembled units reduce capital $/MW and improve heat rates; lead times in SEI’s chosen turbine sizes are ~12–18 months (longer for very large frame units) .
• Economics and competition: Positioning as grid-competitive and more predictable total cost of ownership; fuel (natural gas) is the primary variable; embedded backup and reliability near facility add value for data centers .
• Emissions/permits: SEI deploys low‑NOx turbines and SCRs to achieve sub-2 PPM; supports customers with engineering inputs and third-party consultants for Clean Air Act permitting .
• JV structure and financing: 50.1%/49.9% JV consolidates at SEI, with JV-level debt funding a significant portion and reducing SEI capital by ~$215M; lenders have shown support for financing flexibility .

Estimates Context

• We attempted to retrieve S&P Global consensus for Q4 2024 revenue, EPS, and EBITDA; the request failed due to access limits, so beats/misses cannot be quantified at this time.*
• Company materials did not provide explicit consensus comparisons. Given the magnitude of SPS growth, improved margins, and strong 1H’25 guide, we expect upward estimate revisions for SPS deployment and consolidated EBITDA trajectory, subject to financing, delivery timing, and JV accounting .
• Note: If desired, we can refresh S&P Global estimates comparison once access is restored.*

Key Takeaways for Investors

• The narrative has pivoted decisively to power-as-a-service scale: 1.4 GW operated fleet targeted by 1H’27, anchored by a 6‑year, 500 MW data center JV; SPS is set to dominate earnings mix as deployment ramps .
• Visibility improved: blended contract tenors extended to ~4–5 years, supporting multi-year EBITDA outlook and de-risking near-term volumes .
• Near-term momentum: Q1/Q2 Adjusted EBITDA guides ($44–48M; $50–55M) and SPS MW ramp (360 → 420) suggest sequential growth with logistics rebounding to ~90–95 systems, a helpful offset to Q4 seasonality .
• Funding plan credible: $600M incremental capex for new orders partially mitigated by JV ($215M reduction for SEI) and supportive lenders; December equity raise (~$156M net) bolstered liquidity alongside $160M cash at year-end .
• Watch items: supply chain/tariffs creeping costs, permitting complexity, and execution on deliveries/commissioning; interest expense remains elevated post-MER financing .
• Non-GAAP lens matters: Q4 GAAP included a $7.5M gain on the Kingfisher sale; Adjusted EBITDA better reflects core trajectory as SPS scales .
• Trading implications: Stock likely keyed to incremental contract announcements, SPS MW deployment pace, JV close details/financing, and the durability of logistics rebound into 1H’25 .

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Sources: Q4 2024 8‑K and press release, exhibit 99.1 ; Q4 2024 earnings call transcript ; Q3 2024 8‑K/press release .
*Wall Street consensus values via S&P Global were unavailable at the time of analysis due to access limits. Values will be provided upon data access restoration.