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Solaris Oilfield Infrastructure, Inc. (SOI)·Q1 2024 Earnings Summary

Executive Summary

  • Q1 2024 revenue rose 7% sequentially to $67.9M but declined 18% year-over-year; Adjusted EBITDA increased 7% q/q to $22.7M as ancillary last-mile logistics activity and pricing improved .
  • GAAP diluted EPS was $0.14; adjusted pro forma EPS was $0.16. Free cash flow was $13.5M, with $17.0M cash from operations; the company returned $13M via dividends and buybacks in the quarter .
  • Management reiterated FY 2024 capex “< $15M” and declared a $0.12/share Q2 dividend; Q2 outlook included SG&A ≈ $7.5M, tax rate ≈ 26%, and free cash flow of $15–$20M, with adjusted EBITDA modestly down sequentially on activity mix and absorption .
  • S&P Global Wall Street consensus estimates were unavailable for SOI; third-party transcript summaries indicate beats on EPS ($0.16 vs consensus +$0.04) and revenue (+$5.44M), but we do not anchor on these figures absent SPGI mapping .

What Went Well and What Went Wrong

What Went Well

  • Strong free cash flow ($13.5M) with $17.0M CFO; management emphasized “strong free cash flow generation” as they “harvest cash from the organic investments… over the last few years” .
  • Sequential improvement: revenue +7% and Adjusted EBITDA +7% q/q, aided by last-mile logistics activity and pricing gains .
  • Shareholder returns continued: $8M of buybacks (1.1M shares) and $0.12/share dividend; cumulative returns since 2018 reached ~$178M pro forma the Q2 dividend .

What Went Wrong

  • Year-over-year softness: revenue -18% and Adjusted EBITDA -10% vs Q1 2023 amid lower industry activity .
  • System deployment/utilization down: 102 fully utilized systems in Q1 2024, down 14% YoY; frac crews followed flat q/q at 64, reflecting slower gas-directed basins .
  • Q2 profitability caution: pricing steady but activity softness, job mix and cost absorption expected to pressure adjusted EBITDA modestly sequentially .

Financial Results

MetricQ3 2023Q4 2023Q1 2024
Total Revenue ($USD Millions)$69.676 $63.347 $67.890
GAAP Diluted EPS ($)$0.16 $0.14 $0.14
Adjusted Pro Forma EPS ($)$0.19 $0.15 $0.16
Net Income ($USD Millions)$7.638 $6.959 $7.300
Adjusted EBITDA ($USD Millions)$23.428 $21.322 $22.687
MarginsQ3 2023Q4 2023Q1 2024
Adjusted EBITDA Margin (%)33.6% (=$23.428/$69.676) 33.6% (=$21.322/$63.347) 33.4% (=$22.687/$67.890)
EBIT Margin (%)14.4% (=$10.000/$69.676) 14.6% (=$9.241/$63.347) 14.7% (=$9.956/$67.890)
Net Income Margin (%)11.0% (=$7.638/$69.676) 11.0% (=$6.959/$63.347) 10.8% (=$7.300/$67.890)
Revenue BreakdownQ3 2023Q4 2023Q1 2024
Revenue – non‑related ($USD Millions)$64.427 $60.069 $64.635
Revenue – related parties ($USD Millions)$5.249 $3.278 $3.255
KPIsQ3 2023Q4 2023Q1 2024
Fully Utilized Systems (count)108 103 102
Avg. Industry Frac Crews Followed (count)67 64 64
Cash from Operations ($USD Millions)$20.881 $23.583 $16.875
Free Cash Flow ($USD Millions)$6.0 (after asset sales) $16.410 $13.527

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Capital Expenditures ($USD Millions)FY 2024“< $15M” (Feb 26, 2024) “< $15M” reaffirmed (Apr 25, 2024) Maintained
Quarterly Dividend ($/share)Q2 2024$0.12 scheduled (framework ongoing) $0.12 declared; payable Jun 17; record Jun 7 (~$5M agg.) Maintained
SG&A ($USD Millions)Q2 2024n/a≈ $7.5M (call) New detail
Pro forma Tax Rate (%)Q2 2024n/a≈ 26% (call) New detail
Pro forma Diluted Share Count (shares)Q2 2024n/a≈ 44.1M (call) New detail
Free Cash Flow ($USD Millions)Q2 2024n/a$15–$20M (call) New detail
Adjusted EBITDA (seq trend)Q2 2024n/aDown a couple percentage points vs activity (pricing steady; mix/absorption headwinds) Cautious tone

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q3 2023)Previous Mentions (Q-1: Q4 2023)Current Period (Q1 2024)Trend
Activity & MixAncillary trucking down; system revenue flat; industry activity bottoming Ancillary services and frac crews softened into year-end Oil-directed activity additions later in Q2; delays in gassier basins; EBITDA to track slightly below activity Stabilizing oil; gas basins soft
Product AdoptionTop fill and AutoBlend deployment rising; 55% of crews using them Continued deployment but crews followed fell q/q Improved system pricing supports sequential revenue/EBITDA gains Adoption supports pricing
Capital AllocationPositive FCF; revolver paydown; dividend raised FCF +$16M; buybacks accelerated Jan–Feb Return $13M; Q2 dividend declared; ongoing buybacks Consistent returns
Capex DisciplineQ4 capex outlook $10M; FY at low end $65–$75M FY 2024 capex “< $15M” (75% YoY reduction) Q1 capex ~$3M; FY “< $15M” reaffirmed Tightened materially
Pricingn/aPricing pressured with activity softness Pricing steady; mix/absorption weigh on EBITDA Stable pricing; mix headwinds

Management Commentary

  • CEO: “Solaris started the year with strong free cash flow generation as we continue to harvest cash from the organic investments we made over the last few years.”
  • CEO: “We expect that the continued growth in our free cash flow during the remainder of this year should support continued execution on our shareholder returns commitment…”
  • CFO (call): Q2 guide highlights include SG&A ≈ $7.5M, tax rate ≈ 26%, pro forma shares ≈ 44.1M; FCF expected $15–$20M; adjusted EBITDA down modestly vs activity due to mix and cost absorption; activity additions weighted to late Q2, with program delays in gas/combo basins (e.g., Eagle Ford) .

Q&A Highlights

  • Activity cadence: Management expects oil-directed additions later in Q2 but noted delays in gassier basins; mix and absorption to pressure profitability despite steady pricing .
  • Cost structure: SG&A targeted at ~$7.5M in Q2; continued emphasis on maintenance-level capex and operational efficiency to support FCF .
  • Capital returns: Ongoing dividend program and opportunistic buybacks consistent with the framework to return at least 50% of FCF over time .
  • Balance sheet: Net debt of $27M; liquidity of $41M at quarter-end provides flexibility .

Estimates Context

  • S&P Global consensus estimates for SOI were unavailable due to missing CIQ mapping; therefore, we cannot benchmark results to SPGI consensus in this recap.
  • External transcript summaries indicate EPS of $0.16 beat consensus by $0.04 and revenue beat by $5.44M; treat as directional context only, not SPGI-sourced benchmarks .

Key Takeaways for Investors

  • Free cash flow inflecting: $13.5M in Q1 and $15–$20M guide for Q2 support continued dividends and buybacks; capex discipline (<$15M FY) enhances FCF durability .
  • Sequential improvements amid macro softness: Revenue/EBITDA up q/q despite lower YoY activity; pricing steady, but job mix and absorption are watch items into Q2 .
  • Utilization/crew count: Systems and frac crews tracked flat to down versus prior periods; watch gas-led basins (Eagle Ford) for timing of recovery .
  • Balance sheet optionality: Net debt $27M and $41M liquidity provide capacity to fund returns and selective investments .
  • Trading lens: Near-term catalysts include Q2 FCF delivery vs guide, evidence of activity adds in oil basins, and stability in pricing/mix; a modest EBITDA step-down vs activity is telegraphed—surprises likely tied to activity cadence and mix .
  • Medium-term thesis: Adoption of Solaris systems (top fill/AutoBlend) and pricing improvements support margin resilience; disciplined capex and consistent capital return framework are central to the equity story .
  • Estimates visibility: SPGI consensus unavailable this quarter; investors should focus on company-guided Q2 cost/FCF metrics and watch for future data mapping to enable standard consensus benchmarking .

Additional source documents:

  • Q1 2024 earnings press release and exhibits (Form 8-K, Apr 25, 2024) .
  • Q4 2023 press release and exhibits (Form 8-K, Feb 26, 2024) .
  • Q3 2023 press release and exhibits (Form 8-K, Oct 27, 2023) .
  • IR site: Q1 schedule and results PDFs .