Solaris Oilfield Infrastructure, Inc. Class A Stock

Good morning, and welcome to the Solaris Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note that 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, ma'am.

Thank you, operator. Good morning, and welcome to the Solaris Second Quarter 2026 Earnings Conference Call. Joining us today are our Chairman and Co-CEO, Bill Zartler; our Co-CEO and Director, Amanda Brock; our President, Kyle Ramachandran; and our CFO, Steve 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 discussion of non-GAAP financial measures. 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 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-CEO, Bill Zartler.

Thank you, Yvonne, and 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 2 data centers consistently achieving high reliability, and we are under construction at 2 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 3 leading investment-grade technology companies. Two of those contracts were executed in the last 6 months, and 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 earnings 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 derisks 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, and 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-megawatt 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 8-year extension option. This extension aligns the power contract with other agreements our customers have on this site. We are making rapid progress under this contract. We commenced civil construction in July, and 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 megawatts 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 7 to 8 years away. They increased power capacity from 60 megawatts to approximately 80 megawatts and extended the term of the contract from 4 to 6 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 tenor. While our commercial team develops deep relationships resulting in the initial execution of our contracts, it is also our operational 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 megawatts of open capacity with attractive nearer-term delivery timelines and have 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 2 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 so that we can deliver the solutions our customers are looking for. Today, we deliver infrastructure and services across the full power asset life cycle of design, deployment, operations and maintenance for our own generation and for generation owned by others. We are targeting growth initiatives that, one, derisk 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. To date, every acquisition we have made has been founder-led with entrepreneurs taking mostly stock rather than cash, which creates alignment culturally and financially to keep building the business after closing.

Global Energy Services Alliance or GESA is the latest and largest example. In early July, we acquired GESA, which was formed from the combination of Baseload Power, a U.S. provider of generation aftermarket, installation and commissioning services and Pro-Per Energy Services, a global installation and operations and maintenance provider with project experience in more than 30 countries.

GESA supports a wide range of customers, including utilities and IPPs, governments and OEMs and services a wide range of generation technologies, including large gas turbines. GESA also brings in-house installation and commissioning, long-term operations and maintenance, repair, refurbishment and 24/7 emergency response across aeroderivative, heavy-duty industrial, hydroelectric and steam turbine classes.

Following the acquisition of GESA, we now have a team of over 600 skilled and experienced colleagues installing, commissioning, operating and maintaining power infrastructure. This workforce provides several key strategic benefits for us, including derisking our own execution at a time when the market for experienced and skilled labor is exceptionally tight. As the global installed base of turbines matures, GESA is also well positioned to benefit from significant aftermarket opportunities. Additionally, GESA provides boots on the ground to identify equipment available for refurbishment, which we can add to our own capacity or market.

Finally, it strengthens how we earn new business. Providing turnkey installation, commissioning and long-term operations under one roof enhances our execution capabilities and eliminate multi-contractor handoff risks. That gives customers greater schedule and performance certainty.

We are excited about additional opportunities that we're actively evaluating that we believe will strengthen Solaris over the long run.

I'll now hand it over to Steve.

Good morning, everyone. In the second quarter, we generated revenue of approximately $219 million, up 12% sequentially from the first quarter and adjusted EBITDA of approximately $108 million, up 30% sequentially. Adjusted EBITDA attributable to Solaris, excluding the impact of the noncontrolling interest in our Stateline joint venture was approximately $111 million. Net income was $25 million and adjusted pro forma net income was $37 million or $0.39 per fully diluted share.

In Power Solutions, we averaged approximately 950 megawatts of capacity earning revenue during the quarter, up 4% from approximately 910 megawatts in the first quarter. Segment revenue of approximately $158 million was up 23% sequentially and segment adjusted EBITDA of approximately $96 million increased 34%, driven primarily by increased ancillary service revenue.

In Logistics, segment revenue of $61 million was down 10% on lower last mile transportation activity, while segment adjusted EBITDA of $25 million increased 7% on higher activity and a more favorable project mix.

We have increased our third quarter adjusted EBITDA guidance to $90 million to $105 million, reflecting the contribution of the GESA acquisition as well as our expectations for continued execution. We are also establishing initial fourth quarter adjusted EBITDA guidance of $100 million to $120 million, reflecting the ramp of energization at our Stateline joint venture as well as the first location for our third hyperscaler customer.

I'd also note that our guidance excludes any potential benefits from additional ancillary services. These services, which include third-party engineering studies, start-up, commissioning or decommissioning costs, option payments and now with GESA, third-party equipment sales, can be both short cycle and difficult to precisely predict, but the earnings and cash impact could be meaningful.

During the second quarter, we transformed our capital structure by successfully issuing $1.3 billion of senior unsecured notes and securing a new $650 million 5-year revolving credit facility. In connection with these financings, we were assigned corporate credit ratings of BB minus from S&P, Ba3 from Moody's and BB from Fitch. We ended the quarter with over $800 million in cash and a fully undrawn revolver. This approximately $1.4 billion of liquidity, combined with our operating cash flow, supports our current projected growth.

We also remain committed to our dividend program, and on August 4, our Board approved a third quarter dividend of $0.12 per share, which once paid, will represent our 32nd consecutive dividend.

In summary, the Solaris team delivered another great quarter. And following a successful financing, our balance sheet is in great shape and our growth plan is on track.

With that, we'd be happy to take your questions.

[Operator Instructions] And our first question today will come from David Arcaro with Morgan Stanley.

You've added a lot of new capabilities recently. I'm looking at Slide 4, which now has quite a long list, I guess, of upside strategies here. I was wondering if you could maybe help just elaborate or frame the magnitude of the upside potential as you look at your deployed and contracted fleet over time and what that upside could look like on that run rate EBITDA?

Well, I think what we've laid out here is a view of this on a conservative basis. I think what's embedded in this is not a lot of option value to the growth of the GESA platform as well. So I think there's significant upside to that. This does include some level of probably less than we're actually seeing a balance of plant associated with the additional capacity, but there's more to come on that on top of GESA. So GESA's footprint is global and massive, and we see lots of opportunities out there with that business. They're seeing equipment that has uses both in the U.S. and outside the U.S. with the ability to refurbish and do some work there. So we're seeing a little bit of an aftermarket activity there where we actually can see significant opportunities to generate additional cash in that business as we grow it over the next year or 2.

Okay. Great. And I was wondering if we could also get your latest thoughts on other technologies outside of the turbines that you've been securing. Does the GESA acquisition make you look maybe more seriously at things like combined cycle plants or larger frame turbines in the market? And just any evolution in your thinking around that or more like reciprocating engines, et cetera?

Yes. I mean we're, as we've said all along, agnostic to the source of power. We do understand the limitations and the strengths of the turbines that we're selecting. We are evaluating some technologies on some smaller scale steam generation that could go along with the waste heat that they produce and the capabilities there with the steam generation history that GESA has on top of the ability to look at frames.

And I think as we see this market evolve, I think the nimbyism is clearly real. Everyone reads about it every day. What it will dictate is once there's more than likely a friendly local environment where the local citizens realize the benefits of these manufacturing facilities, if you will, in their towns and that the benefits may be been overblown. I mean the negatives have been overblown. There'll be opportunities to continue to grow those facilities. And so where we see opportunities is evolving these 500 to 1 gigawatt power plants using small, medium-scale turbines and enhancing that with larger equipment and larger units. And so we're actively in the design phase and in the discussion on how you design those facilities to see the continued growth in specific locations because I think it will be easier to grow locations that have been accepted and it will be kind of starting new ones.

And our next question will come from Michael Sullivan with Wolfe Research.

I wanted to just ask on thoughts around financing potential future growth. We've obviously seen what William has done recently with the partner in Blackstone and just your appetite for something like that and what could potentially catalyze it.

Yes. Great question. I'll let Stephen address that.

Yes. As we said in the prepared remarks, we're sitting on significant liquidity today for the projects that we have in front of us. And we actually think there's probably some incremental debt capacity for small additions to our portfolio of projects. But as you may have gathered from our comments, there's quite a few commercial opportunities we're looking at. Some of those may lend themselves to more of a project finance or a structure in which we bring in a partner. So we're in discussions with a wide variety of market participants. We feel there's quite a few attractive options out there if some of these projects come to fruition. We're going to be flexible around those structures, taking into account, of course, cost of capital and flexibility provides the business.

Okay. Great. Very helpful. And then just in terms of -- maybe you could just give us a little color on what you're seeing in the secondary market for turbines that could maybe hit in the next year or 2?

There is active market for the OEMs continue to make it. There's things around the world. Obviously, the U.S. is still -- U.S. and Canada are still sitting on very favorable natural gas prices. The rest of the world is not today. And so the cost of the use of some incremental generation around the world may not be as attractive for the gas-fired equipment as it would be moving here.

So the GESA guys with their footprint and activity are on top of all that. And I think that we will see some ability to free up. We've been active in picking up additional equipment when folks have walked to the OEMs produce 1 or 2 more than they thought they had, and we've been able to get kind of a first call on that or at least the second call. But the market is active. And I think the GESA and the ability to repair, maintain, move, deliver, do all the stuff that is the hard part there that really gives us advantage on finding the equipment and getting it in the shape it needs to be in the U.S. market or in the opportunistic place where we may find it internationally and keep it international and just sell it to somebody else. So I think that it opens a lot of doors for us in the power generation market.

And our next question will come from David Anderson with Barclays.

So balance of plant is really starting to show up in the numbers and it's clearly a big part of your execution platform. Can you talk a bit about how much of your deployed capacity by the end of '27 will have a contracted balance of plant element? Maybe kind of longer-term, kind of how -- like what percentage are you sort of thinking in terms of that part of your business?

Well, obviously, the more the better if we get the right returns on it. So I think it's really addressing the specific customer situation and how we're fitting into their behind-the-meter power solution. But if you -- we've kind of flashed numbers out there kind of arranging the cost and the return to an incremental dollar per megawatt basis, and it ranges clearly as we add balance of plant to that.

So I think one of the evolutions of the company is as we grow this, as we grow into other platforms, it is this X number of megawatts times Y number equals this, equals to our stock price. I think that math is going to be less and less meaningful as we continue to grow the business in the ancillary parts of it as well. So it's not a hard and fast rule. Obviously, we believe that running the entire plant as the operator and owner of it, it's better to control all that equipment and operate it as one specific unit. So I think our goal is to continue to do more of that as we grow and put the fleet to work.

I think the other thing that is happening, it's not only that we believe it is more efficient and cost effective, but our existing customers and the customers that we are talking to believe that sort of one-stop turnkey where we deliver all of the generation, SaaS access and also the distribution side, that turnkey approach is something that they want.

That makes a lot of sense and sort of leads to my next question. It's more of a kind of broader strategic question. So you're obviously moving away from just deploying megawatts. You're talking about balance of plant, there's an SMR, you're talking about the GESA acquisition. Can you talk a little bit about how your strategy has evolved to date? And any insight into how you see the strategy expanding further over the next few years? Clearly, you're looking in many different areas. Just any insight on that would be great.

Yes. I think the strategy is not -- the strategy is -- it's showing up now more than changing. I think we've always believed and understood that adding the balance of plant scope was something that we were looking at. The acquisition strategy to broaden our capabilities is really our view of the market needs and how do we provide those turnkey solutions to the customers and how are we able to grow as a couple of the critical paths here are both having equipment and then having the team and the skill set to put it all together and run it and the ability to maintain it over the life cycle of the equipment. So I think it is -- the strategy hasn't necessarily changed. What's happening now is it's actually showing up.

And our next question will come from Derrick Whitfield with Texas Capital.

Congrats on your quarter and update. I wanted to start on your project pipeline. What impact, if any, have data center moratoriums had on your project pipeline? It would seem to me that your offering would inherently be more valuable given the tightness in compute and power.

Yes. Maybe I'll just jump in. I mean, I think clearly, what we're seeing is the demand for compute is outpacing the incremental supply of compute getting put online broadly. And to the point on moratoriums in different jurisdictions, I think where we fit really neatly into that story is the flexibility of our solution. If you've got access to gas, we can really kind of go anywhere. And so I think rather than having a certain location when we put in a bunch of infrastructure that's kind of stuck there.

I think what really helps us be nimble is the flexibility around the solution that we have, the team that we have that can go out and build projects kind of anywhere. So I think it's kind of all playing into our hand. Bill alluded to it, there's significant job creation here. There's significant stimulus that comes from these localities, and we are seeing areas where there's local influence that is meaningfully pushing towards development. So there are significant pockets available. But certainly, where we sit relative to a fixed geographic position is a really advantageous position in the portfolio.

Great. And then maybe with respect to GESA, while the impact it will have on your offering is clear, how are you thinking about its impact on the industries you can serve from a distributed power perspective and your ability to grow third-party business within their existing offering?

Well, I think that's -- we see that as clear. The data center market is a giant and massively growing market, but there's still utilities. There's still growth in the sector. There's still electrification of lots of things in this country. They're still reshoring the manufacturing. So the ability for us to provide those solutions and the GESA platform really helping us get there is significant. And they're providing utility power internationally in several countries today running those assets. And so we could see that continue and grow, and we can see playing a role in partial ownership of assets. We have the joint venture today where we share -- we own it with our customer, but we operate it. And so that can be a model as things evolve as well.

GESA's largest customer segment at this point is delivering services, both refurb, O&M to utilities. So that is just one example of where we are opening up additional business and the third-party opportunities are significant. We're very excited about what GESA brings to the table.

And our next question will come from Scott Gruber with Citigroup.

I guess just to staying on GESA, Bill, you mentioned the upside in the next year or 2. It sounds like a kind of bullish kind of outlook for commercial synergies. Any targets that you could provide for us? And as you think about it, is it kind of ramping within the kind of core utility market? Or is it really ramping with the behind-the-meter solutions and helping with the install and commissioning on that side of things

I'll give you the perfect answer. The answer is yes. I mean the markets are big. They're broad. The traditional utility market has been at the pace that it's grown. You haven't seen a lot of growth in the U.S. in the last few years. Internationally, power demands are growing. The world is getting more electrified and the needs for that are continuous and steady.

The fuel choice is different around the world. So you kind of have a different use case there. But the target markets and the opportunities we see both with GESA and its core and its ability to find, locate, refurbish used equipment that we can either put internationally or back domestically, I think, is going to be a mix on whether it's going to be a fit for short-term U.S. needs or whether these are long-term assets that stay outside the U.S. But it's big and broad. We don't have any specific targets necessarily other than...

I think importantly, we're in the middle of the flywheel here, and it's continuing to accelerate. We're 2-plus years into this journey and the opportunity set, I think, is continuing to grow. We have found ourselves in a position where all the M&A we've done to date has really been proprietarily sourced. We brought in tremendous entrepreneurs. GESA is the latest example of that, where people see the value of the track record that we've established in actually powering the fastest-growing piece of the power segment. And jumping on to the platform, which is not necessarily a word we love to use, is providing an expansion of opportunities not only for us, but for the businesses that we're bringing in as well. And so tremendous synergies commercially that we are just at the tip of the spear here on this evolution happening around the world, and we'll just continue to find ways to add more to the flywheel.

And at a time that you see labor and skilled labor a shortage and in many cases, potentially a bottleneck. We've just added 600 people to deep domain knowledge, and that just gives us a lot of opportunity looking forward.

Yes. And developing the training programs, it gives us the critical mass to do a lot of those important things. We've got an internal training program that we've combined up with GESA's talent. They've got a relationship with the Main Maritime Academy on their engine training programs, where they bring interns into the facility and work on generators. So I think the real motion is how do we see the next 5 and 10 years rolling out and what kind of skills and assets do we want to have ready to take advantage of the market need.

Yes. It's a good segue into my follow-up, which is on the cost synergy side because it seems like there could be some ability to help on the cost of installation, cost of commissioning and obviously, the maintenance of your turbines over their life. So any color that you can provide on how GESA can help on the cost side of things? And is there a cost angle here, too, that can aid your margins?

There's cost angle, there's spare parts angle, and there's time to do turnarounds and time to do things that are all as we have it in-house, as Scott alerts it, we have control of it. We're doing it for third parties. So the bigger you are, the quicker you can do all the work you need to do in an emergency response or in a planned maintenance cycle. So we got to look at both parts of that and you recognize that there are a lot of equipment here, whether it's our turbines out on a site or third-party turbines or even a third party recips out there with generators that have maintenance needs. So it is -- it's just a tremendous and big opportunity that we see.

And when we look at our own projects, I mean, certainly, when we think about the capitalization of some of these long-term projects, we see some synergy there on bringing cost down by having it in-house. But most critical is the theme of time to compute and hitting time lines and having the in-house execution capabilities where, as we alluded to in the call -- in the prepared remarks, we provide that level of certainty now to customers saying, we are going out and putting together 20 different vendors to make this project happen. We are continuing to build the in-house capabilities to provide certainty to quality as well as execution time line.

And our next question will come from Sean Milligan with Needham.

On the July slide deck, you had $100 million plus in EBITDA potential on scope from customer B and C. First, I just want to make sure I'm thinking about it correctly that, that's all been signed up. And now, I guess, the updated slide deck is showing scope on open capacity. Is that the correct way to think about that first?

Yes. I'd say on the -- first on the additional EBITDA, yes, it is for the balance of plant and the incremental CapEx, which is in line with what we've been communicating in the last several quarters. And then there is still significant upside for the uncontracted capacity that we've already committed to. So all that stays intact relative to what we communicated before.

Okay. And then some customers are dual sourcing equipment? Or is there a potential for you to bring that equipment under your managed services like via some type of agreement? And is that contemplated at all in that Slide 4 guidance?

No, that's not contemplated in the forward numbers. That is a possibility, though.

And as Bill alluded to the JV.

Yes. And we are doing that today in a smaller way. But yes, it can grow, especially with the added capabilities we bring house. And part of this is us maintaining that we keep -- we've had our labor force and struggling -- not struggling, but just really trying to maintain our capital deployment and our people there, and it's been a big task hiring. This accelerates that and really does, to some extent, pull that off of our critical path when we're making decisions on how to continue to grow.

And our ability to service the power market is not limited to our balance sheet to that point. We're working for groups with obviously very large balance sheets and to the extent they've taken a position in some equipment and they want to partner with us in some mix of their own equipment, our equipment and having us in the position of making it all happen is some we can play.

And our next question will come from Derek Podhaizer with Piper Sandler.

I wanted to go back to the GESA conversations. How -- what else should we be thinking about as you look to continue to deepen your moat as a turnkey power supplier? What else from an integrated services perspective, ancillary services, obviously, there was a big impact on your financials this quarter. And as you integrate GESA look forward to seeing that go back to HV MV LV. What else is out there? How could you educate us as far as the different areas that you could pursue to really deepen the moat around the turnkey power supplier you're building out here?

That's a great question. As Kyle alluded to, all these opportunities we've internally sourced through our networks and through working with several of them on different sites. So the last thing I want to do is tell an investment bank on where we're going to go find opportunities to go buy. But I think there are lots of them out there that are entrepreneur-owned. I mean the folks that we're tucking in underneath that see the opportunity. They see the -- frankly, they see taking our stock as it being undervalued in the whole package. So that's part of the point is they're coming in as our partners and helping us to grow this business. And I think we will -- there are more of those out there, and we're going to continue to try to deliver them at the right relative valuation with the right skill sets and focus.

Got it. That all makes sense. So the announcement on the equity investment in the SMR Nuclear company was clearly interesting. So maybe just kind of your high-level thoughts, Bill, as far as you see the future energy mix for your solution and how you see this advancing over time as that looks to scale up and kind of be part of maybe a future solution of yours?

Well, I think that the nuclear industry is going through a bit of a renaissance here as we retrace from the big plants and the engineering battles and the regulatory permitting battles to the SMR market where you've got a few select companies that are really making progress on reactor small designs that actually work and are safe. And so I think us picking the Deployable and understanding where they were in the process for getting critical is really important.

The technologies are -- they're going to work. It's a matter of how do we piece them together and how do we get the demonstration of that power up and running as part of this tool. The economics are still to be determined. So it does save a lot of gas, and it's environmentally friendly to the most extent. But how is this going to fit into the mix of power generation in this country. And we think it will. We think it will have a role. It's a matter of how quick. I think the time lines of some of these, especially with support of the federal government can be quicker than expected, and I think that's what's exciting to us here.

And our next question will come from Stephen Gengaro with Stifel.

Two from me. The first is -- and maybe this acquisition you announced today helps, but we've heard more and more about sort of the wear and tear on turbines in the field working for data centers. I'm just curious kind of your take on that and what you've seen.

I read the Bloomberg article this morning, and there's a lot of experts in this world. We've been doing this. All of our turbines work. We have turbines that, as we've said, are going to be -- that have been temporary that are moving off to another site, and we have checked them all over and we've looked at them, and they're all in great shape. So there is a lot of noise around it. They are difficult loads, pairing it up with some sort of buffer solution, be it a battery or a fuel cell is a good way of managing that. And we've seen the dynamics. I think we've got designs and experience on how to manage that without ring equipment, so to speak, or accelerating the life cycle.

I mean the benefits of some of the equipment we use is this can run on multi-fuels and it has run on multi-fuels and running clean natural gas from a utility through them is far less impactful than trying to run diesel fuel through them or somewhere else, some other fuel around the world. So from our perspective, I mean, we see the dynamic. We think we've engineered and designed in a way that actually eliminates that risk on the equipment.

Great. And my second question is, and you always lay things out really well in the deck. So thanks. And I think when we think about Solaris in 2030, right, do you think it will be materially different? Do you think there'll be M&A in the business on the power gen side? Like how do you think the company evolves from here? I mean, obviously, there's more contracts to sign, et cetera. But do you think the world changes much? Or do you think we kind of have more of the same?

I think it's going to look dramatically different. I mean I think we have a stairstep through here in terms of what we can see today and what we can talk about. But I think if we look at what opportunity set lies out there, what we think is happening, I think that the company will be materially different than it is today.

Our goals are far beyond what we have in this deck in terms of the growth of this company. And a capital-intensive industry, getting ourselves to the size at which we're investment grade is a big step. And I think that we will see things heading that direction by 2030. We'll look back -- if you go back to 2020 -- first quarter of 2024, looking at where we were, looking at where we are today, I think the step change will be about as radical as the last 2 years have been.

And our next question comes from Bobby Brooks with Northland Capital Markets.

Something that really stuck out to me in the prepared remarks was the line of sight commentary on additional capacity. And I'm less interested in trying to size that or time that because I think you've constantly shown the market you can and will execute on that. But what I do want to ask is with the GESA acquisition and the expertise they brought in-house across a broader array of turbine, OEMs, makes models, does that inherent -- did that directly tie to that improved line of sight on capacity additions? And maybe just expand on that.

I think you hit the nail on the head. I mean we have established very good relations with the OEMs and be able to pick up a little bit of kind of used equipment and slots from the OEMs that may have come up or slots they may have been conservative in their rollout and had a few extra turbines that we've been able to buy up. But GESA changes that dramatically from out there, the used or lightly used or highly used equipment where we can actually in-house determine and do the diligence quickly on what might need to be done to that equipment and get it moved.

And so the level of involvement knowledge that's applied to that scanning the world, if you will, looking for opportunistic power generation, I think, is giant with their addition. And we had hired them before to do diligence for us on a set of assets. So we knew their capabilities and are really excited to have them as part of the team.

GESA's footprint is in over -- they've operated in over 30 countries. So they have a lot of visibility into what is happening in these countries, where the power plants are that might be decommissioned and where there is good equipment.

And there's a lot of equipment that isn't going to be suitable. So I think very quickly, understanding what's a wild goose chase and what's a real effort we apply time and energy to is an important thing that they bring to the table.

Very helpful. And it seems -- and also on GESA, it seems like this gives you a notable second and separate shot on that with the entire power gen build-out because of their aftermarket service maintenance across various different turbines. So I just wanted to ask, one, do you plan -- and I think you kind of answered this earlier, but just to confirm, it seems like you do plan on having GESA continue to pursue an expanding set of maintenance and servicing jobs where it might not necessarily be your assets on site. And then secondly, on your own projects or future ones, does adding the GESA team further expand potential scope.

Yes and yes. So I think we do anticipate and want them to continue to grow their third-party work from an O&M perspective and from a generator maintenance perspective, and rewinding and all the really important stuff that they can do for third parties as well as us and continue to grow their shop.

On top of that, they do give us a greater level of expertise on certain elements of what we do, especially as we're developing our preventative maintenance programs, and we're developing all the protocols around that, and we're applying some really cool AI tools to manage and anticipate issues to get ahead of any maintenance to make sure that it's planned versus unplanned. So I think the team there and integration into what we're developing is very important to how we run our business and how we are as reliable as possible for our customers.

And our next question will come from Michael Dudas with Vertical Research Partners.

Maybe a very supportive commentary this morning. What are some of the things we should look for that maybe there's some -- any headwinds on timing, customer commitment, supply chain, integration, anything that we should be thinking about, not that there's any news flow in the marketplace, but to gain continued confidence in the execution moving forward in the next few quarters?

Well, the good news about this market today, it's pretty good at pointing out what it thinks is going to go wrong. These are complicated businesses and us putting the team forward, understanding execution, understanding build-out risk, understanding permitting challenges, understanding all the aspects to make all this happen, I think is really a key driver and a key risk mitigation strategy that we think about every project, every location we're building, every subset of what's happening, maintaining that we've got the team, we've got the ability to put we need.

We've got friendly local relationships with the community where we operate and understanding how to think about that and how to manage that is all part of ensuring that we that we can execute equipment over the short-term. There is more demand for compute than there is compute and power to compute right now from what we see. And so I think getting things up and running at the speed at which the industry wants is important. And we're going to do what we can do. We're going to do it safely, but we're going to do it as fast as possible.

We're also going to be very focused on signing the right contracts at the right time with the right people.

And our next question will come from Jerry Revich with Wells Fargo.

This is Kevin on for Jerry. Congrats on the quarter. Could you help us walk through the economics of the expanded scope? Where is the incremental $100 million plus of annual EBITDA coming from balance of plant infrastructure support, et cetera? Where are you getting the most interest in terms of scope from existing or prospective clients? And how are the returns trending on that scope compared to the rest of the business?

Yes. I'll take a piece of that. As we talked about consistently, when we look at these projects, the generation as well as the balance of plant, we look at it on a return on capital basis when we price the contract. So we look for similar rates of return. So the incremental capital is going to be earning rates of return very similar to what we've already deployed for the turbines. So it's all consistent from a pricing strategy standpoint.

And from an offering standpoint, Bill used the word evolution earlier today, and that's a word we've been using quite frequently recently. And if we look at just the evolution of the offering and the scope that we've put in place here across the 3 major data center contracts that we have, the scope continues to expand at each contract. And so I think to Amanda's point, people are looking for a turnkey trusted provider, and we're doing it organically and inorganically in terms of being able to articulate that value proposition. So we think the earnings potential here is very compelling as we sort of land and expand here.

Every time we've signed a contract, we have expanded the scope under that contract.

And our next question will come from Blake McLean with Daniel Energy.

A lot of great insights already. So maybe I've got just one broader question here. I'm curious to get your take on insights from customers and potential customers from a mindset evolution perspective. You guys had a great interconnection delay data point in your materials. How are those types of anecdotes and other grid headwinds that we keep hearing about changing commercial conversations. So like clearly, it's broadening interest levels. But how is it shaping like when they want to engage with you all? How they think about site selection, size of capacity commitments, that sort of stuff?

Well, I think I alluded to it a little bit earlier. It does -- I think the momentum toward expanding sites that are already there if you've got strong local relationships, continues to be a little bit easier than a greenfield project. That said, there are still many large greenfield projects with eyes to larger-sized campuses, and it's really about the evolution of, if I want to build a 4, 5, 10 gigawatt campus, the sky is the limit, how do I start that? And so what does that look like starting that and rolling up the power supply into a facility like that over the next 2 to 5 years as they build it out.

And so I think that's the ongoing conversation is what does the design look like for that? How does it all fit together? How does it look? What does the generation stack look like for 5-gigawatt islanded power project 3 years from now or 5 years from now.

So I think all of those conversations are very ongoing. I think that there -- our dialogues are consultative with our customers and trying to figure out what -- how that we fit a solution into there and how you partner up with others to execute on the scale, which is needed to execute on.

Moratoriums, the issues associated with the interconnection and the queues, look at the Abbott letter that there's been a lot of conversations about. I mean these are all tailwinds. The -- one of the primary solutions to meaningfully alleviate the strain on public infrastructure and eliminate or at least mitigate the potential of increased costs on the ratepayer really pushes you back to behind the meter. And so these are tailwinds, and as Bill said, we are in discussions as to how to make it happen and how to make it happen and where to make it happen. So the conversations are very consultative.

Yes. And I think their view of the time value of compute time between now and energizing in early '27 versus '29 or '30 is significant value to the customers. And so they see that and they recognize the need to get this going quickly but then have a long-term plan about what it looks like.

I think there's always been a bit of a perception that some more efficient large combined cycle unit is going to be -- fleet is going to be a much more lower cost solution. But in today's environment with the cost of the EPC contracts, the location, siting of all that, the needs for high-voltage transformers and needs for high-voltage transmission and on-site backup power, the costs are beginning to converge in a way that we think is really much pushing the behind-the-meter solution to really become the next generation of power. And that at some point, it can turn around and survive back into the grid as resiliency as needed.

And I'm sure you have one more question, Blake, about the logistics segment.

Anything you want to share on that? We'd love to hear it.

Thank you, Blake. That business continues to perform extremely well. We do see customers focused on it that the trucking bottlenecks with the data center market has taken a lot of the pneumatic trucks and use them for cement service. So the evolution of kind of what's happening there with the growth of the need, and I think John's letter of Sunday night highlighted that you're going to need more frac spreads next year to complete the wells that are being drilled as the rig count grows a little bit.

So all of that points to continued growth in that business for us, and we've got strong reliability. We've really spent a lot of effort in that business, continue to focus on equipment reliability and getting it working. And I think that we're hitting on all cylinders in that business as well.

And this will conclude our question-and-answer session. I'd like to turn the conference back over to Bill Zartler for any closing remarks.

Thanks, Cole. Thank you all for joining us today. This quarter's progress showed once again that our strategy is working. Our team is executing and the company is growing quickly. Our customers keep choosing to grow with us. We keep integrating more of the power value chain and all that combination is producing durable results. About our 2.3 gigawatts that are currently under long-term contract and have a clear path to significant free cash flow from those contracts and other parts of our business over the next decade.

A sincere thank you to our employees, customers and partners. Your dedication and trust are the foundation of everything we are building, and they are why we are more excited about the future than at any point in our history. We look forward to sharing our continued progress. And thanks again. Have a great day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines at this time.

Good day, and welcome to the Solaris Quarter 1 2026 Earnings Teleconference and Webcast. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference to Yvonne Fletcher, Senior Vice President of Finance and Investor Relations. Please go ahead.

Thank you, operator. Good morning, and welcome to the Solaris First Quarter 2026 Earnings Conference Call. Joining us today are our Chairman and Co-CEO, Bill Zartler; our Co-CEO and Director, Amanda Brock; our President, Kyle Ramachandran; and our CFO, Steve 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 discussion of non-GAAP financial measures. 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 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-CEO, Bill Zartler.

Thank you, Yvonne, and thank you, everyone, for joining us this morning. Solaris is off to an exceptional start in 2026. We are consistently executing across our current operations, successfully advancing our long-term growth strategy and growing our long-term business base.

In power, we added 2 significant long-term contracts with 2 investment-grade global technology companies for over 1 gigawatt of contracted power generation capacity and importantly, associated balance of plant equipment. We also closed 2 strategic transactions, which expanded our generation capacity over 40% to 3.1 gigawatts. We are now operating, constructing in the design and planning stage for multiple large behind-the-meter power projects for 3 distinct large technology companies for several different data centers. Building on our proven capabilities, this progress continues to confirm Solaris' strategy and leading project expertise.

We also see a clear path to significantly grow our business further. While we focus on near-term execution, we are concurrently expanding our contracted power services scope to support the future growth of our high-quality customer base. We also continue to have active discussions for new projects with both current and new customers. We expect these diversifying and expanding relationships to result in meaningful incremental returns for Solaris.

As we've now shown repeatedly, we will secure expansion generation capacity once we have visibility and confidence in contracting incremental capacity on a long-term basis. While we've seen that negotiating these initial complex commercial contracts can take an extended period of time to close, we are encouraged by the numerous additional growth opportunities we see with our current customers as well as the general alignment toward a more standard contractual arrangement. We're anticipating going forward that these additional opportunities will be more streamlined to contract.

The broader power market continues to reinforce and support our strategy. The tailwinds we've been describing over the past several quarters remain the same and several have strengthened. Grid interconnection delays have continued to expand, which given the market's focus on speed to compute has accelerated adoption of long-term behind-the-meter power solutions. Electricity affordability for residential grid customers remains at the forefront of every politician and community leaders' minds, which reinforces the need for bring your own power solutions like ours and in some cases, is even essential to many communities.

There is no question that behind-the-meter power solutions will play a significant role in the long-term powering of data centers and other large industrial power loads. Solaris' proven ability to deploy rapidly and compliantly, fully behind the meter in island mode if needed, with the optionality of providing a cost-effective reliability-enhancing complement to the grid continues to be a real differentiator.

Our progress is a result of a power strategy that's not only working but accelerating our growth, executed by a seasoned team that knows how to deliver. We've been clear about our power strategy, build a diversified integrated power services and equipment company that can deliver what the market and our customers need, delivering turnkey solutions from the molecule to the electron, while also ensuring that our earnings stream is growing at attractive returns with improving long-term visibility. With approximately 3.1 gigawatts of secured power generation capacity, a growing exceptional customer base and our demonstrated capability to deliver comprehensive behind-the-meter solutions to the industry where access to power is recognized as a key differentiator. We are well positioned to see continued growth from here.

With that, I'll turn it over to Kyle to walk through our commercial progress and strategic acquisition initiatives.

Thank you, Bill, and good morning, everyone. As Bill pointed out, we've had incredible commercial success over the past couple of months. We now have over 2 gigawatts of power generation under long-term contracts with 3 different leading technology companies. Over half of that capacity was contracted in just the last 2 months with contract terms that have extended to 10 to 15 years.

We announced our most recent long-term contract last night directly with an investment-grade global technology company in which we will provide over 600 megawatts of generation with balance of plant for an initial 10-year term with an option to extend for an additional 5 years. We expect energization under this contract to begin ramping in late 2026. This most recent contract is in addition to the over 500-megawatt contract we announced in early February and the 900-megawatt Stateline joint venture that is currently under development.

These customers selected Solaris as a trusted long-term partner because of our proven capabilities and the team we've built, both organically and inorganically. We have a history of reliable execution demonstrated across multiple at-scale deployments, and these partnerships reinforce our reputation as a leader in this rapidly growing market.

As Amanda will describe, these relationships are also expanding in scope well beyond generation, which further deepens our integration with customers and enhances the return profile of our contracted base over time. We've also continued to move decisively on the supply side to address the challenge we've been direct about. Demand for our solutions continues to outpace our committed and on-order capacity.

On March 16, we closed 2 highly strategic transactions, which together add approximately 900 megawatts of new natural gas fuel turbine capacity. The first was the acquisition of Genco Power Solutions, which will contribute 400 megawatts of incremental capacity between 2026 and 2028, including approximately 100 megawatts of currently operated and contracted capacity. The second was the purchase of 30 turbine delivery slots, providing approximately 500 megawatts of incremental capacity between early 2027 and 2029.

Securing these near-term deliveries puts us in a position to serve customers on the accelerated time lines that they need. Both acquisitions also importantly meaningfully diversify our equipment supplier base as we develop relationships with multiple OEMs. As we grow toward and beyond 3,100 megawatts, working with multiple OEMs increases our operational flexibility, reduces exposure to any single supply chain and gives us more options to configure capacity for varying customer needs.

Outside of Power, our Logistics Solutions segment continues to perform well. Both our execution and demand for our services remained strong during the first quarter, and this momentum continues in the second quarter. Demand for our top fill equipment now exceeds our deployable supply, and our forward-looking calendar is also equally tight. This business line continues to generate tremendous cash that we are reinvesting into the company.

In summary, Q1 2026 was a quarter of successful execution, commercially, operationally and financially. Our results, combined with our continued strategic efforts building and diversifying our capabilities positions Solaris extremely well for further growth through the remainder of 2026 and beyond. With that, I'll turn it over to Amanda.

Thank you, Bill and Kyle, and good morning all. So building on our significant momentum, we want to share with you more about how we are anticipating market needs and leading with new initiatives. We're clearly delivering on our strategy to date, but as important as how we're innovating and looking to the longer term and evolving our business.

Last quarter, we publicly announced our molecule to electron approach in response to a growing market need. Large technology companies are building out compute infrastructure at a speed and scale that creates many challenges, one of the most significant of which is power infrastructure. This includes not only generation capacity, but the power-related distribution, conditioning, storage and management capabilities as well as the equipment needed to supply fuel and minimize emissions.

It became clear that our customers increasingly value a turnkey and rapidly deployable solution. Anticipating this need for a turnkey solution, we've added additional skills and strength to our core team with deep domain knowledge in these areas of expertise as well as making initial key bolt-on acquisitions like Solaris power distribution services. With these enhanced capabilities, we're in a unique position to deliver more than just generation in a time and capital-efficient manner, but we're adding significant value with enhanced project returns.

Our most recent 600-plus megawatt agreement announced last night confirms our strategy and approach, which includes greater project scope covering balance of plant and additional services. In addition to generation, we will be developing and operating last-mile gas delivery as well as natural gas fuel generation assets and the associated distribution storage and balance of plant infrastructure.

This contract's broader scope means more capital deployed per site, closer integration with the customers' infrastructure and depending on the capabilities we deliver, enhanced returns over the contracted period. It also means that contractual relationships become more difficult to replicate and are more durable over time. We now have the capability to deploy at a speed and reliability level that the grid and traditional procurement channels will have difficulty matching.

The demand for a turnkey integrated power solution extends well beyond the single agreement. Examples of our growing platform include: one, we're in advanced negotiations on adding enhanced scope as well as increased generation capacity to the long-term power contract we recently signed in February. We found that as customers evaluate specific site infrastructure requirements, the size and scope of our relationship and what we will be responsible for delivering to a project is growing.

Two, we are currently delivering balance of plant equipment and services at multiple existing data center and compute sites where we don't provide the generation and even where the generation source may be the grid. We believe this increased traction is a result of our distribution capabilities and proprietary approach to power and power management.

Three, while this is not part of our core offerings, we are being approached to provide consulting services to projects facing power challenges. These are customers to whom we may not provide power, but they come to us because of our technical depth, which is now recognized across the market.

And lastly, four, we are very excited that we've recently been asked by one of our large technology customers to participate in a pilot research program related to their development of mobile distributed compute, where we are helping to design and provide expertise for balance of plant and which could also eventually include generation.

These are just several examples of opportunities that are incremental to our contracted generation base, and each one is enabled by the capabilities we've assembled over the past 2 years, the engineering, project management and manufacturing teams that we've grown organically and the distribution and control expertise we've acquired and continue to build on. Our team remains hard at work identifying and continuing to develop proprietary equipment, software, processes and services to enhance the rapid deployment and functionality of our offering and the long-term solutions we can provide to the industry.

So as we look forward, expect us to continue to innovate, investing in and growing our capabilities. The broader our capability set, the more we can do for our customers and the more deeply embedded we become in their infrastructure and the better returns we will earn under long-term contracts. And the market need for power is not going away. This is the exciting long-term value proposition for Solaris, and we are confident in our ability to execute and continue to grow.

I'll now turn the call over to Steve for our financial review.

Thank you, Bill, Amanda and Kyle, and good morning, everyone. I'll begin with a review of our first quarter 2026 results. We generated revenue of $196 million and adjusted EBITDA of $84 million in the first quarter, coming in 22% higher sequentially and 79% higher year-over-year. These results reflect the operational momentum Bill and team described and it's a strong foundation for what we expect to be a significant step-up in earnings and cash flow over the coming years.

In Power Solutions, we operated more than 900 megawatts during the quarter and adjusted EBITDA increased more than 30% sequentially to $72 million, driven by growth in revenue from both owned assets and third-party leased capacity. In Logistics, we averaged 104 fully utilized systems and segment adjusted EBITDA was approximately $23 million, a 2% increase over the fourth quarter of 2025.

Turning to our updated earnings guidance. For the second quarter, we're increasing total adjusted EBITDA guidance by 10% to $83 million to $93 million, reflecting our confidence in near-term execution. We're providing initial third quarter guidance of $80 million to $95 million, which reflects shifting power from temporary to permanent at the Stateline JV project and deliveries of new equipment in the second half of 2026 that are contracted and will begin earning revenue January 1, 2027.

Looking beyond the next couple of quarters, the over 2 gigawatts of contracted capacity we have in place provide line of sight into earnings and cash flow for the next 10 to 15 years, and we are confident that we will see our contracted capacity ramp as incremental opportunities are finalized. In our presentation, we lay out a scenario where total company adjusted EBITDA pro forma for all 3,100 megawatts delivered and operating could well exceed $1 billion annually.

As the scope expansion opportunity that Amanda described continues to materialize, we see upside to that amount. To put it in more concrete terms, any incremental capital we deploy for additional assets per site would be underwritten at returns consistent with our existing framework. That incremental deployment would layer directly into the baseline EBITDA I just described. This visibility and significant earnings growth from leading investment-grade customers underpins how we think about capital allocation, credit capacity and the balance sheet going forward.

In March, we closed a $300 million credit facility, which we subsequently upsized to allow up to $200 million in additional borrowings, giving us meaningful near-term liquidity. With more than $1 billion of additional identified capital to be deployed in 2026 and 2027, we are evaluating funding alternatives, which would allow us to execute our growth plan in an accretive manner and expect to provide further updates in the very near future.

As we look forward, we are positioning Solaris to capitalize on an unprecedented power growth opportunity, a contracted earnings profile that continues to improve, a customer base making decade-long commitments and an expanding scope of opportunities. I'm excited to be part of the team here, and I'm looking forward to helping the team execute on these plans.

With that, we'd be happy to take your questions.

[Operator Instructions] The first question comes from David Arcaro with Morgan Stanley.

Well, congratulations on another contract here. I was wondering, I guess, the time to contracting seems to have accelerated in terms of your activity. I guess -- I'm wondering if that's what you're seeing? Has the turnaround time to securing new customers gotten more urgent? How have those discussions changed in terms of the speed of execution?

Well, these have been baking for a while now. So they've taken a long time to get across the finish line to start with. Obviously, when they're closed, it feels really good to have them done. And I think to the point we made on that is once you've agreed to general standard terms, I mean, this is an industry that this wasn't a conscious decision for them to want to do this. They've been forced into contracting for power in ways like this. So we're walking through that and working closely with them to come up with a way that's a win-win for both has really been important. And it takes a while to get there. And once you're there, it kind of makes the evolution and growth of the relationship even easier and better going forward.

Yes. Got it. No, that makes sense. And I was also curious on the balance of plant business model. From here, I'm wondering, do you plan to pursue that as a separate offering? Or do you aim to, in most cases, combine it with generation? And curious if you could touch on maybe how much you've deployed in terms of the balance of plant, the consulting services that you mentioned in terms of that offering?

We're not going to get into numbers, but I do -- we see opportunities where we are using our expertise around balance of plant to put that to work where we are not doing generation. And I think that plays into the ability to handle multiple sources of generation as that evolves. Right now, our focus has been on the gas turbine supply of generation capacity, and we're integrating the mix of that.

I think going forward, as we mentioned in the call, they're looking for a turnkey solution and us providing everything from gas through the delivery of the electron into the building at the right voltage in the right way, whether it's a DC or an AC in the building. All of that is something that we can put into the mix and handle all that.

So I think it will be a mixture. I think our ideal location would be where we do it all and manage the whole pod. And I think that does drive kind of capital per megawatt up and driving us to really the metric of return on capital is our focus, not really on per megawatt that we're delivering. And so it is a mixture. I think we're seeing all of it, and we'll continue to perform all of it.

David, what we're excited about is in the conversations that we've had and the contracts that we have closed to date, during those negotiations, as people understood what our capability was, their desire for that turnkey solution and increasing what they wanted us to deliver to the project was meaningful. And in the conversations that we are still having for future opportunities, we are seeing that same trend.

As Bill said, turnkey solution, we want you to do more. And we certainly have proven that we can deploy quickly, that we can generate the power needed. And beyond that now with the capabilities we've assembled, we do see that as a trend. But as Bill said, we have the ability to do just generation, the ability to do it all or in the cases that we've also laid out, the ability to just do projects where it's just distribution and doesn't include generation. It's a great platform for us to be offering.

The next question comes from Derek Podhaizer with Piper Sandler.

I just want to expand on David's question. Just you talked about the general alignment towards a more standard contractual arrangement, more streamlined to contract. Could you just provide maybe some further detail on these comments and how we should think about you getting these power contracts over the finish line more efficiently moving forward?

Well, I mean, there's a lot of devil in detail on contracts, and we have built our businesses over the last 30 years around ensuring that we develop the right risk profile for us and the right delivery for the customer. And that's -- there's a lot of work that goes into that on both sides to ensure that both sides get what they need. I can say with assuredness that we have signed contracts that we believe don't have company ending liabilities in them, and I think they're very acceptable as we've fought hard for those positions and our customers have fought hard for other sides of that.

But I think we've developed a standard -- I mean when you're developing new kind of lines of businesses and they don't really have a standard contract developed for the industry, and we saw this in the water side. We saw this in the sand silo business that we're forging new ground and developing the right contractual underpinning really does establish us as a leader and builds a relationship with the customers on what the profile of this business should look like for all.

And I think one addition to that is through this process, I think we've really established tremendous trust. Our track record provides obviously credibility internally in these organizations, and we've been there, done that in terms of providing this kind of resiliency. So I think not only have the terms come to a point where we've got a good form to move forward, but there's also over the course of those discussions, we've really established ourselves internally in organizations that don't have necessarily a long track record of doing these types of applications to support their compute needs. And so this is new ground for them, but I think we've demonstrated the credibility that's required to get them comfortable.

It's been helpful to refer to the uptime that we have had at projects where we're operating, and it makes it easier as a consequence to negotiate your uptime requirements and new contracts. You can actually point to actual operations.

Right, right. That's very helpful. So just looking at your megawatts, counting them up between the 3 hyperscaler contracts, some it's still in the energy patch. It seems like you had about a gigawatt of available capacity. How should we think about that as you deploy those remaining megawatts, whether that's expanding your current contract scope with one of the 3 customers or potentially going after customer #4?

I think it's going to be maybe a combination of all the above.

The next question comes from Dave Anderson with Barclays.

Just coming back to the balance of plant side of your business. How much of that 2 gigawatts plus you have under contract includes balance of plant? And previously, you've talked about a potential 20% to 50% uplift from EBITDA from balance of plant. It looks like you're assuming in the presentation kind of the low end of that guidance. So how do you get to the high end? Does it fluctuate depending on the capabilities delivered? Does that increase over time if you add storage? Just some more color on how that potentially works over the life of the contract.

Yes. I think, Dave, the 20% to 50% is still the right way to think about it. And you're correct. What we've alluded to in the updated numbers is, I'll say, on the lower end of that. And I think that speaks to the conservative nature of how we provide guidance. What we are articulating here is what is actually under contract signed to date. And what we have in the slide deck as well as an outline of another $800 million to $1 billion of additional CapEx that we have very good line of sight of that getting contracted at $160 million to $200 million of incremental EBITDA.

So we haven't put it in as the -- I think it's $875 million to $925 million is sort of the outlook, if you will, that is excluded from that. But what we're articulating there is we don't have anything signed on that expansion beyond the current piece, but very good line of sight, just like we've done it on the generation side. So you're right in terms of backing into the lower end of the range based on what has been signed in the last couple of weeks, but we feel very good about the visibility that we have to expand that beyond that lower end of the range based on the visibility that we have.

And yes, the final point is different customers have different needs and different approaches in terms of how they want to capitalize this as well. And so some of the customers like in the Stateline instance, we're only doing generation. And as we look at the other 2 contracts, there's some shaping depending on the location and the customers as to what they want.

But to be very clear, the generation itself requires all the balance of plant to make it all work. So we're either buying it, capitalizing it and embedding it in the rate or the customer is doing it. And so it just depends on kind of what their framework looks like.

The last 2 contracts include balance of plant.

Okay. Great. And if I could also just ask a non-power question, maybe give a little love just how the business doesn't -- we don't hear a lot about outlook has obviously changed quite a bit now over the next 12 months. A lot of talk about North America E&P is picking up, oil prices structurally higher. How are you thinking about this business now strategically? Is this something you want to grow into? Are you considering divesting it? Or is this just kind of a nice cash flow stream that should really build over the next coming quarters and potentially years?

Yes. Right now, it's a great business. It doesn't feel like time to monetize it. We continue to see customer growth and wins in that business. And the market in North America, as you mentioned, feels like we're on a bit of an upswing. It may not be a rapid upswing, which is actually the better kind of slow roll into growing our production in North America is better than the spiky reactions. And so I think that the capital that's there in our customer base is very strong. And I think at this point, it's a great business for us to hold on to and evaluate as we go along. The cash is irreplaceable in a lot of ways today. And so we're enjoying that.

And I think there's surprisingly been a significant number of engineering and operational synergies across the business lines that are underappreciated. The notion that we are extremely quick to solve problems on the oilfield side of it, extremely quick to be able to mobilize and demob. All of those embedded skill sets and engineering talents have applied very, very well into the turbine industry as we and customers expect speed and want speed and speed wins and speed is important. That's something that really ports over from the oilfield side of this very, very well in the culture and in the team.

The next question comes from Derrick Whitfield with Texas Capital.

First, certainly, congrats to you guys on your commercial success to date. It seems that your execution and balance of plant expertise is increasingly driving success for you. Maybe focusing on balance of plant, how should we think about how that could further evolve from the standpoint of your competitive offering beyond the typical transformer switch gears, cables, et cetera?

Well, I think it evolves a little bit on the life cycle potentially. I mean, obviously, with the growing installed base of smaller turbines, the repair and maintenance function that we grow alongside of this is really important, and we're working hard to develop our own protocols and our own internal skills and capabilities to ensure that as these things, they're going to have mechanical -- the mechanical things, and that means somebody is going to have to repair them from time to time.

And so as we build up that skill set, find training, labor is a challenge, building up our own labor training force across the board is really going to be an important element to how we grow. From a balance of plant perspective, I think we have -- at this point, we're not going into the building, and that's not an area where we will play. But everything from the building to ensuring that the gas is delivered and even if we need to and get a return on, build small pipes into the facility for making sure that the gas is delivered in the way we need it and then all the pressure control systems on top of that.

So it's a pretty diverse offering, and we're thinking about the life cycle of this business as well, knowing that you're building something that's here going to be there for 10 to 15 to 20 years, you need to be able to take care of it.

Great. And as my follow-up, and this is maybe for Amanda. Regarding the pilot research program with one of your clients for the development of mobile distributed compute, could you speak to how this came together and potentially the upside from this development as you see it today?

We've obviously been working with that particular technology company. And when you become embedded in a company and they understand what your capabilities are, different teams get introduced to you. And that's exactly what happened here. We were introduced to another team that understood that we had distribution and design capabilities. They asked us to look at a particular design they had for modular compute.

We looked at it. We came up with some changes. It was an aha moment for them, and they said, "Great, could you please work with us on this project?" So it's really a function of being embedded with a customer. We keep using that word. But once you are working with the customer and they see your capabilities, you get greater traction across the various departments and teams in that customer's company.

Our next question comes from Bobby Brooks with Northland Capital Markets.

I was just curious first to hear on the customer conversations. Just over the past 9 months, have more potential customers entered the discussion? Or have the discussions just progressed to negotiations over that time from mostly the same group of folks that you were talking to, say, 9 months ago?

I think that there are more customers really figuring out that the behind-the-meter strategy is going to be a very important part of their power supply for their data use. And so I think we have seen more direct customers. We've tried to focus on the end user. They're faced with quite an array of decisions on where to go put their data center and who to have build that part of it.

And we've tried to be supportive of the ultimate end customer and focus on we'll put the power where you think you need it, when you need it and allow that dynamic to be ruled and it's been quite a dynamic. The big data users have had selection challenges in terms of where you put these data centers and the pushback from the public environment as well as the drive to provide your power with this has really led them to the final conclusion that we've kind of seen is that it makes sense to bring this power along with you and pair it up with the right sites.

Really appreciate that. And it was awesome seeing you secure another 900 megawatts in the quarter, and some of those were buying queues in the slot, right? And so my question is, do you see more opportunities to do that? I ask that because it's my understanding there is a decent amount of what I'll call speculators in the queue of turbine backlog that thought they could just kind of buy turbines and be a mini SEI.

But they're now realizing that how much technical expertise is needed on the service side and that customers aren't interested in someone just dropping gensets off without any of the service capabilities or the balance of plant power stuff that you've been touching on earlier. So I think there's more opportunities for you to buy those delivery slots that are more near term, but maybe I'm off base. So I just was curious to hear your thoughts.

Well, Bobby, you're hired as a sales guy. That's exactly what -- I mean, I think the notion that you could get in queue and buy all this stuff and be prepared to go put it to work as a powered land guy or as a data center developer. It's not that simple and developing and proving and running a couple of sites now and developing how this goes really will matter. And I think that cleaning out, if you will, of the queue, I mean, that's exactly what we did in one case.

And in some cases, it's not necessarily the fault of the person that bought the engines, they may end up with some sort of idea that you could put this in an area that the local folks were not going to let you put a data center. So we've seen some backlash publicly about where the data centers can go and where they can't go. And so some of that is turning power back on the market. And yes, we're positioned to be able to take that power on and put it to work in the time frames. And so I think that, that really goes to ensuring that we have all the balance of plant stuff with it, right?

As Kyle mentioned, the generators is just a generator, you got to have all the other kit with it and that kit has some lead times and some expertise associated with it as well. So ensuring that what we ultimately deliver is a power electron to a data center requires a lot more than just the generation. And I think we're prepared to take advantage of that and then scoop up opportunistically where we see things coming up earlier in the queue that the customers are very interested in.

The real blue sky there is, as we've alluded to this morning, we are now partnered with 3 of the major leaders in this field that puts us in a position to put that incremental capacity to work very quickly with groups that we're already working with.

Our next question comes from Patrick [indiscernible] with Stifel.

It's Pat on for Stephen Gengaro. Shifting to more near term here. When we think about the third quarter guide, is there any color you can give about the power deployments there and mix of third-party assets? And then any insights into deployment ramp into 4Q?

I'll make a couple of comments. One, we're building this business for 2030, 2029, and the quarterly ramp-up here has been a pretty steady and measured rate with a lot of mixed dynamics over the course of last year. And I think we're going to continue to see that over the next several quarters as we ramp up. I think our -- where expectations in the third quarter are, I think that the market may have gotten a little exuberant about how quick things are rolling out. I think we're measured in our approach and have been generally conservative, but our long-term targets are there.

The timing at which stuff gets put together, whether it's in the first month in the quarter or the last month in the quarter, swings the number still more meaningful than it should. As we grow into it, it won't. But we're in that growth phase that plus or minus a couple of months does swing quarter-on-quarter numbers, which is really not our focus. Our focus is ensuring the long-term delivery of the numbers that we forecast.

Right. Yes. Okay. And then for the 500-megawatt contract, what sort of capacity should we think about this starting at beginning in 2027? And then just curious, like for the turbine delivery slots, are the prices and delivery dates sort of fixed there?

On the turbine delivery slots, the prices are fixed. Delivery dates, we are -- we have an opportunity to move some up which we are working on right now. So we -- and again, as Kyle said in his prepared remarks, we've diversified and derisked some of that supply chain by working with multiple OEMs. So we feel pretty good about our turbine deliveries when to expect them and certainly price is fixed. Kyle, on the OEM.

Yes. And all the 500, they all go under contract at the beginning of the year, but there is a ramping of actual deployment based on the ramp in the data center. So it will ramp throughout the course of '27 of actual spinning turbines, but they all go under rent under the dry lease convention that we alluded to when the contract was put in place. And then as they get deployed and start operating the sort of wet lease convention, including the equivalent of a fired hour charge comes in.

Our next question comes from Jerry Revich with Wells Fargo.

This is Kevin Uherek on for Jerry Revich. Just had a quick question on the quarter. Power Solutions revenue and EBITDA per megawatt both increased on a sequential basis from 4Q. Can you just walk through the moving pieces?

We had more equipment that we rented more of. I'm not sure we've -- the revenue was up...

On a per megawatt basis sequentially.

Yes, there was some mix impact there and some of the pieces of the new contracts that came in.

Yes. And if you have a -- so using that per megawatt metric, as we mentioned earlier, if there is pure distribution that's being rented and it doesn't have a megawatt of generation capacity against it, that's going to show an infinite return on the megawatt. So we're really focused on return on capital and earnings. So yes, the mix shifts around there is going to move that metric around a little bit.

Understood. And then when we think about the capacity additions pipeline, how has that opportunity funnel changed, stayed the same versus the prior period?

In terms of the megawatts that we have available, I think as we've indicated, we are in detailed discussions with a number of parties. And I think Bill answered some of them are existing customers that we have signed up with and some are new. So yes, there is a robust pipeline. We're very happy to be in this position where we have got additional capacity to put to work. And if the past is an indication of the future, this is going to be another great outlook when we put this to work.

The next question comes from Jeff LeBlanc with TPH.

I just had a quick one. With respect to the enhanced scope, how should we think about the lead times of the equipment embedded in your active pipeline?

They're inside of the dates of the turbines, generally speaking, at the voltages that we're operating at. So the turbines and quite frankly, the SCRs continue to be the long lead item in the scope. But as we're developing these projects with customers, we are sequencing the timing of placing purchase orders for all the long leads to ensure that we can -- to meet the energization schedule the customers have. But in general, the balance of plant where we are is still inside of where the turbines SCRs are.

The next question comes from Scott Gruber with Citigroup.

So last call, you discussed about a 20% to 50% uplift on the invested capital on these integrated projects. I want to double check that the baseline for that uplift is against the $1.1 million per megawatt that's kind of been the blended average. And more importantly, kind of how do we think about the return profile on the turnkey projects with greater scope? Just some color on how the payback evolves, if at all, with greater scope would be great.

Well, I think broadly speaking, Scott, the price of power is going up. OEM prices are going up. There's a recent big project announced by the White House in Ohio, and that's penciling out at roughly $3,500 per kilowatt as far as upfront capital. So our installed base and even on an incremental basis is very attractive relative to what the larger scale, longer time line kind of opportunities are. So from a return standpoint, we still look at north of 20% unlevered returns as sort of our target.

And I think with respect to the incremental megawatt going on to the grid, we are still very attractive to the customers. So I think there will be puts and takes with respect to our incremental capital costs as OEM prices continue to go up, but there is a recognition within the customer base that, that is just the cost of doing business at this point.

Yes. I appreciate that. And then as you push forward with these integrated solutions and you're now building diversity into your data center book of business, which is great to see. How do you think about the smaller oil and gas deals or any type of smaller deals in other verticals? You get end market diversity with those contracts, but you're locking in capacity on shorter-term contracts with fewer calories attached. But do you start to tilt away from those smaller kind of nonintegrated projects? Or do you still like that diversity in the book?

We love all of our children, Scott. No, I think the shorter-term contracts are going to be priced that way as well. So I think that the portfolio will have a mixture of some shorter term, longer term and a little bit of open capacity for spot work here and there from emergencies and other places where you are going to get tremendous returns on capital.

And so I think our business is going to be heavily weighted towards from a magnitude perspective, long-term contracts with data centers or large industrial loads. And there'll be a small portion of that, that's a little bit more spot in short term that should see more attractive returns.

The next question comes from Jeff Bellman with Daniel Energy Partners.

So you've laid out how you're broadening into a much more integrated power platform. But I'm curious, as customers move towards these gigawatt and larger campuses, what's the hardest part of scaling your model? And I'm not asking for any specifics, but how do you decide what to build organically inside Solaris or outsource or partner with other providers?

Well, one of the reasons we bought the distribution business was to have that in-house. And clearly, we're not an OEM on transformers and switchgear and the things. So we are doing some of our own assembly work and e-house building and some construction things. And so I think it is a situation dependent on where we need to accelerate. We've made an investment in an SCR manufacturing business earlier this year and see that as very strategic and building our relationship on that side as those are a bottleneck as well as the catalysts associated with the SCR.

So I think we look at the set of equipment out there, recognize where we've got strength and advantages, recognize that where we don't and use partner up in areas where they'll really be helpful to us and we'll be helpful to them in putting it all to work. So I think it's -- there's not really one size fits all here. And obviously, the bigger they are, the larger the footprint, the larger the people needs to do all the installation work and how we partner with various engineering firms and various other subcontractors to make it all work is already part of what we're doing on a regular basis.

I think the overall sort of incremental generation source is evolving as well. And if we look at where we started, we were deploying 20 to 35.5 megawatt units on a site and now the incremental unit is roughly 16.5 megawatts. And as the data centers themselves get larger, we can look at the shaping of the fleet is potentially evolving to include some larger units. We've got the 38-megawatt units going out to a data center in 2026. And so that shaping, I think, will also continue to evolve.

The next question comes from Don Crist with Johnson Rice.

Just one question for me on the JV. As it builds out and starts to generate more revenue, what is the source or what is the use of that capital that's going to come back to the JV? Is it to pay down debt? Or will you use that for cash flow to support the rest of the business? Just where is that cash flow going to go initially at least?

Yes, Don, there's debt servicing requirements down at the JV, interest and amortization. But beyond that, both ourselves and our partner in the JV, the reason that structure was put in place was to create the ability to distribute cash out of it. And so once the requirements on the debt facility with respect to interest and amortization are satisfied, all the cash is available to be distributed up to both Solaris and our partner. And so that will be available cash to continue to grow the business as all other sources of cash for us.

Okay. So that can offset some of the CapEx requirements you may have in other places?

Yes.

This concludes our question-and-answer session. I would like to turn the conference back over to Bill Zartler for any closing remarks.

Thank you all for joining us today. Our first quarter demonstrated once again that our strategy is working. Our team is executing and the company is growing quickly. We're building the company we described, a vertically integrated behind-the-meter power business from molecule to electron, serving the data center and industrial market at scale. It's rewarding to see the milestones we're exceeding and progress we're making.

A sincere thank you to all our employees, customers and partners. Your dedication and trust are the foundation of everything we're building. We look forward to sharing our continued progress over the next quarter. Thanks again, and have a great day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good day, and welcome to the Solaris Q4 2025 Earnings Teleconference and Webcast. [Operator Instructions] 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 Fourth Quarter and Full Year 2025 Earnings Conference Call. Joining us today are our Chairman and Co-CEO, Bill Zartler; our Co-CEO and Director, Amanda Brock, our President, Kyle Ramachandran; and our CFO, Steve Thompsett.

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 outline 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 GAAP measures are available in our earnings release which is posted in the news section on our website. For more details on the company's earnings guidance, please refer to the earnings supplement slide deck published on our website.

I'll now turn the call over to our Chairman and Co-CEO, Bill Zartler.

Thank you, Yvonne, and thank you, everyone, for joining us this morning. 2025 marked a meaningful step forward for Solaris. We showed that we are successfully executing our strategy of growing and establishing a more diversified services and solutions business with accelerated earnings growth, improved long-term visibility and multiple pathways for meaningful expansion.

Through new products, services and targeted investments, both organic and inorganic, we've strengthened our engineering, manufacturing and operational capabilities. This has positioned us to deliver reliable, integrated power solutions to meet our customers' rapidly escalating needs.

Coming out of 2025, we're serving a much wider customer base with active contracts and deployments now spanning multiple data centers, energy infrastructure and diverse industrial and commercial end markets with generation, distribution and full turnkey power.

Our 2025 financial results highlight the success of our diversified strategy. Full year 2025 revenue nearly doubled year-over-year to $622 million, while adjusted EBITDA of $244 million more than doubled. Both of our Power and Logistics segments contributed meaningfully to these results. This is just the beginning of additional step change growth that we believe will accelerate through '26 and '27.

Starting with our Power Solutions segment, which has become the primary growth engine for Solaris. Power now accounts for roughly 70% of our earnings and is heading to 90% contribution as we've consistently grown the business, expanding our capabilities and built on a strong track record of execution.

Solaris is capitalizing on the rapid demand growth for power particularly to support data center compute needs. Our solutions have enabled customers to deploy power quickly and cost effectively while delivering the operational reliability, high uptime and efficiency they require whether as an alternative or as a supplement to the grid.

We have strategically positioned Solaris across the power life cycle for a molecule to electron. This integrated approach delivers true turnkey power for our customers. We can handle sourcing and delivery of clean natural gas at the right volumes and pressure, converted through multiple generation sources and manage the distribution storage and final delivery of electrons all engineered as a cohesive system to meet the most complex and demanding load profiles.

Our strategy has translated into commercial success with both existing and new customers. In 2025, we significantly expanded our partnership with our initial major data center customer. We finalized a 15-year joint venture and upsized the associated long-term power agreement for approximately 500 to 900 megawatts, providing greater visibility with substantial committed capacity for years ahead.

We also acquired a specialty provider of voltage distribution and control equipment that has now been integrated into Solaris Power Solutions. This strategic acquisition has deepened our capabilities and accelerated market penetration, enabling us to deliver integrated equipment and engineered solutions to at least 6 different data centers across the U.S. as well as in numerous industrial and commercial sites.

Building on our success, I'm excited to highlight a significant new long-term contracted customer, which further validates our strategy and reputation in the behind-the-meter power market. In early February, we announced a 10-year agreement with a 5-year extension option to provide leading investment-grade global technology company with over 500 megawatts of power generation tailored to their compute needs. The initial 10-year term begins January 1, 2027, with energization targeted to be phased in, in the beginning of the Q1 of 2027. This agreement validates our strategy of sourcing generation capacity in advance of a contract so that we can successfully deliver behind-the-meter power on aggressive time lines.

We are actively working with this customer to deliver more services related to balance-of-plant equipment such as full power control, storage and delivery infrastructure, engineering and site preparation. As we move forward, expanding our scope, we will deploy additional capital, which will provide Solaris with enhanced returns through the contracted period. We believe that we are well positioned to continue to work with this customer on behind the meter solutions to meet their growing compute needs.

Underscoring the opportunity ahead, the 4 largest global technology companies have recently guided to combined capital expenditures exceeding $600 billion in 2026, focused primarily on data center infrastructure and compute. That's roughly a 70% increase from 2025 levels and nearly double the spending seen in 2024.

With data center and compute power investments accelerating rapidly, Solaris is exceptionally well-positioned to capitalize on the surging demand for reliable, scalable power. Our proven solutions enable us to partner effectively with leading technology companies who are contracting directly for behind-the-meter options to meet their urgent compute piece.

I would also like to highlight the continued performance of our Logistics Solutions segment, which is performing well and contributed over $80 million of free cash flow in 2025. In the fourth quarter, we saw activity levels for both the industry and Solaris increase with Solaris' success driven in part by increasing adoption of our top fill systems. Our top fill system utilization rate was in the mid-90% in the fourth quarter and now nearing 100% in the first quarter. This momentum is expected to carry through for the first half of 2026, supporting consistent utilization net margins while generating cash to fund our broader growth initiatives across the company.

In summary, 2025 was a year of successful execution which positions Solaris for even greater success in 2026. We are extremely focused on delivering value for our customers and shareholders, and we're excited about 2026, which is already shaping up as another year of significant growth new opportunities, continued execution and results.

With that, I'll turn it over to Amanda.

Thank you, Bill, and thank you, everyone, for joining us this morning. We want to spend a few minutes sharing with you how we see our opportunities evolving in the power sector.

2025 was a year of rapid change and significant tailwinds for the company. Our customer base expanded and we grew our capabilities to meet our customers' increased demand for turnkey behind the meter power. We focus not only on building on our proven track record of generation, but also distribution offering a comprehensive power solution, which we refer to as molecule to electron.

We are strategically building our capabilities through organic growth and targeted acquisitions like HVMVLV, which Bill mentioned which has already exceeded expectations since closing last summer. This brings in-house expertise to design, manufacture, refurbish, sell and rent specialized control and distribution equipment, such as transformers, switchgear, e-houses and has also deepens our engineering expertise across voltages and related applications.

The result is broader reach to data centers, industrials, utilities and beyond, delivering tailored power solutions regardless of source or set up. For example, Solaris is now providing equipment and engineering support to customers where grid connections are delayed due to utility equipment and interconnection challenges. This type of diversification creates real value and expands our opportunity set significantly, beyond just generation. We will continue to look for opportunities like this to expand our capabilities as a comprehensive provider of critical power infrastructure.

As we evaluate opportunities across the power spectrum, emissions controls is another area of focus where Solaris has invested both organically and inorganically to enhance our capabilities. We view being best-in-class in emissions management as essential to our own operations and customer priorities. Organically, we've drawn on our growing internal engineering and manufacturing teams to refine and customize selective catalytic reduction, or SCR, designs for improved flexibility and mobility. Additionally, we recently made a small inorganic investment in an SCR manufacturer bolstering our ability to further integrate these technologies.

Our emissions control technologies are well aligned with the EPA's recent subpart KKKKa, quad k amendments to the new source performance standards. These changes provide clarification and support for operating modular and mobile turbines in temporary applications for up to 24 months, bridging the gap before permanent behind-the-meter air permit or grid connections are secured. Combined with our vertical integration in emissions controls, this gives us significantly greater flexibility to deliver fast, reliable and compliant deployments for our customers.

We're continuing to see strong regulatory tailwinds from ERCOT whose recent push to batch large load studies for request over 75 megawatts is a necessary step forward to clearing the estimated 230 gigawatt queue backlog fueled by data center demand. However, it also spotlights the growing delays and scrutiny facing grid-based projects.

Our rapid deployment behind-the-meter solutions mitigate these challenges for technology companies attempting to quickly deploy compute capability. Starting a project in island mode, fully behind the meter can avoid significant delays associated with connecting to the grid.

The growing demand for power, combined with these regulatory tailwinds and our demonstrated track record of execution and our expanded capabilities have accelerated our ongoing discussions with multiple end users to deploy more capacity. We're in advanced negotiations to contract our remaining open capacity and are actively pursuing new capacity additions to support incremental opportunities. Simply put, we believe we have more demand than we have capacity and are actively exploring innovative ways to access new capacity to ensure we can meet the growing needs of all our existing and potential new partners.

We are particularly encouraged by the accelerated pace of these opportunities and the credibility we have earned through nearly 2 years of successful at-scale operations, including the rapid commissioning of multiple large data centers. This proven foundation gives us a clear edge as we scale further and continue to grow in the coming years.

With that, I will turn the call over to Kyle for a detailed financial review.

Thanks, Bill and Amanda, and good morning, everyone. Solaris' fourth quarter demonstrated solid execution in our Power Solutions set as well as continued execution and strong free cash flow generation in our Logistics Solutions segment. For the full year, growth was tremendous across the Power Solutions platform, and we're excited to continue to grow this segment as well as the total company.

2025 was also a year in which we strategically positioned Solaris for growth from a financing perspective. We strengthened the balance sheet by raising capital from 2 convertible bond issuances and establish financing for our joint venture partnership with a key customer and repaid our 2024 term loan. The combination of these activities has driven significant interest cost savings and financial flexibility for the company. As a result of these recent financings and the ongoing cash flow generation from the business, we are currently fully funded for all of our expected deliveries to reach 2,200 megawatts of power generation we expect to have pro forma for all the scheduled equipment deliveries. This leaves our secured borrowing capacity outside of the JV completely available as an option to fund future growth outside of our planned deliveries.

Our financial profile has also improved significantly with our recent commercial success. Adding a new investment-grade customer for a minimum 10-year term for over 500 megawatts adds significant visibility to our earnings and cash flow profile, providing additional financial flexibility.

Turning now to a review of our fourth quarter results and our outlook for the next 2 quarters. During the fourth quarter, Solaris generated revenue of nearly $180 million and adjusted EBITDA of $69 million on a consolidated basis. Our adjusted EBITDA increased slightly from the prior quarter and nearly doubled as compared to the same quarter of 2024, driven by the acceleration of our Power Solutions segment. During the quarter, Logistics Solutions benefited from an increase in completions activity as well as continued adoption of our top-fill solution, which more than offset a modest decline in Power Solutions due to a less favorable project mix and related timing impacts on costs.

We generated revenue from approximately 780 megawatts of capacity during the fourth quarter, relatively flat with the prior quarter. Segment adjusted EBITDA for the Power Solutions segment was $53 million, a modest decrease from the third quarter due to costs associated with timing and mix impact as owned generation units rotated off a utility resiliency project and into planned refurbishment before being redeployed under a long term contract in the first quarter of 2026. This impact was more than offset by an increase in the continued selective use of third-party power generation capacity as activity continued to ramp at our second data center site, which also contributed to a lower margin mix.

We expect Power segment adjusted EBITDA for the first quarter to increase by more than 20%, as both owned and third-party leased capacity generating revenue should increase.

In our Logistics segment, we averaged 93 fully utilized systems, an increase of 11% from the third quarter. Fourth quarter segment adjusted EBITDA was approximately $23 million. We expect our Logistics segment adjusted EBITDA to remain relatively flat for the next 2 quarters.

Netting these factors and considering corporate and other expenses, total adjusted EBITDA guidance for the first quarter is now $72 million to $77 million, up from the prior guidance of $70 million to $75 million and a sequential increase in the fourth quarter. We are also introducing our second quarter 2026 total adjusted EBITDA guidance of $76 million to $84 million.

Accounting for expected longer-term tenor on our fully delivered 2,200 megawatt generation capacity and our recent acquisition, we continue to expect pro forma total company earnings of over $600 million, before considering any additional project scope or growth with our existing customers or new opportunities.

Finally, I'd like to introduce and welcome Steve Thompsett, who officially joined earlier this month of Solaris' new Chief Financial Officer. Steve brings a strong record as a financial executive with deep expertise in capital markets, building and leading high-performance finance and accounting teams and guiding companies through periods of significant transformation and growth. Many members of our management team, Board, employees and investors have worked with Steve before, and we are confident he will exemplify the Solaris culture and deliver substantial value to the company. I am excited to continue as President of the company and will be able to allocate increased focus on our strategic priorities of advancing our overall growth strategy, strengthening operations and driving long-term value for our stakeholders.

With that, we'd now be happy to take your questions.

[Operator Instructions] Our first question will come from David Arcaro with Morgan Stanley.

Congratulations on the new customer announcement here, but I do have to ask, where do negotiations stand with additional customers now to allocate your remaining capacity, if you could elaborate on that and what potential time might be possible?

Well, we were in very active dialogue, and I think it tees up the discussion. We really have the history and operating philosophy of focusing on announcing deals when they're completed and done. The pipeline is extremely active. We have lots of paper flying back and forth with multiple customers. But our goal is to deliver to the public and to our shareholders signed and completed contracts and have a lot of medium. So the dialogue is active, and we feel very confident that we've got plenty more demand and supply, as Amanda referred to, and that we'll be seeing things unfold in due time.

David, these are not discussions. We were very deliberate in our wording. These are active negotiations. So we expect to have good news here in the near future.

Okay. Excellent. Understood. That makes sense. And then I was curious, you had mentioned increasing scope here that you are seeing opportunities for. Wondering if you could just maybe characterize how much of a value uplift you could realize relative to maybe like the EBITDA stream in the baseline power offering, if you're starting to consider those things like balance of plant emissions control, et cetera. I'm wondering if that could apply to your current contracted fleet as well? Are there kind of almost upsale opportunities there?

Yes. I think the notion of adding additional distribution equipment and battery systems to the offering is real. I think with the current customer that we had the most recent announcement, the intent is to build out that system and deliver a full turnkey power service. So as that develops, we continue to believe return on capital is the way we look at that and the return on incremental capital will be there. And I think the range is anywhere between 20% and 50% per megawatt depending on how that scope there is and how far upstream to the gas handling it goes and how far downstream to the actual distribution and transformation of the power goes.

Our next question comes from Derrick Whitfield with Texas Capital.

Also congrats on your recent hyperscaler contract. Perhaps Amanda, in your prepared remarks, you noted you're in advanced negotiations to contract your remaining open capacity and are actively pursuing new capacity additions to support incremental opportunities. Regarding the new capacity, are you attempting to solve for new capacity in 2027 or early 2028?

And then secondly, is that really to expand with your current customers? Or is it really to add a third hyperscaler to the opportunity set?

Thanks for the question, Derrick. And yes, capacity is something we've been talking about for a long time. We made it very clear that the 2.2 gigawatts was not where we were going to stop. We also, as you know, have talked about through all of our acquisitions, we got a lot of domain knowledge through MER and HP in terms of where there is additional capacity. We are looking and have line of sight for capacity -- additional capacity in '27 and '28. And this capacity will be for additional opportunities. We have enough capacity for the opportunities that we have signed up for at this time, even though we also expect that to expand over time.

Terrific. And then maybe, Amanda, just staying with you on EPA's recent Quad-K amendment, it seems like a very positive development for your business and speed to market. How should we think about its practical impact for what you're facing today? And while I understand permits aren't your issue per se, there has been some noise or concerns around the Mississippi operations. So I guess, in your view, a, what's your view on the business impact with Quad-K amendment? And then secondly, how are you thinking about what's taking place right now on Mississippian, if that will likely take the same direction than Memphis did?

So Quad-K is a clarification and further sort of enabling certainty. And so it comes up as a regulatory tailwind. We see this as something that we expected to come through. We were very pleased to see the 24 months, so expanding the temporary ability to be there from 12 to 24. That is certainly something that very much favors the behind-the-meter options and alternatives that we offer, particularly in an environment in which speed to compute is incredibly important. So this is great for us and having this clarification.

In terms of Mississippi, we really don't comment on that. And moving on to another question, where you refer to our responsibility from a permit perspective, I will say that we track that very carefully. And there are circumstances in which we are in discussions where we will, at certain locations, work with our customers as it relates to ensuring that the appropriate permits are there. Customers are increasingly ask us to take on additional scope. We are talking about this as molecule to electron. In Bill's remarks, he referred to doing more on the gas side and obviously, as part of that, we may be doing more on the permitting side. So Quad K, great tailwinds for us.

Our next question comes from Bobby Brooks with Northland.

This is Ken Choke on for Bobby. Other companies have been providing or planning to provide behind the meter power that come out with an announced targets on where their fleet capacity will grow to. For example, they might be at 100-meter megawatts today with another 300 megawatts ordered, but they've talked about getting to a full gigawatt 30...

Operator, can you hear us?

Yes, can you hear me?

I'm able to hear everyone.

Can you hear me?

Yes.

Can you hear us?

Yes. I'm able to hear you. [Technical Difficulty]

What are your thoughts on those targets capacity is evolving to?

Ladies and gentlemen, it appears the speakers have lost connection, please standby while we reconnect to them.

We'll now proceed with the Q&A session. Our next question comes from Bobby Brooks with Northland.

No, it's Keith. Keith, are you there. Sorry, we lost all communications, but we're back. And can you hear us?

Yes, I can hear you.

All right. So yes, please repeat your question. Thank you.

Other companies providing or planning to provide behind-the-meter power of come out and announced targets to where their feed capacity will grow to. For example, they might be at 100 megawatts today with another 300 megawatts ordered, as they talked about getting to a full gigawatt by 2030. What are your thoughts on that, firstly? And then secondly, could you discuss maybe how you think about your capacity evolving through the end of the decade?

That's a good question. I mean, I think I alluded to it a little bit earlier, I mean, that the pipeline of opportunities is just giant. And would we have come out when we bought in 2 years ago and said we'd be at 2 gigs now. We didn't do that, but we did it. So I think our philosophy on how we operate is communicate to our shareholders when we have deals across the finish line and not expect the ball too early, but the pipeline of opportunities and the opportunity set is very large. And I'm very confident that we will have more than we have today in a couple of years.

And if you look forward, that continues to grow, there's a lot of tailwinds, both in how power should work in this country for these large loans and what the right mechanical setup is for that generation behind the meter and I think will play a significant role in how this evolves with our partner customers that understand how to position this, how to position it within the greater power infrastructure and ecosystem to enable it to be there for the development of data centers as well as trying not to impact consumer pricing in a negative way.

Yes. And just a follow-up, and we alluded to do on the call around the hyperscalers capital spending, but this is a massive investment cycle and we've got really attractive opportunities to build infrastructure to support their underlying investments at rates of returns that are very attractive to us under long-term contracts.

And to the last point, Bill made there, clearly, last night in the State of the Union affordability with respect to energy prices broadly is paramount to administration as well as to the consumer. And I think what's very clear here is what we're offering is both economically attractive relative to the long-term cost of adding additional power onto the grid. And secondly, from a time to power perspective, it's a really valuable strategic opportunity for our customers to have in their clever.

Great. Very helpful additional color. And then secondly, or another follow-up. It was great to see the 500 megawatts come off the board with an investor-grade technology leader. What I was curious to hear was if you could provide any further color around how the deal came to fruition and the associated time line of that deal?

Well, I mean every every deal, every transaction has its own life cycle. I think we've been in communication with most of the major customers for the past 6 months to a year, and they evolved, their needs have evolved and the recognition of where they need kind of takes a while. These are big decisions. So at the end of the day, the contract tenor length requires a high level of approval within a very large organization. So we're nimble and quick, and we'll go at the pace at which our customers can go and need to power. So they -- I would, on average, say that the industry would agree, they're taking slightly longer to put together than anyone might have expected, but they're happening and deals are closing.

And we've been at this strategy and operation for roughly 2 years. And I would say the first year was certainly in stealth mode. And more and more of the sort of track record that we developed is being well understood by the other participants in this market. And so that has just been a process for that track record to get unfolded, and I think that's really resonating with customers.

Yes. And philosophically, our notion of under promising and over delivering, both from a delivery of information to the Street as well as from an operational perspective, our operational capabilities and engineering capabilities and execution capabilities have dramatically improved as we've built that out over the last year. And so that gives us a lot more confidence on how we build out the balance of plan and how we deploy the equipment.

Keith, to be a little specific, we do make the comment that these conversations are accelerating as people are looking at sites as people are getting comfortable in island and mode complex deals, but we've been dealing directly with the hyperscale themselves, which is an advantage, and these deals and the time lines are accelerating.

Our next question comes from Derek Podhaizer as with Piper Sandler.

Just wanted to go back to the capacity expansion commentary. Obviously, I know you need more than the 2.2 gigawatts that you have today. But maybe on the funding side, how should we think about the funding mechanisms that are available to you? You obviously noted that you freed up your secured borrowing capacity. But just thinking about as you progress towards 3 gigawatts, 4 gigawatts, wherever that target may migrate over time. Maybe just help us understand further as far as what funding we can expect as we continue to push the capacity targets higher?

Yes. I think we really cleaned up the balance sheet quite well at the end of last year and added significant liquidity into the system. That liquidity is already proving to be very advantageous from a strategic execution standpoint. We did that last year, obviously, with a couple of convertible bonds. As the maturity in the contract profile continues to grow and the notion of potentially multiple investment-grade counterparties. We really think the secured financing options for the business, both from the bank market as well as the sort of term debt market are ample. Bringing in Stephen has been a huge help with that regard. Steve's got extensive experience in getting out game rated, getting notes issued on behalf of companies. And that bandwidth is critical for us as we look at the long-term opportunities for us to finance the business. So I think as we look at it going forward, we've got really attractive cost of capital options relative to where we've been over the last couple of years.

This is Steve, I'll just add that. There's quite a bit of appetite out there in the market, as Kyle alluded to, but bank market, term loan market, high yield and project finance. So I think you're going to see our cost of capital is improving, and it's just going to accrete to the bottom line.

Got it. Okay. No, that's great. I appreciate the color. And then maybe thinking about the integrated power solution. You talked about molecule to electron, just thinking about how you optimize your turkey solution with the grid longer term. Obviously, we're behind the meter, we're island power today. But maybe longer term, how do you think about potentially integrating with the grid just say as we move further into the 2030s, just how do you see your turnkey solution evolving as an integrated strategy and optimization with the grid over a longer period of time?

Well, we certainly believe that, that will be potentially excess power ability at times to move back into the grid, complicated interconnection agreements and all that stuff. Mechanically, we have supported the grid in many ways with our equipment before. So we know how to form to the grid and perform all that. It's a matter of working closely with the utility and the regulators to ensure that what we can provide from the interconnection agreement. What we focus on today, however, is getting that power up and running at speed. The timing for those agreements is not fast. And -- but over time, we do think it may evolve that direction.

The next question will come from Scott Gruber with Citigroup.

Congrats on the latest contracts. So how do you think about getting back into the queue for additional equipment? Do you wait to contract the additional 400 megawatts? Do you get into the queue soon? And what are your thoughts on diversifying your supplier base, just as backlog still across the supplier base?

I think we've been pretty clear from the beginning that as capacity gets contracted, we will be back obtaining more capacity in multiple different options in that regard. So to your point, there's multiple OEMs. We have, to date, been tie pretty closely to one OEM. They've been a great partner, and we'll continue to work with them. But we're obviously looking at other options. There are other new product lines coming into the market that look quite similar to the sort of workhorse asset that we've got in our generation fleet. And so we're evaluating all those options. And clearly, while we were working in conjunction with our new customer, we were also working supply chain. So this isn't like a standing start. We've had these conversations warm for quite some time, and those dialogues are very healthy. I think we've demonstrated to be a very good customer to suppliers paying on time, doing what we say we will do and generally being pretty cooperative with that whole mix. So we are being consistent with what Bill mentioned of doing what we say. And so with respect to more capacity, that's more of the same. And so we are actively analyzing those opportunities and expect to be able to provide updates in due course.

I appreciate that. It was nice to see the 1Q EBITDA bump. In Q2 grows but it's a little bit more slowly than expectations across the street, and maybe this was just a bit ahead of itself. But Logistics, that segment is looking better. So can you just walk us through the kind of megawatts deployed across 1Q and into 2Q? And is there any uncertainty around the deployment schedule at Classes 2 into 2Q? Or are you just embedding some conservatism until you get better line of it?

Well, I mean I think generally, as we look at providing guidance, we always try to embed some level of conservatism rational and reasonable, but some level of conservatism. I mean when it comes to the timing of equipment getting deployed. Most of that is out of our control. That's obviously subject to the OEM. And if you look at how we even shape sort of the capital guidance for the fourth quarter relative to what happened, we assumed in the guidance that we would be receiving installment invoices ahead of when we actually did. And so some of this is a function of the supply chain and where they sit with their processes. We feel very good about the cost is 2 projects with respect to the total 900 megawatts that will be deployed there.

The exact prescriptive timing week-to-week, month-to-month, quarter-to-quarter is going to be somewhat influx depending on OEM deliveries. It's a massive project that's being built in real time. And so there's lots of civil work that needs to take place there as well. So there are lots of puts and takes that are outside of our control, quite frankly. And so that's driving maybe somewhat of the guidance, but I don't think it has any impact whatsoever with respect to the run rate as we look at it. And we're still on track for Q1 of next year to be at the full 900 megawatts at cost.

And then just finally, we have been able to use and to Amanda's point, with respect to some of the new regulatory analysis and ability to put more power out there on a temporary basis to allow the customer to ramp their demand potentially ahead of when the permanent power comes into play.

Our next question comes from Stephen Gengaro with Stifel.

I think 2 for me. The first -- and I'm not sure how much color you can add. But when you talk about discussions that are out there for that or I guess, roughly incremental 400 megawatts, are we talking about like discussions that are in the gigawatt range where you have multiple conversations going on? Or is it -- are they more sort of isolated discussions with specific customers? Like is there any way to think about and kind of quantify sort of the near-term demand for that power?

Stephen, I think the discussions are as widely varies as we need 100 megawatts to we need 2 to 3 gigawatts. And how does that roll out over the course of [ '27, '28, '29 ] kind of time frame, and it's with multiple customers or single customers. So the opportunity set, as Amanda mentioned, is significant. It's large. I think where we will focus on is closing with 1 or 2 customers in that 400-megawatt kind of range.

What happens in these negotiations in which that we've said are negotiations not discussions, is we will maybe start with the 400 megawatts, but because the power electrification is phased in, we will then add over time.

Okay. That's helpful. And the other question, when you think about the price of power, and I know like when you were first deploying assets and your -- because you're basically at the customer's site, you kind of -- your cost of power is pretty close to grid power. And it feels like grid power or even at or below grid power, but as we have these kind of conversations about rising electricity costs over time, how do you price the power, like are you able to take advantage or at least leverage the fact that power prices are likely rising over the next decade when you're signing these longer-term contracts? How is that discussion going?

Yes. I mean I think customers intuitively understand this and how the shape of our curve. We're really focused on return on capital, focused on protecting our costs with colo. We're in most cases, not buying the gas. The customers are buying their gas. So we're not at risk for that part of the expense going up, but we do see maintenance and all the regular costs that can increase over time. But I think this is a -- you can lock it up now and just like you might with a big power, you could do a capacity deal with some variable, which is what we're seeing both on this kind of behind-the-meter scale as well as co-located scale and protect and enhance for the next 10 to 20 years as a customer.

Our next question comes from Michael Dudas with Vertical Research.

As you indicated in your prepared remarks and certainly, as we would see in the market, demand seems to be much greater than supply and capacity. How is that evolving relative to the moat that you're creating given the momentum you've put together over the past couple of years? And how does that impact relative to what you want to do in the uplift to the other services to provide for your integration, is the acquisition market or the opportunities there? Are they quickly enough for you to generate the value from that, just to really solidify your solutions profile.

Yes. I mean I think, number one, this is a very big market. We will not be alone in developing power for this industry, right? The numbers are staggering. So our moat and our offering is one of experience of operations of knowledge of ensuring as reliable power as possible at attractive pricing. As we build out our offering, the more capital we can put to work and the more services we offer that we can get paid for is valuable and I think valuable to the customer and that what we're doing ultimately is just ensuring that they get the power where they need it, when they need it at the right voltage and the tight and that will give us the amount of runway that this business needs to continue to grow very rapidly over the next several years.

Our next question comes from Jeff LeBlanc with TPH.

In SLS, you're guiding to flat EBITDA on a sequential basis, while the pressure pumpers are flagging the Winterson, excuse me, is having a sizable impact on Q1 profitability, can you expand upon how your rentals business is insulating SEI from these types of disruptions?

Well, we did see some downtime during the storm. So what we also see is additional growth business that's offsetting that. So I think we're growing maybe faster than the current pressure pumping market is just in terms of touch the top-fill offering and the savings that it offers for some of these large frac shops is real. And so we continue to see demand there, and we're virtually sold out, as I mentioned on the call, with that equipment. So given the growth in that from quarter-over-quarter, that's going to offset some of the declines that we saw in -- or most of the declines we saw in the store.

Our next question comes from Don Crist with Johnson Rice.

One macro question for me. As you're having these discussions given all the state of the world right now with energy prices and the consumer-facing kind of aspects of that, how many of your discussions are 100% behind the meter versus kind of a hybrid approach with grid versus behind the meter? Is it more -- is it shifting more to where you're going to be a stand-alone island power plant for the life of the data center? Or is it still kind of a hybrid approach?

I think there's a little -- there's still a bit of a hybrid. It's probably weighted toward behind the meter for the life of the plant. Although we're having discussions with a few customers around having a mobile kit that they may rent for the next 10 years that we set up in advance of grid connections that they hope to get there over some period of time. And so the mobile nature and the service of being able to set up power quickly, the tailwinds with the Quad K regulations, which is allowing some of that to happen on a temporary basis, kind of gives a couple of pieces of this offering. One is the pure behind the meter that may end up being co-located over time or we can go in and are looking for long-term contracts to be a bridge provider, which would mean that we may sit on sites between 1 and 2 years, but we have a contract with that customer for multiple years beyond that to move to site to site as they recognize that the connections are slow, and they're building out locations maybe faster than the grid can connect to them and they need a solution like that to complement their rapid growth.

Don, we are seeing, as we said, there's acceleration of discussions the tailwinds here, one, greater tenor on contracts. We always like to see that. Two, people in the last quarter, customers and end users getting very comfortable that they can be in fully island mode, successfully, reliably for a 10-plus year contract. So it's all of the above, but definitely a tailwind toward people getting comfortable that maybe they don't have to connect to the grid. And we think that last night stated, the union address with the rate payer protection pledge, these discussions will continue to gain traction.

Yes, that makes a lot of sense. And just one further one for me. Obviously, the fourth quarter had some maintenance issues or not issues, but maintenance costs that were elevated as you had to kind of update your equipment. But how do we look at it going forward as you add a whole lot more new equipment. Is that maintenance schedule kind of de minimis going forward? Or do you have another wave of stuff coming through in the next 12 to 15 months or so that need to go through that process?

Yes. Don, I think the color on the fourth quarter was around some equipment coming off of a utility project that was relatively short-term nature, and we're doing some modifications to that equipment to get it ready for a long-term contract to serve a microgrid in West Texas area. So that was sort of, I'd say, more of a kind of a one-off in nature. As we've talked about historically, this equipment has an overhaul cycle, which is episodic relative to the number of hours run in the engines. And on average, there are roughly 30,000 hour overhaul cycle. So it's every 4-ish kind of year time frame depending on the fired hours per day or per year for those engines. So yes, we're obviously in a period here where we're not seeing significant maintenance capital. Over time, that will be running through the business, and that's several years out from now.

And then the other thing in the fourth quarter was we did secure some additional third-party equipment to meet an accelerated ramp schedule for one of our larger projects. And so we pulled that in a little bit ahead of when the equipment was deployed on to site. And so that was just some additional cost that was fanbatory in nature in the fourth quarter.

This concludes our question-and-answer session. I would like to turn the conference back over to Bill Zartler for any closing remarks.

Thank you all for joining us today. We're excited about the strong momentum we've built in all aspects of our business in 2025 and the significant opportunities ahead. It's rewarding to see our team grow and deliver real value in this fast-developing market. And to take a big thank you to our dedicated employees, our trusted customers and valued supplier partners. Your commitment makes it all possible. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good day, and welcome to the Solaris Energy Infrastructure's Third Quarter 2025 Earnings Conference Call. [Operator Instructions] 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 Third Quarter 2025 Earnings Conference Call. Joining us today are our Chairman and Co-CEO, Bill Zartler; and our Co-CEO and Director, Amanda Brock; 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 outline 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 GAAP measures are available in our earnings release, which is posted in the News section on our website. For more details on the company's earnings guidance, please refer to the earnings supplement slide deck published on our website. I'll now turn the call over to our Chairman and Co-CEO, Bill Zartler.

Thank you, Yvonne, and thank you, everyone, for joining us this morning. Solaris had a great third quarter, achieving record levels of quarterly revenue and profit. Our strong results demonstrate that we are executing well and are also showing significant progress on our growth. Solaris is at the center of what appears to be a massive and growing market opportunity. Demand for reliable and efficient power generation is accelerating as data center investment and associated power demand continues to grow at a scale and pace that is providing significant attractive growth opportunities for Solaris.

Many data centers now require more than 1 gigawatt of electricity demand per site, which, in some cases, represents only the initial phase of what is likely to evolve into a multi-gigawatt facility. Many of these key artificial intelligence players are now planning numerous locations of this size with multiyear development plans. Power is a key bottleneck for many of these projects. Grid delays, extended equipment lead times, regulatory mandates and surging demand are leading data center developers and hyperscalers to select locations where they can quickly secure significant power for multiple years.

Over the course of the last 18 months, Solaris has positioned itself to provide critical infrastructure and services to support this massive investment cycle. In that short time, Solaris has quickly become recognized as a leading power solutions company. This is attributable to our successful track record of delivering a scalable, reliable and flexible power solutions offering. In order to continue our growth trajectory, we must execute well on all aspects of the business. This includes growing a capable team, while maintaining our culture, developing a strong balance sheet and creating power offerings that optimize capacity, timing, capital and flexibility.

The optimal power solutions for our customers will likely vary based on the application, scale, location, capital efficiency and importantly, the timing needs of each unique project. Solaris is in a position to provide our customers with the most appropriate solution or solutions for their range of needs at any particular site. We can provide multiple generation sources to our customers as well as gas supply infrastructure, power distribution equipment and resiliency equipment such as battery energy storage systems or BESS.

Our solutions can include a combination of natural gas turbines, natural gas reciprocating engines, grid power, BESS, fuel cells and other renewable technologies. It is quickly becoming apparent that an all-of-the-above generation approach could be necessary to meet the rapidly growing power demand. Since we updated you last in July, Solaris has achieved many strategic milestones that have positioned us for substantial growth. First, we continue to demonstrate strong execution.

We operated approximately 760 megawatts during the third quarter, up from approximately 150 megawatts only a year ago. Our growing proprietary operational know-how and strong track record of uptime position us as a reliable provider of power. We began successfully providing primary power to a second data center during the third quarter, highlighting our ability to again rapidly deploy power solutions supported by effective collaboration between our employees, our supply chain partners and our customers.

Second, we secured additional capacity to position our business to enable us to react swiftly and comprehensively to the numerous meaningful commercial opportunities we are pursuing. With the order of 80 megawatts announced a few weeks ago and an additional order of just over 400 megawatts, we now expect to have pro forma generation capacity of approximately 2,200 megawatts by early 2028, compared to our prior plan for 1,700 megawatts by the first half of 2027.

Third, we raised significant capital in the form of a new convertible notes to pay off our existing term loan, providing us the financial and operational flexibility to continue our growth. Kyle will share more detail on this shortly. Fourth, our commercial pipeline is deep and growing, as we are currently evaluating a number of potential long-term opportunities. The combination of growing project size, tenor, timing and reliability has resulted in an increasing interest in solutions like ours.

Our recognized track record of execution and investments we've made in capacity has positioned us at the forefront for many of these opportunities, and we are confident that the additional capacity we have on order will convert into long-term contracts. Fifth, we have expanded our capabilities and customer base through M&A. In the third quarter, we acquired and welcomed HVMVLV, provider of specialty voltage distribution and regulation equipment and engineering services. HVMVLV stands for high voltage, medium voltage, low voltage, just so you know.

Bringing these capabilities in-house further strengthens our power solutions offering by giving us exposure to new high-growth end markets. Importantly, these balance-of-plant solutions are essential across all electricity use cases regardless of generation source. Our acquisition strategy demonstrates how we are strategically both vertically integrating and expanding our technology offering, further enabling us to offer a truly power-agnostic approach to meet our customers' power needs.

Finally, we have welcomed additional talent to complement our existing team and drive further commercial and operational success. We've added high-impact team members to our engineering, operations, commercial and support functions. We've also enhanced our executive leadership team with the addition of Amanda Brock as my co-CEO. Amanda has been a trusted partner of mine for the last decade and brings a proven complementary skill set to the office of the CEO. She has an extensive background in building and managing infrastructure, including both water and power and in leading teams to success.

These capabilities come to us at a critical time, as we rapidly scale our operations for the significant growth ahead. As I've been asked many times, I would like to make it clear that I have no current plans to retire. This co-CEO appointment is about covering more ground and accelerating our growth. Moving now to a discussion of our Logistics Solutions segment. I've often referred to our Logistics Solutions business as the engine that could. While less than 1/3 of our business today, we would not have the success we've had in Power Solutions without the stable cash flow provided by this business segment. This business also is a critical piece of the natural gas value chain required for the Power Solutions segment.

We also continue to earn the operational and financial returns on the investments we've made in our logistics systems, which continue to help drive efficiencies for our customers. For example, we've increased our deployment of multiple Solaris systems on customer locations, which enables more efficient throughput of raw materials, and in turn, helps our customers accelerate their development schedules. Year-to-date, we've deployed multiple Solaris systems on 90% of our customers' locations, which compares to approximately 60% a year ago and 40% the year before that.

We believe that our technology portfolio positions Solaris as the partner of choice for operators and service companies pursuing the industry's leading-edge completions designs. During the third quarter, Lower-48 oil and gas industry activity contracted to what we believe reflects a near-term trough as evidenced by early fourth quarter activity levels. We believe this segment will continue to generate significant free cash flow, while providing a highly reliable and efficient system for our customers.

In summary, we are pleased with both the operational and commercial advancements achieved during the quarter. We are confident that the growing demand for our power services will continue, and we are demonstrating that confidence through our incremental generation orders as well as our continued inorganic investment. We're also taking deliberate steps to ensure that we have the right balance sheet and the right people in place to position Solaris for continued growth.

As has been emphasized by our country's leaders, winning the AI race is an imperative strategic objective for the U.S. Solaris can play an important role in advancing this objective by using its technology to efficiently generate and deliver large-scale, reliable, clean energy. With that, I'll turn it over to Kyle.

Thanks, Bill, and good morning, everyone. Solaris' third quarter demonstrated another quarter of significant growth and solid execution in our Power Solutions segment as well as continued execution and strong free cash flow generation in our Logistics Solutions segment. This growth and execution were driven by the dedication and skills of our team, the continued support of our customers and the dependability and flexibility of our suppliers.

During the third quarter, Power Solutions contributed more than 60% of our revenue and over 3/4 of our segment-level adjusted EBITDA. These results are attributable not only to a robust industry backdrop, but also to the value of the Solaris offering and the team's execution. As Bill highlighted, in addition to the previously announced 80 megawatts we recently ordered, we have also secured additional generation capacity for a total of approximately 500 megawatts. This brings our pro forma expected generation capacity to approximately 2.2 gigawatts by early 2028, which compares to our prior order book of approximately 1.7 gigawatts.

As previously announced, concurrent with our recent convertible financing, we expect the first 80 megawatts of our new orders to be delivered by year-end. The remaining delivery schedule is concentrated around the second half of 2026 and the second half of 2027, with final deliveries of this most recent order occurring in early 2028. Capital expenditures associated with the 500 megawatts total approximately $450 million, consisting mostly of turbines and associated emissions control equipment.

Once equipment is contracted at a particular site, we expect to add additional project scope to accommodate the unique specifications of any given location and customer need. This increased content would be expected to generate returns on invested capital comparable to the economics of our current Power Solutions offering. As a result of our recent financing and the ongoing cash flow generation ahead of these deliveries, we have sufficient cash to fund these incremental generation orders.

In early October, Solaris raised approximately $748 million in the form of senior convertible notes due 2031 with a 0.25% coupon. The proceeds from this offering were used to repay our existing term loan and will be used to fund the 500-megawatt order. This financing also unlocks significant flexibility for Solaris, given the removal of restrictive covenants as well as the meaningful incremental near-term cash flow it unlocks.

Over the next 4 quarters, we now expect to save approximately $45 million in the form of interest and amortization savings as compared to our prior capital structure. Turning now to a review of our third quarter results and our outlook for the next 2 quarters. During the third quarter, Solaris generated revenue of $167 million and adjusted EBITDA of $68 million on a consolidated basis. Our adjusted EBITDA grew 12% from the prior quarter and increased more than 3x as compared to the same quarter last year, driven by the acceleration of our Power Solutions segment.

The primary driver of growth versus the prior quarter was continued activity growth in Power Solutions, which more than offset a modest decline in Logistics Solutions activity. We generated revenue from approximately 760 megawatts of capacity during the third quarter, which reflects an increase of more than 27% from the prior quarter. This increase in activity was driven by increased and accelerated demand from our customers, which we are meeting using a combination of new turbine deliveries as well as selective short-term sourcing of third-party generation capacity.

Segment adjusted EBITDA for the Power Solutions segment was $58 million, a 27% increase from the second quarter. We expect segment adjusted EBITDA next quarter to be relatively flat as a full quarter's benefit from the ramp in operated megawatts and the HVMVLV acquisition is offset by a mix impact from lower spot utilization and commissioning work. While we expect the recent order of 80 megawatts to have a limited impact on fourth quarter results given the expected timing of deliveries, we expect this incremental capacity to drive first quarter 2026 segment adjusted EBITDA for Power Solutions higher sequentially relative to the fourth quarter of this year.

In our Logistics Solutions segment, we averaged 84 fully utilized systems, a decline of 11% from the second quarter. We believe the third quarter represents a near-term bottom in drilling and completion activity and expect our segment adjusted EBITDA to improve slightly in the fourth quarter. Netting these factors and considering corporate and other expenses, total adjusted EBITDA guidance for the fourth quarter is now $65 million to $70 million, up from the prior guidance of $58 million to $63 million and relatively flat from the third quarter.

We are also introducing our first quarter 2026 total adjusted EBITDA guidance of $70 million to $75 million. Accounting for expected longer-term tenor on our fully delivered 2,200 megawatt generation capacity and our recent acquisition, our new estimate of pro forma earnings of the company could be over $600 million before considering any additional scope or growth with our existing customers or new opportunities. We are excited about the accelerating growth of the industry and about the significant strategic steps we've taken to maximize our opportunity to continue to grow.

Our priority remains to deliver strong returns on invested capital, as we continue to develop our Power Solutions business, while sustaining leading market share and strong cash flow generation from our Logistics Solutions operations. With that, we'd be happy to take your questions.

[Operator Instructions] The first question is from Dave Anderson of Barclays.

I was wondering if you could talk a little bit about how you see the supply chain today. You're placing orders now for 2028 deliveries. Is this going to get stretched out a bit more than, say, a year ago? And I would imagine the competition for OEM slots has become substantially tighter in the last few months. I was wondering if you could talk about some of those challenges that you're facing as you look to build out the power business.

I think you surmised it well, David. The supply chain is growing out. We are lucky to get the slots we have with our relationships, and we're exploring other avenues for getting power. Hence, I think what we referred to as multiple sources of generation to power these things, especially in timing-wise. And we're spending a lot of time on the distribution side and the equipment side.

We had a team over in Asia last week looking at a couple of OEM flexibility options around how we get ahead of transformers and switchgear and breakers and those kind of things on a portable basis as well as for permanent equipment. So I think that's a very important part. As I said, we need to execute on all phases of the business and supply chain is clearly one of those phases that's really driving a lot of things today.

And I think that's also coming at a time where the customers are recognizing the sort of opportunity of speed here to build behind-the-meter solutions in a way that provides the right levels of reliability, the right levels of generation in a way that really aligns well with their strategic goals. And I think that's informed in terms of how we're thinking about expanding the fleet at this stage.

The size of the prize appears to be growing at a rate where the sort of cost of poker, i.e., how much capacity you have available is needing to go up. And so what we're sort of -- what we're indicating here is the size of each of these opportunities is growing. And so we've added capacity here sort of second half of '27. And as we look at making further orders beyond this, you're spot on, the delivery dates are extended, but we've got a tremendous track record, I think, of finding unique ways to find capacity.

We continue to benefit from a team that's got tremendous experience and legacy in looking at generation over decades all over the world. And I think that really positions us somewhat differently than maybe others in the market that are kind of just getting into it. So we've got literally decades of experience, both on the generation side as well as on all the distribution side within the company now that we're really able to benefit from.

So I think there's actually a big distinction about how you're actually already managing the megawatts today. And you've talked about the balance of plant and how kind of the challenge is to actually manage this power is more than just owning it. You made that acquisition over the summer -- the HVMVLV, I did it, of the acquisition in terms of the balance of plant. I also noticed this quarter, the megawatts or revenue per megawatts increased about 10% this quarter. Are we starting to already see the impact on the balance of plant? Or is that more about efficiency and utilization of the equipment? And could you tell me how we should be thinking about modeling that going forward? Is that a number we should be kind of steadily increasing over time?

It's -- there's a lot of puts and takes in that. And I think if we specifically look at the third quarter, what we were able to do was to deploy a significant amount of additional generation that was sort of beyond what we initially guided to. And so we are benefiting in the third quarter with some level of contribution from some of our commissioning efforts.

I think the fundamental returns on the equipment are still sort of in line with where we've indicated in the past. The other kind of puts and takes on it align with duration. And as we think about different customer mix and different duration mix, there could be some different ways of looking at, at returns.

The next question is from Derrick Whitfield, Texas Capital.

Congrats on your update. And Amanda, congrats on your appointment. For my first question, I wanted to focus more on the competitive landscape. With this announcement, it's clear that you feel confident in your ability to place your power generation capacity. With that said, to what degree did the recent announcements from Halliburton and Liberty change your view on the size of the growth opportunity for Solaris?

We're having our own discussions and what others do don't necessarily impact it. I don't think that -- this is a very, very large market, if you look at the numbers, and it's going to require multiple companies to perform to satisfy the needs of the growing power demand. So I think it's -- that has not changed our outlook at all in any way.

Yes. And I'd say just to put it in context, so the 2,200 megawatts we're talking about here, to satisfy the leading-edge sort of incremental data center. I'm not sure that satisfies even 2 at this stage. So the sizes of these infrastructure projects continue to grow, to Bill's point, such that it's just a large market.

Yes, fair point. And maybe just to build on that, based on the flurry of recent power AI development announcements across West Texas and the amount of BTC miners that are converting to data centers, do you guys see an opportunity to co-bid these developments with those operators to meet reliability needs of the end client?

I think that's one of the points on the flexible generation here is that the distribution equipment and the packaging up of multiple sources and the way that gets run is something that I think we're developing a pretty good expertise on. And I think that will be -- the way some of this gets executed is a combination of multiple sources, whether it's excess grid power that a Bitcoin miner may have been using, whether they've got some on-site backup generation that flexes or -- and we put some new kind of permanent power or bridge to backup kind of power on site. I think it's going to really be what the ultimate solution looks like to the size of this activity and the timing needs that the industry has.

And our fleet, if you think about just max flexibility with respect to in general, the mobility of the actual equipment, also the size. These are medium-sized gas turbines that are able to be moved and rigged up quite quickly relative to some of the other larger equipment that may be more permanent in nature. And so to your point, as the opportunities shift around in terms of geography, we really benefit from that. And that also ties into our legacy business.

One of the real keys to success of the 10-plus years track record of the legacy Solaris business has been the fact that we've had equipment that can go anywhere at a moments times notice. And so that's allowed us to be very nimble. And I think that will continue to be a paramount sort of culture tenet to our business.

And I would add to the engineering team that is associated with the legacy business and our ability to take a look at this power generation business and modify equipment to make it more mobile. I think the oilfield led the way in developing and partnering to make the mobile turbines to start with and then the addition of mobility around the catalytic reforming technology, we've modified and built our own -- with our own in-house engineering mobile SCRs that pair up quite quickly, quite easily and minimize downtime for the emission control system. So I think that combination of engineering know-how and the focus on mobility and quick execution has been paramount to the continued success in both businesses.

The next question is from Don Crist of Johnson Rice.

Given that I'm one of the only analysts that covered both Aris and Solaris, I have kind of unique impact or relation to Amanda. Just a quick question on the co-CEO role. Is it expected to be kind of the Biden conquer? Or are you all going to make kind of decisions together? And kind of second part of that question, Amanda, I know you've only been there a week or so, but your initial impressions on kind of how the team has put together and your initial impressions as you kind of get to work?

I'll let you start there.

Certainly, and thanks, Don. So look, I'm very happy to be here with this team. I've known Kyle since, I think, 2017, and it's great to still be side-by-side with Bill. And anybody who knows Bill and I and knows that we are different, but have very sort of complementary skill sets. So some of it is, and Bill will talk about it, divide and conquer so we can cover more ground and of course, not getting each other's way and make decisions that are going to enhance the effectiveness and to use Kyle's word nimbleness of the company.

In terms of observations, actually, this is the beginning of week 3 because there was no downtime, and it is really drinking from proverbial fire hose. The speed at which this market is moving is unprecedented. And there are huge tailwinds and opportunities for us, as we focus on delivering these power solutions into a market where power is emerging as a critical bottleneck. The deals we are engaging on and the deals that I've gone straight into work on are real and tangible with very credible counterparties. We have a distinct advantage to have already demonstrated our ability to deliver.

I mean we've been out there. We've been operating, and that just gives you a real perspective. And as Bill has repeatedly emphasized, we've got this track record of executing on large scale and getting larger data center projects and have developed know-how, software, proprietary processes that we can apply on new projects, and that is an advantage. So high-quality opportunities for continued growth. I'm very optimistic. I'm happy to be here, and there's one incredible road ahead of us. So Bill?

As a divide and conquer, you just covered it all. So no need to double up.

I appreciate that color. And a big question coming into this earnings cycle is going to be whether or not you announced a new contract or not. But I think you have said in past calls and whatnot that you wouldn't order any additional equipment if you weren't close on another contract signing for a data center or a large project. Is that still the case?

And I know you don't want to give specific timing, but should we assume something in the next 90 to 180 days that could kind of soak up all that equipment you have on order today?

That is still the case, and your assumptions are pretty good.

The next question is from Derek Podhaizer at Piper Sandler.

Maybe just a bigger picture question. I want to discuss the type of advantage HVMVLV gives you when you're bidding on these large data center projects, and we're talking a gigawatt plus here. So obviously, there's a lot of companies out there going for this behind-the-meter power market. It creates a lot of confusion for investors, who's best positioned and what's a differentiating factor.

Maybe you could just help us understand your differentiating factor versus your peers, I mean, including this integrated solution, which has been bolstered by HVMVLV. Just help us and investors how we should really think about that.

I think you think about it from actual operations and skill sets and then when we add on power -- what comes out of the generator isn't what feeds the data center or any other utility. You have to regulate that power. You have to convert it to the right voltage level. You have to get it to what the building needs. You have to control lots of elements of that with switchgears and you got to protect it with breakers and switchgears.

So the notion that the rest of that stuff really does drive the generation source. And as we mentioned, there's going to be multiple sources of generation to supply this demand because it's too fast and too quick. And as that happens, it's more and more imperative that you pair up the right set of electrical distribution equipment downstream of that. And so as an edge and the ability to engineer, design and operate those systems, I think we have a pretty unique advantage with that with respect to the turbines.

It's the modeling of these businesses, and I think we set a little bit of a trap up on megawatts times dollar equals this times the multiples of value. But there's a lot more to this around protecting that business, building the moat around the operating processes and technology and the pieces of electrical equipment that blew it all together. So a house -- a set of bricks doesn't really work without the mortar, and that's the mortar in this business.

Got it. That's helpful. And then maybe back to your comments about your all of the above power approach. Historically, you've been heavy on the turbines, obviously, the 5.7, 16.5, 38. But it sounds like you'll be exploring battery systems, potentially recips. Just could you help us understand kind of that all of the above approach and then maybe just your latest, the additional 400 megawatts, was that all turbines? Was that a mix of a different type of kit? Just maybe a little bit more color around that.

Yes. And I think we will -- the view forward is the turbine is going to be the workhorse of the power generation industry. It's no different than the way the utilities work. The gas turbine is driving our system in this country of power. So that will be our workhorse. As we complement things for timing and flexibility, the turbines have unique curves with heat and altitude that change their output. And so pairing that up with an engine that doesn't have quite the turndown in the heat like a large reciprocating generation -- generator, and we're running them as part of the kit today. So it's not unique. It's a small piece.

Does it grow slightly? I think we'll see it growing as part of the generation piece slightly going forward. Batteries are an important part of this. It comes down to what is the reliability that you're looking for in data centers. There's an element of this that they have to have virtually 100% reliability when it hits the cooling system to keep the buildings cool and the chips for melting down. The investment is enormous. So thinking about how batteries both provide protection against the volatile loads coming out of the chips as well as very short-term bridges as you flex with your redundancy built into the power grid.

And not every data center is the same. And so there's a -- not a standard design gigawatt data center. They're built in multiple data halls. The data halls can be powered independently. They can be powered together. They can power the cooling systems different from the chip systems. And so the notion that it's just kind of one size fits all is there, and that's why -- one of the other reasons why the distribution part of this is so important, so you can match up what the actual data center power needs look like with the generation equipment.

The next question is from Scott Gruber, Citigroup.

You know some growth CapEx in your '27 outlook. Curious about the Stateline JV, once the 900 megawatts is deployed. Is the JV expected to send cash back up to Solaris? Or do you pay down the term loan? Or does that cash get recycled back into expanding the JV? Just some thoughts on how to think about the JV and the JV cash flow once the 900 megawatts is deployed.

Yes. Good question, Scott. I think there is a -- there's debt down at the JV, and so that does need to be serviced with respect to interest and amortization. But there's a fair amount of flexibility within the constructs of that debt instrument that do allow us to send cash up to both ourselves as well as our partner in that JV.

Options with respect to what to do with that cash, the Board of the JV, which is composed of both Solaris and our customer can choose to distribute the cash or to your point, we can make a choice of keeping cash there and continue to invest at that level to provide additional power to that customer, which obviously has ongoing and growing power needs and demands. So a lot of flexibility in that structure, and we were able to obviously finance that at a pretty attractive rate with respect to the advance rate on the equipment. So that structure, we feel is going to provide a lot of flexibility and ability to drive returns for us.

And then just some color on how you see megawatts deployed over the next several quarters and how you see the transition from your third-party re-rents to wholly owned capacity based upon the delivery schedule and what seems to be greater -- obviously, greater demand from the customer. When do you see kind of fully -- getting to kind of fully owned capacity in the field?

Good question. Obviously, that's continued to change and extend as we've added capacity into the order book. As we look at next year, there's really 2 legs of growth as far as operated capacity. The first is the JV getting stood up with respect to its permanent generation. And we are supporting the power needs of our customers that will ultimately be funded with the JV vis-a-vis some of the re-rented assets today as well as some of our own assets.

So next year, we'll see the construction of roughly 900 megawatts of permanent power for the JV. And then we'll also see delivery of about 400 megawatts that was placed back in March of this year. So those are the 2 avenues of growth for '26. And then as we look into '27, it's primarily the order that we just placed. One small additional note, we did pick up some capacity in the fourth quarter of this year, which will have a full impact beginning in the first quarter of next year. So as we look at the full stood-up fleet, it's sort of a second half of '28, is sort of how I would look at it.

Next question is from Jeff LeBlanc, TPH.

Bill, in the prepared remarks, you mentioned locations evolving to multiple gigawatt sites over the next several years. Given this opportunity set, could you help frame the size of your customer pipeline? And is it safe to assume that by the end of the decade, your operating fleet will be larger than 2.2 gigawatts?

I think that the pipeline is enormous, and that's a technical term. It's -- there's just so much activity. It's frightening. I've never seen anything like it in my life. It's probably fair to say that we'll be beyond what we have on order today operating in a couple of years.

The next question is from Michael Dudas of Vertical Research.

Two questions. One, Bill, could you maybe share some of the circumstances surrounding the second data center order that you cited in the press release? And secondly, as you are negotiating regarding contract tenor, any further confidence thoughts on length? Is that still a sticking point given where people are expecting grid connections out to the future or other BTM solutions? Just want to get a sense if that's still part of the negotiations.

I think the second data center that we stood up during the second quarter was known and predicted and it's rolling into our joint venture, Stateline Power LLC. So we have it running on a temporary power with full emissions control. And then it's -- we're constructing the gigawatt plus power plant starting really in the next quarter, rolling into next year as we ramp up the deliveries of equipment to roll into the permanent site for that facility. So that's up and running. We got it up and running very quickly over the course of the quarter, and it's stable, and we'll be rolling it into the permanent site really beginning 1st of January or so thereafter.

What was the second question?

Contract tenor...

Contract tenor. It's clearly morphing to longer term. I think the grid delays -- the announcement of grid delays, the magnitude of the power, the SB6 approach from the government coming up, the recognition that these guys are going to need this power for a while is really morphing average contract tenors out significantly from where the thought was maybe a year ago about what this business needed to be. So it's morphing into more of a behind-the-meter permanent power or permanent power to a portion of it becomes back up if the grid gets there at a lower cost.

But I think there's a heightened sensitivity within the regulatory framework and the public about power prices going up and the notion that the behind-the-meter helps defray some of that, I think, is an important element that our customers are evaluating.

I appreciate it. Just a quick follow-up. When you talk about behind-the-meter and the -- all the above approach that you've talked about throughout this call, could you maybe rank where other approaches are in solutions relative to what Solaris on the gas -- on your core gas turbine side is and how that may incorporate your lead time or your ability to kind of secure these projects relative to other solutions in the market behind you?

Well, the other solutions are finding a specific grid location where there may be excess power and pulling that down. Most of that at this point, with the size of the data centers need some element of either backup or complementary prime power. And so as those sites or nodes that have -- may have excess power on the grid, they're getting filled up and that is getting scarcer and scarcer. And those are now being complemented by power solutions like ours.

I think the others in the market that are doing this, I think the Williams team is a very professional organization. They run a lot of equipment and assets around the country, and they're doing it similar to, I think, the approach we're taking with equipment and long-term tenor contracts. And I think the market is recognizing that it will be powered on the increment by natural gas, whether that's actually over the next 10 years, whether that's a backup behind-the-meter or whether that's an additional utility-based big turbine running on the grid. So it will all be fired by natural gas on the increment for the stable power that's needed to run these data centers.

And I think just one small piece to add. When we allude to other sources of generation to complement our turbine workhorse, as Bill referred to it as, that allows us to extend the turbine capacity that we have today. In other words, if we're able to complement with a larger size or amount of gas recips as well as potentially fuel cells, that allows us to extend the turbine capacity that we have today on balance sheet to a broader amount of megawatts from a total demand -- from a data center perspective.

So in other words, we've got, I would say, the critical piece that's got the longest lead time associated with it secured with the gas turbines. And if we're able to complement that with additional sources of generation, whether it be combined cycle plant that's getting stood up either interconnected to the grid or in an islanded mode or its recips or something like fuel cells, it gives us optionality to continue to extend to grow the 2,200 megawatts with not necessarily adding specific turbines inside of the sort of time frame where we could be bringing on other sources of generation.

The next question is from Bobby Brooks of Northland Capital Markets.

Congrats Amanda, on the co-CEO role. I just wanted to do -- have a quick follow-up for Kyle, mentioning how adding new power generation can kind of extend the core turbine power that you have on the balance sheet. I'm just curious in your future contract negotiations, is that worked into the contract where it's like, hey, we'll provide you 400 megawatts of power, but it's not specific as to what type of asset is generating that power? Just curious on that.

Sort of a mix of all, I would say. So I think the key asset we have today to engage with customers is our order book, as it sits today. But as we discuss with them, here's what it is, generally speaking, the needs are greater than that. And so as we're looking at putting together contracts, it's sort of step one, lock in what we've got on balance sheet. And step 2 is their demands ultimately are larger, and we're giving them options and flexibility around different levers to pull to increase the total capacity.

So it also could be a combination of other gas turbines that we just -- we haven't secured to date. So I think every opportunity we're discussing, we've got a great somewhat of a starter kit for the customers' needs and additional capacity can be met with additional gas turbines, reciprocating engines or other forms of generation. So we've got the optionality.

Got it. That makes a lot of sense. And then I was just hoping to get a bit more insight of how you guys have been consistently able to secure more managed megawatts near term in the last few quarters. Obviously, I can appreciate that you want to keep the specifics close to the chest. But could you maybe just walk us through at a high level how these opportunities arise and ultimately how you execute on them? And then the second piece is, is it right to think that the 160-megawatt sequential step-up was -- the majority of that was re-rented capacity? Or were you able to secure any early deliveries?

So I think Kyle kind of mentioned earlier, we've got the MER team and the HVMVLV team has decades and decades of experience in the market globally, and we've scoured the market, both in the U.S. and internationally to find equipment that we could put to work mostly on a rental basis. We've evaluated purchasing some of it, and we might, but we have not done that yet. But it is really about our ability to go find those pieces of the puzzle and put them to work and have the distribution equipment ready to go to make it all work together.

This was the last question. I would like to turn the conference back to Mr. Zartler for any closing remarks.

Thank you. Thank you, everyone, for joining us today. I'm excited about the continued growth we've achieved to date as well as the growth that's to come. We're excited to see the Solaris family continue to grow both organically and through acquisitions. Our success is a testament to the dedication and hard work of our employees, the trust of our customers and the strong partnerships with our suppliers. Thank you for being part of the Solaris team. We believe we are just getting started and continuing to meet the industry's growing and urgent needs for comprehensive power solutions. We look forward to sharing our progress with you in a few months. Thank you.

Ladies and gentlemen, the conference has now concluded. Thank you for attending today's presentation. You may now disconnect.