Solaris Energy's Q4 2024: Unpacking Contradictions in Supply Chain, Emissions, and Cost Efficiency

These are the key contradictions discussed in Solaris Energy Infrastructure's latest 2024Q4 earnings call, specifically including: Supply Chain Management and Cost Efficiency, Emissions Standards and Customer Preferences, and Emissions Standards and Customer Emissions Concerns:



Power Solutions Growth:
- Solaris Power Solutions fleet grew to 1,400 megawatts, doubling in size from 700 megawatts, following a recent order for an additional 700 megawatts.
- This expansion was driven by strong demand and strategic long-term customer contracts, such as a 500-megawatt minimum contract with a hyperscaler for a new data center, indicating a shift towards permanent power solutions.

Revenue and Earnings Increase:
- Solaris reported total revenue of $96 million in Q4 2024, reflecting a 28% increase from the previous quarter.
- The growth was primarily due to the full quarter contribution from Solaris Power Solutions and increased activity in the Power segment.

Power Solutions Earnings Potential:
- Adjusted EBITDA from the Power Solutions segment contributed more than 50% to Solaris' total adjusted EBITDA, and the segment is projected to contribute nearly 80% of earnings after planned fleet deployment.
- This significant contribution is attributed to the long-term nature of customer contracts and the competitive pricing structure against traditional grid power.

Logistics Solutions Activity:
- The Logistics Solutions segment expects a 15% sequential increase in fully utilized systems in Q1 2025, with an average of 90 to 95 systems for the first half of the year.
- This increase is driven by the adoption of new technology and market share gains, while maintaining strong profitability per system.