SEI announced impressive first-quarter revenue of $126.3 million, surpassing the initial market prediction of $116.3 million. CEO Bill Zartler highlighted the positive traction in the power sector, where SEI's offerings are poised to meet growing demands effectively. The company is expanding its contracted fleet, which is expected to bolster earnings and enhance shareholder value while maintaining a sound financial standing.
SEI has fortified its collaboration with a prominent player in the artificial intelligence computing industry, agreeing to supply power to a new data center campus. This joint venture has increased its power output by 80%, reaching 900 MW, for a duration of seven years. This partnership underlines SEI's reliability in delivering primary power as well as backup solutions complementing grid power. Additionally, SEI has acquired substantial new generation capacity to address rising power demands, whether for co-located, off-grid, or backup purposes.
Moreover, SEI's Logistics Solutions division saw significant activity growth since the fourth quarter of 2024, attributed to both seasonal trends and the acquisition of new clientele. These clients benefit from SEI's advanced all-electric, high-throughput systems, which improve well site efficiencies. The company remains committed to seeking opportunities that add value to potential Logistics Solutions customers through enhanced service offerings.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 2 analysts, the average target price for Solaris Energy Infrastructure Inc (SEI, Financial) is $13.50 with a high estimate of $14.00 and a low estimate of $13.00. The average target implies an downside of 34.37% from the current price of $20.57. More detailed estimate data can be found on the Solaris Energy Infrastructure Inc (SEI) Forecast page.
Based on the consensus recommendation from 2 brokerage firms, Solaris Energy Infrastructure Inc's (SEI, Financial) average brokerage recommendation is currently 1.5, indicating "Buy" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
SEI Key Business Developments
Release Date: February 21, 2025
- Revenue: $96 million in Q4 2024, a 28% increase from the prior quarter.
- Adjusted EBITDA: $37 million in Q4 2024, a 68% increase from the prior quarter.
- Power Solutions Contribution: Over 50% of adjusted EBITDA in Q4 2024, expected to contribute nearly 80% after fleet deployment.
- Dividend: $0.12 per share, 26th consecutive dividend, totaling over $8 million.
- Power Fleet Growth: Order for additional 700 megawatts, doubling fleet size to 1,400 megawatts by early 2027.
- Joint Venture: Partnership for 500 megawatts with a 6-year initial term, Solaris to own 50.1% of assets.
- Q1 2025 Guidance: Adjusted EBITDA between $44-48 million.
- Q2 2025 Guidance: Adjusted EBITDA between $50-55 million.
- Average Megawatts on Revenue: Expected to increase by 20% to 360 megawatts in Q1 2025, and by 17% to 420 megawatts in Q2 2025.
- Logistics Solutions Growth: Fully utilized systems expected to grow over 15% to approximately 90-95 systems in Q1 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Solaris Energy Infrastructure Inc (SEI, Financial) reported strong free cash flow from its legacy logistics business, which has been reinvested into the growing power solutions segment.
- The company announced a significant expansion of its power solutions fleet, with plans to double its capacity to 1,400 megawatts by early 2027.
- A strategic long-term partnership was formed with a current customer, including a 6-year contract for 500 megawatts, demonstrating confidence in SEI's capabilities.
- SEI's power solutions business is expected to generate 80% of the company's earnings after the fleet is fully deployed, highlighting its growth potential.
- The company has maintained a strong dividend history, with the board approving the 26th consecutive dividend, reflecting its commitment to returning cash to shareholders.
Negative Points
- The company faces risks associated with the forward-looking nature of its statements, which may include unknown financial and operational challenges.
- There is a potential for increased competition in the power solutions market, which could impact profitability and market share.
- Supply chain constraints and tariffs could lead to increased costs for equipment and impact the company's ability to meet demand efficiently.
- The company's reliance on a few large contracts, such as the 6-year data center contract, could pose a risk if these relationships are disrupted.
- The transition to more permanent behind-the-meter power solutions requires significant capital investment, which could strain financial resources if not managed carefully.
