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Barclays CEO Energy-Power Conference PresentationSeptember 6, 2018
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Disclaimer
1
Forward-Looking Statements
The information in this presentation includes “forward-looking statements.” All statements, other than statements of historical fact included in this presentation, regarding our management, strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this presentation, the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on Solaris’ current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described under the heading “Risk Factors” included in Solaris’ Annual Report on Form 10-K filed with the Securities and Exchange Commission on May 6, 2018 and subsequent Quarterly Reports, including the From 10-1 filed with the Securities and Exchange Commission on August 1, 2018. We caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond our control, incident to the transportation, storage and delivery of proppant. These risks include, but are not limited to, the level of domestic capital spending by the oil and natural gas industry natural or man-made disasters and other external events that may disrupt our manufacturing operations, volatility of oil and natural gas prices, changes in general economic and geopolitical conditions, large or multiple customer defaults including defaults resulting from actual or potential insolvencies, technological advancements in well service technologies, competitive conditions in our industry, our ability to fully protect our intellectual property rights and changes in the long-term supply of and demand for oil and natural gas. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements.
You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this presentation. Except as otherwise required by applicable law, we disclaim any duty to update and do not intend to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this presentation.
This presentation includes financial measures that are not presented in accordance with generally accepted accounting principles ("GAAP"), including EBITDA and Adjusted EBITDA. While management believes such measures are useful for investors, they do not have any standardized meaning and are therefore unlikely to be comparable to similar measures presented by other companies. The presentation of non-GAAP financial measures should not be used as a replacement for, and should not be considered in isolation from, financial measures that are in accordance with GAAP. Please see the Appendix for reconciliations of those measures to comparable GAAP measures.
Industry and Market Data
This presentation has been prepared by Solaris and includes market data and other statistical information from third-party sources, including independent industry publications, government publications or other published independent sources. Although Solaris believes these third-party sources are reliable as of their respective dates, Solaris has not independently verified the accuracy or completeness of this information. Some data are also based on the Solaris’s good faith estimates, which are derived from its review of internal sources as well as the third-party sources described above.
Trademarks and Logos
Solaris owns or has rights to various trademarks, service marks and trade names that is uses in connection with the operation of its business. This presentation also contains trademarks, service marks and trade names of third parties, which are the property of their respective owners. Solaris’ use or display of third parties’ trademarks, service marks, trade names or products in this presentation is not intended to and does not imply, a relationship with Solaris or an endorsement or sponsorship by or of Solaris. Solely for convenience, the trademarks, service marks and trade names referred to in this presentation may appear without the ©, TM or SM symbols, but the omission of such references is not intended to indicate, in any way, that Solaris will not assert, to the fullest extent under applicable law, its rights or the right of the applicable owner of these trademarks, service marks and trade names.
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$2 $7
$40
$1 26
2015 2016 2017 2018E
Management1 7%
Yorktown23%
Other6%
Float 54%
2
Ticker SOI (NYSE)
IPO Date May 11, 2017
Market Cap ~$800 million
Long-term Debt $0.0 million
2019 Consensus EV/EBITDA Multiple(2) 4.3x
2019 Consensus FCF Yield(2) 11%
Company Snapshot
(1) As of August 30, 2018(2) 2018E reflects Consensus FACTSET estimates
Ownership (1) EBITDA Growth (2)
in $ millions
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Fleet of 138 Mobile Proppant Management Systems that address challenges related to the transportation, storage and delivery of proppant
Manufacturing capacity of up to 8 systems per month
Manufacture and rent Systems directly to leading E&P operators and pressure pumpers
>95% of fleet deployed to customers with multiple Systems
Blue-chip, diverse customer mix, including leading E&P companies and pressure pumpers
Digitalizing the Supply Chain
Leading Independent Provider of Well Site Logistics Solutions
3
Kingfisher Transload Facility High-capacity, unit train capable transload facility in
Kingfisher, Oklahoma supporting STACK/SCOOP
Underpinned with seven-year contract with leading STACK E&P operator
Drive supply chain efficiencies through real time, remote monitoring of proppant inventory across supply chain:
PropView® and Railtronix™
Leading Well Site Storage and Delivery Systems
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Solaris’ Has the Culture and Team to Constantly Improve Product and Service Offering
Jul-2015First 12-pack
Deployed Dec-2017Railtronix
Acquisition
Mar-2015Redesigned Control
System Using Allen-Bradley
Oct-2015PropViewTM
Beta Deployed
May-2017IPO on NYSE
May-2015First Central
Conveyer Belt Built
May-2018Reconciling
Solution Deployed
Sep-2014Acquisition of Manufacturing Facility and IP
April-2014License
Agreement with Loadcraft
Feb-2016System Tarping
Deployed
Apr-2016Dual
Discharge Deployed
Sep-2016PropViewTMMobile App Deployed
Q4-2016Repurchased
and Upgraded
sold Systems
Q1-2017Urethane Fill
Pipe Extension Deployed
Aug-2017Kingfisher
Ground Breaking
Jan-2018Non-
pneumatic Deployed
4
Solaris Has A Culture And History Of Innovation
Number of Systems in Fleet
Key Events
WTI Price
Chart1
2Q142Q14
3Q143Q14
4Q144Q14
1Q151Q15
2Q152Q15
3Q153Q15
4Q154Q15
1Q161Q16
2Q162Q16
3Q163Q16
4Q164Q16
1Q171Q17
2Q172Q17
3Q173Q17
4Q174Q17
1Q181Q18
2Q182Q18
TodayToday
3
103.1034065934
4
97.2333695652
5
73.0445652174
8
48.7293333333
15
57.723956044
19
46.69
21
42.0125
23
33.550989011
23
45.4602197802
24
44.952826087
29
49.0910869565
35
51.7958888889
44
48.2776923077
59
48.0770652174
77
55.4377173913
98
62.9677777778
122
67.9659340659
138
69.613030303
Monthly System Count
Apr-14May-14Jun-14Jul-14Aug-14Sep-14Oct-14Nov-14Dec-14January-15February-15March-15April-15May-15June-15July-15August-15September-15October-15November-15December-15January-16February-16March-16April-16May-16June-16July-16August-16September-16October-16November-16December-16January-17February-17March-17April-17May-17June-17July-17August-17September-17October-17November-17December-17January-18February-18March-18April-18May-18June-18July-18August-18September-18October-18November-18December-18
Apr-14May-14Jun-14Jul-14Aug-14Sep-14Oct-14Nov-14Dec-14Jan-15Feb-15Mar-15Apr-15May-15Jun-15Jul-15Aug-15Sep-15Oct-15Nov-15Dec-15Jan-16Feb-16Mar-16Apr-16May-16Jun-16Jul-16Aug-16Sep-16Oct-16Nov-16Dec-16Jan-17Feb-17Mar-17Apr-17May-17Jun-17Jul-17Aug-17Sep-17Oct-17Nov-17Dec-17Jan-18Feb-18Mar-18Apr-18May-18Jun-18Jul-18Aug-18Sep-18Oct-18Nov-18Dec-18
2Q143Q144Q141Q152Q153Q154Q151Q162Q163Q164Q161Q172Q173Q174Q171Q182Q183Q184Q18
2334445556789111416181920212122222323232324242426272931323335384044485259667177839098106114122136138146154161
136136136136136136136136136136136136136136136136136136136136136136136136136136136136136136136136136136136136136136136136136136136136136136136136136136136136136136136136136
Monthly System Count
Quarterly Sytem Count
2Q143Q144Q141Q152Q153Q154Q151Q162Q163Q164Q161Q172Q173Q174Q171Q182Q18Today
3458151921232324293544597798122138
$103.10$97.23$73.04$48.73$57.72$46.69$42.01$33.55$45.46$44.95$49.09$51.80$48.28$48.08$55.44$62.97$67.97$69.61
136136136136136136136136136136136136136136136136136136
Quarterly Sytem Count
EBITDA Growth
#'s thousands2015201620172018E
Adjusted EBITDA1.76.839.9
EBITDA Growth
[]
Ownership
Class AClass BTotal% of Total
Management1,700,0006,535,9008,235,90017.6%
Yorktown-10,954,23410,954,23423.4%
Other B-2,669,2552,669,2555.7%
Float24,900,370-24,900,37053.3%
Total26,600,37020,159,38946,759,759100.0%
Ownership
-
Solaris Active Across Lower-48
5
DELAWARE
EAGLE FORD
SCOOP/STACK
HAYNESVILLE
ROCKIES
BARNETT
MARCELLUS / UTICA
Systems at IPO (May 11, 2017) Systems as of August 30, 2018
40
935
99
1
18
9
1
2
3
10
0
Solaris Currently has 138 Systems Operating Across Eight Basins
MIDLAND
2213
2725
Chart1
Systems at IPO (May 11, 2017)
Systems as of 5/15/2018)
Eagle Ford
9
28
Data
Eagle Ford
Systems at IPO (May 11, 2017)9
Systems as of 5/15/2018)28
Chart1
Systems at IPO (May 11, 2017)
Systems as of 5/15/2018)
Rockies
0
3
Data
Rockies
Systems at IPO (May 11, 2017)0
Systems as of 5/15/2018)3
Chart1
Systems at IPO (May 11, 2017)
Systems as of 5/15/2018)
Eagle Ford
2
6
Data
Eagle Ford
Systems at IPO (May 11, 2017)2
Systems as of 5/15/2018)6
Chart1
Systems at IPO (May 11, 2017)
Systems as of 5/15/2018)
Rockies
0
1
Data
Rockies
Systems at IPO (May 11, 2017)0
Systems as of 5/15/2018)1
Chart1
Systems at IPO (May 11, 2017)
Systems as of 5/15/2018)
Eagle Ford
3
16
Data
Eagle Ford
Systems at IPO (May 11, 2017)3
Systems as of 5/15/2018)16
Chart1
Systems at IPO (May 11, 2017)
Systems as of 5/15/2018)
Eagle Ford
1
7
Data
Eagle Ford
Systems at IPO (May 11, 2017)1
Systems as of 5/15/2018)7
Chart1
Systems at IPO (May 11, 2017)
Systems as of 5/15/2018)
Permian
22
60
Data
Permian
Systems at IPO (May 11, 2017)22
Systems as of 5/15/2018)60
Chart1
Data
Permian
Systems at IPO (May 11, 2017)13
Systems as of 5/15/2018)23
Chart1
Systems at IPO (May 11, 2017)
Systems as of 5/15/2018)
Permian
22
60
Data
Permian
Systems at IPO (May 11, 2017)22
Systems as of 5/15/2018)60
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Select Operator Customers Select Pressure Pumping Customers
Solaris has a broad and growing customer mix
Diverse, Blue Chip Operator and Pressure Pumper Customer Base
6
-
Dec-14 Dec-15 Dec-16 Dec-17 Current
Traditional SandKing
Other New Technologies
SOI
7
Growth Driven by Overall Market Growth Combined with Technology Displacement
Well Site Sand Storage Systems by Technology Type (1)
519
314
253
399
~450
30%
25%
45%
Source: Company data, Coras Research(1) Reflects estimated marketed US Frac fleet count to approximate number of well site sand storage systems
Traditional SandKingtechnology has lost share to boxes and silos, with Solaris’ systems having the fastest market adoption rate
Increasing Sand Intensity Levels Are Pervasive
MM TonsMM Lbs
0
5
10
15
20
25
30
0
2
4
6
8
10
12
14
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17
3Q17
4Q17
1Q18
2Q18
Total Proppant Demand (MM tons)
Proppant per Well (MM lbs)
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Supply chain buffer
Greater storage and proppant accessibility
More accessible unloading points
Enclosed system with fewer moving parts and dust suppression
Efficient use of space
Fully automated
Real-time data
Inadequate on-site inventory and offloading capacity
Complicated operations and expansive well site footprint
Opaque inventory information and limited communication
HS&E issues, including silica dust
Bringing Order to Chaos: Solaris Versus Traditional Technology
8
Solaris’ Mobile Proppant Management System
Issues with Traditional Offerings
Our Solution
Traditional Sand Kings
Rolling Storage
Solaris’ Solution
-
Simple, modern, fully-integrated control system
High volume input and output capacity
Mobile and flexible equipment
High Capacity Throughput
Elegant Solution to a Complicated Problem
9
Supply Chain Savings
Increased on-site inventory / access to inventory
Increased truck offloading points
Smaller truck fleet size required to deliver proppant
Decreased truck demurrage
Well Site Savings
Increased inventory stage execution efficiency
Built-in dust control
Lower labor requirements
Reduced fuel requirements
Proppant inventory loss savings
Increased asset utilizationReal-time inventory levels and consumption rates
Seamless Rig-Up and Integration Simultaneous Belly Dump and Pneumatic Loading
Belly Dump Truck
Pneumatic Truck
-
Illustrative 20 MM lb Completion
Proppant Logistics are Bottleneck Prone; In Basin Sand Increases Need for Wellsite Inventory Buffer
10
RAIL TO BASIN
TRANSLOAD STORAGE FACILITY
DELIVERY TO THE WELLSITE
WELLSITE STORAGE AND DELIVERY
SAND MINE
~10,000 tons of sand
~100 railcars
~10,000 tons of throughput
~400 truck loads
~2.5 million lbs / 6 silos; or
~5.0 million lbs / 12 silos
Solaris Provides Key Buffers and Data Along Supply Chain
andPropView ®
PropView ®
Proppant FlowSolaris Data
Solution
NO
RT
HE
RN
WH
ITE
SA
ND
SU
PP
LY
CH
AIN
Illustrative 20 MM lb Completion
DELIVERY TO THE WELLSITE
WELLSITE STORAGE AND DELIVERY
SAND MINE
~10,000 tons of sand
~400 truck loads
~2.5 million lbs / 6 silos; or
~5.0 million lbs / 12 silos
Proppant Flow
IN B
AS
IN /
RE
GIO
NA
L S
AN
D S
UP
PL
Y C
HA
IN
Lost buffer of inventory along the supply chain
-
Trucking / Demurrage
Savings 25%
Daily Completion
Cost Savings40%
Dust Control System Savings
15%
Labor Savings
10%
Inventory Loss Savings 5%
Fuel Savings 5% Lighting / Power Savings
1%
Value Proposition to Customers:Trusted Solution and Low Cost Insurance Policy
11
Note: Analysis based on Management estimates; assumes 3-well Delaware Basin pad, 10,000 tons of proppant/well, 40 stages/well and ~500,000 pounds of proppant/stage(1) Implied average monthly rental and service revenue per system in Q2 2018
Metric $ Amount / Figure
Average Horizontal Well Cost $6,000,000
Solaris Monthly Rental and Service Cost (1) $139,000
Average Number of Wells Completed per Month 3
Implied Solaris Cost per Well $46,333
Solaris System Costs
-
Our Patented Design
12
Silo
Shuttle Conveyor Belt
GravityDual Conveyor Belts
BlenderShuttle Conveyor Belt
Generator
Base unit
GeneratorAerial View of SystemSilo Loading and Delivery Process
Silos
Electrically driven belts
Single point of control for the entire system
Six to twelve silos per System
Four fill tubes per silo
2.5 to 5 million lbs of inventory available at the blender
~50,000 pounds of proppant per truckload
Two issued patents; two utility patent applications and one provisional patent application relating to Systems, services and other technologies
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Digitalization of the Supply ChainPropView®: Real-Time, Remotely Available Inventory Data
13
PropView® provides real-time inventory levels, both at the well site and remotely via any browser or Solaris’ App.
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Digitalization of the Supply ChainPropView® + Railtronix™: Real-Time Inventory Data
14
The Railtronix™ / PropView® integration provides real-time visibility of proppant from source mine to well head
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Kingfisher Facility Fully Operational
15
Proximity to Operators’ Acreage Will Reduce Supply Chain Costs
New High-Capacity Transload Facility Long-Term Contract with Leading STACK E&P Operator
The only independent, high-speed, unit-train capable transload facility dedicated to the STACK/SCOOP
300 acres directly on the Union Pacific Railroad
Within 50 miles of 67 active horizontal rigs (1)
Began transloading service in January 2018
Completed phase one construction in July 2018
Seven-year agreement
Minimum quarterly proppant volume commitment provides run-rate annual revenue of $13 million
Rail-to-truck operations commenced January 2018; dedicated unit train loop and 30,000 tons of silo storage commencing August 2018
Customer is a multi-basin Solaris Mobile Proppant Management System customer
Source: 1Derrick.
100 mile radius
50 mile radius
Central to Current STACK / SCOOP Rig Activity
Source: Baker Hughes North America Rotary Rig Count.(1) Source: IHS Enerdeq, as of March 6, 2018.
100 mile radius
50 mile radius
Legend
Horizontal Oil Rig
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Kingfisher Facility Phase One Construction Completed
16
300 Acres Central to the STACK/SCOOP Plays
Rail-to-truck Service
30,000 Tons of Storage Unit Train Loop
Manifest Loop
-
17
Bringing Order to Chaos…AgainSolaris’ New Mobile Chemical Silo Systems
Chemicals, acid, friction reducer, biocide, etc. stored in multiple totes and iso-containers today
Replaced with 3 silos with inventory control and monitoring, precise flow measurement and improved HS&E
Footprint will be reduced to three Solaris silos
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18
Continued Growth in Solaris’ Financial Performance…
Quarterly Adjusted EBITDA and Margin ($ in Millions)
Quarterly Revenue and Revenue Days ($ in Millions)
Capex ($ in Millions)
Q2 2018 Performance Commentary
61% 60%Margin: 61%
9,8504,564Revenue
Days:6,146
2Q 2018 revenue and Adjusted EBITDA grew 31% and 37%, respectively, versus 1Q 2018
Growth in revenue and Adjusted EBITDA are primarily attributable to an increase in revenue days
− 2Q 18 revenue days grew to 9,850, a 28% sequential increase
− Average rental rates flat versus Q1 2018
Added 24 systems to the fleet in 2Q 2018
− Ended quarter with 122 systems in fleet
Ending Fleet Size:
7,673
64% 12259 77 98
$27.6
$49.9
$41.2 $44.9
3Q 17 4Q 17 1Q 18 2Q 18
$11.2
$15.2
$21.9
$30.0
3Q 17 4Q 17 1Q 18 2Q 18
$18.5
$25.2
$36.0
$47 .2
3Q 17 4Q 17 1Q 18 2Q 18
Chart1
Sheet1
CategoryColumn1Capex
1Q 17$7.61Q 16$2.3
2Q 17$13.92Q 16$1.2
3Q 17$27.63Q 16$2.7
4Q 17$49.94Q 16$5.3
1Q 17$7.5
Wilkey, Patrick L. (VLTA 1):Low rangeS-1 (p 6)
-
…Driven by Sustained Margins Over Cycles and Secular Growth
19
(1) 1H 2018 revenue days, gross margin and Adjusted EBITDA margin annualized.
(1)
58%
65%
7 5%
7 0%
1 2%
37 %
59%62%
2,579
5,745
1 6,712
35,046
-
9,000
18,000
27,000
36,000
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2015 2016 2017 Annualized 1H 2018
Rev
enue
Day
s
Syst
em R
enta
l and
Ser
vice
Gro
ss M
argi
n /
Adj
uste
d E
BIT
DA
Mar
gin
%
System Rental and Service Margin % Adjusted EBITDA Margin Revenue Days
-
20
Drivers of Solaris Growth in 2018 and Beyond
Leading well site storage and inventory management solution and continuing to grow, e.g., manufacturing up to 8 systems per month
Kingfisher Phase One completed July 2018. Opportunities to drive additional volumes through facility
Continued integration and expansion of inventory management data solutions –expansion of Railtronix and PropView offerings
R&D efforts to improve supply chain management and well site handling of other well site consumables, including chemicals, friction reducers, etc.
Free cash flow generation in 2019…return to shareholders, fund continued growth and M&A activity
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Appendix
-
22
EBITDA and Adjusted EBITDA Reconciliation
(1) Income taxes include add back for federal and state taxes, including $22,637 in the three months and twelve months ended December 31, 2017 related to the Tax Cuts and Jobs Act.(2) Stock-based compensation expense related to restricted stock awards with one-year vesting that were granted to certain employees and consultants in connection with the Offering. (3) Represents stock-based compensation expense related to restricted stock awards with three-year vesting and options issued under the Plan.(4) Certain performance-based cash awards paid in connection with the purchase of Railtronix upon the achievement of certain financial milestones.(5) Certain non-recurring organization costs in 2017 associated with our IPO.(6) Other income related to the change in payables related to parties pursuant to the tax receivable agreement includes ($21,936) related to the Tax Cuts and Jobs Act.(7) Represents salaries and related expenses, professional fees, transactional costs, rent and travel expenses incurred in the development of sand mining and terminal assets, which expenses did not recur
in 2016.(8) Represents reserve for deposits made to a supplier, the majority of which was recovered.(9) Non-recurring transaction costs.
Three months ended, Y ear ended($ in 000s) June 30, 2018 March 31, 2018 December 31, 2017 September 30, 2017 December 31, 2017 December 31, 2016 December 31, 2015
N et i ncome (l oss) $21 ,448 $1 3,41 5 $9,244 $7 ,406 $22,487 $2,803 $(1 ,37 3)
Depr eciation and amor tization 3,984 3,202 2,359 1 ,7 42 6,635 3,7 92 2,395
Inter est expense, net 7 1 84 26 27 97 23 22
Income taxes (1) 3,27 7 2,027 24,7 62 61 7 25,899 43 67
EBITDA $28,780 $18,728 $36,391 $9,792 $55,118 $6,661 $1,111
IPO bonuses (2) 307 588 581 61 7 4,627 - -
Stock -based compensation expense (3) 939 925 1 ,039 7 95 2,21 1 1 27 64
N on-r ecurring cash bonuses (4) - 1 ,67 9 - - - - -
Loss on di sposal of assets 23 3 47 41 498 - -
N on-r ecurring organizational costs (5) - - - - 348 - -
Change i n payables r elated to parties pur suant to tax r eceivable agreement (6) - - (22,939) (83) (23,022) - --
Sand mi ni ng and terminal business dev el opment costs (7) - - - - - - 446
N on-r ecurring supplier settlement (8) - - - - - - 38
Other (9) - - 1 07 36 1 43 - -
Adjusted EBITDA $30,049 $21,923 $15,226 $11,198 $39,923 $6,788 $1,659
EBITDA and Adjusted EBITDA Margins:
EBITDA $28,7 80 $1 8,7 28 $36,391 $9,7 92 $55,1 1 8 $6,661 $1 ,1 1 1
÷ Rev enue 47 ,1 55 36,01 8 25,204 1 8,47 8 67 ,395 1 8,1 57 1 4,205
EBITDA Margin 61% 52% 144% 53% 82% 37% 8%
Adjusted EBITDA $30,049 $21 ,923 $1 5,226 $1 1 ,1 98 $39,923 $6,7 88 $1 ,659
÷ Rev enue 47 ,1 55 36,01 8 25,204 1 8,47 8 67 ,395 1 8,1 57 1 4,205
Adjusted EBITDA Margin 64% 61% 60% 61% 59% 37% 12%
-
23
System Rental and Service Gross Margin Reconciliation
Six months ended Year ended($ in 000s) June 30, 2018 December 31, 2017 December 31, 2016 December 31, 2015
System rental and service Revenue:
Proppant management system rental $62,532 $54,653 $14,594 $8,296
Proppant management system services 17,446 12,537 3,563 3,167
Total system rental and service revenue $79,978 $67,190 $18,157 $11,463
System rental and services operating costs:
Cost of proppant system rental 3,101 2,627 1,431 994
Cost of proppant system services 20,785 14,184 4,916 3,847
Total cost of system rental and services $23,886 $16,811 $6,347 $4,841
System rental and service gross margin $56,092 $50,379 $11,810 $6,622
System rental and service gross margin $56,092 $50,379 $11,810 $6,622
÷ System rental and service revenue 79,978 67,190 18,157 11,463
System rental and service gross margin % 70% 75% 65% 58%
-
24
Margins Driven By System Design and Protected by High Switching Cost
Low Personnel Requirement
Margin Structure is Sustainable
Solaris rents proprietary Systems, but we do not operate the Systems
TRAIN, MAINTAIN, MOBILIZE
Risk of Switching is Material
Risk includes running out of sand or malfunctioning equipment – causes delayed completions
E&P companies: risk of higher well costs and delayed revenue
Pressure pumpers: risk of fewer stages pumper per day
Low Maintenance Spend
Solaris’ equipment is not under pressure and has minimal moving parts
Virtually 100% uptime with maintenance performed in the field
Economies of Scale
Solaris is the leading provider of next generation proppant well site storage and inventory management solutions (~30% market share today)
Growing fleet at up to 8 systems / month
Internal manufacturing model drives low manufacturing costs and ability to iterate on design modifications easily
High Switching Costs Relative to Savings from Potential Cheaper Solutions
More Than Just a Silo
Customers rely on Solaris inventory data to manage entire supply chain
Alternative storage solutions not plug and play or comprehensive supply chain solution
-
Solaris System Containerized System
Maximum Storage on Location 2.5 Million Pounds 1.68 Million Pounds
Implied Proppant Storage per Square Foot 1,040 Pounds ~300 Pounds
Well Site Equipment 6 Silos, 2 Base Units, 1 Conveyor 40 Boxes, Rig Mats, 1 Conveyor, Min. 1 Forklift
Personnel Required to Operate Equipment 1 3 – 4
Proppant Offloading Method 24 Fill Tubes 1 Forklift
Truckloads Required to Complete a 25 Million Pound Well 520 ~595
Onsite Non-Truck Equipment Movements 0 ~2,380 Forklift Movements
Frequency of Non-Truck Equipment Movements During Fracing Operations N/A Box Move Every 2.5 Minutes
HS&E Benefits Fewer People, Less Moving Parts, Dust Reduction Dust Reduction
25
Containerized System on LocationSolaris System on “Postage Stamp” Size Location
Solaris System Versus Containerized Solutions
Slide Number 1DisclaimerSlide Number 3Leading Independent Provider of Well Site Logistics SolutionsSlide Number 5Solaris Active Across Lower-48Diverse, Blue Chip Operator and Pressure Pumper Customer BaseSlide Number 8Bringing Order to Chaos: �Solaris Versus Traditional Technology�Elegant Solution to a Complicated ProblemProppant Logistics are Bottleneck Prone; In Basin Sand Increases Need for Wellsite Inventory BufferValue Proposition to Customers:�Trusted Solution and Low Cost Insurance PolicyOur Patented DesignDigitalization of the Supply Chain�PropView®: Real-Time, Remotely Available Inventory DataDigitalization of the Supply Chain�PropView® + Railtronix™: Real-Time Inventory DataKingfisher Facility Fully OperationalKingfisher Facility Phase One Construction CompletedBringing Order to Chaos…Again�Solaris’ New Mobile Chemical Silo SystemsContinued Growth in Solaris’ Financial Performance……Driven by Sustained Margins Over Cycles and Secular GrowthDrivers of Solaris Growth in 2018 and BeyondAppendixEBITDA and Adjusted EBITDA ReconciliationSlide Number 24Margins Driven By System Design and Protected by High Switching CostSolaris System Versus Containerized Solutions