Solaris Energy Infrastructure, Inc. (SEI) Q2 2026 Earnings Report, Transcript and Summary

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.