Solaris Oilfield Infrastructure, Inc. (NYSE:SOI) Q3 2019 Earnings Conference Call - Final Transcript

Oct 31, 2019 • 08:30 am ET

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Solaris Oilfield Infrastructure, Inc. (NYSE:SOI) Q3 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good morning and welcome to the Solaris Third Quarter Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to Yvonne Fletcher Senior Vice President Finance and Investor Relations. Please go ahead.

Executive
Yvonne Fletcher

Good morning and welcome to the Solaris Third Quarter 2019 Earnings Conference Call. I'm joined today by our Chairman and CEO Bill Zartler; 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. I would also 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. With that I'll now turn the call over to our Chairman and CEO Bill Zartler.

Executive
William Zartler

Thank you Yvonne and welcome everyone. During the third quarter of 2019 we had 115 fully utilized systems deployed to customers down approximately 7% from the second quarter and in line with our expectations and prior guidance. Overall frac activity during the quarter increased primarily as a result of frac efficiency gains and budget exhaustion as operators remain committed to producing positive cash flow. Solaris' activity to client match the overall industry trend with some offsets from winning increased share with certain customers as we continue to demonstrate the efficiency and value our systems and service provider. For the quarter we generated approximately $60 million in revenue and adjusted EBITDA of $31.2 million which were down 7% and 11% respectively from the second quarter. During the third quarter we generated approximately $27 million in free cash flow as we continue to harvest cash from the capital investments that we made over the last few years. From an overall activity standpoint the Permian Basin and Eagle Ford shale areas continue to be our most active areas.

We have seen significant decreases in frac activity in the Haynesville Marcellus and Mid-Con regions as continued low natural gas prices challenged well economics. Rig count in the gas basins is down nearly 30% over the last six months versus about 15% for the oil directed rig count. During the quarter we also continued to make progress with our chemical system rollout. We have completed a few systems that incorporate our latest design enhancements and we're very pleased with how the system modifications are working in the field. We plan to finish upgrading the remaining systems over the next couple of quarters and standby ready to manufacture additional systems