Stable top fill system despite challenges: In Q1, Solaris Oilfield’s (SOI) mobile proppant management systems remained unchanged at 92 from Q4 2022. The company continues to aim at new technology deployments, lowering customers’ costs, and achieve well site efficiency. However, in Q2, it will likely face challenges from an activity softness led by the natural gas price’s weakness. Read more about this in our recent article here.
Steady fundamentals metrics: Quarter-over-quarter, SOI’s revenues decreased by 1.6% in Q1, while its adjusted EBITDA margin expanded by 300 basis points. Pricing improvement and contribution from additional top-fill systems led to margin progress in Q1. The share of systems utilizing the top fill systems also increased in Q1.
SOI’s cash flows and shareholders’ returns: SOI’s cash flow from operations increased by 169% in Q1 2023 compared to a year ago. Free cash flow stayed marginally negative but showed improvement in Q1 2023. Encouraged by the cash flow improvement, it plans to return ~50% of free cash to shareholders through a dividend hike and a $50 million share buybacks program.
Thanks for reading the SOI take three, designed to give you three critical takeaways from SOI’s earnings report. Soon we will present a second update on SOI earnings highlighting its current strategy, news, and notes we extracted from our deeper dive.
