Solaris Oilfield Infra (SOI) Valuation Update - Aug 2

[dan_s]

At the time of this post SOI was trading at $10.77. TipRanks' price target is $15.

I have updated my forecast/valuation for their strong Q2 results and the expectation that the Company's revenues will continue to move back to pre-pandemic levels as D&C Capex spending continues to grow. My valuation increases by $1 to $18/share.

Solaris is small oilfield services company that is the best at what they do, which is the very important job of managing frac sand at the wellsites for lots of upstream companies. Solaris equipment and services save upstream companies a lot of money during well completions that cost several million dollars per well.

Key for this one: The Company gained market share during the pandemic because most of their competitors went out of business. Solaris is basically debt free and they pay a dividend of $0.105/quarter. I am expecting them to raise the dividend by year-end because they have very low maintenance capex requirements, so they generate a lot of DCF.

This stock went over $23 in early 2018 and the Company is in much better shape today than it was back them.

[dan_s]

Note from Stifel

Solaris Oilfield Infrastructure, Inc. (SOI, $10.69, Buy; Target $14.00) - Initial Take
– Positive: EBITDA Exceeds Expectations by 14% - Stephen Gengaro

Solaris delivered better-than-expected 2Q22 adjusted EBITDA of $21.1 million, 14% above
our $18.5 million estimate, above the $18.0 million consensus, and rising from $15.7
million in 1Q22. Annualized EBITDA per utilized system slightly exceeded $1.0 million
versus about $839,000 in 1Q22 and ahead of our $876,000 forecast, likely due
to continued traction of SOI's top-fill solutions and AutoBlend™ technology, and
the positive benefits of last-mile trucking activity. SOI averaged 84 mobile proppant
systems in 2Q22 versus our 85 estimate and 75 in 1Q22. We believe the results are
positive for the shares, and we await details on the 9AM ET conference call today
(8/2/22).