Solaris Energy Infrastructure, Inc. (SEI) | The Buildout — AI Infrastructure
The Verdict
Solaris Energy Infrastructure builds and operates behind-the-meter power plants for data centers, energy companies, and industrial sites. Its product is speed: islanded gas-fired generation plus the switchgear, transformers, storage, fuel logistics, and maintenance that surround it, sold to customers who cannot wait years for a grid interconnection. The company describes itself as vertically integrated from molecule to electron, meaning it controls the fuel path, the generation equipment, the balance of plant, and the operations and maintenance under one contract — one turnkey provider instead of several contractors handing off to each other. Power Solutions carries the data-center and hyperscaler exposure. Logistics Solutions, the legacy business, makes equipment for oil and gas well completions and is the internal cash generator that funds the power build.
| Market Cap | — |
| Revenue (TTM) | $762M |
| Revenue Growth | +70.5% |
| EBITDA Margin (TTM) | 38.3% |
| Net Debt | $1.7B |
| Earnings Beats | 6 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- About 2.3 GW of power capacity sits under long-term contract against roughly 950 MW actually earning revenue in Q2 2026 — the gap is what build-out has to convert.
- The Q1 2026 10-Q shows $3,502.5M of future lease payments to be received, stepping up to roughly $480M–$490M a year across 2027–2030.
- Management says it is in active negotiations for multiple gigawatts of additional demand with multiple hyperscalers and AI compute companies, on top of the ~800 MW of open capacity.
- The capital structure was re-based in Q2 2026: $1.3B of senior unsecured notes plus a $650M five-year revolver, BB−/Ba3/BB corporate ratings, and ~$1.4B of liquidity.
- Scope expansion is showing up in signed instruments, not just narrative — the Hatchbo amendment, the third technology customer's expansion, and the energy customer's move from 60 MW to roughly 80 MW.
What We’re Watching
- Concentration: one customer was 47.3% of FY2025 revenue, and a single data-center customer was 88% of Power segment revenue in FY2025 (96% in FY2024).
- Supply: an unnamed supplier provides 'a significant portion of the equipment used in this segment's operations,' per the 10-K, and the build is gated by a $364.9M non-cancellable Baker Hughes turbine purchase obligation.
- Delivery is back-end-loaded — the Stateline joint venture and the third hyperscaler's first location drive the Q4 2026 guide, and Hatchbo revenue does not begin until January 2027.
- Capital intensity: approximately $1,263M of consolidated capital expenditure remains in 2026, about $232M of it at Stateline, against $1,330.4M of power-generation equipment purchase commitments.
The case strengthened this quarter on the contracted side and on the balance sheet, and remains unproven on the delivery side. Management converted a funding promise into a rated capital structure, expanded three existing contracts, and closed what the company calls its largest acquisition — but the revenue those contracts imply arrives mostly in Q4 2026 and January 2027. Customer concentration is still extreme, an unnamed single supplier sits inside the supply chain, and the build spends well ahead of the contracted revenue. The open question is whether the roughly 2.3 GW contracted book energizes on the stated dates and whether the ~800 MW of open capacity signs before the delivery calendar and the funding needs converge.
Earnings Beat
Solaris reported Q2 2026 revenue of $219.4M, up 12% sequentially, with gross margin of 57.6% against 37.1% in Q1 2026. Adjusted EBITDA — the measure management guides on — was ~$108M, up 30% sequentially. Power Solutions did the work: roughly $158M of the revenue (~72% of the total) and roughly $96M of adjusted EBITDA (~89%), on about 950 MW of capacity earning revenue, up 4% from roughly 910 MW in Q1.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $219M | $196M | $149M | +47.0% |
| Gross margin | 57.6% | 37.1% | 34.6% | +2300bps |
| EBITDA | $96M | $75M | $56M | +73.0% |
| EPS | $0.26 | $0.30 | $0.32 | −18.3% |
| Contracted power capacity | ~2.3 GW | Over 2 GW (Q1 2026) | n/a | — |
| Power Solutions capacity earning revenue | ~950 MW | ~910 MW | n/a | Up 4% QoQ |
Today, we are in active negotiations for multiple gigawatts of additional demand with multiple hyperscalers and AI compute companies.— Bill Zartler, Chairman and Co-CEO, 2026-08-06
Management tone: Q1 2026 was the expansion call; Q2 2026 was the delivery call. Management's own framing of the shift: the strategy 'hasn't necessarily changed. What's happening now is it's actually showing up.' The team pointed to executed items rather than new promises — the $1.3B notes and $650M revolver, GESA closing, a third technology customer's scope expansion, and a raise to Q3 guidance. Against that step-change quarter, management repeated its timing caveat: timing inside a quarter 'swings the number still more meaningful than it should.' On the prior call Zartler had said the market 'may have gotten a little exuberant about how quick things are rolling out.' Management also volunteered on Q2 that it believes there is a 'significant disconnect between current public market valuations and the fundamentals.'
Management Guidance
On the Q2 2026 call, CFO Stephan Tompsett raised Q3 2026 adjusted EBITDA guidance to $90M–$105M from the $80M–$95M set a quarter earlier, citing the contribution of the GESA acquisition and expectations for continued execution. He initiated Q4 2026 guidance at $100M–$120M, reflecting the ramp of energization at the Stateline joint venture and the first location for the third hyperscaler customer. Both periods exclude any potential benefits from additional ancillary services. A post-quarter release dated 2026-09-08 said the company raised 3Q26 and 4Q26 guidance and initiated 1Q27 guidance; the revised figures are not captured in the source material. No guide was withdrawn at any point in the captured record.
Trajectory
Revenue compounded from $149.3M in Q2 FY2025 to $219.4M in Q2 FY2026, and trailing-twelve-month revenue growth is 70.5%. Sequential growth decelerated through FY2025 — +18%, +12%, +8%, +9% — before ticking back to about +12% in Q2 FY2026. Margins moved the other way: the code-computed signals show gross margin expanding 250 basis points and EBITDA margin 130 basis points, and the company's adjusted EBITDA margin moved from roughly 43% in Q1 to roughly 49% in Q2 as higher-margin service and ancillary revenue layered onto a largely fixed deployed base. The gap between roughly 2.3 GW contracted and roughly 950 MW earning revenue is what drives the numbers: revenue arrives as energizations land, not as contracts are signed. Free cash flow is deeply negative — $727.8M of trailing-twelve-month outflow — because the build spends ahead of the contracted revenue.
The Model
The model projects FY+1 revenue of $886M with EBITDA of $392M, a 44.2% margin, and FY+2 revenue of $1,300M with EBITDA of $624M, a 48.0% margin. The near-term anchor is the book already signed: the September 2026 energizations, the Q4 2026 Stateline ramp and the third hyperscaler's first location, and Hatchbo's January 2027 revenue start. FY+2 assumes the flywheel continues — the ~800 MW of open capacity signing into long-term contracts, Genco's 400 MW arriving between 2026 and 2028, and the 30 turbine slots (~500 MW) delivering from early 2027. The model's FY+2 revenue spread across its five runs is 27%, from $1,250M to $1,600M.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $622M | $886M | $1.3B |
| YoY Growth | — | +42.4% | +46.7% |
| EBITDA | $218M | $392M | $624M |
| EBITDA Margin | 35.0% | 44.2% | 48.0% |
Projections are the median of 5 independent model runs. The model’s revenue sits 25.4% above analyst consensus.
On the Q2 2026 call, CFO Stephan Tompsett raised Q3 2026 adjusted EBITDA guidance to $90M–$105M from the $80M–$95M set a quarter earlier, citing the contribution of the GESA acquisition and expectations for continued execution. He initiated Q4 2026 guidance at $100M–$120M, reflecting the ramp of energization at the Stateline joint venture and the first location for the third hyperscaler customer. Both periods exclude any potential benefits from additional ancillary services. A post-quarter release dated 2026-09-08 said the company raised 3Q26 and 4Q26 guidance and initiated 1Q27 guidance; the revised figures are not captured in the source material. No guide was withdrawn at any point in the captured record.
What Could Go Right — and Wrong
- The ~800 MW of open capacity converts into long-term contracts at the return profile management targets.
- Integrated scope lands at the higher end of the 20%–50% uplift on invested capital management describes; only the low end is embedded in the current guide.
- GESA builds a third-party aftermarket business servicing turbines Solaris does not own, on top of the installation, commissioning, and 24/7 emergency response it adds.
- More than $1 billion of additional identified capital that management says it can deploy in 2026 and 2027 converts into contracted power capacity.
- Stateline, Hatchbo, and the third hyperscaler's first location all come online on their stated dates, converting already-built capacity into revenue.
- An energization slips past a quarter boundary; management has said timing inside a quarter swings the number more than it should.
- The unnamed single-source equipment supplier fails to deliver on time or at cost, gating the whole build.
- The largest customers — at 47.3% of FY2025 revenue and 88% of Power segment revenue — renegotiate, delay, or do not renew.
- Fuel logistics are a shared constraint: data-center cement demand has absorbed pneumatic trucks, tightening the last-mile capacity the power plants depend on.
- Ancillary services, excluded from guidance, do not repeat — Q2's Power segment EBITDA was 'driven primarily by increased ancillary service revenue.'
Looking Ahead
The next twelve months are a delivery calendar. Two energizations are due in September 2026 — the third hyperscaler's first deployment and the second data-center construction site. Q4 2026 depends on the Stateline joint venture's energization ramp and the third hyperscaler's first location. Hatchbo begins earning revenue in January 2027. The company expects approximately $1,263M of consolidated capital expenditure remaining in 2026, about $232M of it at Stateline, against $1,330.4M of power-generation equipment purchase commitments and a $364.9M non-cancellable Baker Hughes obligation. The swing factor is the ~800 MW of open capacity: management says it is in advanced detailed discussions with numerous customers about deploying that equipment under long-term contracts.
- September 2026Energization due — Third hyperscaler's first deployment; one of the two data-center sites under construction.
- Q4 2026Stateline energization ramp — 900 MW joint venture; Q4 guidance depends on this ramp.
- January 2027Hatchbo revenue begins — 660 MW turnkey plant; over 70% of equipment already available.
- Early 2027Turbine slots deliver — 30 Baker Hughes slots, ~500 MW, dry lease converting to wet.
- By 2030Investment-grade scale — Management's stated ambition to reach investment-grade size.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $313M | $622M | $762M | +98.7% |
| Gross Margin | 25.7% | 32.3% | 40.7% | +665bps |
| EBITDA | $100M | $218M | $292M | +117.8% |
| EBITDA Margin | 32.0% | 35.0% | 38.3% | +307bps |
| Net Income | $16M | $30M | $55M | +91.1% |
| Free Cash Flow | −$129M | −$438M | −$728M | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)40.7%
- EBITDA Margin (TTM)38.3%
- Net Margin (TTM)7.2%
- ROIC5.6%
- FCF Conversion-249.5%
- SBC / Revenue2.3%
The Company
Solaris Energy Infrastructure sells power, not compute. It builds islanded, behind-the-meter gas-fired generation plus the balance of plant around it — switchgear, transformers, high- and medium-voltage distribution, cabling, e-houses, batteries, and controls — and sells it to data center, energy, and commercial and industrial customers under long-term capacity and operating agreements. The company also sells balance of plant without generation at sites where the grid supplies the power, and provides engineering and consulting to customers facing power constraints. The 10-K describes the business as providing 'modular and scalable equipment-based solutions for power generation, control and distribution, and the management of raw materials in oil and natural gas well completions.' Power Solutions is the growth segment and carries the data-center exposure. Logistics Solutions designs and manufactures equipment for managing raw materials in oil and natural gas well completions, alongside field technician support, software, and last mile and mobilization services.
The company is headquartered in Houston, Texas. Its disclosed physical footprint is small and service-oriented: for Power Solutions, a repair and maintenance facility in Buffalo, Texas plus storage and yard facilities in Southaven, Mississippi, Memphis, Tennessee, and Hobbs, New Mexico; for Logistics Solutions, a repair and maintenance facility in Monahans, Texas and a manufacturing facility in Early, Texas. Operating capability has been bought rather than built. Solaris Power Distribution Services supplies electrical distribution in-house; the company invested in an SCR manufacturer it calls a bottleneck; it does some of its own assembly and e-house building; and GESA, closed in early July 2026, adds more than 600 skilled colleagues for installation, commissioning, operations and maintenance, repair and refurbishment, and 24/7 emergency response across aeroderivative, heavy-duty industrial, hydroelectric, and steam turbine classes.
Business Segments
Competitive Landscape
The filings and the calls in the source material do not name a competitor. The supply-chain wiring layer — tagged inferred, with no documented quotes behind it — lists five names. The most informative is GE Vernova, which appears on both sides of the ledger: an inferred supplier of aeroderivative turbines and an inferred competitor that sells gas turbines directly to hyperscalers, bypassing integrators. Solaris's own stated position is that grid interconnection delays, moratoriums, and interconnection queues work as tailwinds, because it can site generation where gas is available rather than waiting for a queue position.
- AggrekoTagged in the inferred wiring layer as a mobile power rental provider using gas and diesel generators.
- Tagged in the inferred wiring layer as a fuel cell provider competing with gas turbine power.
- GE VernovaTagged both an inferred supplier of LM2500/LM6000 aeroderivative turbines and an inferred competitor that sells gas turbines directly to hyperscalers.
- VoltagridTagged in the inferred wiring layer as a behind-the-meter power provider for data centers.
- WärtsiläTagged in the inferred wiring layer as a gas engine power provider for data centers.
Supply Chain
Solaris sits between turbine and equipment suppliers and the data centers, hyperscalers, and industrial loads that buy its power. One unnamed supplier provides a significant portion of the Power segment's equipment, per the 10-K. No neighbor transcript in the source material mentions Solaris by name.
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