SOI

SOLARIS OILFIELD INFRASTRUCTURE INC

Energy | Small Cap

$0.14

EPS Forecast

$73.78

Revenue Forecast

Announcing earnings for the quarter ending 2024-09-30 soon
EX-99.1 2 soi-20200218ex9918e99a5.htm EX-99.1 Ex_99_1

Exhibit 99.1

 

Solaris Oilfield Infrastructure Announces Fourth Quarter and Full Year 2019 Results 

 

Fourth Quarter and Full Year 2019 Highlights

 

·

Net income of $90.4 million, or $1.69 per diluted Class A share, for the full year ended December 31, 2019; adjusted pro forma net income of $62.7 million, or $1.32 per diluted share for the year ended December 31, 2019 (see below for a reconciliation of adjusted pro forma net income to net income attributable to Solaris)

 

·

Net income of $25.3 million, or $0.48 per diluted Class A share, for the quarter ended December 31, 2019; Adjusted pro forma net income of $9.7 million, or $0.20 per diluted share for the quarter ended December 31, 2019

 

·

Adjusted EBITDA of $112.9 million and $20.9 million for the year and quarter ended December 31, 2019, respectively

 

·

Net cash provided by operating activities of $114.9 million and $26.3 million for the year and quarter ended December 31, 2019, respectively

 

     Positive free cash flow of $80.0 million and $24.4 million for the year and quarter ended December 31, 2019, respectively

 

·

Raised the regular quarterly dividend 5% in December 2019 and paid the new regular quarterly dividend of $0.105 per share on December 26, 2019

 

·

Announced a $25 million share repurchase program in December 2019 of which approximately $3.3 million was spent in 2019 to repurchase approximately 0.3 million shares; an additional $14.4 million spent in 2020 to purchase an additional 1.2  million shares through February 14, 2020, leaving approximately $7.3 million of repurchase authorization

 

HOUSTON, February 18, 2020 (BUSINESS WIRE) — Solaris Oilfield Infrastructure, Inc. (NYSE:SOI) (“Solaris” or the “Company”), a leading independent provider of supply chain management and logistics solutions designed to drive efficiencies and reduce costs for the oil and natural gas industry, today reported financial results for the fourth quarter and full year 2019.

 

Operational Update and Outlook

 

During the fourth quarter 2019, an average of 88 mobile proppant management systems were fully utilized, a 23% decrease from the 115 fully utilized systems averaged in the third quarter of 2019, and a 27% decrease compared to fourth quarter 2018. The sequential decrease in fully utilized systems during the fourth quarter of 2019 was primarily due to a decline in active hydraulic fracturing crews as oil and gas operators reduced activity to stay within budgets. For full year 2019, an average 110 mobile proppant management systems were fully utilized, which was essentially flat from the 111 fully utilized systems averaged in 2018.

 

Based on current industry activity levels, the Company believes it has approximately one third of overall U.S. wellsite proppant storage market share, which continues to represent the leading share.

 

The Company continues to maintain 166 mobile proppant management systems in its rental fleet, unchanged from the third quarter, and will continue to incorporate field learnings into its fleet of 14 mobile chemical management systems. The Company expects capital expenditures for the full year 2020 to be $20.0-40.0 million, unchanged from prior guidance.

 

“I’m pleased that the Solaris team delivered another solid year of performance, despite a challenging macro environment,” Solaris’ Chairman and Chief Executive Officer Bill Zartler commented. “In 2019, we began generating meaningful operating cash flow, which we have used to both return capital to our shareholders in the form of dividends and share repurchases, and also continue to invest in value-add new technology. Despite early indications for another decline in industry capital spending levels in 2020, our strong balance sheet and cash generation should allow us to continue driving innovation for our customers while maximizing value for shareholders.”

 

Full Year 2019 Financial Review

 

Solaris reported net income of $90.4 million, or $1.69 per diluted Class A share, for full year 2019, compared to full year 2018 net income of $86.0 million, or $1.59 per diluted Class A share. Adjusted pro forma net income for full year 2019 was $62.7 million, or $1.32 per fully diluted share, compared to full year 2018 adjusted pro forma net income of $79.2 million, or $1.68 per fully diluted share. A description of adjusted pro forma net income and a reconciliation to net income attributable to Solaris, its most directly comparable generally accepted accounting principles (“GAAP”) measure, and the computation of adjusted pro forma earnings per fully diluted share are provided below.

 

Adjusted EBITDA for full year 2019 was $112.9 million, compared to full year 2018 adjusted EBITDA of $122.8 million. A description of adjusted EBITDA and a reconciliation to net income, its most directly comparable GAAP measure, is provided below.

 

Fourth Quarter 2019 Financial Review

 

Solaris reported net income of $25.3 million, or $0.48 per diluted Class A share, for fourth quarter 2019, compared to net income of $19.1 million, or $0.36 per diluted Class A share, in third quarter 2019 and net income of $24.7 million, or $0.47 per diluted Class A share, in fourth quarter 2018. Fourth quarter 2019 included a $17.6 million, or $0.37 per diluted Class A share, benefit for deferred revenue recognition that resulted from a contract termination at the Company’s Kingfisher transload facility. Adjusted pro forma net income for fourth quarter 2019 was $9.7 million, or $0.20 per fully diluted share, compared to adjusted pro forma net income in third quarter 2019 of $15.2 million, or $0.32 per fully diluted share, and $21.2 million, or $0.44 per fully diluted share in fourth quarter 2018.

 

Adjusted EBITDA for fourth quarter 2019 was $20.9 million, compared to adjusted EBITDA of $28.0 million in third quarter 2019 and $34.4 million in fourth quarter 2018.

 

Revenues were $62.9 million for fourth quarter 2019, which were up 5% from third quarter 2019 and up 10% compared to fourth quarter 2018. Excluding the impact of deferred revenue, fourth quarter 2019 revenues declined 20% from third quarter 2019 and decreased 20% compared to fourth quarter 2018.

 

Capital Expenditures, Free Cash Flow and Liquidity

 

The Company invested $1.9 million during fourth quarter 2019 and $34.9 million for full year 2019, which included investments in its mobile proppant and chemical management systems.

 

Free cash flow (defined as net cash provided by operating activities less investment in property, plant and equipment) during fourth quarter 2019 was $24.4 million, which represented the fourth consecutive quarter of positive free cash flow for the Company. For full year 2019, the Company generated $80.0 million of free cash flow.

 

As of December 31, 2019, the Company had approximately $66.9 million of cash on the balance sheet, which reflects over $1.40 per fully diluted share of available cash. The Company’s $50.0 million credit facility remains undrawn.

 

Shareholder Returns

 

On December 3, 2019, the Company announced that its Board of Directors had declared a cash dividend of $0.105 per share of Class A common stock, which represented a 5% increase over the prior quarterly dividend and was paid on December 26, 2019 to holders of record as of December 16, 2019. A distribution of $0.105 per unit was also approved for holders of units in Solaris Oilfield Infrastructure, LLC (“Solaris LLC”). Since initiating the dividend in December 2018, the Company has paid 5 consecutive quarterly dividends, returning a total of nearly $24 million in cash to shareholders.

 

During the fourth quarter of 2019, Solaris repurchased approximately 0.3 million shares for a total of $3.2 million. Since announcing the share repurchase program in December 2019, Solaris has repurchased a total of approximately 1.4 million shares, or approximately 5% of its fully diluted shares outstanding, at a weighted-average share price of $12.40 for a total of $17.7 million. The Company currently has $7.3 million remaining of its original $25 million share repurchase authorization.

 

Conference Call

 

The Company will host a conference call to discuss its fourth quarter and full year 2019 results on Wednesday, February 19, 2020 at 7:30 a.m. Central Time (8:30 a.m. Eastern Time). To join the conference call from within the United States, participants may dial (844) 413-3978. To join the conference call from outside of the United States, participants may dial (412) 317-6594. When instructed, please ask the operator to be joined to the Solaris Oilfield Infrastructure, Inc. call. Participants are encouraged to log in to the webcast or dial in to the conference call approximately ten minutes prior to the start time. To listen via live webcast, please visit the Investor Relations section of the Company’s website at http://www.solarisoilfield.com.

 

An audio replay of the conference call will be available shortly after the conclusion of the call and will remain available for approximately seven days. It can be accessed by dialing (877) 344-7529 within the United States or (412) 317-0088 outside of the United States. The conference call replay access code is 10135468. The replay will also be available in the Investor Relations section of the Company’s website shortly after the conclusion of the call and will remain available for approximately seven days.

 

About Solaris Oilfield Infrastructure, Inc.

 

Solaris Oilfield Infrastructure, Inc. (NYSE:SOI) manufactures and rents mobile equipment that drives supply chain and execution efficiencies in the completion of oil and natural gas wells. Solaris’ patented mobile proppant and chemical systems are deployed in many of the most active oil and natural gas basins in the United States, including the Permian Basin, the Eagle Ford Shale, the STACK/SCOOP formation, the Marcellus and Utica Shales, the Haynesville Shale, the Rockies and the Bakken Shale. Additional information is available on the Solaris website, www.solarisoilfield.com.

 

Website Disclosure

 

We use our website (www.solarisoilfield.com) as a routine channel of distribution of company information, including news releases, analyst presentations, and supplemental financial information, as a means of disclosing material non-public information and for complying with our disclosure obligations under the Securities and Exchange Commission’s (the “SEC”) Regulation FD. Accordingly, investors should monitor our website in addition to following press releases, SEC filings and public conference calls and webcasts. Additionally, we provide notifications of news or announcements on our investor relations website. Investors and others can receive notifications of new information posted on our investor relations website in real time by signing up for email alerts.

 

None of the information provided on our website, in our press releases, public conference calls and webcasts, or through social media channels is incorporated by reference into, or deemed to be a part of, this Current Report on Form 8-K or will be incorporated by reference into any other report or document we file with the SEC unless we expressly incorporate any such information by reference, and any references to our website are intended to be inactive textual references only.

 

Forward Looking Statements

 

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Examples of forward-looking statements include, but are not limited to, statements we make regarding management changes, the outlook for the operation of our Kingfisher Facility, current and potential future long-term contracts and our future business and financial performance. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, our actual results may differ materially from those contemplated by the forward-looking statements. Factors that could cause our actual results to differ materially from the results contemplated by such forward-looking statements include, but are not limited to the factors discussed or referenced in our filings made from time to time with the SEC. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

SOLARIS OILFIELD INFRASTRUCTURE, INC AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF OPERATIONS

 

(In thousands, except per share data)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

 

December 31, 

 

September 30,

 

December 31, 

 

    

2019

    

2018

 

2019

 

2019

 

2018

Revenue

 

 

  

 

 

  

 

 

 

 

 

 

 

 

 

System rental

 

$

28,296

 

$

39,083

 

$

36,638

 

$

142,022

 

$

143,646

System services

 

 

15,250

 

 

13,511

 

 

18,153

 

 

63,871

 

 

43,010

Transloading services

 

 

18,974

 

 

4,236

 

 

4,417

 

 

34,105

 

 

8,083

Inventory software services

 

 

338

 

 

507

 

 

396

 

 

1,689

 

 

2,457

Total revenue

 

 

62,858

 

 

57,337

 

 

59,604

 

 

241,687

 

 

197,196

Operating costs and expenses

 

 

  

 

 

  

 

 

 

 

 

 

 

 

 

Cost of system rental (excluding $5,908, $4,792 and $5,773 of depreciation and amortization for the three months ended December 31, 2019 and 2018 and September 30, 2019, respectively, and $22,389 and $14,920 of depreciation and amortization for the years ended December 31, 2019 and 2018, respectively, shown separately)

 

 

1,970

 

 

2,180

 

 

2,838

 

 

9,707

 

 

7,230

Cost of system services (excluding $375, $385 and $384 of depreciation and amortization for the three months ended December 31, 2019 and 2018 and September 30, 2019, respectively, and $1,548 and $1,274 of depreciation and amortization for the years ended December 31, 2019 and 2018, respectively, shown separately)

 

 

18,383

 

 

15,942

 

 

21,072

 

 

74,749

 

 

50,633

Cost of transloading services (excluding $412, $410 and $411 of depreciation and amortization for the three months ended December 31, 2019 and 2018 and September 30, 2019, respectively, and $1,643 and $954 of depreciation and amortization for the years ended December 31, 2019 and 2018, respectively, shown separately)

 

 

550

 

 

778

 

 

652

 

 

2,601

 

 

2,242

Cost of inventory software services (excluding $193, $196 and $193 of depreciation and amortization for the three months ended December 31, 2019 and 2018 and September 30, 2019, respectively, and $772 and $794 of depreciation and amortization for the years ended December 31, 2019 and 2018, respectively, shown separately)

 

 

144

 

 

183

 

 

160

 

 

604

 

 

797

Depreciation and amortization

 

 

7,050

 

 

5,908

 

 

6,908

 

 

26,925

 

 

18,422

Selling, general and administrative (excluding $162, $125 and $147 of depreciation and amortization for the three months ended December 31, 2019 and 2018 and September 30, 2019, respectively, and $573 and $480 of depreciation and amortization for the years ended December 31, 2019 and 2018, respectively, shown separately)

 

 

4,619

 

 

4,096

 

 

4,933

 

 

18,586

 

 

16,758

Other operating expenses

 

 

56

 

 

75

 

 

248

 

 

585

 

 

1,827

Total operating cost and expenses

 

 

32,772

 

 

29,162

 

 

36,811

 

 

133,757

 

 

97,909

Operating income

 

 

30,086

 

 

28,175

 

 

22,793

 

 

107,930

 

 

99,287

Interest expense, net

 

 

141

 

 

(103)

 

 

(8)

 

 

(634)

 

 

(374)

Total other expense

 

 

141

 

 

(103)

 

 

(8)

 

 

(634)

 

 

(374)

Income before income tax expense

 

 

30,227

 

 

28,072

 

 

22,785

 

 

107,296

 

 

98,913

Provision for income taxes

 

 

4,894

 

 

3,420

 

 

3,703

 

 

16,936

 

 

12,961

Net income

 

 

25,333

 

 

24,652

 

 

19,082

 

 

90,360

 

 

85,952

Less: net income related to non-controlling interests

 

 

(10,317)

 

 

(11,767)

 

 

(7,684)

 

 

(38,353)

 

 

(43,521)

Net income attributable to Solaris

 

$

15,016

 

$

12,885

 

$

11,398

 

$

52,007

 

$

42,431

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share of Class A common stock - basic

 

$

0.48

 

$

0.47

 

$

0.36

 

$

1.69

 

$

1.60

Earnings per share of Class A common stock - diluted

 

$

0.48

 

$

0.47

 

$

0.36

 

$

1.69

 

$

1.59

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average shares of Class A common stock outstanding

 

 

30,933

 

 

27,050

 

 

30,951

 

 

30,141

 

 

25,678

Diluted weighted average shares of Class A common stock outstanding

 

 

30,961

 

 

27,162

 

 

30,980

 

 

30,185

 

 

25,829

 

 

SOLARIS OILFIELD INFRASTRUCTURE, INC AND SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEETS

 

(In thousands, except per share amounts)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

    

December 31, 

    

December 31, 

 

 

2019

 

2018

Assets

 

 

  

 

 

  

Current assets:

 

 

  

 

 

  

Cash and cash equivalents

 

$

66,882

 

$

25,057

Accounts receivable, net

 

 

38,554

 

 

39,746

Prepaid expenses and other current assets

 

 

5,002

 

 

5,492

Inventories

 

 

7,144

 

 

10,470

Total current assets

 

 

117,582

 

 

80,765

Property, plant and equipment, net

 

 

306,583

 

 

296,538

Operating lease right-of-use assets

 

 

7,871

 

 

 —

Goodwill

 

 

17,236

 

 

17,236

Intangible assets, net

 

 

3,761

 

 

4,540

Deferred tax assets

 

 

51,414

 

 

58,074

Other assets

 

 

625

 

 

1,454

Total assets

 

$

505,072

 

$

458,607

Liabilities and Stockholders' Equity

 

 

  

 

 

  

Current liabilities:

 

 

  

 

 

  

Accounts payable

 

$

3,824

 

$

9,127

Accrued liabilities

 

 

14,447

 

 

12,658

Current portion of payables related to Tax Receivable Agreement

 

 

1,416

 

 

 —

Current portion of deferred revenue

 

 

 —

 

 

12,990

Current portion of operating lease liabilities

 

 

596

 

 

 —

Current portion of finance lease liabilities

 

 

30

 

 

35

Other current liabilities

 

 

74

 

 

515

Total current liabilities

 

 

20,387

 

 

35,325

Senior secured credit facility

 

 

 —

 

 

13,000

Deferred revenue, net of current

 

 

 —

 

 

12,468

Operating lease liabilities, net of current

 

 

7,855

 

 

 —

Finance lease liabilities, net of current

 

 

130

 

 

154

Payables related to Tax Receivable Agreement

 

 

66,582

 

 

56,149

Other long-term liabilities

 

 

460

 

 

633

Total liabilities

 

 

95,414

 

 

117,729

Commitments and contingencies

 

 

  

 

 

  

Stockholders' equity

 

 

  

 

 

  

Preferred stock, $0.01 par value, 50,000 shares authorized, none issued and outstanding

 

 

 —

 

 

 —

Class A common stock, $0.01 par value, 600,000 shares authorized, 30,928 issued and 30,765 outstanding as of December 31, 2019 and 27,172, issued and 27,091 outstanding as of December 31, 2018

 

 

308

 

 

271

Class B common stock, $0.00 par value, 180,000 shares authorized, 15,939 shares issued and outstanding as of December 31, 2019 and 19,627 issued and outstanding as of December 31, 2018

 

 

 —

 

 

 —

Additional paid-in capital

 

 

191,843

 

 

164,086

Retained earnings

 

 

74,222

 

 

35,507

Treasury stock (at cost), 163 shares and 91 shares as of December 31, 2019 and 2018, respectively

 

 

(2,526)

 

 

(1,414)

Total stockholders' equity attributable to Solaris and members' equity

 

 

263,847

 

 

198,450

Non-controlling interest

 

 

145,811

 

 

142,428

Total stockholders' equity

 

 

409,658

 

 

340,878

Total liabilities and stockholders' equity

 

$

505,072

 

$

458,607

 

SOLARIS OILFIELD INFRASTRUCTURE, INC AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(In thousands)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

For the Year Ended December 31, 

 

    

2019

    

2018

Cash flows from operating activities:

 

 

  

 

 

  

Net income

 

$

90,360

 

$

85,952

Adjustment to reconcile net income to net cash provided by operating activities:

 

 

  

 

 

  

Depreciation and amortization

 

 

26,925

 

 

18,422

Loss on disposal of asset

 

 

261

 

 

318

Stock-based compensation

 

 

4,475

 

 

3,861

Amortization of debt issuance costs

 

 

753

 

 

296

Write-off of deposit

 

 

202

 

 

 —

Provision for bad debt

 

 

339

 

 

 —

Deferred income tax expense

 

 

16,122

 

 

12,277

Other

 

 

(150)

 

 

620

Changes in assets and liabilities:

 

 

 

 

 

  

Accounts receivable

 

 

853

 

 

(26,766)

Prepaid expenses and other assets

 

 

2,332

 

 

(686)

Inventories

 

 

(2,744)

 

 

(10,470)

Accounts payable

 

 

(3,582)

 

 

4,469

Accrued liabilities

 

 

4,183

 

 

2,614

Deferred revenue

 

 

(25,458)

 

 

25,458

Net cash provided by operating activities

 

 

114,871

 

 

116,365

Cash flows from investing activities:

 

 

  

 

 

  

Investment in property, plant and equipment

 

 

(34,852)

 

 

(161,079)

Cash received from insurance proceeds

 

 

618

 

 

540

Proceeds from disposal of assets

 

 

232

 

 

 —

Investment in intangible assets

 

 

 —

 

 

(6)

Net cash used in investing activities

 

 

(34,002)

 

 

(160,545)

Cash flows from financing activities:

 

 

  

 

 

  

Distribution and dividend paid to Solaris LLC unitholders and Class A common shareholders

 

 

(19,260)

 

 

(4,713)

Share repurchases

 

 

(3,249)

 

 

 —

Payments under finance leases

 

 

(35)

 

 

(28)

Payments under insurance premium financing

 

 

(2,485)

 

 

(1,275)

Proceeds from stock option exercises

 

 

294

 

 

932

Payments related to purchase of treasury stock

 

 

(1,112)

 

 

(1,146)

Proceeds from borrowings under the senior secured credit facility

 

 

 —

 

 

13,000

Repayment of senior secured credit facility

 

 

(13,000)

 

 

 —

Payments related to debt issuance costs

 

 

(197)

 

 

(1,014)

Other

 

 

 —

 

 

60

Net cash provided by financing activities

 

 

(39,044)

 

 

5,816

Net increase (decrease) in cash and cash equivalents

 

 

41,825

 

 

(38,364)

Cash and cash equivalents at beginning of period

 

 

25,057

 

 

63,421

Cash and cash equivalents at end of period

 

$

66,882

 

$

25,057

Non-cash activities

 

 

  

 

 

  

Investing:

 

 

  

 

 

  

Capitalized depreciation in property, plant and equipment

 

$

735

 

$

688

Property and equipment additions incurred but not paid at period-end

 

 

82

 

 

3,909

Property, plant and equipment additions transferred from inventory

 

 

5,882

 

 

7,532

Financing:

 

 

 

 

 

 

Insurance premium financing

 

 

1,869

 

 

1,552

Cash paid for (received from):

 

 

 

 

 

  

Interest

 

 

275

 

 

281

Income taxes

 

 

663

 

 

314

 

 

SOLARIS OILFIELD INFRASTRUCTURE, INC AND SUBSIDIARIES

 

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION — ADJUSTED EBITDA

 

(In thousands)

 

(Unaudited)

 

We view EBITDA and Adjusted EBITDA as important indicators of performance. We define EBITDA as net income, plus (i) depreciation and amortization expense, (ii) interest expense and (iii) income tax expense, including franchise taxes. We define Adjusted EBITDA as EBITDA plus (i) stock-based compensation expense and (ii) certain non-cash items and extraordinary, unusual or non-recurring gains, losses or expenses.

 

We believe that our presentation of EBITDA and Adjusted EBITDA provides useful information to investors in assessing our financial condition and results of operations. Net income is the GAAP measure most directly comparable to EBITDA and Adjusted EBITDA. EBITDA and Adjusted EBITDA should not be considered alternatives to net income presented in accordance with GAAP. Because EBITDA and Adjusted EBITDA may be defined differently by other companies in our industry, our definitions of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies, thereby diminishing their utility. The following table presents a reconciliation of net income to EBITDA and Adjusted EBITDA for each of the periods indicated.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Year ended

 

 

December 31, 

 

September 30,

 

December 31, 

 

 

2019

 

2018

 

2019

 

2019

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

25,333

 

$

24,652

 

$

19,082

 

$

90,360

 

$

85,952

Depreciation and amortization

 

 

7,050

 

 

5,908

 

 

6,908

 

 

26,925

 

 

18,422

Interest expense, net

 

 

(141)

 

 

103

 

 

 8

 

 

634

 

 

374

Income taxes (1)

 

 

4,894

 

 

3,420

 

 

3,703

 

 

16,936

 

 

12,961

EBITDA

 

$

37,136

 

$

34,083

 

$

29,701

 

$

134,855

 

$

117,709

Stock-based compensation expense (2)

 

 

1,213

 

 

720

 

 

1,225

 

 

4,476

 

 

2,920

Loss on disposal of assets

 

 

80

 

 

76

 

 

99

 

 

463

 

 

153

Severance expense

 

 

75

 

 

 —

 

 

154

 

 

229

 

 

 —

Transload contract termination (3)

 

 

(17,630)

 

 

(522)

 

 

(3,204)

 

 

(27,138)

 

 

(522)

Non-recurring cash bonuses (4)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

1,679

IPO bonuses (5)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

896

Adjusted EBITDA

 

$

20,874

 

$

34,357

 

$

27,975

 

$

112,885

 

$

122,835


(1)Federal and state income taxes.

 

(2)Represents stock-based compensation expense related to restricted stock awards.

 

(3)Deferred revenue related to full termination of a sand storage and transloading agreement; no deferred revenue balance remained as of December 31, 2019.

 

(4)Certain performance-based cash awards paid in connection with the purchase of Railtronix upon the achievement of certain financial milestones.

 

(5)Represents stock-based compensation expense related to restricted stock awards with one-year vesting of $896 in the year ended December  31, 2018 that were granted to certain employees and consultants in connection with the IPO.

 

 

SOLARIS OILFIELD INFRASTRUCTURE, INC AND SUBSIDIARIES

 

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION — ADJUSTED PRO FORMA NET INCOME AND ADJUSTED PRO FORMA EARNINGS PER FULLY DILUTED SHARE

 

(In thousands)

 

(Unaudited)

 

Adjusted pro forma net income represents net income attributable to Solaris assuming the full exchange of all outstanding membership interests in Solaris LLC not held by Solaris Oilfield Infrastructure, Inc. for shares of Class A common stock, adjusted for certain non-recurring items that the Company doesn't believe directly reflect its core operations and may not be indicative of ongoing business operations. Adjusted pro forma earnings per fully diluted share is calculated by dividing adjusted pro forma net income by the weighted-average shares of Class A common stock outstanding, assuming the full exchange of all outstanding Solaris LLC Units, after giving effect to the dilutive effect of outstanding equity-based awards.

 

When used in conjunction with GAAP financial measures, adjusted pro forma net income and adjusted pro forma earnings per fully diluted share are supplemental measures of operating performance that the Company believes are useful measures to evaluate performance period over period and relative to its competitors. By assuming the full exchange of all outstanding Solaris LLC Units, the Company believes these measures facilitate comparisons with other companies that have different organizational and tax structures, as well as comparisons period over period because it eliminates the effect of any changes in net income attributable to Solaris as a result of increases in its ownership of Solaris LLC, which are unrelated to the Company's operating performance, and excludes items that are non-recurring or may not be indicative of ongoing operating performance.

 

Adjusted pro forma net income and adjusted pro forma earnings per fully diluted share are not necessarily comparable to similarly titled measures used by other companies due to different methods of calculation. Presentation of adjusted pro forma net income and adjusted pro forma earnings per fully diluted share should not be considered alternatives to net income and earnings per share, as determined under GAAP. While these measures are useful in evaluating the Company's performance, it does not account for the earnings attributable to the non-controlling interest holders and therefore does not provide a complete understanding of the net income attributable to Solaris. Adjusted pro forma net income and adjusted pro forma earnings per fully diluted share should be evaluated in conjunction with GAAP financial results. A reconciliation of adjusted pro forma net income to net income attributable to Solaris, the most directly comparable GAAP measure, and the computation of adjusted pro forma earnings per fully diluted share are set forth below.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Year ended

 

 

December 31, 

 

September 30,

 

December 31, 

 

 

2019

 

2018

 

2019

 

2019

 

2018

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Solaris

 

$

15,016

 

$

12,885

 

$

11,398

 

$

52,007

 

$

42,431

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reallocation of net income attributable to non-controlling interests from the assumed exchange of LLC Interests(1)

 

 

10,317

 

 

11,767

 

 

7,684

 

 

38,353

 

 

43,521

Transload contract termination (2)

 

 

(17,630)

 

 

(522)

 

 

(3,204)

 

 

(27,138)

 

 

(522)

Loss on disposal of assets

 

 

80

 

 

76

 

 

99

 

 

463

 

 

153

Non-recurring write-off of debt issuance costs (3)

 

 

 —

 

 

 —

 

 

 —

 

 

528

 

 

 —

Non-recurring cash bonuses (4)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

1,679

IPO bonuses (5)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

896

Severance expense

 

 

75

 

 

 —

 

 

154

 

 

229

 

 

 —

Income tax expense

 

 

1,873

 

 

(3,011)

 

 

(948)

 

 

(1,748)

 

 

(8,978)

Adjusted pro forma net income

 

$

9,731

 

$

21,195

 

$

15,183

 

$

62,694

 

$

79,180

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares of Class A common stock outstanding - diluted

 

 

30,961

 

 

27,162

 

 

30,980

 

 

30,185

 

 

25,829

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assumed exchange of Solaris LLC Units for shares of Class A common stock (1)

 

 

16,539

 

 

20,742

 

 

16,603

 

 

17,302

 

 

21,370

Adjusted pro forma fully weighted average shares of Class A common stock outstanding - diluted

 

 

47,500

 

 

47,904

 

 

47,583

 

 

47,487

 

 

47,199

Adjusted pro forma earnings per share - diluted

 

$

0.20

 

$

0.44

 

$

0.32

 

$

1.32

 

$

1.68

 

(1)

Assumes the exchange of all outstanding Solaris LLC Units for shares of Class A common stock at the beginning of the relevant reporting period, resulting in the elimination of the non-controlling interest and recognition of the net income attributable to non-controlling interests.

 

(2)

Deferred revenue related to full termination of a sand storage and transloading agreement; no deferred revenue balance remained as of December 31, 2019.

 

(3)

Write-off of certain unamortized debt issuance costs related to lenders under the 2018 Credit Agreement which are no longer parties to the 2019 Credit Agreement.

 

(4)

Certain performance-based cash awards paid in connection with the purchase of Railtronix upon the achievement of certain financial milestones.

 

(5)

Represents stock-based compensation expense related to restricted stock awards with one-year vesting of $896 in the year ended December  31, 2018 that were granted to certain employees and consultants in connection with the IPO.

 

 

 

Contacts:

 

Yvonne Fletcher

Senior Vice President, Finance and Investor Relations

(281) 501-3070

IR@solarisoilfield.com