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Solaris Oilfield Infrastructure Announces First Quarter 2024 Results and Continued Shareholder Returns for Second Quarter 2024

First Quarter 2024 Summary Results and Shareholder Return Highlights

  • Revenue of $68 million

  • Net income of $7 million, or $0.14 per diluted Class A share; Adjusted pro forma net income of $7 million, or $0.16 per fully diluted share

  • Adjusted EBITDA of $23 million

  • Generated $17 million of cash flow from operations and $14 million in free cash flow

  • Returned a total of $13 million to shareholders in first quarter 2024 through share repurchases and dividends, resulting in $172 million cumulatively returned to shareholders since 2018

  • Approved second quarter 2024 dividend of $0.12 per share on April 24, 2024, to be paid on June 17, 2024, which, once paid, will represent Solaris’ 23rd consecutive dividend

HOUSTON, April 25, 2024--(BUSINESS WIRE)--Solaris Oilfield Infrastructure, Inc. (NYSE:SOI) ("Solaris" or the "Company"), today announced first quarter 2024 financial and operational results.

"Solaris started the year with strong free cash flow generation as we continue to harvest cash from the organic investments we made over the last few years," Chairman and Chief Executive Officer Bill Zartler commented.

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"Including today’s announced dividend, we have cumulatively returned nearly half of the company’s current market capitalization to shareholders. We expect that the continued growth in our free cash flow during the remainder of this year should support continued execution on our shareholder returns commitment, while allowing us to maintain our healthy balance sheet and build flexibility for future organic and inorganic investments."

Shareholder Returns

On February 19, 2024, Solaris’ Board of Directors approved a cash dividend of $0.12 per share of Class A common stock, which was paid on March 21, 2024 to holders of record as of March 11, 2024, and a distribution of $0.12 per unit for holders of units in Solaris Oilfield Infrastructure, LLC ("Solaris LLC," and such holders "Solaris LLC Unitholders"), subject to the same payment and record date, or approximately $5 million in aggregate.

Solaris repurchased 1.1 million shares during the first quarter of 2024 for approximately $8 million. Approximately $15 million remains in the current share repurchase authorization. Since initiating the repurchase authorization in the first quarter of 2023, Solaris has repurchased a total of 4.3 million shares of Class A common stock, or approximately 10% of Solaris’ total current outstanding shares.

On April 24, 2024, Solaris’ Board of Directors approved a second quarter 2024 cash dividend of $0.12 per share of Class A common stock, to be paid on June 17, 2024 to holders of record as of June 7, 2024, and a distribution of $0.12 per unit to Solaris LLC Unitholders, which is subject to the same payment and record dates, or approximately $5 million in aggregate.

Pro forma for the announced second quarter 2024 dividend, Solaris has returned approximately $178 million to shareholders through dividends and share repurchases. Since commencing shareholder returns in 2018, the Company has increased the dividend per share by 20% and has driven a 7% net reduction in total shares outstanding.

Free Cash Flow, Capital Expenditures and Liquidity

Free cash flow after asset disposals was positive $14 million in the first quarter of 2024, including a typical seasonal working capital use of $5 million.

Capital expenditures in the first quarter of 2024 were approximately $3 million, down approximately 55% from the fourth quarter of 2023. Solaris still expects full year 2024 capital expenditures to be less than $15 million, an approximately 75% year-over-year reduction.

As of March 31, 2024, Solaris had $3 million of cash on the balance sheet. Solaris ended the first quarter of 2024 with $30 million in borrowings outstanding and $41 million of liquidity. Net debt (defined as total debt outstanding less cash) at the end of the first quarter of 2024 was $27 million.

See "About Non-GAAP Measures" below for additional detail and reconciliations of GAAP to non-GAAP measures in the accompanying financial tables.

First Quarter 2024 Financial Review

Net income was $7 million, or $0.14 per diluted Class A share, for first quarter 2024, compared to fourth quarter 2023 net income of $7 million, or $0.14 per diluted Class A share, and first quarter 2023 net income of $12 million, or $0.23 per diluted Class A share. Adjusted pro forma net income for first quarter 2024 was $7 million, or $0.16 per fully diluted share, compared to fourth quarter 2023 adjusted pro forma net income of $7 million, or $0.15 per fully diluted share, and first quarter 2023 adjusted pro forma net income of $11 million, or $0.24 per fully diluted share.

Revenue was $68 million for first quarter 2024, which was up 7% from fourth quarter 2023 and down 18% from first quarter 2023. Adjusted EBITDA for first quarter 2024 was $23 million, which was up 7% from fourth quarter 2023 and down 10% from first quarter 2023. The sequential increases in revenue and Adjusted EBITDA were driven by an increase in lower-margin ancillary last mile logistics services activity and improved system pricing.

During the first quarter of 2024, Solaris earned revenue on 102 fully utilized systems, which includes sand systems and top fill systems. Total fully utilized systems were essentially flat with fourth quarter 2023 and down 14% from first quarter 2023. Solaris followed an average of 64 industry frac crews on a fully utilized basis in the first quarter of 2024, which was flat with fourth quarter 2023.

See "About Non-GAAP Measures" below for additional detail and reconciliations of GAAP to non-GAAP measures in the accompanying financial tables.

Conference Call

Solaris will host a conference call to discuss its results for first quarter 2024 on Friday, April 26, 2024 at 8:00 a.m. Central Time (9:00 a.m. Eastern Time). To join the conference call from within the United States, participants may dial (844) 413-3978, or for participants outside of the United States (412) 317-6594. Participants should ask the operator to join 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 2917930. 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 Non-GAAP Measures

In addition to financial results determined in accordance with generally accepted accounting principles in the United States ("GAAP"), this news release presents non-GAAP financial measures. Management believes that adjusted net income, adjusted diluted earnings per share, and Adjusted EBITDA provide useful information to investors regarding the Company’s financial condition and results of operations because they reflect the core operating results of our businesses and help facilitate comparisons of operating performance across periods. Although management believes the aforementioned non-GAAP financial measures are good tools for internal use and the investment community in evaluating Solaris’ overall financial performance, the foregoing non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, other measures of financial performance prepared in accordance with GAAP. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures is included in the accompanying financial tables.

About Solaris Oilfield Infrastructure, Inc.

Solaris Oilfield Infrastructure, Inc. (NYSE:SOI) provides mobile equipment that drives supply chain and execution efficiencies in the completion of oil and natural gas wells. Solaris’ patented systems are deployed across oil and natural gas basins in the United States. Additional information is available on our website, www.solarisoilfield.com.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Examples of forward-looking statements include, but are not limited to, our business strategy, our industry, our future profitability, the volatility in global oil markets, expected capital expenditures and the impact of such expenditures on performance, management changes, current and potential future long-term contracts, our future business and financial performance and our results of operations, and the other risks discussed in Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the U.S. Securities Exchange Commission (the "SEC") on February 27, 2024. 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

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

Three Months Ended

March 31,

December 31,

2024

2023

2023

Revenue

$

64,635

$

77,828

$

60,069

Revenue - related parties

3,255

4,894

3,278

Total revenue

67,890

82,722

63,347

Operating costs and expenses:

Cost of services (excluding depreciation and amortization)

39,887

53,223

36,870

Depreciation and amortization

9,934

8,417

9,518

Selling, general and administrative

7,990

6,538

7,229

Other operating (income) expense, net (1)

123

(338

)

489

Total operating costs and expenses

57,934

67,840

54,106

Operating income

9,956

14,882

9,241

Interest expense, net

(799

)

(459

)

(912

)

Income before income tax expense

9,157

14,423

8,329

Provision for income taxes

(1,857

)

(2,486

)

(1,370

)

Net income

7,300

11,937

6,959

Less: net income related to non-controlling interests

(2,983

)

(4,368

)

(2,658

)

Net income attributable to Solaris Oilfield Infrastructure, Inc.

4,317

7,569

4,301

Less: income attributable to participating securities (2)

(277

)

(350

)

(214

)

Net income attributable to common shareholders

$

4,040

$

7,219

$

4,087

Earnings per share of Class A common stock - basic

$

0.14

$

0.23

$

0.14

Earnings per share of Class A common stock - diluted

$

0.14

$

0.23

$

0.14

Basic weighted average shares of Class A common stock outstanding

28,587

31,214

29,024

Diluted weighted average shares of Class A common stock outstanding

28,587

31,214

29,024

1)

Other operating (income) expense, net includes the sale or disposal of assets, credit losses or recoveries, sublease income, transaction costs and other settlements.

2)

The Company’s restricted shares of common stock are participating securities.

SOLARIS OILFIELD INFRASTRUCTURE, INC

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(Unaudited)

March 31,

December 31,

2024

2023

Assets

Current assets:

Cash and cash equivalents

$

3,424

$

5,833

Accounts receivable, net of allowances of $404 and $104, respectively

46,411

44,916

Accounts receivable - related party

2,721

2,378

Prepaid expenses and other current assets

3,405

4,342

Inventories

6,924

6,672

Assets held for sale

3,000

Total current assets

62,885

67,141

Property, plant and equipment, net

320,885

325,121

Non-current inventories

1,566

1,593

Non-current receivables, net of allowance of $862 and $862, respectively

1,663

1,663

Operating lease right-of-use assets

10,394

10,721

Goodwill

13,004

13,004

Intangible assets, net

521

702

Deferred tax assets

45,861

48,010

Other assets

291

342

Total assets

$

457,070

$

468,297

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

$

12,266

$

12,654

Accrued liabilities

16,489

20,292

Current portion of payables related to Tax Receivable Agreement

2,684

Current portion of operating lease liabilities

1,381

1,385

Current portion of finance lease liabilities

2,495

2,462

Other current liabilities

408

Total current liabilities

35,315

37,201

Operating lease liabilities, net of current

11,251

11,541

Credit agreement

30,000

30,000

Finance lease liabilities, net of current

1,766

2,401

Payables related to Tax Receivable Agreement

68,846

71,530

Other long-term liabilities

44

44

Total liabilities

147,222

152,717

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, 28,330 shares and 28,967 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

283

290

Class B common stock, $0.00 par value, 180,000 shares authorized, 13,674 shares issued and outstanding as of March 31, 2024 and December 31, 2023

Additional paid-in capital

182,723

188,379

Retained earnings

17,125

17,314

Total stockholders' equity attributable to Solaris Oilfield Infrastructure, Inc.

200,131

205,983

Non-controlling interest

109,717

109,597

Total stockholders' equity

309,848

315,580

Total liabilities and stockholders' equity

$

457,070

$

468,297

SOLARIS OILFIELD INFRASTRUCTURE, INC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Three Months Ended
March 31,

2024

2023

Cash flows from operating activities:

Net income

$

7,300

$

11,937

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

Depreciation and amortization

9,934

8,417

(Gain) loss on disposal of asset

12

(22

)

Stock-based compensation

2,217

1,980

Amortization of debt issuance costs

43

31

Allowance for credit losses

300

Inventory write-off

223

Deferred income tax expense

1,727

2,329

Other

31

10

Changes in operating assets and liabilities:

Accounts receivable

(1,795

)

(3,581

)

Accounts receivable - related party

(343

)

1,086

Prepaid expenses and other assets

951

905

Inventories

(448

)

(4,071

)

Accounts payable

(131

)

2,042

Accrued liabilities

(3,146

)

(3,122

)

Payments pursuant to tax receivable agreement

(1,092

)

Net cash provided by operating activities

16,875

16,849

Cash flows from investing activities:

Investment in property, plant and equipment

(3,358

)

(18,949

)

Proceeds from disposal of property, plant and equipment

10

123

Net cash used in investing activities

(3,348

)

(18,826

)

Cash flows from financing activities:

Share repurchases and retirements

(8,092

)

(14,427

)

Distribution to non-controlling interest unitholders

(1,641

)

(1,985

)

Dividend paid to Class A common stock shareholders

(3,648

)

(3,656

)

Payments under finance leases

(602

)

(738

)

Payments under insurance premium financing

(414

)

(541

)

Cancelled shares withheld for taxes from vesting of restricted stock

(1,539

)

(1,336

)

Borrowings under the credit agreement

4,000

18,000

Repayment of credit agreement

(4,000

)

Net cash used in financing activities

(15,936

)

(4,683

)

Net decrease in cash and cash equivalents

(2,409

)

(6,660

)

Cash and cash equivalents at beginning of period

5,833

8,835

Cash and cash equivalents at end of period

$

3,424

$

2,175

Non-cash activities

Investing:

Capitalized depreciation in property, plant and equipment

$

120

$

129

Capitalized stock based compensation

134

174

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

331

5,015

Reclassification of assets held for sale to property, plant and equipment

3,000

Additions to fixed assets through finance leases

933

Cash paid for:

Interest

$

758

$

335

Income taxes

76

1

SOLARIS OILFIELD INFRASTRUCTURE, INC

RECONCILIATION AND CALCULATION OF NON-GAAP FINANCIAL AND OPERATIONAL MEASURES

(In thousands)

(Unaudited)

EBITDA AND ADJUSTED EBITDA

We view EBITDA and Adjusted EBITDA as important indicators of performance. We use them to assess our results of operations because it allows us, our investors and our lenders to compare our operating performance on a consistent basis across periods by removing the effects of varying levels of interest expense due to our capital structure, depreciation and amortization due to our asset base and other items that impact the comparability of financial results from period to period. We present EBITDA and Adjusted EBITDA because we believe they provide useful information regarding trends and other factors affecting our business in addition to measures calculated under generally accepted accounting principles in the United States ("GAAP").

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.

EBITDA and Adjusted EBITDA should not be considered in isolation or as substitutes for an analysis of our results of operation and financial condition as reported in accordance with GAAP. Net income is the GAAP measure most directly comparable to EBITDA and Adjusted EBITDA. EBITDA and Adjusted EBITDA should not be considered alternative 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

March 31,

December 31,

2024

2023

2023

Net income

$

7,300

$

11,937

$

6,959

Depreciation and amortization

9,934

8,417

9,518

Interest expense, net

799

459

912

Provision for income taxes (1)

1,857

2,486

1,370

EBITDA

$

19,890

$

23,299

$

18,759

Stock-based compensation expense (2)

2,217

1,980

1,911

(Gain) loss on disposal of assets

12

(361

)

(4

)

Credit losses

300

650

Other (3)

268

200

6

Adjusted EBITDA

$

22,687

$

25,118

$

21,322

____________________

1)

United States federal and state income taxes.

2)

Represents stock-based compensation expense related to restricted stock awards and performance-based restricted stock units.

3)

Other includes the net effect of inventory write-offs, transaction costs and other settlements.

FREE CASH FLOW

Free cash flow is an important supplemental measure to assess our liquidity but should not be considered as an alternative to net cash flow from operating activities presented in accordance with GAAP.

Three Months Ended

March 31,

December 31,

2024

2023

2023

Net cash flows provided by operating activities

$

16,875

$

16,849

$

23,583

Cash used for capital expenditures, net of proceeds from disposal of assets

(3,348

)

(18,826

)

(7,173

)

Free cash flow

$

13,527

$

(1,977

)

$

16,410

ADJUSTED PRO FORMA NET INCOME AND ADJUSTED PRO FORMA EARNINGS PER FULLY DILUTED SHARE

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 units of Solaris LLC ("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

March 31,

December 31,

2024

2023

2023

Numerator:

Net income attributable to Solaris

$

4,317

$

7,569

$

4,301

Adjustments:

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

2,983

4,368

2,658

Loss on disposal of assets

12

(361

)

(4

)

Credit losses

300

650

Other (2)

268

200

6

Incremental income tax expense

(626

)

(779

)

(976

)

Adjusted pro forma net income

$

7,254

$

10,997

$

6,635

Denominator:

Weighted average shares of Class A common stock outstanding

28,587

31,214

29,024

Adjustments:

Potentially dilutive shares (3)

15,543

15,224

15,252

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

44,130

46,438

44,276

Adjusted pro forma earnings per share - diluted

$

0.16

$

0.24

$

0.15

(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)

Other includes the net effect of inventory write-offs, transaction costs and other settlements.

(3)

Assumes the exchange of all outstanding Solaris LLC Units for shares of Class A common stock and vesting of Restricted stock awards and Performance-based restricted stock awards at the beginning of the relevant reporting periods.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240425803054/en/

Contacts

Yvonne Fletcher
Senior Vice President, Finance and Investor Relations
(281) 501-3070
IR@solarisoilfield.com