Solaris Oilfield Infrastructure Announces First Quarter 2021 Results | Financial Buzz

Solaris Oilfield Infrastructure Announces First Quarter 2021 Results

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 first quarter 2021.

Operational Update and Outlook

During the first quarter of 2021, an average of 52 mobile proppant management systems were fully utilized, which was a 24% increase versus the fourth quarter of 2020. The sequential increase in first quarter 2021 was primarily driven by an increase in completions activity across the Lower 48. The winter storm that disrupted much of Texas-based activity in February had minimal impact on the number of fully utilized systems in the quarter, but had a transitory impact on revenue and gross profit per system.

“The Solaris team executed strongly and safely as activity continued to recover during the first quarter,” Solaris’ Chairman and Chief Executive Officer Bill Zartler commented. “We are excited about the interest level in our recently announced new technology developments and look forward to sharing additional technology introductions as the year unfolds. As always, we are committed to preserving our balance sheet strength and maximizing both cash flow and returns on capital as we continue to help our customers drive efficiencies through new technology.”

First Quarter 2021 Financial Review

Solaris reported net loss of $1.9 million, or $(0.04) per diluted Class A share, for first quarter 2021, compared to first quarter 2020 net loss of $33.2 million, or $(0.65) per diluted Class A share. Adjusted pro forma net loss for first quarter 2021 was $1.6 million, or $(0.04) per fully diluted share, compared to first quarter 2020 adjusted pro forma net income of $7.7 million, or $0.17 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.

Revenues were $28.7 million for first quarter 2021, which were up 13% from fourth quarter 2020 and down 40% compared to first quarter 2020.

Adjusted EBITDA for first quarter 2021 was $6.1 million, compared to fourth quarter 2020 Adjusted EBITDA of $4.9 million and $18.0 million in first quarter 2020. A description of Adjusted EBITDA and a reconciliation to net income, its most directly comparable GAAP measure, is provided below.

Capital Expenditures, Free Cash Flow and Liquidity

Capital expenditures in the first quarter 2021 were $2.6 million compared to capital expenditures of $1.8 million during fourth quarter 2020. The Company expects capital expenditures for the full year 2021 to be between $10.0 and $15.0 million compared to the prior guidance of $5.0 and $10.0 million. The increase is primarily driven by incremental investments in new technology.

Free cash flow (defined as net cash provided by operating activities less investment in property, plant and equipment) during first quarter 2021 was $0.1 million, which represented the ninth consecutive quarter of positive free cash flow for the Company.

As of March 31, 2021, the Company had approximately $55.1 million of cash on the balance sheet, which reflects about $1.23 per fully diluted share of available cash. The Company’s credit facility remains undrawn, and total liquidity, including availability under the credit facility, was $90.1 million as of the end of the first quarter 2021.

Shareholder Returns

On March 5, 2021, the Company’s Board of Directors declared a cash dividend of $0.105 per share of Class A common stock, which was paid on March 25, 2021 to holders of record as of March 15, 2021. 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 10 consecutive quarterly dividends. Cumulatively, the Company has returned approximately $78 million in cash to shareholders through dividends and share repurchases since December 2018.

Conference Call

The Company will host a conference call to discuss its first quarter 2021 results on Tuesday, May 4, 2021 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 10153784. 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) provides 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. 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 U.S. 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, 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 various risks and uncertainties associated with the extraordinary market environment and impacts resulting from the volatility in global oil markets and the COVID-19 pandemic, expected capital expenditures and the impact of such expenditures on performance, management changes, 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

 

 

 

March 31,

 

December 31,

 

 

 

2021

 

2020

 

2020

 

Revenue

 

 

 

 

 

 

 

 

 

 

System rental

 

$

13,648

 

 

$

26,059

 

 

$

11,451

 

 

System services

 

 

14,710

 

 

 

20,957

 

 

 

13,394

 

 

Transloading services

 

 

114

 

 

 

465

 

 

 

211

 

 

Inventory software services

 

 

197

 

 

 

349

 

 

 

220

 

 

Total revenue

 

 

28,669

 

 

 

47,830

 

 

 

25,276

 

 

Operating costs and expenses

 

 

 

 

 

 

 

 

 

 

Cost of system rental (excluding depreciation and amortization)

 

 

1,608

 

 

 

2,013

 

 

 

1,483

 

 

Cost of system services (excluding depreciation and amortization)

 

 

17,252

 

 

 

24,130

 

 

 

15,498

 

 

Cost of transloading services (excluding depreciation and amortization)

 

 

244

 

 

 

337

 

 

 

257

 

 

Cost of inventory software services (excluding depreciation and amortization)

 

 

102

 

 

 

145

 

 

 

92

 

 

Depreciation and amortization

 

 

6,693

 

 

 

7,114

 

 

 

6,643

 

 

Selling, general and administrative (excluding depreciation and amortization)

 

 

4,606

 

 

 

4,406

 

 

 

4,269

 

 

Impairment loss

 

 

 

 

 

47,828

 

 

 

 

 

Other operating expenses (1)

 

 

253

 

 

 

1,198

 

 

 

453

 

 

Total operating costs and expenses

 

 

30,758

 

 

 

87,171

 

 

 

28,695

 

 

Operating income (loss)

 

 

(2,089

)

 

 

(39,341

)

 

 

(3,419

)

 

Interest income (expense), net

 

 

(49

)

 

 

111

 

 

 

(198

)

 

Total other income (expense)

 

 

(49

)

 

 

111

 

 

 

(198

)

 

Income (loss) before income tax expense

 

 

(2,138

)

 

 

(39,230

)

 

 

(3,617

)

 

Provision (benefit) for income taxes

 

 

(213

)

 

 

(6,078

)

 

 

(776

)

 

Net income (loss)

 

 

(1,925

)

 

 

(33,152

)

 

 

(2,841

)

 

Less: net (income) loss related to non-controlling interests

 

 

756

 

 

 

14,071

 

 

 

1,405

 

 

Net income (loss) attributable to Solaris

 

$

(1,169

)

 

$

(19,081

)

 

$

(1,436

)

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share of Class A common stock – basic

 

$

(0.04

)

 

$

(0.65

)

 

$

(0.06

)

 

Earnings per share of Class A common stock – diluted

 

$

(0.04

)

 

$

(0.65

)

 

$

(0.06

)

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average shares of Class A common stock outstanding

 

 

29,957

 

 

 

29,312

 

 

 

28,944

 

 

Diluted weighted average shares of Class A common stock outstanding

 

 

29,957

 

 

 

29,312

 

 

 

28,944

 

 

1)

Other operating expenses are primarily related to credit losses, loss on sale of assets and costs associated with workforce reductions.

SOLARIS OILFIELD INFRASTRUCTURE, INC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

 

2021

 

2020

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

55,060

 

$

60,366

Accounts receivable, net of allowances for credit losses of $754 and $1,099, respectively

 

 

21,421

 

 

18,243

Prepaid expenses and other current assets

 

 

1,934

 

 

2,169

Inventories

 

 

1,509

 

 

954

Total current assets

 

 

79,924

 

 

81,732

Property, plant and equipment, net

 

 

242,413

 

 

245,884

Non-current inventories

 

 

2,994

 

 

3,318

Operating lease right-of-use assets

 

 

4,579

 

 

4,708

Goodwill

 

 

13,004

 

 

13,004

Intangible assets, net

 

 

2,787

 

 

2,982

Deferred tax assets

 

 

63,734

 

 

59,805

Other assets

 

 

422

 

 

463

Total assets

 

$

409,857

 

$

411,896

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

11,869

 

$

6,863

Accrued liabilities

 

 

7,551

 

 

11,986

Current portion of payables related to Tax Receivable Agreement

 

 

606

 

 

606

Current portion of lease liabilities

 

 

662

 

 

647

Current portion of finance lease liabilities

 

 

30

 

 

30

Other current liabilities

 

 

75

 

 

75

Total current liabilities

 

 

20,793

 

 

20,207

Lease liabilities, net of current

 

 

7,288

 

 

7,419

Finance lease liabilities, net of current

 

 

93

 

 

100

Payables related to Tax Receivable Agreement

 

 

72,908

 

 

68,097

Other long-term liabilities

 

 

591

 

 

594

Total liabilities

 

 

101,673

 

 

96,417

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, 30,978 shares issued and outstanding as of March 31, 2021 and 28,943 shares issued and outstanding as of December 31, 2020

 

 

310

 

 

290

Class B common stock, $0.00 par value, 180,000 shares authorized, 13,820 shares issued and outstanding as of March 31, 2021 and 15,685 issued and outstanding as of December 31, 2020

 

 

 

 

Additional paid-in capital

 

 

193,890

 

 

180,415

Retained earnings

 

 

15,715

 

 

20,549

Total stockholders’ equity attributable to Solaris and members’ equity

 

 

209,915

 

 

201,254

Non-controlling interest

 

 

98,269

 

 

114,225

Total stockholders’ equity

 

 

308,184

 

 

315,479

Total liabilities and stockholders’ equity

 

$

409,857

 

$

411,896

SOLARIS OILFIELD INFRASTRUCTURE, INC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended

March 31,

 

 

2021

 

2020

Cash flows from operating activities:

 

 

 

 

 

 

Net (loss) income

 

$

(1,925

)

 

$

(33,152

)

Adjustment to reconcile net (loss) income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

6,693

 

 

 

7,114

 

Impairment loss

 

 

 

 

 

47,828

 

Loss on disposal of asset

 

 

18

 

 

 

57

 

Stock-based compensation

 

 

1,199

 

 

 

1,329

 

Amortization of debt issuance costs

 

 

48

 

 

 

44

 

Allowance for credit losses

 

 

283

 

 

 

893

 

Deferred income tax expense

 

 

(302

)

 

 

(5,775

)

Other

 

 

5

 

 

 

23

 

Changes in assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(3,460

)

 

 

(10,241

)

Prepaid expenses and other assets

 

 

235

 

 

 

543

 

Inventories

 

 

(622

)

 

 

(887

)

Accounts payable

 

 

5,055

 

 

 

3,184

 

Accrued liabilities

 

 

(4,461

)

 

 

744

 

Net cash provided by operating activities

 

 

2,766

 

 

 

11,704

 

Cash flows from investing activities:

 

 

 

 

 

 

Investment in property, plant and equipment

 

 

(2,647

)

 

 

(699

)

Cash received from insurance proceeds

 

 

 

 

 

26

 

Proceeds from disposal of assets

 

 

40

 

 

 

 

Net cash used in investing activities

 

 

(2,607

)

 

 

(673

)

Cash flows from financing activities:

 

 

 

 

 

 

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

 

 

(4,797

)

 

 

(4,755

)

Share repurchases

 

 

 

 

 

(26,723

)

Payments under finance leases

 

 

(7

)

 

 

(9

)

Proceeds from stock option exercises

 

 

12

 

 

 

55

 

Payments for shares withheld for taxes from RSU vesting and cancelled

 

 

(673

)

 

 

 

Payments related to purchase of treasury stock

 

 

 

 

 

(454

)

Net cash used in financing activities

 

 

(5,465

)

 

 

(31,886

)

Net (decrease) increase in cash and cash equivalents

 

 

(5,306

)

 

 

(20,855

)

Cash and cash equivalents at beginning of period

 

 

60,366

 

 

 

66,882

 

Cash and cash equivalents at end of period

 

$

55,060

 

 

$

46,027

 

Non-cash activities

 

 

 

 

 

 

Investing:

 

 

 

 

 

 

Capitalized depreciation in property, plant and equipment

 

$

143

 

 

$

161

 

Capitalized stock based compensation

 

 

73

 

 

 

67

 

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

 

 

604

 

 

 

165

 

Property, plant and equipment additions transferred from inventory

 

 

392

 

 

 

229

 

Financing:

 

 

 

 

 

 

Insurance premium financing

 

 

 

 

 

 

Cash paid for:

 

 

 

 

 

 

Interest

 

 

33

 

 

 

33

 

Income taxes

 

 

 

 

 

 

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

 

 

March 31,

 

December 31,

 

 

2021

 

2020

 

2020

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(1,925

)

 

$

(33,152

)

 

$

(2,841

)

Depreciation and amortization

 

 

6,693

 

 

 

7,114

 

 

 

6,643

 

Interest (income) expense, net

 

 

49

 

 

 

(111

)

 

 

198

 

Income taxes (1)

 

 

(213

)

 

 

(6,078

)

 

 

(776

)

EBITDA

 

$

4,604

 

 

$

(32,227

)

 

$

3,224

 

Stock-based compensation expense (2)

 

 

1,199

 

 

 

1,329

 

 

 

1,003

 

Loss on disposal of assets

 

 

18

 

 

 

68

 

 

 

(23

)

Impairment loss

 

 

 

 

 

47,828

 

 

 

 

Severance expense

 

 

 

 

 

331

 

 

 

5

 

Credit losses

 

 

283

 

 

 

711

 

 

 

30

 

Other write-offs (3)

 

 

 

 

 

 

 

 

12

 

Transaction costs (4)

 

 

14

 

 

 

 

 

 

603

 

Adjusted EBITDA

 

$

6,118

 

 

$

18,040

 

 

$

4,854

 

____________________
1)

Federal and state income taxes.

2)

Represents stock-based compensation expense related to restricted stock awards.

3)

Write-off of certain prepaid and cancelled purchase orders in the three months ended December 31, 2020.

4)

Costs related to the evaluation of acquisitions.

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 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,

 

 

2021

 

2020

 

2020

Numerator:

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to Solaris

 

$

(1,169

)

 

$

(19,081

)

 

$

(1,436

)

Adjustments:

 

 

 

 

 

 

 

 

 

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

 

 

(756

)

 

 

(14,071

)

 

 

(1,405

)

Loss on disposal of assets

 

 

18

 

 

 

68

 

 

 

(23

)

Credit losses

 

 

283

 

 

 

711

 

 

 

30

 

Impairment loss

 

 

 

 

 

47,828

 

 

 

 

Severance expense

 

 

 

 

 

331

 

 

 

5

 

Other write-offs (2)

 

 

 

 

 

 

 

 

12

 

Transaction costs (3)

 

 

14

 

 

 

 

 

 

603

 

Income tax (benefit) expense

 

 

11

 

 

 

(8,101

)

 

 

(136

)

Adjusted pro forma net income (loss)

 

$

(1,599

)

 

$

7,685

 

 

$

(2,350

)

Denominator:

 

 

 

 

 

 

 

 

 

Weighted average shares of Class A common stock outstanding – diluted

 

 

29,957

 

 

 

29,312

 

 

 

28,944

 

Adjustments:

 

 

 

 

 

 

 

 

 

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

 

 

14,729

 

 

 

16,614

 

 

 

15,683

 

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

 

 

44,686

 

 

 

45,926

 

 

 

44,627

 

Adjusted pro forma earnings per share – diluted

 

$

(0.04

)

 

$

0.17

 

 

$

(0.05

)

(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)

Write-off of certain prepaid and cancelled purchase orders in the three months ended December 31, 2020.

(3)

Costs related to the pursuit of acquisitions.

 

Contacts

Yvonne Fletcher

Senior Vice President, Finance and Investor Relations

(281) 501-3070

IR@solarisoilfield.com