Second Quarter 2024 Summary Results and Highlights
- Revenue of $74 million
- Net income of $10 million and $0.20 per diluted Class A share;
Adjusted pro forma net income* of $6 million and $0.13 per fully
diluted share
- Adjusted EBITDA* of $21 million
- Generated $19 million of cash flow from operations and $18
million in free cash flow*
- Returned a total of $5 million to shareholders in second
quarter 2024 through dividends, resulting in $178 million
cumulatively returned to shareholders since 2018
- Announced third quarter 2024 dividend of $0.12 per share on
July 29, 2024, to be paid on September 6, 2024, which, once paid,
will represent Solaris’ 24th consecutive dividend
- Announced entry into definitive agreement on July 9, 2024 to
acquire Mobile Energy Rentals LLC (“MER”), a premier provider of
distributed power solutions, for an initial purchase price of
approximately $200 million, consisting of $60 million of cash and
the issuance of approximately 16.5 million shares of the Company’s
Class B common stock at a price per share of $8.50; proposed
transaction remains subject to shareholder approval, receipt of
regulatory approvals, and other customary closing conditions and is
expected to close in the third quarter of 2024
Solaris Oilfield Infrastructure, Inc. (NYSE:SOI) (“Solaris” or
the “Company”), today announced second quarter 2024 financial and
operational results.
“Solaris delivered another quarter of strong free cash flow as
we continue to generate cash from our core sand handling equipment
business and the organic additional fleet investments we made over
the last few years,” Chairman and Chief Executive Officer Bill
Zartler commented.
“The MER acquisition will provide Solaris an exciting
opportunity to diversify into the growing distributed power market,
which will provide an additional business line that we expect to
deliver continued strong shareholder returns from a new earnings
base with access to new end markets, including oil and gas
production, midstream and downstream, as well as various commercial
and industrial applications. We remain on track to close this
transaction in the third quarter 2024.”
Shareholder Returns
A previously announced cash dividend of $0.12 per share of Class
A common stock was paid on June 17, 2024 to holders of record as of
June 7, 2024, and a distribution of $0.12 per unit was paid to
holders of units in Solaris Oilfield Infrastructure, LLC (“Solaris
LLC,” and such holders “Solaris LLC Unitholders”), subject to the
same payment and record date, totaling approximately $5
million.
On July 25, 2024, Solaris’ Board of Directors approved a third
quarter 2024 cash dividend of $0.12 per share of Class A common
stock, to be paid on September 6, 2024 to holders of record as of
August 23, 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.
Solaris did not repurchase shares during the second quarter of
2024. Approximately $15 million remains in the current share
repurchase authorization.
Pro forma for the announced third quarter 2024 dividend, Solaris
has returned approximately $183 million to shareholders through
dividends and share repurchases.
Cash Flow, Capital Expenditures and Liquidity
Net cash from operating activities was $19 million in the second
quarter of 2024 and free cash flow* after asset disposals was
positive $18 million in the second quarter of 2024, including a
working capital use of $4 million.
Capital expenditures in the second quarter of 2024 were
approximately $1 million.
As of June 30, 2024, Solaris had $5 million of cash on the
balance sheet. Solaris ended the second quarter of 2024 with $16
million in borrowings outstanding and $53 million of liquidity. Net
debt* (defined as total debt outstanding less cash) at the end of
the second quarter of 2024 was $11 million.
Second Quarter 2024 Financial Review
Net income was $10 million and $0.20 per diluted Class A share,
for second quarter 2024, compared to first quarter 2024 net income
of $7 million and $0.14 per diluted Class A share, and second
quarter 2023 net income of $12 million and $0.24 per diluted Class
A share. Adjusted pro forma net income* for second quarter 2024 was
$6 million, or $0.13 per fully diluted share, compared to first
quarter 2024 adjusted pro forma net income of $7 million, or $0.16
per fully diluted share, and second quarter 2023 adjusted pro forma
net income of $11 million, or $0.25 per fully diluted share.
Revenue was $74 million for second quarter 2024, which was up 9%
from first quarter 2024 and down 4% from second quarter 2023.
Adjusted EBITDA* for second quarter 2024 was $21 million, which was
down 8% from first quarter 2024 and down 22% from second quarter
2023. The sequential increase in revenue was driven by an increase
in lower-margin ancillary last mile logistics services activity. On
an Adjusted EBITDA basis, this was more than offset by a sequential
decline in fully utilized systems, resulting in a sequential
decrease in Adjusted EBITDA. The decreases in revenue and Adjusted
EBITDA from the second quarter 2023 were primarily due to a
decrease in fully utilized systems.
During the second quarter of 2024, Solaris earned revenue on 92
fully utilized systems, which includes sand systems and top fill
systems. Total fully utilized systems were down 10% from first
quarter 2024 and down 15% from second quarter 2023. Solaris
followed an average of 56 industry frac crews on a fully utilized
basis in the second quarter of 2024, compared to 64 industry frac
crews in the first quarter of 2024.
Footnotes
*
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
second quarter 2024 on Friday, August 9, 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 7967465.
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 EBITDA, Adjusted EBITDA, Net debt, Free
cash flow, Adjusted pro forma net income and Adjusted pro forma
earnings per fully diluted share 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.
Additional Information About the Proposed Transaction and
Where to Find It
In connection with the proposed transaction, the Company filed a
definitive proxy statement on Schedule 14A on August 7, 2024 (the
“Proxy Statement”), and has commenced mailing of proxy cards, prior
to the special meeting, in connection with the solicitation of
proxies from the Company’s stockholders in connection with the
matters to be considered at the Company’s special meeting scheduled
for August 30, 2024. Additionally, the Company will file other
relevant materials with the SEC in connection with its proposed
transaction with the equityholders of MER. The materials filed or
to be filed by the Company with the SEC may be obtained free of
charge at the SEC’s web site at www.sec.gov. Investors and security
holders of the Company are urged to read the Proxy Statement on
file with the SEC and other relevant materials when they become
available before making any voting or investment decision with
respect to the proposed transaction because they contain or will
contain important information about the transaction and the parties
to the transaction.
Participants in the Solicitation
The Company, MER and their respective directors, executive
officers, other members of their management and their employees,
under SEC rules, may be deemed to be participants in the
solicitation of proxies of Company stockholders in connection with
the proposed transaction. Investors and security holders may obtain
more detailed information regarding the names, affiliations and
interests of certain of the Company’s executive officers and
directors in the solicitation by reading the Company’s Proxy
Statement on file with the SEC and other relevant materials filed
with the SEC in connection with the transaction when they become
available. Information concerning the interests of the Company’s
and MER’s participants in the solicitation, which may, in some
cases, be different than those of the Company’s stockholders
generally, are set forth in the Proxy Statement relating to the
transaction.
No Offer or Solicitation
This press release is for informational purposes only and does
not constitute an offer to sell or the solicitation of an offer to
buy any securities, or a solicitation of any vote or approval, nor
shall there be any sale of securities in any jurisdiction in which
such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction.
SOLARIS OILFIELD
INFRASTRUCTURE, INC
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except per
share data)
(Unaudited)
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
2024
2023
2024
2024
2023
Revenue
$
69,640
$
69,925
$
64,635
$
134,275
$
147,753
Revenue - related parties
4,246
7,277
3,255
7,501
12,171
Total revenue
73,886
77,202
67,890
141,776
159,924
Operating costs and expenses:
Cost of services (exclusive of
depreciation and amortization)
46,131
45,652
39,887
86,018
98,875
Depreciation and amortization
9,565
9,071
9,934
19,499
17,488
Gain on reversal of property tax
contingency (1)
(2,483
)
—
—
(2,483
)
—
Selling, general and administrative
8,259
6,825
7,990
16,249
13,363
Other operating expense (income), net
(2)
560
(125
)
123
683
(463
)
Total operating costs and expenses
62,032
61,423
57,934
119,966
129,263
Operating income
11,854
15,779
9,956
21,810
30,661
Interest expense, net
(685
)
(879
)
(799
)
(1,484
)
(1,338
)
Income before income tax expense
11,169
14,900
9,157
20,326
29,323
Provision for income taxes
(1,345
)
(2,659
)
(1,857
)
(3,202
)
(5,145
)
Net income
9,824
12,241
7,300
17,124
24,178
Less: net income related to
non-controlling interests
(3,616
)
(4,709
)
(2,983
)
(6,599
)
(9,077
)
Net income attributable to Solaris
Oilfield Infrastructure, Inc.
6,208
7,532
4,317
10,525
15,101
Less: income attributable to participating
securities (3)
(410
)
(383
)
(277
)
(676
)
(700
)
Net income attributable to Class A common
shareholders
$
5,798
$
7,149
$
4,040
$
9,849
$
14,401
Earnings per share of Class A common stock
- basic
$
0.20
$
0.24
$
0.14
$
0.35
$
0.47
Earnings per share of Class A common stock
- diluted
$
0.20
$
0.24
$
0.14
$
0.35
$
0.47
Basic weighted average shares of Class A
common stock outstanding
28,335
29,542
28,587
28,461
30,373
Diluted weighted average shares of Class A
common stock outstanding
28,335
29,542
28,587
28,461
30,373
1)
Represents reversal of a portion of previously recognized
property tax contingency following a settlement agreement with
Brown County Appraisal District.
2)
Other operating expense (income), net includes the gains or
losses on the sale or disposal of assets, credit losses or
recoveries, sublease income, transaction costs and other
settlements.
3)
The Company’s unvested restricted shares of common stock are
participating securities because they entitle the holders to
non-forfeitable rights to dividends until the awards vest or are
forfeited.
SOLARIS OILFIELD
INFRASTRUCTURE, INC
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except per
share amounts)
(Unaudited)
June 30,
December 31,
2024
2023
Assets
Current assets:
Cash and cash equivalents
$
5,059
$
5,833
Accounts receivable, net of allowances of
$401 and $104, respectively
49,864
44,916
Accounts receivable - related party
4,422
2,378
Prepaid expenses and other current
assets
6,544
4,342
Inventories
8,858
6,672
Assets held for sale
—
3,000
Total current assets
74,747
67,141
Property, plant and equipment, net
312,077
325,121
Non-current inventories
1,186
1,593
Non-current receivables, net of allowance
of $692 and $862, respectively
1,069
1,663
Operating lease right-of-use assets
10,061
10,721
Goodwill
13,004
13,004
Intangible assets, net
339
702
Deferred tax assets
44,789
48,010
Other assets
492
342
Total assets
$
457,764
$
468,297
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable
$
15,845
$
12,654
Accrued liabilities
18,307
20,292
Current portion of payables related to Tax
Receivable Agreement
2,684
—
Current portion of credit agreement
16,000
—
Current portion of operating lease
liabilities
1,378
1,385
Current portion of finance lease
liabilities
2,507
2,462
Other current liabilities
2,976
408
Total current liabilities
59,697
37,201
Operating lease liabilities, net of
current
10,782
11,541
Credit agreement, net of current
—
30,000
Finance lease liabilities, net of
current
1,212
2,401
Payables related to Tax Receivable
Agreement, net of current
68,846
71,530
Other long-term liabilities
44
44
Total liabilities
140,581
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, 30,338 shares and 30,448 shares issued
and outstanding as of June 30, 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 June 30, 2024 and December 31, 2023; convertible into Class A
common stock on a one-for-one basis
—
—
Additional paid-in capital
184,626
188,379
Retained earnings
19,692
17,314
Total stockholders' equity attributable to
Solaris Oilfield Infrastructure, Inc.
204,601
205,983
Non-controlling interest
112,582
109,597
Total stockholders' equity
317,183
315,580
Total liabilities and stockholders'
equity
$
457,764
$
468,297
SOLARIS OILFIELD
INFRASTRUCTURE, INC
condensed CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended June
30,
Three Months Ended June
30,
2024
2023
2024
Cash flows from operating activities:
Net income
$
17,124
$
24,178
$
9,824
Adjustment to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
19,499
17,488
9,565
Loss (gain) on disposal of assets
44
(18
)
32
Stock-based compensation
4,876
3,904
2,659
Amortization of debt issuance costs
87
71
44
Allowance for credit losses
126
(2
)
(174
)
Inventory write-off
325
—
102
Deferred income tax expense
2,908
4,853
1,181
Other
(100
)
(162
)
(131
)
Changes in operating assets and
liabilities:
Accounts receivable
(4,480
)
8,442
(2,685
)
Accounts receivable - related party
(2,044
)
(1,863
)
(1,701
)
Prepaid expenses and other assets
(2,439
)
(520
)
(3,390
)
Inventories
(2,104
)
(5,801
)
(1,656
)
Accounts payable
3,303
3,047
3,434
Accrued liabilities
1,109
(8,728
)
4,255
Property tax contingency
(2,483
)
—
(2,483
)
Payments pursuant to Tax Receivable
Agreement
—
(1,092
)
—
Net cash provided by operating
activities
35,751
43,797
18,876
Cash flows from investing activities:
Investment in property, plant and
equipment
(4,021
)
(40,130
)
(663
)
Cash received from insurance claims
326
69
326
Proceeds from disposal of property, plant
and equipment
55
165
45
Net cash used in investing activities
(3,640
)
(39,896
)
(292
)
Cash flows from financing activities:
Share repurchases and retirements
(8,092
)
(25,757
)
—
Distribution to non-controlling interest
unitholders
(3,282
)
(3,489
)
(1,641
)
Dividend paid to Class A common stock
shareholders
(7,289
)
(7,044
)
(3,641
)
Payments under finance leases
(1,214
)
(1,326
)
(612
)
Proceeds from issuance of insurance notes
payable
3,553
1,520
3,553
Payments under insurance premium
financing
(991
)
(823
)
(577
)
Payments related to debt issuance
costs
—
(91
)
—
Cancelled shares withheld for taxes from
vesting of restricted stock
(1,570
)
(1,355
)
(31
)
Borrowings under the credit agreement
4,000
35,000
—
Repayments of credit agreement
(18,000
)
—
(14,000
)
Net cash used in financing activities
(32,885
)
(3,365
)
(16,949
)
Net (decrease) increase in cash and cash
equivalents
(774
)
536
1,635
Cash and cash equivalents at beginning of
period
5,833
8,835
3,424
Cash and cash equivalents at end of
period
$
5,059
$
9,371
$
5,059
Non-cash investing and financing
activities:
Capitalized depreciation in property,
plant and equipment
$
232
$
202
$
112
Capitalized stock based compensation
300
296
166
Property, plant and equipment additions
incurred but not paid at period-end
412
3,402
412
Reclassification of assets held for sale
to property, plant and equipment
3,000
—
—
Additions to property, plant and equipment
through finance leases
70
1,926
70
Cash paid for:
Interest
$
1,414
$
1,028
$
656
Income taxes
520
198
444
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. 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 the GAAP
financial measure of net income to the non-GAAP financial measure
of Adjusted EBITDA.
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
2024
2023
2024
2024
2023
Net income
$
9,824
$
12,241
$
7,300
$
17,124
$
24,178
Depreciation and amortization
9,565
9,071
9,934
19,499
17,488
Interest expense, net
685
879
799
1,484
1,338
Provision for income taxes (1)
1,345
2,659
1,857
3,202
5,145
EBITDA
$
21,419
$
24,850
$
19,890
$
41,309
$
48,149
Property tax contingency (2)
(2,483
)
—
—
(2,483
)
—
Accrued property tax (3)
(1,794
)
—
—
(1,794
)
—
Stock-based compensation expense (4)
2,659
1,924
2,217
4,876
3,904
Loss (gain) on disposal of assets
30
4
12
42
(357
)
Credit (recoveries) losses
(174
)
(2
)
300
126
(2
)
Transaction costs (5)
1,013
—
45
1,058
—
Other (6)
127
49
223
350
249
Adjusted EBITDA
$
20,797
$
26,825
$
22,687
$
43,484
$
51,943
___________________________
1)
United States federal and state
income taxes.
2)
Represents reversal of a portion
of previously recognized property tax contingency following a
settlement agreement with Brown County Appraisal District.
3)
Represents reversal of previously
recognized accrued property tax expenses following a settlement
agreement with Brown County Appraisal District, included in cost of
services in the condensed consolidated statements of
operations.
4)
Represents stock-based
compensation expense related to restricted stock awards and
performance-based restricted stock units.
5)
Represents transaction costs
incurred for activities related to acquisition opportunities.
6)
Other includes the net effect of
inventory write-offs 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
Six Months Ended
June 30,
March 31,
June 30,
2024
2023
2024
2024
2023
Net cash flows provided by operating
activities
$
18,876
$
30,274
$
16,875
$
35,751
$
43,797
Cash used for capital expenditures, net of
proceeds from disposal of assets
(618
)
(21,139
)
(3,348
)
(3,966
)
(39,965
)
Free cash flow
$
18,258
$
9,135
$
13,527
$
31,785
$
3,832
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
Six Months Ended
June 30,
March 31,
June 30,
2024
2023
2024
2024
2023
Numerator:
Net income attributable to Solaris
$
6,208
$
7,532
$
4,317
$
10,525
$
15,101
Adjustments:
Reallocation of net income attributable to
non-controlling interests from the assumed exchange of LLC
Interests (1)
3,616
4,709
2,983
6,599
9,077
Loss (gain) on disposal of assets
30
4
12
42
(357
)
Property tax contingency (2)
(2,483
)
—
—
(2,483
)
—
Accrued property tax (3)
(1,794
)
—
—
(1,794
)
—
Transaction costs (4)
1,013
—
45
1,058
—
Credit (recoveries) losses
(174
)
(2
)
300
126
(2
)
Other (5)
127
49
223
350
249
Incremental income tax expense
(578
)
(983
)
(626
)
(1,204
)
(1,763
)
Adjusted pro forma net income
$
5,965
$
11,309
$
7,254
$
13,219
$
22,305
Denominator:
Weighted average shares of Class A common
stock outstanding
28,335
29,542
28,587
28,461
30,373
Adjustments:
Potentially dilutive shares (6)
15,990
15,365
15,543
15,722
15,294
Adjusted pro forma fully weighted average
shares of Class A common stock outstanding - diluted
44,325
44,907
44,130
44,183
45,667
Adjusted pro forma earnings per share -
diluted
$
0.13
$
0.25
$
0.16
$
0.30
$
0.49
(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)
Represents reversal of a portion
of previously recognized property tax contingency following a
settlement agreement with Brown County Appraisal District.
(3)
Represents reversal of previously
recognized accrued property tax expenses following a settlement
agreement with Brown County Appraisal District, included in cost of
services in the condensed consolidated statements of
operations.
(4)
Represents transaction costs
incurred for activities related to acquisition opportunities.
(5)
Other includes the net effect of
inventory write-offs and other settlements.
(6)
Represents the weighted-average
potentially dilutive effect of Class B common stock, unvested
restricted stock awards, unvested performance-based restricted
stock units and stock options.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240808967944/en/
Yvonne Fletcher Senior Vice President, Finance and Investor
Relations (281) 501-3070 IR@solarisoilfield.com
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