SOI Solaris Oilfield Infrastructure Inc

Second Quarter 2022 Highlights

• Net income of $8.3 million, or $0.16 per diluted Class A share, for the quarter ended June 30, 2022; Adjusted pro forma net income of $9.4 million, or $0.20 per fully diluted share for the quarter ended June 30, 2022

• Adjusted EBITDA of $21.1 million for the quarter ended June 30, 2022

• Paid a regular quarterly dividend of $0.105 per share on June 17, 2022, Solaris’ 15th consecutive quarterly dividend

• Surpassed $100 million returned to shareholders in the form of dividends and stock buybacks since initiating the dividend in 2018

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 second quarter 2022.

Operational Update and Outlook

During the second quarter of 2022, an average of 84 mobile proppant management systems were fully utilized, which was up 12% from average first quarter 2022 levels.

“The Solaris team delivered on an impressive second quarter where we continued to see the positive impact of our top fill solutions and AutoBlendTM technology,” Solaris’ Chairman and Chief Executive Officer Bill Zartler commented. “We are enthusiastic about the benefits that we expect these technologies can provide for both Solaris and our customers moving forward. Our strong results thus far in 2022 are supported by incremental returns with the investments we are making. We are also proud to now have returned over $100 million to shareholders since 2018 and remain committed to paying our dividends and maintaining healthy liquidity.”

Second Quarter 2022 Financial Review

Solaris reported net income of $8.3 million, or $0.16 per diluted Class A share, for second quarter 2022, compared to first quarter 2022 net income of $5.7 million, or $0.11 per diluted Class A share. Adjusted pro forma net income for second quarter 2022 was $9.4 million, or $0.20 per fully diluted share, compared to first quarter 2022 adjusted pro forma net income of $4.8 million, or $0.11 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 $86.7 million for second quarter 2022, which were up 52% from first quarter 2022, driven by an increase in systems deployed, contribution from new technologies and last mile trucking logistics activity.

Adjusted EBITDA for second quarter 2022 was $21.1 million, which was up 34% from first quarter 2022. The increase in Adjusted EBITDA was driven by an increase in the number of fully utilized systems, mix improvement, an increase in last mile logistics profitability and activity, and contribution from new technologies. 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 second quarter 2022 were $20.6 million. The Company still expects maintenance capital expenditures for full year 2022 to be approximately $10 million. The Company is now narrowing the range of expected growth capital expenditures to between $50 million and $60 million for full year 2022, including investments in additional top fill and AutoBlend™ units, compared to the previously guided range of $40 million to $60 million.

Free cash flow (defined as net cash provided by operating activities less investment in property, plant and equipment) during second quarter 2022 was $(4.4) million and reflects increased capital expenditures and working capital use of $(4.2) million to support growth. Distributable cash flow (defined as Adjusted EBITDA less maintenance capital expenditures) was approximately $20 million for the second quarter 2022 and covered quarterly dividend distributions of approximately $4.9 million.

As of June 30, 2022, the Company had approximately $15.4 million of cash on the balance sheet. The Company’s credit facility remains undrawn, and total liquidity, including availability under the credit facility, was $65.4 million as of the end of the second quarter 2022.

Shareholder Returns

On May 12, 2022, the Company’s Board of Directors declared a cash dividend of $0.105 per share of Class A common stock, which was paid on June 17, 2022 to holders of record as of June 7, 2022. 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 15 consecutive quarterly dividends. Cumulatively, the Company has returned approximately $102 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 second quarter 2022 results on Tuesday, August 2, 2022 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. 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 6639480. 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 equipment and systems are deployed across oil and natural gas basins in the United States. Additional information is available on our 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 press release or will be incorporated by reference into any 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

 

Six Months Ended

 

 

June 30,

 

March 31,

 

June 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

86,711

 

 

 

35,179

 

 

 

56,915

 

 

 

143,626

 

 

 

63,848

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services (excluding depreciation and amortization)

 

 

61,237

 

 

 

25,135

 

 

 

37,671

 

 

 

98,908

 

 

 

44,341

 

Depreciation and amortization

 

 

7,132

 

 

 

6,752

 

 

 

6,929

 

 

 

14,061

 

 

 

13,445

 

Property tax contingency (1)

 

 

3,072

 

 

 

—

 

 

 

—

 

 

 

3,072

 

 

 

—

 

Selling, general and administrative

 

 

6,062

 

 

 

4,964

 

 

 

5,211

 

 

 

11,273

 

 

 

9,570

 

Other operating (income) expenses (2)

 

 

(1,114

)

 

 

360

 

 

 

(309

)

 

 

(1,423

)

 

 

613

 

Total operating costs and expenses

 

 

76,389

 

 

 

37,211

 

 

 

49,502

 

 

 

125,891

 

 

 

67,969

 

Operating income (loss)

 

 

10,322

 

 

 

(2,032

)

 

 

7,413

 

 

 

17,735

 

 

 

(4,121

)

Interest expense, net

 

 

(88

)

 

 

(55

)

 

 

(79

)

 

 

(167

)

 

 

(104

)

Total other expense

 

 

(88

)

 

 

(55

)

 

 

(79

)

 

 

(167

)

 

 

(104

)

Income (loss) before income tax expense

 

 

10,234

 

 

 

(2,087

)

 

 

7,334

 

 

 

17,568

 

 

 

(4,225

)

Provision (benefit) for income taxes

 

 

1,945

 

 

 

(217

)

 

 

1,612

 

 

 

3,557

 

 

 

(430

)

Net income (loss)

 

 

8,289

 

 

 

(1,870

)

 

 

5,722

 

 

 

14,011

 

 

 

(3,795

)

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

 

 

(2,836

)

 

 

659

 

 

 

(2,220

)

 

 

(5,056

)

 

 

1,415

 

Net income (loss) attributable to Solaris

 

$

5,453

 

 

$

(1,211

)

 

$

3,502

 

 

$

8,955

 

 

$

(2,380

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share of Class A common stock - basic

 

$

0.16

 

 

$

(0.04

)

 

$

0.11

 

 

$

0.27

 

 

$

(0.08

)

Earnings per share of Class A common stock - diluted

 

$

0.16

 

 

$

(0.04

)

 

$

0.11

 

 

$

0.27

 

 

$

(0.08

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average shares of Class A common stock outstanding

 

 

31,432

 

 

 

30,984

 

 

 

31,239

 

 

 

31,337

 

 

 

30,473

 

Diluted weighted average shares of Class A common stock outstanding

 

 

31,432

 

 

 

30,984

 

 

 

31,239

 

 

 

31,337

 

 

 

30,473

 

1)

Property tax contingency represents a reserve related to an unfavorable Texas District Court ruling related to prior period property taxes. The ruling is currently under appeal.

2)

Other (income) expense includes change in payable related to Tax Receivable Agreement, settlements for insurance claims, disposal of assets, and credit losses.

 

SOLARIS OILFIELD INFRASTRUCTURE, INC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

June 30,

 

December 31,

 

 

2022

 

2021

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

15,351

 

$

36,497

Accounts receivable, net of allowances for credit losses of $388 and $746, respectively

 

 

66,854

 

 

33,120

Prepaid expenses and other current assets

 

 

6,422

 

 

9,797

Inventories

 

 

4,317

 

 

1,654

Total current assets

 

 

92,944

 

 

81,068

Property, plant and equipment, net

 

 

267,816

 

 

240,091

Non-current inventories

 

 

2,412

 

 

2,676

Operating lease right-of-use assets

 

 

3,908

 

 

4,182

Goodwill

 

 

13,004

 

 

13,004

Intangible assets, net

 

 

1,814

 

 

2,203

Deferred tax assets

 

 

60,198

 

 

62,942

Other assets

 

 

324

 

 

57

Total assets

 

$

442,420

 

$

406,223

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

24,319

 

$

9,927

Accrued liabilities

 

 

29,890

 

 

16,918

Current portion of payables related to Tax Receivable Agreement

 

 

1,210

 

 

1,210

Current portion of lease liabilities

 

 

742

 

 

717

Current portion of finance lease liabilities

 

 

556

 

 

31

Other current liabilities

 

 

1,827

 

 

496

Total current liabilities

 

 

58,544

 

 

29,299

Lease liabilities, net of current

 

 

6,239

 

 

6,702

Finance lease liabilities, net of current

 

 

1,244

 

 

70

Payables related to Tax Receivable Agreement

 

 

71,422

 

 

71,892

Other long-term liabilities

 

 

376

 

 

384

Total liabilities

 

 

137,825

 

 

108,347

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, 31,517 shares issued and outstanding as of June 30, 2022 and 31,146 shares issued and outstanding as of December 31, 2021

 

 

315

 

 

312

Class B common stock, $0.00 par value, 180,000 shares authorized, 13,674 shares issued and outstanding as of June 30, 2022 and 13,770 issued and outstanding as of December 31, 2021

 

 

—

 

 

—

Additional paid-in capital

 

 

200,354

 

 

196,912

Retained earnings

 

 

7,601

 

 

5,925

Total stockholders' equity attributable to Solaris and members' equity

 

 

208,270

 

 

203,149

Non-controlling interest

 

 

96,325

 

 

94,727

Total stockholders' equity

 

 

304,595

 

 

297,876

Total liabilities and stockholders' equity

 

$

442,420

 

$

406,223

 

SOLARIS OILFIELD INFRASTRUCTURE, INC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30,

 

Three Months Ended June 30,

 

 

2022

 

 

2021

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

Net (loss) income

 

$

14,011

 

 

$

(3,795

)

 

$

8,289

 

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

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

14,061

 

 

 

13,445

 

 

 

7,132

 

Property tax contingency (1)

 

 

3,072

 

 

 

—

 

 

 

3,072

 

(Gain) loss on disposal of asset

 

 

(39

)

 

 

117

 

 

 

(146

)

Stock-based compensation

 

 

3,112

 

 

 

2,552

 

 

 

1,519

 

Amortization of debt issuance costs

 

 

98

 

 

 

88

 

 

 

58

 

Allowance for credit losses

 

 

(388

)

 

 

599

 

 

 

(388

)

Change in payables related to Tax Receivable Agreement

 

 

(654

)

 

 

—

 

 

 

(654

)

Deferred income tax expense (benefit)

 

 

3,101

 

 

 

(607

)

 

 

1,646

 

Other

 

 

(178

)

 

 

(146

)

 

 

(177

)

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(33,346

)

 

 

(13,697

)

 

 

(20,809

)

Prepaid expenses and other assets

 

 

5,098

 

 

 

(742

)

 

 

3,381

 

Inventories

 

 

(3,457

)

 

 

(1,085

)

 

 

(2,305

)

Accounts payable

 

 

7,902

 

 

 

7,239

 

 

 

2,862

 

Accrued liabilities

 

 

10,001

 

 

 

72

 

 

 

12,645

 

Net cash provided by operating activities

 

 

22,394

 

 

 

4,040

 

 

 

16,125

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

Investment in property, plant and equipment

 

 

(32,326

)

 

 

(7,716

)

 

 

(20,550

)

Cash received from insurance proceeds

 

 

860

 

 

 

6

 

 

 

629

 

Proceeds from disposal of assets

 

 

57

 

 

 

40

 

 

 

19

 

Net cash used in investing activities

 

 

(31,409

)

 

 

(7,670

)

 

 

(19,902

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

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

 

 

(9,777

)

 

 

(9,594

)

 

 

(4,890

)

Payments under finance leases

 

 

(567

)

 

 

(12

)

 

 

(559

)

Payments under insurance premium financing

 

 

(422

)

 

 

(164

)

 

 

(176

)

Proceeds from stock option exercises

 

 

—

 

 

 

12

 

 

 

—

 

Payments related to debt issuance costs

 

 

(358

)

 

 

—

 

 

 

(358

)

Payments for shares withheld for taxes from RSU vesting and cancelled

 

 

(1,007

)

 

 

(702

)

 

 

(17

)

Net cash used in financing activities

 

 

(12,131

)

 

 

(10,460

)

 

 

(6,000

)

Net decrease in cash and cash equivalents

 

 

(21,146

)

 

 

(14,090

)

 

 

(9,777

)

Cash and cash equivalents at beginning of period

 

 

36,497

 

 

 

60,366

 

 

 

25,128

 

Cash and cash equivalents at end of period

 

$

15,351

 

 

$

46,276

 

 

$

15,351

 

Non-cash activities

 

 

 

 

 

 

 

 

 

Investing:

 

 

 

 

 

 

 

 

 

Capitalized depreciation in property, plant and equipment

 

 

289

 

 

 

289

 

 

 

143

 

Capitalized stock based compensation

 

 

207

 

 

 

151

 

 

 

92

 

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

 

 

6,490

 

 

 

612

 

 

 

6,490

 

Property, plant and equipment additions transferred from inventory

 

 

1,058

 

 

 

536

 

 

 

483

 

Additions to fixed assets through finance leases

 

 

2,267

 

 

 

—

 

 

 

2,267

 

Financing:

 

 

 

 

 

 

 

 

 

Insurance premium financing

 

 

1,331

 

 

 

738

 

 

 

1,331

 

Cash paid for:

 

 

 

 

 

 

 

 

 

Interest

 

 

37

 

 

 

66

 

 

 

—

 

Income taxes

 

 

370

 

 

 

325

 

 

 

348

 

1)

Property tax contingency represents a reserve related to an unfavorable Texas District Court ruling related to prior period property taxes. The ruling is currently under appeal.

SOLARIS OILFIELD INFRASTRUCTURE, INC AND SUBSIDIARIES

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 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

 

Six months ended

 

 

June 30,

 

March 31

 

June 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

8,289

 

 

$

(1,870

)

 

$

5,722

 

 

$

14,011

 

 

$

(3,795

)

Depreciation and amortization

 

 

7,132

 

 

 

6,752

 

 

 

6,929

 

 

 

14,061

 

 

 

13,445

 

Interest expense, net

 

 

88

 

 

 

55

 

 

 

79

 

 

 

167

 

 

 

104

 

Income taxes (1)

 

 

1,945

 

 

 

(217

)

 

 

1,612

 

 

 

3,557

 

 

 

(430

)

EBITDA

 

$

17,454

 

 

$

4,720

 

 

$

14,342

 

 

$

31,796

 

 

$

9,324

 

Property tax contingency (2)

 

 

3,072

 

 

 

—

 

 

 

—

 

 

 

3,072

 

 

 

—

 

Stock-based compensation expense (3)

 

 

1,519

 

 

 

1,353

 

 

 

1,593

 

 

 

3,112

 

 

 

2,552

 

Change in payables related to Tax Receivable Agreement (4)

 

 

(654

)

 

 

—

 

 

 

—

 

 

 

(654

)

 

 

—

 

Credit losses and adjustments to credit losses

 

 

(361

)

 

 

316

 

 

 

(27

)

 

 

(388

)

 

 

599

 

Other (5)

 

 

34

 

 

 

109

 

 

 

(168

)

 

 

(134

)

 

 

141

 

Adjusted EBITDA

 

$

21,064

 

 

$

6,498

 

 

$

15,740

 

 

$

36,804

 

 

$

12,616

 

1)

Federal and state income taxes.

2)

Property tax contingency represents a reserve related to an unfavorable Texas District Court ruling related to prior period property taxes. The ruling is currently under appeal.

3)

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

4)

Reduction in liability due to state tax rate change.

5)

Other includes write off of prepaid purchase orders that were not fulfilled, loss on disposal of assets, gain on insurance claims and other settlements, and costs related to the evaluation of potential acquisitions.

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,

 

 

2022

 

2021

 

2022

 

2022

 

2021

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to Solaris

 

$

5,453

 

 

$

(1,211

)

 

$

3,502

 

 

$

8,955

 

 

$

(2,380

)

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

2,836

 

 

 

(659

)

 

 

2,220

 

 

 

5,056

 

 

 

(1,415

)

Property tax contingency (2)

 

 

3,072

 

 

 

—

 

 

 

—

 

 

 

3,072

 

 

 

—

 

Change in payables related to Tax Receivable Agreement (3)

 

 

(654

)

 

 

—

 

 

 

—

 

 

 

(654

)

 

 

—

 

Credit losses and adjustments to credit losses

 

 

(361

)

 

 

316

 

 

 

(27

)

 

 

(388

)

 

 

599

 

Other (4)

 

 

34

 

 

 

109

 

 

 

(168

)

 

 

(134

)

 

 

141

 

Incremental income tax benefit (expense)

 

 

(1,006

)

 

 

47

 

 

 

(703

)

 

 

(1,708

)

 

 

58

 

Adjusted pro forma net income (loss)

 

$

9,374

 

 

$

(1,398

)

 

$

4,824

 

 

$

14,199

 

 

$

(2,997

)

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares of Class A common stock outstanding

 

 

31,432

 

 

 

30,984

 

 

 

31,239

 

 

 

31,337

 

 

 

30,473

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

15,132

 

 

 

14,701

 

 

 

14,794

 

 

 

14,964

 

 

 

15,095

 

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

 

 

46,564

 

 

 

45,685

 

 

 

46,033

 

 

 

46,301

 

 

 

45,568

 

Adjusted pro forma earnings per share - diluted

 

$

0.20

 

 

$

(0.03

)

 

$

0.11

 

 

$

0.31

 

 

$

(0.07

)

(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)

Property tax contingency represents a reserve related to an unfavorable Texas District Court ruling related to prior period property taxes. The ruling is currently under appeal.

(3)

Reduction in liability due to state tax rate change.

(4)

Other includes write off of prepaid purchase orders that were not fulfilled, loss on disposal of assets, gain on insurance claims and other settlements, and costs related to the evaluation of potential acquisitions.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220801005736/en/

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