Solaris Oilfield Infrastructure Announces Fourth Quarter and Full Year 2020 Results

By Benzinga4 days ago

Fourth Quarter and Full Year 2020 Highlights

  • Net loss of $(51.1) million, or $(1.03) per diluted Class A share, for the full year ended December 31, 2020; Adjusted pro forma net loss of $(6.6) million, or $(0.15) per diluted share for the year ended December 31, 2020 (see below for a reconciliation of adjusted pro forma net income to net income attributable to Solaris)
  • Net loss of $(2.8) million, or $(0.06) per diluted Class A share, for the quarter ended December 31, 2020; Adjusted pro forma net loss of $(2.4) million, or $(0.05) per diluted share for the quarter ended December 31, 2020
  • Adjusted EBITDA of $25.6 million and $4.9 million for the year and quarter ended December 31, 2020, respectively
  • Net cash provided by operating activities of $43.9 million and $5.8 million for the year and quarter ended December 31, 2020, respectively
  • Positive free cash flow of $39.2 million and $4.1 million for the year and quarter ended December 31, 2020, respectively
  • Paid a regular quarterly dividend of $0.105 per share on December 7, 2020

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

Operational Update and Outlook

During the fourth quarter 2020, an average of 42 mobile proppant management systems were fully utilized, a 24% increase from the 34 fully utilized systems averaged in the third quarter of 2020, and a 52% decrease compared to fourth quarter 2019. The sequential increase in fully utilized systems during the fourth quarter of 2020 was primarily due to a stronger than expected increase in completions activity and reduced normal seasonal slowdown as compared to prior years. For full year 2020, an average of 45 mobile proppant management systems were fully utilized, representing a 59% decline from the 110 fully utilized systems averaged in 2019.

“2020 was one of the most challenging years this industry has ever faced, and I'm proud of how the Solaris team successfully managed through it. The team reacted swiftly to the changing market, while continuing to generate cash, invest in new technology, and preserve our dividend,“ Solaris' Chairman and Chief Executive Officer Bill Zartler commented. “As we look to 2021, we remain committed to maximizing cash flow, returning cash to shareholders and maintaining our strong balance sheet. We also look forward to sharing some of our latest technology innovations in the coming months as we continue to help our customers drive efficiencies at the well site.“

Full Year 2020 Financial Review

Solaris reported net loss of $(51.1) million, or $(1.03) per diluted Class A share, for full year 2020, compared to full year 2019 net income of $90.4 million, or $1.69 per diluted Class A share. Adjusted pro forma net loss for full year 2020 was $(6.6) million, or $(0.15) per fully diluted share, compared to full year 2019 adjusted pro forma net income of $62.7 million, or $1.32 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 $103.0 million for full year 2020, which were down 57% from full year 2019.

Adjusted EBITDA for full year 2020 was $25.6 million, compared to full year 2019 Adjusted EBITDA of $113.4 million. A description of Adjusted EBITDA and a reconciliation to net income, its most directly comparable GAAP measure, is provided below.

Fourth Quarter 2020 Financial Review

Solaris reported net loss of $(2.8) million, or $(0.06) per diluted Class A share, for fourth quarter 2020, compared to net loss of $(5.6) million, or $(0.12) per diluted Class A share, in third quarter 2020 and net income of $25.3 million, or $0.48 per diluted Class A share, in fourth quarter 2019. Fourth quarter 2019 included a $17.6 million, or $0.37 per diluted Class A share, benefit for deferred revenue recognition that resulted from a contract termination at the Company's Kingfisher transload facility. Adjusted pro forma net loss for fourth quarter 2020 was $(2.4) million, or $(0.05) per fully diluted share, compared to adjusted pro forma net loss in third quarter 2020 of $(4.0) million, or $(0.09) per fully diluted share, and adjusted pro forma net income of $9.7 million, or $0.20 per fully diluted share in fourth quarter 2019.

Revenues were $25.3 million for fourth quarter 2020, which were up 23% from third quarter 2020 and down 60% compared to fourth quarter 2019.

Adjusted EBITDA for fourth quarter 2020 was $4.9 million, compared to Adjusted EBITDA of $3.1 million in third quarter 2020, a 55% sequential increase, and compared to $20.9 million in fourth quarter 2019.

Capital Expenditures, Free Cash Flow and Liquidity

Capital expenditures in the fourth quarter 2020 were $1.8 million and for the full year were $4.7 million. The Company expects capital expenditures for the full year 2021 to be between $5.0 and $10.0 million.

Free cash flow (defined as net cash provided by operating activities less investment in property, plant and equipment) during fourth quarter 2020 was $4.1 million, which represented the eighth consecutive quarter of positive free cash flow for the Company. For full year 2020, the Company generated $39.2 million of free cash flow.

As of December 31, 2020, the Company had approximately $60.4 million of cash on the balance sheet, which reflects about $2.09 per fully diluted share of available cash. The Company's $50.0 million credit facility remains undrawn.

Shareholder Returns

On November 18, 2020, the Company's Board of Directors declared a cash dividend of $0.105 per share of Class A common stock, which was paid on December 7, 2020 to holders of record as of November 27, 2020. 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 9 consecutive quarterly dividends. Cumulatively, the Company has returned approximately $73 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 fourth quarter and full year 2020 results on Monday, February 22, 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

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 10151681. 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

Year Ended

December 31,

September 30,

December 31,

2020

2019

2020

2020

2019

Revenue

System rental

$

11,451

$

28,296

$

9,197

$

52,171

$

142,022

System services

13,394

15,250

10,855

48,625

63,871

Transloading services

211

18,974

310

1,250

34,105

Inventory software services

220

338

169

930

1,689

Total revenue

25,276

62,858

20,531

102,976

241,687

Operating costs and expenses

Cost of system rental (excluding depreciation and amortization)

1,483

1,970

1,181

5,501

9,707

Cost of system services (excluding depreciation and amortization)

15,498

18,383

13,126

58,767

74,749

Cost of transloading services (excluding depreciation and amortization)

257

550

243

1,040

2,601

Cost of inventory software services (excluding depreciation and amortization)

92

144

97

456

604

Depreciation and amortization

6,643

7,050

6,594

27,021

26,925

Selling, general and administrative (excluding depreciation and amortization)

4,269

4,619

3,840

16,481

18,586

Impairment loss

47,828

Other operating expenses (1)

453

56

1,856

5,782

585

Total operating costs and expenses

28,695

32,772

26,937

162,876

133,757

Operating income (loss)

(3,419

)

30,086

(6,406

)

(59,900

)

107,930

Interest income (expense), net

(198

)

141

(40

)

(162

)

(634

)

Total other income (expense)

(198

)

141

(40

)

(162

)

(634

)

Income (loss) before income tax expense

(3,617

)

30,227

(6,446

)

(60,062

)

107,296

Provision (benefit) for income taxes

(776

)

4,894

(843

)

(8,969

)

16,936

Net income (loss)

(2,841

)

25,333

(5,603

)

(51,093

)

90,360

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

1,405

(10,317

)

2,320

21,752

(38,353

)

Net income (loss) attributable to Solaris

$

(1,436

)

$

15,016

$

(3,283

)

$

(29,341

)

$

52,007

Earnings per share of Class A common stock - basic

$

(0.06

)

$

0.48

$

(0.12

)

$

(1.03

)

$

1.69

Earnings per share of Class A common stock - diluted

$

(0.06

)

$

0.48

$

(0.12

)

$

(1.03

)

$

1.69

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