Solaris Oilfield Infrastructure Announces First Quarter 2021 Results

Rhea-AI Summary

Solaris Oilfield Infrastructure reported Q1 2021 results highlighting a net loss of $1.9 million, improving from a loss of $33.2 million in Q1 2020. Revenues were $28.7 million, up 13% from Q4 2020 but down 40% year-over-year. Despite the financial challenges, the company maintained a positive cash flow for the ninth consecutive quarter and had $55.1 million in cash on hand. A quarterly dividend of $0.105 per share was declared, marking the tenth consecutive dividend payment since initiation. The firm anticipates capital expenditures between $10 million and $15 million for 2021.

Positive

• Achieved a 13% revenue increase from Q4 2020, totaling $28.7 million.
• Maintained positive free cash flow for nine consecutive quarters.
• Declared a cash dividend of $0.105 per share, with ten consecutive dividend payments since December 2018.
• Balance sheet strength with $55.1 million in cash and total liquidity of $90.1 million.

Negative

• Reported a net loss of $1.9 million compared to $33.2 million loss in Q1 2020.
• Year-over-year revenue decline of 40% from Q1 2020.
• Adjusted EBITDA decreased to $6.1 million from $18 million in Q1 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 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

FAQ

What were Solaris Oilfield's revenues for Q1 2021?

Solaris Oilfield reported revenues of $28.7 million for Q1 2021.

How did Solaris Oilfield perform financially in Q1 2021?

The company posted a net loss of $1.9 million, an improvement from a $33.2 million loss in Q1 2020.

What is the dividend declared by Solaris Oilfield in Q1 2021?

Solaris declared a cash dividend of $0.105 per share in Q1 2021.

What was the capital expenditure guidance for Solaris Oilfield in 2021?

Capital expenditures are expected to be between $10 million and $15 million for the full year 2021.

How much cash does Solaris Oilfield have as of Q1 2021?

As of March 31, 2021, Solaris had approximately $55.1 million in cash.