Stocks & Financial News
Breaking financial news 24/7 courtesy of TradingCharts.com Inc. / TFC Commodity Charts
Solaris Oilfield Infrastructure Announces First Quarter 2024 Results and Continued Shareholder Returns for Second Quarter 2024
"Solaris started the year with strong free cash flow generation as we continue to harvest cash from the organic investments we made over the last few years," Chairman and Chief Executive Officer Bill Zartler commented.
"Including today's announced dividend, we have cumulatively returned nearly half of the company's current market capitalization to shareholders. We expect that the continued growth in our free cash flow during the remainder of this year should support continued execution on our shareholder returns commitment, while allowing us to maintain our healthy balance sheet and build flexibility for future organic and inorganic investments."
Shareholder Returns
On February 19, 2024, Solaris' Board of Directors approved a cash dividend of $0.12 per share of Class A common stock, which was paid on March 21, 2024 to holders of record as of March 11, 2024, and a distribution of $0.12 per unit for holders of units in Solaris Oilfield Infrastructure, LLC ("Solaris LLC," and such holders "Solaris LLC Unitholders"), subject to the same payment and record date, or approximately $5 million in aggregate.
Solaris repurchased 1.1 million shares during the first quarter of 2024 for approximately $8 million. Approximately $15 million remains in the current share repurchase authorization. Since initiating the repurchase authorization in the first quarter of 2023, Solaris has repurchased a total of 4.3 million shares of Class A common stock, or approximately 10% of Solaris' total current outstanding shares.
On April 24, 2024, Solaris' Board of Directors approved a second quarter 2024 cash dividend of $0.12 per share of Class A common stock, to be paid on June 17, 2024 to holders of record as of June 7, 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.
Pro forma for the announced second quarter 2024 dividend, Solaris has returned approximately $178 million to shareholders through dividends and share repurchases. Since commencing shareholder returns in 2018, the Company has increased the dividend per share by 20% and has driven a 7% net reduction in total shares outstanding.
Free Cash Flow, Capital Expenditures and Liquidity
Free cash flow after asset disposals was positive $14 million in the first quarter of 2024, including a typical seasonal working capital use of $5 million.
Capital expenditures in the first quarter of 2024 were approximately $3 million, down approximately 55% from the fourth quarter of 2023. Solaris still expects full year 2024 capital expenditures to be less than $15 million, an approximately 75% year-over-year reduction.
As of March 31, 2024, Solaris had $3 million of cash on the balance sheet. Solaris ended the first quarter of 2024 with $30 million in borrowings outstanding and $41 million of liquidity. Net debt (defined as total debt outstanding less cash) at the end of the first quarter of 2024 was $27 million.
See "About Non-GAAP Measures" below for additional detail and reconciliations of GAAP to non-GAAP measures in the accompanying financial tables.
First Quarter 2024 Financial Review
Net income was $7 million, or $0.14 per diluted Class A share, for first quarter 2024, compared to fourth quarter 2023 net income of $7 million, or $0.14 per diluted Class A share, and first quarter 2023 net income of $12 million, or $0.23 per diluted Class A share. Adjusted pro forma net income for first quarter 2024 was $7 million, or $0.16 per fully diluted share, compared to fourth quarter 2023 adjusted pro forma net income of $7 million, or $0.15 per fully diluted share, and first quarter 2023 adjusted pro forma net income of $11 million, or $0.24 per fully diluted share.
Revenue was $68 million for first quarter 2024, which was up 7% from fourth quarter 2023 and down 18% from first quarter 2023. Adjusted EBITDA for first quarter 2024 was $23 million, which was up 7% from fourth quarter 2023 and down 10% from first quarter 2023. The sequential increases in revenue and Adjusted EBITDA were driven by an increase in lower-margin ancillary last mile logistics services activity and improved system pricing.
During the first quarter of 2024, Solaris earned revenue on 102 fully utilized systems, which includes sand systems and top fill systems. Total fully utilized systems were essentially flat with fourth quarter 2023 and down 14% from first quarter 2023. Solaris followed an average of 64 industry frac crews on a fully utilized basis in the first quarter of 2024, which was flat with fourth quarter 2023.
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 first quarter 2024 on Friday, April 26, 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 2917930. 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 adjusted net income, adjusted diluted earnings per share, and Adjusted EBITDA 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.
SOLARIS OILFIELD INFRASTRUCTURE, INC
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
March 31, December 31,
2024 2023 2023
-------------------------------------------------- -------------------------------------------------- --------------------------------------------------
Revenue $ 64,635 $ 77,828 $ 60,069
Revenue - related parties 3,255 4,894 3,278
-------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
67,890 82,722 63,347
Total revenue
-------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Operating costs and expenses:
39,887 53,223 36,870
Cost of services (excluding depreciation and amortization)
9,934 8,417 9,518
Depreciation and amortization
7,990 6,538 7,229
Selling, general and administrative
123 (338 ) 489
Other operating (income) expense, net (1)
-------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
57,934 67,840 54,106
Total operating costs and expenses
-------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Operating income 9,956 14,882 9,241
Interest expense, net (799 ) (459 ) (912 )
-------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Income before income tax expense 9,157 14,423 8,329
Provision for income taxes (1,857 ) (2,486 ) (1,370 )
-------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Net income 7,300 11,937 6,959
Less: net income related to non-controlling interests (2,983 ) (4,368 ) (2,658 )
-------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Net income attributable to Solaris Oilfield Infrastructure, Inc. 4,317 7,569 4,301
Less: income attributable to participating securities (2) (277 ) (350 ) (214 )
-------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Net income attributable to common shareholders $ 4,040 $ 7,219 $ 4,087
==================== ========== ==================== ==================== ========== ==================== ==================== ========== ====================
-------------------- ------------------------------ -------------------- ------------------------------ -------------------- ------------------------------
Earnings per share of Class A common stock - basic $ 0.14 $ 0.23 $ 0.14
==================== ========== ==================== ==================== ========== ==================== ==================== ========== ====================
Earnings per share of Class A common stock - diluted $ 0.14 $ 0.23 $ 0.14
==================== ========== ==================== ==================== ========== ==================== ==================== ========== ====================
Basic weighted average shares of Class A common stock outstanding 28,587 31,214 29,024
1) Other operating (income) expense, net includes the sale or disposal of assets, credit losses or recoveries, sublease income, transaction costs and other settlements.
SOLARIS OILFIELD INFRASTRUCTURE, INC
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
(Unaudited)
March 31, December 31,
2024 2023
---------------------------------------- ----------------------------------------
Assets
Current assets:
$ 3,424 $ 5,833
Cash and cash equivalents
46,411 44,916
Accounts receivable, net of allowances of $404 and $104, respectively
2,721 2,378
Accounts receivable - related party
3,405 4,342
Prepaid expenses and other current assets
6,924 6,672
Inventories
-- 3,000
Assets held for sale
-------------------- -------------------- -------------------- --------------------
62,885 67,141
Total current assets
Property, plant and equipment, net 320,885 325,121
Non-current inventories 1,566 1,593
Non-current receivables, net of allowance of $862 and $862, respectively 1,663 1,663
Operating lease right-of-use assets 10,394 10,721
Goodwill 13,004 13,004
Intangible assets, net 521 702
Deferred tax assets 45,861 48,010
Other assets 291 342
-------------------- -------------------- -------------------- --------------------
Total assets $ 457,070 $ 468,297
==================== ==================== ==================== ====================
Liabilities and Stockholders' Equity
Current liabilities:
$ 12,266 $ 12,654
Accounts payable
16,489 20,292
Accrued liabilities
2,684 --
Current portion of payables related to Tax Receivable Agreement
1,381 1,385
Current portion of operating lease liabilities
2,495 2,462
Current portion of finance lease liabilities
-- 408
Other current liabilities
-------------------- -------------------- -------------------- --------------------
35,315 37,201
Total current liabilities
-------------------- -------------------- -------------------- --------------------
Operating lease liabilities, net of current 11,251 11,541
Credit agreement 30,000 30,000
Finance lease liabilities, net of current 1,766 2,401
Payables related to Tax Receivable Agreement 68,846 71,530
Other long-term liabilities 44 44
-------------------- -------------------- -------------------- --------------------
Total liabilities 147,222 152,717
-------------------- -------------------- -------------------- --------------------
Stockholders' equity:
-- --
Preferred stock, $0.01 par value, 50,000 shares authorized, none issued and outstanding
283 290
Class A common stock, $0.01 par value, 600,000 shares authorized, 28,330 shares and 28,967 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively
-- --
Class B common stock, $0.00 par value, 180,000 shares authorized, 13,674 shares issued and outstanding as of March 31, 2024 and December 31, 2023
182,723 188,379
Additional paid-in capital
17,125 17,314
Retained earnings
-------------------- -------------------- -------------------- --------------------
Total stockholders' equity attributable to Solaris Oilfield Infrastructure, Inc. 200,131 205,983
Non-controlling interest 109,717 109,597
-------------------- -------------------- -------------------- --------------------
Total stockholders' equity 309,848 315,580
-------------------- -------------------- -------------------- --------------------
SOLARIS OILFIELD INFRASTRUCTURE, INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
March 31,
--------------------------------------------------------------------------------------------------------------------------------
2024 2023
------------------------------------------------------ ------------------------------------------------------
Cash flows from operating activities:
Net income $ 7,300 $ 11,937
Adjustment to reconcile net income to net cash provided by operating activities:
9,934 8,417
Depreciation and amortization
12 (22 )
(Gain) loss on disposal of asset
2,217 1,980
Stock-based compensation
43 31
Amortization of debt issuance costs
300 --
Allowance for credit losses
223 --
Inventory write-off
1,727 2,329
Deferred income tax expense
31 10
Other
Changes in operating assets and liabilities:
(1,795 ) (3,581 )
Accounts receivable
(343 ) 1,086
Accounts receivable - related party
951 905
Prepaid expenses and other assets
(448 ) (4,071 )
Inventories
(131 ) 2,042
Accounts payable
(3,146 ) (3,122 )
Accrued liabilities
-- (1,092 )
Payments pursuant to tax receivable agreement
-------------------- -------------- -------------------- -------------------- -------------- --------------------
Net cash provided by operating activities 16,875 16,849
-------------------- -------------- -------------------- -------------------- -------------- --------------------
Cash flows from investing activities:
(3,358 ) (18,949 )
Investment in property, plant and equipment
10 123
Proceeds from disposal of property, plant and equipment
-------------------- -------------- -------------------- -------------------- -------------- --------------------
Net cash used in investing activities (3,348 ) (18,826 )
-------------------- -------------- -------------------- -------------------- -------------- --------------------
Cash flows from financing activities:
(8,092 ) (14,427 )
Share repurchases and retirements
(1,641 ) (1,985 )
Distribution to non-controlling interest unitholders
(3,648 ) (3,656 )
Dividend paid to Class A common stock shareholders
(602 ) (738 )
Payments under finance leases
(414 ) (541 )
Payments under insurance premium financing
(1,539 ) (1,336 )
Cancelled shares withheld for taxes from vesting of restricted stock
4,000 18,000
Borrowings under the credit agreement
(4,000 ) --
Repayment of credit agreement
-------------------- -------------- -------------------- -------------------- -------------- --------------------
Net cash used in financing activities (15,936 ) (4,683 )
-------------------- -------------- -------------------- -------------------- -------------- --------------------
Net decrease in cash and cash equivalents (2,409 ) (6,660 )
Cash and cash equivalents at beginning of period 5,833 8,835
-------------------- -------------- -------------------- -------------------- -------------- --------------------
Cash and cash equivalents at end of period $ 3,424 $ 2,175
==================== ============== ==================== ==================== ============== ====================
Non-cash activities
Investing:
$ 120 $ 129
Capitalized depreciation in property, plant and equipment
134 174
Capitalized stock based compensation
331 5,015
Property and equipment additions incurred but not paid at period-end
3,000 --
Reclassification of assets held for sale to property, plant and equipment
-- 933
Additions to fixed assets through finance leases
Cash paid for:
$ 758 $ 335
Interest
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, 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.
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 net income to EBITDA and Adjusted EBITDA for each of the periods indicated.
Three Months Ended
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
March 31, December 31,
2024 2023 2023
---------------------------------------- ------------------------------------------------------ --------------------------------------------------
Net income $ 7,300 $ 11,937 $ 6,959
9,934 8,417 9,518
Depreciation and amortization
799 459 912
Interest expense, net
1,857 2,486 1,370
Provision for income taxes (1)
-------------------- -------------------- -------------------- -------------- -------------------- -------------------- ---------- --------------------
EBITDA $ 19,890 $ 23,299 $ 18,759
2,217 1,980 1,911
Stock-based compensation expense (2)
12 (361 ) (4 )
(Gain) loss on disposal of assets
300 -- 650
Credit losses
268 200 6
Other (3)
-------------------- -------------------- -------------------- -------------- -------------------- -------------------- ---------- --------------------
____________________ 1) United States federal and state income taxes. 2) Represents stock-based compensation expense related to restricted stock awards and performance-based restricted stock units.
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
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
March 31, December 31,
2024 2023 2023
-------------------------------------------------- -------------------------------------------------- --------------------------------------------------
Net cash flows provided by operating activities $ 16,875 $ 16,849 $ 23,583
(3,348 ) (18,826 ) (7,173 )
Cash used for capital expenditures, net of proceeds from disposal of assets
-------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
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
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
March 31, December 31,
2024 2023 2023
-------------------------------------------------- ------------------------------------------------------ --------------------------------------------------
Numerator:
$ 4,317 $ 7,569 $ 4,301
Net income attributable to Solaris
Adjustments:
2,983 4,368 2,658
Reallocation of net income attributable to non-controlling interests from the assumed exchange of LLC Interests (1)
12 (361 ) (4 )
Loss on disposal of assets
300 -- 650
Credit losses
268 200 6
Other (2)
(626 ) (779 ) (976 )
Incremental income tax expense
-------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- ---------- --------------------
$ 7,254 $ 10,997 $ 6,635
Adjusted pro forma net income
-------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- ---------- --------------------
Denominator:
28,587 31,214 29,024
Weighted average shares of Class A common stock outstanding
Adjustments:
15,543 15,224 15,252
Potentially dilutive shares (3)
-------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- ---------- --------------------
44,130 46,438 44,276
Adjusted pro forma fully weighted average shares of Class A common stock outstanding - diluted
-------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- ---------- --------------------
(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) Other includes the net effect of inventory write-offs, transaction costs and other settlements.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240425803054/en/
SOURCE: Solaris Oilfield Infrastructure, Inc.
<img alt="" src="https://cts.businesswire.com/ct/CT?id=bwnews&sty=20240425803054r1&sid=cmtx6&distro=nx&lang=en" style="width:0;height:0" />
Yvonne Fletcher Senior Vice President, Finance and Investor Relations (281) 501-3070 IR@solarisoilfield.com
COMTEX_451422159/1006/2024-04-25T16:30:11