Second Quarter 2017 Highlights
-
Net income of $1.1 million; a $1.9 million improvement from second
quarter 2016
-
Record Adjusted EBITDA of $7.5 million; 22% increase versus first
quarter 2017 and up 4,839% year-over-year
-
Record revenue of $13.4 million; 30% increase versus first quarter
2017 and up 350% year-over-year
-
Record 3,375 revenue days; 28% increase versus first quarter 2017 and
up 240% year-over-year
-
Added nine proppant management systems to the rental fleet; total of
44 systems at quarter-end
HOUSTON--(BUSINESS WIRE)--
Solaris Oilfield Infrastructure, Inc. (NYSE:SOI) (“Solaris” or the
“Company”), a leading manufacturer and provider of patented mobile
proppant management systems for oil and natural gas well sites, today
reported financial results for the second quarter 2017, as further
described in the Company’s Quarterly Report on Form 10-Q for the quarter
ended June 30, 2017, filed with the Securities and Exchange Commission
(the “SEC”) today.
Second Quarter 2017 Financial Review
Solaris reported net income of $1.1 million for second quarter 2017,
compared to a net loss of $(0.8) million in second quarter 2016 and net
income of $4.8 million in first quarter 2017. Second quarter 2017 net
income included certain non-recurring expenses, including $3.5 million
of IPO-related compensation expense, $0.4 million related to a loss on
disposal of assets and $0.3 million of expense related to organizational
costs in connections with the Company’s initial public offering and the
development of the Company’s transloading facility in Kingfisher,
Oklahoma.
Adjusted EBITDA for the second quarter was $7.5 million, an increase of
$7.3 million from second quarter 2016 and an increase of $1.4 million
compared to first quarter 2017. A description of Adjusted EBITDA and a
reconciliation to net income, its most directly comparable GAAP measure,
is provided below.
Revenues were $13.4 million for the quarter, an increase of $10.4
million, or 350%, compared to second quarter 2016, and an increase of
$3.1 million, or 30%, compared to first quarter 2017.
During second quarter 2017, the Company generated 3,375 revenue days,
the combined number of days that its systems earned revenue during the
quarter, a 240% increase from second quarter 2016, and up 28% compared
to first quarter 2017. Customer demand and adoption rates for Solaris’
systems continue to grow as proppant consumption levels increase across
the industry and customers realize the benefits of Solaris’ technology.
Solaris completed its initial public offering (“IPO”) of its common
stock on May 17, 2017, thus the financial results for a portion of the
second quarter of 2017 reflect a period during which the Company was
privately-owned.
Capital Expenditures and Liquidity
Driven by strong customer demand and continued customer adoption of our
proppant management systems and services, the Company invested $13.9
million in capital equipment during second quarter 2017 and added nine
systems to the fleet, ending the quarter with 44 systems. These
investments help address rising customer demand and are expected to
drive future earnings and cash flow growth for Solaris.
As of June 30, 2017, the Company had $70.1 million in cash and $20.0
million of availability under the undrawn credit facility for total
liquidity of $90.1 million.
Kingfisher Facility
On August 2, 2017 Solaris announced a seven (7) year contract with a
leading STACK E&P operator to provide proppant transloading service in
connection with the Company’s strategic expansion to develop a new
high-capacity transload facility in Kingfisher, Oklahoma (the
“Kingfisher Facility”).
The Kingfisher Facility will be located central to the STACK/SCOOP plays
and will be the first independent, unit-train capable, high speed
transload facility in Oklahoma. The Kingfisher Facility will initially
provide proppant transloading services, but will also have capacity to
provide transloading services for other drilling and completion related
consumables. The Kingfisher Facility will help operators and service
companies reduce logistics costs by virtue of its high-volume capacity
and proximity to well sites.
The Kingfisher Facility will be located on a 300-acre parcel of land,
directly on the Union Pacific Railroad. Solaris has secured a 30-year
land lease with the State of Oklahoma and has started ordering long-lead
construction items in anticipation of breaking ground in August 2017.
The facility is designed to service multiple large volume customers with
dedicated storage and unit train loop tracks, as well as direct
rail-to-truck transloading.
The capital investment required to satisfy the contracted customer’s
dedicated volumes is approximately $40 million, which will be funded
from available cash raised in connection with Solaris’ IPO and cash flow
from operations. This investment includes capital expenditures related
to engineering and site preparation, as well as rail and large-scale
silo construction that is scheduled to be fully completed by August
2018. Solaris estimates that the contracted minimum volumes represent
less than 50% of the operational capacity of the Facility’s initial
development.
The contracted minimum annual revenue upon completion of the initial
development is approximately $13.0 million. Direct costs of transloading
services are expected to be approximately 30% of revenue. Any additional
volumes above the contracted minimum will increase revenue.
Operational Outlook
Solaris currently has 49 systems in its rental fleet, all of which are
deployed with customers. Over 90% of our systems are deployed to
customers with multiple systems. The Company expects to deliver a total
of 14 systems to the rental fleet in the third quarter, for a total of
58 systems by end of September 2017.
On August 2, 2017, Solaris announced a revised outlook for system
deliveries and capital expenditures in 2017 and reaffirmed such
expectations as of the date of this release. Solaris expects to end the
year with a system count between 68 to 72 systems, an increase from the
previous outlook of 60 to 64 systems. On August 2, 2017, Solaris also
increased its 2017 capital expenditure guidance to $75 million to $95
million as a result of both the increased system deliveries and the
development of the Kingfisher Facility.
Solaris’ Chief Executive Officer Greg Lanham commented, “We continued to
execute on our plan in the second quarter, expand our product offering,
and save our customers money on their well completions. We are working
hard to meet market demand for next generation proppant handling and
management solutions by manufacturing additional systems and continuing
to make enhancements to the system design. As proppant consumption
levels increase across the industry, innovative and integrated solutions
that better manage proppant will be critical to optimizing the supply
chain.
“Solaris is uniquely positioned to improve key elements of the supply
chain, including integrating transloading with the well site management
of proppant. The Kingfisher Facility’s high-velocity throughput
capacity, including offloading a unit-train within 24-hours, will
increase railcar turns, help de-bottleneck shared rail infrastructure
and improve last-mile logistics. This will significantly reduce the
delivered cost of proppant.”
Conference Call
The Company will host a conference call to discuss its first quarter
2017 results on Tuesday, August 15, 2017 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 (866) 807-9684. To join the conference
call from outside of the United States, participants may dial (412)
317-5415. 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, 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 10110829. 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) manufactures and
provides patented mobile proppant management systems that unload, store
and deliver proppant at oil and natural gas well sites. These patented
systems are deployed in many of the most active oil and natural gas
basins in the United States, including the Permian Basin, the Eagle Ford
Shale and the STACK/SCOOP. Solaris’ new high-capacity transload facility
being built in Kingfisher, Oklahoma will serve customers with operations
in the STACK/SCOOP. Additional information is available on the Solaris’
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 and Section 21E of
the Securities Exchange Act of 1934. Examples of forward-looking
statements include, but are not limited to, statements we make regarding
the outlook for the construction and operation of our new Kingfisher
Facility, 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, LLC AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) |
| | | | | | | | | | | |
|
| | Three Months Ended
June 30, | | Six Months Ended
June 30, |
| | 2017 | | 2016 | | 2017 | | 2016 |
| Revenue | | | | | | | | | | | | |
|
Proppant system rental
| |
$
|
11,097
| |
$
|
2,329
| |
$
|
19,498
| |
$
|
4,833
|
|
Proppant system services
| |
|
2,292
| |
|
647
| |
|
4,215
| |
|
1,287
|
|
Total revenue
| | |
13,389
| | |
2,976
| | |
23,713
| | |
6,120
|
| Operating costs and expenses | | | | | | | | | | | | |
|
Cost of proppant system rental (excluding $1,196 and $801, and
$2,225 and $1,561, of depreciation and amortization for the three
and six months ended June 30, 2017 and 2016, respectively, shown
separately)
| | |
597
| | |
458
| | |
947
| | |
795
|
|
Cost of proppant system services (excluding $91 and $35, and $154
and $69, of depreciation and amortization for the three and six
months ended June 30, 2017 and 2016, respectively, shown separately)
| | |
2,632
| | |
1,035
| | |
4,706
| | |
1,800
|
|
Depreciation and amortization
| | |
1,370
| | |
911
| | |
2,534
| | |
1,780
|
|
Salaries, benefits and payroll taxes
| | |
1,736
| | |
610
| | |
2,744
| | |
1,357
|
|
Selling, general and administrative (excluding $83 and $75, and $155
and $150, of depreciation and amortization for the three and six
months ended June 30, 2017 and 2016, respectively, shown separately)
| | |
1,600
| | |
747
| | |
2,477
| | |
1,299
|
|
Other operating expenses
| |
|
3,872
| |
|
—
| |
|
3,872
| |
|
—
|
|
Total operating cost and expenses
| |
|
11,807
| |
|
3,761
| |
|
17,280
| |
|
7,031
|
|
Operating income (loss)
| | |
1,582
| | |
(785)
| | |
6,433
| | |
(911)
|
|
Interest expense
| | |
(22)
| | |
(1)
| | |
(44)
| | |
(9)
|
|
Other income (expense)
| |
|
—
| |
|
(11)
| |
|
(25)
| |
|
1
|
|
Total other income (expense)
| |
|
(22)
| |
|
(12)
| |
|
(69)
| |
|
(8)
|
|
Income (loss) before income tax expense
| | |
1,560
| | |
(797)
| | |
6,364
| | |
(919)
|
|
Provision for income taxes
| |
|
(498)
| |
|
(7)
| |
|
(520)
| |
|
(12)
|
|
Net income (loss)
| | |
1,062
| | |
(804)
| | |
5,844
| | |
(931)
|
|
Less: net (income) loss related to Solaris LLC
| | |
1,117
| | |
804
| | |
(3,665)
| | |
931
|
|
Less: net income related to non-controlling interests
| |
|
(2,022)
| |
|
—
| |
|
(2,022)
| |
|
—
|
|
Net income attributable to Solaris
| |
$
|
157
| |
$
|
—
| |
$
|
157
| |
$
|
—
|
| |
|
| |
|
| |
|
| |
|
|
|
Earnings per share of Class A common stock - basic (1)
| |
$
|
0.01
| |
$
|
—
| |
$
|
0.01
| |
$
|
—
|
|
Earnings per share of Class A common stock - diluted (1)
| |
$
|
0.01
| |
$
|
—
| |
$
|
0.01
| |
$
|
—
|
| | | | | | | | | | | |
|
|
Basic weighted average shares of Class A common stock outstanding (1)
| | |
10,100
| | |
—
| | |
10,100
| | |
—
|
|
Diluted weighted average shares of Class A common stock outstanding
(1)
| | |
10,540
| | |
—
| | |
10,540
| | |
—
|
| | | | | | | | | | | |
|
(1) – Represents earnings per share of Class A common stock and
weighted average shares of Class A common stock outstanding for
the period following the reorganization transactions and IPO.
|
|
| | |
| | |
SOLARIS OILFIELD INFRASTRUCTURE, LLC AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) |
| | | | | |
|
| | June 30,
2017 | | December 31,
2016 |
| Assets | | | | | | |
|
Current assets:
| | | | | | |
|
Cash
| |
$
|
70,088
| |
$
|
3,568
|
|
Accounts receivable, net
| | |
7,131
| | |
4,510
|
|
Prepaid expenses and other current assets
| | |
5,387
| | |
403
|
|
Inventories
| |
|
4,348
| |
|
1,365
|
|
Total current assets
| | |
86,954
| | |
9,846
|
|
Property, plant and equipment, net
| | |
74,255
| | |
54,350
|
|
Goodwill
| | |
13,004
| | |
13,004
|
|
Intangible assets, net
| | |
62
| | |
36
|
|
Deferred tax assets
| | |
30,234
| | |
—
|
|
Other assets
| |
|
238
| |
|
—
|
|
Total assets
| |
$
|
204,747
| |
$
|
77,236
|
| Liabilities and Members’ Equity | | | | | | |
|
Current liabilities:
| | | | | | |
|
Accounts payable
| |
$
|
2,847
| |
$
|
705
|
|
Accrued liabilities
| | |
3,380
| | |
2,144
|
|
Current portion of capital lease obligations
| | |
33
| | |
26
|
|
Current portion of notes payable
| | |
—
| | |
169
|
|
Current portion of senior secured credit facility
| |
|
—
| |
|
31
|
|
Total current liabilities
| |
|
6,260
| |
|
3,075
|
|
Capital lease obligations, net of current portion
| | |
193
| | |
213
|
|
Notes payable, net of current portion
| | |
—
| | |
282
|
|
Senior secured credit facility, net of current portion
| | |
—
| | |
2,320
|
|
Payable related to parties pursuant to tax receivable agreements
| | |
11,558
| | |
—
|
|
Other long-term liabilities
| |
|
163
| |
|
—
|
|
Total liabilities
| |
|
18,174
| |
|
5,890
|
|
Commitments and contingencies
| | | | | | |
|
Stockholders' and members’ equity
| | | | | | |
|
Members’ equity
| | |
—
| | |
69,267
|
|
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,
10,100 shares issued and outstanding as of June 30, 2017 and none
issued and outstanding as of December 31, 2016
| | |
101
| | |
—
|
|
Class B common stock, $0.00 par value, 180,000 shares authorized,
32,366 shares issued and outstanding as of June 30, 2017 and none
issued and outstanding as of December 31, 2016
| | |
—
| | |
—
|
|
Additional paid-in capital
| | |
59,237
| | |
—
|
|
Accumulated earnings
| |
|
157
| |
|
2,079
|
|
Total stockholders' equity attributable to Solaris and members'
equity
| |
|
59,495
| |
|
71,346
|
|
Non-controlling interest
| |
|
127,078
| |
|
—
|
|
Total stockholders' and members' equity
| |
|
186,573
| |
|
71,346
|
|
Total liabilities, stockholders' and members’ equity
| |
$
|
204,747
| |
$
|
77,236
|
|
| | |
| | |
SOLARIS OILFIELD INFRASTRUCTURE, LLC AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) |
| | | | | |
|
| | For the Six Months Ended June 30, |
| | 2017 | | 2016 |
|
Cash flows from operating activities:
| | | | | | |
|
Net income (loss)
| |
$
|
5,844
| | |
$
|
(931
|
)
|
|
Adjustment to reconcile net income (loss) to net cash provided by
(used in) operating activities:
| | | | | | |
|
Depreciation and amortization
| | |
2,534
| | | |
1,780
| |
|
Loss on disposal of asset
| | |
409
| | | |
—
| |
|
Unit-based compensation
| | |
677
| | | |
72
| |
|
Amortization of debt issuance costs
| | |
24
| | | |
—
| |
|
Amortization of prepaid expenses and other assets
| | |
462
| | | |
—
| |
|
Deferred income tax expense
| | |
473
| | | |
—
| |
|
Other
| | |
(9
|
)
| | |
—
| |
|
Changes in assets and liabilities:
| | | | | |
—
| |
|
Accounts receivable
| | |
(2,621
|
)
| | |
(593
|
)
|
|
Prepaid expenses and other assets
| | |
(5,451
|
)
| | |
31
| |
|
Inventories
| | |
(4,348
|
)
| | |
593
| |
|
Accounts payable
| | |
2,142
| | | |
(435
|
)
|
|
Accrued liabilities
| |
|
1,409
|
| |
|
(1,066
|
)
|
|
Net cash provided by (used in) operating activities
| |
|
1,545
|
| |
|
(549
|
)
|
|
Cash flows from investing activities:
| | | | | | |
|
Investment in property, plant and equipment
| | |
(21,482
|
)
| | |
(3,469
|
)
|
|
Investment in intangible assets
| |
|
(28
|
)
| |
|
—
|
|
|
Net cash used in investing activities
| |
|
(21,510
|
)
| |
|
(3,469
|
)
|
|
Cash flows from financing activities:
| | | | | | |
|
Payments under capital leases
| | |
(13
|
)
| | |
71
| |
|
Payments under notes payable
| | |
(451
|
)
| | |
13
| |
|
Proceeds from borrowings under the credit facility
| | |
3,000
| | | |
—
| |
|
Repayment of credit facility
| | |
(5,500
|
)
| | |
—
| |
|
Proceeds from pay down of promissory note related to membership units
| | |
4,303
| | | |
—
| |
|
Payments related to debt issuance costs
| | |
(111
|
)
| | |
—
| |
|
Proceeds from issuance of Class A common stock sold in initial
public offering, net of offering costs
| | |
111,075
| | | |
—
| |
|
Distributions paid to unit and option holders
| |
|
(25,818
|
)
| |
|
—
|
|
|
Net cash provided by financing activities
| |
|
86,485
|
| |
|
84
|
|
|
Net increase (decrease) in cash
| | |
66,520
| | | |
(3,934
|
)
|
|
Cash at beginning of period
| |
|
3,568
|
| |
|
6,923
|
|
|
Cash at end of period
| |
$
|
70,088
|
| |
$
|
2,989
|
|
|
Non-cash activities
| | | | | | |
|
Investing:
| | | | | | |
|
Capitalized depreciation in property, plant and equipment
| |
$
|
320
| | |
$
|
342
| |
|
Financing:
| | | | | | |
|
Notes payable issued for property, plant and equipment
| | |
—
| | | |
72
| |
|
Accrued interest from notes receivable issued for membership units
| | |
128
| | | |
208
| |
|
Cash paid for:
| | | | | | |
|
Interest
| | |
90
| | | |
14
| |
| | | | | | | |
|
SOLARIS OILFIELD INFRASTRUCTURE, LLC AND SUBSIDIARIES
RECONCILIATION
OF GAAP TO NON-GAAP FINANCIAL INFORMATION — ADJUSTED EBITDA
(In
thousands)
(Unaudited)
We view EBITDA and Adjusted EBITDA as important indicators of
performance. We define EBITDA as net income (loss), 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) unit-based compensation expense and
(ii) certain non-cash charges and unusual or non-recurring charges.
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 (loss) to EBITDA
and Adjusted EBITDA for each of the periods indicated.
|
| | |
| | |
| | |
| | |
| | Three months ended
June 30, | | Six months ended
June 30, |
| | 2017 | | 2016 | | 2017 | | 2016 |
| | | | |
|
|
Net income (loss)
| |
$
|
1,062
| |
$
|
(804
|
)
| |
$
|
5,844
| |
$
|
(931
|
)
|
|
Depreciation and amortization
| | |
1,370
| | |
911
| | | |
2,534
| | |
1,780
| |
|
Interest expense, net
| | |
22
| | |
1
| | | |
44
| | |
9
| |
|
Income taxes (1)
| |
|
498
| |
|
7
|
| |
|
520
| |
|
12
|
|
|
EBITDA
| |
$
|
2,952
| |
$
|
115
| | |
$
|
8,942
| |
$
|
870
| |
|
Non-recurring organizational costs (2)
| | |
258
| | |
—
| | | |
348
| | |
—
| |
|
IPO bonuses (3)
| | |
3,523
| | |
—
| | | |
3,523
| | |
—
| |
|
Loss on disposal of assets
| | |
384
| | |
—
| | | |
409
| | |
—
| |
|
Unit-based compensation expense (4)
| |
|
341
| |
|
36
|
| |
|
373
| |
|
72
|
|
|
Adjusted EBITDA
| |
$
|
7,458
| |
$
|
151
|
| |
$
|
13,595
| |
$
|
942
|
|
|
(1)
|
Income taxes include add-back for federal and state taxes.
|
|
(2)
|
Certain non-recurring organizational and transaction costs
associated with Solaris’ IPO and the Kingfisher facility.
|
|
(3)
|
One-time cash bonuses of $3.1 million and restricted stock awards
with one-year vesting of $0.4 million were paid or granted to
certain employees and consultants in connection with the Offering.
|
|
(4)
|
Represents unit-based compensation costs of $0.2 million related to
restricted stock awards, with three-year vesting. Also includes $0.1
million and $0.2 million for the three and six months ended June 30,
2017, respectively, related to options under the Plan.
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20170814005228/en/
Solaris Oilfield Infrastructure, Inc.
Kyle Ramachandran,
281-501-3070
Chief Financial Officer
[email protected]
Source: Solaris Oilfield Infrastructure, Inc.