Fourth Quarter and Full Year 2018 Highlights
-
Net income of $86.0 million, or $1.59 per diluted Class A share, for
the year ended December 31, 2018; net income of $24.7 million, or
$0.47 per diluted Class A share, in fourth quarter 2018
-
Adjusted EBITDA of $123.4 million for the year ended December 31,
2018; adjusted EBITDA of $34.9 million in fourth quarter 2018
-
Ended the year with 160 proppant management systems and 3 chemical
management systems in the rental fleet
-
Declared a regular quarterly dividend of $0.10 per share on December
6, 2018
HOUSTON--(BUSINESS WIRE)--
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 2018.
Full Year 2018 Financial Review
Solaris reported full year 2018 net income of $86.0 million, or $1.59
per diluted Class A share, compared to full year 2017 net income of
$22.5 million, or $0.27 per diluted Class A share. Adjusted pro forma
net income for the full year 2018 was $79.6 million, or $1.69 per fully
diluted share, an increase of $58.5 million and $1.21 per fully diluted
share from full year 2017 pro forma net income. A description of
adjusted pro forma net income and a reconciliation to net income
attributable to Solaris, its most directly comparable GAAP measure, and
the computation of adjusted pro forma earnings per fully diluted share
are provided below.
Adjusted EBITDA for the full year 2018 was $123.4 million, an increase
of $83.4 million compared to full year 2017. A description of adjusted
EBITDA and a reconciliation to net income, its most directly comparable
GAAP measure, is provided below.
Revenues were $197.2 million for the full year 2018, an increase of
$129.8 million, compared to 2017.
During 2018, the Company generated 40,526 revenue days, the combined
number of days that its systems earned revenue during the year, a 142%
increase compared to 2017. The increase in revenue days were driven by
an increase in customer demand and adoption for Solaris’ systems as
consumption and intensity of proppant increased across the industry.
Fourth Quarter 2018 Financial Review
Solaris reported net income of $24.7 million, or $0.47 per diluted Class
A share, for fourth quarter 2018, compared to net income of $26.4
million, or $0.49 per diluted Class A share, in third quarter 2018 and
net income of $9.2 million, or $0.13 per diluted Class A share, in
fourth quarter 2017. Adjusted pro forma net income for fourth quarter
2018 was $21.6 million, or $0.45 per fully diluted share, a decrease of
$2.4 million and $0.06 per fully diluted share from third quarter 2018
and an increase of $12.7 million and $0.25 per fully diluted share
compared to fourth quarter 2017. 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.
Adjusted EBITDA for fourth quarter 2018 was $34.9 million, a decrease of
$1.6 million compared to third quarter 2018 and an increase of $19.7
million from fourth quarter 2017. A description of adjusted EBITDA and a
reconciliation to net income, its most directly comparable GAAP measure,
is provided below.
Revenues were $57.3 million for fourth quarter 2018, an increase of $0.7
million, or 1%, compared to third quarter 2018, and an increase of $32.1
million, or 127%, compared to fourth quarter 2017.
During fourth quarter 2018, the Company generated 11,155 revenue days,
the combined number of days that its systems earned revenue during the
quarter, a 6% decrease from third quarter 2018, and up 82% compared to
fourth quarter 2017. Revenue days were down sequentially in fourth
quarter 2018 due to reduced industry activity levels, which resulted
from seasonal customer spending declines and commodity price volatility.
Capital Expenditures and Liquidity
The Company invested $36.1 million during fourth quarter 2018, which
included adding 14 mobile proppant management systems and introducing 3
mobile chemical management systems to the fleet. For full year 2018,
capital expenditures totaled $161.1 million, which included the addition
of 83 mobile proppant management systems and 3 mobile chemical
management systems, and the completion of the Kingfisher Facility. These
investments help address customer demand for Solaris’ products and
services and are expected to drive future earnings and cash flow growth
for Solaris.
As of December 31, 2018, the Company had approximately $82.1 million of
liquidity, including $25.1 million in cash and $57.0 million of
availability under its credit facility, net of $13.0 million of
outstanding borrowings. Subsequent to year end, the Company repaid all
of its outstanding borrowings under its credit facility with cash on
hand.
Operational Update and Outlook
Solaris ended December 2018 with 160 mobile proppant management systems
and 3 mobile chemical management systems in the rental fleet. Based on
current industry activity levels, the Company believes it has
approximately 1/3 of overall U.S. wellsite proppant storage market share
which represents the leading share. The Company expects to end the first
quarter 2019 with 163 mobile proppant management systems and 10 mobile
chemical management systems in the rental fleet.
Solaris’ Chairman and Chief Executive Officer Bill Zartler commented,
“Over the course of 2018 we outperformed overall industry activity
levels, including more than doubling our fleet size and introducing
several new products and enhancements. These new introductions,
including the industry’s first silo-based chemical management systems
and complete automation of our mobile sand systems, will provide
additional growth potential for Solaris. Our solutions reduce labor
requirements and improve wellsite safety for our customers, which is
critical for success during this time of commodity price uncertainty and
upstream capital spending discipline. We will continue to innovate and
be thought leaders in driving this efficiency for our customers, and at
the same time will exercise capital discipline in our business – only
deploying capital when we think we can generate an attractive return for
our shareholders.”
Quarterly Cash Dividend
On December 6, 2018, the Company announced that its Board of Directors
had declared its first quarterly cash dividend of $0.10 per share of
Class A common stock, which was paid on December 27, 2018 to holders of
record as of December 17, 2018. A distribution of $0.10 per unit was
also approved for holders of units in Solaris Oilfield Infrastructure,
LLC (“Solaris LLC”).
Conference Call
The Company will host a conference call to discuss its fourth quarter
and full year 2018 results on Thursday, February 28, 2019 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 10127929. 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 rents
mobile equipment that drives supply chain and execution efficiencies in
the completion of oil and natural gas wells. Solaris’ patented mobile
proppant management systems and mobile chemical management 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, the
STACK/SCOOP formation, the Marcellus and Utica Shales, the Haynesville
Shale, the Rockies and the Bakken Shale. 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 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 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
management changes, the outlook for the operation of our 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, INC AND SUBSIDIARIES |
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
| (In thousands, except per share data) |
| (Unaudited) |
| | | | | | | | | | | | | | | | | | | |
|
| | | Three Months Ended | | | Year Ended |
| | | December 31, | | | September 30, | | | December 31, |
| | | 2018 | | | 2017 | | | 2018 | | | 2018 | | | 2017 |
| Revenue | | | | | | | | | | | | | | | | | | | | |
|
System rental
| | |
$
|
39,083
| | | |
$
|
20,093
| | | |
$
|
42,031
| | | |
$
|
143,646
| | | |
$
|
54,653
| |
|
System services
| | | |
13,511
| | | | |
4,906
| | | | |
12,053
| | | | |
43,010
| | | | |
12,537
| |
|
Transloading services
| | | |
4,236
| | | | |
—
| | | | |
2,000
| | | | |
8,083
| | | | |
—
| |
|
Inventory software services
| | |
|
507
|
| | |
|
205
|
| | |
|
602
|
| | |
|
2,457
|
| | |
|
205
|
|
|
Total revenue
| | | |
57,337
| | | | |
25,204
| | | | |
56,686
| | | | |
197,196
| | | | |
67,395
| |
| Operating costs and expenses | | | | | | | | | | | | | | | | | | | | |
|
Cost of system rental (excluding $4,792, $2,044 and $4,133 of
depreciation and amortization for the three months ended December
31, 2018 and 2017 and September 30, 2018, respectively, and $14,920
and $5,792 of depreciation and amortization for the years ended
December 31, 2018 and 2017, respectively, shown separately)
| | | |
2,180
| | | | |
1,033
| | | | |
1,949
| | | | |
7,230
| | | | |
2,627
| |
|
Cost of system services (excluding $385, $178 and $347 of
depreciation and amortization for the three months ended December
31, 2018 and 2017 and September 30, 2018, respectively, and $1,274
and $461 of depreciation and amortization for the years ended
December 31, 2018 and 2017, respectively, shown separately)
| | | |
15,942
| | | | |
5,544
| | | | |
13,906
| | | | |
50,633
| | | | |
14,184
| |
|
Cost of transloading services (excluding $410 and $529 of
depreciation and amortization for the three months ended December
31, 2018 and September 30, 2018, respectively, and $954 of
depreciation and amortization for the year ended December 31, 2018,
shown separately)
| | | |
778
| | | | |
76
| | | | |
597
| | | | |
2,242
| | | | |
76
| |
|
Cost of inventory software services (excluding $196, $42 and $193 of
depreciation and amortization for the three months ended December
31, 2018 and 2017 and September 30, 2018, respectively, and $794 and
$42 of depreciation and amortization for the years ended December
31, 2018 and 2017, respectively, shown separately)
| | | |
183
| | | | |
—
| | | | |
191
| | | | |
797
| | | | |
—
| |
|
Depreciation and amortization
| | | |
5,908
| | | | |
2,359
| | | | |
5,328
| | | | |
18,422
| | | | |
6,635
| |
|
Salaries, benefits and payroll taxes
| | | |
2,411
| | | | |
3,522
| | | | |
2,182
| | | | |
10,383
| | | | |
9,209
| |
|
Selling, general and administrative (excluding $125, $95 and $126 of
depreciation and amortization for the three months ended December
31, 2018 and 2017 and September 30, 2018, respectively, and $480 and
$340 of depreciation and amortization for the years ended December
31, 2018 and 2017, respectively, shown separately)
| | | |
1,685
| | | | |
1,424
| | | | |
1,687
| | | | |
6,375
| | | | |
5,077
| |
|
Other operating expenses
| | |
|
75
|
| | |
|
153
|
| | |
|
56
|
| | |
|
1,827
|
| | |
|
4,126
|
|
|
Total operating cost and expenses
| | |
|
29,162
|
| | |
|
14,111
|
| | |
|
25,896
|
| | |
|
97,909
|
| | |
|
41,934
|
|
|
Operating income
| | | |
28,175
| | | | |
11,093
| | | | |
30,790
| | | | |
99,287
| | | | |
25,461
| |
|
Interest expense, net
| | | |
(103
|
)
| | | |
(26
|
)
| | | |
(116
|
)
| | | |
(374
|
)
| | | |
(97
|
)
|
|
Income pursuant to Tax Receivable Agreement
| | |
|
—
|
| | |
|
22,939
|
| | |
|
—
|
| | |
|
—
|
| | |
|
23,022
|
|
|
Total other income (expense)
| | |
|
(103
|
)
| | |
|
22,913
|
| | |
|
(116
|
)
| | |
|
(374
|
)
| | |
|
22,925
|
|
|
Income before income tax expense
| | | |
28,072
| | | | |
34,006
| | | | |
30,674
| | | | |
98,913
| | | | |
48,386
| |
|
Provision for income taxes
| | |
|
3,420
|
| | |
|
24,762
|
| | |
|
4,237
|
| | |
|
12,961
|
| | |
|
25,899
|
|
|
Net income
| | | |
24,652
| | | | |
9,244
| | | | |
26,437
| | | | |
85,952
| | | | |
22,487
| |
|
Less: net income related to Solaris LLC
| | | |
—
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
(3,665
|
)
|
|
Less: net income related to non-controlling interests
| | |
|
(11,767
|
)
| | |
|
(7,137
|
)
| | |
|
(13,418
|
)
| | |
|
(43,521
|
)
| | |
|
(15,186
|
)
|
|
Net income attributable to Solaris
| | |
$
|
12,885
|
| | |
$
|
2,107
|
| | |
$
|
13,019
|
| | |
$
|
42,431
|
| | |
$
|
3,636
|
|
| | |
|
| | |
|
| | |
|
| | |
|
| | |
|
|
|
Earnings per share of Class A common stock - basic (1)
| | |
$
|
0.47
|
| | |
$
|
0.13
|
| | |
$
|
0.49
|
| | |
$
|
1.60
|
| | |
$
|
0.28
|
|
|
Earnings per share of Class A common stock - diluted (1)
| | |
$
|
0.47
|
| | |
$
|
0.13
|
| | |
$
|
0.49
|
| | |
$
|
1.59
|
| | |
$
|
0.27
|
|
| | | | | | | | | | | | | | | | | | | |
|
|
Basic weighted average shares of Class A common stock outstanding (1)
| | | |
27,050
| | | | |
15,120
| | | | |
26,197
| | | | |
25,678
| | | | |
12,117
| |
|
Diluted weighted average shares of Class A common stock outstanding
(1)
| | | |
27,162
| | | | |
15,508
| | | | |
26,329
| | | | |
25,829
| | | | |
12,482
| |
(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 initial public offering (“IPO”).
|
|
| | |
|
| | | |
| | | | | | | | |
|
| SOLARIS OILFIELD INFRASTRUCTURE, INC AND SUBSIDIARIES |
| CONDENSED CONSOLIDATED BALANCE SHEETS |
| (In thousands) |
| (Unaudited) |
| | | | | | | | |
|
| | | December 31, | | | December 31, | |
| | | 2018 | | | 2017 |
|
| Assets | | | | | | | | | |
|
Current assets:
| | | | | | | | | |
|
Cash
| | |
$
|
25,057
| | | |
$
|
63,421
| |
|
Accounts receivable, net
| | | |
39,746
| | | | |
12,979
| |
|
Prepaid expenses and other current assets
| | | |
5,492
| | | | |
3,622
| |
|
Inventories
| | |
|
10,470
|
| | |
|
7,532
|
|
|
Total current assets
| | | |
80,765
| | | | |
87,554
| |
|
Property, plant and equipment, net
| | | |
296,538
| | | | |
151,163
| |
|
Goodwill
| | | |
17,236
| | | | |
17,236
| |
|
Intangible assets, net
| | | |
4,540
| | | | |
5,335
| |
|
Deferred tax assets
| | | |
24,624
| | | | |
25,512
| |
|
Other assets
| | |
|
1,454
|
| | |
|
260
|
|
|
Total assets
| | |
$
|
425,157
|
| | |
$
|
287,060
|
|
| Liabilities and Stockholders' Equity | | | | | | | | | |
|
Current liabilities:
| | | | | | | | | |
|
Accounts payable
| | |
$
|
9,127
| | | |
$
|
5,000
| |
|
Accrued liabilities
| | | |
12,658
| | | | |
15,468
| |
|
Current portion of deferred revenue
| | | |
12,990
| | | | |
—
| |
|
Current portion of capital lease obligations
| | | |
35
| | | | |
33
| |
|
Other current liabilities
| | |
|
515
|
| | |
|
—
|
|
|
Total current liabilities
| | |
|
35,325
|
| | |
|
20,501
|
|
|
Senior secured credit facility
| | | |
13,000
| | | | |
—
| |
|
Deferred revenue, net of current portion
| | | |
12,468
| | | | |
—
| |
|
Capital lease obligations, net of current portion
| | | |
154
| | | | |
179
| |
|
Payables related to Tax Receivable Agreement
| | | |
56,149
| | | | |
24,675
| |
|
Other long-term liabilities
| | |
|
633
|
| | |
|
145
|
|
|
Total liabilities
| | |
|
117,729
|
| | |
|
45,500
|
|
|
Commitments and contingencies
| | | | | | | | | |
|
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,
27,091 issued and 27,000 outstanding as of December 31, 2018 and
19,026 issued and 19,010 outstanding as of December 31, 2017
| | | |
271
| | | | |
190
| |
|
Class B common stock, $0.00 par value, 180,000 shares authorized,
19,627 shares issued and outstanding as of December 31, 2018 and
26,811 issued and outstanding as of December 31, 2017
| | | |
—
| | | | |
—
| |
|
Additional paid-in capital
| | | |
126,347
| | | | |
121,727
| |
|
Retained earnings
| | | |
43,317
| | | | |
3,636
| |
|
Treasury stock (at cost), 91 shares and 16 shares as of December 31,
2018 and 2017, respectively
| | |
|
(1,414
|
)
| | |
|
(261
|
)
|
|
Total stockholders' equity attributable to Solaris and members'
equity
| | |
|
168,521
|
| | |
|
125,292
|
|
|
Non-controlling interest
| | |
|
138,907
|
| | |
|
116,268
|
|
|
Total stockholders' equity
| | |
|
307,428
|
| | |
|
241,560
|
|
|
Total liabilities and stockholders' equity
| | |
$
|
425,157
|
| | |
$
|
287,060
|
|
|
|
| | |
|
| | |
| | | | | | | |
|
| SOLARIS OILFIELD INFRASTRUCTURE, INC AND SUBSIDIARIES |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
| (In thousands) |
| (Unaudited) |
| | | | | | | |
|
| | | For the Year Ended December 31, |
| | | 2018 | | | 2017 |
|
Cash flows from operating activities:
| | | | | | | | |
|
Net income
| | |
$
|
85,952
| | | |
$
|
22,487
| |
|
Adjustment to reconcile net income to net cash provided by operating
activities:
| | | | | | | | |
|
Depreciation and amortization
| | | |
18,422
| | | | |
6,635
| |
|
Loss on disposal of asset
| | | |
318
| | | | |
498
| |
|
Stock-based compensation
| | | |
3,861
| | | | |
3,701
| |
|
Amortization of debt issuance costs
| | | |
296
| | | | |
51
| |
|
Change in payables related to Tax Receivable Agreement
| | | |
—
| | | | |
(23,022
|
)
|
|
Deferred income tax expense
| | | |
12,277
| | | | |
25,652
| |
|
Other
| | | |
620
| | | | |
(28
|
)
|
|
Changes in assets and liabilities:
| | | | | | | | |
|
Accounts receivable
| | | |
(26,766
|
)
| | | |
(8,469
|
)
|
|
Prepaid expenses and other assets
| | | |
(686
|
)
| | | |
(3,273
|
)
|
|
Inventories
| | | |
(10,470
|
)
| | | |
(7,532
|
)
|
|
Accounts payable
| | | |
4,469
| | | | |
4,224
| |
|
Accrued liabilities
| | | |
2,614
| | | | |
5,805
| |
|
Deferred revenue
| | |
|
25,458
|
| | |
|
—
|
|
|
Net cash provided by operating activities
| | |
|
116,365
|
| | |
|
26,729
|
|
|
Cash flows from investing activities:
| | | | | | | | |
|
Investment in property, plant and equipment
| | | |
(161,079
|
)
| | | |
(93,912
|
)
|
|
Cash paid for Railtronix® acquisition
| | | |
—
| | | | |
(5,000
|
)
|
|
Investment in intangible assets
| | | |
(6
|
)
| | | |
(72
|
)
|
|
Cash received from insurance proceeds
| | |
|
540
|
| | |
|
—
|
|
|
Net cash used in investing activities
| | |
|
(160,545
|
)
| | |
|
(98,984
|
)
|
|
Cash flows from financing activities:
| | | | | | | | |
|
Payments under capital leases
| | | |
(28
|
)
| | | |
(27
|
)
|
|
Payments under insurance premium financing
| | | |
(1,275
|
)
| | | |
—
| |
|
Payments under notes payable
| | | |
—
| | | | |
(451
|
)
|
|
Proceeds from stock option exercises
| | | |
932
| | | | |
—
| |
|
Payments related to purchase of treasury stock
| | | |
(1,146
|
)
| | | |
—
| |
|
Proceeds from borrowings under the senior secured credit facility
| | | |
13,000
| | | | |
3,000
| |
|
Repayment of senior secured credit facility
| | | |
—
| | | | |
(5,500
|
)
|
|
Payments related to debt issuance costs
| | | |
(1,014
|
)
| | | |
(111
|
)
|
|
Proceeds from issuance of Class A common stock sold in initial
public offering, net of offering costs
| | | |
—
| | | | |
111,075
| |
|
Proceeds from issuance of Class A common stock sold in November
Offering, net of offering costs
| | | |
—
| | | | |
44,684
| |
|
Distributions paid to unitholders
| | | |
—
| | | | |
(25,818
|
)
|
|
Proceeds from pay down of promissory note related to membership units
| | | |
—
| | | | |
5,256
| |
|
Distribution and dividend paid to Solaris LLC unitholders and Class
A common shareholders
| | | |
(4,713
|
)
| | | |
—
| |
|
Other
| | |
|
60
|
| | |
|
—
|
|
|
Net cash provided by financing activities
| | |
|
5,816
|
| | |
|
132,108
|
|
|
Net increase (decrease) in cash
| | | |
(38,364
|
)
| | | |
59,853
| |
|
Cash at beginning of period
| | |
|
63,421
|
| | |
|
3,568
|
|
|
Cash at end of period
| | |
$
|
25,057
|
| | |
$
|
63,421
|
|
|
Non-cash activities
| | | | | | | | |
|
Investing:
| | | | | | | | |
|
Capitalized depreciation in property, plant and equipment
| | |
$
|
688
| | | |
$
|
668
| |
|
Property and equipment additions incurred but not paid at period-end
| | | |
3,909
| | | | |
7,765
| |
|
Issuance of shares in acquisition
| | | |
—
| | | | |
4,505
| |
|
Financing:
| | | | | | | | |
|
Insurance premium financing
| | | |
1,552
| | | | |
—
| |
|
Accrued interest from notes receivable issued for membership units
| | | |
—
| | | | |
—
| |
|
Cash paid for:
| | | | | | | | |
|
Interest
| | | |
281
| | | | |
104
| |
|
Income taxes
| | | |
314
| | | | |
45
| |
| | | | | | | | | |
|
| | | | | | | | | |
|
SOLARIS OILFIELD INFRASTRUCTURE, INC 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, 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 |
|
| Year ended |
| | | December 31, |
|
| September 30, | | | December 31, |
| | | 2018 |
|
| 2017 | | | 2018 | | | 2018 |
|
| 2017 |
| | | | | | | | | | | | | | | | | | | |
|
|
Net income
| | |
$
|
24,652
| | |
$
|
9,244
| | | |
$
|
26,437
| | |
$
|
85,952
| | |
$
|
22,487
| |
|
Depreciation and amortization
| | | |
5,908
| | | |
2,359
| | | | |
5,328
| | | |
18,422
| | | |
6,635
| |
|
Interest expense, net
| | | |
103
| | | |
26
| | | | |
116
| | | |
374
| | | |
97
| |
|
Income taxes (1)
| | |
|
3,420
| | |
|
24,762
|
| | |
|
4,237
| | |
|
12,961
| | |
|
25,899
|
|
|
EBITDA
| | |
$
|
34,083
| | |
$
|
36,391
| | | |
$
|
36,118
| | |
$
|
117,709
| | |
$
|
55,118
| |
|
IPO bonuses (2)
| | | |
—
| | | |
581
| | | | |
—
| | | |
896
| | | |
4,627
| |
|
Stock-based compensation expense (3)
| | | |
720
| | | |
1,039
| | | | |
338
| | | |
2,920
| | | |
2,211
| |
|
Non-recurring cash bonuses (4)
| | | |
—
| | | |
—
| | | | |
—
| | | |
1,679
| | | |
—
| |
|
Change in payables related to Tax Receivable Agreement
| | | |
—
| | | |
(22,939
|
)
| | | |
—
| | | |
—
| | | |
(23,022
|
)
|
|
Loss on disposal of assets
| | | |
76
| | | |
47
| | | | |
51
| | | |
153
| | | |
498
| |
|
Non-recurring organizational costs (5)
| | | |
—
| | | |
—
| | | | |
—
| | | |
—
| | | |
348
| |
|
Other (6)
| | |
|
—
| | |
|
107
|
| | |
|
—
| | |
|
—
| | |
|
143
|
|
|
Adjusted EBITDA
| | |
$
|
34,879
| | |
$
|
15,226
|
| | |
$
|
36,507
| | |
$
|
123,357
| | |
$
|
39,923
|
|
|
(1)
|
|
Federal and state income taxes, including $22,637 related to the
United States federal income tax legislation enacted in Public Law
No. 115-97, commonly referred to as the Tax Cuts and Jobs Act (the
“Tax Act”) in the year ended December 31, 2017.
|
| |
|
|
(2)
| |
One-time cash bonuses of $3,100 in the year ended December 31, 2017
and stock-based compensation expense related to restricted stock
awards with one-year vesting of $581 for the three months ended
December 31, 2017 and $896 and $1,527 for the years ended December
31, 2018 and 2017, respectively, that were granted to certain
employees and consultants in connection with the IPO.
|
| |
|
|
(3)
| |
Represents stock-based compensation expense of $576, $1,012 and $275
for the three months ended December 31, 2018 and 2017 and September
30, 2018, respectively, and $2,713 and $1,918 for the years ended
December 31, 2018 and 2017, respectively, related to restricted
stock awards with three-year vesting, $144 and $63 for the three
months ended December 31, 2018 and September 30, 2018, respectively,
and $207 for the year ended December 31, 2018 related to restricted
stock awards with one-year vesting, and $27 and $293 for the three
months and year ended December 31, 2017, respectively, related to
the options issued under our long-term incentive plan.
|
| |
|
|
(4)
| |
Certain performance-based cash awards paid in connection with the
purchase of Railtronix upon the achievement of certain financial
milestones.
|
| |
|
|
(5)
| |
Certain non-recurring organization costs in 2017 associated with our
IPO.
|
| |
|
|
(6)
| |
Non-recurring transaction costs in 2017.
|
| |
|
| |
|
SOLARIS OILFIELD INFRASTRUCTURE, INC AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION — ADJUSTED
PRO FORMA NET INCOME AND ADJUSTED PRO FORMA EARNINGS PER FULLY DILUTED
SHARE
(In thousands)
(Unaudited)
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 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 |
|
| Year ended |
| | | December 31, |
|
| September 30, | | | December 31, |
| | | 2018 |
|
| 2017 | | | 2018 | | | 2018 |
|
| 2017 |
|
Numerator:
| | | | | | | | | | | | | | | | | | | | |
|
Net income attributable to Solaris
| | |
$
|
12,885
| | | |
$
|
2,107
| | | |
$
|
13,019
| | | |
$
|
42,431
| | | |
$
|
3,636
| |
|
Adjustments:
| | | | | | | | | | | | | | | | | | | | |
|
Reallocation of net income attributable to non-controlling interests
from the assumed exchange of LLC Interests(1)
| | | |
11,767
| | | | |
7,137
| | | | |
13,418
| | | | |
43,521
| | | | |
18,851
| |
|
IPO bonuses (2)
| | | |
—
| | | | |
581
| | | | |
—
| | | | |
896
| | | | |
4,627
| |
|
Non-recurring cash bonuses (3)
| | | |
—
| | | | |
—
| | | | |
—
| | | | |
1,679
| | | | |
—
| |
|
Loss on disposal of assets
| | | |
76
| | | | |
47
| | | | |
51
| | | | |
153
| | | | |
498
| |
|
Non-recurring organizational costs (4)
| | | |
—
| | | | |
—
| | | | |
—
| | | | |
—
| | | | |
348
| |
|
Change in payables related to Tax Receivable Agreement
| | | |
—
| | | | |
(21,936
|
)
| | | |
—
| | | | |
—
| | | | |
(21,936
|
)
|
Remeasurement of deferred tax assets
| | | |
—
| | | | |
22,637
| | | | |
—
| | | | |
—
| | | | |
22,637
| |
|
Other
| | | |
—
| | | | |
107
| | | | |
—
| | | | |
—
| | | | |
143
| |
|
Income tax expense
| | |
|
(3,128
|
)
| | |
|
(1,751
|
)
| | |
|
(2,465
|
)
| | |
|
(9,095
|
)
| | |
|
(7,693
|
)
|
|
Adjusted pro forma net income
| | |
$
|
21,600
|
| | |
$
|
8,929
|
| | |
$
|
24,023
|
| | |
$
|
79,585
|
| | |
$
|
21,111
|
|
|
Denominator:
| | | | | | | | | | | | | | | | | | | | |
|
Weighted average shares of Class A common stock outstanding - diluted
| | | |
27,162
| | | | |
15,508
| | | | |
26,329
| | | | |
25,829
| | | | |
12,482
| |
|
Adjustments:
| | | | | | | | | | | | | | | | | | | | |
|
Assumed exchange of Solaris LLC Units for shares of Class A common
stock (1)
| | |
|
20,742
|
| | |
|
29,888
|
| | |
|
20,781
|
| | |
|
21,370
|
| | |
|
31,622
|
|
|
Adjusted pro forma fully weighted average shares of Class A common
stock outstanding - diluted
| | |
|
47,904
|
| | |
|
45,396
|
| | |
|
47,110
|
| | |
|
47,199
|
| | |
|
44,104
|
|
|
Adjusted pro forma earnings per share - diluted
| | |
$
|
0.45
|
| | |
$
|
0.20
|
| | |
$
|
0.51
|
| | |
$
|
1.69
|
| | |
$
|
0.48
|
|
| | | | | | | | | | | | | | | | | | | | | | | | |
|
|
(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)
| |
One-time cash bonuses of $3,100 in the year ended December 31, 2017
and stock-based compensation expense related to restricted stock
awards with one-year vesting of $581 for the three months ended
December 31, 2017 and $896 and $1,527 for the years ended December
31, 2018 and 2017, respectively, that were granted to certain
employees and consultants in connection with the IPO.
|
| |
|
|
(3)
| |
Certain performance-based cash awards paid in connection with the
purchase of Railtronix upon the achievement of certain financial
milestones.
|
| |
|
|
(4)
| |
Certain non-recurring organization costs in 2017 associated with our
IPO.
|
| |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20190227005976/en/
Yvonne Fletcher
Senior Vice President, Finance and Investor
Relations
(281) 501-3070
[email protected]
Source: Solaris Oilfield Infrastructure, Inc.