Fourth Quarter 2017 Highlights
- Record net income of $9.2 million,
which included $701,000 of net expense relating to the enactment of
the Tax Cuts and Jobs Act of 2017
- Record adjusted EBITDA of $15.2
million; 36% increase versus third quarter 2017 and up 269%
year-over-year
- Record revenue of $25.2 million; 36%
increase versus third quarter 2017 and up 246% year-over-year
- Record 6,146 revenue days; 35% increase
versus third quarter 2017 and up 188% year-over-year
- Added 18 proppant management systems to
the rental fleet; total of 77 systems at year-end
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 fiscal year
2017, as further described in the Company’s Annual Report on Form
10-K for the year ended December 31, 2017, filed with the
Securities and Exchange Commission (the “SEC”) today.
Fourth Quarter 2017 Financial Review
Solaris reported net income of $9.2 million, or $0.13 per share,
for fourth quarter 2017, compared to net income of $3.0 million in
fourth quarter 2016 and net income of $7.4 million, or $0.13 per
share, in third quarter 2017. Fourth quarter 2017 net income
included certain non-recurring items, including approximately
$701,000 of net expenses resulting from the Tax Cuts and Jobs Act
of 2017 (the “Tax Act”), $581,000 of IPO-related compensation
expense, $47,000 related to a loss on disposal of assets and
$107,000 of non-recurring transaction costs.
Adjusted EBITDA for the fourth quarter was $15.2 million, an
increase of $11.1 million from fourth quarter 2016 and an increase
of $4.0 million compared to third quarter 2017. A description of
adjusted EBITDA and a reconciliation to net income, its most
directly comparable GAAP measure, is provided below.
Adjusted pro forma net income for the fourth quarter was $8.9
million, or $0.20 per fully exchanged and diluted share, an
increase of $7.0 million and $0.15 per diluted share from fourth
quarter 2016 and an increase of $3.4 million and $0.07 per diluted
share compared to third quarter 2017. 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 exchanged and
diluted share are provided below.
Revenues were $25.2 million for the quarter, an increase of
$17.9 million, or 246%, compared to fourth quarter 2016, and an
increase of $6.7 million, or 36%, compared to third quarter
2017.
During fourth quarter 2017, the Company generated 6,146 revenue
days, the combined number of days that its systems earned revenue
during the quarter, a 188% increase from fourth quarter 2016, and
up 35% compared to third 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.
In December 2017, the Tax Act was enacted into law. The Tax Act
provides for significant changes to the U.S. Internal Revenue Code
of 1986, as amended, including a reduction of the U.S. federal
corporate income tax rate from 35% to 21%, among other provisions.
As a result of the Tax Act, the Company recognized a $21.9 million
benefit in other income related to the reduction in liabilities
under its tax receivable agreement in the fourth quarter of 2017.
The Company also recognized an additional $22.6 million of income
tax expense as a provisional amount, relating to the remeasurement
of its deferred tax assets.
Full-year 2017 Financial Review
Solaris reported net income of $22.5 million for the fiscal year
ended December 31, 2017, compared to net income of $2.8 million in
fiscal 2016. 2017 net income included certain non-recurring items,
including approximately $701,000 of net expenses resulting from the
Tax Act, $4.6 million of IPO-related compensation expense, $498,000
related to a loss on disposal of assets, $348,000 of non-recurring
organizational costs and $143,000 of non-recurring transaction
costs.
Adjusted EBITDA for fiscal 2017 was $39.9 million, an increase
of $33.1 million from fiscal 2016. A description of adjusted EBITDA
and a reconciliation to net income, its most directly comparable
GAAP measure, is provided below.
Adjusted pro forma net income for fiscal 2017 was $21.1 million,
or $0.48 per fully exchanged and diluted share, an increase of
$19.3 million and $0.44 per diluted share from fiscal 2016. 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 exchanged and diluted share are provided below.
Revenues were $67.4 million for fiscal 2017, an increase of
$49.2 million, or 271%, compared to fiscal 2016.
During fiscal 2017, the Company generated 16,712 revenue days, a
191% increase from fiscal 2016. 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.
As a result of the Tax Act, the Company recognized a $21.9
million benefit in other income related to the reduction in
liabilities under its tax receivable agreement in fiscal year 2017.
The Company also recognized an additional $22.6 million of income
tax expense as a provisional amount, relating to the remeasurement
of its deferred tax assets.
Capital Expenditures and Liquidity
Driven by strong customer demand and continued customer adoption
of our proppant management systems and services, the Company
invested $49.9 million during the fourth quarter, which included
adding eighteen systems to the fleet, ending the year with 77
systems. Also, the Company’s fourth quarter capital expenditures
included $18.9 million in construction activities related to the
Kingfisher Facility and the acquisition of the assets of
Railtronix, LLC. These investments help address rising customer
demand and are expected to drive future earnings and cash flow
growth for Solaris.
During the fourth quarter, the Company completed a public
offering of 8,050,000 Class A Shares, including 3,000,000 primary
shares issued and sold by the Company. Net of underwriting
discounts and commissions and offering expenses, the Company
received net proceeds of approximately $44.5 million. The Company
contributed all of the net proceeds of the offering to its
subsidiary Solaris Oilfield Infrastructure, LLC (“Solaris LLC”) in
exchange for units in Solaris LLC (“Solaris LLC Units”).
As previously disclosed, the Company also entered into a new
credit agreement with certain lenders in January 2018. The credit
facility has a term of four years and is composed of a $20 million
revolver and a $50 million delayed draw term loan.
As of February 28, 2018, the Company had approximately $107.6
million of liquidity, including $43.4 million in cash and
approximately $64.2 million of availability under the undrawn
credit facility.
Operational Update and Outlook
We currently have 91 systems in the rental fleet, all of which
are deployed to customers. The Permian Basin continues to be our
most active area, followed by the Eagle Ford Shale, SCOOP/STACK
formations, Marcellus/Utica Shale and the Haynesville Shale. Our
systems are highly mobile and can be deployed quickly in response
to customer demand.
Proppant supply disruptions and continued logistic complexities
drive demand for our products and services. To meet growing demand,
we recently increased our manufacturing rate and expect to deliver
a total of eight systems to the rental fleet in March, which will
represent the highest monthly manufacturing rate the Company has
achieved in its history. We have been able to accelerate our
manufacturing rate through selective outsourcing of certain
components of our systems. Based on our current manufacturing
outlook, we expect to end the first quarter with 96 to 98 systems
in the fleet and expect to end the second quarter with 118 to 122
systems in the fleet.
Transloading and construction activity continues at the
Kingfisher Facility. Completion of the initial phase of
construction remains on track for August 2018. In the interim, we
are providing direct rail-to-truck transloading service for our
anchor customer. Since commencing transloading operations in
mid-January 2018, we have begun receiving regular shipments of
railcars.
Solaris’ Chief Executive Officer Greg Lanham commented, “We are
very proud of all that we accomplished in 2017. We more than
doubled our mobile proppant management system fleet – from 30
systems to 77 systems – and significantly expanded our market
share. We completed our initial public offering, commenced
construction of the Kingfisher Facility and completed the
Railtronix acquisition. We believe our current fleet of 91 systems
represents the industry’s leading market share for new technology
proppant handling solutions.”
“We look forward to reaching new milestones in 2018, including
delivering eight systems in a single month for the first time in
March and adding our 100th system to the fleet in April. Our strong
balance sheet, experienced team and unique value proposition
provide the opportunity to continue to build upon our success and
drive additional efficiencies for our customers.”
Conference Call
The Company will host a conference call to discuss its fourth
quarter and fiscal 2017 results on Wednesday, March 7, 2018 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,
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 10116267.
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, the STACK/SCOOP formation
and the Haynesville Shale. Solaris’ high-capacity transload
facility in Kingfisher, Oklahoma serves customers with operations
in the STACK/SCOOP formation. 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
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 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, 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, 2017
2016 2017 2017 2016 Revenue
Proppant system rental $ 20,093 $ 5,915 $ 15,062 $ 54,653 $ 14,594
Proppant system services 4,906 1,374 3,416 12,537 3,563 Proppant
inventory software services 205 —
— 205 — Total revenue
25,204 7,289 18,478 67,395 18,157
Operating costs and
expenses Cost of proppant system rental (excluding $2,044,
$934, and $1,523 of depreciation and amortization for the three
months ended December 31, 2017 and 2016 and September 30, 2017,
respectively, and $5,792 and $3,352 for the years ended December
31, 2017 and 2016, respectively, shown separately) 1,033 250 641
2,627 1,431 Cost of proppant system services (excluding $178, $49,
and $129 of depreciation and amortization for the three months
ended December 31, 2017 and 2016 and September 30, 2017,
respectively, and $461 and $160 for the years ended December 31,
2017 and 2016, respectively, shown separately) 5,544 1,615 3,933
14,184 4,916 Cost of proppant inventory software services
(excluding $42 of depreciation and amortization for the three
months and year ended December 31, 2017, show separately) 76 — — 76
— Depreciation and amortization 2,359 1,053 1,742 6,635 3,792
Salaries, benefits and payroll taxes 3,522 1,069 2,942 9,209 3,061
Selling, general and administrative (excluding $95, $40 and $90 of
depreciation and amortization for the three months ended December
31, 2017 and 2016 and September 30, 2017, respectively, and $340
and $250 for the years ended December 31, 2017 and 2016,
respectively, shown separately) 1,424 254 1,176 5,077 2,096 Other
operating expenses 153 — 77
4,126 — Total operating cost and
expenses 14,111 4,241 10,511
41,934 15,296 Operating income
11,093 3,048 7,967 25,461 2,861 Interest expense (26 ) (9 ) (27 )
(97 ) (23 ) Income (loss) pursuant to Tax Receivable Agreements
22,939 — 83 23,022 — Other income — 1
— — 8 Total other income
(expense) 22,913 (8 ) 56
22,925 (15 ) Income before income tax expense 34,006
3,040 8,023 48,386 2,846 Provision for income taxes 24,762
17 617 25,899
43 Net income 9,244 3,023 7,406 22,487 2,803 Less:
net income loss related to Solaris LLC — (3,023 ) — (3,665 ) (2,803
) Less: net income related to non-controlling interests
(7,137 ) — (6,027 ) (15,186 ) —
Net income attributable to Solaris $ 2,107 $ —
$ 1,379 $ 3,636 $ —
Earnings per share
of Class A common stock - basic (1) $ 0.13 $ — $ 0.13
$ 0.28 $ — Earnings per share of Class A
common stock - diluted (1) $ 0.13 $ — $ 0.12 $
0.27 $ — Basic weighted average shares of
Class A common stock outstanding (1) 15,120 — 10,100 12,117 —
Diluted weighted average shares of Class A common stock outstanding
(1) 15,508 — 10,563 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 reorganization
transactions and IPO.
SOLARIS OILFIELD INFRASTRUCTURE, INC
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
(Unaudited)
December 31, December 31, 2017
2016 Assets Current assets: Cash $ 63,421 $ 3,568
Accounts receivable, net 12,979 4,510 Prepaid expenses and other
current assets 3,622 403 Inventories 7,532
1,365 Total current assets 87,554 9,846 Property, plant and
equipment, net 151,163 54,350 Goodwill 17,236 13,004 Intangible
assets, net 5,335 36 Deferred tax assets 25,512 — Other assets
260 — Total assets $ 287,060 $ 77,236
Liabilities and Stockholders'/Members’ Equity Current
liabilities: Accounts payable $ 5,000 $ 705 Accrued liabilities
15,468 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 20,501 3,075 Capital lease
obligations, net of current portion 179 213 Notes payable, net of
current portion — 282 Senior secured credit facility, net of
current portion — 2,320 Payables related to parties pursuant to tax
receivable agreement 24,675 — Other long-term liabilities
145 — Total liabilities 45,500
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, 19,027
issued and 19,011 outstanding as of December 31, 2017 and none
issued and outstanding as of December 31, 2016 190 — Class B common
stock, $0.00 par value, 180,000 shares authorized, 26,810 shares
issued and outstanding as of December 31, 2017 and none issued and
outstanding as of December 31, 2016 — — Additional paid-in capital
121,727 — Accumulated earnings 3,636 2,079 Treasury stock (at
cost), 16 shares and 0 shares as of December 31, 2017 and 2016,
respectively (261 ) — Total stockholders' equity
attributable to Solaris and members' equity 125,292
71,346 Non-controlling interest 116,268
— Total stockholders' and members' equity 241,560
71,346 Total liabilities, stockholders' and members’ equity
$ 287,060 $ 77,236
SOLARIS OILFIELD
INFRASTRUCTURE, INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
(Unaudited)
For the Year Ended December 31, 2017
2016 Cash flows from operating activities: Net income $
22,487 $ 2,803 Adjustment to reconcile net income to net cash
provided by operating activities: Depreciation and amortization
6,635 3,792 Loss on disposal of asset 498 — Provision for bad debt
— 131 Stock-based compensation 3,701 127 Amortization of debt
issuance costs 51 4 Change in payables related to parties pursuant
to tax receivable agreement (23,022 ) — Deferred income tax expense
25,652 — Other (28 ) — Changes in assets and liabilities: Accounts
receivable (8,469 ) (3,065 ) Prepaid expenses and other assets
(3,273 ) 109 Inventories (7,532 ) 327 Accounts payable 4,224 41
Accrued liabilities 5,805 252 Net cash
provided by operating activities 26,729 4,521
Cash flows from investing activities: Investment in
property, plant and equipment (93,912 ) (10,899 ) Cash paid for
Railtronix™ acquisition (5,000 ) — Investment in intangible assets
(72 ) (36 ) Net cash used in investing activities
(98,984 ) (10,935 ) Cash flows from financing
activities: Payments under capital leases (27 ) (25 ) Payments
under notes payable (451 ) (211 ) Proceeds from borrowings under
the credit facility 3,000 2,500 Repayment of credit facility (5,500
) — Payments related to debt issuance costs (111 ) (153 ) Proceeds
from members’ contributions — 948 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
secondary offering, net of offering costs 44,684 — Distributions
paid to unit and option holders (25,818 ) — Proceeds from pay down
of promissory note related to membership units 5,256
— Net cash provided by financing activities
132,108 3,059 Net increase (decrease) in cash
59,853 (3,355 ) Cash at beginning of period 3,568
6,923 Cash at end of period $ 63,421 $ 3,568
Non-cash activities Investing: Capitalized depreciation in
property, plant and equipment $ 668 $ 674 Property and equipment
additions incurred but not paid at year-end 7,765 264 Issuance of
shares in acquisition 4,505 — Financing: Notes payable issued for
property, plant and equipment — 397 Accrued interest from notes
receivable issued for membership units — 327 Cash paid for:
Interest 104 20 Income taxes 45 35
SOLARIS OILFIELD INFRASTRUCTURE, INC
AND SUBSIDIARIESRECONCILIATION 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
Year ended December 31, September 30,
December 31, 2017 2016 2017 2017
2016 Net income $ 9,244 $ 3,023 $ 7,406 $ 22,487 $
2,803 Depreciation and amortization 2,359 1,053 1,742 6,635 3,792
Interest expense, net 26 9 27 97 23 Income taxes (1) 24,762
17 617 25,899 43
EBITDA $ 36,391 $ 4,102 $ 9,792 $ 55,118 $ 6,661 IPO bonuses (2)
581 — 617 4,627 — Stock-based compensation expense (3) 1,039 19 795
2,211 127 Loss on disposal of assets 47 — 41 498 — Non-recurring
organizational costs (4) — — — 348 — Change in payables related to
parties pursuant to tax receivable agreement (5) (22,939 ) — (83 )
(23,022 ) — Other (6) 107 — 36
143 — Adjusted EBITDA $ 15,226 $ 4,121
$ 11,198 $ 39,923 $ 6,788
____________________________
(1) Income taxes include add back for federal and state
taxes, including $22,637 in the year ended December 31, 2017
related to the Tax Cuts and Jobs Act. (2) One-time cash
bonuses of $3.1 million for the year ended December 31, 2017 and
stock-based compensation expense of $0.6 million, $0.6 million and
$1.5 million related to restricted stock awards with one-year
vesting for the three months ended December 31, 2017 and September
30, 2017 and the year ended December 31, 2017, respectively, that
were paid or granted to certain employees and consultants in
connection with the Offering. (3) Represents stock-based
compensation expense of $1.0 million, $19 thousand, $0.8 million,
$1.9 million and $0.1 million for the three months ended December
31, 2017 and 2016, September 30, 2017 and the years ended December
31, 2017 and 2016, respectively, related to restricted stock awards
with three-year vesting and $0.3 million for the year ended
December 31, 2017 related to the options issued under our long-term
incentive plan. (4) Certain non-recurring organizational
costs associated with our IPO. (5) Other income related to
the change in payables related to parties pursuant to the tax
receivable agreement includes ($21,936) related to the Tax Cuts and
Jobs Act. (6) Non-recurring transaction costs.
SOLARIS OILFIELD INFRASTRUCTURE, INC
AND SUBSIDIARIESRECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
INFORMATION — ADJUSTED PRO FORMA NET INCOME AND ADJUSTEDPRO
FORMA EARNINGS PER FULLY EXCHANGED AND 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
exchanged and 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
exchanged and 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 exchanged and 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
exchanged and diluted share should not be considered alternatives
to net income (loss) and earnings (loss) 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 exchanged and diluted share should be
evaluated in conjunction with GAAP financial results. A
reconciliation of adjusted pro forma net income to net income
(loss) attributable to Solaris, the most directly comparable GAAP
measure, and the computation of adjusted pro forma earnings per
fully exchanged and diluted share are set forth below.
Three months ended Year ended
December 31, September 30, December 31,
2017 2016 2017 2017
2016 Numerator: Net income attributable to Solaris $ 2,107 $
— $ 1,379 $ 3,636 $ — Adjustments: Reallocation of net income
attributable to non-controlling interests from the assumed exchange
of LLC Interests(1) 7,137 3,023 6,027 18,851 2,803 IPO bonuses (2)
581 — 617 4,627 — Loss on disposal of assets 47 — 41 498 —
Non-recurring organizational costs (3) — — — 348 — Change in
payables related to parties pursuant to tax receivable agreement
(4) (21,936 ) — — (21,936 ) — Remeasurement of deferred tax assets
22,637 — — 22,637 — Other (5) 107 — 36 143 — Income tax
(expense)/benefit (1,751 ) (1,094 ) (2,570 )
(7,693 ) (1,025 ) Adjusted pro forma net income $
8,929 $ 1,929 $ 5,530 $ 21,111 $ 1,778
Denominator: Weighted average shares of Class A common stock
outstanding - diluted 15,508 — 10,563 12,482 — Adjustments: Assumed
exchange of Solaris LLC Units for shares of Class A common stock
(1) 29,888 42,466 32,726
31,622 42,466
Adjusted pro forma fully exchanged
weighted average shares of Class A common stock outstanding -
diluted
45,396 42,466 43,289
44,104 42,466 Adjusted pro forma
earnings per fully exchanged share - diluted $ 0.20 $ 0.05
$ 0.13 $ 0.48 $ 0.04 (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 $3.1
million for the year ended December 31, 2017 and stock-based
compensation expense of $0.6 million, $0.6 million and $1.5 million
related to restricted stock awards with one-year vesting for the
three months ended December 31, 2017 and September 30, 2017 and the
year ended December 31, 2017, respectively, that were paid or
granted to certain employees and consultants in connection with the
Offering. (3) Certain non-recurring organizational costs
associated with our IPO. (4) Other income related to the
remeasurement of payables related to parties pursuant to the tax
receivable agreement of ($21,936) related to the Tax Cuts and Jobs
Act. (5) Non-recurring transaction costs.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180306006738/en/
Solaris Oilfield Infrastructure, Inc.Kyle Ramachandran, (281)
501-3070Chief Financial OfficerIR@solarisoilfield.com
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