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Solaris Oilfield Infrastructure Announces Second Quarter 2021 Results

Second Quarter 2021 Highlights

  • Net loss of $1.9 million, or $(0.04) per diluted Class A share, for the quarter ended June 30, 2021; Adjusted pro forma net loss of $1.4 million, or $(0.03) per diluted share for the quarter ended June 30, 2021 (see below for a reconciliation of Adjusted pro forma net income to net income attributable to Solaris)
  • Adjusted EBITDA of $6.5 million for the quarter ended June 30, 2021
  • Net cash provided by operating activities of $1.3 million for the quarter ended June 30, 2021
  • Paid a regular quarterly dividend of $0.105 per share on June 25, 2021

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 second quarter 2021.

Operational Update and Outlook

During the second quarter of 2021, an average of 53 mobile proppant management systems were fully utilized, which was up slightly from average first quarter 2021 levels and up over 25% from average fourth quarter 2020 levels.

“The Solaris team continues to execute well and help our customers drive efficiencies through our core products and services,” Solaris’ Chairman and Chief Executive Officer Bill Zartler commented. “While we continue to prioritize investments in new innovations, including our new integrated electric blender, we remain committed to doing so only when we can deliver compelling shareholder returns. We believe our debt-free balance sheet, strong liquidity and dividend allow us to sustain those commitments, and we look forward to sharing progress on additional opportunities through the remainder of 2021.”

Second Quarter 2021 Financial Review

Solaris reported net loss of $1.9 million, or $(0.04) per diluted Class A share, for second quarter 2021, compared to second quarter 2020 net loss of $9.5 million, or $(0.20) per diluted Class A share. Adjusted pro forma net loss for second quarter 2021 was $1.4 million, or $(0.03) per fully diluted share, compared to second quarter 2020 adjusted pro forma net loss of $7.0 million, or $(0.16) per fully diluted share. A description of adjusted pro forma net income and a reconciliation to net income attributable to Solaris, its most directly comparable generally accepted accounting principles (“GAAP”) measure, and the computation of adjusted pro forma earnings per fully diluted share are provided below.

Revenues were $35.2 million for second quarter 2021, which were up 23% from first quarter 2021.

Adjusted EBITDA for second quarter 2021 was $6.5 million, compared to first quarter 2021 Adjusted EBITDA of $6.1 million. A description of Adjusted EBITDA and a reconciliation to net income, its most directly comparable GAAP measure, is provided below.

Capital Expenditures, Free Cash Flow and Liquidity

Capital expenditures in the second quarter 2021 were $5.1 million compared to capital expenditures of $2.6 million during first quarter 2021. Previous capital expenditure guidance for the full year 2021 of $10.0 to $15.0 million included approximately $5.0 million for investments in new technology, which are now expected to be between $5.0 and $10.0 million. As a result, the Company now expects capital expenditures for the full year 2021 to be between $15.0 and $20.0 million.

Free cash flow (defined as net cash provided by operating activities less investment in property, plant and equipment) during second quarter 2021 was $(3.8) million.

As of June 30, 2021, the Company had approximately $46.3 million of cash on the balance sheet, which reflects about $1.00 per fully diluted share of available cash. The Company’s credit facility remains undrawn, and total liquidity, including availability under the credit facility, was $96.3 million as of the end of the second quarter 2021.

Shareholder Returns

On June 5, 2021, the Company’s Board of Directors declared a cash dividend of $0.105 per share of Class A common stock, which was paid on June 25, 2021 to holders of record as of June 15, 2021. A distribution of $0.105 per unit was also approved for holders of units in Solaris Oilfield Infrastructure, LLC (“Solaris LLC”). Since initiating the dividend in December 2018, the Company has paid 11 consecutive quarterly dividends. Cumulatively, the Company has returned approximately $83 million in cash to shareholders through dividends and share repurchases since December 2018.

Conference Call

The Company will host a conference call to discuss its second quarter 2021 results on Thursday, July 29, 2021 at 7:30 a.m. Central Time (8:30 a.m. Eastern Time). To join the conference call from within the United States, participants may dial (844) 413-3978. To join the conference call from outside of the United States, participants may dial (412) 317-6594. When instructed, please ask the operator to be joined to the Solaris Oilfield Infrastructure, Inc. call. Participants are encouraged to log in to the webcast or dial in to the conference call approximately ten minutes prior to the start time. To listen via live webcast, please visit the Investor Relations section of the Company’s website at http://www.solarisoilfield.com.

An audio replay of the conference call will be available shortly after the conclusion of the call and will remain available for approximately seven days. It can be accessed by dialing (877) 344-7529 within the United States or (412) 317-0088 outside of the United States. The conference call replay access code is 10157781. The replay will also be available in the Investor Relations section of the Company’s website shortly after the conclusion of the call and will remain available for approximately seven days.

About Solaris Oilfield Infrastructure, Inc.

Solaris Oilfield Infrastructure, Inc. (NYSE:SOI) provides mobile equipment that drives supply chain and execution efficiencies in the completion of oil and natural gas wells. Solaris’ patented mobile proppant and chemical systems are deployed in many of the most active oil and natural gas basins in the United States. Additional information is available on the Solaris website, www.solarisoilfield.com.

Website Disclosure

We use our website (www.solarisoilfield.com) as a routine channel of distribution of company information, including news releases, analyst presentations, and supplemental financial information, as a means of disclosing material non-public information and for complying with our disclosure obligations under the U.S. Securities and Exchange Commission’s (the “SEC”) Regulation FD. Accordingly, investors should monitor our website in addition to following press releases, SEC filings and public conference calls and webcasts. Additionally, we provide notifications of news or announcements on our investor relations website. Investors and others can receive notifications of new information posted on our investor relations website in real time by signing up for email alerts.

None of the information provided on our website, in our press releases, public conference calls and webcasts, or through social media channels is incorporated by reference into, or deemed to be a part of, this Current Report on Form 8-K or will be incorporated by reference into any other report or document we file with the SEC unless we expressly incorporate any such information by reference, and any references to our website are intended to be inactive textual references only.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Examples of forward-looking statements include, but are not limited to, our business strategy, our industry, our future profitability, the various risks and uncertainties associated with the extraordinary market environment and impacts resulting from the volatility in global oil markets and the COVID-19 pandemic, expected capital expenditures and the impact of such expenditures on performance, management changes, current and potential future long-term contracts and our future business and financial performance. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, our actual results may differ materially from those contemplated by the forward-looking statements. Factors that could cause our actual results to differ materially from the results contemplated by such forward-looking statements include, but are not limited to the factors discussed or referenced in our filings made from time to time with the SEC. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

SOLARIS OILFIELD INFRASTRUCTURE, INC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

March 31,

 

June 30,

 

 

2021

 

 

2020

 

 

2021

 

 

2021

 

 

2020

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

System rental

 

$

14,323

 

 

$

5,463

 

 

$

13,648

 

 

$

27,971

 

 

$

31,522

 

System services

 

 

20,616

 

 

 

3,419

 

 

 

14,710

 

 

 

35,326

 

 

 

24,376

 

Transloading services

 

 

38

 

 

 

264

 

 

 

114

 

 

 

152

 

 

 

729

 

Inventory software services

 

 

202

 

 

 

192

 

 

 

197

 

 

 

399

 

 

 

542

 

Total revenue

 

 

35,179

 

 

 

9,339

 

 

 

28,669

 

 

 

63,848

 

 

 

57,169

 

Operating costs and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of system rental (excluding depreciation and amortization)

 

 

1,556

 

 

 

823

 

 

 

1,608

 

 

 

3,164

 

 

 

2,836

 

Cost of system services (excluding depreciation and amortization)

 

 

23,282

 

 

 

6,013

 

 

 

17,252

 

 

 

40,534

 

 

 

30,143

 

Cost of transloading services (excluding depreciation and amortization)

197

202

 

244

 

441

540

Cost of inventory software services (excluding depreciation and amortization)

 

 

100

122

102

 

202

267

Depreciation and amortization

 

 

6,752

 

 

 

6,671

 

 

 

6,693

 

 

 

13,445

 

 

 

13,785

 

Selling, general and administrative (excluding depreciation and amortization)

4,964

3,967

4,606

9,570

8,373

Impairment loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

47,828

 

Other operating expenses (1)

 

 

360

 

 

 

2,274

 

 

 

253

 

 

 

613

 

 

 

3,472

 

Total operating costs and expenses

 

 

37,211

 

 

 

20,072

 

 

 

30,758

 

 

 

67,969

 

 

 

107,244

 

Operating income (loss)

 

 

(2,032

)

 

 

(10,733

)

 

 

(2,089

)

 

 

(4,121

)

 

 

(50,075

)

Interest income (expense), net

 

 

(55

)

 

 

(35

)

 

 

(49

)

 

 

(104

)

 

 

76

 

Total other income (expense)

 

 

(55

)

 

 

(35

)

 

 

(49

)

 

 

(104

)

 

 

76

 

Income (loss) before income tax expense

 

 

(2,087

)

 

 

(10,768

)

 

 

(2,138

)

 

 

(4,225

)

 

 

(49,999

)

Provision (benefit) for income taxes

 

 

(217

)

 

 

(1,272

)

 

 

(213

)

 

 

(430

)

 

 

(7,350

)

Net income (loss)

 

 

(1,870

)

 

 

(9,496

)

 

 

(1,925

)

 

 

(3,795

)

 

 

(42,649

)

Less: net (income) loss related to non-controlling interests

 

 

659

 

 

 

3,956

 

 

 

756

 

 

 

1,415

 

 

 

18,026

 

Net income (loss) attributable to Solaris

 

$

(1,211

)

 

$

(5,540

)

 

$

(1,169

)

 

$

(2,380

)

 

$

(24,623

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share of Class A common stock - basic

 

$

(0.04

)

 

$

(0.20

)

 

$

(0.04

)

 

$

(0.08

)

 

$

(0.85

)

Earnings per share of Class A common stock - diluted

 

$

(0.04

)

 

$

(0.20

)

 

$

(0.04

)

 

$

(0.08

)

 

$

(0.85

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average shares of Class A common stock outstanding

 

 

30,984

 

 

 

28,638

 

 

 

29,957

 

 

 

30,473

 

 

 

28,975

 

Diluted weighted average shares of Class A common stock outstanding

 

 

30,984

 

 

 

28,638

 

 

 

29,957

 

 

 

30,473

 

 

 

28,975

1)

Other operating expenses are primarily related to credit losses, loss on sale of assets and costs associated with workforce reductions.

SOLARIS OILFIELD INFRASTRUCTURE, INC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

June 30,

 

December 31,

 

 

2021

 

2020

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

46,276

 

$

60,366

Accounts receivable, net of allowances for credit losses of $920 and $1,099, respectively

 

 

31,341

 

 

18,243

Prepaid expenses and other current assets

 

 

3,813

 

 

2,169

Inventories

 

 

1,939

 

 

954

Total current assets

 

 

83,369

 

 

81,732

Property, plant and equipment, net

 

 

241,048

 

 

245,884

Non-current inventories

 

 

2,882

 

 

3,318

Operating lease right-of-use assets

 

 

4,449

 

 

4,708

Goodwill

 

 

13,004

 

 

13,004

Intangible assets, net

 

 

2,593

 

 

2,982

Deferred tax assets

 

 

63,842

 

 

59,805

Other assets

 

 

381

 

 

463

Total assets

 

$

411,568

 

$

411,896

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

14,145

 

$

6,863

Accrued liabilities

 

 

12,006

 

 

11,986

Current portion of payables related to Tax Receivable Agreement

 

 

606

 

 

606

Current portion of lease liabilities

 

 

693

 

 

647

Current portion of finance lease liabilities

 

 

30

 

 

30

Other current liabilities

 

 

813

 

 

75

Total current liabilities

 

 

28,293

 

 

20,207

Lease liabilities, net of current

 

 

6,981

 

 

7,419

Finance lease liabilities, net of current

 

 

85

 

 

100

Payables related to Tax Receivable Agreement

 

 

72,908

 

 

68,097

Other long-term liabilities

 

 

587

 

 

594

Total liabilities

 

 

108,854

 

 

96,417

Stockholders' equity:

 

 

 

 

 

 

Preferred stock, $0.01 par value, 50,000 shares authorized, none issued and outstanding

 

 

 

 

Class A common stock, $0.01 par value, 600,000 shares authorized, 30,984 shares issued and outstanding as of June 30, 2021 and 28,943 shares issued and outstanding as of December 31, 2020

 

 

310

 

 

290

Class B common stock, $0.00 par value, 180,000 shares authorized, 13,820 shares issued and outstanding as of June 30, 2021 and 15,685 issued and outstanding as of December 31, 2020

 

 

 

 

Additional paid-in capital

 

 

194,690

 

 

180,415

Retained earnings

 

 

11,137

 

 

20,549

Total stockholders' equity attributable to Solaris and members' equity

 

 

206,137

 

 

201,254

Non-controlling interest

 

 

96,577

 

 

114,225

Total stockholders' equity

 

 

302,714

 

 

315,479

Total liabilities and stockholders' equity

 

$

411,568

 

$

411,896

SOLARIS OILFIELD INFRASTRUCTURE, INC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

June 30,

 

Three

Months

Ended June

30,

 

Three

Months

Ended

March 31,

 

 

2021

 

 

2020

 

 

2021

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(3,795

)

 

$

(42,649

)

 

$

(1,870

)

 

$

(1,925

)

Adjustment to reconcile net (loss) income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

13,445

 

 

 

13,785

 

 

 

6,752

 

 

 

6,693

 

Impairment loss

 

 

 

 

 

47,828

 

 

 

 

 

 

 

Loss on disposal of asset

 

 

117

 

 

 

1,402

 

 

 

99

 

 

 

18

 

Stock-based compensation

 

 

2,552

 

 

 

2,656

 

 

 

1,353

 

 

 

1,199

 

Amortization of debt issuance costs

 

 

88

 

 

 

88

 

 

 

40

 

 

 

48

 

Allowance for credit losses

 

 

599

 

 

 

1,633

 

 

 

316

 

 

 

283

 

Deferred income tax expense

 

 

(607

)

 

 

(7,369

)

 

 

(305

)

 

 

(302

)

Other

 

 

(146

)

 

 

(145

)

 

 

(151

)

 

 

5

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(13,697

)

 

 

25,760

 

 

 

(10,237

)

 

 

(3,460

)

Prepaid expenses and other assets

 

 

(742

)

 

 

(217

)

 

 

(977

)

 

 

235

 

Inventories

 

 

(1,085

)

 

 

(533

)

 

 

(463

)

 

 

(622

)

Accounts payable

 

 

7,239

 

 

 

147

 

 

 

2,184

 

 

 

5,055

 

Accrued liabilities

 

 

72

 

 

 

(8,063

)

 

 

4,533

 

 

 

(4,461

)

Net cash provided by operating activities

 

 

4,040

 

 

 

34,323

 

 

 

1,275

 

 

 

2,766

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Investment in property, plant and equipment

 

 

(7,716

)

 

 

(1,558

)

 

 

(5,070

)

 

 

(2,647

)

Proceeds from disposal of assets

 

 

40

 

 

 

713

 

 

 

 

 

 

40

 

Cash received from insurance proceeds

 

 

6

 

 

 

 

 

 

6

 

 

 

 

Net cash used in investing activities

 

 

(7,670

)

 

 

(845

)

 

 

(5,064

)

 

 

(2,607

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Distribution and dividend paid to Solaris LLC unitholders and Class A common shareholders

 

 

(9,594

)

 

 

(9,507

)

 

 

(4,797

)

 

 

(4,797

)

Share repurchases

 

 

 

 

 

(26,717

)

 

 

 

 

 

 

Payments under finance leases

 

 

(12

)

 

 

(18

)

 

 

(5

)

 

 

(7

)

Payments under insurance premium financing

 

 

(164

)

 

 

 

 

 

(164

)

 

 

 

Proceeds from stock option exercises

 

 

12

 

 

 

64

 

 

 

 

 

 

12

 

Payments for shares withheld for taxes from RSU vesting and cancelled

 

 

(702

)

 

 

(96

)

 

 

(29

)

 

 

(673

)

Payments related to purchase of treasury stock

 

 

 

 

 

(454

)

 

 

 

 

 

 

Net cash used in financing activities

 

 

(10,460

)

 

 

(36,728

)

 

 

(4,995

)

 

 

(5,465

)

Net (decrease) increase in cash and cash equivalents

 

 

(14,090

)

 

 

(3,250

)

 

 

(8,784

)

 

 

(5,306

)

Cash and cash equivalents at beginning of period

 

 

60,366

 

 

 

66,882

 

 

 

55,060

 

 

 

60,366

 

Cash and cash equivalents at end of period

 

$

46,276

 

 

$

63,632

 

 

$

46,276

 

 

$

55,060

 

Non-cash activities

 

 

 

 

 

 

 

 

 

 

 

 

Investing:

 

 

 

 

 

 

 

 

 

 

 

 

Capitalized depreciation in property, plant and equipment

 

$

289

 

 

$

316

 

 

$

146

 

 

$

143

 

Capitalized stock based compensation

 

 

151

 

 

 

135

 

 

 

78

 

 

 

73

 

Property and equipment additions incurred but not paid at period-end

 

 

612

 

 

 

6

 

 

 

612

 

 

 

604

 

Property, plant and equipment additions transferred from inventory

 

 

536

 

 

 

356

 

 

 

536

 

 

 

392

 

Financing:

 

 

 

 

 

 

 

 

 

 

 

 

Insurance premium financing

 

 

738

 

 

 

 

 

 

738

 

 

 

 

Cash paid for:

 

 

 

 

 

 

 

 

 

 

 

 

Interest

 

 

66

 

 

 

66

 

 

 

33

 

 

 

33

 

Income taxes

 

 

325

 

 

 

813

 

 

 

325

 

 

 

 

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

 

Six months ended

 

 

June 30,

 

March 31,

 

June 30,

 

 

2021

 

 

2020

 

 

2021

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(1,870

)

 

$

(9,496

)

 

$

(1,925

)

 

$

(3,795

)

 

$

(42,649

)

Depreciation and amortization

 

 

6,752

 

 

 

6,671

 

 

 

6,693

 

 

 

13,445

 

 

 

13,785

 

Interest (income) expense, net

 

 

55

 

 

 

35

 

 

 

49

 

 

 

104

 

 

 

(76

)

Income taxes (1)

 

 

(217

)

 

 

(1,272

)

 

 

(213

)

 

 

(430

)

 

 

(7,350

)

EBITDA

 

$

4,720

 

 

$

(4,062

)

 

$

4,604

 

 

$

9,324

 

 

$

(36,290

)

Stock-based compensation expense (2)

 

 

1,353

 

 

 

1,326

 

 

 

1,199

 

 

 

2,552

 

 

 

2,656

 

Loss on disposal of assets

 

 

99

 

 

 

1,345

 

 

 

18

 

 

 

117

 

 

 

1,413

 

Impairment loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

47,828

 

Severance expense

 

 

 

 

 

211

 

 

 

 

 

 

 

 

 

542

 

Credit losses

 

 

316

 

 

 

740

 

 

 

283

 

 

 

599

 

 

 

1,451

 

Transaction costs (3)

 

 

10

 

 

 

 

 

 

14

 

 

 

24

 

 

 

 

Adjusted EBITDA

 

$

6,498

 

 

$

(440

)

 

$

6,118

 

 

$

12,616

 

 

$

17,600

 

______________________________

1)

Federal and state income taxes.

 

 

2)

Represents stock-based compensation expense related to restricted stock awards.

 

 

3)

Costs related to the evaluation of acquisitions.

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 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

 

Six months ended

 

 

June 30,

 

March 31,

 

June 30,

 

 

2021

 

 

2020

 

 

2021

 

 

2021

 

 

2020

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to Solaris

 

$

(1,211

)

 

$

(5,540

)

 

$

(1,169

)

 

$

(2,380

)

 

$

(24,623

)

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reallocation of net income (loss) attributable to non-controlling interests from the assumed exchange of LLC Interests (1)

 

 

 

(659

 

)

 

 

 

(3,956

 

)

 

 

 

(756

 

)

 

 

(1,415

)

 

 

(18,026

)

Loss on disposal of assets

 

 

99

 

 

 

1,345

 

 

 

18

 

 

 

117

 

 

 

1,413

 

Credit losses

 

 

316

 

 

 

740

 

 

 

283

 

 

 

599

 

 

 

1,451

 

Impairment loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

47,828

 

Severance expense

 

 

 

 

 

211

 

 

 

 

 

 

 

 

 

542

 

Transaction costs (2)

 

 

10

 

 

 

 

 

 

14

 

 

 

24

 

 

 

 

Income tax (benefit) expense

 

 

47

 

 

 

182

 

 

 

11

 

 

 

58

 

 

 

(7,920

)

Adjusted pro forma net income (loss)

 

$

(1,398

)

 

$

(7,018

)

 

$

(1,599

)

 

$

(2,997

)

 

$

665

 

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares of Class A common stock outstanding - diluted

 

 

30,984

 

 

 

28,638

 

 

 

29,957

 

 

 

30,473

 

 

 

28,975

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assumed exchange of Solaris LLC Units for shares of Class A common stock (1)

 

 

14,701

 

 

 

16,616

 

 

 

15,494

 

 

 

15,095

 

 

 

16,615

 

Adjusted pro forma fully weighted average shares of Class A common stock outstanding - diluted

 

 

45,685

 

 

 

45,254

 

 

 

45,451

 

 

 

45,568

 

 

 

45,590

 

Adjusted pro forma earnings per share - diluted

 

$

(0.03

)

 

$

(0.16

)

 

$

(0.04

)

 

$

(0.07

)

 

$

0.01

 

(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)

Costs related to the evaluation of acquisitions.

 

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