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Solaris Oilfield First Quarter 2020 Results

Share Print Bookmark    |    Thursday,April 30,2020

Solaris Oilfield Infrastructure, Inc. reported financial results for the first quarter 2020.

First Quarter 2020 Highlights

• Net loss of $33.2 million, or $(0.65) per diluted Class A share, for the quarter ended March 31, 2020; Adjusted pro forma net income of $14.8 million, or $0.32 per diluted share for the quarter ended March 31, 2020 (see below for a reconciliation of adjusted pro forma net income to net income attributable to Solaris)
• Adjusted EBITDA of $18.0 million for the quarter ended March 31, 2020
• Net cash provided by operating activities of $11.7 million for the quarter ended March 31, 2020
• Positive free cash flow of $11.0 million for the quarter ended March 31, 2020
• Paid a regular quarterly dividend of $0.105 per share on March 27, 2020
• Repurchased 2.4 million shares for $26.7 million which exhausted the Company’s original $25 million authorization and included an additional $5 million authorization made by the Company’s Board on February 27, 2020

Operational Update and Outlook

During the first quarter 2020, an average of 83 mobile proppant management systems were fully utilized, a 6% decrease from the 88 fully utilized systems averaged in the fourth quarter of 2019, and a 27% decrease compared to first quarter 2019. The decrease in fully utilized systems was primarily due to a sharp decline in active hydraulic fracturing crews that began in March and has continued through April as oil and gas operators reduced budgets and activity in response to lower oil and gas demand and prices.

The Company expects activity could decline by 75% to 85% sequentially in the second quarter as many operators continue to indicate plans to temporarily pause completion activities while awaiting a recovery in oil demand. As a result, we have taken steps to right size our business and have reduced direct operating costs as well as salaries, headcount and other SG&A expenses. The Company also expects capital expenditures for the full year 2020 to be $10 million or below, unchanged from the guidance issued in the Company’s operational update in early April but reduced from its original $20-$40 million expectation.

Solaris’ Chairman and Chief Executive Officer Bill Zartler commented: “The Solaris team continues to execute well, despite the challenges presented by the global crisis. Our debt-free balance sheet and ample liquidity will ensure that Solaris will not only continue to weather this storm, but will continue to support our customers with the same high levels of service and innovation they’ve grown to expect from us. Our team innovated and earned the trust of new customers through the last downturn and we intend to do the same this time around.”

First Quarter 2020 Financial Review

Solaris reported net loss of $33.2 million, or $(0.65) per diluted Class A share, for first quarter 2020, compared to net income of $25.3 million, or $0.48 per diluted Class A share, in fourth quarter 2019 and net income of $23.4 million, or $0.43 per diluted Class A share, in first quarter 2019. First quarter 2020 included approximately $47.8 million of impairment charges, the majority of which related to the write-off of the Company’s Kingfisher transload facility in Oklahoma. Adjusted pro forma net income for first quarter 2020 was $14.8 million, or $0.32 per fully diluted share, compared to adjusted pro forma net income in fourth quarter 2019 of $9.7 million, or $0.20 per fully diluted share, and $18.5 million, or $0.39 per fully diluted share in first quarter 2019.

Adjusted EBITDA for first quarter 2020 was $18.0 million, compared to adjusted EBITDA of $20.9 million in fourth quarter 2019 and $32.0 million in first quarter 2019.

Revenues were $47.8 million for first quarter 2020, which were down 24% from fourth quarter 2019 and down 13% compared to first quarter 2019. Excluding the impact of deferred revenue in 2019, first quarter 2020 revenues increased 6% from fourth quarter 2019 and decreased 8% compared to first quarter 2019.

Capital Expenditures, Free Cash Flow and Liquidity

The Company invested $0.7 million during first quarter 2020 compared to $1.9 million during fourth quarter 2019.

Free cash flow (defined as net cash provided by operating activities less investment in property, plant and equipment) during first quarter 2020 was $11.0 million, which represented the fifth consecutive quarter of positive free cash flow for the Company.

As of March 31, 2020, the Company had approximately $46.0 million of cash on the balance sheet. As of April 30, 2020, the Company had approximately $55 million of cash on the balance sheet, which reflects approximately $1.20 per fully diluted share of available cash. The Company’s $50.0 million credit facility remains undrawn.

Shareholder Returns

On March 4, 2020, the Company’s Board of Directors declared a cash dividend of $0.105 per share of Class A common stock, which was paid on March 27, 2020 to holders of record as of March 17, 2020. 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 6 consecutive quarterly dividends.

During the first quarter of 2020, Solaris repurchased approximately 2.4 million shares for a total of $26.7 million, which exhausted the Company’s original $25 million authorization and included an additional $5 million authorization made by the Company’s Board on February 27, 2020. The share repurchases were made as part of a program which was fulfilled by March 10, 2020. There is no share repurchase authorization remaining.

Cumulatively, the Company has returned approximately $59 million in cash to shareholders since December of 2018.