Service & Supply | Quarterly / Earnings Reports | Oilfield Services | Second Quarter (2Q) Update

Solaris Oilfield Second Quarter 2020 Results

Share Print Bookmark    |    Thursday,July 30,2020

Solaris Oilfield Infrastructure, Inc. reported its Q2 2020 results.

Operational Update and Outlook

During the second quarter 2020, an average of 20 mobile proppant management systems were fully utilized, a 76% decrease from the 83 fully utilized systems averaged in the first quarter of 2020. The decrease in fully utilized systems was primarily due to a sharp decline in active hydraulic fracturing crews that began in March and bottomed in May as oil and gas operators reduced budgets and activity in response to lower oil and gas demand and prices. Activity has since increased and the Company expects activity could increase by 35-45% sequentially in the third quarter 2020 as many operators resume a modest level of completions activity.

“I’m pleased that the Solaris team was able to respond quickly to the global pandemic pressures and produce a near breakeven Adjusted EBITDA result at what we believe was the bottom of the cycle while continuing to generate significant free cash flow,” Solaris’ Chairman and Chief Executive Officer Bill Zartler commented. “While the pace and the ultimate level of this recovery are still unknown, we are encouraged by the modest return to activity we are seeing from our customers. Our debt free balance sheet, ample cash and liquidity allow us to continue offering our customers the highest level of service quality and vendor dependability while continuing to invest in our business and return cash to shareholders.”

Second Quarter 2020 Financial Review

Solaris reported a net loss of $(5.5) million, or $(0.20) per diluted Class A share, for second quarter 2020, compared to a net loss of ($19.1) million, or $(0.65) per diluted Class A share, in first quarter 2020 and net income of $13.3 million, or $0.42 per diluted Class A share, in second quarter 2019. Adjusted pro forma net income for second quarter 2020 was $(7.0) million, or $(0.16) per fully diluted share, compared to adjusted pro forma net income in first quarter 2020 of $7.7 million, or $0.17 per fully diluted share, and $18.0 million, or $0.38 per fully diluted share in second quarter 2019.

Adjusted EBITDA for second quarter 2020 was $(0.4) million, compared to adjusted EBITDA of $18.0 million in first quarter 2020 and $32.5 million in second quarter 2019.

Revenues were $9.3 million for second quarter 2020, which were down 80% from first quarter 2020 and down 85% compared to second quarter 2019.

Capital Expenditures, Free Cash Flow and Liquidity

Capital expenditures in second quarter 2020 were $0.9 million compared to capital expenditures of $0.7 million during first quarter 2020. The Company expects capital expenditures for full year 2020 to be $5-$10 million.

Free cash flow (defined as net cash provided by operating activities less investment in property, plant and equipment) during second quarter 2020 was $21.8 million, which represented the sixth consecutive quarter of positive free cash flow for the Company.

As of June 30, 2020, the Company had approximately $63.6 million of cash on the balance sheet, which reflects approximately $1.40 per fully diluted share of available cash. The Company’s $50.0 million credit facility remains undrawn.

Shareholder Returns

On May 18, 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 June 16, 2020 to holders of record as of June 2, 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 7 consecutive quarterly dividends. Cumulatively, the Company has returned approximately $63 million in cash to shareholders through dividends and share repurchases since December of 2018.