SOI Solaris Oilfield Infrastructure Inc

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 27, 2023

SOLARIS OILFIELD INFRASTRUCTURE, INC.

(Exact name of registrant as specified in its charter)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Securities registered pursuant to Section 12(b) of the Act:

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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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On July 27, 2023, Solaris Oilfield Infrastructure, Inc. issued a press release announcing its operating and financial results for the quarter ended June 30, 2023. A copy of the press release is furnished as Exhibit 99.1 and incorporated by reference herein.

The information in this Item 2.02, including Exhibit 99.1 to this Current Report on Form 8-K, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

(d)Exhibits.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: July 27, 2023

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Exhibit 99.1

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Solaris Oilfield Infrastructure Announces Second Quarter 2023 Results

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Second Quarter 2023 Summary Results and Highlights

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HOUSTON, July 27, 2023 — (BUSINESS WIRE) — Solaris Oilfield Infrastructure, Inc. (NYSE:SOI) (“Solaris” or the “Company”), today announced second quarter 2023 results, with revenues of $77.2 million, net income of $12.2 million, adjusted pro forma net income of $11.3 million, or $0.25 per fully diluted share and Adjusted EBITDA of $26.8 million.

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“Our strong second quarter results are a testament to the Solaris team’s continued execution on our strategy of growing earnings per frac crew followed. We grew profitability by deploying more top fill and AutoBlend™ systems and improving ancillary trucking services margin despite the softening in drilling and completion activity,” Solaris’ Chairman and Chief Executive Officer Bill Zartler commented.

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“Since we began returning cash to shareholders in 2018, we have cumulatively returned $148 million through dividends and share repurchases. We expect to generate meaningful cash flow as our budgeted growth capital spending slows, allowing us to continue executing on our enhanced shareholder return framework.”

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Second Quarter 2023 Financial Review

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Solaris reported net income of $12.2 million, or $0.24 per diluted Class A share, for second quarter 2023, compared to first quarter 2023 net income of $11.9 million, or $0.23 per diluted Class A share, and second quarter 2022 net income of $8.3 million, or $0.16 per diluted Class A share. Adjusted pro forma net income for second quarter 2023 was $11.3 million, or $0.25 per fully diluted share, compared to first quarter 2023 adjusted pro forma net income of $11.0 million, or $0.24 per fully diluted share, and second quarter 2022 adjusted pro forma net income of $9.4 million, or $0.20 per fully diluted share.

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Revenues were $77.2 million for second quarter 2023, which were down 7% sequentially and down 11% year over year. Adjusted EBITDA for second quarter 2023 was $26.8 million, which was up 7% from first quarter 2023 and up 27% from second quarter 2022. The sequential decrease in revenue was driven by decreases in industry frac activity and ancillary trucking services revenues, which was offset by additional top fill and AutoBlend™ systems. The sequential increase in Adjusted EBITDA was driven by increases in new technology deployments and ancillary trucking services margin.

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During the second quarter of 2023, Solaris earned revenue on 108 fully utilized systems, which includes sand systems, top fill systems and AutoBlend™ systems. Total fully utilized systems were down 8% sequentially from 118 in the first quarter of 2023.

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Capital Expenditures, Free Cash Flow and Liquidity

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Capital expenditures in the second quarter 2023 were approximately $21 million, which is primarily related to manufacturing of top fill systems. Solaris is maintaining its capital expenditure guidance for full year 2023 of $65 million to $75 million, which includes $15 million for maintenance capital. The Company expects capital expenditures in the third quarter of 2023 to be approximately $15 million, including maintenance capital expenditures.

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Free cash flow (defined as net cash provided by operating activities less investment in property, plant and equipment) during second quarter 2023 was positive $7 million, including a working capital source of $3 million and capital expenditures of $21 million. Distributable cash flow (defined as Adjusted EBITDA less maintenance capital expenditures) was approximately $22 million for the

second quarter 2023, which was approximately flat sequentially and up 10% year over year, and covered quarterly dividend distributions of approximately $5 million by approximately four times.

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As of June 30, 2023, the Company had approximately $9 million of cash on the balance sheet. The Company had $43 million in borrowings outstanding on the credit facility and $41 million of liquidity as of the end of second quarter 2023.

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Shareholder Returns

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On May 16, 2023, the Company’s Board of Directors approved a cash dividend to $0.11 per share of Class A common stock, which was paid on June 16, 2023 to holders of record as of June 6, 2023. A distribution of $0.11 per unit was also approved for holders of units in Solaris Oilfield Infrastructure, LLC (“Solaris LLC”).

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During the second quarter of 2023, the Company repurchased 1.4 million Class A common stock shares, or 3.0% of the Company’s total outstanding shares, for approximately $11 million, leaving approximately $24 million in the Company’s stock repurchase authorization. Since initiating the repurchase authorization in the first quarter of 2023, Solaris has repurchased a total of 3.1 million Class A common shares, or 6.5% of the Company’s total outstanding shares.

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Since initiating the dividend in December 2018, the Company has paid 19 consecutive quarterly dividends and repurchased approximately 12% of total outstanding shares, representing approximately $148 million in cash cumulatively returned to shareholders through dividends and share repurchases since December 2018.

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Conference Call

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The Company will host a conference call to discuss its second quarter 2023 results on Friday, July 28, 2023 at 8:00 a.m. Central Time (9:00 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.

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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 6293931. 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.

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About Non-GAAP Measures

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In addition to financial results determined in accordance with generally accepted accounting principles in the United States (“GAAP”), this news release presents non-GAAP financial measures. Management believes that adjusted net income, adjusted diluted earnings per share and Adjusted EBITDA, provide useful information to investors regarding the Company’s financial condition and results of operations because they reflect the core operating results of our businesses and help facilitate comparisons of operating performance across periods. Although management believes the aforementioned non-GAAP financial measures are good tools for internal use and the investment community in evaluating Solaris’ overall financial performance, the foregoing non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, other measures of financial performance prepared in accordance with GAAP. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures is included in the accompanying financial tables.

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About Solaris Oilfield Infrastructure, Inc.

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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 equipment and systems are deployed across oil and natural gas basins in the United States. Additional information is available on our website, www.solarisoilfield.com.

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Website Disclosure

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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.

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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 press release or will be incorporated by reference into any 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.

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Forward Looking Statements

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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

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CONSOLIDATED STATEMENTS OF OPERATIONS

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(In thousands, except per share data)

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(Unaudited)

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SOLARIS OILFIELD INFRASTRUCTURE, INC AND SUBSIDIARIES

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CONSOLIDATED BALANCE SHEETS

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(In thousands, except per share amounts)

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(Unaudited)

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SOLARIS OILFIELD INFRASTRUCTURE, INC AND SUBSIDIARIES

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CONSOLIDATED STATEMENTS OF CASH FLOWS

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(In thousands)

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(Unaudited)

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SOLARIS OILFIELD INFRASTRUCTURE, INC AND SUBSIDIARIES

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RECONCILIATION AND CALCULATION OF NON-GAAP FINANCIAL AND OPERATIONAL MEASURES

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(In thousands)

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(Unaudited)

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EBITDA AND ADJUSTED EBITDA

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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.

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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.

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ADJUSTED PRO FORMA NET INCOME AND ADJUSTED PRO FORMA EARNINGS PER FULLY DILUTED SHARE

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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.

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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.

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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.

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Contacts:

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Yvonne Fletcher

Senior Vice President, Finance and Investor Relations

(281) 501-3070

IR@solarisoilfield.com