Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Jul. 27, 2020 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-38090 | |
Entity Registrant Name | SOLARIS OILFIELD INFRASTRUCTURE, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 81-5223109 | |
Entity Address, Address Line One | 9811 Katy Freeway, Suite 700 | |
Entity Address, City or Town | Houston | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 77024 | |
City Area Code | 281 | |
Local Phone Number | 501-3070 | |
Title of 12(b) Security | Class A Common Stock | |
Trading Symbol | SOI | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Shell Company | false | |
Entity Central Index Key | 0001697500 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Class A Common Stock | ||
Document and Entity Information | ||
Entity Common Stock, Shares Outstanding | 29,376,398 | |
Class B Common Stock | ||
Document and Entity Information | ||
Entity Common Stock, Shares Outstanding | 15,889,169 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 63,632 | $ 66,882 |
Accounts receivable, net of allowances for credit losses of $1,076 and $339 as of June 30, 2020 and December 31, 2019, respectively | 11,160 | 38,554 |
Prepaid expenses and other current assets | 4,809 | 5,002 |
Inventories | 1,016 | 7,144 |
Total current assets | 80,617 | 117,582 |
Property, plant and equipment, net | 255,539 | 306,583 |
Non-current inventories | 3,555 | |
Operating lease right-of-use assets | 4,738 | 7,871 |
Goodwill | 13,004 | 17,236 |
Intangible assets, net | 3,372 | 3,761 |
Deferred tax assets | 58,478 | 51,414 |
Other assets | 545 | 625 |
Total assets | 419,848 | 505,072 |
Current liabilities: | ||
Accounts payable | 3,998 | 3,824 |
Accrued liabilities | 6,333 | 14,447 |
Current portion of payables related to Tax Receivable Agreement | 1,416 | |
Current portion of operating lease liabilities | 579 | 596 |
Current portion of finance lease liabilities | 30 | 30 |
Other current liabilities | 75 | 74 |
Total current liabilities | 11,015 | 20,387 |
Operating lease liabilities, net of current | 7,499 | 7,855 |
Finance lease liabilities, net of current | 115 | 130 |
Payables related to Tax Receivable Agreement | 68,132 | 66,582 |
Other long-term liabilities | 607 | 460 |
Total liabilities | 87,368 | 95,414 |
Commitments and contingencies (Note 12) | ||
Stockholders' equity: | ||
Preferred stock, $0.01 par value, 50,000 shares authorized, none issued and outstanding | ||
Additional paid-in capital | 178,511 | 191,843 |
Retained earnings | 31,516 | 74,222 |
Treasury stock (at cost), 0 shares and 163 shares as of June 30, 2020 and December 31, 2019, respectively | (2,526) | |
Total stockholders' equity attributable to Solaris | 210,314 | 263,847 |
Non-controlling interest | 122,166 | 145,811 |
Total stockholders' equity | 332,480 | 409,658 |
Total liabilities and stockholders' equity | 419,848 | 505,072 |
Class A Common Stock | ||
Stockholders' equity: | ||
Common stock | 287 | 308 |
Class B Common Stock | ||
Stockholders' equity: | ||
Common stock |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Allowance for credit losses | $ 1,076 | $ 339 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 50,000 | 50,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Treasury stock (in shares) | 0 | 163 |
Class A Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 600,000 | 600,000 |
Common stock, shares issued | 28,673 | 30,928 |
Common stock, shares outstanding | 28,673 | 30,765 |
Class B Common Stock | ||
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized | 180,000 | 180,000 |
Common stock, shares issued | 15,839 | 15,939 |
Common stock, shares outstanding | 15,839 | 15,939 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenue: | ||||
Revenue | $ 9,339 | $ 64,101 | $ 57,169 | $ 119,225 |
Operating costs and expenses: | ||||
Depreciation and amortization | 6,671 | 6,622 | 13,785 | 12,967 |
Selling, general and administrative (excluding $172 and $146 and $324 and $265 of depreciation and amortization for the three and six months ended June 30, 2020 and 2019, respectively, shown separately) | 3,967 | 5,006 | 8,373 | 9,034 |
Impairment losses | 47,828 | |||
Other operating expenses | 2,274 | 69 | 3,472 | 282 |
Total operating costs and expenses | 20,072 | 36,778 | 107,244 | 64,175 |
Operating income (loss) | (10,733) | 27,323 | (50,075) | 55,050 |
Interest income (expense), net | (35) | (656) | 76 | (767) |
Total other expense (income) | (35) | (656) | 76 | (767) |
Income (loss) before income tax expense | (10,768) | 26,667 | (49,999) | 54,283 |
Benefit (provision) for income taxes | 1,272 | (4,158) | 7,350 | (8,339) |
Net income (loss) | (9,496) | 22,509 | (42,649) | 45,944 |
Less: net (income) loss related to non-controlling interests | 3,956 | (9,234) | 18,026 | (20,352) |
Net income (loss) attributable to Solaris | (5,540) | 13,275 | (24,623) | 25,592 |
System rental | ||||
Revenue: | ||||
Revenue | 5,463 | 39,740 | 31,522 | 77,088 |
Operating costs and expenses: | ||||
Cost of revenue | 823 | 2,552 | 2,836 | 4,899 |
Depreciation and amortization | 6,034 | 5,481 | 12,035 | 10,707 |
System services | ||||
Revenue: | ||||
Revenue | 3,419 | 19,031 | 24,376 | 30,468 |
Operating costs and expenses: | ||||
Cost of revenue | 6,013 | 21,675 | 30,143 | 35,294 |
Depreciation and amortization | 274 | 391 | 631 | 789 |
Transloading services | ||||
Revenue: | ||||
Revenue | 264 | 4,881 | 729 | 10,714 |
Operating costs and expenses: | ||||
Cost of revenue | 202 | 689 | 540 | 1,399 |
Depreciation and amortization | 0 | 411 | 411 | 820 |
Inventory software services | ||||
Revenue: | ||||
Revenue | 192 | 449 | 542 | 955 |
Operating costs and expenses: | ||||
Cost of revenue | 122 | 165 | 267 | 300 |
Depreciation and amortization | $ 191 | $ 193 | $ 384 | $ 386 |
Class A Common Stock | ||||
Operating costs and expenses: | ||||
Earnings per share of Class A common stock - basic (in dollars per share) | $ (0.20) | $ 0.42 | $ (0.85) | $ 0.85 |
Earnings per share of Class A common stock - diluted (in dollars per share) | $ (0.20) | $ 0.42 | $ (0.85) | $ 0.85 |
Basic weighted-average shares of Class A common stock outstanding (in shares) | 28,638 | 30,609 | 28,975 | 29,326 |
Diluted weighted-average shares of Class A common stock outstanding (in shares) | 28,638 | 30,644 | 28,975 | 29,387 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) $ in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2020USN ($) | Jun. 30, 2019USD ($) | Jun. 30, 2019USN ($) | |
Depreciation and amortization | $ 6,671 | $ 6,622 | $ 13,785 | $ 12,967 | ||
Stock-based compensation expense | 1,326 | 1,178 | $ 2,656 | $ 2,040 | ||
Selling, general and administrative expenses | ||||||
Depreciation and amortization | 172 | 146 | 324 | 265 | ||
Stock-based compensation expense | 1,231 | 1,112 | 2,345 | 1,903 | ||
System rental | ||||||
Depreciation and amortization | 6,034 | 5,481 | 12,035 | 10,707 | ||
Stock-based compensation expense | 18 | 10 | 31 | 14 | ||
System services | ||||||
Depreciation and amortization | 274 | 391 | 631 | 789 | ||
Stock-based compensation expense | 73 | 52 | 273 | 116 | ||
Transloading services | ||||||
Depreciation and amortization | 0 | 411 | 411 | 820 | ||
Stock-based compensation expense | 4 | 4 | $ 7 | $ 7 | ||
Inventory software services | ||||||
Depreciation and amortization | $ 191 | $ 193 | $ 384 | $ 386 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common StockClass A Common Stock | Common StockClass B Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Non-controlling Interest | Total |
Balance at beginning of year at Dec. 31, 2018 | $ 271 | $ 164,086 | $ 35,507 | $ (1,414) | $ 142,428 | $ 340,878 | |
Balance at beginning of year (in shares) at Dec. 31, 2018 | 27,091,000 | 19,627,000 | 91,000 | ||||
Changes in Stockholders' Equity | |||||||
Exchange of Solaris LLC Units and shares of Class B common stock for shares of Class A common stock | $ 32 | 24,925 | (24,957) | ||||
Exchange of Solaris LLC Units and shares of Class B common stock for shares of Class A common stock (in shares) | 3,245,000 | (3,245,000) | |||||
Net effect of deferred tax asset and payables related to parties pursuant to Tax Receivable Agreement from the exchange of Solaris LLC Units and shares of Class B common stock for shares of Class A common stock | (1,895) | (1,895) | |||||
Stock option exercises | $ 1 | 601 | $ (427) | (336) | (161) | ||
Stock option exercises (in shares) | 65,000 | 28,000 | |||||
Stock-based compensation | 553 | 346 | 899 | ||||
Vesting of restricted stock | 2 | $ (4) | (2) | (4) | |||
Solaris LLC distribution paid to Solaris LLC unitholders | (1,638) | (1,638) | |||||
Dividends paid Class A common stock | (3,119) | (3,119) | |||||
Net (loss) income | 12,317 | 11,118 | 23,435 | ||||
Balance at end of year at Mar. 31, 2019 | $ 304 | 188,458 | 44,173 | $ (1,845) | 126,773 | 357,863 | |
Balance at end of year (in shares) at Mar. 31, 2019 | 30,401,000 | 16,382,000 | 119,000 | ||||
Balance at beginning of year at Dec. 31, 2018 | $ 271 | 164,086 | 35,507 | $ (1,414) | 142,428 | $ 340,878 | |
Balance at beginning of year (in shares) at Dec. 31, 2018 | 27,091,000 | 19,627,000 | 91,000 | ||||
Changes in Stockholders' Equity | |||||||
Treasury stock retirements (in shares) | 0 | ||||||
Net (loss) income | $ 45,944 | ||||||
Balance at end of year at Jun. 30, 2019 | $ 309 | 192,734 | 54,284 | $ (2,144) | 131,000 | 376,183 | |
Balance at end of year (in shares) at Jun. 30, 2019 | 30,905,000 | 15,940,000 | 135,000 | ||||
Changes in Stockholders' Equity | |||||||
Effect of ASU No. 2016-02 implementation | 186 | (532) | (186) | (532) | |||
Balance at beginning of year at Mar. 31, 2019 | $ 304 | 188,458 | 44,173 | $ (1,845) | 126,773 | 357,863 | |
Balance at beginning of year (in shares) at Mar. 31, 2019 | 30,401,000 | 16,382,000 | 119,000 | ||||
Changes in Stockholders' Equity | |||||||
Exchange of Solaris LLC Units and shares of Class B common stock for shares of Class A common stock | $ 4 | 3,571 | (3,575) | ||||
Exchange of Solaris LLC Units and shares of Class B common stock for shares of Class A common stock (in shares) | 442,000 | (442,000) | |||||
Net effect of deferred tax asset and payables related to parties pursuant to Tax Receivable Agreement from the exchange of Solaris LLC Units and shares of Class B common stock for shares of Class A common stock | (397) | (397) | |||||
Stock option exercises | 48 | (20) | 28 | ||||
Stock option exercises (in shares) | 11,000 | ||||||
Stock-based compensation | 809 | 428 | 1,237 | ||||
Vesting of restricted stock | $ 1 | 245 | $ (299) | (246) | (299) | ||
Vesting of restricted stock (in shares) | 51,000 | 16,000 | |||||
Solaris LLC distribution paid to Solaris LLC unitholders | (1,594) | (1,594) | |||||
Dividends paid Class A common stock | (3,164) | $ (3,164) | |||||
Treasury stock retirements (in shares) | 0 | ||||||
Net (loss) income | 13,275 | 9,234 | $ 22,509 | ||||
Balance at end of year at Jun. 30, 2019 | $ 309 | 192,734 | 54,284 | $ (2,144) | 131,000 | 376,183 | |
Balance at end of year (in shares) at Jun. 30, 2019 | 30,905,000 | 15,940,000 | 135,000 | ||||
Balance at beginning of year at Dec. 31, 2019 | $ 308 | 191,843 | 74,222 | $ (2,526) | 145,811 | 409,658 | |
Balance at beginning of year (in shares) at Dec. 31, 2019 | 30,765,000 | 15,940,000 | 163,000 | ||||
Changes in Stockholders' Equity | |||||||
Exchange of Solaris LLC Units and shares of Class B common stock for shares of Class A common stock | $ 1 | 460 | (461) | ||||
Exchange of Solaris LLC Units and shares of Class B common stock for shares of Class A common stock (in shares) | 50,000 | (50,000) | |||||
Net effect of deferred tax asset and payables related to parties pursuant to Tax Receivable Agreement from the exchange of Solaris LLC Units and shares of Class B common stock for shares of Class A common stock | (303) | (303) | |||||
Stock option exercises | 66 | $ (80) | (11) | (25) | |||
Stock option exercises (in shares) | 9,000 | 7,000 | |||||
Share and unit repurchases and retirements | $ (24) | (14,804) | (10,177) | (1,711) | (26,716) | ||
Share and unit repurchases and retirements (in shares) | (2,374,000) | ||||||
Stock-based compensation | 907 | 492 | 1,399 | ||||
Vesting of restricted stock | $ 1 | 471 | $ (373) | (473) | (374) | ||
Vesting of restricted stock (in shares) | 105,000 | 37,000 | |||||
Solaris LLC distribution paid to Solaris LLC unitholders | (1,668) | (1,668) | |||||
Dividends paid Class A common stock | (3,087) | (3,087) | |||||
Treasury stock retirements | (1,247) | (1,732) | $ 2,979 | ||||
Treasury stock retirements (in shares) | (207,000) | ||||||
Net (loss) income | (19,081) | (14,071) | (33,152) | ||||
Balance at end of year at Mar. 31, 2020 | $ 286 | 177,393 | 40,145 | 127,908 | 345,732 | ||
Balance at end of year (in shares) at Mar. 31, 2020 | 28,555,000 | 15,890,000 | |||||
Balance at beginning of year at Dec. 31, 2019 | $ 308 | 191,843 | 74,222 | $ (2,526) | 145,811 | $ 409,658 | |
Balance at beginning of year (in shares) at Dec. 31, 2019 | 30,765,000 | 15,940,000 | 163,000 | ||||
Changes in Stockholders' Equity | |||||||
Treasury stock retirements (in shares) | (207,382) | ||||||
Net (loss) income | $ (42,649) | ||||||
Balance at end of year at Jun. 30, 2020 | $ 287 | 178,511 | 31,516 | 122,166 | 332,480 | ||
Balance at end of year (in shares) at Jun. 30, 2020 | 28,673,000 | 15,840,000 | |||||
Balance at beginning of year at Mar. 31, 2020 | $ 286 | 177,393 | 40,145 | 127,908 | 345,732 | ||
Balance at beginning of year (in shares) at Mar. 31, 2020 | 28,555,000 | 15,890,000 | |||||
Changes in Stockholders' Equity | |||||||
Exchange of Solaris LLC Units and shares of Class B common stock for shares of Class A common stock | $ 1 | 395 | (395) | 1 | |||
Exchange of Solaris LLC Units and shares of Class B common stock for shares of Class A common stock (in shares) | 50,000 | (50,000) | |||||
Net effect of deferred tax asset and payables related to parties pursuant to Tax Receivable Agreement from the exchange of Solaris LLC Units and shares of Class B common stock for shares of Class A common stock | (310) | (310) | |||||
Stock option exercises | 36 | (16) | 20 | ||||
Stock option exercises (in shares) | 7,000 | ||||||
Stock-based compensation | 895 | 497 | 1,392 | ||||
Vesting of restricted stock | 171 | (171) | |||||
Vesting of restricted stock (in shares) | 80,000 | ||||||
Cancelled shares withheld for taxes from RSU vesting | (69) | (38) | (107) | ||||
Cancelled shares withheld for taxes from RSU vesting (in shares) | (19,000) | ||||||
Solaris LLC distribution paid to Solaris LLC unitholders | (1,663) | (1,663) | |||||
Dividends paid Class A common stock | (3,089) | (3,089) | |||||
Net (loss) income | (5,540) | (3,956) | (9,496) | ||||
Balance at end of year at Jun. 30, 2020 | $ 287 | $ 178,511 | $ 31,516 | $ 122,166 | $ 332,480 | ||
Balance at end of year (in shares) at Jun. 30, 2020 | 28,673,000 | 15,840,000 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |||
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | |
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY | ||||
Distributions paid to unit holders (in dollars per unit) | $ 0.105 | $ 0.105 | $ 0.10 | $ 0.10 |
Cash dividends paid (in dollars per share) | $ 0.105 | $ 0.105 | $ 0.10 | $ 0.10 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash flows from operating activities: | ||
Net (loss) income | $ (42,649) | $ 45,944 |
Adjustment to reconcile net (loss) income to net cash provided by operating activities: | ||
Depreciation and amortization | 13,785 | 12,967 |
Loss on disposal of asset | 1,402 | 284 |
Allowance for credit losses | 1,633 | 0 |
Stock-based compensation | 2,656 | 2,040 |
Amortization of debt issuance costs | 88 | 665 |
Deferred income tax expense | (7,369) | 7,880 |
Impairment losses | 47,828 | |
Other | (145) | (169) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 25,760 | (4,597) |
Prepaid expenses and other assets | (217) | 1,990 |
Inventories | (533) | (3,296) |
Accounts payable | 147 | (4,661) |
Accrued liabilities | (8,063) | 4,696 |
Deferred revenue | (6,304) | |
Net cash provided by operating activities | 34,323 | 57,439 |
Cash flows from investing activities: | ||
Investment in property, plant and equipment | (1,558) | (28,717) |
Cash received from insurance proceeds | 713 | 38 |
Net cash used in investing activities | (845) | (28,679) |
Cash flows from financing activities: | ||
Share repurchases | (26,717) | |
Distribution and dividend paid to Solaris LLC unitholders (other than Solaris Inc.) and Class A common shareholders | (9,507) | (9,515) |
Payments under finance leases | (18) | (18) |
Payments under insurance premium financing | (932) | |
Proceeds from stock option exercises | 64 | 294 |
Payments for shares withheld for taxes from RSU vesting and cancelled | (96) | |
Payments related to purchase of treasury stock | (454) | (730) |
Payments related to debt issuance costs | (197) | |
Repayment of senior secured credit facility | (13,000) | |
Net cash used in financing activities | (36,728) | (24,098) |
Net increase (decrease) in cash | (3,250) | 4,662 |
Cash at beginning of period | 66,882 | 25,057 |
Cash at end of period | 63,632 | 29,719 |
Non-cash activities | ||
Capitalized depreciation in property, plant and equipment | 316 | 372 |
Capitalized stock based compensation | 135 | 96 |
Property and equipment additions incurred but not paid at period-end | 6 | 829 |
Property, plant and equipment additions transferred from inventory | 356 | 4,939 |
Insurance premium financing | 1,812 | |
Cash paid for: | ||
Interest | 66 | 183 |
Income taxes | $ 813 | $ 663 |
Organization and Background of
Organization and Background of Business | 6 Months Ended |
Jun. 30, 2020 | |
Organization and Background of Business | |
Organization and Background of Business | 1. Organization and Background of Business Description of Business We are an independent provider of supply chain management and logistics solutions designed to drive efficiencies and reduce costs for the oil and natural gas industry. We manufacture and provide patented mobile proppant and chemical management systems that unload, store and deliver proppant and chemicals used in hydraulic fracturing of oil and natural gas wells. The systems are designed to address the challenges associated with transferring large quantities of proppant and chemicals to the well site, including the cost and management of last mile logistics, which includes coordinating proppant and chemical delivery to systems. Our systems are deployed in most of the active oil and natural gas basins in the United States. We also provide software solutions to remotely monitor proppant inventory from the source mine to well site through our Solaris Lens® and Railtronix® inventory management systems. Our customers use data from our software solutions to manage distribution of proppant and chemicals throughout their supply chain. Recent Developments The global response to the coronavirus 2019 pandemic (“COVID-19”) as well as the actions taken by a number of global oil producers has contributed to steep declines in the demand and pricing for oil, natural gas and NGLs, negatively impacting U.S. producers and reducing demand for our services. Our revenues have decreased materially as a result of these lower activity levels. In response, we have reduced direct operating costs and SG&A expenses, including reducing workforce levels across the Company and lowered our capital expenditures. We have also recognized impairments on certain assets which is discussed further in Note. 2. Although pricing has stabilized in the second quarter, the commodity price environment is expected to remain depressed based on over-supply, decreased demand and a potential global economic recession. In response, in addition to other measures, the Company has reduced costs and lowered its capital budget for the year. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2020 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation and Consolidation The accompanying interim unaudited condensed consolidated financial statements of Solaris Oilfield Infrastructure, Inc. (either individually or together with its subsidiaries, as the context requires, “Solaris Inc.” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). These financial statements reflect all normal recurring adjustments that are necessary for fair presentation. Operating results for the three and six months ended June 30, 2020 and 2019 are not necessarily indicative of the results that may be expected for the full year or for any interim period. The unaudited interim condensed consolidated financial statements do not include all information or notes required by GAAP for annual financial statements and should be read together with Solaris Inc.’s Annual Report on Form 10-K for the year ended December 31, 2019 and notes thereto. Solaris Inc. is the managing member of Solaris Oilfield Infrastructure, LLC (“Solaris LLC”) and is responsible for all operational, management and administrative decisions relating to Solaris LLC's business. Solaris Inc. consolidates the financial results of Solaris LLC and its subsidiaries and reports non-controlling interest related to the portion of the units in Solaris LLC (the “Solaris LLC Units”) not owned by Solaris Inc., which will reduce net income attributable to the holders of Solaris Inc.’s Class A common stock All material intercompany transactions and balances have been eliminated upon consolidation. Use of Estimates The preparation of condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates used in the preparation of these condensed consolidated financial statements include, but are not limited to, collectability of accounts receivable, stock-based compensation, depreciation associated with property, plant and equipment and related impairment considerations of those assets, impairment considerations of goodwill, determination of fair value of intangible assets acquired in business combinations, income taxes, determination of the present value of lease payments and right-of-use assets, inventory valuation and certain other assets and liabilities. Actual results could differ from management’s best estimates as additional information or actual results become available in the future, and those differences could be material. Inventories consist of materials used in the manufacturing of the Company’s systems, which include raw materials and purchased parts and is stated at the lower of cost or net realizable value. Net realizable value is determined, giving consideration to quality, excessive levels, obsolescence and other factors. Adjustments that reduce stated amounts will be recognized as impairments in the condensed consolidated statements of operations. The Company recognized a write down of the carrying value of inventory of $2.6 million to its net realizable value during the six months ended June 30, 2020. There were no impairments recorded for the three months ended June 30, 2020 and 2019 or for the six months ended June 30, 2019. Goodwill Due to the impact of the outbreak of COVID-19 and recent oil market developments on our business, we updated our goodwill impairment assessment as of March 31, 2020. We estimated the fair value for each reporting unit using an income approach including a discounted cash flow analysis and the use of significant unobservable inputs representative of a Level 3 fair value measurement. Some of the more significant assumptions inherent in the income approach include the estimated future net annual cash flows for each reporting unit and the discount rate. The Company selected assumptions used in the discounted cash flow projections using historical data supplemented by current and anticipated market conditions, near term declines and estimated growth rates. These estimates are based upon assumptions believed to be reasonable. However, given the inherent uncertainty in determining the assumptions underlying a discounted cash flow analysis, particularly in the current volatile market, actual results may differ from those used in the Company’s valuations which could result in additional impairment charges in the future. The discount rates used to value the Company’s reporting units were between 10.35% and 13.00%. As a result of the March 31, 2020 evaluation of goodwill, $4,231 of goodwill associated with the 2017 purchase of the assets of Railtronix was impaired during the three months ended March 31. 2020. The goodwill associated with the Loadcraft Industries Ltd. purchase was not impaired. An impairment charge would have resulted if our estimate of fair value was approximately 40% less than the amount determined. No additional facts or circumstances warranted an impairment assessment as of June 30, 2020 and no impairment charges were recognized for the three month period then ended. As a result of recent volatility in global oil markets driven by significant reductions in demand for oil due to COVID-19 and certain actions by oil producers globally and the expected impact on our businesses, operations and earnings, the Company concluded that such circumstances warranted an evaluation of whether indicators of impairment are present for its asset groups as of March 31, 2020. Based on this evaluation, the Company performed tests for recoverability of the carrying value of these assets using forecasted undiscounted cash flows. The Company noted that the undiscounted cash flows as well as the fair value of the assets associated with our Kingfisher Facility exceeded their carrying values and the Company recognized impairment losses of $37,775, $2,845 and $410 for property, plant and equipment, ROU assets and other receivables, respectively during the three months ended March 31, 2020 and six month ended June 30, 2020. These impairments resulted from an accumulation of factors leading to the loss of significant customers, reduced operating activities and earnings, including impacts resulting from continued volatility in global oil markets and the COVID-19 pandemic. No additional facts or circumstances indicated that indicators of impairment have become present during the three months ended June 30, 2020. However, if these conditions persist for an extended period of time, additional impairment losses may be recognized in relation to our proppant management systems and inventory management software. Given the inherent uncertainty in determining the assumptions underlying both undiscounted and discounted cash flow analyses, particularly in the current volatile market, actual results may differ which could result in additional impairment charges. We estimated the fair value of the Kingfisher Facility using an income approach including a discounted cash flow analysis and the use of significant unobservable inputs representative of a Level 3 fair value measurement. Some of the more significant assumptions inherent in the income approach include the estimated future net annual cash flows for each reporting unit and the discount rate. The Company selected assumptions used in the discounted cash flow projections using historical data supplemented by current and anticipated market conditions and estimated growth rates. These estimates are based upon assumptions believed to be reasonable. The discount rates used to value this reporting unit were between 10.35% and 13.00%. Limited marketability for the assets group exist in the current volatile market and the analysis resulted in a full impairment of the long-lived assets of the reporting unit. There were no impairment indicators for the three or six months ended June 30, 2019. Accounting Standards Recently Adopted In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) which replaces the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 requires the use of a forward-looking expected credit loss model for accounts receivables, loans and other financial instruments. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. We adopted ASU 2016-13 effective January 1, 2020, which did not have an impact on our condensed consolidated financial statements. Recently Issued Accounting Standards In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform, which provides temporary optional guidance to companies impacted by the transition away from the London Interbank Offered Rate (“LIBOR”). The guidance provides certain expedients and exceptions to applying GAAP in order to lessen the potential accounting burden when contracts, hedging relationships, and other transactions that reference LIBOR as a benchmark rate are modified. This guidance is effective upon issuance and expires on December 31, 2022. The Company is currently assessing the impact of the LIBOR transition and this ASU on the Company’s financial statements. |
Accounts Receivable and Allowan
Accounts Receivable and Allowance for Credit Losses | 6 Months Ended |
Jun. 30, 2020 | |
Accounts Receivable and Allowance for Credit Losses | |
Accounts Receivable and Allowance for Credit Losses | 3. Accounts Receivable and Allowance for Credit Losses Accounts receivable consists of trade receivables recorded at the invoice amount, plus accrued revenue that is not yet billed, less an estimated allowance for credit losses (if any). Accounts receivable are generally due within 60 days or less, or in accordance with terms agreed with customers. We do not accrue interest on delinquent receivables. Total unbilled revenue included in accounts receivable as of June 30, 2020 and December 31, 2019 was $1,338 and $7,423, respectively. In our determination of the allowance for credit losses, we pool receivables with similar risk characteristics and consider a number of current conditions, past events and other factors, including the length of time trade accounts receivable are past due, previous loss history, and the condition of the general economy and the industry as a whole, and apply an expected loss percentage. The expected credit loss percentage is determined using historical loss data adjusted for current conditions and forecasts of future economic conditions. Accounts deemed uncollectible are applied against the allowance for credit losses. The related expense was included in Selling, general and administrative expense on the condensed consolidated statements of operations. The following activity related to our allowance for credit losses on customer receivables for the six months ended June 30, 2020 reflects the estimated impact of the current economic environment on our receivable balance: (in thousands) Balance, December 31, 2019 $ 339 Credit losses 1,633 Less writeoffs (896) Balance, June 30, 2020 $ 1,076 No allowance for credit losses were recognized in the six months ended June 30, 2019. |
Property, Plant and Equipment
Property, Plant and Equipment | 6 Months Ended |
Jun. 30, 2020 | |
Property, Plant and Equipment. | |
Property, Plant and Equipment | 4. Property, Plant and Equipment Property, plant and equipment was comprised of the following at June 30, 2020 and December 31, 2019: June 30, December 31, 2020 2019 Systems and related equipment 297,297 $ 294,547 Systems in process 11,386 11,867 Transloading facility and equipment — 40,272 Computer hardware and software 980 1,335 Machinery and equipment 5,242 5,214 Vehicles 3,736 7,633 Buildings 4,342 4,339 Land 612 612 Furniture and fixtures 238 284 Property, plant and equipment, gross 323,833 366,103 Less: accumulated depreciation (68,294) (59,520) Property, plant and equipment, net $ 255,539 $ 306,583 Depreciation expense for the three months ended June 30, 2020 and 2019 was $6,480 and $6,429, respectively. As described in Note 2, $37,775 of impairment losses were recognized for property, plant and equipment, associated primarily with transloading facility and equipment during the three months ended March 31, 2020. There were no impairment indicators for the three and six months ended June 30, 2019 and for the three months ended June 30, 2020. |
Definite-lived Intangible Asset
Definite-lived Intangible Assets | 6 Months Ended |
Jun. 30, 2020 | |
Definite-lived Intangible Assets | |
Definite-lived Intangible Assets | 5. Definite-lived Intangible Assets Definite-lived Intangible Assets Identified intangible assets with determinable lives consist primarily of customer relationships, a non-competition agreement and software acquired in the acquisition of Railtronix, as well as patents that were filed for our systems and other intellectual property. Amortization on these assets is calculated on the straight-line method over the estimated useful lives of the assets, which is five Identified intangible assets by major classification consist of the following at June 30, 2020 and December 31, 2019: Accumulated Net Book Gross Amortization Value As of June 30, 2020: Customer relationships $ 4,703 $ (1,735) $ 2,968 Software acquired in the acquisition of Railtronix 346 (128) 218 Non-competition agreement 225 (116) 109 Patents and other 114 (37) 77 Total identifiable intangibles $ 5,388 $ (2,016) $ 3,372 As of December 31, 2019: Customer relationships $ 4,703 $ (1,400) $ 3,303 Software acquired in the acquisition of Railtronix 346 (103) 243 Non-competition agreement 225 (94) 131 Patents and other 114 (30) 84 Total identifiable intangibles $ 5,388 $ (1,627) $ 3,761 |
Accrued Liabilities
Accrued Liabilities | 6 Months Ended |
Jun. 30, 2020 | |
Accrued Liabilities | |
Accrued Liabilities | 6. Accrued Liabilities Accrued liabilities were comprised of the following at June 30, 2020 and December 31, 2019: June 30, December 31, 2020 2019 Property, plant and equipment $ 26 $ 47 Employee related expenses 2,135 4,129 Selling, general and administrative 742 1,016 Cost of revenue 786 5,062 Excise, franchise and sales taxes 2,271 2,526 Ad valorem taxes 304 1,598 Other 69 69 Accrued liabilities $ 6,333 $ 14,447 |
Leases
Leases | 6 Months Ended |
Jun. 30, 2020 | |
Leases | |
Leases | 7. Leases The Company has operating and finance leases for equipment, office space, land and facilities. The terms and conditions for these leases vary by type of underlying asset. As described in Note 2, $2,845 of impairment losses were recognized in relation to operating lease ROU assets, during the three months ended March 31, 2020. Operating leases include the guarantee of lease agreement with Solaris Energy Management, LLC, a related party of the Company, related to the rental of office space for the Company's corporate headquarters. Refer to Note 13. “Related Party Transactions” for additional information regarding related party transactions recognized. The components of lease expense were as follows: Three Months Ended Three Months Ended Six Months Ended Six Months Ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Operating lease cost (1) (2) $ 256 $ 297 $ 511 $ 593 Finance lease cost Amortization of ROU assets 8 8 8 16 Interest on lease liabilities 1 1 1 2 Total finance lease cost $ 9 $ 9 $ 9 $ 18 (1) Includes short term leases. (2) Operating lease costs of $185, $20 and $51 were reported in Selling, general and administrative, Cost of system services and Cost of transloading services for the three months ended June 30, 2020, respectively. Operating lease costs of $185, $20 and $92 were reported in Selling, general and administrative, Cost of system services and Cost of transloading services for the three months ended June 30, 2019, respectively. Operating lease costs of $370, $39 and $102 were reported in Selling, general and administrative, Cost of system services and Cost of transloading services for the six months ended June 30, 2020, respectively. Operating lease costs of $370, $39 and $184 were reported in Selling, general and administrative, Cost of system services and Cost of transloading services for the six months ended June 30, 2019, respectively. No variable lease costs were recognized during the three and six months ended June 30, 2020 and 2019. Future minimum lease payments under non-cancellable leases as of June 30, 2020 were as follows: Year Ending December 31, Operating Leases Finance Leases 2020 (remainder of) $ 478 18 2021 1,060 33 2022 1,091 33 2023 1,100 33 2024 1,109 33 Thereafter 8,353 7 Total future minimum lease payments 13,191 157 Less: effects of discounting (5,114) (12) Total lease liabilities $ 8,077 $ 145 Supplemental cash flow information related to leases was as follows: Three Months Ended Three Months Ended Six Months Ended Six Months Ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Supplemental Cash Flows Information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 395 $ 394 $ 638 $ 633 Financing cash flows from finance leases 9 9 18 18 Other information related to leases was as follows: June 30, 2020 Weighted Average Remaining Lease Term Operating leases 13.8 Finance leases 5.1 Weighted Average Discount Rate Operating leases 6.3% Finance leases 3.3% |
Debt
Debt | 6 Months Ended |
Jun. 30, 2020 | |
Debt | |
Debt | 8. Debt Senior Secured Credit Facility On April 26, 2019, Solaris LLC entered into an Amended and Restated Credit Agreement (the “2019 Credit Agreement”) by and among Solaris LLC, as borrower, each of the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent. The 2019 Credit Agreement consists of an initial $50,000 revolving loan commitment (the “Loan”) with a $25,000 uncommitted accordion option to increase the Loan availability to $75,000. The term of the 2019 Credit Agreement expires on April 26, 2022. The 2019 Credit Agreement requires that we prepay any outstanding borrowings under the Loan in the event our total leverage ratio is greater than 1.00 to 1.00 and our consolidated cash balance exceeds $20,000, taking into account certain adjustments. At June 30, 2020, we had no borrowings under the 2019 Credit Agreement outstanding and ability to draw $50,000. Although there were no borrowings outstanding under the 2019 Credit Agreement, the applicable margin ranges from 1.75% to 2.50% for Eurodollar loans and 0.75% to 1.50% for alternate base rate loans, in each case depending on our total leverage ratio. The 2019 Credit Agreement requires that we pay a quarterly commitment fee on undrawn amounts of the Loan, ranging from 0.25% to 0.375 % depending upon the total leverage ratio. We were in compliance with all covenants in accordance with the 2019 Credit Agreement as of June 30, 2020. |
Equity
Equity | 6 Months Ended |
Jun. 30, 2020 | |
Equity | |
Equity | 9. Equity Dividends Solaris LLC paid distributions totaling $4,755 and $4,758 to all Solaris LLC unitholders in the three months ended June 30, 2020 and 2019, respectively, of which $3,087 and $3,164 was paid to Solaris Inc. Solaris LLC paid distributions totaling $9,507 and $9,515 to all Solaris LLC unitholders in the six months ended June 30, 2020 and 2019, respectively, of which $6,176 and $6,280 was paid to Solaris Inc. Solaris Inc. used the proceeds from the distributions to pay quarterly cash dividends to all holders of shares of Class A common stock. Share Repurchase Program During the three months ended March 31, 2020, Solaris Inc. purchased and retired 2,374,092 shares of the Company’s Class A common stock for $26,746, or $11.27 average price per share, and, in connection therewith, Solaris LLC purchased and retired 2,374,092 Solaris LLC Units from the Company for the same amount. During the full share repurchase plan, Solaris Inc. purchased and retired 2,626,022 shares of the Company’s Class A common stock for $30,000, or $11.41 average price per share, and, in connection therewith, Solaris LLC purchased and retired 2,626,022 Solaris LLC Units from the Company for the same amount. As of March 31, 2020, the share repurchase plan was completed. Treasury Stock Retirement During the six months ended June 30, 2020, the Company cancelled and retired, 207,382 shares of treasury stock. No shares were retired during the three and six months ended June 30, 2019. Stock-based compensation The Company’s long-term incentive plan for employees, directors and consultants (the “LTIP”) provides for the grant of all or any of the following types of equity-based awards: (1) incentive stock options qualified as such under United States federal income tax laws; (2) stock options that do not qualify as incentive stock options; (3) stock appreciation rights; (4) restricted stock awards; (5) restricted stock units; (6) bonus stock; (7) performance awards; (8) dividend equivalents; (9) other stock-based awards; (10) cash awards; and (11) substitute awards. Subject to adjustment in accordance with the terms of the LTIP, 5,118,080 shares of Solaris Inc.’s Class A common stock have been reserved for issuance pursuant to awards under the LTIP. As of June 30, 2020, 3,538,005 stock awards were available for grant. The following table summarizes activity related to restricted stock for the three and six months ended June 30, 2020 and 2019: Restricted Stock Awards 2020 2019 Unvested at January 1, 627,251 411,497 Awarded 386,146 375,068 Vested (141,700) (706) Forfeited (32,845) (405) Unvested at March 31, 838,852 785,454 Awarded 10,194 29,847 Vested (80,203) (67,674) Forfeited (37,164) (7,896) Unvested at June 30, 731,679 739,731 Of the unvested 731,679 shares restricted stock, it is expected that 102,164 shares, 264,046 shares, 249,839 shares, and 115,630 shares will vest in 2020, 2021, 2022 and 2023, respectively, in each case, subject to the applicable vesting terms governing such shares of restricted stock. There was approximately $6,918 of unrecognized compensation expense related to unvested restricted stock as of June 30, 2020. The unrecognized compensation expense will be recognized over the weighted average remaining vesting period of 2.6 years . Earnings Per Share Basic earnings per share of Class A common stock is computed by dividing net income attributable to Solaris Inc. by the weighted-average number of shares of Class A common stock outstanding during the same period. Diluted earnings per share is computed giving effect to all potentially dilutive shares. The following table sets forth the calculation of earnings per share, or EPS, for the three months ended June 30, 2020 and 2019: Three Months Ended June 30, Six Months Ended June 30, Basic net income per share: 2020 2019 2020 2019 Numerator Net income (loss) attributable to Solaris $ (5,540) $ 13,275 $ (24,623) $ 25,592 Loss (income) attributable to participating securities (1) — (322) — (575) Net income (loss) attributable to common stockholders $ (5,540) $ 12,953 $ (24,623) $ 25,017 Denominator Weighted average number of unrestricted outstanding common shares used to calculate basic net income per share 28,638 30,609 28,975 29,326 Effect of dilutive securities: Stock options — 35 — 61 Diluted weighted-average shares of Class A common stock outstanding used to calculate diluted net income per share 28,638 30,644 28,975 29,387 Earnings per share of Class A common stock - basic $ (0.20) $ 0.42 $ (0.85) $ 0.85 Earnings per share of Class A common stock - diluted $ (0.20) $ 0.42 $ (0.85) $ 0.85 (1) The Company’s restricted shares of common stock are participating securities. The following number of weighted-average potentially dilutive shares were excluded from the calculation of diluted earnings per share because the effect of including such potentially dilutive shares would have been antidilutive upon conversion: Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Class B common stock 15,856 16,202 15,889 17,450 Restricted stock awards 761 231 726 71 Stock Options 13 — 17 — Total 16,630 16,433 16,632 17,521 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2020 | |
Income Taxes | |
Income Taxes | 10. Income Taxes Income Taxes Based on our cumulative earnings history and forecasted future sources of taxable income, we believe that we will be able to realize our deferred tax assets in the future. As the Company reassesses this position in the future, changes in cumulative earnings history, excluding non-recurring charges, or changes to forecasted taxable income may alter this expectation and may result in an increase in the valuation allowance and an increase in the effective tax rate. Payables Related to the Tax Receivable Agreement been recorded as a current liability, respectively. The increase in payables related to the Tax Receivable Agreement is a result of Solaris Inc.’s acquisition (or deemed acquisition for United States federal income tax purposes) of Solaris LLC Units from TRA Holders during the three months ended June 30, 2020. |
Concentrations
Concentrations | 6 Months Ended |
Jun. 30, 2020 | |
Concentrations | |
Concentrations | 11. Concentrations For the three months ended June 30, 2020, two customers accounted for 11% and 10% of the Company’s revenues. For the three months ended June 30, 2019, three customers accounted for 13%, 12%, and 11% of the Company’s revenues. For the six months ended June 30, 2020, no customer accounted for more than 10% of the Company’s revenues. For the six months ended June 30, 2019, four customers accounted for 14%, 12%, 11% and 11% of the Company’s revenues. As of June 30, 2020, two customers accounted 17% and 10% of the Company’s accounts receivable. As of December 31, 2019, one customer accounted for 15% of the Company’s accounts receivable. For the three months ended June 30, 2020, one supplier accounted for 40% of the Company’s total purchases. For the three months ended June 30, 2019, one supplier accounted for 12% of the Company’s total purchases. For the six months ended June 30, 2020, one supplier accounted for 36 % of the Company’s total purchases. For the six months ended June 30, 2019, no supplier accounted for more than 10% or more of the Company’s total purchases. As of June 30, 2020, three suppliers accounted for 19%, 18% and 15% of the Company’s accounts payable. As of December 31, 2019, one supplier accounted for 44% of the Company’s accounts payable. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies | |
Commitments and Contingencies | 12. Commitments and Contingencies In the normal course of business, the Company is subjected to various claims, legal actions, contract negotiations and disputes. The Company provides for losses, if any, in the year in which they can be reasonably estimated. In management’s opinion, there are currently no such matters outstanding that would have a material effect on the accompanying condensed consolidated financial statements. Commitment fees on our Revolving Loan are $229 which were calculated based on the unused portion of lender commitments, at the applicable commitment fee rate of 0.25%. See Note 8. “Debt,” for interest requirements per the 2019 Credit Agreement. Purchase commitments of $460 primarily relate to agreements with our suppliers for material and part purchases to be used in manufacturing or maintenance activities. The purchase commitments represent open purchase orders to our suppliers. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2020 | |
Related Party Transactions | |
Related Party Transactions | 13. Related Party Transactions The Company recognizes certain costs incurred in relation to transactions primarily incurred in connection with the amended and restated administrative services agreement, dated May 17, 2017, between Solaris LLC and Solaris Energy Management, LLC, a company partially owned by William A. Zartler, the Chief Executive Officer and Chairman of the Board. These services include rent paid for office space, travel services, personnel, consulting and administrative costs. For the three months ended June 30, 2020 and 2019, Solaris LLC paid $191 and $341, respectively, for these services. For the six months ended June 30, 2020 and 2019, Solaris LLC paid $405 and $619, respectively, for these services. As of June 30, 2020 and December 31, 2019, the Company included $231 and $233, respectively, in prepaid expenses and other current assets on the condensed consolidated balance sheets. As of June 30, 2020 and December 31, 2019, the Company included $58 and $74, respectively, of accruals to related parties in accrued liabilities on the condensed consolidated balance sheets. The Company has executed a guarantee of lease agreement with Solaris Energy Management, LLC, a related party of the Company, related to the rental of office space for the Company’s corporate headquarters. The total future guaranty under the guarantee of lease agreement with Solaris Energy Management, LLC is $4,540 as of June 30, 2020. Refer to Note 7. “Leases” for operating lease discussion. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Summary of Significant Accounting Policies | |
Basis of Presentation and Consolidation | Basis of Presentation and Consolidation The accompanying interim unaudited condensed consolidated financial statements of Solaris Oilfield Infrastructure, Inc. (either individually or together with its subsidiaries, as the context requires, “Solaris Inc.” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). These financial statements reflect all normal recurring adjustments that are necessary for fair presentation. Operating results for the three and six months ended June 30, 2020 and 2019 are not necessarily indicative of the results that may be expected for the full year or for any interim period. The unaudited interim condensed consolidated financial statements do not include all information or notes required by GAAP for annual financial statements and should be read together with Solaris Inc.’s Annual Report on Form 10-K for the year ended December 31, 2019 and notes thereto. Solaris Inc. is the managing member of Solaris Oilfield Infrastructure, LLC (“Solaris LLC”) and is responsible for all operational, management and administrative decisions relating to Solaris LLC's business. Solaris Inc. consolidates the financial results of Solaris LLC and its subsidiaries and reports non-controlling interest related to the portion of the units in Solaris LLC (the “Solaris LLC Units”) not owned by Solaris Inc., which will reduce net income attributable to the holders of Solaris Inc.’s Class A common stock All material intercompany transactions and balances have been eliminated upon consolidation. |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates used in the preparation of these condensed consolidated financial statements include, but are not limited to, collectability of accounts receivable, stock-based compensation, depreciation associated with property, plant and equipment and related impairment considerations of those assets, impairment considerations of goodwill, determination of fair value of intangible assets acquired in business combinations, income taxes, determination of the present value of lease payments and right-of-use assets, inventory valuation and certain other assets and liabilities. Actual results could differ from management’s best estimates as additional information or actual results become available in the future, and those differences could be material. |
Inventories | Inventories consist of materials used in the manufacturing of the Company’s systems, which include raw materials and purchased parts and is stated at the lower of cost or net realizable value. Net realizable value is determined, giving consideration to quality, excessive levels, obsolescence and other factors. Adjustments that reduce stated amounts will be recognized as impairments in the condensed consolidated statements of operations. The Company recognized a write down of the carrying value of inventory of $2.6 million to its net realizable value during the six months ended June 30, 2020. There were no impairments recorded for the three months ended June 30, 2020 and 2019 or for the six months ended June 30, 2019. |
Goodwill | Goodwill Due to the impact of the outbreak of COVID-19 and recent oil market developments on our business, we updated our goodwill impairment assessment as of March 31, 2020. We estimated the fair value for each reporting unit using an income approach including a discounted cash flow analysis and the use of significant unobservable inputs representative of a Level 3 fair value measurement. Some of the more significant assumptions inherent in the income approach include the estimated future net annual cash flows for each reporting unit and the discount rate. The Company selected assumptions used in the discounted cash flow projections using historical data supplemented by current and anticipated market conditions, near term declines and estimated growth rates. These estimates are based upon assumptions believed to be reasonable. However, given the inherent uncertainty in determining the assumptions underlying a discounted cash flow analysis, particularly in the current volatile market, actual results may differ from those used in the Company’s valuations which could result in additional impairment charges in the future. The discount rates used to value the Company’s reporting units were between 10.35% and 13.00%. As a result of the March 31, 2020 evaluation of goodwill, $4,231 of goodwill associated with the 2017 purchase of the assets of Railtronix was impaired during the three months ended March 31. 2020. The goodwill associated with the Loadcraft Industries Ltd. purchase was not impaired. An impairment charge would have resulted if our estimate of fair value was approximately 40% less than the amount determined. No additional facts or circumstances warranted an impairment assessment as of June 30, 2020 and no impairment charges were recognized for the three month period then ended. |
Impairment of Long-Lived Assets, Definite-lived Intangible Assets and ROU Assets | As a result of recent volatility in global oil markets driven by significant reductions in demand for oil due to COVID-19 and certain actions by oil producers globally and the expected impact on our businesses, operations and earnings, the Company concluded that such circumstances warranted an evaluation of whether indicators of impairment are present for its asset groups as of March 31, 2020. Based on this evaluation, the Company performed tests for recoverability of the carrying value of these assets using forecasted undiscounted cash flows. The Company noted that the undiscounted cash flows as well as the fair value of the assets associated with our Kingfisher Facility exceeded their carrying values and the Company recognized impairment losses of $37,775, $2,845 and $410 for property, plant and equipment, ROU assets and other receivables, respectively during the three months ended March 31, 2020 and six month ended June 30, 2020. These impairments resulted from an accumulation of factors leading to the loss of significant customers, reduced operating activities and earnings, including impacts resulting from continued volatility in global oil markets and the COVID-19 pandemic. No additional facts or circumstances indicated that indicators of impairment have become present during the three months ended June 30, 2020. However, if these conditions persist for an extended period of time, additional impairment losses may be recognized in relation to our proppant management systems and inventory management software. Given the inherent uncertainty in determining the assumptions underlying both undiscounted and discounted cash flow analyses, particularly in the current volatile market, actual results may differ which could result in additional impairment charges. We estimated the fair value of the Kingfisher Facility using an income approach including a discounted cash flow analysis and the use of significant unobservable inputs representative of a Level 3 fair value measurement. Some of the more significant assumptions inherent in the income approach include the estimated future net annual cash flows for each reporting unit and the discount rate. The Company selected assumptions used in the discounted cash flow projections using historical data supplemented by current and anticipated market conditions and estimated growth rates. These estimates are based upon assumptions believed to be reasonable. The discount rates used to value this reporting unit were between 10.35% and 13.00%. Limited marketability for the assets group exist in the current volatile market and the analysis resulted in a full impairment of the long-lived assets of the reporting unit. There were no impairment indicators for the three or six months ended June 30, 2019. |
Recent Accounting Standards | In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) which replaces the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 requires the use of a forward-looking expected credit loss model for accounts receivables, loans and other financial instruments. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. We adopted ASU 2016-13 effective January 1, 2020, which did not have an impact on our condensed consolidated financial statements. Recently Issued Accounting Standards In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform, which provides temporary optional guidance to companies impacted by the transition away from the London Interbank Offered Rate (“LIBOR”). The guidance provides certain expedients and exceptions to applying GAAP in order to lessen the potential accounting burden when contracts, hedging relationships, and other transactions that reference LIBOR as a benchmark rate are modified. This guidance is effective upon issuance and expires on December 31, 2022. The Company is currently assessing the impact of the LIBOR transition and this ASU on the Company’s financial statements. |
Accounts Receivable and Allow_2
Accounts Receivable and Allowance for Credit Losses (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Accounts Receivable and Allowance for Credit Losses | |
Schedule of allowance for credit losses | (in thousands) Balance, December 31, 2019 $ 339 Credit losses 1,633 Less writeoffs (896) Balance, June 30, 2020 $ 1,076 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Property, Plant and Equipment. | |
Schedule of property plant and equipment | June 30, December 31, 2020 2019 Systems and related equipment 297,297 $ 294,547 Systems in process 11,386 11,867 Transloading facility and equipment — 40,272 Computer hardware and software 980 1,335 Machinery and equipment 5,242 5,214 Vehicles 3,736 7,633 Buildings 4,342 4,339 Land 612 612 Furniture and fixtures 238 284 Property, plant and equipment, gross 323,833 366,103 Less: accumulated depreciation (68,294) (59,520) Property, plant and equipment, net $ 255,539 $ 306,583 |
Definite-lived Intangible Ass_2
Definite-lived Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Definite-lived Intangible Assets | |
Schedule of intangible assets by major classification | Accumulated Net Book Gross Amortization Value As of June 30, 2020: Customer relationships $ 4,703 $ (1,735) $ 2,968 Software acquired in the acquisition of Railtronix 346 (128) 218 Non-competition agreement 225 (116) 109 Patents and other 114 (37) 77 Total identifiable intangibles $ 5,388 $ (2,016) $ 3,372 As of December 31, 2019: Customer relationships $ 4,703 $ (1,400) $ 3,303 Software acquired in the acquisition of Railtronix 346 (103) 243 Non-competition agreement 225 (94) 131 Patents and other 114 (30) 84 Total identifiable intangibles $ 5,388 $ (1,627) $ 3,761 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Accrued Liabilities | |
Schedule of accrued liabilities | June 30, December 31, 2020 2019 Property, plant and equipment $ 26 $ 47 Employee related expenses 2,135 4,129 Selling, general and administrative 742 1,016 Cost of revenue 786 5,062 Excise, franchise and sales taxes 2,271 2,526 Ad valorem taxes 304 1,598 Other 69 69 Accrued liabilities $ 6,333 $ 14,447 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Leases | |
Schedule of components of lease expense | Three Months Ended Three Months Ended Six Months Ended Six Months Ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Operating lease cost (1) (2) $ 256 $ 297 $ 511 $ 593 Finance lease cost Amortization of ROU assets 8 8 8 16 Interest on lease liabilities 1 1 1 2 Total finance lease cost $ 9 $ 9 $ 9 $ 18 (1) Includes short term leases. (2) Operating lease costs of $185, $20 and $51 were reported in Selling, general and administrative, Cost of system services and Cost of transloading services for the three months ended June 30, 2020, respectively. Operating lease costs of $185, $20 and $92 were reported in Selling, general and administrative, Cost of system services and Cost of transloading services for the three months ended June 30, 2019, respectively. Operating lease costs of $370, $39 and $102 were reported in Selling, general and administrative, Cost of system services and Cost of transloading services for the six months ended June 30, 2020, respectively. Operating lease costs of $370, $39 and $184 were reported in Selling, general and administrative, Cost of system services and Cost of transloading services for the six months ended June 30, 2019, respectively. No variable lease costs were recognized during the three and six months ended June 30, 2020 and 2019. |
Schedule of future minimum operating lease payments | Future minimum lease payments under non-cancellable leases as of June 30, 2020 were as follows: Year Ending December 31, Operating Leases Finance Leases 2020 (remainder of) $ 478 18 2021 1,060 33 2022 1,091 33 2023 1,100 33 2024 1,109 33 Thereafter 8,353 7 Total future minimum lease payments 13,191 157 Less: effects of discounting (5,114) (12) Total lease liabilities $ 8,077 $ 145 |
Schedule of future minimum finance lease payments | Future minimum lease payments under non-cancellable leases as of June 30, 2020 were as follows: Year Ending December 31, Operating Leases Finance Leases 2020 (remainder of) $ 478 18 2021 1,060 33 2022 1,091 33 2023 1,100 33 2024 1,109 33 Thereafter 8,353 7 Total future minimum lease payments 13,191 157 Less: effects of discounting (5,114) (12) Total lease liabilities $ 8,077 $ 145 |
Schedule of other information | Supplemental cash flow information related to leases was as follows: Three Months Ended Three Months Ended Six Months Ended Six Months Ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Supplemental Cash Flows Information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 395 $ 394 $ 638 $ 633 Financing cash flows from finance leases 9 9 18 18 Other information related to leases was as follows: June 30, 2020 Weighted Average Remaining Lease Term Operating leases 13.8 Finance leases 5.1 Weighted Average Discount Rate Operating leases 6.3% Finance leases 3.3% |
Equity (Tables)
Equity (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Equity | |
Summary of activity related to restricted stock | Restricted Stock Awards 2020 2019 Unvested at January 1, 627,251 411,497 Awarded 386,146 375,068 Vested (141,700) (706) Forfeited (32,845) (405) Unvested at March 31, 838,852 785,454 Awarded 10,194 29,847 Vested (80,203) (67,674) Forfeited (37,164) (7,896) Unvested at June 30, 731,679 739,731 |
Schedule of earnings per share calculation | Three Months Ended June 30, Six Months Ended June 30, Basic net income per share: 2020 2019 2020 2019 Numerator Net income (loss) attributable to Solaris $ (5,540) $ 13,275 $ (24,623) $ 25,592 Loss (income) attributable to participating securities (1) — (322) — (575) Net income (loss) attributable to common stockholders $ (5,540) $ 12,953 $ (24,623) $ 25,017 Denominator Weighted average number of unrestricted outstanding common shares used to calculate basic net income per share 28,638 30,609 28,975 29,326 Effect of dilutive securities: Stock options — 35 — 61 Diluted weighted-average shares of Class A common stock outstanding used to calculate diluted net income per share 28,638 30,644 28,975 29,387 Earnings per share of Class A common stock - basic $ (0.20) $ 0.42 $ (0.85) $ 0.85 Earnings per share of Class A common stock - diluted $ (0.20) $ 0.42 $ (0.85) $ 0.85 (1) The Company’s restricted shares of common stock are participating securities. |
Schedule of antidilutive shares | Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Class B common stock 15,856 16,202 15,889 17,450 Restricted stock awards 761 231 726 71 Stock Options 13 — 17 — Total 16,630 16,433 16,632 17,521 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Impairments (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020USD ($)item | Mar. 31, 2020USD ($)item | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)item | Jun. 30, 2019USD ($) | |
Intangible assets by major classification | |||||
Inventory write-down | $ 0 | $ 0 | $ 2,600 | $ 0 | |
Goodwill impairment | $ 0 | ||||
Impairment of long-lived assets | 0 | 0 | |||
Measurement Input, Discount Rate | Minimum | |||||
Intangible assets by major classification | |||||
Asset measurement input | item | 10.35 | 10.35 | 10.35 | ||
Measurement Input, Discount Rate | Maximum | |||||
Intangible assets by major classification | |||||
Asset measurement input | item | 13 | 13 | 13 | ||
Property, Plant and Equipment | |||||
Intangible assets by major classification | |||||
Impairment of long-lived assets | $ 0 | $ 37,775 | $ 0 | $ 0 | |
ROU asset | |||||
Intangible assets by major classification | |||||
Impairment of long-lived assets | 2,845 | ||||
Accounts receivable | |||||
Intangible assets by major classification | |||||
Impairment of long-lived assets | 410 | ||||
Railtronix LLC | |||||
Intangible assets by major classification | |||||
Goodwill impairment | $ 4,231 | ||||
Loadcraft Industries Ltd | |||||
Intangible assets by major classification | |||||
Estimate change needed (as a percent) | 40.00% |
Accounts Receivable and Allow_3
Accounts Receivable and Allowance for Credit Losses (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Accounts Receivable and Allowance for Credit Losses | |||
Accounts receivable due maximum period | 60 days | ||
Unbilled revenue | $ 1,338 | $ 7,423 | |
Allowance for credit losses, beginning | 339 | ||
Credit losses | 1,633 | $ 0 | |
Less writeoffs | (896) | ||
Allowance for credit losses, ending | $ 1,076 |
Property, Plant and Equipment_2
Property, Plant and Equipment (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Property, Plant and Equipment | ||
Property, plant and equipment, gross | $ 323,833 | $ 366,103 |
Less: accumulated depreciation | (68,294) | (59,520) |
Property, plant and equipment, net | 255,539 | 306,583 |
Systems and related equipment | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 297,297 | 294,547 |
Systems in process | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 11,386 | 11,867 |
Transloading facility and equipment | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 40,272 | |
Computer hardware and software | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 980 | 1,335 |
Machinery and equipment | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 5,242 | 5,214 |
Vehicles | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 3,736 | 7,633 |
Buildings | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 4,342 | 4,339 |
Land | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 612 | 612 |
Furniture and fixtures | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | $ 238 | $ 284 |
Property, Plant and Equipment -
Property, Plant and Equipment - Depreciation (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Property, Plant and Equipment | |||||
Depreciation expense | $ 6,480 | $ 6,429 | |||
Capitalized depreciation in property, plant and equipment | $ 316 | $ 372 | |||
Impairment of long-lived assets | 0 | 0 | |||
Property, Plant and Equipment | |||||
Property, Plant and Equipment | |||||
Impairment of long-lived assets | $ 0 | $ 37,775 | $ 0 | $ 0 |
Definite-lived Intangible Ass_3
Definite-lived Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Intangible assets by major classification | |||||
Intangible amortization expense | $ 191 | $ 194 | $ 389 | $ 389 | |
Gross | 5,388 | 5,388 | $ 5,388 | ||
Accumulated Amortization | (2,016) | (2,016) | (1,627) | ||
Net Book Value | 3,372 | $ 3,372 | 3,761 | ||
Minimum | |||||
Intangible assets by major classification | |||||
Definite-lived intangible assets useful life | 5 years | ||||
Maximum | |||||
Intangible assets by major classification | |||||
Definite-lived intangible assets useful life | 15 years | ||||
Customer relationships | |||||
Intangible assets by major classification | |||||
Gross | 4,703 | $ 4,703 | 4,703 | ||
Accumulated Amortization | (1,735) | (1,735) | (1,400) | ||
Net Book Value | 2,968 | 2,968 | 3,303 | ||
Software acquired in the acquisition of Railtronix | |||||
Intangible assets by major classification | |||||
Gross | 346 | 346 | 346 | ||
Accumulated Amortization | (128) | (128) | (103) | ||
Net Book Value | 218 | 218 | 243 | ||
Non-competition agreement | |||||
Intangible assets by major classification | |||||
Gross | 225 | 225 | 225 | ||
Accumulated Amortization | (116) | (116) | (94) | ||
Net Book Value | 109 | 109 | 131 | ||
Patents and other | |||||
Intangible assets by major classification | |||||
Gross | 114 | 114 | 114 | ||
Accumulated Amortization | (37) | (37) | (30) | ||
Net Book Value | $ 77 | $ 77 | $ 84 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Accrued Liabilities | ||
Property, plant and equipment | $ 26 | $ 47 |
Employee related expenses | 2,135 | 4,129 |
Selling, general and administrative | 742 | 1,016 |
Cost of revenue | 786 | 5,062 |
Excise, franchise and sales taxes | 2,271 | 2,526 |
Ad valorem taxes | 304 | 1,598 |
Other | 69 | 69 |
Accrued liabilities | $ 6,333 | $ 14,447 |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Mar. 31, 2020 | Jun. 30, 2019 | Jun. 30, 2019 | |
Leases | |||
Impairment of long-lived assets | $ 0 | $ 0 | |
ROU asset | |||
Leases | |||
Impairment of long-lived assets | $ 2,845 |
Leases - Lease cost (Details)
Leases - Lease cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Leases | ||||
Operating lease cost | $ 256 | $ 297 | $ 511 | $ 593 |
Amortization of ROU assets | 8 | 8 | 8 | 16 |
Interest on lease liabilities | 1 | 1 | 1 | 2 |
Total finance lease cost | 9 | 9 | 9 | 18 |
Variable lease costs | 0 | 0 | 0 | 0 |
Selling, general and administrative expenses | ||||
Leases | ||||
Operating lease cost | 185 | 185 | 370 | 370 |
Cost of sales | System rental | ||||
Leases | ||||
Operating lease cost | 20 | 20 | 39 | 39 |
Cost of sales | Transloading services | ||||
Leases | ||||
Operating lease cost | $ 51 | $ 92 | $ 102 | $ 184 |
Leases - Maturities (Details)
Leases - Maturities (Details) $ in Thousands | Jun. 30, 2020USD ($) |
Operating lease obligations | |
2019 (remainder of) | $ 478 |
2021 | 1,060 |
2022 | 1,091 |
2023 | 1,100 |
2024 | 1,109 |
Thereafter | 8,353 |
Total future minimum lease payments | 13,191 |
Less: effects of discounting | (5,114) |
Total lease liabilities | 8,077 |
Finance lease obligations | |
2019 (remainder of) | 18 |
2021 | 33 |
2022 | 33 |
2023 | 33 |
2024 | 33 |
Thereafter | 7 |
Total future minimum lease payments | 157 |
Less: effects of discounting | (12) |
Total lease liabilities | $ 145 |
Leases - Other (Details)
Leases - Other (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Leases | ||||
Operating cash flows from operating leases | $ 395 | $ 394 | $ 638 | $ 633 |
Financing cash flows from finance leases | $ 9 | $ 9 | $ 18 | $ 18 |
Weighted Average Remaining Lease Term - Operating leases | 13 years 9 months 18 days | 13 years 9 months 18 days | ||
Weighted Average Remaining Lease Term - Finance leases | 5 years 1 month 6 days | 5 years 1 month 6 days | ||
Weighted Average Discount Rate - Operating leases | 6.30% | 6.30% | ||
Weighted Average Discount Rate - Finance leases | 3.30% | 3.30% |
Debt (Details)
Debt (Details) - 2019 Credit Agreement $ in Thousands | 6 Months Ended | ||
Jun. 30, 2020USD ($) | Dec. 31, 2019USD ($) | Apr. 26, 2019USD ($) | |
Debt | |||
Maximum borrowing | $ 50,000 | ||
Potential additional borrowing available | 25,000 | ||
Maximum borrowing capacity with accordion option | $ 75,000 | ||
Leverage ratio for threshold | 1 | ||
Cash threshold triggering repayment | $ 20,000 | ||
Outstanding credit facility | $ 0 | $ 0 | |
Remaining borrowing capacity | $ 50,000 | ||
Commitment fee (as a percent) | 0.25% | ||
Minimum | |||
Debt | |||
Commitment fee (as a percent) | 0.25% | ||
Maximum | |||
Debt | |||
Commitment fee (as a percent) | 0.375% | ||
Eurodollar | Minimum | |||
Debt | |||
Applicable margin rate | 1.75% | ||
Eurodollar | Maximum | |||
Debt | |||
Applicable margin rate | 2.50% | ||
Alternate base rate | Minimum | |||
Debt | |||
Applicable margin rate | 0.75% | ||
Alternate base rate | Maximum | |||
Debt | |||
Applicable margin rate | 1.50% |
Equity - Dividends (Details)
Equity - Dividends (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Equity | ||||
Distributions paid to unit holders | $ 9,507 | $ 9,515 | ||
Distribution received | $ 3,087 | $ 3,164 | 6,176 | 6,280 |
Solaris LLC | ||||
Equity | ||||
Distributions paid to unit holders | $ 4,755 | $ 4,758 | $ 9,507 | $ 9,515 |
Equity - Share Repurchase (Deta
Equity - Share Repurchase (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 15 Months Ended | ||
Mar. 31, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Mar. 31, 2020 | |
Equity | |||||
Repurchased and retired (in shares) | 2,374,092 | 2,626,022 | |||
Repurchased and retired | $ 26,746 | $ 30,000 | |||
Average price (in dollars per share) | $ 11.27 | $ 11.41 | |||
Treasury stock retirements (in shares) | 0 | 207,382 | 0 | ||
Solaris LLC | |||||
Equity | |||||
Repurchased and retired (in shares) | 2,374,092 | 2,626,022 |
Equity - SBC (Details)
Equity - SBC (Details) | Jun. 30, 2020shares |
Stock-based compensation | |
Available for grant (in shares) | 3,538,005 |
Class A Common Stock | |
Stock-based compensation | |
Reserved for issuance (in shares) | 5,118,080 |
Equity - Restricted stock (Deta
Equity - Restricted stock (Details) - Restricted stock - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2020 | |
Number of Shares | |||||
Unvested, beginning (in shares) | 838,852 | 627,251 | 785,454 | 411,497 | 627,251 |
Awarded (in shares) | 10,194 | 386,146 | 29,847 | 375,068 | |
Vested (in shares) | (80,203) | (141,700) | (67,674) | (706) | |
Forfeited (in shares) | (37,164) | (32,845) | (7,896) | (405) | |
Unvested, end (in shares) | 731,679 | 838,852 | 739,731 | 785,454 | 731,679 |
Other non-option information | |||||
Unrecognized compensation costs | $ 6,918 | $ 6,918 | |||
Expected period for recognizing compensation expense | 2 years 7 months 6 days | ||||
First vesting period | |||||
Number of Shares | |||||
Unvested, end (in shares) | 102,164 | 102,164 | |||
Second vesting period | |||||
Number of Shares | |||||
Unvested, end (in shares) | 264,046 | 264,046 | |||
Third vesting period | |||||
Number of Shares | |||||
Unvested, end (in shares) | 249,839 | 249,839 | |||
Fourth vesting period | |||||
Number of Shares | |||||
Unvested, end (in shares) | 115,630 | 115,630 |
Equity - EPS (Details)
Equity - EPS (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Numerator | ||||
Net income (loss) attributable to Solaris | $ (5,540) | $ 13,275 | $ (24,623) | $ 25,592 |
Less income attributable to participating securities | (322) | (575) | ||
Net income attributable to common stockholders | $ (5,540) | $ 12,953 | $ (24,623) | $ 25,017 |
Class A Common Stock | ||||
Denominator | ||||
Weighted average number of unrestricted outstanding common shares used to calculate basic net income per share (in shares) | 28,638 | 30,609 | 28,975 | 29,326 |
Effect of dilutive securities: | ||||
Stock options (in shares) | 35 | 61 | ||
Diluted weighted-average shares of Class A common stock outstanding used to calculate diluted net income per share (in shares) | 28,638 | 30,644 | 28,975 | 29,387 |
Earnings per share of Class A common stock - basic (in dollars per share) | $ (0.20) | $ 0.42 | $ (0.85) | $ 0.85 |
Earnings per share of Class A common stock - diluted (in dollars per share) | $ (0.20) | $ 0.42 | $ (0.85) | $ 0.85 |
Equity - Antidilutive (Details)
Equity - Antidilutive (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Potentially dilutive shares | ||||
Excluded from EPS calculation (in shares) | 16,630 | 16,433 | 16,632 | 17,521 |
Class B Common Stock | ||||
Potentially dilutive shares | ||||
Excluded from EPS calculation (in shares) | 15,856 | 16,202 | 15,889 | 17,450 |
Restricted stock | ||||
Potentially dilutive shares | ||||
Excluded from EPS calculation (in shares) | 761 | 231 | 726 | 71 |
Stock options | ||||
Potentially dilutive shares | ||||
Excluded from EPS calculation (in shares) | 13 | 17 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | May 17, 2017 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 |
Tax (benefits) and expenses | $ (1,272) | $ 4,158 | $ (7,350) | $ 8,339 | ||
Effective tax rate | 11.70% | 15.40% | 14.70% | 15.30% | ||
Unrecognized tax benefits | $ 816 | $ 816 | ||||
Current portion of payables related to Tax Receivable Agreement | 1,416 | |||||
Texas | ||||||
Tax (benefits) and expenses | $ 322 | $ 270 | $ 19 | $ 459 | ||
Franchise tax rate (as a percent) | 0.80% | 0.80% | ||||
Maximum taxable margin (as a percent) | 70.00% | 70.00% | ||||
Tax Receivable Agreement | ||||||
Payments of net cash saving (as a percent) | 85.00% | |||||
Benefit of remaining cash savings (as a percent) | 15.00% | |||||
Payables related to Tax Receivable Agreement | $ 68,132 | $ 68,132 | 67,998 | |||
Current portion of payables related to Tax Receivable Agreement | $ 0 | $ 0 | $ 1,416 |
Concentrations (Details)
Concentrations (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2020itemcustomer | Jun. 30, 2019customeritem | Jun. 30, 2020customeritem | Jun. 30, 2019customeritem | Dec. 31, 2019itemcustomer | |
Customer | Revenue | |||||
Concentrations | |||||
Number of customers | customer | 2 | 3 | 0 | 4 | |
Customer | Revenue | Customer One | |||||
Concentrations | |||||
Concentration risk (as a percent) | 11.00% | 13.00% | 14.00% | ||
Customer | Revenue | Customer Two | |||||
Concentrations | |||||
Concentration risk (as a percent) | 10.00% | 12.00% | 12.00% | ||
Customer | Revenue | Customer Three | |||||
Concentrations | |||||
Concentration risk (as a percent) | 11.00% | 11.00% | |||
Customer | Revenue | Customer Four | |||||
Concentrations | |||||
Concentration risk (as a percent) | 11.00% | ||||
Customer | Accounts receivable | |||||
Concentrations | |||||
Number of customers | customer | 2 | 1 | |||
Concentration risk (as a percent) | 15.00% | ||||
Customer | Accounts receivable | Customer One | |||||
Concentrations | |||||
Concentration risk (as a percent) | 17.00% | ||||
Customer | Accounts receivable | Customer Two | |||||
Concentrations | |||||
Concentration risk (as a percent) | 10.00% | ||||
Supplier | Purchases | |||||
Concentrations | |||||
Number of suppliers | item | 1 | 1 | 1 | 0 | |
Concentration risk (as a percent) | 40.00% | 12.00% | 36.00% | ||
Supplier | Accounts payables | |||||
Concentrations | |||||
Number of suppliers | item | 3 | 1 | |||
Concentration risk (as a percent) | 44.00% | ||||
Supplier | Accounts payables | Supplier One | |||||
Concentrations | |||||
Concentration risk (as a percent) | 19.00% | ||||
Supplier | Accounts payables | Supplier Two | |||||
Concentrations | |||||
Concentration risk (as a percent) | 18.00% | ||||
Supplier | Accounts payables | Supplier Three | |||||
Concentrations | |||||
Concentration risk (as a percent) | 15.00% |
Commitments and Contingencies -
Commitments and Contingencies - Interim (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Purchase commitments | $ 460 |
2019 Credit Agreement | |
Commitment fee amount | $ 229 |
Commitment fee (as a percent) | 0.25% |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Related Party Transactions | |||||
Due from related party | $ 231 | $ 231 | $ 233 | ||
Due to related party | 58 | 58 | $ 74 | ||
William A. Zartler | |||||
Related Party Transactions | |||||
Payment made to related party | 191 | $ 341 | 405 | $ 619 | |
Solaris Energy Management, LLC | |||||
Related Party Transactions | |||||
Other commitments | $ 4,540 | $ 4,540 |