Business Wire | Oct 29, 2020 04:33PM EDT

Solaris Oilfield Infrastructure Announces Third Quarter 2020 Results

Oct. 29, 2020

HOUSTON--(BUSINESS WIRE)--Oct. 29, 2020--Solaris Oilfield Infrastructure, Inc. (NYSE:SOI) ("Solaris" or the "Company"), a leading independent provider of supply chain management and logistics solutions designed to drive efficiencies and reduce costs for the oil and natural gas industry, today reported financial results for the third quarter 2020.

Operational Update and Outlook

During the third quarter 2020, an average of 34 mobile proppant management systems were fully utilized, a 70% increase from the 20 fully utilized systems averaged in the second quarter of 2020. The increase in fully utilized systems was primarily due to a rebound in active hydraulic fracturing crews that began at the end of the second quarter of 2020. Assuming normal holiday seasonality, the Company expects its fourth quarter 2020 activity could be flat to up modestly.

"As our customers returned to a modest level of activity in the third quarter, the Solaris team was ready to help them get back to work and as a result, delivered another quarter of solid results and positive free cash flow," Solaris' Chairman and Chief Executive Officer Bill Zartler commented. "We are cautiously optimistic about further activity recovery in the coming year and remain committed to helping our customers operate more efficiently through well site innovation. We also remain committed to our shareholders by continuing to run as lean as possible, paying a dividend and maintaining our debt-free balance sheet."

Third Quarter 2020 Financial Review

Solaris reported a net loss of $(3.3) million, or $(0.12) per diluted Class A share, for third quarter 2020, compared to a net loss of $(5.5) million, or $(0.20) per diluted Class A share, in second quarter 2020 and net income of $11.4 million, or $0.36 per diluted Class A share, in third quarter 2019. Adjusted pro forma net loss for third quarter 2020 was $(4.0) million, or $(0.09) per fully diluted share, compared to adjusted pro forma net loss in second quarter 2020 of $(7.0) million, or $(0.16) per fully diluted share, and adjusted pro forma net income of $14.2 million, or $0.30 per fully diluted share in third quarter 2019.

Adjusted EBITDA for third quarter 2020 was $3.1 million, compared to adjusted EBITDA of $(0.4) million in second quarter 2020 and $28.0 million in third quarter 2019.

Revenues were $20.5 million for third quarter 2020, which were up 120% from second quarter 2020 and down 66% compared to third quarter 2019.

Capital Expenditures, Free Cash Flow and Liquidity

Capital expenditures in third quarter 2020 were $1.3 million compared to capital expenditures of $0.9 million during second quarter 2020. Capital expenditures year-to-date 2020 were $2.9 million, and the Company expects capital expenditures for full year 2020 to be approximately $5 million.

Free cash flow (defined as net cash provided by operating activities less investment in property, plant and equipment) during third quarter 2020 was $2.3 million, which represented the seventh consecutive quarter of positive free cash flow for the Company.

As of September 30, 2020, the Company had approximately $60.9 million of cash on the balance sheet, which reflects over $1.36 per fully diluted share of available cash. The Company's $50.0 million credit facility remains undrawn.

Shareholder Returns

On August 28, 2020, the Company's Board of Directors declared a cash dividend of $0.105 per share of Class A common stock, which was paid on September 17, 2020 to holders of record as of September 7, 2020. A distribution of $0.105 per unit was also approved for holders of units in Solaris Oilfield Infrastructure, LLC ("Solaris LLC"). Since initiating the dividend in December 2018, the Company has paid 8 consecutive quarterly dividends. Cumulatively, the Company has returned approximately $68 million in cash to shareholders through dividends and share repurchases since December of 2018.

Conference Call

The Company will host a conference call to discuss its third quarter 2020 results on Friday, October 30, 2020 at 7:30 a.m. Central Time (8:30 a.m. Eastern Time). To join the conference call from within the United States, participants may dial (844) 413-3978. To join the conference call from outside of the United States, participants may dial (412) 317-6594. When instructed, please ask the operator to be joined to the Solaris Oilfield Infrastructure, Inc. call. Participants are encouraged to log in to the webcast or dial in to the conference call approximately ten minutes prior to the start time. To listen via live webcast, please visit the Investor Relations section of the Company's website at http://www.solarisoilfield.com.

An audio replay of the conference call will be available shortly after the conclusion of the call and will remain available for approximately seven days. It can be accessed by dialing (877) 344-7529 within the United States or (412) 317-0088 outside of the United States. The conference call replay access code is 10147907. The replay will also be available in the Investor Relations section of the Company's website shortly after the conclusion of the call and will remain available for approximately seven days.

About Solaris Oilfield Infrastructure, Inc.

Solaris Oilfield Infrastructure, Inc. (NYSE:SOI) manufactures and rents mobile equipment that drives supply chain and execution efficiencies in the completion of oil and natural gas wells. Solaris' patented mobile proppant and chemical systems are deployed in many of the most active oil and natural gas basins in the United States, including the Permian Basin, the Eagle Ford Shale, the STACK/SCOOP formation, the Marcellus and Utica Shales, the Haynesville Shale, the Rockies and the Bakken Shale. Additional information is available on the Solaris website, www.solarisoilfield.com.

Website Disclosure

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

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

Forward Looking Statements

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

SOLARIS OILFIELD INFRASTRUCTURE, INC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

Three Months Ended Nine Months Ended

September 30, June 30, September 30,

2020 2019 2020 2020 2019

Revenue

System rental $ 9,197 $ 36,638 $ 5,463 $ 40,720 $ 113,726

System services 10,855 18,153 3,419 35,231 48,621

Transloading 310 4,417 264 1,039 15,131services

Inventorysoftware 169 396 192 710 1,351services

Total revenue 20,531 59,604 9,339 77,700 178,829

Operating costs and expenses

Cost of systemrental(excluding 1,181 2,838 823 4,018 7,737depreciation andamortization)

Cost of systemservices(excluding 13,126 21,072 6,013 43,269 56,366depreciation andamortization)

Cost oftransloadingservices 243 652 202 783 2,051(excludingdepreciation andamortization)

Cost ofinventorysoftwareservices 97 160 122 364 460(excludingdepreciation andamortization)

Depreciation and 6,594 6,908 6,671 20,378 19,875amortization

Selling, generalandadministrative 3,840 4,933 3,967 12,212 13,967(excludingdepreciation andamortization)

Impairment loss - - - 47,828 -

Other operating 1,856 248 2,274 5,329 529expenses (1)

Total operatingcosts and 26,937 36,811 20,072 134,181 100,985expenses

Operating income (6,406) 22,793 (10,733) (56,481) 77,844(loss)

Interest income (40) (8) (35) 36 (775)(expense), net

Total other (40) (8) (35) 36 (775)income (expense)

Income (loss)before income (6,446) 22,785 (10,768) (56,445) 77,069tax expense

Provision(benefit) for (843) 3,703 (1,272) (8,193) 12,042income taxes

Net income (5,603) 19,082 (9,496) (48,252) 65,027(loss)

Less: net(income) lossrelated to 2,320 (7,684) 3,956 20,347 (28,036)non-controllinginterests

Net income(loss) $ (3,283) $ 11,398 $ (5,540) $ (27,905) $ 36,991attributable toSolaris



Earnings pershare of Class A $ (0.12) $ 0.36 $ (0.20) $ (0.97) $ 1.33common stock -basic

Earnings pershare of Class A $ (0.12) $ 0.36 $ (0.20) $ (0.97) $ 1.33common stock -diluted



Basic weightedaverage sharesof Class A 28,787 30,951 28,638 28,912 27,270common stockoutstanding

Diluted weightedaverage sharesof Class A 28,787 30,980 28,638 28,912 27,317common stockoutstanding

(1)

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

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

SOLARIS OILFIELD INFRASTRUCTURE, INC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(Unaudited)

September 30,

December 31,

2020

2019

Assets

Current assets:

Cash and cash equivalents

$

60,944

$

66,882

Accounts receivable, net of allowances for credit losses of $1,076 and $339 as of September 30, 2020 and December 31, 2019, respectively

18,044

38,554

Prepaid expenses and other current assets

2,716

5,002

Inventories

1,073

7,144

Total current assets

82,777

117,582

Property, plant and equipment, net

250,454

306,583

Non-current inventories

3,323

-

Operating lease right-of-use assets

4,612

7,871

Goodwill

13,004

17,236

Intangible assets, net

3,177

3,761

Deferred tax assets

59,325

51,414

Other assets

464

625

Total assets

$

417,136

$

505,072

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

$

9,122

$

3,824

Accrued liabilities

8,037

14,447

Current portion of payables related to Tax Receivable Agreement

-

1,416

Current portion of lease liabilities

600

626

Other current liabilities

75

74

Total current liabilities

17,834

20,387

Lease liabilities, net of current

7,499

7,985

Payables related to Tax Receivable Agreement

68,206

66,582

Other long-term liabilities

742

460

Total liabilities

94,281

95,414

Commitments and contingencies

Stockholders' equity:

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

-

-

Class A common stock, $0.01 par value, 600,000 shares authorized, 28,842 shares issued and outstanding as of September 30, 2020 and 30,928 shares issued and 30,765 shares outstanding as of December 31, 2019

289

308

Class B common stock, $0.00 par value, 180,000 shares authorized, 15,785 shares issued and outstanding as of September 30, 2020 and 180,000 shares authorized, 15,939 issued and outstanding as of December 31, 2019

-

-

Additional paid-in capital

179,811

191,843

Retained earnings

25,098

74,222

Treasury stock (at cost), 0 shares and 163 shares as of September 30, 2020 and December 31, 2019, respectively

-

(2,526)

Total stockholders' equity attributable to Solaris and members' equity

205,198

263,847

Non-controlling interest

117,657

145,811

Total stockholders' equity

322,855

409,658

Total liabilities and stockholders' equity

$

417,136

$

505,072

SOLARIS OILFIELD INFRASTRUCTURE, INC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(Unaudited)

September December 30, 31,

2020 2019

Assets

Current assets:

Cash and cash equivalents $ 60,944 $ 66,882

Accounts receivable, net of allowances for creditlosses of $1,076 and $339 as of September 30, 2020 and 18,044 38,554December 31, 2019, respectively

Prepaid expenses and other current assets 2,716 5,002

Inventories 1,073 7,144

Total current assets 82,777 117,582

Property, plant and equipment, net 250,454 306,583

Non-current inventories 3,323 -

Operating lease right-of-use assets 4,612 7,871

Goodwill 13,004 17,236

Intangible assets, net 3,177 3,761

Deferred tax assets 59,325 51,414

Other assets 464 625

Total assets $ 417,136 $ 505,072

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable $ 9,122 $ 3,824

Accrued liabilities 8,037 14,447

Current portion of payables related to Tax Receivable - 1,416Agreement

Current portion of lease liabilities 600 626

Other current liabilities 75 74

Total current liabilities 17,834 20,387

Lease liabilities, net of current 7,499 7,985

Payables related to Tax Receivable Agreement 68,206 66,582

Other long-term liabilities 742 460

Total liabilities 94,281 95,414

Commitments and contingencies

Stockholders' equity:

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

Class A common stock, $0.01 par value, 600,000 sharesauthorized, 28,842 shares issued and outstanding as of 289 308September 30, 2020 and 30,928 shares issued and 30,765shares outstanding as of December 31, 2019

Class B common stock, $0.00 par value, 180,000 sharesauthorized, 15,785 shares issued and outstanding as of - -September 30, 2020 and 180,000 shares authorized,15,939 issued and outstanding as of December 31, 2019

Additional paid-in capital 179,811 191,843

Retained earnings 25,098 74,222

Treasury stock (at cost), 0 shares and 163 shares as of - (2,526)September 30, 2020 and December 31, 2019, respectively

Total stockholders' equity attributable to Solaris and 205,198 263,847members' equity

Non-controlling interest 117,657 145,811

Total stockholders' equity 322,855 409,658

Total liabilities and stockholders' equity $ 417,136 $ 505,072

SOLARIS OILFIELD INFRASTRUCTURE, INC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Three Nine Months Ended Months September 30, Ended September 30,

2020 2019 2020

Cash flows from operating activities:

Net (loss) income $ (48,252) $ 65,027 $ (5,603)

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

Depreciation and amortization 20,378 19,875 6,593

Loss on disposal of asset 1,439 181 37

Allowance for credit losses 2,880 - 1,247

Stock-based compensation 3,732 3,265 1,076

Amortization of debt issuance costs 132 709 44

Deferred income tax expense (8,299) 11,284 (930)

Impairment loss 47,828 - -

Other (151) 37 (6)

Changes in assets and liabilities: -

Accounts receivable 17,630 (4,369) (8,130)

Prepaid expenses and other assets 1,876 2,088 2,093

Inventories (359) (2,555) 174

Accounts payable 5,245 (3,909) 5,098

Accrued liabilities (6,069) 6,424 1,994

Deferred revenue - (9,508) -

Net cash provided by operating activities 38,010 88,549 3,687

Cash flows from investing activities:

Investment in property, plant and (2,901) (32,914) (1,343)equipment

Proceeds from disposal of assets 724 130 64

Cash received from insurance proceeds 53 618 -

Net cash used in investing activities (2,124) (32,166) (1,279)

Cash flows from financing activities:

Share repurchases (26,717) - -

Distribution and dividend paid to SolarisLLC unitholders and Class A common (14,267) (14,274) (4,760)shareholders

Distribution to Solaris LLC unitholders (150) - (150)for income tax withholding

Payments under finance leases (24) (26) (6)

Payments under insurance premium - (1,443) -financing

Proceeds from stock option exercises 64 294 -

Payments for shares withheld for taxes (276) - (180)from RSU vesting and cancelled

Payments related to purchase of treasury (454) (1,108) -stock

Payments related to debt issuance costs - (197) -

Repayment of senior secured credit - (13,000) -facility

Net cash used in financing activities (41,824) (29,754) (5,096)

Net (decrease) increase in cash and cash (5,938) 26,629 (2,688)equivalents

Cash and cash equivalents at beginning of 66,882 25,057 63,632period

Cash and cash equivalents at end of $ 60,944 $ 51,686 60,944period $

Non-cash activities

Investing:

Capitalized depreciation in property, $ 359 $ 559 43plant and equipment $

Capitalized stock based compensation 198 133 63

Property and equipment additions incurred 12 235 6but not paid at period-end

Property, plant and equipment additions 359 5,355 3transferred from inventory

Financing:

Insurance premium financing - 1,869 -

Cash paid for:

Interest 99 200 33

Income taxes 796 663 (17)

SOLARIS OILFIELD INFRASTRUCTURE, INC AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION - ADJUSTED EBITDA

(In thousands)

(Unaudited)

We view EBITDA and Adjusted EBITDA as important indicators of performance. We define EBITDA as net income, plus (i) depreciation and amortization expense, (ii) interest expense and (iii) income tax expense, including franchise taxes. We define Adjusted EBITDA as EBITDA plus (i) stock-based compensation expense and (ii) certain non-cash items and extraordinary, unusual or non-recurring gains, losses or expenses.

We believe that our presentation of EBITDA and Adjusted EBITDA provides useful information to investors in assessing our financial condition and results of operations. Net income is the GAAP measure most directly comparable to EBITDA and Adjusted EBITDA. EBITDA and Adjusted EBITDA should not be considered alternatives to net income presented in accordance with GAAP. Because EBITDA and Adjusted EBITDA may be defined differently by other companies in our industry, our definitions of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies, thereby diminishing their utility. The following table presents a reconciliation of net income to EBITDA and Adjusted EBITDA for each of the periods indicated.

Three months ended Nine months ended

September 30, June 30, September 30,

2020 2019 2020 2020 2019



Net income (loss) $ (5,603) $ 19,082 $ (9,496) $ (48,252) $ 65,027

Depreciation and 6,594 6,908 6,671 20,378 19,875amortization

Interest (income) 40 8 35 (36) 775expense, net

Income taxes (1) (843) 3,703 (1,272) (8,193) 12,042

EBITDA $ 188 $ 29,701 $ (4,062) $ (36,103) $ 97,719

Stock-basedcompensation 1,077 1,225 1,326 3,732 3,265expense (2)

Loss on disposal 38 99 1,345 1,451 383of assets

Credit losses 1,246 - 740 2,698 -

Impairment loss - - - 47,828 -

Severance expense 3 154 211 542 154

Other write-offs 586 - - 589 528(3)

Transload contract - (3,204) - - (9,507)termination (4)

Adjusted EBITDA $ 3,138 $ 27,975 $ (440) $ 20,737 $ 92,542

_________________________

(1)

Federal and state income taxes.

(2)

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

(3)

Write-off of certain prepaid and cancelled purchase orders in the three and nine months ended September 30, 2020 and unamortized debt issuance costs in the nine months ended September 30, 2019 when the Amended and Restated Credit Agreement, dated as of January 19, 2018, was replaced in its entirety by the 2019 Credit Agreement.

(4)

Deferred revenue related to full termination of a sand storage and transloading agreement; no deferred revenue balance remained as of December 31, 2019.

SOLARIS OILFIELD INFRASTRUCTURE, INC AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION - ADJUSTED PRO FORMA NET INCOME AND ADJUSTED PRO FORMA EARNINGS PER FULLY DILUTED SHARE

(In thousands)

(Unaudited)

Adjusted pro forma net income represents net income attributable to Solaris assuming the full exchange of all outstanding membership interests in Solaris LLC not held by Solaris Oilfield Infrastructure, Inc. for shares of Class A common stock, adjusted for certain non-recurring items that the Company doesn't believe directly reflect its core operations and may not be indicative of ongoing business operations. Adjusted pro forma earnings per fully diluted share is calculated by dividing adjusted pro forma net income by the weighted-average shares of Class A common stock outstanding, assuming the full exchange of all outstanding Solaris LLC Units, after giving effect to the dilutive effect of outstanding equity-based awards.

When used in conjunction with GAAP financial measures, adjusted pro forma net income and adjusted pro forma earnings per fully diluted share are supplemental measures of operating performance that the Company believes are useful measures to evaluate performance period over period and relative to its competitors. By assuming the full exchange of all outstanding Solaris LLC Units, the Company believes these measures facilitate comparisons with other companies that have different organizational and tax structures, as well as comparisons period over period because it eliminates the effect of any changes in net income attributable to Solaris as a result of increases in its ownership of Solaris LLC, which are unrelated to the Company's operating performance, and excludes items that are non-recurring or may not be indicative of ongoing operating performance.

Adjusted pro forma net income and adjusted pro forma earnings per fully diluted share are not necessarily comparable to similarly titled measures used by other companies due to different methods of calculation. Presentation of adjusted pro forma net income and adjusted pro forma earnings per fully diluted share should not be considered alternatives to net income and earnings per share, as determined under GAAP. While these measures are useful in evaluating the Company's performance, it does not account for the earnings attributable to the non-controlling interest holders and therefore does not provide a complete understanding of the net income attributable to Solaris. Adjusted pro forma net income and adjusted pro forma earnings per fully diluted share should be evaluated in conjunction with GAAP financial results. A reconciliation of adjusted pro forma net income to net income attributable to Solaris, the most directly comparable GAAP measure, and the computation of adjusted pro forma earnings per fully diluted share are set forth below.

_________________________

(1) Federal and state income taxes.

(2) Represents stock-based compensation expense related to restricted stock awards.

Write-off of certain prepaid and cancelled purchase orders in the three and nine months ended September 30, 2020 and unamortized debt issuance(3) costs in the nine months ended September 30, 2019 when the Amended and Restated Credit Agreement, dated as of January 19, 2018, was replaced in its entirety by the 2019 Credit Agreement.

Deferred revenue related to full termination of a sand storage and(4) transloading agreement; no deferred revenue balance remained as of December 31, 2019.

SOLARIS OILFIELD INFRASTRUCTURE, INC AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION - ADJUSTED PRO FORMA NET INCOME AND ADJUSTED PRO FORMA EARNINGS PER FULLY DILUTED SHARE

(In thousands)

(Unaudited)

Adjusted pro forma net income represents net income attributable to Solaris assuming the full exchange of all outstanding membership interests in Solaris LLC not held by Solaris Oilfield Infrastructure, Inc. for shares of Class A common stock, adjusted for certain non-recurring items that the Company doesn't believe directly reflect its core operations and may not be indicative of ongoing business operations. Adjusted pro forma earnings per fully diluted share is calculated by dividing adjusted pro forma net income by the weighted-average shares of Class A common stock outstanding, assuming the full exchange of all outstanding Solaris LLC Units, after giving effect to the dilutive effect of outstanding equity-based awards.

When used in conjunction with GAAP financial measures, adjusted pro forma net income and adjusted pro forma earnings per fully diluted share are supplemental measures of operating performance that the Company believes are useful measures to evaluate performance period over period and relative to its competitors. By assuming the full exchange of all outstanding Solaris LLC Units, the Company believes these measures facilitate comparisons with other companies that have different organizational and tax structures, as well as comparisons period over period because it eliminates the effect of any changes in net income attributable to Solaris as a result of increases in its ownership of Solaris LLC, which are unrelated to the Company's operating performance, and excludes items that are non-recurring or may not be indicative of ongoing operating performance.

Adjusted pro forma net income and adjusted pro forma earnings per fully diluted share are not necessarily comparable to similarly titled measures used by other companies due to different methods of calculation. Presentation of adjusted pro forma net income and adjusted pro forma earnings per fully diluted share should not be considered alternatives to net income and earnings per share, as determined under GAAP. While these measures are useful in evaluating the Company's performance, it does not account for the earnings attributable to the non-controlling interest holders and therefore does not provide a complete understanding of the net income attributable to Solaris. Adjusted pro forma net income and adjusted pro forma earnings per fully diluted share should be evaluated in conjunction with GAAP financial results. A reconciliation of adjusted pro forma net income to net income attributable to Solaris, the most directly comparable GAAP measure, and the computation of adjusted pro forma earnings per fully diluted share are set forth below.

Three months ended Nine months ended

September 30, June 30, September 30,

2020 2019 2020 2020 2019

Numerator:

Net income (loss)attributable to $ (3,283) $ 11,398 $ (5,540) $ (27,905) $ 36,991Solaris

Adjustments:

Reallocation ofnet income (loss)attributable tonon-controlling (2,320) 7,684 (3,956) (20,347) 28,036interests from theassumed exchangeof LLC Interests(1)

Transload contract - (3,204) - - (9,507)termination (2)

Loss on disposal 38 99 1,345 1,451 383of assets

Credit losses 1,246 - 740 2,698 -

Impairment loss - - - 47,828 -

Severance expense 3 154 211 542 154

Other write-offs 586 - - 589 528(3)

Income tax (274) (1,937) 182 (8,193) (3,973)(benefit) expense

Adjusted pro forma $ (4,004) $ 14,194 $ (7,018) $ (3,337) $ 52,612net income (loss)

Denominator:

Weighted averageshares of Class Acommon stock 28,787 30,980 28,638 28,912 27,317outstanding -diluted

Adjustments:

Assumed exchangeof Solaris LLCUnits for shares 15,803 16,936 16,616 15,860 18,044of Class A commonstock (1)

Adjusted pro formafully weightedaverage shares of 44,590 47,916 45,254 44,772 45,361Class A commonstock outstanding- diluted

Adjusted pro formaearnings per share $ (0.09) $ 0.30 $ (0.16) $ (0.07) $ 1.16- diluted

(1)

Assumes the exchange of all outstanding Solaris LLC Units for shares of Class A common stock at the beginning of the relevant reporting period, resulting in the elimination of the non-controlling interest and recognition of the net income attributable to non-controlling interests.

(2)

Deferred revenue related to full termination of a sand storage and transloading agreement; no deferred revenue balance remained as of December 31, 2019.

(3)

Write-off of certain prepaid and cancelled purchase orders in the three and nine months ended September 30, 2020 and unamortized debt issuance costs in the nine months ended September 30, 2019 when the Amended and Restated Credit Agreement, dated as of January 19, 2018, was replaced in its entirety by the 2019 Credit Agreement.

View source version on businesswire.com: https://www.businesswire.com/news/home/20201029006281/en/

CONTACT: Yvonne Fletcher Senior Vice President, Finance and Investor Relations (281) 501-3070 IR@solarisoilfield.com