Business Wire | Feb 21, 2021 06:47PM EST

Solaris Oilfield Infrastructure Announces Fourth Quarter and Full Year 2020 Results

Feb. 21, 2021

HOUSTON--(BUSINESS WIRE)--Feb. 21, 2021--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 fourth quarter and full year 2020.

Operational Update and Outlook

During the fourth quarter 2020, an average of 42 mobile proppant management systems were fully utilized, a 24% increase from the 34 fully utilized systems averaged in the third quarter of 2020, and a 52% decrease compared to fourth quarter 2019. The sequential increase in fully utilized systems during the fourth quarter of 2020 was primarily due to a stronger than expected increase in completions activity and reduced normal seasonal slowdown as compared to prior years. For full year 2020, an average of 45 mobile proppant management systems were fully utilized, representing a 59% decline from the 110 fully utilized systems averaged in 2019.

"2020 was one of the most challenging years this industry has ever faced, and I'm proud of how the Solaris team successfully managed through it. The team reacted swiftly to the changing market, while continuing to generate cash, invest in new technology, and preserve our dividend," Solaris' Chairman and Chief Executive Officer Bill Zartler commented. "As we look to 2021, we remain committed to maximizing cash flow, returning cash to shareholders and maintaining our strong balance sheet. We also look forward to sharing some of our latest technology innovations in the coming months as we continue to help our customers drive efficiencies at the well site."

Full Year 2020 Financial Review

Solaris reported net loss of $(51.1) million, or $(1.03) per diluted Class A share, for full year 2020, compared to full year 2019 net income of $90.4 million, or $1.69 per diluted Class A share. Adjusted pro forma net loss for full year 2020 was $(6.6) million, or $(0.15) per fully diluted share, compared to full year 2019 adjusted pro forma net income of $62.7 million, or $1.32 per fully diluted share. A description of adjusted pro forma net income and a reconciliation to net income attributable to Solaris, its most directly comparable generally accepted accounting principles ("GAAP") measure, and the computation of adjusted pro forma earnings per fully diluted share are provided below.

Revenues were $103.0 million for full year 2020, which were down 57% from full year 2019.

Adjusted EBITDA for full year 2020 was $25.6 million, compared to full year 2019 Adjusted EBITDA of $113.4 million. A description of Adjusted EBITDA and a reconciliation to net income, its most directly comparable GAAP measure, is provided below.

Fourth Quarter 2020 Financial Review

Solaris reported net loss of $(2.8) million, or $(0.06) per diluted Class A share, for fourth quarter 2020, compared to net loss of $(5.6) million, or $(0.12) per diluted Class A share, in third quarter 2020 and net income of $25.3 million, or $0.48 per diluted Class A share, in fourth quarter 2019. Fourth quarter 2019 included a $17.6 million, or $0.37 per diluted Class A share, benefit for deferred revenue recognition that resulted from a contract termination at the Company's Kingfisher transload facility. Adjusted pro forma net loss for fourth quarter 2020 was $(2.4) million, or $(0.05) per fully diluted share, compared to adjusted pro forma net loss in third quarter 2020 of $(4.0) million, or $(0.09) per fully diluted share, and adjusted pro forma net income of $9.7 million, or $0.20 per fully diluted share in fourth quarter 2019.

Revenues were $25.3 million for fourth quarter 2020, which were up 23% from third quarter 2020 and down 60% compared to fourth quarter 2019.

Adjusted EBITDA for fourth quarter 2020 was $4.9 million, compared to Adjusted EBITDA of $3.1 million in third quarter 2020, a 55% sequential increase, and compared to $20.9 million in fourth quarter 2019.

Capital Expenditures, Free Cash Flow and Liquidity

Capital expenditures in the fourth quarter 2020 were $1.8 million and for the full year were $4.7 million. The Company expects capital expenditures for the full year 2021 to be between $5.0 and $10.0 million.

Free cash flow (defined as net cash provided by operating activities less investment in property, plant and equipment) during fourth quarter 2020 was $4.1 million, which represented the eighth consecutive quarter of positive free cash flow for the Company. For full year 2020, the Company generated $39.2 million of free cash flow.

As of December 31, 2020, the Company had approximately $60.4 million of cash on the balance sheet, which reflects about $2.09 per fully diluted share of available cash. The Company's $50.0 million credit facility remains undrawn.

Shareholder Returns

On November 18, 2020, the Company's Board of Directors declared a cash dividend of $0.105 per share of Class A common stock, which was paid on December 7, 2020 to holders of record as of November 27, 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 9 consecutive quarterly dividends. Cumulatively, the Company has returned approximately $73 million in cash to shareholders through dividends and share repurchases since December 2018.

Conference Call

The Company will host a conference call to discuss its fourth quarter and full year 2020 results on Monday, February 22, 2021 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 10151681. 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) provides 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. 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 U.S. Securities and Exchange Commission's (the "SEC") Regulation FD. Accordingly, investors should monitor our website in addition to following press releases, SEC filings and public conference calls and webcasts. Additionally, we provide notifications of news or announcements on our investor relations website. Investors and others can receive notifications of new information posted on our investor relations website in real time by signing up for email alerts.

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

SOLARIS OILFIELD INFRASTRUCTURE, INC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)



Three Months Ended Year Ended

December 31, September December 31, 30,

2020 2019 2020 2020 2019

Revenue

System rental $ 11,451 $ 28,296 $ 9,197 $ 52,171 $ 142,022

System services 13,394 15,250 10,855 48,625 63,871

Transloading 211 18,974 310 1,250 34,105 services

Inventorysoftware 220 338 169 930 1,689 services

Total revenue 25,276 62,858 20,531 102,976 241,687

Operating costs and expenses

Cost of systemrental(excluding 1,483 1,970 1,181 5,501 9,707 depreciationandamortization)

Cost of systemservices(excluding 15,498 18,383 13,126 58,767 74,749 depreciationandamortization)

Cost oftransloadingservices(excluding 257 550 243 1,040 2,601 depreciationandamortization)

Cost ofinventorysoftwareservices 92 144 97 456 604 (excludingdepreciationandamortization)

Depreciationand 6,643 7,050 6,594 27,021 26,925 amortization

Selling,general andadministrative(excluding 4,269 4,619 3,840 16,481 18,586 depreciationandamortization)

Impairment loss - - - 47,828 -

Other operating 453 56 1,856 5,782 585 expenses (1)

Total operatingcosts and 28,695 32,772 26,937 162,876 133,757 expenses

Operating (3,419 ) 30,086 (6,406 ) (59,900 ) 107,930 income (loss)

Interest income (198 ) 141 (40 ) (162 ) (634 )(expense), net

Total otherincome (198 ) 141 (40 ) (162 ) (634 )(expense)

Income (loss)before income (3,617 ) 30,227 (6,446 ) (60,062 ) 107,296 tax expense

Provision(benefit) for (776 ) 4,894 (843 ) (8,969 ) 16,936 income taxes

Net income (2,841 ) 25,333 (5,603 ) (51,093 ) 90,360 (loss)

Less: net(income) lossrelated to 1,405 (10,317 ) 2,320 21,752 (38,353 )non-controllinginterests

Net income(loss) $ (1,436 ) $ 15,016 $ (3,283 ) $ (29,341 ) $ 52,007 attributable toSolaris



Earnings pershare of Class $ (0.06 ) $ 0.48 $ (0.12 ) $ (1.03 ) $ 1.69 A common stock- basic

Earnings pershare of Class $ (0.06 ) $ 0.48 $ (0.12 ) $ (1.03 ) $ 1.69 A common stock- diluted



Basic weightedaverage sharesof Class A 28,944 30,933 28,787 28,915 30,141 common stockoutstanding

Dilutedweightedaverage shares 28,944 30,961 28,787 28,915 30,185 of Class Acommon stockoutstanding

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

Other operating expenses are primarily related to credit losses, loss on1) 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)

December 31,

December 31,

2020

2019

Assets

Current assets:

Cash and cash equivalents

$

60,366

$

66,882

Accounts receivable, net of allowances for credit losses of $1,099 and $339 as of December 31, 2020 and 2019, respectively

18,243

38,554

Prepaid expenses and other current assets

2,169

5,002

Inventories

954

7,144

Total current assets

81,732

117,582

Property, plant and equipment, net

245,884

306,583

Non-current inventories

3,318

-

Operating lease right-of-use assets

4,708

7,871

Goodwill

13,004

17,236

Intangible assets, net

2,982

3,761

Deferred tax assets

59,805

51,414

Other assets

463

625

Total assets

$

411,896

$

505,072

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

$

6,863

$

3,824

Accrued liabilities

11,986

14,447

Current portion of payables related to Tax Receivable Agreement

606

1,416

Current portion of lease liabilities

677

626

Other current liabilities

75

74

Total current liabilities

20,207

20,387

Lease liabilities, net of current

7,519

7,985

Payables related to Tax Receivable Agreement

68,097

66,582

Other long-term liabilities

594

460

Total liabilities

96,417

95,414

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 and 28,943 shares issued and outstanding as of December 31, 2020 and 30,928 issued and 30,765 outstanding as of December 31, 2019

290

308

Class B common stock, $0.00 par value, 180,000 shares authorized, 15,685 shares issued and outstanding as of December 31, 2020 and 15,939 issued and outstanding as of December 31, 2019

-

-

Additional paid-in capital

180,415

191,843

Retained earnings

20,549

74,222

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

-

(2,526

)

Total stockholders' equity attributable to Solaris and members' equity

201,254

263,847

Non-controlling interest

114,225

145,811

Total stockholders' equity

315,479

409,658

Total liabilities and stockholders' equity

$

411,896

$

505,072

SOLARIS OILFIELD INFRASTRUCTURE, INC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(Unaudited)



December December 31, 31,

2020 2019

Assets

Current assets:

Cash and cash equivalents $ 60,366 $ 66,882

Accounts receivable, net of allowances for creditlosses of $1,099 and $339 as of December 31, 2020 and 18,243 38,554 2019, respectively

Prepaid expenses and other current assets 2,169 5,002

Inventories 954 7,144

Total current assets 81,732 117,582

Property, plant and equipment, net 245,884 306,583

Non-current inventories 3,318 -

Operating lease right-of-use assets 4,708 7,871

Goodwill 13,004 17,236

Intangible assets, net 2,982 3,761

Deferred tax assets 59,805 51,414

Other assets 463 625

Total assets $ 411,896 $ 505,072

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable $ 6,863 $ 3,824

Accrued liabilities 11,986 14,447

Current portion of payables related to Tax Receivable 606 1,416 Agreement

Current portion of lease liabilities 677 626

Other current liabilities 75 74

Total current liabilities 20,207 20,387

Lease liabilities, net of current 7,519 7,985

Payables related to Tax Receivable Agreement 68,097 66,582

Other long-term liabilities 594 460

Total liabilities 96,417 95,414

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 and 28,943 shares issued and outstanding 290 308 as of December 31, 2020 and 30,928 issued and 30,765outstanding as of December 31, 2019

Class B common stock, $0.00 par value, 180,000 sharesauthorized, 15,685 shares issued and outstanding as - - of December 31, 2020 and 15,939 issued andoutstanding as of December 31, 2019

Additional paid-in capital 180,415 191,843

Retained earnings 20,549 74,222

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

Total stockholders' equity attributable to Solaris 201,254 263,847 and members' equity

Non-controlling interest 114,225 145,811

Total stockholders' equity 315,479 409,658

Total liabilities and stockholders' equity $ 411,896 $ 505,072

SOLARIS OILFIELD INFRASTRUCTURE, INC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Year Ended December 31,

Three Months Ended December 31,

2020

2019

2020

Cash flows from operating activities:

Net (loss) income

$

(51,093

)

$

90,360

$

(2,841

)

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

Depreciation and amortization

27,021

26,925

6,643

Impairment loss

47,828

-

-

Loss on disposal of asset

1,428

261

(11

)

Stock-based compensation

4,735

4,475

1,003

Amortization of debt issuance costs

176

753

44

Allowance for credit losses

2,910

339

30

Write-off of deposit

-

202

-

Deferred income tax expense

(9,153

)

16,122

(854

)

Other

(193

)

(150

)

(42

)

Changes in assets and liabilities:

Accounts receivable

17,400

853

(230

)

Prepaid expenses and other assets

2,423

2,332

547

Inventories

(235

)

(2,744

)

124

Accounts payable

3,051

(3,582

)

(2,194

)

Accrued liabilities

(2,445

)

4,183

3,624

Deferred revenue

-

(25,458

)

-

Net cash provided by operating activities

43,853

114,871

5,843

Cash flows from investing activities:

Investment in property, plant and equipment

(4,661

)

(34,852

)

(1,760

)

Cash received from insurance proceeds

100

618

47

Proceeds from disposal of assets

786

232

62

Net cash used in investing activities

(3,775

)

(34,002

)

(1,651

)

Cash flows from financing activities:

Distribution and dividend paid to Solaris LLC unitholders and Class A common shareholders

(19,026

)

(19,260

)

(4,759

)

Share repurchases

(26,717

)

(3,249

)

-

Payments under finance leases

(35

)

(35

)

(11

)

Payments under insurance premium financing

-

(2,485

)

-

Proceeds from stock option exercises

64

294

-

Payments for shares withheld for taxes from RSU vesting and cancelled

(276

)

-

-

Payments related to purchase of treasury stock

(454

)

(1,112

)

-

Payments related to debt issuance costs

-

(13,000

)

-

Repayment of senior secured credit facility

-

(197

)

-

Distribution to Solaris LLC unitholders for income tax withholding

(150

)

-

-

Net cash used in financing activities

(46,594

)

(39,044

)

(4,770

)

Net (decrease) increase in cash and cash equivalents

(6,516

)

41,825

(578

)

Cash and cash equivalents at beginning of period

66,882

25,057

60,944

Cash and cash equivalents at end of period

$

60,366

$

66,882

$

60,366

Non-cash activities

Investing:

Capitalized depreciation in property, plant and equipment

$

613

$

735

$

254

Capitalized stock based compensation

255

189

57

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

172

82

160

Property, plant and equipment additions transferred from inventory

358

5,882

(1

)

Financing:

Insurance premium financing

-

1,869

-

Cash paid for:

Interest

282

275

183

Income taxes

796

663

-

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.

SOLARIS OILFIELD INFRASTRUCTURE, INC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)



Three Year Ended Months December 31, Ended December 31,

2020 2019 2020

Cash flows from operating activities:

Net (loss) income $ (51,093 ) $ 90,360 $ (2,841 )

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

Depreciation and amortization 27,021 26,925 6,643

Impairment loss 47,828 - -

Loss on disposal of asset 1,428 261 (11 )

Stock-based compensation 4,735 4,475 1,003

Amortization of debt issuance costs 176 753 44

Allowance for credit losses 2,910 339 30

Write-off of deposit - 202 -

Deferred income tax expense (9,153 ) 16,122 (854 )

Other (193 ) (150 ) (42 )

Changes in assets and liabilities:

Accounts receivable 17,400 853 (230 )

Prepaid expenses and other assets 2,423 2,332 547

Inventories (235 ) (2,744 ) 124

Accounts payable 3,051 (3,582 ) (2,194 )

Accrued liabilities (2,445 ) 4,183 3,624

Deferred revenue - (25,458 ) -

Net cash provided by operating 43,853 114,871 5,843 activities

Cash flows from investing activities:

Investment in property, plant and (4,661 ) (34,852 ) (1,760 )equipment

Cash received from insurance proceeds 100 618 47

Proceeds from disposal of assets 786 232 62

Net cash used in investing activities (3,775 ) (34,002 ) (1,651 )

Cash flows from financing activities:

Distribution and dividend paid toSolaris LLC unitholders and Class A (19,026 ) (19,260 ) (4,759 )common shareholders

Share repurchases (26,717 ) (3,249 ) -

Payments under finance leases (35 ) (35 ) (11 )

Payments under insurance premium - (2,485 ) - financing

Proceeds from stock option exercises 64 294 -

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

Payments related to purchase of (454 ) (1,112 ) - treasury stock

Payments related to debt issuance - (13,000 ) - costs

Repayment of senior secured credit - (197 ) - facility

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

Net cash used in financing activities (46,594 ) (39,044 ) (4,770 )

Net (decrease) increase in cash and (6,516 ) 41,825 (578 )cash equivalents

Cash and cash equivalents at beginning 66,882 25,057 60,944 of period

Cash and cash equivalents at end of $ 60,366 $ 66,882 $ 60,366 period

Non-cash activities

Investing:

Capitalized depreciation in property, $ 613 $ 735 $ 254 plant and equipment

Capitalized stock based compensation 255 189 57

Property and equipment additions 172 82 160 incurred but not paid at period-end

Property, plant and equipment 358 5,882 (1 )additions transferred from inventory

Financing:

Insurance premium financing - 1,869 -

Cash paid for:

Interest 282 275 183

Income taxes 796 663 -

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 Year ended

December 31, September December 31, 30,

2020 2019 2020 2020 2019



Net income $ (2,841 ) $ 25,333 $ (5,603 ) $ (51,093 ) $ 90,360 (loss)

Depreciationand 6,643 7,050 6,594 27,021 26,925 amortization

Interest(income) 198 (141 ) 40 162 634 expense, net

Income taxes (776 ) 4,894 (843 ) (8,969 ) 16,936 (1)

EBITDA $ 3,224 $ 37,136 $ 188 $ (32,879 ) $ 134,855

Stock-basedcompensation 1,003 1,213 1,077 4,735 4,476 expense (2)

Loss ondisposal of (23 ) 80 38 1,428 463 assets

Impairment - - - 47,828 - loss

Severance 5 75 3 547 229 expense

Credit 30 - 1,246 2,728 - losses

Otherwrite-offs 12 - 586 601 528 (3)

Transaction 603 - - 603 - costs (4)

Transloadcontract - (17,630 ) - - (27,138 )termination(5)

Adjusted $ 4,854 $ 20,874 $ 3,138 $ 25,591 $ 113,413 EBITDA

______________________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 months and year ended December 31, 2020 and unamortized debt issuance costs in the year ended December 31, 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)

Costs related to the pursuit of acquisitions.

5)

Deferred revenue related to full termination of a sand storage and transloading agreement.

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 units of Solaris LLC ("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 months and year ended December 31, 2020 and unamortized debt issuance costs3) in the year ended December 31, 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) Costs related to the pursuit of acquisitions.

5) Deferred revenue related to full termination of a sand storage and transloading agreement.

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 units of Solaris LLC ("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 Year ended

December 31, September December 31, 30,

2020 2019 2020 2020 2019

Numerator:

Net income(loss) $ (1,436 ) $ 15,016 $ (3,283 ) $ (29,341 ) $ 52,007 attributable toSolaris

Adjustments:

Reallocation ofnet income(loss)attributable tonon-controlling (1,405 ) 10,317 (2,320 ) (21,752 ) 38,353 interests fromthe assumedexchange of LLCInterests(1)

Transloadcontract - (17,630 ) - - (27,138 )termination (2)

Loss ondisposal of (23 ) 80 38 1,428 463 assets

Credit losses 30 - 1,246 2,728 -

Impairment loss - - - 47,828 -

Severance 5 75 3 547 229 expense

Other 12 - 586 601 528 write-offs (3)

Transaction 603 - - 603 - costs (4)

Income tax(benefit) (136 ) 1,873 (274 ) (9,281 ) (1,748 )expense

Adjusted proforma net $ (2,350 ) $ 9,731 $ (4,004 ) $ (6,639 ) $ 62,694 income (loss)

Denominator:

Weightedaverage sharesof Class A 28,944 30,961 28,787 28,915 30,185 common stockoutstanding -diluted

Adjustments:

Assumedexchange ofSolaris LLCUnits for 15,683 16,539 15,803 15,842 17,302 shares of ClassA common stock(1)

Adjusted proforma fullyweightedaverage shares 44,627 47,500 44,590 44,757 47,487 of Class Acommon stockoutstanding -diluted

Adjusted proforma earnings $ (0.05 ) $ 0.20 $ (0.09 ) $ (0.15 ) $ 1.32 per share -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.

3)

Write-off of certain prepaid and cancelled purchase orders in the three months and year ended December 31, 2020 and unamortized debt issuance costs in the year ended December 31, 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)

Costs related to the pursuit of acquisitions.

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